Thursday October 3 2019, Weekly News Digest

banks mortgage

News Comments Today’s main news: Morningstar to rate blockchain securities. nCino raises $80M. RateSetter rolls out Access, Plus, Max. Revolut losses double. Today’s main analysis: Race and homeownership. Today’s thought-provoking articles: Big banks are losing mortgage share. Race and homeownership. LendIt Fintech Europe highlights. International P2P lending volumes for September 2019. United States Morningstar to offer […]

The post Thursday October 3 2019, Weekly News Digest appeared first on Lending Times.

banks mortgage

News Comments

United States

United Kingdom

International

European Union

Other

News Summary

United States

Morningstar Inc. will offer ratings to blockchain based securities (Ripple Coin News), Rated: AAA

Chicago-based financial service provider, Morningstar Credit Ratings announced plans to diversify its business operation by providing ratings for debt securities issued on public blockchains, also known as crypto-assets. Morningstar Inc, the parent company of the rating agency is valued at $6.4 billion. Last year it generated $1.7 billion in revenue. The company is well known for rating mutual funds from giants of the financial world like Prudential and  Morgan Stanley among others.

North Carolina-based Fintech Startup nCino Raises $ 80M (Crunchbase), Rated: AAA

North Carolina-based nCino, which has developed a cloud-based operating system for financial institutions, has raised $80 million in a round of funding led by T. Rowe Price Associates Inc.

Bank Wars; ABS East + Blockchain; Housing (PeerIQ), Rated: AAA

In U.S Housing, borrower home equity is hitting all time highs. Homeowners with a mortgage saw equity increase by 4.8% since 2Q2018. This equates to $4,900 gained per American homeowner and a strengthening of the US consumer balance sheet.

Over the past ten years, the largest American banks – Wells Fargo, JPMorgan, and Bank of America – have seem their share of home loan originations fall 30% as digital customer friendly non-banks such as Quicken Loans take share.

Source: PeerIQ, Financial Times

White Americans Have the Highest Homeownership Rates but There Are Large Differences Among Cities (LendingTree), Rated: AAA

Americans who identify as white own a disproportionately large percentage of homes in all of the nation’s 50 largest metros. White Americans make up an average of 59% of people in the metros featured in our study, but they own around 73% of owner-occupied homes.

Where white Americans own the most homes relative to their overall population

New York

% of the population – White alone: 46.99%
Median household income – White alone: $91,806
% of owner-occupied homes – White alone: 68.65%
Difference between % of owner-occupied homes and % of population: 21.66%

San Diego

% of the population – White alone: 46.20%
Median household income – White alone: $80,276
% of owner-occupied homes – White alone: 65.37%
Difference between % of owner-occupied homes and % of population: 19.17%

Phoenix

% of the population – White alone: 56.41%
Median household income – White alone: $64,423
% of owner-occupied homes – White alone: 75.17%
Difference between % of owner-occupied homes and % of population: 18.76%

Source: LendingTree

Where white Americans own the least homes relative to their overall population

Pittsburgh

% of the population – White alone: 85.82%
Median household income – White alone: $59,089
% of owner-occupied homes – White alone: 93.29%
Difference between % of owner-occupied homes and % of population: 7.47%

Source: LendingTree

BFS Capital Eliminates Upfront Fees to Simplify Financing for Small Business Owners (Yahoo! Finance), Rated: A

BFS Capital today announced it has eliminated all upfront fees on its financing solutions, including loans and business advances, as it simplifies pricing for small business owners.

BFS Capital customers can now apply for and receive up to $500,000 in financing with no origination fees, no processing fees and no upfront costs.

Self Announces The Self Visa Credit Card, A First-Of-Its-Kind Secured Credit Card That Does Not Require A Credit Check (Globe Newswire), Rated: A

Self, a leading fintech startup offering people a way to build their credit while also saving money, today announced the release of the Self Visa® Credit Card. This first-of-its-kind secured card uses a unique funding model to provide customers with a line of credit without the need for a significant upfront investment or a credit check – two areas that perennially sideline subprime consumers who are looking to build their credit scores.

The Crowdfunding Revolution Might Never Come To CRE (Bisnow), Rated: A

Crowdfunding has not coalesced into the influential force in commercial real estate some may have expected, and is at risk of being decimated by the next economic downturn.

RiverNorth Marketplace Lending Announces Monthly Distribution of

RiverNorth Marketplace Lending Announces Monthly Distribution of $0.18 Per Share (Crowdfund Insider), Rated: A

.18 Per Share (Crowdfund Insider), Rated: A

RiverNorth Marketplace Lending Corporation, an established and currently operating as a closed-end interval fund dedicated to the marketplace lending asset class, announced on Tuesday its monthly distribution of $0.18 per common share for the months of October, November, and December 2019.

The Robot Revolution Will Wipe Out 200,000 U.S. Banking Jobs in the Next Decade (Fortune), Rated: A

Technological efficiencies will result in the biggest reduction in headcount across the U.S. banking industry in its history, with an estimated 200,000 job cuts over the next decade, Wells Fargo & Co. said in a report.

The $150 billion annually that the country’s finance firms are spending on tech — more than any other industry — will lead to lower costs, with employee compensation accounting for half of all bank expenses, said Mike Mayo, a senior analyst at Wells Fargo Securities LLC.

Goldman Sachs Tries Banking for the Masses. It’s Been a Struggle. (WSJ), Rated: A

Two dozen of Goldman Sachs Group Inc.’s most profitable traders were kicked off their desk last year to make room for the swelling ranks of the firm’s Main Street lending arm.

Small bank’s big digital goal: Launch 3 niche banks (American Banker), Rated: A

The first one, introduced this summer, is called “booyah” and is aimed at college students and young graduates. The $122 million-asset bank sees it as a way to target a specific audience outside the central Florida area and boost deposits in order to ward off competitive threats from fintechs.

The Seven-Year Auto Loan: America’s Middle Class Can’t Afford Its Cars (WSJ), Rated: A

Walk into an auto dealership these days and you might walk out with a seven-year car loan.

That means monthly payments that last well past when the brake pads give out and potentially beyond when the car gets traded in for a new one. About a third of auto loans for new vehicles taken in the first half of 2019 had terms of longer than six years, according to credit-reporting firm Experian PLC. A decade ago, that number was less than 10%.

Naborly Raises $ 7.5M in Seed Funding (FINSMES), Rated: A

Naborly, a San Francisco, CA-based credit bureau for the rental industry, closed its $7.5m seed funding round.

How Much Money Can I Get From a Business Loan? (All Business), Rated: A

It’s rare for two loan offers from two lenders to come out to exactly the same number. Different lenders (traditional banks, online lenders, alternative lenders) evaluate a variety of factors, have different algorithms, and may place more emphasis on different aspects of your business history.

Coinbase Announces 1.25% APY on USDC Holdings (DeFi Rate), Rated: A

Today, Coinbase announced the launch of USDC rewards. US Coinbase customers are now eligible to earn 1.25% APY rewards on all USD Coin ($USDC) held on Coinbase.

This announcement comes amid the DeFi boom in 2019. While 1.25% APY is substantially higher than traditional savings rates at banks, it’s still lagging behind the broader DeFi lending market. As of writing, Compound currently offers 5.34% APY on USDC holdings while dYdX offers 3.85% APY – View current USDC lending rates. This doesn’t account for other stablecoins, such as Dai, where holders can earn upwards of 8%.

Investors Say Curo’s Bid To Nix Their Suit Misses The Point (Law360), Rated: A

Investors on Tuesday said their stock-drop suit against online lender Curo is
about misrepresentations regarding transition away from its most profitable product, not simple failure to meet financial goals, as the company suggests. The online lender said in an August dismissal bid that investors were trying to plead “fraud by hindsight” case in alleging Curo misled them about transition away from offering lucrative single-pay loans in Canada, which had drawn the scrutiny of regulators there, and into longer-term open-end loans. 

eOriginal Chief Product Officer Honored as a 2019 HousingWire Tech Trendsetter (PR Web), Rated: B

eOriginal, a digital lending technology pioneer, is proud to announce that Simon Moir, Chief Product Officer, has been named to HousingWire’s Tech Trendsetters list for 2019. HousingWire’s inaugural award recognizes the impactful and innovative technology leaders serving the housing and mortgage finance industry. This is on the heels of eOriginal’s second consecutive listing as one of HousingWire’s HW Tech 100TM in April 2019.

OYO Announces Partnership With Biz2Credit to Provide Small Business Financing Options to Hotel Owners (Globe Newswire), Rated: B

OYO, the world’s third-largest and fastest-growing chain of hotels, homes and spaces*, has partnered with Biz2Credit to provide working capital and commercial real estate loans to existing and potential hotel partners across the United States.

Finastra Launches Fusion Mortgagebot Data Insights to Help Financial Institutions Optimize their Mortgage Business (Financial Content), Rated: B

Finastra has launched Fusion Mortgagebot Data Insights – a powerful new tool that benchmarks mortgage borrower behavior and demographics for banks and credit unions against that of more than 1,400 other Fusion MortgagebotPOS users. The solution leveraged Big Data and machine learning to provide users with new insights into consumer behavior to drive a better borrower experience.

Seattle Bank expands relationship with Finastra to drive innovation (Finastra), Rated: B

Seattle Bank, a single branch boutique bank with $650 million in assets, has selected Fusion Phoenix from Finastra to be the open, modern core to run its banking operations, enabling the bank to better serve clients. The core banking system will be integrated with additional Finastra solutions, including Fusion Mortgagebot, Fusion Card Payments, Fusion Analytics, Fusion Item Processing Services, Fusion LaserPro, and Fusion Digital Banking.

United Kingdom

Welcome to Access, Plus and Max! (RateSetter), Rated: AAA

I am delighted to say that our three new investment products – Access, Plus and Max – launched today and are ready for you to enjoy.

Fintech unicorn Revolut’s losses double as it pushes for global expansion (CNBC), Rated: AAA

British financial technology start-up Revolut’s losses doubled in 2018, the firm said Tuesday, as the company embarks on an aggressive global expansion.

The London-headquartered firm recorded a £32.8 million ($40.3 million) net loss on revenues of £58.2 million for 2018. That was more than double the £14.8 million loss it posted a year earlier, while revenue climbed 354%.

Visa Expands Alliance with Revolut to Grow in Fintech Space (Zacks), Rated: A

Visa Inc. (V – Free Report) has expanded its partnership with fintech company Revolut. This London based company will be assisted by Visa to expand its business globally.

LandlordInvest staff asked to avoid EU travel as P2P lenders prepare for Brexit deadline (P2P Finance News), Rated: A

LANDLORDINVEST has asked staff to avoid travelling outside the UK after 31 October as peer-to-peer lending platforms prepare for the latest Brexit deadline.

Small business owners should beware when backing their business debt (Money Week), Rated: A

After all, one argument for setting up a business as a limited company, rather than operating as a sole trader, is that you separate your affairs from the company’s.

However, while this is true in theory, it may not pan out in practice. If your business needs to borrow, lenders often expect owners to stand behind the loan. They ask for a personal guarantee that the debt will be repaid. These guarantees aren’t secured – they’re not tied to a particular asset, such as your home – but they do give lenders a legal right to come after your personal wealth in the event your business defaults.

The future of finance is fintech (Raconteur), Rated: A

When Innovate Finance was formed five years ago, with a mandate to represent an emerging UK fintech community, the picture was different to today. The focus was on models challenging traditional approaches to banking, disrupting the incumbents’ model that had stood for decades.

In the years since, peer-to-peer lending became simpler, management of personal finances became more accessible, and remittance processes became faster and more affordable.

Brokers should be Open Banking advocates (Bridging and Commercial), Rated: A

It’s now more than a year and a half since the introduction of Open Banking, which allows people to securely share data about how they spend their money with other parties.

Drapers and Klarna launch Next Generation Entrepreneurs (Drapers), Rated: A

Drapers’ Next Generation Entrepreneurs are the founders and chief executives that we think are changing fashion. The list shines a light on the new wave of game-changers, innovators and boundary-breakers that are making their mark on the UK fashion industry, as well as emerging businesses that exhibit innovative, entrepreneurial spirit.

Dutch app-only bank Bunq to launch in UK this week (AltFi), Rated: A

The Dutch app-only bank bunq is to launch in the UK this week, saying there are “too many traditional banks” in the UK.

10 Respected Entrepreneurs Reveal How Failures and Triumphs Shaped Who They Are Today (Digital Journal), Rated: A

– Courtney Nichols Gould, Founder& co-CEO, SmartyPants Vitamins
– Annie Jackson, co-founder & COO, Credo Beauty
– Sarah Kauss, Founder & CEO, S’well
– Stephen Kuhl, co-founder & CEO, Burrow
– Renaud LaPlanche, co-founder & CEO, Upgrade, Founder of Lending Club (NYSE: LC)
– Jody Levy, Founder, CEO & Creative Director, World Waters (Maker of WTRMLN WTR)
– Betty Liu, Founder of Radiate, Executive Vice Chairman of The New York Stock Exchange (NYSE)
– Ben McKean, Founder, Hungry Root
– Sasha Plavsic, Founder & CCO, ILIA Beauty
– Nat Turner, co-founder & CEO, Flatiron Health

Ex-City minister shines spotlight on P2P lending secondary markets (P2P Finance News), Rated: B

The former City minister, who has already tabled several parliamentary questions regarding the role of the Financial Conduct Authority (FCA) in the collapse of Lendy and Collateral, has widened the scope of his P2P queries.

He has tabled two parliamentary written questions in the past week.

European Union

How Linked Finance is Linking Irish SMEs With Quick Loans (deBanked), Rated: AAA

The nation’s Central Statistics Office puts the number of active enterprises in the private business economy at over 250,000. As of June, Linked Finance had made more than 2,100 loans for a grand total of more than €100 million.

LendIt Fintech Europe 2019 Conference Highlights (Lend Academy), Rated: AAA

We have just wrapped up what I think has been the most successful European conference LendIt has ever had.

We kicked off the show with Rishi Khosla, CEO and Co-Founder of OakNorth. Their approach to underwriting is super interesting. While they have very much a digital approach, they are originating loans typically for £5 million to £10 million to fast growth companies.

Bnext raises $ 25 million for its mobile banking alternative (TechCrunch), Rated: A

Fintech startup Bnext has raised a $25 million funding round. The Spanish company is building a banking product and has managed to attract 300,000 active users.

You can lend money to small and medium businesses and earn interest through October, you can save money using Raisin, you can get a loan, a mortgage, an insurance product, etc. Bnext generates revenue from those partnerships.

International

International P2P Lending Volumes September 2019 (P2P-Banking), Rated: AAA

Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 639 million Euro.

Milestones in culumulative volume lent crossed this month:

Source: P2P-Banking
Australia

P2P lender partners with aggregator (Broker News), Rated: AAA

Peer-to-peer lender RateSetter has announced a partnership with PLAN Australia that will make its unsecured personal loan and car loan products available to the group’s 1,700 brokers and their clients.

National Australia Bank to provide $ 57m warehouse funding facility to Symple Loans (AltFi), Rated: A

Australia’s biggest business bank is furnishing a $57m (£46m) warehouse funding facility to personal lender Symple Loans, as part of its $2bn (£1.63bn) commitment to fund technology startups.

Which banks have cut home loan rates already? (mozo), Rated: A

It’s been two days since the Reserve Bank board made the call to lower the official cash rate from 1.00% to 0.75% – an historically low rate in Australia.

Athena and Homestar raced out of the blocks following Tuesday’s RBA announcement – both delivering full 0.25% cuts to their respective variable rate home loans before the ink on RBA Governor Philip Lowe’s monetary policy statement was dry.

Fellow online lender UBank wasn’t far behind after announcing a 0.25% rate cut of its own across a number of variable rate offers.

Asia

Indonesia’s State-Owned Pawnshop PT Pegadaian to Invest $ 35 Million in Local Fintech Firms (Crowdfund Insider), Rated: AAA

The state-owned pawnshop PT Pegadaian in Indonesia is reportedly planning to invest Rp 500 billion (appr. $35.26 million) in several local Fintech firms this year.

Another Milestone Comes True: INLOCK Is Listed on One of the Largest Crypto Exchanges (NewsBTC), Rated: A

On September 30, 2019, after nearly six months of preparation, the INLOCK project, a peer-to-peer lending solution, was listed on the Liquid by Quoine exchange, one of the largest Japanese crypto exchanges in the Asian region, with a daily turnover of $150-200 million.

INLOCK is a peer-to-peer lending platform; its customers can lend or borrow using their cryptocurrencies as a collateral.

40 Innovative Solutions Shortlisted for 2019 FinTech Awards (MAS), Rated: A

The Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) announced today that 40 finalists have been shortlisted for the FinTech Awards  to be presented at this year’s Singapore FinTech Festival x Singapore Week of Innovation and Technology (SFF x SWITCH).

Africa

CredoLab set to drive financial inclusion in South Africa (Next Billion), Rated: AAA

Credit scoring fintech company, CredoLab announced on Tuesday, 1 October 2019, that it has officially launched in Africa. Starting in South Africa, CredoLab is aiming to drive financial inclusion in emerging economies on the continent by credit scoring more people, especially those who are new to banking or credit.

Canada

Stability’s important, but Canada needs to take more chances with fintech (Financial Post), Rated: A

According to Ernst & Young’s 2019 Global Fintech Adoption Index, Canada is 14 points, and the U.S. 18 points, behind the global average of 64 per cent consumer fintech adoption, and we trail world leaders like China, India and Russia by even more. The two countries’ approaches to regulating fintech, which in many ways reflect enduring national stereotypes, almost certainly have contributed to our continent’s fintech lag.

Authors:

George Popescu
Allen Taylor

The post Thursday October 3 2019, Weekly News Digest appeared first on Lending Times.

Thurday December 7 2018, Daily News Digest

equity sector analysis

News Comments Today’s main news: Google gets EU eMoney license. JD launches online P2P lending service in China. Hexindai partners with Kunming Aotous. Today’s main analysis: Equity sector analysis. Today’s thought-provoking articles: Internet finance in a state of flux in China. P2P lending looking for a fresh start. Wonga collapse clears way for US payday lenders in UK. United […]

The post Thurday December 7 2018, Daily News Digest appeared first on Lending Times.

equity sector analysis

United States

Fed Raises Rates; Sector Analysis; Loan Performance (PeerIQ), Rated: AAA

In regulatory news, Square will refile its Industrial Loan Charter application with the FDIC.

Credit card master trust data showed that net charge-offs dropped by 8 bps YoY, decreasing for the second month in a row.

Source: Bloomberg, PeerIQ

Affirm – Launch pitch at Phocuswright 2018 (PhocusWire), Rated: A

We have identified a $377 billion addressable U.S. online travel market. Millennials, the largest consumer group in the U.S., are shifting their spending from products to experiences.

We’ve also found that 55% of people are avoiding credit cards at checkout when paying for travel. 67% are looking for options to pay over time.

5 Business Trends That Will Continue to Rise in 2019 (Entrepreneur), Rated: A

1. Consumers will demand more control over their data.

2. Alternative lending will continue to grow.

Given that around 80 percent of small business loan applications are rejected, startup founders are increasingly looking to nontraditional financiers for capital.

Since 2006, P2P lending has skyrocketed by 110 percent per year.

United Kingdom

Wonga collapse clears decks for US payday loan firms in UK market (The Guardian), Rated: AAA

Chicago-based Enova, which also operates Pounds to Pocket and On Stride, saw UK revenue jump 20% to $36.6m (£29m). Texas-headquartered Elevate Credit operates in the UK under the Sunny loans brand, and saw its own UK revenue jump 23% to $32m, as new customer loans for Sunny rose 45% to $26,671.

Curo, which is behind WageDayAdvance, saw UK revenue jump 27.1% to $13.5m, while underlying earnings nearly halved from $8.1m to $4.2m. It was helped by a “high percentage of new customers”.

Collapse of ethical lenders stokes fears over access to credit (Financial Times), Rated: A

Ethical lenders that have been touted as alternatives to high-cost firms such as Wonga and BrightHouse are going out of business at the fastest rate in years, fuelling concerns that less well-off customers are in danger of losing access to credit.

The figures mark the worst year since at least 2010, as the sector battles against rising regulatory and technology costs.

Eight UK Credit Unions Went Out Of Business In 2018 (PYMNTS), Rated: A

Eight credit unions closed in 2018, and they affected an estimated 14,000 people with a collective £25 million in savings. Even some of the more successful CUs have had to curtail lending. Credit unions cap rates at 3 percent a month.

Despite initial reports of the feature’s disappearance, Hefeng Online Lending was still available until 4 p.m. on Wednesday. Previously, all products were labeled as being “sold out” after it was removed from the app’s main page. It has subsequently been completely removed.

China

JD launches P2P online lending products (en.ce.cn), Rated: AAA

E-commerce giant JD.com has become the first Chinese tech tycoon to launch peer-to-peer online lending products, CHNFUND.com reported on Sunday.

“Hefeng online lending” or literally “Hefeng Wangdai”, a platform providing information service on P2P online lending under JD.com, sold out all the products within seconds after it started operation on Sunday.

JD Finance removes second P2P lending feature from its app (Technode), Rated: A

JD Finance has removed its second peer-to-peer (P2P) lending feature from its app after it had been online for less than 10 days, highlighting difficulties in China’s P2P loans sector.

Chinese P2P Lender Hexindai Announces Funding Sources Partnership With Kunming Aotous (Crowdfund Insider), Rated: AAA

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Wednesday it has formed a funding sources partnership with Kunming Aotou Economic Information Consulting Co., Ltd. (Kunming Aotou). 

Hexindai reported that through this agreement it will assess borrowers that are using its risk management and credit assessment capabilities before referring them to Kunming Aotou which will facilitate the loans through a trust fund. 

Internet finance in a state of flux with regulators stepping in to bring some stability and direction (Global Times), Rated: AAA

Recently, the Beijing-based Chang An Property Casualty Insurance Co was reported to have compensated nearly 2 billion yuan ($290 million) for its joint business with a number of domestic peer-to-peer (P2P) online lending platforms, according to a report of the Time Weekly.

The Lengjing reported that so far 220 P2P platforms had submitted their self-investigation reports to the government.

European Union

Google Gets EU eMoney License (PYMNTS), Rated: AAA

Google Payment Lithuania, a unit of Alphabet’s Google, was granted an electronic money institution license by The Board of the Bank of Lithuania.

The Lithuanian FinTech initiative now covers more than 100 licensed companies, with most of them involved in payments, electronic money and peer-to-peer lending and crowdfunding.

International

Peer-to-peer lending looks for fresh start as interest wanes (Financial Times), Rated: AAA

But even P2P Global Investments, the first investment fund dedicated to the sector when it launched in 2014, admits the initial “frenzy” of interest has died down.

It is considering changing its name because it no longer accurately reflects the fund’s interests.

Mike Bristow, chief executive of property lender CrowdProperty, suggested that some companies have tried to take advantage of the hype around peer-to-peer without making effective business plans.

Top ten banking tech case studies in 2018 (Fintech Futures), Rated: A

Micro-lending: Mynt
Philippine fintech, Mynt, talks about the business case and technology behind its current micro-lending efforts and where it is planning to head with other financial services, leveraging the customers and data of its majority shareholder, the country’s largest Telco.

Robocash – fintech crossing the borders
In 2017, peer-to-peer (P2P) platform Robocash started its operations in the European Union (EU). Since then, it attracted more than €4 million

Live Oak Bank and Finxact – riding the second wave
The US, in particular, is in urgent need of new core offerings to support next generation digital banking.

Home Credit – to its credit
In an exclusive tour of Home Credit’s (HC) operations in Prague, we met seven staff members and learned about its retail challenger Air Bank, P2P lender Zonky and Home Credit Venture Capital (HCVC).

Mobile banking: RBC – farewell friction
Royal Bank of Canada (RBC) has been proactive with its digitisation strategy.

Australia

Mums and Dads turn to commercial real estate as resi slows in Australia (The Investor), Rated: A

They are also navigating their way around banks’ lending restrictions through peer-to-peer lending, further boosting their investment prospects.

India

Various fees charged by P2P platforms (India Times), Rated: A

Every loan involves a cost. From the time of signing up to delay in repaying the loan, here’s a list of charges a borrower needs to pay while taking a loan from a peer-to-peer (P2P) lending platform.

Asia

UMG Idealab has started its venture journey in Indonesia with 11 portfolios to date.

UMG Idealab  is looking for startups in IoT, Big Data, Voice Recognition (VR), and Artificial Intelligent (AI). He aims to invest in 20 startups next year.

Central bank warns of P2P lending (Vietnam News), Rated: B

The State Bank of Việt Nam (SBV) has warned local people and firms to consider carefully and be cautious before taking part in peer-to-peer (P2P) lending as there are many potential risks related to the service.

Authors:

George Popescu
Allen Taylor

The post Thurday December 7 2018, Daily News Digest appeared first on Lending Times.

Monday August 20 2018, Daily News Digest

transition states

News Comments Today’s main news: SoFi is shopping for $1B credit line. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2018.2. Monzo headed to unicorn status. China Rapid Finance debuts up to $20M share repurchase program. Today’s main analysis: Forcasting cash flows using machine learning. Today’s thought-provoking articles: Report sheds light on early success of real […]

transition states

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

SoFi Eyes $ 1B Credit Line, Post Q2 Loss (PYMNTS), Rated: AAA

Student loan refinancing company Social Finance (SoFi) is looking for a loan of its own: The company is in talks with banks to secure a revolving credit line of as much as $1 billion after posting a second-quarter loss.

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2018-2 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2018-2 (“PMIT 2018-2”). This is a $500.5 million consumer loan ABS transaction.

Preliminary Ratings: Prosper Marketplace Issuance Trust, Series 2018-2

Class Preliminary Rating Initial Class Principal
A A+ (sf) $335,500,000
B BBB (sf) $59,950,000
C B+ (sf) $105,050,000

Forecasting Cashflows using Machine Learning, Strong Retail Sales Report (PeerIQ), Rated: AAA

The price of a loan is the present value of the loan’s cashflows (after accounting for losses and prepayments), discounted by an appropriate discount rate:

Source: PeerIQ

Cashflow Modeling with Credit Models

The inputs of a credit model are loan attributes and borrower factors such as:

  • Originator of the Loan
  • Term of the Loan
  • Interest Rate on the Loan
  • Original Principal of the Loan
  • Age of the Loan (Months on Book)
  • Loan Grade
  • Prior Loan Status
  • Borrower’s Credit Score at Origination

The sparse transition model assumes 7 possible loan statuses which describe the performance of the loan:

  1. Current (or Status C)
  2. 1 Month Delinquent (or Status 1)
  3. 2 Month Delinquent (or Status 2)
  4. 3 Month Delinquent (or Status 3)
  5. 4 Month Delinquent (or Status 4)
  6. Default (or Status D)
  7. Paid Off (or Status P)
Source: PeerIQ

Once a loan arrives at a terminal absorbing state (“Defaulted” or “Paid Off”) there is no future possible transition as there are no further cashflows. Therefore, the probability of a loan remaining defaulted is 100%.

Source: PeerIQ

Model Calibration

Source: PeerIQ

PeerIQ CEO Ram Ahluwalia on OCC Fintech Charter: Consumers Win if it is Implemented Correctly (Crowdfund Insider) Rated: A

We asked Ahluwalia who will benefit from the OCC Fintech Charter and whether it was big tech, Fintechs or other.

“The long-term winner of the charter is the US consumer who will benefit from greater competition, innovation, and access to the financial system. New technology and entrants will also promote the dynamism and resilience of the US financial system,” stated Ahluwalia. “Payments companies that seek to compete with Visa / Mastercard also stand to benefit. Payments arms of firms like Google, Apple, Amazon, and PayPal would fit the profile, as well as large non-bank lenders that can demonstrate sustainable profitability de-risked their business models. Fintech lenders are a major winner as well as they’ll be able to compete on a more level playing field. Big technology firms have an opportunity to expand their role in financial services as well.”

New Research Sheds Light on Early Successes  of Real Estate Crowdfunding (EquityMultiple Email), Rated: AAA

Some of the survey’s key findings include:

  • A full 65 percent of respondents plan to allocate at least 10 percent of their portfolios to real estate crowdfunding sites, with nearly 40 percent expecting to allocate at least 20 percent
  • More than 60 percent of respondents report typical annual returns of at least 8 percent
  • Respondents considered “transparency and details with respect to investment opportunities” the most critical factor in a crowdfunding platform, exceeding all other choices, including “attentive customer service” and “diversity of investment opportunities”
  • With respect to individual investments, “geographic focus” (i.e. where a property is located) matters less to investors than “sponsor/lender experience”, the property’s upside potential or several other factors
Source: Real Estate Crowdfunding Investor Preferences

Read the full report here.

Key Facts About the SBA (Email from SmartBiz Loans ) Rated: AAA

Source: SmartBiz Loans

Many Fintech Names on the Inc. 5000 List of Fastest Growing Companies (Lend Academy) Rated: A

Of the 5,000 companies on this year’s list exactly 233 are in the financial services category. Below is a screenshot of the top 10 companies in this category. Leading the list is Fundrise, the real estate platform for individual investors, a name that would be familiar to Lend Academy readers (I interviewed CEO Ben Miller on the podcast last year). Another well known name is Fundera, the small business lending marketplace, who were the third fastest growing company in our category. I encourage you to explore the complete list here where you can search for specific companies or filter by industry, state and many other criteria.

Source: Lend Academy

Treasury’s plan to legitimize online lenders is good for small businesses (The Guardian) Rated: A

Companies in this industry such as KabbageLending Club and BlueVine have grown significantly over the past few years by offering financing to many small businesses that otherwise would not be able to get loans. Their deals are quick to approve, rarely require collateral and are usually tied in to a customer’s financial systems for close monitoring.

Last month, the Office of the Comptroller of the Currency announced that it was moving ahead with its plan to allow online lenders to apply for banking charters. When recognized as a bank, those types of financiers would no longer have to comply with state laws and would instead be subject to federal banking regulations. “Companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale as a federally chartered, regulated bank,” Joseph Otting, the comptroller of the currency, one of the country’s top financial regulators, told the Los Angeles Times.

RPT-‘Fintechs’ sound cautious note on offer of U.S. bank charter (Rueters) Rated: A

Financial technology companies that lend online are sounding a cautious note on a U.S. banking regulator’s plan to offer them special federal charters because of concerns over legal challenges and requirements that are more onerous than expected.

The Office of the Comptroller of the Currency said last month it would accept applications for banking licenses from the likes of LendingClub and OnDeck Capital Inc, online lenders that do business outside the traditional banking system. They then could operate nationwide under one banking license rather than a patchwork of state-specific regulations.

Fintech executives lobbied for the license and applauded the OCC’s decision, but they are not immediately rushing in, they told Reuters.

CRA-like standards for fintechs could reduce access to credit (American Banker) Rated: A

As reported in American Banker, consumer advocacy groups are concerned that financial inclusion expectations for fintechs chartered as special-purpose national banks may not perfectly mirror the requirements of the Community Reinvestment Act.

This possibility exists because the final version of the Office of the Comptroller of the Currency’s licensing manual supplement for fintechs lacks the same level of specificity as the draft manual that was published for comment last March. Consumer advocates have been steadfast in their insistence that the substance of the CRA, which by its terms applies only to depository institutions, be applied to nondepository fintech national banks. Yet imposing CRA-like requirements on these institutions would likely result in reduced credit opportunities for low-income communities.

Walmart And Others Offer Workers Payday Loan Alternative (NPR) Rated: A

So when Loving heard about a company called PayActiv, a tech startup that helps companies get their workers emergency cash for very small fees, “I thought to myself, now that’s a good idea,” he says. And he signed up.

“Our data analysis showed that it was close to $150 a month being paid by the working poor — per employee or per hourly worker in this country,” says Shah. “That’s a substantial sum of money because it’s about $1,800 or $2,000 a year.”

Venmo competitor Zelle wants to let you pay businesses, too (Payment Source) Rated: A

Zelle, a Venmo-style app that lets consumers send money to friends, roommates and babysitters, is working on ways to ensure that customers can safely pay small businesses as well, according to people familiar with the situation.

Zelle, backed by Bank of America Corp., JPMorgan Chase & Co. and other banks, is beefing up its risk-assessment tools as part of the effort, according to one of the people, who asked not to be identified because the feature hasn’t been announced. The idea is to help protect users when they’re paying businesses like gardeners and hairdressers.

TransUnion Unveils Solution to Extend Real-Time Credit Offers (DSNews) Rated: A

To meet the evolving needs of consumers, Chicago-based TransUnion has announced the launch of credit offers through a simplified, SMS-initiated, mobile experience. The technology seamlessly integrates real-time credit decisioning with consumer and device authentication, creating a secure, personalized, and dynamic user experience.

Credit Karma acquires US lendtech Approved (Fintech Futures) Rated: A

Credit Karma, based in San Francisco, has 80 million members across North America, almost half of which are millennials and 80% of which access the service via their mobile devices.

Andy Taylor, founder and CEO of Approved, says it started the firm with a “vision that borrowers could visit an open house not having even talked with a lender, find the home of their dreams, and get fully pre-qualified on their mobile device before a listing agent offered them a business card”.

With this joint mobile mentality, both firms will be looking to cash in from the crowded US mortgage market. Approved says it has done nearly $5 billion in loan originations.

RealtyShares and Novaya Real Estate Ventures Exit Industrial Property Investment (Herald Courier), Rated: B

RealtyShares, an online platform for commercial real estate investing, has announced that one of its investment syndicates recently exited an industrial investment property—1 Distribution Center Circle in Littleton, Massachusetts—in partnership with Novaya Real Estate Ventures, an established Boston-based operator of commercial real estate throughout New England.

United Kingdom

Monzo poised to join ranks of Europe’s fintech ‘unicorns’ (Financial Times) Rated: AAA

Monzo, the British digital bank popular with millennials, is set to become the latest European fintech “unicorn” with a fresh round of fundraising expected to put a valuation on the company of up to $1.5bn.

The east London-based online bank, known for its distinctive pink cards, is signing up 18,000 customers a week and aims to reach as many as 4m customers in the next couple of years, according to Tom Blomfield, its chief executive.

Seven out of 10 people in UK now bank online (Financial Times) Rated: AAA

While email is still the most common reason people use the internet, online banking is the fastest-growing use. According to a survey by the Office for National Statistics — looking at the UK population, not just internet users — 69 per cent said they banked online, almost double the proportion recorded 10 years ago (35 per cent).

The ONS began running its survey in 1998. In the case of internet usage, people were asked about their use in the January, February and April before the survey.

Source: Financial Times

How P2P plugged the funding gap for small businesses (P2P Finance News), Rated: A

BEFORE the global financial crisis, banks were the lender of choice for Britain’s small businesses, and perhaps the only option they would consider.

Since then, banks have become more risk averse and are pulling back from lending in some parts of the market, especially since the EU referendum. Peer-to-peer, or rather peer-to-business (P2B), lending has stepped in to fill the gap.

The Peer-to-Peer Finance Association (P2PFA) says the industry provided £660m of new lending to businesses in the first quarter of 2018 and, since the third quarter of 2017, there has been a 35 per cent increase in net lending.

US-based payday loan giants Curo, QuickQuid and Lending Stream could face legal action in ‘bigger scandal than PPI’ (Daily Mail Online) Rated: A

Giant American payday lenders could face legal action in the UK today after they were accused of mis-selling loans to up to a million Britons.

Paydayrefunds.co.uk are preparing legal action against Quickquid, Curo and Lending Stream after the US-payday lending giants have so far refused to disclose information on customers who could be due tens of millions of pounds back in compensation.

The company issued a letter of action six months ago, which is due to run out next Friday. Paydayrefunds.co.uk revealed they have already appointed a barrister in preparation for issuing an injunction at the High Court against the lenders.

Income investing, inflation and P2P lending (Investors Chronicle), Rated: A

Emma Aygemang gives us a report on the Financial Conduct Authority’s study on peer-to-peer (P2P) investing, and there’s a discussion on the implications of restricting the sector to private investors, and where P2P providers need to up their game.

Crypto Lending App Lndr, Adds PayPal Integration to Increase Adoption Rates (Bitcoin Exchange Guide), Rated: B

A new cryptocurrency lending app called Lndr is planning integration with one of the most popular financial services in the world: PayPal. This integration will open the ownership to digital assets to 100 million people around the world, which can cause an unseen widespread of cryptocurrency usage even for people who never before considered using cryptocurrencies.

China

China Rapid Finance Debuts Up to $ 20 Million Share Repurchase Program (Crowdfund Insider), Rated: AAA

China Rapid Finance Limited (NYSE: XRF), one of China’s largest consumer lending marketplaces, announced earlier this week the launch of its new share repurchase program, which allows the lender to authorized the repurchase of its ordinary shares in the form of American depositary shares with an aggregate value of up to $20 million.

China regulator orders bailout of peer-to-peer lenders by managers of distressed assets (SCMP), Rated: A

During a Wednesday meeting in Beijing, the China Banking and Insurance Regulatory Commission asked four managers of distressed assets – Huarong, Cinda, Great Wall and Orient – to extend their mandate to non-performing loans owed by peer-to-peer (P2P) lending platforms, according to a source familiar with the matter. The meeting was first reported by Reuters on Thursday.

Regulations help resolve P2P plight in China (Global Times) Rated: A

In July, a total of 165 platforms reported problems, among which 65 percent had difficulties in investments withdrawal, while executives of 8.72 percent of those firms stole money and ran away, according to a report released by domestic industry website wdzj.com on August 1.

Accumulated transactions in the domestic P2P industry had reached 7.48 trillion yuan by the end of July, the report said.

On Wednesday, the China Banking and Insurance Regulatory Commission asked the country’s four State-owned asset management companies to help address rising risks in the P2P sector, according to media reports.

China orders bad-loan managers to help failing P2P lenders (Financial Times), Rated: A

China’s banking regulator has instructed the country’s four state-owned bad loan managers to deal with failing peer-to-peer lending platforms, a sign of Beijing’s concern about possible financial and social instability from the shadow banking sector.

Hundreds of P2P platforms have collapsed in recent months due to borrower defaults and fraud by platform operators. The defaults have sparked panic among investors, some of whom have sought early redemption of their investments.

European Union

European IPOs may shake off sluggish start with a fall bonanza (Gulf Times) Rated: AAA

European markets are set to see a slew of big initial public offerings this fall. Potential mega listings – from companies such as Aston Martin, Volvo Cars and Spanish oil firm Cepsa Trading – could help Europe overcome a relatively slow first half. IPOs there have raised about $31bn in 2018 so far, compared with almost $38bn in the same period last year, data compiled by Bloomberg show.

Still, volatile markets threaten to spook investors and owners away from new share sales. Concerns that turmoil in Turkey could hurt the region’s lenders has added to pressure on European stocks from the US-China trade spat. Commodities have tumbled along with US equities, fuelling fears that the sell- off may be the start of a broader market correction.

International

Disruption or evolution? Why blockchain is the future of global lending (IT Pro Portal), Rated: AAA

Global spending on blockchain solutions is estimated to reach $2.1 billion this year, but for there to be a blockchain revolution, many barriers – technological, political, organisational and societal – need to be overcome first.

Currently, citizens in Europe have the lowest levels of ‘complete trust’ in traditional banks. This is worrying, given money is simply a means of exchange, built on the trust bestowed upon it.

However, some bankers will tell you the traditional financial system is ‘global’ and ‘efficient’ as it is, despite being fully aware of its flaws. In our industry, lending, if you’re currently a non-bank lender who would like to diversify your global lending potential, you will find that it is punitively expensive, time-consuming and exclusive to large funds and traders. This ultimately reduces the potential reward for non-bank lenders through fees.

Given the astonishing fact 39 percent of the world’s population are unbanked, blockchain technologies and associated crypto currencies could open the door for anyone, anywhere to lend, borrow and invest. All you need is internet access.

Australia

Aussies borrow money not knowing how personal loans are assessed, study finds (Daily Telegraph) Rated: AAA

AUSTRALIANS have borrowed $46.6 billion in personal loans over the past 12 months, research has found, but experts claim many are unaware of how loan applications are assessed and how they may affect their own credit scores.

RateCity analysed Australian Bureau of Statistics data from the past 12 months and found personal loan numbers were up 6.4 per cent year on year, with more than half a million Australians using them to buy cars in that period. The total borrowing for new cars was $8.33 billion at an average loan size of $36,341; while a further $5.88 billion was borrowed for used cars.

On top of this, we borrowed $6.05 billion for debt consolidation and $2.54 billion for household goods, but despite the huge outlay, many borrowers are confused about how personal loans work and why they may not be offered the low interest rates they see on advertisements.

India

P2P has great potential, but too early to compare with equities (India Times), Rated: A

People with zero or poor credit score find it hard to get a loan from NBFCs and banks. P2P aims to serve such unbanked and underbanked population. Tell us how do you do it?
NBFCs and banks also lend to people ‘new to credit’. These people typically have a financial transaction whether in form of a bank account or income data, whether salaried or self-employed, and can be validated on the risk ratios, basis the information.

Asia

Cambodia Establishes New Fintech Association (Crowdfund Insider) Rated: AAA

Cambodia Fintech Association also reported it undertakes four major streams of work on behalf of its members, which are the following:

  • Champion: Advise government and regulators on policy change that supports Fintech innovation and growth
  • Assist: Provide research, legal/regulatory help, service provider discounts and other benefits that help our members build and scale their Startups
  • Match: Get customers to buy, investors to invest, and talent to get involved in Fintech solutions
  • Bridging: Connect ventures (capital), talents (education) and other stakeholders within the Cambodia Fintech ecosystem and provide connections to overseas hubs through our network Events and Partners

According to the Phnom Penh Post, CFA Vice President, Eddie Lee, stated that Cambodia is currently progressing in its fintech, but startups are slowly starting to surface in the country. Lee also explained that CFA has also signed a Memorandum of Understanding with the Taiwan Fintech Association, Thailand Fintech Association and Singapore Fintech Association to establish bridges with similar groups in the region. He added that the next step is to register the CFA with the Asian Fintech Network.

Authors:

George Popescu
Allen Taylor