D+H is a global payments and lending technology provider based out of Toronto serving nearly 8,000 financial institutions. With revenues of over $1.5 billion and 5,500 employees, it’s a bona fide giant in the financial technology industry. The company has realized the shift towards digital lending and mobile-first experience, recently launching Total Lending Small Business, […]
D+H is a global payments and lending technology provider based out of Toronto serving nearly 8,000 financial institutions. With revenues of over $1.5 billion and 5,500 employees, it’s a bona fide giant in the financial technology industry. The company has realized the shift towards digital lending and mobile-first experience, recently launching Total Lending Small Business, a mobile-first lending solution designed to boost traction for traditional lenders and improve the lending experience for small business owners across the United States.
D+H hired David Boswell as head of its new lending products division. Under his supervision, they researched the banking sector for a year-and-a-half to spot opportunities for a new product. Before launching the solution, it was put through rigorous testing and, in March 2017, Total Lending Small Business kicked off. A cloud-based SaaS solution developed to target the small business space, banks and other lenders can use it to deploy an online loan application for small business owners in record time.
The solution is a lot quicker and more efficient than paper-based branch models and processes more loan applications with the same amount of resources. It is a pure win-win as there is revenue augmentation without additional costs.
Rather than try to find something new and exotic, D+H went back to the basics and tried to tackle the problem of borrower experience in the loan application process. Even though the solution is primarily all about elevating lender efficiency and borrower experience, the product offers much more. Since it is cloud-based, it will help lenders reduce overhead expenses such as office space and manpower while reducing the chance of human error. That will improve processing speed and customer satisfaction.
Features of Total Lending Small Business
Total Lending Small Business is an entirely online-based application available in both mobile and desktop versions. The USP is its interactive interface. Borrowers can have virtual conversations that develop questions, and answers, on the go. This allows for a hassle-free experience compared to other platforms that use a preset form for all borrowers.
The platform is particularly beneficial as small business owners sometimes don’t really understand the technical details associated with loan applications. Through live interaction, the platform is able to intuitively interact with each borrower. For now, D+H is sticking to the application process, but the company is expected to add other features to the platform that include uploading documents, upselling, and underwriting.
Buy or Build
Some banks are not large enough to develop their own platform or technology solution. Therefore, it makes sense for them to buy a specialist solution. D+H aims to target about 100 banks up to $20-30 billion in revenue.
Small business lending has proven to be an Achilles heel for banks. The financial crisis led banks to vacate this space as the risk was not consummate to returns. But with growing competition in other lending segments, banks have finally started taking the SMB lending space seriously again. They are either developing their own SMB lending solutions or are partnering with alternative lenders with a proven track record.
One association that has made waves in the lending space is the Chase/On-Deck partnership. On-Deck has turned into a tech provider while Chase Bank is leveraging its existing client base and balance sheet to penetrate the SMB lending market.
Over the years, SMB lending has evolved manifold, and a lot of non-traditional lenders are beginning to enter the space. This makes it pertinent for brick-and-mortar lenders to shore up their SMB customer bases by introducing lending systems commensurate with the technology currently prevalent in the market.
Mortgage Lending Solution
Mortgage lending solution is the principal business of D+H. The company got its start in the early 2000s when the internet gaining popular traction. The premier software is available as an SaaS deployed in the cloud or an on-premise platform. Its main targets are online mortgage businesses.
Solutions range from POS origination, processing, and compliance documentation. All these solutions are highly customized for the customer experience. Earlier, only 2% of mortgage applications were completed on mobile devices, but in last 2-3 years, that number has jumped to 20%. This significant increase in number is due to busy lifestyles and smartphones increasingly replacing desktops and laptops for private browsing.
While developing its SMB lending platform, D+H placed specific emphasis on this shifting trend.
Responding to the trend, D+H launched its second Mortgagebot solution. Mortgagebot LOS, a total lending mortgage solution, has signed over 200 customers in two months since its launch. Company executives believe the growing interest in a mobile-optimized experience will lead to greater demand for the product.
Next big thing: Smartphones
These days, more people rely heavily on their smartphones, yet lending companies don’t develop or design software tailor-made for them. D+H believes the introduction of smartphone solutions into the technology mix will completely change how lenders and borrowers interact. The company has been getting feedback from testing its solution on a real user base to ensure an intuitive customer experience.
Making a difference
Many players have entered the market with their white-label online lending platforms. TransUnion recently launched Find My Offer – “a set of configurable white-label web screens that support a lender’s consumer prequalification and digital prescreen initiatives.”
All of these online lending platforms have a similar set of features, and lenders depending on such platforms to boost growth will find themselves behind the curve. Such platforms are a commodity now, and compulsory for operating a lending business.
News Comments Today’s main news: Misys, D+H team up to launch Finastra. Fundrise intros first real estate robo-advisor. UK businesses find it harder to get a loan. Singapore Life gets insurance license. Faircent offers online lenders ‘What-If’ scenario simulations. Today’s main analysis: Does anyone remember how to make a subprime mortgage? The most up-to-date numbers for Prosper, RateSetter. Today’s thought-provoking […]
Finastra launch. GP:”I would like to see more information on how Finastra is going to stay ahead through innovation. The bigger the company the harder it is especially when it will have to spend a lot of ressources and attention merging. For the best environment it is better to have numerous smaller companies then 1 large one as over time the incentive to keep innovating is low and eventually the large company falls behind. “AT: “48 of the top 50 banks worldwide are customers. Finastra exits the gate the third largest fintech company in the world, which puts it in a great position globally and could very well rise to be the largest fintech worldwide with the right management.”
Bank branches are closing in droves. AT: “Is it a matter of time before one of these banks closes its doors for good? Remember when Blockbuster said Netflix hasn’t impacted their business at all. Then, bam! No more Blockbuster. The same thing happened with Border Books. Thanks Amazon. I think we’ll someday read the headline – ‘National Bank Chain Goes Out of Business, Can’t Compete With Online Banks’. It could be within a decade.”
Fundrise revamps service with real estate robo-advisor. AT: “No one should be surprised by this. First, it’s Fundrise, the company that introduced the first eREIT. Secondly, it was just a matter of time before somebody introduced the first real estate robo-advisor, so why not Fundrise? Disclosure: I have in the past written for Fundrise.”
Today Misys and D+H have joined forces to create a diversified global financial software provider, unmatched in terms of depth and breadth of solutions. Operating under the new company name Finastra (www.finastra.com), the combination will create the third largest financial services technology company in the world. The company has approximately 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally. This follows the acquisition of D+H by Vista Equity Partners, which already owns Misys, creating a merger of two highly complementary financial technology providers.
Finastra will be led by Nadeem Syed in the role of Chief Executive Officer. Mr. Syed was previously CEO of Misys and has over 27 years of experience leading global technology companies through transformation and growth. The company has U.S. $2.1 billion* in revenues and has offices in 42 countries around the world. It will be headquartered in London, UK, maintaining North American headquarters in Toronto, Canada.
Finastra offers the broadest set of retail banking, transaction banking, lending, and treasury and capital markets software capabilities available in the world. The company’s open architecture and approach enable financial institutions to harness the power of software ecosystems and will be delivered on premises, hosted or via the cloud. With the increased scale and geographic reach, Finastra will be able to serve customers better, regardless of their size or geographic location – from global banks, to community banks, credit unions, and corporations. Using the company’s secure and reliable solutions, customers will be empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to deliver a superior customer experience, both now and in the future.
Having long pursued a progressive vision of innovation within both businesses, Finastra will strive to further unlock the potential of people and businesses by executing the product strategy of ‘Protect, Extend and Innovate’. This includes protecting our customers’ investments in all of our solutions; extending the value of our solutions by integrating new products and services; and innovating to create the best-in-class solutions. Finastra will work in partnership to help customers transform their business, and become more agile, innovative, and resilient to better meet their evolving needs.
There may be no physical institution as historically revered as a bank.
Nice try. Banks these days are hardly elegant or imposing. Most have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period and Citi closed 302 (28.5 percent).
Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience.
While those in the banking industry feel there will always be brick-and-mortar branches, in large part because the business of banking is grounded in trust, and in knowing the person with whom you’re working, the move to digital technologies is expected to grow exponentially.
Fundrise, one of the leading online investment platforms for real estate, has launched the “2.0” version of their platform. Fundrise has created a Robo-Advisor focused on real estate thus providing an investing tool to match individual investor needs.
The Fundrise Robo-advisor enables individual investors to create a highly diversified real estate portfolio accessing Fundrise’s growing number of eREIT’s. The service provides an estimate based on submitted variables to extrapolate potential returns. Fundrise estimates users will save up to 40% on fees versus traditional services.
Brokers willing to learn the lost art of making risky mortgages are in demand again.
Mr. Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of efforts to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis.
Brokers are a key part of a mortgage chain that starts with a borrower going to a broker for a loan. The broker surveys lenders for the best loan to fit the customer. The lender then funds the borrower’s loan.
While brokers before the crisis served banks and independent lenders, today they are working largely for nonbank lenders who make up a critical part of the mortgage market.
In the first quarter, nonbank lenders accounted for about half the mortgages originated in the U.S., according to industry publication Inside Mortgage Finance.
In the first quarter, nearly a decade after the start of the housing crisis, lenders originated just $6 billion in loans to borrowers with less than stellar credit scores or who are using alternative documentation to prove income, a category now known as “nonprime,” according to Inside Mortgage Finance.
In all of 2016, they originated $22 billion in loans, according to Inside Mortgage Finance. Back in 2005, at the peak for such loans, lenders made about $1 trillion of these mortgages.
Meanwhile, the volume of loans produced by mortgage brokers dropped to $37 billion in this year’s first quarter, down about 34% from the last three months of 2016. Loans from brokers peaked at around $1.1 trillion in 2003.
All your life, you’re told that an education will set you up to fulfill the American dream. But once you graduate, you’re faced with onerous payments that seem to hardly dent the principal. You need a steady job, stat. It’s terrifying to forgo a salary to start something new, let alone invest your assets, when you’re obligated to make monthly payments that can reach thousands of dollars.
One startup is helping its users get ahead of their debt and start the new ventures that our economy needs to thrive. SoFi (short for Social Finance) is largely known as the startup that will refinance your student loans, though it aspires to encompass its members’ entire financial lives.
Nevertheless, student loans are SoFi’s bread and butter, a reflection of the generation of Millennials saddled with insurmountable-feeling debt. That’s why, in addition to its unemployment support and career coaching, SoFi has an entrepreneurship program. The benefits include six months of loan deferment, mentorship resources such as connections to investors, and networking with other entrepreneur members.
Of course, SoFi can’t single-handedly revive American entrepreneurship, not least because the cohorts of accepted entrepreneurs are limited, and the types of businesses that SoFi favors skew toward scalable tech startups rather than conventional small businesses. But student loan relief has a definite impact on the participating SoFi members’ ability to launch companies.
We are offering up to 5,000,000 shares of our Class B Common Stock to the public at $5.00 per share. This offering commenced on February 1, 2017 and as of May 30, 2017, we had settled approximately 2,884,129 shares of our Class B Common Stock of the 3,000,000 shares that we had previously qualified for sale. We are including in the offering an additional 2,000,000 shares of our Class B Common Stock to be sold pursuant to this offering circular.
Square(NYSE:SQ) has disrupted the mobile payment market, and could still be in its early innings of growth. Over the past year, Square’s stock has more than doubled, thanks to its impressive and better-than-expected growth and optimistic forecast.
Over the past year alone, Square’s payment volume increased by 33% to over $13.6 billion, and the company is on the verge of becoming profitable. Plus, Square’s services and subscription revenue more than doubled year-over-year, and has tremendous long-term growth potential.
P2P lenders aren’t the only players in the unsecured lending space anymore — some of the biggest names in the industry are getting involved, which could certainly shake things up in the years to come.
One in particular I have my eye on is Goldman Sachs(NYSE:GS).
Goldman first announced its intention to get into the consumer lending business in 2015, and after a couple of years of development, the company recently launched Marcus (named for Marcus Goldman, one of the bank’s founders), its new lending platform that offers personal loans of up to $30,000.
According to a report by TransUnion, nearly 16 million people took out an unsecured loan in 2016, the highest on record. With an average balance of $7,640 and average interest rate of 12%, this translates into a billion-dollar revenue stream if Goldman can build its market share to just 7%.
Cadre, an online investment marketplace providing access and insight into institutional quality alternative assets, today announced a $65mm Series C financing round led by Andreessen Horowitz, with additional participation from Jim Breyer of Breyer Capital, Ford Foundation, General Catalyst, Goldman Sachs, Khosla Ventures, and Thrive Capital. Cadre’s existing investors include DST, Founders Fund, SL Green, and others.
Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced the launch of its Personal Financial Wellness Solution at the Digital Banking Summit. The Envestnet | Yodlee Personal Financial Wellness Solution is a suite of applications and APIs that leverages enriched data and artificial intelligence to move beyond organizing historical financial data, helping financial institutions and fintech developers provide actionable, financial guidance to their customers across a spectrum of devices, user interfaces and platforms.
The Envestnet | Yodlee Personal Financial Wellness Solution enables financial institutions and fintech developers to provide actionable tools to help consumers identify their projected OK to Spend balance and easily Save for a Goal. By applying Envestnet | Yodlee’s advanced data intelligence to its enriched transaction data of over 15,000 data sources, financial service providers can derive actionable information from consumers’ financial data in order to measure, guide and improve consumers’ financial health.
OK to Spend
Core to the Personal Financial Wellness Solution is OK to Spend, which synergizes predictive analytics and user feedback to deliver smart financial forecasting. OK to Spend can be consumed as a financial application or a fully RESTful API framework that enables financial service providers to create forward-looking forecasts that organize and predict recurring income and financial obligations along with personalized notifications for financial events and projected balances. OK to Spend analytics is run across the consumers’ primary spending accounts (cash and credit card) regardless of which financial institution they primarily bank with, in order to provide a holistic view of their finances.
Patent-protected machine learning and data analytics enable the OK to Spend algorithms to identify sources of recurring income and accurately predicts future income, accounting for anomalies. Similarly, OK to Spend identifies recurring and forecasted financial obligations, while accounting for fluctuations determined from historic data.
Save for a Goal
The Save for a Goal application allows consumers to easily set and track savings goals. The application facilitates money movement across different accounts at a specific time frequency and allows customers to better track their goals by allowing consumers to allocate multiple goals to a single account, or spread a single goal across multiple cash and investment accounts. Save for a Goal provides visual data and notifications such as progress bars, charts, graphs and alerts, engaging customers with the option to flex and prioritize between goals.
The role of the individual and institutional single-family residential investor is highly undervalued and tremendously under-appreciated. About 10 million individuals, businesses and institutions provide secure housing and jobs for millions of average Americans. 67 million souls live in single-family rentals, a million more properties are added each year employing millions of individuals, to buy, renovate, lease and maintain as safe housing for tenants in affordable to luxury markets. Single-family rentals have been discovered as a low-risk passive income revenue source and a growth asset in a balanced portfolio or personal retirement plan.
Using Harris Poll, single-family real estate investors were surveyed nationwide to understand why, where, what and how they invest and manage these properties to provide stable housing and realistic returns on their personal and company investments.
The report touches several other critical components that shape this market. Key among these are how the single-family real estate investor effects the economy, how investors view their properties (as added rental income or as an intentional business goal), investor decision points, and the investor as a customer,” says Steve Murray, Founder & CEO Real Trends.
To download your free copy of the Iceberg Report Executive summary, please go to
These days, there are few “typical” CPA firms left. As they seek to diversify, differentiate and grow by offering their clients value added services, firms are engaging in a much wider range of activities.
With the rise of a new generation of B2B financial technology companies, or Fintechs, the opportunities for CPA firms to offer new services have never been better.
Fintechs are infiltrating every aspect of B2B financial services, and venture investment continues to pour in. Where people used to look to QuickBooks, Oracle and SAP, now there are cloud-based accounting and ERP options like Xero and Freshbooks and NetSuite and Workday. But you probably know about those.
What you might not know is that Fintechs are moving into e-invoicing, expense reporting, data sharing and protection, compliance, tax management and fraud control. They’re executing specific parts of the banking value chain better, cheaper and faster, including lending, trade finance, and payments. Some are even considering becoming banks themselves.
Fintech solutions solve the whole thing– all types of payments and all the work that goes along with the payments. Companies can make 80 percent or more of their payments electronically, and that saves a lot of resources, especially if you’re a BPO writing hundreds of thousands of checks on behalf of your clients. You could be helping them get a lot more card rebates instead.
But what visibility really does is open up more opportunities for CPA or audit or BPO firms down the road. If you’re a BPO, visibility into payments could potentially help you work better with vendors.
The more you can help clients automate, the more nimble they are and the more nimble you are.
So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.
For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays.
All sorts of interest groups are flying in this week to nab some time with lawmakers before the July 4 recess.
The Marketplace Lending Association, a trade group that represents digital financial and lending startups, is in town this week for its first-ever fly-in, meeting with lawmakers and regulators. “The goal is to bring Washington up to speed on the growth of the sector, as well as the emerging partnerships between the fintech member firms and banks,” according to the group. Its member companies include Lending Club, Prosper, Funding Circle, Avant, Marlette Funding and Affirm.
On June 13, 2017, The Financial Industry Regulatory Authority (FINRA) declared the establishment of the Innovation Outreach Initiative, in order to properly assess FinTech‘s industry impact.
FINRA’s Innovation Outreach Initiative comes after the launch of its FinTech site that’s dedicated to emergent topics in the field, and literature on blockchain technology and digital investing.
The initiative will consist of program elements, such as enhancing FINRA’s processes, timely publication of regulatory technology applications, regional outreach roundtable discussions (comprised of FINRA members and nonmembers), and the creation of a FinTech Industry Committee. The committee will help to assist with ongoing discussions about how FINRA’s programs and rules will intersect with FinTech innovations.
Online Lending Policy Institute Names Board of Governors (OLPI Email), Rated: B
The Online Lending Policy Institute (OLPI), a voice for policy analysis, in-depth research, and education for the online lending industry, today announced its Board of Governors, a group of industry experts ranging from academics to lawyers to executives from twelve leading organizations. This newly elected group joins founding members of OLPI: Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans.
The Board of Governors are:
Frank Borchert, General Counsel, Marlette Funding/ Best Egg
Colin Darke, General Counsel/Chief Compliance Officer, RocketLoans
Dr. Michael Dooley, Chief Economist, SoFi; professor of economics UC Santa Cruz
Marc Franson, Managing Partner, Chapman and Cutler LLP
Michael Freedman, General Counsel, BorrowersFirst, Inc.
Gilles Gade, CEO, Cross River Bank
Adam Goller, Chief Credit Officer, Cross River Bank
Cornelius Hurley, Director, OLPI; professor Boston University
John Kromer, Partner, Buckley Sandler LLP
Robert Linderman, General Counsel, Freedom Financial Network, LLC
Tim Li, CEO, Kuber Inc.; professor Fintech School
Marshall Lux, Senior Fellow, Harvard Kennedy School
Marty Mitchell, Managing Director, ProBank Austin (formerly Professional Bank Services)
DiversyFund, Inc., a fast-growing full-service online real estate investment platform, announced the next ground-breaking real estate investment project that their partnership with Roman James Design Build will undertake. DiversyFund and Roman James will be building a new ultra-luxury in Hollywood Hills, one of the most exclusive neighborhoods in Los Angeles.
This investment opportunity is located at the end of Granito Drive in the prestigious Hollywood Hills community of Los Angeles, California, home to Hollywood celebrities, professional athletes and Fortune 500 CEOs.
Van Valkenburg called on Congress to “rationalize the chaos of financial regulation,” pointing to the horrifying reality there exists a byzantine environment of state and federal regulators that, well simply put, doesn’t make sense.
London-based fintech companies attracted more than three times as much capital in the first quarter as Berlin – Europe’s second largest fintech investment hub – and maintained its market share despite moves by other cities in the region to gain from the UK’s departure from the EU.
New research from data provider FinTech Global found six cities that stand out in Europe’s fintech arms race, with companies based in London, Berlin, Stockholm, Paris, Barcelona and Amsterdam raising $823m in the first three months of 2017.
Overall European investment stood at $1.2bn, with London claiming a 36% share at $421m — more than treble the $140m investment in Berlin-based companies, according to the research.
Over the previous three years, London accounted for 39% of European investment, suggesting that the impact of last year’s Brexit vote has been slight.
With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance reveals how credit conditions look to be tightening again, with over 400,000 small businesses now interested in finding an alternative to the banks for a loan.
When asked, 32 per cent of SMEs that had considered raising finance said that it was now harder than six months ago.
As banks are progressively closing their branches and cutting back on front-line staff, businesses now need to go elsewhere to benefit from face-to-face contact before borrowing money. With over a third of small businesses preferring to seek advice in person, the move to online-only offerings and the closure of physical branches is a concern.
Hive claims it will be the first crypto currency invoice financing platform for SMEs, with its ICO opening in 4 days and closing at the end of July.
From what I can gather – and I’d say you’re best to verify this yourself – Hive tokens give holders the right to participate in the network and generate a return by funding invoices. The carrot for small business owners is the speed of execution of the financing element.
And while I was lucky enough to get a master class in person, if you haven’t yet got your head around tokens and ICO, these articles are worth a read:
This announcement is made by Credit China FinTech Holdings Limited (“Company”) on a voluntary basis.
Reference is made to the announcement of the Company dated 26 April 2017 in relation to the Investment in Singapore Life (the “Announcement”). Unless otherwise defined, the capitalised terms used herein shall have the same meaning as those defined in the Announcement.
The board of directors of the Company is pleased to announce that Singapore Life has been approved as a fully licensed direct life insurer by the Monetary Authority of Singapore.
Singapore Life will also soon offer life insurance solutions to customers through its online platform www.singlife.com and financial advisers.
On the other hand, as Grossman points out, ‘since Macron has publicly stated that innovation and disruption is key for France’s growth potential, his intention for closer integration with Europe has been broadly welcomed by the fintech industry.’ Macron seems to be pro-PSD and has invited those affected by Brexit to work in the technology sector in France, all are welcome under En Marche. The French president is also very supportive of SME growth and is interested in helping French Tech.
Macron’s initiatives so far are clearly in favour of the development of fintech in France and with billions promised for innovation, the president is returning to supporting this space, as he did with The Family in Paris, as Grossman points out.
Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.
In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.
RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.
Gargantuan sovereign wealth portfolios are increasingly turning to private debt exposure with almost two-fifths of portfolios now actively investing in the asset class due to its potential for stable risk-adjusted returns and portfolio diversification benefit.
The report found that 39 per cent of sovereign wealth funds now invest in the asset class, an increase of five percentage points over the past 12 months. The majority of sovereign wealth funds with over $10bn in assets now allocate to the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.
Libyan Investment Authority is one such investor in private debt that allocates to the asset class as part of its private equity portfolio. The fund targets distressed debt and mezzanine funds in Europe, North America and MENA.
Mezzanine investments are the private debt fund type most appealing to sovereign wealth funds, with 70 per cent targeting the strategy over the next 12 month and direct lending is sought by 53 per cent.
The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.
Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.
India based Peer-to-Peer lending website, Faircent, has announced the launch of what it claims to be a first-of-its-kind Portfolio What-if Analysis (PWA) tool on its platform. According to the company the tool will allow lenders to simulate different loan scenarios and understand how multi-loan portfolios in peer-to-peer lending operate through a ‘What-if’ analysis.
Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).
Rupaiya Exchange received the award for Best Peer-to-Peer Lending Platform in India in The Asian Banker Financial Peer-to-Peer Audit Awards Programme 2017. The awards ceremony was held in conjunction with the prestigious Asian Banker Future of Finance Summit 2017, the foremost annual meeting for decision makers in the financial services industry in the Asia Pacific region, held at the Asian Civilisations Museum, Singapore.
The awards evaluation criteria were based on multiple dimensions including financial performance, risk management processes, technology, innovation and strategy.
Facilitating simple, fast, and tech-enabled banking services, the emergence of fintech is forcing banks to rethink old business models and delivery mechanisms to adopt a more technology-driven and consumer-centric approach to retail banking.
Leading this ‘uberisation’ of financial services is the online P2P (peer-to-peer) lending sector, which is driving disruption in the institutional lending space through its simplified, tech-enabled approach. What this also means is that online P2P lending will play a significant role in driving the Indian economy.
The adoption of technology means that loan approvals and disbursals can be facilitated in as little as 24 hours from the request origination, whilst digitised operations and processes allow for minimisation of overhead costs. This translates to greater benefits for all stakeholders; while borrowers pay lower interest rates and processing fees, lenders earn higher margins and returns on their investments.
Dubai SME’s financial arm and peer-to-peer lending platform Beehive had signed a memorandum of understanding (MoU) to aid financing for small and medium enterprises (SMEs).
The MoU between Beehive and the Mohammad Bin Rashid Fund (MBRF) will make it easier for SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.
Under the deal, MBRF would act as a guarantor for credit of up to Dh500,000 on SME financing for a period up to 36 months.
LendingArch, a Calgary-based online and point-of-sale lending platform, announced its expansion to Quebec. LendingArch has partnered with medical clinics and home improvement contractors in Quebec to offer POS financing options, enabling LendingArch to become a fourth in-store payment method by applying online to finance products or services for up to 36 months.
News Comments Today’s main news: Enter the bear market in bonds? D+H launches cloud-based small biz lending platform for banks. Over 50K investors register with RateSetter. Revolut partners with Lending Works to offer cut-price instant credit. Blender procures Electric Money Institution license. Blackmoon partners with ID Finance. Today’s main analysis: Fundbox study reveals impact of late SMB payments. The British Business Bank […]
Carvana hires banks for IPO. AT: “What will make used car buying in an MPL world truly innovative is a platform that connects individual buyers with individual sellers and the added value of a financing option. While this has been tried, so far there hasn’t been a success story. Carvana is upping the game, however.”
Stocks and bonds struggled while the dollar climbed Tuesday.
The yield on the 10-year Treasury note on Monday rose to 2.609%, the highest since September 2014. That’s up from 1.867% on Election Day, and nearly double the all-time low of 1.366% hit last July.
Bill Gross, the famed bond investor, underlined the 2.6% yield in January as the pivot point that will usher in the long-anticipated bear market in bonds. Mr. Gross warned that, should yields march above that threshold, it would indicate a “secular bear market has begun.” A break above 2.6%, he observed in chartist vernacular, would break a downward trend line that has been in place for the past three decades.
Fundbox Study Reveals Impact of Late SMB Payments (Fundbox Email), Rated: AAA
Late and unpaid payments cripple small businesses (SMBs) and it’s something they have to deal with on a daily basis. In fact, 64% of SMBs are affected by late payments on open invoices. I would like to give you an early look at a new Fundbox study, which dug deeper to understand the microeconomic impact that takes place when a business is paid late.
Key findings include:
Hiring freeze – 23% can’t hire new employees
Owner pay cuts – 79% of SMB owners said they can’t pay themselves
New equipment gets the squeeze – 23% can’t invest in new equipment
Can’t advertise – 20% can’t spend on marketing efforts
Reduced Payroll – 18% hold back on pay increases or bonuses for employees
Inventory freeze – 17% can’t build up inventory
If paid on time, Fundbox estimates that these SMBs across the U.S. could hire an additional 2.1 million employees, which would reduce unemployment by 27%.
Fundbox helps SMBs overcome cash flow gaps by funding outstanding invoices. Attached please find the infographic. Would you like to also see the release? I can also connect you with Prashant Fuloria, Chief Product Officer at Fundbox who can discuss the critical need for services that solve cash flow gaps.
D+H Launches Cloud-Based Small Business Lending Technology (D+H Email), Rated: AAA
DH Corporation (TSX: DH) (“D+H”), a leading provider of technology solutions to financial institutions globally, today launched Total Lending™ Small Business, a new digital, mobile-first lending solution designed to boost profitability of financial institutions and improve the lending experience for small business owners across the United States. Now, banks and credit unions can deploy an intuitive, online loan application for small businesses, enabling more application throughput than the traditional paper-based branch model.
Total Lending™ Small Business is designed to empower financial institutions to build a more profitable small business loan portfolio. By bringing the loan process online, banks will benefit from reduced overhead and greater scale. An improved application process will also attract more loan requests from new and existing customers who prefer the convenience of the online or mobile experience.
New Data Shows C&I Lending Can Bring Higher Profitability to Community Banks in 2017 (PayNet Email), Rated: AAA
At $4.4 trillion in trade payables, term loans, and working capital loans, private-company credit represents one of the largest credit markets in the U.S. Today, C&I lending represents about 25% of all loans, down from over 40% in 1950. According to a new study by PayNet, Inc. banks can look to higher profitability in 2017 in their core franchise credit C&I business.
PayNet’s study shows that between 2008 and 2016, banks could have achieved $2.6 billion in additional net income, at a higher risk-adjusted return, had they maintained their share of C&I lending.
Banks can find financial technology useful to reduce the time to underwrite a loan from 50 hours to just over 2 hours. In addition, banks can further utilize technology to lower the cost of loan review by 40% while at the same time increasing the frequency of the loan review cycle from once per year to four times per year for the highest risk accounts.
U.S. used-auto retailer Carvana LLC, which allows customers to pick up cars they buy on the internet from vending machine-like towers, has tapped investment banks for an initial public offering, according to people familiar with the matter.
Carvana has hired Wells Fargo & Co (WFC.N) and Bank of America Corp (BAC.N) to lead its IPO, the people said this week.
Carvana sells cars through its website and operates automated towers that store cars in U.S. cities such as Austin and Dallas in Texas, and Nashville, Tennessee.
Now an auto insurance startup called Root is taking that conclusion to the bank, so to speak. It believes that the investigation, as well as its own studies on the matter, make a strong case that Teslas with Autopilot are safer than just plain humans. So confident is Root about this that, starting today, it is charging Tesla drivers lower fees if they turn on and use the controversial Autopilot feature.
The Tesla discount is a natural outgrowth of Root’s business model, which is based on using technology to identify safe drivers and offer them low rates. If you suck at driving, you don’t get a policy. Before getting coverage, customers must submit to a two-to-three-week testing period, downloading the Root app to their phones, which will use the sensors in the device to track location, speed, acceleration, and whether they are weaving recklessly between lanes at 2 a.m. after leaving a taproom. Or whether they are using the actual phone measuring their driving skills to text while in motion. This actually happens, says Timm, because after a few days drivers forget that they are being monitored and revert to bad habits.
According to Timm, about 70 percent of those who undergo this process will be deemed safe drivers, whereupon the company will offer them a low rate, with the entire transaction done on the phone. (Even your proof-of-insurance card will be stored on the device.) The other 30 percent have to get insurance from Root’s competitors.
One might think this will be a boon for insurers, who will see claims drop dramatically. Timm argues otherwise: The paucity of accidents and claims will drop the real cost of insurance so low that the established companies, stuck with high overheads, won’t be able to cut their prices enough. They will thus be subject to Uber-level disruption from newcomers who will be able to charge fees as low as $30 every six months.
Root has not contacted Tesla directly, but says that even without the car manufacturer’s help, the Root app can figure out when a Tesla owner is using Autopilot. Timm hopes that in the future, the company can work directly with Tesla to get better data.
SmartBiz Loans Adds Former SBA Head of Capital Access to Board of Directors (SmartBiz Loans Email), Rated: B
SmartBiz Loans, the first SBA marketplace and bank-enabling technology platform, today announced the addition of Ann Marie Mehlum to the company’s board of directors, a former Small Business Association (SBA) associate administrator and seasoned banking industry veteran, with more than 30 years’ experience.
As former associate administrator for the SBA’s Office of Capital Access, Mehlum directed the government agency’s flagship credit programs including the 7(a) general business loan guarantee program, the 504 program for real estate and long term asset financing, and the microloan programs, with a combined portfolio of more than $100 billion. The SBA is a federal agency that encourages lenders, typically banks, to originate loans to small businesses by providing a guarantee for these loans.
SmartBiz Loans’ SBA marketplace automatically connects small business owners with the right bank which helps to increase loan application approval rates and speed. SmartBiz®bank partners utilize the SmartBiz software platform to increase their efficiency in processing SBA loans by up to 70 percent. SBA loans are widely considered the best type of loan for many small businesses because of their low rates and long repayment terms.
Financial tech firm Finexio is moving its hub from Silicon Valley to Orlando – a move that will open up 10 high-wage jobs, the Orlando Business Journals reported. The startup, which offers a business-to-business commercial payment network, recently decided that the relocation is necessary in order to support its growth.
The company chose Orlando because of its growing reputation as an innovative city, drawing in professionals particularly in the financial technology industry. This move echoes that of other industry giants such as Deloitte and KPMG, which have ramped hiring in Central Florida.
At its new Orlando-based location, Finexio will be looking to hire professionals to work in its corporate headquarters and engineering department.
According to the Orlando Economic Partnership, another reason Finexio chose Orlando is because of the resources available in the area for hiring software engineers. For example, the University of Central Florida is located nearby, which offers a top-tier engineering school.
Peer-to-peer lending platform RateSetter has announced it now has over 50,000 investors.
This was just one of a number of milestones that RateSetter has recently reached, including collecting £1bn of repayments, investors having now earned more than £60m in total interest and more than £1.75bn of loans being delivered to borrowers across the UK.
Revolut has today announced a partnership with peer-to-peer (P2P) loan firm Lending Works to provide instant credit at half the cost of UK banks.
In just two minutes, Revolut customers can now apply for credit from anywhere in the world via their smartphone and receive funds instantly to their Revolut account.
This process cuts out the banks entirely, meaning that Revolut customers are charged just £52 on average to borrow £1,000 over a 12 month period, with a representative APR of 9.9%. In contrast, a recent survey of five major UK banks, whose personal loans are notoriously expensive with time-consuming application processes, showed that consumers are charged £120 on average to borrow the same amount over a 12 month period, with a representative APR of 23.8%*. Credit card rates are also sky-high, reaching a record average purchasing rate of 21.6 per cent APR in March 2016 (Source: moneyfacts).
The new credit features mean Revolut is the first company to approve and pay out P2P loans instantly.
The Revolut app currently offers UK users credit from as little as £500 to a maximum of £5,000, and users can adjust their repayment period between 12 and 60 months. In contrast to many banks, there are no fees to repay the loan early.
Since it was established in November 2014, the British Business Bank has invested Â£135m in peer-to-peer platforms.
Following a freedom of information request submitted by Bridging & Commercial, it was also discovered that in the calendar year 2016, £11.5m was drawn down for participation in loans generated by peer-to-peer lending platforms.
CapitalRise, a London-based property investment platform, announced on Monday it is launching an Innovative Finance ISA (IFISA) wrapper for residential property. According to the platform, the new IFISA allows savers to invest a minimum of £1,000 and up to £15,240 in the current tax year (rising to £20,000 in the 2017-2018 tax year) in residential property, targeting tax-free returns between 10-14% per annum.
We used five full years of historical loan performance data to simulate how the returns in a typical investor’s portfolio can change over time. In our example, an investor lent £10,000 across all the loans originated through Funding Circle in 2012. Each month, the loan repayments and interest received were lent to new borrowers.
The below chart shows the annualised return, after fees and bad debt but before tax, earned by the example investor over a five year investment period.
For the first few months the investor’s annualised return is at its highest, at approximately 7.8% after the 1% annual servicing fee is deducted. This is because the investor has typically yet to experience any borrowers being unable to repay their loans.
Bad debts generally start to occur approximately six months after the loans are made. This is reflected in the chart above, where our example investor’s return starts to dip after six months. This trend then naturally decreases over time as the rate at which businesses run into difficulties tends to decrease.
After 18 months the example investor’s return stabilises, then generally increases as recovery payments start to arrive. As of 1st February 2017, 44% of the value of loans defaulted between 2010 and 2014 has been recovered. This trend typically continues for the rest of the investment period, with the example investor ending the five year investment period having earned an annualised return of 6.5% after fees and bad debt.
A London-based financial advisor has launched a robo advice like service for its clients. FOL Wealth, began offering its automated service at the end of February to give customers access to low-cost advice.
The wealth manager charges an annual fee of 0.90 per cent with a minimum investment of £1,000.
Events abroad meanwhile are dominated by what is happening in the US, where the volatility of change and the frequency of significant news events – what journalists call ‘story burn’ – are increasingly alarming.
In the case of Money&Co, the company I founded and of which I am CEO, we bring individuals looking for a good return on capital together with carefully vetted, well-established and profitable small and medium-sized enterprises (SMEs) seeking funds for growth. We have also recently introduced property lending.
As a P2P business lender, Money&Co does what the banks cannot or will not do – we fund SMEs and we provide a gross yield of nearly 9% a year to the lenders, who extend credit via our platform.
To be fair, banks have baggage we do not – for example, headcount, bonus culture and general institutional sclerosis.
The IFISA was launched almost a year ago, but most P2P lending platforms are still unable to offer it, as they require full Financial Conduct Authority (FCA) approval in order to do so. Money&Co has full FCA approval and so we can now offer the IFISA.
Money&Co’s loan book is currently generating an average gross yield of 8.95%. Investors can choose to either roll up the interest in their ISA account or pay the interest out monthly. We take a fee of 1% a year and so the net yield is 7.95%.
We will also be offering asset-backed loans for inclusion in the IFISA. They will yield slightly less – at around 7% a year net of fees – but I would expect them to be particularly popular with ISA investors.
Yet while the average rate on an easy-access account stands at just 0.37 per cent, the rates on so-called peer-to-peer lending range from 2.6 per cent to 7.2 per cent.
Zopa was the first UK firm to set up in 2005 and now has 75,000 investors on its books.
It was swiftly followed by RateSetter and Funding Circle, which together with Zopa now account for two-thirds of the UK’s peer-to-peer market.
RateSetter alone lent £668 million to individuals and businesses across the UK last year.
It offers three accounts. There is a rolling account — which means your money is not tied in for any length of time — paying 2.6 per cent, a one-year fix at 3 per cent and a five-year deal at 4.8 per cent.
Zopa has three deals on offer, paying 2.9 per cent, 3.7 per cent or 6.1 per cent.
Blender, an international consumer e-lending platform, has garnered a new license to operate as a financial institution in the European Union – the license recognizes Blender as an E-Money Institution, which includes a range of banking activities for the group, per a company statement.
In particular, Blender can now grant loans, transfer funds between customers and service the platform to other companies. Moreover, the licensing agreement also allows for the execution of most banking activities, except leveraging deposits.
ID Finance has integrated with Blackmoon and is now executing investment transactions via the Russian online lending platform. ID Finance is a data science, credit scoring and “nonbank digital lending as an application” provider. ID Finance has is currently operating in Russia, Kazakhstan, Georgia, Poland, Spain and Brazil.
Under the arrangement, loans are screened and scored by ID Finance’s advanced risk assessment system. Blackmoon investors may benefit from interest rates higher than traditional investment tools. If the issued loans meet the strategies of investors that deal with Blackmoon, the system registers the fact of sale, the investor’s funds are transferred to the creditor and the transaction is deemed closed. ID Finance registers the profit by the securitised portfolio and continues servicing borrowers who are redeeming the loans now to the benefit of Blackmoon investors. In this case, Blackmoon ensures execution of transactions, analysis, accounting and investment process management for the investor and lender.
These include AimBrain, which has developed a multi-modal mobile biometric authentication platform.
Another two on the watch list are EZMCOM, a developer of a technology that identifies users with their passphrase, voice modulations and facial authentication, with advanced liveness detection features such as movement of lips and blinking of eye, and Crowd Valley, a technology platform that can create, operate and manage online investing or a lending marketplace.
Qumram made their regional debut at Meftech 2017 when showcasing technology that ensures compliance, aids fraud detection and improves customer experience by recording, analysing and replaying every digital interaction – on web, social and mobile.
The Personal Financial Management innovation of Strands is also on display, while White Label Crowdfunding won the delegates over with their online marketplace lending solution that connects credit demand and supply in a transparent and efficient way.
Software company Leveris was also a highlight with their solution that promises to bypass the ‘spaghetti junction’ of IT legacy architecture with a modular banking-as-a-platform (BaaP) solution.
The BlinkID real-time ID scanner by MicroBlink was another star of the show. And making up the impressive list is a platform developed by Agreement Express that allows financial institutions to on-board new clients without requiring paper or ink signatures; and a dynamic Enterprise Planning Platform for Financial Institutions by Inplenion.
News Comments Today’s main news: SoFi’s loan losses pile up as wealthy borrowers default. Charles Schwab launches hybrid human-robo financial advice. GDR adds Avant as verification network partner. Vista to acquire D+H to merge with Misys. Today’s main analysis: Household debt edges up as auto, credit card, and student debt climb. The regulation of MPL. Today’s thought-provoking articles: Everything […]
SoFi’s loan losses pile up as wealthy borrowers default. GP:”Over the last year approximatively we have seen higher than expected defaults at Lending Club, Prosper, Circle Back, OnDeck and approximatively 5 securitizations hit triggers in the space before today. To be honest I am a little surprised that the SoFi securitization is also hit triggers. I look forward to the analysis behind the reason why this is.” AT: “The article doesn’t discuss reasons for default.”
Household debt edges up as auto, credit card, and student debt climb. GP:” I expect this to be an indicator of a healthy full employment economy. Note that we haven’t quite overpassed the pre-2008 high. If the 2001-2008 cycle is a good indicator, at the present growth speed, we have another 3-4 years in this cycle. However the 2001-2008 cycle was probably fueled by the real estate equity growth which enabled consumers to get into higher debt. “
Charles Schwab launches hybrid human-robo financial advice. GP:” We often see a cycle where a market goes from one extreme, all human, to the other extreme, all robot, to finally understand the pros and cons of each approach and settle at a reasonable ratio. In currencies for example trades below $5mil are done on aggregators, and over by humans. I would expect something similar here.” AT: “If it takes a hybrid approach to get people familiar with robo-advice, so be it. Older Americans are going to need that to make the transition. Millennials are comfortable with technology, but they’d prefer Betterment over Charles Scwhab. It’s just the reverse for older Americans.”
Global Debt Registry adds Avant as verification network partner. GP:” Global Debt Registry verifies data and after the Lending Club crisis it seemed like a required product for the industry. It has taken a lot of time for the solution to finally be publicly endorsed and used by a significant lender. We wonder why it took 1 year. But we are glad the solution is here and it can only help build credibility to the space by confirming that the loan data is indeed correct the overwhelmingly large majority of the time. “
New conferences focuses on branded currency. AT: “This is an interesting concept. I didn’t realize branded currency was big enough to have its own conference. I do think this is a unique marketing opportunity for retail brands to build loyalty in the digital age, and it could give a boost to the cryptocurrency sector, as well.”
NACFB offers members ‘unrestricted’ insurance for P2P. GP: “Insurance has a cost vs risk. And it is usually calculated for the insurance company to make a profit. If the probability of a catastrophe is low and the catastrophe is extremely impactful, it may be worth it. Otherwise, it is probably better to just build an in-house fund.”
Social Finance Inc.’s online borrowers are defaulting at higher rates than underwriters for one of its bond deals had expected, the latest sign that an industry that hoped to upend banking is now getting tripped up by bad loans.
Losses on the company’s personal loans were high enough to breach key levels known as “triggers” last month on a bond deal issued in 2015 and backed by the loans, according to analysts at Morgan Stanley. If defaults keep rising, investors in bonds could end up missing out on expected interest payments.
Other online lenders have had similar trouble with defaults and triggers recently, which has broadly made it more expensive for the startups to fund their businesses. One pioneer in the business, CircleBack Lending Inc., stoppedmaking new loans as growing numbers of its borrowers defaulted.
Credit issues at Prosper Marketplace Inc. resulted in staff cuts at that company, and were largely the result of lending too much, too fast, and a “grow at all cost” attitude fueled by insatiable demand from investors, Prosper CEO David Kimball said at the New York conference last week.
Aggregate household debt balances grew in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt is now 0.8% below its 2008Q3 peak of $12.68 trillion, and is 12.8% above the 2013Q2 trough.
Mortgage balances, the largest component of household debt, which stood at $8.48 trillion as of December 31, saw a $130 billion uptick from the third quarter of 2016.
Balances on home equity lines of credit (HELOC) were roughly flat, rising $1 billion to $473 billion.
Non-housing debt balances rose in the fourth quarter; with increases of $22 billion in auto loans, 32 billion in credit cards, and 31 billion in student loans.
Brokerage Charles Schwab Corp on Tuesday launched a service that combines its automated investment management technology with human advisors, as financial institutions race to offer digital financial advice.
The service, called Schwab Intelligent Advisory, provides clients with a financial and investment plan, unlimited access to a human advisor via phone or video conference, and an investment portfolio of exchange-traded funds managed by computer algorithms.
The service, for clients with at least $25,000 to invest, includes an online platform that keeps track of financial goals and retirement plans, the San Francisco-based company said in a statement. It will charge a 0.28 percent fee on assets, with a quarterly maximum of $900.
At the outset, it may be helpful for us to briefly discuss the scope of this paper and some of the terminology we use. There is no single or universally accepted definition of “marketplace lending.” In general, though, marketplace lenders can be viewed as companies engaged in an Internet-based lending business (other than payday lending) which are not banks or savings associations or otherwise regulated as financial institutions. They may offer a wide variety of financial products, including student loans, small business loans, and real estate loans, in addition to the unsecured installment consumer loans on which the industry initially focused. However, “marketplace lenders” may or may not actually be lenders. This term is a generic term to identify participants in marketing, originating, selling, and servicing loans. They also may fund their loans through a variety of means, including equity capital, commercial lines of credit, sales of whole loans to institutional investors, securitizations, and/or pass-through note programs. In this paper we focus on the consumer lenders since they are the most heavily regulated and have the highest loan volumes. However, much of the discussion herein—outside of matters pertaining directly to consumer lending regulation—will also apply to nonconsumer lenders.
Download “The Regulation of Marketplace Lending: A Summary of the Principal Issues” here.
Global Debt Registry (GDR), the asset certainty company known for its loan data validation expertise, today announced it has added leading online lending platform Avant to its verification network.
Investors in loans through Avant now have turnkey access to enhanced loan due diligence services and can easily add new data insights onto portfolios of loans without having to touch sensitive personally identifiable information (PII) about borrowers.
GDR’s eValidationSM and eVerifySM asset certainty tools require no technology investment, using existing data structures and processes to streamline the flow of information from the lender to the investor. In addition to digital scanning for traditional document verification and data integrity, GDR securely analyzes the Personally Identifiable Information (PII) to ensure borrower data can be independently confirmed in compliance with the investors representations and warranties.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2017-1 (MFT 2017-1). This is a $257.44 million consumer loan ABS transaction that is expected to close on March 23, 2017. This transaction represents the third securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.
Approximately $250 – $325 million of loans are originated through the Platform per quarter. Since March 2015, over $3 billion of loans have been originated though the Platform, and as of February 2017, Marlette has over $100 million of loans on its balance sheet.
The transaction has initial credit enhancement levels of 27.45% for the Class A Notes, 17.95% for the Class B Notes, and 9.10% for the Class C Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A and Class B Notes) and a reserve account funded at closing.
Several developments are creating a “perfect storm” that will revolutionize the financial advice industry and leave many advisors behind, John Lohr writes in Seeking Alpha.
First Ascent still uses real humans on its investment committee, while an independent advisor serves the client, Lohr writes. That model isn’t likely going away: even robo-advice pioneers such as Betterment now offer upgraded services that give investors unlimited interaction with a licensed advisor, he writes.
But Betterment’s annual fee for unlimited calls with an advisor is just .50%, according to Lohr. That means high-fee advisors are on the way out, he writes.
Clarity Money, a revolutionary personal finance app that acts as the “Champion of your Money,” has reached 100,000 customers since its launch in January 2017. The app has been a “featured” personal finance app on the Apple App Store since its launch. Clarity Money was created by venture capitalist and serial entrepreneur Adam Dell.
To keep up with this growing demand, Clarity Money is pleased to announce three new additions to its team – Melissa Manne, Vice President of Product Management; Colin Kennedy, Chief Revenue Officer; and Marc Atiyeh, Chief Strategy Officer. The Clarity Money team already includes financial and technology veterans from Betterment, Google and IBM, as well as advisory board members Niall Ferguson, economic historian, and Dan Ariely, behavioral economist.
Clarity Money works by using data science and machine learning to provide personalized insights for customers. By utilizing a combination of techniques such as natural language processing, anomaly detection and spectral analysis, customers are able to take advantage of features such as: bill lowering, subscription cancellation, creating a savings accounts and providing tailored suggestions on things such as credit cards.
With the potential impact of financial deregulation and the weakening of the Consumer Financial Protection Bureau, consumers need a financial advocate now more than ever. Banks and financial institutions already have powerful tools designed to sell, market and retain customers, but consumers don’t have an equally powerful tool to level the playing field and protect against hidden fees and recurring charges. Clarity Money empowers consumers to take control of their finances, providing them with transparency, organization and actionable insights.
PeerStreet, a marketplace for investing in real estate backed loans, is pleased to announce that it has been named the Top Emerging Real Estate Platform in the LendIt 2017 Awards. PeerStreet is an Andreessen Horowitz-backed platform, focused on democratizing access to investments in real estate debt.
The Top Emerging Real Estate Platform category focused on younger companies that have demonstrated the greatest potential to impact the future of real estate investing. PeerStreet stood out as the top platform with its unique model, as it is not a direct lender and brings an innovative offering to investors.
RealtyMogul.com CEO Jilliene Helman was named Fintech Woman of the Year at the first annual LendIt Industry Awards. Helman was honored for her “outstanding leadership, integrity, performance, and team-building support within RealtyMogul, as well as her contributions to the advancement of the industry.”
The awards, which showcased leaders from across the fintech industry, were part of the annual LendIt USA Conference held in New York City March 6 and 7th. Helman was selected by a panel of 30 industry expert judges from among a field of six leading fintech pioneers.
Flourish: The Growth of Branded Currency is a fintech conference launching in Omaha this April 10 -12. The conference is focused on branded currency, and is targeting a range of retailers from those with a national presence to smaller Midwest retailers and their technology service providers.
K+H Connection is the company hosting the event. K+H is a fintech consulting firm based in Chicago, IL that focuses specifically on helping fintech companies integrate with merchants.
HG: Branded currency is actually a relatively new term. In short, it is any sort of tender that is branded and used for a specific purpose or at a specific merchant or location. It could be a gift card, promotional value you earn through a referral or loyalty program, points earned through a credit card program, prepaid mall-branded gift cards, etc. These types of products are more than just a form of tender, they incentivize spend and behavior.
We’re also focusing heavily on fraud within branded currency. Fraud has been the number one thing that people have asked us to discuss, so we are going to have a huge session on it.
On Thursday, the FCA and JFSA agreed a mutual referral system which will see the regulators provide assistance to fintech businesses that wish to expand UK operations into Japan, or vice versa.
The collaboration, which was confirmed by an exchange of letters, will also facilitate information sharing between the regulators on emerging market trends and regulatory issues pertaining to fintech, as well as information concerning referrals.
CSI globalVCard, a leading B2B payments company specializing in secure and rewarding payments, today announced that it has expanded services to Europe and has opened a London office, its first move in a planned worldwide expansion. The company plans to roll out its services across additional continents by year’s end. CSI will use the payment issuance capacity of PrePay Solutions (PPS), a subsidiary of Edenred (70% owned by Edenred and 30% by MasterCard), worldwide leader in prepaid corporate services. PPS will bring CSI its unique payment technology to issue and process all CSI virtual cards and wire transfers in Europe.
Expansion outside of North America was sparked by CSI globalVCard’s growing demand from multi-national clients, their increased need for native currency payments, as well as customer service support across local time zones. The global payments market is estimated at $1.2 trillion, of which B2B payments account for $550 billion. Ten percent of organizations make between 20 and 50 percent of their payments to foreign suppliers, and organizations earning over $2 billion in revenue pay the largest percent of their payments to foreign suppliers.1
Private equity firm Vista Equity Partners has struck a deal to acquire D+H, a Canadian financial technology provider, with an eye to merging it with UK-based Misys to create a financial software company with $2.2 billion in revenues.
US-based Vista said in a statement today that it will pay C$25.50 per share in cash for D+H, including the assumption of debt, in a deal that values the Toronto-listed firm at 4.8 billion Canadian dollars.
Misys chief executive Nadeem Syed said the combination of the two companies gives them the opportunity to create a “global fintech powerhouse”.
That powerhouse would have about 10,000 employees and 9,000 customers, including 48 of the top 50 banks, the statement said.
Over the last 5-10 years, China, India, and Southeast Asia have leapfrogged from a cash-based society to one where mobile payments are common currency, skipping adoption of credit cards, savings accounts and other consumer financial products common in Western countries. The result: a population that’s smartphone-savvy but still largely unbanked, without the credit histories necessary to access traditional small business or personal loans. It’s a prime market for alternative lenders, who usually use alternative means to assess creditworthiness, foregoing traditional credit scores altogether.
Here is a brief taxonomy of the many types of alternative lenders currently operating in both Asia and the West.
Chinese tech giants have aggressively pursued synergies between different divisions of their sprawling businesses. For instance, Sesame Credit, Alibaba’s alternative credit scoring program, looks at the frequency and cost of a customer’s purchases on Alibaba’s mobile payments platform Alipay in order to determine creditworthiness.
Meanwhile, India’s alternative lending market is in a much earlier stage. Giant tech companies don’t yet dominate the scene, and so the balance-sheet lending landscape includes a large number of small specialists like EarlySalary (payday loans), ZestMoney (point of sale), and Buddy (targeted at students). There are only about 30 P2P lenders in the country, which is surprising for a country where nearly 40% of the population is unbanked, and therefore without access to traditional loans.
In Singapore, the financial center of the region, the major alternative finance players in Singapore are peer-to-company (P2C) lenders: specialized P2P lenders that only provide loans for SMEs. Market leader Capital Match was founded in 2014, but says it has already paid out more than S$32m (US$22.5m) in loans.
The financial services subsidiary of the Bertelsmann Group, Arvato Financial Solutions, and the Japanese investor SBI Group will invest in solarisBank in a partnership that promises significant cooperation potential across international markets. In total, the Berlin-based bank raises EUR 26.3 million in the series A financing, meanwhile seed investors FinLeap, Hegus and yabeo Capital participate as well.
As the young bank steps up its internationalisation efforts, new executives are being added to its leadership team: Roland Folz will join the Management Board as CEO, while Gerrit Seidel will take over as Supervisory Board Chairman from HitFox Group and FinLeap founder Jan Beckers.
solarisBank intends to expand its activities in European and Asian countries over the coming years, and will establish joint venture companies with the SBI Group in order to develop businesses in Asia.
As key professional in the Qatar real estate industry gather for the annual Cityscape exhibition in Doha, MercyCrowd, a brand new type of property crowdfunding platform, will offer for the first time to people in Qatar international real estate purchases through crowdfunding.
MercyCrowd is part of the Elite International Asset Group, an established international company promoting real estate investment in Europe with a specialty in the French and UK market. However, what makes MercyCrowd uniquely different is the company’s core belief that sustainable growth can only stem from real assets that generate real increments and tangible benefits to a society.
What advantages do FinTechs really have? If they do have advantages, how can they maintain that edge? D&H is a public global payments and lending technology provider serving nearly 8,000 financial institutions, specialty lenders, community banks, credit unions, governments and corporations, including Canada’s largest banks. They are large and cost-effective at the same time. How do they […]
What advantages do FinTechs really have? If they do have advantages, how can they maintain that edge? D&H is a public global payments and lending technology provider serving nearly 8,000 financial institutions, specialty lenders, community banks, credit unions, governments and corporations, including Canada’s largest banks. They are large and cost-effective at the same time. How do they do it? By focusing on speed and flexibility.
A Unique Offering
While banks and credit unions weren’t early adopters of technology, they have an advantage.
“People don’t want to be online only,” Church-Adams said. “They still like to go in the branch whether it’s Millennials, Boomers, or a generation in between. Banks still have brick and mortar, but if they’re powered by technology and partnering with D&H, then they’re able to catch up because they have the ease of use, the borrower-facing mobile, and a quicker decision-making apparatus. They then support that by building relationships and servicing their customer base. In terms of compliance, they also have that trust.”
D&H’s history in compliance matched with a bank’s history in managing money creates a strong value proposition for a borrower in terms of considering a bank versus an alternative lender.
“Suddenly, the banks are able to catch up,” Church-Adams said.
Touch points vary per business model, but there are sectors and regions where a physical presence makes a particular entity unique.
“But it’s one among many tools,” Zepecki said. “What’s becoming clear is, if you don’t have the digital tools, no one is going to accept the other tools as an alternative. Your ability to innovate and adapt is always going to be an edge.”
D&H provides the tools for quick applications and quick decision-making. Asked which innovations will make a difference in the next few years, Zepecki said, “I think it depends. If you look broadly, the block chain, payments and contracts, and some of the commercial relationships could be quite interesting. Chat bots? I think time will tell. It’s another channel. Does it prove useful or is it preferred, or does it become just one channel of five? Depends how much more intelligence you can put into a chat bot. I think the jury’s out, but it may appeal to a younger audience as an important channel.”
Zepecki said artificial intelligence could lead to more business for a lender if they can make the decision-making process more efficient.
“If your limitation is a knowledgeable person around decision-making and that person can use their knowledge more effectively with automation and you put the right decisions to the right person, you can have fewer rounds of decisioning,” he said. “Then you can do a bigger book of business. Is that a net gain or a net loss? It will probably depend on the situation.”
Church-Adams has seen banks increase their business with technology.
“We’ve seen large credit union clients who with little commercial lending partner with us and adapt our technology,” she said. “They still need the person, but that person is able to grow their commercial business from zero to $1.8 billion in one year because they’re powered by technology. There’s a multiplying factor for the institution.”
How D&H Established Its Credibility
In 1870, D&H began as a Canadian company that manufactured paper checks. As they evolved in the last century, it became obvious the paper check was not the wave of the future. The company pivoted toward technology and acquired a number of businesses specific to the Canadian market: recover & collateral management solutions, student lending, and brokered and networked mortgages.
Ten years ago, they bought some complementary mortgage technology and then bought Harlin Financial to get into core banking. Recently, they bought a payments company called Funtech. Now, they cover lending, payments, and financial solutions.
John Zepecki and Nina Church-Adams head the lending group, a team of 16 people, in a company of over 5,000 employees. Church-Adams is head of product marketing for the global lending solutions group and leads the marketing team across the U.S. and Canada. The whole group is focused on online lending and alternative credits. Zepecki is group head of product management for lending.
Migrating to SAS Cloud and market shares
“I have the responsibility of driving product to move from a mix of tech-enabled services to more of a SAS Cloud product company,” Zepecki said. “If you look at the businesses, there’s lending, which is very much a software business, and SAS with a couple of major product lines in it. There’s also a payment infrastructure with a number of tier-one banks as clients and broadening over a period of time. Then there’s a traditional business built around checks and the financial core, and some Canadian-specific service businesses built around the relationship we have with large banks.”
The lending side of the business makes up about 40% in terms of revenue,Zepecki said. The other 60% is split between the other two big business blocks. Payments is growing much more quickly than the other sides of the business.
“We really truly the only kind of end-to-end thin technology player,” Church-Adams said. “A lot of our competitors just do mortgage or point-of-sale, or they just do loan origination, but we have breadth and depth, which really sets us apart.”
D&H might not be the biggest in terms of revenue, but with 3,000-4,000 customers, it is among the leaders. They also serve consumer, commercial, mortgage, and small business customers through every step of the loan process.
Interesting Views of the Market
Zepecki said the biggest trends in the market include user experience, making the process easier, shortening collaboration times, and making the decision-making process faster and clearer.
“In some cases, people are behind and need to catch up,” he said. “Technology vendors have a big opportunity to let people change their businesses.”
D&H serves three types of customers. Some are leading edge and figure out they can’t handle mobile, chat bots, and other tech devices with their homegrown system. Others sit out the first few innings of the game on the Internet and lose customers. The third customer sits between those two.
“They’re halfway this way or halfway that way and want to get into the future, starting with one thing and expanding over a period of time,” he said. “That’s where we become attractive. We can start where you want to start on your biggest pain point, but over a period of time, we offer solutions that go together.”
If a customer wants to start with POS and then look at an LOS on mortgage, for example, they want to start with one or the other. D&H is happy to do both.
“Vendor regulation is another trend,” Zepecki said. “Vendor risk goes up, so if you have fewer strategic vendors, that’s appealing. If have solutions that are broader, then you’re better as a vendor, more attractive. Lastly, on compliance, whether it goes up or down, there are going to be changes.”
Those changes in the market create cost. Lenders have to hire somebody who knows what to do, and there are a finite number of people available.
“If everyone is trying to do it themselves, it becomes more prohibitive,” Zepecki said, “That’s where I think we can use our domain expertise and long history around compliance. If you can afford it, which is debatable, and can you find skilled people? I think that is becoming harder and harder.”
For institutions that see compliance and management as difficult, the tendency is to want fewer vendors and outsource compliance, so the focus is on customers, driving the business, or changing to a new business model. That trend serves D&H well because they have a decades-long track record in providing document compliance.
“That is difficult to replicate and makes a great foundation to build off of,” Zepecki said.
News Comments Today’s main news: SoFi among largest mortgage originators. SoFi Superbowl ad caused 100x in traffic. Prosper launches seventh-generation credit model. AssetAvenue stops originating. XOR Data Exchange raises $2mil Today’s main analysis: Comments on OCC National FinTech Charter Today’s thought-provoking articles: D+H launches auto lending platform. United States Fitch adds SoFi to originator assessment list. GP:” To me the interesting […]
Fitch adds SoFi to originator assessment list. GP:” To me the interesting news here is that SoFi is among the top retail mortgage originators. One usually thinks of SoFi as a student loan company. Now we should think of them as a two-headed … rocket?” AT: “This signifies more than the alternative lending industry getting mainstreamed. It could actually be evidence that SoFi itself has crossed over into traditional finance.”
Proposed OCC charter comments & feedback. GP:” I believe most of the comment are encouraging and positive. This OCC charter is needed.” AT: “The comments from industry insiders and top influencers are instructive. It seems the alt lending climate is ripe for regulation, but the right kind of regulation.”
Prosper launches seventh-generation credit model. GP:” It is normal to see lenders modify and update their lending models. As the borrower population changes regularly as a function of the marketing channels the models also need to keep being updated.”
Dead end for AssetAvenue? GP:” Finding lending capital and borrowers in a competitive space is difficult and one needs a real differentiation in product, team, market, technology, or something else.”
SoFi, et. al. bet on Super Bowl overtime ads. GP:” It sound to me like a free option from Fox. Why wouldn’t you buy this? Somebody at FOX messed up. ” AT: “This was a huge gamble that paid off for SoFi. I applaud their ‘thinking outside the dome’ aproach to mainstream advertising.”
Fitch Ratings added SoFi, also known as Social Finance, to its special report containing operational assessments of U.S. residential loan aggregators and originators, along with six other entities.
The update to the special report marks the first update since the report was last published in July 2016, bringing the total number of entities covered in the report to 31.
Fitch notes that because SoFi is now one of the largest online residential mortgage retailers, it deemed it prudent to expand its prime coverage by completing an operation risk review of the SoFi residential mortgage origination program.
The report added that as of Sept. 30, 2016, SoFi originated $7.9 billion in student loan refinancing, $3.3 billion in personal loans, and $900 million in prime jumbo mortgage loans.
Last December, the Office of the Comptroller of the Currency (OCC) – part of the Department of Treasury- proposed a “National Bank Charter for Fintech Companies”. The exploration stirred up a hornet’s nest of public officials that were not too pleased the OCC would think outside the box about financial innovation. The deadline for comments was January 15, 2017, and have been made publicly available here.
Below are some anecdotal excerpts from almost 100 comments posted online.
“We applaud the OCC for its work to support this responsible innovation. The proposed special purpose national bank charters present marketplace lending with an additional path to continue to grow and serve consumers and small businesses nationwide more efficiently, fairly, and affordably.”
“As OCC considers the issuance of a special purpose national bank charter, it should, no doubt, consider how the recipient addresses, or plans to address, financial inclusion. The financial inclusion topic is likely unfamiliar and new to many of the firms potentially examining the OCC chartering process. In that regard, firms new and old would benefit from additional guidance on OCC’s working definition of “financial inclusion,” how firms will be scored against OCC’s financial inclusion framework and what those firms should proactively focus on as they approach OCC for initial exploratory conversations.”
“We believe that, from a public policy perspective, it is far better for financial services regulators to be active participants than onlookers. Protection of consumers, small businesses, and the financial system itself will be more effective if carried out by supervisors who are fully informed and knowledgeable.”
“By encouraging the growth of responsible, compliant online lending platforms, such as Avant, regulatory agencies can help encourage beneficial competition in both the online and traditional lending industries generally. This will lead to more lending opportunities for borrowers and ultimately lower rates and better pricing for consumers.”
“As someone without a background in finance what struck me when I began learning about this industry was how inefficient it was. With 50 states, many of which have their own licensing, fee and interest rate requirements, there was no way for an online platform to operate in a uniform manner. With all the advances in technology, I would have thought that financial intermediation would have become many times more efficient.”
Peter Renton, Co-founder and Chairman, Founder and CEO, LendIt Conference LLC Lend Academy LLC
Prosper Launches Seventh-Generation Credit Model (Prosper Email), Rated: AAA
Prosper recently launched their seventh-generation credit model. The net return of the overall book has increased to an estimated 7.86% after the implementation.
While most of its rivals embrace the hybrid model of combining digital advice with human advisors, robo-advice pioneer Wealthfront is bucking the trend by offering even more automation, Reuters writes.
The company is introducing an automated financial planning tool that connects its clients’ outside accounts to track spending and savings to assist with retirement planning, according to the news service. Using a mobile app, clients can then get projections on what they’ll have to save to meet their retirement objectives, Reuters writes.
Crowdfund Insider received a tip this past week that real estate crowdfunding platform AssetAvenue has stopped originating loans. Emails to the company have not been returned, and repeated attempts to contact AssetAvenue by phone have not been successful. Portions of the AssetAvenue site now generate a 404. AssetAvenue social accounts have not been updated in months. A post on BiggerPockets from several months back indicated that a potential borrower had been told they were no doing any funding.
Attune, the data-enabled company established by American International Group, Inc. (AIG), Hamilton Insurance Group, Ltd. (“Hamilton”), and affiliates of Two Sigma Investments, LP (“Two Sigma”), today announced that James Hobson, Chief Operating Officer of OnDeck® (ONDK), has accepted an offer to assume the position of Chief Executive Officer.
Mr. Hobson, who will step down from his role at on March 15, will be responsible for achieving Attune’s goal of using data science and advanced technology to streamline the submission and insurance underwriting process to meet the needs of small businesses in the US.
XOR Data Exchange closes $ 2M Series A Extension (XOR Data Exchange Email), Rated: A
This morning XOR Data Exchange closed a $2M extension of our Series A to support some big contracts and development work I’ll be announcing soon (some at LendIt). This extension is important to us because it represents the confidence of our investors in our business model and the work we’re doing. Here is a statement from our CEO regarding the close:
We’re grateful for the support of our investors as XOR continues to grow and address bigger industry challenges in 2017. The majority of this $2 million extension comes from our existing Series A investors, which speaks to their confidence in our business model and the innovative approach to data sharing we have employed with our clients and partners. This additional funding will allow XOR to distribute its fraud and credit risk models across the U.S. through strategic partners in order to bring security and accountability back to the companies that rely on our personal information. It’s going to be an exciting year for XOR Data Exchange and we’re thankful for the support of our community and the industries we serve.
Mike Cook, Founder and CEO, XOR Data Exchange
XOR Data Exchange raised $4.2M in its Series A round led by Fenway Summer Ventures. Details at Crunchbase.
Patrick T. Harker, President of the Federal Reserve Bank of Philadelphia, delivered a speech today on Fintech innovation and the importance of regulation. Harker stated that regulation is not only about protecting consumers but it is important to protect innovators as well;
“It’s in their best interest to have an established framework in which to operate,” said Harker.
Recently there has been much discussion about emerging Fintech firms, more pointedly with online lenders and bank alternatives.
Mentioning online lending Harker said;
“Peer-to-peer lending has been going on since time immemorial. What makes Fintech different is that the scope of its ability to match people with one another is infinitely broader.”
Credit Peers is today launching its innovative new business – an online lending platform which allows individuals to lend from £500 upwards for property transactions that were previously only available to institutions and banks.
Recent research undertaken by Credit Peers amongst 1,000 consumers found that 59% trust their bank less than they did a year ago. 44% of respondents are looking for the rate of return on their investment to be between 5-10%*.
UK consumers are extremely open to property as an investment option, with 65% stating that they would like lenders to invest their money into property or real estate, almost double the next most popular options – stocks and shares (33%) and commodities (33%)*.
Credit Peers only deals with professional real estate investors and developers as borrowers, and implements strict lending criteria.
DH Corporation (DH) (“D+H”), a leading provider of technology solutions to financial institutions globally, today announced that it is onboarding its first major automotive captive client on CollateralGuard Enterprise (CGe). The client, which boasts significant market share in Canada, will use CGe as part of its standard lending due diligence process.
CGe, D+H’s next generation search and registration solution, is a risk management technology platform for lenders, which provides a single point of entry to registries across Canada, streamlining all search and registration transactions.
CGe is a scalable platform that leverages the Microsoft technology stack, a combination of tools including Azure, which enables testing, development and agility in a secure environment.
Consumer lending is very different in Japan. Loans to individuals only make up six percent of social lending, according to Crowdport’s research. It is easy to find a one to three percent loan from a bank so the prospect of crowdfunding is less appealing.
From 2015 to 2016, the total amount raised through social lending funds grew 71 percent from around US$300 million to well over US$500 million, according to completed fund data gathered by Crowdport from each lending platform.
Crowdport launched last week and currently is the only service in Japan which compares all 18 Japanese social lending services. Users can sort by company, investment genre, and availability of collateral, as well as filter funds by interest rate and payback period.