Thursday September 19 2019, Weekly News Digest

MAS Singapore

News Comments Today’s main news: SoFi to get its name on a football stadium. Petal raises $300M. Funding Circle closing in on 1-year anniversary of float. Zopa sends warning of imitation scams. Cumulative UK alt lending hits 11.3B GBP. Companies to get social credit in China. Today’s main analysis: Student loan refinancing rates are down. […]

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

MAS Singapore

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United States

United Kingdom

China/Hong Kong

International

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News Summary

United States

Sundays at SoFi: NFL Stadium in Inglewood Lands a Corporate Name (Commercial Observer), Rated: AAA

Online lender SoFi Lending Corp. has secured the naming rights and a 20-year deal with the Rams and Chargers, according to the Los Angeles Business Journal. The firm agreed to pay around $20 million per year, reports say.

SoFi Stadium, which will be the largest in the NFL, is the centerpiece to the much larger $5-billion Hollywood Park project developed by Rams Owner/Chairman E. Stanley Kroenke. Construction is 75 percent complete, and the stadium is expected to open next summer for other events before the NFL preseason begins in August.

Taylor Swift to Open SoFi Stadium Next Summer (KFI AM 640), Rated: B

The opening of the $2.6 billion SoFi Stadium will happen next summer on July 25th. However it’s not for a Rams or Chargers game. Swift announced that she will play two shows (July 25th and July 26th) at the stadium as a part in her much-anticipated 2020 world tour.

Economy is Top Concern for Small Businesses Ahead of 2020 Election (OnDeck), Rated: AAA

Key Findings from the OnDeck Small Business Survey:

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either ”Very Optimistic” or ”Somewhat Optimistic” about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

President Donald Trump was the choice of 37% of small businesses surveyed, followed by Joe Biden at 18%. When combined, the top five Democratic candidates were the preference of 44% of respondents.

Student Loan Refinancing Rates Down Sharply (Credible), Rated: AAA

During August:

  • Rates on 10-year fixed-rate loans averaged 4.70%, down 22% from a July 2018 peak of 6.05%
  • Rates on 5-year variable-rate loans averaged 4.03%, down 14% from September

A borrower repaying the average graduate school debt of $84,300 over 10 years at 6.36% interest — the average rate for grad school loans in recent years — could save:

  • $20,927 by refinancing into a 5-year variable rate loan
  • $8,327 by refinancing into a 10-year fixed-rate loan

Credit card start-up Petal raises $ 300 million debt round from Jefferies (CNBC), Rated: AAA

The New York City-based company announced a $300 million debt round from Jefferies on Tuesday, adding to existing venture capital investments from names like Peter Thiel’s Valar Ventures.

Plaid adds credit card data to Liabilities product (Tearsheet), Rated: A

In July, Plaid launched its Liabilities product that gives developers access to real time information about what consumers owe. Expanding beyond student loan data, the company has added support for credit card information, so firms can build better debt management solutions.

GoCardless launches US debit payments solution and opens San Francisco office (TechCrunch), Rated: A

GoCardless, the London fintech that aims to become the one-stop shop globally for businesses that want to let customers pay via recurring bank payments, has launched a U.S. debit solution.

Specifically, GoCardless’  new U.S. product supports debit payments on the ACH (Automated Clearing House) network.

The company has also opened an office across the pond in San Francisco’s financial district, headed up by Andrew Gilboy, general manager, North America, who was previously the company’s chief revenue officer.

Nav Launches New Feature to Help Business Owners Boost Business Credit (PR Newswire), Rated: A

Today Nav, a fintech company that matches business owners with their best financing options for free, announced new offerings to help small business owners boost their business credit scores, giving an easy solution to developing a strong business credit profile that alternative and traditional lenders can trust and finance.

Why would HUD gut its own disparate impact rule? (The Times Weekly), Rated: AAA

Since 2013, the disparate impact rule has objectively examined the effects of business practices with lenders, landlords, insurers, and real estate professionals against the provisions of the 1968 Fair Housing Act. The rule required that first a plaintiff must establish a discriminatory effect in policies and/or practices, before the defendant(s) would bear the responsibility of proving their own practices were nondiscriminatory.

During delivery of Capitol Hill testimony earlier this spring, Nikitra Bailey, an EVP with the Center for Responsible Lending (CRL) also underscored the importance of disparate impact in fair housing.

“Disparate impact analysis encourages creative approaches that both increase effectiveness and inclusion,” testified Bailey. “This process and the value of disparate impact analysis was recently pointed out and endorsed by the largest personal loan company in the country, Lending Club.”

BlueVine Appoints Dosh & PayPal Vet Brad Brodigan As New Chief Commercial Officer (Crowdfund Insider), Rated: A

Online lender BlueVine announced on Wednesday it has appointed Brad Brodigan as its new Chief Commercial Officer. BlueVine reported that through this role, Brodigan will be responsible for overseeing revenue-generating functions including sales, customer service, and partner management.

Money360 Closes $ 170 Million in Commercial Real Estate Loans in July and August (GlobeNewswire), Rated: A

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, announced today it closed approximately $170 million in loans during July and August. This benchmark brings Money360 close to $500 million in loans closed this year.

Groundfloor Now Allows Real Estate Developers to Gain Pre Approval on Loans (Crowdfund Insider), Rated: A

Groundfloor, a real estate lending and investing platform that allows anyone to participate directly in real estate investments, has launched a new product to make the lending process more easier for real estate investors. Groundfloor now allows certain developers to gain pre-approval on loans with a new program called “QC Maxx.”

ABS East; Stripe’s Lending Arm; Madden Decision (PeerIQ), Rated: A

In financing news, student loan fintech “College Ave” locked down a $300MM securitization and a AAA rating this week. The securitization was co-led by both Barclays and Goldman Sachs. Affirm, led by Max Levchin, is reportedly close to wrapping up a $1.5 Bn debt and equity financing with Thrive Capital and Spark Capital leading.

Stripe is mirroring other payments companies that have since built lending capabilities – notably, Square and PayPal. Stripe believes it can compete in an already crowded small business lending market (OnDeck, Kabbage, Fundera, Funding Circle, etc.) due to its data & channel advantages stemming from its payments business.

Fintech Firm OppLoans Announces Its First Bank-Led Credit Facility (GlobeNewswire), Rated: A

OppLoans, a growing fintech and top rated direct-to-consumer online lending platform, announced today that it has secured its first bank-led asset-backed revolving credit facility. This facility structure will enable OppLoans to further its mission by broadening access to online personal lending products for more middle-income consumers with credit challenges.

Aura Completes Three Social Bond Issuances Totaling 5 million Over Last 4 Months (Yahoo! Finance), Rated: A

M&G Investments and Community Capital Management, a mutual fund that specializes in impact and Community Reinvestment Act (CRA) related investments, have joined with U.S. and international banks to invest $145 million in Aura’s social bonds to finance the origination of affordable, small dollar installment loans to working families in the United States.

Challenger banks insist they’re equal to the task of lending (American Banker), Rated: A

Almost all U.S. challenger banks offer no-fee checking, savings accounts and enhanced personal financial management tools. Now some of the most popular have taken, or are poised to take, their next step: making loans.

Personal loans and credit cards are lucrative but inherently risky, and these young companies — like MoneyLion, Varo and others — will have to prove to regulators, investors and the public that they have the wherewithal to weather downturns in the credit cycle.

Cash-flow data shows promise as predictor of credit risk (American Banker), Rated: A

Melissa Koide, co-founder and CEO of FinRegLab, analyzed loan data from six lenders that use cash-flow data in their underwriting. She shares what she found.

Prevu Raises $ 2 Million in Seed Funding to Grow its Digital Home Buying Platform (Digital Journal), Rated: A

Prevu, a customer-focused digital home buying platform delivering industry-leading efficiency and savings, announced today the closing of its $2 million seed funding round. The round was led by Corigin Ventures, a prominent seed-stage venture capital firm with expertise in the real estate technology and consumer industries as well as a history of backing startups disrupting residential brokerage business models.

Embattled Prodigy Network CEO Rodrigo Niño to step down (The Real Deal), Rated: A

Prodigy Network founder Rodrigo Niño is stepping down from his position as CEO amid mounting financial and legal issues, The Real Deal has learned.

Prodigy, a real estate crowdfunding platform, has faced criticism from investors in recent months over underperforming investment properties and unpaid distributions. On Monday, an investor in one of Prodigy’s newest projects — the 13-story Standard Hotel in Chicago — filed a lawsuit alleging the firm was “insolvent” and had used investments “for purposes other than those relating to the project.”

EquityMultiple Provides Investors with Options to Take Advantage of Unique Tax Benefits (Crowdfund Insider), Rated: A

Opportunity Zones are new, tax-advantaged vehicles for investors to earn more on their money. Created by the Tax Cuts and Jobs Act of 2017, the first qualified opportunity zones (QOZs) first hit the market in early 2018. Designated by state authorities, there are now thousands of QOZs in the US designed to boost development in selected communities. Investors receive a break on capital gains taxes which can be significant. Local officials can spur economic development which leads to more jobs. Online investment platforms immediately saw the opportunity intrinsic to QOZs with multiple platforms now offering investments in developments that benefit from these tax breaks.

Why are your Opportunity Zone Offerings better than some others available on competing investment platforms?

Soren Godbersen: There are a number of firms out there now marketing Opportunity Zone offerings to investors. We’re proud of what we have been able to offer to our investor network and there are a few things about our Opportunity Zone investments that are unique:

How to Recession-Proof Your Investments (U.S. News), Rated: A

AFTER A DECADE OF steady growth, the economic cycle is due for a reversal, with concerns of a recession.

  • Consider other types of investments outside of stocks and bonds.
  • Know that timing the market is difficult.

What to Invest in During a Recession?

Other less correlated assets include the real estate niche. With real estate crowdfunding, hypermarket segmentation is available. Investors can choose their property type and geographic region when investing in real estate. Two real estate crowdfunding platforms for accredited investors are CrowdFund and EquityMultiple. Fundrise and Groundfloor open targeted real estate investing to nonaccredited investors as well.

Litecoin Non-Profit to Hold Undisclosed Treasury Sum with Crypto Lender (CoinDesk), Rated: A

The Litecoin Foundation is putting its capital to work, lending at interest through another cryptocurrency program.

The Foundation has tapped the Celsius Network, a blockchain-based crypto lending program, to become its preferred crypto wallet, Celsius Network CEO Alex Mashinsky told CoinDesk.

As part of the deal, the Foundation will allocate an undisclosed portion of its treasury to the Network. LTC holders can receive up to 10.53% annually back on their crypto holdings and dollar loans as low as 4.95 percent as well.

Fintechs give small business more choice for credit than just banks (PaymentsSource), Rated: AAA

It’s no secret working capital is the lifeblood of all small businesses. It’s the fuel that keeps them running, helps them grow and take on new opportunities.

And yet, so many small businesses struggle with cash flow. In fact, according to a recent study from Intuit QuickBooks, 61% of small businesses have had cash flow issues in the past year.

Source: FIS

Walmart’s New Credit Cards Have One Big Goal: Boost E-Commerce (Bloomberg), Rated: A

In a sign of how much Walmart Inc. is betting on e-commerce, the retailer’s revamped credit-card program with Capital One Financial Corp. offers better rewards for online shopping and checking out with its mobile app.

The new options, which become available Sept. 24 and use Mastercard Inc.’s network, offer 5% cash back for purchases made at Walmart’s website, including groceries. At the chain’s physical stores, shoppers only get that rate for a year and have to check out with Walmart Pay at the cashier. Otherwise, store customers get 2% back.

Finicity Releases New Verification of Income and Employment Solution for Lenders (PR Web), Rated: B

Finicity, a provider of real-time financial data access and insights, announced today the release of its new Verification of Income and Employment (VOIE) solution using patent-pending TXVerify technology that will speed up borrower verifications and further advance the industry shift toward a fully digital experience.

The Finicity VOIE solution digitally extracts a borrower’s pay statement data from the paystub and then cross-verifies that key data with their income transactions from their financial institutions. Enabled by its TXVerify technology, this detailed vetting process creates a real-time picture of an applicant’s income and employment for fast, accurate reports. The solution does this by leveraging the highest value data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs. This process significantly shifts the current paradigm from a mostly manual process to one that is fully digital, all while reducing fraud and increasing confidence in the underwriting process.

Sallie Krawcheck: Why ‘don’t buy daily coffee’ is terrible advice (CNBC), Rated: B

“Don’t buy daily coffee” is the go-to financial advice. Co-founder and CEO of Ellevest, Sallie Krawcheck, says that advice is misleading and just enjoy your latte.

Ethereum Development Studio ConsenSys Announces Codefi, A New DeFi Software Suite (Crowdfund Insider), Rated: A

ConsenSys founder Joseph Lubin announced at the Ethereal Tel Aviv press conference (on September 15) that his New York-based venture studio is launching a new product, Codefi, for the emerging decentralized finance (DeFi) ecosystem.

Despite not having invested in emerging DeFi platforms, Lubin described P2P lending systems such as Uniswap and MakerDAO as some of the blockchain industry’s most promising projects.

ApplePie Capital Partners with LSQ Funding on A/R Franchise Financing (Monitor Daily), Rated: B

Online lender ApplePie Capital entered into a new strategic partnership with LSQ Funding Group, a technology-enabled provider of accounts receivable financing for small and mid-sized businesses.

United Kingdom

Funding Circle nears one-year anniversary of London float (P2P Finance News), Rated: AAA

The peer-to-peer business lender began conditional dealings on the London Stock Exchange on 28 September before being officially admitted to the bourse on 3 October. It launched with an offer price of 440p per share, giving the firm a valuation of £1.5bn.

However, its market capitalisation as of 17 September has since dropped to £348.7m, with its shares now trading at just over 100p.

Zopa warns over imitation scam firms (P2P Finance News), Rated: AAA

ZOPA has warned over a growing number of scam operators targeting UK customers using the peer-to-peer lender’s name to dupe investors.

They include: asking customers directly for their Zopa login details; claiming to work with companies investing money in Bitcoin or other cryptocurrencies; or working with companies who would ask them to take out a Zopa loan to fund an investment.

Record numbers of investors and borrowers as cumulative lending hits £11.3bn (P2P Finance News), Rated: AAA

MORE than 150,000 lenders were invested in 321,483 loans facilitated by Peer-to-Peer Finance Association (P2PFA) platforms at the end of the second quarter, which the trade body deemed “a record level of involvement in the sector”.

Funding Circle is the largest P2P lender among the P2PFA platform members, having lent out a cumulative total of £5.4bn as of the end of the second quarter. It is followed by Zopa at £4.5bn, with ThinCats in third place with just over £491m.

£814m of new loans were made in the second quarter, compared to £866m in the first three months of 2019.

Monzo halts cash referrals as it hits three million users (AltFi), Rated: A

Monzo has ended its cash incentivised referral system as the firm continues to grow users at a rapid pace.

Monzo now has passed the 3 million ‘users’ number, hitting the milestone late on yesterday and is now onboarding 55,000 people to Monzo every week.

Transferwise Books Its Third Consecutive Year of Profits (Lendit), Rated: A

European fintech company Transferwise has recorded its third year in a row of profits; the company reported its net profit after tax climbed to £10.3 million in the fiscal year ending March 2019, up 66% from the previous year on revenue of £179 million;

Payment provider Klarna appearing at London Fashion Week has everybody talking (MyLondon), Rated: A

UK fashion Designer Henry Holland decided to take things up a notch in Saturdays catwalk show with a T Shirt design in collaboration with Klarna.

Klarna expands partnership with Mothercare (The Paypers), Rated: B

Klarna and Mothercare have announced an extension to their partnership, which will see Klarna’s Pay later, Pay in 3, and Slice it products available online and in-store across the UK.

OakNorth Bank provides £3.7m loan to Clearview Developments (London Loves Property), Rated: A

OakNorth Bank the UK bank powered by OakNorth has provided a £3.7m loan to Clearview Developments for a new residential development in Royal Tunbridge Wells.

Smarterly and OakNorth Bank partner to offer new Notice Cash ISA range to Smarterly customers (Fintech Finance), Rated: B

The product range includes five Cash ISA Notice accounts, exclusive to Smarterly, ranging from 35 days at 1.05% to one year at 1.25%; Customers will not be able to apply for these products with OakNorth directly;

These five Cash ISAs Notice Accounts are:

  • 35 days – 1.05%
  • Three months – 1.10%
  • Six months – 1.15%
  • Nine months – 1.20%
  • One year – 1.25%
China/Hong Kong

Coming Soon: ‘Social Credit’ for Companies, Too (WSJ), Rated: AAA

A key target of China’s coming “social credit” system, which among Westerners usually triggers visions of “1984”-style monitoring of people, is actually misbehaving businesses.

Corporate America needs to prepare.

About 80% of information on the main data-sharing platform relates to companies rather than individuals, according to China consulting…

Hexindai Reports Unaudited First Quarter of Fiscal Year 2020 Financial Results (PR Newswire), Rated: A

First Quarter of Fiscal Year 2020 Operational Highlights

  • Total loan volume facilitated[1] was US$ 28.2 million (RMB192.3 million) during the first quarter of fiscal year 2020, a decrease of 93.5% from the first quarter of fiscal year 2019.
  • Gross billing amount (net of VAT)[2] was US$4.7 million during the first quarter of fiscal year 2020, a decrease of 90.7% from the first quarter of fiscal year 2019.
  • Gross billing ratio (net of VAT)[3] for credit loans was 16.7% during the first quarter of fiscal year 2020, an increase from 11.7% during the first quarter of fiscal year 2019.
  • Number of borrowers[4] was 18,546 during the first quarter of fiscal year 2020, a decrease of 36.0% from the first quarter of fiscal year 2019.
  • Number of investors[5] was 9,534 during the first quarter of fiscal year 2020, a decrease of 85.9% from the first quarter of fiscal year 2019.

First Quarter of Fiscal Year 2020 Unaudited Financial Highlights

  • Net revenue was US$4.9 million during the first quarter of fiscal year 2020, a decrease of 90.5% from the first quarter of fiscal year 2019.
  • Operating costs and expenses were US$12.6 million during the first quarter of fiscal year 2020, a decrease of 18.9% from the first quarter of fiscal year 2019.
  • Net loss was US$7.2 million during the first quarter of fiscal year 2020, compared to net income of US$29.7 million in first quarter of fiscal year 2019.
  • Basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to basic earnings per ordinary shares (“EPS”) of US$0.62 in first quarter of fiscal year 2019.
  • Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to diluted EPS of US$0.56 in first quarter of fiscal year 2019.
  • Adjusted net loss attributable to Hexindai Inc.’s shareholders (Non-GAAP) in the first quarter of fiscal year 2020 was US$7.0 million, compared to adjusted net income attributable to Hexindai Inc.’s shareholders (Non-GAAP) of US$29.9 million in the first quarter of fiscal year 2019.
  • Adjusted EBIT (Non-GAAP) in the first quarter of fiscal year 2020 was (US$5.8) million, compared to US$36.6 million in the first quarter of fiscal year 2019.

Zhang Yue, senior vice president at CreditEase, discusses the demand for credit in China, write downs in her portfolio, P2P lending, their wealth management business and their expansion plans.

Securing privacy concerns in FinTech in Hong Kong (Lexology), Rated: A

Hong Kong has built a strong environment for fostering innovation and financial technology or FinTech. With its large financial sector and its strategic role with Mainland China and gateway to the rest of Asia and the world, Hong Kong has the potential to take on an important role in being a leader in FinTech. In March 2019, for example, Hong Kong issued its first virtual banking licences, which will likely increase adoption of FinTech in the financial services sector.

Emerging technologies used in Fintech services and operations come in different forms, and include:

  • data analytics that support the operations of financial institutions (for example, credit scoring, loan processing);
  • peer-to-peer (P2P) financing (such as P2P lending and crowdfunding platforms);
  • distributed ledger technology, such as cryptocurrency, bitcoin transactions and smart contract applications, as well as blockchain services to help reduce fraud by keeping provenance data on the blockchain; and
  • financial investments, such as stock trading apps, robo-advisors and algorithmic trading and budgeting apps.
European Union

Binance Announces Phase Five of Crypto Lending Featuring Privacy Coins XMR, ZEC, and DASH (Crypto-Economy), Rated: AAA

Leading cryptocurrency exchange Binance has announced its launch of the fifth phase of its cryptocurrency lending product in which it customers subscribe to an allocation to lend other users their funds for interest rates as high as 15% Apr.

the 15% interest rate was only available to Binance’s native coin lenders in the first phase. On Tuesday, the exchange revealed three coins that will be included in the crypto lending product including only privacy-centric coins Monero [XMR], Zcash [ZEC] and Dash [DASH]. Their annualized interest rates will be a constant 3.5% but the lending period is only two weeks starting from this Friday September 20th through October 4th.

P2P Lender creditshelf to Acquire SME Finance Provider Valendo (Crowdfund Insider), Rated: A

creditshelf Aktiengesellschaft has signed a purchase agreement for the acquisition of all shares in Valendo – part of the finleap Fintech ecosystem.

According to a company release, the purchase price was in the “low seven-digit amount.” Payment will take place in two separate tranches. creditshelf has the option of settling both tranches in the course of two capital increases via a contribution in kind.

International

How MAS propelled Singapore to the top of the class (Euromoney), Rated: AAA

Today, Singapore sits proudly atop the Euromoney Country Risk (ECR) rankings. Based on ECR’s blend of financial and economic data, combined with the views of leading economists, no country in the world today has a stronger financial position.

When MAS said in July 2019 that it planned to issue five new digital banking licences, analysts soon spotted that three of them were wholesale licences, open to banks and non-banks alike.

Winners will be encouraged to lend, using digital means, to small and medium-sized enterprises and other non-retail segments – further evidence that corporate banking will be the next segment to feel the hot breath of disruption on its neck.

Source: Euromoney County Risk

Goldman Leads Trulioo’s $ 70M Raise To Expand Global Digital ID (PYMNTS), Rated: A

Trulioo, the global identity verification provider, has raised $70 million in new funding, eyeing growth in its core digital identification efforts, the company announced Tuesday (Sept. 17).

The company said in a release that the funding includes $60 million in a Series C round that was led by Goldman Sachs Growth Equity. Other participants included Citi VenturesSantander InnoVentures and existing investor American Express Ventures. The remaining $10 million came as unannounced follow-on financing from early investors, including BDC Capital and Blumberg Capital.

Equifax Continues Leadership In Alternative Data With Worldwide Urjanet Partnership (PR Newswire), Rated: A

Equifax Inc. (NYSE: EFX) and Urjanet today announced a global partnership that empowers consumers and businesses to share their payment data from thousands of utility, telecom and cable providers worldwide for a more complete picture of individual payment history, easier identity verification and the potential for better access to credit. This partnership builds on Equifax’s leadership in alternative data, using the Urjanet Utility Data Platform to incorporate consumer-permissioned data into the Equifax differentiated data approach.

5 Reasons Investors Should Consider Tokenized Assets (Benzinga), Rated: A

According to Deloitte, we shouldn’t view DLT as just a new type of “database ” but rather as a new way to organize the security value chain from issuance to custody. But what exactly can be transmitted through this chain?

Fractional ownership – take as much as you want

Digitizing shares makes them highly divisible, meaning that investors can buy very small percentages of tokenized assets.

So long, intermediaries! 

Security tokens have a simpler investment structure and lower fees.

On the way to maximum liquidity

Cherry on top

A security token is basically a digital signature connected with a smart contract responsible for facilitation and verification of ownership rights transactions.

India

Ribbit leads Series B funding in online investment platform Groww (VC Circle), Rated: AAA

Groww, an online investment platform that sells mutual fund products, has raised $21.4 million (Rs 152.5 crore at current exchange rate) in a Series B funding round led by Silicon Valley-based venture capital firm Ribbit Capital.

Groww said existing investors Sequoia India and Y Combinator also participated in the funding round.

RBI looking at how NBFCs, HFCs set their lending rates (livemint), Rated: AAA

The Reserve Bank of India (RBI) is studying how non-bank lenders and home financiers price their loans, close on the heels of directing commercial banks to link their loan rates to external benchmarks.

Source: livemint

RBI restricts access to credit data of consumers (Economic Times), Rated: A

The Reserve Bank of India has ordered commercial banks and non-banking lenders to stop providing unregulated entities access to consumer data held by credit bureaus, dealing a blow to scores of fintech startups that have based their business models on such information.

Source: India Times

RBI not in favour of ‘teaser’ loans, examines rate-setting mechanism of NBFCs, HFCs (CNBCTV18), Rated: B

The banking regulator is not in favour of hybrid loan products or ‘teaser loans’, a senior Reserve Bank of India (RBI) official today clarified. The remark gains significance in the light of State Bank of India chairman Rajnish Kumar’s recent comment that SBI would seek the regulator’s view on whether banks can introduce fixed-cum-floating rate products.

No dearth of demand on credit side, disbursed credit worth INR 5 billion: Flexiloans Co-founder (IBS Intelligence), Rated: A

FlexiLoans.com, an online lender for MSMEs in India, said that it has crossed a milestone number of disbursing over INR 5 billion of unsecured business loans across the country with its unique digital-only model. The Mumbai-based company, which has disbursed over 16000 loans across 1000 cities and towns in the country, says that there is no dearth of demand on the credit side. The company caters primarily to micro, small and medium-sized businesses.

How has the online lending market shaped up in the last few years?

Digital Lending market is currently at about USD 2 billion, up from about USD 1 billion in 2016. Significant traction and market niches discovered by various FinTech startups across the country have made this space very exciting, holistic and game-changing.

Online SME lender Cash Suvidha plans to raise upto $ 10 million (IBS Intelligence), Rated: B

The online lender for business and personal loans, Cash Suvidha, is planning to raise $5 million -$10 million equity funds in the next six months.

Asia

Terafunding Closes US$ 18M Series B Financing Round (FINSMES), Rated: AAA

Terafunding, a Seoul, South Korea-based Peer-to-Peer (P2P) lending platform, raised US$18M in Series B funding.

Backers included KB Investment, Hana Ventures, IBK Industrial Bank and Woomi Construction.

Julo raises $ 10M to expand its P2P lending platform (TechCrunch), Rated: A

Julo, a peer-to-peer lending platform in Indonesia, said on Wednesday it has extended its $5 million Series A raise to $15 million as it looks to scale its business in the key Southeast Asian market.

The $10 million Series A2 round for the Jakarta-headquartered startup was led by Quona Capital,  with Skystar, East Ventures,  Provident, Gobi Partners and Convergence participating.

Chinese P2P Firms Seeks Business in Vietnamese Market (W7 News), Rated: A

The declining demand for peer-to-peer (P2P) lending in China has prompted firms to find business elsewhere. LearnBonds report that Chinese P2P companies are eyeing Vietnam, which alarmed local lending companies.

MENA

Now Money offers alternative for Gulf’s unbanked expats (Financial Times), Rated: AAA

About 70 per cent of the population in the Middle East and north Africa do not have access to banking services, says Ian Dillon, co-founder of Now Money, a Dubai-based financial technology group.

The GCC recorded outbound remittances of $120bn in 2017, according to World Bank data. However, Gulf banks tend to exclude workers earning less than $1,400 a month, leaving most of them reliant on exchange houses to remit cash home.

Authors:

George Popescu
Allen Taylor

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

Friday July 5 2019, Weekly News Digest

Friday July 5 2019, Weekly News Digest

News Comments Today’s main news: Kabbage secures $200M. Funding Circle plummets 20%. Zopa to raise 200M GBP pre-IPO. RateSetter Isa attracts over 250M GBP in subscriptions. OakNorth doubles staff. Funding Societies tied up in SME financing. Today’s main analysis: Recession talk, global easing, and SoFi rated pass-thru innovation. Today’s thought-provoking articles: 10 years of marketplace […]

The post Friday July 5 2019, Weekly News Digest appeared first on Lending Times.

Friday July 5 2019, Weekly News Digest

News Comments

United States

United Kingdom

International

Southeast Asia

Other

News Summary

United States

Kabbage secures 0M to fuel its AI-based loans platform for small businesses (Tech Crunch) Rated: AAA

Kabbage, the AI-based small business loans platform backed by SoftBank and others, is adding more firepower to its lending machine: the Atlanta-based startup has secured an additional $200 million in the form of a revolving credit facility from an unnamed subsidiary of a large life insurance company, managed and administered by 20 Gates Management, and Atalaya Capital Management.

The money comes on the heels of a $700 million securitization Kabbage secured just three months ago and it is notable not just for its size but its terms: it’s a four-year facility, a length of time that underscores a level of confidence in the company’s performance.

Recession Talk and Global Easing; SoFi Rated Pass-Thru Innovation (PeerIQ), Rated: AAA

In FinTech financing news, Ocrolus, led by CEO Sam Bobley, successfully raised $24 million in their Series B led by Oak HC/FT.

Source: PeerIQ, Goldman Sachs

SoFi Pass Thru Security

SoFi this week secured a provisional A-rating from DBRS on a $200 MM pass-thru security consisting of student refi loans [ PSR and announcement ]. Notably, the structure is the first CUSIP that does not rely on over-collateralization or subordination to provide credit enhancement for investors. This is a promising innovation from the first FinTech to crack open the securitization market for student refi loans.

Ten Years of Investing in Marketplace Lending (Lending Academy) Rated: AAA

This month marks ten years since I made my first investment in what was then called peer to peer lending.

Ten Ways Marketplace Lending Has Changed Since 2009

  1. Scale
  2. The Rise of Institutional Investors
  3. The Rise of Automation

Home Affordability in the “13 Original Colonies” (DS News) Rated: A

To celebrate the Fourth of July, LendingTree, the nation’s largest online loan marketplace, has taken a look at the states that were present at the birth of the country,” said LendingTree Chief Economist Tendayi Kapfidze.

New Hampshire is the most affordable of the original 13 states, with a median home value of $244,900 and a median salary of $71,305. New Hampshire capital Concord is also the most affordable capital, with a median home value of $212,600, and a median salary of $61,310.

The least affordable state is New York, with a median home value of $293,000, which is less than Massachuset’s median value of $352,600, but New York’s median income is slightly less, at $62,765, plus an affordability surplus of just $292.

Embracing The Digital Lending Revolution (Monja Blog) Rated: A

A recent report by McKinsey & Company pointed out that in the traditional lending process of most banks, the “time to decision” for small business loans is usually from three to five weeks, while the “time to cash” can take up to three months. Personal loans usually have shorter processing times but still, take days or even weeks.

Digital lending helps banks retain individual and business customers by making the process more convenient and faster. According to an extensive survey by the American Bankers Association in 2018, an overwhelming majority of banks agree that some level of digitalization is vital to keeping their loan customers from going elsewhere.

Funds raised for direct lending hit a fresh high this year, raising concerns the market could be running a little hot amid the deluge.

Capital One keeps closing branches, even as rivals open them (American Banker) Rated: A

The McLean, Va., company, with roughly $373 billion of assets, has shuttered more than half of its branches over the past decade, including nearly 50 in the second quarter alone, according to a recent analysis by Sandler O’Neill & Partners. It now has fewer than 500 branches in eight states and the District of Columbia.

Policing The Internet Is Critical To Protecting Online Lending Consumers (Forbes) Rated: A

In May, the United States Federal Reserve issued its “

How Two College Dropouts Made $ 860 Million by the Time They Were 23 (Fortune) Rated: A

They are the founders and top executives of Brex Inc. a fintech startup recently valued at $2.6 billion, with an unlikely origin story.

Brex, which launched its first product last year, has become a fintech darling, catapulting its founders into the ranks of the richest entrepreneurs — on paper at least. Today their stakes in the company are worth an estimated $430 million each, according to an analysis by EquityZen, a marketplace for shares of tech firms that haven’t yet gone public.

A ‘turtle bank’ plays catch-up in small-business lending (American Banker) Rated: B

Provident Financial in Iselin, N.J., has partnered with a fintech to become a stronger small-business lender.

The $9.8 billion-asset company is working with Fundation to offer unsecured small-dollar loans to commercial clients. While available in Provident’s more than 80 branches, applications for loans as big as $250,000 are also being accepted online.

United Kingdom

Funding Circle shocks the City, plummeting 20% after slashing growth forecasts thanks to Brexit (Evening Standard) Rated: AAA

The FTSE 250 company now expects 20% revenue growth this year, half its previous guidance of 40%, amid slumping demand for loans from small businesses.

The latest miserable update sent its shares down 20%, or 34p, to 129.6p and piles more pain on investors after a torrid nine months on the stock market. Since going public the shares have fallen 70% amid wider concerns about the peer-to-peer lending model.

Funding Circle bins the boasts as Brexit bites (Brinkwire) Rated: A

As if to show what’s possible, the online lending platform had itself valued at a remarkable £1.5bn in the flotation last year. Investors were invited to ignore current losses and feel the growth in revenues – up 55% to £142m in 2018, it turned out.

Few businesses, even fintech operators with smart kit and a big marketing budget, can sustain that pace, but Funding Circle still reckoned 40% was on the cards this year.

Companies & Markets show: Fintech’s big bang (Investors Chronicle) Rated: A

Digital editor Graeme Davies in discussion with James Norrington and Alex Newman on the latest problems for Funding Circle, Jupiter’s fund manager departure and the massive opportunities in the fin tech space both now and in the future.

Is Funding Circle the barometer for SME opinions on Brexit? (Daily Fintech) Rated: AAA

Loans under management on the platform are up 37% for the first half of 2019 compared to the same period in 2018, currently sitting at £3.5 billion. Originations are up 14% on the prior corresponding period, at £1.2 billion. All healthy figures in their own right.

separate study by academics at St Andrew’s University found that in 2016, 25% of businesses viewed Brexit as a major obstacle to their success. This number had jumped from 16% in the year prior, when they were surveyed right after the referendum.

Zopa plans £200m fundraise ahead of bank launch and IPO (P2P Finance) Rated: AAA

ZOPA is reportedly looking to raise up to £200m as it gears up for its bank launch and a possible stockmarket flotation.

The peer-to-peer consumer lender is in talks with private equity firms and sovereign wealth funds about the fresh funding, which could be secured in the next few months, chief executive Jaidev Janardana (pictured) told Bloomberg.

RateSetter’s Isa attracts more than £250m in subscriptions (Bridging & Commercial) Rated: AAA

RateSetter has revealed that its Isa has attracted over £250m in subscriptions by the end of June.

The P2P lender’s RateSetter Isa — which was launched in February 2018 — received £50m of Isa inflows in the last three months alone.

More than 600,000 customers have used RateSetter to invest or borrow and it has originated £3.3bn of loans, which has generated over £135m in returns for investors to date.

FINTECH UNICORN OAKNORTH DOUBLES STAFF (Business Cloud) Rated: AAA

Challenger bank OakNorth has doubled its staff after securing more than $1 billion in funding.

The London-based unicorn has also signed a five-year deal to provide its technology platform, OakNorth Analytical Intelligence, to Dutch lender NIBC Bank.

With a valuation of $2.8bn, it has rapidly grown to become one of Europe’s most valuable companies, having raised more than $1bn, a record for a European FinTech, from the likes of Japan’s SoftBank Group.

Moneybox launches ISA partnership with OakNorth Bank (AltFi News) Rated: A

OakNorth’s growing role as the go-to ISA partner to the digital disruptors of UK fintech has been further cemented. The bank, which was briefly Europe’s most valuable fintech earlier this year, has today joined forces with Moneybox to offer the latter’s 200k-strong, and growing, user base a Cash Lifetime ISA.

The Moneybox Cash Lifetime ISA, with an interest rate of 1.4 per cent, is designed to help customers who are saving for their first home with its government-backed 25 per cent bonus up to £1,000 per year. Users can open an account with £1.

Nutmeg is another fintech offering the Lifetime ISA while, Skipton – the UK’s fourth largest building society – says it has had over 130,000 accounts opened to date.

OakNorth also powered tax-wrapped savings accounts for Monzo’s c.2m customers in March, although they were not Lifetime ISAs. OakNorth reported a 220 per cent increase in profits last year to £33.9m.

FIBA to publish default rates of lenders (Bridging & Commercial) Rated: A

Adam Tyler, executive chairman at FIBA, said the move followed concerns about the transparency of default rates in the industry, which was raised by members and lender partners.

Mark Posniak, managing director at Octane Capital, initiated the conversation about default interest last week via LinkedIn.

Growth Street rockets past £500m of matched loans (Business Love London) Rated: A

Growth Street, which is reinventing the business overdraft, has hit a big milestones in June. It has now matched over £500m worth of investor funds on its platform since launch in 2014.

LendingCrowd partners with Brismo for verified returns data (Fintech Finance) Rated: A

LendingCrowd, Scotland’s only fintech lending platform, has today announced that it is the latest leading marketplace to partner with Brismo to provide sophisticated and independently verified performance metrics for investors.

Brismo is a London-based provider of lending performance data that uses detailed loan information to analyse and verify returns, allowing investors to perform like-for-like analysis.

Purplebricks $ 5m US retreat shows startups need to slow down (Sifted) Rated: A

Britain’s online estate agent Purplebricks this week said it would pull out of the US to focus on its hometurf.

The peer-to-peer industry isn’t doing enough to protect investors (City AM) Rated: A

Many peer-to-peer lenders target unsophisticated retail investors, who can invest as little as £100. And yet, there is a relatively high cost to on-board small investors, because platforms have to handle customer calls, and anti-money laundering requirements.

There have been dozens of failures, but the closure of Lendy has shocked the industry. The high-profile peer-to-peer lender accrued more than £160m on its loan book, and by the time the administrators were called, £90m was believed to be in default.

Lendingblock partners with institutional crypto platform Caspian (Institutional Asset Manager), Rated: B

Lendingblock, a regulated, open exchange for institutional borrowing and lending of digital assets, has partnered with Caspian, the institutional crypto trading platform. 

This partnership enables essential market infrastructure for borrowing and lending digital assets to be scaled to institutions globally.

China

Breakneck growth in China’s credit-card debt since 2012 raises worries about a potential bust (South China Morning Post) Rated: AAA

Credit-card debt has grown more than sixfold in China since 2012, mirroring booms in other Asian markets that ended badly and raising concerns about the potential risks to Chinese banks, according to a new report from S&P Global Ratings.

The credit rating agency said that unsecured consumer lending in the mainland is expected to increase at a rate of 20 per cent annually for the next two years, a slight slowdown, but reminiscent of problematic booms in Hong Kong, South Korea and Taiwan.

Source: South China Morning Post

It is rash to expect a rerun of past stock market booms in China (Financial Times) Rated: A

One way to profit from Chinese equities is to play a familiar paradox. Market participants know that when economic growth ebbs significantly, Shanghai share prices tend to rally.

The key to this incongruity might be called the “Communist party put”. In the same way that Alan Greenspan, former chairman of the US Federal Reserve, used to relax US monetary policy when dynamism stalled, a tactic known as the “Greenspan put”, China’s ruling party often steps in when commerce starts to wilt.

Regulators curb market irregularities (Ecna) Rated: A

China has spared no efforts to carry out supply-side reform and fight against financial market irregularities by better regulating high-risk institutions to make overall risk manageable, officials of the China Banking and Insurance Regulatory Commission said on Thursday.

In the past two years, China reduced high-risk assets worth 13.74 trillion yuan ($2 trillion), restraining the flow of resources from the real economy — the part of the economy that produces goods and services — to the virtual economy, said Zhou Liang, vice-chairman of the CBIRC, at a news conference.

European Union

Fintech Lender creditshelf Doubles Loan Volume in First Half of 2019 (Crowdfund Insider) Rated: AAA

creditshelf Aktiengesellschaft, a Germany based online lender, says it lending volume has more than doubled in volume during the first 6 months of 2019. In comparing the first half of 2019 versus the first six months of 2018,  creditshelf reports that the volume of arranged loans was  € 35.8 million or 132 % higher year-on-year (prior at € 15.4 million).

June 2019 was the strongest month in creditshelf’s history with arranged loans of € 12.2 million.

The company says the pipeline for the second half of the year is well filled.

PropertyBridges attracts first tranche of peer-to-peer loans for Limerick housing project in record time (Irish Examiner) Rated: A

A project to develop 16 houses in Pallaskenry, Co Limerick, is well on track to raise the €2.4m in funding that it pitched out to peer-to-peer investors just a few weeks ago, having very quickly raised the first tranche of €665,000.

PropertyBridges.com, who are leading the financial management of the project, will raise the remainder in three further tranches when the development progresses over the next 12 months.

International

International P2P Lending Volumes June 2019 (P2P Banking) Rated: AAA

Arboribus is listed for the last time, as the platform will cease to originate new loans.

Generic Looks to Launch Tokenized Peer to Peer Lending Platform (Crowdfund Insider) Rated: A

Blockchain startup Generic wants to create a tokenized bridge for peer to peer lending/merchant cash advanced credit, according to a note from the company. While not live yet, Generic claims it will “create a direct bridge between users and companies looking for funds, without an intermediary.”

FinTech is ‘new normal’ as majority are regular users (FS Tech) Rated: B

A global survey of 883 consumers from the UK, Europe, Asia, Africa, Latin America and Australasia, by financial advisory company deVere Group found that 55 per cent were using FinTech services online or via mobile on a regular basis to access and manage their money.

Australia

Loans.com.au passes on the full rate cut, now offers mortgage rates as low as 3.03% (Mozo) Rated: AAA

This afternoon, however, loans.com.au will be bucking the trend. The online lender announced it will be passing on the cut in full to its variable home loan customers, effective immediately.

The changes will apply to both new and existing customers, and will see owner occupiers looking at rates as low as 3.03% (3.05% p.a. comparison rate*) – among the more impressive on the market. Below, we’ve compiled some stellar loans.com.au home loans for you to check out.

India

Expectations of the Fintech Industry From the Union Budget of 2019 (Entrepreneur) Rated: AAA

The online lending industry has emerged as a massive relief for both individuals and small businesses that have historically been facing a lack of funds and were rendered underserved by traditional financial institutions. But for the digital model to truly thrive, fintech lenders need to have ready access to the credit guarantee schemes being initiated by the government to build a supportive financial structure. For instance, recent government initiatives like that of SIDBI wherein loans can be provided in under an hour, or its subsidiary MUDRA have only been supporting banks, NBFCs, and micro-finance institutions. But their penetration levels are relatively low, because of which a substantial portion of these funds remain unutilized. Therefore, the fintech industry expects the government to extend credit and allow the players to participate in these recent initiatives and other measures being undertaken.

‘P2P model is a solution for many small businesses’ (Deccan Herald) Rated: A

P2P model is a solution for many small businesses that are struggling for funds. Digital lending has changed the face of many developing countries’ economies because of the transparent environment and paperless approvals.

So, from the perspective of Peer-to-Peer (P2P) industry in India, it has tremendous opportunities because this industry is still at a nascent stage and requires encouragement through tax benefits.

Canada

BMO LAUNCHES DIGITAL-ONLY LINE OF CREDIT SERVICE (Betakit) Rated: AAA

Bank of Montreal is launching a new digital-only lending solution, allowing customers to apply for a personal line of credit directly from their mobile devices.

Through the new solution, BMO said customers can apply for credit by taking a short application, receiving a decision on their loan within minutes. Customers will get a real-time decision on their application, as well as faster access to credit, allowing them to tap into their loans within 48 hours of approval.

Asia

Funding Societies in SME Financing Tie-Up (Finews) Rated: AAA

Funding Societies has entered into a partnership with Lazada Malaysia to offers merchants on the e-commerce marketplace short-term financing, Malaysian newspaper «The Star» reported on Thursday.

As part of the tie-up, the peer-to-peer lending platform will leverage alternative data from Lazada as part of its risk assessment, which will provide more opportunities for online businesses to get tailor-made financing products conveniently, the firm said in a joint press statement.

Helios P2P Sri Lanka’s First Peer-To-Peer Lending Platform Secures Second Round Funding (Daily Mirror) Rated: A

Helios P2P – Sri Lanka’s First Peer-To-Peer Lending Platform secured their second round of funding from John Keells X which is the corporate accelerator of John Keells Holdings PLC. Helios P2P were winners of the 2017 John Keells X accelerator programme and the first startup to receive funding for the second stage of the accelerator.

The peer-to –peer lending industry, valued globally at $64 billion in 2015, is growing at a compound annual growth rate of approximately 50%.

Budget Expectations 2019: P2P lending hopes for these policy changes (Banking & Finance) Rated: A

So what will it be – fiscal consolidation or a focus on growth? Getting the balance right is the key here. The top priority according to Abhishek Gandhi, Co-Founder & CFO, RupeeCircle from this budget is to tackle consumption slowdown and boost it by cutting taxes which will increase the spending power of the people, especially in rural areas and the lower income groups. The subliminal effect of this step will boost investments as well. This will especially be a shot in the arm for the Peer-to-peer (P2P) the lending landscape which has been affected by the sluggish pace of policy changes in the past several months (understandably due to the impending general elections of 2019).

Visa Indonesia opens applications for fintech innovation competition (Jakarta Post) Rated: B

Visa Indonesia, a subsidiary of California-based payment systems provider Visa, opened on Wednesday applications for its Visa Everywhere Initiative competition, which is designed to crowdsource financial inclusion solutions from local financial technology (fintech) start-ups.

Authors:

George Popescu
Allen Taylor

The post Friday July 5 2019, Weekly News Digest appeared first on Lending Times.

Thursday December 20 2018, Daily News Digest

US Yield Curve

News Comments Today’s main news: OnDeck to enter equipment financing. SoFi releases video to destigmatize debt. RateSetter sees 47% revenue growth. Funding Circle fund expects lower returns. 360 Finance financials. Today’s main analysis: U.S. yield curve inverts. Today’s thought-provoking articles: Why did OnDeck file suit in Arlington? Fewer Americans rely on cash. More than half of Americans can’t cover a $1,000 […]

The post Thursday December 20 2018, Daily News Digest appeared first on Lending Times.

US Yield Curve

News Comments

United States

United Kingdom

China/Hong Kong

Southeast Asia

Other

News Summary

United States

OnDeck (ONDK) to Enter Equipment Financing Market (StreetInsider), Rated: AAA

OnDeck announced today that it will begin offering equipment finance loans to select U.S. small businesses next year, bringing its heralded technology and digital lending expertise to what has traditionally been a slow-moving, opaque, and complicated process.

Who’s On Deck? And why are they in Arlington? We explain. (Biz Journals), Rated: AAA

At 2 p.m. on a Friday in mid-October, it’s judgment day for 13 small companies from across the country.

The plaintiff is On Deck Capital Inc., a publicly traded online small business lender based in New York that has sued each of the 13 companies for not repaying loans. Its choice of setting: the Arlington General District Courthouse.

New SoFi Campaign Aims To Destigmatize Debt and Financial Insecurity In Powerful “Money Talks” Video (PR Newswire), Rated: AAA

SoFi today launched a campaign showcasing some of its members’ most intimate stories around their personal struggles with money. Produced in collaboration with director Tatia Pilieva, the filmmaker most notably known for her sensational short film ‘First Kiss,’ the video captures twelve SoFi members, strangers to each other, meeting for the first time to have open-ended, unfiltered conversations about their lives, their money, and their views for their futures.

The video, along with more about the members featured in the video, are now live at 

US Yield Curve Inverts; Spreads Widening on New FinTech Deals (PeerIQ), Rated: AAA

Core CPI rose by 2.2% keeping the Fed on track to raise interest rates next week for the fourth time this year. The market-implied probability of a rate hike next week is ~77%, although the rate hike path in 2019 remains uncertain. The US yield curve saw its first post-crisis flatteningwhich we will look at in greater detail below.

US Yield Curve Inverts for the First Time Post-Crisis

The US yield-curve saw its first inversion post-crisis as the spreads between the yields on 3-year and 5-year Treasuries fell to -1 bps. The spread between the yields on 3-month and 10-year treasuries has been an accurate predictor of past recessions. As the chart below shows, there have been 6 recessions since 1970 after the 3-month – 10-year curve inverted. Currently, the 3-month – 10-year curve is 49 bps away from inversion, but markets are watching every part of the yield curve closely.

Source: Federal Reserve, PeerIQ

Spreads are Widening on New FinTech Deals

LendingClub and CommonBond are out with new securitizations. KBRA has rated the tranches on LendingClub’s latest $272 Mn deal CLUB 2018-P3 A-, BBB, and BB. The $300 Mn collateral pool consists of 17,825 Prime loans with an average balance of $16.8 k, a weighted average coupon of 14.58%, and a weighted average remaining term of 48 months. The weighted average FICO score of the borrowers is 703. The deal has an initial O/C of 9.2% and an excess spread of 9.1%. Both the O/C and excess spread are the lowest for LC’s 2018 prime deals. This deal priced 27-50bps wider than LC’s prior deal in September due to market volatility and widening structured products spreads, according to DebtWire.

More Americans are making no weekly purchases with cash (Pew Research), Rated: AAA

Entegra Bank Chooses Velocity Solutions to Power Its Small Business Digital Lending (deBanked), Rated: A

Velocity Solutions announced today that its Akouba digital lending platform was selected by Entegra Bank to power the bank’s digital lending for its small and medium-sized business customers. Akouba provides community and regional banks with origination and underwriting services.

LoanStreet Signs Up Workers Credit Union to Use Fintech Loan Participation Platform (Crowdfund Insider), Rated: B

LoanStreet, a Fintech “loan participation platform,” has signed up Massachusetts-based Workers Credit Union to its growing network.

Lending Express Appoints Former Maple Founder Ofer Ariel to Chief Product Officer; Promotes Daniel Katz to Chief Operating Officer (PR Newswire), Rated: B

Lending Express, the technology company dedicated to increasing access to funding for small businesses, today announced the promotions of Ofer Ariel and Daniel Katz to Chief Product Officer and Chief Operating Officer, respectively. This announcement follows a period of impressive growth for the company, and is indicative of its commitment to provide best-in-class service to both its customers and partners.

United Kingdom

RateSetter Announces 2017-18 Revenue Growth of 47% (Crowdfund Insider), Rated: AAA

UK based peer-to-peer lender RateSetter announced last week the results of its 2017-2018 financial year, which ended on March 31, 2018. The lending platform reported that revenues were up by 47% (which was £34.3 million) from the previous year (£23.4 million). The company noted that the year-end, there were 44,441 active investors on the platform with loans under management of £700 million.

Funding Circle fund expecting lower returns (AltFi), Rated: AAA

A hit from its European Investment Bank transaction as well as higher UK loss rates have prompted a fall in expected returns for the Funding Circle SME Income fund.

The £332m Funding Circle SME Income Fund saw a fall in its net asset value (NAV) of 1.4 per cent in November as the investment trust’s board said it expected returns for the full year would be lower than previously anticipated owing to a higher expected rate of defaults among certain loan pools.

Orca opens waiting list ahead of 2019 IFISA launch (P2P Finance News), Rated: A

ORCA has opened a waiting list for investors interested in its self-select portfolio and Innovative Finance ISA (IFISA), with plans to launch both products in the first quarter of 2019.

The peer-to-peer lending analysis and investment platform, which first revealed its plans to launch a tax wrapper to Peer2Peer Finance News in October, said the Orca ISA will allow investors to hold multiple P2P loans from different providers in one tax wrapper.

It will offer interest of up to 6.5 per cent.

Transferwise – the power of partnerships (Fintech Futures), Rated: A

Cross-border payments were ripe for disruption and doing more than most to shake up things is peer-to-peer (P2P) specialist, Transferwise. Its number of partnerships with banks is multiplying while, in parallel, it is adding settlement options, most recently for direct access to the euro payment infrastructure through a euro settlement account with the Bank of Lithuania.

At present, with one notable exception, the partner banks that have been announced are challenger or other low-end players. However, it now claims over four million people around the world using its service to transfer over £3 billion each month. In the UK, global head of partnerships, Stuart Gregory, says its share of consumer international transfers is around 15%, putting in on or close to a par with some of the largest UK banks.

P2P property lending platform completes £10m investment round (AltFi), Rated: A

Peer-to-peer property lending platform BLEND Network has completed a £10m late-seed round of investing.

N26 Metal Now Available in the UK (coverageR), Rated: A

N26, the provider of mobile banking services which launched in the UK last month with a free account, is now offering N26 Metal – its first premium membership for UK customers.

For the price of £14.90 per month, Metal members get access to an exclusive partner program, dedicated customer service, and worldwide travel insurance provided by Allianz. In addition, members benefit from free ATM withdrawals in pounds, free payments in any currency, free withdrawals worldwide, and LoungeKey airport access in over 1k destinations.

This ex-Googler wants to help high street banks be more like Monzo (Yahoo! Finance), Rated: A

The head of innovation at one of Britain’s big high street banks told me earlier this year that he has a mantra when approaching a new problem: “What would Monzo do?”

Traditional banks are struggling to keep pace as Monzo pushes the boundaries. The startup sends smartphone push alerts when you spend money, knows when you’re abroad, lets you freeze your debit card if lost, and offers chatbot customer service — all through the app.

Onfido Sees 342 Pct Sales Growth In 2018 (PYMNTS), Rated: A

Onfido, the global identity verification company, announced Tuesday (Dec. 18) that it achieved 342 percent sales growth in 2018 compared with 2017 and that it has a four-year growth rate of 3,857 percent.

Starling Bank’s Megan Caywood jumps to Barclays’ ship (Fintech Futures), Rated: B

Megan Caywood, Starling Bank’s chief platform officer, is joining Barclays, as she handed in her notice a couple of weeks ago, according to TechCrunch.

China/Hong Kong

How a Chinese anti-virus software maker builds a fintech firm to wrestle with giants (TechCrunch), Rated: AAA

360 Finance,  an online consumer loan platform that spun off from China’s anti-virus service giant 360 Group, has joined a raft of Chinese fintech companies to go public in the U.S. over the last two years.

The company priced its initial public offering at $16.50 per share last Friday, raising $51 million by selling 3.1 million American depositary shares.

Source: TechCrunch

You’ve applied for a Virtual Bank license, what’s next? (Hubbis), Rated: AAA

Hong Kong is preparing for the arrival of virtual banks (VB) — pure digital players that offer banking services solely through digital channels without bricks-and-mortar branches. In an exclusive article from Synpulse we discover the challenges associated with virtual banking.

What is your differentiating proposition?

With HKMA’s recent announcement of receiving 29 applications for VB, competition is expected to be intense.

Focus on Customer Needs

Basic banking services are about fulfilling three main needs of the customer:

  • How do I pay or get paid?
  • How can I borrow?
  • How do I grow or protect my savings?

Capitalize on strong partnerships

FinTechs have traditionally excelled in one particular area (e.g.p2p lending, remittance and FX conversion).

Avoid a Pure Discount Model

VBs can leverage their lower operating costs to provide lower fees, higher deposit rates or other price incentives to attract customers. However, without a clear differentiating proposition, a pure low-cost play will not be sustainable.

Jiayin, a Top Player in P2P Lending Business, Files for $ 57.5 Million IPO on Nasdaq (Capital Watch), Rated: A

A leading individual financial marketplace, Jiayin Group Inc., is seeking to raise up to $57.5 million in an initial public offering on the Nasdaq Global Select Market in New York.

ByteDance registers fintech trademarks (Technode), Rated: A

In July, Jinri Toutiao launched a fintech product named Safe Lending. Up to 20,000 users were permitted to borrow up to RMB 200,000 (around $30,000) per person per day. The company claimed the Bank of Nanjing was one of its loan partners.

The product became the subject of investigations by the media in September. ByteDance later shuttered the online money lending service, while thousands of Chinese P2P lending companies shut down in the second half of the year.

PINTEC Partners with China National Investment & Guaranty Corporation to Develop Digital Lending Technologies (Markets Insider), Rated: B

Pintec Technology Holdings Ltd. (“PINTEC”) (NASDAQ: PT) today signed a strategic cooperation agreement with China National Investment & Guaranty Corporation (“I&G”), a leading enterprise in China’s guarantee industry. The two sides will jointly develop the next generation digital lending technologies and nurture a dynamic credit financing ecosystem for small and micro-sized enterprises in China.

European Union

Online Lender Creditshelf Partners with CrossLend to Offer First Digital Securitization of Loans (Crowdfund Insider), Rated: AAA

Germany based Fintech creditshelf Aktiengesellschaft, an SME financing platform, is launching a new partnership with CrossLend to offer the first digital securitization of SME loans in Germany.

A Visit to Crowdestor in Riga (P2P Banking), Rated: A

On invitation of Crowdestor I travelled to Riga and met the founders of Crowdestor Janis Timma and Gunars Udris. Crowdestor is a Latvian p2p lending platform for SME loans. They launched a year ago. Loans are typically for terms of up to 18 months and interest rates are quite high – the current loan offer by a transportation company seeking expansion capital carries 17% interest rate. The Crowdestor website is available in English, German and Portuguese language. Currently most investors on the platform are Germans, followed by Spanish investors.

Funding Options: From Fintech Petting Zoos To SME Lending Sanctuaries (Forbes), Rated: A

Both financial institutions and fintech startups have made serving SMEs a priority in 2018. However, despite business current accounts like Mettle being created this year, online comparison marketplace Funding Options has helped millions of firms across Europe, especially those that cannot get traditional bank lending because they are early-stage, high-growth or in difficulty, since its launch in 2012.

International

Finastra announces Eric Duffaut as President and Global Head of Field Operations (RealWire), Rated: A

Finastra has appointed Eric Duffaut as President and Global Head of Field Operations. Based at Finastra’s London Headquarters, Duffaut will take responsibility for the company’s entire go-to-market organization including global sales, services and consultancy, as well as overseeing the Finastra partner ecosystem.

Strengthening the Spread: ETHOS Now Live on Nitrogen Network (CoinTelegraph), Rated: A

Token of Ethos.io, a leading cryptocurrency wallet provider and Blockchain Financial Services (BFS) platform, has been officially listed on Nitrogen Network, a new decentralized peer-to-peer crypto lending network.

Nitrogen Network enables market participants to lend and borrow cryptocurrencies on their own terms, all while maintaining control of their holdings and private keys. This supports effective portfolio management and a diverse range of investment views across a wide variety of crypto assets.

Australia

As banks become stricter with lending, could your HELP debt get in the way of getting a home loan? (ABC.net.au), Rated: AAA

As banks rein in lending in the wake of the banking royal commission which revealed “irresponsible lending is endemic in Australia”, those who might have easily secured a home loan a few years ago now face much more stringent criteria.

Banks are looking more carefully at expenses and debts which, for 2.7 million Australians, will include a HELP (formerly HECS) debt.

India

NBFC Vivriti Capital secures Rs 200 Cr from Creation Investments in Series-A equity funding (Your Story), Rated: AAA

Vivriti Capital, a Chennai-based lending platform for corporate entities, has raised Series A equity funding of Rs 200 crores from Creation Investments, an investment management company focused on financial services.

Crowdfunding – A Brief Overview Of The Regulatory Framework (Mondaq), Rated: A

3. Peer-to-Peer Lending or Debt Crowdfunding: Peer-to-Peer Lending (P2P lending) is a form of crowdfunding used to raise loans which are re-paid along with interest. It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans. The borrower can either be an individual or a legal person requiring a loan. The interest rate may be set by the platform or by mutual agreement between the borrower and the lender. Fees are paid to the platform by both the lender as well as the borrower.2

4. Equity Crowdfunding:

The SEBI Consultation Paper furnishes proposals for a regulatory framework governing procedure of Security based Crowdfunding methods for Start-ups and Small and Medium Enterprises (SMEs).

The Directions define a “Non-banking financial company – Peer to Peer Lending Platform”4(NBFC-P2P) as a non-banking institution which carries on the business of a Peer-to-Peer Lending Platform. Peer-to- Peer Lending Platform5 has been defined as an intermediary providing the services of loan facilitation via online medium or otherwise, to the participants6(a person who has entered into an arrangement with an NBFC-P2P to lend on it or to avail of loan facilitation services provided by it). Non-banking institutions other than companies have been prohibited from undertaking the business of Peer-to-Peer Lending platform.7 The Directions provide the scope of activities, prudential norms (the aggregate loans taken by a borrower at any point of time, across all P2Ps, is subject to a cap of Rs.10,00,000/-), operational guidelines, inter alia other regulations.

Southeast Asia

Why the ASEAN P2P lending market will avoid the Chinese pitfalls (ASEAN Today), Rated: AAA

To say that 2018 was a rough year for peer-to-peer (P2P) lending businesses in China would be a gross understatement. It was nothing short of a bloodbath, mirroring in many ways the US sub-prime mortgage crisis of 2008-09.

China, despite its economic power, shares the following crucial features with smaller markets in South and Southeast Asia:

  • A large percentage of small-to-medium enterprises (SMEs) and individuals without access to traditional banking services
  • High mobile penetration among the population
  • Easy access to investor funds, both domestic as well as international

The Southeast Asian approach to P2P lending regulation is more proactive than the Chinese model

In the heydays of P2P platforms in China, the authorities pursued more of a “wait and watch” approach. In marked contrast, the regulatory bodies of Southeast Asian economies have adopted more pro-active steps to regulation.

Korea’s digital banks have two speeds: fast and faster (Asia Money), Rated: A

The average internet speed in South Korea is 26.7 megabits per second, faster than anywhere else in the world, according to French virtual private network developer Le VPN.

No Korean bank has ever been in the mix for this much-coveted prize. Nor did a single Korean firm appear in the latest Forbes rankings of the world’s 50 most innovative fintech companies. Indeed, it’s hard to identify a single well-known and home-grown fintech brand. There’s no Korean answer to, say, China’s Ant Financial, or Singapore-based ride-sharing-to-food-delivery service Grab.

OJK Pledges to Announce Names of Illegal Fintech Firm (Tempo), Rated: A

The Financial Services Authority (OJK) committed to monitoring legal and registered financial technology (fintech) companies of peer-to-peer lending or online loan as an effort to maintain the security for consumers.

Eurasia

Russia Is A Top Five Leader Of Digital Banking In Europe (Forbes), Rated: AAA

Because of the lack of legacy IT infrastructure within banks in Russia, the country has been listed in the top five leaders of digital banking in Europe, according to a new Deloitte and ID Finance report.

Latin America

Vitacon innovates again and launches an investment opportunity starting at USD250 with return of up to 12,8% per year (PR Newswire), Rated: AAA

Vitacon, a leading construction company that is revolutionizing the way people live in São Paulo, is launching one more investment opportunity for people seeking new options for earning income and diversifying their portfolios. The company, which for the past nine years has been incentivizing the shared economy in its residential developments, is launching the possibility for any investor to invest directly USD250 in a CD, a fixed income security issued by Banco Topázio, with a 24-month maturity, which allows for annual yields of up to 12.8%.

This new method, P2P Lending, is similar to one introduced in 2015, when Vitacon launched the first real estate crowdfunding, which surpassed expectations and created an international benchmark in the field, raising 28% above what was expected for the construction of the VN Cardoso de Melo building in a very prime location of São Paulo, scheduled for delivery next year.

Authors:

George Popescu
Allen Taylor

The post Thursday December 20 2018, Daily News Digest appeared first on Lending Times.

Thursday November 22 2018, Daily News Digest

Major European Neobanks Customers

News Comments Today’s main news: Prosper to introduce HELOCs. Affirm to rebrand, get into travel. Elevate Credit misses earnings estimates. Zopa says parents borrow from children’s piggy banks. Revolut wants to raise $500M through SoftBank. LexinFintech shares jump 8% on 363% earnings increase. Fintonic, Amazon partner in Spain. Today’s main analysis: Are we in an online lending bubble? Today’s thought-provoking articles: […]

Major European Neobanks Customers

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Prosper Announces HELOCs, Releases Q3 2018 Earnings (Lend Academy) Rated: AAA

Prosper noted that according to a 2017 TransUnion Study an estimated 10 million consumers will take out HELOCs between 2018 and 2022 which would be more than double the number originated from 2012-2016.

The new HELOC product will launch officially in early 2019.

Prosper also reported their Q3 2018 results today. Originations were $640.3 million, down 22% over the prior year period. Prosper attributed the decrease to credit tightening as well as the increase of interest rates to borrowers. The company has now originated $13.4 billion since inception. Net revenues also decreased as a result of decreased originations, with net revenue falling from $28.8 million in Q3 2017 to 20.6 million in Q3 2018. Below is a summary of Prosper’s other financial highlights that are availing in the company’s 10-Q.

Source: Lend Academy

Funding Circle US: Consumers will eschew Amazon to support small firms (Peer2Peer Finance) Rated: AAA

FUNDING Circle US has found that the majority of US consumers still make the effort to shop at independent small businesses and would be willing to pay more for the same item than it costs at e-commerce giant Amazon.

The peer-to-peer business lender, which recently floated on the London Stock Exchange, published the results of a survey on US consumers’ support for small businesses.

It found that 77 per cent of 2,171 US adults surveyed said they were willing to pay more for items at small businesses in order to keep money within their communities and support local jobs.

60 per cent of respondents said they would pay a 10 per cent premium or more on Amazon prices.

PayPal co-founder’s installments firm, Affirm, rebrands, gets into travel (Payments Source) Rated: AAA

PayPal co-founder Max Levchin has built a $1.8 billion business offering installment plans to American consumers. The problem: most shoppers have no idea they’re using his company, Affirm, when they choose how to pay at checkout.

Now, in an effort to make its name synonymous with online installment plans, Affirm is rebranding. Besides a new logo, the firm will list all the retailers it works with on its website. Affirm will also focus on travel, letting consumers pay for vacations over time.

Levchin Says Crypto Not a Good Currency But He Likes the Tech (Bloomberg) Rated: A

Elevate Credit (ELVT) Releases Earnings Results, Misses Estimates By

Elevate Credit (ELVT) Releases Earnings Results, Misses Estimates By $0.23 EPS (Fairfield Current) Rated: AAA

.23 EPS (Fairfield Current) Rated: AAA

Elevate Credit (NYSE:ELVT) announced its earnings results on Monday, October 29th. The company reported ($0.10) earnings per share for the quarter, missing the consensus estimate of $0.13 by ($0.23), MarketWatch Earnings reports. Elevate Credit had a positive return on equity of 12.69% and a negative net margin of 0.49%. The business had revenue of $201.48 million for the quarter, compared to analyst estimates of $201.71 million. During the same quarter last year, the company posted $0.01 EPS. Elevate Credit’s quarterly revenue was up 16.6% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.23-0.32 EPS.

Source: Fairfield Current

Amazon: Fundrise Allows You to Invest in Property Near Amazon’s DC Headquarters with New eFund (Crowdfund Insider) Rated: A

Real estate investment platform Fundrise says it has been quietly accumulating property near the area Amazon (NASDAQ:AMZN) has just announced they will be establishing a new headquarters. Amazon’s east coast headquarters will create a huge economic impact for the DC/Northern Virginia market, not to mention increased demand for housing and apartments. Fundrise says it has invested in 30 different buildings in expectation of rising demand. Fundrise is offering a new investment fund for this purpose: HQ2 DC eFund.

According to Fundrise, the fund already features residential properties – ranging from houses, townhomes and condominiums – with plans to invest as much as $50 million in the area. This eFund, issued under Reg A+,  allows any investor the opportunity to capitalize on expected local real estate growth in the wake of Amazon’s announcement.

RealtyShares starting to crumble after lack of venture capital (Born2Invest) Rated: A

The website started out strong. From 2014 to 2016, venture capital was pouring in from crowdfunding firms. However, investors became less interested in the portal as the investment minimum started to ramp up steadily. Company founder Nav Athwal, who had left the company’s board earlier this year, is still a minority shareholder. He also has no idea what happened to the company he helped found.

He, however, has a few words for startups. “Don’t let your burn rates get really large, strive for cash-efficiency or profitability sooner rather than later. Build a resilient business that can continue growing, regardless of where the venture capital markets are.” He adds that a startup should understand its investors and its growth limit as well.

Are we in an online lending bubble? (Tearsheet) Rated: AAA

We’re in an interesting time in online lending. After years of fits and starts and boatloads of money flowing into the sector, record originations are being set all over the industry. We recently explored online lending trends going into 2019 and what participants in the sector are expecting in the near future.

Both consumer and business lenders are tracking strongly:

While personal loans have surged to a record as the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion, it’s fintech firms that are driving a lot of that growth.

Source: Tearsheet

Amalgamated Bank joins $ 26 million closing of Insikt social bond securitization (Impact Alpha) Rated: A

The fintech firm packages up the loans the into securities, which it then issues as bonds to financial institutions, foundations and private investors. Its latest $26 million securitizationattracted Amalgamated Bank, a B-corp-certified commercial bank that went public on the NASDAQ stock exchange in June.

The issuance marks Insikt’s fifth securitization this year, backed by 21,000 loans. INSIKT’s total securitization volume across 16 issuances reached $273 million.

If Recession Comes in 2020, What Will Innovation Look Like? (Bank Innovation) Rated: A

JPMorgan Chase last month predicted a 60% chance of recession by 2020, and that increases to an 80% chance by 2021. It’s not clear how traumatic an event it would be for the U.S. economy, but considering all the new players that have jumped onto the financial scene since the last downturn a decade ago.

CrowdOut Funds More “Eatertainment” (Business Wire) Rated: A

CrowdOut Capital announced the completion of a $20 million facility to Punch Bowl Social, the L Catterton–backed restaurant group that is defining the evolving category of experiential dining. The proceeds will enable the leader in the “eatertainment movement” to open multiple new locations throughout the U.S. This marks the second time Punch Bowl Social has worked with CrowdOut, choosing its flexible debt over traditional loans from financial institutions.

Sell Your House Without Making a Move – Figure Introduces a Smart Alternative for Baby Boomers to Secure Their Retirement (Corp Magazine) Rated: A

Figure Technologies, Inc. (Figure), a FinTech company creating innovative products and tools that empower homeowners to improve their finances, announced today Figure Home Advantage, a smart sell-and-leaseback alternative to reverse mortgages for retirees and a new way for Baby Boomers to lock in record housing prices as they plan their retirement. With Figure Home Advantage, homeowners convert their home equity into cash they can put to use now while continuing to enjoy life at home without the ongoing burden of property taxes, repairs, and maintenance.

Roughly 10,000 Baby Boomers turn 65 years old in the U.S. every day. A study by the National Conference of State Legislators and AARP found that 90 percent of people over age 65 want to stay in their home for as long as absolutely possible. Yet, most older Americans don’t have enough savings to cover retirement expenses or realize the lifestyle they’d imagined. According to a survey by the Insured Research Institute (IRI), only 25 percent of Baby Boomers believe they will have enough money in retirement.

Lenders Extending More Loans to Subprime Consumers as Credit Market Continues to Exhibit Signs of Strength (AP News) Rated: A

Auto loans, credit cards and personal loans all saw year-over-year growth in subprime originations this past quarter, a sign that lenders are returning to this space following several consecutive quarters of declining originations. The latest TransUnion (NYSE: TRU) Industry Insights Report includes insights into consumer credit trends around personal loans, auto loans, credit cards and mortgage loans through the third quarter of 2018.

TransUnion’s report found that origination growth in the subprime risk tier grew at a significant rate across auto, personal loans and credit cards following declines in 2017. Subprime originations in the personal loan category grew 28% between Q2 2017 and Q2 2018 (originations are viewed one quarter in arrears to account for reporting lag), compared to a yearly decline of 7.1% over the prior year. Auto showcased a similar trend, as independent lenders began issuing new loans to subprime consumers following industry pullback in 2016 and 2017. Subprime auto originations increased 7.3% year-over-year, after falling 7.8% year-over-year in Q2 2017.

Are you a minority borrower? You might want to think twice about using an online lender. (The Washington Post) Rated: A

It’s not just bank loan officers with racial biases who discriminate against black and Latino borrowers. Computer algorithms do, too.

That is the groundbreaking conclusion of University of California at Berkeley researchers who found that algorithmic credit scoring using big data is no better than humans at evening the playing field when it comes to determining home mortgage interest rates.

Both online and human lenders earn 11 to 17 percent higher profits off minority borrowers by charging African Americans and Latinos steeper rates, the study said. Black and Latino consumers pay 5.6 to 8.6 basis points higher interest on home purchase loans than their white or Asian counterparts with similar credit profiles — no matter whether they obtained their loans through a face-to-face process or online. The effect is smaller when it comes to refinancing, with black and Latino borrowers paying 3 basis points more.

Read the full report here.

AI-Driven Lead Distribution for Mortgage Lending Helps Loan Officers Deliver Faster Results (Verb Factory Email) Rated: A

ProPair, an innovative mortgage-industry technology start-up based in Silicon Valley, today launched an AI-based lead distribution solution that eliminates the uncertainty of the lead assignment process while optimizing results and ensuring fairness in the assignment process. Using artificial intelligence to correlate lead data with information about individual loan officers, ProPair facilitates the lead assignment process to allow lenders to distribute leads to maximize the performance of the entire loan team.

White Oak Healthcare Finance Provides $ 190 Million Financing for BM Eagle’s 17 SNF Portfolio (Business Wire) Rated: B

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as administrative agent and lead lender on the funding of a $190 million senior credit facility of 17 skilled nursing facilities for BM Eagle Holdings, LLC (“BM Eagle”), a joint venture led by affiliates of BlueMountain Capital Management, LLC (“BlueMountain”). The facilities are located in Northern California and New England.

United Kingdom

Zopa: Parents borrowing from children’s piggy banks (Peer2Peer Finance) Rated: AAA

ZOPA research has found that two fifths of parents have admitted to raiding their children’s piggy banks to borrow cash.

Parents surveyed by the peer-to-peer consumer lender confessed to borrowing money from their kids with a fifth taking over £250 a year.

However, 80 per cent of parents said they will also be giving their children cash as a Christmas present this year.

Nearly a quarter of children can look forward to a gift of up to £100, whilst a lucky three per cent will be receiving more than £500 in cash.

Revolut is in talks with Softbank to raise $ 500 million (Business Insider) Rated: AAA

UK neobank Revolut is currently in talks with the Softbank fund, which is worth $92 billion, for its next funding round, according to City AM. The talks are still early on, but the funding round could be as high as $500 million. It’s not clear whether existing investors, including Draper Esprit and Index Ventures, would participate in the next round.

Source: Business Insider

Monzo to offer cash deposits via PayPoint (FinExtra) Rated: A

PayPoint has announced today that challenger bank, Monzo, has chosen PayPoint’s cash payments solution for its current account holders. Beginning Wednesday 21 November, customers will be able to deposit up to £300 cash directly into their Monzo account in a single transaction at any of PayPoint’s 28,000 convenience stores nationwide.

Starling Bank’s £10m funding helps it make a stand to Monzo (Fintech Future) Rated: A

Starling Bank, the mobile-only bank, has secured £10 million of new capital from Bahamas-based hedge fund manager Harald McPike.

According to the Daily Telegraph, the funding is in preparation for a £80 million round to keep up, or perhaps surpass, other mobile challengers like Monzo, which recently raised £85 millionto reach a £1.5 billion valuation, and getting over 1.1 million customers.

Why data scientists solve irrelevant problems (Bobs Guide) Rated: A

In today’s challenging financial market businesses need to utilize every available resource and technology to reduce risk when processing payments and credit applications. One area in particular that is often talked about, but still either under or incorrectly utilized, is data science.

While many financial institutions are working towards implementing data science within their risk decisioning processes many are still working on creating an environment and culture that allows data scientists to be fully effective.

In a recent webinar Ken Schultz, VP of data science at Elevate Credit – better known under their brand Sunny in the UK -discussed the benefits data science can bring to a financial services organization, including the opportunity to increase accuracy, expand your market, and reduce fraud, all of which can be used to drive business growth.

Lending Works Appoints Three New Board Members, Targets P2P Growth (Crowdfund Insider) Rated: B

Peer to peer lender Lending Works has selected three new members for their Board of Directors. The online lender has appointed; Simon Waugh, former Chairman of CMC Markets, Deputy CEO of British Gas, Paul Noble, CEO of Honeycomb Finance, a Pollen Street Capital business, and Melanie Goward, Investment Director of Maven Capital Partners.

Barclays partners with MarketInvoice (The MarketInvoice Blog) Rated: B

MarketInvoice and Barclays today announced a partnership deal that is set to transform the way small and medium enterprises (SMEs) in the UK manage cash flow and accelerate growth.

The bank has committed to a significant minority stake in MarketInvoice to give Barclays’ SME clients seamless access to innovative forms of finance. The new partnership is a key part of Barclays’ plans to invest in new business models for growth, and MarketInvoice’s ambition to broaden its reach across the UK.

China

Shares of LexinFintech Jump 8% In Early Trading as Earnings Soar 363% (Capital Watch) Rated: AAA

LexinFintech Holdings Ltd. (Nasdaq: LX) saw its shares jump more than 8 percent in early trading Wednesday after the company, an online peer-to-peer lending platform in China, posted better-than-expected earnings for the third quarter with net income increasing more than fourfold.

Despite recent market uncertainty, the Shenzhen-based lender said its operating revenue for the third three months increased more than 13 percent year-over-year to $246.7 million thanks to a 404 percent jump in income from its loan facilitation and servicing fees.

Net income for the quarter was $46 million, or 25 cents per fully diluted ADS, up from $9.93 million a year ago.

Source: Capital Watch

Tencent reboots profits as growth picks up beyond games (Nikkei Asian Review) Rated: AAA

China’s Tencent Holdings handed investors a much-needed profit recovery in the third quarter as revenue rose beyond online games, but the company warned that stricter regulation by Beijing on online advertising could sap growth.

The social media and online game group, which has lost about 40% of its market value since March as China has stalled approval of new games, beat market forecasts thanks to contributions from ads and cloud computing.

Source: Nikkei

China Rapid Finance to Announce Third Quarter 2018 Financial Results on November 20, 2018 (Acrofan) Rated: A

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it plans to release its third quarter 2018 financial results on Tuesday, November 20, 2018, after U.S. market closes.

China Rapid Finance’s management will host an earnings conference call at 8:00 p.m. Eastern Time on November 20, 2018, (9:00 a.m. Beijing/Hong Kong Time on November 21, 2018).

Why China’s online lending crisis makes liberalisation of bank interest rates more urgent (South China Morning Post) Rated: A

How big is China’s fintech sector? I would say, Britain’s peer-to-peer (P2P) lender Funding Circle plus payday lender Wonga times 100. In addition to giants such as Alibaba’s Ant Financial, Pingan’s Lufax and Tencent’s WeBank, a dozen mid-size operators have gone public in the US and Hong Kong in the past 18 months alone. There are also 40 to 50 serious players that are waiting in the wings to go public. However, as the year-long official clampdown has revealed, there are far too many also-ran operators and Ponzi schemes about.

In just five to six years, fintech has surged to levels over US$200 billion in terms of total assets.

Cash-Strapped Online Lenders Ordered to Repay Investors (Caixin Global) Rated: A

Some local governments have ordered cash-strapped peer-to-peer (P2P) lending platforms to begin repaying their investors to head off growing turmoil in the industry.

Hangzhou-based P2P lending platform Yucaiyuan recently announced that the company “did not meet regulatory requirements and was ordered to start repaying (investors),” according to a post on the lender’s website (link in Chinese). The firm will have to repay the principal and interest on all outstanding loans until investors are fully repaid. It has 12 months to do so.

Regulators in the eastern city want to rein in what had once been runaway growth in the industry. They plan to do this by clearing out small and midsize platforms one step at a time, a P2P lender told Caixin.

European Union

Fintonic Links Up with Amazon (Finovate) Rated: AAA

Personal finance app Fintonic announced today it will collaborate with Amazon in Spain. Starting next week, Fintonic customers in Spain will be able to finance their Amazon.es purchases ranging from $225 to $1,100 (€200 to €1,000) at a rate of 0% interest for up to four months.

Mintos to Provide Debit Cards and IBAN Accounts to Investors (P2P Banking) Rated: AAA

P2P lending marketplace Mintos has raised 5 million EUR in a Series A. The money is earmarked to provide new features for investors.

Crowdlending campaign raises total of €1.5 million for the first time (The Brussels Times) Rated: A

A crowdlending campaign has, for the first time, raised a total of €1.5 million in Belgium.

The announcement came on Wednesday from the platform Look&Fin, which specialises in such participative finance loans. The company, Carimat Matériaux, based in Braine-le-Château and active in construction, has raised this record amount.

In total, 483 individuals have invested in Carimat Matériaux, for a global total of €1.5 million. The group, which has specialised in construction since 1988, recorded a turnover of €56 million in 2017 and employs more than 170 people.

Berlin-based fintech startup Bonify raises funding to provide free credit scores and financial advice (EU Startups) Rated: A

Want to apply for a loan, but you’re unsure about your credit score? The Berlin-based startup Bonify provides free, easy-to-read credit reports. Users can use the startup’s platform or app to check and correct their scores, monitor changes, and receive tips on personal finance and how to optimise their scores.

Bonify evaluates consumers real-time creditworthiness, enabling them to improve their financial wellbeing through tailored financial and non-financial recommendations. The app delivers recommendations for how consumers can save money, for instance by switching to a different loan or energy provider. Bonify is also able to predict six to eight weeks in advance when its users might go into their overdraft, and provide personalised suggestions for how to avoid this.

Italian lendtech Credimi feeling dreamy with €10m funding (Fintech Futures) Rated: A

The investment funds came via United Ventures and Vertis, as well as some of the (unnamed) investors who took part in the first round of €8.5 million in September 2015.

Ignazio Rocco di Torrepadula, Credimi founder and CEO, and cool name winner, says: “Credimi’s initial start-up phase has been exhilarating, with results that have far exceeded our expectations.

SME Online Lender Creditshelf Names Fabian Brügmann New CFO (Crowdfund Insider) Rated: B

Creditshelf Aktiengesellschaft, a Germany based online lender, announced on Wednesday it has appointed Fabian Brügmann as its new CFO, effective on January 15, 2019. The lender reported that this appointment continues its planned expansion of its management team and in the newly formed position, Brügmann will be responsible for Finance and Investor Relations and directly report to Dr. Tim Thabe, Chairman of the Management Board and CEO of Creditshelf. He will not serve as a member of the Management Board himself.

According to Creditshelf, Brügmann previously worked as Director of Investor Relations at Commerzbank AG, where he was the contact for shareholders, fixed-income investors, and sell-side analysts. He joined the bank’s Corporate Development and Corporate Finance team in 2012. As IR Manager, Brügmann worked on the capital market communication for the “Commerzbank 4.0” strategy. He previously spent six years with the U.S. bank Goldman Sachs in Frankfurt and London.

Small Business Lender iwoca Appoints Seema Desai as COO (Crowdfund Insider) Rated: B

Online lender iwoca has selected Seema Desai as their new Chief Operations Officer (COO). iwoca provides loans of up to £200,000 to small and micro businesses across the UK, Germany, and Poland via its website and through partner integrations using its proprietary Lending API.

Desai joined iwoca in January 2017 as Head of People, developing the company’s organizational capabilities. Prior to joining iwoca, Seema led the development of the Innovative Finance ISA at peer-to-peer lender Zopa as Head of Product.

As COO, Desai is expected to help scale customer service that has helped propel iwoca to become one of the fastest growing business lender in the UK.

International

Prodigy Finance Launches Refinance Product for International Working Graduates Looking to Reduce Financial Costs (PR Newswire) Rated: A

Prodigy Finance, the pioneer in cross-border finance, announces the launch of a loan refinance product for international working graduates looking to reduce their student debt. The product will allow these alumni, who previously had limited options available to them, to save at least US$20,0001 over the life of the loan, by accessing lower rates and choices of terms.

The edge a serial entrepreneur sees in challenger banks (American Banker) Rated: A

Challenger bank entrepreneur Anthony Thomson has had several lives in banking and fintech.

In 2010, with Commerce Bank founder Vernon Hill, he co-founded Metro Bank, which started with one location in London and now has more than 56 branches and 2,800 employees. Thomson founded a second challenger bank in 2014 called Atom Bank, the first mobile-only bank in the U.K. As of March, it had 1.3 billion pounds of deposits and lent 1.2 billion pounds in mortgages and small-business loans.

Thomson is currently working on his third institution, called 86,400, a mobile-first challenger bank slated to launch in Australia in early 2019.

So it’s fair to say Thomson has learned a lot about what it takes to raise money and how to make it as a neobank entrepreneur.

The Ripple Effect: Crypto Backed Lending Platform Exploring XRP-Powered xRapid (The Daily Hodl) Rated: A

The crypto lending platform Nexo says it’s exploring Ripple’s xRapid, which uses XRP to boost the speed and lower the cost of cross-border payments. The announcement comes from Antoni Trenchev, the co-founder and managing partner of Nexo.

The company is backed by TechCrunch founder Michael Arrington and calls itself a “decentralized lending ecosystem that facilitates open access to credit anywhere and anytime.” It uses a long list of banking and exchange partners to deliver loans.

Nexo follows the payment company and Ripple partner TransferGo, which also revealed its interest in xRapid this week. Nexo recently added XRP to its platform, becoming one of the first lenders to use XRP as collateral.

MSTS Makes B2B Commerce Effortless for SMBs with Credit as a Service (Globe Newswire) Rated: B

MSTS, a global B2B payment and credit solutions provider, today announced that its innovative Credit as a Service solution is now available to mid-market and small businesses.

The original enterprise product, with a record of accelerating sales growth for companies by as much as 500 percent, has been optimized to meet the needs of businesses with simpler payment and credit processes. The cloud-based Credit as a Service solution for mid-market businesses can issue credit lines in less than a minute, automate the customer onboarding process and apply unique B2B customer invoicing, accounts payable and payment term requirements – providing customers flexibility and an enhanced experience.

MSTS works with B2B companies across transportation, manufacturing, retail and eCommerce.

Australia

Advice demand soaring in Australia despite trust issues (International Investment) Rated: AAA

The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.

However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.

The report found more than 40% of Australians do not believe the financial services and banking industries are meeting their obligations to everyday citizens.

Big banks welcome government competition for small end of town (Sidney Morning Herald) Rated: A

Australia’s biggest banks insist they welcome the prospect of looming lending competition from the federal government’s proposed $2 billion small business loan plan.

Under the policy unveiled by Treasurer Josh Frydenberg on Wednesday the government will establish a $2 billion securitisation fund which it will use to buy pools of small business loans from smaller banks and non-bank lenders.

Small business cheer $ 2b end to funding drought (Australian Financial Review) Rated: A

Small business and non-bank lenders have endorsed the Morrison government’s plans to inject $2 billion into the small and medium enterprise loan market.

But regulatory experts warned the government must avoid taking too much financial risk and not weaken bank rules in its quest to stimulate SME funding via a separate proposed bank-financed Australian Business Growth Fund.

Piper Alderman brings in financial services team (Australasian Lawyer) Rated: B

A national firm has added a financial services team, including a new partner in Sydney.

Andrea Beatty has commenced at Piper Alderman as a partner. She brought to the firm two other lawyers and an administrative assistant from NewLaw outfit Keypoint Law, where she was a consulting principal since 2016.

With more than 20 years’ experience in financial services regulation and corporate finance, Beatty is a former partner at legacy Mallesons Stephen Jaques and then at K&L Gates.

Asia

New securities law sparks concerns from expert (Vietnam News) Rated: AAA

Under the revised draft Law on Securities, the foreign ownership ratio in a public company is expanded up to 100 per cent. Previous regulations had capped foreign ownership at 49 per cent. However, this ratio in commercial banks, which is a much-concerned issue recently, was not mentioned in the draft. Why?

The draft has removed limits on how many voting shares foreign investors can buy in public Vietnamese companies. This indicates that the Government has sped up the equitisation process in State-owned enterprises, especially in non-essential sectors that are not too sensitive to the economy. However, under the draft, some conditional business lines, such as commercial banks, would retain their existing 30 per cent limit. I agree with this provision of the drafting agency.

How Standard Chartered Bank is tackling digital disruption (Tech in Asia) Rated: A

While banks have not been immune to the technology bug that has spread in the last few decades, digitization in the industry has only largely been implemented “for purpose in the back end,” according to Michael Gorriz, group chief information officer at Standard Chartered Bank.

“Fifty years ago, we introduced mainframes. We took paper ledgers and put them into computers,” the CIO explains.

But the emergence of a tech-savvy millennial generation is bringing about “the first real massive change in banks since the inception of banking,” he says. As such, banks like Standard Chartered have to digitize front-facing processes or risk losing their customers.

Eurasia

Russian Online Lender MFC Zaymer Joins Robo.cash (Crowdfund Insider) Rated: AAA

Automated peer to peer platform Robo.cash has issued a note saying Russian microfinance company MFC Zaymer is joining their platform. The company operates Zaymer.ru that offers short-term (payday) loans with interest rates for investors of 14% in Euros and up to 18% for loans originated in Rubles.

Africa

Nigeria dials up mobile banking revolution (Financial Times) Rated: AAA

Nigeria’s central bank is looking to increase access to millions of people by opening up the banking system to non-financial companies for the first time; South African telecom operator MTN is set to be the biggest beneficiary with more than 50 million customers located in Nigeria; MTN is planning to apply for a banking license soon with the hopes of having their Mobile Money product available in country by Q2 2019; more than 60 million people in Nigeria do not have bank accounts, showing there is an enormous opportunity for telcos to expand the banking footprint.

Authors:

George Popescu
Allen Taylor

Tuesday October 23 2018, Daily News Digest

FREED Upgrade bond characteristics

News Comments Today’s main news: OnDeck to add PNC to ODX platform. FICO to add alternative data to credit score. PeerStreet named to CB Insights Fintech 250 list of fastest-growing fintech startups. Lendy asks for help. Pintec Technology shoots for $41M IPO. Today’s main analysis: Zelle sees record earnings, FREED 2018-2 and UPGR 2018-1 compared. Today’s thought-provoking articles: Funding […]

FREED Upgrade bond characteristics

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United States

United Kingdom

India

Other

News Summary

United States

OnDeck Announces PNC Will Be The Second Bank On The ODX Platform (Lend Academy) Rated: AAA

It was back in December of 2015 that we first learned about OnDeck’s partnership with JPMorgan Chase. This was the first significant partnership between a large American bank and an online lending platform and it caused a lot of excitement in the industry back then.

A couple of times this year we have heard OnDeck CEO Noah Breslow hint that a second major bank was coming on as a partner soon. Today, we learned who that partner will be: PNC Bank. They are the ninth largest bank in the country, so this gives OnDeck two of the top ten largest banks as clients.

I caught up with Noah and Brian Geary, who heads up OnDeck’s new ODX division (we covered the story of ODX just last week) to talk about this new deal.

FICO Plans Big Shift in Credit-Score Calculations, Potentially Boosting Millions of Borrowers (Wall Street Journal) Rated: AAA

Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Isaac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts for credit reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

PeerStreet Named to the 2018 CB Insights Fintech 250 List of Fastest-Growing Fintech Startups (Business Wire) Rated: AAA

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has been named to the second annual CB Insights Fintech 250 list, a prestigious group of emerging private companies working on groundbreaking financial technology. This comes on the eve of PeerStreet’s third anniversary of opening to the public. PeerStreet opened to all accredited investors on October 30th, 2016 at Money 20/20, an annual conference which is happening this week in Las Vegas. Both PeerStreet founders Brew Johnson and Brett Crosby are in attendance.

PeerStreet is being recognized as a leader in real estate investing for the platform’s innovative approach to making real estate debt an accessible asset class for retail investors. The loans offered for investment are vetted by private lenders who know their communities well, and then again by PeerStreet’s own team using big data and market research.

Marcus Slows Lending Growth, Zelle vs Venmo, Freedom & Upgrade Deals (Peer IQ) Rated: AAA

Bank of America – Record Earnings and Results for Zelle

BofA’s earnings were boosted by the highest Net Interest Income since 2011 delivered by its Lending business.

BofA also saw P2P payments rise on its Zelle platform increase 138%. Venmo, over the last year, has been on the defense due to increased consumer fees and leadership changes. SnapChat’s payment service was discontinued. Tech firms such as Google, Facebook, Tencent, and Ant Financial continue to test payments in overseas markets like India (where it is easier for FinTechs to utilize payments rails).

MS remains laser-focused on growing asset management and lending (secured and warehouse lending) and delivered the best stock price performance post earnings. The stock gained 5.7% post-earnings.

Source: Bank Earnings, PeerIQ

Freedom (FREED 2018-2) vs Upgrade (UPGR 2018-1)

Below we compare these deals on their collateral composition, bond characteristics and triggers. We note that each lender has substantially different lending programs, credit risk profiles, and history – and that shows in terms of deal structure and execution.

Collateral Composition

FREED 2018-2’s collateral pool consists of 2 types of loans – 45.5% Freedom Plus (F+) and 54.5% Consolidation Plus (C+).

F+ Loans: F+ loans are unsecured consumer loans to near prime and prime borrowers. F+ collateral has a WA age of 3 months and WA remaining term of 46 months. The WA current FICO score of the pool is 713 and the WA interest rate is 16.2%.

C+ Loans: C+ loans are offered to select qualified debt settlement clients as an option to shorten the duration of their debt settlement program by making funds available immediately to fund settlements reached by Freedom Debt Relief. C+ collateral has a WA age of 8 months and WA remaining term of 45 months. The WA current FICO score of the pool is 562 and the WA interest rate is 22.9%.

UPGR 2018-1’s collateral pool consists of unsecured consumer loans. The collateral has a WA age of 2 months and WA remaining term of 41 months. The WA current FICO score of the pool is 691 and the WA interest rate is 15.9%.

Freedom’s C+ loans have the highest weighted average coupons and original loan terms among all the pools, and Freedom’s F+ borrowers have the highest weighted average credit scores. The higher weighted average coupon on C+ loans helps the deal generate significant excess spread.

Source: Ratings Agencies, PeerIQ
Source: Ratings agencies and Peer IQ

Identity Risk Scoring from Socure Helps Radius Bank Reduce Online Fraud (Finovate) Rated: A

partnership between AI-powered identity risk scoring innovator Socure and workflow management specialist Alloy has enabled Radius Bank to decrease online fraud by 50%, increase new account conversions by 30%, and make manual review nearly a process of the past – reducing it by 95%.

The joint solution marries Socure’s predictive analytics with Alloy’s decisioning engine, and adds a variety of on- and offline data sources, predictive fraud tools, and a flexible rules engine to enable real-time decisioning and onboarding for new account openings.

Plaid is seeking funding at a $ 2 billion valuation (Business Insider) Rated: A

Plaid, a fintech company whose software is used by Silicon Valley heavyweights like Betterment, Coinbase, and Robinhood, is holding talks with potential investors about raising money that could value the firm at more than $2 billion, according to people familiar with the matter.

The fundraise is still in the early stages, the people said, and a formal deal with investors has yet to be finalized.

In April, Forbes reported that the company’s private valuation was $1 billion — meaning that Plaid, which counts 10,000 banks among its customers, could see its valuation double in less than six months.

Klarna Pairs up With Rancourt to let Shoppers pay Over Time (PR Newswire) Rated: A

Today at Money20/20 in Las Vegas, Klarna, a leading global payments provider, introduced their Slice it in 4 payment option, which allows consumers to pay for purchases in installments using their own debit or credit card. In conjunction with the launch, Klarna has signed its first U.S. merchant, Rancourt & Co., premium leather shoe crafters, to use the offering.

In today’s market, 67% of U.S. millenials do not own a credit card. With Klarna’s Slice it in 4, shoppers can increase their purchasing power without the hassle of a credit agreement or long-term commitment. Four equal payments are automatically collected from the consumer’s chosen method of payment – one installment at purchase and three further payments every two weeks. The plan features no upfront costs or interest and is offered online within the merchant’s existing checkout – ensuring the purchase journey is frictionless with no redirects to other sites.

The cost of fraud rises 8.1 percent, year over year, for U.S. lenders, according to LexisNexis Risk Solutions study (PR Newswire) Rated: AAA

Today, LexisNexis Risk Solutions, a part of RELX Group (NYSE: RELX), released its 2018 True Cost of Fraud study on lending. The 2018 study, which surveyed 186 risk and fraud executives at various lending institutions, including mortgage companies, auto lenders, non-bank personal loan issuers, non-bank credit card issuers and finance companies, highlights the continued rise of fraud costs for U.S. lenders. According to the LexisNexis Fraud Multiplier℠, for every dollar of fraud, lenders incur $3.05 in costs, compared to $2.82 in 2017, an 8.1 percent increase. Larger digital lenders, with at least $50 million in annual revenue, are hit hardest by fraud, incurring $3.37 in costs, which is up from $3.07 in 2017.

Other key findings from the study include:

  • 54 percent of risk and fraud executives at large digital lenders state that verification of customer identity is their largest challenge. This is especially true of verification through the online channel.
  • Lending firms that use a multi-layered solution approach experience a lower cost of fraud. Those who layer core + advanced identity authentication + advanced transaction / identity verification solutions have lower fraud costs than others, per fraud event ($2.63 for every $1 of fraud versus up to $3.47) and as a percent of annual revenues. They also tend to have a lower volume of false positives.
  • Large digital lenders with international transactions attribute nearly 40 percent of their fraud losses to their non-domestic business. Fraud that originates in Asia represents 57 percent of the total international fraud expenses for these lenders.
  • Large digital lenders are more likely to represent “best-in-class” thinking about the adoption of fraud mitigation solutions, as they face attacks that are more significant.

Small Businesses Need Their Bankers More Than They Realize (Nasdaq) Rated: A

It’s easy to see why entrepreneurs are bonding with alternative lenders. What’s not so easy to see is why they’re leaving bankers out of the loop. However, with renewed trust in each other, both institutions are finding mutual benefits. What’s more — the B and B called “Business and Bankers” is finding a renewed comeback.

Say you’re a small business owner feeling the squeeze. You could turn to a traditional bank that requires loan applicants to go through a rigorous review process for a 20 percent chance of approval. Or you could apply online with a peer-to-peer firm that approves more than 60 percent of applications and receive a decision in minutes.

MoneyLion Announces America’s Most Powerful and Rewarding Financial Membership (Business Wire) Rated: A

MoneyLion, the innovative financial platform offering consumers a better way to borrow, save, earn and invest, today officially launched America’s most powerful and rewarding financial membership to help people take control of their finances and achieve their dreams.

In support of the most powerful financial membership, MoneyLion will be launching the Financial Heartbeat as well as a comprehensive suite of premium banking products to help everyday Americans better understand and engage with their finances.

Study Shows Student Debt Can Kill 75% of Millennials’ Average Net Worth (Magnify Money) Rated: A

As of 2018, outstanding student loan debt in the U.S. surpassed $1.48 trillion, almost one-and-a-half times what Americans owe on credit cards.

According to a MagnifyMoney analysis of Federal Reserve data, all this debt is hampering millennials’ chances for long-term financial success.

In fact, this study revealed that the average net worth of a millennial with student loans is only 25% of the net worth for a fellow millennial without them. What’s more, the data suggest student loan debt is preventing some millennials from saving for retirement or buying homes.

Key facts

Millennial households with student loan debt have…

  • An average net worth of $29,087, compared with $114,376 for student loan-free households.
  • 46% less in their savings and checking accounts (median balance of $5,500 vs $10,180 for those without student loans).
  • $21,160 in retirement savings versus an average of $39,905 for those with no student loan debt.

HSBC gets back into US consumer lending (Financial Times) Rated: A

HSBC is getting back into US consumer lending almost a decade after it was forced to write off $10.6bn for its last foray into that market.

The UK banking giant said on Monday that it is launching a digital lending platform for US customers in the first half of 2019. The platform will be powered by online lender Avant, which has already processed almost $5bn of loans for more than 600,000 customers.

Transparency, career development and — a puppy button? Here’s how OppLoans shapes its culture (Built in Chicago) Rated: A

OppLoans CEO Jared Kaplan likes to stress that a company can’t responsibly serve its customers without creating an inclusive atmosphere for its employees first.

That’s why OppLoans promotes from within and supports career development with ongoing education initiatives. We spoke with Kaplan and two other leaders at the company to learn more about what they do to ensure their team feels truly valued.

How would you describe your leadership style?

My leadership style follows a few key principles: rule by motivation, not fear; drive a high-performing culture and reward the top performers; and enable ultimate transparency. If employees are excited to come to work, see clear development paths when they perform and understand the good and bad of the business, I’ve created a great place to work.

We also ensure a workplace where everyone is encouraged to speak their minds when they see opportunities to improve the business.

Hundy Launches Mobile App Turning High Cost Payday Loans Into Low Cost Friends & Family Loans (Hundy Email) Rated: A

Hundy, a peer-to-peer micro-lender that empowers the creditworthy to benefit from their good character, announced today at Money 20/20 that it has released the latest update to its lending platform enabling friend-to-friend lending for a low 1% fee. Now, even borrowers who don’t pass a credit check, will be able to request a loan from a friend or family member utilizing all the tools of the platform including signed loan documents, SMS and email reminders, and automated payment scheduling. Hundy was designed to foster community around a marketplace of borrowers and lenders whose participants benefit from transparent terms, wide availability and low prices.

Gary Beasley of Roofstock (Lend Academy) Rated: A

Investing in real estate has been around for centuries but it is only in the past few years that it has become possible to do this remotely and at scale. While institutional investors have had lots of options individual investors have been limited, for the most part, to buying homes in their local area.

Our next guest on the Lend Academy Podcast is Gary Beasley, the CEO and co-founder of Roofstock. Gary and his team have created the first online platform for investing in single family homes across the US. They help investors select the homes, obtain financing as well as find tenants and property managers.

OCC still ready to grant special fintech charters despite state lawsuits (Lexology) Rated: B

The OCC is still moving forward with plans to grant Special Purpose National Bank charters to qualifying non-depository financial technology firms, notwithstanding a lawsuit challenging the move from New York state regulators and the threat of additional litigation. In response to a question following her speech at the October 9 Online Lending Policy Institute conference, Grovetta Gardineer, OCC’s senior deputy comptroller for compliance and community affairs, said the OCC will accept applications from fintech companies seeking the SPNB charter and intends to grant charters to applicants meeting the criteria. As reported in the October 8 edition of Bank Regulatory News and Trends, the New York State Department of Financial Services filed suit against the OCC, challenging the federal agency’s authority to grant the charters. The Conference of State Bank Supervisors also signaled its intention to file suit against OCC over the charters.

Princeton Alternative Income Fund’s Independent Restructuring Officer Rejected by Ranger Direct Lending (PR Newswire) Rated: B

Princeton Alternative Income Fund’s (PAIF) latest attempt to resolve its bankruptcy dispute by appointing an independent restructuring officer was rejected by Ranger Direct Lending (RDL.L)(RDLZ:LN) last week.

The fund proposed hiring respected former United States Bankruptcy Judge Donald H. Steckroth as an independent officer to oversee the fund’s restructuring to protect all its investors. The executives at Ranger had demanded the appointment of an independent officer earlier in the bankruptcy process only to reject it this week.

CrowdOut Capital Continues Expansion With New Hires (Business Wire) Rated: B

CrowdOut Capital LLC, a pioneer in non-bank private lending for growing middle market companies, today announced two new additions to its management team, Christina Gustavson and Darlene Esquivel.

Gustavson will be CrowdOut’s first controller. She brings a strong accounting background having worked as a senior accountant at C3 Entertainment and at RGM Advisors, an Austin-based quantitative trading firm. A licensed CPA, Gustavson earned a Bachelor of Science in Accounting from Texas State University.

United Kingdom

Funding Circle Q3 2018 Update (Proactive Investors) Rated: AAA

Funding Circle Holdings plc (“Funding Circle” or the “Company”), the leading small and medium enterprise (“SME”) loans platform in the UK, US, Germany and the Netherlands, today announces updates to its statistics pages for the three months ending 30 September 2018 (the “Quarter”) and selected highlights from the quarter.

The data by country included in this announcement is also available on the Company’s website at corporate.fundingcircle.com/investors/loan-performance-statistics.

Source: Proactive Investors

UK peer-to-peer lender asks regulator for help (Financial Times) Rated: AAA

A British peer-to-peer property lender has taken the unusual step of appealing to its regulator for help after one of its biggest borrowers threatened to sue the company and many of its investors.

Retail investors in Lendy are already facing tens of millions of pounds in potential losses after almost two-thirds of borrowers failed to repay their loans on time, according to a Financial Times analysis of its loanbook.

The developments threaten to trigger the first big crisis in Europe’s rapidly expanding peer-to-peer industry, at a time when the sector is fighting to convince regulators it does not need stricter regulation.

Peer-to-peer lending growing in popularity (Computer Weekly) Rated: A

P2P lending is becoming a significant alternative source of financing for SMEs in the UK. According to Entrenching Innovation – The 4th UK alternative Finance Industry Report, published in December 2017, P2P business lending grew from £21m in 2011 to £1.23bn in 2016, generating £3.14bn over the six years. The report noted that the annual growth rate in volume from 2015 to 2016 was 40%.

The report cited data from the British Banking Association that revealed P2P business lending equated to 15% of new small businesses loans. More than a fifth of borrowers had a turnover of less than £500,000 and 23% were in the £500,000 to £1m turnover bracket. It also found that lenders were biased towards localised funding. This diversity of lending across the UK suggested that P2P business lending could become “a suitable solution to systemic geographic biases that exist in traditional and bank SME lending”.

The UK extends its lead as Europe’s established tech unicorn capital (City AM) Rated: A

London has cemented its standing as the capital of Europe’s billion-dollar technology startups, as surrounding cities help to push the UK forward while its companies expand internationally.

New figures released today show the UK has now created 60 so-called unicorn startups – companies with a valuation of $1bn (£769.6m) or more – since 1990, according to research prepared for Tech Nation and the government’s Digital Economy Council by Dealroom.

London houses 36 of those UK startups, representing more than a fifth of all unicorns in Europe at a total valuation of $132bn. In comparison, Berlin holds the second biggest city spot with just eight unicorn startups, worth $32bn.

New partnership aims to encourage growth in P2P lending market (Introducer Today) Rated: A

Landbay has chosen Oracle NetSuite to create a more accessible buy-to-let mortgage marketplace for investors, borrowers and brokers.

Through NetSuite, Landbay will be able to process loan applications ten times faster than other lenders and enable its staff to make swifter decisions around mortgage applications and investor sign ups.

Founded in 2014, Landbay offers individual investors direct access to the lucrative mortgage lending market and offers landlords competitively priced buy-to-let mortgages, with plans to lend £1 billion to UK landlords by 2020.

ACORN machine rebrands to OakNorth Analytical Intelligence (Fintech Finance) Rated: B

OakNorth Holdings Ltd today announces the launch of a new corporate brand identity, logo and website. Its fintech platform, ACORN machine, will now be known as OakNorth Analytical Intelligence (ON AI) and we have a new domain (www.oaknorth.ai).

Rishi Khosla, co-founder of OakNorth Holdings said: “Since our founding, our mission has been to enable small and medium-sized businesses obtain the debt finance they need to grow. Our fintech platform, which we developed to address this problem, is being used by a number of leading banks globally, and by us in the UK.”

China

Pintec Technology Aims For $ 41 Million IPO (Seeking Alpha) Rated: AAA

Pintec Technology Holdings (PT) intends to raise $41 million in an IPO from the sale of ADSs representing underlying Class A shares, according to an amended registration statement.

The company provides a range of point-of-sale and related financial services and solutions to retailers and their customers.

PT appears to be transitioning its business to more diversified revenue streams, and it faces significant regulatory uncertainties and potentially harmful trade war effects that may not be transitory.

Peer-to-Peer Lending in China May Be Going Extinct (Barrons) Rated: A

China’s peer-to-peer lending system may effectively vanish in the next year.

European Union

Lithuanian P2P Lender NEO Finance Now Seeking €200,000 Through Seedrs Funding Round (Crowdfund Insider) Rated: AAA

NEO Finance, a Lithuania-based peer-to-peer lending platform, is now seeking €200,000 through UK’s equity crowdfunding platform, Seedrs.

NEO Finance also reported it is the first P2P platform in Lithuania to have reached constant €1 million monthly issues.

The lender also revealed its current stats are:

  • 5400 active lenders
  • 47,000  registered borrowers
  • €21.7 million in loans financed
  • 2017 revenue grew by 395% to €479,000
Australia

MBIE strongly opposed to the introduction of a comprehensive creditor licensing regime as part of government’s loan shark crackdown (Interest) Rated: AAA

A Ministry of Business, Innovation & Employment assessment that introducing a comprehensive creditor licensing regime as part of the Government’s crackdown on loan sharks would be worse than the status quo doesn’t appear to be based on much evidence.

The recent announcement from Commerce and Consumer Affairs Minister Kris Faafoi included plans to introduce a “fit and proper person” test for lenders.

This means the fit and proper person test was chosen over two other options floated in June’s Ministry of Business, Innovation & Employment (MBIE) discussion paper aimed at increasing lender registration requirements. The other two options were expanded powers to deregister lenders and ban directors from future involvement in the credit industry, and introducing a comprehensive creditor licensing system.

India

Fintech non-performing loans under control, financial authority says (The Jakarta Post) Rated: AAA

The Financial Services Authority (OJK) said the non-performing loans (NPL) rate among financial technology (fintech) firms that use peer-to-peer lending (P2P) hovered around 1 percent monthly, safely below the 2 percent maximal set by the OJK.

“The NPL rate can go as low as 0.9, then rise as high as 1.3 then go down again,” said OJK fintech licensing and supervision director Hendrikus Passagi on Sunday as reported by kompas.com.

Serial entrepreneur Satyen Kothari’s Cube Wealth raises $ 2M in Series A funding (Your Story) Rated: A

Wealth management startup Cube Wealth announced on Monday that it has raised Rs 14 crore (about $2 million) in equity funding from Singapore-based venture fund Beenext, Japan-based Asuka Holding and 500 Startups.

The company said that it will use these funds for additional asset partners, and to develop a network of premium sales and marketing partners across different countries including Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Kolkata and Pune.

Cube Wealth also plans to expand its presence across Europe and Japan, as it is looking to target non-resident Indians from these markets.

Pay for surgery via a cheaper P2P loan (Times of India) Rated: A

If you need a loan for a medical emergency like a surgery, it might help to turn to your peers rather than institution rather than institutions. Peer-to-peer (P2P) lending platforms say they have seen lenders willing to offer interest rates between 8% and 12% for medical emergencies on their platforms. On the contrary, if you try to raise funds as a personal loan from banks, the interest rate is likely to be between 13% and 17%. P2P technology platforms bring borrowers and lenders together, and most offer a variety of  of loans, including personal loans, vehicle loans, education loans and — in some cases — even home loans. Most lenders tend to be individuals too.

P2P players like Faircent, LenDenClub, i2iFunding and LoanTap say they also process medical loans faster.

Asia

Online alternative lending goes mainstream (Opalesque) Rated: AAA

While alternative lending is currently gaining traction among borrowers, it’s also becoming a formidable asset class in its own right, with the U.S. market now accounting for an estimated $50 billion of annual origination.

Born out of peer-to-peer lending, online alternative lending has gone mainstream, presenting new opportunities for small businesses, consumers and investors.

According to Morgan Stanley Investment Management’s study, what began as “peer-to-peer” marketplaces bringing together borrowers and lenders has evolved considerably in recent years.

Alternative-lending platforms now span many categories, including unsecured consumer, small-business and other forms of specialty financing, it said.

Africa

Local fintech start-ups bag R16m in funding (IT Web) Rated: AAA

Prospa, a mobile savings  for low-income earners, and Nisa Finance, an invoice financing platform, are among the eight local fintech start-ups awarded a total of R16 million in funding by AlphaCode.

AlphaCode is an incubation, acceleration and investment vehicle for early-stage financial  businesses, powered by Rand Merchant Investment (RMI).

The AlphaCode Incubate initiative, in partnership with Merrill Lynch SA and Royal Bafokeng Holdings, identifies South African financial services entrepreneurs with extraordinary ideas and businesses that could impact the financial services industry.

More than 200 start-ups applied to participate; of these, 16 made it to the final pitch evening and eight recipients were selected.

Authors:

George Popescu
Allen Taylor

Monday July 23 2018, Daily News Digest

securitization

News Comments Today’s main news: OnDeck completes two international credit facilities. Elevate launches prime credit card for non-prime customers. RateSetter backtracks on Rolling Market rate changes. China’s P2P lender are falling like dominoes. Banco BNI Europa invests in US consumer loans. Today’s main analysis: Deloitte’s survey on fintech lenders. Today’s thought-provoking articles: An inside look at SoFi-Promontory Interfinancial Network […]

securitization

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International

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United States

Elevate launches prime credit card for non-prime consumers (Bankless Times) Rated: AAA

Elevate and Capital Community Bank of Utah announced the launch of Today Card powered by Mastercard. As the first non-prime credit card with a full suite of prime features, Today Card will be issued by Capital Community Bank of Utah and will specifically help expand access to credit for members of the New Middle Class, the nearly 160 million non-prime Americans who are too often overlooked by mainstream financial institutions.

An Inside Look at Bank/Fintech Partnerships: Promontory Interfinancial Network and SoFi (Lend Academy) Rated: AAA

The recent surge in financial innovation has caused many community banks to rethink how they are serving their customers and what they can do to improve that experience. I recently spoke with two community banks about their decision to buy SoFi loans using Promontory Interfinancial Network’s service.

I spoke with Brian Plum, CEO of Blue Ridge Bank, which is a Virginia based community bank with mortgage offices in North Carolina, and Nicole Austin, Chief Lending Officer of Pioneer Bank, which is a New Mexico-based community bank.

Both banks had experience in looking at fintech partnerships before moving ahead with their decision on the SoFi program. They both said that as lending and banking changed, they needed to better understand how new technology could help their businesses.

Lowest Jobless Claims since 1969, Strong Bank and Card Issuer Earnings (PeerIQ), Rated: AAA

Blackstone is launching a $10 Bn direct lending fund focused on middle-market corporate credit opportunities. The search for yield has pushed investors into higher-yielding middle-market lending, with direct lending funds raised $54 Bn in 2017. Consumer, small-business and middle-market lending have been a consistent theme among investors starved for yield by low global interest rates.

Deloitte’s Survey on Fintech Lenders

The main take-aways from the study:

1. 7% of respondents listed cost of funding as one of the top 3 concerns, with liquidity and an inability to diversify rounding out the top 3.

Source: Deloitte, PeerIQ

PeerIQ view: Securitization remains the cheapest source of large-scale financing. MPL bonds continue to go mainstream as credit spreads tighten vs comparable consumer credit issuers. Emerging issuers continue to take efforts to build a brand in the ABS markets via repeat issuance.

Source: Deloitte, PeerIQ

3. Investors remain interested in the online lending space with $11 Bn in equity capital expected to flow into the sector in 2018. The number of startups has decreased, suggesting a maturing market and some consolidation.

Why You Should Bank Without a Branch (US News) Rated: AAA

The first online banks hit the U.S. market more than 20 years ago, attracting customers with higher interest rates and lower fees. While some early innovators are no longer operating, others have evolved. Take ING Direct, for example, which was acquired by Capital One and transformed into Capital One 360 in 2012, or Ally Bank, which is one of the most dominant names in the online banking market.

Today, however, these banking institutions face competition from new direct banks as well as traditional banks that are looking to expand using the online-only model. For instance, Finn by Chase and Marcus by Goldman Sachs bring digital banking to areas in which the companies have no physical presence.

Long-Term Business Loans Available Today (LendEDU) Rated: A

Fortunately, some lenders offer long-term small business loans, which give borrowers the opportunity to repay the loan over a longer period of time (typically up to 25 years).

Long-term business loans certainly do exist but if you’re hoping to score one, you’ll need to have an established business (i.e., no startups or new businesses) and have good business credit.

There are a variety of lending institutions, both traditional and non-traditional, that offer long-term financing, so it’s always best to review all your options, including those offered by your chosen banking institution. However, there are a few lenders that consistently top the charts, and those that follow are known to offer competitive rates, flexible terms, quick access to funds, and positive customer feedback.

Compare Long-Term Business Loans

Loan Amounts

$5,000 – $300,000

$25,000 – $500,000

Term Lengths

Up to 60 months

Up to 60 months

APR Range

10% – 35.5%

4.99% – 26.99%

Walmart’s pay-advance app Even used by 200,000 employees (American Banker) Rated: A

Walmart’s experiment with offering Even.com’s money management and pay-advance app to employees appears to be off to a good start.

The retailer launched the app to employees in December. On Thursday, Walmart and its fintech partner announced that 200,000 Walmart employees are now using it. (The retailer employs 1.5 million people in the U.S.)

About 75% of associates use the app every week and 46% use it every day.

DFS Report Indicates Increased Level Of Online Lending In New York (Mondaq) Rated: A

The New York State Department of Financial Services (“DFS”) found that online marketplace lending has increased dramatically since 2015. In the newly published report, DFS analyzed responses from a “New York Marketplace Lending Survey” along with comments from relevant stakeholders.

Based on data from 2017, DFS found that:

  • the total number of loans increased approximately 118% and the total dollar amount of all loans increased approximately 42% as compared to 2015 levels;
  • many more individuals were being served in this market than small businesses;
  • lenders generally charge a variety of fees (e.g. origination fees, closing fees, processing fees, maintenance fees, transactional fees, and penalty fees), with origination fees being the most common;
  • delinquent loans (both to individuals and businesses) represent approximately 11% of the total number of loans outstanding as of the end of 2017; and
  • respondents used “internal models with various inputs provided by the applicant such as employment history, business history, bank statements and tax records” to determine whether a borrower qualifies for a loan.

LendKey, Gradifi Help U.S. Employers Offer a Student Loan Refinance Benefit to Employees (Business Wire) Rated: A

Gradifi today said it is now offering access to LendKey’s nationwide network of lenders through Gradifi Refi, a student refinance program for employers seeking to help their employees save money or reduce the monthly payment on their student loans.

Gradifi Refi is one of three employee benefit solutions from Gradifi that enable employers to positively impact their employees’ financial well-being. Gradifi’s SLP Plan (Student Loan PayDown) benefit helps employees pay off their student loans faster through employer-sponsored contributions to their student loan provider. The College SaveUp benefit helps employees save for their children’s education and avoid further student debt through employer contributions to an employee’s 529 college savings plan account.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2018 (Markets Insider) Rated: B

Mortgage Category

#1 Winner:
loanDepot, LLC

Personal Loans Category

#1 Winner:
LendingClub

Home Equity Loans Category

#1 Winner:
First MidWest

P2Bi partners with Amalgamated Bank (Bankless Times) Rated: B

P2Binvestor (P2Bi), a marketplace lending platform offering crowdsourced, asset-secured lines of credit to growing companies, today announced a partnership with Amalgamated Bank, a socially responsible bank based in New York.

The P2Bi bank partnership program gives growing businesses a way to quickly access capital while allowing banks to increase their addressable market and improve their conversion rates. This particular alliance will enable Amalgamated Bank to continue to help fund emerging socially responsible businesses.

Colonial Partners with Roostify for Superior Online Mortgage Experience (PR Newswire) Rated: B

Starting today, Roostify’s online, mobile-friendly application and loan collaboration tools will be available to all of Colonial retail mortgage branches and its Home Loan Center national call center.

United Kingdom

RateSetter backtracks on Rolling Market rate changes (Peer2Peer Finance) Rated: AAA

RATESETTER has reversed its decision to stop investors setting their own rate for capital reinvesting on its Rolling Market.

The peer-to-peer lender implemented an overhaulof its popular Rolling Market product on 6 June, no longer allowing investors to set their own rate on reinvested money.

In an email to customers, the lender said feedback demonstrated how much investors valued the option to set their own rate for capital reinvesting.

Some challenger banks are challenging (The Finanser) Rated: AAA

The UK’s challenger banks are busy getting on with it. They’ve got their licences, they’ve deployed their services, they’re partnering with third parties and creating marketplaces. Much of this was cited in a report by CBInsights, comparing the features of the five most notable new ones: Atom, Starling, Monzo, Revolut and Tandem.

N26 were also included, but is not a UK start-up and their report builds on the one I blogged about last month from Optima. The thing I took from the CBInsights report is the massive numbers of users that Revolut and Monzo have already gained. At that time, it was 1.5 million for Revolut and 500,000 for Monzo.

Starling marketplace grows with Growth Street addition (FinTech Futures) Rated: A

Growth Street will be the first SME finance provider on Starling Bank’s in-app marketplace, giving users access to services like pensions, insurance and loyalty schemes.

This partnership is Growth Street’s first marketplace integration, and represents the first live use of its third-party API. The firm is a P2P platform that matches investors’ funds with growing SMEs.

MarketInvoice looks to bolster its financial crime prevention (Peer2Peer Finance) Rated: A

MARKETINVOICE is looking to bolster its financial crime prevention with the appointment of dedicated anti-money laundering (AML) officer.

All regulated firms have to have someone in the business with responsibility for AML monitoring, with some choosing existing staff and others making it a dedicated role.

The peer-to-peer business finance platform is advertising for a AML/financial crime officer to sit within its legal unit.

The IFISA Phenomenon – The New Way to Invest (Dispatch Weekly) Rated: A

There are different types of ISAs including Cash ISAs and Stock & Shares ISAs but the Innovative Finance ISA (IFISA) is fast becoming the new trend in the ISA market.

Source: The Weekly Dispatch

Home loans turned us into a hot property, says Christian Faes, founder of lendinvest (The Sunday Times) Rated: A

Christian Faes could hardly have picked a worse time to get into mortgage lending. It was 2008, financial markets were in free fall and most people were more concerned about putting food on the table than buying a house.

That did not deter Faes, a former lawyer who had moved to London from Australia’s Gold Coast 10 years earlier. He co-founded Montello Bridging Finance in a “windowless serviced office” in the City and set about cold-calling potential investors. “The idea was really sound, but it wasn’t the best moment to be setting up a mortgage lending company,” said Faes, 41.

China/Hong Kong

China’s Peer-to-Peer Lenders Are Falling Like Dominoes as Panic Spreads (Bloomberg) Rated: AAA

The shakeout in China’s $192 billion peer-to-peer lending industry is accelerating at a rapid clip.

At least 118 platforms have failed this month through early Friday, according to Shanghai-based Yingcan Group, whose tally for July stood at 57 just three days ago. The number of failures, which includes platforms that have halted operations or come under police investigation, is already the highest in two years with more than a week left in the month.

China’s clampdown on financial risk has weighed on P2P platforms for the past two years, but the pressure has intensified in recent months after the country’s credit markets tightened and the banking regulator issued an unusual warning to savers that they should be prepared to lose all their money in high-yield products. While that has triggered bouts of panic among users of smaller P2P platforms, there’s little evidence that the turmoil has spread to more systemically important parts of China’s financial sector.
Source: Bloomberg

Chinese Investors Reel as Internet Lenders Close (Wall Street Journal) Rated: AAA

A string of Chinese internet lenders have shut their doors in recent weeks, stranding investors as the economy slows and regulators tighten controls over an unruly side of the fintech sector.

Across China, more than 200 internet-based fund managers since late June have either shut down, closed parts of their operations or are reeling from cash crunches, missing executives and other problems, according to industry tracker Wangdaizhijia.

The tide began to turn against the sector as an end-of-June deadline for new stringent registration regulations approached. With a slowing economy making it difficult for some companies to pay back loans, some lenders decided to shut down, analysts said. Investors, already souring on the sector, began pulling out funds, further pinching the lending platforms.

Source: Wall Street Journal

Distributed Credit Chain wants to use blockchain to prevent the next financial crash (Tech World) Rated: A

Figures from Bloomberg Economics based on data from the People’s Bank of China indicated that three major assets of shadow banking – trust lending, entrusted loans and banks’ acceptances – increased by $555 million in 2017. Entrusted loans, for example, are when businesses loan money to each other, using banks as intermediaries. Meaning that larger (state owned) companies may lend money to smaller companies and make a profit from the differences in interest.

Micro-lending is another phenomenon that has ballooned in recent years, with a proliferation of online lending or peer-to-peer lending platforms springing up. Outstanding debts on these sites increased by 256 percent between October 2015 and October 2017, topping 1.2 trillion yuan (over $179 million).

These issues have been acknowledged by the Chinese government, with China’s top banking regulator, Guo Shuqing, promising the shadow banking industry will be ‘dismantled’.

Shanghai vows to ramp up enforcement of P2P lending platform regulations (Global Times) Rated: A

The Shanghai municipal government has announced it will soon launch a campaign to enforce compliance of financial regulations on the city’s peer-to-peer (P2P) online lending platforms, according to a report by domestic website the Shanghai Observer, in a sign that local authorities will put order into China’s troubled fintech sector.

The Shanghai Office of the Leading Group for the Special Campaign against Internet Financial Risks said that it will  investigate the local online lending industry and severely punish those committing illegal fundraising and financial fraud, as well as fugitive owners. The authorities have reasserted their support of law-abiding firms in a bid to promote a more orderly internet finance industry.

In the last 50 days, up to 163 P2P lending platforms have essentially gone out of business, stopping cash withdrawals from customers, and many have seen their owners run away and declared fugitives,  chinanews.com reported.

Jim Rogers-backed ITF to miss August deadline for virtual bank licence in Hong Kong (South China Morning Post) Rated: B

ITF, a fintech company backed by US veteran investor Jim Rogers, plans to apply for a virtual bank licence in Hong Kong, but will not rush to meet the first application deadline on August 31.

The fintech firm would prefer to wait for more details about regulations, according to its adviser Ignious Yong.

European Union

Creditshelf raises €16.5m through landmark IPO (AltFI News) Rated: AAA

German mid-market lending platform Creditshelf has successfully closed its IPO, raising €16.5m at the fixed price €80.00 per share.

In the end, the company had no need of its €15m backstop order, provided by Hevella Capital GmbH & Co. KGaA, part of a group controlled by Rolf Elgeti. But Obotritia Capital KGaA, which is also part of the group, subscribed for an additional amount of €1.5m, underlining its support for the firm.

International

OnDeck Completes Two New International Credit Facilities (PR Newswire) Rated: AAA

OnDeck (NYSE:ONDK) announced today the closing of an AUD75 million asset-backed revolving credit facility with Credit Suisse, and the closing of a CAD50 million asset-backed revolving credit facility with Crédit Agricole, to finance OnDeck originations in Australia and Canada, respectively.

The new Credit Suisse facility will be used to refinance OnDeck Australia’s current loan book at a significantly lower cost, as well as to fund future originations. The Crédit Agricole facility is the first for OnDeck Canada and provides the business with access to CAD25 million of committed capacity and an additional CAD25 million of capacity available at the discretion of the lenders.  Both facilities are floating rate and have an initial weighted average interest rate of approximately 5.6%. The Credit Suisse facility and Crédit Agricole facility are scheduled to mature in June 2020 and June 2021, respectively.

Banco BNI Europa invests in US consumer loans via Fintex and Upgrade, Inc (Fintech Finance) Rated: AAA

European challenger bank Banco BNI Europa and Fintex have entered into a strategic partnership to invest in Upgrade’s consumer loans and expand access to affordable credit to consumers in the United States. Banco BNI Europa, which is active across Europe, now invests in US consumer loans through Upgrade, one of the fastest growing platforms in the US. This loan purchase programme was implemented by Fintex Capital, which issued a bond to Banco BNI Europa backed by the portfolio and Fintex acts as asset manager for the underlying loans.

As part of the agreement, Banco BNI Europa committed an initial sum of USD 30 million. Banco BNI Europa has already invested in US consumer loans originated on platforms like Lending Club and Prosper through a third-party fund.

How the Blockchain is Helping Redefine Business Financing (Equities) Rated: A

In fact, one report by CB Insights found that about 29 percent of startups failed because they ran out of working capital, which speaks volumes about the morbid state of business financing for startups and budding businesses.

Consequently, business financing has become one of the many areas of fintech that could benefit immensely from blockchain, the decentralized ledger that has been disrupting industries for over a decade.

Here are a few ways that showcase why blockchain could change the way enterprises access funding.

Credit Rating Firm Backs $ 8 Million Fundraise for Crypto Alternative (CoinDesk) Rated: A

A startup looking to build a credit scoring protocol on top of the recently-launched Ontology blockchain has raised $8 million in seed funding.POINTS, founded in 2017, said it drew funding from a mix of traditional venture capitalists including Danhua Capital and Ceyuan Ventures, a backer of OKCoin. Other participants in the seed round include the Ontology Foundation as well as Zhong Cheng Xin Credit Technology, China’s first nationwide credit rating agency.The new capital will be used to expand the company’s engineering team in an effort to speed up its development of blockchain-based know-your-customer (KYC) and credit scoring applications. The idea is to build its protocol on top of a decentralized network and empower apps that can eliminate repetitive processes around identity.

Bitcoin Holds the Line, Salt Slumps, Dash Drives Onward (Blockonomi) Rated: A

The crypto lending platform Salt Lending just got a dose of some strange news when the company suddenly released an announcement stating the appointing of what they call an interim CEO. The former CEO ,who was essentially the face of the company and one of the cofounders, Shawn Owen, appears to have left the company.

But the circumstances under which he left are unclear.

Salt tokens (that run on Ethereum) have been on a strong downward slide for the last few months, and are currently sitting at just over one dollar each. The tokens entered the market at the three dollar range and so are down by more than 66% post ICO. It is also unclear as to whether or not Salt Lending is still operating or giving out new crypto-to-cash loans.

RAD Lending: The Future of Crypto-Assets Backed Lending (News BTC) Rated: A

The growing user base of cryptocurrency and related products has skyrocketed, with the highest number originating from countries like New Zealand, Denmark and Belgium. The community growth is expected to follow the upward trajectory to hit 100 million users soon.

RAD Lending platform might just be the push the market needs to fill the gap between crypto holdings and real-life fiat spending. The P2P lending platform from RAD will act as a matchmaker between loan requests and funding proposals.

India

Digital lending to become $ 1 tn opportunity in India over next 5 years (Money Control) Rated: AAA

A Boston Consulting Group (BCG) report suggests that digital lending in India will become a $1 trillion opportunity in the next five years.

According to the report, four fundamental drivers that pushed the space are internet giants that changed the way consumers behave, rapid growth in technological advances including the proliferation of smartphones and consequent increase in the consumption of data. Also the digital market lending prospered under supportive regulatory conditions across the globe.

Funding in Indian startups this week (16 July-21 July) (EnTrackr) Rated: AAA

This week 16 startups received funding, of which 10 received a total sum of about $228.5 million. Among them, BookMyShow raised the highest investment of $100 million, followed by Cars24 which raised about $50 million.

Meanwhile, funding for six of the total funded startups remained undisclosed.

Source: EnTrackr

Lending platform LenDenClub gets NBFC-P2P certification from RBI (MediaNama) Rated: A

P2P lending platform LenDenClub has received its NBFC-P2P certification from the Reserve Bank of India (RBI), the Economic Times said. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

RBI’s registry will help solve problem of credit shortage: iSpirt’s Sharad Sharma (Livemint) Rated: A

Out of the 8.8 million businesses in India that file taxes, at least 6.6 million businesses do not have access to the credit sources such as banks, non-banking financial companies (NBFCs), and upcoming online lenders. This is a problematic situation for both lenders, and for businesses (especially small businesses), looking for capital loans.

The problem of credit shortage for small businesses is daunting, but the regulators in India have already set things in motion to address the issue. According to Sharma, the revamped goods and services tax (GST) structure, the Reserve Bank of India’s (RBI’s) new public credit registry (PCR) initiative, and UPI (Unified Payments Interface) 2.0 will solve the shortage of data for lenders.

Here’s a look at some brands that are making India artificially intelligent (Business Standard) Rated: A

The rise of promising tech-startups has been successful in ushering India into a dawn of technology.

While AI is believed to revolutionize the current modus operandi and bring about fast-paced automation and efficiencies, it still remains an abstract topic, palled by a lack of nuanced understanding amongst the general public.

Here are some enterprises that are integrating AI in everyday tasks:

Faircent: Making Lending more conducive with AI & Machine Learning

If you think AI is only limited to the IT industry, think once again. Faircent, India’s largest P2P (peer-to-peer) lending platform, has been utilizing the technology to provide users with money during your financial crunch. Doing away with methodologies of conventional lenders (which can often prevent a creditworthy applicant from securing a loan,) the platform leverages Machine Learning and Artificial Intelligence to enhance the effectiveness of its credit profiling and assessment.

Ebix acquires enterprise lending software company Indus for $ 29 M (Your Story) Rated: A

Global on-demand software provider Ebix Inc on Friday announced the acquisition of Indus Software Technologies Pvt. Ltd. (Indus), a global provider of enterprise lending software solutions to financial institutions, captive auto finance and telecom companies, for approximately $29 million, including $5 million of contingent earn-out.

Further to this acquisition, key Indus business executives will become a part of the combined EbixCash senior leadership. The acquisition will increase the employee strength of Ebix in India by 900, to approximately 7,200 employees.

Canada

Fintech OnDeck Canada lines up $ 50-million credit facility from Crédit Agricole (Financial Post) Rated: AAA

OnDeck Canada, the local online arm of the U.S. headquartered OnDeck now has a $50-million asset-backed credit facility, provided by Crédit Agricole, to fund its loans. According to a recent ranking of assets, the French bank is the world’s ninth largest. Its Montreal office offers commercial and investment banking services.This is the first time that OnDeck Canada — which has originated $180 million in small business loans since 2014, all made using a “wide spectrum of data, technology and analytics” — has arranged funding from a source other than its parent.There are two parts to the three-year facility that will finance loan originations created by OnDeck Canada: a $25-million committed facility and an extra $25 million that can be drawn if needed. OnDeck provides term loans up to $250,000 and revolving lines of credit of up to $50,000 to small business.

Authors:

George Popescu
Allen Taylor

Loan Amounts

$5,000 – $300,000

$25,000 – $500,000

Term Lengths

Up to 60 months

Up to 60 months

APR Range

10% – 35.5%

4.99% – 26.99%

on LendingClub’s secure website

on Funding Circle’s secure website

Friday July 6 2018, Daily News Digest

p2p loan korea

News Comments Today’s main news: PayPal, Synchrony close consumer credit portfolio deal. Personal loans hit record high. Funding Circle updates projected returns. Furongbao gets $121M investment. Creditshelf to IPO on Frankfurt Stock Exchange. Today’s main analysis: Swindlers in Korea tarnish P2P lending. Today’s thought-provoking articles: Why Kabbage isn’t ready to go public. Why a lack of local payment options hurts […]

p2p loan korea

News Comments

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United Kingdom

China

International

India

Others

News Summary

United States

PayPal closes sale of consumer credit portfolio (FinExtra) Rated: AAA

PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the closing of its consumer credit receivables transaction with Synchrony (NYSE: SYF).

Under the terms of the transaction, and related transactions with unaffiliated third parties, Synchrony acquired $7.6 billion in receivables, including PayPal’s U.S. consumer credit receivables portfolio, which totaled $6.8 billion at the time of closing, and approximately $0.8 billion in participation interests in receivables held by unaffiliated third parties. PayPal received approximately $6.9 billion in total consideration at closing.

Why This Ambitious Startup Isn’t Going Public–Yet (INC) Rated: AAA

Petralia was discussing her Atlanta-based company’s ambitious expansion plans this year, which include buying other startups and rolling out new payments products. But she was also joking about what’s shiny and new in the world of financial technology startups: everything and anything involving cryptocurrency, relating to the blockchain, or connected to artificial intelligence. Such startups were heavy on the ground in mid-June, when I interviewed Petralia and her co-founder, Rob Frohwein, at the annual MoneyConf event in Dublin, a 5,000-person gathering of entrepreneurs and established companies in every corner of the fintech ecosystem.

Lending remains a large draw for fintech-focused venture capitalists, who put $900 million into the sector in the first quarter of 2018, according to an April CB Insights report. However, venture capitalists are “on pace for a new low” of money spent on lending startups, even while overall global fintech investment is “on pace for a new high,” the report found. Instead, investors are increasingly willing to bet on startups working in wealth management or robo-advising, insurance and blockchain or cryptocurrency.

Karrot Personal Loans Got Chopped: Here’s Where to Borrow Instead (Student Loan Hero) Rated: A

In 2014, Kabbage introduced Karrot, a program that provided unsecured personal loans up to $35,000.

But Kabbage recently stopped offering Karrot personal loans to grow its other offerings. Customers who already borrowed Karrot personal loans can continue making payments online. But those in need of a personal loan will have to look elsewhere.

Business Loan Company Receives Highest Award from TopConsumerReviews.com (Markets Insider) Rated: B

TopConsumerReviews.com recently awarded their best-in-class 5 star rating to OnDeck, a leader among online lenders who facilitate Business Loans.

SoFi Elects Peggy Alford & Magdalena Yeşil to Board of Directors (Crowdfund Insider) Rated: B

On Tuesday, SoFi announced the election of Peggy Alford and Magdalena Yeşil to its Board of Directors. According to the online lender, Alford is the Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative. Previously she held positions at PayPal as CFO of Americas, Global Credit and Global Products and COO in the Asia Pacific region. Most recently, she served as the head of Human Resources-People Operations as well as the head of Cross-Border Trade for PayPal.

Personal Loans Surge to a Record High (Bloomberg) Rated: AAA

Personal loans surged to a record this year and are the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion. Outstanding balances rose about 18 percent in the first quarter to $120 billion. Fintech companies originated 36 percent of total personal loans in 2017 compared with less than 1 percent in 2010, Chicago-based TransUnion said.

Web-based firms like LendingClub, Prosper Marketplace Inc. and closely held Social Finance Inc. are driving the expansion of personal loans. LendingClub said in a filing that personal-loan originations in the first quarter soared 20 percent from a year earlier to $2.1 billion.

Why DC Developers Heart Crowdfunding (Commercial Observer) Rated: A

Small Change, was founded by Eve Picker, an architect and urban designer, with the idea of connecting investors with real estate professionals. The company’s first offering was for a tiny house in Pittsburgh, Penn in 2015. (Picker and Small Change could not provide comment due to federal law. Regulation Crowdfunding requires that all information about an offering reside on the Small Change portal and nowhere else.)

While Small Change is one of the newer platforms to the scene, other online real estate crowdfunding platforms, like Fundrise and Patch of Land, have been around for years.

19 State Attorneys General Unite Against “Madden Fix” Bills (OLPI) Rated: A

The Attorneys General of 19 states and the District of Columbia (the “AGs”) on June 27, 2018, publicly opposed to previously proposed pieces of legislation pending in Congress often referred to as the “Madden fix” bills.   Namely, the AGs made their views against HR 3299 (“Protecting Consumers’ Access to Credit Act of 2017”) and HR 4439 (“Modernizing Credit Opportunities Act”) in a letter (“AG Letter”) to Majority Leader McConnell, Minority Leader Schumer, Chairman Crapo, and Ranking Member Brown.  A copy of the letter can be found here: AG Letter.  HR 3299 passed the U.S. House of Representatives and is pending in the Senate and revises various laws to state that a loan valid when made does not become invalid when it is sold, transferred or assigned.  HR 4439 pending in a House committee would explicitly state that a bank’s being named lender is not affected by any arrangement is has with a service provider.

Nelnet Files Application for Industrial Bank Charter (Nelnet) Rated: A

Nelnet (NYSE: NNI) today announced it has filed an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Nelnet Bank, a Utah-chartered industrial bank. If the charter is granted, Nelnet Bank would operate as an internet bank franchise with a home office in Salt Lake City. Nelnet Bank would be a separate subsidiary of Nelnet, and the industrial bank charter would allow the company to maintain its other diversified business offerings.

Nelnet has hired Andrea Moss to lead the application process, and then Nelnet Bank if the charter is granted.

PayNet Sees Small Business Lending Reaching New Heights (Business Wire) Rated: A

The Thomson Reuters / PayNet Small Business Lending Index (SBLI) jumped 9.4 points to 152.7 in May and is up more than 10% on the year. The SBLI 3-month moving average also rose in May and is 11% above its year-ago level.

Of the ten largest states, growth was led by Texas (+12.9% Y/Y) and North Carolina (+12.3% Y/Y), which both climbed to record highs. The majority of industries also experienced growth in May, led by Transportation & Warehousing (+15.0% Y/Y), Mining (+9.4% Y/Y), and Construction (+7.5% Y/Y). Notably, all four of the industries that declined on a year-over-year basis are in the service sector, including Information (-9.3% Y/Y) and Accommodation & Food Services (-8.1% Y/Y). However, Health Care posted its third consecutive monthly gain (+4.1% Y/Y) after a steady two-year decline.

The PayNet Small Business Default Index (SBDFI) fell two basis points to 1.82% in May and is down seven basis points compared to a year ago, its sharpest annual decline since late 2014. On an annual basis, more than half of the major industries saw defaults fall in May, led by Mining (-183bp Y/Y), Transportation & Warehousing (-133bp Y/Y), and Professional Services (-32bp Y/Y). Regionally, defaults fell in eight of the ten largest states on a monthly basis, but were up in half of the largest states relative to year-ago levels. Notably, Texas (-36bp Y/Y) has seen defaults fall by double-digits in each of the last nine months.

United Kingdom

Funding Circle updates projected returns (Bridging & Commercial) Rated: AAA

Following the latest review, the P2P platform has updated the projected returns it displays for each lending option and will now show these returns as a range.

Projected returns are the annual returns that a diversified investor could earn after fees and bad debt, but before tax.

The projected returns for its balanced and conservative lending options are now:

• balanced: 6-7%
• conservative: 5-5.5%

P2P platform Lendy tops £400m funding (Mortgage Finance Gazette) Rated: A

Lendy’s latest milestone comes as some banks pare back their lending and more property developers seek out alternative finance options.

The firm reached £300 million in lending in April last year and has funded hundreds of bridging and commercial property development loans since its launch in 2012. These include residential developments, commercial property, and conversions.

The £400 million has been invested by over 21,500 investors who have earned more than £40 million in interest so far.

Money saving product recommendations “biggest incentive” to use Open Banking (Credit Strategy) Rated: A

Six months into Open Banking, two fifths of customers willing to share their bank transaction data with a new lender would do so if it provided product recommendations which save them money.

That’s according to research carried out by Equifax. Other motivations to share transaction data through Open Banking include the ability to easily compare products from different financial institutions (36 percent), being offered tailored incentives for switching to a new provider (34 percent), and a streamlined process when applying for mortgages (28 percent) and loans (25 percent).

Record first half for Scottish alternative lender (Business Insider) Rated: A

LendingCrowd , the Scottish alternative lending specialist, has reported record first half lending of almost £14m in 2018 and has upped its proportion of loans to Scotland-based businesses, helped by its £2.75m partnership deal with Scottish Enterprise’s investment arm.

After three consecutive months of record lending in April, May and June, the Edinburgh-based company loaned £13.9m in the first six months of the year, compared to £4.9m for the same period last year. Activity during the second quarter also reached an all-time high, with lending of £8.8m – a 225 per cent increase on the £2.7m delivered in the second quarter of 2017.

LendInvest notches another year of profit (AltFi News) Rated: A

Its loan originations came close to doubling, up 91 per cent to £536m. Revenues were also up, increasing to £53m for the year. Originations look set for further growth too, with lending capital growth of 94 per cent to £791m.

However, despite a surge in these key metrics, profits remain relatively modest at just £1.9m before tax for the period, up from £0.1m before tax the previous year, according to the firm’s gross management accounts. By IFRS standards, LendInvest recorded a similar £1.8m in profit last year, but made a loss of £1m in the preceding year (ending 31 March 2017).

Landbay co-founder looks to shake up property market (Peer2Peer Finance) Rated: A

GRAY Stern (pictured), the co-founder of buy-to-let peer-to-peer lender Landbay, is aiming to shake up the UK property market with his new company.

The investment portal, called Dot, enables amateur landlords to invest in UK and US properties that it has already sourced via estate agents and property portals. The properties come with a pre-approved mortgage, enabling anyone with a 30 per cent deposit to buy them instantly.

As part of its package, Dot provides all the services a landlord would need, including insurance, tax compliance, lettings and management, thereby taking some of the hassle out of the process.

Who is guiding the Big Three? (Peer2Peer Finance) Rated: A

The ‘big three’ P2P lenders – Zopa, Funding Circle and RateSetter – have often led the way in this process.

And as these firms have evolved, their board members – both executives and non-executive directors (NEDs) – have reflected these changes.

Here we look at the make-up of these boards and analyse the expertise and experience of the people who are guiding the big three.

Orca Cofounder Jordan Stodart Shares Update and Quiz Info (Crowdfund Insider) Rated: A

In preparation of its Lending Challenge, the P2P investment aggregation provider Orca partnered with UK P2P Lending Knowledge Leaderboard and posted a quiz targeting investors and industry players to see how much people know about the P2P knowledge. Neither questions nor answers will be posted here to keep the quiz fair.

Orca has teamed up with Peer2Peer Finance News; all winners will receive a print subscription to the magazine. The top 3 quiz placers will win:

  • 1st place: £100 John Lewis voucher, P2P Finance News magazine subscription & Trophy
  • 2nd place: Amazon Echo Dot and P2P Finance News magazine subscription & Silver medal
  • 3rd place: Regency Hamper and P2P Finance News magazine subscription & Bronze medal
China

Chinese P2P Lending Platform Furongbao Receives $ 121M Strategic Investment (China Money Network) Rated: AAA

Chinese peer-to-peer lending platform Furongbao announced that it has received a RMB800 million (US$120.6 million) series B round, strategic investment from a controlling shareholder of Wanjiale Gas Appliances, a Chinese household appliances manufacturer.

Chinese P2P platform fails to pay back $ 15m (Global Times) Rated: A

A Hangzhou-based peer-to-peer (P2P) lending platform  has failed to pay around 100 million yuan ($15 million) back to its investors, media reports said on Thursday.

An investor surnamed Zheng who is based in Hangzhou, East China’s Zhejiang Province, told the Global Times on Thursday that he had invested about 50,000 yuan on niubangold.com, but now he cannot withdraw money from the platform. “[Investors] have reported the case to local police,” Zheng said.

According to a statement posted on niubangold.com late Tuesday, projects worth 98.5 million yuan are overdue.

DLA Piper Adds Beijing Partner From Shearman (The American Lawyer) Rated: B

DLA Piper has recruited capital markets partner Yang Ge in Beijing from Shearman & Sterling, where she was counsel.

Ge’s practice focuses on equity and debt securities offerings. During her time at Shearman, which she joined in 2011, she was involved in several Chinese companies’ initial public offerings in the U.S., including advising the underwriters on online lender LexinFintech Holdings Ltd.’s $124.2 million Nasdaq IPO earlier this year and online micro-lender China Rapid Finance Ltd.’s $60 million listing on the New York Stock Exchange last year.

European Union

Creditshelf Plans Initial Public Offering on Frankfurt Stock Exchange in Q3 (Crowdfund Insider) Rated: AAA

Creditshelf Aktiengesellschaft, a Germany based online lender, has announced its intent to do an initial public offering (IPO) on the Frankfurt Stock Exchange. The IPO is currently scheduled to take place for the third quarter of 2018. The offering is expected to be newly issued shares with a capital increase in the amount of around € 15-20 million. Creditshelf says that Hevella Capital GmbH & Co. KGaA (backed by Rolf Elgeti) has placed a backstop order of up to € 15 million if and to the extent the shares are not subscribed for by investors in the course of the offering.

Creditshelf is an online lender that targets the German marketplace providing access to capital for SMEs. The platform targets a larger ticket size than many other SME lenders with an average loan size of around €500,000 and €600,000 – and moving higher.

International

‘Dollars On The Floor’ — Why A Lack Of Local Payment Options Hurts Retailers (PYMNTS) Rated: AAA

As digital technology keeps bringing new efficiencies to transactions, and more consumers around the world turn to eCommerce for retail and other purchases, an accompanying trend is making life interesting for merchants and payment providers. Local payments options are increasing, resulting in a sector that promises to undergo more fragmentation in the coming years.

Scandinavian consumers have embraced Klarna and other pay-by-invoice services — for reasons not entirely understood by Booth and other analysts, it seems.

If a Chinese consumer trying to make an online purchase cannot do so through Alipay or WeChat Pay, that consumer is more likely to search for another merchant that takes that form of payment rather than, say, using their own UnionPay-branded payment card, Booth said.

Key Learnings at the Cambridge Centre for Alternative Finance 2018 Conference (Lend Academy) Rated: A

Greg Medcraft is the former head securities regulator in Australia and is now the Director of the Directorate for Financial and Enterprise Affairs of the OECD. He talked about trust and how trust in business is low today, particularly in finance. The power of the crowd is impacting trust where companies misdeeds are amplified and public opinion can turn against a company quite quickly. One of the antidotes to this is distributed ledger technology that can create networks with more trust, transparency and traceability.

Probably the country with the biggest success story when it comes to financial inclusion is Kenya. While I have heard the story of M-Pesa before I have never heard it from the person that was in charge of overseeing the economy as it was transforming Kenya. Professor Njuguna Ndung’u was the Governor of the Central Bank of Kenya from 2007 to 2015 during which time M-Pesa went from a curiosity to having half of the country’s GDP flowing through its platform. The introduction of such a system was a major challenge for central bankers as they worried about KYC concerns and financial instability.

India

PolicyBazaar.com Becomes First Indian Unicorn Foraying into Blockchain (BW Disrupt) Rated: AAA

Blockchain has been the talk of town primarily because of bitcoin and other crypto tokens’ parabolic rise in price and then the recent downfall. However the underlying technology, blockchain, rarely gets its fair share of limelight. But when a billion-dollar fintech startup plans a foray in this tech, it deserves attention.

In a chat with their CTO and CPO, Ashish Gupta, he revealed their plans to implement blockchain technology at PolicyBazaar.com, his outlook on the technology as well as how it could affect the fintech space in general.

Artha Venture Fund makes first close at Rs 40 crore (The Economic Times) Rated: A

Early stage venture capital firm Artha Venture Fund (AVF) has achieved the first close of its maiden fund having raised Rs 40 crore. Artha Venture Fund I, which received the approval of the Securities and Exchange Board of India in March this year, will have a corpus of Rs 200 crore along with a greenshoe option of Rs 100 crore.

The fund, which is structured as a Category I alternative investment fund, will invest in startups across seed, pre-series A and series-A levels of growth.

Lending platform BigWin Infotech gets NBFC-P2P certification from RBI (Media Nama) Rated: B

Fintech start-up, BigWin Infotech (PaisaDukan.com) has received its Certificate of Registration (CoR) from the Reserve Bank of India (RBI), paving the way for the launch of its Financial Platform – PaisaDukan.com, a release from the company said today.  Though the company received an in-principle approval from RBI to set up an NBFC Peer-to-Peer lending platform in May, the operations could only commence after the firm received a CoR from the central bank. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

P2P platform Monexo Fintech to raise $ 5 million in equity (The Economic Times) Rated: B

Armed with a licence from the banking regulator to operate an NBFC-cum-P2P lending platform, Monexo plans to invest in IT and infrastructure, which require continuous capital injection in the initial stages of any online marketplace.

The Mumbai-headquartered firm received the RBI licence last Friday.

Asia

Swindlers tarnish P2P loans’ reputation (Korea Joongang Daily) Rated: AAA

Korea’s peer-to-peer (P2P) lending market is turning out to be a Wild West of hucksters and frauds, and government regulations are nowhere in sight.

According to Crowd Institute, a research center that specializes in P2P financial markets, to date, about 3.65 trillion won ($3.2 billion) of P2P loans have been taken out in Korea, about five times the amount from two years ago.

Indonesia’s OVO platform to start peer-to-peer lending in Q4 – head (Nasdaq) Rated: B

Indonesian conglomerate Lippo Group’s payment platform OVO plans to start peer-to-peer lending in the fourth quarter of 2018, its head said on Thursday.

Authors:

George Popescu
Allen Taylor

Wednesday October 11 2017, Daily News Digest

alternative lending and payday lenders

News Comments Today’s main news: College Ave completes $161M securitization of private student loans.Marlette Funding prepares new deal.SoFi’s latest student loan securitization sees strong demand.Zopa closing in on completing the opening of new bank.Mintos exceeds 35K investors.JD Finance launches bank deposit product with yield rate up to 5%.SocietyOne hits $350M in total loan originations.Crisil withdraws […]

alternative lending and payday lenders

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

College Ave Secures Securitization at $ 161 million in Private Student Loans (The Student Loan Report), Rated: AAA

Only three years after its inception, a major student loan marketplace lender, College Ave Student Loans, announced the completion of its first securitization of private student loans. The $161 million transaction got an ”A” rating from DBRS and a ”BBB” rating from S&P according to College Ave. The sole underwriter of the deal completed earlier in the summer was Barclays.

Marlette Funding preps deal as industry heads for “critical quarter” (Global Capital), Rated: AAA

Online lender Marlette Funding is marketing a securitization this week, as the wider marketplace lending industry gears up for an important fourth quarter.

Goldman Sachs, Deutsche Bank and Citi are joint lead managers on the $312m deal, according to a source briefed on the matter. The deal is backed by unsecured consumer loans, which the company originates through Cross River Bank (CRB), and then repurchases before selling to third party loan ….

SoFi’s latest student loan securitization met with strong demand (American Banker), Rated: AAA

Credit rating agencies aren’t overly concerned about recent management changes at Social Finance, and it appears that investors feel the same way. The company’s latest student loan securitization attracted strong interest, and priced at levels similar to or better to its previous transaction, completed in July.

Why the Next Phase for Fintech Is Collaboration, Not Just Competition (Wharton), Rated: AAA

Fintech is growing up: Financial institutions are increasingly viewing these disruptors as partners while startups are learning that they need the scale and regulatory expertise of the incumbents. Both sides have a lot to learn, and benefit, from each other, according to speakers at the recent “Fintech: The Impact on Consumers, Banking, and Regulatory Policy” conference at the Federal Reserve Bank of Philadelphia.

“We are actively seeking startups for our members to partner with,” said Robert Nichols, president of the nearly 6,000-member American Banking Association (ABA).

Capital One has integrated its services with Amazon’s Alexa digital assistant and its video-enabled device, Echo Show. Consumers can ask Alexa for their account balance, request that it track their spending or even make a payment. Bank of America is set to debut its chatbot Erica on the bank’s mobile app to help customers with personal finance decisions. Also, more than 30 banks are using Zelle, a service that lets people send money to each other in minutes. It started in 2011 as a collaboration among Bank of America, Wells Fargo and JPMorgan Chase.

The Federal Reserve Bank of San Francisco launched a fintech portal in May to help companies navigate the regulatory system and show them where to go for further assistance, said Tracy Basinger, its director of financial institution supervision and credit.

One example of alternative data used by online lender the LendingClub is the internet footprint of a customer. It doesn’t use social media information due to privacy concerns. Rather, the company uses things like a geocode IP address for fraud detection.

Overstock’s Regulated Token Exchange Will Launch with Own ICO (Coindesk), Rated: A

Retail giant Overstock.com is to launch its new regulated token exchange with its own initial coin offering (ICO), according to a news report.

The token sale will be the inaugural event for the new exchange, which is set to be the first marketplace specifically for trading tokens classed as securities in the U.S. The service is being launched under the umbrella of Overstock’s capital markets arm, tØ.

The company expects to raise $200 million to $500 million “easily” via the ICO, Byrne said.

Celsius Puts Heat On Credit Card Providers With Blockchain-Based P2P Lending Service (Forbes), Rated: A

This system created a culture of ‘buy now, pay later’, something that came to a grinding halt with the financial crash of 2008. Suddenly, credit was not so easy to come by and the world stopped turning.

Of all disruptions often mentioned in the tech world, the financial crisis was the greatest of them all.

Cash is dying out, digital money and remittances have been completely disrupted and even credit card providers are losing business.

So, step forward, Celsius, an ethereum-member based lending platform that wants to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans.

These loans will pay higher interest to lenders and charge lower interest to borrowers by splitting the bank profits between the members of the community.

In the US, an astonishing $ 1 trillion, more than 50% of all the consumer credit issued worldwide,is currently controlled by six of the largest US banks. Centralized financial institutions like to offer credit to many of their richest clients – those who have well-established and pristine credit histories, but ignore ‘riskier’ millennials.

Celsius Is Creating A Peer-to-Peer Lending Service That Will Give Millennials Broader Access to Consumer Credit (Coinspeaker), Rated: A

In the U.S., $1.1 trillion, one-half of all the consumer credit issued, is currently controlled by six of the largest banks.

Celsius, an ethereum-based lending platform, announces today its plans to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans, swapping out big banks and their exorbitant fees for colleagues, friends or other Ethereum token holders. Celsius will focus its efforts on supporting millennials, the generation that often suffers the most at the hands of credit lending  services—a phenomenon we’ve seen recently with the rise of the student and consumer debt in the U.S. Celsius is building the future of consumer credit by migrating credit scores and legacy data to the blockchain and incentivizing millennials to build a new digital identity and credit score that includes their social and digital footprint. This process encourages the creation of a community of lenders and borrowers with lower loss factors and higher on-time payments, enabling greater credit limits at lower interest rates.

Celsius will hold an ICO for its Degree token in January, but the company just initiated its presale of $30 million from accredited investors. Celsius has added many notable names to its advisory, partner and investor groups including serial entrepreneur Jeff Pulver, co-founder of Vonage and VoIP Pioneer; Chris Dannen, founder and partner of Iterative Capital Management; Ismail Malik, founder of BlockchainLabs; Lou Kerner, top blogger on Medium; and Miko Matsumura, founder of Evercoin.

Celsius offers its users a variety of features, including:

  • Peer-to-peer lending
  • Digital credit score: Celsius will issue each user a credit score based on their digital identity and any other user uploaded data including FICO credit scores and past transaction history on websites such as Amazon and eBay.
  • Global Network
  • Insuring the credit: Celsius provides insurance so that if the borrower defaults, Celsius covers the portion of the principal loan amount for the lender and is responsible to recover the money owed to the lenders.

Need Personal Loans? Blockchain Is Here (Cointelegraph), Rated: A

Companies that offer personal loans (even enterprise-level banking institutions) charge exorbitant fees, and often require you to ‘sign in blood’ for the loan. In fact, much of the consumer credit market is held by just a few major banking institutions.

Nowhere is this situation more critical than among millennials.

According to a recent article in Forbes, the answer for this system seems to be coming from Blockchain technology.

Marketplace lenders should seek to be boring (Global Capital), Rated: A

The marketplace lending industry, particularly in the US, has always sat in a transient grey area between banking and tech firm, providing lending services while also preaching ‘disruption’, as Silicon Valley firms are fond of doing.

While the industry’s image as the ethical and trendy alternative to banking was a great route to publicity in the industry’s infancy, marketplace lending ought to be well enough established for platforms to sell themselves on their core lending business.

Ken Rees, CEO of Elevate, to Keynote at LEND360 Conference (BusinessWire), Rated: A

Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will keynote at the LEND360 conference on October 11, sharing his insights on innovation and the needs of non-prime Americans. Rees will highlight Elevate’s Center for the New Middle Class, its mission, and the company’s commitment to innovating for their customers. His talk will shed light on the realities of being non-prime in America, and help audience members discover new ways to serve this group. Elevate is an online lender that has originated $4.5 billion in credit to more than 1.7 million non-prime consumers.

From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (LendingTree), Rated: A

The mortgage process is speeding up. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.

From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.

LendingTree, Inc. to Report Third Quarter 2017 Earnings on October 26, 2017 (Business Insider), Rated: B

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will release its fiscal third quarter 2017 results on Thursday, October 26, 2017, and the company will hold a conference call at 9:00am ET.

Conference call
Toll free #:  877-606-1416
707-287-9313 outside the United States/Canada

To listen to a replay of the call 
Toll free #: 855-859-2056
404-537-3406 outside the United States/Canada
Replay Passcode: 98763739

Closer Look at Credit Enhancements in Subprime Auto ABS Market Show Signs of Vulnerability (BusinessWire), Rated: A

Davis & Gilbert partner Joseph Cioffi, a widely-respected authority on loan and securitization markets, has found that credit enhancements supporting subprime auto asset-backed securities (ABS) do not necessarily provide the same level of protection as credit enhancements supporting pre-financial crisis era subprime residential mortgage-backed securities (RMBS), leaving them more vulnerable to market shifts and shocks than many realize.

These observations were made on a newly launched blog, the Credit Chronometer, in which Mr. Cioffi and team will be analyzing economic, market and political events that shape the legal landscape, and impact loan and structured credit markets, including those for auto loans, marketplace lending (peer-to-peer), student loans, mortgage loans and Property Assessed Clean Energy (PACE) financing.

Based on the indicators of crisis that foretold the subprime mortgage crisis – within the areas of lending practices, ABS practices and the underlying market for autos – the Credit Chronometer presents the “Subprime Auto Loan Crisis Chronometer” to depict the risk of a crisis, which Mr. Cioffi defines as a “battle over loss allocation.” As events impact the subprime auto market, the Subprime Auto Loan Crisis Chronometer’s bright yellow gauges will show the current level of risk. As of today, the Subprime Auto Loan Crisis Chronometer is set at:

  • Lending practices: Moderate-High
  • ABS Practices: Moderate
  • Auto Market: High
  • Risk of Loss Allocation Battles: Moderate

Austin credit union launches fintech-backed loan to up digital game (American Banker), Rated: A

The $125 million-asset Capitol Credit Union became the first financial institution last month to offer customers the product, Kasasa Loans.

Lending company has Rx for doctors with student loans (Cleveland Jewish News), Rated: A

Splash Financial in Cleveland has focused on relieving the burden of student debt since the company was founded in 2013. But according to founder and CEO Steven Muszynski, it wasn’t until recently the company turned its sights to the medical community.

“We’re an online lender that helps doctors refinance their student loans,” he said. “The majority of people financing their student loans graduate with an average of $200,000 in debt. We’re the only company in the country that allows lenders to pay only $1 a month for trainees.”

Congress Should Roll Back New Payday Loan Rule (Competitive Enterprise Institute), Rate: A

The hysteria in Washington around the release of the Consumer Financial Protection Bureau’s final short-term, small-dollar loan rule has been immense as of late. With the final rule issued late last week, it largely lived up to the hype.

The content of a federal rulemaking, while devastating for the payday loan industry, wasn’t all that was at stake. The CFPB’s Director Richard Cordray has long been expected to run for Governor of Ohio once the rule was finalized. With reports flowing in that Cordray plans to make the announcement any day now, the speculation is well-founded.

But the crux of the final rule remains the same. It will force lenders to conduct an “ability to repay” assessment of customers to ensure that borrowers can repay the loans and fees within two weeks, it will cap the amount of times a customer can roll over a loan at three, and it will prevent lenders from charging a customer’s checking account after two unsuccessful attempts.

This makes the impact of the rule devastating. The CFPB’s own impact analysis found that the rule would reduce industry revenue by approximately 75 percent. This is in essence a death warrant to at least three-quarters of the 20,000 payday loan shops that service some 12 million Americans annually.

There are multiple surveys confirming that the users of payday loans widely approve of the option.

Republicans should waste no time in using the Congressional Review Act to overturn this devastating regulation.

Payday lending rule may lure in lurking loan sharks (The Hill), Rated: A

The Consumer Financial Protection Bureau (CFPB) published its final rule addressing so-called payday loans as well as certain other extensions of credit to consumers on Thursday. These loans are usually small, very short-term (often just a few weeks) and carry a very high effective interest rate after all fees are taken into account.

The rule applies to three types of “covered short-term loans:”

  • Short-term loans maturing in 45 days or less
  • Longer-term (more than 45 days) balloon-payment loans; that is, the loan is paid in full when it comes due or the loan agreement requires at least one substantial down payment of the loan.
  • Longer-term loans with a cost of credit exceeding 36 percent that either have a balloon-payment feature or the lender is authorized to obtain repayment by initiating a transfer of funds from the borrower’s bank account.

3 ways the new rules curtailing payday loans will help consumers (WPXI), Rated: A

Of course, everyone is not happy about the changes, which won’t take effect until July 2019.

Here are three ways the new payday lending rules will help consumers

  1. Prevent overborrowing: Once a consumer has borrowed three times in a 30-day period, a mandatory 30-day “cooling off period” kicks in. During this time, the consumer won’t be allowed to borrow unless at least a third of the previous outstanding loan has been satisfied.
  2. Mandate income verification: Believe it or not, many payday lenders don’t check to see what a borrower’s monthly income is — they don’t have an incentive to. If you don’t pay up, your collateral — in many cases, your car — will become theirs. With the new rules, lenders must verify the consumer’s net monthly income and the amount of payments required for the consumer’s debt to be paid.
  3. Control payment withdrawals: Gone will be the days when a lender can continue to hit up your zero-balance account, triggering those insufficient funds charges. The new rules state that lenders must provide a written notice before a first attempt to withdraw payments for a loan from a consumer’s account. When two consecutive withdrawal attempts fail, the lender must get permission again from the borrower to attempt another withdrawal from the same account.

Ohio must reform payday lending (Record-Courier), Rated: B

Lenders avoided the law’s 28 percent interest rate cap by registering as mortgage lenders or credit-service organizations. That has allowed them to charge an average 591 percent annual interest rate on the short-term loans, watchdogs contend.

According to Pew Charitable Trust, Ohioans who borrow $300 from a payday lender are charged, on average, $680 in interest and fees over a five-month period — the typical payoff for what is supposed to be a two-week loan.

A bill awaiting action in the Ohio House would allow lenders to charge interest rates up to 28 percent plus a monthly 5 percent fee on the first $400 loaned — a $20 maximum rate.

OCC Gives Deposit Advance Programs New Life (PYMNTS), Rated: A

By the CFPB’s own estimates, the regulations will reduce the number of short-term loans in the U.S. by more than half.

Industry estimates project a drop in loan volume that will close the doors of more than 80 percent of short-term lenders in the U.S., most of which are smaller “mom and pop” operations.

A Brief History of Small Banks, DAPs, the CFPB and the OCC

Until around 2013, DAPs were offered as a mainstream banking competitor to payday loans. Their main competitive advantage was twofold: They were faster, and one’s bank could instantly verify those direct deposits. But in 2013, the CFPB released a whitepaper that said DAP loans were so similar to their payday cousins as to have all of the flaws normally associated with such lending products.

The CFPB Has a Change of Heart about DAP

A funny thing happened to the CFPB on its way to publishing those draft regulations on short-term lending: It seems to have had a change of heart about bank-based, short-term lending. In fact, when announcing the short-term lending rules, CFPB executive director Richard Cordray called out a special carve-out for community banks and credit unions, provided they make fewer than 2,500 short-term loans each year and collectively account for less than 10 percent of total lending revenue.

Follow the bouncing regs. The new CFPB rules, released last week, have a carve-out for small banks to pick up some of the short-term lending needs of consumers.

Atty Eyed For Payday Loan Fraud Says Tribe Strategy Is Legit (Law360), Rated: A

An attorney defending himself against charges he helped operate a $2 billion criminal payday-loan empire told a Manhattan federal jury Tuesday that he viewed tribal involvement in the enterprise as a legitimate legal shield and asserted that he had “panicked” when he faked a signature on a legal document.

5 Rules Digital Marketers at J&J, SoFi, J.P. Morgan, and IBM Swear By (Fortune), Rated: A

In May, when an Australian real estate mogul suggested posited the somewhat insulting theory that millennials aren’t able to buy homes because they’re spending too much on discretionary items like avocado toast, SoFi COO Joanne Bradford tapped into that controversy as a way to connect with the company’s millennial customer base: the online lender offered a month of free avocado toast to everyone who got a mortgage through the company. More than a hundred a media outlets jumped on the story and SoFi had three of its greatest months ever.

RealtyShares Wins LendingTree Fintech Innovation Challenge, $ 10K At Benzinga Fintech Summit (Benzinga), Rated: B

RealtyShares, the real estate marketplace that’s funded more than $500 million in developments, took home the Fintech Innovation Challenge presented by Lendingtree Inc TREE 0.04% at the Benzinga Fintech Summit.

CleanCapital Expands Team with Former Managing Director of Global Environmental Fund (Fox 8 Live), Rated: B

CleanCapital announced that Matt Eastwick has joined the company to structure and execute capital markets transactions. As Head of Capital Markets, Eastwick will bring an innovative approach to securing the optimal structures and investors for CleanCapital’s various and growing capital needs. Eastwick’s hire comes after a successful Series A equity raise this past summer, as CleanCapital continues to scale operations, while expanding opportunities for clean energy investing.

Chicago Mayor Cuts Ribbon at New Headquarters of Rising FinTech Firm OppLoans (PR Newswire), Rated: B

Chicago Mayor Rahm Emanuel cut the ribbon at the new OppLoansheadquarters in downtown Chicago this week. OppLoans, the nation’s leading socially responsible online lender, has more than tripled its employee-count in the past two years and expanded their operations in One Prudential Plaza. In 2017, the firm was named the 14th fastest-growing company in Illinois and the 219th nationally.

Real Estate Provides Opportunities for Retirees Looking to Protect and Grow Their Nest Egg (Equities.com), Rated: B

A growing number of investors are starting to take a closer look at the real estate market as a practical way to help fund their retirement. These retirees are getting into real estate investing through real estate crowdfunding platforms that allow them to pool their money for real-life real estate investments.

Last year, real estate crowdfunding sites topped the $3 billion mark and crowdfunding overall is expected to grow into a $300 billion industry in less than a decade. Fewer than 10% of Americans are accredited investors yet make up 70% of the wealthiest individuals in the U.S. Many retirees qualify as accredited, and we can expect many more crowdfunding sites to embrace the average individual investor by lowering the barrier to entry.

United Kingdom

Zopa is ‘pretty close to finishing’ building its new bank (Business Insider), Rated: AAA

Online lender Zopa is close to finishing building the tech it needs to launch a full bank, according to its CEO.

Janardana said he couldn’t comment on Zopa’s progress in getting fully regulated as a bank but said the shortest time it has taken a new bank to be regulated is around two years, suggesting Zopa is still a way off from launch.

‘We’re in close communication with Monzo, Starling, Tandem’

Janardana, who was speaking to BI at LendIt Europe conference in London, said Zopa is working closely with other startup banks in Britain.

During his presentation at LendIt Europe, Janardana said Zopa’s new bank initially plans to launch savings and credit cards. He said the bank will take a customer-focused approach, shunning 0% balance transfers on credit cards in favour of consistent low rates and rejecting teaser rates on savings accounts.

Open banking is an “exciting opportunity” for alternative lenders (P2P Finance News), Rated: A

ZOPA’S chief product officer Andrew Lawson has heralded the move towards open banking as “a really exciting opportunity” that could potentially broaden the peer-to-peer lender’s product offering.

Late last year, Zopa unveiled plans to launch a digital bank that would sit alongside its P2P operations. Lawson re-affirmed that this would enable Zopa to service a wider set of customers with a wider set of products. Revolving credit, credit cards and longer mortgages would not be possible with P2P, he argued.

Zopa CEO: banking must no longer be a “zero-sum game” (AltFi), Rated: A

Speaking at the LendIt Europe conference this morning, Zopa CEO Jaidev Janardana (pictured) issued a stinging critique of the traditional banking model, which he says is set up to “take advantage of customer inertia”. He went further, describing old school banking as a zero-sum game, in which wins for the bank will always be to the detriment of customers, and vice versa.

Mintos marketplace exceeds 35 000 investors (LendIt), Rated: AAA

Mintos marketplace for loans has reached a new milestone – 35 000 registered investors from 64 countries.

About 2 000 new investors join Mintos each month. This has allowed for loans worth more than EUR 325 million to be funded through Mintos in two years since its establishment. More than EUR 200 million has been funded in 2017 alone, making Mints a clear market leader in continental Europe with a 40% market share, according to AltFi Data.

As of September 2017, about EUR 1 million is invested in loans through Mintos daily, which is three times more than just a year ago.

On the supply side of the marketplace, there are 27 loan originators from 13 countries.

Oakam Accelerates Financial Inclusion in the UK with Alternative Data (LendIt), Rated: A

Digital micro-lender, Oakam has provided over 420,000 loans totalling over £320 million to consumers overlooked by mainstream financial institutions since 2006. Alternative data is enabling Oakam to employ new methods in underwriting and risk management to expand credit access for financially excluded consumers in the U.K., while maintaining robust lending standards.

Data from FICO shows that 60-75% of traditionally un-scorable consumers could be assigned a more meaningful credit score using alternative data. For Oakam, supplementing traditional methods of underwriting, such as the analysis of credit bureau data with alternative approaches has enabled Oakam to evaluate a high volume of applications since inception.

Oakam’s use of alternative data has also yielded positive repayment behaviour among customers. 70% of new customers made on-time repayments, despite previous challenges accessing credit due to their income levels; court judgements on prior loan defaults; status as a new resident of the UK; the absence of credit history or low credit scores; or some combination thereof. This is according to a study of 15,000 first-time Oakam customers between January 2015 and July 2016.

Oakam uses the following alternative sources for its underwriting:

  • Network associations: Similar to the use of relationship mapping on LinkedIn, Oakam assesses the connections between borrowers and applicants, based on social network data, geographic proximity, and referrals to study patterns that detect fraud or surface certain risk attributes. Data from Oakam showed that customers who were referred by other customers were 20% less likely to default than customers outside of any network.
  • Reaction data from nudges: In addition to predicting risk, Oakam uses gamification to influence it. Through its gamified mobile app, customers are financially incentivised to repay their loans. Oakam has seen a 25% improvement in on-time repayment since April 2017 as a result. Gamification also provides access to behavioural data to strengthen Oakam’s future underwriting decisions.
  • Unstructured data from online conversations: Oakam uses natural language processing and machine learning to analyse the conversations between potential customers and Oakam Digital Agents via its website, and to detect default risk or fraudulent intent.

Is RBS’s online lender a “massive corporate fudge”? (AltFi), Rated: A

Funding Circle boss takes shot at RBS’s online lending pilot Esme.

Esme, RBS’s online lending pilot for small businesses, went live in February of this year. 30-year RBS veteran Richard Kerton leads the project. This morning, he told the LendIt audience that Esme could approve and fund business loans in as little as 25 minutes, with broader risk parameters than its parent bank.

Desai dismissed the idea that P2P lenders are overly-reliant on brokers as a “myth”, pointing out that 75 per cent of Funding Circle’s borrowers come directly to the platform, and highlighting the simplicity of the platform as a big part of the reason.

You can soon buy and store bitcoin directly with this British “neobank” (Quartz), Rated: A

A British “neobank” called Revolut is working on letting its customers convert and hold bitcoin and other cryptocurrencies directly in their accounts.

The firm will let users buy, sell, and hold three cryptocurrencies: bitcoin, litecoin, and ethereum. Users will also be able to transfer cryptocurrencies to other Revolut account holders. The big thing here is Revolut’s promise to allow “instant” conversion of fiat money to cryptocurrencies within its app, potentially removing the currently troublesome process of signing up on crypto exchanges, or peer-to-peer platforms, or going to a bitcoin ATM, to acquire or dispose of funds.

China

JD Finance Launched Bank Deposit Product, with Yield Rate up to 5% (Xing Ping She), Rated: AAA

JD Finance, a third-party finance platform in China, recently launched several BaoShang Bank deposit products. The one-year yield of the product is as high as 5%, rising by as much as 230% compared with the benchmark interest rate for Banks.

The product description shows that the maturity of this series including 1 year, 6 months and 3 months, correspond the savings deposit rate of 5 %, 3.5% and 3.3%, and the minimum deposit amount of 50000, 100 and 100 RMB. In terms of security, as deposits, the product series guaranteed income. As for liquidity, it can be taken at any time. In procedures, it can be purchased directly without evaluation.

A number of bank retails said that the deposits on individuals always have been conducted through their own channels, and they have never take deposits through a third party platform. It also reflects that the competition of bank deposit market becomes more and more fierce.

However, JD Finance explained that they just play the role of information display platform for the bank deposit product, rather than commission sale. Both product and service are supplied by the bank itself.

Zhongan Insurance Shares Ride the Roller Coaster (Xing Ping She), Rated: A

Zhongan Insurance (06060.HK) has been known as The First Stock in Fintech. After three days of rising in a row, its stock price hit a new high of HK $97.8 and closed at HK $90.8 on October 9th. So far, the market value of Zhongan Insurance reached to HK $130.7 billion.

WIND data shows that the stock has risen 52.09% in six trading days since listed, with a turnover rate of 59. 62%, and the interval volume is 2.62 billion shares, the transaction amount reached to 20 billion RMB.

“Now there is no other pure insurance technology company in Hong Kong stock market. The listing of Zhongan Insurance brings the opportunity for investors to participate in the field of insurance technology. In addition to foreign investment in the stock, mainland funds are also very fond of the unit”, a Hong Kong investment analyst said.

CreditEase Hosted FinTech Themed 2017 Silicon Valley – Beijing Dialogue Conference in San Francisco (Business Insider), Rated: A

CreditEase, a Beijing-based financial technology conglomerate with a robust online platform and a broad offline network, announced it recently hosted a FinTech conference, “2017 Silicon Valley – Beijing Dialogue” themed “The Power of Innovation: Driving Forces behind the FinTech Age 3.0″, in San Francisco.

Hong Kong needs to unlock the potential of the sharing economy, or risk falling behind (SCMP), Rated: B

The city’s ranking in the Global Innovation Index has fallen in the last two years. And this slide has been accompanied by another trend: the rise of China in the table.

With more than 600 million people in China participating in the sharing economy, it’s expected that it will account for 10 per cent of China’s gross domestic product by 2020, according to their State Information Centre.

European Union

CREDITSHELF ANNOUNCES RESULTS OF NEW SME-STUDY AT LENDIT EUROPE 2017 CONFERENCE (LendIt), Rated: A

today at the Lendit Europe gathering of over 1,000 fintech and lending executives in London, creditshelf announced that, according to the study “Industrial SMEs and Financing 4.0”, nine out of ten medium-sized industrial enterprises in Germany would provide lenders with real-time production data to either convince them of the value of making an investment, or to enable them – during the credit term – to check on the performance of a facility already arranged.

European marketplace lenders tap private ABS market (Global Capital), Rated: A

Panellists at LendIt Europe on Monday said that there may be more to Europe’s marketplace loan ABS market than meets the eye, with a number of platforms issuing deals under the radar.

Citi’s Sebastian Walf said that the two public ABS deals, which were sold last year from Funding Circle and Zopa, were just the “tip of the iceberg”, with a number of other online lending platforms issuing private securitizations to meet their funding needs.

Trustly partners with Emric, part of Tieto (Trustly), Rated: B

Trustly, the European payments company, and Nordic software provider Emric, part of Tieto, are delighted to announce a new strategic partnership which will provide Emric’s business customers access to Trustly’s online banking payments technology across Europe.

International

Crowdvouching service Suretly, raised .8 mln in August, is launching beta version in 6 weeks (LendIt), Rated: A

During the ICO last month, Suretly secured its minimum funding requirements in just a few hours. It raised $2.8m. Before the ICO, the first version of the Suretly app was successfully tested. A beta version of it will be released on the market within several weeks from the ICO. Upon release of the app, the system will already be populated with borrowers.

Suretly is an international project. The company has legally set up in the following initial countries: Russia, Kazakhstan, and the USA.

CFTE Launches Online Fintech Foundation Course in Collaboration with 20 CEOs and Senior Leaders (PR Newswire), Rated: A

CFTE is pleased to announce the worldwide release of Around Fintech in 8 Hours. The Fintech foundation course has been designed to give professionals working in the finance industry a solid understanding of how technology is redefining the provision of financial services.

4 senior lecturers and 16 industry experts who are Fintech CEOs, investors and heads of innovation will provide participants with a 360 perspective on Fintech disruption.

16 guest experts such as Rob Frohwein, CEO of Kabbage and Anne Boden, CEO of Starling Bank, will support the lecturers by providing first hand insights into how the structure of the FS industry is being transformed by technology and what this means for professionals.

The Centre for Finance, Technology & Entrepreneurship Preps Online Fintech Course (Crowdfund Insider), Rated: A

The Centre for Finance, Technology and Entrepreneurship (CFTE) is launching their first online Fintech course which will open to the public soon. If you are interested, you may enroll here. The course is described as “Around Fintech in Eight Hours.”

The CFTE has partnered with several accelerators including the Supercharger Fintech Accelerator and LATTIC80. Both are based in Asia (Hong Kong & Singapore) with the CFTE operating out of London.

India sets sights on UAE’s technology sector (AMEinfo), Rated: A

A statement released by ESC says that it is participating at GITEX 2017 to provide Indian IT companies opportunities to exploit the burgeoning Middle East ICT market.  It is the largest participation by India, under the Council’s banner.

Meanwhile ESC Chairman Prasad Garapathi said that Indian IT exporters will continue to look into the whole Middle East and MENA region through this important gateway of Dubai.

Export of software and related services to the Middle East has reached $2bn in 2016-17 while India’s total export of electronics hardware during 2016-17 is estimated at $5.685bn.

The Middle East nation is keen to elevate disruptive Indian fintech startups by providing them an international platform and financial support.

The two sides also signed 14 agreements whereby the UAE vowed it would invest $75 billion in India.

The two countries also set a target of 60 percent increase in bilateral trade in the next five years.

Australia/New Zealand

SocietyOne Achieves $ 350 Million in Total Loan Originations (Crowdfund Insider), Rated: AAA

Australia-based online lender SocietyOne announced on Tuesday it has secured $350 million in total originations. This news comes less than two months after the lending platform celebrated its fifth birthday. According to SocietyOne, the company topping $350 million as the current loan book also reached $200 million for the first time in the lender’s history.

10 Fast Growing Fintechs in Australia and New Zealand (Fintech News), Rated: A

Pay Later, better known as Afterpay, is an easy-to-use payment process allows shoppers to buy their product today and pay it off in 4 equal fortnightly instalments.

Airwallex was founded in 2015 by a team of entrepreneurs who developed a technology that uses machine learning to determine the most cost-effective way of settling every payment that comes through the platform.

CoinJar provides simple tools to manage digital currencies.

Data Republic was founded to empower the liquidity of data by delivering technology which offers best-practice security, privacy compliance and governance controls for organizations looking to safely exchange data.

Harmoney is NZ’s leading peer-to-peer money marketplace – where everyday people borrow money from (and lend money to) other everyday people. Hence the term ‘peer’ to ‘peer.’

HashChing is Australia’s first online marketplace allowing consumers to access great home loan deals without having to shop around.

identitii allows banks to move away from customer level information to detailed information about each and every transaction.

Prospa is Australia’s online small business lender committed to helping small businesses access the funds they need to grow.

SocietyOne is radically changing the landscape of financial services in Australia. Since our foundation almost five years ago, we have gone from a standing start to providing more than $300 million in loans to customers.

Xero is one of the fastest growing software as a service companies globally.

BOQ still worst for home loan disputes (The Australian), Rated: A

Bank of Queensland has topped the list as Australia’s worst ­offender for disputes with home loan customers, according to the financial ombudsman.

It is the fourth year in a row the bank has headed the list, with the number of disputes per 100,000 customers barely improving in the past two years, although the numbers have trended downward since 2014.

For every 100,000 home loan customers, BoQ was involved in 79 disputes during the year. Of those, 40 per cent were resolved by agreement, with 29 per cent in BoQ’s favour, according to the Financial Ombudsman Service.

Home loans accounted for 10 per cent of all disputes FOS accepted in the year, while credit cards accounted for 14 per cent and personal loans 8 per cent.

India

Crisil withdraws proposal to enter peer-to-peer lending business (Business Standard), Rated: AAA

Ratings agency has withdrawn proposal to enter into peer-to-peer lending platform business while the has approved Rs 85.45 crore foreign direct investment (FDI) proposals in September from four companies, the Ministry said on Tuesday.

Crisil’s majority shareholder is international ratings agency Standard and Poor’s, an American corporation.

P2P players seek RBI clarification on permissibility of institutional lenders (Financial Express), Rated: A

After the Reserve Bank of India (RBI) released guidelines for entities engaged in peer-to-peer (P2P) lending last week, an association of such entities is planning to ask the central bank to clarify whether institutions will be allowed to lend through P2P platforms.

A top executive with one of the five P2P lending platforms told FE that the industry is unsure of whether ‘participant’ covers only individuals or institutions as well.

10 Fast Growing Fintechs in India (Fintech News), Rated: A

BankBazaar is the world’s first neutral online marketplace that helps people compare and choose financial products such as loans, insurance, credit cards, fixed deposits, saving accounts, mutual funds etc., – over a highly secure, user friendly, and intuitive platform.

Capital Float is an online platform that provides working capital finance to SMEs in India.

FreeCharge is India’s No.1 payments app.

Lendingkart Technologies Private Limited is a fin-tech startup in the working capital space.

MobiKwik is India’s largest independent mobile payments network connecting 55 million users with more than 1,500,000 retailers.

Mswipe is India’s largest independent mobile POS merchant acquirer & network provider.

Paytm is India’s largest mobile payments and commerce platform.

Policybazaar is an Indian online life insurance and general insurance comparison portal.

Razorpay aims to revolutionize online payments by providing clean, developer-friendly APIs and hassle-free integration.

Rubique (Rubik + Unique) aims to mine every possibilty to offer a unique solution to our customers’ complex financing problems through advanced technologies and data science.

India Money Mart launches P2P lending platform (India Times), Rated: B

India Money Mart (IMM), a digital lending marketplace, has launched its app to allow lenders and borrowers to carry out Peer-to-Peer (P2P) lending a week after the RBI released detailed guidelines for this platform.

The app is useful for people seeking alternative sources of funding to meet emergency requirements, not serviced by banks and other traditional lenders, it said.

Asia

Mongolia’s Untapped Lending Market Has Earned This Japanese-Backed Fintech Startup A $ 30M Valuation (Forbes), Rated: AAA

In Mongolia, where the average monthly income is $390, informal loans between friends or family members are commonplace as credit and small bank loans are hard to get. On the other hand, small informal loans are almost expected to not be paid back.

“There is no leverage system for people to repay, so in the worst case they lose their friends,” says Anar Chinbaatar, 35, CEO of fintech startup AND Global.

His startup, which launched the mobile app LendMN, introduced mobile-based microlending to the North Asian country where borrowers are blacklisted from significant financial services such as mortgages if they default on a small loan from the bank.

After raising $1 million in seed funding in April 2016, the company received another $4 million with a $30.8 million valuation in August from influential backers in Mongolia and Japan including former Japanese parliament member Takami Yuichi, investor Satoshi Matsumoto and his wife Yasuyo Matsumoto. It is also advised by Oko Davaasuren, an influential Mongolian investor from TechStars.

The company, which has issued over $1.9 million in loans as of this month, plans to use the new investment to fuel expansion into the Philippines and Japan and develop new technology such as a blockchain project while preparing for an initial coin offering in December.

Crowdfunding Creates New Opportunities In Malaysia (TMF Group), Rated: A

Malaysia was the first country to regulate the growing industry to support new ideas by providing a funding mechanism. Its Securities Commission (SC) has approved a total of 12 crowdfunding platforms – six equity-based and six peer-to-peer (P2P) lending – and, though there are strict guidelines for operation, the market is creating new avenues for entrepreneurs.

Growing regulation of the crowdfunding industry is not putting off investors; Malaysia as a whole is one of the least complex jurisdictions in Asia, according to TMF Group’s inaugural Financial Complexity Index.

The ranking of 94 jurisdictions across the world resulted in three top-10 spots for Asia Pacific: Vietnam ranked 5th most complex for compliance, followed by China at 7 and India at 10.

But there was a large chunk of southeast Asia which ranked on the less complex side of the table, including Malaysia (59), the first country in Asia to regulate crowdfunding.

Africa

Inspeer Announces Crowd Sale for Its ‘Inspiration Through Peer to Peer’ Lending Service (Digital Journal), Rated: AAA

Inspeer, one of the few players to recognize the need for revolutionary technology in the financial services industry has opted to introduce additional utilities backed by cryptocurrencies and their underlying blockchain technology. The platform, designed to use cryptocurrency alongside fiat currency for the purpose of peer to peer lending has announced the launch of its upcoming crowdsale campaign.

With their primary operations located in Russia under the LightFin.ru brand, more than 200,000 loans applications were processed within the first year of platform deployment.

Inspeer’s platform uses loan pipelines and scoring algorithms which consist of the InsCore system and OLAF algorithms. Together, these two components help to effectively execute an assessment of the borrower’s likelihood of repayment as based on more than 20,000 predictors.

ICO will start on Nov. 6 and continue for Dec 6.

Authors:

George Popescu
Allen Taylor

Monday July 31 2017, Daily News Digest

credit card issuers

News Comments Today’s main news: RateSetter tops 2B GBP in lending. P2P Global Investments holds steady. P2P Finance Association reports new lending growth. One of China’s largest P2P lenders quits. BNI Europa invests 15M Euro in Creditshelf. Marqeta, Visa partner on global payments. Prospa secures $20M debt facility. Today’s main analysis: Bank and credit card issuer charge-off trends. Today’s thought-provoking articles: […]

credit card issuers

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

News Summary

United States

Earnings Season Continues—Bank and Card Issuer Charge-Off Trends (PeerIQ), Rated: AAA

As PeerIQ observed last quarter, we continue to see a “tale of two cities”–a divergence in charge-off rates of card issuers and large money center banks.

Discover reported a 55% increase in loan loss reserves citing re-normalization of credit performance, an increased supply of consumer credit, and an increase in consumer leverage. We also see observe increases in loan loss reserves from Synchrony Financial (30%), American Express (26%), and Capital One (13%).

Source: PeerIQ, Bloomberg

Outlook for Consumer Lending 

The backdrop for consumer lending businesses is strong. Although delinquencies have picked up, originators remain compensated for taking on credit risk. The ROE for Discover and American Express are both over 20% as compared to C, JPM, WFC, and BAC where ROE remains stubbornly low in the 6 to 11% range. Also, consumer loan demand continues to grow (total loan requests on Lending Tree increased 48% year-over-year to 5.4 Mn).

The biggest challenge to the above state-of-play is the latest scale entrant to the retail banking business–Goldman Sachs. GS’s new lending business, Marcus, is on pace to originate $2 Bn in loans this year–the fastest growth rate of any lender that PeerIQ tracks.

Inside seven plans for a faster U.S. payments system (American Banker), Rated: AAA

A task force convened by the Federal Reserve has released its evaluations of 16 proposals to build a faster U.S. payment system. The plans were judged by the task force’s consulting firm, McKinsey & Co., based on how well they satisfied 36 criteria related to speed, security and other attributes.

EastWest ties up with PLDT unit (Inquirer.net), Rated: A

Gotianun-led EastWest Banking Corp. has teamed up with FINTQ, the technology arm of PLDT and Smart’s Voyager Innovations, to offer consumer loans through digital lending platform Lendr.

With this partnership, consumer-focused lender EastWest will make available personal loans and auto loans through Lendr by the fourth quarter of this year. Eventually, the offering will also include EastWest home loans, small and medium enterprise (SME) loans and credit cards.

Providing well-rounded financial advice and servicing through automated technologies (CGI.com), Rated: A

While robo-advice may account for only a fraction of the total assets under management today, it is a technology that is here to stay—but not in the way that has dominated news stories. Rather than supplanting the financial advisor with technology, firms need to leverage new multi-channel automation to empower their advisors to focus on value-added, relationship-building activities. In this paper, we look at how wealth management players can focus on getting to the right combination of human advisors and automated investment advisory solutions in a hybrid model that seamlessly integrates the two.

Read the paper here.

Overstock’s TØ Has Already Built a Platform for Trading Regulated ICOs (Coindesk), Rated: A

US retail giant Overstock.com has been waiting for the US Securities and Exchange Commission (SEC) to tell the world exactly when a crypto token is a security.

Then, earlier this week, tØ got the news it had been waiting for when the SEC finally published the results of a landmark report in which it clearly laid out its rationale for why some tokens are still securities.

Long a detractor of a practice called “naked short selling” – where traders methodically bid down the price of stock by selling shares they haven’t first procured, Byrne set about using blockchain to cut out everyone who stood in the way of buyers and sellers.

BLOCKCHAIN AND INITIAL COIN OFFERINGS: SEC PROVIDES FIRST U.S. SECURITIES LAW GUIDANCE (Pepper Hamilton LLP), Rated: A

For those who hoped that the SEC would allow cryptocurrency and ICO markets to evolve unregulated, their hopes were dashed by the report and the bulletin. The SEC did not outlaw ICOs by any stretch of the imagination, but it did indicate that, depending on the facts and circumstances, an ICO may indeed involve an offering of securities. In that case, organizations that proceed without registering with the SEC or that structure the offering in such a manner so as to qualify for an exemption from registration will violate federal securities laws. The remedies for such a violation include rescission of the offering, cease-and-desist orders, fines and penalties, bans from participating in the securities industry, bans on serving as an officer or director of a public company, and, in the most egregious cases, referral to the local U.S. Attorney for possible criminal prosecution. So, whether an offering involves a “security” is a very important initial determination.

Inside the development of Erica, Bank of America’s AI-powered bot (Tearsheet), Rated: A

However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.

The bot is now in the beta testing phase.

Fintech Apps and Banking Mobile App Development for Startups (Upwork), Rated: A

Paypal is the world leader in processing payment apps today. The app for Android and iOS devices provides the same functionality as the online Paypal.com service.

A good choice for small businesses Due.com lets users benefit from a convenient digital wallet, invoicing service and fast operations handled at low transaction rates.

iZettle also efficiently serves small businesses. What this fintech app does perfectly is that it allows small business owners accept cash and credit card payments from a smartphone or tablet. With additional cash drawers and receipt printers from iZettle one can also provide customers with printed or online receipts.

Another interesting example of a successful fintech app is Mobikwik. Now with the base of 50 million users Mobikwik offers a user-friendly digital wallet, which has become a real substitute of a physical purse for its users worldwide.

In regards to the ways of making personal loans an easier experience for users, LendUp offers just one of them. It’s a web application (also available for mobile) that lets users from selected US states apply for a short-term loan 24/7.

Citi Mobile is one of the leading mobile apps for iOS and Android mobile devices introduced by Citibank. According to Business Insider, the app has significantly grown in popularity mainly due to addition of FICO scorefeature.

Rating the Robo-Advisors (Barrons), Rated: A

By tech start-up standards, robo-advisors are already approaching middle age. Betterment, the pioneering robo-advisor and still the largest of the independent firms, turned seven in May. It now has $9.1 billion in assets under management.

Lawmaker Queries Alt-Lenders With Concerns Over ‘Trapped’ Small Biz Borrowers (PYMNTS), Rated: A

Rep. Emanuel Cleaver II (D-Mo.) has reportedly sent letters to five alternative SMB lending companies with questions regarding borrower protections, anti-discrimination efforts, transparency and other factors.

Cleaver is reportedly seeking details of the companies’ business models and products offered to small businesses, how those products are originated, information on fees and rates and whether these businesses offer borrowers a repayment plan based on future credit card receivables, reports said.

The lawmaker is also seeking information on how these lenders handle transparency and whether they make disclosures to SMBs the same way they do to consumers as required under the Truth in Lending Act. He is also asking about whether these firms pull a consumer credit report for small business lending.

The SEC’s ICO crackdown will help in the long-run. (The Financial Revolutionist Email), Rated: A

But unless your plan was to make a quick billion in ICOs in time to ring in 2018 with Payments deal activity is en fuego.

Also in payments land, 

What is “working capital”? And how can it help my small business? (OnDeck), Rated: A

For many business owners, it makes sense to borrow funds to create a liquid cash cushion to operate their business to the best of their ability. Before you decide to borrow, you need to understand what your working capital needs are and to make sure numbers make sense for you and your business.

3 Reasons Why the Finance Industry Needs VR (UploadVR), Rated: A

The finance industry is one of the most data-driven trades, and by visualizing and analyzing data in VR, early adopters can get a leg up on the competition. Not only can VR improve the way data is viewed, but it can also improve the level of communication through the use of a shared virtual office (SVO). This is immensely important because, in the high stakes world of finance, a mistake or lapse in communication could cost millions of dollars.

The Biggest Trends in Home Mortgage Loans We’ve Seen This Year (Huffington Post), Rated: B

Typical of hot real estate markets, there’s a cycle. Home prices rise, people catch on and want in, and then they decide to sell. Soon, even more people jump in the market and serious sellers make their sale, causing inventory to thin. Buyers get wise to the overheated marketplace and decide to wait until the prices come down. The sellers who are eager to make a buck overprice their houses and when they don’t sell, they become income properties. As a result, the rental markets fill up with income properties, and the inventory continues to thin out.

We are at historic lows for mortgage rates, and they are not going to spike that drastically in the next year that it would preclude you from getting a solid thirty-year fixed rate loan.  The important thing is that you do NOT overpay for a home.

GE Alum Brings Discipline to High-Growth Financial Firm (CFO), Rated: B

After 16 years at General Electric, Chris Capozzi was still a young man. That was because he’d joined the company upon graduating from Boston College, where he earned a degree in finance and management information systems.

Eventually, one of the alumni introduced Capozzi to Stone Point Capital, which had just become a major investor in Freedom Financial Network, a privately held financial services firm. Everything clicked with the company’s co-founders and co-CEOs, Bradford Stroh and Andrew Housser, so Capozzi moved across the country to start work as Freedom’s CFO at the beginning of this year.

What kinds of opportunities are you focused on?

Secondly, we’re in the process of developing a securitization platform to complement our existing sources of capital and further expand our investor base, which will enable the growth on the marketplace lending side. Initially the plan is to securitize unsecured consumer loans, very similar to what other marketplace lenders, like SoFi and Avant, have done.

United Kingdom

Peer-to-peer lender RateSetter passes £2 billion lending milestone (Yahoo! Finance), Rated: AAA

Peer-to-peer lender RateSetter announced on Monday that it has passed £2 billion in loans over its platform, with more than £1 billion of the total made since the beginning of 2016.

About £1.3 billion of the total lent has gone to individuals, with £700 million going to businesses. The company now has 423,000 customers, the majority of whom are borrowers, more than any other UK peer-to-peer lender.

P2P fund holds steady on dividend (AltFi), Rated: AAA

Onerous banking regulations will continue to hamper growth in regulatory capital‐intensive lending asset classes, according to the investment managers of the £821m P2P Global Investments trust.

The fund is moving away from a pure P2P play, instead transitioning more into direct lending and other Alternative Credit niches. Its manager MW Eaglewood is also merging with Pollen Street Capital, which while still on-going, is expected to close later this year subject to regulatory approval. Pollen Street is also the manager of £359m Honeycomb investment trust which invests in direct lending assets.

Source: AltFi Data

P2PFA reports growth in new lending as LendInvest departs (P2P Finance News), Rated: AAA

CUMULATIVE lending among the Peer-to-Peer Finance Association (P2PFA) members in the second quarter of 2017 fell slightly to £8.39bn, due to LendInvest’s departure from the trade body.

However, new lending among the members has still grown significantly year on year, the P2PFA said on Friday.

The number of investors in P2PFA member-platforms has now hit 185,652, the trade body said, while the number of current borrowers has risen to 435,267.

UK P2PFA: Peer to Peer Lending Rises in Q2 (Crowdfund Insider), Rated: A

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Folk2Folk

£139,344,302

£161,408,804

Funding Circle

£1,524,427,000

£1,830,397,245

£2,158,457,107

£2,455,740,443

Landbay

£42,948,000

£43,142,119

£43,975,419

£46,515,723

LendInvest

£776,112,000

£855,354,293

£971,875,952

Lending Works

£33,636,000

£39,368,050

£48,864,686

£58,441,220

MarketInvoice

£754,325,000

£837,793,900

£918,450,994

£1,018,021,696

RateSetter

£1,442,743,000

£1,604,406,564

£1,815,320,079

£1,995,142,453

ThinCats

£196,907,000

£211,446,000

£226,981,000

£242,540,000

Zopa

£1,731,685,000

£1,926,038,724

£2,172,561,894

£2,409,257,844

Total

£6,502,783,000

£7,347,946,895

£8,495,831,433

£8,387,068,183

The LendInvest bond promises to pay investors 5.25% with two payments a year until 2022 (This is Money), Rated: A

Alternative property lender and investment platform LendInvest has launched a five-year bond paying 5.25 per cent a year for investors with a minimum of £2,000.

In an era of one per cent savings rates and where yields ranging beyond 5 per cent are hard to come by in the equity markets, this deal is sure to whet the appetite of many investors – particularly as it comes with twice-yearly payouts.

LendInvest’s Christian Faes On Why Property Investing Is Still Going Strong (Forbes), Rated: A

According to Christian Faes, CEO and co-founder of LendInvest, the retail bond serves a number of purposes – it allows the business to diversify its funding and expand its capacity to lend to property professionals, but also creates a new entry point into property for investors.

He explains:

[The retail bond] is launching at a critical time when demand in the UK’s residential property market continues to outstrip supply. There’s a serious lack of capital available to professional property investors who buy, build, refurbish and renovate homes for UK streets. Our model allows us – and by extension our investors – to support these people and small businesses.

Faes says that it is difficult to pin down what a typical LendInvest investor looks like; the investor base ranges from those looking to build a portfolio of property loans on the firm’s online investment platform all the way up to pension funds, infrastructure funds and banks.

Fintech company DueCourse goes into administration (Manchester Evening News), Rated: A

Manchester fintech company DueCourse has called in administrators.

This comes less than a year after the cloud-based invoice financing service for SMEs was boosted by a £6.25m investment, the largest seen outside of London for a fintech firm.

Bosses said the money will be used to expand and grow its software with plans to raise a further £10-15m to grow its services worldwide.

Abundance Tops £50 Million in P2P Invesment into Renewable Energy Projects (Crowdfund Insider), Rated: A

Abundance Investment, a UK based peer to peer lending platform in the renewable energy sector, has just topped £50 million in investment, according to a company report. Management said the “huge” popularity of its IFISA and three highly popular renewable projects from tidal, geothermal and energy efficiency technologies helped to fuel the recent growth. Abundance says three projects have attracted more than £10 million of new investment in less than 2 months.

  • Atlantis tidal energy debenture has sold out raising £4.3 million,
  • Green Deal bond will close in 4 days’ time and has raised £3.95 million to date
  • United Downs Geothermal project has raised 60% of its £3.8 million target (£2.7m) in less than a week.

New products and milestones for ethical P2P platforms (AltFi), Rated: A

Investors looking for ethical options now have more choices when it comes to peer-to-peer lending.

Lending platform Downing Crowd has launched two regular access crowd bonds, with one for a renewable energy generation and storage company.

Cash management and peer-to-peer lending could boost your balance sheet (Director), Rated: A

With inflation on the rise but interest rates at an all-time low in the UK – and some high-street banks even raising the prospect of charging commercial customers to keep deposits – companies’ savings may actually be losing value in real terms.

If you can’t beat ’em, join ’em

Over the past few years a new way to potentially beat the banks has emerged – one that plays them at their own game. Called property-backed peer-to-peer lending, it gives companies the opportunity to be the lending bank themselves.

One of the fastest-growing products of this type is Choice, offered by Octopus Investments, an experienced investment company that manages more than £6bn of assets.

Working with a growing roster of challenger banks, Octopus can offer a savings product that currently provides an interest rate of more than one per cent.

This week in MoneyWeek: banks are back (MoneyWeek), Rated: A

Banks have been out of favour for the last ten years after they almost brought the global financial system to its knees.

So why would anybody invest in them? Oddly, one reason is “the failure by politicians to enforce a key promise” – that no bank would ever become “too big to fail” again. “In every developed country”, says Jonathan, the big banks have just got bigger. The “never again” promises have been replaced with “complex rules to strengthen bank capital, thus reducing the chances of collapse”. Another reason is that “banking has changed for the better” – governance has improved and customer satisfaction has shot up.

Why Banks Can’t Help But Help Fintechs (Fintech Weekly), Rated: B

It remains to be seen if any bank can ever do what the music industry is in the process of doing – taking back “their” industry by becoming the pre-eminent innovators. Such a thought might be laughable right now. But a word of caution on laughing too soon – if they do realise how to leverage their enormous power, accept that legacy systems must be overhauled and replaced wth the truly innovate, and execute such a strategy well, would you bet against them retaining and entrenching their dominance?

For now and the foreseeable future, most banks prefer to sit back and avoid risk. Really the risk lies in doing nothing and inviting a slow death by a thousand cuts. OK, yes, you can talk about record bank investment in fintech, cooperation between banks and fintechs – again, this is only helping fintechs move in on bank stomping ground.

China

One of China’s biggest P2P lenders quits ahead of clampdown (Financial Times), Rated: AAA

China’s pending regulatory crackdown on the $120bn peer-to-peer lending industry has claimed its first scalp before it has even begun, with one of the biggest players saying it will wind up its business in an industry full of bad loans and no profits.

P2P lending, in which borrowers are matched with investors via online platforms, has mushroomed in the past five years, with China boasting more than 2,100 such platforms, but so too have scandals. Last year was marked by multibillion-dollar scams in China and a governance scandal that rocked New York-listed LendingClub.

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Beijing this month said it would delay regulations that will bar online lenders from guaranteeing principal or interest on loans they facilitate, cap the size of loans at Rmb1m for individuals and Rmb5m for companies, and force lenders to use custodian banks — a requirement only a fraction of the industry has met so far.

Three more Chinese banks join Swift’s global payments innovation (Banking Technology), Rated: A

Three local Chinese commercial banks have joined Swift’s global payments innovation initiative (gpi), bringing the number of Chinese banks involved to 16, the most in the world, according to Xinhua.

The new trio are Yinzhou Bank and Bank of Ningbo in eastern China’s Zhejiang province; and the Bank of Jiangsu, in the eastern Jiangsu province (and just south of Zhejiang).

Embrace the cardless era, CUP launched the electronic account cloud flash, or its Jedi fight back (TMT Post), Rated: A

A few days ago, UnionPay cloud flash together with Apple Pay launched promotional activities; early June, CUP also joined nearly 10 million businesses to create “62 CUP cloud flash to the whole people Sheng Hui.” Looks, CUP is imitating Alipay, WeChat to pay the subsidy routine.

Can you imagine using your Jingdong or US group (the new US big) account, you can pay through the UnionPay POS machine? Do not scan, do not have to swipe, do not open the APP, just need to close the POS machine and verify the fingerprint can be completed to pay.

The point is that you do not need to use the bank card account directly, but through the Jingdong or US group to pay the account, you can use the phone in the UnionPay POS machine to complete the payment.

European Union

BNI Europa invests EUR15 million in Creditshelf (Finextra), Rated: AAA

In Banco BNI Europa (“BNI Europa”), Creditshelf has succeeded in acquiring another strategic partner to help it provide financing to small and medium-sized undertakings (SMEs).

The online marketplace that specialises in SME financing, and the Bank, which operates throughout Europe, have agreed that Banco BNI Europa will invest up to 15 million Euro in the credit platform over the coming months.

Your Banker Is Always In: Sweden Rolls Out the Robots (Bloomberg), Rated: A

Aida is the perfect employee: always courteous, always learning and, as she says, “always at work, 24/7, 365 days a year.”

Aida, of course, is not a person but a virtual customer-service representative that SEB AB, one of Sweden’s biggest banks, is rolling out. The goal is to give the actual humans more time to engage in more complex tasks.

Besides Aida at SEB, there’s Nova, which is a chatbot Nordea Bank AB is introducing at its life and pensions unit in Norway. Swedbank AB is adding to the skills of its virtual assistant, Nina. All three are designed to sound like women, based on research suggesting customers feel more comfortable with female voices.

International

Marqeta & Visa Ink Global Partnership to Power Payments & Loans (Crowdfund Insider), Rated: AAA

Visa (NYSE: V) and Marqeta, a payment card issuing platform that can provide consumers with immediate loans, has announced a global partnership to propel innovations in commercial and consumer payments in lending. Visa has also made a strategic investment in Marqeta and led a $25 million funding round that included the participation of previous Marqeta investors including Commerce Ventures, 83 North, Granite Ventures, IA Capital, and CommerzVentures GmbH, as well as new investor CreditEase in China, one of the world’s largest alternative lender.

15 ‘RegTech’ Investors Every Fintech Startup Needs to Know (Entrepreneur), Rated: A

  1. Octopus Ventures
  2. SeventySix Capital
  3. Summer Capital
  4. Carrick Capital Partners
  5. EQT Ventures
  6. Insight Venture Partners
  7. JMI Equity
  8. Aquiline Capital Partners LLC
  9. Sageview Capital
  10. Accel Partners
  11. Warburg Pincus
  12. HarbourVest
  13. Digital Currency Group
  14. TTV Capital
  15. Balderton Capital
Australia

Online lender secures $ 20m debt facility (Australian Broker), Rated: AAA

Digital online lender Prospa has secured a $20m debt facility from the Australian arm of a US-based commercial finance provider, Partners for Growth (PFG).

Fintechs target millennials with online financial services (The Australian), Rated: A

Millennials are likely to fall into three categories:

• Inheritors: With wealthy parents, they are major consumers while they wait to inherit.

• Strivers: Coming from a more modest background, they are studying, saving and working hard with ambitions for promotion. They will borrow to support their lifestyle, not unlike inheritors.

• Given-ups: They are more likely earning a low salary but continue to consume as much as the other two categories. Buying a house is not on the agenda, so they do not see the point in saving.

And 71 per cent of millennials, according to Viacom’s Millennial Disruption Index, would rather go to the dentist than to the bank.

India

i2ifunding looks to break even by second half of FY20 (DNA India), Rated: AAA

i2ifunding.com, a peer-to-peer (P2P) lending platform, today said it aims to break even by the second half of 2019-20, given its robust growth in the last two years and promising outlook in the next two years.

It has a vision to scale up this disbursement up to Rs 200 crore over the next two years, i2ifunding.com said in a statement.

Fin-tech startup Finomena shuts down after failing to raise funding (The Indian Wire), Rated: A

Finomena, a startup which provided small ticket loans to students and young professionals, has shut down after failing to raise pre-Series A funding round.

The company is now no longer accepting new users on its website.

FinMomenta to introduce new products; targets SMEs (Deccan Herald), Rated: A

After working in a bank for many years, Brahma Mahesh and his friend decided to do something in the burgeoning FinTech space. They zeroed in on lending, as only 5-6% of the population is covered by banks and NBFCs. Mahesh, along with four other co-founders, started FinMomenta last year, and launched its first product ‘Tachyloans’, a peer-to-peer lending platform in May this year.

FreeCharge’s acquisition is proof that the Axis of Indian banking is changing (Quartz), Rated: A

In the next five years, almost 50% of the world’s financial services are planning to acquire fintech startups, according to a report by PricewaterhouseCoopers LLP. Collaborations, too, are expected to increase, with eight out of 10 companies waiting to partner with these new players, the report added.

Some 67% of senior Indian financial sector executives believe their business is at risk following the rise of fintech firms, and 95% of them were willing to explore partnership with them, a separate report by PwC released this April revealed.

On July 27, Axis Bank, the country’s third-largest private sector lender, acquired FreeCharge, a payments application and mobile-wallet company, for Rs385 crore ($60 million). This is the first such deal in the sector, potentially setting off more such transactions in the future, believe experts.

These serial entrepreneurs are offering bank products through an Ola-Uber model (YourStory), Rated: A

Five-month-old fintech startup Cashcow, which provides banking services and products to a customer at his doorstep, has expanded its operations to seven cities including Delhi, Kolkata, Pune, Ahmedabad, Hyderabad and Chennai. 

Joining fintech company Rubique as a chief product officer in 2016 introduced him to Manish Aggarwal, his future co-founder, who was leaving the startup at that point.

According to the founders, Cashcow is a platform providing banking services and products to a customer at his doorstep.

Can Regulatory Sandbox Nurture India’s FinTech Innovation? (CXO Today), Rated: A

The Indian financial services sector is undergoing major changes today. With more than 600 startups in the space of lending, payments, insurance and trading space, Fintech startups are not only spearheading innovation, but are also prompting traditional banks and financial institutions to explore new technologies and investing heavily in digital service delivery channels.

However, fintech startups unlike others face additional challenges of operating in a heavily regulated industry and have stiff competition as their key competitors are well established banking players. To overcome this challenge, experts believe, adopting a “Regulatory Sandbox” based approach where the regulator works closely with emerging Fintech firms make better sense.

Asia

Finca launches Pakistan’s first ever digital wallet (Daily Pakistan), Rated: AAA

FINCA Microfinance Bank, one of the fastest growing microfinance banks in Pakistan, has announced a movement to make digital commerce and payments free in the country.

SimSim, a mobile payment platform, was introduced in partnership with Finja – an internationally funded FinTech startup – at a launch event Thursday night at Mohatta Palace, Karachi. The event was attended by major industry stakeholders, government officials, artists, tech enthusiasts and media figures.

SimSim will give people access to frictionless payment options directed towards a diverse pool of merchants.

Middle East

Bahrain’s FinTech Sector Loses Ground to Dubai (Cryptocoins News), Rated: AAA

Africa

FINTECH Association of Nigeria debuts to support development of the financial technology industry (PR Share), Rated: AAA

Over 25 FinTech companies attended the recent inaugural meeting of FTAN – FinTech Association of Nigeria – which principal objective is to serves as a platform for the development of the financial technology industry in Nigeria and to be a forum for the exchange of ideas and dissemination of information by and between various stakeholders in the industry. 

Authors:

George Popescu
Allen Taylor

Tuesday February 21 2017, Daily News Digest

Tuesday February 21 2017, Daily News Digest

News Comments Today’s main news: Defaults Slash Returns for Online Loan Investors Colchis and P2P GI. Banks warm to alt finance providers. Anaxago opens up French RECF to institutional investors. Alibaba to invest $200mil in Korea’s Kakao Pay. Today’s main analysis: OFF3R Index: Strong P2P lending growth continues. Today’s thought-provoking articles: Midsized companies turn to MPL. Consumer confidence at 10-year high. P2P […]

Tuesday February 21 2017, Daily News Digest

News Comments

United States

  • Defaults Slash Returns for Online Loan Investors GP:”Very interesting data from Colchis and P2P GI. A must read. Defaults are a real problem that has to be taken seriously.”
  • PeerIQ’s weekly industry update. GP: “Lending Club is showing stronger interest in balance-sheet risk throught building securitization shelf in-house. Other platforms may want to take note. And a very interesting reminder that all debt indicators are in the green.” AT: “With consumer confidence high, wage growth strong, and other economic indicators improving, we should see a rise in consumer loans. The outlook for MPL has never been better.”
  • High rate of defaults hit P2P lending sector. GP:” Finextra is mentioning this article. AT: “This is truly one of the biggest problems the industry faces. On the flip side, defaults are bound to happen. They are a critical part of the lending business.”

United Kingdom

European Union

Australia

Asia

India

United States

Defaults Slash Returns for Online Loan Investors, (WSJ), Rated: AAA

LendingClub unit, Colchis Capital record lowest returns in their main funds since each launched in 2011.

At LC Advisors, the Broad Based Consumer Credit (Q) Fund returned 1.83% in 2016, down from 5.76% in 2015 and 8.02% in 2014, according to the investor documents. That was worse than the 2.65% return of the Bloomberg Barclays U.S. Aggregate Index, a broad measure of performance of various fixed-income securities that LC Advisors uses as a benchmark.

LendingClub said in a securities filing in January that it was seeing signs of a stabilization in delinquencies after it raised rates on borrowers by a weighted average of 1.18 percentage points over the course of several months. And the Broad Based Consumer Credit (Q) Fund has outperformed its benchmark by more than 2 percentage points over the past three years. “The holistic performance of the Fund tells an important story,” LC Advisors said in a letter to investors.

Colchis’s P2P Income Funds, which have $1.3 billion in assets under management, posted a 2016 return of 6.2%, according to investor documents.

Colchis’s returns exceeded 9% in each of the preceding four years but were weighed down in 2016 in part because of weak debt-collection efforts at LendingClub and Prosper and a new accounting regime introduced earlier in the year, according to the documents.

Meanwhile, P2P Global Investments, which is managed by a unit of U.K. hedge-fund firm Marshall Wace LLP and listed on the London Stock Exchange, returned 4.1% in 2016, down from 6.6% the year prior.

At the end of the year, the fund’s shares traded at a roughly 20% discount to its net asset value.

Weekly Industry Update: February 20, 2017 (PeerIQ), Rated: AAA

In a major shift, Lending Club unveiled in their

High rate of defaults hit P2P lending sector (Finextra), Rated: AAA

Investors in the peer to peer (P2P) lending sector have seen their returns suffer due to a high rate of borrower defaults among start-ups, reports the Wall Street Journal (WSJ).

Shares in a number of P2P lending platforms have dropped as high profile players like US-based LendingClub and On Deck Capital have faced numerous difficulties. Investors previously attracted to the sector are now rethinking their approach, reports the WSJ.

The lending platforms are finding it difficult to bring down the default rates of their borrowers – insisting on more stringent credit standards and a more thorough application process would make the challenger lenders less attractive in comparison to the incumbent, traditinal lenders.

 

United Kingdom

Midsized Companies Turn to Marketplace Lending at Lendix & Creditshelf (Crowdfund Insider), Rated: AAA

At the onset of the marketplace lending market, lending to businesses was equated with lending to small and very small businesses: businesses at the low end of the small and medium-size enterprise (SME) market who were borrowing on average under €100,000. However, as the alternative lending market matures, it seems to attract larger SMEs borrowing bigger tickets, north of €400,000.

Olivier Goy is the founder and CEO of Lendix, an international business lending marketplace launched 2 years ago in France which has since then expanded into Spain and Italy. Tim Thabe is the co-founder and Managing Director of creditshelf, a German B2B lending marketplace for SME corporate borrowers and professional investors which launched in 2015.

Olivier GoyAt the onset, we did not plan to serve bigger tickets.

To give you an idea: the average loan size projected in our business plan was €50,000. The actual loan size in our first year of operation was €200,000. Now it is €400,000.

Of course, our funding mix, the fact that 80% of our funding comes from institutional investors was key to achieving this.

Tim Thabe: Indeed, we have deliberately targeted larger tickets. Our motivation was twofold. Firstly, we believed that we needed larger tickets to justify the expense of in-depth credit risk analysis. Secondly, the larger SMEs have more history and substance, and therefore more material to which we can apply this risk analysis in a meaningful way.

Currently, our average loan size is between €500,000 and €600,000. We expect it to grow towards between €800,000 and €1 million.

Olivier Goy: Bigger tickets are less expensive to recruit than small SME borrowers. However, the structure of larger SMEs is more complex, therefore is takes more time to analyze them and assess their credit risk. So far, we have not noticed a major difference in default rate, even though we know for a fact that there is a negative correlation between company size and credit default rate.

Olivier Goy:  European alternative investment funds (ELTIFs) now make it easier to invest in larger tickets. We are voluntarily limiting ourselves to €2.5 – €3 million because don’t want to be exposed to a few big tickets.

Tim Thabe: At creditshelf, we don’t have a regulatory loan size limit because we use a fronting bank and because we raise funds for each project from a small number of accredited investors; 20 or fewer.

The main issue with regulation is that it is not consistent throughout Europe.

Tim Thabe: We believe that there is a gap in the private debt market reaching from very small tickets all the way up to ticket sizes of €10 million or €15 million where private debt funds are starting to operate and traditional private placements can be arranged economically.

OFF3R Index: Strong P2P Lending Growth Continues (Crowdfund Insider), Rated: AAA

OFF3R, an online marketplace for alternative investments, published a report on P2P lending and crowdfunding last week. OFF3R said that while equity crowdfunding sagged in January – dropping 65% from December – P2P lending remained strong.

Regarding P2P lending, OFF3R covers nine UK platforms in their Index. According to their numbers, these nine platforms lent a total of £294 million in January 2017, an increase of 6% versus December 2016.

OFF3R stated that historically low-interest rates are helping to drive investor interest in P2P lending assets as their risk-adjusted returns are appealing. OFF3R said this is highlighted by the fact that the Index platforms lent 50% more money in January 2017 compared to the same month in 2016.

Banks warm to alternative finance providers (Bridging&Commercial), Rated: AAA

Speaking at Fintech Fortnight on 16th February, Angus Dent, CEO of P2P business lender ArchOver, revealed that some banks were now directing borrowers they cannot serve to alternative finance providers rather than rejecting them outright.

Angus suggested that by recommending borrowers to platforms such as ArchOver or RateSetter, banks could maintain a relationship with the client rather than risk losing them to a competitor in future.

P2P lending discovers new pitfalls in the construction sector (Financial Times), Rated: AAA

A couple of years ago, a little-known civil engineering company called Elimco UK got into trouble.

Pressed for money, the company did what a small but growing number of businesses are doing today. It turned to the “peer-to-peer” lending sector. In June 2015, Elimco began using MarketInvoice, a startup backed by the government-owned British Business Bank. Cash flowed again, but not for long. Eight months later, Elimco was in administration and MarketInvoice’s investors were looking at losses of almost £800,000.

When MarketInvoice first took on Elimco as a customer in June 2015, the firm was assigned a high risk rating, seven out of 10, even though it had a guarantee from its Spanish parent company. But Elimco’s risk rating soon improved dramatically. By August, just two months later, it was selling invoices with a risk rating of two out of 10, in part because it had made payments on time.

To-date, MarketInvoice has financed around £1bn in invoices and plans to double that number this year alone. The construction sector accounts for about 16 per cent of invoices* sold through the seven-year old startup.

One of the factors investors are unable to filter by with MarketInvoice’s autobid function, however, is sector. An investor can’t decide to avoid construction companies, for example. Last year, in an email to an investor seen by FT Alphaville, a MarketInvoice employee said this was because it would be harder for businesses to get financing if investors could engage in sector by sector “cherry picking”.

In construction, you have ‘set off’ rights, which give a customer the right to withhold payments due on one contract in order to compensate for costs incurred on another contract. It’s basically a form of security for the customer.

Set off rights proved to be an issue in the case of Elimco. When it went into administration, it was owed £1.4m by Scottish Power, which in turn claimed around £2m for costs it would have to incur to complete other work Elimco was contracted to do. Elimco UK had little in the way of assets, so the only money available to be distributed to MarketInvoice was the money owed by Scottish Power, which had effectively said it wouldn’t pay because of its ‘set off’ rights.

BondMason CEO Stephen Findlay Comments on RBS Move into Online Lending via NatWest (Crowdfund Insider), Rated: A

Last week, NatWest – part of the Royal Bank of Scotland (RBS) – announced a new online platform designed to simplify the loan making process for UK SMEs.

Stephen Findlay, CEO of BondMason – Robo-Advisor for investors in P2P loans, shared his thoughts on RBS’s strategic move challenging peer to peer lending.

“… we don’t view this as negative competition to the P2P platforms already in this space, or vice versa. Rather, we think these different offerings will complement the industry and encourage improved standards and better self-regulation as more participants enter the market – a ‘flight to quality’ which we certainly welcome. The move by the banks also supports the growth of what is becoming a mainstream asset class, demonstrating that P2P lending is now recognized and being embraced by the traditional banking and finance sector.”

European Union

Anaxago Opens Up French Real Estate Crowdfunding to Institutional Investors (Crowdfund Insider), Rated: AAA

Anaxago Immobilier, the real estate arm of leading French equity crowdfunding platform announced last Saturday that it has secured € 10 million of funding pledged by a group of French institutional investors, qualified investors, and family offices to finance real estate development projects alongside retail investors. With this move, the firm departs from its 100% retail investor-funded model.

The French real estate crowdfunding market emerged only in 2015. It is almost entirely dedicated to the short-term (average 17 months) debt-funding of real estate development, as opposed to funding buy-to-let.

This FinTech CEO Is Making Money Instantly Available Anywhere In The World (Forbes), Rated: A

The mission of Creamfinance is to become the first one-click consumer loan provider in the world; making money available anytime, anywhere. The startup has raised over $7.3 million in funding to date, and has grown to over 200 employees expanding across 7 countries. In 2014, the data-driven consumer lending company raised 5 million Euros from the leading international venture capital fund, Flint Capital, which invests across the U.S., Israel and Europe.

Creamfinance currently offers consumers rapid credit solutions in several global markets, including Poland, Latvia, Czech Republic, Georgia, Denmark, and Mexico.

Matiss Ansviesulis: We focus on Smart Data scoring, otherwise known as behavioral pattern recognitions tools focusing on relevant, value-adding data.

We all know that big data is defined around four core aspects – data volume, velocity, veracity, and value. Whereas volume and velocity aspects refer to data generation and storage process, veracity and value deal with the usefulness of the data. In Big Data, due to the large number of data points, a lot of noise is being created, which challenges the value of data. Instead, we focus on smart data — well-defined, meaningful information that can expedite information processing and offer more privacy, stability. This is way more economical and creates less noise.

In 3-5 years, I hope to have initiated more discussion and action towards FinTech and banks cooperation. Also, in 3-5 years, I expect other companies to put emphasis on smart data scoring that leads to quicker decision making, and therefore more speedy loans for the customer.

Australia

Federal Treasurer Scott Morrison recently told a G20 conference in Germany of his plans to encourage more robo-adviser start-ups to launch in Australia.

But his comments highlight a general lack of understanding of the differences between “robo-advisers” and the digital advice needs of the majority of Australians.

However this leads to a common misunderstanding that pure B2C robo-advice start-ups address the everyday person, they don’t. In fact, we estimate they will only represent 5 per cent of the market.

It is broadly accepted that 15 per cent of the Australian population utilises traditional financial advisers (about 2.4 million people currently see planners according to Investment Trends— and typically that is the wealthiest 15 per cent of the population seeking to enhance investment opportunities.

The fact is robo-advisers are geared towards people making non-super investments. Ordinary working Australians – the other 85 per cent of the market – are accumulating wealth into superannuation and their homes.

Advising the remaining 80 per cent of the population is what the banks and super funds are striving for.

Asia

Alibaba Unit to Invest $ 200 Million in Korea’s Kakao Pay (Cryptocoins News), Rated: AAA

China’s Ant Financial, the financial investment arm of Alibaba Group and the world’s most valuable Fintech company, will invest $200 million in the mobile payment subsidiary of Kakao Corp, a major South Korean messaging platform.

Ant Financial announced the investment to be a part of a ‘larger strategic partnership agreement’ which will see Kakao Pay gain access to Ant Financial’s tremendously popular Alipay platform, allowing subscribers of both platforms to use each other’s services. Fundamentally, the move is to bridge Ant’s 450 million global users with Kakao Pay, which has over 14 million members in South Korea.

Further, the new partnership will benefit some 7.5 annual Chinese tourists visiting South Korea. Alipay users will be able to use their payments app with Kakao’s network of 34,000 South Korean merchants, both online and offline.

New platform revolutionizes the way Cambodian businesses borrow money (Southeast Asia Globe), Rated: A

Frustrated by limited funding options for small businesses, Chansamrach Lem launched the country’s first online peer-to-peer lending platform

Securing funding is a significant challenge for small- and medium-sized enterprises (SMEs) everywhere, but it is an even bigger obstacle in Cambodia, where banks, by and large, only accept real estate as loan collateral and few alternative financing solutions exist beyond friends and family.

While other P2P lending platforms are already in use in Cambodia, Komchey is the first such software to be designed and owned by a Cambodian company.

India

RBI asks banks to collaborate with fintech cos (India Times), Rated: A

The RBI deputy governor has said that in view of the competition from fintech companies, banks should reorient their business model and look at collaborating with more efficient players after assessing the likely impact of disruption.

The deputy governor said that SME lending, being a hugely underserved market, is a major opportunity for fintech startups to build and scale up sustainable businesses by offering services such as credit underwriting, and marketplace lending.

With around 51 million units throughout the geographical expanse of the country, MSMEs contribute around 8% of GDP, 40% of the total exports and around 45% of the manufacturing output.

South America

Interview with the CEO of Brazil Fintech Company, IOUU (TechBullion), Rated: A

Bruno Sayão: Our inspirations are Funding Circle (Europe) and Prosper (USA) and like them, we are passionate about micro and small companies, so we want to revolutionize the way they access financing. For this, we want to build a marketplace and make financing fair, simple and fast.

Bruno Sayão: IOUU charges only a credit origination fee after the company is able to capture the desired loan amount.

Bruno Sayão: In IOUU we try within 48 hours to inform if the company is going to be able to take loan with us, we created an extremely efficient process, whereas in the banks these processes are inefficient.

In addition, the interest rates charged are much lower than the banks, since our spread is extremely low because the whole process is done 100% online and we do not hide tariffs, the borrower knows exactly how much to pay in interest, IOF and Rate.

Bruno Sayão : Currently our biggest challenge is to get a partner financial institution interested in backing our operations, because in Brazil we can only operate being within the norms of the Central Bank of Brazil, since we act as banking correspondent;

Bruno Sayão : For the Brazilian to invest is still difficult and complex. People can not really understand the types of investments that are available and how they can do them. Estimates indicate that 55 million people over the age of 18 do not have a bank account and that 40% of micro and small enterprises in Brazil are debtors.

Bruno Sayão : Peer to peer lending is a risky investment made to diversify the investor’s portfolio. To mitigate risk to the maximum for the investor, our technology can verify in more than 500 public and private databases the credit history of the companies that will be published for capture in the platform. In addition, we recommend never investing the entire value in a single company, but rather diversify the investment into a pool of companies.

Authors:

George Popescu
Allen Taylor