Friday November 3 2017, Daily News Digest

p2p lending volumes

News Comments Today’s main news: Kabbage sued over true lender doctrine. Orchard to launch online lending industry page on Bloomberg terminal. KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-6. DBRS assigns provisional ratings to SoFi Consumer Loan Program 2017-6. RateSetter changes approach to property loan defaults. Lendy breaks another record. MarketInvoice enters business loan market. Today’s main analysis: FT Partners’ […]

p2p lending volumes

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United States

Small Business Borrower Sues Kabbage (PYMNTS), Rated: AAA

A small business (SMB) in Massachusetts borrowing funds via marketplace lender Kabbage has sued the platform, igniting new debate in the conversation over the definition of a “true lender,” according to reports in the National Law Review on Tuesday (Oct. 31).

The small business that sued the parties is reportedly arguing that Celtic let Kabbage “rent” that bank charter to originate loans with excessive interest rates, despite Kabbage being the “true lender,” because Kabbage, not Celtic, bears the risk of loss. The plaintiffs are using state usury and consumer protection statutes, the publication said, as well as the federal RICO statute and Lanham Act.

Orchard to Launch Online Lending Industry Page on the Bloomberg Terminal (PR Newswire), Rated: AAA

Orchard Platform’s online lending industry data and insights will be made available to Bloomberg terminal subscribers, providing a wealth of information on an asset class that offers a number of potential investment opportunities.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-6 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”). This is a $591 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-6

Class Preliminary Rating Initial Class Principal
A-1 AA+ (sf) $315,000,000
A-2 AA+ (sf) $175,000,000
B A (sf) $75,000,000
C BBB (sf) $26,000,000

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-6 LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-6 LLC (SCLP 2017-6):

— $315,000,000 Class A-1 Notes at AA (sf)
— $175,000,000 Class A-2 Notes at AA (sf)
— $75,000,000 Class B Notes at A (sf)
— $26,000,000 Class C Notes at BBB (sf)

FinTechs Taking Larger Share of Personal Loan Market While Increasing Portfolio Risk-Return Performance (Globe Newswire), Rated: AAA

FinTech lenders continue to gain market share in the personal loan space while maintaining their portfolio risk-return performance. Results from TransUnion’s “Fact versus Fiction: FinTech Lenders” study were released today during the Digital Lending + Investing Conference in New York.

To better understand the personal loan market, TransUnion studied unsecured personal loan originations over the past several years, as well as more detailed portfolio performance between 2014 and 2016. The analysis differentiated between those loans issued by banks, credit unions, FinTechs and traditional finance companies to compare performance across lender types. The study found that the balance share of these loans originated by FinTechs had dramatically risen in recent years. At the end of 2016, FinTechs represented 30% of all personal loan balances, up from about 4% in 2012 and less than 1% in 2010. This trend continued through the first six months of 2017, with FinTechs now representing 32% of personal loan balances.

Share of Originated Personal Loan Balances

Timeframe/Lender Banks Credit Unions FinTechs Traditional Finance
2017 (Through June) 29 % 24 % 32 % 15 %
Full year 2016 26 % 23 % 30 % 21 %
Full year 2015 27 % 22 % 28 % 23 %
Full year 2012 35 % 32 % 4 % 29 %

As part of this study, TransUnion developed a coarse risk-return metric*. While loans provided by FinTechs experienced higher delinquencies than competitors, specifically within the lower credit risk tiers, TransUnion’s study found that they generated effective portfolio risk-return ratios that exceeded those of banks and credit unions. As of Q2 2017, FinTechs averaged an 8.7% return compared to 6.7% for banks and 6.3% for credit unions. Traditional finance companies average the highest return at 11.5%.

The study demonstrated how FinTechs focus their originations in the near prime and prime risk tiers.  As of Q4 2016, 59% of FinTech balances originated were in those two risk tiers. This is slightly higher than the 57% rate in Q1 2014.

Personal Loans Continue to Grow

The study also observed general personal loan trends. Personal loan total balances and consumer participation have both grown considerably. As of Q2 2017, 16.1 million consumers possessed a personal loan, compared to 14.8 million in Q2 2016 and 13.1 million in Q2 2015. Just five years ago in Q2 2012, approximately 9.8 million consumers had a personal loan. Total outstanding balances have risen from about $45 billion in Q2 2012 to $106 billion in Q2 2017.

While conventional wisdom holds that personal loan borrowers fall in the subprime risk bucket, TransUnion data through Q2 2017 show that personal loan adoption is greatest in the near prime (26%) and prime and above (49%) risk levels. Subprime constituted only 25% of such loans.

The most recent TransUnion data show that the number of lenders issuing personal loans has decreased in recent years from 7,245 in 2012 to 6,896 in 2015 and 6,680 in 2016. However, the number of lenders issuing large volumes of personal loans (at least 10,000 annually) has nearly doubled in the last 5 years from 68 in 2012 to 128 in 2016.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

October was another very active month for the FT Partners team as we announced seven significant FinTech transactions. We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    6th Avenue Capital Secures $ 60 Million Commitment For Merchant Cash Advance Funding (AltFi), Rated: A

    6th Avenue Capital, LLC (“6th Avenue Capital”), a provider of small business financing solutions, announced today its securement of a $60 million commitment from a large institutional investor. The investor made their commitment based on 6th Avenue Capital’s industry-leading underwriting, compliance standards and processes. 6th Avenue Capital will draw from this commitment to offer merchant cash advances to small businesses through its nationwide network of Independent Sales Organizations (“ISOs”) and other strategic partnerships, such as banks and small business associations.

    Success of CFPB data-sharing guidance relies on how it is enforced (American Banker), Rated: A

    This month, the Consumer Financial Protection Bureau took an important step toward making that potential a reality with its release of consumer-authorized data-sharing and aggregation principles. In the principles, the bureau reiterated consumers’ right to share data, recognizing that connectivity is the underlying magic fueling the consumer fintech revolution. The guidelines will promote innovation, competition and consumer control.

    Data sharing often requires consumers to provide their bank account usernames and passwords to third parties. In the guidance, the CFPB clarified that granting consumers access to their data does not necessarily mean sharing login credentials. At the same time, the bureau made it equally clear that if banks and others want to prevent the sharing of credentials, they need to find another, more secure way to provide access. Both banks and data aggregators should have an incentive to eliminate the use of credentials.

    Third, banking regulators could update their third-party vendor risk management guidelines to clarify the kinds of due diligence banks are required to conduct on parties with whom they share data.

    Elevate Credit Third Quarter 2017 Earnings Release Available on Its Investor Relations Website (CNBC), Rated: A

    Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”), today announced financial results for the third quarter ended September 30, 2017. Elevate has posted its third quarter earnings release to its Investor Relations webpage at 

    Fintech Brokerage Robinhood Launches Spotify-Like Web Platform (Benzinga), Rated: A

    Robinhood, the fintech brokerage that offers commission-free trading through a mobile app, announced Wednesday it’s launching a web platform.

    Bhatt says the web trading platform is primarily geared towards informing people who are interested in investing about the stock market. However, the company faces an interesting product design challenge, in that about half of its users have invested previously on another platform.

    LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q3 2017 (Business Insider), Rated: A

    LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the third quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

    Mortgage Category

    #1 Winner:
    Busey Bank

    Personal Loans Category

    #1 Winner:
    Best Egg

    Auto Loans Category

    #1 Winner:
    RefiJet

    Online lenders shrug off scandals to increase US market share (Financial Times), Rated: A

    The online lenders set up to upend US retail banking in the wake of the financial crisis are still expanding in spite of scandals and setbacks at some of the biggest names in the business.

    Financial technology groups originated $15bn of personal loans in the first half of the year, according to figures published on Thursday by TransUnion, the credit bureau whose database covers the borrowing habits of 220m consumers.

    That was almost a third of the total US market for new personal loans — a bigger share than banks or credit unions or other traditional consumer finance companies — and compares with just 4 per cent in 2012 and 28 per cent in 2015.

    R3 to take on Ripple with cross-border payments blockchain (American Banker), Rated: A

    R3 is working with 22 of its member banks to build a real-time, cross-border payments solution on Corda, the consortium’s “blockchain inspired” distributed ledger.

    The banks include U.S. Bank, TD Bank, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank and Woori Bank, R3 said Tuesday.

    What type of data is fair in credit models? (American Banker), Rated: A

    It’s long been a mantra in the fintech community: Traditional underwriting models that rely heavily on conventional credit scores leave out people who haven’t built up a credit history. A percentage of these people are creditworthy, but without a history to go on, the credit bureaus haven’t created profiles of them yet.

    To assess whether unscored people can repay loans, lenders are increasingly looking at “alternative data” — information that comes from someplace besides a traditional credit bureau that can help predict how a potential ….

    Foundation Capital Leads CoverWallet Series B Financing (Foundation Capital), Rated: A

    Which is why we’re excited to have led the Series B for CoverWallet, an online insurance broker for small businesses which is upending the industry.

    Small-to-medium business (SMB) insurance is a profitable, but highly fragmented $100 billion/year market. At the present, SMB insurance is sold through 40k+ brick-and-mortar insurance brokers, which employ 500k+ agents and move 99% of premiums. The typical SMB insurance application has 27 pages, and is completed while having “the talk” with the agent, which will include many upsell & cross-sell attempts. The typical SMB insurance quote takes 7-10 days. For SMB owners, this process is time consuming and painful.

    Affirm Now on Apple and Android (NewsCenter.io), Rated: A

    Affirm, a popular web service that allows users to buy online and pay off their purchases in fixed monthly payments, has launched their Android and iPhone app.

    Remitly Raises up to $ 115M in Series D Funding (FINSMES), Rated: A

    Remitly, a Seattle, WA-based independent digital remittance company, is to raise up to $115m in Series D funding.

    The financing – subject to applicable third party and regulatory approvals – will be led by Naspers’ fintech investment division PayU, a global online payment service provider, with participation from existing investors Stripes Group, DFJ, and DN Capital. In conjunction with the funding, Laurent le Moal, PayU CEO, will join Remitly’s board of directors.

    New, New Real Estate Crowdfunding Platform (Business Insider), Rated: A

    When you see prominent investors such as George SorosLarry Silverstein and Goldman Sachs participating in the real estate crowdfunding business – it means something. So, let’s follow the smart money. The real estate crowdfunder that everyone is talking about now is CityVest, which claims a top pedigree of founders and investors. And CityVest.com is living up to its mission – Smarter Real Estate Investing.

    CityVest provides wealthy individuals with online access to institutional real estate funds and the higher rates of return they generate.

    Which States Do Home Buyers Want to Move to—and From? (Realtor.com), Rated: A

    Prospective home buyers overwhelmingly want to head south, according to a recent LendingTree analysis. The online loan marketplace looked at the 1.5 million mortgage requests it received from October 2016 to October 2017 to come up with the results.

    Which state do home buyers most want to move to?

    But of all the Southern states, which was the most desirable? Drumroll please … that would be Florida. The Sunshine State was the top destination for folks from 18 states, or about 9.14% of those looking at loans on LendingTree.

    Which state do home buyers most want to leave?

    Vermont residents were the most likely to want to hightail it out of the Green Mountain State. Despite its popular ski resorts, only about 76% of locals were looking for in-state mortgages.

    Which state do home buyers most want to stay in?

    Texans were the most happy of any state’s residents to stay put. About 92.5% of folks looking for potential mortgages wanted to stay within Texas, according to LendingTree’s report.

    Real Estate Investing For The Tech-Minded (Forbes), Rated: A

    So as a techie, how does one go about evaluating not just the real estate but also the platform offering the investment?

    That’s why it’s critical for real estate investing platforms to be willing and able to answer questions from prospective investors — even those would-be investors without a ton of prior real estate knowledge. These companies should take a page out of Amazon’s book and develop a customer obsession.

    Be leery of any cliché claims of leveraging big data to automate underwriting. Underwriting is as much science as it is intuition/experience, and the best commercial real estate professionals have a carefully tailored mix of both.

    In the long run, the track records of the platforms will speak loudest.

    Steven Dupree was SoFi’s first marketing executive and VP of marketing for 3 years. He and his growth-oriented team took SoFi from originating 10 loans a day to over 1000.

    The three most basic ingredients for being able to succeed in FinTech are:

    1) “Good enough” technology

    2) Tremendous capital markets expertise

    3) Some sort of customer acquisition strategy

    Companies like Experian and Equifax know if you have loan balances, and specifically they know if you have student loan balances. We sent pre-screened offers to prospects with outstanding student loan debt through physical mail about how SoFi could help them with those loans.

    Plan Would Take Payday Lending Interest Rates From As High As 600% to 28% (StateNews.org), Rated: A

    Several community groups rallied to show their support for a bipartisan bill they think is needed reform against predatory lending.

    The bill would cap the interest rate of payday lenders at 28% and close any loopholes around that cap.
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    Filene, QCash Financial, CFSI Offer Free Webinar on the Benefits of Small-Dollar Lending (BusinessWire), Rated: A

    QCash Financial, a CUSO providing automated, cloud-based, omni-channel small-dollar lending technology for financial institutions, announces it will co-host a free webinar with Filene Research Institute and the Center for Financial Services Innovation to discuss the opportunities for credit unions in offering small-dollar lending on November 14.

    During the webinar, QCash Financial will address our industry’s impact and opportunity to deliver small dollar loans. QCash Financial, the Center for Financial Services Innovation and Filene will collaborate to discuss the omni-channel lending solution that serves members in search of small, short-term unsecured loans.

    Registration information can be found at filene.com. The webinar is scheduled from 2 p.m. CST / 12 p.m. PST until 3 p.m. CST / 1 p.m. PST.

    Ken Rees, CEO of Elevate, to Speak at Dallas Techweek 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 speak on a panel session at Dallas Techweek on Thursday, November 2, at 9:15am CT. The panel will focus on data intelligence, breaking down the hype around data science, and exploring ways companies can turn that hype into actionable business intelligence.

    Rees will be joined by local tech talent and founders, including Clarisa Lindenmeyer, Chief of Strategy/Partnerships at Launch DFW; Sravan Ankaraju, President of Divergence.Academy, CEO of Divergence.AI; Dave Copps, CEO of Brainspace; and Steve Hebert, Co-Founder & CEO of Nimbix, Inc.

    Elizabeth Warren Warns: Navient Deal A Danger To Student Loan Borrowers (International Business Times), Rated: A

    U.S. Sen. Elizabeth Warren warned Wednesday that the nation’s largest student loan servicer has positioned itself to stealthily strip consumer protections from unwitting borrowers across the country. In an interview with International Business Times, she also said the loan servicer, Navient, should not be permitted to be a government contractor handling student loans on behalf of the U.S. Department of Education.

    The Massachusetts Democrat was sounding an alarm about Navient’s recent acquisition of online lender Earnest. She said the transaction opened up the possibility that the company will try to boost its profits by selling debtors on refinancing their current federal student loans with the company’s own private loans — the kind that she said to do not necessarily permit income-based repayment options.

    BrightPlan Launches ‘Hybrid-Robo’ Advisory Service (Plan Adviser), Rated: B

    A new robo-advisory platform has hit the market, under the moniker BrightPlan.

    Important to note, according to the firm, clients are not required to invest through BrightPlan in order to receive financial planning advice. They can manually input external account balances or link external accounts from more than 10,000 financial institutions to BrightPlan, which will monitor goal progress and provide advice to stay on track.

    Will a robot take your job? These startups hope so (PitchBook), Rated: B

    Avant wants to replace loan officers

    Avant has created an online lending platform that uses Big Data and machine learning algorithms to streamline the loan decision process helping borrowers consolidate debt through personal loans. The company, led by CEO and co-founder Al Goldstein (pictured), raised $325 million in Series E financing back in September 2015, with General Atlantic leading a round at a $2 billion valuation.

    Avant isn’t alone, with competitors like publicly traded Lending Club (NYSE: LC) and VC-backed Kabbage using a similar strategy: automating the credit creation process.

    Dreiling and Stamets join Attune (Royal Gazette), Rated: B

    Two new appointments have been made at data-enabled platform Attune, the company jointly created last year by American International Group, Hamilton Insurance Group and Two Sigma Investments.

    Martha Dreiling takes on the role of head of analytics and corporate operations, while Richard Stamets has been appointed head of underwriting strategy.

    United Kingdom

    RateSetter changes approach to property loan defaults (P2P Finance News), Rated: AAA

    RATESETTER is changing the way it deals with defaulted property development loans, which could involve taking control of the project and completing it itself.

    The peer-to-peer lender said on Wednesday that if a property development is only partially completed and has gone into default, it will now examine whether maximum value would be delivered via an immediate sale or by completing the development and then selling it.

    Lendy Update: Breaks Previous Monthly Loan Repayment Record; Recovers £20 Million in October 2017 (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer property platform Lendy announced on Thursday it has broken all previous records for loan repayments generated in any one month, recovering £20 million in total in October 2017 alone. The online lender reported that this exceeds its previous September 2016 high of £14.5 million. The record figure includes repayments on P2P loans on three caravan parks in Christchurch, Dorset, totaling £7.6 million and a Manchester mill of £1.35 million.

    This UK fintech is taking on big banks with business loans — and one key EU law is driving it (CNBC), Rated: AAA

    A digital invoice finance platform in the U.K. will provide business loans to its customers for the first time, it was announced Wednesday.

    The firm said it would expand into the business lending market, pitting it against established players such as U.S. listed peer-to-peer lender LendingClub and Britain’s Funding Circle. The latter raised £82 million ($100 million) in funding from venture capital investors earlier this year.

    CEO and co-founder Anil Stocker told CNBC that MarketInvoice will take advantage of an incoming European Union regulation called the Second Payment Services Directive (PSD2), which forces banks to open up data about their customers to third party companies.

    Citigroup Bets Millions on U.K. Mortgage Lender (Bloomberg), Rated: A

    Brexit may be roiling Westminster and inflating prices on supermarket shelves, but don’t tell that to financial institutions eyeing the U.K.’s burgeoning online-lending industry.

    In the latest sign of confidence in the sector, Citigroup Inc. has agreed to provide a fintech firm called LendInvest Ltd. with funding for mortgages, the startup said in a statement Wednesday.

    Citi Provides Warehouse Facility to LendInvest in Buy to Let Expansion (Crowdfund Insider), Rated: A

    LendInvest, a Fintech marketplace platform for property finance, has agreed a long-term warehouse facility with Citi boosting its entry into the UK’s £40 billion buy-to-let (BTL) market.

    The perils and profits of of peer-to-peer lending (The Spectator), Rated: AAA

    ‘We’re taking business from the banks, from the invoice discounters and from the traditional suppliers of finance, in ever larger amounts,’ says Angus Dent, chief executive of ArchOver, a P2P lender that launched in September 2014. ‘We only lend to companies with strong balance sheets and we only lend against accounts receivable (ARs). We will loan up to 80 per cent of the value of the ARs. Once the loan is made the ARs must be maintained at 125 per cent of the value of the loan, monitored by us on a monthly basis. This provides a quickly realisable asset for our investors in case the borrower gets into difficulties over repaying for the loan.’ The minimum amount that ArchOver expects clients to invest is £1,000 per project.

    For Anil Stocker, chief executive and co-founder of MarketInvoice, P2P lending against receivables (amounts owed to a business) offers a particularly interesting investment class ‘because it’s of short duration, a liquid product, with invoices typically taking 45 to 50 days to be paid.

    Source: The Spectator

    Lenders must help brokers meet specialist challenge – LendInvest (Mortgage Solutions), Rated: A

    IMLA found that lending by specialists has grown by an average of 19% each year from 2009 to 2016, with a total of almost £17bn lent last year. That’s enormous growth from a sector that was particularly badly dented by the effects of the financial crisis.

    Even with these enormous annual increases in lending, the market share of these specialists remains modest. According to IMLA it has grown from 3.5% in 2009 to 6.8% in 2016, and that still lags significantly below the levels seen before the onset of the financial crisis.

    UK fintechs take market share from dominant high-street banks (Financial Times), Rated: A

    Britain’s leading financial technology start-ups are celebrating a record-setting week as they accelerate their push to take market share from high-street banks in areas such as payments and lending.

    TransferWise will on Thursday announce that it has collected $280m from investors, a record fundraising round for a UK fintech, to finance expansion of its cross-border payments service into more countries around the world.

    Meanwhile, Funding Circle has for the first time outstripped net new lending by the major high-street banks to UK small businesses, according to figures released by the Bank of England this week and data provided by Europe’s largest peer-to-peer lender to SMEs.

    Britain’s small businesses bank on alternative finance options (Finextra), Rated: A

    Of 1000 small biz owners quizzed by WorldPay, more than half say that they are planning for growth in 2018, yet 52% admit to being concerned that the traditional routes to finance, such as bank loans, are not going to be as easily available in the coming year.

    While 21% of business owners aged 44 or under say they’re still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17%) say they’re more likely to look at crowd-funding, while 11% prefer P2P lending, and six per cent say they favour business cash advance.

    HSBC unveils robo-advisor plans (Business Insider), Rated: A

    HSBC’s head of retail wealth, Dean Butler, provided his perspective on automated advice, and the bank’s plans for new products in the area, at the UK Robo-Advice Innovation Forum on Wednesday, attended by BI Intelligence.

    Source: Business Insider

    Landbay & Buy to Let Club Complete Lending to New Southgate Building in Less Than Two Months (Crowdfund Insider), Rated: A

    Earlier this week, Landbay and Buy to Let Club completed lending to a new building in Southgate, a suburban area of north London, in under two months. The initial case was reportedly submitted on the broker portal by Buy to Let Club on August 24th.

    Fintech firm MarketInvoice enters business loans market (Asset Finance International), Rated: A

    Fast-growing fintech firm MarketInvoice has launched a new business loans service that expands its solutions beyond invoice finance.

    Businesses will now be able to obtain unsecured business loans from £10,000 to £100,000 over a 12-month term, with no early repayment fees.

    By expanding into the £35 billion business loans sector, MarketInvoice aims to increase support for businesses which need working capital around their invoice finance requirements.

    Natural evolution (P2P Finance News), Rated: A

    Stuart Lunn, co-founder and chief executive of Edinburgh-based P2P business lender LendingCrowd, sees the benefits of both.

    “For P2P investing to become truly mainstream, it’s essential to simplify the products on offer and enable greater comparability between opportunities,” he asserts.

    “Passive products force greater diversification and I think that will benefit the sector as a whole.”

    Funding Circle and RateSetter make LinkedIn’s ‘Top 25’ companies list (P2P Finance News), Rated: A

    Funding Circle and RateSetter have been placed at number eight and number 21, respectively, in the ‘LinkedIn Top 25 Companies – Startups’ list, which was released on Thursday morning.

    Funding Circle was the highest-ranking P2P platform, and it was praised for funding more than 28,800 companies over the past seven years, with more than £2.8bn allocated to borrowers.

    CEO switch for online lender Patch of Land (AltFi), Rated: A

    Jason Fritton returns to his former post as CEO, as Paul Deitch steps down.

    P2P firm Assetz continues profitability (AltFi), Rated: A

    Assetz Capital notches seven figure pre-tax profit during the six months from April to September 2017.

    Durham’s Atom Bank named by LinkedIn as one of UK’s top 25 start-ups (ChroncleLive), Rated: A

    A North East company has been named by social media site LinkedIn as one of the country’s 25 most disruptive companies.

    Durham ’s Atom Bank, which is shaking up the banking world with its mobile-based app and personalised services, is named alongside companies including Deliveroo, Uber and Airbnb, on a list of start-ups which LinkedIn says are changing the UK business landscape.

    Online retailer Asos offers buy now pay later option with Klarna (Finextra), Rated: B

    Today, leading European payments provider Klarna has announced a UK partnership with ASOS – one of the world’s leading destinations for fashion loving 20-somethings.

    The news means that UK customers with the iOS or Android ASOS app can now use Klarna’s ‘Pay later’ solution to pay for their items up to 30 days later – with no interest or fees.

    Alternative lender Sancus announces new managing director (AltFi), Rated: B

    The alternative finance services firm has announced that Dan Walker will take over from current MD Caroline Langron in January 2018.

    The group is part of GLI Finance, which acquired peer-to-peer lending platform FundingKnight in 2016. Earlier this year, FundingKnight was moved into Sancus BMS Group, was awarded full FCA authorisation in July.

    China

    Chinese Listed Banks still create more profits than BAT (Xing Ping She), Rated: AAA

    In recent years, with the rise of Internet financial and the change of macroeconomic environment, the traditional commercial banks did go through a “severe winter”. Since 2011, banking climate index has been down all the way. It is not until 2017 that the new season of spring is coming.We selected 38 listed Chinese Banks in exchange of Shanghai, Hong Kong and Shenzhen as the performance comparison samples, and analyzed their comprehensive profitability based on the financial data of the first half of 2017.During this time, the total net profit of the 38 banks selected in this paper was 823.93 billion RMB, up 4.14 percent from the same period last year. The chart below described the profit data of all the 38 banks in the first half of 2017.


    Profitability Banks Ranking
    Among the 38 listed banks, we can also find the Top10 earning banks as follows, including 5 large-scale commercial banks and 5 joint-equity commercial banks. In addition, the net profit of Ping An Bank and Beijing Bank has reached the threshold of 10 billion RMB.


    Chinese listed banks VS internet giants in profitability
    According to the total value and earning data of the selected 38 listed banks as follow, their total market capitalization is about 10 trillion RMB, and the total net profit was 823.93 billion RMB. That means the net profit ratio was about 0.082.

    As for the BAT giants which are closely watched in the Internet industry, the three Internet companies are worth about 6.5 trillion RMB in total for the first half of 2017, and the net profit reached 52 billion RMB. That means their net profit ratio was just 0.008, much lower than the listed banks. Obviously, Banks still have an advantage over emerging Internet companies in terms of profit creation.

    In fact, research shows that the rise of the Internet financial companies has little impact on the profitability of large commercial Banks and rural commercial Banks, while has a great influence on city commercial Banks, and Joint-stock commercial Banks have been promoted instead because they can seize the Internet financial opportunities. In general, though the development of Internet finance has brought adverse effects on the profitability of commercial Banks, and also forced it to actively adjust the profit model and promote the diversified development of the profit structure.

    Data resource: Wind Database

    Another Chinese P2P lender! Senmiao Technology files for a $ 20 million IPO (NASDAQ), Rated: A

    Senmiao Technology, a early-stage Chinese marketplace for peer-to-peer lending, filed on Monday with the SEC to raise up to $20 million in an initial public offering.

    China pours millions into facial recognition start-up Face++ (Financial Times), Rated: A

    Chinese facial recognition start-up Megvii Face++ has raised $460m in an investment round led by a government fund, as the country pours money into efforts to become an artificial intelligence superpower to rival the US.

    The Beijing-based Face++ said on Wednesday that it had raised money from China State-Owned Venture Capital Fund and the China-Russian Investment Fund, which is backed by the sovereign wealth funds of both countries. Private investors including Alibaba’s payments affiliate Ant Financial also participated.

    Chinese listed company transferred shares of Wei Dai Network, making over 1B RMB (Xing Ping She), Rated: A

    On October 17, Handing Yuyou(300300.SZ), a listed company that was suspended from trading, began to transfer its assets of internet finance continuously. On October 30th, the company announced that it would transfer a 2 percent stake in the Wei Dai Network for 170m RMB, and then they announced to transfer a 1.5 percent stake in the Wei Dai Network for 127.5 million RMB. Through the two deals, Handing Yuyou(300300.SZ) will receive nearly 300 million RMB in cash. Deducting the previous investment costs, Handing Yuyou(300300.SZ) won over 100 million RMB in less than half a year. In the past three years, according to the company’s history of the investment in Wei Dai Network, we can find that the company has earned at least 10 times to the original investment.

    The transferee of this transaction is Beijing Qianshan Xinyuan Investment Management co., LTD. According to the public information, Beijing Qianshan Xinyuan Investment Management co., LTD. was established in 2015 with the registered capital of 10 million RMB. Its parent company, Qianshan Capital Management co., LTD is a private company registered in 2016. The parent company also have the other several subsidiary corporations, including Qianshan Venture Investment Management co., LTD., Beijing Qianshan Wealth Management co., LTD., etc. Currently, the parent company has a total capital size of 1 billion RMB.

    European Union

    Mintos Scraps Secondary Market Fees (P2P-Banking), Rated: AAA

    Starting from today, November 1, 2017, we have removed the 1% fee for selling loans on the secondary market of the Mintos marketplace. This means from now on, there are absolutely no fees for investing through Mintos.

    Source: P2P-Banking

    Orange is the new bank? Telecoms giant ventures into lending (Business Insider), Rated: A

    Telecoms giant Orange launches its own bank on Thursday, aiming to win 25 percent of France’s online banking market by capitalizing on the rising use of smartphones to steal share from established lenders with inferior technology.

    Orange is starting from a small base – Coisne says it has 25,000 customers have expressed interest ahead of the launch, a tiny fraction of the company’s 21 million mobile clients. But the timing of its entry gives some room for optimism.

    In France, 793.4 million online banking e-payments were made last year according to the European Central Bank, up from 586.2 million in 2014.

    INFOGRAPHIC: FINTECH AND THE FUTURE (Irish Tech News), Rated: A

    The GetLine Network  a decentralized P2P lending platform, recently reached out to us with one of their infographics on FinTech, and we thought it was appropriate and timely for our audience.

    Financing and loans are even being re-thought of with new forms of capital raising, such as ICOs, crowdsourcing/crowdfunding, and P2P lending, making banks and legacy financial institutions even less needed.

    Source: Irish Tech News
    International

    Lendio Gives supports Kiva borrowers (Bankless Times), Rated: AAA

    Small business loan marketplace Lendio announced it has provided more than $25,000 in loans to over 1,200 small business owners in 75 countries around the world through its employee-based Lendio Gives program in partnership with Kiva.

    The top five sectors supported by Lendio’s funding are agriculture, food, retail, clothing, and services. Of the loans Lendio has funded, 86 percent have gone to women or women’s groups. The top countries Lendio has supplied funding to include Zimbabwe, Peru, Haiti, the Democratic Republic of Congo, Ecuador, the Philippines, Kenya, El Salvador, and Senegal.

    International P2P Lending Volumes October 2017 (P2P-Banking), Rated: AAA

    Thincats reached the milestone of 250 million GBP loans originated since launch.

    This month I added Bolden.

    Source: P2P-Banking

    Fintech and Cross-Border Payments (IMF), Rated: AAA

    To gauge the IMF’s most recent analysis: A speech last month, at the Bank of England, by the IMF’s Managing Director—Christine Lagarde—analyzed potential challenges posed by fintech innovations to central banking.

    In my remarks here today—focusing on implications of fintech for cross-border payments—I’ll explore three broad areas: [1]

    • First, a sketch of the economic framework on how fintech applications will affect financial services and the market structure.
    • Second, the current landscape of cross-border payments, and the possible evolution of cross-border payment systems; and
    • Third, the role of central banks, themselves, and the possible reasons for them to issue their own digital currencies.

    Alternatives assets such as P2P loans to double in volume by 2025 (AltFi), Rated: B

    Alternative asset classes – in particular, real assets, private equity and private debt – will more than double in size, reaching $21.1trn by 2025, accounting for 15 per cent of global AuM as investors diversify to reduce volatility and target specific return and risk outcomes, according to research by PwC.

    Zelle adds major tech partners to roster (Banless Times), Rated: B

    Zelle – a new, real-time payments network from bank-owned Early Warning Services – has added ACI Worldwide, CGI, D3 Banking Technology, and IBM to its growing list of technology partners.

    India

    One Size Fits All? Regulating Peer-To-Peer Lending Platforms (India Corporate Law), Rated: A

    Briefly, as per the Master Directions:

    • It is now mandatory for entities proposing to undertake this business to be registered as ‘NBFC-P2P Lending Platforms’ with the RBI (NBFC-P2P). To ensure business continuity, existing players have been given a period of three months to apply for this licence. Applicants will be scrutinised for scalable and secure technological capabilities, financial standing as well as fit and proper management.
    • Fundamentally, the NBFC-P2P is expected to operate only as an intermediary and not undertake any lending activities itself or hold any funds of its participants (lenders or borrowers) on its books. Towards this end, an escrow mechanism for movement of funds has also been envisaged.
    • The exposure of each lender and loans (not exceeding a three year maturity period) availed by each borrower across all NBFC-P2Ps has also been capped at INR 10 lakhs, with each borrower not permitted to avail more than INR 50,000 per lender.
    • In addition, directions also prescribe that NBFC-P2Ps adopt minimum standards of transparency, disclosure requirements and fair practices.

    Impact on Aggregators

    • To the extent P2P lending platforms are servicing individuals and/or unregulated entities, there is merit in regulating such operators to contain any systemic risks. However, there are existing players in the market who primarily service regulated financial institutions (viz. banks and NBFCs) as lenders. The Master Directions fail to recognise this distinction.
    • Separately, banks and NBFCs today use distribution channels including web-based loan aggregators.

    SBI partners with Primechain Technologies and Intel to adopt blockchain-driven KYC (The Times of India), Rated: A

    PrimechainTechnologies announced on Wednesday that the country’s largest bank, State Bank of India (SBI), will adopt blockchain technology to manage the mandatory Know Your Customer (KYC) details in its system. Intel Corporation will act as a technology provider to facilitate the implementation.

    Asia

    P2P lender PeopleFund aims to change landscape (The Investor), Rated: A

    Korea’s accumulated peer-to-peer lending reached 1.47 trillion won (US$1.31 billion) by end-September as more and more borrowers are embracing the new, more convenient platforms for connecting with investors.

    Considering that the figure accounts for only 60 members of the Korea P2P Finance Association among the industry estimates of 130 lenders, the market is actually bigger. It also reflects a sharp upward trend; back in June 2016, when the association first began compiling data, accumulated loans granted by 22 members stood at just 152 billion won.

    Against this background, Kim founded PeopleFund in March 2015. Since then, the bank has been on a roll. On Nov. 1, its accumulated loans stood at 121 billion won, compared to 19 billion won in February. It’s the No. 3 player in the local industry.

    Africa

    SME failure rate set to spike unless funding issue is addressed (Engineering News), Rated: AAA

    The South African SME sector is set for a major crisis unless access to adequate business funding can be ensured as a matter of urgency. This was the key takeout from the just-released Key Funding Challenges for South African SMEs 2017 report developed by online lenderLulalend.

    “76% of respondents to our national survey of SMEs said they had undergone a tedious months-long paperwork-heavy process in applying for businessfunding from traditional lenders, only to have their applications denied.

    Considering access to credit was the #1 business challenge for nearly three out of every five SMEs surveyed, this disconnect between the needs of business owners and the lenders that have traditionally supported them is creating conditions of high risk and volatility.”

    Authors:

    George Popescu
    Allen Taylor

Monday September 11 2017, Daily News Digest

Zopa trailing 12-month net return

News Comments Today’s main news: Equifax cybersecurity breach. Goldman to take on UK retail banks. China cracks down on online lenders, cryptocurrency dealers. Klarna is testing credit cards with employeees. Today’s main analysis: CECL overview. Today’s thought-provoking articles: Consumers who go to Equifax for help after data breach may not be able to sue. The data behind Zopa’s lowered return […]

Zopa trailing 12-month net return

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

News Summary

United States

Equifax Cyber Incident (Equifax Email), Rated: AAA

At Equifax, we recognize that consumers and customers expect us to provide superior data security, and we work hard to do that every day. Unfortunately, on September 7th, 2017, we announced a cybersecurity incident involving consumer information.  This cybersecurity incident strikes at the heart of who we are and what we do.  Above all else, our first priority is to support consumers and you, our customers, by doing what we can to make this right.

What happened?

On July 29, 2017, Equifax identified a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Equifax discovered the unauthorized access and acted immediately to stop the intrusion. We promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. We also reported the criminal access to law enforcement and continue to work with authorities.

What information may be impacted?

The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Criminals also accessed credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.

Additional Information:

We have found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.  In addition, we have found no evidence that this cybersecurity incident impacted Equifax’s core consumer or commercial credit reporting databases, including,  ACRO, Workforce Solutions, including The Work Number payroll data, NCTUE, IXI and  CFN.

Where can I learn more?

We have set up a dedicated website at www.equifaxsecurity2017.com:

  • To see if you are potentially impacted, you can click on the Potential Impact Tab
  • To enroll in complimentary identity theft protection and credit file monitoring services and how to find out if your personal information may have been impacted, you can click on the Enroll Tab.
  • To learn more about the complimentary offering, you can click on TrustedID Premier Tab. TrustedID Premier provides you with copies of your Equifax credit report; the ability to lock your Equifax credit report; 3-Bureau credit monitoring of your Equifax, Experian and TransUnion credit reports; Internet scanning for your Social Security number; and identity theft insurance.

To speak to someone directly, we have also established a call center at 866-447-7559, available every day (including weekends) from 7 a.m. – 1 a.m. EST, for individuals to ask questions.

Consumers Who Go to Equifax for Help After Data Breach May Lose Their Right to Sue (Money), Rated: AAA

On Thursday credit bureau Equifax said a data breach put personal information of 143 million people at risk. Now its response is drawing more outrage, as lawmakers and others accuse it of encouraging consumers who come to it seeking answers to sign away their chance to seek recourse in the courts.

Following the breach, which compromised tens of millions of Social Security numbers and other valuable data, Equifax set up a website to help worried consumers determine whether or not their information was at risk. That website encouraged visitors to sign up for a program known as TrustedID Premier, the company’s credit monitoring service, which provides automated alerts to credit changes and up to $1 million in ID theft insurance. That’s where the trouble began.

TrustedID’s terms of service include an arbitration clause, insisting that customers agree “all claims, disputes, or controversies…shall be finally settled by arbitration” rather than a court of law. Such clauses aren’t unusual for credit monitoring services — or indeed many other consumer products. But in this circumstance, it created the impression that Equifax was asking consumers it had harmed to surrender their legal rights — including becoming part of a class-action law suit — before it would agree to help them.

One key legal avenue that arbitration clauses typically close off for consumers is the class-action lawsuit. That could be significant for Equifax — at least on one proposed class-action lawsuit was already filed against the company late Thursday, according to Bloomberg.

Equifax free credit monitoring service has some concerned (News Channel 6 Now), Rated: A

The 143 million Americans whose information was compromised by the Equifax data breach may still be on edge even with the free credit monitoring service being offered by the company.

Everything from names, addresses, social security numbers and credit card numbers were hacked in the Equifax data breach.

Kuehner said right now the company is sending out letters letting people know if they have been potentially affected. They can also check online at equifaxsecurity2017.com.

However, it is not only the breach that has consumers concerned, it is the company’s response.

“We’re taking unprecedent step of offering every U.S consumer in the country a comprehensive package of identity theft protection, ecredit file monitoring at no cost,” said Rick Smith, Equifax Chairman, and CEO, in a statement released online.

CECL Overview (PeerIQ), Rated: AAA

This past Wednesday, FASB released an update to the current expected credit losses methodology (CECL) for estimating credit loss allowances. This new accounting standard, which was initially published in June 2016 (in conjunction with regulators such as the FDIC, OCC, and NCUA), will apply to financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt. Once in place, these assets must be held on the balance sheet net of an expected loss account. Changes are effective for fiscal years beginning after Dec 15, 2019, for all for-profit companies that file with the SEC.

Once firms adopt CECL, management will have increased discretion around forecasts and ultimately net asset carrying value. This represents a dichotomy for investors. Assets should be carried at more accurate levels and better reflect the organization’s financial position. However, management estimates will significantly affect the balance sheet and income statement.

The major change with the CECL methodology is that organizations are expected to include forward looking information when determining credit losses. Banks will need to calculate expected credit loss at the loan level for the entire life of the loan and then aggregate with similar instruments.

Since ECL is calculated for the life of the financial asset, rather than the annual rate, almost all held-to-maturity instruments that are not risk-free will have a credit loss allowance. These long-dated assets may appear more volatile than financial statement users are accustomed to because their impairment has large implications for the balance sheet and income statement. Under the new regulation it will be more important to have correct, auditable, and explainable expected credit losses.

Source: PeerIQ, FASB, FDIC

Overall, we applaud the coming changes to US GAAP and expect investors to respond favorably.

Square Becoming a Bank Is Brilliant. Here’s Why (Inc.), Rated: A

However, there is much more to this story. In fact, this strategic decision could be one of the best moves the company has made. Square’s decision could start a revolution and revamp the entire financial institution structure to address the changes in the transaction and lending environment.

Square essentially is proving how the traditional bank is no longer necessary. By becoming their own bank, they do not have to seek out a separate institution as a strategic partner. They don’t have to add specific business banking services to their portfolio.

Although the banking sector has tried, most banks still have too many fees and capital requirements to provide business accounts with their needs. Numerous freelancers or startups just can’t satisfy those requirements because banks are still designed with the larger business in mind.

More small businesses need smaller sized loans to tap into for their launches and expansion. Recognizing how peer-to-peer lending has grown together as an entire industry illustrates how ripe the financial industry is for more competition. Peer-to-peer lending is more personal, with a much needed boost to the financial sector in watching to find new ways to provide the much-needed financial support of smaller entities and businesses.

With these products, it makes sense that the company could become a one-stop shop for financial needs. To become a one-stop service requires obtaining a bank charter, which is what the company has now applied for under the moniker, Square Financial Services Inc.

King of fintech defined by optimism (San Francisco Business Times/Ron Suber Email), Rated: A

Source: San Francisco Business Times

PeerStreet – Real Estate Investing for Rich Millennials (Nanalyze), Rated: A

While your average American doesn’t have much in the way of savings, the younger “millennial generation” is actually saving at a higher rate than any other generation. More than 80% of those “investment professionals” will then go on to underperform the market and get paid anyway.

If all of this sounds too daunting already and you want the easy way out, use Betterment.

Founded in 2013, Los Angeles startup PeerStreet has taken in just over $21 million in funding from investors that include Andreessen Horowitz to build “a marketplace that provides unprecedented access to high quality real estate loan investments“. Before you start getting too excited, take note that you’re going to need some cash to bring to the table. PeerStreet shows you some dropdown boxes when you create your account and unless you choose the one that says you make $300,000 a year or the one that says you have $1 million in assets, you’re not going to be allowed in. Those of you who were smart enough to major in a STEM subject are more likely to be squared away here while those of you who majored in underwater basket weaving should probably just stop reading right now.

Right away we can see that this is a property that is out of reach for the majority of Americans with a hefty $3.78 million price tag.

This means that the amount of money we could get from selling our property falls to around $3 million which still makes it very easy to pay off a $2 million loan. In fact, the only point we would start to worry is if property prices fell more than -53% over an 18-month period. This would represent a “black swan” type of event which has a very low probability of occurring. Of course there’s always the risk of PeerStreet going under but then you still have the property as collateral for the loan and you are first in line to receive payback should their property portfolio be liquidated. For providing everyone with this great service, PeerStreet takes a reasonable .75% fee which is paid each month alongside the interest payments.

The first thing to note here is that the price of entry is an extremely attractive $1,000. You’d be joining the 295 other investors who have already plunked down an average amount of $6,169 which brings the loan up to 91% funded. If you then went out and found 9 other properties to invest in, you’d have a nice little diversified portfolio of 10 various property investments that are transparent and relatively simple to understand (provided you took the time to understand the risks as we have done with this example), all for just $10,000.

Source: Nanalyze

Lend360: Fintech is No longer a Boutique Financing Option, but a Key Component of Lending Market (Crowdfund Insider), Rated: A

The early days of peer to peer lending have morphed into a far more complex and data driven credit service that is competing against not just innovative Fintech startups but traditional lenders seeking to maintain relevance. Crowdfund Insider recently asked Lend360 organizers a few questions on their perspective of the online lending industry and what has changed – and what they expect going forward.

What has changed in the lending environment in the past 12 months?

The biggest change is that Fintech is no longer just viewed as a boutique financing option, but a key component of today’s lending market. For proof of this change one only needs to look at the push for a national Fintech charter.

Where do you see current opportunities?

As long as there is a demand for credit, there will be an opportunity for Fintechs to step up and fill the void.

 

Unexpected expenses hit non-prime Boomers hard (Banking Exchange), Rated: A

New research, “The unGolden Years: Non-prime Baby Boomers,” from the Elevate Center for the New Middle Class indicates that non-prime Boomers are borrowing against their 401k accounts three times as frequently as prime Boomers do. The survey found that 4% of prime Boomers have 401k loans, while 13% of non-prime Boomers have borrowed against these retirement plans.

Less than half—43%—of the non-prime Boomers in the company’s research feel comfortable with their ability to manage their day-to-day finances, let alone prepare for retirement. Not that prime Boomers all feel confident, either, with 76% saying they can manage daily financial needs.

Elevate’s study, based on a survey of over 1,000 prime and nonprime consumers, found that non-prime Boomers are 14 times as likely as prime Boomers to have difficulty predicting monthly income—and 4 in 10 say they live paycheck to paycheck. They also tend to have difficulty predicting monthly expenses and are therefore more likely to experience unexpected expenses, the research says.

Among non-prime boomers, 7 in 10 run out of money at least once a year, in spite of generally decent employment levels—frequently, in fact, with more than one job apiece.

The study asked respondents how they would meet an emergency need for $1,200. Among the non-prime Boomer respondents, nearly half had difficulty coming up with a source of funds—1 in 8 could think of no solution at all.

  • 22% of non-prime Boomers could cover the $1,200 surprise through savings—about half of the portion of prime Boomers who could do so.
  • 22% said they could use a credit card to cover the surprise, but less than a third said they could pay off that borrowing before it began to accrue interest.
  • 11% said they could tap family or friends for the money. Interestingly, only 2% of prime Boomers would go that way.
  • A small portion—4.4%—of non-prime Boomers would use payday lenders, deposit advances, or overdraft programs. Interestingly, in a separate question, 13% of non-prime Boomers said they’d used a payday loan in the previous 12 months.

HedgeCoVest Rebrands, Pivots Toward a TAMP (Wealth Management), Rated: A

HedgeCoVest is pivoting away from being a platform to help investors access hedge funds in favor of being a turnkey asset management platform. To reflect the change, the company is rebranding as SmartX Advisory Solutions.

And as part of the change, SmartX is bringing on 27 new investment strategies from firms like Blackrock, Morningstar Investment Management and Nasdaq Dorsey Wright. The models will cover strategies including ETFs, income portfolios, international equities, global/macro investing and U.S. equity strategies.

RIA in a Box Introduces Trade Monitoring

The technology company has a new employee trade-monitoring tool for its MyRIACompliance software platform that RIA in a Box says will help firms comply with Rule 204A-11, which requires the submission of securities holdings and transaction reports. The new tool digitizes the process, provides an interface for employees to electronically link applicable personal brokerage accounts, and provides chief compliance officers with supervision, administration and reporting capabilities.

Cryptocurrency IRAs

CoinIRA, a subsidiary of Goldco focused on digital currencies, is launching Digital IRA Bundles, new investment products that come prepackaged with combinations of popular cryptocurrencies such as Bitcoin, Litecoin and Ethereum.

Commonwealth Selects Quovo for Aggregation 

Commonwealth Financial Network announced the completion of an upgrade to the account-aggregation features within Investor360 using Quovo.

Don’t Fall for Loan Sharks Just Because They Have Hip Branding  (Lifehacker), Rated: A

We all know payday lenders, loan sharks, and credit cards profit when you go into debt and, therefore, they can be dangerous. But many of these companies conceal their danger with clever marketing. Beware: a debt trap by any other branding is just as dangerous.

Over at the Outline, writer Gaby Del Valle discusses one such company, Affirm. v

The difference between this service and a typical subprime loan seems to mostly lie in the marketing. Unlike other loans, Affirm is a bit more upfront about the terms you’re getting into.

Everyone is picking on Affirm here, but the issue is not unique to them. This reminds me of the recent fiasco with Navient, the student loan servicer that was sued by the Consumer Financial Protection Bureau (CFPB) over shady business practices like misapplying student loan payments. In the lawsuit, Navient said they have no obligation to act in their customers’ best interest. But that’s not exactly the message that comes across on their “Financial Tips Blog.” These companies use financial literacy to hook you into making bad financial moves.

How to Use a Peer-to-Peer Loan to Pay off High-Interest Debt (Forbes), Rated: A

High-interest debt, such as credit cards, sometimes seems impossible to pay off.

Peer-to-peer loans are unsecured — you don’t have to tie any collateral to them. They’re attractive to borrowers with high-interest rate debt because they provide concrete payoff dates and an option for a fixed — and potentially lower — interest rate.

In fact, according to peer-to-peer platform Lending Club, its borrowers — on average — secure a 24% lower interest rate when using its peer-to-peer loans to consolidate debt.

SS&C Announces Major New Release of Precision LM Loan Management Solution (Business Insider), Rated: A

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced the availability of Precision LM™ 3.0, the latest version of the company’s loan origination, servicing, accounting and asset management solution. The new version marks the culmination of significant input and engagement from Precision LM clients as well as SS&C’s proven ability to execute on its comprehensive development roadmap.

Pefin, a fintech start-up, is using A.I. to offer financial advice. Just don’t call it a ‘robo advisor.’ (CNBC), Rated: A

Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as “the world’s first [artificial intelligence] financial advisor.” The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.

“I started Pefin mainly because when you think about less affluent people, there’s really no access to financial advice aside from robos,” Joseph told CNBC in an interview recently.

“Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we’ll help you if we think it’s the right move for you” rather than generating fees for the company, she told CNBC.

Pefin Welcomes Catherine Flax as Chief Executive Officer (Benzinga), Rated: A

Pefin, the world’s first Artificial Intelligence (AI) financial advisor, welcomed Catherine Flax as Chief Executive Officer today.

Flax has had a multi-decade, distinguished career on Wall Street, as the Managing Director and Head of Commodity Derivatives, Americas at BNP Paribas and as Chief Marketing Officer of J.P. Morgan. She was named the Most Influential Woman in European Investment Banking in 2012 and one of the 100 most influential women in European Financial Markets in 2010 and 2011. Flax has been a leader in the FinTech space, as a Board Member of leading blockchain company, Digital Asset Holdings, and for the last two years, as an Advisor to Pefin in matters of Marketing, Regulation, Business Development and International Growth.

CoverWallet, Benzinga Fintech Award Winner, Appoints OnDeck’s Paul Rosen As COO (Benzinga), Rated: B

CoverWallet, the winner of Best Insurtech Solution at the 2017 Benzinga Global Fintech Awards, has hired Paul Rosen, formerly the chief sales officer at On Deck Capital Inc ONDK, as its chief operating officer.

Insurtech reminds Rosen of what fintech looked like five to six years ago, he told Benzinga.

Former OnDeck Director Joins Pearl Capital as Chief Revenue Officer (Monitor Daily), Rated: B

Pearl Capital Business Funding, a provider of direct financing to small and midsize businesses, announced Jared Kogan joined the company as chief revenue officer.

Kogan joined Pearl following a 10 year career in the fintech space, most recently serving as the director of OnDeck’s broker division where he funded 10,000 loans for over $650 million in volume and was able to grow production from $14 million to over $40 million per month. Prior to OnDeck, Kogan served as vice president at Newtek, the largest non-bank SBA lender in the country.

Bad Credit? Business Loan Options For Entrepreneurs (Business Computing World), Rated: B

Online Lending Platforms

Typically, these lenders operate only on the web and promise quick assessment and disbursal with less bureaucracy. Some specialist bad credit lenders are ready to structure loans according to your convenience. You can also look at peer-to-peer lending platforms that give you access to individuals who are looking to invest their money in different ventures. Again, these platforms can get cash relatively more quickly into the system.

United Kingdom

Goldman Sachs to take on UK retail banks (Financial Times), Rated: AAA

Goldman Sachs is looking to expand its retail banking business to the UK, replicating its mass-market offering in the US, as it continues a steady march from Wall Street to Main Street.

The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.

Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.

The data behind Zopa’s lowered return projections (AltFi Data Email), Rated: AAA

Zopa has an enviable track record of delivering net returns as evidenced by a more than 10 year track record of delivering 4-7% returns  (after losses and fees).

Source: AltFi Data
Source: AltFi Data

Investors value projected returns over track record (P2P Finance News), Rated: A

INVESTORS rank the expected rate of return as the most important factor when choosing an investment provider, research shows.

Analysis by bond provider Minerva Lending, based on a poll of 1,000 adults with more than £50,000 to invest, found 61 per cent consider the rate of return as the most important factor when choosing who to trust their money with.

The research, released on Friday, does not refer to peer-to-peer lending but investors appear to be looking for many factors that P2P firms offer.

Zopa’s Andrews warns on post-Brexit skills shortage (P2P Finance News), Rated: A

THE UK is facing a technology skills shortage that may worsen because of Brexit, Zopa’s co-founder and chairman has warned.

Giles Andrews (pictured) said that the peer-to-peer consumer lender’s decision to open a hub in Barcelona was partly due to a concern that it would be harder to recruit top tech talent following the UK’s departure from the EU.

Assetz signs for Manchester Green office (North West Place), Rated: B

Assetz Capital, part of the Manchester-based Assetz Group, has relocated from Newby Road in Hazel Grove where it occupied 3,000 sq ft of a 6,000 building, to take the newly refurbished Building 3 on a 10-year lease.

China

Cryptocurrency dealers and online lenders feel heat in China (Nikkei), Rated: AAA

On Friday, Caixin, a Chinese business news outlet, reported that financial authorities have decided to shut down virtual currency exchanges.

Beijing appears eager to eliminate money laundering and choke off capital outflows by shutting down bitcoin exchanges and other virtual currency trading platforms. It is also tightening its grip on peer-to-peer lending, in which individuals privately contract to borrow and lend.

Some exchanges have temporarily halted trading in response to the report. Investors rushed to sell their digital currencies for cash, sending bitcoin about 20% lower versus the yuan at one point on Saturday, compared with the day before, to below 24,000 yuan ($3,703).

Report Casts Doubt on Future of China’s Bitcoin Exchanges (Coindesk), Rated: A

Regulators in China are said to be considering a move to close all domestic bitcoin and cryptocurrency exchanges.

As of now, no official announcements from regulators have been seen. However, there are reasons to believe the report may be authentic.

The work group was first launched by China’s State Department in 2016 to tackle market risks in the country’s financial technology industry such as p2p lending.

Emerging Digital Payments are Crowding out the Banking Market (Xing Ping She), Rated: A

According to report from the Central Bank, in the second quarter of 2017, banking financial institutions have handled 36.247 billion electronic payment services, amounting to 545.58 trillion RMB, which was down about 4.4% from the same period of last year.

Actually, non-bank payments including Alipay and wechat Pay are growing rapidly. The Central Bank’s data also shew that in the second quarter of 2017, the scale of non-bank payment market reached to 570.95 trillion RMB. Compared to the amount of 23.35 trillion in the same period last year, it has significantly increased 34.87 percent.

 

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China.

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China. According to WeChat Pay, users of the new product will be able to make payments and transfer, send Hongbao, pay back credit card debt and be awarded with interest on their digital wallet balances.

As response to the latest regulation, NEO Council announced it would offer refunds for NEO purchased through its ICO.

On September 4th, China’s leading digital payment service Alipay announced to expand its operation to Norway.

Early this week, Proptech BBT announced that the platform had managed to secure RMB 60 million Pre-A funding from Hongdao Capital at the beginning of August.

European Union

Klarna is reportedly testing its own credit cards among employees (Business Insider), Rated: AAA

Since Klarna received its full banking license this summer, there have been many questions as to how exactly it would be leveraged. One among many speculative scenarios includes launching the company’s very own credit- and bank cards.

Now there are some initial reports indicating that the credit card rumours are for real. Referring to internal documents it has been able to access, Breakit reports that the Swedish e-invoicing giant, valued at $2,5 bn, is testing credit cards in-house.

A memo sent through the company’s intranet has supposedly given Klarna’s Swedish employees the opportunity to test proprietary payment cards for a limited amount of time.

Knowledge is power in Grid Finance’s revolution (Independent.ie), Rated: A

SME lender Grid Finance is expanding its offering to include a digital pension product targeted at the owners of small businesses. The company has engaged Conexim to provide the back office infrastructure on the product – as well as the regulatory umbrella – while Grid will act as distributor.

It is the latest piece of innovation being undertaken by the company, which is looking to build what chief executive Derek F Butler calls “a small business bank in all but name”.

10 Swiss Fintech Startups to Watch (LinkedIn), Rated: A

The 10 selected entrepreneurs reflect the acceleration of the Swiss fintech scene in the recent years and the impressive quality of its startups. They will join the intense journey taking place from September 10 – 16 in New York.

  • Advanon, Phil Lojacono: Advanon in its basic version is an online platform that allows SMEs to pre-finance their open invoices directly through financial investors.
  • Algo Trader, Andy Flury: The startup provides an algorithmic trading software that allows automation of complex, quantitative trading strategies.
  • Creditgate24, Teddy Amberg: CreditGate24 is an independent Swiss company and a fully automated platform for lenders and borrowers which offers efficient, transparent and scalable credit processing at high quality.
  • KiWi (eBOP), Christian Sinobas: KiWi transforms merchant’s phone into a smart point of sale.
  • Monito (Global Impact Finance), François Briod: Sending money abroad? Monito is the Booking.com for money transfers, helping migrants and expatriates find, review and compare money transfer services.
  • OneVisage, Christophe Remillet: OneVisage is a leading cyber-security company developing biometric solutions to help financial services eliminating identity theft and increasing user’s digital experience.
  • SONECT, Sandipan Chakraborty: SONECT enables every shop in the neighborhood to act as a virtual ATM.

Should you let a ‘robot’ manage your retirement savings? (BBC.com), Rated: A

Consultancy firm Accenture found that 68% of global consumers would be happy to use robo-advice to plan for retirement, with many feeling it would be faster, cheaper, and more impartial than human advice.

Joe Ziemer, vice president of communications at Betterment, a US robo-adviser with more than $9bn under management, says: “The Betterment service takes your information and uses a series of algorithms to create an asset allocation plan, which might be, for example, 90% equities and 10% bonds for a retirement saver.”

Wealth Wizards, for example, typically charges £65 for investments up to £30,000, and 0.30%, or £300, on a £100,000 investment pot. Betterment charges 0.25% a year.

That’s peanuts compared to human advisers’ fees, which come in at about £580 for advice on a £200-a-month pension contribution, or £1,000-£2,000 for guidance on what to do with your £100,000 pot when your retire, according to UK adviser network Unbiased.

Robo.cash Reports Steady Growth in European P2P Lending (Crowdfund Insider), Rated: A

The young lender says the total amount of investments now exceed €1.8 million. Approximately €400,000 in loans were added in August. The average invested amount per investor gained 2.2% to the previous month at €3,270 in August. In regards to the number of investors using the platform, in August Robo.cash added 188 users. Currently, there are more than 900 investors in total who have joined the platform in the first six months of operation.

Source: Crowdfund Insider
International

Mitek Unveils Mobile Verify® for Lending (Globe Newswire), Rated: A

For the first time at FinovateFall, Mitek (NASDAQ:MITK) (www.miteksystems.com), a global leader in mobile capture and identity verification software solutions, will demonstrate Mobile Verify® for Lending. This new, five step digital lending experience enables lenders to verify identity and bank account information in real time for fast loan decisions with a simple process for borrowers.

When applying for a consumer loan from a desktop computer, the borrower will first log into their online bank account and agree to have their account information shared with the lender. A text message is then sent to the borrower’s smartphone directing them on how to take four photos: front and back of their driver’s license, a selfie and a photo of their pay stub or other trailing document, to complete the loan application process. This new digital experience is quick and easy for the borrower and provides the lender with real-time identity and bank account verification.

Moroku lands on the BNP Paribas Radar (Moroku Email), Rated: A

Dear friends

Last week Moroku was identified as one of the top 4 Fintech’s globally best positioned to take on the battle for Millennials 

Fintech has transformed payments but not savings, says BlackRock’s chief executive (SCMP), Rated: A

The financial technology boom has transformed the way over a billion people engage with financial services, particularly when it comes to making payments, but Larry Fink, chief executive of BlackRock, the world’s largest money manager, said that no company has yet managed to use technology successfully to get people investing for the long term.

Both in China, and in Europe and North America, a plethora of investment platforms and robo advisory services are evolving, but none has yet reached critical mass.

Memorandum of Understanding Signed with GoldMint (LSE), Rated: B

Eurasia, the platinum, palladium, iridium, rhodium and gold production company, is pleased to announce it has entered into a Memorandum of Understanding with GoldMint PTE (“GoldMint”), a Singapore based Limited Company.

Australia/New Zealand

Broker numbers to swell in SME space (AustralianBroker), Rated: A

More brokers will diversify into the SME loan space due to increased competition in traditional markets and growing demand from clients, the lender’s head of sales Michael Burke said.

“Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times.”

As well as providing a digital platform to facilitate the loan process, OnDeck’s underwriting policy also helps ease the broker’s burden, Burke told Australian Broker.

PledgeMe joins Equitise in eyeing Australian market (Scoop), Rated: A

PledgeMe, the equity crowdfunding and peer-to-peer lending platform, has joined rival Equitise in signalling plans to enter the Australian market ahead of a law change coming into effect across the Tasman this month.

Co-founder Anna Guenther will relocate to Brisbane for six months to establish the Wellington-based company’s Australian arm, according to a PledgeMe blog post. PledgeMe will participate in the Queensland government’s HotDesQ programme, which provides networks, support, and funding for companies to relocate to the state.

India

SoftBank Vision Fund makes second bet in two months; fintech remains investors’ favourite baby (Yourstory), Rated: A

SoftBank Vision Fund, the world’s largest pool of private capital, placed its second major bet on an Indian startup in a span of two months with its investment in OYO Rooms. The $250-million funding has taken OYO’s valuation from $460 million in August last year to between $850 million and $900 million.

APAC

This Not-for-profit Fintech Hub Wants To Impact The Unbanked Population (BLLNR), Rated: A

Allow me to set the scene: in the wider region of Southeast Asia that surrounds Singapore, where Lattice80, our not-for-profit fintech hub that we launched last year is based, there is a huge unbanked population. KPMG estimates put the number at about 438 million. In poor countries like Cambodia, the population with a bank account falls to just 5 percent.

McKinsey did a similar study in 2010 on the world’s 2.5 billion unbanked. Asia’s emerging markets were identified as a hotbed of unbanked. The same study suggests that reaching the unbanked population in ASEAN could increase the economic contribution of the region from US$17 billion to US$52 billion by 2030.

Multi-asset funds offer ‘all-in-one solutions’ (Straits Times), Rated: A

Q WHAT IS THE ATTRACTION OF MULTI-ASSET INVESTING?

It is the ability to combine a range of asset classes with different and largely independent economic drivers in order to achieve consistent return and reduce downside risk.

Years of central bank intervention in markets have depressed interest rates and left investors hunting for reliable yield. More asset classes beyond traditional equities and bonds have become more accessible in the past decade.

Q WHAT IS THE COMPOSITION OF YOUR MULTI-ASSET PORTFOLIOS?

More recently, we added peer-to-peer lending, mortgage and corporate funds that offer excess return over corporate bonds for a similar level of risk, litigation financing and credit funds. The world’s largest institutional investors have already diversified into these assets. Now, smaller institutions and individual investors can too, through our multi-asset strategies.

Authors:

George Popescu
Allen Taylor

Friday November 18 2016, Daily News Digest

p2p china

News Comments Today’s main news: PeerStreet announces $ 15M funding round led by Andreessen Horowitz. Online lenders and non-profits team up on small business loans. Wonga may sell BillPay to Klarna. Today’s main analysis: China leading as new guard takes over FinTech. Today’s thought-provoking articles: Korean government to regulate Bitcoin. Why President-elect Donald Trump should and should not […]

p2p china

News Comments

United States

  • Andreesen Horowitz leads PeerStreet’s $ 15M funding round. GP: “PeerStreet has a particularly strong team, with Google high level alumni, and I believe this is the main reason why Andreesen decided to invest in PeerStreet vs all their 30+ competitors.”
  • Online lenders team up with non-profits to offer more small business loan options. AT: “Online lenders continue to get innovative. Partnering with non-profits to deliver more loans to small businesses, who are typically underserved by traditional banks, expands the opportunities for all parties.”
  • Marketplace lending grows while Payday lending shrinks . “At 210% growth, personal Marketplace loans were the fastest-growing segment while online and storefront payday loans together fell the sharpest, reflecting 23% less spending by consumers.”
  • Maples Fund Services launches MPL solution. AT: “Here’s another interesting development in MPL that solidifies the sector as legitimate. I expect to see more tech solution providers move into the online lending space.”
  • CoverWallet acquires $ 7.8M in funding. GP: ” This is not that relevant for our focus except it is yet another example of insure-tech which could be connected well with lending, SMB lending in this case.”
  • MPL reasons to kill and not kill Dodd-Frank. AT: “In the mainstream press, you don’t often hear arguments opposed or in favor of Dodd-Frank as it impacts alternative lending. This article gives both sides of the argument as it pertains to marketplace lending. I always favor legislation that encourages innovation rather than protection, but I’m not the president.”

United Kingdom

European Union

China

Korea

United States

PeerStreet Announces $ 15 Million Series A Funding Round Led by Andreessen Horowitz (BusinessWire), Rated: AAA

PeerStreet, the leading marketplace for investing in real estate backed loans, today announced a Series A funding round led by Silicon Valley venture capital firm Andreessen Horowitz.

This investment round comes on the heels of a significant first year for PeerStreet. To date, the firm has onboarded thousands of investors, funded over $165 million in loan investments and returned more than $50 million to investors; all with zero losses. Additionally, PeerStreet has significantly expanded its national footprint, working with more than 50 lenders and offering investments across half the country.

Nonprofit, Online Lenders Team Up to Offer More Small-Business Loans (Palm Beach Post), Rated: AAA

A wave of new partnerships between online lenders and nonprofits that offer microloans means more small-business owners can get fast, convenient and sometimes less expensive small-business loans.

The details of the specific partnerships vary, but they all combine what makes online lenders successful – intuitive, sophisticated technology – with what nonprofit lenders bring to the table – lower-cost capital and relationship-driven support.

Lending Club and Opportunity Fund

Opportunity Fund focuses on underserved California business owners. It offers small-business loans from $2,600 to $100,000 with one- to five-year terms and APRs ranging from 10.6% to 23%, depending on the term. Through the partnership, California borrowers with bad credit who apply for a Lending Club loan and don’t qualify will be seamlessly directed to Opportunity Fund, which will underwrite and service the loan.

OnDeck and the Association for Enterprise Opportunity

The Association for Enterprise Opportunity’s Tilt Forward initiative uses OnDeck’s technology to help participating CDFIs underwrite borrowers more efficiently. Four CDFIs currently use the Tilt  platform: Georgia-based Access to Capital for Entrepreneurs, New Jersey-based The Intersect Fund, Missouri-based Justine Petersen and New York-based Business Center for New Americans. When small-business owners apply for a loan with these nonprofits, they’ll have the same fast and convenient experience that OnDeck offers, but they’ll be matched with a lower-cost loan.

VEDC

VEDC offers small-business loans with lower APRs – 8% to 15% – and terms up to 10 years, but it doesn’t have a line-of-credit product. It can offer borrowers a wider range of financing products.

CFSI Study: Payday Shrinks While Underserved Consumers Pay More for Auto Insurance (3bl Media), Rated: AAA

Today, the Center for Financial Services Innovation (CFSI) and Core Innovation Capital (Core) released their sixth annual Financially Underserved Market Size Study. The report, which benefited from the financial support and strategic input of Morgan Stanley and with additional financial support from CFSI’S Founding Partner the Ford Foundation, reveals that underserved American consumers spent $141 billion in fees and interest in 2015, generated from a volume of $1.6 trillion in financial activity. More information and visual assets are available at www.cfsinnovation.com.

The Market Size Study found that the overall volume of financial activity grew from $1.5 trillion in 2014 to $1.6 trillion in 2015, a rate of 4.3%, while spending on fees and interest increased by nearly six percent.

  • Marketplace Outpaces Payday: At 210% growth, personal Marketplace loans were the fastest-growing segment while online and storefront payday loans together fell the sharpest, reflecting 23% less spending by consumers. This fluctuation could be attributed to a shift in available loan alternatives for consumers to installment loans or subprime credit cards as a result of regulatory and marketplace pressures.
  • Driving For Broke: Perhaps most startling was the high cost of auto insurance for underserved consumers, a category tracked for the first time in 2015. Underserved consumers spent more on auto insurance premiums in 2015 ($36.5 billion) than they did for interest and fees on subprime auto loans ($24 billion). On average, underserved consumers paid 26.5% more in premiums than their fully served counterparts to insure vehicles of comparable value.
  • Going Long: Consumers continued to spend the largest share of interest and fees on  long-term credit by a nearly 2-to-1 margin. At $55.2 billion in spending, long-term credit is the single largest percentage of fees and interest paid by consumers, with subprime auto and student loans making up the majority of these loans. Short-term credit products such as subprime credit cards and marketplace loans account for $26.2 billion in spending and continue to grow at a faster rate than single payment products like payday or overdraft.

Maples Fund Services Launches Marketplace Lending Solution (Fin Alternatives), Rated: AAA

Fund administrator Maples Fund Services has extended its product offerings to include the rapidly growing peer-to-peer lending sector.

The company’s customized solutions for marketplace lending funds introduce a level of independence in asset verification and valuation and ensure data integrity. By assuming certain administrative tasks – such as platform and custodian reconciliations, interest accruals, principal repayments, default monitoring and accounting for late payment penalties – Maples Fund Services streamlines the internal operations of marketplace lending fund managers so they can focus on investment decision making.

Small Business Insurance Site CoverWallet Pulls In $ 7.8 Million in Funding (Insurance Journal), Rated: A

Online commercial insurance agency CoverWallet announced it has received $7.8 million in funding in a Series A round led by Union Square Ventures, bringing its total raised to date to $9.5 million.

CoverWallet announced seed funding of $2 million in March.

Launched in early 2016, CoverWallet provides a concierge-like service for small businesses, giving them access to quotes, advice and policy management tools online or over the phone. It offers general liability, commercial property, workers’ compensation, directors and officers, professional liability, errors and omissions, and cyber liability coverages.

Reasons Why Donald Trump Should and Shouldn’t Dismantle Dodd-Frank (Forbes), Rated: A

The Center for Financial Services Innovation(CFSI) recently released its latest Underserved Market Size report, highlighting just how expensive financial services are for subprime consumers. The report revealed that underserved Americans paid $141B in fees and interest last year for access to some financial services , including lending – an increase of $3B since 2014. The growth in marketplace lending has been particularly relevant in light of Dodd-Frank criticism. According to CFSI, marketplace lending for personal loans grew by a staggering 210%, and small business loans in this sector grew by 64%.

Some analysts have argued that the major impetus for this growth has been the funding gap that was indirectly created by the Dodd-Frank Act.

The CFSI report found that “Microloans to small businesses in low-to-moderate income communities, and Marketplace Loans for small businesses, represented $1.7 billion in spending on fees and interest.”

Alternative lending can get very expensive for some small business owners. The average annual interest rate for large national banks varies between 1.31% and 4.31%. For online and alternative lenders, these rates can climb, on average, to as much as 66.57%.

Given the prevailing attitudes in both the Legislative and the Executive Branch, it is unlikely the law will survive in its current state for the next four years.

United Kingdom

Wonga weighs sale of German arm BillPay after Klarna approach (Sky News), Rated: AAA

The new approach for BillPay, which Wonga only acquired in 2013, is understood to have  come from Klarna, a Swedish-based provider of e-commerce payment solutions.

A source close to the situation said Wonga was examining the approach as part of a broader effort to raise additional financing capacity over the coming months.

The discussions follow a shake-up of the payday lender’s management team, with Tara Kneafsey taking over as group chief executive, and Tommy Jordan replacing her at the helm of its UK operations.

Wonga has sought to focus on the expansion of a flexible loan product as it seeks to diversify away from the short-term lending activity that sparked political and public controversy.

Wonga’s losses have totalled nearly £120m in the last two years following a string of scandals and costs associated with cutting hundreds of jobs.

Wonga executives will also have to continue rebuilding its public image amid continuing disdain for the payday lending industry.

Increase in Defaults in Online Loans Has Industry Concerned (Investopedia), Rated: A

When online and peer-to-peer (P2P) lending became trendy, it was hailed by some as a revolution to consumer loans, offering a viable alternative to standard bank loan proceedings. However, it seems that things are not entirely as they should be in that industry, as a surge in defaults has sent analysts into a panic about the future of the burgeoning area. There have been signs that trouble was on the horizon for several months, starting with concerns throughout the industry about LendingClub, a leader in the P2P lending area.

At this rate, lenders and underwriters may be forced to begin paying down bonds too early. In spite of efforts by LendingClub and some of its competitors to tighten lending standards and raise interest rates, it may be too late to counter the trend of defaults and the longer term repercussions this had.

P2P Lender ThinCats Becomes NACFB Patron (Crowdfund Insider), Rated: B

P2P lending platform ThinCats, which recently passed £200m milestone in loans issued to UK SMEs, has joined become an NACFB patron seeking to provide a direct link with member brokers who demonstrate similar working methods to the ThinCats model.

European Union

Growth in FinTech is Shaping the Future of Invisible Finance & Virtual Banking (BusinessWire), Rated: A

Research and Markets has announced the addition of the “Future of Financial Services”report to their offering.

This study will address implications to the labor force employed in the financial services market, as a lot of the responsibilities currently held by individuals will be susceptible to automation. Another consequence to automation might be the role of institutions in the industry moving to advisory rather than transaction processing.

Key Topics Covered:

  1. Executive Summary
  2. Research Scope, Objectives, and Background
  3. Overview and Introduction
  4. Key Disruptions in Segments
  5. Funding of Fintech
  6. Trends in Financial Services
  7. Profiles of Fintech Disruptors
  8. Conclusion
China

China’s central bank recruits blockchain experts (The Asset), Rated: AAA

China’s central bank is recruiting cryptocurrency and blockchain experts to explore the potential of distributed ledger technology in the financial sector.

With digitization becoming an integral part of China’s financial system, Chinese authorities are exploring uses for blockchain technology in improving its financial system. China is also planning to launch its own cryptocurrency.

The People’s Bank of China (PBoC), China’s central bank, has set up an R&D department for digital currency this year.

In the private sector, e-commerce giant Alibaba Group’s affiliate Ant Financial is leading the charge to develop blockchain.

P2P lending sees growing scrutiny (China Daily), Rated: AAA

As China advances its supply-side structural reform, a large number of struggling financial companies will be eliminated, thus exposing once-concealed online financial risks.

Peer-to-peer, or P2P online lending platforms, reflect the explosion of online financial risks. Statistics provided by independent P2P portal wdzj.com shows that there were 3,858 P2P in operation at the end of last year, and 1,263 of them had operation problems. Most of these platforms promised an extremely high return rate, as much as 10 percent annually. Meanwhile, they illegally established capital pools.

Platforms which have been reported with problems have mostly crossed the red line of illegal fund-raising.

But Wang says such simple reasons cannot sustain P2P companies’ much higher return rate compared to banks. Most P2P companies cannot find small and micro-sized enterprises that are willing and able to return the loans. Therefore, P2P companies give these loans to big company clients.

China is leading the way as a new guard takes over the fintech charge (Business Insider), Rated: AAA

China’s fintech scene is being boosted by huge private funding rounds, while the UK is suffering, and Germany is benefitting, from Brexit related uncertainty.

This means the dynamics of the global fintech ecosystem are changing as funding and focus shifts away from the original fintech hubs. The US and UK can no longer be complacent when it comes to potential threats to their fintech crowns.

Marketplace lending, for example, is the largest segment of the alternative finance market across Europe and the US, but it’s now taking off in a big way in China.

Robo-advisers help investors instead of wealth managers (China Daily), Rated: A

Leading Chinese peer-to-peer lending and wealth management company CreditEase Corp is developing a robo-adviser product to serve small and medium domestic investors.

Tang said they have about 1 million small and medium investors at their platform.

Launched in June, ToumiRA is a robo-adviser mobile application that can create asset allocation solutions for investors based on their investment goals and risk preferences. The threshold to be an investor is $500.

Korea

Government to introduce regulations for Bitcoin (Korea JoongAng Daily), Rated: AAA

In response to the growing popularity of Bitcoin and other digital currencies traded online, the country’s financial regulator said Thursday that it would introduce regulatory guidelines for digital currency exchanges by the first quarter of next year.

The Financial Services Commission has launched a task force that will meet regularly to discuss the regulatory status of digital currency and create licensing rules for exchanges as well as devise measures to prevent money laundering and fraud in transactions.

The top three Bitcoin exchanges in the country processed around 1.5 trillion won ($1.3 billion) between January 2015 and October 2016, according to data from the regulatory commission. The Financial Services Commission said average monthly transactions in 2016 increased by 6 percent compared to last year.

Besides Bitcoin, there are over 700 digital currencies circulating around the world.

Authors:

George Popescu
Allen Taylor