Thursday October 25 2018, Daily News Digest

The Most Free and Clear Cities

News Comments Today’s main news: Funding Circle cuts price range for IPO. Nelnet withdraws industrial loan charter (ILC) application. China Rapid Finance names former Hewlett Packard exec as Co-CEO. Faircent drops prime lending rates. Today’s main analysis: The most free and clear cities in America. Today’s thought-provoking articles: Fincera grows as China’s P2P lending industry falters. BNP Paribas discusses […]

The Most Free and Clear Cities

News Comments

United States

United Kingdom

China/Hong Kong

International

India

Other

News Summary

United States

Nelnet withdraws application for industrial loan charter (American Banker) Rated: AAA

Nelnet, a student loan servicing company, has withdrawn its application to become a Utah-chartered industrial bank.

The Lincoln, Neb., company had filed an application with the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions in late June to form Nelnet Bank. Nelnet was pursuing an industrial loan charter.

The withdrawal is a “temporary step back” in what Nelnet knew could be a long process, Tim Tewes, the company’s president, said in a press release.

LendingTree Reveals the Most Free & Clear Cities in America (Lending Tree) Rated: AAA

Many U.S. property owners dream of the day they shed the mortgage, owning their homes outright. Reaching this milestone means not only skipping the monthly payment but achieving what is perhaps a lifelong goal of asset accumulation. LendingTree ranks U.S. cities by the proportion of such homeowners who are free and clear.

Source: LendingTree

The Federal Reserve’s measure of how much wealth households have in real estate equity has climbed from a $6-trillion level nine years ago to about $15 trillion in 2018.

Source: LendingTree

CreditShop Announces the Successful Conversion of More Than 500,000 Mastercard Credit Card Accounts (PR Newswire) Rated: A

CreditShop LLC today announced the successful conversion of more than half a million Mastercard credit card accounts and $1.4 billion in receivables. The portfolio, which was acquired in March 2017, was converted to the new Mercury Mastercard® which launched in May.  The Mercury Mastercard is marketed by CreditShop, and issued by First Bank & Trust of Brookings, South Dakota.

CreditShop believes that there are few reasonably priced credit cards available to credit-challenged consumers. There are about 75 million Americans in the “middle market” with FICO scores ranging between 575 and 675, and many are charged high fees by sub-prime credit card issuers.  The Mercury Mastercard is designed to give hard-working, middle market consumers access to a better credit card, at a reasonable price, so they can manage their financial lives better.

Covr Financial Technologies raises $ 10MM Series A from leading technology venture firms (PR Newswire) Rated: A

Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, today announced it has raised $10 million in Series A funding. In addition to Covr’s existing individual and family investors that made additional investments during this funding round, Covr’s current venture partners all participated including Nyca Partners, Commerce Ventures, Countour Venture Partners and Connectivity Capital Partners and were joined by new investor Allianz Life Ventures. This most recent round brings Covr’s total fundraising to more than $20MM.

Fintech Leader OppLoans Appoints Stacee Hasenbalg to Chief Compliance Officer Role (PR Newswire) Rated: B

OppLoans has announced the appointment of Stacee Hasenbalg to the role of Chief Compliance Officer. Ms. Hasenbalg has held positions in banking and financial services for more than 20 years, including the role of Associate General Counsel, US Regulatory Liaison at Bank of Montreal, and Chief Compliance Officer at Avant. At OppLoans, Hasenbalg will join the executive team leading the company’s compliance and risk oversight function to ensure maximal transparency and efficiency as the firm delivers financing to underbanked consumers.

United Kingdom

Funding Circle cuts price range for London IPO (Financial Times) Rated: AAA

Funding Circle, the peer-to-peer lending platform, has cut the maximum valuation it is seeking in its upcoming stock market flotation, which is viewed as a test for UK investors’ appetite to back alternative lending vehicles.

The loss making company — which connects small businesses seeking credit with private and institutional investors willing to lend to riskier borrowers for potentially higher returns — originally set a price range of 420p to 530p per share for its IPO. This would have valued it at up to £1.8bn.

Funding Circle, which is the first peer-to-peer lender to go public in the UK, has now narrowed that price range from 440p to 460p, giving a maximum valuation of £1.5bn.

Lending to manufacturers grew over the last year (Business Insider) Rated: A

Lending to manufacturers grew by 7.4 per cent over the last 12 months, in contrast to a wider 2.1 per cent contraction overall in UK business borrowing, according to banking trade body UK Finance.

The figures released today also show that UK business deposits for non-financial companies grew by 1.5 per cent in the last 12 months.

PLATFORM RAISES £4.5M TO END ‘PAYDAY POVERTY’ CYCLE (Business Cloud) Rated: A

FinTech start-up Wagestream has raised £4.5m in funding from a group of the world’s leading technology and social impact investors.

The fledgling company’s ‘Get-Paid-As-You-Go’ service allows workers to access their monthly wages in real-time.

Backers include QED Investors, Village Global (a global VC backed by leading entrepreneurs, including Bill Gates and Jeff Bezos), as well as the London Mayor’s Co-Investment Fund and the Fair by Design fund, whose social impact charities include Big Society Capital, Nominet Trust and the Joseph Rowntree Foundation.

Frank Field asks City watchdog to protect Wonga borrowers from ‘disaster zone’ (AOL) Rated: A

MP Frank Field has written to the City watchdog to seek assurances that borrowers from collapsed payday loan company Wonga will be protected from “a financial disaster zone”.

Following a meeting with Wonga’s administrators Grant Thornton, the independent politician has written a letter to Financial Conduct Authority (FCA) chief executive Andrew Bailey asking what steps the regulator will take to protect customers from loan sharks.

Mr Field wrote that it was still possible “people of good will” could buy the company’s £400 million worth of outstanding loans and “treat borrowers without exploitation”.

Tandem Bank adds auto-savings rules (Fintech Futures) Rated: B

Tandem Bank is launching the possibility of setting auto-savings rules, designed to help customers automate regular payments to the savings pot.

When a rule is triggered, money will be automatically moved from their current account into their Tandem account. This money will then start to earn interest.

China

As China’s P2P Industry Stumbles, One Company Is Soaring (The Diplomat) Rated: AAA

China’s peer-to-peer (P2P) lending industry is going through a challenging time, as regulators ensure that companies follow a list of over 100 new rules. The rules have been put into place to eliminate the fraudulent or poor business practices that have plagued the industry since its inception in 2006. Many of these firms have struggled to reduce customer credit risk, lacking sufficient financial and technological expertise. But some companies have continued to perform well despite the chaos, and one of these is Fincera, which lends to businesses.

Fincera Inc. is one of the first companies in China to make loans to trucking businesses online. The company operates a P2P lending platform called “Qingyidai” that continues to thrive despite the turbulence in China’s P2P lending sector. As hundreds of P2P lending firms are shut down and/or bailed out due to China’s current regulatory and economic environment, the few that persist stand out. For Qingyidai, the secret to survival is in its risk control methods, which combine technology with traditional risk control methods.

China Rapid Finance Limited (XRF) Names Former Hewlett Packard Executive as Co-CEO (Street Insider) Rated: AAA

China Rapid Finance Limited (“XRF” or the “Company”) (NYSE: XRF), a leading consumer finance marketplace and technology platform in China, today announced the expansion of its leadership team with the appointment of Russell Krauss, a former Hewlett-Packard executive, as Co-Chief Executive Officer and Vice Chairman. The appointment is intended to help accelerate its strategic corporate transformation as it launches new initiatives and business lines.

Crypto.com Announces Advisory Board (PR Newswire) Rated: B

Huey Lin (Operations)

Huey Lin is COO of Affirm which offers services that empower consumers to advance their financial well-being. Affirm was founded by Max Levchin and is one of Silicon Valley’s fastest growing fintech startups, having raised over US$500m. As COO, Huey is responsible for all aspects of operations, and scaling the company. Prior to Affirm, Huey spent nearly 12 years at PayPal in several key roles, including director of international risk policy & strategy and senior director of Asia-Pacific operations. She played an instrumental role in helping PayPal expand in Europe, meet critical global compliance requirements and was one of the first product managers.

European Union

Aren’t we at the ‘peak of the cycle’? BNP Paribas responds (Altfi News) Rated: AAA

In an exclusive interview with AltFi, Stéphane Blanchoz said the firm plans to originate €1 billion a year in SME loans in Europe, with at least €400m in the UK. Blanchoz is heading up the operation as head of SME alternative financing.

BNP is working with a number of origination partners, including CODE Investing and Caple, but also plans to originate loans itself.

The operation will focus on ‘medium enterprises’, with loans ranging from £500k to £5m. According to a presentation delivered at its offices last week, the asset manager sees this as an underserved segment of the market, populated by around 34,000 companies. Companies within this segment are turning over between £1m and £50m a year.

Ronald Kleverlaan, Director European Centre for Alternative Finance, Shares Insight Into European Fintech Marketplace (Crowdfund Insider) Rated: A

Ronald Kleverlaan: The alternative finance market in Europe is currently preparing for the next growth phase with EU wide regulations, launch of new initiatives backed by large institutional funders and public support for cross-border investments.

Previously alternative finance was used in startups or specific higher risk industries and in several countries 10-20% of that market is already funded through alternative finance providers.

One of the main drawbacks is the maximum of €1 million to be raised by companies through a platform. In most member states this maximum has already been raised to €5 million or €8 million making it applicable also for larger scale-ups and growing companies to raise funding though these platforms.

The Finnish Financial Supervisory Authority approved Fellow Finance Plc’s prospectus (Globe Newswire) Rated: A

The Finnish Financial Supervisory Authority has today, on 26 September 2018, approved Fellow Finance Plc’s (“Fellow Finance” or the “Company”) Finnish language Prospectus (“Prospectus”) regarding the Company’s planned listing on the First North Finland marketplace of Nasdaq Helsinki Ltd and the initial public offering related thereto (the “IPO”).

The Prospectus will be available in electronic form on or about 26 September 2018, on Fellow Finance’s website at www.fellowfinance.com/company/ipo, at the website of Evli Bank Plc at www.evli.com/fellowfinance and at the website of Nordnet Bank AB Finnish Branch at www.nordnet.fi/fellowfinance. The printed versions of the Prospectus will be available on or about 27 September at the registered office of the Company at Ratakatu 1 b A 10, FI-00120 Helsinki, at Evli Bank Plc’s office located at Aleksanterinkatu 19 A, 4th floor, FI-00100 Helsinki and at the Nasdaq Helsinki Ltd (Fabianinkatu 14, 00100 Helsinki).

MYBESTBRANDS Launches Universal Checkout in Collaboration With Payment Provider Klarna (PR Newswire) Rated: B

Klarna, one of Europe’s leading payment providers, and MYBESTBRANDS, Germany’s largest online shopping mall for premium and luxury fashion, have joined forces to launch the Universal Checkout (UCO), the first cooperation of its kind in Germany. Innovative bot technology developed by MYBESTBRANDS combined with the Klarna Checkout will create a superior shopping experience for customers, driving increased order values, conversion and ultimately building loyalty for MYBESTBRANDS’ merchants.

Customers will now be able to add items from different merchants to a single cart on MYBESTBRANDS and then pay with a click via Klarna.

International

Striking the Delicate Balance Between Customer Experience and Fraud Prevention (TransUnion), Rated: AAA

Striking the delicate balance between customer experience and fraud prevention is not an easy feat. This was a common theme among newly released Forrester Consulting global studies exploring fraud in the financial services, insurance and single and multi-family rental industries.

Increases in fraud are corroborated by the research conducted by Forrester.

  • Nearly all financial services firms (94%) in the study recognized that they have experienced some sort of fraud, whether it’s identity theft/new account fraud, synthetic identity fraud, or account takeover fraud in the past two years.
  • Almost two-thirds of insurance companies (62%) have seen an increase in soft fraud and 57% have seen an increase in identity fraud in the past year.
  • Virtually all property management companies (97%) have experienced fraud in the properties they manage in the past two years.
Source: TransUnion

The studies come at a time when TransUnion’s own proprietary fraud data found that outstanding balances of suspected synthetic fraud for auto loans, bankcards, retail cards and personal loans have now surpassed $1 billion as of Q2 2018. Insurers and large and small property managers also face new fraud schemes as the prevalence of online applications continues to rise.

Source: TransUnion

See the full study on fraud here.

Speakers tell ABS pros not to sweat the credit cycle (GlobalCapital) Rated: A

Panelists speaking on state of the consumer ABS market on day two of ABS East told a packed audience that while the credit cycle is definitely in its late stages, material distress in consumer credit was unlikely to be seen for some time.

The comments reflect a broader sentiment that has been expressed at the conference, that the bull market is showing no signs of slowing down and is throwing the likelihood of a recession of any size into question (see related article).

This Exchange Protects User Funds by Keeping 98% in Cold Storage (News BTC) Rated: A

A new European exchange wants to protect their customer funds from governments and hackers by regulatory compliance and a special focus on security.

Blockchain.io is a newly announced exchange that intends on enforcing strict rules to comply with both international and local laws, even for future regulations. The company wants to stay regulatory-compliant, audit their records and only approve carefully selected coins in order to make sure that they stay on the right side of the law.

For instance, a variety of simple and complex order types will be featured. Moreover, there are plans to integrate a peer-to-peer (p2p) lending system to let user borrow from a fund managed and maintained by Blockchain.io. The interest rates of such transactions will be based on supply and demand.

Australia

Real Estate Startup Konkrete Gets Backing From Signum Capital (ThirtyK) Rated: AAA

Blockchain startup Konkrete announced it is receiving financial backing from Signum Capital, an investor in blockchain technologies.

Konkrete, which provides a platform for tokenizing real estate assets, is in the midst of raising $3 million. The Melbourne, Australia-based company has $2 million in precommitments with Signum as the lead investor, according to Australia’s Financial Review.

The announcement comes amid a flurry of blockchain-related real estate projects worldwide.

India

Faircent.com drops prime lending rates by 200Bps to 9.99% p.a. for unsecured loans (Economic Times) Rated: AAA

Leading NBFC-P2P Faircent.com on Wednesday announced a reduction in the interest rate on unsecured loans to 9.99% per annum for prime borrowers listed on its platform. According to a statement, the move is a first for India’s lending market, with such an interest rate being the lowest for unsecured loan offered by any private/PSU bank or alternative lending platform in the country, so far.

Faircent says this is the direct result of RBI regulating the peer-to-peer lending sector in India and recognizing it as an NBFC-P2P, thereby unlocking the alternative credit supply into the economy.

SC verdict on Aadhaar Act may make operations expensive for fintech players (Your Story) Rated: A

The Supreme Court of India on Wednesday, while upholding the constitutional validity of Aadhaar, struck down Section 57 of the Aadhaar Act, which allowed the sharing of citizen data with private entities.

Bhavin Patel, co-founder and CEO of P2P lending platform LenDenClub, says,

“The authenticity of data through Aadhaar is really high considering physical documents (like PAN card) can be copied. The costs of verification for delivering ultra-small ticket size loans (of say Rs 5,000) will definitely be a concern. We estimate that there will be a 30-percent increase in costs on physical verification, which will add up to another Rs 100 or Rs 150.  Also, deployment may take a day or more now (in an ideal scenario) since physical verification takes 24 hours at least.”

COAI to examine implications of Supreme Court verdict on Aadhaar linkage with mobile connections (Economic Times) Rated: A

Cellular Operators’ Association of India (COAI) Wednesday said it will examine and assess implications of the Supreme Court judgement, which states that it will not be mandatory for customers to link Aadhaar for mobile connections and bank accounts.

The apex court Wednesday struck down the Section 57 of the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016 that permitted private entities like telecom companies or other corporates to avail of the biometric Aadhaar data.

Loan Rate DOWN: While HDFC, SBI, ICICI, Indusland Bank hike lending rates, this lender bucks the trend (Zee Business) Rated: A

Loan takers are having to pay interest through their noses and there has been no relief in sight for a long time. However, bucking the trend is this new-age online lender. Faircent.com has actually reduced interest rates on unsecured loans by a whopping 200 bps to 9.99% per annum for prime borrowers listed on its platform. This is lowest “lowest” interest rate for unsecured loans offered by any private/PSU bank or alternative lending platform in the country, Faircent claimed in a statement. It further said the reduction in lending rate is the “direct result of RBI regulating the peer-to-peer lending sector in India and recognizing it as an NBFC-P2P, thereby unlocking the alternative credit supply into the economy.”

Significantly, unsecured loans are issued without any collateral and are supported only by the borrower’s creditworthiness.

The Reserve Bank of India (RBI) had hiked repo rate in August 2018 from 6.25% to 6.50% to curb inflation. This affected both the existing as well as future borrowers taking loans from banks. Following RBI decision, several public sector and private banks have increased their Marginal Cost-based Lending Rates (MCLR), making the with borrowers pay higher interest rates and EMIs on their loans. Faircent.com has done the opposite.

Asia

BoT readies peer-to-peer lending service (Bankok Times) Rated: AAA

The Bank of Thailand plans to set regulations for peer-to-peer (P2P) lending service by the year-end, widening opportunities for small-business operators to access financial sources.

The central bank expects to set out regulations to cover all related parties, including P2P lending platforms, borrowers and lenders, said assistant governor Ruechukorn Siriyothin.

Authors:

George Popescu
Allen Taylor

Thursday May 17 2018, Daily News Digest

aadhaar

News Comments Today’s main news: Chime surpasses 1M bank accounts. Top MPLs (SoFi, VPC, more) join Marketplace Lending Association. LendingPoint secures up to $600M credit facility. Today’s main analysis: Survey on Aadhaar, data-driven insights. Today’s thought-provoking articles: Why the credit card boom has peaked. Should banks have ‘flanker’ brands? The Baltics are stars in EU P2P lending. Top personal loans […]

aadhaar

News Comments

United States

United Kingdom

India

International

Other

News Summary

United States

Chime Surpasses One Million Bank Accounts (PR Newswire) Rated: AAA

Chime announced it surpassed one million accounts to date last month and has now processed more than $4.5 billion in total transaction volume, solidifying Chime’s position as the clear leader in the U.S. challenger banking segment.

Unlike traditional banks that charged consumers over $34 billion in fees in 2017, Chime is transforming the consumer banking experience. The company’s unique business model, which doesn’t rely on fees, allows Chime to relentlessly focus on its mission of helping members lead healthy financial lives.

 

CreditShop Introduces the Mercury Mastercard for Hardworking Americans (Pr Newswire) Rated: A

CreditShop LLC, a finance company focused on developing, marketing and servicing consumer-friendly credit products, today announced the introduction of the Mercury Mastercard. Mercury cards will provide cardmembers with complementary access to their FICO score, and account performance will be reported to major credit bureaus. The cards will be issued by First Bank & Trust of Brookings, South Dakota.

There are about 75 million Americans in the “middle market” with FICO scores ranging between 575 and 675, and many are charged high fees by sub-prime credit card issuers.

LendingPoint Secures up to $ 600 Million Credit Facility Arranged by Guggenheim Securities (Business Wire) Rated: AAA

LendingPoint today announced it has closed an up to $600 million, committed credit facility arranged by Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners.

With this new deal, LendingPoint has secured up to $1.1 billion of senior credit financing in less than one year. In September 2017, the company announced it had secured an up to $500 million committed credit facility, also arranged by Guggenheim Securities.

What are the Forces Behind the GreenSky IPO? (PYMNTS) Rated: A

Some 58 percent of U.S. homeowners will pay for home improvements this year, roughly the same level of interest in 2017, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks.

But spending plans tell a different story, one that works in favor of the GreenSky IPO. “The percentage of people intending to use a home improvement loan has grown 29 percent from 2017, with 54 percent more 18- to 34-year-olds planning to fund projects through home improvement financing,” the report said. “While overall, 30 percent of homeowners say they’ll pay for some portion of their 2018 project with a credit card, 16 percent fewer homeowners aged 18 to 34 plan to use them” compared to 2017.

Coinbase just rolled out 4 new crypto trading tools, and they offer a big clue to where the platform might be headed next (Business Insider) Rated: A

On Tuesday, the company announced the launch of four services, all centered on attracting financial institutions to its platform. The new tools include options like Coinbase Custody, a custodian partnership similar to the custodian offerings typically provided by banks to secure customers’ cash, and Coinbase Prime, a platform centered on research and market data geared toward institutional clients.

After collaborating previously at Exeter Finance and AmeriCredit, auto finance industry veterans Mark Floyd and Kenneth Wardle are teaming up again; this time to leverage what’s happening online when consumers search for financing.

According to a news release sent to SubPrime Auto Finance News this week, Floyd and Wardle have acquired an equity stake in Horizon Digital Financial Holdings, an online auto finance technology firm located in the Dallas-Fort Worth Metroplex. The transaction was effective May 1.

Horizon Digital is the parent company for online consumer loan marketplace participant myAutoloan.com.

Floyd will serve as chairman and chief executive officer of Horizon Digital, and Wardle will serve as chief operating officer.

Is Envestnet’s market dominance also its weakness? (Financial Planning) Rated: A

At well over $400 billon, Envestnet has more than six times the assets of its nearest competitor in its core asset management platform business. Tamarac, the firm’s rebalancing, reporting and practice management software powerhouse, has seen revenue grow approximately eight-fold since Envestnet bought the company six years ago.

The always-opportunistic Envestnet insured itself a pole position in data aggregation and analytics, one of the sexiest tech areas in the business, by acquiring the innovative Silicon Valley firm Yodlee three years ago.

After raising $ 110M, Circle raises announces new US dollar-linked cryptocurrency (Silicon Angle) Rated: A

Bitcoin and blockchain startup Circle Internet Financial, Inc. has raised $110 million in new funding as a “strategic investment” while also announcing its intent to launch a new cryptocurrency tied to the U.S. dollar.

The new round announced Tuesday, the first since 2016, was led by Bitmain, with the participation of IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, Pantera, Blockchain Capital and Tusk Ventures.

A fintech shifts gears to virtual cards (American Banker) Rated: A

The fintech startup Regalii, which originally built technology to help immigrants pay bills back home, has pivoted. Under a new name, arcus, it is now helping banks reissue credit and debit cards to customers whose cards have been lost, stolen or breached.

What is Elix / Elixir (ELIX)? | Beginner’s Guide (Coin Central) Rated: A

Elix is an Ethereum-based platform for payments, loans, and crowdfunding. The team is uniquely taking a mobile-first approach and focusing on usability to attract as large of a user base as possible from the start.

Elix also includes a platform, Boost, to facilitate decentralized crowdfunding campaigns using smart contracts.

Peer-to-Peer (P2P) Lending

With Elix, though, both the lender and the borrower are incentivized to follow the terms of the loan. When setting up a loan, the participants can opt to include a mining period once the loan is complete to gain additional rewards. If enabled, as a lender, you must hold the ELIX in your wallet for a certain amount of time in a system similar to Proof-of-Stake. When that holding period is complete, Elix hands out the rewards in the form of a new token, Token P. This token will most likely have a different name in the future.

If the borrower pays back the loan on time, the reward is split with the lender receiving 65% and the borrower receiving 35%. If the borrower has late payments, though, the lender receives 100% of the reward.

Why the Credit-Card Boom May Have Just Peaked (Wall Street Journal) Rated: AAA

Following some of their strongest years ever, credit-card issuers are grappling with an uneasy future.

Five of the largest credit-card issuers— American Express Co. AXP 0.87% Capital One Financial Corp. COF 1.15% Citigroup Inc., C -0.20% Discover Financial Services DFS 0.54% and Synchrony Financial SYF 0.90% —generated a median return of 2.1% on their assets for common shareholders in the first quarter, up from 2% a year earlier but down from 2.6% two years prior, according to analysis by Autonomous Research. The recent peak was 3.7% in the second quarter of 2011, according to an industry analysis by Autonomous at the time.

Top 5 Personal Loans With No Origination Fee (Student Loan Hero) Rated: AAA

To help, here’s our list of the top five lenders. Interest rates were current as of May 16, 2018. Some rates include a discount for setting up autopay. LightStream rates can vary by loan amount, repayment period, and the purpose of the debt.

Source Student Loan Hero

7 Alternatives to a Traditional Bank Account (Dough Roller) Rated: A

However, when you invest in P2P lending, you’re only purchasing notes, not entire loans. The notes represent $25 slivers of individual loans. That means that you can invest in 40 different loans with an investment of $1,000. That will help to minimize your risk.

The returns on P2P lending are impressive. Lending Club advertises average returns of about 4% to 6% per year, but many individuals are reporting much higher returns.

Coinbase’s first investment, Compound, earns you interest on crypto (Tech Crunch) Rated: A

Compound wants to let you borrow cryptocurrency, or lend it and earn an interest rate. Most cryptocurrency is shoved in a wallet or metaphorically hidden under a mattress, failing to generate interest the way traditionally banked assets do. But Compound wants to create liquid money markets for cryptocurrency by algorithmically setting interest rates, and letting you gamble by borrowing and then short-selling coins you think will sink. It plans to launch its first five for Ether, a stable coin, and a few others, by October.

Today, Compound is announcing some ridiculously powerful allies for that quest. It’s just become the first-ever investment by crypto exchange juggernaut Coinbase’s  new venture fund. It’s part of an $8.2 million seed round led by top-tier VC Andreessen Horowitz, crypto hedge fund Polychain Capital and Bain Capital Ventures — the startup arm of the big investment firm. [Update: Compound told us it was Coinbase Ventures’ first investment when it closed its round, though Coinbase notes that it’s done 8 rapid-fire investments over the past two months alongside this funding.]

NYU’s Sam Chandan on the Changing Real Estate Capital Markets (Commercial Property Executive) Rated: B

While there is potential for growth and it’s an exciting opportunity, real estate crowdfunding will remain a relatively small share of the overall market. In our view, on the long-term, banks, agency lenders, life insurance companies will remain the dominant sources of financing into the market.

 

Rene van Kesteren joins BlockFi as Chief Risk Officer (BlockFi) Rated: B

Former Managing Director of Equity Markets at BOA Merrill Lynch, Rene van Kesteren, joins BlockFi as Chief Risk Officer. BlockFi, based in New York City, serves crypto investors by offering USD loans collateralized by cryptoassets.

Van Kesteren will be responsible for the company’s risk models and product development in addition to general strategic influence as part of the company’s executive team.

United Kingdom

Is it wrong for banks to launch ‘flanker’ brands? (AltFi News) Rated: AAA

Samir Desai, co-founder and chief executive officer of one of the UK’s biggest fintech firms Funding Circle, once suggested Esme was little more than a ‘massive corporate fudge’.

For the uninitiated, Esme is the online lending platform launched by NatWest. It can advance loans of up to £150,000 to small businesses in less than an hour, utilising a wholly online process that is a great deal swifter and simpler than its progenitor, NatWest, can manage.

NatWest is by no means alone in having launched a separate digital banking or lending brand – often called ‘flanker’ brands by innovation specialists.

Victory Park Capital joins Marketplace Lending Association (Peer2Peer Finance) Rated: B

VICTORY Park Capital (VPC) has joined US industry body the Marketplace Lending Association (MLA).

 

China

China’s tech giants have few worries from smaller rivals (Channel Asia News) Rated: A

Chinese start-ups and other established companies like Didi Chuxing, Xiaomi and Meituan Dianping may command high valuations but they are unlikely to dislodge leaders Alibaba and Tencent, says one observer from the Financial Times.

China’s pre-eminent tech duo of Alibaba and Tencent are approaching their 20th birthdays. Still reasonably youthful but old enough to have spawned an entire new generation of internet wunderkinder.

Peer-to-peer lending, for example, offers a graphic illustration of what can happen when multiple players are unleashed.

European Union

The Baltics, the Shining Stars in the EU P2P Lending landscape (The Baltic Times) Rated: AAA

Finbee (LV) offers average yields as high as 20%, while all of them offering returns between 10-20%.

An explanations of the yield/risk ratio is that they use quality originators, a magic formula for due diligence, using new technologies such as machine learning and artificial intelligence.

One too watch is Peerberry (LV) using outside loan originators and creating a marketplace to trade consumer loans offering a 12.49% on average.

 

International

Marketplace Lending Association Announces Nine New Members (PR Newswire) Rated: AAA

The Marketplace Lending Association (MLA) today announced the addition of nine new companies to the Association. The new members join as the MLA continues to expand its presence and engage with policymakers in Washington and around the country.  The three new lending firms include Social Finance(SoFi), LendingPoint and College Ave.  The six new Associate and Investor Council Members of the MLA include Laurel Road, Education Loan Finance (ELFI), Arcadia Funds, Victory Park Capital, PricewaterhouseCoopers, and First Associates.  The MLA now has 24 active members.

TraXion.tech announces pre-sale, ICO (Inquirer) Rated: B

Ireland-based company Pluma Technologies Ltd together with its Philippine partner Gava Technologies Inc. are raising $4M worth of Ether through a pre-sale for its TraXion tokens.

TraXion.tech Chief Executive Officer Ann Cuisia said that the company’s token sale would pave the way for TraXion to become the go-to crypto-economy for payments, peer-to-peer lending, remittances, savings, insurance, investments, and philanthropy.

The TraXion token pre-sale began last May 1, 2018 and the Initial Coin Offering (ICO) will start on June 1, 2018, respectively. TraXion tokens are currently valued at 0.001 ETH.

India

Largest Independent Survey on Aadhaar, provides Data-Driven Insights (IDinsight Press Office) Rated: AAA

IDinsight, a global development analytics firm, today released its State of Aadhaar Report 2017-18 which provides data-driven insights on Aadhaar, the world’s largest biometric system. The report is based on an independent household survey covering 2947 rural households in 21 districts across three Indian states.  The survey was conducted between November 2017 and February 2018.

The key highlights of the report are:

  • Over 96% of respondents value privacy and thought it is important to know what the government will do with their Aadhaar data. At the same time, 87% of respondents approve of mandatory linking of Aadhaar to public welfare programs.
  • Aadhaar’s coverage is widespread, but the data quality has room for improvement. The report finds a higher uptake of Aadhaar than voter identification cards. In addition, the report finds no evidence of differences in enrollment by gender, caste, religion, or education levels. The report highlights that 8.8% of Aadhaar-holders reported errors on their name, age, address, or other information on their Aadhaar letter. Compared to voter identification cards, the error-rate on Aadhaar was 1.5 times higher.
  • While exclusion from food subsidy welfare-benefits due to Aadhaar-related factors is significant, it is lower than exclusion explained by factors unrelated to Aadhaar. State capacity has a bearing on the functioning of welfare distribution, with wide variation between certain states. Overall monthly exclusion from welfare benefits ranges from 9.9% to 1.1%. Of this, Aadhaar-related factors contribute 2.2% and 0.8% respectively. Despite this, the report finds that a majority of welfare beneficiaries prefer Aadhaar-based benefits delivery in both states, as they perceive biometric authentication prevents identity fraud.
Source: State of Aadhaar Report

Read the full report here.

Peer-to-peer lending expected to see huge traction in India (The Week) Rated: A

Peer-to-peer (P2P) lending, which helps people to borrow and lend money without the help of an official financial set up such as a bank as an intermediary, is expected to see huge traction in the country in the near future. It is estimated that the value of P2P lending to be generated in India over next five years will be around $4 billion (which will be 160 times the current lending size).

However, this is sum is small when compared to China where P2P lending book currently is around $100 billion, indicating the potential for exponential growth opportunity available for P2P in India. India currently has around 30 online P2P lending platforms with a current loan book of $ 25 million.

Indian Govt’s Flagship Startup Scheme Slows Down As DIPP Hits Brakes On Funding (Inc42 Media) Rated: B

The Indian government’s $1.47 Bn (INR10,000 Cr ) Fund-of-Funds for Start-ups (FFS) , a part of the Start-up India Action Plan aimed at helping startups gather funds, isn’t seeing much action and it isn’t because of lack of trying, The Indian Express reported.

Small Industries Development Bank of India (SIDBI), which manages FFS program, has so far committed $189.3 Mn( INR 1,285 Cr) to 27 local venture capital funds under the FFS scheme, of which $20.8 Mn (INR 141 Cr)  —only about 11% — has been disbursed to these funds till April 2018.

Asia

Standard Chartered to use Robo Web’s LnB platform (Taipei Times) Rated: A

Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) yesterday entered into a partnership with peer-to-peer lending operator Robo Web Technology Co (瑞保網路科技) to expand its retail banking clientele from high-net-worth individuals to the general public.

The alliance enables borrowers to open accounts and apply for loans without visiting brick-and-mortar branches and came as competition from non-traditional players gains force.

Standard Chartered would continue to pursue affluent clients, but also aims to take advantage of the fast-growing digital banking business, which was valued at US$64 billion in 2015 and could hit US$1 trillion in 2025, Lin said.

 

How proptech is changing Hong Kong’s property industry (South China Morning Post) Rated: A

Start-ups in Asia-Pacific have received US$4.8b, or over 60pc of the world’s proptech investments, with Hong Kong and China taking US$3b of that amount.

In Hong Kong, some companies working in property have begun adopting proptech, but by and large, the industry and regulators have been slow in tapping into these advances, which analysts attribute to a few factors.

JLL said in a November report that 179 start-ups in Asia-Pacific have received US$4.8 billion, or over 60 per cent of the world’s proptech investments since 2013, with Hong Kong and mainland China taking US$3 billion of that amount.

Hong Kong is also aiming to become a global hub for innovation and technology, earmarking HK$50 billion (US$6.37 billion) this year to boost the tech sector.

 

Authors:

George Popescu
Allen Taylor

Wednesday November 15 2017, Daily News Digest

credit spreads

News Comments Today’s main news: PayPal launches P2P funding platform.True Accord lands $22M in funding.Lendable hits 100M GBP lending milestone.P2P Global Investments fund sees huge reduction in U.S. consumer loan exposure.Yirendai’s Q3 results.Klarna, PPRO partner on credit payment across Europe. Today’s main analysis: The latest trends in consumer credit.The corporate bond market suffers indigestion. Today’s […]

credit spreads

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Canada

MENA

News Summary

United States

New Q3 2017 TransUnion Industry Insights Report reveals latest consumer credit trends (TransUnion Email), Rated: AAA

With the holiday shopping season officially kicking off during Black Friday next week, TransUnion’s (NYSE: TRU) just released  

Credit Card Lending Metric Q3 2017 Q3 2016 Q3 2015 Q3 2014  

Number of Credit Card Loans  

414.3 million  

398.5 million  

374.2 million  

361.2 million Borrower-Level Delinquency Rate (90+ DPD)  

1.68%  

1.53%  

1.44%  

1.35%  

Average Debt Per Borrower $5,483 $5,323 $5,229 $5,251 Prior Quarter Originations* 15.5 million 17.6 million 15.3 million  

13.7 million Average New Account Credit Lines*  

$5,307  

$5,252  

$5,047  

$4,920

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Q3 2017 Credit Card Loan Performance by Age Group

Age/Variable 90+ DPD Annual Pct. Change Average Loan Balances Per Consumer Annual Pct. Change
Gen Z (1995 – present) 2.55% 15.5% $1,101 28.5%
Millennials (1980-1994) 2.48% 5.6% $4,028 12.0%
Gen X (1965-1979) 2.10% 7.7% $6,997 4.9%
Baby Boomers (1946-1964) 1.11% 8.8% $6,351 0.8%
Silent (Until 1945) 0.74% 10.2% $3,928 0.2%

 

Q3 2017 Auto Loan Trends

 

Auto Lending Metric

Q3 2017 Q3 2016 Q3 2015 Q3 2014
 

Number of Auto Loans

 

78.6 million

 

74.8 million

 

69.8 million

 

64.6 million

Borrower-Level Delinquency Rate (60+ DPD)  

1.40%

 

1.33%

 

1.19%

 

1.20%

 

Average Debt Per Borrower

$18,567 $18,361 $17,946 $17,351
Prior Quarter Originations* 7.1 million 7.3 million 7.2 million 6.8 million
Average Balance

of New Auto Loans*

 

$20,653

 

$20,436

 

$20,097

 

$19,524

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Mortgage Delinquency Rates Continue Extended Decline

Q3 2017 Mortgage Loan Trends

 

Mortgage Lending Metric

Q3 2017 Q3 2016 Q3 2015 Q3 2014
 

Number of Mortgage Loans

 

52.7 million

 

52.3 million

 

52.9 million

 

53.6 million

Borrower-Level Delinquency Rate (60+ DPD)  

1.91%

 

2.29%

 

2.50%

 

3.51%

 

Average Debt Per Borrower

$199,417 $193,489 $189,428 $186,577
Prior Quarter Originations* 1.9 million 2.0 million 1.9 million 1.4 million
Average Balance

of New Mortgage Loans*

 

$224,502

 

$230,120

 

$221,753

 

$195,514

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

 Personal Loan Balances Reach All-Time High as Delinquency Rates Decline

Q3 2017 Unsecured Personal Loan Trends

 

Personal Loan Metric

Q3 2017 Q3 2016 Q3 2015 Q3 2014
Total Balances $112 billion $100 billion $83 billion $66 billion
Number of Unsecured Personal Loans  

17.5 million

 

16.2 million

 

14.3 million

 

12.5 million

Borrower-Level Delinquency Rate (60+ DPD)  

3.13%

 

3.53%%

 

3.51%

 

3.61%

 

Average Debt Per Borrower

$8,017 $7,755 $7,258 $6,673
Prior Quarter Originations* 3.6 million 3.6 million 3.6 million 3.2 million
Average Balance of New Unsecured Personal Loans*  

$6,140

 

$5,475

 

$5,520

 

$4,847

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Corporate bond market suffers bout of indigestion (Morningstar), Rated: AAA

The corporate bond market suffered a bout of indigestion last week. Between absorbing a healthy amount of new issues and profit-taking from early year-end window-dressing, corporate credit spreads widened, albeit from levels that are still near multiyear lows. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) widened 5 basis points to +104. In the high-yield market, the BofA Merrill Lynch High Yield Master Index widened 24 basis points to end the week at +376.

Source: Morningstar

Energy Companies’ Credit Quality Expected to Continue to Improve;
2018 Oil Forecast $55-$60

A confluence of global events recently drove the crude oil futures price curve into backwardation, a condition in which a commodity’s market price today (or spot price) is higher than the price for further-out month contracts. As of this writing, the spot price for West Texas Intermediate crude is $56.90/barrel and the December 2018 contract is priced at $55.70/barrel. Typically, the oil market trades in contango, which is the opposite of backwardation. In contango, a commodity’s spot price is below the price for further-out month contracts.

Source: Morningstar

See the full Morningstar report here.

Goldman Sachs’ Marcus is winning the personal loans arms race (Tearsheet), Rated: AAA

Marcus by Goldman Sachs said it was going to lend $2 billion to customers by the end of this year. As of late Monday, it had already done that.

Lending Club has reported losses exceeding $200 million over the last six quarters; Prosper has lost $210 million since the start of 2016, despite various cost-cutting measures, and lost its unicorn status. Even OnDeck Capital, which focuses on small businesses, is struggling to become profitable, having reported losses over eight consecutive quarters.

Goldman sees a $13 billion lending opportunity with Marcus over three years, CFO Marty Chavez said Tuesday in remarks at the Bank of America Merrill Lynch Future of Financials Conference.

TrueAccord Nabs $ 22M Series B To Bring Machine Learning To Debt Collections (Forbes), Rated: AAA

San Francisco based TrueAccord, announced today that is has closed $22M in additional funding led by Arbor Ventures, with participation from existing and new investors. The Series B funding follows a period of sustained and rapid growth for the company.

Why customer acquisition is so difficult for financial startups (Tearsheet), Rated: AAA

Customer acquisition is expensive. For a large bank it could cost between $1,500 and $2,000 to acquire a retail banking customer, according to Ciaran Rogers, director of marketing at StratiFi, an early stage startup that helps advisors manage portfolio risk. In credit cards the cost could be in the hundreds, not thousands — according to David True, a partner at PayGility Advisors. An expensive customer could be as high as about $800, which would include the cost of teasers and bonus loyalty points. At startups it could be between $5 to about $300 for one customer. Fintechs want to spend less money on that — Wealthfront, for example, decreases its marketing budget year after year.

Partnerships with bigger brands have been one way to bring that cost down. For example, Canada’s fifth largest bank, CIBC, is reportedly in talks with robo-adviser Wealthsimple over a referral deal in which the bank would send some of its customers to the digital investment startup.

At MoneyLion, the cost of customer acquisition is about $5 or less, said chief marketing officer Tim Hong. MoneyLion launched in 2013 and now touts about 1.5 million customers. Earlier this year, Luvleen Sidhu, president and chief strategy officer of the all-digital BankMobile, said it spends about $10 to acquire an account.

Solar Finance Pioneer CleanCapital Closes 3.7M Investment Round to Help Investors Tap Solar Market (EIN Presswire), Rated: A

CleanCapital, an online marketplace for clean energy investing, announced today that it closed its Series A with a total investment of $3.7 million. This investment came through 50 investors to include FinTech and cleantech leaders as well as SeedInvest’s Selections Fund in this latest round.

Over the past five years, the solar market grew an average rate of 72% per year, fueled by regulatory stability and reduced install costs.

As Black Friday Nears, a Record 196 Million Consumers Now Have Access to Various Forms of Credit Cards and Other Revolving Lines of Credit (TransUnion Email), Rated: A

With the holiday shopping season officially kicking off during Black Friday next week, TransUnion’s (NYSE: TRU) just released Q3 2017 Industry Insights Report found that 195.9 million consumers now have access to revolving credit such as bank-issued and private label credit cards. According to the report, this is the highest level of revolving credit access since TransUnion began measuring the variable and is greater than the 192.6 million consumers who had access to such credit products in Q3 2016.

TransUnion’s analysis found that average private label card originations in the holiday season (defined as November and December) for 2016 was 148% of the average originations for the January through October timeframe. This is tracking in line with recent rises observed in 2015 (156%) and 2014 (164%).

Other Consumer Credit Headlines from the Industry Insights Report:

  • Total Credit Balances Rise despite Slowdown in New Credit Card Accounts
  • Auto Loan Market Shifting Toward Less Risky Consumers
  • Mortgage Delinquency Rates Continue Extended Decline
  • Personal Loan Balances Reach All-Time High as Delinquency Rates Decline

Online Lending And A Tale Of Two Fed Studies (PYMNTS), Rated: A

In 2010, digital lenders originated $249 million in unsecured personal loans, and by 2016 that number had grown ninety-fold.

Cleveland’s Dark Outlook

That detail alone isn’t necessarily bad news – after all, having more debt doesn’t necessarily mean the online lending customers are doing worse. But paired with other data, the news looks pretty grim. According to the Cleveland Fed survey, the online lending customers also showed lower credit scores on average, more delinquent debt and more total debt outstanding.

The findings further suggest that in some cases, the three- to five-year installment loans of up to $30,000 to $40,000 often offered by online lending sites are not being used for their intended purpose of consolidating credit card debt into a single, lower-interest loan. Instead, customers were using those loans to rack up more debt and maxing out the cards they used to pay off the loans.

Philly, Chicago And A Very Different Result

The earlier report did note that outcomes varied depending on the specific borrower profile and their precise lending requirements. However, because of the expanded and more inclusive credit ranking criteria, consumers who might otherwise be “credit invisible” or appear to have a sub-prime score are able to get a more complete evaluation that considers a wider array of factors.

The lack of regulatory clarity raises concerns, they said, over whether customers are treated fairly, have “equal access to credit, and receive offers that can be easily compared and understood,” suggesting that alt lenders need to compete on a level playing field with their regulated bank counterparts.

Why The Discrepancy?

The Cleveland Fed study examined data from TransUnion for consumers who had been identified as having taken out “online bank-based loans.” That includes a much wider set of businesses and lenders than is technically defined by the more traditional online lenders.

The Philly-Chicago study focused entirely on data from Lending Club, a marketplace lender.

Fintech critics call it predatory lending (CBS News), Rated: A

The Cleveland Fed study goes even further. It claims that P2P lending is a ticking time bomb in which loose lending and cascading defaults could lead to another crash like the one the US suffered in 2008 when the subprime lending bust took down major banks and insurers, disabling the housing market for years.

Astrada points specifically to the high interest rates that prospective borrowers with poor credit could have to pay. Many websites offering P2P loans advertise 5 percent loans with terms of one to five years. This may look good to those who would like to roll their credit card debt of 25 percent into a P2P loan.

But the reality is that for many borrowers, the interest rate is much higher. He emphasizes that one up and coming P2P lender about to go public claims that its average loan portfolio across its business model is nearly 150 percent.

While Killing The Check, Kill The (Airline) Voucher, Too (PYMNTS), Rated: A

In the seventh installment of the “Kill the Check” series, PYMNTS’ Karen Webster sat down with Ingo Money CEO Drew Edwards to get a sense of how airlines can use push payments to quell misfires and compensate passengers for their troubles when things go awry.

The digital nature of push payments also helps airlines as they can better control when, where and how such monies are spent. In addition, Edwards noted, push payments are instantly reconciled with the airline’s own accounting functions as they are being used.

Real Estate Fintech Firm Unison Announces 2018 Expansion Plans (Crowdfund Insider), Rated: A

On Monday, home ownership investment platform Unison announced 2018 expansion plans.

The platform reported that in 2017 alone it has expanded into five additional states including IllinoisNew YorkArizonaNew Jersey and Pennsylvania, bringing its total footprint to twelve states plus Washington D.C.

In addition to announcing 2018 expansion plans, Unison also revealed multiple promotions and additions to its management team. These are the following:

  • Jim Riccitelli assumed the role of President focusing on facilitating Unison’s rapid expansion and supporting Unison’s trademark focus on consumer education and financial literacy.
  • Bill Walker and Brian Elbogen, former Managing Directors, have been promoted to Chief Revenue Officer and Chief Strategy Officer
  • Laura Wensley has been brought on as Director of Finance
  • Rayan Rafay has been promoted to Chief Operating Officer of Unison’s investment management business
  • John Arens, who is General Counsel at Unison, has taken on additional responsibilities as Managing Director of Business Operations
  • Heather Phillips has joined as Associate General Counsel

CFPB requests information on free access to credit scores (American Banker), Rated: A

The Consumer Financial Protection Bureau is seeking more information about consumers’ experience with free access to credit scores.

In two separate notices published in the Federal Register on Monday, the CFPB said it wants more data on which companies consumers are using to obtain their free scores. The bureau also said it is updating a public list of companies that offer free access to a credit score.

Dave Wilson’s Chart of the Day for Nov. 14 (Bloomberg), Rated: A

GUESTS: David Wilson Stocks Editor Bloomberg News Discussing his Chart of the Day “Here’s a ‘secret’ about tech stocks from Rich Bernstein.”

Julie Verhage Reporter Bloomberg Editorial Discussing the Cleveland Federal Reserve Bank slamming the peer-to-peer lending business, calling it predatory and asking for more regulation.

Listen to the podcast here.

Lend360: A New Era in Online Lending (Crowdfund Insider), Rated: A

I can sense that most of the folks attending the conference that got hurt by Operation Chokepoint feels a bit vindicated by the latest roll back of many new proposals laid out by the CFPB, Consumer Finance Protection Bureau. Just recently the United State senate overruled the CFPB’s arbitration rule. The overruling by CFPB and essentially a no-confidence vote happened about a week after Lend360 concluded in Dallas, Texas.

I attended Dan Quan’s “The Regulator’s View of Fintech” session on the last day of the conference. Dan manages the small dollar lender desk at the Consumer Financial Protection Bureau, at his panel, Dama Brown from FTC and Shamoil Shipchandler from SEC all spoke about an era of collaboration with lenders. The tones from all three regulatory representative is vastly different than that of five years ago where mass regulation and penalties were the topic of discussion.

I feel like the industry has finally evolved from a cat and mouse game with the regulators to a more collaborative marketing participants as this industry continues to mature.

2017 Holiday Budgets by City (WalletHub), Rated: A

The National Retail Federation predicts the average per-person tab this holiday season will reach $967, up nearly 3.4 percent since 2016.

Americans are on track to end 2017 with more than $60 billion in additional credit-card balances, according to WalletHub’s projections. That figure puts us perilously close to the nearly $1 trillion grand total recorded at the height of the Great Recession.

Holiday Budget by City

Overall Rank* City Holiday Budget
1 Naperville, IL $2,381
2 Sugar Land, TX $2,368
3 Bellevue, WA $2,367
4 Sunnyvale, CA $2,360
5 Carmel, IN $2,330
6 Milpitas, CA $2,262
7 League City, TX $2,225
8 Maple Grove, MN $2,221
9 Allen, TX $2,163
10 Columbia, MD $2,032

In order to determine the cities with the biggest holiday budgets, WalletHub’s analysts compared 570 cities across five key metrics: 1) Income, 2) Age, 3) Debt-to-Income Ratio, 4) Monthly Income-to-Monthly Expenses Ratio and 5) Savings-to-Monthly Expenses Ratio.

National Real Estate Investor Ranks Magilla Loans a Top Financial Intermediary with $ 1B in Commercial Loans (PR Newswire), Rated: B

Magilla Loans, a search engine for loans which connects borrowers to banks without requesting personal information, has been recognized by National Real Estate Investor (NREI), a leading authority on trends in the commercial real estate market, as one of the 2017 Top Financial Intermediaries for commercial real estate loans arranged within the last calendar year. The ranking identifies Magilla Loans as a reliable and efficient service which satisfies the needs of commercial real estate developers and executives.

Read our featured analysis on Magilla Loans.

Värde Partners Acquires CreditShop (PR Newswire), Rated: B

CreditShop and Värde Partners today announced that Värde will acquire Austin-based CreditShop.  CreditShop is a specialty finance company focused on providing consumer friendly credit products and personal loans to prime and near-prime consumers.  CreditShop is the 25th largest MasterCard and Visa credit card issuer in the United States.

In March 2017, CreditShop acquired a $1.6 billion MasterCard credit card portfolio from Barclaycard.  The company expects to launch its own credit card products in 2018.

United Kingdom

Lendable hits £100m lending landmark (P2P Finance News), Rated: AAA

LENDABLE has announced that it has hit the £100m cumulative lending milestone in less than four years since launch.

The peer-to-peer consumer lender said on Monday that it is the third UK consumer lender after Zopa and RateSetter to reach this milestone and that it reached it in the fastest time.

P2P Global Investments fund sees large reduction in US consumer loan exposure (AltFi), Rated: AAA

The £798m P2P Global Investments fund has entered into an agreement to sell a significant proportion of its exposure to US consumer loans.

The transaction represents a reduction of £36.9m net exposure or 4.56 per cent of the fund’s net asset value (NAV) and £167.1m in gross exposure.

Demands of millennial borrowers underline need for digitisation in lending (AltFi), Rated: A

A new report from Equiniti finds that 30 per cent of consumers aged 18-25 have borrowed more than £1,000 over the past year. This equates to approximately 2 million people, according to estimates: the highest proportion of any generational group.

The report draws on data from a survey of 2,001 UK consumers in August 2017. 32 per cent were classified millennials, 34 per cent generation-x and 34 per cent baby boomers. 52 per cent were women, 48 per cent were men.

Since 2015, borrowing (of over £1,000) has increased by 17 per cent among millennials, 9 per cent for generation-x and just 1 per cent for baby boomers.

Fintech sector needs a meaningful investment fund says challenger bank boss (Yorkshire Post), Rated: A

Speaking at a fintech summit in Leeds, Mr Letts also questioned whether the challenger banks were radically different from mainstream banking, positing that some had simply “put new clothes on the emperor”.

“On other the other side are what I call the ‘neobanks’, people coming in with much hurrah and hysteria and telling everyone that the big banks are finished and that they are going to take over the world .

“If you set up a fund, from Government, that invested in fintechs and you had a billion pound fund where do you think businesses will come to? It is very simple.”

More than one in 20 nurses have taken out a payday loan to pay bills, survey claims (ChronicleLive), Rated: A

The Royal College of Nursing’s (RCN) workforce survey found that 6% of nurses have been forced to take out one of the high interest rate loans in the last year to meet their daily bills and living expenses.

Meanwhile, one in four has borrowed money from friends, family or their bank, 23% have taken on an additional paid job and half did overtime to cover their bills and expenses, according to the poll of 7,720 nurses from across the UK.

China

Yirendai Reports Third Quarter 2017 Financial Results (PR Newswire), Rated: AAA

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) today announced its unaudited financial results for the quarter ended September 30, 2017

For Three Months Ended

in RMB million

September
30, 2017

June
30, 2017

September
30, 2016

QoQ
Change

YoY
Change

Amount of Loans Facilitated

12,185.4

8,536.1

5,617.5

43%

117%

Total Net Revenue

1,513.9

1,183.1

876.7

28%

73%

Total Fees Billed (non-GAAP)

2,475.3

1,862.5

1,322.6

33%

87%

Net Income

303.0

269.1

344.3

13%

-12%

Adjusted EBITDA(1) (non-GAAP)

422.4

378.4

220.7

12%

91%

Adjusted Net Income (2) (non-GAAP)

303.0

269.1

192.6

13%

57%

In the third quarter of 2017, Yirendai facilitated RMB 12,185.4 million (US$1,831.5 million) of loans to 192,725 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 117%; 75.7% of the borrowers were acquired from online channels; 57.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.

In the third quarter of 2017, Yirendai facilitated 214,967 investors with total investment amount of RMB 13,510.0 million(US$2,030.6 million), 100% of which was facilitated through its online platform and 92% of which was facilitated through its mobile application.

For the third quarter of 2017, total net revenue was RMB 1,513.9 million (US$227.5 million), an increase of 28% from the previous quarter and 73% year-over-year; net income was RMB 303.0 million (US$45.5 million), and increase of 13% from the previous quarter and a decrease of 12% year-over-year. The decrease of net income is mainly because that, in the third quarter of 2016, the Company recognized a tax credit of RMB 151.7 million because one of its subsidiaries became qualified as a software enterprise which makes it eligible for an exemption of enterprise income tax for 2015 and 2016. Excluding the impact of the tax credit, adjusted net income in the third quarter of 2016 was RMB 192.6 million.

Have phone will borrow: Here’s the latest tech play on China’s spendthrift youth (SCMP), Rated: A

An online lender targeting spendthrift 24 to 36 year olds is the latest fintech firm from China to bet on the willingness of Chinese youth to go into debt for the newest smartphone – and on the willingness of US investors to bid up its shares.

Shenzhen-based Lexin Fintech Holdings, which operates an online e-commerce platform offering instalment shopping, is following in the footsteps of Chinese microcredit providers Qudian and Hexindai which raised US$900 million and US$50 million in their US IPOs in October and November, respectively.

They were also out in force for the recent Singles’ Day shopping festival, which saw sales on Alibaba’s e-commerce platforms reach 168 billion yuan (US$25.3 billion). During the first hour of the 24 hour shopping spree the number and value of orders on the Fenqile platform rose three and six times respectively compared with the same period last year.

Hui Ying Financial Holdings Corp. Reports Unaudited Third Quarter 2017 Financial Results (PR Newswire), Rated: A

Hui Ying Financial Holdings Corp. (OTCQB: SFHD) (“Hui Ying” or the “Company”), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises (“SMEs”) and individual borrowers in China, today announced its financial results for the three and nine months ended September 30, 2017.

Third Quarter 2017 Highlights

For the Three Months Ended September 30,

($ millions, except per share data)

2017

2016

% Change

Revenues

$           14.28

$            7.07

101.9%

Loan origination service fee

$             8.39

$            5.11

64.3%

Loan repayment management fee

$             5.25

$            1.97

167.0%

Financing income from entrusted loans

$             0.64

$                  –

NM

Operating income

$             6.41

$            1.92

233.2%

Other income (expenses)

$           (0.24)

$            0.04

-717.6%

Net income

$             4.76

$            1.46

226.3%

EPS – diluted

$             0.06

$            0.02

179.0%

  • Total loans facilitated through our platform increased by 73.3% to RMB 2.6 billion for the third quarter of 2017, from RMB 1.5 billion for the same period of last year, as China’s online peer-to-peer lending platform industry continued to grow significantly during the third quarter, coupled with the increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace.
  • Total revenues more than doubled to $14.28 million for the third quarter of 2017 from $7.07 million for the same period of last year, as a result of increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fee, loan repayment management fee and financing income from entrusted loans were $8.39 million$5.25 million and $0.64 million, respectively, for the third quarter of 2017 compared to $5.11 million$1.97 million and nil, respectively, for the same period of last year.
  • Net income was $4.76 million, or $0.06 per diluted share, for the third quarter of 2017, compared to $1.46 million, or $0.02 per diluted share, for the same period of last year.
European Union

PPRO, Klarna team up for credit payment methods across Europe (The Paypers), Rated: AAA

PPRO Group and Klarna have announced an agreement aimed at enabling PSPs to offer credit-based payments through PPRO`s payment hub to European merchants.

The partnership will be marketed to PPRO’s payment service providers customer base and will provide access to Klarna’s services and consumers across Sweden, Norway, Finland, Denmark, the Netherlands, Germany, Austria, and the UK.

Banco BNI Europa and Belgian Fintech EDEBEX celebrate a partnership to support Portuguese SMEs (BNI Europa Email), Rated: A

Banco BNI Europa and Edebex have announced today the celebration of a new partnership for immediate availability of an online platform for the purchase and sale of invoices to Portuguese companies with cash requirements, offering an innovative alternative to financial credit and traditional factoring.

Swiss Fintech Goes Germany (FiNews), Rated: A

CreditGate24 is opening its first branch outside Switzerland in Berlin, seeking to develop the German market for digital financing and investment, the company said in a statement today.

Fintech putting power in hands of the customer (Belfast Telegraph), Rated: A

A number of areas have been established or significantly impacted by FinTech; Peer-to-Peer (P2P) lending, mobile payments, and instant payment notifications, to name a few.

The ongoing bank branch closures across Ireland and the UK demonstrates the changing climate.

With a reduction in branches, banks are investing heavily in technology to reduce costs, to improve their customer experience and to increase customer self-service in an attempt to ward off the threat of FinTech start-ups.

The blockchain is another example of FinTech and one which has been a hot topic across multiple industries for a number of years.

A Digital Future: Financial Services and the Generation Game (EIU.com), Rated: B

A digital future: financial services and the generation game is a report sponsored by Banco Santander for presentation at the Tenth Santander International Banking Conference, written by The Economist Intelligence Unit.

It assesses how people’s expectations of their financial services providers are changing and how technology must be deployed to meet them. The report is based on extensive desk research and in-depth interviews, conducted in August-October 2017 with 14 representatives of financial institutions and companies.

International

PayPal launches P2P funding platform (Business Insider), Rated: AAA

PayPal has launched Money Pools, a service that allows its users to create fundraising pages where their contacts can contribute money for a shared item or event, like a group gift or trip, 

Source: Business Insider

Bringing Cash Into The Digital World – On A Global Stage (PYMNTS), Rated: A

In the latest Data Drivers installment, Steve Villegas, vice president of Partner Management at PPRO Group, told PYMNTS’ Karen Webster that “alternative payments are going to drive the future of eCommerce.” But between the promise and the reality, some connectivity is on order, bringing consumers payment options – and merchants toward better conversion rates when it comes to online commerce.

Data Point One: 17.6 Percent

This is the percentage of credit card penetration worldwide – a lot of cards, but not a lot of penetration on a global stage.

Alternative payments may capture 50 percent of transactions this year, globally speaking, he said.

As has been widely reported, Alibaba grabbed as much as $25 billion in sales to 225 countries and regions. Roughly 90 percent of transactions were completed on mobile devices.

Data Point Two: Three Billion

This is the number of people estimated worldwide to be without a bank account – and yet, armed with mobile devices, can be brought into the world of digital transactions and can participate fully in the global economy.

Data Point Three: 38 Percent

This is the average rate of eCommerce growth of the 11 fastest growing countries globally. That far outpaces the 12 percent a year eCommerce growth seen in the U.S.

China provides a stark reminder of the explosive boost to eCommerce, at 64 percent year over year. Other areas that have high eCommerce growth rates include Indonesia and Malaysia. Growth is high both in bank payment-related transactions and with eWallet. Russia is also showing growth, Villegas stated.

TRANSFORMATION IN CAPITAL MARKETS DEMANDS EVOLUTIONARY APPROACH, FIND CELENT AND FINASTRA (Global Banking and Finance), Rated: A

New research from Celent (commissioned by Finastra) which examines the future transformation of capital markets, identifies six key drivers of change over the next five years to 2022:

  • Digitalization of the trade and client lifecycle
  • The Fintech revolution
  • The need to integrate with an evolving ecosystem
  • The trend for banks to focus on core capabilities and outsourcing of non-core functions
  • Advances in big data, machine learning and data analytics
  • The rise of open APIs and micro-services in helping banks deliver increased agility

The report, The Great Transformation in Capital Markets – Revolution to Evolution’, examines the changes that have already taken place in capital markets since the 2008 crisis, the wave of big transformation projects undertaken since 2011-12 designed to optimize operations and reduce costs, and expected trends in the transformation journey over the next five years. It incorporates the findings of detailed discussions conducted with 17 tier one and two global capital markets institutions, predominantly in the US and Europe but also across Asia and Latin America.

Australia/New Zealand

David Chaston reviews the effective cost of credit, being interest plus standard fees, of taking out a payday loan (Interest.co.nz), Rated: A

In this table we have set out what each lender says you must repay for borrowing $500. (We targeted 30 days but not every lender offers that.) Then we calculated the effective annual interest rate for entering into that deal. This is different to the interest rate the lender discloses because we bundle up that interest rate with any set-up loan fees into an effective rate. But we haven’t included any fees if you default; this analysis assumes the borrower meets all payments on time.

making one repayment (except as noted) Borrow Repay in (days) % daily % pa
in random order … $ $ # effective effective
Ferratum $500 $748 30 1.352% 493.4%
Save My Bacon $500 $828 30 1.696% 618.9%
Need Cash Today $500 $640 28 (4 wp) 1.458% 532.1%
Moola $500 $640 28 (4 wp) 1.458% 532.1%
Zebra Loans $500 $835 30 1.724% 629.3%
Payday Advance $500 $932 30 2.097% 765.6%
Payday Loan $500 $932 30 2.097% 765.6%
Can’twait $500 $731 30 1.274% 465.0%
Cash Relief $500 $748 30 1.352% 493.4%
Smart Cash $500 $691 30 1.084% 395.8%
Just Cash $500 $748 30 1.352% 493.4%
Little Loan Shop $500 $748 30 1.352% 493.4%
Seed Cash – 3 monthly pymts $500 $950 91 (3 mp) 1.128% 411.8%
Cash Burst – 2 monthly pymts $500 $1189 61 (2 mp) 2.029% 740.6%
Real Finance $500 $665 30 0.956% 348.9%
Easy Cash $500 $605 30 0.537% 232.5%
Cash till Payday $500 $647 30 1.700% 620.5%
Money Shop $500
Easy Financing $500
Instant Cash Online $500 $637 30 0.812% 296.3%
India

How FinMomenta plans to change the way financial loans are disbursed (Money Control), Rated: A

Ex-bankers Brahma Mahesh, Naveen Madgula, and a techie for 17 years at Hexaware – Praveen Krishnam founded FinMomenta last year, launching its loans platform Tachyloans in May.

The startup borrows from the emerging trend of servicing small-ticket loans online for individuals and SMEs.

“The loan approval process in banks is very subjective. It is dependent on a human perception of the loans officer. It kills the whole idea of credit scoring. That’s the reason banks are able to service just about 2%-5% of the huge working class of about 60 crore population. Others just depend on money lenders. Banks don’t touch these people because they don’t have a credit history,” says FinMomenta co-founder Brahma Mahesh.

The interest rates on Tachyloans range from 11.5% to 25% depending on the FinMomenta credit rating – the better the credit score, the lower the interest rate.

By the end of 2018, the company is targeting to service 1,500 loans and 34,000 loans in next 5 years, which will increase its loan portfolio to about Rs 500 crore.

Canada

Forget iris scans, Canadians to use Blockchain for digital IDs (Information Management), Rated: A

Consumers will be able to sign up for new digital-identity system developed by SecureKey Technologies Inc. and underpinned by IBM Corp.’s blockchain technology in the first half of 2018. They’ll be able to instantly prove who they are to banks, telecom providers and governments using apps on their phones and Windows devices, according to Greg Wolfond, chief executive officer of Toronto-based SecureKey.

Canada’s six-largest lenders, including Toronto-Dominion Bank and Royal Bank of Canada invested C$30 million ($24 million) in the project.

MENA

DIFC unveils $ 100 million fintech investment fund (The National), Rated: B

The Dubai International Financial Center (DIFC) it has established a $100 million fund to invest in fintech start-ups, the latest move in the freezone’s bid to position itself as the regional centre for the fast-growing and disruptive sector.

Authors:

George Popescu
Allen Taylor