Cryptocurrencies entered the mainstream in 2017. The million dollar fortunes made and 1,000% returns hogged the headlines. But behind all the hoopla is blockchain, the technology behind cryptocurrencies, quietly and steadily changing the business universe. The technology has myriad applications. Also called distributed ledger technology (DLT), it can reimagine entire industries in hitherto unknown ways. […]
Cryptocurrencies entered the mainstream in 2017. The million dollar fortunes made and 1,000% returns hogged the headlines. But behind all the hoopla is blockchain, the technology behind cryptocurrencies, quietly and steadily changing the business universe. The technology has myriad applications. Also called distributed ledger technology (DLT), it can reimagine entire industries in hitherto unknown ways. From issues of security to scalability and cost effectiveness, entrepreneurs are incorporating DLT to bring the benefits to the masses.
Similarly, alternative lending has changed how Americans borrow. Small business and consumer lending was hard hit when banks decamped en masse after the 2008-09 crisis. Online lending came to the fore with players like Lending Club, SoFi, OnDeck building multi-billion dollar lending platforms.
Almost 10 years since, alternative lending is growing but not at the speed which experts had imagined. Morgan Stanley had predicted Trillion Dollar funding via such platforms in the coming future. The sector is nowhere close to these figures. Aside from corporate governance issues, fraud and high default rates have been the true bane of the industry. IdentityMind, a RegTech company, reports that fraud caused 12% of losses in P2P online lending. That translates to almost 1.2% of total funding, which is also 2-3 times as compared to banks or retail cards.
Blockchain and Alternative Lending
Blockchain is an open, distributed ledger that records transactions between two parties in a verifiable and efficient manner. Putting digital assets (contracts, documents, financial data, etc.) on blockchain technology helps build a wall against unauthorized access and prevents fraud. Blockchain helps maintains transparency between entities; it could be between buyer and seller, business and employee, or customers and investor.
A World Economic Forum report predicts that, by 2025, 10% of GDP will be stored on blockchains. Amalgamating blockchain and alternative lending has not only a technical appeal but is business common sense. Online finance decentralized lending allows savers to directly fund borrowers; they took away the middlemen, traditional banks, who otherwise used to take the major benefit away from the transaction. Now, it is the alternative lending sectors’ turn to leverage the power of decentralization via blockchain.
The Benefits of a Decentralized Distributed Ledger
Currently, alternative lenders hold their complete data centrally, in either their own servers or on Amazon Web Services-type cloud structures. This is a honey pot for hackers. In 2017, an Equifax data breach collected 145.5 million users’ data. The breach was caused by a software flaw that allowed the hackers to take over the company’s website.
Lenders have access to extremely sensitive data such as bank account numbers, social security numbers, and other personal identification information. Losing control of that data can compromise the entire financial history of an individual or a business. Blockchain eliminates the risk by storing information on a decentralized ledger. So a massive data hack would never be possible because it will be practically impossible for the hackers to have access to each and every part of the distributed record.
A distributed ledger also provides transparency and allows that all transactions are recorded are on the blockchain in an immutable manner. Thus, backdating of contracts is not possible under any circumstance (Re: Lending Club backdating loans scandal). Corporate governance improves across the board, and investors and regulators can breathe easy knowing that the data they are seeing is the absolute truth.
Digital loans can be tokenized via blockchain and be constructed as a tradeable security. This, in effect, allows securitization for loans; so you don’t need to wait till you are a billion dollar fintech lender. Othera, a blockchain lending platform, is doing just that. It creates an online marketplace where lenders can tokenize their cashflow by putting the loan on the blockchain and selling it to investors.
Apart from this, blockchain technology is more user-friendly as it is open to the public with no authentication or permission issues. It is scalable and cost efficient for businesses to incorporate into their existing systems and allows for all stakeholders to easily extract relevant information about their transactions without risking the entire system’s database.
Digital identity verification
Identity theft is one of the biggest reasons for online lending fraud. That is exacerbated by the fact that the lender and the borrower usually never meet in real life. The old traditional way was to go through the lengthy and costly process of physical verification. But in the age of blockchain, by merging identity verification with decentralized blockchain principles, a tamper proof digital-id can be used as the digital signature for recording and validating all transactions.
How Blockchains Are Revolutionizing Lending
Alternate lending has seen many iterations and pivots since inception. From being a pure peer-to-peer platform, the sector has metamorphosed to one dominated by balance sheet lenders and institutional investors. Now, the era of Alt Lending 2.0 is emerging, which is going to be dominated by players who have co-opted blockchain as an integral part of their business processes.
Here is a brief description of some companies that are doing innovative work in the field.
The ERP giant is experimenting with blockchain on an enterprise level. One of its applications is focused on KYC. The distributed ledger solution is to store a customer’s ID and link it to their personal documents, which are not stored on the blockchain. Once the transaction is cleared, the link is established and the documents are accessed to prove identity and the onboarding process continues. In this, SAP provides a solution to KYC issues, with running proof of identity. Thus, there is a single source of truth for all parties.
WishFinance is a Singapore- and Honk Kong-focused lender to merchants and small businesses. It is keeping its entire loan portfolio on a public blockchain to push transparency for investors. The investors can evaluate the performance of a loan at anytime (the data is anonymized so no identifiable borrower information is shared).
SALT is reversing the model by allowing crytpocurrency holders to cash out without actually selling their crypto assets. It allows loans for Bitcoin. The borrower can redeem his crypto assets once the loan is paid.
Blockchain has the power to allow alternative lending companies to scale effortlessly and solve fraud and KYC issues haunting the industry. Lenders who are able to get their blockchain game right should see renewed investor interest and benefit from higher unit economics.
News Comments Today’s main news: PayPal launches P2P funding platform.True Accord lands $22M in funding.Lendable hits 100M GBP lending milestone.P2P Global Investments fund sees huge reduction in U.S. consumer loan exposure.Yirendai’s Q3 results.Klarna, PPRO partner on credit payment across Europe. Today’s main analysis: The latest trends in consumer credit.The corporate bond market suffers indigestion. Today’s […]
Marcus is winning the personal loans arms race. AT:”We must ask why Marcus seems to be winning. Are the leading alternative lenders losing market share to Marcus’s attack on fees? Is it simply because they’ve got the backing of Goldman Sachs. For sure, there does seem to be a competitive play going on, but is that the total picture?”
Why customer acquisition is difficult for financial startups. AT: “Customer acquisition costs are important for long-term profitability. A company can take a short-term loss in exchange for the long-term benefit, but it’s a risky proposition. Interesting that Wealthfront reduces its marketing budget every year.”
A tale of two Fed studies. AT: “Online lenders up in arms over the recent Cleveland Fed study should remember that the study is based on different data than a previous Fed study that was favorable. In truth, one cannot base a conclusion on the study of a single online lender. I think the real picture is what lies beyond both Fed studies.”
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Personal Loan Balances Reach All-Time High as Delinquency Rates Decline
Q3 2017 Unsecured Personal Loan Trends
Personal Loan Metric
Number of Unsecured Personal Loans
Borrower-Level Delinquency Rate (60+ DPD)
Average Debt Per Borrower
Prior Quarter Originations*
Average Balance of New Unsecured Personal Loans*
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Corporate bond market suffers bout of indigestion (Morningstar), Rated: AAA
The corporate bond market suffered a bout of indigestion last week. Between absorbing a healthy amount of new issues and profit-taking from early year-end window-dressing, corporate credit spreads widened, albeit from levels that are still near multiyear lows. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) widened 5 basis points to +104. In the high-yield market, the BofA Merrill Lynch High Yield Master Index widened 24 basis points to end the week at +376.
Energy Companies’ Credit Quality Expected to Continue to Improve;
2018 Oil Forecast $55-$60
A confluence of global events recently drove the crude oil futures price curve into backwardation, a condition in which a commodity’s market price today (or spot price) is higher than the price for further-out month contracts. As of this writing, the spot price for West Texas Intermediate crude is $56.90/barrel and the December 2018 contract is priced at $55.70/barrel. Typically, the oil market trades in contango, which is the opposite of backwardation. In contango, a commodity’s spot price is below the price for further-out month contracts.
Marcus by Goldman Sachs said it was going to lend $2 billion to customers by the end of this year. As of late Monday, it had already done that.
Lending Club has reported losses exceeding $200 million over the last six quarters; Prosper has lost $210 million since the start of 2016, despite various cost-cutting measures, and lost its unicorn status. Even OnDeck Capital, which focuses on small businesses, is struggling to become profitable, having reported losses over eight consecutive quarters.
Goldman sees a $13 billion lending opportunity with Marcus over three years, CFO Marty Chavez said Tuesday in remarks at the Bank of America Merrill Lynch Future of Financials Conference.
San Francisco based TrueAccord, announced today that is has closed $22M in additional funding led by Arbor Ventures, with participation from existing and new investors. The Series B funding follows a period of sustained and rapid growth for the company.
Customer acquisition is expensive. For a large bank it could cost between $1,500 and $2,000 to acquire a retail banking customer, according to Ciaran Rogers, director of marketing at StratiFi, an early stage startup that helps advisors manage portfolio risk. In credit cards the cost could be in the hundreds, not thousands — according to David True, a partner at PayGility Advisors. An expensive customer could be as high as about $800, which would include the cost of teasers and bonus loyalty points. At startups it could be between $5 to about $300 for one customer. Fintechs want to spend less money on that — Wealthfront, for example, decreases its marketing budget year after year.
Partnerships with bigger brands have been one way to bring that cost down. For example, Canada’s fifth largest bank, CIBC, is reportedly in talks with robo-adviser Wealthsimple over a referral deal in which the bank would send some of its customers to the digital investment startup.
At MoneyLion, the cost of customer acquisition is about $5 or less, said chief marketing officer Tim Hong. MoneyLion launched in 2013 and now touts about 1.5 million customers. Earlier this year, Luvleen Sidhu, president and chief strategy officer of the all-digital BankMobile, said it spends about $10 to acquire an account.
CleanCapital, an online marketplace for clean energy investing, announced today that it closed its Series A with a total investment of $3.7 million. This investment came through 50 investors to include FinTech and cleantech leaders as well as SeedInvest’s Selections Fund in this latest round.
As Black Friday Nears, a Record 196 Million Consumers Now Have Access to Various Forms of Credit Cards and Other Revolving Lines of Credit (TransUnion Email), Rated: A
With the holiday shopping season officially kicking off during Black Friday next week, TransUnion’s (NYSE: TRU) just released Q3 2017 Industry Insights Report found that 195.9 million consumers now have access to revolving credit such as bank-issued and private label credit cards. According to the report, this is the highest level of revolving credit access since TransUnion began measuring the variable and is greater than the 192.6 million consumers who had access to such credit products in Q3 2016.
TransUnion’s analysis found that average private label card originations in the holiday season (defined as November and December) for 2016 was 148% of the average originations for the January through October timeframe. This is tracking in line with recent rises observed in 2015 (156%) and 2014 (164%).
Other Consumer Credit Headlines from the Industry Insights Report:
Total Credit Balances Rise despite Slowdown in New Credit Card Accounts
Auto Loan Market Shifting Toward Less Risky Consumers
In 2010, digital lenders originated $249 million in unsecured personal loans, and by 2016 that number had grown ninety-fold.
Cleveland’s Dark Outlook
That detail alone isn’t necessarily bad news – after all, having more debt doesn’t necessarily mean the online lending customers are doing worse. But paired with other data, the news looks pretty grim. According to the Cleveland Fed survey, the online lending customers also showed lower credit scores on average, more delinquent debt and more total debt outstanding.
The findings further suggest that in some cases, the three- to five-year installment loans of up to $30,000 to $40,000 often offered by online lending sites are not being used for their intended purpose of consolidating credit card debt into a single, lower-interest loan. Instead, customers were using those loans to rack up more debt and maxing out the cards they used to pay off the loans.
Philly, Chicago And A Very Different Result
The earlier report did note that outcomes varied depending on the specific borrower profile and their precise lending requirements. However, because of the expanded and more inclusive credit ranking criteria, consumers who might otherwise be “credit invisible” or appear to have a sub-prime score are able to get a more complete evaluation that considers a wider array of factors.
The lack of regulatory clarity raises concerns, they said, over whether customers are treated fairly, have “equal access to credit, and receive offers that can be easily compared and understood,” suggesting that alt lenders need to compete on a level playing field with their regulated bank counterparts.
Why The Discrepancy?
The Cleveland Fed study examined data from TransUnion for consumers who had been identified as having taken out “online bank-based loans.” That includes a much wider set of businesses and lenders than is technically defined by the more traditional online lenders.
The Philly-Chicago study focused entirely on data from Lending Club, a marketplace lender.
The Cleveland Fed study goes even further. It claims that P2P lending is a ticking time bomb in which loose lending and cascading defaults could lead to another crash like the one the US suffered in 2008 when the subprime lending bust took down major banks and insurers, disabling the housing market for years.
Astrada points specifically to the high interest rates that prospective borrowers with poor credit could have to pay. Many websites offering P2P loans advertise 5 percent loans with terms of one to five years. This may look good to those who would like to roll their credit card debt of 25 percent into a P2P loan.
But the reality is that for many borrowers, the interest rate is much higher. He emphasizes that one up and coming P2P lender about to go public claims that its average loan portfolio across its business model is nearly 150 percent.
In the seventh installment of the “Kill the Check” series, PYMNTS’ Karen Webster sat down with Ingo Money CEO Drew Edwards to get a sense of how airlines can use push payments to quell misfires and compensate passengers for their troubles when things go awry.
The digital nature of push payments also helps airlines as they can better control when, where and how such monies are spent. In addition, Edwards noted, push payments are instantly reconciled with the airline’s own accounting functions as they are being used.
On Monday, home ownership investment platform Unison announced 2018 expansion plans.
The platform reported that in 2017 alone it has expanded into five additional states including Illinois, New York, Arizona, New Jersey and Pennsylvania, bringing its total footprint to twelve states plus Washington D.C.
In addition to announcing 2018 expansion plans, Unison also revealed multiple promotions and additions to its management team. These are the following:
Jim Riccitelli assumed the role of President focusing on facilitating Unison’s rapid expansion and supporting Unison’s trademark focus on consumer education and financial literacy.
Bill Walker and Brian Elbogen, former Managing Directors, have been promoted to Chief Revenue Officer and Chief Strategy Officer
Laura Wensleyhas been brought on as Director of Finance
Rayan Rafay has been promoted to Chief Operating Officer of Unison’s investment management business
John Arens, who is General Counsel at Unison, has taken on additional responsibilities as Managing Director of Business Operations
Heather Phillips has joined as Associate General Counsel
The Consumer Financial Protection Bureau is seeking more information about consumers’ experience with free access to credit scores.
In two separate notices published in the Federal Register on Monday, the CFPB said it wants more data on which companies consumers are using to obtain their free scores. The bureau also said it is updating a public list of companies that offer free access to a credit score.
I can sense that most of the folks attending the conference that got hurt by Operation Chokepoint feels a bit vindicated by the latest roll back of many new proposals laid out by the CFPB, Consumer Finance Protection Bureau. Just recently the United State senate overruled the CFPB’s arbitration rule. The overruling by CFPB and essentially a no-confidence vote happened about a week after Lend360 concluded in Dallas, Texas.
I attended Dan Quan’s “The Regulator’s View of Fintech” session on the last day of the conference. Dan manages the small dollar lender desk at the Consumer Financial Protection Bureau, at his panel, Dama Brown from FTC and Shamoil Shipchandler from SEC all spoke about an era of collaboration with lenders. The tones from all three regulatory representative is vastly different than that of five years ago where mass regulation and penalties were the topic of discussion.
I feel like the industry has finally evolved from a cat and mouse game with the regulators to a more collaborative marketing participants as this industry continues to mature.
The National Retail Federation predicts the average per-person tab this holiday season will reach $967, up nearly 3.4 percent since 2016.
Americans are on track to end 2017 with more than $60 billion in additional credit-card balances, according to WalletHub’s projections. That figure puts us perilously close to the nearly $1 trillion grand total recorded at the height of the Great Recession.
Holiday Budget by City
Sugar Land, TX
League City, TX
Maple Grove, MN
In order to determine the cities with the biggest holiday budgets, WalletHub’s analysts compared 570 cities across five key metrics: 1) Income, 2) Age, 3) Debt-to-Income Ratio, 4) Monthly Income-to-Monthly Expenses Ratio and 5) Savings-to-Monthly Expenses Ratio.
Magilla Loans, a search engine for loans which connects borrowers to banks without requesting personal information, has been recognized by National Real Estate Investor (NREI), a leading authority on trends in the commercial real estate market, as one of the 2017 Top Financial Intermediaries for commercial real estate loans arranged within the last calendar year. The ranking identifies Magilla Loans as a reliable and efficient service which satisfies the needs of commercial real estate developers and executives.
CreditShop and Värde Partners today announced that Värde will acquire Austin-based CreditShop. CreditShop is a specialty finance company focused on providing consumer friendly credit products and personal loans to prime and near-prime consumers. CreditShop is the 25th largest MasterCard and Visa credit card issuer in the United States.
In March 2017, CreditShop acquired a $1.6 billion MasterCard credit card portfolio from Barclaycard. The company expects to launch its own credit card products in 2018.
A new report from Equiniti finds that 30 per cent of consumers aged 18-25 have borrowed more than £1,000 over the past year. This equates to approximately 2 million people, according to estimates: the highest proportion of any generational group.
The report draws on data from a survey of 2,001 UK consumers in August 2017. 32 per cent were classified millennials, 34 per cent generation-x and 34 per cent baby boomers. 52 per cent were women, 48 per cent were men.
Since 2015, borrowing (of over £1,000) has increased by 17 per cent among millennials, 9 per cent for generation-x and just 1 per cent for baby boomers.
Speaking at a fintech summit in Leeds, Mr Letts also questioned whether the challenger banks were radically different from mainstream banking, positing that some had simply “put new clothes on the emperor”.
“On other the other side are what I call the ‘neobanks’, people coming in with much hurrah and hysteria and telling everyone that the big banks are finished and that they are going to take over the world .
“If you set up a fund, from Government, that invested in fintechs and you had a billion pound fund where do you think businesses will come to? It is very simple.”
The Royal College of Nursing’s (RCN) workforce survey found that 6% of nurses have been forced to take out one of the high interest rate loans in the last year to meet their daily bills and living expenses.
Meanwhile, one in four has borrowed money from friends, family or their bank, 23% have taken on an additional paid job and half did overtime to cover their bills and expenses, according to the poll of 7,720 nurses from across the UK.
Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) today announced its unaudited financial results for the quarter ended September 30, 2017
For Three Months Ended
in RMB million
Amount of Loans Facilitated
Total Net Revenue
Total Fees Billed (non-GAAP)
Adjusted EBITDA(1) (non-GAAP)
Adjusted Net Income (2) (non-GAAP)
In the third quarter of 2017, Yirendai facilitated RMB 12,185.4 million (US$1,831.5 million) of loans to 192,725 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 117%; 75.7% of the borrowers were acquired from online channels; 57.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.
In the third quarter of 2017, Yirendai facilitated 214,967 investors with total investment amount of RMB 13,510.0 million(US$2,030.6 million), 100% of which was facilitated through its online platform and 92% of which was facilitated through its mobile application.
For the third quarter of 2017, total net revenue was RMB 1,513.9 million (US$227.5 million), an increase of 28% from the previous quarter and 73% year-over-year; net income was RMB 303.0 million (US$45.5 million), and increase of 13% from the previous quarter and a decrease of 12% year-over-year. The decrease of net income is mainly because that, in the third quarter of 2016, the Company recognized a tax credit of RMB 151.7 million because one of its subsidiaries became qualified as a software enterprise which makes it eligible for an exemption of enterprise income tax for 2015 and 2016. Excluding the impact of the tax credit, adjusted net income in the third quarter of 2016 was RMB 192.6 million.
An online lender targeting spendthrift 24 to 36 year olds is the latest fintech firm from China to bet on the willingness of Chinese youth to go into debt for the newest smartphone – and on the willingness of US investors to bid up its shares.
Shenzhen-based Lexin Fintech Holdings, which operates an online e-commerce platform offering instalment shopping, is following in the footsteps of Chinese microcredit providers Qudian and Hexindai which raised US$900 million and US$50 million in their US IPOs in October and November, respectively.
They were also out in force for the recent Singles’ Day shopping festival, which saw sales on Alibaba’s e-commerce platforms reach 168 billion yuan (US$25.3 billion). During the first hour of the 24 hour shopping spree the number and value of orders on the Fenqile platform rose three and six times respectively compared with the same period last year.
Hui Ying Financial Holdings Corp. (OTCQB: SFHD) (“Hui Ying” or the “Company”), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises (“SMEs”) and individual borrowers in China, today announced its financial results for the three and nine months ended September 30, 2017.
Third Quarter 2017 Highlights
For the Three Months Ended September 30,
($ millions, except per share data)
Loan origination service fee
Loan repayment management fee
Financing income from entrusted loans
Other income (expenses)
EPS – diluted
Total loans facilitated through our platform increased by 73.3% to RMB 2.6 billion for the third quarter of 2017, from RMB 1.5 billion for the same period of last year, as China’s online peer-to-peer lending platform industry continued to grow significantly during the third quarter, coupled with the increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace.
Total revenues more than doubled to $14.28 million for the third quarter of 2017 from $7.07 million for the same period of last year, as a result of increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fee, loan repayment management fee and financing income from entrusted loans were $8.39 million, $5.25 million and $0.64 million, respectively, for the third quarter of 2017 compared to $5.11 million, $1.97 million and nil, respectively, for the same period of last year.
Net income was $4.76 million, or $0.06 per diluted share, for the third quarter of 2017, compared to $1.46 million, or $0.02 per diluted share, for the same period of last year.
PPRO Group and Klarna have announced an agreement aimed at enabling PSPs to offer credit-based payments through PPRO`s payment hub to European merchants.
The partnership will be marketed to PPRO’s payment service providers customer base and will provide access to Klarna’s services and consumers across Sweden, Norway, Finland, Denmark, the Netherlands, Germany, Austria, and the UK.
Banco BNI Europa and Belgian Fintech EDEBEX celebrate a partnership to support Portuguese SMEs (BNI Europa Email), Rated: A
Banco BNI Europa and Edebex have announced today the celebration of a new partnership for immediate availability of an online platform for the purchase and sale of invoices to Portuguese companies with cash requirements, offering an innovative alternative to financial credit and traditional factoring.
A number of areas have been established or significantly impacted by FinTech; Peer-to-Peer (P2P) lending, mobile payments, and instant payment notifications, to name a few.
The ongoing bank branch closures across Ireland and the UK demonstrates the changing climate.
With a reduction in branches, banks are investing heavily in technology to reduce costs, to improve their customer experience and to increase customer self-service in an attempt to ward off the threat of FinTech start-ups.
The blockchain is another example of FinTech and one which has been a hot topic across multiple industries for a number of years.
A digital future: financial services and the generation game is a report sponsored by Banco Santander for presentation at the Tenth Santander International Banking Conference, written by The Economist Intelligence Unit.
It assesses how people’s expectations of their financial services providers are changing and how technology must be deployed to meet them. The report is based on extensive desk research and in-depth interviews, conducted in August-October 2017 with 14 representatives of financial institutions and companies.
PayPal has launched Money Pools, a service that allows its users to create fundraising pages where their contacts can contribute money for a shared item or event, like a group gift or trip, Source: Business Insider
In the latest Data Drivers installment, Steve Villegas, vice president of Partner Management at PPRO Group, told PYMNTS’ Karen Webster that “alternative payments are going to drive the future of eCommerce.” But between the promise and the reality, some connectivity is on order, bringing consumers payment options – and merchants toward better conversion rates when it comes to online commerce.
Data Point One: 17.6 Percent
This is the percentage of credit card penetration worldwide – a lot of cards, but not a lot of penetration on a global stage.
As has been widely reported, Alibaba grabbed as much as $25 billion in sales to 225 countries and regions. Roughly 90 percent of transactions were completed on mobile devices.
Data Point Two: Three Billion
This is the number of people estimated worldwide to be without a bank account – and yet, armed with mobile devices, can be brought into the world of digital transactions and can participate fully in the global economy.
Data Point Three: 38 Percent
This is the average rate of eCommerce growth of the 11 fastest growing countries globally. That far outpaces the 12 percent a year eCommerce growth seen in the U.S.
China provides a stark reminder of the explosive boost to eCommerce, at 64 percent year over year. Other areas that have high eCommerce growth rates include Indonesia and Malaysia. Growth is high both in bank payment-related transactions and with eWallet. Russia is also showing growth, Villegas stated.
New research from Celent (commissioned by Finastra) which examines the future transformation of capital markets, identifies six key drivers of change over the next five years to 2022:
Digitalization of the trade and client lifecycle
The Fintech revolution
The need to integrate with an evolving ecosystem
The trend for banks to focus on core capabilities and outsourcing of non-core functions
Advances in big data, machine learning and data analytics
The rise of open APIs and micro-services in helping banks deliver increased agility
The report, ‘The Great Transformation in Capital Markets – Revolution to Evolution’, examines the changes that have already taken place in capital markets since the 2008 crisis, the wave of big transformation projects undertaken since 2011-12 designed to optimize operations and reduce costs, and expected trends in the transformation journey over the next five years. It incorporates the findings of detailed discussions conducted with 17 tier one and two global capital markets institutions, predominantly in the US and Europe but also across Asia and Latin America.
In this table we have set out what each lender says you must repay for borrowing $500. (We targeted 30 days but not every lender offers that.) Then we calculated the effective annual interest rate for entering into that deal. This is different to the interest rate the lender discloses because we bundle up that interest rate with any set-up loan fees into an effective rate. But we haven’t included any fees if you default; this analysis assumes the borrower meets all payments on time.
Ex-bankers Brahma Mahesh, Naveen Madgula, and a techie for 17 years at Hexaware – Praveen Krishnam founded FinMomenta last year, launching its loans platform Tachyloans in May.
The startup borrows from the emerging trend of servicing small-ticket loans online for individuals and SMEs.
“The loan approval process in banks is very subjective. It is dependent on a human perception of the loans officer. It kills the whole idea of credit scoring. That’s the reason banks are able to service just about 2%-5% of the huge working class of about 60 crore population. Others just depend on money lenders. Banks don’t touch these people because they don’t have a credit history,” says FinMomenta co-founder Brahma Mahesh.
The interest rates on Tachyloans range from 11.5% to 25% depending on the FinMomenta credit rating – the better the credit score, the lower the interest rate.
By the end of 2018, the company is targeting to service 1,500 loans and 34,000 loans in next 5 years, which will increase its loan portfolio to about Rs 500 crore.
Consumers will be able to sign up for new digital-identity system developed by SecureKey Technologies Inc. and underpinned by IBM Corp.’s blockchain technology in the first half of 2018. They’ll be able to instantly prove who they are to banks, telecom providers and governments using apps on their phones and Windows devices, according to Greg Wolfond, chief executive officer of Toronto-based SecureKey.
Canada’s six-largest lenders, including Toronto-Dominion Bank and Royal Bank of Canada invested C$30 million ($24 million) in the project.
The Dubai International Financial Center (DIFC) it has established a $100 million fund to invest in fintech start-ups, the latest move in the freezone’s bid to position itself as the regional centre for the fast-growing and disruptive sector.