August 2nd 2016, Daily News Digest

August 2nd 2016, Daily News Digest

News Comments Today’s most interesting articles in my eyes are Venmo’s growth, TransUnion’s report on credit unions, UBS’s survey on bank disruption, the bank boardroom composition charts and perhaps what happens in payments is indicative of what will happen in lending. And New Zealand’s Harmoney is being used by the regulator and pleading guilty. However […]

August 2nd 2016, Daily News Digest

News Comments

  • Today’s most interesting articles in my eyes are Venmo’s growth, TransUnion’s report on credit unions, UBS’s survey on bank disruption, the bank boardroom composition charts and perhaps what happens in payments is indicative of what will happen in lending. And New Zealand’s Harmoney is being used by the regulator and pleading guilty.
  • However the article that is most intruiging comes from Japan : a robot is hired to sell life insurance. Why ? How ? A lot of interesting questions from this source.

United States

United Kingdom


European Union

New Zealand




  • A robot is being hired to sell life insurance. This is very intruiguing. Why is that ? Do people trust computers to sell products more than they trust humans ? Perhaps computers don’t make mistakes, don’t round corners, treat everybody in the same friendly and reliable way, all day every day . Or are computers just cheaper than employees ?

News Summary

United States

Venmo Will Soon Be Larger Than Any Bank P2P Service, (Bank Innovation), Rated: AAA

July’s PayPal earnings call talked quite a bit more about Visathan Venmo, but while the consequences of the Visa deal are still unknown, Venmo’s numbers are already known, and they look great.

Specifically, Venmo processed $4 billion in transactions in Q2, compared with $3.2 billion the quarter previous. This is 25% growth on the quarter, and 140% growth on the year.

Compare this with QuickPay, the peer-to-peer payments service from JPMorgan Chase, part of the clearXChange realtime network, which also includes U.S. Bank, Bank of America, Wells Fargo, and Capital One. QuickPay processed $20 billion in 2015, and is growing 40% year over year.

If Chase’s numbers continue to climb at the same rate, it should reach $28 billion in 2016. If Venmo’s growth continues at current rates, it should reach $18.25 billion. But where Venmo particularly shines is in its user numbers. Ron Shevlin calculated the average Venmo transaction size at $2, which seems low, but certainly indicates more activity than Chase QuickPay, which reports an average transaction size of $300.

The Chase number indicates about 93 million QuickPay transactions, while Shevlin’s Venmo number implies 9 billion transactions. (PayPal reported just 1.4 billion mobile transactions this quarter, which may indicate Venmo users are not accurately reporting usage.)

Venmo probably already has more users than the nation’s largest bank. PayPal counts more than 188 million active users, while JPMorgan Chase counts more than 20 million active mobile users.

Venmo is also expanding its Pay with Venmo service, and added a number of merchants and expanded the pilot class, according to CEO Dan Schulman on the earnings call.

Increase in Global Lending of MSMEs to Drive the Global Peer-to-peer Lending Market Until 2020, Reports Technavio, (Business Wire), Rated: AAA

Technavio analysts forecast the global peer-to-peer (P2P) lending market to grow at a CAGR exceeding 53% during the forecast period, according to their latest report.

Browse Related Reports:

  • Global Crowdfunding Market 2016-2020
  • Global Shadow Banking Market 2016-2020
  • Global Venture Capital Investment Market 2016-2020

Technavio is a global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Investors Turn Their Noses Up At Online Lending, (Pymnts), Rated: AAA

Comment: we covered the reduction in equity investment in online lending yesterday. Just a reminder with a little more info.

According to a new report from PitchBook Data, Inc., equity investments going toward online lending companies fell 44 percent in the first half of 2016 to $2.1 billion. That compares to $3.8 billion in the year-earlier period. What’s more, the report found investments in online lending during the second quarter were the lowest since last year’s second quarter. Investors were put off partly because of Lending Club, which is roiling from the departure of its chief executive officer.

Outside of Lending Club’s internal woes, online lending companies have been suffering from declining loan volume and customers who are finding money in different places. In an effort to increase loan volume and lure customers, some of the online lending platforms have been getting more lax with their underwriting, but that is just leading to more delinquencies and loan defaults. According to PitchBook, online lending startup companies were able to raise $12.6 billion since 2011, encompassing 463 deals. The peak of the investment cycle was in 2015, when 132 companies raised a total of $5.2 billion.

4 charts showing how few bank boardrooms include technology professionals, (Tradestreaming), Rated: AAA

Comment: once again a charts article. Very interesting.

Millennials Central to Credit Union Growth, TransUnion Research Finds, (Transunion), Rated: AAA

Credit unions are growing 3x faster than large and regional banks. The results from TransUnion’s latest survey are indicative of credit unions’ strategic focus on millennial growth, via auto loans, mortgages, and shared draft accounts.

Auto loans rank at the top for credit union executives in terms of loan growth, focus and opportunity over the next 12 months. Coming in second is mortgages and compared to five years ago, credit union mortgage memberships have grown 13% from 3.29 million in the first quarter of 2011.

Key Study Findings:

  • In Q1’16, active credit union members grew at more than 3x the rate of credit active consumers across all lender types, such as large and regional banks.
  • 25% of credit union members were millennials in Q1 2016. In Q1 2013, millennials made up 20% of credit union members.
  • The report shows that credit unions grew their auto membership 9.8% Y/Y from Q1 2015 to Q1 2016.
  • In Q1’16, credit unions had 3.8 million mortgage members, an increase of 4% from 3.67 million in Q1 2015.

According to Nidhi Verma, TransUnion Sr. Director of Research & Consulting, “Millennials are an important set of borrowers for credit unions’ growth.  Credit unions are actively building their millennial membership, and in fact, have experienced growth every quarter since 2010. Millennials are likely candidates for new mortgages and other credit products as they age, offering credit unions a way to further their market share.”

US and Italian banks face the greatest risk of fintech disruption, (Business Insider), Rated: AAA

  • Culture. UBS notes that the low risk to French and Japanese banks is likely cultural. Though UBS doesn’t provide any cultural insight in its note, we think that it may have to do with aversion to risk.
  • Poor banking services. Consumers are more likely to turn to fintech products when legacy financial institutions aren’t meeting their needs. In Italy, for example, banks arestruggling to survive, and there are few resources available for product innovation. This may explain why it’s at risk of disruption.
  • Lending. Globally, 25% of consumers say they either have a loan from a P2P lender or plan to take one out in the next 12 months. UBS notes that given the high reported adoption, respondents may have answered affirmatively for loans made through digital payments platforms like M-Pesa as opposed to digital platforms specifically designed for P2P lending. Banks’ response to the threat of P2P lenders has been to partner — 29% of banks in developed markets either already have a partnership in place or plan to form one in the next 12 months. We think that the trend will continue and as banks begin to offer similar technology, demand for loans from standalone P2P lenders will decrease.

These changes should particularly affect millennials, as more members of this demographic are moving toward digital banking, and as a result, they’re walking into their banks’ traditional brick-and-mortar branches less often than ever before.

This generation accounts for the greatest share of the U.S. population at 26% and the employed population at 34%, so it’s easy to see why their behaviors and preferences will have a profound effect on the future of the banking industry, particularly with regard to the way banks interact with their customers.

  • The bank branch will become obsolete. It will be some time before the final death rattle, but improving online channels, declining branch visits, and the rising cost per transaction at branches are collectively leading to branch closures.
  • Banks that don’t act fast are going to lose relationships with customers. Consumers are increasingly opting for digital banking services provided by third-party tech firms. This is disrupting the relationships between banks and their customers, and banks are losing out on branding and cross-selling opportunities. For many banks, this will require further commoditization of their products and services.
  • The ATM will go the way of the phone booth. Relatively low operational costs compared to bank branches, paired with customers’ preference for in-network ATMs, makes the ATM an attractive substitute for bank tellers. But as cash and check transactions decline, the ATM will become nonessential, ultimately facing the same fate as the physical branch.
  • The smartphone will become the foundational banking channel. As the primary computing device, the smartphone has the potential to know much more about banks’ customers than human advisors do. The smartphone goes everywhere its user goes, has the ability to collect user data, and is already used for making purchases. Therefore, the banks that will endure will be those that offer banking services optimized for the smartphone.
United Kingdom

wiseAlpha Delivers Senior Secured Corporate Bonds to Retail Investors, (Crowdfund Insider), Rated: AAA

wiseAlpha, the Fintech firm that provides access to senior secured corporate debt to retail investors, is now introducing senior secured bonds from established UK brands on its platform. Any investor may now participate in assets that generate between 5% to 8% in a relatively low-risk investment. WiseAlpha points to its offerings as a “compelling alternative” to traditional savings accounts, the stock market and peer to peer lending.

wiseAlpha outlined the process stating investors may participate for as little as £100 – lending to large corporations.

The bonds wiseAlpha will be listing on its platform are secured by the assets of the company and this collateral backing offers a degree of capital and structural protection for investors. Senior secured corporate bonds have a first ranking charge over the assets of the company and a pledge over the company shares. These are fixed rate debt instruments that pay a periodic coupon.

wiseAlpha also raised £579,000 on Crowdcube several weeks back.  The offer initially sought just £350,000.

Has the Brexit vote blown up the UK’s start-up boom? Founder of Uberated – backed by Sir Terry Leahy – reveals how entrepreneurs can still get ahead, ( This is Money), Rated: A

I personally know of many cases where investment has at best been put on hold, or at worst been taken off the table altogether. But the silence from the start-up sector is deafening. Most entrepreneurs, who are born optimists after all, are putting a brave face on things.

Recent funding for the invoice platform Market Invoice and the success of Crowdcube’s own post-Brexit fund raising campaign has shown that the appetite for the right investments – with solid traction and a clear growth strategy – is still holding up.

The right start-ups combined with still generous tax breaks could be enough to convert some would-be angels.

This implies more of an emphasis on selling and proving you have the right product for your market.

And the days of endlessly tinkering internally instead of talking to clients to find out what they really need have surely come to an end.

P2P lender hires ex-Digicel executive to lead expansion, (Irish Times), Rated: A

Dublin-based peer-to-peer lending platform Linked Finance has hired former Digicel executive Niall Dorrian to lead a major expansion of its lending activity and position the company as the biggest non-bank lender to Irish SMEs within three years.
Mr Dorrian will spearhead a plan to lend €350 million to Irish SMEs out to 2019. This compares with the €11 million it has lent out since it was set up in 2013.
Mr Dorrian said the company would seek to generate funding from financial institutions, pension funds (including self-administered funds), and Government agencies.
Latest accounts for Linked P2P Ltd show it had accumulated losses of just more than €1 million at the end of April 2015. The minimum loan amount starts at just €50, with interest rates ranging from 8 to 12 per cent. To date, it has facilitated loans for more than 420 Irish SMEs and the default rate has been 1.16 per cent.

CreditEase Appoints Ms. Anju Patwardhan, Former Global Chief Innovation Officer of Standard Chartered Bank, as Venture Partner for its Fintech Investment Fund and Fund of Funds, Effective 1 August 2016, (PR Newswire), Rated: B

Based in Silicon Valley, USA, Ms. Patwardhan will work closely with CreditEase’s fund management team in China to support its global investment strategy, deal sourcing and investment management. With her deep expertise of the global financial services industry, Fintech ecosystem and regulatory engagement, she will play a key role in accelerating the fund’s position as a preeminent global Fintech investment platform.

Ms. Patwardhan is an alumnus of the Indian Institute of Technology (IIT) and the Indian Institute of Management (IIM), with further professional qualifications in risk management, board directorship and art appreciation. She is a Distinguished Fellow of Singapore Institute of Banking and Finance, the highest financial services industry accolade in Singapore. She serves on the World Economic Forum (WEF) steering committees on Disruptive Innovation in Financial Services and “Internet for All.  She is also an advisor to the Government of Estonia on their e-residency program.

European Union

Bondora: We Want to Be the Market Leader in Transparency, (Crowdfund Insider), Rated: A

Bondora explained they have established a “new standard” in marketplace lending by being first in a number of areas:

  1. The first marketplace open to investors across Europe,
  2. The first marketplace providing credit seamlessly across multiple countries,
  3. The first rating system making loans across markets comparable,
  4. The first marketplace open to accredited investors globally and
  5. The first marketplace in Europe with a public API and granular performance data.

Crowdfund Insider was intrigued by the recent push for added transparency.  Bondora is one of the highest yielding marketplace lenders in the European market today (last check 16.9% net).

New Zealand

Commerce Commission says P2P lender Harmoney pleading guilty to misleading consumers into believing they had been pre-approved for a personal loan, (New Zealand), Rated: AAA

The Commerce Commission says it has filed charges under the Fair Trading Act against peer-to-peer (P2P) lender Harmoney alleging it misled consumers into believing they had been pre-approved for a personal loan.

The six Fair Trading Act charges Harmoney faces relate to 27 versions of a pre-approval letter sent to over 500,000 New Zealanders, across a range of demographics, between October 2014 and April 2015. Each letter featured a similar message and the same misleading representations, the consumer watchdog says.

The Commerce Commission says the Fair Trading Act charges are unrelated to its Credit Contracts and Consumer Finance Act (CCCFA) investigation into Harmoney’s P2P lending transaction. The regulator says it intends to provide an update on this investigation shortly.

This investigation is in relation to whether fees charged by P2P lenders are covered by the fees provisions of the CCCFA. Against the backdrop of this Commerce Commission probe, Harmoney quietly made major changes to fees charged to borrowers late last year.

Harmoney to plead guilty to misleading consumers: Commerce Commission, (NZ Herald), Rated: AAA

Company chief executive and founder Neil Roberts has been contacted this morning, but could not be immediately reached.

In a separate statement, the peer-to-peer lender said it acknowledged the information wasn’t clear enough to show customers still needed to go through the credit process, and that it had cooperated since the regulator first contacted it.

“Once Harmoney was made aware of the issue it took immediate action, stopping the campaign completely and ensuring a more robust process in the sign off of marketing campaigns,” the company said.

In a statement this morning, Harmoney said:

“The recipients of the marketing material had been pre-selected through a credit screening process. Harmoney acknowledges that the information that qualified the offer wasn’t sufficiently prominent so as to be clear there was still a credit process to go through. Once Harmoney was made aware of the issue it took immediate action, stopping the campaign completely and ensuring a more robust process in the sign off of marketing campaigns. Harmoney has co-operated fully from first contact with the Commerce Commission,” it said.

Biggest peer-to-peer lender posts loss, (Stuff), Rated: A

Peer-to-peer lender Harmoney lost $14.2 million in its first year of operation.

Its financial statements show the loss in the year ended March 31.

In 18 months of operation, it has raised $30m in working capital, assessed more than $2 billion in loan applications and facilitated more than $275m in lending.

Across its portfolio, it now offers investors an 11.85 per cent average annual return. Since it started operating, just over 5.6 per cent of the money invested in the platform has been lost through loan defaults.

In the year to March 31, Harmoney’s biggest expense was $8.1m on marketing. Another $6.3m went on employee costs and $2.1m on information technology expenses.

Harmoney has been approached for comment.

Claire Matthews, a banking expert at Massey University, said a loss in itself was not concerning.

“To make a loss in the first year is not all that surprising, it’s quite common,” she said.

“It’s a matter of understanding where that loss comes from. Assuming it’s normal operating expenses in terms of setting things up and getting the business operation, that’s fine.”


Fintech startup led by two students score first bank partnership with DBS, (Singapore Business), Rated: B

Comment: this is a very old story, but perhaps worth a new read if you are not familiar yet.

Kelvin Teo, 30, and Reynold Wijaya, 28, founded Funding Societies in 2015, an online peer-to-business lending platform in Singapore for Small-Medium Enterprises (SMEs) to secure loans for growth and for lenders to earn good returns.

They secured $1.7m


DomaCom partners with peer-to-peer lender, (IFA), Rated: A

DomaCom chief executive Arthur Naoumidis said DomaCom’s partnership with ThinCats Australia will allow advisers to be on both sides of property transactions by creating leveraged book builds.

 “This also provides the 350 lenders on the ThinCats platform the opportunity to gain exposure to property assets and the ability to lend funds at an attractive interest rate with a lower risk profile,” Mr Naoumidis said.

“The loan must be positively geared – that is, the rent must exceed the loan repayments and all other costs,” he said.

“The default rate for the fund borrowing the money is a low 3.5 per cent above the ANZ overnight cash rate. This currently equates to 5.25 per cent per annum.”


Pepper gets another job: Softbank robot to sell life insurance at 80 stores in Japan, (Dailymail), Rated: A

Meiji Yasuda Life Insurance Co will be deploying 100 Pepper robots across 80 branches in Japan to help out on the sales floor by 2017.

According to The Yomiuri Shimbun, Pepper will accompany employees and explain insurance products and services to customers.

Along with this, the robot will interact with visitors at insurance seminars and accompany salespeople on promotional visits to other companies.

The firm hopes Pepper will help to draw in more customers, and the plan is set to move into action by fiscal 2017.

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George Popescu