Thursday January 3 2019, Daily News Digest

china p2p lending

News Comments Today’s main news: RateSetter passes 500M GBP in secondary market lending. U.S. economy fuels boom in consumer debt. Seedrs tops 500M GBP in crowdfund securities. Today’s main analysis: China P2P lending crackdown could see 70% firms closed. Today’s thought-provoking articles: Peter Renton’s Q3 2018 MPL results. 2018 was a standout year for fintech funding. 9 big ideas […]

The post Thursday January 3 2019, Daily News Digest appeared first on Lending Times.

china p2p lending

News Comments

United States

United Kingdom

China

International

India

News Summary

United States

U.S. Economy Fuels Boom in Consumer Debt (WSJ), Rated: AAA

Consumer debt, including credit cards, auto and student loans and personal loans, is on pace to top $4 trillion in 2019.

Consumer spending has increased 2.7% on average in the four quarters through September compared with the same period a year earlier, as disposable income rose 2.7% on average, according to Moody’s Investors Service. Meanwhile, personal savings as a percentage of disposable income was 6.3% in the third quarter, above a 20-year average of 5.9%, according to Bureau of Economic Analysis data.

My Quarterly Marketplace Lending Results – Q3 2018 (Lend Academy), Rated: AAA

My trailing 12 month returns for the year ended September 30, 2018 across all my accounts was 4.77% up from 4.46% in my last update. My original six accounts, all with Lending Club and Prosper, also improved over last quarter but are still at a paltry 3.19%.

Source: Lend Academy

How Betterment Stayed on Top in 2018 (and How they Plan to Stay There in 2019) (Financial Advisor IQ), Rated: A

Robo advisor Betterment currently manages $15 billion in assets for its more than 400,000 customers, firm CEO Jon Stein tells FA-IQ. But at the start of 2016, Betterment’s AUM was just a little over $6 billion, Stein says. The firm has cemented its place on the 2018 Financial Times’ 300 Top RIAs list.

Q: How has Betterment’s client base evolved?

A: When Betterment was first launched, our customer base was mainly young folks in their twenties who were depositing $100-$500 to invest at a time. That client demographic has shifted dramatically over the years. Today, more than one-third of our business comes from customers who are at least 50 years old.

2018 – Volatile Equity and Credit Markets (PeerIQ), Rated: A

2018 was a volatile year for equity and credit markets, particularly in the fourth quarter. The S&P500 is down ~7.5% for the year, and cyclical stocks are down more. CDX IG spreads have widened ~40 bps and CDX HY spreads have widened ~150bps.

ABS markets enjoyed record issuance. However, spreads widened, and all-in yields were higher leading to rate increases for borrowers and tighter margins for lenders. 2019 is shaping up to be a pivotal year in this late economic cycle. Synchronized global growth could turn into a synchronized slowdown. The risk of policy error is heightened as the Fed navigates record low unemployment and a slowdown in growth. The US yield curve has partially inverted and the all-important 3-month – 10-year yield spread is at ~37 bps.

Kevin Tweddle of Independent Community Bankers of America (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Kevin Tweddle. His official title is the Group EVP for Innovation and Financial Technology at the Independent Community Bankers of America (ICBA), the leading trade organization representing community banks. He is completely focused on fintech and helping community banks use technology to thrive in the future.

Online Loan Marketplaces: Benefits, Challenges, and Enormous Growth (Small Biz Trends), Rated: A

Financial technology (Fintech) and the internet have enabled the creation of online loan marketplaces. Marketplace lending is made possible by technology platforms that use scoring algorithms to determine the borrowers’ ability to repay.

Fintech online loan platforms have started creating partnerships with banks and credit unions to reach small businesses who aren’t as comfortable dealing entirely online. Traditional lenders are eager to jump on the Fintech bandwagon to avoid being made obsolete.

As a small business owner, will you consider online lenders to finance your business? The convenience of banking online is attractive to many who want to bank from anywhere. Online lender Kabbage says 17% of their loans have been accessed through mobile.

Equifax Faces Scrutiny As Dems Take Over The House (PYMNTS), Rated: A

A report in the Wall Street Journal, citing analysts, reported that legislative response to the massive Equifax data breach of 2017 is at the top of the agenda for 2019. The Wall Street Journal noted that existing proposals, some bipartisan, provide a glimpse into how changes can be made to the industry. The paper noted the changes would pertain to how the firms handle consumer information and could include tougher cybersecurity standards and making it easier for consumers to fix mistakes on their credit reports.

White Oak Healthcare Finance Provides $ 161 Million to Support Allegiant Healthcare’s SNF Acquisition (AP News), Rated: B

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as sole lender and administrative agent on the funding of a $161 million senior credit facility for Allegiant Healthcare (“Allegiant”) and Hillstone Healthcare, Inc. (“Hillstone”). The funds were used to acquire and provide working capital for a portfolio of 17 skilled nursing facilities in Ohio.

Five reasons Bitcoin could enter a more extreme death spiral (The Conversation), Rated: B

The one upside to all this is that, although cryptocurrencies may have entered a death spiral, the blockchain economy is here to stay. As well as allowing safe peer-to-peer lending and transactions, it is being used to build more efficient supply chains and in the evolution of the internet of things – to name just a few of its applications.

United Kingdom

RateSetter passes £500m in lending on secondary market (P2P Finance News), Rated: AAA

RATESETTER has passed £500m in lending on its secondary market, marking a major liquidity milestone for the platform.

At the end of December 2018, the peer-to-peer platform revealed that a cumulative total of £500m in liquidity had been provided to investors via its secondary market. According to the platform, in the majority of cases investors were able to access these funds within one working day.

Seedrs Tops £500 Million in Crowdfunded Securities (Crowdfund Insider), Rated: AAA

In a blog post, UK crowdfunding platform Seedrs shared that it has now topped £500 million in investment crowdfunding. The money has been raised for 720 deals that have been successfully funded since the platform launched.

P2P set for fundraising boom in 2019 (P2P Finance News), Rated: A

P2P lenders raised more than £10m through crowdfunding platforms last year to boost their technology and operations, while almost £2bn was ploughed into the wider fintech sector.

“39 fintech companies have used crowdfunding platforms to raise capital. This is a record level of crowdfunding investment into fintech companies and we expect to see more of this in 2019.”

Robo-advice app for self-employed launches (FT Adviser), Rated: A

A new robo-advice service designed especially for the self-employed and freelancers is expected to launch in the first quarter of 2019.

The start-up, which received £1.5m after a funding round in late 2017, is currently in the Financial Conduct Authority (FCA) Sandbox, and hoping to receive authorisation in the next couple of months.

iwoca adds Barclays and HSBC to Open Banking connections (Fintech Finance), Rated: B

iwoca,the UK’s fastest growing small business lender, today announces it has connected to Barclays and HSBC banks under Open Banking. This expands the number of Open Banking connections offered by iwoca to three, including Lloyds Bank, and will enable more than 60 percent of the lender’s customers to take advantage of the Open Banking service.

Arbuthnot Commercial ABL provides £6.5m facility to Fluorocarbon Group (Specialist Banking), Rated: B

Arbuthnot Commercial Asset Based Lending (ABL) has agreed to provide a £6.5m refinancing facility to fluoropolymer processor the Fluorocarbon Group.

China

China P2P Lending Crackdown May See 70% of Firms Close (Bloomberg), Rated: AAA

The number of Chinese peer-to-peer lenders may drop by 70 percent this year, a research firm that tracks the industry says, as the nation intensifies a crackdown on riskier forms of financing.

As few as 300 companies will remain by the end of the year, according to an estimate from Shanghai-based Yingcan Group. The number of operators dropped by more than 50 percent to 1,021 during 2018, it said, adding that there’s been no new entrants into the market since August.

Tighter Reg Shrinks China’s P2P Lending Mkt By 50 Pct In 2018 (PYMNTS), Rated: A

According to Yingcan Group, by the end of 2019, there will only be 300 P2P lenders remaining. During 2018, the market research firm said the number of P2P lenders declined by 50 percent to 1,021. What’s more, no new companies have entered the market since August.

Yidai shuts shop as China intensifies crackdown on P2P lenders (Banking & Finance), Rated: A

Yidai, an online peer-to-peer (P2P) lending intermediary, is the latest to exit the business as China reins in its US$176 billion experiment with this riskier form of financing.

The company set up a committee to start refunding its lenders after “months” of losses, Yidai said in statements over the extended holiday weekend. It has about 32,000 lenders with an outstanding principal balance of four billion yuan (S$795.4 million), and expects to repay them in three-to-five years.

International

2018 was a standout year for fintech funding (Business Insider), Rated: AAA

In the first half of 2018 alone, fintechs secured $57.9 billion, nearing the previous annual record of $62.5 billion set in 2015.

Fintechs including UK neobank Revolut, US insurtech Root, US fintech for gig economy workersEarnin, Hong Kong-based alt lender Oriente, and US crypto exchange operator Coinbase all raised funding rounds of over $100 million this year.

9 big ideas for 2019 (American Banker), Rated: AAA

JPMorgan Chase collected more than $1.8 billion in revenue from overdraft fees in 2017, according to an analysis of regulatory data by the Center for Responsible Lending. Bank of America and Wells Fargo both raked in more than $1.6 billion. Big banks typically charge around $35 per overdraft. Many other institutions also rely on such fees.

Give customers some control of their financial data

For decades, banks, credit card networks and credit bureaus have been sharing and selling consumers’ financial data without their knowledge or consent while data aggregators have screen-scraped that information without the full cooperation of financial services providers.

But there are signs that is beginning to change.

Fintech Predictions for 2019 (Crowdfund Insider), Rated: A

10. New Asset Class – New Asset Backed Lending for Crypto

The likes of Nexo, SALT, CoinLoans & Unchained Capital have emerged in the recent months unlocking the value of your cryptocurrency. There is a list of crypto lending sites here.

8. Banks will rule again

We have seen big banks leveraging Fintech platforms from OnDeck and Avant in 2018. More of it will come in 2019 as banks begins to decentralize banking again.

7. Everyone will be rich (unlocking home equity value)

I attend a talk by Mike Cagney of Figure at 2018’s Lendit China conference. He’s creating something completely different to unlock the potential of the entire “supply chain” process from home equity lines of credit to bundling and tracking this asset class utilizing smart contracts and blockchain. He wants to eliminate the hurdles and ambiguity for the secondary market.

As home equity value rises and interest rates increase, home equity products will need a ton of tech. It has become a forgotten art since the great depression. I am predicting that a lot more of Fintech companies will come to light in 2019 working with the banks to unlock consumers’ home equity value

India

Top 30 Fintech Influencers in India 2019 by Digital Fifth (Fintech News), Rated: AAA

Amrish Rau : CEO at PayU India

Amrish Rau is the CEO of PayU India, the country’s leading digital payment solution provider valued at around USD 2.5 billion. Previously, he had founded Citrus Pay, which was acquired by Naspers (PayU) in one of the largest startup acquisitions in India. PayU’s digital lending platform Lazypay has done extremely well with nearly 4.5 lakh customers already using it. He has also invested in multiple startups like Signzy, Elemential, Nuo and Open.

Harshil Mathur : CEO & Co-Founder at Razorpay

Harshil runs one of India’s most innovative Fintechs, Razorpay, which is morphing from a B2B Payment Gateway into a Financial Conglomerate. They have entered the lending business with Razorpay Capital, which has already reached an annual loan disbursal rate of USD 30 million.

Manish Khera : CEO at Happy

Manish is the founder of Happy Loans – one of the fastest growing MSME lending platform in the country.

Naveen Kukreja : Co-Founder & CEO at Paisabazaar.com; CMO at Policybazaar

Naveen is the co-founder and CEO of Paisabazaar.com. Under Naveen’s leadership, Paisabazaar.com has become one of the largest marketplace platforms for lending and banking products. Paisabazaar.com currently disburses annualized loans worth USD 1 billion to more than 1000 towns and cities across India.

Red tape grounds P2P startups as investors stay clear of space (India Times), Rated: A

The latest entrants into the digital lending sector, peer-to-peer lending platforms, are facing an uphill task attracting investors with regulatory restrictions limiting their growth potential.
OMLP2P is a Mumbai-based lending platform and disburses around Rs 20 lakh per month. Another Mumbai-based P2P lending startup Paisadukaan’s founder Rajiv Ranjan also said that VCs have been shying away from this sector because of the limitation imposed by the RBI.
Authors:
George Popescu
Allen Taylor

The post Thursday January 3 2019, Daily News Digest appeared first on Lending Times.

Wednesday August 22 2018, Daily News Digest

Elevate Credit

News Comments Today’s main news: Elevate Credit expected to announce $203.49M in sales. Ant Financial delays IPO again. SocietyOne getting close to $500M in total lending, six years in. ClearScore to offer credit scores in India. Capital Float buys Sequoia and Walnut. Today’s main analysis: 10 years after financial crisis, credit market on upward curve. Today’s thought-provoking articles: New […]

Elevate Credit

News Comments

United States

China

International

India

Other

News Summary

United States

Brokerages Anticipate Elevate Credit Inc (ELVT) Will Announce Quarterly Sales of $ 203.49 Million (Baseball Daily Digest) Rated: AAA

Equities research analysts forecast that Elevate Credit Inc (NYSE:ELVT) will post $203.49 million in sales for the current fiscal quarter, Zacks reports. Two analysts have issued estimates for Elevate Credit’s earnings, with estimates ranging from $201.00 million to $205.97 million. Elevate Credit reported sales of $172.85 million during the same quarter last year, which indicates a positive year-over-year growth rate of 17.7%. The firm is expected to report its next quarterly earnings report on Monday, October 29th.

According to Zacks, analysts expect that Elevate Credit will report full-year sales of $803.23 million for the current financial year, with estimates ranging from $801.00 million to $805.45 million. For the next financial year, analysts expect that the company will report sales of $927.09 million per share, with estimates ranging from $926.97 million to $927.20 million. Zacks’ sales calculations are a mean average based on a survey of research firms that follow Elevate Credit.

Financial Crisis – 10 Years Later: Consumer Credit Market on an Upward Curve (Nasdaq) Rated: AAA

Ten years after the biggest financial crisis to hit the United States since the Great Depression, much has changed in the consumer credit marketplace. Serious delinquency rates have recovered since that period, and the credit quality of consumers has broadly improved. Yet the crisis has had a profound effect on consumer access to credit and the relationship they have with it.

TransUnion’s (NYSE:TRU) just-released Q2 2018 Industry Insights Report allows for comparisons between Americans’ credit preferences today versus 2008, specifically in the auto finance, credit card, mortgage and unsecured personal loan markets.

Source: TransUnion

Lawmaker Questions FinTech Industry Over Lending Practices (Govtech) Rated:A

Rep. Emanuel Cleaver (D-Mo.) released a report Friday detailing the lending practices of some prominent fintech companies, finding that some companies could be discriminating against minorities and calling for more transparency from the fintech sector.

Fintech companies are somewhat controversial because many engage in traditional banking practices, and some consumers and regulators are calling for them to be regulated like traditional banks.

Small banks need big data to maintain customer service edge (American Banker) Rated: A

Big data isn’t just for big banks.

The modern banking customer wants advanced online and mobile banking options, and delivering such services requires even the smallest community bank to get a handle on customer data, said Corey LeBlanc, chief technology officer and vice president at Origin Bank.

Blockchain Meets REIT – A New Era in Real Estate Investing (Market Insider) Rated: A

Building Block, Inc. announced today it is the first North American REIT (Real Estate Investment Trust) to embrace the emerging efficiencies of blockchain technology and provide a new way to invest in one of the world’s most well-known and trusted assets, real estate.   Blockchain technology will enable Building Block REIT to virtually eliminate friction in REIT shareholder communication by allowing direct dividend disbursement, secure user voting, and smart contract functions that execute automatically when pre-set parameters are met.

Building Block REIT plans to raise funds in the form of a digital initial public offering (Digital IPO) accepting payments via U.S. Dollars or fractional Ethereum cryptocurrency.  Investors worldwide will be able to purchase shares in Building Block REIT on SEC compliant alternative trading systems (ATS) or peer-to-peer exchanges with whitelisted parties to invest in US commercial office, multi-family and mixed-use real estate.

JPMorgan launching Roar platform for crowdsourced data (Business Insider) Rated: A

JPMorgan’s corporate and investment bank is best known for advising businesses on billion-dollar acquisitions, helping private unicorns tap into the public markets, and managing the cash of Fortune 500 companies.

But now it is quietly working on a new platform that would go far beyond anything the firm has previously done, using crowdsourcing to accumulate massive amounts of data intended to one day help its clients make complex decisions about how to run their businesses, according to people familiar with the project.

The platform, called Roar by JPMorgan, would store sensitive private data, such as hospital records or satellite imagery, that’s not in the public domain. Typically, this type of information is exchanged between firms on a bilateral arrangement so it is not improperly used. But Roar would allow clients to tap into this data, which they could then use in a secure fashion to make forecasts and gain business insights.

New Report Shows Identity Verification a Priority for eCommerce and Online Lending Businesses (Global News) Rated: A

A new report from Whitepages Pro shows that an overwhelming majority of North American companies in ecommerce and financial services surveyed consider identity verification to be a top business priority but many still don’t believe they do it well or have all the data and tools they need to be successful. For the report, “The State of Identity Verification Maturity in North America,” businesses were asked, among other things, to rank themselves on a 4-stage scale of identity verification maturity for how they use identity data to combat fraud and improve the customer experience.

Among the report’s key findings:

  • Driven by the belief that fraud attempts are increasing in frequency and sophistication, identity verification is a priority for most organizations (93 percent). While they vary in the degree to which they use advanced techniques, most organizations want to improve their identity verification methods and outcomes. Just 2 percent believe they are completely successful at identity verification.
  • Organizations want access to more data points (just 13 percent say they have all the data they need) and see data linkages (the relationships between data elements) as a way to improve their identity verification processes. While access to traditional data (like a street address) is common, many still don’t have or use digital data (like an IP address). Most of the survey respondents believe linking data reduces fraud with 77 percent believing it increases confidence in a customer’s identity.
  • Organizations want more and improved identity verification automation. However they often rely on in-house (such as historical data and white/black lists) that make it difficult to expand the use of automation, resulting in an over reliance on costly and time consuming manual reviews. A large majority (71 percent) believe machine learning can play a role in reducing manual reviews and making identity verification more effective.

Bank of the West exec bolts for startup, sees chance ‘to redefine retail banking’ (American Banker) Rated: A

Thibault Fulconis, who until recently was chief operating officer of Bank of the West, has joined the fintech digital banking startup Varo Money as its chief financial officer.

Varo Money is a mobile-first challenger bank that aims to help Americans achieve financial health. It is in the same league as Chime, Digit, Moven, MoneyLion, Qapital and N26.

White Oak Healthcare Finance Closes $ 40 Million Financing for LifeCare Holdings, Inc. (Business Wire) Rated: A

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as lead lender and administrative agent on the funding of a $40 million asset based senior credit facility for LifeCare Holdings, Inc. (“LifeCare”). The funds were primarily used to refinance existing indebtedness. White Oak previously announced the financing of LifeCare Home Health LLC, the home health entity owned by LifeCare.

TradeStation Launches New Fully Paid Lending Program (GlobeNewswire), Rated: A

TradeStation, a Monex Group company and award-winning online broker-dealer and futures commission merchant, today announced the launch of its Fully Paid Lending Program. This program allows qualified equities account holders the opportunity to earn interest income on lendable securities in their accounts.

Under the Fully Paid Lending Program, TradeStation identifies stocks in qualified accounts that are eligible for lending. Based on market demand, some or all of a qualified client’s fully paid positions or excess-margin securities may be lent out to other financial institutions to satisfy their customers’ position requirements. While their stocks are on loan, clients automatically receive 50% of the net proceeds earned by TradeStation for lending out the shares, which is accrued daily and automatically posted monthly to their accounts. Daily income ceases to accrue when the client sells a lendable stock or the stock is no longer on loan.

US wakes up to SME cybersecurity needs (Fintech Futures) Rated: B

US President Donald Trump has signed the National Institute of Standards and Technology (NIST) Small Business Cybersecurity Act, a bill which will provide a set of resources for small businesses to best protect their digital assets from cybersecurity threats.

United Kingdom

Private credit offers an escape from miserly bond yields (Citywire) Rated: AAA

For reasons that are quite clear if you follow my writings on a regular basis, equities and bonds will most likely deliver disappointing returns for many years to come.

My central forecast is an annual average inflation-adjusted return of 0-2% on a global portfolio consisting of 40% bonds and 60% equities between now and 2050.

The good news next.  Fortunately, there are many things you can do to improve on those lacklustre numbers. Those returns are for the lazy investor; someone who invests passively.

China

Ant Financial IPO plans pushed back again (Financial Times) Rated: AAA

A blockbuster listing of Ant Financial, the fast-growing electronic payment affiliate of China’s leading tech group Alibaba, has again been delayed as it continues to burn through cash and come under pressure from Beijing’s crackdown on non-traditional financial institutions.

Ant was valued at $150bn in its last private fundraising in June, a round that bankers said paved the way for an initial public offering as early as this year.

Moody’s: China’s new measures on P2P lending are credit positive (ECNS) Rated: AAA

The global credit rating agency Moody’s called China’s newly-issued regulations on peer-to-peer lending platforms are “credit positive”, because they will strengthen protections to individual lenders and prevent risk spilling over to the broader financial system.

Moody’s commentary came after Chinese regulators announced 10 measures to address risks related to P2P lending platforms on August 12. The P2P platforms enable individuals to lend directly to borrowers through the Internet.

The new regulations clarified responsibilities of P2P platforms and their shareholders, stipulated conditions for orderly liquidation of failed platforms, outlined penalties for borrowers that escape their debt obligations and prohibited registration of new platforms.

Next Step to Regulating P2P Lending Platforms — Figuring Out Who Owns Them (Caixin Global) Rated: A

Months into the crisis in China’s online lending industry, regulators want to know who actually owns the country’s peer-to-peer (P2P) lending platforms.

The National Internet Finance Association of China (NIFA) issued a notice on Monday designed to help it keep tabs on key stakeholders in China’s online P2P lending platforms as financial and legal difficulties continue to engulf the business.

The effort to bring greater clarity to the workings of P2P platforms comes after hundreds of online platforms have encountered financial and legal troubles in the last few months. In July, at least 165 P2P platforms had difficulties meeting cash-withdrawal demands, saw their owners abscond with investor funds, or were investigated by police, according to a report by internet lending research firm Wangdaizhijia. The number was nearly triple that in June, Wangdaizhijia said.

In-Depth: Police Launch Global Hunt for ‘Solar King’ Caught Up in P2P Bust (Caixin Global) Rated: AAA

Peng Xiaofeng was once China’s youngest billionaire and a rising star in the solar industry. But the founder of now-bankrupt LDK Solar has been put on China’s most-wanted list, hunted by law enforcement agencies for illegal fund-raising by his peer-to-peer (P2P) lending platform Solarbao.com.

Police in the city of Suzhou, where Solarbao.com is registered, want Interpol to issue a Red Notice against 43-year-old Peng, who is accused of swindling more than 5,000 investors and leaving a trail of debt amounting to 220 million yuan ($32.1 million). They have also branded the platform, a subsidiary of Nasdaq-listed SPI Energy Co. Ltd., a fraud.

HuaAn Finds Itself Target of Investor Ire After P2P Company Accused of Fraud (Caixin Global) Rated: A

The Shanghai office of fund manager HuaAn Future Asset Management Co. Ltd.was surrounded on Monday by throngs of angry investors who blame the company for what they perceive to be its role in an online-lending fraud. HuaAn denies any involvement.

Monday’s protest centered on P2P site PPMiao.com, which was accused of illegal fundraising by police in the eastern city of Hangzhou, where PPMiao.com operator Guangxi PPMiao Internet Technology Co. Ltd. is registered. HuaAn held a 37.5% stake on behalf of an asset management plan in PPMiao.com’s former operator, Hangzhou Fuqian Network Technology Co. Ltd., as of June 30, making HuaAn the target of investor ire when PPMiao.com’s financial problems surfaced.

International

Many countries don’t use credit scores like the US — here’s how they determine your worth (Business Insider) Rated: AAA

In the US, a good credit score can feel like a key determinant of success. It defines how good an interest rate you can get on a car loan or mortgage, the quality of credit card you can get approved for, or if you’ll get approved for any credit at all.

The better your score, the better the perks. A bad score can become a black mark that leads to missing out on the home you want (credit checks are a common aspect of apartment applications), higher car insurance rates, or even difficulty getting a cell phone, according to Nerdwallet.

But as monolithic as the credit score seems, many countries in the world handle credit very differently — with many having no credit score system at all.

Blockchain Can Help Peer-To-Peer Car Lending Schemes Gain Traction (Market News) Rated: A

Blockchain technology can help car-sharing companies to track a person using the car any time. According to industry analysts, the car sharing economy is expected to hit $335 billion by the year 2025.

The car sharing idea has been gaining a lot of interest among car drivers over the recent years. According to estimates by Global Market Insight, the peer-to-peer car sharing sector will amount to $11 billion. The growth has largely been attributed to raising cost of owning a car.

The biggest challenge with the Peer-to-peer lending system is trust. The car owner has to have total trust in the person hiring the car. Additionally, the car owner has to be sure that the hirer has enough money to cover the period the car is hired. The owner of the vehicle would also like to track where the car is as well as the condition in which it is being driven. On the side of the hirer, they would love to know if they are hiring the car from the original owner and that the data exchanged between the two parties is secure.

Australia

SocietyOne Celebrates Sixth Anniversary; Total Lending Now Approaching $ 500 Million (Crowdfund Insider) Rated: AAA

Australia-based marketplace lender SocietyOne announced celebrated its sixth anniversary of operations as total lending since inception approaches $500 million.

SocietyOne also reported it has more than 20,000 customers and since the beginning of 2016, total lending has grown nearly 6 times and the lender’s loan book now totals over $220 million, up from $41 million at the start of 2016.

India

UK’s fintech startup ClearScore set to offer credit scores in India (Economic Times) Rated: AAA

UK-headquartered fintech startup ClearScore is all set to start its business in India offering credit scores to Indian consumers in partnership with Experian, free of cost, to improve the awareness levels of the consumers regarding credit. India is their second international market after the company started operations in South Africa last year.

ClearScore will be available on Google Play Store and will provide details of the credit score, giving alerts about changes in the score and provide details about how consumers can improve the score.

Capital Float buys Sequoia & SAIF-backed Walnut for $ 30 mn (VC Circle) Rated: AAA

Bengaluru-based digital lending platform Capital Float has acquired personal finance management app-maker Walnut for $30 million (Rs 209 crore) in a cash and stock deal, a company statement said. Both the companies count Sequoia Capital and SAIF Partners as common venture capital investors.

Walnut allows users to track spends, check on credit and bank balance, bill payments and split expenses within a group. In July 2017, it launched a small ticket credit line for its users called Walnut Prime based on user data and consumer behaviour. The platform has so far disbursed Rs 100 crore in consumer loans.

OfBusiness Raises INR 200 Crore in Series C Financing (FinSMEs) Rated: A

OfBusiness, a Gurgaon, India – based technology enabled SME financing platform, raised INR 200 crore (approx $29m) in Series C financing.

The round was led by Creation Investments and Falcon Edge with participation from existing investors Matrix Partners India and Zodius Capital. With this new round of funding, the company has raised a total of INR 500 crore of equity and debt funding to date. It has also raised debt lines from Kotak, Tata Capital, RBL Bank and Northern Arc amongst other lending partners.

The capital will be used for continued rapid growth and model scaling.

Five Star Business Finance Raises USD$ 100M in Funding (FinSMEs) Rated: A

Five Star Business Finance Limited, a Chennai, India–based fully-secured small business financing company focused on South India, raises USD$100M in funding.

The round was led by alternative asset firm TPG, with participation from existing investors Norwest Venture Partners, an investment fund managed by Morgan Stanley, and Sequoia Capital. The company’s first investor, Matrix Partners India, continues to stay invested in the company.

Led by D. Lakshmipathy, Chairman and Managing Director, Five Star is a non-bank finance company providing loans to nearly 40,000 customers.

P2P Online Lending Startup Finzy Completes $ 2.3 Mn Pre-Series A Fund Raise (Indian Web) Rated: A

Bangalore-based peer to peer (P2P) lending platform Finzy on Monday announced raising funds worth USD 2.3 million in Pre-Series A round, including USD 1.3 million raised in the first tranche in March 2018.

This funding round has been funded by senior professionals from BFSI industry and successful entrepreneurs. The startup plans to use the freshly raised capital for geographical expansion, technology investment and stronger distribution networks.

Founded in 2016, by Abhinandan Sangam, Amit More and Vishwas Dixit, Finzy is a premier P2P lending solution in India that connect borrowers with investors and make the entire process simple and easy so that one can get a loan in as little as 48 hours.

Five things you should know before lending on P2P platform (Economic Times) Rated: A

Don’t let greed cloud your judgment. If you are in a tearing hurry to pocket double-digit returns, you are likely to overlook many warnings signs. That is why it is always better to start with a small amount, learn the ropes, before going for the kill.

Different platforms have different ticket size for lending. With companies like Faircent offering as low as Rs 750 per loan. The ROI would vary as per the borrower profile and loan tenure. The total amount invested by a lender across all P2P-NBFCs is capped at Rs 10 lakh, as per the existing RBI norms.

The RBI came out with regulations for P2P companies in October. There are around 30 online P2P companies in India, of which only eight have received a certificate of registration (CoR) from the RBI to carry out P2P lending activities.

Asia

Singapore police recover S$ 27 million linked to China Ponzi scheme (Channel News Asia) Rated: AAA

Singapore police said on Tuesday (Aug 21) they have recovered more than S$27 million linked to one of the biggest Ponzi schemes in China, which saw 1.15 million investors cheated out of 38 billion yuan (S$7 billion).

Ezubao, once China’s biggest peer-to-peer lending platform, folded in 2016 after it turned out to be an online scam that concocted fake projects to attract investment and pocketed funds instead of passing them to borrowers to generate returns.

Latin American

Mexico’s new government wants fintech, banks to help financial inclusion (Channel News Asia) Rated: AAA

Mexico’s next government will look to fintech companies and large corporate banks to increase financial inclusion in the country, where only one-third of adults have a bank account, senior officials said on Tuesday.

Arturo Herrera, one of two future deputy finance ministers, said in an interview that the lack of financial inclusion was one of the biggest obstacles in the new government’s fight against poverty, inequality and slow economic growth.

Authors:

George Popescu
Allen Taylor

Friday March 9 2018, Daily News Digest

Friday March 9 2018, Daily News Digest

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

Friday March 9 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

India

Africa

News Summary

United States

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: WalletHub

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

Source: WalletHub
Source: WalletHub

 

 

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

Source: J.D. Power

View the full report here.

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

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

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

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

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

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

Fourth Quarter 2017 Compared to Fourth Quarter 2016:

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

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

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

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

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

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

Indiegogo

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

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

SeedInvest

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

StraightUp

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

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

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

United Kingdom

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

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

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

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

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

 

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

Source: Crowdfund Insider

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

Source: Crowdfund Insider

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

European Union

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

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

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

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

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

 

Capital Markets Union (European Commission), Rated: B

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

Action Plan on Financial Technology

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

Legislative proposal on crowdfunding

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

 

International

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

The promise of direct lending 2.0

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

The arrival of credit culture 2.0?

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

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

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

Source: Celent

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

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

India

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

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

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

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

Africa

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

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

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

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

Authors:

George Popescu
Allen Taylor

Monday March 5 2018, Daily News Digest

marketplace lending

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

marketplace lending

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Africa

News Summary

United States

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

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

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

1. Lawsuit settlements

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

2. A challenging environment

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

3. Cost cuts in 2018

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

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

 

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

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

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

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

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

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

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

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

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

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

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

Read the full report here.

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

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

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

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

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

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

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

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

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

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

Source: PaymentSource

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

This represents around 12,000 businesses in the region.

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

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

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

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

 

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

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

Some of the new features include:

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

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

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

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

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

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

China

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

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

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

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

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

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

European Union

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

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

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

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

International

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Australia/New Zealand

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

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

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

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

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

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

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

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

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

India

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

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

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

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

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

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

Africa

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

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

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

Authors:

George Popescu
Allen Taylor