Thursday September 19 2019, Weekly News Digest

MAS Singapore

News Comments Today’s main news: SoFi to get its name on a football stadium. Petal raises $300M. Funding Circle closing in on 1-year anniversary of float. Zopa sends warning of imitation scams. Cumulative UK alt lending hits 11.3B GBP. Companies to get social credit in China. Today’s main analysis: Student loan refinancing rates are down. […]

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

MAS Singapore

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United States

United Kingdom

China/Hong Kong

International

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News Summary

United States

Sundays at SoFi: NFL Stadium in Inglewood Lands a Corporate Name (Commercial Observer), Rated: AAA

Online lender SoFi Lending Corp. has secured the naming rights and a 20-year deal with the Rams and Chargers, according to the Los Angeles Business Journal. The firm agreed to pay around $20 million per year, reports say.

SoFi Stadium, which will be the largest in the NFL, is the centerpiece to the much larger $5-billion Hollywood Park project developed by Rams Owner/Chairman E. Stanley Kroenke. Construction is 75 percent complete, and the stadium is expected to open next summer for other events before the NFL preseason begins in August.

Taylor Swift to Open SoFi Stadium Next Summer (KFI AM 640), Rated: B

The opening of the $2.6 billion SoFi Stadium will happen next summer on July 25th. However it’s not for a Rams or Chargers game. Swift announced that she will play two shows (July 25th and July 26th) at the stadium as a part in her much-anticipated 2020 world tour.

Economy is Top Concern for Small Businesses Ahead of 2020 Election (OnDeck), Rated: AAA

Key Findings from the OnDeck Small Business Survey:

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either ”Very Optimistic” or ”Somewhat Optimistic” about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

President Donald Trump was the choice of 37% of small businesses surveyed, followed by Joe Biden at 18%. When combined, the top five Democratic candidates were the preference of 44% of respondents.

Student Loan Refinancing Rates Down Sharply (Credible), Rated: AAA

During August:

  • Rates on 10-year fixed-rate loans averaged 4.70%, down 22% from a July 2018 peak of 6.05%
  • Rates on 5-year variable-rate loans averaged 4.03%, down 14% from September

A borrower repaying the average graduate school debt of $84,300 over 10 years at 6.36% interest — the average rate for grad school loans in recent years — could save:

  • $20,927 by refinancing into a 5-year variable rate loan
  • $8,327 by refinancing into a 10-year fixed-rate loan

Credit card start-up Petal raises $ 300 million debt round from Jefferies (CNBC), Rated: AAA

The New York City-based company announced a $300 million debt round from Jefferies on Tuesday, adding to existing venture capital investments from names like Peter Thiel’s Valar Ventures.

Plaid adds credit card data to Liabilities product (Tearsheet), Rated: A

In July, Plaid launched its Liabilities product that gives developers access to real time information about what consumers owe. Expanding beyond student loan data, the company has added support for credit card information, so firms can build better debt management solutions.

GoCardless launches US debit payments solution and opens San Francisco office (TechCrunch), Rated: A

GoCardless, the London fintech that aims to become the one-stop shop globally for businesses that want to let customers pay via recurring bank payments, has launched a U.S. debit solution.

Specifically, GoCardless’  new U.S. product supports debit payments on the ACH (Automated Clearing House) network.

The company has also opened an office across the pond in San Francisco’s financial district, headed up by Andrew Gilboy, general manager, North America, who was previously the company’s chief revenue officer.

Nav Launches New Feature to Help Business Owners Boost Business Credit (PR Newswire), Rated: A

Today Nav, a fintech company that matches business owners with their best financing options for free, announced new offerings to help small business owners boost their business credit scores, giving an easy solution to developing a strong business credit profile that alternative and traditional lenders can trust and finance.

Why would HUD gut its own disparate impact rule? (The Times Weekly), Rated: AAA

Since 2013, the disparate impact rule has objectively examined the effects of business practices with lenders, landlords, insurers, and real estate professionals against the provisions of the 1968 Fair Housing Act. The rule required that first a plaintiff must establish a discriminatory effect in policies and/or practices, before the defendant(s) would bear the responsibility of proving their own practices were nondiscriminatory.

During delivery of Capitol Hill testimony earlier this spring, Nikitra Bailey, an EVP with the Center for Responsible Lending (CRL) also underscored the importance of disparate impact in fair housing.

“Disparate impact analysis encourages creative approaches that both increase effectiveness and inclusion,” testified Bailey. “This process and the value of disparate impact analysis was recently pointed out and endorsed by the largest personal loan company in the country, Lending Club.”

BlueVine Appoints Dosh & PayPal Vet Brad Brodigan As New Chief Commercial Officer (Crowdfund Insider), Rated: A

Online lender BlueVine announced on Wednesday it has appointed Brad Brodigan as its new Chief Commercial Officer. BlueVine reported that through this role, Brodigan will be responsible for overseeing revenue-generating functions including sales, customer service, and partner management.

Money360 Closes $ 170 Million in Commercial Real Estate Loans in July and August (GlobeNewswire), Rated: A

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, announced today it closed approximately $170 million in loans during July and August. This benchmark brings Money360 close to $500 million in loans closed this year.

Groundfloor Now Allows Real Estate Developers to Gain Pre Approval on Loans (Crowdfund Insider), Rated: A

Groundfloor, a real estate lending and investing platform that allows anyone to participate directly in real estate investments, has launched a new product to make the lending process more easier for real estate investors. Groundfloor now allows certain developers to gain pre-approval on loans with a new program called “QC Maxx.”

ABS East; Stripe’s Lending Arm; Madden Decision (PeerIQ), Rated: A

In financing news, student loan fintech “College Ave” locked down a $300MM securitization and a AAA rating this week. The securitization was co-led by both Barclays and Goldman Sachs. Affirm, led by Max Levchin, is reportedly close to wrapping up a $1.5 Bn debt and equity financing with Thrive Capital and Spark Capital leading.

Stripe is mirroring other payments companies that have since built lending capabilities – notably, Square and PayPal. Stripe believes it can compete in an already crowded small business lending market (OnDeck, Kabbage, Fundera, Funding Circle, etc.) due to its data & channel advantages stemming from its payments business.

Fintech Firm OppLoans Announces Its First Bank-Led Credit Facility (GlobeNewswire), Rated: A

OppLoans, a growing fintech and top rated direct-to-consumer online lending platform, announced today that it has secured its first bank-led asset-backed revolving credit facility. This facility structure will enable OppLoans to further its mission by broadening access to online personal lending products for more middle-income consumers with credit challenges.

Aura Completes Three Social Bond Issuances Totaling 5 million Over Last 4 Months (Yahoo! Finance), Rated: A

M&G Investments and Community Capital Management, a mutual fund that specializes in impact and Community Reinvestment Act (CRA) related investments, have joined with U.S. and international banks to invest $145 million in Aura’s social bonds to finance the origination of affordable, small dollar installment loans to working families in the United States.

Challenger banks insist they’re equal to the task of lending (American Banker), Rated: A

Almost all U.S. challenger banks offer no-fee checking, savings accounts and enhanced personal financial management tools. Now some of the most popular have taken, or are poised to take, their next step: making loans.

Personal loans and credit cards are lucrative but inherently risky, and these young companies — like MoneyLion, Varo and others — will have to prove to regulators, investors and the public that they have the wherewithal to weather downturns in the credit cycle.

Cash-flow data shows promise as predictor of credit risk (American Banker), Rated: A

Melissa Koide, co-founder and CEO of FinRegLab, analyzed loan data from six lenders that use cash-flow data in their underwriting. She shares what she found.

Prevu Raises $ 2 Million in Seed Funding to Grow its Digital Home Buying Platform (Digital Journal), Rated: A

Prevu, a customer-focused digital home buying platform delivering industry-leading efficiency and savings, announced today the closing of its $2 million seed funding round. The round was led by Corigin Ventures, a prominent seed-stage venture capital firm with expertise in the real estate technology and consumer industries as well as a history of backing startups disrupting residential brokerage business models.

Embattled Prodigy Network CEO Rodrigo Niño to step down (The Real Deal), Rated: A

Prodigy Network founder Rodrigo Niño is stepping down from his position as CEO amid mounting financial and legal issues, The Real Deal has learned.

Prodigy, a real estate crowdfunding platform, has faced criticism from investors in recent months over underperforming investment properties and unpaid distributions. On Monday, an investor in one of Prodigy’s newest projects — the 13-story Standard Hotel in Chicago — filed a lawsuit alleging the firm was “insolvent” and had used investments “for purposes other than those relating to the project.”

EquityMultiple Provides Investors with Options to Take Advantage of Unique Tax Benefits (Crowdfund Insider), Rated: A

Opportunity Zones are new, tax-advantaged vehicles for investors to earn more on their money. Created by the Tax Cuts and Jobs Act of 2017, the first qualified opportunity zones (QOZs) first hit the market in early 2018. Designated by state authorities, there are now thousands of QOZs in the US designed to boost development in selected communities. Investors receive a break on capital gains taxes which can be significant. Local officials can spur economic development which leads to more jobs. Online investment platforms immediately saw the opportunity intrinsic to QOZs with multiple platforms now offering investments in developments that benefit from these tax breaks.

Why are your Opportunity Zone Offerings better than some others available on competing investment platforms?

Soren Godbersen: There are a number of firms out there now marketing Opportunity Zone offerings to investors. We’re proud of what we have been able to offer to our investor network and there are a few things about our Opportunity Zone investments that are unique:

How to Recession-Proof Your Investments (U.S. News), Rated: A

AFTER A DECADE OF steady growth, the economic cycle is due for a reversal, with concerns of a recession.

  • Consider other types of investments outside of stocks and bonds.
  • Know that timing the market is difficult.

What to Invest in During a Recession?

Other less correlated assets include the real estate niche. With real estate crowdfunding, hypermarket segmentation is available. Investors can choose their property type and geographic region when investing in real estate. Two real estate crowdfunding platforms for accredited investors are CrowdFund and EquityMultiple. Fundrise and Groundfloor open targeted real estate investing to nonaccredited investors as well.

Litecoin Non-Profit to Hold Undisclosed Treasury Sum with Crypto Lender (CoinDesk), Rated: A

The Litecoin Foundation is putting its capital to work, lending at interest through another cryptocurrency program.

The Foundation has tapped the Celsius Network, a blockchain-based crypto lending program, to become its preferred crypto wallet, Celsius Network CEO Alex Mashinsky told CoinDesk.

As part of the deal, the Foundation will allocate an undisclosed portion of its treasury to the Network. LTC holders can receive up to 10.53% annually back on their crypto holdings and dollar loans as low as 4.95 percent as well.

Fintechs give small business more choice for credit than just banks (PaymentsSource), Rated: AAA

It’s no secret working capital is the lifeblood of all small businesses. It’s the fuel that keeps them running, helps them grow and take on new opportunities.

And yet, so many small businesses struggle with cash flow. In fact, according to a recent study from Intuit QuickBooks, 61% of small businesses have had cash flow issues in the past year.

Source: FIS

Walmart’s New Credit Cards Have One Big Goal: Boost E-Commerce (Bloomberg), Rated: A

In a sign of how much Walmart Inc. is betting on e-commerce, the retailer’s revamped credit-card program with Capital One Financial Corp. offers better rewards for online shopping and checking out with its mobile app.

The new options, which become available Sept. 24 and use Mastercard Inc.’s network, offer 5% cash back for purchases made at Walmart’s website, including groceries. At the chain’s physical stores, shoppers only get that rate for a year and have to check out with Walmart Pay at the cashier. Otherwise, store customers get 2% back.

Finicity Releases New Verification of Income and Employment Solution for Lenders (PR Web), Rated: B

Finicity, a provider of real-time financial data access and insights, announced today the release of its new Verification of Income and Employment (VOIE) solution using patent-pending TXVerify technology that will speed up borrower verifications and further advance the industry shift toward a fully digital experience.

The Finicity VOIE solution digitally extracts a borrower’s pay statement data from the paystub and then cross-verifies that key data with their income transactions from their financial institutions. Enabled by its TXVerify technology, this detailed vetting process creates a real-time picture of an applicant’s income and employment for fast, accurate reports. The solution does this by leveraging the highest value data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs. This process significantly shifts the current paradigm from a mostly manual process to one that is fully digital, all while reducing fraud and increasing confidence in the underwriting process.

Sallie Krawcheck: Why ‘don’t buy daily coffee’ is terrible advice (CNBC), Rated: B

“Don’t buy daily coffee” is the go-to financial advice. Co-founder and CEO of Ellevest, Sallie Krawcheck, says that advice is misleading and just enjoy your latte.

Ethereum Development Studio ConsenSys Announces Codefi, A New DeFi Software Suite (Crowdfund Insider), Rated: A

ConsenSys founder Joseph Lubin announced at the Ethereal Tel Aviv press conference (on September 15) that his New York-based venture studio is launching a new product, Codefi, for the emerging decentralized finance (DeFi) ecosystem.

Despite not having invested in emerging DeFi platforms, Lubin described P2P lending systems such as Uniswap and MakerDAO as some of the blockchain industry’s most promising projects.

ApplePie Capital Partners with LSQ Funding on A/R Franchise Financing (Monitor Daily), Rated: B

Online lender ApplePie Capital entered into a new strategic partnership with LSQ Funding Group, a technology-enabled provider of accounts receivable financing for small and mid-sized businesses.

United Kingdom

Funding Circle nears one-year anniversary of London float (P2P Finance News), Rated: AAA

The peer-to-peer business lender began conditional dealings on the London Stock Exchange on 28 September before being officially admitted to the bourse on 3 October. It launched with an offer price of 440p per share, giving the firm a valuation of £1.5bn.

However, its market capitalisation as of 17 September has since dropped to £348.7m, with its shares now trading at just over 100p.

Zopa warns over imitation scam firms (P2P Finance News), Rated: AAA

ZOPA has warned over a growing number of scam operators targeting UK customers using the peer-to-peer lender’s name to dupe investors.

They include: asking customers directly for their Zopa login details; claiming to work with companies investing money in Bitcoin or other cryptocurrencies; or working with companies who would ask them to take out a Zopa loan to fund an investment.

Record numbers of investors and borrowers as cumulative lending hits £11.3bn (P2P Finance News), Rated: AAA

MORE than 150,000 lenders were invested in 321,483 loans facilitated by Peer-to-Peer Finance Association (P2PFA) platforms at the end of the second quarter, which the trade body deemed “a record level of involvement in the sector”.

Funding Circle is the largest P2P lender among the P2PFA platform members, having lent out a cumulative total of £5.4bn as of the end of the second quarter. It is followed by Zopa at £4.5bn, with ThinCats in third place with just over £491m.

£814m of new loans were made in the second quarter, compared to £866m in the first three months of 2019.

Monzo halts cash referrals as it hits three million users (AltFi), Rated: A

Monzo has ended its cash incentivised referral system as the firm continues to grow users at a rapid pace.

Monzo now has passed the 3 million ‘users’ number, hitting the milestone late on yesterday and is now onboarding 55,000 people to Monzo every week.

Transferwise Books Its Third Consecutive Year of Profits (Lendit), Rated: A

European fintech company Transferwise has recorded its third year in a row of profits; the company reported its net profit after tax climbed to £10.3 million in the fiscal year ending March 2019, up 66% from the previous year on revenue of £179 million;

Payment provider Klarna appearing at London Fashion Week has everybody talking (MyLondon), Rated: A

UK fashion Designer Henry Holland decided to take things up a notch in Saturdays catwalk show with a T Shirt design in collaboration with Klarna.

Klarna expands partnership with Mothercare (The Paypers), Rated: B

Klarna and Mothercare have announced an extension to their partnership, which will see Klarna’s Pay later, Pay in 3, and Slice it products available online and in-store across the UK.

OakNorth Bank provides £3.7m loan to Clearview Developments (London Loves Property), Rated: A

OakNorth Bank the UK bank powered by OakNorth has provided a £3.7m loan to Clearview Developments for a new residential development in Royal Tunbridge Wells.

Smarterly and OakNorth Bank partner to offer new Notice Cash ISA range to Smarterly customers (Fintech Finance), Rated: B

The product range includes five Cash ISA Notice accounts, exclusive to Smarterly, ranging from 35 days at 1.05% to one year at 1.25%; Customers will not be able to apply for these products with OakNorth directly;

These five Cash ISAs Notice Accounts are:

  • 35 days – 1.05%
  • Three months – 1.10%
  • Six months – 1.15%
  • Nine months – 1.20%
  • One year – 1.25%
China/Hong Kong

Coming Soon: ‘Social Credit’ for Companies, Too (WSJ), Rated: AAA

A key target of China’s coming “social credit” system, which among Westerners usually triggers visions of “1984”-style monitoring of people, is actually misbehaving businesses.

Corporate America needs to prepare.

About 80% of information on the main data-sharing platform relates to companies rather than individuals, according to China consulting…

Hexindai Reports Unaudited First Quarter of Fiscal Year 2020 Financial Results (PR Newswire), Rated: A

First Quarter of Fiscal Year 2020 Operational Highlights

  • Total loan volume facilitated[1] was US$ 28.2 million (RMB192.3 million) during the first quarter of fiscal year 2020, a decrease of 93.5% from the first quarter of fiscal year 2019.
  • Gross billing amount (net of VAT)[2] was US$4.7 million during the first quarter of fiscal year 2020, a decrease of 90.7% from the first quarter of fiscal year 2019.
  • Gross billing ratio (net of VAT)[3] for credit loans was 16.7% during the first quarter of fiscal year 2020, an increase from 11.7% during the first quarter of fiscal year 2019.
  • Number of borrowers[4] was 18,546 during the first quarter of fiscal year 2020, a decrease of 36.0% from the first quarter of fiscal year 2019.
  • Number of investors[5] was 9,534 during the first quarter of fiscal year 2020, a decrease of 85.9% from the first quarter of fiscal year 2019.

First Quarter of Fiscal Year 2020 Unaudited Financial Highlights

  • Net revenue was US$4.9 million during the first quarter of fiscal year 2020, a decrease of 90.5% from the first quarter of fiscal year 2019.
  • Operating costs and expenses were US$12.6 million during the first quarter of fiscal year 2020, a decrease of 18.9% from the first quarter of fiscal year 2019.
  • Net loss was US$7.2 million during the first quarter of fiscal year 2020, compared to net income of US$29.7 million in first quarter of fiscal year 2019.
  • Basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to basic earnings per ordinary shares (“EPS”) of US$0.62 in first quarter of fiscal year 2019.
  • Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to diluted EPS of US$0.56 in first quarter of fiscal year 2019.
  • Adjusted net loss attributable to Hexindai Inc.’s shareholders (Non-GAAP) in the first quarter of fiscal year 2020 was US$7.0 million, compared to adjusted net income attributable to Hexindai Inc.’s shareholders (Non-GAAP) of US$29.9 million in the first quarter of fiscal year 2019.
  • Adjusted EBIT (Non-GAAP) in the first quarter of fiscal year 2020 was (US$5.8) million, compared to US$36.6 million in the first quarter of fiscal year 2019.

Zhang Yue, senior vice president at CreditEase, discusses the demand for credit in China, write downs in her portfolio, P2P lending, their wealth management business and their expansion plans.

Securing privacy concerns in FinTech in Hong Kong (Lexology), Rated: A

Hong Kong has built a strong environment for fostering innovation and financial technology or FinTech. With its large financial sector and its strategic role with Mainland China and gateway to the rest of Asia and the world, Hong Kong has the potential to take on an important role in being a leader in FinTech. In March 2019, for example, Hong Kong issued its first virtual banking licences, which will likely increase adoption of FinTech in the financial services sector.

Emerging technologies used in Fintech services and operations come in different forms, and include:

  • data analytics that support the operations of financial institutions (for example, credit scoring, loan processing);
  • peer-to-peer (P2P) financing (such as P2P lending and crowdfunding platforms);
  • distributed ledger technology, such as cryptocurrency, bitcoin transactions and smart contract applications, as well as blockchain services to help reduce fraud by keeping provenance data on the blockchain; and
  • financial investments, such as stock trading apps, robo-advisors and algorithmic trading and budgeting apps.
European Union

Binance Announces Phase Five of Crypto Lending Featuring Privacy Coins XMR, ZEC, and DASH (Crypto-Economy), Rated: AAA

Leading cryptocurrency exchange Binance has announced its launch of the fifth phase of its cryptocurrency lending product in which it customers subscribe to an allocation to lend other users their funds for interest rates as high as 15% Apr.

the 15% interest rate was only available to Binance’s native coin lenders in the first phase. On Tuesday, the exchange revealed three coins that will be included in the crypto lending product including only privacy-centric coins Monero [XMR], Zcash [ZEC] and Dash [DASH]. Their annualized interest rates will be a constant 3.5% but the lending period is only two weeks starting from this Friday September 20th through October 4th.

P2P Lender creditshelf to Acquire SME Finance Provider Valendo (Crowdfund Insider), Rated: A

creditshelf Aktiengesellschaft has signed a purchase agreement for the acquisition of all shares in Valendo – part of the finleap Fintech ecosystem.

According to a company release, the purchase price was in the “low seven-digit amount.” Payment will take place in two separate tranches. creditshelf has the option of settling both tranches in the course of two capital increases via a contribution in kind.

International

How MAS propelled Singapore to the top of the class (Euromoney), Rated: AAA

Today, Singapore sits proudly atop the Euromoney Country Risk (ECR) rankings. Based on ECR’s blend of financial and economic data, combined with the views of leading economists, no country in the world today has a stronger financial position.

When MAS said in July 2019 that it planned to issue five new digital banking licences, analysts soon spotted that three of them were wholesale licences, open to banks and non-banks alike.

Winners will be encouraged to lend, using digital means, to small and medium-sized enterprises and other non-retail segments – further evidence that corporate banking will be the next segment to feel the hot breath of disruption on its neck.

Source: Euromoney County Risk

Goldman Leads Trulioo’s $ 70M Raise To Expand Global Digital ID (PYMNTS), Rated: A

Trulioo, the global identity verification provider, has raised $70 million in new funding, eyeing growth in its core digital identification efforts, the company announced Tuesday (Sept. 17).

The company said in a release that the funding includes $60 million in a Series C round that was led by Goldman Sachs Growth Equity. Other participants included Citi VenturesSantander InnoVentures and existing investor American Express Ventures. The remaining $10 million came as unannounced follow-on financing from early investors, including BDC Capital and Blumberg Capital.

Equifax Continues Leadership In Alternative Data With Worldwide Urjanet Partnership (PR Newswire), Rated: A

Equifax Inc. (NYSE: EFX) and Urjanet today announced a global partnership that empowers consumers and businesses to share their payment data from thousands of utility, telecom and cable providers worldwide for a more complete picture of individual payment history, easier identity verification and the potential for better access to credit. This partnership builds on Equifax’s leadership in alternative data, using the Urjanet Utility Data Platform to incorporate consumer-permissioned data into the Equifax differentiated data approach.

5 Reasons Investors Should Consider Tokenized Assets (Benzinga), Rated: A

According to Deloitte, we shouldn’t view DLT as just a new type of “database ” but rather as a new way to organize the security value chain from issuance to custody. But what exactly can be transmitted through this chain?

Fractional ownership – take as much as you want

Digitizing shares makes them highly divisible, meaning that investors can buy very small percentages of tokenized assets.

So long, intermediaries! 

Security tokens have a simpler investment structure and lower fees.

On the way to maximum liquidity

Cherry on top

A security token is basically a digital signature connected with a smart contract responsible for facilitation and verification of ownership rights transactions.

India

Ribbit leads Series B funding in online investment platform Groww (VC Circle), Rated: AAA

Groww, an online investment platform that sells mutual fund products, has raised $21.4 million (Rs 152.5 crore at current exchange rate) in a Series B funding round led by Silicon Valley-based venture capital firm Ribbit Capital.

Groww said existing investors Sequoia India and Y Combinator also participated in the funding round.

RBI looking at how NBFCs, HFCs set their lending rates (livemint), Rated: AAA

The Reserve Bank of India (RBI) is studying how non-bank lenders and home financiers price their loans, close on the heels of directing commercial banks to link their loan rates to external benchmarks.

Source: livemint

RBI restricts access to credit data of consumers (Economic Times), Rated: A

The Reserve Bank of India has ordered commercial banks and non-banking lenders to stop providing unregulated entities access to consumer data held by credit bureaus, dealing a blow to scores of fintech startups that have based their business models on such information.

Source: India Times

RBI not in favour of ‘teaser’ loans, examines rate-setting mechanism of NBFCs, HFCs (CNBCTV18), Rated: B

The banking regulator is not in favour of hybrid loan products or ‘teaser loans’, a senior Reserve Bank of India (RBI) official today clarified. The remark gains significance in the light of State Bank of India chairman Rajnish Kumar’s recent comment that SBI would seek the regulator’s view on whether banks can introduce fixed-cum-floating rate products.

No dearth of demand on credit side, disbursed credit worth INR 5 billion: Flexiloans Co-founder (IBS Intelligence), Rated: A

FlexiLoans.com, an online lender for MSMEs in India, said that it has crossed a milestone number of disbursing over INR 5 billion of unsecured business loans across the country with its unique digital-only model. The Mumbai-based company, which has disbursed over 16000 loans across 1000 cities and towns in the country, says that there is no dearth of demand on the credit side. The company caters primarily to micro, small and medium-sized businesses.

How has the online lending market shaped up in the last few years?

Digital Lending market is currently at about USD 2 billion, up from about USD 1 billion in 2016. Significant traction and market niches discovered by various FinTech startups across the country have made this space very exciting, holistic and game-changing.

Online SME lender Cash Suvidha plans to raise upto $ 10 million (IBS Intelligence), Rated: B

The online lender for business and personal loans, Cash Suvidha, is planning to raise $5 million -$10 million equity funds in the next six months.

Asia

Terafunding Closes US$ 18M Series B Financing Round (FINSMES), Rated: AAA

Terafunding, a Seoul, South Korea-based Peer-to-Peer (P2P) lending platform, raised US$18M in Series B funding.

Backers included KB Investment, Hana Ventures, IBK Industrial Bank and Woomi Construction.

Julo raises $ 10M to expand its P2P lending platform (TechCrunch), Rated: A

Julo, a peer-to-peer lending platform in Indonesia, said on Wednesday it has extended its $5 million Series A raise to $15 million as it looks to scale its business in the key Southeast Asian market.

The $10 million Series A2 round for the Jakarta-headquartered startup was led by Quona Capital,  with Skystar, East Ventures,  Provident, Gobi Partners and Convergence participating.

Chinese P2P Firms Seeks Business in Vietnamese Market (W7 News), Rated: A

The declining demand for peer-to-peer (P2P) lending in China has prompted firms to find business elsewhere. LearnBonds report that Chinese P2P companies are eyeing Vietnam, which alarmed local lending companies.

MENA

Now Money offers alternative for Gulf’s unbanked expats (Financial Times), Rated: AAA

About 70 per cent of the population in the Middle East and north Africa do not have access to banking services, says Ian Dillon, co-founder of Now Money, a Dubai-based financial technology group.

The GCC recorded outbound remittances of $120bn in 2017, according to World Bank data. However, Gulf banks tend to exclude workers earning less than $1,400 a month, leaving most of them reliant on exchange houses to remit cash home.

Authors:

George Popescu
Allen Taylor

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

Thursday September 12 2019, Weekly News Digest

bank technology

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-4 Trust. Stripe debuts corporate credit cards. College Ave completes $300M securitization of private student loans. Yirendai issues earnings results. Today’s main analysis: Deregulating Fannie and Freddie (A MUST-READ REPORT FROM THE U.S. TREASURY). Today’s thought-provoking articles: Average FICO scores hit […]

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

bank technology

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-4 Trust (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-4 Trust (“SCLP 2019-4”). This is a $465 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-4

Class

Preliminary Rating

Class Principal

A

AAA (sf)

$360,000,000

B

AA+ (sf)

$29,500,000

C

A+ (sf)

$47,500,000

D

BBB+ (sf)

$28,000,000

OnDeck CEO Noah Breslow to Deliver Keynote Address at 2019 LEND360 Conference (GuruFocus), Rated: A

OnDeck today announced that Chairman and CEO Noah Breslow will be a keynote speaker at the LEND360 Conference in Dallas, Texas on Thursday, September 26, 2019. Mr. Breslow will discuss industry trends in alternative data and how they are improving many aspects of online lending to small businesses.

Case activity for On Deck Capital, Inc. vs Beautyshea, LLC on Sept. 9 (Pennsylvania Record), Rated: B

‘Judgment Entered For $6,593.50 On 09-09-2019 236 Notice Of Judgment Sent 09-09-2019’

Payments giant Stripe debuts a credit card in its latest step into the financing fray (TechCrunch), Rated: AAA

Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.

College Ave Student Loans Completes $ 300 Million Securitization of Private Student Loans (Crowdfund Insider), Rated: AAA

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $300 million securitization of private student loans, its third securitization and largest to date. According to College Ave, the transaction was oversubscribed attracting a broad and diverse group of repeat investors and new participants. Barclays and Goldman Sachs were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

The Deregulation of Fannie and Freddie; Rate Cuts; “Full Stack” Banks (PeerIQ), Rated: AAA

This week, the Trump administration released their long awaited housing finance plan that will privatize Fannie Mae and Freddie Mac.

The plan would require a significant recapitalization – up to $180 Bn.

Read the full report here.

Source: Federal Reserve, PeerIQ

Average FICO score hits all-time high (CNBC), Rated: AAA

For the first time, the average national credit score has reached 706, according to FICO, the developer of one of the most commonly used scores by lenders.

Source: CNBC

U.S. Consumer Debt Surges on Jump in Credit-Card Balances (Bloomberg), Rated: A

U.S. consumer borrowing swelled in July by the most since late 2017 as Americans carried larger credit-card balances to fund both everyday and online purchases.

Total credit rose by $23.3 billion from the prior month, exceeding all estimates in a Bloomberg survey of economists, Federal Reserve figures showed Monday. Revolving debt outstanding increased by $10 billion, also the most since November 2017, while the growth of non-revolving credit was little changed from a month earlier.

Kabbage Launches New Small Business Revenue Index (Crowdfund Insider), Rated: A

Global financial service platform Kabbage announced this week the launch of its new Small Business Revenue Index. According to Kabbage, the index has two million live data connections the platform maintains across its customer base of more than 200,000 small businesses.

The Current State of the Small Business Lending Sector (Lend Academy), Rated: AAA

The companies that I view as pioneers in this space are Kabbage and OnDeck.

Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding CircleStreetsharesFundboxBlueVineBiz2CreditFundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.

The Challengers of Small Business Lending

Probably the most recognizable name is PayPal and the Working Capital product which, according to deBanked, has surpassed OnDeck in small business lending volume.

Patriot Financial leads $ 15 million round for Numerated (American Banker), Rated: A

Numerated, the loan technology company that incubated inside Eastern Bank and spun off on its own in May 2017, has raised $15 million from bank investment fund Patriot Financial Partners. Existing investors Venrock, Fintop Capital and Hyperplane also joined the round.

TBF Financial Buys $ 60 Million in Commercial Debt from Major Online Lender (PR Newswire), Rated: A

TBF Financial purchased nearly $60 million in non-performing loans from a major online small business lender in recent transactions, CEO Brett Boehm announced today.

TBF bought the pools of post-charge-off loans as the highest bidder in transactions arranged through multiple brokers. In most cases, the company purchases directly from alternative lenders, equipment leasing companies and banks.

LendingTree Ranks the 50 Most Expensive Towns in America (NewKerala), Rated: A

No. 1 Vineyard Haven, Mass.

Total population 17,321
Median individual income $39,045
Median home value $674,600
Affordable housing costs for a median income earner $911
Calculated mortgage payment for a median priced home $2,767
Median rent payment $1,441
Home affordability deficit -$1,856
Rent affordability deficit -$530

The DeFi trend is accelerating and gaining acceptance, with Coinbase joining the fray. The leading brokerage has created the Coinbase Bootstrap Fund, to boost DeFi projects. Coinbase will invest in two projects, the Compound crypto lending scheme, and the dy/dx crypto derivative exchange.

The 30-somethings guide to creating passive income (Ladders), Rated: A

You might not have $30,000 saved up to buy a rental property right now, but do you have $500? The beauty of REITs like DiversyFund is you can start investing for the amount of money you might drop on a new pair of shoes.

There are public and private REITS as well as funds classified as real estate crowdfunding. Compare your options and find the best one that works for you.

PeerStreet Named CRETech 2019 Real Estate Tech Award Winner (Crowdfund Insider), Rated: B

Real estate investment platform PeerStreet announced on Tuesday it won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs for the Information & Intelligence – Crowdfunding category.

Zillow chooses Impac Mortgage COO Rian Furey to lead mortgage expansion (Housingwire), Rated: B

Zillow announced Monday that it is naming Rian Furey president of Zillow Home Loans.

Balboa Capital Continues Accelerated Growth, Adds 125 New Employees in First Half of 2019 (Yahoo! Finance), Raated: A

Balboa Capital, an online lender that specializes in equipment financing and small business loans, hired 125 new employees during the first six months of 2019 to accommodate the company’s rapid increase in new business and acquisition of several new strategic partners.

United Kingdom

Why crowdfunding may not be the great democratising force in investment after all (The Conversation), Rated: AAA

The digital revolution has had a huge impact on the way new and small companies are financed – and crowdfunding has been at the forefront.

Initially, crowdfunding brought great optimism that it would have a “democratising effect” on finance. On the one hand it would enable entrepreneurs excluded from traditional sources of finance to attract funding. And, on the other, it would provide new opportunities for people with even relatively modest amounts of money to invest. For example, private investors looking for higher returns than those available with high street banks have been attracted to various lending platforms – also known as peer-to-peer (P2P) platforms.

Sonovate raises £110m to drive invoice finance (Fintech Futures), Rated: A

Finance tech provider Sonovate is looking to expand internationally and deploy more working capital to SMEs and mid-market businesses after raising £110 million, reports Jane Connolly.

Spotcap find 77% of SME brokers are upbeat about Brexit (AltFi), Rated: A

Over three-quarters of commercial finance intermediaries in the UK expect the number of loans they broker to increase after Brexit, with more than half saying the number will rise “by a lot”.

In July Berlin-based online lender Spotcap asked 132 UK brokers, accountants and advisers about the future of SME finance in the UK, the results of which it published today as part of a report entitled The State of Commercial Finance in the UK.

FCA urges firms to prepare for no-deal Brexit and launches helpline (P2P Finance News), Rated: A

FIRMS should prepare for the possibility of a no-deal Brexit, says the Financial Conduct Authority (FCA), as it launches a dedicated helpline for businesses.

The City watchdog, which oversees the peer-to-peer lending market as well as the rest of the financial servcies sector, says firms who have not prepared appropriately for the UK leaving the EU without a deal may see an impact on their business.

Foreign firms eyeing P2P market entry (P2P Finance News), Rated: A

REGULATORY consultancy Bovill has reported a steady stream of interest from new entrants to the peer-to-peer lending market, particularly from overseas firms.

Brown attributed the slowdown to the fact that P2P is a more mature market, meaning there was “less of a gold rush” for new players.

H&M extends Klarna ‘buy now, pay later’ service to the UK (Fashion United), Rated: B

Swedish fast-fashion giant H&M has extended its partnership with payment provider Klarna to the UK market, offering Brit shoppers the option to ‘buy now, pay later’.

New SME services added to Starling Bank’s marketplace (AltFi), Rated: B

Digital Risks is an insurance provider for small and medium-sized digital businesses, including cover for specific threats like commercial legal protection, cyber security, management liability, employers liability, public liability and professional indemnity.

While CyberSmart is a platform for SMEs to identify digital weaknesses and achieve their Cyber Essentials Certification, the government-backed accreditation for companies looking to protect against cyber threats.

China

Yirendai (NYSE:YRD) Issues Earnings Results (Mayfield Recorder), Rated: AAA

Yirendai posted its earnings results on Tuesday, September 3rd. The technology company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.24), Morningstar.com reports. Yirendai had a return on equity of 32.93% and a net margin of 15.30%. The firm had revenue of $322.89 million for the quarter.

LexinFintech Secures $ 300 Million Private Placement of Convertible Notes with PAG (Crowdfund Insider), Rated: A

Chinese consumer financing platform LexinFintech announced on Wednesday it has entered into a convertible note purchase agreement with PAG issue and sell convertible notes in an aggregate principal amount of $300 million through a private placement. 

IceKredit Raises $ 47M in Pre-Series C Funding (FINSMES), Rated: A

IceKredit, Inc., a Los Angeles, CA and China-based credit risk and credit management company, raised $47m in pre-Series C funding.

These Chinese Online Lenders Are Not For the Weak at Heart (GuruFocus), Rated: A

Beijing-based online lender Yirendai (NYSE:YRD) and Shanghai-based Paipaidai, or PPDAI Group (NYSE:PPDF), shares have been pummeled down to their lowest levels in the past year. Yet aside from receiving credit lines from large Chinese institutions amid China’s crackdown on fraud lending in their industry, both lenders appear to remain in a healthy state.

PPDAI — the older and bigger of the two lenders — came out strong in its recent quarter, beating earnings expectations. The $1.2 billion online lender reported it had 29% year-over-year growth in loan origination volume to $3 billion, compared to just 1.6% growth a year earlier.

Hexindai Announces Support For Regulators’ Decision to Include P2P Platforms in Central Bank’s Credit System (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Tuesday its support for the decision by industry regulators to include the country’s P2P platforms in the central bank’s credit system. The online lender reported that it believes this as a positive move for the P2P industry.

Sequoia-Backed P2P Lender Huobank Collapses As Beijing Mops Up Online Finance Risks (China Money Network), Rated: A

European Union

Banks raise concerns ahead of ECB meeting (Irish Examiner), Rated: A

The president of Germany’s powerful savings banks association, community lenders that dominate the country’s shopping streets, joined Dutch bank ING yesterday in criticising the ECB’s loose monetary policy.

Its 50 million customers have increased their savings by almost 5% since last year to €965bn which is roughly the size of the Dutch economy. With lending amounting to about €860bn, the banks are left with a chunky unused surplus.

Fintech Europe Selects Eight Startups for its Fourth Batch (Yahoo! Finance), Rated: B

Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the eight startups selected for its fourth batch. The platform has grown its partner base to 11 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, and Finablr, it runs two 12-week innovation programs a year.

CashDirector 

CashDirector SA is a technology company providing SMEs and banks with a Digital CFO integrated with on-line banking, helping with SMEs manage cash flow and accessing financing.

Credit Kudos

Credit Kudos is a credit bureau that uses financial behaviour to measure creditworthiness.

International

Technology Is Banks’ New Battleground (WSJ), Rated: AAA

European banks are spending vast sums on technology—but it may not be enough to defend against the incursions of bigger, richer American rivals.

U.S. lenders already dominate investment banking in Europe. The big risk for the continent’s banks is that slicker tech could give their American rivals a platform to make gains in lending to companies—the Europeans’ traditional stronghold.

This year, Europe’s banks plan to make technology investments worth in aggregate $77 billion, according to consulting firm Celent. That compares with $105 billion for their U.S. rivals. Faster, more seamless trading systems have long been a priority, but tech spending has shifted across business lines and from back office to front office. It can cover everything from maintaining decades-old systems to cutting-edge artificial intelligence.

Source: Celent

Wirecard Teams Up With Credibly to Digitalize Funding Disbursements (Crowdfund Insider), Rated: A

Germany-based global provider of digital payments and commerce solutions Wirecard announced on Wednesday it is partnering with U.S. business funding fintech Credibly to digitalize funding disbursement. Wirecard claims to be one of the largest issuers of payout cards in the U.S. and is now offering fully digitalize solutions.

PwC to AM industry: disrupt yourself or face extinction (City Wire Selector), Rated: A

The European financial services industry is facing an ‘Amazonisation’ moment, in which those offering consumer-first solutions underpinned by sustainable finance will survive and the others will cease to compete.

That is the headline finding of 52-page report co-authored by PwC Luxembourg and Luxembourg for Finance, which investigated underlying industry trends and indicated that the European market is losing ground on its US and Asian peers when it comes to innovation and assets.

State of the Chain: Five Winning Use Cases for Blockchain in 2019 (U.today), Rated: A

Predictably it was Binance that stole the limelight, with the surprise launch of its eponymous lending platform, which was unveiled on Monday, August 26, and then proceeded to fill its initial lending quota of 200,000 BNB and 10 million USDT in a matter of seconds two days later.

Dharma and Compound have announced new products, while Coinbase has hinted that this will be the next vertical it expands into.

Lenders can enjoy annualized interest of up to 15%, which is significantly better than the negative rates they are currently offered on fiat savings and on negatively yielding government bonds.

Australia

Hopes fintech inquiry will ‘validate’ bank competitors (The Sydney Morning Herald), Rated: A

On Wednesday New South Wales senator Andrew Bragg successfully moved to secure a senate committee inquiry into the fintech and regulatory technology spaces, paving the way for a year-long review into how competitive Australia is in these sectors.

Chief executive of small business lender Lumi, Yanir Yakutiel, said the inquiry should focus on expanding the regulatory sandbox program, which is designed to help early stage fintechs test their ideas.

India

Five Ways Artificial Intelligence Is Instigating Paradigm Shift In Online Lending Space (Via.news), Rated: AAA

Currently, digital lending accounts for around 15% to 20% of the total lending market and could surpass 50% in coming years.

Asia

Chinese P2P Lending Companies Ventures to Vietnam (LearnBonds), Rated: AAA

This business model boomed in China, but following a regulatory clampdown by authorities on risky financial practices, the number of fintech and peer-to-peer (P2P) lending platforms in the country dropped from about 1,900 a year ago to just 900 in May.

It now appears that some of these Chinese P2P lending companies have not necessarily disappeared. They simple ventured into new markets and in particular Vietnam.

According to the State Bank of Vietnam (SBV), there were 40 peer-to-peer lending companies operating in Vietnam as of March. Of these, 10 companies are from China.

MENA

The opportunity of peer-to-peer lending in Lebanon (Executive Magazine), Rated: AAA

Through conversations with Lebanese entrepreneurs, business owners, bankers, and politicians, I have had a number of eye-opening discussions into the challenges and opportunities faced by Lebanon’s SME ecosystem. Given the country’s long-standing tradition in financial services and its large banking sector, I believe fintech—with solutions such as peer-to-peer lending, machine learning to personalize insurance solutions, and the use of artificial intelligence for wealth management—stands as a serious contender to unlock the funding challenges faced by Lebanon’s SMEs.

Latin America

SoftBank in talks to invest in Latam venture capital funds (Reuters), Rated: AAA

Japan’s SoftBank Group Corp (9984.T) is in talks with venture capital firms in Latin America to invest hundreds of millions of dollars in their funds, a move likely to speed up spending of a $5 billion regional venture capital fund, three sources with knowledge of the matter said.

So far, SoftBank has only announced direct investments using the fund’s resources, injecting capital into Colombian delivery app Rappi, Brazilian lender Creditas, gym membership app Gympass and Mexican payments firm Clip, for instance.

Proptech Flat raises US$ 4.5 million pre-seed round led by ALLVP (Contxto), Rated: A

Contxto – Not only is the Mexican real estate industry huge but also outdated with many inefficient processes. Counteracting this, a new Mexican startup, Flat, recently raised US$4.5 million in one of Mexico’s largest pre-seed rounds ever.

Africa

Nigerian online-only bank startup Kuda raises $ 1.6M (TechCrunch), Rated: AAA

Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.

Canada

Peer to Peer Lender Lending Loop Tops $ 50 Million in Loans (Crowdfund Insider), Rated: AAA

Canada’s first peer to peer lending platform for SMEs, Lending Loop, has topped CDN $50 million in loans, according to a post by Brendon Vlaar, co-founder and CTO of the company. Lending Loop provides investment opportunities in debt-based securities to both accredited and non-accredited investors.

PayBright Raises $ 34M in Growth Equity Financing (FINSMES), Rated: A

PayBright, a Toronto, Canada-based fintech company, received a $34m equity investment from goeasy.

Authors:

George Popescu
Allen Taylor

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

Thursday September 13 2018, Daily News Digest

funding circle

News Comments Today’s main news: OnDeck tops $10B in small business lending. KBRA assigns preliminary ratings to Consumer Loan Underlying Bond Credit Trust 2018-P2. Robinhood looking to IPO. Faircent approved by Reserve Bank of India. Today’s main analysis: A credit card debt study from Wallet Hub. Today’s thought-provoking articles: Should the next billion dollar financial platform be for […]

funding circle

News Comments

United States

United Kingdom

India

Other

News Summary

United States

OnDeck Small Business Online Lending Tops $ 10 Billion (PR Newswire) Rated:AAA

OnDeck has achieved a milestone in the Financial Technology (FinTech) industry, becoming the first non-bank online lender to surpass $10 billion in total loans originated to small businesses. OnDeck, with operations in the United StatesCanada and Australia, is the world’s largest non-bank online lender to small business by total loan volume.

The achievement by OnDeck, a pioneer of the FinTech lending industry, is the latest indication that small businesses increasingly prefer to seek financing online. According to the Small Business Credit Survey from the Federal Reserve, small business owners are turning to online lenders in record numbers. In 2017, 24 percent of small businesses seeking credit applied online, up from 21 percent the previous year.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P2 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P2 (“CLUB 2018-P2”). This is a $270.30 million consumer loan ABS transaction that is expected to close September 27, 2018.

Source: Business Wire

Robinhood is targeting an IPO (Business Insider) Rated: AAA

Fintech unicorn Robinhood, which offers zero-fee stock, option, and crypto trading, has begun preparations to go public, Baiju Bhatt, the company’s chief executive, revealed at TechCrunch Disrupt SF last week. The US-based firm has raised $539 million in funding, and it’s currently valued at $5.6 billion.

Source Business Insider

In preparation for the initial public offering (IPO), the five-year-old company is in the process of hiring a chief financial officer (CFO), as well as undertaking audits from the Securities and Exchange Commission (SEC) and FINRA, a US securities markets watchdog.

The Next Billion Dollar Financial Platform – Baby Boomers (The Sociable) Rated: AAA

If you’ve immersed yourself in the world of Silicon Valley and you keep up with current trends, then it comes as no surprise that ageism in the U.S. tech world is an ongoing debate. The job search engine Indeed reports that 43% of workers in the tech industry worry about losing their jobs due to their age. While the general population is aware of the issue, its resolution is slow-moving.

The characteristics of Generation Z – those born after 1996 – are still being discovered. We don’t know enough about them yet to understand what kind of impact they will have. The Millennial Generation and Gen X have arguably been the main sales focus during the rise of Silicon Valley. Millennials in particular have overtaken the market, with 83% of today’s managers belonging to that generation. Finally, we have the Baby Boomers. Whether it’s because Millennials believe that older generations can’t use new tech – or that they inherently cater to people their own age by nature – Boomers are falling by the wayside.

People aged 50+ are the largest demographic in the United States, encompassing one third of the total population at 110 million. This age group is responsible for spending 50% of the total disposable income in the country.

Credit Card Debt Study: Trends & Insights (Wallet Hub) Rated: AAA

Americans repaid $40.6 billion in credit card debt during Q1 2018 – the second-largest quarterly payoff ever. But we added almost $30 billion back to our tab in Q2 2018. We also began the year owing more than $1 trillion in credit card debt for the first time ever, after adding a post-Great Recession record of $91.8 billion to our tab in 2017.

Only four times in the past three decades have we overspent so much in a year. And in each case, the charge-off rate – currently near historical lows – rose the following year. That’s true so far, as charge-offs are up nearly 3% from Q4 2017 to Q2 2018.

Source: WalletHub

Source: WalletHub

College Ave Student Loans Announces Completion of Second Successful Securitization (Crowdfund Insider) Rated: A

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $199 million securitization of private student loans, its second successful securitization. According to the platform, the CASL 2018-A transaction completed over the summer, achieved higher ratings than College Ave’s inaugural securitization, receiving an ‘AA’ rating from DBRS and an ‘A’ rating from S&P for its senior notes. 

According to College Ave, the transaction was heavily oversubscribed attracting a broad and diverse group of repeat investors and nine new participants. Barclays and Credit Suisse were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

White Oak Global Advisors raises $ 2.1 billion for its Direct Lending Strategy (Globe Newswire) Rated: A

White Oak Global Advisors, LLC (“White Oak”) is pleased to announce the close of the White Oak Yield Spectrum Fund (the “Fund”) to outside investors. The Fund and other associated vehicles raised concurrently approximately $2.1 billion of total commitments, exceeding the $1.75 billion fundraising target. White Oak’s previous flagship fund, the White Oak Summit Fund, closed with approximately $1.3 billion of commitments in March 2016.

The capital for the White Oak Yield Spectrum Fund was raised from a diversified group of institutional investors worldwide. In particular, the Fund attracted very strong support from public and private pension funds, insurance companies and global family offices. White Oak currently manages over $5.6 billion of committed assets.

The Fund will primarily invest in first-lien, directly originated lending strategies, including term loans, asset-based loans, and equipment financing.

‘Fintech Charter’ Has No Early Takers as Lawsuit Looms (Wall Street Journal) Rated: A

A national banking regulator is offering cutting-edge financial firms a new pathway into the traditional banking system. So far, few of them are biting.

The lack of immediate interest from the likes of LendingClub Corp. LC +0.00% , Square Inc., and others comes in large part from uncertainty about what activities the Office of the Comptroller of the Currency’s so-called fintech charter will allow, what regulatory requirements it will carry, and whether it will hold up in court.

That uncertainty grew Wednesday when the Conference of State Bank Supervisors, a group of state regulators, said it intends to file a lawsuit challenging the OCC’s authority, renewing a previously unsuccessfully legal challenge.

2018 Fed Rate Hike Survey (Wallet Hub) Rated: A

Source Wallet Hub

Opendoor Buys Open Listing To Create End-to-End Marketplace (PYMNTS) Rated: A

In a press release, Opendoor said the acquisition of Open Listings, which operates a platform that aims to make it easier and lower-cost to find, tour and buy any home on the market, will enable it to create an end-to-end marketplace for the buying, selling and trading of homes. According to the company, 71 percent of home sellers are also looking to purchase a home.

With the acquisition, Opendoor customers will be able to line up a purchase of any home on the market via a trade-in transaction. Buyers who use Open Listings will get a discount on the home purchased through a commission rebate of up to 50 percent, the company said in the press release.

Via mobile phone or computer, customers can tour and submit an offer on any home on the market, get an offer on their existing home and align the timing of both transactions. By integrating Open Listings with Opendoor‘s mortgage, title and homes services, the company said conducting a real estate transaction will be as easy as booking a flight or making an online purchase.

Fintech out to start national bank clears one hurdle but faces more (American Banker) Rated: A

Varo Money in Salt Lake City is one step closer to becoming a national bank.

The fintech firm, which aims to lower the cost of banking through a mobile-only platform, recently received preliminary and conditional approval from the Office of the Comptroller of the Currency. Varo still needs to apply and receive approval from the Federal Deposit Insurance Corp. and the Federal Reserve.

Colin Walsh, Varo’s co-founder and CEO, is optimistic that the company will be operating as a bank within a year. He characterized the OCC’s decision as a pivotal moment for banking — one that shows regulators are more willing to consider nontraditional models.

State regulators renew push to block OCC’s fintech charter (American Banker) Rated: A

State regulators said Wednesday they intend to refile a lawsuit against the Office of the Comptroller of the Currency in an effort to block it from offering a new federal bank charter for fintech firms.

The Conference of State Bank Supervisors said its board recently decided to proceed with another round of litigation against the national bank regulator now that the agency said July 31 it would offer a so-called special-purpose national bank charter to fintech firms.

This will be the state regulators’ second attempt at blocking the OCC in court.

Millennials in this American city are carrying the most debt (Ladders) Rated: B

New data from online loan marketplace LendingTree shows that San Antonio is the American city where Millennials have “the most debt,” with a median debt balance of $27,122 — not including mortgages.

Researchers took a look at “anonymized credit report data of My LendingTree users who live in the 50 biggest metro areas in the U.S.” to compile the data. They were born anywhere between the years 1981 and 1996.

The 10 cities where Millennials have the most debt

Here they are, plus the average percentages of what highly contributes to Millennials’ “total debt balances.” Again, these don’t include mortgages:

  1. San Antonio: median balance of $27,122, with car loans making up 43.2% of “total debt balances”
  2. Pittsburgh: median balance of $26,403, with student debt being 45.7% of all debt
  3. Austin: median balance of $26,164, with 18.1% of all debt being from credit cards and 37.1% being from car loans
United Kingdom

Stress testing at Funding Circle (Funding Circle) Rated: AAA

This means building a sustainable platform that allows investors to earn attractive and stable returns by lending to creditworthy businesses, during every stage of an economic cycle. Since 2010, globally we’ve improved access to affordable capital for more than 50,000 businesses, and opened up a new asset class for over 80,000 investors.

Source: Funding Circle

Fed stress parameters included:

Adverse Scenario Severely Adverse Scenario
GDP Falls 2 ¼ percent below Q4 2017 Falls 7 ½ percent below Q4 2017
Unemployment Rises to 7% Rises to 10%
Home Prices Falls 12% Falls 30-40%
Source: Funding Circle

Thinking of buying into the Funding Circle IPO? Read this first (AOL) Rated: A

Peer-to-peer lender Funding Circle fired the starting gun on its much-anticipated plans to go public earlier this month. The company, which is only eight years old, is looking to attract a value of £1.7bn and raise £300m in the process.

Since its founding, Funding Circle has transformed the market for business financing, matching everyday investors who have money to spare with businesses looking for funding to expand. In total, the company has put together £5bn in loans for small businesses since 2010.

However, if you’re thinking of buying into the IPO, there are several issues you need to consider first.

Barclays opens up mobile banking app to rival accounts (Fintech Futures) Rated: A

Barclays has become the “first” UK bank to allow customers to bring their other current accounts into its mobile banking app.

Barclays says this new feature gives customers a way to get a clearer picture of their day-to-day finances within its app. It uses API technology – all powered by open banking.With competition in UK banking tougher than an East End gangster, banks are trying to stand out and play a game of constant one-upmanship.

It’s also a riposte to the many fintech start-ups offering a similar service. For example, last month London-based personal finance app Bippit launched with the offer of an account connecting and savings service.

Monzo: When is a bank not a bank? (FT Alphaville) Rated: A

Monzo is frequently hailed as one of the most exciting challenges the tech industry poses to high street banks.

Wikipedia calls it a “digital, mobile-only bank”. Mashable summed it up as the “bank that’s apparently so cool it’s become a chat up line in London’s bars”. Its own stated ambition is to “build a better bank”. In April 2017, it acquired a banking licence.

But does Monzo actually behave like a bank?

Banks, under one interpretation, are economic inventions which create liquidity from an array of otherwise illiquid assets. Douglas Diamond, the US economist, describes a bank as “a lender financed with demand deposits”. Depositors sacrifice higher returns for the privilege of immediately being able to withdraw their capital whenever they want.

iwoca: We are the UK’s Fastest Growing SME Finance Provider (Crowdfund Insider) Rated: A

Online lender iwoca says it is UK’s fastest growing SME finance provider. The claim comes following the publication of the Sunday Times Hiscox Tech Track 100 which ranked iwoca 30th on the list.

The Sunday Times Hiscox Tech Track 100, published last Sunday, 9th September 2018. Ranked No. 30 on the ilst – which ranks Britain’s tech firms in regards to the fastest-growing sales. iwoca joins a group of prominent UK Fintechs recognized by the Times.

Proptech Startup Unmortgage Raises £10M in Seed (FinSMEs) Rated: A

Unmortgage, a London, UK-based proptech startup, raised £10m in funding.

Backers included Anthemis Exponential Ventures, and Augmentum Fintech plc.

The company intends to use the funds to expand operations and finance the part of the homes it purchases.

Crowdfunding – looking beyond equity investment (What Investment) Rated: A

At a time when banks were increasingly adopting the ‘computer says no’ approach, entrepreneurs and those involved with company start ups sought different ways of financing their ambitions.

Crowdfunding platforms including CrowdCube and Seedrs emerged, using technology to bring investors and companies thirsty for cash together.

Ten years later there are more crowdfunding platforms than ever, the top 10 crowdfunding platforms in 2018  as listed by What Investment.co.uk’s sister website Growth Businessinclude names such as Seedrs, CrowdCube plus RateSetter, Trillon Fund and Funding Circle.

P2PFN celebrates its second birthday (Peer2Peer Finance) Rated: B

PEER2PEER Finance News launched two years ago today!

The progress that has been made in two years is staggering. Most P2P platforms have become fully FCA authorised and many of them have launched IFISAs – which attracted £290m in the last tax year.

The UK’s largest P2P firms have cumulatively lent out more than £11bn, Zopa is getting closer to its bank launch and Funding Circle is floating on the main market of the London Stock Exchange next month.

China

China’s tech is addicted to debt (Technode) Rated: AAA

China has become addicted to debt. Now, its tech industry is hooked too.

It started innocently enough. Back in 2008, when the fallout of America’s own debt binge was giving the whole world a hangover, China engaged in a decisive and robust economic stimulus, injecting RMB 4 trillion into key sectors of its economy. Banks, mostly state-owned in China, were directed to lend more, particularly to other state-owned firms. As a result, China recovered quickly from the global financial crisis, even as the US and Europe struggled to get back on their feet.

However, even as the Chinese economy recovered, the banks continued to lend, and Chinese companies continued to invest, most notably in infrastructure projects. Not only did they invest, they invested A LOT.

Source: TechNode
European Union

Spotcap Issues Quarter of a Billion in Credit Lines to Businesses (Spotcap) Rated: AAA

Global fintech lender Spotcap has issued more than EUR 250 million in credit lines since its launch in 2014.

The company combines robust credit assessment principles with innovative technology to offer a smooth and straightforward loan experience. The fintech undertakes cash flow based, rather than credit-score based underwriting, resulting in a fair assessment of the real-time performance of a business.

In the last 12 months, Spotcap experienced more than 100 percent year-on-year growth in the volume of credit lines it provided, growing at a faster pace than the alternative finance industry, which recently experienced 41 percent year-on-year growth in Europe.

International

Fintech investment powerhouse Ribbit Capital aims for $ 420 million with its latest fund (Tech Crunch) Rated: A

Ribbit Capital, the financial technology investment firm whose portfolio includes hits like the no-fee mobile investment platform Robinhood; cryptocurrency wallet and marketplace provider Coinbase; and Root Insurance, the automotive insurance platform that just joined the billion-dollar startup club; is raising $420 million for its latest fund, according to a filing with the Securities and Exchange Commission.

The fund would be Ribbit’s fifth foray out with limited partners and its $420 million target is only a nominal increase from the $300 million it had set out to raise for its fourth fund last year.

Coinbase alone is now worth at least $8 billion on paper, and no one laughs when chief executive Brian Armstrong says that his company’s goal is to become the New York Stock Exchange of crypto securities.

Robinhood, another one of Ribbit’s portfolio darlings, is flirting with a $6 billion valuation after its latest funding round earlier this year — and has become synonymous with stock trading for a new generation of investors (despite some criticism about its business model).

 Australia

Fintech Prospa Ranks 6th in LinkedIn Top Startups List (Crowdfund Insider) Rated: AAA

Prospa says it has been named 6th on the 2018 LinkedIn Top Startups List. The list marks the 25 best startups to work for in Australia. Prospa adds that it is the top Fintech on the list as well.

Prospa is an online lender catering to small business. Prospa allows SMEs access to loans between $5,000 and $250,000, with approval and funding within as little as 24 hours.

Now in its sixth year, Prospa has established itself as delivering consistent high growth with a solid customer satisfaction NPS score averaging 77 and customer repeat rates of 69%.

Small business lenders pledge fairness under ASIC’s gaze (The Sidney Morning Herald) Rated: A

Fintech lenders say they’re moving quickly to review and amend any unfair contract terms before the watchdog comes knocking, but there are still questions about best lending practice.

Last week, alternative lender Prospa confirmed it had changed a number of contract clauses after receiving a query letter from the Australian Securities and Investments Commission (ASIC) back in June that arrived just days before the startup put the brakes on its planned ASX listing.

India

Authors:

George Popescu
Allen Taylor

Wednesday October 11 2017, Daily News Digest

alternative lending and payday lenders

News Comments Today’s main news: College Ave completes $161M securitization of private student loans.Marlette Funding prepares new deal.SoFi’s latest student loan securitization sees strong demand.Zopa closing in on completing the opening of new bank.Mintos exceeds 35K investors.JD Finance launches bank deposit product with yield rate up to 5%.SocietyOne hits $350M in total loan originations.Crisil withdraws […]

alternative lending and payday lenders

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

College Ave Secures Securitization at $ 161 million in Private Student Loans (The Student Loan Report), Rated: AAA

Only three years after its inception, a major student loan marketplace lender, College Ave Student Loans, announced the completion of its first securitization of private student loans. The $161 million transaction got an ”A” rating from DBRS and a ”BBB” rating from S&P according to College Ave. The sole underwriter of the deal completed earlier in the summer was Barclays.

Marlette Funding preps deal as industry heads for “critical quarter” (Global Capital), Rated: AAA

Online lender Marlette Funding is marketing a securitization this week, as the wider marketplace lending industry gears up for an important fourth quarter.

Goldman Sachs, Deutsche Bank and Citi are joint lead managers on the $312m deal, according to a source briefed on the matter. The deal is backed by unsecured consumer loans, which the company originates through Cross River Bank (CRB), and then repurchases before selling to third party loan ….

SoFi’s latest student loan securitization met with strong demand (American Banker), Rated: AAA

Credit rating agencies aren’t overly concerned about recent management changes at Social Finance, and it appears that investors feel the same way. The company’s latest student loan securitization attracted strong interest, and priced at levels similar to or better to its previous transaction, completed in July.

Why the Next Phase for Fintech Is Collaboration, Not Just Competition (Wharton), Rated: AAA

Fintech is growing up: Financial institutions are increasingly viewing these disruptors as partners while startups are learning that they need the scale and regulatory expertise of the incumbents. Both sides have a lot to learn, and benefit, from each other, according to speakers at the recent “Fintech: The Impact on Consumers, Banking, and Regulatory Policy” conference at the Federal Reserve Bank of Philadelphia.

“We are actively seeking startups for our members to partner with,” said Robert Nichols, president of the nearly 6,000-member American Banking Association (ABA).

Capital One has integrated its services with Amazon’s Alexa digital assistant and its video-enabled device, Echo Show. Consumers can ask Alexa for their account balance, request that it track their spending or even make a payment. Bank of America is set to debut its chatbot Erica on the bank’s mobile app to help customers with personal finance decisions. Also, more than 30 banks are using Zelle, a service that lets people send money to each other in minutes. It started in 2011 as a collaboration among Bank of America, Wells Fargo and JPMorgan Chase.

The Federal Reserve Bank of San Francisco launched a fintech portal in May to help companies navigate the regulatory system and show them where to go for further assistance, said Tracy Basinger, its director of financial institution supervision and credit.

One example of alternative data used by online lender the LendingClub is the internet footprint of a customer. It doesn’t use social media information due to privacy concerns. Rather, the company uses things like a geocode IP address for fraud detection.

Overstock’s Regulated Token Exchange Will Launch with Own ICO (Coindesk), Rated: A

Retail giant Overstock.com is to launch its new regulated token exchange with its own initial coin offering (ICO), according to a news report.

The token sale will be the inaugural event for the new exchange, which is set to be the first marketplace specifically for trading tokens classed as securities in the U.S. The service is being launched under the umbrella of Overstock’s capital markets arm, tØ.

The company expects to raise $200 million to $500 million “easily” via the ICO, Byrne said.

Celsius Puts Heat On Credit Card Providers With Blockchain-Based P2P Lending Service (Forbes), Rated: A

This system created a culture of ‘buy now, pay later’, something that came to a grinding halt with the financial crash of 2008. Suddenly, credit was not so easy to come by and the world stopped turning.

Of all disruptions often mentioned in the tech world, the financial crisis was the greatest of them all.

Cash is dying out, digital money and remittances have been completely disrupted and even credit card providers are losing business.

So, step forward, Celsius, an ethereum-member based lending platform that wants to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans.

These loans will pay higher interest to lenders and charge lower interest to borrowers by splitting the bank profits between the members of the community.

In the US, an astonishing $ 1 trillion, more than 50% of all the consumer credit issued worldwide,is currently controlled by six of the largest US banks. Centralized financial institutions like to offer credit to many of their richest clients – those who have well-established and pristine credit histories, but ignore ‘riskier’ millennials.

Celsius Is Creating A Peer-to-Peer Lending Service That Will Give Millennials Broader Access to Consumer Credit (Coinspeaker), Rated: A

In the U.S., $1.1 trillion, one-half of all the consumer credit issued, is currently controlled by six of the largest banks.

Celsius, an ethereum-based lending platform, announces today its plans to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans, swapping out big banks and their exorbitant fees for colleagues, friends or other Ethereum token holders. Celsius will focus its efforts on supporting millennials, the generation that often suffers the most at the hands of credit lending  services—a phenomenon we’ve seen recently with the rise of the student and consumer debt in the U.S. Celsius is building the future of consumer credit by migrating credit scores and legacy data to the blockchain and incentivizing millennials to build a new digital identity and credit score that includes their social and digital footprint. This process encourages the creation of a community of lenders and borrowers with lower loss factors and higher on-time payments, enabling greater credit limits at lower interest rates.

Celsius will hold an ICO for its Degree token in January, but the company just initiated its presale of $30 million from accredited investors. Celsius has added many notable names to its advisory, partner and investor groups including serial entrepreneur Jeff Pulver, co-founder of Vonage and VoIP Pioneer; Chris Dannen, founder and partner of Iterative Capital Management; Ismail Malik, founder of BlockchainLabs; Lou Kerner, top blogger on Medium; and Miko Matsumura, founder of Evercoin.

Celsius offers its users a variety of features, including:

  • Peer-to-peer lending
  • Digital credit score: Celsius will issue each user a credit score based on their digital identity and any other user uploaded data including FICO credit scores and past transaction history on websites such as Amazon and eBay.
  • Global Network
  • Insuring the credit: Celsius provides insurance so that if the borrower defaults, Celsius covers the portion of the principal loan amount for the lender and is responsible to recover the money owed to the lenders.

Need Personal Loans? Blockchain Is Here (Cointelegraph), Rated: A

Companies that offer personal loans (even enterprise-level banking institutions) charge exorbitant fees, and often require you to ‘sign in blood’ for the loan. In fact, much of the consumer credit market is held by just a few major banking institutions.

Nowhere is this situation more critical than among millennials.

According to a recent article in Forbes, the answer for this system seems to be coming from Blockchain technology.

Marketplace lenders should seek to be boring (Global Capital), Rated: A

The marketplace lending industry, particularly in the US, has always sat in a transient grey area between banking and tech firm, providing lending services while also preaching ‘disruption’, as Silicon Valley firms are fond of doing.

While the industry’s image as the ethical and trendy alternative to banking was a great route to publicity in the industry’s infancy, marketplace lending ought to be well enough established for platforms to sell themselves on their core lending business.

Ken Rees, CEO of Elevate, to Keynote at LEND360 Conference (BusinessWire), Rated: A

Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will keynote at the LEND360 conference on October 11, sharing his insights on innovation and the needs of non-prime Americans. Rees will highlight Elevate’s Center for the New Middle Class, its mission, and the company’s commitment to innovating for their customers. His talk will shed light on the realities of being non-prime in America, and help audience members discover new ways to serve this group. Elevate is an online lender that has originated $4.5 billion in credit to more than 1.7 million non-prime consumers.

From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (LendingTree), Rated: A

The mortgage process is speeding up. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.

From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.

LendingTree, Inc. to Report Third Quarter 2017 Earnings on October 26, 2017 (Business Insider), Rated: B

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will release its fiscal third quarter 2017 results on Thursday, October 26, 2017, and the company will hold a conference call at 9:00am ET.

Conference call
Toll free #:  877-606-1416
707-287-9313 outside the United States/Canada

To listen to a replay of the call 
Toll free #: 855-859-2056
404-537-3406 outside the United States/Canada
Replay Passcode: 98763739

Closer Look at Credit Enhancements in Subprime Auto ABS Market Show Signs of Vulnerability (BusinessWire), Rated: A

Davis & Gilbert partner Joseph Cioffi, a widely-respected authority on loan and securitization markets, has found that credit enhancements supporting subprime auto asset-backed securities (ABS) do not necessarily provide the same level of protection as credit enhancements supporting pre-financial crisis era subprime residential mortgage-backed securities (RMBS), leaving them more vulnerable to market shifts and shocks than many realize.

These observations were made on a newly launched blog, the Credit Chronometer, in which Mr. Cioffi and team will be analyzing economic, market and political events that shape the legal landscape, and impact loan and structured credit markets, including those for auto loans, marketplace lending (peer-to-peer), student loans, mortgage loans and Property Assessed Clean Energy (PACE) financing.

Based on the indicators of crisis that foretold the subprime mortgage crisis – within the areas of lending practices, ABS practices and the underlying market for autos – the Credit Chronometer presents the “Subprime Auto Loan Crisis Chronometer” to depict the risk of a crisis, which Mr. Cioffi defines as a “battle over loss allocation.” As events impact the subprime auto market, the Subprime Auto Loan Crisis Chronometer’s bright yellow gauges will show the current level of risk. As of today, the Subprime Auto Loan Crisis Chronometer is set at:

  • Lending practices: Moderate-High
  • ABS Practices: Moderate
  • Auto Market: High
  • Risk of Loss Allocation Battles: Moderate

Austin credit union launches fintech-backed loan to up digital game (American Banker), Rated: A

The $125 million-asset Capitol Credit Union became the first financial institution last month to offer customers the product, Kasasa Loans.

Lending company has Rx for doctors with student loans (Cleveland Jewish News), Rated: A

Splash Financial in Cleveland has focused on relieving the burden of student debt since the company was founded in 2013. But according to founder and CEO Steven Muszynski, it wasn’t until recently the company turned its sights to the medical community.

“We’re an online lender that helps doctors refinance their student loans,” he said. “The majority of people financing their student loans graduate with an average of $200,000 in debt. We’re the only company in the country that allows lenders to pay only $1 a month for trainees.”

Congress Should Roll Back New Payday Loan Rule (Competitive Enterprise Institute), Rate: A

The hysteria in Washington around the release of the Consumer Financial Protection Bureau’s final short-term, small-dollar loan rule has been immense as of late. With the final rule issued late last week, it largely lived up to the hype.

The content of a federal rulemaking, while devastating for the payday loan industry, wasn’t all that was at stake. The CFPB’s Director Richard Cordray has long been expected to run for Governor of Ohio once the rule was finalized. With reports flowing in that Cordray plans to make the announcement any day now, the speculation is well-founded.

But the crux of the final rule remains the same. It will force lenders to conduct an “ability to repay” assessment of customers to ensure that borrowers can repay the loans and fees within two weeks, it will cap the amount of times a customer can roll over a loan at three, and it will prevent lenders from charging a customer’s checking account after two unsuccessful attempts.

This makes the impact of the rule devastating. The CFPB’s own impact analysis found that the rule would reduce industry revenue by approximately 75 percent. This is in essence a death warrant to at least three-quarters of the 20,000 payday loan shops that service some 12 million Americans annually.

There are multiple surveys confirming that the users of payday loans widely approve of the option.

Republicans should waste no time in using the Congressional Review Act to overturn this devastating regulation.

Payday lending rule may lure in lurking loan sharks (The Hill), Rated: A

The Consumer Financial Protection Bureau (CFPB) published its final rule addressing so-called payday loans as well as certain other extensions of credit to consumers on Thursday. These loans are usually small, very short-term (often just a few weeks) and carry a very high effective interest rate after all fees are taken into account.

The rule applies to three types of “covered short-term loans:”

  • Short-term loans maturing in 45 days or less
  • Longer-term (more than 45 days) balloon-payment loans; that is, the loan is paid in full when it comes due or the loan agreement requires at least one substantial down payment of the loan.
  • Longer-term loans with a cost of credit exceeding 36 percent that either have a balloon-payment feature or the lender is authorized to obtain repayment by initiating a transfer of funds from the borrower’s bank account.

3 ways the new rules curtailing payday loans will help consumers (WPXI), Rated: A

Of course, everyone is not happy about the changes, which won’t take effect until July 2019.

Here are three ways the new payday lending rules will help consumers

  1. Prevent overborrowing: Once a consumer has borrowed three times in a 30-day period, a mandatory 30-day “cooling off period” kicks in. During this time, the consumer won’t be allowed to borrow unless at least a third of the previous outstanding loan has been satisfied.
  2. Mandate income verification: Believe it or not, many payday lenders don’t check to see what a borrower’s monthly income is — they don’t have an incentive to. If you don’t pay up, your collateral — in many cases, your car — will become theirs. With the new rules, lenders must verify the consumer’s net monthly income and the amount of payments required for the consumer’s debt to be paid.
  3. Control payment withdrawals: Gone will be the days when a lender can continue to hit up your zero-balance account, triggering those insufficient funds charges. The new rules state that lenders must provide a written notice before a first attempt to withdraw payments for a loan from a consumer’s account. When two consecutive withdrawal attempts fail, the lender must get permission again from the borrower to attempt another withdrawal from the same account.

Ohio must reform payday lending (Record-Courier), Rated: B

Lenders avoided the law’s 28 percent interest rate cap by registering as mortgage lenders or credit-service organizations. That has allowed them to charge an average 591 percent annual interest rate on the short-term loans, watchdogs contend.

According to Pew Charitable Trust, Ohioans who borrow $300 from a payday lender are charged, on average, $680 in interest and fees over a five-month period — the typical payoff for what is supposed to be a two-week loan.

A bill awaiting action in the Ohio House would allow lenders to charge interest rates up to 28 percent plus a monthly 5 percent fee on the first $400 loaned — a $20 maximum rate.

OCC Gives Deposit Advance Programs New Life (PYMNTS), Rated: A

By the CFPB’s own estimates, the regulations will reduce the number of short-term loans in the U.S. by more than half.

Industry estimates project a drop in loan volume that will close the doors of more than 80 percent of short-term lenders in the U.S., most of which are smaller “mom and pop” operations.

A Brief History of Small Banks, DAPs, the CFPB and the OCC

Until around 2013, DAPs were offered as a mainstream banking competitor to payday loans. Their main competitive advantage was twofold: They were faster, and one’s bank could instantly verify those direct deposits. But in 2013, the CFPB released a whitepaper that said DAP loans were so similar to their payday cousins as to have all of the flaws normally associated with such lending products.

The CFPB Has a Change of Heart about DAP

A funny thing happened to the CFPB on its way to publishing those draft regulations on short-term lending: It seems to have had a change of heart about bank-based, short-term lending. In fact, when announcing the short-term lending rules, CFPB executive director Richard Cordray called out a special carve-out for community banks and credit unions, provided they make fewer than 2,500 short-term loans each year and collectively account for less than 10 percent of total lending revenue.

Follow the bouncing regs. The new CFPB rules, released last week, have a carve-out for small banks to pick up some of the short-term lending needs of consumers.

Atty Eyed For Payday Loan Fraud Says Tribe Strategy Is Legit (Law360), Rated: A

An attorney defending himself against charges he helped operate a $2 billion criminal payday-loan empire told a Manhattan federal jury Tuesday that he viewed tribal involvement in the enterprise as a legitimate legal shield and asserted that he had “panicked” when he faked a signature on a legal document.

5 Rules Digital Marketers at J&J, SoFi, J.P. Morgan, and IBM Swear By (Fortune), Rated: A

In May, when an Australian real estate mogul suggested posited the somewhat insulting theory that millennials aren’t able to buy homes because they’re spending too much on discretionary items like avocado toast, SoFi COO Joanne Bradford tapped into that controversy as a way to connect with the company’s millennial customer base: the online lender offered a month of free avocado toast to everyone who got a mortgage through the company. More than a hundred a media outlets jumped on the story and SoFi had three of its greatest months ever.

RealtyShares Wins LendingTree Fintech Innovation Challenge, $ 10K At Benzinga Fintech Summit (Benzinga), Rated: B

RealtyShares, the real estate marketplace that’s funded more than $500 million in developments, took home the Fintech Innovation Challenge presented by Lendingtree Inc TREE 0.04% at the Benzinga Fintech Summit.

CleanCapital Expands Team with Former Managing Director of Global Environmental Fund (Fox 8 Live), Rated: B

CleanCapital announced that Matt Eastwick has joined the company to structure and execute capital markets transactions. As Head of Capital Markets, Eastwick will bring an innovative approach to securing the optimal structures and investors for CleanCapital’s various and growing capital needs. Eastwick’s hire comes after a successful Series A equity raise this past summer, as CleanCapital continues to scale operations, while expanding opportunities for clean energy investing.

Chicago Mayor Cuts Ribbon at New Headquarters of Rising FinTech Firm OppLoans (PR Newswire), Rated: B

Chicago Mayor Rahm Emanuel cut the ribbon at the new OppLoansheadquarters in downtown Chicago this week. OppLoans, the nation’s leading socially responsible online lender, has more than tripled its employee-count in the past two years and expanded their operations in One Prudential Plaza. In 2017, the firm was named the 14th fastest-growing company in Illinois and the 219th nationally.

Real Estate Provides Opportunities for Retirees Looking to Protect and Grow Their Nest Egg (Equities.com), Rated: B

A growing number of investors are starting to take a closer look at the real estate market as a practical way to help fund their retirement. These retirees are getting into real estate investing through real estate crowdfunding platforms that allow them to pool their money for real-life real estate investments.

Last year, real estate crowdfunding sites topped the $3 billion mark and crowdfunding overall is expected to grow into a $300 billion industry in less than a decade. Fewer than 10% of Americans are accredited investors yet make up 70% of the wealthiest individuals in the U.S. Many retirees qualify as accredited, and we can expect many more crowdfunding sites to embrace the average individual investor by lowering the barrier to entry.

United Kingdom

Zopa is ‘pretty close to finishing’ building its new bank (Business Insider), Rated: AAA

Online lender Zopa is close to finishing building the tech it needs to launch a full bank, according to its CEO.

Janardana said he couldn’t comment on Zopa’s progress in getting fully regulated as a bank but said the shortest time it has taken a new bank to be regulated is around two years, suggesting Zopa is still a way off from launch.

‘We’re in close communication with Monzo, Starling, Tandem’

Janardana, who was speaking to BI at LendIt Europe conference in London, said Zopa is working closely with other startup banks in Britain.

During his presentation at LendIt Europe, Janardana said Zopa’s new bank initially plans to launch savings and credit cards. He said the bank will take a customer-focused approach, shunning 0% balance transfers on credit cards in favour of consistent low rates and rejecting teaser rates on savings accounts.

Open banking is an “exciting opportunity” for alternative lenders (P2P Finance News), Rated: A

ZOPA’S chief product officer Andrew Lawson has heralded the move towards open banking as “a really exciting opportunity” that could potentially broaden the peer-to-peer lender’s product offering.

Late last year, Zopa unveiled plans to launch a digital bank that would sit alongside its P2P operations. Lawson re-affirmed that this would enable Zopa to service a wider set of customers with a wider set of products. Revolving credit, credit cards and longer mortgages would not be possible with P2P, he argued.

Zopa CEO: banking must no longer be a “zero-sum game” (AltFi), Rated: A

Speaking at the LendIt Europe conference this morning, Zopa CEO Jaidev Janardana (pictured) issued a stinging critique of the traditional banking model, which he says is set up to “take advantage of customer inertia”. He went further, describing old school banking as a zero-sum game, in which wins for the bank will always be to the detriment of customers, and vice versa.

Mintos marketplace exceeds 35 000 investors (LendIt), Rated: AAA

Mintos marketplace for loans has reached a new milestone – 35 000 registered investors from 64 countries.

About 2 000 new investors join Mintos each month. This has allowed for loans worth more than EUR 325 million to be funded through Mintos in two years since its establishment. More than EUR 200 million has been funded in 2017 alone, making Mints a clear market leader in continental Europe with a 40% market share, according to AltFi Data.

As of September 2017, about EUR 1 million is invested in loans through Mintos daily, which is three times more than just a year ago.

On the supply side of the marketplace, there are 27 loan originators from 13 countries.

Oakam Accelerates Financial Inclusion in the UK with Alternative Data (LendIt), Rated: A

Digital micro-lender, Oakam has provided over 420,000 loans totalling over £320 million to consumers overlooked by mainstream financial institutions since 2006. Alternative data is enabling Oakam to employ new methods in underwriting and risk management to expand credit access for financially excluded consumers in the U.K., while maintaining robust lending standards.

Data from FICO shows that 60-75% of traditionally un-scorable consumers could be assigned a more meaningful credit score using alternative data. For Oakam, supplementing traditional methods of underwriting, such as the analysis of credit bureau data with alternative approaches has enabled Oakam to evaluate a high volume of applications since inception.

Oakam’s use of alternative data has also yielded positive repayment behaviour among customers. 70% of new customers made on-time repayments, despite previous challenges accessing credit due to their income levels; court judgements on prior loan defaults; status as a new resident of the UK; the absence of credit history or low credit scores; or some combination thereof. This is according to a study of 15,000 first-time Oakam customers between January 2015 and July 2016.

Oakam uses the following alternative sources for its underwriting:

  • Network associations: Similar to the use of relationship mapping on LinkedIn, Oakam assesses the connections between borrowers and applicants, based on social network data, geographic proximity, and referrals to study patterns that detect fraud or surface certain risk attributes. Data from Oakam showed that customers who were referred by other customers were 20% less likely to default than customers outside of any network.
  • Reaction data from nudges: In addition to predicting risk, Oakam uses gamification to influence it. Through its gamified mobile app, customers are financially incentivised to repay their loans. Oakam has seen a 25% improvement in on-time repayment since April 2017 as a result. Gamification also provides access to behavioural data to strengthen Oakam’s future underwriting decisions.
  • Unstructured data from online conversations: Oakam uses natural language processing and machine learning to analyse the conversations between potential customers and Oakam Digital Agents via its website, and to detect default risk or fraudulent intent.

Is RBS’s online lender a “massive corporate fudge”? (AltFi), Rated: A

Funding Circle boss takes shot at RBS’s online lending pilot Esme.

Esme, RBS’s online lending pilot for small businesses, went live in February of this year. 30-year RBS veteran Richard Kerton leads the project. This morning, he told the LendIt audience that Esme could approve and fund business loans in as little as 25 minutes, with broader risk parameters than its parent bank.

Desai dismissed the idea that P2P lenders are overly-reliant on brokers as a “myth”, pointing out that 75 per cent of Funding Circle’s borrowers come directly to the platform, and highlighting the simplicity of the platform as a big part of the reason.

You can soon buy and store bitcoin directly with this British “neobank” (Quartz), Rated: A

A British “neobank” called Revolut is working on letting its customers convert and hold bitcoin and other cryptocurrencies directly in their accounts.

The firm will let users buy, sell, and hold three cryptocurrencies: bitcoin, litecoin, and ethereum. Users will also be able to transfer cryptocurrencies to other Revolut account holders. The big thing here is Revolut’s promise to allow “instant” conversion of fiat money to cryptocurrencies within its app, potentially removing the currently troublesome process of signing up on crypto exchanges, or peer-to-peer platforms, or going to a bitcoin ATM, to acquire or dispose of funds.

China

JD Finance Launched Bank Deposit Product, with Yield Rate up to 5% (Xing Ping She), Rated: AAA

JD Finance, a third-party finance platform in China, recently launched several BaoShang Bank deposit products. The one-year yield of the product is as high as 5%, rising by as much as 230% compared with the benchmark interest rate for Banks.

The product description shows that the maturity of this series including 1 year, 6 months and 3 months, correspond the savings deposit rate of 5 %, 3.5% and 3.3%, and the minimum deposit amount of 50000, 100 and 100 RMB. In terms of security, as deposits, the product series guaranteed income. As for liquidity, it can be taken at any time. In procedures, it can be purchased directly without evaluation.

A number of bank retails said that the deposits on individuals always have been conducted through their own channels, and they have never take deposits through a third party platform. It also reflects that the competition of bank deposit market becomes more and more fierce.

However, JD Finance explained that they just play the role of information display platform for the bank deposit product, rather than commission sale. Both product and service are supplied by the bank itself.

Zhongan Insurance Shares Ride the Roller Coaster (Xing Ping She), Rated: A

Zhongan Insurance (06060.HK) has been known as The First Stock in Fintech. After three days of rising in a row, its stock price hit a new high of HK $97.8 and closed at HK $90.8 on October 9th. So far, the market value of Zhongan Insurance reached to HK $130.7 billion.

WIND data shows that the stock has risen 52.09% in six trading days since listed, with a turnover rate of 59. 62%, and the interval volume is 2.62 billion shares, the transaction amount reached to 20 billion RMB.

“Now there is no other pure insurance technology company in Hong Kong stock market. The listing of Zhongan Insurance brings the opportunity for investors to participate in the field of insurance technology. In addition to foreign investment in the stock, mainland funds are also very fond of the unit”, a Hong Kong investment analyst said.

CreditEase Hosted FinTech Themed 2017 Silicon Valley – Beijing Dialogue Conference in San Francisco (Business Insider), Rated: A

CreditEase, a Beijing-based financial technology conglomerate with a robust online platform and a broad offline network, announced it recently hosted a FinTech conference, “2017 Silicon Valley – Beijing Dialogue” themed “The Power of Innovation: Driving Forces behind the FinTech Age 3.0″, in San Francisco.

Hong Kong needs to unlock the potential of the sharing economy, or risk falling behind (SCMP), Rated: B

The city’s ranking in the Global Innovation Index has fallen in the last two years. And this slide has been accompanied by another trend: the rise of China in the table.

With more than 600 million people in China participating in the sharing economy, it’s expected that it will account for 10 per cent of China’s gross domestic product by 2020, according to their State Information Centre.

European Union

CREDITSHELF ANNOUNCES RESULTS OF NEW SME-STUDY AT LENDIT EUROPE 2017 CONFERENCE (LendIt), Rated: A

today at the Lendit Europe gathering of over 1,000 fintech and lending executives in London, creditshelf announced that, according to the study “Industrial SMEs and Financing 4.0”, nine out of ten medium-sized industrial enterprises in Germany would provide lenders with real-time production data to either convince them of the value of making an investment, or to enable them – during the credit term – to check on the performance of a facility already arranged.

European marketplace lenders tap private ABS market (Global Capital), Rated: A

Panellists at LendIt Europe on Monday said that there may be more to Europe’s marketplace loan ABS market than meets the eye, with a number of platforms issuing deals under the radar.

Citi’s Sebastian Walf said that the two public ABS deals, which were sold last year from Funding Circle and Zopa, were just the “tip of the iceberg”, with a number of other online lending platforms issuing private securitizations to meet their funding needs.

Trustly partners with Emric, part of Tieto (Trustly), Rated: B

Trustly, the European payments company, and Nordic software provider Emric, part of Tieto, are delighted to announce a new strategic partnership which will provide Emric’s business customers access to Trustly’s online banking payments technology across Europe.

International

Crowdvouching service Suretly, raised .8 mln in August, is launching beta version in 6 weeks (LendIt), Rated: A

During the ICO last month, Suretly secured its minimum funding requirements in just a few hours. It raised $2.8m. Before the ICO, the first version of the Suretly app was successfully tested. A beta version of it will be released on the market within several weeks from the ICO. Upon release of the app, the system will already be populated with borrowers.

Suretly is an international project. The company has legally set up in the following initial countries: Russia, Kazakhstan, and the USA.

CFTE Launches Online Fintech Foundation Course in Collaboration with 20 CEOs and Senior Leaders (PR Newswire), Rated: A

CFTE is pleased to announce the worldwide release of Around Fintech in 8 Hours. The Fintech foundation course has been designed to give professionals working in the finance industry a solid understanding of how technology is redefining the provision of financial services.

4 senior lecturers and 16 industry experts who are Fintech CEOs, investors and heads of innovation will provide participants with a 360 perspective on Fintech disruption.

16 guest experts such as Rob Frohwein, CEO of Kabbage and Anne Boden, CEO of Starling Bank, will support the lecturers by providing first hand insights into how the structure of the FS industry is being transformed by technology and what this means for professionals.

The Centre for Finance, Technology & Entrepreneurship Preps Online Fintech Course (Crowdfund Insider), Rated: A

The Centre for Finance, Technology and Entrepreneurship (CFTE) is launching their first online Fintech course which will open to the public soon. If you are interested, you may enroll here. The course is described as “Around Fintech in Eight Hours.”

The CFTE has partnered with several accelerators including the Supercharger Fintech Accelerator and LATTIC80. Both are based in Asia (Hong Kong & Singapore) with the CFTE operating out of London.

India sets sights on UAE’s technology sector (AMEinfo), Rated: A

A statement released by ESC says that it is participating at GITEX 2017 to provide Indian IT companies opportunities to exploit the burgeoning Middle East ICT market.  It is the largest participation by India, under the Council’s banner.

Meanwhile ESC Chairman Prasad Garapathi said that Indian IT exporters will continue to look into the whole Middle East and MENA region through this important gateway of Dubai.

Export of software and related services to the Middle East has reached $2bn in 2016-17 while India’s total export of electronics hardware during 2016-17 is estimated at $5.685bn.

The Middle East nation is keen to elevate disruptive Indian fintech startups by providing them an international platform and financial support.

The two sides also signed 14 agreements whereby the UAE vowed it would invest $75 billion in India.

The two countries also set a target of 60 percent increase in bilateral trade in the next five years.

Australia/New Zealand

SocietyOne Achieves $ 350 Million in Total Loan Originations (Crowdfund Insider), Rated: AAA

Australia-based online lender SocietyOne announced on Tuesday it has secured $350 million in total originations. This news comes less than two months after the lending platform celebrated its fifth birthday. According to SocietyOne, the company topping $350 million as the current loan book also reached $200 million for the first time in the lender’s history.

10 Fast Growing Fintechs in Australia and New Zealand (Fintech News), Rated: A

Pay Later, better known as Afterpay, is an easy-to-use payment process allows shoppers to buy their product today and pay it off in 4 equal fortnightly instalments.

Airwallex was founded in 2015 by a team of entrepreneurs who developed a technology that uses machine learning to determine the most cost-effective way of settling every payment that comes through the platform.

CoinJar provides simple tools to manage digital currencies.

Data Republic was founded to empower the liquidity of data by delivering technology which offers best-practice security, privacy compliance and governance controls for organizations looking to safely exchange data.

Harmoney is NZ’s leading peer-to-peer money marketplace – where everyday people borrow money from (and lend money to) other everyday people. Hence the term ‘peer’ to ‘peer.’

HashChing is Australia’s first online marketplace allowing consumers to access great home loan deals without having to shop around.

identitii allows banks to move away from customer level information to detailed information about each and every transaction.

Prospa is Australia’s online small business lender committed to helping small businesses access the funds they need to grow.

SocietyOne is radically changing the landscape of financial services in Australia. Since our foundation almost five years ago, we have gone from a standing start to providing more than $300 million in loans to customers.

Xero is one of the fastest growing software as a service companies globally.

BOQ still worst for home loan disputes (The Australian), Rated: A

Bank of Queensland has topped the list as Australia’s worst ­offender for disputes with home loan customers, according to the financial ombudsman.

It is the fourth year in a row the bank has headed the list, with the number of disputes per 100,000 customers barely improving in the past two years, although the numbers have trended downward since 2014.

For every 100,000 home loan customers, BoQ was involved in 79 disputes during the year. Of those, 40 per cent were resolved by agreement, with 29 per cent in BoQ’s favour, according to the Financial Ombudsman Service.

Home loans accounted for 10 per cent of all disputes FOS accepted in the year, while credit cards accounted for 14 per cent and personal loans 8 per cent.

India

Crisil withdraws proposal to enter peer-to-peer lending business (Business Standard), Rated: AAA

Ratings agency has withdrawn proposal to enter into peer-to-peer lending platform business while the has approved Rs 85.45 crore foreign direct investment (FDI) proposals in September from four companies, the Ministry said on Tuesday.

Crisil’s majority shareholder is international ratings agency Standard and Poor’s, an American corporation.

P2P players seek RBI clarification on permissibility of institutional lenders (Financial Express), Rated: A

After the Reserve Bank of India (RBI) released guidelines for entities engaged in peer-to-peer (P2P) lending last week, an association of such entities is planning to ask the central bank to clarify whether institutions will be allowed to lend through P2P platforms.

A top executive with one of the five P2P lending platforms told FE that the industry is unsure of whether ‘participant’ covers only individuals or institutions as well.

10 Fast Growing Fintechs in India (Fintech News), Rated: A

BankBazaar is the world’s first neutral online marketplace that helps people compare and choose financial products such as loans, insurance, credit cards, fixed deposits, saving accounts, mutual funds etc., – over a highly secure, user friendly, and intuitive platform.

Capital Float is an online platform that provides working capital finance to SMEs in India.

FreeCharge is India’s No.1 payments app.

Lendingkart Technologies Private Limited is a fin-tech startup in the working capital space.

MobiKwik is India’s largest independent mobile payments network connecting 55 million users with more than 1,500,000 retailers.

Mswipe is India’s largest independent mobile POS merchant acquirer & network provider.

Paytm is India’s largest mobile payments and commerce platform.

Policybazaar is an Indian online life insurance and general insurance comparison portal.

Razorpay aims to revolutionize online payments by providing clean, developer-friendly APIs and hassle-free integration.

Rubique (Rubik + Unique) aims to mine every possibilty to offer a unique solution to our customers’ complex financing problems through advanced technologies and data science.

India Money Mart launches P2P lending platform (India Times), Rated: B

India Money Mart (IMM), a digital lending marketplace, has launched its app to allow lenders and borrowers to carry out Peer-to-Peer (P2P) lending a week after the RBI released detailed guidelines for this platform.

The app is useful for people seeking alternative sources of funding to meet emergency requirements, not serviced by banks and other traditional lenders, it said.

Asia

Mongolia’s Untapped Lending Market Has Earned This Japanese-Backed Fintech Startup A $ 30M Valuation (Forbes), Rated: AAA

In Mongolia, where the average monthly income is $390, informal loans between friends or family members are commonplace as credit and small bank loans are hard to get. On the other hand, small informal loans are almost expected to not be paid back.

“There is no leverage system for people to repay, so in the worst case they lose their friends,” says Anar Chinbaatar, 35, CEO of fintech startup AND Global.

His startup, which launched the mobile app LendMN, introduced mobile-based microlending to the North Asian country where borrowers are blacklisted from significant financial services such as mortgages if they default on a small loan from the bank.

After raising $1 million in seed funding in April 2016, the company received another $4 million with a $30.8 million valuation in August from influential backers in Mongolia and Japan including former Japanese parliament member Takami Yuichi, investor Satoshi Matsumoto and his wife Yasuyo Matsumoto. It is also advised by Oko Davaasuren, an influential Mongolian investor from TechStars.

The company, which has issued over $1.9 million in loans as of this month, plans to use the new investment to fuel expansion into the Philippines and Japan and develop new technology such as a blockchain project while preparing for an initial coin offering in December.

Crowdfunding Creates New Opportunities In Malaysia (TMF Group), Rated: A

Malaysia was the first country to regulate the growing industry to support new ideas by providing a funding mechanism. Its Securities Commission (SC) has approved a total of 12 crowdfunding platforms – six equity-based and six peer-to-peer (P2P) lending – and, though there are strict guidelines for operation, the market is creating new avenues for entrepreneurs.

Growing regulation of the crowdfunding industry is not putting off investors; Malaysia as a whole is one of the least complex jurisdictions in Asia, according to TMF Group’s inaugural Financial Complexity Index.

The ranking of 94 jurisdictions across the world resulted in three top-10 spots for Asia Pacific: Vietnam ranked 5th most complex for compliance, followed by China at 7 and India at 10.

But there was a large chunk of southeast Asia which ranked on the less complex side of the table, including Malaysia (59), the first country in Asia to regulate crowdfunding.

Africa

Inspeer Announces Crowd Sale for Its ‘Inspiration Through Peer to Peer’ Lending Service (Digital Journal), Rated: AAA

Inspeer, one of the few players to recognize the need for revolutionary technology in the financial services industry has opted to introduce additional utilities backed by cryptocurrencies and their underlying blockchain technology. The platform, designed to use cryptocurrency alongside fiat currency for the purpose of peer to peer lending has announced the launch of its upcoming crowdsale campaign.

With their primary operations located in Russia under the LightFin.ru brand, more than 200,000 loans applications were processed within the first year of platform deployment.

Inspeer’s platform uses loan pipelines and scoring algorithms which consist of the InsCore system and OLAF algorithms. Together, these two components help to effectively execute an assessment of the borrower’s likelihood of repayment as based on more than 20,000 predictors.

ICO will start on Nov. 6 and continue for Dec 6.

Authors:

George Popescu
Allen Taylor

Wednesday June 28 2017, Daily News Digest

china big banks

News Comments Yesterday, Lending-Times incorrectly stated that Zopa would charge all borrowers the same rates with its planned bank. In actuality, the plan is to price the book the same between new and existing customers, and not make a difference between new and existing customers as other banks do. Today’s main news: MarketInvoice, Funding Circle, […]

china big banks
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United States

Elevate’s RISE Credit Enters a Sixteenth State, Offering Lines of Credit in Kansas (BusinessWire), Rated: AAA

Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced today that its RISE product, traditionally offering installment loans, will now offer lines of credit. Kansas will be the sixteenth state where RISE’s products are available and the first state in which RISE’s line of credit is available to non-prime consumers.

RISE is a state-licensed online lender offering unsecured installment loans and lines of credit. RISE is designed to meet the needs of the millions of non-prime Americans with less than prime-credit, who do not have access to traditional sources of credit. RISE is a path toward a brighter financial future with features such as fast approval, flexible loan terms, lower rates than other non-prime lenders, rates that can go down over time, credit bureau reporting, free credit score monitoring and financial literacy courses.

Take These 9 Steps Early To Make The Most Of Your Company’s Regulation A+ IPO (Forbes), Rated: AAA

When online peer to peer lending was new, consumers were the first investors to step in while accredited and institutional investors stayed on the sidelines until later – they now dominate the peer to peer lending business, which has grown to be a huge multi-billion dollar market.

1. If you have an enthusiastic following in your industry:

If you have a large enough network, this group might fund your entire capital raise. Take steps to build a working contact list of them. And make sure to establish a regular habit of emailing them so that when you later send out an email suggesting that they consider investing in your Reg A+ offering, your email will be opened and read.

2. Build a large and enthusiastic customer base.

VidAngel emailed their most active 30k customers andraised $10 mill in 5 days live to investors, setting the record for the fastest rate of onlineinvestor capital raise in Reg A+ to date.

3. Establish a direct sales relationship with your customers.

When your customers find it normal that you send them an email message, they are far more likely to respond favorably when you send them an email offering them the opportunity to become an investor and part owner of your company.

4. Add a consumer appealing product or service;

5. Build a large social media fan base;

A fan base of 100k people is a good start.

6. Combine product and investment marketing;

This combination can save marketing expense and also emphasizes the brand building and product sales synergy that can be levered in a Reg A+ offering.

7. Leverage your existing investors;

As an example, a sizable portion of the recent MYONYSE IPO and the ADOMNASDAQ IPO investments were from existing investors and their friends.

8. Prepare consumer investment rewards:

Line up your reward packages ahead of time to ensure that you have long lead time items ready and on hand in quantity when your Reg A+ goes live.

9. Assemble the proof points that you will need;

Gather and build the market size and total available market evidence you will need to make credible claims that your market is large enough to justify the attention of investors.

Larry Raffone is racing to ‘lock up’ the 401(k) market by combining robo with a semi-national RIA (RIABiz), Rated: A

Financial Engines Inc. CEO Larry Raffone is seeking to give his company a second date with destiny by combining the biggest 401(k) robo-advisor and one of the larger national RIAs — and coming out of it with a true national RIA that can take on the accounts of Fortune 500 companies at the retail as well as the pension-plan level.

Raffone plans to open new Financial Engines offices in more populous areas such as Southern California, where Financial Engines is already on-site at corporations where participants use its managed account 401(k) service.

The pricing model is still TBD, but William Blair equity analyst Robert Napoli said in an April 6 report that he expects Personal Advisor to come in at 80 basis points. He notes that compares to 35 basis points for FE’s managed account 401(k) program.

LendingOne Closes Series A Funding, Investors Include Ron Suber, Richard Vague, Sidney Brown, Michael Heller (Latest Share News), Rated: A

LendingOne, one of the nation’s fastest growing online lenders for real estate investors, announced today it closed a Series A financing round.

Investors include Ron Suber, a prominent fintech investor and President of Prosper Marketplace, Richard Vague, co-founder and former CEO of two credit card companies, First USA and Juniper Financial, Sidney Brown, CEO of NFI Industries and former Chairman of Sun National Bank, Michael Heller, CEO of Cozen O’Conner, a national full-service law firm, along with LendingOne founder and CEO, Bill Green.

College Ave Closes First Securitization, SoFi Finalizes Its Fourth (Lendedu), Rated: A

College Avenue Student Loans, an online student loan refinancing and origination company, has closed its first securitization of private student loans, according to Global Capital.

Getting into the asset-backed securities (ABS) business for the first time, College Ave’s securitization is a $160.89 million offering backed by private student loans. Barclays is the only underwriter on the company’s first ABS transaction.

Credit research and ratings company DBRS has assigned provisional ratings for the various classes of notes issued by College Ave. The Class A-1 notes worth $95,320,000 have been given an A rating, while the Class A-2 notes worth $43,470,000 have also been an A rating. The Class B notes worth $10,760,000 have been given a BBB rating, and, finally, the Class C notes worth $11,340,000 have been given a BB rating, according to DBRS.

Disruption Brings Great Opportunities — and Risks — to the Middle Market (PR Newswire), Rated: A

Most executives of middle-market companies not only expect their business to experience disruption in the near future, but welcome it, according to Disruption in the Middle Market, a report released today by Capital One Commercial Bank. However, this optimistic view does not always translate into action; only a small portion of middle market companies have taken a full range of defensive measures to protect against disruption’s potentially destructive consequences.

Capital One surveyed more than 300 senior executives from companies with annual revenues ranging from $100 million to $3 billion to determine their views on disruption—a significant interruption to an existing business arising from innovative technology, a new business model, or political, economic and environmental forces.

The study revealed that attitudes toward disruption correlated to size.  Smaller middle-market companies are more likely than their larger counterparts to be unprepared for disruption. The report also highlighted a series of steps, such as strengthening financial relationships, that smaller companies can take to catch up.

Disruption in the Middle Market provides a detailed picture of the views of middle-market executives about disruption and the steps they are taking to address it. Eighty-eight percent of respondents reported that their companies have already experienced disruption or expect to experience it during the next three years.  However, only one-sixth of those surveyed believe they are prepared to deal with a disruptive event. Despite this lack of preparation, four-fifths of middle-market executives view disruption as an opportunity, not a threat.  Many of these executives believe that disruption threatens their industry—but not their own company.  Forty-three percent said that their industry is vulnerable to disruption, while just 18 percent reported that their own company is vulnerable.

Size proved the key determinant in a company’s preparedness and attitude toward disruption. Companies with revenue between $2 billion and $3 billion are much more likely to see a disruptive event as an opportunity than companies in the $100 million to $499 million range. In addition, larger companies are more likely to have insulated themselves from the effects of a disruptive event and to be pursuing a disruptive strategy of their own that could lead to a competitive advantage.

Financial Preparation Is Critical

The study revealed that a strong relationship with a stable financial institution could play a critical role in helping a middle-market company respond to disruptive forces. Sixty-eight percent of those with an ongoing banking relationship expect to need additional funding in the face of a disruption. These companies will find it easier to arrange than the 32 percent without a strong banking relationship.  Here again, smaller companies are at a disadvantage.  Many lack the holistic banking relationship needed to confront disruption, and instead are willing to consider alternative sources of capital like peer-to-peer lending and even crowdfunding.

Attitude toward disruption varies considerably by industry
Middle market executives in some industries have adopted a much more proactive approach to disruption than those in others.

  • Financial services and insurance companies are archetypical disruptors. Forty-seven percent are quite or extremely prepared for disruption, and 83 percent are pursuing a disruptive strategy. The overall middle-market averages for the survey are 16 percent and 60 percent, respectively.
  • Energy, resources, and chemicals companies tend to be classic delayers. Eighty-three percent are slightly or not at all prepared for a disruptive event (compared to 53 percent for the full survey), and only 37 percent are pursuing a disruptive strategy (compared to 60 percent overall).

Plaid puts out a ‘request for startups’ in nine underserved fintech sectors (TechCrunch), Rated: A

Plaid wants to make it easier for financial services companies to serve consumers and businesses, but it also sees significant holes in the fintech ecosystem. As a result, the company has issued a Y Combinator-like “request for startups” to tackle particular issues where it believes significant innovation is lacking.

Like Yodlee before it, Plaid enables startups and other tech companies to more easily connect with banks, credit card companies and other financial institutions, both to authenticate consumer accounts and access their financial data.

  1. Better bills.
  2. Consumer-centric loan servicing.
  3. Hardware + software for branches.
  4. Tax preparation.
  5. Mobile bank account opening.
  6. Abstractions from the core.
  7. Brokerage-as-a-Service.
  8. “Exotic” insurance.
  9. Compliance-as-a-Service.

Easiest Path to Riches on the Web? An Initial Coin Offering (The New York Times), Rated: A

A new crop of technology entrepreneurs is forgoing the usual routes to raising money. The entrepreneurs are not pitching venture capitalists, selling stock in an initial public offering or using crowdfunding sites like Kickstarter.

Instead, before they even have a working product, they are creating their own digital currencies and selling so-called coins on the web, sometimes raising tens of millions of dollars in a matter of minutes.

Since the beginning of the year, 65 projects have raised $522 million in these offerings, according to Smith & Crown, a research firm focused on the new industry.

Last month, a small team of computer engineers in Lithuania raised $14 million in 45 minutes by selling a coin, known as Mysterium, that is intended to give access to an encrypted online data service that is still being built.

The next day, a group of coders in the Bay Area pulled in $35 million in under 30 seconds of online fund-raising. The coders were offering Basic Attention Tokens, which will one day work on a new kind of ad-free web browser.

Then this week, a team in Switzerland raised around $100 million for a coin that will be used on an online chat program that has not yet been released, known as Status.

Last year, the first blockbuster coin offering, the Decentralized Autonomous Organization, quickly raised more than $150 million. But the project blew up after a hacker manipulated the code and stole more than $50 million worth of digital currency.

Private SLABS upgrades anticipated (Structured Credit Investor), Rated: A

Moody’s has placed on review for possible upgrade the ratings of 41 private student loan ABS bonds – totalling approximately US$2.56bn worth of securities across 19 securitisations – issued by three marketplace lending platforms. At the same time, Fitch has released an exposure draft of criteria for rating US private student loan ABS that could result in multiple-category upgrades for …

Insurance Tech Rising: 135+ Insurance Startups Across P2P, Life, Commercial & More in One Chart (CB Insights), Rated: A

The map focuses on 11 categories, as follows.

  • Life/annuity: Private startups providing distribution of life insurance products including term life and annuities including Abaris and PolicyGenius
  • Auto insurance (split into distribution, usage-based insurance/telematics, and claims): Startups ranging from aggregators including CoverHound and Goji to white label auto claims apps (Snapsheet) to per-mile managing general agents like Metromile.
  • P2P insurance: Private peer-to-peer insurance and mutual-based startups include Lemonade, Guevara, Friendsurance, and others.
  • Small business insurance: Private tech companies serving as commercial insurance brokers and managing general agents to SMBs  include Insureon, Embroker, and Next Insurance.
  • Insurance industry software/analytics/IaaS: Insurance-specific software across the value chain providers range from BI and data-warehousing startup Quantemplate to insurance fraud detection firm Shift Technology to re-insurance SaaS analytics startup Analyze Re to claims inspection startup Spex.
  • Mobile insurance management: Startups focusing on allowing consumers to manage and purchase insurance policies via their mobile device including Knip and GetSafe.
  • Product insurance: Companies insuring or tracking products — i.e. smartphones, laptops — for insurance applications.
  • Renters/homeowners: Startups providing distribution of renter’s insurance and homeowner’s insurance as well as lease default insurance programs.
  • Sharing economy: Startups working on new insurance products in coverage areas including short-term rental marketplaces and for sharing economy 1099 workers.
  • Health insurance: Across new carriers like Oscar as well as healthcare insurance startups targeted at individuals (Stride Health) and employers (Zenefits).
  • Pet insurance: Startups include Embrace Pet Insurance and Figo Pet Insurance.
Source: CB Insights

 

The Fiduciary Rule And Investment Advisers: Why It Matters (AlphaFlow), Rated: A

One of the most hotly contested aspects of the Fiduciary Rule is around the standard of suitability as a determinant for an investment choice made by a registered representative. Today, a registered representative must only ensure that an investment is ‘suitable’ for a client. This suitability is determined by factors including investment risk tolerance, time frame, and goals. However, there is no determination made as to whether the investment is in the client’s best interests.

To illustrate, let’s say the registered representative (RR) has a choice of offering two different mutual funds to a client. Both invest in similar stocks and have relatively similar returns (before fees), but one charges higher fees and also pays the RR’s firm based on the total dollar investments made into that particular fund.  The RR only offers the client the one for which they get compensated, even though the other mutual fund option may be a better option for the client (because it charges lower fees).  The reason the RR can do this is that both mutual funds are considered “suitable”: meaning as long as the recommendation meets the client’s risk profile and investment goals, then they can offer that product to their client.

In contrast, an investment adviser representative (IAR) must act as a fiduciary.  In the same situation, if the IAR wanted to offer the same mutual fund that the RR did, they would need to disclose to the client that they are getting compensated for sales of that fund and that the lower cost option makes more sense for the client.  So, instead of simply offering a suitable choice for the client, the IAR must: 1) disclose conflicts of interest and, 2) act in the best interest of the client rather than in their own best interest.

What The Fiduciary Rule Would Change

Staying with the scenario above, the Fiduciary Rule would require an RR to act like the IAR in when selling any products related to, or be advising on anything related to retirement.

The rule would also apply to anyone dually-registered (meaning they are registered both as an RR and an IAR).  Currently, the dually-registered representative can decide what ‘hat’ they wear (RR or IAR) when suggesting investments for retirement.

A new way to estimate your home equity (Chicago Tribune), Rated: B

LendingTree, the popular mortgage site, which debuted its own valuation model earlier this month, can tell you why: Because none of the other value estimators calculate your home equity or suggest how and when you might want to tap into it.

If you’re not quite ready to move ahead but instead prefer to track your equity, credit and mortgage situation on a regular basis, you can sign up for a more comprehensive “My LendingTree” service, for which there is no charge. It provides you with monthly updates plus periodic alerts on your home equity movement. You get an alert when there’s “an actionable opportunity” for you to tap into your equity on favorable terms, based on “real-time market data,” changes in your credit files and equity levels, according to the website. There’s no requirement that you take any action.

OppLoans Welcomes Daniel Fell as VP of Business Development and Partnerships (Digital Journal), Rated: B

OppLoans, the nation’s leading socially responsible online lender serving non-prime consumers, has announced the appointment of Daniel Fell to the role of Vice President of Business Development. Fell will oversee all strategic business development and partnership objectives at the high-growth, profitable firm.

6 things that will help cut the cost of your business debt (TD Daily), Rated: B

1. Choosing the right product

Debt works really well when you choose the right type of debt for your business. You can reduce what you pay for business debt by making a well-informed choice. For example, peer-to-peer lending may be an option if you’re unable to get a loan or finance from a traditional bank and can be cheaper too.

2. Nurturing your cashflow/credit score

If your business doesn’t have great creditworthiness, or is too new to have any credit history, then a lender will look at the credit score of someone able to guarantee the business’ debts.

3. Shopping around for the best deal

If you need finance consider all the options – the high street bank, the online lender, the peer-to-peer lender and the government-backed lender.

4. Staying on top of the repayments

5. Consolidating debts

6. Pay your debts off more quickly

United Kingdom

MarketInvoice, Funding Circle, Zopa, LendInvest make Fintech 250 (P2P Finance News), Rated: AAA

MARKETINVOICE, Funding Circle, Zopa and LendInvest have made CB Insights’ Fintech 250 list for 2017, which awards the companies worldwide that are leading the transformation in financial services.

The list of 250 emerging private companies from 23 countries, which was chosen out of a longlist of more than 2,000 entrants, was revealed by the research firm’s chief executive and co-founder Anand Sanwal during The Future of Fintech conference in New York on Tuesday.

The Fintech 250 companies (in alphabetical order):

51Xinyongka

Axoni

Canopy Tax

55 Capital

Behalf

Capital Float

Acorns

Beijing LaKala Billing Services

Captable.io

Activehours

Better Mortgage

Chain

Addepar

Betterment

Circle Internet Financial

Adyen 

Billtrust

CircleUp

Affirm

BIMA

Clarity Money

Airwallex

bitFlyer

ClearTax

Algomi

BitPesa

Cloud9 Technologies

AlphaSense

Blend

Clover Health

AngelList

Blockstack Labs

Coinbase

Ant Financial Services Group

Blockstream

Coins.ph

Artivest Holdings

BlueVine

ComplyAdvantage

Assembly Payments

bonify

Credit Benchmark

Atom Bank

Branch International

Credit Karma

AutoGravity

Brave Software

Creditas

Auxmoney

Bright Health

CreditEase Insurance Agency

Avalara

C2FO

CreditMantri

AvidXchange

Cadre

Cross River Bank

Crowdcube

IEX Group

Nongfenqi

CurrencyCloud

Indiegogo

Nubank

CurrencyFair

Indifi Technologies

Numerai

Cyence

iyzico

Nutmeg

Dadao Financial

iZettle

One97 Communications  

Deposit Solutions

JD Finance

Onfido

DianRong

Juvo

OpenFin

Digit

Juzhen Financials

OpenGamma

Digital Asset Holdings

Kabbage

Oportun

Digital Reasoning Systems

Kakao Pay

Orchard Platform

Droit Fintech

Kasisto

Oscar Health Insurance Co.

Earnest

Kensho Technologies

Paga

Easynvest

Kickstarter

Parasut

Ebury

Klarna

Paymax

Ellevest

Kreditech

PayNearMe

Embroker

Kyriba

Payoneer

eShares

Ladder

Paystack

Even Respsonsible Finance

Lemonade

Paytm Payment Bank

EverCompliant

LendingHome

PeerIQ

Ezetap Mobile Solutions

Lendingkart

PeerStreet

Factom

LendInvest

Perfios

Fenergo

LendUp

Personal Capital

Fenqile

LevelUp

Ping++

figo

Lu.com

Plaid Technologies

FinanceIt

M-DAQ

Point Digital Finance

FinancialForce.com

Magento Commerce

Polychain Capital

Finrise

MarketInvoice

Ppdai

Flywire

Marqeta

Propel

Folio

Merlon Intelligence

Property Partner

freee

MetroMile

Prospa

Fundbox

MobiKwik

Qapital Insight

Funding Circle

MoMo

QFPay

Funding Societies

MoneyFarm

Qingsongchou

Futu5

Moneytree

Quantopian

GoCardless

Monzo

Qudian

GoFundMe

Mynt

Quovo

GreenSky

N26

Raisin

GuiaBolso

Namely

RealtyShares

Guideline

Nav

Red Dot Payment

Gusto

Neighborly

Reorg Research

Habito

NerdWallet

Revolut

hibob

New York Shipping Exchange  

Ripple Labs

IceKredit

Next Insurance

Riskalyze

Robinhood

THEO

Weidai

Rong360

Tiger Brokers

WeLab

Roofstock

Tink

WorldCover

Roostify

Token

WorldRemit

Seedrs

Tradeshift

Xapo

Shenzhen Kingdee

Trading Ticket

Xiaoyusan Insurance

Suishou Technology

TransferWise 

Xignite

Signifyd

TravelBank

Xishan Information Technology

Silverfin

Trov

YapStone

simplesurance

TrueAccord

Yoco

SirionLabs

Trulioo

YongQianBao

Smava

Trumid

Yuanbaopu

SocietyOne

Tyro Payments

Zeitgold

Socure

Upgrade

ZestFinance

SoFi

VATBox

ZestMoney

solarisBank

Veem

Zhong An Insurance

Stash Invest

Verato

Zoona

Street Contxt

Viva Republica

Zooz

Stripe

Wave Accounting

Zopa

Symphony Communication

Wealthfront

Zuora

Services Holdings

WealthNavi

Tala

Wealthsimple

Tally Technologies

WeCash

Fifty years of the ATM: How long can cash survive in a digital world? (International Business Times), Rated: AAA

Fifty years of using the hole in the wall

  • As of 2015 there were 70,270 cash points in the UK, more than 52,000 of which were free to use.
  • 48 million of us use cash machines and 89% use them at least once a month.
  • In 2015 the amount of average withdrawal was £69.
  • On average each cash machine dispensed £7,576 per day in 2015 – and that figure is on an upward trend.
  • The daily record for cash withdrawals was £730m, which was set on 23 December 2016.
  • 46% of cash machines are in supermarkets, shops and shopping centres, 27% are in banks and 4% in Post Offices.
  • HSBC has the UK’s busiest cash machine by Cambridge Circus in central London.
  • The original cash machine was designed by Scottish inventor John Adrian Shepherd-Barron who came up with the idea of a machine dispensing cash, rather than chocolate bars, while in his bath.
  • ATMs in temples in India let you make religious donations.
  • Vatican City has the only ATM that gives instructions in Latin.

TransferWise CEO talks about Brexit worries for fintech companies (CNBC), Rated: A

 

The Profitability Challenge for Fintech Startups (Finextra), Rated: A

The evidence from a sample of 20 fintech startups in the UK is that there are substantial profitability challenges that still need to be overcome. As of June 2017, the total equity investment in the sample companies I have looked at has been £852m. The total valuation of the sample at the last valuation round for each company was £2.6bn, but none are profitable and cumulative losses have been £211m.

Only one company in the whole sample has reported a single year of profitability, but this has since fallen back into loss.

However, the median losses are: £0.3m in year 1, £1.3m in year 2 and £2.0m in year 3. One company, Atom Bank, is already losing £22.5m in the third year of operation, substantially more than any of the others.

RateSetter exec sees opportunity in Brexit (Bankless Times), Rated: A

While the head of one of the United Kingdom’s largest P2P sites understands why small business owners are hesitant to make big decisions in Brexit’s wake, he cautions them to not miss the opportunities either.

“The door is open for business leaders to redefine Brexit so that it is seen as an opportunity, rather than a threat.”

Increasing options on low-yielding properties (Bridging & Commercial), Rated: A

Property investors have had to deal with a host of government and regulatory changes over the last couple of years.

These new rules have resulted in many buy-to-let lenders requiring much more significant interest rental coverage, often looking for as high as 145%.

For example, in the last LendInvest Buy-to-Let Index we found that Southampton offered an average yield of 4.08% – significantly lower than landlords can enjoy in other areas of the UK. Yet it has seen solid capital price growth at 5.47%,  its excellent transport links into the capital regularly see it named as a future house price hotspot, while the presence of two large universities boosts its appeal to landlords.

FT PARTNERS CONTINUES EXPANSION WITH ESTABLISHMENT OF EMEA PRESENCE IN LONDON (LendIt.com), Rated: B

Financial Technology Partners (FT Partners), the only global investment banking firm focused exclusively on FinTech, is pleased to formally announce its planned expansion into the Europe, the Middle East and Africa (EMEA) markets. This announcement is a direct response to the global demand the Firm is seeing for its highly specialized and deep domain focused advisory capabilities from EMEA clients and further highlights the Firm’s strong activity in cross-border FinTech deals globally. FT Partners’ global team of FinTech focused investment bankers will continue to serve its clients and its EMEA operations will be based out of London in the United Kingdom. The Firm is also announcing the continued expansion of its senior team with the addition of Timm Schipporeit, former FinTech investment banker at Morgan Stanley and FinTech investor at Index Ventures, who joins as Managing Director in our London office

Women In Fintech 2017 Powerlist: Innovate Finance Opens Nominations (Forbes), Rated: B

UK organisation and global fintech representative Innovate Finance has announced today the opening for submissions to its 2017 Women in Fintech Powerlist.

Innovate Finance is calling on both men and women to submit names of female colleagues (CxOs, managers, lawyers and journalists) to be included in the 2017 Powerlist.

China

Fintech No Threat for China’s Big Banks (Bloomberg), Rated: AAA

Concerns that bad-loan levels are worse than lenders are confessing to, combined with fears the country’s fintech giants, including Alibaba Group Holdings Ltd. affiliate Ant Financial, are disrupting operations, have weighed on stocks.

For one, bad-debt figures, if you believe them in the first place, are coming down. And even if you do think nonperforming loans have been understated, what’s undeniable is that the country’s big banks have been shifting into mortgage lending, which has a lower default rate than the state-firm lending that’s long been their bread and butter. The nonperforming loan ratio of a mortgage in China is 0.37 percent, one sixth of a corporate advance, according to CIMB Securities Ltd. analyst Michael Chang.

Of course, fintech companies getting into the lending business is cause for concern. Alipay’s consumer credit site Ant Check Later will lend up to a certain amount without needing to see bank records, while e-commerce outfits like JD.com Inc. allow monthly payment installments that blur the line between bank and retailer.

However, it’s worth noting that lending is a business with thin margins, and figuring out default risk is crucial, especially considering many fintech startups cater to those people the big banks won’t touch.

FinTech Wave Revolutionizes Financial World (SCMP), Rated: A

According to Morgan Stanley, online loan volume in the US market is expected to reach US$120 billion in 2020, up from US$20 billion in 2015.

Among others, one important promise of FinTech is that there will be greater reliance on algorithmically-determined financial decisions in areas such as loan, insurance and stock picking. The advancement of artificial intelligence methods has been the propeller facilitating the transition in such a direction.

The overall implication here is that a machine can replace a human in processing large amounts of text in a much more efficient way. This information extraction procedure also helps us understand more about the interplay between investors and various types of information. Interestingly, we find that investors react more strongly to negative than to positive text, and that analyst report text is more useful when it places more emphasis on non-financial topics, is written more assertively and concisely, and when the perceived validity of other information signals in the same report is low.

One common feature of the above two research studies is that computer algorithms are used to extract and quantify some otherwise fuzzy concepts: analyst sentiment in the first study, and analyst information discovery and interpretation effort in the second one. The computer achieves it by aggregating a huge amount of data which is surely beyond any human’s ability to process. Even though humans can understand intuition through very limited observations, it is hard for them to transfer the intuition or knowledge to other people. The computational limitation and the qualitative nature of the human knowledge are the underlying reasons why computers will eventually outperform humans in more and more settings.

FinTech does not come as a free lunch, however. Algorithm-based decisions are not immune to anomalies and manipulations. On 6 May, 2010, the Dow Jones Industrial Average dropped 998.5 points (about 9%), mostly within minutes. This sudden market crash was later attributed to the algorithm trading systems being manipulated by a trader.

European Union

Visa takes a strategic stake in Klarna, the finance startup out of Sweden (TechCrunch), Rated: AAA

Klarna, the $2 billion+ startup out of Sweden that works with some 70,000 e-commerce sites to enable payments and provide flexible financing to make purchases, is adding one more key investor to help take its next steps into a wider range of services. Today it announced that credit card giant Visa is making an equity investment in the company, and as part of it, the two are forging a strategic partnership to roll out new products.

Visa and Klarna are not disclosing the size of the stake — following the same pattern Visa took when it invested some years ago in two other fast-growing financial startups, Square and Stripe — and Klarna is not specifying what form the strategic partnership will take.

Brexit upheaval prompts French entrepreneurs to dream of home (Financial Times), Rated: A

In 2014, I moved to London to launch an asset management firm investing in loans originated by marketplace lending platforms.

Starting the business in London made sense. The UK boasted a business environment in which risk-taking was encouraged and entrepreneurial success valued and rewarded. Simple rules such as entrepreneurs’ relief, which reduces capital gains tax on the sale of a business, are very attractive for budding entrepreneurs.

However, the vote in last year’s referendum for Britain to leave the EU has caused me to reconsider my decision to live in and operate my business from London.

Gaël de Boissard joins the winner of last year’s Money20/20 Europe Startup Competition (deBanked), Rated: A

Exactly one year after winning Money20/20 Europe Startup Competition, James (a FinTech in Credit Risk, formerly known as CrowdProcess) returns to Copenhagen after closing an oversubscribed investment round led by Ex-Credit Suisse Board Member Gaël de Boissard. This round also included ex-Deutsche Bank COO, Henry Ritchotte, and BiG Start Ventures, a VC focused on FinTech and InsurTech. As a result of this deal, Mr. de Boissard has now joined James’s Board of Directors, after having previously been at the board of Credit Suisse.

Blockchain technology is moving into the financial mainstream with IBM and seven European banks (CNBC), Rated: B

IBM is building blockchain technology that will be used by seven of Europe’s largest banks, including HSBC and Rabobank, to facilitate international trade for small and medium-size enterprises, the company said on Tuesday.

International

Kiva.org Reaches $ 1 Billion Milestone in Crowd-Funding Loans Disbursed Globally (BusinessWire), Rated: AAA

Today Kiva.org, the world’s first and largest crowdfunding platform for social good, announced that it surpassed $1 billion USD in loans supporting borrowers around the world. More than 2.4 million entrepreneurs, farmers and students globally have been able to launch and expand viable businesses or pursue an education thanks to loan support from 1.6 million people, lending just $25 dollars at a time.

Recently on World Refugee Day (celebrated globally on June 20), Kiva launched a new World Refugee Fund, a $250K matching fund to be followed by a rotating fund of up to $9M in loan capital to provide support to refugees and host communities in countries including Lebanon, Jordan, and Turkey.

The World Refugee Fund seeks to fill this lending gap and is being developed by Kiva and the Alight Fund, along with founding partners the Tent Foundation and USA for UNHCR. To date, Kiva has crowdfunded $4.3 million in loans to 4,544 refugee borrowers globally.

Can Cash be Crushed? Multi-Country FinTech Survey Finds Many Adults Still Rely on Paper Money (IT News Online), Rated: AAA

According to KPMG’s 2016 global Pulse of Financial Technology (FinTech) Report (source), Venture Capital (VC) investment in the FinTech sector reached an all time high with a total of $13.6 billion across 840 financings in 2016. While FinTech investment proved to be “hot” in 2016, has this massive investment translated into consumer adoption? Today, at Money 20/20 Europe, early-stage venture capital firm Blumberg Capital released the results of its recent survey conducted online by Harris Poll in France, Germany, Israel, United Kingdom (U.K.), and the United States (U.S.), which found that FinTech appears to be gaining traction with Israel emerging as a leader in early-adoption. Despite investment and adoption progress, cash still remains king for most of these countries such as Germany, where 75 percent of adults still use paper currency and coins to make purchases at least once a week. Can cash ever be crushed? To see the full findings, please visit globalfintech.blumbergcapital.com.

Israel Embraces FinTech Early but Cash is Still König in Germany
The findings indicate Israel as a leader in early FinTech adoption as this country is more likely than other countries surveyed to use mobile banking apps and mobile wallets to make a purchase at least once per month. Additionally, nearly one in 10 Israeli adults say they have used alternative financing/lending services within the last 12 months. While many may believe cash to be an antiquated form of payment, the survey revealed paper money is still regularly in use.

  • Israeli adults are most likely to use a mobile banking app at least once a month (e.g., to check account balances, transfer funds, make a mobile deposit) (50 percent vs. 38 percent in U.S., 37 percent in U.K., 35 percent in France, 28 percent in Germany).
  • Israeli adults are more likely than French, British, and American adults to use mobile wallet apps to purchase goods/services at least once a month (27 percent of Israeli adults vs. 21 percent of French adults, 18 percent of American adults, and 17 percent of British adults).
  • Seven percent of Israeli adults have used alternative financing/lending services (e.g., peer-to-peer lending, online lender, lease-to-own) within the last 12 months.
  • German adults are most likely to use cash to make purchases at least once a week (75 percent vs. 64 percent of British adults, 58 percent of American adults, 48 percent of French adults, 47 percent of Israeli adults).

What is Fraud Anyway?
As cybersecurity continues to dominate the headlines, there was a surprisingly low level of concern among most countries surveyed given the current risk landscape. In Blumberg Capital’s 2017 State of Cybersecurity Report, findings revealed a gross overconfidence in cybersecurity knowledge and safety despite $15 billion being stolen from 13.1 million American consumers in 2015 in the U.S. alone (source). This disregard for fraud risk could indicate that consumers generally have confidence in the products and services they choose, suggesting that FinTech companies have the opportunity to educate new users on the security measures they have in place and why they are important.

  • British, American and Israeli adults are more likely than French and German adults to worry about being defrauded (e.g., getting scammed, having identity stolen, having accounts hacked) when they make financial transactions online (43 percent, 39 percent, and 38 percent vs. 31 percent and 23 percent, respectively).

Nationalism vs. Globalization: Are transactions crossing borders?
The survey also looked at how often people make online cross border purchases at least once a month. Again, Israeli adults lead the charge in cross-border transactions which could reflect on the narrower range of product choice available locally in Israel compared to other countries or Israel’s acceptance and wider adoption of FinTech and international eCommerce. Additionally, people were polled regarding the costs related to cross-border transactions, which revealed a budding anticipation of increased costs for these types of purchases in the future, especially in  the U.K. This belief in the U.K could be related to Brexit.  Findings include:

  • Israeli adults are most likely to make online purchases outside of the country they live in at least once a month (44 percent vs. 17 percent of French adults, 14 percent of German adults, 13 percent of British adults, and 9 percent of American adults).
  • 21 percent of British adults believe making online purchases outside of the country they reside will become more expensive (i.e., goods/ services will cost more and/or there will be additional fees) in the future. (Vs. 16 percent of American adults, 14 percent of German adults, 11 percent of French adults, 9 percent of Israeli adults).

Methodology
This survey was conducted online by Harris Poll on behalf of Blumberg Capital from May 16-22, 2017 among 2,166 American adults ages 18+, 1,046 German adults ages 18+, 1,048 French adults ages 18+, 1,050 British adults ages 18+, and 550 Israeli adults ages 18+. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For additional information about the survey results and methodology please contact: blumberg@sparkpr.com

What’s Next For Fintech After 50 Years Of The Cash Machine (Forbes), Rated: A

For the 50th anniversary of the first ATM, YouGov has conducted a global poll of 8000 consumers on behalf of ACI Worldwide to survey the usage of automated teller machines.

The survey found that only 42% of British consumers use ATMs just as much as they always have, while 48% in Germany, 47% in Spain and 40% in France believe the same, perhaps because of the widespread availability of alternative digital payments. 29% of UK consumers, 31% of French, 38% of Spanish and 43% of Italian would prefer this as well as a more secure way of payment authentication.

Zurawski does not see an ATM retirement any time soon as many still prefer using hard cash because it is a deliberate way of controlling spending.

The survey presented that customers want mini-statements, alerts for upcoming payments or overdraft fees plus the ability to dispense a new credit or debit card.

G20 watchdog says fintech doesn’t pose threat to financial stability (Reuters), Rated: A

The rise of fintech does not pose any compelling risks to financial stability, according to a review by global regulators, but this may change as the sector grows.

While financial technology is changing how financial services and information are being delivered, there is no evidence that services like crowdfunding, “robo” advice and cloud computing will fundamentally change underlying activities such as lending, the Financial Stability Board (FSB) said in a report published on Tuesday.

Australia

While money transfers and payments services still lead the fintech charge with an adoption rate of 50 per cent in 2017, insurance has come in a surprise second with a 24 per cent global adoption rate.

The adoption level for insurance fintech services in Australia stands at four per cent higher than the global average (29 per cent), linked to the upswing of personalised wearables with in-built abilities which allow for prediction of claim probability and lifestyle trends by insurance firms.

India

i2iFunding emerges as first P2P lending player (Outlook India), Rated: AAA

While many players try to attract investors by offering high-interest rates and leave them in the lurch in the case of default, i2iFunding has walked the talk by making the first payment from the Principal Protection Fund, and reiterated its commitment to shore up investors’ confidence.

Deteriorating asset quality has become an inevitable problem of the banking sector these days. Bad loans skyrocketed 135 percent over the last two years, and now, they constitute close to 11 percent of the advances of Public Sector Banks (PSBs).

The P2P lending industry is no immune to this trend.

i2iFunding has become the first P2P lending platform in India to compensate investors for the loss of outstanding principal amount incurred on the defaulted accounts.

Principal Protection programme will also be strengthened further, and many new features will be included. As of now, the level of principal protection depends on the category of the loan. Default in the category “A” qualifies for 100% protection of outstanding principal. This falls by 10% for the every next category and default in the “F” category offers you 50% protection. The functioning of the Principal Protection Fund will be further rationalised and smoothened. i2ifunding will primarily provide 50% and 100% principal protection options in each category from ‘A’ to ‘F’. There will also be the third option of ‘zero’ protection. Depending on the option selected by the investor, he/she will have to settle in for lower EMIS. The fee for offering principal protection service would be deducted through EMIs, but won’t be collected upfront. It’s noteworthy that, this may proportionately reduce the returns earned on lending projects but would make lending at i2iFunding safer and more secure.

Rubique breaks the language barrier; goes local to create earning opportunities for all (Outlook India), Rated: A

Always ahead of the innovation curve, Rubique has yet again demonstrated its focus on making financial solutions accessible to as many users as possible. The one-stop online marketplace providing technology enabled end-to-end solutions to financing needs of individuals and SMEs has just localised its Rubique Associate app.

The interactive app now live in Hindi, Marathi and Bengali language will now enable more number of potential Business Associates to register with Rubique and earn a commission for every reference search for loans or credit cards.

Authors:

George Popescu
Allen Taylor

Wednesday April 19 2017, Daily News Digest

FinTech MENA

News Comments Today’s main news: SoFi raised new $105M fund.Landbay unveils March 2017 UK Rental Index.P2P-Banking launches IFISA comparison database.Personal loan applications surge in Australia. Today’s main analysis: Development of fintech in Hong Kong.Fintech startups in MENA raise $100M last decade. Today’s thought-provoking articles: OCC fintech plan uncertain as comptroller term expires.Goldman’s internal fintech revolution can’t […]

FinTech MENA

News Comments

United States

United Kingdom

European Union

International

Australia

China

MENA

Africa

News Summary

United States

Online lender SoFi has a new $ 105 million fund for yield-hungry investors (CNBC), Rated: AAA

SoFi, the online lending start-up sporting a lofty $4.3 billion valuation, has just raised a $105 million fund to give outside investors another way to buy into the company’s loans.

In a regulatory filing Monday afternoon, SoFi Prime Income Fund is listed as the issuer of equity in a limited partnership. According to the filing, the fund has 33 investors that put in a minimum of $500,000 each.

Nino Fanlo, SoFi’s chief financial officer, said the fund is the first of its kind for SoFi and provides another avenue to raise capital for issuing loans. Returns after fees are expected to be in the low double digits, he said.

OCC Fintech Plan Faces Uncertainty as Comptroller Term Expires (Credit Union Times), Rated: AAA

As the term of Comptroller of the Currency Thomas Curry expires and with no replacement in sight, the OCC could be headed toward a showdown with Congress over the agency’s decision to issue special charters to fintech companies.

In March, the OCC published a draft supplement to its licensing manual, which contains existing regulations for chartering national banks.

And although Curry said the OCC will issue charters to fintech companies, his own future is in doubt. His term expired this month and President Trump has not nominated a replacement, although Joseph Otting, a former associate of Treasury Secretary Steven Mnuchin at OneWest Bank ,has been mentioned as a possible nominee.

Sens. Sherrod Brown (D-OH), ranking Democrat on the Senate Banking Committee and Jeff Merkley (D-OR) said earlier this year that authority to issue such charters must come from Congress.

Meanwhile, traditional banking and credit union trade groups are divided over the charter proposal.

Earlier this year, NAFCU said that the OCC must ensure that online lenders are subject to the same consumer protections and data standards as banks and credit unions.

The American Bankers Association has said it supports the concept of the OCC issuing fintech charters, but wanted it to ensure that companies meet the same standards as traditional banks.

For Goldman, the Fintech Revolution Can’t Come Soon Enough (NYT), Rated: A

Goldman Sachs’s internal technology revolution cannot come soon enough.

Goldman’s fledgling Main Street operation is a bright spot. With more than $115 billion in deposits, it’s already one of the top 25 banks in the United States by that measure. Marcus, as the online consumer-lending unit is called, is experiencing “demand more robust than we thought,” the unit’s boss, Harit Talwar, said recently.

Consumer lending can earn at least a 3 percent return on assets — triple what Goldman has been managing as a whole of late.

For now, lending through new web platforms remains a small industry, with just $40 billion of credit extended over a decade, according to Deloitte.

CREATING A BETTER TOMORROW (NYSE), Rated: A

Texas-based Elevate Credit (NYSE: ELVT), which recently held its IPO at the exchange, exists because of what it sees as an opportunity in the financial services market.

In between are working people, roughly 170 million residents of the U.S. and the U.K., whom Elevate refers to as “the New Middle Class.” These are people with low or no credit scores, who often have to resort to non-prime lenders in moments of personal or medical emergency.

Elevate offers three products. The first, called Rise, is an unsecured, online loan vehicle; Sunny is its U.K. counterpart, and Elastic is a line of credit issued by Kentucky-based Republic Bank, Member FDIC. While the company’s customers have credit scores typically in the 560 to 600 range, those with lower credit or no credit can also be approved, depending on what Elevate’s data analysis reveals about their reliability.

Elevate’s analytics platform, DORA, is home grown. It’s based on open-source software tools that enable model development and risk analytics. DORA inputs and outputs are monitored and evaluated to help ensure legal and regulatory compliance. Elevate’s IQ platform deploys business logic and algorithms. And driving the analytics and decision-making technology is the very human decision to create specific data sets, generated from sources that monitor non-prime customers.

The platforms draw on more than 10 different sources of consumer information, including the big three credit bureaus as well as other bureaus that specialize in non-prime customers. In addition, Elevate acquires data from LexisNexis, ID Analytics and other unique data sources to validate the applicant’s identity and to draw inferences about the applicant’s intent to repay. Elevate uses this data in ongoing tests to optimize its underwriting, to ensure that fraud and serious credit risks are more easily distinguished from acceptable risks.

In the last year, Elevate’s charge-off rates have remained steady, while its customer acquisition costs have dropped, says Rees.

Elevate also uses its nimble, data-driven underwriting model to reward its best customers. Borrowers who establish a history of on-time repayment, and who take advantage of online financial literacy tools and videos, will see their APRs drop over time. Currently, the most responsible Elevate customers pay APRs as low as 36 percent.

Is An OnDeck Acquisition On Deck? (PYMNTS), Rated: A

When OnDeck completed its IPO in 2009, it entered the public markets with a massive amount of buzz, ending the day with a share price north of $20 dollars and a valuation around $1.9 billion.

Two years out, and the banks’ lunch remains uneaten — because those alternative lenders like OnDeck have had a rather bumpy two years.  OnDeck’s share price is down 75 percent since its 2014 IPO — in the last 12 months the firm has shed 37 percent of its value.

Today OnDeck’s market cap stands at $330 million.

Marathon Partners Equity Management, LLC has owned 1.75 percent of OnDeck since the end of 2016 — and the activist investor is now pushing for a new direction, preferably one that involves a sale.

That letter apparently did not get quiet enough of a reaction from the board — OnDeck’s official response was that they “value dialog with their shareholders,” and so as of the end of last week, the campaign ramped up.

Whether or not very drastic changes are coming soon to OnDeck remains to be seen — the annual meeting for shareholders will likely be spirited.

Not Everyone Is Happy About Latest Fintech Charter Proposal (Corporate Counsel), Rated: A

Public comments are now available from companies, regulators, advocacy groups and individuals weighing in on the Office of the Comptroller of the Currency’s licensing manual draft supplement for special purpose national bank charters.

The OCC received only 17 total comments on its March 15 supplement for evaluating bank charter applications from financial technology companies, far from the 120 it received on the broader whitepaper Exploring Special Purpose National Bank Charters for Fintech Companies, which introduced the idea of the OCC granting fintech companies these bank charters back in December 2016.

“While many states have made admirable efforts to align their regulations with technological innovation, state laws by and large were drafted for a physical branch banking environment that did not envision online delivery of financial services,” wrote Robert Lavet, general counsel of San Francisco-based personal finance company Social Finance, or SoFi, in his comments to the OCC.

In her comments, personal lending company Oportun Inc.’s chief compliance officer Joan Aristei voiced no concerns with the financial inclusion standards. She wrote the guidance on this type of plan will “inform our discussions regarding how we can modify and enhance the efforts we have already undertaken,” adding that she “appreciates the OCC’s willingness to innovate and look beyond traditional measures of financial inclusion.”

New York State Department of Financial Services superintendent Maria Vullo called the OCC’s proposal for fintech charters a “hasty and misguided effort.” She said that regulation for the financial technology providers is better left to the states, not the OCC.

The Tax Implications of Real Estate Crowdfunding (Alpha Flow), Rated: A

The first thing to understand is that an equity investor in a syndication is actually a partner in partnership. Investments in syndications will generally be considered “passive” activities.

When combining all passive activities, if the investor has a net passive loss, then the remaining net loss is effectively “suspended” whereby they are carried forward to future years and subject again to the passive activity rules. If an investor has passive income then that is taxed at the taxpayer’s marginal tax rate.

In the subsequent tax year, any passive losses that carried over can offset passive income that is generated.

Crowdfunding syndications offer one additional special tax advantage and that is favorable long-term capital gains rates. When a property (apartment building, retail center, etc.) is acquired through a syndication and is held for longer than one year, the sale of the property would typically result in long-term capital gains. These gains are taxed at a rate of 15% (with certain exceptions). Any depreciation that was deducted on the property would be subject to tax rates not to exceed 25%.

MortgageHippo raises $ 2.25M to help lenders give you a mortgage online (Chicago Tribune), Rated: A

MortgageHippo, a mortgage-technology startup based in Chicago, has raised about $2.25 million in seed funding, the company announced Tuesday.

CMFG Ventures, based in Madison, Wis., led the $1.5 million round that closed last week, Saportas said. CMFG is the venture capital arm of CUNA Mutual Group, which sells insurance and investment products to credit unions. The investment closed MortgageHippo’s seed funding.

Inside Bond Street’s content marketing strategy (Tearsheet), Rated: A

Jones said the company is “passionate about building a brand,” which it does by creating editorial content. It has a blog that profiles business owners Bond Street serves across the country, like the guys behind the Two Hands cafes and restaurants or the women that launched Sky Ting Yoga in New York City; and an online magazine that looks at the cultural and economic impact of independent businesses in New York (celebrity restaurateur Daniel Boulud and artist Baron von Fancy are among many interviews that address the importance of supporting local businesses). It also has a podcast called the Nitty Gritty that features the entrepreneurs behind brands like Sweetgreen, charity:water, McNally Jackson and Smitten Ice Cream; and a series of city-specific resources for female entrepreneurs.

Jones declined to share Bond Street’s annual content marketing budget, but said the company has two dedicated employees working on content marketing, out of about 40 total employees.

Marketing has become expensive for online lenders because of the high cost of customer acquisition. Partnerships are an easy way to bring that cost down, Benton said. To date, Bond Street has partnered with WeWork to offer loans to member companies of the co-working space company; SMB-focused software companies like Booker and Front Desk to offer their clients discounted loans; and most recently, with NerdWallet, the comparison shopping site for credit cards and other financial services, to help provide small business owners with financing options.

Payix and Nortridge Software Announce Strategic Alliance (BusinessWire), Rated: B

Payix® and Nortridge Software announce they have formed a strategic alliance to help lenders connect with their borrowers and improve their ability to collect payments. The alliance allows Payix to offer real-time integration between its suite of collections tools and the Nortridge Loan System (NLS).

Payix’s collections tools include its intuitive, engaging and affordable mobile collections application, as well as web, interactive voice response (IVR), text, and collector portal applications. Nortridge clients can add the Payix solutions to their existing collections tools with virtually no IT work on their part and in just a few weeks’ time.

The Nortridge and Payix teams collaborated in the development of the seamless web services interface between the Nortridge Loan System and the Payix payment system, ensuring that transactions could be carried out in real-time and without interruption.

Payix’s collections tools are white-labelled to help lenders promote their own brands with their borrowers, and they were specifically designed for any size lender to use easily and affordably.

China Rapid Finance will be the Fifth Online Lender to IPO in the US (Lend Academy), Rated: B

In late March, 2017 we learned that Chinese online lender China Rapid Finance filed to go public, hoping to raise up to $100 million. They will list on the New York Stock Exchange under the ticker symbol XRF and will be the second Chinese online lender to go public in the United States.

Milbank Advises FinTech Lending Company College Ave Student Loans in Its $ 30 Million Capital Raise (Milbank), Rated: B

Milbank, Tweed, Hadley & McCloy LLP advised College Ave Student Loans on a $30 million capital raise.

The Milbank team was led by Corporate partner Roland Hlawaty with Corporate associate Joanne Luckey.

$ 3M Raised for Clarendon Park Apartments in Phoenix Through RealtyShares (Yahoo! Finance), Rated: B

RealtyShares, a leading online marketplace for real estate investing, today announced that its network of accredited investors has collectively funded a $3 million investment for the acquisition of Clarendon Park Apartments, a 138-unit multifamily property in Phoenix, Ariz.

The deal is sponsored by Rincon Partners, an Arizona-based owner and operator of multifamily properties focused primarily on the Southwestern United States. Rincon Partners intends to use the funds to rehabilitate and modernize the apartment interiors and amenities to potentially improve its position within the market.

The property is located in midtown Phoenix, between the city’s two largest employment corridors and close to shops, restaurants and newly developed amenities. The property itself features a swimming pool, spa, clubhouse and fitness center, as well as access to light rail within two blocks.

United Kingdom

Landbay Unveils March 2017 UK Rental Index (Crowdfund Insider), Rated: AAA

Last week, UK-based peer-to-peer lending platform Landbay released the March 2017 Rental Index. This report reveals details about the country’s rental market.

“Since March 2016, average rents in the UK have risen by 0.9% to £1,191. In England, rents were up 0.87% to £1,222; in Northern Ireland, they rose by 0.07% to £557; meanwhile in Scotland rents rose to £723 following annual growth of 1.25% and in Wales, the average rent is up 1.41% to £636. Average rents for one, two and three-bed properties hit £1,012, £1,152 and £1,321 respectively in March 2017.”

P2P-Banking Launches Database to Enable Investors to Compare IFISA Providers Easily (P2P-Banking), Rated: AAA

P2P-Banking launches a new IFISA database, that enables investors an easy comparison of offers by IFISA providers. UK taxpayers can invest up to 20,000 GBP per year tax-free in ISAs. This amount is per tax year, so a person could invest 20,000 GBP this tax year and invest 20,000 GBP in a different ISA next year. The Innovative Finance ISA, short IFISA, was introduced in 2016 with most offers becoming approved by HRMC only in the 2017/2018 tax year.

The new database of IFISA offers allows speedy selection and sorting to review IFISA products by different providers and then links to the provider’s website for in detail information. Investors can filter by interest rate, term, loan type, minimum investment amount, possibility of transfers in and out, flexible IFISA, bonus & cashback promotions and several other criteria.

Fintech synergy as challenger bank teams up with robo advice app (AltFi), Rated: A

Starling Bank is partnering with app-based wealth manager Moneybox for real-time savings.

Moneybox’s savings and investment services will be now offered by digital-only bank Starling to enable customers to easily open ISAs and round up their spending in real time.

The service will be available to Starling customers as early as the end of April.

The new service is made possible through Starling’s open APIs. The integration has two distinct features. Firstly, it allows customer data to be securely shared between the two apps, meaning transactions will appear within the Moneybox app in real time as customers spend.

Secondly, the integration with Starling means that customers will be able to set up round ups from their Starling account in a matter of seconds.

Starling Bank publicly launched its API and developer platform to enable external developers and technology companies to integrate with the banking app earlier in April, and Moneybox is the first to launch a live integration on this API.

CEO Stephen Findlay Comments on BondMason’s New SIPP Service (Crowdfund Insider), Rated: A

In response to growing demand from investors in search of better investment returns for their pensions, UK P2P service provider BondMason has launched a new Self-Invested Personal Pension (SIPP) service.

The new SIPP service offers a flexible, tax-efficient way to save for retirement and allows investors to access returns from a diverse set of approved P2P Lending opportunities. Investors can open with a lump sum from £5,000 and there is no tie-in – an investor can typically exit in full within 48 hours. The service also aims to allow SIPP administrators to easily and compliantly grant their clients access to returns from P2P Lending.

Social P2P venture hindered by wholesale crackdown (P2P Finance News), Rated: A

THE FOUNDER of ThinCats has said that the regulator’s clampdown on wholesale lending will affect projects that can be funded through his social peer-to-peer lending platform Community Chest.

Kevin Caley (pictured) launched the social enterprise last year and it funded its first loan in February 2017 for £130,000. The debt facility went to a local Birmingham finance company called ART Business Loans, which supports West Midlands enterprises.

But Caley says the Financial Conduct Authority (FCA)’s tighter restrictions on wholesale lending mean that loans like these will no longer be possible, as the money was lent to another lender.

ClearBank: a MSFT Azure B2B Fintech (Daily Fintech), Rated: A

A well kept secret of the UK B2B banking sector, is now public. Clear Bank, a clearing Bank in the UK, is ready to compete with the four UK clearing banks,

  • Barclays
  • HSBC
  • Lloyds
  • Royal Bank of Scotland (RBS).

Clear Bank is the fifth UK clearing bank and the only one that is pure B2B since it does not offer services direct to the consumer.

Back in the 60s there were 16 clearing banks in the UK. Consolidation in this part of transactional banking has left the UK currently with 4 clearing banks that process over 80 Trillion pounds annually worth of payments in the UK.

Clear Bank will be helping Challenger banks to access the payment system at the Bank of England level, at the same level as incumbents.

Clear Bank will help the 44 UK Building societies offer current account services in a cost effective way. Right now, only 2 out of the 44 offer such capabilities to their members due to prohibitive costs.

Clear Bank will boost indirectly retail banking by reducing the substantially processing costs, which will facilitate competition for incumbents in the UK.

Clear Bank will help Fintechs by providing Banking as a service through the Cloud at a very low cost. Clear Bank will be offering an API so that Fintechs can interconnect to the ClearBank Fabric.

UK Firms VC Funding Holds Steady Despite Brexit (PYMNTS), Rated: A

According to Venture Beat, U.K.-based startups raised $1.04 billion in venture capital (VC) during the first three months of 2017. That’s a slight decrease from the $1.17 billion raised during same period one year ago, but it’s above the amounts raised in each of the last three quarters.

The U.K. remains number one in Europe for VC raised, with Germany second at $779 million and France third at $665 million.

Peer-to-peer lending service Funding Circle helped push the U.K. into the number one spot, raising $97 million in VC funding and $43 million in debt funding during the first three months of 2017.

Which fintech stocks does Neil Woodford own? (The Motley Fool), Rated: A

The fintech — financial technology — sector has emerged rapidly over the last decade. The Confederation of British Industry expects it to be worth £300bn in the UK alone by 2020.

Given Neil Woodford’s long-prevailing dislike of the big banks, it’s perhaps not surprising that he’s attracted by the relatively simple business models and exciting investment opportunities in the fintech sector.

Woodford is invested in some unquoted fintech companies, such as RateSetter, a peer-to-peer lending platform, and Seedrs, which opens up venture capitalism “to anyone with an internet connection”. However, he also has two holdings that are listed on the stock market — and very interesting they are too.

P2P Global Investments (LSE: P2P) is a FTSE 250 firm with a market cap of around £700m.

VPC Specialty Lending Investments (LSE: VSL) is in the FTSE SmallCap index but is a decent-sized company with a market cap of around £290m. Its business is similar to P2P’s and like the FTSE 250 firm, considerable quantities of cash flow into shareholders’ pockets.

George Banco appoints RateSetter co-founder to board (Loantalk), Rated: A

Guarantor lender George Banco has appointed the co-founder of peer-to-peer platform RateSetter as a non-executive director.

Peter Behrens (pictured above) – who also serves as the chief operating officer at RateSetter – co-founded the platform in 2010, and has seen more than £1.8bn of loans facilitated through the company in this time.

Alternative funding options come into focus (Works Management), Rated: B

Alternative funding options will be a major theme at Business, Innovation, Technology and Efficiency (BITE) 2017 hosted by MHA Carpenter Box at the Amex Stadium, Brighton on Thursday 27 April.

Andy Davis (pictured), former editor of FT Weekend and author of the ‘Beyond the Banks’ report on alternative finance, will be one of the industry experts forming an ‘alternative funding panel’ at the free one-day conference, where he will share his expertise with local business leaders.

European Union

Why EU Passporting Is Vital For Britain’s Fintech Firms (Forbes), Rated: AAA

The impact on fintech could be significant, as an Emerging Payments Association (EPA) report Passport to the Future makes clear: “HM Treasury estimates the UK fintech market employs 60,000 people and is worth £6bn to the UK economy. Fintech is part of the UK’s financial services sector that employs 1.9 million people and contributes 10 per cent of the UK’s GDP. Payments represents over 40 per cent of financial services in revenue terms and in 2016, 40 per cent of all fintech investments were in payments companies, amounting to £10bn globally.”

In a recent survey of its members, the EPA found that 88 per cent of its members think that passporting rights are important or very important to their current businesses, while over 91 per cent think passporting is important or very important to the UK’s fintech sector and its continued growth.

As the EPA’s report states: “This could see the flight of some or part of the 5,500 licensed companies abroad and have a significantly negative impact on the UK economy.”

Alfa Finance Launches New P2P Lender DoFinance (Crowdfund Insider), Rated: A

Latvia based Alfa Finance Group has launched a new peer to peer lending platform named DoFinance.  The company stated it had invested €2 million to get the P2P lender up and running. The online lender is said to be available in all EU and EEA countries.

International

Simplex Partners with Beacon – Risk Magazine’s FinTech Start-Up of the Year (BusinessWire), Rated: A

Simplex Inc., one of Asia’s leading financial services technology firms, announced a strategic partnership with Risk Magazine’s FinTech start-up of the year, Beacon Platform, Inc.

The partnership combines Simplex’s expertise in implementing trading and risk management solutions with Beacon’s experience in building cross-asset trading and risk management platforms for industry leaders including Goldman Sachs, JP Morgan and Bank of America Merrill Lynch.

Australia

Personal loan applications surge as credit cards wane (The Sydney Morning Herald), Rated: AAA

Australians are shunning high interest credit cards and turning to personal loans for large purchases.

Driving the switch are tech-savvy consumers taking up loans from peer-to-peer (P2P) lenders, a new breed of online competitors to banks.

Credit card applications fell by almost 4 per cent in the March 2017 quarter compared with the same quarter last year, the latest report on consumer credit by credit bureau Equifax shows. That’s the biggest fall since September 2012 quarter.

Reserve Bank figures suggest that more frequent but lower value transactions are being made on credit cards.

One P2P lender is showing an interest rate on its website of 10.3 per cent on a $10,000 unsecured personal loan paid back over three years.

Banks would typically charge 13.02 per cent for a loan on the same terms, while credit cards are higher still – typically 14.15 per cent for a non-rewards credit card and 19.6 per cent for a rewards card, plus annual fees.

China

Development of Financial Technologies (Legislative Council Panel on Fiancial Affairs), Rated: AAA

This paper provides an update on the local financial technologies (Fintech) landscape and measures to support the development of the industry.

The number of Fintech start-ups operating in co-working spaces and incubator/accelerator programmes in Hong Kong increased by 60% between August 2015 (86) and August 2016 (138), according to Invest Hong Kong (InvestHK)’s Start-up Profiling Survey.

Hong Kong attracted about US$400 million of venture capital (VC) investment in Fintech companies during 2014-2016, lower than the Mainland and India (both of which are economies with huge domestic markets) but ahead of regional peers such as Australia, Japan and Singapore1 .

Universities such as The Chinese University of Hong Kong and The Hong Kong Polytechnic University will launch dedicated, publicly-funded firstyear first-degree and senior year programmes in Fintech starting from the 2017/18 academic year. Moreover, The University of Hong Kong’s School of Professional and Continuing Education has been offering a part-time, four-month programme, Executive Certificate in Internet Finance.

For payment services, the general public is increasingly receptive to new products and services, as Stored Value Facility (SVF) operators are launching new services while banks are rolling out new payment services (such as a note-issuing bank’s mobile App which enables cross-bank P2P fund transfer through mobile messaging). Building on the momentum from the introduction and development of various new payment channels in the market, the Government will strive to provide more convenient means for settling government bills and fees, such as making on-line credit card payment through digital wallets in mobile phones. HKMA will also work with the Government to explore with the industry ways of improving the payment infrastructure (such as introducing the Faster Payment System in 2018) and encouraging more standardisation in payment applications across various services providers, including the use of QR codes in streamlining the payment process, and facilitating the development of new electronic and mobile payment channels by the Government for various government services.

Read the full report here.

Alibaba’s Ant Financial Increases Bid for MoneyGram (Crowdfund Insider), Rated: A

Dallas based MoneyGram (NASDAQ:MGI), a global provider of money transfer services, has become quite popular. This past January, Alibaba’s Ant Financial subsidiary announced it had offered the firm $13.25 per share to acquire the company. The two companies had entered into a definitive agreement to merge.  Today, it appears that agreement was not quite as definitive as thought as Ant Financial has now increased the share offer to $18/share.

Last night, MoneyGram and Ant Financial announced they had updated the agreement in an effort to fend off a competing bid by Kansas based Euronet Worldwide.

Dianrong Announces New Financial Leadership Appointments (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform, Dianrong, announced on Tuesday the following financial leadership changes, effective immediately: Xuxia Kuang, the lender’s CFO, has been named COO. Yawen Cui has joined Dianrong as the new CFO. Kuang and Cui will report to Dianrong founder and CEO Soul Htite.

MENA

‘Fintech startups in Middle East, North Africa raised $ 100m last decade’ (Venture Burn), Rated: AAA

Fintech startups in the Middle East and North Africa have raised $100-million over the last decade, yet 28% fail in their initial years, says a new report by business support organisation Wamda and online payment gateway Payfort.

The region was home to 105 fintech startups by the end of 2015 (see featured image), with half of these having been launched since 2012. In all 30 firms are situated in North Africa. The UAE leads with 30 fintech startups, followed by Egypt with 17 and Jordan and Lebanon with 15 each.

Just 10% of fintech startups in the region account for 43% of investments and employ 55% of the 1600 employees in the sector.

Africa

How to make sure your crowdfunding campaign is successful (Destiny Man), Rated: AAA

“The vast majority of the South African market activity – $13,8m – came from peer-to-peer consumer and business lending, with the remaining $1.2 million spread across microfinance, donation-based and reward-based crowdfunding,” according to a report published by the Cambridge Centre for Alternative Funding.

In order to reap the benefits of crowdfunding, it’s important to launch a great campaign. Patrick Schofield, CEO and founder of Thundafund, a crowdfunding platform that has helped several companies start or expand, says there are several things you can do to increase the chances of success for your business.

“Spend as much time on pre-campaigning planning as you would on your actual campaign. If you’re thinking of [running a campaign] for up to 45 days spend, 45 five days getting your ducks in a row,” he says.

Approaching journalists and key influencers will get you enough people who can make noise about what you’re doing.

‘Crowdfunding is the future’(Times Live), Rated: A

In an alternative funding benchmarking report by the UK’s Cambridge Centre for Alternative Finance, published last month, South Africa was identified as the potential leader in the growth of online and peer-to-peer lending models in Africa.

In 2015 South Africa represented 18% of the total African online alternative finance market, raising more than $15-million. Kenya was the only African country ahead of it, with $16.7-million raised. South Africa’s online alternative finance market focused more on business activity and less on charitable causes.

Local IT firm Khonology has partnered with the UK’s White Label Crowdfunding to develop bespoke crowdfunding platforms for entrepreneurs here.

Authors:

George Popescu
Allen Taylor

Friday April 14 2017, Daily News Digest

millennial asset allocation

News Comments Today’s main news: Marathon Partner calls for change at OnDeck. LC releases mobile app. Ranger slumps after the collapse of Argon Credit. College Ave secures $30M in a fourth equity round. Droom launches first used auto MPL in India. First Circle secures funding to expand into SE Asia. Today’s main analysis: High-Net-Worth Millennials want advice from humans. Ranking the […]

millennial asset allocation

News Comments

United States

  • Marathon Partners calls for change at OnDeck. GP:”There is an entire industry, especially in New York, of funds who buy a minor number of shares in public companies and then mount a public campaign to impose their views to the companies. Examples are Karl Icahn, Bill Ackman, Dan Loeb and Herbalife.  Their objective is a quick appreciation of the share value and not the long-term success of the company. They typically encourage the company to sell assets to quickly raise cash for the share prices to increase quickly. They then sell their shares at a large profit, having double or tripled their investment in months to a year. And over time, the company is left on its own, now without the assets, it sold. All companies have issues and I am sure plenty of people disagree with the choices made at OnDeck. But from there to saying that OnDeck is in big trouble I think the leap is too large. Many companies have the exact same board structure as OnDeck, common CEO and Chairman and more. I see this campaign as a pressure campaign, unfortunately, picked up by WSJ,  who probably saw some pieces of truth and some sensationalism in it but is likely exaggerated. The real issue at OnDeck: they need cash, and soon. Let’s see how they solve that issues while keeping control. Being a public company opens the doors to this kind of attacks. “AT: “More and more, it’s looking like OnDeck may be headed for a sale. It could at least see a changeover in leadership. That new leadership will be expected to turn the company around, and if they can’t, we could see a buyer emerge in the near- to mid-term future.”
  • Activist steps up pressure on OnDeck. GP:” See comment above.” AT: “One influential person is all it takes to impact a change.”
  • LendingClub releases mobile app for investors. GP:”As many of our readers we are surprised they didn’t have a mobile app yet. There is a difference between a mobile responsive website and a native app. When will people be able to apply for a loan using just the app? While the core of Lending Club’s applicants are baby boomers and Gen X, I still think that mobile apps open the door to new features like taking pictures of your IDs and documents in real time, using the mobile phone’s info for underwriting and applying even faster.” AT: “I wonder why they hadn’t already.”
  • SoFi intros new two-step verification process. GP:” A small important step, focused on security. We discussed recently the importance of security, especially of borrower’s data.”
  • HNW Millennials are hungry for advice from humans. AT: “This is interesting since we’ve been hearing a lot about how millennials prefer robo, or at least want a mix of human-robo advice. High-net-worth individuals are different, though, and I think that’s across generations. Significant is the fact that many HNW millennials are in charge of their families’ fortunes, or at least a part of it. I would imagine they would not want to be responsible for losing what their fathers and grandfathers built, therefore, it makes sense they’d want advice from a human mentor in some respects.”
  • Ranking all 50 states by average credit score of citizens. AT: “The interesting thing about this to me is there seems to be a cultural attitude at play here. The top states and bottom states in the ranking are clumped together in regions, which says to me that attitudes toward credit, and behavior driven by those attitudes, are at work within the cultures. Of course, you also can’t deny economic indicators such as unemployment, which tends to be higher in certain areas, probably due to certain industries losing out to automation and other paradigm-shifting forces.”
  • College Ave secures $30M in a fourth equity round. GP:” Student Lending continues to attract nice investments. Congratulations !”
  • CrediFi launches CredifX MPL for commercial real estate lending. AT: “We’re beginning to see the growing RECF market branch out into specialization. It’s an exciting time to be a marketplace lender in the real estate sector.”
  • Startup helps Chinese investors put money into U.S. funds.
  • Could fintech enable a resurgence in predatory lending. AT: “Yes, but this is a scare tactic aimed at borrowers. This thinking takes away from personal responsibility. It’s important for lenders to take note of this attitude and develop responsible-but-profitable lending practices. Anything else could land lenders in the same hot water as those caught up in the S&L crisis and mortgage default crises.”

United Kingdom

European Union

International

Australia

China

India

Asia

Africa

News Summary

United States

Marathon Partners Calls for Change at OnDeck (Yahoo! Finance), Rated: AAA

Marathon Partners Equity Management, LLC, together with its affiliates (“Marathon Partners”), announced today that it has released a letter that was sent to the board of directors of OnDeck Capital, Inc. (“OnDeck” or the “Company”) last month expressing concerns about the direction of the Company and making recommendations on steps to improve shareholder value.  Marathon Partners also announced today its intention to vote against the three incumbent directors up for election at OnDeck’s upcoming Annual Meeting scheduled to be held on May 10, 2017.

In its letter to the Board, Marathon Partners recommended two courses of action for OnDeck:

  • Fully rationalize the Company’s cost structure in order to rapidly achieve GAAP profitability and reduce the pressure on the organization to grow its loan portfolio
  • Seek the sale of the Company to a stable partner where OnDeck can thrive without the risks of destabilizing confidence in the business from shareholders and the capital markets.

In addition to the concerns expressed in the letter, Marathon Partners is also disappointed with OnDeck’s corporate governance and executive compensation practices, as exemplified by ISS’s Governance QuickScore of ’10’ – indicating the highest level of concern – at the 2016 Annual Meeting.  OnDeck’s current practices, including plurality voting for director elections, a classified board structure, no special meeting rights for shareholders, and combined CEO and Chairman roles, among others, serve to disenfranchise their shareholders’ rights. Marathon Partners also has concerns around the metrics believed to denote success for the Company, such as adjusted EBITDA that ignores stock-based compensation and is blind to increased balance sheet risk.

Given Marathon Partners’ lack of confidence in the Board’s ability to represent the shareholders’ best interests, it plans on voting against the entire class of directors up for election at the 2017 Annual Meeting.

Activist Steps Up Pressure on On Deck Capital (WSJ), Rated: AAA

Marathon Partners Equity Management LLC, which owned 1.75% of On Deck’s shares as of the end of 2016 according to FactSet data, also publicly released the text of a letter it sent to the company’s board and lead independent director in March urging them to slash expenses and explore a possible sale of the business.

The three directors up for re-election are Noah Breslow, who also serves as On Deck’s chief executive; Jane Thompson, a former financial-services executive at Wal-Mart Stores Inc. WMT -0.39% ; and Ron Verni, a former CEO of Sage Software Inc.

On Deck’s shares, which fell 3.3% Thursday afternoon, are down more than 35% over the past 12 months following the reporting of wider losses and cooler investor demand for its loans.

The LendingClub Investor Mobile App Has Arrived (LendingClub), Rated: AAA

Today, with more than $24 billion invested through the platform, LendingClub is thrilled to introduce its new iOS mobile application – LendingClub Invest.

Investors said that some of the most important functionality they use on a regular basis is checking their account summaries and investing in Notes. Armed with this insight, the team crafted a visually-attractive user interface that consolidates the investor’s total account value, available cash, returns and holdings on the first page.

SoFi Introduces New Two-Step Verification Feature to Offer Users Next Level of Account Protection (Crowdfund Insider), Rated: AAA

Online lender SoFi recently announced the launch of its new two-step verification feature that will offer users the next level of account protection. The company revealed that two-factor authentication (or 2FA) would provide an additional layer of security to help protect accounts from unauthorized access.

HNW Millennials Are Hungry For Advice… From Humans (Wealth Management), Rated: AAA

High-net-worth millennials enjoy growing influence in the management of their families’ portfolios, but few are fully satisfied with their investment objectives. They have strong opinions, but are hungry for advice and don’t seem particularly excited about getting it from a computer.

Only 32 percent of millennials rate their values-based investment knowledge highly, with roughly a quarter deeming their knowledge either poor or very poor. That being said, there is a continuing hunger for investment knowledge, with 42 percent claiming they would like to learn more about the area.

The other potential reason for this discontent is that millenials simply have differing philosophies on investment than previous generations.

Ranking All 50 States by Average Credit Score of its Citizens (Statistical Future), Rated: AAA

Scores range from 300 to 850, the data comes from Experian. The national average ends up being 673, this is kind of shocking to me since my banker seemed to stress the necessity of a 720 credit score to get a loan with the best rate. Obviously, not everyone owns their home, but even in the state with the highest average – Minnesota – the average is only 706.5. Even then, the state ranks a full 7 points ahead of the runner up – Wisconsin.

Someone has to bring up the rear and for this metric, that someone is the state of Georgia, with an average credit score of 642.

At first glance, the aspect that pops out the most is that the top four states are all bundled in the upper Midwest while 5 of the 6 lowest are basically neighbors in the south.

High unemployment + low wages = lower than average credit scores.

College Ave Student Loans Secures $ 30 Million During Fourth Equity Round (Crowdfund Insider), Rated: A

Student loan marketplace, College Ave Student Loans, announced on Thursday it secured $30 million during its fourth equity round. Investors of the funding round included new and existing participants, which included Comcast Ventures and Leading Edge Ventures.

First data-driven marketplace for commercial real estate loans speeds process to finance commercial properties (PR Newswire), Rated: A

CrediFi Corp., the leading source of data and analytics for commercial real estate (CRE) finance, has announced the launch of CredifX, its online marketplace for financing commercial properties.

CrediFi has already made the commercial real estate market more transparent, by providing data about more than two million properties and thirteen trillion dollars in loans across the U.S. Now CredifX is taking that transparency revolution one step further. In addition to accessing information about commercial real estate finance through the CrediFi platform, CRE borrowers, brokers and lenders will now have unprecedented access to financing opportunities allowing them to close real estate deals through CredifX, CrediFi’s latest fintech solution.

The launch of CredifX follows just weeks after CrediFi secured $13 million for its Series B funding, helping drive the launch of CredifX.

Chinese Fintech Startup Helps Mainlanders Invest Money in US Funds (Crowdfund Insider), Rated: A

The last method mentioned above, utilizing the $50,000 limit on transfers, is being utilized by Chinese fintech startup, Niu Jiao Suo, to help Chinese investors to move their money overseas. Niu Jiao Suo operates by connecting Chinese investors with foreign mutual funds. Its mobile app allows users to invest in foreign mutual funds like Blackrock, Vanguard, JP Morgan, and Goldman Sachs with a minimum investment amount of $400. Users are limited to $50,000 in total investments per year in accordance with China’s annual threshold. A $400 investment may not sound attractive to funds by itself, but Niu Jiao Suo is able to attract such prestigious funds by bundling their users’ smaller investments together into a larger investment package.

Could Fintech Enable a Resurgence in Predatory Lending? (Tech.co), Rated: B

The average household carries $134,643 in combined debt which includes mortgage, credit cards, auto loans, and student loans. A good chunk of household income go into servicing these loans as illustrated in how Americans spend their paychecks. The biggest chunks of people’s monthly spending correspond to housing, transportation, and education. For other expenses, Americans continue to rely on plastic. While not necessarily a bad thing, many fail to pay charges in full and carry a balance on their cards, further exposing them to compounded interest and other fees.

Credit card debt is at its highest since 2008. Americans added $60.4 billion to the outstanding credit card debt as 2016. Worse is that, 69 percent of Americans have less than $1,000 in savings. 34 percent of respondents revealed that they don’t have any savings at all. When emergency strikes, many are left with little choice but to get more loans. However, with bad credit scores, borrowers are resort to getting them from predatory lenders.

For cash-strapped consumers, the promise of fast and easy money is always enticing. The payday loan industry alone is a $38.5 billion industry.

Late last year, the Office of the Comptroller for Currency started to accept applications from fintech companies that would subject them to federal banking rules. Chartered companies will face controls to prevent money laundering and have to abide by consumer protection rules. However, some argue that a federal charter would also enable fintech companies to bypass state-specific provisions such as interest rate caps. Such flexibility may be abused by enterprising lenders.

You should always go with numbers. Know how much the loan will totally cost you. Calculate the annual percentage rate (APR). Many predatory loans would have APRs of three digits meaning you could pay triple, quadruple, or even more of the loan amount in a year’s time if you fail to pay. While many of these loans are designed to be short term, it’s really dependent on your capacity to pay.

United Kingdom

Ranger slumps as collapsed lender forces write-down (Citywire), Rated: AAA

Shares in Ranger Direct Lending (RDL) have slumped after the investment trust was forced to write down 4% of its portfolio following the collapse of US peer-to-peer lending platform Argon Credit.

Shares in the trust are trading at 996p, down 6.9% since the write-down was announced yesterday, languishing at a 17.3% discount to net asset value.

The £172 million trust holds a position in Princeton Alternative Income, which gives the trust indirect exposure to $28.3 million of a $37.5 million credit facility Princeton has supplied to Argon, which went bust in December.

Numis analyst Charles Cade said the entire position in Princeton represented 12.1% of net assets in December and as Ranger could not determine the exact impact ‘we would not be surprised to see further writedowns’.

RateSetter channels £120k to Essex foster care SMEs (P2P Finance News), Rated: AAA

A £120,000 loan arranged by RateSetter boosted child care placements in an Essex-based foster care company by almost a quarter.

The peer-to-peer lending platform helped Brighter Futures Foster Care increase the number of new foster households from 67 to 83, making its foray into a sector where it found “finance is desperately needed”.

The borrower works with local authorities in the South East to find foster families for young people amidst a national shortage of 10,000 foster places, and is looking to raise further finance to bring the number of placements to 110-120.

P2P lending platform Assetz Capital to raise interest rates for limited time (Finextra), Rated: AAA

Assetz Capital, one of the UK’s largest and fastest growing peer-to-peer finance platforms, today announced it was raising the interest rate on its popular 30 Day Access Account (30DAA) by 0.5% to 4.75% for a limited time.

Investors will have until midday on 11 May to take advantage of the new rate and will benefit from a capped return of 4.75% for up to 90 days after an investment is made. After this, the account will return to its original rate of 4.25%.

Investors can automatically invest any amount from £1 in a diverse portfolio of secured business loans that have passed Assetz Capital’s strict credit checks.

A quiet crash in bank lending? March industry news (Funding Circle), Rated: A

Bank of England statistics reveal that since the EU referendum, net lending (that’s total lending minus repayments) to British small businesses by 22 of the largest banks dropped from £1 billion in the second quarter of 2016, down to just £220 million in the last three months of the year. Meanwhile, Funding Circle investors lent £167 million on a net basis in Q4 alone!

It was also great to see Samir Desai, Funding Circle CEO, featured in the The Sunday Times Maserati 100 list, which recognises influential entrepreneurs who are disrupting the business world.

And finally, our US business announced that Community Investment Management, an impact investment firm focused on direct lending, is now lending an additional $100 million to American small businesses.

FCA accused of hampering P2P market (FT Adviser), Rated: A

The Financial Conduct Authority’s decision to define peer-to-peer lending too narrowly has hampered the market, it has been claimed.

According to one compliance expert, the FCA’s decision has meant only 40 per cent of the P2P loans which HM Treasury had intended to be covered by the legislation were actually captured by the regulator’s definition.

Chinese firm Hywin Financial buys UK wealth manager (Fund Strategy), Rated: A

Hywin Financial Holding Group has acquired UK wealth manager Azure Wealth, which will now be known as Hywin Wealth.

Shangjia Monica Lin has been appointed chair of the board following the acquisition.

Banks favour lending to the owner-occupier market (Bridging and Commercial), Rated: A

Lendy believes that regulations such as Basel III have incentivised banks to take risks in the owner-occupier market and cut exposure to property developers.

This comes after the peer-to-peer secured lending platform found that the number of new residential mortgages worth over £1m increased by 24% in the 12 months to 30th September 2016.

Lendy discovered that the number of new £1m plus mortgages written by banks in 2015/16 increased to 4,844, up from 3,896 in 2014/15, while the total value of these mortgages grew by 18% from £7.59bn to £8.95bn in the same period.

When blockchain meets online lending: The business using one to improve the other (City A.M.), Rated: A

Sydney-based platform Othera goes a step further: the blockchain lending platform allows lenders and investors to access digital loans. It then chops up those loans – which are backed by businesses’ cashflows – in a process called tokenisation. These tokens can then be sold on an exchange, turning a traditionally fairly illiquid asset into a highly liquid digital asset.

Why did you launch Othera?

The overarching reason for launching Othera and building a blockchain lending platform is to unlock the alternative investment asset class and help it become mainstream.

You use blockchain to provide ongoing credit analysis of borrowing firms. How does that work and why is that so useful?

The blockchain provides what I call “total asset provenance” which means that every single interaction between the borrower and the lender is logged on it.

How does tokenisation work?

When we talk about tokenisation in the context of our platform, I am talking about the process of linking the rights to loan repayment cashflows (the principal and interest of the loan) to a digital cryptographic token similar to a bitcoin. So if you hold (own) the token, you will receive the pro rata portion of the loan repayment that your token represents. Tokens represent a digital form of fixed-income alternative investment. Tokens can be bought and sold just like an equity or bond or cryptocurrency.

Tell us about the importance of the secondary market.

Creating a vibrant secondary market for alternative investment assets is key to the growth of an industry or product sector for several reasons:

  • First, at a basic level, investors will only ever commit a relatively small portion of their investable funds into an asset class or a market with no liquidity.
  • Second, secondary markets are also a very good barometer of the performance of an asset class or specific investment, as the market quickly builds the strength or weakness of an investment into the current market price of that asset.
  • And third: liquidity.

Carney Says Crisis Lessons Are Why BOE Keeps Up With Fintech (Bloomberg), Rated: B

Bank of England Governor Mark Carney said the crisis shows why regulators and the banking industry must stay on top of the rapid developments in financial technology so that the system is solid enough to withstand shocks.

European Union

Online Lender 4finance Prices $ 325 Million Over-Subscribed Bond Issue (Crowdfund Insider), Rated: A

Riga-based 4finance Holding S.A., a large online and mobile consumer lending group, has placed and priced $325 million of senior unsecured 5 year fixed rate notes. These notes mature in 2022 and were issued with a 10.75% yield, at par.

The new 5 year issue was described as representing a liquid benchmark offering, with the scale to attract over 50 investors and secures 4finance’s long term funding.

These senior notes have a 5 year maturity with a 2 year non-call period and were offered on a Rule 144A / Reg S basis with ISINs XS1597295838 / XS1597294781 respectively. The bond was priced on April 12th, closing is expected on 28 April 2017.

International

FMS.next Alternative Finance platform enhanced with more FinTech functionality (Bob’s Guide), Rated: B

Profile Software, an international financial solutions provider, today announced the latest upgrade in the FMS.next Alternative Finance platform, to offer enhanced capabilities for “Auto-investing” that further boost the marketplace lending processes.

Australia

LendEx, Australia’s leading peer-to-peer marketplace lending platform for direct commercial property lending, appoints new board members (LendIt Blog), Rated: B

LendEx, Australia’s leading marketplace lender, today announced the appointment of Mr Brian Benger and Ms Kim Jenkins to its board as non-executive directors.

Mr Benger is on a number of the Australian subsidiary boards of Mercer Australia.

Ms Kim Jenkins is CEO of the Australian Retail Credit Association (ARCA), the peak body for organisations involved in the disclosure, exchange and application of credit reporting data in Australia.

China

CHINA: THE WORLD’S NEW FINTECH LEADER (International Banker), Rated: AAA

In November 2016, a report jointly produced by professional-services firm Ernst & Young (EY) and leading Singaporean bank DBS stated in no uncertain terms that China has now leapfrogged ahead of global technology hubs such as Silicon Valley and London to become “the undoubted centre of global fintech innovation and adoption”. Multiple fintech hubs have now emerged in China alone, most prominently in Shanghai, Hangzhou, Beijing and Shenzhen, which has led to EY and DBS concluding that the country now clearly leads the way in fintech and is “revolutionising many aspects of financial services”.

China also dominates the fintech “unicorn” space—those startups valued in excess of $1 billion. The country is home to eight of the world’s 27 unicorns.

Firstly, the sector has been well supported by the country’s regulatory framework.

Secondly, China’s population appears to be increasingly open to using online finance, with evidence mounting that they are eager to incorporate the support provided by various fintech services into many different aspects of their lives, including online banking, payments, transfers, crowdfunding, investing and shopping. Indeed, e-commerce in China is estimated to be a RMB 16 trillion market, and is now transforming the consumption habits of a rapidly growing number of Chinese people.

A significant chunk of China’s fintech success in recent years can be credited to Baidu, Alibaba and Tencent. Collectively referred to as BAT, the three tech giants control an intimidating share of China’s e-commerce landscape, as well as online messaging and Internet search platforms. They also control approximately half of the Chinese third-party payments market; whereas their US equivalents—Alphabet, Apple, Facebook and Amazon—control a mere 2 percent, as per recent analysis by Citigroup.

Payments/e-wallets is the dominant sector at present, with China having 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

The popularity of online banking is also exploding, with both China’s tech companies and its existing banks making a foray into this world, often in joint initiatives.

P2P (peer-to-peer) lending also deserves a mention, with China almost exclusively leading Asia’s growth in platforms designed to deliver credit to individuals and SMEs.

China P2P lender Dianrong sees market shakeout driving its growth (Reuters), Rated: AAA

Chinese online lender Dianrong.com expects to grow rapidly in the next few years, benefiting from tightening regulation driving a shake-out in the nation’s $100 billion-plus peer-to-peer (P2P) industry and pent-up demand for credit and investment.

Loan originations at the P2P lender, which is backed by investors including U.S. investment firm Tiger Global and Standard Chartered’s private equity unit, more than doubled to 16.2 billion yuan ($2.3 billion) in 2016 from the previous year.

Dianrong.com matches investors with individuals and small and medium-sized businesses in real-time, with loan sizes ranging from 500 yuan to 200,000 yuan for individuals and a maximum of one million yuan for small and medium enterprises.

Nearly half of the 4,000-odd online lending platforms in China were “problematic”, China’s banking regulator said in August when it unveiled the rules.

The P2P lender, founded in 2012 by Guo, a former lawyer, and Soul Htite, a co-founder of LendingClub Corp, is looking to grow loan origination by 50 percent annually over the next three to five years. It expects to broker about 30 billion yuan in loans this year.

India

Droom launches loan marketplace for used automobiles (VC Circle), Rated: AAA

Droom, an online platform for buying and selling used vehicles, has launched Droom Credit, a loan marketplace for pre-owned automobiles it claims is the country’s first.

For the initial rollout, it is going live with a dozen lenders, including HDFC Bank, Kotak Prime, Tata Capital, Faircent, i2i Lending and Capital First, a company statement said.

The platform, which guarantees loan approval within 30 seconds, uses the government-backed Aadhaar stack, apart from PAN verification, credit score validation and several other variables for credit evaluation.

There are three ways we are going to earn money, he said.

“First, the take rate, which will depend on who the lender is (different take rates and commission structures for different lenders). It will also depend on the category and profile of the borrower, and on the fulfilment and disbursal of the loan.”

Second, Droom will charge Rs 999 from borrowers.

Third, it will also charge the lender Rs 999 upon successful loan disbursal.

Droom Credit will initially restrict lending to borrowers purchasing vehicles from Droom. Going forward, however, it plans to open it to other platforms too.

Asia

Crowd Genie Receives Regulatory Approval from MAS (Crowdfund Insider), Rated: AAA

Crowd Genie, a small business lending platform, has received regulatory approval from the Monetary Authority of Singapore (MAS). Crowd Genie was granted a Capital Markets Services (CMS) license from MAS, an important development for the peer to peer lending platform. Crowd Genie has been in operation since mid-2016.

First Circle Secures Funding from Global Investors to Expand Access to Credit in Southeast Asia (Yahoo! Finance), Rated: AAA

First Circle today confirmed investments from Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Deep Blue VC. First Circle has now reported equity funding of $2.5m USD – from Accion Venture Lab, Deep Blue VC, 500 Startups, IMJ, and Key Capital – along with an undisclosed sum of debt funding.

The investment funds will be used to further develop First Circle’s technology and data analytics platform.

Africa

South Africa’s FSB to rule on crowdfunding by June 30 (Ventureburn), Rated: AAA

South Africa’s Financial Services Board (FSB) has set a date of 30 June by which it plans to rule on whether to craft specific rules or not for equity crowdfunding, an FSB spokesman said this week.

The African Crowdfunding Association has been calling for the FSB to craft a specific regulatory framework on crowdfunding.

“It’s not that it (equity crowdfunding) is illegal – it’s just that there’s no clarity,” he said.

Thundafund chief executive Patrick Schofield said he was not waiting for any regulatory certainty from the FSB and was going ahead with setting up a platform to facilitate equity crowdfunding in South Africa.

His idea is to use venture capital funds to vet deals and provide a certain percentage of the total equity injection, before placing these on the platform to attract investors.

Meanwhile a new lending threshold which came into effect in November under the National Credit Regulations is also likely to limit the ability of peer-to-peer lending platforms to fund startups.

Authors:

George Popescu
Allen Taylor

July 29th 2016, Daily News Digest

July 29th 2016, Daily News Digest

News Comments Today we have a lot of articles about banks and how banks are surfing successfully on the FinTech wave. The bank articles are mostly in the US section but the Australia section has an interesting article as well. Note the 1st article from Bloomberg and the 7th and 8th articles.  In the India […]

July 29th 2016, Daily News Digest

News Comments

  • Today we have a lot of articles about banks and how banks are surfing successfully on the FinTech wave. The bank articles are mostly in the US section but the Australia section has an interesting article as well. Note the 1st article from Bloomberg and the 7th and 8th articles.
  •  In the India section, you will find an article of quotes from P2P lenders in India which are worth a quick read. And in the UK section a very interesting article, the 1st one, just talking about the profitability of Zopa and Funding Circle, but the real interesting piece are the profitability of LendInvest and RateSetter which are not in the title. And a 2nd article that is also very clear and well thought out.

United States

United Kingdom

European Union

India

Australia

 

United States

Big Banks Turn Silicon Valley Competition Into Profit, (Bloomberg), Rated: AAA

It’s not that the upstarts — often called fintech — are failing to gain traction. Internet ventures pitching loans to cash-strapped consumers, small businesses and home buyers, for instance, have posted spectacular growth in recent years. It’s just that banks have a huge lead in lending and are watching the startups closely. As borrowers embrace new services, traditional firms are riding along.

Here are five examples:

LendingClub’s Backers

In May, LendingClub broke out its sales to banks: Community banks and other old fashioned lenders snapped up about 34 percent of the $2.8 billion of loans it arranged in the first quarter, up from an average of about 25 percent during 2015.

Some of LendingClub’s biggest loan buyers have bolstered their war chests or operations with financing from banks. Colchis Income Advisors entered into a credit agreement with Bawag PSK of Austria, according to regulatory filings. Arcadia Funds arranged for two of its Cirrix partnerships to borrow from Silicon Valley Bank. And MW Eaglewood lined up financing for its main LendingClub fund from Capital One Financial Corp. in 2012. Spokesmen for the funds and banks declined to comment or didn’t respond to messages.

Chasing Entrepreneurs

Small businesses can thank internet ventures for simplifying loan applications, speeding decisions and providing much-needed credit when many traditional banks were pulling back in the wake of 2008’s financial crisis. Nonbanks now provide about one-quarter of the $800 billion in loans outstanding to the sector, according to research by QED Investors and Oliver Wyman. But the interest rates aren’t always low.

For a time, banks were content backing the loans. Goldman Sachs was among firms that entrusted more than $300 million years ago to fund lending by On Deck Capital Inc., one of the largest providers of small business loans over the internet.

Now, established lenders are taking a more active role. JPMorgan announced a deal in December, letting it access On Deck’s proprietary credit-scoring system to quickly evaluate applicants before using its own balance sheet to make loans. On Deck, in turn, gets a foothold in the burgeoning “fintech as a service” market. But the arrangement has done little to stop a 49 percent slide in the company’s stock this year.

More recently, established lenders have announced their own online lending portals for entrepreneurs.

Wells Fargo & Co. said in May that its new “fast decision” platform will help it reach a goal of providing $100 billion in new loans to small businesses by 2019. AmEx, which already provides more than $200 billion of funding to entrepreneurs for business purchases on their credit cards, expects a new online-loan portal will let it handle even more of their spending.

Mortgage Apps

Fintech ventures starred in Super Bowl ads this year, with Quicken Loans toutingRocket Mortgage, a platform letting users apply for home loans on smartphones.

The tidal wave is benefiting banks, too. Behind the scenes, many of the upstarts get support from traditional banks. Detroit-based Quicken, for example, raised $1.25 billion for itself and its parent company last year in a bond sale underwritten by JPMorgan and Credit Suisse Group AG. It also used lines of credit from banks to help close $80 billion in home loans that year.

[Comment: 4th was Blockchain, not very relevant to our readers here]

Robo-Advisers

Top Wall Street firms, seeking stable fee income, are now developing their own robotic arms. Bank of America Corp. will unveil an automated investment prototype this year after assigning dozens of employees to the project in November, people familiar with the matter told Bloomberg at the time. Morgan Stanley and Wells Fargo also have said they would build or buy a robo-adviser.

US consumer agency seeks to overhaul debt collection industry, (CNBC), Rated: AAA

“Today we are considering proposals that would drastically overhaul the debt collection market,” said Consumer Financial Protection Bureau Director Richard Cordray in a statement. “This is about bringing better accuracy and accountability to a market that desperately needs it.”

According to a summary, the proposal would make sure collectors “substantiate the debt before contacting consumers,” by confirming their identities and the amount owed, as well as checking for any payments made after a default. Consumers frequently file complaints at the agency about receiving calls for debts that do not exist.

In an attempt to “limit excessive contact,” the proposal would cap agencies’ calls to debtors to six attempts each week. It would also create a 30-day waiting period after a person dies for contacting survivors.

Agencies would have to communicate specific information to consumers, such as when outstanding debt is too old for a lawsuit. They would also have to make it easier to both dispute or pay a debt through tear-off coupons on the bottoms of collection notices.

Roughly 13 percent of consumers have a debt currently in third-party collection, with an average amount of $1,300, data from the Federal Reserve Bank of New York shows.

In a survey released alongside its proposal, the CFPB found more than three-quarters of the country’s 3,994 debt collection firms are small, with less than 100 employees. Larger firms pull in about two-thirds of the industry’s $12.18 billion total revenue.

The agency also found credit card, student loan and automobile debts in collection typically have balances of $2,000 or more.

Cloudvirga Raises $ 7.5 M to Automate the Entire Mortgage Process, (PR Newswire), Rated: A

Cloudvirga, the company developing the cloud-based intelligent Mortgage Platform® (iMP) designed to streamline the mortgage process, today announced it has raised $7.5M in its series A funding sponsored by Dallas Capital with participation from Upfront Ventures and Tribeca Angels.

“Increased regulations stemming from the subprime mortgage crisis have made the entire process more labor intensive and time consuming than ever, and those are the pain points we’re alleviating with iMP,”

Come Together – Finding Common Ground in Small Business Lending Associations, (Lend Academy), Rated: AAA

So where do we go from here? Advancing the marketplace lending industry’s efforts to create a more transparent and efficient financial system is critical as the industry matures.

The good news is that small businesses today – even those with lackluster or thin credit history – can choose from a dynamic set of loan products including term loans (both traditional and short-term), business lines of credit, loans for startup companies, equipment purpose loans, various SBA loans, accounts receivable financing, merchant cash advances, and peer-to-peer loans. This is a far cry from where we were in 2008-2010, when (according to the Huffington Post) more than 170,000 small businesses shut down.

At Lendio, we’re convinced that there needs to be a single, industry unifier – and we feel the SMART Box is headed in that direction. Lendio will now participate in the 90-day engagement period and I’m asking all those who offer loan products throughout the Lendio platform to consider doing so as well.

How Much Lower Will Your Student Loan Rate Be With a Cosigner?, (Wall Street Journal), Rated: AAA

Undergraduates who qualified for private student loans with a cosigner–often a parent–were offered average interest rates of 5.37% versus 7.46% without a cosigner, according to Credible.com, a student-loan marketplace. Rates for graduate students were also discounted to 4.59% on average with a cosigner compared to 6.22% without one.

The figures from Credible.com are based on five lenders’ responses and offers—which included a mix of fixed and variable interest rates—to nearly 8,000 applicants who shopped for student loans on the site over a 12-month period through early June. The lenders include Citizens Financial Group—which is quickly gaining market share in the private student loan market—as well as online lenders CommonBond and College Ave Student Loans.

Approval rates fall dramatically without cosigners. Fifty-one percent of undergraduates shopping for loans on Credible.com received offers compared with 20% of those without a cosigner. Similarly, 56% of graduate students–who lenders have historically viewed as relatively safer borrowers–received offers with a cosigner versus 45% without.

In some cases, it can be cheaper for parents to join their children on a private student loan as opposed to signing up for a parent-only loan from the federal government. The 5.37% average rate undergraduates received with a cosigner on private student loans is nearly one percentage point cheaper than the interest rate on the federal Plus loan for parents that charges 6.31% for the upcoming academic year. Private lenders also don’t charge origination fees, while the Plus loan currently has a roughly 4.3% upfront charge.

Think twice before you co-sign on a student loan, (CNBC), Rated: AAA

But co-signing is risky. It ties you to that debt, meaning you could be responsible for the entire amount outstanding if the primary borrowercan’t — or won’t — pay up. Nearly 40 percent of co-signers found themselves on the hook for at least part of the bill, according to a June survey from CreditCards.com, and 28 percent saw a drop in their credit score from the primary borrower’s bad credit habits.

How Ayasdi’s machine learning is giving banks an analytical advantage, (Tradestreaming), Rated: AAA

“The future is already here — it’s just not very evenly distributed.” Banks are increasingly using machine learning to power part of their operations, but the adoption of these new technologies is not uniform.

Top data scientists are employed by financial institutions and working with programming tools like SPCC and R, they filter and analyze huge data sets in order to perform analytical tasks. “No human being can wrap his head around that amount of data,” said Daniel Druker, CMO of Ayasdi, a machine learning company that partners with financial institutions, like Citi and Credit Suisse. Instead, using machine learning algorithms, a computer can surface insights and recommendations from those data sets, while the quants examine and take actions based on those learnings.

According to McKinsey’s 2015 Global Banking Report, banks that have replaced older statistical-modeling approaches to credit risk with machine learning techniques have experienced up to 20 percent increases in cash collections from outstanding loans.

Out of over 20 banks that work with Ayasdi, Drucker said, 100% are either already operating in this stage or actively exploring implementing such technology.

The highest level of machine learning application is the fully automating business processes. Take a life insurer, for example. When a customer applies for a policy, he might be asked to fill out a 40-page long form and get a physical examination. That information is then sent back to the company for approval. The entire process can take over a month to complete.

According to McKinsey, some European banks using these techniques report 10 percent increases in sales of new products, 20 percent savings in capital expenditures, and 20 percent declines in customer churn.

CB Insights has identified 41 companies providing machine learning solutions in the financial industry. Together with the explosion of general applications of  AI, deals and investments in AI companies reached record levels in 2016. Since the beginning of 2016, over 15 fintech AI companies have closed investment rounds.

How Digital Investments Are Changing the Face of Banking, (The financial Brand), Rated: AAA

Investment in digital banking is driving increased customer acquisition, cross-selling and satisfaction while decreasing branch traffic and related costs.

This is confirmed by the J.D. Power research that showed that there is an immediate lift in overall satisfaction when customers use mobile banking (+27 points on a 1,000-point scale), and this impact increases even more when banks provide their mobile banking customers with a highly satisfying experience (+82). According to J.D. Power, “The outlook for Big Banks remains positive, driven by their (big banks) ability to invest in customer-centric innovations (e.g., digital channels, analytics, and branch transformation), as well as their success in growing customer segments.”

Recent disclosures of mobile banking use by the big banks provides a glimpse of the impact of digital investment on mobile use. Of the three largest U.S. banks, JPMorgan Chase leads the way with nearly 25 million active mobile customers as of the second quarter. That was up 18% compared with the same period last year. Bank of America had the second most active mobile users, with 20.2 million monthly active app users, with Wells Fargo reporting 18 million active users.

 

United Kingdom

Britain’s 2 biggest peer-to-peer lenders lost £50 million in the last decade

The two platforms have facilitated almost £3 billion of loans between them but Funding Circle, founded in 2010, has never made a profit, while Zopa, founded in 2005, made a small profit 2 years running, totalling less than £60,000.

Here’s the breakdown of Zopa and Funding Circle’s financial performance, as per accounts filed with Companies House:

  • Zopa: losses between 2005 and 2014 total £21.79 million, according to accounts filed with Companies House, on cumulative revenues of £25.84 million. The platform made a small profit in in 2011 and 2012, totalling £58,648.
  • Funding Circle: cumulative net loss of £28.71 million on total revenues of £20.89 million, according to accounts covering 2010 to 2014. The company has yet to make a profit.

These losses have been funded by investment from venture capitalists: $273 million (£208.1 million) for Funding Circle and at least $56.6 million (£43 million) for Zopa, according to Crunchbase.

Funding Circle, which offers loans to small businesses, declined to comment on its losses when contacted by BI but pointed to comments CEO Samir Desai made to BI last year when we reported the company’s latest financial results. Desai said at the time:

“If you actually look at the core business of doing loans in the UK — strip away the technology investment and all the other extra stuff we’re doing — the business is already profitable in the UK and is moving that way in the US as well. A lot of the investment we’re doing is investing in creating a global business.”

Zopa’s CEO Jaidev Janardana told BI in an emailed statement:

“We have demonstrated that our business model is profitable with two consecutive profitable years in 2011 and 2012. Since then our investors and the business have placed more value on investing in our growth. In doing so we have been able to double our loan volumes last year, deliver positive returns for our customers at the same time investing in talent, technology, and our office.

“This all means we are in the best position to deliver on our strategic plan for continued growth and profitability long-term. Looking forward, I’m glad to say that we expect to be EBIDTA positive in Q4 2016 and profitable in 2017.”

Christian Faes, CEO of the UK’s fourth largest marketplace lender LendInvest, told BI he thinks that loss-making platforms will face increased pressure to turn a profit to “prove that they can.” Remember, the growth that Zopa and Funding Circle are chasing could be disappearing.

LendInvest, which lets investors put money into short-term mortgages for people looking to renovate then sell properties, made a pre-tax profit of £3.1 million in 2015 and £1.1 million in 2014.

A spokesperson for RateSetter told BI: “We have recorded a profit for two consecutive financial years, proving that our model works and is sustainable. We are now investing to scale up, broaden, and deepen our market while continuing to deliver maximum value for investors.”

Is the dream of peer-to-peer lending beginning to fade?, (Thersa), Rated: AAA

Why is this a problem? Because unlike banks, which can make money on captive and repeat business in current accounts, credit cards and remortgages, P2P lenders need to continuously find and process new borrowers in order to earn commission. Should the sluggish times continue, the danger is that P2P lenders may soon be tempted to shoot for riskier borrowers in order to maintain their rate of growth. Remember that these platforms have investors of their own to placate and appease, many of whom will be pushing for decisive action to keep transaction volumes on an upward trajectory.

Finally, there is the question of where the money flows to on these platforms. Nesta and Cambridge University’s research is unequivocal: peer-to-peer lending has helped many thousands of people and businesses access loans in the face of rejection from high street banks. Yet only 20 percent of borrowers using P2P consumer lending platforms are women, and only a quarter earn less than £25k (note that the median wage of workers in the UK is  £27.5k). Although the makeup of borrowers using P2P platforms may simply reflect lending patterns across the financial industry, it challenges the theory that fintech innovations are inherently more inclusive.

The point of raising these red flags is not to pour cold water on the P2P lending phenomenon. Many of these platforms promise users a brilliant customer experience, faster decision making, more choice and – for some – better rates on loans than they can find elsewhere. Indeed, one of the greatest impacts P2P lenders have had is in changing the practices of long-standing incumbents. Take Wells Fargo, which recently launched a rapid turnaround system for small business loans, partly to match the responsiveness of P2P startups. These innovations should linger on even if P2P platforms fade away, and suggests the sector could catalyse positive transformation in financial services without needing to achieve a dominant position in the loans market.

No, this is not to dismiss the real achievements of P2P platforms. Rather, it is a plea to be pragmatic and realistic about what P2P lending – and all forms of fintech for that matter – can ultimately achieve without a more significant structural change in the nature of the financial industry. John Kay, in his brilliantly detailed new book Other People’s Money, rightly reminds us of the fundamental functions of finance: to enable people to save for the future, receive and send money, manage everyday risks, and borrow to invest in a real economy that truly creates value for others.

Ablrate & Access Commercial Finance Tout Origination Partnership, (Crowdfund Insider), Rated: A

Asset-backed peer to peer lender Ablrate has released information on an origination partnership with Access Commercial Finance based in Leeds. The arrangement is said to have generated over £2.5 million of loans so far this year. Ablrate launched as a niche P2P lender focusing on aircraft finance but has since branched out into capital equipment and property. Ablrate’s arrangement with Access is thus driving platform growth. Ablrate also offers a secondary market for investors in their loans.

The origination partnership is said to have resulted in sizeable deals for a range of sectors, including an £800,000 funding boost for a previously mothballed Eco Park, near Newcastle. The deal is expected to grow by £1.4 million. The waste management plant in Blaydon suffered following the collapse of Lehman Bros in 2013. The £800,000 in finance  raised through Ablrate and Access is expected to get the plant fully operational by October creating at least 30 jobs.

European Union

BBVA Plans New Management Revamp as Chairman Pushes Digital Bank, (Bloomberg), Rated: AAA

Banco Bilbao Vizcaya Argentaria SA is preparing its second management reorganization in 14 months as Chairman Francisco Gonzalez streamlines Spain’s second-biggest lender and accelerates its push into digital banking.

BBVA is pushing to offer more products and services online and via mobile phones as Gonzalez predicts few banks will survive competition from technology companies such as Google Inc. or Facebook Inc.

Vicente Rodero, current head of Country Networks, a unit created last year to boost the results of the group’s lenders in various countries, is set to leave his post. Chief Financial Officer Jaime Saenz de Tejada and Javier Rodriguez Soler, head of strategy and M&A, will be given additional responsibilities.

India

Fintech firms to take profit-first approach, say panellists at VCCircle summit

India’s fintech startups will also learn more from China, owing to similar demographic opportunities and challenges, unlike other industries that primarily learnt from the US, the panellists said. While there are no successful models yet, companies are experimenting with different models that include marketplace, bidding process and intermediary, they added.

Adhil Shetty, founder and CEO of Bankbazaar, said the popularity of the company is that its website received 90 lakh visitors in the month of March alone. Hence, it won’t be an extended arm as the platform offers products from partnering financial services companies as well standalone products.

Gaurav Hinduja, co-founder of Capital Float, which operates a hybrid model by lending online through its non-banking finance company, said these data sets will reduce the time taken from application to disbursal to 10 minutes. He added that social data can be used for verification as well as help in recoveries.

Rajat Gandhi of Gurgaon-based Faircent, which operates a peer-to-peer (P2P) lending platform facilitating borrowers and lenders through a bidding process, said that credit score would continue to be main criteria for disbursal of loans while data from social media can only be a value-add.

Vaddadi also said that fintech companies are increasing focus on customer acquisition, but added that this will not be done by burning cash.

The panellists also said that chances of default by borrowers are lower for fintech companies as these firms monitor the business performance of the borrower through analytics that can give out an early warning. Vaddadi said his firm has a 0.16% default rate.  [Comment: I do not believe this is true unless the fintechs really download the business’s information regularly and reliably. I am not aware of any company who really does this well. ]

Australia

Global banks: Is fintech a threat or an opportunity?, (Financial Review), Rated: AAA

UBS banking analysts surveyed 27,914 customers of more than 210 banks in 24 countries, along with 61 management teams from banks around the world. Local UBS banking analyst Jonathan Mott along with analysts in London, New York and Tokyo.

The survey found that a growing number of Australians are considering trying fintech services in the next 12 months: 15 per cent of Australian respondents said they will use a fintech money transfer business; 14 per cent said they will use a mobile payment fintech; 9 per cent will use peer-to-peer lending; and 9 per cent said they are likely to use a “robo adviser” for digital financial advice.

According to the management survey, 38 per cent of banks have a fintech partnership and this is expected to rise to 51 per cent over the next 12 months. The report said that in developed markets, bank returns on equity could be lifted from an average of 9.8 per cent to 10.2 per cent, as global cost to income ratios fall.

The survey found a high level of satisfaction from customers in the US and Britain using P2P lending which pointed to the threat to banks being real.
Australia’s largest P2P lender, SocietyOne, said this week it had appointed DDB Group to lift brand awareness through a TV, online, radio and print advertising campaign after the company, which is being led by former Westpac senior executive Jason Yetton, raised a further $25 million in equity in May.

UBS also predicted “the use of robo-advisers looks likely to grow exponentially” by between 70 and 150 per cent over the next year.

Cyber security is an area of concern, with 35 per cent of the customer respondents indicating a lack of trust in security as an explanation for not using fintech mobile payment services.

Author:

George Popescu