Wednesday November 22 2017, Daily News Digest

delinquent credit cards

News Comments Today’s main news: Ron Suber shares lessons learned from his first 120 days in ‘rewirement’. Paytm invests in CreditMate. Faruqi & Faruqi law firm investigates Qudian. China clamps down on microlending. Australian alternative lenders make Fintech 100. Today’s main analysis: Americans having trouble paying off credit cards. Today’s thought-provoking articles: Alt lenders accuse banks of not following […]

delinquent credit cards

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

LESSONS FROM THE FIRST 120 DAYS OF REWIREMENT (Ron Suber), Rated: AAA

The first 120 days were filled with new languages, cultures, histories, beliefs, and people. I visited four foreign lands that were completely new to me, and no, New York and Silicon Valley were not on the itinerary.

Here are some lessons I’ve gained from the journey.

  • LESSON 1: Being first, ahead of your time and unique doesn’t guarantee success and longevity.
  • LESSON 3: The USA credit card and payments industry has a long way to go to catch up. No one (and I mean no one) swipes a credit card nor inserts a chip credit card in a machine and then signs a paper receipt in Australia and Singapore.
  • LESSON 4: There is still a huge opportunity to disrupt the currency exchange market. Upon arriving in Australia, I went to change US dollars to AU currently and was faced with: “No, you are not a customer” or “Yes, no problem” followed by a bad conversion rate and a 12% fee!
  • LESSON 8: New and old global giants are awakening to the FinTech Golden Age and responding accordingly, albeit slowly. Singapore is now a major global financial center that has come a long way very fast, and generally not focused on the short term.

The big successes are coming to those thinking long term (Bezos/Musk), the balance of power is shifting globally and the best is yet to come!!

P.S. Two young new FinTech companies to watch: Finch and Friendly Transfer. (No, I am not invested…yet)

US law firm launches investigation into star Chinese payday loan lender Qudian (SCMP), Rated: AAA

Qudian, the Chinese online payday loan platform, could be facing a rash of class-action lawsuits in the US after its share price tumbled drastically this week on the New York Stock Exchange, triggering concerns over the integrity of the firm.

New York-based law firm Faruqi & Faruqi, is now encouraging investors in Qudian to get in contact with it, as it is now “investigating potential claims against Qudian”, it said in a statement. Qudian was unavailable for comment.

Shares in the leading provider of online small consumer credit in China tumbled 5.28 per cent on Monday to close at US$20 in New York, 16.7 per cent down from its IPO price of US$24, and more than 40 per cent down from a historic intraday high of $35 reached on its trading debut on October 18.

Source: South China Morning Post

Americans are having trouble paying off their credit cards — and it could spell trouble for the economy (Business Insider), Rated: AAA

US credit-card debt recently surged to record highs, surpassing peaks seen before the 2008 financial crisis. Several large US banks and credit-card companies reported a rise in credit-card delinquency rates for August, the second consecutive monthly rise.

Source: New York Fed
Source: New York Fed

Fed funds is just 1% to 1.25% after four increases starting in December 2015, and yet many Americans pay credit-card rates well into the double digits.

Banks aren’t following CFPB data-sharing guidance, fintechs say (American Banker), Rated: AAA

Some fintechs are accusing financial institutions of not following either the spirit or letter of the data-sharing principles the Consumer Financial Protection Bureau released in October.

One of fintechs’ primary accusations is that banks are selectively choosing fintechs to work with — leaving the rest out in the cold. Though the CFPB data-sharing principles do not spell out that banks should work with everyone equally, the spirit of the document suggests financial institutions should work with all trusted third parties.

Capital One has signed agreements with five fintechs and data aggregators—Clarity Money, Intuit, Abacus, Xero and Expensify—since introducing its data-sharing application programming interface in February. It says more are in the pipeline.

Banks have too many conflicting requirements

Another issue cited by fintechs is that it’s tough dealing with each bank’s different set of standards and requirements.

“Some of those standards may be in conflict,” Petralia said. “It can take years to comply with a bank’s requirements and it probably eliminates access to newer startups, to smaller businesses that don’t have a lot of cash sitting on their balance sheet, to support that kind of long lead time for legal requirements.”

Early Stage Investing vs. Real Estate Investing: Similarities and Differences (Crowdfund Insider), Rated: A

Both venture capital (VC) investing and real estate investing involve some level of risk assessment, they both have the potential for big returns, and investors have the opportunity to help someone else reach a desired goal. Despite this common ground, there are some distinct differences.
Private Equity Investing
To realize returns on this type of investment, investors must understand the different stages of the startup cycle, how to evaluate a business plan, understand how to assess talent, technology, and business processes to determine whether a startup has the potential to succeed, and know how to judge market forces that could have an impact on the startup company.
Real Estate Investing
Real estate investments can be structured in many ways to benefit investors who are looking for specific types of returns. For instance, house flipping (Fund That Flip and Peerstreet) or commercial or multifamily flips (Sharestates and Patch of Land) offer short-term gains while rental properties (Roofstock and HomeUnion) offer long-term passive income. Commercial real estate investing (CrowdStreet and RealtyShares) may involve property development or long-term leasing with spans of three, five, ten years or more. New REITs (FundRise eREITs and MogulREIT) offer investors a way to invest in multiple properties or types of real estate through a single vehicle. Real estate funds or portfolios (AlphaFlow) also allow investors to diversify their debt investments through a single vehicle.
How to Evaluate an Early Stage or a Real Estate Crowdfunding Opportunity
Due diligence in real estate investing is also important. Basic criteria for evaluation include:

  • The platform – Does it have a strong financial position and available capital? Is the underwriting done in-house or outsourced? What is the background and experience of management team? What is their plan for insolvency, recouping losses, and managing risk?
  • Fees – Every investment involves opportunity cost. Is there an ongoing management fee, or does the investor pay a percentage based on returns or total portfolio size?
  • Borrowers – How does the platform assess borrower track record and credit? 
  • The investment – What is the developer’s business plan? What are the expected cashflows, expenses and projected returns? What is the loan-to-value before repairs and after repairs? Are investors in a first-lien position or second? Where is the property located?

CFPB, CashCall Spar Over Possible $ 287M In Restitution (Law360), Rated: A

The Consumer Financial Protection Bureau squared off against CashCall Inc. and its affiliates in California federal court on Monday about whether it would be appropriate to make the online lender pay as much as $287 million for deceiving consumers, with the CFPB calling the company’s loans “financial snake oil” and CashCall saying its business was legitimate.

JPMorgan, Goldman Sachs Trial DLT for Equity Swaps (Coindesk), Rated: A

A group of major financial firms including JPMorgan Chase and Goldman Sachs has trialed the exchange of equity swaps over a distributed ledger (DLT) system.

By carrying out trades across a network where all parties use the same valuation data and share the same books, in theory, payments can be processed nearly instantaneously and disputes over transactions will be less likely.

Small Business Saturday: Why Banks And Businesses Need To Start Playing Offense (Forbes), Rated: A

Similarly, while I do believe the banking industry has made strides in embracing technology over the past few years, the reality is that far too many bankers are still “playing defense” when it comes to fully integrating technology into every aspect of their business.

Finastra Universe introduces Sophia the humanoid robot (Finastra Email), Rated: B

I wanted to invite you attend Finastra Universe in New York on Tuesday, December 5thFinastra Universe is a one-day global executive event series focusing on fintech and the future of financial services.

The event will include panel and Q&A sessions, where Finastra experts and guest speakers will explore how financial firms can leverage new, more dynamic technologies within lending and other areas to improve internal efficiencies, deliver connected customer experiences and enhance business outcomes.

I’ve included a link to the full agenda Where: Marriott Marquis Times Square, 1535 Broadway, New York

When: Tuesday, December 5th, 2017
 
Click 

Financial tech is a big business. What Charlotte’s doing to become a larger player. (Charlotte Observer), Rated: B

More than 125 people attended the inaugural Southeast Fintech Venture Conference on Monday to hear presentations from investors, fintech success stories such as small-business lender Kabbage and new firms just getting off the ground, including some from Charlotte. Sponsors included investment firm Frontier Capital and asset manager Barings, which hosted the event at its new Tryon Street headquarters.

According to the National Venture Capital Association, Charlotte-area companies brought in about $393 million in venture capital investments in 2017, led by a $300 million round for payments company AvidXchange.

United Kingdom

Consumer credit – walking the regulatory tightrope (Lexology), Rated: AAA

Subprime and near prime lending have been subject to intense regulatory scrutiny during the aftermath of the financial crisis. The global economic crisis that took hold in 2007 has largely been attributed to the widespread practice of irresponsible lending to consumers, often with no means of repayment. In 2013, StepChange Debt Charity reported that the average payday loan debt of its clients was £1,657, whereas the same clients’ average net monthly income was a much lower £1,379.

Following the transition in regulatory regimes from the OFT to the FCA, a series of tougher measures have been introduced to move staunchly away from the lending practices which allowed firms such as payday lender Wonga to maintain a representative APR of 5,853% in 2013. The FCA has made it clear that it regards non-standard finance as a “high risk” activity and as such dedicates special resources to intensively monitoring businesses in this sector.

Almost half of SMEs have never checked their credit score (Bridging&Commercial), Rated: A

Nearly half of SMEs (44%) have never checked their credit score, according to the latest research from RateSetter’s business finance division.

RateSetter’s research also found that a further 6% of businesses had not checked their credit score within the last 12 months and only 18% had viewed their score within the last six months.

Never mind the Brexit: Alternative finance offers a route to prosperity (Startups.co.uk), Rated: A

It is a little over a decade since Northern Rock became the first UK bank in 150 years to fail because of a run on its deposits. For a brief moment it looked as if the entire global financial system might collapse overnight, with only government intervention and billions in bail-outs preventing a worst-case scenario.

According to data from the Office for National Statistics (ONS), the number of small businesses that were successful in their attempt to get a loan fell from 90% in 2007, to 65% in 2011.

According to our latest research, just 43% of small business owners see trading conditions improving in the coming year. Meanwhile 52% of start-up business owners say they do not think banks will continue to lend at the same levels in 2018.

More than half of the 1,000 small business owners we surveyed say they are planning to grow or expand their business in 2018.

These alternatives to traditional forms of lending are proving particularly popular among the 96% of UK businesses that employ fewer than 10 people.  According to our research, 40% of start-ups and younger business owners say the growth of alternative finance options has made them less reliant on banks for funding.

Investment Committee: Arnaud Gandon, Heptagon Capital (Citywire), Rated: A

One area of credit we find attractive, however, is lending to small businesses in the UK and Europe. The opportunity set for companies such as Funding Circle is growing fast, due to the retreat of traditional banks in providing loans for smaller companies. During the last quarter, Funding Circle outstripped the major high street banks for net new loans. We see the company essentially as a technology platform enabling the efficient issue of small loans to thousands of companies. It has a solid management team and is looking to expand its successful business model to other geographies.

Here’s what the UK’s fintech community is most concerned about over Brexit (Verdict), Rated: A

Fintech is now worth over £7bn to the UK economy every year and employs around 60,000 people, according to the Treasury office.

Marta Piekarska, director of ecosystems at Linux Foundation’s Hyperledger project, said she believes Brexit will impact fintech in the UK because it will make things harder for collaboration.

“About half of our developer workforce today are non-UK European nationals. Already it is hard to find great developer talent in the UK.  Obviously, if freedom of movement isn’t as easy and non-UK EU nationals feel that it’s not really a nice environment to come to the UK to work, then we will have a problem.”

Open Banking: How can customer centricity drive innovation? (City A.M.), Rated: A

The Payments Services Directive (PSD2) is a major piece of UK/EU legislation that will ensure that all payment service providers (PSPs) that operate in the single market are subject to rigorous supervision and adhere to the appropriate transformative rules to create a fair, open-banking framework.

In practical terms, a customer will be able sign up for a loan, credit card or a mortgage by using a log-in that looks and feels a little bit like Facebook Connect and authorises the provider to see all of the customer’s financial transactions from the previous 36 months. The main gatekeepers and one of the leading innovators in this space are London-based FinTech company TrueLayer. As the go-between between a customer, their bank and the product or service provider, they ensure real-time, secure connectivity of the customer’s data.

Blockchain Based Building Platform BitRent Announces Token Sale (The Merkle), Rated: B

BitRent has given itself a mission: to make real estate investing easy, transparent and profitable all over the world. The platform uses a combination of techniques that will allow its users to control construction processes. These techniques include BIM open modeling and computer aided monitoring using RFID chips, to make investing in commercial and residential shared-equity construction more transparent and predictable. On the platform, investors can invest in real estate, without a minimum entry threshold. The online mode allows them to control construction processes and receive dividends when the construction has been completed. Moreover, users can receive data on free area or items of commercial property.

The BIM (Building Information Modeling) technology that the platform uses, allows all users of the platform to monitor a project at any stage.

The platform will release its RNT tokens, based on Ethereum. The token sale will start on the 1st of December 2017, 11:00 UTC and will last till March 1, 2018.

China

China clamps down on online micro lending; U.S.-listed shares plunge (Reuters), Rated: AAA

China took steps to rein in the rapidly growing and lightly regulated market for online micro-lenders in the government’s latest crackdown on internet finance, sending shares of U.S.-listed Chinese financial firms into a tailspin.

A top-level Chinese government body issued an urgent notice on Tuesday to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders, sources who had seen the notice told Reuters.

The multi-department body, tasked by the central government to rein in risks in the internet finance sector, also told local regulators to restrict granting of new approvals for micro-loan firms to conduct lending across regions, according to the sources.

Shares Of Chinese Online Credit Providers Crash Over Crackdown Fears (NASDAQ), Rated: A

Shares of Qudian ( QD ), Yirendai ( YRD ) and other China-based providers of online credit plunged Tuesday on reports that China’s Internet Financial Risk Management Group had ordered a suspension of online small-loan approvals, but some stemmed their losses by session’s end and others even gained ground.

In addition to Qudian and Yirendai, also falling were China Rapid Finance ( XRF ) and PPDAI Group ( PPDF ).

U.S.-listed Chinese financial firms dive on regulatory action (Reuters), Rated: A

Shares in online lender Qudian (QD.N), whose shares only debuted last month, sank by as much as 20 percent in early trading.

Shares of China Commercial Credit Inc (CCCR.O) fell 6.4 percent, those in PPDAI Group (PPDF.N) some 17.8 percent. Jianpu Technology (JT.N), which also debuted just this month, fell 9.5 percent and China Rapid Finance (XRF.N) slipped 12.92 percent.

From Drone Hackers to Cyber Bodyguards, China Cyber Security a Growing Concern (China Money Network), Rated: A

Q: What major trends are you seeing in China’s cybersecurity market?

A: I think the major trend in China is similar to what is happening in the rest of Asia. The frequency and extent of cyber-attacks are increasing rapidly.

Q: What Chinese business sectors are most vulnerable, or need to do more to protect themselves?

A: Tech companies with lots of portals to its websites, especially like peer-to-peer lending, or any tech companies with valuable intellectual property are prime targets of cyber attacks.

Q: What should Chinese tech companies be doing to defend themselves, or at least reduce the damage done by cyber attacks?

A: Firstly, employee education is important. Over 90% of hacking is conducted through phishing and spear phishing. We have worked with a Chinese company with 20,000 employees, and we sent 20,000 emails to them with a link offering a chance to win iPhone. 30% of the staff clicked on the link, which actually is a quite regular percentage. In a real-life scenario, if 30% of your 9000 staff were to click, that’s 3000 cases of malware potentially downloaded into your systems. But after phishing training, finishing the exercises, the number was reduced to 5%.

Q: There are reports saying cyber security experts “cyber bodyguards” is one of the hottest jobs in China. What particular specialty expertise faces the greatest shortage?

The “cyber bodyguards” are in a booming industry, particular for providing preventative measures. Firstly, there are the penetration testers; also known as ethical hackers or white hat hackers. They replicate what a real hacker would do; not stealing any data or doing anything bad, but will scan systems for any gaps and weaknesses in the company’s defenses that may be exploitable during a cyber attack. They will then advise on remediation measures.

European Union

EBA weighs up risk and rewards of Fintech in new Discussion Paper (FinanceJobs.ie), Rated: AAA

The European Banking Authority takes a cautious and carefully balanced view in its deliberations on how it should approach FinTech in its latest Discussion Paper. In reviewing the FinTech landscape in Europe the EBA raises many more questions than it answers, concluding that it should undertake much more detailed follow-up work in a number of areas. But it does raising warning flags about possible unevenness in the playing fields offered by different jurisdictions, in the area of sandboxing and innovation hubs, for example.
Overall, the The European Banking Authority says, FinTech may increase competitiveness in the Single Market by lowering barriers to entry for newcomers while preserving fair competition and incentives to innovate.

The EBA says a significant increase in overall operational risk has been witnessed in the last few years, including higher conduct risk, increased cybersecurity issues and digital fraud issues, and increased outsourcing risk. ‘At the same time new or previously immaterial risks, such as the risk of mismanagement of personal data / lack of data privacy, seem to be amplified by the lack of expertise of human resources and the inadequacy of technology infrastructures.’

It points out that alternative lending platforms such as peer-to-peer lending can put pressure on the interest income from loans of existing credit institutions while new entrants offering commoditised products and services at lower costs, such as money transfers and brokerage, can reduce the fees and commission income of established players.

DreamQuark beefs up financial services through artificial intelligence (TechCrunch), Rated: A

Meet DreamQuark, a French startup that wants to help banks, insurance companies and asset management firms with all of their artificial intelligence needs. DreamQuark crunches your data, creates models based on machine learning and lets you apply those models on all past and future data points.

International

Robeco launches fintech investment fund (Finextra), Rated: A

Robeco has launched a Global Fintech Equities fund to give wholesale and retail investors exposure to companies that are transforming the financial sector.

The actively managed fund will invest in three distinct segments, labelled ‘today’s winners’, ‘fintech enablers’ and ‘challengers’. Today’s winners include companies that already have a competitive advantage in this space, fintech enablers provide the digital backbone for emerging companies, and challengers are the companies that have the breakout potential to stand out from the pack.

Following a successful pre-ICO, Etherecash has announced a public ICO that launched November 15th and will end December 19th. Focusing on the 2.5 billion unbanked, Etherecash looks to excel in both spending and sending, as well as providing a peer-to-peer lending platform, to enable those with little or no credit history the ability to access funds.

The ICO sale will auction off 144,000,000 tokens, which will help support ongoing development of the platform and can be purchased with Bitcoin or Ethereum. A bonus of 12% is available for participants in the first week, which goes to 3% in week four, and finally to 0% in week five.

The ICO has a soft cap of $15 million, which if not reached, will conclude the ICO as a failure with funds returned to the respective investors. The hard cap is set at $100 million. 40% of funds will be used for further core development; 25% in growth and marketing; 20% for legal, accounting, and advisory feeds; and the remaining 15% for admin and operational costs.

57% of internal frauds are carried out by senior and middle management, according to the whitepaper.

Australia/New Zealand

Aussie lenders make Fintech 100 list (TheAdviser), Rated: AAA

Ten Australian companies have been listed in KPMG’s Fintech 100 list, which identifies the top 50 fintech firms and an “emerging 50” list of companies “seeking to boldly push the envelope in financial services”.

Online SME lender Prospa was the highest ranked Australian company at number 24. It also placed second on the Australian Financial Review’s Fast 100 list after averaging a 239 per cent revenue growth since 2013–14 and holding $50 million in equity and debt funding in 2017.

US-based lender OnDeck, which broke into the Australian market in 2015, placed 28th in the ranking, up two places from last year’s report, while German fintech Spotcap (which also has operations in Australia) came in at number 32.

How I’m Saving a Week (or ,500 This Year) on My Home Loan (Mozo), Rated: A

Fast forward to three months ago, when I suddenly realised my rate of 4.27% was more than 60 basis points higher than the best on the market. I had become a victim of that time honoured tradition of banks fattening profit margins and it was time to do something about it.

I knew there were now stacks of lenders offering rates below 4.00%, and after comparing the best loans decided to go with an online lender to take advantage of their super low variable rate of 3.64%.

India

Paytm invests in online lending startup CreditMate (VC Circle), Rated: AAA

One97 Communication Ltd, which runs mobile wallet firm Paytm, said on Tuesday it has picked up a stake in Mumbai-based fintech startup CreditMate.

CreditMate helps two-wheeler dealers and financiers assess and approve vehicle loans to customers with no formal credit history, Paytm said in a statement.

8 ‘blockhain hacks’ which NITI Aayog, AWS, Microsoft, Accel, Coinbase believe are beneficial for society (YourStory), Rated: AAA

Anshul said that there is a lot of hype and misconceptions related to blockchain. He explained that outside of a small group of crypto-savvy investors and developers, blockchain is often synonymous with cryptocurrency, and erroneously so. Their goal with this hackathon was to give developers (with or without past blockchain experience) a chance to envision how the same distributed ledger technology that powers Bitcoin might be able to improve transparency, efficiency, and honesty in enterprise and government processes, particularly in regions of the world suffering from high corruption.

Anshul added that another objective of the event was to explore use cases for concepts like IndiaChain — a blockchain infrastructure for a Digital India, building on existing initiatives like Aadhar, the world’s largest biometric identity project with unique 12-digit IDs for 1.2 billion Indian residents.

Gif credit- Proffer

Here are eight hack projects recognised by the partners.

  • 1. SWASHchain: a battery SWApping and SHaring infrastructure verified on the blockchain
  • 2. AgroChain: tracking farm products from farmer to consumer
  • 3. chAIn: decentralised AI with Homomorphic Encryption to guarantee data privacy
  • 4. Betoken: decentralised Hedge Fund for social impact investing
  • 5. Open Complaint Network: crowdsourcing issues and rewards
  • 6. 0xSHG: zero-interest loans for rural microfinance – Hence the team believes that blockchains are a unique solution which address both issues by organising not just financial capital but also social capital. The team has created an Aadhar-linked capital-pooling network.

  • 7. SureFly: last-minute crowdfunded insurance for flight delays – Insurance premium is calculated as a function of the probability that a passenger will miss a flight which is in turn a function of flight time, insurance seeker’s distance from the airport, traffic on the roads, length of airport lines, etc.
  • 8. MyH2OBot for “Habit Economics”

Sharing economy: creating opportunities in the digital era (livemint), Rated: A

The rise of the sharing economy is commonly attributed to culture or ideology. It’s assumed that millennials don’t want to be trapped by houses, cars and other expensive belongings, for example, or that they believe sharing is good for the environment.

Research conducted by the BCG Henderson Institute (BHI) indicates that economics, not attitude, is driving the sharing economy.

Among respondents who use sharing services, 40% of Germans, 57% of Americans and 67% of Indians said that well-priced, convenient offers could convince them to abandon ownership altogether.

Aside from physical assets, investors have also poured $5.7 billion into peer-to-peer lending ventures.

Start-ups by no means have a lock on the sharing market, however. In fact, 55% of consumers in India said they would prefer dealing with established operators—the highest among the countries surveyed.

Asia

Banyuwangi Regent Anas Connects MSME with Fintech Startups (Netral News), Rate: A

Banyuwangi Regional Government will again partner with digital platform startups to develop the region.

After with Gojek ride-hailing service provider, there are several more similar companies that will be embraced. One of them is the startup of financial technology (fintech), especially for financing facilities to micro, small and medium enterprises (MSME).

Canada

CANADIAN PAYMENTS INNOVATION FORUM SAYS COLLABORATION CONTINUES TO DRIVE FINTECH INNOVATION (Betakit), Rated: A

At the third annual Canadian Payments Innovation Forum in Toronto, over 100 payments and banking executives gathered to examine how FinTech is transforming the Canadian financial services industry, and what providers can do to prepare.

After launching with Samsung Pay earlier this year, Gamble indicated that ‘cash alternatives’ would continue to be a focus and something to watch in the market. Due to Interac’s smaller size (the company has about 250 employees), Gamble said they just don’t have the “bandwidth” to do everything themselves, so turning to partnerships is key.

“We strive to deliver alternatives to cash, and as a community, we’ve done an amazing job of delivering contactless capabilities at POS. Canadians moved more than $90 billion in etransfers this year, so our little country is significantly leading the space in P2P transfers.”

AI is already moving forward quickly in financial advice and management, and the use of financial technology, or fintech, seems to be growing among older Canadians.

“Our average client is 47 years old and our second largest demographic group is baby boomers,” says Randy Cass, CEO and founder of Nest Wealth, a Canadian financial robo-advisor that was founded in 2013.

“For retirement planning, the AI isn’t necessarily cutting the financial advisor out of the process. What we’re likely to see is AI helping the financial advisor to get faster and more comprehensive data analysis and provide more seamless client support,” Mr. Narvey says.

Authors:

George Popescu
Allen Taylor

Thursday August 10 2017, Daily News Digest

Lending Club

News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA

NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.

The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.

The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.

Q2 2017: An Update from Our CIO (LendingClub), Rated: AAA

Projected investor returns are also largely unchanged from the first quarter and continue to range from approximately 4% to 9% (see below).

A few factors that influence returns on the platform1 are listed below:

  • Economic Backdrop. The American economy remains robust but growth continues to be relatively modest. The unemployment rate has changed little over the past year, measuring at 4.4% as of July 2017. Meanwhile, GDP increased by 2.6% in the second quarter of 2017.
  • Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
Source: LendingClub

Lending Club makes a surprise comeback (Business Insider), Rated: AAA

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal (Bloomberg), Rated: AAA

LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites (BNL Finance), Rated: A

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions.

PFM apps are folding as banks work them into their own apps (Tearsheet), Rated: AAA

Last week,  Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.

PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.

For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.

Chinese Stock That Rallied 4,555% Could Get the Boot From the Nasdaq (Bloomberg), Rated: A

Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.

Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.

Source: Bloomberg Markets

Installment Loan Provider Earns Top Rating from TopConsumerReviews.com (PR Web), Rated: A

TopConsumerReviews.com recently awarded their highest five-star rating to Lending Club, an industry leader among companies offering Installment Loans.

“For Installment Loans ranging from $1000 to $40,000, Lending Club provides incredible customer service with fair interest rates and fees,” according to Brian Dolezal, of TopConsumerReviews.com, LLC.

StreetShares raises $ 10.3m for “Shark Tank meets eBay” approach to P2P lending (Banking Technology), Rated: A

Alternative lending platform StreetShares raised $10.3 million in a venture round this week, writes Finovate(Banking Technology‘s sister company).

The funds come from an undisclosed investor and bring the Virginia-based company’s total funding to almost $20 million since it was founded in 2013.

Real Estate Crowdfunding Platforms Work to Find a Niche (National Real Estate Investor), Rated: A

However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.

Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.

RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.

Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.

Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.

How David Zalik Skipped High School On His Way To Becoming A Billionaire (Forbes), Rated: A

With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.

GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.

From Illinois’ woes to the state of credit: Jamie Dimon lets loose (Crain’s Chicago Business), Rated: A

Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.

What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.

Would you ever see banks getting directly into online consumer lending?

Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable

5 fintech trends disrupting retail banking (and how banks can fight back) (The Financial Brand), Rated: A

  1. Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
  2. Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
  3. Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
  4. Smart Budgeting and Personal Finance Management
  5. Digital Currencies That Don’t Require Central Banks

Fintech expert Maule to join British digital banking startup (American Banker), Rated: A

Fintech expert Sam Maule has been hired by nascent digital banking firm 11:FS to head up its expansion in North America.

Marketplace Lending Abs Fund Form D (Weekly Register), Rated: B

The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.

Online Lending Policy Institute to Host Second Annual Summit in Washington, D.C. (Markets Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.

Capital One VP Joins veteran-focused fintech firm (American Banker), Rated: B

A former Capital One executive has moved to StreetShares, an online lending and investing platform.

Heather Tuason, formerly senior vice president of small business at Capital One, is now the fintech startup’s chief product officer, it announced Tuesday.

EquityBuild Announces Master Class Webinar on Five Years to Wealth Through the Brand New Model (Benzinga), Rated: B

EquityBuild announces a new master class on the Power of Five, highlighting their new five-year investment model.

Here is the upcoming webinar master class to attend August 14, 2017:

EquityBuild Power of Five Master Class – Find out how this unique model changing the way investors view real estate. Join us for this special event here.

Labor Department delays fiduciary rule implementation date (Reuters), Rated: B

The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.

Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.

United Kingdom

LendInvest makes London Stock Exchange debut with £50m raise (Finextra), Rated: AAA

LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).

The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.

The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.

P2P Lending: MarketInvoice Loanbook Snapshot (LinkedIn), Rated: AAA

MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.

Source: Sukhwinder Shoker

MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.

Source: Sukhwinder Shoker

Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.

Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.

Meet Finimize: The fintech startup that turned a popular newsletter into a financial planning platform (Tech World), Rated: A

Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.

Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.

Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.

The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.

The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.

WiseAlpha opens up corporate bond market for investors (AltFi), Rated: A

Online lending platform WiseAlpha is adding corporate bond and loan investments to its platform.

Retail investors can now access Tesco’s £300m institutional bond that has a 4.8 per cent return.

Users can buy the debt for as little as  £100 and cash in their bonds via the secondary market on the platform. The grocers bond matures in 2042.

Six of the best alternative income ideas (IG.com), Rated: A

Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.

Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.

MARKET INSIGHT: OLD MONEY, NEW METHOD (Campden FB), Rated: A

Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:

  • attractive absolute and relative returns compared to other fixed interest instruments
  • ability to create some granular/diverse portfolios through investment in loan parts
  • transparent credit process and loan pricing
  • ability to match maturity profile to desired outcomes

At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.

How can family offices engage with marketplace lenders?

Firstly, investors need to consider the asset class and risk profile they wish to invest in.

Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.

Glint is a stealthy London fintech startup that promises to turn gold into a ‘new global currency’ (TechCrunch), Rated: A

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.

Railsbank, a new fintech startup from founder of Currencycloud, raises $ 1.2M led by Firestartr (TechCrunch), Rated: A

Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.

The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.

China

China targets mobile payments oligopoly with clearing mandate (Financial Times), Rated: AAA

China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.

Big banks on notice that they’re losing ground to China’s fintech giants (SCMP), Rated: AAA

“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.

“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”

The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.

The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.

Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.

Top3 Chinese block chain asset trading platform (the second-tier platforms) (Xing Ping She), Rated: A

First of all, how to define the Chinese second-tier platforms? We refer to the following three factors:

  1. It has been established for a long time, and there is little risk of failure for the company after a long-term market test and trials.
  2. Popular and profitable.
  3. It belong to the major currencies which are the top of the list. And it has certain dominance in a few currencies.

So, the TOP3 Chinese second-tier platforms are finally selected as:

BTC
Online date: May 2013
Website: btc38.com
Registered capital: 10 million
Office address: Shenzhen

CDC CloudCoin
Online date: April 2014
Website: yunbi.com
Registered capital: 10 million
Office address: Beijing

CHBTC
Online date: early 2013
Website:chbtc.com
Registered capital: 10 million
Office address: Zhongshan city, Guangdong province

China Commercial Credit Enters Share Exchange Agreement with Sorghum Investment Holdings Limited (Markets Insider), Rated: A

China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.

Sina Corp Establishes $ 500M Online Finance Fund To Back Chinese FinTech Firms (China Money Network), Rated: A

Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.

Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.

Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.

LendIt Lang Di Fintech Names Omega One PitchIt Competition Winner (PR Newswire), Rated: B

LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.

As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.

Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.

European Union

FinTech Group Counts on BearingPoint RegTech (BusinessWire), Rated: B

Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.

International

Fintech startup brings blockchain and cryptocurrencies to invoice finance (GT Review), Rated: A

New fintech startup Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space.

Having raised more than US$10mn in crowdfunding in just five days, the company has now started piloting its new platform, which lets firms and individuals sell or buy invoices globally.

Australia

Locked out of property market? Five better places for Millennials to put money (The Sydney Morning Herald), Rated: A

Below are five better places to put your money as a young Australian in 2017.

Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.

You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.

Women in Finance finalists revealed (TheAdviser), Rated: B

Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.

India

Just Rent, Don’t Buy (Business Today), Rated: AAA

India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.

There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.

Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).

There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”

Is our banking industry facing existential crisis from fintech boom? (The Jakarta Post), Rated: A

Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.

The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.

On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.

Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.

Asia

Globe Telecom’s Fuse to Provide Loans Powered by Mambu (Markets Insider), Rated: AAA

Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.

Mynt is increasing access to  financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.

Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.

Singaporean fintech hub Lattice80 to launch office in India (Tech Wire Asia), Rated: A

LATTICE80, Singapore’s fintech hub will be opening an India branch at the end of September, as reported by Bloombergmarking the company’s first step in expanding their global operations.

The fintech hub is planning to open offices in world’s financial capitals, especially London, New York and cities in the Middle East.

MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.

Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.

Authors:

George Popescu
Allen Taylor