Thursday July 6 2019, Weekly News Digest

PayPal

News Comments Today’s main news: 3 top execs exit SoFi. Zopa proclaims end of monogamous banking. LendInvest earnings hit the roof. Financial Conduct Authority sets new rules for UK P2P lending. Quarter of global small firms are significant fintech users. Biz2Credit raises $52M. Today’s main analysis: Alternative lenders steal business from banks. P2P lending will be […]

The post Thursday July 6 2019, Weekly News Digest appeared first on Lending Times.

PayPal

News Comments

United States

United Kingdom

China/Hong Kong

International

Other

News Summary

United States

SoFi Loses Three Top Executives (WSJ), Rated: AAA

Three top executives of Social Finance Inc. are leaving the financial-tech startup in the coming weeks, adding to the challenges the company faces as it moves through a tough environment for online lenders.

Marketing chief Joanne Bradford, head of risk Kevin Moss and Ashish Jain, the lender’s top capital markets executive, recently told Chief Executive Anthony Noto about their plans to step down from their roles. All three had been at the company prior to Mr. Noto taking the reins in early 2018.

Tech Driving Bank Earnings Growth (PeerIQ), Rated: AAA

US first quarter GDP growth was revised lower to 3.1%. There is fear that the economy is slowing due to the ongoing trade war and the length of this economic expansion. The 3 month-10 year yield curve fell to its most inverted since 2007 to -12.3 bps. Recessions have usually followed within 18 months of this curve inverting. The market is looking to the Fed to bolster economic growth with the odds of a rate cut at the September meeting now at 54%.

Source: CME, PeerIQ

Technology Driving Earnings Growth

Banks and lenders are reaping the benefits of their technology investments now. Banks like Citi have been able to offer new products and grow their deposit base, while Capital One has improved its efficiency ratio by 400 bps. Banks and lenders continue to make large technology investments for faster growth at lower cost.

Alternative Lenders Continue to Steal Business From Banks (The Financial Brand), Rated: AAA

What is less well known is the rapid growth of PayPal as a digital lending alternative. It may be time for banks and credit unions to wake up, however, as the company announced that they had crossed $10 billion in small business lending in only 5 years.

Amazon Joins PayPal as Top 5 Small Business Digital Lender

Amazon has joined PayPal, OnDeck, Kabbage, and Square as a top 5 digital small business lender. In fact, Amazon revealed that it had made more than $1 billion in small business loans to US-based merchants in 2018.

The peer-to-peer business lender, Funding Circle, also revealed its first-quarter trading update, showing that loans under management rose by 44% compared to the first quarter of 2018, while originations grew by 23% (they have originated $9.5 billion in loans).

Consumer Financial Protection Bureau Releases Rules for Comprehensive Reform of Debt Collection Industry (Debevoise & Plimpton), Rated: AAA

On May 7, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) released a Notice of Proposed Rulemaking (“NPRM” or “Notice”) to increase regulation of the debt collection industry.1 The much-anticipated Notice is the outgrowth of the CFPB’s 2016 Outline of Proposals (the “Outline” or the “2016 Outline”), which was a cornerstone of the Obama Administration’s efforts to protect consumers and overhaul all aspects of consumer finance (see our August 10, 2016 client alert on the Outline here). One presidential election and two CFPB Directors later, CFPB Director Kathleen Kraninger announced a more limited plan to put in place substantial protections, but which rejects some of the 2016 Outline’s more ambitious proposals. The NPRM would overhaul the industry by, for example, requiring that debt collectors make no more than seven attempts by telephone per week to reach consumers about specific debts, and allow debtors to opt out of allowing collectors to contact them via e-mail, text messages, or other media. However, the proposal fails to address many of the Outline’s calls for increased regulation of substantiation of debt, decedent debt, and transfer of information to subsequent collectors (among other things).

See the full report here.

Biz2Credit Raises $ 52M In Funding To Expand (PYMNTS), Rated: AAA

Biz2Credit, the online lending platform that helps banks and other financial institutions manage small and medium-sized business (SMB) lending processes, announced Tuesday (June 4) that it raised $52 million in venture funding.

Biz2Credit said the Series B funding round was led by WestBridge Capital.

Jared Kaplan of OppLoans (Lend Academy), Rated: A

The next guest on the Lend Academy Podcast is Jared Kaplan, the CEO of OppLoans.

Lighter Capital Introduces Suite of Alternative Financing Solutions to Fund More Startups up to $ 3 Million (Yahoo! Finance), Rated: A

Lighter Capital announced today that it has launched new financing products to better match the capital needs of growing startups. To date, Lighter Capital has provided over $150 million in more than 500 rounds of financing to over 300 startups. The company has historically provided Revenue-Based Financing and has now broadened its portfolio to include lines of credit and term loans, designed to provide startups capital over time as they need it. Unlike most venture debt, startups do not need to have raised Venture Capital to qualify for funding.

1. Lighter Line of Credit – Startups have fluctuations in capital needs, to make essential payments like payroll or wait for a big customer payment. The Lighter Line of Credit is a revolving working capital line. It enables startups to draw and return capital numerous times, to even out their cash needs.

2. Lighter Term Loan – Provides startups growth capital in a traditional structure with predictable payments. Lighter Capital will also make forward commitments, giving startups the right to get additional capital for a period of time. For example, a startup could get a $500,000 loan today and a commitment from Lighter Capital to provide an additional $500,000 over the following six months.

LendPro Unveils Dynamic Routing Capability to Streamline POS Financing (LendPro Email), Rated: A

LendPro LLC, a provider of Lending-As-A-Service (LaaS) products and platforms for retailers, today unveiled Dynamic Routing —an innovative POS financing solution that automatically matches consumer credit applications with the best-available lending option.

While alternative lending software moves credit applications through a pre-defined, inflexible process, Dynamic Routing by LendPro dynamically guides borrower application data to lenders in the merchant’s financing portfolio based on the attributes of the sale. For example, if the total price for a specific purchase is too large (or small) for a lender’s target loan size, LendPro’s Dynamic Routing system can route the applicant to a different lender. This technological innovation saves time, increases simplicity, and may help the borrower avoid an unwanted credit application.

Why it’s Time to Ask Your Wealth Manager About P2P Lending (Crowdfund Insider), Rated: A

Using a crowdfunding platform, however, 5,000 individuals might each invest $1,000 into the company. Each of those individual investors is exposed to a very small amount of risk, and the company is able to raise the funds without surrendering ownership.

Possible Finance lands $ 10.5 million to provide consumers softer, kinder short-term loans (TechCrunch), Rated: A

It’s one reason that venture capitalist Rebecca Lynn, a managing partner with Canvas Ventures  and an early investor in the online lending company LendingClub, has largely steered clear of the numerous startups crowding into the industry in recent years. It’s also why she just led a $10.5 million investment in Possible Finance, a two-year-old, Seattle-based outfit that’s doing what she “thought was impossible,” she says. The startup is “helping people on the lower end of the credit spectrum improve their financial outlook without being predatory.”

Santa Clarita Ranked Second Highest ‘Debt-Ridden’ City In California (Home Town Station), Rated: A

LendingTree, an online loan marketplace, released a report this week detailing the accrued debt of all California cities with a population of at least 50,000.

Santa Clarita ranked the second highest in auto loan debt with an average of about $21,000, and second in the state for personal loan debt, excluding mortgages, with an average of just over $6,000.

Source: Home Town Station

Cities With the Highest Percentage of Black Homeowners (Black Enterprise), Rated: A

Even though housing discrimination has been outlawed for 50 years, studies show that the U.S. black homeownership rate isn’t any higher than when the Fair Housing Act initially passed in 1968. In fact, the racial gap between white and black homeowners today is significant. According to the U.S. Census Bureau, the homeownership rate among white Americans is 73.2%, while the black homeownership rate stands at 41.1%. In comparison, 42% of black households owned their homes back in 1970, two years after housing discrimination based on race, color, religion, and national origin was outlawed.

According to the report, the U.S. cities that have the highest percentage of black homeowners are San Jose, Los Angeles, Salt Lake City, San Antonio, and Portland. On the other hand, the cities where black homeownership is lowest relative to overall population are Memphis, New Orleans, Baltimore, Virginia Beach, and Milwaukee, where the median household income for black residents is a mere $28,928.

See LendingTree’s report here.

Real Crowd Says HNW Investors Poised to Boost Real Estate Investments in 2019 (Crowdfund Insider), Rated: A

Real estate crowdfunding platform RealCrowd reports that High Net Worth (HNW) investors are looking to increase their portfolio of real estate investments during 2019. According to a survey by the Fintech platform, 53% of surveyed HNW individuals expect to make “two-to-four direct real estate investments in 2019.” Specific details on the survey process were not revealed.

This is a big improvement over year prior when just 33% planned to do the same thus an increase of around 20%.

The survey also stated that 47% of respondents’ desire to allocate more than 25 percent of their investment portfolio to commercial real estate.

WealthStone – Democratizing Access to Commercial Real Estate (PR Newswire), Rated: A

WealthStone LLC announces the launch of its new website, WealthStoneLLC.com, where technology brings increased access to institutional-quality commercial real estate investments to a wider audience, while delivering the best customer experience possible for its growing global investor base.

3 Investments That Lead to Passive Income (Realty Biz News), Rated: B

Peer-to-peer lending is a relative newcomer to the world of investments. Lending Club and Prosper were the first institutions to offer P2P loans beginning in mid-2000, and they’ve changed the way countless loans are handled. Instead of going to the bank, borrowers apply for loans from other people. People who have been denied loans from financial institutions are often approved for P2P loans at rates that are lower than those of larger financial institutions.

Sagent Lending Technologies to Transform the Lending Experience, Powered by Microsoft Azure (BusinessWire), Rated: A

Sagent Lending Technologies announced today a strategic initiative to transform the borrower and the lender experience through Microsoft Azure. Sagent will leverage the potential of artificial intelligence, machine learning, data science, and cognitive services available on Azure that will provide a reimagined experience for Sagent clients and their consumer borrowers.

BofA, Longtime Leader in Leveraged Loans, Warns of `Carnage’ (Bloomberg), Rated: A

The U.S. economy is on solid footing except for one potential trouble spot, according to Bank of America Corp.’sChief Executive Officer Brian Moynihan: leveraged loans — a business the bank has dominated for a decade.

Bank of America was bookrunner on some $317 billion of leveraged loans this year, accounting for 10.8 percent of the market share, the Bloomberg data show, which captures all leveraged term loans and revolver facilities that are either new or have been amended.

Moody’s Investors Service said covenant quality for 2018’s last quarter was close to a record low, and the rating company sees no signs of improvement this year. Federal Reserve Chairman Jerome Powell said last month that the market looks a lot like the mortgage industry in the run-up to the subprime crisis.

Digital Banks Look to Attract Older Generations (LendIt), Rated: A

One of the challenges for the challenger banks like Monzo, Starling and Revolut is to go beyond the young demographic they’ve been successful at attracting to their products; not surprisingly, less than 5% of Monzo’s customers over 60; as more bank branch close they are looking to bring in older customers who are no longer being served by traditional banks; Monzo and Starling have both added the ability to make cash deposits; Starling recently partnered with the post office and Monzo partnered with a payments service which is in 30,000 shops in the UK; these digital banks and their competitors are experimenting in how they can have more physical points of contact with customers; Revolut recently shared a plain English customer contract in a move to help their customers better understand the product.

The tech banks are using to boost deposit growth (American Banker), Rated: A

First Arkansas & Trust, for example, is using Plinqit, a goal-oriented savings app from a fintech called HTMA Holdings, in the hopes of boosting deposits.

And some banks have begun to specialize in the banking-as-a-service model to increase deposits.

Following is a look at how regional and community banks are employing tech to help in the race for deposit growth:

Wharton just released an online fintech course for the masses (Technical.ly), Rated: A

On Thursday, the University of Pennsylvania’s Wharton Online announced its new virtual fintech specialization program, “FinTech: Foundations and Applications of Financial Technologies,” for students and professionals who want to learn about the rapidly changing tech.

The four-course financial program is available via online education platform Coursera, and will detail the use of cryptocurrency, robo-advising, crowdfunding and modern investing.

BlueVine Appoints Silicon Valley Veteran Herman Man to Chief Product Officer (BlueVine), Rated: B

BlueVine, which provides small- and medium-sized businesses with access to fast and simple online financing, announced today that it has named Silicon Valley technology and engineering veteran, Herman Man, its Chief Product Officer. In this role, Man will focus on developing the next generation of BlueVine products and oversee the company’s product vision, strategy, design and execution to deliver on its mission to provide fast, fair and easy financing solutions every small business needs to thrive.

Lendio Announces New Senior Vice President of Lender & Partner Strategy (Lendio), Rated: B

Lendio announced today that Denada Ramnishta has been promoted to Senior Vice President of Lender & Partner Strategy.

Thomas M. Affolter Joins White Oak as Managing Director to Bolster Origination Efforts (Yahoo! Finance), Rated: B

White Oak Global Advisors, LLC (White Oak) is pleased to announce that Thomas (Tom) M. Affolter has joined White Oak as a Managing Director based in Chicago. Mr. Affolter will focus on originating new investment opportunities and expanding the coverage network for White Oak’s private debt funds.

United Kingdom

Zopa says fintech revolution has killed off monogamous banking (P2P Finance News), Rated: AAA

ZOPA has declared that “monogamous banking is a thing of the past”, as new research reveals that the average UK adult has a relationship with seven different financial providers.

The peer-to-peer consumer lender, which is launching a digital bank, said that the fintech revolution has changed the shape of financial services for consumers.

It cited a survey that found 71 per cent of UK adults said they do not need a relationship with their main bank, while two thirds are actively using products from banks and financial providers other than their main current account provider.

LendInvest earnings soar as it looks to disrupt ‘slow moving’ banks (P2P Finance News), Rated: AAA

ONLINE property lender LendInvest has reported an 82 per cent jump in core earnings, as it looks to disrupt the UK mortgage market.

LendInvest, which used to be a peer-to-peer lender before it shut its platform to retail investors, posted core earnings of £4m for the year ended 31 March 2019, up from £2.2m the previous year.

The firm, which is considering a stock market flotation, said that platform assets rose by 69 per cent to £788.3m over the same period, while revenue rose by 36 per cent to £72.7m.

FCA Announces New Rules For UK P2P Lending Platforms (Lend Academy), Rated: AAA

The long awaited changes to P2P lending regulations in the UK are finally here. Today, the Financial Conduct Authority (FCA) announced that the new rules for peer to peer lending platforms have been set and will come into effect on December 9, 2019.

  • Introducing more explicit requirements to clarify what governance arrangements, systems and controls platforms need to have in place to support the outcomes they advertise. These new rules focus particularly on credit risk assessment, risk management and fair valuation practices, especially for platforms with more complex business models.
  • Strengthening rules on plans for the wind-down of P2P platforms.
  • Applying marketing restrictions to P2P platforms, designed to protect new or less experienced investors. We have also clarified the practical implication of these new rules as they apply to P2P agreements.
  • Introducing a requirement that an appropriateness assessment (to assess an investor’s knowledge and experience of P2P investments) be undertaken, where no advice has been given to the investor. We have also provided guidance on what the assessment should include.
  • Setting out the minimum information that P2P platforms need to provide to investors

Assetz Capital hits bridging loans and small business lending milestones (AltFi), Rated: A

Peer-to-peer lender Assetz Capital said it has hit a double milestone, providing over £100m in bridging loans and a further £50m in small business funding, “as the appetite for alternative forms of finance continues to rise across the UK”.

The Manchester-based fintech adds that since it was founded six years ago it has lent over £780m to small firms and property developers, helping build 3,700 homes in Britain.

UK P2P sector poised for “significant further growth” (P2P Finance News), Rated: A

THE UK’S peer-to-peer lending sector is set to experience “significant further growth”, according to Standard & Poor’s.

A report released by the ratings agency this week said that the growing involvement of institutional funds and increased securitisation issuance are set to boost the industry.

Santander and eBay team up on UK loans app (Techradar), Rated: A

In an effort to fend off tech giants and newer digital rivals, Santander and eBay have announced a new lending partnership for small businesses.

The Spanish bank will begin offering loans to over 200,000 small and medium-sized businesses that sell products on eBay in the UK through its financial technology app Astro.

As £165m Lendy collapses, experts warn ‘a dozen more peer-to-peer firms will follow’ (The Telegraph), Rated: A

While investments of varying risk are available, some platforms have tempted consumers with returns of more than 12pc on high-risk projects. But the collapse of one large platform, Lendy, which offered loans on property developments, has concerned investors across the sector.

Wagestream Says One Complaint Against PayDay Lenders is Resolved for Every Three Received (Crowdfund Insider), Rated: A

Payday loan alternative Wagestream has issued a release stating the Financial Ombudsman Service (FOS) has received 47,220 complaints against payday lenders since 2018. Yet while many complaints have been received only a fraction have been resolved. Wagestream states that only one out of three are resolved or just under 17,000.

Welendus unveils rebrand as Fund Ourselves (P2P Finance News), Rated: B

WELENDUS, the peer-to-peer payday lender, has rebranded as Fund Ourselves.

ARBUTHNOT SPECIALIST FINANCE CONCLUDES FIRST LOAN COMPLETION SINCE LAUNCHING THE BUSINESS (Arbuthnot Latham), Rated: B

Arbuthnot Specialist Finance (ASFL) is pleased to announce it has concluded its first loan completion since announcing its launch in late May. The deal is a 70% LTV residential product loan on a property located less than half a mile from the University of Central Lancashire campus in Preston.

China/Hong Kong

The Escalating US-China Trade War, Part 1 (In Homeland Security), Rated: AAA

China is in debt, significantly. Part of the problem is that it is difficult, if not impossible, to assign a figure to the debt. There are Chinese statistics for official debt, but following the 2008 economic crisis, China implemented new restrictions on lending. Over the past decade, those restrictions have shifted from one type of loan to another so Chinese citizens get creative with how they borrow money for business purposes or to purchase property.

Furthermore, the economic crisis took “shadow lending” to new heights. Shadow lending can include everything from organized crime to banks obfuscating the purpose of a loan or peer-to-peer lending. China cracked down on this lending practice too, but the debt amount is significant and official numbers do not typically include shadow lending.

New US Tariffs Spell Doomsday for China’s Economy (The Epoch Times), Rated: AAA

The additional 25 percent tariff imposed by the United States on $200 billion worth of Chinese goods will trigger a new round of factory closures in China, driving economic collapse.

In the context of the blow-up of the P2P (peer-to-peer lending) and other usury, the 8.4 trillion will cause most medium and small-sized banks to fall into bankruptcy crisis.

HSBC Rolls Out Digital Wallet To Hong Kong Businesses (PYMNTS), Rated: A

HSBC has reportedly expanded its PayMe digital wallet to startups and small businesses, marking its first foray into the business payments marketplace.

European Union

ING pushes for open banking with SME financing platform and Yolt expansion (Fintech Futures), Rated: A

ING is keen to maximise the possibilities of open banking and is working with Yolt and Funding Options on bringing new features to customers across Europe.

Firstly, ING is launching a marketplace for SME financing in the Netherlands, which will open to other external financing providers, becoming the first Dutch bank in doing so.

International

We are “very close” to peak fintech, with more than 10,000 startups jumping into the boom (Quartz), Rated: AAA

According to Curve’s Shachar Bialick, the founder and CEO, an app that lets customers to link all their credit and debit cards to just one card, says there are more than 10,000 fintech startups around the world, and even he can’t keep track of them all. Some, or even most, aren’t going to make it.

Quartz: It’s been about four months since Amex blocked Curve. What are your plans now?

Bialick: Amex was never a critical part of Curve. It was always an opportunity to solve a big problem Amex has in the UK and Europe, which is access.

Curve has continued to grow in Europe without Amex.

Have we reached the peak in terms of new fintech startups?

I don’t know if we reached the peak, but we definitely are very close, because today there are over 10,000 fintechs globally. I don’t know over 90% of them.

Peer To Peer Lending To Be The Next $ 1 Trillion Industry (ValueWalk), Rated: AAA

By eliminating the need for banks, peer to peer lending allows investors to invest in individual and company debt with 5-10% returns – a far cry from the the lowly 1.5% that you’ll received in a regular CD account.

And it works better for borrowers too. Borrowers are able to take out loans with greater ease and lower interest rates, typically offered in the region of 3-4%.

The average default rate at Lending Works is only 3.2% over the last six years. And many P2P lenders allow you to choose secured loans for additional protection.

Transparency Market Research estimates the industry be worth $900 billion by the end of 2024, with an annual growth rate of 48%, up from $26 billion in 2015.

Source: ValueWalk

One quarter of world’s small firms are ‘significant’ fintech users, says report (AltFi), Rated: AAA

Fintechs are becoming the ‘new normal’ in financial services, said a survey by professional services firm EY.

Fintech adoption is by far the highest in China, where 61 per cent of small businesses use their services, followed by the US, 23 per cent, the UK, 18 per cent, South Africa, 16 per cent, Mexico, 11 per cent, with the average set at 25 per cent.

Source: Ernst & Young

See the full report here.

Tencent, Temasek Invest $ 35 Million in U.K. Open-Banking Startup (Bloomberg), Rated: A

Chinese technology giant Tencent Holdings Ltd. and Singapore government-owned fund Temasek is to invest $35 million in London-based TrueLayer.

The Fintech Bubble Floats Toward a $ 64 Billion Pin (The Washington Post), Rated: A

Trendy U.S. online payments company Stripe, worth some $22.5 billion according to private-market valuations, is joining Amazon.com Inc. and Apple Inc. in warning about the impact of EU rules aimed at getting customers to double-check payments going out from their accounts.

Adyen trades at a gob-smacking 110 times this year’s earnings, with a market value of 20.8 billion euros. That’s almost twice the worth of Deutsche Bank AG, even though the Dutch fintech only employs the equivalent of 1% of the German lender’s staff. Stripe is the sixth most expensive private company in the world, according to researchers at CBInsights.

Australia

RBA Boss Warns Banks On Undermining The Economy (SB Dirty South Soccer), Rated: A

THE Reserve Bank of Australia (RBA) has cut the cash rate to a new record low.

The online lender announced a new headline variable rate for owner-occupiers at 3.34 percent.

Authors:

George Popescu
Allen Taylor

The post Thursday July 6 2019, Weekly News Digest appeared first on Lending Times.

Thursday March 14 2019, Weekly News Digest

GreenSky

News Comments Today’s main news: FTC makes final decision on SoFi. OnDeck extends two revolving credit facilities. LendingPoint sees drop in debt management loans, increase for new purchases. LendInvest to float 500M GBP. Lufax hits $39.4B valuation. Klarna adds GooglePay as payment option. Today’s main analysis: Unemployment rate and GreenSky’s earnings. Today’s thought-provoking articles: Earnest vs. SoFi for student loan […]

The post Thursday March 14 2019, Weekly News Digest appeared first on Lending Times.

GreenSky

News Comments

United States

United Kingdom

European Union

Australia/New Zealand

Other

News Summary

United States

Deal Final in FTC’s Action Against Online Lender (Manatt), Rated: AAA

The Federal Trade Commission (FTC) has finalized its deal with SoFi, an online lender that the agency had accused of making false statements about student loan refinancing.

According to the FTC, the California-based personal finance company misrepresented how much money student loan borrowers have saved or could save by refinancing.

Read the FTC complaint here.

Read the FTC decision and order here.

OnDeck Announces Extension of Two Revolving Credit Facilities With Credit Suisse & Deutsche Bank (Crowdfund Insider), Rated: AAA

OnDeck, a small business online lending platform, announced on Wednesday extensions to its existing credit facilities with Credit Suisse and Deutsche Bank on improved terms.  According to OnDeck, the amended facilities provide an aggregate of $360 million of committed funding capacity and are available to finance OnDeck’s term loans and revolving lines of credit. The scheduled maturity dates for the facilities were extended three years to March 2022.

Unemployment Rate Drops to 3.8%; GreenSky’s Strong Earnings (PeerIQ), Rated: AAA

The unemployment rate dropped to a near five decades low of 3.8% even as nonfarm payrolls only rose by 20K. Average hourly earnings rose by 3.4%, above economists’ expectations.

Source: WSJ
Source: Deutsche Bank Research, WSJ

GreenSky’s Strong 4Q2018 Earnings

GreenSky’s 4Q revenue grew by 22% YoY to $109 Mn, although net income fell by nearly 43% YoY to $23 Mn. The stock rose by ~6% post earnings.

  • Transaction volume increased by 23% YoY to $1.3 Bn.
  • Loan servicing portfolio increased by 36% YoY to $7.3 Bn.
  • GSKY had aggregate commitments of $11.8 Bn from its nine bank partners, of which $4.8 Bn were unused.
  • 30+ DQ rates rose slightly YoY from 145 bps to 148 bps.
  • GreenSky now has nearly 12 k home improvement merchant partners and nearly 3 k elective healthcare partners.
Source: GreenSky, PeerIQ

How to Decide Between Earnest and SoFi for Student Loan Refinancing (Credible), Rated: AAA

Earnest and SoFi are two of the best student loan refinancing companiesout there. They both offer fixed as well as variable rate loans, a 0.25% autopay rate discount, and certain unemployment protections to help in the event of involuntary job loss, but they also have their differences.

Here’s a side-by-side comparison of both lenders to help you make an informed decision.

Source: Credible

The rate of borrowers using loans for debt management drops; growing proportion of borrowers use loans for new purchases (LendingPoint), Rated: AAA

It turns out that, over the past two years, the proportion of our borrowers who say they are earmarking their loans for debt consolidation has decreased markedly, from about 60% in 2017 to about 54% in 2018. The percent using loans to pay for new merchandise or services has grown during those two years. Home improvement jumped from 6% to 8%; loans for medical expenses rose from 2% to 7%.

In 2017, the percent of millennial consolidators was about 61%. In 2018, that dropped a full 10%, down to 51%, a bigger decrease than any other age cohort.

Source: LeningPoint

What Do Millennials Want From Banks? Non-Financial Products (Forbes), Rated: AAA

If they haven’t, then why are 56% of Millennials giving megabanks (the four largest US banks) their 

Source: Cornerstone Advisors

The “Millennials hate banks” meme is a myth.

Millennials’ Access to Subscription Services
Percentage of Millennials that…
Don’t have the service but would like to Have the service, and pay for it directly Have the service, but don’t pay for it directly Don’t have or want the service
Identity theft protection 31% 20% 29% 21%
Personal/family data storage 29% 20% 19% 31%
Child identity theft protection 27% 15% 16% 42%
Rx, vision, hearing discounts 26% 31% 25% 18%
Travel/trip insurance 26% 18% 19% 37%
Roadside assistance 19% 40% 26% 15%
Cell phone damage protection 18% 42% 20% 19%
Source: Cornerstone Advisors

Green Dot targets social media influencers in banking-as-service push (American Banker), Rated: A

A new affinity banking service developed by Green Dot proposes to tap one of the most potent — and controversial — sources of distribution in the digital economy: social media influencers.

The digital banking and payments provider is developing what it calls Bank OS, a simpler version of its enterprise banking-as-a-service platform already used by the likes of Intuit, Stash, Uber and Walmart. It would enable partners to develop their own financial products just as those brands do, including offering credit cards, debit cards with loyalty programs or even a mobile app.

How online lenders attract and service the evolving SMB borrower (Tearsheet), Rated: A

But while small businesses still struggle with cash flow, how they shop for loans and their level of financial education about their options are changing. On Tearsheet’s recent webinar with leaders at Kabbage, BlueVine, and Intuit’s QuickBooks Capital, we discussed the changing nature of the SMB borrower and how their firms have evolved to keep up.

Pay Yourself First? Last Is How Small Biz Often Works (Newsmax), Rated: A

Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.

About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (), a cash flow optimization platform.

PAYNET STRATEGIC INSIGHTS MARCH 2019 (PayNet), Rated: A

The PayNet Small Business Lending Index (SBLI) rebounded with a 17.2 point jump to 150.7 in January, climbing to its second-highest level ever. On an annual basis, the SBLI increased 4.9%. The SBLI 3-month moving average also rose in January and currently stands 1.5% above its year-ago level.

Source: PayNet

The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due edged up one basis point to 1.45% in January, and is up six basis points on an annual basis — its 33rd consecutive year-over-year increase. The SBDI 91–180 Days Past Due was unchanged at 0.38% but is three basis points above its year-ago level.

Less Than Zero? This Proposed ETF Would Pay Investors, But There’s A Catch (Benzinga), Rated: A

Salt Financial, which currently offers one ETF, has filed plans with regulators to launch a low volatility that would pay investors, but there’s a catch.

Equifax Deleted Key Data Breach-Related Docs, Senators Say (Law360), Rated: A

Equifax Inc. failed to preserve key internal discussions over its massive 2017 data breach, U.S. senators said Thursday at a hearing where elected officials grilled the credit reporting giant’s CEO and the…

Home Equity Line of Credit Providers Face Growing Threat from Alternative Lenders, J.D. Power Finds (JD Power), Rated: A

Despite record-high levels,[1]new home equity line of credit (HELOC) originations have been steadily declining[2] as a perfect storm of rising interest rates, new tax laws and growing competition from alternative lenders has crimped traditional HELOC growth. According to the J.D. Power 2019 U.S. Home Equity Line of Credit Satisfaction Study, released today, HELOC customers are more likely than ever to shop for alternative sources of funding and HELOC providers are falling short on digital offerings.

This week in Chicagoland real estate: One Chicago Square, Woodlawn and more (Chicago Agent Magazine), Rated: A

New York-based DDG, Chicago-based Marc Realty and Ruttenberg Gordon announced plans for a 13-story hotelwith 250 rooms in Fulton Market. The developers are raising $55 million to fund the project through Prodigy Network, a New York-based real estate crowdfunding platform. The hotel will be located at 1234 West Randolph Street and will be operated by New York-based Standard Hotels. It’s set to be completed within two years.

PeerStreet Expands Executive Leadership with Two Senior Hires in Finance Team (BusinessWire), Rated: B

PeerStreet has announced the hiring of two executives with extensive experience in the financial services and real estate sectors: Ellen Coleman and Bob Brown. Ms. Coleman joins as Executive Vice President of Finance, and Mr. Brown joins as Executive Vice President of Finance & Corporate Development.

CoreLogic : Introduces Verification of Employment and Income Solution to Expedite Borrower Verification Process (MarketScreener), Rated: A

CoreLogic, a global property information, analytics and data-enabled solutions provider, today released an enhanced Verification of Employment and Income(VOE/I) product. The comprehensive new VOE/I product takes time, touch and cost out of traditional employment and income verification through a three-step ‘waterfall workflow’ process, ensuring that every mortgage applicant can be verified.

The enhanced VOE/I product features a three-step ‘waterfall workflow’ that ensures each borrower’s employment and income is verified as efficiently as possible.

  • Step One: Instant verification via a direct integration to The Work Number (TWN)
  • Step Two: Automated verification leveraging dozens of third-party data sources
  • Step Three: Manual verification by a team of dedicated CoreLogic verification experts

CORELOGIC INTEGRATES CONDOSAFE WITH THE ELLIE MAE ENCOMPASS ALL-IN-ONE MORTGAGE MANAGEMENT SOLUTION (CoreLogic), Rated: B

CoreLogic today announced the integration of its CondoSafe product with the Ellie Mae Encompass® all-in-one mortgage management solution. CondoSafeis a one-stop condo project review tool that enables lenders to have a single, consistent, standardized review process, allowing them to determine eligibility earlier in the process, resulting in quicker approvals.

ArborCrowd Announces New Equity Offering in 707-Unit Multifamily Portfolio (AP News), Rated: B

ArborCrowd, the first crowdfunding platform launched by a real estate institution, today announced a new offering that allows investors to acquire equity interests in the Sioux Falls Multifamily Portfolio, a collection of class-B apartment communities located in Sioux Falls, S.D. The properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.

The investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to five-year hold period. Tzadik has budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces.

LendPro’s Female Leaders Celebrated on International Women’s Day (LendPro Email), Rated: B

As the financial technology (fintech) industry continues to grow, innovators are increasingly looking for leadership and expertise to grow their companies and stand out from competitors. LendPro, a Lending-As-A-Service (LaaS) fintech company, prides itself in hiring strong talent.  Women make up 50% of staffing at LendPro’s Charlottesville corporate office, versus 37% female staffing at most fintech companies.

United Kingdom

Property finance hub Lendinvest plots £500m London float (Sky.com), Rated: AAA

The online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market.

Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.

Lending revolution: fintechs vs banks (Raconteur), Rated: AAA

Eight out of ten SME loan applications were approved by banks in the third quarter of 2018, according to the latest figures from trade association UK Finance. While this is a far cry from the days of the global financial crisis, when SME lending all but dried up in part due to regulatory pressures to shore up capital, smaller companies are still citing challenges in securing funding from traditional players, according to Stuart Chalmers, commercial banking lead for Accenture UK.

Alternative lenders understand the hunger for a seamless customer experience and have built credit journeys that align to business expectations

Almost 30,000 companies used non-traditional channels over the year, with peer-to-peer lending and equity-based crowdfunding now established investment vehicles for seed, startup, early-stage and fast-growth companies seeking capital. In fact, CCAF estimates that 29 per cent of all new loans issued in 2017 to small businesses with annual turnovers less than £2 million came from alternative finance.

Source: Raconteur

Burnham residents are the most thrill-seeking in the UK according to new study (Windsor Observer), Rated: A

It may come as somewhat of a surprise, but according to research from Zopa, Burnham has been revealed to be the most thrill-seeking town.

Peer-to-peer firms told to improve wind-down arrangements (Out-Law), Rated: A

In a letter to chief executives (4 page / 352KB PDF) sent last week, the FCA said a recent supervisory review of firms’ current arrangements against current requirements “strongly suggests” some P2P firms were falling short of the standards required by its rules.

Augmentum Capital signs up to Innovate Finance (P2P Finance News), Rated: A

AUGMENTUM Capital has joined Innovate Finance as its first investor member.

It is currently planning to issue extra ordinary shares in its investment trust as it looks to fund around £300m of potential opportunities in the sector.

PEER TO PEER LENDER RELAUNCHES PRODUCTS (Insider Media), Rated: A

A South West-based peer to peer lender is to re-launch its lending products aimed at individuals and businesses.

Folk2Folk is to offers 9 per cent interest rates for investors with a loan to value ratio of up to 60 per cent.

The business has so far brought £275m into rural businesses in Britain over the past six years.

Wonga compensation claims four times higher than expected (TechRound), Rated: A

It has been recently revealed that the number of compensation claims made against the failed payday lender Wonga, which filed for administration in August 2018, has ended up increasing four-fold. The initial figure given by the Financial Ombudsman Service in a Treasury Committee in January this year suggested that there were around 10,500 customers who had open complaints with the short-term credit, high-interest company.

Now, it turns out that the number of redress claims that have been made against Wonga is considerably higher, totalling over 40,000. It is potentially the case that these people will not end up getting their money back after having been mis-sold loans.

The IFISAs you can open for £100 or less (P2P Finance News), Rated: A

According to the most recent HMRC statistics, overall ISA savings fell from £79.8bn in 2015/16 to £61.5bn in 2016/17. Meanwhile, Bank of England statistics found that the amount of money that Brits were saving (both within and outside of the ISA wrapper) fell by £7bn in 2018 alone.

  • Abundance

Minimum investment: £5

  • Assetz Capital

Minimum investment: £1

  • Crowd2Fund

Minimum investment: £10

  • RateSetter

Minimum investment: £10

  • Octopus Choice

Minimum investment: £10

Environmental benefits of ISA investment (The Ecologist), Rated: A

Crowdfunding and peer to peer lending grew out of the banking crisis of 2008. According to the European Central Bank, the availability of bank loans to SMEs declined 23 percent immediately following the crash, causing a devastating impact on the economy.

Over 100 Finastra customers upgraded trade software in time to meet new SWIFT standards (RealWire), Rated: B

Over 100 Finastra customers were upgraded to the latest compliant versions of its transaction banking software, Fusion Trade Innovation, ahead of the new SWIFT standards deadline of 17 November 2018. The new ‘Standards MT Release’ included significant changes to category 7 messaging standards used in trade finance – the most significant set of changes to the SWIFT trade finance messaging interface in over 30 years.

China

China’s Lufax hits huge $ 39.4bn vaulation thanks to Primavera Capital-led Series C (Alt Assets), Rated: AAA

Chinese peer-to-peer lending business Lufax has confirmed it has reached an enormous $39.4bn valuation thanks to a Series C round led by private equity house Primavera Capital.

Chinese fintech unicorn Lufax in no rush to IPO (Technode), Rated: A

Chinese peer-to-peer (P2P) lender Lufax is not in a hurry to list on the stock markets, said an executive of its biggest shareholder, Ping An Insurance, during its earnings call, Chinese media reported (in Chinese) on Wednesday.

Ping An Insurance Group deputy CEO Jessica Tan said after Lufax’s latest round of funding, Ping An still holds approximately 41% of its shares.

European Union

Google Pay Added to Klarna’s Bank of Payment Options (WWD), Rated: AAA

Today, Klarna, the global payments provider “smoothing” out kinks in the checkout process for retailers, announced a partnership with GooglePay. Available for Klarna customers in Sweden, the intention is to make mobile payments “even easier and more secure.”

CreditEase Invests in wefox Group, the European Largest Insurtech Platform (PR Newswire), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its direct investment arm, CreditEase FinTech Investment Fund (CEFIF), participated in wefox Group’s $125 million USD Series B, a fast-growing Berlin-based insurtech firm together with Mubadala’s newly created European Ventures Fund. The investment is the largest Series B round for a European insurtech and Goldman Sachs International is acting as the private placement adviser to wefox Group in connection with the transaction.

The investment will help spearhead the company’s expansion into the European broker market. It also paves the way for wefox Group to accelerate growth and create the world’s most innovative product and engineering team applying advanced data analytics to create an all-in-one insurance platform in which all interactions are personalized. The company, which was founded in 2014, has grown its revenue to around $40 million USD, while serving more than 1500 brokers and over 400,000 customers, making it Europe’s number one insurtech platform.

Luna Connect: A new digital disrupter in the lending landscape (Irish Times), Rated: A

Luna Connect is a new digital lending platform primarily aimed at those lending to SMEs. It is designed to fit into the rapidly evolving financial services ecosystem and its founder, Brian D’Arcy, drew the inspiration for his business from the disruption currently underway in the financial services sector.

The company’s target market are lenders offering loans of under €200,000, whose borrowers typically require a fast decision on their application and want a more transparent lending process. The initial focus will be on Ireland and the UK with Europe and the US to follow. Investment in the project to date has been around €120,000 which was self-funded with support from the NDRC and Enterprise Ireland through the competitive start fund.

Australia/New Zealand

New US ambassador warns of China’s ‘payday loan diplomacy’ (The Washington Post), Rated: AAA

The new U.S. ambassador to Australia said Wednesday that he’s concerned about the way China lends money to developing Pacific nations in what he describes as “payday loan diplomacy.”

China categorically rejects accusations that it uses loans, grants and other financial inducements to extend its diplomatic and political reach, saying it is merely acting in the best interests of both sides in such transactions.

New way to borrow takes Australia by storm (Mozo), Rated: A

As distrust of the nation’s big banks and mortgage brokers swells amongst the wreckage of the banking royal commission, online lenders are emerging as real challengers in the home loan, business loan and personal lending markets.

NAB’s UBank launches ‘green’ deposits to chase Millennials’ savings (Financial Review), Rated: A

The CEO of National Australia Bank subsidiary UBank, Lee Hatton, says future retail depositors will want more control over where banks lend their money, prompting it to launch a “green” term deposit targeting environmentally concerned Millennial customers.

How marketplace lending meets investor needs (Cuffelinks), Rated: A

However, it’s also true that today’s investors face a risk environment of unprecedented complexity. In 2018, the S&P/ASX200 declined by 6.8%. Residential property values are falling and bank deposit rates fail to match inflation. In the last year, the Australian media landscape was dominated by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with its revelations of duplicitous lending practices, improper fees, and general misconduct that, by the banks’ own admission, fell far short of community expectations.

Financial Markets Authority executive steps down over employment matter (NZ Herald), Rated: B

Financial Markets Authority (FMA) executive Garth Stanish left the investment watchdog at the end of last month over an internal employment matter, a spokesman for the authority said.

Stanish was also a director of markets oversight, a group that includes oversight of NZX, crowd-funding/P2P lending platforms and frontline supervisors.

India

P2P startup PaisaDukan raises 1st round of investment from JITO (UNI India), Rated: AAA

Vivriti Capital raises second round of funding of Rs 110 Cr from Creation Investments (YourStory), Rated: A

Vivriti Capital, a Chennai-based lending platform for corporate entities, secured Rs 110 crore worth of equityin an additional round of funding from its existing investor Creation Investments.

This comes just within two months of the Series A funding closure in December 2018, in which the company raised Rs 200 crore from Creation Investments. With the current equity infusion, Vivriti’s overall capital stands at approximately Rs 320 crore.

MSME Lending fuelled by Digitisation (Free Press Journal), Rated: A

MSMEs play a major role in Economic development of India. There are around 63.4 million units and they contribute to 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities and 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India. The sector grows at a rate faster than the large ones at more than 10% pa.

About 20% of the MSMEs are based out of rural areas.They provide employment to more than 130 million people and contribute to 45% of exports. MSMEs are also the largest employment generator every year. As of Sep18, the total credit in India was Rs 105.5 Lakh crores and MSMEs had borrowed Rs 24.7 cr. Large and Mid Caps borrowed Rs 44.4 cr. Year on Year the growth of overall commercial credit was at 13.5%.

Micro loans which are less than Rs1 cr grew 22.2% year on year and SME loans between Rs1 cr – Rs 2.5 cr grew at 18.3%.The growth was faster than the overall growth. Share of NBFCs in SME credit increased from 13% in Sep 15 to 17% in Sep 18. The number of NBFCs lending more than Rs 100 cr to MSMEs stood at 77 at the end of Sep 18.

Asia

Investment Task Force suspend operation of 168 illegal fintech firms (Antara News), Rated: AAA

The Investment Alert Task Force has suspended the operation of 168 entities allegedly running peer-to-peer lending services without a legal business license from the Financial Service Authority (OJK).
The task force has also suspended the operation of 47 illegal investment entities which has the potential to harm the public.
“Based on the monitoring on website and application in Google Playstore, the Investment Alert Task Force has stopped the operation of 168 entities that have violated OJK regulation no. 77/POJK.01/2016 on fintech peer-to-peer lending services, which has the potential to harm the public,” head of the task force Tongam L Tobing said in a statement here on Wednesday.

Fintech group to help develop P2P lending (The Jakarta Post), Rated: A

A group of financial technology (fintech) lenders wants to help develop a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.The Indonesian Fintech Lenders Association (AFPI) will help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other thing…

Government moves to legalise P2P lending (Vietnam Vet), Rated: A

During a recent meeting with relevant ministries and agencies to discuss P2P lending, Hue instructed that during the pilot operation, P2P lending would be restricted to connecting lenders and borrowers as currently being run by most P2P lending companies in Viet Nam. P2P lending companies would not be allowed to mobilise capital, but act as intermediaries to connect lenders (investors) and borrowers.

The development of P2P lending will also create a new capital supply channel. Research conducted by Transparency Market Research showed that P2P lending would surge by 48.2 per cent annually in the 2016-24 period, while Morgan Stanley forecast the business model would reach a growth rate of 53.5 per cent globally by 2020.

Authors:

George Popescu
Allen Taylor

The post Thursday March 14 2019, Weekly News Digest appeared first on Lending Times.

Thursday February 14 2019, Weekly News Digest

OnDeck revenues

News Comments Today’s main news: SoFi invests in Apex Clearing. Zopa chairman steps down. Ratesetter ISA tops 17M GBP in first year. Assetz Capital surpasses 700M GBP in lending. Revolut denies getting Lithuanian bank license to influence politics. Today’s main analysis: OnDeck’s Q4 earnings review. Today’s thought-provoking articles: What’s happening with auto loans. How Amazon controls small businesses with lending. Banks […]

The post Thursday February 14 2019, Weekly News Digest appeared first on Lending Times.

OnDeck revenues

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

SoFi held talks to acquire a fintech company backing some of the hottest robo advisors as it eyes expansion beyond its lending roots (Business Insider), Rated: AAA

OnDeck Q4 2018 Earnings Review (Lend Academy), Rated: AAA

The company achieved much of what they set to do in 2018 and posted another solid quarter as they rounded out the year. Q4 2018 net income came in at $14 million on gross revenues of $109.5 million. The company ended the year with a total of $27.7 million in net income. Below is a snapshot of their Q4 and 2018 full year highlights.

As of Q4 2018 the company still had $246 million of excess debt capacity.

BB&T and SunTrust merger; Tech in Bank Earnings (PeerIQ), Rated: AAA

The Fed’s January 2019 Senior Loan Officer Survey showed that banks tightened standards for commercial real estate (CRE) loans. Overall, banks tightened standards for credit card borrowers. However, lending standards for most categories of consumer loans and C&I loans remained unchanged. Banks also reported weaker demand for both business and household loans.

Source: Federal Reserve, PeerIQ

BB&T agreed to buy SunTrust for $28.2 Bn – the first major mega-bank deal in a decade. This deal will create the sixth-largest US retail bank. The M&A is supported by a constructive regulatory environment fostered by the OCC and CFPB, among others. The previous large acquisition was the JP Morgan acquisition of Bank One in 2004.

A major motivation for the deal was the ability of both banks to pool resources to build better digital offerings. SunTrust has a FinTech focused fund and has partnered with FinTech lenders to provide home improvement and small business loans. Banks are investing billions in digital tech spend to maintain relevance with customers that are increasingly eschewing bank branches for a seamless, online, full-service banking and wealth management customer experience.

Auto Loans in High Gear (Liberty Street Economics), Rated: AAA

Total household debt increased modestly, by $32 billion, in the fourth quarter of 2018, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Although household debt balances have been rising since mid-2013, their sluggish growth in the fourth quarter was mainly due to a flattening in the growth of mortgage balances. Auto loans, which have been climbing at a steady clip since 2011, increased by $9 billion, boosted by historically strong levels of newly originated loans. In fact, 2018 marked the highest level in the nineteen-year history of the loan origination data, with $584 billion in new auto loans and leases appearing on credit reports, up in nominal terms from 2017’s $569 billion. In this post, we take a closer look at the composition and performance of outstanding auto loan debt using the New York Fed’s Consumer Credit Panel (CCP), which is based on anonymized Equifax credit data and also the source for the Quarterly Report.

Amazon’s lending perpetuates the tech giant’s control over small businesses (Tearsheet), Rated: AAA

Amazon runs a marketplace with 2.5 million sellers, 24,000 of which had more than $1 million in sales on the platform in 2018. These sellers represent the potential customer base for the company’s lending model.

From this base of borrowers, Amazon has been able to reportedly lend over $1 billion in 2017, exceeding  $3 billion in total lending volume from its inception in 2011 to 2017. As for 2018, in its annual report, the company reported receivables outstanding from their lending program of $710 million, up from $692 million a year prior.

With access to detailed information and data on each seller, Amazon is able to mitigate lending risk substantially. Seller metrics only available to Amazon are utilized to determine a small business’s creditworthiness. Sales history, product offerings, customer service feedback, and shipping metrics enable Amazon’s lending business to have better insight into how to accurately issue loans. This allows Amazon to have an understanding of the health of each small business on its seller marketplace.

Goldman Sachs, Point72 and others invest $ 44 million in business credit startup Nav (Reuters), Rated: A

Nav, a startup that gives small businesses free access to their credit reports, said on Monday that it had raised $44 million from investors including Goldman Sachs Group Inc (GS.N), Point72 Ventures and Experian Ventures (EXPN.L).

Well Fargo Outage Points to Opportunity in Digital Banking (Lend Academy), Rated: A

Wells Fargo is still digging out from a PR disaster last week when the bank went offline for a large segment of customers due to a fire alarm triggered in a server facility in Minnesota. Customers could not access the mobile app, the website or ATMs. The incident has been used to highlight how big an opportunity there is for fintech firms or more nimble banks.

What the outage shows is that bank infrastructure is still stuck in the past, analysts rightly askedwhy Wells Fargo did not have the bank running on a cloud based system.

Digital bank Chime seemed to benefit from the news with more than 10,000 accounts being opened, a record 24 hour period for the startup.

new survey by Fraedom says 80 percent of banks believe challengers have impacted their business and 30 percent say they are their biggest threat.

Susan Ehrlich of Earnest (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Susan Ehrlich, the CEO of Earnest. They are one of the largest student loan refinancers in the country and they also offer personal loans. Back in 2017 Earnest was acquired by the student loan servicer Navient which was itself spun out from Sallie Mae in 2014.

Government Shutdown Slows SBA Lending Volume, Approval Percentage Dipped Slightly in January (GlobeNewswire), Rated: A

Business loan approval rates dropped three-tenths of a percent at regional and community banks in December 2018. Small bank approvals dropped a full percentage point from 49.9% in December 2018 to 48.9% in January.

Small business loan approval rates for big banks remained at a record high 27% in January 2019, according to the Biz2Credit Small Business Lending Index, which examines more than 1,000 small business credit applications made via its online lending platform.

Goldberg added that since reopening on January 28, her office has guaranteed more than 200 SBA loans worth $59.3 million.

Institutional lenders climbed up to 65.1 %, a jump of three-tenths of a percent from December’s mark of 64.8%.

Loan approval rates among alternative lenders rose from 56.6% in December to 57.3% in January, a jump of seven-tenths of a percent.

Citi rolls out new personal loan, online savings account (American Banker), Rated: A

Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its rollout of its new digital bank.

The New York bank recently introduced Citi Flex Loan, which allows select existing Citi credit card customers to convert part of their credit lines to a loan with a fixed annual percentage rate, Mark Mason, Citigroup’s incoming chief financial officer, said Tuesday at an investor conference.

Square’s banking bid avoids backlash that doomed Walmart’s (American Banker), Rated: A

As Square seeks federal approval for a Utah industrial loan company, the fintech’s bid has so far avoided the kind of loud, public opposition that marred past ILC bids by higher-profile nonbanks.

Community banks still criticize the ILC charter as a banking loophole for non-financial firms, and the Independent Community Bankers of America opposes Square’s application.

Almost 60% of small business owners launch with less than $ 25,000 (CNBC), Rated: A

At least that’s according to entrepreneurs polled recently by Kabbage, a financial services and data platform serving small businesses. More than half of those polled, or 58 percent, started their businesses with less than $25,000. A third started with less than $5,000.

These numbers track with the latest data from the U.S. Census Bureau, which found that the median cost to start or acquire a company is about $25,000. It did find fewer businesses that begin with less than $25,000, only 46 percent, though that could be due to its inclusion of new owners who purchase existing operations as well owner starting from scratch.

LoanStreet Adds Commercial Lending Features for Financial Institutions (Crowdfund Insider), Rated: A

LoanStreet, an online platform that enables traditional finance like banks credit unions and other direct lenders to streamline the process of sharing, managing, and originating loans, has added new features. The SaaS platform now offers commercial loan origination and administration solution for any size financial institution, loan or deal volume.

LoanStreet’s new lending features include:

  • Built-in collaboration tools offering the flexibility to originate the loan best suited to your borrowers’ needs without sacrificing the ability to invite other financial institutions into the deal.
  • Single access point allowing all parties, including borrowers, lenders, attorneys and auditors, continuous and secure access to the same information.
  • Integrated platform from origination to maturity avoids re-keying, duplication of efforts and eliminates transfer errors and other critical information loss that occurs over time.
  • Efficient process management enabling online, borrower self-service of key administrative tasks — including online payment acceptance — while improving internal controls and information flow.
  • Automated reporting facilitating completion of all applicable regulatory and financial entries for you and every investor.

Velocity Investments sues woman for breach of contract, seeks ,500 in damages (Louisiana Record), Rated: A

Velocity Investments LLC, assignee of Lending Club Corporation, filed a complaint against Heather Darling on Feb. 12 in the 24th Judicial District Court. According to the lawsuit, the plaintiff states that the defendant has failed to pay off the balance of $22,495.23 plus interest on a contract between the parties. The defendant is accused of sums due on an open account and breach of contract.

Online Loan Companies Are No Easy Fix for Desperate Borrowers (Real Daily), Rated: A

Lending Club is currently the largest online lender in the world. By some estimates, Lending Club, which launched in 2007, facilitated anywhere between $35 billion and $55 billion in online loans in 2018.

Now as more financial institutions are beginning to extend loans, Americans are falling even deeper into debt again. Americans, as individuals and households, owed over $13 trillion dollars, collectively, in 2018.

Best News We’ve Heard All Day: More Single Women Own Homes Than Single Men (Pure Wow), Rated: A

Online loan marketplace LendingTree reports that on average, single women own around 22 percent of homes, while single men own less than 13 percent. The study states that the gender gap in housing across the country is particularly interesting “given the average woman in the U.S. only makes 80 percent of what the average man does.” Interesting, indeed. (We can think of another word for it.)

Thoma Bravo Is Buying Digital-Focused Mortgage Company (WSJ), Rated: A

Thoma Bravo LLC has agreed to buy mortgage software firm Ellie Mae Inc. for $3.7 billion, the latest indication that challenges in the home-lending market are spurring consolidation across the industry.

The transaction will give the private-equity firm control of a company whose technology has been used to help automate the closing of millions of home loans. Based in Pleasanton, Calif., Ellie Mae handles the technology that underpins the entire home-loan origination process, and its services are used in

INSIKT Changes Name to Aura (Business Wire), Rated: B

INSIKT, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced that it has changed its name to Aura to expand its focus on creating greater financial health, independence and economic stability for millions in America.

Roostify Expands Advisory Board with Investment Virtuoso (Roostify), Rated: B

Roostify, the San Francisco-based digital lending platform provider, announced today the addition of financial services consultant Marshall Lux to its advisory board. Lux, a distinguished consultant, advisor and educator, brings more than 30 years’ experience in private equity to the rapidly expanding business and reflects Roostify’s commitment to perfecting a scalable operational model and further developing an ecosystem of technology partners and strategic alliances.

LendIt Fintech USA 2019 (LendIt), Rated: B

April 8-9
Moscone West
San Francisco

HIGHLIGHTED KEYNOTES

Sallie Krawcheck
CEO & Co-Founder
Ellevest

Rob Frohwein
CEO & Co-Founder
Kabbage

Steven Streit
CEO
Green Dot

Mike Cagney
Co-Founder
Figure

United Kingdom

Zopa chairman Giles Andrew to step down after 15 years (Independent), Rated: AAA

Zopa’s co-founder Giles Andrew is to step down as chairman after 15 years at Britain’s oldest peer-to-peer lender.

Zopa appoints Virgin veteran McCallum as chairman (Finextra), Rated: A

P2P lender Zopa has appointed former Virgin Management CEO Gordon McCallum as chairman as it gears up for the forthcoming launch of its new banking venture.

Ratesetter ISA tops £175m in first year (AltFi), Rated: AAA

The peer-to-peer lending platform said its ISA accounts for one-fifth of its £830m of funds under management.

Peer-to-peer lending platform Ratesetter said it has been “blown away” by the popularity of its first ISA product, which has hit £175m of subscriptions a year after launch.

Assetz Capital surpasses £700m lending mark (Bridging and Commercial), Rated: AAA

Assetz Capital has now lent over £700m to SMEs and property developers since launching in 2013.

The P2P lending platform has enjoyed significant progression, providing over £200m of funding in the eight months since it surpassed the £500m lending milestone in June 2018.

Former Assetz Capital founder launches fintech consultancy (AltFi), Rated: A

The co-founder of one of Europe’s largest peer-to-peer lenders has launched a fintech consultancy to help young firms “avoid some of the mistakes made by the early incumbents of the industry”.

Former Assetz Capital chief credit officer Andrew Holgate will lead a team of City veterans at consultancy Equitivo, which will help growing fintech firms raise cash, focus on strategy, trim operations and boost performance.

‘There is no magic bullet, people will get P2P over time’ (FT Adviser), Rated: A

The chief operating officer of peer-to-peer platform Relendex, Max Lehrain, has concerns about the Financial Conduct Authority’s crack down on P2P lenders and crowdfunding platforms.

UK challenger bank Starling secures £75m for European expansion (Fintech Futures), Rated: A

Life is sweet for UK challenger bank Starling as it has raised £75 million in funding for its expansion plans in Europe.

It got £60 million in a Series C round led by Merian Global Investors, including the Merian Chrysalis Investment Company.

Monzo Launches First 100 Business Accounts (Crowdfund Insider), Rated: A

UK challenger bank Monzo announced on Monday the launch of its first 100 business accounts. This news comes just a few months after Monzo revealed it was considered business banking, with Founder and CEO, Tom Blomfield, stating 2019 plans included business accounts. Speaking about the new accounts, Monzo reported:

Main Street banks say fintechs like Monzo, N26 and Chime pose the biggest disruptive threat to their businesses (Business Insider), Rated: A

Main Street banks believe upstarts like Monzo, N26 and Chime, known as challenger banks, pose a significant threat to their business, according to a recent survey.

Fraedom, a credit card specialist who works with companies like Visa, SunTrust, and Bank of Montreal, surveyed bankers on what some of the biggest impacts to their business will be in 2019. The vast majority (80%) believe challenger banks have an increased impact to their business, and 30% pegged the new competitors as the biggest disruptive threat to their business in 2019.

Tandem Bank boss calls for rate cut to kick-start UK economy (AltFi), Rated: A

Ricky Knox, chief executive of app-only lender Tandem Bank called on the central bank to cut rates to kick-start growth, as currently savers are locking away cash in specialist higher interest accounts.

Peer-to-Peer Lending and Brexit (4th Way email), Rated: A

Shares plunged and the pound plummeted to a 31-year low when the UK voted to leave the EU. More recently chaotic Brexit negotiations indicate a disorderly exit that could see investors avoid traditional investments in the UK, but what does this mean for peer-for-peer lending and should lenders be worried?

Bank and P2P lending is far less volatile than equity investing, because:

  • It is short-term orientated.
  • Lenders easily diversify widely across thousands of investments – loans – as opposed to a typical stock investor who diversifies across hundreds of shares through share funds.
  • In P2P lending, buy/sell price swings, often fuelled by uncertainty, are usually irrelevant, since lenders hold loans for the full term.
  • Lenders are usually in a better place in the queue compared to equity investors when recovering losses is involved, which can mean smaller losses on individual investments (loans) that go wrong.
  • With lending being data driven, recession conditions are easier to plan for. A turbulent P2P Brexit would mean a tripling of defaulting loans in some kinds of lending and cut-price sales of borrowers’ assets. Interest rates and reserve funds are prepped for most disasters, leaving a very low chance of a sizeable overall loss on a well-diversified, low-risk lending portfolio.

Most investors in peer-to-peer lending are using platforms that are run by people with relevant banking experience. The banks, when we look at their bread-and-butter lending, have found it easy to maintain net profits even during multiple downturns over the past 20 years, which includes the Great Recession. This is across the spectrum of lending, from buy-to-let mortgages to personal loans and credit cards. Perhaps surprisingly, retail and small business lending combined was still profitable for the UK’s high street banks during the 2008 and 2009 crash.

Learn more about 4th Way here.

Mojo Mortgages secures £7million to revolutionise the UK mortgage experience (Manchester Digital), Rated: A

Mojo Mortgages, a fintech start up based in the North West has secured £7million in Series A funding to transform the mortgage experience.

Mortgage Brain boosts user numbers (Mortgage Introducer), Rated: A

Mortgage Brain welcomed over 2,000 new customers during 2018 with a host of national networks, corporate firms and individual adviser firms choosing to use one or more of its products and services.

A number of new customers – including Censeo, Intelligence Mortgage Solutions, Your Expert Group, Affinity Mortgages and Your Mortgage Solutions – as well as a number of contract renewals and user license increases, have all contributed to Mortgage Brain’s growth throughout 2018.

UK inflation below official target for first time in 2 years (Miami Herald), Rated: A

Lower energy costs as well as a waning impact from the pound’s sharp fall in the aftermath of the country’s Brexit vote have helped consumer price inflation in Britain fall below the Bank of England’s target of 2 percent for the first time in two years.

The Office for National Statistics said Wednesday that consumer prices rose by 1.8 percent in the year to January, down from the 2.1 percent recorded in the previous month. Inflation has been consistently falling since August as the effects of the pound’s decline drop out of annual comparisons. The latest decline was further accentuated by a fall in the price of electricity, gas and other fuels.

Inflation is now at its lowest since January 2017, when inflation was also 1.8 percent.

Arbuthnot Commercial ABL delivers £12m refinancing facility (Bridging Loan Directory), Rated: B

Arbuthnot Commercial Asset Based Lending Ltd. is delighted to announce it has completed a £12m refinancing for L&C Limited, trading under Red 7 Marine (“R7M”), provider of nearshore access solutions to the UK marine construction and maintenance industry, and an investee company of Perwyn Private Equity (“Perwyn”).

European Union

UK fintech unicorn Revolut forced to deny links to Russia (Business Insider), Rated: AAA

Unicorn challenger bank Revolut has strongly denied claims that its activities in securing a banking license in Lithuania are attempts to interfere in the country’s politics.

Revolut was granted a European Banking License in Lithuania in December but has since faced claims of interfering in the country’s political processes by Lithuanian Member of Parliament Stasys Jakeliūnas, chair of the Lithuanian parliament’s budget and finance committee.

German Lending Marketplace auxmoney Overtakes Midsize Banks in Consumer Loan Origination (Crowdfund Insider), Rated: AAA

Düsseldorf-based Fintech auxmoney has surpassed its targets in 2018. Loan volume increased by 74 percent compared to 2017. Raffael Johnen, Founder and CEO of auxmoney, commented:

“While the major German banks are in crisis mode, the leading German fintechs are always setting new records. With our continuously strong growth, we managed to be the first credit marketplace to catch up with medium-sized banks in Germany.”

It issued new loans totaling €551 million last year.

Auxmoney Now Stands for 0.5% of the Market of German Consumer Loans (P2P-Banking), Rated: A

German p2p lending marketplace Auxmoney announced that it has facilitated 551M EUR in consumer loans in the year 2018. Up 74% compared to 2017. Approximately 73,000 loans were financed. That would mean Auxmoney now stands for a market share of roughly 0.5% of the market.

Gymshark teams up with Klarna to announce pay later service (RLI), Rated: B

Fitness wear brand Gymshark has announced the launch of a pay later service in the UK, Sweden, Norway, Finland and Denmark. The company is now in a partnership with Klarna, a payments provider which will offer Gymshark the new payment option. The payment service will allow online shoppers to try on items at home before paying for the order.

Instantor releases report on how machine learning is revolutionising credit risk management in Europe (Fintech Finance), Rated: B

Instantor, the 3rd. fastest growing Swedish FinTech who makes tough calls easy within credit risk management presents “Credit Risk Management 2019 – How Do You Stack Up?”, a report based on a survey conducted by Instantor across Europe among top executives within leading financial organisations. The report reveals that two-thirds of these players are well underway to implementing machine learning (ML) and the majority benefits from its implementation within credit risk management.

International

30 Under 30 Europe: The Young Money Merchants Shaping Financial Markets In 2019 (Forbes), Rated: AAA

Finance is hardly known for its youthfulness, yet this year’s Finance 30 Under 30s are proving that an old industry can learn new tricks. These young venture capitalists, fintech entrepreneurs, crypto enthusiasts and Millennial bankers, with an average age of just 27, are reshaping the sector and transforming our relationship with money.

The Next Global Financial Meltdown Is Just Around the Corner (Equities.com), Rated: AAA

As Bloomberg reported last year:

Shadow banking in China has ballooned into a $10 trillion ecosystem which connects thousands of financial institutions with companies, local governments and hundreds of millions of households. The practice is now at the center of a Chinese government-led regulatory crackdown aimed at defusing financial risks that threaten the wider economy. Unlike in the U.S., traditional commercial banks drive shadow banking, or unregulated lending, in China. That’s because the banks have been able to keep shadow-banking assets off their balance sheets, thereby sidestepping regulatory constraints on lending.

About 169 million Chinese, or about 12 per cent of the population, have invested in wealth management products online, a rise of 66 per cent from two years ago, according to a Moody’s report published this month. Essentially, they are putting money into the shadow banking system.

“The picture is different in the European Union. Here, the shadow sector now accounts for perhaps 30–40% of total financial intermediation. But it is growing. Between 2012 and 2016, shadow banking as broadly measured expanded by almost 40% in the eurozone.

Atlanta-based IDology to Be Acquired by GBG for $ 300m (PR Newswire), Rated: A

GBG, the UK-headquartered Identity Data Intelligence specialist, today announces that it has conditionally agreed to acquire the entire issued share capital of IDology, a US-based provider of identity verification and fraud prevention services, for $300m (£233m) in an all-cash transaction.

Nexo lending to offer crypto-backed loans with Blockport exchange (Bankless Times), Rated: B

Blockport users will be able to use the Nexo platform to get crypto loans, offering them another alternative to selling their cryptocurrencies for fiat currencies. Instead of selling they cryptocurrency assets, Blockport users can now keep their crypto, with all potential upsides, and leverage them to get instant access to cash.

Australia

Next Growth Wave: Fintech (Seeking Alpha), Rated: AAA

In this article we look at some fintech companies, beyond investor’s normal horizon of the United States. In Australia there is a small cluster of listed fintech companies that have started to explode. Some have made gains of 400% in a year and more than 1,000% on the back of strong revenue and turnover growth. Moreover because Australian companies lack access to large scale V.C. investments, technology companies often need to capital raise through a public listing.

Zip Co. (ASX: Z1P)

Zip Co. is quite similar to Afterpay and in some ways its closest competitor with an established market position. However in addition to payment splitting, it also offers interest based loans and is different in other ways.

  • Zip Co. is smaller with a market capitalization of $380 M AUD (about $266 M USD), but still has 12,600 retail partners including most of Australia’s largest retailers, however it hasn’t yet entered the U.S. or the U.K.
  • Zip Co. has Zip Pay, which provides a payment splitting application with no interest, but with more flexibility in length of time or repayment amount than Afterpay’s solution.
  • Zip Co. also has Zip Money also provides loans for purchases above $1,000 AUD, with a 3 month interest free period, but with an establishment fee of up to $99.
  • Source: Seeking Alpha

Labor’s negative gearing policies could hurt first-home buyers (Your Mortgage), Rated: A

“Despite Australia’s tight regulations on foreign investment, other overseas property markets are tighter – including China, Canada and New Zealand,” Driscoll said. “Unlike in Australia, the Chinese lack many appealing alternative investments at home and, due to government crackdowns on peer-to-peer lending, private equity funds and with the majority of their property being leasehold, many investors are forced to look elsewhere.”

India

India’s fintech future looks bright, but it needs to find its raison d’être (India Times), Rated: AAA

Yet there is more room for growth. The market in India is still small; far more deals are being done in China, and for far higher valuations. Last year alone, venture capital investments into Chinese fintechs were more than 10 times larger than those in India, with 75 percent more deals.

Although the value of investments in India declined by 21 percent in 2018 over the previous year, the number of deals actually rose 12 percent, making 2018 the most active year on record for fintech financing.

RBI may change Rs 10 lakh lending cap on P2P platforms, say P2P players (India Times), Rated: A

Peer to Peer or P2P players are hopeful that the comprehensive financial data sought by the Reserve Bank of India might help the regulator to take some major policy decisions concerning the industry.

Asia

Hundreds of unlicensed P2P lenders still operating in Indonesia (The Jakarta Post), Rated: AAA

The Financial Services Authority (OJK) has found that 231 illegal peer-to-peer lending (P2P) providers, including those from other countries, have been operating in the country since January.

An Overview on Peer-To-Peer Lending in Indonesia (Legal Business Online), Rated: A

Two years following the enactment of Financial Service Authority (Otoritas Jasa Keuangan/”OJK) Regulation No. 77/POJK.01/2016 of 2016 (POJK 77/2016), Peer-to-Peer Lending (P2P Lending) has grown popular in Indonesia. Based on data from OJK per Oct. 2018, a total of 15,990,143,141,355 rupiah has been distributed to the borrowers in P2P Lending. It has grown 432.5% from Jan. 2018 until Oct. 2018. Until Dec. 2018, the number of P2P Lending Platform which has been registered and supervised by OJK has reached 88 companies, one of them has been given a license.

Canada

Finastra announces Siobhan Byron as new Head of Technology Enabled Managed Services (Finastra), Rated: A

Finastra has appointed Siobhan Byron as Senior Vice President and Head of Technology Enabled Managed Services (TEMS). In this role, she oversees planning and execution, sales and marketing, research and development and product management across four lines of business including Checks, Enhanced Services, Student Lending and Canadian Mortgage Technology, all in the Canadian market. She oversees more than 1,300 employees that make up Finastra’s TEMS business.

Authors:

George Popescu
Allen Taylor

The post Thursday February 14 2019, Weekly News Digest appeared first on Lending Times.

Wednesday January 31 2018, Daily News Digest

eloans

News Comments Today’s main news: Spreads narrow on SoFi’s SCLP 2018-1 consumer loan ABS. DiversyFund raises $1M. Ranger Direct Lending sees arbitration delay. Klarna partners with Maplin. BNI Europa partners with Funding Circle on German SME lending. Western Union opens tech center in India. Today’s main analysis: Banco Popular reboots Eloan. Today’s thought-provoking articles: Marketplace Lending Association executive director’s testimony […]

eloans

News Comments

United States

United Kingdom

China

European Union

International

APAC

News Summary

United States

Spreads narrow on SoFi’s 1st consumer loan ABS of 2018 (Asset Securitization Report), Rated: AAA

Strong demand and higher credit enhancement allowed Social Finance to offer lower spreads on its first consumer loan securitization of the year, even after upsizing the deal to $850 million from $650 million originally.

Four tranches of rated were issued, resulting in an advance rate of 91%, according to a person familiar with the transaction. The amount of overcollateralization in the deal will gradually build from 9% to 16%.

Two senior tranches of notes rated AA + by KBRA were issued. The Class A-1 tranche, which has a shorter expected life, pays 50 basis points over the Eurodollar synthetic forward curve, in from 57 basis points on the comparable tranche of the previous transaction. The Class A-2 tranche pays 75 basis points over the interpolated swaps curve, in from 90 basis points on the previous deal.

 

Ranger Direct hit by arbitration delay and manager uncertainty (Citywire), Rated: AAA

The New Year rally in Ranger Direct Lending (RDL) shares has come to an abrupt halt after the listed loan fund, which is backed by fund manager Mark Barnett, said arbitration to settle the legal dispute between it and Princeton Alternative Finance had been extended by around two months.

The £119 million investment trust has been locked in an argument with Princeton, a New Jersey-based investment fund in which it is the leading investor, over its exposure to Argon Credit, a US peer-to-peer lending platform that collapsed in December 2016.

Uncertainty over the exposure to Argon – which represents 14% of its £217 million net assets – and doubts over the due diligence by its adviser Ranger Alternative Management (RAM) have hobbled the shares. They fell over 23% last year but had rallied since the end of December when they hit a record low discount of 32% below net asset value. From 704p at the start of the year they recovered to 767p last week but have dropped 4% or 31p today after yesterday’s announcement. Although still wide, the discount has narrowed to just under 13%.

Relx pays £580m for digital identity company (Financial Times), Rated: A

Relx, the UK-listed information and analytics group formerly known as Reed Elsevier, has struck its biggest deal in a decade with the £580m purchase of ThreatMetrix, an online identify verification business.

ThreatMetrix has one of “largest repositories of online digital identities”, according to UBS analysts, and has built a database containing 1.4bn unique online digital identities from 4.5bn devices in 185 countries.

GLI Finance scores £50m funding line from HoneyComb fund (AltFi), Rated: A

The funding line has a term of 3 years and comprises a £50m revolving credit facility, of which £20m will be drawn and deployed immediately.

Ezbob Raises £15M in Expansion Capital (Finsmes), Rated: A

Ezbob, a London, UK-based E-lending company, raised £15M in funding.

Da Vinci Capital Management Ltd. reportedly made the investment at a post money valuation of £100m.

Meet The Lenders That Need Your SME’s Money More Than You Need Theirs (Forbes), Rated: A

in particular, the UK’s peer-to-peer lending platforms are now crying out for new customers.

Today, however, more than 30 lending platforms, including all the large small business lenders, offer their own IFISA or are on the verge of launching a product. For investors, moreover, the returns available from these schemes looks very attractive: annual yields of 10 per cent or more in some cases look phenomenal when set against the backdrop of bank and building society accounts typically paying less than 0.5 per cent a year, even if there is a risk of losses on IFISAs if borrowers default.

Augmentum Capital to seek public listing to back fintech start-ups (Financial Times), Rated: B

Augmentum Capital, the venture group backed by Lord Rothschild, is planning to list a financial technology investment fund in what would be one of the sector’s biggest initial public offerings in a decade.

It is understood to be applying for admission to London’s main market in March and will seek to raise up to £125m with the sale of new shares.

China

China’s financial risk worse than in US before financial crisis, says former finance minister (Today Online), Rated: AAA

The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.

“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”

According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (S$34.75 trillion), or 203 per cent of China’s nominal GDP in 2017.

Chinese P2P lending platform Senmiao Technology sets terms for $ 14 million US IPO (NASDAQ), Rated: A

Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, announced terms for its IPO on Tuesday.

The Chengdu, China-based company plans to raise $14 million by offering 3.3 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Senmiao Technology would command a market value of $109 million.

European Union

Klarna signs Maplin for online pay-later (Finextra), Rated: AAA

Today, leading payments provider Klarna has announced a partnership with Maplin – the UK’s number one specialist technology retailer. Maplin customers will now be able to use Klarna’s Pay later and Slice It services, allowing them to order online and receive the very latest Smart Home tech, security/CCTV products, top quality drones and so on, and then pay for them either at a later date or spread the cost over time.

Pay later enables online and mobile Maplin customers making purchases of £200 or less to receive their products and pay for them 30 days later, with no interest or fees.

BNI Europa to fund German SME loans via Funding Circle (Finextra), Rated: AAA

The Portuguese online bank Banco BNI Europa and Funding Circle have entered into a strategic partnership to support the growth of small and medium-sized businesses in Germany.

Investment will support the funding needs of c. 600 companies and thereby help to create c. 1,500 new jobs

Banco Popular reboots Eloan for new era in online lending (American Banker), Rated: AAA

Banco Popular is relaunching E-loan (it dropped the hyphen from the name) to serve as its “fintech arm,” a stand-alone brand offering solely digital products.

Launched in 1997, Eloan re-enters a market where fintechs now account for over 30% of personal loan originations, according to TransUnion. The brand will compete for clients alongside well-financed upstarts like LendingClub as well as new offerings from banks such as Marcus from Goldman Sachs.

 

Spendesk Raises €8 Million to Expand Its Platform for All Company Purchases (Payments Journal), Rated: A

Spendesk, a fintech solution that helps businesses manage their spending, has raised an €8 million Series A round led by Index Ventures, with participation from existing investors. The funds will be used to accelerate product development and expand across Europe.

ABN Amro, ING and Rabobank hit by cyberattacks (Fintech Futures), Rated: B

Three Dutch banks, ABN AmroING and Rabobank, suffered a series of DDoS attacks last weekend (27 and 28 January).

During the attack, internet banking, mobile banking, its website and Ideal were unavailable or extremely slow on 27 January from around 8pm to 12.15am CET and on 28 January from 12pm to 2pm CET and after 7pm CET.

International

 

CHECQIT, the P2P Lending Platform Aiming to Empower the Unbanked (The Merkle), Rated: A

According to the World Bank’s Global Findex report, nearly 2 billion adults and 160 million small businesses from all over the world do not have bank accounts. Efforts to approach them to traditional financial institutions have not been enough, limiting their economic growth potential.

Only 14% of adults living in the Middle East hold a bank account, opposed to the 94% of citizens from first world western countries that do. Developing regions with underserved communities such as India and sub-Saharan Africa comprise, when combined, nearly 32% of the world’s unbanked and underbanked population.

As a response to this issue, Nassim Benzekri and his team developed CHECQIT, an Ethereum-based, decentralized, peer-to-peer lending platform that allows users to grow their collaterals against a fast-guaranteed loan.

Finastra acquires Olfa Soft SA (Realwire), Rated: B

Finastra has acquired Olfa Soft SA and its cutting edge FX e-trading platform for banks and financial institutions. The move enables Finastra to deliver a unique end-to-end real-time eFX trading solution for banks’ treasury departments, covering distribution, position-keeping, post-trade and payments.

India

Western Union Opens Tech Center In India (Bank Innovation), Rated: AAA

Cross-border payments company Western Union is opening a technology center in India, which will focus on biometrics, machine learning, and robotics, the company announced yesterday.

The center, located in Pune, Maharashtra, will have over 1,000 employees all focused on building these “innovative digital and retail customer experiences globally,” the company said in a press release.

Rubique announces strategic partnership with Optacredit (Outlook), Rated: AAA

Rubique, a marketplace lending platform for individuals and SMBs, entered into a strategic partnership with OptaCredit, an Artificial Intelligence-powered, data-driven online lending platform focused on providing unsecured credit to salaried professionals across India.

With its Online PLUS technology led model and proprietary matchmaking algorithm, Rubique will enlist the company on its online marketplace for applicants to avail viable loan products from OptaCredit’s offerings.

P2P Lending Set to Explode in 2018 (PR Newswire), Rated: AAA

RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders. The NBFC-P2Ps will act as an intermediary to provide an online platform to lenders and borrowers to transact on mutually agreeable terms. RBI has defined P2P lending as a form of crowdfunding that entails issuing unsecured loans to borrowers via an online portal in its 2016, ‘Consultation Paper on Peer to Peer Lending’. However, P2P lending is different from other crowdfunding activities in being a purely debt product, in which multiple lenders fund borrowers as personal loans or small business loans. Most of the P2P platforms in India such as IndiaMoneyMart curate their borrowers after conducting KYC checks, credit assessment, and due diligence before listing them on their loan exchanges.

On the positives, the regulation has made P2P lending platforms accountable to furnish credit repayment/non-repayment information to all 4 credit bureaus, thereby increasing transparency in the credit rating system. The credit rating agencies have records on about 150 million population but P2P lending platforms are also going to bring customers hitherto relying on private money lenders. This presents a huge opportunity to close the credit information gap. It will also reward sub-prime borrowers with a better credit score for showing improvement in loan repayment behaviour.

As many first time or retail borrowers take loans from money lenders or payday companies which charge interest as high as 5% to 20% per month, P2P platforms like IndiaMoneyMart are bridging the gap by making credit not only accessible but affordable. Bangalore-based IT consultant, Tanmay Thorat* (name changed) was paying over 300% interest to payday loan companies and approached IndiaMoneyMart for a small ticket size loan of INR 1 Lakh secured at rate of 13% annualized interest in March 2016required to settle his credit card debt and pay rent deposit.

The expectation from the Union Budget 2018 is immense in the BFSI segment, especially after RBI regulation. Experts hope that essential financial services will have GST rates revised from 18% to 5% or nil.

Budget 2018: how can we enhance the growth of startups in India? (YourStory), Rated: A

Most importantly, the fund of funds for startups (FFS) has begun to take shape with as much as Rs 1,100 crore being disbursed to SIDBI for allocation to venture funds. As of September 15, 2017, 17 venture funds have raised Rs 605 crore from SIDBI and as many as 72 startups have received about Rs 318 crore funds. The Department of Industrial Policy and Promotion (DIPP) has also recently announced that this number will be increased to Rs 2,400 crore by the end of the next fiscal.

For instance, the startup space has reportedly seen a decline of 53 percent in seed funding and 25 percent in venture funds in 2017.

Listed below are four suggestions for Budget 2018.

  1. Abolish angel tax
  2. Encourage Indians to fund India
  3. Extend tax holiday
  4. Standardise and simplify   

10 things FM Arun Jaitley can do to boost access to capital via digital lenders (Financial Express), Rated: A

  1. Allow a lower MHP for servicing short-term needs of MSMEs
  2. Raise rate caps under MUDRA scheme: The RBI currently has capped the final rate that can be charged above the refinance rate offered by MUDRA at 3% for banks, 6% for NBFCs and 10%-12% for MFIs, depending on portfolio size. Since most of the new lenders incur high opex, this cap should be increased in the Budget 2018 to 10-12% in line with MFIs, for loans up to Rs 5 lakhs, and 8-10% for loans from Rs 5-25 lakh value.
  3. Extend the SIDBI net
  4. Make P2P platforms more attractive: A cap of 5% of net worth for lenders and a maximum individual loan amount of Rs 25 lakh for the borrowers would make these platforms attractive for both lender and borrower.
  5. Expand access to MSMEs
  6. Introduce PSU Banks turndown program
  7. Raise eKYC-based lending limit: The cap for lending through OTP based eKYC should be increased from Rs 60,000 to Rs 5 lakh.
  8. Promote eSign
  9. Mandate eMandate
  10. Increase the flow of data for lending
APAC

Lancers raises $ 9.2m venture round (Deal Street Asia), Rated: AAA

Tokyo-based Lancers, which operates a crowdsourcing platform under the same name, has closed a JPY 1 billion ($9.2 million) round from Tokyo-listed enterprises Persol Holdings and Shinsei Bank.

The investment sees Lancers concluding business partnership contracts with both companies concurrently and will also see it commence its new financing business targeting freelance workers, which the company claims comprise 17 per cent, or 11.22 million workers of Japan’s entire working population.

The addition of Shinsei Bank as an investor will see Lancers, Persol and Shinsei collaborate to develop and provide a new loan service to individual workers who need equipment investment or education/training upon starting a new business.

Crowd Realty closes $ 5.2m Series A (Deal Street Asia), Rated: A

Tokyo-based property crowdfunding portal Crowd Realty has closed its Series A round at JPY 580 million ($5.2 million) from Tokyo-listed Mitsubishi Estate, Shinsei Corporate Investment, Shinsei Bank, and Mizuho Capital, based on an account from The Bridge.

The Series A round saw two tranches: a follow-on investment of JPY 230 million subsequent to a JPY 350 million investment from Mitsubishi Tokyo UFJ Bank, Mitsubishi UFJ Capital, and Kabu.com Securities.

SSC warns against investing in cryptocurrencies (Viet Nam News), Rated: B

In a notice issued on its website on Monday, SSC said that the market now had companies operating in fintech, including cryptocurrency, initial coin offering, crowdfunding, peer-to-peer lending and blockchain. These were new products that had not been regulated, SSC said, thus posing high risks.

 

Authors:

George Popescu
Allen Taylor

Monday December 18 2017, Daily News Digest

Chinese share prices

News Comments Today’s main news: Investors are losing big on Chinese IPOs in the U.S. Funding Circle’s projected returns. Ablrate funds 30M GBP, launches portfolio loans product. Cash Suvidha raises $2.7M in debt funding. SimplyFi challenges banks in Russia. Goldman Sachs secures majority stake in Financeit. Today’s main analysis: Sharpe ratios for ex-ante forecasts of credit models. Today’s thought-provoking articles: What makes […]

Chinese share prices

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

MENA

Canada

News Summary

United States

Chinese IPOs in the U.S. Are Saddling Investors With Big Losses (WSJ), Rated: AAA

Sixteen companies from China have debuted on the New York Stock Exchange or Nasdaq so far in 2017, making this year one of the busiest of the past decade for Chinese IPOs in the U.S., according to data provider Dealogic. Ten of the newly issued stocks this year are trading below their IPO prices, with some plunging within weeks of listing.

The worst performer is Qudian Inc., a three-year-old online lender whose shares have slumped 46% through Friday since the company raised $900 million in October in one of the larger U.S. IPOs this year.

Chinese companies have raised a total of $3.7 billion by listing their shares in the U.S. in 2017, representing about 8% of the total U.S. IPO funds raised, according to Dealogic. Firms from China broadly have also powered a global surge in IPOs this year, driven in part by investors who bought into expectations of robust growth in China’s economy.

Source: The Wall Street Journal

During a period of big stock market gains, shares of all companies that raised at least $50 million in U.S. IPO proceeds this year are up an average of 18.3% since their listings through Friday, according to Dealogic. But Chinese companies in this category have fallen by an average 5.7% through Friday, with more than half of them down by double-digit percentage terms.

Source: The Wall Street Journal

Introducing Sharpe Ratios (PeerIQ), Rated: AAA

Over the last few months, we have received investor inquiry on how to incorporate both expectations and uncertainty in expectations to manage risk. The motivation is two-fold—expected returns are an insufficient statistic to drive investment decision making. For example, an investment with a 5% expected return but a higher range of outcomes may be less attractive than an investment with an expectation of 4% that has a tighter distribution of outcomes.

The Sharpe ratio is designed to measure riskiness while controlling for risk-free rates and volatility. The ratio, introduced by Nobel Laureate Bill Sharpe, measure return per unit of total risk taken above the risk-free rate.

[ Quant Note: The Sharpe ratio is typically used for assessing performance on liquid traded instruments (such as equities), and should not be used to evaluate ex-postperformance for illiquid collateral – including whole loans. However, the Sharpe ratiocan be a useful tool to analyze ex-ante forecasts are drawn from a credit model that generates independent and identically distributed draws (such as a monte carloprocess drawing from a roll-rate model). ]

Source: PeerIQ

What is a good FICO score? (The Mortgage Reports), Rated: AAA

Credit scores do not reflect income – it’s entirely common for people with big earnings to have weak credit, and for people with small wages to have great credit.

Source: The Mortgage Reports

Credit scores may not include all of your bills. For example, if you rent a home from a private owner, he or she will probably not report your payment history to credit bureaus.

Incorrect or out-of-date information on your credit report can reduce your score. And that can cost you when you shop for a mortgage. Fannie Mae’s Loan Level Pricing Adjustment Matrix, pictured below, shows just how much extra a lower score can cost you.

Source: The Mortgage Reports

According to Ellie Mae, the typical closed mortgage in October had a credit score of 724. However, you can get mortgage financing with lower scores.

HUD, the Department of Housing and Urban Development, allows FHA borrowers to purchase with 3.5 percent down with a credit score of 580 or better. Those with credit scores between 500 and 580 must put at least 10 percent down.

How technology giants are using their reach and digital prowess to take on traditional banks (Business Insider), Rated: AAA

As headlines like “Amazon Is Secretly Becoming a Bank” and “Google Wants to Be a Bank Now” increasingly crop up in the news, tech giants are coming into the spotlight as the next potential payments disruptors.

Google, Apple, Facebook, Amazon, and Microsoft, collectively known as GAFAM, are already active investors in the payments industry, and they’re slowly encroaching on legacy providers’ core offerings. Each of these five companies has introduced features and offerings that have the potential to disrupt specific parts of the banking system. And we expect a plethora of additional offerings to hit the market as these companies look to build out their ecosystems.

Source: Business Insider

Lendio Announces New Franchise in Detroit (Crowdfund Insider), Rated: A

Lendio, an online lending marketplace for small business loans, announced on Thursday the opening of its new franchise in the Detroit Metro area.

Walmart employees should use the new early pay policy as a last resort (Yahoo! Finance), Rated: A

Walmart, the largest private employer in the U.S., will begin allowing its 1.44 million employees to access their paychecks before payday.

After two years of talks with Even, a fintech startup that helps users budget by accessing upcoming pay early, Walmart (WMT) is rolling out the app to its entire workforce. In conjunction with PayActiv, Even lets employees take up to 50% of the amount they have earned up to that point, prior to the standard 2-week pay period. Individuals can do this interest-free up to eight times annually.

“I think this is a great perk for employees to have, provided they are able to use it responsibly.  The key is to treat it the same as an interest-bearing payday loan,” said Corey Sunstrom, director at Hobart Financial Planning and founder of thepocketadvisor.com.

Bitcoin surge spawns startup lenders willing to accept crypto-collateral (American Banker), Rated: A

The woes of an early bitcoin investor. Until recently, people who paid virtually nothing for the virtual currency and watched it soar had only one way to enjoy their new wealth — sell. And many weren’t ready.

Lenders on the fringe of the financial industry are now pitching a solution: loans using a digital hoard as collateral.

While banks hang back, startups with names like Salt Lending, Nebeus, CoinLoan and EthLend are diving into the breach. Some lend — or plan to lend — directly, while others help borrowers get financing from third parties. Terms can be onerous compared with traditional loans. But the market is potentially huge.

Human vs. machine: The rise of the bionic advisor (FinancialPlanning), Rated: A

As technological innovations continue to revamp the way business is conducted in the industry, the human element of financial advice is more important than ever. Clients now demand an experience as convenient and advanced as the robo advice platforms but will also look to advisors who add value beyond the numbers and calculations, create a deep connection, and consider both financial and non-financial assets.

But one important question remains: Is the middleman between investors and markets still important?

JPMorgan Chase, Barclays join IBM quantum computing network (American Banker), Rated: A

Two major banks have become charter members of a quantum computing network established by IBM, another sign of how far financial services companies are going to make themselves more competitive and to steel themselves against security threats.

PMorgan is looking at using IBM’s quantum computing systems for trading, portfolio optimization, asset pricing and risk analysis, among other things. Barclays is just beginning to investigate potential uses for the financial industry.

New frontiers of investing (Centre Daily Times), Rated: A

Another investment practice that is gaining popularity — and has had a longer history than cryptocurrencies — is peer-to-peer lending. Depending on the credit worthiness of the person borrowing, the interest earned by a lender can vary from 5 to almost 20 percent.

Notice how in both cryptocurrency and peer-to-peer lending, an attempt is made to remove the central entity that acts as the source of trust in the transaction. The central entity is then replaced by a large number of people. While a great concept, I’m not convinced that the central entity — which benefits most from the transaction — is actually removed. What I think is taking place is actually an attempt to reshuffle power.

In the case of peer-to-peer lending, the central power may not technically be a bank, but for all intents and purposes performs the same functions as the bank. The facilitator’s duties may have changed and the process may be simpler, but there’s still someone charging a fee to set the loan parameters.

Private Equity, Hedge Funds Are Supercharging Payday Lending (ValueWalk), Rated: A

Private equity moguls have invested heavily in the payday and installment lending, putting additional resources, tangible and intangible, at the disposal of these often-predatory businesses, according to a new report by Americans for Financial Reform and the Private Equity Stakeholder Project.

The report, available here, documents 23 payday and installment companies in which private equity firms have invested, sometimes to acquire ownership stakes, other times to fund actual lending.

Using Bitcoin as Loan Collateral (BTCManager), Rated: A

Bitcoin’s current market value, with the price around the $18,300 level, is nearly $315 billion. And, just like in “real” currencies, nearly 40 percent of that wealth is held by around 1,000 users.

Someone looking to take $100,000 in cash would be giving the lender $200,000 in bitcoin as collateral, with about a 12 to 20 percent interest rate.

 Coinbase is now the No. 1 iPhone app in the U.S. (recode), Rated: A

The crazy spike in the value of a bitcoin — from around $1,000 at the beginning of this year to more than $18,000 today, according to CoinMarketCap — has made Coinbase, an app that lets you buy, sell and store bitcoin, a winner. As of this afternoon, it is now the most-downloaded iPhone app in Apple’s U.S. app store.

Source: recode

 

Firms clamp down on brokers taking clients when they leave (StarTribune), Rated: A

Recently, Morgan Stanley and UBS Financial Services pulled out of a private “cease fire” agreement among brokerage houses that has made it easy for brokers to move from firm to firm. By withdrawing, the two are signaling to brokers considering a move at the two firms that they and their new employer face the threat of lawsuits if they take client contact information with them, a practice allowed under the pact.

The defections by two of the largest players, employing more than 18,000 brokers between them, raises the prospect that the industry may return to the era when the client-adviser relationship was treated as the property of the firm.

Marlette Funding Appoints Sabrina Basht Chief Strategy Officer for Best Egg (Marlette Funding), Rated: B

Marlette Funding, LLC, the parent company of , today announced the promotion of Sabrina Basht to the position of chief strategy officer (CSO), effective immediately. In this role, Basht will continue to report to Josh Tonderys, President.

As part of her new role, Sabrina will also lead the company’s communication efforts for Marlette Funding and Best Egg.

How Much Would it Cost to Travel to Every Star Wars Filming Location? (OppLoans), Rated: B

The cost of traveling to the filming locations for every Star Wars movie prior to The Last Jedi (excluding studio lots) would be just a hair over $10,900.

Source: OppLoans

 

Modo Announces Brian Billingsley, Former CEO of Klarna North America, to Join Team (PR Newswire), Rated: B

Modo, the company that creates interoperability for payments, today announced Brian Billingsley, Former CEO of Klarna North America, as the latest to join their team. Billingsley has an extensive payments background that will play an integral role in continuing the expansion of Modo’s capabilities for their clients. Billingsley will be joining as Modo’s Chief Revenue Officer.

BFS Capital Names Former BankUnited Executive, Mary Harris, as Chief Marketing Officer (BusinessWire), Rated: B

BFS Capital, a leading small business financing platform, announced today the hiring of Mary Harris as its Chief Marketing Officer. Harris formerly led marketing and public relations for BankUnited, a leading U.S. business bank headquartered in Miami-Lakes, Florida. Harris will join the BFS Capital senior leadership team and report to the company’s Chief Executive Officer, Michael Marrache.

Harris brings over 25 years of experience to BFS Capital across financial services and retail sectors. For BankUnited, she helped to rebrand and position the company as a national commercial bank now listed as one of Forbes magazine’s “Best Banks in America.” At BFS Capital, Harris will be responsible for marketing, branding, advertising and public relations strategies as well as customer acquisition and loyalty.

MPOWER Financing Named “Growth Tech Company of the Year” (PR Newswire), Rated: B

Continuing its impressive momentum as a market-leading provider of student loans, MPOWER Financing has been named Growth Tech Company of the Year by Technical.ly DC.

United Kingdom

Funding Circle refines projected returns calculations (P2P Finance News), Rated: AAA

FUNDING Circle has changed the way its projected returns are calculated, so that the data applies to a larger proportion of its investors.

Funding Circle said on Friday that its projections will now show the minimum rate that 65 per cent of investors could achieve.

The target rate on the Balanced return portfolio is now 7.2 per cent rather than 7.5 per cent, while the Conservative product remains at 4.8 per cent.

Assetz Capital Announces New Website & Refresh Branding While Prepping For Upcoming ISA Debut (Crowdfund Insider), Rated: AAA

On Thursday, online lending platform Assetz Capital announced the launch of its new website and “refreshed” brand just ahead of its upcoming Assetz Capital ISA.

Ablrate Launches Portfolio Loans Product After Topping £30 Million in Total Funding & Securing £3 Million in IFISA Funds (Crowdfund Insider), Rated: AAA

Asset-backed lending platform Ablrate announced on Thursday it launching a new range of portfolio loan lending products. This news comes just after the platform topped £30 million in total funding and achieved £3 million in IFISA funds.

Squirrel Announces Partnership With HM Government & Nesta While Crowdcube Campaign Nears £450,000 (Crowdcube Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, announced on Friday it has formed a partnership with the HM Government and Nesta.

SBDA Group Closes Series A Investment Round (Finovate), Rated: A

Banking personalization company SBDA Group has landed a Series A investment today. FinSight Ventures and Digital Space Ventures contributed to the round, the amount of which was undisclosed. This marks the company’s first ever VC funding round.

Alternative Finance Boom Continues With 43% Growth (Forbes), Rated: A

The UK’s booming alternative finance market shows little sign of slowing down, with the value of funding for small and medium-size enterprises growing by well over a third last year, new research shows. Data from the Cambridge Centre for Alternative Finance (CCAF) suggests new funding models ranging from loan- and equity-based crowdfunding to invoice finance offer an increasingly important alternative to conventional SME funding such as bank support.

Overall, the UK’s alternative finance market grew by 43 per cent in 2016, to £4.6bn from £3.2bn in 2015, the CCAF said. The growth means that over the six years to the end of 2016, alternative finance has provided an additional £11bn of funding.

The research found that peer-to-peer business lending was the single largest market segment in 2016, growing by 36 per cent last year to reach £1.23bn, followed by peer-to-peer consumer lending at £1.17bn (up 47 per cent), and peer-to-peer property lending at £1.15bn (up 88 per cent).

Fintech startup Loot raises £2.2 million for its digital banking app (Tech.eu), Rated: A

UK fintech startup Loot has raised £2.2 million in funding from Portag3, the VC division of Power Corporation, and Speedinvest.

Nottingham fintech firm secures Open Banking investment (The Business Deck), Rated: A

Handle, based at the Accelerate Places tech hub, enables businesses to take control of their digital profile all the way from managing their credit score to optimising their online presence and presenting a professional face to the world.

Now, it’s been selected by the UK’s innovation foundation, Nesta, to help drive a revolution in small business banking opened up by the arrival in 2018 of the Open Banking initiative.

It’s been given £100,000 by Nesta to help it further develop its dashboard into a single app which makes it easier for small business owners to keep control of their cash position, grow top line sales, compare and save money on their key expenses and keep their credit score finance-friendly.

Rebuilding Trust In Money (MinuteHack), Rated: A

The credit crunch led to widespread job losses, loss of disposable income and a drought in available capital, all exacerbated by what is generally agreed upon as long-term irresponsible lending practices from some financial institutions.

In my opinion, we’re heading for even further mistrust with the trouble currently brewing in the peer-to-peer lending sector. Yield hungry investors are drifting into peer-to-peer (P2P) investing via the new Innovative Finance ISA, without being fully aware of the risks – the FCA have already identified this as an issue.

So how can the financial services industry, and the institutions and professionals who work within it, start to rebuild the bridges that have been burnt over the last 10 years and re-establish a trusting relationship with consumers?

Protect yourself against rising rates (The Times), Rated: B

A report by Lendy, the peer-to-peer lending platform, found a substantial drop in “bad debt” with £72 million worth of residential loans written off by banks and building societies in the 12 months to September, compared with £348 million in the previous year.

China

China Futures (Seeking Alpha), Rated: AAA

And of course, over 1.4 billion people live there, the most populous nation on the planet. It imports and exports over $3.7 trillion of products every year. China’s growth over the past 30 years has been truly astounding, a miracle of modern development.

Total debt – government, corporate, and household – has grown in recent years to over 200% of the Chinese economy.

China Total Debt to GDP. Source: Bloomberg

Despite Being World’s Largest Fund, Ant Financial’s Yu’E Bao Is Risky (China Money Network), Rated: A

Technology is both revolutionizing and super-sizing China’s financial services sector. But it’s not making it any safer, according to a report by Fitch Ratings that compares the world’s two largest money management funds, Ant Financial’s Yu’e Bao and JP Morgan U.S. Government Money Market Fund.

The report notes that in just four years, Yu’e Bao has ridden the fintech wave to become the world’s largest money market fund with RMB1.56 trillion (US$233 billion) in assets under management. Since its 2013 launch, Yu’E Bao has been growing at a CAGR of 125%, thanks to technological development and its links with Alibaba Group Holding Limited’s online payment platform, Alipay.

A Bonanza Awaits China’s Surviving Fintech Lenders (Bloomberg), Rated: A

China’s whac-a-mole approach to risk — hit it everywhere it pops up — is set to hand control of the surging $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.

The survivors are in for a bonanza in coming years: Macquarie estimates credit extended by China’s fintech firms will jump more than seven-fold by 2022 to 6.2 trillion yuan ($940 billion) 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.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Zhima Credit, the credit services and rating agencies of Ant Financial, used to offer two types of credit report inquiries. The one in collaboration with SHULIDATA.com offers users access to individual credit reports issued by the PBoC and the other with CreditKarma, presents the channel for oversea credit inquiries (at present only available to users’ credit records in the U.S.).

On December 8th, a task force specially set up by China Banking Regulatory Commission (CBRC) released a rectification document towards micro lending, signaling a period of tightening oversight of the unregulated lending activities and related financial risks. This round of rectification will focus on 11 key areas: Source: Sina

  1. Tighter management of micro lending approval authority;
  2. Re-examination of micro lending enterprise qualification;
  3. Equity management;
  4. Balance sheet financing;
  5. Asset securitization financing;
  6. Real interest rates;
  7. Loan management and debt collection;
  8. Product category;
  9. Business cooperation;
  10. Information security;
  11. Illegal operation.

On December 13th, the NYSE-listed micro lender PPDAI released the unaudited financial performance report for Q3 of 2017. According to the report, in compliance with the recently issued cash loan regulations, PPDAI will

  1. Replace the one-time charges of fees into monthly fees;
  2. Reduce the overall fees and interests of its loan products to lower than 36%;
  3. Cancel the investor reserve funds from the year of 2018.

Here is the List of the Fintech 50 in China as Ranked by KPMG (Crowdfund Insider), Rated: B

Source: Crowdfund Insider

Figuratively Speaking (Global Times), Rated: B

0.78%

Nonperforming loan ratio as of end-November of Chinese online lender MYbank, backed by Chinese e-commerce giant Alibaba Group Holding.

European Union

Wealth Migrate Launches WEALTHE Coin to Democratize Access to Global Real Estate Investing (Euro Investor), Rated: A

Global online real estate marketplace Wealth Migrate today launched the WEALTHE Coin, a digital currency created to democratize access to wealth through international commercial and residential real estate ownership. Wealth Migrate allows for investment in real estate investment opportunities previously accessible only to high net worth individuals or institutional investors. While almost half of the world’s wealth is held in real estate, fewer than 13 percent of people have access or the resources to invest in and benefit from this lucrative market. Wealth Migrate aims to transform the real estate investment landscape and bridge the global wealth gap with its investment platform and WEALTHE Coin, with the vision of enabling anyone to invest with as little as $1.

WEALTHE Coin will be available in a token presale launching on the 15 December 2017, with the Public Crowdsale scheduled for February 1, 2018.

International

Three Blockchain Companies That Could Change Everything in Traditional Lending (Observer), Rated: AAA

More than $3.3 billion was raised with Initial Coin Offerings (ICO) this year alone.

SALT delivers an alternative route to make money from cryptocurrency assets without giving up your position. It’s a lending platform which uses blockchain to back loans. In simple terms, SALT brings the ability to list your blockchain assets as collaterals for a cash loan. Every crypto asset holder can lend them to anyone else, receive interests and regain their crypto asset as soon as the loan is paid back.

Another disrupting crypto lending project is Jibrel Network. It’s a place where users, brokers and investors can tokenize their financial assets and sell them on blockchain for profit. Even though the platform is still in development, it receives strong support from cryptocurrency enthusiasts and ICO investors. Moreover, its pre-sale ICO was more than success and raised over $3 million and attracted funds from both individual investors as well as institutions, such as TaaS Fund, Tech Squared, Aurora Partners and others.

ETHLend is a facilitating platform for both borrowers and lenders. Here, lenders and borrowers can meet up and decide everything from loan duration to the interest rate. Like Jibrel, the platform runs on Ehtereum network and uses ERC20 tokens act as a deposit on the loan.

Datarius Cryptobank Has Reached SoftCap in a Few Hours After Start of Pre-ITO (Digital Journal), Rated: A

Datarius Cryptobank has opened the doors to participate in the project to all comers and has gone to the pre-ITO stage. A SoftCap of $125,000 has been reached within just a few hours from the start of the campaign, as stated by information now available on the official website of the project.

ETHEREUM CO-CREATOR STEVEN NERAYOFF JOINS RCN ADVISORY BOARD AS THEIR GLOBAL LENDING ECOSYSTEM EXPANDS TOWARDS ASIA (Bitcoinist), Rated: B

Entrepreneur and venture capitalist Steven Nerayoffhas joined the RCN global lending project as a lead advisor.

RCN is a peer-to-peer credit protocol based on cosigned smart contracts that connect lenders and borrowers anywhere in the world and in any currency through the use of RCN tokens, the platform’s native cryptocurrency. Having successfully raised over $40 million during their recent token sale, the RCN network has the potential to democratize digital economy by increasing credit access for borrowers, eliminating the risk of default for lenders, and reducing asymmetric information between network agents.

Israel and Singapore fintech hubs sign MoU (Finextra), Rated: B

The Singapore FinTech Association (SFA) and the Israeli City TLV association have inked a Memorandum of Understanding (MOU) to foster greater FinTech co-operation between the two communities.

The Challenge Of Delivering Relevant Content To Educate Customers (Forbes), Rated: B

According to advisory firm KMPG, there was a total of $3.2 billion invested globallyin fintech companies in Q1 of 2017. What’s even more interesting is that a PwC report on fintech’s growing influence on financial services showed that 82% of financial services companies want to increase fintech partnerships in the next three to five years.

India

Fintech Startup Cash Suvidha Raises $ 2.7 Mn In Debt Funding (Inc42), Rated: AAA

Just a few days after fintech platform Finbucketannounced its $1.87 Mn funding, Delhi-based online lending startup Cash Suvidha has raised an institutional debt of $2.7 Mn from various financial institutions.

The funds have been raised from six financial institutions and will be primarily used to facilitate further lending to Small and Medium Enterprises (SMEs).

Amazon to strengthen fintech space with stake in Capital Float (Economic Times), Rated: A

Online retail giant Amazon is looking to expand its footprint in the financial technology space and is in talks to invest in digital lending startup Capital Float, two persons aware of the development said.

Bengaluru-based Capital Float, which has so far focused on small businesses, is also set to start consumer financing on Amazon’s platform, apart from the ecommerce seller financing it already does, they said.

Deal or no deal – 2017: transaction trends and regulatory reforms (YourStory), Rated: A

Online retail giant Amazon is looking to expand its footprint in the financial technology space and is in talks to invest in digital lending startup Capital Float, two persons aware of the development said.

 

Statistically speaking, at the close of the third quarter of 2017, FDI inflow was $25 million, with a growth of approximately 17 percent over the corresponding period last financial year.  Mauritius, Singapore and Japan topped the list of countries investing in India as of September, 2017.

From a VC-PE activity perspective, 2017 also recorded a six-year high in deal values, with deals worth approximately $48 billion, up 34 percent over 2016. According to data published by Venture Intelligence, ‘private equity firms invested about $17.6 billion in Indian companies in the first nine months of 2017, sailing past the previous high of $17.3 billion in 2015.’

The sectors that remained bullish in 2017 were fintech, digital innovation, IT e-commerce, logistics, infrastructure and life sciences. Within e-commerce, fintech, mobile gaming, and health apps contributed a significant pie in the growth trajectory.

Now, score high marks in exams to get low interest rates on loans (Times of India), Rated: A

Can 90% in your college exam get you an iPhone? It could as a number of online student lenders are scrutinising marksheets to assess credit worthiness, and hand out loans for consumer durables.

Nagaraju T, a 21-year-old student at Malla Reddy College of Engineering in Hyderabad bought a Lenovo i5 laptop for Rs 36,000 in 2016. “I got my dad to make the down payment of Rs 10,000, and I paid the EMIs of Rs 2,000. I closed the loan in 13 months, and then bought a MINote 4 for Rs 14,000 and paid monthly installments of Rs 850,” says Nagaraju.

KrazyBee places a cap of Rs 15,000 for consumer durable loans, Rs 50,000 for two-wheeler loans and Rs 3.5 lakh-Rs 4.5 lakh for educational loans.

KrazyBee, Faircent and Buddy.com say their non-performing asset (NPA) levels are under 3%, which is below the industry norm. The low default rate, they say, is due to risk assessment and screening of applicants.

Online lender Deal4Loans’ Rishi Mehra says the use of proxies such as marksheets instead of CIBIL scores needs to be viewed with caution. In the early 2000s, a rash of NBFCs lent based on such proxies for credit scores, he says.

FinTech startup Cash Suvidha raises USD 2.7 mn for expansion (Outlook India), Rated: A

Delhi-based FinTech startup Cash Suvidha, the trade name of Usha Financial Services Pvt. Ltd., raised an institutional debt of USD 2.7 million from various financial institutions towards driving growth.

Sort your loan application issues with these fintech apps (Outlook India), Rated: B

Every borrower registered on Faircent is identity-checked, credit-checked and risk-assessed by our system as well as an experienced team. Its tech-enabled credit evaluation algorithms reject over 90 percent of the borrowers who apply for loans.

OHMY Technologies Private Limited is the owner and operator of OMLP2P, an online Peer-to-Peer (P2P) lending platform. The platform assesses creditworthiness of a prospective borrower using its proprietary algorithm developed in consultation with CRIF HighMark, one of the leading Credit Bureau.

CoinTribe is a leading online loan disbursement platform that provides quick and easy collateral-free loans to small businesses and individuals. It is the only online lending platform which has back-tested its credit model with large banks.

Aye Finance differentiates itself by creating a technically enabled process that builds credit insights through a variety of available business and behavioral data. This effective credit appraisal coupled with the use of modern workflow automation, and a small but engaged workforce is helping bridge the gap between the MSMEs and organized lending.

CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financers.

Asia

Uber rival Go-Jek drives payments push with acquisition of three fintech start-ups (CNBC), Rated: A

Ride-hailing start-up Go-Jek has acquired three financial technology (fintech) start-ups as it looks to dominate Indonesia’s digital payments space.

Go-Jek said Friday it had bought offline payments service Kartuku, payment gateway Midtrans and saving and lending firm Mapan for undisclosed amounts.

MENA

Fintech News from the Middle East and North Africa (MENA) (Finovate), Rated: B

  • Al Baraka Banking Group partners with Path Solutions to deploy iMAL Islamic core banking system.
  • UAE Exchange to launch gocash card and mobile app courtesy of partnership with online travel firm, Cleartrip
  • Online real estate marketplace and KPMG Global Fintech Top 50 member Wealth Migrate opens office in UAE, announces new country CEO, Lee-Ann Rush.
Russia

Russian fintech company challenges banks (Banks.am), Rated: AAA

According to the press service of the company, SimplyFi’s new product gives Russian company the opportunity to apply and receive loans up to RUR 300 000 (around USD 5000) from private investors completely remotely through a fully-electronic application process, transferred to any bank account.

Through a scoring system developed on the basis of technological analysis of big data, decisions on applications are made automatically within two hours. The company will only need tax ID and a statement of turnover in the settlement account. SimplyFi provides a 100% guarantee for the raising of funds once an application is placed on the market.

Canada

Financeit Recapitalizaton Gives Goldman Sachs Majority Stake (Finovate), Rated: AAA

Point-of-sale financing provider Financeit completed an investment round today with existing shareholder Goldman Sachs. The round gives the firm a majority stake in the Toronto-based fintech.

Financeit helps merchants increase closing rates and transaction sizes by enabling them to offer customers affordable monthly or bi-weekly payment plans.

Authors:

George Popescu
Allen Taylor

Hit or Miss? – Qudian’s US IPO

Qudian

Qudian, a pure online lender based in China dealing in micro-consumer loans to consumers, recently listed itself on the New York Stock Exchange. The IPO is touted to be the largest New York offering by a Chinese fintech company after Alibaba Group Holding Ltd made a record-breaking offering of US$25 billion in 2014. The company […]

Qudian

Qudian, a pure online lender based in China dealing in micro-consumer loans to consumers, recently listed itself on the New York Stock Exchange. The IPO is touted to be the largest New York offering by a Chinese fintech company after Alibaba Group Holding Ltd made a record-breaking offering of US$25 billion in 2014. The company raised almost $900 million in its initial public offering. Qudian priced its IPO at $24 per share and the current price is around $33, implying a return of almost 40%. Let’s walk through a brief history of the company to understand its background.

Brief Overview and Insight

Founded in 2014, Qudian is a financial firm that started its life as a micro lender under the name Qufenqi. The founders Shuang Liu and Min Luo started Qufenqi as an online micro lending platform, issuing small amounts of credit to help college-going students to buy things like computers and smartphones. In order to reflect a broader focus on retail products and services, the company changed its name from Qufenqi to Qudian and started providing consumer loans of small amounts.

The company facilitates all its transactions through mobile devices. Borrowers can apply for loans from their mobile sets and receive approval within seconds. The funds are disbursed to borrowers through Alipay, the giant e-payment platform originally built by Alibaba Group and now operated by Ant Financial.

Qudian’s Investor Overview

Since its inception, Qudian has aggressively raised funds from multiple high-profile investors including Ant Financial, RMB Angel Investments, BlueRun Ventures, and Beijing Kunlun Tech Co Ltd, a Chinese online gaming firm. In 2016, Hangzhou Liaison Interactive Information Technology and Beijing Phoenix Wealth Holding Group made a pre-IPO investment of more than US$450 million. The company has raised almost $873 million in six rounds of private funding. Qudian’s principal shareholders include API controlling 12.8% shares and Qufenqi Holding controlling 21.6% shares. Other principal shareholders include Kunlun Group Ltd and Source Code Accelerate L.P. controlling 19.7% and 16.1% shares, respectively.

Numbers Revolving around Qudian

The company has facilitated approximately US$5.6 billion in transactions to 7 million active borrowers in the six months ended June30, 2017. In the first half of 2017, Qudian earned total revenue of US$270.4 million, an increase of 393.3% in comparison to the same period last year when the company earned total revenue of US$56.3 million. The company’s net income also grew to US$143.6 million from US$18.5 million, up by 695.2%. The cash credit products of the company had an average loan size of approximately US$136 and weighted average term of two months while the merchandise credit products had an average loan size of US$184 and weighted average term of approximately eight months in the six months ending June 30, 2017.

The charts below depict the growth of the business since the inception of the company in 2014.

Qudian’s US IPO

Qudian, which has been listed among the top 50 fintech companies of China, will trade under the ticker “QD.” The company was able to surprise analysts by pricing its shares at $24 as compared to the $19-$22 range earlier expected. It’s lead underwriters include marquee names like Morgan Stanley, Credit Suisse, Citigroup, China International Capital Corp., and UBS Investment Bank.

Qudian will utilize the proceeds from its IPO for strategic acquisitions, for marketing, and borrower engagement. The aim is to become the number one fintech lender by generating greater consumer awareness and by buying value-added assets. The question here arises as to why Qudian’s IPO has been welcomed given it is just a three-year-old company and is operating in an industry which was recently in the Chinese regulator’s cross hairs. The raison d’être is that the IPO gives access to one of the hottest investment plays in the world market — the rising Chinese consumer.

Qudian has been on a tearing growth spree and has been able to cultivate investors and strategic partnerships with players like Ant Financial. Qudian’s market leadership, partnership with Ant Financial, its profitability, ability to attract and retain potential borrowers, and revenue growth, are some of the reasons that made it one of the hottest IPOs of the year.

But the flip side of the story is the relative infancy of Qudian. Founded in 2014, Qudian’s limited operating history elevates the risk element associated with the Chinese micro lender.

Conclusion

Qudian has had blockbuster financial results. The IPO was the fourth biggest in the US this year and has emboldened other Chinese players to seek the prestigious US listing. Peer-to-peer lender Ppdai has already announced that it will look to raise almost $350 million in a US listing, and a FT article speculates that there are more than a dozen Chinese players firming up their plans for an American listing.

There are obvious reasons for this allure of a NYSE/NASDAQ IPO. Not only are these the largest pools of capital in the world, they represent the gold standard of corporate governance. Chinese companies looking to shed the overhang of the regulatory discount back in China and aiming to fill their war chest for the largest marketplace lending market in the world are looking to the US for that stamp of legitimacy. Qudian shows that American investors are ready to vote with their pockets for well-run profitable Chinese players.

Author:

Written by Heena Dhir.

Friday October 13 2017, Daily News Digest

China P2P

News Comments Today’s main news: Ron Suber delivers last keynote at Lend360. Kroll assigns preliminary ratings to Marlette Funding Trust 2017-3. Judge says he is likely to certify LendingClub lawsuit as class action. Lemonade rolls out open API. Zopa CEO struggles with perception that P2P lender is struggling. Reserve Bank of India issues KYC guidelines for prepaid payment instruments. State Bank of Mauritius, […]

China P2P

News Comments

United States

United Kingdom

China

European Union

International

India

Africa

South America

 

News Summary

United States

The “Godfather of Fintech’s” Last US Keynote (FintechSauce), Rated: AAA

Ron Suber walked onto the LEND360 main stage to the theme song of Francis Ford Coppola’s The Godfather.

This was Ron’s last keynote in the US (until he makes a Jordan-like comeback, perhaps?), which attracted a standing room only crowd. His talk started off with the theme of consolidation, comparing FinTech to previous life-changing industries such as radio, tv and mobile phones.

Ron also shared his top tips for entrepreneurs and platforms:

  1. He suggested that the platforms know what makes them unique and to be able to pitch your company in two sentences or less.
  2. He also said that there is no “single solution.” There will always be ways to do things.
  3. Also, listen to consumers–they’re the ones that drive innovation.
  4. Focus. The need to focus as an entrepreneur is key to success.

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2017-3 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Marlette Funding Trust 2017-3 (MFT 2017-3). This is a $297.8 million consumer loan ABS transaction that is expected to close on October 26, 2017. This transaction represents the fifth securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.

The transaction has initial credit enhancement levels of 37.70% for the Class A Notes, 24.90% for the Class B Notes, 14.90% for the Class C Notes and 7.00% for the Class D Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A, Class B and Class C Notes) and a reserve account funded at closing.

LendingClub Investors Poised To Win Cert. Over Objections (Law360), Rated: AAA

A California federal judge Thursday said he will likely certify a class of LendingClub Corp. investors who allege the peer-to-peer lending company hid defects in its internal controls before and after its $1 billion initial public offering, over objections from both the company and investors pursuing separate state law claims.

U.S. District Judge William Alsup indicated he was “inclined to certify everything,” but seemed likely to trim the terms, telling LendingClub attorney Victoria Parker of Quinn Emanuel Urquhart Sullivan LLP she’d “raised some good points” about….

Online Lending 2.0 by Renaud Laplanche (Field Services on Demand), Rated: AAA

Lemonade platform now “open to the world” with API (Banking Technology), Rated: AAA

“We’re opening up the Lemonade platform to the world!” says Shai Wininger, co-founder of Lemonade, a US-based insurtech firm.

The new Lemonade API supports quoting, policy creation and payment for homeowners, condo, and renters insurance policies in the company’s active markets  of New York, California, Texas, Illinois, New Jersey and Rhode Island. More regions will be added “in the near future”.

Lending Disrupted? Not Yet, Says Renaud Laplanche (Crowdfund Insider), Rated: A

Renaud Laplanche, co-founder and CEO of Upgrade, and former co-founder and CEO of Lending Club tried to reignite the flame of the consumer lending sector by forecasting not only its continuing success, but further the emergence of major innovations.

The growth of online lending will re-accelerate in the next 15 months.

Credit card debt is currently growing at a 5% rate and represents $1.021 trillion. The total debt balance of US households totals $12.73 trillion.

The US is experiencing one of the longest economic growth run, yet still 20 months shorter than the growth run which preceded the great depression. Observers estimate at less than 30% the risk of recession.

When I asked Renaud Laplanche about his personal vision of the ideal product – the product he would like his company to deliver if there were no technological or other barrier, he said: “one click responsible credit.”

Goldman wants to help flip that house (CNBC), Rated: A

Now Goldman is getting into lending for real estate pros through its acquisition of Genesis Capital.

The deal, for undisclosed terms, gives Goldman a business that makes loans of $100,000 to $10 million at rates of 7 percent to 12 percent. It won’t lend to occupants, so that leaves real estate professionals who are renovating and looking to sell fairly quickly. Genesis made $1 billion of loans last year.

Affirm’s Plan To “AMP” Retailer Margins And Conversions (PYMNTS), Rated: A

You’ve heard the old story: If brick-and-mortar merchants watched 75 percent of their customers walk in their stores and then walk out without having purchased a single thing, sirens would be screaming. But that’s precisely the situation with online commerce – three out of every four consumers who load their cart, don’t buy what’s in that cart.

AMP is integrated with seven of the top email service providers that online merchants use to market to consumers. Thee integrations give online merchants a new way to nudge a consumer into making that purchase by offering the ability to pay in installments, using Affirm. Retailers using any of those email providers are able to drag and drop the Affirm “as low as” pricing offer into any of their email templates, and then use it as a mechanism to convert abandoned carts.

“We want to give retailers a new way to follow up,” Overstreet said. “Instead of just showing their consumer the same $400 loveseat that they decided not to buy a day or a week ago, the consumer gets a prompt letting them know they can buy that $400 loveseat for little as $35 a month.”

Should you add a loan to your shopping cart? (San Francisco Chronicle), Rated: A

Got your eye on a new living room set at Wayfair? Or maybe you’re booking your honeymoon on Expedia. Increasingly, shoppers at these sites and others are encountering payment options from third-party lending companies like Affirm, Bread, Klarna and Acima Credit.

Lyst, an online clothing store carrying brands such as Burberry, Marc Jacobs and J. Crew, offers loans through Klarna. And Walmart is considering checkout loans from Affirm for items above $200, according to a report by the Wall Street Journal.

While some retailers may offer zero-interest promotional rates, annual percentage rates from Affirm and Bread, for example, can be as high as 30%. A $345 handbag at Rebecca Minkoff will wind up costing you $385 if you pay for it with a 12-month loan from Affirm at an APR of 21% — the average rate for its borrowers, Affirm says.

HOW SHOPPING LOANS WORK

The process is similar to selecting a store credit card at checkout. The loan option might appear next to the purchase price or in your shopping cart. In the online experience, selecting the loan option will direct you to the lender’s website or a smartphone app. You enter a few pieces of personal information — typically your name, date of birth and last four digits of your Social Security Number, or in some cases, just your phone number.

If you’re approved, the lender displays multiple loans with varying interest rates, monthly payment amounts and terms. You pick a loan, sign the agreement and finish checking out. Just like using a store credit card, the whole process takes anywhere from a few seconds to a few minutes.

From Weeks to Minutes: How Fintech Is Changing the Speed of Lending (Wharton), Rated: A

In this Knowledge@Wharton interview, Spencer Robinson, head of strategy for the company, explains what Kabbage has discovered that allows it to approve loans in minutes, versus what he says can often be a multi-week slog with traditional banks. 

Knowledge@Wharton: Your website notes that you’ve provided $3.5 billion in financing to some 100,000 businesses online, and you’re still not a household word, which, with those kinds of numbers, surprises me.

Spencer Robinson: Capital One really changed the way people looked at consumer credit finance. And that sort of mindset really helps lay the foundation for the types of things that we do.

Knowledge@Wharton: It’s interesting, the difference between you and a traditional lender. I’ve seen stories about Kabbage. One is about a small business owner who wanted to borrow $50,000 and they took their loan request to a bank. It took three weeks and the answer was “no.” And then they went to you and they got their $50,000 in six minutes. Why can’t banks do that? Why is it that you can do that?

Robinson: I would say banks can. A lot of times it’s a matter of getting out of your own way.

Robinson: Our APR average is right at about 39% to 40%.

Knowledge@Wharton: What is the highest amount that you lend?

Robinson: We’re at $150,000 now.

Listen to the podcast interview here.

If the rules are right, digital microlending could play role in subprime market (R Street), Rated: A

Credit unions frequently are the best available choice for those who have difficulty obtaining credit through traditional banks. But for some, digitally coordinated peer-to-peer lending agreements—inspired by microfinance arrangements for economically fragile communities internationally—also are proving to be an emerging option.

Peer-to-peer digital microlending has the potential to fill a portion of the gap by providing this cohort with small, short-term loans that typically range from $100 to $500.

One of the largest such peer-to-peer digital microlending platforms is the “R/ Borrow” section of reddit.com. This subreddit uses the reputational ecosystem within reddit to identify worthy borrowers, banning users who default or violate the terms of use. The subreddit facilitates the microloans and acts as a central database of transactions, coordinating more than $780,000 in loans in 2015.

If it can be properly scaled, peer-to-peer digital microlending could be a worthy option over payday loans for subprime borrowers.

More than 100 financial firms using Ripple blockchain software (American Banker), Rated: A

Ripple’s campaign to beat Swift at cross-border payments just got some new recruits.

The San Francisco startup announced several new customers of its enterprise blockchain software on Tuesday, bringing the total number of financial ….

ValueInsured Closes Financing Led by Global Reinsurer (PR Newswire), Rated: A

ValueInsured, the only provider of down payment protection, today announced the closing of $6.5M of funding led by an affiliate of Everest Re Group Ltd. and also Houston International Insurance Group (HIIG). The latest round of funding from Everest Re and HIIG builds on their existing partnerships with ValueInsured, which began in 2014 with an initial $6M seed round. This additional investment provides ValueInsured with the growth capital to continue its aggressive distribution partnership strategy, expanding channel presence and enhancing the features of the +Plus SM down payment protection program.

An API-Based Cure For Post-Purchase Blues? (PYMNTS), Rated: A

But many consumers could soon find an easier process for obtaining savings on such purchases, thanks to an API-based solution: Earny, an app-based bot born from a Mastercard API. Earny launched last year with the promise of offering consumers a more frictionless price protection process.

According to Vakrat, Earny’s inspiration started with a blazer purchased for $129 by co-founder Dori Yona. A few weeks later, Yona came down with a sudden case of sticker shock after shopping online and finding the same blazer available for roughly half the price.

Vakrat said he and Yona contacted the credit card company to see if Yona could receive a refund on the difference. The credit card company offered price protection, but Vakrat politely described the process of getting reimbursed for the difference as “inefficient.” While ultimately successful, it took two weeks for Yona to complete the process and receive his $65.

To develop a more efficient post-purchase refund process, the two co-founders entered Mastercard’s Masters of Code Hackathon. The result was the Earny app, which taps into Mastercard’s Simplify Commerce API. Earny uses APIs to authenticate users through their Gmail, Yahoo or Microsoft email providers, then scans their inboxes for eCommerce receipts and compares them to prices from approximately three dozen retailers – including Target, Costco and Overstock.com – checking for price drops. The service works by automating the price protection process, automatically refunding consumers for any detected price differences.

According to Mastercard’s research, U.S. consumers walk away from more than $50 billion in price drops every year because they were either unaware of better offers or because the refund process can be lengthy and require tedious paperwork.

Fed’s Bullard warns bank regulators are ‘complacent’ over fintech risks (Kitco), Rated: A

U.S. banking regulators must accelerate efforts to address the risks posed by fintech companies to the banking sector which could be “eviscerated” by these innovative new players, St. Louis Fed President James Bullard said on Thursday.

In the lending sector alone, Goldman Sachs estimates that $11 billion of annual profit is at risk of leaving the banking system, according to research cited by the Fed.

Fintech’s Got 99 Problems And Diversity Is Definitely One (Forbes), Rated: A

Marketplace lending platform P2Binvestor announced today the launch of a first-of-its-kind bank partnership program with New Resource Bank in order to provide crowdsourced lines of credit to growing, mission-aligned businesses with a hunger for innovation.

Alongside transforming the lending structure for fintech companies, P2Binvestor’s attitude towards diversity in the workplace and moving away from traditional, yet stereotypical roles is second to none, headed up by CEO Krista Morgan.

Five Ways To Bounce Back From A Culture Catastrophe (Forbes), Rated: A

Corporate culture is a growing concern for boards and stockholders. One study shows that 92% of executives believe improving corporate culture would increase their firm’s value. That is an overwhelming majority, and yet so many companies with seemingly unlimited resources keep falling into the trap of poor culture.

A recent victim is SoFi, a privately held online lender. SoFi lost its CEO amid a storm of accusations including sexual harassment, verbal harassment and a culture of fear.

The CFPB’s Payday Lending Rule: An Opportunity in Disguise? (JD Supra), Rated: A

Editorial: Payday loan rules make sense (LJWorld), Rated: B

Kansas legislators should take steps to rein in the predatory lending practices some in the payday lending industry employ.

According to the state bank commissioner, payday loans in Kansas totaled more than $300 million in 2016. Interest rates and fees average an astounding 391 percent per year.

Under UCCC rules, payday loans are limited to $500 on loans that last seven to 30 days, and lenders cannot charge more than 15 percent of the amount borrowed. However, they can charge an additional 3 percent per month for loans that go past their maturity date. Lenders cannot make more than two loans to the same person at any one time, and they cannot make more than three loans to the same person within a 30-day period.

Editorial: Payday lending should be restricted (CJOnline), Rated: B

The average federal student loan carries an interest rate of around 5 percent. When you take out a loan for a car, you can expect to pay between 3 percent and 10 percent. The average interest rate for a credit card is a little more than 15 percent. But if you get a payday loan in Kansas, you’ll be slapped with an interest rate of 391 percent.

According to the Pew Charitable Trusts, payday borrowers are disproportionately likely to be low-income African Americans with lower average levels of education. Borrowers are 62 percent more likely to earn less than $40,000 per year, 82 percent more likely to have lower than a four-year degree and 105 percent more likely to be African American.

LendingClub Schedules Third Quarter 2017 Earnings Release and Conference Call (Business Insider), Rated: B

LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, announced that it will report earnings for the third quarter of 2017 on Tuesday, November 7, 2017, after market hours. LendingClub will host a conference call to discuss the third quarter financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.

A live webcast of the call will be available at  under the Events & Presentations menu. To access the call please dial +1 (888) 317-6003 or outside the U.S. +1 (412) 317-6061 with conference ID 7584209 ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).

United Kingdom

Zopa CEO on lender freeze: Popular restaurants don’t ‘put on more tables, they take reservations’ (Business Insider), Rated: AAA

The CEO of peer-to-peer lending business Zopa has rejected claims the business is struggling to attract borrowers, saying the platform is still growing lending volumes by as much as 50%.

CEO Jaidev Janardana told Business Insider: “I do struggle a little bit with this thing that we’re struggling with borrowers. We have been growing [lending] by 45-50%. I don’t think there are other businesses that are growing at 50% year-on-year that would be looked at as struggling.”

Zopa has built up a waiting list of 15,000 people who want to lend over the platform. The company hopes to let some of them onto the platform towards the end of the year.

‘Consumer lending is always a cyclical business’

The Bank of England has been sounding the alarm on rising consumer credit levels and warned lenders in July not to “return to the punch bowl,” saying it is worried that lenders relaxing their lending criteria could lead to repeats of mistakes made during the financial crisis.

Orca’s New P2P Lending Investor Guide Makes a Splash: UK Surpasses £11B Cumulative Lending Mark (Crowdfund Insider), Rated: AAA

Orca’s analytic service recorded a new milestone for the asset class this month – £11bn cumulatively lent, all-time in the UK. With over 200,000 active investors and 30% of market share attributed to institutional investment, UK P2P lending is maintaining its growth trajectory, set for a market value of £15bn by 2020. In 2017 year-to-date, £3.4bn has been invested across P2P lending platforms, which is over £100m more than the 2016 total lent figure, according to the Guide.

Source: Orca

Download the guide here.

Legal 500 2017: The region’s top performers in banking and finance (Manchester Evening News), Rated: A

Law firms across Greater Manchester continue to act for a host of well-known lenders and borrowers on a wide range of leveraged, real estate and corporate and asset finance transactions.

While this year’s tiers one and two remain the same as last time, Eversheds Sutherland (International) LLP has moved up from tier four to tier three and gunnercooke LLP has moved from tier five to tier four.

TIER TWO – DWF has a ‘strong’ borrower practice whose experience spans corporate banking, acquisition finance, public sector finance, and peer-to-peer lending.

LendInvest Teams Up With UKPA to Launch Second Annual PropTech Influence List (Crowdfund Insider), Rated: A

On Thursday, UK-based p2p lending platform LendInvest announced it has teamed up with the UK PropTech Association (UKPA) to release the second annual PropTech Influence List.

The deadline to vote is November 3rd. The list will be announced at 

Search is on for PropTech Influencers of the Year (Estate Agent Today), Rated: B

The LendInvest PropTech Influencer List  recognises the 25 people doing the most to develop the understanding, reach and benefit of PropTech in the property market.

Nominations are open to anyone working in or contributing to PropTech in the UK and overseas.

Last year’s winner was Estate Agent Today contributor James Dearsley, who this year becomes one of the judges in the competition.

IT portfolio – debt/alternatives to gilts (Citywire Money Forums), Rated: A

In terms of alternative uncorrelated debt what are the alternatives? I hold Investec local currency EM debt, Carador income and Funding Circle IT.

Can the gilt portion be modified to other sources of debt? I have considered SQN Asset, and P2P global (recent weaknesses) as a top up. Will these forms of debt hold up in a downturn? I’m not so sure against gilts/treasuries which are overvalued but possibly the only real diversifier (I also hold 7% in gold).

SONECT wins LendIt Europe PitchIt startup competition (Bankless Times), Rated: B

SONECT, a platform that can convert anyone or any shop into a virtual ATM, is the PitchIt winner at LendIt Europe.

China

China’s Online Lending  Consolidates As Market Grows (PIIE.com), Rated: AAA

China’s online peer-to-peer (P2P) lending industry is going through a welcome consolidation. Weak, noncompliant platforms are failing, but long overdue regulatory tightening and still excessive competition is likely to further winnow down the 2,000 platforms online today to a few hundred in the coming years. However, those that survive will compete in a much larger market that has grown quickly despite a minefield of new regulations and frequent failures.

This post expands and updates two earlier installments in this series: an introduction to Chinese P2P in part 1, including its earlier growing pains and the regulatory loopholes they used to grow. Part 2describes regulatory measures taken up to July 2016, especially the difficulties involved with regulation through local officials.

Source: PIIE

P2P loans outstanding in China at the end of September are up 63 percent from a year ago, to RMB 1.15 trillion (around $173 billion).

Source: PIIE
European Union

Linked Finance aims to increase level of peer-to-peer lending (RTE), Rated: AAA

Linked Finance has raised €2 million in equity as part of plans to expand its business.

Since launching in 2013, Linked Finance has lent €34.5m to Irish SMEs, more than a third of which has already been repaid, and agreed its 1,000th loan in September.

Source: RTE

RTÉ’s Business News Weekly Podcast – October 13 (RTE), Rated: A

On this week’s podcast: Peer-to-peer lending platform Linked Finance raises €2m to fund its expansion and why small and medium sized Irish companies stand to benefit from more favourable tax treatment for employee share incentive schemes announced in Tuesday’s budget.

Listen to the podcast here.

Big banks discuss how to adjust to a digital economy (Business Insider), Rated: A

During a panel discussion at 

Source: Business Insider

 

Zinbaustein “Wohnen Im Village 11” Hits €625K Goal, Starts Investor Waitlist (Crowdfund Insider), Rated: A

Private investors may now participate in a new equity crowdfunding real estate round for a mortgage of residential buildings in Darmstadt / Frankfurt area of Germany.  “Wohnen Im Village 11” on zinsbaustein.de features ten semi-detached houses and one detached house.  Private investors can participate in the form of a subordinated loan from 500 euros to 10,000 euros with a maturity of approximately 18 months and receive an interest rate of 5.25 percent per year. There is a repayment option after 12 months, when construction and sales run according to schedule. To date, 625,000 euros have been raised from the crowd for the project; a waitlist has been started.

French fintech startup Manager.one raises €2 million (Tech.eu), Rated: B

Manager.one, a fintech startup based in Paris, has raised €2 million from angel investors for its online banking platform for entrepreneurs.

International

Finastra delivers next-generation payments technology on Microsoft Azure (Realwire), Rated: A

Finastra is bringing its next-generation payments solutions to the cloud via Microsoft Azure, Microsoft’s enterprise-ready trusted cloud platform. Banks will benefit from streamlined onboarding, as well as faster access to new products and upgrades. This alliance is an extension of Finastra’s cloud-based lending oversight solution that was previously launched on Azure in the US and Canadian markets in 2016. Since then, Finastra has broadened its relationship with Microsoft and is migrating its payments capabilities to Azure.

Worldcore: Bringing Banking to the Blockchain (BTCManager), Rated: A

Worldcore is an established online money transfer service, which has recently announced plans to expand its operation to create an online, blockchain-powered peer-to-peer lending platform. To this end, they have announced an ICO, which is currently scheduled to begin on October 14, 2017.

Jeff Woodward Joins Brickblock as CIO (BlockTribune), Rated: B

Brickblock, the investment platform connecting real-world assets and cryptocurrencies, has added experienced property investor and developer Jeff Woodward to its team as Chief Investment Officer (CIO).

In December, Brickblock will complete a world-first by selling an entire apartment building on the blockchain.

India

RBI announces strict KYC guidelines for prepaid payment (Jagran Josh), Rated: AAA

Africa

The SBM Group and SALT Technology Enter Exploratory Partnership to Collateralize Blockchain Assets (BlockchainNews), Rated: AAA

The State Bank of Mauritius, SBM Group and FinTech service provider SALT,  creators of the first Blockchain-backed loan platform, today announced that they have entered into an exploratory relationship to become the first to use Blockchain assets as collateral for lending services.

South America

Ripio Raises $ 31 Million in ICO Pre-sale (BlockTribune), Rated: AAA

Buenos Aires micro-lending startup Ripio has raised $31 million as part of an initial coin offering (ICO) pre-sale ahead of a new credit network launch. The public ICO will begin on October 24.

Investors in the pre-sale included Blacktower Capital, Blockchain Investors Consortium, and FBG Capital. According to the startup, participants were drawn from various parts of the world like Russia, South Korea and Canada.

Two FinTech Startups That Want to Reach Customers ‘Door-to-Door’ (Let’s Talk Payments), Rated: A

This year, the two largest contributions were made to Creditas, which received ~$18.87 million, mostly from IFC (the World Bank’s investment arm), and Avante – with ~$12.14 million received mostly of Fiinlab, innovation laboratory of the Mexican group Gentera, and the Vox Capital impact fund.

Avante, a FinTech startup that provides micro-loans, has already lent more than ~$31.45 million to 44,000 microentrepreneurs.

Creditas, an online lending platform that offers secured consumer loans to individuals with home and automobile as collateral, offers credit at lower rates using technology and data intelligence for efficiency. The startup is the second-largest Brazilian in funding, with a total of ~$28.3 million – only behind Nubank.

Authors:

George Popescu
Allen Taylor

Solving the Student Loan Problem for International Students

U.S. international students

The most common and pertinent issue facing an international student looking to study in the United States is securing credit for various needs like tuition, credit card, and buying a car. The stress of settling in a new country coupled with finding the best loan option can be a daunting task. Nomad Credit realized there […]

U.S. international students

The most common and pertinent issue facing an international student looking to study in the United States is securing credit for various needs like tuition, credit card, and buying a car. The stress of settling in a new country coupled with finding the best loan option can be a daunting task. Nomad Credit realized there is a void with regards to helping international students and visa holders (H-1B, L1, etc.) find credible lenders, and vice-versa. Nomad Credit’s search engine provides comparable options for the credit seeker to compare and decide the best possible loan option for them. It functions as a pure marketplace.

International Student Analytics

The number of international students in the U.S. grew by 7.1% and crossed the 1 million mark in the 2015-16 academic year. China (328,547) is the biggest contributor followed by India (165,918), Saudi Arabia (61,287), South Korea (61,007) and Canada (26,973). In total, there are approximately 5 million international students around the world, and by 2025, the number is expected to reach 8 million.

Source: NewAmericanEconomy.org

Economic Benefit of International Students

Source: NAFSA.org

As per the latest NAFSA’s analysis, 1,043,839 international students contributed $32.8 billion and supported more than 400,000 jobs in the U.S. economy during the 2015-16 academic year. That means for every seven international students enrolled, three U.S. jobs are created.

Source: NAFSA.org

All of the above highlights the definitive impact international students have on the economy of the host nation. But the hurdles these students face in accessing credit is remarkable. Though they are a riskier credit bet as compared to local students, shutting down a multi-billion dollar market is just not feasible.

Introduction to Nomad’s Specialized Marketplace

Nomad Credit has its headquarters in Chicago and was launched in 2017. Founder and CEO Brian Hoffman initially launched a plain-vanilla education loan company, following SoFi’s footsteps. But soon the company’s focus changed from refinancing student loans to funding international students. It aims to find the right financial product for international students and/or visa holders currently or planning to live in the U.S. The main visa holders it serves are F1, J1, L1, and H-1B visas.

Prior to Nomad Credit, Hoffman worked as an analyst at Sagence, a management advisory firm. In the beginning of this year, the company managed to raise $125,000 in angel funding.

Business/Revenue Model

The underlying business matrix is similar to already established fintech loan marketplaces like Lending Tree or Credit Karma. Nomad gets paid from partner lending companies for providing leads or customers. Payment structure may vary as it also deals with lenders based out of the United States, but could include a percentage fee, fixed fee per customer, monthly fee, or fee per led. This flexibility in payment options is necessary for serving and partnering with multiple lenders in different parts of the world.

The company has invested its resources to help find international students find the right combination of lender, insurer, and other financial services depending on their needs. It uses a simple questionnaire focused on the school, degree, original location of the student, and other personal information.

Partners and Unique Selling Proposition

The young company has managed to stitch up multiple partnerships with 11 financial partners, 2 insurance companies, and one international payments company. Adding insurance to its list of services was a no-brainer as international students are simultaneously looking at travel, medical, and renter insurance.

Though there are established players in the overall education and marketplace segment, such as Credible and Lending Tree, what sets Nomad Credit apart from its competitors is its specialization on becoming the one-stop shop for international students. It is the only company that is directly dealing with the U.S. as well as Indian lenders and is in the process of onboarding Chinese lenders. Though there is little competition from traditional lenders in India, well-funded Indian tech startups like BankBazaar are also turning their attention to student loans.

Nomad Credit’s Ideal Customer

Though the company is only 4 months old, it has managed to generate a lot of interest among international students while website traffic has been increasing two- or three-fold every month. It uses various marketing tools in India like advertising through partnerships, using paid ads, and blogging, and will be adding a student forum soon.

Anyone from Asia or African country coming to the United States to get an advanced degree like MBA or M.Eng (Masters in Engineering) is a prospective customer. Lenders prefer students who are studying MBA or M.Eng because those are highly employable and lucrative degrees, and there is lesser chance of default.

Though the company is based out of the United States, it has consciously decided to serve the entire international student ecosystem and not just students looking to come to the U.S. It has originated a lot of loans for students from India going to Germany or Singapore for higher studies.

Future Headwinds and Goals

Sallie Mae funds almost 95% of the U.S. student loan market. This has stifled innovation and made it imperative that Nomad targets markets where government entities are not the biggest players in student loans. Massive markets like India fit the bill; there is a lot of potential as the majority of the market is still untapped. That is the reason why this young startup sees more value in going after Asian countries.

Once the company is able to establish a firm footing in India, it wants to further expand into China and Nigeria. It aims to form partnerships in more and more countries so that it is able to serve a wider range of the population. Moving forward, it wants to further improve its technology as well its products so that it can cater to people from different cultures with unique needs. Integrating multiple languages into the platform is an important step toward that vision.

There are roughly 5 million international students today. They have more than doubled since 2000 and represent a hundred billion dollar opportunity for the financial services industry, currently being overlooked due to the fragmented nature of the customer base. Nomad Credit has been able to envisage the power of uniting this global industry on one platform and with funding and proper execution can actually target one of the last few untapped pockets of the alt-lending industry.

Authors:

Written by Heena Dhir.

Allen Taylor

Monday July 24 2017, Daily News Digest

Amazon Square PayPal

News Comments Today’s main news: SoFi loses another senior executive. Prosper performance update for June 2017. Lending-Times listed as #3 P2P lending website. Zopa’s lent 2.46B GBP since March 2005. Zopa sees 35% rise in home improvement loan originations. Revolut partners with robo-advisor. Today’s main analysis: A closer look at Amazon’s lending business. Today’s thought-provoking articles: 5 ICO platforms in China. A […]

Amazon Square PayPal

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

SoFi loses another senior executive, as chief revenue officer Michael Tannenbaum departs (TechCrunch), Rated: AAA

Online finance startup SoFi has lost yet another senior executive, the company has confirmed. Chief revenue officer Michael Tannenbaum is the latest exec to leave, following a string of departures in the company’s senior ranks.

Tannenbaum joined SoFi as VP of finance in 2014, but quickly moved up the ranks over the last few years. After the company moved beyond its student loan refinancing business to also include mortgages, he took over that business.

Most recently, Tannenbaum served as CRO, where he was responsible for driving the company’s growth strategy across all of SoFi’s core lending products, including student loan refinancing, mortgages and personal loans.

Tannenbaum is reportedly looking to work on his own startup in the finance space, according to a person familiar with the matter.

A Close Look at Amazon’s Lending Business (Market Realist), Rated: AAA

Amazon (AMZN) has disbursed more than $1.0 billion in small business loans in the past 12 months, implying that the company has supplied about $2.5 billion in loans to sellers on its marketplace since it launched its credit business in 2011. These loans, in the range of $1,000 to $750,000, have gone to more than 20,000 sellers in the United States (SPY), the United Kingdom (EWU), and Japan (EWJ).

The consumer interest in low-cost or free shipping, as highlighted by the survey, could embolden Amazon to add even more perks to Prime to make it more attractive. Prime is vital to Amazon as it fends off competition from the likes of eBay (EBAY), Wal-Mart (WMT), and Target (TGT). According to research company Consumer Intelligence Research Partners, there are more than 80 million Prime subscribers in the United States (SPY).

Prosper Performance Update: June 2017 (Prosper), Rated: AAA

Today we are sharing performance data from the Prosper portfolio for June 2017.

  • The weighted average borrower rate for Prosper’s June 2017 vintage is similar to May 2017, a continuation of a platform rate which is the highest since 2013.
  • Delinquencies for 2017 originations are tracking near 2016 H1 and are in line with expectations based on a materially riskier ratings distribution.
  • Prepayments continue to edge up for 2016 H2 and 2017 vintages.
  • When viewing the U.S. consumer through a macro lens and looking more granularly at Prosper’s loan performance, our risk team expects to continue tightening credit over the remainder of the year.

Top 100 Peer to Peer Lending Blogs and Websites for P2P Borrowers and Lenders (Feedspot), Rated: AAA

#1 Lend Academy

About Blog – Lend Academy is the leading resource for people interested in peer to peer lending. Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.
Frequency – about 5 posts per week

#2 P2P-Banking

About Blog – P2P Lending Marketplace News and Reviews
Frequency – about 2 posts per week

#3 Lending Times 

About Blog – Daily News, Analysis and Data for the Alternative,Peer-to-peer (p2p) and Marketplace lending space. Lending Times provides daily News, Analisys and News Digest for the Peer to Peer and Alternative Lending industry. We also provide data for the industry.
Frequency – about 9 posts per week

Robo-advice pioneers target ethical investors (AltFi), Rated: A

U.S.-based platforms Wealthfront and Betterment are joining the green investing trend, giving users the option to invest in socially responsible companies.

The rivals are approaching the green investment options differently. Betterment is investing in ETFs that track socially responsible indexes. Wealthfront will allow users to invest directly in stocks and screen out four areas that might not match their socially conscious criteria, including fossil fuels, deforestation, tobacco and weapons.

The Amazon Model: Can New-Age Technology and Local Touch Co-Exist in Lending? (Forbes), Rated: A

Online lending has doubled in size every year since 2010, and the global marketplace lending space is expected to reach $290 billion by 2020, a 50 percent growth year-over-year, according to a Morgan Stanley report.

SurveyMonkey study released this month found that millennials (defined as 18- to 34-year-olds) tend to adhere to traditional methods of banking. In fact, 80 percent of millennials surveyed say they want to be able to visit a brick-and-mortar bank branch, and more than half reported visiting a branch at least once in the last month. Even the most digitally connected generation in history values personal touch when it comes to financial transactions.

Fed panel puts faster payments on three-year track (American Banker), Rated: A

A panel convened by the Federal Reserve has established an ambitious new goal: By 2020, anyone with a bank account in the United States should be able to receive payments that are highly secure and delivered in something close to real time.

The three-year target is disclosed in the final report of a task force organized by the Fed two years ago.

Ben Miller of Fundrise (Lend Academy), Rated: A

Non-accredited investors have always had fewer investment options than accredited investors. That is starting to improve as some companies take advantage of a law called Regulation A+, created as part of the JOBS Act, to do offerings to the general public.

In this podcast you will learn:

  • The story behind the founding of Fundrise.
  • How the financial crisis shaped the way Ben thought about raising capital.
  • How Fundrise put together their investor deal before the JOBS Act.
  • Why the non-accredited investor is core to Fundrise’s mission.
  • How Fundrise has evolved since doing those early deals.
  • How their eREITs work.
  • The differences between a publicly traded REIT and a Fundrise eREIT.
  • How Fundrise sources their deals.
  • Details of their successful Reg A+ equity fundraise early in 2017.
  • Why Ben thinks Fundrise can be the Blackstone of the internet age.
  • And more

Robo-advisors: The future of investing or the latest financial craze? (Tennessean), Rated: A

Technology has undoubtedly created, destroyed and changed countless industries in the last 20 years.

The financial services has not been immune to this disruption. In 1980, there were approximately 5,500 people working on the floor of the New York Stock Exchange. Today, that number has dwindled to around 700.

In the United States, there are currently over 200 robo-advisors and more are launching every single day. In general, the fees associated with this new way of investment advice range from free to about 0.75 percent. There is normally not a minimum that is needed to start investing, unlike many financial advisors.

Crowd Invest Summit (CIS) has announced that Indiegogo and their equity crowdfunding vertical has joined it’s roster for CIS West 2017.

Applied Data Finance, iHeartMedia, announce marketing agreement (Bankless Times), Rated: B

Fintech lender and asset manager Applied Data Finance (ADF) has signed a marketing agreement with iHeartMedia which will see ADF promote its online lender Personify Financialacross the iHeartMedia series of networks.

‘Fedcoin’ Strikes Again: Fintech Companies Propose Use of Crypto to US Fed (Coin Telegraph), Rated: B

In a report by the Faster Payment Task Force, fintech companies have outlined how Blockchain technology can be used to make payments faster for the US Federal Reserve.

The companies that submitted their proposals include Ripple, Eccho, Xalgorithm, Hub Culture, Kalypton Group, Nanopay Corporation and Thought Matrix Consulting.

United Kingdom

Zopa Has Lent £2.46 Billion Since March 2005 (Crowdfund Insider), Rated: AAA

While revealing a “refresher” of its lending policies, UK-based peer-to-peer lender, Zopa, announced that as of July 20th it has lent £2.46 billion and is lending around £80m per month.

Zopa also noted that it believes diversification is a key tool for the individual investor risk mitigation. The lending platform notably spreads investments across multiple loans, starting in £10 chunks, so that no one borrower has more than 1% of the overall investment.

Zopa sees 35pc rise in home improvement loan originations (P2P Finance News), Rated: AAA

ZOPA said it has seen a 35 per cent year-on-year increase in home improvement loan originations in the first half of 2017, equating to over £92m in funding.

The world’s oldest peer-to-peer lender said on Wednesday that it has now helped over 70,000 people to renovate their home and increase the value of their property.

P2P lender joins bank lobby group (AltFi), Rated: A

ArchOver is now a member of UK Finance, a recently created trade body for the banking and financial sector.

Other P2P lenders, including Landbay, are already part of UK Finance.

HLnot selling new Lendinvest Retail Bond at launch (Money Forums), Rated: A

Lendinvest have issued a 5.25 percent ORB Retail Bond.

Hargreaves Landsdown have decided not to participate in the IPO so unless investors who use that platform set up an account elsewhere, e.g. Interactive Investor, it isn’t possible to buy at launch as the bond has to be in a nominee account.

A New Era in Fintech Payment Innovations? (Law.ox.ac.uk), Rated: A

forthcoming paper in Law, Innovation and Technology laces payment innovations within a payment system. The payment system comprises the initiation of payments, transfer, as well as clearing and settlement. We argue that existing payment systems are defined by certain institutional tenets that serve commercial objectives, but, more importantly, deliver public goods and public interest objectives for users and policy-makers.

Three types of payment innovations have been hailed to have disruptive potential in recent developments. First, innovations in retail payment interfaces or options at point of sale, such as mobile or app payments, may displace the use of cash and cards. Second, virtual currencies, such as Bitcoin, may come to be accepted as legitimate forms of payment by merchants and businesses. Third, new ledger technologies, such as the distributed ledger or autonomous organisation technologies, may replace existing infrastructure in payment clearing and settlement systems.

Flender puts its faith in the crowd (The Business Post), Rated: A

If you are a start-up, or an SME, you know that money does not come easy. In the early days, you might need to tap up your savings, your family or even friends to get started. Even more established companies can fall between the cracks when it comes to bank loans or government funding. For all of these reasons, peer-to-peer lending was created.

Credit scoring startup Aire raises $ 5m; wins Zopa deal (Finextra), Rated: A

AI-based credit scoring startup Aire has raised $5 million in a Series A funding round and won deals to work with P2P lending pioneer Zopa and the UK arm of Toyota Financial Services.

Young people face barriers in farming as report shows 13% of farmers are under 45 (Farming UK), Rated: B

A report has been released showing the barriers young entrants into farming face in today’s often uncertain times.

The report said that only 13% of farmers were under the age of 45 in 2015, but while fewer young people are entering the sector, their ideas are still needed to harness the technologies that can make farming an up-to-date industry.

Finance is seen as the biggest obstacle to growth; 28% are trying peer-to-peer lending and one fifth have tried crowd-funding to help with projects.

China

Information about Five ICO Platforms in China (Xing Ping She), Rated: AAA

Recently there comes a wave of ICO (Initial Coin Offering) around the world. Many people are enthusiastic about the investment on ICO. So, here is the information of five well-known ICO platforms founded in China, which was collected by Nan Gongyuan, a famous Internet finance columnist as well as special commentator on Xing Ping She.

1. Bizhongchou
Founded time:In 2015
website:Bizhongchou.com
background:Affiliate ICO website of block chain media Babbitt
Registered Capital:$ 1,481,613 USD
Legal person:Zhi-Peng Liu(the well-known science fiction writer, Changjia, a consecutive Galaxy Award winner from 2006 to 2008.)
Location:Zhejiang, Hangzhou Province

2. Bitouzi
Founded time:In 2017
website: /> background: Affiliate ICO website of Blockchain asset trading platform BTC9.COM
Registered Capital:$740,795 USD
Legal person:Liu Jingchao
Location:Nanchang, Jianfgxi Province

3. Icoage.com
Founded time:In 2017
website:Icoage.com
background:Affiliate ICO website of Shanghai Qukuai Information Technology co. LTD
Registered Capital:$ 17,996 USD
Legal person: Fu Xiaoqi
Location:Shanghai

4. Ico365.com
Founded time:In 2017
website:Icoage.com
background:Affiliate ICO website of Shenzhen Kedian Technology co. LTD
Registered Capital:$148,161 USD
Legal person:Ye Peifeng
Location:Shenzhen

5. Ico.info
Founded time:In 2017
website:Ico.info
background: Affiliate ICO website of Beijing Yunbi Technology co. LTD
Registered Capital:$ 1,481,613 USD
Legal person:Qiu Liang
Location:Beijing

The World is Paying Attention (Lend Academy), Rated: A

In China there are more than a billion consumers that are generally underserved across a broad spectrum of financial services, making for a diverse and exciting array of opportunities to address. Yet China is dominated by giants – institutions like Bank of China and technology firms like Alibaba –companies that have tens of thousands of employees and hundreds of millions of customers. The scale of the opportunity is enormous, and so is the size of the companies trying to address it.

When 90% of the world’s data were created in the last two years, it is obvious that our ability to create data has far outstripped our ability to measure and analyze it.  This is why companies like ZhongAn (online insurance), Phoenix Finance (wealth management), Lexin (green finance), Wedai (car finance), Credit Karma (financial education), Upgrade (consumer lending in the US), and Lufax (consumer lending & wealth management in Asia) all tout AI/ML as a cornerstone of their strategies.

In the end, fintech is leading us to a more inclusive financial system, which is to say that financial services will be more accessible, more comprehensive, more affordable, and more sustainable.

Dianrong and marketplace lending in China (Enterprise Innovation), Rated: B

At the FINTalks forum, held on July 17, 2017 at KPMG in Hong Kong, Renaud Laplache, co-founder and CEO of Upgrade, described online lending as a massive improvement over lending as offered by banks and traditional lenders. “Online lending generally helped lower costs by about 400-500 basis points – massive cost reductions coming from the ability to use technology to automate tasks that were manual at many banks and also to do away with the branch network – a very costly infrastructure,” he explained in simplified terms.

European Union

Fintech startup Klarna taps Permira for around $ 250M at $ 2.5B valuation (TechCrunch), Rated: AAA

Klarna, the Swedish startup that works with e-commerce businesses and retailers to provide financing and other payment services, today announced that it has picked up yet another large investment, its third inside of two months. Permira, the private equity firm and prolific late-stage tech investor, has taken a minimum 10 percent stake in the fintech business. Klarna and Permira are not confirming the exact amount getting invested, or the valuation. But TechCrunch understands that it is more than $225 million, and the FT is reporting a value of $250 million.

Klarna the startup was last valued at $2.25 billion in 2015 and a source confirmed to us that this valuation has gone up as the business has grown. If a $250 million investment works out to 10 percent of its valuation, that would mean Klarna’s overall value has ticked up to $2.5 billion.

Added up, this means that Klarna has raised somewhere in the region of $500 million in the last 7 weeks.

July 21, 2017 – Funding Round Private Equity (Crunchbase), Rated: A

  • Funding Type: Private Equity
  • Money Raised: $225M
  • Valuation: $2.28B Pre-Money
  • Announced On: July 21, 2017
  • Investors: 

Revolut’s robo-advice dance partner revealed (AltFi), Rated: AAA

App-based banking disruptor Revolut intends to partner with its first robo-advisor. A report in this morning’s Citywire suggests that Revolut has already partnered with ETFmatic to roll out its wealth offering. Revolut has confirmed that this is its intention.

Revolut, however, is yet to formally announce the ETFmatic partnership, and it is possible that the proposition that ultimately emerges will look somewhat different.

Bank of Finland: Household debt accumulation poses mounting risk (YLE), Rated: A

Bank of Finland reports that household debt grew five percent in May on the previous year, with so-called unsecured consumer credit, via international online credit providers and peer-to-peer lending services, up by 13 percent in the same period.

As the selection of loan alternatives grows, increasing numbers of Finnish consumers are now moving beyond traditional new home and housing cooperative loans to secure expensive consumer credit from sources that Finland’s central bank says are difficult to monitor.

Figures show that every fourth Finnish resident now holds some kind of consumer debt. Cars, trips abroad, boats and appliances are the most common purchases behind the loans.

The good news in this scenario is that regulators and credit ratings agencies agree that Finnish banks are very stable.

Kickstart Accelerator’s 10 Most Promising Fintech Startups (Forbes), Rated: A

AAAccell (Switzerland)

Converts and develops top research achievements into trusted solutions and tools for the financial services industry.

Fjuul Vision Oy (Finland)

Offers a Software as a Service (Saas) platform for insurers to grow their business at lower risk.

PriceHubble (Switzerland)

Enables smarter real estate decisions by bringing the latest in machine learning, big data analytics and data visualization to market participants along the entire real estate value chain.

International

Fintech’s Wealthy Elder Statesmen (Bloomberg), Rated: A

Shares of U.K. company Paysafe Group Plc — whose businesses include payments processing, digital wallets and money transfers — are trading at an all-time high after an approach from private-equity bidders Blackstone and CVC.

In December, Paysafe’s shares suffered a nasty blow because of fears about its exposure to China’s crackdown on gambling, although they recovered. This is not your run-of-the-mill Worldpay-style payments giant, even if that may be the goal of its prospective private equity buyers.

5 Facts About the State of FinTech — and Why They Really Matter (Mimeo), Rated: A

The rapid innovation in the financial technology, or FinTech vertical, shows no signs of slowing down. In the past year, global investments in FinTech increased 11 percent to a staggering 17.4 billion USD.

1. The Majority of Executives Are Worried

A recent report from Pricewaterhouse Cooper (PwC) revealed that a staggering 80 percent of executives globally feel their business is at risk due to the rate of innovation in the FinTech sphere.

2. Governments Are Getting Behind FinTech

Per KPMG’s recent report on the pulse of FinTech, governments worldwide are beginning to show visible support for innovation in financial technology. The UK, Australia, Singapore, Malaysia, and Thailand have all debuted sandbox programs for regulatory innovation.

3. Blockchain Is Predicted to Take Over in 2017

4. 30 Percent of Consumers Love FinTech

PwC reports that 30 percent of today’s customers plan to increase their use of nontraditional ways of payments, fund transfers, finance, loans, and saving.

5. Robot Bank Tellers May Not Be a Far-off Fantasy

Australia/New Zealand

Non-bank lenders support fast-forwarding Robo-Advice access (Scoop), Rated: AAA

Robo-Advice, Digital-Advice, Automated-Advice. Whatever you choose to call it, the appetite to access financial advice online is growing, and New Zealand’s legislation is yet to catch up.

The law is currently hindering the development of personalised robo-advice models in New Zealand, as it states financial advice must be given by a natural person.

The Financial Services Federation (FSF) has submitted in support of the Consultation Paper: proposed exemption to facilitate personalised robo-advice, which could accelerate the provision of personalised robo-advice services ahead of law reforms which aren’t likely to take effect until 2019.

Fintech the future (SMH), Rated: A

​According to Kate Carnell, there have been less than 10 complaints about fintech operators in Australia since March 2016.

There are an estimated 600 fintech operators in Australia. The industry is burgeoning and continues to attract new players, so receiving less than double-digit complaints in 16 months isn’t a bad track record.

“So the growth rate is quite phenomenal and there’s more to come. We know of at least another 20 to 30 that are yet to launch.”

Small business lender expands BDM team (Australian Broker), Rated: B

Small business loan specialist OnDeck Australia has announced two new appointments to foster growth in its broker channel.

The firm has hired two new business development managers (BDMs), Adrian Dodson in Melbourne, Victoria and Tim Kwast on the Gold Coast, Queensland.

India

P2P players plan to widen lender base (Telangana Today), Rated: AAA

With the Reserve Bank of India guidelines on peer-to-peer lending firms likely to be released in a few weeks, city-based companies are getting ready to increase their registered lenders. They are optimistic that demand for loans will rise significantly as the haze surrounding the lending platforms will be cleared.

For instance, city-based i-lend says there is loan demand of about Rs 500 crore in one year while another firm Oxyloans says there could be a demand for Rs 600 crore in the same time.

Another player, Oxyloans, has 1,300 users including 264 lenders and 1,000 plus borrowers. “We see a loan demand of Rs 600 crore and are hoping to achieve Rs 200 crore in six months or so,” said Radhakrishna Thatavarti, founder and chief executive officer of SRS Fintech Labs, which operates Oxyloans.

Axis Bank to deploy tech solutions of three startups from Thought Factory accelerator (VC Circle), Rated: A

Private sector lender Axis Bank has selected three fintech startups from the first batch of its accelerator programme ‘Thought Factory’ whose solutions it will commercially deploy at its business units, it announced at an event in Bangalore on Friday.

Six startups, namely S2Pay, Pally, Perpule, FintechLabs, Paymatrix and Gieom graduated from the first batch. Axis Bank will collaborate with Pally, FintechLabs and Gieom for their tech solutions.

Using AI, Pally enables businesses in the financial domain to deliver better customer experiences. It has created a chatbot that creates an investment portfolio for tax savings when it is fed an image of a salary slip.

S2Pay’s solution forms a layer over any payments app and users can make secure payments from their mobile app, even when they are offline.

A Kalaari Capital-funded startup, Perpule allows users to scan products from their mobile app and pay from within the app once the list is complete.

Sunil Kalra, Rajan Anandan back fintech startup Monsoon CreditTech (VC Circle), Rated: A

Monsoon CreditTech Technologies Pvt Ltd, a fintech startup that has been in stealth mode till recently, has raised an undisclosed amount of funding from marquee investors, the startup said in its statement.

The investors include independent angel investors Sunil Kalra and Aditya Singh, former senior Microsoft executive Rishi Srivastava, and Google India’s Rajan Anandan, the statement added.

Asia

Ron Suber Says P2P Lending is Daylight Banking (Not Shadow Finance) (Crowdfund Insider), Rated: AAA

Ron Suber, perhaps the most prominent global Fintech Ambassador and President Emeritus of Prosper Marketplace, is on an extended swing across Asia visiting various platforms and presenting at events. Visiting with CNBC Asia this week, Suber explained how important transparency is for online lending and how both sides win: investor and borrower.

Startup Modalku Launches Mobile App for Individual Lenders (Jakarta Globe), Rated: A

Mitrausaha Indonesia Group, a homegrown marketplace that provides peer-to-peer lending, introduced a new mobile application that will allow individual lenders to offer loans to small businesses using a crowdfunding scheme.

Mitrausaha, which flies the Modalku flagship, offers small and medium enterprises (SMEs) access to non-collateral loans with interest rates ranging from 12 percent to 26 percent.

Modalku had launched a mobile app in January called “Modalku Dana Usaha,” customized for prospective debtors looking to replenish their working capital. The app is available on Android and iOS.

Lenders can start investing with Rp 1 million ($75).

New individual lenders need to deposit Rp 10 million into their account before giving out loans.

Early days for alternative funding (The Star), Rated: A

Two years ago, the Securities Commission gave out licences to operate equity crowdfunding platforms and last November, it gave out the licences for peer-to-peer lending.

pitchIN, one of the six operators of the equity crowdfunding platforms, has raised the most among the operators since end-2015, raising more than a third of the RM16mil raised by issuers up until this June.

Funding for early stage start-ups has become much harder due to grants becoming bleaker and investors looking for quality deals.

Awareness remains an issue, with entrepreneurs who want to raise funds through either ECF or P2P lamenting the lack of awareness or understanding.

Collapse of branch banking in 1 century (Korea Times), Rated: A

Throughout paradigm shifts, banks’ operations have changed dramatically. Many global lenders are now setting up branchless and digital operations as the way to go ― a move that is in stark contrast to the strategy they took over the past century.

According to a 1932 Federal Reserve report, the Bank of Italy had 25 offices by the end of 1919 and it rapidly increased to 292, 10 years later. Except for 40 branches in San Francisco, home to its headquarters, 252 were out-of-town branches, scattered literally all over California.

JPMorgan Chase is scaling down its branch networks, Citigroup is accelerating its move to transform into a digital bank globally and Wells Fargo is downsizing its branches so it can hire fewer employees and sit in a smaller space.

A CNN Money report said the number of the bank’s branches in the U.S. dropped by 10 percent to 4,789 as of the end of the second quarter of 2015.

Korea’s homegrown banks are also joining global giants’ moves.

According to six banks ― KB Kookmin, Shinhan, Woori, KEB Hana, NH NongHyup and Industrial Bank of Korea (IBK) ― the total number of their branches across the country declined to 5,493 at the end of May this year, down 442 from 5,953 at the end of the first quarter of 2013.

Liftoff enters Japan with former Criteo exec as country manager (e27), Rated: B

California-based mobile app marketing and retargetting platform Liftoff announced its official launch to the Japanese market today with the appointment of Country Manager Kota Amano, former Senior Director of Partner Development, APAC at Criteo.

In a press statement, Liftoff said that it has opened a data centre in Tokyo and is hiring a team of Sales and Customer Success Managers.

Canada

HOW TO NAVIGATE CANADA’S TANGLED REGULATIONS AND BUILD YOUR FINTECH STARTUP (Betakit), Rated: AAA

Our team at Ferst Digital is building a mobile-first banking platform that helps startups and small businesses. Our platform will let them bank, manage their finances, and integrate all of their financial productsand services in a simple and intuitive way.

To empower ourselves, we decided to own our regulatory know-how.

We decided to categorize our regulators around three common forms of purpose: protection, behaviour, and permission.

Authors:

George Popescu
Allen Taylor

Tuesday April 18 2017, Daily News Digest

funding mix non-bank lenders

News Comments Today’s main news: A comparison of funding & liquidity sources with lender maturity by PeerIQ. China Rapid Finance sets terms for U.S. IPO. China bank lending falls in March. Perfios raise $6.1M in Series A round. Abu Dhabi ranks as top fintech hub for MENA region. Today’s main analysis: Lenders test personalities to determine loan eligibility. Today’s […]

funding mix non-bank lenders

News Comments

United States

United Kingdom

  • Blockchain can save banks tens of billions of dollars per year. GP:”There is a lot of speculatio and the technology is not mature enough yet. There are also still unclear business cases. In the US about 40% of professionals in finance are very familiar with blockchain according to latest surveys so it is not a familiarity problem. On the other side regulation is not there yet and is in fact the largest obstacle to blockchain adoption.” AT: “Blockchain is a technology is a lot of underused potential. It could make the banks competitive again, but it would take years to implement on a global scale to the point where it would be useful and effective in making the financial system of the world transparent, trustworthy, and effective. Getting every bank to adopt it would be a massive undertaking. All it’s going to take is one major bank using it and proving how it can improve banking services to include regaining customer trust. If bank services customers get behind it, the banks will have to.”
  • Pariti shows you your debts, offers to save money via P2P lending. AT: “This is a cool, and useful, development.”
  • Ex-Barclays CEO says Uber moments are happening in finance.

International

China

India

Asia

MENA

Africa

News Summary

United States

A Comparison of Funding & Liquidity Sources (PeerIQ), Rated: AAA

The US Fed released their quarterly report covering “Quarterly Trends for Consolidated U.S. Banking Organizations”. The report shows that the ROE for the banking sector remains mired in the 7 to 9% range, below pre-crisis levels and the theoretical cost-of-capital for many banks.

Earnings season kicked off last week, with J.P. Morgan leading the trio of banks who released their first quarter earnings. In a positive sign, JPM booked lower loan loss provisions ($1.32 Bn) vs. prior year ($1.82 Bn) for the same quarter. Higher rates improved net interest margin by 11 bps to 2.33%.

Analysis of Funding Mix Across Leading Non-Bank Lenders

Soruce: PeerIQ
Source: PeerIQ
Although the funding mix might indicate that OneMain does not rely on warehouse finance, quite the opposite is true. OneMain also has eleven revolving conduit facilities with a maximum balance of $4.8 Bn in additional liquidity. The facilities represent a substantial liquidity backstop (from diverse counterparties with staggered maturities) should term ABS markets seize for a prolonged portion of time.
OneMain does not appear to be optimizing for a singular goal such as low-cost funding or maximizing ROE. All together, it appears that OneMain has implemented a financing strategy to deliver an attractive ROE (potentially high-teens or low twenties) while ensuring sufficient liquidity ballast to guard against disruptions in capital markets. For example, OneMain is also funding via $1 Bn of 8.25% senior notes issued in April last year rather than drawing on lower-cost liquidity available via warehouse finance.  OneMain is willing to take on somewhat higher financing costs in exchange for access to diverse and longer-term funding sources.
OnDeck
OnDeck’s financing strategy varies significantly from OneMain. OnDeck is unique in the peer group from their utilization of whole loan marketplace sales. We note that the usage of this liquidity channel continues to decline over time as gains-on-sales from whole loans decrease, and as investors demand more ‘skin-in-the-game.’
OnDeck also utilizes both securitization and credit facilities for their funding. Securitization makes up 24% of their loan funding, while their utilized credit facilities comprise 50% (although ONDK still has $287 MM undrawn).
OnDeck has the highest loan generation per unit of capital in the cohort. OnDeck is funding through the heavy usage of low-cost securitization and warehouse finance channels, and accordingly has the lowest funding cost in the peer group. However, we note OnDeck has more concentrated sources of funding channels that in turn rely on reliable execution and smooth functioning capital markets.
Enova
Enova employs all three debt financing tools—ABS, warehouse finance, and corporate debt—to fund origination. Enova had no facility borrowing amount reported as outstanding at the end of 2016.
Elevate
Elevate, as a young online lender measured by receivable and inception, does not have any securitization programs to date and limited diversity in warehouse finance. Elevate’s primary source of financing consists of credit facilities provided by Victory Park Capital. Of the four platforms, Elevate has the least diversity in funding sources. The peer analysis suggests that diversification into securitization channels could potentially lower cost of funds for Elevate.
Funding Cost by Financing Channel
As observed in Exhibit 3, securitizations can partially replace secured and unsecured debt in the capital structure with more favorable non­recourse funding. The overall funding costs are positively impacted by the increased usage of securitizations and credit facilities, as the deals are executed at interest rates significantly below the coupon associated with the unsecured debt.

Source: PeerIQ

Issuers that that take the long-view and develop a competitive advantage in financing & liquidity stand to slingshot past their competitors when the cycle turns.

P2P Lender China Rapid Finance Sets Terms for US IPO (Crowdfund Insider), Rated: AAA

China Rapid Finance, a peer-to-peer (P2P) lender based in Shanghai, China, announced that it has set the terms for its upcoming US IPO. The company plans to raise $105 million through the offering of 10 million shares priced between $9.50 to $11.50 a share. At $10.50 a share, China Rapid Finance would have a fully diluted market value of $586 million.

Founded in 2001, China Rapid Finance is a consumer lending marketplace that aims to serve China’s emerging middle class. Their target demographic are employed and well-educated Chinese individuals between the ages of 18 and 29, who live in urban cities, and who are avid mobile users. This demographic, known as EMMA (Emerging Middle class Mobile Active), is estimated to include over 500 million individuals.

Are you too neurotic? Lenders test personalities to determine loan eligibility (Tearsheet), Rated: AAA

When no credit history is available, lenders in emerging markets are increasingly looking to personality tests to fill the gap. Psychometric data, or data acquired through personality tests, is now being used to determine if customers qualify for credit in countries like Turkey, Russia, Mexico and India. Some assessors look at traits like conscientiousness, extroversion, agreeableness and neuroticism. For example, if someone ranks high on conscientiousness, they’re likelier to be better at saving, thus more secure financially.

The method has yet to go mainstream in the U.S. in part due to culture, regulations and the range of data already available to American lenders.

Still, psychometric data offers another option to assess consumers for whom insufficient data is available to generate a credit score. It’s a section of the population that’s gained more attention in the U.S., where over 25 million people are considered unscoreable by the Consumer Financial Protection Bureau.

Over 700 characteristics are organized; results are crunched along with repayment data into a number that represents a credit score.

The global unscoreable population is huge, including in India where over 70 percent of the 1.2 billion-strong population fall into this category, McCaffery said.

For the past few months, FICO, working with the Entrepreneurial Finance Lab, has been testing psychometric testing in Turkey, Russia and Mexico. While it’s too early to offer definitive assessments, FICO is optimistic about the model’s ability to deliver results.

Before launching psychometric data in the U.S., Taylor-Shoff said lenders would need to ensure compliance with regulations including those on consumer disclosure (e.g. being able to explain to someone why they were denied credit); fair lending (making sure the method doesn’t disadvantage a particular type of customer) and safety and soundness of the data. Operational considerations, including how lenders would use this method alongside traditional methods , would still need to be resolved too.

“U.S. consumers are not going to submit to a psychometric analysis by their lender,” said Zeydoon Munir, founder and CEO of RevolutionCredit, a startup that uses behavioral data garnered from quizzes and games, in addition to traditional data, to determine if customers qualify for certain credit products. “Who would do that?”

Fifth Third Bank Expands Partnership With Accion U.S. Network (Crowdfund Insider), Rated: A

Fifth Third Bank announced on Thursday an investment and expanded partnership with nonprofit small business lender network, Accion U.S. Network, to support lending to underserved small businesses in Florida, Indiana, Illinois, Michigan, and Ohio.

This builds upon the bank’s five-year, $30 billion Community Commitment, which includes $10 billion for small business lending, product innovation and enhanced underwriting and fulfillment. Additionally, the Fifth Third Bank’s  commitment includes expanding technical assistance and support for alternative lending channels.

Fintech Report Card: March 2017 (Riskalyze), Rated: A

What happened: eMoney Advisor announced on March 23 the launch of eMoney for Enterprise, a division that will support users in the home offices of banks, large registered investment advisors, broker/dealers, insurance companies and other financial institutions.

What happened: The new product is likely to target individuals with less than $1 million to invest, a significantly larger market than Goldman Sachs’ current private wealth management service that caters to clients with at least $50 million. Their acquisition of Honest Dollar and the launch of a loan platform called Marcus suggest that this robo venture is part of a larger diversification strategy.

What happened: The Office of the Comptroller of the Currency pressed ahead with its plan to offer a specialty license to fintech firms, a move that would allow the industry to enter the federal banking system. Currently, fintech firms must apply for licenses in each state to do business, which can be a costly process. The new federal banking license would allow for one set of rules nationwide.

Why it matters: Thumbs up for allowing fintech firms to focus on innovation rather than paperwork. Removing the handcuffs of redundant licenses will surface relevant technology even faster, and I think we’ll see advisor confidence in fintech platforms continue to rise.

What happened: Morgan Stanley is continuing its technology surge after hiring Charles Schwab’s Naureen Hassan as Chief Digital Officer and appointing Jim Rosenthal to lead the development of the company’s digital services, which includes tentative plans for a self-directed robo platform.

What happened: Merrill Lynch is introducing new features to its website, such as a dashboard to track investments, real-time maps of the markets and interactive charts.

What happened: MIT and TD Bank hosted their first fintech hackathon, an event challenging 26 student teams to develop a fintech platform in under 36 hours. A team from Cornell University and their product called Switch, which they describe as a micro-loan and insurance broker, took home the $5,000 prize.

US robos move to ‘hybrid’ automated advice models (IFA), Rated: A

Adviser Intelligence founder and chief executive Jacqui Henderson said in a blog that some of the biggest US robo advisers are now adding humans to their advice services.

“Last month, the second largest robo in the US, Schwab, also combined its automated investment management technology with human advisers for its clients with at least $25,000 to invest.

“These moves by the biggest robos in the world are a sure admission that we are a long way off from a fully automated model becoming a reality.”

Oracle Powers DecisivEdge’s Lending/Leasing as a Service Product (Monitor Daily), Rated: B

DecisivEdge, a business consulting and technology services company, launched its lending and leasing as a service (LLaaS) product, powered by Oracle.

LLaaS is a simple, flexible, securely featured and cost-effective way for small and medium sized lenders to the leverage the capabilities of a solution.

Oracle Financial Services Lending and Leasing is at the core of DecisivEdge’s offering. It is hosted in a securely featured cloud and bundled with 24/7 monitoring, support and other value added services.

HEALTHCARE LENDER HCS RECEIVES FUNDS FROM ARES MANAGEMENT (Health Credit Services), Rated: B

Health Credit Services (HCS), a healthcare funding company created to bring quality-of-life care to more individuals, announces a new financing relationship with Ares Management, a leading global alternative asset manager.

The HCS team will leverage the Ares Management-provided financing to increase patient access to quality-of-life medical care nationwide. With loan approvals in seconds, budget-friendly installment loans ranging from 12 to 84 months and simple loan management, HCS solutions make healthcare financing easy and affordable.

Due to rising insurance deductibles and premiums, the typical American spends nearly 10 percent of their income on out-of-pocket healthcare expenses.

United Kingdom

Blockchain Can Save Banks Tens of Billions of Dollars a Year (Coin Telegraph), Rated: AAA

The Bank of England (BoE), one of the first central banks to form a research group dedicated to the development of Blockchain technology, still believes the Blockchain has the potential to save banks tens of billions of dollars in operating costs.

Researchers at BoE perceive the Blockchain as an immutable, transparent and secure technology which banks and financial institutions can utilize to handle operations in an autonomous ecosystem.

BoE along with other banks including the Reserve Bank of Australia and Bank of Korea envision a Blockchain-based platform wherein many banks can participate as members of the network and settle transactions and assets in a transparent ecosystem. By relying on a shared ledger, banks can easily eliminate any additional intermediaries that are contracted to process complex settlements.

Apart from collaborative projects, BoE recently showcased a proof of concept Blockchain platform with PwC, with the intent of demonstrating the potential and applicability of Blockchain technology in the finance industry.

Pariti app shows you your debts, offers to save you money via peer-to-peer lending (9to5Mac), Rated: A

Link Pariti to your bank accounts and credit cards, and it will show you the total costs of your debts. If peer-to-peer lending would offer a better deal, it then offers you the option of consolidating everything into a single loan at a lower rate. The company says that while credit cards typically charge interest rates in the 16-25% range, it can get the APR down to single digits.

Ex-Barclays CEO Antony Jenkins: We’re ‘beginning to see some Uber moments’ in finance (Business Insider), Rated: A

Former Barclays CEO Antony Jenkins believes the global financial system is beginning to undergo the “Uber moments” he predicted in the sector a year and a half ago.

Jenkins, who was CEO of Barclays from 2012 to 2015, forecast a series of Uber-style disruptions in the banking industry in late 2015. He said that advances in technology could shrink headcount at traditional big banks by as much as 50%, while profitability in some areas could collapse by over 60%.

Since being ousted at Barclays, Jenkins has set up his own fintech business: 10X Future Technologies. The startup has developed a new core banking platform, effectively a new operating system for banking to build products and services on top off. It aims to help banks cope with the “Uber” disruption by giving them a modern canvas to build upon.

International

Over 200 Fintech Startup Finalists to Celebrate Worldwide Fintech Innovation at the Benzinga Global Fintech Awards (Yahoo! Finance), Rated: AAA

Benzinga, a leading online financial media publication and data provider, announced today the finalists for the 2017 Benzinga Global Fintech Awards.

The Benzinga Global Fintech Awards is the largest fintech event focusing on the capital markets. In its third year, Benzinga has expanded the event’s purview to the global stage, bringing over 200 companies to New York City from countries including India, Israel, Poland, and Singapore.

The Benzinga Global Fintech Awards finalists, by category:

Best Use of Alternative Investments Platform, Tool, or App

  • BankerBay
  • CFX Markets
  • ClearVest Advisers, LLC
  • CoolMellon
  • Entrex
  • Equitise
  • Frictionless Healthcare Finance
  • Income&
  • Kettera Strategies
  • Mercury Capital Advisors
  • SAF Platform
  • Seedrs
  • Swaper
  • YieldStreet

Best Analysis Platform, Tool, or App

  • Alpha Hat
  • Artivest
  • BondCliQ
  • ChartYourTrade
  • F.A.S.T. Graphs
  • NewsHedge
  • Novus
  • Orchard Platform
  • Polly Portfolio
  • TradingView
  • Web Financial Group
  • Ycharts

Best Digital Mortgage or Real Estate Platform, Tool, or App

  • Brickvest
  • BRICKX
  • BuildFax
  • Cadre
  • Morty
  • Neat Capital
  • Neighborhood Pay Services
  • PeerStreet
  • Quicken Loans / Rocket Mortgage
  • RealtyMogul
  • RealtyShares
  • Unison Home Ownership Investors

Best Education & Personal Finance Platform, Tool, or App

  • BillGO
  • Clarity Money
  • Copper Street
  • Dream Forward 401(k)
  • FinTech Business School
  • MoneyLion
  • Shift
  • SmartAsset
  • TradeBench

Best Financial Advisor or Wealth Management Platform, Tool, or App

  • Advisor Engine
  • ALBRIDGE
  • Backstop Solutions Group
  • BaseVenture
  • CBOE Vest
  • FUNDBASE
  • LendingCalc
  • Mil Advisor
  • MyVest
  • ORION
  • RobustWealth
  • STRATIFI
  • Truelytics

Best Forex Platform, Tool, or App

  • Fortex
  • FXPRIMUS
  • FXStreet
  • Markets.com
  • MarketsFactory.com
  • MobyTrader
  • Remitly
  • TF Global Markets
  • uChange

Best InsurTech Platform, Tool, or App

  • Aclaimant
  • Bought By Many
  • Coverfy
  • CoverWallet
  • Embroker
  • FitSense
  • Insureon
  • League
  • Life.io
  • Neuroprofiler
  • Senteri
  • UnBrokerage
  • WeSavvy

Best Lending Platform, Tool, or App

  • Bizfi
  • Datanomers
  • Global Debt Registry
  • IdFinance
  • InterNex Capital
  • MYJAR
  • P2Binvestor
  • PayMe
  • Rubique
  • Stilt
  • Suretly
  • Think Money
  • TWINO

Best Proprietary Technology or APIs

  • Alpha Exchange
  • Connamara Systems
  • Dataminr
  • Finicity
  • Nomad COnnection
  • OpenFin
  • OptionsCity
  • Overbond
  • Push Payments
  • Quovo
  • Redtail Technology
  • Tradier
  • Xignite

Best RegTech Platform, Tool, or App

  • AQMetrics
  • AU10TIX
  • ComplyAdvantage
  • ComplySci
  • Neurensic
  • Qumram
  • Rippleshot
  • ThetaRay
  • Trulioo
  • Trunomi
  • Uniken

Best Research Platform, Tool, or App

  • AlphaSense
  • FinanceBoards
  • MackeyRMS
  • OptionMetrics
  • PitchBook
  • Slingshot Insights
  • Sqoop
  • Street Diligence
  • Virtual Cove

Best Robo Advisor

  • Betterment
  • Clinc
  • Exeria
  • Gravity Investments
  • Polaris Portfolios
  • Scalable Capital
  • Unicorn Bay
  • Vestwell
  • Ways2Wealth
  • Wealthfront
  • Wealthsimple
  • WiseBanyan

Best Trading Execution or Brokerage Platform

  • DriveWealth
  • Fidelity
  • FINVASIA
  • Lime Brokerage (Wedbush)
  • m1 Finance
  • OptionsHouse
  • SelfWealth
  • Sterling Trading Tech
  • StocksToTrade
  • T3 Live
  • TD Ameritrade (AMTD)

Best Trading Idea Platform, Tool, or App

  • ADVFN
  • Alpaca
  • BullBoard
  • Chaikin Analytics
  • Equities.com
  • iStockPicker
  • SharingAlpha
  • Stocks For The Week
  • TalkMarkets
  • Ticker.tv
  • TickerTags
  • Trade Ideas
  • Tradespoon
  • Trumid Financial
  • Vest Cycle
  • Vetr

Best Under-banked or Emerging Market Solution

  • Amplify
  • Billmo, LLC
  • Eastpesa Limited
  • Elevate
  • FarmDrive
  • Ovamba
  • PayActiv
  • Ping Express
  • WorldRemit

Best Use of Blockchain or Bitcoins

  • AlphaPoint
  • Blockchain
  • Brave New Coin
  • I/O Digital
  • Melonport
  • Netcoins
  • Paxos
  • Purse
  • Remitt
  • SecureKey Technologies

Finding Alpha

  • AlphaStreet
  • Cindicator
  • Croudify
  • DarcMatter
  • ExtractAlpha
  • Kavout
  • PortfolioEffect
  • Prattle
  • PureFunds
  • RelateTheNews
  • SavaNet
  • Tradagon
  • Visible Alpha

Institutional Innovators

  • Bond Price Validation
  • Bridge Financial Technology
  • ChartIQ
  • Cloud9 Technologies
  • Intro-act
  • Marstone, Inc.
  • Opportunity Network
  • Veriday

Investing In Millennials

  • Aspiration
  • EZMCOM Inc
  • GRAIN
  • Lean Financial
  • MATADOR
  • Payscape
  • SprinkleBit
  • STASH

Leveling the Playing Field

  • CALL LEVELS
  • Capitali.se
  • Click IPO Securities
  • DIY.Fund
  • EnergyFunders
  • finbox.io
  • IEX
  • OptaCredit Fintech Private Limited
  • trigger

Solving Problems Through Payments

  • Alipay
  • CHeckbook.io
  • disburze
  • PayKey
  • Payment Rails
  • RenovITe Technologies Inc
  • Sharepay
  • Soundpays
  • Spendesk
  • SWITCH Inc
  • Zebit
  • ZOOZ
China

China bank lending falls in March; other credit up (Marketwatch), Rated: AAA

Chinese banks scaled bank lending last month, though other forms of credit outside the traditional banking system rose sharply, official data showed.

Chinese financial institutions issued 1.02 trillion yuan ($148 billion) of new yuan loans in March, down from CNY1.17 trillion yuan in February, the People’s Bank of China said Friday.

Total social financing, a measure that includes nonbank credit such as trust products, stood at CNY2.12 trillion in March, up sharply from CNY1.15 trillion in February

Hong Kong’s Central Bank is Trialing a Digital Currency (CoinDesk), Rated: A

Hong Kong’s de facto central bank is developing a prototype digital currency.

The disclosure came in a Hong Kong legislative document published by the Legislative Council Panel on Financial Affair this week and dated 18th April.

India

Indian Fintech Startup Perfios Raises $ 6.1M in Series A (Crowdfund Insider), Rated: AAA

Last week, Perfios, a fintech startup based in Bangalore (Bengaluru), India, announced it had raised approximately US $6.2 Million (400 Million INR) in its Series A round of funding. The funding is a sign of how much the fintech market has been steadily growing in India the last few years.

The report estimates that the fintech market in India will rise to over USD 2.4 billion by 2020.

The Series A was funded by Bessemer Venture Partners, a venture capital firmed based in New York.

Asia

P2P financing kicks off in Malaysia (The Edge Markets), Rated: AAA

The peer-to-peer (P2P) lending industry is off to an encouraging start. Funding Societies Malaysia, the first platform to launch, successfully raised RM320,000 for two term loan financing programmes within three weeks in March.

The loans will be used to fund the working capital of two companies – an electronics business and an automobile parts distribution business. Meanwhile, the platform aims to provide investors with an effective return of 22% and 24.91% respectively over a year.

Wong says the platform aims to seal another 80 to 100 deals in the next 12 months and raise RM10 million to RM20 million. This means investors can expect more deal flows, which will allow them to invest in a variety of companies.

Small countries like Singapore, Switzerland must cooperate in fintech: Swiss Finance Minister (Channel News Asia), Rated: A

Singapore and Switzerland are not competitors when it comes to the development of financial technology (fintech) and with both countries being small financial hubs, it is important to cooperate, said Swiss Finance Minister Ueli Maurer.

The minister also noted that Singapore’s fintech sector benefits from its close proximity to a big Asian market, and can act as a stepping stone into Asia for Swiss fintech start-ups. For Singapore firms looking to expand into Europe, Switzerland can similarly do the same.

Lattice80 is one of the organisations that the Swiss delegation is visiting during their time in Singapore. Launched in November 2016, more than 80 foreign and local fintech firms have taken up spaces at Lattice80, which is dubbed the world’s largest fintech hub by Singapore-based private investment group Marvelstone.

Bank Negara Malaysia’s FTEG calls participants for ‘Fintech Hacks’ initiative (EconoTimes), Rated: A

The Financial Technology Enabler Group (FTEG) that was established by Bank Negara Malaysia in June 2016, has launched an initiative ‘Fintech Hacks’ that identifies pain points in the delivery as well as consumption of financial services.

The Malaysian central bank has sought ideas from the public regarding the improvements to financial services sector by adopting innovation and technology.

MENA

Abu Dhabi ranks as the Top FinTech Hub for MENA Region (Emirates 24/7), Rated: AAA

Abu Dhabi with the Abu Dhabi Global Market, ADGM, has been ranked as the top FinTech Hub for the MENA region in the latest Global FinTech Hubs Review, “A Tale of 44 Cities”, by Deloitte in partnership with the Global FinTech Hubs Federation.

From the 44 cities, Abu Dhabi is ranked top FinTech hub in the MENA region. The Deloitte report reiterated that the launch of ADGM’s Regulatory Laboratory, RegLab, for FinTech startups, the only “live” Fintech regulatory regime in the MENA region with 11 Fintech players in its first batch of applications, as a “milestone success for Abu Dhabi and marked the openness and support by regulators and government towards innovation.”

Africa

Boost for crowdfunded businesses in South Africa (Times Live), Rated: AAA

In an alternative funding benchmarking report by the Cambridge Centre for Alternative Finance‚ published last month‚ South Africa was identified as the potential leader in the growth of online and peer-to-peer lending models in Africa.

In 2015 South Africa represented 18% of the total African online alternative finance market‚ raising over $15-million. Kenya was the only African country ahead of it with $16.7-million raised.

The report also found that in Africa 90% of online alternative finance was originated from platforms headquartered outside of the continent.

Authors:
George Popescu
Allen Taylor