Thursday March 29 2018, Daily News Digest

Thursday March 29 2018, Daily News Digest

News Comments Today’s main news: SoFi changes wealth portfolios. Silver Lake buys $500M of Credit Karma stock. Half of Zopa deposits are into IFISA accounts. Landbay considers IPO, opens Seedrs campaign. Wonga South Africa enters personal lending. Today’s main analysis: 7 reasons to hate the long bond (A GREAT READ). Today’s thought-provoking articles: The benefits of additional data from […]

Thursday March 29 2018, Daily News Digest

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United Kingdom

China

European Union

International

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News Summary

United States

SoFi Announces Changes to Wealth Portfolios (Crowdfund Insider), Rated: AAA

On Tuesday, online lending platform SoFi announced it was making changes to wealth portfolios. SoFi made changes in all five risk strategies – Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.

Conservative:

“Our lowest risk portfolio invests heavily in bonds, which may be appropriate for someone investing with a lower tolerance for risk or a shorter time horizon, like under three years. With bonds, there are three options: Short-term bonds are considered lower-risk/lower-reward, intermediate-term bonds are considered moderate-risk/moderate-reward, and long-term bonds are considered higher-risk/higher-reward.

Source Crowdfund Insider

Moderately Conservative

“The Moderately Conservative strategy is also weighted toward short-term bonds, so it’s a fairly cautious approach. Historically, we’ve selected both investment-grade bonds (lower risk, lower interest rate) and high-yield bonds (higher risk, higher interest rate). Now, we’re reducing some of that high-yield exposure and increasing the amount of investment-grade bonds to lower the overall risk of this portfolio. This strategy also invests a bit in the stock market. Our approach here (and in other strategies) is to balance our investments across the globe. We’re putting a little less in Emerging Markets, less in U.S. Markets, and more in Developed Markets outside the U.S. (like Japan, parts of Europe, and Canada). We believe that these new allocations will give this portfolio a relatively better chance to grow.”

Source Crowdfund Insider

Silver Lake Buys $ 500 Million Stake in Credit Karma (Fintech Collective), Rated: AAA

San Francisco based Credit Karma has received $500m in a secondary offering from Silver Lake, valuing the company at $4b.

Credit Karma isn’t receiving any proceeds or issuing any new shares as part of the transaction, Chief Executive Kenneth Lin said in an interview. Rather, Silver Lake is amassing common shares from earlier investors and employees in a so-called secondary sale that values the 11-year-old company at roughly $4 billion, according to a person familiar with the matter.

How You May Benefit from Additional Data When Reviewing Subprime Applicants (Lendit), Rated: AAA

Nearly 80 million adults have what is considered subprime credit, according to Experian data.

The takeaway: while Darrell has a higher biweekly income than Nancy, he is much less stable in his borrowing history. And, while Nancy has been late on a few payments, she has a proven track record of ultimately satisfying her debts.

These examples illustrate why lenders hoping to help consumers in the growing nonprime and subprime markets stand to benefit from alternative credit data.

Sophisticated Investors May Be Harming Fintech Lending Platforms (Harvard Business School), Rated: AAA

But lending platforms, also called peer-to-peer lending, must address a major design problem: Sophisticated investors have been gaming the system by applying specialized screening tools to scoop up the choicest loans with the lowest default rates, leaving less experienced investors with less attractive loans to choose from. After these lower-grade loans perform poorly—that is, the borrowers fall into arrears with payments or default altogether—these less savvy investors may flee the platform.

Can lending platforms make their systems more equitable for all investors?

In their new working paper Marketplace Lending: A New Banking Paradigm? Vallée and Yao Zeng, an assistant professor of finance at the University of Washington, address these issues from the perspective of what platforms can do to level the investing playing field.

The key variable to control, Vallée and Zeng found, is the amount of information available about loan applicants. When platforms share a lot of information about applicants with potential investors—data such as income, debt level, and credit history, and even whether the loan is financing a wedding, for instance—experienced investors can precisely pin down the safest loans to back.

The researchers looked at all transactions executed by LendingRobot users for a three-year period between January 2014 and February 2017, including more than $120 million invested on the two major lending platforms, LendingClub and Prosper. They found that using the LendingRobot screening model paid off by reducing the average loan default rate by more than 20 percent compared to the average level on the platforms.

Bond Investors Should Double Down On Due Diligence As Yields Rise (Seeking Alpha), Rated: AAA

Appealing to this new financial demographic is the idea behind such companies as Upstart and Social Finance Inc. (commonly known as SoFi). Since 2013, SoFi has securitized about $9.5 billion in loans, while Upstart last year packaged $338 million of personal loans into two deals.

SoFi targets top college graduates – Harvard lawyers, Yale doctors, Wharton bankers – people whose outstanding student-loan balances match their outstanding career potential. For SoFi, this cohort is a good bet to provide lower-cost loans that allow the buyers to de-lever faster and hopefully return for car loans, mortgages and wealth management services such as college and retirement savings plans. Upstart took the idea a stage further by widening the customer base beyond the Ivy League.

Kabbage Data Shows Mobile is the Future for Small Business Lending (Lend Academy), Rated: A

Mobile devices have changed consumer expectations. People now expect that you can have access to anything you might need right from your mobile device. While this has historically been the case for consumer financial apps, Kabbage released data today on small businesses which shows they too are leveraging mobile to better manage their business.

They analyzed behavior of almost 150,000 small business and found that between April 2014 and February 2018 loans accessed through mobile increased by more than 360 percent. Dollars accessed through mobile increased over 1,220 percent.

Petal, WebBank to launch card for ‘credit invisibles’ (American Banker), Rated: A

The fintech startup Petal announced a partnership Wednesday with WebBank to officially launch a credit card for the estimated 65 million people who have insufficient credit history to qualify for a traditional credit card.

The CFPB has identified 45 million people who have no credit score,” Gross said. “Experian and others have indicated that there are 50 million more people that are thin file people and have a have a credit score that’s not accurate because of limited data at the credit bureau. Andreessen Horwitz has estimated 90 million people are misscored — that’s a third of the U.S. population.

Property Coin ICO: A Securities Token for a Real Estate Portfolio (Crowdfund Insider), Rated: A

Aperture is a new platform that is focusing on the real estate marketplace putting a new spin on property crowdfunding. While not the first blockchain based real estate startup, Property Coin (PCX) is in the midst of a security token offering that is claiming first when it comes to crypto denominated securitization / structured real estate portfolio using distributed ledger technology.

Operating in the fix and flip space, Aperture says they have delivered over “50% un-levered IRRs so far – a claim that is pretty impressive.

In aggregate, their team claims they have been involved in the closing of over $150 billion of real estate financing transactions and have originated over $10 billion in mortgage loans, having worked for some of the largest investment banks in the world.

A mortgage in 30 minutes? Fintech says it’s coming (American Banker), Rated: A

Lenda claims to make the fastest mortgages out there — currently two weeks start to finish, with an eventual goal of 30 minutes in a nearly all-digital process.

Launched in 2014, Lenda has made $200 million worth of mortgages, is licensed in 12 states and plans to expand to 12 more later this year. Jason van den Brand, its co-founder and CEO, said that despite other big players, the mortgage arena is ripe for further disruption.

How Lenda works

Lenda lets the consumer log in to their bank account from its portal to retrieve the necessary three months of bank statements. (They could also download the statements from their Dropbox, Box or Google Drive account and then upload them to Lenda.)

Income verification and employment verification are automated where possible. To be sure, some employers don’t share employment data with databases used by lenders. In such cases employment verification needs to be manual.

Consumers ready for a digital mortgage

Consumers, meanwhile, seem to be increasingly ready for digital mortgages. According to a Harris poll commissioned by Fiserv, 69% of consumers already research loan options online and 68% said they review loan documents online. Among millennials, 48% said they would be comfortable researching loan options on their smartphone.

New small businesses have a tough time in these 10 cities, report says (Fast Company), Rated: A

Specifically, it looked at businesses that earn an annual revenue of less than $7,500,000, have been in business for at least six months and no longer than 60 months, and submitted a loan query to LendingTree between Jan. 1, 2016, and Jan. 23, 2018. The self-reported data was then limited to the 50 most populous metropolitan areas, and with that, a list was born.

Here are the 10 worst cities, per LendingTree:

  1. Cincinnati
  2. Rochester, N.Y.
  3. Philadelphia
  4. Louisville, Ky.
  5. Birmingham, Ala.
  6. Detroit
  7. Harrisburg, Pa.
  8. New Orleans
  9. Virginia Beach, Va.
  10. Chicago

Here are the 10 best cities, per LendingTree:

  1. Sacramento, Calif.
  2. Grand Rapids, Mich.
  3. Portland, Ore.
  4. Knoxville, Tenn.
  5. Denver
  6. Seattle
  7. Tulsa, Okla.
  8. Albuquerque, N.M.
  9. Fresno, Calif.
  10. Los Angeles

With No Movement On Lending Reforms, Catholic Group Starts Microloan Program (WOSU), Rated: A

Faced with watching some parishioners struggle to pay back high-interest loans, the Society of St. Vincent de Paul Diocese of Columbus launched its own microloan program in Licking County in late 2016. Since then, it’s expanded to four other counties.

The non-profit organization has partnered with a local credit union to offer loans of up to $500. Borrowers then make monthly payments for 12 to 15 months to pay off loans that carry an interest rate of 3 percent.

That’s a fraction of the rate for loans from payday lending businesses, where interest can exceed 600 percent.

The Catholic microloan program is open to people of all faiths, and Zabloudil says about 75 percent of loan recipients have made good on their payments. Part of the reason for that, Zabloudil says, is they work to ensure borrowers don’t get in over their head.

The program currently offers loan to people from Franklin, Delaware, Fairfield, Knox, Licking and Ross Counties. Zabloudil hopes to eventually take the program to the 17 other counties served by the Roman Catholic Diocese of Columbus.

 

 

LENNAR TO INTRODUCE ONLINE, MOBILE MORTGAGE APPS (Builder), Rated: B

Lennar Corp. plans to start using mortgage-application technology from San Francisco, Calif.-based startup Blend in an effort to attract younger buyers. By applying for a mortgage online or on a phone, consumers can shave 10 days off the process, executives say. The Wall Street Journal’s Laura Kusisto reports:

Making it easier for those buyers to get mortgages could help Lennar with attracting millennials, a critical group of home buyers that have been put off from buying new homes by the high prices and long commute times to many communities. An additional obstacle on the margins for younger home buyers is the complicated process of applying for a mortgage.

GoKapital Launches Its Nationwide Business Loans Affiliate Program (PR News), Rated: B

GoKapital, an online lender from Miami Florida, has launched an affiliate program that will allow bloggers, webmasters, and digital marketers to earn commissions when they refer new customers to one of their business loan programs.

GoKapital’s Affiliate program highlights:

  • Business loans ranging from $10,000 to $1,000,000 for every industry. Servicing businesses in all 50 states, Canada, and Puerto Rico
  • 24-hour funding with 95% approval rate
  • Dedicated support and integration manager

Marshall Lux Joins Marlette Funding as an Advisor (Business Wire), Rated: B

Marlette Funding, LLC, owner of the Best Egg personal loan platform, today announced the addition of Marshall Lux as an Advisor to the Board and Company.

Marshall Lux has been a Financial Services consultant and practitioner for 30 years. He began his career at McKinsey where he served all manner of financial service firms across a variety of subsectors and functional areas. Marshall led McKinsey’s and BCG’s private equity practice. He has extensive relationships across PE Firms.

Seven banks in seven months select Jack Henry’s Core Director platform (Fintech Futures), Rated: B

Jack Henry & Associates’ banking division is in seventh heaven with the revelation that seven US community banks within the last seven months have selected to implement its Core Director processing platform.

The platform can be installed in-house or implemented through JHA OutLink Processing Services, Jack Henry Banking’s outsourced offering.

The firm names two of the banks – California International Bank and the State Bank of Bottineau, located in North Dakota. FinTech Futures has contacted Jack Henry for the other five names but they won’t be revealed yet.

United Kingdom

Accounts promising rates up to 15% are drawing in savers – with 12,000 at Zopa alone (This Is Money), Rated: AAA

Half of all customer deposits at peer-to-peer lender Zopa since the start of the year have come via its Innovative Finance Isa, despite only launching the tax-free accounts in June 2017, This is Money can reveal.

Zopa, which was the first to offer the new style Isa product, said 12,000 customers have opened one of its two Isas, which offer up to 4.6 per cent interest.

For savers with a cash Isa, the FSCS offers protection of up to £85,000 per banking licence. This means that if something goes wrong with the bank or building society where you have deposited your money, you will never lose the first £85,000.

Meanwhile for those with a stocks and shares Isa, the first £50,000 is protected, as long as the provider belongs to the scheme.

Landbay opens Seedrs round to new investors as chief eyes IPO (Peer2Peer Finance), Rated: AAA

LANDBAY has announced that it is opening its latest equity funding round to new investors on Seedrs, as its chief executive unveils the company’s flotation ambitions.

The peer-to-peer lender, which specialises in buy-to-let mortgages, has already raised its target of £1.25m from this funding round but it has been opened up again to new investors.

Landbay recently hit the £100m cumulative lending milestone, with over 25 per cent of that amount having been originated in the last three months.

LendingCrowd raises $ 2.8 mln (PE Hub), Rated: A

LendingCrowd said March 28 that it secured another 2 million pounds ($2.8 million) in funding led by Equity Gap. Also participating were a number of private investors from Scotland’s entrepreneurial and finance scene and the Scottish Investment Bank. LendingCrowd, of Edinburgh, Scotland provides a peer to peer lending platform.

Credit unions and the tech revolution: Lessons from the Abcul conference (Coop News), Rated: A

But technology also presents opportunities to reach new markets – making it vital that credit unions keep up with new developments, delegates at this year’s conference of the Association of British Credit Unions (Abcul) were told.

Pitching his fintech to the conference, he said it could offer new possibilities to the sector, such as partnering with the Post Office to offer branch facilities where members can deposit and withdraw money.

“Mobile use is continuing to shoot up. 78% of the UK population is using a smartphone two-four hours a day – and fastest growth is the over -55s. In the South Manchester Credit Union 65% of traffic comes from mobile devices. It’s something we’ve got to accept.”

Colchester is top area for buy-to-let (Mortgage Introducer), Rated: A

Colchester in Essex is the top area to invest in buy-to-let based on capital growth, transaction volumes, rental yield and rental price growth, LendInvest research shows.

In Colchester prices are rising by 9.98% per year, rental growth is increasing by 3.41%, transaction volumes are rising by 2.79% and yields stand at 3.71%.

Despite topping LendInvest’s list Colchester is far from the best in terms of yield, with Manchester offering returns of 5.42%.

The worst area to invest is in East Central London, where capital gains are falling by 3.76%, rental price growth is sliding by 1.1% and transaction volume growth is down 1.73% year-on-year. Despite all of these factors landlords in that area still make a yield of 2.9%.

Scott Wright: Will RBS fund lead to better deal for SMEs? (Herald Scotland), Rated: A

In a growing economy there is a balance to be struck between ensuring banks are well-capitalised and providing the credit private companies need to expand. That much is recognised by leading business figures such as Mike Welch and Jim McColl, with the latter planning to launch his own bank to help address the funding issues.

In that context, the £425 million Royal Bank of Scotland has set aside to boost competition in the banking sector for SMEs is to be welcomed.

And it is encouraging that Nationwide said it would direct that funding to the UK’s 5.7 million smaller and micro businesses rather than the big corporates, given that is arguably firms of this size which have suffered most from the tightening of bank lending. It is also SMEs, broadly speaking, which have been caught up in the shocking mistreatment scandals that have to occurred at certain banks since the financial crisis.

Cryptocurrencies yet to convince the savvy investor – Assetz Capital (Finextra), Rated: B

Investors in the Assetz Capital platform are yet to be convinced by cryptocurrencies, with just 16% seeing them as worthwhile investments.

The peer-to-peer lending platform canvassed the views of its investors in the Q1 Assetz Capital Investor Barometer. 43% believe the entire market is on the brink of collapse, while 40% feel cryptocurrencies are still too immature at present with significant risks attached. 14% feel it is a worthwhile investment but only in moderation, with just 2% thinking it is the future of investments.

The doors are open to MBAs in finance, including fintech, wealth management and venture capital (Find MBA), Rated: B

One route into the fintech sector is the Spotcap Fellowship, which provides up to £8,000 towards the cost of an MBA and a path to working at the Berlin-based online lender.

Niels Turfboer, UK managing director of Spotcap and an IE Business School MBA graduate, says he created the scholarship to address a talent shortage. A survey by recruitment website Indeed found that 20 percent of top fintech job vacancies were left unfilled after 60 days.

 

 

China

CreditEase FinTech Investment Fund Invests in Branch International (PR Newswire), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced that its venture fund, CreditEase FinTech Investment Fund (“CEFIF”), recently joined a group of prestigious investors to participate in the Series B investment round of $70 million in Branch International. Other strategic investors in this round of financing include International Finance Corporation (IFC), Andreessen Horowitz, Trinity Ventures and Victory Park.

According to the report recently published by CreditEase, jointly with IFC and Stanford Business School, there are over two billion adults globally in the emerging markets who do not have access to basic financial services (click here to download the Financial Inclusion Report). On a daily basis, Branch processes tens of thousands of loans, in amounts ranging from $2.50 to $500, and expects its total loan origination to exceed $250 million in 2018. Recently entered into the Nigerian market, Branch is currently growing 50 percent month-over-month within that country and 20% month-over-month overall.

European Union

How Fintech is Fixing Broken Credit (Lend Academy), Rated: AAA

For millions of people, a lack of access to credit is just another part of life. Yet, without this access, it can be incredibly difficult for businesses and customers to connect with each other. In fact, according to The World Bank, despite a 20% increase between 2011 and 2014 in the number of adults with access to formal financial services worldwide, an expected 2 billion adults worldwide are unbanked. In addition, some 200 million businesses are excluded from the formal financial system.

The problem is particularly prolific in high growth markets; with a 2015 PwC report putting India’s unbanked population at 233 million (that’s nearly every 1 in 6 people). In South East Asia, a further 264 million people are without access to credit (including a staggering 80% of Cambodians). And even beyond the individuals affected, some 200 million businesses are excluded from the formal financial system.

A key way that we are achieving this at PayU is through our €110 million investment in German fintech company Kreditech, a leading technology group for digital consumer credit using machine-learning based underwriting. With traditional credit models simply not catering to large sections of the population, collaborative partnership can be instrumental in finding new ways to offer innovative solutions to the huge problem at hand.

International

Seven reasons to hate the long bond (INTL FCStone Email), Rated: AAA

The price of long-term treasuries will fall because:
1 – The global savings glut is turning into a global savings squeeze
2 – Just look at a chart of Treasury yields
3 – Speculative traders have a massive one-way bet on curve-flattening
4 – China could (should?) sell long-term Treasuries to teach Trump a lesson
5 – The Federal Reserve is reducing the size and duration of its holdings: it still has $526 bn of long bonds to sell!
6 – U.S. public debt is abnormally short: deficit-driven issuance will hit the long end disproportionately
7 – Forward guidance artificially compressed term premia: economic uncertainty will make them rise again

Source: INTL FCStone
Source: INTL FCStone

Chinese savings are unlikely to support anymore U.S. bonds for at least five reasons:
• The disappearance of China’s trade surpluses: China’s trade surplus has fallen from 10% of GDP in 2007 to 1% last year. China may become a deficit country next year.
• The Belt and Road initiative: China has found much better uses for its savings than financing the U.S. military and boomers’ Social Security claims. Going forward, China’s mountains of savings will build the infrastructure of Central Asia, the horn of Africa, Russia, Iran, Southeast Asia, and Eastern Europe, rather than flood the U.S. Treasury market.
• American protectionism: In the unlikely event that Trump’s bid to reduce the U.S.-China trade deficit by $100 billion next year is successful, China will have $100 billion less to invest in the U.S. Treasury market.
• China’s retaliation against American protectionism: Despite Trump’s claim that “trade wars are easy to win”, other countries have national interests too. China also has industries to protect, jobs to defend, and face to maintain. China is sitting on $3.1 trillion in currency reserves: according to the U.S. Treasury, China holds about $1.2 trillion in U.S. national debt (that just includes official accounts).

Source: INTL FCStone

 

Fintech and Property: What You Need to Know (The Urban Developer), Rated: A

Fintech is disrupting the global finance industry, to the benefit of both businesses and consumers.

Advancements in communication and information technology has enabled the rapid growth of technology platforms that provide transactional services. Online payment systems, debt platforms and online exchanges allow companies to better manage their clients and use the data collected to provide the best possible service.

What Fintech products will the property industry gain the most benefit from?

Data Analytics: Using information and data from Fintech platforms will help advisors and agents to make informed decisions for their clients. They will be able to get a better understanding of the client’s overall position, while also increasing the level of personalisation for the client.

 

Raising Capital: There are a number of avenues available for raising capital and the digitalisation of fundraising will open up new opportunities. Using Fintech products will not only speed up the process, but it will also open the door for reaching new investors through a number of online platforms.

India

Nuo Bank, India’s First Decentralized Cryptocurrency Bank, Raises $ 250,000 from Directors of PayU India (Crypto News), Rated: AAA

Despite government’s discouraging stance towards cryptocurrencies India’s crypto startups are getting their deserved thumbs-up from the industry and investors. One such promising startup known as Nuo Bank just raised about Rs. 1.6 crore ($250,000) from the CEO and MD of PayU India within a week of its launch, which shows the kind of trust that both PayU directors have in its growth potential.

Next, like other major cryptocurrency companies Nuo bank will also have its own coin. It’s going to issue 200 million Nuo tokens to customers, which represent 20% of its 1 billion token supply. The value of these tokens will be determined from smart contracts, and the smart contracts stipulate that 25% of Nuo Bank’s revenue should be kept reserved for these tokens.

P2Ps are in a race to build 1st blockchain platform here (The Economic Times), Rated: A

From established players like Faircent to early stage companies like India Money Mart, Paisadukaan and OML P2P, all are trying to develop the industry’s first blockchain platform and also share data about lending transactions between them in order to mitigate frauds.

All these companies have applied and are waiting for the NBFC P2P licence from the Reserve Bank of India.

Faircent, the country’s largest P2P platform has committed upwards of $1 million for this kind of a solution which they feel will help them reap huge benefits when traction on these platforms gains.

 

Asia

Fintech startup takes receivables platform to blockchain (Global Trade Review), Rated: A

The Singapore-based firm forecasts a US$2tn market opportunity in its use of blockchain to provide a secure invoice factoring solution using its customised cryptocurrency. With its token pre-sale set to end on April 8, the group’s initial coin offering will launch on April 9.

Acudeen Technologies brands its platform as “an inclusive environment for small businesses who are having a hard time getting financing using traditional means”.

Africa

Wonga South Africa Enters the Personal Loans Market (The African Exponent), Rated: AAA

Fintech craze changing face of lending (Business Daily), Rated: A

The numbers are in and the jury is out. The world over the fintech craze that underpins lending outside the traditional banking ecosystem continues unabated.

Whether the channel of consumption is online, mobile or the services packaged differently such as payday lending and layaway financing, investments continue to pour in chasing opportunities in a vertical that is quickly getting overcrowded with little to no service differentiation and a continued insistence on insight wizardry riding off copious amounts of personal data ingested.

Will technology save independent financial advice? (Money Web), Rated: B

Essentially technology can do two things for the advisor. It can significantly reduce the costs of administration and record keeping, while also making these processes simpler and more efficient.

“The whole market place is talking about digital – the rewiring of the investor and the investment advisor,” Wilson says.

Authors:

George Popescu
Allen Taylor

Friday Match 23 2018, Daily News Digest

ifisa

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

ifisa

News Comments

United States

United Kingdom

China

European Union

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News Summary

United States

Prosper Announces Pricing Changes (Prosper), Rated: AAA

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

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

Pricing Change Impact Simulation

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

Source: Prosper

 

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

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

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

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

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

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

A Paper from Citi

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

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

Not all Roses and Plush Toys, Though

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

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

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

Key questions discussed in this report:

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

Ranking at first is Sacramento.

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

 

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

Source: Which? News

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

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

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

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

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

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

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

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

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

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

China

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

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

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

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

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

European Union

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

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

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

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

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

International

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

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

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

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

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

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

Australia/New Zealand

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

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

Source: the Spinoff

Jrny

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

India

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

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

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

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

Source: American Banker

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

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

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

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

Afica

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

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

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

Canada

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

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

Authors:

George Popescu
Allen Taylor

Friday March 2 2018, Daily News Digest

Seed

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

Seed

News Comments

United States

United Kingdom

European Union

International

Asia

News Summary

United States

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

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

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

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

Source: American Banker

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

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

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

One notable leader in this endeavor is 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A more diversified option

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International

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

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

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

What kind of technologies do crypto banks use?

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

All transactions are recorded on the Blockchain.

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

Do crypto banks have their own native currency?

Yes. Native cryptocurrencies help make the bank global.

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

What is social lending?

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

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

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

Asia

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

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

Authors:

George Popescu
Allen Taylor

Thursday January 11 2018, Daily News Digest

consumer loan mpl abs

News Comments Today’s main news: Vanguard’s robo-advisor passes $100B AUM. YieldStreet raises $113M. RateSetter, Funding Circle join FSB funding platform. Funding Circle looks at Autumn for flotation. ETHLend launches secondary blockchain partnership. Modalku hits $7.4M in total crowdfunding. Today’s main analysis: KBRA 2017 consumer loan marketplace lending year in review and 2018 outlook. Today’s thought-provoking articles: LendingTree survey: Survey takers […]

consumer loan mpl abs

News Comments

United States

United Kingdom

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European Union

International

Australia/New Zealand

India

APAC

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News Summary

United States

Vanguard’s Digital Advice Platform Is First to Pass $ 100B in AUM (Investopedia), Rated: AAA

Vanguard reached another milestone that should keep competing robo-advisors on their toes: it is the first firm to have a digital advice platform to surpass the $100 billion mark in terms of assets under management. And that comes with Vanguard having launched the service in 2015, just three years ago.

According to Stokes, 90% of the platform’s $101 billion in assets under management as of the end of 2017 are from existing clients. Vanguard’s assets under management beat those of Charles Schwab, which has $25 billion in assets under management for its Intelligent Portfolios, Institutional Intelligent Portfolios and Intelligent Advisory services, as well as Betterment’s $10 billion in assets, noted FinancialPlanning.

KBRA Releases 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) released its 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook. The accompanying research report highlights the fact that 2017 was a notable year in the consumer loan marketplace lending (MPL) space in many respects. Total ABS issuance topped $7.8 billion in 2017, up from $4.6 billion in 2016, a year-over-year increase of 71%. SoFi led the way in 2017 in terms of number of ABS deals and total securitization volume, having completed six securitizations for $3.2 billion in total notes. Prosper completed three securitizations totaling $1.5 billion under their PMIT program followed by four deals from LendingClub’s prime and near prime shelves totaling $1.2 billion and three from Marlette’s MFT shelf totaling $919 million. Avant completed two securitizations totaling $480 million while Upstart issued its inaugural securitization in June 2017 followed by a subsequent deal in November. Investor demand strengthened with orders exceeded total deal size and a larger number of investors participated in the deals.

KBRA’s 2017 year in review and 2018 outlook provides:

  • KBRA’s outlook for 2018
  • Information behind the growth in the consumer MPL market
  • Detailed loan origination and ABS issuance volume by platform
  • Securitization performance and rating trends
  • Comparison of collateral characteristics, lending license arrangements platform servicing strategies and funding sources
  • Synopsis of legal and regulatory developments affecting the sector
  • Summary of significant equity raised by fintech companies

Read the full report here.

LendingTree Survey Reveals Optimistic Outlook for Personal Finances in 2018 (PR Newswire), Rated: AAA

LendingTree recently conducted an online survey among 1,025 Americans to gauge financial expectations, concerns and overall sentiment regarding personal finances for 2018. According to the results, two out of three Americans have an optimistic outlook for the year ahead, with millennials being even more optimistic.

According to the survey, almost half of Americans (45%) feel that 2017 was at least somewhat better than 2016 in terms of personal finances. Approximately one third (34%) earned more in 2017 than they did in 2016, 24 percent put more into savings in 2017 compared to 2016, and 21 percent improved their score over the past 12 months. However, only 16 percent reduced their total credit card debt, making debt reduction a priority in the year ahead.

Additional positive expectations for 2018 include:

  • 46% expect income to increase
  • 28% expect to pay off credit card debt
  • 35% plan to make and/or stick to a budget in 2018
  • 35% also expect to improve their credit score
  • 18% expect to save for a down payment on a house
  • 27% plan to build an emergency fund
  • 26% expect to save for a savings/purchase goal

To view the rest of the survey results, visit 

Spike in delinquency rate mars outlook for personal loans (American Banker), Rated: A

U.S. consumers are falling further behind on loans commonly used to consolidate debt, the latest sign that monthly payment burdens have become unsustainable for more households.

In the third quarter of 2017, 1.9% of all bank-issued personal loans were at least 30 days delinquent, according to data released Tuesday by the American Bankers Association. That was a notable jump from the second quarter, when the delinquency rate was 1.52%.

YieldStreet Raises $ 113 Million Financing Round to Disrupt Alternative Investing (BusinessWire), Rated: AAA

YieldStreet, the alternative investment platform working to change the way wealth is created, today announced that it has closed a $113 million financing round. The round includes $12.8 million of Series A equity financing co-led by Greycroft and Raine Ventures, as well as a revolving credit facility of $100 million from a New York based family office (the “Family Office”). Additional equity investors include Saturn Ventures, Expansion Venture Capital, the Family Office and FJ Labs.

The equity capital will help enable YieldStreet to accelerate the transformation of wealth creation by investing in further product innovation and growing its loyal community of investors. The raise comes as YieldStreet reached a tipping point in 2017, almost tripling prior year originations and surpassing $250 million raised by retail investors at the end of the year.

Alan Patricof, co-founder of Greycroft and one of the pioneers of modern private equity as the founder of Apax Partners, will join the YieldStreet advisory board. Ian Sigalow of Greycroft, Gordon Rubenstein of Raine Ventures and a representative from the Family Office will join YieldStreet’s board.

It’s Time to Talk About Alternative Assets (ThinkAdvisor), Rated: A

While many high-net-worth investors get advice from friends, family and sources on the internet, the majority — 72% — rely on financial professionals such as their advisors for investment information, according to research by Millennium Trust. In fact, financial professionals are over three times more relied on and trusted than the next trusted investment source: 51% of HNW investors trust financial professionals more than competing sources, including family, which is the most trusted source for only 13% of investors.

When advisors discuss potential investments with clients, they often focus on traditional options like stocks, bonds and mutual funds. As our research shows, however, many HNW investors are interested in alternative investments, such as hedge funds, private equity, real estate, commodities, marketplace lending and crowdfunding.

For example, 63% are moderately or extremely interested in investing in real estate and 46% report the same level of interest in private equity. But when it comes to discussing those investments with their broker or advisor, the numbers are significantly lower: Just 25% have discussed residential rental properties, 20% commercial rental properties, 23% real estate investment trusts, and 27% real estate limited partnerships, whereas 38% have discussed private equity.

Ryan Feit, CEO of SeedInvest, Updates on 2017 Progress & Crowdcube Partnership (Crowdfund Insider), Rated: A

SeedInvest is one of the most selective investment crowdfunding platforms in the US.

Today, SeedInvest is a full stack platform allowing companies the ability to sell securities under each of these exemptions.

How were your numbers for 2017? Can you share some top line detail?

Ryan Feit: We had another record year at SeedInvest.  We invested around $50 million into startups during 2017 (more than in our prior four years combined).  By our calculations we did at least twice as much investment volume as the next largest US-based equity crowdfunding platform that is open to all investors.

During 2017, what were some of the highlights for SeedInvest?

Ryan Feit: Here are a few additional highlights for 2017:

  • HelloMD completed the largest Regulation CF Side-by-Side round fundraise in history, raising $3 million.
  • Knightscope completed the largest pure Equity Crowdfunding round in history, raising $20 million.
  • We launched Auto Invest to help investors easily diversify in up to 25 startups and so far, 470 investors have made 3,300 auto investments into startups.
  • We launched LIVE Fundraising at events around the world and through our partnerships with LAUNCH Festival/Scale and
  • TechCrunch Disrupt, $10 million was raised from 5,800 people on SeedInvest.
  • SeedInvest had 14,000 startups apply to raise capital (vs. 1,500 in 2015).
  • SeedInvest had 2.5 million site visitors (vs. 400k in 2015).
  • SeedInvest processed 20,000 investments (vs. just 275 in 2015!).

Petal Card Raises $ 13M Led by Thiel’s VC Firm (Bank Innovation), Rated: A

Petal, the card designed to serve the credit invisible, has raised $13 million in funding that it will use to double its employees as the young startup tries to meet the demand of its growing user-base.

The Series A funding round was led by Peter Thiel’s VC firm, Valar Ventures.

U.S. News & World Report Names LendingPoint One of 2017’s Best Personal Loan Companies (BusinessWire), Rated: A

LendingPoint, the company working to revolutionize access to consumer credit, was named one of nation’s six best personal loan companies by U.S. News & World Report.

The media company evaluated personal loan companies in five key areas, reviewing data on eligibility, loan terms, fees, repayment methods and additional features. LendingPoint was cited as 2017’s top lender for people with fair to good credit, who have merit-based qualifications beyond FICO scores that make them worthy loan candidates.

Alkami raises $ 70 million for mobile banking software (TechCrunch), Rated: A

Plano-based Alkami has developed a white label service that credit unions and banks use across digital platforms.

And Alkami’s 4.5 million users have generated enough revenue for the company to justify a $70 million Series D round, led by General Atlantic, with participation from MissionOG. Existing investors include S3 Ventures and Argonaut Private Equity.

Chase Partners with AutoFi to Deliver Digital Car-Buying for Dealerships across the Country (BusinessWire), Rated: A

Chase announced today a partnership with AutoFi, a financial technology company that helps customers select and finance vehicles through their automotive dealers’ website and reduce the time it takes to complete the sale. Chase is the first national bank on the AutoFi platform.

The AutoFi digital retailing platform connects dealers with buyers and lenders. Chase will deliver financing terms online through the AutoFi platform, often within seconds.

Nearly half of consumers want to purchase and finance vehicles online, Chase’s research has found.

CECL compliance dragging small banks toward automation (American Banker), Rated: A

Like many small-to-midsize banks, Bank Independent in Sheffield, Ala., calculated its monthly allowance for loan and lease losses the hard way: setting aside a week every month to complete a largely manual, Excel-based model.

Download Your Guide to LendItFintech USA (LendIt), Rated: B

Discover who attends, why you should attend, andmore.

Ascentium Capital Exceeds $ 1 Billion in Funded Volume During Fiscal Year 2017 (Ascentium Capital), Rated: B

Ascentium Capital LLC, the nation’s largest private-independent finance company, announced it surpassed $1 billion in annual funded volume for the first time in the organization’s history.

 

Real estate investing startup Cadre partners with Goldman Sachs (Reuters), Rated: A

New York-based real estate investment company Cadre has partnered with Goldman Sachs Group Inc (GS.N) to allow the bank’s private wealth management clients to invest through the startup’s platform.

Goldman Sachs clients have committed to investing $250 million in properties through Cadre’s platform so far, the companies said on Wednesday.

Better Saves Homeowners $ 2.7 Million in Mortgage Refinancing Costs in 2017 (Better Email), Rated: A

PeerStreet: A Group Of Surfers Out To Revolutionize Real Estate Investing (Benzinga), Rated: A

PeerStreet is an investment platform that enables accredited investors to easily invest in high-yield, short term, real estate backed loans. PeerStreet sources its loans from non-bank lenders across the nation. They underwrite both the lenders and the loans using advanced algorithms, big-data analytics, manual processes and on-the-ground due diligence to filter and select high quality loans.

Who are your investors, if any?

Our investors include: Andreessen Horowitz, Felicis Ventures, Rembrandt Venture Partners, Montage Ventures, ThomVest, The Kaiser Family Foundation, Colchis Capital, Toba Capital, Le Frak, and many notable individual investors including Dr. Michael Burry, Adam Nash, Ron Suber, D. A. Wallach, etc.

Is there anything else Benzinga should know about your company?

PeerStreet is entrenched in the financial technology and lending industries at large. PeerStreet has been named by American Banker as one of the “Best Places to Work in Financial Technology” in 2018 and one of the “10 Best Startups in Los Angeles” in 2017 by Zippia. PeerStreet is a member of the Marketplace Lending Association and has partnerships with over 150 private residential real estate lenders in over 30 states.

Q&A With Chief Investment Officer Chris Fraley (RealtyMogul), Rated: A

Q: How do you intend to translate your experience from Rockwood Capital to your role at RealtyMogul?

In 2018, I see RealtyMogul expanding the size of its investment transactions, something I have direct experience in managing and find very exciting. I believe RealtyMogul is entering its third phase of growth as a business, evidenced by its recent acquisition of Serendipity Apartments this past September. Due to the ability to invest larger amounts of equity, we were able to maintain a majority, controlling interest in a $24M apartment community. While providing opportunities in preferred equity, mezzanine debt and smaller, passive limited partner interests will still be a critical aspect of our business, I’m hopeful that our real estate team’s substantial institutional background will help us acquire and successfully manage properties with larger transaction values.

Q: Do you think RealtyMogul will impact the traditional institutional investing model?

Absolutely. The institutional world is already starting to sign on to the concept of direct investing because the typical closed end fund model is broken, inefficient and fraught with possibility of misalignment of interests.

Surprisingly, most institutional investors do not want to invest in value add real estate investments in the bottom of a cycle until there is clear evidence of a market recovery. This was evident in the last downturn by the paucity of institutional allocations to value add strategies in the 2008-2012 timeframe. When the market starts to recover, institutional investors should start to make allocations. This may take a year or two. They lock up allocations with 3-4 year investment periods, oftentimes at the peak of cycle. Now is a perfect example of this disconnect.

Direct investment platforms allow investors to move in and out of market more efficiently and avoid an extra layer of fees to the investor. I believe this is the future of our industry and RealtyMogul is poised to lead.

RealtyMogul Hires New Chief People Officer (RealtyMogul), Rated: B

RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.

Stressing About When And How To Pay Your Debts? Pefin’s AI Assistant Is Here To Help (Benzinga), Rated: A

Pefin is the world’s first Artificial Intelligence (AI) financial advisor. The platform provides intelligent, unbiased and personalized financial planning and advice. Pefin’s mission is to look after the financial best interests of users in a way that embraces the unique individuality of their lives.

The platform offers:

  • 1. Long-term Financial Planning services, including a complete Financial Plan
  • 2. Financial Advice, including savings and debt management strategies
  • 3. Investment Advice and Portfolio Management Services
  • 4. Real-time monitoring, updates, and curated financial literacy content for each user

Tech advances force advisers to adjust — or else (ROI-NJ), Rated: A

There’s a machine-versus-human calculus that’s going on in the world of money management.

It may not yet be that more financial advice is provided by machines than humans, but to say the industry is on that path isn’t hyperbole. Investors themselves — particularly those of a younger demographic — have shown they are willing to trust a robot for advice.

John Babcock, president of Peapack-Gladstone Bank’s private wealth management division, sides with the humans, but understands automation is quickly changing the face of his business.

ProShares and VanEck are withdrawing their requests for bitcoin ETFs (Business Insider), Rated: A

Two financial services giants — ProShares and VanEck — are withdrawing requests to the Securities and Exchange Commission to list bitcoin ETFs.

 

US Banks Rely on Fintech Firms to Overcome Legacy Systems (Payments Journal), Rated: A

Legacy systems are preventing nearly two thirds (64%) of US commercial banks from developing Fintech applications, research commissioned by Fintech provider Fraedom has revealed.

Interestingly, 82% of the respondents that highlighted this concern were shareholders. Over half of those polled also noted a lack of expertise within banks as an important concern (56%), just ahead of limited resources (53%).

Commercial banks outsourcing services to a Fintech provider is clearly a trend on the rise, with only 22% of US banks revealing that they do not outsource any payment services compared to 30% of their UK counterparts.

How a Fintech Startup Aims to Take the Fear Out of Investing (Wharton), Rated: A

Riskalyze CEO Aaron Klein talks to former Wharton visiting professor Vinay Nair about his startup’s business model and path to growth.

Nair: Can you give us a sense of what your Risk Number model is and why advisors are attracted to it?

Klein: We built the technology on top of the academic framework that won the Nobel Prize for economics in 2002 — Daniel Kahneman and Amos Tversky’s work on prospect theory. We had a team of academics do a deep dive into the methodology and they said, ‘On the one hand, there are a lot of novel things in what you’ve done. On the other hand, a lot of what you’ve done is taken stuff that we’ve been working on in the labs for 15 years to 20 years and figured out a way to make it commercially viable and understandable by the average human.’

Listen to the podcast here.

Can taking out a loan be a good experience? (WGN Radio), Rated: A

Kabbage has enough experience with small businesses to say providing loans to small businesses can make for a good experience. John Parise is the Head of Customer and Partner Marketing and has been following company journeys for years now. His way of making loans a positive experience is by offering flexibility.

Listen to the podcast.

Fintech Startup Apruve Partners With MSTS For Credit Card Alternative (Benzinga), Rated: B

B2B fintech companies MSTS and Apruve announced Wednesday a payment process obviating the need to leverage capital and resources to provide credit and payment terms.

The new service enables automated instant credit approval, buyer onboarding, billing, customer service and collections services while allowing business clients to eschew the high transaction fees of credit cards.

4 of the 5 Biggest IPOs in 2017 Bombed. Here’s Who Won (Madison), Rated: B

The number of companies going public in 2017 surged 52% over the year ago period, hitting 160 deals, with the proceeds from the IPOs reaching $35.6 billion, double the amount in 2016, according to an analysis by Renaissance Capital.

5. Qudian (down 47.8%)

United Kingdom

RateSetter and Funding Circle added to FSB Funding Platform (P2P Finance News), Rated: AAA

RATESETTER, Funding Circle and Assetz Capital are some of the peer-to-peer lenders that have been included on the Federation of Small Businesses’ (FSB) new business funding platform.

The FSB Funding Platform, developed by Finpoint, matches potential borrowers with more than 100 lenders through the use of Artificial Intelligence (AI).

FSB launches AI-led business finance aggregator (P2P Finance News), Rated: A

THE FEDERATION of Small Businesses (FSB) has launched a new business finance aggregator that uses Artificial Intelligence (AI) to match potential borrowers with more than 100 lenders.

The trade body unveiled the FSB Funding Platform on Wednesday, after it was trialled on FSB members in three UK regions.

The new platform has been developed for the FSB by Finpoint and is regulated by the Financial Conduct Authority.

Funding Circle eyes autumn flotation, report claims (The Digital Banking Club), Rated: AAA

UK peer-to-peer lender Funding Circle is set to hire investment advisers as part of preparations to float on the London Stock Exchange.

UK Businesses Enter 2018 Vulnerable to Economic Shocks (CL News), Rated: A

These are unpredictable times for the UK economy. The great financial crisis remains fresh in the memory of business owners and its effects are still being seen in the form of relatively low wages growth and lagging productivity. Meanwhile, the ongoing talks on Britain’s future relationship with the European Union are a reminder that the future too is uncertain. Against this backdrop, a significant number of Britain’s SMEs are acutely vulnerable to any downturn in trade, according to a survey by the business lender, Nucleus Commercial Finance.

Small business owners were more or less evenly split on the question of whether the UK should remain in Europe, but as the survey indicates, the possibility that current trade talks will lead to a poor outcome is now a major concern,  trumping both the possibility of another major financial crash or the threat of digital attack by hackers.

And almost half of the businesses taking part in the survey said they are financially exposed to any event that impacts on trade, with 47% admitting they wouldn’t last a month on the basis of their current cash reserves. 30% said they wouldn’t last two weeks.

After 2017’s European Brexodus companies want to know the UK is open for business (Verdict), Rated: A

The first Morgan McKinley London employment monitor of the new year has revealed a 37 percent decrease in jobs available year-on-year while there are 30 percent fewer people seeking jobs in the capital.

Month-on-month there was a 52 percent decrease in jobs available, while the number of people seeking jobs in London fell by 40 percent.

China

WeChat shows messaging is the future of financial services ‘platforms’ (Tearsheet), Rated: AAA

WeChat could be the next big broker-dealer among high-net-worth Chinese investors.

Its parent company, Tencent, now has a license that allows it to sell mutual funds on WeChat and give the popular messaging app’s 980 million users more options to help boost funds sold on the platform. It also gives Tencent more sway in deciding which financial products third-party companies can sell on its different platforms.

WeChat is showing that messaging channels, at least in China, are where people like making financial transactions.

European Union

Berlin-based FinTech startup Penta accuses TransferWise to have stolen its debit card branding (EU Startups), Rated: A

The London-based FinTech giant TransferWise just announced its borderless current account, which enables users to spend money in a choice of up to 28 foreign currrencies with a debit card. Tranferwise’s choice of a neon green colour for its first debit card was met with anger by Berlin-based SME challenger bank Penta, which turned to Twitter to express its anger at the striking resemblance to its own neon green card.

Looking at the two card designs, you’ll notice that it’s really just about the colour, and chances are high, that TransferWise picked the similar colour “by accident”.

International

Crypto P2P lender ETHLend launches secondary blockchain partnership (P2P Finance News), Rated: AAA

CRYPTO-BACKED peer-to-peer lending platform ETHLend has partnered with a technology provider to help record and store transactions more securely.

ETHLend, founded by Finland-based Stani Kulechov, is a P2P lending platform funding business and personal loans in the Ethereum digital currency.

Central banks are experimenting with blockchain technology — here’s why (Business Insider), Rated: A

So, blockchain can be quite resilient, it can also be a way to create greater transparency into central banking, more credibility because of the rules a blockchain-based system enforces.

Blockchain based BABB Kicks Off Initial Coin Offering to Create the “World Bank for the Micro Economy” (Crowdfund Insider), Rated: A

BABB, a banking platform based on Blockchain based in London, is launching its initial coin offering (ICO) on January 15th with a pre-sale. The general token sale of BAX will commence immediately following the pre-sale seeking to raise a hard cap of USD $20 million. Once their app is live, BAX will be used to pay for services, fees and licensing costs; so if an individual or business wants to use a BABB account, they will use BAX to pay for it. BAX tokens can also be used for other services.

The money raised by the ICO will be used for BABB to deliver: a smartphone app with bank account capability and international money transfer functionality; a European banking license in the appropriate jurisdiction for their go-to market strategy; and a partnership with a leading retail or central bank in an emerging market, to open corridors for international transactions.

Finova’s FNVA to Become the First Equity-linked Token (BTCManager), Rated: A

Finova Financial is growing as a trusted online lender enabling people to access affordable loans quickly. The platform is recognized as part of the “Fintech 100 list of the world’s leading financial technology innovators for 2016.”

Finova’s FNVA tokens are unique because these tokens are linked with a share of equity in Finova Financial itself. Also, it utilizes the ERC-20 Ethereum token standard that will be traded on cryptocurrency exchanges that are SEC approved and has the backing of assets of a US corporation. Therefore, the token sale is like a hybrid between an ICO and IPO.

These tokens will soon be available through FrontFundr investment platform.

The token price structure of the sale is displayed below, where the price will increase over time. A total of $18.5 million worth of tokens will be sold, on a sliding scale between $0.75 and $1.56 as the supply of FNVA increases.

 

Source: BTCManager
Australia/New Zealand

Auswide Bank sells stake in MoneyPlace, only two years after investing in online lender (The Courier Mail), Rated: AAA

BUNDABERG-based bank Auswide is offloading its 62 per cent stake in online lender MoneyPlace only two years after making an investment to “take a position” in the hi-tech sector.

Mom and pop investors fleeing property rental business (Scoop), Rated: A

Increasing numbers of mom and pop landlords are contemplating giving up on property investment and exploring alternative investments due to reasons such as the increasing pressure they feel from what can be a capital-intensive investment, changes to the legal environment (such as the Healthy Homes Guarantee Act 2017) and fears of how methamphetamine contamination could ruin their retirement planning.

CEO of New Zealand’s largest peer-to-peer mortgage lender Southern Cross Partners, Luke Jackson, says a string of inquiries about alternative investment options that don’t stray too far from property have been received by his team in recent weeks.

India

Existing NBFC cannot operate as peer-to-peer lender (IIFL), Rated: AAA

The Reserve Bank of India (RBI) notified that existing non-banking financial companies cannot operate as peer-to-peer lenders. Further, new applicants for peer-to-peer lending license will need to provide the list of promoters and the source of funds for the minimum capital requirement of Rs20mn, the regulator said.

RBI further clarified that electronic platforms that assist only banks, non-banking financial companies and other regulated financial institutions to identify borrowers for lending will not be classified as peer-to-peer lending platforms. Only electronic platforms that also cater to retail lenders can register separately as such platforms, the central bank said.

The future of online financial advice and mutual funds (hubbis), Rated: A

Kunal Bajaj points out India is a large country without sufficient financial advisors to serve the population’s needs. With most people simply finding a financial advisor close to their home or place of employment, financial advice in India is primarily limited by geography which is not an ideal situation. As an added problem, many people find that their advisor has persuaded them into choosing a product which did not meet their needs. “Clearfunds eliminates this issue by delivering a bespoke solution for each customer which uses our internet platform.” Bajaj explains.

Traditional financial advisors try to channel every client into one of 21 possible portfolios (0-100 Debt-Equity or 100-0 Equity-Debt, in five-percent steps) or outcomes, often through first impressions or physical factors. With an online financial advisor, this is not possible, and therefore more work is put into finding out more about the person themselves and their individual requirements by asking periodic psychometric questions about the stability of their employment and income stream.

Bajaj has seen Clearfunds go from strength to strength in the 12 months since the platform has been online. “We have customers across 400 cities and around $10 million in assets under management.” He says. “Betterment and WealthFront took over a year to gather their first $10 million in the USA but now they both have billions in assets. Nutmeg has been in business for 7 years and has around 40,000 accounts and a billion dollars of assets under management.”

APAC

Indonesia P2P Startup Modalku Milestone: Hits $ 74 Million in Total Crowdfunded MSME Loans (Crowdfund Insider), Rated: AAA

Modalku, an Indonesia-based peer-to-peer lending fintech startup, successfully surpassed $74 million (Rp 1 trillion) in total crowdfunded MSME loans.

Canada

Mike Novogratz is planning a crypto version of Goldman Sachs (Business Insider), Rated: A

In a statement out Tuesday, Novogratz said he is looking to raise $200 million for Galaxy Digital LP, a “best-in-class, full service, institutional quality merchant banking business” for the crypto market. Novogratz also plans to list the company on TSX Venture Exchange, a Canada-based exchange for small cap companies.

The new bank will be born out of Canadian-based First Coin Capital, which Novogratz plans to buy and then merge with Bradmer Pharmaceuticals. Its main businesses will include trading, advisory services, asset management, and private equity-like investing.

Authors:

George Popescu
Allen Taylor