Monday February 26 2018, Daily News Digest

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News Comments Today’s main news: Revolut breaks even, prepares for global expansion. RateSetter finances divorces. Which Isas pay 6% or more. Half of all employers offer financial advice. CoAssets increases revenue by 471% in half a year. Today’s main analysis: Do Americans really want a bank branch? Today’s thought-provoking articles: Ron Suber, Godfather of Fintech. Unscrupulous banks fueled the rise […]

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United States

How Helping Your Employees Improve Their Credit Helps Your Bottom Line (Forbes), Rated: AAA

One possible cause of an employee’s poor attitude is that he or she has looming debts or is attempting to climb out of a credit score canyon. Workers facing these challenges are often unable to completely focus on their job responsibilities. It’s no surprise that constant stress over meeting financial obligations leads to a loss of focus and time dedicated to work obligations. And because employees work for paychecks that go toward their debts, it makes sense that they begin to associate the two.

Defeating Debt-Fatigue

About 

Giving the middle class credit: New bill a step in right direction (The Hill), Rated: A

Consumers need access to credit, and bank-fintech partnerships are one way to meet their needs. Indeed, bank-fintech partnerships are good for both consumers and banks.

As I noted, consumers benefit because banks can use fintech to deliver safer, more transparent, lower-cost and more convenient financial products and services over the internet and mobile devices.

Banks benefit because fintech companies can leverage big data and technology, offering the infrastructure banks need to serve and welcome more people into the financial system.

An excellent example of community banks using fintech to compete with the Wall Street banks is Radius Bank, a $1-billion asset institution in Boston, which according to news reports is establishing “long-term relationships” with fintech providers, and is finding them to be “mutually beneficial.”

Ron Suber, the Godfather of Fintech (Lend Academy), Rated: AAA

In this podcast you will learn:

  • Ron’s background and how he became interested in marketplace lending.
  • Why he saw a big opportunity for Prosper back in 2012.
  • What was behind Ron’s decision to leave Prosper last year.
  • What rewirement means to Ron and why it is important.
  • How the typical work week looks today for Ron.
  • Highlights of some of the trips he has taken recently.
  • What it was like doing the road show for the Credible IPO in Australia.
  • Details of the meeting Ron recently had with the Australian Treasurer.
  • What Ron is doing at Prosper these days.
  • Knowing what he knows now, what he would have done differently at Prosper.
  • What the marketplace lending industry still needs to improve upon today.
  • What inning the industry is in today.
  • What Ron looks for when he considers a new investment.
  • Why he pulled the trigger on some of his recent investments.
  • Ron’s view on Marcus and its impact on the online lending space.
  • What area of fintech Ron is most excited about today.
  • How he is able to maintain so many connections in fintech.
  • What is next for Ron Suber.

 

Chris Larsen Of Ripple (XRP) @Google (ValueWalk), Rated: A

Fed Minutes (PeerIQ), Rated: A

The Fed released the minutes of the January FOMC meeting and provided a bullish outlook to the economy with upside risks due to tax reform. The committee indicated that they were on track to raise interest rates in the March meeting, and market participants are expecting 3 rate hikes in 2018.

Meritize Raises $ 6.8M in Seed Funding (Finsmes), Rated: A

Meritize, a Frisco, Texas-based student lending platform, raised $6.8M in seed funding.

Colchis Capital, Chicago Ventures and Cube Financial Holdings led the investment round with participation from ECMC, College Loan Corporation, University Ventures, City Light Capital, PC Squared and Meritize management.

LendingPoint Co-founder Weighs in on Lending Club’s Earnings Report (deBanked), Rated: B

“In my view, [Lending Club’s] underlying problem is that they don’t have alignment of interest between their stakeholders,” Tavares said. “At LendingPoint, we have a different approach. We look at it really as a balance sheet model, which means that we put everything on our books. We use our own equity. We leverage other investors’ capital, but we’re not an origination platform…Lending Club’s model primarily is that they have to continue feeding the beast, so to speak, in order to continue making their revenues. They don’t have inventory to continue generating assets or to monetize going forward. That’s a significant shortcoming in their model,” he said.

Bay Area Man’s Opportunity Fund Giving Small Businesses A Leg Up (CBS Local), Rated: A

About 8,000 small business loans are denied every day in this country, according to the U.S. Federal Reserve. It’s a story Alicia Villanueva knows all too well.

So in 1992, Weaver founded Opportunity Fund, launched with a consortium of 15 banks. But although the San Jose-based non-profit works with traditional lenders, its business practices are a bit different. Weaver says Opportunity Fund delves into an applicant’s financial picture and character.  And since it lends to people with bad or non-existent credit, a granted loan comes with an automatic offer of hands-on financial management support, and a hefty dose of financial responsibility.

Today, Opportunity Fund loans about $5 to $7 million a month to small business owners in California and 13 other states. The money comes from business and private donations. An average loan can range from $2,600 to $250,000. Under Weaver’s leadership, 6,200 businesses have received loans.

Opportunity Fund, along with other partners like Lending Club, is set to expand into other parts of the U.S. later this year.

A Look at CUneXus’ Strong Growth in 2017 (Finovate), Rated: A

Lending automation company CUneXus published some impressive growth stats today. Here’s a quick overview of a few of the California-based company’s success metrics:

  • Grew from 45 FI clients to 72 over the course of one year, from 2016 to 2017, a 60% year-over-year increase
  • Reaches more than 6.5 million potential end consumers across the U.S.
  • Averaging more than $6 million in new loan requests per day
  • Generated more than 140,000 loans totaling more than $2.5 billion with its 1-click borrowing solution

These and other FI clients have reported that CUneXus has helped contribute to their own success, including:

  • Loan processing times cut in half
  • A 110% increase in pre-approved lending activity
  • A 135% spike in funded loan amounts

3 Ways Technology is Bringing in New Real Estate Investors (Realty Biz News), Rated: A

Today, in addition to teaming up with development companies, many investors are using technology solutions to research options remotely. Here are the three trending ways technology is revolutionizing how new investors step into the real estate market space.

Mobile apps like Vacation Rentals by Owner (VRBO) and Airbnb have become popular and more people are now looking to invest in such short-term rentals.

Big data is now a critical offering for the public, and the real estate niche is looking for ways of gathering and presenting the information for driving purchase behavior.

Following the success of the customer-centric applications, it’s clear to see that the industry holds a huge potential if technology is leveraged to bring in new investors. Real estate is the largest global economy asset with figures hinting at $217 trillion – surpassing the world’s GDP of $80 trillion! This is a clear indicator that there is a huge potential for financial freedom creating entrepreneurs looking to tap into the real estate market.

New York Federal Reserve: Fintech Has Improved the Mortgage Lending Market (Crowdfund Insider), Rated: A

The New York Federal Reserve has published a staff report pertaining to “The Role of Technology in Mortgage Lending”.

While still relatively small, this segment of onlien lending has grown annually by 30% from $34 billion of total originations in 2010 or 2% of the market, to $161 billion in 2016 or 8% of the market.

The Fed research finds that Fintech lenders reduce mortgage processing time by about 10 days, or 20% of the average processing time.

Additionally, default rates tank by a whopping 25% indicating the credit process is superior to the antiquated analog method of traditional banks.

 

 

Do the Majority of Americans Really ‘Want’ to Use a Branch? (The Financial Brand), Rated: AAA

According to research conducted by Novantas, 60% of Americans said they would rather open a new checking account in person at a bank branch than on a phone, tablet or desktop computer. Reinforcing this finding is the reality that most consumers still only use digital channels for the most basic banking functions, such as checking account balances and transferring funds. For more complicated issues, like problems with an account or advice, most consumers prefer human contact.

The reliance on branches in North America is almost double other countries, where better digital offerings have been introduced. In fact, according to Novantas, 75% of consumers in Australia report visiting the branch less than once per month, or even less! The UK is very similar while, interestingly, only about half of US consumers exhibit the same behavior.


The banking industry has seen the closure of 1,700 branches in the 12 months ending in June 2017 – the largest one-year decline on record. Capital One Financial Corp. has cut 32% of its branches from mid-2012 to mid-2017, while SunTrust Banks Inc. cut 22% and Regions Financial Corp. has cut 12%.

U.S. Bank Offers New Online Tool to Help Consumers Get Fast, Convenient Car Loan Approvals (BusinessWire), Rated: A

Working with financial technology startup AutoGravity, U.S Bank created a new platform on USBank.com that provides a simplified, streamlined loan application process for users that typically takes just minutes to receive a loan decision.

Car buyers using the new U.S. Bank tool simply:

1) Pick their car and select a dealership online

2) Apply for a pre-approval for a U.S. Bank loan online

3) Close the loan at the dealership and drive off in their new car

When Weak Bank Lending Is a Good Sign (WSJ), Rated: A

Total commercial and industrial loans extended by U.S. banks were up just 1% from a year earlier on Feb. 7, according to weekly Federal Reserve data. For the month of January, C&I loans were down an annualized 10.8% compared to December, according to calculations by Keefe, Bruyette and Woods.

Asked how demand for loans has changed over the past three months from large and medium-sized firms, 84% said it was “about the same” or “somewhat stronger,” while just 16% said it was “moderately weaker.” For small firms with annual sales of less than $50 million, 88% of bankers said loan demand was about the same or better, while only 12% said it was weaker.

Financial incumbents are starting to care about financial education (Tearsheet), Rated: A

On Wednesday, Greenlight Financial Technology — the creator of a smart debit card for kids, teens, and college students — closed $16 million in a Series A funding round. Its investors went beyond your traditional venture capital firm, including a disparate coalition of  financial services bigwigs like SunTrust Bank and Ally Financial as well as the Amazon Alexa Fund, among other VCs. Greenlight, whose mission is to help strengthen financial literacy among kids and give parents a platform to raise “financially smart kids,” will use the new funds to develop its products.

That coalition of Greenlight partners signals a renewed understanding of the reality of most Americans’ financial lives — 57 percent of Americans are financially unhealthy according to the Center for Financial Services Innovation — by legacy financial services companies coming to terms with the fact that they need to be in the business of financial health in order to keep customer relationships in tact over the long term.

Don’t be THAT credit union. Offer short-term loans to your members. (CUInsight), Rated: B

CashPlease is an innovative new short-term, small-dollar loan solution that allows credit unions to implement a consumer loan product efficiently and compliantly.  Here’s how:

  • No additional loan officers or other additional staff needed
  • Underwriting technology that is automated and proven
  • Assistance with compliance best practices
  • Data-driven marketing to educate consumers about the availability of lower-cost loans

ATTORNEY GENERAL HERRING OBTAINS FULL RESTITUTION FOR CUSTOMERS OF ONLINE LENDER (Virginia.gov), Rated: A

Attorney General Mark Herring announced today that his office has reached a settlement with eight affiliated online lenders and debt collectors to resolve allegations that the companies offered unlawful open-ended credit plan loans and engaged in unlawful debt collection practices including contacting borrowers’ employers and implementing wage garnishments. As a result of the settlement, borrowers will receive nearly $150,000 in restitution and forgiven debt.

The settlement includes the following key terms relating to loans made by the lenders during the period from January 2015 through June 19, 2017:

  • The Lenders agree to refund all interest and fees paid by consumers in excess of 12% of the loan amount, totaling approximately $85,000;
  • The Lenders agree to forgive all outstanding remaining debt of Virginia consumers, totaling over $63,000;
  • The Lenders agree to a permanent injunction against consumer lending activity in Virginia;
  • The Debt Collectors agree to a permanent injunction against all debt collection activity in Virginia;
  • The Lenders agree to pay $10,000 in civil penalties and $10,000 in attorneys’ fees;
  • The Debt Collectors agree to pay $75,000 in civil penalties and $10,000 in attorneys’ fees.

The companies include six lenders (Field Asset Service Team, LLC; VIM Holdings, LLC; MR Capital Group, LLC; Nascent Holdings, LLC; B Financial, LLC; and DTS Capital, LLC, collectively “the Lenders”) and two debt collectors (Bradley Goldberg & Miller, LLC and U Solutions Group, LLC, “the Debt Collectors”) that acted in concert to provide and collect open-end credit plan loans made over the Internet to Virginia consumers.

The Lenders offered open-end credit plan loans and imposed “service fees” as high as $160 per month. The Debt Collectors then emailed consumers in an effort to collect on these loans and contacted the consumers’ employers to implement wage assignments and collect money directly from the consumers’ paychecks.

CFPB Drops Lawsuit Against Payday Lender (JD Supra), Rated: B

The CFPB has dropped a recent lawsuit against a payday lender accused of charging up to 950% interest.

The case is CFPB v. Golden Valley Lending, Inc., et al., Case No. 17-cv-02521 (District of Kansas).

United Kingdom

Difficult divorce? RateSetter can help (P2P Finance News), Rated: AAA

The ‘big three’ peer-to-peer lender has been offering a family finance product for a number of months, whereby individuals can apply for a loan to pay for their divorce litigation.

The P2P platform offers personal loans ranging from £500 to £35,000, with terms between one year and five years, according to its website. Borrower rates range from 3.9 per cent to 29.9 per cent.

Unscrupulous banks have fuelled rise of alternative lenders (RealBusiness), Rated: AAA

Now it emerges that one bank was actively working against small businesses in its greed-fuelled quest for profits and bonuses. RBS has been exposed for making up fees, imposing punishingly high interest rates, acquiring equity and property from failed businesses – and pocketing huge bonuses off the back of it.

As a result, it is alternative lenders that are now the go-to for independent businesses in need of assistance when it comes to growth. Take, for example, the business cash advance, which is sometimes referred to as a merchant cash advance. This funding can be from as little as £500 up to £300,000 and is advanced to the business against future credit and debit card turnover.

These Isas pay 6% and more – but should you invest? (Which?), Rated: AAA

Last week, Ratesetter launched an Isa paying a top rate of 5.8%, while yesterday (24 February), Easyjet founder Stelios Haji-Ioannou launched an tax-free account aiming to pay 4.05% per year.

Other innovative finance Isas are currently paying returns as high as 16% a year.

Zopa is currently paying between 4% and 4.6%. Zopa primarily lends to individuals, Ratesetter lends to both individuals and businesses whereas Funding Circle lends exclusively to small businesses. The latter’s innovative finance Isa is only available to existing customers, but is projecting an annual return of 7.5%.

EasyMoney launches Innovative Finance ISA (P2P Finance News), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s ‘easy’ family of brands, has launched in the UK with an Innovative Finance ISA (IFISA) offering a target rate of 4.05 per cent a year.

Jacob Rothschild-backed firm plans £100m float (Professional Adviser), Rated: A

Augmentum Fintech, which is preparing to float next month, has unveiled plans to issue a target of 100 million ordinary shares at a price of £1 each, with a maximum issue size of 125 million shares.

FCA seeks feedback on its ideas for a global sandbox (Mondaq), Rated: A

The FCA’s new webpage contains its ideas for a global sandbox [14.02.02]. Its current sandbox only allows firms to test their ideas in the UK.

It highlights three areas:

  • addressing “pre-identified challenges” in areas known for “regulatory problems that cross jurisdictional boundaries” e.g. AML and KYC on-boarding.;
  • enabling firms wishing to expand in different markets to “bring their ideas to market more quickly and easily, creating more effective competition.” The FCA asks for firms who could benefit from testing out their ideas in a number of markets to get in touch; and
  • policy and regulatory challenges – the FCA suggests the sandbox could be used to convene “joint events and papers on emerging trends and challenges” using the experiences of the range of firms and regulators taking part to develop “consistent approaches”.

Brexit to shut the door on lengthy London house price boom (Euronews), Rated: A

British inflation will outstrip gains in house prices this year and next, particularly in the capital, as uncertainty over Brexit and weak consumer spending power hits demand, a Reuters poll found on Friday.

Next year, house prices will rise 0.9 percent in London and 2.0 nationally, still both below the 2.1 percent expected inflation rate. In 2020, London prices will increase 2.0 percent and by 2.3 percent nationally.

“Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of 33,000 pounds ($46,000), and your average flat in London costing over 500,000 pounds, it’s extremely difficult to see how London can be viewed as anything but very expensive,” LendInvest’s Lockhart said.

China

Hang Seng Bank deploys fintech to simplify mobile banking, mulls use of facial recognition at ATMs (SCMP), Rated: A

Hang Seng Bank plans to expand the use of fintech to mobile banking services and is also toying with the idea of incorporating facial recognition, after initial success with iPhone X, to allow customers to withdraw cash from its ATMs across the city, according to its chief executive.

The global facial recognition market is forecast to be worth US$6.5 billion by 2021, up from US$2.3 billion in 2016, according to estimates from research company Technavio.

European Union

Klarna Bank AB appoints Niklas Savander to Board of Directors (LeapRate), Rated: B

Klarna Bank AB has announce the appointment of Niklas Savander to the Board of Directors with effect from Thursday 22nd of February 2018. Niklas Savander will replace Niklas Adalberth.

International

Digital banking start-up Revolut breaks even as it prepares global expansion (CNBC), Rated: AAA

Revolut said Monday that it had broken even for the first time in December, and that its monthly transaction volume surged to $1.5 billion, an increase of over 700 percent in the last 12 months.

The start-up has signed up a total of 1.5 million users to its mobile app, up 50 percent from a figure it achieved in November.

Cryptocurrency A Risk Factor, Bank Of America Says In Annual SEC Filing (International Business Times), Rated: A

The 10-K filing referred to cryptocurrencies, without naming any specific one, three times under a subsection titled “Risk Factors” and described three different ways in which they could pose problems for the bank’s business.

The first reference was under geopolitical risks, with the bank talking about international money-laundering.

The third reference was along similar lines, with BoA saying: “The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions,” adding it “might not be successful in developing or introducing” competing products at lower prices.

 

Australia

SPOTCAP AWARDS SCHOLARSHIP TO ASPIRING FINTECH ENTREPRENEUR (Global Banking & Finance), Rated: A

Spotcap today announced Vishal Uppal as the winner ofthe Fintech Scholarship 2017. The first of its kind in Australia, the scholarship awards one aspiring graduate with an interest in fintech $10,000 towards the cost of their tuition.

India

Guide to smart banking: Why P2P lending is an ‘interest’ing idea (Business Line), Rated: AAA

P2P lending, on the other hand, is a completely tech-driven investment, which gives a net annualised return of 18-22 per cent to lenders, who start earning their principal and interest back from the very first month. The returns are higher because you can lend directly to the borrower and the intermediary costs are drastically reduced.

A majority of investors on these platforms are salaried professionals aged between 20 and 35 years looking for additional sources of income.

On Faircent.com lenders can invest as low as 750 per loan size or choose tech-enabled processes like auto-invest to save time. These features are a major attraction for millennials and, in fact, according to the last Research and Analytics report on P2P lending published by Faircent.com, 64 per cent of lenders are below 35 years of age.

Retirement plan: How real estate investment can help millennials secure their future (Financial Express), Rated: A

A growing number of millennials are also opting for investments into commercial real estate, as opposed to investments into residential properties made by their parents.

Commercial real estate: better yields for better financial security

Leases on these properties are usually taken out for multiple years by blue-chip companies, thus ensuring that steady rental income is assured for a specific duration of time. With India’s rise as a prominent international business destination, the sector is also witnessing remarkable growth; the country’s 537 million square feet of rent-generating commercial real estate inventory is currently estimated to be worth nearly $70 billion.

How technology is enabling millennials to make high-value real estate investments

The investments can start as low as Rs 5 lakh, making the entire process extremely affordable for millennial buyers whilst also allowing them to make multiple investments to diversify their portfolio, increase rental incomes, and minimise risk. Average rental returns to the tune of 7%-8% are quite common, while the overall returns can be as high as 22%.

India is projected to become the youngest country in the world by 2020, with a median age of 29.

Movers And Shakers Of The Week [19-24 Feb 2018] (Inc42), Rated: B

BigWin Infotech, a government recognized fintech startup has appointed Suneel Mohnot a the Director on its board.

BigWin Infotech is a self-funded startup who has recently forayed into P2P lending business through its solely owned market place PaisaDukan.com post revised RBI guidelines for NBFC-P2P and one of the strong contenders for NBFC-P2P license.

APAC

CoAssets Reports Half-Year Results With 471% Increase In Revenue (AsiaOne), Rated: AAA

CoAssets Limited (“CoAssets” or the “Group”) (ASX: CA8), a leading crowdfunding platform and Fintech lender specialising in facilitating funding for businesses reported its financial and operating results for the half year ended 31 December 2017, together with an update on the Group’s growth and capital strategy to the Australian Securities Exchange (ASX) on 22 February 2018.

Total reported revenue increased by 471% from S$446,040 in 2016 to S$2,547,554 in 2017. Group’s profits in year 2017 was S$2,046,013, from a loss of S$3,899,325 in 2016. This increase in profits was due to business activities as well as investment gains. Operating expenses decreased from S$3,570,287 in 2016 to S$2,577,013 in 2017. This represents about S$1million or 28% in cost savings. Registered investor base reached 433,805 as at 31 December 2017. This represents an 88.17% increase from 30 June 2017.

Singapore — CoAssets Pte Ltd (“CAPL”)

After receiving the Capital Market Services (CMS) licence from the Monetary Authority of Singapore (MAS) in June 2017, the company crowdfunded more than S$5.11million worth of deals from 1 July 2017 to 31 December 2017.

Singapore — CoAssets International Pte Ltd (“CAI”)

The company disbursed more than S$6.65million worth of loans over the last 6-months, with its loan book growing to more than S$16.21million as at 31 December 2017.

China — CoAssets China

This represents the Group’s fastest growing market, achieving remarkable growth in registered user base of more than 117% (from 173,000 to more than 375,000 members) from 1 July 2017 to 31 December 2017. The CoAssets platform in China funded more than RMB28.15million (S$5.94million) worth of crowdfunding projects over the last 6-months in 2017.

Hong Kong — Fintech Pte Ltd

In April 2017, the Group acquired Fintech Pte Ltd, an online corporate cash management platform called “PiggieBank ” in Hong Kong.  Since then, PiggieBank has successfully managed funds flow of more than S$21. 39million as at 9 February 2018.

Hong Kong — Brighten Finance Limited (“BFL”)

As at 31 December 2017, BFL’s loan book was worth HK$36.91million (S$6.27million).

EF, KoinWorks Serve Online Loans for Courses (netral english), Rated: A

English First, an English Education Institute signed a joint venture with KoinWorks – a Indonesian Peer to Peer Lending Platform – that serves investments and online loans without collateral for various productive loans.

Africa

Blockchain and financial services disruption (Punch), Rated: AAA

Key areas of the financial services that are most likely to be affected by blockchain include transfers, payment and lending. We have seen different start-ups such as OneFi, Inspire, Upstart, and Funding Circle, playing critical roles in peer- to -peer lending and services to individuals.

The closest we have seen so far is what VoguePay, a leading online payment start-up, has done.

It recently launched a multi-currency payment platform to enable businesses to send and receive payment from local and international customers, allowing merchants to accept payment in dollars, Euros, Rands, Cedis, Naira and Bitcoin payment.

The average Nigerian bank pays about five per cent interest rate on fixed deposits while requesting for two-digit interest rates on loans from customers. Economically, this does not make much sense because the margin is too wide when compared to what they offer for holding customers’ fund. Many people are tired of the highly monopolistic nature of banking.

Authors:

George Popescu
Allen Taylor

Tuesday January 10 2017, Daily News Digest

Global VC FinTech investment

News Comments Today’s main news: Wellesley aims to raise 1.5M BP on Seedrs. China cracks down on P2P lending. Today’s main analysis: It doesn’t take much to put nonprime Americans into financial crisis. Today’s thought-provoking articles: Why France will steal the UK FinTech crown. Indonesia releases new P2P regulations. United States What it will take to put […]

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United States

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United States

UNEXPECTED EXPENSES: IT DOESN’T TAKE MUCH TO PUT NONPRIME AMERICANS INTO FINANCIAL CRISIS (Elevate email), Rated: AAA

Unexpected expenses are more likely to hit nonprime Americans much sooner and harder than their counterparts with prime credit scores, according to research released today by Elevate’s Center for the New Middle Class. For example, the research shows that the 160 million Americans who are nonprime, can only weather an unexpected expense of 31 percent of their monthly income, as opposed to 53 percent for their prime counterparts.

The Center’s latest study explores the impact of unexpected expenses on nonprime Americans, defined as those who have credit scores below 700. Key findings include:

  • A bill becomes a crisis for nonprime Americans at $1,400; for prime, it’s $2,900
  • Many common expenses such as a vehicle transmission, broken arm, or apartment security deposit are above the $1,400 threshold for nonprime Americans, but below the $2,900 threshold for prime Americans
  • Almost half of nonprime Americans have more than three disrupting expense events per year compared to approximately one-quarter of primes
  • Nonprime Americans can survive only half as long as prime Americans after a drop in income
  • Half of nonprime Americans have an income that fluctuates month-to-month

Additionally, based on geographic location, purchasing power can create large disparities in threshold amounts. For example, local purchasing power adjusted for $100 in Tulsa, OK, acts more like $131 in Kansas City, MO, and a mere $77 in New York, NY.

What to Watch For in Marketplace Lending During 2017 (Crowdfund Insider), Rated: A

While surprises are undoubtedly in store for 2017, indications are that certain trends—the growth of bank partnerships and industry consolidation—will continue and accelerate as some legal certainty is achieved, legal cases which absorbed the industry’s attention in 2016 will be resolved and the focus will shift to Capitol Hill, as marketplace lenders step up lobbying activities given the new administration’s presumed predilection to assist the expansion of credit.

Taking a Look Back at 2016

From the start of the year through mid-May we witnessed what can be described as “rational exuberance” as market participants continued to look optimistically at opportunities, tempered by a recognition that regulatory scrutiny was increasing and demanded careful attention.

The mid-May developments at Lending Club, with the abrupt resignation of its CEO Renaud Laplanche, one of the most prominent figures in the industry who had just a few weeks before regaled the LendIt crowd with a keynote address, marked the start of the second distinct period.

With the end of the summer, the market entered its third phase, as parties again waded back into the water, cautiously optimistic about the outlook. By the end of the year, things had come nearly full-circle, as Lending Club tapped investor demand and completed its first rated securitization of consumer loans.

What’s Ahead for 2017

Increased Bank Partnerships. One theme likely to continue in 2017 is the increasing focus on partnerships between lending platforms and traditional banks.

While the Office of the Comptroller of the Currency’s December announcement to move forward with limited purpose national bank charters for fintech companies represents a measured and beneficial step for the industry, it is relatively unlikely that any final developments occur before the end of 2017.

Further Industry Consolidation. Expect the industry consolidation that started in 2016 to continue and grow in 2017.

Lastly, expect M&A activity in the marketplace arena to accelerate in 2017.

Morningstar Corporate Credit Research Highlights (Morningstar Email), Rated: A

Money360 Closes Record $ 35.6 Million in Loans in December (Yahoo! Finance), Rated: A

Money360, the leading commercial real estate marketplace lending platform, announced today that it closed a record $35.6 million in commercial real estate loans in December 2016 — the result of ongoing growth of the company.

December’s transactions reflect short-term bridge loans for a mix of property types, including retail, office and industrial in California, Florida and Illinois. A total of five properties were financed including a one-story suburban office building in Irvine, California; a three-building industrial complex in Richmond, California; a seven-building anchored retail property in Orlando, Florida; a three-story suburban office building in Palm Harbor, Florida; and a three-story office property in Rosemont, Illinois.

December’s loans were for terms of between one and two years, and all were collateralized with a first-lien positions on the properties. They include:

  • Irvine, California: $5.4 Million to Refinance an Office Property Currently Being Re-entitled for Multifamily Development: Money360 provided a 12-month, $5.4 million bridge loan to the owner of a one-story, suburban office building to pay off two maturing loans, taxes and to provide cash out to afford the borrower sufficient time to continue processing land entitlements for a 45-unit condominium project planned on the site. The borrower brought in equity of $548,000 to close with a loan-to-value of 75 percent.
  • Richmond, California: $5.7 Million to Purchase a Three-Building Industrial Complex: Money360 provided a $5.7 million 24-month bridge loan to allow the borrower to purchase Adel Park, consisting of three contiguous industrial buildings containing a total of 159,156 square feet. The borrower was processing an SBA loan, but due to a hard closing date, opted for the bridge loan to consummate the purchase.
  • Orlando, Florida: $9.53 Million to Refinance a Seven-Building Anchored Retail Property: Money360 provided $9.53 million in bridge financing to pay off two current maturing loans and to finance tenant improvements and leasing commissions associated with re-tenanting the anchor space. The first-lien mortgage loan has a term of 24 months, with a loan-to-value ratio of 73.9 percent.
  • Palm Harbor, Florida: $2.5 Million to Refinance a Three-Story Office Building: Money360 provided a $2.5 million bridge loan to pay off a maturing CMBS loan for the three-story Palm Harbor office building in Palm Harbor, Florida. The first mortgage loan is for a term of 24 months with a loan-to-value ratio of 71.43 percent. The subject property is 84.6 percent occupied and professionally managed.
  • Rosemont, Illinois: $12.5 Million to Refinance a Suburban Office Property: Money360 provided a $12.5 million bridge loan for a single-tenant, suburban property in Rosemont, Illinois, allowing the borrower to pay off a maturing loan and buy out existing partners. The 24-month loan is secured by 71,132 square foot property, broken down as 60,207 square feet of office space and 10,925 square feet of warehouse space.
United Kingdom

Wellesley Aims to Raise £1.5M on Seedrs for Further Expansion (Crowdfund Insider), Rated: AAA

Peer to peer lending platform Wellesley has been crowdfunding on Seedrs for almost a month to raise £1.5M (approximately $1.82M). The campaign is currently restricted to Wellesley customers so it is hard to track.

Wellesley, like many other young firms, needs additional capital to continue operations.

Wellesley told P2P Banking that the platform’s campaign on Seedrs stands out because over 15,000 people have already invested in the company, the firm has a social issue of building Britain, and the company has been running for three years while remaining less speculative than other startups in this space.

Advisor Focused P2P Platform Octopus Choice Receives FCA Approval (Crowdfund Insider), Rated: A

Peer to peer lending platform Octopus Choice has received full authorisation from the Financial Conduct Authority. Octopus Choice is part of Octopus Investments. The company said the FCA approval was a first for an advisor focused P2P platform.

Octopus Choice was launched in April 2016, to coincide with the FCA’s decision to broaden the scope of advisers’ permissions to include P2P lending.  The company now claims to be one of the fastest growing P2P platforms having facilitated approximately £45 million in loans for 75 deals since launch.

James Hay bans non-standard investment purchases through platform (Money Marketing), Rated: A

From today, new customers will no longer be able to buy non-standard investments through James Hay’s platform except for in SSASs.

James Hay lists the following investments as non-standard: intellectual property, land banking, overseas commercial property, peer-to-peer lending, unconnected loans, carbon credits, storage pods, UK unquoted shares, overseas unquoted shares, unquoted loan notes and bonds, second-hand endowment policies, and fractional property investments.

Gold bullion will no longer be treated as a non-standard investment in James Hay products, however, and will still be allowed for new investments.

InvestCloud acquires UK fintech Babel for $ 20M (EconoTimes), Rated: A

Californian fintech firm InvestCloud has announced a strategic acquisition of London fintech company Babel Systems for $20 million in a deal.

The strategic acquisition connects InvestCloud’s digital platform with Babel’s trading and accounting capabilities in a move to provide a unique solution for fintech companies. InvestCloud will carry on supporting clients using other accounting solutions and also serve as an open supplier to the market, the release stated.

The client base of Babel includes the market leader in Robo-Advice ‘Nutmeg’ and other progressive Wealth Managers and Family Offices. The fintech company is the modern trade and accounting firm that addresses the needs of a regulated and international marketplace. The modular Babel’s solution is API based and enables the company to be integrated with any client platform.

Getting to know you: Tarlochan Garcha (Business Matters Magazine), Rated: A

Kuflink Ltd is our entry into the peer-to-peer world.  This business is about to go live and compliments Kuflink Bridging, as it will be facilitating lenders and borrowers on UK property.

The conclusion of those findings was clear and this complemented Kuflink Bridging.  Whilst the peer-to-peer sector is highly regulated, the barriers to entry are very high and this appeals to us given our knowledge of the industry, niche offering and desire to build a successful business.  Just nine months later, we are ready to launch our unique peer-to-peer lending platform.

Survival guide to personal loans (Independent), Rated: B

When we asked Moneysupermarket.com what the best buy deals were on personal loans from £1,000 – £1,999, £2,000 – £2,999, and £3,000 – £4,999 – enough for a modest car purchase or an affordable kitchen, the cheapest deal each time was from Zopa, the original peer-to-peer lender.

The advent of peer-to-peer lending has revolutionised the loan market by cutting out middle men and matching up savers looking for a better than average deal with would-be borrows hoping the beat the high street loan rates. When peer-to-peer (also known as P2P) started out it wasn’t regulated in the way as the banks and customers were initially nervous about both lending and borrowing. That’s all changed, with Uk registered P2P lenders falling under the same policing as traditional banks by the Financial Conduct Authority (FCA). From April 2017 they’ll also have to have at least a £50,000 cash buffer to bail out their customers if one side of the deal fails for some reason.

AlliedCrowds: Here’s 2016 Recap & 2017 Priorities (Crowdfund Insider), Rated: B

AlliedCrowds’ 2016 highlights include:

  • Building its database, the Capital Finder: Offers information for crowdfunding, VCs, angel networks, impact investors, and public/semi-public firms.
  • Consulting Service Expansion: AlliedCrowd invested more time in running a number of consulting projects for developing organizations and private sector firm.

  • Created Ecuador’s First Crowdfunding Platform: Known as GreenCrowds.

AlliedCrowds’ 2017 priorities will be to finalize Capital Finder, publish a new alternative report, and appoint a new MD for its debt platform.

European Union

Here’s why France might steal the UK’s fintech crown (Business Insider), Rated: A

The UK’s fintech sector overwhelmingly supported remaining in the EU in the runup to June’s referendum.

Now, as Brexit looms

€2 billion has been invested over German fintech platform Raisin (Business Insider), Rated: A

German fintech Raisin has passed €2 billion (£1.7 billion, $2.1 billion) of investment over its platform three years after launching.

Raisin announced in a press release on Tuesday that it had passed the milestone, just three months after announcing €1.7 billion had been invested over its platform. The fintech said the money comes from 60,00 customers, up from 50,000 in September.

Entrepreneur behind a $ 180M watch brand quietly invested in Klarna (Business Insider), Rated: A

Filip Tysander, the founder of the Daniel Wellington watch brand, quietly bought millions of pounds worth of shares in payments startup Klarna, according to Swedish tech site Breakit.

Klarna has raised over $290 million (£238 million) and is worth $2.25 billion (£1.85 billion), making it one of Sweden’s few billion dollar tech companies.

China

China Cracking Down On P2P Lending (PYMNTS.com), Rated: AAA

The first nationwide crackdown on P2P lending in China is underway — and expected to eliminate many of the 2,400 or so leading platforms in the nation.

The crackdown comes following a series of multi-billion dollar scams in the Chinese P2P lending space, as well as governance issues in U.S. segment leader LendingClub.  Chinese regulatory authorities have officially released new guidelines and sent inspection teams to companies to make sure said guidelines are being following. Those that do not comply by August of this year will be shut down.

The new regulations will block lenders from guaranteeing principal or interest on loans they facilitate as well as cap the size of loans for individuals at Rmb1m and at Rmb5m for companies. Lenders going forward will also be required to use custodian banks — which the vast, vast majority do not.

CreditEase Boosts Customer Experiences with Verint Customer Engagement Optimization Solutions (BusinessWire), Rated: A

Verint® Systems Inc. (Nasdaq: VRNT) today announced that CreditEase—a leading FinTech company in China, specializing in small business and consumer lending as well as wealth management for high net worth and mass affluent investors—is leveraging Verint Speech Analytics, along with Call Recording and Quality Management, to support the transformation of its customer engagement platform.

Since implementing the Verint software solutions, CreditEase has experienced improvements in operational performance and reports an increase in the use of digital channels through omnichannel service strategies. The ability to assess larger data samples, focus on important interactions, gain customer intelligence and target coaching to employees also has helped the organization enhance service delivery and the customer experience.

CreditEase also reports that it has saved operating costs of 45 percent on an annual basis by reducing print and mailed financial statements as customers have migrated to the use of digital channels and self-service e-statements. Its quality assurance initiatives also have yielded benefits in terms of generating an additional 30 percent savings by helping personnel become even more effective in their roles. The organization’s customer satisfaction ratings also have increased, in part due to a sharp reduction (by 80 percent) in billing-related complaints.

India

FSA Support Service Fintech Peer to Peer Lending (Tempo.co), Rated: AAA

the Financial Services Authority (FSA) shows its commitment to support the development of technology-based financial services orfinancial technology (fintech) in Indonesia.

Deputy Commissioner Strategy Management IA FSA, Imansyah said that regulation provides an opportunity for offenders fintech in Indonesia in order to grow.

Faith added the FSA will set up a special website page to facilitate it. The process of setting up a website to ready access would require at least six months after the regulation is published.

InstaEMI expands to more metro cities (India Times), Rated: B

Hyderabad-based financial services platform InstaEMI today announced its plans to expand its presence in metro cities across the country including New Delhi, Mumbai, Pune and Kolkata.

While peer-to-peer lending is another area of their focus, marginal size of the business constitutes of big ticket investments.

Asia

Indonesia: New Fintech, P2P Regulations Released (Crowdfund Insider), Rated: AAA

According to a report in Deal Street Asia, the Indonesian Financial Services Authority (OJK) laid out the following rules:

  • Registration – P2P lending (pinjam meminjam) startups must register and obtain their business license before operating.
  • Foreign ownership – Foreign businesses have to find a local partner because foreign ownership is limited to 85 percent of a company, and they can only act as lenders.
  • Minimum capital requirements – A company must have access to a little over $260,000 in order to carry out its business.  It must have at least approximately $74,000 in capital by the time it registers, and it must also have at least approximately $188,000 to obtain its operating license.
  • Interest rate provision – There is no limit on the interest rate, but loans cannot exceed $150,000.
  • Consumer protection – Fintech firms must only “advise” lenders and borrowers of its selected interest rates, which take “into account fairness and developments in the economy”.  They must also use escrow and virtual accounts in order to prevent operators from directly accessing the capital flowing between the lenders and borrowers.

CoAssets Launches New Real Estate Subsidiary for Full Spectrum of Real Estate Services (Crowdfund Insider), Rated: A

CoAssets Limited, a Singapore-founded Fintech firm that is listed on the ASX (ASX:CA8), has launched a newly incorporated subsidiary, CoAssets Real Estate (Care) Pte Ltd.

“As a crowdfunding platform, user protection is one of our key focus. We are now looking at crowdfunding deals that are backed by assets as a way to protect our users amidst economic uncertainty. Given this move towards secured crowdfunding and our market position as a real estate crowdfunding platform, having a real estate agency fits in well into our overall business strategy,” said Getty Goh, CEO of CoAssets.

CoAssets also shared that all deal listed on the crowdfunding platform undergo a proprietary risk assesment model labeled CoAssets Risk Assessment Model or CRAM.  This process was said to be developed with the assistance of one of the top auditing firms.  The CRAM score is used to help decide whether crowdfunding or other forms of financing could be offered to companies that are looking for funding.

RE/MAX Malaysia Crowdfunding Campaign Raises Over MYR 300,000 (Crowdfund Insider), Rated: A

Kellerhhof International Sdn Bhd led RE/MAX Malaysia‘s equity crowdfunding campaign over the past month to aim to raise MYR 200,000 (approximately $45,000).  The campaign on CrowdPlus.asia finished yesterday and resulted in RE/MAX Malaysia successfully surpassing its minimum goal, raising MYR 322,888 (approximately $72,000).

Yesterday our Equity Crowdfunding was closed. An amazing 161% funded, what gives us great appreciation.

 

Authors:

George Popescu
Allen Taylor