Thursday November 30 2017, Daily News Digest

Lending Club

News Comments Today’s main news: Lending Club rolls out its next-generation small business credit policy. Elevate’s RISE surpasses $300M in outstanding loans. Upgrade, Corridor collaborate on big data, credit analytics. Assetz Capital completes Seedrs funding round with 1.6M GBP. Alibaba seeks majority stake in SenseTime. Revolut banks on cryptocurrency. Comunitae suspends activities due to fraud. Today’s main analysis: The hidden relationship between […]

Lending Club

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United States

United Kingdom

China

European Union

International

Australia

India

MENA

News Summary

United States

Next Generation Small Business Credit Policy (Lending Club), Rated: AAA

We are excited to announce the next generation small business credit policy on our platform which allows us to power the vision of even more small business owners.

Minimum qualifications have been reduced from 24 months in business to 12 months in business and from $75,000 to $50,000 in annual sales.

Since 2014 we’ve facilitated over $500 million in loans to thousands of small businesses across the nation.

Elevate’s RISE Product Surpasses $ 300 Million in Outstanding Loans (BusinessWire), Rated: AAA

Elevate Credit, Inc., a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced its RISE product has surpassed $300 million in total outstandings, with more than 130,000 open accounts.

Will Lending Club Turn a Corner? (GuruFocus), Rated: AAA

Lending Club arguably pioneered peer-to-peer lending, which has been one of the most vibrant segments of the credit market. Some analysts, however, have questioned the company’s ability to continue growing without adopting some traditional banking practices, like taking deposits.

Lending Club has failed to manage costs well over the past two years, leading to its inability to net profits. As illustrated in the chart below, the company’s trailing 12-month revenue now stands at about $551 million, but it has managed to reduce the net loss from about $175 million in the first quarter to about $94 million in the third quarter.

Source: GuruFocus

Lending Club’s first-half 2017 loan originations figure, however, declined from the prior-year period, dropping to approximately $4.1 billion versus $4.7 billion last year.

Would You Take Out a Loan for a Pair of Jeans? (Racked), Rated: AAA

Jocelyn Vera Zorn is not eager to talk about the loan she took out to buy the pants. “It’s kind of embarrassing,” she grimaces.

For merchants, Affirm provides exceptional benefits, increasing average order values across the board; perhaps not surprisingly, people will shop more, and more often, when they don’t immediately feel the costs. And for many customers, including Jocelyn, the predictable, convenient payments are worth the higher interest rates.

Affirm claims to be a more transparent and honest, if not cheaper, line of credit for the underserved. Using internal, proprietary data science and artificial intelligence, the company says it approves 126 percent more borrowers than traditional lenders, based on soft credit pullsand an opaque mosaic of consumer information.

Source: Racked

While more than two-thirds of Americans own at least one credit card, 20 percent are considered subprime, with a FICO score of 600 or below. Another 10 percent are on the bubble.

Source: Racked

Upgrade and Corridor Collaborate on Big Data and Credit Analytics (PR Newswire), Rated: AAA

Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, today announced a strategic partnership with Corridor Funds (), a new credit analytics and portfolio management platform founded by Manish Gupta. Mr. Gupta was recently EVP, Global Head of Information Management and Advanced Decisioning at American Express and prior to that spent many years as Chief Credit Officer of the Amex US consumer lending business. Under the terms of the partnership, Corridor will provide independent analytical review and validation to investors in Upgrade’s personal loan products, and will collaborate with Upgrade on new product design.

TechCrunch Founder Arrington Raising 0 Million XRP Fund (Coindesk), Rated: A

Announced today at CoinDesk’s Consensus: Invest in New York, TechCrunch founder Michael Arringtonrevealed he’s raising $100 million for a hedge fund that will buy and hold crypto assets while making investments in token sales and (some) equities and debt.

Launched under a new entity called Arrington XRP Capital, the fund claims to be the first that will require all limited partners (LPs) to make investments in XRP, the cryptocurrency that powers San Francisco startup Ripple’s RippleNet software.

Why Social Impact Matters in Tech: How LendUp Saved our Customers More Than $ 150 Million Dollars (Huffington Post), Rated: A

Five years later, LendUp customers are improving their credit scores, and now I’m proud to say that LendUp Loan customers have saved $150 million versus what they would have spent with traditional small dollar lenders, all while improving their credit score to open up more financial options in the future.

Two-thirds of LendUp Loan customers report having income swings of $100 or more a month. And since our newest customers lack short-term savings — 83% aren’t confident they can cover a $400 emergency — 77% report that they often miss bill payments.

Fintech Can Help Fast-Track Puerto Rico’s Recovery (Forbes), Rated: A

Agile, customer-experience-focused financial technology businesses continue to drive innovation, modernization and access to credit in America’s financial services marketplace when banks and other traditional providers can’t meet consumers’ needs. For example, fintech lenders help consumers and small businesses alike find financial products and services that meet their credit needs, whether it’s a short-term loan for an emergency expense or capital to help grow a small business — even when these applicants have been denied by their banks.

OnDeck monthly series highlights successful small businesses (Bankless Times), Rated: A

Online small business lender OnDeck today launched a new monthly series spotlighting the achievements of its small business customers and how they are thriving as a result of receiving capital from OnDeck.

For December, the customer success spotlight is on Dana Donofree, the owner of AnaOno, a lingerie and loungewear company for women with a unique mission.

“Applying for a loan can be incredibly stressful but fortunately, OnDeck had quick questions and quick responses.  Right away, I could see how much financing I was approved for and what that meant regarding payback. I had the opportunity to review everything before I took the loan.”

New Survey Finds Relationship Tension and Anxiety are Hidden Costs of Debt (BusinessWire), Rated: AAA

The old saying goes, ‘money can’t buy happiness.’ It should also say ‘and debt can make you anxious, keep you up at night and cause problems in relationships.’ That’s according to a new telephone survey of 1,004 U.S. adults conducted by Harris Poll on behalf of the American Institute of CPAs (AICPA). The survey found nearly three-quarters of Americans (73 percent) are living with debt driven by factors such as everyday expenses, a lack of income, mortgage costs and student loans, reflecting the far-reaching potential impact of debt upon society.

Recent data shows outstanding household debt reached a record high of $12.84 trillion, making this survey timely. With U.S. consumer spending growing at its fastest pace since 2009, it appears the frugal habits many Americans adopted directly after the Great Recession are a thing of the past.

More than half of Americans with debt (56 percent) say it has negatively impacted their life.

Of those, one-in-five (21 percent) say debt is causing relationship tension with a spouse or partner and one-in-ten (11 percent) have misled family or friends about their financial situation. Debt is not just impacting life at home, it has found ways to creep into all aspects of the day. Nearly a third (31 percent) admit to worrying about their debt in general while nearly one-in-five (18 percent) say they worry while at work and one-in-four (25 percent) worry at bedtime.

Living with debt has become a financial and mental burden for nearly three-in-ten Americans with debt (28 percent) who stress about everyday financial decisions because of their debt. Nearly one-fifth of Americans with debt (19 percent) have received letters and calls from collection agencies. While the low interest rate environment has the potential to keep payments lower, one-in-four (25 percent) say that they’re worried a rate hike could change that.

Nearly seven-in-ten Millennials with debt (68 percent) admit it has had a negative impact on their everyday life compared with roughly half of Baby Boomers (48 percent) and three-fifths of GenXers (59 percent) with debt. Most concerning, the survey found that of those with debt, Millennials are twice as likely to worry about debt compared to Baby Boomers (M: 43 percent, BB: 19 percent) and more than a third (37 percent) admit that their debt causes them to stress about everyday financial decisions.

Source: BusinessWire

World’s largest bitcoin exchange, bitFlyer, enters the US (CNBC), Rated: A

The world’s largest bitcoin exchange by trading volume is launching in the U.S.

BitFlyer, based in Tokyo, announced Tuesday it became the fourth digital currency exchange to receive a “BitLicense” to operate in New York. The exchange said it also has licenses to operate in 40 other states.

Former U.S. Comptroller Thomas Curry, Now At Boston Firm, Is Still Fintech Advocate (The National Law Journal), Rated: A

Curry, who was integral in leading the federal banking regulator’s efforts in advancing financial technology, including through the proposal of a special purpose national bank charter for fintechs, joined Nutter McClennen & Fish this week. He is a partner and will co-lead Nutter’s Banking and Financial Services practice group.

How involved with fintech do you plan to be?

That will be a key area and something I’m excited about working with the other members of the firm on. Fintech is interesting, especially if you’re talking about online lending and marketplace lending.

Do you expect the fintech charter will, in fact, move forward?

From my standpoint, I would not have pursued the charter without being very comfortable with the legal foundation for it.

How will you advise clients in the meantime until any special purpose charter is finalized?

Today institutions, banks as well, need to be making strategic decisions about which direction they’re going in. Well before you decide whether to apply to a fintech charter, you should be thinking through the process, so I think the time is now.

Here’s How Andreessen Horowitz & Union Square Ventures Are Betting On Blockchain (CB Insights), Rated: A

This year’s blockchain craze has pushed a huge amount of new money into cryptocurrencies, private blockchain projects, and companies holding initial coin offerings (ICOs). As of now, the total market capitalization of cryptocurrencies stands at more than $340B — a huge leap from where it started the year at $18B.

Source: CB Insights

Blockchain startup AlphaPoint names Nasdaq EVP Salil Donde CEO (Finextra), Rated: B

As it gears up for the launch of a public blockchain network promising to democratise asset digitisation, AlphaPoint has poached Nasdaq EVP Salil Donde and installed him as CEO.

Should I Refinance My Student Loans? (Credible), Rated: B

But you shouldn’t make the decision to refinance your loans lightly. Refinancing can help some borrowers save money, but what refinancing can do for you depends on a number of factors, including the repayment term and repayment options that you choose for your new loan.

Source: Credible
United Kingdom

Assetz Capital Completes Latest Seedrs Round With More Than £1.6 Million in Funding (Crowdfund Insider), Rated: AAA

Peer-to-peer lending platform Assetz Capital completed its latest equity crowdfunding round on Seedrs. The online lender launched the funding round last month and raised a total of £1,665,892.

Thistle and lender rescue developer (Development Finance Today), Rated: A

LendInvest has teamed up with specialist packager Thistle Finance to provide a developer with a £1.3m development exit finance loan.

The developer was set to move from his standard development finance rate on to a more punitive default rate on 1st December, which could have added 0.75% to his monthly interest payments.

However, the development exit finance loan provided by LendInvest – at around 70% LTV – will save the borrower 0.5% on the standard rate he had been paying.

Finance a vital resource as billing delays hit building industry (Asset Finance International), Rated: A

Businesses in the UK construction sector have been hit by a leap in payment delays, with invoices taking an average of 69 days to be settled.

Analysis of more than 13,000 companies by Funding Options, the online business finance supermarket, shows that delays have risen 8% in the past two years.

Yours Clothing in payments tie-up with Klarna (Retail-Systems), Rated: A

Yours Clothing, a UK independent retailer of plus size ladies clothing, has announced a partnership with Klarna which will allow its customers to use the Pay later and Slice it payment options.

Klarna’s Pay later allows customers to try goods first. When checking out online or on mobile, Yours Clothing customers who use Klarna’s Pay later will receive their products and then have 14 days to pay Klarna back interest-free.

Klarna’s second payment option – Slice it – gives shoppers the ability to spread the cost of any purchases over £60 into equal monthly instalments.

Proplend Joins the NACFB (Crowdfund Insider), Rated: B

On Wednesday, Proplend, a UK based peer to peer lender in the property space, announced it has joined the NACFB.

3 smart New Year’s resolutions for business owners (Funding Circle), Rated: B

  • Manage your stress level
  • Make smart money decisions – 
    • Improve your personal credit. Yes, this has everything to do with money. You see, the higher your credit score, the more likely you’ll be able to score lower interest rates on the money you borrow. This can save you hundreds of thousands of dollars over your lifetime, so it’s definitely a resolution worth making.
    • Compare financing offers. Some options just aren’t good for your business. Before you sign on the dotted line, make sure you know the APR you’ll be paying, and compare multiple loans to pick the best deal.
  • Continue to learn
China

China fintech lending boom fuels risks of data theft (Financial Times), Rated: AAA

The rise of online consumer loans in China has spawned a thriving black market in stolen user data.

Virtually non-existent in the country five years ago, consumer lending through websites and mobile apps has expanded rapidly over the past 18 months amid a proliferation of fintech start-ups that use big data to assess credit risk.

In a chatroom devoted to consumer lending on Tencent’s QQ social-media platform, the Financial Times contacted a person claiming to be an employee of an online lender who was offering user data for sale.

For Rmb4 ($0.61) per user, he offered to provide the full name, national ID number, phone number and loan limit. He added that for some borrowers, the data would also include a credit score from Sesame Credit, the unit of Alibaba’s financial affiliate Ant Financial that sells credit scores to banks and consumer lenders with users’ consent.

Alibaba Seeking Biggest Stake in AI Startup SenseTime (Bloomberg), Rated: AAA

Alibaba Group Holding Ltd. is in discussions to invest about 1.5 billion yuan ($227 million) and become the largest backer of Chinese facial recognition startup SenseTime, according to a person familiar with the matter.

SenseTime, which says it’s valued at more than $2 billion, is backed by Qualcomm Inc. and considered one of the more advanced players in machine vision technology.

Uncertainties of overseas markets may transmit P2P risks back to China (Global Times), Rated: A

A number of Chinese peer-to-peer (P2P) lending companies went public in the US this year. Those P2P firms have been growing quickly, with some venturing into high-risk segments such as campus loans and cash advances. As they go public overseas, it creates potential risks that may eventually affect China’s financial stability. Supervision is needed to bring the P2P lending sector in order.

That these companies listed in the US reflects several factors. One main reason is the companies are expanding. Most are underperforming, and some are in the red. US stock exchanges do not have strict requirements for indicators such as net profit and cash flow. Also, the US market attracts investors from all over the world, easily raising more funds.

China’s Lending Crackdown Is Notable for Three Reasons (Bloomberg), Rated: A

Policy makers from the People’s Bank of China and the China Banking Regulatory Commission convened in Beijing on Nov. 23 to discuss new measures to crackdown on online consumer loan platforms, including those for payday loans and peer-to-peer lending. On the same day, Alibaba Group affiliate Ant Financial said it will enforce a cap of 24 percent on interest rates charged by lenders on its website, or 12 percentage points lower than current rates.

Although the measures haven’t been made public, our industry checks suggest three notable changes. First, the issuance of new licenses to online micro-loan platforms is being suspended, suggesting that regulators are scrutinizing online lending practices. Second, banks and bank-holding companies are being told not to buy loans underwritten by online platforms because such assets are deemed too risky. Third, turning the loans into securities will be forbidden because regulators believe securitization amplifies risks and gives investors less of an incentive to perform due diligence on the underlying assets.

So-called P2P online lending platforms have mushroomed from fewer than 10 to more than 2,000 in just over seven years, but only a few hundred operate with government-issued permits.

European Union

Digital Bank Revolut Prepares to Launch Cryptocurrency Features (Crowdfund Insider), Rated: AAA

Digital only challenger bank Revolut is preparing to enter the cryptocurrency world with new features on their bank app to allow users to exchange and use Bitcoin and other digital currencies.

While no official announcement has been made yet, Edward Cooper, Head of Mobile at Revolut, recently tweeted out Revolut’s intent to offer digital currency solutions.

Spanish Peer to Peer Lender Comunitae Suspends Activity Due to Fraud (Crowdfund Insider), Rated: AAA

According to a report in El Español, peer to peer lender Comunitae has ceased all operations indefinitely due to fraud detected on the platform this past October. The Comunitae web site is still live but certain portions are not functional.

Swedish Chamber Export Prize 2017 to Klarna and Daloc (Sweden Abroad), Rated: B

The Swedish Chamber of Commerce for the Netherlands, The Embassy of Sweden and Business Sweden are very proud to announce the winner of the Swedish Chamber Export Prize 2017; Klarna.The prize aims to strengthen the Swedish-Dutch business relations and has been awarded since 2012 to Swedish related companies in the Netherlands.

International

Alibaba-Backed Paytm Aims to Become World’s Largest Digital Bank (Bloomberg), Rated: AAA

Paytm Payments Bank aims to create the world’s largest digital bank with 500 million accounts, envisioning an online financial services provider of everything from wealth management to credit cards and stock market trading.

The bank, backed by the country’s largest digital wallet of the same name, launched formally Tuesday and is targeting people who don’t have access to professional financial services. That aligns with Prime Minister Narendra Modi’s ambition to broaden access for the under-banked in the nation of 1.3 billion people.

Paytm was one of fewer than a dozen entities that secured permits to start payments banks, which can accept deposits and remittances but cannot lend.

It said it will operate a mobile-first bank with zero fees on online transactions and no minimum balance.

Cryptocurrencies and the ‘crowd’ are small businesses’ bank alternative (PaymentsSource), Rated: AAA

A major trend shaping the small-business landscape is the rise in cryptocurrency, which can provide alternative means for a variety of cross-border financial transactions.

Cryptocurrency is ideal for cross-border transactions in several ways. In addition to being secure and permanent, cryptocurrency transactions allow borrowers and lenders to sidestep time spent working through a bank, as well as converting from one currency to another. For many investors, the speed and convenience of cryptocurrency-based transactions presents an opportunity to magnify gains.

Along with crowdfunding and peer-to-peer lending, cryptocurrency can improve access to both payments and credit for SMEs.

International Fintech companies with > 5M funding (Crunchbase), Rated: A

TransferWise is an money transfer service allowing private individuals and businesses to send money abroad without hidden charges.
Funding Circle is a lending platform focused exclusively on small businesses operating in in the U.S., the U.K. and Continental Europe.
Blockchain is a web-based bitcoin platform that makes using bitcoin safe, easy, and secure for all consumers and businesses worldwide.
Building a bank as smart as your phone. Intelligent notifications, instant balance updates and financial management.
WeLab analyzes unstructured mobile big data within seconds to make credit decisions for individual borrowers.

Independent Asset Managers need to become polygamous (Finextra), Rated: A

Independent asset managers shall maintain relationships not only to custodians. Due to disintermediation and distributed ledger technology they will be able to profit from a much broader range of financial assets.

Source: Finextra

SWIFT warns banks on cyber heists as hack sophistication grows (Reuters), Rated: A

Brussels-based SWIFT has been urging banks to bolster security of computers used to transfer money since Bangladesh Bank lost $81 million in a February 2016 cyber heist that targeted central bank computers used to move funds.

Taiwan’s Central News Agency last month reported that Far Eastern International Bank (2845.TW) lost $500,000 in a cyber heist. BAE later said that attack was launched by a North Korean hacking group known as Lazarus, which many cyber-security firms believe was behind the Bangladesh case.

Nepal’s NIC Asia Bank lost $580,000 in a cyber heist, two Nepali officials told Reuters earlier this month.

Australia

FACEBOOK LIVE: Treasurer Scott Morrison on fintech and the banking royal commission (Business Insider), Rated: A

He’s now in Sydney at fintech business Prospa, the nation’s leading online lender to small business, where’s he talking to Business Insider about the sector as well as the 12-month investigation into misconduct by the banks.

See the video interview here.

India

Want a loan? Make sure you’re tweeting the right things (Quartz), Rated: AAA

The article that someone tweeted about, posts that they liked on Facebook, and a new phone just bought on an e-commerce site—all these events now play a crucial role in determining if an individual is eligible for a loan or not.

Online lending firms have seen rapid growth in the last two years, despite the presence of a wide network of banks and non-banking financial companies (NBFCs) in India. That’s because, till 2015, about 70% of Indians remained under-served by banks and other financial institutions, an opportunity that these firms are trying to cash in on. Now, even banks and NBFCs are tying up with online lending firms to reach out to more customers.

The 166 million households that make up middle-income India—with annual earnings of between Rs2.2 lakh ($3,414) to Rs3.59 lakh ($5,572)—typically apply for personal loans to buy consumer durables, for weddings, to meet medical expenses, set up a new business, and the likes.

“We have about 80-90 parameters that are used to check a consumer’s credit worthiness. And that’s where technology comes into play to ensure that it can be done swiftly and efficiently,” said Satyam Kumar, co-founder, LoanTap, an online fintech platform that provides retail loans to salaried individuals.

Delhi start-up wins GIST pitch (The Hindu), Rated: B

GyanDhan, a Delhi-based start-up working in the space of education loans, emerged winner of a GIST pitch competition for enterprises in the Fintech and Digital Economy, one of the four focus sectors at the Global Entrepreneurship Summit, here on Wednesday.

Lupiya Circle, an online market place created by women in Zambia to financially empower women in the African nation through a branchless banking model was declared the runners-up.

MENA

Saudi Arabia puts buzz back into Mideast startup scene (Arab News), Rated: A

Since 2005, the top 200 funded startups in the MENA region have attracted more than $2 billion in capital, according to a report issued by MAGNiTT, which tracks the development of startups across the region.

To date, the majority of top funded startups in the region were established in the UAE, and the primary financial backers have also tended to be UAE-based.

But a recent uptick in funding from Saudi investment firms points to a developing ecosystem for startups in the Kingdom, according to MAGNiTT founder Philip Bahoshy.

Bahoshy said that startups providing solutions for broader regional challenges such as sticky logistics and cross-border banking frictions stand the best chance of attracting meaningful investment.

2018 will be the year African fintech takes off (Global Trade Review), Rated: AAA

Next year will be a good year for Sub-Saharan Africa. After a challenging 2017 for many of its nations, 2018 will see economic growth return across the continent, gas activity boom and fintech innovation pick up in speed.

So says Ecobank Research as it recently launched the newest version of its yearly Fixed Income, Currency and Commodities Guidebook, which provides analysis on African markets for investors and businesses.

The research department of the Pan-African bank forecasts three key trends that will take hold across Africa during the next 12 months. GTR takes a closer look at them.

3. Africa’s evolving role in fintech leadership

But 2018, he emphasises, will see African fintech firms increasingly driving this innovation. “There will still be international investors, but the actual leadership of fintech development is going to start coming increasingly from the Africans. It’s not going to be the Europeans and Americans going in, saying, ‘you should do this’.”

Ecobank’s research highlights South Africa, Kenya, Rwanda, Nigeria, Ghana and Côte d’Ivoire as tech hubs that will nurture the next wave of African startups and help connect them with investors.

One fintech that has caught Ecobank’s attention in particular is IroFit, a firm that uses the mobile network to enable real-time financial payments without the need for an internet connection.

Other emerging innovations in Africa include digital tools to build credit profiles for the previously ‘unbankable’ or using blockchain technology for digital identity and KYC solutions.

Authors:

George Popescu
Allen Taylor