Friday April 20 2018, Daily News Digest

Marketplace Lending Securitization League Table

News Comments Today’s main news: OnDeck closes $100M credit facility. LendingClub expected to announce quarterly sales of $152.18M. Affirm expands to cover smaller purchases. Funding Circle lends 80M GBP through IFISA. China Construction Bank opens robot-only branch. Today’s main analysis: Originator league table. UK P2P lending nears 9B GBP. Today’s thought-provoking articles: Top fintech investors by stage. Interview with […]

Marketplace Lending Securitization League Table

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United States

United Kingdom

China

Australia

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News Summary

United States

OnDeck Announces New 0 Million Revolving Credit Facility (PR Newswire) Rated: AAA

OnDeck announced today the closing of a $100 million asset-backed revolving credit facility with Pioneers Gate LLC, a lending vehicle of a leading life insurance company managed by 20 Gates Management. The new facility provides the longest revolving funding period of any of OnDeck’s funding sources, and the lowest interest margin of any of OnDeck’s variable-rate funding facilities to date.

Lending Club (LC) Expected to Announce Quarterly Sales of 2.18 Million (The Lincolnian Online) Rated: AAA

Wall Street brokerages expect that Lending Club (NYSE:LC) will announce sales of $152.18 million for the current fiscal quarter, according to Zacks. Three analysts have provided estimates for Lending Club’s earnings. The lowest sales estimate is $150.00 million and the highest is $154.53 million. Lending Club posted sales of $124.48 million during the same quarter last year, which suggests a positive year-over-year growth rate of 22.3%. The firm is scheduled to announce its next earnings results after the market closes on Tuesday, May 8th.

On average, analysts expect that Lending Club will report full-year sales of $688.45 million for the current financial year, with estimates ranging from $680.00 million to $693.30 million. For the next fiscal year, analysts expect that the company will post sales of $803.61 million per share, with estimates ranging from $773.00 million to $858.31 million. Zacks Investment Research’s sales averages are an average based on a survey of sell-side research analysts that cover Lending Club.

Affirm Expands Offering to Cover Smaller Purchases with Simple, Transparent Payments (The Virginian Pilot) Rated: AAA

Affirm, Inc., the company founded by entrepreneur Max Levchin to provide fair and honest financial products, today announced Affirm will partner with brands and retailers to offer shoppers a simple, no-interest payment option on purchases of any size via three easy, monthly payments. Now, Affirm’s financial products are available for purchases of any size, marking an expansion for the company. Affirm will continue to offer shoppers the option to buy now and make simple, transparent payments over time for purchases up to thousands of dollars, with terms ranging from 3 to 36 months.

The expansion of Affirm’s capabilities will be especially valuable to fashion and apparel brands and retailers that want to offer a quick and convenient payment method that better aligns with shoppers’ cash flows and are more transparent than traditional credit.

PeerIQ Releases Their Marketplace Lending Securitization Tracker For Q1 2018 (Lend Academy) Rated: AAA

We see another robust quarter for marketplace lending securitizations with $4.3 billion in new deals.

SoFi lead the way again with $2.6 billion or around 60% of the market with two huge student loan deals and a consumer loan deal.

Online Lending in Risk On Mode: Unprecedented 21 Months of Non Stop Securitization Issuance (Crowdfubd Insider) Rated: A

The most recent report stated that PeerIQ has observed an “unprecedented 21 months of non-stop issuance. Markets remain in a “risk-on” mode and MPL investor appetite continues to grow. This is a very bullish statement for online lenders coming at a time when interest rates are rising as is competition in the sector is increasing.

Top Seed-Stage FinTech Investors (Crunchbase News) Rated: AAA

Crunchbase News recently took a deep dive into the U.S. FinTech industry’s Q1 2018 venture activity. We found that deal volume in 2017 amounted to more than $7 billion in venture funding for seed, early, and late-stage startups. As 2018 came to a head, the number of deals in the space declined slightly, while venture capital dollars increased by 37 percent quarter over quarter.

The firm has made more than 690 investments in technology companies, with lead investments in 24 startups. Plug and Play also made an early bet on PayPal, now a public company with a market cap over $90 billion. California-based Hippo Insurance picked up an investment by Plug and Play in its $25 million Series B in January 2018. Hippo Insurance was coincidentally also mentioned in our Crunchbase News analysis of startups that have weird names.

Source: Crunchbase News

Defi Solutions, a SaaS platform for lenders, was the latest growth-stage FinTech company to score an investment by the firm. Bain Capital Ventures was the sole investor in the startup’s $55 million Series C in January 2018.

Source: Crunchbase News

RealtyMogul’s MogulREIT I Closes Senior Debt Investment in San Francisco (The Virginian Pilot) Rated: A

MogulREIT I today announced that it has completed an investment in a $6.69 million mixed use building in San Francisco, California, its 15 th acquisition since inception. MogulREIT I was designed to offer investors potential cash flow through managing a diversified portfolio of commercial real estate investments, including, but not limited to medical office buildings, multifamily apartment complexes, office spaces and retail shopping centers.

Ascentium Capital Surpasses $ 4 Billion in Originations (deBanked) Rated: A

Texas-based lender Ascentium Capital announced last week that it had surpassed $4 billion in origination volume since the company was founded in 2011.

The other business channel is a direct channel where Ascentium makes direct loans to small and medium sized businesses of up to $250,000. Depping told deBanked that the company’s direct channel makes up about 30 to 40 percent of its business.

Q&A: Renaud Laplanche on Starting Upgrade and Offering New Credit Products to Consumers (LendEDU) Rated: AAA

Q: It looks like you co-founded Upgrade with a total of 6 co-founders. How has starting Upgrade been unique from a team building perspective?

A: Over the last year we’ve on-boarded more than 250 team members across our three offices – San Francisco, California headquarters, Phoenix, Arizona operations center and Montreal, Quebec, Canada development center. It has been an incredible year, especially looking back at the team we’ve formed.

Q: How did the challenges of starting LendingClub compare to the unique challenges of starting Upgrade?

A: The challenges are quite different because the launch of each company stands about decade apart, so the landscape is very different.

Q: Beyond credit monitoring, how is Upgrade helping to educate consumers about their finances?

A: We believe helping people get smarter about credit can enable them to access more affordable credit in the future, and that’s why we launched Credit Health. Credit Health comprises of a range of tools that we think can help people understand their credit profile and what they can do to improve it. In addition to credit monitoring and alerts we offer Credit Health Insights – a library of educational articles and videos. Credit Health also features a credit simulator that gives you customized advice and tips tailored to your unique credit history. We haven’t seen other credit monitoring platforms offer this the same way we do.

Blockchain Startup Backed By Billionaire Bitcoin Bull Peter Thiel Gets $ 28 Million Investment (BTC Manager) Rated: A

Harbor, a blockchain startup backed by billionaire bitcoin bull Peter Thiel, has received an additional $28 million investment that it hopes will make blockchain real-estate investing a reality.

This latest cash infusion was led by Thiel’s Founders Fund, venture-capital fund Andreessen Horowitz, and cryptocurrency investment firms Pantera Capital and Craft Ventures. The San Francisco-based Harbor secured $10 million in Series A financing in February 2018, raising its total investments to $40 million.

LendingClub vs. Prosper Review: Here’s What You Need to Know (Student Loan Hero) Rated: A

In recent years, there’s been rising interest in peer-to-peer (P2P) lending. A report from Research and Markets estimates that P2P lending could grow by 53.06% between 2016 and 2020, while Transparency Market Research projects that the global P2P market will be worth $897.85 billion by 2024.

Source: Student Loan Hero

Need an Alternative to a Capital One Personal Loan? Here’s Where to Look (Student Loan Hero) Rated: B

For example, if you’re looking for a small loan — say, around $500 — you should skip online lenders. Most don’t provide loans for less than $1,000 or $2,000. Also remember that your credit score is vital to the approval process, so if you can’t get one on your own, consider getting a cosigner.

Source: Student Loan Hero

Why digital banks are welcoming CRA revamp (American Banker) Rated: A

To get a sense of why Ally Bank wants the Community Reinvestment Act rewritten, look at its situation in Utah.

Since it has no retail branches, the $137 billion-asset Ally is assessed for CRA compliance for its lending in Salt Lake City, where its bank is headquartered. But Ally gets no CRA credit for lending in Detroit, where its holding company is based and where nearly four in 10 households are living in poverty.

Quarles suggests new Fed approach to ILCs (American Banker) Rated: B

The Federal Reserve Board’s chief regulator suggested he was open to companies receiving industrial loan company charters, a sign that the central bank’s view on ILCs may be evolving.

“I don’t think of [ILCs] as a particularly special, excessively problematic case,” said Federal Reserve Vice Chairman for Supervision Randal Quarles at an International Monetary Fund forum Wednesday.

Education Loan Finance Receives AAA Ratings on Inaugural Securitization Deal (Business Wire) Rated: A

Education Loan Finance (ELFI), a division of SouthEast Bank, focusing on student loan debt refinancing and consolidation, announces the close of its inaugural securitization of refinanced student loans. Education Loan Finance is the first student loan refinancing lender to receive the AAA rating from both Standard & Poor’s and DBRS on its senior notes in its first securitization transaction comprised of this type of education loan product.

The $200 million transaction was comprised of $24.784 million of variable rate Class A-1 Notes, $158.65 million of fixed rate Class A-2 Notes, and $16.566 million of Class B Notes. The Class B Notes are rated A by DBRS. Citi and Credit Suisse served as joint lead managers on the transaction.

The process of elimination in multiple-offer scenarios (The Ledger) Rated: A

If a house is listed for $400,000 and someone presents a cash offer for $380,000, that will not be favored over an offer for $400,000 from a person getting an 80 percent loan.

For example, a 75 percent loan from an online lender with no ties to the Nashville area could be trumped by a 100 percent loan from a local, well-known lender that provides physician loans.

Boulder solar power finance firm lands big bucks (like $ 112M of them) (Denver Business Journal) Rated: A

Boulder-based Wunder Capital, which lends money for commercial-scale solar power projects, said Wednesday it’s raised $112 million in equity and debt financing to grow the company.

The Series B financing round was led by New York City investment firm Cyrus Capital Partners, which manages $4 billion in investments. Existing investors also were involved in the round, including Techstars Ventures which led the company’s Series A round of funding in March 2016.

United Kingdom

£80m lent through Funding Circle Isa (Bridging & Commercial) Rated: AAA

Funding Circle has announced that approximately £80m has already been lent to thousands of businesses through its Innovative Finance Isa (IFIsa).

The Isa offers an estimated tax-free projected return of 7.2% and is a flexi Isa which allows investors to take money out of their account and put it back later in the tax year without losing their tax-free entitlement.

There is an initial minimum investment of £1,000 and investors will be able to transfer exiting Isas into the Funding Circle Isa later this year.

 

 

P2PFA: UK Peer to Peer Lending Industry Nears £9 Billion in Total Lending (Crowdfund Insider) Rated: AAA

The UK Peer to Peer Finance Association (P2PFA) has released Q1 data for its member platforms. According to the industry association, P2P lending is nearing £9 billion in loan originations having provided finance for approximately 50,000 business and 221,000 individuals. Total investors stand at around 150,000.

 

Source: Crowdfund Insider

How Starling Bank is taking cues from Amazon (Tearsheet) Rated: AAA

And digital-only banks with a license, like Monzo, Starling, Tandem and OakNorth, are growing market share.

What are the biggest problems with banking today?
Banking as it is today sucks — it’s hard to easily manage account openings, and [until recently] to send payments to friends. That’s why Venmo has been so successful, but this should be a thing banks do.  You shouldn’t have to read an FAQ to use the mobile app or set up a bill pay.

LendInvest Calls Upon UK Government to Improve Finance Access for Property SMEs (Crowdfund Insider) Rated: A

LendInvest reported that in a new report entitled Putting Finance First: the alternative route to funding Britain’s SME housebuilders, the online lender recognizes that while the government is trying to help improve the outlook for property SMEs, but then argues that not enough is being done to put rhetoric into action. The report focuses on three proposed initiatives that combine existing government-backed funding mechanisms with the experience and expertise of alternative lenders, like LendInvest, to speed up and increase the supply of finance to property SME businesses:

  • Homes England: Should deploy its £2.5 billion Home Building Fund through funding lines agreed with alternative lenders.
  • Local authorities: Should co-invest with alternative lenders in local developments, utilizing the Public Works Loan Board mechanism to provide discounted capital for SMEs.
  • The British Business Bank: Should appoint more alternative lenders to use the ENABLE Guarantee programme to underwrite property investment and development loans.

Malta-Based Decentralized Ventures to Spearhead Crypto Island’s Blockchain Services Provision (Blockchain News) Rated: B

Blockchain services provider Decentralized Ventures on Tuesday announced its official launch, with the objective of bolstering Malta’s crypto communities.

A partnership between initial coin offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin Inc., Decentralised Ventures is designed to support the Maltese government’s plans to create the world’s first fully regulated market for ICOs, DLT and virtual currencies, a statement said.

 

JustUs launches IFIsa to support ethical housing scheme (Bridging & Commercial) Rated: B

The IFIsa aims to raise £367,500 and will offer a return of up to 6.5% to investors.

JustUs will provide a bridging loan to Mersten for up to 50% of the property’s value to fund the renovation.

China

 

China Construction Bank opens robot-run branch (Fintech Futures) Rated: AAA

China Construction Bank (CCB) has opened a branch in Shanghai run solely on the power of pure technology.

According to the South China Morning Post (SCMP), the branch has no human staff and instead uses facial recognition, artificial intelligence (AI) and virtual reality (VR) to provide the bank services.

SCMP says it is hyped as a first for the Chinese banking industry, and the Beijing-based bank says it has installed 1,600 smart machines at its 360 branches in the city to ramp up its appeal to tech-savvy customers and trim staff costs.

CreditEase’s Hou outlines allocation outlook (Asian Investor) Rated: A

Beijing-based CreditEase, a peer-to-peer P2P lending platform and wealth management platform, has been busy building its roster of mutual fund, trust and insurance products.

European Union

iZettle squares up to Square with e-commerce platform launch (Fintech Futures) Rated: A

Swedish mobile payments firm iZettle is taking on Square with the launch of its new e-commerce platform that will allow merchants to sell in-store and online.

Called iZettle E-commerce, it lets small business owners set up and customise a new webshop or start selling across channels online, including social media, blogs and existing websites.

International

Digital banking’s key trends: Demand, competition, mobile on the rise (American Banker) Rated: AAA

Two global studies — a study of 150,000 consumers polled by Gallup for the World Bank for its Global Findex Database, and a survey of 5,200 consumers by the tech giant Oracle — found complementary trends in the use and adoption of digital banking.

For example, 60% of customers globally want to open a bank account online, according to Oracle’s survey.

Many are already there: Sixty-seven percent of customers globally are on digital banking platforms now, according to Oracle; the World Bank reports that 515 million customers worldwide opened a banking account through a mobile money provider in the last three years.

 

More Than Half Of Cards Issued Globally Were EMV-Enabled (PYMNTS) Rated: A

Data from EMVCo shows that 54.6 percent of all cards issued globally by the end of 2017 were EMV-enabled.

In addition, the number of EMV payment cards in circulation around the world increased by 1 billion over the previous 12 months — to a total of 7.1 billion.

“Both EMV chip card issuance and EMV chip transactions surpassing 50 percent globally is testament to the increasing maturity of the worldwide infrastructure, and [is] a significant milestone for the payments community,” EMVCo Executive Committee Chair Jack Pan commented.

 

Australia

Australia’s top bank says it charged dead clients for advice (CNN) Rated: AAA

Australia’s top bank has admitted to charging fees to clients it knew had died years previously.

Commonwealth Bank of Australia (CBAUF) told a government inquiry Thursday that the practice of billing deceased customers for financial advice stretched back years. In one instance, an adviser at the bank’s financial planning business was collecting fees from a client more than a decade after they had died.

The revelations emerged as part of a Royal Commission, or public inquiry, into malpractice in Australia’s financial services industry.

One winner from the banking royal commission (The Australian) Rated: B

The peer-to-peer lending space may be a major beneficiary of the poor practice scandals coming out of the Royal Commission, according to one non-bank lender.

ME hikes home loan interest rates: does this mark the end of super low rates? (MOZO) Rated: A

Online lender ME has announced it is increasing home loan interest rates across its variable mortgage range effective today, citing increased funding costs as the reason – and it’s not the first to do so.

ME hiked its standard variable rate for existing owner-occupier principal-and-interest borrowers with an 80% LVR by 6 basis points, bringing it to 5.09% p.a. (5.11% comparison rate).

Existing investor principal-and-interest borrowers were hit with a bigger increase of 11 basis points, while interest-only borrowers saw the biggest increase of 16 basis points.

Source: MOZO
Asia

 

High investor FOMO about P2P lending in SE Asia: Funding Societies co-founder Kelvin Teo (Deal Street Asia) Rated: AAA

Your Series B round is likely the largest for a P2P lender in the region. Is that a measure of how strong the investor interest in this space and the potential for the sector in Southeast Asia?

P2P lending is a promising sector in Southeast Asia. We see strong investor interest, but perhaps too much, especially for emerging markets like Indonesia where the fear-of-missing-out (FOMO) is high. SME lending is a technical and a very localized business, and Southeast Asia apparently is not easily understood. We did not realize the significance of them until we started speaking to investors for Series B. In all candour, it was slightly painful to interact with investors who do not know Southeast Asia and/ or lending business.

Is $25 million the amount that you were looking to raise? 

We have a trust-based relationship with our shareholders. Our early discussion with our Series A lead investor Sequoia was to raise US$ 10M – 15M.

Alternative investment opportunities in Việt Nam (Viet Nam News) Rated: A

Access to and use of formal financial services is low in Việt Nam compared with other countries in the region, with only 31 per cent of all adults having formal bank accounts in 2016, according to the World Bank.

In 2016, 14.6 per cent of Vietnamese had saved money with a formal financial institution, 18.4 per cent had a loan with a formal financial institution, and only 26.5 per cent had access to a debit card. Interestingly, about 30 per cent of adults borrowed from friends or family in 2016 in Việt Nam, against 18.4 per cent who have borrowed from a financial institution.

Latin America

Creditas investment a Brazilian first for Santander InnoVentures (Bankless Times) Rated: AAA

Santander InnoVentures, the fintech venture capital fund of Santander Group, announced today an investment in the startup Creditas, a Brazilian secured lending platform. This is Santander InnoVentures’ first investment in Brazil and second in Latin America.

Creditas also announced today an increase of its Series-C funding round to $55 million with the addition of Santander InnoVentures and Amadeus Capital Partners. The round was led by Vostok Emerging Finance (VEF), a company focused on early and growth stage fintech companies across emerging and frontier markets, based in Sweden. Current investors also participated in the round, including Kaszek Ventures, Quona Capital, QED Investors, International Finance Corporation and Naspers Fintech.

Authors:

George Popescu
Allen Taylor

Monday November 13 2017, Daily News Digest

p2p lending credit score

News Comments Today’s main news: SoFi cancels plans for Australia, Canada. SoFi completes largest consumer loan securitization to date. Elevate launching credit card for sub-prime consumers. Funding Circle posts record month. Zopa developing IFISA transfer features. PPDai debuts weakly in New York. WeLab raises $220M for expansion. Australia upgrades RateSetter. Today’s main analysis: Three Myths of Peer-to-Peer Lending. Today’s thought-provoking articles: Cleveland […]

p2p lending credit score

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

MENA

Africa

News Summary

United States

SoFi drops plans to enter Australia, Canada (Death Rattle Sports), Rated: AAA

Online lender Social Finance Inc said on Thursday it is pulling back from expanding into Australia and Canada as previously planned, choosing instead to focus on improving its core lending products like student loans and mortgages in its home market.

The San Francisco-based company will also drop its plans to push into asset management, according to a letter from its interim CEO to shareholders and seen by Reuters.

SoFi Completes Largest Consumer Loan Securitization to Date (Crowdfund Insider), Rated: AAA

On Friday, SoFi announced it has completed a $727 million issuance of SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”) notes, making it the largest offering of securities backed by consumer loans and is SoFi’s 11th ABS transaction this year, bringing the lender’s total issuance for 2017 to $6.1 billion. 

Fintech Company Elevate Launching a Credit Card for Sub-Prime Consumers (LendEDU), Rated: AAA

Elevate, a fintech lender from Texas, recently announced it wants to try out the credit card business according to Business Insider. On Monday, the company released its plans for 2018 which included a variety of new products and a possible partnership with a bank.

One of the products that Elevate is looking to release is a credit card with a third-party bank by next year. The card would be potentially geared toward subprime borrowers, which constitutes a large group of Elevate’s customer base.

Another company, Petal, is trying to offer a new credit card in 2018. It’s goal is to increase the availability of credit cards to consumers who are lacking credit.

Fed researchers compare P2P lending to subprime mortgages (Finextra), Rated: AAA

The peer-to-peer lending industry has the potential to destabilise consumer balance sheets, with loan performances bearing a striking resemblance to the subprime mortgage market before the 2007 crisis, warns a new paper from the Cleveland Federal Reserve.

And things could get much worse, warn the Fed researchers after looking through credit bureau data on 90,000 people who took out P2P loans between 2007 and 2012 and comparing them to 10 million traditional borrowers.

The researchers conclude that, in fact, P2P loans do not achieve these things and actually resemble “predatory loans” in terms both of who takes them out and the impact on borrowers’ finances.

Source: Finextra

Peer-To-Peer Loans Remind The Cleveland Fed Of An Obscure Historical Episode Known As ‘The Subprime Mortgage Crisis’ (Dealbreaker), Rated: A

Are consumers really better off skipping the local BofA branch and instead filling in a few online forms and having an algorithm spit out an interest rate? Are all these newfangled credit-rating tools helping to serve those traditionally brushed aside by the big boys? Is P2P good?

Researchers at the Cleveland Fed have an answer to all these questions: No.

Source: Dealbreaker

The pattern is worse for those with credit card debt; compared to the control group, P2P borrowers see a 47 percent increase in credit card debt after getting an online loan.

Meanwhile LendingClub has posted exactly two quarters of profit since going public in 2014. Its last earnings report sent shares down 20 percent.

Federal Reserve Cautions on Peer to Peer Lending (Crowdfund Insider), Rated: AAA

According to the authors, Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, peer to peer loans resemble predatory loans in terms of the consumer market they serve and impact on consumer finances.

Among their findings:

  • Credit scores of P2P borrowers fall substantially after taking out a loan when compared to peers who did not take out a P2P loan.
  • Loan delinquency rates are more than 50% higher for P2P borrowers two years after the loan origination when compared to peers who did not take out a P2P loan.
  • P2P borrowers exhibit a 47% increase in credit card balances after obtaining P2P credit when compared to similar non-P2P borrowers.

Read the full document here.

Federal Reserve of Cleveland Makes Some Dubious Claims in a Report on P2P Lending (Lend Academy), Rated: AAA

[Side note: This report seems to be using P2P lending to mean the broader online lending industry beyond just Lending Club and Prosper so keep that in mind when you see me using the P2P lending term in this article].

One of the things I disliked most about this new report was the how opaque their analysis was. They just said they used data provided by TransUnion “in which we observe about 90,000 distinct individuals who received their first P2P loan between 2007 and 2012.”. They provide no indication as to which platforms this data is based upon and then we see this very strange chart below showing supposed delinquency rates by year.

In 2006, the only consumer P2P lending (or any significant online lending) platform in existence in this country was Prosper and their 2006 vintage was terrible. This data was all publicly available at one point and I reported that of the 28,936 loans issued during those initial two and a half years 10,456 loans defaulted, a 36% default rate. Subsequent vintages at Prosper performed much better. When I see the table above showing those numbers I have to question the entire data set of the report because obviously their 2006 data is wrong.

Online loans leave consumers deeper in debt, Fed research says (American Banker), Rated: A

The study, published Thursday, is likely to spark intense debate. One of its findings is that consumers who take out online loans, sometimes called peer-to-peer loans or marketplace loans, likely have access to traditional banking services.

“We are scratching our heads,” Nathaniel Hoopes, executive director of the Marketplace Lending Association, an industry trade group, said in an email, “because the Philadelphia and Chicago Federal Reserve recently conducted a more granular study and reached the opposite conclusion as this Cleveland Fed research.”

In 2010, digital lenders originated $249 million in unsecured personal loans, according to a recent study by the credit bureau TransUnion. By last year, the annual loan volume had grown more than ninetyfold.

The study finds that the consumers who took out online loans grew their other debts by about 35% more over the next two years than did their counterparts who did not take out the loans.

Source: American Banker

 

Square’s new strategy is paying off. Its stock is up 175% this year (KITV), Rated: A

Square is trying to upend the way people pay for stuff and change the way businesses handle money.

Clearly, its strategy is working: Square’s stock is up 175% this year. That’s more than 11 times the S&P 500’s 15% growth.

The company cashed in on those subscription services, which generated around $65 million in revenue — up more than 80%.

It is also making big money from its largest merchants. Almost half of the $17.4 billion in payments Square handled last quarter came from merchants with more than $125,000 in annual sales.

It has lent small businesses more than $300 million.

The CFO of Goldman Sachs keeps talking about becoming the Google of Wall Street (Business Insider), Rated: A

A Harvard Business School case study on the bank’s digital strategy was presented as part of the executive MBA program last week.

The case study runs through some of the history of Goldman Sachs’ efforts to switch to thinking like a tech company, some of the tension it has caused, and the payoffs.

Travel Companies Start Lending Consumers Money to Book Trips (Skift), Rated: A

Several major sellers of travel, such as Expedia, United, JetBlue, Southwest, and Lufthansa, are testing extending credit to U.S. consumers to enable them to pay for their vacations over time rather than up-front.

Paying for a trip in monthly payments primarily appeals to consumers with average credit ratings who are willing to accept short-term, interest-based loans.

But consumers with high credit scores also appear to be getting tempted into splurging on luxury trips if companies lend them credit on attractive terms.

The new installment products — called layaway when paid off prior to trip and a loan if paid off after — have been common in developing countries.

A few fintech startups — most prominently Affirm, Airfordable, and UpLift — are hoping that their services will make delayed payment for travel fashionable.

THE DOWNLOW ON UPLIFT

This year, UpLift said that its average 12-month travel loan through travel brands was $2,420, said CEO Brian Barth in an interview. For “highly-qualified” borrowers, it has typically charged 8.99 percent annual percentage rate, he said.

Consumers participating in UpLift’s loans had an average FICO (Fair Isaac Corp.) score of 692. Scores range from 300 to 850. UpLift has lent money to customers with FICO scores as low as 475.

AFFIRM’S PROMISE

Affirm said that its travel partners see a 20 percent increase in customer conversions, on average, by offering its product.

PeerIQ’s Q3 Public Lender Tracker (PeerIQ Email), Rated: A

The tracker, a new release from PeerIQ’s research and analytics team, examines credit performance trends across publicly traded banks, FinTechs, and card issuers. We also deep-dive into the earnings of Lending Club and OnDeck. Stay tuned for a release this week and scroll down for an excerpt.

Real Estate Crowdfunding Platform Groundfloor Preps for Reg A+ Offer (Crowdfund Insider), Rated: A

Groundfloor has filed a Form 1-A with the Securities and Exchange Commission indicating its intent to sell shares in the real estate crowdfunding platform.  According to the filing, GroundFloor is offering up to 2.5 million in Common Stock at $10 per share. Interestingly, the Groundfloor offering circular indicates the company intends to limit the offer and sale solely to accredited investors – even though under Reg A+ issuers may sell to both accredited and non-accredited investors alike (although in other parts of the document it appears they will accept non-accredited investors).

Real Estate Crowdfunding: Trends to Watch in 2018 (Realty Biz News), Rated: A

Real estate crowdfunding is a growing industry of great interest for realtors and investors. A report on Crowdfunding for Real Estate by crowdsourcing.org anticipated a $3.5 billion growth for real estate crowdfunding in 2016, and experts project that the industry will grow to over $300 billion by 2025.

Source: Realty Biz News

Digital mortgages advancing, but borrowers still want more speed (National Mortgage News), Rated: A

Despite digital mortgage advances, borrowers think it still takes too long to get a loan, J.D. Power finds in its annual customer satisfaction ranking of originators.

The most frequently used method for submitting a mortgage application for both refinances and purchases was online for the first time, according to the survey. Forty-three percent applied digitally, up from 28% a year ago.

But satisfaction with online submissions declined 8 points and borrowers also gave online submission a satisfaction score 10 points below that of in-person applications.

Online Lender Pioneer, SellersFunding Launches Algorithm to Streamline Funding for Amazon Merchants (Sys-Con), Rated: A

As sales from Marketplace outpace Amazon’s own sales, sellers need increased funding for things like, advertising and purchasing inventory.

The SellersFunding model interprets data like products, prices, payments, customer reviews and feedback. With more than fifteen billion single data points on tap, all rigorously tasked, the company’s model can boast high levels of accuracy.

Small Banks Vow To Protect Regulations Keeping Retailers And Tech Giants Off Their Turf (PYMNTS), Rated: A

But those laws may be up for reconsideration, as Keith Noreika, the acting Comptroller of the Currency, has raised the possibility that those laws are in need of review and possibly revision.

Needless to say, the nation’s small banks and their representatives are less than thrilled.

“If Walmart wants to be a bank, that’s fine, as long as they make the appropriate investments to protect the parts of the banking system that are so critical,” said Kelly King, chief executive at regional lender BB&T Corp.

King added that he was “absolutely opposed” to the idea of a limited banking license.

LendingTree, Inc. to Host Analyst and Investor Event on December 13, 2017 (Business Insider), Rated: B

LendingTree, Inc. (NASDAQ: TREE) today announced it will host an Analyst and Investor Event on Wednesday, December 13, 2017 in New York.  The company will host in-person attendees at the Nasdaq MarketSite, 4 Times Square, New York, NY10036. Doors will open for registration at 10:00 a.m. Eastern Time and presentations will begin promptly at 10:30 a.m.

United Kingdom

Funding Circle posts record month (Bridging&Commercial), Rated: AAA

Funding Circle is celebrating a global record month after lending over £120m to businesses throughout October in the UK alone.

In total, 1,721 UK businesses accessed finance last month via the lending platform, which directly and indirectly created 4,400 jobs.

More than 8,900 small businesses have accessed finance through Funding Circle in the last six months, totalling over £630m in loans.

Funding Circle: Investors can expect 5pc returns in a recession (P2P Finance News), Rated: A

A FUNDING Circle loan portfolio would still deliver returns of close to five per cent in a severe recession, the platform claims.

The peer-to-peer business lender has stress-tested its loan book, using a model similar to what the Prudential Regulation Authority (PRA) uses for banks, to see how two example portfolios would stand up against a severe recession similar to the one in 2007/08.

Even with these assumptions, the projected annual returns after fees and bad debt but before tax were 5.3 per cent for portfolio A, and 4.9 per cent for portfolio B, Funding Circle said.

Unusual ways to invest when you don’t have much money (AOL.com), Rated: A

Microinvesting

The Money Box mobile app launched this time last year, allowing savers to invest in stocks including Netflix, Unilever and Disney with as little as £1 to spend.

There are, though, fees to pay: after three months, users must pay £1 a month to subscribe to the service, plus 0.45% a year on the value of their investments.

Other services for investing small amounts are available from Nutmeg, which has a minimum of just £500, while Hargreaves Lansdown has a minimum ISA investment of £25 a month.

Peer-to-peer lending
Peer-to-peer lending schemes can offer a high return, with some claiming rates of more than 7%.

Crowdfunding

Two of the bigger equity crowdfunding operators are Seedrs and Crowdcube, both of which allow a minimum investment of just £10.

Funding Circle joins Women in Finance Charter (P2P Finance News), Rated: B

FUNDING Circle is among the latest round of firms to have signed the Treasury’s Women in Finance Charter, which aims to tackle gender inequality in senior roles.

The Treasury announced on Friday that a further 26 companies have signed up to the Charter, increasing the number of employees covered by the Charter to over 600,000.

Zopa developing IFISA transfer features (P2P Finance News), Rated: AAA

ZOPA is working on ways to let investors transfer their existing holdings into its Innovative Finance ISA (IFISA).

Andrew Lawson (pictured), chief product officer for Zopa, said some investors have already been selling old loans and buying new ones to fund the tax-free product.

However, the lender is now working on a one-off option for customers with more than £1,000 in its Classic or Access account to move that money into an IFISA, keeping the Safeguard coverage intact and without paying sale fees.

How do P2P platforms balance investor and borrower numbers? (Bridging&Commercial), Rated: A

New peer-to-peer platforms should put as much effort into attracting borrowers as they do promoting and obtaining inward investment, according to Kuflink.

Stuart Law, chief executive at Assetz Capital, claimed: “A number of long-established peer-to-peer platforms have more investors than borrowers, meaning they have been closed to new investment, while the company tries to find more loans.

Stephen Findlay of BondMason added: “I think there is generally an oversupply of capital for the available investment opportunities, across most markets.”

Peer-to-peer lending: is it too late to profit? (The Telegraph), Rated: A

Peer-to-peer (P2P) lending has grown dramatically since the financial crisis. In 2005 when Zopa, the first lending “platform” was launched, loans totalled just £1.5m.

But last year total lending was £3.2bn with Zopa, Funding Circle (which counts the British government as an investor) and RateSetter controlling two-thirds of the market.

Rates offered by P2P firms have dropped: investors can earn 3.7pc with Zopa Core and 4.5pc with Zopa.

Risks are also rising. When Zopa launched it only offered loans to 0.5pc of applicants, said Neil Faulkner of 4thWay. Now its approval ratings are in line with traditional banks, which give loans to 20pc of applicants.

UK tech founders planning swift exits (AltFi), Rated: A

A new report from equity crowdfunder VentureFounders has found that most tech founders in the UK intend to exit within 2-5 years, despite recognising the risks of exiting too early. Fully 56 per cent of the entrepreneurs surveyed by VentureFounders expect to sell their business for £50m or less.

The UK Robo-Advice Innovation Forum: key takeaways (Banking Technology), Rated: B

Conclusions

  • The banks are coming and will quickly take market share. With Nutmeg claiming majority market share with less than 50,000 customers, banks accessing millions of customers will quickly grow the market.
  • Exchange-traded fund (ETF) providers and investment managers interacting with advisors can create even more value. The “man and machine” approach may be best.
  • Developing a pensions or SIPP product could triple the total addressable market (TAM) showing a clear route to profitability for the currently loss-making robo-advice community.
  • A pension offering could see LDI frameworks finally reach the retail market.
  • The digital asset management community doesn’t like the term “robo-advisor” as confusingly many do not give “regulated advice” and of course and disappointingly, there are no robots!
China

Ppdai Makes Weak Debut in New York (Caixin), Rated: AAA

Ppdai, which operates an online platform connecting small investors and lenders, priced its initial public offering at $13 a share, well below the $16-$19 target. At that level, the company raised about $220 million, compared with its maximum goal of $350 million.

The shares then opened higher and rose as much as 10% in early trading in New York. Ppdai finished its first day trading at $13.06.

Online Lender WeLab Raises $ 220 Million for Expansion (Caixin), Rated: AAA

WeLab, an online lender in Hong Kong and the Chinese mainland, said it has raised $220 million in new funds from investors including Alibaba Hong Kong Entrepreneurs Fund and International Finance Corp.

Part of the new funds will be used to expand outside Greater China, WeLab said in a statement.

China Fintech IPO Fever Wanes as Regulators Weigh Crackdown (Bloomberg), Rated: AAA

PPDAI priced its offering a week after news that Chinese regulators are considering a crackdown on the country’s cash microlenders in response to claims that some have charged excessive interest rates. The initial public offering of Qudian helped trigger the regulator’s review of the sector, people with knowledge of the matter said earlier this month.

PPDAI priced its sale of 17 million American depositary shares at $13 apiece, after marketing them at $16 to $19 each. The stock started trading Friday in the U.S.

While Chinese law already limits lending rates to 36 percent annually, regulators are considering drafting rules to specify the cap applies to the cash microlending sector, people with knowledge of the matter said this month. In its IPO prospectus, PPDAI said total borrowing costs for some of its loan products exceed that level after adding in transaction fees.

ZhongAn shares have risen 28 percent from their IPO price, outpacing the 5.3 percent gain in the Hang Seng Index over the same period.

CreditEase CEO Ning Tang Discussed Fintech-Driven SME Economy at APEC CEO Summit 2017 (Business Insider), Rated: A

CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated in the annual Asia-Pacific Economic Cooperation (“APEC”) CEO Summit event, in Da Nang, Vietnam on November 9.

“Over the next decade, tens of millions of SMEs in China will focus more on the quality of their growth, technological innovation, and sustainable development. We at CreditEase has been committed to empowering these SMEs as well as the real economy with technology breakthroughs and new business models ever since the company’s establishment,” said Mr Tang. “Going forward, we will continue to leverage our FinTech strengths in inclusive finance and wealth management to enhance SMEs’ overall financial capabilities and create more value for society.”

Higher rates for addresses in caps – online lender WeLend reveals how it determines your creditworthiness (SCMP), Rated: A

If you are looking to take out a loan from online lending platform WeLend to buy the iPhone X, be warned – should you use only upper-case letters when filling out the address field in your application, you could be charged a higher interest rate.

“We actually match how people fill out addresses with the probability of [them] declaring bankruptcy after a certain number of years,” said Simon Loong, the founder and chief executive of WeLab, the Hong Kong company that operates WeLend.

“The probability of [an applicant] declaring bankruptcy is highest when they fill in their address in capital letters,” he said.

n Hong Kong, the company relies primarily on a user’s credit history and interaction data. In mainland China, where less than 30 per cent of the population has a credit score, WeLab relies much more on unstructured, mobile data.

Yet another observation WeLab has made is that delinquency rates tend to correlate with loan application times – if a user applies for a loan between 1am and 6am, they are more likely to default on a payment than users who apply in the day, Loong said.

Food Delivery Platform Ele.me is Heading to the Micro Lending Market (Crowdfund Insider), Rated: B

On November 8th, Chinese leading food delivery platform Ele.me quietly marched into the micro lending market. The loans ranges from RMB 500 yuan to RMB 2000 yuan with terms of either 7 days or 14 days. This is a collaborative product with Lixiadai.com which means borrowers apply this loan on Ele.me will be directly led to Lixiadai.com. 

Nearly two months ago, the stock app jointly set up by JD Finance and four other brokerages stopped operating. According to JD.com, the suspension of the operation is due to a system upgrade. Yet, as reported by the media, the app was actually halted for procedural noncompliance in account opening and trading.

Chinese FinTech CFO on IPO Day: Mobile, Blockchain Will Drive Industry Innovation (Cheddar), Rated: B

Ho fills Cheddar in on why there is such a massive opportunity in peer-to-peer lending in China. He notes that companies capitalized on the governments unwillingness to hand out small loans to individuals.

European Union

Klarna adds pay-later feature at Swedish stores (PaymentsSource), Rated: AAA

Sweden’s Klarna made its mark with a pay-later model for e-commerce shopping that’s spread to other European countries and the U.S., and now it’s piloting the same concept for in-store purchases.

In partnership with the Danish payments technology firm Nets, Klarna has developed a feature that appears on payment terminals at certain stores giving consumers the option to pay for a purchase later—fully or in part—before completing the transaction, Klarna said in a recent blog post.

FinScience Closes €1M Seed Funding Round (FINSMES), Rated: A

FinScience, a Milan, Italy-based fintech startup, closed €1m seed funding round.

FinScience has developed a platform that gives simple access to alternative data to people who work in financial industry.

USING AI TO FIND THE NEXT TECH UNICORN (BusinessCloud), Rated: A

A technology-focused venture capital firm is using artificial intelligence (AI) to look for new European investment opportunities and find the next tech unicorn.

Andreas Thorstensson is tech partner and investment adviser at EQT Ventures, which went live in 2016 and is part of global private equity group EQT.

EQT Ventures has been using Motherbrain internally for almost two years, with the platform now responsible for up to 30 per cent of the fund’s deal flow.

ETHERECASH TOKEN PRE-SALE A HUGE SUCCESS (Bitcoinist), Rated: B

Some of the Etherecash features and benefits:

  • Peer to Peer Lending Crypto Backed: Lend to borrowers internationally with Border Free Loans.
  • Get Higher Returns Than Typical Bank Deposits.Borrow 70-80% of crypto value, without needing to liquidate any assets.
  • Worldwide Money Transfer: Send money to anywhere in the world using Etherecash. Money transfer has never been easier, more secure and most of all private.
  • Multi-Crypto Debit Card:Etherecash is the first of its kind, enabling users to put multiple currencies on a single debit card. Use it just like a normal debit card for making payments, shopping online or ATM withdrawals in local currencies. It can be used in any country while traveling to mitigate international charges and conversion fees.
International

Disruptive innovation in equity crowdfunding (Deloitte), Rated: A

A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” studies the disruptive forces shaping the future of equity crowdfunding. Read on to explore key takeaways for the equity crowdfunding segment, and consider what these findings mean for your business.

Get the full document here.

Kony Announces Digital Banking Marketplace Expansion (Crowdfund Insider), Rated: A

Kony, Inc., the leading enterprise mobility and digital applications company, today announced it is expanding its global partner ecosystem with financial technology solutions featured on the Kony Digital Banking Marketplace.

4 Emerging Fintech Trends Relevant to Every Entrepreneur (Elevator Pitch), Rated: B

FinTech is disrupting the traditional financial services, such as: money transfers, loans, mobile payments, asset management and fundraising. According to Statista, Transaction Value is expected to show an annual growth rate (CAGR 2017-2021. of 20.5 percent resulting in the total amount of U.S.$6.9 billion in 2021.

1. Multi-currency digital wallets

A recent example is CashDash, a mobile app that allows you to buy, collect and return foreign currency.

2. Payments security advances using biometrics

3. Cryptocurrencies

4. Robo-advisors and automated wealth management services.

According to the consulting firm A.T. Kearney, assets under management by robo-advisors will grow by 68 percent annually to a whopping $2.2 trillion in the next five years.

How Fitness Pros Are Pushing Payments (PYMNTS), Rated: A

In an effort to offer rideshare workers faster access to their wages, First Data recently launched a new solution that delivers the money directly onto a debit card.

collaboration between Ingo Money, Visa and digital lending platform OnDeck will allow SMBs that request loans through OnDeck to have the funds disbursed directly to their business debit cards in real time.

A group of 13 Australian banks announced a joint effort to allow customers to get real-time payments beginning on January 26, the nation’s Australia Day holiday. With the service in place, bank customers can exchange money between contacts in a matter of seconds using identifiers such as mobile numbers and email addresses, instead of sensitive data like bank accounts.

YES Bank’s fintech survey to study ecosystem worldwide (The Hindu Business Line), Rated: B

YES Bank is all set to launch a first-of-its-kind fintech survey. Called India Fintech Opportunities Review, the study will cover India and a few major fintech markets in the world.

A research initiative of YES FINTECH, which is the bank’s innovation programme to accelerate fintech start-ups, the survey will cover more than 1,000 firms globally, said Amit Shah, Head-Strategy, Yes Bank.

Australia

RateSetter gets upgraded Down Under (P2P Finance News), Rated: AAA

RATESETTER’S Australian operations have been given a higher rating by SQM Research.

The independent ratings agency upgraded the peer-to-peer lending platform to a “favourable” rating and described its lending product as “approved investment grade.”

This puts it just one step below SQM’s top rating of ‘high investment grade.’

Credible Labs wants to be an ASX tech darling (Financial Review), Rated: A

US-based online student loans marketplace owner Credible Labs Inc is seeking an Australian Securities Exchange listing which would value the company at more than $300 million.

Credible is expected to seek to raise $67.5 million in a deal valuing the company’s equity at $306.6 million. If successful, it would be Australia’s biggest tech IPO this year.

India

Fisdom Raises $ 4M in Series B Funding (FINSMES), Rated: A

Fisdom, a Bangalore, India-based personal finance management startup, raised $4m in Series B funding.

The round was led by Accion Frontier Inclusion Fund, managed by Quona Capital with participation from existing investor Saama Capital.

Fintech company Payoneer to support e-commerce exports from India (The Hindu Business Line), Rated: A

Payoneer, a global cross border B2B digital payments provider, has decided to expand the scope of its offering in the Indian market to e-commerce related export businesses, it’s visiting CEO Scott Galit has said.

Galit said that India is the fastest growing digital market in the world and that more people are going digital in India than anywhere in the world.

India will move faster than China for a while, but on much smaller scale. The B2C e-commerce exports in India is around $ 500 million a year, while in China it is $ 400 billion, according to industry insiders.

Asia

The Future of Branch.. Banking? (Fintech News), Rated: A

My opinion is that both views are problematic in its own way, branch banking is still quite a distance away from being dead largely fueled by face to face KYC requirements and the need to serve different segments of the customer.

However, there’s one reality that bankers cannot escape from, banks are increasingly under pressure to close their branches.

The Digitised Branch

The whole idea of digital banking is the ability to perform banking on-the-go, to go to the bank to perform banking-on-the-go (what a tongue twister) seems to defeat the point entirely.

This approach enables bankers to still serve the segment of their customers prefer to conduct their banking activities through the branch or customers who for whatever reason need to visit branch all while still keeping the costs at bay.

Fintech investors striking a match (Business Times), Rated: A

Among the fresh fintech funds that have come into this space is GTR Ventures (GTRV), the venture capital arm of trade finance intelligence firm Global Trade Review. Operating in both Singapore and London, it is the world’s first investment platform targeted specifically at fintechs operating in the global trade ecosystem.

Kelvin Tan, co-founder and chief investment officer, told The Business Times that the fund screens fintechs that can help to close the annual US$1.5 trillion trade finance gap, particularly for SMEs.

MENA

How 690-million customer China Construction Bank has digitally transformed (Tahawul Tech), Rated: A

China Construction Bank’s name may not be a household one in the Middle East, but the stats speak for themselves in evoking the bank’s vast resources and influence within China, and across the world. With 363,000 employees on its books, CCB is consistently ranked in the top 30 of the Global Fortune 500 and currently has over $3 trillion worth of assets. In 2015, it was the second largest bank in the world by market capitalisation, and the sixth largest company in the world by revenue.

Africa

KiaKia launches alternative credit scoring, virtual lending platform (Vanguard), Rated: AAA

Aside its numerous products that are void of the usual financial bureaucracy and also offer easy access capital to SMEs and individuals, KiaKia, a licensed online peer to peer and direct lending platform, has introduced ‘Mr. K’, an artificial intelligence (AI) and machine learning powered alternative credit scoring, customer service, Direct and P2P lending virtual agent.

Speaking further on the new product, Abiola said 80 percent of KiaKia high scoring borrowers access the same loans at between 7.5 percent and 15 percent as against the 30 percent of its competitors, as well as, connecting credible borrowers with lenders offering loans as low as 5.5 percent interest rate for longer tenured loans.

Authors:

George Popescu
Allen Taylor