Thursday April 5 2018, Daily News Digest

Thursday April 5 2018, Daily News Digest

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-2. dv01’s Q1 securitization volume hits $2.58B. Revolut releases open API. RainFin acquires stake in 4AX. Today’s main analysis: International P2P lending volumes for March 2018. Today’s thought-provoking articles: Trends on millennials and money. A tale of two fintech sectors. Amazon could become the third largest […]

Thursday April 5 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

India

Africa

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-2 (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-2 (“SCLP 2018-2”). This is a $544.6 million consumer loan ABS transaction.

This transaction represents SoFi Lending Corp.’s (“SoFi” or the “Company”) 14th rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its state licenses or complies with certain requirements where a state lending license is not required.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-2

Class Preliminary Rating Initial Class Principal
A-1 AA (sf) $277,700,000
A-2 AA (sf) $127,900,000
B A (sf) $75,000,000
C BBB (sf) $64,000,000

DV01’S Q1 SECURITIZATION VOLUME TOPS $ 2.58B, ENCOMPASSING NINE DEALS FROM SIX ORIGINATORS (DV01), Rated: AAA

dv01 closed out Q1 with nine new securitizations, totaling $2.58 billion in total issuance. This represents a 141% increase from last year’s Q1 volume, which totaled $1.07 billion.

Deals were originated by six different lenders, including Prosper, Upgrade, LendingClub, CommmonBond, SoFi, and Marlette. Three of the deals (UPT I 2018-1, UPT I 2018-2, and CLUBC 2018-2) were trust certificates. dv01 was loan data agent on eight of the nine deals; loan level data and reporting tools for all the deals are accessible through dv01’s Securitizations portal.

Millennials and Money: 30+ Trends Financial Marketers Need to Know (The Financial Brand), Rated: AAA

Here are over 30 facts, statistics and insights about Millennials banks and credit unions need to know to serve this essential market segment more effectively.

  •  Millennials want to learn how to feel financially empowered. Nearly three quarters say they feel confident in their ability to make financial decisions, but they still want to learn more. 92% believe that being educated on personal finances is important. (Source: CSpace)
  • Millennials are so serious about their financial health that more than a third (34%) have a written financial plan, much higher than the 21% of Gen X and 18% of Baby Boomers who have done the same. However, 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than make a spreadsheet to help them manage their finances. (Sources: Schwab, Varo Money)
  • Maybe Millennials don’t need help from real human beings. With 85% saying artificial intelligence could help them better manage their finances, banks and credit unions should use digital tools and AI to deliver the financial insights they crave. Nearly half of Millennials say they want their bank to be able to anticipate their financial needs and offer them timely advice (Sources: Varo Money, Segmint).
  • Millennials’ top savings priorities are emergency funds (64%), retirement (49%), and buying a house (33%). Nearly half already have $15,000 or more in savings, and 16% have a whopping $100,000 or more in savings. (Source: Bank of America)
  • When it comes to saving, Millennials still have significant headwinds: three in four college graduates today will have a heavy student debt load. (Source: ABA)
  • The average graduate from the university class of 2016 has $37,172 in student loan debt, up 6% from the prior year. (Source: Student Loan Hero)
  • Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college. (Source: Harvard)

Publicly Listed Fintech Companies – a Tale of Two Sectors (Lend Academy), Rated: AAA

(KFTX) is a good place to start.

Since inception in June 2016, the index has returned 46%, outperforming the broad market S&P 500 by a whopping 24%, and even the tech-heavy NASDAQ by a meaningful 9%.

Source: Lend Academy

Amazon could become the third-biggest US bank if it wants to: Bain study (CNBC), Rated: AAA

Amazon could rival the nation’s big banks in as few as five years, capitalizing off its digital prowess and massive consumer base, according to a Bain & Company report.

Pushing customers toward a co-branded banking account also allows Amazon to cut down on transaction costs, Bain said.

Amazon could – according to Bain calculations – avoid more than $250,000,000 in credit card interchange fees every year if finds a bank willing to partner on checking accounts.

Source: Bain & Company

Why Amazon won’t enter the advice market (Investment News), Rated: A

Despite what many see as the inevitability of tech giants entering the financial advice business, the economics of doing so — as well as the intensely regulated nature of the business — make their entry unlikely, according to a new report from Cerulli.

The Boston-based research firm says that “companies like Facebook, Amazon, Apple, Netflix and Google (FAANGs) have the tools and data to excel, but face significant obstacles that will likely preclude their entry,”

One major obstacle, Cerulli says, is the relatively small size of the market. The firm estimates that the “digital advice opportunity segment” represents only about 12% of investors, or a segment “that would be difficult to scale to be of strategic interest to the world’s largest technology providers.”

The Credit Junction Secures $ 150 Million Credit Facility from MidCap Financial (Business Wire), Rated: A

The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $150 million credit facility from MidCap Financial, a leading capital provider to the middle market specialty finance industry. The facility strengthens and expands The Credit Junction’s ability to deliver comprehensive capital solutions to businesses across the United States.

The Credit Junction combines traditional credit metrics with data intelligence and partners with business owners to deliver asset-based financing alternatives unique to the needs of each borrower. Since its launch in May 2015, The Credit Junction has helped businesses across the country achieve their growth objectives while supporting job creation and development in the communities they serve.

Real Estate Investment Platform, Sharestates, Changes the Game with User Experience (UX) (PR Newswire), Rated: A

Sharestates, an online real estate investment platform, announced today the launch of new online user portals that fully optimize the real estate investment process from beginning to end, providing investors with the first ever UX solutions in the real estate investment industry.

Sharestates’ unique solution was designed by the company’s development team alongside CEO and Co-Founder Allen Shayanfekr with UX and functionality in mind – now offering investors a streamlined “one stop shop” in real estate financing.

Banking Disruptors: Peer-to-Peer Lending and Payments (The Motley Fool), Rated: A

Peer-to-peer lending platforms such as Prosper and LendingClub (NYSE:LC) have changed the way people can borrow money, and apps such as Venmo and Zelle have made it easier and cheaper to send money.

In this segment from Industry Focus: Financials, analyst Michael Douglass and Motley Fool contributor Matt Frankel talk about the ways that technology is disrupting big banks, and what this trend could mean to the banking industry.

How Affirm Personal Loans Can Help You Finance Smaller Purchases (Student Loan Hero), Rated: A

The average student loan payment is $351. Between such a high monthly payment and rent, finding the money to furnish your home or buy a new computer can seem daunting.

If approved, you can now shop. When you’re ready to make a purchase, you can enter the total from your online shopping cart on Affirm’s site. You then choose an amount between $50 and $10,000. You’ll be provided virtual card information to complete the purchase. With some partner retailers, you might select Affirm at checkout instead.

LendingTree Launches Credit Analyzer, a Free Credit and Debt Analysis Tool (Lending Tree), Rated: A

LendingTree, the nation’s leading online loan marketplace, today announced the launch of its Credit Analyzer, a free credit and debt analyzer tool, which was created to help consumers avoid common credit mistakes, improve debt management skills and find the right financial products for their needs.

Credit Analyzer is a free tool that provides a deeper, instant analysis of consumers’ credit and debt situations and offers personalized recommendations based on individuals’ financial goals. The user experience is designed to make it easier for consumers to understand the most important factors that impact credit scores.

 

What will the financial services industry look like in five years? (Lend Academy), Rated: A

This article briefly touches on many of the themes being explored at our LendIt Fintech USA 2018 conference, which is now just days away:

Audits Will Go the Way of the Dodo Bird

The protocol of trust is here to stay, and it’s going to disrupt everything.

While the blockchain has not rendered audits unnecessary yet, I believe we’ll see it happen within the next five years.

Smart Contracts Are In, Long, Paper-Intensive Financial Processes Are Out

As I write this, Lending Robot is raising a private round of growth capital. The closing process, called “papering” for very obvious reasons, is just as onerous and Microsoft Word-oriented as I remember it back in the early 2000s when I was a young VC.

Fintech is Everywhere

Fintechs are enhancing the customer experience along four axes: choice, price, convenience, and predictability. They are meeting the needs of educated, aware, demanding consumers and they are attacking traditional financial institutions at every angle.

 

Five Things Fintech Startups Must Do In 2018 To Get Noticed, Adopted And Funded (Forbes), Rated: A

Here are five things the winners nailed that newcomers must do to compete:

  1. Build a seamless digital customer experience (CX) customized to each set of eyeballs, across platforms — plus, make financial services ubiquitous, instead of an unfortunate necessity.
  2. Streamline their lead generation and nurturing through automation, machine learning and AI, plus intelligent CRM throughout the customer journey. This powers faster, more accurate processes like loan origination, mortgage underwriting and credit application decisions, among others.
  3. Instead of being scared of increased regulation, embrace it as a driver of innovation.
  4. Upend an established Wall Street business model both by undercutting fees and over-delivering on performance.
  5. Find novel, values-driven ways to increase millennial participation in financial services.

Financing Small Businesses- 6 Tips For Finding An Online Loan (Bizztor), Rated: A

Online business loans are a popular option for financing small businesses. Over the years more small business owners have been turning to online lenders as banks have cut down on loans to smaller businesses.

With the assistance of technology and algorithm, online lenders are able to assess conventional credit standards like cash flow and personal credit score.

DriveWealth Raises $ 21M in Series B Funding (Finsmes), Rated: A

DriveWealth Holdings, Inc., a Chatam, N.J.-based fintech company, closed a $21m Series B funding.

The round was led by Raptor Group Holdings, SBI Holdings, Inc, and Point72 Ventures, LLC, as weel as existing investors Route 66 Ventures.

The company intends to use the funds to develop its technologies and scale its business.

Mosaic Readies New Solar Loan Deal (Global Capital), Rated: A

The San Diego-based company filed documents with the Securities and Exchange Commission on Monday for Mosaic Solar Loans 2018-1. The ABS-15G forms name Deutsche Bank and BNP Paribas as banks on the deal.

The transaction, Mosaic Solar Loans 2017-2, was priced at 185bp over interpolated swaps for the senior class, yielding 3.854%. Energy related ABS such as solar and Property Assessed Clean Energy (Pace) deals were heavily subscribed throughout last year, with strong issuance of residential Pace bonds and the first ever issuance of commercial Pace ABS from Greenworks Lending.

Laurel Road And Darien Rowayton Bank Officially Rebrand Under Integrated Laurel Road Name (PR Newswire), Rated: B

Laurel Road, an online lender and FDIC-insured bank, officially announced today that Darien Rowayton Bank and its national online lending division will rebrand under the integrated national Laurel Road brand. The new, unified Laurel Road brand represents a deep understanding of its customer base, best-in-class technology and industry-leading compliance and risk management.

Bankrupt Payday Lender Can’t Move Pa. AG’s Suit To Texas (Law 360), Rated: B

Think Finance LLC, a financial technology firm that critics say uses Native American tribes to skirt payday lending laws, failed to convince a Pennsylvania federal judge on Tuesday to move an action brought by the state’s attorney general to Texas, where it has filed for bankruptcy.

The company has been hit with lawsuits over its alleged role in several “rent-a-tribe” schemes, where a high-interest lender affiliates itself with a Native American tribe to shield itself from legal challenges.

Sarasota-Manatee ranks last for millennials buying homes (Sarasota Herald-Tribune), Rated: B

Millennials rank as the key target in the economic development world setting sights on future prosperity. A new study casts a pall over efforts to build the Sarasota and Manatee population of this prized demographic. Out of the largest 100 U.S. metropolitan statistical areas in the country, Sarasota-Manatee ranked dead last among cities favored by millennial homebuyers.

The study, conducted by LendingTree, focused on the percentages of all loan requests to the online loan marketplace that came from millennials. That figure for Sarasota fell far from top-ranked Des Moines, Iowa — 17.9 percent versus 42.4 percent. Fort Myers ranked just above Sarasota, with 19.8 percent.

The Online Lending Policy Institute (OLPI) Appoints Deputy Director (Lendit), Rated: B

Robert J. (Bob) Mullenbach, CRCM, Managing Director – Compliance Division Deputy at ProBank Austin – has been appointed as the Online Lending Policy Institute’s (OLPI) new Deputy Director. Mr. Mullenbach brings 25 years of regulatory compliance experience in billion-dollar financial institutions, regional and community banks, fintech’s, and leading consulting firms. In his current position, Bob audits clients on the myriad of regulatory requirements associated with consumer/commercial lending, bank secrecy act/anti-money laundering, privacy, and non-deposit investment products.

Microloans offer needy a better alternative (The Columbus Dispatch), Rated: B

Central Ohio chapters of the St. Vincent dePaul Society, an international charity run by Roman Catholic volunteers, give needy folks a better option through the society’s microloan program. Information is available through the organization’s website at svdpcolumbus.org.

Anyone of any faith who needs up to $500 for car repairs, school, home repairs or medical bills, can apply for a quick loan with a low interest rate and 12 to 15 months to pay it off.

Contrast that with the typical payday-loan operation, which loans a couple-hundred dollars and demands payment in two weeks. Many borrowers who are strapped enough to go to such a lender in the first place can’t pay it back that quickly. This leads to loans on top of loans, with tacked-on fees that can lead to an effective interest rate of nearly 600 percent.

SunTrust teams with fintech to offer loans for HVAC upgrades (American Banker), Rated: B

SunTrust Banks in Atlanta is teaming up with another fintech upstart to expand its reach in consumer lending.

The $202 billion-asset company said Wednesday that it has struck a partnership with the online lender Microf to offer point-of-sale loans to homeowners looking to replace aging residential heating, ventilation and air conditioning systems.

SunTrust will hold the loans on its books and a pay a fee to Microf for the referrals. Microf, based in Albany, Ga., offers the loans through its nationwide network of HVAC contractors.

United Kingdom

Revolut unleashes open API to all customers (Fintech Futures), Rated: AAA

APIs and open banking are hotter than a freshly tarmacked road in summer, and Revolut joins the mad-for-it crowd.

On its blog, the bank, which was launched in mid-2015 and offers a money transfer app, says account owners can generate sandbox and production keys, and set whitelisted IPs as an “extra layer of security”.

Away from these API days, the firm adds that over the last few months it’s been making updates to its business accounts.

New fintech fund could boost P2P sector (Peer2Peer Finance), Rated: A

At a time when investment trusts such as Victory Park Capital Specialty Lending have signalled a shift away from P2P opportunities, Augmentum Fintech’s investment adviser has hinted that P2P lenders could be included in the portfolio.

Augmentum Fintech was launched by Augmentum Capital, a venture capital (VC) firm backed by Lord Rothschild’s RIT Capital Partners, last month. The VC firm already had a 7.4 per cent holding in P2P giant Zopa worth £18.5m that has been transferred into the investment company portfolio and its founder Tim Levene, who is acting as investment adviser to Augmentum Fintech, said that the firm is well geared to the P2P sector.

FCA reveals it intervened in Collateral administration to protect investors (Peer2Peer Finance News) Rated: A

THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.

Wigan-based Refresh Recovery was selected by Collateral when the company shut down in February but it was revealed on Tuesday that the City watchdog was looking to appoint a different administrator.

“The Collateral companies were required to obtain the approval of the FCA when appointing an administrator,” the FCA said in a statement on Wednesday.

ISA countdown: The latest IFISAs on the market (Peer2Peer Finance News), Rated: A

March saw the introduction of tax wrappers from peer-to-peer property platforms The House Crowd and Safe as Houses, while EasyMoney, part of Sir Stelios Haji-Ioannou’s easy family of brands, launched its second IFISA offering.

Safe as Houses

The Safe As Houses ISA, which invests in loans made to Safe as Houses Group to develop, regenerate and sell on distressed properties, offers investors a return of six per cent.

The IFISA has a five-year term and requires a minimum investment of £5,000.

The House Crowd

The House Crowd’s IFISA invests in secured P2P loans and property development investments and offers a target return of seven per cent.

The House Crowd requires a minimum investment of £1,000, and new investments can be added to the IFISA in £1,000 increments, up to a maximum of £20,000 across an investor’s entire ISA portfolio.

Investors will get a fixed return paid in twice a year in October and April.

EasyMoney

The latest IFISA to hit the market before the deadline came from EasyMoney, offering target returns of 7.28 per cent. This eclipses the 4.03 per cent returns offered by its first product that launched in February.

The P2P lending platform said its new ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, limited to 75 per cent loan-to-value (LTV).

MINOR INVESTOR: An Innovative Finance Isa with a 7% rate is a tempting idea but tread carefully in the investing Wild West (This is Money), Rated: A

Only the peer to peer lending element can be included in an innovative Isa, not the equity version where investors take a stake in a company.

Obviously, innovative Isas don’t qualify for the savings element of the Financial Services Compensation Scheme that protects up to £85,000 per licensed bank.

Crucially, however, neither do they get the FSCS investing element that covers up to £50,000 in case your investing platform goes bust and hasn’t done what it is meant to with your money.

European Union

Robo advisors and the Data Revolution (GDPR) (AltFiNews), Rated: AAA

With just a month to go until the General Data Protection Regulation (GDPR) is implemented throughout Europe in May. We look at how the new regulatory regime will affect the nascent Digital Advice industry. Some of the upcoming regulatory changes issued from the EU and its commissioners should be positive for fintech asset managers.

With a clear focus on transparency, robo-advisors should look forward to the new era of information portability and openness.

The digital advice sector has from inception attempted to gain a competitive edge with clear transparent product engineering and pricing, but it won’t all be plain sailing and there may be headwinds ahead.

BANCO BNI EUROPA grows significantly in 2017 and attracts equity investor (Fintech Finance), Rated: A

2017 was once again characterized by the significant growth of Banco BNI Europa’s activity, increasing 41% in assets (from € 362M in 2016 to € 509M in 2017), 16% in customer deposits (from € 262M in 2016 to € 305M in 2017) and 379% in banking income (€ 2,8M in 2016 to € 13,2M in 2017). 

Net income reached € 2.3M, increasing regulatory capital to € 23.3M and the solvency ratio comfortably above the statutory limit at 13%.

International

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

Milestones achieved this month (overall volume since launch):

  • Landbay reached 100M GBP
  • Estateguru reached 50M EUR
  • Linked Finance reached 50M EUR
Source P2P Banking

Banking at a Tipping Point as Fintech Drives Change (Cash Lady News), Rated: AAA

According to Citigroup consumer banking currently generates around $870bn in revenues across Europe and North America, with digital innovators accounting for just 5% of that total. But if the report’s predictions are correct, by 2023, disruption by fintech companies will account for 17% of a total earnings pot of $1.200bn

Follow the Money

CitiGroup cites figures showing that global investment has risen from around $0.5bn in 2019 to just under $20bn today. And most of that investment – Citigroup puts it at 70% is focused on the key areas of personal and SME banking.

Read the full report here.

ROSCAcoin: A Self-Regulating, Autonomous and Decentralized Financial Platform for the Unbanked (BTC Manager), Rated: A

ROSCAcoin is a new decentralised autonomous and self-regulating platform built on the Ethereum blockchain. The project aims to develop an innovative financial infrastructure that allows creating solutions for people with little or no access to financial services. ROSCAcoin is set upon an ancient model of borrowing very popular in third world countries.

ROSCA, or Rotating and Saving Credit Association, is defined by a method of borrowing where a group of individuals agree to cooperate for saving and borrowing purposes within a pre-established period; is also a form of peer-to-peer banking and peer-to-peer lending. ROSCAcoin strives to introduce this method using the blockchain technology.

The platform is powered by its own currency RCA, which will be the engine of the whole ecosystem. By using smart contracts, ROSCAcoin is trying to build the ultimate financial solution for the unbanked.

“Stars are Aligned” for an Higher US Dollar Against the Swiss Franc (PoundSterling Live), Rated: B

The Dollar has risen 4.4% versus the Swiss Franc since mid-February and could be about to accelarate the move suggest analysts; this despite the sizeable global stock market sell-off which would normally be expected to support the safe-haven Franc.

Safe-haven currencies usually strengthen in times of fear, such as the present, however this does not appear to be the case with USD/CHF which has risen due to the USD outperforming CHF – not the other way round.

White Oak Signs Agreement to Acquire LDF Group (Globe Newswire), Rated: B

White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that White Oak has agreed to expand its asset-based lending platform to serve clients in the U.K. and Europe through the acquisition of LDF Group (“LDF”), a U.K.-based finance company providing asset finance, business loans, commercial mortgages and education leases to small and middle-market companies.  Established in 1986, LDF is an industry leader and one of the largest independent finance providers for small businesses in the U.K.

India

Faircent brings Shalabh Gupta on-board as national sales head – lending (The Siasat Daily), Rated: A

Leading Peer-to-peer (P2P) lending company Faircent on Thursday announced that the company has hired Shalabh Gupta as national sales head – lending.

As an industry veteran with over 17 years of extensive sales experience with brands like the Times Group, Reliance Capital, HDFC Bank, and ITC Limited, Shalabh will play a crucial role in furthering the company’s impressive growth plans and vision as a part of its leadership team.

Aadhaar-Based EKYC Limitations Cause Trouble For Fintech Startups (Ink 42), Rated: AAA

Since the Supreme Court extended the deadline for linking of Aadhaar to host of services, the fintech segment has been riddled with burdens of limited Aadhaar-based eKYC. The companies have been unable to access Aadhaar database for verification of their customers.

Impact Of Aadhaar KYC On Fintech Startups

According to reports, fintech startups across the insurance, lending and broking sectors are being denied access to authentication agencies for eKYC to verify customer antecedents on the Aadhaar database amidst rising concern over data privacy.

UIDAI revokes e-KYC services for some e-wallets, online lenders (The Times Of India), Rated: A

In a move that seems to have left fintech players scrambling, the Unique Identification Authority of India (UIDAI) revoked on Tuesday their access to a dozen agencies that provide e-KYC verification and authentication services. Some of these agencies – KUAs (e-KYC user agencies) and AUAs (authorised user agencies) – will no longer be able to provide e-KYC verification to onboard new customers or authenticate financial transactions affecting e-wallets, online lenders, NFBCs and smaller fintech players.

Africa

RainFin acquires stake in 4AX (Business Tech), Rated: AAA

Fintech company RainFin has announced the conclusion of a transaction with 4 Africa Exchange Proprietary Limited (4AX), which will see the company sell to 4AX its corporate debt marketplace, in exchange for a strategic shareholding in 4AX.

RainFin’s credit marketplace technology has been utilised by companies to raise debt funding from both tradition and non-traditional sources since its formation in 2002.

Accra, Ghana to Host 2018 Startupbootcamp Africa (Tech in Africa), Rated: B

Accra, Ghana’s capital city will host the forthcoming Startupbootcamp (SBC) Africa Accelerator program. The SBC sponsors include the Old Mutual, BNP Paribas, RCS, PwC, and Nedbank. During the event, startups present to the panelists for about two hours.

Authors:

George Popescu
Allen Taylor

Friday March 9 2018, Daily News Digest

Friday March 9 2018, Daily News Digest

News Comments Today’s main news: What SoFi pays for prime customer acquisition. Funding Circle investors lent over 113M GBP in February. Landbay hit 100M GBP lending milestone. Atom Bank secures 149M GBP, BBVA ups stakes. Today’s main analysis: LendingTree personal loan offers report – February 2018. Americans owe more than $1T in credit card debt. Today’s thought-provoking articles: Americans […]

Friday March 9 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

India

Africa

News Summary

United States

SoFi Is Paying Top Dollar To Acquire Its Prime Customers (Fast Company), Rated: AAA

Last year, even as a sex scandal engulfed the six-year-old company, SoFi originated $12.9 billion in loans, added 225,000 customers, and turned a profit.

All told, SoFi spent $170 million on marketing in 2017, or $756 to acquire each new customer, according to data obtained by Fast Company and confirmed by the company. This year, SoFi plans to spend $200 million.

Other online lenders targeting prime borrowers, like Lending Club and Prosper, typically spend $350-$450 to acquire each customer, industry experts say.

Judge ‘Shocked’ By $ 16M Atty Fee Bid In LendingClub Deal, (Law 360), Rated: A

A California federal judge said he was “shocked” attorneys want $16 million for representing LendingClub Corp. investors in two securities class actions against the peer-to-peer lending company, telling the plaintiffs’ lawyers at a hearing Thursday they “may be being greedy” by asking for that much of the $125 million settlement.

LendingTree Personal Loan Offers Report – February 2018 (LendingTree), Rated: AAA

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.44% in February.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.44%, an increase of 3 basis points from the prior month, but down 19 basis points from the same period one year ago.
  • At $23,689, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down 2.23% ($528) from January, but up over 21.44% ($5,078) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 4.97% on average, and loan amounts of $33,050. A borrower with this APR and loan amount would save $2,748 by consolidating debt with a 10% APR over a three-year term.
Source: LendingTree

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.69% in February.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.69%, down 10 basis points from last month, but up almost 126 basis points from a year earlier.
  • At $16,272, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs increase by almost 4% ($644) in the last month and by almost 5% ($795) from February 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 6.75%, offered with an average loan amount of $24,484. A borrower with this APR and loan amount would save $3,440 by consolidating debt from a 15% APR over a three-year term.
Source: LendingTree

Credit Card Debt Study: Trends & Insights (WalletHub), Rated: AAA

Americans now owe more than $1 trillion in credit card debt for the first time ever, after adding a post-Great Recession record $92.2 billion to our tab in 2017. Only four times in the past 30 years have we spent so much in a year. And in each of those prior cases, the charge-off rate – currently hovering near historical lows – rose the following year.

Source: WalletHub

The $67.6 billion in credit card debt that we added in Q4 2017 is the highest quarterly accumulation in the last 30 years – 68% higher than the post-Great Recession average.

Source: WalletHub
Source: WalletHub

 

 

Fintechs on Bank of Amazon: It’d be a net plus (American Banker), Rated: A

When Chris Britt, founder and CEO of the challenger bank Chime, heard that 

Brett King — founder of Moven, which is on its way to becoming a U.S. challenger bank — had a similar reaction.

“I’m frankly surprised it took them this long, given Alibaba’s massive success with Yue Bao,” he said, referring to the money market fund the online retailer formed that now has more than 370 million investors.

Kathryn Petralia, co-founder and president of the small-business lending fintech Kabbage, also liked the idea of Amazon offering checking with a large bank partner.

“It made perfect sense to me,” she said. “It seems like Amazon is doing this to enhance the customer experience, and they have a really strong focus on customer experience and customer service.”

Kabbage already competes with Amazon for small-business loans. Amazon began making loans of $1,000 to $750,000 in 2011. Last June, the company said it had issued more than $1 billion in loans during the previous 12 months and $1.5 billion in loans in the four years prior. Kabbage has made $4 billion in loans since it started in 2009.

Small-bank contract negotiators expand from core systems to fintech (American Banker), Rated: B

The consulting firm Paladin fs announced on Tuesday that Alex Lopatine, who founded the cloud-based core systems provider Nymbus, will be the managing director of its new “FinTech Advantage,” a unit dedicated to helping banks buy financial technology “needed to remain competitive and successful in the fast-evolving industry,” according to a press release.

St. Vincent de Paul Society’s alternative to payday loans (The Arlington Catholic Herald), Rated: A

 

In 2014, the Arlington District Council of St. Vincent de Paul Society began looking into the issue. In February, the group launched the Alternative Loan Program. People who qualify will be eligible for a loan of up to $1,000 to escape debt due to a payday loan. For people who need help with housing utilities, or medical bills, “we’ll still administer our assistance program,” said George Degnon, chairman of the loan committee.

To help run the program, the council partnered with Apple Federal Credit Union, which has several branches around Northern Virginia. “(The society) will maintain deposits at Apple Federal to serve as security for loans to borrowers whom the society recommends,” the group said in a press release. An interest rate of 3.1 percent will be retained by Apple Federal to cover administrative costs of the program.

Borrowers are required to take a budgeting class before qualifying for a loan, and can repay at a rate of just $25 a month, said Degnon.

Will 2018 Be the Year the Mortgage Industry Finally Bridges the Digital Divide? (JD Power Email), Rated: A

It should come as little surprise to those familiar with the mortgage industry that attendees at the recent Mortgage Bankers Association Annual Servicing Conference overwhelmingly selected Technology & Innovation when asked what their priorities were for 2018.

Digital Interaction Improves Mortgage Customer Satisfaction
For the first time, the 2017 J.D. Power U.S. Primary Mortgage Origination StudySM found both refinance and purchase customers cite online/website as the most frequent method of submitting a mortgage application. A total of 43% of mortgage customers report applying digitally in 2017, up from just 28% in 2016. Customers applying digitally also report substantially higher overall satisfaction with the mortgage origination process.

Still Need a Human Touch – Balancing Self-Service with Live Support Presents Challenges
The J.D. Power 2017 U.S. Retail Banking Satisfaction Study was the first to introduce
the idea of the “rise of the retail banking omnivore,” a financial services consumer that flips seamlessly through multiple interaction channels. Specifically, the study found that more customers than ever are using mobile banking (49% of Millennials, 31% of Gen X and 16% of Boomers). Despite this widespread adoption of the digital channel, 71% of all bank customers visited the branch an average of 14 times over the past year. Among Millennials, 71% used the branch, averaging 11 visits in the past year.

Source: J.D. Power

View the full report here.

HomeUnion Launches Investimate to Determine a Home’s Value as an Investment Property (Business Wire), Rated: A

HomeUnion, the leader in online residential real estate investing, has launched Investimate, a tool that enables consumers to see the potential value of a house as an investment using AI and machine learning. Investimate predicts a property’s investment value by estimating three factors: its price, rent, and operating expenses. Investimate is powered by big data on 110 million homes, institutional-quality research and on-the-ground experts with deep insight into local real estate market conditions.

With the launch of Investimate, HomeUnion is the only website that forecasts the performance of residential properties over a period of 15 years. After entering the address of a house, a consumer views comprehensive information on that property, including yields, appreciation and total returns. HomeUnion’s Investimate also displays in-depth information about the physical characteristics of each property, surrounding neighborhoods, historic price and rent trends, sales comps and other detailed information.

Real estate tech company Qualia closes $ 33M Series B (Bankless Times), Rated: A

Qualia, a real estate technology company streamlining the home closing process, today announced the closing of a $33M Series B led by Menlo Ventures with participation from 8VC, Bienville Capital, and Barry Sternlicht. With this new capital, Qualia will expand its engineering and product teams and accelerate their growth into additional markets across the U.S.

BBX Capital Corporation Reports Financial Results For the Fourth Quarter and Full Year, 2017 (MarketWired), Rated: A

Fourth Quarter 2017 Compared to Fourth Quarter 2016:

  • Total consolidated revenues of $214.7 million vs. $198.5 million, an increase of 8.2%
  • Net income attributable to shareholders of $44.0 million vs. $4.9 million
  • Diluted earnings per share of $0.43 vs. $0.05
  • Benefit for income taxes of $37.3 million vs. a provision for income taxes of $12.5 million due to a decrease in net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act (2)
  • Free cash flow of $19.6 million vs. $16.0 million (1)

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016:

  • Total consolidated revenues of $815.8 million vs. $767.3 million, an increase of 6.3%
  • Net income attributable to shareholders of $82.2 million vs. $28.4 million
  • Diluted earnings per share of $0.79 vs. $0.32
  • Benefit for income taxes of $7.2 million vs. a provision for income taxes of $36.4 million primarily due to a decrease in net deferred tax liabilities (2)
  • Free cash flow of $43.6 million vs. $68.2 million (1)

Balance Sheet as of December 31, 2017 Compared to December 31, 2016:

  • Total consolidated assets of $1.6 billion vs. $1.4 billion
  • Total shareholders’ equity of $573.2 million vs. $454.6 million
  • Fully diluted book value per share of $5.52 vs. $4.22

Three equity crowdfunding platforms you should consider (Born2Invest),  Rated: A

Indiegogo

Founded in 2007, Indiegogo remains to be one of the most popular and easy-to-access crowdfunding platforms to date. The website is home to countless crowdfunding projects, most of which are gadgets and technological innovations. Some of the successful campaigns out of Indiegogo are the ONAGOfly smart droneSondors THIN electric bike, and popSLATE2, which serves as a second screen for iPhones.

Other than a huge selection of startups to invest on, Indiegogo is also one of the few crowdfunding platforms that provide initial coin offerings (ICO) for new cryptocurrencies, according to Black Enterprise.

SeedInvest

The minimum investment to be made at SeedInvest is $500. Also, since the projects on the website are highly vetted and promising, chances of success are bigger. The platform offers a customizable auto invest program that allows people to diversify their investments in up to 25 startups as well.

StraightUp

For New Yorkers, StraightUp is going to be of great help. Coming straight out of the incubation of HAP Ventures, the company carries a deep knowledge of property crowdfunding and The Big Apple’s real estate market.

What StraightUp does differently from other competitors in its field is that it invests along with its clients. Whatever project their client finds interesting, StraightUp also supports by being a part of its crowdfunding. In doing so, the interest between StraightUp and its clients are in line with each other.

Lendio adds Gainesville-Ocala franchise (Bankless Times), Rated: B

Small business loan marketplace Lendio today announced the opening of a new Lendio franchise in the Gainesville-Ocala, Florida region. Through the Lendio franchise program, Luis Salazar will help local businesses in the community apply for loans, review their options and secure funding, easing the financial hurdles for small business owners.

Lendio is an online service helping business owners find the working capital they need to grow their business through the company’s network of more than 75 lenders. Funding options include SBA loans, startup loans, equipment loans, and commercial real estate loans. In the last fiscal year alone, Lendio facilitated more than $300 million in funding.

 

HR Buzz: March Madness, Taxes and Mobility, Disappointing HiPos (Bloomberg), Rated: B

More than seven in 10 (71.4 percent) student debtors consider benefits covering their loans to be an important or very important factor when pondering job offers, a survey commissioned by student loan consolidation and refinancing service LendEDU and online lender Laurel Road found.

More than half (53.1 percent) would stay in a job they disliked if it was helping them pay off their student debt, and 58.4 percent would take a loan repayment benefit instead of additional vacation days. The survey was done Feb. 8-9 among 1,000 student borrowers who graduated between 2012 and 2017.

EnTrustPermal Expands Alternative Investment Capabilities With Dedicated Aviation Financing Team (PRNewswire), Rated: B

EnTrustPermal, a global alternative asset manager, today announced the expansion of its private debt opportunities investment platform with the addition of John Morabito, a veteran aviation investor from the CIT Group.  EnTrustPermal’s private debt opportunities capabilities now include direct leasing and financing vehicles in the maritime and aviation industries.

Commercial Real Estate Veteran Joins PeerStreet to Lead Commercial Real Estate Team (BusinessWire), Rated: B

PeerStreet is excited to announce the appointment of Greg Galusha as Head of Commercial Real Estate. He will be based in the firm’s headquarters in Los Angeles, California.

Galusha is responsible for leading PeerStreet’s growing commercial real estate division, which will help PeerStreet expand and enhance the current spectrum of commercial real estate investments offered through its marketplace.

 

Elevate Named as Finalist for LendIt Fintech 2018’s Financial Inclusion Award (Business Wire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2018. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

United Kingdom

Landbay Milestone: Hits £100 Million in Lending (Crowd Fund Insider), Rated: AAA

UK-based peer-to-peer lender Landbay announced this week it has hit its £100 million in lending milestone. The online lending platform achieved its half-way point in lending this past September and revealed that since then momentum has accelerated to result in near-on double of lending volumes in just six months. The lender also noted that the amount to more than £4 million in interest was earned by its investors from loans originated by its platform.

Landbay also confirmed that while lending volumes are always increasing, its focus remains on ensuring that all the lending it does is responsible and it is proud to affirm that its track-record of zero defaults or arrears is still intact.

Founded in 2013, Landbay describes itself as a fast-growing UK peer-to-peer lending platform that enables retail investors, institutions, and local governments to invest in UK’s private rented sector through the funding of residential buy-to-let mortgages.

Landbay is fully authorized and regulated by the FCA, but peer-to-peer lending platforms are not covered by the FSCS. Since its founding, Landbay has launched six other Seedrs campaigns, with the previous initiative attracting more than £1.6 million, which includes an investment from tennis star, Andy Murray.

 

Funding Circle Investors Lent More Than £113 Million to Over 1,700 UK Businesses in February 2018 (Crowdfund Insider), Rated: AAA

Source: Crowdfund Insider

On Wednesday, online lender Funding Circle announced investors lent more than £113 million to over 1,700 UK businesses throughout the month of February. Funding Circle also reported that over the last six months investors have helped more than 10,200 small businesses be able to gain access to financing. More than 678 million has been lent through its platform from August 2017 to February 2018. Breakdowns of February 2018 included the following:

Source: Crowdfund Insider

 

Woodford-backed Atom Bank grabs £149m as Spanish bank BBVA ups its stake (City A.M.), Rated: AAA

Challenger bank Atom, which counts rapper Will.i.am as a board adviser, has today grabbed £149m in its latest capital raising.

BBVA, which invested £85.4m and has ploughed in a total of £167m so far, upped its stake to 39 per cent and said the new investment signalled its “confidence in both the business strategy and management team”.

Augmentum’s fintech fund exceeds crowdfunding target to raise £695,000 (Peer2Peer Finance News). Rated: A

A VENTURE capital firm that has a stake in Zopa has breezed through its crowdfunding target to hit £695,000 before closing to new investments, and now looks set to raise £100m from a London flotation.

The initial £500,000 crowdfunding target was hit within 24 hours.

LendInvest Funds £5.5 million Development Deal on Historical Glaswegian Location (CrowdFund Insider), Rated: A

LendInvest also reported that construction is expected to be completed by late October 2018. The total GDV is forecast at just under £8.5 million.

Ablrate considers buying Collateral’s loan book (Peer2Peer Finance News), Rated: A

BUSINESS lender Ablrate is considering buying the loan book of Collateral, the peer-to-peer lending platform that recently went into administration.

Ablrate’s chief executive David Bradley-Ward said he has contacted Collateral’s administrators to find out how it can help.

LATTICE80 opens New Global Headquarters in London (LATTICE80), Rated: B

Global Fintech Hub LATTICE80 strategically relocates its global headquarters from Singapore to London.

LATTICE80 announced its plan to expand into several cities globally including London, New York and Seoul. By relocating its global hub to London, it can better support its global expansion plans in Europe, Asia and US this year. LATTICE80 will still keep the operations in Singapore to cover Southeast Asia.

European Union

Business Borrowers Should Think Outside the Bank (Payments Journal), Rated: A

Peer-to-Peer lending for small businesses is not new, as those of us on this side of the pond can recall from Lending Club and Prosper, and surely not without lender risk. One of the points made in this piece is that SMEs in Scotland account for ‘more than half’ of all private sector employment.  This is not dissimilar to the world in general, although SME definitions vary widely. In the U.S. for example, there are about 102 million people employed and we would estimate that roughly 60% work for businesses with less than 100 employees. Among these are about 24 million businesses with no employees (sole-proprietors).

They key to this business space however is to help fill a liquidity gap in the market that banks are either unwilling or unable to accommodate, given capital regulations, asset risk ratings, liquidity ratios and so forth.

Real estate crowdfunding company Housers teams up with Redpiso (PropertyPortalWatch), Rated A

The participative real estate financing platform Housers has signed a collaboration agreement with Redpiso so that its promoters appear on the website of this real estate company, the two companies reported today.

 

Capital Markets Union (European Commission), Rated: B

Commission presents Action Plans on sustainable finance and financial technology and adopts legislative proposal on crowdfunding

Action Plan on Financial Technology

The Action Plan sets out 23 steps to enable innovative business models to scale up, support the uptake of new technologies, increase cybersecurity and the integrity of the financial system.

Legislative proposal on crowdfunding

The Commission also put forward new rules that will help crowdfunding platforms to grow across the EU’s single market.

 

International

Is a new and better culture evolving in the credit market? (AltFi), Rated: AAA

The promise of direct lending 2.0

The fastest-growing and potentially huge segment of private credit is being brought about by tech and data powered lending platforms – Direct Lending 2.0. These groups have evolved from their P2P roots. Business models are being re-examined, which is healthy. Several, such as Auxmoney, Funding Circle and Lending Club are now large originators and servicers of SME and consumer credits direct for institutional investors. Just one UK-based platform lender originating SME credits of around 100,000 Euros per clip made more loans of that size to UK companies than the entire UK banking system managed in Q4. This potentially vast capital market has the potential to be a sustainable alternative to the banking system.

The arrival of credit culture 2.0?

In this context it was interesting to see Patty McCord, world-beating Netflix’s ‘Chief Talent Officer’ (we don’t see many of those in the credit market) recently join Lending Club.

Meeting the Fintech Challenge in Digital Consumer Lending: Strategies and Technologies for Innovation (Celent), Rated: A

Digital lending is not limited to fintechs; banks and credit unions have many strengths which, when combined with digital technology, will enable them to thrive long after the Fintech Era ends.

Source: Celent

Finastra, Microsoft form strategic alliance to shape future of financial services software (RealWire), Rated: A

Finastra and Microsoft have formed a strategic alliance to deliver secure, flexible and cost effective financial services cloud solutions. As part of the alliance, Microsoft Azure, Microsoft’s enterprise-ready trusted cloud platform, will underpin FusionFabric.cloud as Finastra’s strategic cloud platform. In addition, Finastra will launch a selection of its global payments and retail banking products on Azure over the course of this year.

India

This husband-wife duo makes AnyTimeLoan a reality (Your Story), Rated: AAA

Keerthi is an engineering graduate and an alumnus of IIM and ISB with over 14 years of experience across financial service and infrastructure sectors. He co-founded the AnyTimeLoan along with his wife Neha Jain, 32, who is a Chartered Accountant by profession and has over nine years of experience in taxation, compliance, and audit. She was associated as Partner in a CA firm before she took over ATL as co-founder wherein she handles entire finance, compliance, etc.

ATL has also applied to the RBI and is in the process of seeking NBFC P2P license.

For the financial year 2017-18, it is clocking revenues worth Rs 300 lakh, with total loans disbursed around Rs 39.8 crores. It also claims to have a default rate of less than 0.23 percent.

Africa

Africa’s banks lag behind on innovation in financial services (Financial Times), Rated: AAA

African central banks are stifling development by failing to keep up with financial services innovation, according to the head of a UN economic agency and industry executives.
Penetration of mobile money is more than 90 per cent in countries such as Kenya, where Safaricom, a telecoms provider, developed the Mpesa platform in 2007. But it is only 1 per cent in Nigeria.

Meanwhile, some central banks, such as in Tanzania, allowed innovations such as payments between different telecoms operators three years ago while others still ban them.

Many financial services companies, such as mobile-based micro-loan companies, have escaped formal regulation in most African countries as central banks and telecoms regulators struggle to categorise them.

Authors:

George Popescu
Allen Taylor

Monday March 5 2018, Daily News Digest

marketplace lending

News Comments Today’s main news: Kabbage says ‘no’ to lending for assault guns. Collateral enters administration. Orix invests $60M in Wecash. SMBs accept face-to-face payments via mobile devices. Today’s main analysis: The friction between new finance and old regulations (a must-read report). Today’s thought-provoking articles: 3 lessons from LendingClub’s earnings. The business schools that produce the highest salaries. Beware fintechs […]

marketplace lending

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Africa

News Summary

United States

Online lender Kabbage to restrict weapons lending (Reuters), Rated: AAA

Kabbage Inc, a U.S. online lender for small businesses, said it will cut ties with clients that make or sell assault-style rifles or that sell weapons or ammunition to people under 21 years old, one of the strongest steps by any financial firm after last month’s high school massacre in Florida.

3 Revelations From LendingClub’s Earnings Report (The Motley Fool), Rated: AAA

1. Lawsuit settlements

One piece of good news is that the company recently dealt with its largest liabilities from the 2016 scandal, settling both federal and state class action shareholder lawsuits. The bad news: LendingClub has to pay plaintiffs a total of $125 million, with $47.75 million covered by insurance, leaving LendingClub on the hook for the remaining $77.25 million. That amounts to roughly 12% of the company’s liquid assets and about 5% of the current market capitalization.

2. A challenging environment

In addition to these company-specific problems, the macroeconomic environment has become more challenging, though that is no fault of LendingClub. Increased awareness of personal loans delivered via the internet has spurred a large increase in applications, and LendingClub saw a 43% increase in applications in 2017 — much higher than the company’s 3.7% growth in originations.

3. Cost cuts in 2018

LendingClub believes it has stabilized both its credit model and its investor base in 2017 while introducing new investor products, and it will pivot in 2018 to focusing on controlling costs. Part of that will entail outsourcing its loan servicing to industry-standard third parties while reallocating internal engineers to the things that differentiate the company, like data-driven underwriting and product innovation.

For the full year 2018, the company forecasts 18% to 22% revenue growth while targeting cost growth of only 14% to 16%.

 

The top 20 business schools where graduates earn the most money, ranked from lowest to highest salary (Business Insider), Rated: AAA

With that in mind, online lender SoFi looked at the average salary graduates of American business schools earn and ranked the top 20.

SoFi’s approach is unique. It reviewed the self-reported income on over 60,000 student-loan refinancing forms from January 2014 to December 2017.

The average salary for graduates of all business schools SoFi reviewed was $109,992.

  • 20. University of Texas at Austin — $139,776
  • 3. Stanford University — $186,534
  • 2. Columbia University — $189,295
  • 1. University of Pennsylvania — $224,034

There is Friction Between New Finance & Old Regulation (Crowdfund Insider), Rated: AAA

The Milken Institute is out with a comprehensive report this week that drills down into existing legislative action by Congress that addresses the emerging Fintech industry. This is the first report of its kind and provides a solid perspective on what Congress has accomplished to date while recognizing the fact elected officials can do far more.

“Subjecting nonbank lenders to 50 different state usury laws is inconsistent with today’s increasingly interconnected and digital global economy.”

The research provides multiple policy recommendations. In brief, they are as follows:

  • Provide certainty on “true lender” and “valid when made” issues to maintain a vibrant, competitive marketplace for credit.
  • Harmonize inconsistent state-by-state regulations related to mobile banking to drive financial inclusion and access.
  • Update tax reporting guidelines regarding cryptocurrency transactions to protect against tax evasion and to promote a more transparent, responsible marketplace.
  • Enable the reporting of alternative data that can expand access to credit.
  • Develop common reporting standards among U.S. financial regulators to foster a more transparent marketplace.
  • Require the IRS to automate certain data collection and reporting processes that can help enhance the speed and efficacy of the underwriting process.

This report is a must read policy paper for Capitol Hill staffers and US Fintech industry participants.

Read the full report here.

Equity and Credit Market Volatility, Continuing Bank-FinTech Partnerships (PeerIQ), Rated: AAA

US equity markets had a bad week as the S&P500 closed 3.3% lower at 2,659. CDX IG spreads widened marginally by 0.6 bps to 55 bps and CDX HY spreads widened by 8.7 bps to 337 bps. We have seen significantly higher volatility this year, driven mainly by rising interest rates and inflation expectations. No new MPL deals have priced since the rise in volatility, although we expect the first $1 Bn MPL ABS transaction to announce soon.

We share a few anecdotes from our informal conversations which we share in generic fashion to protect the innocent:

  • A large issuer: “Our bonds are oversubscribed 2 to 3x. And when we share that with our investors they want more.”
  • A large ABS investor: “We need help monitoring losses in the personal loan ABS space. Is this an indutry issue?”
  • A large investment bank (Warehouse): “We ar doubling our exposure to warehouse lending. We have the mandate to grow the book.”
  • A large investment bank (Syndicate Desk): “MPL has gone mainstream now.”
  • A lender: “The 5% risk retention requirement is hurting our ability to issue loans to consumer and grow our business responsibly.”
  • An issuer: “We are a small emerging originator and we have 7 term sheets – from large banks and small – in the last few weeks. Competition in warehouse lending is growing.”

Also heard at the conference was that Citibank is planning a Marcus-like online lender to enter the consumer unsecured loans space, although the timeline was unclear. Our view is that the GS Marcus – and specifically the ROE and NIM opportunity – is inspiring competitive response from other banks including Citi.

Marketplace lenders develop new wrinkles to attract more funding (American Banker), Rated: A

Last year, marketplace lenders learned that maintaining diverse sources of funding is just as important as managing the credit risk in their loans.

LendingClub, Marlette Funding and others developed their own securitization platforms, rather than relying on whole-loan sales to large investors. They also invited some of these investors to contribute seasoned loans to collateral pools for these in-house deals.

Marketplace lending’s death has been over exaggerated (PaymentsSource), Rated: A

It’s clear that equity investors no longer see the value of marketplace lenders, such as companies that provide credit at the point of sale or online lending.

Source: PaymentSource

A typical lender leverages equity into debt at a fixed ratio. If they want to grow their portfolio they have to raise equity and lever it into more debt. An off-balance sheet marketplace eliminates the equity-debt leverage ratio allowing a lender to double and triple their portfolio as quickly as they can grow their marketplace.

The SEC Goes Hot with ICO Subpoenas but are Regulators “on Shaky Legal Ground?” (Crowdfund Insider), Rated: A

The fact the Securities and Exchange Commission has been issuing subpoenas to initial coin offering (ICOs) issuers has been rumored for quite some time. Recently, multiple publications, including Crowdfund Insider, revealed this fact. The SEC has been warning of this sort of activity for many months and, while not surprising to most, it is an unpleasant moment for an issuer when that subpoena shows up.

Mulvaney says the CFPB will depend heavily on state Attorneys General for enforcement of consumer protection laws (Lexology), Rated: B

For example, the acting director noted that the agency will devote greater resources to consumer education, instead of relying heavily on enforcement actions to ensure consumers make the correct choices, reaffirming previous remarks in a Wall Street Journal opinion piece (previously covered by InfoBytes here).

Mulvaney stated that he does not anticipate devoting any further resources to mandatory arbitration clauses, citing Congress overturning its arbitration rule through the Congressional Review Act as evidence the Bureau does not have the authority to do so.

3rd Circuit holds payday lender’s arbitration clause unenforceable (Lexology), Rated: B

On February 27, the U.S. Court of Appeals for the 3rd Circuit held that an arbitration clause is unenforceable if the corresponding forum selection provision designates a forum that does not actually exist.

The benefits of fintech for the credit invisible (microbilt), Rated: A

 

Rethinking The Reputation Of The Merchant Cash Advance (PYMNTS), Rated: A

The rise of alternative lending and familiarity of growing names like OnDeck is beginning to shift public perception of the merchant cash advance, however.

There are scenarios, too, in which a merchant cash advance may actually be the best financial option for a business in need of working capital.

“We see a lot of clients who already have a long-term equipment loan, or an SBA loan, or a loan from a traditional bank or a factoring line, and they’re looking to unlock short-term liquidity from their business,” he said. “When you take out an SBA loan or equipment loan, you have to have some type of collateral to pledge, and that money can dry up quickly. We come in un-collateralized.”

One driver behind the shifting reputation of merchant cash advances is the industry’s participation in technology adoption and innovation.

At Best Egg, talk is a best practice (American Banker), Rated: B

So, every quarter, he and the company’s management team host an all-hands meeting and outline to the company’s 100-plus employees what the most important goal for the next 90 days will be.

So the word went out to employees that for the time being, efforts to grow the business would have to take a back seat to making certain that the existing business was profitable. According to Meiler, it was employees’ focus on the task that helped Best Egg rack up $11 million in GAAP profits last year, even as competitors were still posting operating losses in the tens of millions of dollars. And, he adds, the company still grew its business by 60% anyhow.

Best Fintechs to Work For (American Banker), Rated: A

Office exercise happens beyond a standing desk at many of the companies. NvoicePay not only provides stretching areas and lockers to employees, it offers monthly classes with a certified trainer and kinesiologist. Marlette Funding’s Best Egg unit offers employees self-defense classes on site, along with yoga.

And if you like the beach, check out nCino, where employees regularly go for early morning paddleboat sessions at nearby Wrightsville Beach in Wilmington, N.C., and SmartbizLoans, which hosts “Disco Yoga” at San Francisco’s Baker Beach.

Addressing an employee’s well-being and comfort comes in different forms, whether it is Cross River Bank’s policy of providing 100% of the premium for various insurance benefits covering employees and their families, Nav’s unlimited paid time off option for employees, or Ensenta’s tradition of celebrating workforce diversity with multiple holidays, including Kwanzaa, Diwali, and the Day of the Dead.

To keep burnout in check, PeerStreet mixes play with hard work (American Banker), Rated: A

To that end, they’ve established a company that regularly celebrates its successes and milestones with parties, and encourages employees to get together and have fun in nonwork environments. A prime example of the latter is the PeerStreet Olympics, an annual event in which the company is divided for a day into teams of friendly athletic competition, some of which takes place on the beach near its Southern California offices.

United Kingdom

Peer-to-peer lender Collateral enters administration (Financial Times), Rated: AAA

Collateral (UK), a small P2P company offering pawnbroker-style and property-backed loans with 15 per cent returns, went into administration on Wednesday after it emerged that it was not authorised by the Financial Conduct Authority.

BondMason offers to step in on Collateral loans (P2P Finance News), Rated: A

PEER-TO-PEER investor BondMason has offered to step in and manage the loanbook of the troubled Collateral platform.

BondMason, which invests in loans across more than 30 P2P platforms on behalf of investors, revealed it has invested 2.48 per cent of its portfolio through Collateral, which has fallen into administration.

P2P platforms reassure investors after Collateral closure (P2P Finance News), Rated: A

PEER-TO-PEER lending firms have been reassuring their investors about the safety of their platforms in the aftermath of Collateral going into administration.

Business lenders Ablrate and MoneyThing have both sent messages to their customers detailing their stability, performance and regulatory requirements that mean they have to hold client money separately and have a ‘living will’ that puts a plan in place should a business fail.

Growth in the number of Zombie businesses in the South East says report (Daily Echo), Rated: A

The proportion of south east companies which are only paying the interest on their debts – one of the signs of a so-called ‘zombie’ business – has risen to four per cent in December from one per cent in April 2017, according to indicative research by R3, the insolvency and restructuring trade body.

This represents around 12,000 businesses in the region.

Beware Fintech Firms Bearing Bitcoin (Bloomberg), Rated: AAA

Rather than try and undercut banks, or chase millennial savers’ pennies at a loss, fintech firms are now leaping at the chance to make serious cash through a technology that most banks won’t even touch. What’s more, Bitcoin has the power to take over people’s lives. One trader says it’s worse than gambling; Korea calls victims “zombies.”

Here’s a roll call of recent converts: Mobile-payments firm Square Inc. has rolled out Bitcoin trading; social-payments app Circle splashed $400 million on Poloniex, only about 15 months after it had stopped offering bitcoin trading; and money-transfer company Revolut has started offering crypto trading facilities.

Trading platform Coinbase booked more than $1 billion in revenue last year, according to Recode, which, if true, is more than peer-to-peer marketplace Lending Club and more than Square. On top of the money to be made from trading fees and asset-price gains, Bitcoin could also act as a lure, helping startups cross-sell their other products to a bigger audience.

 

London Fintech Humaniq Launches New Version of Mobile App (Crowfund Insider), Rated: A

On Friday, London-based FinTech firm Humaniq revealed it is marking the milestone of its mobile app reaching its first 50,000 downloads by unveiling a new, improved version.

Some of the new features include:

  • New referral program: The new 2.0 referral program will build on this by displaying community progress with referrals and thereby make the referral process more transparent and intuitive for all users.
  • Transaction options extension: Transactions can now be made through the messaging chat system.
  • New registration process: Allows users to start interacting with a Humaniq assistant bot, which becomes smarter and is learning to execute more useful commands, even without the registration.

Peer-to-peer lender Linked Finance helps firms to add 2,400 jobs (The Times), Rated: A

The country’s largest peer-to-peer lending platform said that it had supported the creation of more than 2,400 jobs since it began its Irish operations almost five years ago.

Linked Finance, which connects local businesses in need of loans with an online lending community of individuals, institutions and other investors, said firms that had borrowed money through its platform had raised staffing levels by 24 per cent on average.

City Moves for 5 March 2018 – who’s switching jobs at ArchOver? (City A.M.), Rated: B

ArchOver, the peer-to-peer (P2P) business lending platform, has announced Bill Johnston will join its board of directors as a non-executive director (NED). In his role, Bill will support ArchOver in formularising its training and development programme, to ensure it has the right talent in place as it continues to scale.

China

Orix invests $ 60m in Chinese fintech startup (Asian Review), Rated: AAA

Japanese financial services group Orix bought a 6.4 billion yen ($59.8 million) stake in Wecash, a Chinese startup that uses big data and artificial intelligence to rate consumer credit.

Wecash can calculate a consumer’s creditworthiness in 10 seconds or less using phone records and other personal information, and has partnered with dozens of financial institutions so far. It also suggests potential lenders to consumers looking to take out a loan.

Only about 30% of the Chinese population is believed to borrow money from banks.

Hong Kong gives fintech measures the thumbs up (Asia Asset Management), Rated: B

Hong Kong will allocate HK$500 million (US$64.1 million) to financial services, including fintech, over the next five years, Mr. Chan said in the budget speech.

European Union

We talked to Nordic fintech queen Lena Apler – and her message to legacy banks is reboot or die (Business Insider), Rated: A

Big banks are particularly exposed when it comes to ETF funds. The fast-growing $5 trillion-dollar industry is being challenged by a crop of robo advisors, such as Apler’s portfolio company Sigmastocks, an algorithm-powered tool that tailors portfolios for customers, or BetterWealth, a roboadvisor app.

Although the region’s leading banks, such as Danske, Nordea and Swedbank are doing some good things and building new digital banking products and roboadvisory capabilities, Apler says, it won’t be enough.

Apler’s online bank Collector, which received its full banking license in 2015, has expanded to comprise cards, saving accounts and quick loans to both consumers and businesses. Collector doesn’t face the same issues as legacy banks in a digital world, Apler explains.

International

SMBs Turn To Mobile Devices To Accept Payments In Face-To-Face Environments (PYMNTS), Rated: AAA

The retail point-of-sale (POS) terminal market is no stagnant business. While it is currently a $15 billion industry, Global Market Insights is expecting it to reach $45 billion by the year 2024.

Only 13 percent of small- and medium-sized businesses (SMBs) are considering adding new payment types to face-to-face and remote environments, according to The PYMNTS SMB Technology Adoption Index.

Here are five ways SMBs are accepting payments from their customers.

  1. About a quarter – or 26 percent – of SMBs use hardware and software integrated POS to accept payments in a face-to-face environment.
  2. Almost two in 10 – or 19 percent of SMBs – use check scanning to accept payments in a face-to-face environment.
  3. And just about the same amount – 18 percent – of SMBs use NFC-enabled terminals to accept payments in a face-to-face environment.
  4. Fourteen percent of SMBs use mobile phones to accept payments in a face-to-face environment.
  5. Just under one in 10 – or 8 percent – of SMBs use mobile tablets. 

AltFin Shines As Investor Interest In B2B FinTech Continues (PYMNTS), Rated: A

Total venture capital across the global FinTech market between 2010 and 2017 hit a combined $97.7 billion, growing at a compound annual growth rate (CAGR) of 47 percent.

Accenture highlighted Kabbage, the U.S. alternative small business lending firm, that secured $900 million in 2017, while other alternative finance players, like LendingPoint and SoFi, landed significant investment rounds.

This week, alternative lender C2FO showed that the alternative finance funding gears are still turning, landing $100 million from Allianz X and Mubadala Investment Company. Existing backers Temasek, Union Square Ventures and Mithril Capital also participated, an announcement said.

This week’s blockchain investment comes from Square Peg Capital, which provided $5.5 million in Series A funding to AgriDigital, an Australian company hoping to use the funds to expand into North America.

Reports in The Australian Financial Review this week said the company uses blockchain to facilitate supply chain finance to the agriculture business, offering supply chain management features also powered by distributed ledger technology.

Why More MBA Students Are Gunning For Careers In Fintech (Business Because), Rated: A

According to CB Insights, $4.7 trillion of revenue generated by financial services firms is at risk of being displaced by fintech startups.

Prominent business school alumni have founded successful fintech startups, such as Giles Andrews, who setup peer-to-peer lender Zopa after getting an MBA at INSEAD. Jeff Lynn and Carlos Silva developed crowdfunding platform Seedrs during their MBA at Oxford’s Saïd Business School. According to PwC’s Global Fintech Report 2017, funding of fintech startups has increased at an annual growth rate of 41% over the past four years, with $40 billion in cumulative investment made.

Niels Turfboer is UK managing director at Spotcap, the Berlin-based online lender.

Lending and profit on the blockchain – Bitstrades targets new markets (The Merkle), Rated: B

Bitstrades is clearly aiming to position itself as a complete platform that both links users together and also leverages economies of scale to make both lending and investing possible. The Bitstrades ICO raised millions in funding and now the BSS token is available for trading.

TigerWit Raises $ 5M in Funding (Finsmes), Rated: B

TigerWit, a global fintech company, secured $5m in funding.

Australia/New Zealand

Financial planners not needed in credit space (TheAdviser), Rated: A

Bringing financial planners into the credit space would be unnecessary, according to a Commonwealth Bank executive, as there are more than enough brokers to service the mortgage needs of Australians.

The CBA executive said: “With 16,000 brokers out in the marketplace, we’re certainly not in a position where we need more people to serve Australians well in meeting their mortgage needs. For me, it’s certainly not a quantity issue.

The PC has also alleged that brokers working for lender-owned aggregators could feel compelled to provide customers with home loan products offered by the bank with an ownership share of the business.

Commissioner Stephen King referenced CBA’s ownership of Aussie Home Loans and cited figures published in the PC’s report, which said that 37 per cent of loans written by Aussie brokers were for CBA products.

We launch a new calculator that figures out the true “cost of credit” of a loan contract (Interest.co.nz), Rated: B

This one will be very helpful for readers who know just three things: how much they are borrowing, the amount of their repayments, and the number of those repayments.

It will be very useful indeed for anyone contemplating taking out a personal loan, a car loan, or even a payday loan.

With just these three items, you can work out the effective cost of credit of the debt obligation, expressed as a % per annum.

India

FY 19 – Beginning of a New Era for P2P Lending in FinTech Sector (India Info Online), Rated: AAA

India is poised to be a USD 4-trillion economy by 2022, of which USD 1-trillion would be digital economy.

Digital economy was a focal point for this budget ’18 as government’s support with regard to lending MSME’s allocated 3794 crore in the form of capital support and interest subsidy by 2022 which will help develop the MSME sector. Micro, Small and Medium Enterprises (MSMEs) contribute about a third of India’s manufacturing output and provide employment to over 10 crore people. Despite this, the share of institutional lending in the total borrowings of MSMEs is less than 10%.

The prudential guidelines include maximum leverage ratio that can be maintained (2 times), minimum net owned funds (Rs2 crore), cap on aggregate exposure of lender to all borrowers (Rs.10 lakh), borrowers across all P2P (Rs10 lakh), exposure of single lender to borrower (Rs50,000) and maturity of loans (not exceed 36 months).

Signzy is helping banks solve customer authentication, onboarding problems with blockchain-based solution (YourStory), Rated: B

Signzy developed blockchain and AI-based solutions to digitally identify, verify, and authenticate customers. Its onboarding solution, Real KYC, has now been deployed by more than 45 large clients, including leading banks, NBFCs, mutual funds, P2P lending platforms, payment wallets, and so on.

Africa

Nigerian banks are using Facebook Messenger to onboard small businesses (Tearsheet), Rated: AAA

Mastercard is working with Facebook Messenger to bring a digital payments and banking experience to small businesses in Nigeria, in an effort to incentivize Nigerian merchants to close the mobile payments adoption gap and bring them onto the formal financial grid.

The payments giant, which has said it’s in the business of killing cash, is bringing this initiative to a country where 98 percent of the $301 billion in consumer-to-business payments is transacted using cash.

Authors:

George Popescu
Allen Taylor

Thursday March 1 2018, Daily News Digest

JPMorgan

News Comments Today’s main news: RateSetter opens IFISA to new investors today. Amazon customers would bank with e-tailer. Zopa’s VC firm raises 500K GBP in 24 hours. Collateral goes off line. Auxmoney hits profitability. Credy raises $1.4M. Today’s main analysis: Is JPMorgan’s tech investment paying off? Today’s thought-provoking articles: Presenters at LendIt Fintech USA 2018. Klarna’s end-of-year report. Asia’s fintech investment drops. […]

JPMorgan

News Comments

United States

United Kingdom

European Union

International

Asia

Canada

News Summary

United States

Many Amazon customers would welcome banking services (RetailDive), Rated: AAA

  • More than half of 1,000 U.S. Amazon customers recently surveyed said they would be willing to use an Amazon-created virtual currency for purchases, according to a survey conducted by student loan marketplace LendEDU.
  • Among other findings, the survey (which questioned consumers, including some Amazon Prime members, that made purchases on Amazon within the previous 30 days) found that 44.5% said they would also keep their primary bank account with Amazon if the e-commerce giant offered such a service.
  • Furthermore, about half of respondents said they would seek personal loans from Amazon if they were available, and roughly 45% said they would use an auto loan offering from the company. Another 30% claimed they would be ready to take out an Amazon-created mortgage.

Broad Mix of Thought Leaders to Present at LendIt Fintech USA 2018 (Lend Academy), Rated: AAA

Lending

  • Jay Farner, CEO, Quicken Loans
  • Max Levchin, Co-Founder & CEO, Affirm
  • Anthony Noto, CEO, SoFi
  • Renaud Laplanche, CEO, Upgrade

Digital Banking

  • Yolande Piazza, CEO, Citi FinTech
  • Suresh Ramamurthi, Chairman & CTO, CBW Bank
  • Luvleen Sidhu President, Co-Founder & Chief Strategy Officer, BankMobile
  • Jeremy K. Balkin, Head of Innovation, HSBC Bank USA
  • Nicolas Kopp, U.S. CEO, N26 Inc.

Blockchain for Financial Services

For 2018 we looked at one of the biggest new trends in financial services, blockchain and decided to create an event within our event. We are debuting our new blockchain event Blockfin by LendIt.

  • Tim Draper Founder & Managing Director DFJ
  • Richard Craib, CEO, Numerai
  • Tom Ding, Co-founder & CEO, String Labs/Dfinity
  • Vincent Wang, Chief Innovation Officer, China Wanxiang Group
  • Kathleen Breitman, Co-Founder, Tezos
  • Catherine Wood, CEO/CIO, ARK INVEST

Will JPMorgan’s splashy tech investment pay off? (American Banker), Rated: AAA

“Retail distribution is like a muscle,” Chief Financial Officer Marianne Lake said in discussing the company’s recently announced plan to open 400 branches in up to 20 new markets. “You have to exercise it or it goes to waste.”

Nonetheless, the New York megabank raised eyebrows when it said it would invest an additional $1.4 billion in technology in 2018 — the driving factor in projections for noninterest expenses to rise 6% in the year ahead.

Fintech Platform Current Announces Strategic Investment from Fifth Third (Crowdfund Insider), Rated: A

Current, the fintech platform that allows teens to connect their money with the people, brands and experiences they value, announced on Tuesday that Fifth Third Capital, a direct equity investment subsidiary of Fifth Third Bancorp (NASDAQ: FITB), has joined the recently announced Series A funding, led by QED Investors.

Leasing App Honcker Plans Expansion With $ 23M Funding From IAC (Auto Finance News), Rated: A

Vehicle leasing startup Honcker secured $23 million in series A funding this week and is using the capital injection to expand nationwide and bring some added features to its app, founder and Chief Executive Nathan Hecht told Auto Finance News today.

InterActive Corp. (IAC) — the media investor behind Investopedia, Tinder, Vimeo, and many others — is making its foray into the vehicle marketplace with this funding round to take a minority stake in the company. Honcker partners with dealers and plugs into their existing lender network to provide an online leasing marketplace.

How Are Fintech And Proptech Changing The Real Estate Industry In 2018? (Forbes), Rated: A

2. Ability To Reach New Investors Online

The ability to raise capital online and reach new accredited investors through online portals is still in its infancy.

5. Data Analysis To Drive Investment Decisions

Really use data analysis to drive your investment decisions, don’t just look at the headlines. Utilize big data and predictive analytics to dig into what is responsible for the migration of renters, and what those renters are seeking in their new apartment.

7. Reduced Friction In Buying, Owning And Selling

We are constantly pushing to incorporate or develop technologies to improve our business and customer experience by reducing cost, friction and time, as well as improve transparency and security. Some of these we develop ourselves, like application of machine learning and AI to develop a national neighborhood rating system. Others we adopt, like animated 3D visualization software. –

LA tech startup InvestFar’s innovative platform spearheads globalization of real estate investing (Digital Journal), Rated: A

Rising LA startup InvestFar; recently launched its signature mobile app to help aspiring investors with informed investment decisions. Titled as “InvestFar”, the app is the first platform to boast all the tools and resources needed for successful investments in long-distance or local markets nationwide.

Built in LA, this real estate tech startup is on a path to innovating how real estate and investors in this industry scale and manage their investments beyond local markets, especially in markets like Los Angeles, San Francisco and New York – where we often see inflated housing prices and shrunken inventory given increasing foreign investment.

Small construction companies lukewarm on tech investment (ConstructionDive), Rated: A

  • A recent customer survey from small business funding siteKabbage revealed that fewer than 35% of small construction companies planned to make investments at some level this year in technologies that could help their businesses and further bring them into the digital age.
  • More than 65% of contractors who responded to the study did not have a plan to invest in tools like big data solutions or mobile technologies, and the same percentage was either neutral, against or not likely to spend more than 20% on social media advertising.
  • Kabbage also found that even with well-publicized cyber attacks and other computer-related crimes, not even 40% of small construction firms planned to invest in cybersecurity.

ACA International Responds to Misleading ACLU Report on Debt Collection Industry (ACA International), Rated: B

Last week, the American Civil Liberties Union (ACLU) released a misguided and heavily misleading report accusing private debt collectors of using the criminal justice system to “punish” and “terrorize” consumers. This is absolutely false and undermines the commitment and integrity of the professional debt collection industry.

Legitimate debt collectors work with consumers to help recover outstanding debt on behalf of businesses, nonprofit organizations and governmental entities.

Tiny Kansas bank bets big on fintech (American Banker), Rated: B

Nbkc bank in Overland Park, Kan., is comfortable sitting at the same table as many of the banking industry’s biggest innovators.

The $632 million-asset bank, a unit of Ameri-National Corp., recently participated in a $16 million investment in Greenlight Financial Technology, which offers debit cards for kids that parents can control from their phones. Other investors included the Amazon Alexa Fund, SunTrust Bank and Ally Financial.

United Kingdom

RateSetter to open IFISA to new investors on Thursday (P2P Finance News), Rated: AAA

RATESETTER is opening up its Innovative Finance ISA (IFISA) to new investors on Thursday, meaning that two out of the ‘big three’ lenders will be offering the tax wrapper outside of their existing customer base.

Industry onlookers argue that the IFISA will only begin to move into the mainstream once the largest P2P platforms offer the product to new investors.

VC firm behind Zopa raises £500,000 for fintech fund in just 24 hours (P2P Finance News), Rated: AAA

A FINTECH venture capital firm that has a stake in Zopa has surpassed a £500,000 fundraising target for a new investment company in the first 24 hours.

Augmentum Capital, which has a 7.4 per cent holding in peer-to-peer lender Zopa worth £18.5m, is looking to raise £100m through an initial public offering (IPO) alongside a crowdfunding listing on Seedrs.

What’s Up at Collateral? (P2P-Banking), Rated: AAA

A question concerned investors have been speculating on for over 36 hours now, since the website of UK p2p lending platform Collateral went down around 7pm two days ago and is showing a maintenance message. Investors criticize that there was no pre-announcement of this maintenance and worse that Collateral seemed to have ceased all communications to investors and did not react to any phone or email messages.

With no communications from the platform whatsoever investors wondered what to do. Some investors reported the incident to ActionFraud squad of the police while another contacted the FCA to voice his concern and seek advice.

1) How should a p2p lending platform communicate in a crisis?

In my view not communicating at all is the worst choice.

2) What can concerned investors actually do to react, if the platform is seemingly unreachable/unresponding over a longer period of time?

Collateral investors in limbo after lender shuts down site (P2P Finance News), Rated: A

Meanwhile, it emerged that the three limited companies listed on the Financial Services Register that have traded under the name of Collateral have not had regulatory permission to operate as a consumer credit business for at least 11 months and have all now been dissolved.

Cash4Assets, which traded under the name Collateral, had cancelled its interim permissions with the Financial Conduct Authority (FCA). A permission end date is given of 23 March 2015.

Regal Pawnbroker, which also listed Collateral as one of its trading names, saw its interim permissions lapse on 31 March 2016.

And Goldmann and Sons saw its interim authorisation lapse on 31 March 2016.

Assetz Capital introduces manual lending Isa (Bridging&Commercial), Rated: A

The P2P lender recently announced it had registered 2,000 investors for its Innovative Finance Isa(IFIsa) since it launched in December last year.

So far, Isa users have invested £14m, with one third coming from transfers from other Isa providers.

Funding for finance start-ups hits all-time high in threat to big banks (The Telegraph), Rated: A

Major fundraisings in the UK last year included digital insurance distributor BGL Group getting $900m, while payments venture TransferWise got $280m. Elsewhere Monzo raised £93m in two separate rounds, while Revolut got $66m.

Britain’s two biggest lenders, Lloyds and RBS, announced £5.5bn worth of investment programmes between them last week, with online banking a primary focus of their spending plans.

Banks scramble to be open as clients shrug (Royal News 24), Rated: A

Open banking, as this particular revolution is known, was introduced on the second weekend of January, forcing Britain’s biggest banks to provide third parties with access to the accounts of any customers who authorise it.

A Citigroup analysis published last week finds three reasons why disintermediation of the established order is likely to be delayed. One is slow consumer adoption. A second is the fragmentation of the market for new “open banking” services in early stages of the regime. The final one is the ability of established payment providers to adapt to the new rules.

European Union

Klarna year-end report January – December 2017 (Cision), Rated: AAA

July – December 2017
● Compared to last year, total sales volume grew by 43%
● Total operating revenues increased 32% to SEK 2,474m (1,868)
● Operating income for the period was SEK 203m (35)
● Net income for the period amounted to SEK 117m (17)

January – December 2017
● Year over year growth in total sales volumes was 42%
● Total operating revenues increased 27% to SEK 4,526m (3,561)
● Operating income amounted to SEK 524m (168)
● Net income for the year amounted to SEK 346m (113)
● 26,000 new merchants, Group total now 89,000
● 19 million new consumers used Klarna this year

Highlights from the year
● Bank license was obtained in June
● BillPay GmbH was acquired in September
● Additional tier 1 capital was raised in May and a senior unsecured bond was issued in September

German fintech lender auxmoney hit profitability in 2017 (AltFi), Rated: AAA

Its origination volumes rose by 75 per cent during the course of the year, with over 40,000 loans and €316 million funded. Auxmoney has now disbursed more than 100,000 loans in its history, with a cumulative funding total of around €700m.

BNI Europa eyeing up further P2P lending deals (P2P Finance News), Rated: A

BANCO BNI Europa is eyeing up further deals in the alternative finance space to diversify its portfolio and widen its product offering for clients.

The Portuguese online bank has announced several funding deals over the past year, including peer-to-peer lenders Funding Circle in Germany and Raize in Portugal, and UK P2P invoice finance platform MarketInvoice.

JSC VIA SMS Group interim twelve month report for year 2017 (GlobeNewswire), Rated: B

The Group has closed the reporting period with a net turnover of EUR 20 141 087 that shows 21,5% increase in comparison with the same period in 2016. The largest net turnover was reached in Spain where the net turnover has increased by 63%; the second largest turnover was reached in Sweden – by 55%, the third – in Poland where net turnover increased by 17% in comparison with data reported to December 31, 2016.  Company’s EBITDA in 2017 has reached EUR 2 779 456 and has ensured the net profit of EUR 835 542.

International

Cerberus Capital Management to Acquire Bluestone Group’s Australasian Operations (PR Newswire), Rated: B

Cerberus Capital Management, L.P. today announced that one of its affiliates has entered into an agreement with Bluestone Group, the international financial services business based in the U.K., to acquire its Australasian mortgage lending and portfolio servicing operations (“Bluestone Holdings Australia”).

India

Credy raises US$ 1.4 million in seed round (Tech in Asia), Rated: AAA

The online lender secured the funding from Y Combinator, Khosla Ventures, and Vy Capital, in addition to several Silicon Valley-based angel investors. It will use the capital to expand its loan book, build partnerships with institutional lenders, enhance its underwriting technology, and hire new team members.

Asia

ASIA SEES MASSIVE DROP IN FINTECH INVESTMENT AS CHINA LOSES MOMENTUM (CFO Innovation), Rated: AAA

Total fintech funding in Asia was US$3.85 billion in 2017—a massive drop-off from the more than US$10 billion invested in 2016 while the amount in Q4 2017 declined to US$748 million across 38 deals after a solid US$1 billion+ in Q3, said KPMG.

Decreased fintech investment in China accounted for much of the decrease in investment in Asia, KPMG explained. According to the firm, China saw just US$45.8 million in investment in Q4’17, while total investment in 2017 was US$1.33 billion.

The top five fintech deals in the region in Q4 are as follows:

  • WeLab (lending firm in Hong Kong): US$220 million, Series B
  • GoSwiff (payments/transactions firm in Singapore): US$100 million, M&A
  • BiWang Group (Institutional/B2B firm in Shenzhen, China): US$100 million, M&A
  • PolicyBazaar (Insurtech firm in Gurugram, India): US$77 million, Series E
  • Onlyou (Institutional/B2B firm in Shenzhen, China): US$45 million, late-stage VC
Canada

Katipult Named Among Industry Giants as Finalist for “Most Promising Partnership” Award (Cision), Rated: A

Katipult Technology Corp. (TSXV:FUND) is honoured to announce that it has been nominated, alongside Polymath Inc., for the Most Promising Partnership Award at the second annual Lendit Fintech Industry awards in April. The Katipult-Polymath partnership will be competing against some of the world’s finance and fintech giants including partnerships involving Goldman Sachs, Macquarie Group, Swedbank, and Lending Club.

National Bank CEO praises federal cybersecurity plan (Financial Post), Rated: A

The chief executive of National Bank of Canada said Wednesday that the federal government’s latest budget included “a big step forward” on cybersecurity.

The federal budget tabled on Tuesday proposed various cybersecurity-related commitments, including $155.2 million over five years so that the Communications Security Establishment could create a new “Canadian Centre for Cyber Security.”

Crypto KABN launches Blockchain-Enabled Biometric ID Validation (Yahoo! Finance), Rated: B

Crypto KABN Holdings Inc. (‘Crypto KABN’ or the ‘Company’) an innovator in financial services, technologies and products for the blockchain industry, is pleased to announce that it is launching a revolutionary Blockchain-enabled biometric validation platform, called ID KABN, as the first component of its suite of financial and technology services, at the FFCON18: Velocity Conference in Toronto on March 5, 2018.

Authors:

George Popescu
Allen Taylor

Thursday April 27 2017, Daily News Digest

banks online lenders

News Comments Today’s main news: Conference of State Bank Supervisors files lawsuit against OCC. The actual complaint. P2PFA members lent more than 1B GBP in Q1. Marc Franson’s comment on CSBP lawsuit: “The proposed OCC FinTech charter had enough obstacles and questions of its own, but the Conference on State Bank Supervisors has sued the OCC in […]

banks online lenders

News Comments

United States

  • CSBS files complaint against OCC. GP:”The US is in an interesting equilibrium between state power and federal power. In the internet era state control of online institutions will lead to cross-state-boarder regulation arbitrage. States entering regulator-competition could be good for the fintechs. On the other side I don’t see why and how a federal regulator isn’t allowed to create new types of charter and compete with the states as well. I do hope that the rumore is true and the states will be more constructive in offering better alternatives instead of blocking innovation. ” AT: “This has been a long-time coming, and quite frankly, I’m surprised it’s taken this long.”
  • The actual complaint against OCC. AT: “I can’t say that I disagree with the CSBS position that the OCC deciding on its own to start a charter and regulate digital banking is an overstep of its authority. Nevertheless, I’m not convinced that states are the best regulators of an industry that inherently is cross-boundary. Constitutionally, the federal government is the regulatory authority for interstate commerce.”
  • How banks can compete against an army of fintech startups. GP:”An interesting summary worth a read.”AT: “This is a great read with practical solutions, but banks will never be as agile or as nimble as tech startups.”
  • Rising rates pose risk for students looking to refinance. GP:”A raising rates environment favors for the borrowers fixed rates and for everybody else floating rates. The rism with adjustable rates credit is of course to push the borrowers into default. There is an equilibrium between lenders seeking profits and making sure not to push borrowers into default.”
  • Helping investors avoid The Lending Club trap. GP:”Global Debt Registry offers a 3rd party solution to increase investor confidence in online loans. A good approach for the industry. They already signed up a few markee customers like Avant.”
  • Fintech apps bring stability to stressed families. GP:”There is an advantage in having credit cards you can use in case of emergency. Online lines of credit will likely act in the same way”
  • Marketplace real estate lending. GP:”…growing number of online real estate platforms…”
  • Fintech funding in New York companies is tanking. GP:”New York investors are more risk averse then Silicon Valley ones. “AT: “Maybe it’s because the more interesting innovations right now are happening somewhere else.”
  • PeerStreet named ‘Best Overall P2P Lending Platform’.
  • Kabbage CEO discusses future of entrepreneurship, IP.

United Kingdom

China

International

European Union

Australia

India

Canada

News Summary

United States

CSBS Files Complaint Against Comptroller of the Currency (CSBS), Rated: AAA

The Conference of State Bank Supervisors (CSBS) announced today it has filed a complaint in the United States District Court for the District of Columbia against the Office of the Comptroller of Currency (OCC).  The complaint seeks to prevent the agency from moving forward with an unlawful attempt to create a national nonbank charter that will harm markets, innovation and consumers.

“The OCC’s action is an unprecedented, unlawful expansion of the chartering authority given to it by Congress for national banks.  If Congress had intended it to be used for another purpose, it would have explicitly authorized the OCC to do so,” said John W. Ryan, CSBS President and CEO.  “If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority.  We are confident that we will prevail on the merits.”

The complaint asserts that by creating a national bank charter for nonbank companies, the OCC has gone far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws. Those laws authorize the OCC to only charter institutions that engage in the “business of banking,” which under the National Bank Act requires an institution, at minimum, to receive deposits.  Yet the OCC is attempting to create a new special purpose charter for nonbank companies that do not take deposits, without express statutory authorization. The OCC does not have the authority to create a special purpose charter for nonbanks without specific congressional approval.

CONFERENCE OF STATE BANK SUPERVISORS v. OFFICE OF THE COMPTROLLER ) OF THE CURRENCY and THOMAS J. CURRY (BankCSBS), Rated: AAA

  1. CSBS, the nationwide organization of state banking regulators in the United States, brings this action challenging the OCC’s recent decision to create a new special-purpose national bank charter for financial technology (“fintech”) and other nonbank companies.
  2. Although the OCC’s decision primarily focuses on fintech companies, the OCC has declared that it is empowered to create a charter for nonbank financial services providers regardless of the extent to which they are technology-driven.
  3. State authorities (including CSBS’s members) have been successfully overseeing and regulating nonbank companies—including those viewed as fintechs—for many years. In addition to supervising state-chartered banks, most state banking departments regulate a variety of nonbank financial services providers, including money transmitters, mortgage lenders, consumer lenders and debt collectors. Among other prudential requirements, these companies are required to meet state safety and soundness requirements and conform to both state and federal consumer-protection and anti-money-laundering laws.
  4. The OCC contends that the number of fintech companies in the United States and United Kingdom has reached more than 4,000, with investment in the sector growing from $1.8 billion to $24 billion worldwide in just the last five years. Regardless of the accuracy of the OCC’s calculations, it is without question that the OCC’s actions will have significant economic consequences—for example, the largest 100 money transmitters alone transferred more than $800 billion in funds in 2014.
  5. The OCC’s interest in nonbanks culminated in Comptroller Curry’s announcement in December 2016 that the OCC has decided to create a new national bank charter for nonbank companies, which would pull chartered nonbank fintech companies into the national banking regulatory system, potentially preempting and replacing the licensing, regulation, and supervision responsibilities of state authorities.
  6. It is well settled by court precedent, federal banking statutes, and industry custom that carrying on the “business of banking” under the NBA requires, at a minimum, engaging in receiving deposits. Yet the OCC has, through its latest effort, created, without express statutory authorization, a new charter for nonbank companies that would not be engaged in deposit-taking and, thus, would not carry on either the business of banking or any expressly authorized special purpose.
  7. Because the OCC has acted beyond its statutory authority, its creation of a national bank charter for non-depository companies, and the regulation upon which the OCC relies in doing so, are contrary to the NBA and violate the Administrative Procedure Act (“APA”), and therefore cannot stand.
  8. Notwithstanding the significance of the Case 1:17-cv-00763 Document 1 Filed 04/26/17 Page 3 of 31 4 fintech and non-depository industries to the financial markets and the consequences of this new charter, the OCC has declined to pursue publicly vetted regulations.
  9. Instead, the OCC has indicated that it will, as part of the chartering process, determine which (otherwise inapplicable) federal banking laws will be applied to each charter holder and will incorporate those laws through private operating agreements individualized to the business model of each applicant. The OCC does not intend to publicly disclose such operating agreements, and the OCC’s negotiations with each charter holder will be secret. The OCC’s failure to follow proper rulemaking procedures in effecting such a fundamental change in national bank regulatory policy likewise violates the APA.
  10. Further, because the OCC made its decision to offer these special-purpose charters without adequately considering and addressing the myriad policy implications and concerns raised by the public or conducting an adequate cost-benefit analysis, and because the OCC has not offered a reasoned explanation for its decision, its actions should be deemed not only contrary to law, but also arbitrary, capricious, and an abuse of discretion.
  11. Finally, the OCC’s creation of this nonbank charter program will allow chartered entities to operate outside the bounds of existing state regulation, thus creating conflicts between state and federal law that will trigger significant preemption issues. Because Congress has not granted the OCC the requisite authority to charter these nonbank entities, much less expressed the intent that the OCC’s nonbank charter program should preempt state law, the OCC’s program violates the Supremacy Clause and the Tenth Amendment of the U.S. Constitution.
Read the full complaint for declaratory and injunctive relief here.

How Banks Can Compete Against an Army of Fintech Startups (Harvard Business Review), Rated: AAA

It’s been more than 25 years since Bill Gates dismissed retail banks as “dinosaurs,” but the statement may be as true today as it was then. Banking for small and medium-sized enterprises (SMEs) has been astonishingly unaffected by the rise of the Internet. To the extent that banks have digitized, they have focused on the most routine customer transactions, like online access to bank accounts and remote deposits. The marketing, underwriting, and servicing of SME loans have largely taken a backseat. Other sectors of retail lending have not fared much better. Recent analysis by Bain and SAP found that only 7% of bank credit products could be handled digitally from end to end.

The glacial pace at which banks have moved SME lending online has left them vulnerable.

Lending to small and medium-sized businesses is ready to move online

In a recent survey from Javelin Research, 56% of SMEs indicated a desire for better digital banking tools. In a separate, forthcoming survey conducted by Oliver Wyman and Fundera (where one of us works), over 60% of small business owners indicated that they would prefer to apply for loans entirely online.

Transaction costs associated with making a $100,000 loan are roughly the same as making a $1,000,000 loan, but with less profit to the bank, which has led to banks prioritizing SMEs seeking higher loan amounts. The problem is that about 60% of small businesses want loans below $100,000.

Last year, less than $10 billion in small-business loans was funded by online lenders, a fraction compared to the $300 billion in SME loans outstanding at U.S. banks. Morgan Stanley estimates the total addressable market for online SME lenders is $280 billion and predicts the industry will grow at a 47% annualized rate through 2020.

Can banks out-compete the disruptors?

Banks’ cost of capital is typically 50 basis points or less. By comparison, online lenders face capital costs that can be higher than 10%, sourced from potentially fickle institutional investors like hedge funds. Banks also have a built-in customer base, and access to proprietary data on depositors that can be used to find eligible borrowers who already have a relationship with the bank. Comparatively, online lenders have limited brand recognition, and acquiring small business customers online is expensive and competitive.

Rising Rates Pose a Risk for Students Looking to Refinance Debt (WSJ), Rated: A

Interest-rate savings on student-loan refinancing are also shrinking as short-term rates have started to move higher, according to a new report.

Refinancing student loans has taken off in the last five years as fintech lenders, led by Social Finance Inc. or SoFi, have been offering to replace borrowers’ federal student loans with new loans that have lower interest rates.

Until recent years, rates on many federal student loans weren’t based on market rates, but a higher uniform rate set by the government.

Now, the savings are declining for some of the most creditworthy borrowers. Those with the highest credit scores who refinanced early this year received an interest rate that on average was about 2.2 percentage points lower than the rate on their original loan, according to LendKey Technologies Inc., which tracks student loans at credit unions and community banks. In 2014 and 2015, the average interest rate savings exceeded 3 percentage points.

Helping Investors Avoid The Lending Club Trap (PYMNTS), Rated: A

In an interview with Karen Webster, Charlie Moore, president of loan validation platform Global Debt Registry, said that within the last 18 months there has developed a clear need for better investor confidence in online loans — specifically loans being funded by institutional capital across different lending models.

One of the big challenges, said Moore, is for the institutional investor to be able to validate the integrity of the loan data itself.

The spreadsheets themselves might indicate, hypothetically, that a woman with a 700 FICO score, between the ages of 35 and 44 in New York City has taken out a loan of $10,000, but they won’t, as Moore stated, get the full PII or validating information that this is a real person with a real income that can be used to pay that loan’s terms. “The investors are buying on trust,” he said.

The Global Debt Registry, in turn, seeks to confirm the information in the spreadsheet, with affirmation that the borrower is a real person, that they have a social security number, that the credit score is real and that they have the capacity to pay back the loan.

Fintech Apps Bring Stability to Stressed Families (WSJ), Rated: A

The past few years have seen a proliferation of apps designed to help families—not rich people looking to allocate 401(k) retirement accounts, but the larger number struggling to make it from paycheck to paycheck, coping with the uncertainty of everyday life and trying to keep the promises they made to themselves to save.

About 12% of respondents to a 2015 Federal Reserve survey said their income varied “quite a bit” from one month to the next during the past year; an additional 20% said they occasionally had some unusually high or low months.

A three-year-old app called Even, for instance, is a response to the volatility of some people’s income. Based on past paychecks, Even estimates the amount a person makes on average, advancing money on bad weeks that the user pays back on a good week. The cost of the credit extended is covered by a subscription fee—$3 a week for individuals, though for many users employers subscribe and offer Even as an employee benefit. The company has raised $12 million in venture capital.

Another app, Digit, from Hello Digit Inc., attempts to make saving easier.

The Prism app, from Prism Money, began by simply putting all of a user’s bills in one app to cut down on the hassle of keeping track of them all. But the founders realized that managing the payment of bills was a huge source of stress to many people and shifted their focus to helping users with that, says Tyler Griffin, until recently Prism’s CEO and now entrepreneur in residence at the Center for Financial Services Innovation. Users connect the app to their bank accounts and monthly bills. The app reminds users when a bill is due and allows them to pay it with one click.

 

Marketplace Real Estate Lending (Prime Meridian), Rated: A

Today, online lending to both consumers and small businesses continues to grow in acceptance and popularity, thanks to applied technology that has enabled a smoother, quicker, and better experience for the borrower relative to traditional lending.

Real estate lending has also gone online and continues to flourish for the same reasons.

There are a growing number of online real estate platforms and, combined, we estimate that they originated well over $1 billion in loans in 2016[1]. Examples of these platforms include ShareStates, Patch of Land, Realty Mogul, LendingHome, and Money360, to name just a few.

The U.S housing market demonstrated strong growth over the past year. Price appreciation accelerated from 4.9% to 5.3%, existing home sales outpaced 2015 by almost 3%, new home sales were up 13% and housing starts were up 6%[2]. We expect this positive market environment to continue in 2017, supported by demographic trends of increasing demand that should, in turn, support more renovation and new construction of most property types.

Fintech funding to New York companies is tanking (Biz Journals), Rated: A

According to data provider CB Insights, fintech funding to VC-backed New York companies fell 35 percent on a quarterly basis.

New York fintech deals increased for the second straight quarter. The tally rose 26 percent from the fourth quarter of 2016. However, that’s 33 percent below the same quarter last year.

PeerStreet Named “Best Overall Peer-to-Peer Lending Platform” In FinTech Breakthrough Awards (Yahoo! Finance), Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is pleased to announce that it has been recognized as the Best Overall Peer-to-Peer Lending Platform in the 2017 FinTech Breakthrough Awards.

The mission of the FinTech Breakthrough Awards is to honor excellence and recognize the creativity, hard work and success of FinTech companies, technologies and products. Winners are chosen by a panel of senior-level, experienced FinTech professionals that have personally worked in the industry including journalists, analysts and technology executives.

Kabbage CEO discusses the Future of Entrepreneurship and Intellectual Property (BusinessWire), Rated: B

Rob Frohwein, CEO and co-founder Kabbage, will deliver the keynote at the 13th IP Hot Topics Luncheon at Georgia State University College of Law at noon Wednesday, May 10, at the Knowles Conference Center, 85 Park Place NE, Atlanta.

Frohwein will share his experiences going from a practicing attorney to a global entrepreneur that raised nearly $1 billion based on patented IP for a global lending technology platform. An accomplished author and former radio host, Frohwein will entertain attendees with his vision of the changing industrial and financial climate.

United Kingdom

P2PFA members lent out more than £1bn in first quarter (P2P Finance News), Rated: AAA

THE PEER-TO-PEER Finance Association (P2PFA) members – including new entrant Folk2Folk – lent out more than £1bn in the first quarter of 2017.

The nine P2P platforms – Zopa, RateSetter, Funding Circle, Landbay, LendInvest, Lending Works, MarketInvoice, ThinCats and Folk2Folk – collectively represent more than 80 per cent of the UK market. They originated more than £636m in business loans during the first three months of the year and lent out around £368m to individuals, according to data released by the trade body on Wednesday.

Borrowers becoming increasingly picky (Securities Lending Times), Rated: A

This has created a buyer’s market, with borrowers picking and choosing which lenders they trade with on the basis of the RWA ratings of their available stock.

Another panellist commented that the rise of peer-to-peer lending is likely at help improve liquidity, which is a key concern for European market participants in the context on the European Central Bank’s public sector asset purchase programme.

Collateral to launch P2P app for investors and borrowers (P2P Finance News), Rated: A

The peer-to-peer pawnbroker, which offers investors annual returns of up to 12 per cent, said that it will begin the beta testing phase in the coming weeks and will fully launch the new offering in a couple of months.

Despite the P2P sector’s emphasis on technology, most of the best-established platforms still do not have their own apps. Funding Circle has an app purely for investors, but Zopa and RateSetter do not have apps available. Smaller platforms Crowd2Fund and LendingCrowd already have their own apps, just aimed at investors.

Sikoba, a Decentralized P2P IOU Platform on Blockchain, Launches Presale Ahead of Token ICO (Yahoo! Finance), Rated: A

Sikoba, a global decentralized money platform based on peer-to-peer IOUs and blockchain technology, is taking the first step towards its upcoming ICO by launching a token presale. The presale will give participants a chance to receive a 50% bonus on SKO tokens. These tokens are designed to be used for making transactions on the Sikoba platform. The ICO will run from April 25 to May 15, 2017.

Sikoba’s P2P credit relationships are governed by smart contracts with specific conditions, fee structures, and repayment rules. Through the use of ‘credit conversion’, payments between participants who either do not know or do not trust each other are made possible. Fiat currencies or cryptocurrencies can act as a medium of exchange when there are no credit links between participants, or to repay outstanding balances when needed.

My Lendy Experience – Portfolio Review After 2 Years Investing (P2P-Banking), Rated: A

Lendy is a platform offering bridge loans secured by property. I last reviewed my portfolio performance here on the blog in January 2016. Since then the following major changes have taken place at Lendy:

  1. Different interest rates
    Initially all loans had carried 12% interest. Interest range for investors on new loans now are in the range between 7 and 12%.
  2. Lendy sold the security of the second defaulted loan (Garden Center).
  3. Since March 2017 investor can not buy loans on the secondary market and deposit funds afterwards (this still is possible on the primary market).
  4. Since April 2017 there is a new default policy in effect. For loans more than 90 days overdue interest continues to accrue but will not be paid until Lendy has received payment by the borrower. All loans more than 180 days overdue are now automatically classified as default loans. The number of defaulted loans has risen to 14 at the time of this writing.

My portfolio amount is 10K GBP spread out over 14 different loans. The vast majority is in 12% interest rate loans.

My yield (self calculated with XIRR) so far is 12.1% in GBP. Unfortunately I deposited most funds during the time when the pound was at a high, therefore calculated in Euro currency the yield is only 4.4% for me.

Peer to Peer Lending Car Documentary (Gumtree), Rated: B

I am doing a documentary on the peer to peer lending phenomenon. Specifically peer to peer car lending.

Looking for to talk to anyone who has done this. Good experiences or bad.

Fee paid for your time.

China

P2P Lending News (Xing Ping She Email), Rated: AAA

The annual salary of employees from AI(Artificial Intelligence) field start from $1M!

Chinese fintech market keep booming these years, and the scarcity of talent for the area, especially those who have comprehensive abilities are the most needed. Some professional employees’ annual salary starts from $1M, and it is also very common for a professional expert to earn over one million dollars every year.

In the battle for talents between traditional financial institutions and fintech companies, some traditional institutions are restricted by salary and institution system. According to analysis from industry players, an increasing number of traditional financial institutions cooperate with fintech enterprises, leading fintech intelligence turning to the new financial area.

Chinese:
百万年薪抢夺人工智能人才,新金融公司“截胡”传统机构
金融科技热浪袭来,尤其是复合型人才缺口日益增大,金融科技人才的身价也水涨船高。尤其以人工智能领域人才最为稀缺,年薪起步价即达到百万元,相对成熟的人工智能专家百万美元年薪亦非常普遍。在传统金融机构与新兴金融科技公司争夺金融科技人才的卡位战中,受制于薪酬体系以及机构体制等要求,部分传统金融机构略显疲态。业界人士分析,传统金融机构越来越多与金融科技公司的合作,正是金融科技人才向新金融公司集中的必然走向。

Parent Company of a P2P Lending Platform divests its traditional business, taking P2P Lending as Primary Business.

Recently, P2P lending platform Niwodai reported its annual report, which showing the net profit increased fivefold. Jiayin Fin-tech(New Third Board:832031), the parent company of Niwodai, adjusted their structure of communications business of 2016. They have ceased the communication network technology services from the third quarter of 2016, which means Jiayin is gradually divesting its traditional business, and focus on P2P lending in future.

Chinese: 
你我贷母公司剥离传统业务,网贷成主营
近日发布年报净利增长5倍的互金平台你我贷的母公司嘉银金科,于2016年对通信相关业务结构进行调整,出售了主要从事通信网络技术服务的子公司上海汇祥信息工程有限公司和上海复跃信息科技有限公司,2016 年第三季度起公司不再从事通信网络技术服务。此举也意味着嘉银金科正在逐渐剥离原有传统业务,今后网贷业务将成为公司的主营业务。

60% P2P Lending Institutions may not finish Funds Depository in time.

Unlike the indifferent attitude in the past, banks begin to compete for P2P lending funds depository business after the government’s instruction released. According to a P2P lending platform with listed company background, some banks have been grabbing customers in terms of depository. However, it’s still not easy for platforms to get access to the threshold.“If a platform has not yet carried out depository, we can basically consider it may not continue their business in the near future” an insider of the P2P lending industry said,“Currently the number of potential platforms for depository cooperation is few , and it is estimated that around 60% platforms cannot accomplish depository within the rectification period.”

Chinese:
网贷存管上演“生死时速”,六成机构将“随波逐流”
某上市系网贷平台表示,过去银行对平台爱搭不理,在存管发布后已有多家银行上门咨询合作意向。看似银行已经开启抢业务模式,但网贷存管门槛仍旧不低。“如果这时候还没有开展存管业务洽谈,基本判断平台不想继续经营或实力不够已被挡在门外。”一位网贷行业人士表示,潜在签约平台已不太多,根据当前已签约机构数估计,将有六成左右平台无法在整改期限内完成存管。

CEO Tang Ning and CreditEase Honored for Contribution to Financial Literacy (PR Newswire), Rated: A

Ning Tang, Founder and CEO of CreditEase, received the China Financial Literacy Distinguished Contribution Award at the 2nd China Financial Literacy Annual Conference held in Beijing and Shanghai from March 18 to 20, 2017. As an institution, CreditEase was also honored with the China Financial Literacy Distinguished Contribution Award.

The event with the theme “FinTech and Blockchain” was co-organized by Chinese Museum of Finance Group, China Center of Financial Literacy and China Blockchain Research Center. Financial experts from China and abroad, as well as financial regulators convened to talk about opportunities and challenges brought by FinTech, particularly blockchain, as well as necessity to improve financial literacy of the general public, especially students.

During the keynote speech, Tang stated that China has become a global leader in FinTech innovation and regulation, boasting the comparatively matured payment and online lending industries and expecting more innovations aiming to solve financing difficulties of SMEs.

International

Where funding for financial technology is going, in five charts (Tearsheet), Rated: AAA

CB Insights’ Global Fintech Report reported Wednesday that investment in financial startups soared 222 percent quarter over quarter in Europe and 89 percent in Asia, while North American investment took a small dip.

In the first quarter, fintech startups raised $2.7 billion across 226 deals. That’s a 33 percent rise in funding on a quarterly basis but down 47 percent from the same quarter last year. Deal activity increased 12 percent from the fourth quarter of 2016.

At the current rate, Europe fintech deal activity could top 2016’s total by 57 percent, according to CB.

UK fintech companies raised $328 million in the first quarter, including more that $200 million invested in Atom Bank and Funding Circle.

European Union

Venture Capital Enthusiasm for Fintech Startups Shifts to Europe (Fortune), Rated: AAA

Venture capital investments in financial services startups are showing a geographical split, with funding for so-called “fintech” companies in the United States cooling but soaring in Europe, according to a new report out Wednesday.

In the first quarter this year, venture-backed fintech companies in the U.S. raised $1.1 billion, an 8% drop from the previous quarter and down 39% from the same period a year ago, according to a new report from venture capital database CB Insights.

U.S. fintech startups closed a total of 90 financing deals, down 9% from the previous quarter, and the median deal size in dollars also fell.

Meanwhile, investments during the first quarter in European venture-backed fintech companies jumped to $667 million, a 250% increase over the previous quarter and 133% climb from a year ago.

The number of fintech deals in Europe spiked 74% from the previous quarter to 73, and the average deal size ticked up.

BBVA steps up fintech acquisition strategy with purchase of Openpay (Finextra), Rated: A

BBVA’s ongoing strategy to buy out promising fintech startups has moved ahead with the acquisition of Mexican B2B payments platform Openpay.

Currently, Openpay has a network of more than 15,000 payment reception points in Mexico, connected in real time through its Paynet network, and manages more than one million transactions a month. The Openpay platform is used by more than 1000 businesses in Mexico, from startups to SMEs and large corporate clients.
Australia

Millennials’ financial heartache drives P2P lending (Financial Standard), Rated: AAA

According to P2P lending platform RateSetter, millennials are coming in droves to seek out alternatives to traditional saving and investment products. The investor group is now one of the largest retail investor groups in the P2P market after increasing its involvement by 250% in the last 12 months.

In an analysis of RateSetter investors, the platform found 64% of its millennial investors had chosen to move money from low interest savings accounts and term deposits, while 23% had redirected money from equities into the P2P investment market.

The increase in investment however did not only come from millennials. In the past 12 months, post-millennials, pre-retirees, and retirees have all increased their investment in P2P by 209%, 264%, and 212% respectively (see Table 1). As the average investor numbers continue to climb, so does the average amount of money invested, with pre-retirees increasing their average amount invested from $25,929 a year ago, to $50,123 today.

Australian Govt Regulator Inks FinTech Agreement with Indonesia (Cryptocoins News), Rated: A

Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has entered a FinTech cooperation agreement with its Indonesian counterpart in a bid to bolster innovation in the sector.

Signed on Friday between the ASIC and Indonesia’s Otoritas Jasa Keuangan (OJK) in Melbourne, the agreement will see the two regulators combine to develop and establish a framework that promotes financial services in each other’s markets.

India

New segments to enter fintech landscape in India this year (India Times), Rated: AAA

Fintech market landscape in India has been dominated by payments and lending firms so far, although other segments, particularly personal finance and enterprise solutions, are poised to gain ground this year, a recent PwC report has found.

Canada

Mobetize and G&F Financial Group Launch Mobile Lending App (News.sys-con.com), Rated: A

Mobetize Corp. (OTCQB: MPAY), a provider of mobile financial services (MFS) technology for the multi-billion dollar business to business (B2B) segment of the Fintech as a Service (FaaS) sector, and G&F Financial Group (G&F), a full service credit union that provides personal, business and wealth financial solutions in British Columbia, are pleased to announce the launch of an online and mobile lending application “Smart Money Loan“. Both parties are excited to invite other financial institutions to join in this innovation and offer the same service to their own clientele.

Smart Money Loan is a proprietary digitized lending product that allows borrowers to apply for secured and unsecured loans ranging from $500 up to $35,000 to refinance credit card debt, student loans, weddings, or household projects.

Key benefits for FI’s include:

  • An omnichannel and simple user experience for fast loan decisions and funding
  • Digitized back-office processes and interoperability
  • Ability to lead innovation with configurable KYC and heuristic adjudication rules
  • Configurable workflow of applications
  • Easy white-labeling configurability for branding and rapid launch
  • Opportunity to leverage new lending business models
  • Ability to respond to and address security and regulatory requirements

Authors:

George Popescu
Allen Taylor

Are bank reserves meaningless?

Is the central bank in the business of lending bank reserves for final and absolute settlement purposes, or is it now in the business of lending safe assets like Tbills for final and absolute settlement purposes?
Continue reading: Are bank reserves me…

Is the central bank in the business of lending bank reserves for final and absolute settlement purposes, or is it now in the business of lending safe assets like Tbills for final and absolute settlement purposes?

Continue reading: Are bank reserves meaningless?

The Fed’s slow march into collateral intermediation

The Fed sure seems to be getting comfortable with the idea of acting as a centralised counterparty for collateral transactions. It’s unclear whether the market’s quite as enamored with the idea.

This year’s Jackson Hole conference was on monetary policy implementation, which often serves as a shorthand for the following questions: how should the Fed control interest rates, and how big of a role should it play in financial markets?

While the topic seems arcane, it’s important to understand how thoroughly the Fed has changed its approach to controlling interest rates (and through that, its relationship with markets). The topic isn’t just for technocrats — the debate now is over whether that change should be a permanent one.

Continue reading: The Fed’s slow march into collateral intermediation

The Fed sure seems to be getting comfortable with the idea of acting as a centralised counterparty for collateral transactions. It's unclear whether the market's quite as enamored with the idea.

This year's Jackson Hole conference was on monetary policy implementation, which often serves as a shorthand for the following questions: how should the Fed control interest rates, and how big of a role should it play in financial markets?

While the topic seems arcane, it's important to understand how thoroughly the Fed has changed its approach to controlling interest rates (and through that, its relationship with markets). The topic isn't just for technocrats -- the debate now is over whether that change should be a permanent one.

Continue reading: The Fed’s slow march into collateral intermediation

QE: quantitatively shrinking collateral reuse

Adding to the QE scarcity concerns already highlighted by David earlier on Monday, here’s a couple of charts from Citi’s Hans Lorenzen reflecting the fundamental “too much of a good thing” problem with QE.

Continue reading: QE: quantitatively shrinking collateral reuse

Adding to the QE scarcity concerns already highlighted by David earlier on Monday, here’s a couple of charts from Citi’s Hans Lorenzen reflecting the fundamental “too much of a good thing” problem with QE.

Continue reading: QE: quantitatively shrinking collateral reuse