How Machine Learning Will Transform P2P Lending

artificial intelligence machine learning p2p lending

Artificial Intelligence, fondly known as AI, is the approach and research field of creating machines that are able to replicate human intelligence. Although we aren’t yet teeming with robots as intelligent as humans, we have managed to build: Intelligent programs that can beat reigning Go world champs Virtual assistants like Siri and Google Assistant to […]

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artificial intelligence machine learning p2p lending

Artificial Intelligence, fondly known as AI, is the approach and research field of creating machines that are able to replicate human intelligence.

Although we aren’t yet teeming with robots as intelligent as humans, we have managed to build:

With the passing of time, more and more fields are benefiting from AI and machine learning (ML). The latter is a specific form of AI that deals with devising strategies and methods for allowing a machine to learn from the available and historical data, all to find better solutions for existing problems.

Among the various markets growing by leaps and bounds with machine learning is marketplace lending. AI and machine learning have enabled this sector to automate a variety of processes, shrink operating costs, and make life easier for both lenders and borrowers.

In the past two decades, there has been a tremendous surge in people interested in learning ML as a hobby as well as a professional career choice. Before diving deeper into the subject of how machine learning will transform P2P lending in the future, let’s first get ourselves a brief understanding of ML.

The Craft of Machine Learning a.k.a. ML

Machine learning, or ML, is a subfield of artificial intelligence that follows the notion that machines can learn and adapt better from experience rather than from extensive programming.

Although machine learning is a subset of AI, there are several notable differences between AI and ML. Hence, both fields are considered to be distinct. This analogy is followed by deep learning and machine learning too, where the former is the subfield of the latter.

Today, we are surrounded by many instances of ML, varying from Apple’s Face ID and facial recognition in general to navigational and shopping recommendations generated by virtual assistants. ML also had a profound impact on the financial industry, especially the lending sector, which we are going to discuss in the upcoming sections.

The Present Impact of Machine Learning on P2P Lending

The ongoing evolution of technology and the emergence of tech innovation is having a greater impact on the financial services industry. From designing impactful business models and enhancing the customer experience to cutting costs, the benefits are many.

Fintech firms and the Internet are providing platforms to even niche products to get interested financial supporters as well as potential customers to grab their side. Peer-to-peer financing isn’t only about crowdfunding, but also includes P2P lending.

A bank offers P2P lending by allocating capital from the lending party to the borrowing party while acting as the broker, as well as the risk mitigator. The higher the risk, the higher is the imposed interest rate. Fintech organizations have made this simpler and more effective.

Several Fintech P2P lending firms like LendingClub and Prosper offer a platform where individuals gain interest by lending money to the ones who require it. These firms make money by taking a small fee for making the connection among the two parties possible.

As an alternative to submitting a traditional application, borrowers present compelling stories about why they need the capital via fintech platforms.

Other than the aforementioned, here are some of the most important benefits presently enjoyed by the P2P lending industry thanks to adding the art of machine learning to its arsenal:

1. Easy Identification of Defaulters

As the financial sector grows, so does the number of defaulters and bad loans. This has led the financial institutions to be more careful than ever to spot and avoid defaulters.

Machine learning, with its predictive analysis, can help lenders identify early the borrowers who are highly likely to default later. An early deduction of defaulters can significantly lessen the credit risks, which, in turn, reduces the total number of actual defaulter cases.

2. Hastening the Loaning Process

Of course, lending is one of the most complex business processes. This is the prominent reason why it is a long and tiresome process to accomplish. Thanks to its intuitive analysis, machine learning can remove the redundant parts and, hence, speed up the whole process.

An automated workflow offers lenders a competitive edge against the competition as there is less space for human error. Thus, lenders can process mammoth workloads in shorter time periods. This helps them not only to maximize profit, but also to better serve their clientele.

3. Lessening/Eradicating Errors

Lending involves a lot of documentation. From the very early stage of loan origination to underwriting, most of the steps involved demand preparing and verifying several documents. Doing it manually not only increases the overall time required but also makes it prone to errors.

Machine learning comes in handy here by adding automation to the process, prompting for human intervention where required the most, and thus, streamlining the complete loan cycle.

4. Reducing Operating Costs by Automating Several Aspects of the Lending Process

There are several aspects contributing to the operating costs of a financial institution. Among them, the most notable aspect is loan decisioning. In most cases, the loan arrives at a positive lending decision irrespective of the loan amount.

Machine learning is able to automate the process, consolidate the entire data, and process the same by taking into account a number of factors. Moreover, ML performs a credit check and enhances the overall experience and quality of the process while reducing the overall costs.

5. Simplifying the Whole Process

The traditional way of lending is a very complex process. Hence, it is obvious for lenders to look for options that can simplify the conventional lending workflow (i.e. decreasing the total time required, lowering the overall cost involved, and smoothing out the whole process).

Machine learning helps in simplifying the whole lending process by:

  • Automating various aspects of the business process with customizable rules engine
  • Easing the borrowing process
  • Ensuring straightforward processing of loan applications
  • Standardizing the entire process

The Upcoming Impact of Machine Learning on P2P Lending

With time, artificial intelligence and machine learning are getting bigger and better. This is evident by the fact that there’s a continuous rise in candidates interested in learning AI in general, and ML in particular.

Although machine learning has already started revolutionizing the way P2P lending works, it will continue getting better and more beneficial for the craft. Following are some projections about how ML will impact lending in the near future:

  • Ability to self-modify with little to no requirement for human intervention
  • Better means of filtering irrelevant data from relevant data
  • Completely automating the underwriting process
  • Even faster application, approval, and funding processes
  • Helping lenders to see the bigger picture by insights drawn using efficient ML algorithms
  • Increasing the outreach of lenders and identifying potential lenders
  • Introducing younger people to the lending-borrowing culture
  • More stringent safety protocols to safeguard sensitive information
  • Offering insightful decisions with a higher probability of success
  • Providing capital to more and more honest borrowers
  • Recognize patterns in a specific dataset to help build effective business models
  • Using more number of data points to better check the likelihood of the borrower repayment and estimating the time period of the lender getting the amount back

Challenges Posed by Machine Learning Algorithms

Although machine learning provides access to a variety of avenues for financial institutions, it still needs to do the heavy lifting in some areas to further improve. Three of the most important aspects of ML requiring effort are discussed as follows:

1. Concealed and Undesired Bias

Bias is an inseparable aspect of machine learning algorithms. No ML algorithm can exist bias-free. Although a small degree of bias can be easily managed, the bigger it becomes, the more difficult it gets to fix the same.

Chances for machine learning algorithms to develop concealed and undesired biases from the same data used to train them do exist. Hence, human intervention becomes absolutely necessary to ensure that apposite suggestions or predictions are made by the ML systems.

2. Undetected Errors

Machine learning aims to minimize human interference as much as possible. Hence, it kind of makes humans dependent on machines. Most times, they are free from errors. However, there is room for some errors to slip through.

In case of errors that the machines aren’t able to correct themselves, human intervention becomes mandatory. However, manually identifying and correcting complex algorithms can be arduous and time-consuming.

As lending is an important aspect of the economy, even the smallest of errors being unintentionally passed through can propagate through the system and lead to a huge, undesirable consequence.

3. Time Requirement for Developing Precise Predictions

Machine learning algorithms rely greatly on historical data. The accuracy of the predictions developed by ML algorithms is directly proportional to the total time they spend interacting with the data. Therefore, making precise predictions instantly isn’t possible.

It is mandatory to feed historical data as well as the new data to the ML system continuously for ensuring that the predictions produced by the same are accurate and reliable.

Afternote

There is no denying the fact that the advent of artificial intelligence and machine learning has completely altered the way the lending sector works today. It has become faster, bigger, and better than ever with continuous improvement.

Borrowers and lenders, irrespective of the capital involved, aim to have as few formalities as possible. Though it seems unachievable with the traditional form of lending, the technology-backed lending strives to move as much closer to it as possible.

Fintech firms leverage the latest technological innovations to offer a quicker, smoother, and reliable experience to the lenders and borrowers. There are lots of challenges faced by the industry as of now. Developing better machine learning algorithms might be the key to solving them all.

The post How Machine Learning Will Transform P2P Lending appeared first on Lending Times.

Thursday November 29 2018, Daily News Digest

GlobalData

News Comments Today’s main news: MPOWER Financing raises $110M. Funding Circle, BBB partner on SME lending. Zopa sells batch of defaulted loans. Yirendai misses earnings estimates by .17 EPS. RateSetter aiming to be Australia’s biggest consumer loans provider. Revolut greenlighted to expand into Singapore, Japan. Today’s main analysis: Is UK headed for credit card crisis? Today’s thought-provoking articles: 37.4% of purchase […]

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United Kingdom

Southeast Asia

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United States

MPOWER Financing raises USD110 million in latest funding round (Private Equity Wire) Rated: AAA

MPOWER Financing, a fintech company providing educational loans to high-potential international and DACA students, has completed its largest funding round to-date with USD110 million in new financing for students enrolling in major US universities.

This latest round, led by Gray Matters Capital and Community Investment Management (CIM), will be used to support new product growth and technology enhancements as well as to finance MPOWER Financing’s expanding student loan portfolio.

“We co-created a unique type of debt with Community Investment Management’s leadership team. This USD100 million is just the beginning of MPOWER’s Capital Markets roadmap,” says Mike Davis, MPOWER Financing Chief Investment Officer and co-founder.

37.4% of Purchase Borrowers Received  Mortgage Rates Under 5% Last Week (LendingTree), Rated: AAA

  • For 30-year fixed-rate mortgages, 37.4% of purchase borrowers received offers under 5%, up from 29.4% the prior week. A year ago, 98.1% of purchase offers were under 5%.
  • Across all 30-year fixed-rate mortgage purchase applications on LendingTree, the most common interest rate was 4.875%, offered to 21.3% of borrowers.
  • 27.9% of 30-year fixed-rate mortgage refinance borrowers received offers under 5%, up from 20.1% the prior week. A year ago, 98.1% of refinance offers were under 5%.
  • Across all 30-year fixed-rate mortgage refinance applications, the most common interest rate was 5.00%, offered to 22.3% of borrowers.


5 Technologies And Trends Changing The Credit Industry (ValueWalk), Rated: AAA

New tools and advancements in the credit industry are transforming the way consumers borrow cash. Before, loan options were limited to government entities (Pag-IBIG and SSS), banks, credit cards, cash advance from credit cards, and loan sharks. These financial institutions (apart from loan sharks) are heavily regulated, but with a roster of new methods offered today, loaning has become more accessible and borrower-friendly.

The Future of Fintech Video Series: Intuit Consumer Group (ATM Marketplace), Rated: A

Intuit Consumer Group’s Varun Krishna gives some background on the company’s latest partnerships with Lending club and Wealthfront. This interview is part of a video series, “The Future of Fintech,” produced by Mobile Payments Today and powered by Galileo Processing.

MPL Loan Performance Monitor (as of August 2018) (PeerIQ), Rated: A

Highlights from the August 2018 MPL Loan Performance Monitor :

  • Our MPL Loan Performance Monitor tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders.
  • Delinquencies on the 2017 vintage in the first 18 months are lower than those on the 2015 and 2016 vintages with lenders having tightened underwriting standards.
  • Cumulative loss rates on the 2017 vintage are lower than those on the 2015 and 2016 vintages. Cumulative losses on the 2015-2017 vintages are outpacing those on earlier vintages.
  • Cumulative prepayments have picked up, with the 2017 vintage paying significantly faster than all prior vintages.

Lendio Recognized as a Great Place to Work for Third Consecutive Year (Lendio), Rated: A

Lendio was certified for the third consecutive year as a great workplace by the independent analysts at Great Place to Work. Lendio earned this credential based on extensive ratings provided by its employees in anonymous surveys. A summary of these ratings can be found at 

Four Major Fintech Trends In The Self-Directed IRA Industry (Forbes), Rated: A

Fintech has helped significantly increase the number of investment options available to self-directed IRA investments. From online crowdfunding platforms to peer-to-peer lending portals, as well as cryptocurrency and digital asset exchanges, new financial technology has helped self-directed IRA investors gain access to new and exciting investment opportunities in an efficient and secure investment environment.

There has never been a better time to find a bad credit mortgage (Mortgage Introducer), Rated: A

Research conducted by the Online Mortgage Adviser website has discovered that up to 70% of potential mortgage applicants fail to approach lenders or other service providers because they mistakenly believe that their personal circumstances or financial histories will preclude them from being considered.

The study, which was based upon a survey of over 2,000 people nationwide, found that almost 50% of respondents believed that a low credit score, or evidence of previous issues, would automatically disqualify their application. 33% and 15% (respectively) felt that a zero-hour contract or payday loan would prevent them from achieving a mortgage loan.

stREITwise Launches Invest for a Cause (GlobeNewswire), Rated: A

stREITwise, an investment vehicle that makes commercial real estate investments accessible to everyone, is announcing the second annual Invest for a Cause holiday campaign. Through December 31st, their executive team will personally make a donation equal to 2% of any new investment to a non-profit of the investor’s choice.

2018’s Top Takeaways (Commercial Property Executive), Rated: A

But perhaps the biggest catchphrase of 2018 represents the rapidly evolving technologies that are benefiting—and some even say revolutionizing—the commercial real estate industry. So-called “proptech” includes a range of building performance solutions, along with financial benefits like the developing blockchain process protections and growth of the still fledging real estate crowdfunding business. (Our most recent discussions include our Mission: Success profile of MetaProp’s founders and the CFO Corner column “3 Ways to Leverage Fintech.”)

Small Banks Join Forces To Bring Fintech To Customers (Forbes), Rated: A

The move is driven in part by a desire to innovate and part survival. It comes as millennials are bypassing branches and traditional banking services for the fintech offerings at an increasing rate. Take Quicken Loans, the Detroit-based lender that operates Rocket Mortgage it’s completely digital platform, for one glaring example.

Stocks Hold Onto Gains Ahead of Powell Speech (Nasdaq) Rated: A

Counterstrike: The market looks like it might rise into the G-20 meeting that begins on Friday, so Jeremy thought this was a good time to pick up a couple names. Firstly, the editor added a 6% allocation in online marketplace Lending Tree (TREE), which has been halved from its 2018 highs. But it could be poised for a sharp move higher as a strong quarterly report has exposed its oversold position.

Online Lender Settles With FTC Over Refinancing Misrepresentations (Manatt), Rated: A

Issuing a warning to other lenders, the Federal Trade Commission (FTC) reached a deal with an online lender over charges the company violated the FTC Act by making false statements about student loan refinancing.

Velocity Commercial Capital Chooses SS&C for its Finance Transformation (SS&C), Rated: A

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that Velocity Commercial Capital, LLC (‘Velocity’) has signed a multi-year agreement with SS&C Primatics’ EVOLV platform. EVOLV will help Velocity transform their financial operations and capitalize on growth opportunities in a controlled environment. Velocity, a direct portfolio lender, provides investment property loans for residential 1-4, multi-family, mixed-use and small balance commercial properties.

Guaranteed Rate Expands Its Footprint in Hawaii (GlobeNewswire), Rated: B

Guaranteed Rate, Inc. (“Guaranteed Rate”), one of the largest independent retail mortgage companies in the United States, today announced that it will acquire certain assets of Honolulu HomeLoans (HHL) and Hawaii Lending Alliance (HLA), growing its existing Guaranteed Rate presence in the Hawaii market and adding an experienced team of mortgage professionals.

BFS Capital Appoints Mark Ruddock as Chief Executive Officer (Citizen Tribune), Rated: B

BFS Capital announced today the appointment of Mark Ruddock as Chief Executive Officer, effective immediately. He will also join the company’s Board of Directors.

United Kingdom

Funding Circle and BBB announce £150m SME lending partnership (Bridging & Commercial), Rated: AAA

The British Business Bank (BBB) has committed to lend up to £150m to UK small businesses through Funding Circle.

The transaction has been made under the bank’s ENABLE Funding programme and is expected to support the growth of over 2,000 UK companies.

The new facility will provide senior financing to a transaction with the Funding Circle SME Income Fund Limited, the publicly traded fund that lends exclusively through Funding Circle.

Zopa sells batch of defaulted loans to boost investor returns (P2P Finance News), Rated: AAA

ZOPA has sold a batch of defaulted loans to a debt collection agency, which it says will enable a faster and higher recovery for investors.

The peer-to-peer consumer lender informed its investors last week about the debt sale. It said that it has received upfront payment for the loans in question and will pass on the proceeds to investors within the next couple of weeks.

The UK could be headed for a credit card crisis (GlobalData Email), Rated: AAA

Almost three quarters of retail consumers in the UK (those with liquid assets between £0 and £3,918) do not pay off their credit card balances in full each month, says 

Britain’s creative industries break the £100 billion barrier (Gov.UK), Rated: A

The UK’s roaring creative industries made a record contribution to the economy in 2017, smashing through the £100 billion mark.

Its value of the creative industries to the UK is up from £94.8 billion in 2016 to £101.5 billion, and has grown at nearly twice the rate of the economy since 2010, according to figures published today by the Department for Digital, Media, Culture and Sport (DCMS).

It continues to perform highly and over the last two months British tech firms Monzo, Farfetch and Funding Circle have surpassed the $1 billion mark, meaning they are now so-called ‘unicorns’.

China

Yirendai (YRD) Posts Quarterly Earnings Results, Misses Estimates By $ 0.17 EPS (Fairfield Current), Rated: AAA

Yirendai (NYSE:YRD) announced its earnings results on Monday, November 12th. The technology company reported $0.35 earnings per share (EPS) for the quarter, missing the Zacks’ consensus estimate of $0.52 by ($0.17), Briefing.com reports. The company had revenue of $163.20 million for the quarter, compared to the consensus estimate of $179.48 million. Yirendai had a return on equity of 40.40% and a net margin of 18.56%. The company’s revenue was down 28.3% compared to the same quarter last year. During the same period last year, the firm posted $0.74 EPS.

Source: Fairfield Current

Senmiao Technology (AIHS) Acquires 60% Equity Interest in Chinese Automobile Financial Leasing (StreetInsider), Rated: AAA

Senmiao Technology Limited (NASDAQ: AIHS), an online lending platform in China connecting investors with individual and small-to-medium-sized enterprise borrowers and creditors, today announced that it entered into an Investment and Equity Transfer Agreement (the “Agreement”) to acquire a 60% equity interest in Hunan Ruixi Financial Leasing Co., Ltd. (“Ruixi”), a Chinese licensed financial leasing company focusing on the auto industry with registered capital of $10 million. In exchange for the 60% equity interest in Ruixi from its three existing shareholders, Senmiao has agreed to contribute $6 million in registered capital to Ruixi. The acquisition closed on November 22, 2018.

Beyond The Sugar Rush: Strategic Stimulus For Chinese Stocks (Seeking Alpha), Rated: A

Private companies and even individuals have taken full advantage of loose credit conditions. Rising corporate bond defaults and nonperforming loans, as well as the recent collapse of hundreds of peer-to-peer lending platforms, suggest that at least in some cases, the money came too easily. Concerned global equities investors are already applying a substantial discount to Chinese stocks because of debt issues.

European Union

‘Inconsistent and punitive’ employee ownership rules are damaging Europe’s start-ups, say tech bosses (Telegraph), Rated: AAA

A group of thirty European tech start-ups have warned that the European Union’s “inconsistent and often punitive rules” employee ownership rules are hindering their businesses.

The entrepreneurs, which include the founders and chief executives of iZettleTransferWise and Delivery Hero, stated that laws across the continent make it costly for employers to give out stock options to employees.

The warning to EU policymakers, in an open letter, comes as research by venture capitalists Index Ventures finds that employees own only 10 per cent of late-stage start-ups in Europe, because of limitations brought about by regulations.  However in the US it is 20 per cent.

Online Lender October Officially Launches in the Netherlands (Crowdfund Insider), Rated: A

Online lender October (formerly Lendix) has launched in the Netherlands. Alongside this expansion, the Paris based October is providing SME financing in France, Spain, and Italy.

According to a note from October, SMEs may apply for loans ranging from €30,000 and up to €3.5 million.

Solactive Launches New Sharing Economy Index (Mondo Visione), Rated: B

Solactive is pleased to announce the launch of the Solactive Sharing Economy Index. It tracks companies active in the Sharing Economy, and other modern economies such as on-demand and subscription.

Formerly being attributed to open-source communities, the umbrella term “Sharing Economy“, nowadays reflects various economic activities such as peer-to-peer sharing of goods and services.

International

Zero Fees and Interest-free Loans in Decentralized Credit Networks (NewsBTC), Rated: AAA

Money lending is the core principle of any functioning economy. Decentralized credit networks which have recently seen a rapid increase in popularity promise easy and global access to credit and loans for businesses and the public by immediately connecting borrowers and lenders on the platform. Users of IOU credit networks can even take advantage of interest-free loans and zero fees.

Australia

RateSetter putting pieces in place to be Australia’s biggest consumer loans provider (Finder), Rated: AAA

When RateSetter started operations in Australia four years ago, the peer-to-peer (P2P) lending industry was in its infancy and its risk-based, investor-funded loan was seen as an alternative. But a lot can happen in four years. Today, major banks such as CommBank, HSBC and Citi use risk-based pricing, once only the domain of P2P lenders, while the formerly “alternative” RateSetter funded over $25 million in consumer loans this month.

Foggo said the lender has been “determined” to focus on specific products. One of its new ones is a renewable energy loan which it launched two and a half years ago.

India

Suspension of Aadhaar verification to hit lending of small fintech players (The Hindu Business Line), Rated: AAA

Fintech players, especially online lenders in the personal and consumer loans segment, are likely to face slowdown in business following the Supreme Court order that prevents private companies from seeking Aadhaar data for e-KYC and e-signatures.

Asia

Fintech firm Revolut gets green light to expand to Japan and Singapore (CNBC), Rated: AAA

British mobile bank Revolut has obtained licenses to operate in Japan and Singapore as it readies an expansion into Asia.

The London-based financial technology firm said Thursday that it had acquired a remittance license from the Monetary Authority of Singapore and full authorization from Japan’s Financial Services Agency.

It said Thursday that it intends to launch its platform in the Asia-Pacific (APAC) region in the first quarter of 2019, and is looking to select Singapore to host its APAC headquarters.

Online lending platform Oriente announces 5m initial funding for Southeast Asia (kr-Asia), Rated: A

Hong Kong-based online lender Oriente today announced a US$105 million initial round of financing to scale its business across Southeast Asia. The fintech startup already runs lending platforms in the Philippines and Indonesia and will launch in Vietnam soon.

Tapping into digital economy (The Jakarta Post), Rated: A

According to the latest survey by Google and Singapore’s Temasek Holdings, Indonesia’s digital economy is projected to triple to US$100 billion by 2025 from $27 billion this year, given the mushrooming of the country’s online marketplaces. The projection is not an exaggeration as indicated by the huge transaction values at a recent online shopping festival, dubbed a warm-up for the National Online Shopping Day in mid-December.

P2P lending transactions total Rp 13.8 trillion in first three quarters (The Jakarta Post), Rated: A

According to Financial Services Authority (OJK) data, transactions through peer to peer (P2P) lending totaled Rp 13.8 trillion (US$951 million) in the first three quarters of 2018, with the non-performing loan (NPL) rate recorded at 1.2 percent.

P2P lending transactions in 2018 have increased drastically compared to the last two years, with the OJK recording Rp 284 billion in transactions in December 2016 and Rp 2.56 trillion in December 2017.

Who’s afraid of peer-to-peer lending? (Bangkok Post), Rated: A

The recent announcement by the Bank of Thailand on peer-to-peer (P2P) lending rules represents a significant paradigm shift. If all goes to plan, by early next year Thailand will be among the few Asian countries, most notably China and Indonesia, to legalise this match-making platform between lenders and borrowers.

Bukalapak eyes investment products, P2P lending to cash in on fintech opportunity (Deal Street Asia), Rated: B

Indonesia’s online marketplace unicorn Bukalapak is planning to cast a wider net in the country’s booming fintech market. The company is looking at launching new investment products and enter new verticles such as P2P lending and remittances, co-founder and president Muhamad Fajrin Rasyid told this portal.

Authors:

George Popescu
Allen Taylor

Tuesday September 18 2018, Daily News Digest

Student Loan Balance by Servicer and Loan Status

News Comments Today’s main news: Funding Circle U.S. sees loan defaults go up. OnDeck sales expectations. LendInvest raises $39.5M. Zopa boosts target interest rates on all products. UnionPay launches European expansion. Qatar Investment Authority could invest in Lufax. Today’s main analysis: Navient, Nelnet and the student loan market. Today’s thought-provoking articles: This former Googler, Facebook employee is running with SoFi. What’s […]

Student Loan Balance by Servicer and Loan Status

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United States

Funding Circle Fund Sees US Loan Defaults Rise (PYMNTS) Rated: AAA

In August, more corporate borrowers defaulted on their loans issued by Funding Circle‘s U.S. operations than they did previously in 2018. According to Peer2Peer (P2P) Finance News reports on Friday (Sept. 14), the Funding Circle SME Income Fund (FCIF) revealed there were seven corporate loan defaults in during the month, up from the year’s average so far of six per month.

Still, the company noted, the value of those defaults has inched higher, too. Reports said the FCIF’s net asset value return for August dropped to 0.1 percent from 0.4 percent a month prior, with analysts citing rising impairment charges as a result of the U.S. loan defaults.

How This Former Google And Facebook Employee Is Helping People Reach Their Financial Goals (Forbes) Rated: AAA

Libby Leffler, vice president of membership at Social Finance (SoFi), negotiated with the tooth fairy as a child. “Looking back, I think this lighthearted family story speaks volumes about the way I think about negotiating or knowing one’s worth. Throughout my entire career, I’ve never been shy to ask for a raise or promotion – or both,” she says.

As an adult, Leffler continues to “lean in” and was even business lead to Sheryl Sandberg, the woman who started the Lean In movement. Leffler worked at Google and Facebook before attending Harvard Business School and working at SoFi, a San Francisco-based lending and wealth management company founded in 2011. Now the 

Brokerages Expect On Deck Capital Inc (ONDK) Will Announce Quarterly Sales of $ 94.63 Million (Baseball Daily) Rated: AAA

Equities research analysts expect On Deck Capital Inc (NYSE:ONDK) to announce sales of $94.63 million for the current quarter, Zacks Investment Research reports. Four analysts have made estimates for On Deck Capital’s earnings, with the lowest sales estimate coming in at $83.41 million and the highest estimate coming in at $98.74 million. On Deck Capital reported sales of $83.67 million during the same quarter last year, which indicates a positive year over year growth rate of 13.1%. The firm is scheduled to report its next quarterly earnings results on Monday, November 5th.

On average, analysts expect that On Deck Capital will report full year sales of $373.98 million for the current year, with estimates ranging from $331.20 million to $385.61 million. For the next year, analysts forecast that the firm will post sales of $417.35 million per share, with estimates ranging from $361.41 million to $435.88 million. Zacks Investment Research’s sales averages are an average based on a survey of research analysts that that provide coverage for On Deck Capital.

Navient & Nelnet and the Student Loan Market, OnDeck milestone (Peer IQ) Rated: AAA

As discussed in a recent piece in American Banker, Navient and Nelnet are increasing their role in the private student loan market. Both companies are big players in the market for servicing federally funded student loans. Together, they service $405 Bn with approximately 38% of the market share as of March 31, 2018. Nelnet, which currently focuses on servicing student loans, recently applied to for an industrial bank charter.

Source: Peer IQ

In April 2014, Navient was spun out of Sallie Mae, splitting the business in two. Sallie Mae continued its consumer banking business as well as origination of private student loans. Navient continued with loan management, servicing, and asset recovery. After the split, Navient kept 99% of the legacy company’s FFELP loans and 83% of the legacy company’s private loans. In October of last year, Navient acquired Earnest, a student, and personal loan lender, for $155 Mn in cash. The acquisition allowed Navient to begin originating student loans under the Earnest brand (as they were previously not allowed to make loans under any brand due to a non-compete with Sallie Mae). Starting in 2019, Navient will be allowed to compete directly with Sallie Mae under the Navient brand.

Lehman Brothers – What It Can Teach The Cryptocurrency Business About Lending (Block Tribune) Rated: A

It was all thanks to a niche security asset that had exploded in popularity: collateralized debt obligations (CDO), which packaged individual loans, such as credit card debt and mortgages, into a secondary market product for investors. In just six years, from 2000 to 2006, the CDO market exploded with sales multiplying from $69B to $500B.

Lehman Brothers, the fourth largest investment bank in the US, invested heavily into these securities, and enjoyed incredible profits as a result. In 2007, Lehman reported net income of $4.2B on $19.3B revenue.

The majority of CDOs were comprised of subprime mortgages. Rated triple-B, at the bottom of investment-grade bonds, these mortgages had been distributed to borrowers with higher-than-average credit risk. Computer models had packaged these CDOs into “tranches” based on interest rate and risk, making CDOs incredibly opaque and complex. These models also assumed that the housing market would continue its upward trajectory.

Property Genius Harnesses Big Data to Help Investors Capitalize on (oaoa) Rated: A

Property Genius announces the launch of its proprietary, end-to-end research and marketing platform which harnesses big data to streamline the entire process of finding and investing in Off-market and Wholesale real estate. Built specifically with the real estate professional and investor in mind, Property Genius aims to solve a long-standing problem for the industry by organizing extensive amounts of assessor data from numerous sources into one convenient and customizable dashboard to improve investment opportunities. The company’s initial launch utilizes property data in Colorado – with more states soon to follow – helping investors find, purchase, and reap the rewards on opportunistic properties including foreclosures, absentee owners, and other distressed properties.

The founder of LendingClub, ousted two years ago, pledges not to make the same mistakes with his new company (CNBC) Rated: A

More than two years after his ouster from LendingClub, Renaud Laplanche still owns millions of dollars worth of stock in the company he created, even though he’s since started a rival online lender that’s rapidly growing.

For his second act in financial services, Laplanche is focused on avoiding past mistakes. He was forced to resign suddenly from LendingClub in May 2016 for a convoluted set of events involving the questionable sale of certain loans by the company and a lack of transparency with the board.

Laplanche started his new company, Upgrade, in August 2016, three months after leaving LendingClub. His start-up passed $100 million in monthly loan originations in April. By way of comparison, LendingClub, founded in 2006, averaged almost $1 billion in monthly originations in the second quarter.

Charles Anderson of Currency (Lend Academy) Rated: A

One of the largest verticals in all of lending is equipment finance. There is $1.1 trillion worth of equipment financed each year and yet only a tiny fraction of this number is financed in an all digital process.

Our next guest on the Lend Academy Podcast has made it his mission to change that. Charles Anderson is the CEO and Co-Founder of Currency, the world’s first digital equipment finance platform. They are applying technology, often for the first time, to all phases of the equipment buying process.

CoreLogic Launches AutomatIQ Borrower (Corelogic) Rated: B

CoreLogic (NYSE: CLGX) today announced AutomatIQ Borrower, phase one of a comprehensive new underwriting solution designed to help lenders streamline their current mortgage workflows by digitizing, standardizing and automating borrower analysis and verification. By pulling all of the disparate borrower verification tools together into one integrated solution delivered from one provider, AutomatIQ Borrower will help lenders:

  • Reduce underwriting costs and time to close
  • Improve overall loan quality and user experience
  • Increase trust at each step of the borrower underwriting workflow

Hurricane Florence / Lendr (Lendr Email) Rated: B

“All of our clients have been contacted or we will continue to try and get in contact with them and support them in any way we can. We will suspend payments for the rest of September for any client that is affected by Hurricane Florence. Most clients will come back on a reduced payment schedule for a short period of time. In the past we have provided additional funding for clients in need to help get their business back on track due to these types of natural disasters.”  – Tim Roach, CEO of Lendr. 

United Kingdom

LendInvest raises $ 39.5M to grow its P2P property finance platform (TechCrunch) Rated: AAA

Today, LendInvest, a peer-to-peer platform that connects property buyers in the UK with people willing to finance those purchases (bypassing traditional mortgage lending infrastructure in the process), announced that it has raised around $39.5 million (around £30.5 million) in a Series C round of funding led by existing investor Atomico, which participation also from GP Bullhound and Tiger Management (founded by hedge fund investor Julian Robertson).

The plan will be to use this funding to continue to develop its technology and grow business into more the traditional (and bigger) mortgage business. A spokesperson for the company says there are no plans to extend beyond the UK market for now.

LendInvest Is Gearing Up To Be London’s Second Peer-To-Peer IPO (Forbes) Rated: A

Just weeks after Funding Circle launched its $2 billion IPO plans, London’s next peer-to-peer lender is gearing up to follow suit.

LendInvest, the online platform, which matches investors and institutions with borrowers looking for property finance, today announced a “pre-IPO” funding round of $39.5 million.

Since launching in 2008, LendInvest has facilitated over $1.9 billion in loans to buy, build or renovate some 5,000 homes across the U.K., turning a profit consecutively over the last four years.

With fresh capital raised from existing backer Atomico, along with new investors GP Bullhound and Tiger Management, its management seems to be signaling that they’re finally ready to float the business.

Zopa boosts target interest rates across all products (Peer2Peer Finance) Rated: AAA

ZOPA has boosted its lender returns in response to the recent Bank of England interest rate rise.

The peer-to-peer lender is now offering target returns of 4.5 per cent on its Core product and 5.2 per cent for its Plus account, both of which can be held in an Innovative Finance ISA (IFISA) wrapper.

Target returns were previously four per cent and 4.6 per cent respectively.

Church of England considers Wonga rescue (Charity Finance Week) Rated: A

The Church of England is considering bringing together a group of interested parties to buy the £400m loan book of collapsed company Wonga.

Payday loan company Wonga entered administration at the end of August, with Grant Thornton appointed to conduct an “orderly wind down” of the business and sale of assets.

In response to this announcement, Labour MP Frank Field wrote to the Archbishop of Canterbury Justin Welby, urging him to build a consortium of “people of good will” to buy the loan book “in a way which protects poorer people”.

Orca Money to Raise 500K via Equity Crowdfunding – Interview with CEO Iain Niblock (P2P Banking) Rated: A

Orca Money is currently running an equity crowdfunding campaign on Seedrs to raise 500K GBP at a premoney valuation of 1.7M GBP. Anybody can invest in Orca Money shares with a minimum investment amount of 10 GBP applicable. I interviewed the Orca CEO Iain Niblock

You are currently raising money. Who are you raising from and what do you plan to use the capital for?

Our investment is open to the public on the Seedrs equity crowdfunding platform. Investors across the EU can register and invest in the Orca business. The proceeds will allow us to expand our userbase, integrate with more lenders and to further develop the functionality of our platform.

Prior to launching the crowdfunding campaign, we secured a portion of this investment from two institutional funds based in Northern Ireland and a number of leading angel investors. It’s great to be combining these investors with crowd investors.

CTO on our doorstep: David Genn, CTO at Goji, on bridging the gap between the technology team and stakeholders (Information Age) Rated: A

When the regulator comes knocking, companies had better be ready. So it is with the peer-to-peer lending sector which was recently the subject of a 156-page review on the part of the Financial Conduct Authority (FCA) which has proposed a new set of rules for the still formative P2P lending sector.

The issues being addressed by the FCA are as much a technology challenge as they are a regulatory one, particularly when the companies involved are very young and the technology they are utilising is quite new and innovative.

Lenders flock to Scotland as P2P sector takes off (Peer 2 Peer Finance) Rated: A

SCOTLAND looks set to become a peer-to-peer lending hotspot despite fears about the potential impact of Brexit and another independence referendum.

This year has seen lenders such as Assetz Capitaland The House Crowd expanding their presence in the country, while professional services firms Pinsent Masons and Deloitte have formed partnerships with Fintech Scotland to drive the financial technology sector’s growth. LendingCrowd already has its headquarters in Edinburgh, as does ShareIn, which provides a white label crowdfunding technology solution.

China

Platform registers 94 mln online loans (CGTN) Rated: AAA

Online loans worth 116 billion yuan (16.97 billion US dollars) had been registered by the end of August on a unified platform operated by an industry association in China, amid a nationwide campaign to reduce financial risks.

The volume was up 18 percent from a month ago, the National Internet Finance Association (NIFA) has said.

The platform, established in June 2017 had recorded 94.31 million lending deals submitted by 66 online agents, which involved a total of 3.6 million borrowers.

Online registration starts for victims of illegal fundraising cases (Infosurhoy) Rated: A

China’s Ministry of Public Security has started registering investors of 50 illegal fundraising cases involving online peer-to-peer lending platforms to better protect their legitimate interests.

Investors of these platforms can register their information and obtain the latest development of related cases at .

Public security authorities will ensure utmost transparency in their investigation and do their best to recover the losses of investors, an official with the ministry’s economic crime department said.

Registration will open for investors of more cases, the official added.

European Union

China UnionPay kicks off European expansion with UK launch (Financial Times) Rated: AAA

China UnionPay is the biggest payment card issuer in the world and is now launching their cards in the UK, the move will challenge Visa and MasterCard and is the first step in a planned European expansion. The company has struggled to compete with Alipay and WeChat Pay in China

Klarna Bank to acquire UK’s Close Brothers Retail Finance (Compelo) Rated: A

Payment provider Klarna Bank has agreed to acquire Close Brothers Retail Finance (CBRF) from UK merchant banking group Close Brothers Group for an undisclosed sum.

Klarna said that the acquisition of CBRF will enable the payments firm to expand its retail financing services for customers in the UK market.

Banks jump on to the fintech bandwagon (Financial Times) Rated: A

The Treasury Report on fintech released a few weeks ago talks about the promise of data sharing between big bank and technology. The author in the FT questions this enthusiasm, wondering if these tech companies can be trusted with financial data. The article points out that while the EU started allowing data sharing earlier this year it comes with several provisions to protect consumers.

International

Qatar Fund Is Near Investment in China’s Top Online Lender (Bloomberg) Rated: AAA

The Qatar Investment Authority is in advanced talks about an investment in Lufax, China’s biggest online lender, as the sovereign wealth fund seeks to tap into the world’s second-largest economy, people familiar with the matter said.

QIA has been negotiating the potential purchase of a minority stake in Lufax, which is an arm of China’s Ping An Insurance (Group) Co., according to the people. It could spend about $500 million to $1 billion, the people said, asking not to be identified because the matter is private.

A deal could be announced as soon as the next few weeks, the people said. Shanghai-based Lufax, which became profitable for the first time last year, completed a fundraising in 2016 that valued it at $18.5 billion.

What is happening in the IPO market? (Alpha Street) Rated: AAA

The IPO market is abuzz as usual, with many companies inching closer to public listing, while a few have backtracked from their plans. Let’s take a quick look at what you can expect in the coming days.

Cloud-based financial planning company Anaplan Inc. intends to raise up to $100 million through an IPO to meet the working capital and fund operations. The company has roped in former Tesla (TSLA) CAO David Morton as its CFO. It is currently working with an exchange to list the shares under the “PLAN” ticker. It was founded in 2006 as a cloud-based business planning and performance management platform based on a single hub.

Funding Circle Holdings is inching closer to a public listing as the company plans to raise gross proceeds of about 300 million pounds. Shares will be listed on the London Stock Exchange. Funding Circle is a small and medium enterprise loans platform with operations in the UK, US, Germany, and the Netherlands.

Australia

ASIC warns all fintech business lenders over contracts (AFR) Rated: AAA

The corporate regulator wants all online business lenders to remove unfair terms from their contracts just like Prospa has done, indicating start-ups that want to compete against banks will be held to similar regulatory standards as community expectations lift following the royal commission.

In a letter sent last week to Brad Kitschke, CEO of industry lobby group FinTech Australia, the Australian Securities and Investments Commission declared “action [is] required”.

Why this small business owner used a peer-to-peer personal loan for funds (Finder) Rated: A

One of these owners is Mel Flannagan, owner of software and design company Nook Studios. Flannagan’s work is project based and primarily with government departments, so cash flow needs to be managed carefully.

“Sometimes contracts just take a little bit of time to come through,” Flannagan says. But while Nook Studios is a unique business, she says their cash-flow situation is quite common, with the cyclical nature of waiting for invoices to be paid just being “the nature of having a small business”.

To ensure she had the funds to keep her business going, Flannagan didn’t even consider a traditional business loan because she knew she wouldn’t qualify.

Asia

Going international is nice on PowerPoint but difficult to execute, says Grab president Ming Maa (Deal Street Asia) Rated: AAA

“I suspect going international is a nice thing on PowerPoint, but the actual execution of that is very difficult,” Grab president Ming Maa said in a fireside chat at DEALSTREETASIA‘s Asia PE-VC Summit 2018 last week.

Drawing parallels with Meituan-Dianping’s tumultuous ride-sharing journey, Maa said, “We saw that Meituan spent somewhere around $500 million in two different cities in China. In that process, they spent a tremendous amount of capital on subsidies. What that tells me is – for a company to spend so much on subsidies means there are natural barriers to entry for this business.”

E-Commerce Platform KinerjaPay Launches P2P Lending Platform “KFUND” (Crowdfund Insider) Rated: A

KinerjaPay Corp., (OTCQB: KPAY), a digital payment and e-commerce platform, announced on the launch of its new peer-to-peer (P2P) lending platform, KFUND. According to Kinerjapay, PT. Kinerja Simpan Pinjam has been officially registered and will manage KFUND brand as an online lender that focuses on micro-lending activities.

Kinerjapay reported that KFUND will mainly target consumer sectors to provide micro-lending facilities in the range of $100 to $1,000 on biweekly or monthly term loans.

Africa

The Digital Transformation of Banking – Driving Constructive Economic Outcomes from the FinTech Ecosystem in Africa (Global Banking and Finance) Rated: AAA

The hugely successful events in our Finnovation Africa Series in Uganda, Ethiopia, Kenya and South Africa saw more than 800 thought leaders, FinTech pioneers and bankers representing the foremost financial institutions from across the continent gather to address how FinTech can contribute to the positive and profitable transformation of financial services in Africa. From banking powerhouses to start-up FinTech disruptors, Finnovation World sets the stage for the positive and profitable transformation of financial services –and Ethico Live! is now excited to announce the expansion of the conversation to Finnovation Ethiopia 2018for the 2nd year at the Radisson Blu Addis Ababa on the 1st of November 2018. The event will seek to harness the FinTech revolution to boost strategic economic priorities such as financial inclusion and deepening – and how FinTech can make a positive and profitable difference in Africa.

With a focus on the most significant technologies driving the financial services paradigm shift, including Blockchain & Cryptocurrencies, Open Banking & APIs, Payments innovation and Mobile Money, Finnovation Africa: Ethiopia 2018 also features a number of innovative sessions such as The Wolves’ Den, Sheba Valley: Harnessing Ethiopia’s FinTech boom, Inside the Investor’s Mind,and live-on-stage interviews with international Finnovators and African FinTech pioneers.

Authors:

George Popescu
Allen Taylor

Wednesday June 13 2018, Daily News Digest

Financial Strain by category

News Comments Today’s main news: Money360 surpasses $750M in commercial real estate loans closed. Attorneys defend $16M LendingClub fee. Funding Circle lending unlocked 75K jobs in 2017. Westpac ends Prospa relationship. Today’s main analysis: Should financial advice be tailored along credit and gender lines? Today’s thought-provoking articles: GreenSky look fairly valued, but there are competitive risks. 4 companies driving […]

Financial Strain by category

News Comments

United States

United Kingdom

European Union

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News Summary

United States

Money360 Surpasses $ 750 Million in Commercial Real Estate Loans Closed (Globe Newswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced it has surpassed $750 million in loans closed since inception. This includes $82.5 million in loans closed in May 2018.

Notable loans closed in 2018 include:

  • A $26 million bridge loan for a specialty retail center in Punta Gorda, FL, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $15.6 million bridge loan for an office building in Houston, TX, brought to Money360 by Rich Perry at Churchill Commercial Capital
  • A $17.25 million bridge loan for a medical office in Newport Beach, CA, brought to Money360 by Scott Monroe at NorthMarq Capital, Inc.
  • A $7.9 million bridge loan for Raytheon’s industrial space in Albuquerque, NM, brought to Money360 by Jake Clopton at Clopton Capital
  • A $9.2 million bridge loan for a neighborhood center in Tulsa, OK, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $5 million bridge loan for an office park property in South Bend, IN, brought to Money360 by Dean Giannakopoulos at Marcus & Millichap Capital Corp.
  • A $5 million bridge loan for a manufactured housing property and park in West Sacramento, CA, brought to Money360 by Jake Clopton at Clopton Capital
  • A $3 million bridge loan for a mid/high rise multifamily building in Detroit, MI, brought to Money360 by Robert Krupka at Gelt Financial
  • A $2.3 million bridge loan to a self-storage building in Panama City Beach, FL, brought to Money360 by Doug Brooks at Marcus & Millichap Capital Corporation
  • A $1.6 million bridge loan to a multifamily building in Macon, GA, brought to Money360 by Naveed Khan

Attys Defend $ 16M LendingClub Fee Bid That ‘Shocked’ Judge (Law360) Rated: AAA

Attorneys seeking $16 million for representing LendingClub Corp. investors in securities class actions against the peer-to-peer lending company defended their fee bid Monday to a California federal judge who previously said the amount “shocked” him, saying their work produced an “outstanding result under any measure.”

The 28-page motion filed by attorneys for Robbins Geller Rudman & Dowd LLP, lead counsel for the lead plaintiff, argues that the requested 13.1 percent cut of the $125 million settlement is reasonable in light of the results achieved, the risks…

GreenSky Looks Fairly Valued, But Competitive Risks Remain (Forbes) Rated: AAA

GreenSky followed through with its plans to go public within weeks of confidentially filing with the SEC last month – making it the largest fintech IPO in the country since LendingClub and OnDeck went public nearly four years ago. The company offered 38 million shares at $23 per share to raise $874 million (with the actual proceeds being $830 million after underwriting fees). The company’s shares have largely traded around this level since then. This points to a valuation of $4.4 billion for GreenSky – around the figure .

GreenSky’s role as an intermediary between lenders and potential borrowers with strong credit histories makes its overall business model a risk-averse one, as it bears negligible credit risk. At the same time, the relationships it has built with banks, home improvement companies and healthcare providers promise to drive growth at a steady pace over the foreseeable future, even as the company explores other growth segments.

Four companies driving the bank tech discussion, with only one a FAANG (American Banker) Rated: AAA

Facebook, Apple, Amazon, Netflix and Google garner so much attention that they have their own collective shorthand, FAANG. But at American Banker’s Digital Banking conference this week, a mostly different set of companies were top of mind: Call them SASA, or Starbucks, Amazon, Sears and Acorns.

More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through Starbucks’s app, and that just over 23 million consumers over the age of 14 will use the Starbucks app to make a point-of-sale purchase at least once every six months, according to Gavin Michael, head of technology for Citigroup’s Global Consumer Bank, citing data from research firm eMarketer.

Should financial advice be tailored along credit and gender lines? (American Banker) Rated: AAA

Women with credit scores below 700, according to an analysis conducted by Elevate’s Center for the New Middle Class, an independent research arm of the online lender.

Source: American Banker/Elevate

Fifty-six percent of women with subprime scores say their finances cause them significant stress. About 45% of men with subprime credit scores say the same, as well as only 23% of women with prime ratings and 16% of men with prime ratings.

Seventy percent of women with subprime credit scores work full time, versus 62% of women with prime scores.

The woman with subprime credit is 41% more likely to have children in her home than a prime woman. She is also 79% more likely to have an elderly parent living with her.

Only 39% of Non-Prime Women Believe They Have the Skills to Manage Their Finances (SC Now) Rated: A

Most surprisingly, only 39% of this group believe they have the skills to manage their finances, despite the fact that ongoing research from myriad sources have found women to be the primary financial stewards of their households.

Key findings in the research include:

  • Two-thirds of non-prime women live paycheck to paycheck.
  • They are 3x more likely to have lost a job in the last year compared to prime women
  • Only 34% of non-prime women hold salaried jobs
  • They are 4x more likely to have trouble predicting next month’s income compared to prime women
  • More than 4 out of 5 non-prime women admit to running out of money at least once a year
  • More than one quarter admit to running out of money every month
  • They are 24% more likely to say their finances cause them stress compared to non-prime men
  • Only 13% of non-prime women would have money on-hand to cover an emergency of $1200
  • Non-prime women are 6x more likely to have used a payday loan

But another myth persists: Seasonal businesses suffer most of all. SBA’s data doesn’t bear this out, showing companies across varied industries tend to follow similar patterns in terms of failure. Manufacturing-based businesses, for example, are no more protected from failure than seasonally driven businesses like restaurants and retail stores, meaning other factors determine companies’ likelihood of long-term success.

An Ohio State University study indicated that  of restaurants don’t make it past the first year. Another 2005 study amended that, saying that the 60 percent figure applied to the first three years.

With CB Insights finding that  of small business failures can be attributed to cash flow problems, it’s imperative that seasonal business owners find ways to “spread the wealth.”

Kabbage, for example, ties its line of credit to a small business’s live data, allowing the company to adjust lines of credit in real time to match a business’s seasonal needs.

Why Digital Lenders Are Tightening Their Lending Criteria (PYMNTS) Rated: AAA

In the early days of online lending, the big appeal was access to funds for potential borrowers with few, if any, options for securing capital.

According to recent reports, some of the largest marketplace lending players in the field — SoFi, LendingClub, AvantProsper — are being pushed by their investors to batten down their credit hatches and demand better credit scores from their borrowers, as well as shorter maturities so they can make more attractive offerings to investors as they look to repackage those loans into asset-backed securities.

According to KBRA, the weighted average of FICO credit scores of Prosper’s loans, packaged in ABS, increased to 717 in a March 2018 deal from 704 in a sale two years earlier. And they weren’t the only lender to see its average score go up — SoFi, increased the weighted average of its FICO credit scores to 744 in a sale earlier this year from 732 in a deal at the start of last year.

Overlooked Millionaires: Finding A Home In The Democratized Family Office Model Of Financial Advice (Forbes) Rated: A

Over the last 20 years, the number of American investors with between $2 million and $20 million in investible assets has grown remarkably. According to 

Optimal Blue, Finastra partner for pricing integration (Mortgage Professional America) Rated: B

Optimal Blue and Finastra have announced an expansion of their relationship under which Optimal Blue will be integrated Finastra’s Fusion MortgagebotPOS product.

The new integration enables banks and credit unions to provide mortgage applicants with Optimal Blue’s live pricing searches via any point-of-sale channel. Fusion MortgagebotPOS is a web-based platform that allows lenders to receive applications through every point-of-sale channel: consumer-direct via the internet, in the branch or call center, or through professional loan officers.

Direct 1031 Exchange Launches New Online Platform for Accredited Investors (Sys-Con Media) Rated: A

A new online platform is now available for accredited investors seeking direct access to Section 1031 exchange investment opportunities with the launch of real estate investment sponsor Direct 1031 Exchange. The company provides Section 1031 exchange offerings directly to investors using the Delaware statutory trust structure under SEC Rule 506(c).

Through Direct 1031 Exchange’s online investment portal, accredited investors can participate in 506(c) DST offerings sponsored by the firm with no upfront load or commission paid by the investor.

LendStreet and Its Unique Approach to the Debt Settlement Space (Lend Academy) Rated: A

LendStreet is a lender that works with consumers who are experiencing financial difficulties. These are people who have taken on too much debt and find themselves in a hole, unable to pay it all back. But rather than declaring bankruptcy, these people want to work things out and reduce their debt through a debt settlement.

This is the point when the debt settlement companies come in. LendStreet lends only to customers whose debt is being or will be negotiated by a debt settlement company. Most of LendStreet’s customers are already enrolled with debt settlement companies before getting to LendStreet. Those who come directly to LendStreet are paired with a debt settlement company to negotiate down their debt, which will be funded by a LendStreet loan.

Chris Sugden of Edison Partners (Lend Academy) Rated: A

Chris Sugden is the Managing Partner of Edison Partners, a growth equity firm based in Princeton, New Jersey. They provide growth capital for small business doing $5 million to $20 million in annual revenue, typically based on the east coast between DC and Boston. They have never invested in a Silicon Valley startup.

In this podcast you will learn:

  • The history of Edison Partners and their unique New Jersey location.
  • The difference between East Coast and West Coast entrepreneurs.
  • The three different verticals they cover.
  • The impact that Marcus will have on the broader fintech space.
  • The shift Chris has seen with the banks as they embrace fintech.
  • The interesting fintech trends Chris is focused on right now.

Radius in Boston working with fintech firm on online business checking platform (American Banker) Rated: A

Radius Bank in Boston has lined up its next fintech project.

The $1.2 billion-asset online bank is working with a Treasury Prime, a San Francisco startup, to create a business checking account. The Tailored Checking Account will allow business owners around the country to quickly open accounts online.

SME smartphone lending set to take off (P2P Finance News), Rated: A

Fintech platform Kabbage predicts that 20 per cent of US dollars lent to SMEs will be via smartphone apps by the end of 2018.

Kabbage analysed nearly 150,000 US small businesses and found an increasing trend towards lending organised via mobile devices, with the number of loans increasing more than 300 per cent.

Online Lender Accused Of Using Tribe To Shield Illegal Loans (Law 360) Rated: A

An internet lending company and others have engaged in a plot to charge illegally high interest rates on loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit, a group of borrowers said in a proposed class action filed in California federal court Monday.

Four plaintiffs from various states claimed in their complaint that even though Big Picture Loans LLC said it was owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, loans made in Big…

Nobel laureate Kahneman says human financial advisors are still crucial (CNBC) Rated: A

Daniel Kahneman, a Nobel Prize-winning economist, said Tuesday financial advisors still play a major role in the finance world — despite recent technological disruptions in the industry — as they act as therapists for investors.

Robo-advisors are growing at a very fast rate, surpassing $200 billion in assets under management last year, according to BackEnd Benchmarking, which releases quarterly data on robo-advisors.

Lending Express Opens Shop in Silicon Valley & Adds Moshe Kazimirsky to Team (Crowdfund Insider) Rated: B

Lending Express, an AI-powered marketplace for business loans, has opened a new Silicon Valley office in San Mateo, as well as the appointment of Moshe Kazimirsky to VP of Strategic Partnerships and Business Development to support the West Coast team. The announcement comes on the heels of Lending Express’ May $2.7 million seed funding round led by Entrée Capital, iAngels, and existing investors.

PeerStreet’s CEO Brew Johnson and Leadership Team Wins Comparably’s 2018 Culture Awards in Multiple Categories (Business Wire) Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has won Comparably’s 2018 Culture Awards in the following categories:

  • Best CEOs for Diversity
  • Best CEOs for Women
  • Best Managers
  • Best Leadership Team

Robots could replace as many as 10,000 jobs at Citi’s investment bank (Business Insider) Rated: A

Robots could replace as many as 10,000 human jobs at the banking giant Citi within five years, its president told the Financial Times.

Wells Fargo bans cryptocurrency purchases on its credit cards (Payments Source) Rated: B

Wells Fargo & Co. customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere.

United Kingdom

Lending through Funding Circle unlocked 75,000 jobs in 2017 (Pr Newswire) Rated: AAA

A new report published today by Oxford Economics reveals that lending through Funding Circle, the global small business loans platform, unlocked 75,000 jobs in the United States and Europe in 2017.

Peer-to-peer lender Funding Circle to create 200 UK jobs (B Daily) Rated: A

Peer-to-peer lending platform Funding Circle is creating 200 jobs in the UK.

The London-headquartered firm has this morning (June 13) confirmed plans to take on 400 new employees in 2018, half of whom will be recruited in the UK.

LendInvest’s path from adversity to opportunity (City A.M.) Rated: A

Although the online marketplace model had been proven to work – Amazon and eBay had been established over a decade earlier – LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play.

The path to success is littered with unforeseen obstacles, good days can follow bad, tailwinds become headwinds. LendInvest is no exception. When the company was young, raising debt finance often felt like an uphill struggle. It took many air miles and international calls, but eventually an eastern European bank offered a £2m funding line, later increased to £6m.

Ranger Direct shares end higher after bowing to activist pressure to wind up (Financial Times) Rated: A

Ranger Direct Lending operates a £128 million investment company which has faced pressure from activist investors who own almost 30% of the company.

The board proposed yesterday of winding down the company as Ares Management withdrew itself from consideration to manage the trust. Ranger’s board also suggested shareholders vote against newly nominated directors by activist investors.

Ranger Direct Lending has struggled as defaults have crept up in the sector.

Monzo launches task automation with IFTTT (Tearsheet) Rated: A

Personal finance apps offer customers insights into their budgeting and spending habits, but U.K.-based digital bank Monzo is taking that a step further by letting its customers design their own rules on how they want to interact with their money.

Monzo’s tie-up with If This Then That, rolled out in early June, lets customers automate tasks using their financial data through personalized rules. IFTTT is a web and app-based platform to help customers get apps and devices to work together. It lets users set up “if, then” rules; for example, “if I post an Instagram, post it as a native photo on Twitter,” or “if I add a new task to an Amazon Alexa to-do list, add it to the iPhone reminders app,” and so on. IFTTT’s integration with consumer financial data lets them experiment with new use cases for financial data and lets the bank learn more about customer preferences and behavior.

Collateral investors may have to join queue of creditors (Peer2Peer Finance) Rated: A

COLLATERAL investors may end up having to recoup any unpaid interest owed as a creditor of the company, the administrator of the closed peer-to-peer lending platform has revealed.

An update from BDO said its initial view was that due to section 26 of the Financial Services and Markets Act – which deems that agreements with unregulated parties are unenforceable – investors would be treated as creditors.

This means they would have to submit documentation to BDO on what they are owed and wait to see what funds can be recouped through the administration.

European Union

B2B FinTech Could Earn Index Ventures $ 2 Billion This Year (PYMNTS) Rated: A

Venture capitalist (VC) firm Index Ventures is on its way to earn $1.6 billion from its early investments in B2B FinTech, according to Forbesreports Monday (June 11). Index Ventures’ portfolio includes iZettle and Adyen, with unconfirmed reports of a Funding Circle initial public offering (IPO) that could push Index Ventures into the $2 billion mark.

LendInvest joins Luxembourg fintech hub (Finextra) Rated: B

LendInvest, the UK’s leading online marketplace platform for property finance, has become a fellow of the Luxembourg House of Financial Technology (LHoFT), the country’s leading FinTech innovation hub.

LendInvest has had a presence in Luxembourg since 2014 when it established its first Luxembourg-domiciled fund.

Fintech threatens to eclipse banks that do not adapt digitally (Financial Times) Rated: A

Writing an opinion piece for the FT BBVA Executive Chairman Francisco Gonzalez talks about the rise of fintech and big tech in banking. He explains that banks still have an advantage when it comes to security, privacy and compliance.

A new regulatory model is needed for the new era of digital banking and data. Banks need to build on what they do best and evolve to ensure they stay relevant. He believes there is a paradigm shift occurring in banking and that banks need to find a new way to support customers and build out their assets

Australia

Westpac Ends Prospa Collaboration After IPO Postponement (PYMNTS) Rated: AAA

Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.

Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.

Dover Financial Group calls in outstanding debts from financial planners (Australian Financial Review) Rated: A

Dover Financial Group lured financial advisers by offering to postpone payment of annual licence fees for a year or more, but the collapsed company is now calling for immediate payments of those debts, leaving planners, who are already worried about their future, furious.

India

With Rs 35 cr in disbursals, Lendbox is creating a new asset class for investors (Your Story) Rated: AAA

Basing only 20 percent of its risk assessment engine on the CIBIL score, the platform assesses a borrower’s credit-worthiness based on their social, professional, behavioural analysis, including their salary expenditure trends and limits on credit card. The founders claim that the platform takes close to 130 data points into consideration before deciding on a suitable interest rate.

The borrowers are then classified between A1 (A2 and A3) and B3, with the rate of interest ranging from 12 to 36 percent.

Ekmeet says that close to 85 percent of loan requests are denied by the platform, and only 20 percent of their total users are from Tier II towns and cities.

Asia

Kakao Bank’s chatbot will answer up to 80% of requests (Fintech Futures) Rated: A

Kakao Bank, South Korea’s largest internet-only bank, is already showing the beta version of its customer support chatbot, which is scheduled to be launched sometime this month.

The bank says that the tech will help relieve the stress on its customer services department, which receives up to 80% of requests that could be automated.

Canada

Luge Capital goes huge with $ 75m fintech funding (Fintech Futures) Rated: AAA

Initially, $50 million of the raised capital was announced in October 2017 by the Caisse de dépôt et placement du Québec (CDPQ) and Desjardins Group, two of the fund’s major investors.

Sun Life Financial, the Fonds de Solidarité FTQ and La Capitale are also “significant” participants. Luge says it may expand the fund up to $100 million in the coming months.

Real estate crowdfunding in Canada: portal insights for 2017/18 (IT Business Blog) Rated: A

Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025.

Latin America

Defaults the largest driver of Brazil banking spreads -cenbank (Reuters) Rated: AAA

Credit defaults have been the main factor keeping Brazilian banks from cutting interest rates to households and companies, the central bank said on Tuesday, even as benchmark rates have fallen to all-time lows.

The average cost of credit fell 1.3 percentage points in 2017 to 21.3 percent, according to a central bank report, compared with a 6.75 percentage point decline in the benchmark Selic interest rate. Spreads fell 3.8 percentage points to 18.9 percentage points.

Defaults, which reached 3.2 percent at the end of 2017 according to a widely used metric, forced banks to keep interest rates high to account for potential losses, the central bank said.

Defaults were behind an average 37.4 percent of banking spreads in 2015-2017, the largest contributor to bumping up credit costs to consumers. Other reasons were administrative expenses, taxes and financial margins, a central bank report showed.

Authors:

George Popescu
Allen Taylor

Thursday May 31 2018, Daily News Digest

places that owe the most in student debt

News Comments Today’s main news: Online lenders tighten rules against default wave. UK P2P lenders join effort to overturn Brexit. Consumer credit sees the most financial complaints in UK. Today’s main analysis: Where is the most student debt? Today’s thought-provoking articles: How regulations will impact Ant Financial. The 7 most innovative fintech companies. Where is the fintech innovation right […]

places that owe the most in student debt

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United States

United Kingdom

China

International

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United States

Online lenders tighten rules as default wave rattles investors (American Banker) Rated: AAA

It’s gotten a lot harder to borrow money from the raft of fintech firms looking to bring online lending into the mainstream.

Besieged by a wave of defaults after several years of rapid growth, the biggest online lenders have been forced by bond investors to tighten underwriting standards. Social Finance, Prosper, LendingClub and Avant now demand higher average credit scores and offer shorter maturities to boost the quality of loans they repackage into asset-backed securities.

The shift in the $30 billion market comes after a swarm of borrower defaults in the past three years rattled ABS investors. It also marks a coming of age of sorts for the fintech startups that offered cut-rate loans to build a customer base. Now, with rates rising and a potential economic slowdown looming, the move toward higher-quality from the push for quantity has taken on added urgency.

According to Kroll, the weighted average of FICO credit scores of Prosper’s loans packaged in ABS increased to 717 in a March 2018 deal from 704 in a sale two years earlier.

LendingTree Study: Which Places Have the Most Student Debt? (PR Newswire) Rated: AAA

LendingTree today released its study on the places with the most student debt. To determine whether there are geographic variations in student debt, LendingTree analysts looked at a sample of anonymized users who logged into My LendingTree in the first quarter of 2018 and calculated how many had student loans, as well as the other reported statistics related to their balances.

Source: Lending Tree

Wells Fargo Plans to Expand Auto Lending Again (Lend EDU) Rated: A

Wells Fargo & Co. expects to increase its auto lending again. In mid-2017, Wells Fargo decided to reduce car financing and tighten its underwriting standards. In February 2018, the firm said it intended to finish consolidating its regional car loan centers by April, and that lending would expand within two quarters, reported Bloomberg.

For lenders in a $1.2 trillion U.S. auto loan market, they face a landscape with falling vehicle resale prices, making it difficult for them to soften losses from repossessing cars when borrowers default.

Principal Financial acquires digital advice startup RobustWealth (Investment News) Rated: A

Principal Financial Group is acquiring financial technology startup RobustWealth to improve its own technology offering and expand distribution capabilities among the banking, broker-dealer and registered investment adviser channels.

Principal also sees the RobustWealth’s platform — which includes digital advice, goal-based investment tools and client onboarding — as providing the foundation for a direct-to-consumer robo-adviser in the future.

What to Do When You Lend Family Money But They Can’t Pay You Back (Entrepreneur) Rated: A

Like many people, Entrepreneur Network partner Jeff Rose once has convinced himself it was a good idea to loan money to a family member. In reality, the situation can get messy when this close personal connection cannot return the investment. This does not mean Rose has given up on peer-to-peer lending, which is a helpful tool that can streamline the loan process.

OppLoans Named One of the Country’s Best Workplaces by Inc. Magazine (Markets Insider) Rated: A

Online lender and service provider OppLoans has been listed as one of the country’s 2018 Best Workplaces by Inc. Magazine. The award determination was based on employee survey results in areas like benefits, perks, executive leadership and opportunities for career development.

OppLoans enjoys a rating of 4.9 out of 5 stars on Glassdoor as well as a 98 percent retention rate and 99 percent approval rating for CEO Jared Kaplan. Last December, Glassdoor rated the Chicago-based startup as the sixth-best place to work nationally for small-to medium-sized businesses. The firm was named #219 on the 2017 Inc. 500 list of fastest-growing companies and the third-fastest growing technology company in Chicago by Built in Chicago.

Autoloans Company Lendbuzz Secures $ 30 Million in Funding (CTech) Rated: A

Boston-headquartered car financing service Lendbuzz Funding LLC has raised $30 million in financing, the company announced Tuesday. The round was led by BHI, the U.S. division of Israel-based Bank Hapoalim, by Viola credit, the growth and venture lending arm of Israel-based Viola Group, and by U.S.-based ConnectOne Bank.

The company, which currently offers its services in most U.S. states, says it reviews loan requests within 24 hours and transfers money immediately upon approval. Since its establishment, the company raised $43 million in both debt and equity funding.

Fifth Third Bank eBus offers free financial advice (The Blade) Rated: B

For the next week, a large bus operated by Fifth Third Bank will travel throughout Toledo, offering residents free money management advice and job-searching services.

The bus, called the Fifth Third Bank Financial Empowerment Mobile, or eBus, was located at the Lucas Metropolitan Housing Authority on Wednesday, and though it’s operated by Fifth Third, its services can be used by any residents no matter which bank they use, said Loretta Humphrey-Cruz, community development relationship manager.

PLI 23rd Annual Consumer Financial Services Institute (JD Supra) Rated: B

The third location of PLI’s 23rd Annual Consumer Financial Services Institute will take place in PLI’s San Francisco Conference facility and via concurrent live Webcast on June 25-26, 2018.  This will be the first time in many years that the Institute will take place in San Francisco.  Since the first location of this event in NYC on March 26-27 was well-attended, and the second location in Chicago on May 7-8 was sold-out, anyone interested in attending the program in San Francisco is encouraged to act quickly to register.

United Kingdom

Tech Entrepreneurs Launch Campaign to Reverse Brexit Vote (Forbes) Rated: AAA

Could Britain’s leading technology entrepreneurs derail Brexit? More than 80 innovators and investors from across the UK’s tech sector have launched a new group, Tech for UK, which will campaign for a meaningful vote on the final terms of the Brexit agreement that the British Government is currently negotiating with the European Union. Such a vote should give Britons the option to vote for the UK to remain in the EU, Tech for UK argues.

The group boasts a string of high-profile business leaders from the tech sector, including Martha Lane-Fox, best-known as the co-founder of Lastminute.com, Giles Andrews, one of the founders of peer-to-peer lending pioneer Zopa, and George Bevis, the CEO of Tide Bank. It also features leading venture capital and private equity investors, such as Simon Murdoch, the managing partner of Episode 1 Ventures.

Consumer credit made up the bulk of financial complaints last year (Peer2Peer Finance) Rated: AAA

The FOS annual report for 2017/2018 found consumer credit products, which includes some peer-to-peer lending as well as payment protection insurance, accounted for the most complaints at 36,349 last year, up 40 per cent.

The Ombudsman upheld 47 per cent of complaints, up from 45 per cent a year before.

There was also an eight per cent increase in complaints about unsecured loans to 6,909, while credit card complaints were up 15 per cent to 11,073.

How to invest in property without buying a home (City A.M.) Rated: A

Over the past few years, property-oriented investment companies have been coming in thick and fast, bolstered partly by the launch of the Innovative Finance Isa (IFISA).

The minimum investment can be as little as £10, which isn’t a patch on the huge deposits needed to buy a house (the average deposit in London is more than £90,000).

Robo-rumble: Will FCA scrutiny stop digital services moving further towards advice? (Money Marketing) Rated: A

The FCA reviewed seven firms offering online discretionary investment management services and three firms giving automated advice.

It found service and fee-related disclosures at most online discretionary investment management firms in its sample were unclear.

Some firms did not make clear whether their service was advised, non-advised, discretionary or non-discretionary. Others also compared their fee levels with their peers in a “potentially misleading way”. For example, they compared a non-advised, non-discretionary service with a discretionary service solely on a cost basis without explaining the difference in the nature of the service.

FIVE SPEAKERS JOIN ‘FUTURE OF FINTECH’ EVENT LINE-UP (Business Cloud) Rated: B

Five speakers from the world of FinTech have been confirmed for BusinessCloud’s The Future of FinTech event in London on 12 July.

Nicola Horlick, a former investment banker turned high-profile player in the peer-to-peer (P2P) lending market, is the headline speaker for the breakfast event.

China

How Will Ant Financial, China’s Fintech Giant, Be Impacted By New Regulations? (Forbes) Rated: AAA

Regulations are expected to be implemented on money market funds. Ant Financial’s main money market fund, Yu’e Bao, has been rated as much weaker than its 

GXChain (GXS) Review – A Blockchain-based Commercialized Data Marketplace (Chain Bits) Rated: A

With the proliferation of data on the internet, there are many pain points for individuals. Since you do not own your data, someone can sell you information and personal data without sharing profits. In addition, data is often scattered among multiple platforms, making it difficult to manage. Finally, data is difficult, if not impossible, for individuals seeks to monetize and earn from it. They don’t know how the blockchain could be applied in this scenario to better their lives.

GXChain solves these pain points by obtaining user consent before collecting and storing user data on a blockchain.

GXChain wants to be the data trading network that protects user privacy and offers copyright protection and usability at the same time. It has real-world applications in insurance, online lending, consumer loans and banks.

International

7 most innovative Fintech companies right now (Forex News Now) Rated: AAA

Stripe-is one of the most valuable Fintech startups. It was worth over $9 billion in 2016.

Ant Financial-has a market capitalization of $60 billion, which makes it the most valuable Fintech company in the world.

Atom Bank-has raised over $290 million in financing.

Robinhood-Valued at $5.6 billion, offers its customers a mobile wallet that allows trading shares and exchange-traded funds without paying commissions.

Lufax-is an online peer-to-peer lending platform. It matches borrowers with investors for a fee of 4% and is valued at over $18.5 million.

SoFi-is valued at over $4.4 billion.

Coinbase-has over 13 million users and makes more than $1 billion in revenue a year.

Where In the World Is Fintech Innovation? (Bank Innovations) Rated: AAA

China is also at the forefront of innovation. The government is actively cultivating fintech there.

Fintech companies like Qudian, LuFax, and ZhongAn (owned by Ant Financial), China’s first online-only insurer, are now emerging. Investment bank CLSA ranks ZhongAn as the sixth most valuable e-finance company in the world. The Chinese government has also designated development zones, such as Zhongguancun and Shenzhen, for innovation industries.

Source: Bank Innovation
Australia

Banks’ $ 220m bill for dudding customers to rise ‘significantly’ (The Canberra Times) Rated: A

Banks are set to refund “significantly” more than the $220 million already set aside for financial advice clients who were charged for services that were never provided, as institutions search their files for customers who were ripped off.

What you should look for when buying a partially renovated house (Domain) Rated: A

A recent survey by online lender State Custodians found 52 per cent of people would be open to a renovation project for their next purchase but only 19 per cent of people would be keen on tackling a full fixer-upper.

On the other hand, a quarter of respondents would prefer taking on a partially renovated home as a project, with Millennials in particular more open to the idea of buying a half-renovated house.

India

ICICI Bank also wants to be a fintech (The Ken) Rated: A

In mid-2017, B Madhivanan, the chief technology and digital officer of ICICI Bank, met Rohan Angrish, the chief technology officer of online lender Capital Float. Madhivanan had questions about online lenders’ small-ticket loans. Fintechs like Capital Float lend to underserved segments like kirana stores that banks don’t normally touch.

Asia

Funding Societies partners with UOB Malaysia to accelerate small business growth (Deal Street Asia) Rated: AAA

United Overseas Bank (Malaysia) Bhd has partnered with regional peer-to-peer financing platform Modalku Ventures Sdn Bhd (Funding Societies) to connect startups and small businesses with alternative financing solutions.

Through the partnership, startups and UOB Malaysia’s small business customers will be able to raise up to RM500,000 directly from individual and institutional investors using Funding Societies’ platform without the need to pledge collateral.

Fintech firms need support from banks: SBV (Vietnam News) Rated: A

The fintech (financial technology) sector is facing difficulties of capital mobilisation shortage, inadequate legal framework and banks’ hesitance in co-operation, said Lê Minh Hưng, Governor of State Bank of Việt Nam (SBV).

Hưng told the Việt Nam fintech forum 2018 held in Hà Nội on Wednesday that fintech and banks could contribute to expand financial universalisation, and promoting hunger eradication and poverty reduction while enhancing social equality and sustainable economic development.

Japan’s Gumi Games Founder Launches $ 30M Crypto Fund (Blockchain News) Rated: A

Japanese mobile games publisher gumi today launches a fund to invest in promising global cryptocurrency companies. With USD 30 million in initial investment secured, the venture capital fund is moving to open up the Japanese crypto startup market to international investors, honing in on a target that has, up to now, been a struggle to access and understand.

While the Japanese yen accounts for over 56 percent of Bitcoin volume, gumi believes that there is lack of understanding of Japan’s crypto market and the project’s leaders are keen to fill a void in the country that was also the first to legalize bitcoin.

He has helped to raise over USD 250 million to date for companies such as Bee Token, the Decentralized AirBnB and crypto lending platform Celsius Network.

Africa

Fintech in Africa: what investors are looking for (Fin24) Rated: AAA

According to EcoBank, more than 57% of all mobile money accounts globally can be found in sub-Saharan Africa, with the African fintech market set to grow from $200m currently to $3bn by 2020.

A recent study by McKinsey found room for growth in meeting unmet banking needs in Africa. These include borrowing, saving, and investing across the continent. South Africa alone is set to see an increase in banking revenues of $4bn over the next five years.

Kenya calls for regulation of fintech lenders (IT Web) Rated: A

A boom in  by fintech firms in Kenya has led to an increase in predatory lending practices, the country’s central bank governor said yesterday, calling for the sector to be regulated.

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.

Canada

One set of borrowers at greater risk are Canada’s 1.14 million small businesses, defined as companies that employ up to 99 workers. Statistics Canada reports that small businesses represented 98 per cent of all businesses, employed 70 per cent of workers, and generated 30 per cent of each province’s GDP on average. This category includes startups and high-growth firms, which represent Canada’s best hope for job creation and economic growth.

Fortunately, small businesses now have an alternative source for loans called peer-to-peer (P2P) lending. These online platforms match borrowers and investors directly and can provide loans cheaper and faster than traditional sources. How can that be? The answer is technology.

Fintech Select Records a Net Profit of $ 986k for Q1 Ending March 31 2018  (GlobeNewswire) Rated: A

Fintech Select Ltd. is pleased to announce that its financial statements for the Q1 ending March 31 2018 have resulted in a net profit of $986k. Q1 2018 Financial Statements and Management Discussion & Analysis (“MD&A”) have been filed on SEDAR.

Authors:

George Popescu
Allen Taylor

Friday April 27 2018, Daily News Digest

Canada investments

News Comments Today’s main news: Kabbage buys Orchard.Ascentium Capital issues $330M securitization.LendingTree reports record Q1 results.Funding Circle issues second MPL deal.Revolut raises $250M, achieves unicorn status.BBVA issues first blockchain loan from a global bank.IOU Financial releases 2017 results. Today’s main analysis: Canadian fintech funding declines 60 percent in Q1. Today’s thought-provoking articles: Where the oldest […]

Canada investments

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United States

United Kingdom

European Union

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Canada

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United States

It’s Official: Kabbage To Acquire Orchard (Lend Academy) Rated: AAA

It was the worst kept secret in fintech. There were rumors flying around during LendIt Fintech earlier this month and then Bloomberg published this story a couple of weeks ago about the pending deal. Well, today it became official. In a press release this morning it was confirmed that Kabbage, the tech-focused small business lender, will acquire Orchard.

So, what will become of Matt Burton and his team? Some clues are provided in the press release:

Orchard’s CEO and co-founder, Matt Burton, as well as Chief Analytics Officer and co-founder, David Snitkof, will both join Kabbage in leadership roles upon the closing, helping oversee technology integrations and future innovations. In total, Kabbage will add more than twenty Orchard employees who are predominantly focused on advanced analytics, data science and engineering to its New York City office.

Kabbage plan in Orchard deal: Expand offerings to banks, small businesses (American Banker) Rated: A

Kathryn Petralia, president and co-founder of Kabbage, said the acquisition will help the company diversify its business and offer more data-driven services to small businesses and financial institutions. It currently works with ING, Santander and Scotia Bank. Kabbage’s U.S.-based loans are issued by Celtic Bank in Salt Lake City.

The Orchard name will not survive. “At closing we will be Kabbage,” Burton said.

Until now, Orchard has been providing loan and portfolio analysis to other online lenders. This business model will be discontinued and those relationships will most likely end. Orchard’s current clients are being told about its sale to Kabbage, Burton said.

Ascentium Capital Announces $ 330 Million Securitization (Ascentium) Rated: AAA

Ascentium Capital issued a $330 million small ticket equipment securitization of Ascentium Equipment Receivables 2018-1 Trust.

This represents the company’s ninth securitization since 2012 and the first time a non-investment grade, independent equipment finance company received triple AAA and Aaa ratings from both Standard & Poor’s and Moody’s.

LendingTree Reports Record 1Q 2018 Results (Markets Insider) Rated: AAA

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com today announced results for the quarter ended March 31, 2018.

First Quarter 2018 Business Highlights

  • Revenue from mortgage products of $73.5 million represents an increase of 17% over first quarter 2017 driven by strong growth in both purchase and refinance revenues at 13% and 18%, respectively.  According to Mortgage Bankers Association, originations industry-wide were projected down 4% in the comparable period.
  • Record revenue from non-mortgage products of $107.6 million in the first quarter represents an increase of 55% over the first quarter 2017.
  • Revenue from our credit card offerings continued its momentum, growing to $46.1 million in 1Q, up 36% over the first quarter 2017.
  • Personal loans revenue of $26.0 million grew 53% over first quarter 2017.
  • Home equity revenue continued to climb, growing 81% over first quarter 2017.
  • More than 8.0 million consumers have now signed up for free credit scores and savings alerts through My LendingTree.  Revenue contribution from MyLendingTree grew 76% in the first quarter compared to the prior year period as new features, such as Credit Analyzer and free credit monitoring, are driving increased engagement.

LendingTree Study Reveals Which Places Buy the Oldest Used Cars (PR Newswire) Rated: AAA

LendingTree today released the findings of its study on the places that buy the oldest used cars. LendingTree analyzed auto loan offers for borrowers in the top 50 U.S. metros (based on population) to find the average age of used cars financed in each metro, as well as which makes of used cars were most popular.

The national average age of a used car people sought to finance was six years old, but some parts of the country prefer older used cars more than others.

Source: Lending Tree

Mobile Banking One of Top Three Most Used Apps by Americans, 2018 Citi Mobile Banking Study Reveals (Citigroup) Rated: AAA

Apps for mobile banking have become some of the most widely used by Americans, according to Citi’s 2018 Mobile Banking Study, released today. The survey of 2,000 U.S. adults found that, measured by top two ranked responses, 31 percent of consumers use their mobile banking app the most, behind only apps for social media (55 percent) and the weather (33 percent).

“Over the past year we’ve witnessed this increase in engagement first-hand, with mobile usage in North America increasing by almost 25 percent, and we don’t see this trend slowing down any time soon.”

LendingClub was sued for the fees it charges — how you can avoid being overcharged (Market Watch) Rated: A

Pay attention to both the interest rate advertised, as well as the annual percentage rate (APR), Clements said. If they’re different, the lender is likely factoring additional fees into your annual percentage rate.

You may need to borrow more money than you expected if that’s the case, he said, because the total amount you would receive will be less than you asked for.

Research several lenders before choosing which one you want, he said. And if there are any unfamiliar terms, or any confusion about how much you’ll pay back monthly, ask.

Digital bank in a box: Fintech offers branding tool (American Banker) Rated: A

The core systems provider Nymbus is offering a new product for bank customers that want to get in on the burgeoning trend of having a stand-alone, digital brand.

Dubbed SmartLaunch, the offering enables financial institutions to create a digital brand under their existing charter in as little as 90 days, according to Nymbus. The product is built on Nymbus’ cloud-based SmartCore platform, and the company says it provides banks that use the service with all outsourced operational and technological requirements to run the digital bank. Also included are client support, digital marketing and website services.

Source: American Banker

RealtyMogul and Comunidad Realty Partners Close $ 30 Million in Texas Multifamily Properties (Citizen Tribune) Rated: A

RealtyMogul, a pioneer in providing private real estate to discerning investors, announced that MogulREIT II, its real estate investment trust or “REIT,” has completed investments in multifamily apartment complexes in Fort Worth, Texas and San Antonio, Texas, consisting of over 450 units.

The properties were acquired through a partnership with Comunidad Realty Partners, a dynamic real estate investment firm specializing in workforce housing communities in culturally diverse neighborhoods.

Scaling Real Estate Crowdfunding: PeerStreet Establishes a Culture of Excellence at the Top (Crowdfund Insider) Rated: A

Loans on PeerStreet are sourced and curated from vetted private lenders throughout the United States. These lenders have real estate expertise and established borrower relationships. To date, PeerStreet has helped to finance over $900 million in loans by using this partnership approach. The properties they help finance are typically smaller in value – a segment of the industry that is usually overlooked by big institutional money. Loans range from 6 to 24 months and are first lien so investors have a good degree of security.  Most of the loans are below a loan to value of 75%. About a year ago, PeerStreet announced having funded $300 million in loans. In less than 12 months, PeerStreet has funded double that number.

PeerStreet is doing small loans commercial, some multi family and mixed used properties. The largest loan size is around $5 million but there can be exceptions. The rate of return for investors during 2017 stood, on average, at 8% net of fees. As for defaults, so far only five loans have gone into foreclosure but they have not experienced any loss of principle – a positive metric.

Citizens Bank Taps Finastra and Infosys for Trade Finance Solution (Citizens Bank) Rated: A

Citizens Bank, working with Infosys as its implementation partner, has selected Finastra to power the trade finance solution it offers to its corporate clients. This new capability will enable Citizens’ corporate clients to digitize traditionally paper-based trade processes, leading to increased efficiencies and reduced costs.

The new trade finance offering will allow the bank to meet increased client demand. Citizens picked Finastra’s Fusion Trade Innovation for its end-user experience, ability to support all trade products, capacity to integrate with downstream systems through open APIs and its high level of configurability.

Consumers in Columbus less likely to put fraud alerts on their credit reports (The Columbus Dispatch) Rated: A

However, a new study finds that consumers in the biggest Midwest cities, including Columbus, are much less likely to put alerts on their credit reports than those in other cities, such as Las Vegas, Houston, Miami and New York. The study by online lender Lending Tree was based on a random sample.

US banks to get more freedom to offer unsecured loans (Financial Times) Rated: B

Joseph Otting, Comptroller of the Currency, said he believed standards should be relaxed to allow banks back into the small dollar loan market; loans would range from $500 to $5,000 and be paid back in 45 and 90 days; right now payday lenders dominate this space and typically take advantage of borrowers by charging high fees and rolling over the principal; allowing banks back into the market will help to bring more regulation and cut down on abuses.

Growth plans: Both big and small banks set to expand locally (Orlando Business Journal) Rated: B

David Stahl, senior vice president, SunTrust Bank: We acquired an online lender called LightStream two years ago, and that has been a huge opportunity for us. The days of people walking into a bank and applying for a loan are pretty much gone.

Free Research Reports on These Credit Services Stocks — MoneyGram, Navient, Oaktree Specialty Lending and On Deck Capital (PR Newswire) Rated: B

This morning, WallStEquities.com observes MoneyGram International Inc. (NASDAQ: MGI), Navient Corp. (NASDAQ: NAVI), Oaktree Specialty Lending Corp. (NASDAQ: OCSL), and On Deck Capital Inc. (NYSE: ONDK). Credit Services companies originate, acquire, and service loans to individuals and corporations. Their products include student loans, mortgages, lines of credit, private equity, and venture capital. All you have to do is sign up today for this free limited time offer by clicking www.wallstequities.com/registration

Covr Financial Technologies appoints Chris Growney to Board of Directors; Gregory Fleming and Robert Kerzner, join Covr’s Advisory Board (PR Newswire) Rated: B

Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, announced that Chris Growney, an advisor with venture capital and advisory firm Nyca Partners has joined Covr’s Board of Directors following Nyca’s role in Covr’s June, 2017 fundraising. Growney, a director, advisor and investor in a broad range of start-up and growth companies was most recently the founder of Clearwater Analytics, an investment analytics and accounting software company based in Boise, Idaho.

6th Avenue Capital Announces Promotion of Darren Schulman to President (deBanked) Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the promotion of Darren Schulman to President, effective immediately. In his new position, Schulman has oversight over originations, underwriting, operations, collections and strategic initiatives. He previously served as Chief Operating Officer, and will continue to report directly to Chief Executive Officer Christine Chang.

The company also announced today that Chang and Schulman have been appointed to the company’s Board of Directors.

Best Egg Teams with Junior Achievement of Delaware on Financial Education Initiatives (Business Wire) Rated: B

Best Egg, the consumer lending brand of Marlette Funding, LLC, is providing both classroom education and other inspiring financially-related activities for Junior Achievement of Delaware (JA of DE). This announcement coincides with National Financial Literacy Month, being celebrated throughout the month of April.

United Kingdom

Funding Circle brings second marketplace loan deal (Global Capital) Rated: AAA

Sole arranger and lead manager Deutsche Bank announced Thursday a £207m UK SME securitization from Funding Circle, Small Business Loan Origination Trust 2018-1, the second ABS offering from the online lender.

In addition to being just the second deal from Funding Circle, and the third European marketplace loan ABS overall, SBOLT 2018-1 marks the first time Kroll Bond Rating Agency has assigned a public rating for a European securitization deal.

KBRA Europe Assigns Preliminary Ratings to Small Business Origination Loan Trust 2018-1 DAC (Business Wire) Rated: A

Kroll Bond Rating Agency Europe Limited (KBRA) has assigned preliminary ratings to four classes of notes (“Rated Notes”) issued by Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”). This is a £206.6 million ABS transaction collateralised by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”).

This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”), and the first European rated ABS securitisation for KBRA.

Source: Business Wire

Confirmation of that came on Thursday as Revolut became the first of Britain’s digital-only banks to achieve “unicorn” status – in other words, a privately held start-up company with a valuation of more than $1bn (£720m).

Revolut, which was only founded in July 2015, has been valued at $1.7bn (£1.22bn) in its latest funding round.

The bank, which started out as a currency exchange app but later moved into providing personal banking and cryptocurrency trading services, raised $250m (£180m) from backers including DST Global, an investment firm backed by the Russian billionaire Yuri Milner, whose previous early-stage tech investments have included Facebook, Twitter, Airbnb and Spotify.

Ranger Direct Lending rejects investor call to wind up (City Wire) Rated: A

Ranger Direct Lending (RDL) has criticised shareholder Oaktree Capital Management for trying to force the struggling alternative income fund to wind up.

Oaktree, the second largest shareholder in the fund that invests in and through lending platforms, has made public its correspondence with Ranger, which it described as a ‘sub-scale platform’ with shares ‘too illiquid to attract large institutional investors, especially in light of its persistent trading discount to net asset value (NAV)’.

Goji passes £50m in assets (Goji) Rated: A

Goji has now got more than £50m of assets on its platform a little over a year after opening its doors to investors.  With over 5,000 customer accounts, our hard earned growth is testament to the work the whole industry has done in selling the asset class to the UK public.

After campaigning hard to change the tax laws to open up the ISA rules so that non-lending platforms could also offer an IFISA, Goji was the first firm to offer investors diversification across a number of platforms through a single Innovative Finance ISA.  Goji’s Diversified Lending Bonds target 5%, whilst it’s Renewables Lending Bond targets returns in excess of 8%.

A lending site where you can rent anything just scored millions in venture capital (Business Insider) Rated: A

Fat Lama, which announced $10 million in its Series A on Wednesday in a round led by Blossom Capital, says it will use its latest funding to further its reach within the US and to create a mobile-first offering (so far, the site’s mobile app is only available in the UK).

Fat Lama lets users borrow everything from drones to camera equipment to printers.

The site insures any item listed on its site for up to $30,000, and Englander said his company has plans to raise that amount to $50,000 in the near future.

 

 

Artificial intelligence backed to reduce P2P defaults (Peer2Peer Finance) Rated: A

ARTIFICIAL intelligence (AI) could provide peer-to-peer lenders with greater lending security and less chance of defaults, a technology consultancy claims.

Nick Parham, technical pre-sales consultant at NashTech, said there is much P2P platforms can learn about AI from traditional lenders.

“The traditional lending market offers us a powerful insight into the potential for AI in P2P lending,” he said.

TURNING TO YOUR PEERS (BQ Live) Rated: A

They created ArchOver, a peer-to-peer (P2P) lending platform that allows firms that have been operating for more than two years to borrow money from lenders using its website. Companies borrow a minimum of £250,000, with interest rates starting at 7.7% a year.

Since it launched in the autumn of 2014, ArchOver has helped its lenders to inject more than £65m into British businesses, bringing in more than £2.5m in interest at an average return of 7.3%. In an age when bank savings accounts are paying less than 0.5%, it’s easy to see the attraction for investors who understand the risks as well as the rewards.

European Union

Klarna integrates with Magento for streamlined checkout (Payments Source) Rated: AAA

Commerce platform Magento is giving merchants the option to activate Klarna instant credit for online checkouts.

Sweden-based Klarna is built into the latest version of Magento Commerce, giving merchants a streamlined path to offer goods consumers may opt to pay for immediately, within 30 days, or longer via installments, Klarna said in a Thursday press release.

Taaleri increases its ownership in Fellow Finance by 7.3 per cent (Globe Newswire) Rated: A

Taaleri Plc has decided to exercise its option to acquire an additional 7.3% holding in Fellow Finance Oy, as outlined in the shareholders’ agreement signed in 2015. After the transaction Taaleri’s shareholding in Fellow Finance, which offers a crowdfunding platform for companies and for consumers, will increase to 45.7%. The transaction is scheduled to be realized in April-May.

International

BBVA and Indra deliver the world’s first blockchain-supported corporate loan (BBVA) Rated: AAA

BBVA has successfully completed the first global corporate loan transaction using blockchain technology from the negotiation of the deal to its signing, in line with their close collaboration to leverage cutting-edge technologies to streamline business processes.

The pilot enabled the closing of a €75 million loan using a solution developed by BBVA based on distributed ledger technology (DLT). This demonstrates how BBVA continues to incorporate innovative and disruptive technology into its customer solutions, including those products that up to now have seen limited digital innovation, as is the case with wholesale finance.

BANKS VS FINTECHS: THE WAR FOR TALENT (International Banker) Rated: A

Many of these start-ups, moreover, are equipped with enough cash to be able to compete with their banking counterparts on salaries. According to assessments by recruitment site Glassdoor, for example, a London-based software engineer at online lender Funding Circle will earn a base salary of £51,000 on average, which is equal to the salary paid at Goldman Sachs for a similar role. At UBS, that figure is £59,000, while at challenger Monzo Bank it is currently £64,000. Speaking recently to Bloomberg, co-founder and CEO of property lending platform LendInvest, Christian Faes, asserted that between 30 and 40 percent of the company’s hires are from major financial institutions, while banks also account for 100 percent of its small-risk and compliance team. Similar trends are also being reported by UK online lender MarketInvoice Ltd., where three-quarters of its 85 employees have come from either the financial-services or accountancy space.

Source: International Banker

Deserve Raises $ 50 Million in Debt Financing (Finovate) Rated: A

In rebranding his company from SelfScore to Deserve, CEO Kalpesh Kapadia explained “we believe that access is everything and everyone deserves a chance to build a positive credit history. So we are making our products available to all students, U.S., and international, and to all those who seek to build and/or maintain a good credit history.”

And now Deserve is $50 million closer to serving this broader population of potential customers. The Accel-backed fintech has just secured a $50 million debt facility from Keystone National Group to drive growth in account receivables and help “jumpstart” first-time credit owners’ financial journeys.

 

Fintech for the Financially Excluded? (Stanford Social Innovation Review) Rated: A

At Bamboo Capital Partners, we believe fintech can help low-income people reduce vulnerabilities, build assets, manage cash flow, and increase income, and we have invested as such: In the last couple of years, we have made four equity investments in fintech companies in Colombia, Mexico, Chile, and Tanzania, committing more than $16 million. Our investees are helping democratize access to finance through peer-to-peer lending platforms (KuboFinanciero), promoting access to insurance (ComparaOnline), enabling mobile payments and savings for low-income people through nano deposits (Movii), and providing a smart data platform for emerging market financial institutions (First Access).

APAC

Game-changing technologies at work in Asia Pacific’s real estate (JLL) Rated: AAA

Singapore-based mall operator Capitaland has a chatbot called Sparkle on its app that responds to shoppers’ queries and make reservations or hail a ride from its malls.  National Australia Bank is participating in a A$9 million investment round for real estate crowdfunding platform Brick X.

The rise of proptech, however, could be a cause for cybersecurity concerns, as highlighted in JLL’s report Clicks and Mortar: The Growing Influence of Proptech.

Source: Jill Real Views

 

Coast Labor MP Calls For Ban On Loan Machines (TripleM Network) Rated: A

There are calls for the Berejiklian Government to outright ban payday loan machines cropping up on the Central Coast.

There’s a Cash N Go kiosk at Wyoming offering up to $1000 at a time with minimal checks, while the devices, which look like ATMs, have also been spotted in the Hunter and Illawarra.

Latin America

Brazil’s Central Bank authorizes peer-to-peer lending (Rueters) Rated: AAA

Brazil’s Central Bank on Thursday released rules for credit start-ups that include authorization for peer-to-peer lending, as a way to increase competition in loans in a country with notoriously high interest rates for consumers.

Credit fintechs will be allowed to operate with a minimum capital of 1 million reais ($288,000), according to the new regulation. Peer-to peer lending had not yet been formally authorized in the country. The practice involves lending between individuals through online services.

Canada

Funding for Canadian Fintech Companies Declines 60 Percent in Q1 (Investing News) Rated: AAA

Canadian fintech companies received $88 million in investment over the first quarter of 2018, representing a 60-percent decline, says a new report from PwC.

Total investment in Canada in the first quarter of 2018 was over $1 billion, which is a 52-percent increase over the last quarter. A total of 105 deals were signed as compared to 81 in the previous quarter, representing a 30-percent increase.

Source: PwC

Read the full report here.

IOU Financial Inc. Releases Financial Results for the Year Ended December 31, 2017 (Benzinga) Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV:IOU) announced today its results for the year ended December 31, 2017.

  • Reached profitability during the year with positive adjusted net earnings of $0.1 millionin Q4.
  • Surpassed the half-billion loan origination mark with loan originations of $91.3 million(US) for the year.
  • Increased interest revenue of 8.1% to $14.4 million for the year ended December 31, 2017 vs 2016.
  • Reduced operating costs (excluding non-recurring costs) by 20.3% to $9.0 million for the year ended 2017.
  • Raised $3.5 million via a private placement.

BlackChain Solutions Signs LOI With DMG Blockchain Solutions to Bring P2P Lending to the Cryptocurrency Market (Investing News) Rated: B

Under the proposed license, BlackChain will retain exclusive rights for use of the technology for P2P Lending. DMG will be entitled to a royalty on commercial revenues generated by Blackchain using the technology. The parties intend to negotiate and finalize a definitive agreement by May 15th, 2018.

 

MENA

Global REIT’s crypto-powered real estate investment model will be first of it’s kind… (Global Cryptocurrency Press) Rated: AAA

Moving this structure onto the blockchain, and powering the investments with cryptocurrency now means the average cryptocurrency investor can easily access the real estate investment market. Global REIT will begin in their home of Dubai, a place where real estate is currently exploding, and acquire assets within the U.A.E, before branching out globally.

Authors:

George Popescu
Allen Taylor

Impact of Interest Rates on P2P Lenders

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering […]

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering effects of the rising interest rates on three of the biggest P2P markets in the world: the UK, US, and China.

United Kingdom

Last year, Bank of England (BoE) reduced the interest rate by 0.25 percent along with a sling of monetary policies to encourage growth. But in October of this year, BoE increased the interest rate, though only marginally by 0.25%. Both of these times, banks and other financial institutions immediately reviewed the mortgage and saving rates, and the effect was passed on to customers. But the change is too small to have any damaging effect on P2P lenders.

Source:

 

Moreover, P2P lenders do not fall directly under the scope of BoE, hence, are not immediately affected by the BoE base rate. Lender return is directly proportional to the demand and supply in the market. For the short term, P2P lenders will not be making any headline-grabbing changes to their rate structure. If the rate does end up crossing 2%, the P2P market will definitely ring up some changes in their rate structure.

Zopa, the pioneering UK-based P2P platform, was able to thrive even when rates were above 5%. But the real reason P2P gained a substantial foothold in the UK was because of the low yield environment. With saving rates below inflation, money lost its value over a period of time when held in savings accounts. This prompted people to go for P2P platforms as alternative saving options even though it had a way higher percentage of risk attached to it. If rates do reach a certain level, the lender might go for the safer option of saving accounts returns rather than the high-risk high-profit approach offered by P2P platforms. But if P2P lending is considered an investment, the yield will always be attractive for a certain class of investors.

United States

During the last decade, the US economy endured the worst financial recession in 80 years. And to counter that, the Fed dropped the rates to 0-0.25% for an extended period of time. But with US unemployment rates at multi-decade lows, the rate has been slowly yet steadily hiked to a range between 1%-1.25%.

Impact of increase in the interest rates

Lending Club, the largest P2P platform in the United States, has mentioned in its prospectus the adverse effect hike in interest rate will have on its business

“… fluctuations in the interest rate environment may discourage investors and borrowers from participating in our marketplace, which may adversely affect our business.”

Many retail investors use the P2P platform as an investment option. Since they lend directly to the borrowers, the non-involvement of the intermediaries allows them to enjoy handsome returns as compared to returns they get for depositing into saving accounts.

Source:

As the chart above clearly depicts, a number of delinquencies are directly impacted by the increase in the interest rate. The higher the interest rates, the higher are delinquencies. Thus, the low rate environment had led to lower delinquencies. But now, there is a growing fear that a hike in interest rates will be detrimental to peer-to-peer lending platforms.

Ben McLannahan of the Financial Times believes that an increase in Fed rates can actually devastate the nascent peer-to-peer lending industry.

  1. Increasing default rates for peer-to-peer lending notes might trigger an exodus by institutional investors, thus triggering liquidity concerns and
  2. Traditional investment options would see returns revert to historical means, rendering moot the allure of higher returns offered by the p2p industry. (Source)

China

China is one of the biggest markets in terms of size and population. Even new regulations and the crackdown by authorities cannot halt China’s P2P market juggernaut. In March this year, it crossed $130 billion (Rmb 900bn), and it is widely expected that lending will cross Rmb 1 trillion mark this year.

With outstanding loans weighing heavy on the balance sheets of lenders, the regulatory body PBOC is worried this will lead to yet another economic recession, and that is the reason it is clamping down on the P2P industry. For the most part of its journey, the P2P industry in China has been unregulated. The sudden onslaught of regulators led to a major decline in the number of players. Case in point: There were 2,281 P2P platforms in the country, and now the number has come down to 331.

Interest Rates

The basic interest rate is hovering around 4.35 percent. Chinese regulators believe the global economic situation is still shaky, therefore, raising the open market rate is much more appropriate than raising the benchmark rates. In February this year, PBOC raised the interest rate on open market operation to reverse repurchase agreements (repos) by 10 basis points, and furthermore, it increased the lending rates on standing lending facility (SLF). The overnight rate for the SLF loan was raised to 3.1 percent from 2.75 percent. The SLF rate acts as a de facto ceiling for interbank lending.

Source:

A change in short and medium lending rates were executed to address the rapid build-up in debt and to safeguard the economy against the consequent financial risk. Increase in interest rates along with regulatory reforms being put in place by PBOC will help the industry to grow in a safe and structured environment.

Conclusion

Rising interest rates pose a threat to the P2P industry as the initial adoption was triggered by the low yield offered by traditional banks. P2P lenders were able to circumvent this and offer a win-win for both borrowers and lenders. With interest rates inching up, many feel the P2P lenders will be facing higher delinquency and lower investor interest. But this does not take into account the evolution of the industry; the players have been extremely nimble and understand the predicament facing them. Many have tightened lending norms, and almost all players now have long-term institutional money on board. With credit algorithms leveraging artificial intelligence and machine learning, profitability for the nascent industry is not a distant dream. In such a scenario, interest rates offered by P2P lenders will adapt to the demand-supply ratio in the market.

Author:

Written by Heena Dhir.

Wednesday November 20 2017, Daily News Digest

credible

News Comments Today’s main news: SoFi offers 6-month grace period for SoFi ReFi. Zopa to build Open Banking infrastructure. Faircent secures $4M funding round. Assetz Capital launches IFISA. Ping An make big bet on technology. Ant Financial partners with Standard Chartered. Today’s main analysis: Student loan borrowers prefer payments over iPhone X or bitcoin. Who are LendingClub borrowers? (A must-read market […]

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India

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United States

Behind the Investment Platform: The LendingClub Borrower (LendingClub), Rated: AAA

From 2007 through 2017, LendingClub has matched $31 billion investor dollars with 2 million borrowers’ loans.

Source: LendingClub

Today, outstanding credit card and personal loan balances in the U.S. are approximately $960 billion. Of that, two-thirds, or roughly $600 billion, represents interest-earning balances carried month-to-month —the overall addressable population. About half of the addressable population (more than $300 billion) currently meets LendingClub’s target credit profile—a market that we have only just begun to penetrate.

Read LendingClub’s Marketplace Insights report in full here.

Holiday Finance with Lending Club (ABC News), Rated: A

LendingClub Appoints Former Netflix Chief Talent Officer Patty McCord As New Board of Directors Member (Crowdfund Insider), Rated: B

Online credit marketplace LendingClub Corporation (NYSE: LC), announced on Tuesday it has appointed Patty McCord as the newest member of its Board of Directors, effective December 13, 2017.

McCord spent 14 years creating the unique and high-performing culture at Netflix and as the video streaming giant’s Chief Talent Officer, she helped create the Netflix Culture deck and experimented and cultivated new ways to work.

SoFi Now Offering Six-Month Grace Period for Graduates Using SoFi ReFi (Crowdfund Insider), Rated: AAA

On Tuesday, online lending platform SoFi announced it is now offering a six-month grace period for graduates using its newly launched SoFi ReFi program.

ABS investors could pull back from MPLs in 2018 as cycle set to turn (GlobalCapital), Rated: AAA

Interest in marketplace loan ABS from the buyside picked up in 2017, but some investors are now saying that they could sit things out in 2018 as credit concerns grow and a lack of data presents problems in the late stages of the credit cycle.

ABS volumes doubled from $3.4bn in 2016 to $7bn in 2017, with SoFi issuing more than $3bn in deals this year, according to data from JP Morgan. The introduction of multi-seller platforms from SoFi, Lending Club, Marlette Funding, Prosper Marketplace also drove liquidity for the sector, while new …

Fiserv teams with TransUnion for loan origination system (Banking Technology), Rated: A

Financial services company Fiserv and credit reporting agency and risk information provider TransUnion have joined forces, reports Julie Muhn at Finovate (Banking Technology‘s sister company).

Under the agreement, Fiserv will integrate TransUnion’s CreditVision Link to increase precision of scoring and risk modeling in its Automotive Loan Origination System.

Over 65% of students prefer student loan payments over iPhone X or Bitcoin for holidays (TechRepublic), Rated: AAA

LendEDU asked 1,000 people repaying student loans if they would prefer a popular holiday gift or a loan payment of equal value. And, despite the hype surrounding tech trends, they wanted loan payments more.

Source: LendEDU

Voice assistants like Google Home and Amazon Echo won’t change banking in 2018 (Tearsheet), Rated: A

Bankers agree voice will be the biggest and most important channel to their business after mobile, only this time, it won’t sneak up on them like mobile did. They’re looking at 2018 as a year to get their companies more involved with voice by adding features to their Alexa skills, creating an Alexa skill if they haven’t done so already or expanding Alexa capabilities to other parts of the organization. But for the most part, they’re looking for a clearer sense of how people even use Alexa.

In 2017, USAA, Ally Bank and U.S. Bank launched Alexa skills. Before this year, Capital One was the only bank with the feature, which it launched in 2016.

Upstart’s First SaaS Partner (LinkedIn), Rated: A

Earlier this year, we announced an initiative to bring the industry’s first Software as a Service (SaaS) lending platform to market, which we call “Powered by Upstart”. Now we’re excited to announce that BankMobile is the first bank to launch their personal loan program on the Upstart platform. Beginning today, BankMobile offers consumers in 43 states personal loans from $5,000 to $30,000, with no origination fees and interest rates starting at 5.99%.

Overcoming the Hurdles of Big Data Start-ups (Big Data), Rated: A

We are an early investor in the company ‘Kabbage” and Kabbage to me is a major disruption in the fund-lending and risk-analysis market. Established in 2009, Kabbage supported the emerging companies that were suffering the blow of a financial crisis. Banks were declining to lend money to small businesses and entrepreneurs had no access to capital to support their businesses. What aggravated the problem is that even if they did get access to money, the procedure for evaluating the risks of money lending were strictly based on scrutinizing the company’s financial background and fico scores instead of probing into the business. Deviating from the established model of risk analysis, Kabbage stepped into the market at a time of financial distress and operated on a completely different strategy. They would evaluate your UPA shipping data, ebay seller reviews, and other bits of information that are generated on different platforms and then assess credit card risks based on these factors and not just credit card fico scores. Kabbage started off by accumulating a ton of third party data which they ingested, analyzed and then created a solution. Over time, the company has gathered a substantial amount of primary data that they can use to tweak and refine their risk-analysis model. The company efficiently leveraged big data to provide an entire new service in the risk-analysis industry.

Anthemis Group’s Jillian Williams on tough times for personal finance apps (Tearsheet), Rated: A

It’s a space that started out with Mint ten years ago, with a new way to look at all of one’s finances in one place. The field has now grown to accommodate an ever-expanding number of direct-to-consumer PFM apps, including apps like Digit, Clarity Money, Penny and Qapital, and banks are now folding PFM capabilities into their mobile apps.

Banks have been folding in PFM features and competing apps are having trouble differentiating. Where do you see the PFM market right now?
A lot of PFM will continue to move to a business-to-business, or business-to-business-to-consumer model. Things [business-to-consumer PFMs] struggle with are being able to monetize and with customer acquisition.

What’s the problem with business-to-consumer PFM?
The market is really crowded and it’s hard to provide that extra value to really distinguish themselves from other platforms in the space.

Instant Loans at Checkout: helpful or hurtful? (MSN News Now), Rated: A

An $800 mattress for your bed. A $600 sofa for your living room. A vintage designer bag as a Christmas gift for your best friend.  They’re all pretty big purchases to buy online, but now you can get an instant loan for any of them right at checkout.

Ingle says the payment plans are different than credit card options. Companies like Affirm partner with certain retailers to offer the loans, which are installment loans with interest rates, and set payments are made over time.

India

Peer-to-peer lending platform Faircent gets $ 4m in Series B (Economic Times), Rated: AAA

Peer-to-peer lending platform Faircent has raised $4 million in a Series-B round led by Belgian impact investment fund Incofin and Muthoot Fincorp.

P2P platform Faircent raises Series B from Muthoot Fincorp, Incofin, others (Economic Times), Rated: A

In a statement Faircent said it will utilise the newly acquired funds towards strengthening the platform’s technology and creating greater awareness about P2P lending’s significance as a new and highly rewarding asset class.

Fintech Startups Seek to Shake Up Money Transfer Industry (WSJ), Rated: AAA

The race is on to become the top global app for international money transfers.

Fintech startups including WorldRemit Ltd., TransferWise Ltd. and Remitly Inc. are pulling ahead of the pack of the dozens of companies trying to disrupt the remittance industry, using the latest technology to send money internationally.

More than $600 billion is remitted world-wide every year, mostly by migrant workers from places like India, Mexico and the Philippines, who have traditionally had to deal with long lines and high fees to send money home.

Source: The Wall Street Journal

Finvasia gets licence to operate as NBFC (The Tribune), Rated: A

Chandigarh-based Finvasia, a fintech company offering zero brokerage, has received the Certificate of Registration (CoR) from RBI to operate as a non-banking financial corporation (NBFC). This extension will allow the company to offer loan-based products to retail and corporates alike. The company plans to develop block chain technology based P2P (peer-to-peer) lending platform.

Canada

Fintech Select Announces Launch of Physical Bitcoins (GlobeNewswire), Rated: A

Fintech Select Ltd. (“Fintech Select” or the “Company”) (TSX-V:FTEC) is pleased to announce that it will be launching its physical Bitcoin product alongside its Selectcoin closed loop swipe card.

Authors:

George Popescu
Allen Taylor

Friday December 15 2017, Daily News Digest

mortgage tech

News Comments Today’s main news: Walmart partners with Even, PayActiv on employee financial wellness. Moody’s says some consumer ABS sectors will be weaker next year. LendInvest has $1B in funds under management. Yirendai’s investment in Lion Rock amounts to $50M. LexinFintech kicked off IPO yesterday. Crowd Genie to launch ICO. Today’s main analysis: Why mortgage tech is finally taking off. Australian […]

mortgage tech

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United Kingdom

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United States

Walmart Teams Up With Fintech Startups Even & PayActiv to Launch Financial Wellness Services For Associates (Crowdfund Insider), Rated: AAA

On Wednesday, retail giant Walmart announced it has teamed up with fintech startups Even and PayActiv to provide a suite of new financial wellness services for its more than 1.4 million associates nationwide.

Goldman Sachs’ and Morgan Stanley’s Big Growth Opportunities (The Motley Fool), Rated: AAA

Goldman Sachs (NYSE:GS) and Morgan Stanley(NYSE:MS) are both trying to expand their businesses into more traditional areas of consumer banking, such as consumer loans and mortgages.

Matt Frankel: Out of all the major unsecured lending platforms — Lending Club, things like that — Marcus was the quickest one to get to $1 billion in loan volume.

The interest rates people have gotten are more competitive than the others, because they can afford to run it at slightly more compressed margins than, say, a Lending Club.

Frankel: Morgan Stanley’s robo-advisory platform just launched. So that’s one way they’re trying to branch out into more traditional areas of banking and investing.

Just to throw a couple of figures out there, Morgan Stanley’s wealth management business, which is not the highest-margin business, which is why they’re not as efficient as Goldman, their wealth management business, they’re margin has gone from 9% to 22% since 2010.

Morgan Stanley estimates that their clients still have about over $2 trillion worth of assets with other asset managers, and they’re trying to bring some of that in.

Nearly 5 Million Americans in Default on Student Loans (WSJ), Rated: AAA

The number of Americans severely behind on payments on federal student loans reached roughly 4.6 million in the third quarter, a doubling from four years ago, despite a historically long stretch of U.S. job creation and steady economic growth.

In the third quarter alone, the count of such defaulted borrowers—defined by the government as those who haven’t made a payment in at least a year—grew by nearly 274,000, according to Education Department data released Tuesday.

The total number of defaulted borrowers represents about 22% of the Americans who were required to be paying down their federal student loans as of Sept. 30. That figure has increased from 17% four years earlier.

 

Mortgage Tech 101: What It Is & Why It’s Taking Off Now (CB Insights), Rated: AAA

By the end of 2017, nearly $1.8T worth of mortgages will have been originated in the United States this year, according to government-backed mortgage lender Freddie Mac.

Yet, despite the size of the mortgage industry, the space still hasn’t digitized. Originating, processing, and underwriting a home loan with a large bank lender still requires faxes and snail mail and take almost as long as it did 20 years.

Source: CB Insights

Driver 1: New lenders increase the competition

Non-bank lenders are becoming much bigger players in mortgages. In 2011, three banks accounted for half of new mortgage loans, according to the Washington Post. As of September 2016, that share dropped to 21%.

In 2011, just two of the top 10 biggest lenders were non-bank lenders. In 2016, non-bank lenders like Quicken Loans accounted for six of the top 10.

Driver 2: Incumbents are looking to improve their technology

At an average cost of $7,000, originating and processing a loan takes over 400 pages and more than 25 humans working hundreds of hours across 50 days. Of the total, approximately $5,000 can be attributed to human processing costs.

Driver 3: Individuals’ debt burden forces them to find alternative lenders

Eighty percent of millennial renters want to buy a single-family home or apartment, but 72% cannot afford to, according to survey data from Apartment List.

Source: CB Insights

Although total US homeownership has risen to 64% as of Q3’17, when examined by age group, the percentage of homeowners under 35 years old is only 36%. This is down from 44% in 2004.

Some consumer ABS sectors to have weaker collateral performance due to pockets of borrower stress and weaker underwriting (Moody’s), Rated: AAA

The anticipated continued expansion of the US economy into 2018 will support overall collateral performance of consumer asset-backed securities (ABS), according to Moody’s Investors Service. However, growing financial strains among some pockets of borrowers and loosening of underwriting by lenders will result in slightly weaker collateral performance for several categories of consumer ABS, including transactions backed by auto loans, credit cards and unsecured personal loans.

Amid further declines in automobile sales and used vehicle prices, Moody’s says issuers will generally maintain the steady collateral quality in their 2018 auto loan and lease deals, with incremental weakening in certain collateral attributes such as loan terms. New private student loan ABS, meanwhile, will likely continue to have strong credit quality and performance.

An Open Internet is Essential for Financial Inclusion (Huffington Post), Rated: AAA

The Federal Communications Commission (FCC) voted today to dismantle internet “net” neutrality: a vote that determined whether the internet should be treated like a public good or service or whether it should be treated like a product.

Another consequence of dismantling net neutrality has to do with undermining financial inclusion and the impending technological revolution of financial services. An array of financial technologies—online and mobile technologies referred to by their shorthand “fintech”—is heralded with the potential to expand access to financial services to underserved households and in underserved communities.

Internet connectivity is required for online and mobile transactions and many lower-income households alreadycannot afford internet service capable of making these transactions.

Online and mobile banking could become less reliable if internet service companies adjust connectivity speeds. Banks are increasingly shifting their products and services online and the number of bank branches is projected to decline by 20% over the next decade.

Prosper brings on JPM Chase veteran as board member (GlobalCapital), Rated: A

Online lender Prosper announced the appointment of Claire Huang as a board member this week as the company looks to enhance its product offerings in 2018.

Huang’s appointment was effective as of Tuesday, according to a company statement. Prior to joining the San Francisco-based lender’s board of directors, Huang was the first ever chief marketing officer at JP Morgan Chase.

INSIKT raises $ 50 million to lend to low-income communities (TechCrunch), Rated: A

An estimated 45 million Americans don’t have a credit score and others have trouble bringing up their scores, even if they are in a better financial position than in years past.

And after facilitating 125,000 loans in three years, INSIKT is raising $50 million to expand. The round is led by Grupo Coppel, with participation from FirstMark Capital, Revolution Ventures and Colchis Capital. INSIKT has raised $100 million to date.

INSIKT has built what they believe is a better alternative to payday loans, breaking up payments into smaller installments. Its white-label loan processing service is used in over 600 banks and credit union locations across California, Texas, Illinois and Arizona.

Kasisto Raises $ 17M in Series B Funding (Finsmes), Rated: A

Kasisto, the NYC-based creator of a conversational AI platform for finance, raised $17m in Series B funding.

The round was led by Oak HC/FT with participation from existing investors Propel Venture Partners, Two Sigma Ventures, Commerce Ventures, Mastercard and Partnership Fund for New York City.

Consumer lending 2017: Bold bets and strategic exits (American Banker), Rated: A

With the economy continuing to improve and household wealth growing, total consumer debt has increased in 12 consecutive quarters and hit a record $12.8 trillion in the second quarter, according to the Federal Reserve Bank of New York. And, for the most part, consumers are staying on top of their bills. The American Bankers Association said recently that the midyear consumer delinquency rate held steady around 1.56%, which is below the 15-year average of 2.16%.

Banks searching for growth pushed and pulled on a variety of consumer lending levers this year. Personal loans, particularly those offered through digital channels, were especially popular as banks aimed to emulate online lenders’ speed and efficiency.

How Twine, John Hancock’s robo-adviser tool, keeps a startup feel (Tearsheet), Rated: A

John Hancock wants to change that narrative with Twine, its robo-adviser and personal finance tool it released last month.  Twine emphasizes simplicity in its look and feel — a user interface similar to many startup-developed apps out there.

John Hancock looked outside, buying San Francisco-based financial services AI startup Guide Financial in 2015.

Twine operates as a separate organizational unit based in San Francisco, while most of John Hancock’s offices are in Boston. The team of around 25 employees includes engineers, product managers, user experience designers and marketing staff. But despite being organizationally separate, Goose said the team stays in contact with the mother ship through travel and video conferencing.

41% of households mix digital, human financial advice (InvestmentNews), Rated: A

But this isn’t a return to the way things used to be, said Hearts & Wallets, the Rye, N.Y.-based research firm that conducted the study of 40,000 individuals.

Today’s investors are what the firm calls “hybrids,” who use a mix of paid and free live professional advice, digital advice and their own insights. They now account for 41% of all U.S. households, the firm said.

Blenders of digital and live advice include 68% of consumers ages 35 to 44 with investable assets between $100,000 and $250,000, and 85% of consumers under age 35 who have over $1 million in assets. In all, over 75% of consumers under age 45 with assets of over $250,000 are “hybrids,” the firm said.

USAA’s Heather Cox is blurring the lines between business and technology (Tearsheet), Rated: A

In hiring Cox, the San Antonio bank, which has a longstanding reputation for being innovative, effectively agreed to restructure the entire company. She has plans to “levelize” the business and technology teams and morph them into “business technologists,” who are empathetic and understand that technology is the enabling function of their entire business — not the checking account or the insurance policy.

The new model will make USAA look more like one of the technology “greats” — the usual suspects like Apple, Amazon, Facebook and Google — instead of an old bank or insurance company, Cox said.

 

Despite court win, OCC still faces legal ‘landmine’ over fintech charter (American Banker), Rated: A

Comptroller of the Currency Joseph Otting has not weighed in on the fate of a fintech charter yet, but the ball is now squarely in his court.

The agency that Otting was just appointed to run scored a victory earlier week when a judge dismissed a lawsuit from the New York Department of Financial Services, which had challenged the Office of the Comptroller of the Currency’s authority to create a charter for fintech firms.

Jax small businesses turn to site to find lenders (Jacksonville Business Journal), Rated: B

New York-based Fundera has made a splash in Jacksonville with companies looking to find lenders.

Regions Bank Increases Prime Lending Rate (BusinessWire), Rated: B

Regions Bank today announced it is increasing its prime lending rate to 4.50 percent from 4.25 percent, effective Thursday, Dec. 14.

United Kingdom

LendInvest hits $ 1bn in funds under management (AltFi), Rated: AAA

Cutting out retail P2P investors doesn’t seem to have slowed LendInvest down. The UK’s leading fintech property lender now holds £765m (approximately $1bn) under management. Its capital base has more than doubled in 2017, up 104 per cent since the start of the year.

Manchester tops the buy to let index for England and Wales (PropertyWire), Rated: A

The highest yields for landlords are in Manchester at 5.55% and the city is also top in terms of rental growth at 5.76% and has a reasonable capital gains growth at 8.34%, the buy to let index from specialist lender LendInvest.

When it comes to capital gains the top city is Colchester at 11.96%, followed by Southall at 11.09%, Hemel Hempstead at 10.27%, Slough at 10.19%, Harrow at 9.89% and Ipswich at 9.44%.

Millennials will spend £1.1MILLION on rent over their lifetimes if they don’t get onto the property ladder (DailyMail), Rated: AAA

Millennials who began renting at 21-years-old and live in an average-sized property outside of London will spend an average of £110,830 in household rent before buying their first home – typically at an age of 32, according to research by peer-to-peer lending platform Landbay.

For those living in the capital – where property prices and rents are significantly higher – the amount increases to £273,210.

Source: DailyMail

Mortgage write-offs fall 79% in one year (Bridging&Commercial), Rated: A

The value of residential mortgages written off by banks and building societies has dropped by 79% in the past year, according to the latest research.
Data from the Bank of England revealed that UK lenders wrote off £72m of residential loans in the year end 30th September 2017, 79% lower than the same period in 2015/2016 – when £348m was written off – and even lower than pre-credit crunch levels.

Developer secures £1.9m from P2P platform for Merseyside projects (Development Finance), Rated: B

Mitty Group has secured £1.98m worth of funding from Assetz Capital to develop two new residential and leisure sites in Merseyside.

UK consumers ditching banks for digital loan alternatives (Finextra), Rated: A

UK consumers looking for personal loans are increasingly shifting away from traditional banks towards digital loan providers according to Zopa, the pioneering financial services company.

Research on the price comparison sector* shows loan sales obtained via price comparison sites have doubled in the last two years.
The data highlighted by Zopa shows that over 113,000 loans were sold through price comparison sites in the 6 months to April 30 2017, representing a 139% increase compared to the same period in 2015, whereas the overall unsecured personal loan market grew only by approximately 20% in the same period.

Gibraltar launches world’s first licence for fintech firms using blockchain (Independent), Rated: A

Gibraltar’s financial services watchdog will introduce the world’s first bespoke licence for “fintech” firms using blockchain distributed ledger technology from next month in a bid to attract start-ups to the British overseas territory as it prepares for Brexit.

Twenty-two of the world’s biggest banks and fintech firm R3 have just developed an international payments system using blockchain.

Gibraltar expects firms numbering well into “double digits” to seek authorisation after the new rules come into force on January 1, Gomez said.

China

Yirendai Makes $ 50 Million Strategic Investment in Finance Services Platform Lion Rock (Crowdfund Insider), Rated: AAA

China-based fintech Yirendai announced on Wednesday it has made a $50 million strategic investment in Lion Rock through the financial service platform’s Series A funding round.

LexinFintech starts IPO amid sector crackdown (Finance Asia), Rated: AAA

The Shenzhen-headquartered online micro lender, which launched the deal on Thursday, joins a flurry of other Chinese internet finance companies, including Qudian, PPDai and Hexindai, in their rush to  raise capital with a New York listing…with a US share sale worth up to $132 million.

Chinese fintech company PPDAI Group inks partnership deal with Sun Hung Kai (SNL.com), Rated: B

The move comes after Sun Hung Kai became a strategic investor in PPDAI Group through a private placement concurrent with the latter’s U.S. IPO.

European Union

Belgian crowdlending company expands in Europe (The Brussels Times), Rated: AAA

Look & Fin, the largest Belgian player in the field of crowdlending, plans to expand again in Europe.

On average, more than one million euros is invested monthly via Look & Fin. Loans vary between €50,000 euros and €1 million, with an average term of 38 months. Individuals invest on average €2,400 and can count on an average return of 7.6%.

Can a BBVA spinoff crack the digital ID code? (American Banker), Rated: A

Governments, banks and startups have been trying for years to solve the problems associated with identifying people in a digital world. The challenges are only getting harder thanks to identity thieves, data breaches that have exposed the personal information of hundreds of millions of consumers, and the fact that some folks want to avoid having to register face-to-face.

The latest entrant, a recent BBVA spinoff called Covault, is a bit different.

Its app lets consumers store their digital identity documents, passwords and (potentially) digital currency in a secure cloud, and then share pieces of that information with others as they see fit.

Regtech insights from Suade CEO, Diana Parades (Holland Fintech), Rated: A

Diana is the CEO and co-founder of Suade, a software platform which allows financial institutions to better understand and meet their regulatory requirements.

At SIBOS2017, Paredes encouraged financial institutions to think of regulation as being at the centre of their business. More education and research for implementation is needed, suggested Paredes in our interview. Smaller companies like startups offer more agile  implementation as they are technology driven companies. Meanwhile, the big machine of a bank is becoming better at agile acceptance of new technology.

‘Regtech will prevent the next financial crisis.’

Paredes explained this quote saying that while regulation is trying to prevent another crisis, it has no implementation guide. As such, regtech will be needed to give effect to the regulation.

Saxo Payments Banking Circle Nabs Prestigious Award (Holland Fintech), Rated: B

The Banking Technology Awards 2017 has named the organisation’s Banking Circle Virtual IBAN as the Best Corporate Payments Initiative.

International

Exclusive Interview with Celsius CEO Alex Mashinsky (ChipIn), Rated: A

Celsius is a peer-to-peer (P2P) and blockchain-powered global lending and borrowing network designed to enable coin holders to earn interest.

First off, why did you decide to use the blockchain to build Celsius?

The blockchain is the first real technology threat that the large banks have faced for the past 100 years. It has the potential to spur a new financial revolution from which they cannot adjust. We decided to build Celsius using blockchain to leverage the technology’s global presence and decentralized design to extract the bank’s profits and distribute them to our members.

What was your thought process behind it?

We want to find the best way to add the next 100M crypto users to the market, and we came to the conclusion that offering coin holders 5-7% in interest on their coins would be the best way to get there.

Did you face a problem within the consumer credit industry or do you think there is a gap in the market for Celsius to fill?

Unfortunately, the continued concentration in the banking sector has allowed banks to pay people less than 2% interest but charge our credit cards 25% interest when lending us the same dollars.

THE TRANSFORMATION OF THE GLOBAL REINSURANCE INDUSTRY (All About Alpha), Rated: A

A new paper from Milliman, a consultant to the insurance and financial services industries, discusses the ongoing transformation in and of the global reinsurance industry that alternative investment has created.

By the end of 2016, Milliman says, alternative capital in the catastrophe space consisted of around $76 billion, which breaks down as follows:

  • Collateralized reinsurance $39 billion
  • CAT bonds, $25 billion
  • Sidecars $8 billion, and
  • Industry loss warranties $4 billion.

As a proportion of the whole: alternative capital now represents roughly 13% of the available capital in global reinsurance.

Since 2011 the percentage of bonds with indemnity triggers has increased from 30% to roughly 70%.

Australia

Behind the 500% increase in small businesses using marketplace lending (SmartCompany), Rated: AAA

The number of small business customers signing onto loans through marketplace lenders has increased more than 500% over the past year, but experts say scrutiny must be put on the alternative finance sector now to ensure smaller operators get the best deal.

In 2015-16, ASIC’s survey of the sector put the total value of loans through this kind of model at $156 million, but that figure has doubled over the past year to now sit at $300 million. Total borrowers for the year jumped from 7,448 last year to 18,746 this year.

Australian Securities & Investment Commission Publishes Report on Marketplace Lending, Shows Double the Loans (Crowdfund Insider), Rated: AAA

Earlier today, the Australian Securities and Investments Commission (ASIC) published a report on the marketplace lending industry (peer to peer lending).  ASIC believes that by monitoring Fintech they are better positioned to assess any risk as the industry develops.

The survey covers marketplace lending activities of 12 platforms that are regulated by ASIC – so it is not comprehensive of the entire online lending sector.

In summary, there were 353 incidents or suspected incidents of fraud , compared to 126 incidents or suspected incidents of fraud during the 2015 – 16 survey. There was one cyber security incident, compared to zero during the 2015– 16 survey. There were reports of some borrower complaints but most appeared to be minor. The average default rate was 2.2%.

Source: Australian Securities and Investments Commission
Source: Australian Securities and Investments Commission

Read the full report here.

India

Impanix Fuels Loans Marketplace Finbucket With $ 1.87 Mn Funding (Inc42), Rated: AAA

New Delhi-based online loans and investments marketplace FinBucket has raised $1.87 Mn (INR 12 Cr) from Impanix Capital.

As evident from her statement, the online loans marketplace aims to use the newly raised funds in the growth of business and infuse new technology to scale further.

Asia

CROWD GENIE ASSET EXCHANGE TO HOLD ICO (Bitcoinist), Rated: AAA

Crowd Genie, a fully operational Singapore-based peer-to-peer digital lending platform licensed by the Monetary Authority of Singapore (MAS), has been selected by the token holders of the ICOS platform as the latest promising project to hold its own ICO.

Unlike most projects contemplating an ICO, Crowd Genie is not a startup but rather a debt-based lending platform that has been in operation for more than 12 months. It is one of only four P2P lending platforms licensed by the MAS. The project’s vision is to build a tokenized Pan-Asian lending exchange based on smart contracts, to ensure cost-effective, safe and efficient cashflows between lenders and borrowers.

The public ICO will begin on January 15, 2018, and will run until February 15, 2018. On offer will be 50,000,000 CGCOINs, a utility token which can be used to trade on the Crowd Genie platform.

Credit Suisse Snaps Up Fintech Stake (FiNews), Rated: A

Singapore-based fintech Canopy announced it has raised fresh funding of $3.4 million from investors including Switzerland’s second-largest bank Credit Suisse as well as Lionrock Capital.

Canopy, formerly known as Mesitis, is a Singapore-based anonymous account aggregation and analytics platform for financial institutions, wealth management professionals, and high net worth individuals.

Authors:

George Popescu
Allen Taylor

Friday June 23 2017, Daily News Digest

fintech Australia

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-4. Lending Club closes $279.4M self-sponsored securitization. Wellesley directors paid over 900K GBP last year. Renren’s Q1 results. Harmoney hits $500M. Vindi, Smartbill merge. Today’s main analysis: Recent Fed credit survey exposes clear small business financing opportunities Today’s thought-provoking articles: How the P2P sector has fared […]

fintech Australia

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Africa

Latin America

News Summary

United States

Kroll Bond Rating Agency Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-4 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two class of notes issued by SoFi Consumer Loan Program 2017-4 LLC (“SCLP 2017-4”). This is a $499.5 million consumer loan ABS transaction that is closing on July 5th, 2017.

Initial credit enhancement levels are 22.69% for the Class A Notes and 12.77% for the Class B Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A Notes), excess spread and a reserve account funded at closing.

Preliminary Ratings Assigned: SoFi Consumer Loans Program 2017-4

Class Preliminary Ratings Principal Balance
A AA (sf) $443,000,000
B A (sf) $56,500,000

LendingClub Closes $ 279.4 Million Self Sponsored Securitization (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has announced its first first self sponsored securitization deal had closed. Announced after the market closed, Lending Club issued $279.4 million in notes backed by consumer loans originated on the LendingClub platform. The Consumer Loan Underlying Bond (CLUB) NP Credit Trust 2017-NP1 (CLUB 2017-NP1) was described as marking the start of LendingClub’s securitization program as Sponsor, Servicer and Administrator.

Kroll rated the securities that included $162.4 million of Class A notes rated “A- (sf)”, $41.2 million of Class B notes rated “BBB (sf)” and $75.7 million of Class C notes rated “BB (sf)” backed by approximately $337 million of collateral.

In a separate note, LendingClub also announced that Brad Coleman, Principal Accounting Officer and Corporate Controller, will be resigning from his position as Principal Accounting Officer to pursue other opportunities, effective on August 10.

There’s A New Way To Pay For IVF, But No Guarantee It’ll Pay Off (BuzzFeed), Rated: AAA

Future Family, which officially launches on Thursday, aims to make the complicated, expensive, and emotionally fraught world of fertility treatments “accessible and affordable,” in the words of CEO Claire Tomkins, a former SolarCity executive. “We think of it as modern insurance for a woman,” she told BuzzFeed News.

Because most insurance plans don’t cover these services, fertility patients tend to have high incomes to begin with. In one survey by FertilityIQ, an online advice resource for patients, 42% reported yearly earnings between $100,000 and $199,999. But not everyone has necessarily saved enough to comfortably afford IVF, which costs around $20,000 on average, according to FertilityIQ. In a 2015 Prosper-commissioned survey of 213 US women, 84% said they had financial concerns about their treatments, and nearly half said that those concerns affected how much treatment they pursued.

Future Family’s standard IVF plan, which covers one cycle, is $250 a month, with no down payment. Customers can sign up for a minimum of 5 years and a maximum of 10 years, making the total cost at least $15,000. That would be cheaper than the national average cost of $20,000. The top-tier plan, which covers one cycle as well as egg storage, costs as much as $33,000 ($275 a month for up to 10 years).

Meanwhile, Future Family’s top-tier egg-freezing plan costs as much as $21,000, at $175 a month for up to 10 years of storage. FertilityIQ’s Anderson-Bialis estimates that, nationwide, egg retrieval and freezing costs average $16,000, while storage costs about $3,700 for five years.

Two years ago, Prosper, a peer-to-peer lending service, purchased, for $21 million, a lender with loans for fertility and other non–insurance-covered medical procedures. And in 2014, LendingClub spent $140 million on a similar acquisition. Its fertility loans range from $2,000 to $50,000, while Prosper’s go as high as $100,000.

One year in: How JPMorgan is transforming small-business lending (Tearsheet), Rated: A

For JPMorgan Chase, small business is big. The bank is among the third top lender of Small Business Administration loans by unit in the U.S.

As of May, Chase approved 2,375 loans in 2017 for a total $679 million. But beyond SBA loans, the bank also extended more than $24 billion in credit to 4 million small business customers in 2016 through its business banking, Ink from Chase credit card and commercial term lending. In each of the last four years, it’s extended more than $19 billion in new small business loans.

After the recession, the largest U.S. banks, Chase itself included, halted most of their small business lending, later creating the opportunity for online lenders to enter the market — like Bond Street or OnDeck. Last year, JPMorgan began using OnDeck’s technology for its Chase Business Quick Capital product, a  short-term, quickly funded small business loan. It was one of the first banks to embrace a partnership-type relationship with a fintech startup, at a time when the industry narrative still focused on startups’ potential to displace banks.

Lending Club Decision Provides Guidance For Bringing Section 11 Claims Based on Weaknesses in Internal Controls (National Law Review), Rated: A

We have been following defendants’ motions to dismiss in the In re Lending Club Securities Litigation class action, No 3:16-cv-02627-WHA, in the United States District Court for the Northern District of California (“the Lending Club Litigation”).

As the Supreme Court noted in Omnicare, generally a plaintiff pursuing a claim under Section 11 “need not prove . . . that the defendant acted with any intent to deceive or defraud.”  However, defendants in the Lending Club Litigation argued that plaintiffs’ claims under Section 11 sounded in fraud because they employed the same factual allegations to allege fraudulent conduct under Section 10(b), and therefore needed to satisfy the heightened pleading standard of Rule 9(b), which requires plaintiffs alleging fraud to state with particularity the circumstances constituting fraud.

Plaintiffs argued that their Section 11 claims were not grounded in fraud and therefore did not need to satisfy the heightened pleading standard of Rule 9(b).

Despite this holding, the Court found that lead plaintiff had “met that heightened pleading standard with respect to three of its Section 11 claims.”  Id.  In particular the court held that lead plaintiff adequately pleaded its Section 11 claims relating to representations at the IPO regarding (1) the strength of Lending Club’s internal controls and financial reporting, (2) its relationship with Cirrix, and (3) its data integrity and security.[1]

Henry W. Ramsey Acquires 9,500 Shares of Elevate Credit Inc (ELVT) Stock (Transcript Daily), Rated: A

Elevate Credit Inc (NASDAQ:ELVT) insider Henry W. Ramsey purchased 9,500 shares of the stock in a transaction on Friday, June 2nd. The stock was acquired at an average cost of $7.17 per share, for a total transaction of $68,115.00. Following the completion of the acquisition, the insider now owns 9,500 shares of the company’s stock, valued at approximately $68,115.

Banks Going Digital – Transforming Branches, Apps and a Focus on Customer Experience (Lend Academy), Rated: A

The big banks have all started to understand that the traditional way of banking is a thing of the past. Keynote speaker Yolande Piazza, CEO, Citi Fintech talked about disrupting from within, changing how they operate to enable the customer and move to a mobile first approach. She explained how this approach is radical for a bank and the layers of compliance did not make the transition smooth. They have completely rethought how they hire, 50 percent of their fintech talent is from outside the company.

Other interesting areas to note while at the event were BioCatch’s innovations in cyber security with keystroke and mouse analysis along with behavioral biometrics. New payments provider Zelle launched with 40 partners, including 34 top level banks, to allow consumers to send and receive money in minutes. Banks are starting to become innovation hubs and fintech companies, once seen as competitors in the past, are helping the banks make this transformation.

Leading fintech companies like SoFi, Lending Club and OnDeck provide a template for a better customer experience and banks are taking notice.

Recent Fed Credit Survey Exposes Clear Small Business Financing Opportunities (Forbes), Rated: A

The Federal Reserve just published its 2016 Small Business Credit Survey examining the current small business conditions and credit environment. The Fed found that although big banks are still the major lenders, small business owners are having trouble accessing credit and are therefore looking elsewhere. However, while many small businesses are turning towards online lenders, SBA loans are largely underutilized.

Overall, 10,000 surveys were completed by employer firms across all 50 states. Of those surveyed, roughly half were profitable and almost two-thirds expected their revenues to grow over the coming year. Even job growth looked good, with 39% of small businesses expecting to add jobs within the next year.

PayPal has jumped into the alternative lending game and now finances as much as $3 billion in total small business capital. What’s more, PayPal recently increased its maximum financing limit to $125k, meaning that a majority of small businesses who applied for credit in 2016 could fulfill their financing needs with PayPal.

Online lenders like SmartBiz have a 62% approval rate, on average.

The Fed’s survey found that CDFIs had a 77% approval rate and small banks had a 67% approval rate. Both of these rates higher than many online lenders that are known to typically have some of the easier qualifications.

By comparison, the overall approval rate among larger banks is 54% and 46% among credit unions.

Banks should avoid replicating their millennial strategy for Gen Z (American Banker), Rated: A

Facebook chatbots (kids love messaging apps!), smartphone-enabled ATMs (they spend so much time on their smartphones!) and an on-demand ATM on wheels that will come to you (Uber is the only way to get around!). Not only are these investments failing to resonate with millennials, but the money spent is also failing to plan ahead for the next generation: Generation Z.

Born between 1995 and 2010, Gen Z consumers are looking for something more than simple digital updates: They are looking for a partner that offers them solutions for all pieces of their financial life, including their pressing concern over mounting college debt. In fact, offering “digital” solutions to traditional banking products will not be enough to impress Gen Z, as they are the first to grow up in the post-digital era, giving them high standards for technological capabilities.

Gen Z is also a highly skeptical generation with little brand loyalty; if they see a well-researched, proven option available to them, they will have no hesitation jumping ship or avoiding traditional providers altogether. Whereas 45% of millennials favor loyalty programs, only 30% of Gen Z consumers do. In fact, 41% of Gen Z say they would consider banking services from digital power players like Google, Amazon, Apple or Facebook because they are brands that they interact with daily and trust.

Acting comptroller’s wish list echoes long-held demands by banks (American Banker), Rated: A

In his first testimony to Congress, acting Comptroller of the Currency Keith Noreika is set to submit a laundry list of detailed proposals to loosen regulatory restrictions on financial institutions of all sizes — recommendations that appear to jibe with those made by the Treasury Department this month.

Noreika is offering 17 specific legislative proposals that echo the banking industry’s wish list for regulatory reform.

LendingTree Subsidiary Purchases MagnifyMoney (Crowdfund Insider), Rated: A

LendingTree, Inc. (NASDAQ: TREE) announced on Tuesday its subsidiary, LendingTree, LLC, has acquired the company behind consumer-facing media property platform, MagnifyMoney. This news comes just days after LendingTree announced it acquired DepositAccounts.com.

According to LendingTree, the acquisition purchase has a possible total consideration of $29.5 million, which consists of 29.5 million in cash at closing, and contingent consideration payments of up to $10 million.

A former cohead of tech at Goldman Sachs has joined a startup that wants to be the iOS of Wall Street (Business Insider), Rated: A

Paul Walker, the former cohead of technology at Goldman Sachs, has joined the board at OpenFin, a startup that helps electronic-trading firms build their desktop applications.

Bain Capital Ventures, Pivot Investment Partners, and Nyca Partners have already invested in OpenFin, as have the likes of Cris Conde, former CEO of SunGard, and Tom Glocer, former CEO of Thomson Reuters.

Walker retired from Goldman in 2016 after 15 years with the Wall Street titan. Walker joined the firm in 2001 as a vice president in FICC strategies. He made partner at the firm in 2008.

OpenFin is looking to become Wall Street’s version of what the iOS and Android platforms are to the mobile application space.

Orchard Platform Pivot? Not So Fast. (Crowdfund Insider), Rated: A

Earlier this week there was note circulating the Orchard was in the midst of a pivot.  Specifically, the report said Orchard was pivoting from a data/analytics platform to a loan trading platform. This was interesting as the secondary transaction platform for securities based on online loans has been in the works for quite some time.

“We have wanted to have a trading platform for years now,” said Matt Burton, CEO and co-founder of Orchard. “I am not certain where that came from. We have always wanted to facilitate [secondary] transactions. We still have the same vision.”

LENDonate Changes The Game of Nonprofit Financing by Creating Swift Access to High Quality Loans (PR.com), Rated: A

LENDonate, a fintech company, today announced the launch of its distinct hybrid, online lending platform for 501(c)(3) nonprofits. The first-of-a-kind, hybrid platform uses an innovative process that lets nonprofits source loans and donations simultaneously. LENDonate unites nonprofits with lenders, including financial institutions, philanthropic organizations, and accredited investors for quick funding of high-quality, low cost loans. LENDonate is the only marketplace lending platform that enables nonprofits to effortlessly expand their donor base while financing major projects or smoothing out uneven cash flow.

LENDonate was founded by Vivienne Hsu, CEO, a seasoned investment professional and nonprofit fundraiser. She was motivated by a desire to improve nonprofits’ access to the low-cost funding, while providing high-quality, socially impactful investment opportunities for banks and philanthropists.

Which Loans Can Help You Expand Your Small Business? (NASDAQ), Rated: A

Below is an exhaustive list of documents that your lender may request. Online lenders are less stringent and may ask for less, while traditional banks will want the entire suite. Also expect lenders to pull your personal credit score and your business credit score as part of the approval process.

  • Personal financial statement: This SBA form requires you to list your personal assets (cash, investments, real estate and cars) and liabilities (mortgages, other debts and unpaid taxes). Private lenders may ask for a similar statement.
  • Business certificate/license
  • Business plan
  • Loan application history
  • Income tax returns
  • Resumes
  • Business lease

The Small Business Administration (SBA)—which guarantees a percentage of the loan amount to banks rather funding directly—is particularly helpful for expansion loan options. The SBA will guarantee up to 85 percent of loans for as much as $150,000 and up to 75 percent of loans over $150,000. A small SBA loan of $25,000 or less can get an 8% interest rate with a payment term of fewer than seven years. The rate on a loan over $50,000 can drop to as low as 6.5% with the same payment terms. Some banks may offer private loans, but their requirements are even stricter than those of the SBA.

Online lenders offer loans with higher rates. But the online lenders often have a faster approval process than banks originating SBA loans.

Another borrowing source on the rise is peer-to-peer lending, or marketplace lending, for businesses.

OCC, CSBS Exchange Views on OCC’s Special-Purpose Charter (Banking Journal), Rated: A

The OCC’s proposed limited-purpose charter for fintech companies was the subject of a lively discussion at the American Bankers Association’s Payments Forum today, as regulators from the OCC and Conference of State Bank Supervisors exchanged at-times opposing views.

Margaret Liu, SVP and deputy general counsel at CSBS reiterated her organization’s view that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act (the CSBS previously filed a lawsuit against the OCC on those grounds).

Kathy Oldenborg, director of payments systems policy at the OCC, emphasized that under the limited-purpose charter, fintech companies would be held the same high regulatory standards as banks, based on the products and services they provide to consumers. She added that while much of the focus around the OCC’s work on innovation has centered on the charter proposal, “the broader initiative was… the ability to signal to banks that it’s okay to innovate. You can work with fintech companies, you can partner with fintech companies, you can buy one if you want. There’s nothing that says you can’t work with fintech companies outside this whole chartering discussion.”

Home Point Financial Establishes Institutions Group (Marketwired), Rated: B

Home Point Financial Corporation (“Home Point”) a national multi-channel mortgage originator and servicer, today announced the formation of its new Institutions Group. This group will include Correspondent Lending, Capital Markets and Home Point’s wholly-owned warehouse lending subsidiary, NattyMac. Led by Maria Fregosi, Chief Capital Markets Officer, the Institutions Group will be able to efficiently and effectively serve correspondent clients with services and products that capitalize on the financial resources, technology and expertise of Home Point Financial.

Cross River on OCC Comptroller’s testimony calling on clarification of the applicability of the “Valid when Made” doctrine (Cross River Bank Email), Rated: B

Cross River Bank, a marketplace leading originator and pioneer in the banking financial technology space, released the following statement on the recommendation by acting OCC Comptroller of the Currency Keith Noreika to clarify the applicability of the “Valid when Made” doctrine.

It is of the utmost importance to deliver regulatory certainty and foster innovation while providing access to credit to all consumers in a compliant, safe, and sound environment. We commend Comptroller Noreika for his testimony this morning recommending clarification of the applicability of the “Valid when Made” doctrine. Cross River remains a steadfast supporter of the Comptroller’s, and the entire regulatory agency community’s, efforts to bring clarity to the regulatory framework and advance the interests of the consumers while ensuring their protection.

Aspire Retains SenaHill (Aspire Email), Rated: B

“Aspire Financial Technologies Inc. (“Aspire”) is announcing today that it has retained SenaHill Advisors LLC (

Crowdfunding Becoming Viable Way to Fund Real Estate (Realty Biz News), Rated: B

It’s estimated that by 2025 the crowdfunding real estate industry will be worth more than $300 billion. One of the reasons for this prediction is that it provides individual investors the opportunity to participate in large real estate deals even if they only have a small amount of capital to invest. Just a few years ago things were very different as crowdfunding had yet to gain traction. In 2010 the crowdfunding industry was worth $880 million but is now worth $34.4 billion which is an incredible rate of growth.

CFPB details complaint process at Comply2017 Conference (JD Supra), Rated: B

At the Comply2017 conference held earlier this week in New York City, Scott Steckel, a member of the CFPB’s Office of Consumer Response, gave a presentation in which he detailed the CFPB’s complaint process and how the CFPB shares complaint data through its complaint database.

United Kingdom

Wellesley directors were paid more than £900,000 last year (P2P Finance News), Rated: AAA

WELLESLEY & Co’s directors collectively pocketed £923,000 last year, while the property lender reported a full-year loss of £210,288.

Chief executive and founder Graham Wellesley was awarded the highest salary of £342,000, while co-founder Andrew Turnbull took home £244,000, according to the latest annual report filed with Companies House earlier this month.

Former Lloyds Banking Group chief executive Eric Daniels, who stepped down as non-executive chairman at the end of May 2016, received £50,000. Daniels has now joined the board of Funding Circle.

How has the P2P sector fared in the year since the Brexit vote? (P2P Finance News), Rated: AAA

Funding Circle, which received full FCA authorisation last month, has seen new lending grow each quarter since the referendum, from £151,803 lent in the second quarter of 2016 to £182,854 in the third and £305,970 in the fourth. It lent £328,059 in the first three months of this year.

Similarly, Zopa, also now fully authorised, has seen lending increase each quarter, from £154m in the second quarter of 2016, to £175m in the third. There was £194.3m of lending in the fourth quarter and £246.4m at the start of the year.

RateSetter, the last of the big three still awaiting full FCA approval, has seen both consumer and business lending increase.

New business lending was at £59.8m in the second quarter of 2016, rising to £73.8m in the following three months before dropping to £60.5m at the end of the year. It bounced back to £72.5m at the start of 2017.

Landbay has been more mixed, with new lending dropping from £5m in the second quarter to £282,820 in the third and £193,800 in the final three months of the year. New lending was back up to £833,300 at the start of the year.

RateSetter has seen the biggest increase, taking on 9,573 up to the first quarter of 2017 to 44,402.

Funding Circle was a close second, taking on 8,604 to 59,740, while Zopa took on 6,091, taking the total number of lenders to 60,755.

Only MarketInvoice saw a drop by 47 to 220.

Zopa has taken on the most new borrowers at 41,310 since the referendum to 171,607 while RateSetter has taken 30,286 to 203,994.

Landbay and Thincats have taken on the least, at four and 34 respectively.

The FCA received 77 submissions for the second phase of the regulatory sandbox, more than applied for cohort one. 31 applications met the sandbox eligibility criteria and were accepted to develop towards testing. The current cohort consists of the 24 firms that are ready to begin testing shortly.

AssetVault

AssetVault enables consumers to catalogue all of their assets in a secure online register and better understand their total value. AssetVault then works with insurance providers to protect the consumer and their assets with appropriate insurance products.

Beekin

Leverages artificial intelligence and data sharing to build transparency and liquidity in alternative assets (real estate, angel investments), and offers risk management and analytics services to small investors.

Experian

A mortgage eligibility tool that can be used to help consumers who are in the research phase of buying a home by increasing awareness of their eligibility, based on the lender’s affordability criteria.

FloodFlash

FloodFlash provides event-based flood insurance, even in high-risk areas.

Insure A Thing

An alternative insurance business model where the consumer makes payments at the end of the month, based on the exact cost of claims settled during that period.

Nimbla

Nimbla provides flexible trade credit insurance and credit and invoice management tools to UK SMEs, via an online platform

Paylinko A DLT-based payments solution enabling users to send and receive payments using a link.

We are now accepting applications from firms to be part of our third sandbox phase. Firms have until 31 July 2017 to submit their applications.

Departing Bank of England rate-setter takes swipe at Mark Carney in final speech (Belfast Telegraph), Rated: A

A departing rate-setter at the Bank of England has taken a final swipe at dovish Governor Mark Carney, saying record-low interest rates are no longer justified.

In her final speech as an external member of the Monetary Policy Committee (MPC), Kristin Forbes questioned the continued need for “emergency” level interest rates, as well as the “substantial amount of stimulus” rolled out in the wake of the Brexit vote, stressing that forecasts for a recession and higher unemployment after the referendum have failed to materialise.

No sign of decreasing P2P appetite, claims lender (Bridging & Commercial), Rated: A

There has been no sign of a decrease in demand for peer-to-peer finance, online platform RateSetter has told Bridging & Commercial.

“…We’ve seen steadily increasing demand from advisers, and the value of IFA-administered accounts on our platform has doubled over the last year.

“Although there are clearly hurdles – for example, direct investments in peer-to-peer lending are not currently available through investment platforms commonly used by IFAs to buy products on their clients behalf – we see no signs of decreasing appetite.”

Jane Dumeresque, CEO at Folk2Folk, explained that the FCA process was extremely tough and was not too surprised that some had withdrawn.

Peter McDermid: help to build (The Scotsman), Rated: A

Today marks the Scottish launch of the LendInvest Property Development Academy, an adult education course that puts development skills at the fingertips of aspiring house builders.

The first London course was ten times oversubscribed and to date more than 120 “students” have completed our courses. Now we’ve rolled out countrywide to satisfy demand.

Sessions are led by experienced and, as importantly, local advisers who know what it takes to get small-scale property developments delivered on time and on budget.

Development issues

Access to finance continues to be the biggest hurdle. A severe lack of lenders in Scotland is problematic.

Any experienced developer knows that applying for and awaiting planning permission can be a long, exhausting and expensive process. This is where it pays to do your research.

Structuring a professional team is one of the most important aspects of planning for a development, and a task that can be more complex than it first appears. There are various questions that a developer needs to ask: what are the key development costs? How long will a project take?What consultants are involved in a development project and how should they all work with one another? How do developers insure their teams against delays and accidents?

Sales and marketing are commonly regarded as an afterthought, something to worry about “later”, when in fact marketing needs to be in the forefront of a developer’s mind from the very beginning.

Three out of four investors refuse to pay for financial advice (Money Observer), Rated: A

A survey conducted by investment management company Legg Mason has found that only 24 per cent of investors would be prepared to pay the typical hourly fee for financial advice – which works out on average at £150 per hour, according to unbiased.co.uk.

Just 10 per cent of those who answered said they would be willing to pay £150 or more, while an additional 11 per cent agreed that they would pay between £50 and £149.

Over a third of respondents (36 per cent) said they would refuse to pay for financial advice outright, while 15 per cent said they were unsure what they would be happy to pay.

Why Financial Advisers Won’t Succumb To The Robots Any Time Soon (Huffington Post), Rated: B

Add to this, low levels of financial education, low levels of trust in financial services generally and overwhelming product choice (e.g. 2,000+ investments) and engaging customers without a human adviser is tough. That’s why, according to the industry’s regulator the FCA, of the £208 billion invested by consumers last year 78% was through advisers.

The vast majority of investment advice consumers now get from advisers is supported by online, model driven, financial technology (FinTech) which helps advisers more scientifically assess their risk profile and develop probability based investment strategies which give them a higher chance of meeting their goals at an acceptable risk level.

There are four developments now emerging, which will almost certainly change the game:

  1. Simple, automated advice
  2. Account aggregation
  3. Social networks
  4. Artificial intelligence
China

Renren Announces Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

  • Total net revenues were US$20.9 million, a 94.3% increase from the corresponding period in 2016.

    • Advertising and IVAS net revenues were US$11.6 million, a 90.2% increase from the corresponding period in 2016.
    • Financing income was US$9.3 million, a 99.7% increase from the corresponding period of 2016.
  • Gross profit was US$6.4 million, a 172.6% increase from the corresponding period in 2016.
  • Operating loss was US$17.6 million, compared to an operating loss of US$19.2 million in the corresponding period in 2016.
  • Net loss attributable to the Company was US$16.2 million, compared to a net loss of US$23.2 million in the corresponding period in 2016.
  • Adjusted net loss(1) (non-GAAP) was US$11.0 million, compared to an adjusted net loss of US$15.9 million in the corresponding period in 2016.

P2P Industry News (Xing Ping She Email), Rated: AAA

Internet Finance Giants Ant Financial, Baidu etc., working with bank for new opportunities on fintech. 

It seems a trend that internet financial giants working with traditional banks in China. Recently, Baidu built a strategic partnership with Agricultural Bank of China (ABC). The cooperation focuses on fintech areas, including co-building of financial brains and portraits of clients , precise marketing, customer credit evaluating, risk monitoring, robo-advising, etc.

Previously, both Jingdong Finance and Ant Financial Services Group have announced partnerships with banks. On 16th June, Jingdong signed a framework agreement on financial business cooperation with ICBC, planning to conduct cooperation in fintech, retail banking, enterprise credit, etc. While in the late of March, the CCB has signed a tripartite cooperation agreement with Alibaba and Ant Financial. According to the agreement, Ant financial would help CCB to boost the online credit card business. They are going to strength cooperation in offline & online channel and electronic payment business, so as to open up the credit system.

Bank of China Set Up the Inclusive Finance Division

On 20th June, the Inclusive Financial Division of BOC was founded officially. The new division aim at providing financial services in comprehensive coverage of rural and urban. According to reports, China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC) have all set up their Inclusive Financial Division at the general bank level.

Baidu and the Agricultural Bank reached a strategic cooperation in the layout of intelligent finance (Sina), Rated: A

In accordance with the strategic cooperation agreement, the cooperation mainly focused on the field of financial technology, including the construction of financial brain and customer portrait, precision marketing, customer credit evaluation, risk monitoring, intelligent investment, intelligent customer service and other specific applications, Around the financial products and channel users and other areas to start a comprehensive cooperation.

Bank of China Begin Fintech Move (AI Topics), Rated: B

Bank of China (BOC) and Tencent have established a joint financial technology laboratory, the lender said in a statement this week. The lab will work on cloud computing, big data, blockchain and artificial intelligence to promote financial innovations.

European Union

IDA ‘confident’ of Brexit investments pipeline, banking event told (Irish Times), Rated: A

IDA Ireland’s head of international financial services, Kieran Donoghue, has said he is “confident” that the Republic will secure a number of wins as his organisation “aggressively” pursues the opportunity to lure financial activity from London following Brexit.

Luxembourg’s politicians pin economic hopes on fintech drive (Financial Times), Rated: A

Britain’s planned departure from the EU has provided policymakers with an incentive to build a fintech hub in Luxembourg that could attract UK technology companies looking to maintain a foothold in the EU.

Prime minister Xavier Bettel has made the country’s digital transformation a priority since succeeding the long-serving Jean-Claude Juncker in December 2013. Mr Bettel launched the Digital Lëtzebuerg [Luxembourg] initiative the following year as a platform for encouraging new technology in the financial industry as well as society as a whole.

The flagship project to encourage fintech is the Luxembourg House of Financial Technology, opened with much fanfare in April with backing from the government and business groups.

Its focus is on insurance, banking and fund technology in areas such as digital investment and portfolio management, blockchain applications, payment platforms, data analytics, artificial intelligence, security and authentication.

International

How Fintech is Disrupting Banking for Businesses Around the Globe (Due), Rated: A

Same day bank transfers were rolled out in the United Kingdom almost a decade ago. NACHA, the regulatory organization responsible for the ACH system, announced efforts for faster transfers two years ago. However, very few banks are actually implementing faster transfers.

Digital wallets are a key concept in bringing financial services to the unbanked and underbanked.

Multiple large banks have added bot features to their customer service toolset, and there is no limit to how far it can go. Just a few months ago at LendIt I captured a video of someone asking a computer for help picking a credit card.

Over $36 billion were poured into FinTech ventures in 2016 alone, and about a quarter of that went to banking related ventures. Payments, investments, and wealth management were other major categories for 2016 FinTech investment.

Australia/New Zealand

Harmoney’s Marketplace Hits $ 500,000,000 (Scoop), Rated: AAA

Peer-to-peer lending marketplace Harmoney announced today that $500,000,000 in lending has been transacted through the platform in just under three years of operation. 30,000 Kiwis have made the choice to join the Harmoney community with additional support from two challenger NZ owned banks TSB and Heartland.

Kiwis have borrowed for all sorts of reasons;

  • 12,000 to pay off debt, mainly expensive Credit Card debt
  • 4,000 have completed home improvements and renovations
  • 3,000 have taken a special trip or holiday
  • Almost 2,000 have upgraded their car and;
  • 10,000 have borrowed for a vast array of other reasons, from dream weddings, book publishing to achieving their dreams at the Paralympics.

Consultation on personalised robo-advice (JD Supra), Rated: AAA

There is a clear demand, from both industry and the regulator, to allow personalised robo-advice to be provided ahead of the FAA reforms. As a result, the FMA is consulting on an exemption to allow this to happen – the exemption consultation can be found here.

The exemption will be subject to conditions but these are very similar to those that regulators have imposed in other jurisdictions (such as Australia) where our offices have been advising on for some time. We don’t expect there to be too much objection to these.

Limits:

  • Service: The exemption will be limited to financial advice or investment planning services and won’t cover the provision of DIMS under the FAA or the FMCA.
  • Product type: The robo-adviser will be limited to advice on financial products that are highly liquid or easily transferable. The FMA’s over-riding concern here is that consumers should be able to easily unwind their holdings if the robo-advice is poor or unsuitable. The proposed product list for robo-advice will be:
  • KiwiSaver and managed funds that are continuously offered and redeemed at a price based on the value of the scheme property
  • Listed equities and listed debt
  • Government bonds
  • General insurance products (home, contents and vehicle) and
  • Savings products and credit contracts (other than mortgages).

Conditions: 

  • Pre-notification procedure: A robo-adviser will need to give prior notice to the FMA setting out ‘good character’ declarations in relation to senior managers and directors and giving details of any criminal convictions in New Zealand or overseas. The FMA will need to issue a no objection confirmation in relation to the good character declarations before the robo-adviser starts business.
  • Status disclosure: The robo-adviser will need to clearly disclose that it is relying on the exemption and that the FMA has not in any way endorsed, approved or reviewed the service.
  • Disclosure: Before giving advice to a client, the robo-adviser will need to give the client sufficient information to make an informed decision, including:
  • The nature and scope of the service and whether the service is limited to a particular range of products. This will need to include:
  • Clarification of the extent of human involvement
  • Clarification that the advice provided will depend solely on the information provided by the client
  • An explanation of any limits on the advice or portfolios generated by the algorithm
  • A concise explanation of the benefits and risks of the service.
  • An explanation of the fees that must be paid.
  • Details of how the robo-adviser is paid and disclosing any actual or potential conflicts of interest that may influence the services provided.
  • An explanation of how complaints can be made.

Regulator seeks feedback on robo-advice exemption (NZ Adviser), Rated: A

The Financial Markets Authority (FMA) is seeking feedback on its proposals that would enable entities to provide robo-advice.

The current law, passed in 2008, did not contemplate digital advice, meaning that personalised advice, or advice that takes into account an individual’s financial situation or goals, can only be given by “a natural person”.

The purposes of the Financial Advisers Act (‘FA Act’) are aligned with the Financial Markets Conduct Act, which include “promoting innovation and flexibility in financial markets.”

Global Credit Investments gives OnDeck Australia A$ 22.5m financing (AltFi), Rated: A

Asset manager Global Credit Investments has hit up its network of rich Australian families and raised A$22.5 million to refinance OnDeck Australia’s small business loan book.

A press release issued by both companies said the capital raise was “significantly oversubscribed”, with wealthy Australians attracted to the returns offered by OnDeck‘s loans, typically in the high-single-digits.

FinTech Australia releases fintech ecosystem map (Fintech Australia), Rated: A

Australia’s fintech industry body today released its first member ecosystem map, which helps build domestic and international understanding of the nation’s fintech strengths and diversity, particularly in wealth generation and lending.

The ecosystem map shows that wealth and investment, and consumer and business lending, are Australia’s two largest fintech sub-sectors – an outcome that is consistent with findings from last year’s.

Online Lender Prospa Appoints Damon Pezaro as Chief Product Officer (Crowdfund Insider), Rated: B

Prospa, an Australian online lender for small businesses, has appointed Damon Pezaro as its first Chief Product Officer.

Pezaro joins Prospa from Domain, where as CPO he led major transformation across the business and, apparently, a dramatic period of growth.

Asia

Asian Fintech Scene ‘Leapfrogging’ Over US In Innovation (Benzinga), Rated: A

While fintech companies proliferate in the United States, driving the expansion of a well-established financial sector with flourishing credit card and personal banking industries, Orchard Platform CEO Matt Burton is turning an eye to the east.

“In a lot of Asia, that doesn’t exist whatsoever,” Burton said at Benzinga’s 2017 Fintech Awards. “The population there are getting loans for the first time ever. There’s no credit bureaus there, so any data set that you’re able to acquire is completely proprietary.”

Matt Burton, CEO of Orchard Platform, at the 2017 Benzinga Global FinTech Awards

Africa

End of the road for mobile money loan defaulters (Standard Media), Rated: AAA

Credit reporting firm TransUnion yesterday said it had introduced into the Kenyan market a mobile score card that profiles borrowers using mobile lending platforms, which it will be sharing with banks and other lenders.

TransUnion Kenya Chief Executive Billy Owino said the Mobile Score Card would enable lenders access predictive and customised risk views while offering consumers alternative access to credit and an opportunity to build a positive credit score.

This wil be made possible by making use of mobile lending platforms. He added that the mobile money ecosystem has outgrown necessity-based transactions and peer-to-peer lending and is now transiting into mobile credit and loans.

Latin America

Two Brazilian Companies Merged to Create a Super Fintech (Crossroads Today), Rated: AAA

Vindi, a Sao Paulo, Brazil-based provider of subscription/recurring billing and payment solutions, merged with Smartbill, a Sao Paulo, Brazil-based provider of a subscription management system.

The financial terms of the deal were not disclosed, but the merger of the two companies aims to consolidate the market of payments focused on the service sector in Latin America.

Companies like Thomson Reuters, Movile, B2W, Empiricus, Serasa Experian, Buscape, Smartfit, Editora Abril and the most important subscription businesses are using Vindi and Smartbill solutions.

Authors:

George Popescu
Allen Taylor