Thursday January 18 2018, Daily News Digest

mobile banking user growth

News Comments Today’s main news: Marcus passes the $2B loan origination mark. Varo Money secures $45M in Round B. Funding Circle’s fund announces Citibank deal. Qudian enters budget auto financing. PeerStreet intros 30-day notes. Today’s main analysis: Investing in Mintos’ secondary market. Today’s thought-provoking articles: Mobile banking is more important than ever. Credit score changes would force banks to help […]

mobile banking user growth

News Comments

United States

United Kingdom

China

International

India

APAC

News Summary

United States

Goldman Sachs’ Online Lending Platform Marcus Has Originated Over $ 2 Billion in Loans, Deposits Rise to Over $ 5 Billion (Crowdfund Insider), Rated: AAA

Meeting a prediction from this past June set by Goldman Sachs CEO Lloyd Blankfein, online lending platform Marcus topped $2 billion in loan originations. Additionally, Marcus reported online deposits of over $5 billion. Deposits and consumer lending have now been combined under a single brand, thus, in reality, creating a challenger bank for the future.

Overall, Goldman Sachs (NYSE:GS) reported net revenues of $32.07 billion and net earnings of $4.29 billion for the year ended December 31, 2017.

Diluted earnings per common share were $9.01 compared with $16.29 for the year ended December 31, 2016. Goldman reported a Q4 loss of $5.51 per share. The results were impacted by a tax related expense of $4.4 billion. Without this expense, Goldman said earnings per share would have been $5.68.

Varo Money Closes $ 45M Series B Financing Round (Varo Money Email), Rated: AAA

Mobile banking is more important than ever (Business Insider), Rated: AAA

As we’ve seen for the past few quarters, mobile banking is continuing to rise, but the rate of growth is decelerating as offerings mature.

  • JPMorgan Chase 

    How a 23-year-old Max Levchin got Peter Thiel to invest in PayPal in under 24 hours (Business Insider), Rated: A

    Levchin told Shontell, “I saw [Thiel’s] name on the pinboard, wandered into a class that was taught by him, which turned out to be more like seminar with six people in the room. So it was a very small group of people. One: I couldn’t sleep because it would be obvious, but two, he was actually pretty interesting. So I stayed awake and chatted him up afterwards.”

    That turned out to be a good move. Here’s Levchin:

    “In the inimitable Peter Thiel fashion, we basically spend about 20 minutes talking after his lecture, and he said, ‘Well, what are you doing in Silicon Valley?’ I said, ‘I just got here two weeks ago. Probably gonna start a company.’ He said, ‘Oh, great. We should meet for breakfast.’

    “We met the next day. He said, ‘All right, so what companies are you thinking of starting?’ I had two ideas that I was concurrently thinking about. I described No. 1., No. 2. He said, ‘No. 1 is better; you should do that.’ ‘OK.’ ‘I’d like to invest.’ It was less than 24 hours later. Peter was a committed investor in my new project.”

    Credit score changes would saddle banks with risk to help nonbanks (American Banker), Rated: AAA

    Recently, the Federal Housing Finance Agency has been evaluating whether to allow originators that sell loans to Fannie Mae and Freddie Mac to use something other than the currently mandated FICO model. Specifically, the FHFA is evaluating whether originators can also use the VantageScore model offered by a company owned by the three credit bureaus — Equifax, Experian and TransUnion.

    VantageScore contends that its model will provide credit scores on more than 30 million additional consumers and make 7.6 million of these scores eligible for a loan sold to Fannie or Freddie because of the model’s supposed ability to more accurately assess blemished and dormant credit histories and accommodate thin credit files that most often effect younger consumers. VantageScore also argues that, since the model consolidates data from all three credit bureaus, it eliminates scoring differences caused by data discrepancies. The result, the company maintains, will be expanded home ownership, a more vibrant housing market, more consistent underwriting and faster economic growth.

    The major proponents of the alternative credit scoring model are large nonbank originators and credit reporting firms — companies that make their living from the quantity of loans they originate, not the quality. Their business models shield them from ongoing credit risk and require ever-increasing volumes to achieve scale economies. In short, nonbank originators generally don’t eat their own cooking — either in the form of loans or in the form of securities backed by the loans they originate. Therefore, they have everything to gain from this FHFA change, and very little to lose.

    PeerStreet Announces New Investment Product “30-Day Notes” (Crowdfund Insider), Rated: AAA

    On Wednesday, PeerStreet announced the launch of its new investment product, 30-Day Note, to provide increased liquidity for accredited investors at 30-day terms. According to the online lender, the 30-Day Notes product was launched quietly in October as a pilot program, is now offered monthly.

    Axial Members Surpass $ 25 Billion in Closed Middle Market Deals (Axial Email), Rated: A

    Axial, the deal network for the middle market, today announced its members have closed more than $25 billion in deals on 2,000-plus M&A and growth capital transactions since Axial’s launch in 2010. To facilitate these closed transactions, Axial arranged more than 2.1 million private member-to-member deal connections. Nearly one-third (650) of the total transactions closed in 2017.

    In 2017, the revenues of businesses that privately transacted using the Axial deal network ranged from $2.9 million to $610 million, with EBITDA ranging from negative $19 million to $223 million. Top sectors of deal flow activity include Business Services, SaaS, Healthcare IT, Distribution & Logistics, and Manufacturing. Notably, 24% of all growth capital transactions attempted in 2017 were in the Technology sector, more than doubling year-over-year from 10% in 2016.

    Worthy Peer Capital Receives SEC Qualification for 5% Money Market Alternative (Worthy Financial Email), Rated: A

    Worthy Financial, Inc., a modern personal finance company that delivers alternative investment products and digital savings solutions to a wide-range of retail investors, is pleased to announce that its subsidiary Worthy Peer Capital, Inc. has been qualified by the U.S. Securities and Exchange Commission (SEC), under Regulation A+, to bring a new liquid peer-debt product to the entire investing ecosystem.

    The new Worthy Bond offers all investors – including non-accredited investors – a 5% fixed return. Although the bonds have a 36 month term, they can be cashed in at any time for those with imminent liquidity needs, thereby serving more as an alternative to traditional money market products. Bonds may be purchased at .

    Democrats Add Momentum to G.O.P. Push to Loosen Banking Rules (The New York Times), Rated: A

    But unlike the $1.5 trillion tax overhaul, which passed along party lines, the effort to loosen the post-crisis rules is somewhat bipartisan. A group of Senate Democrats has joined Republicans to support legislation that would mark the first major revision of the 2010 Dodd-Frank Act, a signature accomplishment of President Barack Obama that has been deemed “a disaster” by President Trump.

    The bill would allow hundreds of smaller banks to avoid certain elements of federal oversight, including stress tests, which measure a bank’s ability to withstand a severe economic downturn. Under current law, banks with assets of $50 billion or more are considered “systemically important financial institutions” and therefore governed by stricter rules. The bill would raise that threshold to institutions with assets of $250 billion or more, leaving fewer than 10 big banks in the United States subject to the stricter oversight.

    Banks with assets of $50 billion to $100 billion would be immediately freed from those requirements. Financial institutions with $100 billion to $250 billion in assets, such as BB&T and American Express, would no longer be subject to tougher rules after 18 months, although the Federal Reserve would retain the authority to periodically conduct stress tests on those firms.

     

    The One Big Reason It’s So Hard to Refinance Your Student Loans (Money), Rated: A

    More than half of borrowers who applied for refinancing in 2017 were turned down, according on a report released Wednesday by LendEDU, a student loan marketplace that tracked 32,000 applications to eight refinance companies.

    Using data from users of the LendEDU marketplace, the report found that 58% of 2017 refinance applicants were ultimately rejected. And those who passed muster had very high FICO credit scores—the average approved applicant had a score of 764. Nationally, the average credit scoreis 700 out of 850; anything above 720 qualifies as excellent.

    Refinancing companies are currently advertising fixed interest rates that start at about 3.5%. Yet the average on refinanced loans in 2017 was 5.56%, LendEDU found.

    Source: Money

    Bill Gates made these 15 predictions in 1999 — and it’s scary how accurate he was (Business Insider), Rated: A

    Gates’ prediction: “People will carry around small devices that allow them to constantly stay in touch and do electronic business from wherever they are. They will be able to check the news, see flights they have booked, get information from financial markets, and do just about anything else on these devices.”

    No. 3: Instant payments and financing online 

    Gates’ prediction: “Automated price comparison services will be developed, allowing people to see prices across multiple websites, making it effortless to find the cheapest product for all industries.”

    The Top Ten Fintech Predictions for 2018 (Crowdfund Insider), Rated: A

    10. Resurgence of Peer to Peer Lending and the Emergence of A New Asset Class

    We’ve seen coin-backed lending such as Salt Lending. There will be many more platforms that will attempt to solve solvency and liquidity issues with lending in fiat currency backed by coins.

    9. Alternative Internet

    The cost of a simple PayPal transaction might go up dramatically because it was routed through Comcast’s fiber. You may have to pay an additional $3.99 a month for an “Online Banking” package if you want to do online banking…

    8. Banks will rule again

    Most of the online platforms (payments or lending) plus secondary markets are at the mercy of banks. Without a bank charter, you are simply limited on growth.

    6. Baby Boomer Financial, Inc.

    The youngest baby boomers are approaching retirement age. The baby boomer generation is about 75 million people (on par with Millennials) in the US and represents a vast amount of wealth in this country. They want to transact, invest, bank and most importantly transfer their wealth in a responsible way. I predict that there will be Fintech startups specifically addressing the needs of this generation of folks.

    4. Mass Adoption of Zero Latency Payment Clearance/Credit.

    Over the past few decades, we went from a cash society and in-person / in-branch interviews to “same-day” ACH (direct deposit) and next day loan funding. I predict that in 2018, we will see instant credit approval and funding.

    3.  Social Networks Venture Into Credit.

    I am making another prediction that Facebook or Snapchat will venture into extending credit.

    2. Vertical Integration.

    WeWork will get into the Working Capital lending business. And dare I say Indeed, Monster, and LinkedIn, will start lending money based on your resume and activities within your professional connections?!

    BlackRock makes impact a necessity for companies (ImpactAlpha), Rated: A

    Larry Fink flips social impact from a luxury to a necessity for every company. The chief executive of BlackRock, the world’s largest asset manager with $6 trillion under management, served notice on corporate CEOs their companies “must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Fink made his point as clearly as possible: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

    Would a bank payday loan be any safer? (Daily Journal of Commerce), Rated: A

    Thanks to a recent regulatory change, it now may be possible for banks to offer small, short-term loans that could be a lot less dangerous for borrowers. Whether banks will actually do so remains to be seen.

    Standard Chartered creates fintech investment unit (Fintech Futures), Rated: B

    Standard Chartered has established a new business unit, SC Ventures, to invest in fintechs and other start-ups.

    Christopher Blake Joins Cross River Bank Loan Team (Long Island Press), Rated: B

    Veteran loan officer Christopher Blake joined Cross River Bank, where he’ll serve clients in Long Island, Queens and Brooklyn in the lender’s Commercial and Multi-Family Real Estate division, the company announced Tuesday.

    Freefly has teamed up with three fantastic financing partners (Freefly), Rated: B

    AFFIRM FINANCING

    Ideal for individuals looking to finance their Freefly purchases.

    SCL EQUIPMENT FINANCE

    A flexible lender designed for U.S. business, sole proprietors, and independent contractors.

    GLOBAL FINANCE

    A creative lender with options for businesses in the U.S. and many countries across the globe.

    United Kingdom

    Funding Circle’s fund unveils Citibank deal (P2P Finance News), Rated: AAA

    FUNDING Circle’s listed fund has inked a deal with Citibank, whereby the financial institution indirectly channels £50m to small businesses through the peer-to-peer lending platform.

    The transaction was announced by the Funding Circle SME Income Fund (FCIF) on Wednesday.

    Under a rather complicated structured finance deal, Citibank’s London branch will advance a senior, floating rate loan of £50m through two Irish special purpose vehicles. The facility matures in December 2026.

    Funding Circle SME Income Fund Limited (London South East), Rated: A

    The Board is pleased to announce that the Company has entered into a formal agreement with Citibank, N.A. London Branch (“Citibank London”) to establish a funding transaction to make loans to ?UK small businesses through the Funding Circle platform?. The transaction will serve to support the Company’s target dividend yield of 6-7% per annum.

    Under the terms of the agreement Citibank London will provide �50 million of funding into the transaction, by entering into a senior, floating rate loan. The Company will contribute a portfolio of existing UK small business loans at par, and in return shall receive ?approximately �50 million of cash to be deployed in accordance with its investment policy, and junior notes.

    Fintech firms struggling to get a foothold with established lenders (The Irish Times), Rated: A

    Banks and other financial institutions remain extremely wary of working with fintech firms, particularly in Ireland where few are willing to give start-ups the endorsement they need to help secure business elsewhere.

    Andrew Patrick White, founder and chief executive of FundApps, a regtech firm that provides compliance and regulation monitoring services to asset managers and hedge funds, said many financial institutions were afraid of fintech solutions because of a fear that they would be used to replace staff.

    “Your grandmother probably has more sophisticated apps on her iPad than many banks have inhouse,” Mr White added.

    Your morning briefing (PaymentsSource), Rated: A

    ‘All-in-one’ cards get another shotCurve has debuted a card in the U.K. that allows consumers to switch a card used to fund a payment after they have left the store. Through the card’s “back in time” feature, card preferences can be changed for up to two weeks, a system the company is selling as a financial management tool. Curve, which is being offered for free with a $60 premium option with more rewards, works like a regular card and is usable anyplace that accepts Mastercard. While all-in-one cards have struggled to gain traction over the years, more than 100,000 people signed up during the card’s testing phase and spent more than $120 million, according to a release.

    OnePlus’ fraud hit: Electronic equipment company OnePlus became the latest to get hit with card fraud, with consumers reporting unauthorized transactions and the company disabling credit card payments but still allowing PayPal transactions. The company is doing a complete audit of its systems and is looking for alternative payment options.

    When we asked, which, if any, Isas have you used over the 2017/18 tax year, nearly a third (32%) said they’d only used a Stocks and Shares Isa.

    This was followed by nearly a quarter (24%) who’ve only used a Cash Isa, and 17% who use a mixture of different Isas.

    This decline in Cash Isa savings is likely to be attributed to poor cash savings rates and the introduction of the personal savings allowance in April 2017.

    Interestingly, Innovative Finance Isas – used for peer-to-peer lending – don’t appear to have taken off, with just 3% of those who voted in our poll only using this savings vehicle.

    Source: Moneywise

    Name Change for Funding Knight as GLI Finance Updates to Sancus Funding (Crowdfund Insider), Rated: B

    As part of an ongoing strategic update, GLI Finance has renamed peer to peer lending platform FundingKnight to Sancus Funding Limited with immediate effect. GLI Finance, an AIM listed company, has also transferred ownership to Sancus BMS Group Limited.

    China

    Qudian is Moving into Budget Auto Financing (CapitalWatch), Rated: AAA

    The newly listed peer-to-peer lending company in China, Qudian (NYSE: QD), has moved into auto-purchase financing, a new business initiative called “Dabai Auto,” according to the company.

    Launched in late November 2017, Dabai Auto is currently targeting Qudian’s existing high quality users, who have been approved with credit lines, but have not actively transacted in small cash installments. The company also announced that it plans to spend around RMB 100 million ($15.5 million) to promote Dabai Auto through online and offline channels. The offline channels would include Qudian user engagement and delivery centers that are located in the shopping districts of over 100 cities across China.

    HNA-owned P2P lending platform doing business normally, executive says (Global Times), Rated: A

    Payments of investment products on jbh.com, an online peer-to-peer (P2P) platform owned by HNA Group, remain normal and there have not been any capital losses since the platform was set up three years ago, an executive of the company said on Wednesday.

    Payments for all maturing investment products on jbh.com are being made as normal, sina.com.cn reported Wednesday, citing Xia Aobi, president of jbh.com.

    International

    Funding Circle and Lufax: Two High Profile IPOs for 2018 (Lend Academy), Rated: AAA

    Neither IPO is a surprise as both companies have indicated their intentions before. But we now have a clearer indication on the timing. First off the rank will likely be Lufax. The South China Morning Post reported that Lufax is planning to do their IPO in Hong Kong in April at a possible valuation of US$60 billion. This would be more than three times the valuation of their previous funding round in 2016.

    The Funding Circle news actually broke just before the New Year with this article from Sky News. They reported that the company was preparing to hire advisors in the first steps towards an IPO. They are supposedly going to interview investment bankers this quarter with a possible listing in London in late fall which would put us in the latter part of the third quarter.

    A successful Funding Circle IPO, one where the valuation rises after it goes public will be very good for the marketplace lending industry in both the UK and the US. We have had little good news here in the last couple of years when it comes to the public markets and I would very much like to see a success story here.

    Investing on the Mintos Secondary Market – Hint One (P2P-Banking), Rated: AAA

    On the Mintos p2p lending marketplace the majority of investors invest on the primary market into loans, either manually or via autoinvest. But for the 29% of investors that do invest on the secondary market picking loans presents them with a huge choice of about 125,000 offers (no typo, really 125K loan parts on offer!).

    Source: P2P-Banking

    For the shown loans there is a very high probability that they will miss the payment and therefore run an additional 60 days until they are repaid under the buyback guarantee. If that happens the remaining actual loan duration would be 62 or 63 days and the impact of the 0.1% discount on the YTM would be much smaller. The resulting YTM would be somewhere around 11 to 13%. So they would not be a good buy and there are much better offers on the secondary market.

    Source: P2P-Banking

    With two weeks remaining the effective YTM for a buyer is not 36% but rather around 12%. Again there are offers with better YTMs on the secondary market.

    Chinese tech groups undermine banks’ dominance of finance (Financial Times), Rated: AAA

    The recent refusal by US regulators to sign off on Ant Financial’s $1.2bn acquisition of Dallas-based money transfer firm MoneyGram International does not signal the end of the Alibaba-affiliated payments group’s US financial ambitions.

    On one level, the scuppered deal suggests that Chinese companies, whether state-owned or otherwise, will have an ever harder time winning approval for US acquisitions. The move also confirms that the Americans now believe that the definition of national security — their basis for scrutinising overseas deals — embraces anything related to information and data.

    But Ant Financial’s attempted US play also shows how much technology is undermining the dominance of traditional global titans, especially in the financial sphere. It is especially noteworthy that many of the upstart challengers to banks and other legacy companies increasingly either have a Chinese face or Chinese capital behind them. That, in turn, underscores how some Chinese players have leapfrogged into prominence across the world.

    Blockchain is revolutionizing the loan industry – a look at Valorem… (Global Crypto Press), Rated: A

    Smart contracts are providing the solution to the trust issues that are usually the main concerns in the micro loan industry.  Whether it be student loans, cars, or any other kind of micro lending – blockchain technology provides what’s needed to move away from the banks, and towards a peer to peer lending model.

    Volerem Foundation is building the infrastructure to facilitate exactly this.

    India

    Govt should think of new ways to boost sectors like P2P lending: LenDenClub (India Info Online), Rated: A

    Additionally, we also expect the government should think of new ways to boost sectors like P2P lending. Eg.- Enable tax exemption for the lenders on P2P lending platforms, under section 80C. This will result in raising the trust bar and credibility, leading to more and more people investing in such platforms. It will also bring in a good enough capital infusion in the P2P lending space.

    Introducing Syndicates for India (Angel.co), Rated: A

    Today, we are announcing Syndicates for India, a new way for investors in India to invest alongside experienced angels and VC funds that invest in India’s vibrant tech ecosystem.

    To date, over 1,800 startups have raised more than $700M through Syndicates on the AngelList platform, receiving more than $6B in follow-on funding.

    APAC

    Gov’t urged to increase ceiling for individual investment in P2P lenders (Yonhap News Agency), Rated: AAA

    A business lobby of peer to peer (P2P) finance firms said Thursday it has asked financial regulators to raise the annual ceiling on individual investment in P2P lenders.

    The Korea P2P Finance Association has asked the Financial Services Commission (FSC) to increase the limit to 100 million won (US$93,632) per year from the current 10 million won, an association official said.

    ZorroSign Among Top 25 FinTech Companies (PR Newswire), Rated: B

    ZorroSign, Inc., today announced the company has been recognized among the top 25 FinTech companies in Asia-Pacific (APAC) by CIO Outlook. The honor spotlights organizations that are fundamentally disrupting the way companies in the global finance sector do business. ZorroSign offers unique secure eSignature, end-to-end Digital Transaction Management, and post-execution fraud protection solution. With security being on top of mind for financial services providers, ZorroSign Document 4n6 (Forensics) Token technology offers a major advantage to its customers.

    Authors:

    George Popescu
    Allen Taylor

Thursday December 1 2016, Daily News Digest

ratesetter

News Comments Today’s main news: CAN Capital replaces CEO and other execs. Croudify: LC’s secondary market. Funding Circle sets new monthly UK record. Today’s main analysis : Online credit card fraud jumps 20%. Ratesetter’s provision fund. Today’s thought-provoking articles: China emerges as world’s largest FinTech and P2P market. Online lenders get majority of Chinese C-round funding. United States CAN Capital […]

ratesetter

News Comments

United States

  • CAN Capital replaces CEO and other execs. AT: “When a company lets more than one top leader go at the same time, that’s usually an indication that something is wrong with the internal workings of the company. Judging by the comment from the company, I’d say it has to do with investor value. If collection processes impacted this turnover and the company isn’t satisfied with the performance of some of its assets, that spells unsatisfactory profits. According to Bloomberg, CAN’s biggest competitor OnDeck, has seen a decrease in value in its shares by 55%. While CAN Capital is still private, its backers–Wells Fargo Capital Finance, Morgan Stanley, Barclays, and other large banks–will definitely want to see the company’s profits go up, not down, in this critical time when big banks are investing in FinTech.”
  • Croudify startup launches as LC secondary market. AT: “Earlier this year, Prosper shut down its secondary market Foliofn because few investors were using it. This makes me wonder if there is a marketing for Lending Club loans in the secondary sector. We’ll have to wait and see.” GP:” I strongly believe that a secondary market is needed and there is a big demand. I hope the user interface and the process is simply and smooth. I also hope pricing works similarly or better as on Lending Club’s FolioFN. The other interesting part here is how Orchard is still working on theirs…”
  • Online retail credit card fraud increases 20% during holiday shopping. AT: “We’ve been hearing more and more about online credit card fraud and CNP fraud. This is a natural outflow of the rise of e-commerce, but it does need to be addressed. Online retailers need to address this security issue, as do online lenders and alt finance companies that offer consumer loans.”
  • New LC ABS to test market. GP:”This is supposed to be the 1st rated LC securitization.”
  • OnDeck creates new chief risk officer position.GP:”De facto somebody already has or should have this role in each lender. It’s perhaps just a matter of title and holding 1 person accountable.” AT: “If Nick Brown succeeds in this role, I think you’ll see more online lenders appoint risk management officers, and if they can get a handle on the growing problem of loan defaults by improving the borrower approval process, it will be good for the industry as a whole.”
  • Finstar invests in Rocket10.
  • Mara Poling enters crowd investing niche. AT: “Mara Poling’s focus is on multi-family properties, a great niche to develop.”
  • RealtyShares names Bill Lanting VP of commercial debt originations.

United Kingdom

European Union

China

India

News Summary

United States

Shakeup at CAN Capital – CEO and 2 other Execs Put on Leave of Absence (deBanked), Rated: AAA

CAN Capital has confirmed that CEO Dan DeMeo has gone on a leave of absence. The company’s chief financial officer Aman Verjee and chief risk officer Kenneth Gang have also reportedly stepped down. Parris Sanz, the company’s Chief Legal Officer, has been made acting head of the company, while Ritesh Gupta has been promoted to COO.

Some of CAN Capital’s referral partners have reported to us that the funding of new deals has been put on hold until January 2017. This could not be confirmed, however.

A statement from CAN Capital is below:
As the board and our leadership team conducted our business reviews and looked at how we can best position the firm for future growth, we self-identified that some assets were not performing as expected and that there was a need for process improvements in collections. It became clear that our business has grown and evolved faster than some of our internal processes.

Croudify Launches Platform for Lending Club Secondary Market (Lend Academy), Rated: AAA

A new company called Croudify recently announced that their secondary market platform for Lending Club was launching in beta. The company describes itself as a secondary trading platform that allows you to find the best listed notes based on analytical models that they have built.

What made Croudify’s platform possible was the creation of Lending Club’s secondary market API last year. In fact, Croudify was the company that worked closely with Lending Club as they were developing the secondary market. Abhishek stated that after beginning work on their product in 2015 they eventually compelled Lending Club to build the API which was eventually made public.

Logging into Croudify you are presented with a portfolio summary which includes a snapshot of your loan portfolios, holdings by states (pictured below) and the percentage of your loans that are performing.

Clicking on a note shares further information.

Online Retail Credit Card Fraud Jumps 20% During Holiday Shopping Weekend (Marketwired), Rated: AAA

iovation, the leading provider of device intelligence for authentication and fraud prevention, today released new data that shows card-not-present fraud — fraudulent transactions where a credit card is not physically presented to a merchant — increased significantly from Black Friday to Cyber Monday 2016 when compared to the same period in past years.

iovation research shows a 20 percent increase in online retail credit card fraud during the 2016 holiday shopping weekend when compared to the same period in 2015, and a 34 percent increase in online credit card fraud from Black Friday to Cyber Monday 2014 to 2016. In addition, iovation disclosed:

  • The percent of all online retail fraudulent transactions from Black Friday to Cyber Monday that involved credit card fraud
    • 2016: 59 percent
    • 2015: 49 percent
    • 2014: 44 percent
  • The percent of all online retail fraudulent transactions in 2014, 2015 and 2016 that involved credit card fraud
    • 2016: 59 percent
    • 2015: 42 percent
    • 2014: 50 percent
  • The percent of online retail transactions from Black Friday to Cyber Monday that were fraudulent
    • 2016: 0.38 percent
    • 2015: 1.16 percent
    • 2014: 2.34 percent
  • The percent of online retail transactions in 2014, 2015 and 2016 that were fraudulent
    • 2016: 1.13 percent
    • 2015: 2.89 percent
    • 2014: 2.53 percent

iovation attributes the rise in online credit card fraud to the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards. While the new chip cards have proven to do a great job of stopping card-present fraud, it is now clear that fraudsters are turning online.

iovation also found that consumers conducted 55 percent of their retail online transactions from this Black Friday to Cyber Monday using mobile phones and tablets compared to 49 percent the rest of 2016. This continues an ongoing mobile retail transaction increase over the holidays and year-to-year. Last year during that same period that percentage was 47 percent compared to 44 percent the rest of the year, in 2014 that was 37 percent compared to 32 percent the rest of the year and in 2013 that was 31 percent compared to 20 percent the rest of the year.

For the holiday shopping weekend, mobile retail transactions compared to all retail online transactions were:

  • 56 percent on Black Friday, Nov. 25
  • 59 percent on Saturday, Nov. 26
  • 59 percent on Sunday, Nov. 27
  • 48 percent on Cyber Monday, Nov. 28

New Lending Club ABS to test market (GlobalCapital), Rated: A

Sources speaking with GlobalCapital on Wednesday said that the deal could potentially reflect whether investors have been put off by recent reports of several outstanding marketplace loan securitizations breaching their loss triggers earlier than expected.

OnDeck names Nick Brown to newly created position of chief risk officer (MarketWatch), Rated: A

OnDeck Capital Inc. ONDK, -0.22% said Wednesday it has named Nick Brown to the newly created role of chief risk officer. Brown comes to the company from Commonwealth Bank of Australia, where he was general manager of the group decision sciences team. Brown has a PhD in organizational behavior and statistics from Cornell University.

Finstar Announces Investment in Mobile Marketing Tech Company Rocket10 (BusinessWire), Rated: A

Finstar Financial Group, a fintech-focused international private equity group founded by Oleg Boyko, announces that it has invested USD 3 million in Rocket10, a rapidly growing mobile marketing agency. This investment forms part of Finstar’s strategy to use mobile technology to grow its fintech businesses.

As part of the venture investment, Finstar will utilise Rocket10’s mobile marketing technology across the Group’s portfolio of companies. This will offer cost efficiency and unlock new development opportunities for both companies. Finstar has also secured the right to further increase its equity stake in Rocket10.

Financial services is a key focus area for Finstar and its portfolio companies. It is estimated that the number of mobile phone users will hit 4.77 billion in 2017. So mobile is becoming increasingly important, especially in the financial services sector.

Mara Poling Enters Crowd Investing (Digital Journal), Rated: A

Both Mara Poling and FundingTree.com will be sponsoring the Crowd Invest Summit in Los Angeles, California on December 7-8, 2017. Pat Poling, Founder & CEO of Mara Poling will be speaking at CIS as a panelist. Rayaan Arif, Founder & CEO of FundingTree.com will also be moderating a panel at the Summit. Mara Poling has partnered with FundingTree.com to bring Accredited Investors to properties before opening them to the public.

Mara Poling marketing partner, FundingTree.com is a new total commercial real estate marketing solution in the crowd investing and funding marketplace. The principals have decades of experience in Marketing, Social Media, Technology and Fundraising with a strong emphasis on Commercial Real Estate.

Bill Lanting Joins RealtyShares to Expand Commercial Real Estate Debt Program (BusinessWire), Rated: B

RealtyShares, a leading online marketplace for real estate crowdfunding, today announced the hiring of Bill Lanting as Vice President of Commercial Debt Originations.

Lanting brings rich financial experience in the real estate syndication and hospitality industries to the online marketplace. A former executive with Radisson Hotels and Wyndham Hotels, he has recently been responsible for bridge loan originations, underwriting, and raising large, multi-million dollar investment funds from institutional investors for Thorofare Capital and Partners Capital. At RealtyShares, he will head the expansion of the platform’s commercial debt product.

United Kingdom

Defaults gather, and now our Ratesetter watch begins (FT Alphaville), Rated: AAA

As we’ve discussed in detail before, Ratesetter now reserves the right to take interest payments and capital away from investors and put it into the provision fund, in order to make sure there are enough funds to account for loans going bad. The upshot is that investors in Ratesetter need to pay attention to the entire book of loans, rather than their individual investments. (Whisper it softly, it’s sort of like a bank.)

So how’s the provision fund doing? Well, here’s one set of data the company shows to investors on its provision fund page, as it was on Tuesday, with the relevant numbers highlighted:

But there’s another set of data provided by Ratesetter, which tells a slightly different story. It’s on their statistics page, which provides “data on annual performance of loans and returns, updated automatically in real time.” Again, the relevant numbers are highlighted below:

The second thing to note is that it’s possible to calculate the total value of expected bad debt using the numbers on the statistics page. It’s a simple matter of applying the “actual lifetime bad debt rate to date” figures to the total amount lent, and then comparing that to the value implied by the “projected lifetime bad debt rate”. The difference is the total amount of defaults that are yet to happen.

It comes to £24.3m, according to our calculations, which is about £2m higher than the amount of current and expected money in the provision fund. However, according to a Ratesetter spokesperson, that’s not the whole story. They said “around £3m” of those losses are on loans not covered by the provision fund, which means they are held by institutional rather than retail investors.

Funding Circle tops £100m in a month (alt fi), Rated: AAA

Funding Circle, a leading marketplace lender for small businesses, has recorded a UK industry first by topping £100m in loan originations in a single month. As of yesterday, the platform was sitting on £107m in loan originations for the month.

In addition to the monthly mark, Funding Circle also notched a daily lending record yesterday, with over £9.3m disbursed.

After a temporary slowdown in volumes post-Brexit, the UK marketplace lenders hit their stride again in September, with Funding Circle, RateSetter and Zopa each posting monthly origination records. Funding Circle led the pack with what was then a UK industry-wide record at £75.2m. Funding Circle then smashed its own monthly record in October, with £95m lent.

European Union

Global Companies Enlist DirectID for Real-Time Bank Data Ahead of PSD2 (Benzinga), Rated: AAA

DirectID today announced Fleetcor, Marlette Funding and Shawbrook Bank as examples of 8 new companies using its platform for trusted online verifications and live financial data. With DirectID, these companies can reduce application fraud, enable instant customer on-boarding, and scale services internationally.

These new customers build on earlier DirectID integrations with Prosper Marketplace, Amigo Loans, Bigstone Capital, and other banking, lending, payments, insurance, property and legal businesses. Forward thinking fintech disruptors can use DirectID to unlock the power of live bank data far ahead of the expected European Union Payment Services Directive (PSD2) activation in 2018.

DirectID combines identity verification, real-time financial data, compliance checks, affordability insights and ACH payment confirmation into a single platform. This improved process automates new customer on-boarding and actively reduces risk to support growth and scalability. Businesses using DirectID reduce fraud attempts by 75%, decrease on-boarding time from days to seconds, increase back office efficiencies, and can expand product offerings to over 32 countries.

In addition, DirectID announced that U.S.-based marketplace lending accelerator LendFoundry has integrated the service to offer real-time financial data and insights, such as verification income, to its participating companies for faster and more accurate credit risk underwriting capabilities.

Comrade-to-Comrade Lending? A Marketplace Lender Opens to Russia (The Wall Street Journal), Rated: AAA

Twino, a Latvian company that facilitates peer-to-peer lending, will begin listing Russian subprime loans on its website on Thursday, a first for a European marketplace lender. Investors get scant information on the people they are lending to, but they’re offered double-digit interest payments.

Twino operates a model more akin to a payday-loan operator than a classic peer-to-peer lender. Rather than matching borrowers and lenders, Twino makes loans and then uses its website to resell them to investors. It makes money by taking a cut of the interest payments.

The cut is considerable: The Russian loans will pay around 14% annual interest to investors. The company’s portion depends on the interest charged on the loan. Meanwhile, the borrowers in Russia will pay over 100% in interest, Mr. Kazanins says. Twino says that large margin is enough for it to pledge to repurchase any defaulted loans.

Russia getting slapped with international sanctions in 2014 after annexing Crimea “was a break for us,” says Mr. Kazanins. Russian banks curtailed lending and customers were forced into the nonbank market to get loans.

TRANSFER PRICING Italian ABS hindered by NPL valuation issues (LinkedIn Pulse), Rated: A

The securitisation of non-performing loans (NPLs) has been deemed a credible solution for Italian banks seeking to offload the assets from their balance sheets. Just one deal has launched to date, however. Getting a plausible valuation for the NPL portfolio being transferred to the SPV may be one of the main obstacles.

Following a set of initiatives set out by the Italian government over the past 18 months, many Italian banks are anticipating sales of large NPL portfolios into SPVs for securitisation purposes. The Italian government has agreed to guarantee the senior NPL ABS notes under its Garanzia Cartolarizzazione Sofferenze (GACs) scheme, while the fund Atlante II will invest in mezzanine notes (SCI passim).

Several factors drive the transfer price of an NPL portfolio to an SPV: the quality of the loans, the geographical location and whether the loans are secured or unsecured. However, the lengthy Italian legal process and the availability of loan data are two additional factors that may also be weighing on the NPL valuation process.

Banking Platform Mambu Receives AWS Financial Services Competency Certification (Crowdfund Insider), Rated: B

Mambu, a software as a service (SaaS) banking platform, has received the Amazon Web Services (AWS) Financial Services Competency certification.

The AWS Financial Services Competency is focusing on the AWS Partner Network (APN) members in three categories: Risk Management, Core Systems, and Data Management. Mambu had to achieve specific requirements in order for them to be a recognized partner.

China

China Emerges As The Biggest Advanced Fintech Market In The World (China Money Network), Rated: AAA

China is the world’s largest financial technology market, with a market size greater than US$1.8 trillion in 2015.

Out of 27 Fintech unicorns globally, China’s eight Fintech unicorns have raised US$9.4 billion in funding and have a combined valuation of US$96.4 billion, according to a report released by entrepreneur Gaurav Sharma.

The four biggest Fintech unicorns in the world are Chinese: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion), and Qufenqi (US$5.9 billion).

Mobile payments are also at an all-time high. China has 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

On the other hand, domestic incumbent banks continue to struggle with their relatively undeveloped systems. The biggest Fintech startups are in payments and lending, which account for nearly 80% of the combined value of all unicorns.

China is also the world’s biggest P2P (peer-to-peer) lender. In 2015, registered P2P lenders originated around US$60 billion consumer and US$40 billion business loans.

Lufax is the largest P2P lender, with a valuation of US$18.5 billion. There is also Jiedaibao, which is backed by JD Capital.

Around Jan 2016, there were 4,500 P2P platforms in China with 50% of them facing frauds, high delinquency, or liquidity issues.

China is also planning to develop a far-reaching social credit system by collecting information online and providing all its citizens a score.

Hyperledger Project Hits 100 Members With Addition of China’s SinoLending, Gingkoo, ZhongChao (Bitcoin Magazine), Rated: A

Hyperledger Project, an open source blockchain initiative hosted by the Linux Foundation, has hit a major milestone of 100 active members. Several new members from China have joined the project, including Dianrong (formerly SinoLending), Shanghai Gingkoo Financial Technology and ZhongChao Credit Card Industry Development Company.

Dianrong now ranks among the top three peer-to-peer lending platforms in China, according to a report by Wdzj.com and Yingcan Consulting.

Htite has hinted numerous times at his company’s interest in blockchain technology, stating earlier this month that Dianrong has been developing blockchain applications for use in online lending. He said that that the company has committed to invest between U.S. $30-40 million in development over the next two years.

More than 80% of Internet Finance Companies Received C-round Funding are Online Lending Platforms (Crowdfund Insider), Rated: A

Data from IT Juzi.com indicates there are now 30 Chinese internet finance companies having received C-round funding (25thNovember 2016).

India

Rupaiya Exchange raises $ 200,000 in funding (Business Standard), Rated: A

Rupaiya Exchange, a peer-to-peer (P2P) lending aggregator, has raised USD 200,000 (about Rs 1.36 crore) in angel funding from a group of high-net-worth individuals (HNIs) and professionals.

The company, which began its operations in November last year, has developed proprietary technology to assess users registered on its platform and perform credit checks on the borrowers.

The information is then shared with lenders which includes banks, non-financial companies (NBFCs) and individuals.

i-lend.in signs pact with Cove Ventures (India Info Online), Rated: A

Hyderabad-based i-lend.in; one of the best performing company in the nascent Peer 2 Peer (P2P) / Alternate Finance and UK-based Cove Venture, a leading Big Data solutions provider entered into a strategic agreement.

Under this strategic agreement, both firms will apply Artificial Intelligence, Deep and Machine Learning algorithms in the Indian Alternate Finance & P2P Lending industry to ensure more people in urban and rural India get access to credit at moderate interest.

The models will help improve the predictability by analyzing online, social and financial behaviour thereby enabling I-lend with significant accuracy. This predictability will help in pricing loans, opening up new segments and deliver better financial performance.

Authors:

George Popescu
Allen Taylor