Thursday November 22 2018, Daily News Digest

Major European Neobanks Customers

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

Major European Neobanks Customers

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United States

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

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

The new HELOC product will launch officially in early 2019.

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

Source: Lend Academy

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

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

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

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

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

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

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

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

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

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

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

.23 EPS (Fairfield Current) Rated: AAA

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

Source: Fairfield Current

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

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

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

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

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

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

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

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

Both consumer and business lenders are tracking strongly:

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

Source: Tearsheet

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Read the full report here.

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

Source: Business Insider

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

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

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

Source: Capital Watch

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

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

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

Source: Nikkei

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

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

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

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

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

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

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

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

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

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

European Union

Fintonic Links Up with Amazon (Finovate) Rated: AAA

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Australia

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Asia

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

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

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

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

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

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

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

Eurasia

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

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

Africa

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

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

Authors:

George Popescu
Allen Taylor

Monday August 13 2018, Daily News Digest

Reasons for Personal Loan Inquiries July 2018

News Comments Today’s main news: OnDeck CEO says online lending is the future of SMB lending. SALT Lending now in 35 states. LendInvest debuts exclusive 5-year fix product through buy-to-let club. Weidai files $100M IPO in New York. Wonga says $3M African loans are unaffected by UK woes. Today’s main analysis: LendingTree Personal Loan Offers Report for July 2018. […]

Reasons for Personal Loan Inquiries July 2018

News Comments

United States

United Kingdom

China

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News Summary

United States

OnDeck Capital CEO says online lending is the future for small businesses, talks strong earnings (Proactive Investors) Rated: AAA

CEO Noah Breslow tells Proactive Investors the small business lending company has provided over US$9bln to small businesses, crossing the US$10bln mark this fall, saying online lending is the future for small businesses and consumers.

U.S. Cryptocurrency-Backed Lending Platform Now Available in 35 States After Passing Stringent Regulations (Crypto Disrupt) Rated: AAA

The cryptocurrency-backed lending firm, SALT, has released details that it is now operational across 35 states in lieu of passing crypto regulations and will be expanding its network to 20 new locations.

SALT is based in Colorado and is one of the few companies that allows borrowers to leverage their held crypto as collateral for loans. As more people than ever before hold crypto, it is important that cryptocurrency-backed lending firms pass regulatory checks to offer more competition to potential crypto borrowers in the safest possible manner.

SALT is planning to move into 20 new states, which will include North Carolina, Oklahoma, Florida, and Virginia. Crypto users in all but 15 states can now leverage their crypto to receive personal cryptocurrency-backed lending packages.

Tesla and Spotify say public markets have major flaws. Do they have a point? (Quartz) Rated: AAA

According to two prominent executives this week, the stock market isn’t all that it’s cracked up to be. Initial public offerings are broken, according to Spotify CFO Barry McCarthy (paywall). Tesla CEO Elon Musk says stock investors are too focused on the short-term, and his threat to take the company private sent tradersbankersfans, and government watchdogs into a tizzy.

McCarthy and Musk aren’t alone in their worries. The number of IPOs and listed companies in the US is shrinking: There were an average of 310 public offerings annually from 1980 to 2000, according to an analysis by Jay Ritter, a finance professor at the University of Florida. The average has slipped to 108 since then.

A common complaint is that public markets are too demanding. It’s expensive to comply with regulations, and these days there’s ample private money available for companies to tap without all the hassles of dealing with analysts, short sellers, quarterly reporting, and the rest of it.

Source Quartz

LendingTree Personal Loan Offers Report – July 2018 (Lending Tree) Rated: AAA

Offered loan amounts are down about 3.5% for all borrowers, while offered APRs inched up. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 64% of all loan inquiries.

Source Lending Tree

WV ranked 24th in US for student loan debt (Herald Dispatch) Rated: B

West Virginia schools rank 24th in the nation for the amount of debt its students graduate with, with Marshall University coming in sixth out of the schools tallied in a recent LendEDU report.

By licensing data collected from the annual Peterson’s voluntary financial aid survey, LendEDU, an online loan marketplace, completed its annual Student Loan Debt by School by State Report, a comprehensive analysis of student loan debt statistics for over 1,000 colleges and universities throughout the United States.

The total outstanding student loan debt now stands at $1.52 trillion, making it the second largest form of consumer debt behind only mortgages.

Average individual student loan debt up $ 313 in 2017 (UPI) Rated: AAA

The average amount of individual student loan debt owned by U.S. college students increased by more than $300 in 2017, according to a study by LendEDU.

The New Jersey-based online loan marketplace’s annual Student Loan Debt by School by State Report found the average debt per borrower for the class of 2017 was $28,288, up $313 from $27,975 in 2016.

“Student loan debt in the U.S. continues to be an issue of the utmost importance. The total outstanding student loan debt now stands at to $1.52 trillion, making it the second largest form of consumer debt behind only mortgages,” LendEDU said Wednesday.

The annual report uses data from the Peterson’s financial aid survey, which collects responses from 1,080 four-year public and private institutions to determine average individual student loan debt figures and rank states and colleges in terms of debt per borrower.

Who’s Departed, Who’s Left and Who’s Leading Among Robo-Advisors (Think Advisor) Rated: A

The second quarter of 2018 was a busy one for robo-advisors. Hedgeable announced its impending closure, WorthFM became history and LearnVest notified customers it was discontinuing its planning and online investment services.

During the same quarter, US Bank and Fifth Third Bank launched their robo-advisor platforms and SoFi, a fintech lender with a robo product, introduced checking accounts with debit cards, further blurring the lines between banking and digital advice. And U.K.-based Wealth Wizards, an independent digital advisor with AI capabilities, is exploring a talking robo-advisor.

What you need to know on Wall Street today (Business Insider) Rated: A

The crypto bear market has been a blessing for this bitcoin trading firm’s booming new business

Genesis Global Trading, a crypto trading shop based in New York,launched a crypto lending unit, Genesis Capital, earlier this year.That business originated $30 million in crypto loans on Tuesday, its largest amount ever, according to chief executive officer Michael Moro. The company typically lends out around $2 million per day on average.

In a sense, it could be a bearish indicator for the market. Many of the people who are borrowing crypto from the firm are doing so in order to take a short position on a given coin.

What happens when the government stops doing its job? (The Washington Post) Rated: A

It took almost two years for two dozen officials at the Consumer Financial Protection Bureau to pull together a case against Golden Valley Lending. The online lender was making small short-term loans at interest rates as high as 950 percent, violating laws in at least 17 states that cap interest rates.  Last October, the agency finalized a rule to stop “payday debt traps” by requiring lenders to determine whether people can afford to repay their loans.

Yet a few months later, it unceremoniously dropped the case, telling a federal judge in Kansas that it would “continue to investigate the transactions that were at issue.” Golden Valley is still doing business; its Web site says: “Get the money you need. It’s easy!”

Mulvaney has all but halted the enforcement of certain government regulations. He stripped the bureau’s fair-lending unit of enforcement power and redefined it as an advocacy office.

RealtyShares Launches New Brand Identity and Online Learning Center (SC Now) Rated: A

RealtyShares announced today the launch of its new corporate brand identity and online learning center. The brand changes come at a time when the company is continuing its focus on the commercial middle market, commercial transaction values under $50 million.

As part of the rebrand, RealtyShares is launching a new online learning center where investors can learn more about diversifying investments and the role that commercial real estate can play in an investment portfolio. This learning center includes guided learning paths and educational articles created and curated by RealtyShares’ expert professionals. The content is designed to help investors with a range of investing experience better understand the risks and rewards of investing in commercial real estate.

Kirill Bensonoff: 5 ways real estate can be transformed with a blockchain approach (Augusta Free Press) Rated: A

The real estate market has seen steady growth the past few years, and is showing no signs of slowing down. The commercial real estate industry alone is expected to reach $414 billion in commercial transactions next year.

This isn’t the biggest news in the real estate industry though.

According to real estate and cryptocurrency expert, Kirill Bensonoff, the most significant growth for real estate in the next few years will be how blockchain technology is applied to the market.

U.S. Fintech Even Opens New East Coast Headquarters In North Carolina After Securing More Than $ 40 Million in Series B Funding (Crowdfund Insider) Rated: B

Holistic financial health platform Even announced on Friday it has opened its new office in Raleigh, North Carolina. This news follows the company securing $40 million through its Series B funding round. Founded in 2014, Even describes itself as a mission-driven technology company working to help Americans escape the paycheck-to-paycheck cycle.

Even also reported that its mobile apps instantly budget so that users know how much is “okay to spend,” safely address cash flow issues with Instapay (on-demand access to wages), and help employees automatically save money out of their paycheck before it ever hits their bank balance.

Buy The Block: First Black-Owned Real Estate Investment Platform Allows Communities to Fight Gentrification (Digital Journal) Rated: A

Buy the Block founder Lynn P and her team have struck gold in the hills of Colorado for a second time in as many years with the release of their new app now available on Android and iOS platform. This app will expand the already extensive number of BlockVestor enthusiasts that populate the first Black-female owned FINRA and SEC regulated real estate crowd investing platform in the United States. The addition of the new app will rapidly expand a brand that is on the cutting-edge in alternative financing. This unique and innovative platform allows many inner-city residents a never-before available opportunity to invest with their peers and their communities.

Lowe’s Ventures backs Moved, a startup that makes moving less stressful (Tech Crunch) Rated: A

Moving can also be expensive, so the company has announced a partnership with Affirm, where Affirm’s financing will allow you to break up the moving costs into monthly payments.

To be clear, Moved isn’t doing the moving itself — instead, it’s basically connecting you to a marketplace of movers and other service providers. Pittenger said the company is “very strict about the suppliers and the vendors” and will remove them if customers aren’t happy with their experience.

Moved is managing all of this through a real, human assistant who can help you figure out what you need, handle the scheduling and serve as a “consumer advocate” who ensures that you’re not getting ripped off.

Take a Crash Course in Student Housing Investments (US News) Rated: A

As the back-to-school season gets under way, you may be shopping around for new investments for your portfolio. Real estate is a solid diversification tool and student housing is an under-the-radar sector to consider this fall.

“The student housing real estate investment market is virtually untapped,” says Jay Morrison, CEO of the Tulsa Real Estate Fund. An aura of exclusivity surrounds student housing investments but it’s a sector that’s far from fully realized, “which means there’s plenty of room for opportunity for new investors in this market.”

As a smaller niche within the commercial real estate market, student housing has long been the domain of institutional investors and people with a high net worth.

United Kingdom

LendInvest Debuts Exclusive Five-Year Fix Product Through Buy to Let Club (Crowdfund Insider) Rated: AAA

Following the recent changes on its marketplace lending platform, UK-based LendInvest announced the launch of an exclusive five-year fix product through the lender’s Buy to Let Club. The lender reported that the product is Designed for landlords who wish to utilize a higher fee, lower interest rate loan, and allows the borrower to leverage their cash flow.

According to LendInvest, the five year fixed rate of 2.75% is available up to 75% LTV through the distributor, with a product fee of 4.99% which can be added to the loan. Affordability is then calculated at an Interest Cover Ratio (ICR) of 140% for higher rate taxpayers; 125% for limited companies and basic rate taxpayers, at an assessment rate of 4.19% against the total gross loan amount. The mortgage is available on loans up to £500,000 for purchase and remortgages, and suitable for standard property types and HMO’s.

Business funding options – what choices do you have? (Estate Agent Today) Rated: A

When you are starting up a new business, it is unlikely that you will already have enough capital to invest. Taking out a business loan is the best option as this will give you the chance to get set up.

But which loan type is best for your business idea?

Peer to Peer Lending

As banks are increasingly wary about giving out business loans, peer to peer lending has become a more popular method for matching people who wish to invest their money and those who need to borrow. Though this method can be quite expensive and may be risky, it is quite easy to raise substantial funds this way.

Crowdfunding

There are two types of crowdfunding: equity-based and reward-based. Equity-based crowdfunding is where people contribute money to receive equity in your business; reward-based crowdfunding is where people contribute money for a reward.

Competition from alternative lenders driving growth in business lending (London School of Business and Finance) Rated: A

Competition from alternative lenders is driving banks to boost lending amounts for businesses, according to Conrad Ford, Chief Executive of SME finance aggregator Funding Options.

Barclays and NatWest/Royal Bank of Scotland are among the banks that are boosting access to finance for SMEs.

Growing competition

Competition from alternative lenders is thought to have been the driving force behind Barclays’ decision to increase its lending amount to £100,000.

Commenting on the trend, Ford stated that there is growing competition in this sector, adding that Barclays is not the only bank that is taking action, with RBS/NatWest launching their Esme loans service, a digital lending platform that enables SMES to access unsecured loans of up to £150,000.

The pros and cons of alternative property investment and crowdfunding (Buy Association) Rated: A

With tax changes and stricter lending rules making it harder for some to finance a property purchase, investors are increasingly looking to navigate the challenges in the buy-to-let sector.

It’s why setting up a limited company through which to buy and operate rental properties is growing in popularity.

Peer to peer lending has exploded in popularity because it offers investors high interest rates paid over relatively short time periods.

There is obviously a level of risk involved – the property is used as security, and if house prices drop suddenly then you risk losing some capital. That’s why it’s important to consider the loan to value ratio (LTV) – for example, if this is 75%, the borrower can borrow three quarters of the value of their property. This means house prices would need to fall 25% before the investor made a loss.

China

How peer-to-peer lending turned middle-class Chinese dreamers into angry protesters (Quartz) Rated: AAA

In recent years, many in China’s middle classes poured their savings into peer-to-peer lending platforms, known as P2P for short, drawn in by promises of high returns. But amid a larger effort to curb financial risk to China’s economy, financial regulators tightened rules for these platforms, leading many of them to collapse without returning investor money. In Li’s case, the main stakeholders of Yonglibao, which he had put his money into, suddenly disappeared in mid-July (link in Chinese), he told the South China Morning Post. By the time its founders abandoned its offices, the platform had amassed a transaction volume of 7.6 billion yuan ($1.1 billion). The other protester told Quartz he had lost the equivalent of $50,000 on a platform called iqianjin.com—its name is Love Money, though it can also be understood as “Get Ahead” or “Money Coming.”

Both hoped a protest in Beijing would compel the government to help people recover their money from the dozens of P2P platforms that stopped allowing fund withdrawals last month. Instead, they were foiled by hundreds of uniformed police who locked down the area, patrolling corners near the offices of the central bank and securities regulators, and checking identity cards. More than 120 buses were brought to the area to take the stealth protesters away, according to a reporter with AFP.

Chinese Peer-to-Peer Lender Weidai Files to Raise Up to 0 Million in New York (Capital Watch) Rated: AAA

Hangzhou-based peer-to-peer lending platform Weidai, which translates as “micro-lending,” filed its preliminary prospectus Friday seeking to raise up to $100 million in an initial public offering in New York.

The proposed IPO size shrinked significantly since the company first announced its plans in April. According to Bloomberg citing sources, Weidai was previously planning to raise nearly $400 million.

Launched in 2011, the online micro-lending platform has attracted multiple high-profile investments, including a $159 million series C funding in 2016 led by Vision Knight Capital. Among other key investors were Chinese billionaire Chen Tianqiao’s Shanda Group and Shenzhen-listed software developer Hakim Unique Internet Co.

HK is running out of runway (The Edge Markets) Rated: AAA

BRACE, brace. Hong Kong’s initial public offering (IPO) take-off is going to come to a screeching halt.

Source: The Edge Markets

Ascletis Pharma Inc, a Hangzhou-based maker of HIV drugs, has slumped 20% since making its entrance at the end of July (1).

Even the online insurer that sparked a revival of Hong Kong’s IPO frenzy is in the red. ZhongAn Online P&C Insurance Co, a company backed by Internet behemoths Tencent Holdings Ltd and Alibaba Group Holding Ltd, surged on its debut in September, but now stands 42% below its price on listing.

Two-thirds of IPOs that raised more than US$1 billion in the two years ended July 2017 were below their offer prices after six months; three-quarters had dropped after a year, data compiled by Bloomberg show. Ironically, the cause of the pain can be traced partly to measures Hong Kong Exchanges & Clearing Ltd has taken to fight back against a US market that was luring away China’s new-economy stars.

Hexindai Further Strengthens Risk Control to Better Protect Investors (Crowdfund Insider) Rated: A

Hexindai (NASDAQ:HX), a China-based peer to peer lender, announced on Friday it has further strengthened its risk control system to better protect investors throughout the entire process of borrower acquisition, risk-based pricing, post-loan management, and default risk coverage through its new comprehensive, stable and efficient asset security system, HX-CORE. Hexindai reported it established the system based on advanced risk control technologies that leverage risk control models and enormous volumes of credit data from cooperating partners and business data accumulated by the online lending platform.

According to Hexindai, the risk-based pricing is conducted by the Company’s proprietary risk control system, called Hurricane, which was developed by the lender and operates in cooperation with a number of credit information organizations and third-party Big Data risk management companies.

Ning Tang, CEO of CreditEase, Shares Insight into P2P Lending in China (Crowdfun Insider) Rated: A

Ning Tang, founder and CEO of CreditEase – a huge Chinese Fintech that started as just a peer to peer lending platform, recently spoke to Bloomberg in Asia. CreditEase is also the majority shareholder of US listed online lender Yirendai (NYSE:YRD)

Tang provided an interesting update on the Chinese P2P sector as it has been going through a transformational process. In July alone, it has been reported that over 100 peer to peer lenders shut down in China as regulatory authorities tighten operational standards to curb rampant fraud. The actions are to ensure a robust and sustainable sector of online lending.

Tang shared that revenues have not been impacted much by the regulatory actions as CreditEase has become more diversified with inclusive finance, alternative asset management, and wealth management.

China reduces risks of peer-to-peer lending (CGTN) Rated: A

Chinese authorities are taking immediate actions to reduce risks in the peer-to-peer (P2P) lending business and better protect the interests of private investors.

The latest moves by Chinese financial regulators include urging leading internet platforms to undergo self-inspection and fix problems. They will also guide unqualified P2P lending platforms in exiting the market and dealing with their assets and debts in a market-oriented way based on legal principles.

European Union

Sweden’s Largest Loan Marketplace (Killer Startups) Rated: A

Thanks to rapid technological development around the world, it’s now possible for consumers to sidestep banks and other unnecessary intermediaries and secure private loans more efficiently.

One nation where this hasn’t been an issue is Sweden.  Look no further than Lendify – the country’s largest peer-to-peer lending platform – for proof.

“Lendify is a marketplace platform that connects borrowers with investors, without the involvement of banks or credit card companies,” said Erik Wikander, the company’s Founder.  “Some of Sweden’s foremost entrepreneurs are a big part of the platform – and we’ve been granted full approval from Finansinspektionen (the government’s financial regulation agency).”

Schwarmfinanzierung: Deloitte Study on “Crowdlending” in Germany says Banks Win (Crowdfund Insider) Rated: A

Deloitte Germany has published research on the crowdfunding sector and when it comes to comparing new forms of online capital formation and old banks – banks win. That is, at least in the eyes of the Deloitte research.

Deloitte states that when it comes to providing finance to medium sized firms, the fabled Mittelstand, these companies have “little interest” in using this new form of finance. Simply put, their relationships with banks is too strong of a bond.

The research published by Deloitte was done in partnership with EFAM (Europäisches Forschungsfeld für Angewandte Mittelstandsforschung) at the University of Bamberg, the document said that the threat to traditional banks by crowdfunding or crowdlending has not panned out. This more recent study follows a similar one back in 2015 which stated that crowdlending was relatively unknown among company executives. Three years later, their survey of 250 medium size German firms appears to indicate little has change.

International

CreditRiskMonitor Announces Licensing Agreement with DBRS (Credit Risk Monitor) Rated: AAA

CreditRiskMonitor (OTCQX: CRMZ) today announced a new licensing agreement with DBRS, an independent, privately-held, globally recognized credit agency. DBRS is the fourth-largest ratings agency globally, with ratings on more than 2,400 issuer families and nearly 50,000 securities worldwide.

CreditRiskMonitor has also invested in cutting-edge technologies to improve the accuracy of its predictive scoring methods. The FRISK® score, a measure of bankruptcy risk in public companies, uses crowdsourced click patterns of risk professionals who subscribe to CreditRiskMonitor’s service. The PAYCE score, used for private company financial risk assessment, is formulated with deep neural network technology, a type of artificial intelligence.

Can Blockchain Revolutionize The Traditional Lending System? (Crypto Coin News) Rated: A

With the introduction of blockchain technology, there have been lots of projects built on blockchain that have attempted to improve the traditional banking system. This brings us back to the question; Can blockchain revolutionize the traditional lending system? The answer is unequivocally YES since there are projects already on the brink of achieving this. Also, the below features of blockchain technology is naturally what is needed to revolutionize the traditional lending system.

Ways blockchain technology edge the traditional lending system:

  • Accessibility
  • Time
  • Removal of intermediaries
  • Reduced risk

Assuring the future of financial services (Network World) Rated: A

The financial services industry is experiencing a period of dramatic change as a result of the growth in digitalization and its effect on customer behavior. In an emerging landscape made up of cryptocurrencies, frictionless trading, and consolidated marketplace lending, traditional banks have found themselves shaken by the introduction of new, disruptive, digitally-native and mobile-first brands.

With a reputation as being somewhat conservative and slow to innovate, many financial service providers are now modernizing and improving their systems, transforming their new business models and technologies in an effort to stay ahead of the more agile challengers snapping at their heels.

However, while this digital transformation brings significant opportunities, implementing these new technologies also presents challenges.

Australia

Blockchain P2P lender secures $ 1.35m to fund growth (Mortgage Business) Rated: A

BLOCKLOAN, a new blockchain-based marketplace lender headquartered in Sydney, has announced that venture capital fund Xplora Capital has purchased $1.35 million in tokens, as it continues its mission to provide “transparent, easy to understand, [and] real-time” access to personal finance on a global scale at more competitive rates than the banks.

The fintech said that by using cryptocurrency-backed loans on a global P2P lending marketplace, it aims to eliminate the “unnecessary” fees associated with traditional lending, while promising end-to-end loan origination, matching and management through the use of pooled smart contracts and an automated KYC and credit risk engine.

India

Are Digital Platforms Transforming Lending Decisions? (Entrepreneur) Rated: AAA

The effects of technology and the disruptions technology make, manifests itself in clearly perceivable ways. This is very evident in many sectors – in a short span (just eighteen months after its release) Google Maps had knocked out GPS navigation device makers and Amazon and Taobao (Alibaba) have disrupted how consumers shop for goods by moving them to online from offline (O2O). Enterprises are worried about being Uber-ed or Airbnb-ed as new age companies are challenging traditional ways of doing business.

Banking and Lending space have also gone through an amazing level of rapid innovation and disruption starting at the turn on the new millennium. Traditional banking monoliths can no longer feel impervious as they were protected by a myriad of government regulations which used to make it hard for fintech start-ups. Fintech start-ups don’t have to deal with the large legacy systems that drag down big banks and are nimbler and more suited to adapt to global trends and changing regulations. Internet only online banks with meagre to no brick and mortar branch presence have come up and have shaken up the large banks by offering better interest rates for deposits and borrowing than traditional banks. As an added benefit with the ubiquity of eKYC systems and adoption by fintech industry, accounts can now be opened in a matter of minutes and can be ready to transact than days and after an insane amount of paperwork that needed to be filled in earlier days.

Africa

Wonga faced collapse in the UK, but says its 3 million loans in South Africa are unaffected (Business Insider) Rated: AAA

An emergency cash injection of R178 million has saved microlender Wonga from collapse – for now.

The UK firm, which has operations in South Africa, is currently facing immense pressure after the British authorities forced it to write off loans worth R4 billion because Wonga failed to properly check whether customers could afford them.

Wonga’s shareholders, two venture capital funds, have pledged the money to prop up Wonga.

Mobile banking inevitable but ATM card will remain useful (The New Times) Rated: A

During a wide-ranging interview with The New Times at a recent GSMA M360 Africa Series in Kigali, Mr Akinwale Goodluck, Head of the Global Mobile Operators’ organisation in sub-Saharan, sought to dispel the myth that mobile money would cannibalise banks.

He pointed to the fintech synergy between telcos and banks, noting how the significant numbers of people across the region are using “phones to do proper mobile banking.”

This is true, and perhaps more pronounced in East Africa. The sub-region has the largest mobile money market on the continent, accounting for 56.4 per cent of total users in sub-Saharan Africa, according to GSMA.

East Africa is, however, only leading the way, but not for long.

Asia

Indonesian startups Akseleran, Pomona confirm recent funding (Deal Street Asia) Rated: AAA

Two Indonesian startups have confirmed raising a funding round earlier this year.

P2P lending startup Akseleran said it raised a pre-Series A funding round of $1.85 million, while adtech startup Pomona said it secured an undisclosed Series A funding round.

P2P lending startup Akseleran raises $1.85 pre-Series A funding Peer-to-peer lending startup Akseleran has confirmed raising a $1.85-million pre-Series A funding round backed by a New York-based family office, the parent company of PT Bintraco Dharma Tbk and several angel investors.

According to a press release, the startup plans to use the fresh funding for expansion by recruiting representatives in a number of cities in Java such as Yogyakarta, Solo, Surabaya and Semarang. It also plans to step up its marketing campaigns through various advertisements.

Authors:

George Popescu
Allen Taylor

Friday April 6, 2018 Daily News Digest

Friday April 6, 2018 Daily News Digest

News Comments Today’s main news: SoFi to roll out deposit accounts, debit cards next month. PeerStreet raises $29.5M. Welendus loanbook hits 100K GBP in 3 months. Weidai plans $400M IPO. Instamojo to expand into SME lending. Today’s main analysis: Banks slow fintech investment, revert to their own digital infrastructure plans. Today’s thought-provoking articles: Credit bureaus aren’t going anywhere yet. Blockchain […]

Friday April 6, 2018 Daily News Digest

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

SoFi Plans to Start Rolling Out Deposit Accounts Next Month (Bloomberg), Rated: AAA

Social Finance Inc. said it will start offering deposit accounts and debit cards to some customers next month, the first major new product under Chief Executive Officer Anthony Noto.

The San Francisco-based company is looking to branch into various financial services as Goldman Sachs Group Inc. ratchets up pressure on SoFi’s profitable center of personal loans. The startup unveiled a banking-like product, called SoFi Money, in January and began accepting applications to a waiting list.

Majority of Millennial Women Have Money to Invest, But Fear Holds Them Back (Markets Insider), Rated: A

The biggest driver of the investment gap between men and women isn’t knowledge or other financial obligations, but fear, according to a new study by SoFi and professional networking site Levo League (Levo).

However, while millennial women are extremely active in managing their financial status, and over 50%+ have the means to invest each month, the study found the majority of millennial women do not to invest due to fear (56%). Furthermore, the study results indicated the top two reasons why millennial women do not invest is because they don’t know where to start (25%+) and because they are paying down their debt (25%+).

Credit bureaus aren’t going anywhere. For now (American Banker), Rated: AAA

The breach of personal data on more than 143 million customers Equifax revealed in September was followed in mid-March by the news that an executive insider-traded stock before the public was notified about the breach. This week, Equifax acknowledged it had sent erroneous breach notification letters to an undisclosed number of people.

 

 

LendingTree Personal Loan Offers Report – March 2018 (Lending Tree), Rated: AAA

Lenders offered personal loan borrowers less money than they did last month, while offered APRs were mixed. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.42% in March.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.42%, a decrease of 2 basis points from the prior month, and down 22 basis points from the same period one year ago.
  • At $22,644, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down 4.61% ($1,045) from February, but up over 17.60% ($3,986) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 4.87% on average, and loan amounts of $35,669. A borrower with this APR and loan amount would save $3,021 by consolidating debt with a 10% APR over a three-year term.

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.89% in March.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.89%, up 20 basis points from last month and 139 basis points from a year earlier.
  • At $15,993, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs decrease by 175 basis points ($279) in the last month, but increased by 242 basis points ($386) from March 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 7.00%, offered with an average loan amount of $23,822. A borrower with this APR and loan amount would save $3,250 by consolidating debt from a 15% APR over a three-year term.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 63% of all loan inquiries.

Source: Lending Tree
Source: Lending Tree

LendingTree Mortgage Offers Report – March 2018 (LendingTree), Rated: AAA

  • March’s best offers for borrowers with the best profiles had an average APR of 4.25% for conforming 30-year fixed purchase loans, up from 4.22% in February. Refinance loan offers were up 11 bps to 4.24%. Mortgage rates vary dependent upon parameters including credit score, loan-to-value, income and property type.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 5 bps to 4.85%. The loan note rate hit the highest since March 2016 at 4.75% and was also up 5 bps from February. We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.72% in March, vs 4.99% for consumers with scores of 680-719. The APR spread of 27 bps between these score ranges was unchanged from February and still near the widest since this data series began in April 2016. The spread represents over $14,000 in additional costs for borrowers with lower credit scores over 30 years for the average purchase loan amount of $238,593. The additional costs are due to higher interest rates, larger fees or a combination of the two.
  • Refinance APRs for conforming 30-yr fixed loans were up 6 bps to 4.83%. The credit score bracket spread remained at 24 bps, amounting to nearly $13,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $239,668.
  • Average proposed purchase down payments were little changed at $62,758.
Source: Lending Tree

PeerStreet Raises $ 29.5 Million to Further Transform Real Estate Investing (Business Wire), Rated: AAA

PeerStreet today announced the close of a Series B funding round of $29.5 million to continue driving the company’s mission of democratizing access to real estate debt.

The Series B round was led by World Innovation Lab. Existing investors Andreessen Horowitz, Thomvest, Colchis Capital, Felicis Ventures, and others participated along with new investors Solon Mack and Navitas Capital. The raise will accelerate PeerStreet’s growth. Specifically, PeerStreet will be broadening the type of real estate loans it cultivates from its network of lenders and hiring more world-class talent.

RealtyMogul Closes $ 2.75 Million Equity Investment in Plano Multifamily Portfolio (Business Wire), Rated: A

RealtyMogul announced that it has completed an investment in a $11.9 million multifamily apartment portfolio in Plano, Texas, consisting of 156 units.

The property was acquired through a partnership with Comunidad Realty Partners, a dynamic real estate investment firm specializing in multifamily apartment communities in densely-populated Hispanic neighborhoods. Comunidad reports to have owned and managed over $600 million in multifamily assets overall, comprised of approximately 8,200 units. RealtyMogul has invested with Comunidad Realty Partners on five previous transactions.

Stripe launches a new billing tool to tap demand from online businesses (Tech Crunch), Rated: A

Stripe  has made its name by providing developers with a simpler way to start charging customers and handling transactions, but today they hope to take another step by launching a billing product for online businesses. That’ll allow them to handle subscription recurring revenue, as well as invoicing, within the Stripe platform and get everything all in the same place. The goal was to replace a previously hand-built setup, whether using analog methods for invoicing or painstakingly putting together a set of subscription tools, and make that experience as seamless as charging for products on Stripe.

While this is a tool that’s a natural fit for something like Stripe, it’s certainly one that’s created a substantial business opportunity. Last month, Zuora — an enterprise subscription services company — filed to go public amid a fresh wave of enterprise IPOs that included Dropbox and Zscaler (and also, to a certain extent, Salesforce’s big acquisition of Mulesoft). Zuora’s subscription services revenue continues to grow, showing that Stripe will certainly have competition here, but also that there’s a large market opportunity.

Enhancing the Business Value of Loan Pricing Systems (Loan Pricing Pro), Rated: AAA

Today, FinTech companies, marketplace lenders, traditional banking institutions and many other types of innovative new lending platforms are using loan pricing systems to sharpen their focus on balancing shareholder returns with customer pricing sensitivities and market demands.

The lending landscape is changing, but the need to achieve an adequate rate of return while delivering fair and accurate pricing, remains a constant.

Source: LoanPricingPro

Read the white paper in full here.

Five Ways for FinTech Lenders to Achieve ROI on a Loan Pricing System Investment (ProBank), Rated: A

There are a variety of strategies to consider ensuring attaining a reasonable return on your investment in a loan pricing system. We’ll cover each of these in the form of short case studies that we’ve taken from one or more of our existing clients’ actual experiences.

  1. Enhanced Loan Yield Quantitative analysis can be easily used to measure the effectiveness of the loan pricing system implementation on a pre-test / post-test basis. The technique used relies on the same Funds Transfer Pricing (FTP) methodology which a robust loan pricing system uses to calculate loan profitability. To illustrate this, we’ll use a recent client implementation of LoanPricingPRO at a $1 billion lender.
    Source: Probank Report
  2. Increased Collection of Loan Fees In today’s highly competitive environment with historically low rates and generally weak loan demand, loan fees are often sacrificed, or at least underutilized as a tool for increasing profitability. As a general rule, the shorter the loan term, the more powerful the impact of loan fees on loan profitability and ROE.
  3. Decline in Lost Opportunities-Lenders using LoanPricingPRO® usually have a higher batting average when measuring the number of new loan clients against the total number of requests received or applications taken.
  4. Active Portfolio Management-When implementing a loan pricing system with an interface to the organization’s core data systems, significant new reporting capabilities are attained. Lenders are able to receive reports on and track trends in loan officers’ portfolios.
  5. Improved Discipline, Accuracy & Pricing Consistency-As has been shown, it is possible for senior management teams and lenders working
    together and aided by an accurate and appropriately calibrated loan pricing system, to significantly improve the return performance and growth rate of the lending client base.

Read the full report here.

 

A Third of Americans Would Forfeit Their Voting Rights For a 10% Pay Raise, Says Study (Time), Rated: A

More than a third of Americans would give up their right to vote for a 10% annual pay raise, according to a new survey.

The peculiar findings come from a survey conducted by LendEDU, an online student loan marketplace, that polled 1,238 working Americans. In exchange for the hypothetical pay bump, about 35% of these employees said they would sacrifice their voting rights for life. In addition, just over 9% of respondents said they would give up their children’s (or future children’s) right to vote for life for the make-believe raise.

But those aren’t the only big sacrifices the respondents would make for a 10% annual salary increase. More than 12% said they would break up with their partners, and nearly 19% said they would give up their health insurance for the next five years. Forty percent would forfeit their dental care for five years for a raise, and nearly 18% would say goodbye to their Social Security benefits.

Source: Lend EDU

DepositAccounts.com Releases 2018 Top 200 Healthiest Banks and Credit Unions in America (Benzinga), Rated: A

DepositAccounts.com, a subsidiary of LendingTree, today released its list of the 2018 Top 200 Healthiest Banks and Credit Unions in America.

Source: Deposit accounts

If You Can’t Beat Them, Join Them — How Banks, Fintech And Tech Players Can Win Together (Forbes) Rated: A

As tech giants like Amazon, Facebook and WeChat set out on their quest to be all things to all people, eroding the boundaries between industries, banks that want to maintain and grow their market share need to rethink the rules of competition.

While a growing number of banks have acquired fintechs to avoid fading into the background (

12 Best Bank of America Personal Loan Alternatives (Student Loan Hero), Rated: A

Bank of America offers various loans — but not personal loans

Bank of America’s loans, however, are limited to two specific types:

Some online lenders with competitive interest rates on personal loans include:

LendingClub and Prosper, for example, are both in the peer-to-peer lending space. LendingClub has fixed personal loan rates ranging from 5.99% – 35.89%. You’ll need to check your rate with Prosper directly since it varies depending on your credit and borrower profile.

Marlette Funding Welcomes a New Advisor with a Focus on Innovation (LendEDU), Rated: B

Marlette Funding, LLC, recently appointed Marshall Lux as an advisor to its board of directors and company. Marlette Funding is the parent company of Best Egg, which is a lending platform that offers unsecured personal loans.

Jeffrey Meiler, chief executive officer of Marlette Funding, said Lux’s considerable experience in financial services and his expertise in the consumer market make him a good fit for the company.

FinTech Veteran Ethan Schwarzbach Joins inFactor To Head inFactorIQ Platform (PR Newswire), Rated: B

inFactor Corp, an integrated financial technology company providing liquidity solutions across the spectrum of non-bank lending, has announced today that Ethan Schwarzbach has joined the company to head up the company’s new inFactorIQ platform.

Mr. Schwarzbach joins inFactor from Orchard Platform where he most recently served as a Manager on the Business Development team. Orchard Platform is the leading provider of data, technology, and software to the online lending industry.

SOLO FUNDS ALLOWS YOU TO SEAMLESSLY BORROW FROM YOUR PEERS (Black Enterprise), Rated: B

According to a recent statement, SoLo’s founders uniquely understood the plight that American workers were facing every day because they too were once in their shoes. It is not uncommon to seek a small loan from friends and family, but the founders were not seeing a quick and easy lending solution to help facilitate the process.

Traditional banks don’t lend small dollars, and payday lenders charge excessively high interest rates that for many in emergency situations are almost impossible to pay back. There was simply no affordable way to get a small dollar loan. The team thought that the limited resources for small-dollar loans only plagued the minority communities like the ones they were raised in, but that was wrong; they discovered a more mainstream problem. According to the statement, 78% of American workers live paycheck to paycheck and 47% of the country can’t cover a $400 emergency expense without borrowing from someone else or selling a personal asset.

Liquid FSI Adds Key Board Member (deBank), Rated: B

Liquid FSI, a direct lender and creator of the Convert2Pay platform, which provides on-demand payment for medical invoices, added Barry Blecherman to its Board of Advisors.

While a few recent graduates of the NYU Tandon School of Engineering were helping the Liquid FSI team with some algorithms for their technology platform, they mentioned Blecherman, a professor of Finance and Risk Engineering at the Tandon School.

United Kingdom

Welendus loanbook hits £100,000 in just three months (Peer2Peer Finance News), Rated: AAA

WELENDUS investors have funded £100,000 of short-term loans in just three months of its beta stage, the platform has announced.

Nadeem Siam (pictured), founder of the platform, says a full launch of the product is planned soon but Welendus has already built up more than 4,000 users.

Klarna: 53% of retailers say “always on” sales are damaging profits (Tamebay), Rated: A

Research by payments provider Klarna shows that discounting is no longer confined to the traditional winter and summer sales. The new rules of retail mean discounting has become a fluid and unpredictable phenomenon with over half (57%) of consumers expecting regular sales.

The research of 500 British retailers highlighted the negative impact this can have on the bottom line of merchants. Over half of retailers surveyed (53%) say the “always on” nature of sales is having a negative impact on profits – 11% said discounting cost them over £25,000 throughout 2017. This isn’t felt just by smaller retailers, but merchants of all sizes – in fact, it’s those with 100-239 employees that feel the burden most with 66% saying constant discounts are impacting profits.

Investing Show: What you need to know about crowdfunding, peer to peer, and Innovative Finance Isas (This is Money), Rated: A

Stewart Cazier, of alternative lending platform Thincats, details what investors need to know about peer to peer, crowdfunding and Innovative Finance Isas on the Investing Show.

He explains to Simon Lambert, of This is Money, and Richard Hunter, of Interactive Investor, how alternative lending works, what investors need to consider, how to diversify and why it’s important not to consider it risk-free or put all your eggs in one basket.

Five questions for: Samantha Bamert, CEO of AskIf (Money Week), Rated: A

Ask Inclusive Finance (AskIf) is a commercial enterprise with an ambitious social mission – to close the sizeable funding gap for loans to financeable small companies unable to secure funding from banks. Smaller estimates suggest this funding gap could be upwards of £2.2bn per year.

Other research estimates much larger numbers. AskIf is a platform lender bringing together funders, a network of lending partners and the borrowers themselves. By providing support and funding to small companies, we’ll enable job creation, economic value and opportunity in many communities across the UK.

JP Jenkins – Continued New Initiatives (PR Newswire), Rated: B

JP Jenkins reports that its co-owner, Peterhouse Corporate Finance, has closed its 200th capital raise in the past three years, with a total funding of circa £200m for smaller growth companies.

Significant new capital has recently been provided by Malcolm Burne, a substantial shareholder and Executive Director, to expand the JPJ franchise further. The Company has also entered into partnership & collaborative agreements with US Capital Partners, private placements, Equidate a US private companies Stock Market, and Primary Markets an International Unlisted Exchange.

China

Chinese Online Lender Weidai Plans $ 400 Million IPO (Bloomberg), Rated: AAA

Chinese peer-to-peer lender Weidai Hangzhou Financial Information Service Co. is planning an initial public offering that could raise about $400 million, according to people with knowledge of the matter.

There hasn’t been a major listing of a Chinese financial technology company in the U.S. or Hong Kong since LexinFintech Holdings Ltd., which raised $124 million in a downsized U.S. IPO in December, according to data compiled by Bloomberg. Qudian Inc., which completed a $1 billion IPO in October, has since fallen 52 percent from its offer price.

European Union

Insurance and the Open Banking wave: seven use cases (Holland Fintech), Rated: A

Source: Holland Fintech

INNOPAY has defined a first set of use cases for insurance companies. The use cases have been mapped on the most important value levers for insurance to capture relevancy and see where exactly the use cases drive value. The mapping is presented in figure 1 and a first description of the cases is given below.

  1. New (cyber)insurance product for a new client segment: insure TPPs in PSD2 landscape: data sharing through third parties implies new (cyber) risks and thus accountability in case of data breaches.
  2. Better deal engines: PSD2 provides third parties access to payment account information data (AIS). This data can be mined and relevant insights on customer behaviour can be extracted. This behaviour can then be for example spending on insurance to see if a better offer can be made to the customer or looking for patterns which can imply a better risk profile and thus better pricing on insurance products for the customer.
  3. Improve personalised advice: next to mining, the data can be used to improve personalized advice. Although TPPs are by law only allowed to present the account information of customers, insurance companies can use that information to give advice about their financial situation.
  4. Optimise claims management: together with other data sources, account information that is shared by customers’ banks can be used to create new data sets that could be used to improve reconciliation and reimburse the right amount to customers and gain better insights on possible fraud (by looking at for example customer spending patterns).
  5. Up to date customer records: although there is no Open Banking standard yet and all banks are developing their own view and strategy on opening up data beyond PSD2 compliance, there are already good examples insurance companies can build upon.
  6. Expanding service proposition to providing accounts: with the possibility to execute a transaction (PIS) on behalf of the customer or to check available funds (CAF) the functional scope of PSD2 is limited.
  7. Digital identity verification: banks can help in identifying a person during a digital onboarding or digital identity verification process. This functionality is for example already operated by the banks in The Netherlands under the iDIN scheme.

Swiss Crowdlender Banks on Blockchain (Finews), Rated: B

A Swiss crowd-lending platform is using the blockchain technology to improve the way it brokers loans to companies. It will also introduce tokens as a currency of valuation.

Swisspeers, a Winterthur-based platform specialized in loans to small- and medium-sized companies is registering transactions on the Ethereum blockchain. The company is going to use the so-called Smart Contract developed specifically for its purposes, Swisspeers said on Thursday.

International

Not just dumb pipes: Fintech investment slows as banks try to gain back control (Tearsheet), Rated: AAA

Banks’ investment in fintech companies is slowing down as they refocus on improving core banking infrastructure, according to a report by CB Insights.

The Banks in Fintech report, released this week, found that banks have been foregoing big investments and partnerships over the past five quarters with a preference for building products in house — particularly in lending, payments and personal financial management. In both the U.S. and Europe banks spent more of their architecture investment dollars on capital markets software companies than blockchain startups.

Source: CBInsights

KPMG’s Pulse of Fintech report for the fourth quarter of 2017 noted that while deal activity among venture capital and private equity firms remained steady compared to 2016, the earliest stage of VC financing could see fewer deals and a volume decline in particular segments like online lending in the coming year. It’s a sign of the industry’s maturity; banks are showing their efforts to “fight fintech with fintech,” Lindsay Davis, an intelligence analyst at CB Insights, said in a presentation.

Source: Tearsheet

Blockchain Integration Is Leading to a Revolution in Global Trade (The Market Mogul), Rated: AAA

In every step of the trade financing process, blockchain technology seems to offer an efficiency boost in commodity transactions and the global supply chains. From contract generation level, which includes time-consuming reviews of the operation by the Letter of Credit issuing bank, to the settlement level, which often proves problematic due to payment platform incompatibility, fintech offers smart solutions.

Although credit fintech is on the rise, blockchain was mostly used for peer-to-peer lending and that the trade financing gap persists, according to the Asian Development Bank. 70% of financial institutions which responded to the survey claimed that the technology would allow for greater exposure to SME risk, mostly because of significant cost reduction in compliance and due diligence.

Mambu unleashes digital marketplace (Fintech Futures), Rated: A

Software-as-a-Service (SaaS) banking engine provider Mambu has launched its digital marketplace to offer cloud-enabled apps, products and tools for banking and lending.

Mambu Marketplace offers a choice of global and localised solutions which can be integrated with the SaaS engine. Its offerings are based on an API-driven architecture.

Will fintech realize its potential for financial inclusion? (LinkedIn), Rated: A

But it’s increasingly clear that many of the financially underserved are also technologically underserved. The GSMA’s Mobile Economy 2018 reports that nearly 40% of the world’s 5 billion mobile subscribers have no internet access; most of the offline, live in the low- and middle-income countries that could benefit the most from digital financial services. Many mobile subscribers live outside of 3G or 4G signal range, which slows service or limits what they can do with their devices. Many unconnected users must contend with poor network performance, high connectivity and handset costs, poor digital literacy, or a lack of locally relevant content.

Digital lending innovations: Small businesses face a $5 trillion financing gap. Inefficiencies in customer acquisition and analysis prevent lenders from making reliable lending decisions and entrepreneurs from getting the financing that they need. But new technologies and data sources can help small businesses: Mexico’s Konfio analyzes thousands of data points – including biographic information, financial history, electronic invoicing, and social media usage – to make lending decisions quickly and inexpensively.

India

Instamojo plans to expand into SME lending, logistics: CEO Sampad Swain (Livemint), Rated: AAA

Online payment solution provider Instamojo Technologies Pvt. Ltd plans to expand into business loans, logistics and advertising services for small merchants, as more small and medium enterprises (SMEs) turn to digital means to sell and market their product, a top company executive told Mint.

Bengaluru-based Instamojo, which focuses primarily on SMEs, currently has 400,000 SMEs using its payment service, and it is also targeting to onboard at least 1 million SME customers by the end of FY19, the company’s chief executive Sampad Swain said in an interview.

Peer to Peer (P2P) Lending – a Niche in the Financial Ecosystem (PR Newswire), Rated: A

Investment avenues are available either in the form of instruments per se (e.g. equity stocks, bonds, etc.) or as vehicles for participating in the instruments e.g. Mutual Funds, Portfolio Management Services, Alternate Investment Funds, etc. Some of the vehicles are available in small ticket sizes, e.g. Mutual Funds, whereas some require a sizable ticket e.g. PMS (Rs 25 lakh) or AIF (Rs 1 crore). There is a differentiated investment avenue, which is neither a tradable instrument nor a structured vehicle, but a facilitator for retail investors. This is called Peer to Peer (P2P) Lending where there is an online intermediary, which brings the lender and borrower together to facilitate direct lending by the lender to the borrower on mutually agreed terms. This is an online marketplace where the digital platforms like e.g. IndiaMoneyMart would conduct due diligence and credit assessment of the borrower and connect the two individuals.

Asia

Outsmarting the traditional experts with the aid of AI (Asia Asset Management), Rated: A

FinEX Asia offers Asian investors access to US consumer credit assets

Asian institutional investors often find it difficult to gain exposure to US consumer credit assets because of the diverse array of such products and a lack of investment channels.
Canada

Canadian Fintech PayBright Announces  E-Commerce Financing Solution is Now Available on IBM Websphere (Crowdfund Insider), Rated: AAA

Canadian fintech lender PayBright announced on Thursday its e-commerce financing solution is now available for merchants operating the IBM Websphere Commerce platform.

According to PayBright, the e-commerce solution integrates with merchant’s e-commerce platforms and provides Canadian customers with an additional payment option at checkout. Upon selecting PayBright as a payment method, customers can finalize their purchases in a matter of seconds. Merchants then receive their funds directly from PayBright the next business day with no credit risk. Customers then pay for their purchases in affordable monthly installments over time, with interest rates as low as 0%. 

Authors:

George Popescu
Allen Taylor

Friday Match 23 2018, Daily News Digest

ifisa

News Comments Today’s main news: Prosper changes pricing. Revolut launches disposable virtual cards. OakNorth reports annual profit. Lufax delays IPO. eToro raises $100M for blockchain development. Today’s main analysis: Isas that pay up to 16%. Today’s thought-provoking articles: Is personal service getting lost in digital? What makes big data BIG? How quantum computing can change financial services. Can the blockchain prevent bank […]

ifisa

News Comments

United States

United Kingdom

China

European Union

International

India

Other

News Summary

United States

Prosper Announces Pricing Changes (Prosper), Rated: AAA

Earlier this week in anticipation of the Fed Rate hike, we discussed Prosper’s approach to portfolio pricing in a rising rate environment. Our goal with rate-setting is to deliver value for both sides of the Prosper platform by providing a fair price for borrowers and a reasonable return for investors.

In order to deliver on this objective, the borrower rates offered in our marketplace must react to rate changes in the economy at large.  Today, the Federal Reserve announced a 25 basis point (bps) increase in the Fed Funds rate.  In light of this development, the rates offered to borrowers through the Prosper platform are being modified.

Pricing Change Impact Simulation

The table below summarizes the simulated impact of the rate increase on the portfolio originated through the Prosper platform in March month-to-date (MTD) 2018.  Overall borrower rates on the platform are increasing by 26 bps.

Source: Prosper

 

Is Personal Service in Fintech Getting Lost Amid the Digital Mindset? (Lend Academy), Rated: AAA

Profitability of digital-only businesses can be astounding because the model is so cost-efficient. Some just don’t want customers with “high maintenance” needs such as human customer support.

The best overall answer is to offer all options. Enable customers to interact solely in a digital way or with live support to guide through the process, answer questions and solve problems. Make it easy to use both, such as Amazon does. Online ordering is usually a breeze. But when a problem or concern arises, they have caring and competent live human beings to help.

Ways To Show That You’re Invested (Or Want To Be) In Human Caring

  1. Check in with your world.
  2. Beat your “human caring” drum.
  3. Extend human touch company-wide.

WHAT MAKES BIG DATA SO … BIG? (AllAboutAlpha), Rated: AAA

A Paper from Citi

A new paper by Citi Business Advisory Services throws a lot of light on where Big Data stands.

The paper argues that due to Big Data, “the innovation seen in systematic trading models over the past decade could accelerate” and (a closely related point) the “differences between what used to represent quantitative versus qualitative research” could disappear.

Not all Roses and Plush Toys, Though

The process by which the new data capabilities and principles get internalized by the swifter funds, those that want to be on the winning side of the arb plays, isn’t a painless one. There are “integration and cultural challenges” that have to be overcome. After all, the experts that an aspiring arbitrageur would hire come from “internet firms, gaming companies, the military” and consumer research. The world of asset management will be new to them, so everyone on the developing teams can “work effectively together.”

2017 Digital Lending Fraud Report (Mitek), Rated: A

The explosive adoption of the digital channel is changing the nature of lending. Consumers are coming to expect the kind of convenience and speed that a digital experience can deliver, and lenders are increasingly looking to oblige. Although many of the consumer benefits of digital lending are clear, certain complications related to fraud arise when lending goes digital. This is a function of the degree of separation and anonymity in the digital lending process. Building on these factors, today’s fraudsters are relying on a diversified playbook of schemes and techniques to commit loan fraud in digital channels, including the use of synthetic identities, volumetric attacks, and technology designed to disguise their digital footprint. In this report, Javelin explores how these issues have come to unfold and the steps that lenders must take if they want to effectively resist this growing epidemic of digital lending fraud.

Key questions discussed in this report:

  • What effect has the use of digital channels had on the lending space?
  • How has fraud changed as a result of lending going digital?
  • What are the technology factors affecting the risk of lending fraud in digital channels?
  • What are the fraud risks specific to each type of loan product?
  • How are different segments of consumers affected by digital lending fraud?
  • What are the steps that FIs and other lenders can take to effectively prevent new account fraud?

Foolishness Versus Fintech: Foolishness Wins Again (Lexology), Rated: A

A recent decision from a federal district court in Colorado, Colorado ex rel. Meade v. Avant, strikes another blow against many of the financial technology firms that are revolutionizing the way consumers and businesses access credit. Joining what is now a line of decisions, the court limited the valid-when-made doctrine, which provides that a loan that is valid when it is made does not become invalid (i.e., usurious) when it is sold or assigned to a third party.

2nd Colo. ‘True Lender’ Case Sent Back To State Court (Law360), Rated: A

A Colorado federal judge ruled Wednesday that the Federal Deposit Insurance Act doesn’t so completely preempt a state financial regulator’s claims against nonbank lender Marlette Funding LLC that they have to be heard in federal court.

U.S. District Judge Philip A. Brimmer remanded the case from Julie Ann Meade, the administrator of Colorado’s Uniform Consumer Credit Code, making it the second such “true lender” action to get kicked back to Denver state court this month.

CFPB handled over 84K debt collection complaints last year: Report (American Banker) Rated: A

In a joint annual report to Congress released Tuesday with the Federal Trade Commission about debt collection practices, the CFPB said it had initiated four enforcement actions last year, had resolved one case and has five others pending related to unlawful debt collection practices.

Acting CFPB Director Mick Mulvaney has indicated that debt collection will be a top priority for the agency. About 26% of consumers with a credit file have debt that is being collected by a third party, the CFPB said.

The CFPB recovered $577,000 in consumer relief from its enforcement actions while $78,800 was paid into the civil penalty fund, which is used to provide relief to eligible consumers who otherwise would not be compensated.

 

United States: Taking Stock Of Washington State’s New Student Education Loan Bill Of Rights (Consumer Protection), Rated: A

On March 14, Governor Jay Inslee of Washington signed the Washington Student Education Loan Bill of Rights. This law had been in the works since 2017 when a report, released by Attorney General Bob Ferguson in December, documented significant disparities across gender, income, age, and race in student loan borrowing and highlighted a handful of the hundreds of complaints the office received from student loan borrowers about their student loan servicers. Providing strong protections for Washington’s more than 730,000 student loan borrowers, whose debt now totals $22.9 billion, the law changes Washington’s regulatory schematic for lenders and servicers operating in the student loan marketplace in the following ways:

  • It creates the position of “Advocate” within the Washington Student Achievement Council to assist student education loan borrowers with student loans, akin to the position off “ombudsman” under proposed and enacted servicing bills in other states.
  • It requires servicers to obtain a license from the DFI.
  • Per this law, all student loan servicers, except those entirely exempt from the statute, are made newly subject to sundry statutory duties.
  • It imposes several requirements on third-parties providing student education and loan modification services.
  • It compels institutions of higher education to send borrower notices regarding financial aid.
  • It calls for the establishment, by rule, of fees sufficient to cover the costs of administering the program that it itself creates.
  • Lastly, the statute provides for a complete exemption for “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.”

Upstate N.Y. popular for millennial home buyers, study says (Rochester Business Journal), Rated: B

Upstate New York is a popular place for millennials to buy houses, according to a national survey by online lender Lending Tree. For home buyers 35 and under, Rochester ranks 16th among the nation’s 100 largest cities for home mortgage requests and offers from borrowers between Feb. 1, 2017, and Feb. 1, 2018.

STUDY: FRESNO SMALL-BUSINESS ENVIRONMENT AMONG BEST IN NATION (The Business Journal), Rated: B

LendingTree, an online lending exchange company, released a study listing the best and worst cities for a new small business, and Fresno ranked ninth for best cities to start a new small business.

Ranking at first is Sacramento.

To conduct the study, LendingTree used data from over 80,000 queries submitted by new small-business owners seeking loan offers through their small business loan marketplace to find out where businesses tend to perform the best.

 

Even Financial Announces Expanded Partnership With Credit.com; Will Power Personal Loan Marketplace (Benzinga), Rated: B

Fintech service provider Even Financial has announced an expanded partnership with Credit.com that will make it the sole provider of Credit.com’s personal loan marketplace.

The change will allow Credit.com users to get matched with personal loan offerings that can be pre-approved in real-time without leaving the site thanks to Even’s technology. Previously, users looking for personal loans on the site were referred to individual lender websites.

Roostify Adds Mark McLaughlin as Vice President of Business Development (Business Wire), Rated: B

Roostify today announced the addition of Mark McLaughlin as the company’s Senior Vice President of Business Development. McLaughlin will be responsible for formulating the company’s overall partner strategy, creating a scalable operational model, and further developing an ecosystem of technology partners and strategic alliances.

Citi sets restrictions on gun sales by retail clients (KFGO), Rated: B

Citigroup Inc added restrictions on firearms sales for new retail-sector clients, the Wall Street bank said on Thursday, the strongest move to date by a major U.S. lender following last month’s high school shooting in Florida.

In an emailed statement Citi said it will require those clients only sell firearms to customers who have passed a background check, restrict firearms sales for buyers under 21, and not sell so-called “bump stocks” or high-capacity magazines.

United Kingdom

Revolut launches disposable virtual cards (AltFiNews), Rated: AAA

In an effort to stay one step ahead of the game at all times, digital banking app Revolut is set to launch disposable virtual cards next week to help users of its Premium service protect themselves against online card fraud.

Revolut users will be able to create disposable virtual cards for online purchases in seconds, with card details that automatically regenerate after each transaction. This will also protect users from inconveniences like chargebacks from sites on one-off purchases, as well as preventing fraudsters from tracking bank account information.

The virtual cards will work alongside existing Revolut security features, such as location-based transaction security, the familiar “freeze/unfreeze” physical card ability, as well as being able to disable swipe and contactless payments.

OakNorth becomes first UK digital bank to report annual profit (Financial Times), Rated: AAA

UK based digital bank OakNorth reported an annual profit of $149mn, becoming the first digital bank to do so; in their second year of full operations the bank has seen their loan book triple in size and deposits double in size; Rishi Khosla, OakNorth chief executive, told the Financial Times, “we build them for profit and on strong foundations so as you grow you’re scaling a real business rather than what happens to a lot of fintech where you just keep building for top-line or number of customers, but don’t necessarily have the strongest business model.”

These Isas pay up rates of up to 16%: what’s the catch? (Which? News), Rated: AAA

See the table below to see what Ifisas are on the market, what industry they invest into, the minimum investment amount and what kind of returns you can expect.

Source: Which? News

Among the highest rates, FundingSecure offers up to 16% on investments from £25. However, as a peer-to-peer ‘pawnbroking platform’ borrowers are looking for urgent loans to be given within 24 hours, which are secured against their assets. Borrowers are not required to pass any credit checks. Ablrate offers variable rates up to 16%, but they’re set by the borrower and you have to decide if the return is worth the risk. Past funded loans include units for a film studio, a waste management company and a modular building company.

Where else can I find high interest rates? They may not offer 16% interest, but there are a number of current accounts that pay up to 5% – and they don’t come with the associated risks of a Ifisa.

  • Nationwide’s FlexDirect account offers 5% AER on balances up to £2,500 when you pay in at least £1,000 a month. This is only for the first 12 months, however.
  • The TSB Plus account offers 3% AER on funds up to £1,500 as long as £500 is paid in each month and you register for online and paperless banking. There’s also the opportunity to earn up to £10 cashback a month, for a limited time.
  • The Tesco Bank current account also offers 3% AER on balances up to £3,000. You need to pay in £750 a month and set up at least three direct debits.

Tide gets FCA-authorised, launches new card and integrations (AltFiNews), Rated: A

From today, digital business bank Tide has been authorised by the Financial Conduct Authority (FCA) as an electronic money institution (EMI), which according to Bevis will give Tide “the option to access the same banking infrastructure as older banks”. Since the bank launched last January, 1 in 12 of all business accounts opened in the UK has been with Tide.

Now managing the accounts of over 30,000 businesses, Tide has today also launched a new vertical card and updated app design, and an integration with online accounting provider FreeAgent, which will automatically upload Tide transaction data into the software for easy expenses tracking.

Tide’s recent partnership with iwoca for business lending is also proving fruitful, with the fastest rate of service from first click to credit in the user’s account sitting at 6 minutes and 1 second.

China could snatch the crown of fintech capital, Britain is warned (The Times), Rated: B

Mark Tucker, chairman of HSBC, Britain’s largest bank, and Nigel Wilson, chief executive of Legal & General, the insurer, said that there was no room for complacency in Britain’s so-called fintech industry.

Philip Hammond, the chancellor, told an industry conference yesterday that the UK was the “global capital of fintech” and that the emerging industry contributes £7 billion to the economy.

China

Lufax Delays IPO Amid Regulatory Crackdown (Financial Times), Rated: AAA

One of China’s largest online lenders has shelved their IPO because of the regulatory crackdown on online lending; the FT reports that Lufax is waiting until the China Banking Regulatory Commission (CBRC) required online lenders to apply for a license; the current thinking is the government will approve licenses in April, though the time frame could be a bit longer; Lufax wants to ensure they get it right instead of rushing to be first.

Small Business Confidence in Mainland China Booms, Driven by Technology, E-commerce and Social Media (Markets Insider), Rated: A

Seventy-eight per cent of small businesses in Mainland China expect to grow in 2018 and 97.5 per cent of small business are confident that the local economy will remain the same or improve in the next 12 months. These are the best survey results for MainlandChina since 2014.

“The high rates of technology use among Mainland China’s small businesses is one of the key drivers of growth, with over 80 per cent of businesses in Mainland China earning more than 10 per cent of revenue from online sales — ranking MainlandChina at the top of the surveyed markets.

European Union

Will PSD2 Open up New B2B Lending Opportunities? (Payments Journal), Rated: A

This referenced posted blog is a good question and likely the answer is ‘yes’, but also we need to wait and see how effective.  Since PSD2 is a legal imperative, one key question posed by the author is whether or not end user companies (the client buying or using a particular financial services product) wishes to share actual bank or account data with the 3rd party vendors for which API-based sharing was designed to assist.

‘When it comes to new services around B2B and working capital, I believe like any good market hypotheses to test, we need to understand a basic question when it comes to corporates – will they provide third party vendors this access?   I don’t know the answer to that question, but I do know it comes down to trust and value proposition.  Certainly making sure vendors have the security around your bank data will be important in this age of constant hacking threats’. 

Cerberus Capital Management Appoints Roberto Nicastro as Senior Advisor in Europe (PR Newswire), Rated: B

Cerberus Capital Management, L.P. and its affiliates (“Cerberus”), a global leader in alternative investing, announced today that Roberto Nicastro has become a Senior Advisor to the firm. In this role, Mr. Nicastro will consult with Cerberus as it continues its focus on investment opportunities and strategic partnerships in the European financial services sector.

International

eToro raises $ 100m Series E to fund blockchain effort (AltFiNews), Rated AAA

The raise is set to support eToro’s expansion as it heads into new markets, and continued research and development of blockchain technology and digital assets. The round brings the platform’s total capital raised to $162m, following a signficant period of growth for the business driven in part by its foray into cryptocurrency investments.

eToro added Stellar as its eighth cryptocurrency asset listed on its Crypto Copyfund in February, joining fellow cryptos Bitcoin, Bitcoin Cash, Litecoin, Ethereuem and Ripple amongst others. The trader launched its Crypto Copyfund in July 2017, which uses CFDs to enable investors to diversify across all available cryptocurrencies (weighted by market cap) with just one click.

How quantum will change everything (including banking, money and security) (The Financier), Rated: AAA

Basically, a quantum computer doesn’t work with bits but with qubits using particles that can be in superposition (two or more quantum states added together to create another state). This is why particles can take on the value 0, or 1, or both simultaneously. The reason that this is important is that it will allow computers to process and store far more information with far less energy and far more speed than current state computers. For example, in 2016, a team of Google and Nasa scientists found a quantum computer was 100 million times faster than a conventional computer. Elsewhere, in a step towards quantum computing, researchers have guided electrons through semiconductors using incredibly short pulses of light. These extremely short, configurable pulses of light could lead to computers that operate 100,000 times faster than they do today.

This is important in banking because it could displace blockchain, ledger and digital identity developments within a decade. This is because the quantum internet would excel at sending information securely through what is known as quantum encryption. This technology enables banks and businesses to be able to send “unhackable” data over a quantum network. This is because quantum cryptography uses a mechanic called quantum key distribution (QKD), which means an encrypted message and its keys are sent separately. Tampering with such a message causes it to be automatically destroyed, with both the sender and the receiver notified of the situation.

Australia/New Zealand

Cash, crypto and crowdlending: meet New Zealand’s rising FinTech future (The Spinoff), Rated: A

It’s this hassle that Hnry (pronounced ‘Henry’) wants to help resolve, doing away with the need for spreadsheets, software and even costly accountants. Whether it’s income tax, GST, ACC or student loan repayments, Hnry will calculate and pay all of these for you. Same goes for your tax returns, which Hnry will complete on your behalf. It’ll also handle all your invoices, regardless of whether you work for a single client or multiple clients at the same time.

Source: the Spinoff

Jrny

Born from a desire to change how enterprise companies and individuals interact with one another, Jrny uses AI and conversational interfaces to create more relevant, two-way channels of communication. Jrny allows businesses to handle thousands of messages instantly in an effort to build a closer relationship between company and customer.

India

Could blockchain tech help prevent bank fraud? (American Banker), Rated: AAA

A massive fraud that cost India’s second-largest bank at least $2 billion is highlighting concerns about vulnerabilities in institutions’ internal controls and spurring some to claim that blockchain could have prevented the crime.

In a recent incident at Punjab National Bank, a deputy branch manager and his subordinate allegedly falsified 150 letters of undertaking directing other banks to give loans to a group of jewelry companies, with PNB providing surety for those letters. Virtually all of them defaulted, causing PNB to be on the hook.

What made the fraud so difficult to detect was that, as far as its internal systems were concerned, the transactions didn’t exist. The letters of undertaking were sent using the Swift network, but none were recorded on PNB’s internal record-keeping software, which wasn’t linked to the Swift system.

Source: American Banker

That’s why some are arguing that bockchain, or distributed ledger technology, could have prevented the fraud. Because immutable records are kept on a decentralized database that multiple parties can view, it’s possible that the fraud either wouldn’t have happened or could have been detected sooner.

Now here’s a crypto bank you can grow with (The Economic Times), Rated: A

In this virtual bank, your savings are stored in crypto format on a blockchain, and instead of interest on your savings, you get a virtual share in the revenue of the bank.

This is an unconventional concept developed by Mumbai-based entrepreneurs Varun Deshpande, Ratnesh Ray and Siddharth Verma, whose product Nuo Bank went live this week.

Afica

Naspers To Sell $ 10bn Tencent Shares To Invest In Fintech (Forbes), Rated: AAA

Naspers, the most valuable listed company in Africa, will be selling $10-billion of its shares of Chinese messaging giant Tencent to invest in fintech, classified and online food delivery businesses.

Naspers announced it will sell up to 190-million Tencent Holdings Limited shares, or  2% of Tencent’s total issued share capital. Naspers is reducing its stake in the maker of WeChat and QQ – which is worth an estimated $545-billion – from 33,2% to 31,2%.

Canada

Royal Bank of Canada Launches API Developer Portal (Crowdfund Insider), Rated: AAA

On Tuesday, the Royal Bank of Canada (RBC) announced it has opened its very own API developer platform. According to the bank, the RBC Developers platform will allow eligible external software developers, industry “innovators,” and clients to access select RBC APIs. While sharing more details about the platform, Sumit Oberai, Senior Vice President of Digital Technology at RBC, stated: “Across other industries we’ve seen the transformational effects of APIs. By providing external developers, industry innovators, and clients with access to select RBC APIs, we have the opportunity to increase connectivity, create new tools and experience for clients, and enable open and innovative collaboration to improve the future of banking.”

Authors:

George Popescu
Allen Taylor

Friday March 2 2018, Daily News Digest

Seed

News Comments Today’s main news: How Funding Circle wants to fix the financial system. VPC Specialty Lending, Ranger Direct see dividends move up. Klarna triples net profit, mainly in Nordic countries. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Can Seed solve banks’ digital onboarding issues? How banking institutions can decentralize (The best read of the day). Institutional […]

Seed

News Comments

United States

United Kingdom

European Union

International

Asia

News Summary

United States

This neobank believes it can solve banks’ digital onboarding problem (American Banker), Rated: AAA

Since 2014 the neobank Seed has been reimagining one of the sleepier areas of banking: deposit accounts for small businesses.

Rather than walk into a branch — Seed, of course, has none — yoga instructors, food truck owners and other would-be customers can apply for accounts in less than five minutes on the startup’s web or mobile app. If approved, they receive a business debit card in the mail.

Now Seed, led by veterans of the fintech Simple, is selling banks software to help them solve one of their most pressing problems: finding a way to open accounts online as branch transactions continue to decline.

Source: American Banker

Lendio Franchise Announced in Clemson Region (Lendio), Rated: A

Lendio, the marketplace for small business loans, today announced the opening of a new Lendio franchise in the Clemson, South Carolina Region. Through the Lendio franchise program, Andy Ronemus will help local businesses in the community apply for loans, review their options and secure funding, easing the financial hurdles for small business owners.

In A Time of Need, A Woman Rises To Disrupt Fintech In Puerto Rico (Forbes), Rated: A

One notable leader in this endeavor is 

Fintech Startup Magilla Wants to Be the Match.com of Loans (Big Law Business), Rated: A

Since its launch in January 2016, Sacramento-based startup Magilla Loans says it’s originated more than $5 billion in loans and is changing the way lenders connect with borrowers. The platform can shrink into a few days what can often be a weeks- or months-long process of loan applications, data submissions and waiting just to get a loan term sheet.

Crowdlending helped Shorewood business woman’s dreams come true (tmj4), Rated: A

One Shorewood businesswoman did this all on a website called Kiva.

Shelia Long’s business is a workspace that helps ladies who work from home come together to get inspired.

“It was so great as the loans were coming in you can see like Switzerland, Boston, Carlsbad, Texas,” said Shelia Long.

One-hundred-thirty-seven people in total used PayPal to help her get to a goal of raising $8,000 at zero-percent interest.

Validus Specialty Launches Package Policy for Fintech Companies (Crowdfund Insider), Rated: A

Validus Specialty Underwriting Services, Inc. (Validus Specialty) announced on Thursday a comprehensive package policy specifically designed for private U.S. fintech companies. According to the company, the solution is designed to address Fintech’s complex risk management needs, which are traditionally underserved by incompatible and inadequate policy forms.

What’s next for marketplace ABS? Revolvers, ETFs & IOs (Asset Securitization Report), Rated: A

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

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

INSTITUTIONAL INVESTORS WARY OF PASSIVITY (All About Alpha), Rated: AAA

Geopolitical events are the most worrisome prospect on the minds of the decision makers at institutions looking ahead to 2018. The percentage of respondents who believe such events will have a negative impact this year is at 74%. The second most worrisome? Asset bubbles (65%).

More than three fifths (63%) of those surveyed said that the growth of passive investing has increased systemic valuation risk: 59% believe that flows into passive strategies artificially suppress volatility.

In 2015, Natixis found that 64% of institutions said they were upping their investments with active managers. In 2016, that number rose to 67%. In the latest survey it rose again, to 68%.

Be cautious when seeking income (Money Week), Rated: A

But Square Pie had sold bonds on the Crowdcube platform, offering lenders 8% a year. It illustrates why so many people are suspicious of mini-bonds (debt issued by small, retail-orientated firms). Anyone thinking of lending to just the one relatively new business has to be aware of the risks – and then ask: is 8% enough?

A more diversified option

The latest offering in this category comes from a platform called Goji, which aggregates a variety of direct-lending and peer-to-peer (P2P) platforms. It has just brought out a Renewables Lending Bond, which pays out anything from 5.5% for a three-year term (with regular income) to 7.6% over five years, where the interest is rolled up at repayment. The underlying assets are provided by a direct lender called Prestige Group, which lends to clean-energy projects.

The book of loans – around 39 – has an average duration of four years, with a typical loan-to-value ratio of between 70% and 80%.

2018 LightStream Home Improvement Survey (PR Newswire), Rated: A

More than half (58 percent) of homeowners are planning to spend money on home improvement projects in 2018, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks, Inc. (NYSE: STI). Budgets for renovations are on the rise: among homeowners planning renovations, 45 percent will spend $5,000 or more — an all-time survey high. Those planning to spend $35,000 or more doubled from 2017.

The survey shows robust enthusiasm for renovation, as well as a thoughtful desire to balance a home’s needs and the homeowners’ budget, so they have the financial confidence to move forward. Specifically, the survey revealed the following trends:

    • Home “Sweat” Home
      The majority of homeowners plan to invest sweat equity, as 65 percent say they’ll do at least some of the work themselves. The 18-34 group is particularly fond of do-it-yourself projects, with 70 percent planning to work on at least a portion of their renovation.
    • Staying — and Aging — in Place
      Only seven percent of homeowners are renovating to prepare their homes to be sold, the lowest percentage since 2015. Instead, 14 percent of homeowners across all age groups — not just baby boomers — are citing “aging in place” as a reason for making a home improvement. Even respondents aged 18 to 34 (11 percent) and 35 to 44 (10 percent) say they’re renovating “to prepare my home so I can stay in it as I get older.”
    • Tax Reform Boosting Budgets
      With recent passage of tax reform, homeowners have already begun calculating how the changes might affect what they spend on home improvements. One in four homeowners who have set a budget for renovation projects stated that tax reform has had an impact, with 18 percent increasing their budget and seven percent decreasing it.
    • Paying for Projects
      The majority of homeowners (62 percent) plan to pay for projects, at least in part, by using savings. Additional payment strategies were further revealed. Intent to fund through home equity lines of credit (HELOC) jumped from 10 to 13 percent. “U.S. economic growth and limited housing inventory have contributed to healthy home equity gains,” said Ellen Koebler, SunTrust head of consumer solutions. “HELOCs can offer a financial solution for many homeowners, as accrued value may be available to tap for renovations.”

At the same time, the percentage of people intending to use a home improvement loan has grown 29 percent from 2017 with 54 percent more 18- to 34-year-olds planning to fund projects through home improvement financing.

Crowdfunding your way to homeownership (Mic), Rated: A

According to recent research from the National Association of Realtors®, 24% of buyers under age 36 saved for their down payment for more than two years.

NAR research also found that 25% of homebuyers ages 36 and younger used a gift from relatives or friends for some or all of their down payment.

Platforms have popped up that simplify this process: HomeFundMe, which launched last year, and Feather the Nest.

An estimated 1,500 “nesters” have used Feather the Nest to crowdfund a down payment since 2014, according to company president Beth Butler, with an average goal of $10,000 to $15,000.

JPMC’s FinLab Launches $ 3M Contest For FinTech Startups (PYMNTS), Rated: B

To help identify FinTech products that may improve the financial health of underserved populations in the U.S., the Financial Solutions Lab (FinLab) launched its fourth annual $3 million challenge. The lab focuses on products that meet the financial needs of overlooked populations, JPMorgan Chase said in an announcement.

Accounts in Transit (O’Dwyer PR), Rated: B

Kwittken signs up Laurel Road, online lender of student loans, personal loans and mortgages. Aaron Kwittken’s firm will be responsible for raising awareness of the company’s products through content marketing, brand activations, thought leadership and traditional media relations. Laurel Road, which is part of Darien Rowayton Bank, recently surpassed $3 billion in student loan originations.

United Kingdom

Keeping the little guys in the loop: How Funding Circle hopes to fix the financial system (City A.M.), Rated: AAA

“When we think about the people we hire, it’s all about energy,” says Funding Circle co-founder James Meekings. “We want staff to share their excitement about what they do with others in the office – even if they’re talking about tax.”

“Even though we now have 800 employees, we still feel like a small business. We still push for opportunity and for people to be creative.”

VPC and Ranger funds see dividends tick up, but remain below target (AltFi), Rated: AAA

The £219m Ranger Direct Lending and £337m VPC Specialty Lending investment trusts have announced their latest quarterly dividends with both portfolios showing an uptick since their last pay-outs.

Leeds offers business loans through peer-to-peer platform (Room151), Rated: A

Leeds City Council is to use a peer-to-peer lending platform to lend money to local businesses.

The authority has decided to use the rebuildingsociety.com platform — based in the city — to provide money for small and medium sized businesses with an LS postcode.

Isas 2018: Innovative Finance Isas hit stumbling blocks (Financial Times), Rated: A

Innovative finance Isas (IF Isas) offer the promise of a good return, sheltered from tax, to investors willing to take on the higher risks of the peer to peer (P2P) finance market.

The market has taken longer than expected to ignite, however, as providers struggle to match growing demand with limited supply. Many new investors will find the door shut, at least for now.

Growing consumer indebtedness in the UK combined with the prospect of rising interest rates could push up default rates on loans, sharpening the dangers for those invested in the highest-risk P2P products.

How does the Isa allowance actually work? (Which?), Rated: B

For the tax year 2017-18, the maximum amount you can pay into one – or a combination – of Isas held in your name, is £20,000.

Once the new tax year for 2018-19 begins on 6 April, your allowance resets – once again to £20,000.

There are five main types of Isas. The current annual limits are as follows:

  • Help to Buy Isa: Money can only be used to buy your first home, and savings receive a government bonus of 25%. You can save £1,200 in the first month, then £200 per month thereafter. Therefore, in the first year you will have a limit of £3,400. In the following years the limit will be £2,400.
  • Lifetime Isa: Expressly for first-time buyers or to be used in retirement once the account holder has reached the age of 60. There’s a 25% government bonus on savings up until the account holder is 50 years old. You can pay in up to £4,000 per year.
  • Cash Isa: A traditional savings account – money you pay in grows with the provider’s interest rate. You can pay in up to £20,000.
  • Stocks & shares Isa: Money you deposit is invested in stocks & shares by the provider. Returns can be higher, but so is the risk that you may end up with less money than you paid in. There will also usually be fees involved for managing your investments. You can pay in up to £20,000.
  • Innovative finance Isa: Money paid in is invested in Peer-to-Peer (P2P) lending platforms, and you receive the interest when this loan is repaid. There is also some risk involved. You can pay in up to £20,000.
European Union

Klarna’s profits driven by growth in Nordics and Germany (Financial Times), Rated: AAA

The Swedish group posted a 27 per cent increase in revenues to SKr4.53bn ($546m) while net profit more than tripled to SKr346m. Klarna processed about €18bn in online transactions last year, an increase of 42 per cent.

Klarna reports double-digit sales growth (Finextra), Rated: A

As a result, 89,000 retailers globally now use Klarna products, this represents a 20% growth compared to the previous year. Available in 14 countries, retailers are increasingly adopting Klarna solutions which makes the payment processes as smooth as possible for consumers. As a result of the surge in retailer adoption, Klarna now handles 10% of all online payments in Northern Europe.

International

How Banking Institutions Can be Decentralized (CoinTelegraph), Rated: AAA

Decentralized banking is a term that has been construed in the wake of the cryptocurrency boom.

Cryptobanks are decentralized platforms that provide the usual services that centralized banks provide, primarily lending services and credit scoring, but essentially cuts out all of the middlemen that a centralized bank uses. The people needed in a bank to approve loans and structure financial data are replaced in a crypto banking ecosystem by smart contracts and p2p, peer-to-peer, services.

What kind of technologies do crypto banks use?

P2P, Blockchain, cryptocurrencies, Machine Learning, Big Data and smart contracts are used in crypto banking.

All transactions are recorded on the Blockchain.

Machine Learning Big Data.These technologies help to automate the lending process and cut through bureaucracy. AI can work 24/7 and match lenders with borrowers.

Do crypto banks have their own native currency?

Yes. Native cryptocurrencies help make the bank global.

Datarius, the first social p2p crypto bank, for instance, uses their own native token DTRC for all transactions. This helps create a standard for a global payment system within the p2p lending process.

What is social lending?

Thanks to Big Data and AI, crypto banks can see beyond a borrower’s credit score to identify their level of trust. Listings can include Trust Limit, Trust Management and User Ratings which helps AI decide if the participant is justified in borrowing from a specific lender.

Crowdlending: Anatomy of a successful strategy (EurekAlert!), Rated: A

The entrepreneur’s strategy for achieving this can be summarized in three stages. The first consisted of bypassing the banking monopoly on his platform using “cash vouchers,” a tool dating from 1937 that had long been forgotten. They allow personal loans to be made without a bank as intermediary. Secondly, by collaborating with future competitors, the public authorities and the sector’s regulators(2), the entrepreneur contributed to the development of a long-term crowdlending regulation in France. This collaboration relies on the creation of a meta-organization(3) called “Financement Participatif France” (FPF), which worked to define the status of “Intermédiaire en Financement Participatif” (IFP, equivalent to “crowdlending financing intermediary” in English), which regulates this new market.

Asia

Smartag International Signs Agreement to Provide Fintech Solutions to Rural Indonesia (PR Newswire), Rated: A

Smartag International, Inc. entered into a joint venture agreement with PT. Supratama Makmur Sejahtera (“PTSMS”), an Indonesian Fintech company to form a Joint Venture Indonesian PMA company in which Smartag will own 51% equity and PTSMS will own 49%. This follows an earlier MOU signed on October 12, 2017 between PTSMS and PT Rijan Dinamis Selaras (“RDS”) representing Pondok Pesantren Riyadhul Jannah Pacer Mojokerjo, founder of Consultative Assembly of Indonesian Boarding Schools which has a network of 28,000 boarding schools to undertake a Fintech project (the “Indonesian Project”).

Authors:

George Popescu
Allen Taylor

Friday January 26 2018, Daily News Digest

marketplace lending

News Comments Today’s main news: SoFi completes $960.2M student loan securitization. Robinhood adds zero-fee crypto trading, tracking. Goldman partners with Cadre. South Korea earmarks 11.2T won for midrange borrowers. Today’s main analysis: Buying overdue loans at discount on Mintos’ secondary market. Today’s thought-provoking articles: What RateSetter will look like without unsecured commercial loans. AltFi Data predicts strong U.S. MPL […]

marketplace lending

News Comments

United States

United Kingdom

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

SoFi Completes $ 960.2 Million Student Loan Securitization (Crowdfund Insider), Rated: AAA

Online lender SoFi announced on Thursday the closing of its $960.2 million offering of SoFi Professional Loan Program 2018-A Notes (SoFi 2018-A). According to the lending platform, the offering reflects underlying collateral of more than $1billion in student loans and is SoFi’s largest ever securitization, as well as the first by any fintech lender to reach the billion-dollar collateral mark.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-1 (“SCLP 2018-1”). This is a $591.5 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-1

Class Preliminary Rating Class Principal
A-1 AA+ (sf) $320,000,000
A-2 AA+ (sf) $142,500,000
B A (sf) $81,000,000
C BBB (sf) $48,000,000

A Knife in Twitter’s Back Could Bring A Happy Ending to SoFi Investor’s Wild Ride (Inc.), Rated: A

And the reason that departure could make me better off is that I invested in SoFi in December 2014 when the company was valued at $1 billion. The last time SoFi raised money – in 2017 – it was valued at $4.3 billion.

There are five reasons I invested in SoFi  — of which these four are the most important.

1. It was targeting a huge market

SoFi started out targeting the $1.2 trillion student loan industry and in 2014 announced an expansion into the $12 trillion mortgage market.

 2. Its management team had excellent industry knowledge

 3. It knew what ailed stakeholders and provided a remedy

Of the 15,500 borrowers who had taken out about $1.3 billion worth of loans in 2014, SoFi estimated that it had saved the average borrower $11,783.

 4, It looked like it could reach $100 million in revenue

In November 2017, Bloomberg reported that in the third quarter of 2017 SoFi’s adjusted operating revenue rose 8.2% to $145.3 million in the third quarter while its adjusted earnings totaled $56.1 million.

Moreover, SoFi added 55,000 members in the quarter to a total of 400,000 – having completed “more than $3.52 billion in loans in the period and completed three securities offerings totaling more than $1.5 billion,” according to Bloomberg.

Scandal-rocked SoFi says it has foundation for full recovery (American Banker), Rated: A

He points to the $12.9 billion in loan originations SoFi did last year. The company sold more than $2 billion of those loans.

“All our investors are still buying, and we’ve added many new investors post Mike leaving,” Jain said. “All our lenders continue to lend to us and they’ve shown interest in lending us more. In the face of adversity, we did all we could.”

Source: American Banker

6 Awesome Benefits of SoFi Parent Student Loans (Student Loan Hero), Rated: A

If your child is a college student, you can borrow money to help offset their education costs with a SoFi Parent Loan. According to the company, borrowers can save $3,637 over the life of the loan compared to a federal Parent PLUS Loan, on average.

If you took out a federal Parent PLUS Loan, you could face interest rates as high as 7.00%.

  1. Low interest rates – Depending on your credit score and income, you could qualify for a much lower rate with SoFi than you would with a federal student loan. SoFi student loans have fixed interest rates as low as 3.25% and variable rates as low as 2.58%.
  2. No origination or application fees – For borrowers who received their loans after October 2017, that fee is 4.264 percent of your loan amount. On a $10,000 loan, that means you’ll have to pay a fee of $426.40, adding to the cost of your child’s education.
  3. Career support
  4. Wealth advisors
  5. Member discounts – If you have a SoFi parent student loan and go on to take out a personal loan, mortgage, or another student loan with the company, you’ll receive a 0.125 percent interest rate discount on the new debt.
  6. Customer support

Loan Program Plans to Offer Students Prepaid Bank Cards (The New York Times), Rated: A

The Department of Education plans to provide students with a prepaid card that would hold surplus loan money that is not needed for tuition, giving the government and financial services providers a firsthand look at how students are spending those dollars.

Robinhood adds zero-fee cryptocurrency trading and tracking (TechCrunch), Rated: AAA

No-commission stock trading app Robinhood will let you buy and sell Bitcoin and Ethereum without any added transaction fees starting in February, compared to Coinbase’s 1.5 to 4 percent fees in the US. And as of today Robinhood will let all users track the price, news, and set alerts on those and 14 other top crypto coins, including Litecoin and Ripple.

Former Ripple Exec Invests $ 57.5 Million in Uphold (CoinDesk), Rated: A

Digital money platform Uphold today announced it has received a $57.5 million investment from former Fed Reserve senior analyst and Ripple chief risk officer Greg Kidd.

Goldman Sachs Teams Up With This Silicon Valley Upstart in Commercial Real Estate (The Motley Fool), Rated: AAA

Goldman’s strategic investments group, which makes venture-capital-like investments, now owns 80 portfolio companies.  One such company is Cadre, a fintech company involved in online commercial real estate investing that Goldman funded in its Series B, C, and D funding rounds. The start-up, which happens to be led by some Goldman alumni, also just received a $250 million investment from Goldman’s private wealth clients.

Cadre also charges its LPs less than a typical private real estate fund. These funds usually charge a management fee, often around 1.5%, as well as a 20% cut of the profits above an 8% “preferred” return to LPs. On Cadre’s website, it advertises a 1% “transaction fee” (I assume that’s based on a per-deal fee, like a broker would get) and then a similar 1.5% management fee, but no incentive fee. Cadre claims this fee structure will increase investors’ invested rate of return by over 2% compared with a typical fund, all other factors being equal.

Instant cash out comes to Venmo (Business Insider), Rated: A

Venmo, the PayPal-owned digital peer-to-peer (P2P) transfer service, is within 30 minutes) cash out their Venmo balance for a flat $0.25 fee.

Trump administration prepares to roll back key financial protections for consumers (MarketWatch), Rated: A

The new leadership has taken over at a time when consumers are struggling with credit-card, auto loan and student loan debt. They’re also worried about their personal data, after a 2017 breach at the credit reporting agency EquifaxEFX, +0.81%   exposed personal information of more than 145 million U.S. adults, including their Social Security numbers and financial accounts.

Mulvaney requested zero dollars for his second-quarter budget

The bureau already had $177 million in reserves, enough to cover the $145 million the bureau projected it would need during the second quarter, he said.

USA consumer bureau delays prepaid card rules into 2019 (AliveForFootball), Rated: B

The Consumer Financial Protection Bureau today finalized changes to its final rule on prepaid products, including an overall delay of the rule’s effective date until April 1, 2019 – an extension long sought by the American Bankers Association. The bureau also made changes meant to boost compliance with the rule and loosen rules on linking credit cards to prepaid accounts or “virtual wallets”.

The rule requires companies to disclose fees on prepaid cards and cooperate with consumers who discover unauthorized charges or errors.

Mastercard eyes biometric totality by 2019 (Fintech Futures), Rated: A

Mastercard says all consumers will be able to identify themselves with biometrics such as fingerprints or facial recognition, when they shop and pay with Mastercard by April next year.

StreetShares lands $ 23M for expansion, will look for new office space (Washington Business Journal), Rated: A

The veteran-oriented online lender will beef up staff and look to expand its government contracting offerings.

REIT Industry Veteran Talks About What to Expect from the Sector in 2018 (NREI Online), Rated: A

NREI: More specifically, what’s your take on how publicly-traded REITs will perform this year? Will 2018 be better overall than 2017?

Aaron Halfacre: In 2017, publicly-traded REIT performance was anemic relative to the S&P 500. I think that can be largely attributed to a few factors: big demand for large-cap “infotech” names driving the broader market, a meaningful sell-off in retail REITs and general market hesitation on REITs in front of the tax bill and Fed decisions. On a relative basis, publicly-traded REITs are well-positioned in 2018, not only from the fundamentals picture, but from a value perspective.

NREI: What about non-traded REITs?

Aaron Halfacre: I think 2018 could be as strong, or stronger, than what we saw in 2017. Personally, I am excited about the industry changes in the non-traded REIT space. It is a good thing to see Blackstone and Starwood entering the space while some of the traditional fee-hungry shops have bowed out—a good advocacy trend for the individual retail investor. Institutional-grade real estate choices without the… fee structures of yesteryear, combined with greater valuation transparency and an investment that is not correlated to the broader equity market — that’s a positive story for all of us who aren’t part of the 1 percent.

‘AI isn’t just technology, it’s good judgment’: Cathy Bessant on why banks need humans (Tearsheet), Rated: A

Bessant is transforming B of A into a technology firm and leading it into a future that requires humans to apply immense computing power to immense amounts of data — an artificial intelligence future. But like any every other technology executive, she’s facing a shortage of talent with science, technology, engineering and math backgrounds. The result is often departments hiring from other departments.

Bank of America will spend $600 million this year on cyber defense alone. It employs 1,200 people whose jobs are dedicated to nothing else but information security, although the company makes that “the job of every single employee,” Bessant said. But the caliber of the talent the bank hires is just as important as the technology it invests in, since they’ll be the ones that determine how to work responsibly with AI.

Bank of America Enters Car Subscription Space With Volvo (Auto Finance News), Rated: A

All of Volvo Car Financial Services’ loan and lease originations end up on Bank of America’s balance sheet, Hollodick explained, including subscriptions to Care by Volvo, which starts at $600 a month for an XC40 compact crossover.

2,000+ bank branches closed in US in 2017 (Fintech Futures), Rated: B

US banks accelerated their pace of branch closures in 2017, shutting down 2,069 locations (an 18% increase compared to 2016), according to CoStar, a US-based commercial real estate news site.

3 Industries that can benefit from alternative credit data (MicroBilt), Rated: A

Although alternative credit remains a murky, unfamiliar concept to some, its adoption is slowly but steadily spreading. Some sectors may be particularly well-positioned to benefit from its use, and businesses under those umbrellas should consider adopting them if they haven’t yet done so.

Rally Rd collects $ 2.6 mln seed (PE Hub), Rated: A

Rally Rd., A marketplace for making investments in collector cars the same way you buy & sell stock, announced that it has raised a $2.6 million seed round investment from leading venture capital firms and individual investors.

The Unconventional Way This Man Paid Off $ 70,000 in Student Loans (Student Loan Hero), Rated: A

When Ray Laureano and his wife graduated from college, they left school with a staggering amount of student loans. Between the two of them, they were over $200,000 in debt.

Ray and his wife paid off over $70,000 in just one year.

A radical debt repayment strategy

Instead, he talked to each loan servicer and entered the lower-interest loans into forbearance; in other words, he paused payments on those loans.

With his other debt payments on hold, he put all of his extra money toward just one loan with the highest interest rate. When that loan was fully paid off, he tackled the next highest-interest debt, and so on.

Ray estimates that they will be debt-free by March 2020.

Enacomm Inks Reseller Agreement with Telvoyant (GlobeNewswire), Rated: B

Data intelligence and advancements in communications technologies are helping financial institutions dramatically improve the customer self-service experience. Enacomm, Inc., a leading provider of intelligent interactions and customer authentication technologies for banks, credit unions and credit card companies, today announced a new partnership with Telvoyant, a premier telecom consulting firm providing comprehensive telecom solutions for business, non-profit organizations and government institutions. Through a reseller agreement between the two companies, Telvoyant’s bank and credit union customers will be able to take advantage of Enacomm’s VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

United Kingdom

What will RateSetter look like without unsecured business lending? (P2P Finance News), Rated: AAA

Consumer loans still make up the lion’s share of RateSetter’s £2.2bn loan book, while its commercial arm – both secured and unsecured – makes up 9.8 per cent, equating to £223.4m.

Of 2,213 commercial loans in total, including those that have been paid and repaid, 1,622 were unsecured and 591 secured as of the end of last year.

But its secured loans tend to be larger. 42.5 per cent of the value of RateSetter’s commercial loan book are listed as unsecured. This represents £95.1m worth of unsecured business loans compared with £128.2m of secured business loans.

UK Federation Of Small Businesses Says AltFin Is Just Heating Up (PYMNTS), Rated: A

The not-for-profit Federation of Small Businesses (FSB) has been a vocal proponent of faster SMB payment times, greater access to more robust banking services and tighter regulation in support of small businesses across the U.K. Most recently, the FSB announced plans to join the alternative finance world and establish the FSB Funding Platform, a marketplace lending portal through which small businesses can access funding from more than 100 lenders.

The FSB’s own research on small business finance, outlined in its Q4 FSB Voice of Small Business Index, found that fewer SMBs were concerned about their access to finance in Q4 2017 than they were in the same quarter of 2016. For the first time since Q1 2012, the FSB’s credit availability index has surpassed its credit affordability index.

And yet, according to the report, small business confidence fell into negative territory, with 73 percent of SMBs reporting a rise in the cost of doing business.

Does cutting-edge technology require a new approach to insurance? (techworld), Rated: A

Digital Risks, an insurtech startup launched in 2014, focuses solely on providing insurance to startups working in the digital, media and tech space.

“We insure things like challenger banks, peer-to-peer lending, payments, medtech, teleadvice, fraud detection, cyber security software, and sharing economy businesses,” Rose adds. “The general focus is around technology.”

Digital Risks doesn’t provide insurance itself – rather, it acts as a broker between companies and a group of about 20 different underwriters.

Lendinvest backs £12m Leeds-based PRS scheme (Specialist Lending Solutions), Rated: B

The specialist property finance lender has completed a £12.5m financing deal with KMRE Group to build 111 new homes in Kirkstall, in a private rental sector (PRS) scheme.

The whole development will be managed as a PRS scheme, and was forward sold before construction commenced to a £300bn investment management group.

International

AltFiData Predicts Strong Growth for Marketplace Lending in the US in 2018 (Lend Academy), Rated: AAA

Today, leading data analytics provider for marketplace lending, AltFiData, released the total origination numbers for the UK, Europe and the USA. They are predicting solid growth for the industry in all three regions in 2018. The new loan volume for the USA in 2018 is expected be $38.9 billion, a year on year increase of 46%.

Still, I think 46% growth is a little on the high side for the four companies covered here but I expect we will get close to those numbers. Interestingly, AltFiData is expecting the UK industry to grow at 43%, slightlty slower than the USA, and Continental Europe to grow at 73% off a much smaller base.

Investing on the Mintos Secondary Market – Hint 2 – Buying overdue loans at discount (P2P-Banking), Rated: AAA

I get a result of 349 loans with various discounts and an YTM of up to 14%. Not surprising for me, many of the loans listed at the top are Mogo loans.

Source: P2P-Banking

If these loans do pay up and then run till regular maturity date, then he recieves a yield of 12.4% to 13.8%. Decent, but not very high compared to other Mintos loans.

However there is a chance of at least 50% that these loans will default and are bought back within the next 30 days. If that happens to a loan, that a buyer bought at 0.3% discount, it will boost his yield very roughly by more 3.6% (0.3% for 30 days multiplied by 12 to get annual effect). Likely it is more because the next payment date will be less than 30 days away. But even taking 3.6% the yield will be around 17%.

The loan with the 0.6% discount would mean a boost of very rougly 7.2% yield on top (0.6*12). So that could lead to about 20% yield.

Global Venture Capital Investment Market – Top 3 Trends by Technavio (BusinessWire), Rated: A

According to Technavio analysts, the global venture capital investment market will grow at a CAGR of more than 27% during the forecast period.

The three emerging market trends driving the global venture capital investment market according to Technavio research analysts are:

  • IPO market gains momentum
  • Growing portion of new investments in China and India
  • Increased participation from mutual funds, hedge funds, and banks in the VC market

In 2017, a lot of major startups such as Cloudera, China Rapid Finance, and Okta came up with IPOs. Most of the companies issuing IPOs were technology-focused and were software and cloud service providers.

During the forecast period, the Americas was the leading venture capital investment market with a market share of more than 56%, with the US being the leading country in the region.

Source: BusinessWire

Crowdfunding – Raising Billions (BW Disrupt), Rated: B

Equity crowdfunding has also become legal in countries like United Kingdom, France, Austria, Germany, Netherlands, Australia, Hong Kong and the U.S. with President Obama legalizing the equity crowdfunding by signing the JOBS Act into law.

Source: BW Disrupt

The Crowdfunding statistics for 2017 reports a global amount raised for $34 billion, broken into $25 billion through peer-to-peer lending, $5.5 billion through reward and donation and $2.5 billion through equity crowdfunding. The projection of the crowdfunding industry is expected to grow over $300 billion by 2025.

Australia/New Zealand

Big banks, biased financial advisers, and the three tricks to avoid them (The NewDaily), Rated: AAA

This week the big banks got more bad press when the corporate regulator ASIC declared that their huge networks of financial advisers were failing to operate in the best interests of their customers.

The report, which covered the financial advice arms of the Commonwealth Bank, Westpac, ANZ, NAB and AMP, found that an astonishing 75 per cent of advice provided was not in the best interests of customers.

And in 10 per cent of cases, consumers were actually worse off than they would have been if they hadn’t got advice.

PledgeMe announces new crowdlending-inspired platform in the works (bizEDGE), Rated: A

PledgeMe has jumpstarted the year with the announcement of the launch of a new lending platform they will be offering.

The Ta Koha platform will be based on a crowdlending model in partnership with the Māori Women Development Inc (MWDI).

India

Innovative products pay off for e-lending startups (ET Rise), Rated: A

After payments, digital lending as a space is at the vanguard of innovations, driven by a clutch of startups seeking to take formal lending to a customer segment that never got easy credit from banks.

From a digital EMI card to instant personal loans and a line-of-credit product, new-age disruptors such as Stashfin, Kissht, and Antworks, along with their established peers Paysense and Moneytap, are trying to generate traction through innovative lending products. Mumbai-based Kissht is financing consumption requirements of low-income households with a digital EMI card that can be used to make payments directly.
“There are around 40 online merchant partners and 2,000 points of presence accepting the Kissht EMI card across businesses like electronic stores, furniture shops and others,” said Krishnan Vishwanathan, chief executive of Kissht. Another Delhi-based startup, Stashfin, is also targeting consumers with income levels between ?20,000 and 1 lakh per month.
Asia

W11.2tr earmarked for midrange borrowers (The Korea Herald), Rated: AAA

South Korea’s Financial Services Commission said Thursday it plans to circulate a combined 11.2 trillion won ($10.6 billion) this year for local retail borrowers that hold midrange credit scores while having trouble finding corresponding loans.

The FSC pledged to pour a combined 8 trillion won into state-run loan products sold at banks, including those designed for refinancing. The remaining 3.2 trillion won will be spent to encourage private banking institutions to develop and sell midrange loan products this year, and the volume of support is expected to gradually increase, according to the plans.

By 2022, the government’s annual financial support for five commercial banking groups — Shinhan, KB, KEB Hana, NH and Woori — will increase by 2.5 times to 2.4 trillion won from 2017, according to the plans. Direct banks Kakao Bank and K Bank received 900 billion won in 2017, and the volume will increase by 3.5 times to 3.1 trillion won in 2022.

Africa

SelfKey Receives Regulatory Sandbox License in Mauritius (Crowdfund Insider), Rated: B

SelfKey, a blockchain-based digital identity firm, has obtained a Mauritius’ Regulatory Sandbox License (RSL), according to information provided by the company. This license will allow SelfKey to develop their self-sovereign digital identity wallet and financial services marketplace under supervision and scrutiny of the Board of Investment of Mauritius.

Authors:

George Popescu
Allen Taylor

Introduction to DropDeck.io

number of platforms

Welcome to DropDeck DropDeck will revolutionize the way businesses are funded because there are so many people who are interested in becoming more involved by funding promising companies. The task becomes daunting when information about startups is abundant, but reliable information is scarce, and this situation worsens when one makes the attempt at researching companies while […]

number of platforms

Welcome to DropDeck

DropDeck will revolutionize the way businesses are funded because there are so many people who are interested in becoming more involved by funding promising companies. The task becomes daunting when information about startups is abundant, but reliable information is scarce, and this situation worsens when one makes the attempt at researching companies while they try to figure out how to integrate several independent platforms to take care of their investing needs.

From A.I. deep learning algorithms churning masses of data to the blockchain providing consistency, speed, and security, DropDeck provides the all-inclusive platform to service companies with loans and cryptocurrency funding — all securely developed with smart contracts to ensure that all funds are repaid. All of this is tied together by using a cryptocurrency, the Decentralized DropDeck (DDD) Token. The DDD Token provides a mechanism by which all of the users agree upon its value commit to a one-time action (like contributing a fund to a company) according to terms via the same smart contracts. When all parsed in a way to develop a feedback loop which rewards users for successful participation, DropDeck provides a token with growing value in a space that desperately needs consolidation.

So what is our competition providing?

While we have already discussed some of the details in terms of the specific services that our competition provides (titled “Shortfalls in investing and lending platforms”), we can outline some main points from our analysis. Approximately one-third of the available platforms provide any forms of data access about the companies therefore it is likely that a user will have to have. To lend an example, here is a breakdown in the category of investing platforms.

In the space of investing platforms we can note some disparities among the services provided between some of our competitors and to get an all around experience that one can use in their investing practices one will currently need to subscribe to several platforms. Management between multiple apps in modern times, while it is becoming second-nature, can be a real hassle when the information is about vital decisions and there’s simply no agreement among the different services offered which service to use in which circumstance. There is also no validation service (for the most part; only 4 companies offer credit scoring), which is unfortunate because this could be a way to provide a transparent relationship between all the parties involved.

DropDeck’s overview of lending platforms:

In this diagram, there is more overlap between the services, but particularly one disparity of which should be alarming to certain companies. Only one offers full support with cryptocurrency lending therefore an integration in this space would be a massive lifesaver.

DropDeck as a unifying force and unification of platform functionality

The DropDeck Platform is a unifying force in terms that it fills all the gaps left by existing lending and investing platforms as we discuss in length in our previous article. DropDeck aspires to be your ideal, all-in-one funding experience from a company first getting listed in the sea of competition and all the way down the chain to evaluations, appraisals, legal officiating by delegators, smart contract development, to funding, growing and receiving your funds and scheduled returns. The blockchain framework for DropDeck really provides an advantage in that its abilities to flawlessly integrate seemingly independent functions so that an otherwise complicated process for an end-user (using multiple clunky platforms) can be streamlined in one smooth control panel.

The fusion of investing and trust

Some companies out there charge a premium by providing evaluations but it is hard to get specifics on whether or not the evaluations have solid metrics supporting them, therefore we need a smart-system that can machine learn to provide transparent metrics based on actual human behaviors and real life outcomes, not on the intention of claims — at least not by untrusted participants. By using the DDD Token, being based in an ecosystem that will continuously grow with its users, it DropDeck provides the safest environment possible for companies and individuals of all sizes to flourish.

Integrating blockchain technology and A.I.

In the second part of our article “The Three Innovations of Drop Deck”, we explain how integrating blockchain technology with in A.I. applications equipped with machine learning abilities will drive forward better and more consistent trust scores along with fewer sunk opportunity costs. Since this wasted potential can quickly be converted to gains that grow, the market possibilities for providing funders, backers, contributors, companies, hunters, evaluators, delegators, insurers, and the many other users who may benefit from our platform is seemingly endless, the DDD Token will have yet another driver influencing its own growth. These two technologies, when properly fused, provide security and stability with a system that causes users believe in operating from the best intentions while having trust in the community at large as well as their trust in the information they’re presented.

The DDD Token is the glue that holds it all together

DropDeck’s transparency and DDD Token are continuously growing in value, and that provides a landscape for people to spend more time on the tasks they prefer over the tasks they feel pressured to complete. This focalization of work will provide a feedback process in itself for users to get better at providing the functions that they provide so that the rate at which the token’s value increases should increase as well.

If time is money: DropDeck saves both while it grows

Getting trustworthy, coherent information from solid sources that can be relied upon time after time is exceedingly rare. If DropDeck can provide the trust, then the trust causes the first amount of pressure for its growth, while other aspects of the DDD Token all feed into this big feedback loop designed to increase in value from several major avenues.

It was shown in our whitepaper that the entire market size for startups seeking funding in the landscape of lending and investing is approximately 33.3 billion USD. Out of that sum of money, let us examine a breakdown in terms of how that money ends up being allocated.

A generic breakdown suggests simply in terms of the amount of money in time spent, funders and lending companies could save up to $10 billion dollars by having all the investment information in one location on a single user interface. Narrowing down from a list of 10,000 companies to 10 companies with a few clicks using our trustworthy platform will do exactly that if the contributors and companies that participate have the capacity to spend more time acting according to their specialty.

Obviously the bulk of the lost money through investments are not due to the logistics of evaluation and convenience of information access, but can be attributed to the sunk costs into failed companies, and that can be at least partially attributed to the lack of reliable information access. If a small percentage of these companies became successes instead of failures, the market cap of saving the market $33.3 billion dollars grows substantially because, across the board the distribution of growth is spread across every participant.

Decentralized DropDeck (DDD) Token sales

Our token will open for sales and this event will take place on November 21st, 2017. The token will be made available at the best, promotional price during the first hour of the sale event. After the crowd sale of the DDD Token ends, we will have a market cap and thus eligible for a small exchange. As DropDeck users contributor, the DropDeck Token will increase in value thus growing with respect to its market cap at an accelerating rate because as the tokens value increases, more tokens will be redistributed to the DropDeck community as an incentive for their participation.

Originally published at Medium.

Monday December 11 2017, Daily News Digest

Lending Club stress test

News Comments Today’s main news: SoFi completes $769M student loan securitization. Affirm is headed to unicorn status. Funding Circle SME fund to double. Funding Circle SME Income Fund NAV, profit to rise. Zopa investors can move repayments into IFISA automatically. Harmoney says Kiwi SMEs are tapping into P2P for cash flow more. TransUnion launches Mobile Score Card in Africa. Today’s main […]

Lending Club stress test

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

MENA

Africa

News Summary

United States

SoFi Announces Completion of $ 769 Million Student Loan Securitization, Bringing Total ABS Issuance in 2017 to $ 6.9 billion (PR Newswire), Rated: AAA

SoFi announced today the closing of its $769 million offering of SoFi Private Student Loan notes (SoFi 2017-F).

The closing marked the company’s 12th ABS transaction this year, bringing its total issuance in 2017 to $6.9 billion, up from $4.2 billion in 2016.  The 2017 total includes six Student Loan ReFi and six Consumer Loan transactions.

LendingClub’s Investor Day Highlights (PeerIQ), Rated: AAA

Rep. Patrick McHenry (R-NC) sent a letter to the Cleveland Fed accusing them of using their study on peer-to-peer lending to block bill “Protecting Consumers Access to Credit Act” (H.R. 3299). The bill proposes to overturn a decision in the Madden v. Midland Funding case against the “valid when made” clause which allows sales of legally made loans in one state to parties in other states, even if the loan exceeds the interest rate cap in the state of the borrower.

Positioning and Strategy 

LendingClub doubled-down on the capital-light marketplace lending model, and emphasized the role of technology, data & analytics, and the “virtuous cycle of scale.”  LendingClub also emphasized the new product innovation on the investor side of its business – notably the Exchange Traded Product (ETP) which we think may have been lost in the immediate reaction to revised guidance.

LC sees an addressable market opportunity of $300-350 Bn in the credit card refinance and debt consolidation spaces, and a $38 Tr pool of addressable capital on the investor side of its marketplace.

LC has a two-pronged strategy to attack these markets and meet EBITDA margin goals:

  1. 2018: Focus and Invest
    1. Accelerate personal loans growth while prudently managing credit
    2. Invest in auto and leverage secured capabilities for personal loans
    3. Strengthen Investor franchise by expanding securitization and growing new structures
    4. Address legacy issues
  1. 2019-2020: Expand and Deepen
    1. Expand lead in personal loans through further data, analytics, and product and testing efforts
    2. Expand role in the borrower journey through new products and services
    3. Expand investor universe to lower cost of funds, improve resiliency, capture more value
Source: Lending Club

As seen in the chart below, LendingClub is positioning MPL loans as a new asset class that offers higher risk-adjusted returns as compared to other fixed incomealternatives, while offering lower interest rate risk. LC has delivered historical annualized loss-adjusted returns of 6.7% on its Prime loans portfolio, and 10.9% on its Near-Prime loans portfolio.

Source: LendingClub

The top question on investors’ minds remains the expected performance of MPL loans thru a recessionary scenario in the chart below, LendingClub published estimates of expected annualized charge-offs on Prime loans in a baseline scenario of 5.5%, in a moderate recession scenario of 7.9%, and in a protracted slump scenario of 11.5%.

Source: LendingClub

Why it is easier now for small businesses to go global (Born2Invest), Rated: AAA

It has become significantly easier today to run a multinational business compared to a few years ago. This is down to the increasing adaptation of technological advances to various business operations.

Markets are becoming decentralized and barriers to entry are minimal

The internet is central to the paradigm shift we have witnessed in the business environment over the last couple of decades. For instance, you do not have to live in the U.S. to sell your products or services to the Americans. Even where certain levels of certification are required, these can easily be done online thereby allowing a foreigner to obtain the required credentials for operating a business that targets American citizens. Therefore, market access is global, decentralized and without limits for anyone looking to expand exponentially.

Another thing that is influencing growth strategies among small businesses is the ease of access to financing.

Ideally, most businesses would opt for local lending. However, with the growing popularity of online-based peer-to-peer lending platforms like Lending Club, small businesses can now access financing regardless of whether they have security. But it is not as easy and straightforward as it sounds. According to National Business Capital, the process can be as tasking as trying to apply for a securitized loan with background checks and credit scores playing a crucial role.

Nonetheless, lending institutions are being pressured by the increasing number of peer-to-peer lending platforms. This has forced them to lighten up their lending requirements in a bid to increase their loan portfolios and subsequently interest incomes. In this case, we could say that technological advances and the emergence of alternative lending solutions have forced the hand of the credit market to create a more conducive environment for businesses to thrive.

Max Levchin’s lending startup is heading for unicorn territory (Axios), Rated: AAA

Affirm, the personal credit startup led by PayPal co-founder Max Levchin, has filed a stock authorization form in Delaware that would allow it to raise up to $210 million in new funding at around a $1.4 billion pre-money valuation.

How Max Levchin cofounded and built PayPal into a payments monster after 6 pivots and a bitter rivalry with Elon Musk (Business Insider), Rated: A

He now spends most of his time at Affirm, which offers small loans but doesn’t charge any penalties or fees.

 

PayPal founder talks digital payments, bitcoin (The Seattle Times), Rated: A

Q: Are digital payments progressing as quickly as you hoped since you started PayPal?

A: They are moving at a good pace, adjusted for just how large and complicated the market is. It’s highly regulated and there are a lot of things to be careful about. The elephant in the room for the last seven or eight years has been cryptocurrency.

Q: What are some of the most interesting areas of digital payments?

A: A good example is international remittances, where companies can pop up and do well. They’re the guys who figured out how to do it much cheaper and much more transparently with much lower friction to both the recipient and the sender.

Can I get my pay instantly? New payday apps give workers fast access to wages — for a price (Mic), Rated: AAA

And while many workers typically wait anywhere from once a week to once a month to get the money their company owes them, new apps from financial technology startups like DailyPay, FlexWage and PayActiv are giving workers everywhere — including at Goodwill, McDonald’s and Uber — faster access to wages, and sometimes even on the same day they clocked their hours.

Proponents like Shah say faster access to wages can motivate hourly workers to put in longer hours (since they’ll reap the rewards more quickly) and can reduce their reliance on abusive payday loans with sky-high interest rates that can leave borrowers in an unending debt cycle. Indeed, taking out a single $100 payday loan for two weeks could eat up more than $130 out of your next paycheck, once you factor in interest and fees. Repeat that every two weeks and you are down hundreds of dollars for the year — equivalent to a full month’s rent for many.

With DailyPay — which is used by hourly workers at DoorDash delivery service, the Maids residential cleaning service and Kellermeyer Bergensons Services facilities management firm — employees can access 100% of their accrued and unpaid net wages for a fee of $1 to $3 per transaction. The money can be deposited directly into their bank account or put on a prepaid card or payroll card on the same day.

Another app called Earnin lets workers withdraw up to $100 a day and $500 per pay period in advance of receiving their regular paycheck. While it charges no fees, it does give workers the option of “tipping.” The service then withdraws funds directly from your checking account after you’ve been paid.

FlexWage, for example, only lets workers tap up to 70% of their unpaid wages between regular paychecks (for a $3 to $5 fee per transaction). PayActiv gives them access to 50% of their net pay for every 30 hours worked for a $5 fee.

Instant Financial lets employees withdraw half their daily net pay every day at no cost at all: Instead they charge employers $1 per month per employee enrolled in the program.

Source: Mic

There’s an attractive way to profit from the $ 1.3 trillion student-loan bubble (Business Insider), Rated: A

According to Goldman Sachs, the outstanding student loan balance has reached $1.3 trillion in face value, about the size of the high-yield corporate-bond market. This outstanding debt is not without problems, as it delays homeownership for some millennials and cuts their disposable income.

It’s the $190 billion of outstanding loans that are held within asset-backed securities (ABS) refinanced by private lenders such as SoFi.

“Recent marketplace student loan deals have featured borrower pools with average credit scores above 770 and average borrower incomes above $160k: a very different credit profile than the government guaranteed portfolios.”

Source: Business Insider

Some lenders stand to gain as others leave auto niche (American Banker), Rated: A

The indirect auto business is in a state of transition.

TCF Financial in Wayzata, Minn., surprisingly walked away from the segment on Dec. 1, and others like Regions Financial and Fifth Third Bancorp have tapped the brakes for reasons ranging from competition and credit concerns to regulatory pressure and low yields.

Auto sales are also projected to fall by 7% this year, according to Autodata and the Bureau of Economic Analysis.

Financial Literacy Curricula for Non-Prime Consumers Should Focus on Relevant Topics, Attainable Goals (BusinessWire), Rated: A

America’s financial literacy programs may be failing the very people who need them most, according to newly released research from Elevate’s Center for the New Middle Class (CNMC). Non-prime consumers learn and retain financial education material differently than their prime peers, the research indicated.

To be most effective for a non-prime audience, financial literacy curricula should:

Be trans-media. Use different media types to deliver different messages.

Address the unique challenges of non-prime Americans. A financial wellness program will be more effective for non-prime Americans if it directly addresses their unique challenges – things like income volatility and a lack of available resources. It also needs to identify outcomes that are relevant, attainable, and meaningful to them.

Highlight the next immediate steps.

Focus on building their credit. Non-prime Americans understand that their credit scores affect every part of their financial lives and they are hyper-focused on what they can do to improve them. Anchoring a financial wellness program on credit score management can actually lead non-prime consumers to understand broader financial management principles.

Ken Rees of Elevate (Lend Academy), Rated: A

In this podcast you will learn:

  • The evolution of Ken’s career that led to the founding of Elevate.
  • The different products that Elevate offers today.
  • A profile of the typical Elevate customer.
  • How Elevate’s products help their customers’ financial situation.
  • Their typical loan terms.
  • Ken’s view of the new CFPB rules on small dollar loans.
  • How Elevate’s underwriting process works.
  • The total originations for Elevate in the US and UK.
  • The importance of data analytics in their business.
  • The percentage of customers coming to them through a mobile device.
  • How they can underwrite 95% of their loan applications in an automated way.
  • How their charge-off rates have been trending.
  • The different funding sources they use to fund these loans.
  • What their Center for the New Middle Class does.
  • How their IPO process went and what it is like being a public company.

 

Winners and Losers in the CFPB Mess (Credit Union Times), Rated: A

Winners

Payday Lenders – Like them or not, the payday lending industry was in for a huge takedown under the CFPB’s final rules that will restrict the way they do business.

Still, the industry now has a friend rather than a foe in the director’s office. And that can’t hurt for an industry that just weeks ago appeared to be headed for a major takedown.

Attorneys general call for Consumer Financial Protection Bureau independence (Lake County News), Rated: B

California Attorney General Xavier Becerra on Friday joined attorneys general from 17 other states in calling on the Trump Administration to respect the independence of the Consumer Financial Protection Bureau.

PNC to offer consumer loans through mobile devices (American Banker), Rated: A

PNC Financial Services Group plans to introduce a consumer lending product that it will market through both its mobile wallet and in new branches.

The $375 billion-asset Pittsburgh company intends for the new loan product to be available on a national scale, Chairman and CEO William Demchak said this week.

Kaplan Fox Announces Investigation of Qudian Inc. (Business Insider), Rated: A

Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating Qudian Inc. (“Qudian” or the “Company”) (NYSE:QD) on behalf of investors who purchased Qudian American Depository Shares.

On October 17, 2017, Qudian issued 37.5 million American Depository Shares at $24 per share under a Registration Statement and Prospectus filed with the U.S. Securities and Exchange Commission, for gross proceeds of $900 million.

On November 21, 2017, Chinese media sources began to reveal that the personal information of millions of Qudian customers were allegedly available for sale on the black market. On November 23, 2017Bloomberg reported that “Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.

Meet Tim Russi, President of Auto Finance at Ally Financial (Vator.TV), Rated: A

VatorNews: How is technology influencing and impacting Ally’s auto business? Why is this technology integral to the company’s future in this arena?

Tim Russi: We’re a company that’s 100 years old, and you don’t become a 100 year old company in today’s world if you don’t have the ability to reinvent yourself.

Ally operates in what we in the lending world refer to as an ‘indirect model,’ so dealers originate the loans and leases and then we purchase them from the dealers. The speed and access of the indirect model has changed significantly in the last 15 years. The industry was very disruptive in creating online portals for dealers to be able to submit applications to lenders, so the lender didn’t have to be on site to do the loans.

VN: How have you seen technology in the auto space evolve in that short amount of time? How quickly is the space changing?

TR: You look at a lot of the lending models today and they’re going direct to consumers, and we’ve even got a direct model, because as you look at digital and the consumers doing shopping online, and wanting to buy, there’s no reason they shouldn’t be able to select and purchase the vehicle and obtain financing right at the ‘point of sale.’ If the sale’s going to be online, not in the dealership, we want to make sure we’re there and then fulfillment can occur at the dealership.

VN: How has SmartAuction changed the way dealers sell and buy vehicles? What kind of ROI have you seen?

TR: SmartAuction, we actually developed in 1999 and we’ve done over 5 million transactions. We have 20,000 vehicles that are available for sale or purchase in the marketplace. It’s a wholesale marketplace so dealers can post and buy.

Notable Real Estate Trends To Watch For In 2018 (Forbes), Rated: A

3. Fractional Investing

As peer-to-peer lending and crowdfunding catch mainstream attention, folks looking for greater diversification and passive investment opportunities will engage in factional investing. The last few years have seen some extremely credible startups innovate in this space, and next year could lead to individuals moving away from sole ownership to fractional ownership via crowdfunding. – Sohin ShahInstaLend

7. On-Demand Access For Renters

We often hear from renters that they are too busy to sweat the small stuff. They want immediate tour confirmations, like booking a restaurant on OpenTable, and near-immediate confirmation that they have leased, like booking a hotel. This real-time service expectation from a new generation of renters is exactly what we plan to cater to in 2018. – Anthemos GeorgiadesZumper

Peer-To-Peer Lending : Here Are 5 Things To Know (NDTV), Rated: B

  1. P2P lending is a form of financial innovation but the concept that works behind it is the same as in the case of the banking system.
  2. Any lay investor or lender can lend money to any borrower who is registered with the P2P platform.
  3. Borrowers and lenders enter into a contract according to which they agree to the amount disbursed and the rate of interest.
  4. A borrower can raise loan at the rate of interest, which is inversely proportional to his credit score.
  5. Each P2P lending platform charges a fee for the transactions that are fructified at their platforms.

Trump says fines for Wells Fargo will not be dropped (Des Moines Register), Rated: B

President Donald Trump weighed in on an investigation into scandal-plagued Wells Fargo, tweeting Friday that fines and penalties against the bank would not be dropped, and may actually be “substantially increased.”

Trump’s statement comes a day after Reuters reported that Mick Mulvaney, the president’s budget director and now acting director of the Consumer Financial Protection Bureau, was weighing whether the bank should have to pay tens of millions in fines already levied against it for mortgage lending abuses.

United Kingdom

Funding Circle SME fund size to double following C share merger (P2P Finance News), Rated: AAA

THE FUNDING Circle SME Income Fund (FCIF) is set to double the value of its assets after announcing plans to convert its conversion shares into the ordinary portfolio on 20 December.

The investment trust, which invests in loans on the Funding Circle platform, revealed in its half-year report that the move will increase the fund’s size to around £310m.

Currently the ordinary shares are worth £165.3m and the C shares, launched in April, are worth £142.3m.

Funding Circle SME Income Fund Net Asset Value And Profit Both Rise (Morningstar), Rated: AAA

Net asset value per ordinary share was 100.55 pence per share, representing an increase in the total NAV to GBP167.0 million from GBP165.0 million at the start of the half, which ended September 30. Net asset value total return was 12%.

For the C shares, net asset value was 99.82p, having only been issued in April. These shares are due to convert to ordinary shares on December 20.

Zopa investors can now automatically move repayments into their IFISA (P2P Finance News), Rated: AAA

ZOPA investors can now automatically re-direct their repayments into their Innovative Finance ISA (IFISA).

The peer-to-peer consumer lender confirmed this week that customers can gradually move their Zopa money into the tax wrapper without having to sell loans or pay extra fees.

Moving money into the IFISA will contribute to the investor’s annual tax-free allowance, Zopa said. However, once money is in the IFISA and has been lent out, those repayments will not contribute to the IFISA allowance.

Why banks will share your financial secrets (BBC), Rated: AAA

Customers of nine of the biggest UK banks have received letters and emails in recent weeks informing them that their information can be shared, securely, with other firms. All they need to do is give their permission.

The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.

Most people stay loyal to their bank. The Competition and Markets Authority (CMA) found that only 3% of personal customers move their accounts each year.The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.

How will it work?

In practice and in time, customers will probably see a dashboard on their bank’s mobile phone app.

This will show them how much money they have in their different accounts, with different banks, and eventually how much they owe on credit cards and store cards too.

A set of computer programming rules in the UK, called Application Programming Interfaces (APIs), will ensure all these new services and banks to talk to each other.

Applications for mortgages could be dealt with more quickly, as providers and brokers could access spending history, rather than ask for printed copies of the last three months of bank statements.

Anne Boden, of mobile-only Starling Bank, says customers will be able to see exactly what they bought for lunch each day, an app could analyse the calorie levels, and then cross-check it with how much exercise that person is doing.

Customers could be bombarded with invitations to try out a new service, and could quickly lose control of their financial data, according to Mick McAteer, of the UK’s Financial Inclusion Centre.

He describes Open Banking as “a daft idea”, which will lead to more financial exclusion for those already on low incomes.

Unscrupulous individuals would be keen to access this data and use it alongside information revealed on social media to build up a complete set of personal information.

The UK needs its own version of business development companies (Financial Times), Rated: A

The great scramble for yield has seen asset managers hunt down ever more alternative sources of income. Many are starting to move into the world of shadow banking, alternative forms of lending in areas where banks are not competing for business as much as they used to.

But evidence from the US suggests that the biggest opportunity probably lies in what is called direct lending, preferably through a structure that might mimic US business development companies. These BDCs are a large and diverse universe of tax efficient, listed, closed-end funds resident in the US. Collectively they are worth at least $100bn, according to Keefe, Bruyette & Woods, the investment bank, nearly all of which has been lent to mid-market private businesses in the US — capital that has arguably helped to improve the nation’s corporate productivity and profitability. Income-hungry investors have also snapped up these funds, with average yields well over 9 per cent per year.

Direct lending companies will service the mid-market secured lending space for loans above £50m but they, in turn, lack an outlet into the public markets typically afforded by BDCs in the US.

Industry reacts to Cambridge report on alternative finance (AltFi), Rated: A

The Cambridge Centre for Alternative Finance’s report, entitled Entrenching Innovation, found the UK online alternative finance market grew 43 per cent in 2016 to £4.6bn.

“Abundance was particularly pleased to see our category (debt securities) confirmed as the fastest growing of all at 1,147 per cent year on year, with an accompanying 40 per cent increase in average deal size to £1.4m. It was also good to see hard evidence of investors in debt securities conducting their own due diligence and being comfortable with the risk/reward offers they found,” he said.

Anil Stocker, CEO and co-founder of fintech business finance firm MarketInvoice, says as awareness increases, which will be propelled by PSD2, so too will the use of alternative finance platforms.

The UK ranks top of all major developed economies for establishing new businesses (City A.M.), Rated: A

The UK outranked all other major developed economies in terms of the number of businesses established last year, according to figures from accounting group UHY Hacker Young.

It became home to 218,000 more businesses in 2016, a rise of six per cent over year-on-year. Meanwhile, other major developed economies including France, Germany, Italy, Japan and the US saw an average two per cent rise in number of businesses over the year.

FCA to change advice definition in January (FT Adviser), Rated: B

The Financial Conduct Authority has said it will introduce its new definition of advice from Wednesday 3 January.

As part of this it has amended its handbook to change the definition of financial advice, meaning only advice which offers a personal recommendation will be considered regulated.

China

Chinese Banks Face Potential Capital Shortfall, IMF Says (WSJ), Rated: AAA

Chinese banks may have insufficient capital to weather potential losses from the nation’s rapidly mounting credit risks, the International Monetary Fund said, in a broad review of China’s financial system.

With Chinese banking-sector assets, at $34.7 trillion, soaring to three times the size of China’s economic output, at $11.2 trillion, the IMF said that “holding more capital would strengthen the banking system and bolster financial stability,” according to a report on Thursday.

The IMF said China should consider boosting risk-weighted assets at its banks by 0.5% to 1% over the coming 12 months.

Source: The Wall Street Journal

 

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

LexinFintech, China’s online provider of installment-based loans has decided to conduct extra due-diligence investigation for its IPO in the US.

This week, KPMG China announced the 50 leading Fintech companies operating in China and published a related insight report.

(Note: Companies are arranged in alphabetical order based on the first letter of their Chinese name in pinyin.)

  1. Anxindeli
  2. Baidu Finance
  3. BAIFENDIAN
  4. 100credit
  5. ICE KREDIT
  6. TENPAY.COM
  7. Dianrong.com
  8. RQuest
  9. FUTUNN.COM
  10. ChinaPnR
  11. PING ++
  12. 3GOLDEN
  13. JFZ.COM
  14. JD Finance
  15. Juxinli
  16. QUARK FINANCE
  17. 99Bill
  18. Tigerbrokers
  19. QuantGroup
  20. LENGJING INFO
  21. LU.com
  22. Ideacome
  23. MSXF
  24. Ant Financial
  25. PINTEC
  26. QFPAY
  27. Qudian
  28. UCREDIT
  29. Rong360
  30. Wecash
  31. ChinaScope
  32. BBD
  33. Souyidai
  34. Suanhua Credit
  35. Feidee
  36. Taiyiyun
  37. TalkingData
  38. Tcredit
  39. Beagle Data
  40. Tong Dun
  41. Wacai
  42. Wei Zhong Shui Yin
  43. WeBank
  44. WeLab
  45. u51.com
  46. Onchain
  47. Hcspark.com
  48. Zipeiyi
  49. Zhongan Insurance
  50. Zuihuibao

New guidelines for banks to support P2P lending (Taipei Times), Rated: A

The Financial Supervisory Commission on Thursday gave its nod to guidelines on collaborations between peer-to-peer (P2P) lending platforms and commercial banks, in a move to support the development of emerging financial services.

Under the guidelines, banks may provide custodian and trust account services to P2P platforms, as well as transaction processing to meet rules against collection of deposits by non-bank entities, the commission said.

However, banks are barred from making recommendations on decisions about loan approval, interest rates and principal amounts.

The guidelines also regulate the so-called peer-to-bank (P2B) model, where banks participate as lenders on P2P platforms.

CreditEase’s CEO Ning Tang spoke about FinTech and innovation at Fortune Global Forum (Business Insider), Rate: A

Ning Tang, Founder and CEO of CreditEase, attended the 2017 Fortune Global Forum on December 6-8 in Guangzhou. With the theme of “Openness & Innovation: Shaping the Global Economy,” the Global Forum convened world leaders, senior executives and prestigious scholars to discuss the dynamic frontiers of international commerce.

Tang stated that the Chinese FinTech industry still sees great potential in the coming decade represented by development in applications such as microloans for SMEs, crowdfunding, robo-advisory, insurance technology, and blockchain products and services.

India’s FDI climate good for China investment (China Business Law Journal), Rated: A

Mumbai-based fintech start-up Kissht recently raised US$10 million in funding primarily from Fosun International, a Chinese investment consortium. The Krishnamurthy & Co team acted for and represented Kissht and its owner OnEMI Technology Solutions, led by Mumbai-based partner Sanket Sethia and associate Vwastav Ghosh.

European Union

Moody’s highlights improving performance for European SME ABS next year (FTSE Global Markets), Rated: AAA

The performance of small and medium-sized enterprise (SME) asset-backed securities (ABS) will remain stable across all major markets in Europe and issuance volumes will likely increase slightly, according to the 2018 outlook for European SME ABS from Moody’s. However, emerging political risks have created some uncertainty in affected markets, with a limited effect on securitised deals in the United Kingdom (UK), and potentially negative effects in Spain.

Billie Raises €10m Series A (LendIt), Rated: A

Billie is an invoice finance platform that launched earlier this year; the round was led by Creandum with participation from existing investors Speedinvest and Global Founders Capital; the company focuses on complete automation with no human interaction; It was co-founded by Matthias Knecht and Christian Grobe; Billie also secured a refinancing facility from a major German bank.

International

Regulated Crypto Platform Plays By the Rules and Disrupts Trading Model (Coin Telegraph), Rated: A

Trade.io’s solution is to develop an exchange platform for the sharing economy where traders can not only exchange tokens, crypto and fiat currencies and other assets but also share in the risk and revenue of the liquidity pool. To participate in the liquidity pool, members buy 2,500 Trade Tokens secured by financial assets in their trade.io wallets. Crypto and fiat currencies are accepted as collateral.

Trade Token owners share in 50 percent of the gains or losses of the liquidity pool, which are distributed to the wallets of pool participants. Besides trading fees and commissions, revenue is earned from investment banking and P2P lending fees.

Australia/New Zealand

Harmoney Reports Increase in Kiwi SMEs That Are Tapping into P2P Lending for Business Cashflow (Crowdfund Insider), Rated: AAA

Earlier this week, Harmoney announced there has been an increase in Kiwi SMEs that are tapping into peer-to-peer (P2P) lending for business cashflow.

The New Zealand online lender stated it estimates $100 million will be loaned to business accounts through its lending platform within the next six to twelve months. Currently, the average loan amount for business cashflow on its platform is $25,000.

Sydney fintech Avoka raises $ 16m in Roger Allen-led round (Financial Review), Rated: A

Avoka Technologies, a fast-growing Sydney-based provider of customer acquisition services to financial institutions, has raised $16 million from investors, including prominent venture capitalist Roger Allen, as offshore revenue rises above 75 per cent and the headcount moves towards 300.

Avoka offers a software-as-a-service platform called Transact, which claims to enable institutions to launch new digital products in weeks rather than months, and monitors customer interaction with them once established.

BankWest’s mobile banking app was built on Avoka, while Mr Copeland said HSBC was about to launch new credit cards whose customer interface was developed through the platform.

Asia

Crowdcredit, Inc from Japan (Makoto UJIKE Email), Rated: AAA

Crowdcredit is a cross border online lending platform, which raises funds from Japanese investors and finances overseas financial institutions, SMEs, or individuals.

Crowdcredit, Inc. announced its completion of appx. USD3.5mn financing mainly from Femto Partners, one of the most influential venture capitals in Japan.

Crowdcredit track record;

  • – Established in January 2013
  • – Started raising funds since June 2014,
  • – Finances financial institutions, SMEs, or consumers in Peru, Cameroon, Estonia, Finland, Spain, Latvia, Lithuania, Georgia, etc.,
  • – Has registered investment user of 8,000+
  • – Has issued funds in total US$ 45.5mm, and
  • – Issues funds of US$ 4mm monthly with increasing trend.
Source: Crowdcredit
Source: Crowdcredit
Source: Crowdcredit

Learn more about Crowdcredit here.

Crowd-lending platform New Union awarded CMS license (The Edge Markets), Rated: A

Crowd-lending platform New Union has been awarded the full Capital Markets Service license (CMS) by the Monetary Authority of Singapore (MAS), and announced a potential deal flow pipeline of about S$2 million to be launched soon.

P2P lending platform Validus Capital gets licence to deal in securities in Singapore (Business Times), Rated: A

VALIDUS Capital announced on Monday that it has been awarded a full Capital Markets Services (CMS) licence by the Monetary Authority of Singapore (MAS), to deal in securities – a move that may give Singapore’s small and medium-sized enterprises (SMEs) more access to financing opportunities.

Singapore banks can save over 10% from fintech (SBR.com.sg), Rated: A

Moreover, about 41% of banked balance has now abandoned traditional channels.

MAS estimates fintech payments already takes up 20-50% of household consumption if the probability of payments disintermediation is high in the next five years.

A majority of 56% of the banked population is also willing to shift their savings into a pure play digital bank. An average of 41% of total balance has already been shifted.

Equity crowdfunding and peer-to-peer lending (The Star), Rated: B

Equity crowdfunding has become an increasingly popular way for early-stage and early-growth companies to tap investors attracted by the potential for high returns. An investor who has spent the last couple of years lamenting over the lacklustre performance of his stocks sees ECF as an investment channel that claims to offer even better returns.

P2P investing is garnering a lot of interest from would-be investors who are looking for something different and better than banks’ fixed deposits.

ECF means investing in very early stage businesses and as such, there are inherent risks to be aware of such as the likelihood of bankruptcy, in which case, you will not be able to recover your original investment.

With P2P investing, the most obvious risk that comes attached is of course the possibility of the borrower defaulting on the debt. As the reasons for not being able to repay the loan are typically financial, any subsequent attempts to recover your investment may prove futile if the business indeed has gone under.

Key tips to investing

1. Know where ECF and P2P stands in your strategic asset allocation.

2. Ensure you are investing in best of breed by comparing apple to apple when it comes to risk versus returns.

a) Ensure the platform is approved by SC.

b) Research each scheme on the platform as not every one is the same.

c) Read the fine print in the platform operator’s agreement and know the rights and liabilities of each party. Pay particular attention to the risk warnings in the agreement with regards to potential loss of invested capital and the unsecured nature of the investment (for P2P).

3. Diversification is key.

4. Monitor how your investments are performing.

5. Consider the time required before you see your investments come to fruition.

MENA

New Amendment To Address Reward-Based Crowdfunding And What To Expect (Mondaq), Rated: AAA

A new omnibus code that amends, amongst others, the Capital Markets Code (“CMC“) has been enacted by the Turkish parliament and published in the Official Gazette on 5 December 2017.

The CMC amendment primarily refers to reward-based crowdfunding (i.e. receipt of goods, reward or pre-sales in return or investment-based or loan-based crowdfunding) while donation-based crowdfunding where the investor donates the money with no return is still subject to aid and donations legislation. The said amendment limits crowdfunding to project or venture financing and only through crowdfunding platforms that are prior-recognised by the Capital Markets Board (“Board“).

Crowdfunding platforms can only operate in Turkey once they obtain the necessary permission from the Board.

Fintech Is The New Oil In The Middle East And North Africa (Forbes), Rated: AAA

Over the past decade, fintech startups in the region have raised over $100 million in funding, and investment is predicted to double by 2020, according to the State of Fintech report. Disclosed investment infintech had jumped 100% to over $35 million by October 2017 — Paytabs ($20million), Souqalmal ($10 million) and Beehive ($5 million) — compared to $18 million last year. The number of fintech startups also increased from 46 in 2013 to 105 in 2015. It is estimated that it will more than double again to 250 by 2020, according to the report.

Aside from the fact that the sector encompasses every tech startup active within the financial services industry, beyond the ones that specialize in online payments or money transfers, e-commerce in the region is set to quadrupleuntil the end of this decade. Additionally, despite the ubiquity of smartphones and internet connectivity, 86% of the adult population in the region is unbanked, while three in four GCC bank customers are ready to switch banks for a better digital experience.

Boosting financial inclusion is crucial for economic diversity and growth across the region. Moussa Beidas, co-founder of Dubai-based startup Bridg, which allows smartphone-to-smartphone payments using bluetooth, says fintech has become an innovative way to bridge the divide and provide cheaper services to the unbanked.

Significant banking changes due to tech innovation (Gulf News), Rated: A

The rapid advancement in innovation is transforming the financial services industry, especially the banks, as technology has become an integral part of the business strategy — from initially being just an enabler to now actually streamlining operating processes.

The Middle East has amassed more than $100 million (Dh367 million) in FinTech start-up funding in the past ten years, with 105 FinTech start-ups launching in 2016, with hopes to raise $50 million in funding by the end of 2017.

Banks in the UAE remain the trendsetters, although other GCC countries are not lagging far behind, with several banks in the region embracing FinTech in many different ways.

Africa

TransUnion launches Mobile Score Card solution (IT Web Africa), Rated: AAA

Data firm TransUnion has launched Mobile Score Card, a mobile loan information service that enables lending firms to access a loan applicant’s credit status.

Mobile Score Card is a database solution that continually ‘learns’ based on mobile transactional history.

It also provides mobile lenders with customisable and reliable risk view of the mobile loans. The product targets banks with mobile lending solutions, savings and credit cooperative organisation and independent mobile lenders.

Authors:

George Popescu
Allen Taylor

Monday December 11 2017, Daily News Digest

Monday December 11 2017, Daily News Digest

News Comments Today’s main news: SoFi completes $769M student loan securitization. Affirm is headed to unicorn status. Funding Circle SME fund to double. Funding Circle SME Income Fund NAV, profit to rise. Zopa investors can move repayments into IFISA automatically. Harmoney says Kiwi SMEs are tapping into P2P for cash flow more. TransUnion launches Mobile Score Card in Africa. Today’s main […]

Monday December 11 2017, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

MENA

Africa

News Summary

United States

SoFi Announces Completion of $ 769 Million Student Loan Securitization, Bringing Total ABS Issuance in 2017 to $ 6.9 billion (PR Newswire), Rated: AAA

SoFi announced today the closing of its $769 million offering of SoFi Private Student Loan notes (SoFi 2017-F).

The closing marked the company’s 12th ABS transaction this year, bringing its total issuance in 2017 to $6.9 billion, up from $4.2 billion in 2016.  The 2017 total includes six Student Loan ReFi and six Consumer Loan transactions.

LendingClub’s Investor Day Highlights (PeerIQ), Rated: AAA

Rep. Patrick McHenry (R-NC) sent a letter to the Cleveland Fed accusing them of using their study on peer-to-peer lending to block bill “Protecting Consumers Access to Credit Act” (H.R. 3299). The bill proposes to overturn a decision in the Madden v. Midland Funding case against the “valid when made” clause which allows sales of legally made loans in one state to parties in other states, even if the loan exceeds the interest rate cap in the state of the borrower.

Positioning and Strategy 

LendingClub doubled-down on the capital-light marketplace lending model, and emphasized the role of technology, data & analytics, and the “virtuous cycle of scale.”  LendingClub also emphasized the new product innovation on the investor side of its business – notably the Exchange Traded Product (ETP) which we think may have been lost in the immediate reaction to revised guidance.

LC sees an addressable market opportunity of $300-350 Bn in the credit card refinance and debt consolidation spaces, and a $38 Tr pool of addressable capital on the investor side of its marketplace.

LC has a two-pronged strategy to attack these markets and meet EBITDA margin goals:

  1. 2018: Focus and Invest
    1. Accelerate personal loans growth while prudently managing credit
    2. Invest in auto and leverage secured capabilities for personal loans
    3. Strengthen Investor franchise by expanding securitization and growing new structures
    4. Address legacy issues
  1. 2019-2020: Expand and Deepen
    1. Expand lead in personal loans through further data, analytics, and product and testing efforts
    2. Expand role in the borrower journey through new products and services
    3. Expand investor universe to lower cost of funds, improve resiliency, capture more value
Source: Lending Club

As seen in the chart below, LendingClub is positioning MPL loans as a new asset class that offers higher risk-adjusted returns as compared to other fixed incomealternatives, while offering lower interest rate risk. LC has delivered historical annualized loss-adjusted returns of 6.7% on its Prime loans portfolio, and 10.9% on its Near-Prime loans portfolio.

Source: LendingClub

The top question on investors’ minds remains the expected performance of MPL loans thru a recessionary scenario in the chart below, LendingClub published estimates of expected annualized charge-offs on Prime loans in a baseline scenario of 5.5%, in a moderate recession scenario of 7.9%, and in a protracted slump scenario of 11.5%.

Source: LendingClub

Why it is easier now for small businesses to go global (Born2Invest), Rated: AAA

It has become significantly easier today to run a multinational business compared to a few years ago. This is down to the increasing adaptation of technological advances to various business operations.

Markets are becoming decentralized and barriers to entry are minimal

The internet is central to the paradigm shift we have witnessed in the business environment over the last couple of decades. For instance, you do not have to live in the U.S. to sell your products or services to the Americans. Even where certain levels of certification are required, these can easily be done online thereby allowing a foreigner to obtain the required credentials for operating a business that targets American citizens. Therefore, market access is global, decentralized and without limits for anyone looking to expand exponentially.

Another thing that is influencing growth strategies among small businesses is the ease of access to financing.

Ideally, most businesses would opt for local lending. However, with the growing popularity of online-based peer-to-peer lending platforms like Lending Club, small businesses can now access financing regardless of whether they have security. But it is not as easy and straightforward as it sounds. According to National Business Capital, the process can be as tasking as trying to apply for a securitized loan with background checks and credit scores playing a crucial role.

Nonetheless, lending institutions are being pressured by the increasing number of peer-to-peer lending platforms. This has forced them to lighten up their lending requirements in a bid to increase their loan portfolios and subsequently interest incomes. In this case, we could say that technological advances and the emergence of alternative lending solutions have forced the hand of the credit market to create a more conducive environment for businesses to thrive.

Max Levchin’s lending startup is heading for unicorn territory (Axios), Rated: AAA

Affirm, the personal credit startup led by PayPal co-founder Max Levchin, has filed a stock authorization form in Delaware that would allow it to raise up to $210 million in new funding at around a $1.4 billion pre-money valuation.

How Max Levchin cofounded and built PayPal into a payments monster after 6 pivots and a bitter rivalry with Elon Musk (Business Insider), Rated: A

He now spends most of his time at Affirm, which offers small loans but doesn’t charge any penalties or fees.

 

PayPal founder talks digital payments, bitcoin (The Seattle Times), Rated: A

Q: Are digital payments progressing as quickly as you hoped since you started PayPal?

A: They are moving at a good pace, adjusted for just how large and complicated the market is. It’s highly regulated and there are a lot of things to be careful about. The elephant in the room for the last seven or eight years has been cryptocurrency.

Q: What are some of the most interesting areas of digital payments?

A: A good example is international remittances, where companies can pop up and do well. They’re the guys who figured out how to do it much cheaper and much more transparently with much lower friction to both the recipient and the sender.

Can I get my pay instantly? New payday apps give workers fast access to wages — for a price (Mic), Rated: AAA

And while many workers typically wait anywhere from once a week to once a month to get the money their company owes them, new apps from financial technology startups like DailyPay, FlexWage and PayActiv are giving workers everywhere — including at Goodwill, McDonald’s and Uber — faster access to wages, and sometimes even on the same day they clocked their hours.

Proponents like Shah say faster access to wages can motivate hourly workers to put in longer hours (since they’ll reap the rewards more quickly) and can reduce their reliance on abusive payday loans with sky-high interest rates that can leave borrowers in an unending debt cycle. Indeed, taking out a single $100 payday loan for two weeks could eat up more than $130 out of your next paycheck, once you factor in interest and fees. Repeat that every two weeks and you are down hundreds of dollars for the year — equivalent to a full month’s rent for many.

With DailyPay — which is used by hourly workers at DoorDash delivery service, the Maids residential cleaning service and Kellermeyer Bergensons Services facilities management firm — employees can access 100% of their accrued and unpaid net wages for a fee of $1 to $3 per transaction. The money can be deposited directly into their bank account or put on a prepaid card or payroll card on the same day.

Another app called Earnin lets workers withdraw up to $100 a day and $500 per pay period in advance of receiving their regular paycheck. While it charges no fees, it does give workers the option of “tipping.” The service then withdraws funds directly from your checking account after you’ve been paid.

FlexWage, for example, only lets workers tap up to 70% of their unpaid wages between regular paychecks (for a $3 to $5 fee per transaction). PayActiv gives them access to 50% of their net pay for every 30 hours worked for a $5 fee.

Instant Financial lets employees withdraw half their daily net pay every day at no cost at all: Instead they charge employers $1 per month per employee enrolled in the program.

Source: Mic

There’s an attractive way to profit from the $ 1.3 trillion student-loan bubble (Business Insider), Rated: A

According to Goldman Sachs, the outstanding student loan balance has reached $1.3 trillion in face value, about the size of the high-yield corporate-bond market. This outstanding debt is not without problems, as it delays homeownership for some millennials and cuts their disposable income.

It’s the $190 billion of outstanding loans that are held within asset-backed securities (ABS) refinanced by private lenders such as SoFi.

“Recent marketplace student loan deals have featured borrower pools with average credit scores above 770 and average borrower incomes above $160k: a very different credit profile than the government guaranteed portfolios.”

Source: Business Insider

Some lenders stand to gain as others leave auto niche (American Banker), Rated: A

The indirect auto business is in a state of transition.

TCF Financial in Wayzata, Minn., surprisingly walked away from the segment on Dec. 1, and others like Regions Financial and Fifth Third Bancorp have tapped the brakes for reasons ranging from competition and credit concerns to regulatory pressure and low yields.

Auto sales are also projected to fall by 7% this year, according to Autodata and the Bureau of Economic Analysis.

Financial Literacy Curricula for Non-Prime Consumers Should Focus on Relevant Topics, Attainable Goals (BusinessWire), Rated: A

America’s financial literacy programs may be failing the very people who need them most, according to newly released research from Elevate’s Center for the New Middle Class (CNMC). Non-prime consumers learn and retain financial education material differently than their prime peers, the research indicated.

To be most effective for a non-prime audience, financial literacy curricula should:

Be trans-media. Use different media types to deliver different messages.

Address the unique challenges of non-prime Americans. A financial wellness program will be more effective for non-prime Americans if it directly addresses their unique challenges – things like income volatility and a lack of available resources. It also needs to identify outcomes that are relevant, attainable, and meaningful to them.

Highlight the next immediate steps.

Focus on building their credit. Non-prime Americans understand that their credit scores affect every part of their financial lives and they are hyper-focused on what they can do to improve them. Anchoring a financial wellness program on credit score management can actually lead non-prime consumers to understand broader financial management principles.

Ken Rees of Elevate (Lend Academy), Rated: A

In this podcast you will learn:

  • The evolution of Ken’s career that led to the founding of Elevate.
  • The different products that Elevate offers today.
  • A profile of the typical Elevate customer.
  • How Elevate’s products help their customers’ financial situation.
  • Their typical loan terms.
  • Ken’s view of the new CFPB rules on small dollar loans.
  • How Elevate’s underwriting process works.
  • The total originations for Elevate in the US and UK.
  • The importance of data analytics in their business.
  • The percentage of customers coming to them through a mobile device.
  • How they can underwrite 95% of their loan applications in an automated way.
  • How their charge-off rates have been trending.
  • The different funding sources they use to fund these loans.
  • What their Center for the New Middle Class does.
  • How their IPO process went and what it is like being a public company.

 

Winners and Losers in the CFPB Mess (Credit Union Times), Rated: A

Winners

Payday Lenders – Like them or not, the payday lending industry was in for a huge takedown under the CFPB’s final rules that will restrict the way they do business.

Still, the industry now has a friend rather than a foe in the director’s office. And that can’t hurt for an industry that just weeks ago appeared to be headed for a major takedown.

Attorneys general call for Consumer Financial Protection Bureau independence (Lake County News), Rated: B

California Attorney General Xavier Becerra on Friday joined attorneys general from 17 other states in calling on the Trump Administration to respect the independence of the Consumer Financial Protection Bureau.

PNC to offer consumer loans through mobile devices (American Banker), Rated: A

PNC Financial Services Group plans to introduce a consumer lending product that it will market through both its mobile wallet and in new branches.

The $375 billion-asset Pittsburgh company intends for the new loan product to be available on a national scale, Chairman and CEO William Demchak said this week.

Kaplan Fox Announces Investigation of Qudian Inc. (Business Insider), Rated: A

Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating Qudian Inc. (“Qudian” or the “Company”) (NYSE:QD) on behalf of investors who purchased Qudian American Depository Shares.

On October 17, 2017, Qudian issued 37.5 million American Depository Shares at $24 per share under a Registration Statement and Prospectus filed with the U.S. Securities and Exchange Commission, for gross proceeds of $900 million.

On November 21, 2017, Chinese media sources began to reveal that the personal information of millions of Qudian customers were allegedly available for sale on the black market. On November 23, 2017Bloomberg reported that “Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.

Meet Tim Russi, President of Auto Finance at Ally Financial (Vator.TV), Rated: A

VatorNews: How is technology influencing and impacting Ally’s auto business? Why is this technology integral to the company’s future in this arena?

Tim Russi: We’re a company that’s 100 years old, and you don’t become a 100 year old company in today’s world if you don’t have the ability to reinvent yourself.

Ally operates in what we in the lending world refer to as an ‘indirect model,’ so dealers originate the loans and leases and then we purchase them from the dealers. The speed and access of the indirect model has changed significantly in the last 15 years. The industry was very disruptive in creating online portals for dealers to be able to submit applications to lenders, so the lender didn’t have to be on site to do the loans.

VN: How have you seen technology in the auto space evolve in that short amount of time? How quickly is the space changing?

TR: You look at a lot of the lending models today and they’re going direct to consumers, and we’ve even got a direct model, because as you look at digital and the consumers doing shopping online, and wanting to buy, there’s no reason they shouldn’t be able to select and purchase the vehicle and obtain financing right at the ‘point of sale.’ If the sale’s going to be online, not in the dealership, we want to make sure we’re there and then fulfillment can occur at the dealership.

VN: How has SmartAuction changed the way dealers sell and buy vehicles? What kind of ROI have you seen?

TR: SmartAuction, we actually developed in 1999 and we’ve done over 5 million transactions. We have 20,000 vehicles that are available for sale or purchase in the marketplace. It’s a wholesale marketplace so dealers can post and buy.

Notable Real Estate Trends To Watch For In 2018 (Forbes), Rated: A

3. Fractional Investing

As peer-to-peer lending and crowdfunding catch mainstream attention, folks looking for greater diversification and passive investment opportunities will engage in factional investing. The last few years have seen some extremely credible startups innovate in this space, and next year could lead to individuals moving away from sole ownership to fractional ownership via crowdfunding. – Sohin ShahInstaLend

7. On-Demand Access For Renters

We often hear from renters that they are too busy to sweat the small stuff. They want immediate tour confirmations, like booking a restaurant on OpenTable, and near-immediate confirmation that they have leased, like booking a hotel. This real-time service expectation from a new generation of renters is exactly what we plan to cater to in 2018. – Anthemos GeorgiadesZumper

Peer-To-Peer Lending : Here Are 5 Things To Know (NDTV), Rated: B

  1. P2P lending is a form of financial innovation but the concept that works behind it is the same as in the case of the banking system.
  2. Any lay investor or lender can lend money to any borrower who is registered with the P2P platform.
  3. Borrowers and lenders enter into a contract according to which they agree to the amount disbursed and the rate of interest.
  4. A borrower can raise loan at the rate of interest, which is inversely proportional to his credit score.
  5. Each P2P lending platform charges a fee for the transactions that are fructified at their platforms.

Trump says fines for Wells Fargo will not be dropped (Des Moines Register), Rated: B

President Donald Trump weighed in on an investigation into scandal-plagued Wells Fargo, tweeting Friday that fines and penalties against the bank would not be dropped, and may actually be “substantially increased.”

Trump’s statement comes a day after Reuters reported that Mick Mulvaney, the president’s budget director and now acting director of the Consumer Financial Protection Bureau, was weighing whether the bank should have to pay tens of millions in fines already levied against it for mortgage lending abuses.

United Kingdom

Funding Circle SME fund size to double following C share merger (P2P Finance News), Rated: AAA

THE FUNDING Circle SME Income Fund (FCIF) is set to double the value of its assets after announcing plans to convert its conversion shares into the ordinary portfolio on 20 December.

The investment trust, which invests in loans on the Funding Circle platform, revealed in its half-year report that the move will increase the fund’s size to around £310m.

Currently the ordinary shares are worth £165.3m and the C shares, launched in April, are worth £142.3m.

Funding Circle SME Income Fund Net Asset Value And Profit Both Rise (Morningstar), Rated: AAA

Net asset value per ordinary share was 100.55 pence per share, representing an increase in the total NAV to GBP167.0 million from GBP165.0 million at the start of the half, which ended September 30. Net asset value total return was 12%.

For the C shares, net asset value was 99.82p, having only been issued in April. These shares are due to convert to ordinary shares on December 20.

Zopa investors can now automatically move repayments into their IFISA (P2P Finance News), Rated: AAA

ZOPA investors can now automatically re-direct their repayments into their Innovative Finance ISA (IFISA).

The peer-to-peer consumer lender confirmed this week that customers can gradually move their Zopa money into the tax wrapper without having to sell loans or pay extra fees.

Moving money into the IFISA will contribute to the investor’s annual tax-free allowance, Zopa said. However, once money is in the IFISA and has been lent out, those repayments will not contribute to the IFISA allowance.

Why banks will share your financial secrets (BBC), Rated: AAA

Customers of nine of the biggest UK banks have received letters and emails in recent weeks informing them that their information can be shared, securely, with other firms. All they need to do is give their permission.

The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.

Most people stay loyal to their bank. The Competition and Markets Authority (CMA) found that only 3% of personal customers move their accounts each year.The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.

How will it work?

In practice and in time, customers will probably see a dashboard on their bank’s mobile phone app.

This will show them how much money they have in their different accounts, with different banks, and eventually how much they owe on credit cards and store cards too.

A set of computer programming rules in the UK, called Application Programming Interfaces (APIs), will ensure all these new services and banks to talk to each other.

Applications for mortgages could be dealt with more quickly, as providers and brokers could access spending history, rather than ask for printed copies of the last three months of bank statements.

Anne Boden, of mobile-only Starling Bank, says customers will be able to see exactly what they bought for lunch each day, an app could analyse the calorie levels, and then cross-check it with how much exercise that person is doing.

Customers could be bombarded with invitations to try out a new service, and could quickly lose control of their financial data, according to Mick McAteer, of the UK’s Financial Inclusion Centre.

He describes Open Banking as “a daft idea”, which will lead to more financial exclusion for those already on low incomes.

Unscrupulous individuals would be keen to access this data and use it alongside information revealed on social media to build up a complete set of personal information.

The UK needs its own version of business development companies (Financial Times), Rated: A

The great scramble for yield has seen asset managers hunt down ever more alternative sources of income. Many are starting to move into the world of shadow banking, alternative forms of lending in areas where banks are not competing for business as much as they used to.

But evidence from the US suggests that the biggest opportunity probably lies in what is called direct lending, preferably through a structure that might mimic US business development companies. These BDCs are a large and diverse universe of tax efficient, listed, closed-end funds resident in the US. Collectively they are worth at least $100bn, according to Keefe, Bruyette & Woods, the investment bank, nearly all of which has been lent to mid-market private businesses in the US — capital that has arguably helped to improve the nation’s corporate productivity and profitability. Income-hungry investors have also snapped up these funds, with average yields well over 9 per cent per year.

Direct lending companies will service the mid-market secured lending space for loans above £50m but they, in turn, lack an outlet into the public markets typically afforded by BDCs in the US.

Industry reacts to Cambridge report on alternative finance (AltFi), Rated: A

The Cambridge Centre for Alternative Finance’s report, entitled Entrenching Innovation, found the UK online alternative finance market grew 43 per cent in 2016 to £4.6bn.

“Abundance was particularly pleased to see our category (debt securities) confirmed as the fastest growing of all at 1,147 per cent year on year, with an accompanying 40 per cent increase in average deal size to £1.4m. It was also good to see hard evidence of investors in debt securities conducting their own due diligence and being comfortable with the risk/reward offers they found,” he said.

Anil Stocker, CEO and co-founder of fintech business finance firm MarketInvoice, says as awareness increases, which will be propelled by PSD2, so too will the use of alternative finance platforms.

The UK ranks top of all major developed economies for establishing new businesses (City A.M.), Rated: A

The UK outranked all other major developed economies in terms of the number of businesses established last year, according to figures from accounting group UHY Hacker Young.

It became home to 218,000 more businesses in 2016, a rise of six per cent over year-on-year. Meanwhile, other major developed economies including France, Germany, Italy, Japan and the US saw an average two per cent rise in number of businesses over the year.

FCA to change advice definition in January (FT Adviser), Rated: B

The Financial Conduct Authority has said it will introduce its new definition of advice from Wednesday 3 January.

As part of this it has amended its handbook to change the definition of financial advice, meaning only advice which offers a personal recommendation will be considered regulated.

China

Chinese Banks Face Potential Capital Shortfall, IMF Says (WSJ), Rated: AAA

Chinese banks may have insufficient capital to weather potential losses from the nation’s rapidly mounting credit risks, the International Monetary Fund said, in a broad review of China’s financial system.

With Chinese banking-sector assets, at $34.7 trillion, soaring to three times the size of China’s economic output, at $11.2 trillion, the IMF said that “holding more capital would strengthen the banking system and bolster financial stability,” according to a report on Thursday.

The IMF said China should consider boosting risk-weighted assets at its banks by 0.5% to 1% over the coming 12 months.

Source: The Wall Street Journal

 

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

LexinFintech, China’s online provider of installment-based loans has decided to conduct extra due-diligence investigation for its IPO in the US.

This week, KPMG China announced the 50 leading Fintech companies operating in China and published a related insight report.

(Note: Companies are arranged in alphabetical order based on the first letter of their Chinese name in pinyin.)

  1. Anxindeli
  2. Baidu Finance
  3. BAIFENDIAN
  4. 100credit
  5. ICE KREDIT
  6. TENPAY.COM
  7. Dianrong.com
  8. RQuest
  9. FUTUNN.COM
  10. ChinaPnR
  11. PING ++
  12. 3GOLDEN
  13. JFZ.COM
  14. JD Finance
  15. Juxinli
  16. QUARK FINANCE
  17. 99Bill
  18. Tigerbrokers
  19. QuantGroup
  20. LENGJING INFO
  21. LU.com
  22. Ideacome
  23. MSXF
  24. Ant Financial
  25. PINTEC
  26. QFPAY
  27. Qudian
  28. UCREDIT
  29. Rong360
  30. Wecash
  31. ChinaScope
  32. BBD
  33. Souyidai
  34. Suanhua Credit
  35. Feidee
  36. Taiyiyun
  37. TalkingData
  38. Tcredit
  39. Beagle Data
  40. Tong Dun
  41. Wacai
  42. Wei Zhong Shui Yin
  43. WeBank
  44. WeLab
  45. u51.com
  46. Onchain
  47. Hcspark.com
  48. Zipeiyi
  49. Zhongan Insurance
  50. Zuihuibao

New guidelines for banks to support P2P lending (Taipei Times), Rated: A

The Financial Supervisory Commission on Thursday gave its nod to guidelines on collaborations between peer-to-peer (P2P) lending platforms and commercial banks, in a move to support the development of emerging financial services.

Under the guidelines, banks may provide custodian and trust account services to P2P platforms, as well as transaction processing to meet rules against collection of deposits by non-bank entities, the commission said.

However, banks are barred from making recommendations on decisions about loan approval, interest rates and principal amounts.

The guidelines also regulate the so-called peer-to-bank (P2B) model, where banks participate as lenders on P2P platforms.

CreditEase’s CEO Ning Tang spoke about FinTech and innovation at Fortune Global Forum (Business Insider), Rate: A

Ning Tang, Founder and CEO of CreditEase, attended the 2017 Fortune Global Forum on December 6-8 in Guangzhou. With the theme of “Openness & Innovation: Shaping the Global Economy,” the Global Forum convened world leaders, senior executives and prestigious scholars to discuss the dynamic frontiers of international commerce.

Tang stated that the Chinese FinTech industry still sees great potential in the coming decade represented by development in applications such as microloans for SMEs, crowdfunding, robo-advisory, insurance technology, and blockchain products and services.

India’s FDI climate good for China investment (China Business Law Journal), Rated: A

Mumbai-based fintech start-up Kissht recently raised US$10 million in funding primarily from Fosun International, a Chinese investment consortium. The Krishnamurthy & Co team acted for and represented Kissht and its owner OnEMI Technology Solutions, led by Mumbai-based partner Sanket Sethia and associate Vwastav Ghosh.

European Union

Moody’s highlights improving performance for European SME ABS next year (FTSE Global Markets), Rated: AAA

The performance of small and medium-sized enterprise (SME) asset-backed securities (ABS) will remain stable across all major markets in Europe and issuance volumes will likely increase slightly, according to the 2018 outlook for European SME ABS from Moody’s. However, emerging political risks have created some uncertainty in affected markets, with a limited effect on securitised deals in the United Kingdom (UK), and potentially negative effects in Spain.

Billie Raises €10m Series A (LendIt), Rated: A

Billie is an invoice finance platform that launched earlier this year; the round was led by Creandum with participation from existing investors Speedinvest and Global Founders Capital; the company focuses on complete automation with no human interaction; It was co-founded by Matthias Knecht and Christian Grobe; Billie also secured a refinancing facility from a major German bank.

International

Regulated Crypto Platform Plays By the Rules and Disrupts Trading Model (Coin Telegraph), Rated: A

Trade.io’s solution is to develop an exchange platform for the sharing economy where traders can not only exchange tokens, crypto and fiat currencies and other assets but also share in the risk and revenue of the liquidity pool. To participate in the liquidity pool, members buy 2,500 Trade Tokens secured by financial assets in their trade.io wallets. Crypto and fiat currencies are accepted as collateral.

Trade Token owners share in 50 percent of the gains or losses of the liquidity pool, which are distributed to the wallets of pool participants. Besides trading fees and commissions, revenue is earned from investment banking and P2P lending fees.

Australia/New Zealand

Harmoney Reports Increase in Kiwi SMEs That Are Tapping into P2P Lending for Business Cashflow (Crowdfund Insider), Rated: AAA

Earlier this week, Harmoney announced there has been an increase in Kiwi SMEs that are tapping into peer-to-peer (P2P) lending for business cashflow.

The New Zealand online lender stated it estimates $100 million will be loaned to business accounts through its lending platform within the next six to twelve months. Currently, the average loan amount for business cashflow on its platform is $25,000.

Sydney fintech Avoka raises $ 16m in Roger Allen-led round (Financial Review), Rated: A

Avoka Technologies, a fast-growing Sydney-based provider of customer acquisition services to financial institutions, has raised $16 million from investors, including prominent venture capitalist Roger Allen, as offshore revenue rises above 75 per cent and the headcount moves towards 300.

Avoka offers a software-as-a-service platform called Transact, which claims to enable institutions to launch new digital products in weeks rather than months, and monitors customer interaction with them once established.

BankWest’s mobile banking app was built on Avoka, while Mr Copeland said HSBC was about to launch new credit cards whose customer interface was developed through the platform.

Asia

Crowdcredit, Inc from Japan (Makoto UJIKE Email), Rated: AAA

Crowdcredit is a cross border online lending platform, which raises funds from Japanese investors and finances overseas financial institutions, SMEs, or individuals.

Crowdcredit, Inc. announced its completion of appx. USD3.5mn financing mainly from Femto Partners, one of the most influential venture capitals in Japan.

Crowdcredit track record;

  • – Established in January 2013
  • – Started raising funds since June 2014,
  • – Finances financial institutions, SMEs, or consumers in Peru, Cameroon, Estonia, Finland, Spain, Latvia, Lithuania, Georgia, etc.,
  • – Has registered investment user of 8,000+
  • – Has issued funds in total US$ 45.5mm, and
  • – Issues funds of US$ 4mm monthly with increasing trend.
Source: Crowdcredit
Source: Crowdcredit
Source: Crowdcredit

Learn more about Crowdcredit here.

Crowd-lending platform New Union awarded CMS license (The Edge Markets), Rated: A

Crowd-lending platform New Union has been awarded the full Capital Markets Service license (CMS) by the Monetary Authority of Singapore (MAS), and announced a potential deal flow pipeline of about S$2 million to be launched soon.

P2P lending platform Validus Capital gets licence to deal in securities in Singapore (Business Times), Rated: A

VALIDUS Capital announced on Monday that it has been awarded a full Capital Markets Services (CMS) licence by the Monetary Authority of Singapore (MAS), to deal in securities – a move that may give Singapore’s small and medium-sized enterprises (SMEs) more access to financing opportunities.

Singapore banks can save over 10% from fintech (SBR.com.sg), Rated: A

Moreover, about 41% of banked balance has now abandoned traditional channels.

MAS estimates fintech payments already takes up 20-50% of household consumption if the probability of payments disintermediation is high in the next five years.

A majority of 56% of the banked population is also willing to shift their savings into a pure play digital bank. An average of 41% of total balance has already been shifted.

Equity crowdfunding and peer-to-peer lending (The Star), Rated: B

Equity crowdfunding has become an increasingly popular way for early-stage and early-growth companies to tap investors attracted by the potential for high returns. An investor who has spent the last couple of years lamenting over the lacklustre performance of his stocks sees ECF as an investment channel that claims to offer even better returns.

P2P investing is garnering a lot of interest from would-be investors who are looking for something different and better than banks’ fixed deposits.

ECF means investing in very early stage businesses and as such, there are inherent risks to be aware of such as the likelihood of bankruptcy, in which case, you will not be able to recover your original investment.

With P2P investing, the most obvious risk that comes attached is of course the possibility of the borrower defaulting on the debt. As the reasons for not being able to repay the loan are typically financial, any subsequent attempts to recover your investment may prove futile if the business indeed has gone under.

Key tips to investing

1. Know where ECF and P2P stands in your strategic asset allocation.

2. Ensure you are investing in best of breed by comparing apple to apple when it comes to risk versus returns.

a) Ensure the platform is approved by SC.

b) Research each scheme on the platform as not every one is the same.

c) Read the fine print in the platform operator’s agreement and know the rights and liabilities of each party. Pay particular attention to the risk warnings in the agreement with regards to potential loss of invested capital and the unsecured nature of the investment (for P2P).

3. Diversification is key.

4. Monitor how your investments are performing.

5. Consider the time required before you see your investments come to fruition.

MENA

New Amendment To Address Reward-Based Crowdfunding And What To Expect (Mondaq), Rated: AAA

A new omnibus code that amends, amongst others, the Capital Markets Code (“CMC“) has been enacted by the Turkish parliament and published in the Official Gazette on 5 December 2017.

The CMC amendment primarily refers to reward-based crowdfunding (i.e. receipt of goods, reward or pre-sales in return or investment-based or loan-based crowdfunding) while donation-based crowdfunding where the investor donates the money with no return is still subject to aid and donations legislation. The said amendment limits crowdfunding to project or venture financing and only through crowdfunding platforms that are prior-recognised by the Capital Markets Board (“Board“).

Crowdfunding platforms can only operate in Turkey once they obtain the necessary permission from the Board.

Fintech Is The New Oil In The Middle East And North Africa (Forbes), Rated: AAA

Over the past decade, fintech startups in the region have raised over $100 million in funding, and investment is predicted to double by 2020, according to the State of Fintech report. Disclosed investment infintech had jumped 100% to over $35 million by October 2017 — Paytabs ($20million), Souqalmal ($10 million) and Beehive ($5 million) — compared to $18 million last year. The number of fintech startups also increased from 46 in 2013 to 105 in 2015. It is estimated that it will more than double again to 250 by 2020, according to the report.

Aside from the fact that the sector encompasses every tech startup active within the financial services industry, beyond the ones that specialize in online payments or money transfers, e-commerce in the region is set to quadrupleuntil the end of this decade. Additionally, despite the ubiquity of smartphones and internet connectivity, 86% of the adult population in the region is unbanked, while three in four GCC bank customers are ready to switch banks for a better digital experience.

Boosting financial inclusion is crucial for economic diversity and growth across the region. Moussa Beidas, co-founder of Dubai-based startup Bridg, which allows smartphone-to-smartphone payments using bluetooth, says fintech has become an innovative way to bridge the divide and provide cheaper services to the unbanked.

Significant banking changes due to tech innovation (Gulf News), Rated: A

The rapid advancement in innovation is transforming the financial services industry, especially the banks, as technology has become an integral part of the business strategy — from initially being just an enabler to now actually streamlining operating processes.

The Middle East has amassed more than $100 million (Dh367 million) in FinTech start-up funding in the past ten years, with 105 FinTech start-ups launching in 2016, with hopes to raise $50 million in funding by the end of 2017.

Banks in the UAE remain the trendsetters, although other GCC countries are not lagging far behind, with several banks in the region embracing FinTech in many different ways.

Africa

TransUnion launches Mobile Score Card solution (IT Web Africa), Rated: AAA

Data firm TransUnion has launched Mobile Score Card, a mobile loan information service that enables lending firms to access a loan applicant’s credit status.

Mobile Score Card is a database solution that continually ‘learns’ based on mobile transactional history.

It also provides mobile lenders with customisable and reliable risk view of the mobile loans. The product targets banks with mobile lending solutions, savings and credit cooperative organisation and independent mobile lenders.

Authors:

George Popescu
Allen Taylor

Monday October 30 2017, Daily News Digest

third-party collections

News Comments Today’s main news: Lending Club closes 5 investment funds, rebrands LC Advisors. CommonBond closes $248M securitization, receives AA S&P rating. LendingTree Q3 results. LandlordInvest expects to double IFISA intake. Ant Financial puts off IPO. Renredai volume surpasses 37.8B RMB. New Zealand prepares for open banking. SMART Box to debut in Canada. Today’s main analysis: Don’t forget about loan recoveries. Today’s […]

third-party collections

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News Summary

United States

Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA

Yesterday, Lending Club announced the closure of several funds. The funds were part of what was previously known as LC Advisors, an investment management company dedicated to investing in notes originated by the platform.

Since each fund is a separate legal entity there were many different buyers that participated. While we don’t know the terms of the deals or who purchased these loans, Suri did share with us that there were over 40 bids for the assets and 5 of the 6 funds have been sold at fair value or a slight premium.

 

What happens next?

Lending Club is rebranding its asset management business. Now called LendingClub Asset Management or LCAM for short.

When we asked Suri about positioning the new offerings to investors he stated that their biggest flagship fund under LC Advisors had delivered slightly over 6% annualized since 2011.

CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA

CommonBond, a leading financial technology company that helps students and graduates pay for higher education, today announces the close of a $248 million securitization of refinanced student loans. The offering’s most senior notes achieved AA ratings from Moody’s, S&P, and DBRS – Aa2, AA, and AA (high), respectively – the company’s highest ratings to date.

The transaction was CommonBond’s fifth and largest to date. Investors submitted $1 billion in orders, making the deal more than four times oversubscribed. Goldman Sachs served as structuring agent, co-lead manager, book-runner, and co-sponsor. Barclays and Citi also served as co-lead managers and book-runners on the transaction, while Guggenheim Securities served as co-manager.

The transaction was the first of CommonBond’s to be rated by S&P, who assigned AA ratings to the transaction, alongside similar ratings from Moody’s and DBRS. Moody’s and DBRS also recently upgraded CommonBond’s ratings on previous deals in recognition of the company’s strong credit performance.

Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA

To showcase the significance of the third-party debt collection industry in America, the New York Fed publishes in their Quarterly Report on Household Debt and Credit a ‘Third-Party Collections’ chart (below). As of 2017-Q1, between 12-13% of consumers with debt have debt being collected by third-party agencies (blue line). Of those, the average amount of debt in collections is ~$1,400 (red line).

Source: Orchard Platform

The 2015-2016 roll rate matrix is experiencing a higher percentage of loans going from non-performing (60-89 DPD & 90-119 DPD) to current when compared to the 2013-2014 roll rate matrix. This 100 bps difference for 60-89 DPD and 200 bps for 90-119 DPD can be attributed to the improvement of servicers’ collection and outreach programs for delinquent loans.

Source: Orchard Platform

Consumer loans have experienced a monthly recovery rate between 5% to 15% within different portfolios on our platform. Based on this table, a $100M pool of loans would have a $1M valuation difference between a 5% and 15% recovery rate input.

LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced results for the quarter ended September 30, 2017.

Third Quarter 2017 Business Highlights

  • Record revenue from mortgage products of $73.8 million represents an increase of 38% over third quarter 2016 driven by strong growth in both purchase and refinance revenues at 87% and 24%, respectively. According to Mortgage Bankers Association, originations industry-wide were down 16% in the comparable period.
  • Record revenue from non-mortgage products of $97.7 million in the third quarter represents an increase of 138% over the third quarter 2016 and increased to 57% of total revenue compared to 43% one year ago.
  • Home equity revenue growth accelerated, increasing $9.0 million, or 176% over third quarter 2016, and marked the eighth consecutive quarter of year-over-year growth exceeding 100%.
  • Personal loans revenue of $25.4 million grew 44% over third quarter 2016 and grew 24% sequentially.
  • Revenue from our credit card offerings grew to $39.4 million in 3Q compared to just $6.6 million in 3Q 2016. On a proforma basis, giving effect to the CompareCards and MagnifyMoney acquisitions as if they had occurred on January 1, 2016, credit cards revenue grew 43%.
  • More than 6.5 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the volume of new enrollments accelerated. Revenue contribution from MyLendingTree grew 96% in the third quarter compared to the prior year period as new features and smarter savings alerts are driving increased engagement.

Third Quarter 2017 Financial Highlights

  • Record consolidated revenue of $171.5 million represents an increase of $76.9 million, or 81%, over revenue in the third quarter 2016.
  • GAAP net income from continuing operations of $10.1 million, or $0.74per diluted share.
  • Record Variable Marketing Margin of $59.1 million represents an increase of $22.8 million, or 63%, over third quarter 2016.
  • Record Adjusted EBITDA of $34.7 million increased $16.2 million, or 88%, over third quarter 2016.
  • Adjusted Net Income per share of $1.17 represents growth of 65% over third quarter 2016.
  • During the quarter, the company repurchased 42 thousand shares of its stock at a weighted-average price per share of $237 for aggregate consideration of $10.0 million. As of September 30, 2017, the company has $38.7 million in repurchase authorization remaining.

Business Outlook – 2017

LendingTree is revising Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for full-year 2017, as follows:

  • Revenue is anticipated to be in the range of $603 – $608 million, representing growth of 57% – 58% over full-year 2016 and an increase from prior guidance of $580 – $590 million.
  • Variable Marketing Margin is anticipated to be $202 – $205 millioncompared to prior guidance of $190 – $195 million.
  • Adjusted EBITDA is anticipated to be in the range of $111 – $113 million, up 59% – 62% over full-year 2016 and an increase from prior guidance of $103 – $106 million.

McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA

A recent report from McKinsey on the global banking industry addressed the threat banks face from technology firms. Amazon stock jumped 13% on earnings and reporting that Amazon is increasing its lending footprint. Tune into Bloomberg Radio archive to hear more about this topic as PeerIQ’s CEO discusses the threats and opportunities of big technology with Bloomberg’s Lisa Abramowicz and Pimm Fox.

Summary of Amazon’s Lending Business
Amazon finances small businesses that sell products through the Amazon marketplace on an invitation-only basis. Interest rates range from 6 to 15%, tenor ranges from 4 to 6 months, and loan size is up to $750K.

Although there is no segment-level P&L reporting for the lending unit, loss-rates according to Amazon’s Peeyush Nahar have been “very, very small.” Amazon’s lending makes up a small part of their business (e.g., $3 Bn in loans to date vs. Amazon’s $136 Bn annual revenue). Amazon is also not directly financing the consumers indicating substantial opportunity to grow.

Owning the Customer
The most compelling advantage big tech has outside of data and customer acquisition are the creation of entirely new channels that banks cannot easily replicate.

A few examples:

  • In-Home: Large consumer tech firms occupy the most intimate space of consumer through services such as Amazon’s Echo, Google’s Home, or Apple’s Siri. These platforms represent a trojan horse for delivering new products and services in a highly personal and exclusive manner.
  • Personal assistants that are increasingly anticipatory and have access to the calendars, preferences, and daily lives of consumers.
  • Mobile and virtual wallets which shift the battleground from legacy “share of wallet” and “primary card” concepts to mobile platforms and virtual wallets
  • Virtual spaces created via social media including Facebook or services such as Lyft or Uber which enable unobstructed access to the consumer.

Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A

Technology giants like Google and Amazon, which gained their market muscle from non-finance-related ventures, are slowly stepping into the space. Their next target could be small business lending, and according to some experts, it’s fast approaching the market.

Amazon in particular is positioned to dominate. The company has already lent more than $1 billion to merchants selling on its platform, and, just as alternative lenders put the pressure on traditional FIs with their quick surge into the market, the Amazons of the world will do the same, Mills predicted.

Chatter Picks Up Steam

Karen Mills’ statements have found new backing in the latest banking report released by McKinsey & Co. this week. New reports in Bloomberg on Wednesday (Oct. 25) said the report identifies Amazon as the newest, biggest threat to the small business lending status quo.

The report points to sagging return on equities for the banks, which have not been able to surpass 10 percent since the 2007/2008 global financial crisis. The FIs that collaborate with those FinTechs could boost their return on equities to 14 percent and even higher if they develop their own solutions in-house.

Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A

GUEST: Ram Ahluwalia, CEO and co-founder of Peer IQ, on how Amazon and other big tech companies are challenging big banks.


Why Student Loan Companies Like SoFi Are Becoming Useless (Fortune), Rated: A

In fact, starting this year the entire business model of private student loan refinancing may prove to be less viable.

First, only a tiny percentage of all student loan borrowers can reap significant savings from private loan refinancing. And second, the private refinance boom was created by a historically large spread between federal and private rates. As today’s federal student loan rates fall and private loan rates rise, that gap is shrinking.

SoFi, for example, claims the average lifetime savings of borrowers who have refinanced with them is $22,359. I tried using SoFi’s own calculator to arrive at such a figure, and found that a borrower paying 8% on $100,000 in loans with 10 years remaining could refinance down to 4.5%, saving up to $177 a month or $21,285 over the life of the loan.

Consumer finance site NerdWallet indicates that the average approved borrower at SoFi has an annual income of $130,000 and an average credit score of 766. From this we can infer what kind of borrowers fit SoFi’s profile: lawyers, doctors, MBAs, and other professionals who are high earners.

It turns out that private lenders are targeting a very small slice of student loan borrowers. To put things in perspective, as of September 2017, only 6.9% of all working professionals make $130,000 or more per year.

Credit Sesame Raises $ 42 Million in Growth Funding (PR Newswire), Rated: A

Credit Sesame, a fast-growing, personalized credit service and financial wellness company, announced today 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 funds will be used to accelerate the company’s growth, hiring, and member acquisition, and to advance its analytics, robo-advisor and machine learning technologies.

There’s something broken in small-business lending (American Banker), Rated: A

Banks often tout the strength of their small-business loan programs. So why are their small-business customers so hacked off?

It’s hardly an enigma, according to J.D. Power. The thing that sticks in the craw of most small-business owners is that their banks have not assigned account representatives to take care of their needs, the market research firm said in its latest Small Business Banking Satisfaction Study.

McDonald’s Owners Settle PA Payroll Card Class Action (PYMNTS), Rated: A

McDonald’s franchise owners in Pennsylvania have settled a lawsuit filed in 2015 over their use of payroll cards, news reports on Wednesday (Oct. 25) said.

Owners of 16 McDonald’s locations across the state have agreed to pay nearly $3 million to hourly employees that joined a class action lawsuit against the fast food restaurant owners’ use of payroll cards they said were riddled with unfair fees. Employees were forced to pay fees whenever they went to an ATM to withdraw funds from their payroll cards, as well as when they made online bill payments.

The class action named the McDonald’s franchisees as well as the card-issuing banks, JPMorgan Chase & Co. and JPMorgan Chase Bank N.A., as defendants.

BankMobile’s long road to profitability (American Banker), Rated: A

What will BankMobile’s future look like once it is spun off from Customers Bancorp?

Customers launched the digital-only bank, designed to target millennials and technophiles, in January 2015. Since then, BankMobile has adapted an app for Apple Watch, formed an innovation unit and created a financial literacy and self-help podcast series.

Overview of US real estate platforms (online lenders) (MonJa), Rated: A

Having said that, the real estate construction sector is showing no signs of slowing down and in 2015 it reached a size of $1.113 trillion as per the U.S. Census Bureau. There was an evident demand-supply mismatch in the market that led to the rise of alternative online lenders.

Source:
  • LendingHome () – It has raised over $166 million in various rounds of funding and has originated loans in excess of $1.75 billion.
  • Fundrise () – This incredibly efficient new model enables access to a diversified portfolio of private real estate assets with as little as $500. It has raised over $55 million and has invested $1.4 billion in real estate so far.
  • Sharestates (www.sharestates.com) – It has so far funded $656 million.
  • RealtyShares (www.realtyshares.com– It has raised over $100 million in various rounds of funding and over $500 million has been invested through its platform.
  • Patch of Land (patchofland.com– It has raised almost $25 million in different rounds of funding and has done over $366 million in loan origination.
  • RealtyMogul.com (www.realtymogul.com– It has raised over $46 million in funding and over $300 million has been invested through its platform.
  • GroundFloor () – In 2015, GroundFloor became the first issuer to be qualified by SEC for selling private real estate debt investments to non-accredited investors.
  • Allrise Financial Group Inc () – It has originated $ 162 million in loans so far and has a network of 169 borrowers in four different countries.
  • CrowdStreet (www.crowdstreet.com) – It has raised over $5.5 million so far and has done $155 million in equity loan funding.
  • Money360 (– The company’s total loan origination stood at $70 millionin 2015. It has raised almost $165 million in debt financing from multiple investors.
  • Wealth Migrate (www.wealthmigrate.com– It has raised $5.6 million so far and over $64 million has been invested through its platform.
  • Roofstock (www.roofstock.com– It has raised over $68 million in funding.
  • PeerStreet () – It has raised over $ 21 million in various rounds of funding.
  • AssetAvenue (www.assetavenue.com– It has raised over $19 million so far.
  • AlphaFlow (www.alphaflow.com) – It is the first and the fastest growing automated real estate investment service. It managed to raise $6.4 million as seed funding from various investors notably Y Combinator, FundersClub and Red Swan Ventures.
  • Acquire Real Estate (www.acquirerealestate.com– It has raised $6 million in various rounds of funding.
  • EarlyShares (www.earlyshares.com)  It has raised over $5.8 million in funding.
  • Fundthatflip (www.fundthatflip.com– It has raised over $2 million so far.
  • RealCrowd (www.realcrowd.com) – It has raised $1.6 million.
  • DiversyFund () – It has raised over $1.2 million so far.

PayNet Provides Expert Testimony to U.S. Congress on The State of Fintech (BusinessWire), Rated: A

PayNet, Inc., the nation’s provider of credit assessments on privately held commercial lending businesses, addressed The Congress of the United States, U.S. House of Representatives, Committee on Small Business to testify on online lending’s role in improving small business capital access.

New mobile application designed to reinvent personal credit (Muskogee Phoenix), Rated: A

A recent study conducted by Affirm, a company intent on reinventing personal credit, found that 67 percent of 1,600 U.S. adults surveyed expressed personal fears about debt. Almost a third — 32 percent — are fearful because they don’t know how long it would take to pay off that debt, and 72 percent of those who have carried a credit card balance worried about how much their purchases would end up costing after interest was included.

Findings like those and other factors prompted PayPal co-founder and serial entrepreneur Max Levchin to develop and roll out a new mobile application designed to reinvent personal credit. The Affirm app — rolled out this week and available for download from the App Store and Google Play — allows customers to split big online purchases into smaller, fixed payments with a virtual card.

Braviant Holdings Announces $ 40 Million Credit Facility with Redpoint Capital Group (PR Web), Rated: A

Braviant Holdings, a leading fintech startup that offers analytics and technology-driven credit solutions for underserved Americans, has entered into a $40 million Senior Secured Credit Facility with Redpoint Capital Groupfor its wholly-owned subsidiary, Balance Credit.

SBA Approves a Record $ 869 Million in Loans to NJ Small Business (Cap May County Herald), Rated: A

The U.S. Small Business Administration approved a record $869 million in loans to New Jersey small business owners during the agency’s fiscal year 2017(the period from Oct. 1, 2016 thru Sept. 30, 2017). Nationally SBA approved over 68,000 loans for over $30 billion, during the past year.

This past year, SBA has launched its online lender referral tool Lender Match. “The idea is to always be thinking of streamlining and simplifying whenever possible, when it comes to giving entrepreneurs access to capital,” said Titone. “In 2017, SBA loans have helped New Jersey companies to create 8,666 jobs and retain another 10,671 jobs. When you look at it that way, our programs are having significant impact on our local economy.”

Genesis Financial Solutions, Inc. agrees to service Signet Jewelers’ non-prime consumer accounts (Genesis Email), Rated: A

Online lenders can get needed credit to small businesses (The Hill), Rated: A

This challenge has resulted in a global small-business financing gap, estimated by the International Finance Corporation (IFC) to be between $2.1-$2.6 trillion in developing countries.

Four leading trades — Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association and the Small Business Finance Association — commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence.

The survey found that a large majority (70 percent) of small business owners believe there are more credit options today compared to five years ago, and 97 percent of those feel that the growing number of financing options is a good thing.

The Kauffman Foundation has found that even in the depths of the U.S. financial crisis, young and small firms (fewer than five years old and with less than 20 employees) 

State of Small Business Lending: 2017 Spotlight on Women Entrepreneurs (Fudera), Rated: A

After reading stats like women entrepreneurs receive only 16% of all traditional small business loans, we wanted to know: do these same stats also ring true in online business lending?

Our 2016 report, which can be revisited here, found that women entrepreneurs who applied for financing through Fundera were applying less, getting approved less often, receiving smaller loan amounts, and paying more for financing than their male counterparts.

In our 2017 report, you’ll find some things have remained lamentably the same as last year. But, we’re excited to say that in some of the most important areas, there have been positive and significant shifts since 2016.

  • Women are now being approved for larger loan amounts than their male counterparts in certain product categories.
  • Women are receiving offers with lower APR than men in certain product categories.
  • Women business owners still apply for business financing less frequently than male business owners do, and when they do apply for financing, women still ask for less than their male counterparts.

A startlingly low 28% of applicants at Fundera are women. However, since our last report, this number has gone up from 25%. Additionally, our last report showed that female entrepreneurs ask for roughly $35,000 less in business financing than men. Since then, the number has decreased only slightly to less than $33,000.

In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A

When customers open an account at one of these automated investing firms, they’re put into funds from companies like Charles Schwab Corp. and Vanguard Group and charged a fee of anywhere from 25 to 50 basis points. In return, they get some extra benefits, like tax loss harvesting, which can result in a lower tax bill, and automatic re-balancing at no extra cost.

But there’s a catch, the funds that customers buy through these advisors are all available on free trading platforms such as Robinhood Financial, where there’s no added cost.

SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A

Consumer analytics company SelfScore has rebranded as Deserve, writes Julie Muhn at Finovate (Banking Technology‘s sister company).

The California-based company continues to be committed to providing underbanked Americans with access to credit, and to fuel that mission, Deserve has received $12 million in funding. The round was led by Accel, with participation from Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group, and GDP Venture, and brings Deserve’s total funding to $27 million.

Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A

Blockchain is particularly relevant to the lending market. Lending is a contract-intensive process with an extensive lifecycle; it carries significant risk and limited trust across its value chain – from origination to funding through to the fulfillment and servicing of the loan.

Moreover, the integration of blockchain with digital lending ensures transactions are tracked in an open and transparent way. Banks and lenders get direct visibility into exactly what happened during the lending process – who was involved, who had control over the authoritative copy of the digital assets and ultimately, who owns the value of those assets, as required by law.

Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A

Jiko, an Oakland, Calif.-based personal bank startup, raised $7.7m in Series A funding.

The round was led by Upfront Ventures and Radicle Impact with participation from Social Capital, 500 Fintech, Digital Currency Group, Core Innovation, Embark Ventures and Story Ventures.

Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A

Templum, LLC, a NYC-based fintech startup facilitating regulatory compliant ICOs as securities and secondary trading of digital assets, closed a $2.7m seed funding round.

The round was led by Raptor Group, Galaxy Investment Partners, Blockchain Capital and firstminute.capital.

Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A

Current, a new mobile-only banking platform for parents and teenagers, has raised $5m in a Series A funding round led by QED Investors.

 

10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A

Touching on the recent boom in real estate crowdfunding firms, John McNellis, co-founder of Palo Alto, Calif.-based development firm McNellis Partners, divided the crowdfunding sector into two groups: firms that simply connect investors with developers and firms that invest in projects themselves. The first concept should work in the long term, he noted. But when it comes to crowdfunding firms underwriting real estate deals, McNellis pointed out that it takes at least a decade in the business to become a reliable underwriter. “To expect these 20-year-olds who are good at tech to be good at underwriting” is unrealistic, he said. McNellis added that established developers normally already have financial partners that they prefer to work with. The developers most in need of crowdfunding dollars would be either those just starting out in the business or developers with a spotty track record.

Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A

The decline in underlying collateral quality — a theme across wider consumer ABS sectors — has been playing out in marketplace loan ABS, with recent deals from Prosper, Marlette Funding and Avant featuring a growing proportion of loans taken by borrowers with credit scores of less than 680.

Local veterans get help launching businesses through crowd lending (WFLA), Rated: A

There is now a way anyone can help veterans launch their new life through a concept called StreetShares.

You can invest just a few dollars or thousands to the fund. Investors can earn 5 percent on their money.

For Shane and Melissa Underwood, a $20,000 loan allowed them to purchase a piece of equipment that launched their small business Driveshaft Specialists.

3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A

Crowdfunding

A 2017 crowdfunding reportby the National Women’s Business Council, for example, found that 47% of successful campaigns on the popular crowdfunding platform Indiegogo were run by women.

Online Lenders

Keep in mind that online business loan shopping sites may operate in a variety of ways:

  • Lead generation sites will simply gather your information then sell it to various lenders, which may then call or email you with information or offers.
  • Online lenders may offer a specific set of loan products aimed at specific types of borrowers (for example, those with significant credit card sales). Remember: just because you can’t qualify with one lender doesn’t mean you can’t quality with others.
  • Online brokers may try to help get you funding with various lenders with whom they have a relationship. They may charge a significant fee for this service, so be sure to ask.
  • Online marketplaces will present you with options and allow you to choose which ones seem right for your needs. Ideally, you’ll also see which loans are best matched to your qualifications. (Disclosure: Nav’s small business loan marketplace operates this way.)

Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B

Zeus CrowdFunding once again offers borrowers what other lenders won’t – low rates designed specifically for the real estate investor and their year-end needs. For a limited time, qualified applicants will pay only six percent interest for the first six months of the loan term.

The company loans up to 100 percent of a project’s cost to qualified applicants in as little as four days.

On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B

On Deck Capital, Inc. (NYSE:ONDK) is scheduled to be issuing its quarterly earnings data before the market opens on Wednesday, November 1st. Analysts expect the company to announce earnings of $0.03 per share for the quarter.

MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B

MākuSafe, a West Des Moines, Iowa-based Insurtech startup, raised $1.25m convertible note round of funding.

Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B

As banks rush to catch a wave of robo technologies, Wells Fargo Advisors is rolling out a factor-based approach designed for advisors and their clients.

The wirehouse has launched an expansion to its electronic model portfolio services platform, according to Patty Loepker, WFA’s head of research directed advisory programs. The new managed accounts program features allocations built around smart beta ETFs.

Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B

Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B

Litigation finance specialist Pravati Capital has launched its third fund vehicle to capitalize on opportunities in the burgeoning litigation finance sector.

The new fund, named Pravati Credit Fund III, will invest in mature stage, high-probability, high-value cases or case portfolios where there is established liability and precedent for settlement, according to a statement.

United Kingdom

LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA

LANDLORDINVEST is expecting its Innovative Finance ISA (IFISA) intake to double this tax year.

The property peer-to-peer platform, which launched its IFISA in January, said it attracted £419,385 in the previous tax year and was hoping to see that double to nearer £1m.

Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A

LENDINGCROWD has been ranked as an alternative to Funding Circle for investors looking to continue with manual lending, as they both offer similar interest rates and borrower profiles.

Peer-to-peer analyst Orca said that before Funding Circle shifted to manual lending last month, 27 per cent of investors used the manual option, suggesting there is demand for this functionality.

UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A

The U.K. government’s economic and finance ministry has released a new policy document stating that cryptocurrencies like bitcoin pose a “low risk” for terrorist financing.

The paper further cited the peer-to-peer lending industry, which it said has the potential to be used as a “terrorist financing tool,” though no incidences have been observed in the U.K. to date.

Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A

How did you find your way to founding Onfido?

Initially, my co-founders and I had experience verifying identity documents meant for an offline world. The current way of verifying documentation for a standard current account requires hours and hours of face-to-face in-branch and still not getting approved; it’s no wonder there’s a 40% drop-off.

Of the 7 billion people in the world, Facebook has brought their social identity online, LinkedIn has brought their professional identity online and now we’re looking to bring their legal identity online.

How exactly are Onfido providing something that mainstream banks should take notice of?

Very simply, we help business verify the identity of the people they are onboarding digitally. That can be with a photo of their government issued ID that the user can send with a smartphone. We cover 600 IDs globally and use machine learning to verify whether the ID is genuine or not. There are three steps to our core technology. The first, we extract the details, see if the patterns are consistent and compare them to the millions of historically computed IDs. The second step is asking the user to take a photo or short video of their face, which we compare to the photo on their identity document for similarity. The third step is to check that their details – name, date of birth and address – are consistent with records on multiple databases. Altogether this verifies the person is who they claim to be and, end-to-end, takes two minutes.

We use a hybrid machine/human approach – the technology is able to automatically process the vast majority of documents, and the small number of outliers are passed to our expert human team for review. It means that human resource can be put to more effective use, and would heavily cut down on the 30,000 people employed by Citibank, for example, who just work on onboarding and compliance checks.

As a Millennial yourself, how much of a role do you think generations play on attitudes to banking?

Millennials are just so used to doing absolutely everything on their phone.

Fintechs have really monopolised the millennial market and they’re building the models to ensure they keep that market for the next 15-20 years. That’s where PSD2 becomes very relevant as a leveller of the playing field for the market – it’ll increase healthy competition.

Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A

Silicon Valley investors have more than doubled funding for UK technology companies this year, in a sign of strengthening links with the world’s biggest tech hub after the Brexit vote.

British start-ups received £884.8m from venture capital backers based in San Francisco and the Bay Area in the first nine months of this year, compared to £342m in the whole of 2016, according to London & Partners, the London mayor’s promotional agency.

London fintech firms set for record investment despite Brexit (Descrier), Rated: A

According to the latest figures from London & Partners (L&P), the Mayor of London’s official promotional firm, investors from around the world have backed London-based fintech firms to the tune of £825m so far this year. This is a positive sign for the industry after UK fintech investment plummeted by more than a third in 2016 as investors put off decisions in the wake of the Brexit vote.

One of the biggest London fintech success stories, currency exchange platform Transferwise, is reported to be in discussions with investors to raise a further £77m, which would value the company at more than £1.2bn.

What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A

Strange as it may seem, using the analogy of Lego may be the best way to demonstrate why we believe the peer-to-peer (P2P) industry also isn’t – and can’t be – a one trick pony. While some see the industry as a fad that is set to become redundant, there are many reasons why this isn’t the case.

P2P platforms are exploring a range of new and old ways, and their aim is to create something which is more equitable, satisfactory and useful for everyone.

Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B

Homelyfe, a London, UK-based insurtech startup, raised £2.4m in seed funding.

Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B

Uber has appointed a former senior adviser to the Bank of England as non-executive chair in the UK, as it endeavours to clean up its image and “make things right” after Transport for London last month revoked the ride hailing company’s licence to operate in the city.

Laurel Powers-Freeling, who will take up the newly created position, is currently senior independent director at online lender Atom Bank.

Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B

Quantuma, a corporate recovery and business advisory firm that works with several peer-to-peer lending platforms, has joined the UK Peer to Peer Finance Association(P2PFA). Earlier this year, the P2PFA announced the creation of Associate Membersto broaden its membership beyond strict lending platforms.

China

Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA

Flush with cash, Chinese financial-technology giant Ant Financial Services Group is putting on hold plans for an initial public offering while it steps up investments in everything from startups to artificial intelligence, according to a senior company executive.

Investors and analysts have been expecting Ant to go public sometime in 2018. The Hangzhou-based company last raised $4.5 billion from private investors in April 2016 in a deal that gave it a $60 billion valuation—and its business has since expanded significantly.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

51 CreditCard (u51.com), an online platform for credit card bill management, is reported to be listed on Hong Kong Exchanges and Clearing Limited (HKEX) in 2018, aiming to raise at least 500 million dollars.

According to a report of China Daily, the credit database of PBOC has collected credit information of more than 840 million individuals as well as more than 19 million companies and organizations by the end of April. Among these agencies, only 255 licensed micro loan companies have been connected to the company credit information system and 156 to the individual credit information system.

From November 1st, customers will be able to pay their train tickets by using WeChat Pay through the official booking website 12306.com or in the train station (booking office/self-service ticket machine).

On October 26thBihubao.com reached cooperation with France’s No.1 mutual insurance provider VYV.

On October 18th, Trustdata released the long-awaited “Trustdata: China Consumer Finance Analysis Report (2017)”. The document presents a comprehensive review of consumer finance development in China, makes a deep analysis of payday loan, installment credit and consumer behaviors, and proposes a new concept called “Consumer Finance Development Index”.  Statistics from the research notes that, by the end of last month, the credit scale of consumer finance in China has reached more than 110 billion yuan with 3.7 million registered users.

Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A

The phenomenon of “Chinese companies lining up for an IPO in the United States or Hong Kong” has re-surfaced recently, Tiger Brokers, an online brokerage helping Chinese investors trade US- or HK-listed stocks, told chinadaily.com.cn Thursday.

Beijing-based Jianpu Technology Inc, which is 100 percent controlled by RONG360 Inc filed its preliminary prospectus with the US Securities and Exchange Commission, without the estimated IPO price range, on Oct 20.

Prior to Jianpu, Chinese online small consumer credit provider Qudian Inc made its debut on the New York Stock Exchange on Oct 18. Qudian priced its IPO of 37,500,000 American depositary shares (ADSs) at $24.00 per ADS for a total offering size of about $900 million, according to Xinhua News Agency. Qudian closed at $26.39 Wednesday after diving 7.24 percent, still above its IPO price.

Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA

Recently, Renrendai issued its performance report for the third quarter of 2017.According to the report, the cumulative turnover of the platform surpass 37.88 billion RMB, with 524 thousand transactions in total.

More details, Renrendai remained steady growth in the third quarter. The volume on the platform reached 6.51 billion RMB this quarter, a 109% increase over the same period last year, and the amount of money that investors earn is up 55% from the same period last year. In addition, the per capita borrowing amount on the platform is 80.8 thousand RMB, which represents the capital requirements of small business owners and self-employed people in the class, and always below the national regulations of loan balance ceiling of $200000.

Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A

On 27th October, the shares of Qudian tumbled again, closing down $3.59 to $22.8, down 13.6% below the offering price of $24 a share.

The company has fall into constant questioning just after it landed in the SEC. Luo Min, the CEO of Qudian, responded several questions through an interview Qudian’s Luo Min Respond To All, but this move has raised more query. Many media and media outlets gathered to lambast Luo Min for “lying” in her response.

On 23th October, Luo Min avoided all the media interviews again. Since then, the shares of Qudian began to slump, which closed at $26.39 on 26th Oct, down nearly 20 percent from the opening price of $31.89 on Wednesday.

Chinese fintech Rong360 targets 0m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A

Jianpu Technology Inc, a wholly-owned subsidiary of Chinese fintech firm Rong360, has filed for a $200 million IPO in the US. Goldman Sachs, Morgan Stanley and JP Morgan are bookrunners for the deal, according to a stock exchange filing.

Read more at:

China to tighten regulation of fintech consumer loans (Financial Times), Rated: A

China is preparing to tighten regulation of online consumer lending as part of a campaign against financial risks, dealing a possible setback to Chinese fintech groups that hope to sell shares in the US.

Household debt in China remains low as a share of GDP, and authorities have encouraged growth of consumer credit as a way to rebalance the economy towards consumer spending, but now concerns are rising about irresponsible lending practices online.

Online consumer lending has replaced peer-to-peer lending as the trendy new area in Chinese fintech, as a regulatory crackdown on P2P reduced that sector’s profitability. Short-term consumer loans outstanding in China grew by Rmb1.49tn ($225bn) through the first nine months of this year, compared to an increase of Rmb830bn for all of 2016, according to PBoC data.

China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A

Chan also said the rapid growth of new fintech services, such as peer-to-peer lending marketplaces and online money market funds, was made possible by a lack of innovation by the country’s traditional banks in addressing the needs of not only the average consumer, but also many small and medium-sized enterprises.

High-flying start-up Ant Financial Services Group, which runs online payments service Alipay and money market fund Yu’ebao, has made AI a key driver for expanding its businesses and improving customer service.

China was the world’s second-biggest investor in AI enterprises last year, injecting US$2.6 billion into the sector, according to the state-run think tank, Wuzhen Institute. The United States topped the list with US$17.9 billion in investments.

Source: South China Morning Post

Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA

What would your reaction be if you wanted to get a loan and your bank asks to go through your Facebook profile? In China, this is already happening on a large scale, but it’s not banks that are doing the rating—it’s the country’s burgeoning fintech companies. And it’s not Facebook they are looking at—its social platform WeChat and shopping website Taobao.

Social credit scoring analyses data from non-traditional sources: social media, online shopping, payment apps, cell phone accounts, and more. This type of scoring is meant to fill a gap for people who want a loan but don’t have any way of proving they can repay one. In order to gauge whether you are creditworthy or not, the score can take into account a number of variables: who your friends are, what you buy, whether pay your bills on time or even how much time you spend reading the user agreement. It’s like FICO but decidedly more creepy.

Alibaba was once a kind of shadow lender too. The company first started building its own credit scoring model to provide loans to Taobao vendors. For this, it relied solely on the platform’s ability to gather big data—transactions, user ratings, market positioning, and others.

Sesame Score (screenshot above) tracks five areas: identity information, such as information on users’ education and work, ability to keep financial obligations, credit history, behavioral preferences like shopping, money transfers, and connections with other people. In return, it offers deposit-free bike and power bank rentals as well as other benefits.

Source: Technode

China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A

Yirendai (YRD) is a Chinese fintec company focused on facilitating unsecured loans. Leveraging the experience of its parent company, CreditEase, Yirendai has facilitated more than RMB 47 billion (US$7 billion) of loans since commencing operations in March 2012.

Financials and performance

Yirendai’s core business has seen rapid growth, facilitating over RMB 20 billion(US$3 billion) in loans in 2016, up 112% from 2015. The most recent forecastfrom the company expects loan volume to continue to grow through 2017, with RMB 35-37 billion (US$5.3-5.6 billion) this year. Earnings have been strong and growing as well, with net income for the six months ending June 30, 2017, rising from RMB 392 million to 620 million (US$58.9 million to 93.2 million) over the same prior-year period, translating to diluted earnings per ADS of RMB 6.71 to 10.26 (US$1.01 to 1.54) for the same periods.

China’s upcoming Social Credit System

Presently, eight companies have been licensed to develop algorithmic SCS scoring systems, including China Rapid Finance, a partner of social network TenCent (OTCPK:TCEHY) and Sesame Credit, which is run by Ant Financial, an Alibaba (BABA) affiliate.

European Union

 

Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A

Italian P2P firm BorsadelCredito.it has followed in the footsteps of its UK antecedent Funding Circle by launching a closed-end fund. The unlisted fund, which is called Colombo, hopes to raise €100m to invest across a 5 year timespan, and is managed by BorsadelCredito.it (through a vehicle named ART SGR SpA). The fund’s custodian bank is Caceis Bank.

By investing in Italian SME loans, originated exclusively by BorsadelCredito.it, the fund will target a yield of 5 per cent (5.5 per cent pre-tax).

Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A

To be or not to be a bank? That was the question asked by Funding Circle boss Samir Desai at the AltFi Europe Summit in London earlier this year (video below).

Desai left the audience in no doubt that Funding Circle has “no plans” to launch a bank. Later that same day, Zopa CEO Jaidev Janardana delivered his keynote: “Why we’re launching a bank”.

José Rego, who runs Portuguese P2P firm Raize, sees the issue as black-and-white.

“By definition, if you become a bank, you stop being an alternative lender,” he said. “Becoming a bank is an extremely complex and very expensive strategic decision which typically takes into consideration other elements besides the equity value generated by the alternative lending. Only a select number of platforms are likely to have the opportunity to become banks (if they wish so). So, in reality, I don’t think it should be something we’re thinking about within the industry.”

CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B

Crypto Lending Project (CLP) announces its crowdsale campaign.

Name: CLP coin

Start Date: 1st November, 2017

End Date: 30th November, 2017

International

Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA

In a new report ‘Asset & Wealth Management Revolution: Embracing Exponential Change’, PwC anticipates that global Assets under Management (AuM) will almost double in size by 2025, from US$84.9 trillion in 2016 to US$111.2 trillion by 2020, and then again to US$145.4 trillion by 2025.

By 2025, AuM will have almost doubled – rising by 6.2% a year, from US$84.9 trillion in 2016 to US$145.4 trillion in 2025, with the fastest growth seen in the developing markets of Latin America and Asia Pacific.

While active management will continue to grow and play an important role, reaching $87.6 trillion by 2025 (60% of global AuM), PwC predicts growth in passive management to reach $36.6 trillion by 2025 (25% of global AuM).

If current growth is sustained, the industry’s penetration rate (managed assets, as a proportion of total assets) will expand from 39.6% in 2016 to 42.1% by 2025.

PwC anticipates assets growing at 5.7% a year in North America from 2016 to 2020, slowing to 4.0% per annum from 2020 to 2025, lifting assets from US$46.9 trillion to US$71.2 trillion over the nine years. Similarly, Europe is projected to grow at 8.4% and 3.4% per annum respectively over the two periods, with assets rising from US$21.9 trillion to US$35.7 trillion.

Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA

McKinsey said that the industry needs to continue its digital makeover to protect the up to 40 percent of revenues at risk by 2025 and prepare for competition from so-called platform companies like Bezos’s Amazon.com Inc.

As he extends Amazon’s reach, the Seattle-based company has had discussions with banking regulators about financial innovation, according to lobbying disclosures reviewed by American Banker. And it already has a small-business lending arm that has doled out more than $3 billion to more than 20,000 of the merchants on its e-commerce platform.

The global banking industry, which had an 8.6 percent return on equity last year, could offset the loss of profits from price competition by partnering with platform companies and generating more revenue from their data. Banks that go further by creating their own platforms could elevate their ROE to 14 percent, according to the report. ROE is a measure of profitability.

How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A

Furthermore with smartphone prices of $30 to $50, Asian markets maintain a robust mobile market. 76% of Taiwan is connected to mobile, and 70% of Myanmar is connected.

Experts estimate Asia as the region to become the fastest growing Internet region by 2020. And while their internet industry is flourishing, only 27% of Southeast Asians have a bank account. In 2017, China has 731 million internet users. That is only 53.1% of the population. China represents internet development at a fast pace, but it still has 21% unbanked. Internet traffic growth in Myanmar is at 58%, yet Myanmar is one of the lowest banking rates in Asia with over 70% of adults (aged 15+ years) unbanked.

P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A

As an example OECD research points out that financial sector works constitute 19% of the top 1% earners but the share of finance in the overall employment is only 4%.

In developed world, there are huge reserves of money lying in banks at sub zero, zero or miniscule interest rates. On the other hand in the developing world where there is a dearth of credit, loans can only be had at rates as high as 20-30%.

According to Eurostat, SMEs represent around 99% of all enterprises. In OECDcountries alone SMEs are responsible for job creation to the tune of 60-70%.

Source: Cryptocoins News

Karma plans to use the blockchain in such a way that individuals as well as legal entities can make the most of profitable relationships with each other. This will entail creating a community of participants, who will be able to lend money, borrow money, insure against default, Score loans and carry out assessments and even collections. All of this will be fuelled by the Karma token that will be at the centre of this new ecosystem.

The sale of Karma tokens is legal in all jurisdictions including the United States and China. Qualified US investors can participate. The basic price of Karma Token is US$ 0.01. Early investors can get discounts of 50% till US$ 1 mln is collected, thereafter 30% discount is available till US$3 mln is collected and 15% till US$ 8 mln is collected. There is a hard cap of US$ 10 mln on the token sale.

Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA

Though fintech can take many forms, “I think the disruption is really in the payer experience,” says Sharon Butler, EVP, education at Flywire, a global payment solutions company. “Essentially we are leveraging banking infrastructure. I think really what fintech is, is sort of the blend of the old and the new.”

Preceding the growth in cross-border tuition fee payment services, which track the money and file it instantly with minimum costs involved, were more staff resources sifting through multiple transactions and matching them to the student, coupled with uncertainty from the student’s side about when or whether the money would actually have arrived.

Improvements in payment services is one of the biggest ways fintech has benefitted students, agrees Devie Mohan, founder of fintech research company, Burnmark.

Fertile ground in China
Financial technology as an industry has grown globally at an unprecedented scale. Last year, fintech reaped $17.4 billion of venture capital investment – a colossal increase on the $2.5 billion it received just four years ago.

And $7.7 billion of this investment went to China, seeing it overtake the US as the top investment market for fintech companies for the first time.

A platform targeting the Chinese market has recently struck a deal to partner with ChinaPay, the online payment subsidiary of China UnionPay, one of the world’s payment giants.

The mobile payment industry is one which has grown particularly quickly in China in comparison with other countries around the world, predominantly led by Alipay and WeChat Pay. These two platforms combined saw $2.9 trillion in transactions overall last year.

Modernising student loans

But it was Prodigy Finance that entered the loan market specifically to serve international students. Since its inception in 2007, the platform has lent over $310 million to international students all around the world to study overseas, and is expanding its services.

 

Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B

Financial services startup Ethercash has proudly announced its Pre-ICO Campaign, which will raise funds to develop its blockchain-backed financial platform. The Ethercash platform aims to revolutionise three core functions of finance to bring greater transparency and security in the way we lend, send and spend. The Etherecash platform will allow its users to leverage their cryptocurrency holdings to acquire fiat currency loans without the need for credit history, through the application of lawyer-backed smart contracts. The Etherecash Pre-ICO campaign will run from October 25th, 2017 until November 7th, 2017 and ICO campaign will begin November 15th, 2017 and finish on  December 19th, 2017.

Australia/New Zealand

NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA

Andrew Sieprath is among the first people in the Europe to embrace “open banking” as a customer.

His chosen banking provider is Revolut, which isn’t even a bank.

Revolut is just one of three “open banking” services due to launch here in the next few months. They will lead New Zealand into something of a banking revolution which threatens to do to banks what Uber is doing to taxi firms, and ultimately put more pressure on them to cut staff or close branches.

There are many emerging open banking models, but as a starting point, think internet banking that’s slicker, more intuitive, and allows users to see and manage accounts from multiple banks in a single place.

Robo-advice raises alarm (Financial Standard), Rated: A

While the technology behind robo-advice is making it cheaper to invest, it doesn’t mean it is actually providing advice let alone the right advice, says the Association of Real Return Investment Advisers general manager Rebecca Jacques.

She told a recent Calastone forum that she put a few global and domestic robo-advisers to the test by giving each the same simplistic target: to pay her young children’s private school fees.

Every robo asked for a country of origin; only one asked for a tax bracket – but what was “scary” was that not one asked if the funds would be used for private school tuition, she notes.

COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A

IN the competitive fight against the big banks, smaller lenders such as credit unions find themselves hopelessly outgunned in terms of technology budgets.

But the chairwoman of the Customer Owned Banking Association said smaller lenders were taking opportunities to collaborate on budgets and spruce up their technological offering.

3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A

But the report found property transactions made up a very small part of that alternative financing industry, making up just $49 million, or 8%, of the $609 million dealt out in 2016.

Australia lags behind the Asia-Pacific average (excluding China) of 17% of alternative financing going towards real estate. The popularity of peer-to-peer property financing in South Korea is a big contributor to the high average.

The $49 million alternative lending spent on real estate in Australia is made up of $36 million in peer-to-peer lending and $13 million in crowdfunding. In the US, peer-to-peer is worth $1 billion and crowdfunding $800 million.

  • CrowdfundUP –  The startup has so far allowed 2,000 people invest in 17 projects, with individual investments typically ranging from $5,000 to $2 million.
  • BrickX – BrickX, as previously reported by Business Insider, allows everyday folk to invest in fractions of a residential property through units called “bricks”, which can cost as little as $66.
  • CoVESTA – The real estate on offer includes residential, commercial and even agricultural properties, with investors requiring to contribute at least 5% of the purchase price if they wish to be a tenant in the property. For passive ownership, just 1% ownership is required.
India

RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA

It has been observed that, when the P2P lending industry or any other industry is prudently regulated, it attracts more participation. In terms of P2P, the regulation will increase entry of investors as well as borrowers. This is a reason why RBI regulating the NBFC-P2Ps is a long-term positive for the Indian P2P lendingindustry.

RBI regulating the sector means dead-end for players that are looking only to generate money without adding any value.

P2P regulations: A missed opportunity (Livemint), Rated: A

However, the potential social benefits of P2P lending are contingent on a facilitative and proportionate regulatory ecosystem. A review of the P2P regulations issued by the RBI leaves much to be desired in that sense. Saliently, the P2P regulations delegate potentially arbitrary discretion to RBI in gatekeeping, impose high market-access barriers that would inhibit innovation in a technology-intensive sector, and lack clarity around critical issues like leverage ratio.

A. Excessive regulatory discretion: One of the principal governance issues of a modern state is injecting accountability into regulatory discretion.

B. Disproportionate minimum capital requirements: The RBI has prescribed a mandate that would require a minimum net-owned fund (NOF) of Rs2 crore.

C. Lack of clarity around critical issues like leverage ratio: Leverage ratio is defined as “total outside liabilities divided by owned funds, of the non-banking financial corporation in P2P (NBFC-P2P)”. This leverage ratio has been capped at 2.

Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A

The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs. When they require loans as working capital or for expenditures like purchase of raw materials, payment towards wages etc. to achieve scale and growth, approaching a bank directly or even visiting loan aggregator websites becomes challenging in terms of time & information. Also, due to varied risk appetite of traditional financial institutions, many SME and MSME entrepreneurs are often puzzled in terms of documentation requirements; different banks and lenders have their own set of risk parameters which they assess while sanctioning a lending facility. This results in high rejection rates within the loan ecosystem.

Why online lending is emerging as an enabler for India’s MSME industry

New-age fintech lending marketplaces endeavor to revolutionize the country’s financial lending patterns by changing the way it works. They are enabling easy access to loans by connecting these small businesses to financial institutions on a consolidated platform for quicker sanctions. Such neutral platforms, with customer-centric features offering a wide range of loan products and end-to-end loan fulfillment, enable MSMEs to concentrate on building their businesses rather than worrying about finances to fulfill the gap in their cash flows or fund their expansion and growth.

I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A

While the Reserve Bank of India’s (RBI) guidelines for lenders and borrowers on peer to peer (P2P) lending platforms are important cautionary moves, caps on lending should ideally be linked to lenders’ incomes, Neha Agarwal, co-founder of i2ifunding, told Shritama Bose. The company has disbursed more than Rs 3 crore so far in FY18 and has a full-year target of Rs 10 crore, she added.

We have had more than 30,000 registrations on our platform so far, of which around 25,000 people are registered as borrowers and around 5,000 as lenders. Since launch, around 500 loans have been disbursed and we have around 2,000 active lenders.

The average loan size is about Rs 1.5 lakh.

Almost 90% of the lenders have invested more than once. Around 40% of lenders are lending regularly on our platform.

Five platforms which were a boon during demonetization (Business-Standard), Rated: A

  • Paytm
  • Faircent
  • Rubique
  • LoanTap
  • BankBazaar
Asia

P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A

Gregor has a company in Singapore where individuals can securely store their gold and silver.

Using peer to peer lending you can withdraw up to half of your holdings in loans at low-interest rates. For example, if you have $100k worth of gold you can deposit and take out a loan for 50k at around 3.5% interest per year.

Here are some emerging bright spots in fintech innovation in Asia (e27), Rated: A

The fast growing Fintech industry is another feather in the cap of rising Asia. According to EY FinTech Adoption Index 2017, there is a palpable global shift of fintech activities from the UK and the US to Asia.

Source: e27

Another report provided by KPMG and CB Insights says in 2016, investments in Fintech companies in Asia hit $8.6 billion across 181 deals.

Source: e27

In light of this, fintech innovation labs and fintech accelerator/incubator spaces are rapidly growing throughout Asia, especially in Hong Kong. The FinTech Innovation Lab Asia-Pacific is collaboration between Accenture and leading financial institutions including Bank of America, Merrill Lynch, Goldman Sachs, HSBC, J.P. Morgan, and Standard Chartered, etc.

A bout of high-profile mega-rounds in the Chinese market has also played a vital role in uplifting Fintech investment. One such activity was a whopping US$4.5 billion funding round by Ant Financial, an affiliate of Alibaba group. The other smaller but successful funding rounds in China during 2016 were: US$73 million to Quant Group, and US$30.4 million to China Rapid Finance.

According to a recent research conducted by Startupbootcamp FinTech Mumbai and PwC, it was found that more than 95% of financial service companies are seeking partnership with Fintech startups through collaboration rather than competing with them.

Another report regarding Indian Fintech ecosystem is more interesting. It says Indian Fintech market is expected to double from current US$1.2 billion to US$2.4 billion in 2020.

VCs call on startups to set sights on SE Asia (The Investor), Rated: A

Tan, who formerly partnered with Sequoia Capital Asia, said his Singapore-based fund is looking for ambitious, strong Korean tech startups to invest in what could become the next unicorn.

He believes Asian-based VCs have a competitive advantage over established VCs from Europe or the US in the region as they can effectively tackle the needs of startups.

Fintech and software as a service, especially targeting small and midsized businesses, are the buzzword in Southeast Asia, according to Yoo Jung-ho, investment manager at Korea Investment Partners.

“In many of these countries, payment, banking abd finance, are still in a nascent stage with only 10 percent of the population utilizing credit and banking services,” said Yoo. “There is a great demand for firms that provides peer-to-peer lending and payment services. “So companies that target small and medium enterprises that make up the majority in Southeast Asia, will have a fighting chance.

 

Africa

The Credit Crisis in Malawi (Maravipost), Rated: A

According to recent reports, only 12 percent of households in Malawi have access to credit. With 65 percent of the population living under the poverty line, the rural population is especially vulnerable to the limitations of credit.

In today’s modern age, a physical bank is no longer needed to conduct financial services. Virtual and automated banking is expected to replace 30 percent of bank roles in the next ten years. These virtual banks even the playing field for Malawians by allowing consolidated rates, 24/7 access to services, and a location for information about other services. Some of these alternative, virtual services include:

  • Personal Loans: To find a personal loan, Malawians can use search sites such as this example from Finland.
  • Peer to Peer Loans:Rather than receiving a loan from a financial institution, peer to peer loans allow people to receive a loan directly from an individual financer. In order to apply for a loan, you must visit a peer to peer lending platform such as Prosper or Perform, and the online marketplace will match borrowers and lenders. Although the site still uses credit scores, individuals may have more sympathy towards you and your situation as opposed to a national bank.
  • Crowdfunding:Another way to finance an opportunity is through crowdfunding. Crowdfunding is a fairly recent innovation that utilizes crowdsourcing as a way to raise funds for a project or business.

The change in financial technologies in the coming years will have a great impact in Malawi, and create more access to services for the entire population.

Canada

CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA

The Canadian Lenders Association (CLA) and the Innovative Lending Platform Association (ILPA) today announced the introduction of the SMART Box™ into Canada – a model pricing disclosure and comparison tool that will enable Canadian small businesses to better assess and compare their finance options. Top small business lenders in the country, including Company CapitalEvolocity Financial GroupIOU FinancialLendifiedMerchant Advance CapitalOnDeck and Thinking Capital, have committed to adopt the tool for use by their customers.

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

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.

Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A

Finn.ai, the award-winning, AI-powered virtual assistant built for banking and personal finance, today announced it has raised $3 million in its recent institutional financing round.

Authors:

George Popescu
Allen Taylor