Wednesday January 3 2018, Daily News Digest

ETFs Europe

News Comments Today’s main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada. Today’s main analysis: Can Mifid II spur growth in European ETF market? Today’s thought-provoking […]

ETFs Europe

News Comments

United States

United Kingdom

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Who’s the Most Valuable Online Lender? After This Deal, It’s GreenSky (WSJ), Rated: AAA

Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.

It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. fintech company behind Stripe Inc., which processes payments for Internet businesses.

Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.

What 2018 Will Mean For Marketplace Lenders (PYMNTS), Rated: AAA

2017 was a tough year for some of the biggest names in alternative financial services in the U.S. – Prosper, OnDeck and LendingClub, in particular.

Breslow is hyping OnDeck’s future of partnerships with mainstream baking players – in particular, calling out a renewed partnership with JPMorgan Chase in August to expand the banks’ SMB lending reach.

Prosper, perhaps unsurprisingly, is focused on remaining prosperous, as measured by profitability and further developing its new securitization platform.

LendingClub finally got investors to show them some love – and after its record low following its analyst day earnings accounting, stock jumped 15 percent in mid-December and has managed to hold relatively stable.

Marketplace Lending Predictions for 2018 (Lend Academy), Rated: AAA

First, let’s review my predictions I made exactly one year ago.

  1. 2017 will be the year of the bank partnership
    I would say I was partially right on this one.
  2. The OCC Fintech Charter will receive a positive reception
    So, while many of the fintech platforms supported the charter there was no real positive movement this year.
  3. Lending platforms will offer banking products
    While we had a couple of platforms offering credit cards for the most part this prediction failed to materialize.
  4. One large platform will be acquired
    Student lender Earnest was acquired by Navient in a deal announced in early October.
  5. There will be no new IPOs this year
    I was almost right on this one but one US lending platform did have an IPO in 2017.
  6. China will become an important source of capital outside the USA
    I got this one right.
  7. Artificial intelligence will take center stage
    I think I read more articles about AI this year than in the previous five years combined.

My 2018 Marketplace Lending Predictions

  1. Five top 25 banks will launch their own online lending platforms
    Banks have realized that if you want to provide successful loan products today you need to have an online presence.
  2. Two new pieces of legislation will be passed that will benefit the industry
  3. One of the top five (non-bank) online lending platforms will be acquired
  4. A major lending platform will get hit with a cyber attack
    Here is the one prediction where I really hope I am wrong.
  5. The tech giants consolidate their positions in online lending
    Amazon, PayPal and Square have all started to roll out various online lending offerings to their huge customer bases.
  6. 2018 is the year of product line expansion
  7. Messaging apps start to get integrated into online lending

The Top 10 Most Important Marketplace Lending Stories of 2017 (Lend Academy), Rated: A

  1. Mike Cagney is Gone as CEO of SoFi Effective Immediately
  2. The Cleveland Fed Retracts Their Report on “P2P Lending”
  3. Prosper Finally Closes Their Big $5 Billion Deal
  4. Renaud Laplanche is Back with a New Consumer Lending Platform Called Upgrade 
  5. The New Breed of Small Business Lenders: Amazon, Paypal and Square
  6. The Fastest Consumer Lenders to $1 Billion in Originations
  7. CFPB Announces No-Action Letter to Upstart
  8. The OCC Publishes Details on the Fintech Charter
  9. Bills Being Introduced to “Fix” Decision in Madden v. Midland
  10. Takeaways From LendingClub’s First Ever Investor Day

Ex-Netflix Exec Thinks This Fintech Company Has Netflix-Like Potential (The Motley Fool), Rated: AAA

Netflix has completely disrupted the entertainment industry, sending large incumbents scrambling to compete with its vast global scale.

How did Netflix pull this off? Several reasons, but one is certainly Netflix’s unique culture, outlined in its now-famous Culture Deck.

That deck was constructed by Patty McCord, who spent 14 years as Netflix’s chief talent officer.

The company McCord joined is Lending Club (NYSE:LC).

In the press release, McCord stated:

I see a lot of parallels between where Netflix was as a company 10 years ago, where LendingClub is today, and where it can go in the next 10 years. I’m attracted to LendingClub for the stellar people and the way it exemplifies the concepts of freedom and responsibility. Culture can help drive innovation in companies that are paving new ground and transforming legacy industries, like Netflix did and like LendingClub is doing today. … In our innovative world, I see marketplaces like LendingClub as the future.

Ousted SoFi CEO is back with a new startup (Axios), Rated: A

Why it matters: If 2017 was the year in which VCs began to fire controversial execs, 2018 may be the year in which they’re forced to decide on quick-turn second acts.

Affirm’s big business for 2018 is marketing (Tearsheet), Rated: A

  • Affirm isn’t just a payment method or a personal loan anymore — it’s a marketing lever for merchants

  • Affirm sees every transaction at the point of sale — who is buying, what they’re buying and where; it’s a departure from the way credit is underwritten today, where lenders have no idea why borrowers need the money or how they’ll use it

Where Does Alternative Lending Go in 2018? (Hackernoon), Rated: A

When most people think of alternative lending, they immediately think of payday loans and other abusive loan products. In the tech world, the first thing that comes to mind are online lenders: those who take loans traditionally originated in person and move them online. That was the first wave of alternative lenders — think LendingClub, Prosper, OnDeck, to name a few.

Alt investments on the rise among RIAs (InvestmentNews), Rated: A

Based on the success of the RIA industry, the trend of breakaway advisers interested in exploring the independent channel continues to gain momentum.

Propagated by wirehouse branch management to keep their top producers in their seats, this false campaign is now being revealed as its exact opposite; there are more customizable solutions for RIAs to access and deploy alternative investments for their high net worth clients than ever before.

For example, to access alternatives on their own, RIAs in the past typically would be looking at $25 million AUM minimums just to reach cost-effective scale, and many alternative managers have $10 million individual minimums themselves.

5 fintech charts that surprised us this year (Tearsheet), Rated: A

Loyalty and rewards incentives may not be enough to make consumers like mobile payments, and it could be on retailers to find what would keep people coming back to their mobile wallets. Mobile payment adoption among Apple, Android and Samsung Pay today is low. Paying with cash or card works just fine for them, customers say.

Transparency is the big sticking point when it comes to why small businesses still prefer banks to online lenders.

What Silicon Valley Misunderstands About Banking & Fintech (The Financial Brand), Rated: A

There are some relevant lessons learned about behavioral finance and digital adoption discussed in the book “FinTech Innovation.” One of the most important lessons is the distinction between digital banking winners and laggards over time.

  • Disruptive innovation is ultimately less important than sustaining innovation.
  • Digital is a ‘pull’ technology, while much of financial serves are ‘push’ market places.
  • Platforms win on digital: bundling is more important than unbundling.

The Distinction Between ‘Push’ and ‘Pull’ Marketplaces

Digital brings many benefits to streamline the processes in financial services, but front office disintermediation could easily create financial exclusion in the Western world because many households operate in a ‘push’ modality. Only the few self-directed consumers are comfortable enough to ‘pull’ financial products.

This is the reason why the growth of first mover Robo-Advisor solutions were initially very promising but then faltered, while firms like Vanguard and Charles Schwab can still grow fast on digital.

Being a ‘pull’ marketplace means using digital with a purpose, like looking for a specific product on Amazon. However, very few households would google for the next investment fund or business loan. Instead, the majority would ask a friend, a banking organization or an advisor about their recommendations.

Will tomorrow’s core banking systems run on open-source software? (American Banker), Rated: A

Banks, long committed to keeping customer data private and their own code proprietary, are now opening up to fintechs and third-party developers in new ways.

Open-source projects are underway at Deutsche Bank, which made code from its Autobahn commercial banking software publicly available this fall, and at JPMorgan Chase, whose Quorum blockchain software is available in the open-source software repository GitHub.

For fintech owned by a CUSO, will banks buy? (Banking Exchange), Rated: A

Morales, CEO of QCash Financial, a credit union service organization (CUSO) owned by WSECU (formerly Washington State Employee Credit Union), says that constraint may be lessening based on the final ruling on payday lending issued by the Consumer Financial Protection Bureau in October.

Credit unions, however, are interested in the QCash small-dollar lending platform. Morales says that nine credit unions have signed up for the product and five are currently live with it.

Fintech Predictions For 2018 (Financial Advisor), Rated: B

Identity verification will be a priority in 2018, with 60 percent of online marketplaces and other websites adopting technologies and techniques for verifying new users’ identities, the company predicts.

Bankers anxious as Trump mulls credit union regulator for CFPB (American Banker), Rated: B

The Trump administration’s consideration of J. Mark McWatters to lead the Consumer Financial Protection Bureau is stoking fears among bankers that he will show favor to credit unions once in office.

United Kingdom

UK’s Largest P2P Lender Funding Circle Said to be Planning IPO at £2 Billion Valuation (Crowdfund Insider), Rated: AAA

Funding Circle, a UK based peer to peer lender, is reportedly planning an initial public offering (IPO) for 2018. The news of the new listing is courtesy of SkyNews that reports Funding Circle will begin meeting with investment banks during Q1 of 2018 as they sign up underwriters for the deal. Shares are expected to list at some point in late 2018. If Funding Circle trades on an exchange it will become the first UK P2P lender to do so thus representing a seminal event in the online lending industry.

Urban Jungle Raises £1M in Seed Funding (FinSMEs), Rated: A

Urban Jungle, a London, UK-based insurtech startup, completed a £1m seed funding round.

Moneywise reveals top 2018 financial resolutions for UK adults (London School of Business & Finance), Rated: A

Research from financial advice website Moneywise has revealed the top financial goals of its users for 2018.

Moneywise found that cutting down on unnecessary spending was the top financial resolution for 2018, with 18 per cent citing this as their main priority.

Starting or boosting cash savings was voted the second most popular financial resolution for 2018, with this goal being set by 11 per cent of Moneywise users, whilst 10 per cent plan to start investing for the first time or boosting investments in a Stocks and Shares Isa.

When IFAs fight back against digital investment management (WhatInvestment.co.uk), Rated: A

More robo-advice platforms are on the market than ever before, and the number will grow rapidly during 2018. A joint report from the FCA and the Treasury, published last June, found that 100 robo firms are either on the market already or in active development.

IFAs may well find this frustrating – even with professional credentials and years of experience, they are subject to more distrust and scrutiny than a number of untested algorithms. Worse, these algorithms may come to represent their primary competition: they offer lower prices, they open up access to financial advice, and there is a range of options available for customers minded to use them, with more to come.

Proplend Looks Back on 2017 P2P Successes & Announces 2018 Plans (Crowdfund Insider), Rated: A

On Tuesday, online platform Proplend gave its 2017 peer-to-peer lending year in review.

  • The majority of platforms gained full Financial Conduct Authority (FCA) authorization
  • Many platforms sought ISA Manager Status to launch Innovative Finance ISA (IFISA) – with Proplend being among the early adopters.
  • LendInvest withdrew FCA approval application and stepped down from the Peer to Peer Finance Association as it moved from all P2P activity
  • RateSetter’s wholesale lending practices notably proved costly. The lender eventually withdrew from the P2PFA after breathing the association’s operating principles

The lender went on to note its plans for 2018:

  • The redesign of Lender Dashboards, Proplend.com website and the launch of our Auto-Invest product
  • Initially Proplend Auto-Invest will be a low-risk (Tranche A), three-year, Innovative Finance ISA product targeting returns of c.5% each year
  • The lender has built a “healthy” loan pipeline which will be available on the platform from early 2018, subject to due diligence, valuations, and legals.

5 alternative investments to the stock market (BM Magazine), Rated: B

  1. Real Estate
  2. Gold and other Precious Metals
  3. Backing and Staking in Poker
  4. Peer-to-Peer Lending
  5. Equity Crowdfunding

Could 2018 be a bumper year for tech IPOs? (Computer Business Review), Rated: B

After a couple of quiet years on the IPO front, the market could be ready to bounce back with Funding Circle said to be the first targeting flotation.

In January 2017 the P2P site surpassed a £1bn valuation thanks to an £82m funding round, led by the likes of Accel.

With distribution deals with the likes of the Royal Bank of Scotland and Santander, Funding Circle lent more than £1.7bn in 2017.

The London Stock Exchange revealed that 106 companies floated on its markets in 2017, raising £15bn, up 63% by number and 164% by value on 2016. These numbers mean that the LSE surpassed all European exchanges in the year by both IPO number and by money raised.

European Union

ETF providers hope Mifid II will spur European growth (Financial Times), Rated: AAA

ETF trading has since spread to 25 exchanges across Europe, but no accurate record of activity has been required by regulators. About 70 per cent of ETF trading in Europe goes unreported because it occurs via private bilateral over-the-counter transactions.

This should begin to end from Wednesday with the introduction of sweeping European rules designed to strengthen protection for investors and improve transparency across the continent’s financial markets. The package of regulations, known as Mifid II, requires comprehensive, detailed reporting of ETF trades.

Source: Financial Times

The passive investment industry, which is dominated by BlackRock, State Street and Vanguard, are betting Mifid II will set their European businesses on a growth path akin to the US, where usage has spread far more widely and deeply. Assets held in US-listed ETFs stood at $3.5tn at the end of November, compared with just $790bn across all European-listed ETFs, according to ETFGI.

Source: Financial Times
International

The FinTech outlook for 2018 (The Finanser), Rated: AAA

There are four big things for 2018 from a FinTech viewpoint that are obvious to me however, which are:

  1. Getting down to business with Artificial Intelligence (AI)
  2. Rationalising and cleansing core data structures
  3. Continuing the digital drive
  4. Distributed Ledger Technology (DLT) continues to rise

Therefore, rather than me making predictions, I thought it interesting to review the views of other commentators.

Jim also wrote another piece that nicely summarises Forrester’s predictions for 2018 which include:

  1. Banks not embracing Open Banking, but increasing partnerships with start-ups;
  2. Faster moves to embrace Digital Banking whilst losing focus on face-to-face communications; and
  3. Focus on back office transformation.

 

Saxo Bank’s Payments business sent me a press release with their top three predictions, which are:

  • The demise of traditional, slow, expensive cross border payments
  • Payment Service Providers (PSPs) will help merchants to expand internationally
  • Tech giants move into banking

Top 10 Companies of the Blockchain Industry in 2017 (Coin Telegraph), Rated: A

The total market capitalization of all the cryptocurrencies hit the $600 bln mark in December.

Source: Coin Telegraph

Coinbase is one of the top digital currency wallet and platform for exchange. Market capitalization: $2 bln (GDAX)

Ripple is a real-time gross settlement and currency exchange. Its main goal is to make an entire system devoted to money transferring. Market capitalization: $30 bln

India

P2P players blame lending limit for rising costs (Business Standard), Rated: AAA

Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the  But they argue the Rs 1-million limit placed on across all platforms is restrictive.

“With time, these limits are going to be relaxed by the  These have been imposed in order to avoid rapid growth that could lead to systemic risk,” said Ekmeet Singh, CEO, Lendbox.

Industry players want the to raise the limit for individual borrowers and remove the limit for institutional 

P2P lender AnyTimeLoan, prop-tech startup Foyr, tech firm Imanis raise funds (Deal Street Asia), Rated: A

While Spice Digital is investing up to $3.9 million in AnyTimeLoan, prop-tech startup Foyr has raised $3.8 million from JLL and others. Also, Wipro has put in an additional $2 million in US-based tech firm Imanis.

Asia

Crowdo Recaps 2017 Milestones: 3,500+ Projects Funded (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding, posted an infographic citing its 2017 milestones.

Canada

Meet GN Compass: The ICO Attempting to Disrupt Liquidity In The Lending Market (Equities.com), Rated: AAA

Collins: I left the railway, cashed out my pension and started my own lending company; Great North Capital Inc. We have successfully funded approximately 100 loans; primarily focusing on high risk clients. Based on my accumulative knowledge and experience in both banking and running Great North Capital, I started to develop the idea for a peer-to-peer lending solution where there is very limited risk to the investors (lenders) while making loans liquid. Also by having our own credit system for borrowers, they have the opportunity to improve their credit rating on the platform by making timely payments and having no delinquencies. At the same time, I was learning more about cryptocurrencies and blockchain technology. I quickly realized the huge potential of the blockchain and how it can solve the liquidity problem as well as securing an investor’s principal capital; which are the main issues of current peer-to-peer lending platforms. I got in touch with Jean Pierre Rukebesha who immediately liked the idea and decided to come on board as co-founder and CFO. Hence GN Compass (Great North Compass) was born.

Older Canadians still leery of fintech despite flood of services, RateHub finds (IT Business), Rated: A

Between last year’s official release of Android Pay, the increasing ubiquity of artificial intelligence (AI)-powered support platforms such as Sun Life’s Ella, and the ongoing digital transformation of Canada’s banks, Canadians have more opportunities than ever to integrate fintech into their lives – but according to financial comparison platform developer Ratehub.ca, the eldest among us aren’t taking advantage.

According to the company’s 2017 Digital Money Trends Report, released last month, fewer than half of baby boomers reported trusting robo-advisors, mobile payments, marketplace and peer-to-peer lenders, and rate comparison website, while in many cases millennials and generation X-ers were nearly twice as likely to do so.

Other findings from the report include:

  • Nearly twice as many millennials (44 per cent) and generation X-ers (42 per cent) reported trusting robo-advisors compared to boomers (23 per cent).
  • Nearly twice as many millennials (71 per cent) said they trust mobile payments compared to boomers (38 per cent). (62 per cent of generation X-ers said they trust mobile payments.)
  • Twice as many millennials (47 per cent) and generation X-ers (48 per cent) trust marketplace lenders compared to boomers (23 per cent).
  • 58 per cent of millennials and 53 per cent of generation X-ers trust peer-to-peer lenders, versus only 32 per cent of boomers.
  • 63 per cent of millennials and 60 per cent of generation X-ers trust rate comparison websites, versus 42 per cent of boomers.
Africa

Internet firm Opera bets on Kenyan to steer Africa Fintech (Business Daily), Rated: A

Internet browser company Opera has picked Eddie Ndichu to drive its Fintech strategy in Africa even as it prepares to set up an office in Nairobi.

Opera has said that it is investing Sh10.3 billion ($100 million) in Africa’s digital economy over the next two years and OPay is part of those investments.

In a statement Tuesday, Opera said that it had appointed Mr Ndichu as the managing director and vice president for Fintech in Africa.

Authors:

George Popescu
Allen Taylor

Wednesday January 3 2018, Daily News Digest

ETFs Europe

News Comments Today’s main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada. Today’s main analysis: Can Mifid II spur growth in European ETF market? Today’s thought-provoking […]

ETFs Europe

News Comments

United States

United Kingdom

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Who’s the Most Valuable Online Lender? After This Deal, It’s GreenSky (WSJ), Rated: AAA

Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.

It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. fintech company behind Stripe Inc., which processes payments for Internet businesses.

Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.

What 2018 Will Mean For Marketplace Lenders (PYMNTS), Rated: AAA

2017 was a tough year for some of the biggest names in alternative financial services in the U.S. – Prosper, OnDeck and LendingClub, in particular.

Breslow is hyping OnDeck’s future of partnerships with mainstream baking players – in particular, calling out a renewed partnership with JPMorgan Chase in August to expand the banks’ SMB lending reach.

Prosper, perhaps unsurprisingly, is focused on remaining prosperous, as measured by profitability and further developing its new securitization platform.

LendingClub finally got investors to show them some love – and after its record low following its analyst day earnings accounting, stock jumped 15 percent in mid-December and has managed to hold relatively stable.

Marketplace Lending Predictions for 2018 (Lend Academy), Rated: AAA

First, let’s review my predictions I made exactly one year ago.

  1. 2017 will be the year of the bank partnership
    I would say I was partially right on this one.
  2. The OCC Fintech Charter will receive a positive reception
    So, while many of the fintech platforms supported the charter there was no real positive movement this year.
  3. Lending platforms will offer banking products
    While we had a couple of platforms offering credit cards for the most part this prediction failed to materialize.
  4. One large platform will be acquired
    Student lender Earnest was acquired by Navient in a deal announced in early October.
  5. There will be no new IPOs this year
    I was almost right on this one but one US lending platform did have an IPO in 2017.
  6. China will become an important source of capital outside the USA
    I got this one right.
  7. Artificial intelligence will take center stage
    I think I read more articles about AI this year than in the previous five years combined.

My 2018 Marketplace Lending Predictions

  1. Five top 25 banks will launch their own online lending platforms
    Banks have realized that if you want to provide successful loan products today you need to have an online presence.
  2. Two new pieces of legislation will be passed that will benefit the industry
  3. One of the top five (non-bank) online lending platforms will be acquired
  4. A major lending platform will get hit with a cyber attack
    Here is the one prediction where I really hope I am wrong.
  5. The tech giants consolidate their positions in online lending
    Amazon, PayPal and Square have all started to roll out various online lending offerings to their huge customer bases.
  6. 2018 is the year of product line expansion
  7. Messaging apps start to get integrated into online lending

The Top 10 Most Important Marketplace Lending Stories of 2017 (Lend Academy), Rated: A

  1. Mike Cagney is Gone as CEO of SoFi Effective Immediately
  2. The Cleveland Fed Retracts Their Report on “P2P Lending”
  3. Prosper Finally Closes Their Big $5 Billion Deal
  4. Renaud Laplanche is Back with a New Consumer Lending Platform Called Upgrade 
  5. The New Breed of Small Business Lenders: Amazon, Paypal and Square
  6. The Fastest Consumer Lenders to $1 Billion in Originations
  7. CFPB Announces No-Action Letter to Upstart
  8. The OCC Publishes Details on the Fintech Charter
  9. Bills Being Introduced to “Fix” Decision in Madden v. Midland
  10. Takeaways From LendingClub’s First Ever Investor Day

Ex-Netflix Exec Thinks This Fintech Company Has Netflix-Like Potential (The Motley Fool), Rated: AAA

Netflix has completely disrupted the entertainment industry, sending large incumbents scrambling to compete with its vast global scale.

How did Netflix pull this off? Several reasons, but one is certainly Netflix’s unique culture, outlined in its now-famous Culture Deck.

That deck was constructed by Patty McCord, who spent 14 years as Netflix’s chief talent officer.

The company McCord joined is Lending Club (NYSE:LC).

In the press release, McCord stated:

I see a lot of parallels between where Netflix was as a company 10 years ago, where LendingClub is today, and where it can go in the next 10 years. I’m attracted to LendingClub for the stellar people and the way it exemplifies the concepts of freedom and responsibility. Culture can help drive innovation in companies that are paving new ground and transforming legacy industries, like Netflix did and like LendingClub is doing today. … In our innovative world, I see marketplaces like LendingClub as the future.

Ousted SoFi CEO is back with a new startup (Axios), Rated: A

Why it matters: If 2017 was the year in which VCs began to fire controversial execs, 2018 may be the year in which they’re forced to decide on quick-turn second acts.

Affirm’s big business for 2018 is marketing (Tearsheet), Rated: A

  • Affirm isn’t just a payment method or a personal loan anymore — it’s a marketing lever for merchants

  • Affirm sees every transaction at the point of sale — who is buying, what they’re buying and where; it’s a departure from the way credit is underwritten today, where lenders have no idea why borrowers need the money or how they’ll use it

Where Does Alternative Lending Go in 2018? (Hackernoon), Rated: A

When most people think of alternative lending, they immediately think of payday loans and other abusive loan products. In the tech world, the first thing that comes to mind are online lenders: those who take loans traditionally originated in person and move them online. That was the first wave of alternative lenders — think LendingClub, Prosper, OnDeck, to name a few.

Alt investments on the rise among RIAs (InvestmentNews), Rated: A

Based on the success of the RIA industry, the trend of breakaway advisers interested in exploring the independent channel continues to gain momentum.

Propagated by wirehouse branch management to keep their top producers in their seats, this false campaign is now being revealed as its exact opposite; there are more customizable solutions for RIAs to access and deploy alternative investments for their high net worth clients than ever before.

For example, to access alternatives on their own, RIAs in the past typically would be looking at $25 million AUM minimums just to reach cost-effective scale, and many alternative managers have $10 million individual minimums themselves.

5 fintech charts that surprised us this year (Tearsheet), Rated: A

Loyalty and rewards incentives may not be enough to make consumers like mobile payments, and it could be on retailers to find what would keep people coming back to their mobile wallets. Mobile payment adoption among Apple, Android and Samsung Pay today is low. Paying with cash or card works just fine for them, customers say.

Transparency is the big sticking point when it comes to why small businesses still prefer banks to online lenders.

What Silicon Valley Misunderstands About Banking & Fintech (The Financial Brand), Rated: A

There are some relevant lessons learned about behavioral finance and digital adoption discussed in the book “FinTech Innovation.” One of the most important lessons is the distinction between digital banking winners and laggards over time.

  • Disruptive innovation is ultimately less important than sustaining innovation.
  • Digital is a ‘pull’ technology, while much of financial serves are ‘push’ market places.
  • Platforms win on digital: bundling is more important than unbundling.

The Distinction Between ‘Push’ and ‘Pull’ Marketplaces

Digital brings many benefits to streamline the processes in financial services, but front office disintermediation could easily create financial exclusion in the Western world because many households operate in a ‘push’ modality. Only the few self-directed consumers are comfortable enough to ‘pull’ financial products.

This is the reason why the growth of first mover Robo-Advisor solutions were initially very promising but then faltered, while firms like Vanguard and Charles Schwab can still grow fast on digital.

Being a ‘pull’ marketplace means using digital with a purpose, like looking for a specific product on Amazon. However, very few households would google for the next investment fund or business loan. Instead, the majority would ask a friend, a banking organization or an advisor about their recommendations.

Will tomorrow’s core banking systems run on open-source software? (American Banker), Rated: A

Banks, long committed to keeping customer data private and their own code proprietary, are now opening up to fintechs and third-party developers in new ways.

Open-source projects are underway at Deutsche Bank, which made code from its Autobahn commercial banking software publicly available this fall, and at JPMorgan Chase, whose Quorum blockchain software is available in the open-source software repository GitHub.

For fintech owned by a CUSO, will banks buy? (Banking Exchange), Rated: A

Morales, CEO of QCash Financial, a credit union service organization (CUSO) owned by WSECU (formerly Washington State Employee Credit Union), says that constraint may be lessening based on the final ruling on payday lending issued by the Consumer Financial Protection Bureau in October.

Credit unions, however, are interested in the QCash small-dollar lending platform. Morales says that nine credit unions have signed up for the product and five are currently live with it.

Fintech Predictions For 2018 (Financial Advisor), Rated: B

Identity verification will be a priority in 2018, with 60 percent of online marketplaces and other websites adopting technologies and techniques for verifying new users’ identities, the company predicts.

Bankers anxious as Trump mulls credit union regulator for CFPB (American Banker), Rated: B

The Trump administration’s consideration of J. Mark McWatters to lead the Consumer Financial Protection Bureau is stoking fears among bankers that he will show favor to credit unions once in office.

United Kingdom

UK’s Largest P2P Lender Funding Circle Said to be Planning IPO at £2 Billion Valuation (Crowdfund Insider), Rated: AAA

Funding Circle, a UK based peer to peer lender, is reportedly planning an initial public offering (IPO) for 2018. The news of the new listing is courtesy of SkyNews that reports Funding Circle will begin meeting with investment banks during Q1 of 2018 as they sign up underwriters for the deal. Shares are expected to list at some point in late 2018. If Funding Circle trades on an exchange it will become the first UK P2P lender to do so thus representing a seminal event in the online lending industry.

Urban Jungle Raises £1M in Seed Funding (FinSMEs), Rated: A

Urban Jungle, a London, UK-based insurtech startup, completed a £1m seed funding round.

Moneywise reveals top 2018 financial resolutions for UK adults (London School of Business & Finance), Rated: A

Research from financial advice website Moneywise has revealed the top financial goals of its users for 2018.

Moneywise found that cutting down on unnecessary spending was the top financial resolution for 2018, with 18 per cent citing this as their main priority.

Starting or boosting cash savings was voted the second most popular financial resolution for 2018, with this goal being set by 11 per cent of Moneywise users, whilst 10 per cent plan to start investing for the first time or boosting investments in a Stocks and Shares Isa.

When IFAs fight back against digital investment management (WhatInvestment.co.uk), Rated: A

More robo-advice platforms are on the market than ever before, and the number will grow rapidly during 2018. A joint report from the FCA and the Treasury, published last June, found that 100 robo firms are either on the market already or in active development.

IFAs may well find this frustrating – even with professional credentials and years of experience, they are subject to more distrust and scrutiny than a number of untested algorithms. Worse, these algorithms may come to represent their primary competition: they offer lower prices, they open up access to financial advice, and there is a range of options available for customers minded to use them, with more to come.

Proplend Looks Back on 2017 P2P Successes & Announces 2018 Plans (Crowdfund Insider), Rated: A

On Tuesday, online platform Proplend gave its 2017 peer-to-peer lending year in review.

  • The majority of platforms gained full Financial Conduct Authority (FCA) authorization
  • Many platforms sought ISA Manager Status to launch Innovative Finance ISA (IFISA) – with Proplend being among the early adopters.
  • LendInvest withdrew FCA approval application and stepped down from the Peer to Peer Finance Association as it moved from all P2P activity
  • RateSetter’s wholesale lending practices notably proved costly. The lender eventually withdrew from the P2PFA after breathing the association’s operating principles

The lender went on to note its plans for 2018:

  • The redesign of Lender Dashboards, Proplend.com website and the launch of our Auto-Invest product
  • Initially Proplend Auto-Invest will be a low-risk (Tranche A), three-year, Innovative Finance ISA product targeting returns of c.5% each year
  • The lender has built a “healthy” loan pipeline which will be available on the platform from early 2018, subject to due diligence, valuations, and legals.

5 alternative investments to the stock market (BM Magazine), Rated: B

  1. Real Estate
  2. Gold and other Precious Metals
  3. Backing and Staking in Poker
  4. Peer-to-Peer Lending
  5. Equity Crowdfunding

Could 2018 be a bumper year for tech IPOs? (Computer Business Review), Rated: B

After a couple of quiet years on the IPO front, the market could be ready to bounce back with Funding Circle said to be the first targeting flotation.

In January 2017 the P2P site surpassed a £1bn valuation thanks to an £82m funding round, led by the likes of Accel.

With distribution deals with the likes of the Royal Bank of Scotland and Santander, Funding Circle lent more than £1.7bn in 2017.

The London Stock Exchange revealed that 106 companies floated on its markets in 2017, raising £15bn, up 63% by number and 164% by value on 2016. These numbers mean that the LSE surpassed all European exchanges in the year by both IPO number and by money raised.

European Union

ETF providers hope Mifid II will spur European growth (Financial Times), Rated: AAA

ETF trading has since spread to 25 exchanges across Europe, but no accurate record of activity has been required by regulators. About 70 per cent of ETF trading in Europe goes unreported because it occurs via private bilateral over-the-counter transactions.

This should begin to end from Wednesday with the introduction of sweeping European rules designed to strengthen protection for investors and improve transparency across the continent’s financial markets. The package of regulations, known as Mifid II, requires comprehensive, detailed reporting of ETF trades.

Source: Financial Times

The passive investment industry, which is dominated by BlackRock, State Street and Vanguard, are betting Mifid II will set their European businesses on a growth path akin to the US, where usage has spread far more widely and deeply. Assets held in US-listed ETFs stood at $3.5tn at the end of November, compared with just $790bn across all European-listed ETFs, according to ETFGI.

Source: Financial Times
International

The FinTech outlook for 2018 (The Finanser), Rated: AAA

There are four big things for 2018 from a FinTech viewpoint that are obvious to me however, which are:

  1. Getting down to business with Artificial Intelligence (AI)
  2. Rationalising and cleansing core data structures
  3. Continuing the digital drive
  4. Distributed Ledger Technology (DLT) continues to rise

Therefore, rather than me making predictions, I thought it interesting to review the views of other commentators.

Jim also wrote another piece that nicely summarises Forrester’s predictions for 2018 which include:

  1. Banks not embracing Open Banking, but increasing partnerships with start-ups;
  2. Faster moves to embrace Digital Banking whilst losing focus on face-to-face communications; and
  3. Focus on back office transformation.

 

Saxo Bank’s Payments business sent me a press release with their top three predictions, which are:

  • The demise of traditional, slow, expensive cross border payments
  • Payment Service Providers (PSPs) will help merchants to expand internationally
  • Tech giants move into banking

Top 10 Companies of the Blockchain Industry in 2017 (Coin Telegraph), Rated: A

The total market capitalization of all the cryptocurrencies hit the $600 bln mark in December.

Source: Coin Telegraph

Coinbase is one of the top digital currency wallet and platform for exchange. Market capitalization: $2 bln (GDAX)

Ripple is a real-time gross settlement and currency exchange. Its main goal is to make an entire system devoted to money transferring. Market capitalization: $30 bln

India

P2P players blame lending limit for rising costs (Business Standard), Rated: AAA

Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the  But they argue the Rs 1-million limit placed on across all platforms is restrictive.

“With time, these limits are going to be relaxed by the  These have been imposed in order to avoid rapid growth that could lead to systemic risk,” said Ekmeet Singh, CEO, Lendbox.

Industry players want the to raise the limit for individual borrowers and remove the limit for institutional 

P2P lender AnyTimeLoan, prop-tech startup Foyr, tech firm Imanis raise funds (Deal Street Asia), Rated: A

While Spice Digital is investing up to $3.9 million in AnyTimeLoan, prop-tech startup Foyr has raised $3.8 million from JLL and others. Also, Wipro has put in an additional $2 million in US-based tech firm Imanis.

Asia

Crowdo Recaps 2017 Milestones: 3,500+ Projects Funded (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding, posted an infographic citing its 2017 milestones.

Canada

Meet GN Compass: The ICO Attempting to Disrupt Liquidity In The Lending Market (Equities.com), Rated: AAA

Collins: I left the railway, cashed out my pension and started my own lending company; Great North Capital Inc. We have successfully funded approximately 100 loans; primarily focusing on high risk clients. Based on my accumulative knowledge and experience in both banking and running Great North Capital, I started to develop the idea for a peer-to-peer lending solution where there is very limited risk to the investors (lenders) while making loans liquid. Also by having our own credit system for borrowers, they have the opportunity to improve their credit rating on the platform by making timely payments and having no delinquencies. At the same time, I was learning more about cryptocurrencies and blockchain technology. I quickly realized the huge potential of the blockchain and how it can solve the liquidity problem as well as securing an investor’s principal capital; which are the main issues of current peer-to-peer lending platforms. I got in touch with Jean Pierre Rukebesha who immediately liked the idea and decided to come on board as co-founder and CFO. Hence GN Compass (Great North Compass) was born.

Older Canadians still leery of fintech despite flood of services, RateHub finds (IT Business), Rated: A

Between last year’s official release of Android Pay, the increasing ubiquity of artificial intelligence (AI)-powered support platforms such as Sun Life’s Ella, and the ongoing digital transformation of Canada’s banks, Canadians have more opportunities than ever to integrate fintech into their lives – but according to financial comparison platform developer Ratehub.ca, the eldest among us aren’t taking advantage.

According to the company’s 2017 Digital Money Trends Report, released last month, fewer than half of baby boomers reported trusting robo-advisors, mobile payments, marketplace and peer-to-peer lenders, and rate comparison website, while in many cases millennials and generation X-ers were nearly twice as likely to do so.

Other findings from the report include:

  • Nearly twice as many millennials (44 per cent) and generation X-ers (42 per cent) reported trusting robo-advisors compared to boomers (23 per cent).
  • Nearly twice as many millennials (71 per cent) said they trust mobile payments compared to boomers (38 per cent). (62 per cent of generation X-ers said they trust mobile payments.)
  • Twice as many millennials (47 per cent) and generation X-ers (48 per cent) trust marketplace lenders compared to boomers (23 per cent).
  • 58 per cent of millennials and 53 per cent of generation X-ers trust peer-to-peer lenders, versus only 32 per cent of boomers.
  • 63 per cent of millennials and 60 per cent of generation X-ers trust rate comparison websites, versus 42 per cent of boomers.
Africa

Internet firm Opera bets on Kenyan to steer Africa Fintech (Business Daily), Rated: A

Internet browser company Opera has picked Eddie Ndichu to drive its Fintech strategy in Africa even as it prepares to set up an office in Nairobi.

Opera has said that it is investing Sh10.3 billion ($100 million) in Africa’s digital economy over the next two years and OPay is part of those investments.

In a statement Tuesday, Opera said that it had appointed Mr Ndichu as the managing director and vice president for Fintech in Africa.

Authors:

George Popescu
Allen Taylor

Thursday November 16 2017, Daily News Digest

securitization

News Comments Today’s main news: Marcus surpasses 2017 goal. LendInvest gets into buy-to-let. Top 3 spots on KPMG Fintech 100 list are all Chinese. Lendix launches SME bridge loans in France, Spain, and Italy. Mauritia issues draft P2P lending rules. Marlette closes fourth securitization in a year. Today’s main analysis: Rising challenges unlikely to deter U.S. securitizations. Today’s thought-provoking articles: […]

securitization

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Canada

Russia

News Summary

United States

Marcus from Goldman Sachs Surpasses 2017 Goal (Bank Innovation), Rated: AAA

Martin Chavez, chief financial officer for Goldman Sachs, showed in a slideshow at a Bank of America Merrill Lynch event yesterday that Marcus had already surpassed $1.96 billion in originations as of Nov. 9.

What that means is that from Nov. 9 to Nov. 14, over a span of five days, Marcus originated more than $40 million in loans.

Rising challenges unlikely to deter U.S. securitization in 2018 (Asset Securitization Report), Rated: AAA

As a result, Fitch’s outlook for U.S. structured finance ratings is predominately stable for 2018. That said, given where we are in the credit cycle, Fitch is keeping a close watch on select asset types that could run into some issues over the next 12 months.

Entering 2018, Fitch has either Positive or Stable Outlook on over 90% of its rated securitized bonds.

Perhaps the most notable change that has manifested from risk retention is the shrinking universe of originators bringing new securitizations to market. This is particularly notable in the universe of CMBS originators, which has shrunk from a high of roughly 40 to now less than 20 due to a combination of risk retention and Reg A/B.

Competitive pressures, long in place for subprime autos, are escalating in a marketplace ABS environment that is struggling to find its footing by testing recent underwriting models, asset quality and, in some cases, business models. Delinquencies and chargeoffs of existing assets continue to increase as marginal borrowers increase their leverage. Not likely to help is the drive for growth among large marketplace lenders coupled with rising market pressure from competing banks like Goldman Sachs (Marcus), Discover, and Suntrust. And unless originators tighten their credit policies with discipline, the strain will intensify.

Source: Asset Securitization Report

Online lenders should heed criticism of their effect on borrowers (American Banker), Rated: AAA

The consumer lending industry is abuzz about the Federal Reserve Bank of Cleveland’s recent report on debt consolidation and online lending. This excellent piece of research concludes that, on average, online installment loan borrowers fall into more debt after taking out a loan, experience hits to their credit score and history as a result, and take out online loans despite having access to traditional banking and credit channels.

The first two conclusions are damning, especially as these loans are often marketed as a way to help consumers consolidate credit card debt and improve their finances. At the end of the day, a lender’s duty is not merely to avoid losses. Any loan must be suitable for the customer — which means it should be made only if the lender believes it is improving the customer’s financial health. A lender not guided by that principle should be prepared for severe criticism as well as elevated losses down the road.

But it would be nonsensical to discredit or ignore the study because it includes online lenders beyond well-known fintech names.

The Best of Both Worlds with Prosper for Borrowers and Lenders (DoughRoller), Rated: AAA

Founded in 2005, and generally recognized as the first peer-to-peer (P2P) lending platform in the US, Prosper has funded more than $10 billion in loans since.

While borrowers can get personal loans ranging in size between $2,000 and $35,000, investors can put as little as $25 toward funding those loans.

There is one exception, however. You cannot use loan proceeds for post-secondary educational expenses. That’s because some of the rules in federal law aren’t compatible with P2P lending. More specifically, with education loans, the borrower must have at least 30 days to accept or reject a loan offer.

Medical procedures available for financing under the PHL program include:

  • Cosmetic dentistry
  • Bariatric surgery
  • Cosmetic and plastic surgery
  • Fertility and reproductive procedures

All Prosper loans have a term of either three or five years.

The minimum requirements are:

  • A minimum FICO score of 640, based on a TransUnion FICO 08 score
  • Debt-to-Income (DTI) ratio below 50%
  • Stated income greater than $0 (you must have an income)
  • No bankruptcies filed within the previous 12 months
  • Fewer than seven credit bureau inquiries within the last six months
  • A minimum of three open trades reported on your credit report

Interest rates are between a minimum of 3.00% for the best AA rated borrowers to a maximum of 36.00% for the lowest rated HR borrower grades.

Source: DoughRoller

Prosper for Investors

Prosper advertises that the average rate of return by investors on the platform is 7.41% per year.

Loans rated HR have a much higher average return, at 11.73%.

You can open either a General Investment Account or an IRA. Available IRAs include traditional, Roth, SIMPLE, SEP and rollover IRAs (IRA accounts are held with Millennium Trust Company). At this time, Prosper has made only individual accounts available. You cannot hold an account jointly with someone else.

For regular investment accounts, the minimum is $25. For IRA accounts, the minimum is $5,000.

Similar to other P2P platforms, when you invest with Prosper, you don’t actually invest in whole loans. Instead, you invest in small slivers of those loans, referred to as “notes.” The notes are in denominations of $25. This means that you can spread an investment of $1,000 across as many as 40 different loans.

The servicing fee is 1% of the outstanding balance of a loan. That means that if the loan pays 8%, your net return will be 7%.

Source: DoughRoller

Marlette Funding Closes Fourth Personal Loan Securitization Within Past Year (LendEDU), Rated: A

Last week, marketplace lender Marlette Funding announced the closing of its fourth proprietary securitization. The transaction was worth an estimated $312 million, and it is the fourth securitization announcement since August of 2016 from Marlette Funding.

eOriginal Named as One of Fastest Growing Companies in North America on Deloitte’s 2017 Technology Fast 500 (eOriginal), Rated: A

eOriginal, Inc., today announced it has been named to Deloitte’s Technology Fast 500 list as one of North America’s fastest growing technology, media, telecommunications, life sciences, and energy companies. eOriginal earned the rank of 294 by more than doubling revenues during the evaluation period of FY 2013 through FY 2016.

Betterment, the investing startup with $ 11 billion in assets, is rolling out a new service to make charitable giving easier (Business Insider), Rated: A

Betterment, the New York-based roboadviser, announced Wednesday a charitable giving feature that’ll let users donate shares of their account to partnered charities.

The firm, which manages $11 billion for over 300,000 customers, partnered with 11 charities for Betterment Charitable Giving, including Big Brothers Big Sisters of NYC, UNICEF, and World Wildlife Fund, according to a news release. The new feature is set to go live November 28.

Subprime car loans souring faster at nonbank lenders (American Banker), Rated: A

Despite signs of trouble in subprime auto lending, U.S. banks and credit unions are well positioned to ride out any market turbulence, a new report from the Federal Reserve Bank of New York suggests.

More than $435 billion in auto loans to borrowers with credit scores below 660 were outstanding during the third quarter of this year, the report found. That total has been climbing steadily since bottoming out at $249 billion in early 2011. Delinquency rates have also been rising as it has become easier to qualify for an auto loan.

Fidelity latest financial firm to facilitate data sharing with fintechs (American Banker), Rated: A

Fidelity Investments is joining the ranks of financial firms sharing customer account data with others through an application programming interface.

The new service, called Fidelity Access, will give third parties access to Fidelity customers’ account data for use in apps and services like tax preparation, budgeting, financial planning, spending analysis and portfolio advice — provided the Fidelity customers give their OK. Customer data to be shared includes Fidelity account balances, securities holdings, and transactions.

These are the most valuable fintech companies in America (MarketWatch), Rated: A

Stripe Inc., whose software is used by businesses to accept and track digital payments, leads the way as the most valuable fintech startup in the U.S., with a $9.2 billion valuation.

And just to be clear, fintech startups are nowhere near close to catching up to the big banks. Wells Fargo & Co. has a market cap of more than $266 billion, and Bank of America Corp. has a market cap of more than $273 billion.

RealtyProfits Offers Accredited Investors an Innovative Platform to Invest in the Real Estate Sector (Digital Journal), Rated: A

RealtyProfits (www.RealtyProfits.com) announces today an exciting and innovative investment opportunity, RealtyProfits IV, with a Preferred Return of 12 percent per annum, available exclusively to accredited high net-worth individuals and institutional investors. The private preferred equity securities, available for purchase at www.RealtyProfits.com, are being offered through WealthForge Securities, LLC, a registered broker/dealer and member of FINRA/SIPC.

The geographically diversified portfolio includes properties in 700 cities coast to coast, with a current estimated value of $1.73 billion and more than $700 million of equity in more than 5,900 portfolio properties. The properties include primarily single-family homes and condominiums ranging in value from $100,000 to more than $2,500,000.

Accredited investors can start investing with as little as $20,000. RealtyProfits IV offers monthly cash distributions. Preferred equity investors receive all distributions made by RealtyProfits IV until fully repaid. The Preferred Return is 12 percent per annum, with initial monthly Base Preferred Return payments at 6 percent per annum anticipated depending on cash flow during each of the first 24 months.

Reality Shares Teams up with Nasdaq to Launch Blockchain Tech Index (BusinessWire), Rated: A

Reality Shares and Nasdaq announce the creation of the Reality Shares Nasdaq Blockchain Economy Index, a smart-beta index that tracks the growth and development of leading global companies creating and implementing blockchain solutions.

An ETF that will track the Index is already in the works, with Reality Shares filing for it on November 2, 2017.

Reality Shares and Nasdaq compiled the index by utilizing internal and external research and their proprietary Blockchain ScoreTM ranking system. The Index is comprised of global companies that seek to capitalize upon transformational blockchain technology that may potentially disrupt the markets in which they operate.

How to Choose Between a Peer-To-Peer Lending or Traditional Loan (Experian), Rated: A

Shopping for a loan at a P2P provider is a two-step process. First, based on a credit score (or credit scores) and your answers to a few basic questions—your full name, address, date of birth and annual income—the lender determines which loan offer(s) to extend to you. (It’s possible at this juncture that the lender will decide not to extend any loan offers; if they do, they’ll explain why.)

Once you choose the loan you want, the lender does a more detailed credit check and may ask you to verify your income and to provide additional background information.  Each P2P site has its own lending criteria, including minimum credit scores, and additional information requirements vary accordingly. Some P2P lenders want information on your educational background; others want work history or details about your financial assets. In most cases, you can submit the necessary documents electronically.

The first step in the P2P loan-approval process gets one or more of your credit scores by a method known as a soft inquiry—the same process you use when you check your own credit scores. Soft inquiries have no impact on your credit scores. However, the hard inquiries traditional lenders make when you apply for a credit cards or bank loans are reported to the national credit bureaus. They appear on your credit reports, and typically cause temporary credit-score drops of several points.

In the second step of P2P loan approval, the lender performs a hard inquiry to confirm your credit score and, likely, to review your full credit report.

Before you apply for a P2P loan

  • Take a look at the fine print on the bottom of each provider’s homepage, to get an overview of the loan amounts they offer and the rates and fees they charge.
  • Make sure the lender operates in your state.
  • Check your FICO Score and review your credit reports for any major negative entries. Accounts in collection, liens and civil judgments are among the items that could torpedo your loan application, even if you meet the credit-score requirements.
  • Determine the amount of money you need and watch out for tempting upsells.
  • Consider using the Experian loan-referral tool to explore offers from multiple P2P lenders (and possibly traditional lenders as well).

Resignation of CFPB head gives Trump opportunity to erase Elizabeth Warren’s legacy (Legal Insurrection), Rated: A

Richard Cordray, an Obama appointee and head of the Consumer Financial Protection Bureau (CFPB) announced to staff in an email Wednesday his plans to resign. While he’s yet to confirm his plans, there’s speculation Cordray will return home to run for Ohio’s governorship.

Seven Signs That the Bond Bull Market is Over (INTL FCStone), Rated: A

  • The bond bear market is already here: short and medium-term treasuries have lost value in the past 5 years
  • Buybacks have fallen to a five-year low, and big repurchasers have underperformed
  • Oil prices are at a 30-month high, and the futures curve is in backwardation
  • The long and the short ends of the yield curve are moving together again
  • The Chinese trade surplus has shrunk from 10% of GDP to almost zero in the past ten years
  • The U.S. deficit is growing again, an unprecedented phenomenon in times of expansion and peace
  • Small bubbles are popping out: Auckland houses, Ethereum crypto coins, and collectible cars
Source: Global Macro Report, INTL FCStone

Read the full report here.

Spring Framework Creator Launches Atomist for Development Automation With $ 22 Million in Series A Funding (Marketwired), Rated: A

Today on stage at Structure 2017, Atomist is formally launching and unveiling its Development Automation Platform with an Open Source client and API. As part of today’s launch, Atomist is announcing $22 million in Series A funding from Accel and Matrix Partners.

Bestow Gives Texas Residents First Access to On-Demand Life Insurance (PRWeb), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced the early access roll out of its comprehensive, full-stack, digital life insurance solution in Texas. For the first time Bestow’s solution is available to the public, giving Texas residents primary access to apply for the only on-demand life insurance solution, instantly and without a medical exam.

Leveraging applied intelligence and algorithmic underwriting, Bestow redefines the way consumers research, buy and manage life insurance. Using data to calculate risk, Bestow removes the need for a medical exam and streamlines the entire process into a matter of minutes. The Texas launch gives consumers access to choice term life insurance plans, including a unique two year term policy never before available for life insurance. Additionally, customers can choose between ten or twenty year term life insurance.

The Zebra Raises $ 40 Million, Taps New CEO To Expand Beyond Car Insurance (Forbes), Rated: A

The Zebra, which has always described itself as the Kayak of car insurance, has hired a longtime Kayak executive as its new CEO.

The Austin-based company, which allows drivers to compare prices for car insurance online, said on Tuesday that it has tapped Kayak’s former president Keith Melnick to run the company.

The Zebra also said it has raised $40 million in a Series B funding round, led by Accel Partners. That brings its total funding to $61.5 million.

MarketScout in Dallas Creates $ 25M Insurtech Venture Fund (Insurance Journal), Rated: B

Dallas-based insurance exchange and MGA MarketScout announced it has launched MarketScout InsurTech (MIT), which will make investments in tech-enabled insurance distribution. The initial funding of $25 million will come exclusively from MarketScout Corp., parent of MIT, according to the firm.

House Financial Services Committee Approves Legislation to Help Keep Lending Partnerships Between Banks and Online Lenders (Crowdfund Insider), Rated: A

The House Financial Services Committee has approved HR 3299 or the “Protecting Consumers’ Access to Credit Act of 2017.” The bill “restores consistency” in lending laws across state boundaries. HR 3299 impacts the case of Midland Funding, LLC v. Madden – an ongoing law suit that has the potential to undermine online lenders. Sponsored by Congressman Patrick McHenry, includes an important statement that clarifies allowable interest rates on loans potentially ending the issue associated with the law suit.

How Do You Beat a Robo-Advisor? Trust (Think Advisor), Rated: A

“Technology by itself cannot create trust,” Robert C. Merton, a Nobel laureate in economics now teaching at MIT, recently told ThinkAdvisor. “The successful advisor must have the trust of their clients.”

Given the importance of trust in the advisor-client relationship, Merton recommends financial advisors (the breathing kind) should:

  • Check what they are doing to retain and enhance trust with their clients.
  • Make sure the business model being used supports the creation of trust.
  • Take advantage of technology to improve/enhance what the advisor does.
  • Do not view technology as a “competitor or substitute” for the advisor.
  • Understand and assess the financial technology they employ to certify trusting its use in client solutions.

HFLA launches initiative to help underserved reach financial stability (Cleveland Jewish News), Rated: A

The Hebrew Free Loan Association has launched its Looking to the Future Initiative with support from the St. Luke’s Foundation and the PNC Foundation. The initiative accounts for $73,000.

The initiative enables HFLA to increase its lending of interest-free loans to Cleveland’s underserved neighborhoods and grows the organization by expanding its reach, according to a news release. HFLA received a $63,000 grant from the St. Luke’s Foundation and a $10,000 grant from the PNC Foundation to launch the effort.

Fundation Purchases Select Assets from Able Lending to Enhance Partnership Strategy (BusinessWire), Rated: B

Fundation Group LLC, a digitally-enabled lender and credit solutions provider, today announced that it has acquired a variety of assets from online small business lender, Able Lending of Austin, Texas.

Former Capital One Executive Troy Jamison Joins Victory Park Capital as Chief Risk Officer (BusinessWire), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Troy Jamison joins as chief risk officer for the firm’s nonbank financial services portfolio. Jamison is based in Chicago and reports directly to CEO and Co-Founder Richard Levy.

CFPB updates website to officially address end of arbitration rule (Housingwire), Rated: B

The Consumer Financial Protection Bureau finally updated its website to acknowledge President Donald Trump revoking the controversial arbitration rule.

blog post from Ballard Spahr previously stressed the importance of the CFPB updating its website to note the rule’s override since the rule was killed nearly two weeks ago.

The webpage for “Arbitration agreements” now has an update on the top that states:

On Nov. 1, 2017, the President signed a joint resolution passed by Congress disapproving the Arbitration Agreements Rule under the Congressional Review Act (CRA). Pursuant to the joint resolution, the Arbitration Agreements Rule has no force or effect. The materials relating to the Arbitration Agreements Rule on the Bureau’s website are for reference only.

HOUSE FINANCIAL SERVICES COMMITTEE PASSES SMALL BUSINESS CREDIT ACT (Coalition for Small Business Growth Email), Rated: B

The 

United Kingdom

LendInvest launches into buy-to-let (Mortgage Strategy), Rated: AAA

LendInvest is launching a range of buy-to-let loans aimed at professional landlords and investors.

Rates start at 3.69 per cent for a two-year fix at 60 per cent LTV.

The firm will offer loans of between £50,000 and £5m, up to a maximum LTV of 80 per cent.

Citigroup joins the AI bandwagon (Business Insider), Rated: A

Citigroup 

Source: Business Insider

SyndicateRoom Alum Squirrel Launches Crowdcube Funding Round (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, has launched an equity crowdfunding round on Crowdcube. This initiative debut comes less than one year after the company completed its SyndicateRoom funding round with £585,000 in funds. Squrriel is now seeking £400,000.

Government unveils financial package to support tech (P2P Finance News), Rated: A

THE GOVERNMENT has given a £21m boost to a technology programme that has supported firms such as Zopa and Funding Circle as part of a range of measures to boost the tech sector.

The funding will make Tech City UK and Tech North one national organisation called Tech Nation and help grow government-backed startup support programmes such as Founders Network, Northern Stars, Future Fifty and Upscale.

Cash Converters International Ltd reports security breach and ransom demand (The Motley Fool), Rated: A

Payday lending and pawnbroking business Cash Converters International Ltd (ASX:CCV) announced a cybersecurity breach in its UK operations last night.

Sadly, computer system integrity is becoming an increasingly relevant – and often overlooked – concern for investors, with a vast majority of companies relying in one way or another on computer systems.

Valorem Foundation Launches All-New Cryptocurrency Platform (PR Newswire), Rated: A

Valorem Foundation, a Blockchain startup specializing in stabilized value-based exchange and transactions, has announced the launch of its new cryptocurrency platform. The company has developed a multi-layered platform to disrupt and expand the following services globally: microloans, car loans, student loans, rent payment, P2P networks, buying and selling of goods & services, business investing, real estate crowdfunding, and insurance.

Empowering the world: How you can make money through improving lives (City A.M.), Rated: A

This sea change should explain why investment firm Ethex has managed to scoop up so much support in its short history – raising more than £50m since 2013.

Its business model has a peer-to-peer lending feel – that is, it uses a digital platform to allow retail investors to lend to individuals and entrepreneurs.

But it comes with a twist, because Ethex is a not-for-profit organisation which lets you invest in companies that have a positive impact – socially and environmentally.

If you want to get involved, the platform has a minimum investment of £50, which arguably makes it more accessible to younger generations.

Trussle hires VP engineering from Funding Circle (Mortgage Introducer), Rated: B

Trussle has appointed Matthew Gretton as vice president of engineering from peer-to-peer lending platform Funding Circle.

China

Alibaba affiliates sweep top 3 spots in global fintech ranking (Asian Review), Rated: AAA

Financial technology companies linked to China’s Alibaba Group Holding took over the podium in KPMG’s latest Fintech 100 list, announced on Wednesday.

Ant Financial, which runs Alibaba’s massive Alipay e-payments network, took the No. 1 spot on the list, which was compiled with fintech accelerator H2 Ventures. Online property insurer ZhongAn Insurance and microloan provider Qudian placed second and third; both have received investments from Ant.

See the full list here.

One of China’s hottest companies rebuffs criticism about transparency (CNBC), Rated: A

Despite public criticism about a lack of transparency in some practices, Ant Financial is doing things the right way, a senior executive at the company said Wednesday.

“The demand for these securities is very healthy and continuing to expand,” Douglas Feagin, senior vice president and head of global business at Ant Financial, told CNBC’s “Street Signs.” “That, at the end of the day, is the ultimate barometer of whether you’re giving enough information to investors to invest.”

Ant Financial will use local partners in Southeast Asia: executive from CNBC.

Earnings at Some U.S.-Listed Chinese Microlenders Taper (Caixin), Rated: A

In the three months ending Sept. 30, Yirendai’s net income was down 12% to 303 million yuan ($45.7 million) from 344.3 million yuan a year ago, the company said Wednesday. Another Chinese microlender, China Rapid Finance Ltd., earlier reported a wider net loss of $4.4 million in the third quarter. Although Qudian Inc., a larger player that listed in New York last month, recently posted a four-fold increase in its third-quarter net profit from a year ago, citing better operational efficiency and its growing borrower base.

Cinda International Leads Massive Round In Chinese Fintech Company 9f Group (China Money Network), Rated: A

Beijing-based fintech company 9f Group has raised a massive new funding round from Cinda International Holding Ltd, a subsidiary of state-owned China Cinda Asset Management Co., Ltd., Focus Media Information Technology’s Chairman Jiang Nanchun, video game developer Youzu Interactive’s chairman Lin Qi and an unnamed Chinese industry fund.

The company did not disclose financial details except to say that it raised “hundreds of millions of U.S. dollars” in the latest financing deal, according to a company announcement. It is also unclear how the company is valued in the round, but 9f Group is listed on China Money Network’s China Unicorn List with a US$1 billion valuation when it last raised a US$110 million series B round in 2015.

European Union

For Spain’s banks, survival means digital (Financial Times), Rated: AAA

Santander’s Openbank has changed a great deal since it was founded as Spain’s first telephone banking service in 1995. Now a fully digital operation, its mobile app allows users to temporarily disarm a lost credit card, as well as to check whether fellow Openbank customers are buying or selling a given stock at any moment. Currently, it has some 1.2m customers in Spain and more than €8bn ($9.3bn) in assets under management.

In recent years, Spain’s two biggest banks — Santander and BBVA — have increased their financial and managerial investment in fintech, digital banking and big data. Like their peers, they are convinced that the days of branch-based lending are drawing to a close.

Spanish banks average about €15m assets under management per employee, says Daragh Quinn, banks analyst at investment bank Keefe, Bruyette & Woods. At a digital operator like Openbank, that number is close to €60m.

The digital push is on two fronts: first, a mobile app that allows customers to access almost all of the bank’s products without going into a branch. Second, a venture capital approach whereby banks invest in or partner with fintech start-ups to add products.

Online Lender Lendix Launches Flexible SME Bridge Loans in France, Spain & Italy (Crowdfund Insider), Rated: AAA

Lendix, online lender for SMEs in continental Europe, has announced the launch of a new financing product: the Flexible Bridge Loan. This product is designed to will allow a greater number of French, Spanish and Italian SMEs to benefit from the speed of execution of Lendix’s lending platform while leaving them the possibility of setting up an overall refinancing solution with other financial institutions.

The Lendix Flexible Bridge Loan is a 5-year amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

Swedish $ 370 Billion Home-Loan Market Gets New Mortgage Fund (Bloomberg Quint), Rated: A

As investors wonder whether Sweden’s housing market is headed for a correction, the country’s first mortgage fund is about to enter the $370 billion Swedish home-loan industry.

Stabelo plans to pool capital from Swedish institutional investors in exchange for fixed-income securities. That money will then be lent to home buyers. The fund starts offering its products this week and will work with Avanza Bank AB, Sweden’s largest online lender. Avanza, which owns just below 20 percent of Stabelo, will handle distribution and marketing.

International

Has P2P marketplace lending become B2P? (Cuffelinks), Rated: AAA

Due to this issue, the original incarnation of peer-to-peer lending has not lasted. As the CEO of Zopa, a UK-based P2P lender said,

“As bad debts soared, the approach was abandoned and Zopa was moulded into a ‘big sausage machine’. Its technology now links lenders with a pool of borrowers without any direct contact or the need for investors to make credit decisions.”

Australia’s major peer-to-peer lender is SocietyOne. It currently has $350 million borrowed through its platform, and is growing rapidly. In fact, loan volumes in the first three quarters of this year have totalled $141 million so far, surpassing the $139 million in loans facilitated over the entire course of 2016, as shown below.

Source: Cuffelinks
Australia/New Zealand

Exemption for personalised digital (robo) advice (Scoop), Rated: A

Following the FMA’s release of its second consultation paper on personalised robo-advice (now called digital advice), the leading law firm has published its tips for providers looking to develop digital advice platforms.

Head of Russell McVeagh’s Corporate Advisory group, Dan Jones, says the exemption is a necessary first step in putting the New Zealand financial advice regime on equal footing with overseas regimes, and may provide particular assistance to New Zealanders in KiwiSaver.

India

How P2P lending can be a route to creating financial inclusion (Daily News & Analysis), Rated: A

For years, banks have had a monopoly in lending money to businesses and individuals. However, the 2007-08 financial crisis created a havoc, rapidly-expanding the funding gap. This led to the advent of a niche fintech vertical, peer-to-peer (P2P) lending.

The geographical reach of a P2P lending platform is far superior, with the major differentiator being its online interface. Such digital financial services play an important role in supporting the objective of financial inclusion. Anybody, from the remotest areas, having access to internet, can be eligible to get/give a loan.

In the age of digitisation where almost everyone has access to internet, such platforms have the potential to change the financial graph of a country.

Are P2P platforms safe for lending and borrowing? (India Times), Rated: B

While banks and non-banking finance companies (NBFC) are the readily available sources for loans, who does the P2P platform cater to? “Unfortunately, banks in India follow mediocre credit assessment policies which are suited only for borrowers who can offer collateral or have an impeccable credit history. In practice, majority of the borrowers lie in between these extremes. Therefore, majority of Indians can borrow on P2P platforms,” says Raghavendra Pratap Singh, co-founder, i2ifunding, an online P2P lending marketplace.

RBI has put a cap on the amount that can be borrowed and lent. The aggregate exposure of a lender or the maximum that one may borrow at any point of time, across all P2Ps, shall be capped at Rs 10 lakh. Even the exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000 and the maturity of the loans shall not exceed 36 months. “More clarity from RBI is expected on how the regulator intends to monitor the compliance of this aspect and how it will fix the responsibility,” says Singh.

Risks for a lender
Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender needs to be aware of the risks involved. Bubna says, “All investments involve risk. However, in comparison to equity or commodity market investments or real estate, P2P lending has lower risk as it is addressed by on-boarding high quality borrowers. Further, lenders are suggested to create a diversified portfolio of loans.”

Asia

Introducing ACE, Crowdo’s New Artificial Intelligence Due Diligence System (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding unveiled today its proprietary Artificial Intelligence driven due diligence system, Crowdo ACE, aimed at benefiting both their borrowers and investors. Crowdo ACE takes into account a few thousand unconventional and alternative attributes and represents a new way to perform due diligence versus traditional means used by conventional financial institutions. It has already been applied to process more than 3,000 loans.

In a largely-unbanked Indonesia, Amartha uplifts women micro-entrepreneurs (YourStory), Rated: A

Twenty-six people, four nationalities, 10 days. Travelling across Southeast Asia as a Startup AsiaBerlin Roadshow delegate to explore startup ecosystems was an experience unto itself.

Amartha has so far disbursed over $13 million to 60,000 women micro-entrepreneurs and aims to improve their income, and ultimately quality of life.

Aria: Amartha is an Indonesian financial technology startup that focuses on providing affordable financial access, and mentorship to the unbanked population living below the poverty line. Amartha operates much like a peer-to-peer lending platform, and so far, has disbursed more than $13 million to 60,000 borrowers. The borrowers are mostly women micro-entrepreneurs and Amartha aims to improve their income, and ultimately alleviate their status through financial inclusion.

Aria: When we started operations in April 2016, we disbursed $40,000 a month. By the end of 2016, we were disbursing $800,000. Today, on average, we disburse $2.5 million per month. So far, we have disbursed more than $13 million, across more than 60,000 borrowers. The average ticket size of a loan now is around $300.

We charge a fee based on the profit sharing principle. Of the 22-30 percent annual interest rate paid by borrowers, we collect 11-13 percent for our revenue.

Africa

The Mauritian Financial Services Commission Issues Draft Peer-To-Peer lending Rules (Mondaq), Rated: AAA

Following the announcement of the Government on peer-to-peer lending and funding in the 2017-2018 Budget, the Mauritian Financial Services Commission (“Commission”) has issued draft rules on 10 November 2017 to regulate the peer-to-peer lending sector – as sector which has grown rapidly in other countries.

In the region, Kenya and Africa are leading in the peer-to-peer business lending market. According to a study conducted by the University of Cambridge, within Africa, South Africa had the largest number online alternative finance platforms, with $15 million raised in 2015 (The Africa and Middle East Alternative Finance Benchmarking Report, February, 2017).

Borrower and lender – a borrower must be a resident in Mauritius; however, there is no residency requirement for the lender.

Restrictions on amounts  Hence, a lender, who is a legal person, cannot lend more than MUR 500,000 (approx. GBP 11,000) in any 12 months’ period. A lender, who is a natural person, cannot lend an amount in excess of 10 per cent of his income or a maximum of MUR 300,000 (approx. GBP 6,600), whichever is lower, in any 12 months’ period.

Obligations of a P2P operator – the Peer-to-Peer operator must publish the following information on its website:

  • details of how the P2P lending will operate
  • measures to prevent money laundering and combatting terrorist financing
  • security measures to ensure data protection
  • dispute resolution mechanism.
Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

Russia

Moscow Is On Its Way To Becoming A Smart City And Fintech Powerhouse (Forbes), Rated: A

Its citizens and businesses are also quick to adopt the latest disruptive technologies such as fintech and cryptocurrencies. Moscow has a 35 percent fintech adoption rate, higher than New York’s 33.1 percent.

Authors:

George Popescu
Allen Taylor

Monday April 3 2017, Daily News Digest

PeerIQ mpl securitization

News Comments Today’s main news: Activist investor pushes for new strategy at On Deck. Why Zopa is building a bank. Landbay reduces product rates & fees. Unicorn India Ventures invests in SmartCoin. SGX partners with Crowdo, PwC. Alternative Circle raises $1.1M.  Today’s main analysis: Q1 2017 MPL securitization tracker from PeerIQ. Today’s thought-provoking articles: New York case is a win […]

PeerIQ mpl securitization

News Comments

United States

United Kingdom

European Union

Australia

China

India

Asia

Africa

News Summary

 

United States

Marketplace Lending Securitization Tracker Q1 2017 (PeerIQ), Rated: AAA

  • Marketplace lending securitization remains a bright spot in the ABS market. Total issuance topped $2.9 Bn this quarter with cumulative issuance now totaling $18.0 Bn across 80 deals.
  • The movement towards rated securitizations at larger transaction sizes continues. All deals were rated in this quarter, with record-sized consumer deals from SoFi, a large multi-seller deal from Marlette (where 45% of loans were funded by affiliates of GS and Cross Rive Bank), and the first prime paper deal from Lending Club. All deals this quarter had at least one rating.
  • New issuance spreads continued to tighten and flatten—a credit friendly environment for securitization.  In 1Q2017, we saw spreads tighten in riskier tranches, indicating strong investor appetite for MPL ABS paper in the market.
  • Bank and non-bank platform partnerships continue to emerge. Over 15 banks are purchasing loans from marketplace lenders.
  • Our year-end forecasts volumes for new issuance of $11.2 Bn remain on-track. New issuers and repeat issuers are increasing deal activity.
  • 3rd party solutions are emerging to improve investor confidence. Originators are relying on 3rd party solutions to address “stacking”, perform data verification, loan validation, and improve investor confidence.
  • We expect higher volatility from rising rates, regulatory uncertainty, and an exit from a period of unusually benign credit conditions. Platforms that can sustain low-cost stable capital access, build investor confidence via 3rd party tools, and embrace strong risk management frameworks will grow and acquire market share.

 

Activist Investor Pushes for New Strategy at On Deck Capital (WSJ), Rated: AAA

Marathon Partners Equity Management LLC, a New York hedge-fund firm with about $275 million in assets under management, is pushing On Deck to shed millions of dollars in expenses to get to profitability, said Mario Cibelli, a managing partner at the firm, in an interview. Mr. Cibelli said he would also like On Deck to explore a potential sale or other alternatives that could increase shareholder value.

On Deck in February reported a record loss of $85.5 million in 2016 and burned through half of its cash, ending the year with a balance of $80 million. The New York-based company launched an initiative to eliminate 11% of its workforce, find other cost savings and get to profitability in 2018.

But Mr. Cibelli argued that the proposals don’t go deep enough. “The current strategy is not the right one and needs to be changed,” he said. Marathon has been buying shares in On Deck since last year, amassing a stake of 1.75% of the company as of the end of 2016, according to FactSet.

NEW YORK CASE IS A WIN FOR THE MERCHANT CASH ADVANCE INDUSTRY (Pepper Hamilton LLP), (Pepperlaw.com), Rated: AAA

On March 16, the Supreme Court of New York, Nassau County, issued a decision in IBIS Capital Group, LLC v. Four Paws Orlando LLC. The decision reaffirms the position consistently taken by New York courts that “For a true loan it is essential to provide for repayment absolutely and at all events [and where] the payment or enforcement [of an agreement to repay funds advanced] rests upon a contingency, the agreement is valid even though it provides for a return in excess of the legal rate of interest.”

Under section 190.40 of New York’s Penal Code, a person cannot intend to charge, take or receive interest on a loan greater than 25 percent. In this case, plaintiff IBIS advanced funds to defendant Four Paws under an agreement for the purchase and sale of future receivables. Four Paws subsequently refused to honor its commitment to pay IBIS on the basis that the payments called for a usurious rate of interest. IBIS sued Four Paws for breach of contract, and Four Paws asserted criminal usury as an affirmative defense.

The court further said that, even if the agreement had created a loan, there would be no violation of New York’s criminal usury law because Four Paws could not show that IBIS intended to charge a usurious rate of interest. To this end, in order to commit criminal usury, a person must enter into the agreement knowing that they are charging interest that exceeds 25 percent.

Ex-Xero boss Chris Ridd to lead cloud financial adviser platform Myprosperity (Financial Review), Rated: A

The former Australian CEO of accounting software firm Xero Chris Ridd will join cloud financial adviser platform myprosperity as its new CEO, after he and MYOB founder Craig Winkler backed its first external fund raising round.

The company provides an online platform, which is targeted at helping households manage their finances by using cloud technologies to connect data feeds from numerous sources, and provide a real-time picture of overall wealth and financial health. It sells most commonly to accountants and financial planners, who then use the platform to advise clients.

The company capped its capital raising at $2.5 million, saying it needed to take on the funds to ramp up its sales and marketing efforts, now that it has established itself, with more than 250 advisers and 10,000 subscribers signed up.

The top 10 US tech companies that pay the most when poaching employees (SCMP), Rated: A

3: Lending Club, the peer-to-peer lending site, pays on average a 48 per cent premium to poach. Employees were earning on average US$128,457 at their previous job and increased to US$183,469.

5: Groupon pays on average a 38 per cent premium to poach. Employees were earning on average US$137,390 at their previous job and increased to US$175,233.

Bank of America to commit $ 1.5M to Charlotte’s fintech initiative (Biz Journals), Rated: A

Bank of America Corp. (NYSE:BAC) will commit $1.5 million over three years to Charlotte’s fintech initiative, according to sources close to the matter. The bank confirmed the investment to the Charlotte Business Journal Wednesday.

Will Using Artificial Intelligence To Make Loans Trade One Kind Of Bias For Another? (NPR), Rated: A

Digital lending is expected to double in size over the next three years, reaching nearly 10 percent of all loans in the U.S. and Europe. There are now some 2,000 digital startups, many of which are using artificial intelligence to analyze the troves of data created every day.

Digital lenders are pulling in all kinds of data, including purchases, SAT scores and public records like fishing licenses.

Government research has found that FICO scores hurt younger borrowers and those from foreign counties because people with low incomes are targeted for higher-interest loans. Girouard argues that new, smarter data can make lending more fair.

If artificial intelligence can weed out good borrowers from bad just by looking at things like Web browsing history, suddenly it doesn’t matter if you live in a low-income neighborhood or your family just immigrated. But it does open the door to new, 21st century versions of redlining.

But what if you’re just buying M&Ms or prefer using cash? An algorithm doesn’t know that. Left unchecked, computers could create all sorts of unintended bias.

Some companies have correlated late-night Internet use with bad loan repayment. But does that mean night owls should pay a higher interest rate?

Comparing Costs For A Marketplace Loan Vs. A Bank Loan (NASDAQ), Rated: A

Since the early 1980s, the finance rate on personal loans at commercial banks for a 24-month loan has steadily dropped. At its height in 1981, the average reached 19.21%. Today, borrowers can expect to pay 9.45% according to the Federal Reserve Bank of St. Louis. However, many borrowers will face a higher rate given the average U.S. credit score of 695. At this score, a borrower will likely face an interest rate of 13.5% to 17.5%. Accessing these rates means having a minimum FICO score of 660 in many cases.

Remember, the origination fee is deducted from the loan amount. Therefore, if you borrow $15,000 at a 2% origination fee, you are only getting $14,700. Origination fees can reach as high as 6%.

Online lenders offer speed and flexibility that is not possible with traditional banks. Those in good credit standing can access capital for as low as 5.7% making the loans more competitive than the neighborhood bank.

Some of the most competitive providers like SoFi and Discover Personal Loans require no origination fee and users can borrow up to $100,00. Additionally, there are no prepayment fees. If we compare a borrower with a strong credit score at a bank versus an online lender, then the rates are 9.45% and 5.7% comparatively. Moreover, the absence of fees makes the savings even better.

6 Real Estate Startups Poised To Disrupt The Industry (Forbes), Rated: B

Using public records, comparables and other metrics, Bowery creates custom, data-driven reports that offer in-depth information to find the most accurate property appraisal value possible.

And if you’re on a lease and you need to leave town for a while, subletting your space without stress is just as difficult. Flip aims to make managing or finding subleases a breeze.

Ravti, a Y-Combinator-backed startup, brings intelligent software to building owners and operators reducing costs by 18 to 30 percent on capital replacements through direct procurement.

OnTarget helps construction projects wrap up successfully and on schedule. The cloud-based app allows property investors, managers, contractors and other vendors to connect through an online dashboard. This gives managers a simple and effective option to ensure everything is on track and information to respond appropriately when delays put the project schedule at risk.

Enertiv is focused on giving property owners and managers access to real-time energy use information around the clock. Through its proprietary platform, clients can view energy use by location with live data and prior period comparisons. Its weather overlay shows how a change in temperature translates to an increase or decrease in usage, letting you know instantly if you need to make money-saving adjustments.

As an event management option, the company turns a boring apartment building into a bustling lifestyle center. With fitness classes like yoga, pilates and fitness bootcamps, and a mix of social and professional events, hOM communities see a 15 percent higher tenant retention rate than the national average. Property managers and agents can use hOM to reduce turnover and related costs, helping owners improve overall profitability without overspending on gyms, pools, hot tubs and other amenities.

Venture Capital Funnel Shows Odds of Becoming a Unicorn Are Less than 1% (CB Insights), Rated: A

We followed a cohort of over 1,000 startups from the moment they raised their first seed investment to see what happens to them empirically.

Just over 70% of startups stall at some point in the VC process and fail to exit or raise follow-on funding.

Of the 1,098 tech companies we tracked that raised seed rounds in the US in 2008-2010, less than half, or 46%, managed to raise a second round of funding.

  • 306 (28%) of companies that raised a seed round in 2008–2010 exited through an M&A or IPO within 6 rounds of funding.
  • Less than 1%, 10 (0.91%) companies from our seed cohort ended up becoming unicorns valued at $1B+. Some of these companies are the most-hyped tech companies of the decade, including Uber, Airbnb, and Slack.
  • 61% of companies that raise a follow-on after their initial seed are then able to raise a second follow-on round after that.

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The Evolution of Crowdfunding Could Change Everything (Industry Leaders), Rated: A

According to the annual Massolution Crowdfunding Industry Report, the total equity crowdfunding volume worldwide in 2015 peaked $2.56 billion. The number is expected to triple in 2017 and will be roughly in the neighborhood of $4-5 billion.

While venture capital investment holds a steady $30 billion per year, equity crowdfunding is expected to surpass angel capital by 2020. According to the World Bank, the crowdfunding market as a whole will hit $90 billion in volume by 2020.

The launch of Crowdemand, Inc., has got crowdfunded fashion shopping up and running.

With the launch of crowdfunded insurance by American International Group, we saw the first of kind in the crowdfunding industry. Currently, AIG only sells coverage on the platforms, however, it is soon poised to offer insurance protection to all investors using the platform.

With real estate crowdfunding on sites like RealtyMogul.com, anybody can raise more than $200 million to crowdfund a real estate property.

Pebble E-Paper Watch Kickstarter campaign originally started out as a corporate crowdfunding initiative, raising $10,266,845.

Similarly, IBM has developed its own crowdfunding platform called iFundIT, through which employees in the IT department can develop and pitch potential projects on the company’s internal social network. Employees are given up to $2,000 of IBM money, which they can use to promote their products.

Is regtech the new fintech? (Computer Weekly), Rated: B

With mobile apps, banking automation and blockchain already transforming financial services, financial institutions are now looking to regulation technology, or regtech, to meet compliance requirements.

The key differentiator of regtech is agility. regtech allows the use of advanced technologies to extract, transfer and load data sets that are cluttered and tangled to create consumable information. This is done quickly and efficiently, giving businesses the agility to solve real-world problems and stay ahead of the competition.

Example: Onfido delivers next-generation background checks, helping financial services organisations and other businesses verify the identity of any person remotely using machine learning technologies.

Example: Scaled Risk is a financial software that integrates in-memory analytics and big data to provide real-time, scalable, and flexible risk management solutions for banks and other financial services companies.

Example: FundApps, a cloud-based platform, automates shareholding disclosures by organising regulatory information, combining regulatory compliance content with technology.

United Kingdom

Zopa’s Jaidev Janardana: Here’s Why We’re Building a Bank (Crowdfund Insider), Rated: AAA

“Legacy technology and poor customer service has disappointed consumers. That’s why we’ve seen a wave of start-up banks emerge, with greater focus on delivering a high quality customer experience through technology. This is what Zopa does in the peer-to-peer investment and loans space.”

Jaidev noted that along with the bank, Zopa will be expanding its customer offering as well. He and his team are planning to offer FSCS-protected deposit accounts for savers, P2P investments, including IF ISAs for investors, and personal loans, car finance, and credit cards for people looking to borrow.

P2P Lending Platform Landbay Reduces Product Rates & Fees (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lending platform Landbay has reportedly reduced its product rates and fees. According to various sources, Landbay’s rates are now starting at 3.39% for a 2-year fix and 3.59% for a 5-year fix, with arrangement fees up to 75% on standard products, which were cut from 1.75% to 1.5%.

Landbay’s products are available through the lender’s distribution partners, which are Atom, Brightstar, Complete FS, Connect Mortgages, Mortgage for Business, The Buy to Let Business and TBMC.

Five reasons fintech fears London may lose its crown after Brexit (Financial News), Rated: A

The UK fintech sector represented approximately £6.6 billion in revenue in 2015 and attracted around £524 million in investment, according to EY.

Startups say they are “apprehensive” and “worried” about the possible damage that Brexit may cause.

FN talks to key fintech founders and other entrepreneurs of their top five Brexit concerns and why they worry for London.

1. Talent

Jan Hammer, a partner at venture capital firm Index Ventures, said: “What we fear and are concerned about is that post-Brexit Britain will lose access to talent.”

More than 30% of the 250 chief executives and founders of fintech startups that are members of Innovate Finance are non-British, and others employ many European staff.

2. Funding

Funding has already dipped since Britain’s decision to leave the EU. A survey conducted by Tech London Advocates, a 4,500-strong industry body of key players, found that one in 10 of London’s tech sector has experienced investors holding off or withdrawing from a funding round since last summer.

3. Financial passport trading

Unfettered trade within the European Union is essential for most fintech companies and many worry the loss of the EU financial passport will result in a mountain of red tape.

Many are already looking to open offices in Luxembourg, Ireland and The Netherlands to give their business a European headquarters.

4. Government support

One fintech entrepreneur who asked not to be identified, said the fintech community has lost many of the relationships it had with Downing Street and Whitehall: “There was a proper massacre of the Cameroonians when the regime change happened.”

5. Reducing uncertainty

One company providing software using artificial intelligence to the asset management industry who asked not to be identified said that it experienced a potential German buyer holding off because it wanted to see how Brexit will play out.

HSBC partners with Tradeshift as banks increasingly see fintech as friends (Business Insider), Rated: A

HSBC announced on Thursday that it is partnering with Tradeshift to offer working capital to companies that use its platform. Tradeshift offers a cloud-based software platform to help companies keep track on their entire supply chain in one place. Lanng likened it to Facebook, connecting up all companies that do business together, directly or indirectly, in one place. Founded in 2010, it already has over 1.5 million companies connected to its platform on both the buy and supply side and processes $500 billion in trade over its platform each year.

European Union

EstateGuru launched its third market – Lithuania! (EstateGuru Email), Rated: AAA

In March, EstateGuru funded its first Lithuanian investment opportunity on the platform and thereby launched in the Lithuanian market.

The launch of the Lithuanian market established EstateGuru as the only peer-to-peer lending platform in the entire world to facilitate property-backed business loans in three countries. In addition to the newly added Lithuanian market, the company also provides secured real-estate loans in Estonia and Latvia, with several following destinations under preparation.

Klarna is working on a new personal finance service to rival banks and fintech apps (Business Insider), Rated: A

Swedish fintech giant Klarna is preparing the launch of a new product line that will directly compete with personal finance apps like Qapital and Tink, reports Breakit.

Meeting of Government Pension Fund Managers Considers P2P Lending Allocation (P2P-Banking), Rated: A

At an informal meeting of 21 government pensions funds in Geneva, Switzerland, the topic of alternative lending was for the first time on the agenda. A representative of the Australian Future Fund said, that investing to p2p lending marketplaces might be an interesting strategy in order to reduce the systemic risks that banks pose. However it would be much to all early to take this step now.

Australia

The ‘booming’ NSW economy that 100,000 people have joined (Western Advocate), Rated: AAA

The sale of goods and services via peer-to-peer technologies generated $2.6 billion in revenue for the NSW economy last year, recording growth of nearly 70 per cent, according to the research from Deloitte Access Economics commissioned by the finance department.

But the Deloitte report finds that financial services and peer-to-peer lending are the fastest growing part of the state’s collaborative economy.

Financial peer-to-peer businesses, including lending companies such as SocietyOne, a platform that connects lenders with borrowers more than tripled their yearly revenue last year. The number of people who derived income from collaborative financial services enterprise also rose more than 150 per cent.

An estimated 38,000 NSW homes are listed on the short-term accommodation rental service Airbnb, according to company estimates. The average user earns about $4700 a year from renting out their home for 28 nights a year.

China

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

On March 21, Ant Fortune, the investing app of Ant Financial Services Group (Alibaba Group’s finance affiliate), unveiled a B2C platform “Caifu Hao”, which would allow third-party financial institutions to set up shops inside the app.

On March 21, JD Finance announced to launch the blockchain based assets management system, which would be operated within JD Finance’s Assets Cloud Factory. With the aid of the system, consumer finance companies were first to settle in the Assets Cloud Factory.

On March 20, InsurTech Company Xiaoyusan, founded by Tencent, closed on RMB 100 million in Series B funding led by Matrix Partners and Tasly Capital. Its first two rounds of financing were led by Sequoia Capital and AV Capital.

India

Unicorn India Ventures makes maiden investment in fintech with SmartCoin (India Times), Rated: AAA

Early-stage venture fund Unicorn India Ventures, which is set to close its maiden fund in the range of Rs 100 crore, has made its first investment in the fintech space, leading a round of about half-a-million dollars in Bengaluru-based microlending startup SmartCoin.

The startup offers loans starting from Rs 1,000 and is targeting individuals beyond the salaried class, including cab drivers, delivery persons and kirana store owners, and has tied up with a few nonbanking finance companies (NBFCs).

Can’t Pay Your Car Loan? Here’s What To Do So You Don’t Default (Lifehacker), Rated: B

If you’re in danger of defaulting on your car loan, you’re not alone. Subprime borrowers are falling behind at the highest rate since 2010 . Before you default, make sure you’ve explored these possible options , though.

  • Talk to your lender: See if you can extend the length of your loan for a smaller monthly payment, negotiate your interest rate, or even get a 30-day deferral (which is basically more time to pay off your loan).
  • See if you can sell it or trade it in: Do you have equity? Check the car’s value. If it’s higher than the amount you owe, yes, you have equity and you may be able to sell your car and pay off your loan.
  • Find someone to take over your payments: There are peer-to-peer lease exchange sites like Swapalease andLeaseTrader .
  • Refinance your car loan: There are also peer-to-peer lending sites likeLending Club and Prosper where you may be able to get a better loan than you’d get with most traditional lenders.
Asia

Singapore stock exchange inks partnership with P2P lending company, wants to educate about access to capital (Yahoo! News), Rated: AAA

Aimed at helping startups find access to capital, Singapore’s stock exchange (SGX) signed two separate Memorandums of Understandings (MOUs) with separate stakeholders in the startup economy.

The agreement that can be considered unique to our modern economy is an MOU signed with Crowdo, a regional lending platform with P2P and equity crowdfunding options. To date, it has financed about 2,000 projects.

PwC is a global professional services company. The firm brands Venture Hub as a ‘one-stop shop’ for entrepreneurs and investors to find solutions and services to help build partnerships.

The MOU with SGX is meant to promote Singapore as an attractive hub for startups and educate global players about the opportunities in Asia (with Singapore as a hub). The two sides will also arrange dialogue and thought leadership in the ecosystem.

Yo Shibata, Co-Founder of Crowdport, Updates on “Social Lending” Status in Japan (Crowdfund Insider), Rated: A

According to a recent article in TechinAsia, 52% of Japan’s personal assets, or more than $15 trillion, are held as cash.

Yo Shibata: Marketplace lending in Japan started around 2008 as peer-to-peer lending, where borrowers were primarily individuals.

The default rate has been very low (close to zero among major CFPs for three years).  Annual investment amount has grown from $140 million USD in 2014 to $540 million USD in 2016.

Yo Shibata: Interest rates of bank savings in Japan is around 0.01〜0.1% (ARR). On the other hand, Japanese consumers are concerned that they might not be able to have a large enough pension after they have retired.

Yo Shibata: I had little knowledge of lending before starting Crowdport. To me, 8% ARR in Japan with close-to-zero default rate was “too good to be true”.

Yo Shibata: We are starting by providing quantitative and qualitative analytics on CFPs and their funds. On the quantitative analysis, we collect all the public data from all the funds released every day and provide free-to-use tools to investors to compare against historical data points.

Orchard Platform: Asia Is ‘Light Years’ Ahead In Innovation (Benzinga), Rated: A

Among the 27 “unicorn” companies in the planet, eight of them are based in China and valued at a combined $96.4 billion. Ant Financial, Alibaba Group Holding Ltd BABA‘s affiliate, leads the group with a $60 billion valuation.

By comparison, 14 fintech unicorns are United States-based and valued at a combined $31 billion.

Law Firms in Singapore and Malaysia Launch FinTech Practice (Cryptocoins News), Rated: B

Singapore-based Allen & Gledhill and Malaysia-based Rahmat Lim & Partners, which is also an associate firm of Allen & Gledhill, announced that they would be establishing fintech practices for both countries.

Last November, it was reported that U.K. law firm, Addleshaw Goddard, was offering free mentoring and legal advice to fintech startups through a new scheme worth up to £500,000.

Global law firm Steptoe & Johnson LLP, is another law practice that has embraced the legal issues fintech companies experience by launching a multidisciplinary blockchain practice with lawyers involved across the globe.

Africa

Kenyan fintech startup Alternative Circle raises $ 1.1m funding (Disrupt-Africa), Rated: AAA

Kenyan fintech startup Alternative Circle has raised US$1.1 million in funding from international credit risk management company Creditinfo Group to help it achieve a wider geographical footprint.

Alternative Circle will in July launch its mobile-based credit facility app Shika, which allows users to access mobile loans and uses a decision engine to identify creditworthy borrowers.

The funding arrangement with Creditinfo will see the startup benefit from the larger firms expertise in classic and alternative credit risk management.

Authors:

George Popescu
Allen Taylor