Thursday December 6 2018, Daily News Digest

Consumer Spending

News Comments Today’s main news: Zopa gets banking license. SoFi cuts mortgage business jobs. KBRA assigns preliminary ratings to CLUB Credit Trust 2018-P3. Money360 surpasses $1B in loan originations and closings. SoftBank is biggest startup story in 2018. Today’s main analysis: Rate hikes pause in 2019. LendingTree Debt Report November 2019. Today’s thought-provoking articles: LendingTree Debt Report November 2019. October was biggest […]

Consumer Spending

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United States

United Kingdom

International

Southeast Asia

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News Summary

United States

SoFi Cutting Jobs in Their Mortgage Business (Lend Academy), Rated: AAA

Late Friday Bloomberg reported that SoFi was cutting 7% of its staff, or around 100 jobs, in the company’s mortgage department. This is due to a change in strategy as to how they underwrite mortgage loans. Rather than underwrite loans themselves, as they have done since launching their mortgage business back in 2014, they will outsource the underwriting to a partner.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P3 (AP News), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P3 (“CLUB 2018-P3”). This is a $272.40 million consumer loan ABS transaction that is expected to close December 13, 2018.

The transaction has initial credit enhancement levels of 30.87%, 22.80% and 9.70% for the Class A, Class B, and Class C notes, respectively. Credit enhancement is comprised of overcollateralization, subordination of the junior note classes, a cash reserve account and excess spread.

This transaction is LendingClub Corporation’s eighth rated sponsored securitization, fourth of 2018 and the fifth sponsored securitization consisting of prime unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com.

Money360 Milestone: Surpasses $ 1 billion in Loans Originated & Closed (Crowdfund Insider), Rated: AAA

Real estate marketplace lender Money360 announced on Monday it has surpassed $1 billion in loans originated and closed since inception. The announcement comes just 11 months after the lending platform revealed it had hit $500 million.

Rate Hikes Pause in 2019; Performance of Credit Card Borrowers with Personal Loans (PeerIQ), Rated: AAA

US Q3 GDP showed 3.5% annualized growth, well above potential growth of 2%. Growth slowed from the blistering 4.2% pace in Q2 due to rising inventories and lower consumer spending:

Source: WSJ, PeerIQ
Source: VantageScore, PeerIQ

LendingTree Debt Report November 2018 (LendingTree), Rated: AAA

Nine months into 2018, Americans had a cumulative $3.93 trillion in non-mortgage debt. About a quarter of that debt is credit cards and other revolving debt, while the remainder is for car payments, student loans and other fixed-rate loans such as personal loans.

In just five years, Americans will have increased their debt by $1 trillion. Consumer debt eclipsed the $3 trillion mark in 2013. By comparison, the previous $1 trillion milestone — from $2 trillion to $3 trillion of consumer debt — took more than 10 years.

43.5% of Purchase Borrowers Received Mortgage Rates Under 5% Last Week (LendingTree), Rated: A

For the week ending Dec. 2, 2018, the share of borrowers with rates under 5% was the highest in two months, which may lend some support to a weakening housing market.

Source: LendingTree
Source: LendingTree

LendingTree’s State Migration Study Finds Americans Are Moving South (GuruFocus), Rated: A

LendingTree today released its State Migration Study on where Americans are interested in moving. The study looked at where people moving out of state are going and discovered that of the 12.1 percent of homebuyers across the country who change states, most plan to head south.

Florida is the No. 1 destination. Florida was the top new destination for 15 of the 50 states.

Texas residents love the Lone Star State. Texas had the highest percentage of residents looking to move within state lines — 93.4 percent of purchase mortgage requests from individuals in Texas were for properties in the same state.

Source: LendingTree

October was Biggest Month for Reg CF Since May 2016 (Crowdfund Insider), Rated: AAA

October was a big month for Reg CF campaigns, according to the StartEngine Index. In fact, October booked the most money raised using the crowdfunding exemption since the rule became actionable in May of 2016.

According to StartEngine, $10.9 million in funding was raised. Until October came along, this past July held the top spot at $10.7 million. The Index indicates that Reg CF has now raised $151.7 million since inception. The Food & Beverage industry remains the most popular sector to use Reg CF followed by Tech.

Source: Crowdfund Insider

Fintechs’ Take On Installment Payments Explodes Online (Forbes), Rated: AAA

Installment payments have been around for seemingly forever but a new crop of fintechs are offering it with a twist: the ability to pay off smaller purchases in installment payments that in many cases are interest-free.

And it appears to be resonating with scores of U.S. consumers judging from the brisk business installment payment services like QuadPay.com enjoyed during the kick off to holiday shopping season this past Thanksgiving weekend. David Sykes, chief operating officer at QuadPay.com said 35% of online Black Friday sales for one large merchant customer came via QuadPay. On average Sykes said its service accounts for around 20% of all the online transaction from its roughly 500 e-commerce partners.

QuadPay.com makes money via the merchant, getting a cut of the sales generated by its service. That enables it to offer interest-free loans to consumers wanting to purchase everything from Uggs to underwear. Sykes said the average value of the orders on the platform is $150. QuadPay takes 25% of that on day one and then spreads out the remaining payments every two weeks. Because the average installment payment is around $37 there isn’t too much risk of customers defaulting on the loan.  To prevent default it won’t let a customer use the service again if they were ever late with a payment. The executive noted QuadPay approves 92% of all applicants.

How the largest US financial institutions rank on offering the mobile banking features customers value most (Business Insider), Rated: A

In Business Insider Intelligence’s second annual Mobile Banking Competitive Edge study, 64% of mobile banking users said that they would research a bank’s mobile banking capabilities before opening an account with them. And 61% said that they would switch banks if their bank offered a poor mobile banking experience.

Source: Business Insider

Why Wealthfront is offering free financial planning (Financial Planning), Rated: A

Wealthfront is offering its planning services for free, effectively unbundling its software, and giving millions of Americans access to a financial roadmap.

The second largest independent robo is betting the firm can steer users into fee-based accounts after they interact with its software to come up with a financial plan. The freemium software uses the firm’s automated advice engine, Path, according to the firm.

Credit Karma’s Kenneth Lin on building a billion dollar brand (Tearsheet), Rated: A

Building a great service is hard but not impossible. But building a great service and making it available for free — that’s really hard.

Credit Karma seems to have figured out a way to do both. The company, with 85 million members in the U.S. and Canada, continues to roll out free, innovative financial products to its user base. It all began 11 years ago with a simple premise: to provide users with free access to their credit scores. From there, the company has rolled out a bunch of new products, including ID monitoring, tax preparation, a financial chatbot, auto finance, and unclaimed money.

Betterment launches tool to optimize cash savings (Tearsheet), Rated: A

Automated investment advisor, Betterment is rolling out “Two-Way Sweep”, a tool that can automatically “sweep” excess money from customers’ bank accounts into a Betterment account optimized to provide better returns for cash.

What’s behind this new product: Studies show that only one in three millennials is investing in the stock market. That means they’re holding a high percentage of cash. In fact, Betterment sees 30 percent of customers with cash balances of $20,000 on average. This excess in savings earns little to no interest. Betterment’s Two-Way Sweep is intended to take the hesitation out of deploying more money into investments by automating the process.

CommonBond Acquires NextGenVest to Help Reach Generation Z (Lend Academy), Rated: A

CommonBond, best known as a leading provider of online student loans, has made its second acquisition, NextGenVest, an artificial intelligence powered advice platform for Generation Z. NextGenVest helps high school and college students in New York, Chicago and Philadelphia with their college financial needs through a combination of human “money mentors” and AI-powered suggestions delivered entirely through text messages.

OppLoans Named a Best Workplace by Glassdoor for the Second Year in a Row (GlobeNewswire), Rated: A

Chicago-based fintech firm OppLoans has been honored with a Glassdoor Employees’ Choice Award, recognizing the best places to work in 2019. This marks the second year in a row that the personal lender has been named to this prestigious list in the Small & Medium Business category. The Employees’ Choice Awards program, now in its 11th year, is based solely on the input of employees, who elect to provide feedback on their jobs, work environments and companies on Glassdoor, one of the world’s largest job and recruiting sites.

Backstage Capital-Backed CapWay Moves to Atlanta As It Expands Its Digital Banking Offerings (Hypepotamus), Rated: A

According to 2017 statistics from the FDIC, 16 percent of households in Mississippi are unbanked, choosing instead to use “predatory services” like corner store check cashing in their neighborhoods.

Allen founded her first startup, an app development shop, while still in college. After moving to Silicon Valley, Allen realized it wasn’t just rural communities that were underserved by banks. Inner city areas across the country, most of which are home to majority Hispanic and African-American populations, are also affected. An FDIC survey found that more than 15 million adults in the U.S. go unbanked.

In 2016, Allen founded CapWay with co-founder and fellow Mississippian Timothy Lampkin. The mobile-first platform is aimed at younger generations (think older millennials and Gen Z) in those unbanked communities to help them break out of the predatory economy cycle.

Finicity Announces Partnership with Princeton Mortgage for Effortless Digital Mortgage Origination (Benzinga), Rated: B

Finicity, a provider of real-time financial data aggregation and insights, announced today it is working with mortgage banker Princeton Mortgage to automate borrower asset verification for lenders. The agreement will provide Princeton Mortgage loan officers and borrowers with a faster, simpler loan origination experience that reduces both paper chase and headache.

NBKC Bank fintech accelerator participant wins $ 1M (Biz Journals), Rated: B

Onward Financial Inc., a member of the first cohort in NBKC Bank’s Fountain City Fintech accelerator program, won a $1 million award from the Communities Thrive Challenge, which is put on by The Rockefeller Foundation and the Chan Zuckerberg Initiative.

United Kingdom

P2P Lender Zopa Granted a Banking License in the UK (LendIt Fintech), Rated: AAA

Back in 2005 Zopa quietly launched their P2P lending platform in the UK, the world’s first. It was the start of a lending revolution that has moved on to all corners of the globe. Today, a new chapter begins as the company announced that regulators have approved Zopa’s banking license. With that Zopa achieves another first: becoming the world’s first combined peer to peer lending platform and digital bank.

Zopa Says it Will Redefine Banking (Crowdfund Insider), Rated: AAA

Zopa explained that this is called the “mobilisation’ phase” as regulators put some restrictions in place. A full licence will be granted once it meets the conditions set by the regulators.

Zopa said it will begin its new service next year. The digital bank will include options such as a fixed term savings product protected by the Financial Services Compensation Scheme (FSCS), credit card and a money management app.

Pointing to a statement by the FCA that just “40% of UK adults have confidence in the financial services industry,” Zopa sees opportunity in becoming a digital bank unencumbered by green-screen legacy tech and unnecessary brick and mortar branches.

Zopa explained it would redefine banking with the following services:

  • Giving customers a fair deal as standard – with no catches like sign-up offers that aren’t available to existing customers or hidden fees and charges.
  • Making sure money management is simple and a real person is available to discuss
  • Going beyond ‘good enough’

Zopa: Bank launch won’t impact P2P rates (P2P Finance News), Rated: A

ZOPA has insisted its peer-to-peer lending rates will not be dictated by the savings products on offer when its bank launched.

It currently offers target returns of 4.5 per cent on its Zopa Core product and 5.2 per cent on Zopa Plus.

Thomas Cook to slip out of FTSE 250 index in quarterly review (The Guardian), Rated: A

Other companies expected to be promoted to the FTSE 250 are peer-to-peer lending platform Funding Circle, the retirement housebuilder McCarthy & Stone and the investment trusts Smithson and Woodford Patient Capital.

Funding the future of the UK PLC (Business Leader), Rated: A

Looking at 2017, we saw some encouraging trends and one of them is in terms of diversity and choice. We saw peer-to-peer lending grow at over 50%. It’s obviously coming from a smaller base as it’s a reasonably new form of lending, but 50% growth is a very strong outcome.

Tandem’s Journey Card strives to better users’ credit scores (Alt Fi), Rated: A

Tandem Bank has announced its Journey Card has assisted nearly three-quarters (72 per cent) of its users to first-time credit or is helping individuals with poor credit history get back on track.

Due to the higher risk users it targets, the credit card carries a reasonably expensive representative APR of 24.9 per cent.

Tandem says it hopes to help the 43 per cent of Journey Card holders who have poor credit history, some of whom have defaulted with other providers.

CrowdProperty Provides Performance Metrics Disclosing Lending Returns Using Brismo Methodolgy (Crowfund Insider), Rated: A

Peer to peer property lender CrowdProperty is now disclosing their performance metrics using Brismo’s (formerly known as AltFi) standardized reporting methodology. CrowdPropert states that it is the first property development platform to incorporate the Brismo process which is described as an independent standard.

UK housebuilders back new online property listing start-up (Financial Times), Rated: A

Some of the UK’s largest housebuilders are backing a new property portal that will launch next year in the latest attempt to challenge the two dominant market leaders, Rightmove and Zoopla.

Barratt Developments, Bovis, Persimmon and Redrow have signed up to list their homes with the start-up Rummage4Property, as have Countrywide and about 30 other estate agency groups.

ARBUTHNOT BACKS MBI TEAM WITH £2 MILLION FACILITY (Arbuthnot Latham), Rated: A

Arbuthnot Commercial Asset Based Lending (ABL) has supported a highly experienced Management Buy In (MBI) team, led by Paul Hampton, with a £2m invoice discounting facility to support Premier House Investment’s acquisition of Ralph Coleman International Ltd (RCI) and provide ongoing working capital, paving the way for the company’s exciting expansion plans.

KAMBO expands its reach with two native apps (Life Pulse Health), Rated: A

KAMBO is expanding beyond desktops to become accessible on our most coveted devices, our smartphones. With the introduction of two native apps, KAMBO’s lending platform will become one of the most flexible and diverse of its kind.

The KAMBO app is now available on iOS and Android, making it the first crypto-lending platform to have an app in the App store.

LendInvest Joins Ingard’s Buy to Let Panel (Crowdfund Insider), Rated: B

Ingard, a compliance network, brokerage, and lending packager specialist, announced on Tuesday online lending platform LendInvest has joined its buy to let panel. According to Ingard, members may now access the lender’s buy to let range direct by registering through LendInvest’s online portal

China

Ping An GammaLab Wins Global AI Machine Reading Comprehension Competition (Markets Insider), Rated: AAA

Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An” or the “Group”) is pleased to announce that OneConnect, a subsidiary of the Group, ranked first in one of the world’s most authoritative machine-reading comprehension challenges — the Stanford Question Answering Dataset 2.0 (SQuAD). GammaLab Institute of Artificial Intelligence (GammaLab), owned by OneConnect, scored 83.435, close to the human performance level of 86.831, way ahead of other companies in the challenge.

Another scenario is internet arbitration in universal financial inclusion. Small loan companies tend to turn to online arbitration, which is expensive and takes time to resolve, under the current peer-to-peer lending market. With the reading comprehension skill of GammaLab, the arbitrator will finish a case quicker, reducing the cost for arbitration.

International

International P2P Lending Volumes November 2018 (P2P Banking), Rated: AAA

Mintosleads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 473 million Euro.

I removed Unilend, as the platform has closed and the company has gone into receivership.

Source: P2P Banking

CORELOGIC LAUNCHES NEW AUTOMATED VALUATION SOLUTION TO HELP STREAMLINE MORTGAGE LOAN ORIGINATIONS (CoreLogic), Rated: A

CoreLogic, a global property information, analytics and data-enabled solutions provider, announced today the introduction of its Total Home Value for Originations AVM solution.

The new Total Home Value for Originations solution is specifically calibrated and packaged to improve efficiencies when performing property valuations during the purchase and refinance loan underwriting process.

Becoming a Digital Leader: 5 Customized Fintech Strategies That Work (Cutomer Think), Rated: A

According to EY study, fintech startups have raised $41.7 billion in the first half of 2018 across the globe. So, what fintech strategies need to be implemented to transform the consumer experience on the market?

  • Consumers first
  • Rebuilding trust
  • Lack of credibility
  • Partnership instead of competition
  • Improving the quality of lives

Nasdaq buys Canadian alternative data provider Quandl (Finextra), Rated: B

Nasdaq has acquired Quandl, a Toronto-based provider of alternative and core financial data. Terms of the deal were not disclosed.

Australia

Crypto Lending Services Coming to Australian Markets (NewsBTC), Rated: AAA

Helio Lending is the first independent crypto lending company to launch on Australian shores according to reports.

The company claims to be in the position to offer 50% more spending power to clients than they would have by holding on to their crypto assets.

Lakeba Invests in Lodex to Become Latest Capital Equity Partner (CryptoTechNews), Rated: A

Lodex, Australia’s first auction-style loans and deposits marketplace leader, today announced it has secured capital investment from Lakeba Group, an established Australian technology innovator.

India

India catches up with China, records 2nd highest fintech adoption rate: Here’s all you need to know (Financial Express), Rated: AAA

India is finally catching up with its neighbour and biggest competitor China. The country now has the second highest fintech adoption rate of 52%, only behind China’s 69%, which also throws a huge opportunity for India to not only make best out of financial services sector but also to disrupt it.

Southeast Asia

How Japan’s SoftBank and Its $ 100 Billion Vision Fund Became the Biggest Startup Story of 2018 (Inc.), Rated: AAA

UberWeWorkSaudi Arabia. The biggest startup stories in 2018 shared one long and influential thread: Japanese conglomerate SoftBank, its $100 billion tech investment fund, and founder Masayoshi Son.

The Vision Fund is backed by several prominent investors, including Apple and the government of Abu Dhabi, but its largest financial partner is Saudi Arabia’s sovereign wealth fund. The country’s government, under crown prince and de facto ruler Mohammed bin Salman, contributed 45 percent of the $100 billion, and in October announced plans to put another $45 billion into a second Vision Fund.

P2P lending can plug Southeast Asia’s US$ 175B business finance gap (Yahoo! News), Rated: AAA

Peer-to-peer (P2P) lending has emerged as a popular alternative financing option for small and medium enterprises (SMEs) in Southeast Asia. In 2016, P2P lending generated US$115.01 million, which accounted for more than half of total market share of Southeast Asia’s alternative financing market. In an evolving financing landscape, P2P lending complements the services banks provide and support the region in realising its growth and development potential. The very fact that investment in the region’s startups tripled from US$2.52 billion in 2016 to US$7.86 billion in 2017 is a testament of the vast potential in Southeast Asia’s FinTech startups.

Businesses, largely SMEs, benefited from such platforms too. According to a Deloitte report, SMEs contribute to 40% of Southeast Asia’s gross domestic product (GDP) and hiring 70% of the region’s workforce. Despite the importance of SMEs regionally, support is generally lacking, especially in terms of financing. This is due to strict banking regulations imposed after the 2008 global financial crisis, which have made banks and most financial institutions increasingly risk-averse. This is evidenced by McKinsey Global Institute’s report stating that 39 million Southeast Asian SMEs (or 51%) lack access to credit.

Malaysia may issue more equity crowdfunding, P2P lending licences in 2019 (Asia Asset Management), Rated: AAA

Malaysia’s securities regulator may license more operators of equity crowdfunding (ECF) and peer-to-peer (P2P) lending platforms next year, after current operators raised more than 200 million ringgit (US$48.25 million) for small firms since the industry was legislated in 2015, according to its chairman.

Singapore’s Milieu Insight raises US$ 730K to enhance market research platforms (e27), Rated: A

Singapore- and Thailand-based marketing software startup Milieu Insight has announced that it has raised S$1 million (US$730,000) from a group of private investors including former Rippledot Capital Director, Ravi Ravulaparthi.

Korean Fintech Startup HonestFund Attracts $ 12 Million Series B Investment (PR Newswire), Rated: A

HonestFund (CEO: Sanghoon Seo) has announced that the company, one of the largest marketplace lending players in South Korea, has successfully raised $12 million Series B investment.

Investment was led by Korea’s leading VCs and investment companies, such as Dunamu & Partners, MurexPartners, KB Investment, TL Asset Management, Bass Investment and HB Investment. This brings HonestFund’s total investment to $21 million, making it one of the most valuable Fintech companies in South Korea.

Canada

How experimental tech drives TD Bank’s mobile app (American Banker), Rated: AAA

While many banks have sought to employ experimental technologies when dealing with customers, including predictive virtual assistants, geolocation and advanced data analytics, few have brought all those pieces together to the degree used by TD Bank.

The bank has used such technologies live in production and won significant customer adoption, with its mobile app becoming No. 1 in the finance category in Canada for both iOS and Android. Mobile customers use the app 17 times a month on average, a figure that is growing.

OnDeck to merge Canadian operations with Evolocity Financial Group (Seeking Alpha), Rated: A

OnDeck (NYSE:ONDK) will combine its Canadian lending operations with Evolocity Financial Group, a private, Montreal-based online small business lender, to create OnDeck Canada.

Africa

Peer-to-Peer Lending as a Means of Propelling Startup Growth (Modern Ghana), Rated: AAA

Capital is the livewire of any business, especially for startups and established small businesses. Hence, they are always seeking for some additional funding that is too small for an angel investor to get a return for their effort. Banks also think it’s not worth their time. That’s where peer-to-peer (P2P) lending is working to fill that lending gap. This model may be a solution for many small businesses that are struggling with just tapping smaller funding amounts.

Authors:

George Popescu
Allen Taylor

Tuesday November 27 2018, Daily News Digest

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments Today’s main news: LendingClub hits $1B in CLUB certificate issuance. Zopa boosts Augmentum Fintech fund returns. Monzo breaks record on crowdfunding round. Yirendai’s critical stage to regain growth. Judo gets $350M in funding. Today’s main analysis: How late-cycle expansions turn into recessions. Today’s thought-provoking articles: LendingClub does more lending during holidays. Turning LendingClub into a financial health club. Why […]

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments

United States

United Kingdom

India

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News Summary

United States

LendingClub Reaches $ 1bn in CLUB Certificate Issuance (Lend Academy) Rated: AAA

LendingClub has seen issuance of their new CLUB Certificate reach $1bn in less than a year after first announcing the pass-through security product last December at their investor day. The CLUB Certificate was created to make it easier for institutions to invest in LendingClub originated loans.

Loan for the holidays: Lending Club loans out more during holiday shopping months (Thinknum Media) Rated: AAA

This year was a record-breaking season for holiday shopping, as online spending surged 23.6% according to Adobe Analytics.

But where is all that money coming from? While some consumers saved up for the season, others might have turned to loans, such as ones offered at Lending Club ($NYSE:LC), to pay down huge gifts or refinance debt from credit card spending.

Outside of March 2016 — a month during an unusual stretch of time right before its chief executive Renaud Laplanche stepped down and a federal subpoena came in — Lending Club typically has the most loans issued by dollar amount in the months before the holiday season, according to data tracked since 2013.

Source: Thinknum

LendingClub CEO Working to Turn It Into a Financial Health Club (Web Pro News) Rated: AAA

The CEO of LendingClub, Scott Sanborn, says that they are really looking to make membership in the club mean something and are working to take Lending Club and turn it into a ‘financial health club’ that will help people successfully manage expenses. He says that LendingClub helps by shining a spotlight on credit card debt which is the first step to doing something about it.

A Looming Crisis in People’s Overall Financial Health

We are seeing really an epidemic happening which is incomes have been stagnant for more than 20 years. All of people’s major expenses, healthcare, college, housing, is going up and it’s creating a real looming crisis in people’s overall financial health and it’s something that people just aren’t talking about. Close to half of Americans have credit card debts and they are more than twice as likely to talk about spousal infidelity than they are about the fact that they have credit card debt that they need to manage. We believe that by shining a spotlight on the problem it’s the first step to helping people do something about it.

Top fintech VCs explain how PayPal missed a golden opportunity and why they wouldn’t invest in LendingClub today (Business Insider) Rated: AAA

PayPal is arguably one of the biggest success stories to come out of Silicon Valley in the last 20 years. It launched the careers of Peter Thiel, Elon Musk, and Max Levchin and paved the way for other members of the “PayPal mafia” to make seed investments in a next generation of startups.

“OnDeck and LendingClub have scaled, strong businesses now, but you’d never invest in those companies as startups today,” Harris said. “I don’t think you would look at unsecured personal lending or small-business lending, where you have to go out and acquire customers in the wild, with no special sauce. That’s 10-year-old thinking.”

The current model many VCs advocate is for companies to find ways to offer additional services, like loans, to existing customers. Acquiring new customers can be expensive, and there’s a competitive advantage when you underwrite or target new services to existing customers, because they know more about them.

PeerIQ’s Lender Earnings Webinar; Bank Exec Comments on the Credit Cycle (Peer IQ) Rated: AAA

One of the main themes that we explored in the LEI was how late we are in the credit cycle. Most C-level executives were extremely are sanguine on the economy but are nonetheless taking precautions. PeerIQ’s view is “The good news — and the bad news — is that conditions don’t get better than they are now.” We recommend reviewing Bloomberg Julie Verhage’s “US Banks See Good Times Ahead Even as Many Prep for Downturn” for more.

Source: Peer IQ

How Late-Cycle Expansions Turn into Recessions

The current US expansion that started in June 2009 is the longest on record at over 113 months. Late expansions are characterized by low unemployment, high consumer confidence, high asset values. We currently observe a near 50-year low unemployment rate, near record high consumer confidence, and the highest level of consumer credit outstanding (although well below peak per-capita debt levels).

Ironically, it is these solid economic indicators that are responsible for the party coming to an end. In a simplified model, credit availability expands to the marginal borrower (e.g., new entrants, cov-lite corporate loans, thin-file credits, etc.) just until the marginal consumer or corporate loans creates more losses than expected. Lenders feel the pinch on credit performance and on funding due to rising rates. Lenders individually tighten lending leading to a reduction in the supply of credit on an aggregate basis.

PeerIQ’s Q4 2018 Lending Earnings Insights Report (Lend Academy) Rated: A

PeerIQ released their Q4 2018 Lending Earnings Insights Report which points to a number of themes showing the economy is strong but CEOs are striking a cautious tone. Delinquencies and defaults continue to be low as consumers have seen their wages rise and taxes drop. Lenders are increasing reserves as they anticipate credit to renormalize in the near future, saying the economy right now was too good to be true.

Read the Full Report here.

Excerpts:

Regulators are increasingly focusing on the greater role of non-banks in consumer lending.Large money center banks continue to pull-back from riskier loans such as small business and consumer lending. Large banks instead have increased their credit facility volume 6x since 2010. FDIC Chair Jelena McWilliams cites the significant role of non-banks in origination as potential for systemic risk. The FDIC is contemplating granting ILC charters to non-banks – a major shift.

Delinquencies and charge-offs in FinTech asset classes are near all-time lows, although charge-offs on prime credit are increasing. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. The change in LendingClub’s charge-off estimates across loan grades was mixed. Charge-offs on grades B and C are estimated to be higher by 28 bps and 16 bps respectively QoQ.

Small Businesses Are Poised for Growth, but Are Lenders Ready? (Business Wire) Rated: AAA

Source Business Wire

Betterment, Merrill Edge, Fidelity’s Go Lead the Pack in Digital Advice Branding, Claims Cerulli (Financial Advisor IQ) Rated: A

Robo-advice pioneer Betterment is the pack leader in digital platform awareness among investors, a new Cerulli Associates study reveals. But Merrill Lynch and Fidelity aren’t far behind, the study shows.

Among the more than 5,500 people polled, the Betterment brand was known by 15% of respondents, Merrill Lynch’s Merrill EDGE by 13%, and Fidelity’s Go by 12%. Trailing the three frontrunners was Charles Schwab’s Intelligent Portfolios and Vanguard’s Personal Advisor Services, which were each recognized by 10% of respondents, the study reveals.

For its digital platform marketing awareness study, Cerulli polled investors under the age of 45 earning more than $125,000 annually and with more than $250,000 in investable assets.

5 Business Loans You Can Get Without Being Profitable (NAV) Rated: A

With the Bureau of Labor Statistics reporting over 415,226 startup firms less than 1 year old in 2017, it’s apparent that this category of business will need funding like never before. However, business loans are tricky. On hand, they tend to offer a larger line of credit to companies than personal loans or lines of credit. On the other hand, qualifying can be difficult and often requires you to provide at least two years of documentation that you are profitable.

For the brand new business that hasn’t managed to turn a profit (yet), what is left? How can you get a cash infusion into your business in time to expand, add employees, support a product launch, or refinance existing debt? The following loans are a bit non-traditional, but just might be exactly what you are looking for in your quest for funding during your startup years.

TD Bank Launches New Digital Mortgage Experience Powered by Roostify (Business Wire) Rated: A

Roostify, a digital lending platform provider, announced that TD Bank, America’s Most Convenient Bank®, has leveraged Roostify’s technology to provide customers with a digital mortgage offering. This digital experience combines the latest in lending technology with a human-centric approach that gives TD Bank’s customers an accelerated, low-stress path to home ownership.

The deployment now provides prospective homebuyers with useful tools to assist them in finding a loan that fits their needs and budget. Leveraging Roostify’s proprietary DecisionBuilder lead tool, TD Bank’s Digital Mortgage allows consumers to explore which loan products they qualify for, right from a simple-to-use web page. Consumers can then move on to apply for their chosen loan in minutes, and follow a streamlined, all-digital process for moving their loan through closing. With easy access to TD Bank’s expert loan team, homebuyers can enjoy both the convenience of a digital solution and reassurance of expert guidance as they navigate one of the most significant transactions of their lives.

The Lending Alternatives Hopeful Investors Should Know Inside And Out (Forbes) Rated: A

People buy real estate for many reasons — generating cash flow, a tax write-off, appreciation value. Some of the greatest profits are made when buying real estate in a down market. Seasoned investors and fortunate newcomers who purchased coastal residential property from 2012-2017 are sitting on healthy equity appreciation as well as competitive interest rates in the 3.5-5% range.

The traditional path to buy a property is to obtain financing through banks, credit unions or a mortgage company. Following the 2008 housing crisis, traditional lenders implemented more strict guidelines: Stellar credit scores from 740 and above, stable employment, a low debt-to-income ratio, six months or more of liquid reserves.

For hopeful investors unable to meet these demands, alternatives are to pay all cash or to finance the purchase using hard money financing or a private lender. By utilizing one of these two methods, buyers also do not have to be concerned with the mounds of paperwork lenders requested. There are some advantages and disadvantages by using either type of alternative financing.

How Marcus by Goldman Sachs took to the streets of New York to market its high yield savings account (Tearsheet) Rated: A

Marcus, the online consumer bank by Goldman Sachs, has been running a man-on-the-street ad campaign about recent research the company conducted. According to the survey, 60 percent of Americans with savings accounts don’t know the interest rate on their savings account, and *more than half* of Americans with savings accounts (56 percent) opened theirs without exploring other options.

Dustin Cohn, head of brand and marketing communications at Marcus, joins the podcast to talk about the survey and why Marcus chose interest rates as a differentiator. We unpack the recent advertising campaign and explore the recent acquisition and integration of personal finance app, Clarity Money.

Ross: Easy money and the rise of ‘neo banking’ (My NorthWest) Rated: A

Banks are entering a whole new era. It’s called neo banking. Because it’s so “neo.”

You just sign over your paycheck, and suddenly you can buy things with a wave of the phone. As far as I can tell, you just look romantically at what you want to buy – and it’s yours!

You can even get loans. But it’s friendlier because neo banks don’t have loan officers who look at your income statement and say “Ha ha ha, you’re kidding!”

United Kingdom

Zopa helps boost Augmentum Fintech fund returns (Peer2Peer Finance) Rated: AAA

ZOPA’S latest funding round has boosted the value of Augmentum Fintech’s portfolio, helping the fintech investment fund report net asset value growth of 5.1 per cent in its maiden financial results.

UK-listed Augmentum Fintech unveiled its first financial results on Monday since launching in December 2017. It reported that a recent £60m private fundraise by Zopa had boosted the value of its stake in the lender by £3.5m to £22m.

Augmentum Fintech Sees Portfolio Rise In First Interims Since IPO (Morning Star) Rated: A

Augmentum Fintech PLC reported its first interim results Monday since listing on the London Main Market in March.

In the period from incorporation on December 19 last year to September 30, the fintech venture capital investor had a net asset value total return of 5.1%.

At September 30, Augmentum Fintech’s NAV per share was 104p. The company’s net assets at September 30 totalled GBP97.8 million.

The company’s portfolio fair value increased 62% since the company listed in March to GBP53.9 million on September 30 from GBP33.3 million on March 13.

Monzo confirms record-breaking UK fintech crowdfunding round (City AM) Rated: AAA

Digital bank Monzo has today announced it will be heading back to the crowd for the last chunk of its series E fundraising round, with a target of up to £20m.

The raise, first reported exclusively by City A.M. in August, will be the largest fintech crowdfunding round in the UK to date.

Going live on Exeter-based platform Crowdcube, existing Monzo investors will get early access to the round from 3 December. The round will then be opened up to other Monzo customers, who can invest up to £2,000.

Banking app Monzo explores expansion into high-cost loan products (The Telegraph) Rated: A

Monzo, the financial technology start-up,  is considering launching loans aimed at “the Wonga segment” of the market, its chief executive Tom Blomfield said.

Mr Blomfield said he hopes in future to offer loans to people with poor credit scores who may not be able to access more traditional loan products.

UK Competition and Markets Authority Questions PayPal Acquisition of iZettle (Crowdfund Insider) Rated: A

The UK Competition and Markets Authority (CMA) has issued a statement on the PayPal acquisition of iZettle – an event that was announced in early 2018 and closed in September. PayPal purchased Sweden based iZettle for $2.2 billion as the company seeks to gain access to iZettle’s point of purchase credit platform.

The CMA stated:

“… the CMA has found that PayPal could face insufficient competition in the UK after acquiring its market-leading rival. The finding raises concerns that the merger could result in customers, which include small and medium-sized businesses, paying higher prices or receiving a lower quality service.”

The CMA added that iZettle could have provided strong competition for PayPal if the company had not moved to take over the Fintech.

NatWest digital loan ceiling lifted to £700K (FinExtra) Rated: A

NatWest has today announced the launch of a new digital platform which will be available to all NatWest business and commercial customers allowing them to apply online for secured and unsecured loans of up to £750,000 – the largest digitally available loans in the industry.

The new platform, available to all business and commercial banking customers who use online banking, will allow applicants to complete the process in a matter of minutes, with a decision being communicated to customers usually within 24 hours, sometimes immediately. This fully digitised application process streamlines the customer experience and reinforces NatWest’s position as the UK’s leading commercial lender.

NatWest’s development underlines the bank’s commitment to further improving its digital offering and builds on the success of its ESME Loans platform, which provides loans of up to £150,000, Mettle – the standalone digital business current account, and LenderComm, the first production use of blockchain in the syndicated loan marketplace.

Arbuthnot Commercial Asset Based Lending supports acquisition of Euxton Tile Supplies Ltd (Bridging Loan Directory) Rated: B

Arbuthnot Commercial Asset Based Lending (ABL) has supported the acquisition of Euxton Tile Supplies Ltd (Euxton) by Earle Group with a £2m asset based lending facility, comprising a £1,250,000 confidential invoice discounting line and a £750,000 cash flow strip to provide the desired level of headroom in the transaction.

Wonga to automate compensation claims (TNT Magazine) Rated: A

Wonga, the payday lender that went into administration this August, plans to automate its compensation claims process – sparking fears that customers will lose out. Accounting firm Grant Thornton is in the process of winding up Wonga and is legally obliged to assess the claims of all customers who believe that they have been mis-sold loans.

The Guardian reports that in a bid to cut costs the administrators are creating an automated ‘adjudication tool’ that will decide which claims to pay out on, rather than processing each claim manually.

In its October letter to creditors, Wonga said that it had been receiving roughly 200 to 500 compensation claims every day after it went into administration on 30 August. Before that date the company had received 24,000 complaints from customers and a further 9,500 had been escalated to the Financial Ombudsman Service.

Proplend Milestone: Surpasses £50 Million in Online Lending (Crowdfund Insider) Rated: A

Less than six months after surpassing £40 million in online lending, UK based peer to peer lender in the property space, Proplend, announced on Monday it has now reached £50 million in online lending. According to the lender, all loans are commercial property backed, comprising a mix of bridging and mortgage lending risk-adjusted returns, which were funded by the lending platform’s growing band of Classic account, Pension account, and ISA “Lenders.” Proplend also revealed:

“By circumventing the traditional banking system, our Lenders have access to secured, inflation-beating fixed income returns whilst providing creditworthy commercial borrowers with an invaluable source of fast, flexible, interest only alternative funding. Having facilitated its first loan in 2014, Proplend has since accommodated over 50 commercial facilities, each loan typically funded within 24 hours by more than 100 participating Lenders. With a maximum loan term of 5 years, 20 loans have fully repaid to date with more than £15m capital returned and over £4m interest earned across the book – much of it tax-free.”

China

Yirendai Is At A Critical Stage To Regain Growth (Seeking Alpha) Rated: AAA

Yirendai Ltd (NYSE: YRD) released the third quarter 2018 earnings on November 12, with diluted Earnings per ADS of RMB2.43 (USD$0.35), decreased from USD 0.5 from second quarter. Considering the application of ASC 606, the adjusted earnings per ADS (if ASC were not adopted) is RMB 5.89 (USD 0.86), increased from RMB 4.91 in the same period from last year.

  1. The volume of newly originated loans has been decreasing, more than the loan volume decrease of the industry. We can compare YRD’s loan volume with the industry, as well as some competitors, as below.
    Source: Seeking Alpha

WeiyangX Fintech Review (Crowdfund Insider) Rated: A

Ping An Invests $47 million in Berlin-based Fintech Startup Finleap

The Ping An Insurance Group’s Global Voyager Investment Fund led a €41.5 million ($47 million) investment towards Berlin-based Fintech company Finleap.

Internet Finance Association of Jiangxi Province Issues P2P Exit Guidelines

On November 16, the Internet Finance Association of Jiangxi Province issued the “Guidelines for the Exit of Online Lending Intermediary Organizations in Jiangxi Province (Trial)”, stating that online lending institutions should put the rights of protecting lenders at the top of their exit work and minimize the loss of lenders. The guidelines specifically mention that when a P2P institution exit, it needs to take eight steps, namely:

(1) to file an application for withdrawal;

(2) to set up an exit work leading group;

(3) to issue an exit notice and close some platform functions;

(4) to prepare a business list of circumstances and formulate an exit plan;

(5) submit an exit plan and other related materials;

(6) publish relevant information such as the exit plan;

(7) implement the lender’s funds as planned, and steadily settle the stock items;

(8) completion of the exit.

European Union

Lendingblock Receives In-Principle Licence as DLT Provider in Gibraltar (Crowdfun Insider) Rated: AAA

Securities lending platform for digital assets Lendingblock has issued a statement indicating that the Gibraltar Financial Services Commission (GFSC) has made an in-principle decision to grant the firm authorization as a Distributed Ledger Technology (DLT) provider. Lendingblock adds that it continues to work closely with the GFSC as it seeks the full DLT licence.

Lendingblock says that following this decision, and the successful testing period, the Lendingblock platform is open for institutional onboarding in preparation for launch.

Market participants are now able to sign up for access and will be able to commence borrowing and lending  BTC, ETC, BCH, and LTC beginning early next year.

Digital lenders ‘must keep investing to grow’ (IBS Intelligence) Rated: A

Research from digital ID specialist Mitek has concluded that there is a huge opportunity for digital lenders to grow, if they continue to invest in digitisation.

The findings have been published as a whitepaper, authored by fintech research practice Autonomous NEXT. Titled European Digital Lenders, it looks into the state of the digital lending market in Europe.

He said the report found that venture capital investment is still flowing into the space and is set to hit $800m in Europe: “The UK alone has originations of over $6bn, and Europe-wide, the addressable market is $150bn – with current digital lender revenues estimated at $400m,” he added. “Moreover, the market shows impressive originations growth, with a 60% CAGR since 2013.”

Australia/New Zealand

Australian challenger bank Judo gets $ 350m funding boost (Fintech Futures) Rated: A

Melbourne-based challenger bank Judo Capital is edging towards a bank licence with a $350 million debt facility agreement with firm Credit Suisse.

The bank shared the news with Business Insider. David Hornery, co-founder and co-CEO of Judo, says the facility will provide further depth to Judo’s funding for Australian SMEs.

Short-term loan, long-term debt: Superloans under investigation after slew of complaints (Stuff) Rated: A

Short-term money lender Superloans has come under attack from people who say they target poor and vulnerable consumers, charge extremely high interest rates, and resort to illegal means for recouping their money.

The Commerce Commission has launched an investigation into Superloans after it received more than 20 complaints against the company since 2013 – several from financial advisors.

Copies of the complaints, obtained under the Official Information Act, reveal one complainant alleged Superloans threatened to take repayments out of a person’s pay cheque, illegally.

Another woman complained that a Superloans’ employee only looked at her bank statements before approving her loan application, and did not check her credit.

India

IvyCap Ventures makes first investment in P2P lending through Lendbox (The Ecomonic Times) Rated: AAA

Credit marketplace LendBox has secured the first investment by a large institutional investor in India’s peer-to-peer lending space, raising Rs 6 crore in a pre-series A financing round.

Major Trends Witnessed this year in Fintech (Entrepreneur) Rated: A

Online lending platforms have been quite phenomenal in filling in the credit void within our country. But how accomplished are they in doing so? MSME loans are considered as the trickiest element of lending given the sheer opacity that exists within the sector. This opacity has decreased the share of scheduled commercial banks in MSME credit from 95% to 90% between December 2015 and March 2018. The credit growth turned negative post-demonetization. During the same period, the share of loans by NBFCs (which are essentially used by online lending platforms) nearly doubled growing with an annual average of 35 per cent, largely because of cutting-edge technologies such as Artificial Intelligence and Big Data.

5 ways to reduce risk in P2P lending (The Economic Times) Rated: A

Lending money is a risky affair. However, there are ways to minimize the risk. Since peer-to-peer (P2P) lending is a relatively new concept and the RBI regulations for the P2P sector are barely about a year old, here are five effective ways in which you can reduce the risk to ensure getting your money back. Of course, with interest.

Understand the platform
You should try to understand how the online P2P model works before lending money on it. An investor should be aware how the money is lent on the platform and what are the risks involved in lending money on the platform.

Do not hesitate to ask the P2P player about the overall volume, defaults, recovery process and likely returns. You can do your own research or simply contact the P2P company through emails, chats or phone calls.

Do not go overboard
Sure, P2P platforms can offer your higher double-digit returns. But that doesn’t mean you should lend your entire in P2P lending. Choose the amount you wish to invest and then diversify,” says Raghavendra Pratap Singh, Co-Founder, i2ifunding.

Ex-Infosys CFO & Director V. Balakrishnan Joins Association of NBFC P2P Platforms as Patron Member (Indian Web) Rated: B

Within a month after the formation of NBFC-P2P industry bodyAssociation of NBFC P2P Platforms, the association today announced the joining of finance industry veteran & Former Infosys Chief Financial Officer V Balakrishnan as Patron Member.

P2P lending industry players have formed association to represent the Indian NBFC-P2P industry at various national as well as at international forums. The P2P operators participating in the operations are OML P2P, Monexo, PaisaDukan, Finzy, Cashkumar, Liquiloans, Micrograam, Lendsmartp2p, Peerlend and Indiamoneymart. The association aims to establish formal lines of communication between various government and regulatory authorities on matter of compliance and to create awareness about the industry and to work towards enhancement of public trust in this sector.

Asia

HonestFund Raises $ 12.2 million (USD) in our Series B round (Honestfund Email) Rated: AAA

HonestFund is one of the largest peer-to-peer lending players in South Korea. We were founded in 2015 and currently have about USD 300 million in cumulative originated loans. We have recently raised USD 12.2 million in our Series B round from the top VC firms, IT giants, and the largest financial institutions (i.e. Shinhan Bank and Hanwha Life Insurance) in South Korea.

Canada

Unlicensed online payday lenders are operating in New Brunswick (Global Newswire) Rated: A

Unlicensed online payday lenders are targeting New Brunswickers, warns the Financial and Consumer Services Commission.

FCNB has been receiving complaints from consumers about inappropriate collection practices by payday lending businesses not licensed to operate in the province.

“We are hearing that these businesses are contacting consumers who have fallen behind in their payments at their place of employment and in some cases, threatening to seek repayment from their employer. Sometimes they are contacting them up to 50 times a day,” said Alaina Nicholson, director of Consumer Affairs at FCNB. “It is against the law for a payday lender in the province to contact you at your place of work, or to contact your employers or coworkers to collect a payday loan that is late.”

Subscribe Technologies Upgrading Lendertech With Peer To Peer Lending Service And Integrating Platform Into Gingerly Marketplace (Stockhouse) Rated: A

Subscribe Technologies Inc. is pleased to announce it is upgrading the Company’s Lendertech financial technology platform with financial service auction and matchmaking features and has begun the initial phase of integrating the technology with the Company’s flagship Gingerly small business software application marketplace.

LenderTech facilitates greater and broader access to capital for those in need, including across a number of traditional and emerging areas such as mortgages, commercial lending, auto loans, student loans, and small business loans, among others.

As intended, our development team is now integrating this money lending service into the Gingerly software application marketplace and dashboard, with the addition of new Peer-to-Peer matchmaking features, designed for SMEs to have greater and faster access to lenders in one clean and simple to use interface.

IOU Financial Inc. Joins the FINSYNC Lending Network  (PR Newswire) Rated: B

 IOU FINANCIAL INC., a leading online lender to small businesses (IOUFinancial.com), is pleased to announce its strategic partnership with FINSYNC, Inc. (“FINSYNC”).

Small businesses of all types rely on FINSYNC to visualize, manage and project cash flow and analyze loan options.  IOU’s non-collateralized financing product has been assimilated by FINSYNC, enabling users who apply for financing through FINSYNC to quickly access IOU’s affordable, flexible financing for working capital and expansion.

Africa

Nigeria’s mixed signals on fintech (Euromoney) Rated: AAA

Earlier this year, the country’s central bank and the Nigeria Inter-Bank Settlement System opened a regulatory sandbox to enable budding fintech companies to develop new products freely and securely, becoming one of the first African countries to do so.

Even before that launch, Nigeria was frequently touted as the continent’s next big fintech hub, set to compete with South Africa and Kenya.

Bitcoin exchange NairaEx, online lender KiaKia and invoicing platform Payant are just three of the firms that have made a name for themselves in short order.

Authors:

George Popescu
Allen Taylor

Monday March 19 2018, Daily News Digest

Monday March 19 2018, Daily News Digest

News Comments Today’s main news: Robinhood valuation tops $5B. MarketInvoice reaches 2B GBP milestone. Lendy reaches 20K investors. Senmiao Technology prices IPO at low end. Merchant Advance Capital closes $30M debt facility. Today’s main analysis: CLUB 2018-NP1 Deep Dive. Today’s thought-provoking articles: Helena, Montana wants to be tech talent destination. More SMEs plan to apply for finance. The third age of credit. Australian […]

Monday March 19 2018, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

International

Australia

Other

News Summary

United States

Valuation for Robinhood, Maker of App That Offers Free Stock Trades, Tops $ 5 Billion (Wall Street Journal), Rated: AAA

Robinhood Markets Inc. is set to be valued at about $5.6 billion in a new funding round, according to people familiar with the matter, a fourfold increase in just one year that reflects the stock-trading app’s soaring popularity among millennials.

The Silicon Valley startup is in the final stages of securing around $350 million from a group of investors led by Russian firm DST Global, according to the people familiar with the fundraising.

Helena, Montana wants to be a new destination for engineers after landing a SoFi office (VentureBeat), Rated: AAA

With a population of slightly more than 31,000, Helena is one of the country’s smallest state capitals. It’s not surprising, given that the entire state of Montana is home to only 1 million people. In addition to being tiny, Helena is also incredibly remote. The closest large metropolitan areas are Salt Lake City and Seattle, which are both nearly 500 miles away.

Those qualities shouldn’t make Helena a candidate to house a large engineering team for one of Silicon Valley’s most valuable unicorns. However, SoFi, the online personal finance company focusing on student loans, mortgages, and personal loans, has multiple locations in the city that together house roughly 140 employees — many of them programmers and engineers, as I learned on a trip last month to Helena.

Amazon’s footprint grows, CLUB 2018-NP1 Deep Dive (Peer IQ), Rated: AAA

Amazon continued its foray into the lending sector this week by offering a a robo advisor. Amazon is partnering with banks where they lack a clear regulatory swim lane.

CLUB 2018-NP1

Source: Peer IQ

This is the largest near-prime deal that has been issued so far. The deal has 8,237 loans more than the CLUB 2017-NP2 deal and the average loan balance is $422 lower. The weighted average FICO on LC’s near-prime deals is 639, lower than that on AVNT 2017-B.

Source: Peer IQ

Kushners’ Cadre Startup Benefited From Misleading Rent Filings (Bloomberg), Rated: A

Cadre owned about 60 percent of three rent-regulated buildings in Queens sold by Kushner Cos. in April 2017. The $59 million price tag was an 80 percent premium over what they paid in January 2015, property records in New York show. It was the first known deal that Cadre, then a fledgling company, took from purchase to sale, and the high rate of return in a short time was touted as a proof-of-concept for its web-based investing platform.

Kushner Cos., Cadre’s operating partner at the properties, told the city the buildings had no rent-regulated tenants when applying for construction permits to update the buildings in 2015 but tax records filed later showed almost 100 such residents, according to a report by the Associated Press. The number of tenants fell precipitously prior to the buildings’ sale, the wire service reported.

 

U.S. Appeals Court Voids Obama-Era ‘Fiduciary Rule’(Financial Advisor), Rated A

A federal appeals court on Thursday voided the U.S. Department of Labor’s “fiduciary rule,” an Obama administration measure adopted in 2016 meant to curb conflicts of interest among providers of financial advice to Americans planning for retirement.

Study Finds Link Between Payday Loans, Poor Health (LendEDU), Rated: A

A new study has disclosed that almost 40 percent of people seeking short-term, high-interest loans from lenders such as payday loan companies are likely to report their health as either fair or poor.

Short-term loans have grown from a $10 billion industry in 1998 to $48 billion in 2011, reported The Guardian. Interest is extremely high on these loans—up to 600 percent per year—and the funds, typically utilized by low-income borrowers, are used for necessities including car repairs, food, and rent, according to the study.

Short-term loans have grown from a $10 billion industry in 1998 to $48 billion in 2011, reported The Guardian.

How Citizens Bank is reaching millennials (Tearsheet), Rated: A

Citizens Bank is selling millennials a comfortable, enjoyable life of travel, adventure and everything short of avocado toast in an effort to grow its student loan refinancing business.

At the end of 2017, Citizens’ student loan book was valued at $8.1 billion, according to the company. It’s a space which startups have forged a path, with CommonBond funding $1.5 billion loans since it was founded in 2012, and the value of SoFi’s student loan originations at $14 billion. Still, banks have unique advantages when it comes to the student loan refinance market, like a strong resource base to invest in marketing, and a book of business based on deposit products that lowers their costs.

Goldman Sachs launches in-house incubator (Tearsheet), Rated: A

Goldman Sachs has launched an in-house incubator to allow its employees to bring innovative ideas and solutions to life, and to Goldman.

GS Accelerate is accepting applications for “ideas that can deliver best-in-class solutions for our clients, take Goldman Sachs into new business areas, manage risk and tackle inefficiencies in our operations,” according to an executive memo sent to staff Thursday and shared with Tearsheet. Goldman declined to comment further.

Developing The Application of Anti-fraud Technology to Enhance Financial Risk Management (Lendit), Rated: A

With the maturity of the underlying technologies such as artificial intelligence and blockchain, the manual driven anti-fraud method will be closely integrated with artificial intelligence driven anti-fraud method by incorporating the online and offline scenarios, constantly and quickly generating a surge in innovative strategies from the previous unidirectional and inefficient strategy.

The current application of anti-fraud technology is a rule engine driven approach, that is, it can detect the problems when the frauds are triggered but cannot predict and warn in the early stage. By accumulating and studying the data of fraudulent activities and developing the new cyber technology, the application of anti-fraud technology is expected to be turn from passive investigation into active pre-warning to build up the first firewall of anti-fraud. Adding intervention techniques out of the rule engine, such as neural network technology, will help to improve the pre-warning mechanism.

Bank Fintech Partnership More Than Just a Good Idea (Lendit), Rated: A

Bank customers demand highly functioning and seamless digital experiences.  They expect easy loan application processes that minimize data entry and turn around decision and funding in session-time.  They expect configurable communications, inbound and outbound, via the channel of their choosing and on the cadence of their choosing.  They expect to conduct every possible interaction, including account opening, without being require to walk into a branch.  They crave AI-driven advice and AI-fueled interaction channels.  With mobile payment processes, remote deposit capture, 24/7 access and service, and high degrees of security all to boot.

While it is possible to develop these capabilities in house, the best solutions already exist, developed by fintech providers who are ready to partner with the bank.

Blake Cohen of SALT Lending (Lending Academy), Rated: A

In this podcast you will learn:

  • How Blake first got involved with blockchain and bitcoin.
  • The conversation that led to the founding of SALT Lending.
  • The outcome of his conversations with banks around accepting bitcoin as collateral.
  • How they discovered there would be demand for their proposed lending service.
  • Why they decided to sell discounted memberships instead of doing an ICO.
  • Why anybody who is holding cryptocurrency instantly understands their value proposition.
  • How much membership tokens, known as SALT tokens, cost.
  • The total amount of loan demand they have received to date.
  • How the process works when taking out a loan.
  • The loan products they are offering today.
  • How their margin calls work.
  • Why they do no credit checks on their borrowers.
  • How loans are getting funded today and their plans for the future here.
  • How the volatility in the price of cryptocurrencies has impacted their business.
  • The vision for the future of SALT lending.

Best Online Checking Accounts (Benzinga), Rated: A

Online checking accounts are different from regular checking accounts at your bank/credit union and the number one reason they’re different is that they’re from banks that forgo a traditional branch structure. Ally Bank is a great example of this type of online-only option.

Best for no monthly fees: Capital One 360 Online Checking Account
Best for hIgh APY: Consumers Credit Union Free Rewards Checking
Best for no deposit minimum: Ally Interest Checking
Best business online checking account: EverBank Business Checking

Lendio announces South Charlotte franchise (Bankless Times), Rated: B

Small business loan marketplace Lendio this week opened a franchise in Charlotte, North Carolina. Through the Lendio franchise program, Chris Cronk will help local businesses in the community apply for loans, review their options and secure funding.

OnDeck Names Diamond Janitorial Services as Small Business Of the Month (PR Newwire), Rated: B

OnDeck (NYSE: ONDK), the leader in online lending to small business, today announced that Diamond Janitorial Services has been selected as the OnDeck Small Business of the Month for March, 2018.

 

Government Lifts Prohibition on Payday Lending Chain’s Partnership With National Banks (WSJ), Rated: B

The Office of the Comptroller of the Currency has lifted a prohibition on partnerships between payday loan chain ACE Cash Express Inc. and national banks, as the agency’s Trump-appointed head, Joseph Otting, is encouraging financial institutions to offer more small-dollar consumer loans.

The OCC rescinded a 2002 consent order that restricted ACE’s ability to offer payday loans funded by nationally chartered banks.

Private equity firms buying real estate data and software provider EDR for $ 205 million (Housingwire), Rated: B

Two prominent private equity firms are buying EDR, a provider of real estate data and software-as-a-service, for $205 million, the companies announced earlier this week.

The buyers for EDR, which provides property due-diligence and risk management technology and information, are Silver Lake and Battery Ventures.

United Kingdom

MarketInvoice reaches £2b milestone (Finextra), Rated: AAA

Business finance company MarketInvoice has today reached the landmark milestone of having advanced £2b worth of invoice finance and business loans to UK companies.

The first £1b was achieved after 5 years of trading and the second £1b took just 14 months to reach. During this brief time, two new products were launched (confidential invoice discounting and business loans). These helped MarketInvoice provide funding worth £714.2m to business in 2017 up from £410.4m in 2016 (up 74%).

Lendy Announces 20,000 Investor Milestone & Repays Five Loans in February 2018 (Crowdfund Insider), Rated: AAA

Lendy announced this week it has attracted its 20,000th investor to its peer-to-peer lending platform. This news comes just days after the online lender announced it repaid five loans in February 2018.

According to P2P Finance News, the lender reported that about 7,000 new investors have joined its platform during the past year, with growth in the under 40 age group. Lendy also revealed that investors have secured more than £37 million in interest since its platform’s launch in 2012, with over  £373 million in total has been lent through the platform.

More SMEs planning to apply for finance, research shows (London School of Business & Finance), Rated: AAA

A study from market research agency BDRC has shown that the number of SMEs planning to apply for finance increased in 2017, rising from 10% in the first quarter to 14% in the last three months of the year.  

The company’s SME Finance Monitor surveyed 132,000 businesses and also found that more SMEs are becoming aware of peer-to-peer (P2P) lending, with more than 30% being aware of this type of finance in the final quarter of 2017.

The research showed an increase in awareness of P2P lending combined with crowdfunding, with 46% being aware of these types of finance, up from 36% at the start of last year.

Nearly half (48%) of larger businesses with 50-249 employees were found to be aware of P2P lending, compared to 32% of solo operations and 31% of smaller businesses with fewer than ten employees.

Get ready for UK fintech’s Big IPO Year (AltFiNews), Rated: A

Funding Circle, one of the most notable UK ‘unicorns’ (a tech firm with a valuation north of £1bn), is the latest firm to make headlines for a soon-expected IPO. It also recently enlisted Goldman Sachs and Morgan Stanley to help with the process, according to media reports. Many other notable digital lending platforms such as Zopa and LendInvest as well as banking challengers such as Monzo have also dropped hints that they aspire to move into public spheres eventually, if not soon.

Peer-to-peer lender offers rare secured retail bond paying 5.4pc (The Telegraph), Rated: A

peer-to-peer lender is launching a secured retail bond paying 5.375pc in interest annually, until it matures in 2023. The company, LendInvest, is a service that allows individuals to loan their money to finance property projects.

IF Isas: a bold way to build your capital (Money Week), Rated: A

This time last year, for example, none of the big three peer-to-peer (P2P) lending platforms – Zopa, RateSetter, and Funding Circle – had IF Isas available. But the situation has improved, and now more than 30 platforms offer them.

More than 75% of those surveyed by specialist researcher AltFi Data shortly before Christmas said they weren’t aware of the products.

If you want to lend to consumers, you could try RateSetter, which offers up to 4.9% a year over five years. A far riskier option is FundingSecure. This platform offers 12% or more on sub-prime asset-backed lending – P2P pawnbroking, effectively.

On the lending to business side, Funding Circle offers 7.2%, but is currently only open to existing customers. Assetz Capital offers from 3.75% to 15% over various terms. Crowdstacker offers up to 7%. The UK Bond Network allows you to invest from £5,000 in individual corporate bonds from listed and unlisted businesses, returning an average of 11.1%. And if you prefer to invest in renewable-energy projects, Abundance Investments offers up to 15%.

China

Micro-cap Chinese fintech Senmiao Technology prices $ 12 million IPO at $ 4 low end (Nasdaq), Rated: AAA

Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, raised $12 million by offering 3.0 million shares at $4.00, the low end of the range of $4.00 to $4.50.

At $4.00, the company commands an IPO market cap of $102 million and an enterprise value of $90 million. During fiscal 2017, it booked $0.2 million in revenue and a net loss of $0.7 million.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Ant Financial Buys Shares in Telenor Microfinance Bank

On March 13, Pakistan’s Telenor Group announced a strategic partnership with China’s Ant Financial Services Group. According to the agreement, Ant Financial will acquire 45% of Telenor Microcredit Bank, at the value of US $184.5 million. According to the agreement, Ant Financial will acquire 45% of Telenor Microcredit Bank, at the value of US $184.5 million.  

JD Finance Starts a New 13 Billion-Yuan Fundraising

On March 13, JD Financial announced that the group has initiated a new 13 billion yuan fundraising round. The new funding raised will be mainly utilized for financial licenses acquisition, technology research and marketing. It is said that CICC and COFCO shall lead this investment with a share of 10-billion-yuan. The leading investors will sign the agreements with JD Finance by the end of March and close their investment by the end of April.

Statistics shows that the valuation of JD Finance has reached 120-billion-yuan before this planned investment and is expected to reach between 165 and 190-billion-yuan after that.

 

 

Weekly Review (Investors Business Daily), Rated: A

China-based online lender Qudian (QD) reported $229.2 million in revenue and diluted EPS of 26 cents. ADT posted a surprise adjusted loss of 6 cents a share on 6% sales growth to $1.11 billion. On a GAAP basis, the home security company earned 99 cents a share.

European Union

Real estate crowdfunding in Finland: the drivers of campaign success and the industry development (Theseus.fi), Rated: B

The objectives of the study were to examine the phenomenon of real estate crowdfunding in Finland, to explain the success or failure of RECF campaigns, to understand the drivers behind industry development and to assess its future potential. The data was collected from the two main sources: interviews with the experts and the information from the websites of the crowdfunding platforms.

International

The Third Age of credit (TechCrunch), Rated: AAA

Today, buoyed by a plethora of technologies and a golden age for abundant data, creditis undergoing its most radical change yet. But it is being pulled in many directions by competing forces, each with their own vision for the future.

The last year has witnessed a Cambrian explosion in credit innovation, unveiling hundreds of possibilities for the future of credit. Unlike the last two ages, credit of the future will be personal, predictive, self-correcting and universal.

What does a new world of credit look like?

Thousands of startups are all finding new ways to apply this same concept of statistical modeling. WeLab in Hong Kong and Kreditech in Germany, for example, use up to 20,000 points of alternative data to process loans (WeLab has provided $28 billion in credit in four years). mPesa and Branch in Kenya provide developing-world credit using mobile data, Lendabledoes so using psychographic data and Koradoes this on blockchain. Young peer-to-peer lending startups like Funding CircleLending Club and Lufax have originated more than $100 billion in loans using algorithmic underwriting.

Victory Park Capital partners IFC on fintech fund for emerging markets (Finextra), Rated: A

Victory Park Capital (“VPC”), a leading investment firm focused on providing flexible debt and opportunistic equity solutions worldwide, announced today that it has launched a new fund together with the International Finance Corporation (“IFC”), a member of the World Bank Group.

The new fund will invest in financial technology companies in emerging markets. The partnership aims to improve access to debt capital for financial technology companies that lend to small businesses and consumers in emerging markets.

Accountants Look to Artificial Intelligence As Clients Get More Demanding (Sanvada), Rated: A

Accountancy firms to be particular are busy investing in AI and automation initiatives to help staffs with mundane tasks. The need is so open in some situations that businesses fail to deliver their mandate to customers.

In the research, close to 50 percent of the accountants said they would like to automate number crunching, diary management and the most time consuming of all: data entry. On the same note, three quarter showed great attraction to AI, to have it assist time-consuming responsibilities and automate involving tasks with recurring patterns.

Accounting firms have been in the front line of using cloud computing and Sage report stated that 67 percent of respondents now link their success to the use of cloud tech.

Finastra named provider of best payments solution by Global Finance (Vested for Finastra Email), Rated: B

Finastra has been named ‘best payment solutions provider’ by Global Finance, as part of the publication’s Best Treasury & Cash Management Banks and Providers for 2018, announced in the March issue of the magazine.

Finastra received the award based on its best-of-breed payments and financial messaging solutions that enable financial institutions and their business customers to manage cash, process payments, exchange information and transfer funds cost-effectively, securely and reliably within and across national boundaries.

Australia

SMEs shun banks, turn to fintechs (Financial Standard), Rated: AAA

The proportion of SMEs planning to use banks dropped from 38% to 24% between 2014 and 2018, the Scottish Pacific SME Growth Index shows. It is recalculated every six months.

About half (47.6%) of the 1253 small-to-medium business leaders who had not used non-banking lending options in the last 12 months said they are interested in using alternative financing in the future.

Of the SMEs that used alternative working capital options in 2017, the most popular was debtor finance (77%), followed by merchant cash advances (23%), peer-to-peer lending (10%), crowdfunding (9%) and other online lending (5%).

9 in 10 SMEs say cash flow problems prevented revenue growth (Finder), Rated: A

A new report released this week has revealed the changing state of cash flow, finance and growth for Australian small- to medium-sized enterprises (SMEs). The SME Growth Index, released by working capital provider Scottish Pacific, found that one in five (21.1%) SMEs were unable to take on new work because of cash flow restrictions, and 9 in 10 (92.7%) SMEs said that cash flow restrictions actually prevented them from generating more revenue.

Small business revenue is heavily influenced by the business’ cash flow. Of the 1,253 small business respondents to the Index, only 7.3% said that improved cash flow would not have led to more revenue. The restrictions on revenue due to cash flow has cost the Australian economy $229.8 billion.

FinTech Australia Points to Report that Highlights Growth in Fintech Lenders as Traditional Finance Declines (Crowdfind Insider), Rated: A

FinTech Australia, is highlighting a report this week that points to the decline in traditional fince options (IE Banks) and the ongoing rise in SMEs using Fintech platforms to address their capital needs.

The report is courtesy of the Scottish Pacific SME Growth Index, released every six months, which is based on interviews with 1,253 SMEs across Australia with annual revenues of up to $5 million.

For SMEs with plans to invest in expansion over the next 6 months, 24% say they will fund growth by borrowing from their main relationship bank – continuing a downward trend, and well short of the high of 38% who nominated this option to fund growth in the first round of the Index in September 2014. More than one in five SMEs (22%) plan to use alternatives to their main bank to fund upcoming growth, with 91% relying on their own funds. Of the SMEs that used alternative working capital options in 2017, their funding choices were: debtor finance (used by 77%), merchant cash advances (23%), P2P lending (10%), crowdfunding (9%) and other online lending (5%).

Gen Y advisers shy away from the big banks (Financial Review), Rated: B

Data from consumer information company Adviser Ratings provided exclusively to The Australian Financial Review reveals in the last two years, the non-aligned sector – or what was previously termed the independent space – has seen it attract 70 per cent of all news advisers, compared with 40 per cent previously.

There has also been a 32 per cent increase in the number of Australian Financial Services Licenses (AFSLs) granted by the Australian Securities and Investments Commission. This equates to 400 new licenses in two years. Total adviser numbers have grown 10 per cent, up to 24,777 from 22,612 over that period.

India

Is RBI sleeping over Faircent’s P2P ad that promises huge returns? (MoneyLife), Rated: AAA

An overhyped, front page advertisements in a leading economic daily by Faircent.com, which claims it is India’s largest peer-to-peer (P2P) lending website, is luring people promising returns that are safer than the risky ’Sensex’ — almost like a Ponzi scheme. Shockingly, the company’s business and its puffery does not seem to attract the attention or supervision of any regulator. Not even the Reserve Bank of India (RBI), whose governor recently lamented that his organisation does not have adequate powers over banks — especially public sector banks. So what about finance companies that are regulated by it? The Faircent.com advertisement would give you a clue. The last line of the advertisement, in its fine print carries a disclaimer saying, the “Reserve Bank of India (RBI) should not be held responsible for these claims or promises”.

Movers And Shakers Of The Week [12–17 March 2018] (Inc 42), Rated: B

Online financial services marketplace BankBazaar has appointed Aparna Maheshas the Chief Marketing Officer.

P2P lending company Faircent has roped in Vikas Prasad and Mayank Bishnoi on board its leadership team.  Vikas has joined Faircent as Head – Planning, Processes, and Control, while Mayank has taken over as Head – Customer Experience.

Asia

Genie: the broadest Asian business loans exchange platform (Global Coin Report), Rated: A

The Genie ICO recently hit its soft cap of $5 million, with another $20 million in the pipeline. They had achieved about $2.5million through crowd sale; with the $3million underwritten amount, the current token purchase crosses the soft cap of $5million.

 

The ICO, which started a few weeks ago, finalized on March, 1st. Tokens were for sale at a rate of 0.0025 ETH, with a fundraising goal of 5,000,000 USD that was already met.

INTERVIEW-Indonesian banks will see “more than 12 pct” loan growth in 2018- regulator (Reuters), Rated: A

Indonesian banks will see “more than 12 percent” loan growth in 2018 thanks to a recovering global economy and a pickup in commodity prices, the country’s financial regulator said.

Loan growth in Indonesia has fallen below 10 percent since the start of 2016, compared with more than 20 percent during the commodity boom years before that.

Canada

Merchant Advance Capital Closes $ 30 Million Debt Facility (deBanked), Rated: AAA

Canadian Merchant Advance Capital closed a $30 million debt facility from Comvest Credit Partners today.

“This is giving us significant runway,” Merchant Advance Capital CEO David Gens told deBanked. “For the next 12 months in particular, we’ve got great visibility as far as where our incremental capital is going to come from. This will allow us to focus less on fundraising and more on just building the business.”

Founded in 2010, Merchant Advance Capital offers several small business financing products including fixed term loans and business lines of credit.

Royal Bank of Canada Explores Blockchain to Automate Credit Scores (CoinDesk), Rated: A

The Royal Bank of Canada may be interested in putting credit scores on a blockchain.

In a patent application released Thursday, the bank outlines a platform built on a blockchain that would automatically generate credit ratings using a borrower’s historical and predictive data. The application as described proposes a system that would utilize more data sources than existing credit rating systems, improving the loan process while creating an immutable record.

If a loan application is submitted, the system would automatically determine what sort of loan and creditor would be appropriate before generating a unique smart contract that contains the terms of the loan.

Authors:

George Popescu
Allen Taylor

Wednesday March 14 2018, Daily News Digest

equity factor returns

News Comments Today’s main news: H&R Block, LendingTree partner on credit score access. KBRA assigns preliminary ratings to LendingClub’s CLUB Credit Trust 2018-NP1. Ant Financial consumer lending hits $95B. Non-Standard Finance buys guarantor loans business. EU rolls out new crowdfunding rules. Today’s main analysis: LendingTree’s mortgage savings tracker, mortgage rate competition index. Does strong economic growth equate to high factor […]

equity factor returns

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

H&R Block, LendingTree partner to empower clients to improve their financial well-being (Nasdaq), Rated: AAA

As part of continued efforts to help clients better understand their financial situation, H&R Block (NYSE:HRB) is partnering with LendingTree (NASDAQ:TREE) to provide clients convenient access to their credit score, LendingTree Academy and more. H&R Block clients can now seamlessly enter LendingTree via their MyBlockaccount, which is a private, secure, online portal clients can use year-round to access and add tax documents and personal information.

LendingTree Introduces New Mortgage Savings Tracker and Mortgage Rate Competition Index (PRNewswire), Rated AAA

LendingTree today announced the release of its Mortgage Savings Tracker and Mortgage Rate Competition Index. The LendingTree Mortgage Rate Competition Index is a new measure of the dispersion in mortgage pricing and will be released weekly. Built on top of the Mortgage Rate Competition Index, the Mortgage Savings Tracker will bring a new transparency to mortgage shopping by highlighting the significant savings that are available to potential borrowers for both purchase mortgages and refinancing.

Source: PRNewsfoto/LendingTree

 

Source: PRNewsfoto/LendingTree

Findings from the inaugural report:

  • Across all purchase loan requests on LendingTree (we looked at refinance loan requests separately) in 2017, we found an average Mortgage Rate Competition Index of 0.46 — this was the average spread between the lowest and highest APR offered by lenders.
  • It may not sound like much, but over 30 years translates to $21,000 in additional costs on a $300,000 loan.
  • The index was wider in the refinance market, averaging 0.55. Potential borrowers there could have saved an average of $26,000 had they shopped around to find the lowest rate.
  • Ringing in the new year, the index widened to 0.59 for potential purchase borrowers, translating to a potential savings of just over $27,000.
  • For potential refinance borrowers, again, the index was even higher at 0.63. That could result in a savings of almost $30,000. The savings increased because lenders are reacting differently to the overall uptick in rates.
  • The most recent data for the week ending 3/11/2018 showed potential savings of $26,780 for purchase and $27,616for refinancing.

See LendingTree white paper on the Mortgage Rate Competition Index here.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-NP1 (Business Wire), Rated AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-NP1 (“CLUB 2018-NP1”). This is a $301.727 million consumer loan ABS transaction that is expected to close March 21, 2018.

Source Business Wire

LendingClub trims CE on next near-prime consumer loan ABS (Asset Securitization Report) Rated: AAA

As in the past, LendingClub itself contributed only a small portion (7.55%) of the collateral for the Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-NP1 transaction from loans it held on balance sheet, but this time only three unaffiliated parties were invited to contribute the remainder of the collateral.

source American Banker

CLUB 2018-NP1 will issue three classes of notes totaling $301.727 million. Credit enhancement for the senior $180.7 million tranche of Class A notes is 49.5%, down 30 basis points from the senior tranche of the previous transaction, which carried the same A-rating. However, enhancement for the BBB-rated Class B tranche has risen by 5 basis points to 37.4% and enhancement for the BB-rated Class C tranche has risen by 35 basis points to 15.35%, per Kroll.

DOES STRONG ECONOMIC GROWTH EQUATE TO HIGH FACTOR RETURNS? (All About Alpha), Rated: AAA

In this research report we initially focus on the Value, Size and Momentum factors from Fama-French, which are constructed as dollar-neutral long-short portfolios based on the top and bottom 10% of the US stock market. The data includes companies with small market capitalisations, excludes transaction costs and is available since 1926. We expand the factor set by the Low Volatility, Quality, Growth and Dividend Yield factors based on our own data, which is available since 2000. These are created via long-short beta-neutral portfolios and only include stocks with a market capitalisation of larger than $1 billion. Portfolios are rebalanced monthly and each transaction occurs costs of 10 basis points.

EQUITY FACTORS & REAL GDP GROWTH: 1947 – 2017

The chart below shows the returns of the S&P 500 and three factors (long-short) since 1947 sorted by positive and negative quarters of real GDP growth.

It’s worth highlighting that there were only 7 quarters of negative real GDP growth since 2000, so the results have to be taken with caution.

DIVERSIFICATION FOR AN EQUITY-CENTRIC PORTFOLIO

New Media Announces Strategic Alliance with Kabbage (BusinessWire), Rated: B

New Media Investment Group Inc. (“New Media” or the “Company”, NYSE: NEWM), one of the largest publishers of locally based print and online media in the United States as measured by number of publications, announced today that it has entered into an agreement with Kabbage, a pioneering financial services, technology and data platform serving small businesses. This alliance is intended to bring awareness of simple access to working capital through Kabbage’s fully automated online lending platform to more than five million small and medium sized businesses (SMBs) that do business in New Media’s markets.

AI as new tool in banks’ crime-fighting bag? (American Banker), Rated: A

But a funny thing has happened on the way to what should be an AI-led revolution — banks have been worrying what their regulators would say if they filed fewer suspicious activity reports, especially if their rivals continue to submit far more.

source: American Banker

“All the banks are worried that if they use machine learning, the number of SAR filings will go way down and the regulators will say, what happened?” Saleh said. “How come your SAR filings fell by 50%? Maybe there’s money laundering you’re not catching.”

Should Banks Become the New ‘Payday’ Lenders? (LendEDU), Rated: A

In early March, the Florida state legislature approved revamping regulations for payday loans, voting to allow payday lenders to make larger loans for a longer period of time.

The bill aims to allow alternative lenders to make installment-type loans up to $1,000, with a 60- to 90-day repayment period. The current law caps loans at $500 for a period of seven to 31 days.

The Pew Charitable Trusts’ proposal suggested that small banks could instead provide loans with payments capped at 5 percent of a borrower’s paycheck.

According to The Pew Charitable Trusts’ research, the average payday loan customer borrows $375 over five months and pays $520 in fees, while banks and credit unions could profitably offer the same amount over the same period for less than $100.

Bank regulators vow more flexibility in vetting fintech partnerships (American Banker), Rated: B

Senior leaders at the Federal Reserve, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, who all spoke at a banking conference in Orlando, Fla., said they have been working with examiners to be more understanding of the budding partnerships forming between banks and fintech firms — and how to examine those relationships going forward.

Clinc wants to solve financial institutions’ AI problems (Business Insider), Rated A

Clinc, a US-based provider of conversational AI technology for financial institutions (FIs),announced the launch of a new self-service platform, Spotlight, that enables FIs to train and deploy sophisticated conversational AI software in-house, independently of vendors.

source: Business Insider

Spotlight is available in over 80 languages, and can be integrated into any digital channel, including contact centers, mobile apps, and Alexa, Google, and Facebook Messenger, allowing FIs to create a consistent user experience. Spotlight is already being used by USAA and Isbank, one of Turkey’s largest banks.

MoneyLion Plus Takes An Innovative Approach to Encourage New Investors to Save (Lend Academy), Rated: A

As a nation we are chronically bad at saving and while the savings rate went up for a time after the financial crisis it is back down near 2005 levels now which was the all time low.

MoneyLion is trying to do something about this.

I interviewed CEO Dee Choubey on the Lend Academy Podcast just over a year ago but they have made some great strides since then. I caught up with him again recently to get an update. Today, over 2.2 million people have downloaded the MoneyLion app and 1.3 million people have connected their bank account.

Behavioral biometrics company BioCatch closes $ 30M round (Bankless Times), Rated: A

Behavioral biometrics provider BioCatch today announced it has closed a $30 million financing round led by Maverick Ventures with additional participation from American Express Ventures, NexStar Partners, Kreos Capital, CreditEase, OurCrowd, JANVEST Capital and other existing investors.

What Makes Warren Buffett Such an Influential Leader? (Industry Leaders), Rated: A

A data scientist at Orchard Platform, Michael Toth, who has also worked with BlackRock as portfolio analyst has evaluated Buffett’s shareholder letters annually at Berkshire Hathaway for personal growth as a sole investor. Using statistical computing, Toth quantified and highlighted Buffett’s positivity penchant for many years according to CBNC.
And results from the analysis revealed that Buffett has the ability to balance both realism and optimism. The dataset also taught Toth about the reasons why Buffett is a legendary investor and as well as an influential leader.
Only five of the forty shareholder letters analyzed showed a negative score of sentiment, and most interestingly, they all correspond perfectly to five periods of downturn in the economy.

What’s next for neobank Chime (Bankrate), Rated: B

Since its 2014 launch, the San Francisco-based startup has emerged as one of the leaders in the so-called neobank space. Earlier this year, it announced it has 750,000 accounts opened to date, and is now adding new accounts at a rate of 100,000 a month.

How Fintech Advances Are Creating New Opportunities for Micro-Businesses (NewsTimes), Rated: B

Those solutions benefit business owners, ranging from freelancers, to founders of startups, to leaders of burgeoning small businesses and other enterprises.

Lending is one of the most critical areas where fintech has filled a gap for small businesses. As smaller businesses often don’t need a considerable amount of money when they seek loans, they’ve struggled to get any financial assistance. That’s because banks and other lending institutions often don’t see any profit in providing loans of less than $100,000.

United Kingdom

 

Former RateSetter-backed lender ‘transforms’ new owner’s guarantor loans business (Peer2Peer Finance), Rated: AAA

Non-Standard Finance bought the guarantor loan provider last August for £53.5m, which included a minority stake owned by RateSetter.

The London-listed firm said on Tuesday that the acquisition has “transformed” its guarantor loans business, helping that division’s loan book to grow by 35 per cent. It said the acquisition contributed to the group’s overall operating profit rising 497 per cent to £2.7m in its latest annual results.

Tandem Bank to buy Pariti in UK fintech tie-up (Financial Times), Rated: A

Digital bank Tandem has agreed to buy fellow British fintech group Pariti, as it looks to head off rising competition from established lenders taking advantage of new legislation that gives them greater access to customer data.

New rules that came into force in January allow companies such as Tandem and Pariti to access customer data from other lenders if the individuals give consent.

AltFi London Summit Preps for Event this Month as UK Alternative Finance Continues to Grow (Crowdfund Insider), Rated: A

The 5th Annual London Summit is scheduled to take place on March 26th during a time of significant change in the UK. Brexit jitters along with dramatic regulatory changes such as Open Banking and PSD2 has created a varied and dynamic environment. Yet alternative finance continues to grow with AltFi estimating that UK loan origination volumes increased by 41.9% to £14.1 billion in 2017. During 2018, this number is predicted to jump by £7 billion.

Speakers already confirmed include Samir Desai, CEO and co-founder of Funding Circle, Ricky Knox, CEO and co-founder of Tandem and Anne Boden, CEO and founder of Starling Bank.

 

Eight luxurious Holywood homes get £3m in funding from peer-to-peer lending firm (Belfast Telegraph), Rated: B

Eight luxury homes being built in the hills of Holywood have received £3m in peer-to-peer (P2P) funding.

Cobain Group, which is behind The Twisel Brae development, received the funding from lender Assetz Capital.

The eight detached properties, styled by designer Kris Turnbull, will range from 2,200 to 4,000 sq ft in size, and cost between £575,000 and £800,000.

China

Ant Financial Consumer Lending Reaches $ 95 Billion (Bloomberg), Rated: AAA

From the start of 2017 until this month, Ant’s consumer lending has doubled via its Huabei and Jiebei units even as the government reduces quotas for new asset-backed securities that can underpin such loans, one of the people said, asking not to be named as the matter is private. The loans can incur annual interest rates as high as 15 percent, although they are normally less than that, another person said.

Controlled by Alibaba Chairman Jack Ma, Ant has become a financial giant that was said to be valued at $60 billion and currently has more outstanding consumer loans than China’s second-biggest bank.

China’s Financial Disintermediation And M2 (Trade Captain), Rated: A

The past few weeks have been deluged with important events in Asia, but we don’t want the data to be washed away in the flood. In particular, note that China’s liquidity conditions continue to tighten, pointing to a further slowdown in nominal GDP growth over the next two years. Granted, M2 growth bounced back in February, and should edge higher in coming months, due to favourable base effects. But it remains historically low. Moreover, growth in our broader gauge of liquidity likely will continue to slow.

WeChat: the real Beast from the East (The Finanser), Rated: A

 

Mobile payments is another area where Tencent is thriving. WeChat Pay, a mobile payment system integrated into the app, holds 40% of China’s whopping US$12.77 trillion mobile payment market. Kickstarted by China’s virtual red packets exchange that supplanted the tradition of giving monetary gifts during Chinese New Year, WeChat Pay has seen impressive growth since its launch in 2013. Its monthly offline commercial transactions jumped 280% year over year in 2017 while social payment transactions grew 23%. Along with Alibaba’s Alipay, the service is making cash and plastic obsolete in China.

European Union

New rules put forward to help crowdfunding platforms grow across EU (Bridging & Commercial), Rated: AAA

These proposals – which are part of the European Commission’s fintech action plan – will enable crowdfunding platforms to offer their services EU-wide and improve access to this form of finance for start-ups and SMEs.

At present, it is difficult for many crowdfunding platforms to expand into other EU countries, but once these proposals have been adopted by the European Parliament and the Council, the proposed regulation will allow platforms to apply for an EU label based on a single set of rules.

Future Finance Closes €40 million Investment Round (PR Newswire), Rated: A

  • Future Finance completed €40 million Series C round with existing investors.
  • Investors remain excited about Future Finance’s ability to disrupt the UK student lending market.
  • Equity injected will be used to fund loans and hire top talent in LondonDublin and Chicago.

Start-up to stardom, Bondora turns 10 years old (Bondora) Rated: B

In the height of the global financial crisis, Bondora was officially founded on 11.03.2008. While it may have seemed counter-intuitive to most to create a new financial platform at this time, there was a clear need to serve customers who had been failed by the banks and disrupt the wider financial ecosystem.

International

Higher yields driving marketplace lending uptake among institutions, finds study (AltFiNews), Rated: AAA

According to a new study, marketplace lending is here to stay. That’s among the major findings of the Greenwich Marketplace Lending research study, conducted August to October 2017. It is based on the fact that 52 per cent of institutions currently investing in the asset class believe that marketplace lending will be a significant part of the financial system in the next 10 years.

Greenwich Associates interviewed 74 investors from pension planners to asset managers to compile its results. These investors control more than $3.5 trillion in assets between them. When the research was conducted, 21 of the firms were investors in marketplace loans, while 53 were not.

Of those investing in the asset class, 67 per cent cited higher yield as their primary reason for investing. Diversification and low correlation (48 per cent), access to consumer or small business credit (43 per cent) and low volatility (33 per cent) were also cited as important drivers.

Australia

 

Why Smart Aussies Are Dumping Banks for Online Loans (Mozo), Rated: B

Everything is online these days – including some of the best value home loans around. In fact, Mozo has taken a look at our database, and found that 1 in 2 home loans with a rate under 4% are offered by online lenders.

And when we crunched the numbers, we found that by switching from the average big four bank variable rate to the best deal around from an online lender, a typical borrower with a $300,000 home loan could save as much as $2,596** every year!

Square Peg In $ 200m Round Hole (Channel News), Rated: A

Paul Bassat’s venture capital outfit Square Peg Capital is said to be looking to raise more than $200 million as it seeks to add more investments to its portfolio interests in graphic design group Canva and online lender Prospa. Melbourne-based Square Peg, which was backed in its early days by billionaire James Packer, invests across Australia, Israel and South-East Asia.

India

Faircent.com bolsters its leadership ranks with two key appointments (India Times), Rated: AAA

P2P lending major, Faircent.com on Wednesday said it is strengthening its leadership team with industry veterans Vikas Prasad and Mayank Bishnoi coming on board. Prasad has joined the company as Head – Planning, Processes & Control, while Bishnoi has taken over as Head – Customer Experience.

“As the largest player in the rapidly-growing P2P lending industry, Faircent.com is currently at a critical juncture of its growth journey. More and more Indians from across multiple geographies are associating with our platform, both as lenders and as borrowers,” said Rajat Gandhi, Founder & CEO – Faicent.com in a statement.

Regulations for fintech companies in India: A dire need (Qrius) Rated: A

FinTech small business lending is currently developing with promising potential to complement and emerge as a healthy alternative to brick and mortar banking. The number of small businesses turning to FinTechs or non-traditional lenders has exploded over the past couple of years with many economies reporting a sharp increase in the number of small businesses turning to marketplace lenders in 2017. Marketplace lending accounts for 0.08% of the $96 trillion global corporate and household outstanding debt. Growing at an average 123% a year since 2010, Morgan Stanley forecasts that it will reach $290 billion by 2020.

FinTech lenders are forced to pay a commission to introducers or brokers which goes up to 4% of the loan amount which is normally passed on to clients.

Asia

Grab to offer loans, insurance with new fintech platform Grab Financial (The Straits Times), Rated: AAA

Grab will now offer loans and insurance with its new fintech platform – Grab Financial – the ride-hailing company announced on Tuesday (March 13).

This new platform will encompass all of Grab’s fintech offerings, including payment services, rewards and loyalty services, and financial services, among others.

To provide loans to consumers, micro-entrepreneurs and small businessess across South-east Asia, Grab has embarked on a joint venture (JV) agreement with Credit Saison Co, one of Japan’s largest consumer financing companies.

Initial offerings include accident, hospitalisation and other critical insurance coverage to Grab’s 2.6 million drivers, accessible through the Grab driver app.

FintruX advisor Yash Mody explains the platform’s future plans (Finder), Rated: A

Basically, FintruX is building a truly global peer-to-peer lending platform, and it’s secure, it’s fast, it’s easy. Lenders and borrowers don’t have to worry because the platform does all the work for them. They basically set their criteria and then they don’t have to think about it. They don’t have to auction and they don’t, you know, it’s not a cumbersome process. So that’s why we think it’s a new way of doing business.

And obviously, there’s a lot of regulation in this area. So how scalable is it? Are you going to run into lots of different regulatory issues with, issues lending loans between countries?

Yeah, so we’ve taken great care to make sure that we’re within regulation. We have four lawyers on board and advisers and all that, and we’re very cognisant of what’s required. As a first stage, we’re not going to be doing cross-border lending. So let’s say, for example, we’re going to launch in Singapore and Canada, so it would be a loan that’s in Canada from a lender and a borrower in Canada.

Indonesia eyes fintech regulation to avoid ‘loan shark-like’ practices (Reuters), Rated: A

Indonesia’s financial regulator said it was considering setting a cap on interest rates and the size of loans offered by fintech firms, in a move aimed at minimizing the risk of defaults.

The emergence of these peer-to-peer (P2P) lending platforms, offering loans ranging from as little as a few hundred dollars to several thousands, has so far been welcomed by Indonesia, Southeast Asia’s biggest economy where tens of millions of people have little or no access to bank credit.

More than 300,000 people have borrowed from these firms, with total loan distribution reaching 3 trillion rupiah ($218 million) as of January, versus 247 billion in December 2016, according to data from the Financial Services Authority (OJK).

Venture financing investments in the software segment receiving highest attention in Japanese enterprise market (Global Data) Rated : A

In 2017, venture financing (VF) investments in the software segment constituted 46% of the total deal value in the Japanese enterprise market, according to GlobalData, a leading data and analytics company. On the other hand, 38% of the total number of VF deals in the country was in the software segment.

source Global Data

VF investments in the IT service segment constitute 38% of the total deal value in 2017. The IT service segment investments are primarily focused on consumer facing enterprises, such as online lending, social networking, online media publishing, e-commerce, and online dating, among others. As Japanese technological advancements are on the forefront of global market, VF companies are investing in Japanese technology enterprises in order to expand their operations and achieve business growth.

New Business Models, Emerging Tech Enabling FinTech Companies to Improve Financial Inclusion (PRNewswire), Rated: A

FinTech companies are making significant progress in promoting financial inclusion through innovative business models, products and increased use of emerging technologies such as digital identity, Internet of Things (IoT), Artificial Intelligence (AI) and machine learning, says a new report co-authored by CreditEase, IFC, a sister organization of the World Bank and member of the World Bank Group, and Stanford Graduate School of Business. The report, “Financial Inclusion in the Digital Age,” was launched today during Money20/20 Asia in Singapore.

Over two billion unbanked adults in the world, representing 38 percent of all adults globally, do not have access to basic financial services and another 57 percent have basic accounts but do not have access to a full range of services that include diversified savings and investments, low-cost payments systems, insurance, or credit.

Peer to Peer lending increasingly popular in Vietnam (VietNamNet), Rated: A

In 2012, P2P outstanding loans worldwide totalled $1.2 billion, while the figure rose to $64 billion in 2015 and is expected to reach $1 trillion by 2025.

A big advantage of the P2P model is the high information security level based on BigData technology which encrypts, stores and controls customers’ information.

Analysts said with the advantages of the model, plus current conditions in Vietnam, P2P could replace black credit, or lending at very high interest rates, which is illegal in Vietnam.

According to the World Bank, 79 percent of the population in Vietnam cannot access official financial services.

Vietnamese P2P lending startup Tima seeks to close Series B round by June (Deal Street Asia), Rated: B

Tima claims to be the first P2P lending startup in Vietnam. Launched in 2015, the platform has seen cumulative money from its lender partners reach over $900 million. In 2016, Tima closed a seven-digit US dollar Series A funding from an undisclosed Singapore fund to accelerate its growth in the local market.

Authors:

George Popescu
Allen Taylor