Tuesday March 20, 2018, Daily News Digest

fintechs

News Comments Today’s main news: Affirm intros in-store capabilities. SoFi prices first student loan ABS with medical residency refis. Experian targets non-prime borrowers with new credit score. RateSetter CEO warns of collaboration risk. Today’s main analysis: Hui Ying Financial Holdings’ 2017 financial results. Today’s thought-provoking articles: What the Senate Banking Committee bill means. Key Chinese technology players. What Europe’s investors […]

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United Kingdom

China

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United States

Affirm Introduces In-Store Capabilities (Business Wire), Rated: AAA

Affirm will partner with merchants to make Affirm financing available in-store. Now shoppers can use Affirm InStore in brick-and-mortar locations, securing credit in just seconds before they even get to the cash register, and can pay for their purchase over time in simple, fixed monthly installments. Additionally, the company announced that consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, the easy, secure and private way to pay, via the Affirm mobile app.

Affirm InStore brings the same easy experience shoppers and retailers have come to expect online to the point-of-sale in brick-and-mortar locations. Affirm gives merchants two flexible options: they can integrate the Affirm InStore API (application programming interface) with their Point Of Sale (POS) system or use Affirm’s expanded virtual card experience.

According to a survey conducted by Affirm, this can impact a retailer’s brand even if the financing product is offered by a third party. Fifty-five percent of respondents said they would think less favorably of a brand that offers a financial product that can be harmful to consumers.

Affirm’s platform makes it possible for shoppers to pay for purchases over multiple-month terms with simple interest loans that don’t charge compounding interest or late fees. And, unlike most credit lenders that base loan decisions on a consumer’s credit score and income alone, Affirm takes a more sophisticated approach, using data science in credit-scoring algorithms that combine credit history and other relevant factors to assess creditworthiness.

Affirm, a startup founded by PayPal co-founder, just launched Apple Pay Credit Card without the plastic (Tech Startups), Rated: A

Affirm now has more than 1,000 merchants using its service.

The company is going after the millennials with a new type of credit card, without plastic and only available online. The company announced today the launch of Affirm virtual card to Apple Pay Credit Card without the plastic. With Affirm Virtual Card, consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, via the Affirm mobile app. With the virtual card, Affirm is reinventing credit with alternative to traditional credit cards and making its micro-lending program available through Apple Pay and letting customers use their iPhones to pay in brick-and-mortar stores.

SoFi prices 1st student loan ABS with medical residency refis (American Banker), Rated: AAA

Social Finance’s second private student loan securitization of the year, which priced Friday, is also its first to include loans refinancing the debt of medical residents.

Loans refinancing the debt of medical residents and fellows account for approximately 5% of the collateral for the original collateral for the transaction, SoFi Professional Loan Program 2018-B Trust, according to rating agency presale reports. The collateral for the deal was upsized, to $900 million from $700 million originally, in response to strong demand, though investors demanded slightly higher spreads on the senior notes compared to SoFi’s previous student loan securitization, completed in January.

Experian Releases a New Credit Score Aimed at Non-Prime Borrowers (Lend Academy), Rated: AAA

The ranks of thin file consumers continues to grow in this country. According to Experian these consumers now number 25% of the total U.S. population. These are people with five or fewer items in their traditional credit history.

Since the acquisition they have worked with the Clarity Services team to build a new score specifically for the non-prime segment. They are calling it the Clear Early Risk Score. As the name implies this new score is designed to give lenders a clearer view of the risk of these thin file consumers, many of whom should not be categorized as subprime.

When I asked Alex how this new score will be used in conjunction with their traditional FICO score he said it will be used in two ways:
1. When the consumer has no traditional file and therefore no credit score it will be used as an independent score.
2. The consumer may be originally scored as subprime and this new score could provide new  information that may lead to a different conclusion regarding risk.

 

 

 

Here’s what the latest Senate bill means for US fintech (Business Insider), Rated: AAA

A bill that the Senate Banking Committee has been drafting for several years, designed to reduce the regulatory burden for small- and mid-sized US lenders, received bipartisan approval in the Senate on Wednesday with a 61-38 vote.

The bill’s proposals include raising the threshold for the Dodd-Frank definition of a “systemically important” lender from $50 billion in assets to $250 billion, thus absolving smaller banks from strictures like annual stress tests; absolving banks with under $10 billion in assets from the Volcker Rule; and allowing small banks and credit unions to report less of their mortgage loan data, among other things.

Source: Business Insider

U.S. Online Merchants Believe Instant Financing Will Drive Increased Sales (PR Newswire), Rated: A

Online merchants in the U.S. are increasingly recognizing the importance of offering instant financing to shoppers, according to a new online e-commerce survey. Nearly two-thirds of retailers polled (64 percent) believe providing online financing options through their store is important to driving new and increased sales. Forty-six percent indicate it would decrease cart abandonment – still one of the most critical challenges for online retailers today.

The merchant survey, which recognizes the importance of instant financing among online retailers, corresponds with consumer attitudes as revealed in a Klarna-sponsored survey last year that showed:

  • Three quarters of consumers (75 percent) indicate preference for online merchants offering instant financing
  • 39 percent said they would spend more money if given instant credit options when purchasing goods and services online
  • 28 percent would be very likely or completely likely to change merchants in order to use instant financing
  • Nearly half of respondents (47 percent) would like to be presented with an instant financing option while shopping online

THE QUANTS, THE ALGORITHMS, AND THE PERFORMANCE (All About Alpha), Rated: A

In the forthcoming paper he contends that with only “a tiny handful of exceptions” (read “Renaissance”) such trading doesn’t produce exceptional results. The problem goes far beyond what one addresses by saying that the field is new and still developing, that machine learning will get better, that Big Data will get even bigger, and so forth.

Heaton asks us to contemplate Citadel LLC. This huge hedge fund “returned only about 13 percent in 2017,” which was short of the S&P 500 gain. Yet the S&P gain would have been “available quite inexpensively to anyone with the money to open an account at Vanguard Group.”

Does Citadel compensate for underperformance in bull markets by preserving capital in bear markets? Heaton says that it does not, “Citadel fell nearly 60 percent in 2008, far more than the S&P 500 index.”

Composing Architecture for Growth (Lendit), Rated: A

The same technology that is influencing this change is also making it possible to deliver that experience at a fraction of the time and cost it would take with older technology.

This ‘right’ technology means embracing cloud-based services and an API-enabled composable architecture.  Today, building an architecture is quick and cost effective, particularly through the use of cloud technology.  Rather than having to buy, build, and maintain a collection of poorly-connected systems, an API-enabled composable architecture lets institutions leverage services built on a flexible yet secure infrastructure.

A composable API-driven architecture is necessary to tap into the full potential of cloud technology. The traditional approach is all or nothing, build an end-to-end solution which relies on a single vendor which would be responsible for the implementation.  But the composable approach embraces thinking that one company cannot focus on everything and be the best at it.  The architecture can be divided in small pieces and managed through life cycles separately and tested, removed or replaced without risk.

Everlasting Capital Grows from a Basement to Inc.’s 500 List (deBanked), Rated: A

“I was making $267 a week at the pawn shop and I was having to ask friends to help me pay my rent for a room,” Feinberg said. “So at that point, I realized that something needed to change.”

That question prompted Feinberg to present to his brother and Murphy the idea to start a finance company. Feinberg said he drew up a business plan in a day and a half and his brother and Murphy agreed to give him $3,000 to start the company. That was November of 2012.

And it did. After a year, Feinberg’s company, Everlasting Capital, made $110,000 in commissions and $3.5 million in volume. Within that first year, he also hired three people and moved from the basement of the pawn shop in Rochester, NH to a 600 square foot office in the same town.

This lightning fast trajectory is by no means common. That’s why Everlasting Capital made it onto 2017’s Inc. 500 list, the iconic list of America’s fastest growing private companies. By year two, Everlasting Capital earned $640,000 in commissions, generating $14 million in volume, and by year three it earned $1.6 million in commissions with $18 million in volume.

A Conversation with Lendup’s CEO Sasha Orloff and Vice President Jotaka Eaddy (The Financial Revolutionist), Rated: A

We were happy to connect with LendUp’s co-founder and CEO Sasha Orloff and Jotaka Eaddy, the company’s vice president of policy, strategic engagement and impact. Orloff, Eaddy and the rest of the LendUp team are clearly mission-driven professionals who want to put borrowers on the pathway to better financial health.

The Financial Revolutionist: Sasha and Jotaka, it’s great to see you again. Sasha, I know you started the company in 2011 with your step brother, Jake. When did you start making loans?

Sasha Orloff:    Thanks Gregg. We recently hit our six-year anniversary of our first loan. Although Jake and I “started” the company in 2011, LendUp was really born after coming out of Y Combinator’s Winter 2012 class.

FR:     Is access to credit a civil rights issue that needs more attention?

JE:    Absolutely. It’s just that some of the blatant racism that’s confronting our nation these days takes center stage on TV and social media. But historically, race has played a major role in accessing credit and how people are marginalized when trying to access it. Plus, when you look at the predatory products across this country, they are heavily marketed to poor communities. So yes, safe access to credit is an important issue for me — and should be for everyone — and LendUp is on the right side of it.

OCC once wanted payday lenders to ‘stay the hell away’ from banks. No longer (American Banker), Rated: A

More than a decade has passed since federal regulators cracked down on partnerships between payday lenders and banks that had been designed to circumvent state interest rate caps.

Now the Office of the Comptroller of the Currency, operating under newly installed leadership, has taken a notable step in the opposite direction.

The agency said Friday that it has terminated a 2002 consent order with Ace Cash Express.

South Dakota is an example of a state that could be impacted. Sixteen months ago, the state’s voters approved a 36% interest rate cap. Critics of payday lending worry that federal banking regulators may effectively overturn such laws, and that last week’s decision by the OCC is a step down that path.

Goldman Sachs Adds LPL Financial to Its Securities-Lending Business (US News), Rated: A

Goldman Sachs Group Inc has signed LPL Financial Holdings, the largest U.S. independent broker-dealer by revenue, to its securities-based lending platform, the bank said on Tuesday.

Called GS Select, the platform was launched last year as a way for the Wall Street bank to target borrowers who have less than $10 million in investable assets. GS Select issues loans worth $75,000 to $25 million that are collateralized by the borrowers’ investment portfolios.

Goldman’s typical wealth clients have at least $50 million in assets.

Questions raised as robo advisers hire humans (FT Advisor), Rated: A

Robo-advice firms offering automated financial advice have begun incorporating human advisers into their service, raising questions about how this will impact their business models.

Schroders-backed Nutmeg is currently looking at introducing human advisers into its service, while rival Scalable Capital, in which Blackrock has a large minority stake, has recently done just that.

Cerberus completes Cyanco acquisition (PE Hub Network), Rated: B

Cerberus Capital Management, L.P. today announced the completion of the previously announced acquisition of Cyanco Holding Corp. by a Cerberus affiliate from funds managed by Oaktree Capital Management, L.P. The transaction closed on March 16, 2018.

Cyanco will continue to be led by its current management team. As part of its investment, Cerberus will be putting in place a new board of directors for Cyanco. The new board will be chaired by Daniel Ajamian, an executive who has been Chairman of several other Cerberus portfolio companies.

Here Are 7 Atlanta Startups That Have Raised More Than $ 100 Million in Funding (Atlanta Inno), Rated: B

Kabbage, a FinTech company that connects small businesses with capital they need, is sitting pretty at $1.6 billion in total funding acquired since its debut on the Atlanta credit scene in 2009. Kabbage was recently in the news after the lending startup announced that, in the wake of the Parkland shooting, it would stop processing loans to assault-style weapons manufacturers.

Greensky, a consumer lending company which offers paperless solutions and financial services to businesses, secured a total of $350 million in funding in just two rounds.

 

United Kingdom

RateSetter CEO warns of ‘risk’ of collaboration over competition (Peer2Peer Finance), Rated: AAA

At the Innovate Finance Global Summit at London’s Guildhall, Lewis warned that if the two cohorts solely collaborate, there would be little visible change from the viewpoint of the consumer.

“The technological advances being made are unstoppable; the question is who is going to take them to market,” he said on Monday.

There have been an increasing number of partnerships between fintech firms and the very incumbents that they are trying to disrupt. US investment bank Goldman Sachs has acquired a number of innovative start-ups through its online lending platform Marcus.

report released last month from consulting firm Capgemini and corporate networking website LinkedIn found that more than 75 per cent of fintech firms cite collaborating with incumbent firms as their primary business objective.

 

The state-backed Royal Bank of Scotland (RBS) is working on secret plans to create a standalone digital bank to compete with emerging British fintech champions including Monzo and Revolut.

Sky News has learnt that RBS has assigned one of its top executives to the project, which is so confidential that few people inside the company are aware of its existence.

RBS has already struck agreements with a number of leading fintech companies such as Funding Circle, with which it works to direct customers to peer-to-peer and other providers of alternative finance.

 

LendInvest launches second retail bond offer (Bridging & Commercial), Rated: A

The online platform for property finance has issued a five-and-a-half year 5.375% fixed rate retail bond due October 2023.

Payments under the bond will be guaranteed by LendInvest and the bond will be secured by way of a floating charge over the whole of the undertaking and all property, assets and rights, both present and future, of the issuer.

LendInvest’s first retail bond – which trades on the London Stock Exchange – raised £50m from a broad base of retail and institutional investors.

As of 31st December 2017, the bond was 99.6% utilised, with an interest coverage ratio of 192% and a weighted average LTV ratio of 57%.

Letter: Build a brighter future (Watford Observer), Rated: A

My suggestion was Funding Circle, which enables businesses to access finance independent of their banks and allows them to receive funds within a couple of weeks, compared to up to three months with a traditional bank loan.

It’s been a tried and tested investment since August 2010 and there are currently 18 councils investing through the Funding Circle platform, and the amounts invested vary from £1,000 to £2 million.

The Funding Circle minimum a council could lend to a business is £20, so Funding Circle suggests lending £2,000 would allow a council to lend to at least 100 businesses, lend no more than 1 per cent of the portfolio to each business.

What recent IPOs reveal about the state of fintech (AltFiNews), Rated: A

Over the last week or so we’ve seen not one but two fintech focused venture capital style listed funds list on the London market: Augmentum Fintech raised £94m while TruFin hit the market with a £70m valuation. Both of these funds have their own unique characteristics although perhaps the most interesting information from the listings is what they reveal about the likely worth of the alternative finance space in the UK.

The fund’s 15 per cent stake in Zopa, by contrast, seems a little more tangential though it’s also the single most valuable asset in the fund.

City of London and Innovate Finance Launch Fintech Strategy Group (Crowdfund Insider), Rated: B

The City of London Corporation and Innovate Finance have jointly announced the launch of the Fintech Strategy Group (FSG) to help continue the success of the UK Fintech sector. According to Innovate Finance, the group will combine senior industry leaders across the sector including banks, regulators, and innovative Fintech startups.

The purpose of the FSG is to foster a collaborative dialogue on the future of UK Fintech – a vital issue as Brexit weighs on the financial services industry.

 

 

China

Chinese Tech Major Key Players – Tencent, Vipshop, Weibo, and Yirendai Market Analysis & Forecast 2017 to 2022 (Digital Journal), Rated: AAA

China’s government is intent on upgrading its manufacturing sector and leading the world in a range of advanced technologies. Implicit in its “Made in China 2025” 10-year plan is the notion that China will displace the US as the world’s dominant technological power.

The US is likely to remain a leader in all major advanced technologies over the next decade, with Baidu the only Chinese player equipped to challenge the US’s lead in next generation technologies such as AI. There are signs though, that China is closing the overall gap faster than we expected.

This report researches the state and thrust of Chinese technology over the next two to five years and what it implies for global technology investors.

Hui Ying Financial Holdings Corp. Reports Fiscal Year 2017 Financial Results (Markets Insider), Rated: AAA

Revenues increased by 88.4% to $46.5 million and loans facilitated through platform increased 59.9% to over $1.3 Billion

Source: Markets insider
  • Total loans facilitated through our platform increased by 59.9% to $1,308.7 million for the year ended 2017 from $818.5 million in 2016, as China’s online peer-to-peer lending platform industry continued to grow significantly during 2017, coupled with an increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace. This led to accumulated value of loans facilitated through our platform in the aggregate amount of $2.87 billion since the launch of our marketplace in December 2013 through the end of 2017.
  • We had 8,047 borrowers and 69,232 investors participated in an aggregate of 23,263 loans during 2017, compared to 1,067 borrowers, 39,999 investors and 8,739 loans during 2016. As of the end of 2017, we had 367, 893 registered investors and 24 cooperative partners who frequently serve as guarantors of loans on our platform.
  • Total revenues increased by 88.4% to $46.50 million for the year ended 2017 from $24.68 million in 2016, as a result of an increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fees, loan repayment management fees and financing income from entrusted loans were $26.70 million$18.21 million and $1.58 million, respectively, for the year ended 2017 compared to $17.49 million$7.19 million and nil, respectively, in 2016.
  • Net income increased by 344.1% to $15.27 million for the year ended 2017 from $3.44 million in 2016. Diluted earnings per share was $0.21 for the year ended 2017, compared to $0.05 for 2016.

Blockchain startups are overvalued: Q&A with Anju Patwardhan, Managing Director at CreditEase China (Technode), Rated: B

Blockchain technology is in full swing. Baidu, Alibaba, and Tencent are all vigorously investing in blockchain technology and Chinese VCs are fishing for blockchain tech companies. What’s more, the Chinese government is also poised to educate Chinese people about this booming technology. However, that doesn’t mean that all blockchain projects are viable.

With a $500 million fund and another RMB fund with the same amount, CreditEase Fintech Investment Fund is investing in fintech companies, mostly participating in B and C rounds.

European Union

Here’s what investors in France, Spain and Italy are up to (GooRuf), Rated: AAA

Lendix is one of the leading European players in the crowdlending sector for SMEs and although it is not yet active in the UK or outside of Europe, it sure is expanding fast.

So what are investors’ preferences?

– The French investor prefers grade A projects with a duration of 37 to 48 months.
– Spaniards are the most risk-averse and tend to invest more in projects with A and A + grades, but are not opposed to longer durations.
– Italian investors are the most risk-prone: they prefer B rated projects but with shorter durations (0-24 months).

This data shows that the Lendix community invests 11% more on A, A + and B + projects than on B or C ratings. Moreover, the duration seems to have a relative impact in terms of amounts invested, even if investors are more attentive to this parameter in the case of small projects (amounts up to 100,000 euros). In general, the community invests 32% more in long-term projects.

These 2 brothers just declared a mortgage price war – and Sweden is going nuts (Business Insider), Rated: A

Sweden’s mortgage industry is today worth around 3 trillion krona ($370 bn), according to Statistics Sweden, and most of the interest on these loans end up in the pockets of big banks.

A new fintech venture called enkla.com has today launched a potentially game-changing service. The Swedish online lender offers consumers a 0.95% fixed mortgage rate for three years, which is considerably less than the 1,6% average for similar loans among Sweden’s major banks, according to Di Digital.

Enkla’s self-stated goal is to borrow 100 billion SEK ($12,2 billion) worth of mortgages in the next 18 months by issuing mortgage bonds on the international markets, Di Digital writes. If the target is met, Enkla.com would be looking at a 3 percent share of the Swedish mortgage market.

The service enters a market where Sweden’s household debt has exploded from 66 percent to 87 percent of GDP in the past decade, driven by soaring housing prices. Consumers are evidently hungry for a cheaper deal than what banks can offer. Currently, Sweden’s four biggest banks – Swedbank, Nordea, Handelsbanken and SEB – have 75 percent of the country’s mortgage market, Breakit reports.

Enkla.com takes a 0,35% cut on the mortgages.

Beyond data sharing, open banking boosts omnichannel payments (PaymentsSource), Rated: A

In Europe the move to open banking has been driven by regulations such as the revised Payment Services Directive PSD2 and General Data Protection Regulation (GDPR), which compel banks to open their core systems to allow customers to control and release their data to third parties delivering added value services.

In other territories with no regulatory imperative, the drive towards open banking is led by the desire to provide the best customer experience, with added value services, new business models and connected marketplace products from third parties and vice versa. To do this, the application programming interfaces (APIs) of the bank will need to be open and connected to external providers. And cloud technologies will be fundamental in enabling this to become a reality.

International

Tech and Global Money Transfers: Why We Need Each Other (Canstar), Rated: AAA

Digital disruptors such as peer-to-peer lending services, mobile apps and blockchain have shifted the market, offering borderless accounts combined with speed and transparency.

Powering these disruptors are new technologies like artificial intelligence, big data and robotics, which are changing the customer experience; providing unprecedented insights into customer behaviour that help deliver a more seamless money transfer experience.

The World Bank predicts the value of global remittances will grow by 3.4% to USD$616 billion in 2018. In order for the industry to continue to thrive, businesses will be better served by coming together to redefine the future of money transfers.

A bitcoin trading firm just opened up a lending business — and it’s going gangbusters (Business Insider), Rated: A

Bitcoin might be in a bit of a slump, but one brand new bitcoin business is going gangbusters.

Genesis Capital, the recently launched subsidiary of market making firm Genesis Trading, has close to $100 million in loans outstanding, a person familiar with the company’s operations told Business Insider. That’s a striking milestone, considering the business was launched two weeks ago.

It gives out loans worth $100,000 or more in cryptocurrencies including bitcoin, ether, and bitcoin cash. BlockTower Capital, a cryptocurrency hedge fund, and DV Chain, a crypto trading firm, are some of Genesis’ clients, according to people familiar with the matter.

Autonomous NEXT estimates the number of crypto funds has increased to 226. That’s up from approximately 50 at the end of August 2017. In total, they manage approximately $3.5 to $5 billion, a tiny fraction of the $3.2 trillion managed by traditional hedge funds.

What are the technology trends to look out for in 2018? (Investment Week), Rated: A

One key trend at the forefront of the digital space is artificial intelligence (AI). Some estimates predict that the AI market could grow from $5bn to $120bn by 2025.

A report from digital consultancy Juniper Research, has found that annual cost savings derived from the adoption of ‘chatbots’ in healthcare will reach $3.6bn globally by 2022, up from an estimated $2.8m in 2017.

The UK is leading the way when it comes to peer-to-peer lending, and is one of Europe’s largest alternative finance markets at £4.9bn, according to the University of Cambridge’s Judge Business School.

 

Fintech: partner, build, or buy? (Banking Exchange), Rated: A

“Fintech” covers many things, but is often used to refer to nonbank firms that leverage cutting-edge technology to deliver financial services directly to consumers and businesses. In that sense, banks initially viewed fintechs as competition, as they compete for lending, personal finance, payments, and other consumer services.

1. What’s the problem to be solved?

Sounds like common sense, but a fintech partnership should necessitate an extensive evaluation of the underlying need, such as filling in product or service gaps, or, in this bank example, offering borrowers a digital channel for applying and getting to closing quicker on a commercial loan as their primary competitors offered. Clear objectives help the bank and fintech determine if the match is on solid ground from the start.

A fintech partnership should offer the bank an upside—quantitative and qualitative—that simply isn’t available at more favorable cost, risk, and performance measures under the build or buy options.

2. What’s the difference between buying vs. partnering with a fintech?

Is it a shared risk and shared reward? Does the reward justify the risk? Or is it just the innovation culture of the third party? The definition is critical as the process of evaluating a fintech’s performance, costs, and risks entails unique considerations from a typical vendor evaluation.

Many partnerships are really just vendor relationships. That’s okay. In many cases, banks with extremely low risk appetites prefer the typically lower risk of a vendor relationship. One fintech exec noted how impossible it is to run many banks’ risk gauntlets because they don’t understand what they are getting into.

Asia

Indonesia eyes banking boom (Asean Economist), Rating: A

Indonesian banks will enjoy “more than 12 per cent” loan growth this year due to a recovering global economy and rising commodity prices, according to Jakarta’s financial regulator.

Loan growth in Indonesia has fallen below 10 per cent since early 2016, compared with more than 20 per cent during the preceding commodity boom.

MENA

Interview with Ahmed Moor, CEO of Liwwa (P2P Banking), Rated: A

What is Liwwa about?

liwwa is a marketplace lending platform that provides funding to small and medium businesses in Jordan. Our mission is to support job and income growth in the region. To date we have underwritten about 10 million USD in loans. This has helped to create 475 jobs in Jordan, 1.77 million USD in income, and 13.05 million USD in economic output.

What are the three main advantages for investors?

The type of investors we target are financially-savvy professionals who already have a portfolio of investments. They are attracted to our service because it is a way for them to further diversify their existing portfolio. The other advantage is that there are no big barriers to testing out the platform – provided he meets certain basic criteria, anyone can register and there is no minimum amount required in order to start lending.

What are the three main advantages for borrowers?

There is a 240 billion USD capital access gap in the MENA region. For borrowers, we provide a much-needed alternative to bank financing.

Canada

BMO launches banking chatbot with Finn.ai (Fintech Futures), Rated: A

The chatbot – called BMO Bolt – is available via Facebook Messenger, which is Canada’s “top messaging platform”, according to Finn.ai.

84% of the country’s population uses a smartphone to access Facebook and 38% performs mobile banking tasks via mobile phones, the vendor adds.

Authors:

George Popescu
Allen Taylor

Thursday December 7 2017, Daily News Digest

Robinhood

News Comments Today’s main news: Credible raises $50M in Australian IPO. Kabbage considers IPO. Blockchain project gives New York homeless a digital identity. Funding Circle surpasses $5B global lending, $1B to U.S. businesses. RateSetter publishes 2016-17 accounts. Starling Bank gets full FCA, PRA approval. N26 launches premium debit card, partners with WeWork. Revolut rolls out bitcoin services. Vietnam gets first P2P lending platform. IOU […]

Robinhood

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United States

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International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

Kabbage Mulling An IPO (Seeking Alpha), Rated: AAA

According to FT Partners, the FinTech market saw a record 412 financial deals during the third quarter of 2017. One of the largest deals in the quarter involved a $250 million investment by Softbank (OTCPK:SFTBY) in billion-dollar unicorn Kabbage (Private:KBGE).

Kabbage generates revenue from the fees on the loans. It expects revenue of over $200 million in 2017, roughly double the revenue in 2015. The company claims to have a loss rate lower than the rest of the industry, and that its direct lending business had turned profitable in the fourth quarter of 2016. It expected the whole business to be profitable in the second half of this year.

Kabbage plans to use the funds for expansion into Asia and build new products like insurance and payroll services. It will also be positioning the company for a possible IPO.

Securitizations Securing the Future (Lending Club), Rated: AAA

As we near year’s end, we’re excited to announce that LendingClub has closed its third self-sponsored securitization. The $330 million transaction saw immediate traction and has further increased access to consumer credit for the stable and scalable pool of investor capital in the liquid Asset-Backed Securities (ABS) investor market.

Of note, with 48 total securitization investors this year, over two-thirds 34 are new to LendingClub, including insurance companies, hedge funds, a bank and a pension fund.

We Analyzed 7 Of The Fastest-Growing Personal Finance Apps Of All Time To Figure Out The Secrets To Their Success (CB Insights), Rated: AAA

Ninety-two million millennials will soon be in what Goldman Sachs calls their “prime spending years.” In aggregate, they command $1.3 trillion in annual spending.

(Bankrate found 83% of millennials don’t think they’ll ever retire: they simply “don’t think they’ll have the money” to do so.)

Source: CB Insights

For three of the tools we looked at — Mint, Level Money, and Check — we studied how their product evolved all the way up to their acquisition (by Intuit, Capital One, and Intuit, respectively).

Source: CB Insights

What follows are the results of our analysis — six secrets to success in the world of personal finance management.

1. Use pre-launch marketing to build both trust and hype

Mint had by far the most significant growth in its valuation — from $0 to $170M in just two years.

Source: CB Insights

2. Making the first experience valuable

Keeping users around is hard: according to Localytics, the average mobile app loses 80% of its users within just three days of download.

The best apps retain about 70% of users after three days. The next-best retain about 60%.

Source: CB Insights

3. Design for The Specific User You Want

Source: CB Insights

Millions Are Hounded for Debt They Don’t Owe. One Victim Fought Back, With a Vengeance (Bloomberg), Rated: AAA

A few minutes later, Therrien’s phone buzzed. It was the same guy. He gave his name as Charles Cartwright and said Therrien owed $700 on a payday loan. But Therrien knew he didn’t owe anyone anything. Suspecting a scam, he told Cartwright just what he thought of his scare tactics.

Therrien had been caught up in a fraud known as phantom debt, where millions of Americans are hassled to pay back money they don’t owe. The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

The problem is as simple as it is intractable. In 2012 a call center in India was busted for making 8 million calls in eight months to collect made-up bills. The Federal Trade Commission has since broken up at least 13 similar scams.

This New Blockchain Project Gives Homeless New Yorkers A Digital Identity (Fast Company), Rated: AAA

Three thousand homeless people in New York are about to receive a special holiday gift: a free smartphone that allows them to manage their digital identity, access shelters and food pantries, and make use of financial services.

The project comes from Blockchain for Change, a New York City startup that has developed a mobile app called Fummi that’s preloaded on the phone. It has teamed up with Life Wireless, which provides phones to low-income groups using federal subsidies. Also involved are NYC service providers like Urban PathwaysPart of the Solution (POTS), Hakook, and the Robin Hood Foundation.

Life Wireless is distributing the phones, starting in the Bronx. The service groups create the blockchain identities for individuals. Once on the system, they can then open an account, receive money, and track their activity.

Blockchain for Change has raised more than $500,000 in a seed round, but it’s also planning a public initial coin offering where it hopes to raise up to $50 million. It generates revenue by charging fees to users at a rate of $3 per month.

On Earnings Calls, Which Tech Company Are Senior Execs Most Obsessed With? (CB Insights), Rated: A

More than Google, Apple, or Facebook, there’s one company that CEOs and public company execs are talking about the most. We analyzed earnings call transcripts to identify the new king of technology.

Amazon has been mentioned nearly 3000 times in the last year.  That’s more than Facebook, Apple, and Microsoft combined.

Source: CB Insights

 

Global Debt Registry joins Wall Street Blockchain Alliance (Finextra), Rated: A

Global Debt Registry (GDR), the asset certainty company, today announced its membership to The Wall Street Blockchain Alliance (WSBA).

WSBA is an industry non-profit trade association created for financial market professionals, by financial market professionals. The alliance engages market participants, regulators, policymakers and technology innovators to advocate the adoption of blockchain’s distributed ledger technology.

Discover Enables Apple Pay Cash (PYMNTS), Rated: A

Discover has announced that transactions made with Apple’s new Apple Pay Cash card will leverage the Discover Network.

The card is part of the new Apple Pay functionality, which allows U.S. customers to quickly, easily and securely send and receive money among friends and family. When Apple customers receive money on a supported device, the money is added to their new Apple Pay Cash card. They can use the money instantly to pay someone or to make purchases using Apple Pay in stores, apps and on the web.

Payday lender Curo to launch in New York with $ 620m valuation (Financial Times), Rated: A

One of America’s biggest payday lenders is launching on the stock market with a $620m valuation, cashing in on mounting hopes that the Trump administration and Republicans in Congress will ease regulatory restrictions on the sector.

Curo Group, which targets “underbanked” consumers and is behind WageDayAdvance in the UK as well as Speedy Cash in the US, begins trading on the New York Stock Exchange on Thursday.

Shares in the private equity-backed company were priced on Wednesday evening at $14 per share, according to Bloomberg data.

Jury Convicts Online Lender Of $ 220M (Mondaq), Rated: A

Recently, a Manhattan federal jury convicted Richard Moseley Sr., the head of an online network of payday lenders and loan servicers, on charges of wire fraud, aggravated identity theft, and violating the Racketeer Influenced and Corrupt Organizations Act and Truth in Lending Act, among other counts.

Moseley was convicted due to his leadership role over a vast and complicated system of interrelated companies that collected over $220 million from more than 600,000 borrowers and deceived regulators in the process. Convincing state and federal regulators and even his own lawyers that his companies were based offshore and not bound by U.S. law, Moseley coordinated a network of lenders and loan servicers that routinely misled both consumers and regulators.

Instamotor Customers Can Now Apply for Financing While Shopping For A Used Car (BusinessWire), Rated: A

Instamotor, the free online used car marketplace, announced today that its customers can now apply for and receive financing for vehicles on its platform.

An estimated 54% of used car buyers need financing according to Experian. By working with leading direct-to-consumer automotive lenders, Instamotor will become one of the few true automotive marketplaces to enable its users to shop for a used car and secure the financing more than half of them will need, all conveniently integrated in one place.

Loans enabled through Instamotor will be available to consumers with FICO scores as low as 500, which are people who commonly have trouble receiving optimal loan terms through traditional financing methods. Also, the application is optimized to be completed entirely in the comfort of one’s home rather than in a dealership office or credit union.

Lendio Opens New Franchise in Nashville (Crowdfund Insider), Rated: A

Marketplace lending platform Lendio, recently announced its has opened its new franchise located in Nashville, Tennessee. Lendio revealed that its franchise program makes accessing business loans easy by helping small business owners skip the legwork of looking for a small business loan.

Progressive Leasing and Marqeta Partner to Power New Lease-to-Own Financing Experience (BusinessWire), Rated: A

Marqeta, the open API payment card issuing platform, and Progressive Leasing, a virtual lease-to-own company and a division of Aaron’s, Inc., today announced a technology partnership that will enhance the checkout process for Progressive Leasing customers.

As one of the largest players in the lease-to-own industry, Progressive Leasing sought a partner who could support their needs today and provide innovative solutions to help build their future payment checkout roadmap. Through the partnership, Marqeta will enable Progressive Leasing to issue virtual cards at the point of sale and work with them to create additional innovative payment offerings.

With the partnership, Marqeta will enable Progressive Leasing to take advantage of a wide range of modern features, including virtual card issuance, tokenization, and its patent-pending Just-in-Time (JIT) Funding, allowing Progressive Leasing to authorize and reconcile transactions in real time.

Real estate crowdfunding expands into more niche markets (Curbed), Rated: A

To those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds online, crossing Kickstarter with construction. A pair of six-story towers connected by a skybridge, the commercial project does in fact resemble a hand weight, with an ostentatious, colorful Italianate pattern sprawled across the facade for extra impact.

Funded in part by investors who pooled money via the Crowdstreet crowdfunding platform, the building, located in a former industrial neighborhood called Burnside Bridgehead, is also open for business and looking for tenants. It’s the city’s first crowdfunded building, and a sign that the growing world of real estate crowdfunding has developed and matured since a 2012 change in investment regulations made these platforms possible.

While reliable numbers about this growing and fragmented market prove difficult to come by, research firm Massolution estimated the global market for real estate crowdfunding surpassed $3.5 billion in 2016.

Hope grows that a larger SEC crackdown on ICOs is coming — and soon (TechCrunch), Rated: A

More than $3 billion has been raised through so-called initial coin offerings so far in 2017.

That wait-and-see stance looks to evolve into much more action in 2018, suggest those who’ve either spoken with the Securities and Exchange Commission or otherwise have a vested interest in its rulings. (The SEC isn’t commenting publicly on its specific plans.)

Just Friday, a new division of the agency that’s focused on ICOs filed charges against an outfit called PlexCoin that reportedly raised $15 million from thousands of investors by promising a 1,354 percent return in 29 days or less.

Credit score row as FICO chief hits out at banks over ‘Fako’ rivals (Financial Times), Rated: A

A row has erupted over credit scoring after the head of FICO, the company whose metric underpins trillions of dollars in lending decisions in the US, hit out at some lenders for supplying customers with a rival measure he dismissed as “Fako”.

The group that supplies lenders with the rival assessment, VantageScore, hit back, saying Mr Lansing was spreading “misinformation aimed at discrediting FICO’s only real competitor”.

The spat points to the opacity of credit scoring, a crucial part of America’s consumer finance economy that is in the spotlight after the huge data loss at the credit reporting company Equifax.

Tips for Reducing College Costs (Earnest Email), Rated: B

Source: Earnest

Roostify to Integrate With Black Knight’s LoanSphere Empower Loan Origination System (BusinessWire), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced that it has signed an agreement with Black Knight, Inc. (NYSE:BKI) to integrate its platform with Black Knight’s LoanSphere Empower loan origination system (LOS). The integration will enable Empower users to add further efficiency and transparency to the loan origination process – from application to closing.

Envestnet | Yodlee Incubator Unveils New Class of Fintech Disruptors (Business Insider), Rated: B

Envestnet | Yodlee(NYSE: ENV) today announced the members of the newest Envestnet | Yodlee Incubator class.

The members of the 2017–2018 Envestnet | Yodlee Incubator class are:

  • Amplifunds helps donors find non-profits that match their interests and performance expectations.
  • Datasine turns transactional data into psychometric insights, allowing banks to better serve their customers.
  • Golden helps families care for their senior parents’ financial health, wealth and security.
  • Peanut Butter offers a cloud-based software to help employers attract college-educated talent by managing student loan assistance programs.
  • Starbutter AI makes text and voice chat Artificial Intelligence (AI) agents that help consumers pick financial products like credit cards and mortgages.
  • Stessa enables property owners to manage, track, and communicate performance of their real estate assets.
  • Tangello improves home affordability by bridging the gap between renting and buying and offering a flexible, lower cost, and quicker way to finance homes, directly from mobile devices.
  • Veryfi provides mobile-first bookkeeping software that empowers business owners by automating the tedious parts of accounting through AI and machine learning.

AutoGravity Names Sheng Wang As Chief Technology Officer (PR Newswire), Rated: B

AutoGravity has announced the appointment of Sheng Wang as Chief Technology Officer (CTO) to drive the company’s global engineering efforts. Wang joins AutoGravity’s executive team with responsibility for leading product and engineering to deliver a trustworthy and innovative car buying experience that empowers the consumer.

Prior to her appointment as CTO, Wang led AutoGravity product development as the company’s first Director of Product, building cross-functional teams to develop and launch the award-winning AutoGravity platform, as well as branded platforms for Volkswagen Credit and Kia Motors Finance. Wang joined AutoGravity with more than fifteen years of leadership experience in the technology industry and an uncompromising dedication to building dynamic teams and high-impact products that people love.

QCash Financial Wins Financial Times Future of Fintech Awards for the Innovation Category (BusinessWire), Rated: B

QCash Financial, a Credit Union Service Organization (CUSO) providing automated, cloud-based small-dollar lending technology for financial institutions, announced that it was selected as the winner of Financial Times Future of Fintech Innovation Award.

The FT Future of Fintech awards recognize pioneering companies able to demonstrate innovative ideas capable of creating lasting change in the financial services sector on a global scale. Financial Times offers an Innovation Award for newer Fintech companies that are bringing out novel solutions. QCash Financial was awarded the Innovation Award.

United Kingdom

Funding Circle passes $ 5 billion lent globally, including $ 1 billion lent to US businesses (PR Newswire), Rated: AAA

Funding Circle today announced that investors have lent more than $5 billion globally to small businesses through the Funding Circle platform. This has supported a network of 40,000 businesses across the UK, USAGermany and the Netherlands and helped to create more than 100,000 new jobs.*

Today’s news follows a record November for Funding Circle globally with the business facilitating more than $260 million of lending, including $175 million in the UK (£130m), $70 million in the US and $15 million in Continental Europe (€14.5m). Together this has helped thousands of business owners to access fast, transparent finance to grow their businesses, and will lead to an estimated 7,500 new jobs.

With US businesses now having accessed more than $1 billion in funding through the platform, Funding Circle becomes the first lending platform anywhere in the world to have facilitated more than $1 billion across two markets.

Your December Review – Insight and Analysis (Funding Circle), Rated: AAA

Your lending has reached £3 billion in the UK! November was also a record month, with £129 million lent to small businesses in the UK.

Over half of Brits (56%) think they have the skills to run their own business, but only 13% believe they’re entrepreneurial.

Source: Funding Circle
Source: Funding Circle

RateSetter Publishes 2016-2017 Accounts (Crowdfund Insider), Rated: AAA

On Wednesday, UK peer-to-peer lending platform RateSetter released its accounts for the year ending on March 31, 2017. The online lender reported that revenues were £23.7m, up 38 percent from 2015-16; loans under management grew by 23 percent, from £581m to £714m; the number of active lenders grew by 36 percent from 31,036 to 42,049; and, over the same period, the number of active borrowers grew 27 percent from 161,000 to 204,000.

Peer-to-peer lender RateSetter’s losses jump as it takes a hit from bad loan to ad company (Business Insider), Rated: A

RateSetter booked a pre-tax loss of £23.3 million in the year to March 2017, compared to a £5.3 million in the previous year. The company operates a peer-to-peer platform that matches retail investors with individuals looking to borrow money.

Operating losses were £9.2 million last year but the figure was pushed higher by a one-off write-down relating to a loan the platform made to Adpod Limited, an advertising business RateSetter lent £12 million.
‘A resilient business’
RateSetter’s accounts also show that revenue rose by 38% to £23.7 million. Loans under management rose by 23% to £714 million. The number of active lenders on the platform rose by 36% to 42,049 and the number of borrowers rose by 27% to 204,000.

Goodwill impairment helps push Ratesetter further into to the red (Verdict), Rated: A

A goodwill impairment pushed pre-tax losses for RateSetter down to £23m in the year ending March 2017, despite revenue growth of 38% to £23.7m.

The company, which launched a consumer vehicle and commercial assets HP offer this year, saw a rise of 36% in the number of lenders and 27% of borrowers. However, operating losses of £9.2m were further weighed down by a £14.1m goodwill impairment on a loan to advertising company Adpop.

In 2015 Vehicle Trading Group, a company operating in motor finance for consumers and dealerships, used a wholesale facility from RateSetter to lend £12m to Adpop. Both Vehicle Trading Group and Adpop subsequently went into financial difficulties, and RateSetter then bought the two companies.

RateSetter thus decided to back Adpop’s repayments of third party loans, preventing its provision fund from absorbing the hit, as it normally would in case a borrower defaults.

Starling Bank Receives Full Regulatory Approval from FCA & PRA to Offer Broad Portfolio of Financial Products (Crowdfund Insider), Rated: AAA

Starling Bank has been granted approval by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to offer customers a wide array of financial products by the mobile only bank.  Starling Bank received a licence to operate as a bank by the Bank of England in 2016. The digital only challenger bank will now be able to provide; mortgages, consumer loans, ISAs, and other investment products via their App. No bricks and mortar necessary.

Barnett backs P2P Global Investments for recovery (Citywire), Rated: A

P2P Global Investments (P2P), the largest of the listed alternative lending funds, has won the backing of Invesco Perpetual’s Mark Barnett, its largest shareholder, for the turnaround plan it outlined last week.

The future of advice is ‘Fintegration’ (Professional Adviser), Rated: A

The financial advisory sector has seen much change in the past few years, much of it driven by new technologies and a wave of new market entrants. While we are seeing consolidation and innovation in response, this is just the start. So if you thought the merry-go-round was slowing down, then grab hold tightly because it is only going to accelerate.

‘Fintegration’ – the integration with fintech services – is emerging as an important factor.

What is common to both groups is their appetite for financial online and digital services – from online banking and mortgage management to peer-to-peer lending platforms. There is no doubt we will shortly see the fully integrated dashboard becoming commonplace.

China

China targets booming online lending as crisis fears build (Hong Kong FP), Rated: AAA

The 24-year-old secretary is among millions of Chinese who have turned to proliferating online companies that dish out quick loans — and are worrying the country’s leadership.

Jia started accumulating her debt when she was in college, turning to tech titan Alibaba when she could not get a credit card.

The ease of a few taps on her phone and a four minute wait led Jia to borrow and borrow and when she was finally able to take out a card, she used it to repay Alibaba’s affiliate Ant Financial.

But her debt reached roughly US$9,000 this summer, and her monthly interest payments eclipsed her meagre salary.

‘Lending nirvana’ 

Alternative lending, with loans that can be wired to accounts within minutes, has taken off in China and accounts for 85 percent of the global market, according to a University of Cambridge report.

European Union

N26 launches a premium debit card for ‘the digital customer,’ partners with WeWork (TechCrunch), Rated: AAA

N26, the European mobile banking service, today announced the launch of N26 Metal, the company’s premium MasterCard-affiliated debit card “tailored to the needs of digital customers” at TechCrunch Disrupt Berlin. N26 Black customers in Germany, France, Italy and Austria will be able to sign up for the new NFC-enabled card, which obviously features a metal core made from tungsten and that makes the card weigh a lot, starting December 14.

It’s also worth noting that this is the first metal card in Europe that supports contactless payments.

What better company to partner with then than co-working and real estate startup WeWork. Using the N26 Metal service, N26 customers will also be able to join the WeWork network and get credits to reserve workspaces and conference rooms.

International

Currency trader Revolut’s offer to those champing at the bitcoin (The Times), Rated: AAA

Revolut, which provides foreign currency services to consumers and small businesses, said that from today its users would be able to buy bitcoin and other “cryptocurrencies” using 25 conventional currencies.

BFS Capital has Extended Over $ 1.7 Billion in Financing to Businesses across the US, UK and Canada (BusinessWire), Rated: A

Marking its 15th anniversary year, BFS Capital, a leading small business financing platform, announced it has now extended over $1.7 billion in financing since funding its first deal in 2002. The company also reported that over 75 percent of its originations have occurred in the last five years and more than 25 percent took place in the last 18 months. For full year 2017, BFS Capital expects to generate more than $300 million in originations, a new annual high.

Recent Origination Milestones in Online Lending (Lend Academy), Rated: A

Today, Kabbage announced they had crossed the $4 billion mark. They have now lent to more than 130,000 small businesses which they claim is the largest customer base of any online small business lender.

This week LendingHome announced it had crossed $2 billion in mortgage loans for homeowners and real estate investors.

Funding Circle UK crossed the £3 billion (approx. $4 billion) mark in small business lending for their UK business.

LendingClub quietly announced total small business originations of $500 million since 2014 in a recent blog post.

Emerging markets are under pressure, but I’m buying the dip (CNBC), Rated: A

The Chinese government instituted tough new regulations on online consumer lending platforms, which are made up of payday loans and peer-to-peer lending. Some of them are associated with large holdings in the emerging markets exchange-traded fund like Ant Financial, an Alibaba Group affiliate.

While much of this is a continuation of the Chinese debt bubble, the move suggests that it has gotten out of the regulators’ control.

We see a global trade boom continuing to drive emerging markets as global Purchasing Manager indexes show continued growth in demand for manufactured goods. For example, Korea is already registering signs of slowing Chinese demand but is still showing 9.6 percent year-on-year growth for November exports. However, we continue to watch the tone out of Washington, since a shift toward more protectionism could put a dent in this.

Viola FinTech is a new $ 100M Israel-based VC fund targeting fintech startups around the world (TechCrunch), Rated: B

Viola, the Israel-based technology investment group, is launching new independent VC fund targeting fintech startups from anywhere in the world. Dubbed Viola FinTech, the “cross-stage venture fund” has an initial closing of $100 million but will extend that towards $120-150 million. It is backed by global banks, insurance companies and asset managers from North America, Europe, APAC and Israel, including Scotiabank, The Travelers Companies, Inc and Bank Hapoalim.

Australia/New Zealand

San Francisco’s Credible Raises $ 50 Million in Australian IPO (Bloomberg), Rated: AAA

San Francisco-based financial technology company Credible Labs Inc. is going public, but not on a U.S. exchange.

The startup, a consumer loans marketplace, raised $50 million (A$66 million) in an initial public offering on the Australian Securities Exchange, according to a statement Thursday.

The IPO values Credible at A$300 million, about 50 percent higher than the valuation it got in its last fundraising round, according to people familiar with the matter, who asked not to be identified as the details aren’t public.

Yellow Brick Road Adds Prospa to Lending Panel in Boost to Aussie Small Business (Crowdfund Insider), Rated: A

Yellow Brick Road has added online lender Prospa to its lending panel. The move was described as an effort to diversify its lending offerings for Australian small business customers. Yellow Brick Road is a full service wealth management company that offers products and services for home loans, financial planning, insurance, superannuation, and investments.

Marketplace lenders must ‘start educating’ SMSFs on opportunities, discipline (Nestegg), Rated: A

Speaking to Nest Egg, CEO of fully licensed marketplace lender Zagga, Alan Greenstein said that self-directed investing is now a “very, very big part of SMSF investment” and that according to Zagga research, well over 30 per cent of SMSFs at a sophisticated wholesale level are self-directed investors.

Pointing to a recent whitepaper produced by Zagga, Mr Greenstein said SMSFs tend to be invested at either end of the spectrum; very high risk and high yielding opportunities, or very low risk opportunities.

He said that Zagga’s newly launched ZAG Fund offered a middle ground, with a targeted net return of 6.5 per cent.

Ngā Tangata Microfinance breaking hold of predatory lenders (Scoop), Rated: A

With loan capital provided by Kiwibank, Ngā Tangata Microfinance (NTM) provides no-interest loans to qualifying clients for family well-being and relief from high-interest debt.

An evaluation conducted by the University of Auckland’s Centre for Applied Research in Economics found NTM’s no-interest loans were crucial in helping low-income clients break the cycle of debt caused by predatory payday and fringe lenders.

Partnering with local budgeting advisors, NTM has now disbursed more than $660,000 in no-interest loans to more than 300 clients, with 70% of the support being for relief from high-interest debt. It is estimated these loans had potentially saved clients a total of more than $1 million in interest and additional costs. Requests for help continued to trend up – 30% more NTM loans were approved in the past 12 months compared to the previous year, amounting to nearly 130 loans worth $275,000.

India

Loans are easy to get, but are they for you? (livemint), Rated: AAA

When you buy a phone, you have the option to pay for it then or pay later. You have this option even when you are buying grocery or paying bills. Credit these days can be available relatively easily, even for amounts as low as Rs1,000. In fact, in a country where you need to have a good credit history and credit score to get loans from banks, you can now get loans on your phone—even if a bank would not lend to you.

According to data from the Centre for Monitoring Indian Economy Pvt. Ltd (CMIE), personal loans (incremental numbers) increased 179% and credit card outstanding rose 34.63% in value during April to October period in FY 2017-18. In comparison, incremental numbers during the same period for housing loans showed negative 32.7%.

Source: livemint

HDFC Bank Ltd saw a 35.75% growth in personal loans and 44.50% growth in credit card business in the second quarter (on a year-on-year basis). ICICI Bank, in its second quarter results this financial year said that its personal loan book saw a 40.1% year-on-year growth and the credit card business grew by 36.5%. And this is true for the non-banking finance companies (NBFCs) as well. Bajaj Finance Ltd saw a 42% growth in consumer lending in the same period.

Asia

Vietnam launches first peer-to-peer lending platform (XinhuaNet), Rated: AAA

Vietnam has launched its first peer-to-peer lending service Vay Muon, enabling people to borrow and lend money without having to go through a financial institution.

Matching lenders and borrowers via a smartphone application, the lending platform does not require mortgages and one-on-one meetings, local VTV online newspaper reported on Thursday.

First-time loan requests will be reviewed and disbursed within four hours and subsequent requests will be handled in just half an hour.

‘Korean startups should do what they are good at to get funding’ (The Investor), Rated: A

Korean startups flock to Silicon Valley hoping to become the next Facebook or Google. However, setting up a business from scratch where thousands of new startups come and go every year, is not easy, and becoming a “unicorn” is near impossible.

One fundamental reason is because they can’t get enough funding, according to Tim Chae, head of the Korean unit of US accelerator 500 Startups.

First of all, a company should either run a business in a certain sector for which Korea is widely famous worldwide, such as beauty and e-sports segments, rather than roll out me-too services and products.

Datarius Cryptobank Participates at BlockShow Asia 2017 (Digital Journal), Rated: B

On November 29–30 a large-scale event — Block Show Asia 2017 — was held, and Datarius Cryptobank participated in this event.

Datarius Cryptobank is a unique project. This is a first social cryptobank built on base of the distributed register technologies using neural networks and artificial intelligence. The main attractive features of the project for investors and future customers are the lowest transaction fees, as well as P2P-lending.

Canada

IOU Financial Surpasses US$ 500 Million in Loans Originated (Cision), Rated: AAA

IOU Financial Inc. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that it has facilitated more than US$500 million in financing to thousands of merchants and small businesses across the United States and Canada since launching its lending platform.

Authors:

George Popescu
Allen Taylor

Turn a debit card into a credit card in 180 seconds, no FICO needed

Turn a debit card into a credit card in 180 seconds, no FICO needed

In 180 seconds on your phone Float offers a mobile-first financial service that enables consumers instant access to a line of credit that they can use with their existing debit card. Float acts as an overdraft killer.  The start-up services the 63% of millennials who are living without a credit card with a solution that is simple, […]

Turn a debit card into a credit card in 180 seconds, no FICO needed

In 180 seconds on your phone Float offers a mobile-first financial service that enables consumers instant access to a line of credit that they can use with their existing debit card. Float acts as an overdraft killer.  The start-up services the 63% of millennials who are living without a credit card with a solution that is simple, accessible, and consumer-friendly.

$17.5 billion in overdraft fees

Most of us probably know what it feels like to overdraw a checking account. There’s a particular sinking feeling everyone gets when they see that minus sign in front of their available balance. According to research reports, every year $17.5 billion is paid as overdraft fees by Americans.  Float wants to empower people to employ alternative solutions as compared to the normally usurious overdraft facilities of their bank. Their mobile-first consumer financial technology gives users an instant and easy way to access a line of credit without a traditional credit report.

Company history

Float is aiming to revolutionize the credit experience for the modern, mobile consumer. It was established in September 2015 with their head office in Los Angeles, California. They were able to raise seed capital of over $1.5 million from 4 investors (500 startups, Camp One ventures, Funders Club and Plug and Play) and will be raising another $1.5 million in the next 3 months. Total seed money will be in the range of $3-3.5 million. Andy Burke is the CTO of the company. Kevin Bass is the President and Max Klein is the CEO of the company (also the founder of Cachet LA -website on premium lifestyle in Los Angeles). Presently, they have over 15 employees in their company. According to Max, Float was born with a simple mission of creating better experiences between consumers and their finances.

How it works

Float’s vision is to change the way users’ access, manage and spend money on a daily basis and simultaneously help them build a strong credit file. Data security is taken very seriously, they protect sensitive information with full encryption and safeguards that meet industry best practices. This feature is necessary, ensuring the customer feels secure while using Float and linking it to their bank account. Its target market is in the age of 18-30 and it is lending them $50 to $1000 on an average.

Float is committed with a simple and straightforward process of belief in clear, upfront pricing.

–     Charge 5% for transfers to your bank account for $50 or more. For transfers under $50, they charge $2.50 flat.

–    Each billing cycle is about 30 days, just like a typical credit card.

– If the dues are not cleared within the cycle, the user will be charged a $20 penalty.

–    There is an auto pay option to avoid late fees.

–    No other fees, interest, or APR to access your line of credit

The company claims that the process from downloading the Float app to applying and being able to spend the money takes only 180 seconds. The convenience of getting credit in such a short time period can disrupt not only the overdraft segment of the banks but also the payday loan industry. You have to be 18 years or older and must have a bank account with Float associated banks.  Within seconds of connecting a bank account, a line of credit is offered between $50 and $1000 and is available for immediate use with any existing debit card. Since their target market is millennials, they use social media as the main channel for advertising. They create huge awareness at the college campuses with an exclusive brand ambassador program targeting influential and affluent students, enabling them with the tools to help promote Float among their friends.

No-FICO

Float believes in eliminating fear and hesitation out of the on-boarding process, that’s why they don’t use traditional FICO scores before giving credit. Instead, they do cash flow analysis when the user connects their current bank account, and they layer alternative list scores from several other providers to produce an internal score for a personalized line of credit payable every 30 days. In case, someone does not have a debit or credit card, funds will arrive in 1-3 days via an ACH transfer in the connected bank account. There is an option to pay back the loan early as well before every billing cycle and it has to be paid in full to avoid any late fees. There is an auto pay option as well, to ensure the borrower never misses a payment or incurs a late fee. Another feature being added is a set up for direct transfer, which means whenever the balance goes below $50, Float will send $100, and thus ensuring there is no overdraft and the exorbitant overdraft fees. Float’s credit product is currently in early access mode and will be available to select customers from December of this year.

Next steps

Float is launching in Utah the next month and plans to initially lend from its own balance sheet. After the proof of concept, it plans to tie-up with third party providers for the capital needs of it users.  It also secured second place out of 850 applicants in Plug and Play, a 12-week accelerator program that partners with Citi Ventures, Deutsche Bank, Capital One, Intuit, JCB, and USAA to help bring to market the next disruptive financial solution for the growing worldwide economy. Recognition from Plug and Play, a pioneer in fintech sector is particularly noteworthy.

The ability to get add-on credit within seconds will lead to a change in how consumers interact with their finances especially overdraft. The key success factor for the company will be analyzing which user to lend and how to manage prospective delinquents.

Author: Heena Dhir and George Popescu

George Popescu