News Comments
- Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. LendingPoint increases mezzanine financing. UK publishes Open Banking operational guidelines. Raisin raises $114M.
- Today’s main analysis: International P2P lending volumes for January 2019.
- Today’s thought-provoking articles: Where are we in the credit cycle? Marketplace lending associations respond to FDIC small dollar lending rule request. 8 U.S. challenger banks traditional banks should be scared of. Due diligence on P2P platforms. Global regulators struggle to define fintech credit.
United States
- KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. The lowest rating is a BBB, highest AAA. No surprises, really.
- Where we are in the credit cycle. Traditional banks are happy with where things are. Also includes a roundup of some big news in the alternative lending sector, including Acorns’ huge raise of $105 million.
- How the industry responds to the FDIC small dollar lending rule request. Both the Marketplace Lending Association and the Online Lenders Alliance issue statements. Included: The statement from the Online Lenders Association. A must-read.
- LendingPoint increases mezzanine financing to more than $67.5 million.
- 8 challenger banks traditional institutions should be afraid of. There are way more challenger banks than this, but these are the bigger ones. SoFi Money is one of the late comers, but with its financial strength, it should be a contender. Down below, don’t miss the interview with Joust, which is not on this list.
- Joust interview: The bank for freelancers.
- Chime tries to disrupt American banking.
- Challenger bank Rising Bank sets up in Midwest.
- P2P Global sells U.S. loans.
- Molo offers 15-minute mortgages.
- 25% say money is biggest hurdle in running a business.
- Plaid, Quovo scratch the surface of data aggregation.
- PeerLoanAdvisor intros loan ratings for P2P lending investors.
- Dharma Labs offers blockchain lending.
- CashCall class action will need to be refiled.
- LendingHome named to Forbes Fintech 50.
- PeerStreet integrates with Liquid Logics.
- Fluent appoints new chief financial officer.
- CoreLogic launches enhanced title, closing solution for lenders.
- Custody firm backing Betterment, Stash to launch crypto custody service.
United Kingdom
- Due diligence on P2P platforms. Are things going to get tougher for UK P2P lenders?
- Open Banking guidelines are offered.
- Starling Bank launches euro accounts.
- Aire raises $11 million.
- AccountScore offers real-time financial advice with Open Banking.
- Is SMEs declining external investments a barrier to scale?
- ANNA gets 8.5 million GBP in funding.
- Celsius has issued $630 million in crypto loans in six months.
- Aave launches Bitcoin lending on ETHLend.
- UK Bond Network closes doors.
European Union
- Raisin raises $114 million.
- ING offers Dutch SMBs funding options.
- NOVA disrupts P2P lending in Ireland.
- Banco BNI Europa, NDGIT accelerate Open Banking, PSD2.
International
- P2P lending volumes for January 2019. RateSetter crossed over 3,000 million GBP. Zopa crossed 4,000 million GBP.
- Regulators struggle to define fintech credit.
- Why venture capital is the answer to falling returns.
- Can technology stop the unbanked from falling through the cracks?
- Sancus to accept euros, dollars for loan funding.
- Revolut partners with WeWork.
Other
- China: CreditEase offers social lending to farmers.
- Australia: Wisr launches ad campaign toward disillusioned big bank customers.
- Malaysia: Youth urged to diversify P2P lending investments.
- Canada: Vancouver-based crypto trading platform with lending features launches.
- Africa: DexAge offers versatile crypto trading and includes lending.
News Summary
- United States
- KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA
- Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
- The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA
- LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA
- Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA
- P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A
- 15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A
- Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A
- 1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A
- Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A
- Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A
- US challenger Rising Bank rises up in Midwest (Fintech Futures), Rated: A
- PeerLoanAdvisor.com Introduces Exclusive Loan Ratings for Peer to Peer Lending Investors (PRWeb), Rated: A
- California-based blockchain lender proves attractive to investors (CoinGeek), Rated: A
- Long-running CashCall class action headed to state court (Reuters), Rated: A
- LendingHome Named to Forbes Fintech 50 List for Second Consecutive Year (Business Wire), Rated: B
- PeerStreet Announces New Software Integration with Liquid Logics (PeerStreet), Rated: B
- Fluent, Inc. Appoints Alex Mandel as Chief Financial Officer (Globe Newswire), Rated: B
- CoreLogic Launches Enhanced Title and Closing Solution for Lenders (CoreLogic Email), Rated: B
- A fintech firm backing hot robo advisors like Betterment and Stash is planning to launch crypto custody services within the next few months (Business Insider), Rated: B
- United Kingdom
- Due diligence on P2P platforms (FT Adviser), Rated: AAA
- UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA
- Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A
- Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A
- AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A
- Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A
- SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A
- What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A
- Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A
- Exclusive: P2P firm shuts platform (AltFi), Rated: B
- China
- From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA
- European Union
- PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA
- ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A
- The Irish fintech startups disrupting their industries (Irish Times), Rated: A
- Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A
- International
- International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA
- Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA
- Why VC Is The Answer To Falling Returns (Forbes), Rated: A
- Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A
- Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A
- Revolut team ups with WeWork (AltFi), Rated: B
- Australia
- Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A
- APAC
- Diversify investments in P2P lending, youths urged (The Star), Rated: AAA
- Africa
- DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA
- Canada
- Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA
United States
KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-1 (“SCLP 2019-1”). This is a $480.7 million consumer loan ABS transaction.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-1 |
||||||||
Class | Preliminary Rating | Class Principal | ||||||
A | AAA (sf) | $351,800,000 | ||||||
B | AA+ (sf) | $39,400,000 | ||||||
C | A+ (sf) | $51,500,000 | ||||||
D | BBB (sf) | $38,000,000 |
Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
This week’s big funding news was that digital savings and investing platform Acorns raised $105 million in its Series E round, bringing its total valuation to $860 million.
The US economy generated 304 k jobs in January, marking a record 100 months of job growth. Average hourly earnings rose by 3.2% and the unemployment rate rose slightly to 4%.
Marlette CEO Jeff Meiler discussed profitability and loan performance with Peter Renton (transcript and podcast here). Marlette announced another year of profitability in 2018.
Overall, lenders view the US consumer as healthy and the US economic growth as solid.
The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA
So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.
There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient.
The Marketplace Lending Association (MLA) provided a detailed 10-page response where they urged the FDIC (and other regulators) to do more to support banks and foster closer working relationships with fintech providers:
The Online Lenders Alliance is a trade group that contains many small dollar lenders who operate online. Not surprisingly they are against the 36% rate cap but they also have a lot in common with their sub-36% brethren such as promoting partnerships between banks and fintech companies.
The Center for Responsible Lending gave one of the most detailed responses to the RFI, a full 38 pages.
Read the full Online Lenders Alliance response here.
LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA
LendingPoint, the consumer lending platform, announced it closed an increase of its mezzanine financing, bringing the total of the facility to $67.5 million. A Paragon co-investor joined the facility as a lender.
Today’s announcement is the latest in a string of financing transactions LendingPoint has closed in the past 15 months. The company secured an up to $500 million Senior Credit Facility in August 2017 and an up to $600 million Senior Credit Facilityin May 2018, both arranged by Guggenheim Securities.
Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA
1. BankMobile — Hooked Up With T-Mobile
Parent Company: Customers Bank
Website: www.bankmobile.com
Launched: 2015
Category: Mobile bank
The creation of father-daughter team of Jay and Luvleen Sidhu (CEO and President respectively), BankMobile is an evolving banking-as-a-service platform.
2. Chime — Super Slick App
Website: www.chimebank.com
Launched: 2013
Category: Mobile banking and money management app (in partnership with the The Bancorp Bank)
Notable Milestone: 2 million account relationships
3. Finn — Chase Bank’s Millennial Play
Parent Company: JPMorgan Chase
Website: www.chase.com/personal/finnbank
Launched: 2017
Category: Mobile bank
Chase is offering a $100 for opening a new Finn account (as long as you make ten qualifying transactions in the first 60 days).
4. Marcus — Sucking Up Your Customers
Parent Company: Goldman Sachs
Website: www.marcus.com
Launched: 2016
Category: Online bank
Notable Milestones: 2+ million customers and $35 billion in deposits.
Marcus’ loans range from $3,500 to $40,000 at rates of 6.99% to 25%. The average loan in 2018 was $15,000 over four years with a 12% interest rate, according to Bloomberg BusinessWeek. That leaves plenty of margin room even with its online savings rate up at 2.25% (as of January 2019).
5. N26 — Platform Maestro
Website: n26.com
Launched: 2015
Category: Mobile bank
Notable Milestones: 2.3 million users and $1 billion in deposits.
6. Revolut — The Amazon of Banking
Website:www.revolut.com:
Launched: 2015
Category: Mobile financial provider
Notable Milestones: 3 million customers — both consumers and businesses. Opening about 8,000 accounts per day. 1.2 million monthly active users. Monthly transaction volume $3 billion. Received European banking license in December 2018. More than 60,000 U.S. customers on Revolut’s waiting list.
7. SoFi Money — Join The ‘Waitlist’
Parent Company: Social Finance, Inc.
Website: www.sofi.com
Founded: 2011 (Sofi Money Beta Launch, June 2018)
Category: No-fee Mobile banking account
8. Varo Money — Almost OCC Approved
Website: www.varomoney.com
Founded: 2015
Category: Mobile banking/money management app in partnership with the The Bancorp Bank.
Notable Milestones: First mobile-only bank to get preliminary approval for a national bank charter.
Walsh feels Varo Money is particularly suitable for the 70% of the people they initially surveyed who are “hands-off creditworthy Millennials.”
P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A
It said its net asset value (NAV) rose by 0.78 per cent in the final month of the year, amounting to a total 5.2 per cent return in 2018, as the fund sold off a number of poorly performing loans, according to its December newsletter published today.
15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A
Francesca Carlesi is the Co-Founder and CEO of Molo, a new, super exciting fintech start-up, aiming to reimagine how people get mortgages forever. She was originally a University professor, envisioning pursuing an academic career, before quickly joining McKinsey & Co., immediately after finishing her Ph.D. Molo is her first experience as a start-up entrepreneur after a long career in the finance and banking world. Here she discusses how she made the transition and found the journey so far.
Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A
57 million people in the US freelance and 30 million or so of those are micro and small businesses. Small businesses use approximately a dozen apps and pieces of software to manage their finances. From a bank account to payments to QuickBooks to factoring, microbusinesses spend 365 hours a year reconciling the data between all their financial tools.
1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A
Key Findings
- 1 in 4 Americans considers funding to be the biggest obstacle.
- More women say not knowing how to run a business is a challenge than men.
- Millennials ages 25 to 34 are the most afraid of failure.
- 1 in 3 Americans lacks a strong business idea to begin with.
Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A
The fintech consolidation is starting, at least in the financial data side of the business, with Plaid recently announcing an
With fintechs getting access to customers data residing at different banks and investment firms, the tie-up between Plaid and Quovo is seen as the early signs of the next wave of fintech disruption. These startups will not only help fintechs aggregate data but analyze it as well. That’s according to David Jegen, a partner at F-Prime Capital, an early stage venture fund based in Boston that co-led the Series B round of fundraising for Quovo. He said the industry has rapidly shifted from a time when no one beyond financial advisors gave much thought to aggregating all of a customer’s’ financial data to it now becoming expected. Just ask a millennial who wants to easily access their data from their bank account on a mobile trading app.
Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A
United Kingdom
Due diligence on P2P platforms (FT Adviser), Rated: AAA
In the immediate aftermath of the credit crunch, politicians enthused about the new crop of peer-to-peer providers and even created the Innovative Finance Isa.
UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA
The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.
With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.
Read the full report here.
Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A
The digital-only bank, which expects to top one million customers this year, said the new account is a simple was to ‘send and receive euros for free’.
Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A
Alternative credit assessment innovator Aire has picked up $11 million in new funding. The London-based company, which demonstrated its Aire Credit API at FinovateEurope 2015, said the new capital will support the continued development of its credit insight engine, as well as support expansion in the U.S.
AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A
A new service has been set up for people in debt, giving them the power to let advisors see their bank accounts in order to offer quick and accurate advice.
The service is a tie-up between fintech bank transactions firm AccountScore and The Insolvency Panel launched this month.
Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A
Small businesses accounted for 22 per cent of the UK’s economic growth in 2017 according to Octopus Investments High Growth Small Business Report. These SMEs, which comprise less than one per cent of UK companies, created one in five jobs in 2017 and hold a wealth of potential for our economy. When it comes to the future of the UK business landscape, it seems that the best things do come in smaller packages.
SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A
SME business account Anna has received an investment of £8.5 million from Kinetik as it prepares to launch new tools and products.
What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A
The cryptocurrency winter has been one of many contrasts. While some firms have gone out of business and shut down, some have thrived. Celsius Networks belongs to the latter.
Based in London, the firm launched just six months ago, but it has grown by leaps and bounds. It has lent over $630 million in loans, predominantly in cryptocurrencies.
Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A
AAVE, a UK-based FinTech Startup, today announced a new release for its crypto lending marketplace ETHLend. The release introduces the capability for the ETHLend users to use their Bitcoin holdings as a collateral to borrow funds for spending.
Exclusive: P2P firm shuts platform (AltFi), Rated: B
The UK Bond Network, a p2p platform for corporate bonds, is closing as of today Monday 4 February 2019, according to the firm.
China
From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA
Financial services group CreditEase runs an app through which its private banking clients can be connected to needy women farmers in China’s rural interior. It’s a remarkable initiative taken up by 200,000 farmers and shows what can be done with low-level credit. But how does the risk management work?
European Union
PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA
German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.
ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A
Dutch bank ING is linking its small business (SMB) customers to alternative lending marketplace Funding Options, the firms said on Monday (Feb. 4).
The partnership means Funding Options has launched services in the Netherlands, expanding beyond the U.K. for the first time, said reports in Crowdfund Insider. Approximately 1.8 million SMBs in the Netherlands will gain access to Funding Options via ING Bank.
The Irish fintech startups disrupting their industries (Irish Times), Rated: A
Also based at NOVA is Initiative Ireland which aims to give cautious investors lower-risk access to the Irish property market. With poor interest rates, investors face the perennial problem of what to do with their money. Risk takers will always have options, cautious investors less so, and this is Initiative Ireland’s sweet spot. It is offering returns in the order of six to eight per cent to those investing in its novel peer-to-peer lending platform for developers building social and affordable housing.
Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A
The European challenger bank in Portugal, Banco BNI Europa, has become a customer of NDGIT, provider of the API platform for banking and insurance in Europe.
BNI Europa implements “PSD2 Ready”, NDGIT’s smart standardized software solution following the Berlin Group RTS standard, to fulfil all PSD2 requirements. This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next step in their company’s development.
International
International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA
Milestones achieved this month (total volume since launch):
- MyTripleA crossed 50M EUR
- Peerberry crossed 50M EUR
- Ratesetter crossed 3000M GBP
- Swaper crossed 50M EUR
- Zopa crossed 4000M GBP
Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA
While many jurisdictions have highlighted fintech credit as a key development in the nonbank financial space over the last year, they struggle to define exactly what fintech credit is, per findings of the Financial Stability Board’s (FSB’s) Global Monitoring Report on Non-Bank Financial Intermediation 2018.
Why VC Is The Answer To Falling Returns (Forbes), Rated: A
In uncertain times, VC offers the advantage that its performance is completely uncorrelated with public equity markets. Last year, both the US and Europe saw record VC investment, reaching over
Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A
Those of us who work in finance can’t imagine life without a bank account. But for the world’s 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live — and remain — in a cycle of poverty.
In the U.S., nearly 95 percent of adults have a mobile phone and 80 percent of those are smartphones. And since they’re not tied to traditional banking norms such as branches, ATMs, and credit cards, the unbanked are more likely to adopt digital banking via their phones.
TymeBank in South Africa uses AI to help people learn about their money and how to save. It teaches people about credit scores and rewards them for good financial behavior — TymeBank offers an amazing 10 percent interest rate on savings accounts for customers who can define specific financial goals they want to hit, and then contribute to them.
Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A
SANCUS will start accepting euro-denominated loans within the next few months, to help it expand its investor base.
The alternative business finance provider is also planning to establish a new base in the Cayman Islands by the end of 2019, a move which would allow it to accept dollar-denominated investments as well.
Revolut team ups with WeWork (AltFi), Rated: B
The new partnership will provide Revolut for Business customers with 3 months free of hot-desk space at a WeWork co-working space.
Australia
Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A
Peer to peer lending service provider Wisr has targeted disillusioned big bank customers in its new ad campaign.
APAC
Diversify investments in P2P lending, youths urged (The Star), Rated: AAA
Technology-driven peer-to-peer (P2P) lending is becoming a popular investment choice among young investors, but the anticipated slowdown in the economy this year also raises the risk of losing money.
To protect their investment, a P2P financing platform operator said that investors should spread their investment into as many deals as possible.
Africa
DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA
The P2P Crypto loan services allow users to retain their assets in case they predict the concerned cryptocurrency value might appreciate in the future. DexAge enables users to stake their crypto assets as collateral and acquire a loan of the same value to expand their investment profile.
Canada
Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA
iBank Digital Asset L.P. (“iBank Digital”, “iBankEx” or the “Company”) has officially launched Vancouver’s first peer-to-peer (P2P) OTC digital currency trading platform on iBankEx. (www.ibankex.io) This launch is supported by Huobi Cloud (“Huobi Cloud”) technology, which has officially entered the Canadian market in 2019 with 120 exchanges around the world.
iBank Products & Services:
Fiat Lending – A decentralized global lending network connecting financial institutions worldwide by offering crypto backed loan business.
Crypto Lending – iBank provides crypto loans collateralized by your crypto assets in BTC/USDT with security and confidentiality.
Authors:
The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.
Thursday April 12 2018, Daily News Digest
News Comments Today’s main news: Upgrade to issues ABS–but when? FCA warns Funding Circle clone. Funding Circle Netherlands approved for Guarantee SME Credit Scheme Participant. Today’s main analysis: The metro areas with the most fraud alerts. Today’s thought-provoking articles: The regulation of marketplace lending (A MUST-READ REPORT). LendIt, PitchIt award winners. Is China Rapid Finance close to profit? GDPR consent […]
News Comments
- Today’s main news: Upgrade to issues ABS–but when? FCA warns Funding Circle clone. Funding Circle Netherlands approved for Guarantee SME Credit Scheme Participant.
- Today’s main analysis: The metro areas with the most fraud alerts.
- Today’s thought-provoking articles: The regulation of marketplace lending (A MUST-READ REPORT). LendIt, PitchIt award winners. Is China Rapid Finance close to profit? GDPR consent for data processing. The 2018 VC market is off to a strong start.
United States
- Upgrade may issue an ABS soon. At this point, until I see an official announcement, I’m not ready to say it’s going to happen. But it wouldn’t surprise me to see it happen.
- The metro areas with the highest, lowest fraud alerts. Houston and Las Vegas top the list of the highest. Rochester and Buffalo, New York are top of the list of the lowest.
- The regulation of marketplace lending. A must-read.
- PitchIt, LendIt award winners. Congratulations to all the winners.
- Modernizing consumer lending.
- CashCall appeal could jeopardize Consumer Financial Protection Bureau.
- Optimizing mortgage loan lifecycles.
- Big banks are using non-bank middlemen to lend to subprime borrowers.
- Second chances – Mike Cagney and Renaud Laplanche.
- Blockchain gives P2P lenders a taste of their own medicine. There will always be innovation, and that’s good.
United Kingdom
- FCA warns Funding Circle clone.
- Prestige Funds partners with Goji.
- Loan approval and payments speed.
- Higher salaries give fintechs a leg up.
China
European Union
International
- The VC market is off to a strong start.
- How global fintech trends impact banking.
- What’s going on with blockchain P2P lending startups.
Other
News Summary
- United States
- Ex-LendingClub chief’s new venture set to issue ABS (GlobalCapital), Rated: AAA
- LendingTree Ranks Metros with the Most Fraud Alerts (PR Newswire) Rated: AAA
- The Regulation of Marketplace Lending: A Summary of the Principal Issues (Chapman and Cutler) Rated: AAA
- LendIt Fintech Names PitchIt Competition Winners And Second Annual LendIt Industry Award Winners (PR Newswire) Rated: AAA
- To modernize consumer lending, it had to strip systems to the core (American Banker) Rated: A
- Appeal could jeopardize CFPB win in landmark tribal sovereignty case (Reuters) Rated: A
- Optimizing Mortgage Loan Lifecycles With Fintech (the M Report) Rated: A
- Big Banks Using Non-Bank Middlemen to Lend to Subprime Borrowers (Low Cards) Rated: A
- Two’s company (Breakingviews) Rated: A
- Blockchain makes online lenders taste own medicine (Nasdaq) Rated: A
- United Kingdom
- FCA issues warning about Funding Circle clone (Peer2Peer Finance News) Rated: AAA
- Prestige Funds partners for Innovative Finance ISA bond (The Armchair Trader) Rated: A
- The need for speed for loan approvals and payments (Credit Strategy) Rated: A
- Higher salaries giving fintech sector edge over traditional banking (Finextra) Rated: B
- China
- China Rapid Finance: Is It Close To Making A Profit? (Seeking Alpha) Rated: AAA
- European Union
- Ministry of Economic Affairs and Climate Approves Funding Circle Netherlands As Guarantee SME Credit Scheme Participant (Crowdfund Insider) Rated: AAA
- GDPR and financial advice: Consent for data processing (Professional Adviser) Rated: AAA
- International
- Strong start to 2018 for VC market (Digital News Asia) Rated: AAA
- How global fintech trends will impact your banking (Bank Rate) Rated: A
- What’s Happening with P2P Lending Blockchain Startups in 2018 (Equities) Rated: A
- Africa
- The future of financial advice is tech and touch (Moneyweb) Rated: A
- MENA
- Dipping Into Digital (Global Finance) Rated: AAA
- New Realities, New Technologies (Global Finance) Rated: B
- Authors:
United States
Ex-LendingClub chief’s new venture set to issue ABS (GlobalCapital), Rated: AAA
Upgrade is said to have a private warehouse facility in place and is looking to debut a securitization in the coming months, according to two people familiar with the matter.
According to an April 2017 press release, Jefferies is advising the company on its capital markets strategy and is….
LendingTree Ranks Metros with the Most Fraud Alerts (PR Newswire) Rated: AAA
With millions of Americans affected by data breaches every year, such as recent revelations at Uber and Equifax, LendingTree decided to look at anonymized data from a sample of the over 7 million My LendingTree users to see where people are most likely to have asked a credit bureau to place a fraud alert on their credit report.
Key findings of the study:
- The average rate of fraud alert requests among all cities reviewed is 6.4 percent.
- Las Vegas and Houston tie for the highest rate of fraud alerts, at 13.6 percent.
- Miami and New York are close behind, tied at 12.9 percent.
- Rochester, N.Y. has the lowest rate of people requesting fraud alerts at 2 percent. Nearby Buffalo, N.Y. has 2.6 percent.
The Regulation of Marketplace Lending: A Summary of the Principal Issues (Chapman and Cutler) Rated: AAA
So-called “true lender” litigation remains one of the most significant risks facing the marketplace lending industry. These are cases involving a claim by a borrower or regulator that the “true lender” of a loan funded by a Funding Bank for a marketplace lender is the marketplace lender rather than the
Funding Bank. Often such litigation involves asking the court to look past the form of the loan transactions to their substance in order to ascertain which party, the Funding Bank or the marketplace lender, holds the predominant economic interest in the loans. The aim of true lender claims is to subject
the marketplace lender to federal and state regulation as a non-bank lender, enabling the claimant to pursue actions based on failure to comply with state lender licensing or usury laws.
Read the full report here.
LendIt Fintech Names PitchIt Competition Winners And Second Annual LendIt Industry Award Winners (PR Newswire) Rated: AAA
Out of eight PitchIt finalists, the judge’s winner was CreditStacks, a company that offers U.S. based premium credit cards to prime, new-to-credit customers. The audience winner was Narmi, a fintech company the helps credit unions and banks deliver a unified experience with modern and secure online banking, mobile banking and websites.
Below are the second annual LendIt Industry Award winners, per category:
Fintech Innovator of the Year
Affirm
Executive of the Year
Anthony Hsieh, Founder & CEO, loanDepot
Fintech Woman of the Year
Kathryn Petralia, Co-founder & COO, Kabbage
Blockchain Innovator of the Year
ConsenSys
Most Innovative Token Economy
AxiomZen
Top Consumer Lending Platform
Yirendai
Top Small Business Lending Platform
Kabbage
Top Real Estate Lending Platform
LendInvest
Emerging Lending Platform
LendingUSA
Excellence in Financial Inclusion
Oportun
Most Promising Partnership
LendingClub + Opportunity Fund
Most Successful Cross-Border Partnership
Kasisto + DBS Bank
Most Innovative Bank
Cross River
International Innovator of the Year
IrisGuard
Top Enterprise Technology Company
ThreatMetrix
Top Emerging Technology Company
MoneyLion
Top Professional Services Company
Millennium Trust
Most Innovative Mobile Technology
Juvo
Top Fintech Equity Investor
Edison Partners
Best Journalist Coverage
Tony Zerucha, Managing Editor, Bankless Times
Top Investment Bank in Fintech
FT Partners
To modernize consumer lending, it had to strip systems to the core (American Banker) Rated: A
Replacing core systems can be an expensive and risky proposition for banks, but KeyCorp has decided the time is now to replace an antiquated legacy system.
The $138 billion-asset bank announced at the Oracle Industry Connect conference in New York this week that it plans to ditch its existing lending platform in an effort to digitize and modernize the lending process.
Appeal could jeopardize CFPB win in landmark tribal sovereignty case (Reuters) Rated: A
Online lender CashCall filed a notice of appeal Tuesday in a Consumer Financial Protection Bureau enforcement action that set precedent on whether consumer lenders can evade state interest rate caps by affiliating with Native American tribes and invoking tribal sovereignty. In 2016, U.S. District Judge John Walter of Los Angeles granted partial summary judgment to the CFPB, holding that CashCall was the true lender, rather than a company owned by a member of the Cheyenne River Sioux Tribe, so state laws govern CashCall loans. The company’s notice to the 9th U.S. Circuit Court of Appeals, filed by its lawyers at Latham & Watkins and Skadden Arps Slate Meagher & Flom, indicated that CashCall will challenge the landmark summary judgment decision on tribal sovereignty, as well as other rulings by Judge Walter.
Judge Walter, however, concluded that the bureau hadn’t shown it was entitled to any restitution and that CashCall had not knowingly flouted consumer protection laws. He awarded the bureau only $10.3 million in penalties.
Optimizing Mortgage Loan Lifecycles With Fintech (the M Report) Rated: A
Integrated properly into both the trading and operational side of the mortgage lifecycle, fintech can not only increase margins but also allow for lenders to originate more loans in less time and in a more efficient and secure manner. Additionally, by using fintech throughout the mortgage lifecycle, each phase of management is enhanced and therefore produces optimized outcomes leading to better investment returns, while still providing the borrower with a great customer experience.
A “High Level” Tech-Enabled Residential Mortgage Lifecycle*
*This chart is provided as a “high level” example of what types of fintech can optimize the lifecycle. It is not to be considered a complete integration or feature roadmap.
Big Banks Using Non-Bank Middlemen to Lend to Subprime Borrowers (Low Cards) Rated: A
If a borrower has a low credit score and needs a loan for a $12,000 vehicle, this would not be of interest to a large bank such as Wells Fargo. But it would be an option for a non-bank lender like Exeter Finance. Exeter would screen the applicant and approve the loan at their discretion. Then, Wells Fargo would extend a loan to Exeter. The bank is still profiting from a sub-prime loan, but they are giving the money to another lender.
This does not eliminate risk on Wells Fargo’s end. However, it does push the burden onto the non-bank lender, according to The Wall Street Journal.
Two’s company (Breakingviews) Rated: A
Silicon Valley is giving two of its most noted fintech outcasts a second chance. Former Social Finance boss Mike Cagney and erstwhile LendingClub Chief Executive Renaud Laplanche are each back with new loan ventures after losing their jobs to scandals.
Between them, both men created what are now the two largest fintech lenders, having originated or facilitated some $63 billion between them in the past few years.
Blockchain makes online lenders taste own medicine (Nasdaq) Rated: A
Blockchain is giving online lenders a taste of their own medicine. The likes of Prosper, Social Finance and On Deck Capital found cryptocurrency technology trying to steal the limelight at their annual get-together in San Francisco this week. It’s a case of the disruptors being disrupted.
United Kingdom
FCA issues warning about Funding Circle clone (Peer2Peer Finance News) Rated: AAA
THE CITY watchdog has issued a warning to consumers about a clone of peer-to-peer lender Funding Circle.
The clone, Funding Circle Loans, had set up a website purporting to be the P2P platform.
Its website, , has since been suspended.
Prestige Funds partners for Innovative Finance ISA bond (The Armchair Trader) Rated: A
Prestige Funds, a specialist direct lending manager, is partnering with UK-based Goji to launch a Renewables Lending Bond which is eligible for inclusion in an Innovative Finance ISA (IFISA). IFISAs are a new, tax-free way for investors to access investment opportunities that are not available on stock exchanges.
The Goji Renewables Lending Bond will include a yield target of between 5.5% and 6.5% over three and five year terms. Interest payments on the bond will be supported by UK government subsidies, such as Feed-in-Tariffs.
The need for speed for loan approvals and payments (Credit Strategy) Rated: A
Arguably, consumer lending has come full circle.
But today’s consumer lenders are having to contend with raised customer expectations. “Empowered borrowers,” says consultancy firm PwC, expect not only a simple, but also a fast loan process.
Consumer lending research published by PwC found that other than economic factors (interest rates and closing costs) or “having an existing relationship,” the speed of the process was the most important factor for borrowers in choosing a lender.
Higher salaries giving fintech sector edge over traditional banking (Finextra) Rated: B
The threat from Brexit has also called into question how Britain has – and will – deal with the country’s departure from the European Union in terms of its strong worldwide financial standing. With this in mind, Joblift has analysed and compared the UK’s Fintech and traditional banking sectors over the last 12 months. The analysis shows that traditional banking has felt the effect of the competition from Fintech and the upcoming Brexit with vacancies decreasing by 3% monthly, while Fintech seems to be flourishing, with a huge growth of 9% monthly, in the face of these challenges.
China
China Rapid Finance: Is It Close To Making A Profit? (Seeking Alpha) Rated: AAA
China Rapid Finance (XRF) went public on NYSE on April 28, 2017, as the beginning of the IPO wave for China P2P companies in 2017. The company focuses their business on meeting the credit demand for EMMAs (Emerging Middle-class Mobile Active consumer) in China.
- China Rapid Finance (XRF) has experienced a business shift from lifestyle loans (larger in size) to consumption loans (smaller size), which will lead to bigger impact from regulatory hammer;
- Q4 earnings results didn’t satisfy investors and stock price dropped 15% in two days after the ER release;
- Despite of the short term concerns, operating efficiency has significantly improved in 2017, which makes the profitability outlook of the firm very positive.
European Union
Ministry of Economic Affairs and Climate Approves Funding Circle Netherlands As Guarantee SME Credit Scheme Participant (Crowdfund Insider) Rated: AAA
The Ministry of Economic Affairs and Climate (EZ) has reportedly approved Funding Circle Netherlands as a Guarantee SME Credit (BKMB) scheme participant.
According to AltFi, for participating firms, which are typically major banks, the BKMB provides guarantee of up to 75% of the loan amounts that fit within its criteria.
GDPR and financial advice: Consent for data processing (Professional Adviser) Rated: AAA
A firm could be in trouble with the Information Commissioner’s Office (ICO) if an individual makes a complaint about being marketed to by a firm and there is no consent in place, since this constitutes a breach of the GDPR.
Article 6 – lawfulness of processing
Processing shall be lawful only if and to the extent that at least one of the following applies:
a. the data subject has given consent to the processing of his or her personal data for one or more specific purposes;
b. processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract;
d. processing is necessary in order to protect the vital interests of the data subject or of another natural person;
f. processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data, in particular where the data subject is a child.
International
Strong start to 2018 for VC market (Digital News Asia) Rated: AAA
Mega-deals continue to shape Asian market
After rounding off 2017 at a remarkable high bolstered by megadeals, Asia continued to see large deals in Q1 2018.
Global Q1 2018 key highlights
- Global VC investment rose from US$46 billion in Q4’17 to US$49.3 billion in Q1 2018, a solid increase buoyed by five US$1 billion+ megadeals.
- The number of global VC deals declined for the fourth straight quarter, falling from 3,286 in Q4 2017 to 2,661 in Q1 2018. The number of VC deals has dropped by half since reaching a peak of 5,480 deals in Q1’15.
- The Americas set a new record for VC investment in Q1 2018, with US$29.4 billion raised across 1,782 deals. Asia raised US$14.6 billion across 317 deals, and Europe raised US$5.2 billion across 548 deals.
- Corporate participation in global VC deals set a new record for the second straight quarter, rising from 18.5% in Q4 2017 to 21% in Q1 2018.
- New and old unicorns – companies valued at over US$1 billion – attracted a significant amount of funding with US$14 billion across 32 deals. Two unicorns went public late in Q1 2018: cloud-based security provider Zscaler and cloudstorage provider Dropbox, with both companies seeing positive results to date. With Spotify set for a direct listing in April and UK-based online loan provider Funding Circle planning to go public later this year, the IPO market may be opening up.
How global fintech trends will impact your banking (Bank Rate) Rated: A
In the last few years, the U.S. has seen the launch of a whole crop of neobanks, consumer-friendly startups that are trying to change the way we manage our money. A bunch of neobanks have appeared in Europe, too (they are called challenger banks across the pond), and it seems like they are all eyeing the U.S. market.
Last year, French firm Revolut, which includes a crypto wallet and free international transfers among its features, announced its plans to expand into the U.S. Germany’s N26 recently raised $160 million from venture capital investors to fuel a U.S. expansion. Meanwhile, British startup Cleo, which is more of an AI-powered budgeting tool than a challenger bank, recently began offering its product in the U.S.
What’s Happening with P2P Lending Blockchain Startups in 2018 (Equities) Rated: A
That is why startups like Alchemy, SALT, Eth-Lend and Celsius can be game-changers not only in peer-to-peer (P2P) lending, but for the future of the American economy as well. Based on blockchain technology, these startups are committed to creating a safe, global, and accessible source of P2P lending.
The debt is then pooled into Collateralized Debt Obligations (CDO’s) which are then organized by risk and made available to purchase on the platform. This not only provides an easy and secure source of P2P funding, but creates a sustainable ecosystem and investment opportunity for anyone on the network.
Africa
The future of financial advice is tech and touch (Moneyweb) Rated: A
There is a lot of conversation around investing digitally, right now. Supporters of the idea suggest that investors should cut out their brokers or financial advisors and take their money online by investing through digital platforms. The argument goes that while an advisor might give your investments a bit of an edge in terms of growth, the fees they charge tend to negate the value that they add.
Since both financial advisors and technology have such an important role to play in supporting individuals in making the right financial decisions, and in the convenience of access to information about their spread of financial products, I recommend a “touch-and-tech” model of engagement.
MENA
Dipping Into Digital (Global Finance) Rated: AAA
The MENA fintech sector is booming, with more than $100 million raised by start-ups in the last decade. Dubai-based digital research network Wamda’s State of Fintech report released last March predicted the total for just that year would reach $50 million, an increase of 270% over 2016.
Although online payments, remittances, crowdfunding and peer-to-peer lending attracted the largest tickets, fast-growing fintech subsectors include cryptocurrencies, artificial intelligence and digital wallets.
In 2017 some of the major deals included a $20 million capital injection in Saudi Arabia’s online payment solution PayTabs; a $10 million round by three investors, including UK firm Gocompare, for Emirati price-comparison platform Souqalmal; $13 million for Emirati Cloud HR and insurance platform Bayzat; $5 million for Emirati peer-to-peer lending company Beehive; and $3.5 million for Emirati comparison website Yallacompare.
Lebanon was one of the first MENA countries to invest massively in the digital economy. Back in 2013, the central bank, Banque du Liban, issued a circular guaranteeing up to $400 million worth of investments in innovative technologies, later raising that amount to $600 million. Today, the country is home to 15 funding institutions, as well as a myriad of accelerators and start-up support programs.
New Realities, New Technologies (Global Finance) Rated: B
Surprisingly, the UAE accounts for 70% of the investments in areas such as digital banking services, cryptocurrencies, ecommerce and fintech start-up deals. For a nascent market, the growth rate is explosive, with dozens of new start-ups launching every year. So far, online payments, remittances, crowdfunding and peer-to-peer lending have attracted the largest investments. Late last year, Bahrain introduced the world’s first shariah-compliant fintech consortium.
Authors:
Monday March 5 2018, Daily News Digest
News Comments Today’s main news: Kabbage says ‘no’ to lending for assault guns. Collateral enters administration. Orix invests $60M in Wecash. SMBs accept face-to-face payments via mobile devices. Today’s main analysis: The friction between new finance and old regulations (a must-read report). Today’s thought-provoking articles: 3 lessons from LendingClub’s earnings. The business schools that produce the highest salaries. Beware fintechs […]
News Comments
- Today’s main news: Kabbage says ‘no’ to lending for assault guns. Collateral enters administration. Orix invests $60M in Wecash. SMBs accept face-to-face payments via mobile devices.
- Today’s main analysis: The friction between new finance and old regulations (a must-read report).
- Today’s thought-provoking articles: 3 lessons from LendingClub’s earnings. The business schools that produce the highest salaries. Beware fintechs bearing bitcoin. Equity and credit market volatility.
United States
- Kabbage restricts lending for guns. AT: “A bold move for any financial institution, but an even bolder move for an alternative lender.”
- 3 things LendingClub’s earning report reveals. AT: “Nothing earth shattering, but interesting insights from The Motley Fool.”
- Top 20 business schools where grads earn the highest salaries. AT: “SoFi takes a look at business schools to see where graduates are earning the highest salaries after graduation. There are probably few surprises for anyone familiar with the top business schools, but top salaries don’t reflect a true financial condition for the graduates. How much debt did they incur to earn that money?”
- The friction between new finance and old regulations. AT: There is obvious friction, but this report from The Milken Institute goes into a lot of detail and gets into the weeds of Congressional action on finance. This is a must-read report.”
- Equity and credit market volatility. AT: “As always, PeerIQ gives us something to think about. Especially prescient: ‘No new MPL deals have priced since the rise in volatility’.”
- Marketplace lenders develop new wrinkles.
- Marketplace lending’s death has been greatly exaggerated. AT: “As many predicted last year, there has been a lot of consolidation and growth in that direction. However, consolidation is more about thinning the heard than lowering the volume. As this graph shows, there certainly is not lowering of the volume.”
- The SEC ramps up ICO subpoenas.
- Mulvaney says Consumer Financial Protection Bureau will depend on state AGs.
- 3rd Circuit holds Cashcall’s arbitration clause unenforceable.
- The benefits of mobile transactions on the credit invisible.
- Rethinking the reputation of merchant cash advance.
- Best Egg likes to talk about it.
- Who are the best fintechs to work for? AT: “A look inside company cultures of alternative lenders, digital banks, etc.”
- PeerStreet mixes play with hard work. AT: “In the 20th century, companies competed on benefits to attract and retain employees. In the 21st century, it’s more about career-building and company culture. PeerStreet is one alternative lender that is using this thinking to attract millennials with talent.”
United Kingdom
- Collateral enters administration. AT: “After last week’s headline, this was expected.”
- BondMason offers to manage Collateral’s loanbook. AT: “This should be good for both parties.”
- P2P platforms reassure investors.
- Zombie businesses have grown in South East.
- Beware companies bearing bitcoin. AT: Cryptocurrencies are getting a lot of press right now, both good and bad. There are those who are bullish and those who won’t go near them with a 10-foot pole. Both sides have alternative lenders making their position known. This is a great debate with no easy answer. Those companies taking a chance on crypto, like Square, should be applauded. They built their businesses on risk, calculated and mitigated, so why change now? I see it as an expansion, and a necessary one is cryptocurrencies continue their present climb in interest.”
- Humanique launches new mobile app version.
- Linked Finance helps firms add 2,400 jobs.
- Archover gets a new board member.
China
European Union
International
- SMBs offer face-to-face payments via mobile devices. AT: “Not only do companies like Square make this possible, but this is good business all around.”
- AltFin shines as investor interest in B2B fintech continues.
- Why more MBA students are seeking careers in fintech.
- Bitstrades offers lending on the blockchain.
- TigerWit raises $5M.
Australia/New Zealand
- Credit space doesn’t need financial planners.
- Calculator that reveals true cost of credit on loan contract.
India
Africa
News Summary
- United States
- Online lender Kabbage to restrict weapons lending (Reuters), Rated: AAA
- 3 Revelations From LendingClub’s Earnings Report (The Motley Fool), Rated: AAA
- The top 20 business schools where graduates earn the most money, ranked from lowest to highest salary (Business Insider), Rated: AAA
- There is Friction Between New Finance & Old Regulation (Crowdfund Insider), Rated: AAA
- Equity and Credit Market Volatility, Continuing Bank-FinTech Partnerships (PeerIQ), Rated: AAA
- Marketplace lenders develop new wrinkles to attract more funding (American Banker), Rated: A
- Marketplace lending’s death has been over exaggerated (PaymentsSource), Rated: A
- The SEC Goes Hot with ICO Subpoenas but are Regulators “on Shaky Legal Ground?” (Crowdfund Insider), Rated: A
- Mulvaney says the CFPB will depend heavily on state Attorneys General for enforcement of consumer protection laws (Lexology), Rated: B
- 3rd Circuit holds payday lender’s arbitration clause unenforceable (Lexology), Rated: B
- The benefits of fintech for the credit invisible (microbilt), Rated: A
- Rethinking The Reputation Of The Merchant Cash Advance (PYMNTS), Rated: A
- At Best Egg, talk is a best practice (American Banker), Rated: B
- Best Fintechs to Work For (American Banker), Rated: A
- To keep burnout in check, PeerStreet mixes play with hard work (American Banker), Rated: A
- United Kingdom
- Peer-to-peer lender Collateral enters administration (Financial Times), Rated: AAA
- BondMason offers to step in on Collateral loans (P2P Finance News), Rated: A
- P2P platforms reassure investors after Collateral closure (P2P Finance News), Rated: A
- Growth in the number of Zombie businesses in the South East says report (Daily Echo), Rated: A
- Beware Fintech Firms Bearing Bitcoin (Bloomberg), Rated: AAA
- London Fintech Humaniq Launches New Version of Mobile App (Crowfund Insider), Rated: A
- Peer-to-peer lender Linked Finance helps firms to add 2,400 jobs (The Times), Rated: A
- City Moves for 5 March 2018 – who’s switching jobs at ArchOver? (City A.M.), Rated: B
- China
- Orix invests $ 60m in Chinese fintech startup (Asian Review), Rated: AAA
- Hong Kong gives fintech measures the thumbs up (Asia Asset Management), Rated: B
- European Union
- We talked to Nordic fintech queen Lena Apler – and her message to legacy banks is reboot or die (Business Insider), Rated: A
- International
- SMBs Turn To Mobile Devices To Accept Payments In Face-To-Face Environments (PYMNTS), Rated: AAA
- AltFin Shines As Investor Interest In B2B FinTech Continues (PYMNTS), Rated: A
- Why More MBA Students Are Gunning For Careers In Fintech (Business Because), Rated: A
- Lending and profit on the blockchain – Bitstrades targets new markets (The Merkle), Rated: B
- TigerWit Raises $ 5M in Funding (Finsmes), Rated: B
- Australia/New Zealand
- Financial planners not needed in credit space (TheAdviser), Rated: A
- We launch a new calculator that figures out the true “cost of credit” of a loan contract (Interest.co.nz), Rated: B
- India
- FY 19 – Beginning of a New Era for P2P Lending in FinTech Sector (India Info Online), Rated: AAA
- Signzy is helping banks solve customer authentication, onboarding problems with blockchain-based solution (YourStory), Rated: B
- Africa
- Nigerian banks are using Facebook Messenger to onboard small businesses (Tearsheet), Rated: AAA
United States
Online lender Kabbage to restrict weapons lending (Reuters), Rated: AAA
Kabbage Inc, a U.S. online lender for small businesses, said it will cut ties with clients that make or sell assault-style rifles or that sell weapons or ammunition to people under 21 years old, one of the strongest steps by any financial firm after last month’s high school massacre in Florida.
3 Revelations From LendingClub’s Earnings Report (The Motley Fool), Rated: AAA
1. Lawsuit settlements
One piece of good news is that the company recently dealt with its largest liabilities from the 2016 scandal, settling both federal and state class action shareholder lawsuits. The bad news: LendingClub has to pay plaintiffs a total of $125 million, with $47.75 million covered by insurance, leaving LendingClub on the hook for the remaining $77.25 million. That amounts to roughly 12% of the company’s liquid assets and about 5% of the current market capitalization.
2. A challenging environment
In addition to these company-specific problems, the macroeconomic environment has become more challenging, though that is no fault of LendingClub. Increased awareness of personal loans delivered via the internet has spurred a large increase in applications, and LendingClub saw a 43% increase in applications in 2017 — much higher than the company’s 3.7% growth in originations.
3. Cost cuts in 2018
LendingClub believes it has stabilized both its credit model and its investor base in 2017 while introducing new investor products, and it will pivot in 2018 to focusing on controlling costs. Part of that will entail outsourcing its loan servicing to industry-standard third parties while reallocating internal engineers to the things that differentiate the company, like data-driven underwriting and product innovation.
For the full year 2018, the company forecasts 18% to 22% revenue growth while targeting cost growth of only 14% to 16%.
The top 20 business schools where graduates earn the most money, ranked from lowest to highest salary (Business Insider), Rated: AAA
With that in mind, online lender SoFi looked at the average salary graduates of American business schools earn and ranked the top 20.
SoFi’s approach is unique. It reviewed the self-reported income on over 60,000 student-loan refinancing forms from January 2014 to December 2017.
The average salary for graduates of all business schools SoFi reviewed was $109,992.
- 20. University of Texas at Austin — $139,776
There is Friction Between New Finance & Old Regulation (Crowdfund Insider), Rated: AAA
The Milken Institute is out with a comprehensive report this week that drills down into existing legislative action by Congress that addresses the emerging Fintech industry. This is the first report of its kind and provides a solid perspective on what Congress has accomplished to date while recognizing the fact elected officials can do far more.
“Subjecting nonbank lenders to 50 different state usury laws is inconsistent with today’s increasingly interconnected and digital global economy.”
The research provides multiple policy recommendations. In brief, they are as follows:
- Provide certainty on “true lender” and “valid when made” issues to maintain a vibrant, competitive marketplace for credit.
- Harmonize inconsistent state-by-state regulations related to mobile banking to drive financial inclusion and access.
- Update tax reporting guidelines regarding cryptocurrency transactions to protect against tax evasion and to promote a more transparent, responsible marketplace.
- Enable the reporting of alternative data that can expand access to credit.
- Develop common reporting standards among U.S. financial regulators to foster a more transparent marketplace.
- Require the IRS to automate certain data collection and reporting processes that can help enhance the speed and efficacy of the underwriting process.
This report is a must read policy paper for Capitol Hill staffers and US Fintech industry participants.
Read the full report here.
Equity and Credit Market Volatility, Continuing Bank-FinTech Partnerships (PeerIQ), Rated: AAA
US equity markets had a bad week as the S&P500 closed 3.3% lower at 2,659. CDX IG spreads widened marginally by 0.6 bps to 55 bps and CDX HY spreads widened by 8.7 bps to 337 bps. We have seen significantly higher volatility this year, driven mainly by rising interest rates and inflation expectations. No new MPL deals have priced since the rise in volatility, although we expect the first $1 Bn MPL ABS transaction to announce soon.
We share a few anecdotes from our informal conversations which we share in generic fashion to protect the innocent:
- A large issuer: “Our bonds are oversubscribed 2 to 3x. And when we share that with our investors they want more.”
- A large ABS investor: “We need help monitoring losses in the personal loan ABS space. Is this an indutry issue?”
- A large investment bank (Warehouse): “We ar doubling our exposure to warehouse lending. We have the mandate to grow the book.”
- A large investment bank (Syndicate Desk): “MPL has gone mainstream now.”
- A lender: “The 5% risk retention requirement is hurting our ability to issue loans to consumer and grow our business responsibly.”
- An issuer: “We are a small emerging originator and we have 7 term sheets – from large banks and small – in the last few weeks. Competition in warehouse lending is growing.”
Also heard at the conference was that Citibank is planning a Marcus-like online lender to enter the consumer unsecured loans space, although the timeline was unclear. Our view is that the GS Marcus – and specifically the ROE and NIM opportunity – is inspiring competitive response from other banks including Citi.
Marketplace lenders develop new wrinkles to attract more funding (American Banker), Rated: A
Last year, marketplace lenders learned that maintaining diverse sources of funding is just as important as managing the credit risk in their loans.
LendingClub, Marlette Funding and others developed their own securitization platforms, rather than relying on whole-loan sales to large investors. They also invited some of these investors to contribute seasoned loans to collateral pools for these in-house deals.
Marketplace lending’s death has been over exaggerated (PaymentsSource), Rated: A
It’s clear that equity investors no longer see the value of marketplace lenders, such as companies that provide credit at the point of sale or online lending.
A typical lender leverages equity into debt at a fixed ratio. If they want to grow their portfolio they have to raise equity and lever it into more debt. An off-balance sheet marketplace eliminates the equity-debt leverage ratio allowing a lender to double and triple their portfolio as quickly as they can grow their marketplace.
The SEC Goes Hot with ICO Subpoenas but are Regulators “on Shaky Legal Ground?” (Crowdfund Insider), Rated: A
The fact the Securities and Exchange Commission has been issuing subpoenas to initial coin offering (ICOs) issuers has been rumored for quite some time. Recently, multiple publications, including Crowdfund Insider, revealed this fact. The SEC has been warning of this sort of activity for many months and, while not surprising to most, it is an unpleasant moment for an issuer when that subpoena shows up.
Mulvaney says the CFPB will depend heavily on state Attorneys General for enforcement of consumer protection laws (Lexology), Rated: B
For example, the acting director noted that the agency will devote greater resources to consumer education, instead of relying heavily on enforcement actions to ensure consumers make the correct choices, reaffirming previous remarks in a Wall Street Journal opinion piece (previously covered by InfoBytes here).
Mulvaney stated that he does not anticipate devoting any further resources to mandatory arbitration clauses, citing Congress overturning its arbitration rule through the Congressional Review Act as evidence the Bureau does not have the authority to do so.
3rd Circuit holds payday lender’s arbitration clause unenforceable (Lexology), Rated: B
On February 27, the U.S. Court of Appeals for the 3rd Circuit held that an arbitration clause is unenforceable if the corresponding forum selection provision designates a forum that does not actually exist.
The benefits of fintech for the credit invisible (microbilt), Rated: A
Rethinking The Reputation Of The Merchant Cash Advance (PYMNTS), Rated: A
The rise of alternative lending and familiarity of growing names like OnDeck is beginning to shift public perception of the merchant cash advance, however.
There are scenarios, too, in which a merchant cash advance may actually be the best financial option for a business in need of working capital.
“We see a lot of clients who already have a long-term equipment loan, or an SBA loan, or a loan from a traditional bank or a factoring line, and they’re looking to unlock short-term liquidity from their business,” he said. “When you take out an SBA loan or equipment loan, you have to have some type of collateral to pledge, and that money can dry up quickly. We come in un-collateralized.”
One driver behind the shifting reputation of merchant cash advances is the industry’s participation in technology adoption and innovation.
At Best Egg, talk is a best practice (American Banker), Rated: B
So, every quarter, he and the company’s management team host an all-hands meeting and outline to the company’s 100-plus employees what the most important goal for the next 90 days will be.
So the word went out to employees that for the time being, efforts to grow the business would have to take a back seat to making certain that the existing business was profitable. According to Meiler, it was employees’ focus on the task that helped Best Egg rack up $11 million in GAAP profits last year, even as competitors were still posting operating losses in the tens of millions of dollars. And, he adds, the company still grew its business by 60% anyhow.
Best Fintechs to Work For (American Banker), Rated: A
Office exercise happens beyond a standing desk at many of the companies. NvoicePay not only provides stretching areas and lockers to employees, it offers monthly classes with a certified trainer and kinesiologist. Marlette Funding’s Best Egg unit offers employees self-defense classes on site, along with yoga.
And if you like the beach, check out nCino, where employees regularly go for early morning paddleboat sessions at nearby Wrightsville Beach in Wilmington, N.C., and SmartbizLoans, which hosts “Disco Yoga” at San Francisco’s Baker Beach.
Addressing an employee’s well-being and comfort comes in different forms, whether it is Cross River Bank’s policy of providing 100% of the premium for various insurance benefits covering employees and their families, Nav’s unlimited paid time off option for employees, or Ensenta’s tradition of celebrating workforce diversity with multiple holidays, including Kwanzaa, Diwali, and the Day of the Dead.
To keep burnout in check, PeerStreet mixes play with hard work (American Banker), Rated: A
To that end, they’ve established a company that regularly celebrates its successes and milestones with parties, and encourages employees to get together and have fun in nonwork environments. A prime example of the latter is the PeerStreet Olympics, an annual event in which the company is divided for a day into teams of friendly athletic competition, some of which takes place on the beach near its Southern California offices.
United Kingdom
Peer-to-peer lender Collateral enters administration (Financial Times), Rated: AAA
Collateral (UK), a small P2P company offering pawnbroker-style and property-backed loans with 15 per cent returns, went into administration on Wednesday after it emerged that it was not authorised by the Financial Conduct Authority.
BondMason offers to step in on Collateral loans (P2P Finance News), Rated: A
PEER-TO-PEER investor BondMason has offered to step in and manage the loanbook of the troubled Collateral platform.
BondMason, which invests in loans across more than 30 P2P platforms on behalf of investors, revealed it has invested 2.48 per cent of its portfolio through Collateral, which has fallen into administration.
P2P platforms reassure investors after Collateral closure (P2P Finance News), Rated: A
PEER-TO-PEER lending firms have been reassuring their investors about the safety of their platforms in the aftermath of Collateral going into administration.
Business lenders Ablrate and MoneyThing have both sent messages to their customers detailing their stability, performance and regulatory requirements that mean they have to hold client money separately and have a ‘living will’ that puts a plan in place should a business fail.
Growth in the number of Zombie businesses in the South East says report (Daily Echo), Rated: A
The proportion of south east companies which are only paying the interest on their debts – one of the signs of a so-called ‘zombie’ business – has risen to four per cent in December from one per cent in April 2017, according to indicative research by R3, the insolvency and restructuring trade body.
This represents around 12,000 businesses in the region.
Beware Fintech Firms Bearing Bitcoin (Bloomberg), Rated: AAA
Rather than try and undercut banks, or chase millennial savers’ pennies at a loss, fintech firms are now leaping at the chance to make serious cash through a technology that most banks won’t even touch. What’s more, Bitcoin has the power to take over people’s lives. One trader says it’s worse than gambling; Korea calls victims “zombies.”
Here’s a roll call of recent converts: Mobile-payments firm Square Inc. has rolled out Bitcoin trading; social-payments app Circle splashed $400 million on Poloniex, only about 15 months after it had stopped offering bitcoin trading; and money-transfer company Revolut has started offering crypto trading facilities.
Trading platform Coinbase booked more than $1 billion in revenue last year, according to Recode, which, if true, is more than peer-to-peer marketplace Lending Club and more than Square. On top of the money to be made from trading fees and asset-price gains, Bitcoin could also act as a lure, helping startups cross-sell their other products to a bigger audience.
London Fintech Humaniq Launches New Version of Mobile App (Crowfund Insider), Rated: A
On Friday, London-based FinTech firm Humaniq revealed it is marking the milestone of its mobile app reaching its first 50,000 downloads by unveiling a new, improved version.
Some of the new features include:
- New referral program: The new 2.0 referral program will build on this by displaying community progress with referrals and thereby make the referral process more transparent and intuitive for all users.
- Transaction options extension: Transactions can now be made through the messaging chat system.
- New registration process: Allows users to start interacting with a Humaniq assistant bot, which becomes smarter and is learning to execute more useful commands, even without the registration.
Peer-to-peer lender Linked Finance helps firms to add 2,400 jobs (The Times), Rated: A
The country’s largest peer-to-peer lending platform said that it had supported the creation of more than 2,400 jobs since it began its Irish operations almost five years ago.
Linked Finance, which connects local businesses in need of loans with an online lending community of individuals, institutions and other investors, said firms that had borrowed money through its platform had raised staffing levels by 24 per cent on average.
City Moves for 5 March 2018 – who’s switching jobs at ArchOver? (City A.M.), Rated: B
ArchOver, the peer-to-peer (P2P) business lending platform, has announced Bill Johnston will join its board of directors as a non-executive director (NED). In his role, Bill will support ArchOver in formularising its training and development programme, to ensure it has the right talent in place as it continues to scale.
China
Orix invests $ 60m in Chinese fintech startup (Asian Review), Rated: AAA
Japanese financial services group Orix bought a 6.4 billion yen ($59.8 million) stake in Wecash, a Chinese startup that uses big data and artificial intelligence to rate consumer credit.
Wecash can calculate a consumer’s creditworthiness in 10 seconds or less using phone records and other personal information, and has partnered with dozens of financial institutions so far. It also suggests potential lenders to consumers looking to take out a loan.
Only about 30% of the Chinese population is believed to borrow money from banks.
Hong Kong gives fintech measures the thumbs up (Asia Asset Management), Rated: B
Hong Kong will allocate HK$500 million (US$64.1 million) to financial services, including fintech, over the next five years, Mr. Chan said in the budget speech.
European Union
We talked to Nordic fintech queen Lena Apler – and her message to legacy banks is reboot or die (Business Insider), Rated: A
Big banks are particularly exposed when it comes to ETF funds. The fast-growing $5 trillion-dollar industry is being challenged by a crop of robo advisors, such as Apler’s portfolio company Sigmastocks, an algorithm-powered tool that tailors portfolios for customers, or BetterWealth, a roboadvisor app.
Although the region’s leading banks, such as Danske, Nordea and Swedbank are doing some good things and building new digital banking products and roboadvisory capabilities, Apler says, it won’t be enough.
Apler’s online bank Collector, which received its full banking license in 2015, has expanded to comprise cards, saving accounts and quick loans to both consumers and businesses. Collector doesn’t face the same issues as legacy banks in a digital world, Apler explains.
International
SMBs Turn To Mobile Devices To Accept Payments In Face-To-Face Environments (PYMNTS), Rated: AAA
The retail point-of-sale (POS) terminal market is no stagnant business. While it is currently a $15 billion industry, Global Market Insights is expecting it to reach $45 billion by the year 2024.
Only 13 percent of small- and medium-sized businesses (SMBs) are considering adding new payment types to face-to-face and remote environments, according to The PYMNTS SMB Technology Adoption Index.
Here are five ways SMBs are accepting payments from their customers.
- About a quarter – or 26 percent – of SMBs use hardware and software integrated POS to accept payments in a face-to-face environment.
- Almost two in 10 – or 19 percent of SMBs – use check scanning to accept payments in a face-to-face environment.
- And just about the same amount – 18 percent – of SMBs use NFC-enabled terminals to accept payments in a face-to-face environment.
- Fourteen percent of SMBs use mobile phones to accept payments in a face-to-face environment.
- Just under one in 10 – or 8 percent – of SMBs use mobile tablets.
AltFin Shines As Investor Interest In B2B FinTech Continues (PYMNTS), Rated: A
Total venture capital across the global FinTech market between 2010 and 2017 hit a combined $97.7 billion, growing at a compound annual growth rate (CAGR) of 47 percent.
Accenture highlighted Kabbage, the U.S. alternative small business lending firm, that secured $900 million in 2017, while other alternative finance players, like LendingPoint and SoFi, landed significant investment rounds.
This week, alternative lender C2FO showed that the alternative finance funding gears are still turning, landing $100 million from Allianz X and Mubadala Investment Company. Existing backers Temasek, Union Square Ventures and Mithril Capital also participated, an announcement said.
This week’s blockchain investment comes from Square Peg Capital, which provided $5.5 million in Series A funding to AgriDigital, an Australian company hoping to use the funds to expand into North America.
Reports in The Australian Financial Review this week said the company uses blockchain to facilitate supply chain finance to the agriculture business, offering supply chain management features also powered by distributed ledger technology.
Why More MBA Students Are Gunning For Careers In Fintech (Business Because), Rated: A
According to CB Insights, $4.7 trillion of revenue generated by financial services firms is at risk of being displaced by fintech startups.
Prominent business school alumni have founded successful fintech startups, such as Giles Andrews, who setup peer-to-peer lender Zopa after getting an MBA at INSEAD. Jeff Lynn and Carlos Silva developed crowdfunding platform Seedrs during their MBA at Oxford’s Saïd Business School. According to PwC’s Global Fintech Report 2017, funding of fintech startups has increased at an annual growth rate of 41% over the past four years, with $40 billion in cumulative investment made.
Niels Turfboer is UK managing director at Spotcap, the Berlin-based online lender.
Lending and profit on the blockchain – Bitstrades targets new markets (The Merkle), Rated: B
Bitstrades is clearly aiming to position itself as a complete platform that both links users together and also leverages economies of scale to make both lending and investing possible. The Bitstrades ICO raised millions in funding and now the BSS token is available for trading.
TigerWit Raises $ 5M in Funding (Finsmes), Rated: B
TigerWit, a global fintech company, secured $5m in funding.
Australia/New Zealand
Financial planners not needed in credit space (TheAdviser), Rated: A
Bringing financial planners into the credit space would be unnecessary, according to a Commonwealth Bank executive, as there are more than enough brokers to service the mortgage needs of Australians.
The CBA executive said: “With 16,000 brokers out in the marketplace, we’re certainly not in a position where we need more people to serve Australians well in meeting their mortgage needs. For me, it’s certainly not a quantity issue.
The PC has also alleged that brokers working for lender-owned aggregators could feel compelled to provide customers with home loan products offered by the bank with an ownership share of the business.
Commissioner Stephen King referenced CBA’s ownership of Aussie Home Loans and cited figures published in the PC’s report, which said that 37 per cent of loans written by Aussie brokers were for CBA products.
We launch a new calculator that figures out the true “cost of credit” of a loan contract (Interest.co.nz), Rated: B
This one will be very helpful for readers who know just three things: how much they are borrowing, the amount of their repayments, and the number of those repayments.
It will be very useful indeed for anyone contemplating taking out a personal loan, a car loan, or even a payday loan.
With just these three items, you can work out the effective cost of credit of the debt obligation, expressed as a % per annum.
India
FY 19 – Beginning of a New Era for P2P Lending in FinTech Sector (India Info Online), Rated: AAA
India is poised to be a USD 4-trillion economy by 2022, of which USD 1-trillion would be digital economy.
Digital economy was a focal point for this budget ’18 as government’s support with regard to lending MSME’s allocated 3794 crore in the form of capital support and interest subsidy by 2022 which will help develop the MSME sector. Micro, Small and Medium Enterprises (MSMEs) contribute about a third of India’s manufacturing output and provide employment to over 10 crore people. Despite this, the share of institutional lending in the total borrowings of MSMEs is less than 10%.
The prudential guidelines include maximum leverage ratio that can be maintained (2 times), minimum net owned funds (Rs2 crore), cap on aggregate exposure of lender to all borrowers (Rs.10 lakh), borrowers across all P2P (Rs10 lakh), exposure of single lender to borrower (Rs50,000) and maturity of loans (not exceed 36 months).
Signzy is helping banks solve customer authentication, onboarding problems with blockchain-based solution (YourStory), Rated: B
Signzy developed blockchain and AI-based solutions to digitally identify, verify, and authenticate customers. Its onboarding solution, Real KYC, has now been deployed by more than 45 large clients, including leading banks, NBFCs, mutual funds, P2P lending platforms, payment wallets, and so on.
Africa
Nigerian banks are using Facebook Messenger to onboard small businesses (Tearsheet), Rated: AAA
Mastercard is working with Facebook Messenger to bring a digital payments and banking experience to small businesses in Nigeria, in an effort to incentivize Nigerian merchants to close the mobile payments adoption gap and bring them onto the formal financial grid.
The payments giant, which has said it’s in the business of killing cash, is bringing this initiative to a country where 98 percent of the $301 billion in consumer-to-business payments is transacted using cash.
Authors:
Tuesday November 23 2016, Daily News Digest
News Comments Today’s main news: SoFi, Lending Club gear up for a busy quarter. RateSetter drops unsecured business loans. Zopa’s targeted returns rise to 4% and 4.5%. Monzo to phase out prepaid cards. Funding Societies surpasses SGD 100M in SME crowdfunding in SE Asia. Today’s main analysis: CEO optimism grows worldwide. Today’s thought-provoking articles: Which car brands borrowers stretch […]
News Comments
- Today’s main news: SoFi, Lending Club gear up for a busy quarter. RateSetter drops unsecured business loans. Zopa’s targeted returns rise to 4% and 4.5%. Monzo to phase out prepaid cards. Funding Societies surpasses SGD 100M in SME crowdfunding in SE Asia.
- Today’s main analysis: CEO optimism grows worldwide.
- Today’s thought-provoking articles: Which car brands borrowers stretch the most to buy. Europe’s alt finance is growing. Fundbox demonstrates open banking.
United States
- SoFi, Lending Club look forward to busy quarter. AT: “And I’d say a busy year.”
- Twitter shares dip amid news of SoFi’s potential poaching. AT: “Yesterday, the big news was that SoFi made an offer to Twitter COO for its CEO position, but Anthony Noto has yet to decide. Twitter’s stock is down for the year, so this news didn’t help.”
- LendingTree reports the automobiles borrowers stretch to buy. AT: “This is an interesting analysis and worth a read. Luxury car buyers can easily afford their purchases, but Buick owners have the most problems. Likely, no causation connection, but I wonder why.”
- Fundbox demonstrates how open banking is done. AT: “The intended audience here are bankers, but there is something for alt lenders to learn, as well.”
- Square is like Google, Amazon in early days.
- CashCall gets off with only a $10M fine. AT: “This is a slap at the Consumer Financial Protection Bureau.”
- defi Solutions raises $55M. AT: “Congratulations.”
- YieldStreet looks back at 2017 achievements.
- Lend Academy podcast interview with TrueAccord’s Ohad Sumet.
- US Banks suffer 20% jump in credit card losses.
- Petal’s latest fundraising signals upturn in New York fintech scene.
- Is a robo-advisor good enough?
- Yahoo! rolls out P2P lending app Tanda.
- Dayton home market isn’t competitive.
- FormFree is 10 years old.
United Kingdom
- RateSetter to focus solely on asset-backed lending for business. AT: “Personal loans will remain untouched.”
- RateSetter kills unsecured business lending products.
- Zopa’s targeted returns increases.
- Monzo to phase out prepaid cards. AT: “The cards are likely not profitable for Monzo.”
- UK leads Europe in crowdfunding, P2P lending.
- Startup revolution getting fatigued.
- Investly to raise 2M GBP on Seedrs.
- Loans focus on helping the poor avoid premium for poverty.
European Union
International
- CEO optimism booms.
- Trade finance gap isn’t reduced yet.
- Longfin launches Ziddu smart contracts for bullion financing.
Asia
- Funding Societies surpasses SGD 100M in SME crowdfunding. AT: “Congratulations.”
- SME access to credit in Vietnam.
News Summary
- United States
- SoFi, Lending Club gear up for busy quarter (GlobalCapital), Rated: AAA
- Twitter slides after news that online lending startup SoFi may poach its operations chief (Business Insider), Rated: A
- LendingTree Reveals Which Used Car Brands Borrowers are Stretching the Most to Buy (Business Insider), Rated: AAA
- Fintech lender Fundbox shows how open banking can be done (American Banker), Rated: AAA
- Square is like ‘Amazon or Google in their early days’ (Business Insider), Rated: A
- CashCall to pay $ 10 mln, CFPB request for $ 287 mln denied (Reuters), Rated: A
- defi SOLUTIONS Lands $ 55 Million (Finovate), Rated: A
- A Bird’s Eye View of What We Achieved (YieldStreet), Rated: A
- Ohad Samet of TrueAccord (Lend Academy), Rated: A
- US Banks Suffer 20 Percent Jump in Credit-Card Losses (Newsmax), Rated: A
- Credit Card Startup Petal’s Latest Funding Round Signals NYC Fintech Upturn (Crunchbase), Rated: A
- Do You Need a Personal Financial Advisor or Will a Robo-Advisor Do? (Nerdwallet), Rated: A
- What to Know About Peer-to-Peer Lending Apps Like Yahoo’s ‘Tanda’ (Lifehacker), Rated: A
- Lending Tree: Dayton home market isn’t so competitive (Dayton Daily News), Rated: B
- FormFree Celebrates Its Tenth Year of Operations (Send2Press), Rated: B
- United Kingdom
- RateSetter to Focus Solely on Asset Backed Lending for Commercial Loans (Crowdfund Insider), Rated: AAA
- RateSetter exits unsecured business loans market (P2P Finance News), Rated: A
- Zopa increases targeted returns for first time since 2015 (Moneywise), Rated: AAA
- Monzo to phase out popular prepaid cards by April (Financial Times), Rated: AAA
- The UK is leading the way in crowdfunding and P2P lending as the rest of Europe plays catch-up (City A.M.), Rated: A
- Start-up revolution shows signs of fatigue after years of growth (Financial Times), Rated: A
- Investly Plans to Raise 2M GBP on Seedrs (P2P-Banking), Rated: A
- Loans to help poorest families avoid poverty premium (Third Force News), Rated: A
- European Union
- European online alternative finance is growing (Cambridge Network), Rated: AAA
- International
- CEO optimism booms despite increasing anxiety over threats to growth – New content available (The News Market), Rated: AAA
- Fintechs Haven’t Reduced the Trade Finance Gap – So far (American Express), Rated: A
- Longfin (LFIN) Launches Commercial Ziddu Smart Contracts on Ethereum Blockchain (StreetInsider), Rated: B
- Asia
- Funding Societies Surpasses SGD 100 Million in SME Crowdfunding (Core Sector Communique), Rated: AAA
- Increasing the Access of SMEs to Credit in Vietnam (International Policy Digest), Rated: A
United States
SoFi, Lending Club gear up for busy quarter (GlobalCapital), Rated: AAA
Up to four transactions from marketplace lenders SoFi and Lending Club are slated to hit the market this quarter, including prime and non-prime consumer and student loan refinancing offerings.
SoFi is preparing to bring at least one consumer loan offering and possibly one more refinanced student loan offering over the next two months. The planned offerings could be in the range of previous transactions, said a source familiar with the company’s plans.
Twitter slides after news that online lending startup SoFi may poach its operations chief (Business Insider), Rated: A
Shares of Twitter dipped on Monday after it was reported that Twitter’s chief operating officer, Anthony Noto, may leave the company for an offer to become the CEO of Social Finance, or SoFi, an online lending company.
Twitter’s stock was down 1.16% on Monday at $23.39 per share.
LendingTree Reveals Which Used Car Brands Borrowers are Stretching the Most to Buy (Business Insider), Rated: AAA
A recent LendingTree survey found that 27 percent of Americans plan to purchase a car in 2018. To discover if consumers are more likely to stretch their available incomes to own certain brands, LendingTree looked at people who found auto loans on the LendingTree.com platform in 2017 to buy used vehicles.
Contrary to popular assumptions, the results revealed that people aren’t going broke to buy used luxury cars. In fact, buyers of the most expensive cars seem to handily afford them.
On the other hand, LendingTree found Buick owners have the hardest time affording their car payments — not because they’re indulging in particularly expensive vehicles but because their income tends to be on the lower side, meaning they use a larger share of take home pay to cover their monthly payments.
Car Makes Borrowers Stretch the Most to Buy Used |
||||
Rank |
Make |
Estimated Monthly Payment as a Percent of Estimated Monthly Income |
Average Estimated Monthly Payment |
Average Estimated Vehicle Price |
1 |
BUICK |
10.9% |
$418 |
$18,597 |
2 |
CHRYSLER |
10.9% |
$440 |
$18,497 |
3 |
NISSAN |
10.6% |
$405 |
$18,231 |
4 |
DODGE |
10.6% |
$454 |
$22,290 |
5 |
CHEVROLET |
10.2% |
$437 |
$20,930 |
6 |
KIA |
9.7% |
$368 |
$17,357 |
7 |
HONDA |
9.4% |
$389 |
$18,053 |
8 |
HYUNDAI |
9.3% |
$356 |
$17,216 |
9 |
MITSUBISHI |
9.0% |
$370 |
$17,205 |
10 |
CADILLAC |
8.8% |
$480 |
$25,294 |
11 |
FIAT |
8.8% |
$341 |
$16,543 |
12 |
FORD |
8.6% |
$424 |
$21,648 |
13 |
GMC |
8.3% |
$466 |
$25,077 |
14 |
JEEP |
8.1% |
$414 |
$21,885 |
15 |
VOLKSWAGEN |
8.0% |
$363 |
$16,909 |
16 |
MAZDA |
7.8% |
$355 |
$18,326 |
17 |
TOYOTA |
7.7% |
$385 |
$19,788 |
18 |
JAGUAR |
7.6% |
$503 |
$27,734 |
19 |
INFINITI |
7.6% |
$454 |
$24,728 |
20 |
BMW |
7.4% |
$476 |
$25,038 |
21 |
MERCEDES-BENZ |
7.3% |
$519 |
$28,792 |
22 |
SUBARU |
7.2% |
$361 |
$19,219 |
23 |
ACURA |
7.0% |
$409 |
$22,623 |
24 |
AUDI |
6.8% |
$482 |
$26,725 |
25 |
LEXUS |
6.7% |
$459 |
$25,393 |
26 |
LINCOLN |
6.6% |
$396 |
$22,205 |
27 |
LAND ROVER |
6.2% |
$569 |
$31,704 |
28 |
VOLVO |
6.1% |
$400 |
$20,877 |
29 |
MINI |
5.7% |
$355 |
$17,728 |
30 |
PORSCHE |
5.0% |
$635 |
$42,173 |
31 |
TESLA |
4.6% |
$818 |
$54,234 |
Fintech lender Fundbox shows how open banking can be done (American Banker), Rated: AAA
The online small-business lender Fundbox says it is integrating its automated lending service with several software programs commonly used by its borrowers — and it’s a move that could hold a lesson for banks.
What’s striking about what Fundbox is doing, and the reason bankers could learn from it, is it is capitalizing on the concept of open banking — allowing a piece of a lender’s products and services to be accessed through a third party — in a way that few U.S. banks have.
Capital One comes the closest — its application programming interfaces let third parties offer services like prequalifying customers for Capital One credit cards and sharing its reward information.
Square is like ‘Amazon or Google in their early days’ (Business Insider), Rated: A
When Wall Street compares one of Jack Dorsey’s two public companies to Amazon and Google, you’d expect them to be talking about the one in the tech sector — Twitter. But on Friday, Nomura analyst Dan Dolev said that Square, Dorsey’s payments company, is the one that resembles today’s tech giants in their early days.
Dolev thinks that these new initiatives will massively increase the number of payments Square processes by a long-term compound annual growth rate of 20%. Dolev also says that this growth will provide a 40% to 45% boost to earnings margins.
CashCall to pay $ 10 mln, CFPB request for $ 287 mln denied (Reuters), Rated: A
In a decision on Friday, U.S. District Judge John Walter ordered California-based CashCall to pay $10.3 million instead, ruling that the CFPB did not justify the larger amount.
defi SOLUTIONS Lands $ 55 Million (Finovate), Rated: A
Loan origination solutions company defi SOLUTIONS just closed on $55 million in funding. The Series C round comes from Bain Capital Ventures, offering social proof along with a stamp of approval for defi’s suite of loan services. This is the Texas-based company’s first round of financing.
The primary capital portion of the investment will be used to accelerate product development, expand resources and facilities, and grow the number of employees by nearly 50% this year.
A Bird’s Eye View of What We Achieved (YieldStreet), Rated: A
Ohad Samet of TrueAccord (Lend Academy), Rated: A
Ohad Samet is the CEO and Co-founder of TrueAccord. They are a new kind of debt collection company that uses a data driven approach and digital first communications.
US Banks Suffer 20 Percent Jump in Credit-Card Losses (Newsmax), Rated: A
U.S. banks have reportedly recently suffered a 20 percent jump in credit card losses.
The soaring bad debts has fueled fear about the financial health of middle America, the Financial Times explained.
Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5 billion hit from soured card loans last year, about $2 billion more than a year ago. The FT reported.
Reuters recently warned that U.S. banks, already under pressure from slower loan growth and low interest rates, could be facing yet another challenge as a rising number of Americans fall behind on their credit card payments.
U.S. consumer credit outstanding rose in November by the most in 16 years as credit-card balances surged, recent Federal Reserve data showed, by $11.2 billion, to $1.023 trillion.
Credit Card Startup Petal’s Latest Funding Round Signals NYC Fintech Upturn (Crunchbase), Rated: A
Last week, alternative credit card issuer Petal closed its $13 million Series A led by Peter Thiel’s Valar Ventures. It was announced just four months after Petal’s $3.6 million seed round.
The news marks a significant month for Manhattan’s sometimes-struggling fintech scene, with MoneyLionhaving raised a whopping $42 million during its Series B in early January. And while these numbers are a drop in the bucket compared to the U.S. fintech industry surpassing $5 billion in Q3 ’17, the momentum is already being felt, and it comes as a welcome change for the city.
Do You Need a Personal Financial Advisor or Will a Robo-Advisor Do? (Nerdwallet), Rated: A
At the top end, some personal financial advisorscharge an annual fee plus investing expenses as a percentage of your assets under management, typically about 1% to 1.5%. As a result, these advisors often require that new clients have an account minimum of $250,000 in assets.
By comparison, robo-advisors — which use algorithms to build and manage a client’s investment portfolios and require little human interaction — charge fees from 0.45% to 0.70% of the amount managed. And many will take on new clients with $0 to open an account.
The downside of robo-advisors: Investment choices are more limited — often a small selection of low-cost index funds or exchange-traded funds — than the asset choices that full-service brokers and advisors may provide. And while many offer financial advice via email, chat or phone consultations, those hybrid services are likely to come at an additional cost.
What to Know About Peer-to-Peer Lending Apps Like Yahoo’s ‘Tanda’ (Lifehacker), Rated: A
The Tanda app, launched by the company Friday and available on Android and shortly on iOS, does exactly what its name implies. It lets you join groups of people to work toward savings goals together, in tandem: Each user pays an agreed-upon amount into a pot, choosing when they receive the money. Those who need it soonest pay a fee, and those who wait the longest receive a two-percent bonus. Yahoo Finance takes eight percent of the first payout and seven percent of the second payout, according to Android Police.
Yahoo Finance isn’t the first to think to monetize a more formal version of this sytem—the site eMoneyPool has been available to the public since 2013, servicing over $3 million, and the apps KyePot and Cashare serve a similar purpose. On Tanda, users receive a trust score, with higher scores allowing users access to larger money pools, up to $2,000.
Lending Tree: Dayton home market isn’t so competitive (Dayton Daily News), Rated: B
In a national ranking, Dayton ranks relatively low for factors Lending Tree deems indicative of a competitive housing market. Prospective buyers in this area have relatively low average down payments, among other factors Lending Tree placed in the ranking.
On the list of 100 cities with the “most competitive home buyers,” Dayton ranks overall at 96, below Augusta, Ga. and above El Paso, Texas. Youngstown Ohio is last on the list at No. 100. San Francisco, Calif. is first.
FormFree Celebrates Its Tenth Year of Operations (Send2Press), Rated: B
In 2016, Fannie Mae named FormFree its first designated vendor for automated asset verification as part of the Day 1 Certainty initiative. Since then, FormFree has signed more than 800 lender clients, including 70 percent of the nation’s top 40 mortgage originators, and accepted over 1.25 million orders for the company’s flagship AccountChek® Asset Report. The company also increased its total number of technology integrations and reseller partnerships to over 100, making AccountChek available for more than 90% of mortgage transactions nationwide.
A recent announcement from the U.S. Department of Veterans Affairs (VA) makes even more loans eligible for automated asset verification through AccountChek. On December 29, the VA published Circular 26-17-43 confirming that the VA permits the use of automated asset verification services like AccountChek.
United Kingdom
RateSetter to Focus Solely on Asset Backed Lending for Commercial Loans (Crowdfund Insider), Rated: AAA
Peer to peer lender RateSetter said its commercial lending vertical will focus solely on secured lending in its commercial finance vertical. Following a review of its commercial finance operations, RateSetter said it would move to “simplify” its commercial finance by funding only property backed or asset backed loans.
RateSetter said it will continue to maintain a diversified approach to lending into consumer, business and motor finance markets, however, the commercial finance offer will no longer include unsecured business finance.
RateSetter exits unsecured business loans market (P2P Finance News), Rated: A
Business borrowers will now only be able to access property-backed development and investment loans or asset-backed hire purchase deals.
All existing unsecured business applications will be processed and will continue to repay in line with their schedule, the platform said.
Zopa increases targeted returns for first time since 2015 (Moneywise), Rated: AAA
The targeted annual return for its basic Zopa Core product has increased from 3.7% to 4% while the higher risk Zopa Plus product now has a targeted return of 4.6%, up from 4.5%.
Monzo to phase out popular prepaid cards by April (Financial Times), Rated: AAA
Challenger bank Monzo has announced it will close its popular prepaid Mastercard in early April, although its half a million customers can still enjoy valuable travel perks if they upgrade to Monzo’s current account.
Until this month, Monzo cards also offered fee-free cash withdrawals from foreign ATMs. However, this has now been capped at £200 of overseas withdrawals within a rolling 30-day period, and customers pay a 3 per cent fee if they exceed this limit.
The UK is leading the way in crowdfunding and P2P lending as the rest of Europe plays catch-up (City A.M.), Rated: A
While the UK remained the largest alternative finance market in Europe by far, at €5.6bn (£4.9bn), the rest of Europe began to play catch-up as it grew its own market by 101 per cent, the data from the university’s Centre for Alternative Finance showed.
Excluding the UK, Estonia ranked first for alternative finance volume per capita for the second year in a row, at €63, followed by Monaco and Georgia.
Start-up revolution shows signs of fatigue after years of growth (Financial Times), Rated: A
Britain’s start-up revolution is stalling, with the number of businesses created last year falling for the first time in almost a decade.
There were 5.5 per cent fewer start-ups in 2017 compared with 2016, according to research by DueDil, a financial analysis company. It found that 647,923 new businesses were started last year — down from 685,928 in 2016, bringing to an end what had been annual increases since 2008.
Investly Plans to Raise 2M GBP on Seedrs (P2P-Banking), Rated: A
Investly is currently pitching on Seedrs to raise between 500K and 2M GBP in a crowdfunding for equity campaign. To become a shareholder, the required minium investment amount is 13 GBP.
What are the three main advantages when investing in the invoices?
Liquidity – Investly is quite different compared to most platforms because the investment period is only 30 to 40 days on average.
Return – Historically investors have earned 11-12% annually on invoices.
What ROI have investors made on average on the platform in the past?
The net return on Estonian invoices has been 11.2% annually and in the UK it’s been 12.6% annually.
Loans to help poorest families avoid poverty premium (Third Force News), Rated: A
A £600 loan repaid over six months would typically cost an extra £330 to repay to a door step lender and over £500 to repay via a payday lender. Repaying via a social lender could easily halve this cost.
Hollywood actor and social activist Michael Sheen has supported the launch of a new £1 million fund set up by the Carnegie UK Trust and features in a new short film called Speaking out for Fair Credit.
“The need for ethical alternative providers is clear, whether they be on our local high streets or available online. But it’s not just about creating more providers – we need to do more to enable them to compete with the high cost providers and to provide vital financial support to communities across the UK, putting people before profit.”
It is estimated that around 150,000 people in Scotland borrow £250m from high cost lenders like pay day loan firms, door step lenders and rent-to-own shops annually.
European Union
European online alternative finance is growing (Cambridge Network), Rated: AAA
Excluding the United Kingdom, which remained by far the largest alternative finance market in Europe at 5.6 billion euros, online alternative finance grew 101 per cent in Europe to 2.06 billion euros from 1.02 billion euros a year earlier. The UK’s market share in Europe declined to 73 per cent in 2016 from 81 per cent a year earlier as other markets grew faster.
France (444 million euros), Germany (322 million euros) and the Netherlands (194 million euros) are the three largest European alternative finance markets outside the UK, followed by Finland (142 million euros), Spain (131 million euros), Italy (127 million euros) and Georgia (103 million euros).
Peer-to-peer consumer lending is the largest alternative finance segment in Europe for the third year in a row, at 34 per cent, followed by peer-to-peer business lending (17 per cent), invoice trading (12 per cent), equity-based crowdfunding (11 per cent) and reward-based crowdfunding (nine per cent).
International
CEO optimism booms despite increasing anxiety over threats to growth – New content available (The News Market), Rated: AAA
Fifty seven percent of business leaders say they believe global economic growth will improve in the next 12 months.
Optimism in global growth has more than doubled in the US (59%) after a period of uncertainty surrounding the election (2017: 24%). Brazil also saw a large increase in the share of CEOs who are optimistic global growth will improve (+38% to 80%). And even among the less optimistic countries such as Japan (2018: 38% vs. 2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global growth has more than doubled since last year.
Fintechs Haven’t Reduced the Trade Finance Gap – So far (American Express), Rated: A
According to a September 2017 report from the Asian Development Bank (ADB), the trade finance gap remained relatively steady at $1.5 trillion in 2016 compared to a record high $1.6 trillion gap the year prior.1 MSMEs remain hardest hit by gaps in trade finance: the ADB report attributed 74 percent of rejected trade finance requests to MSMEs and midcap firms in 2016, compared to just 57 percent in 2015.2
ADB says this is despite fintech investment in trade finance that exceeded $13 billion in 2016 – more than half of the estimated $24 billion in total 2016 fintech investment cited in a separate report from the International Chamber of Commerce (ICC).3 Some experts – including Steven Beck, Head of Trade Finance at ADB – say fintech efforts may need to be redirected before their impact on import-export trade finance can be fully realized.4
Longfin (LFIN) Launches Commercial Ziddu Smart Contracts on Ethereum Blockchain (StreetInsider), Rated: B
Longfin Corp. has announced that its Ziddu Smart Contracts are commercially available on the Ethereum blockchain.
Ziddu Smart Contracts are currently available for Trade Finance and FX markets, and Longfin is preparing to launch Smart Contracts for bullion financing within the second quarter of 2018.
Asia
Funding Societies Surpasses SGD 100 Million in SME Crowdfunding (Core Sector Communique), Rated: AAA
Funding Societies, the leading peer-to-peer (P2P) lending platform in Southeast Asia, welcomed the start of the year by crossing the SGD 100 million mark in total crowdfunded SME loans across Singapore, Indonesia and Malaysia. In line with the platform’s goal of responsible growth, Funding Societies expanded its crowdfunding book by 400% in 2017 while maintaining a default rate of 1.5%.
Increasing the Access of SMEs to Credit in Vietnam (International Policy Digest), Rated: A
According to statistics by the Ministry of Planning and Investment (MPI), SMEs contributed approximately 48% of Vietnam’s GDP in 2012. Moreover, based on research by the United Nations Economic and Social Commission for Asia and the Pacific, since SMEs are usually labour intensive they employed 77% of Vietnam’s labour force.
The Ministry of Planning and Investment in their survey in 2012 of SMEs ability to access financing indicated that approximately 30% of SMEs in Vietnam could not get any financing from financial institutions and another 30% that could get financing faced numerous difficulties in accessing funds.
The 2015 survey found that the percentage of firms having bank loans in 2015 for micro-sized firms was 40%, small firms 62%, medium firms 74% and 81% for large firms. Access to bank services in 2015 also took into consideration how common it was for these enterprises to give bribes to the bank staff: Micro (64%), small (56%), medium (49%) and large firms (39%). The percentage of firms that experienced how interest rates and other lending conditions applied to private businesses are always more difficult than those for SOEs: micro (74%), small (71%), medium (65%) and large (48%).
Authors:
Tuesday November 19 2017, Daily News Digest
News Comments Today’s main news: Clarity Services integrates with Experian. Octopus Choice passes 100M GBP AUM. Funding Circle hits 100M Euro in German lending. Younited Credit tops 100K loans. Square Peg invests $8M in Airwallex. Silver Bullion hits $50M in loans. Today’s main analysis: The deteriorating auto loan quality. Today’s thought-provoking articles: China’s startup investors are a bunch of “cashed-up […]
News Comments
- Today’s main news: Clarity Services integrates with Experian. Octopus Choice passes 100M GBP AUM. Funding Circle hits 100M Euro in German lending. Younited Credit tops 100K loans. Square Peg invests $8M in Airwallex. Silver Bullion hits $50M in loans.
- Today’s main analysis: The deteriorating auto loan quality.
- Today’s thought-provoking articles: China’s startup investors are a bunch of “cashed-up cowboys.” Chinese borrow a lot from multiple lenders. How China’s war on risk benefits U.S. companies. Online banking, payments solutions coming down the pike. How M-Pesa is transforming money for the poor in Africa.
United States
- Clarity Services integrates completely with Experian. AT: “A letter to Clarity Services suppliers explains Experian invoicing.”
- Max Levchin explains, again, how Affirm is different from credit cards. AT: “I don’t understand why this is confusing. It isn’t Levchin’s communication skills.”
- Moody’s sends warning about deterioriating auto loan quality. AT: “Goes broader than auto lending, but it connects auto loan quality to the broader economy. A great read.”
- Square doesn’t want to be lumped in with Amazon, Facebook. AT: “I can’t blame them.”
- Interview with Levi King of Nav.
- Why traditional financial advisors should not fear artificial intelligence.
- America’s gig economy workers. AT: “This is very telling. More than a third of American workers are in the gig economy. Of course, most of them are part-time and/or earn less than $500/month. So the question is, are these workers prime targets for online lending products, and, if they’re entrenched in the gig economy, does that mean the way to reach them is through online channels?”
- $287M restitution sought in CashCall case.
- How to create the best B2B customer experience.
- Why P2P lending is an interesting investment. AT: “Very basic.”
- Cayan being acquired.
United Kingdom
- Octopus Choice now has more than 100M GBP under management. AT: “Congratulations. Great achievement.”
- Assetz Capital changes Great British Business, green energy accounts.
- Ranger Direct Lending provides $9.1M for Argon Credit.
- ThinCats launches updated website, rebranding.
- Goji makes new appointments.
China
- Startup investors are ‘cashed-up cowboys’. AT: “Perhaps there was a natural tendency to favor their own despite the evidence of overvaluation. It’s not like we haven’t seen similar tendencies in the U.S.”
- Borrowers still target multiple online lenders. AT: “The interesting thing here is the indication of attempts to profit from lending arbitrage.”
- Fintech IPOs don’t dazzle Wall Street.
European Union
- Funding Circle lends 100M Euro in Germany. AT: “Congratulations.”
- Younited Credit issues 100K loans. AT: “Congratulations.”
- BorsadelCredito.it raises 1.6M Euro.
- DreamQuark wins Fintech of the Year award.
- Chairman appointed to National Personal Credit Platform.
International
- Airwallex secures $8M investment from Square Peg.
- Chatbot home loan advice is diversified.
- Challenger banks are okay, but need improvement.
India
Asia
- Silver Bullion hits $50M in lending.
- Amartha focuses on P2P lending for women entrepreneurs.
- Affin Islamic Bank’s latest sponsored volume on IAP.
Canada
Africa
News Summary
- United States
- Integration of Clarity Services by Experian (Clarity Services Email), Rated: AAA
- PayPal Co-Founder Max Levchin Gave a Remarkably Honest Response to Accusations About His New Startup (Inc.), Rated: AAA
- Moodys Warns Of Deteriorating Auto Loan Quality (ValueWalk), Rated: AAA
- Square to small banks: Don’t lump us in with Amazon and Facebook (American Banker), Rated: A
- Levi King of Nav (Lend Academy), Rated: A
- Traditional FAs Shouldn’t Fear AI (Financial Advisor IQ), Rated: A
- Working in America’s gig economy (Multibriefs), Rated: A
- Consumer board seeks $ 287 million in restitution over CashCall case (Northern California Record), Rated: A
- How To Build The Best B2B Customer Experience (Forbes), Rated: A
- Interesting Investments: Peer-to-Peer Lending (Equities.com), Rated: A
- Boston Fintech Company Cayan Is Getting Acquired for $ 1.05B (Bostinno), Rated: B
- United Kingdom
- Octopus Choice passes £100m AUM (AltFi), Rated: AAA
- Assetz Capital Makes Changes to the Great British Business & Green Energy Accounts (Crowdfund Insider), Rated: A
- Ranger Direct Lending makes further $ 9.1m provision for Argon Credit (AltFi), Rated: A
- ThinCats Reveals New Branding, Launches Updated Website (Crowdfund Insider), Rated: B
- Goji – Empowering Direct Lending (LinkedIn), Rated: B
- China
- China’s Wild Bunch: Startup Investors Are Cashed-Up Cowboys (WSJ), Rated: AAA
- Borrowing From Multiple Online Lenders Remains Prevalent (Caixin), Rated: AAA
- China’s war on risk hands US$ 121b loan market to big firms (The Malay Mail Online), Rated: AAA
- Chinese FinTech IPOs Don’t Dazzle Wall Street (PYMNTS), Rated: A
- European Union
- Funding Circle hits €100m lending milestone in Germany (P2P Finance News), Rated: AAA
- C’est Génial! Younited CREDIT Tops 100,000 Loans (Crowdfund Insider), Rated: AAA
- BorsadelCredito.it Raises €1.6M in Funding (FinsSMEs), Rated: A
- DreamQuark wins the 2017 Fintech of the Year (Digital Journal), Rated: B
- National Personal Credit Platform Appoints Chairman (Caixin), Rated: B
- International
- Online Banking and Payments: Innovative Solutions on the Horizon (FinsSMEs), Rated: AAA
- How Banks Are Leveraging Chatbots for Customer Service (Crowdfund Insider), Rated: A
- Digital investments: Modern ways to invest in the digital age (Bankless Times), Rated: A
- Australia/New Zealand
- Australian Fintech Airwallex Secures $ 8 Million Investment From Square Peg (Crowdfund Insider), Rated: AAA
- Testing a chatbot’s home loan advice gives a range of outcomes (Stuff), Rated: A
- Regulatory Pathway for Challenger Banks Just OK, Could be Improved (Crowdfund Insider), Rated: A
- India
- 5 Consumer Lending Trends To Look Forward To In 2018 (Inc42), Rated: AAA
- Asia
- Unique Secured P2P Lender Silver Bullion Reaches $ 50 Million in Loans (Crowdfund Insider), Rated: AAA
- Amartha Powers Micro Peer to Peer Lending in Indonesia, Focuses on Women Entrepreneurs (Crowdfund Insider), Rated: A
- Affin Islamic Bank lists latest sponsored venture on IAP (New Straits Times), Rated: A
- Canada
- Payday lenders squeezed by new regulations (The Globe and Mail), Rated: B
- Africa
- A mobile banking service is transforming how the poor transfer money — here’s how it works (Business Insider), Rated: AAA
United States
Integration of Clarity Services by Experian (Clarity Services Email), Rated: AAA
As a supplier to Clarity Services Inc, we are writing to formally notify you that as of October 6, 2017, Clarity Services Inc has been purchased by Experian Holdings, Inc.
Effective January 1, 2018, purchases and invoice payments will be processed by Experian’s centralized Procurement and Accounting departments.
PayPal Co-Founder Max Levchin Gave a Remarkably Honest Response to Accusations About His New Startup (Inc.), Rated: AAA
To its critics, though, Affirm, which recently raised $200 million in a growth round, is engaged in something sinister, luring people into a financial trap by enticing them to buy things they can’t afford. CEO Max Levchindoesn’t agree with that interpretation at all, but he does accept some of the blame for not creating a more accurate perception.
Here’s how Affirm works: You can borrow money to make a purchase at any store that integrates with Affirm (or any store at all if you use the mobile “virtual card”). If Affirm’s proprietary credit model judges that you’ll be able to pay back the sum, then you’re offered a loan. During the next several months — up to a year — you’re expected to make monthly payments, which include interest. The APRs range from 10 to 30 percent.
The key things that differentiate Affirm from other credit options are that you get all of the information up front, stated plainly, and the interest charged by the startup is simple rather than compounding. When you make the initial purchasing decision, you know exactly how much extra you will end up paying to buy the product right now, instead of saving up over several months. There are no additional fees.
Moodys Warns Of Deteriorating Auto Loan Quality (ValueWalk), Rated: AAA
The economy is expected to expand in 2018, with projections for stock market performance clocking in at 8% basis Goldman Sachs. But not all is well – a Moody’s report notes that specific asset sectors are struggling, particularly when it comes to car loan quality worsening.
Moody’s anticipates that US GDP growth will strengthen slightly to 2.3% in 2018 from 2.2% in 2017, with unemployment also continuing to move lower to 4.0% from 4.4%.
Auto loan quality is worst, but pockets of “challenged” loans exist across the board
Auto loan ABS issuers will likely securitize pools with attributes broadly similar overall to those in the pools backing their 2017 securitizations, even as a further decline in US auto sales pressures lenders to loosen underwriting to support volumes. We project sales will slip another 0.6% after an estimated 3.6% drop in 2017, following eight consecutive years of annual increases.
Auto loans appear to be on the front-lines of credit issues. Household debt, for instance, has increased to $13 trillion, with a significant part of that increase in auto loans. Sub-prime auto loans, in particular, are showing signs of weakness.
When looking at investment in asset-backed securities, the originator makes a difference. ABS backed by loans from online lenders such as SoFi, Lending Club Corporation, Prosper Marketplace Inc. and Marlette Funding have correlated with “prime credit quality.” But that is not the case across the board.
Square to small banks: Don’t lump us in with Amazon and Facebook (American Banker), Rated: A
Square, the Silicon Valley payment processor that is at the center of the fight over the tech industry’s ambitions in banking, is firing back at its small-bank critics, while also taking steps to placate community activists.
Advocacy groups that once expressed concern about the adequacy of Square’s plan to satisfy its obligations to low- and middle-income customers are now sounding more supportive of the fintech’s bid to open a bank.
Levi King of Nav (Lend Academy), Rated: A
In this podcast you will learn:
- Levi’s background that led to the founding of Nav.
- The products that Nav offers today.
- How their business model works.
- How they get small business owners interested in finance.
- How Nav saves their customers money.
- Why Levi thinks that small business owners may not need to be educated on finances in the future.
- Their approach to producing content on their site.
- The marketing channels they use to attract small business owners.
- Levi’s thoughts on the entry on Amazon, PayPal and Square into small business lending.
- Why proprietary data sets are going to be so important going forward.
- The story behind the Nav brand and why they rebranded a couple of years ago.
- The big name equity investors they have and how they closed their funding rounds.
- What the future holds for Nav.
Traditional FAs Shouldn’t Fear AI (Financial Advisor IQ), Rated: A
Traditional wealth managers are convinced the advent of robo-advisors and artificial intelligence threatens the jobs of financial services professionals, Wendy Spires writes on WealthBriefing. But the reality is that the high-touch business of financial advice stands to benefit from AI, as do its traditional practitioners, she writes.
For example, while 71% of wealth managers believe financial advice clients are prepared to accept advice from robo-advisors, the reality is different, she writes. Self-directed investing, for example, dropped from 45% in 2010 to 38% in 2016 — during a time when the number of robos and the services they offer expanded significantly, according to Spires.
Working in America’s gig economy (Multibriefs), Rated: A
“The gig economy … is now estimated to be about 34 percent of the workforce and is expected to be 43 percent by the year 2020,” notes Intuit CEO Brad Smith. “We think this points to a lot of growth as we look ahead.”
Based on the most recent demographic data available from the Bureau of Labor Statistics, it appears the gig workforce is fairly evenly distributed across the age spectrum, but the highest percentages are seen at opposite ends of the scale. Individuals 65 years and older had the highest level of self-employment at 24.1 percent, while those under 35 (the so-called millennial generation) made up 18 percent.
BLS data reveals a few more interesting statistics concerning the gig workforce:
- Men are almost twice as likely as women to be self-employed.
- More than 30 percent of gig workers possess professional or advanced degrees.
- Whites and Asians are marginally more engaged in gig work than are other racial or ethic groups.
In fact, data crunched by online lender Earnest and reported by Priceonomics indicates that about 85 percent of gig workers make less than $500 per month.
Consumer board seeks $ 287 million in restitution over CashCall case (Northern California Record), Rated: A
A Nov. 20 hearing featured the Consumer Financial Protection Bureau calling CashCall a purveyor of “financial snake oil” and arguing the online lender should pay as much as $287 million because they deceived customers.
How To Build The Best B2B Customer Experience (Forbes), Rated: A
In order to build the best B2B customer experience, companies should focus their effort on four principles:
- Invest in digital systems. Financial technology start-up Kabbage leverages new technology to approve small business loans in just seven minutes—a huge improvement over the 20 days it takes a typical bank. By simplifying the loan application process for web and mobile, Kabbage allows customers to apply for loans within minutes from anywhere in the world, which relieves a huge pain point for small businesses.
- Leverage data.
- Customize the experience.
- Use omnichannel to see the big picture. In fact, the average B2B customer uses six different channels as they make a decision. Customer experience happens in many places, which means companies need to create a consistent omnichannel experience.
Interesting Investments: Peer-to-Peer Lending (Equities.com), Rated: A
Peer-to-peer (P2P) lending, also known as peer lending, crowdlending, or social lending, is essentially what it says on the tin: lending money to another in an unsecured loan.
Prosper, one of the bigger companies managing P2P lending, has seen a fairly consistent return of about 9 percent through 2014, with a dip to 6.6 percent in 2012. Lending Club has seen a rise from 4.9 percent in 2009 to about 8 percent in 2014. All told, not bad ROIs.
First, you must be at least 18 years old, with a Social Security number, and live in an eligible state to even consider investing. Then, some states require that you have a minimum $70,000 gross income ($85,000 for California), and a minimum net worth of $70,000. You may not be able to invest more than 10 percent of your net worth. However, if your net worth is at least $250,000, there is no minimum income requirement.
Prosper, for example, has an annual default rate 3 to 4 percent higher across all grades. Lending Club has a 6 to 7 percent default rate.
Boston Fintech Company Cayan Is Getting Acquired for $ 1.05B (Bostinno), Rated: B
Cayan, a payment processing company that has been around the Boston fintech scene for the last 19 years, is in the process of getting acquired by Total System Services in an all-cash transaction valued at approximately $1.05 billion. The transaction is expected to close in the first quarter of 2018.
United Kingdom
Octopus Choice passes £100m AUM (AltFi), Rated: AAA
Octopus Choice has passed £100m of assets under management, following on from the launch of its Innovative Finance ISA in the summer.
Assetz Capital Makes Changes to the Great British Business & Green Energy Accounts (Crowdfund Insider), Rated: A
On Monday, online lending platform Assetz Capital announced it is doing away with the Great British Business Account (GBBA) and the Green Energy Account (GEA).
China
China’s Wild Bunch: Startup Investors Are Cashed-Up Cowboys (WSJ), Rated: AAA
In the first 11 months of this year, 3,418 new venture-capital and private-equity funds in China raised 1.6 trillion yuan ($241.76 billion), more than double the amount of 2015 and more than 10 times that of 2006, according to consultancy Zero2IPO Group. It estimates about 12,000 investment firms manage 8.5 trillion yuan in capital, an increase from 8,000 firms managing 5 trillion yuan in 2015.
Out of 221 unicorns in the world, 59 are in China, according to CB Insights. While that may lag behind the 127 from the U.S., it’s ahead of the U.K.’s 12 and India’s nine. Many Chinese investors want to invest in Silicon Valley because they think the valuations there are more reasonable.
Government agencies and local governments have announced 1,040 venture funds since 2015 aiming to raise about 8 trillion yuan, according to Zero2IPO. Much of the money is used to lure businesses to set up local offices, to help boost employment and tax revenues. The Hubei Province’s 200 billion yuan fund is believed to the largest of its kind.
Borrowing From Multiple Online Lenders Remains Prevalent (Caixin), Rated: AAA
In China, online lenders or peer-to-peer (P2P) platforms that only facilitate lending do not have full access to borrowers’ credit information as there is no such centralized platform that shares the data.
Some borrowers take advantage of this information asymmetry to apply for loans from multiple lenders so they can roll over previous debts elsewhere, or to take out cheaper loans to repay the ones that charge higher interest rates and profit from the difference, or even become lenders on other P2P platforms themselves, according to a study by the Beijing Internet Finance Industry Association.
The association’s recent report found that among the 61 online lenders surveyed, 44% of their customers on average had borrowed from multiple sources.
The survey found that nearly 500,000 borrowers tried to profit from arbitrage by taking advantage of the different interest rates charged by different online lenders. On average, each of them borrowed from 2.36 online lenders, the survey said.
China’s war on risk hands US$ 121b loan market to big firms (The Malay Mail Online), Rated: AAA
China’s whac-a-mole approach to risk — hit it everywhere it pops up — is set to hand control of the surging US$121 billion technology-driven lending market to a small group of leaders such as Lufax Holding and the finance affiliate of Jack Ma’s Alibaba Group Holding Ltd.
Macquarie estimates credit extended by China’s fintech firms will jump more than seven-fold by 2022 to 6.2 trillion yuan (RM3.8 trillion) to pay for things like luxury and household goods or training and education. About half that market is micro-lending — typically small, short-term loans with high interest rates, Macquarie says.
China’s 10 biggest fintech companies account for 36 percent of all loans, said Dexter Hsu, a Taipeh-based Macquarie analyst. Tighter regulation could erode China’s more than 2,000 online micro-lenders and so-called P2P platforms, which directly match borrowers with investors, to less than 200, he said.
Chinese FinTech IPOs Don’t Dazzle Wall Street (PYMNTS), Rated: A
Newly listed Chinese FinTech companies in the U.S. are struggling on Wall Street, leaving investors with unexpected losses and posing as a setback to other Chinese firms hoping to go public.
“The quality of the businesses were either too early [to go public], untested or just poor,” said Anh Lu, an equities portfolio manager at T. Rowe Price in Hong Kong. “And they were asking for very high valuations on top of that.”
European Union
Funding Circle hits €100m lending milestone in Germany (P2P Finance News), Rated: AAA
FUNDING Circle has hit the €100m (£88.2m) loans milestone in Germany just two years after launch in the country.
The business lending platform says 3,000 investors have backed 1,100 German businesses and created more than 2,000 jobs since 2015.
The platform entered the European market following its acquisition of German platform Zencap in 2015. It now has operations in the UK, US, Germany and the Netherlands.
Earlier this month it said it had passed £3bn of lending in the UK and $5bn globally across all its platforms.
C’est Génial! Younited CREDIT Tops 100,000 Loans (Crowdfund Insider), Rated: AAA
Younited Credit has just surpassed 100,000 in loans since platform inception. The Paris based online lender (formerly named Pret d’Union) reported an accelerating rate of loan originations as the number has doubled since September 2016 when total loans stood at 50,000. The platform provides loans from €1000 to € 40,000. To date, Younited Credit has originated over € 650 million in loans.
BorsadelCredito.it Raises €1.6M in Funding (FinsSMEs), Rated: A
BorsadelCredito.it, a Milan, Italy-based fintech startup, raised €1.6m in funding.
The round was led by P101 Ventures, with participation from Azimut Enterprises Holding, GC Holding, Banca Popolare di Fondi and private investors.
DreamQuark wins the 2017 Fintech of the Year (Digital Journal), Rated: B
A startup company called DreamQuark, which produces Artificial Intelligence applications for financial services, has been awarded the Finance Innovation ‘Fintech of the Year’ prize.
National Personal Credit Platform Appoints Chairman (Caixin), Rated: B
The chairman of a wholly-owned central bank subsidiary, Zhu Huanqi, has been appointed chairman of a planned national personal credit-information platform, Caixin has learned from sources familiar with the matter.
International
Online Banking and Payments: Innovative Solutions on the Horizon (FinsSMEs), Rated: AAA
In the near future, online banking and payments will go through some fascinating changes beyond what has already happened over the past several years.
Advanced Mobile Payments
Today, there is increasing demand for biometric authentication apps. To ensure that consumers get what they want, MasterCard is going a step further by developing facial identification, voice recognition, and even cardiac rhythm programs. These innovative solutions will enhance the mobile payment experience for customers and retailers alike.
Growing Opportunities for Mobile Wallets
Back in 2014, Apple was the only real contender for mobile wallets. Within just one year, others followed their lead, including Samsung and Google. Then, in just a short amount of time, more big-name players joined in, such as Chase, Amazon, and Walmart. However, that was not the end. Even social media platforms started offering online payment options. With sites like Facebook that have mobile wallet solutions, people can send money and make payments.
Another prediction is that by 2025, 75 percent of all transactions will be made using mobile wallets rather than actual cash.
Greater Demand for Digital Remittances
For instance, a San Francisco-based company founded in 2001 called Xoom has experienced amazing growth because of digital remittances. In fact, it passed up MoneyGram, which speaks volumes.
Growth Potential with Peer-to-Peer Lending
For instance, having originated loans over $20 million since being founded, Lending Club ranks as one of the fiercest competitors in this arena.
How Banks Are Leveraging Chatbots for Customer Service (Crowdfund Insider), Rated: A
Bank of America: Erica
In October of 2016, Bank of America unveiled Erica, their new AI chatbot. Available in the bank’s mobile app, Erica can work with voice and text commands.
Erica uses machine learning and specially-designed algorithms to provide Bank of America services that were typically reserved for the bank’s top-tier customers. As an example, it could recommend a way to pay down more on your credit card debt to save on interest payments. Or if your checking account is close to being overdrawn, it could contact you to recommend a transfer from your savings account.
Swedbank: Nina
Customers can access Nina from the bank’s website, and it can understand a wide range of text requests using specially designed Natural Language Understanding technology.
In the first three months after Nina’s release, the software was handling an average of 30,000 customer interactions per month. Of those early interactions, Nina was able to provide a resolution rate of 78%.
Capital One: Eno
Eno from Capital One is a chatbot program that works through SMS messaging.
You can use this AI chatbot to check the balance on your accounts, see your available credit, track recent transactions, pay bills, and more.
Wells Fargo
The Wells Fargo virtual assistant is a chatbot that the bank recently released for use with Facebook Messenger. Once a customer enrolls their account, they can then use Messenger to contact the virtual assistant for basic tasks like tracking recent transactions, balance inquiries, and finding the nearest ATM.
Digital investments: Modern ways to invest in the digital age (Bankless Times), Rated: A
The internet has brought about all kinds of new ways to invest one’s money.
- Bitcoin
- Peer-to-peer lending – You’re best off using a well-established site such as Ratesetter.
- Micro-investment apps – Some apps round up all of your expenses to the nearest dollar and then put the leftover change into an account (for example, if a cup of coffee costs $3.14, this will be rounded up to $4 and the $0.86 extra change will be put into the account).
- Social media shares
Australia/New Zealand
Australian Fintech Airwallex Secures $ 8 Million Investment From Square Peg (Crowdfund Insider), Rated: AAA
Less than one year after securing $13 million during its Series A funding round, Aussie fintech startup Airwallex announced it has received an $8 million investment from Paul Bassat’s Square Peg.
Testing a chatbot’s home loan advice gives a range of outcomes (Stuff), Rated: A
A mortgage broking firm is offering an AI chatbot to help first-home buyers understand some of the basics – but an experiment shows you shouldn’t put too much faith in any online calculators’ estimates of how much you might be able to borrow.
Squirrel has launched Alan, an online tool that answers questions like “how much deposit do I need”, “what’s an auction” and “how much can I borrow?”
Regulatory Pathway for Challenger Banks Just OK, Could be Improved (Crowdfund Insider), Rated: A
FinTech Australia has provided a comment onthe consultation paper published in August regarding authorising new entrants into the banking industry. The creation of digital challenger banks in Australia is a welcomed move but, according to FinTech Australia, needs some improvement.
India
5 Consumer Lending Trends To Look Forward To In 2018 (Inc42), Rated: AAA
This amendment to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 is a step towards standardisation and providing a visible digital identity, thereby promoting transparency in financial transactions. Another factor that is pushing financial transparency is the rise of Fintech and the subsequent new-age companies that are offering digital avenues for finance such as payment platforms, blockchain companies, alternative financers like P2P lenders and so on.
Consumer Lending Trends To Look Forward To In 2018
Alternative Lending Boom
New service providers will serve the underserved and unserved, meeting the unmet demand. We will continue to see the rise of direct lending as well as P2P lending, marketplaces, crowdfunding platforms etc.
Ease Of Access To Credit
Credit will continue to grow, thanks to the alternative lending boom. One such burgeoning space is the Line of Credit. It has gained momentum in 2017 with the metros being early adopters and is expected to expand into tier 2 & tier 3 cities in 2018.
The Rise Of InsurTech
Investment In Emerging Technologies
Blockchain will expand in putting together smart contracts, and digital identification. Already, FinTech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015, driven mainly by China and India.
Government And Regulatory Push For Fintech
Asia
Unique Secured P2P Lender Silver Bullion Reaches $ 50 Million in Loans (Crowdfund Insider), Rated: AAA
Silver Bullion, a peer to peer lending platform based in Singapore, has reached $50 million in loan originations. The unique platform that provides secured lending based off of bullion saw more than double the lending volume in 2017 versus year prior.
Amartha Powers Micro Peer to Peer Lending in Indonesia, Focuses on Women Entrepreneurs (Crowdfund Insider), Rated: A
Amartha Founder & CEO, Garuda Typhoon Andi Putra recently commented;
“Since its establishment, Amartha has been committed to connecting the unbanked micro entrepreneurs, and investors who want to add this asset investment in a sector that is more profitable and socially valuable. The uniqueness lies in the micro-entrepreneurs or Amartha Partners, all of which are women. Today, more than 72,000 women micro entrepreneurs throughout Indonesia have enjoyed our services, with a total fund distributed more than 200 billion rupiah (US $ 15 million). “
Affin Islamic Bank lists latest sponsored venture on IAP (New Straits Times), Rated: A
KUALA LUMPUR: Affin Bank Bhd’s wholly owned subsidiary, Affin Islamic Bank Bhd, has today listed its latest sponsored venture with Segi Seri Sdn Bhd on Investment Account Platform (IAP), a shariah-compliant platform similar to crowdfunding and peer-to-peer lending platforms.
Affin Islamic said the venture plans to raise RM3.3 million on IAP to part-finance contract awarded to them recently, which is related to preparation and serving of dietetic food to an established government hospital in Malaysia for a duration of three years.
Canada
Payday lenders squeezed by new regulations (The Globe and Mail), Rated: B
Another challenge is the new technology. Instant Financial Inc., a Vancouver-based startup, released an app this year that lets workers paid by the hour get their day’s earnings after a shift. It’s free for employees. Employers pay a fee. The focus so far is the hospitality industry, and includes companies such as McDonald’s and Outback Steakhouse in the United States. Instant has about 175,000 people on the service in the United States and about 5,000 in Canada. Wal-Mart has a similar product, which it sourced from another company.
Africa
A mobile banking service is transforming how the poor transfer money — here’s how it works (Business Insider), Rated: AAA
In 11 countries around the world, some 30 million people use a mobile money service that is transforming how people handle their finances.
It’s called M-Pesa, and it has lifted hundreds of thousands of people out of poverty in Kenya.
Krispo, 40, is enrolled in GiveDirectly’s experiment in basic income, a system of wealth distribution in which people receive a standard salary just for being alive.
The money comes with no strings attached. Krispo and the other villagers have received $22 a month since October 2016, and they’ll continue getting it until October 2028.
Scattered around town are M-Pesa stands, outfitted with live agents who can dispense money — essentially an ATM with a human teller.
Authors:
Wednesday November 22 2017, Daily News Digest
News Comments Today’s main news: Ron Suber shares lessons learned from his first 120 days in ‘rewirement’. Paytm invests in CreditMate. Faruqi & Faruqi law firm investigates Qudian. China clamps down on microlending. Australian alternative lenders make Fintech 100. Today’s main analysis: Americans having trouble paying off credit cards. Today’s thought-provoking articles: Alt lenders accuse banks of not following […]
News Comments
- Today’s main news: Ron Suber shares lessons learned from his first 120 days in ‘rewirement’. Paytm invests in CreditMate. Faruqi & Faruqi law firm investigates Qudian. China clamps down on microlending. Australian alternative lenders make Fintech 100.
- Today’s main analysis: Americans having trouble paying off credit cards.
- Today’s thought-provoking articles: Alt lenders accuse banks of not following Consumer Financial Protection Bureau (CFPB) data-sharing guidance. Walking the regulatory tightrope on consumer credit. European Banking Authority discusses risks, rewards of fintech. 8 blockchain hacks emerging in India.
United States
- Ron Suber shares lessons learned from rewirement. AT: “I like this. Suber is always thought-provoking, but what I notice here is that many of these lessons were learned (supposedly) from experiences not related to lending at all, or business for that matter, but which apply all the more. A great read.”
- Faruqi & Faruqi investigates Qudian. AT: “The implication here is that Qudian may have overvalued its own stock. The question is whether their sudden fall was due to market forces (see the China news section) or due to misleading statements. I’m guessing this is what the investigation is about.”
- Americans having trouble paying off credit cards. AT: “I’d like to know why.”
- Online lenders say banks aren’t following CFPB guidance on data sharing. AT: “Or it could just be that they’re taking their time with due diligence. Remember, banks are slow.”
- Early stage investing vs. real estate investing. AT: “Note that AdaPia d’Errico’s role has changed. She’s no longer COO at AlphaFlow, but has her own consulting company focused on helping firms integrate female leadership skills into company cultures.”
- CFPB, CashCall go to battle over restitution amount.
- JPMorgan, Goldman Sachs trial distributed ledger for equity swaps.
- Why banks, businesses need to play offense.
- Finastra Universe introduces Sophia the humanoid robot. AT: “I’m not sure what this has to do with fintech unless she will go the bank for me. I guess that’s why you have to attend the conference.”
- Why Charlotte, North Carolina is focusing on increasing its fintech footprint.
United Kingdom
- Walking the regulatory tightrope on consumer credit. AT: “An interesting read.”
- Almost half of SMEs have never checked their credit score.
- Alternative finance’s route to prosperity.
- Lending to small businesses.
- Why the fintech community is concerned about Brexit.
- Open banking and customer centricity.
- BitRent to sponsor token sale.
China
- The clampdown on online microlending has led to a plunge in U.S.-listed shares.
- Credit provider stocks crash.
- Qudian, Ppdai share prices hit the dirt.
- Why cybersecurity is a growing concern.
European Union
- Banking authority weighs risks, rewards of fintech.
- DreamQuark uses AI to beef up financial services.
International
Australia/New Zealand
- Alternative lenders make KPMG Fintech 100. AT: “Congratulations to all.”
- How one borrower saved $87/week on a home loan.
India
- Paytm invests in CreditMate.
- 8 blockchain hacks featured in India. AT: “A super-interesting read.”
- How the sharing economy is creating opportunities.
Asia
Canada
News Summary
- United States
- LESSONS FROM THE FIRST 120 DAYS OF REWIREMENT (Ron Suber), Rated: AAA
- US law firm launches investigation into star Chinese payday loan lender Qudian (SCMP), Rated: AAA
- Americans are having trouble paying off their credit cards — and it could spell trouble for the economy (Business Insider), Rated: AAA
- Banks aren’t following CFPB data-sharing guidance, fintechs say (American Banker), Rated: AAA
- Early Stage Investing vs. Real Estate Investing: Similarities and Differences (Crowdfund Insider), Rated: A
- CFPB, CashCall Spar Over Possible $ 287M In Restitution (Law360), Rated: A
- JPMorgan, Goldman Sachs Trial DLT for Equity Swaps (Coindesk), Rated: A
- Small Business Saturday: Why Banks And Businesses Need To Start Playing Offense (Forbes), Rated: A
- Finastra Universe introduces Sophia the humanoid robot (Finastra Email), Rated: B
- Financial tech is a big business. What Charlotte’s doing to become a larger player. (Charlotte Observer), Rated: B
- United Kingdom
- Consumer credit – walking the regulatory tightrope (Lexology), Rated: AAA
- Almost half of SMEs have never checked their credit score (Bridging&Commercial), Rated: A
- Never mind the Brexit: Alternative finance offers a route to prosperity (Startups.co.uk), Rated: A
- Investment Committee: Arnaud Gandon, Heptagon Capital (Citywire), Rated: A
- Here’s what the UK’s fintech community is most concerned about over Brexit (Verdict), Rated: A
- Open Banking: How can customer centricity drive innovation? (City A.M.), Rated: A
- Blockchain Based Building Platform BitRent Announces Token Sale (The Merkle), Rated: B
- China
- China clamps down on online micro lending; U.S.-listed shares plunge (Reuters), Rated: AAA
- Shares Of Chinese Online Credit Providers Crash Over Crackdown Fears (NASDAQ), Rated: A
- U.S.-listed Chinese financial firms dive on regulatory action (Reuters), Rated: A
- From Drone Hackers to Cyber Bodyguards, China Cyber Security a Growing Concern (China Money Network), Rated: A
- European Union
- EBA weighs up risk and rewards of Fintech in new Discussion Paper (FinanceJobs.ie), Rated: AAA
- DreamQuark beefs up financial services through artificial intelligence (TechCrunch), Rated: A
- International
- Robeco launches fintech investment fund (Finextra), Rated: A
- ETHERECASH LAUNCHES ICO (Bitcoinist), Rated: A
- Australia/New Zealand
- Aussie lenders make Fintech 100 list (TheAdviser), Rated: AAA
- How I’m Saving $87 a Week (or $4,500 This Year) on My Home Loan (Mozo), Rated: A
- India
- Paytm invests in online lending startup CreditMate (VC Circle), Rated: AAA
- 8 ‘blockhain hacks’ which NITI Aayog, AWS, Microsoft, Accel, Coinbase believe are beneficial for society (YourStory), Rated: AAA
- Sharing economy: creating opportunities in the digital era (livemint), Rated: A
- Asia
- Banyuwangi Regent Anas Connects MSME with Fintech Startups (Netral News), Rate: A
- Canada
- CANADIAN PAYMENTS INNOVATION FORUM SAYS COLLABORATION CONTINUES TO DRIVE FINTECH INNOVATION (Betakit), Rated: A
- Robo-help for companionship, brain teasers or financial advice (The Globe and Mail), Rated: A
United States
LESSONS FROM THE FIRST 120 DAYS OF REWIREMENT (Ron Suber), Rated: AAA
The first 120 days were filled with new languages, cultures, histories, beliefs, and people. I visited four foreign lands that were completely new to me, and no, New York and Silicon Valley were not on the itinerary.
Here are some lessons I’ve gained from the journey.
- LESSON 1: Being first, ahead of your time and unique doesn’t guarantee success and longevity.
- LESSON 3: The USA credit card and payments industry has a long way to go to catch up. No one (and I mean no one) swipes a credit card nor inserts a chip credit card in a machine and then signs a paper receipt in Australia and Singapore.
- LESSON 4: There is still a huge opportunity to disrupt the currency exchange market. Upon arriving in Australia, I went to change US dollars to AU currently and was faced with: “No, you are not a customer” or “Yes, no problem” followed by a bad conversion rate and a 12% fee!
- LESSON 8: New and old global giants are awakening to the FinTech Golden Age and responding accordingly, albeit slowly. Singapore is now a major global financial center that has come a long way very fast, and generally not focused on the short term.
The big successes are coming to those thinking long term (Bezos/Musk), the balance of power is shifting globally and the best is yet to come!!
P.S. Two young new FinTech companies to watch: Finch and Friendly Transfer. (No, I am not invested…yet)
US law firm launches investigation into star Chinese payday loan lender Qudian (SCMP), Rated: AAA
Qudian, the Chinese online payday loan platform, could be facing a rash of class-action lawsuits in the US after its share price tumbled drastically this week on the New York Stock Exchange, triggering concerns over the integrity of the firm.
New York-based law firm Faruqi & Faruqi, is now encouraging investors in Qudian to get in contact with it, as it is now “investigating potential claims against Qudian”, it said in a statement. Qudian was unavailable for comment.
Shares in the leading provider of online small consumer credit in China tumbled 5.28 per cent on Monday to close at US$20 in New York, 16.7 per cent down from its IPO price of US$24, and more than 40 per cent down from a historic intraday high of $35 reached on its trading debut on October 18.
Americans are having trouble paying off their credit cards — and it could spell trouble for the economy (Business Insider), Rated: AAA
US credit-card debt recently surged to record highs, surpassing peaks seen before the 2008 financial crisis. Several large US banks and credit-card companies reported a rise in credit-card delinquency rates for August, the second consecutive monthly rise.
Fed funds is just 1% to 1.25% after four increases starting in December 2015, and yet many Americans pay credit-card rates well into the double digits.
Banks aren’t following CFPB data-sharing guidance, fintechs say (American Banker), Rated: AAA
Some fintechs are accusing financial institutions of not following either the spirit or letter of the data-sharing principles the Consumer Financial Protection Bureau released in October.
One of fintechs’ primary accusations is that banks are selectively choosing fintechs to work with — leaving the rest out in the cold. Though the CFPB data-sharing principles do not spell out that banks should work with everyone equally, the spirit of the document suggests financial institutions should work with all trusted third parties.
Capital One has signed agreements with five fintechs and data aggregators—Clarity Money, Intuit, Abacus, Xero and Expensify—since introducing its data-sharing application programming interface in February. It says more are in the pipeline.
Banks have too many conflicting requirements
Another issue cited by fintechs is that it’s tough dealing with each bank’s different set of standards and requirements.
“Some of those standards may be in conflict,” Petralia said. “It can take years to comply with a bank’s requirements and it probably eliminates access to newer startups, to smaller businesses that don’t have a lot of cash sitting on their balance sheet, to support that kind of long lead time for legal requirements.”
Early Stage Investing vs. Real Estate Investing: Similarities and Differences (Crowdfund Insider), Rated: A
Both venture capital (VC) investing and real estate investing involve some level of risk assessment, they both have the potential for big returns, and investors have the opportunity to help someone else reach a desired goal. Despite this common ground, there are some distinct differences.
Private Equity Investing
To realize returns on this type of investment, investors must understand the different stages of the startup cycle, how to evaluate a business plan, understand how to assess talent, technology, and business processes to determine whether a startup has the potential to succeed, and know how to judge market forces that could have an impact on the startup company.
Real Estate Investing
Real estate investments can be structured in many ways to benefit investors who are looking for specific types of returns. For instance, house flipping (Fund That Flip and Peerstreet) or commercial or multifamily flips (Sharestates and Patch of Land) offer short-term gains while rental properties (Roofstock and HomeUnion) offer long-term passive income. Commercial real estate investing (CrowdStreet and RealtyShares) may involve property development or long-term leasing with spans of three, five, ten years or more. New REITs (FundRise eREITs and MogulREIT) offer investors a way to invest in multiple properties or types of real estate through a single vehicle. Real estate funds or portfolios (AlphaFlow) also allow investors to diversify their debt investments through a single vehicle.
How to Evaluate an Early Stage or a Real Estate Crowdfunding Opportunity
Due diligence in real estate investing is also important. Basic criteria for evaluation include:
- The platform – Does it have a strong financial position and available capital? Is the underwriting done in-house or outsourced? What is the background and experience of management team? What is their plan for insolvency, recouping losses, and managing risk?
- Fees – Every investment involves opportunity cost. Is there an ongoing management fee, or does the investor pay a percentage based on returns or total portfolio size?
- Borrowers – How does the platform assess borrower track record and credit?
- The investment – What is the developer’s business plan? What are the expected cashflows, expenses and projected returns? What is the loan-to-value before repairs and after repairs? Are investors in a first-lien position or second? Where is the property located?
CFPB, CashCall Spar Over Possible $ 287M In Restitution (Law360), Rated: A
The Consumer Financial Protection Bureau squared off against CashCall Inc. and its affiliates in California federal court on Monday about whether it would be appropriate to make the online lender pay as much as $287 million for deceiving consumers, with the CFPB calling the company’s loans “financial snake oil” and CashCall saying its business was legitimate.
JPMorgan, Goldman Sachs Trial DLT for Equity Swaps (Coindesk), Rated: A
A group of major financial firms including JPMorgan Chase and Goldman Sachs has trialed the exchange of equity swaps over a distributed ledger (DLT) system.
By carrying out trades across a network where all parties use the same valuation data and share the same books, in theory, payments can be processed nearly instantaneously and disputes over transactions will be less likely.
Small Business Saturday: Why Banks And Businesses Need To Start Playing Offense (Forbes), Rated: A
Similarly, while I do believe the banking industry has made strides in embracing technology over the past few years, the reality is that far too many bankers are still “playing defense” when it comes to fully integrating technology into every aspect of their business.
Finastra Universe introduces Sophia the humanoid robot (Finastra Email), Rated: B
I wanted to invite you attend Finastra Universe in New York on Tuesday, December 5th. Finastra Universe is a one-day global executive event series focusing on fintech and the future of financial services.
The event will include panel and Q&A sessions, where Finastra experts and guest speakers will explore how financial firms can leverage new, more dynamic technologies within lending and other areas to improve internal efficiencies, deliver connected customer experiences and enhance business outcomes.
I’ve included a link to the full agenda Where: Marriott Marquis Times Square, 1535 Broadway, New York More than 125 people attended the inaugural Southeast Fintech Venture Conference on Monday to hear presentations from investors, fintech success stories such as small-business lender Kabbage and new firms just getting off the ground, including some from Charlotte. Sponsors included investment firm Frontier Capital and asset manager Barings, which hosted the event at its new Tryon Street headquarters. According to the National Venture Capital Association, Charlotte-area companies brought in about $393 million in venture capital investments in 2017, led by a $300 million round for payments company AvidXchange. Subprime and near prime lending have been subject to intense regulatory scrutiny during the aftermath of the financial crisis. The global economic crisis that took hold in 2007 has largely been attributed to the widespread practice of irresponsible lending to consumers, often with no means of repayment. In 2013, StepChange Debt Charity reported that the average payday loan debt of its clients was £1,657, whereas the same clients’ average net monthly income was a much lower £1,379. Following the transition in regulatory regimes from the OFT to the FCA, a series of tougher measures have been introduced to move staunchly away from the lending practices which allowed firms such as payday lender Wonga to maintain a representative APR of 5,853% in 2013. The FCA has made it clear that it regards non-standard finance as a “high risk” activity and as such dedicates special resources to intensively monitoring businesses in this sector. Nearly half of SMEs (44%) have never checked their credit score, according to the latest research from RateSetter’s business finance division. RateSetter’s research also found that a further 6% of businesses had not checked their credit score within the last 12 months and only 18% had viewed their score within the last six months. It is a little over a decade since Northern Rock became the first UK bank in 150 years to fail because of a run on its deposits. For a brief moment it looked as if the entire global financial system might collapse overnight, with only government intervention and billions in bail-outs preventing a worst-case scenario. According to data from the Office for National Statistics (ONS), the number of small businesses that were successful in their attempt to get a loan fell from 90% in 2007, to 65% in 2011. According to our latest research, just 43% of small business owners see trading conditions improving in the coming year. Meanwhile 52% of start-up business owners say they do not think banks will continue to lend at the same levels in 2018. More than half of the 1,000 small business owners we surveyed say they are planning to grow or expand their business in 2018. These alternatives to traditional forms of lending are proving particularly popular among the 96% of UK businesses that employ fewer than 10 people. According to our research, 40% of start-ups and younger business owners say the growth of alternative finance options has made them less reliant on banks for funding. One area of credit we find attractive, however, is lending to small businesses in the UK and Europe. The opportunity set for companies such as Funding Circle is growing fast, due to the retreat of traditional banks in providing loans for smaller companies. During the last quarter, Funding Circle outstripped the major high street banks for net new loans. We see the company essentially as a technology platform enabling the efficient issue of small loans to thousands of companies. It has a solid management team and is looking to expand its successful business model to other geographies. Fintech is now worth over £7bn to the UK economy every year and employs around 60,000 people, according to the Treasury office. Marta Piekarska, director of ecosystems at Linux Foundation’s Hyperledger project, said she believes Brexit will impact fintech in the UK because it will make things harder for collaboration. “About half of our developer workforce today are non-UK European nationals. Already it is hard to find great developer talent in the UK. Obviously, if freedom of movement isn’t as easy and non-UK EU nationals feel that it’s not really a nice environment to come to the UK to work, then we will have a problem.” The Payments Services Directive (PSD2) is a major piece of UK/EU legislation that will ensure that all payment service providers (PSPs) that operate in the single market are subject to rigorous supervision and adhere to the appropriate transformative rules to create a fair, open-banking framework. In practical terms, a customer will be able sign up for a loan, credit card or a mortgage by using a log-in that looks and feels a little bit like Facebook Connect and authorises the provider to see all of the customer’s financial transactions from the previous 36 months. The main gatekeepers and one of the leading innovators in this space are London-based FinTech company TrueLayer. As the go-between between a customer, their bank and the product or service provider, they ensure real-time, secure connectivity of the customer’s data. BitRent has given itself a mission: to make real estate investing easy, transparent and profitable all over the world. The platform uses a combination of techniques that will allow its users to control construction processes. These techniques include BIM open modeling and computer aided monitoring using RFID chips, to make investing in commercial and residential shared-equity construction more transparent and predictable. On the platform, investors can invest in real estate, without a minimum entry threshold. The online mode allows them to control construction processes and receive dividends when the construction has been completed. Moreover, users can receive data on free area or items of commercial property. The BIM (Building Information Modeling) technology that the platform uses, allows all users of the platform to monitor a project at any stage. The platform will release its RNT tokens, based on Ethereum. The token sale will start on the 1st of December 2017, 11:00 UTC and will last till March 1, 2018. China took steps to rein in the rapidly growing and lightly regulated market for online micro-lenders in the government’s latest crackdown on internet finance, sending shares of U.S.-listed Chinese financial firms into a tailspin. A top-level Chinese government body issued an urgent notice on Tuesday to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders, sources who had seen the notice told Reuters. The multi-department body, tasked by the central government to rein in risks in the internet finance sector, also told local regulators to restrict granting of new approvals for micro-loan firms to conduct lending across regions, according to the sources. Shares of Qudian ( QD ), Yirendai ( YRD ) and other China-based providers of online credit plunged Tuesday on reports that China’s Internet Financial Risk Management Group had ordered a suspension of online small-loan approvals, but some stemmed their losses by session’s end and others even gained ground. In addition to Qudian and Yirendai, also falling were China Rapid Finance ( XRF ) and PPDAI Group ( PPDF ). Shares in online lender Qudian (QD.N), whose shares only debuted last month, sank by as much as 20 percent in early trading. Shares of China Commercial Credit Inc (CCCR.O) fell 6.4 percent, those in PPDAI Group (PPDF.N) some 17.8 percent. Jianpu Technology (JT.N), which also debuted just this month, fell 9.5 percent and China Rapid Finance (XRF.N) slipped 12.92 percent. Q: What major trends are you seeing in China’s cybersecurity market? A: I think the major trend in China is similar to what is happening in the rest of Asia. The frequency and extent of cyber-attacks are increasing rapidly. Q: What Chinese business sectors are most vulnerable, or need to do more to protect themselves? A: Tech companies with lots of portals to its websites, especially like peer-to-peer lending, or any tech companies with valuable intellectual property are prime targets of cyber attacks. Q: What should Chinese tech companies be doing to defend themselves, or at least reduce the damage done by cyber attacks? A: Firstly, employee education is important. Over 90% of hacking is conducted through phishing and spear phishing. We have worked with a Chinese company with 20,000 employees, and we sent 20,000 emails to them with a link offering a chance to win iPhone. 30% of the staff clicked on the link, which actually is a quite regular percentage. In a real-life scenario, if 30% of your 9000 staff were to click, that’s 3000 cases of malware potentially downloaded into your systems. But after phishing training, finishing the exercises, the number was reduced to 5%. Q: There are reports saying cyber security experts “cyber bodyguards” is one of the hottest jobs in China. What particular specialty expertise faces the greatest shortage? The “cyber bodyguards” are in a booming industry, particular for providing preventative measures. Firstly, there are the penetration testers; also known as ethical hackers or white hat hackers. They replicate what a real hacker would do; not stealing any data or doing anything bad, but will scan systems for any gaps and weaknesses in the company’s defenses that may be exploitable during a cyber attack. They will then advise on remediation measures. The EBA says a significant increase in overall operational risk has been witnessed in the last few years, including higher conduct risk, increased cybersecurity issues and digital fraud issues, and increased outsourcing risk. ‘At the same time new or previously immaterial risks, such as the risk of mismanagement of personal data / lack of data privacy, seem to be amplified by the lack of expertise of human resources and the inadequacy of technology infrastructures.’ It points out that alternative lending platforms such as peer-to-peer lending can put pressure on the interest income from loans of existing credit institutions while new entrants offering commoditised products and services at lower costs, such as money transfers and brokerage, can reduce the fees and commission income of established players. Meet DreamQuark, a French startup that wants to help banks, insurance companies and asset management firms with all of their artificial intelligence needs. DreamQuark crunches your data, creates models based on machine learning and lets you apply those models on all past and future data points. Robeco has launched a Global Fintech Equities fund to give wholesale and retail investors exposure to companies that are transforming the financial sector. The actively managed fund will invest in three distinct segments, labelled ‘today’s winners’, ‘fintech enablers’ and ‘challengers’. Today’s winners include companies that already have a competitive advantage in this space, fintech enablers provide the digital backbone for emerging companies, and challengers are the companies that have the breakout potential to stand out from the pack. Following a successful pre-ICO, Etherecash has announced a public ICO that launched November 15th and will end December 19th. Focusing on the 2.5 billion unbanked, Etherecash looks to excel in both spending and sending, as well as providing a peer-to-peer lending platform, to enable those with little or no credit history the ability to access funds. The ICO sale will auction off 144,000,000 tokens, which will help support ongoing development of the platform and can be purchased with Bitcoin or Ethereum. A bonus of 12% is available for participants in the first week, which goes to 3% in week four, and finally to 0% in week five. The ICO has a soft cap of $15 million, which if not reached, will conclude the ICO as a failure with funds returned to the respective investors. The hard cap is set at $100 million. 40% of funds will be used for further core development; 25% in growth and marketing; 20% for legal, accounting, and advisory feeds; and the remaining 15% for admin and operational costs. 57% of internal frauds are carried out by senior and middle management, according to the whitepaper. Ten Australian companies have been listed in KPMG’s Fintech 100 list, which identifies the top 50 fintech firms and an “emerging 50” list of companies “seeking to boldly push the envelope in financial services”. Online SME lender Prospa was the highest ranked Australian company at number 24. It also placed second on the Australian Financial Review’s Fast 100 list after averaging a 239 per cent revenue growth since 2013–14 and holding $50 million in equity and debt funding in 2017. US-based lender OnDeck, which broke into the Australian market in 2015, placed 28th in the ranking, up two places from last year’s report, while German fintech Spotcap (which also has operations in Australia) came in at number 32. Fast forward to three months ago, when I suddenly realised my rate of 4.27% was more than 60 basis points higher than the best on the market. I had become a victim of that time honoured tradition of banks fattening profit margins and it was time to do something about it. I knew there were now stacks of lenders offering rates below 4.00%, and after comparing the best loans decided to go with an online lender to take advantage of their super low variable rate of 3.64%. One97 Communication Ltd, which runs mobile wallet firm Paytm, said on Tuesday it has picked up a stake in Mumbai-based fintech startup CreditMate. CreditMate helps two-wheeler dealers and financiers assess and approve vehicle loans to customers with no formal credit history, Paytm said in a statement. Anshul said that there is a lot of hype and misconceptions related to blockchain. He explained that outside of a small group of crypto-savvy investors and developers, blockchain is often synonymous with cryptocurrency, and erroneously so. Their goal with this hackathon was to give developers (with or without past blockchain experience) a chance to envision how the same distributed ledger technology that powers Bitcoin might be able to improve transparency, efficiency, and honesty in enterprise and government processes, particularly in regions of the world suffering from high corruption. Anshul added that another objective of the event was to explore use cases for concepts like IndiaChain — a blockchain infrastructure for a Digital India, building on existing initiatives like Aadhar, the world’s largest biometric identity project with unique 12-digit IDs for 1.2 billion Indian residents. Here are eight hack projects recognised by the partners.
When: Tuesday, December 5th, 2017
Click Financial tech is a big business. What Charlotte’s doing to become a larger player. (Charlotte Observer), Rated: B
United Kingdom
Consumer credit – walking the regulatory tightrope (Lexology), Rated: AAA
Almost half of SMEs have never checked their credit score (Bridging&Commercial), Rated: A
Never mind the Brexit: Alternative finance offers a route to prosperity (Startups.co.uk), Rated: A
Investment Committee: Arnaud Gandon, Heptagon Capital (Citywire), Rated: A
Here’s what the UK’s fintech community is most concerned about over Brexit (Verdict), Rated: A
Open Banking: How can customer centricity drive innovation? (City A.M.), Rated: A
Blockchain Based Building Platform BitRent Announces Token Sale (The Merkle), Rated: B
China
China clamps down on online micro lending; U.S.-listed shares plunge (Reuters), Rated: AAA
Shares Of Chinese Online Credit Providers Crash Over Crackdown Fears (NASDAQ), Rated: A
U.S.-listed Chinese financial firms dive on regulatory action (Reuters), Rated: A
From Drone Hackers to Cyber Bodyguards, China Cyber Security a Growing Concern (China Money Network), Rated: A
European Union
EBA weighs up risk and rewards of Fintech in new Discussion Paper (FinanceJobs.ie), Rated: AAA
The European Banking Authority takes a cautious and carefully balanced view in its deliberations on how it should approach FinTech in its latest Discussion Paper. In reviewing the FinTech landscape in Europe the EBA raises many more questions than it answers, concluding that it should undertake much more detailed follow-up work in a number of areas. But it does raising warning flags about possible unevenness in the playing fields offered by different jurisdictions, in the area of sandboxing and innovation hubs, for example.
Overall, the The European Banking Authority says, FinTech may increase competitiveness in the Single Market by lowering barriers to entry for newcomers while preserving fair competition and incentives to innovate.
DreamQuark beefs up financial services through artificial intelligence (TechCrunch), Rated: A
International
Robeco launches fintech investment fund (Finextra), Rated: A
ETHERECASH LAUNCHES ICO (Bitcoinist), Rated: A
Australia/New Zealand
Aussie lenders make Fintech 100 list (TheAdviser), Rated: AAA
How I’m Saving a Week (or ,500 This Year) on My Home Loan (Mozo), Rated: A
India
Paytm invests in online lending startup CreditMate (VC Circle), Rated: AAA
8 ‘blockhain hacks’ which NITI Aayog, AWS, Microsoft, Accel, Coinbase believe are beneficial for society (YourStory), Rated: AAA
- 7. SureFly: last-minute crowdfunded insurance for flight delays – Insurance premium is calculated as a function of the probability that a passenger will miss a flight which is in turn a function of flight time, insurance seeker’s distance from the airport, traffic on the roads, length of airport lines, etc.
- 8. MyH2OBot for “Habit Economics”
Sharing economy: creating opportunities in the digital era (livemint), Rated: A
The rise of the sharing economy is commonly attributed to culture or ideology. It’s assumed that millennials don’t want to be trapped by houses, cars and other expensive belongings, for example, or that they believe sharing is good for the environment.
Research conducted by the BCG Henderson Institute (BHI) indicates that economics, not attitude, is driving the sharing economy.
Among respondents who use sharing services, 40% of Germans, 57% of Americans and 67% of Indians said that well-priced, convenient offers could convince them to abandon ownership altogether.
Aside from physical assets, investors have also poured $5.7 billion into peer-to-peer lending ventures.
Start-ups by no means have a lock on the sharing market, however. In fact, 55% of consumers in India said they would prefer dealing with established operators—the highest among the countries surveyed.
Asia
Banyuwangi Regent Anas Connects MSME with Fintech Startups (Netral News), Rate: A
Banyuwangi Regional Government will again partner with digital platform startups to develop the region.
After with Gojek ride-hailing service provider, there are several more similar companies that will be embraced. One of them is the startup of financial technology (fintech), especially for financing facilities to micro, small and medium enterprises (MSME).
Canada
CANADIAN PAYMENTS INNOVATION FORUM SAYS COLLABORATION CONTINUES TO DRIVE FINTECH INNOVATION (Betakit), Rated: A
At the third annual Canadian Payments Innovation Forum in Toronto, over 100 payments and banking executives gathered to examine how FinTech is transforming the Canadian financial services industry, and what providers can do to prepare.
After launching with Samsung Pay earlier this year, Gamble indicated that ‘cash alternatives’ would continue to be a focus and something to watch in the market. Due to Interac’s smaller size (the company has about 250 employees), Gamble said they just don’t have the “bandwidth” to do everything themselves, so turning to partnerships is key.
“We strive to deliver alternatives to cash, and as a community, we’ve done an amazing job of delivering contactless capabilities at POS. Canadians moved more than $90 billion in etransfers this year, so our little country is significantly leading the space in P2P transfers.”
Robo-help for companionship, brain teasers or financial advice (The Globe and Mail), Rated: A
AI is already moving forward quickly in financial advice and management, and the use of financial technology, or fintech, seems to be growing among older Canadians.
“Our average client is 47 years old and our second largest demographic group is baby boomers,” says Randy Cass, CEO and founder of Nest Wealth, a Canadian financial robo-advisor that was founded in 2013.
“For retirement planning, the AI isn’t necessarily cutting the financial advisor out of the process. What we’re likely to see is AI helping the financial advisor to get faster and more comprehensive data analysis and provide more seamless client support,” Mr. Narvey says.
Authors:
Friday October 20 2017, Daily News Digest
News Comments Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO. Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the […]
News Comments
- Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO.
- Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the lending GAP.
- Today’s thought-provoking articles: Qudian’s IPO underlines China’s fintech appetite. Chinese P2P lending bankruptcies raise eyebrows. Mind the GAP in the lending GAP. The digital future of the Middle East.
United States
- Betterment valued at $1B based on EquityZen trading. AT: “This makes me wonder if we might see an IPO in the works. Maybe Betterment thinks it doesn’t need to go public. If they can be this strong as a private company, maybe not.”
- Venmo now accessible through 2 million retailers. AT: “Venmo has a lot of potential, and it can make PayPal an even stronger force to reckon with.”
- PayPal sees huge profit rise after focusing on mobile payments. AT: “Mobile payments is still in its infancy. PayPal has the potential to be one of the major worldwide forces in mobile payments as the industry grows.”
- Finova Financial secures $102.5M in equity and credit facility funding. AT: “Congratulations. Does this mean we’ll soon see expansion into other states?”
- Fundrise Growth eREIT files to raise $45.7M.
- Clearbanc works with Facebook to deliver financing to small businesses.
- Alternative lenders speak on small dollar rule. AT: “Online lenders seem to be in favor of the rule across the board. That’s understandable since a decline in brick-and-mortar payday lenders could lead to a rise in online lenders who can create viable products to fill the gap.”
- Consumer Financial Protection Bureau advisory board sets meeting date for Nov. 2.
- Climb Credit enters into $130M loan purchase agreements.
- How consumer banks embrace artificial intelligence. AT: “If banks are going to compete, they’ll have to move beyond chatbots and virtual assistants. They’re not really embracing AI until they start using it for underwriting.”
- Top 10 affordable MBA programs.
- Is dating a financial audition? AT: “It should be.”
- Fintechs should have the option to apply for a national bank charter.
- 6 ways home buyers scare off sellers.
- OppLoans appoints Data Everywhere founder as CTO.
- Oklahoma to send out CashCall refund checks soon.
United Kingdom
- Lendy has repaid 100M GBP to investors this year.
- First Associates receives FCA authorization.
- IFISA investments should take off in 2018.
- Othera partners with Lendhaus.
- HSBC launches offering through Bud.
- Britain sees record investments since Brexit.
- 3 ways to use social media to get a business loan.
China
- Qudian’s IPO underlines Chinese appetite for fintech. AT: “I think we’ll see more to come.”
- Chinese P2P bankruptcies raises eyebrows.
- Supply chain finance poised to be the next Internet boom in China.
European Union
- PayKey raises $10M for Asian expansion.
- Mind the GAP in the lending GAP.
- P2P auto lending risks investor returns.
Australia/New Zealand
India
Asia
MENA
Canada
News Summary
- United States
- Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA
- Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA
- PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA
- Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA
- Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A
- LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options (PR Newswire), Rated: A
- Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A
- Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A
- CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B
- Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A
- Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A
- How consumer banking leaders are embracing AI (American Banker), Rated: A
- The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A
- Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A
- OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B
- Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B
- Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B
- State rolls out refund program, checks on the way (KFOR), Rated: B
- United Kingdom
- Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA
- First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A
- IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A
- Othera announces new contract with U.K.’s Lendhaus (LendIt), Rated: A
- HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A
- Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A
- 3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B
- China
- Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA
- A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA
- Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A
- European Union
- Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA
- Mind the GAP in the Lending GAP (AltFi), Rated: AAA
- P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A
- Australia/New Zealand
- Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA
- Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A
- India
- What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A
- Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B
- Asia
- Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA
- MENA
- Transitioning to a digital future in the Middle East (TXF News), Rated: AAA
- Canada
- When Kickstarter isn’t enough (The Globe and Mail), Rated: A
United States
Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA
Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.
Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.
EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding.
Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA
PayPal is giving over 2 million retailers in the US the ability to accept Venmo payments, marking the firm’s most aggressive move yet to
PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA
Sharp growth in mobile payments led PayPal Holdings Inc (PYPL.O) to report a better-than-expected third-quarter profit on Thursday and lift its guidance for earnings through the rest of the year.
The San Jose, California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. Those deals are clearly starting to bear fruit, analysts said.
PayPal shares were up 3.9 percent at $69.89 in after-hours trading following the results.
The company’s adjusted profit rose 32 percent during the third quarter to $560 million, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 21.4 percent to $3.24 billion.
Its mobile payments volume jumped 54 percent during the third quarter compared with the year-ago period, to about $40 billion. Total payments volume rose 31 percent to $114 billion.
Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA
Florida fintech firm Finova Financial announced on Tuesday it has secured $102.5 million in equity and credit facility funding. The financing was led by CoVenture with participation from existing investors.
Finova’s current digital products include its Car Equity Line of Credit (CLOC) and Automobile-Secured Prepaid Card. Its services are available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon and Arizona.
Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A
The Fundrise Equity REIT, or Growth eREIT, has filed with the SEC to raise up to $45,730,440 under Reg A+. The amount includes $11.8 million from a previous offering circular.
The Growth eREIT most recently paid an 8% dividend.
The first Growth eREIT sold out at the maximum amount under Reg A+ of $50 million.
Investors may purchase shares in the eREIT with at a minimum $1000. Under Reg A+, both accredited and non-accredited investors may participate.
LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options (PR Newswire), Rated: A
Mota Group’s LILY® division today announced a new flexible time-payment option, partnering with Affirm to offer shoppers in the United States the flexibility of buying now and making simple monthly payments for their purchases.
This new option is in addition to LILY’s existing payment methods of credit and debit cards, Bitcoin, and PayPal, making LILY the only consumer drone company to offer all five methods of payment.
LILY customers may select Affirm at checkout and view their monthly payments up front before making their purchase. More information and purchasing options are available at www.lily.camera/affirm.
Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A
“The number one thing that prevents entrepreneurs from growing big businesses is access to capital,” says tech entrepreneur and CBC Dragon Michele Romanow. She’s looking to change that for e-commerce businesses.
Today, Romanow’s Clearbanc, which provides revenue-based financing to online businesses, announced a new program with Facebook that will give the social media giant’s five million online merchants across Canada and the U.S. access to up to $500,000 in financing without having to give up any equity or fill out any paperwork or even undergo a credit check.
Facebook advertisers that have been operating for more than six months and are looking for money to grow, and have positive economics on ad spends — meaning when they buy an ad they are making a positive margin on selling that product — can apply online through Clearbanc’s Chrged program, which provides tools to help businesses scale, and connecting their Facebook Ad Account and payment processor.
Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A
Sasha Orloff, CEO and Co-Founder of LendUp:
As a socially-responsible lender on a mission to improve credit access for underserved consumers, LendUp shares the CFPB’s goal of reforming the troubled payday lending market. Since our founding, we’ve been a strong advocate for eliminating the predatory practices that have defined the short-term lending market and are pleased that many of these reforms are included in the rule.
At a time when more than half of Americans are unable to access traditional banking products, it is critical that we offer consumers as many safe credit options as possible.
Ken Rees, CEO of Elevate Credit:
We believe the CFPB got it exactly right with the rule.
The rule will dramatically change the landscape of non-bank, non-prime lending in this country. In addition to reducing the number of payday lenders and title lenders, the requirements for advanced underwriting and reporting will push most of the mom-and-pop, primarily brick-and-mortar lenders out of existence. We believe that the growing need for non-prime consumer credit will be filled by more sophisticated technology-enabled online lenders.
Lisa McGreevy, President & CEO, Online Lenders Alliance (full response here):
The biggest problem with the rule is the very prescriptive nature for a product that is $500 or less. There is no room for any new products or innovation in this space.
APR is an irrelevant measure for very short term loans like this. The CFPB quotes that more than 80% of these loans are rolled over for another loan within the month. That is unacceptable.
CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B
The CFPB has published a notice in the Federal Register announcing that a meeting of its Consumer Advisory Board will be held in Tampa, Florida on November 2, 2017.
Presumably, the loan discussion will focus on the CFPB’s final payday loan rule.
Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A
Climb Credit, a student lending company that expands access to quality education for the new economy, today announced that it has entered into agreements with investors to purchase $130 million of student loans originated by Climb Credit.
The transaction will enable Climb Credit to continue expanding its student loan programs beyond its current network of software development, UI/UX design, robotics, welding, nursing, and other skills-based programs in additional high-earning fields. Climb Credit’s focus is to transform the higher education paradigm by providing better access and affordable funding to students to attend schools that consistently demonstrate a strong return on investment (ROI) for their students.
Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A
Roostify, a provider of automated mortgage transaction technology, today announced the upcoming release of Decision Builder, a new tool that will enable lenders to easily provide their prospective applicants with a clear, easily-digestible view of their loan options, based on the lender’s actual product and pricing system. The company will be offering live demonstrations of Decision Builder for the first time at the upcoming MBA Annual Convention.
The Decision Builder tool can be placed on a lender’s existing website, and features a handful of dropdown questions, such as the desired loan amount, the expected down payment, and the ZIP code of the house to be purchased. With that information, Decision Builder will generate a series of loan options based on the lender’s product and pricing system, showing the consumer what products and rates they would qualify for. Each option is presented in a visual, easy-to-understand interface with clear explanation of the benefit of the loan product – for example, a lower monthly payment or low total interest. From there, the consumer can more easily evaluate which loan product is right for them.
With accurate, realistic loan information from the lender’s website, the consumer can carefully consider their options on their own time, without the pressure of having to decide within the limited window of an appointment with a loan officer. When they’ve made a decision, the interface includes a convenient option to move forward on their chosen loan with the click of a button.
How consumer banking leaders are embracing AI (American Banker), Rated: A
Artificial intelligence is becoming a competitive advantage that will force institutions to incorporate it, according to participants at the BankAI conference this week.
“People will have to adopt artificial intelligence,” said Brian Pearce, senior vice president of artificial intelligence at Wells Fargo. “It will have to become part of everyone’s set of tools.”
What banks are doing
Wells Fargo is piloting several chatbot technologies, though it has yet to suggest a launch date for any of them.
The bank has a team dedicated to bereavement — they take these phone calls and help executors manage the estates of the newly deceased.
Bank of America
Michelle Moore, head of digital banking at Bank of America, shared an update on the virtual assistant it announced a year ago, erica. It’s now in use by 300 employees. Sixty percent of the time, employees choose to interact with erica by voice, though they could also use chat, Moore said.
Ally Bank
Ally Bank was one of the first to launch an AI-based virtual assistant two years ago: Ally Assist, which is based on technology from Personetics.
Most people who commonly interact with Ally Assist are heavier transaction customers, Morais said.
The bank is also using AI in the back office. For instance, the bank used robotic process automation to streamline an exception process that had required back-office staff to navigate multiple screens and type hundreds of keystrokes. It now takes three clicks.
BBVA
Robert Sears, executive vice president and global head of product for new digital businesses at BBVA, said the bank is applying AI in credit decisions and focusing on explainability.
The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A
For those studying abroad, organizations like Prodigy Finance—a borderless, peer-to-peer lending platform—provide international, post-graduate loans.
Student Loan Hero looked at 116 of the top American business schools to identify which programs are most financially affordable, taking into account the average debt of graduates, average starting salaries, and annual tuition fees.
Rank | Business School | Average Indebtedness | Percentage of graduates with debt | Annual tuition and fees | Average starting compensation |
---|---|---|---|---|---|
1 | Lehigh University | $0 | 0 | $19,350 | $86,667 |
2 | Oklahoma City University | $11,331 | 9 | $16,230 | $101,090 |
3 | University of Texas — Dallas | $7,132 | 25 | $19,048 | $83,000 |
4 | Missouri University of Science and Technology | $11,386 | 19 | $15,402 | $66,667 |
5 | Oklahoma State University (Spears) | $18,728 | 22 | $12,121 | $70,700 |
6 | University of Missouri (Trulaske) | $20,495 | 20 | $14,599 | $64,252 |
7 | Florida State University | $14,379 | 31 | $18,693 | $67,308 |
8 | West Virginia University | $18,608 | 33 | $9,450 | $58,488 |
9 | Louisiana State University—Baton Rouge (Ourso) | $17,900 | 27 | $17,800 | $62,429 |
10 | West Texas A&M | $18,500 | 54 | $9,600 | $93,625 |
Got a Business Loan? 4 Great Ways to Use It for Growth (Business News Daily), Rated: A
Jay DesMarteau, head of commercial bank specialty segments at TD Bank, said early-stage businesses will often use their funds for operational necessities such as buying inventory and building products.
Isaac Rodriguez, CEO of Provident Loan Society, notes that as a not-for-profit collateral lender, most of his organization’s loans are made for short-term expenses such as meeting payroll.
David Reiling, CEO of Minnesota-based Sunrise Banks, confirmed this trend, noting that many of the bank’s small business customers now use their borrowed capital for technology purchases.
For example, according to a recent survey from TD Bank, 69 percent of small business owners either believe they do not have a business credit score or believe that business credit scores do not exist.
Of course, an alternative lender may be a better option if you want an even smaller loan or if you don’t qualify for a traditional bank loan.
Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A
Student loan marketplace and refinancing website LendEDU polled 1,000 Americans to discover their personal finance preferences when it comes to dating.
The big question, though, was this one: “Would you consider [annual income, student loan debt, or credit card debt] to be a critical factor when deciding to date someone?”
Just over 30% of respondents said that credit card debt was a critical factor in deciding whom to date, compared with just less than 19% who saw annual income as a critical factor and 12% who saw student loan debt as critical.
OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B
Acting Comptroller of the Currency Keith Noreika today reiterated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks, while emphasizing that a path should exist for these companies to apply for a national bank charter.
Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B
So, in case you want to make sure you aren’t doing anything that might send up red flags, here are some things buyers do that scare off sellers.
For instance, a new, fly-by-night online lender might give some sellers the heebie-jeebies. So make sure to ask your agent (and also the seller’s agent) whether there’s a certain lender they trust.
Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B
Online lender OppLoans announced on Thursday it has appointed Andy Pruitt to the role of CTO. Pruitt is a hands-on technologist who has helped start and grow three Chicago-area software companies. He isfounder of Data Anywhere, a data management company.
State rolls out refund program, checks on the way (KFOR), Rated: B
CashCall refunds are still on the way.
By the time Wanda took action she had already paid online lender, CashCall, $1800 dollars on an $800 dollar loan and she didn’t even get her loan through CashCall.
The agreement gives the state one million dollars to distribute to customers.
United Kingdom
Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA
LENDY has announced that it has returned £100m to investors over the last year alone, as it celebrates its fifth birthday this week.
The peer-to-peer property platform said on Thursday that this was a 120 per cent year-on-year increase and that it has now repaid £183m to investors since launch.
Lendy recently announced the repayment of a £7.92m loan, one of the largest seen in the UK’s P2P sector to date. The facility had been repaid ahead of schedule and delivered annual returns of 12 per cent to investors.
First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A
First Associates Loan Servicing announced that they have received Financial Conduct Authority authorization to undertake debt administration and debt collection in the United Kingdom.
In addition to having a stellar reputation for their loan servicing support and being the only loan servicer in their class to earn Morningstar Credit Ratings’ highest operational assessment ranking1, First Associates also offers lending support solutions to their roster of industry-lending clients including:
- Capital Markets Support
- Pre-Funding Support
- Post-Funding Support
IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A
2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.
Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.
Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.
Othera announces new contract with U.K.’s Lendhaus (LendIt), Rated: A
Announced at Lendit in London, Othera, a blockchain software provider for the financial services industry has just signed to their proprietary blockchain platform, Lendhaus, a London- based loan originator providing syndicated lending for the commercial real estate sector.
HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A
HSBC UK has announced a partnership with Bud through first direct to offer an integrated offering of financial services products and tools across the market.
This first direct trial kicks off in December and it includes proprietary algorithms – Market+ – to suggest the most suitable financial and non-financial products and services based on individual needs.
Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A
More than £825million has been pumped into the UK fintech since January – double the amount raised in the same period in 2016 – proving the vote to leave the European Union (EU) has not turned investors off Britain.
In fact, since the EU referendum vote, UK fintech companies have raised more than £1billion, according to research by London & Partners.
The capital has been the major winner from investment, receiving around 90 per cent of all venture capital investment.
London-based firms Funding Circle, Revolut and Receipt Bank each raised tens of millions of pounds of investment this year.
3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B
There are several online lenders available to offer you loans; they use your social media data to take a decision. Kabbage is the most popular loan landers working online. Kabbage offers the loan to the small businesses and keeps the cash flow in the different businesses. Before giving you the loan, they will ask you to get the access to your social media accounts.
Mark Arnold – a branding expert advises the credit unions and banks check a business credibility and see how effectively they are grabbing the market through social media. These businesses primarily look at different business especially at LinkedIn pages to determine the loan eligibility.
Use some crowdfunding websites to raise money for your business-like GoFundMe, Kickstarter, and Indiegogo.Share links to your crowdfunding webpages on your social networks on Twitter and Facebook and motivate people to share on their social networks.
China
Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA
Qudian, one of China’s largest online lenders, had a debut to remember on the New York Stock Exchange this week. Its shares closed up 22 per cent, making a multi-millionaire of founder and chief executive Min Luo.
The company, which raised $900m in the share sale, is the latest to underline investors’ appetite for the collision of lending and technology that has given rise to the Chinese fintech sector. Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to raise $350m in New York, and at least a dozen similar issuers are preparing flotations.
About 40 per cent of consumers in China make payments online, and 14 per cent have gone on the web to borrow money, according to DBS.
Qudian’s IPO — the fourth-biggest in the US this year — comes on the heels of Chinese online insurer ZhongAn’s hotly received $1.5bn IPO last month in Hong Kong. ZhongAn’s stock is up 34 per cent from its debut.
Wary of online lending, regulators have strictly limited online financial products such as high interest “payday loans” and microloans by capping interest rates at 36 per cent. Last May, new restrictions wiped out scores of P2P lending networks in China, after worries that it was fuelling real estate speculation and subprime lending.
A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA
In the past two months at least seven online lenders backed by SOEs have collapsed. It was a business none should have been in, far removed from the industries they were supposed to focus on. The money potentially lost is trivial—roughly 1bn yuan ($150m), compared with government assets worth more than 100trn yuan. Still, these cases highlight how hard it is for the party to stamp its authority on the vast state sector.
The troubled SOEs include distant subsidiaries of the national nuclear company, an aviation company and a big energy company in Shanxi, a northern province. They had acquired stakes, from as little as 20% up to 100%, in online peer-to-peer (P2P) lending platforms.
They were “marriages of convenience”, says Joe Zhang, chairman of China Smartpay, a financial-services company.
Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A
China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.
And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.
That 15 trillion yuan figure was calculated by Forward Business, a Shenzhen-based consultancy focusing on studies of IT and other emerging industries, which also suggests mainland banks granted a combined 12.65 trillion yuan in new loans to the budding sector.
But the grim reality remains, that the larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk.
Established in 2013, Tiandihui is an online platform where cargo and trucks are matched.
It s network stretches across 50 mainland cities and it handled some 64 billion yuan worth of transactions last year. The company, which charges fees for its matchmaking, has yet to break even.
European Union
Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA
Israeli fintech startup PayKey has raised $10 million in its Series B round led by MizMaa with participation from SBI Group, Digital Ventures, SixThirty, Fintech71, and The FinLab.
The new funds will be invested in global expansion, namely in the Asian market. Several of the investors in this round are Asian based while the startup graduated from the Singaporean FinLab accelerator.
Mind the GAP in the Lending GAP (AltFi), Rated: AAA
The Lending Gap has been one of the most quoted negative consequences of the financial crisis. Many political efforts have been conducted to stimulate the economy. New business models (e.g., private debt, direct lending, alternative finance, peer to peer) were born with the explicit aim and mission to “fill the gap”.
Where are we today, 10 years after the crisis? Are borrowers still suffering? What investment opportunities are out there, if any?
- FACT #1. The lending gap has been reduced, and the drivers have changed.
- FACT #2. New alternative lending opportunities have opened up.
- FACT #3. Banks are in better shape today, but exposed to the digital revolution and various structural challenges.
- FACT #4. Credit expansion has resumed since YE 2014.
P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A
THE MOVE towards auto-lending among some peer-to-peer platforms may limit interest rates and be a stumbling block for investors worried about the type of businesses they lend to, a European automated P2P firm has said.
Despite being automated itself, Latvia-based Robo.cash has claimed lenders may be missing out on higher interest rates with a passive investment strategy.
As an example, Funding Circle recently moved from manual to auto-lending,now offering a conservation option at 4.8 per cent or a balanced approach at 7.5 per cent.
Australia/New Zealand
Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA
Online retail marketplace MyDeal.com.au has launched business loan offering MyDeal Marketplace Loans to accelerate the growth of their listed retailers.
Retailers who list their products through the MyDeal Marketplace can now apply for a business loan of up to $250,000 directly through their supplier management system and in many cases receive the funding in under 24 hours.
This offering is in partnership with fintech business Prospa, Australia’s leading online lender for small business.
Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A
“We’ve long seen the potential for technology to deliver better personalised financial advice to Kiwis,” said Ramesh Naran, Senior Manager, Digital and Innovation at Kiwi Wealth. “With this decision by the FMA, we can go through the application process and turn Future You into the powerful, personalised tool we’ve always wanted it to be. It’s already on its way to becoming the platform that’ll set the industry standard.”
Mr Naran said the FMA’s approach recognises the ability of technology to improve financial understanding and outcomes for New Zealanders.
India
What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A
In a much-awaited move, RBI issued guidelines to govern peer-to-peer lending or P2P. This is a landmark decision that will go the distance in achieving the objective of financial inclusion.
For the time being, RBI has advised NBFC P2Ps not to offer or arrange any credit enhancement or credit guarantee. Against this backdrop, the principal protection fund, which has been an exclusive offering of i2iFunding so far, may need some tweaking. At present, we are neither guaranteeing any compensation from the third-party nor are we making a claim of apportioning our capital for the purpose. Therefore, we will approach the regulator to get more clarity on this and would do our best in the interest of members of the platform. Existing investors need not hit the panic button.
Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B
More than 24,000 branches and 42 crore customers make the State Bank of IndiaBSE 0.00 % the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.
“Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“
Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled.
Asia
Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA
Founded and developed in Kazakhstan, the biggest economy of Central Asia, FinTech startup Lendex has announced plans for ICO crowdsale to finance the launch of a cross-border P2P (peer-to-peer) lending platform for underbanked consumers in Central and South East Asia.
MENA
Transitioning to a digital future in the Middle East (TXF News), Rated: AAA
Global fintech investment has risen phenomenally in recent years – from $3 billion in 2013 to $24.7 billion in 2016.
Although less than 0.1% of fintech investment originates in the Middle East, growing influence from a soaring millennial population, and increasing expectations for digital solutions, are giving rise to a burgeoning number of fintech initiatives throughout the region. In fact, the number of fintech companies in the Middle East and North Africa (MENA) region is expected to surge – from 105 at the start of 2016 to 250 by 2020. And fintech investment is predicted to grow by 270% in the Middle East this year, indicating the huge potential for digital change –and a strengthening drive to deliver it.
Payments
The majority of fintech innovation so far has been in the payments sector. Although fintech has already made a mark in the retail payments space – with new companies such as the UAE’s Beehive, an online marketplace for peer to peer lending, and Telr, an online payment gateway for emerging markets – effecting change in the corporate sector is more challenging. This is primarily due to the often more complex, cross-border nature of corporate payments and the accompanying regulations and security requirements.
SWIFT gpi already has the backing of over 110 banks across the globe – including BNY Mellon – which represents over 75% of SWIFT’s global payments traffic. The UAE’s Mashreq Bank was the first Middle Eastern bank to join SWIFT gpi earlier this year.
Trade finance and fintech development
AI, for instance, offers solutions to improve documentation flow and cut the need for time consuming processes. Two types of AI that could benefit trade finance are optimal character recognition (OCR) and intelligent character recognition (ICR). OCR converts images of paper documents into machine-encoded text, enabling documents used in trade transactions to be verified automatically; while ICR is able to learn and identify patterns of behaviour embedded in trade documentation. These capabilities would both help to improve efficiency and reduce costs in the supply chain.
Canada
When Kickstarter isn’t enough (The Globe and Mail), Rated: A
They launched their Toronto-based venture, MagneTree Books, in the spring of 2015 with the help of a Kickstarter campaign for presales of their inaugural book.
Neither Josie, who was at the end of a maternity leave, nor Ronny, who worked for a humanitarian aid organization, had much savings to fund their startup or the first run of books, which together rang in at more than $65,000. A bank loan wasn’t an option; neither entrepreneur was in a position to cover the debt if something went awry.
Online sales have been slow – just 15 per cent of their books are sold on the web. But corporate gifting and wholesaling has proven fertile. Still, the company has yet to break even. Profit on a run of books rings up at about $7,000.
But they have a big problem: no cash to fund the second book’s production and marketing. Neither sibling is able to personally lend the company money, and they have begun crowdfunding once more.
Expert advice
Mr. Zakharia notes that the amount of money the siblings need to fund their second book is relatively small at between $7,000 and $10,000. Still, their inability to make a personal loan or secure a bank loan will make them unattractive to traditional lenders. “Banks are going to be very conservative,” Mr. Zakharia said.
One option the pair might consider is Lending Loop, a peer-to-peer lending marketplace that might be their fastest route to raising cash. “Because it’s such a small amount, I think it would be pretty easy to raise,” he said.
Authors:
Why Online Lenders Need Strong Legal Counsel
Non-bank financial services are being scrutinized similar to banks. This highlights the fact that the Consumer Financial Protection Bureau (CFPB) plans to hold online lenders to the same legal standards as other financial institutions involved in lending. The bureau gets a lot of information from lending companies themselves. It has executed “Project Catalyst,” which aims […]
Non-bank financial services are being scrutinized similar to banks. This highlights the fact that the Consumer Financial Protection Bureau (CFPB) plans to hold online lenders to the same legal standards as other financial institutions involved in lending. The bureau gets a lot of information from lending companies themselves. It has executed “Project Catalyst,” which aims to help innovative consumer financial products meet regulatory requirements. The bureau also started the “no-action letter” initiative, which allows companies to seek pre-approval for product testing.
The CFPB recently fined LendUp a record $1.8 million for violating multiple provisions of the Consumer Financial Protection Act. Having the right law firm from the beginning is not only essential, but it’s a survival tool for lending startups struggling with complex legal issues with multi-state permissions, aggressive advertising, data security, and other issues that could get a lender caught in the crosshairs of regulation.
Venable LLP is a leader in compliance and regulatory litigation and does a lot of work in areas dealing with CFPB, enforcement, and investigations. A well-respected law firm ranked 66 on AmLaw’s top 100, the firm has close to 600 attorneys in multiple countries. Alexandra Megaris, an attorney at the firm, explained to Lending-Times the complicated scenario facing young startups. She advises companies on regulatory investigations and government enforcement matters with a focus on consumer protection, consumer finance, and advertising issues. She works with banks and non-banks to prepare for and navigate supervision examinations by the CFPB and other regulators, including advising companies on building and enhancing compliance management systems.
A Look at CFPB Case Studies
Megaris said the CFPB’s focus is on enforcement. Legal actions lead to big headlines, so attention is skewed towards enforcement. She believes that, though examination and supervision get less attention, they have the biggest impact on the FinTech ecosystem.
Though the CFPB has initiated many feel-good proposals, it has not been extremely amicable to the sector like other regulators. Many enforcement matters start out as examinations. Unlike investigations, examinations expect an “open kimono” policy. That is, they can access everything (even privileged documents). She also believes the CFPB has taken a lead over the FTC in becoming the most active regulatory agency in the FinTech lending segment.
LendUp was required to pay a restitution of $1.8 million to borrowers and another $1.8 million as a penalty. The CFPB found that LendUp misled consumers through false advertisements and other means with regard to the true cost of lending, shifting performers to lower APR loans and failing to report credit information to the bureaus. She also said this ruling puts the onus of responsibility on advertisers and marketers. Usually, the courts have held that affiliate messaging is the responsibility of the company. Now, the lead generator might also be obligated to make sure that information is being utilized by the end lender.
T3Leads and Lead Publisher is a case where the CFPB sought monetary relief, including disgorging the founder of Lead Publisher of his profits and banning him from the financial products and consumer leads industries. CFPB Director Richard Cordray issued a statement that said, “This is a reminder to the middlemen who traffic in personal information: If you ignore warning signs that those buying this data are violating the law, you risk the consequences for the harm you are doing to people.”
These cases show that CFPB is not going soft on Silicon Valley for any abuse of consumer rights. The entire FinTech industry will need to ensure it is compliant with the relevant laws, and that every vendor is responsible for how the information is utilized by the down chain.
Online Lenders Can No Longer Operate Without Sound Legal Advice
The True Lender Doctrine is another potential minefield for lenders. In the case of Cashcall, CFPB argued the company was the actual “true lender” and implied that its operations were unauthorized. Furthermore, the CFPB said, any legal structuring was deceptive and improper. The case hinged on the fact that, though payday loans were originated by tribal entity Western Sky Financial, the de-facto lender was Cashcall because the tribal entity had no monetary interest in the loans. Cashcall wanted to shield itself from state usury laws by processing transactions through an exempt tribal entity. Megaris has seen multiple litigations on the True Lender Doctrine and is not surprised to see that courts have ruled differently on similar sets of facts. This creates huge uncertainty for companies on whether their day-to-day operations are legal or not.
All this indicates that FinTechs are currently operating in a legal gray zone. It is essential to have compliance experts on board from the beginning. This will ensure that all products created are vetted by a professional well versed in what is allowed under the relevant laws. Advertising, affiliate network and purchase, and sale of users’ personal data are other corporate actions which need to go through an attorney to make sure the company is not participating in anything prohibited. Startups won’t be able to defend themselves by saying they could not afford such services or that the infractions took place when they were only a five-person team. LendUp got to know that the hard way. Other lenders are advised to learn from LendUp and firm up the legal side of the lending business.
Authors:
Written with Heena Dhir.
Monday September 5th 2016, Daily News Digest
News Comments Dear readers, I am in Shenzhen and Tokyo this week. Due to the time difference, we will likely send Lending Times around 9am , Chinese time. We will revert to the normal 1pm New York time next week. Today’s news in focus : summary judgment on CFPB vs Cash Call and its consequences; […]
News Comments
- Dear readers,
- I am in Shenzhen and Tokyo this week. Due to the time difference, we will likely send Lending Times around 9am , Chinese time. We will revert to the normal 1pm New York time next week.
- Today’s news in focus : summary judgment on CFPB vs Cash Call and its consequences; and an article with insights in lender-bank alliances.
United States
- A summary judgment in CFPB vs Cash Call is an interesting milestone in the True Lender debate. 1 article that is mostly directed at attorneys has all the case details. A second article which is directed to the general public includes a quote from an ex-CFPB attorney who speculates that following this discussion the CFPB will mostly focus on the lender of records ( Indian reservation-based structures, other structures…) than on the marketplace lenders themselves. Time will tell.
- We now have more details on the previously announced RiverNorth Marketplace Lending Fund.
- Moody’s MD discusses present and future of marketplace lending. A very re-assuring discussion.
- And a very interesting article getting more into the details of the existing bank-lender partnerships and future directions. A must read for lending and bank executives.
United Kingdom
- The point of view of an advisor on p2p lending: buy the stock and not the loans. As this goes completely against the majority’s thought it may be worth thinking about it. Perhaps the trend, now that the stocks have established a floor, has changed ?
- Further context and details around Zopa’s rate cut.
Australia
India
- A strange article which at 1st recommends no regulation and then points out a reasonable regulation. I believe the title should be instead: ” A proposal on how online lending should be regulated”. It is Lending Times’ view that anytime somebody touches somebody else’s money the temptation is too big and regulation is required.
News Summary
- News Comments
- United States
- CFPB Scores Big Win in CashCall Lawsuit That Turns on “True Lender” Analysis, (Lexology), Rated: AAA
- Online Lenders Face Higher Litigation Risk After U.S. Court Ruling, (Nasdaq), Rated: AAA
- RiverNorth Marketplace Lending Fund Nears Launch, (Crowdfund Insider), Rated: AAA
- How does Moody’s respond to questions about whether online lending is a bubble?, (Alt Fi), Rated: AAA
- Bank collaboration with P2P platforms rising, (Euromoney), Rated: AAA
- United Kingdom
- Adviser shuns P2P to back sector’s selling platforms, (FT Adviser), Rated: A
- P2P giant Zopa to cut rates, (FT Adviser), Rated: A
- Australia
- Innovation and fintech are the focus of ASIC’s Corporate Plan, (Finder), Rated: A
- India
- Why online lending should not be regulated,(DailyO), Rated: A
United States
CFPB Scores Big Win in CashCall Lawsuit That Turns on “True Lender” Analysis, (Lexology), Rated: AAA
The court first ruled that CashCall was the true lender on the loans that were issued by Western Sky Financial because “the entire monetary burden and risk of the loan program was placed on CashCall, such that CashCall, and not Western Sky, had the predominant economic interest.”
Having reached this conclusion, the court then determined that because CashCall was the “true lender,” the choice of law provision in the loan agreements at issue—which provided that the laws of the Cheyenne River Sioux Tribe (CRST) would apply—should be disregarded in favor of the laws of the borrowers’ home states.
Finally, the court held that CashCall’s founder, sole owner, and president was also liable for CashCall’s corporate violations because he participated in and had the authority to control the conduct at issue, and because he knew of or was recklessly indifferent to the misrepresentations.
A federal district court in California handed the Consumer Financial Protection Bureau (CFPB) a big win on Wednesday, August 31, 2016, granting the agency summary judgment on liability in its lawsuit against CashCall, Inc., its affiliated entities, and its owner.
In a 16-page decision and order, the US District Court for the Central District of California ruled that CashCall engaged in deceptive practices by servicing and collecting on loans in certain states where the interest rate on the loans exceeded the state usury limit and/or where CashCall was not a licensed lender.
The decision represents an additional judicial touchpoint on the important question of who is a “true lender” in a transaction and validates, at least for now, the CFPB’s theory that collecting on loans that state law renders void and/or uncollectable constitutes a violation of federal law.
The court’s decision is important both to CFPB enforcement efforts and to the validity of bank partner programs. The CFPB has at least one other pending lawsuit in which it has asserted a similar theory of liability that collecting on loans rendered void by state law constitutes unfair, deceptive and abusive conduct (UDAAP). Moreover, the CFPB may be emboldened by this decision to identify additional ways to “federalize” state law violations under its expansive UDAAP authority.
With respect to the “true lender” question, the decision is inconsistent with standards adopted by other courts. Some courts have determined the “true lender” based solely on the creditor named in the loan agreement. Other courts have determined the true lender through a narrow evaluation of facts regarding which party engages in the three non-ministerial acts that banking regulators have identified: (i) the determination to extend credit; (ii) the extension of credit itself; and (iii) the disbursement of funds resulting from the extension of credit.
Online Lenders Face Higher Litigation Risk After U.S. Court Ruling, (Nasdaq), Rated: AAA
Former CFPB lawyers said the CashCall decision is more likely to spur further CFPB actions against tribal lenders that use such exemptions to make loans online that don’t mesh with certain state laws. The agency has been careful not to take a public stance seen as too aggressive with marketplace lenders as it is a fairly new industry and regulators are wary of killing innovation through new rules.
The agency has been careful not to take a public stance seen as too aggressive with marketplace lenders as it is a fairly new industry and regulators are wary of killing innovation through new rules.
“I don’t think this means the CFPB will target marketplace lenders,” said James Kim, a former senior enforcement attorney at the CFPB who is now at Ballard Spahr LLP. “Having said that, it’s still dangerous for marketplace lending because state authorities and plaintiffs’ lawyers will use this case against them.”
RiverNorth Marketplace Lending Fund Nears Launch, (Crowdfund Insider), Rated: AAA
Chicago-based RiverNorth Marketplace Lending Corporation is poised to launch a fund that will be investing in marketplace lending assets under the 40s Act as a non-listed closed end fund. A substantial portion of the fund is expected to be investing in whole loans. The filing indicates that a substantial portion of the marketplace loans will originate on LendingClub and Prosper – at least initially.
The investment objective of the fund is to seek a high level of current income with at least 80% of its managed assets being in marketplace lending investments. The new investment vehicle expects to invest up to $1 billion in loans from these online lenders. The minimum initial investment in shares will be $1,000,000, with a minimum subsequent investment of $5,000. The fund will use leverage to help boost returns and overall leverage is predicted to be approximately 10% of the fund’s net assets at launch. RiverNorth will extend quarterly repurchase offers from 5% to 25%.
You can read the entire filing here.
How does Moody’s respond to questions about whether online lending is a bubble?, (Alt Fi), Rated: AAA
Moody’s published a report on the potential benefits and pitfalls of partnerships between banks and marketplace lenders on Wednesday. The report states that customer acquisition costs amount to around 25 per cent of revenues for some platforms, but that bank partnerships can lower these costs by “rebalancing the channel mix”.
Of course, the elephant in the room is the fact that some banks are now beginning to build their own indigenous funding solutions. The Moody’s report makes mention of Wells Fargo’s FastFlexFM.
Moody’s Jim Ahern regularly reminds inquisitors that the estimated size of the collective pool of marketplace loans in the US is a mere $70-80bn. A drop in the ocean when compared to the scale of the subprime mortgage bubble.
The benefits of securitisation in fintech include lowering funding costs and channeling finance through to the real economy.
Ahern also stressed that securitisation brings an extra layer of scrutiny to bear upon marketplace loan portfolios. Whenever Moody’s rates a bond, the underlying loans are subjected to a rigorous third party analysis.
Bank collaboration with P2P platforms rising, (Euromoney), Rated: AAA
SMEs will often try banks first to get better rates, which can be around 4%. This is in comparison with interest rates at Funding Circle, which typically start from 6%, and increase depending on the assessment of the individual customer.
One bank that has already taken the move is Santander. It has been working with Funding Circle for two years. The bank’s focus is on providing better-quality customer service by referring customers to the platform if the bank itself cannot provide financing. Following its success, Funding Circle signed a similar agreement with RBS at the beginning of the year.
In the US, Lending Club already has agreements with Union Bank and Alliance Partners, which manages the BancAlliance consortium of small local banks.
Santander does not take any fees from the borrowing clients it refers, but not all banks will operate in this way. Misys’ Jollant says this potential to take a cut will make collaboration even more appealing, adding: “The bank is earning through two points – taking an origination fee that can be around 3% to 6% and a second 1% fee for payments processing and servicing the account. There is certainly money to be made through P2P for the banks.”
Banks will no doubt be delighted if they can make this money while dumping the actual credit risk on investors coming through the P2P platforms, so avoiding capital charges.
The next stage might be the potential opening up of a mandatory referral process. The UK government has assessed the possibility of SMEs being referred on to alternative lenders if their banks are unable to provide funds. These borrowers’ information will be passed on to a referral pool at the British Business Bank, which P2P platforms can access.
United Kingdom
Adviser shuns P2P to back sector’s selling platforms, (FT Adviser), Rated: A
Philip Milton, of Devon-based Philip J Milton & Co, said he invested up to £1m from one of his company’s strategies into P2P Global, buying when the shares were worth £10.30 and selling when they were worth £11.93.
He has since been facing questions from his clients about whether they should put their money into a P2P platform.
P2P giant Zopa to cut rates, (FT Adviser), Rated: A
Comments: We covered these news for our readers on Friday. We found some additional important info to share regarding these news.
In a blog posted on the company’s website, it said all of its lender rates will decrease by 0.2 per cent from the 8 September.
Andrew Lawson, chief product officer at Zopa, said headline rates from other loan providers have fallen between 0.1 and 0.3 per cent since the interest rate cut.
He also pointed out that banks have already reduced their rates dramatically, in many cases by more than 0.25 per cent.
“This lack of competitiveness for investors from the banks has led to a surge in new lenders at Zopa, meaning slower lending speeds and queues of, on average, 10 days for our Classic account.
“The reality is no bank, deposit-taker or lender, is completely disconnected from the bank rate.
Australia
Innovation and fintech are the focus of ASIC’s Corporate Plan, (Finder), Rated: A
The Australian Securities and Investments Commission’s (ASIC) new corporate plan renews its focus on fintech by outlining how it will mitigate the risks of digital disruption. The plan comes after ASIC’s budget was extended by $127.2 million in April.
The plan identified five key challenges to ASIC’s long-term vision, two of which related to fintech, as well as the key risks it will focus on in 2016-17 – 2018/19.
- Following in the same line as its guidance for marketplace lending, ASIC plans to progress FSI initiative on non-cash payments as well as working with the Treasury on the ePayments code.
India
Why online lending should not be regulated,(DailyO), Rated: A
Comment: a strange article which at 1st recommends no regulation and then points out a reasonable regulation. I believe the title should be instead: ” A proposal on how online lending should be regulated”. It is Lending Times’ view that anytime somebody touches somebody else’s money the temptation is too big and regulation is required.
In markets in early stages of their development, regulation is a burden for both the emerging sector and the regulator alike.
Whether the lending marketplace system in India would want to emulate the Chinese diffusion model or carve out its own unique model of growth and viability is anyone’s guess. But regulation will play a big part on how this pans out in India.
Markets, if left alone, are self-correcting in nature.
As P2P does not carry liabilities on its books and no conventional balance sheet risks as such (P2P platforms source their income predominantly from arrangement fees from both sides), these platforms, asset-light in essence, become “non-banking, non-financial companies”. Therefore,
1. The proper regulatory authority for “non-banking, non-financial companies’ is the ministry of corporate affairs. However, these companies should register with the Reserve Bank of India (RBI) so that at any point the central bank can track the growth of this sector and make mid-course corrections for systemic risks.
2. Whilst they register with the relevant regulator, they must remain a self-regulating mechanism, which is a self-regulating organization (SRO), as in microfinance and pre-paid wallet sectors. This mechanism supports and supplements regulatory bodies and reduces their burden of supervision.
3. Business rules should be not attempted to be granularly defined or cast in stone in early stages.
Here are a few ways in which to go about it:
a) Among proposed guidelines, P2P lenders are required to put investors’ money in nodal/escrow accounts in banks. Under such an arrangement, banks would have to disclose an array of data including the platform’s number of borrowers and lenders and its volume of bad loans. These can be done equally by an SRO and backstopped by credit rating agencies.
b) Subsequently, the SRO from day one (working closely with the relevant regulating body, and across) can also work out detailed guidelines on various industry safeguards like leverage, interest rate caps, lending/borrowing caps, borrowing processes, KYC, underwriting norms and soft and hard credit check.
c) Since the tech platform has no financial liabilities, exposures or provisioning requirements (it just connects lenders with borrowers), the equity of Rs 2 crore is high. Most companies are happily capitalized at tens of lakhs (pre-funding) with modest debt:equity ratio. Therefore, a proportional capital base dependent on the size of the portfolio may be better.
Author:
New Maryland Court Decision: Potential Impact on Consumer Marketplace Lenders
A recent decision of the Maryland Court of Appeals (the highest court in Maryland) could require marketplace lenders and others who arrange for federal or state banks to fund consumer loans to consumers residing in Maryland to obtain licenses as “credit services businesses” and, of perhaps greater importance, could prohibit them from arranging those loans […]
A recent decision of the Maryland Court of Appeals (the highest court in Maryland) could require marketplace lenders and others who arrange for federal or state banks to fund consumer loans to consumers residing in Maryland to obtain licenses as “credit services businesses” and, of perhaps greater importance, could prohibit them from arranging those loans at interest rates exceeding the applicable Maryland usury caps. The decision therefore could reduce the volume of loans which certain marketplace lenders and loan marketers will be permitted to arrange in Maryland.
The Maryland decision, CashCall, Inc. and J. Paul Reddam v. Maryland Commissioner of Financial Regulation (filed June 23, 2016), concerned sanctions imposed by the Maryland Commissioner of Financial Regulation (the “Commissioner”) on CashCall, Inc., a California-based payday lender (“CashCall”). CashCall maintained a website through which consumers could apply for loans. CashCall had entered into contractual arrangements with two federally-insured state banks (the “Funding Banks”) pursuant to which CashCall would forward each completed loan application to one of the Funding Banks for its review. If the Funding Bank approved a loan application, it would disburse the loan proceeds directly to the consumer, net of an origination fee, and then sell the loan to CashCall not later than the third day following the funding date. The Funding Bank also would pay CashCall in connection with each funded loan a “royalty fee” equal to a portion of the related origination fee. The interest rates on the loans substantially exceeded the rates generally allowed on consumer loans under Maryland law 1 . The Funding Banks had not violated Maryland law in extending the loans because, under federal law, federally insured depository institutions may charge the interest rates permitted by their home states on consumer loans regardless of the borrower’s actual location.
The Commissioner nonetheless found that in arranging the loans, CashCall had violated the Maryland Credit Services Business Act (the “Credit Services Act”) which, in relevant part, prohibits any person engaged in a “credit services business” from assisting consumers to obtain loans at interest rates which, except for federal preemption of state law, would be prohibited under Maryland law2. The Commissioner found that CashCall had arranged more than 5,000 loans in Maryland in violation of the Credit Services Act and imposed on CashCall a penalty of $1,000 per loan, resulting in a total civil penalty of $5,651,000.
CashCall argued on appeal that it was not engaged in a “credit services business” and therefore had not violated Maryland law3. The Credit Services Act defines a “credit services business” as one in which a person obtains or assists a consumer in obtaining an extension of credit “in return for the payment of money or other valuable consideration.” In an earlier decision the Court of Appeals had held that under the quoted language, a business is a “credit services business” only if the payment it receives for arranging an extension of credit comes “directly from the consumer.” Gomez v. Jackson Hewitt, Inc., 427 Md. 128, 154 (2012) (emphasis added). CashCall argued that as it did not receive any origination fees from the borrowers, but only royalty fees paid by the Funding Banks, it had not received any payments “directly from the consumer” and therefore was not subject to the Credit Services Act.
The Court rejected CashCall’s argument and upheld the sanctions imposed by the Commissioner. The Court held that CashCall was not entitled to rely upon Gomez, and clarified the scope of that decision by stating that the direct payment requirement only applies to companies that are primarily engaged in providing goods or services to consumers other than arranging extensions of credit and does not extend “to a company, like CashCall, which is exclusively engaged in assisting Maryland consumers to obtain small loans bearing [usurious] interest rates.”4 The Court further stated that the Maryland legislature had intended the Credit Services Act to prohibit payday lenders from partnering with non-Maryland banks to extend loans at rates exceeding the Maryland usury caps and that it would undercut the purpose of the legislation to limit its application to loan marketers who receive “direct payments” from the borrowers beyond the payments made on the loan.5 In fact, said the Court, CashCall’s activities were exactly what the Maryland legislature intended the Credit Services Act to prohibit.
The Court did acknowledge that the Credit Services Act only applies to loan marketers who provide their services “in return for the payment of money or other valuable consideration.” In this regard, the Court held that CashCall’s right to receive principal, interest and fees on the loans it purchased from the Funding Banks constituted adequate “consideration” for purposes of the statute. In fact, said the Court, the overall arrangements between CashCall and the Funding Banks (under which the latter retained no economic interest in the loans) appeared to constitute a “rent-a-bank scheme” that “rendered CashCall the de facto lender.” This latter statement is interesting to the extent it suggests that the Maryland courts may be willing, at least in some circumstances, to apply the “true lender” doctrine to loan marketers if the originating bank has no continuing economic interest in the loans.6
The Court’s decision potentially creates significant issues for marketplace lenders who partner with non-Maryland banks to offer consumer loans to Maryland consumers. First, the decision impacts licensing. The import of the decision is that a non-bank marketplace lender may need to have a credit services business license in order to market loans originated by a financial institution. The decision may also indicate that marketplace lenders need to adhere to the substantive provisions of the Credit Services Act, including the prohibition on soliciting Maryland residents for loans at interest rates exceeding the applicable usury caps permitted under Maryland law. It is true that the legislative history discussed by the Court indicates that the Maryland legislature principally intended the relevant provisions of the Credit Services Act to address abusive practices by payday lenders. Maryland regulators therefore may have less interest in applying the Act to marketplace lenders who arrange loans at much lower rates. A marketplace lender (other than a balance sheet lender) might also distinguish its practices from those of CashCall by noting that it typically will sell the loans it purchases from the originating banks to third-party investors and therefore will not receive ongoing payments on the loans for its own account. The statutory language, however, does not distinguish between payday and marketplace lenders and potentially exposes to civil and/or criminal penalties any marketer who arranges consumer loans (i) without being licensed as a “credit services business,” or (ii) at rates exceeding the usury caps.
The Court of Appeals did not hold that bank loans arranged by unlicensed credit services businesses or at interest rates exceeding the usury caps are unenforceable (either in whole or in part). In fact, the decision states that loans made by out‑of‑state banks at rates permissible for that bank are valid. The decision therefore does not appear to cast doubt on the ability of loan purchasers (including securitization trusts) to enforce any Maryland loans purchased by them. However, the decision has implications for entities marketing loans that are not licensed and/or who solicit loans for others in excess of Maryland permissible rates.
Authors:


About the authors:
Peter Manbeck is a partner in Chapman and Cutler’s New York office. Peter joined the firm in 2011. Peter represents issuers, sponsors, collateral managers, broker-dealers, swap providers, and other participants in asset-backed commercial paper programs and other structured transactions. He has considerable experience with trade receivable and securities portfolio financings and has worked on numerous corporate debt and equity financings. He also represents sponsors and investors in internet-based lending programs and has extensive experience in matters involving state securities laws and FINRA corporate financing rules.
Marc Franson is a partner in the Banking and Financial Services Department and Practice Group Leader of the Bank Corporate Group. He represents financial institutions, finance companies, retailers, other creditors and brokers on an array of financial services matters including regulatory applications, consumer credit transactions, deposit products, bank mergers and acquisitions, licensing, regulatory issues and compliance, sale of non-deposit products, technology contracting, payment processing, portfolio acquisitions/divestitures, fair lending and privacy matters, Internet banking, stored value products and marketplace (P2P) lending. He also represents clients in conjunction with legislative and trade association activities.
Notes :
- The maximum per annum interest rate permitted by Maryland law on consumer loans is 33% for loans of $2,000 or less and 24% for loans greater than $2,000. Md. Com. Law § 12-306(a)(6).
- Credit services businesses also must obtain licenses from the Maryland Department of Labor, Licensing and Regulation.
- CashCall originally filed its appeal of the Commissioner’s sanctions in the Circuit Court for Baltimore City. The Circuit Court agreed with CashCall and reversed the Commissioner’s order. The Commissioner then appealed the Circuit Court decision to the Maryland Court of Special Appeals, which reversed the Circuit Court and upheld the sanctions. Maryland Comm’r of Fin. Regulation v. CashCall, Inc., et al, 225 Md. App. 313, 124 A.3d 670 (2015). We discussed the Court of Special Appeals’ decision in our Client Alert dated November 9, 2015. http://www.chapman.com/insights-publications-Maryland_Court_Consumer_Marketplace_Lenders.html. The Court of Appeals subsequently agreed to hear CashCall’s appeal from the decision of the Court of Special Appeals, resulting in the decision discussed herein.
- The Gomez case involved a tax preparation firm that assisted interested clients in obtaining refund anticipation loans (“RALs”) by helping them to file RAL applications with a California bank. The clients did not pay the tax preparation firm any fees specifically related to the RALs, but the bank made certain fixed and variable payments to the firm for the client referrals. The Court of Appeals held that the Credit Services Act was intended by the Maryland legislature to address abuses by “credit repair agencies” and payday lenders and should not be extended to the tax preparation firm since it primarily was engaged in providing services to its clients unrelated to any extension of credit (i.e., the preparation of their tax returns) and the clients did not directly compensate it for helping to arrange the RALs.
- The Court nonetheless stated that if the direct payment requirement did apply to companies such as CashCall, the requirement had been satisfied because CashCall, as the purchaser of each funded loan from the Funding Banks, would receive payment from the consumer of the origination fee that is “rolled” into the principal amount of each loan together with the interest payments and (potentially) late fees due on the loan.
- Under the “true lender” doctrine, courts may examine the facts and circumstances surrounding loan marketing programs to determine whether, for regulatory purposes, the non-bank loan marketer rather than the bank which funds the loans should be treated as the actual lender. Among other matters, the court will consider the extent of the bank’s economic interest in the loans and its involvement in setting the underwriting criteria and vetting prospective borrowers. If the loan marketer, rather than the bank, is deemed to be the “true lender,” the marketer will not be entitled to rely upon federal preemption of state law to establish exemptions from state consumer lender licensing requirements or state usury limits. The “true lender” doctrine is discussed in greater detail in our Client Alert dated February 1, 2016. http://www.chapman.com/insights-publications-Federal_Court_True_Lender_Doctrine_Internet_Lender.html.