Thursday February 8 2018, Daily News Digest

LendingTree personal loans

News Comments Today’s main news: RateSetter’s IFISA finally arrives. Renaud Laplanche to keynote at LendItFintech USA 2018. LendingClub makes changes to IRA product. Goldman could be buying Clarity. Today’s main analysis: LendingTree January 2018 Personal Loan Offers Report. LendingTree January 2018 Mortgage Offers Report. Today’s thought-provoking articles: Amsterdam gaining ground on London as Europe’s fintech capital. Senmiao Technologies sets terms […]

LendingTree personal loans

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United States

Renaud Laplanche Joins LendItFintech USA 2018 As Keynote Speaker (PR Newswire), Rated: AAA

LendItFintech, the world’s leading event in financial services innovation, today announced that Renaud Laplanche, founder and CEO of Upgrade, Inc., will join the keynote speaker roster for LendItFintech USA 2018. For three days, the world’s most prominent and emerging fintech CEO’s will gather at the Moscone Center to focus on the hot button topics and issues exploring the future of finance.

Laplanche’s keynote speech will focus on his vision for Online Lending 2.0 and in particular how new technology, blockchain, enhanced processes and the combined learnings of the past 10 years have helped make online lending better for consumers and investors alike.

Laplanche will also unveil Upgrade’s next major consumer credit product that industry observers are already touting “the biggest innovation in financial services since the credit card. Also, to illustrate how the Online Lending 2.0 principles help create more value for consumers and enable faster growth while achieving better risk management, compliance and credit performance, Laplanche for the first time, will release metrics about Upgrade exactly one year after its public launch.

Tax Efficient Investing and LendingClub IRA Changes (Lend Academy), Rated: AAA

Tax rates for 2018 start at 10% and go up to 37% for the highest wage earners. It’s important to understand how this ordinary income affects taxes compared to other asset classes like equities.

Let’s assume you decide to invest through a taxable LendingClub account. In a given tax year, you are only allowed to deduct $3,000 in losses against your ordinary income unless you have capital gains to offset the losses.

If you have a sizable investment in LendingClub and have no capital gains you’ll have to carry forward any losses beyond the $3,000 to future years.

LendingClub Offering a Bonus for IRA Investors

After understanding the benefits of investing through an IRA it’s worth mentioning that LendingClub offers bonuses for new accounts. The bonuses range from $25 all of the way up to $3,000 and are available on Traditional IRAs, Roth IRAs, SEP IRAs or SIMPLE IRAs. Below are the bonus amounts in place for 2018.

TaxSlayer Teams Up With Kabbage To Provide Small Businesses Easy Access To Working Capital (PR Newswire), Rated: A

TaxSlayer, a leading online and professional tax and financial technology company, today announced a strategic partnership with Kabbage, Inc., a global technology and data platform powering small business lending. The collaboration offers qualified small business customers hassle-free access to lines of credit up to $250,000 from Kabbage, and exclusive tax resources, including tips, promotions and discounts from TaxSlayer.

TaxSlayer customers will have access to:

  • Lines of credit from Kabbage up to $250,000 for qualified borrowers
  • Promotions from Kabbage, including a $100 gift card after qualification
  • Partner offers through the Kabbage Customer Perks network
  • Tips and insight on small business lending and finance

Kabbage customers will have access to:

  • Small business and personal tax tips from TaxSlayer
  • Market leading tax-filing support from TaxSlayer
  • Unique promotions and discounts from TaxSlayer, including 20 percent off services

LendingTree Personal Loan Offers Report (LendingTree), Rated: AAA

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.41% in January.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.41%, a decrease of 13 basis points from the prior month, and 47 basis points from the same period one year ago.
  • At $24,218, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above, was down up 17 basis points ($41) from December, but up over 23% ($5,607) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had APRs of 4.98% on average, and loan amounts of $34,892. A borrower with this APR and loan amount would save $2,896 by consolidating debt with a 10% APR over a three-year term.
Source: LendingTree

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.79% in January.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.79%, down 12 basis points from last month, but up almost 200 basis points from a year earlier.
  • At $15,628, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs increase by 1% ($160) in the last month, but drop by 1.72% ($268) from January 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 7.19%, offered with an average loan amount of $24,130. A borrower with this APR and loan amount would save $3,215 by consolidating debt from a 15% APR over a three-year term.
Source: LendingTree

LendingTree Mortgage Offers Report (LendingTree), Rated: AAA

  • January’s best offers for borrowers with the best profiles had an average APR of 3.93% for conforming 30-year fixed purchase loans, up from 3.80% in December. Refinance loan offers were up 5 bps to 3.75%.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 13 bps to 4.55%. The loan note rate hit the highest since March 2016 at 4.45% and was also up 13 bps from December.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.41% in January, vs 4.70% for consumers with scores of 680-719. The APR spread of 29 bps between these score ranges was 1 bps narrower than in December but still near the widest since this data series began in April 2016. The spread represents nearly $15,000 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $238,518.
  • Refinance APRs for conforming 30-yr fixed loans were up 15 bps to 4.46%. The credit score bracket spread widened to 25 from 24 bps, amounting to $13,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $244,540.
  • Average proposed purchase down payments fell for the first time in 8 months to $63,411.
Source: LendingTree

Apple May use Marcus for Point of Sale Financing (Crowdfund Insider), Rated: A

Indicative of this systemic trend is a report this week in WSJ.com saying Apple may be cutting a deal with Marcus – Goldman Sachs’ vision of the future on online lending.

According to the WSJ report, Goldman may provide Apple with point of sale credit at interest rates far lower than the typical credit card.

“By offering a lower-cost loan, Goldman hopes to siphon off some of that business. Goldman charges 12% interest on its average Marcus loans. Credit cards can charge upward of 20% and carry late fees and other charges. Partnerships with big retailers like Apple are key. They can deliver millions of customers that Goldman would struggle to find on its own.”

Goldman is said close to buying personal-finance startup Clarity (American Banker), Rated: AAA

Goldman Sachs is in discussions to acquire the personal finance startup Clarity Money, with plans to fold it into its Marcus online lender, according to people familiar with the matter.

Robinhood users ramped up deposits during Monday’s market bloodbath (Business Insider), Rated: A

On Monday, the US stock market witnessed its largest point decline ever. The Dow Jones industrial average dropped as much as 1,600 points during Monday trade before closing down 1,175 points. Still, a spokesperson for Robinhood, the California-based brokerage, told Business Insider its users ramped up deposits on its zero-commission stock trading platform.

Venmo monetization may be on the horizon (Business Insider), Rated: A

Source: Business Insider

Venmo alone hit $10.4 billion, about 39% of the P2P total. As P2P surges across the board, it’s helping 

Identity fraud hits all time high with 16.7m US victims in 2017 (Payments Cards and Mobile), Rated: A

The 2018 Identity Fraud Study released by Javelin Strategy & Research, revealed that the number of identity fraud victims increased by 8% (rising to 16.7 million US consumers) in the last year, a record high since Javelin began tracking identity fraud in 2003.

The study found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victims in 2017, with the amount stolen rising to $16.8 billion.

The 2018 Identity Fraud Study found four significant trends:

  • Record high incidence of identity fraud  In 2017, 6.64% of consumers became victims of identity fraud, an increase of almost 1 million victims from the previous year.
  • Account takeover grew significantly – Account takeover tripled over the past year, reaching a four-year high. Total ATO losses reached $5.1 billion, a 120% increase from 2016.
  • Online shopping presents the greatest fraud opportunity – Card Not Present Fraud is now 81% more likely than point of sale fraud, the greatest gap Javelin has observed.
  • Fraudsters are getting more sophisticated

Nearly half of small businesses plan to invest in cybersecurity in 2018 (AZ Big Media), Rated: A

Half of all U.S. small businesses were breached in 2016, according to 2016 State of SMB Cybersecurity Report. Disruption to normal operating expenses costs an average of $955K, which can be devastating to small business owners.

As part of Kabbage’s ongoing effort to help small businesses to be successful, Kabbage recently surveyed more than 800 customers and nearly half (47 percent) plan to invest in cybersecurity products and services in 2018.

Hackers find value in obtaining employee and customer data, bank account information and/or intellectual property, no matter the size of the business. Today, more than 70 percent of attacks are targeted toward small businesses, largely due to the their beliefs that they won’t be hacked (mostly due to their size).

Virginia consumers to receive $ 2.7 million in relief from settlement with internet lender (WINA), Rated: A

Attorney General Mark R. Herring announced today that more than $2.7 million in relief will be provided to Virginia consumers who took out loans with Internet lender MoneyLion of Virginia LLC-an affiliate of New York based Internet lender MoneyLion, Inc. Attorney General Herring’s settlement with MoneyLion will provide refunds and debt forgiveness to 3,800 consumers as a result of the company’s alleged violations of the Virginia Consumer Protection Act. Since creating a Predatory Lending Unit in his Consumer Protection Section, Attorney General Herring’s Office has recovered more than $25 million in restitution and debt forgiveness for Virginia consumers from online lenders.

The settlement includes the following key terms relating to loans made by MoneyLion during the period in question:

• MoneyLion agrees to provide $359,811.50 in refunds to 1,161 Virginia consumers who paid more than their loan principal plus 12% APR;
• MoneyLion agrees to give up the collection of $2,354,097.05 in illegal interest it charged on loans with 2,639 Virginia consumers;
• A payment to the Commonwealth of $10,000 as a civil penalty for MoneyLion’s alleged violations of the VCPA;
• A payment to the Commonwealth of $20,000 for its costs and fees in investigating MoneyLion’s alleged violations of the VCPA;
• Permanent injunctions preventing MoneyLion from misrepresenting its license status, allowable interest rates, and allowable fees.

Bankrupt Payday Lender Can’t Move CFPB Suit To Texas (Law360), Rated: A

A Montana federal judge refused to transfer a CFPB action alleging Think Finance duped borrowers and used sham tribal payday lenders to collect money it was not owed, finding Tuesday the case need not be moved to where the financial technology company’s Texas bankruptcy is.

U.S. District Judge Brian M. Morris said the state of Montana has a “substantial interest” in hearing the Consumer Financial Protection Bureau’s case since Think Finance LLC’s loans were voided under the state’s law.

Movement Mortgage Implements CompenSafe to Automate LO Compensation (Send2Press), Rated: B

LBA Ware, a leading provider of automated compensation software and systems integration solutions for mortgage lending and retail banking, announced that South Carolina-based Movement Mortgage has implemented CompenSafe to automatically calculate commissions for its loan originators (LOs) located in 700 branches across 49 states.

Cerberus Capital Management, L.P. today announced that an affiliate has entered into an agreement to acquire Cyanco Holding Corp. from funds managed by Oaktree Capital Management, L.P. (“Oaktree”).  Cyanco is the largest global producer of sodium cyanide, a critical input in the gold and silver mining industry. Terms of the transaction, which is subject to customary conditions to closing, were not disclosed.

OCC Chief Praises Mulvaney On Halting Payday Rule (PYMNTS), Rated: B

After a 45-minute meeting on Tuesday (Feb. 6), Comptroller of the Currency Joseph Otting had nothing but praise for acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney.

“Acting Director Mulvaney has helped reduce the burden on the banking system by delaying implementation of his agency’s Home Mortgage Disclosure Act rule, committing to reconsidering its payday lending rule, and deferring action on additional regulations until completing a more thorough review of those matters,” Otting said in the release. “I also applaud him for realigning his agency’s mission to the current needs of the nation, making its processes more transparent and fair.”

United Kingdom

RateSetter Innovative Finance ISA is Finally Here (Crowdfund Insider), Rated: AAA

Peer-to-peer lending platform RateSetter has shared that is Innovative Finance ISA (IFISA) will launch tomorrow (February 8th). RateSetter said the IFISA will initially be available to existing customers, then to new customers on 1 March and to inward transfers from other ISAs in April.

What a difference a tax year makes! P2P platforms pile in to the IFISA market (P2P Finance News), Rated: A

Just a handful of peer-to-peer platforms had full Financial Conduct Authority approval in time to launch an IFISA product in April 2016, with 2,000 accounts and £17m subscribed up to April 2017.

Many saw this as a damp squib, but as we enter ISA season for the 2017/18 tax year, platforms representing almost 80 per cent of the market could be set to lead the charge.

Both Zopa and Funding Circle have loan books worth more than £3bn each, while RateSetter boasts a portfolio worth £2.5bn.

ISA Innovation: What do investors think? (AltFi), Rated: A

Crowdstacker’s CEO Karteek Patel reveals why investors have opted for the Innovative Finance ISA over the past two years. 

When the first types of ISA launched in 1999 the country was still in the first flush of a much feted Blair Government, the economy was buoyant, and the outlook rosy.

It was the end of a decade that saw average base rates of around 8%. Inflation meanwhile may have started at 9.5% in 1990, but it rapidly fell to a more manageable 1.5% by 1999.

2016-17 average ISA subscriptions were £5,558. Average subscriptions for our Innovative Finance ISA were above £11,000 – probably indicating early adopters of the IFISA are more seasoned investors, who are investing larger sums. Of course, as we know from other innovations such as smartphones and social media, where early adopters lead, the masses will follow, as long as the proposition is attractive.

How UK challenger bank Monzo turned its customers into a loyal community (Tearsheet), Rated: A

Monzo asks customers for feedback on product launches and fees, allows them to invest in the company through equity crowdfunding rounds and holds community events across the U.K., either at Monzo offices or customer suggested venues. Its approach is based on the principle that customers will stay loyal and will refer others if they’ve got some kind of stake in it. Banks have traditionally relied on large-scale ad campaigns and promotions to get customers to change their providers. But U.K. customers still aren’t changing their banks in droves; according to U.K. nonprofit Bacs only 4.45 million successful switches have taken place since 2013. Plus, they’ll have less and less motivation to switch bank providers as more non-bank entities begin offering comparable services.

The company’s biggest growth driver is loyalty, with word-of-mouth referrals being the source of 80 percent of new customer growth, according to the company. The remaining 20 percent is based on a limited amount of sponsored ads on Facebook and Twitter. More than 30,000 customers participate in an online feedback forum for new products.

Separately, Monzo holds eight to 12 events per year around the U.K.

 

Esme Loans joins NatWest’s alternative finance panel (Finextra), Rated: A

Esme Loans, the digital lending platform that allows small and medium sized businesses to quickly obtain unsecured loans of up to £150,000, will join a select group of leading alternative finance firms on NatWest’s Capital Connections panel.

Princeton dispute pushes Ranger’s 2017 returns into negative territory (P2P Finance News), Rated: A

RANGER Direct Lending (RDL) saw its net asset value (NAV) slide 2.95 per cent over 2017 due to its ongoing Princeton legal arbitration.

The investment trust’s December update showed its NAV return was 4.53 per cent in 2017 but the ongoing legal dispute with its Princeton investment over bankrupt lender Argon pushed it into negative territory.

On a monthly basis, RDL’s NAV was actually at a six-month high to 0.48 per cent.

Lendy secures major repayment on west London flat (Bridging&Commercial), Rated: B

P2P lending platform Lendy has announced that it has received a major repayment in excess of £2.1m on a luxury flat in west London.

The property has a security value of £3.25m, a loan value of £2.12m and an LTV of 65%.

Personal lending increases four times faster than wages (BBC), Rated: A

In comparison, wage data from the Office for National Statistics (ONS) shows the typical full-time worker has seen pay increase by 6.5%, over the same period.

British households amassed £37bn in unpaid personals loans in 2017, an increase of £7bn from three years earlier.

In Northern Ireland personal loan debt is just over £1bn and has risen 4% since 2014.

FINTECH AND BANKING GROUP SET FOR IPO (BusinessCloud), Rated: B

TruFin has published a document announcing its intention to float on the AIM market of the London Stock Exchange in late February.

TruFin has offices in London and Birmingham and currently operates under three separate businesses: Distribution Finance Capital (DFC), Satago and Oxygen Finance.

The group also owns a 15 per cent stake in technology-led peer-to-peer lender Zopa. The platform was launched in 2005 and has since originated over £2.6bn of unsecured loans, connecting more than 320,000 customers to 70,000 investors.

China

China’s recent crackdowns indicate growing pains for its advanced fintech industry (Tearsheet), Rated: A

The central bank is now reining in “social credit” scoring models by companies like Tencent and Alibaba that use consumer data from purchases and social behavior, as of the past weekend. These programs are designed to make up for the lack of institutional records of individuals’ creditworthiness in China’s financial system — something the central bank itself has tried to address with its own solution. Now the government is worried e-commerce-turned-fintech giants could use social scoring as marketing to sell their financial products.

China is a mobile-first nation. Mobile e-commerce took off there because its retail landscape was weaker and less efficient 15 years ago compared to that of the U.S.

European Union

Amsterdam Makes The Most Of Its Fintech Credentials (Global Finance), Rated: AAA

Despite Brexit, London has managed to hang onto its status as Europe’s leading fintech hub, at least for now. According to the Nesta 2016 European Digital City Index, “London leads for both start-ups and scale-ups.” However, Stockholm and Amsterdam, which rank second and third respectively out of 60 cities, are leading the pack nipping at London’s heels, according to the index, which looks at how European cities support “digital entrepreneurship.”

Amsterdam has many claims to fame, but one of its lesser-known features is its concentration of 350 fintech companies, more notably in the payments (Adyen, Payvision, GlobalCollect), trading (BinckBank, Flow Traders) and alternative finance (Funding Circle, Spotcap) spaces.

European Investors Elect Favorite Projects as Prêtons Ensemble Launches New €200 Million Digital Lending Fund (Crowdfund Insider), Rated: A

The asset management firm Eiffel Investment Group which manages the €100 million marketplace lending fund “Prêtons Ensemble” (meaning “Let’s Lend Together”) for institutional investors Aviva France, AG2R LA MONDIALE, MAIF, MGEN and Klesia awarded European Digital Lending Awards at a gathering held in Paris on February 1st. The awards recognized SME projects presented on the lending platforms backed by the fund.

Nominated platforms included leaders such as Funding Circle and Lendix. The prizes however went to smaller marketplaces, a good opportunity to put the spotlight on these up-and-coming fintechs:

  • Green Economy award: Générale du Solaire, a project presented on Lendosphere, France.  
  • Job creation award: Metalliance on Wesharebonds, France.  
  • Innovation award: Selfstock on ClubFunding, France.  
  • Quality of Life award: All About Healthcare on Linked Finance, Ireland. Linked Finance is Ireland’s largest P2P lending platform with more than 16,000 registered lenders who have lent over €32 million to Irish businesses
  • Inclusive Economy: Mujeres y CIA on Finanzarel, Spain, and
    Nou verd and Nou set on Loanbook, Spain.  
  • Best pivot: Sky Hero on Look & Fin, Belgium.  
International

Senmiao Technologies Proposes Terms For $ 14 Million U.S. IPO (Seeking Alpha), Rated: AAA

Senmiao Technology (AIHS) intends to raise $14 million in a U.S. IPO by selling 3.25 million shares at between $4.00 to $4.50 per share.

According to a 2017 research report by the World Federation of Direct Selling Associations, the global direct selling volume increased by 1.9% in 2016, reaching $183 billion in sales between 107 million direct sellers.

In 2014, 45% of direct selling volume came from the Asia Pacific region and grew to 46% in 2015 – 2016, as the chart below shows:

Source: Seeking Alpha

According to management, ‘there are approximately 40 lending platforms in Sichuan province.’ Major competitive vendors that provide similar services include:

  • Sichuan Jinding Wealth Information Technology
  • Koudai Network Services
  • Chengdu Hongxue Jinxin Business Consulting
  • Chengdu Zhongke E-Commerce Co

Revenue ($)

  • Six months ended Sept 30, 2017: $182,960
  • FYE March 31, 2017: $73,237

Operating Loss ($)

  • Six months ended Sept 30, 2017: ($671,729)
  • FYE March 31, 2017: ($185,535)

Operating Margin (%)

  • Six months ended Sept 30, 2017: Negative
  • FYE March 31, 2017: Negative

Cash Flow from Operations ($)

  • Six months ended Sept 30, 2017: $302,568 cash flow used in operations
  • FYE March 31, 2017: $1,324,449 cash flow from operations

As of Sept 30, 2017, the company had $76,863 in cash and $736,246 in total liabilities.

(Source: Senmiao S-1/A)

 

Exclusive Interview with FintruX CEO Nelson Lin (Chipin), Rated: A

FintruX is an established online lending platform that is introducing blockchain into its financial network to better serve both kinds of customers.

Nelson. Thanks for joining us today. Can you tell us more about yourself and FintruX?

I am the founder and CEO of FintruX and also Robocoder. Robocoder provides the technology behind Fintrux.

FintruX is a global peer-to-peer (P2P) lending platform on the Ethereum blockchain network for providing unsecured loans. It connects small businesses who need money for cash flow issues, with lenders who want to earn a better return on their money.

In some ways, tokenized P2P lending platforms is a “killer app” for the blockchain technology. We are pretty sure you would agree, but can you elaborate and in the context of what you are trying to do.

All the current monetary transactions require too many intermediaries to facilitate a simple transaction from end-to-end and the process itself is also inefficient and time-consuming. Furthermore, most of the systems are fragmented, inconsistent and usually require extensive human intervention. Finally, such transactions require numerous touch-points to handle and manage the “trust” between all of the parties involved. Our mission is to make trustless financing a no-brainer for both borrower and lender.

What is the biggest problem within the industry or do you think there is a gap in the market for FintruX to fill?

The biggest problem is that small and startup businesses do not have sufficient credit history or access to capital for their short-term cash flow needs. Furthermore, the traditional systems are inadequate, fragmented, inconsistent, labor intensive and involve lots of intermediaries. There are many P2P lending platforms in existence but they do not talk to each other.

Australia

Global tech giants will threaten bank tax receipts (Financial Review), Rated: A

The $14 billion in taxes the federal government receives each year from the banking sector could be eroded by global technology companies including Apple capitalising on policies designed to boost competition in the sector, the chief executive of the Australian Bankers’ Association, Anna Bligh, will warn on Thursday.

In its half-year results presentation on Wednesday, Commonwealth Bank, the country’s second largest taxpayer, pointed to the $2 billion of taxes it pays to contribute to the economy. This contrasts to many of the global tech players, who book little profit in Australia despite huge sales, and therefore pay much less tax.

India

Credit is here to stay, new lenders beyond banks to play bigger role (money control), Rated: A

Emerging as an alternative to mainstream banking, NBFCs have also been playing an important role in bridging the credit gaps, i.e. in meeting the increasing financial needs of the underserved and unbanked areas in the corporate sector, unorganized sector and also for the local borrowers.

According to the Reserve Bank of India, in January 2017, a total of 28.8 million credit cards were in operation. Credit cards, also known as revolving credit, have been the preferred choice of masses as it enables repetitive use for daily purchases that can be paid back in instalments on a monthly basis.

According to PwC research, over 95% of financial services incumbents seek to explore FinTech partnerships.

MENA

A year when new innovations show up in Dubai realty (Gulf News), Rated: AAA

In the UAE, we are seeing some significant strides, where one technology-driven real estate crowdfunding platform, Smart Crowd, recently received approval from the Dubai Financial Services Authority to establish the region’s first regulated real estate crowdfunding platform. This will enable any individual to invest and own a piece of UAE property for as little as Dh5,000 and will most likely stimulate sales in the secondary market.

Canada

Business loans: Which one works for you? (Bankless Times), Rated: A

Source: Bankless Times
Bermuda

Trunomi Closes $ 3.5 Million Round from CloudScale Capital (Finovate), Rated: AAA

Consumer consent and data rights company Trunomi closed a $3.5 million round of funding today. This investment brings the Bermuda-based company’s total funding to $10.5 million.

Authors:

George Popescu
Allen Taylor

Thursday September 21 2017, Daily News Digest

RateSetter

News Comments Today’s main news: RateSetter surpasses $150M in loans. New York AG requests cybersecurity safeguards from Experian, TransUnion. Point72 Ventures leads AlphaFlow’s $4.1M seed round. Cross River appoints VP of Government Affairs to focus on regulatory framework. Clarity Money passes 500,000 user milestone. MarketInvoice’s losses doubled last year. Raisin expands into the UK with acquisition. Today’s main analysis: Millennial investors don’t […]

RateSetter

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United States

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United States

Real estate investment platform AlphaFlow picks up $ 4.1 mln seed (PE Hub Network), Rated: AAA

AlphaFlow, an automated alternative investment platform for real estate, announced today the closing of a $4.1 million seed round funding, led by Resolute Ventures and Point72 Ventures, the venture capital arm of Steve Cohen’s Point72 Asset Management. Other investment partners include Upside Partnership, Social Capital, Y Combinator, Clocktower Technology Ventures, an affiliate of Drobny Capital, Red Swan Ventures, and more.

AlphaFlow’s seed round comes two years after the company was established by CEO and former RealtyShares Co-Founder, Ray Sturm. AlphaFlow plans to use the funding to continue scaling successful partnerships with lenders and investors, both accredited individuals and investment managers.

AlphaFlow Optimized Portfolios are available for investment professionals such as endowments, pension funds, RIAs, and wealth managers, as well as by independent investors seeking uncorrelated returns through short‐term, higher‐yielding real estate loans backed by properties.

To date, AlphaFlow’s flagship product, AlphaFlow Optimized Portfolios, boasts broad diversification across hundreds of loans in 29 states, average LTV of 72%, and target net returns between 8 to 10%. With this seed round funding, AlphaFlow intends to continue to innovate in the application of sophisticated finance mechanisms to scale within the investment industry.

Another Study Confirms It – Millennial Investors Don’t Know What They Are Doing (ValueWalk), Rated: AAA

Millennial investors are woefully underprepared for the next financial crisis according to a survey conducted by online real estate crowdfunding service Fundrise.

The Fundrise survey suggests that 67.2% of millennial investors are not prepared for the next crisis, and 47.1% feel that there is nothing that they can do to prepare for it. With 83 million millennials in the US holding an average of $75,500 in assets, this means the largest generation is at risk of losing $3.1 trillion in the next financial crisis assuming a repeat of the 50% drawdown seen last time around.

According to an annual study by Charles Schwab, 56% of millennial investors say ETFs are their investment of choice, compared to only 23% of seniors.

77.8% of respondents said that they had no interest in investing outside of the stock market while 42% of millennials surveyed said that they did not know whether it was important to invest outside of the stock market.

Source: ValueWalk

Cross River Appoints VP of Government Affairs (PR Newswire), Rated: AAA

Cross River, the financial services organization that merges the established expertise of a bank with the innovation and product offering of a technology company, announced today the appointment of Phil Goldfeder as VP of Government Affairs. Goldfeder will lead a team at Cross River working with regulatory agencies and policy makers in Washington, D.C., as well as state governments across the U.S., to implement appropriate regulatory frameworks that will encourage innovation while ensuring consumer protection.

Clarity Money Passes 500,000 User Milestone (BusinessWire), Rated: AAA

Clarity Money, the personal finance app that acts as the “Champion of your Money,” today announced that it reached 500,000 users on September 4, 2017, less than seven months after launching on iOS.

This milestone builds upon Clarity Money’s tremendous momentum in 2017, which has included:

  • Two successful rounds of funding, from noted investors such as Citi Ventures and Soros Capital
  • A nomination for the 21st Annual Webby Awards in the financial and banking services categories for mobile apps
  • Being a featured personal finance app on the Apple App Store and debuting as Apple’s #1 app under “New Apps We Love” in the Apple Store days after launching

NY AG Wants To Know About TransUnion, Experian Cybersecurity (PYMNTS), Rated: AAA

TransUnion and Experian, two of The Big Three credit reporting companies, have received letters from New York Attorney General Eric Schneiderman inquring them about their cybersecurity safeguards in the wake of the massive data breach at rival Equifax.

According to a news report in The Associated Press, the attorney general wants the two companies to describe what security systems they have in place and what changes they are implementing since data on 143 million U.S. customers at Equifax was breached.

New York’s attorney general wants to know if the companies would waive fees for consumers that needed credit freezes because of the hack.

Equifax breach has banks tightening their defenses, counseling customers (Information Management), Rated: A

Asking bankers to comment on the Equifax data breach generally evokes a cone of silenceforged out of a combination of sympathy and fear — I’m not going to speak about it because it could happen to me.

A few, though, will acknowledge the toll the breach has taken on their customers and their security departments, which have scrambled to ensure they won’t share (or haven’t shared) Equifax’s fate.

Another banker, Jim Hanlon, the chief technology officer at Dedham Savings Bank in Boston, was astounded that Equifax did not catch its breach more quickly.

“We have 60,000 customers,” he said. “If somebody came into our network and was looking at 100 files, that would raise a flag with us. If somebody’s accessing millions of records, how is something not alerting them to that fact? That’s the concerning piece to me. The documentation said they take network security seriously. But there should have been a red flag somewhere.”

Equifax’s security team detected and blocked suspicious network traffic associated with its U.S. online dispute portal web application on July 29. But the company’s investigation found that hackers had access to certain files containing personal information from May 13 through July 30.

The Equifax Breach: What You Need to Do Now (Parade), Rated: A

While I don’t have all the answers, financial/debt attorney and author of Life & Debt Leslie H. Tayne of Tayne Law Group, P.C., has some great suggestions.

Q: What can consumers affected by the breach do now to protect their information?

A: For starters, sign up for credit monitoring so that future account fraud and identify theft attempts will be noted and immediately brought to your attention. Next, get in the habit of regularly monitoring your bank and credit cards on your end for any suspicious activity. While you’re online, update your account passwords using long, strong, unique passwords for every single account.

Q: Should you freeze your credit so that no one can use your information illegally?

A: There are pros and cons to freezing your credit. The biggest pro of freezing your credit is that no one can apply for credit in your name. But that no one includes yourself, meaning it could create delays and problems when credit is needed quickly in the case of applying for a loan, credit cards or jobs or if seeking insurance, looking to buy or rent a home or contracting with a utility company during the freeze period. Yes, you can unfreeze your credit at any time, but this is also time consuming and may involve having to pay a fee.

Q: It doesn’t sound like freezing your credit is the best option right now.

A: With these types of drawbacks, a better avenue to consider may be signing up for a fraud alert.

Q: What else do consumers need to know or be on the lookout for going forward?

A: A key concern emerging from the Equifax security breach that consumers need to watch out for are cons and phishing scams. They need be wary of anyone who may approach them impersonating financial or government institutions or general companies who may come across offering support in resolving their data breach.

To Survival: Listen, Learn, Repeat (PYMNTS), Rated: AAA

While it may not be the oldest credit union around, the Boeing Employees Credit Union (BECU) of Tukwila, Washington, has been in business since the days of the Great Depression. Founded in 1935, BECU began as a credit union for employees of the Boeing Company aircraft manufacturing firm. Today, at 82 years old, BECU is looking pretty fit for its age. It currently holds more than $17.2 billion in assets and services more than 1 million members, placing it in among the top five U.S. credit unions for cash assets — and that’s without a steady diet of kale and spinach smoothies.

But, a common element with which older financial institutions must contend is new players arriving on the scene and throwing older players’ relevance into question.

Should older institutions treat these younger upstarts as rivals or as potential partners?

Doug Marshall, BECU’s senior vice president of retail, recently told PYMNTS that BECU has chosen the latter approach.

BECU has approached approximately 60 organizations in the FinTech space to explore opportunities for collaboration, Marshall said. Among the companies approached is Even, a supply-side marketplace lending company. An official partnership has not yet been established, but BECU turned to the company to explore innovations for the credit union’s own lending habits and to help members “smooth their cash flow.”

A few years ago, BECU launched an updated mobile app in partnership with MX, a technology solutions provider for financial services companies. Marshall said BECU was excited to see how members would embrace the newly-launched app. When it went live, however, it became clear they weren’t thrilled.

“We did quite [a lot] of research before we deployed,” Marshall said. “But, in some ways, we didn’t ask one of the most fundamental questions.”

According to Marshall, one of the important lessons that younger FinTechs can teach older credit unions about staying relevant is to not be afraid to fail.

“Lesson three is pivot quickly,” Marshall said. “That’s the magic of a FinTech partnership. We were able to respond and [quickly] deploy a fix.”

Morningstar CEO Kunal Kapoor tells advisers to embrace technology (Investment News), Rated: A

Imagine financial technology that can create personal portfolio indexes for individual investors or a computer program that can assign forward-looking performance ratings for mutual funds and ETFs.

That’s the way Morningstar CEO Kunal Kapoor thinks when he imagines where technology is heading, and why he believes financial advisers need to run toward technological innovation to avoid being left in the digital dust.

He compared the initial fear of robo-advice platforms to fears from the threat of online brokerage trading in the 1990s.

“The online trading platforms were supposed to put everyone out of business, but they were just absorbed into the mainstream,” he said.

Impact Housing REIT, LLC Launches $ 35 Million Equity Crowdfunding Opportunity Focused Housing Crisis in America (BusinessWire), Rated: A

Impact Housing REIT, LLC (ImpactHousing.com), a new apartment real estate investment trust led by Edward (“Eddie”) P. Lorin, a 30-year multifamily real estate veteran, is pleased to announce that its $35 million direct public offering under Regulation A+ has been qualified by the Securities and Exchange Commission (SEC) and is now open for investment. All investors – accredited and unaccredited, domestic and international – can invest directly in Impact Housing REIT Series A equity round for as little as $1,000.

Poor housing conditions due to a rising economy, extreme weather conditions, and poverty is effecting our health, quality of life, and country, as a whole. Impact Housing is the first REIT in the country using the new equity crowdfunding laws to focus on America’s housing crisis, specifically on creating affordable, livable, distinctive multifamily communities for America’s working people and their families.

Employing a strategy that Mr. Lorin has refined over decades, Impact Housing plans to buy neglected, poorly managed apartment buildings throughout the U.S., and transform them into thriving, healthy, family-oriented communities. Upgrades typically include new amenities, refreshed and upgraded interiors, resort style pools, playgrounds, state-of-the-art fitness centers, BBQs, dog parks, community gardens and open space social areas.

The technology enabling this online investment offering is backed by CrowdStreet, a leading provider of real estate fundraising and investor management solutions.

HOW AI APPS FOR BANKS ARE CHANGING THE FACE OF THE FINANCIAL SECTOR (TechGenix), Rated: A

Long before chatbots popped up as interesting business-use cases, long before mobile banking applications offered military-grade secure transactions, and much before focused analytics tools for banking made themselves known, AI apps for banks augmented by machine learning and deep learning began creating an impact in the world of banking.

The following factors make the financial sector a highly targeted market for all kinds of AI apps for banks:

  • Massive amounts of structured data from the past.
  • Consistency in data recording and archiving practices across financial institutions.
  • Quantitative nature of finance and banking business practices and operations.
  • Accuracy in data records.

AI apps for banks: Smart portfolio management for end users

These applications help banks build an online accessible tool that considers user preferences, personal demographic information, earning power, and wealth sources, and then matches these with their financial goals. In parallel, these systems take real-time market data and factor in parameters like a customer’s credit history, risk aversion, and lifestyle practices, creating a very robust portfolio of investment and saving instruments across asset classes.

Mobile banking applications like Moven and Simple leverage the idea of using algorithms that grow smarter with time. More precisely, they grow smarter by handling more data and measuring more results.

These AI-based applications can integrate with a user’s online bank accounts, debit and credit cards, and e-wallets to track their expenses, present advice on better expense management practices, and help them choose more suitable financial products that sit well with their financial habits, liquidity requirements, and short-term saving goals.

Automated hedge fund management

These models collate inputs from several sources of real-time financial information from the major financial markets of the world. Also, these models incorporate quantified inputs regarding sentiments in the financial markets.

Self-learning security systems for fraud detection

AI-based fraud detections tools of today leverage the principles of deep learning and machine learning, and are already beginning to incorporate the benefits of neural learning, and hence have tremendous potential in cybersecurity, particularly for the banking sector.

PeerStreet Named One of the Top Ten Startups to Work For in Los Angeles (Crowdfund Insider), Rated: B

Real estate crowdfunding platform PeerStreet announced on Tuesday it was named one of the Top Ten Startups to Work For in Los Angeles. The list was created by Zippia, an online startup career platform.

LendUp Appoints Jotaka Eaddy As New VP of Policy, Strategic Engagement & Impact (Crowdfund Insider), Rated: B

LendUp, a socially responsible online lender on a mission to redefine financial services for the emerging middle class, announced on Wednesday it has appointed Jotaka Eaddy as its new Vice President of Policy, Strategic Engagement, and Impact. Eaddy previously served as LendUp’s Head of Government Affairs.

LendUp has now saved borrowers nearly $135 million in interest and fees. The lender expects to surpass $200 million by the end of the year.

Need Money Fast? 4 Options for Small Business Owners (Entrepreneur), Rated: B

There’s an extremely fine line you have to walk when scaling. If you expand too quickly, hire too many employees, and order excess inventory, you could deplete your financial resources and crash. But if you don’t take any chances or prepare your business for growth, you won’t be able to respond in an efficient manner when you finally get the big break you’ve been waiting for.

So, what, exactly, can you do when you are ready and need money to expand? Here are four options.

1. Online lenders

If you need a sizable loan, you’ll still need to go through a traditional bank or lender. However, if you need only a modest amount of cash, online lending msy be the way to go.

2. Personal installment loans

If you’re really in a bind and need some quick cash, a personal installment loan might be the way to go. A lender simply checks your credit score and processes your request.

3. Line-of-credit loans

With a line of credit, your business gets approved for a certain amount of money for a specified period of time — typically one year.

4. Receivable financing (factoring)

The factor advances a portion of the receivables — likely 75 to 90 percent of the value — and then holds on to the remaining portion. It’s a good solution for businesses that have orders coming in, but don’t have the money to fill those orders.

United Kingdom

MarketInvoice’s losses doubled in 2016 (P2P Finance News), Rated: AAA

MARKETINVOICE saw its losses double during 2016, as the peer-to-peer invoice finance platform continues to use funds to scale up.

Its latest accounts on Companies House for 2016 showed a loss before taxation of £6m, increasing from £3.1m in 2015.

This is despite turnover increasing from £4.1m to £4.4m and an increasing number of invoices getting funded, at £442m, compared with £328m a year before.

Deposit marketplace fintech enters UK via acquisition (AltFi), Rated: AAA

A leading European deposit marketplace has acquired Manchester-based fintech PBF Solutions as part of its entry into the UK market. Raisin will target UK savers with its marketplace of savings accounts, while also offering an end-to-end deposit raising solution for UK banks and other firms.

Founded in Berlin in 2013, Raisin is already partnered with 40 banks and financial institutions across Europe. In the past four years the firm has also attracted over €4.3bn in what it calls “marketplace deposits”.

PBF will become Raisin UK, and will significantly increase the size of its UK-based operations over the coming months. CEO Kevin Mountford will take charge of Raisin’s UK expansion.

Lendable: the next generation lending platform that can give borrowers a small loan within two hours (Independent), Rated: A

By taking advantage of the large amount of data available in the UK at a time when consumer lending was evolving fast, Kissinger and his team conceived of a new kind of online lending that they claim is faster and more efficient than larger peer-to-peer lenders Zopa and Ratesetter.

Since 2014, they have built the third largest unsecured consumer lending platform in the UK by 2016 volume, even though – at 4.6 per cent – their market share is still small. So far it has lent a comparatively small £80m to around 20,000 borrowers. Zopa, by comparison, has approved £2.62bn in loans since 2005.

But with a growth rate of 430 per cent in the last year, Lendable is expanding quickly. It aims to be the fastest lender to decide on applications and transfer cash in the market, getting funds of between £1,000 and £15,000 in the borrower’s account in as little as two hours.

Power to the people: Meet the P2P lender that uses a centuries-old way of lending (City A.M.), Rated: A

But for many rural businesses, Folk2Folk has been a saving grace. The peer-to-peer (P2P) lending platform has helped struggling companies in a time of need, and in some cases prevented an entire community from caving in on itself.

“We don’t exist as a platform that wants to talk solely about interest rates,” says Giles Cross, the company’s chief marketing officer. “Rather, our purpose is to sustain local and rural communities around the UK – where people want to club together to make a difference.”

A large proportion of the businesses that use Folk2Folk are startups that have been starved of funding, largely because they don’t have a long-standing track record.

The House Crowd Says Investor Confidence at Record High (Crowdfund Insider), Rated: B

The House Crowd, a UK property crowdfunding platform, is reporting “record levels of investor confidence”. According to the platform, the House Crowd is experiencing high demand for its property-backed peer-to-peer lending products, with over 1,270 people having invested in one. The House Crowd states that 66% of its investors now repeatedly reinvesting their capital through the business.

FCA’s Bailey calls for govt action on debt crisis (FT Adviser), Rated: B

Higher UK interest rates could spark a consumer debt crisis unless the government intervenes, according to Andrew Bailey, chief executive of the Financial Conduct Authority (FCA).

More than 8.3m adults in the UK are struggling under the burden of debt – a higher proportion of the population than in 2016, according to figures from the Money Advice Service.

Its data revealed 15.9 per cent of the UK population is living with a debt problem, up from 15.4 per cent in 2016.

China

Social Media Giant Tencent Gets Into Old-School Finance (Bloomberg), Rated: AAA

Tencent Holdings Ltd., China’s largest social media firm, is entering the traditional finance industry by investing in CICC International Capital Corp., a move that may help the investment bank’s expansion in wealth management.

Shares of CICC jumped by a record after it said Tencent is paying HK$2.9 billion ($372 million) for roughly 5 percent of China’s oldest investment bank. The companies will team up on marketing and data analysis, according to an exchange filing.

Source: Bloomberg Technology

Ping An Securities deploys Finastra technology to boost revenue and enter new markets (The Asset), Rated: A

Ping An Securities has implemented FusionCapital from Finastra throughout its operations in Greater China.

The business, part of China’s Ping An Group, is now using the flexible Finastra platform to help extend its securities brokerage capabilities on a global scale – meaning it can boost revenues as it enters new markets.

Ping An Bank launched intelligent investment services (01Caijing), Rated: A

China Ping An “simple life” conference held in Shanghai. Ping An Bank mobile banking business – “safe pocket bank” launched a smart investment service (referred to as “safe intellectual investment”), the first open to ordinary investors to use. The service uses the Black-Litterman model (BL model) and the quantitative asset allocation method, which are widely used by overseas investment bankers, and develop personalized investment plan according to the customer’s risk appetite.

International

Japan wants to roll back regulations for financial technology startups — here’s why it could be bad for the US (Business Insider), Rated: AAA

Japan’s push to attract innovative financial technology startups to the country could spell trouble for the US.

On Wednesday at the New York Stock Exchange, Japanese Prime Minister Shinzo Abe said the government was moving forward with a plan to roll back regulations on some fintech startups to help spur the development of emerging technology and drive growth in the country.

As such, Abe is pushing for a regulatory sandbox program that would allow fintechs, startups looking to automate or digitize aspects of financial services, to operate and scale without meeting existing regulations.

While such an environment is understood to exist in Silicon Valley more broadly, Berenguer said, those hoping to break through specifically in the financial industry in the US are often required to subscribe to the same regulations as their much larger peers.

That often means paying lawyers to ensure compliance, costs that can force entrepreneurs to put off investing in their product and team. This creates a sort of Catch-22 for some startups. Venture-capital backers are less likely to give entrepreneurs money without a product, but it’s more difficult to create a product with less money when also paying legal costs. Berenguer says this has made financial technology harder to break into relative to the overall tech industry.

Singapore, UK sandbox

Some companies, he said, are seeking greener pastures in Singapore and the UK, where a sandbox program has existed for some time.

Where the huge SoftBank-Saudi tech fund is investing (Money), Rated: AAA

The Softbank Vision Fund was unveiled less than a year ago, backed by Saudi Arabia and Japan’s SoftBank (SFTBF). By May it had raised $93 billion, out of a planned $100 billion, to spend on technology businesses of the future.

Saudi Arabia is the biggest Vision Fund investor, followed by SoftBank. Other investors include Apple (AAPLTech30), Qualcomm (QCOMTech30), Foxconn, Shar (SHCAY)p and Mubadala, the sovereign wealth fund of the United Arab Emirates.

It’s already invested in 10 firms, leading funding rounds worth at least $7.7 billion.

Here’s what it has backed so far this year:

  • Slack
  • OYO
  • Fanatics
  • WeWork
  • Roivant
  • Guardant Health
  • Nvidia
  • Flipkart
  • Brain Corp
  • Plenty
Australia

P2P lender surpasses $ 150m in loans (Broker News), Rated: AAA

Peer-to-peer lender RateSetter has now reached the $150m mark in loans facilitated thanks to a rapid influx of lenders into the platform.

Millennial investors have helped to drive this growth, especially in RateSetter’s one-month market where these younger demographics make up 72% of the lender’s investors since the firm launched in 2014. This is followed by the one-year market where Millennials make up 40% of all investors.

Investment in the platform has risen by 50% over the last five months alone after RateSetter hit the $100m loan milestone in March. There are now more than 7,700 investors registered with the platform, making RateSetter the largest P2P lender in Australia.

For the one-month market, the average amount invested has increased from $3,777 two years ago to $11,483 today.

Source: Broker News
India

In Game Of Loans, RBI Arms A New Player (Bloomberg), Rated: AAA

Amit Parker, 26, needed money for his father’s heart surgery. Banks refused to lend as he had delayed repayments on a motorcycle loan three years ago. The travel firm executive tried his luck at Lenden Club (Lenden is Hindi for give-and-take), an online portal that connects individual borrowers with lenders. He managed to get Rs 70,000.

Most of these are small-ticket transactions, and the market is small. A few hundred such loans are disbursed a month with only the young with poor credit record or the tech-savvy borrowing, Rajiv Raj, co-founder of credit-scoring platform CreditVidya, told BloombergQuint. Adoption could improve once the central bank comes out with guidelines.

The Reserve Bank of India on Wednesday provided that clarity, bringing P2P lending platforms on a par with non-bank finance companies. And the opportunity is huge. More than 30 such startups have come up in the last four years, including Faircent, i2ifunding, Lenden Club and Billionloans.

Yet, since it involves lending to people with poor credit scores, interest rates can go as high as 28 percent. That didn’t deter Parker from taking another Rs 1.5-lakh loan on Lenden Club. He wishes to continue borrowing on the platform.

Millennials are the most active lenders and borrowers, Rajat Gandhi, co-founder of Faircent, said over the phone. About 60 percent of its 18,000 members are below 35 years. For its Mumbai-based rival Lenden Club, more than two-thirds of its users are 30-40 years old.

They largely borrow to improve lifestyle.

Loan marketplace Rubique targetting 250 pct growth in disbursement, 300 pct in revenue (Financial Express), Rated: A

Does the launch of your mobile app mean that you are shifting your focus to individual borrowers from SMEs?

From day one, we have maintained that our take on the opportunity in the financial space is not focused on retail or SME. The Indian financial sector is largely influencer-driven. Whenever, someone wants a loan, they go through an influencer, whether a chartered accountant or a financial advisor.

How much have you disbursed through your platform so far in FY18?

Last year, we did Rs 1,000 crore in disbursements, of which 60% was in the SME category and 40% in the retail category. This year, as a company, in the first four months (April-July), we did Rs 500 crore worth of disbursements and we have been clocking very healthy revenue. This month, we are touching around Rs 3 crore in revenue. We had been going at a monthly average of about Rs 2 crore in revenues so far. This year, we are targeting almost 250% growth over last year (in disbursements) and a healthy revenue growth. Last year, the revenue was Rs 15.5 crore. This year, we are targeting an almost 300% jump and we expect to cross `45 crore.

Buying a car this festive season? Consider these factors when comparing car loans (India Times), Rated: A

Many people wait for the festival season to make big-ticket purchases like buying a car. That is because banks and non-banking finances companies (NBFCs) usually lower their lending rates on car loans and even have offers such as writing off processing fees.

Source: India Times

“The only benefit of availing a car loan through the dealer is the slight convenience. Dealers tend to push the customer towards their captive finance arms or towards banks where they get higher commissions. So, when a customer compares the offer from the dealer with more banks or at online marketplaces, they will typically find lower interest rates and better terms than those offered by the car dealer,” says Gaurav Gupta, CEO, MyLoanCare.in, an online loans marketplace.

Source: India Times

Remittance firms should consider fintech start-ups as partners rather than competitors (The National), Rated: A

A recent Statista report estimates that fintech will be worth around US$20 billion by 2017.

For instance, 2016 GCC-wide figures by Statista showed that a full 57 per cent of banks and financial services providers saw fintech startups in their operational space as potential partners, while only 22 per cent saw them as competition.

Fintech start-ups tend to be technologically led. They harness mobile tech, social networks and a well-designed user interface to bring services directly to customers. But this technology-first model is most useful in the first and last mile fulfilment, ie, when a customer requests a transaction, or is notified of its completion. When it comes to actual transaction processing, fintech startups often lack the size, scale and well-developed treasury functions needed to fulfil global requests.

But mutually beneficial fintech partnerships can be a game changer. We are heading for what might be called a hybrid model – where a transaction is initiated in-app but is then handled by conventional partners through systems that are already compliant with regulations and have a robust track record of transaction fulfilment.

Asia

Used-car dealer taps fintech for one-stop ease (SGSME.sg), Rated: A

A USED-CAR dealership has tapped fintech to offer a paperless and hassle-free one-stop service to buyers, who can make an electronic deposit for a preferred model and submit an online car loan application, complete with insurance cover.

Orchard Credit, best known for its four decades in the vehicle financing business, recently set up a dedicated used-car showroom to provide the full range of car services to its customers.

Orchard Credit also pioneered the car loan aggregator. It is the only dealer which offers online car loans from nine banks and financial institutions – DBS, Hitachi Capital, HL Bank, Maybank, OCBC, Standard Chartered, Sing Investments and Finance, Tokyo Century and UOB.

INDONESIAN peer-to-peer (P2P) lending startup KoinWorks launches a new programme under its KoinPintar category of loans in collaboration with Binus Online Learning.

Benedicto says that KoinWorks will cover a maximum of 80% of the fees based an applicant’s finances. Loans with a flat interest rate between 9% to 12.5% will be offered to cover the rest.

How technology is changing equity trading (The Asset), Rated: A

The widespread use of algorithmic trading has lessened the need for interaction between the buyside and sellside, and brought with it increased reliability, faster speeds and lower costs. However, it also brings technology-related risks and a lack of transparency.

The widespread use of algorithmic trading – basically the process of using computers programmed to follow a defined set of instructions for placing a trade – means that it is no longer necessary for the buyside traders to speak to their counterparts every time they make a trade.

Authors:

George Popescu
Allen Taylor

Tuesday March 14 2017, Daily News Digest

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News Comments Today’s main news: SoFi’s loan losses pile up as wealthy borrowers default. Charles Schwab launches hybrid human-robo financial advice. GDR adds Avant as verification network partner. Vista to acquire D+H to merge with Misys.  Today’s main analysis: Household debt edges up as auto, credit card, and student debt climb. The regulation of MPL. Today’s thought-provoking articles: Everything […]

total debt balance

News Comments

United States

United Kingdom

European Union

Canada

Asia

Middle East

News Summary

United States

SoFi’s Loan Losses Pile Up as Even Wealthy Borrowers Default (Bloomberg), Rated: AAA

Social Finance Inc.’s online borrowers are defaulting at higher rates than underwriters for one of its bond deals had expected, the latest sign that an industry that hoped to upend banking is now getting tripped up by bad loans.

Losses on the company’s personal loans were high enough to breach key levels known as “triggers” last month on a bond deal issued in 2015 and backed by the loans, according to analysts at Morgan Stanley. If defaults keep rising, investors in bonds could end up missing out on expected interest payments.

Other online lenders have had similar trouble with defaults and triggers recently, which has broadly made it more expensive for the startups to fund their businesses. One pioneer in the business, CircleBack Lending Inc., stoppedmaking new loans as growing numbers of its borrowers defaulted.

Credit issues at Prosper Marketplace Inc. resulted in staff cuts at that company, and were largely the result of lending too much, too fast, and a “grow at all cost” attitude fueled by insatiable demand from investors, Prosper CEO David Kimball said at the New York conference last week.

Household Debt Edges Up as Auto, Credit Card, and Student Debt Climb (New York Fed), Rated: AAA

Aggregate household debt balances grew in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt is now 0.8% below its 2008Q3 peak of $12.68 trillion, and is 12.8% above the 2013Q2 trough.

Mortgage balances, the largest component of household debt, which stood at $8.48 trillion as of December 31, saw a $130 billion uptick from the third quarter of 2016.

Balances on home equity lines of credit (HELOC) were roughly flat, rising $1 billion to $473 billion.

Non-housing debt balances rose in the fourth quarter; with increases of $22 billion in auto loans, 32 billion in credit cards, and 31 billion in student loans.

Charles Schwab launches hybrid human-robo financial advice (WHTC), Rated: AAA

Brokerage Charles Schwab Corp on Tuesday launched a service that combines its automated investment management technology with human advisors, as financial institutions race to offer digital financial advice.

The service, called Schwab Intelligent Advisory, provides clients with a financial and investment plan, unlimited access to a human advisor via phone or video conference, and an investment portfolio of exchange-traded funds managed by computer algorithms.

The service, for clients with at least $25,000 to invest, includes an online platform that keeps track of financial goals and retirement plans, the San Francisco-based company said in a statement. It will charge a 0.28 percent fee on assets, with a quarterly maximum of $900.

The Regulation of Marketplace Lending: A Summary of the Principal Issues (Chapman and Cutler LLP), Rated: AAA

At the outset, it may be helpful for us to briefly discuss the scope of this paper and some of the terminology we use. There is no single or universally accepted definition of “marketplace lending.” In general, though, marketplace lenders can be viewed as companies engaged in an Internet-based lending business (other than payday lending) which are not banks or savings associations or otherwise regulated as financial institutions. They may offer a wide variety of financial products, including student loans, small business loans, and real estate loans, in addition to the unsecured installment consumer loans on which the industry initially focused. However, “marketplace lenders” may or may not actually be lenders. This term is a generic term to identify participants in marketing, originating, selling, and servicing loans. They also may fund their loans through a variety of means, including equity capital, commercial lines of credit, sales of whole loans to institutional investors, securitizations, and/or pass-through note programs. In this paper we focus on the consumer lenders since they are the most heavily regulated and have the highest loan volumes. However, much of the discussion herein—outside of matters pertaining directly to consumer lending regulation—will also apply to nonconsumer lenders.

Download “The Regulation of Marketplace Lending: A Summary of the Principal Issues” here.

Global Debt Registry Adds Avant as Verification Network Partner (Yahoo! Finance), Rated: AAA

Global Debt Registry (GDR), the asset certainty company known for its loan data validation expertise, today announced it has added leading online lending platform Avant to its verification network.

Investors in loans through Avant now have turnkey access to enhanced loan due diligence services and can easily add new data insights onto portfolios of loans without having to touch sensitive personally identifiable information (PII) about borrowers.

GDR’s eValidationSM and eVerifySM asset certainty tools require no technology investment, using existing data structures and processes to streamline the flow of information from the lender to the investor. In addition to digital scanning for traditional document verification and data integrity, GDR securely analyzes the Personally Identifiable Information (PII) to ensure borrower data can be independently confirmed in compliance with the investors representations and warranties.

Kroll Bond Rating Agency Assigns Preliminary Ratings to Marlette Funding Trust 2017-1 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2017-1 (MFT 2017-1). This is a $257.44 million consumer loan ABS transaction that is expected to close on March 23, 2017. This transaction represents the third securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.

Approximately $250 – $325 million of loans are originated through the Platform per quarter. Since March 2015, over $3 billion of loans have been originated though the Platform, and as of February 2017, Marlette has over $100 million of loans on its balance sheet.

The transaction has initial credit enhancement levels of 27.45% for the Class A Notes, 17.95% for the Class B Notes, and 9.10% for the Class C Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A and Class B Notes) and a reserve account funded at closing.

Traditional Advisor Business Model Will Not Last (Financial Advisor IQ), Rated: A

Several developments are creating a “perfect storm” that will revolutionize the financial advice industry and leave many advisors behind, John Lohr writes in Seeking Alpha.

First Ascent still uses real humans on its investment committee, while an independent advisor serves the client, Lohr writes. That model isn’t likely going away: even robo-advice pioneers such as Betterment now offer upgraded services that give investors unlimited interaction with a licensed advisor, he writes.

But Betterment’s annual fee for unlimited calls with an advisor is just .50%, according to Lohr. That means high-fee advisors are on the way out, he writes.

Clarity Money Marks Continued Growth with 100,000 Customers and Senior Hires (BusinessWire), Rated: B

Clarity Money, a revolutionary personal finance app that acts as the “Champion of your Money,” has reached 100,000 customers since its launch in January 2017. The app has been a “featured” personal finance app on the Apple App Store since its launch. Clarity Money was created by venture capitalist and serial entrepreneur Adam Dell.

To keep up with this growing demand, Clarity Money is pleased to announce three new additions to its team – Melissa Manne, Vice President of Product Management; Colin Kennedy, Chief Revenue Officer; and Marc Atiyeh, Chief Strategy Officer. The Clarity Money team already includes financial and technology veterans from Betterment, Google and IBM, as well as advisory board members Niall Ferguson, economic historian, and Dan Ariely, behavioral economist.

Clarity Money works by using data science and machine learning to provide personalized insights for customers. By utilizing a combination of techniques such as natural language processing, anomaly detection and spectral analysis, customers are able to take advantage of features such as: bill lowering, subscription cancellation, creating a savings accounts and providing tailored suggestions on things such as credit cards.

With the potential impact of financial deregulation and the weakening of the Consumer Financial Protection Bureau, consumers need a financial advocate now more than ever. Banks and financial institutions already have powerful tools designed to sell, market and retain customers, but consumers don’t have an equally powerful tool to level the playing field and protect against hidden fees and recurring charges. Clarity Money empowers consumers to take control of their finances, providing them with transparency, organization and actionable insights.

PeerStreet Awarded ‘Top Emerging Real Estate Platform’ by LendIt (Yahoo! Finance), Rated: A

PeerStreet, a marketplace for investing in real estate backed loans, is pleased to announce that it has been named the Top Emerging Real Estate Platform in the LendIt 2017 Awards. PeerStreet is an Andreessen Horowitz-backed platform, focused on democratizing access to investments in real estate debt.

The Top Emerging Real Estate Platform category focused on younger companies that have demonstrated the greatest potential to impact the future of real estate investing. PeerStreet stood out as the top platform with its unique model, as it is not a direct lender and brings an innovative offering to investors.

RealtyMogul.com CEO Jilliene Helman Named Fintech Woman of the Year (Yahoo! Finance), Rated: A

RealtyMogul.com CEO Jilliene Helman was named Fintech Woman of the Year at the first annual LendIt Industry Awards. Helman was honored for her “outstanding leadership, integrity, performance, and team-building support within RealtyMogul, as well as her contributions to the advancement of the industry.”

The awards, which showcased leaders from across the fintech industry, were part of the annual LendIt USA Conference held in New York City March 6 and 7th. Helman was selected by a panel of 30 industry expert judges from among a field of six leading fintech pioneers.

New fintech conference focused on branded currency comes to Omaha (siliconprairienews), Rated: A

Flourish: The Growth of Branded Currency is a fintech conference launching in Omaha this April 10 -12. The conference is focused on branded currency, and is targeting a range of retailers from those with a national presence to smaller Midwest retailers and their technology service providers.

K+H Connection is the company hosting the event. K+H is a fintech consulting firm based in Chicago, IL that focuses specifically on helping fintech companies integrate with merchants.

HG: Branded currency is actually a relatively new term. In short, it is any sort of tender that is branded and used for a specific purpose or at a specific merchant or location. It could be a gift card, promotional value you earn through a referral or loyalty program, points earned through a credit card program, prepaid mall-branded gift cards, etc. These types of products are more than just a form of tender, they incentivize spend and behavior.

We’re also focusing heavily on fraud within branded currency. Fraud has been the number one thing that people have asked us to discuss, so we are going to have a huge session on it.

Podcast 93: John Donovan of Bizfi (Lend Academy), Rated: A

Industry pioneer John Donovan talks about why he is excited to be at the helm of one of the leaders in small business lending.

LendIt USA 2017: Sessions You May Have Missed (LendIt), Rated: B

Thanks to everyone who joined us at LendIt USA 2017. Our growth surpassed our expectations and we had close to 5,900 attendees at the two-day conference.

United Kingdom

NACFB offers members ‘unrestricted’ insurance cover for peer-to-peer (Bridging&Commercial), Rated: AAA

The National Association of Commercial Finance Brokers (NACFB) has announced it will now offer members unrestricted insurance cover for peer-to-peer (P2P) lending.

Under the terms of NACFB membership, brokers must have professional indemnity insurance covering them against mis-selling claims from clients.

UK and Japanese regulators agree to cooperate on fintech (Out-Law.com), Rated: A

On Thursday, the FCA and JFSA agreed a mutual referral system which will see the regulators provide assistance to fintech businesses that wish to expand UK operations into Japan, or vice versa.

The collaboration, which was confirmed by an exchange of letters, will also facilitate information sharing between the regulators on emerging market trends and regulatory issues pertaining to fintech, as well as information concerning referrals.

European Union

CSI globalVCard Expands Globally (PR Newswire), Rated: AAA

CSI globalVCard, a leading B2B payments company specializing in secure and rewarding payments, today announced that it has expanded services to Europe and has opened a London office, its first move in a planned worldwide expansion. The company plans to roll out its services across additional continents by year’s end. CSI will use the payment issuance capacity of PrePay Solutions (PPS), a subsidiary of Edenred (70% owned by Edenred and 30% by MasterCard), worldwide leader in prepaid corporate services. PPS will bring CSI its unique payment technology to issue and process all  CSI virtual cards and wire transfers in Europe.

Expansion outside of North America was sparked by CSI globalVCard’s growing demand from multi-national clients, their increased need for native currency payments, as well as customer service support across local time zones. The global payments market is estimated at $1.2 trillion, of which B2B payments account for $550 billion. Ten percent of organizations make between 20 and 50 percent of their payments to foreign suppliers, and organizations earning over $2 billion in revenue pay the largest percent of their payments to foreign suppliers.1

Canada

Vista to acquire D+H for fintech merger with Misys (Financial News), Rated: AAA

Private equity firm Vista Equity Partners has struck a deal to acquire D+H, a Canadian financial technology provider, with an eye to merging it with UK-based Misys to create a financial software company with $2.2 billion in revenues.

US-based Vista said in a statement today that it will pay C$25.50 per share in cash for D+H, including the assumption of debt, in a deal that values the Toronto-listed firm at 4.8 billion Canadian dollars.

Misys chief executive Nadeem Syed said the combination of the two companies gives them the opportunity to create a “global fintech powerhouse”.

That powerhouse would have about 10,000 employees and 9,000 customers, including 48 of the top 50 banks, the statement said.

Asia

Here’s Everything You Should Know About Alternative Lending In Asia (Forbes), Rated: AAA

Over the last 5-10 years, China, India, and Southeast Asia have leapfrogged from a cash-based society to one where mobile payments are common currency, skipping adoption of credit cards, savings accounts and other consumer financial products common in Western countries. The result: a population that’s smartphone-savvy but still largely unbanked, without the credit histories necessary to access traditional small business or personal loans. It’s a prime market for alternative lenders, who usually use alternative means to assess creditworthiness, foregoing traditional credit scores altogether.

Here is a brief taxonomy of the many types of alternative lenders currently operating in both Asia and the West.

According to Bloomberg, China has 2,200 P2P lenders alone, and its P2P lending market is valued at an estimated $100 billion.

Chinese tech giants have aggressively pursued synergies between different divisions of their sprawling businesses. For instance, Sesame Credit, Alibaba’s alternative credit scoring program, looks at the frequency and cost of a customer’s purchases on Alibaba’s mobile payments platform Alipay in order to determine creditworthiness.

Meanwhile, India’s alternative lending market is in a much earlier stage. Giant tech companies don’t yet dominate the scene, and so the balance-sheet lending landscape includes a large number of small specialists like EarlySalary (payday loans), ZestMoney (point of sale), and Buddy (targeted at students). There are only about 30 P2P lenders in the country, which is surprising for a country where nearly 40% of the population is unbanked, and therefore without access to traditional loans.

Southeast Asia has one of the fastest growing economies in the world, but the small- and medium-sized businesses (SMEs) that make it up have more limited access to financial credit than the global average.

In Singapore, the financial center of the region, the major alternative finance players in Singapore are peer-to-company (P2C) lenders: specialized P2P lenders that only provide loans for SMEs. Market leader Capital Match was founded in 2014, but says it has already paid out more than S$32m (US$22.5m) in loans.

Malaysia is doing its part to meet P2P companies like Funding Societies in the middle, having recently updated its financial guidelines to include P2P lending. Thailand has done the same, issuing a consultation paper on regulations for P2P lending last fall.

German Challenger Bank SolarisBank Goes to Asia (Fintech News), Rated: AAA

The financial services subsidiary of the Bertelsmann Group, Arvato Financial Solutions, and the Japanese investor SBI Group will invest in solarisBank in a partnership that promises significant cooperation potential across international markets. In total, the Berlin-based bank raises EUR 26.3 million in the series A financing, meanwhile seed investors FinLeap, Hegus and yabeo Capital participate as well.

As the young bank steps up its internationalisation efforts, new executives are being added to its leadership team: Roland Folz will join the Management Board as CEO, while Gerrit Seidel will take over as Supervisory Board Chairman from HitFox Group and FinLeap founder Jan Beckers.

solarisBank intends to expand its activities in European and Asian countries over the coming years, and will establish joint venture companies with the SBI Group in order to develop businesses in Asia.

Middle East

The real estate property crowdfunder with an ethical conscience (Zawya), Rated: A

As key professional in the Qatar real estate industry gather for the annual Cityscape exhibition in Doha,  MercyCrowd, a brand new type of property crowdfunding platform, will offer for the first time to people in Qatar international real estate purchases through crowdfunding.

MercyCrowd  is part of the Elite International Asset Group, an established international company promoting real estate investment in Europe with a specialty in the French and UK market.  However, what makes MercyCrowd uniquely different is the company’s core belief that sustainable growth can only stem from real assets that generate real increments and tangible benefits to a society.

Authors:

George Popescu
Allen Taylor