Thursday February 7 2019, Weekly News Digest

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News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. LendingPoint increases mezzanine financing. UK publishes Open Banking operational guidelines. Raisin raises $114M. Today’s main analysis: International P2P lending volumes for January 2019. Today’s thought-provoking articles: Where are we in the credit cycle? Marketplace lending associations respond to FDIC small dollar lending rule request. […]

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

International

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News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-1 (“SCLP 2019-1”). This is a $480.7 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-1

Class Preliminary Rating Class Principal
A AAA (sf) $351,800,000
B AA+ (sf) $39,400,000
C A+ (sf) $51,500,000
D BBB (sf) $38,000,000

Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA

This week’s big funding news was that digital savings and investing platform Acorns raised $105 million in its Series E round, bringing its total valuation to $860 million.

The US economy generated 304 k jobs in January, marking a record 100 months of job growth. Average hourly earnings rose by 3.2% and the unemployment rate rose slightly to 4%.

Marlette CEO Jeff Meiler discussed profitability and loan performance with Peter Renton (transcript and podcast here).  Marlette announced another year of profitability in 2018.

Prosper’s December Performance Update showed that Prosper is focusing on making higher grade loans with 62% of December originations rated AA-B.

Overall, lenders view the US consumer as healthy and the US economic growth as solid.

The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA

So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.

There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient.

The Marketplace Lending Association (MLA) provided a detailed 10-page response where they urged the FDIC (and other regulators) to do more to support banks and foster closer working relationships with fintech providers:

The Online Lenders Alliance is a trade group that contains many small dollar lenders who operate online. Not surprisingly they are against the 36% rate cap but they also have a lot in common with their sub-36% brethren such as promoting partnerships between banks and fintech companies.

Source: Online Lenders Alliance

The Center for Responsible Lending gave one of the most detailed responses to the RFI, a full 38 pages.

Read the full Online Lenders Alliance response here.

LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA

LendingPoint, the consumer lending platform, announced it closed an increase of its mezzanine financing, bringing the total of the facility to $67.5 million. A Paragon co-investor joined the facility as a lender.

Today’s announcement is the latest in a string of financing transactions LendingPoint has closed in the past 15 months. The company secured an up to $500 million Senior Credit Facility in August 2017 and an up to $600 million Senior Credit Facilityin May 2018, both arranged by Guggenheim Securities.

Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA

1. BankMobile — Hooked Up With T-Mobile

Parent Company: Customers Bank
Websitewww.bankmobile.com
Launched: 2015
Category: Mobile bank

The creation of father-daughter team of Jay and Luvleen Sidhu (CEO and President respectively), BankMobile is an evolving banking-as-a-service platform.

2. Chime — Super Slick App

Websitewww.chimebank.com
Launched: 2013
Category: Mobile banking and money management app (in partnership with the The Bancorp Bank)
Notable Milestone: 2 million account relationships

3. Finn — Chase Bank’s Millennial Play

Parent Company: JPMorgan Chase
Websitewww.chase.com/personal/finnbank
Launched: 2017
Category: Mobile bank

Chase is offering a $100 for opening a new Finn account (as long as you make ten qualifying transactions in the first 60 days).

4. Marcus — Sucking Up Your Customers

Parent Company: Goldman Sachs
Websitewww.marcus.com
Launched: 2016
Category: Online bank
Notable Milestones: 2+ million customers and $35 billion in deposits.

Marcus’ loans range from $3,500 to $40,000 at rates of 6.99% to 25%. The average loan in 2018 was $15,000 over four years with a 12% interest rate, according to Bloomberg BusinessWeek. That leaves plenty of margin room even with its online savings rate up at 2.25% (as of January 2019).

5. N26 — Platform Maestro

Websiten26.com
Launched: 2015
Category: Mobile bank
Notable Milestones: 2.3 million users and $1 billion in deposits.

6. Revolut — The Amazon of Banking

Website:www.revolut.com:
Launched: 2015
Category: Mobile financial provider

Notable Milestones: 3 million customers — both consumers and businesses. Opening about 8,000 accounts per day. 1.2 million monthly active users. Monthly transaction volume $3 billion. Received European banking license in December 2018. More than 60,000 U.S. customers on Revolut’s waiting list.

7. SoFi Money — Join The ‘Waitlist’

Parent Company: Social Finance, Inc.
Websitewww.sofi.com
Founded: 2011 (Sofi Money Beta Launch, June 2018)
Category: No-fee Mobile banking account

8. Varo Money — Almost OCC Approved

Websitewww.varomoney.com
Founded: 2015
Category: Mobile banking/money management app in partnership with the The Bancorp Bank.
Notable Milestones: First mobile-only bank to get preliminary approval for a national bank charter.

Walsh feels Varo Money is particularly suitable for the 70% of the people they initially surveyed who are “hands-off creditworthy Millennials.”

P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A

It said its net asset value (NAV) rose by 0.78 per cent in the final month of the year, amounting to a total 5.2 per cent return in 2018, as the fund sold off a number of poorly performing loans, according to its December newsletter published today.

15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A

Francesca Carlesi is the Co-Founder and CEO of Molo, a new, super exciting fintech start-up, aiming to reimagine how people get mortgages forever. She was originally a University professor, envisioning pursuing an academic career, before quickly joining McKinsey & Co., immediately after finishing her Ph.D. Molo is her first experience as a start-up entrepreneur after a long career in the finance and banking world. Here she discusses how she made the transition and found the journey so far.

Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A

57 million people in the US freelance and 30 million or so of those are micro and small businesses. Small businesses use approximately a dozen apps and pieces of software to manage their finances. From a bank account to payments to QuickBooks to factoring, microbusinesses spend 365 hours a year reconciling the data between all their financial tools.

1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A

Key Findings

  • 1 in 4 Americans considers funding to be the biggest obstacle.
  • More women say not knowing how to run a business is a challenge than men.
  • Millennials ages 25 to 34 are the most afraid of failure.
  • 1 in 3 Americans lacks a strong business idea to begin with.
Source: Valpak

Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A

The fintech consolidation is starting, at least in the financial data side of the business, with Plaid recently announcing an 

Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A

United Kingdom

Due diligence on P2P platforms (FT Adviser), Rated: AAA

In the immediate aftermath of the credit crunch, politicians enthused about the new crop of peer-to-peer providers and even created the Innovative Finance Isa.

UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA

The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.

With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.

Source: Business Insider Intelligence

Read the full report here.

Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A

The digital-only bank, which expects to top one million customers this year, said the new account is a simple was to ‘send and receive euros for free’.

Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A

Alternative credit assessment innovator Aire has picked up $11 million in new funding. The London-based company, which demonstrated its Aire Credit API at FinovateEurope 2015, said the new capital will support the continued development of its credit insight engine, as well as support expansion in the U.S.

AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A

A new service has been set up for people in debt, giving them the power to let advisors see their bank accounts in order to offer quick and accurate advice.

The service is a tie-up between fintech bank transactions firm AccountScore and The Insolvency Panel launched this month.

Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A

Small businesses accounted for 22 per cent of the UK’s economic growth in 2017 according to Octopus Investments High Growth Small Business Report. These SMEs, which comprise less than one per cent of UK companies, created one in five jobs in 2017 and hold a wealth of potential for our economy. When it comes to the future of the UK business landscape, it seems that the best things do come in smaller packages.

SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A

SME business account Anna has received an investment of £8.5 million from Kinetik as it prepares to launch new tools and products.

What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A

The cryptocurrency winter has been one of many contrasts. While some firms have gone out of business and shut down, some have thrived. Celsius Networks belongs to the latter.

Based in London, the firm launched just six months ago, but it has grown by leaps and bounds. It has lent over $630 million in loans, predominantly in cryptocurrencies.

Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A

AAVE, a UK-based FinTech Startup, today announced a new release for its crypto lending marketplace ETHLend. The release introduces the capability for the ETHLend users to use their Bitcoin holdings as a collateral to borrow funds for spending.

Exclusive: P2P firm shuts platform (AltFi), Rated: B

The UK Bond Network, a p2p platform for corporate bonds, is closing as of today Monday 4 February 2019, according to the firm.

China

From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA

Financial services group CreditEase runs an app through which its private banking clients can be connected to needy women farmers in China’s rural interior. It’s a remarkable initiative taken up by 200,000 farmers and shows what can be done with low-level credit. But how does the risk management work?

European Union

PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA

German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.

ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A

Dutch bank ING is linking its small business (SMB) customers to alternative lending marketplace Funding Options, the firms said on Monday (Feb. 4).

The partnership means Funding Options has launched services in the Netherlands, expanding beyond the U.K. for the first time, said reports in Crowdfund Insider. Approximately 1.8 million SMBs in the Netherlands will gain access to Funding Options via ING Bank.

The Irish fintech startups disrupting their industries (Irish Times), Rated: A

Also based at NOVA is Initiative Ireland which aims to give cautious investors lower-risk access to the Irish property market. With poor interest rates, investors face the perennial problem of what to do with their money. Risk takers will always have options, cautious investors less so, and this is Initiative Ireland’s sweet spot. It is offering returns in the order of six to eight per cent to those investing in its novel peer-to-peer lending platform for developers building social and affordable housing.

Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A

The European challenger bank in Portugal, Banco BNI Europa, has become a customer of NDGIT, provider of the API platform for banking and insurance in Europe.

BNI Europa implements “PSD2 Ready”, NDGIT’s smart standardized software solution following the Berlin Group RTS standard, to fulfil all PSD2 requirements. This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next step in their company’s development.

International

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

Milestones achieved this month (total volume since launch):

Source: P2P-Banking

Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA

While many jurisdictions have highlighted fintech credit as a key development in the nonbank financial space over the last year, they struggle to define exactly what fintech credit is, per findings of the Financial Stability Board’s (FSB’s) Global Monitoring Report on Non-Bank Financial Intermediation 2018.

Source: Business Insider Intelligence

Why VC Is The Answer To Falling Returns (Forbes), Rated: A

In uncertain times, VC offers the advantage that its performance is completely uncorrelated with public equity markets. Last year, both the US and Europe saw record VC investment, reaching over 

Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A

Those of us who work in finance can’t imagine life without a bank account. But for the world’s 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live — and remain — in a cycle of poverty.

In the U.S., nearly 95 percent of adults have a mobile phone and 80 percent of those are smartphones. And since they’re not tied to traditional banking norms such as branches, ATMs, and credit cards, the unbanked are more likely to adopt digital banking via their phones.

TymeBank in South Africa uses AI to help people learn about their money and how to save. It teaches people about credit scores and rewards them for good financial behavior — TymeBank offers an amazing 10 percent interest rate on savings accounts for customers who can define specific financial goals they want to hit, and then contribute to them.

Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A

SANCUS will start accepting euro-denominated loans within the next few months, to help it expand its investor base.

The alternative business finance provider is also planning to establish a new base in the Cayman Islands by the end of 2019, a move which would allow it to accept dollar-denominated investments as well.

Revolut team ups with WeWork (AltFi), Rated: B

The new partnership will provide Revolut for Business customers with 3 months free of hot-desk space at a WeWork co-working space.

Australia

Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A

Peer to peer lending service provider Wisr has targeted disillusioned big bank customers in its new ad campaign.

APAC

Diversify investments in P2P lending, youths urged (The Star), Rated: AAA

Technology-driven peer-to-peer (P2P) lending is becoming a popular investment choice among young investors, but the anticipated slowdown in the economy this year also raises the risk of losing money.

To protect their investment, a P2P financing platform operator said that investors should spread their investment into as many deals as possible.

Africa

DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA

The P2P Crypto loan services allow users to retain their assets in case they predict the concerned cryptocurrency value might appreciate in the future. DexAge enables users to stake their crypto assets as collateral and acquire a loan of the same value to expand their investment profile.

Canada

Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA

iBank Digital Asset L.P. (“iBank Digital”, “iBankEx” or the “Company”) has officially launched Vancouver’s first peer-to-peer (P2P) OTC digital currency trading platform on iBankEx. (www.ibankex.io) This launch is supported by Huobi Cloud (“Huobi Cloud”) technology, which has officially entered the Canadian market in 2019 with 120 exchanges around the world.

iBank Products & Services:

Fiat Lending – A decentralized global lending network connecting financial institutions worldwide by offering crypto backed loan business.

Crypto Lending – iBank provides crypto loans collateralized by your crypto assets in BTC/USDT with security and confidentiality.

Authors:

George Popescu
Allen Taylor

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

Streamlining Data Gathering For Lenders

data aggregation for lenders

For any lender looking to gather information, the data gathering process can be cumbersome. Digital processing allows financial institutions to streamline how data is brought into the business model and consumed by lending platform. This is of value to both the customer and the financial institution because the data can be looked at more granularly. […]

data aggregation for lenders

For any lender looking to gather information, the data gathering process can be cumbersome. Digital processing allows financial institutions to streamline how data is brought into the business model and consumed by lending platform. This is of value to both the customer and the financial institution because the data can be looked at more granularly. With more details, more insights behind the details, and the ability to understand the trend of the data, there will be a deeper understanding of the customer’s financial situation. A credit score of 680 going up indicates a completely different trajectory than a credit score of 680 going down.

Terry McKeown is the practice manager for Envestnet/Yodlee. For 17 years, Yodlee has been acting as a data aggregator company for different financial institutions, mostly in the credit space. “For the first 15 years, it was used a lot for investment needs.” McKeown said. “It was used for insight in credit lending by providing additional info on assets, verification on those assets, income, employment, savings and investment accounts, and more, from a variety of data sources.”

Yodlee’s core competency is data aggregation and account verification.

Yodlee was acquired by Envestnet about a year ago. A pioneer in the industry, Yodlee has brought over 70 patents and a wide breadth of data — 15,000 different data sources including checking accounts, brokerages, 401Ks, and more — to the lending ecosystem. Seventy-five percent of the data comes through direct feed. While they have been aggregating data for years, doing so in lending is a newer side of the business. Yodlee does business currently in 16 countries.

“It’s all customer-permissioned,” McKeown said. “We are doing it on their behalf. This isn’t a traditional credit bureau process.”

The process is quite helpful in subprime. If the customer’s file is thin and unscorable, Yodlee can get additional information to provide more insight to the lender. In the prime category, it provides a more holistic view of the borrower’s financial situation, because knowing what assets they have helps in the size and type of loan. For a small business, Yodlee can pull up to a year of data.

“This gives seasonality so the lender has more insight into the health of the business over a long time period,” McKeown said.

The customer inserts their information directly into the lending portal and Envestnet/Yodlee gathers that information then provides the lender with a data file, a report, HTML view, PDF format, and multiple other formats. This streamlining helps lenders make better credit decisions because they have a comprehensive understanding of the applicant’s financial health.

“We’re providing what the industry needs,” McKeown said, “not so much what we can provide, but what the industry is asking for. We can be more timely with credit decisions and more precise with decisions to assist the lender in any format they ask for.”

Yodlee pulls data on borrowers from bank accounts (savings, CDs, money market accounts, checking accounts, business accounts, and more), investment accounts from brokerages to trusts, retirement accounts, insurance products like annuities, life insurance, auto insurance, and health, and liabilities, which includes mortgages, home equity loans, HELOC, credit cards, student loans, e-billers, and more. This means lenders can get most of their data from a single source rather than doing all the legwork themselves. This is data aggregation for the 21st century.

Authors:

Written with Nicki Jacoby.

Allen Taylor

Thursday March 9 2017, Daily News Digest

Thursday March 9 2017, Daily News Digest

News Comments Today’s main news: Kabbage’s prices $525M securitization. LendIt announces industry award winners. AlphaFlow launches automated real estate investing platform. Zhong An to sell 5-10% stake ahead of IPO. Ant Financial invests in Mynt. Atom Bank raises $102M for mobile-only bank. Today’s main analysis: Is the short-term credit cycle ready to roll over? TU bolsters fraud prevention exchange. Today’s thought-provoking […]

Thursday March 9 2017, Daily News Digest

News Comments

United States

  • LendIt Awards winners and PitchIt competition. GP:”In my eyes, Scott Sanborn winning best executive of the year is the award that stands out the most. The second award that was interesting is for Zopa winning best consumer lender award while also being the oldest (started in 2005!). Note: Zopa was also nominated among the most innovative platforms. Being the oldest, the one that stands out and among the most innovating is outstanding and certainly worthy of an award. A healthy industry that is growing also needs its celebrations. Having awards is a great way to bond the industry together and make it into an industry celebration. ”  AT: “Congratulations to all awards winners.”
  • Kabbage prices $525M securitization. GP:” ABS on small and medium business loans are less usual than on unsecured person. This securitization seem quite hot. Senior are anticipated to be rated A by Kroll. Expected to close arond March 20. Significantly oversubscribed. We can conclude that the SME securitization market is looking strong. We should look at the next OnDeck securitization with this in mind and hopefully be able to differentiate the market trends vs the company effect in that securitization. “
  • AlphaFlow launches new automated real estate investing platform.
  • Second sign in as many days that the short-term credit cycle will turn over. GP:” The articles on AlphaFlow are a mixed bag. One should critically evaluate the contents beyond the title. The defaults in auto and p2p are inching up as TransUnion showed recently. But very little and I wonder if it’s really significative. In p2p the defaults had inched up last year but it seemed to have been due to companies focused on growth too much. Recently OnDeck’s reserves for losses had to more then triple, however we haven’t seen this in their competitors. Perhaps not yet. I would conclude that we should watch what is going on but not panic, yet. “
  • TU bolsters fraud prevention exchange. AT: “As the number of consumers with personal loans rises the potential for fraud increases. This should be an area of concern for all lenders.”
  • Data aggregation for lending decisions.
  • CreditEase addresses top FinTech trends at LendIt.
  • Election years can disrupt Fintech too. AT: “Regulation is going to be a big discussion for the industry this year and next.”
  • StreetShares partners with Nor-Cal FDC.
  • Qapital raises $12M to expand Fintech app to more areas.

United Kingdom

European Union

China

India

Asia

News Summary

United States

Kabbage prices $ 525m securitisation (Finextra), Rated: AAA

Kabbage, a pioneering financial services, technology and data platform, today announced that on March 7, 2017, it priced $525 million of fixed-rate, asset-backed notes in a private securitization transaction.

The facility is expandable to $1.5 billion. The notes will be issued in four classes by Kabbage Asset Securitization LLC, a newly formed, wholly owned subsidiary of Kabbage Inc. The senior class of notes is anticipated to be rated “A(sf)” on the closing date by Kroll Bond Rating Agency (KBRA). Guggenheim Securities is serving as sole structuring advisor and initial purchaser of the notes. The securitization is expected to close on or about March 20, 2017, and is subject to customary closing conditions.

The securitization was significantly oversubscribed with interest from top-tier institutional investors. This represents the largest asset-backed securitization of small business loans in the online lending industry, next to Kabbage’s prior, expandable, ABS note issuance in March 2014.

LendIt Names PitchIt Competition And LendIt Industry Award Winners (PR Newswire), Rated: AAA

LendIt, the world’s largest show in lending and fintech, today announced the startup winner for its fifth PitchIt competition and 18 winners for its first LendIt Industry Awards in various categories including Innovator of the Year, FinTech Woman of the Year and Executive of the Year.

PitchIt is a leading global competition for fintech startups to earn mentorship, endorsement and exposure to institutions, investors and broad visibility. Out of eight PitchIt finalists, the judges winner as well as the audience winner was awarded to Nova Credit, the world’s first cross-border credit reporting agency. Nova Credit is fundamentally changing the way immigrants secure loans by enabling individuals to transfer their overseas data.

  • Best Journalist Coverage – George Popescu, Editor in Chief, Lending Times
  • Emerging Real Estate Platform – PeerStreet
  • Top Fund Manager – Prime Meridian Capital Management
  • International Innovator of the Year – Trulioo
  • Top Law Firm – Chapman and Cutler
  • Top Accounting Firm – Deloitte
  • Top Fintech Equity Investor – QED Investors
  • Most Innovative Bank – Cross River Bank
  • Top Service Provider – First Associates Loan Servicing
  • Best in Show – Deloitte – awarded to the best exhibitor at LendIt, judged on booth design and impression as well as staff conviction and enthusiasm.

AlphaFlow Launches New Investment Platform to Bring Automated Investing to Real Estate (BusinessWire), Rated: AAA

AlphaFlow, the leader in passive online real estate investment, today announced it has launched AlphaFlow Managed Portfolios. The company will build, manage, and rebalance a portfolio of 75-100 real estate loans for investors. This marks the first automated real estate investment service of its kind.

AlphaFlow provides clients with a first-of-its-kind set it and forget it automated service to build and manage a real estate portfolio. The company’s founders have been at the forefront of the disruption in real estate investing. In 2013, Sturm co-founded RealtyShares, one of the largest real estate crowdfunding platforms. Three years later, AlphaFlow was the first to offer funds that allowed investors to participate in loans across multiple real estate crowdfunding platforms with a single investment. AlphaFlow Managed Portfolios bring similarly innovative benefits to investors, including daily portfolio rebalancing that automatically reviews portfolios on a daily basis for opportunities to reallocate investments in order to increase diversification.

While many investors have embraced online equity investing, the real estate industry has traditionally been slow to change. As a result, the options available today are fairly limited for passive investors. AlphaFlow believes that in the next ten years, everyone will have some type of real estate in their investment portfolio.

The Second Sign In As Many Days That The Market Is Ready To Roll Over (Seeking Alpha), Rated: AAA

It has now been widely known that there is a bubble in the United States automobile market and recent exposes about subprime financing and recent commentary from dealerships about heavily discounted and incentivize selling have led us to this conclusion in a relatively straightforward fashion.

We also believe that the first loan default cracks would show in peer-to-peer lending, a riskier and lower credit worthy form of lending that exists in the spot where bankers simply used to not lend. Just days ago, we saw Lending Club, arguably the most popular peer-to-peer lender, report that delinquencies had risen significantly.

More importantly, this news pushes us further into our thesis that the short term credit cycle is likely about to turn over.

This was always a two pronged thesis: peer to peer lending and the auto market. With the second piece now falling into the puzzle, we think this is a great time to reiterate our notion that the market has hit its peak and that we think this is a great time to get hedged. In addition to having about 60% of our portfolio long and about 40% short at this time, we have also added some short-term S&P 500 puts to further hedge our long positions.

TransUnion Bolsters Fraud Prevention Exchange as Online Fraudsters Continue to Impact Personal Loan Delinquency Rates (Yahoo! Finance), Rated: AAA

Newly released TransUnion (TRU) data found that as personal loan delinquency rates rise, online fraud, which includes loan stacking, continues to make significant contributions to these increases. Serious delinquency rates (90+ days past due) at the conclusion of 2016 for personal loans originated in 2015 rose to 6.22%, up nearly 3% from the year-end 2015 delinquency rate of 6.05% for loans originated in 2014.*

Serious delinquency rates (90+ days past due) for personal loans with characteristics of online fraud stood at 11.02% at the end of 2016 for loans originated in 2015. Online fraud includes fraudulent loan stacking, which involves attempting to secure multiple loans from one or more lenders within a short period of time. While down from the 11.81% rate at the conclusion of 2015 for loans originated in 2014, it represents even more borrowers because of the continued growth in the personal loan space.

To combat online fraud, TransUnion has further expanded its Fraud Prevention Exchange to offer insights from the entire network of available TransUnion customer data — not just from Exchange members. These newest updates were unveiled today at LendIt USA 2017, a lending and FinTech conference.

The Exchange enables lenders to:

  • Reduce fraud losses without impacting the consumer experience and lending timelines.
  • Receive real-time alerts (within seconds) to mitigate instances where lenders don’t discover problematic accounts until days or weeks have passed and losses may have been incubating unknowingly inside live loans.
  • Utilize TransUnion’s vast network of customers inside and outside of the Exchange for more insight into originations fraud.
  • Quickly adjust and adapt to evolving fraud threats and trends.

Data aggregation’s new frontier: Lending decisions (American Banker), Rated: A

Financial data aggregation, long used to power digital personal financial management tools, has found a more moneymaking role — speeding up underwriting decisions.

Rather than faxing in documents or submitting PDFs of data downloaded from multiple websites, consumers and small-business owners are granting online lenders permission to use aggregation technology to grab their financial transaction data.

So long as the technology is working as intended, lenders will gain something they may have not been privy to before — years’ worth of transaction data, such as cash flows that aggregators think lenders should crunch as part of their credit analysis in addition to credit history data. And sure, banks may already count some applicants as customers and have access to their financial transactions. However, most consumers have multiple bank accounts that lenders would also need to mine.

Lenders in other countries like Australia and Europe appear to be further along than U.S. banks — especially in building open application programming interfaces to simplify the flow of data among apps.

CreditEase Addresses Top FinTech Trends at LendIt USA 2017 Conference in New York (Yahoo! Finance), Rated: A

CreditEase, China’s leading fintech company announced today that its subsidiary company, Yirendai (YRD), an leading online digital consumer financial service platform, together with CreditEase Fintech Investment Fund and CreditEase Offshore Private Credit Fund (“OPCF”) delivered a series of keynote speeches at the 2017 LendIt USA conference in New York from March 6 to 7.  LendIt annual conferences are recognized as one of the largest global fintech industry events dedicated to connecting the global fintech and lending communities.

On the main stage, Yirendai executives delivered a keynote speech named From Big to Strong: China FinTech Entering a New Era. Yihan Fang and Yang Cao of Yirendai shared with the audience the latest fintech industry trends in China, regulatory environment of online marketplace lending in China, and industry’s current challenges. In addition, Yirendai announced the launch of Yirendai Enabling Platform (“YEP”), a technology platform that enables partner companies to utilize Yirendai’s data acquisition, anti-fraud technology, as well as customer acquisition capabilities, to help optimize industry’s efficiency and enhance customer experience.

Anju Patwardhan, Senior Partner of CreditEase Fintech Investment Fund and member of Investment Committee delivered a keynote speech on financial inclusion issues for the middle class and also discussed the latest trends in fintech globally. CreditEase Fintech Investment Fund, launched in December 2015, is a venture fund investing in growth-stage fintech companies globally. The Fund has an equivalent of USD 1 billion in total committed capital.

LendIt: Election years can disrupt fintech, too (Housingwire), Rated: A

Congressman Patrick McHenry, a representative of North Carolina’s 10th congressional district and a member of the Republican Party, gave one of the first major speeches on the topic. Congressman McHenry has been a vocal proponent of fintech regulation overhaul and he discussed his priorities, beginning with the modernization of infrastructure underlying the IRS income verification form (4506T), which is used by lenders to make underwriting decisions (the form is currently manually handled by the IRS and takes 2- 8 business days for processing).

A counter-point to this speech was provided by Amias Gerety, who served in the U.S. Treasury during President Obama’s time in office. He outlined the ways in which the Treasury Department currently engages with emerging fintech companies through discussions, white papers and, eventually, changes in policy.

He addressed some of the popular requests of fintech companies including the demands for a “regulatory sandbox” for startups to innovate without the shackles of regulation.

Lastly, he discussed the shadow of the crisis on regulators’ minds as it relates to financial innovation, since many of the products that caused the 2008 recession were considered  “innovative” at the time. He encouraged companies to think about innovating across the whole spectrum of the customer value chain of acquisition, user experience, underwriting, funding and servicing / collections, since the last two stages of funding and servicing / collections tended to get overlooked during a growth cycle but tend to result in “immense bad behavior” during a downturn.

The third notable speech for the day was delivered by Thomas Curry, the Comptroller of Office of the Comptroller of the Currency. He highlighted the power of  “responsible innovation” by fintech companies to expand financial inclusion.

He confirmed that the OCC has the necessary authority and highlighted their capabilities, including “…experienced examiners who specialize in banking technology, have expert knowledge of payment systems, credit, and consumer protection, and know where companies can face pitfalls.”

He confirmed that the OCC has the necessary authority and highlighted their capabilities, including “…experienced examiners who specialize in banking technology, have expert knowledge of payment systems, credit, and consumer protection, and know where companies can face pitfalls.”

StreetShares Partners with Nor-Cal FDC to Serve California Veteran, Small Business Owners and Government Contractors (PR Newswire), Rated: A

As part of the statewide California bizWin™ and VetBizWin™ Initiatives, StreetShares has partnered with Nor-Cal FDC (Northern California Financial Development Corporation) to provide contract financing and small business lending solutions to California small and veteran-owned businesses.

As a Nor-Cal FDC premium partner, StreetShares will work with the Nor-Cal FDC Small Business Finance Support Team to assist small business and veteran business owners in obtaining funding needed to win new opportunities.

Qapital Raises $ 12M To Expand Its Fintech App Into More Areas (PYMNTS.com), Rated: A

Qapital, the FinTech startup, raised $12 million in venture funding to expand its app that enables users to make goals and save money to reach those goals.

With the app, users can integrate their checking, savings and credit card accounts, so in addition to setting financial goals, they can stay on top of their finances.

By including debit cards into the product, the report noted that it gives the startup a new revenue stream, because it can make money from the interchange fees.

United Kingdom

Zopa bags top consumer lender award (P2P Finance News), Rated: AAA

ZOPA reaffirmed its leading position in the peer-to-peer consumer space last night as it won the accolade of top consumer lending platform at LendIt’s awards in New York.

The world’s oldest P2P lender fended off competition from US consumer-finance heavyweights such as SoFi and Avant, bagging top scores on loan performance, volume, growth, and product diversity from a panel of 30 industry experts.

The new award caps off a bumper month for the platform, which posted record lending figures for February. It originated more than £81m of new loans last month – £24m more than the same month last year.

Forming new partnerships will be a key strategy going forward, according to Zopa’s chief product officer Andrew Lawson.

The P2P platform, which has so far focused exclusively on unsecured lending, is also looking to expand its range of loans and maturities. As Peer-to-Peer Finance News previously reported, this may include a move into the secured auto finance space.

Atom Bank raises $ 102M at $ 320M valuation for a mobile-only bank for millennials (TechCrunch), Rated: AAA

Atom Bank, a startup out of the U.K. that has built a mobile-only bank targeting consumers between the ages of 18 and 34, has raised another £83 million ($102 million) in funding led by BBVA, the Spanish bank and owner of Simple in the U.S. The funding gives Atom a post-money valuation of £261 million ($320 million), TechCrunch has confirmed with the company. BBVA also led Atom’s previous $128 million round in November 2015.

Robo-advice case study: Munnypot (Banking Technology), Rated: A

Munnypot looks like the archetypal disruptor. It is a sophisticated robo-advice service that allows consumers to manage their savings digitally. The platform makes straightforward and easy to understand financial advice available to everyone, at a fraction of the cost of most financial advisors or wealth managers.

First, from 2012, regulatory changes were introduced to provide much greater transparency to consumers, particularly around pricing. These changes have, however, made advice less affordable for people without large savings pots. This has contributed to the “advice gap” of 16 million people in the UK who could take advantage of financial advice if it were simpler and cheaper.

Second, the UK’s simplified tax rules similarly paved the way for providing advice to consumers on a range of more straightforward financial products.

Third, changing customer behaviour means most people are now comfortable with using technology for more and more purchases, whether via websites or apps.

Alternative lenders berate Chancellor for ineffective first budget (AltFi), Rated: A

Stuart Law, CEO and co-founder of secured business lending platform Assetz Capital, has berated Philip Hammond for delivering no news of any import for small businesses – “or indeed their lenders” – in his first budget as Chancellor.

Law said that Hammond has missed a chance to remove a “fatal flaw” from the Innovative Finance ISA tax wrapper, which allows investors to shelter peer-to-peer investments from income tax. The existing rules do not allow investors to spread their annual ISA allowance across multiple peer-to-peer platforms, which Law believes is making diversification “very difficult”.

Ex-ING Direct boss joins RateSetter board (Investor Daily), Rated: B

Peer-to-peer lender RateSetter has appointed former ING Direct chief executive Vaughn Richtor to its Australian board of directors.

European Union

PAYPAL FUNDS FINTECH PROF ROLE (Delano), Rated: AAA

The FNR Pearl chair in fintech will be jointly funded over five years by online payment giant PayPal and the National Research Fund (FNR), the government said in a press release following the signing of a memorandum of understanding on 6 March.

The chair will be established at the University of Luxembourg’s Interdisciplinary Center for Security, Reliability and Trust (SnT).

Personetics to Present Its Cognitive Banking Applications at Fintech 2017 in Zurich, Switzerland (Yahoo! Finance), Rated: A

Personetics, the leading provider of cognitive applications for the financial services sector, will present at Fintech 2017, Switzerland’s most influential fintech conference, which will take place in Zurich 9 March.

Personetics will be presenting a session entitled “Personalized Guidance: Turning Customer Data into a Delightful Customer Experience” at 10:50.

China

Zhong An plans to sell 5-10 percent stake ahead of IPO (Yahoo! Finance), Rated: AAA

Zhong An Online Property and Casualty Insurance plans to sell 5-10 percent of the company to a couple of strategic investors, to raise up to 10 billion yuan ($1.45 billion), ahead of a planned initial public offering in mainland China, according to four people with direct knowledge of the matter.

China’s first internet-only insurer, whose current major shareholders include two of China’s largest Internet companies – Alibaba Group’s Ant Financial affiliate with 16 percent and Tencent Holdings Ltd with 12 percent – is in early talks with potential investors, according to the sources who declined to be named.

China’s Biggest Blockchain Backer Launches Startup Accelerator (CoinDesk), Rated: A

A blockchain venture backed by Chinese conglomerate Wanxiang Group has launched a new startup accelerator.

The kick-off, which formally took place on 22nd February, comes soon after Wanxiang pledged to spend as much as $30bn on a smart cities initiative, set to be invested over a seven-year period. As part of that plan, Wanxiang, best known as the country’s biggest makers of automotive parts, said it would look to fund blockchain entrepreneurs.

The investors would be expected to commit at least 1 billion yuan each and the new funds would be used by Zhong An to expand its business and buy time before securing a green light from regulators for the IPO, one of the people said.

India

No misuse of Aadhaar biometrics, says UIDAI (The Indian Express), Rated: A

The Unique Identification Authority of India (UIDAI), which maintains the database of Aadhaar numbers, said on Sunday that there was no misuse of Aadhaar biometrics, which allegedly led to identity theft and financial loss.

Furthermore, with reference to the incident of misuse of biometrics reported in a newspaper, the UIDAI said it was an isolated case of an employee working with a bank’s business correspondent’s company making an attempt to misuse biometrics, which was detected by the authority’s internal security system and subsequently actions were initiated under the Aadhaar Act.

Asia

Ant Financial invests in Globe Telecom’s Mynt (Telecomasia.net), Rated: AAA

Alibaba’s Ant Financial is making its first foray into the Philippines via partnership with Ayala and an investment into Globe Telecom’s Fintech business unit Mynt.

Alibaba’s Ant Financial is making its first foray into the Philippines via partnership with Ayala and an investment into Globe Telecom’s Fintech business unit Mynt.

The flowering field of fintech (Infographic) (Tech in Asia), Rated: AAA

So, why are fintech firms so popular? What makes them better than other finance companies? One of the key reasons is that they have very stable and predictable business models, making people feel safe about their products and/or services. Investors are also attracted to businesses with predictable business models, as the risk is lower. Fintech companies are also low-cost yet deliver exceptional service.

 

Authors:

George Popescu
Allen Taylor