Monday January 22 2018, Daily News Digest

California triple-digit APR loans

News Comments Today’s main news: SoFi seeks to poach Twitter  COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]

California triple-digit APR loans

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United States

SoFi Offers CEO Spot to Twitter Executive Anthony Noto (WSJ), Rated: AAA

Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.

The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs Group Inc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.

Twitter’s Noto offered CEO spot at SoFi (SeekingAlpha), Rated: A

He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.

How Your Business’s Online Brand Can Help You Get A Loan (Forbes), Rated: AAA

An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.

Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.

Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.

How super high-interest loans have boomed in California (Los Angeles Times), Rated: AAA

Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.

These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.

In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.

The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.

Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.

CFPB To Reconsider Payday Lending Rules (Forbes), Rated: A

Within this large document, there are four key actions being proposed:

  • Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
  • Limit payday rollovers
  • Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
  • Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.

The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:

  • Risks are high: The people using payday loans are very high risk borrowers.
  • Price competition is absent: For a payday loan, people value speed and access.
  • Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.

Consumer protection bureau drops payday lender lawsuit (KYMA), Rated: A

The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.

Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.

Bank of America’s digital investments pay off (Business Insider), Rated: A

  • BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
  • Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.

BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.

The Biggest Myths About the Underbanked (MicroBilt), Rated: A

Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:

Bank Earnings, GS Enters Home Improvement loan market, PeerIQ Hires (PeerIQ), Rated: A

in 6 years as its trading revenue was impacted by losses in commodities trading. GS, continuing on its strategic objective to generate $13 Bn in loans in 3 years, also announced that 

Zelle’s anti-fraud efforts trip up key group: Its users (American Banker), Rated: A

The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.

Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.

Loanable is Working to Disrupt Student Loan Industry (The Student Loan Report), Rated: A

One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.

According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.

This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.

The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:

  • The full amount of the loan
  • Each lender’s name, address and email
  • The borrower’s name, address and email
  • The interest rate – which is usually between 2% and 10% for friends and family loans
  • The loan term (normally 36 months)
  • A designated late fee
  • The start and end dates of the lending schedule

SoFi Parent Loan vs. Parent PLUS Loan: Which Is the Better Option? (Student Loan Hero), Rated: A

SoFi Parent Loans Parent PLUS Loans
Eligibility requirements Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible non-citizen
Application process Apply for an instant rate quote with a pre-approval application (soft credit pull); submit full application when you choose a loan (hard credit pull) Submit the FAFSA; work with your college financial aid office to request a Parent PLUS Loan
Credit requirements SoFi considers your credit score, debt-to-income ratio, income, career, education, and other factors. Another parent or guardian can cosign You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits $5,000 minimum, up to the total cost of attendance Up to the total cost of attendance, minus any other financial aid received
Rates Fixed APRs from 3.25% – 7.25%; variable APRs from 2.58% – 7.07% Fixed interest rate of 7.00% for the 2017-2018 school year
Origination fees None 4.264 percent for the 2017-2018 school year
When repayment begins Immediate repayment Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options Five- or 10-year terms Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)

Tax Preparation Firms Use Zero Interest Loans As Lead Generator (Lend Academy), Rated: A

With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.

H&R BlockJackson HewittLiberty Tax Service and more recently Credit Karma all market interest free advances on your tax refund. The process is simple and the loans are paid back to the tax preparer when your refund comes back from the government.

CSBG Applauds Senate Introduction of the Small Business Credit Availability Act (Coalition for Small Business Growth Email), Rated: B

The “The introduction of the Heller-Manchin Small Business Credit Availability Act is welcome news for America’s small and mid-sized businesses. The legislation recognizes that business development companies (BDCs) have become an important source of capital for Main Street businesses and modernizes the way BDCs are regulated. If passed, this bill could quickly result in billions of dollars of credit availability for companies often overlooked by traditional lenders,” said Joe Glatt, co-founding member of CSBG.

Learn more about the Small Business Credit Availability Act (H.R. 3868) here.

State of New York Poised to Empower New York Department of Financial Services to Study Online Lending (Crowfund Insider), Rated: B

There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS).

This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.

NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly.

Read the New York Senate Act here.

United Kingdom

Peer to Peer Lender Zopa Increases Interest Rates Paid to Investors (Crowdfund Insider), Rated: AAA

Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.

Bankers in fight to lure Softbank float to City (The Times), Rated: AAA

Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.

The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.

8 in 10 SMEs still prefer traditional bank loans over alternative finance (growth business), Rated: A

Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.

UK Open Banking crew call on Contego to verify you (Fintech Futures), Rated: A

Contego, a regtech and compliance firm, has been chosen by the Open Banking Implementation Entity (OBIE) to verify its users and support open banking development in the UK.

Envestnet | Yodlee unveils API solution for PSD2 compliance (Fintech Futures), Rated: A

Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).

Tech drives financial sector consultancy in the post-crisis era (Financial Times), Rated: A

“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.

LendInvest seals £17m deal for first phase of 5,750 home site (Specialist Lending Solutions), Rated: B

LendInvest has been named the exclusive development finance lender on the first phase of a long-term development scheme that aims to build up to 5,750 new homes outside Dover in Kent.

The lender is funding the first 216 units on the first section of the site to be developed by Halsbury Homes – the largest number of units it has funded so far.

Astute investments for under $ 1,000 (Bankless Times), Rated: B

In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
China

Shake-up in China’s online P2P lending sector (China.org.cn), Rated: A

The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.

Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.

On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.

However, the company owner, Yang Yinghua, went missing the next day.

European Union

Orange Bank: is a phone company the future of fintech? (Financial Times), Rated: A

And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.

The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.

 

Springhouse Receives MOR RV2 Residential Vendor Ranking from Morningstar Credit Ratings, LLC for Asset Valuation (Yahoo! Finance), Rated: A

Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.

As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.

EUROPEAN DIGITAL LENDING AWARDS (Eiffel Investment Group), Rated: A

Eiffel Investment Group actively supports the development of digital lending throughout Europe.

We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.

The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at contact@eiffel-ig.com (advanced registration is mandatory).

See voting categories here.

International

Transferwise Launches Borderless Bank Account (CLNews), Rated: AAA

Launched in January, the company’s ‘borderless’ account – coupled with a debit card –  allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.

But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.

Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals –  last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.

To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.

Today’s Banks Need a Millennial Banking Technology Framework (Finextra), Rated: AAA

According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.

According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.  

Embrace the Millennial Banking Revolution

59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.

Spotcap partners up with major bank to offer same-day financing (Spotcap), Rated: AAA

Spotcap has entered into a market-leading strategic partnership with BAWAG Group to give Austrian small and medium-sized enterprises (SMEs) access to same-day financing.

More than 99 percent of Austrian businesses are small or medium-sizedand access to finance is a key challenge for SMEs in Austria, as it is for SMEs globally.

We will now provide Lending as a Service to major institutions in addition to our direct SME loan offering in the United Kingdomthe NetherlandsSpainAustralia & New Zealand.

AlfaToken ICO to Make Smart Contracts Accessible Even for Those with Zero Coding Skills (BTC Manager), Rated: A

AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.

Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.

Australia

 

Eight big things coming to finance in 2018 (finder), Rated: A

1. Blockchain

Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.

94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.

2. Biometric payments

Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.

3. The end of our low-interest world

Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.

4. The declining human face of banking

A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.

5. The rise of one-to-one lending

For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.

6. The disappearance of ATMs and cheques

The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.

7. Savings innovations for children

Finder’s 2017 Banking Innovation award went to Spriggy – an app which allows parents to pay pocket money onto debit cards.

8. And finally… instant banking and the New Payments Platform (NPP)

By far the biggest change to the financial industry in Australia will be the New Payments Platform (NPP), which will be switched on in phases from February 2018.

India

More millenials borrowing to travel; take micro loans (The New Indian Express), Rated: AAA

It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.

According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.

Pre-budget 2018 Reaction Mr. Rajat Gandhi Founder & CEO, Faircent.com (Technuter), Rated: A

In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.

Asia

OJK Set to Issue Regulation on Crowdfunding (Netral News), Rated: AAA

The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.

 

Building wealth management strategies for this year (The Star), Rated: A

Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.

Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.

  • Review your holistic financial plan
  • Review your cashflow statement
  • Review your strategic asset allocation statement

Axiata invested US$ 200m in digital ventures (New Straits Times), Rated: B

Axiata Group Bhd is in the process of building one of the largest fintech companies in Asia to include five micro services – payments, remittance, lending, savings, and insurance.

President and group chief executive Officer Tan Sri Jamaludin Ibrahim said since 2013, Axiata had invested some US$200 million for its digital and internet ventures.

Out of the US$200 million, RM50 million worth of investment went into Axiata’s fintech business.

Russia

Russia’s Sberbank plans crowdinvesting platform for small firms, say sources (Gulf Times), Rated: AAA

Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.

The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.

It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.

Authors:

George Popescu
Allen Taylor

Thursday October 6 2017, Daily News Digest

China mortgage loans

News Comments Today’s main news: SoFi surpasses $25B in originations. JPMorgan Chase rolls out mobile banking app. ID Analytics has 85% visibility into online consumer lending. Zopa prices new securitization. Fannie Mae expands digital mortgage platform. SEC investigated Bank of Internet. China’s cash loan market hits 1 trillion RMB. Lendified secures $60M credit facility. Facebook, Clearbanc partner on merchant cash advance. Today’s main […]

China mortgage loans

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United States

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News Summary

United States

A new milestone: we’ve surpassed $ 25b in loan originations! (@SoFi on Twitter), Rated: AAA

Thank you to our community of over 390,000 people for growing with us.

Will JPM’s millennial-app experiment grant access to new markets? (American Banker), Rated: AAA

JPMorgan Chase spent more than a year researching what millennials (and clients wanting to bank like them) desire in a financial relationship. The result is a new mobile-only app that lets people sign up for a bank account within minutes and also helps manage their spending.

The megabank made a splash on Monday debuting Finn by Chase, an app that includes a checking and savings account and a physical debit card.

ID Analytics Now Has 85% Visibility Into Online Consumer Lending (deBanked), Rated: AAA

At Money2020, deBanked caught up with Kevin King, Director of Product Marketing and Ken Meiser, VP of Identity Solutions for ID Analytics. The last time I crossed paths with the company was six months ago at the LendIt Conference in New York City. Since then, the company has increased its visibility into the online consumer lending market to 85%.

Fannie Mae goes all-out on fintech collaborations (Business Insider), Rated: AAA

Fannie Mae, a US government agency that funds mortgages for lenders, rolled out 

92.3% of acceptance partners said Behalf increased their sales 10-20% (Behalf), Rated: AAA

Behalf’s merchant acceptance partners have found a way to apply Amazon’s small business strategies to their own business models. By adding the Behalf instant credit approval tool to their ecommerce experience, they also unlock the power of flexible terms on every sale. Customers of our partners can get instant access to up to $50,000 in buying power with their choice of flexible payment terms. With this boost in working capital, small businesses are able to invest in their growth, which increases their business purchasing velocity. Case in point: 92.3% of the Behalf acceptance partners surveyed reported that adding Behalf to their checkout experience drove a 10-20% sales lift.

Source: Behalf

Download and read the full whitepaper here.

Bank of Internet was under 16-month SEC investigation (New York Post), Rated: AAA

Online lender Bank of Internet was the subject of a formal 16-month Securities and Exchange Commission investigation, according to a report.

The company, led by Chief Executive Greg Garrabrants, was the subject of scrutiny until June — when it ceased without the SEC taking any action.

The probe was focused on alleged conflicts of interests, auditing practices, and loans made to two entities, according to subpoenas and government documents obtained by Probes Reporter, a publisher of investment research.

Wealthier Depositors Pressure Banks to Pay Up (WSJ), Rated: AAA

Large U.S. banks are starting to pay up to keep depositors from moving their money, saying customers are becoming increasingly demanding as the stronger economy nudges interest rates higher.

The average interest rate paid by the biggest U.S. banks on interest-bearing deposits jumped to 0.40% in the third quarter, the highest level since 2012 and the biggest quarterly increase this year, from 0.34% in the second quarter, according to Autonomous Research.

Bank executives said that the newest pressure for higher rates is coming primarily from wealth-management customers, typically well-to-do individuals and families who deposit cash as part of their investment accounts.

Fifth Third executives said they were raising deposit rates for some of those customers, particularly those who had other relationships with the bank.

Source: The Wall Street Journal

FT Partners Advises Credit Sesame on its ,000,000 Growth Financing (FT Partners), Rated: A

  • On October 25, 2017, Credit Sesame announced it has raised over $42 million in equity and venture debt
    • The funding comes from existing and new investors including Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, SF Capital, among others, along with a strategic investor
  • The $42 million in funding is comprised of $26.6 million in equity and $15.5 million in venture debt, bringing the Company’s total funding to over $77 million
  • Headquartered in Mountain View, CA, Credit Sesame was founded in 2011 and has provided credit and loan management tools to over 12 million members
    • The mobile and web solution provides consumers with tools to build a path to achieve financial wellness, including free access to their credit profile complete with their credit score, credit report grades, credit monitoring, interactive step-by-step tools and recommendations for better lending options
Source: FT Partners

 

The 13 Chinese Companies That Listed On US Stock Exchanges In 2017 (Frontera), Rated: A

With about $2.4 billion raised in IPOs on US exchanges by Chinese companies so far this year, other China-based firms are increasingly vying for US investors and exchanges.

Qudian Inc (QD)

On October 18, Chinese online micro-credit provider Qudian Inc listed on the NYSE, raising $900 million in an IPO that was priced at $24, in the biggest ever US listing by a Chinese fintech firm. The financial sector firm’s stock, trading under the symbol QD, closed at $33 as of October 23. The stock commands a market capitalization of $8.8 billion in the US stock market.

Year-end Forward P/E for the depository receipt is estimated at 21.47. Estimated earnings-per-share stand at $8.21.

China Internet Nationwide Financial Services (CIFS)

This Beijing-based financial sector firm, trades under the ticker CIFS on the NASDAQ GM stock exchange, is engaged in providing financial advisory services in China. The company’s stock listed on the US stock market on August 8 at an initial offer price of $10 a share, raising $20.2 million for the company. The stock, trading at $31.5 (as of October 23rd), commands a market capitalization of $693 million in the US stock market.

China Rapid Finance Ltd (XRF)

Listed since April 28th on the NYSE stock market, China Rapid Finance Limited operates one of China’s largest online consumer lending marketplaces.  The company caters well to China’s 500 million EMMAs (Emerging Middle-class Mobile Active consumers), and has facilitated over 20 million loans to more than 2.7 million borrowers. Back in April, the company raised $69 million in an IPO, marking its listing on the US stock exchange under the ticker XRF. The shares initially offered at $6 a share, and now trade at $9.06 (as of October 23) with a market capitalization of $586.2 million.

Source: Frontera

Leading Banks are Embracing Digital Strategies More Than Ever (Lend Academy), Rated: A

JPMorgan was the first major US bank to partner with a fintech company when they launched their small business lending partnership with OnDeck in early 2016. That partnership was renewed earlier this year and has helped the bank to offer a seamless small business lending experience and reach customers it might not have otherwise. In recent months they have struck a new partnership with Mosaic Smart Data to help the slumping fixed income trading revenues and they have also completed an acquisition of WePay, a Silicon Valley company that offers payment capabilities to business platforms using APIs. Finally, just this week they launched Finn by Chase, an app aimed at millennials that allows people to use a phone to open a bank account, make deposits, issue checks, track spending and set up savings plans.

Bank of America saw more than 1 million users added to their digital channels and active digital banking users go from 32.8 million to 34.5 million in the last year. The main driver of this growth was through their mobile app. Customers are using the mobile deposit feature more than any other, mobile deposits now account for 21 percent of total bank deposits.

Wells Fargo’s digital growth, which includes web based and mobile users, saw a 2 percent increase from 2016. Branch and ATM interactions were down 6 percent while digital sessions through the web and mobile app increased 6 percent.

Citi is the first global bank to integrate banking, money movement and wealth management on mobile.

How Tech is Changing Multifamily Lending (Multi-Housing News), Rated: A

“Technology has helped us bring efficiency, speed and first-rate customer service to the small-loan space for all of our stakeholders, borrowers and brokers alike,” said Bonnie Habyan, executive vice president, marketing, at Arbor. Small-balance owners and operators need to work long hours to be successful, and the time and paperwork dedicated to obtaining financing is an inefficient use of time. Online multifamily financing platforms such as Arbor LoanExpress, or ALEX, address this by providing the ability to e-sign and upload documents.

“Crowdfunding was originally created to give average investors access to investments they normally wouldn’t have access to, and to give sponsors or borrowers easier access to capital,”said Bill Lanting, vice president, Commercial Debt at RealtyShares. “We were formed specifically with that idea in mind, to make borrowing easier and less cumbersome, and also to make investments in assets more available to everybody.”

AutoGravity Announces Partnership With Global Lending Services (PR Newswire), Rated: A

AutoGravity, a FinTech pioneer on a mission to transform car financing by harnessing the power of the smartphone, announced a partnership with Global Lending Services LLC, a South Carolina-based auto finance company, to provide access to finance offers through the innovative AutoGravity digital platform. Qualified car buyers gain access to an even broader set of car finance options through the AutoGravity iOS, Android and Web Apps.

Can employers help solve the student debt problem? (HRDive), Rated: A

The good news about student loans is that they allow millions of people to earn college degrees who otherwise wouldn’t be able to afford them. The bad news is that college graduates enter the workforce deeply mired in debt that deflates their net worth and keeps them cash-strapped for years, if not decades. The current wave of college graduates is facing debt in amounts far above previous generations.

Oliver Wyman, a global management consulting firm, sets the median figure for an undergraduate degree at more than $25,000. That figure rises with each advanced degree. Graduates with MBAs enter the workforce with a median debt of $45,000. Medical school graduates can expect to be $200,000 in debt.

Debt repayments for the typical college graduate will amount to $265 a month and for medical school graduates, $1,600 a month.

Target.com Introduces GiftNow (PYMNTS), Rated: B

Target announced that, starting this November, the retailer will integrate a wallet function in its Target mobile app. The purpose, says the retailer, is to allow customers to pay for purchases and redeem promotions through the use of a smartphone.

Legendary Investor Jim Rogers Believes FinTech Will Replace Banks and Cash (Cryptocoins News), Rated: B

Veteran investor Jim Rogers believes that banks must invest in the financial technology (fintech) space or they face being replaced.

According to the report, he has invested in Hong Kong-based ITF Corporation, the world’s first financial technology bank founded by Hui Jie Lim. Rogers has also invested in Tiger Broker, a Chinese online brokerage.

He also believes that digital currencies could change how we see money in the next 10 to 20 years. Even though he hasn’t invested in the crypto market Rogers is of the opinion that governments could issue their own cryptocurrencies in the future.

United Kingdom

New Zopa securitisation priced, highlights market confidence (AltFi), Rated: AAA

A securitisation of loans originated by peer-to-peer lending firm Zopa has received a warm reception in the market. The deal, which is the second securitisation of Zopa loans, has been priced significantly tighter than last year’s transaction.

The securitisation was led by P2P Global Investments PLC, the first UK listed investment trust to dedicate itself to investing in marketplace loans, and was arranged by Deutsche Bank. The most senior class of notes was priced at 70bps over one month Libor, compared to 145bps last year.

The senior tranche of the £209m securitisation, which represents 80 per cent of the portfolio, was rated AA by Moody’s.

Using the secondary market for above average returns on investment (P2P Banking), Rated: AAA

One central piece to understanding why trading (or flipping) strategies can be highly attractive is the effect of even small premiums pocketed on the portfolio yield. Take an investor that invests into a 100 (whatever currency) loan part and sells that part for 100.40 after holding it for 5 days. That is only a 0.4% premium, but the annualized yield is 33.8%.

Two main strategy approaches

Investors can
A) Invest on the primary market and then sell the loan later on the secondary market
or
B) Buy loan parts on the secondary market which they deem underpriced and then sell at a higher price. Be it buying at discount and selling at a lower discount, or already buying at premium and selling at an even higher premium.

One important point, is that market conditions change, usually good opportunities will stop working after a few months or weeks either because too many investors try to use them, or more general  the demand/supply ratio changes or the marketplace itself changes the rules how the market functions.

  1. First an investor will want to look how loan information is presented on the primary and secondary market.
  2. Understand the allocation mechanism on the primary market. How does the autoinvest feature work exactly?
  3. When is interest paid? Does it accrue for each of the day held, or does the investor holding the loan at the date of the interest payment gets full interest credited. This is important, because if in the example at the start of the article the investor not only makes a 0.40 capital gain but also collects interest for the 5 days he held the part, it will have a huge impact on yield
  4. Usually for this strategy longer duration loans are more attractive.
  5. Usually smaller loans are more attractive.
  6. Usually the time span a trading investor wants to hold on to a loan part, will be as short as possible (days). However there might be patterns observed where it could be desirable to hold for longer time spans.
  7. Strategies that allow to hold parts only at a time when the status of a loan cannot change can be attractive.

Monzo and Starling take bigger steps towards payment integration (AltFi), Rated: A

Monzo has announced today, after a week of dropping hints on various Twitter accounts, that it plans to integrate Android Pay into its user interface for current account users.

A few hours earlier, Starling Bank confirmed this morning that it will be the first bank in the UK to connect with Fitbit Pay.

Case study: the technology behind P2P (Banking Technology), Rated: A

The UK peer-to-peer (P2P) lending market has flourished in the last decade. Lending volumes among the major platforms are increasing rapidly, pushing the cumulative total above £7 billion for the first time, as the understanding of the investment model continues to grow.

New technology architectures, as well as the ability to quickly run up minimal viable products, mean that emerging P2P companies can turn ideas into reality much faster than their larger counterparts (“fail fast” or as I like to call it, “test quickly”).

This prioritisation of speed and efficiency, coupled with the ability to focus, means that P2P lenders can zero in on specific problems and provide what customers want and are increasingly expecting. At Landbay we can bring a new micro service up from scratch in 20 minutes, with the lag for code from committing to going live being about six to eight minutes whilst still maintaining the up time required.

Brokers should consider the P2P option (Mortgage Introducer), Rated: A

As the alternative finance market has become saturated with different funding options, it can be difficult for brokers to determine the best solution to suit their clients’ needs.

Loans can also be tailored to fit the specific needs of customers, with fixed rates available to allow customers to budget effectively for the full term of the loan. The flexibility of loans means borrowers can cover unexpected costs or finance planned purchases at more affordable rates, meaning P2P finance is a great option when situations happen to change at a company.

Whilst 25% of borrowers that apply to banks have their loan application rejected, according to British Business Bank, other forms of lending have paved the way for businesses to obtain cash, with P2P lending becoming one of the most prominent solutions in the current market.

Open letter to Andrew Bailey, chief executive of FCA (Specialist Banking), Rated: A

Dear Andrew, your comments on the BBC on Monday 16th October reflect the concerns that many share with the FCA about the effect of the high cost of credit impacting society widely and, in particular, the young.You cited concerns about certain aspects of credit card and payday lending practices, but you did not pass comment on the retail banks and their provision of overdraft credit at rates that may well exceed the rates of payday and credit card loans.It should be noted that at 1p per day for every £7 of overdraft, the fees for an overdraft of, for example, £2,000 pa, are in excess of 50% interest, uncompounded. This is certainly higher than many credit cards.Alex Letts
Founder and chief unbanking officer, U
China

Chinese Cash loan market grown to 1 trillion RMB in one year (Xing Ping She), Rated: AAA

Cash loan originated from the payday loan in America, and accelerated in China. In less than one year, the total volume increased from 600 billion RMB to 1 trillion RMB. As a branch of consumer finance, cash loan developed rapidly as much as P2P lending industry.

Early in this April, the regulator issued the first order to clean up the “cash loans”,while after six months the trend of compliance in the field is still unclear. Recently, with several relative businesses coming to the U.S. for IPO, the critical voice on the profiteering of cash loan becomes louder.

However, owing to the annual lending rate much more than the rate legal limited (36%), taking the consumer finance vents, cash loan still grow wildly under strict regulation.

Xi’s Neighborhood Watch (Bloomberg), Rated: AAA

Houses are for living in, not for speculation, Chinese President Xi Jinping said last week. The trouble is, fueling this speculation has been a surge in consumer lending, not only by banks but also by fintech firms such as recently listedQudian Inc.

Thanks to improved earnings and corporate debt that’s souring at a slower rate, Chinese bank shares have rallied this year.

Source: Bloomberg

What investors may be ignoring at their peril, however, is the spike in household advances. Consisting of mortgages, credit-card debt and auto loans, consumer lending as a share of the total is relatively low. Only 400 million Chinese had personal loans in 2016, or about 29 percent of the population. The ratio in the U.S. is about 82 percent, according to Bloomberg Intelligence. But it’s been growing fast and even People’s Bank of China Governor Zhou Xiaochuan is worried. China’s household debt-to-GDP ratio reached 47 percent in the first half, according to a recent Citigroup Inc. report.

Source: Bloomberg

Ali Microcredit Ltd. made 2.6 billion RMB in first half, exceeding 14 public banks (Xing Ping She), Rated: A

In the first half year of 2017, Chongqing Ali Microcredit Ltd. has made the revenue of 3.97 billion RMB, which increased 100 million RMB compared to the 3.86 billion RMB of 2016. The company’s net profit was 2.644 billion RMB, in a growth of about 700 million RMB from the end of 2016.

As one of the Ant Financial eco-system, Ali Microcredit takes the business of credit loan (Ant Jiebei). Therefore, Ali Microcredit is already the industry leader in the consumer finance field. Even compared to the listed banks, Ali Microcredit’s profit data can defeat many of them. Take the first half year for example, the company profit exceeded 14 of all the 38 listed banks in stock exchange of Shanghai, Hong Kong and Shenzhen, including Guangzhou Rural Commercial Bank (01551.HK, profit of 2.639 billion RMB), Bank of Tianjin(01578.HK,profit of 2.62 billion RMB), Bank of Hangzhou(600926.SH, profit of 2.53 billion RMB),etc.

Cash loan controversy (Global Times), Rated: A

Chinese people are becoming more and more willing to spend. But if they don’t have money, they borrow. This ever-growing phenomenon has recently thrown cash loans, also known as fast loans, right under the public spotlight.

Han, a 26-year-old white-collar worker in Shanghai, who preferred only to give her surname, borrowed a 6-month loan of 10,000 yuan ($1505.53) from Mayi Jiebei, the online cash loan service provided by e-commerce giant Alibaba’s subsidiary Ant Financial, at the end of September.

When borrowing the money, Han was informed by Mayi Jiebei that she will need to pay a monthly interest rate of slightly more than 100 yuan. In total, Han will need to pay an interest rate of 637 yuan to the provider.

Currently, the entire cash loan market is worth between 600 billion yuan and 1 trillion yuan, the wdzj.com report showed.

LendingClub of China: World’s no.2 economy is a fintech haven (MSN), Rated: A

China provides the infrastructure for financial technology to succeed, such as clearly-defined laws and good internet penetration, says Soul Htite, Dianrong CEO.
Watch the video interview here.

China Rapid Finance names Zhou Ji’an a non-executive independent director (Bankless Times), Rated: B

China Rapid Finance has named Zhou Ji’an a non-executive independent director. He becomes the seventh member of a board that includes former executives of Hewlett Packard, McKinsey & Company, Morgan Stanley, and UBS.

Mr. Zhou is the executive director and general manager of China United SME Guarantee Corporation aka Sino Guarantee. He previously served in senior roles with China Export & Credit Insurance Corporation, and China Life Insurance Co . and is a senior scholar of the Eisenhower Fellowships, an international nonprofit leadership corporation.

European Union

ECN Convention Debates Technology & Cross-border Future in EU Alternative Finance & Crowdfunding (Crowdfund Insider), Rated: AAA

Two main topics of the 6th Annual Convention of the European Crowdfunding Network (ECN) on October 19th and 20th were technology innovation and cross-border finance.

To retain their lead in innovation over banks and traditional finance’s Fintech, startups must keep delivering greater customer orientation and execution efficiency. The success of Initial Coin Offerings (ICOs) is a clear signal, and a red flag, that there exist gaps in technology and cross-border funding that finance has not filled.

Cross-border alternative finance is still hampered by the fragmentation of the European Union (EU) regulation at many levels: Not only do crowdfunding and crowdlending regulation differ from one country to the next, but so do investor taxation and corporate law.

Ingi Sigurdsson, CEO, Karolina Engine, claimed that artificial intelligence enables the platform to predict the success of crowdfunding campaigns with 80% accuracy. Mads Dalsgaar CMO, Funderbeam, explained how Funderbeam uses Bitcoin’s blockchain to register, clear and settle the trading of private companies’ shares. For Rein Ojavere, CFO of Bondora, technology enables his lending platform to “cut through the layers of fat” of multiple investment intermediaries. In the same vein, Lasse Mäkelä, CEO of Invesdor, called his company a “digital investment bank.”

Umberto Piattelli of law firm Osborne Clarke summarized the conclusion of ECN’s updated complete review of national crowdfunding and crowdlending regulations in 29 countries. He stressed the strong correlation between the growth of alternative finance and effective crowdfunding regulation. Only 11 out of the 28 EU markets researched have published specific regulations for crowdfunding and crowdlending. These markets have taken off rapidly after the issuing of such regulations.

Tink secures investment and bank partners as it plans European expansion (Banking Technology), Rated: A

Swedish fintech company Tink has signed with Nordic banks NordeaKlarna and Nordnet. Integrating in 2018, the banks will use Tink’s payment technology and personal finance management (PFM) platform within their existing customer channels.

In addition to the partnership agreements, SEB, Nordea, Nordnet, ABN Amro, Creades and Sunstone has invested €14 million in Tink.

International

DTCC: HOW TO THINK ABOUT FINTECH (All About Alpha), Rated: A

The Depository Trust and Clearing Corporation (DTCC), a provider of clearance, settlement, and a wide range of other services to the financial markets, has issued a new white paper on technological innovations and the disruptions fintech may generate.

By “core banking functions,” (1) the authors of the white paper have in mind credit, liquidity, and maturity transformation. The banks have more institutional experience handling these functions than upstart fintech firms and, to the extent the latter take over the core functions of the former, there may be reason to worry. Likewise, the fragmentation (2) of “the creation and delivery of financial services across additional providers and platforms” could cause errors and inefficiencies. And (3) if certain players could become too good at delivering these services in this way, they could pose systemic risks.

Source: DTCC

Read the full report here.

The Importance of Fintech Spreads Across the Financial Industry (PR Newswire), Rated: A

A research report by Transparency Market Research, predicts that the global peer-to-peer (P2P) market lending valuation will reach US$897.85 billion by 2024, as it expands at a significant CAGR of 48.2% from 2016 to 2024.

Dragon Victory International Limited (NASDAQ:  LYL) announced today that, the Company has entered into a Strategic Cooperation Agreement (the “Agreement”) with Shenzhen 708090 Investment and Development Co., Ltd (“708090”), a leading provider of shared workspace, community, and services for entrepreneurs, freelancers, startups and small businesses, to promote incubation services.

On October 24th, Fiserv announced that Regions Bank will expand their digital money movement capabilities with the addition of person-to-person payment and account-to-account transfer solutions from Fiserv.

On June 15th, Yirendai announced that it was awarded the Best P2P Lending Platform in ChinaAward at The Future of Finance Summit (the “Summit”) held in Singapore. Yirendai is the first FinTech company in China to receive this prestigious reward.

Qudian Inc. (NYSE: QD) is a leading provider of online small consumer credit in China. The Company uses big data-enabled technologies, such as artificial intelligence and machine learning, to transform the consumer finance experience in China. The company recently emphasizes Its collection efforts and pricing policy. The Company’s collection efforts extend to every delinquent borrower. The Company’s collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken. As part of the major upgrade of the Company’s risk management system in January 2017, the Company has developed a machine learning algorithm to better allocate collection resources based on more detailed grouping of larger delinquency risk. Higher risk groups are allocated with more collection resources as the likelihood of their outstanding balance becoming longer-term delinquent or even uncollectable is generally higher.

Australia

ANZ BBSW penalty too low: P2P lender (InvestorDaily), Rated: A

On Tuesday, ASIC announced that it had reached a confidential in-principle settlement with ANZ resolving the dispute over alleged BBSW misconduct. Commenting on the matter, RateSetter chief executive Daniel Foggo said the corporate regulator’s activity in this area of the market bodes well for a more transparent financial system.

India

Gratification Unleashed (OutlookMoney), Rated: A

There was a time when a loan mostly meant you were going to buy a house or a car. This is not the case any longer. With changing times, now there are loans against salary advance to fund even your honeymoon. Today, there are loans available practically for every need and dream.

Take the case of the ubiquitous car loan, the advent of luxury cars has turned several car companies to offer loans that are tailored to suit customer offerings. For instance, Volkswagen Finance (India), offers financing solutions to customers for both new and pre-owned Volkswagen group vehicles (namely Volkswagen, Skoda, Audi, Porsche, Lamborghini, MAN and Scania) through registered and authorised Volkswagen group dealer channels.

Yet, borrowing is not as smooth as one would expect it to be. Take for instance Mumbai-based Amit Shukla, he had to take a personal loan of Rs 5 lakh to fund his first commercial car, because a car loan did not work out the way he wanted it to work for him.

Asia

Finance: Ensuring a safe investment crowdfunding landscape (The Edge Markets), Rated: AAA

When equity and debt-based crowdfunding platforms were launched in the market, there were concerns that these vehicles could be used for money laundering. After all, investors could unknowingly fund a fraudulent company and the money could end up being misused by the issuers for their personal gain or, even worse, to fund criminal activities.

The Securities Commission Malaysia (SC) introduced a legal and regulatory framework for equity crowdfunding (ECF) in 2015 and peer-to-peer (P2P) financing last year to address these concerns. According to the SC’s deputy general manager Tengku Ahmad Ruzhuar Tengku Ali, the regulator views money-laundering activities to be of minimal risk on ECF and P2P platforms due to the safeguards built into their frameworks and the platform operators’ vetting process.

There have been several cases of fraud linked to investment crowdfunding. The first widely known case, involving US-based Ascenergy, came to light in 2015. The company had raised US$5 million from about 90 local and foreign investors by leveraging some of the better known crowdfunding platforms such as Fundable and EquityNet.

The SC’s approach

All six ECF operators registered in Malaysia are operational. According to Tengku Ahmad Ruzhuar, 31 issuers had successfully raised RM18.3 million on ECF platforms as at end-September, reaching 80% of their target amount.

Retail investors are allowed to invest up to RM5,000 per issuer and a total investment of RM50,000 within a 12-month period. Angel investors registered with the Malaysian Business Angel Network can invest up to RM500,000 while there are no restrictions for sophisticated investors.

Issuers are able to keep the funds raised if they reach a minimum of 80% of the target amount, but they are not allowed to raise multiple funds for the same purpose.

Canada

Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: AAA

Lendified, a Canada-based lender who provides small business loans online has entered into an agreement with ClearFlow Commercial Finance to increase its lending capacity. According to the lending platform, through the agreement, ClearFlow is providing it with a $60 million credit facility to fund loans delivered through its website.

Facebook teams up with Clearbanc to offer cash advances to business (Financial Times), Rated: AAA

Small businesses advertising on Facebook can now get their hands on up to half a million dollars in growth capital, in the latest example of an online platform moving into territory historically dominated by bricks-and-mortar banks.

The social network has been trialling a scheme in partnership with Clearbanc, a Toronto-based firm, since February. Under the scheme, known as “Chrged,” customers connect their Facebook Ads account and their payment processor with Clearbanc, which then makes an offer.

Funds are not loans but merchant cash advances, giving Clearbanc the right to a certain portion of revenues flowing through the customer’s account until it gets its money back, plus a fee, typically of 5-10 per cent. The fee is set by analysing daily cash flows to determine the customer’s ability to repay.

About 1,000 small-business owners have so far taken up an offer.

MONEYTREE Q3 REPORT: STRONG AI AND FINTECH FUNDING PUSHING 2017 BACK ON TRACK (Betakit), Rated: A

According to CB Insights and PwC’s Canada’s latest MoneyTree report, 2017’s sluggish start may transform into a podium finish by year’s end.

The report, which tracks VC activity in Canada for Q3 2017, indicates that Canada could exceed $2.5 billion ($2 billion USD) across more than 300 deals for the year. The result would match or surpass activity from last year, when a total of $2.2 billion USD was invested, and 2016, which fell just below the $2 billion USD threshold.

Source: Betakit

Seed-stage deals accounted for 32 percent of deals in Q3 2017, a 19 percent drop from 51 percent of all deals in Q2 2017. However, early-stage and expansion-stage deals increased to 27 percent and 21 percent of deal share, respectively. Expansion-stage deals climbed to an eight-quarter high in Q3 — a strong contrast from past quarters where seed-stage deals were the most prominent, and perhaps a sign of a more robust investment ecosystem.

FinTech was another notably strong sector, as Canadian FinTech companies have received $252 million ($200 million USD) across 27 deals. This year is on pace to see $341 million ($270 million USD) invested across over 30 deals, on par with last year’s figure of $351 million ($278 million USD).

Source: Betakit

Authors:

George Popescu
Allen Taylor

Friday September 8 2017, Daily News Digest

mobile payments APAC

News Comments Today’s main news: Square makes big move on banking. Folk2Folk CEO to step down. ZhongAn approved for $1B Hong Kong IPO. KBRA  and DBRS  assigns preliminary ratings to SoFi Consumer Loan Program 2017-5. Assetz Capital to set up in Belfast. ZhongAn approved for $1B Hong Kong IPO. Citi Singapore launches Facebook Messenger banking chatbot. Today’s main analysis: Using digital assets to […]

mobile payments APAC

News Comments

United States

United Kingdom

China

European Union

International

India

APAC

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-5 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-5 (“SCLP 2017-5”). This is a $527.12 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-5

Source: BusinessWire

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-5 (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-5 (SCLP 2017-5):

— $287,200,000 Class A-1 Notes at AA (sf)
— $173,800,000 Class A-2 Notes at AA (sf)
— $66,120,000 Class B Notes at A (sf)

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Consumer Loan Program 2017-5 LLC Class A-1 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class A-2 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class B Notes Provis.-New A (sf) Sep 7, 2017 US
US = USA Issued, NRSRO
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU Endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating

Square Makes Its Big Move On Banking (PYMNTS), Rated: AAA

According to WSJ reports, Square intends to submit an application later today (Sept. 7) to form a wholly owned and operated bank in Utah.

That business unit would be called Square Financial Services Inc. — and it would be designed to offer loans and deposit accounts to small businesses. The bank would be capitalized with around $56 million in cash.

Online lender SoFi made a similar move, as did mobile banking start-up Varo Money Inc. The timing is not quite a surprise — federal regulators have been more open to the idea of new banks recently than they have been at any time since the Great Recession.

Square Wants to Be a Bank, Sort of (Paybefore), Rated: AAA

Mobile point-of-sale pioneer Square Inc. is applying for an Industrial Loan Company (ILC) charter to support the expansion of its lending business, the volume of which grew 123 percent year-over-year in the second quarter to $189 million.

The news was met with immediate rancor by at least one community banking group, which also lodged complaints about blurring the lines between commerce and banking when online lender SoFI applied for the same charter in June.

Before Square made its move, the Independent Community Bankers of America (ICBA) wrote in an August blog post that it would fight “tooth and nail” against attempts to remove the “historic separation of banking and commerce in federal law and regulation.” It reiterated that sentiment in news reports about Square’s plans on Sept. 7.

For more than a decade, CFSI has been conducting research and bringing various stakeholders—industry, regulators, consumer advocates—together around using technology to increase access to financial services. Its 2016 research estimates the size of the financially underserved market in the U.S. to be $140.7 billion.

The Dodd-Frank Act had placed a moratorium on such charters that ended in 2013, but the FDIC has been “gun-shy” since Walmart’s failed attempt to secure an ILC charter in 2006, Moeser notes.

Walmart and Affirm: A match Amazon will find hard to beat (RetailDive), Rated: AAA

At the end of August, news flashed across the wire that Walmart and Affirm were close to finalizing a pilot deal with each other. This is a game changer for three critical reasons:

  1. Affirm was started by PayPal wunderkind Max Levchin – Through a simple online application process, Affirm customers can obtain loan financing with interest rates in the range of 10% to 30% for their desired online purchases. Customers can clearly and easily see what they will owe at the time of checkout online, with no hidden costs or surprises.
  2. Walmart is involved – All indications are that Walmart is aggressively going after scan-and-go/checkout-free shopping in their stores. Scan-and-go quite possibly will be the technology that most impacts physical retail in the next 10-15 years.
  3. Affirm and Walmart are a match made in heaven for budget conscious America – Affirm’s digital financing capabilities and Walmart’s scan-and-go capabilities, when combined, will stretch the bank accounts of all Americans — especially Americans who cannot afford Prime membership fees (uh oh Amazon).

A screen pops up, and what used to be a three-pack of Crest for $5.00 is now suddenly the same three-pack but for $0.83/month for six months, or for $0.42/month for 12 months instead.

Lima One Capital Acquires RealtyShares’ Residential Debt Origination Business (Broadway World), Rated: A

Lima One Capital, the premier lender for residential real estate investors, announced today that it has acquired the residential debt origination business of RealtyShares, an online marketplace for real estate investing and financing.

Lima One Capital began partnering with RealtyShares as an institutional investor in early 2017, drawn by the quality of deals listed on the marketplace platform.

New Credit Card Option for Those With Scant Credit Histories (The New York Times), Rated: A

A New York start-up aims to use everyday financial information to qualify people with scant or no credit histories for its credit cards.

The company, called Petal, considers an applicant’s standard credit scores, when available. But it also analyzes their digital financial records, like checking accounts or, in some cases, prepaid debit cards, to rapidly assess their income and spending habits.

The company plans to target consumers who are “new to credit,” like young adults, recent immigrants and lower-income consumers, as well as others who may lack traditional credit scores, Mr. Gross said.

The idea is that by sharing information about their personal cash flow, consumers can get a quick decision on a card application and access to a low-cost card, even if they don’t fit the traditional profile of a top-tier credit customer.

The company’s Petal Visa card isn’t widely available yet, but is being tested privately starting this month. Consumers can sign up online to receive an invitation to apply.

Introducing Petal — a simple, no-fee credit card (Medium), Rated: A

Today, it’s hard to exist without a credit score.

You need one to get a credit card, finance a car, purchase a home, or qualify for a small business loan. And, increasingly, you need credit to do things that seem to have little to do with credit, like sign a lease for an apartment, set up a cell phone plan, or even get a job — nearly 50% of employers today are checking credit reports as part of a job application.¹

That access is important. The cost of a poor credit score can be as much as $250,000 in additional interest and fees over the course of your lifetime.²

The number of American adults that lack access to credit because they are new to credit is staggering:

Over 65 million, and growing as a percentage of the total population.³

The 65 million credit invisible, unscorable and thin-file consumers in the U.S. are not a snapshot of America. They are disproportionately likely to be young, black and Hispanic, first- and second-generation immigrant, and/or low- and moderate-income. The same groups that have been historically underserved by the banking system are routinely denied access and opportunity because of how the credit system works.

Two years later, we’re launching Petal — a simple, no-fee credit card, designed to make life easier for everyone.

Petal makes money from merchants when customers swipe the card, and on interest when customers carry a balance past their due date. And before customers carry a balance, we show them exactly what it will cost — in dollars, not just in interest rates and APRs. It’s our belief that customers should be able to use credit safely and affordably, without falling into costly debt.

SoFi’s Career Incubator, SoFi Accelerate, Going to Chicago (LendEDU), Rated: A

Social Finance, Inc., a fintech and student loan refinancing company, announced this week that SoFi Accelerate, the company’s career incubator, will be visiting Chicago this September.

On Sunday, September 24th, SoFi Accelerate will head to the Windy City to offer professionals a chance to hear from a couple of speakers and to develop their own path for career success.

The career incubator will only last one day and is open to SoFi members and non-members as well. There will be two speakers, Adam Foss and Ryan Holiday, that guests will have the chance to listen to.

The event will be held at the Chicago Botanic Garden at 1000 Lake Cook Road in Glencoe, Illinois from 9:30 AM to 6:00 PM central time. For SoFi members, the price of admittance will be $75, while non-members will have to pay $125 upon entry. However, the first 50 non-members will receive a special discount so that they only have to pay $100 to attend.

Americans Are Spending Mind-Blowing Money on Lotto Tickets in These Top States (TheStreet), Rated: A

In some states, buying lottery tickets is an extremely popular pastime that borders on obsession. The U.S. generated $66.78 billion from lottery sales with the exception of seven states who have not legalized lotteries — Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming — based on an analysis of data conducted by LendEDU, a Hoboken, N.J.-based student loan marketplace, utilizing 2015 data released by the U.S. Census Bureau. Out of the total amount, $42.27 billion was allocated for prizes, $3.18 billion was allocated for administration and $21.35 billion was allocated for proceeds.

For 2016, the Census Bureau projected there were $323 million people living in the U.S. which means the average amount spent on various types of lottery tickets is $206.69 per year, LendEdu said.

Some residents are diehard fans of playing the lottery, and Massachusetts natives spend the most money per capita at $734.85 annually while Rhode Island follows a close second at $513.75 each year. The third highest amount was spent in Delaware at $420.82, New York with $398.77 and West Virginia at $359.78.

The states with the largest amount of people generated the largest revenue – New York’s total was $7.78 billion, followed by California at $5.52 billion, Florida at $5.27 billion, Massachusetts at $5.01 billion and Texas at $4.28 billion.

Leading Carrier and Reinsurer Partner with Insurtech Startup Bestow on its Highly Anticipated, On-Demand Platform (PR Web), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced a partnership with Munich American Reassurance Company, the U.S. life and disability reinsurance division of Munich Re, and North American Company for Life and Health Insurance®, a top-rated carrier in the United States and member company of Sammons® Financial Group, to develop new life insurance products for Bestow’s anticipated on-demand life insurance platform.

Together, the three brands are actively working on products that will premiere as part of Bestow’s full stack, digital platform later this fall. Upon launch, the platform will give consumers an entirely new way to research, buy, and manage life insurance with product options that are affordable, simple to understand, and seamless to purchase.

Bestow’s partnership with Munich Re and North American follows the company’s recent announcement of closing $2.5 million in seed funding, led by NEA.

How to Leverage Crowdfunding to Invest Like a Millionaire (Inc.com), Rated: A

You probably don’t think of relatively small investments and passive income opportunities when talking about commercial real estate. But the new standards for commercial real estate investing are surprisingly simple and potentially profitable. Here’s what Jilliene Helman shared about the industry-disrupting platform.

Platforms like RealtyMogul let you crowdfund multi-million dollar commercial real estate investments with as little as $1,000 to $5,000. Depending on your cash flow, you can make an investment immediately and continue reinvesting the profits.

Anyone who has ever been a landlord knows that dealing with tenants and all the hands-on work that comes with it is cumbersome. But commercial real estate can be a completely passive opportunity that doesn’t require you to do anything. Jilliene agrees that you don’t need to be active in all of your investments.

Jilliene shares that in RealtyMogul’s case, they’ve now gone through 12 months at 8% distribution annualized. While some investors might take that distribution and spend it, others will take that 8% and keep reinvesting it to turn it into a compounding investment. In the second month of a payout, investors will be earning on that original 8% in addition to interest earned each subsequent month of distribution.

Affirm: The San Francisco Startup Using Fintech To Simplify Lending (Benzinga), Rated: A

Rob Pfeifer, chief risk officer at the San Francisco fintech startup Affirm, remembers the moment the company began lending: 7:57 p.m. on Aug. 21, 2014.

Since going live, Affirm has made more than 1 million loans totaling more than $1 billion.

The platform originally targeted millennials, but has drawn a wider clientele, said Pfeifer, 35, who’s scheduled to speak at the Benzinga Fintech Summit Sept. 28 in San Francisco.

BitX Funding takes online middleman approach to small-business lending (Westfair Online), Rated: A

“About four to five years ago, I worked for OnDeck Capital in Manhattan,” said Rowe, referring to a non-bank lender to small businesses, where he was a senior business development manager. “Back in 2008, when we had the market correction, banks stopped lending and small-business owners had nowhere to go to get funds. OnDeck, at the time, filled that gap.”

In 2013, Rowe in Southport launched BitX Funding as an online marketplace for small-business owners and aspiring entrepreneurs to seek financing for their endeavors.

BitX Funding works with a borrower in fill out data on the company regarding how much money they want to borrow, the time frame they are working in to receive their funds and how long they have been in business. Rowe reviews the information and contacts the applicant to receive more information about the depth and scope of the requested loan. The BitX founder Rowe, who is now working with 20 banks as his company’s financing outlets, determines which applicants have the best chance of moving forward.

To date, Rowe has secured 100 small-business loans for clients. Applicants do not pay him a fee or a commission for the service, he noted, with his revenue coming from the participating lenders.

“I’m actually pre-underwriting the applications. Because of Dodd-Frank and all of the other regulations and paying an underwriter a $100,000 salary for a $50,000 loan, it’s not really in their (lending banks’) wheelhouse.”

Washington DC-based RegTech Startup Securrency Joins Forces With International FinTech Firm Humaniq (PR Newswire), Rated: A

Securrency, a RegTech company with a platform designed to streamline regulatory compliance for token offerings, has just signed an extensive strategic partnership with Humaniq, an Ethereum-based Blockchain ecosystem looking to bring financial inclusion to over 2 billion unbanked people globally.

The partnership included an investment into Securrency by Humaniq as the lead investor of their current investment round. Humaniq will also provide additional technological capabilities which will be used for their collective efforts on a LegalTech platform. This LegalTech platform is designed to efficiently match capital to opportunity in transformational emerging technologies. The platform will provide efficient access to capital for startups, liquidity for frontier markets, and a scalable securitization process for established global industries. By automating certain compliance functions and connecting legacy financial services to the power of the blockchain, the team sees a path to revolutionize technology finance.

Payments firm Baton Systems adds former Citi vice chairman Kaden to advisory board (Finextra), Rated: B

Baton Systems (“Baton”, formerly known as Ubixi), the platform for clearing, settling and managing payments between financial institutions, has appointed former Citigroup Vice Chairman Lewis B. Kaden to its Advisory Board.

He joins Arjun Malhotra, Co-Founder of HCL Technologies and Headstrong, as the newest addition to Baton’s Advisory Board.

Kaden was labeled “The Most Powerful Banker You’ve Never Heard of” by Bloomberg Businessweek in 2009. He joined Citigroup in 2005, where he oversaw the bank’s global functions and advised the CEO on numerous strategic and business matters. Kaden has also served as Chairman of the United States Government Overseas Presence Advisory Panel, as well as Chairman of the Industrial Cooperation Council of the State of New York and Governor Mario Cuomo’s Commission on Competitiveness. He holds degrees from both Harvard College and Harvard Law School.

Home Point Financial Names Ross Gloudeman Chief Compliance Officer (Business Insider), Rated: B

Home Point Financial Corporation (“Home Point”), a national, multi-channel mortgage originator and servicer, today announced that Ross Gloudeman has been named Chief Compliance Officer.

Prior to joining the Home Point team, he was a Principal at AIMD Consulting, LLC, providing advisory and contract risk or compliance expertise to financial services clients. Previously, he was Senior Vice President, Executive Risk and Compliance Officer, at Walter Investment Management Corp.

United Kingdom

Industry reacts to 2,000 IFIsas opened (Bridging&Commercial), Rated: AAA

Data also showed that the average investment into IFIsas during 2016/17 was £8,500, while £17m was invested collectively.

Octopus Choice launched its IFIsa last month, allowing investors to deposit as little as £10 in loans underwritten by Octopus Property.

Folk2Folk launched its IFIsa in July to its existing lenders.

Giles Cross, CMO of Folk2Folk, said: “Since the introduction of our IFIsa in July, we have seen a huge amount of interest from investors looking for an alternative income with tax-free returns.”

Some peer-to-peer platforms have found the HMRC’s figures promising, including Landbay, which launched its IFIsa early in the year.

John Goodall, CEO of Landbay, said the number of accounts that had been opened had exceeded expectations.

Folk2Folk CEO to step down (Bridging&Commercial), Rated: AAA

Peer-to-peer lending platform Folk2Folk has announced the resignation of its chief executive officer Jane Dumeresque (pictured above), who will step down during September.

During her tenure, Folk2Folk opened new regional offices in Yorkshire, Somerset and the Three Counties, built further representation in Cumbria, Dorset, Cheshire and East Anglia and grew the platform’s cumulative loan book from £30m to over £170m.

Peer-to-peer lenders pledge to set up base in Belfast (Irish News), Rated: AAA

PEER-to-peer lending platform Assetz Capital, which to date it has lent more than £300 million to businesses across the UK, is expanding its operations into Northern Ireland.

Get bigger profits from mini bonds (MoneyWeek), Rated: A

But in the past year we’ve seen a steady rise in the quality of these bonds, partly because reputable alternative asset managers have moved in with asset-backed propositions (ie, companies that own physical assets, providing a certain amount of security for lenders). Downing, for instance, has its own “crowd bond” business that provides debt capital to businesses, usually within an Innovative Finance Individual Savings Account wrapper. Currently Downing has two projects that allow instant access (ie, no maturity), paying a 3% yield on an energy-backed business. This is a bit on the low side, but Downing also advertises an imminent bond that involves lending to a pub business for 18 months at 5.5%.

Property lender LendInvest raised £50m when it issued the alternative finance sector’s first retail bond, paying 5.25% a year over five years. The bond issue was oversubscribed, and the bonds now trade at £102 (implying a net yield to maturity of just over 5% a year).

In the news…

• Peer-to-peer lender RateSetter has reignited the debate about transparency after it admitted placing loans via rival platforms without telling its customers, reports The Times. It placed around £10m in property development loans on Wellesley, and an unspecified sum via Archover, which lends to small businesses. Both Wellesley and Archover offer investors a higher return than RateSetter. A spokesman for RateSetter said it would not lend via either platform again. RateSetter withdrew from industry body the P2P Finance Association last month after admitting it had “breached the principles of the Association”, but stressed that “no customer has experienced any loss from our actions”.

A third of financial technology startups expect to IPO within five years (City A.M.), Rated: A

The UK’s ambitious fintech startups are eyeing success on the public markets with a third of them planning an IPO in the next five years, new figures reveal.

Transferwise, Revolut and World Remit are among the country’s innovative financial technology companies with long-term ambitions of going public, signalling the burgeoning industry’s confidence.

Of the 250 fintechs surveyed in fresh research from EY and Innovate Finance on behalf of HM Treasury measuring the health of the industry, more than half also said they expect revenue to more than double over the next 12 months. Collectively, they expect to raise more than £2.5bn in their next funding rounds, having already raised £3.5bn to date.

Digital challenger bank Revolut told City A.M. it has an ambition to go public “later down the line”, while co-founder of “unicorn” startup Transferwise Taavet Hinrikus said over the summer it was time to think seriously about becoming a public company “in a few years”.

Using Digital Assets to Secure a Bitcoin Loan (Cryptocoins News), Rated: A

Ledgermark Ltd develops, markets and issues distributed ledger technology, specifically; various forms and implementations of distributed ledgers that can be used in combination with technologies like Bitcoin.

The company is launching a new digital asset; Meridian (MDN). Meridian represents a fork in the road as it is different from traditional digital assets. Instead of being positioned as a bitcoin alternative, Meridian is being designed to be used in combination with bitcoin. In short, via their Bitcoin Loans Platform, Ledgermark Ltd will be accepting Meridian tokens as collateral for bitcoin loans of higher value.

Is the P2P lending industry working with Bell Pottinger? (P2P Finance News), Rated: B

The P2P industry – and those linked to it – have a relatively small exposure to Bell Pottinger, with most firms opting for smaller PR agencies.

Basset & Gold, which advises and provides financing to P2P platforms and direct borrowers, is still a client of Bell Pottinger as of 6 September 2017, but is reviewing its relationship.

P2P lender Wellesley & Co previously had a relationship with Bell Pottinger, but is no longer using them.

MangoPay – which provides payment technology for P2P lenders – was still a client of Bell Pottinger as of 2 June 2017.

Darktrace in UK’s top three fastest-growing tech companies (Business Weekly), Rated: B

Norwich-based Know Your Money is the other new entrant – in at 97.

Cambridge company CashFlows surges from 94th last time to 58th in the pantheon with annual sales growth of 72 per cent to £37.3m.

Norwich’s strength in FinTech is further demonstrated by the inclusion of  Epos Now, a payment systems developer, which is placed 53rd (down from 32nd) with growth of 81 per cent to £13.9m.

The companies in the East appear with businesses from around Britain, including designer fashion website Farfetch, peer-to-peer lending platform Funding Circle and money transfer provider WorldRemit.

China

Chinese online insurer ZhongAn wins HK approval for $ 1 billion IPO (Reuters), Rated: AAA

ZhongAn Online Property and Casualty Insurance Co Ltd, China’s first internet-only insurer, secured Hong Kong stock exchange approval for its planned initial public offering which could raise more than $1 billion, sources with direct knowledge of the deal said on Friday.

The company plans to start gauging investor appetite for the IPO as soon as Monday after receiving the nod from the listing committee of the Hong Kong stock exchange, added the sources. It plans to launch the IPO and take orders from investors on Sept. 18.

The IPO would be the biggest by a financial technology company (fintech) in the city, which wants to lure more new listings of so-called new economy startups. Hong Kong has had $5.73 billion worth of new listings so far in 2017, compared with $21.3 billion in all of 2016, Thomson Reuters data showed.

Sino Fortune buys $ 2.8m equity interest in online lender TouZhiJia (Deal Street Asia), Rated: A

Chinese fintech solutions firm Sino Fortune Holding Corp has acquired a 4.45 per cent stake in Shenzhen TouZhiJia Financial Information Service Co Ltd (TouZhiJia) for about $2.8 million (RMB19.1 million).

Sino Fortune is making the 4.45 per cent equity interest acquisition through Puhui Equity Investment Co Ltd (Puhui).

Founded in September 2014, TouZhiJia’s main businesses include vertical P2P search engine, private wealth management, and secondary loan exchange services.

TouZhiJia has reportedly accumulated 2.74 million registered users and facilitated 1.98 million transactions with aggregate transaction value of more than $2.30 billion (RMB 15.63 billion). TouZhiJia is an affiliate of Yingcan Group.

European Union

LendIt Europe Agenda Released, Discounted Pricing Ends Soon (Lend Academy), Rated: AAA

The full agenda is on the LendIt website, but here are a few topics I am most excited about:

  • How to Navigate Open Banking (Imran Gulamhuseinwala, Ernst & Young)
  • Digitization of Finance How Customer Expectations are Changing (Anne Boden, Starling Bank, Rhydian Lewis, Ratesetter Giovanni Daprà, Moneyfarm)
  • Implementing AI in Financial Services: Case Study (Francesco Brenna, IBM, Roberto Mancone, Deutsche Bank)
  • How Big Banks Are Approaching the New Connected World (Gilad Amir, Lloyds Banking Group, Benoit Legrand, ING, Raman Bhatia, HSBC, Gustavo Vinacua, BBVA)
  • Renaud Laplanche of Upgrade talking about Online Lending 2.0 and the state of the US fintech market.

Summer pricing of £1,295 ends at midnight on September 8th. After that, ticket prices will rise to £1,495. As always Lend Academy readers can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout.

What Kinds of Fintech Platforms Help Startups with Fundraising (TechBullion), Rated: A

By the way, the alternative funding market in Europe is not just a developed one, but it is often supported by the state in every way. Moreover, crowdlending currently is a major competitor for the conventional banking area. In the future, it will consolidate its position because, due to introducing new Basel lll requirements to banks, including a reduction of risk assets, the requirements to bank lenders will become ever more stringent.

For instance, in 2015, Austria adopted an act that governs and legalizes the operation of companies involved in non-banking lending. But at the same time, in the biggest fintech country in Eastern Europe – Russia – and in several EU countries, there is yet no such document. Germany has a credit rating of companies that protect the investor.

What kinds of non-banking business lending platforms exist?

According to data of KPMG studies, the last 3 years period demonstrated a 131% growth of the share of mutual business lending, with the share of peer-to-peer consumer lending having increased merely by 54%.

  • Crowdfunding– investments for a remuneration from a company.
  • Crowdlending– this is mutual business lending assuming a return on investments (Funding Circle).
  • Crowdinvesting – an investor receives a share in a company with a view to growth of the value of one’s purchased share and, certainly, receiving dividends from company operations (Crowdcube, Seedmatch).
  • Refinancing receivables or online factoring. A loan is provided on collateral in the form of expected payments or accounts receivable.
  • Invoice discounting – this is in essence factoring, but with a somewhat other funding structure. Within its framework, funding is not split into deliveries but is paid in full on spot. In case of assignment of claims, the lender will bear the obligations of reimbursing the factor the funds underpaid by the borrower.

The Microfinance Centre’s (MFC’s) Alternative Finance Forum; October 5, 2017; Warsaw, Poland (MicroCapital), Rated: B

Event Location: Copernicus Conference Centre; Warsaw, Poland

Summary of Event: This forum aims to “introduce new forms of financial services” while covering topics including equity-based crowdfunding, social impact bonds, online lenders to small businesses and peer-to-peer lending platforms. The event has support from the European Union and its European Investment Bank Institute.

Cost: Participation is free of charge

Event Website: 

International

How digital assets are revolutionizing payments (The Asset), Rated: A

Experian, an information services group, estimates that the average error rate of bank account data is around 12.7%, indicating that there is a lack of understanding of foreign bank codes and account numbers.

A key problem with cross-border payments today is the fact that transactions are at the mercy of correspondent banking relationships.

Ripple, a global digital payment provider, has designed its XRP digital asset solely the cross-border transfer of value between enterprises.

Aside from Ripple, other companies have started to look at the usage of digital assets for transactions. Visa for instance recently filed a patent with United States Patent and Trade Office (USPTO) on the creation of a digital asset network to eliminate third parties and simply their transaction process.

Fintech Companies Disrupting Finance, Creating Bank of Tomorrow (Cointelegraph), Rated: B

One popular recent development in the Blockchain community is the creation of multi-crypto/fiat debit cards. These cards allow users to interchange between the given set of currencies in a seamless manner.

Luhaaar notes that fintech companies have consistently delivered better results in individual financial system services. He says that Change Bank wants to bring these companies together to create a global fintech bank of tomorrow.

India

Capital Float Digitally Removes Credit Gap (CXO Today), Rated: A

In an exclusive interaction with CXOToday, Rohan Angrish, CTO, Capital Float, takes us through how they have made it possible with the aid of technology which helped reduce wait times for SMEs, and enabled disbursement of funds in just three days. Last month, the company announced an equity raise of $45 Million (Rs. 293 crores) in Series C funding.

CXOToday: Tell us about your expansion plans across India. Any plans to go global in the near future?

Angrish: Over the past year alone, we have disbursed loans of over Rs. 2,100 crores to 12,000 plus customers across 300 cities. We will continue to identify and serve under-served SME segments. We have also ventured into financing micro-entrepreneurs like taxi drivers, travel agents, and Kirana store owners. Although these are small-ticket loans, the sheer size of these segments indicates immense potential. India will keep us busy for the short term. By the end of the financial year, we expect to have our geographic footprint spread across 500 cities from our current number of 300 cities, without increasing headcount.

CXOToday: Who are your customers?

Angrish: These include SMEs who have traditionally been denied finance due to ineligibility based on credit parameters set by formal financiers, lack of collateral and inability to furnish the required documentation.

CXOToday: Please throw light on your corporate partnerships.

Angrish: The company has partnered with ecosystem leaders across various verticals such as e-commerce (Amazon, Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, etc.), travel and hospitality (VIA and Yatra), retail (Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services) and taxi aggregators (UBER and Ola) etc. Through these partnerships, we are able to effectively expand our reach to SMEs operating on these platforms.

Fintech startup EarlySalary raises Rs 5cr in debt financing from IFMR Capital (YourStory), Rated: A

Fintech startup EarlySalary, which offers instant cash loans and salary advances, has raised debt financing of Rs 5 crore from IFMR Capital. Previously, this past May, the company had raised a Series A round of $4 million (Rs 28 crore) in equity funding from IDG Ventures India and DHFL and plans to leverage its equity multiple times over the next few months.

In an earlier interaction with YourStory, Co-founder and CEO Akshay Mehrotra had said that almost 75 percent of the Rs 28 crore would be utilised for building their lending book. The remaining amount was to go into expanding their team, with a specific focus on machine learning skill sets, and helping grow the customer base.

EarlySalary has already disbursed more than 7,000 loans last month. Currently operating in eight cities including Mumbai, Pune, Chennai, Bengaluru, Hyderabad, New Delhi, Jaipur, and Ahmedabad, it is looking at expanding into other cities as well.

Growth deals drive VC investments in August (The Times of India), Rated: B

Online lender Capital Float attracted $45 million, while Treebo Hotels took $34 million. Bioinformatics company MedGenome attracted $30 million from investors led by Sequoia India and fitness chain operator Curefit raised $25 million from existing investors including Accel Partners and IDG Ventures.

With seed funding becoming more challenging, early stage investors are asking questions on whether the business is viable and if it can raise follow on capital, which is an indication of the market maturing, he adds.

APAC

Citi Launches First Facebook Messenger Banking Chatbot in Singapore that Provides Customer Account Information (Fintech News), Rated: AAA

Citi Singapore today announced the launch of Citi Bot – the bank’s new natural language chatbot on Facebook Messenger. Singapore is the first market for the launch of the chatbot which will be introduced progressively in the Asia Pacific region over the next few months.

This landmark initiative furthers Citi’s open architecture approach to digital banking as the bank taps on its global network to form strategic partnerships and to co-create with leading players in digital ecosystems globally and locally.

Citi Bot will first be made available to some 600 Citi customers and employees who will form Citi Singapore’s Beta Testing Community, referred to as the Citi Beta Community.

The second phase of the Citi Bot will introduce more new features such as card activation, ability to lock and unlock credit cards and transaction alerts for cards among others.

India, Indonesia lead growth in mobile payments (The Asset), Rated: AAA

Asia-Pacific now leads the way in the adoption of mobile payments, according to a report by ACI Worldwide (ACI) entitled “Global Consumer Survey and Consumer Trust and Security Perceptions.”

Within the Asia, India and Indonesia saw the biggest growth of mobile wallet use with 56% of Indian and 47% Indonesian participants of saying that they used mobile wallets. This represents a significant increase from 2014 results which saw 47% of Indian and 32% of Indonesian survey participants using mobile wallets.

Source: The Asset

Authors:

George Popescu
Allen Taylor

Tuesday August 29 2017, Daily News Digest

Global fintech

News Comments Today’s main news: Has Float shut down? Ford to use alternative data for credit scoring. OnDeck Capital, Scale Operations Management finalize partnership. Money Dashboard raises 1.33M GBP. Mintos adds Georgian ID Finance loans. Today’s main analysis: HNA raises billions from shadow banks. Today’s thought-provoking articles: SoFi personal loans help people pay off over $5B in credit card […]

Global fintech

News Comments

United States

United Kingdom

China

European Union

International

Australia

Asia

Middle East

News Summary

United States

Rumor: Online Lender Float Has Shut Down (Crowdfund Insider), Rated: AAA

Online lending platform Float has allegedly shut down. Crowdfund Insider has heard from several different sources the digital platform has called it quits. Earlier today, Crowdfund Insider attempted to contact the platform but no response has been forthcoming.

Ford to Look Beyond Credit Scores in Sales Push (Fox Business), Rated: AAA

The company says it is looking at ways to increase loan and lease approvals for applicants with limited credit histories. These consumers are often denied credit because they lack a history of managing debt and as a result have low credit scores. Ford’s credit division plans to review new data to try to determine whether these customers, as well as those with more robust borrowing histories, are likely to repay their loans.

Ford’s U.S. sales are down 4.3% during the first seven months of the year compared with the same period a year prior, while total U.S. new auto sales are down 2.8%, according to Edmunds.com. Wells Fargo & Co.’s auto lending volume fell 45% in the second quarter from a year earlier due to tightening underwriting standards. Ally Financial Inc.’s auto loan originations fell 8.5% for the same period.

Ford Credit is among the largest U.S. lenders to say that it is looking at using alternative methods of underwriting, beyond the traditional factors that are mostly centered around credit reports.

SoFi Personal Loans Help People Pay Off More Than $ 5 Billion In Credit Card Debt (PR Newswire), Rated: AAA

Today SoFi announced its members have cumulatively paid off over $5 billion dollars in credit card debt using SoFi Personal Loans, getting them out of debt faster and at lower interest rates.

Members who used SoFi Personal Loans to pay off credit cards reduced their effective interest rate by 42% on average. They also saw their credit scores rise by 17 points on average due to reduced credit utilization, a key component of credit scores.

Credit card utilization has been steadily rising since the 2008 financial crisis. Americans’ credit card debt eclipsed $1 trillion this year, according to Federal Reserve data, and the average credit card APR inched up to an all-time high of 16.14 percent, according to CreditCards.com.

SoFi offers an array of options for Personal Loans, letting members find their rate, choose their loan amount (up to $100,000), and choose their term (three, five, or seven years) through a simple, fully-online application process. Loans are funded in less than a week on average. Though SoFi Personal Loans can be used for lots of purposes, more than 70 percent of SoFi members report using them for credit card refinancing and loan consolidation.

On Deck Capital Finalizes Funding Partnership with Scale Operations Management (Digital Journal), Rated: AAA

At one point in recent history – the internet was the wild west of commerce and industry. It seemed as if anyone with a computer and an idea could start a company from their home office. Two decades later, way after the dot com bubble burst; it is clear that the internet is becoming saturated and more competitive.

The competition for attention has led to increases in advertisement costs.

Doing business online went from a luxury to a necessity and budgets went from small to large.

Andrew Ukpabi, Founder of Scale Operations Management – a business management company with 15 Million in client assets under management; believes that this trend in the short term will only grow and he explains cheerfully how this has impacted the growth of his company:

“I’ve been on a signing spree lately. In the last week I’ve signed deals with CRMS’s, chargeback mitigation platforms, and processing companies.”

The partnership with On Deck Capital (ONDK) a NYSE listed company that boasts 4 Billion in funding to more than 40,000 small business customers in the US, Australia, and Canada; is the latest in his signing spree.

NEPC SURVEYS E&F MANAGERS ABOUT ALTERNATIVE INVESTMENTS (All About Alpha), Rated: A

NEPC, the investment consulting group that caters especially to endowments and foundations, has posted a survey about what such institutions think of marketable alternatives.

This broad category “marketable alternatives” includes direct hedge funds, funds of hedge funds, liquid alternatives, and global asset allocation.

Where are these allocations headed, near future? Not quite two-thirds of the respondents (65%) planned to maintain their current level of allocation in such investments. Sixteen percent plan to make a “modest change” increasing the allocation. Symmetrically, another 16% plan to make a “modest change” in the opposite direction. Only 3% plan to decrease the allocation “substantially,” and no respondents plan to increase it substantially.

As to what they have done over the past year: 18% have increased their allocation to such alternatives, 32% have decreased it, so the remaining half have kept it where it is.

Source: All About Alpha

There is a split on the question of the classification of marketable alternatives within a foundation or endowment’s portfolio, one that reflects a series of evenly divided binary choices. Not quite half (48%) of respondents say they have a dedicated allocation to this asset class, and that’s the end of the issue for them.

So that leaves 52% who do something else. A little more than half of them (about 28% of the whole) say that they have marketable alternatives both within a dedicated allocation and as part of an allocation to another class.

Should SoFi be granted a bank charter? Rep. Waters isn’t so sure (HousingWire), Rated: A

SoFi outlined in the application that the purpose of the charter is to provide its customers a FDIC insured NOW account and a credit card product. The bank will offer no other products or services.

In response to Waters’ comments, a SoFi spokesperson said, “We’re happy to discuss our application with Rep. Waters and other interested parties, and confident the FDIC will conduct its review of our application expeditiously and in accordance with the law.”

The Independent Community Bankers of America also sent a letter to the FDIC over the application, urging the FDIC to reject the application.

ICBA also stressed that Congress should close the ILC loophole, stating it not only threatens the financial system but creates an uneven playing field for community banks.

1 Popular Way Millennials Are Cutting Back on Living Expenses (and Why There’s Nothing Wrong With It) (CheatSheet), Rated: A

Co-living has been a popular option among young people just out of college. And now businesses are also jumping on the co-living bandwagon, hoping to make some quick cash from this idea.

The act of sharing housing, work, and commuting space is second nature to millennials. Co-living is just one more option young people have to stretch their resources and meet new people if they so choose.

Research shows more millennials are living with their parents than with a spouse. Living with parents is the No. 1 living arrangement among millennials, according to Census Bureau research. In 2016, 22.9 million (31%) young adults lived with their parents.

One company that joined the co-living movement is WeWork, which originally started out offering co-working spaces to individuals and companies. WeWork branched out to co-living spaces, called WeLive, in 2016.

Some co-living buildings, such as PodShare, even provide free food and fully furnished apartments, further helping their residents keep costs down.

Thinking of going the co-living route? Here are some of your options in three major cities.

Chicago

Los Angeles

New York

Malkiel Provides Investment Advice For IRA Allocations (Financial Advisor), Rated: A

Although the top leading robo-advisor firms grew by 65 percent in eight months to $19 billion assets under management in 2014, according to Financial Advice Market Review (FAMR), robo-advice is limited to assembling a group of stocks and bonds to avoid risk in a portfolio.

CAN WE ALL PARTICIPATE IN THE NEXT UNICORN? (All About Alpha), Rated: A

With the passage of the Title III portion of the JOBS Act, this paper tries to address a very critical question: can non-accredited investors find and invest in the next unicorn?

AltFi Data [2015], a data aggregator of equity crowdfunding, published a report on equity crowdfunding from 2011 through June 30, 2015 using the five most significant online platforms based on origination volume. These include Crowdcube, Seedrs, SyndicateRoom, CrowdBnk and Venture Funders. There were 431 investment crowdfunding rounds from 367 companies. The UK report indicates that crowdfunding has revolutionized the funding of small and medium sized enterprises involving both professional and small retail investors. It is reported that 62% of crowd funding investors describe themselves as retail investors with no previous investment experience.

3 Keys To Earning Up To 7% With Peer-To-Peer Lending (Forbes), Rated: A

Lending Club, the world’s largest P2P platform, has served over $55 billion in new loans in 2017. That’s a 40% growth in loan volume compared to last year.

Now, the likes of Goldman Sachs serve about 70% of all peer-to-peer loans.

P2P lending is still a place to earn market-beating yields of up to 7%. But private investors are now competing against the world’s biggest financial institutions.

  1. Spread Your Risk and Invest No Less Than $5,000
  2. Use Automated Rebalancing Tools – NSRInvest.com is a registered advisor that offers managed accounts to P2P investors. Investors can link their Lending Club and Prosper accounts to the website and have NSR experts invest for them based on their loan selection criteria.

Depending on the selected strategy, NSR users have outperformed the market by as much as 2.6% (average is 1.5%).

  1. Enhance Your IRA with P2P

Tell Us Who Your Favorite Fintech Companies Are: Forbes Fintech 50 Call For Nominations (Forbes), Rated: B

If you own or work at a fintech firm that you think is worthy — or if you’re a fan of one — please tell us about it. The only stipulations are that it be a venture-backed startup with operations in the United States. That means no publicly traded companies or their subsidiaries and no privately held established firms.

If you are submitting a company for which you’re an owner or employee, please use this form.

If you’re nominating a startup of whose inner workings you have no knowledge, please fill this out.

The deadline for both sets of submissions is Friday, September 15, 2017. If we have more specific questions, we will be in touch.

United Kingdom

Money Dashboard Raises £1.33M in Equity Crowdfunding (Finsmes), Rated: AAA

Money Dashboard, an Edinburgh, UK-based personal finance management app, raised £1.33M in equity crowdfunding.

1708 investors have participated in the campaign via Crowdcube acquiring an equity stake of 9.55% in the company.

The company had a target of £1m at a pre-money valuation of £12.6m.

Half of UK businesses lack confidence in government’s Brexit strategy (Consultancy.uk), Rated: A

Now, a recent survey conducted by peer-to-peer finance platform Market Invoice found that 54% of 3,000 businesses polled said the government had lost its way in talks with Brussels and that Brexit Secretary David Davis lacked preparedness, while only 5% felt he was doing a good job.

Maintaining stability in the sterling was meanwhile considered important by just 7%, reversing a KPMG study of businesses performed earlier in the year. In response to the falling pound however, the UK is projected to lose as many as 40,000 investment banking jobs post-Brexit.

A total of 20% of firms voted against further financial support spent on marketing, and aim to reduce it in the nearby future. A 54% majority of small businesses have not yet witnessed Brexit leaving a negative impact on the hiring plans, as only 2% are predicted to reduce exposure to EU nationals with a further 6% being more reluctant to hire from the bloc.

Startup Accelerator Level39 Launches Cyber39 (LendIt), Rated: B

Level39 has launched Cyber39, a program focused on fighting cyberthreats in London.

China

Chinese Dealmaker Raises Billions From Shadow Banks (Bloomberg), Rated: AAA

A Bloomberg News review of more than 100 investment documents and corporate filings sheds light on how HNA has financed its remarkable run of deal-making, which has included acquiring multi-billion dollar stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc.

The documents, pieced together from fund prospectuses and disclosures to China’s Administration for Industry and Commerce, show how HNA has employed a network of trusts and asset management products, in addition to more conventional financing, to fund everything from takeovers to day-to-day expenses. Among the key findings: Units of the group have pledged more than $10 billion of unlisted shares to non-bank lenders and, in some cases, have paid interest rates on shadow debt that far exceed China’s benchmark rates for bank loans and bond issuance.

The documents, pieced together from fund prospectuses and disclosures to China’s Administration for Industry and Commerce, show how HNA has employed a network of trusts and asset management products, in addition to more conventional financing, to fund everything from takeovers to day-to-day expenses. Among the key findings: Units of the group have pledged more than $10 billion of unlisted shares to non-bank lenders and, in some cases, have paid interest rates on shadow debt that far exceed China’s benchmark rates for bank loans and bond issuance.

HNA’s parent company said in a response to questions that financing from non-bank institutions makes up a “small” portion of the group’s overall funding and that its credit limit from Chinese banks has increased by more than 100 billion yuan ($15 billion) this year. The company said its debt-to-asset ratio has dropped for the past seven years and added that HNA Group’s profitability and asset quality have been improving.

Source: Bloomberg

Taken together, the documents suggest that HNA’s main units have increased their use of shadow financing in absolute terms over the past two years.

China’s regulators preparing new rules for digital coin offerings (Reuters), Rated: A

Chinese regulators are preparing new regulations on digital coin offerings and may ban them until the rules are in place, the financial magazine Caixin reported on Monday, as interest in the new fundraising channel grows rapidly in a regulatory grey area.

Digital currencies, also called cryptocurrencies, such as bitcoin and a growing stream of alternatives, allow anonymous peer-to-peer transactions without the need for banks or central banks.

China’s top insurers ploughing billions into fintech (SCMP), Rated: A

China Life and Ping An Insurance, the country’s two largest insurers, have both been focusing heavily on investment in technology, and now it appears artificial intelligence (AI) may becoming more important than sales agents across the sector, as premium income continues to soar.

The nation’s largest insurer China Life still has 1.58 million agents, while number two Ping An has over 1.1 million, and both have previously made much of the fact they plan to expand those sales forces in future.

China Life said last Thursday it had teamed up with internet search firm Baidu to form a fund to invest 7 billion yuan (US$1 billion) in AI-related technology companies and internet finance operations. China Life will plough 5.6 billion yuan into the venture, with Baidu covering the rest.

European Union

Mintos Marketplace Adds ID Finance Loans Issued in Georgia (Crowdfund Insider), Rated: AAA

ID Finance, an emerging markets focused Fintech company, is now listing investment opportunities on the Mintos marketplace incorporating prime personal loans issued under its Solva brand in Georgia. Solva is a fully owned ID Finance subsidiary in Georgia that has disbursed 28,000 personal loans worth €12 million since late 2016.

The loan originator will offer a buyback guarantee for loans that are delinquent for more than 60 days. The share of non-performing loans for Solva is said to currently be at approximately 4%. ID Finance will keep at least 10% of each loan available on the Mintos marketplace on its balance sheet so its interests are aligned with investors.

PSD2 – What will happen in January 2018? (AltFi), Rated: A

With the inception of financial digitalization, we’ve seen new firms such as Goldman Sachs adapt their strategy to cover retail and embrace fintech, firms such as Citi and BNY Mellon have ventured into open banking and finance APIs and Vanguard has created a digital behemoth of their robo-advisor.

Open Banking is still a new concept and, as new concepts go, it will be refined by trial and error. Some banks are farther along than others, with e.g. BBVA already in commercial use with several APIs. Yet the roll out of new “API Markets”, as they are often called, will see a learning experience from both the bank providers as well as those looking to utilize them.

Swiss fintech launches first-ever mobile app for alternative investments (Opalesque), Rated: A

Opalesque Industry Update – Fundbase has announced immediate availability of Fundbase Mobile, a revolutionary application for qualified investors to source alternative investment products. With Fundbase Mobile, investors will have access to a globally diversified universe of high quality alpha producing alternative investments at their fingertips.

The majority of Fundbase users expect to improve their fund sourcing process with Fundbase Mobile by spending more time logged in, searching funds. Pancho Vanhees, of TFAL Investments, a Luxembourg-based investor, believes the mobile app will improve their systematic processes and quickly identify top performing emerging hedge fund managers while on-the-go.

Why Only Initial? Worldcore Aims to Use ICO to Conquer Blockchain Competitors (Coin Telegraph), Rated: A

In the past week alone, prominent investor Mark Cuban and entrepreneur Kim Dotcom have both signalled their involvement in ICOs.

Worldcore aims to undercut banks, banking disruptors such as TransferWise and FairFX, and soon the technologically innovative operators heavily involved with cryptocurrencies.

Offering both payments and consumer spending options such as a prepaid debit card, the company is already accepting Bitcoin as a funding option, the first step in a Blockchain rollout which will occur incrementally over several years as the technology improves.

Biometric account access in the form of face and voice recognition replaces passwords, while Blockchain offerings themselves will take the form of a payment gateway reminiscent of Ripple.

Worldcore’s fee structure, for example, is noticeably more complex than that of Bitcoin-based prepaid cards from Bitwala, ANX and others.

Fintech Can Contribute to the Quality of Country’s Financial Center (Crowdfund Insider), Rated: B

The Federal Council of Switzerland is out with a note regarding Fintech. Federal Councillor Ueli Maurer is apparently doing a swing through the Swiss Fintech scene to improve awareness and relationships.

Maurer is expected to visit Fintechs in Zurich and Zug – a fact finding mission to garner updates on current tech topics, risks, opportunities and challenges.

The Federal Council believes that a dynamic Fintech ecosystem can contribute significantly to the quality of Switzerland’s financial center – something that is strategically important. It can also boost its competitiveness around the world.

Credissimo – Contender for European FinTech Awards 2017’s Title of ‘European Innovator 2017’ (Digital Journal), Rated: B

Credissimo is the only Bulgarian company featured in the European FinTech Awards 2017 where it is nominated for the “Alternative Finance” category.

This prestigious nomination places Credissimo amongst lead European companies where it will compete with the largest FinTech organizations for 2017’s European Innovator award.

International

Alternative finance market in robust health, despite slight summer downturn (Opalesque), Rated: AAA

Opalesque Industry Update – The world’s first global Crowdfunding and Marketplace Finance Index (CAMFI) shows that the industry exhibited a slight downturn in July, dropping from 94.11 in June to 90.32 in July.

Key points:

  • The global crowdfunding and marketplace finance industry exhibited a slight downturn in July
  • Segment-wise, the Reward Sub-Index was the major cause of the July decline
  • Attribute-wise, the main declining driver was the market Scale measures
  • Industry Scale continued to shrink, most evidently in the Reward segment
  • Industry Efficiency improved significantly, with both Debt and Reward segments demonstrating growth
  • Industry Transparency underwent no noticeable changes
  • Debt has stayed relatively stable, which is expected given it is such a large and diverse market
  • Equity has seen had a significant downturn in trading
  • Rewards has had the biggest downturn, with significantly fewer campaigns, backers and amounts of money raised for each campaign during the July period

Despite the slight downturn demonstrated in June and July, data from TAB shows that the industry is growing rapidly year on year:

  • In 2014, campaigners in the UK raised over $2 billion via crowdfunding platforms. In 2016, they raised over $3.96 billion.
  • China is demonstrating huge growth, with companies raising $134 million via crowdfunding platforms in 2014. In 2016, they raised $2billion.
  • France is also seeing significant growth, with companies raising $70 million in 2014, and $159 million in 2017 to date.
  • In 2014, companies raised $5.4 billion in debt finance globally, increasing to $12.7 billion in 2016.
  • In 2014, companies raised $345 million in equity finance globally, increasing to $766 million in 2017 to date.
  • Rewards finance raised via crowdfunding globally has increased from $680 million in 2014 to $1.1 billion in 2016.
  • The Real Estate industry raised $1.2 billion via crowdfunding in 2014. In 2016, it raised to $3.8 billion.
  • The Capital Goods industry raised $751 million in 2014. This year to date, it has raised $1.4 billion.

Funding & Deals On Pace For A Record Year (CB Insights), Rated: A

Last quarter set a record for funding to VC-backed fintech companies, which raised $5.2B across 251 deals (as highlighted in the CB Insights Q2 2017 Global Fintech report). At the current run rate, deals are on pace to increase 5% this year, while investment dollars are on pace to grow 19%.

The quarter also saw new unicorn births, with 5 companies reaching new valuations of $1B+: online lending site Tuandaiwang (valued at $1.5B at the time of its unicorn round), invoice and payment company AvidXchange ($1.4B), online investment platform Robinhood ($1.3B), health insurance startup  Clover Health ($1.2B), and cloud-based communication platform Symphony Communication Services ($1B).

Source: CB Insights

Funding to global VC-backed fintech companies set a quarterly record in Q2’17, rising 83% to reach $5.2B. Deals experienced less dramatic growth, but still increased 2% from the previous quarter, reaching a five-quarter high of 251.

Source: CB Insights
Australia

Car finance drives P2P growth in Australia (P2P Finance News), Rated: AAA

CAR finance is one of the driving forces behind the growth of P2P lending among brokers in Australia.

According to new research from RateSetter’s Australian business, one fifth (20 per cent) of all broker-led loans on the platform are used for car and vehicle finance, with an average loan value of AUS$13,186 (£8,077).

Meanwhile, home improvement loans account for 19 per cent of the platform’s broker-led activity, with an average loan value of $14,299, while 12 per cent of loans are used for debt consolidation, and seven per cent are used for education.

Business borrowing accounts for nine per cent of total broker loans, but has the highest loan values with an average of $28,094 per loan.

CARS AND RENOVATIONS DRIVING GROWTH OF P2P LOANS IN THE BROKER MARKET (LendIt), Rated: A

Peer-to-peer lending is gaining traction amongst Australian brokers, with RateSetter today announcing that it has reached the milestone of 2,000 brokers accredited with the peer-to-peer lending platform. Lending volumes through the broker channel, largely driven by car and home improvement loans, are doubling approximately every six months according to RateSetter.

Vehicle financing is the most popular reason brokers are choosing peer-to-peer loans for their clients, followed closely by funding for home improvements and loans to consolidate high-interest credit card or other bank debt.

The milestone also coincides with RateSetter passing $150 million in loans facilitated since launching in 2014. Across both the broker and direct channels, lending has grown 50% in the last 5 months alone, after passing the $100m milestone in March.

An analysis of RateSetter’s loan data found that brokers are helping their clients finance loans worth an average $16,871, with an average loan term of 44 months at an average interest rate of 8.37% p.a.

Source: LendIt
Asia

Here’s How Chinese Tech Giants Including Tencent And Ant Financial Are Plowing Into Southeast Asia (CB Insights), Rated: AAA

Here’s a summary of the investment and M&A moves of the five Chinese internet giants within Southeast Asia:

Didi Chuxing: Chinese ride-hailing startup Didi Chuxing was the first among the Chinese tech giants to enter Southeast Asia, when it invested in Singaporean ride-hailing startup Grab’s $350M Series E round in 2015. It invested again in Grab in 2017, in its $2B Series B round.

JD.comThe Chinese e-commerce giant made an investment in leading Indonesian travel booking platform Traveloka this past year as part of its ongoing fund-raise, participating in $150M of its ongoing $500M round, along with Sequoia Capital, Hillhouse Capital Group, and East Ventures. Expedia contributed $350M.

TencentTencent recently invested in Indonesia’s Go-Jek, a company most widely known for its on-demand motorbike service. But Go-Jek is strategically similar to Tencent in a notable way: Like Tencent’s WeChat, Go-Jek is also developing a “super app” of sorts, which includes the ability to order food, massages, and other services, in addition to the development of its own mobile payments product called Go-Pay. In 2013, Tencent launched MNC Tencent, a joint venture with Indonesia’s MNC Media (not pictured in timeline). According to media reports, this venture was launched with the intention of pushing Tencent’s WeChat in the country. More recent reports claim that this JV hasn’t seen much traction.

Alibaba: Alibaba’s most recent investment into Southeast Asia was a $1.1B investment into Indonesian consumer-to-consumer e-commerce site Tokopedia in August 2017. This investment comes after months of rumors that JD.com was planning an investment into the company. Alibaba has also invested twice into Tokopedia’s competitor, Singapore-headquartered e-commerce site Lazada. First, in April 2016, it invested $1B in Lazada, valuing it at $1.5B. In June 2017, it upped its existing 51% stake to 83%, giving Lazada a valuation of $3.15B. It announced that this investment would leave its investments into the e-commerce site at a little over $2B.

Ant Financial: Ant Financial, Alibaba’s financial investment arm, operates Alipay and has made its fair share of investments into the region, across different countries and on different terms. In 2015, it invested in Singaporean cross-border trading platform M-DAQ. In 2016, it put money into Thai fintech company Ascend Money to help grow its digital and offline payments and financial services business. 2017 brought an entrance into the Philippines, with an investment into Globe Telecom-owned fintech company Mynt, and into Malaysia, where Ant Financial set up a joint venture with CIMB Group-owned Touch ‘n Go, which operates a smart card that works on transportation payments, like tolls and public transportation. According to reports, the joint venture would allow Ant Financial to build an e-wallet for Malaysia.

Source” CB Insights

Thai proptech startup Seekster raises seed funding from Digital Ventures, 500 Tuk Tuks and dtac Accelerate (e27), Rated: A

Seekster, an alumni from the dtac Accelerate programme batch 5, announced today it has raised an undisclosed seed funding from Digital Ventures, 500 Tuk Tuks and dtac Accelerate.

The startup is a company that connects properties to cleaning and maintenance service providers. While there are many on-demand cleaning companies, Seekster targets the commercial sector and SMEs. The startup says it facilitates about 5,000 to 6,000 jobs per month in Thailand.

Furthermore, the startup also announced it has inked a deal with real estate company Ananda Development to provide maids and technicians for its condos.

Middle East

Robo-advisory: Show me the money (Khaleej Times), Rated: AAA

Robo-advisory services describes a range of algorithm driven models that help sift and select investment options for individuals based on the investors’ requirements and risk appetite. Similar to P2P lending, this technology platform brings the customer closer to the investment. It enriches the information available through graphic rich dashboards and content that allow the investor to see how the portfolio is performing over time as well as versus benchmarks.

Deloitte’s report, The Expansion of Robo-Advisory in Wealth Management suggests that by 2020, the assets-under-management or more simply the amount of money invested via robo-advisors will be somewhere between $2.2 trillion to $3.7 trillion. By 2025, the number is expected to rise to $16 trillion or roughly three times the amount handled by the world’s biggest asset management firm, BlackRock.

Source: Khaleej Times

What I Know about the right time to crowdinvest: Eureeca’s Chris Thomas (Wamda), Rated: A

Unlike other crowdfunding platforms, Eureeca specializes in equity investment. If crowdfunding is the umbrella term for debt funding or reward funding, crowdinvesting describes the equity side of crowdfunding. At Eureeca, entrepreneurs and investors are put through a stringent vetting process before it is determined who can join the platform. For its first class of companies, Eureeca chose 60 businesses out of 3,000 applicants. With more than 14,000 active investors, the average investment amount is $5,800.

As the first company to obtain a crowdfunding license from the Dubai International Finance Centre, Eureeca – in the person of Thomas – laid out for Wamda everything from the right time for entrepreneurs to crowdinvest to what they should expect from the process.

Crowdfunding should not be your second or third choice. It should be the first place you go to try and fix your funding requirement. In the Middle East, the concept is still being socialized. Crowdfunding is essentially the online mechanism for raising money. If you are raising $100,000 or $10 billion, join a platform to see what they can do and you’ll be surprised at the support. By bringing the fundraising online, you reduce the amount of time and effort you put in and increase your reach to potential investors, including access to crossborder investments.

It works best for businesses with a consumer-facing element. People need to have an emotional connection with your business. It’s not going to work for a steel factory in Ras al Khaimah [an outlying emirate in the UAE]. If you have a product that’s already being distributed and there are people who know and love your product, they are the ones that can be converted from lovers of your business to investors in your business.

Regular fundraising prep applies. Be sure that you have a strong network and that you are constantly building your contact list.

Authors:

George Popescu
Allen Taylor

What is 506(c), and What Does It Mean for Fundraising?

recorded capital commitments

Regulation D is a set of rules under which an issuer can sell its securities without having to register with the SEC. Rule 506 under Regulation D has been the most widely used means of raising capital in the US. Rule 506 was basically bifurcated into two separate rules — 506 (b) and 506 (c) […]

recorded capital commitments

Regulation D is a set of rules under which an issuer can sell its securities without having to register with the SEC. Rule 506 under Regulation D has been the most widely used means of raising capital in the US. Rule 506 was basically bifurcated into two separate rules — 506 (b) and 506 (c) — after the passing of Title II of the Jumpstart Our Business Start-ups (JOBS) Act in September 2013. 506 (b) is merely the extension of the old Rule 506, and 506 (c) is the new section that has completely revolutionized the world of private investing.

Under rule 506 (b), companies are free to accept backing from accredited investors and 35 non-accredited investors for an unlimited amount. Under rule 506(c), companies can sell to accredited investors only. On top of that, they need to verify that each investor is accredited.

An accredited investor is one who has a net worth of $1,000,000 excluding his primary residence, or if he has made $2,000,000 on an annual basis in the past two years.

So what is the advantage of this new rule? It allows for general solicitation.

506(b) does not permit general solicitation. The issuer needs to prove a pre-existing relationship with investors. This reduces the pool of investors a company can target. With general solicitation allowed under 506(c), start-ups can leverage the internet, TV, radio, and other media to attract a larger base of investors. This has “democratized” investing and the ability to raise capital. A company offering securities need not have any prior relationship with investors. Rather, they can publicly promote their capital-raising offer.

Crowdnetic, now FinMkt, tracked 6,063 investment crowdfunding private offerings under JOBS Act Title II 506(c) rules, which have combined recorded capital commitments (“RCC”) of approximately $870.0 million in the two years between September 23rd, 2013 (when Title II rules went into effect) and September 23, 2015 (the date of the report).

There is not an ounce of doubt that Rule 506(c) has brought a lot of upside for the issuers as they can broaden their reach by advertising their offering. The issuing company can raise more capital at a much faster pace without relying on the traditional gatekeepers that earlier helped them to find suitable investors. From the perspective of the investor, under rule 506(c), the advertised offering benefits them, as well. They now have a much larger choice available and can get on board a startup much earlier in its life as compared to waiting for an IPO.

Effect of 506(c) changes

There is an additional burden of verifying investors and making sure they meet the SEC’s definition of “Accredited Investor.” Many companies have sprung up to help start-ups outsource this tedious legal due diligence.

Startups have been using social media to attract users and customers since at least a decade. Now, they are able to leverage their skill set to attract money for their ventures. We are used to hearing about CAC (i.e. Customer Acquisition Cost); we will soon be reading about CAI – Cost of Acquisition of Investor. This metric will become a key success factor for start-ups looking to grow aggressively, and it allows them to even sidestep venture capitalists for funding.

Research by Crowdnetic shows that investors are comfortable investing in startup equity, thus highlighting that markets and investors have accepted this new rule with open arms.

What does it mean for alternative lenders?

This rule is a boon for marketplace lenders. They have proved adept at bringing thousands of lenders onto their platforms. P2P lenders have generally been a happy lot due to higher risk-adjusted returns they’ve been able to generate through platforms. The company should be able to tap this base for equity fundraising, as well. If you’ve invested $50,000 through SoFi, you might be predisposed to invest $10,000 in its equity.

And not only start-ups, even VCs and accelerators are taking note of the rule and its implied implications. 500 Startups has recently filed a Form D under 506( c ) for a fintech fund targeting a raise of $25 million. It is a prominent accelerator and has invested over $350 million in 1800 companies. This shows that the entire ecosystem of fundraising is poised for an upheaval with the 506(c) rule.

Conclusion

Rule 506 will break the hegemony of investment bankers and VCs over the fundraising process. A startup doing well can target its own user base for accredited investors rather than having to pay sky-high fees or dilute control to VCs. The startup community has been extremely receptive to the change, and you can see multiple platforms launched for the sole purpose of helping thousands of start-ups raise funding from a wider pool of investors. It is easy to see that 506(c) has been a win-win for all involved.

Author:

Written by Heena Dhir.

Monday February 6 2017, Daily News Digest

Germany crowdinvesting

News Comments Today’s main news: Fundrise IPO is over-subscribed. P2P lenders prevented from offering wholesale finance. Today’s main analysis: Online lending student loans favor the rich. Today’s thought-provoking articles: Dodd-Frank Retention Rule. Orchard’s online lending snapshot. Lend Academy interview with SoFi’s Mike Cagney. Seniors’ income boosted by sharing economy. United States Fundrise IPO over-subscribed. GP:” […]

Germany crowdinvesting

News Comments

United States

United Kingdom

European Union

Australia

China

United States

Fundrise IPO Over-Subscribed, Increases Max Share Offer Under Reg A+ (Crowdfund Insider), Rated: A

In a solid indication of confidence of the young real estate crowdfunding platform, Fundrise has received solid investor interest in its self-crowdfunding IPO under Reg A+. Demand was sufficient to compel management to increase the maximum funding round from 2 million shares to 3 million shares of Class B Common Stock. At a price per share of $5.00, this means Fundrise may now raise up to $15 million.

The offer was only made available to individuals that had previously invested via the Fundrise platform. As of today, the platform indicates  the “offering is paused due to high demand.”

Even Good-Guy Student Loan Startups Still Favor the Rich (BuzzFeed), Rated: AAA

Last February, the online lending company SoFi paid $5 million for a 30-second ad during the Super Bowl.

That wasn’t where it always landed. The original version of the ad included three more words: “You’re probably not.” But at the last minute, SoFi cut them. The message, a spokesperson told Adweek, wasn’t “authentic” to the company’s image.

The line may have sounded too crude for national TV, but it was actually a perfect encapsulation of SoFi’s brand. Most people aren’t in great financial shape, and SoFi was built around identifying the best and rejecting the rest.

The problem these startups purport to solve is, inarguably, a huge one. Forty-four million Americans currently owe more than $1.4 trillion in student debt. That’s $1.4 trillion dollars hanging over 44 million heads, and, for those who can’t repay their loans, it’s a lifetime of ruined credit scores and dodging collections agencies.

But although the marketing has changed, the demographics have not. Ratings reports from the past four months show that the average Earnest borrower is a 32-year-old with an annual income of $143,447 and monthly free cash flow after expenses of $4,524. CommonBond’s average borrower is 33 years old with an annual income of $159,028 and $5,996 in monthly free cash flow. SoFi’s average borrower, in the new bond with the AAA rating from S&P, is 34 years old, with an annual income of $170,260 and free cash flow of $7,088. (Most graduates saddled with student loan debt don’t fit that description, which is why applicants for private refinancing often need their creditworthyparents to cosign, a caveat that doesn’t get mentioned in the ads.)

Kevin Reed, chief operating officer at Peer IQ, a risk analysis firm focused on online lending, said the emphasis on new metrics is aimed at venture capital investors, not institutional investors. “When you’re pitching Silicon Valley, you need an angle, some competitive differentiation,” he said.

In fact, one of the strongest signals that these online lenders are focusing on elite borrowers is the fact that banks like Citizens, which jumped in to compete in the refinancing ring, have a similar customer base but don’t use cutting-edge technology to find them.

In marketing documents obtained by the Financial Times, the company told investors that refinancing is “how they find the best and brightest and prevent them from attaching to a bank or broker.” In the same documents, SoFi also stressed it has the regulatory freedom to zero in on niche markets such as “the ‘next five percent.’” (That’s a term for the wealth bracket just a couple of rungs below the “1%.”) The company has already become a “one-stop shop for high earners,” focused on offering HENRYs more products, like mortgages, and personal loans.

High ratings have driven the refinancing boom. But Jon Riber, senior vice president at the ratings agency DBRS, told BuzzFeed News that the new metrics are unproven and haven’t been through a full credit cycle, so DBRS determines ratings looking at traditional data like FICO scores: “When it comes to free cash flow and income, we consider that but it doesn’t go into our model for forecasting defaults,” he said.

When you drill down into the ratings reports, there are some signs that the type of borrower is changing. For example, although 65% of the borrowers in Earnest’s latest securitization are making more than $100,000, the largest category is $50,000 to $99,000, which represents 32% of the securitization.

Dan Macklin, the SoFi co-founder, also said he didn’t think it was fair to describe SoFi clients as rich. Although SoFi borrowers earn salaries above the national average, many of them live in expensive cities, so they are not as well off as they seem.

DeGisi from CommonBond acknowledged that the average new borrower looks similar to the average old one, but claimed that CommonBond has been able to substantially broaden its customer base.

Dodd-Frank Risk Retention (RR) Rule Effective Now (PeerIQ), Rated: AAA

President Trump signed a memorandum to review Dodd-Frank Act on Friday. Loosening bank regulation, as noted by WSJ, would return

  • a 5% interest in each class of the securitization (an “eligible vertical interest,” or “EVI”);
  • a 5% of the fair value of the securitization in a first loss, subordinate tranche (an “eligible horizontal residual interest,” or “EHRI”);
  • any combination of an EVI and an EHRI such that the sum of the fair value of the EHRI and the percentage of the EVI are equal to at least 5 percent of the securitization (a “L-shaped” retention interest).
  • The transfer and hedging restrictions for RMBS are different from those of non-RMBS securitization. For RMBS, they expire on or after the date that is (1) the latest of (a) five years after the date of the closing of the securitization or (b) the date on which the total unpaid principal balance (UPB) of the securitized assets is reduced to 25 percent of the original UPB of the transaction, but (2) in any event no later than seven years after the date of the closing of the securitization.

    For all ABS deals other than RMBS, the transfer and hedging restrictions expire on or after the date that is the latest of (1) the date on which the total UPB of the securitized assets that collateralize the securitization is reduced to 33 percent of the original UPB at deal close, (2) the date on which the total UPB under the ABS interests issued in the securitization is reduced to 33 percent of the original UPB at deal closing, or (3) two years after the date of the closing of the securitization transaction.

    The risk retention rule also contains an exemption for securitizations that consist solely of qualifying high-quality loans that satisfied specific underwriting criteria.

    We highlight two important benefits from issuer’s perspective for QM designation. Issuers are 1) insulated from claims and defenses by borrowers due to safe harbor, and 2) are not required to retain 5% of capital structure per the credit risk retention rule. For example, all loans in Majority owned affiliate (MOA) – CLO managers raise equity capital from 3rd party investors through the creation of MOA to finance the purchase of risk retention securities. MOA holds the retention interest, but the securitizers control the major economic decisions of the MOA in relation to the retention interest and any other assets owned by the MOA. Control is measured by ownership of 50% or more of the equity of an entity or ownership of any other controlling financial interest under GAAP.

    Capitalized Majority owned affiliate (C-MOV) – The C-MOA can function as an originator and comply with both US and European retention requirements. The C-MOA has an option to act as the asset manager. As the asset manager, it can originate a small proportion of the assets owned by the CLO and still earn a management fee. The first CLO of the year, Venture XXVI, employs C-MOA.

    Capitalized Manager Vehicle (CMV) – In this solution, instead of CLO Managers serving as asset managers, the CMV is the primary asset manager. The CMV then hires CLO Managers as sub‐advisors. The CMV receives management fees on retained interest. The key accounting consideration is ensuring the CMV is not consolidated by the CLO Manager. 

     

    Weekly Online Lending Snapshot – February 03, 2017 (Orchard), Rated: AAA

    Interest in the space has been accelerating since the first of the year. Late last week it was reported that the American Banker’s Association is looking for an online lending platform to help its members expand their digital lending offerings, and it was reported that Citigroup Inc., has launched its own online lending offering which will make loans of up to $1 million available to small businesses. Also, in small business lending news, Credibility Capital announced this week that it successfully sold a pool of whole loans using Orchard’s software to share and affirm the data of a seasoned loan portfolio with its regional bank client.

     

    Podcast 89: Mike Cagney of SoFi (Lend Academy), Rated: AAA

    In many ways SoFi has become the leading company in all of fintech at least in this country. They raised $1 billion in Q3 of 2015, the largest equity round ever in our industry by a considerable margin. Since then they have continued to add new products, break records and execute flawlessly.

    • How Mike explains what SoFi does today.
    • The part of the business that Mike is most excited about.
    • Where they are at in their student loan business today.
    • Why their unsecured consumer loan product is very different to others in the market.
    • The killer product they have in the real estate market.
    • How SoFi views their wealth management product.
    • Why they decided to move into life insurance.
    • How Mike feels about the Superbowl ad they did in 2016.
    • How they have been raising money recently.
    • What is it about SoFi that makes their securitizations so successful.
    • How they would handle a shutdown in the securitization market.
    • Where SoFi is focusing their resources when it comes to tech.
    • What SoFi customers have in common.
    • The international plans for SoFi and their expansion to Australia.
    • The future vision for SoFi and their place in financial services.

    OnDeck Capital COO James Hobson to step down (Reuters), Rated: A

    James Hobson, the chief operating officer of marketplace lender OnDeck Capital Inc, will resign from his role on March 15 to become chief executive of online insurance startup Attune, according to an OnDeck statement.

    Jason Altieri, Former GC at Lending Club, Lands at Roofstock (Crowdfund Insider), Rated: A

    Roofstock, an online marketplace that facilitates direct purchases of rental property, has announced the appointment of Jason Altieri as Chief Legal and Compliance Officer. Altieri was previously General Counsel at publicly traded marketplace lending platform Lending Club (NYSE:LC).

    Altieri left Lending Club last October where, according to his LinkedIn profile, he remains an advisor.

    Orchard Platform Predicts Super Bowl Outcome (Crowdfund Insider), Rated: B

    The population of New England, at approximately 14.7 million is 1.45 times the population of Georgia, approximately 10.1 million.  New total loan volume in the New England region has been proportionally somewhat higher since 2010; In 2016 through September, New England had 1.58 times the loan volume that Georgia does.

    Winner: Patriots

    Parteger says that during 2016 borrowers from New England had higher incomes and FICO scores, with lower debt-to-income ratios. Borrowers in Georgia had one percent lower revolving credit utilization.

    A larger percentage of borrowers in New England rent their home, a lower percentage have mortgages.

    Winner: Patriots

    During 2016, both regions experienced similar sized loans. Interest rates were slightly higher in Georgia. Loans in New England were graded slightly higher but loans in Georgia had lower risk grades.

    Winner: Tie

    Using 2014 vintage loans, Pargeter says the Georgia has a slightly higher charge-off rate and a big higher average interest rate so overall returns are a bit better in Georgia.  Falcons get the edge on this one.

    Winner: Falcons

    Orchard says the Falcons will win!

    United Kingdom

    Peer-to-peer lenders prevented from offering wholesale finance (This is Money), Rated: AAA

    Peer-to-peer lenders are to be prevented from offering wholesale finance because it is considered too risky for private individuals.

    But the City watchdog, the Financial Conduct Authority, is thought to fear this would mimic banking – but without the same protection for individuals or regulations for the firms involved.

    LendInvest Responds to the UK Government’s Modern Industrial Strategy (Crowdfund Insider), Rated: A

    Last week, UK Prime Minister Theresa May unveiled a modern Industrial Strategy proposal to help build on the country’s strengths and take on its weaknesses.

    LendInvest’s team noted they plan to get behind four pillars to help kickstart the country’s productivity:

    • Technology and innovation: LendInvest noted that the strategy makes a significant investment in research and development for nascent UK sectors, which includes an Industrial Strategy Challenge Fund.
    • Infrastructure: The online lender shared that there were some commitments, including investments towards road, rail and digital infrastructure to enhance mobility and connectivity for citizens and businesses across the country. 
    • Developing skills: LendInvest stated it encouraged the government to invest in skills initiatives for small and medium enterprises (SMEs) property professionals to ensure that would-be property entrepreneurs are equipped with the tools to get projects off the ground.
    • Supporting businesses to start and grow: The website that while the government has already established the Patient Capital Review, it also welcomes further funding from the British Business Bank and a commitment to helping the BBB in providing finance businesses outside of London and the South East. It also encourages the government to use the review into entrepreneur to better understand how to support property developers to grow their businesses.
    European Union

    Germany: Investment Crowdfunding Grew by 39% in 2016 (Crowdfund Insider), Rated: AAA

    In a publication created by Crowdfunding.de, the report, entitled “Marktreport 2016: Crowdinvesting in Deutschland,” states that investment crowdfunding grew by 39% during 2016 reaching €63.8 million.

    The sector was largely powered by a sharp increase in real estate crowdfunding that captured €40.3 million growing by 92.5% during the year. Platforms like Exporo, Zinsland, Zinsbuastein, Bergfürst and IFunded closed 48 real estate crowdfunding rounds in 2016. Exporo led the group with €21.4 million in funding.

    Funding for SMEs and start-ups hit €18.8 million which is approximately at the same level of 2015.  Companisto led this sector with just over 50% of funding or €9.4 million in total.

    Wonga strikes £60m deal to sell European unit to Swedish suitor (Sky News), Rated: A

    Sky News has learnt that Wonga will confirm that it has decided to offload BillPay, one of its most valuable units, to Klarna, a Swedish provider of e-commerce solutions.

    Talks between Wonga and Klarna have been taking place for several months, although they had appeared to falter several weeks ago owing to a number of domestic issues faced by the Swedish purchaser.

    The sale of BillPay will be the most significant international disposal undertaken by Wonga, which is striving to rebuild its business in the wake of a string of scandals and a regulatory crackdown in the UK.

    Wonga’s losses have totalled nearly £120m in the last two years following a string of scandals and costs associated with cutting hundreds of jobs.

    Australia

    Seniors enjoy significant income boost from the sharing economy (News.com.au), Rated: AAA

    New research by peer-to-peer lender RateSetter has found that 44 per cent of over-55s earn money through sharing economy services such as online marketplaces, ride sharing, renting out rooms to travellers and lending money via online platforms.

    RateSetter’s research found that over-65s are the fastest growing group of spenders in the sharing economy, paying an average $82 a month, but younger generations aged below 44 remain the biggest spenders at more than $110 a month.

    Online marketplaces such as eBay and Gumtree remain the most popular part of the sharing economy, with 54 per cent of people using them.

    China

    Company Slammed by Short Seller Over Deals Says More Coming (Bloomberg Markets), Rated: AAA

    Credit China FinTech Holdings Ltd. is planning more investments as it aggressively expands beyond its original loans and lease-financing businesses into online payments and peer-to-peer lending.

    The company, part of a consortium that offered to buy a stake in Ping An Securities Group Holdings Ltd. last month, is currently in talks with “multiple” financial-services companies based in Asia outside China, Chief Executive Officer Phang Yew Kiat said in an interview in Hong Kong on Wednesday.

    The firm’s acquisition strategy — which is now focused outside China — has been driven by HK$4.3 billion ($554 million) of funds that it raised over the past three years, Phang said.

    The acquisitions put Credit China onto the radar of short seller Anonymous Analytics, which expressed doubts over some of the investments in December, as it rated the company a “strong sell.” In a report, Anonymous alleged Credit China had engaged in “a number of questionable” investments, including the purchase of a stake in payment provider Shanghai Jifu, which the short seller said was linked to a “key individual” within Credit China.

    About 480,000 investors involved with problematic P2P lenders by Jan (Global Times), Rated: A

    Over the last three years, a growing number of investors have got involved with problematic P2P lending platforms, according to the report. The figure reached 478,000 by the end of January, accounting for 4.5 percent of P2P investors in China.

    About 64 platforms reported problems or suspended their business in January, including three lenders whose managers disappeared, the report said.

    Authors:

    George Popescu
    Allen Taylor