Friday April 27 2018, Daily News Digest

Canada investments

News Comments Today’s main news: Kabbage buys Orchard.Ascentium Capital issues $330M securitization.LendingTree reports record Q1 results.Funding Circle issues second MPL deal.Revolut raises $250M, achieves unicorn status.BBVA issues first blockchain loan from a global bank.IOU Financial releases 2017 results. Today’s main analysis: Canadian fintech funding declines 60 percent in Q1. Today’s thought-provoking articles: Where the oldest […]

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United Kingdom

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United States

It’s Official: Kabbage To Acquire Orchard (Lend Academy) Rated: AAA

It was the worst kept secret in fintech. There were rumors flying around during LendIt Fintech earlier this month and then Bloomberg published this story a couple of weeks ago about the pending deal. Well, today it became official. In a press release this morning it was confirmed that Kabbage, the tech-focused small business lender, will acquire Orchard.

So, what will become of Matt Burton and his team? Some clues are provided in the press release:

Orchard’s CEO and co-founder, Matt Burton, as well as Chief Analytics Officer and co-founder, David Snitkof, will both join Kabbage in leadership roles upon the closing, helping oversee technology integrations and future innovations. In total, Kabbage will add more than twenty Orchard employees who are predominantly focused on advanced analytics, data science and engineering to its New York City office.

Kabbage plan in Orchard deal: Expand offerings to banks, small businesses (American Banker) Rated: A

Kathryn Petralia, president and co-founder of Kabbage, said the acquisition will help the company diversify its business and offer more data-driven services to small businesses and financial institutions. It currently works with ING, Santander and Scotia Bank. Kabbage’s U.S.-based loans are issued by Celtic Bank in Salt Lake City.

The Orchard name will not survive. “At closing we will be Kabbage,” Burton said.

Until now, Orchard has been providing loan and portfolio analysis to other online lenders. This business model will be discontinued and those relationships will most likely end. Orchard’s current clients are being told about its sale to Kabbage, Burton said.

Ascentium Capital Announces $ 330 Million Securitization (Ascentium) Rated: AAA

Ascentium Capital issued a $330 million small ticket equipment securitization of Ascentium Equipment Receivables 2018-1 Trust.

This represents the company’s ninth securitization since 2012 and the first time a non-investment grade, independent equipment finance company received triple AAA and Aaa ratings from both Standard & Poor’s and Moody’s.

LendingTree Reports Record 1Q 2018 Results (Markets Insider) Rated: AAA

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com today announced results for the quarter ended March 31, 2018.

First Quarter 2018 Business Highlights

  • Revenue from mortgage products of $73.5 million represents an increase of 17% over first quarter 2017 driven by strong growth in both purchase and refinance revenues at 13% and 18%, respectively.  According to Mortgage Bankers Association, originations industry-wide were projected down 4% in the comparable period.
  • Record revenue from non-mortgage products of $107.6 million in the first quarter represents an increase of 55% over the first quarter 2017.
  • Revenue from our credit card offerings continued its momentum, growing to $46.1 million in 1Q, up 36% over the first quarter 2017.
  • Personal loans revenue of $26.0 million grew 53% over first quarter 2017.
  • Home equity revenue continued to climb, growing 81% over first quarter 2017.
  • More than 8.0 million consumers have now signed up for free credit scores and savings alerts through My LendingTree.  Revenue contribution from MyLendingTree grew 76% in the first quarter compared to the prior year period as new features, such as Credit Analyzer and free credit monitoring, are driving increased engagement.

LendingTree Study Reveals Which Places Buy the Oldest Used Cars (PR Newswire) Rated: AAA

LendingTree today released the findings of its study on the places that buy the oldest used cars. LendingTree analyzed auto loan offers for borrowers in the top 50 U.S. metros (based on population) to find the average age of used cars financed in each metro, as well as which makes of used cars were most popular.

The national average age of a used car people sought to finance was six years old, but some parts of the country prefer older used cars more than others.

Source: Lending Tree

Mobile Banking One of Top Three Most Used Apps by Americans, 2018 Citi Mobile Banking Study Reveals (Citigroup) Rated: AAA

Apps for mobile banking have become some of the most widely used by Americans, according to Citi’s 2018 Mobile Banking Study, released today. The survey of 2,000 U.S. adults found that, measured by top two ranked responses, 31 percent of consumers use their mobile banking app the most, behind only apps for social media (55 percent) and the weather (33 percent).

“Over the past year we’ve witnessed this increase in engagement first-hand, with mobile usage in North America increasing by almost 25 percent, and we don’t see this trend slowing down any time soon.”

LendingClub was sued for the fees it charges — how you can avoid being overcharged (Market Watch) Rated: A

Pay attention to both the interest rate advertised, as well as the annual percentage rate (APR), Clements said. If they’re different, the lender is likely factoring additional fees into your annual percentage rate.

You may need to borrow more money than you expected if that’s the case, he said, because the total amount you would receive will be less than you asked for.

Research several lenders before choosing which one you want, he said. And if there are any unfamiliar terms, or any confusion about how much you’ll pay back monthly, ask.

Digital bank in a box: Fintech offers branding tool (American Banker) Rated: A

The core systems provider Nymbus is offering a new product for bank customers that want to get in on the burgeoning trend of having a stand-alone, digital brand.

Dubbed SmartLaunch, the offering enables financial institutions to create a digital brand under their existing charter in as little as 90 days, according to Nymbus. The product is built on Nymbus’ cloud-based SmartCore platform, and the company says it provides banks that use the service with all outsourced operational and technological requirements to run the digital bank. Also included are client support, digital marketing and website services.

Source: American Banker

RealtyMogul and Comunidad Realty Partners Close $ 30 Million in Texas Multifamily Properties (Citizen Tribune) Rated: A

RealtyMogul, a pioneer in providing private real estate to discerning investors, announced that MogulREIT II, its real estate investment trust or “REIT,” has completed investments in multifamily apartment complexes in Fort Worth, Texas and San Antonio, Texas, consisting of over 450 units.

The properties were acquired through a partnership with Comunidad Realty Partners, a dynamic real estate investment firm specializing in workforce housing communities in culturally diverse neighborhoods.

Scaling Real Estate Crowdfunding: PeerStreet Establishes a Culture of Excellence at the Top (Crowdfund Insider) Rated: A

Loans on PeerStreet are sourced and curated from vetted private lenders throughout the United States. These lenders have real estate expertise and established borrower relationships. To date, PeerStreet has helped to finance over $900 million in loans by using this partnership approach. The properties they help finance are typically smaller in value – a segment of the industry that is usually overlooked by big institutional money. Loans range from 6 to 24 months and are first lien so investors have a good degree of security.  Most of the loans are below a loan to value of 75%. About a year ago, PeerStreet announced having funded $300 million in loans. In less than 12 months, PeerStreet has funded double that number.

PeerStreet is doing small loans commercial, some multi family and mixed used properties. The largest loan size is around $5 million but there can be exceptions. The rate of return for investors during 2017 stood, on average, at 8% net of fees. As for defaults, so far only five loans have gone into foreclosure but they have not experienced any loss of principle – a positive metric.

Citizens Bank Taps Finastra and Infosys for Trade Finance Solution (Citizens Bank) Rated: A

Citizens Bank, working with Infosys as its implementation partner, has selected Finastra to power the trade finance solution it offers to its corporate clients. This new capability will enable Citizens’ corporate clients to digitize traditionally paper-based trade processes, leading to increased efficiencies and reduced costs.

The new trade finance offering will allow the bank to meet increased client demand. Citizens picked Finastra’s Fusion Trade Innovation for its end-user experience, ability to support all trade products, capacity to integrate with downstream systems through open APIs and its high level of configurability.

Consumers in Columbus less likely to put fraud alerts on their credit reports (The Columbus Dispatch) Rated: A

However, a new study finds that consumers in the biggest Midwest cities, including Columbus, are much less likely to put alerts on their credit reports than those in other cities, such as Las Vegas, Houston, Miami and New York. The study by online lender Lending Tree was based on a random sample.

US banks to get more freedom to offer unsecured loans (Financial Times) Rated: B

Joseph Otting, Comptroller of the Currency, said he believed standards should be relaxed to allow banks back into the small dollar loan market; loans would range from $500 to $5,000 and be paid back in 45 and 90 days; right now payday lenders dominate this space and typically take advantage of borrowers by charging high fees and rolling over the principal; allowing banks back into the market will help to bring more regulation and cut down on abuses.

Growth plans: Both big and small banks set to expand locally (Orlando Business Journal) Rated: B

David Stahl, senior vice president, SunTrust Bank: We acquired an online lender called LightStream two years ago, and that has been a huge opportunity for us. The days of people walking into a bank and applying for a loan are pretty much gone.

Free Research Reports on These Credit Services Stocks — MoneyGram, Navient, Oaktree Specialty Lending and On Deck Capital (PR Newswire) Rated: B

This morning, WallStEquities.com observes MoneyGram International Inc. (NASDAQ: MGI), Navient Corp. (NASDAQ: NAVI), Oaktree Specialty Lending Corp. (NASDAQ: OCSL), and On Deck Capital Inc. (NYSE: ONDK). Credit Services companies originate, acquire, and service loans to individuals and corporations. Their products include student loans, mortgages, lines of credit, private equity, and venture capital. All you have to do is sign up today for this free limited time offer by clicking www.wallstequities.com/registration

Covr Financial Technologies appoints Chris Growney to Board of Directors; Gregory Fleming and Robert Kerzner, join Covr’s Advisory Board (PR Newswire) Rated: B

Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, announced that Chris Growney, an advisor with venture capital and advisory firm Nyca Partners has joined Covr’s Board of Directors following Nyca’s role in Covr’s June, 2017 fundraising. Growney, a director, advisor and investor in a broad range of start-up and growth companies was most recently the founder of Clearwater Analytics, an investment analytics and accounting software company based in Boise, Idaho.

6th Avenue Capital Announces Promotion of Darren Schulman to President (deBanked) Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the promotion of Darren Schulman to President, effective immediately. In his new position, Schulman has oversight over originations, underwriting, operations, collections and strategic initiatives. He previously served as Chief Operating Officer, and will continue to report directly to Chief Executive Officer Christine Chang.

The company also announced today that Chang and Schulman have been appointed to the company’s Board of Directors.

Best Egg Teams with Junior Achievement of Delaware on Financial Education Initiatives (Business Wire) Rated: B

Best Egg, the consumer lending brand of Marlette Funding, LLC, is providing both classroom education and other inspiring financially-related activities for Junior Achievement of Delaware (JA of DE). This announcement coincides with National Financial Literacy Month, being celebrated throughout the month of April.

United Kingdom

Funding Circle brings second marketplace loan deal (Global Capital) Rated: AAA

Sole arranger and lead manager Deutsche Bank announced Thursday a £207m UK SME securitization from Funding Circle, Small Business Loan Origination Trust 2018-1, the second ABS offering from the online lender.

In addition to being just the second deal from Funding Circle, and the third European marketplace loan ABS overall, SBOLT 2018-1 marks the first time Kroll Bond Rating Agency has assigned a public rating for a European securitization deal.

KBRA Europe Assigns Preliminary Ratings to Small Business Origination Loan Trust 2018-1 DAC (Business Wire) Rated: A

Kroll Bond Rating Agency Europe Limited (KBRA) has assigned preliminary ratings to four classes of notes (“Rated Notes”) issued by Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”). This is a £206.6 million ABS transaction collateralised by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”).

This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”), and the first European rated ABS securitisation for KBRA.

Source: Business Wire

Confirmation of that came on Thursday as Revolut became the first of Britain’s digital-only banks to achieve “unicorn” status – in other words, a privately held start-up company with a valuation of more than $1bn (£720m).

Revolut, which was only founded in July 2015, has been valued at $1.7bn (£1.22bn) in its latest funding round.

The bank, which started out as a currency exchange app but later moved into providing personal banking and cryptocurrency trading services, raised $250m (£180m) from backers including DST Global, an investment firm backed by the Russian billionaire Yuri Milner, whose previous early-stage tech investments have included Facebook, Twitter, Airbnb and Spotify.

Ranger Direct Lending rejects investor call to wind up (City Wire) Rated: A

Ranger Direct Lending (RDL) has criticised shareholder Oaktree Capital Management for trying to force the struggling alternative income fund to wind up.

Oaktree, the second largest shareholder in the fund that invests in and through lending platforms, has made public its correspondence with Ranger, which it described as a ‘sub-scale platform’ with shares ‘too illiquid to attract large institutional investors, especially in light of its persistent trading discount to net asset value (NAV)’.

Goji passes £50m in assets (Goji) Rated: A

Goji has now got more than £50m of assets on its platform a little over a year after opening its doors to investors.  With over 5,000 customer accounts, our hard earned growth is testament to the work the whole industry has done in selling the asset class to the UK public.

After campaigning hard to change the tax laws to open up the ISA rules so that non-lending platforms could also offer an IFISA, Goji was the first firm to offer investors diversification across a number of platforms through a single Innovative Finance ISA.  Goji’s Diversified Lending Bonds target 5%, whilst it’s Renewables Lending Bond targets returns in excess of 8%.

A lending site where you can rent anything just scored millions in venture capital (Business Insider) Rated: A

Fat Lama, which announced $10 million in its Series A on Wednesday in a round led by Blossom Capital, says it will use its latest funding to further its reach within the US and to create a mobile-first offering (so far, the site’s mobile app is only available in the UK).

Fat Lama lets users borrow everything from drones to camera equipment to printers.

The site insures any item listed on its site for up to $30,000, and Englander said his company has plans to raise that amount to $50,000 in the near future.

 

 

Artificial intelligence backed to reduce P2P defaults (Peer2Peer Finance) Rated: A

ARTIFICIAL intelligence (AI) could provide peer-to-peer lenders with greater lending security and less chance of defaults, a technology consultancy claims.

Nick Parham, technical pre-sales consultant at NashTech, said there is much P2P platforms can learn about AI from traditional lenders.

“The traditional lending market offers us a powerful insight into the potential for AI in P2P lending,” he said.

TURNING TO YOUR PEERS (BQ Live) Rated: A

They created ArchOver, a peer-to-peer (P2P) lending platform that allows firms that have been operating for more than two years to borrow money from lenders using its website. Companies borrow a minimum of £250,000, with interest rates starting at 7.7% a year.

Since it launched in the autumn of 2014, ArchOver has helped its lenders to inject more than £65m into British businesses, bringing in more than £2.5m in interest at an average return of 7.3%. In an age when bank savings accounts are paying less than 0.5%, it’s easy to see the attraction for investors who understand the risks as well as the rewards.

European Union

Klarna integrates with Magento for streamlined checkout (Payments Source) Rated: AAA

Commerce platform Magento is giving merchants the option to activate Klarna instant credit for online checkouts.

Sweden-based Klarna is built into the latest version of Magento Commerce, giving merchants a streamlined path to offer goods consumers may opt to pay for immediately, within 30 days, or longer via installments, Klarna said in a Thursday press release.

Taaleri increases its ownership in Fellow Finance by 7.3 per cent (Globe Newswire) Rated: A

Taaleri Plc has decided to exercise its option to acquire an additional 7.3% holding in Fellow Finance Oy, as outlined in the shareholders’ agreement signed in 2015. After the transaction Taaleri’s shareholding in Fellow Finance, which offers a crowdfunding platform for companies and for consumers, will increase to 45.7%. The transaction is scheduled to be realized in April-May.

International

BBVA and Indra deliver the world’s first blockchain-supported corporate loan (BBVA) Rated: AAA

BBVA has successfully completed the first global corporate loan transaction using blockchain technology from the negotiation of the deal to its signing, in line with their close collaboration to leverage cutting-edge technologies to streamline business processes.

The pilot enabled the closing of a €75 million loan using a solution developed by BBVA based on distributed ledger technology (DLT). This demonstrates how BBVA continues to incorporate innovative and disruptive technology into its customer solutions, including those products that up to now have seen limited digital innovation, as is the case with wholesale finance.

BANKS VS FINTECHS: THE WAR FOR TALENT (International Banker) Rated: A

Many of these start-ups, moreover, are equipped with enough cash to be able to compete with their banking counterparts on salaries. According to assessments by recruitment site Glassdoor, for example, a London-based software engineer at online lender Funding Circle will earn a base salary of £51,000 on average, which is equal to the salary paid at Goldman Sachs for a similar role. At UBS, that figure is £59,000, while at challenger Monzo Bank it is currently £64,000. Speaking recently to Bloomberg, co-founder and CEO of property lending platform LendInvest, Christian Faes, asserted that between 30 and 40 percent of the company’s hires are from major financial institutions, while banks also account for 100 percent of its small-risk and compliance team. Similar trends are also being reported by UK online lender MarketInvoice Ltd., where three-quarters of its 85 employees have come from either the financial-services or accountancy space.

Source: International Banker

Deserve Raises $ 50 Million in Debt Financing (Finovate) Rated: A

In rebranding his company from SelfScore to Deserve, CEO Kalpesh Kapadia explained “we believe that access is everything and everyone deserves a chance to build a positive credit history. So we are making our products available to all students, U.S., and international, and to all those who seek to build and/or maintain a good credit history.”

And now Deserve is $50 million closer to serving this broader population of potential customers. The Accel-backed fintech has just secured a $50 million debt facility from Keystone National Group to drive growth in account receivables and help “jumpstart” first-time credit owners’ financial journeys.

 

Fintech for the Financially Excluded? (Stanford Social Innovation Review) Rated: A

At Bamboo Capital Partners, we believe fintech can help low-income people reduce vulnerabilities, build assets, manage cash flow, and increase income, and we have invested as such: In the last couple of years, we have made four equity investments in fintech companies in Colombia, Mexico, Chile, and Tanzania, committing more than $16 million. Our investees are helping democratize access to finance through peer-to-peer lending platforms (KuboFinanciero), promoting access to insurance (ComparaOnline), enabling mobile payments and savings for low-income people through nano deposits (Movii), and providing a smart data platform for emerging market financial institutions (First Access).

APAC

Game-changing technologies at work in Asia Pacific’s real estate (JLL) Rated: AAA

Singapore-based mall operator Capitaland has a chatbot called Sparkle on its app that responds to shoppers’ queries and make reservations or hail a ride from its malls.  National Australia Bank is participating in a A$9 million investment round for real estate crowdfunding platform Brick X.

The rise of proptech, however, could be a cause for cybersecurity concerns, as highlighted in JLL’s report Clicks and Mortar: The Growing Influence of Proptech.

Source: Jill Real Views

 

Coast Labor MP Calls For Ban On Loan Machines (TripleM Network) Rated: A

There are calls for the Berejiklian Government to outright ban payday loan machines cropping up on the Central Coast.

There’s a Cash N Go kiosk at Wyoming offering up to $1000 at a time with minimal checks, while the devices, which look like ATMs, have also been spotted in the Hunter and Illawarra.

Latin America

Brazil’s Central Bank authorizes peer-to-peer lending (Rueters) Rated: AAA

Brazil’s Central Bank on Thursday released rules for credit start-ups that include authorization for peer-to-peer lending, as a way to increase competition in loans in a country with notoriously high interest rates for consumers.

Credit fintechs will be allowed to operate with a minimum capital of 1 million reais ($288,000), according to the new regulation. Peer-to peer lending had not yet been formally authorized in the country. The practice involves lending between individuals through online services.

Canada

Funding for Canadian Fintech Companies Declines 60 Percent in Q1 (Investing News) Rated: AAA

Canadian fintech companies received $88 million in investment over the first quarter of 2018, representing a 60-percent decline, says a new report from PwC.

Total investment in Canada in the first quarter of 2018 was over $1 billion, which is a 52-percent increase over the last quarter. A total of 105 deals were signed as compared to 81 in the previous quarter, representing a 30-percent increase.

Source: PwC

Read the full report here.

IOU Financial Inc. Releases Financial Results for the Year Ended December 31, 2017 (Benzinga) Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV:IOU) announced today its results for the year ended December 31, 2017.

  • Reached profitability during the year with positive adjusted net earnings of $0.1 millionin Q4.
  • Surpassed the half-billion loan origination mark with loan originations of $91.3 million(US) for the year.
  • Increased interest revenue of 8.1% to $14.4 million for the year ended December 31, 2017 vs 2016.
  • Reduced operating costs (excluding non-recurring costs) by 20.3% to $9.0 million for the year ended 2017.
  • Raised $3.5 million via a private placement.

BlackChain Solutions Signs LOI With DMG Blockchain Solutions to Bring P2P Lending to the Cryptocurrency Market (Investing News) Rated: B

Under the proposed license, BlackChain will retain exclusive rights for use of the technology for P2P Lending. DMG will be entitled to a royalty on commercial revenues generated by Blackchain using the technology. The parties intend to negotiate and finalize a definitive agreement by May 15th, 2018.

 

MENA

Global REIT’s crypto-powered real estate investment model will be first of it’s kind… (Global Cryptocurrency Press) Rated: AAA

Moving this structure onto the blockchain, and powering the investments with cryptocurrency now means the average cryptocurrency investor can easily access the real estate investment market. Global REIT will begin in their home of Dubai, a place where real estate is currently exploding, and acquire assets within the U.A.E, before branching out globally.

Authors:

George Popescu
Allen Taylor

Tuesday April 3 2018, Daily News Digest

FT Partners

News Comments Today’s main news: SoFi issues $2.6B in ABS notes in Q1 2018. GreenSky files for IPO. China’s P2P lenders brace for more regulations. FinanZero raises $3.6M. Today’s main analysis: FT Partners’ CEO alternative lending market analysis. Today’s thought-provoking articles: Cities with highest share of cash-out refinance borrowers. Retailers grow financial services capabilities. India’s unsecured instant loan interest rates […]

FT Partners

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United States

SoFi Issues a Record $ 2.6 Billion in ABS Notes in the First Quarter of 2018 (PR Newswire), Rated: AAA

SoFi announced today that it completed $2.6 billion in loan securitizations in the first quarter of 2018, a 35% increase over the prior-year period and its largest-ever quarterly ABS issuance volume.

In Q1 2018, SoFi completed a total of three securitization transactions: two student loan ABS offerings ($960 million SOFI 2018-A Notes and $869 million SOFI 2018-B Notes) and one consumer loan ABS offering ($774 million SCLP 2018-1 Notes). The SoFi 2018-B Notes marked the first time SoFi included medical residency loans as a part of the collateral.

LendingTree Ranks Cities with the Highest Share of Cash-Out Refinance Borrowers (PR Newswire), Rated: AAA

LendingTree today released the findings of its study on where cash-out refinancing was most prevalent in the past year.

Cities with the highest share of cash-out borrowers

Source Lending Tree

Cities with the highest cash-out loan amounts

Source Lending Tree

Fintech Firm GreenSky Files Confidentially for IPO (Wall Street Journal), Rated: AAA

Financial-technology firm GreenSky LLC has confidentially filed paperwork with the Securities and Exchange Commission for a sizable initial public offering that could come as soon as this summer, according to people familiar with the matter.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, could seek to raise $1 billion at a valuation of roughly $5 billion, some of the people said.

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

This month’s report features an exclusive interview with Manu Smadja, co-founder and CEO of MPOWER Financing, an alternative lender that enables high-potential international students to finance their education. In our conversation with Manu, he discusses the inception of MPOWER, along with the unique opportunities and challenges of lending to this market.

M&A

Source: FT Partners

Read the full report here.

Max Levchin To Participate In A Keynote Fireside Chat At LendIt Fintech USA 2018 (PR Newswire), Rated: A

LendIt Fintech announced today that Max Levchin, Co-founder and Chief Executive Officer of Affirm, a financial services technology company that is reimagining consumer credit and banking, will be featured in a keynote fireside chat on April 9. The world’s most prominent and emerging fintech CEOs from Wall Street to Main Street will gather April 9-11 at Moscone Center in San Francisco to focus on the hot-button topics and issues exploring the future of finance.

In a session titled The future of credit: Reimagining the financing ecosystem, Levchin’s keynote fireside chat will delve into how the retail industry has evolved and how retail experiences are continuing to grow beyond the capabilities of traditional credit and lending. Levchin will share his thoughts on why the industry needs to reimagine the financing ecosystem from the ground up in order to unlock the future of credit. Levchin will also discuss why Affirm is committed to reinventing credit, starting with the belief that it should help improve consumers’ financial lives in addition to financing their purchases.

Kabbage: Small Businesses Turning To Mobile Lending In Big Numbers (Payment Week), Rated: A

Sometimes, businesses need ready cash to get from “the latest bills” to “the next paid invoice,” and that’s where lenders are coming in. A new report from Kabbage says that small businesses are turning to mobile devices to get in on that lender funding in increasing numbers.

Kabbage surveyed almost 150,000 small businesses, and found that loans accessed by mobile device had increased better than three-fold, over 360 percent, of what they were back in April 2014. While the total numbers went through the roof, the value of the loans accessed went through the roof and over the treetops, having increased over 1,220 percent.

Why Marcus Has Changed Everything (Orchard Platform), Rated: A

Fast forward almost 18 months and Marcus is the fastest growing online lender in history. They have lent $2.5 billion in this time to 350,000 customers and have 700 employees spread across three offices. Not only that, but they have grand ambitions in the space. Goldman Sachs CEO Lloyd Blankfein has repeatedly talked about the importance of Marcus to the future of Goldman Sachs.

According to a recent article in the Wall Street Journal the consumer banking business of Goldman Sachs is expected to generate $1 billion in revenue for the firm by 2020. That is significantly more revenue than LendingClub is expected to generate in 2018 as an 11-year- old business.

We have heard that Barclays and PNC Financial will be launching their own lending platforms in 2018 and there are rumors that many other large banks are going to do the same.

Most people probably don’t know Goldman Sachs offers a savings account with excellent perks — and anyone can use it with just $ 1 (Business Insider), Rated: A

Marcus— named after the Goldman Sachs founder Marcus Goldman — allows any adult (except in Maryland, where Marcus is not yet available) to create a savings account.

The big selling point for Marcus is the 1.5% annual percentage yield offered. Whereas interest rates for many banks have plummeted to as low as 0.01%, Goldman Sachs’ savings accounts create significant interest.

There is also no minimum amount needed to open an account with Marcus, and a deposit of even $1 allows users to earn the 1.5% APY.

Ohio Insurtech Root Insurance Completes Series C Round With $ 51 Million in Funding (Crowdfund Insider), Rated:A

Root Insurance, an Ohio-based car insurtech company, announced last week it secured $51 million in funding through its Series C round, which was led by Redpoint Ventures, with Scale Venture Partners and existing partners Ribbit Capital and Silicon Valley Bank Capital Partners. 

Root will use the new funding to expand into additional states and continue to invest in technology that significantly improves the customer experience.

That Fast Online Loan Could Have Super-high Interest Rates and Hidden Fees That Bankrupt Your Business (Entrepreneur), Rated: A

recent lawsuit against fintech small-business lender Kabbage Inc., charging that it partnered with a bank in order to offer interest rates that exceeded the legal limit, highlights the need for more regulatory oversight of the growing number of online lenders signing deals with small businesses.

Online lenders are getting more scrutiny.

The recent Massachusetts federal case brought by a small business against Kabbage (and its partner Celtic Bank) highlights why non-bank fintech lenders should be regulated. The suit alleges that Kabbage used its relationship with Celtic — which “rented” its balance sheet to Kabbage — as a basis to charge interest rates that violated usury laws.

How Credit Karma is using data to become a central finance hub (Tearsheet), Rated: A

It’s not a bank, but it uses customer data to help banks find customers.

Currently valued at $4 billion, Credit Karma has 80 million customers — half of whom are millennials. The company joins a growing number of financial startups like Clarity Money, SoFi, Chime and Varo Money that are aiming to become one-stop shops for customers’ finances. The field is growing increasingly competitive. Meanwhile, banks are bundling personal finance advice into their mobile apps. But Credit Karma has two advantages its competitors often struggle with — scale and data — and it’s using a chatbot to lock in the relationship with the customer.

A Chase Sapphire experiment is getting revived and expanded after the trial run blew away expectations with millennials last year (Business Insider), Rated: B

Last year, ahead of the spring homebuying season — the busiest of the year — JPMorgan Chase engineered an experiment to gain an edge in the mortgage-lending competition.

So the bank targeted its Sapphire customers, offering another 100,000 in rewards points if they closed a mortgage with the bank — a bonus worth as much as $1,500.

HNW Clients Warming Up To Digital Advice (Financial Adviser), Rated: A

In its report, “The Cerulli Edge—U.S. Retail Investor Edition, 1Q 2018 Issue,” the researcher found that more than one-quarter of investors over 70 who have $2 million to $5 million in investable assets said they would consider online-only engagement. Beyond that, high-net-worth investors in general seemingly are more receptive to digital advice platforms.

In 2015, Cerulli found that 38% of investors with investable assets of $2 million to $5 million said they were willing to engage with digital providers. Last year, that number jumped to 46%. And among investors with $5 million-plus in investable assets, those numbers went from 30% in 2015 to 38% last year.

Why borrower experience will be the principal driver of bank revenue in the lending market (Lendit), Rated: A

Tech giants such as Google and Amazon have rewritten the rulebook for consumers when it comes to what they can reasonably expect from their service providers. Consequently, bank offerings are being judged to the same standard as the most innovative digitally native products in the world.

The benefits of improved customer experience

More generally, banks must focus on improving user experience to remain competitive as digitally native fintech products flood the marketplace. Focusing especially, the motivations for improving customer experience can be described as:

  •  Differentiation Financial services can no longer lean on long-standing relationships and brand positioning to generate new customer business.
  • Positive brand response in addition to research, some customers will also emphasize the emotive impression they receive from a product when making purchasing decisions.
  • Coping with an economic downturn During a recession or other global economic hardship businesses are placed under increased financial strain. Services viewed positively by their existing clients will stand a better chance of retaining their clients as well as growing their client base during the downturn.

Pindrop Introduces New Biometric Solution: Tongueprinting (Finovate), Rated: A

Banking Technology’s Anthony Peyton reports that the Atlanta-based anti-fraud and authentication specialist has unveiled Tongueprinting, a technology that analyses every person’s unique tongue as its newest biometric engine. Banking Technology is Finovate’s sister publication.

The idea is for Tongueprinting to stop fraudsters from taking over legitimate accounts by spoofing the call centre with automated bots, social engineering, and knowledge-based authentication questions.  

HomeUnion Launches Crowdfunding Platform for Individual Investors (Business Wire), Rated: A

HomeUnion, the leader in online residential real estate investing, has launched a crowdfunding platform that allows investors to purchase stakes in funds of single-family rental (SFR) properties on its website. Starting with a minimum investment of $10,000, retail investors now have the ability to acquire interest in the HomeUnion Fix-and-Flip Fund. The fund enables consumers to invest in SFR assets acquired for fix-and-flip purposes in seven HomeUnion markets: Atlanta, Austin, Charlotte, Chicago, Dallas, Raleigh and Tampa.

Upstart tests buyer appetite with riskier loans, more sub notes (Global Capital), Rated: A

Online lender Upstart is the latest marketplace loan company to broaden the risk profile of its ABS, announcing a deal this week offering more subordinate bonds and backed by a higher proportion of longer term loans.

The California-based lender, founded by ex-Google employees, uses an underwriting model which incorporates data points beyond borrowers’ FICO scores, utilizing other factors such as schools attended, areas of study, academic performance and work history.

Is low pay hurting banks in the battle for tech talent? (American Banker), Rated: A

Conversations about pay in the banking industry typically focus on whether executives at the top are paid too much or workers at the bottom are paid too little.

But new data available as a result of the Dodd-Frank Act is drawing rare attention to the compensation of employees in the middle. In what will become an annual exercise, publicly traded U.S. companies are now required to disclose annually the median pay of their employees.

Information and Data Integrity: A Two-Way Street (Lendit), Rated: A

For many businesses, data is an important aspect of decision management. When you are choosing with whom to do business, you rely on the validity of data to guide you. If it proves faulty, you may be steered into accepting bad customers or rejecting good ones, which can seriously affect your bottom line. For consumers, inaccurate data can be equally harmful—leading to the appearance of having bad credit, denials of services or products or worse, flagged as potentially fraudulent.

Spanning both digital and real worlds, and encompassing data about identity, financial characteristics, behaviors and more, an integrated view is the foundation of enhanced insights that can ultimately improve financial outcomes. TransUnion understands the importance of current, accurate data and gives its customers access to information—including both highly-regulated and publicly available forms of alternative data—that creates powerful, comprehensive views of consumers.

Here’s Why Millennials Are Choosing Personal Loans (Lendit), Rated: A

When it comes to millennial spending habits, it looks as though they’re rounding a corner to a new kind of credit. With the vast treasure trove of accumulated data available, credit bureaus like TransUnion are seeing spikes in personal loans compared to Generation X’s spending habits in the early 2000s. It’s a tremendous opportunity for marketers to capture a demographic that expects more from their lender.

The Overarching Trends

The newly minted adults of Generation Z are at the very beginning of their financial journey, but millennials are at the age where they’re expected to make major purchases. As they struggle with the economy and student debt, they’re making different financial choices along the way.

Adopting New Technology

Lenders are turning to financial technology (fintech) to help peddle their products, which millennials are all too happy to use. Ironically, applying for a personal loan without the face-to-face connection can be far more attractive than the traditional application process.

A Decline in Credit Card Usage

Right or wrong, credit cards have long been linked to perpetual debt in many people’s minds. In 2009, the CARD Act was introduced to place stricter limits on the marketing of credit cards at college campuses. Debit cards have become more of the rule as opposed to the exception, leaping from 8 billion transactions in 2000 to 60 billion in 2015.

Small Business Confidence Is Up, What Does that Mean? (Lendit), Rated: A

The year 2017 saw small business owners across the United States grow more optimistic about the future than they’ve ever been—at least since the creation of the Optimism Index by the NFIB in the 70s.  “2017 was the most remarkable year in the 45-year history of the NFIB Optimism Index,” said NFIB President and CEO Juanita Duggan.

The Tax Bill Could be a Boon for Small Businesses

Sole proprietorships, partnerships, and S corporations are all examples of what are called pass-through businesses; and make up roughly 95 percent of all U.S. businesses. They also happen to be many of our customers at OnDeck, and other online small business lenders. One of the main components of the new tax bill is a 20 percent tax deduction for those businesses, where business owners can “shield” 20 percent of their business income from flowing through to their personal income tax returns.

Cincinnati-based financial tech startup raises $ 1.2 million (Cincinnati Business Courier), Rated: B

A Cincinnati-based financial tech startup that aims to help users secure low-dollar loans without having to resort to a payday lender raised $1.2 million in venture capital.

Mayor proposes employee loans to offset predatory lenders (Santa Fe New Mexican), Rated: B

A few months after a new annual 175 percent cap on small-loan interest rates in New Mexico went into effect, Mayor Alan Webber is proposing a short-term loan program to help municipal workers avoid payday lending businesses viewed as predatory by consumer advocates.

BlockFi Gives Hodlers Another Option to Borrow Against Crypto Assets (BitcoinMagazine), Rated: B

Options for borrowing and lending with cryptocurrencies are on the rise. One of the latest start-ups to join the likes of SALT and Unchained Capital is BlockFi, a New York City–based startup that issues loans backed by bitcoin and ether to individuals, companies and institutions in 35 U.S. states.

BlockFi takes cryptocurrency as collateral, offering interest rates on loans of around 12 percent. This is generally lower than unsecured loans and higher than loans secured with traditional assets such as securities or real estate.

eBus to offer visitors financial advice, credit reports (The Repository), Rated: B

The eBus is a mobile classroom which is equipped with 14 personal computers and satellite technology staffed by Fifth Third bankers and representatives from nonprofit community organizations. On the bus, visitors can request a credit report and review it with a professional; receive a personalized evaluation of finances; receive internet banking and bill pay demonstrations; speak with nonprofits about housing, money management and business advice; receive consultation on foreclosure prevention; and conduct online job searches.

United Kingdom

Scots ‘side businesses’ generate £1.7bn a year (The Scotsman), Rated: A

More than 500,000 people living in Scotland have started a side business, generating a collective £1.7 billion a year out of more than £33bn UK-wide, according to new research.

Online lender Sunny said many of those north of the Border turning to side businesses are doing so to help with the cost of bills, savings and debts, and bring in an average of £272 a month on top of their main income.

That represents a 20 per cent increase from when they first started their business.

China

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated: AAA

China will soon be rolling out new licensing requirements for p2p lenders; The system will kick off in April with approvals slated to come at the end of this month, but many lenders aren’t aware of the filing process; in 2016 and 2017 many p2p lenders shut down and according to data there are around 2,000 remaining; it is expected that many of the 2,000 will not pass the new requirements; the new rules won’t allow platforms to guarantee loan payments and also limit loans to individuals and businesses; it will also require that platforms use custodian banks.

China Rapid Finance Executives Selected to Speak at LendIt Fintech USA 2018 (PR Newswire), Rated: A

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF) announced today that the Company will participate as a sponsor and exhibitor at the upcoming LendIt Fintech USA 2018, to be held between Apr 9th and 11th in San Francisco, California.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 28th, cross-border payment company iPayLinks announced that it had completed, at the beginning of this year, a hundreds of million-yuan B1 round of financing led by Tencent and followed by Legend Capital.

NIFA Issues a Self-Discipline Convention for Debt-Collection Practitioners

The five-chapter convention is mainly applying to regulate the behavior of overdue debt collection within the Internet Finance industry by establishing several basic principles (e.g. observing laws and regulations, prudential regulations, protecting privacy, and strict self-discipline). In other words, the document outlines a framework of debt-collection regulation in terms of discredited punishment, business management, personnel management, information management, outsourcing management, and complaints.

China’s internet lenders fall foul of data privacy rules (Financial Times), Rated: A

More than half of Chinese internet finance lenders are failing to comply with data privacy regulations, research has found, raising risks for investors as China steps up the implementation of laws to protect consumer data.

The breaches include collecting phone numbers from users’ contact lists, which can be used to mount harassment campaigns and shame users into repaying debts.

The survey of 200 finance apps by Renmin University and Nandu Personal Data Protection Research Centre, a Beijing think-tank, ranked 111 apps as having “low” compliance.

It found that almost half — 95 apps — wanted to read users’ text messages, while 97 of them wanted access to users’ contact lists, despite such access not being necessary for the app’s functioning.

International

How retailers are growing their financial services capabilities (Tearsheet), Rated: AAA

Amazon isn’t the only retailer encroaching on the financial services space. It may be the scariest — just the rumor of it entering a company’s space will send its stock price down — but ultimately, Amazon only cares about getting more buyers and more sellers to join its platform.

Overstock’s Raj Karkara, vp of loyalty and financial services, echoed that sentiment earlier this year, saying that offering financial services or connecting customers with financial services providers is a natural extension of its retail function of buying and selling consumer goods.

Rakuten
Rakuten is Japan’s largest e-commerce site and has slowly been growing outside of the country. It has a footprint in media, video-on-demand, mobile messaging, e-books, travel, fashion, marketing and even sports. It also operates the largest online bank in the country.

Overstock
For the past few months, e-commerce company Overstock.com has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing; and, most recently, a discounted trading platform.

Sainsbury (and Tesco)
Amazon may not be interested in becoming a bank but that doesn’t mean it can’t succeed in stealing customer attention from them. The U.K.’s largest grocers have all opened banks attached to their brands —  Sainsbury’s and Tesco.

ETHLend (LEND) Token – Will It Go Down After Kyber Network Partnership? (Hot Stocked), Rated: A

ETHLend has recently partnered up with Kyber Network. The ETHLend (LEND) Token has reached a market capitalization of 45.69 Million US dollars in the last 24 hours. The token traded 9.50%higher against the U.S. dollar during the last 24 hours ending at 10:30 AM EDTon April 2nd. That rise might be as a result of the partnership. ETHLend aims to become another decentralized and secure financial marketplace, but targeting peer to peer lending agreements via Blockchain and Smart Contracts.

Source CoinMarketCap

 

Australia

SMALL BUSINESS LOANS IN AUSTRALIA: SHOULD YOU SEEK FINANCE FROM A BANK OR AN ONLINE LENDER? (Dynamic Business), Rated: A

Considering the small business sector employs nearly half the national workforce and contributes around $380 billion to Australia’s GDP [1], it’s easy to see why it’s frequently referred to as the ‘engine room’ of the economy.

Like all engine rooms, the sector requires sufficient fuel – in this case, working and growth capital – to not only keep running but also accelerate. However, poor access to capital remains a significant barrier to small businesses, accounting for a majority of failures in the sector.

Part of the reason is that banks are reluctant to lend to small businesses in circumstances where the borrower doesn’t have bricks-and-mortar security – especially if a short-term loan is sought.

APRA rejected CBA home loan data as inaccurate and incomplete (Financial Review), Rated: B

Commonwealth Bank was being pressured by the prudential regulator to appoint external consultants and fix its flawed home lending data almost 2½ years before the Hayne royal commission began exposing the big four for sloppy administrative errors and irresponsible lending.

The Australian Prudential Regulation Authority’s frustration with the failure of Australia’s biggest home lender to accurately identify what proportion of its loans were taken out by property investors and its level of exposure to big borrowers has been revealed in evidence tendered to the banking royal commission and published in a massive dump of more than 100 documents late last week.

India

Interest rates on unsecured instant loans are high (LiveMint), Rated: AAA

Financial institutions and fintech companies have launched multiple small credit products in India in the past 1-3 years. It is now possible to get loans even on your mobile phone. But how do you pay for this convenience?

P2P lending platform

Peer-to-peer lending companies such as Faircent, i2ifunding and Lendbox connect lenders and borrowers on their platforms. Usually, the lender is an individual and not a financial institution. The interest rates are between 15% and 36% per annum and the loan amount can range from Rs50,000 to Rs5 lakh. The interest rate is decided based on the credit profile of the customer. Usually, the P2P lending companies take into account your Cibil credit score. The loan tenure is 3 months to 24 months.

Fintech eco-system is moving to blockchain and AI: Rajat Gandhi, Faircent (Economic Times), Rated: A

A lot of players have come into the fintech space. There are wallet players, then there are PPI, P2B, crowdsourcing and other payment players as well. So, regulation is one of the key challenges the private players are going through. What is your take on it?

Surprisingly, the Indian regulators, I would say, are strict. You can see the example of NBFC P2P licences regulation. It is a good rule-based model. In fact, the players themselves were pushing for some kind of regulation because financial markets need them. It’s not like e-commerce or running a taxi where the risks are not that high.

India’s Finzy Raises $ 1.3 Mln At Pre Series A Funding (Reuters), Rated: A

Finzy, India’s fastest growing peer to peer lending platform, has raised USD 1.3 million in first round of Pre Series A from investors in the industry. A second round of fundraising is expected to close with pre-identified set of investors within the next 60 days.

Latin American

Brazilian Loan Marketplace FinanZero raises USD 3.6 million in Series A Funding Round (PR Newwire), Rated: AAA

FinanZero is a leading marketplace for consumer loans in Brazil. The business is an independent broker for loans, negotiating the customer’s loan application with several banks and credit institutions, to find the loan with the best interest rate and terms for the consumer. FinanZero handles the lending process from start to finish.

The Series A round was led by Swedish publicly listed investment company, Vostok Emerging Finance, with participation by other Swedish investors, including Webrock Ventures and Zentro Founders.

Africa

Fintech is central to Nigeria’s future success (Financial Times), Rated: A

Central to this opportunity is an acceleration in the development of a modern banking and financial services sector. We are already seeing huge breakthroughs in digital banking and the adoption of fintech-based services by Nigerian consumers — be they retail or business customers. But this expansion must be encouraged by policies that will see greater inclusion of women and rural communities into mainstream banking activity.

Asia

Meet the most disruptive fintech startup in South Korea (Forbes), Rated: AAA

Viva Republica is the most disruptive fintech startup in South Korea. Since the 2015 launch of its simple peer-to-peer payments app Toss, banks are finally revamping their user experiences and customers have easier access to financial products. South Korea’s mobile payments have more than quadrupled in that time to $4.6 billion, according to Bank of Korea data.

The startup, funded at $76 million, hasn’t stopped there. After PayPal joined a $48 million investment in Toss in March, Toss has grown from a simple money-transfer app to a diverse consumer-finance platform generating Viva Republica’s $20 million in expected revenue in 2017. Toss thus joins Asia’s ranks of fast-growing mobile P2P payment services, reaching a $12 billion transaction volume in 2017.

Authors:

George Popescu
Allen Taylor

Tuesday April 3 2018, Daily News Digest

FT Partners

News Comments Today’s main news: SoFi issues $2.6B in ABS notes in Q1 2018. GreenSky files for IPO. China’s P2P lenders brace for more regulations. FinanZero raises $3.6M. Today’s main analysis: FT Partners’ CEO alternative lending market analysis. Today’s thought-provoking articles: Cities with highest share of cash-out refinance borrowers. Retailers grow financial services capabilities. India’s unsecured instant loan interest rates […]

FT Partners

News Comments

United States

United Kingdom

China

International

Australia

India

Other

News Summary

United States

SoFi Issues a Record $ 2.6 Billion in ABS Notes in the First Quarter of 2018 (PR Newswire), Rated: AAA

SoFi announced today that it completed $2.6 billion in loan securitizations in the first quarter of 2018, a 35% increase over the prior-year period and its largest-ever quarterly ABS issuance volume.

In Q1 2018, SoFi completed a total of three securitization transactions: two student loan ABS offerings ($960 million SOFI 2018-A Notes and $869 million SOFI 2018-B Notes) and one consumer loan ABS offering ($774 million SCLP 2018-1 Notes). The SoFi 2018-B Notes marked the first time SoFi included medical residency loans as a part of the collateral.

LendingTree Ranks Cities with the Highest Share of Cash-Out Refinance Borrowers (PR Newswire), Rated: AAA

LendingTree today released the findings of its study on where cash-out refinancing was most prevalent in the past year.

Cities with the highest share of cash-out borrowers

Source Lending Tree

Cities with the highest cash-out loan amounts

Source Lending Tree

Fintech Firm GreenSky Files Confidentially for IPO (Wall Street Journal), Rated: AAA

Financial-technology firm GreenSky LLC has confidentially filed paperwork with the Securities and Exchange Commission for a sizable initial public offering that could come as soon as this summer, according to people familiar with the matter.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, could seek to raise $1 billion at a valuation of roughly $5 billion, some of the people said.

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

This month’s report features an exclusive interview with Manu Smadja, co-founder and CEO of MPOWER Financing, an alternative lender that enables high-potential international students to finance their education. In our conversation with Manu, he discusses the inception of MPOWER, along with the unique opportunities and challenges of lending to this market.

M&A

Source: FT Partners

Read the full report here.

Max Levchin To Participate In A Keynote Fireside Chat At LendIt Fintech USA 2018 (PR Newswire), Rated: A

LendIt Fintech announced today that Max Levchin, Co-founder and Chief Executive Officer of Affirm, a financial services technology company that is reimagining consumer credit and banking, will be featured in a keynote fireside chat on April 9. The world’s most prominent and emerging fintech CEOs from Wall Street to Main Street will gather April 9-11 at Moscone Center in San Francisco to focus on the hot-button topics and issues exploring the future of finance.

In a session titled The future of credit: Reimagining the financing ecosystem, Levchin’s keynote fireside chat will delve into how the retail industry has evolved and how retail experiences are continuing to grow beyond the capabilities of traditional credit and lending. Levchin will share his thoughts on why the industry needs to reimagine the financing ecosystem from the ground up in order to unlock the future of credit. Levchin will also discuss why Affirm is committed to reinventing credit, starting with the belief that it should help improve consumers’ financial lives in addition to financing their purchases.

Kabbage: Small Businesses Turning To Mobile Lending In Big Numbers (Payment Week), Rated: A

Sometimes, businesses need ready cash to get from “the latest bills” to “the next paid invoice,” and that’s where lenders are coming in. A new report from Kabbage says that small businesses are turning to mobile devices to get in on that lender funding in increasing numbers.

Kabbage surveyed almost 150,000 small businesses, and found that loans accessed by mobile device had increased better than three-fold, over 360 percent, of what they were back in April 2014. While the total numbers went through the roof, the value of the loans accessed went through the roof and over the treetops, having increased over 1,220 percent.

Why Marcus Has Changed Everything (Orchard Platform), Rated: A

Fast forward almost 18 months and Marcus is the fastest growing online lender in history. They have lent $2.5 billion in this time to 350,000 customers and have 700 employees spread across three offices. Not only that, but they have grand ambitions in the space. Goldman Sachs CEO Lloyd Blankfein has repeatedly talked about the importance of Marcus to the future of Goldman Sachs.

According to a recent article in the Wall Street Journal the consumer banking business of Goldman Sachs is expected to generate $1 billion in revenue for the firm by 2020. That is significantly more revenue than LendingClub is expected to generate in 2018 as an 11-year- old business.

We have heard that Barclays and PNC Financial will be launching their own lending platforms in 2018 and there are rumors that many other large banks are going to do the same.

Most people probably don’t know Goldman Sachs offers a savings account with excellent perks — and anyone can use it with just $ 1 (Business Insider), Rated: A

Marcus— named after the Goldman Sachs founder Marcus Goldman — allows any adult (except in Maryland, where Marcus is not yet available) to create a savings account.

The big selling point for Marcus is the 1.5% annual percentage yield offered. Whereas interest rates for many banks have plummeted to as low as 0.01%, Goldman Sachs’ savings accounts create significant interest.

There is also no minimum amount needed to open an account with Marcus, and a deposit of even $1 allows users to earn the 1.5% APY.

Ohio Insurtech Root Insurance Completes Series C Round With $ 51 Million in Funding (Crowdfund Insider), Rated:A

Root Insurance, an Ohio-based car insurtech company, announced last week it secured $51 million in funding through its Series C round, which was led by Redpoint Ventures, with Scale Venture Partners and existing partners Ribbit Capital and Silicon Valley Bank Capital Partners. 

Root will use the new funding to expand into additional states and continue to invest in technology that significantly improves the customer experience.

That Fast Online Loan Could Have Super-high Interest Rates and Hidden Fees That Bankrupt Your Business (Entrepreneur), Rated: A

recent lawsuit against fintech small-business lender Kabbage Inc., charging that it partnered with a bank in order to offer interest rates that exceeded the legal limit, highlights the need for more regulatory oversight of the growing number of online lenders signing deals with small businesses.

Online lenders are getting more scrutiny.

The recent Massachusetts federal case brought by a small business against Kabbage (and its partner Celtic Bank) highlights why non-bank fintech lenders should be regulated. The suit alleges that Kabbage used its relationship with Celtic — which “rented” its balance sheet to Kabbage — as a basis to charge interest rates that violated usury laws.

How Credit Karma is using data to become a central finance hub (Tearsheet), Rated: A

It’s not a bank, but it uses customer data to help banks find customers.

Currently valued at $4 billion, Credit Karma has 80 million customers — half of whom are millennials. The company joins a growing number of financial startups like Clarity Money, SoFi, Chime and Varo Money that are aiming to become one-stop shops for customers’ finances. The field is growing increasingly competitive. Meanwhile, banks are bundling personal finance advice into their mobile apps. But Credit Karma has two advantages its competitors often struggle with — scale and data — and it’s using a chatbot to lock in the relationship with the customer.

A Chase Sapphire experiment is getting revived and expanded after the trial run blew away expectations with millennials last year (Business Insider), Rated: B

Last year, ahead of the spring homebuying season — the busiest of the year — JPMorgan Chase engineered an experiment to gain an edge in the mortgage-lending competition.

So the bank targeted its Sapphire customers, offering another 100,000 in rewards points if they closed a mortgage with the bank — a bonus worth as much as $1,500.

HNW Clients Warming Up To Digital Advice (Financial Adviser), Rated: A

In its report, “The Cerulli Edge—U.S. Retail Investor Edition, 1Q 2018 Issue,” the researcher found that more than one-quarter of investors over 70 who have $2 million to $5 million in investable assets said they would consider online-only engagement. Beyond that, high-net-worth investors in general seemingly are more receptive to digital advice platforms.

In 2015, Cerulli found that 38% of investors with investable assets of $2 million to $5 million said they were willing to engage with digital providers. Last year, that number jumped to 46%. And among investors with $5 million-plus in investable assets, those numbers went from 30% in 2015 to 38% last year.

Why borrower experience will be the principal driver of bank revenue in the lending market (Lendit), Rated: A

Tech giants such as Google and Amazon have rewritten the rulebook for consumers when it comes to what they can reasonably expect from their service providers. Consequently, bank offerings are being judged to the same standard as the most innovative digitally native products in the world.

The benefits of improved customer experience

More generally, banks must focus on improving user experience to remain competitive as digitally native fintech products flood the marketplace. Focusing especially, the motivations for improving customer experience can be described as:

  •  Differentiation Financial services can no longer lean on long-standing relationships and brand positioning to generate new customer business.
  • Positive brand response in addition to research, some customers will also emphasize the emotive impression they receive from a product when making purchasing decisions.
  • Coping with an economic downturn During a recession or other global economic hardship businesses are placed under increased financial strain. Services viewed positively by their existing clients will stand a better chance of retaining their clients as well as growing their client base during the downturn.

Pindrop Introduces New Biometric Solution: Tongueprinting (Finovate), Rated: A

Banking Technology’s Anthony Peyton reports that the Atlanta-based anti-fraud and authentication specialist has unveiled Tongueprinting, a technology that analyses every person’s unique tongue as its newest biometric engine. Banking Technology is Finovate’s sister publication.

The idea is for Tongueprinting to stop fraudsters from taking over legitimate accounts by spoofing the call centre with automated bots, social engineering, and knowledge-based authentication questions.  

HomeUnion Launches Crowdfunding Platform for Individual Investors (Business Wire), Rated: A

HomeUnion, the leader in online residential real estate investing, has launched a crowdfunding platform that allows investors to purchase stakes in funds of single-family rental (SFR) properties on its website. Starting with a minimum investment of $10,000, retail investors now have the ability to acquire interest in the HomeUnion Fix-and-Flip Fund. The fund enables consumers to invest in SFR assets acquired for fix-and-flip purposes in seven HomeUnion markets: Atlanta, Austin, Charlotte, Chicago, Dallas, Raleigh and Tampa.

Upstart tests buyer appetite with riskier loans, more sub notes (Global Capital), Rated: A

Online lender Upstart is the latest marketplace loan company to broaden the risk profile of its ABS, announcing a deal this week offering more subordinate bonds and backed by a higher proportion of longer term loans.

The California-based lender, founded by ex-Google employees, uses an underwriting model which incorporates data points beyond borrowers’ FICO scores, utilizing other factors such as schools attended, areas of study, academic performance and work history.

Is low pay hurting banks in the battle for tech talent? (American Banker), Rated: A

Conversations about pay in the banking industry typically focus on whether executives at the top are paid too much or workers at the bottom are paid too little.

But new data available as a result of the Dodd-Frank Act is drawing rare attention to the compensation of employees in the middle. In what will become an annual exercise, publicly traded U.S. companies are now required to disclose annually the median pay of their employees.

Information and Data Integrity: A Two-Way Street (Lendit), Rated: A

For many businesses, data is an important aspect of decision management. When you are choosing with whom to do business, you rely on the validity of data to guide you. If it proves faulty, you may be steered into accepting bad customers or rejecting good ones, which can seriously affect your bottom line. For consumers, inaccurate data can be equally harmful—leading to the appearance of having bad credit, denials of services or products or worse, flagged as potentially fraudulent.

Spanning both digital and real worlds, and encompassing data about identity, financial characteristics, behaviors and more, an integrated view is the foundation of enhanced insights that can ultimately improve financial outcomes. TransUnion understands the importance of current, accurate data and gives its customers access to information—including both highly-regulated and publicly available forms of alternative data—that creates powerful, comprehensive views of consumers.

Here’s Why Millennials Are Choosing Personal Loans (Lendit), Rated: A

When it comes to millennial spending habits, it looks as though they’re rounding a corner to a new kind of credit. With the vast treasure trove of accumulated data available, credit bureaus like TransUnion are seeing spikes in personal loans compared to Generation X’s spending habits in the early 2000s. It’s a tremendous opportunity for marketers to capture a demographic that expects more from their lender.

The Overarching Trends

The newly minted adults of Generation Z are at the very beginning of their financial journey, but millennials are at the age where they’re expected to make major purchases. As they struggle with the economy and student debt, they’re making different financial choices along the way.

Adopting New Technology

Lenders are turning to financial technology (fintech) to help peddle their products, which millennials are all too happy to use. Ironically, applying for a personal loan without the face-to-face connection can be far more attractive than the traditional application process.

A Decline in Credit Card Usage

Right or wrong, credit cards have long been linked to perpetual debt in many people’s minds. In 2009, the CARD Act was introduced to place stricter limits on the marketing of credit cards at college campuses. Debit cards have become more of the rule as opposed to the exception, leaping from 8 billion transactions in 2000 to 60 billion in 2015.

Small Business Confidence Is Up, What Does that Mean? (Lendit), Rated: A

The year 2017 saw small business owners across the United States grow more optimistic about the future than they’ve ever been—at least since the creation of the Optimism Index by the NFIB in the 70s.  “2017 was the most remarkable year in the 45-year history of the NFIB Optimism Index,” said NFIB President and CEO Juanita Duggan.

The Tax Bill Could be a Boon for Small Businesses

Sole proprietorships, partnerships, and S corporations are all examples of what are called pass-through businesses; and make up roughly 95 percent of all U.S. businesses. They also happen to be many of our customers at OnDeck, and other online small business lenders. One of the main components of the new tax bill is a 20 percent tax deduction for those businesses, where business owners can “shield” 20 percent of their business income from flowing through to their personal income tax returns.

Cincinnati-based financial tech startup raises $ 1.2 million (Cincinnati Business Courier), Rated: B

A Cincinnati-based financial tech startup that aims to help users secure low-dollar loans without having to resort to a payday lender raised $1.2 million in venture capital.

Mayor proposes employee loans to offset predatory lenders (Santa Fe New Mexican), Rated: B

A few months after a new annual 175 percent cap on small-loan interest rates in New Mexico went into effect, Mayor Alan Webber is proposing a short-term loan program to help municipal workers avoid payday lending businesses viewed as predatory by consumer advocates.

BlockFi Gives Hodlers Another Option to Borrow Against Crypto Assets (BitcoinMagazine), Rated: B

Options for borrowing and lending with cryptocurrencies are on the rise. One of the latest start-ups to join the likes of SALT and Unchained Capital is BlockFi, a New York City–based startup that issues loans backed by bitcoin and ether to individuals, companies and institutions in 35 U.S. states.

BlockFi takes cryptocurrency as collateral, offering interest rates on loans of around 12 percent. This is generally lower than unsecured loans and higher than loans secured with traditional assets such as securities or real estate.

eBus to offer visitors financial advice, credit reports (The Repository), Rated: B

The eBus is a mobile classroom which is equipped with 14 personal computers and satellite technology staffed by Fifth Third bankers and representatives from nonprofit community organizations. On the bus, visitors can request a credit report and review it with a professional; receive a personalized evaluation of finances; receive internet banking and bill pay demonstrations; speak with nonprofits about housing, money management and business advice; receive consultation on foreclosure prevention; and conduct online job searches.

United Kingdom

Scots ‘side businesses’ generate £1.7bn a year (The Scotsman), Rated: A

More than 500,000 people living in Scotland have started a side business, generating a collective £1.7 billion a year out of more than £33bn UK-wide, according to new research.

Online lender Sunny said many of those north of the Border turning to side businesses are doing so to help with the cost of bills, savings and debts, and bring in an average of £272 a month on top of their main income.

That represents a 20 per cent increase from when they first started their business.

China

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated: AAA

China will soon be rolling out new licensing requirements for p2p lenders; The system will kick off in April with approvals slated to come at the end of this month, but many lenders aren’t aware of the filing process; in 2016 and 2017 many p2p lenders shut down and according to data there are around 2,000 remaining; it is expected that many of the 2,000 will not pass the new requirements; the new rules won’t allow platforms to guarantee loan payments and also limit loans to individuals and businesses; it will also require that platforms use custodian banks.

China Rapid Finance Executives Selected to Speak at LendIt Fintech USA 2018 (PR Newswire), Rated: A

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF) announced today that the Company will participate as a sponsor and exhibitor at the upcoming LendIt Fintech USA 2018, to be held between Apr 9th and 11th in San Francisco, California.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 28th, cross-border payment company iPayLinks announced that it had completed, at the beginning of this year, a hundreds of million-yuan B1 round of financing led by Tencent and followed by Legend Capital.

NIFA Issues a Self-Discipline Convention for Debt-Collection Practitioners

The five-chapter convention is mainly applying to regulate the behavior of overdue debt collection within the Internet Finance industry by establishing several basic principles (e.g. observing laws and regulations, prudential regulations, protecting privacy, and strict self-discipline). In other words, the document outlines a framework of debt-collection regulation in terms of discredited punishment, business management, personnel management, information management, outsourcing management, and complaints.

China’s internet lenders fall foul of data privacy rules (Financial Times), Rated: A

More than half of Chinese internet finance lenders are failing to comply with data privacy regulations, research has found, raising risks for investors as China steps up the implementation of laws to protect consumer data.

The breaches include collecting phone numbers from users’ contact lists, which can be used to mount harassment campaigns and shame users into repaying debts.

The survey of 200 finance apps by Renmin University and Nandu Personal Data Protection Research Centre, a Beijing think-tank, ranked 111 apps as having “low” compliance.

It found that almost half — 95 apps — wanted to read users’ text messages, while 97 of them wanted access to users’ contact lists, despite such access not being necessary for the app’s functioning.

International

How retailers are growing their financial services capabilities (Tearsheet), Rated: AAA

Amazon isn’t the only retailer encroaching on the financial services space. It may be the scariest — just the rumor of it entering a company’s space will send its stock price down — but ultimately, Amazon only cares about getting more buyers and more sellers to join its platform.

Overstock’s Raj Karkara, vp of loyalty and financial services, echoed that sentiment earlier this year, saying that offering financial services or connecting customers with financial services providers is a natural extension of its retail function of buying and selling consumer goods.

Rakuten
Rakuten is Japan’s largest e-commerce site and has slowly been growing outside of the country. It has a footprint in media, video-on-demand, mobile messaging, e-books, travel, fashion, marketing and even sports. It also operates the largest online bank in the country.

Overstock
For the past few months, e-commerce company Overstock.com has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing; and, most recently, a discounted trading platform.

Sainsbury (and Tesco)
Amazon may not be interested in becoming a bank but that doesn’t mean it can’t succeed in stealing customer attention from them. The U.K.’s largest grocers have all opened banks attached to their brands —  Sainsbury’s and Tesco.

ETHLend (LEND) Token – Will It Go Down After Kyber Network Partnership? (Hot Stocked), Rated: A

ETHLend has recently partnered up with Kyber Network. The ETHLend (LEND) Token has reached a market capitalization of 45.69 Million US dollars in the last 24 hours. The token traded 9.50%higher against the U.S. dollar during the last 24 hours ending at 10:30 AM EDTon April 2nd. That rise might be as a result of the partnership. ETHLend aims to become another decentralized and secure financial marketplace, but targeting peer to peer lending agreements via Blockchain and Smart Contracts.

Source CoinMarketCap

 

Australia

SMALL BUSINESS LOANS IN AUSTRALIA: SHOULD YOU SEEK FINANCE FROM A BANK OR AN ONLINE LENDER? (Dynamic Business), Rated: A

Considering the small business sector employs nearly half the national workforce and contributes around $380 billion to Australia’s GDP [1], it’s easy to see why it’s frequently referred to as the ‘engine room’ of the economy.

Like all engine rooms, the sector requires sufficient fuel – in this case, working and growth capital – to not only keep running but also accelerate. However, poor access to capital remains a significant barrier to small businesses, accounting for a majority of failures in the sector.

Part of the reason is that banks are reluctant to lend to small businesses in circumstances where the borrower doesn’t have bricks-and-mortar security – especially if a short-term loan is sought.

APRA rejected CBA home loan data as inaccurate and incomplete (Financial Review), Rated: B

Commonwealth Bank was being pressured by the prudential regulator to appoint external consultants and fix its flawed home lending data almost 2½ years before the Hayne royal commission began exposing the big four for sloppy administrative errors and irresponsible lending.

The Australian Prudential Regulation Authority’s frustration with the failure of Australia’s biggest home lender to accurately identify what proportion of its loans were taken out by property investors and its level of exposure to big borrowers has been revealed in evidence tendered to the banking royal commission and published in a massive dump of more than 100 documents late last week.

India

Interest rates on unsecured instant loans are high (LiveMint), Rated: AAA

Financial institutions and fintech companies have launched multiple small credit products in India in the past 1-3 years. It is now possible to get loans even on your mobile phone. But how do you pay for this convenience?

P2P lending platform

Peer-to-peer lending companies such as Faircent, i2ifunding and Lendbox connect lenders and borrowers on their platforms. Usually, the lender is an individual and not a financial institution. The interest rates are between 15% and 36% per annum and the loan amount can range from Rs50,000 to Rs5 lakh. The interest rate is decided based on the credit profile of the customer. Usually, the P2P lending companies take into account your Cibil credit score. The loan tenure is 3 months to 24 months.

Fintech eco-system is moving to blockchain and AI: Rajat Gandhi, Faircent (Economic Times), Rated: A

A lot of players have come into the fintech space. There are wallet players, then there are PPI, P2B, crowdsourcing and other payment players as well. So, regulation is one of the key challenges the private players are going through. What is your take on it?

Surprisingly, the Indian regulators, I would say, are strict. You can see the example of NBFC P2P licences regulation. It is a good rule-based model. In fact, the players themselves were pushing for some kind of regulation because financial markets need them. It’s not like e-commerce or running a taxi where the risks are not that high.

India’s Finzy Raises $ 1.3 Mln At Pre Series A Funding (Reuters), Rated: A

Finzy, India’s fastest growing peer to peer lending platform, has raised USD 1.3 million in first round of Pre Series A from investors in the industry. A second round of fundraising is expected to close with pre-identified set of investors within the next 60 days.

Latin American

Brazilian Loan Marketplace FinanZero raises USD 3.6 million in Series A Funding Round (PR Newwire), Rated: AAA

FinanZero is a leading marketplace for consumer loans in Brazil. The business is an independent broker for loans, negotiating the customer’s loan application with several banks and credit institutions, to find the loan with the best interest rate and terms for the consumer. FinanZero handles the lending process from start to finish.

The Series A round was led by Swedish publicly listed investment company, Vostok Emerging Finance, with participation by other Swedish investors, including Webrock Ventures and Zentro Founders.

Africa

Fintech is central to Nigeria’s future success (Financial Times), Rated: A

Central to this opportunity is an acceleration in the development of a modern banking and financial services sector. We are already seeing huge breakthroughs in digital banking and the adoption of fintech-based services by Nigerian consumers — be they retail or business customers. But this expansion must be encouraged by policies that will see greater inclusion of women and rural communities into mainstream banking activity.

Asia

Meet the most disruptive fintech startup in South Korea (Forbes), Rated: AAA

Viva Republica is the most disruptive fintech startup in South Korea. Since the 2015 launch of its simple peer-to-peer payments app Toss, banks are finally revamping their user experiences and customers have easier access to financial products. South Korea’s mobile payments have more than quadrupled in that time to $4.6 billion, according to Bank of Korea data.

The startup, funded at $76 million, hasn’t stopped there. After PayPal joined a $48 million investment in Toss in March, Toss has grown from a simple money-transfer app to a diverse consumer-finance platform generating Viva Republica’s $20 million in expected revenue in 2017. Toss thus joins Asia’s ranks of fast-growing mobile P2P payment services, reaching a $12 billion transaction volume in 2017.

Authors:

George Popescu
Allen Taylor

Tuesday August 22 2017, Daily News Digest

Peter Renton investment results

News Comments Today’s main news: PawnHero lands $9.7M financing. AltFi Data scoops equity investment, appoints advisory board. Funding Circle to launch new Autobid, Autosell lending features. SocietyOne celebrates fifth anniversary. Today’s main analysis: Peter Renton’s MPL results for Q2 2017. Today’s thought-provoking articles: How Amazon’s Alexa will upend wealth management. The future of banking investments. Will finance businesses jeopardize the credit quality […]

Peter Renton investment results

News Comments

United States

United Kingdom

China

European Union

International

  • Instant gratification and real-time vacations. AT: “In 2005, my wife and I toured Germany by train. At that time, we had our laptops and managed to book hospitality services using the public railway system’s free wi-fi. We thought it was cool that we could plan a two-week vacation on the fly and move from one city to the next with minimal planning. Today’s technology is even better and more readily available for this type of ‘vagabonding’.”
  • International REITs.

Australia

APAC

Middle East

News Summary

United States

My Quarterly Marketplace Lending Results – Q2 2017 (Lend Academy), Rated: AAA

One could almost say my returns are in a downward spiral. Since peaking in Q1 2014 at 12.44% my returns have decreased pretty much every quarter and for the last two years that decrease has averaged around 0.5% per quarter.

This past quarter my overall returns stood at 7.28% and the returns for my original six accounts were 5.07%. My worst Lending Club account was my original account there and it came in at 1.95% for the year. The only good news, if there was any, was that I did not have a negative quarter in any of my accounts this quarter unlike in Q1.

Source: Lend Academy
  1. All the account totals and interest numbers are taken from my monthly statements that I download each month.
  2. The Net Interest column is the total interest earned plus late fees and recoveries less charge-offs.
  3. The Average Rate column shows the weighted average interest rate taken directly from Lending Club or Prosper.
  4. The XIRR ROI column shows my real world return for the trailing 12 months (TTM). I believe the XIRR method is the best way for individual investors to determine their actual return.
  5. The six older accounts have been separated out to provide a level of continuity with my earlier updates.
  6. I do not take into account the impact of taxes.

Lending Club

While Lending Club shows an 8.19% return I ignore that number and do my own calculation. My TTM return here is at an all time low of 1.95% but at least I have reversed what happened in Q1 when I had a negative quarter.

Prosper

Source: Lend Academy

Direct Lending Income Fund

The Direct Lending Income Fund continues to be my most consistent performer returning solid double digit returns every quarter since I started investing back in 2013.

How Amazon’s Alexa will upend wealth management (Financial-Planning), Rated: AAA

Advisors wondering how Amazon will enter wealth management should look to its cloud computing arm, Amazon Web Services, which is pitching the natural language processing, machine-learning brain behind its voice interactive service to wirehouses, broker-dealers and robo advisors.

Already, UBS has partnered with Amazon to enable clients and non-clients of the bank to get answers to financial and economic questions through Alexa.

The Future Of Banking Investments (Modest Money), Rated: AAA

I’ve actually had this subject on my mind for awhile. In my article “Customer Experience And Retail Banking: Why Banks Need To Enter The Modern World”, I discussed a day where my district manager came to show us the ABSOLUTE IMPORTANCE OF LOBBY LEADERSHIP!!!!!!! I was rather underwhelmed by its importance, but overwhelmed by the fact that the banks were all putting such a heavy focus on greeting customers at the door and making each trip to the bank “an experience”

One of the downsides of the future of banks—and one of the things that might compel someone to avoid bank stocks—is that they are slow to change. They are loathe to change.

Other businesses are trying to please their customers. Banks are trying to please their regulators. Because customers don’t issue multi-million dollar fines on banks when they don’t get what they want.

A New Challenger Has Entered The Battle!

Businesses always have competition within their field. Banks are no exception. Banks compete with other banks to provide their services to the global market.

Except now, with fintech growing at a record pace, banks face competition from small fintech companies and major technology giants such as Google and Apple.

We’ve seen companies like Lending Club take the world of lending andinvesting by storm with their peer-to-peer lending services. LendingTree has changed the way people shopped for mortgages, and LendKey is fast becoming a leader in student loans by acting as a broker for not-for-profit lenders and providing full after-funding services. I wrote a review about LendKey here.

For non-lending companies that aren’t brought to you by the letter “L”, there’s PolicyGenius (an online life insurance broker). There’s Acorns, a “micro investment” company that takes each of your debit card purchases, rounds them up to the nearest dollar, and invests the spare change into your investment portfolio. And of course, there’s PayPal, the legendary online payments/money transfer company.

Of course, the fintech firms aren’t even the largest future competitors! Ironically, it’s non-financial technology giants that pose the greatest threat to the future of traditional banks!

Why I Think Bank Stocks Are A Great Future Investment

No, I’m bullish on banks because I think that they will adapt, in their own unique way.

Read the rest of this snarky analysis.

What Key’s fintech investments say about commercial payments (American Banker), Rated: A

Last week the Cleveland-based bank announced it had taken an equity stake in the fintech firm Billtrust, which provides digitized and automated accounts receivable capabilities for companies. The investment is one of a series the $134 billion-asset Key has made in the space in the last two years.

Other banks are also making an effort to enhance commercial payments capabilities. Wells Fargo, for example, in June announced that receipt imaging would be available for commercial card customers who use the bank’s commercial card expense reporting service, which allows them to upload and manage receipts directly on mobile devices. U.S. Bank also began offering corporate clients a virtual payments service, for employees who need to make a one-off work-related payment or who make purchases rarely enough that they don’t need a physical plastic corporate card.

Key is hoping that B-to-B payment solutions will make it stand out in the competitive landscape of commercial banking.

Making Friends with Fintech: Tips for Bankers (ABA Banking Journal), Rated: A

Time and reality have since set in, and the tone of the conversation has shifted away from “compete” toward “collaborate.” Banks increasingly see the value of capabilities developed by fintech firms, and those companies in turn are becoming better acquainted with the challenges of regulation and other barriers to bringing their products to market.

For banks, the wakeup call has been the realization that customers are coming to value—and expect—a frictionless banking experience. And if banks can’t provide that kind of frictionless experience, Henrichs says, they’ll turn to alternate solutions.

Keys to building a successful fintech strategy

1. Adopt the right cultural mindset.

First and foremost, the bank must have an appetite for innovation.

For some banks, this may involve a shift away from viewing fintech companies as simply third-party vendors or service providers, and instead as collaborators working side by side to develop something new.

2. Do something.

And size isn’t an excuse to sit back and wait, Henrichs adds. Rather, it’s about choosing an area of focus that makes sense for the bank in terms of available resources. While that may not always be a big, sexy innovation, banks can start by achieving smaller, incremental change—something as simple as building and beta testing a new email delivery system can help build up the bank’s “try and fail muscle” and help lay the groundwork for future, larger-scale projects.

3. Be forward-looking.

Consumers’ demands are shifting every day, and new products will continue to hit the market at an unrelenting pace. Knowing that, bankers must be able to keep an eye on the horizon.

Will the human-robo approach to wealth management become best practice? (WhatInvestment.co.uk), Rated: A

According to the quarterly Fiserv “Expectations & Experiences: Borrowing and Wealth Management” survey conducted in June 2016, 49 per cent of consumers are interested in receiving financial advice from a robo-advisor.

However, there are limits to a robo-only approach. That is why we are witnessing an increase in wealth management firms that incorporate both digital advice and human advice to create a hybrid model, which is likely to become best practice in the industry.

Property Partner adds student assets to portfolio (Property Week), Rated: B

Real estate crowdfunding platform Property Partner has added student accommodation assets to its portfolio for the first time due to its high returns.

Online financial websites abound with free information (Lebanon Democrat), Rated: B

Annualcreditreport.com is a free website and app which will allow you to get a free copy of your credit report every 12 months from each credit reporting company.

Nerdwallet.com is another free website and app. The site offers financial tools and objective advice to help people better understand their financial options and make the best possible financial decisions.

Mint.com is a free website and app that helps you create budgets that make sense today and set you up for success tomorrow.

Bankrate.com is a free website and app that will help you find and compare rates on financial products like mortgages, credit cards, car loans, savings accounts, certificates of deposit, checking ATM fees, home equity loans and banking fees.

United Kingdom

Funding Circle to Launch New Version of Autobid & Autosell Lending (Crowdfund Insider), Rated: AAA

On Monday, Funding Circle announced it is set to launch a new version of its existing Autobid and Autosell lending tools. Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Funding Circle created a new section on their web site dedicated to the explanation as to why they were moving away from peer to peer lending and becoming more like a fund by eliminating manual selection.

While many investors have enjoyed manually choosing loans, there are some drawbacks to it:

  • Many investors do not currently benefit from lending to all types of businesses.
  • It can mean your lending is not spread evenly across lots of businesses.
  • It can be confusing for investors.73% of new investors who join Funding Circle choose Autobid, and 80% of Funding Circle investors* say simplicity of lending is important to them.”

Regulatory spotlight on crowdfunding & P2P lenders (Moore Stephens), Rated: A

The FCA has launched a crackdown on peer-to-peer (P2P) lending, in the coming months, aiming to ensure protection for retail investors within this heavily risk-associated market.

China

Finance businesses may jeopardise credit quality of internet companies, Moody’s says (SCMP), Rated: AAA

These operations could weaken the internet companies’ credit quality, especially if their finances are consolidated on the technology companies’ accounts, Moody’s Investors Service said.

That’s because most internet companies don’t generate enough profits from operating these businesses, and they lack a track record of holding borrowers accountable for timely payments on their loans, Moody’s said.

Source: South China Morning Post

Unruly and unregulated, nation’s Internet finance sector urgently needs supervision (Global Times), Rated: A

After years of explosive but unruly growth, the online finance market requires cooling through tighter regulation.

On the contrary, there were few regulations to guide or hamper China’s Internet finance industry, with no such requirements as reserve levels or loan-to-deposit ratios. The near-absence of regulation greatly lowered the barriers to entry for the sector, which witnessed both explosive expansion and high failure and fraud rates as it grew. Take P2P lending platforms, for example. As of the end of July, 5,916 P2P lending platforms had been set up in China, but only 2,090 were operating normally, with the rest either encountering liquidity problems or simply closing, according to statistics from wangdaizhijia.com, a P2P industry portal.

Views on Yu’E Bao: easy for payment but difficult in credit! (Xing Ping She), Rated: B

Ant Financial has a big market share in the online payments industry in China. However, its ambitions go far beyond that. Recently, Ant Financial was known to get involved in the credit market.

Ant Financial seeks to merge the gap between the Yu ‘E Bao account and the general bank account through the online merchant bank. It hopes to connect the supply and demand side of the credit in its own account system, just as the bank account do.

But it won’t be easy. The biggest difference between the credit business and the payment business is that the credit business is a heavy capital business and a highly regulated licence business with a strong social spillover effect.

European Union

Sweden Cryptocurrency Boom: Top 3 Swedish Fintech Startups To Watch (IBT), Rated: AAA

The Swedish startup Klarna made waves this summer by launching its own peer-to-peer payment app called Wavy and acquiring a full banking license, which sets Klarna apart as one of the few fintech companies able to compete with traditional banks head-on. TechCrunch described it as a $2 billion startup working the  700,000 e-commerce sites. In June, Visa Inc. announced it is buying a stake in Klarna plus forming a payments partnership. Klarna is now widely considered one of the world’s most promising fintech startups.

The Stockholm Fintech Hub is less than a year old and is now reportedly home to more than 200 startups, plus representatives from a few global players like IBM and Microsoft.

There is a small but growing demand for bitcoin in Sweden. Sweden’s central bank is even considering the merits of making its own national cryptocurrency. In the meantime, Safello aims to become the “ Coinbase of Europe,” since the European bitcoin landscape is far more diverse than North America in terms of regulation and user habits. Coinbase, arguably the world’s best funded bitcoin exchange, is already available in Europe. However, Safello sets itself apart by focusing exclusively on the needs of European users, including support in nine different languages.

So far, Schuil said Safello has facilitated $10 million worth of transactions involving tens of thousands of European users.

Klarna and Safello aren’t the only Swedish startups with the potential to completely overhaul how people interact with money. Among all the startups buzzing around Stockholm, Biohax International certainly stands out. Biohax CEO Jowan Osterlund told IBT his team has implanted 3,000 microchips in people’s bodies, usually their hands, most of which happened in the past year.

These microchips can be used for purchases like train tickets and food. The Wisconsin company Three Square Market now lets employees buy office snacks with the swipe of a bio hacked hand, while also using the chip as a workplace ID for office equipment.

AltFi Data scoops equity investment, appoints advisory board (AltFi), Rated: A

The transparency agenda in online lending has taken a step forwards, as another analytics firm raises capital. AltFi Data has raised an undisclosed sum of equity funding, in tandem to forming a new advisory board.

Roger Spooner and Peter Wilson will join existing backer and executive board-member Michael Baptista on the newly established advisory board. Spooner was most recently a member of the management committee at global data firm Markit, where he was head of global client management. Following a 20 year career in private equity, Wilson was the inaugural CEO of British Business Bank Investments, where he was responsible for £1.5bn of government investment. In this role he oversaw a number of early institutional investments within the UK’s marketplace lending sector.

Funding campaign aims to establish new co-working space in Dublin (Irish Times), Rated: B

Sona 10 Newmarket, which is located next to the Teeling Whiskey Distillery, is being created in collaboration with the long-established Dublin Food Co-Op and will be hosted on its premises.

The brainchild of Adrian O’Connor, a Canadian entrepreneur who has lived and worked in the area for about a decade, Sona 10 has already raised some private funding to get the building open with some tenants already coming on board.

It is now seeking to raise an additional €25,000 via the Irish crowdfunding platform Flender to kit out the premises.

International

Real-Time Vacations: The Instant Gratification Of Fintech (Forbes), Rated: AAA

Being able to transfer money between accounts in real-time has become part of our daily lives, so much so that when these automatic services do not work, it becomes a problem.

Smartphones have become global standard: ‘conventional banking meant writing traveler’s checks and exchanging physical currency ahead of a trip, both of which are very expensive for the average consumer. Since then, new fintech providers – even in emerging markets – have dramatically increased the acceptance of foreign credit and debit cards,’ Likar said.

Vacationing in real-time is here: ‘you can now rent an apartment for same-day arrival on Airbnb or HomeAway, find last-minute dinner reservations through OpenTable, borrow a car near your location with Turo, and even book by-the-minute hotel rooms through the Recharge app.

Another aim of the fintech industry, in the same vein of the eradication of cash, is helping those that are unbanked and underbanked pay for services only available for those with credit cards. ‘Most airlines today accept payments from alternatives like PayPal. Other financial services companies, such as Affirm, offer three, six and twelve-month financing plans for customers who cannot afford to pay for the flight up front.’

WeSwap is a multi-currency card that can hold up to 18 different currencies, ensuring that consumers can lock in the exchange rate upfront rather than after the purchase,’ Likar mentioned.

International REITs: An Overlooked but Surging Asset Class (Investopedia), Rated: A

In the U.S., the real estate sector is one of the smallest groups in the S&P 500, but real estate investment trusts (REITs) are popular among income investors.

As WisdomTree points out in a recent note, a massive chunk of global real estate investments are actually found outside the U.S. (See also: Eyeing Emerging Markets REITs? See These ETFs.)

Australia

SocietyOne Celebrates Five Year Anniversary Of Helping Customers (Crowdfund Insider), Rated: AAA

Australia-based online lender SocietyOne announced on Monday it is celebrating its five-year anniversary of helping customers achieve their lending needs. This celebration comes less than two months after the lending platform surpassed $300 million in total originations. The lender revealed that more than 13,000 customers thanks to $325 million provided by its investor funders.

APAC

PawnHero bags $ 9.7m financing, partners PLDT fintech arm (Deal Street Asia), Rated: AAA

Southeast Asia’s first digital pawn shop PawnHero has closed a $9.7 million (P500 million) financing deal with a Philippine investment bank even as it signed a partnership agreement with the fintech arm of telco giant PLDT.

Middle East

Ever a lender or a borrower be… (Khaleej Times), Rated: AAA

The key to the banks’ risk taking ability is aggregation. The bank is able to get the deposits at scale and at the same time lend to a large number of customers most of which are likely to pay back. In a portfolio of loans, historically, only a small percentage is non-performing. The individual lender has so far not had the ability to create a portfolio. The start of crowdfunding a few years ago began to change that. Crowdfunding works in the area of providing returns through some level of ownership of either the product itself or the company which is promoting it. For individual investors seeking a stream of steady income on the other hand, P2P Lending or Marketplace Lending makes more sense.

However, the speed of growth of P2P lending outstrips that of traditional banking. An excellent December 2014 whitepaper, A Trillion Dollar Market By the People, For the People published by Foundation Capital, describes the blistering pace at which P2P lending grew from a base of $870 million dollars in 2012. Estimates of the size of the industry vary from between $100 billion to $200 billion. The whitepaper predicts that the market size will be about $1 trillion by 2025.

On average, P2P lending platforms like Beehive are able to reduce interest rate spreads between sourcing and lending money by about 400 basis points (4 per cent). That’s because players in this space do not keep the loans on their balance sheets.

Authors:

George Popescu
Allen Taylor

The Final Underwriting Step that Subprime Lenders Are Missing

loan underwriting

From the time a subprime consumer applies for a loan until the moment of funding, the underwriting process can be a perilous journey. Loan defaults cost subprime lenders over $12 million in January alone, according to alternative credit reporting bureau Clarity Services. With more loans being issued for increasingly larger amounts, the need to properly […]

loan underwriting

From the time a subprime consumer applies for a loan until the moment of funding, the underwriting process can be a perilous journey. Loan defaults cost subprime lenders over $12 million in January alone, according to alternative credit reporting bureau Clarity Services.

With more loans being issued for increasingly larger amounts, the need to properly manage risk has never been greater. From 2014 to 2015, Clarity data shows an increase of 66 percent in the number of loans issued, with a 163 percent jump in the dollar value of loans during the same period.

Lenders of all sizes and across all industries are scrambling to find reliable ways to mitigate both known and hidden risks without sacrificing speed or customer service.

Re-Thinking Successful Underwriting

Underwriting can mean different things to different lenders. Whether it involves using a sophisticated system of credit data reports, or simply checking the lender’s own internal records, the goal is the same: confirm identity, avoid fraud and, hopefully, recover the funds as agreed.

However, in an effort to meet lofty sales or revenue goals, it is possible to approve the wrong applicants or take on too much risk – leaving lenders open to an increasing default rate and, ultimately, the loss of revenue.

Finding a way to standardize the process is key. Alternative credit bureaus can provide cross-industry visibility into a consumer’s credit activity, including current obligations and recent credit inquiries. This is especially important, since consumers with eight inquiries in the past 30 days have a default rate of 56 percent!

“While underwriting is not a marathon, it’s also not a sprint,” said Clarity CEO Tim Ranney.

“Despite market pressures to move quickly, the most successful lenders blend agility with the right underwriting tools for risk management.”

Cover the Whole Journey, Not Just the Beginning

There are many types of solutions to cover the early stages of underwriting. A credit report will show a lender whether an applicant is creditworthy and how well they’ve managed debt in the past. When an applicant’s history has been considered and a preliminary decision has been made, the process is usually considered finished. But is it?

Let’s say a lender’s standard practice is to fund loans at closing time as part of a daily batch. A lender can approve an applicant at 10 a.m., and that transaction will fund at 6 p.m. and be reported to the credit bureau as a tradeline.

The question is, what did the customer do in the hours between 10 a.m. and 6 p.m.? Was that window used to apply for another loan?

Clarity’s internal data shows that consumers with one or more additional credit inquiries within 24 hours following initial underwriting are nearly 40 percent more likely to default on the loan.

There is an extra step that could save a lender thousands. Clarity developed a final checkpoint in the underwriting journey. Just before a loan is officially funded, the lender can take a “last look” at the applicant to make sure their credit history hasn’t changed since they first applied.

End-to-End Underwriting

A lot can happen in the hours between initial underwriting and funds dispersal. Clarity’s data shows that 51 percent of loans had multiple inquiries after the initial stages of underwriting were complete.

While concerning, it is possible that in some cases the additional inquiries may be a result of lead generation companies saturating the market, and may not actually represent new consumer inquiries. Taking a last look can help lenders avoid losing legitimate business over a perceived threat that later proves false.

Of course, this last look is only effective if the lender covered all of the basic questions of early underwriting. Was the applicant’s identity verified? Did they trigger any fraud alerts? These are important questions to answer early.

But lenders no longer have to stop there. Cover the entire underwriting journey by taking a last look before the funds go out the door.

Author:

Written by Tim Ranney.

Tim Ranney

Tim Ranney is president and CEO of Clarity Services, Inc., a real-time credit bureau providing credit-related data on subprime consumers. Prior to founding Clarity in 2008, Ranney spent 20 years as a leader in internet security and risk management, serving as COO of an industry leader and senior executive for both Network Solutions and VeriSign.

Enabling Banks to Advise Users On How to Improve Credit

interactive credit report

Credit reports are a pivotal factor in determining if borrowers will be approved for a loan. But is that the best approach to analyse credit worthiness? One company challenging the status quo of the static credit report is Lantern Credit. Lantern Credit’s Interactive Credit Report helps users evaluate “the impact of their financial actions on their credit […]

interactive credit report

Credit reports are a pivotal factor in determining if borrowers will be approved for a loan. But is that the best approach to analyse credit worthiness? One company challenging the status quo of the static credit report is Lantern Credit.

Lantern Credit’s Interactive Credit Report helps users evaluate “the impact of their financial actions on their credit scores and accept new credit offers.” The report is based on an interactive machine learning technology, Beam AI, which provides customized recommendations to its customers on ways to improve their credit score.

The company sells its white label product to banks and financial institutions, which displays the bank’s credit products. This enhances the customer experience and reduces adverse action reporting, which proves to be advantageous for lenders and customers. The banks are charged on the basis of actions taken by consumers on the recommendations of Lantern Credit. A non-labelled solution shows all available credit products in the credit report.

Though there are existing apps available like Kredit Karma, Lantern Credit offers flexibility while suggesting ways bank customers can improve their financial habits leading to improved credit scores.

Goal-Centric Approach to Credit Score Improvements

Lantern Credit is able to meet this need of bank customers through the use of proprietary artificial intelligence technology, called Beam AI. The company focuses on what the customer is trying to achieve in terms of funding (i.e. house, car, education, etc.) rather than on just the credit score. Since all analytics are actionable, the customer is able to act swiftly rather wait for long periods of time.

The interactive credit report provides guidance to consumers on ways to improve their credit score through actions like balance transfers and pay downs. It also offers customers available credit options. Rather than targeting consumers across the board, Lantern Credit concentrates on customers whose credit score lies between 650 and 720.

In order to enhance its machine learning engine Beam AI, Lantern Credit acquired Abstract Regression-Classification (ARC) machine learning library. This tool uses non-linear symbolic regression to generate auditable credit models by applying analytical predictions on consumer data acquired from banks. This helps manage risk and provide credit offers in a timely and actionable manner while elevating data accuracy.

Lantern Credit also appointed ARC’s inventor Michael Korn as chief data officer. Beam AI puts most of its emphasis on customer goal achievement rather than credit score alone. It helps customers access credit for large items like auto, home, and loan refinancing. Banks can also identify potential customers based on their goals.

Since Lantern Credit is not a credit reporting agency, this credit improvement model does not required adherence to FCRA regulations. Also, CFPB considers the model transparent as it provides all rules upfront to the consumer. The founder believes it is a more cost-effective tool than a financial advisor. He suggests advisors can use the tool to provide better wealth management services.

Lantern Credit History

Lantern Credit, LLC was founded in 2013 and is headquartered in Newport Beach, California. The company’s previous name was New England Funding Technologies, but was formally changed on July 20, 2017 to reflect the company’s mission (illuminate the world of consumer credit and debt) more acutely.

The company emerged with the aim to “provide customers with unique patented credit tools that enable them to reflect the impact of their actions on their credit score and manage their financial wellness.”

Lantern Credit raised $10 million in its latest round of funding, backed by three investors– John Mack, John Sculley and Kevin Knight. All three are presently board members. The funds were used by the company to accelerate the development of mPowerCredit, a patented online platform that allows consumers to enhance their credit scores in real-time.

G. Christopher Imrey, founder and executive chairman, has more than 20 years experience in technology innovation. He founded Apollo Enterprise Solutions Ltd and holds nine issued and provisional software technology patents. Chad Swensen, co-founder and CEO, has experience in developing and leading technology companies and founded wireless technology solutions provider Sweet Spot Solutions.

Lantern Credit’s board members include luminaries like John Mack, former chairman and CEO of Morgan Stanley, and John Sculley, former Apple CEO and youngest president of Pepsi-Cola Company. The company has 39 employees and expects to expand to 75-100 by the end of the year.

Lantern Credit has been able to stitch together an impressive team, board of members, and clients. Its revolutionary Interactive Credit Report uses proprietary AI to analyze and suggest actions to consumers to improve credit scores. Its ability to remain out of regulatory cross hairs is an important indicator of how big the company is expected to grow.

Author:

Written with Heena Dhir.

Allen Taylor

Monday April 17 2017, Daily News Digest

Monday April 17 2017, Daily News Digest

News Comments Today’s main news: Republicans propose drastic overhaul of CFPB.  BOE chief sees no need for tougher FinTech regulation. CBRC assistant chair reported ‘out of contact’. Today’s main analysis: Transparency remains a sticking point for online lenders. The India FinTech Market Map. Today’s thought-provoking articles: How this FinTech CEO plans to prosper. Interview with Scott Sanborn. International regtechs […]

Monday April 17 2017, Daily News Digest

News Comments

United States

  • Republicans propose drastic overhaul of CFPB, Dodd-Frank. GP:” This is just a proposal and it will likely change a lot by the time, if and when, it gets adopted into law. In all cases, the theme here seems to be more control and less power for the agencies.”  AT: “We saw this one coming. I didn’t expect a name change, but I think that’s interesting, especially the use of the word ‘opportunity,’ which puzzles me. Why would a regulatory agency include that word in its name? Another thing I find interesting is the deputy director holding the job at the will of the president, which I expected. However, it makes the agency serve at the whim of the winds of the political climate, like all other executive agencies. What makes that interesting is it goes against the initial conception of the agency, which was intended to be independent of the chief executive. I’m not saying it’s right or wrong, good or bad either way, but we can expect the Democrats to fight this hard.”
  • How this FinTech CEO plans to prosper in 2017. GP:”The key is customer satisfaction, which itself relies on a good product, fair pricing, ease of use whom themselves depend on the cost of financing, employee satisfaction, technology quality and an infinite list of other items.”
  • Transparency remains a sticking point for online lenders. GP:”This is very interesting data. If the online lenders build a reputation of being expensive, regardless if it’s true or not, it will hurt their customer acquisition costs significantly. This has to be fought and this perception is very dangerous. In general consumers, especially opinion leaders, are not stupid. I think a good way to fight for transparency and to fight the high rate and unfavorable terms opinion is by actually releasing actual verifiable data that offers more transparency and demonstrates the rate and term points. ” AT: “It’s important that online lenders not simply claim to be transparent. Most consumers, millennials, in particular, are well aware that technology is not inherently transparent. It can be used to set up walls of opaqueness as easily as see-through curtains, or blinds. If you’re going to call yourself ‘transparent’, you’ve got to be transparent.”
  • Chatting P2P marketplaces with LendingClub’s CEO. GP:” Lending Club is really turning into a large company, run as a large company, on values and brand and letting every department alone to do what they can with controls in place. I am curious how it will defer from a large bank in two or three years.” AT: “Scott Sandborn shares some interesting insights into marketplace lending in general and LendingClub in particular.”

United Kingdom

  • BOE chief sees no need for tougher FinTech regulation. GP:”I am pleasantly surprised, and once again I understand how the UK, despite being a small market, continues to be the point of reference in finance in the entire world and has been for hundreds of years. I am yet to see a single US regulator who says even once: there is no need for more regulation.” AT: “This is a sign of maturity. In the U.S., when legacy institutions sense up-and-coming competitors, the first thing they want to do is use regulation as a protectionist scheme. Competition is good–for the goose and the gander.”
  • Researcher showcases unauthorized NFC payments with cloned Android device. AT: “This is interesting. We must all understand there’s no such thing as fail-safe security in the cyber world. Every device is a potential entry point for bad actors. In fact, every app on every device is a potential entryway for hackers and other bad actors. The key goal for security experts is to stay ahead of them. This hole needs to be plugged quickly.”

European Union

International

China

India

Asia

MENA

Africa

News Summary

United States

Republicans propose drastic overhaul of Dodd-Frank and CFPB (Housingwire), Rated: AAA

According to the summary of bill changes, the original CHOICE Act would restructure the FHFA and OCC as bipartisan commissions. The FDIC would be reorganized as a bipartisan commission with all five commissioners appointed by the president, and both the Comptroller of the Currency and the CFPB director would be removed from the FDIC board. Also, NCUA board of directors would be increased from three members to five.

The new CHOICE Act 2.0 cuts a lot of those proposed changes, and instead, the FHFA director would be removable at will by the president, with no changes to the current law regarding OCC and NCUA. The FDIC structure would stay the same as proposed in CHOICE 1.0.

The original CHOICE Act replaced the director of the CFPB with a Consumer Financial Opportunity Commission, a bipartisan independent Commission serving staggered terms.

Instead, in the newest version, the Consumer Financial Protection Bureau would be changed to the Consumer Financial Opportunity Agency, an executive agency with a sole director removable at will. The deputy director would also be appointed and removed by the president.

While the original CHOICE Act established a CFPB Credit Union Advisory Council, the updated one removed it because the bill eliminates mandatory CFPB advisory committees.

How This FinTech CEO Plans To Prosper In 2017 (Forbes), Rated: AAA

Along with FinTech industry guru Ron Suber, Prosper’s president, Kimball is intent on growing loan volumes, offering lower average rates compared to traditional lenders, delivering higher returns to investors and returning Prosper to profitability.

Prosper, which is the original online peer-to-peer marketplace, has originated over $9 billion in consumer loans over the past decade.

Since being appointed CEO of Prosper Marketplace late last year, Kimball has stepped outside his former financial role as Prosper’s CFO to take on a more operational-driven strategy.

David Kimball: Ultimately, the long-term success of platforms will be dependent on their ability to deliver a great product and a consistent experience. The success of the partnerships will depend on the ability for the two companies to communicate and understand each other (language, transparency, and culture), and it will depend on how well objectives remain compatible.

David Kimball: Last year, the industry did a lot to lay the foundation for a successful 2017, and we’re seeing that work pay off. The [recently announced loan purchase deal] gives us the funding stability we need to continue to grow, while at the same time giving us some great long-term partners that are invested in our business and its success.

David Kimball: A successful CFO is one who partners with the business instead of playing the finance sheriff. That requires a willingness to understand the business, to think holistically, to work with peers who jointly own the results. The CFO is the finance subject matter expert, but should be able to consider other disciplines, just as a CTO should be able to understand the financial implications of engineering decisions.

As CEO, I continue to think holistically and I now have an opportunity to flex into other areas of the business.

Transparency remains a sticking point for online lenders (Tearsheet), Rated: AAA

A small business credit survey by the Federal Reserve Bank of New York found 46 percent customer satisfaction at online lenders like Lending Club and OnDeck Capital with a 19 percent rate of dissatisfied customers – compared with large banks’ 61 percent of customers who indicated they were satisfied with their small business loan process and 15 percent of whom expressed dissatisfaction. Almost half of all customers specified that their dissatisfaction came from a “lack of transparency.”

Online lending customers are also dissatisfied with higher interest rates and unfavorable repayment terms, two common issues for the growing industry, which continues to have a higher cost of capital and for customer acquisitions.

Chatting P2P marketplaces with LendingClub CEO, Scott Sanborn (Simple Innovative Change), Rated: AAA

CL: The LendingClub story is a fascinating one and one that I’ve followed from the early days. So how does it feel to sit here and realize that so much of what is here today and the proliferation of all these different lending platforms is really because of this company and this team and what you have been able to build?

SB: I think it is exciting. It’s very gratifying to see how the initial idea has gained traction and how that has spawned new players who are bringing new energy and new ideas to different segments of the market. I think the clearest benefit is looking at how much value we’ve driven to consumers and investors.

For example, the personal loan market was actually shrinking when we first started. It shrank like 57% from 2007 to 2010, and yet we were still able to giveCL: There’s this great photo from the day of the IPO back in 2014 in which you can see just how elated you were. At the time you were the CMO and it was a very happy day, but when you stepped into the CEO role recently it wasn’t necessarily under the happiest of conditions. So, how have you handled the ups and downs of being a part of the Lending Club team, and how are do you lead the team through these challenging periods?

CL: That’s the answer you want to hear, by all means. Since becoming CEO at LendingClub, what have you learned about your own management style and how are you navigating the transition to this role?

SB: So much is swirling and changing in real-time, which means you need to keep everyone in the loop. In those early days after I stepped into the CEO role, I can’t tell you how many times we pulled all 1,500 employees together and marched them across the street to a hotel, to fit them into one room and explain, “Here’s what’s happening. Here’s what we know. Here’s what comes next.” That was certainly critical.

Lastly, we have focused tirelessly on assembling the right team. When a business is growing 80% to 100% a year for so many years it’s hard for the organization to keep up, and this was an opportunity to say, “Okay, new reality. Let’s look at what the right foundation is for the next decade of Lending Club.”

CL: One of the other reasons that I wanted to speak with you is because I often speak with seed and series A Fintech startups that’ll eventually face the challenges of being a larger organization if successful. So, what do you think are the challenges associated with trying to be an innovator while also being a larger organization?

SB: Literally, I left that conversation, and sat down with several team members in a room and said, “Okay, what are our values?” It was remarkably easy, actually, to identify what our values were. We put those down on paper and we revisit them, probably annually, maybe every 18 months or so and say, “Do they still resonate? Are they still right for this stage of the company?” Essentially all of our initial values have remained intact and we’ve added one or two as we’ve grown to reflect the new stage of the company.

Since then we have remained crisp on what our values are, and we have made sure we’re hiring to those values, and that our performance reviews reflect those values as well. That’s how you keep the essence of a company and that integrity of the company as you grow. The reality is, as you get bigger and layers get introduced and processes get introduced maintaining that value system will help the company stay, essentially, intact and stay functioning well.

CL: As we look to the vision of the future loan markets, do you think that startups will increasingly become the sourcing mechanisms of loans with financial institutions acting more as the wholesale banking providers?

SB: I think we’re not done seeing the different types of models that could emerge and how they could participate, and I think that’s part of what’s exciting. Not all of them will be great ideas, and not all of them will work, but some will.

If you look at our model, banks provide between a quarter and 30% of our funding and they have a very low cost of capital. When you combine their low cost of capital with our low operating cost it allows us to give, especially that super-prime customer, an incredible value that they couldn’t get at these institutions directly.

United Kingdom

Bank of England Chief Sees No Need for Tougher Fintech Regulation (Corporate Counsel), Rated: AAA

Fintech could pose a threat to traditional banks in the United Kingdom, according to Bank of England Governor Mark Carney. But that doesn’t mean he thinks they should be subject to tougher regulation.

The Bank of England created a New Bank Start-up Unit last year, which advises companies trying to become new banks. Carney said in his speech that four mobile banks have been authorized as a result of the new division.

Some of the questions that he said need to be answered, moving forward are: “Which fintech activities constitute traditional banking activities by another name and should be regulated as such? How could developments change the safety and soundness of existing regulated firms? How could developments change potential macroeconomic and macrofinancial dynamics including disruptions to systemically important markets? And what could be the implications for the level of cyber and operational risks faced by regulated firms and the financial system as a whole?”

Researcher Showcases Unauthorized NFC Payments With Cloned Android Device (The Merkle), Rated: A

While this concept sounds ridiculous to most people, they should not underestimate the power of root malware on Android devices. By using this type of malicious software, it is possible to abuse the host card emulation protocol. Google introduced this feature in Android 4,4, as it allows for NFC payments by keeping the Android device next to a payment terminal. Unfortunately, it appears this protocol can also be used to make fraudulent purchases.

Thankfully, this exploit has been discovered by a security researcher who notified both Google and all of the applications he successfully “abused” about this vulnerability.

European Union

Aegon Leaves Legacy Behind With Ohpen’s Cloud Finserv Platform (Forbes), Rated: A

Ohpen, a banking technology company based in Amsterdam,has announced that it will partner with Aegon to develop a new platform for Aegon’s Dutch services, from banking to investments. It will also support multiple labels including Aegon’s Knab (bank spelled backwards) an entirely digital bank.

Aegon, a global financial conglomerate whose American holdings include Pimco, will replace multiple individual systems for pensions, savings, current accounts and wealth management with a single Ohpen platform running in the cloud on Amazon Web Services (AWS). Aegon will plug into Ohpen’s platform through a flexible, 100% API-based interface.

Multiple companies under one corporate umbrella do many of the same things and have their own infrastructure and staff. Ohpen lets them merge all those activities onto a single cloud-based back end and then put an API on top so any application or Web site can get to it.

International

Keeping the banks honest: meet the regtech rule-obeyers (Wired UK), Rated: AAA

Under mounting pressure to become more transparent and accountable, banks and financial institutions are turning to regtech: technology that automates regulatory compliance.

London-based FundApps alerts financial institutions when regulations change, and gives them software to help compliance. Launched in 2010, it covers 88 jurisdictions.

Legislation in Europe requires companies to “know your customer” to make sure they’re not money laundering. That’s what Trulioo does.

Qumram records, retains and allows on-demand replays of digital activity across web, social and mobile.

US accounting rules require banks to store historical loan data to predict future repayment. “This is what we help them do,” says Vivek Subramanyam, CEO of Fintellix. Launched in 2006, it recently launched a website targeting US community banks and credit unions that are grappling with accounting regulations.

KYC3 (“Know Your Customer, Counterparty and Competition”) automates due diligence, so companies can screen potential clients.

How the World’s Richest Companies Can Help Its Poorest Citizens (Time), Rated: AAA

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

Four of the world’s largest telco system manufacturers — Sweden’s Ericsson, China’s Huawei, Canada’s Telepin and India’s Mahindra Comviva — have put aside their fierce competition and agreed to collaborate, not out of altruism but in order to better compete. Announced at the Innovate Finance Global Summit in partnership with the Bill & Melinda Gates Foundation, who works to bring competitors together to meaningfully address financial inclusion for the poor, these companies are developing a set of “application programming interfaces,” or in plain English, ways of making computers talk to each other. These APIs will create open-source standards for the development of digital financial services that are automatically compatible with each other, lowering costs for providers and increasing the utility of digital financial services for customers overall.

By governing how different digital accounts send and receive money, the APIs can be the basis for a new “internet of payments,” across which individuals, banks, merchants, employers, and governments seamlessly transact. The APIs are still under development, but when they’re complete they will be released as a global public good, available to anyone who wants to invent.

AI In Fintech: 100+ Companies Using AI Algorithms To Improve The Fin Services Industry (CB Insights), Rated: B

Funding to AI startups reached record highs in 2016 and applications for artificial intelligence technologies exist across nearly the entire spectrum of business. Highlighted here are the top 100 AI startups selected by CB Insights operating across numerous industry verticals.

China

Assistant chairman of China Banking Regulatory Commission, Yang Jiacai, reported to be ‘out of contact’ (SCMP), Rated: AAA

Fifty-six-year-old Yang Jiacai, assistant chairman of the China Banking Regulatory Commission (CBRC) was reported to be “out of contact” since Tuesday, April 11, by Chinese media Caixin and Caijing.

Caixin reported Yang had transferred all his responsibilities to his colleague, the commission’s vice-chairman Cao Yu.

Yang made his last public appearance a week ago during a press conference for the CBRC, during which he introduced some heavy-handed regulatory moves planned by the commission.

Podcast 97: Yihan Fang of Yirendai (Lend Academy), Rated: AAA

In this podcast you will learn:

  • The origins of Yirendai and how it was incubated inside CreditEase.
  • When and why Yirendai was spun-off from CreditEase.
  • Some background on all the divisions inside CreditEase.
  • The typical borrower who comes to Yirendai for a loan.
  • How Yirendai has broken new ground in China.
  • The different channels they use to obtain borrowers.
  • The typical size, rate and term of their consumer loans.
  • How these borrowers use their loan proceeds.
  • How Yirendai differentiates themselves from their competitors.
  • Who the typical investors are who participate on their platform.
  • The average amount each of their 200,000 investors deploy on their platform.
  • How their investor product works and details of their risk protection fund.
  • How their business model works as far as revenue.
  • A breakdown of their institutional investor interest.
  • Why they decided to do an IPO in New York rather than Shanghai or Hong Kong.
  • The impact of the new marketplace lending regulations in China.
  • Yihan’s perspective on the fraud that has happened in China.
  • Details of their new Yirendai Enabling Platform that they launched at LendIt.
  • What areas Yirendai will focus on in the coming years.

China is Cracking Down on Unscrupulous Financial Services (Crowdfund Insider), Rated: A

In a series of reports, ChinaNews is pointing to the increasing scrutiny of the Chinese government regarding financial fraud and over-all malpractice.

Now the China Banking Regulatory Commission has published measures to address risks in the financial and banking sectors. According to ChinaNews, CBRC highlighted 10 areas for improving risk control in both traditional and internet finance – which includes peer to peer lending.

All of this is taking place with the back-drop of Xian Junbo, Chairman of China Insurance Regulatory Commission (CIRC), being placed under investigation for “disciplinary violations.” He will be the most senior government financial regulator to be investigated in several years.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Big Data Company Wecash raised $ 80 million in series C funding led by China Merchants Capital, Fore Bright Capital and SIG. Two new investors – Dongfang Hongdao Asset Management and Lingfeng Capital joined the existing investors in this round.

On April 10, China Banking Regulatory Commission released “Guidelines on risk prevention and control in banking industry” to make the P2P online lending market standard by perfecting the in-out mechanisms, paying more attention to the supervision and perfecting the governance of online lending companies.

According to the PwC Global FinTech Survey China Summary 2017 released on April 6, the three main areas to be disrupted by FinTech in China over the next five years will be consumer banking, investment & wealth management, and fund transfers & payments. E-retailers, large technology companies and financial institutions will be the biggest sources of disruption.

Compared with developed countries, the market-penetration level of auto finance in China is much lower. However, it also indicates that China has a tremendous room to develop and grow.

US

Australia

China

Market-penetration

80% – 85%

70%

Less than 30%

On April 6, second-hand car online trading platform Souche closed on $180 million in Series D Funding led by Warburg Pincus. Other participants in the round included VMS Investment Group, ClearVue Partners, Haitong International, CreditEase and Morningside Capital. Notably, Souche just finished Series C Funding led by Ant Financial in the last November. In the past five months, Souche has raised a total of $280 million.

 

India

The India Fintech Market Map: 72 Startups Working Across Lending, Payments, Insurance & Banking (CB Insights), Rated: AAA

Looking at Indian fintech specifically, funding to private companies in the sector boomed from about $175M in 2014 to a high of $2B in 2015 (buoyed by mega-rounds to Paytm) and then slid to $530M in 2016. Still, 2016′s total funding was more than 200% higher than total funding in 2014. A host of global corporations and their venture arms have entered the fray, eager to reach India’s mostly unbanked population and profit from the country’s tech-friendly regulatory environment.

‘Free’ credit reports from fintech portals (livemint), Rated: A

Apart from bureaus, online financial marketplaces are also offering free credit scores and reports. These reports are not counted against the free reports you can get from credit bureaus directly.

On the four fintech platforms we went to, it took no more than a few minutes to log on, authorise the fintech to access our credit report, and get it on the screen or in email. And it was also simpler to get a report here than from a bureau’s website.

On Bankbazaar, we got the report on its website and in email. Paisabazaar displays the report on its website. Both sites provided reports from Experian Credit Information Co. of India Pvt. Ltd.

FinTech: To Regulate Or Not To Regulate? Former RBI Deputy Governor R Gandhi Explains (Bloomberg Quint), Rated: A

In lending, peer-to-peer lenders and online SME (small and medium enterprises) lenders are targeting clients considered too risky by banks. They claim to use technologies that can assess credit worthiness in smarter ways than the traditional income statements used by banks. In payments, wallet companies have taken the lead in retail payments forcing banks to up their game.

One gripe that banks have is that these fintech firms are getting away unregulated, which gives them a lot more flexibility in how they do business.

That’s true for now, said R Gandhi, former deputy governor of the Reserve Bank of India (RBI) who retired after a 37-year stint at the central bank earlier this month. The dilemma for the regulator is to decide when to regulate and how to regulate so as to ensure that innovative business models get a fair chance, Gandhi explained in an interview with BloombergQuint on Tuesday.

Is India ready for Peer-to-Peer lending industry? (Faircent), Rated: A

What we are trying to do is to create a P2P (Peer to peer) lending industry. Fundamentally we are providing an alternative to banking and other financial institutions.

Karun: Investors whom we call lenders can get returns up to 18% to 20% per annum which is much better than other options today. As a borrower you can avail unsecured loans at much cheaper interest rates. What we feel is that the banks make huge margins in terms of the rates that they offering customers on their savings and the rates they are lending it out to people at, in the form of loans. By reducing the margin, with Faircent as the match maker, we are able to pass value to both sides of the table, to borrowers as well as lenders.

Karun: We are purely a digital entity.   We are trying to use technology so that there is minimal offline intervention.

We’ve done a lot of marketing technology interventions, like we have a CRM which is built on top of our platform, which is a custom made CRM. We have integrated it with our lead gen channels. We have an email marketing platform using which we nurture our customers and also do promotional activities with potential customers. We have done a lot of work in trying to become Omni-channel. Three main channels which we use are email, SMS and Voice.

Karun: We are using a lot of the off- the- shelf products. But the challenge for us is really how do we integrate them with our platform. So hence we have to be much more careful about which option we choose. We are using Octane and Amazon for email. Octane is basically a mix of email and SMS which we are predominantly using for marketing.

Karun: Yes, we have a mobile app which is available on the Android and iOS platform. Right now, our focus has been more to enable our customers to access our platform on the mobile device. So for example if there is an investor who wants to invest in loans on the fly he can do it using our app. At present we’re not really focused on the app to acquire more borrowers or acquire more investors and lenders.

Razorpay plans overseas foray (The Hindu Business Line), Rated: B

Razorpay, a payment gateway solution provider focused on online merchants, plans to go international. It is looking to enter South East Asia and West Asia markets in 2018-19, Harshil Mathur, co-founder, has said.

The fintech startup, which started its journey in mid-2014, is in talks with local and global (banking) players in these markets, Mathur said.

Razorpay, which had raised Series A funding of $11.5 million, is not worried about funding for the next two years, according to Mathur.

Asia

ORIX Launches New Online Lending Business for Japanese Small Businesses (Orix), Rated: AAA

ORIX Corporation (“ORIX”) and Yayoi Co., Ltd. (“Yayoi”), an ORIX Group company, announced today that they are launching a new online lending business, a new FinTech service utilizing accounting big data and proprietary Artificial Intelligence (AI) based credit model.

The business will provide Internet-based lending to small businesses in Japan. A new credit model is under development, utilizing ORIX’s credit expertise, Yayoi’s accounting big data, and cutting edge AI technology by ORIX’s partner company, d.a.t. Inc. Most existing credit models in the market to date relied solely on static data such as financial reports; by utilizing dynamic data, such as day-to-day journal data and other transactional data, the new credit model is expected to offer much better predictive power than before.

ALT plans to start offering lending services on a trial basis to the approximately 600,000 companies, who are existing users of Yayoi’s online services1 in October 2017. Customers will be able to apply online, during which process they grant permission to access their accounting data.

According to a survey of 7,609 Yayoi customers, 85.0% of small corporations have a need for short-term financing, but 36.5% of those have been shying away from obtaining traditional loans, due in part to the excessive amount of time and efforts required for approval of short-term financing. With respect to sole proprietors, just 16.4% of them have obtained short-term traditional loans. Utilizing online lending can reduce complex administrative procedures, including the need to submit financial reports and other paperwork and to visit financial institutions in person, and can also shorten the time needed to obtain much needed cash, making simpler, more flexible financing possible.

AN INDONESIAN peer to peer (P2P) lending startup, KoinWorks is supporting small and medium enterprises (SME) and education by launching an art exhibition, ARTificial Intelligence which will run from April 13 to April 30 at Pacific Place, Jakarta.

Benedicto also says that KoinWorks mainly focuses on SMEs that conduct their sales and marketing activities online. He also believes that by connecting SMEs to lenders, it will bring benefits to both sides.

Benefits for lenders are through net gained interest from their investment which can be up to 19.8% annually depending on the risk level. The service also fulfils social needs by helping businesses to grow.

Users may invest in KoinWorks with a minimum deposit of US$7.50 (100,000 rupiah). The funding will be deposited in real-time at a virtual bank account. Users only need to scan and upload information from their identity card, fill in the form, and deposit the money.

LendIt China Event, Lang Di Fintech, Updates on PitchIt Competition (Crowdfund Insider), Rated: A

LendIt, the global lending and Fintech conference, has announced the official launch of the Asian edition of their Fintech startup competition, PitchIt, in association with JadeValue, a Shanghai-based Fintech incubator. The competition is for all early stage Fintech startups in Asia-Pacific.

PitchIt will take place at the Lang Di Fintech conference, China’s largest global Fintech conference in Shanghai in July.

The 8 Finalists Will Receive:

  • Opportunity to secure investment and partners by meeting investors
  • Have your pitch heard by the international fintech community in front of an audience of international and local attendees across APAC.
  • Gain valuable exposure through global PR
  • Up to $1,000 for travel to Lang Di Fintech
  • Year-round exposure through press and brand visibility and the chance to gain mentorship from Global VCs on pitching and product positioning prior to the event.

The Winner Will Receive:

  • Mentorship, co-working space for 6 months and guaranteed investment of $150,000 from JadeValue
  • 2 free passes to LendIt USA 2018, roundtrip airfare and accommodations
  • Curated meetings for investment purposes in the US during LendIt USA 2018 (April, 2018, San Francisco)
  • Complimentary sponsorship at LendIt USA 2018
MENA

The future of digital money (Gulf News), Rated: A

At a time when the consumer relationship with cash is more virtualiser and abstract, and where use of physical cash continues to decline in many markets, the next phase of digital money offers undiscovered potential for a new period of expansive growth in transactions, beyond the limits of national borders.

The region’s e-commerce marketplace is thriving too, but it depends more on cash on delivery than on electronic payments. At the same time, a relatively low share of adults have bank accounts, while mobile money accounts have had limited success. That could be about to change. New Fintech entrants are playing their part in helping drive payment digitisation.

Furthermore, developments in payments technology are making it easier for us all to transact. Egypt’s Payfort recently has successfully helped smaller merchants accept electronic payments, and offers instalment payment options to help merchants improve sales. We’re also seeing global providers such as Apple Pay, Google Pay becoming more active in the region after a slow start and more global players are coming, for example Samsung, with Samsung Pay about to deploy payment services that are promising to be easier, faster and more secure using your Samsung smart phone.

Africa

VoguePay Wins Best Fintech Startup Award (This Day Live), Rated: B

VoguePay.com, a secure payment gateway has won the “Best Fintech Startup” at the 6th edition of the Cashless Africa Awards 2017, organised by Mobile Money Africa in Lagos recently.

Authors:

George Popescu
Allen Taylor