Thursday October 31 2019, Weekly News Digest

Thursday October 31 2019, Weekly News Digest

News Comments Today’s main news: Prosper Marketplace Issuance Trust (PMIT) 2019-4 to sell $138M in securities. PeerStreet raises $60M in Series C round. Funding Circle revamps secondary market. ID Finance Crowdcube campaign overfunds. Stablecoin loans surge 38%. Flender raises 75 million euro. Today’s main analysis: Genesis Capital’s digital asset lending snapshot (A MUST-READ). Today’s thought-provoking […]

The post Thursday October 31 2019, Weekly News Digest appeared first on Lending Times.

Thursday October 31 2019, Weekly News Digest

News Comments

United States

United Kingdom

European Union

Other

News Summary

United States

PMIT funds online marketplace lending with $ 138 million (Asset Securitization Report), Rated: AAA

Prosper Marketplace Issuance Trust, (PMIT) 2019-4, is counting on a de-leverage transaction structure that will boost its credit enhancement levels over time, as it seeks to sell $138 million in securities backed by unsecured consumer loans.

PMIT is also utilizing total subordination of 23.79% for the class A notes and 11% for the class B. The deal’s credit support also includes excess spread of about 9.75%, based on a collateral weighted average interest of 14.32%.

PeerStreet Announces a $ 60MM Series C Fundraise and $ 4.25 Billion in New Capital Commitments (Business Wire), Rated: AAA

PeerStreet, a platform for investing in real estate backed loans, is excited to announce it has completed a $60 million Series C funding round. Colchis Capital led the round with a consortium of institutional investors. Existing investors Andreessen Horowitz, World Innovation Lab and Thomvest Ventures also participated.

Some Real Estate Crowdsourced Funding Isn’t Actually Crowdfunding (Propmodo), Rated: A

Some things, such as pool parties and potlucks, are just better the more people that get involved. Another one of those things is participation in real estate investment. The more people that invest, the more capital there is to fuel deals and improve everything from office quality to housing availability. People make money and society progresses. It’s how the market should work.

Santander Enters the Ring, FinTech Charter Roadblock, Recession Checklist (PeerIQ), Rated: AAA

The NY Fed has increased permanent and temporary repo operation offerings from $75 billion to $120 billion and saw strong demand for its offerings.

Source: PeerIQ, Blackstone, St. Louis Fed

Digital Asset Lending Snapshot (Genesis Capital), Rated: AAA

Genesis continues to see sustained growth in its digital asset lending business. In the third quarter of 2019, Genesis added $870M in new originations, breaking our record of $746M set in the previous quarter. As of September 30, 2019, active loans outstanding stood at $450M, roughly flat from the previous quarter despite a significant decrease in Bitcoin’s price.

Originations increased 38.1% QoQ marking a sixth consecutive quarter of strong growth and bringing total originations to $3.1B since we launched the lending business in March 2018. Our loan portfolio largely sustained its value through increased cash (USD and stablecoin) loan issuance, offset by a decrease in the notional value of crypto loans outstanding.

Source: Genesis Capital

See the full report here.

Former Wall Street Traders Warn of Crypto Lending Bubble (Crowdfund Insider), Rated: A

The availability of cheap, cryptocurrency-collateralized loans is growing unsustainably and could induce a crisis, two former Wall Street traders now working in crypto lending have told Bloomberg.

Interests rates for these services started at 11% but now sit at around 5% APR.

Another Credit Bubble Grows: the $ 5 Billion Crypto-Loan Market (Bloomberg), Rated: A

Crypto credit has expanded too quickly and is headed for a blow-up, says a group of former Wall Street traders who are now seeking riches in digital assets. A near $5 billion industry has emerged from nothing just two years ago and the number of loan platforms is rapidly proliferating, according to blockchain data company Graychain Ltd.

Kabbage: The Care And Feeding Of A Fintech Unicorn (Forbes), Rated: AAA

Want to start and grow a tech unicorn — a privately held startup company valued at over $1 billion? You have to target a large market. The Atlanta-based fintech company, Kabbage, has a valuation of $1.2 billion and is on the Forbes Fintech 50 2019.

The use of online lenders among employer firms has grown markedly over the past couple of years — from 19% in 2016 to 32% in 2018, according to the Small Business Credit Survey 2019 Report on Employer Firms, Federal Reserve Banks.

While less than what small businesses borrowed from banks before the recession, small business loans are still a huge market — more than $600 billion lent each year, according to Small Business Lending in the United States, 2016.

More than nine in 10 (91%) of small business owners spend as much as 20 hours per week on cash flow management from handling payroll to invoicing and purchasing inventory, according to a Kabbage survey summarized by Forbes contributor Moira Vetter. Imagine how much more revenue a small business could generate if it had more time to focus on growth.

 

Naysayers Are Unavoidable When Launching Your Business. Here’s Why You Should Listen to Them (Inc.com), Rated: A

Entrepreneurs become successful, essentially, by refusing to do what everyone else is doing, or by doing the thing everyone else refuses to do. But even when you know you’re onto a great thing, it can be difficult to ignore the naysayers and skeptics you’ll encounter on your way to growing a business.

LendingTree Study Reveals the Most Stretched Homebuyers in America for 2019 (LendingTree), Rated: AAA

  • Five of the top 10 cities where buyers are stretching themselves the most are in California. Though there is some speculation that the housing boom in California may be nearing its end, home prices in the state are still high. As a result, many buyers, especially those who don’t work in lucrative industries like tech, will take out large loans to cover the cost of their homes.
  • Since last year, Los Angeles and San Diego have remained the 2 cities where borrowers have to stretch their budgets the most. The leverage ratios in these two cities are 3.91 and 3.64, respectively.
  • Salt Lake City is the place with the highest leverage ratio not in California. A housing shortage is one of the key reasons buyers in Salt Lake may need to stretch their budgets so much in order to be able to afford a home.
  • Like last year, homes in the Rust Belt and the South are the most affordable in the nation. The average home price in our 10 most affordable cities is a bit more than $171,000, which is $90,000 less than the average home price for the whole nation. Furthermore, the leverage ratio in the most affordable cities is 2.25, compared with a ratio of 2.81 for the whole country.
  • Pittsburgh, Cleveland and Detroit are where buyers are taking the smallest loans relative to their incomes. An average leverage ratio of 2.08 could make these cities attractive to potential homebuyers.
Source: LendingTree

Three Ways AI Will Impact The Lending Industry (Forbes), Rated: A

Consider the massive size of real estate lending. The Fed’s

Aura Secures $ 130 Million Credit Facility from Varadero Capital (Business Wire), Rated: A

Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced it has closed a $130 million asset-backed revolving credit facility with Varadero Capital, L.P. This new facility comes during a period of rapid growth for Aura in which the company has provided approximately $635 million in loans to more than 475,000 borrowers at over 1,250 partner locations since its founding in 2014.

Amount Announces Amount Pay (PR Newswire), Rated: A

Amount, a fintech company helping financial institutions reinvent the retail experience, today announced Amount Pay, an installment point-of-sale (POS) financing solution launching in Q1 2020.

Marqeta Announces New Reserve Financing Product (Financial Content), Rated: A

Marqeta, the world’s first modern card issuing platform, unveiled its new Marqeta Reserve Financing product at the Money2020 conference in Las Vegas today, a reserve financing option built into its core platform workflow. Marqeta Reserve Financing is uniquely tailored to the needs of companies struggling with the logistical, practical and administrative burdens of funding a reserve account to launch new payment card programs and keep it actively replenished with funds.

Become, the online platform for SMBs to find and optimize their funding solutions, today announced the closing of a $10 million Series A investment round led by Benson Oak Ventures and Magenta Venture, supported by RIO Ventures Holdings, iAngels, and Entrée Capital. The company has also secured an additional $2.5 million in venture debt from Viola Credit, bringing the total to $12.5 million. The funds will be used to scale up operations in the United States and Australia in order to execute Become’s mission to remove ecosystem friction and enable more SMBs to “become” the businesses they aspire to be.

The current small business lending landscape is fundamentally flawed, with 58% SMBs denied access to funding with no recourse or guidance on how to solve it.

This entrepreneur aims to boost fintech startups in Delaware (Technical.ly), Rated: A

In fact, with 9% of all jobs in the state falling under the fintech umbrella, Delaware has the highest share fintech employees of any U.S. state, according to a report conducted by the Delaware Prosperity PartnershipFirst State Fintech Lab and University of Delaware in June.

At the same time, the number of fintech startups in Delaware is small: There are a few mid-stage companies like Marlette FundingFair Square Financial and Acorns, but early-stage fintech companies are not exactly booming.

Businesses See Costly Decline of Consumer Trust as a Result of Large-Scale Data Breaches According to Annual IDology Fraud Report (Financial Content), Rated: A

IDology, a GBG company, today released its Seventh Annual Fraud Report, revealing the growing impact of large-scale data breaches and fraud on consumer trust and the critical need for businesses to balance the digital consumer experience with strong identity verification processes. The report also found that senior executives believe their companies are still not prepared to combat synthetic identity fraud and mobile attacks. Additionally, the California Consumer Privacy Act (CCPA) is expected to have significant implications in 2020 and many businesses may not be ready to comply.

Five Key IDology Fraud Report Findings:

  • The true impact of data breaches: A decline in consumer trust – 49% of businesses report a decline in customer trust over the past year. Additionally, 46% indicate that increased regulations are a top impact of large-scale data breaches.
  • Fraud vectors are shifting away from point-of-sale (POS) – 58% of businesses report fraud is increasing in their online channels.
  • New fraud threats, synthetic and AI fraud on the rise – 40% of businesses across industries experienced an increase in synthetic identity fraud (SIF) over the last 12 months and 92% percent expressed concern over SIF. The study found 33% believe that the fraudulent use of artificial intelligence and machine learning will be the most severe form of fraud in the next three years.
  • Compliance is an increasing burden – 28% of businesses believe CCPA compliance will be more burdensome than GDPR while 30% believe it will be equally as burdensome. CCPA contains additional rules with respect to identity verification that go far beyond what is required for GDPR.
  • How to thrive in the changing environment  96% of businesses see identity verification as a competitive differentiator. Also, 80% believe accurate address verification is very or extremely important to the identity verification process.
Source: IDology

Varo crosses 1 million customers, with plans to become a bank by 2020 (Bank Innovation), Rated: A

Digital banking brand Varo has 1 million customers, and is pushing ahead with plans to become a nationally-chartered bank early next year, CEO Colin Walsh told Bank Innovation Tuesday.

Varo offers checking accounts, savings accounts and installment loans. Becoming a nationally-chartered bank will help Varo differentiate through an expansion of its product suite, said Walsh. Like other digital-only banks, Varo intends to grow relationships with customers through multiple product relationships and integrations with other platforms. According to the company, 60% of its customers have more than one product relationship with the brand.

The changing shape of bank-fintech partnerships (American Banker), Rated: A

Blend, a fintech that initially specialized in software for mortgage lenders, is expanding into auto loans in the latest example of a startup broadening well beyond its initial area of expertise in an effort to appeal to more customers.

The San Francisco-based firm launched an auto lending product on Monday that is designed to enable consumers to upload documents quickly using mobile devices to get loan approvals faster. It comes on top of two other recent consumer-facing expansions, into home equity loans and deposit account opening products.

Walmart and Green Dot expand relationship, form new fintech program (Talk Business), Rated: A

Walmart announced a new seven-year contract agreement with Green Dot to continue as the issuing bank and manager for the retail giant’s MoneyCard program. The partners also agreed to launch a new financial tech accelerator.

As Digital Transactions Increase, Financial Services and Lending Firms Bear the Growing Cost of Fraud (PR Newswire), Rated: A

For every dollar of fraud loss, financial services companies now incur $3.25 in costs (losses related to the transaction face value for which firms are held liable, plus fees and interest incurred, fines and legal fees, labor and investigation costs and external recovery expenses), up from $2.92 in 2018. This represents an 11.3% year-over-year increase. Lenders see $3.44 in costs for every dollar of fraud loss, up from $3.05 in 2018, a 12.8% increase. Banks and credit lenders, in particular, were found to have the highest costs of fraud, with both percentages jumping double digits since last year – 17% and 16%, respectively.

Trends

  • Expansion of Mobile – There has been a significant increase in the use of mobile channels since 2018, with 73% of financial services (a 66% increase) and 71% of lending firms (an 8% increase) now offering this option to customers. This growth stems primarily from small financial services firms and digital financial services and lending firms now transacting through the mobile channel.
  • More Cross-Border Transactions – International transaction volume has risen among both mid/large-sized digital banks and all digital lenders. However, mortgage lenders have reported a significant drop in foreign transactions, which coincides with a decline in global growth and housing inventory.
  • The Rise of Botnets – A majority of banks reported double-digit year-over-year growth in botnet activity, which appears to at least be related to banks with international business reporting more transactions. Nearly half (47%) of mortgage lenders reported an average increase of 16% in botnet activity since last year. While surveyed firms appear to be aware of botnet activity, they have not been able to adequately prevent it.

Download the 2019 True Cost of Fraud study here.

Urjanet and LevelCredit Enhance Credit Files With Rent and Utility Payment Tradeline Reporting (PRWeb), Rated: A

Despite representing nearly 25% of consumer spend, until now rent, utility, cable, and telecom tradelines have been severely underreported in traditional credit reports, with only about 1% of consumer files currently including rent data and 2.4% including utility data according to FICO. When alternative data is included, it has proven to accurately score more than 90% of thin or no-file applicants, representing a powerful revenue tool that lenders can use to safely expand their markets, increase assets, and build lasting relationships with borrowers.

Urjanet and LevelCredit today announced a strategic partnership enabling lenders, banks, and fintech companies to confidently qualify thin and no-credit file consumers using rent and utility bill payment history. The partnership enhances LevelCredit’s existing rent reporting services with consumer-permissioned payment history from thousands of utility, cable, and telecom providers, helping financial services organizations safely extend credit to a growing number of consumers who aren’t getting the credit they deserve today.

Inside the Groundbreaking Nova Credit-American Express Partnership (Lend Academy), Rated: A

It all started with a cold LinkedIn message back in 2016. The co-founder of the (then) tiny startup Nova Credit, Nicky Goulimis, reached out to an executive at American Express to discuss a potential partnership. It was an audacious move but one that, three years later, has paid tremendous dividends for the company.

Behind Credit Karma’s savings account launch with Jagjit Chawla (Tearsheet), Rated: A

Credit Karma built a wonderful business providing almost 100 million people with free products to help them manage their debt. It was inevitable that they move into the asset side of their customers’ personal balance sheets. Last week, the firm announced a new savings account.

AccountScore and Equifax release new Open Banking credit risk index (Fintech Finance), Rated: B

AccountScore and Equifax have today announced the release of a new credit risk index for the consumer lending sector which allows financial institutions to more effectively understand consumers applying for credit products.

Lendio’s Online Bookkeeping Software, Sunrise, Announces Partnership With WePay (Lendio), Rated: B

Sunrise, a Lendio company, today announced a strategic partnership with WePay, the integrated payments business of JPMorgan Chase & Co. Through this collaboration, Sunrise will provide its small business clients with a new feature called Sunrise Pay, powered by Chase, which gives users immediate access to invoicing capabilities as well as the ability to set up recurring payments.

Cred Appoints Former Netflix Executive to Leadership Team (Valdosta Daily Times), Rated: B

Cred, the leading global digital asset lending and borrowing platform serving customers in over 180 countries, today announced that veteran technology executive Cliff Edwards has joined the company as chief marketing officer to help accelerate understanding of blockchain technology and to promote innovative use cases for digital assets.

United Kingdom

Funding Circle revamps secondary market to boost liquidity (P2P Finance News), Rated: AAA

The peer-to-peer business lender, which saw its average loan part resale time rise to 124 days this month, said that following a recent review, it is introducing a new selling tool on 2 December to improve access to funds.

Funding Circle also announced that it is introducing a 1.25 per cent transfer payment, which will be deducted from the seller’s proceeds and go to the buyer of the loan part.

Funding Circle ditches selling queue (The Times), Rated: A

Funding Circle appears to have listened to complaints from investors waiting for as long as four months to take their money out of the platform.

ID Finance crowdfunding surges past £2m target as investors eye Latam region (UK Investor Magazine), Rated: AAA

ID Finance, the fintech company operating in Europe and Latin America, has surged past its £2m crowdfunding target on Crowdcube and is now overfunding with £2.3m raised from over 700 investors. The Barcelona-based lending-tech scaleup is the second-fastest growing fintech in Europe, according to Financial Times, has enjoyed strong investor demand as it looks to disrupt the LatAm market. The company will continue to take commitments from investors at crowdcube.com/idfinance

Source: Crowdcube

The House Crowd investments now available within a SIPP (P2P Finance News), Rated: A

THE HOUSE Crowd has announced that it is now able to accept investments through a self-invested pension plan (SIPP).

London lending start-up Koyo raises $ 4.9m and already has ‘global ambitions’ (LearnBonds), Rated: A

Digital lending start-up Koyo has raised $4.9m for its plans to sell loans to new migrants and people with thin credit histories.

Business lending platform Trade Ledger raises £1.5 million (Finextra), Rated: A

Trade Ledger, the ground-breaking business lending platform, which automates commercial lending processes for global banks and alternative finance providers, today announces strategic investment in a £1.5M round led by Hambro Perks, to further accelerate revenue growth.

M&S LAUNCHES ‘BUY NOW, PAY LATER’ SERVICE (Independent), Rated: A

Marks & Spencer is the latest retailer to adopt a “buy now, pay later” payment model, in the hope that it may attract younger customers in the run up to Christmas.

The retailer has partnered with Clearpay to launch the initiative, which allows customers to pay for purchases via a series of four instalments paid over a period of six weeks. The payments can be made via a smartphone app.

CashEuroNet, UK LLC’s Enter Into Administration (Global Legal Chronicle), Rated: B

Slaughter and May has advised the administrators of CashEuroNet, UK LLC which entered administration on 25 October 2019.

The company previously traded as QuickQuid.

China

China’s Financial Hub Moves to Shut Down P2P Lending (Bloomberg), Rated: AAA

The regulator in China’s financial center has ordered Shanghai’s more than 40 peer-to-peer lenders to exit the business, people familiar with the matter said, the latest blow to an online industry that’s shrunk by half this year.

Some of the nation’s biggest platforms including Ping An-backed Lufax and Dianrong.com have been told in recent meetings with Shanghai’s financial services bureau to stop issuing new products and to wind down existing peer-to-peer lending services, the people said, asking not to be identified as the matter is private.

European Union

Flender secures €75m funding line, slashes interest rates (The Irish Times), Rated: AAA

Peer-to-peer lending company Flender has secured a new €75 million funding line to provide loans to Irish businesses.

The rate cuts mean that loans of up to €250,000 are now available for SMEs from 6.45 per cent for terms up to 36 months.

Max Crowdfund: A Real Estate Crowdfunding Platform Leveraging Blockchain Technology to Simplify Property Investment (CardRates), Rated: A

In a Nutshell: Blockchain technology has helped many industries innovate in recent years. Max Crowdfund is one company using the technology to make investing in real estate easier and more accessible. The platform also simplifies investment managment for real estate professionals. Through the use of blockchain technology, properties can be tokenized — or broken down into investment opportunities as low as €1,000 — something that can’t be done through traditional real estate investing. Overall, the Max Crowdfund platform makes real estate investing faster, cheaper, and easier for everyone.

CNH Industrial and October signed a crowd-funding partnership agreement to offer digital funding to Small and Medium Companies. (Emergency-Live), Rated: B

CNH Industrial and the fintech lending platform October entered into a partnership agreement in July 2019 to support Small and Medium Enterprises (SMEs) working with IVECO and CASE Construction Equipment brands through the adoption of crowd-lending in France, Italy, the Netherlands and Spain.
International

Crypto Sentiment on the Rise? Quarterly Stablecoin Loans Surge 38% to $ 870m (Forbes), Rated: AAA

Genesis Capital, a subsidiary of Digital Currency Group (DCG), one of the largest investment firms in the crypto sector, has reported a 38% increase in stablecoin loans in the 3rd quarter of 2019.

Australia

Pop Up Tax Shop and Mr Tax Acquired by Queensland Accounting Group (Newsmaker), Rated: B

Mr Tax Refund was incorporated in 2012 and majority-owned by online lender, Paid International. In January 2015, Paid was sold to ASX listed, Money3 Corp Ltd.

India

P2P Lenders Grow Amid A Gloomy NBFC Environment (Bloomberg Quint), Rated: AAA

The 19 P2P lenders have now facilitated disbursals of close to Rs 500 crore, estimate industry executives who say that a good chunk of this growth has come in the last twelve months. While P2P lenders are registered with the Reserve Bank of India, the regulator does not release lending data for these platforms. As such, BloombergQuint could not independently verify the extent of loans given out via these platforms.

Online lender Aye Finance’s profits grew 10x at INR 250 mn in FY19 (IBS Intelligence), Rated: A

Aye Finance Private Limited (Aye Finance) is among the few in the Indian online lending space that has been posting profits for the last two years. The company, which provides micro-financial services, has reported a net profit of INR 250 million during fiscal 2019, a 10x increased from INR 23 million net profit a year ago.

P2P Bitcoin Exchange Paxful Sees BTC/Rupee Trade Volumes Soar by 22% As India Celebrates Diwali (Bitcoin Exchange Guide), Rated: B

As India donned its festive hats to celebrate a whole week of Diwali, the real gift went to the peer-to-peer lending exchange Paxful. It saw the country’s Bitcoin trading volume on its platform reach an all-time high.

Southeast Asia

Digital Financial Services to Generate $ 38 Billion in Southeast Asia, Study Finds (Bloomberg), Rated: AAA

Digital financial services from lending to asset management are expected to generate at least $38 billion of annual revenue across Southeast Asia by 2025, more than tripling from $11 billion in 2019, according to a new study by Bain & Co.Google and Temasek Holdings Pte.

Online lending will comprise about half that total for the region, which houses some of the world’s fastest-evolving internet and mobile industries. Growing smartphone penetration promises to unlock internet-based services such as insurance to more than 70% of an adult population neglected by traditional banks, according to the report.

Indonesian P2P lender Investree close to Series C funding, plans expansion of Islamic business (Salaam Gateway), Rated: A

While celebrating its fourth anniversary this week, the fintech start-up that set the peer-to-peer lending ball rolling in Indonesia is preparing for its third major round of investment, possibly in the next month.

Aside from regional expansion, Investree intends to intensively develop its Shariah-compliant business unit over the coming year.

Golden Gate Ventures, Modalku invest in Indonesian accounting SaaS startup Paper.id (e27), Rated: B

Indonesia’s Software as a Service (Saas) startup Paper.id announced that it has closed an undisclosed amount of Series A funding from Southeast Asia-based venture capital firm Golden Gate Ventures and Indonesia’s P2P lending platform Modalku.

Authors:

George Popescu
Allen Taylor

The post Thursday October 31 2019, Weekly News Digest appeared first on Lending Times.

Wednesday August 29 2018, Daily News Digest

US economic growth poised to accelerate

News Comments Today’s main news: Yirendai’s Q2 2018 financial results. Crowdstacker exceeds 50M GBP in funds raised for British businesses. Data breach complaints soar in the UK. Flender raises 10M Euro for SME lending. Google partners with banks on digital lending in India. Today’s main analysis: Moody’s says Q2 2018 has a strong outlook. Today’s thought-provoking articles: If Wonga […]

US economic growth poised to accelerate

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Venmo is considering eliminating its public feed (Business Insider) Rated: AAA

PayPal executives are in talks about potentially eliminating the ability for users to publicly post and view transactions on Venmo, its peer-to-peer payments app, Bloomberg reported, citing a person familiar with the matter.

2Q 2018: Strong performance in line with positive outlook (Moody’s Email) Rated: AAA

The PMIs reported strong results in the second quarter of 2018, reflecting growth in new production, earned premiums from high-quality recent vintage business and lower incurred losses. Although mortgage rates have begun trending higher and housing affordability lower, we believe credit fundamentals will remain positive for the sector, and likely drive healthy performance through the second half of the year.

Other key areas the report looks at in-depth include:

  • New business volume rises in Q2. In Q2 2018, PMIs produced about $80.3 billion of new insurance written (NIW), up 14% from Q2 2017. For the first half of 2018, NIW totaled $138.8 billion while production was also up 14% on the year.
  • Premium rate cuts highlight competitive pressure. In April 2018, MGIC (senior Ba2) reduced its premium rates on its most popular policies by about 11%, effective June 2018. Competitors, inspired by corporate tax cuts, then cut rates themselves, essentially wiping out gains from the tax cuts. Given the current high persistency rates and expected ordinary loan amortization profiles, we do not expect the new lower premium rate business to become a majority of in-force business for several years.
  • GSE pilot programs signal potential changes in industry dynamics. In March 2018, Arch Capital Group (ACGL, senior Baa1 stable) and Freddie Mac (FMCC, senior Aaa stable) announced a new risk transfer pilot program, IMAGIN (Integrated Mortgage Insurance) through a newly formed Arch subsidiary that will cede 100% of the risk exposure to multiline reinsurers as an alternative to traditional mortgage insurance. A few months later, in July, Fannie Mae (FNMA, senior Aaa stable) announced a pilot program for enterprise paid mortgage insurance (EPMI). Both programs effectively serve as substitutes for single premium MI policies and highlight the evolution of the mortgage risk transfer market.
Sources: U.S. Bureau of Economic Analysis, Moody’s Analytics forecast

Read the full report here.

US credit card firm Deserve raises $ 17m funding (Fintech Futures) Rated: A

US-based credit card company Deserve has raised $17 million in Series C funding for its Generation Z ambitions.

The round was led by an unnamed investor, with additional participation from Accel, Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group and GDP Venture.

These are the most valuable cities in the US (Fox Business) Rated: A

The value of residential real estate in New York is greater than the GDP of all but six countries, according to a new study from online lenderLendingTree, which ranks the most valuable cities in the U.S. based on real estate values.

1. New York, $2.54 trillion

2. Los Angeles, $2.17 trillion

3. San Francisco, $1.25 trillion

4. Chicago, $813 million

5. Washington, $795 million

6. Boston, $697 million

7. Miami, $648 million

8. Seattle, $641 million

9. Dallas, $549 million

10, San Jose, Calif., $535 million

Docutech owner Serent Capital increases investments in fintech lending (Housing Wire) Rated: A

Serent Capital, a San Francisco-based private equity firm, and owner of Docutech, just made its 12th investment in fintech and fourth in the lending technology market.

GDS Link helps clients efficiently manage credit risk strategies and improves lending and account management efforts.

Why P2P lending should be a part of retirement portfolio? (The Financial Express) Rated: A

Below are four reasons why peer to peer lending should be an integral part of retirement portfolio:

1. Diversified Portfolio – Retired people should always have a backup option if in case one of the investment plans fails and someone suffers a loss.

2. Low Risk Investment – While it is a common belief that P2P lending carries higher risk, the reality is different.

3. Compounding Benefits – Since one receives a part of interest and principal amount back every month, the retired person can reinvest this amount and earn interests on the whole amount.

4. Is It Safe To Invest Retirement Money In P2P Lending? – Since P2P lending removes the intermediary and is a relatively new concept, many people are sceptical about this investment option.

United Kingdom

Crowdstacker Milestone: Online Lender Exceeds £50 Million in Funds Raises For British Businesses (Crowdfund Insider) Rated: AAA

Crowdstacker, a UK-based peer-to-peer (P2P) lending platform, recently announced it has exceeded £50 million in funds raised for UK businesses that are featured on its portal. According to the online lender, 100% of the P2P lending funds raised for British businesses through Crowdstacker has come directly from Crowdstacker’s “crowd.”

Top tech investors stand to lose millions if Wonga collapses (The Times) Rated: AAA

Some of the technology industry’s most respected investors face losing tens of millions of pounds as Wonga stands on the edge of failure.

Early investors including Accel, Balderton Capital and Greylock Partners are among the backers of the sub-prime lender that face losing their entire investment as it teeters close to collapse amid a rise in compensation claims.

Wonga’s backers had put about £90 million into the payday lender, including £10 million in the past month. However, if Wonga is placed into administration, shareholders are likely to be left with nothing as its assets are sold off to pay creditors, including customers with outstanding claims for redress.

If payday lender Wonga collapses what will it mean for customers? (The Guardian) Rated: A

Aside from the well-rehearsed arguments about whether or not to take out payday loans (on Monday Wonga’s website was advertising a short-term loan at an annual percentage rate (APR) of interest of 1,509%) the latest news about the company’s struggles should not particularly affect that choice. The company is still operating and is making loans. If Wonga collapses, those loans will likely end up being owned by another lender.

If Wonga falls, responsible credit providers must be there for those in need (Metro News) Rated: A

Research from StepChange Debt Charity found that an estimated 1.1million people used high cost credit for everyday household costs in 2016. A recent update of this research found that this had increased in 2017 to an estimated 1.4million people. It’s becoming a bigger and bigger problem.

This has led to a situation where one in four working adults in the UK are now unable to afford an unexpected £500 bill and a growing number of low income households are becoming reliant on credit to cover basic needs.

UK data breach complaints soar under new EU rules (Financial Times) Rated: AAA

The Information Commissioner’s Office (ICO) said they received more than 6,200 complaints in the first 6 months of GDPR; the majority of complaints were from customers saying their data was shared without permission and companies self reporting cases where data was accessed.

10 percent of complaints come from the financial services market, other sectors include education, healthcare and local governments.

The ICO is looking to increase funding by almost 50 percent and hire more than 200 more workers to handle the amount of complaints.

Victory Park Capital fund holds steady with dividend, eyes performance fee (Altfi News) Rated: A

The £332m VPC Specialty Lending investment trust has announced its second consecutive dividend of 2p per share this year, its target level, following a two year turnaround amid lower than expected returns, according to an investor update.

Following on from recording its highest monthly return to date for May 2018 the closed-ended fund has declared an interim dividend of 2p pence per share for the three-month period to 30 June 2018.

Tide CEO: Why SMBs Need Their Own Bank (PYMNTS) Rated: A

Small business (SMBs) are distinct from other customer groups, Tide CEO Dr. Oliver Prill told Karen Webster during this week’s Monday Conversation, with a specific set of product and service needs that often go unmet because they are so unique. That means small businesses of all sizes — particularly the small businesses with fewer than 10 employees — simply deal with inefficiencies in their work flow that are actually rather damaging.

Starling looks for further funding as users grow fivefold (Financial Times) Rated: A

UK based digital bank Starling Bank is looking to raise additional capital as the bank has seen user growth reach more than 200,000, up from 43,000 in November.

The bank is also making significant progress on account balances, Starling accounts averaged £420 while competitor Monzo came in at less than £150.  The fresh capital raise will be led by existing investor Harald McPike who owns more than 50 percent already and is a Bahamas based hedge fund investor.

Starling to help RBS develop digital bank (FinExtra) Rated: A

Royal Bank of Scotland (RBS) has reportedly enlisted the help of challenger bank Starling in its efforts to develop a digital bank of its own.

The news, reported by The Times newspaper, came as a result of a letter to shareholders from Starling’s chief executive Anne Boden which stated that it has signed a contract “to provide payment services to support new initiatives at RBS/NatWest”.

China

Yirendai Reports Second Quarter 2018 Financial Results (PR Newswire) Rated: AAA

In the second quarter of 2018, Yirendai facilitated RMB 11,736.2 million (US$1,773.6 million) of loans to 177,754 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 38%; 23.4% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai’s platform before; 76.3% of the borrowers were acquired from online channels; 100% of the loan volume originated from online channels was facilitated through mobile.

In the second quarter of 2018, Yirendai facilitated 202,380 investors with total investment amount of RMB 12,175.4 million (US$1,840.0 million), 100% of which was facilitated through its online platform and 96% of which was facilitated through its mobile application.

Chinese fintech company X Financial files for a $ 250 million US IPO (Nasdaq) Rated: AAA

X Financial, which operates a peer-to-peer lending platform in China, filed on Tuesday with the SEC to raise up to $250 million in an initial public offering.

The Shenzhen, China-based companywas founded in 2014 and booked $445 million in revenue for the 12 months ended June 30, 2018. It plans to list on the NYSE under the symbol XYF. X Financial filed confidentially on January 8, 2018. Deutsche Bank and Morgan Stanley are the joint bookrunners on the deal. No pricing terms were disclosed.

China Holds to Hard Line on Peer-to-Peer Lending, Pledged-Stock Loans (Caixin) Rated: A

At a recent meeting entitled “Disposing of Financial Risk,” regulatory officials devoted most of their time to discussing China’s peer-to-peer (P2P) lending industry and pledged-stock loans.

In fact, they spoke of little else.

Beijing (Failed) Protests Over Collapse of China’s Peer-to-Peer (P2P) Industry (Whats on Weibo) Rated: A

China’s P2P industry has seen a quick rise and fall over the past year, causing some panic and chaos.

Earlier this week, China’s New Fortune magazine reported of one case where an investor had just invested 360,000 RMB (±US$52,700) into P2P platform Guojinbao, when they discovered the platform was already abandoned the day before, and there was no way to get their money back. It is just one among many recent cases.

European Union

Irish P2P Lending Platform Flender Raises €10 Million Through Latest Funding Round For SME Lending (Crowdfund Insider) Rated: AAA

Irish peer-to-peer lender Flender has reportedly raised €10 million through its latest funding round to lend to small and medium-sized enterprises (SMEs). Flender, which was launched in early 2017,  is authorized and regulated by the Financial Conduct Authority under Registration Number 657861. The online lender is now on a mission to enable businesses and consumers the ability to borrow money through their existing networks of friends, family, and customers. 

Flender also reported that it intends to offer established small businesses an innovative new way to access finance by leveraging their loyal customer base. The lender will facilitate and formalize an existing and large market of social lending across the UK and Ireland.

International

Aussie super asset allocation “riskier”: Research (Financial Standard) Rated: AAA

UBS Asset Management’s latest pension fund indicator report highlights the propensity of Australian superannuation funds to invest a substantial portion of retirement savings in “risker” assets such as equities.

According to the report, the asset allocation of Australian superannuation funds is heavily geared towards equities, with 45% of assets allocated to equities. The asset manager said Australia’s equity allocation is almost double its bond allocation, which attracts 26% of assets.

Source: Financial Standard

MAKING SENSE OF PRIVATE CREDIT FUNDS (all About Alpha) Rated: AAA

The paper distinguishes among five strategies, then adds a catch-all “other” category. The five are:

  1. Business Development Companies. The BDCs operate under specific regulations mandating their “significant managerial assistance” to their debtor companies. The majority of BDCs are treated as RICs for tax purposes, which involves additional regulatory oversight.
  2. Senior Loan Funds. These are closed-end vehicles that make first or second lien loans to small- and mid-sized companies. They use floating rate spreads composed of a risk premium and the benchmark rate, and typically target gross returns in the neighborhood of 10%.
  3. Mezzanine Funds. These are also closed-end vehicles. Typically, they make junior capital investments (often a hybrid between debt and equity) in small- and medium sized companies funding acquisitions, growth, recapitalizations, or buyouts. They typically target return in the mid- to upper teens, given their position subordinate to the senior liens.
  4. Distressed Debt Funds. These can be either closed- or open-end vehicles. They invest in the debt securities of mid- to large-sized companies that are experiencing financial distress, seeking deeply discounted purchases. There are a variety of strategies involved under this broad heading, including loan-to-own or turnaround lending.
  5. Special Situation Funds. These are typically closed-end vehicles. They, too, target mid- to large-sized companies in tight circumstances. They have a much broader mandate than the distressed debt funds, investing across the capital structure.

Getmoder Foundation Offers a Reliable Platform for Lending and Borrowing Crypto Currencies and Digital Assets (Digital Journal) Rated: A

Cryptocurrency has significantly opened a new world in financial sector which was primarily owned by bank namely lending and borrowing capital. Even through peer to peer lending and borrowing has developed in the recent years in fiat currency space, it’s only recently hat options for lending and borrowing cryptocurrencies are on the rise. Getmoder Foundation provides reliable platform for this recent practical option.

Getmoder is a known open-platform for lending and borrowing cryptocurrencies and digital assets. This platform allows lenders and borrowers to enter to fully collateralized crypto versus crypto lending agreement. With Getmoder lenders will be able to earn increased interest income on their long-term digital assets investments.

Australia

Australia: How can you avoid unfair contract terms? (Mondaq) Rated: AAA

Have you heard about Prospa? This startup shot to Australian Financial Review fame in early June this year. It is an online lender which offers unsecured business loans to small businesses which big lenders consider to be too risky.Their own business was going remarkably well. So well in fact that Prospa was getting ready to take the ASX by storm and launch an IPO. The excitement was surely palpable, the founders would have been so proud of themselves and their strong team for getting to this point. The dollars were about to roll in!

And then, right before the IPO was about to take place, ASIC raised concerns purportedly regarding Prospa’s potentially unfair contract terms. This is not surprising given the climate of industry-wide reviews of lending practices. This concern led to postponement of the IPO on 6 June 2018, only 15 minutes prior to launch. A $576 million dollar ASX float on hold, indefinitely, whilst these standard form contracts were scrutinised. The issue? Potentially unfair terms in their standard form contracts contrary to the Australian Consumer Law.

India

Google Teams With Banks to Launch Digital Lending for India (Bloomberg) Rated: AAA

Alphabet Inc’s Google is partnering with four Indian banks to grant consumer loans online, as the fight for a $1 trillion digital finance market intensifies.

The U.S. search giant is teaming with HDFC Bank Ltd.ICICI Bank Ltd.Kotak Mahindra Bank Ltd. and Federal Bank Ltd. to offer instant, pre-approved loans to customers “right within Google Pay in a matter of seconds,” it said in a statement.

From Facebook Inc.’s WhatsApp to Jack Ma’s Ant Financial, internet giants are joining a race to provide financial services in the world’s fastest-growing mobile arena. Online lending is becoming the next frontier as mobile users look for small loans with minimal paperwork, served to them even without credit ratings as fintech companies use data and algorithms to determine risk.

Digital Lending Startup ZestMoney Raises $ 13.4 Mn From Xiaomi, Others (Inc42) Rated: A

Bengaluru-based digital lending startup ZestMoney has raised $13.4 Mn in extended Series A round of funding led by Chinese smartphone maker Xiaomi.Existing investors PayU, Ribbit Capital and Omidyar Network also participated in the round.

The company plans to strengthen its technology and data science capabilities as well as expand use cases for the core ZestMoney Affordability Product.

How digital lending is helping bridge the credit gap in India (Qrius) Rated: A

Over the past two years, digitisation and the rising penetration of internet in India have irrevocably transformed the lending process from being extremely long and complex to a quick and technologically-exercise. The emergence of digital lending has challenged the stronghold of traditional financial institutions as the chief credit enablers in the economy while presenting consumers with an opportunity to access credit in a simplified and efficient manner.

Credit lending in India: Then and now

For decades, the credit lending market in India has been dominated by traditional banks and Non-banking financial companies (NBFC’s). Their complex policies and methods of operation have made it extremely difficult for the majority of Indians to avail credit. As a result, the gap between the demand for and supply of credit has amplified, while the number of underserved consumers in the country has risen exponentially.

Asia

Indonesia offers a fresh battleground for fintech (Nikkei Asian Review) Rated: AAA

Coinhako is just one of the many “fintech” startups flocking to Indonesia. The Indonesian Fintech Association said there are more than 200 fintech companies in the country, including the 31 e-payment providers that have secured licenses from Bank Indonesia and more than 60 peer-to-peer lending companies registered with the Financial Services Authority.

Despite still seeing fintech companies as potential threats, Indonesia’s major banks are also investing in local startups. Bank Mandiri has invested in P2P lending startups Amartha and KoinWorks through its venture capital arm Mandiri Capital Indonesia.

P2P Lending Fintech May Contribute Rp25tn to GPD, Indef Says (Indonesian News Portal) Rated: B

The Institute for Development of Economics and Finance (Indef) said that fintech-based companies offering peer-to-peer lending services can improve Indonesia’s macroeconomics capability.

Indef’s review, done together with the Indonesian Fintech Association (Aftech), estimates that fintech development in Indonesia can contribute up to Rp25.97 trillion to the GDP.

Speaking at the discussion with the theme “Lending Fintech Roles to Indonesia’s Economy” in Jakarta, August 28, Indef economist Bhima Yudhistira Adhinegara said that the Rp25.97 trillion contribution includes both direct and indirect impacts.

Authors:

George Popescu
Allen Taylor

Thursday March 22 2018, Daily News Digest

Thursday March 22 2018, Daily News Digest

News Comments Today’s main news: LendingTree launches free credit monitoring. Paytm gets into P2P lending. EquityMultiple stops promoting Reg D 506c offerings. Trusted Quid customer info stolen in data breach. PPDai grows revenue as stock rises. Today’s main analysis: Why China Rapid Finance’s ownership structure is important. Today’s thought-provoking articles: Are Amazon, Costco, and Target inching into wealth management? Open banking […]

Thursday March 22 2018, Daily News Digest

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingTree Launches Free Credit Monitoring Service (LendingTree), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today announced the launch of a free credit monitoring service within the My LendingTree platform. In partnership with TransUnion, LendingTree monitors users’ credit profiles daily and sends alerts of any changes or potential suspicious activity within 30 minutes of the credit report being updated.

Real Estate Investment Platform EquityMultiple Gives up on Reg D 506c (Crowdfund Insider), Rated: AAA

No longer will EquityMultiple publicly promote its real estate offerings online and elsewhere. Previously, EquityMultiple has leveraged Reg D 506c – a new securities exemption created by the JOBS Act of 2012. This rule allowed issuers and platforms to promote offerings on the internet – via social media and elsewhere  – in contrast to old Reg D (506b) that was barred from any advertising. And why on earth would EquityMultiple not want to promote unique and compelling investment opportunities? Because of the broken nature regarding the general solicitation rule.

Amazon in wealth management? What about Costco or Target? (Financial Planning), Rated: AAA

With Amazon inching closer to financial services, industry observers say its a worthy exercise to think about other potential retail competitors.

“People may roll their eyes in the land of wealth management and financial services, but it’s no longer a place for just banks. They don’t own it anymore,” said Doug Fritz, CEO and founder of F2 Strategy, a technology and marketing consulting firm to the wealth management industry based in the San Francisco Bay area.

Costco seems like the most obvious candidate to get into the wealth management space, said Fritz.

Incumbents such as Charles Schwab have already boxed in robos with products and are not being shy about advertising them, he adds.

5 Savvy Ways To Invest $ 10,000 In 2018 (Forbes), Rated: A

Online Real Estate Investing

Poll of SMBs Reveal Plans to Make Tech Investments Amid Strong Sales Growth (WWD), Rated: A

In a recent poll of small- to medium-sized businesses, financial and technology firm Kabbage Inc. found high expectations for sales growth this year as well as plans to make investments aimed at automation.

Kabbage, which offers lines of credit of up to $250,000 and cites retail as its top vertical, said more than 67 percent of the brick-and-mortar retailers polled expect revenue growth of over 20 percent this year. More than 73 percent of the online retailer respondents expect the same. The survey was based on responses from 800 businesses.

Regarding automation technology, nearly 44 percent of physical store retailers have plans to make investments in this area compared with 60 percent of online retailers. With cyber security and similar fraud prevention technologies, about 44 percent of both online and physical store retailers have plans to make investments in these solutions.

 

 

 

Hundreds of Start-Ups Tell Investors: Diversify, or Keep Your Money (New York Times), Rated: A

The American venture capital industry, which invested $84 billion in more than 8,000 companies last year, has long faced little to no impetus to alter its demographics. Venture firms are usually small private companies made up of former tech executives or financial types, who are mostly male and white. And because venture firms operate with long-term horizons — their funds generally invest over a 10-year period — the industry’s pace of change is often glacial.

In 2016, 11 percent of venture capital firms’ investment partners were women, according to a survey by the National Venture Capital Association and Deloitte. The survey found no black investment partners at venture firms, while 2 percent of investment partners were Latino.

Buyers acquire taste for deposit-rich banks (American Banker), Rated: A

Total loans at banks with less than $10 billion in assets rose by nearly 17% between 2012 and 2017, surpassing the roughly 5% increase in deposits over that time, according to data from the Federal Deposit Insurance Corp.

 

NYDFS sends survey request to online lenders (National Law Review), Rated: B

The New York Department of Financial Services has sent a letter directed to businesses that the DFS “understands…may be involved in online lending in the State of New York” and that asks recipients to complete a “New York Marketplace Lending Survey” that they can access online.

The letter states that the DFS is conducting the survey to gather information for a public report that it is required to issue by July 1, 2018 and which must include information about online lenders operating in New York and their business practices, including lending practices, interest rates and costs charged, and consumer complaints and investigations about the industry.

United Kingdom

Open Banking prompts UK fintechs to reassess collaboration partners (P2P Finance News), Rated: AAA

A report from accountancy firm EY, released on Thursday, found that 59 per cent of UK fintech firms see Open Banking as an opportunity to review their collaboration strategies.

The survey of 31 UK fintech firms also found that 74 per cent of respondents believe that new competitors such as tech firms will become increasingly important over time.

The new data rules, which mandate high street banks to share anonymised customer data with approved third parties, came into effect in January 2018. Peer-to-peer lenders such as Zopa and Lending Works have already announced their plans to capitalise on the new initiative.

94 per cent of fintech firms said they were focused on enhancing their current products and services and 81 per cent said they are planning to use Open Banking to build new services.

Early Returns From Open Banking Show a Mixed Picture (Lend Academy), Rated: A

Banks have not really stepped into the new world until recently as HSBC has stated they will be set to go live with a product by early May, RaboBank is creating a mobile ecosystem and RBS has explained they are working on solutions which includes a stand alone digital bank.

Digital banks Monzo and Starling Bank have already established themselves as early leaders in the market with their open APIs. Both have created financial marketplaces to allow for easy integration and access to different banking services.

Payday lender Trusted Quid admits 66,000 customers details were stolen in data breach (The Sun), Rated: AAA

Details of 66,000 customers including phone numbers, dates of birth, addresses, loan details, employment status and bank account information, were all taken from the website.

In a statement the company said: “There has been a theft of data from unauthorised access to the Trusted Quid website.”

“The incident relates to data directly entered by people applying for a loan only on the Trusted Quid website between 1 July 2016 and 17 February 2018.”

Trusted Quid say they have made three previous attempts to contact customers affected by the data breach.

 

Feature: Is London cooling? (Mortgage Strategy), Rated: A

Research from online estate agent HouseSimple in January showed only 387 properties for sale in zones 1–2 below the magic £300,000 level, rising to just 1,235 in zone 3. For homes valued at £300,001–£500,000, there were just 7,687 in zones 1-3 that were eligible for a stamp duty cut.

BUSINESS SHOWCASE : LOANBIT (Irish Tech News), Rated: A

LoanBit is a multi-currency platform that supports everything from fiat currencies to the latest cryptocurrencies. It allows you to send money in an encrypted format and secure it with state-of-the art security measures.

LoanBit offers an armor of a protection for the lenders. It safeguards the interests of the lenders in the community by covering up to 75% of the loan.

With LoanBit you can:

  • Keep money in a multi-currency wallet,
  • Trade on the integrated exchange,
  • Invest money in cryptocurrencies, and
  • Get a loan in the currency of your choice

ISAs 2018: Innovative Finance Isa can offer rates from 5 to 10 per cent (Express), Rated: A

The Innovative Finance Isa, or Ifisa, was announced by the Government in April 2016, giving ordinary savers the opportunity to invest in growing British businesses free of tax through the growing peer-to-peer (P2P) lending market, sometimes called crowdlending.

Landbay targets 3.54 per cent, Zopa aims for 4.6 per cent a year, Ratesetter offers between3and 6 per cent and Money&Co an average of 8.6 per cent.At the riskier end of the scale the RebuildingSociety is aiming for 9.7 per cent.
China

Is Ping An China’s Most Valuable Insurer or a Tech-Investing Fad? (The Wall Street Journal), Rated: AAA

The $100 billion question for the world’s second-largest insurer: is it an insurance firm or is it a technology firm?

Shares of China’s Ping An Insurance—the biggest insurer by market value after Warren Buffett’s Berkshire Hathaway—have more than doubled in the past year, far outpacing peers. The increase in its market capitalization—of more than $100 billion—is partly due to the fast growth of its life- and health-insurance business. The value of new business last year grew 33% from 2016.

Shares Rise as PPDai Reports Revenue Growth, Stock Buyback (Capital Watch), Rated: AAA

PPDai Group Inc., an online peer-to-peer lending platform in China, reported today that its operating revenues for the fourth quarter increased more than 85 percent compared with a year earlier.

The Shanghai-based company, which completed its initial public offering in November, said during the quarter, it had a net loss attributable to ordinary shareholders of $200.4 million, or 89 cents per American depositary share. That was in contrast to income of $2.8 million a year earlier. Revenue for the three months ended Dec. 31 was $140.2 million, up from $75.7 million in the year-earlier period.

Why China Rapid Finance Limited’s (NYSE:XRF) Ownership Structure Is Important (Simply Wall St News), Rated: AAA

I am going to take a deep dive into China Rapid Finance Limited’s (NYSE:XRF) most recent ownership structure, not a frequent subject of discussion among individual investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, I will take a look at XRF’s shareholders in more detail.

Source Simple Wall Strett

Institutional Ownership

In XRF’s case, institutional ownership stands at 18.79%, significant enough to cause considerable price moves in the case of large institutional transactions, especially when there is a low level of public shares available on the market to trade.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market.

General Public Ownership

The general public holds a substantial 42.76% stake in XRF, making it a highly popular stock among retail investors.

Private Equity Ownership

Private equity firms hold a 16.12% stake in XRF.

Private Company Ownership

Potential investors in XRF should also look at another important group of investors: private companies, with a stake of 5.44%, who are primarily invested because of strategic and capital gain interests.

China toughens supervision on third party payment (xinhuane), Rated: B

Agricultural Bank of China announced in a recent notice that it would cut off the payment channel for Internet finance businesses such as peer-to-peer lending, the Xinhua-run Economic Information Daily reported.

The move followed a series of penalties levied at banks and online payment companies, which analysts said were aimed at curbing risks arising from direct clearance agreements between them.

European Union

 

Danish online lender basisbank to implement Fico Blaze Advisor (Finextra), Rated: B

With FICO Blaze Advisor decision rules management system, Basisbank risk analysts will be able to quickly make changes to credit strategies for unsecured consumer loans and point-of-sale financing in order to increase profitability and reduce the risk of loans going unpaid. Basisbank receives more than 75 percent of its credit applications from mobile devices.

International

How digital banks are raising the bar for customer experience (Tearsheet), Rated: AAA

Challenger bank N26 raised $160 million in Series C funding this week to fuel its expansion to the U.S., and other markets, later this year. Revolut, another U.K. challenger, has been planning a U.S. launch this year too and Monzo is rumored to follow.

Digital-only challenger banks have changed customer expectations, including customer service and how customers want to use financial products. Big banks are taking notice, with companies developing sub-brands to hook younger, digital-savvy customers or others — the most recent of which is rumored to be the Royal Bank of Scotland.

For Monzo, which just crossed 500,000 current account holders, the absence of physical branches doesn’t mean a lack of interaction with customers. Monzo’s approach is to release early versions of products to a group of customers and get customer feedback from within the app and through an online forum. It’s an approach that gives customers a sense of ownership and excitement about the brand. For Monzo’s marketplace beta, it sought out feedback from 3,000 customers.

India

Digital payments player paytm wants slice of P2P lending (The Economic Times), Rated:AAA

Paytm, the country’s largest digital payments company, is trying to enter the lending space and is seeking a licence from RBI to become a peer-to-peer lending platform.

According to documents sourced by ET from the Ministry of Corporate Affairs, the company moved a board resolution on February 7 saying it intends to “carry on the business of non-banking financial company — peer-to-peer”.

Authors:

George Popescu
Allen Taylor

How to Avoid the Downstream Effects of Data Breaches

How to Avoid the Downstream Effects of Data Breaches

It seems like there’s a news story almost daily about data breaches involving retailers, credit bureaus, or government entities. While many of the stories focus on the immediate consequences for consumers, the downstream effects of these data breaches can wreak havoc on online lenders and their customers. The trouble for lenders often starts when fraud […]

How to Avoid the Downstream Effects of Data Breaches

It seems like there’s a news story almost daily about data breaches involving retailers, credit bureaus, or government entities. While many of the stories focus on the immediate consequences for consumers, the downstream effects of these data breaches can wreak havoc on online lenders and their customers.

The trouble for lenders often starts when fraud teams respond too aggressively to a major data breach. By setting overly conservative identity verification screening rules, for example, lenders can end up rejecting good customers, resulting not just in the loss of immediate business but also the potential for long-term customer revenue. Once they are denied a loan that they probably should have been approved for, customers are unlikely to return and certainly won’t be likely to recommend the lender to others.

While it’s a difficult balance to strike, there are proven methods for lenders to confidently verify a customer’s identity in the era of constant data breaches. Here are three rules of thumb:

#1. Assume every identity has been compromised

In the first half of 2017, the number of data breaches climbed 29 percent. From the Republican National Committee contractor whose breach exposed voting data on nearly 200 million Americans to Verizon’s breach that affected more than 14 million customers, data hacks are increasing in frequency and severity across all industries.

The recent breach of credit reporting giant Equifax is another example. Reported by the Wall Street Journal as the largest social security data breach in history, approximately 143 million U.S. consumers’ confidential data, including social security numbers, names, birth dates, and addresses were compromised. What’s more, the breach exposed the credit card numbers of 200,000 consumers as well as “dispute documents” with personal information of another 180,000.

Because personal data of every kind is readily available to fraudsters, online lenders face significant identity verification challenges. They need smarter systems to allow borrowers to use their own (likely compromised) data while being able to recognize when criminals are using the same data illegally.

#2. Go beyond Social Security Numbers

For many online lenders, the social security number has long been regarded as a key indicator of identity. But if it wasn’t made abundantly clear by the Equifax data breach, social security numbers (SSNs) can no longer be a trusted piece of identity data. In fact, SSNs were never meant to serve this purpose in the first place. They were created solely as a way to keep track of an individual’s earnings for social security and benefits purposes.

So, what do you do if SSNs are a key customer identifier for your business? Start incorporating modern identifiers into your verification process. Those include home address, email, phone, and IP address. Better yet, verify all of these elements and link them back to the customer.

#3. Confirm Whole Identities by Linking Identity Data Attributes Together

While it’s easy to use and piece together stolen identity data, it is impossible to fabricate the linkages that effectively mimic a real person. Legitimate borrowers can be confirmed by verifying many identity data elements and ensuring they all connect to the individual behind the transaction, clearly distinguishing them from bad actors whose data elements won’t correlate properly.

Linkage analysis can include connecting name, address, phone, IP, and other non-personally identifiable information (non-PII) data.

Some positive signals include things like:

  • an email address age of more than 720 days
  • an IP address within 10 miles of the physical address
  • a match between phone and address
  • a match between email and name
  • a match between phone and name
  • a match between address and name

And common risk signals include:

  • a mismatch between linked email, phone, or address details
  • an email address less than 90 days old
  • a non-fixed VoIP or toll free phone number
  • a phone country code and physical address mismatch
  • invalid phone, email, or address info
  • a proxy IP address

Eva Casey Velasquez, President and CEO of the ID Theft Resource Center, which provides non-profit resources and support to victims of identity fraud, has recommended businesses take action with multi-factor authentication processes. “We are encouraging businesses to be fearless in their security,” she said. “At the end of the day, it is your customer base that you are helping.”

The rate of data breaches continues to pick up speed with no end in sight. Lenders that fortify their fraud management strategies with a multi-layer approach will be able to avoid reactive decision-making in the aftermath of a data breach.

Just because the personal data of your borrowers is available on the dark web doesn’t mean that verifying their identity is hard or impossible. It just means that basic identity data attribute verification won’t work and whole identity verification will be required. Your teams will appreciate their newfound ability to excel through the wake of the next data breach and your growing base of happy customers will be more apt to refer your business to a friend.

Authors:

Tom Donlea leads the global marketing efforts of Whitepages Pro, the worldwide identity verification data provider for risk management in banking and online lending. With over ten years of online payments and risk experience, he previously was the founding executive director of the Merchant Risk Council.