Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in […]
Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in the United States who accept digital and mobile payment methods as of October 2017.
Similarly, IoT is no longer the future. Autonomous cars and voice-controlled assistants like Amazon’s Echo and Google’s Home are already in our lives. All of these technology developments represent a new challenge in how to manage and secure our digital payment and IoT devices and infrastructure.
The MagicCube Business Model
The MagicCube solution helps in securing digital transactions on different devices, with the same level of security as device hardware solutions without the complexity and cost associated with hardware deployments.
While working with VISA, founder and Chief Executive Officer Sam Shawki witnessed that companies had to use Apple Pay to access chips while securing credit cards. This required an extensive hardware set up. This led him to embark on a project to create virtual chips.
MagicCube’s patented technology provides an embedded software solution in the existing hardware set up. Now, Visa users will not have to go to Apple to get tokenized cards. Rather, they can use the hardware of MagicCube on their regular devices via cloud by just entering a pin. Now the phone can be used to access payments and there is no need for a separate external device. A lot of companies used to give these devices to merchants for free to capture payments and lending business. But now, with MagicCube, the onboarding process does not require expensive hardware. This allows for faster and cheaper penetration of the market, and merchants don’t have to interact with bulky hardware for managing transactions. Now, consumers will not require credit cards to make payments and merchants will not need any hardware device for accepting payments.
The company charges a setup fee depending on the geography, specific requirements, and volume of the client. There is a fee for active merchants on a monthly basis and a software license fee for every user.
MagicCube Products
Mobile Payments: According to research reports, digital payments will overtake cash transactions by 2023. All stakeholders in the payments ecosystem need to conform to the latest technologies as well as ensure that these payments are as secure as those executed through chip-based credit cards. The company’s MC Token Shield will offer a device-independent, hardware-grade security for mobile payments without the complications of hardware. It will also render the excessive middlemen fees associated with current digital payments redundant. The company has achieved PC-DSS Level 1 SP Certification and needs just a single API for integration with any App.
Connected Cars: Device security in connected cars is extremely important. According to research, by 2020, one in five vehicles on the road will have some form of wireless network connection. The company’s MC Vehicle Shield offers hardware-grade security to autonomous vehicles for their most critical parts. It will not only reduce the hardware bill for the car manufacturers, but any updates in security standards can be handled like a normal software update instead of having to recall the vehicles.
Pin on Glass: Only 45% of US Small Businesses accept credit cards. The point-of-sale hardware costs and the complexity attached with operating them has made it too expensive for millions of small merchants. Pin on Glass technology allows for a regular smartphone to safely accept payment card PINs, thus transforming the humble phone into a POS terminal. The tech has the power to change the entire payments paradigm. MagicCube’s MC Screen Shield works on delivering hardware-grade security and cloud monitoring services for such “PIN on Glass” payments.
Who Are MagicCube?
Founded in 2014, the Silicon Valley- and Brisbane, Australia-based MagicCube is the creator of the world’s only Software Trusted Execution Environment (sTEE) platform, a technology that enables large-scale deployment and management of IoT and mobile-secure solutions for consumers. The company has raised over $10.5 million in funding from Bold Capital, Epic Ventures, Silicon Valley Bank, and others. The company’s seed round saw participation by payments giant Visa.
Before launching the startup, Shawki was the head of Visa’s Global Remote Payments business unit. He was the driving force behind the company’s global push in mobile and remote payments. He also served as the chief innovation officer of VimpelCom, the sixth largest telecom player in the world with over 214 million customers in 18 countries.
Nancy Zayed is the cofounder and chief technical officer. She was head of engineering and operations at InnoPath, a founding member of OMA (Open Mobile Alliance), head of platform development at Cisco Systems, and also spent 10 years at Apple in various leadership roles.
Partnerships and Competitors
The company has entered into a partnership with Visa-funded Yellowpepper to secure token-based payments and is launching the solution in the Latin American market. The company has also partnered with ID Tech, a POS solutions provider for launching a product that will securely allow any mobile device to be converted into a POS terminal.
The young startup is competing with heavyweights like Qualcomm and Infineon, who provide security chips powering and securing payments today. But the CEO is confident that their software will soon make any hardware solutions obsolete. The company is also looking to partner with other players for launching new products and is in the process of attaining critical industrial certifications which will make the sales process much easier. The company seems to be in the pole position to change how digital payments and IoT devices will be secured in the future.
News Comments Today’s main news: SoFi brightens startup scene in Helena, Montana. LendingTree rates Upgrade #1 personal loan. UK P2PFA gets a new head. India considering digital payments tax rebate for P2P lenders. Today’s main analysis: Why point-of-sale lending is hot. Today’s thought-provoking articles: Industrial loan company (ILC) applications may soon be seen in a positive light. P2P lending […]
SoFi feeds startup fever in Helena, Montana. AT: “Thanks to technology, anyone can run an international company from anywhere in the world, even small town and rural areas. Your truly hails from just outside Gettysburg, Pa.”
Why point-of-sale lending is hot right now. AT: “I think POS financing is going to be hot for some time. It has been growing hotter over the last year thanks to companies like Affirm and Klarna, but those are not by any means the only companies working in this space. There will be plenty more, and I think many online commerce companies will begin to realize they will have to offer some form of financing to remain competitive. Amazon has led the way in this. Others will follow. It will become the norm, both online and off line, for the next generation.”
Inside Overstock’s financial services strategy. AT: “Overstock is a good example of an online merchant who has taken advantage of their financial strength and available technology to improve access to financial services, including POS loans.”
There is a new millennial-friendly mixed-use development with a high-end steakhouse, movie theater, and hotel. And yes, even a town of 30,000 located more than 500 miles from the closest major metropolitan areas (Salt Lake and Seattle) has an entrepreneurial ecosystem. In fact, in some ways Helena has a startup scene larger cities would be jealous of. A few years ago, SoFi, the online student loan servicer that also provides personal loans and mortgages, contracted with two local programmers to help build their platform.
One of those programmers, David Thompson, is a graduate of the University of Montana-Western, Montana Tech, and the University of Montana. David had no interest in moving to the Bay Area, and successfully convinced SoFi to locate a substantial portion of its engineering team in Helena. Today SoFi is multi-billion-dollar startup, and David is the VP of Engineering, managing more than 100 programmers and engineers out of two locations in Helena.
For the last several decades–and especially over the last few years–we’ve heard a lot about the death of small towns and middle America. However, the success of SoFi and the emerging startup scene in Helena shows the potential for tech companies to be agents of economic revitalization in small towns and cities outside of the coasts.
LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, announced that it will report earnings for the fourth quarter of 2017 on Tuesday, February 20, 2018, after market hours. LendingClub will host a conference call to discuss the fourth quarter financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.
A live webcast of the call will be available at under the Events & Presentations menu. To access the call please dial +1 (888) 317-6003 or outside the U.S. +1 (412) 317-6061 with conference ID 8062913 ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).
Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced financial results for the fourth quarter and full year 2017. Elevate has posted its fourth quarter and full year earnings release to its Investor Relations webpage at
Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, announced that it has been named #1 in the personal loans category for the fourth quarter of 2017 by LendingTree.
But research conducted by banks and fintechs has found that many younger Americans are uncomfortable carrying credit card balances, partly because they saw their parents struggle with debt during the financial crisis and prefer the more certain repayment terms of installment loans.
Personal loans issued by banks — these exclude credit cards and auto and home equity loans — hit a record $807 billion at Sept. 30, according to data from the Federal Deposit Insurance Corp., up 9% from two years earlier and nearly 30% since 2012. That’s not even including the many billions of dollars of loans made by upstart online lenders that don’t end up on banks’ balance sheets.
San Francisco-based Affirm originated more than $1 billion in point-of-sale loans last year — and, increasingly, regional banks that are funding the loans, either directly or behind the scenes.
For the past few months, the 19-year-old e-commerce company has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing, as of last week — and as of Tuesday morning, a discounted trading platform.
Financial-technology firms eager to offer banking products are eyeing a century-old model that fell out of favor during the financial crisis but could see a revival under the Trump administration.
The industrial loan company charter, available in a handful of states and particularly popular in Utah, allows nonfinancial companies to enter the banking sector without being subject to many of its restrictions, including oversight by the Federal Reserve. Companies seeking the charters must still obtain deposit insurance from the Federal Deposit Insurance Corp., which last approved insurance for an industrial loan company in 2008.
That could soon change. President Donald Trump’s pick to head the FDIC, Jelena McWilliams, suggested during Senate testimony last month that she would look favorably on new applications.
According to Forbes, Larsen’s net worth is between $7.5 billion and $8 billion in cryptocurrency, in large part thanks to his massive holding of Ripple—the cryptocurrency he co-founded in 2012.
Larsen, a Stanford M.B.A. and veteran Silicon Valley player, is no stranger to the world of digital finance. Prior to his involvement in cryptocurrency, he co-founded the online mortgage lender E-Loan. The company was valued at $1 billion in 2000. In 2006, he co-founded Prosper Marketplace—the first peer-to-peer lending marketplace in the United States.
Wealth tech company Personal Capital is making it easier for investors to put their money in causes that are important to them with the launch of its Socially Responsible Personal Strategy today.
Toyota Financial Services (TFS) has launched an evaluation of AI software from Aire to spot customers with higher risks of delinquency.
Aire’s machine learning technology will identify which lessees have entered customer delinquency by skipping a payment, and will give TFS an estimate on how likely they are to default on further instalments.
Aire’s software has already been used by lenders, including p2p lender Zopa, in the initial credit application phase.
Confluent, provider of the streaming platform based on Apache Kafka, today announced 2017 results, which include 4X subscription growth year over year and 98 percent customer satisfaction.
In the 2017 Apache Kafka Report, many companies reported using the distributed streaming platform for more accurate and faster decision making, reduced operating costs, improved customer experiences and reduced risk. 1 in 4 respondents work for organizations with more than $1 billion in annual sales, illustrating how quickly this technology has gained traction across large enterprises. In addition, more than 15% of respondents are processing more than a billion messages a day.
Other 2017 highlights include:
Raised $30 million from Sequoia, Index Ventures and Benchmark to meet global demand for streaming platforms.
Expanded employee base by 120 percent, added numerous offices throughout the US and extended its footprint to six additional countries.
Added new customers around the globe, including Alight Solutions, Capital One, Funding Circle, HomeAway and Nordea Bank.
Announced the general availability of Confluent Cloud, an Apache Kafka as a Service offering that empowers enterprises and developers to move faster with streaming data.
Surpassed 200 partners, including some of the largest Systems Integrators and Platform partners in the industry.
That Radius Bank in Boston would strike another fintech partnership — it announced one Wednesday with the startup Mantl, which is trying to cut down online-account openings to four minutes — is less revealing than its part in Radius’ evolving MO.
When Nathaniel Harley, CEO of Mantl, first visited Radius, he was seeking feedback on a personal financial management technology the company was working on. But he was quickly talked into changing the direction of his company.
The two companies started building an account-opening system for all digital channels in March 2017. They worked to reduce manual entry and other hassles from the account-opening process. Mantl brought in one of its own fintech partners, Alloy, to handle much of the decisions, including anti-money-laundering checks, identity verification and fraud detection. Radius and Mantl used Alloy’s workflow management tool to configure the decision-making process.
Banking rules cannot be rewritten overnight, and so acting Consumer Financial Protection Bureau Director Mick Mulvaney has a tall order remaking the payday loan regulation crafted under his predecessor. But observers say Mulvaney has options for altering the rule to the industry’s favor.
One option would be to refocus the rule on disclosure requirements, which would be several steps short of a repeal but more amenable to lenders than the current CFPB regulation.
Did the Consumer Financial Protection Bureau kill its investigation into Equifax’s data breach that exposed the personal information of 145.5 million U.S. consumers to hackers?
On Thursday, a group of 32 Democratic senators sent a letter to the CFPB, demanding answers on the state of the bureau’s investigation into the Equifax breach.
The CFPB has issued a request for information that seeks comment on how the agency can best achieve meaningful burden reduction or other improvement in the processes it uses to enforce federal consumer financial law while continuing to meet the CFPB’s statutory objectives and ensuring a fair and transparent process. Comments on the RFI must be received no later than 60 days after the date it is published in the Federal Register, which the CFPB expects to be February 12, 2018.
In the new RFI, the CFPB now seek comment on all aspects of its enforcement processes but lists the following seven topics:
Communication between the CFPB and subjects of investigations, including timing and frequency of such communications and information provided by the CFPB on the status of an investigation
Length of CFPB investigations
Notice and Opportunity to Respond and Advise (NORA) process, including whether the NORA process should be mandatory rather than discretionary and the information contained in letters the CFPB may send to potential subjects of investigations pursuant to the NORA process
Whether subjects of potential enforcement actions should have the right to make an in-person presentation to the CFPB before the CFPB decides whether to initiate legal proceedings
Calculation of civil money penalties, including whether the CFPB should adopt a civil penalty matrix
Standard provisions in CFPB consent orders
Manner and extent to which the CFPB can and should coordinate enforcement activity with other federal and/or state agencies with overlapping jurisdiction
Altegris, an alternative investment research and management firm, and Artivest, an alternative investment technology firm, announced today that they plan to merge under the name Artivest, pending customary corporate and regulatory conditions to closing. The joint 100-person team will service over $3 billion in client capital—immediately becoming the largest independent alternative investment technology and solutions firm for wealth managers, fund managers, and independent advisors.
Taking a next step in its mission toprovide liquidity to private growth companies,SharesPost today announced the launch of its Digital Securities Group.
The Digital Securities Group will bring security token issuers and investors into the SharesPost private marketplace. Token issuers and investors will use SharesPost’s existing Alternative Trading System to invest in ICO’s and trade in digital securities in compliance with U.S. securities laws.
Homeowners soon will be able to count income they earn from Airbnb Inc. rentals on applications for refinance loans.
A new program — expected to be announced on Thursday by Airbnb, mortgage giant Fannie Mae and three big lenders — will allow anyone who has rented out property on Airbnb for a year or longer to count some or all of that money as income.
In 2018 the SEC’s Office of Compliance Inspections and Examinations plans to pay closer attention to matters involving retail investors, particularly when it comes to disclosures, and zero in on cryptocurrencies, initial coin offerings and secondary market trading, the regulator says in a press release.
The regulator will also continue monitoring digital advice platforms, with a special focus on their compliance programs, including algorithm oversight, investor data protection and disclosures of conflicts of interest, according to the exam priorities. The SEC has made progress in the ratio of investment advisors it examines each year, from just 8% five years ago to 15% in fiscal year 2017, the regulator says. In 2018, the SEC plans to target those advisors it has never examined before, according to the regulator.
LD Holdings Group, LLC, parent company of loanDepot, the nation’s fifth largest retail lender, today appointed top real estate executive Chris Heller to head its recently-launched mello Home business. Combining digital simplicity and smart local advice, mello Home seamlessly connects home buying, financing, and improvement services into a single consumer experience.
If the theme of the 2017 T3 Conference was the fiduciary rule, 2018 was all about the future of financial advice.
Quovo launched Cue, a new alerts engine that leverages Quovo’s aggregation technology to notify financial advisers about account activity and client milestones.
MoneyGuidePro announced a new partnership with MX, a data aggregation provider, that lets advisers bring held-away assets into the financial planning software.
It was through the work of the P2PFA, led by Christine Farnish, that these regulations were sensible and promoted the growth of the industry there. And while this initial regulatory framework is currently being reviewed by the FCA, today, the UK is one of the most competitive markets in the world in no small part because of these initial regulations.
Paul Smee brings more than 17 years experience in leading trade bodies in the UK. Previously, he was Director General of the Council of Mortgage Lenders for six years so he comes with experience leading finance trade bodies. He looks like a great choice to take over from Christine.
Lendy, one of Europe’s leading P2P secured property platforms, is pleased to announce the appointment of Andrew Wawrzyniak as its new head of finance. Andrew was previously head of finance at Fund Partners, a leading fund manager, which specialises in the operation of collective investment schemes.
RegTek.Solutions, the market-leading control and compliance software provider for global trade and transaction reporting, has appointed Rob Bernstein as chief financial officer (CFO).
PEER-TO-PEER business lender Rebuildingsociety has secured an agreement with Leeds City Council whereby the local authority funds loans through its platform.
The council will review business loan requests from companies with an LS postcode prefix, consider the industry and location of the company, and contribute to the loan amounts required by suitable applicants.
According to Robo.cash, P2P lending is turning to a significant source of additional income for the growing number of the European investors.
The online lending platform also confirmed:
“The majority of investors are in the age groups: 25-34 years — 40%, 35-44 years — 31%, 45-60 years — 20%. The less number is the age of 18-24 years (6%) and 61 plus (3%). These figures are supported by the employment of investors: employees — 72%, entrepreneurs — 15%, students — 6%, retiree — 2%. At the same time, the most investors are just getting acquainted with P2P-services (52%) and the comparable number already has at least one-year practice: 1-3 years — 34% and over 4 years — 13%.”
The country has been actively promoting itself as gateway destination to the European marketplace for non-EU firms and British startups fleeing Brexit. Registering a company takes merely three days, while getting a Payment Institution or Electronic Money Institution license takes only three months, two-to-three times faster than in other EU jurisdictions. Other perks include remote Know Your Customer (KYC) procedures, low profit tax, startup visa options and a sandbox regime for fintech startups in their first year.
The country also boasts a growing talent pool of up to 31,000 trained IT professionals with a further 8000 in the pipeline.
This week, Invest Lithuania released the Lithuania Fintech Report 2017, which revealed that a total of 117 fintech companies were operating in the country in 2017, with 35 of them being registered last year.
IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based c-store solutions provider goEBT (goEBT.com). Through this strategic partnership, goEBT’s network of 25,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.
Our companies come together united by the common vision of providing financial inclusion for more than one billion new and underserved individuals across the globe. We will together provide a suite of credit scoring and identity verification products to more than 20 emerging markets.
Our companies have individually facilitated over 5 million credit assessments since inception, allowing more than 50 financial institutions to disburse over $2 billion USD in credit to people with limited information.
The first joint product offering is already live in Asia and Latin America, with additional products and features scheduled for release in the coming months.
Terry Gou, the billionaire chief of Taiwanese electronics giant Foxconn, is said to have invested in a cryptocurrency merchant bank being set up by Mike Novogratz, a former Wall Street macro hedge fund manager.
Citing a source familiar with the matter, Bloomberg reported that Novogratz has raised about US$250 million for his cryptocurrency merchant bank venture through a private placement.
The government might consider giving tax rebates to merchants accepting payments digitally in order to promote the overall fintech sector, which is at its infancy at present but growing at a rapid pace, suggested the Reserve Bank of India.
Talking about the fintech sector the RBI has identified tech startups working in the space of peer-to-peer lending, blockchain, big data, smart contracts, robo advisors and online aggregators.
Traditionally, one’s option was limited to getting an education loan from a public sector bank. Now that the demographics are favourable and the education loan market has the potential to grow, non-banking finance companies (NBFCs), fintech players and peer-to-peer (P2P) lenders are jockeying for a piece of the market.
Seek more funding: Education loans are part of the priority lending category, but unlike the US, there is no provision for student loan waiver in India. It means your loan will not go away until you pay it off. Try and find out if there is any other source of funding available, including financial aid, bursary and scholarship or upfront savings, which will bring down the loan amount.
What Banks Offer
Most of them offer education loans for studying medicine, engineering or management at graduate and post-graduate levels or for pursuing further studies in India and abroad. Some also provide categorised loans. For instance, State Bank of India (SBI) offers Scholar Loan for students who get admitted to premier institutions like IITs, IIMs, NITs and AIIMS, and a Global Ed-Vantage loan for studying in global counterparts. Bank of Baroda offers Baroda Scholar loan for studying abroad and Baroda Gyan loan for higher studies in India while separate schemes are available for courses conducted by the country’s top institutions.
Source: Money Today
Fintech/P2P Players
Landing an education loan may not be easy anymore, given the spurt in defaults. And that is where the new-age fintech firms and P2P lenders see a lucrative opportunity. “For those who fail to qualify for education loans from banks and NBFCs, P2P lending platforms can be an alternative way to borrow,” says Gaurav Aggarwal, Associate Director, Unsecured Loans, at Paisabazaar. In other words, aspiring students can raise personal loans from banks or fintech players like MoneyTap and LoanTap, or P2P lenders like Faircent and CreditMantri to cover their educational expenses.
To understand what lies ahead for India’s fintech sector, it makes sense to understand the fintech growth is expected to boom in the Asia Pacific region. A Frost & Sullivan report predicts that the region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion.
According to Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast.
Indian digital payments industry is expected to reach $700 billion by 2022 in terms of value of transactions.
It is expected that more than 80% of the urban population in India will adopt digital payments as a part of their routine by 2022, and 70% of the retail chains will adopt the same.
Enter IOU Financial. As “online lending” has become a 21st century reality, a financial niche has sprung up with online lending institutions that are prepared to cater to small businesses and provide badly needed capital, efficiently and affordably.
Compared to the above, IOU Financial provides easily manageable, working capital term loans for small business, and does so:
Quickly
Efficiently
Affordably
The speed of IOU’s loan application process is a big draw for small business owners. IOU’s application generally takes roughly three to five minutes to complete.
OnDeck (NYSE: ONDK), the online lender to small businesses, today announced that Grounded Kitchen & Coffeehouse, owned by Amir Rahim, has been selected as the OnDeck Small Business of the Month for February, 2018. The Ottawa-based restaurant is the first small business in Canada to earn the OnDeck spotlight award.
So assuming I have $1000.00 I have no use for and would want to make a little interest on, All I have to do is go unto one of these platforms to match me with someone in need of $1000.00. These platforms because of the high risk they take (borrowers don’t provide tangible collaterals) usually charge higher interest and in return given higher interest to lenders than Treasury Bills will normally do. This idea is supposed to be easy and help people financially as there is gap between loans needed and financial institutions willing to give (“The two largest peer-to-peer (P2P) lending platforms, Prosper and LendingClub founded in 2005 and 2006 respectively, have originated over $6 Billion in loans to date. Although they have only begun to scratch the surface of the $3 trillion consumer debt market” Nav Athwal Cofounder and CEO of RealtyShares, a crowdfunding for real estate platform). Yet like most good things miscreants, hooligans and hoodlums find a way to make the system corrupt.
These swindlers promise up to a 100% interest rates within 5 working days. So they lure greedy but naïve people to roll in cash through mobile money. With a Minimal amount of GHC100.00 you get registered and paired with another person. You’re required to send the money to this person who they claim registered 5 days ago and the said day is the day of maturity.
Ways to spot financial scams and Ponzi schemes
1. If your interest is too good to be true, then its probably a lie. When you’re being offered an interest bigger than the T Bills in lending you should be wary and do due diligence.
2. They usually don’t tell the project in which your money will be invested.
3. Pressurised to respond quickly? 4. Are the contact details vague?
News Comments Today’s main news: Impact investment performance. The UK home lending market had a watershed year. Opus, Statista predict digital payments to rise in 2018. Crowd Genie opens up blockchain-based lending to Singapore. Fast Invest offers crypto-enabled loan investments across Europe. Today’s main analysis: Where financial institutions will spend money on fintech in 2018. Today’s thought-provoking articles: The […]
Where money will be spent on fintech in 2018. AT: “American Banker predicts where banks and other financial institutions will put their investments in 2018. A good read with some solid predictive analysis, and good reporting. Top of the list: Blockchain & AI. Big surprise: Bank will get more aggressive with student lending and mortgages.”
Performance of impact investing. AT: “Regardless of what you call it, impact investing allows investors to grow portfolios while performing a social good, but how do these investments do over time? Not bad.”
A study released in December found that 82% of U.S. commercial banks plan to increase fintech investment over the next three years; 86% of bank senior managers surveyed said they intend to boost fintech funding imminently. The research was commissioned by the global fintech provider Fraedom.
Here are the fintech markets likely to get some love in the coming year:
Blockchain
Up till now, many blockchain pilots have been about gaining back-office efficiencies, such as in clearing securities, Canaday noted. She said she expects the use of blockchain to shift to ways to make money.
Artificial intelligence
“There was a study done about last quarter’s conference calls where the count of the number of times companies said ‘artificial intelligence’ in their calls was 800, up 25% quarter over quarter,” Steinberg said. “When you’re competing with 800 companies, it’s probably a difficult experience.”
B-to-B payments
While many fintechs focus on serving consumers, “toward the end of this year we started to see more of a shift in investment toward the B-to-B side,” said Grewal. “There’s big money being thrown into the B-to-B space. We’re seeing a lot of new company formation around the B-to-B payment space in a way we haven’t seen before. That’s one trend we’ll see a lot more of next year.”
Banks could “unlock” $11 billion in new revenue streams from small and midsize businesses by 2020, according to an Accenture report.
Consumer apps
Better experiences from fintech apps like Digit and Acorns are turning financial services firms into “ingredients” rather than “destinations,” according to Schwark Satyavolu, general partner at Trinity Ventures.
Grewal also sees a lot of interest in the cross-border commerce space — consumers from China wanting to make purchases in the U.S. and the U.K. and vice versa.
Banktech
Now that the Consumer Financial Protection Bureau has been defanged, so to speak, banks can get back into student lending and mortgages without fear of reprisal, he said.
The Global Impact Investing Network has offered its own take on a much discussed question: do “impact investing” and its variants under various names – sustainable investing, socially conscious investing, ESG investing, etc. – work? And, if so, how well? It looks at this question in a very granular way, focusing especially on II through private equity and private debt. Given this focus it engages in a meta-study, or literature review.
The GIIN begins with the observation that private equity is the most commonly employed vehicle for impact investing. It is used by more than 75% of the impact investors.
How did they do? That 2015 study made the following points:
Since inception the 71 funds have generated aggregate net returns of 5.8% on average, with 4.6% showing up as the median.
The fund level internal rate of return can vary a good deal. The top 5% of funds get 22.1% or higher and the bottom 5% lose 15.4% or more.
That range itself is “similar to what is seen in conventional investing and illustrates that fund manager selection is key to strong performance.”
According to government statistics, 28.8 million small businesses currently operate in the U.S., employing 57 million people. A study by U.S. Bank notes the major reason these businesses fail is due to cash flow problems. Eighty-two percent of those businesses, in fact, are tanking because of lack of cash.
“You have this compression happening across every stage along the way,” Graham says. “For example, 24-hour turn with orders, better systems allowing a distributor to invoice faster, and easier ways to accept payment up front. It’s enabling everything to move faster. The need for financing is not as great as it used to be as a result of the options available now to be able to turn everything faster.”
There’s also big growth in the online lending space, Graham says, allowing for a lot of flexibility and options to get bank-like financing for business needs. But she thinks the next huge financing shift will surround something completely different.
“I think a lot of the real changes are going to happen around digital currency,” she says.
Lending Requirements
“Document requirements won’t change,” Seagraves says. “To get a loan today, you need to have some vehicle to communicate your plan, and that vehicle should include a set of business projections, like an Excel spreadsheet that talks about your financial requirements for the short term and how long it’ll take to become cash flow-positive. Then the lender is going to want to know your financial position as an individual and if any of your assets can be leveraged to secure a loan. These are all very traditional requirements, and I don’t see them changing any time soon.”
Eight out of ten American adults feel anxious about the state of affairs of their personal finance.
In addition to this, neural activity associated with “stressful information processing” was 20% higher among people who made their own money decisions compared to someone who received financial advice.
The membership of the Equity Release Council in the UK has increased annually by 23%, rising to 219 from 178 at the same time last year, boosted by new entrants to the market, the latest official figures show.
Lending in the third quarter of 2017 surpassed £800 million for the first time in any single quarter, with the sector also on course to reach a record-breaking £3 billion in lending for the first time in a single year.
By any measure, 62-year-old Shan Juzhen was an easy mark. After the shortest of conversations with other investors, Shan put more than US$15,000 – or nearly a year of her pension – into a lending club she had never heard of.
She felt it unnecessary to check the qualifications of the lending club, which serves as an alternative for borrowers who cannot get a loan from a big bank. She also did not ask questions about how her money would be lent. The only thing Shan wanted to know was would the platform give her a high return on her investment.
A report published in December by Chaoyang Court in Beijing found that the number of Chinese senior citizens involved with lending-related disputes surged to more than 4,400 in 2016, a nearly sevenfold increase from a year earlier. And among all lending-related disputes the court handled last year, about 45 per cent involved elderly Chinese.
P2P online lending has now reached US$908 billion in transactions, according to Internet Loan House, a website that tracks the industry.
Given this assessment, the ESAs are of the view that, even though automation in financial advice is not presently observed equally across all financial sectors and/or EU Member States, the phenomenon has the potential to continue to grow. The ESAs will assess the feedback to this Discussion Paper in order to better understand the phenomenon and to decide which, if any,
regulatory and/or supervisory action is required.
In considering the topic of automation in financial advice, the ESAs have observed the following across the banking, securities and insurance and pensions sectors :
In the banking sector:
i. Automation specifically in relation to financial advice does not seem to be very widespread. However, human contact is supported more and more by the use of various automated tools. These include comparison websites that can compare products offered by various financial institutions, and websites providing information on specific products and helping consumers to select between products by using simulators and calculators.
ii. New business models that are based in providing advice through automated advisory tools have nonetheless emerged (e.g. automated tools where the consumer fills in all relevant information and receives an advice on which mortgage to get as a result).
In the securities sector:
i. Automation in relation to financial advice is a more mature phenomenon, although the provision of advice that is completely automated appears to feature only in a few EU Member States. In this business model, automated tools are used as a type of financial adviser, often referred to as a ‘robo-adviser’: the automated tool asks prospective investors for information about their specific circumstances and, based on the answers provided, an algorithm is used to recommend transactions in financial instruments that match the customer’s profile.
ii. Different automated tools may be used to support different parts of the advice process, for example the collection of information, risk profiling, portfolio analysis, and order processing or trading.
iii. Some advice services are entirely automated, whereas other services foresee human interaction between the consumer and the advice provider at some stage.
iv. In a greater number of European jurisdictions, other automated tools exist that offer various online functionality to consumers. Such offerings include (but are not limited to): the possibility to open and manage online trading accounts that allow the consumer to trade financial instruments on an execution-only basis; automated portfolio management services; and automated tools that compare the prices of transacting in different financial instruments.
Peer-to-peer (P2P) lending platforms have disrupted American financing. That is old news. What is more interesting is the impact of such platforms in Europe where big banks have long dominated the entire loan-initiation process as well as the investment chain.
European P2P initiatives grew 92% in 2015 to 5.4 billion euros. P2P consumer lending is, so far, the biggest and fastest growing market segment, although far from the only one.
Brexit will mean that British banks will lose what is called “passport rights” that enable them to have access to European markets. And P2P lenders are already jumping into the void this is creating, as well as allowing new kinds of services and income investment opportunities.
Introducing Fast Invest
Fast Invest’s mission is to create a cross-European platform where investors can earn returns for investing in loans. At present, the platform offers an 8-15% return based on past performance for short-term investments of as low as 1 euro, US dollar, pound or Polish zloty after ten months.
Today, before the crowdfunding, the company has 8,500 plus daily customers across Europe, 21 certified lenders, 36 client origin countries and over 50 employees on staff.
Investors will be able to choose between investing in cryptocurrency or a crypto-proved loan investment. This will significantly increase yield over regular bank returns which are about 1.25% API at present. These investments include traditional and alternative investments including issued loans, real estate, private equity and other structured finance products.
Investors can invest as little as 1 euro and get that back within one day with the Fast Invest buyback guarantee.
FIT tokens allow investors to participate in a growing P2P market opportunities across Europe and the US.
Cork-based loan investors are the most likely to back local firms, according to data from peer-to-peer lending platform Linked Finance.
The numbers are based on business loans made over the Linked Finance platform, which matches investors to their choice of borrowers using the so called peer-to-peer lending model that cuts out banks.
Analysis of the investors using the platform found that just over one in three (34pc) of lenders have incomes in excess of €100,000, 39pc own their homes outright and 40pc are homeowners with a mortgage.
2017 was a significant year of growth for digital payments, according to an Opus Consulting report, together with the emergence of alternative payments. Peer-to-peer, wallets and mobile payments reached “high adoption levels” in the mainstream, reaching $3.6 trillion in terms of transactions during 2016-2017. According to the report, that amounted to a 20 percent year-on-year growth–a number that will only continue increasing from here.
In terms of global mobile payment revenue, the report states the number is estimated to reach $930 billion in 2018, representing a 19 percent growth from 2017 with China leading the way in the mobile payments market. Global payments revenue as a whole is poised to reach $2.3 trillion, with 43 percent of that representing banking revenues.
Similarly, data from Statista indicates that transaction values are expected to grow at a compound annual growth rate of 41.9 percent over the next five years to 1.32 trillion, while the number of users in the mobile point of service payments will reach 977 million by 2022.
Fintech outlook 2018: Companies to watch
Glance Technologies, whose flagship product is its mobile app, Glance Pay, decided in 2017 that it would create its own cryptocurrency built on the ethereum platform to use smart contracts to provide rewards, which Green says will be purchases in conjunction with its mobile payment app.
The development of biometrics on mobile devices is set to have an outsized impact on mobile wallets and international money transfer. Advances such as fingerprint login, retinal scan, and facial recognition offer a rare opportunity for remittance companies to both combat fraud and improve the user experience.
Mobile wallet transactions alone are expected to reach nearly $1.4 trillionin 2017, growing 32% compared to 2016, and the number of mobile phone users will top 5 billion.
Biometrics improves the user experience by reducing form fields, eliminating the need to upload a picture of a physical ID, and fully automating the know-your-customer (KYC)/anti-fraud process. Moreover, for the first time, digitally funded transfers will offer better KYC and fraud checks than banks or brick-and-mortar competitors.
With hacked or compromised credentials, attackers can wreak havoc by posing as legitimate users and moving or stealing unauthorized funds. Not only is there a risk of theft, but fraudsters also exploit peer-to-peer (P2P) money transfer services for money laundering and terrorism financing. Considering the fact that P2P payments are expected to be used by nearly129 million adults in the US by 2021, the threat isn’t going away anytime soon.
The number of people living outside of the country in which they were born has surpassed 244 million, representing a 41% increase between 2000 and 2015. Many of these people come from places where the identity infrastructure is weak and disconnected from developed systems in the US and Europe.
About 93% of consumers would rather use biometrics than passwords.
Earlier this year, McKinsey & Co. published a paper on impact investing in India. The data base for that study consisted of 48 PE and VC transactions, of which 31 targeted the “financial inclusion” sector: that is, enterprises designed to bring banking and bank-like services to the unbanked.
In this case they varied from a loss of 46% to a gain of 153% with a median gross IRR of 10% and a weighted average of 11%.
Investments in the fintech space in India also witnessed frenzied activity this year, with total value of investments jumping by 388% from $383 million in 2016 to $1,868 million in the first three quarters of 2017, according to industry database CB Insights.
With over 1 billion mobile phones, 325 million broadband connections and 306 million new bank accounts, India became a case study in digital financial inclusion, driven by the Jan Dhan Yojana, Aadhaar and mobile (JAM), as reported by the communications ministry.
More than 225 alternative lending companies were founded in India in 2017 and the segment was the second most funded in India’s fintech space, as per data from an industry database Tracxn.
According to the National Payments Corporation of India (NPCI), eKYC verifications have jumped almost 77% to 84 million in FY18 over FY17, speeding up the on-boarding process and reducing costs significantly.
In 2017, almost 46 strategic partnerships and deals took place between lenders, payments companies and fintech innovators. Some of these were the tie-ups between Paytm and ICICI Bank for short-term interest-free credit lines; Amazon India and Bank of Baroda for unsecured micro loans; Mobikwik and Bajaj FinServ for offering all features and benefits of Bajaj Finserv EMI cards over a digital payments wallet; Fisdom and Lakshmi Vilas Bank for a robo-advisory platform; and between Senseforth and HDFC Bank for chatbots.
RBI’s recognition of P2P lendingstartups as a new category of non-banking financial companies (NBFCs), was celebrated all-round by the sector.
One of the most celebrated advantages of the fintech boom is that of ‘financial inclusion’ and the potential to service the underserved. However, the sector is hoping that the guidelines placed will initiate control and check on the unorganised side of money lending and the digital push will bring about competitive rates and transparency.
Another announcement the RBI made in October was the introduction of guidelines for digital wallet companies. There were mandates on higher capital requirements for license holders of prepaid payment instruments or digital wallets, KYC or know-your-customer norms and the initiation of interoperability of various digital wallets.
Rohit Lohia, CO-Founder and COO of Cointribe believes 2018 will see scaling up of players in the lending space especially in small business lending.
The government’s decision to bear the merchant discount rate (MDR) on digital payments of up to Rs2,000 will bring greater level of acceptability for digital payment systems. Digital payments will become a way of life both for consumers and merchants and bring a cultural shift in digital payments.
Renu Satti, MD and CEO, Paytm Payments Bank
India is currently at the center of the banking world, and is set to emerge as a benchmark in digital and financial inclusion.
The global economic meltdown of 2008 was the catalyst to get people to shift gears, and supplement their income by sharing assets that they owned. Added to this, the increasing internet penetration and the evolving economic system helped companies such as Airbnb and Uber popularise the concept of shared economy, and successfully pave the path for other industries.
However, while these platforms helped millions of people find alternative sources of income, they suffered elementary setbacks. To begin with, the companies have significant amount of transactional overhead, be it monetary or operational. Second, international boundaries restrict cross-border economic sharing. Thus, the peer-to-peer markets are unable to foster collaborative ownership which is crucial to enable true sharing of resources.
Blockchain — the key to global sharing
The peer-to-peer network in the sharing economy, allows individuals to organise themselves without the involvement of any third party. As the intermediaries are based on the algorithms, the technology builds trust, making it a versatile technology that can be match specific user requirements.
According to a PwC report, the peer-to-peer-lending global market is pegged to touch $335 billion by 2025. As the sharing economy continues to grow, the idea of private ownership is being replaced by the revival of collaborative and shared consumption and adoption of blockchain can guarantee safe and secure transactions.
Crowd Genie is a peer-to-peer lending platform based in Singapore. It connects small to medium businesses seeking loans with capital via a blockchain-based cryptocurrency system.
Lenders can expect to make at least 14% return with all funds held in escrow. This peer to peer lending activities will be tokenized using smart contracts to enable lending without borders more efficient, cheaper and safer. Ultimately, the team has a vision to build an Asset Trading Exchange on Blockchain that will democratize trading and allow investment in infrastructure, stocks, cryptocurrency, and bonds across Asia, which would be prohibitively expensive, and potentially unfeasible due to issues of transparency and trust without Blockchain.
Hi, Akshay. Thanks for joining us today. Can you tell us more about yourself and Crowd Genie?
Crowdfunding is popular in the West, but the idea is relatively new in Singapore and other Asia countries. Observing how lenders getting low returns from the banks because of the overhead costs and how established SMEs unable to receive full funding desired and become under-banked, I would like to match this two parties together to solve the problem and that’s what Crowd Genie has been doing.
Why did you decide to use blockchain in building Crowd Genie?
Although our existing P2P digital loan business is incredibly innovative in the Singapore financial sector, it would have been impossible to scale to enable lending without borders and offer Asia-wide asset trading before blockchain technology was introduced.
To build and scale an asset exchange with pre-blockchain technologies would be prohibitively expensive, and potentially unfeasible due to issues of transparency and trust.
In the whitepaper, you talk about creating “Asian Passport” rights or identities. Tell us how you came up with the idea and how you think you will implement this regionally. Is this based on the idea of European passport banking rights?
To build an end-to-end Asset Exchange, a Digital Passport is essential for us to identify who are the lenders and borrowers, are they associated with negative news, illegal activities or politically exposed. We will continue with our existing due diligence process where we ask for proof of identity and bank statement and check it against a world-wide recognized database. Thereafter we set up a digital passport and store in on blockchain.
Please explain the notion of “fractionalized assets,” and how it is redefining how P2P lending is occurring.
P2P lending is an illiquid investment. Imagine that you have invested in a 12 months tenure loan, but would like to get some money back before it matures, say 2 months later. You can do so by selling it on Crowd Genie Asset Exchange by indicating the fraction of your assets that you would like to sell.
News Comments Today’s main news: SoFi completes $769M student loan securitization. Affirm is headed to unicorn status. Funding Circle SME fund to double. Funding Circle SME Income Fund NAV, profit to rise. Zopa investors can move repayments into IFISA automatically. Harmoney says Kiwi SMEs are tapping into P2P for cash flow more. TransUnion launches Mobile Score Card in Africa. Today’s main […]
Why it is easier for small businesses to go global. AT: “Much of this is intuitive. The internet has made the world a smaller place. Access to P2P funding it certainly helping, but internet-based businesses have had an easy go of going global even before the rise of P2P financing. The significance of P2P financing models for global business is that it is now possible for traditional businesses to leverage the capital necessary for expansion.”
How payday apps give workers fast access to wages. AT: “I think the most interesting of these are the ones where workers can access their wages before payday, essentially serving as payday loan apps. Another interesting idea is getting paid by the hour as you work.”
Lenders are exiting the auto niche. AT: “This should create a hole for other lenders to profit from. As supply diminishes, if demand does not also diminish, opportunities will rise for those still in the game.”
Why banks will share financial secrets. AT: “Some of the concerns are valid, but with the right precautions in place, open banking should be a net positive for consumers.”
SoFi announced today the closing of its $769 million offering of SoFi Private Student Loan notes (SoFi 2017-F).
The closing marked the company’s 12th ABS transaction this year, bringing its total issuance in 2017 to $6.9 billion, up from $4.2 billion in 2016. The 2017 total includes six Student Loan ReFi and six Consumer Loan transactions.
Rep. Patrick McHenry (R-NC) sent a letter to the Cleveland Fed accusing them of using their study on peer-to-peer lending to block bill “Protecting Consumers Access to Credit Act” (H.R. 3299). The bill proposes to overturn a decision in the Madden v. Midland Funding case against the “valid when made” clause which allows sales of legally made loans in one state to parties in other states, even if the loan exceeds the interest rate cap in the state of the borrower.
Positioning and Strategy
LendingClub doubled-down on the capital-light marketplace lending model, and emphasized the role of technology, data & analytics, and the “virtuous cycle of scale.” LendingClub also emphasized the new product innovation on the investor side of its business – notably the Exchange Traded Product (ETP) which we think may have been lost in the immediate reaction to revised guidance.
LC sees an addressable market opportunity of $300-350 Bn in the credit card refinance and debt consolidation spaces, and a $38 Tr pool of addressable capital on the investor side of its marketplace.
LC has a two-pronged strategy to attack these markets and meet EBITDA margin goals:
2018: Focus and Invest
Accelerate personal loans growth while prudently managing credit
Invest in auto and leverage secured capabilities for personal loans
Strengthen Investor franchise by expanding securitization and growing new structures
Address legacy issues
2019-2020: Expand and Deepen
Expand lead in personal loans through further data, analytics, and product and testing efforts
Expand role in the borrower journey through new products and services
Expand investor universe to lower cost of funds, improve resiliency, capture more value
Source: Lending Club
As seen in the chart below, LendingClub is positioning MPL loans as a new asset class that offers higher risk-adjusted returns as compared to other fixed incomealternatives, while offering lower interest rate risk. LC has delivered historical annualized loss-adjusted returns of 6.7% on its Prime loans portfolio, and 10.9% on its Near-Prime loans portfolio.
Source: LendingClub
The top question on investors’ minds remains the expected performance of MPL loans thru a recessionary scenario in the chart below, LendingClub published estimates of expected annualized charge-offs on Prime loans in a baseline scenario of 5.5%, in a moderate recession scenario of 7.9%, and in a protracted slump scenario of 11.5%.
It has become significantly easier today to run a multinational business compared to a few years ago. This is down to the increasing adaptation of technological advances to various business operations.
Markets are becoming decentralized and barriers to entry are minimal
The internet is central to the paradigm shift we have witnessed in the business environment over the last couple of decades. For instance, you do not have to live in the U.S. to sell your products or services to the Americans. Even where certain levels of certification are required, these can easily be done online thereby allowing a foreigner to obtain the required credentials for operating a business that targets American citizens. Therefore, market access is global, decentralized and without limits for anyone looking to expand exponentially.
Another thing that is influencing growth strategies among small businesses is the ease of access to financing.
Ideally, most businesses would opt for local lending. However, with the growing popularity of online-based peer-to-peer lending platforms like Lending Club, small businesses can now access financing regardless of whether they have security. But it is not as easy and straightforward as it sounds. According to National Business Capital, the process can be as tasking as trying to apply for a securitized loan with background checks and credit scores playing a crucial role.
Nonetheless, lending institutions are being pressured by the increasing number of peer-to-peer lending platforms. This has forced them to lighten up their lending requirements in a bid to increase their loan portfolios and subsequently interest incomes. In this case, we could say that technological advances and the emergence of alternative lending solutions have forced the hand of the credit market to create a more conducive environment for businesses to thrive.
Affirm, the personal credit startup led by PayPal co-founder Max Levchin, has filed a stock authorization form in Delaware that would allow it to raise up to $210 million in new funding at around a $1.4 billion pre-money valuation.
Q: Are digital payments progressing as quickly as you hoped since you started PayPal?
A: They are moving at a good pace, adjusted for just how large and complicated the market is. It’s highly regulated and there are a lot of things to be careful about. The elephant in the room for the last seven or eight years has been cryptocurrency.
Q: What are some of the most interesting areas of digital payments?
A: A good example is international remittances, where companies can pop up and do well. They’re the guys who figured out how to do it much cheaper and much more transparently with much lower friction to both the recipient and the sender.
And while many workers typically wait anywhere from once a week to once a month to get the money their company owes them, new apps from financial technology startups like DailyPay, FlexWage and PayActiv are giving workers everywhere — including at Goodwill, McDonald’s and Uber — faster access to wages, and sometimes even on the same day they clocked their hours.
Proponents like Shah say faster access to wages can motivate hourly workers to put in longer hours (since they’ll reap the rewards more quickly) and can reduce their reliance on abusive payday loans with sky-high interest rates that can leave borrowers in an unending debt cycle. Indeed, taking out a single $100 payday loan for two weeks could eat up more than $130 out of your next paycheck, once you factor in interest and fees. Repeat that every two weeks and you are down hundreds of dollars for the year — equivalent to a full month’s rent for many.
With DailyPay — which is used by hourly workers at DoorDash delivery service, the Maids residential cleaning service and Kellermeyer Bergensons Services facilities management firm — employees can access 100% of their accrued and unpaid net wages for a fee of $1 to $3 per transaction. The money can be deposited directly into their bank account or put on a prepaid card or payroll card on the same day.
Another app called Earnin lets workers withdraw up to $100 a day and $500 per pay period in advance of receiving their regular paycheck. While it charges no fees, it does give workers the option of “tipping.” The service then withdraws funds directly from your checking account after you’ve been paid.
FlexWage, for example, only lets workers tap up to 70% of their unpaid wages between regular paychecks (for a $3 to $5 fee per transaction). PayActiv gives them access to 50% of their net pay for every 30 hours worked for a $5 fee.
Instant Financial lets employees withdraw half their daily net pay every day at no cost at all: Instead they charge employers $1 per month per employee enrolled in the program.
According to Goldman Sachs, the outstanding student loan balance has reached $1.3 trillion in face value, about the size of the high-yield corporate-bond market. This outstanding debt is not without problems, as it delays homeownership for some millennials and cuts their disposable income.
It’s the $190 billion of outstanding loans that are held within asset-backed securities (ABS) refinanced by private lenders such as SoFi.
“Recent marketplace student loan deals have featured borrower pools with average credit scores above 770 and average borrower incomes above $160k: a very different credit profile than the government guaranteed portfolios.”
The indirect auto business is in a state of transition.
TCF Financial in Wayzata, Minn., surprisingly walked away from the segment on Dec. 1, and others like Regions Financial and Fifth Third Bancorp have tapped the brakes for reasons ranging from competition and credit concerns to regulatory pressure and low yields.
Auto sales are also projected to fall by 7% this year, according to Autodata and the Bureau of Economic Analysis.
America’s financial literacy programs may be failing the very people who need them most, according to newly released research from Elevate’s Center for the New Middle Class (CNMC). Non-prime consumers learn and retain financial education material differently than their prime peers, the research indicated.
To be most effective for a non-prime audience, financial literacy curricula should:
Be trans-media. Use different media types to deliver different messages.
Address the unique challenges of non-prime Americans. A financial wellness program will be more effective for non-prime Americans if it directly addresses their unique challenges – things like income volatility and a lack of available resources. It also needs to identify outcomes that are relevant, attainable, and meaningful to them.
Highlight the next immediate steps.
Focus on building their credit. Non-prime Americans understand that their credit scores affect every part of their financial lives and they are hyper-focused on what they can do to improve them. Anchoring a financial wellness program on credit score management can actually lead non-prime consumers to understand broader financial management principles.
Payday Lenders – Like them or not, the payday lending industry was in for a huge takedown under the CFPB’s final rules that will restrict the way they do business.
Still, the industry now has a friend rather than a foe in the director’s office. And that can’t hurt for an industry that just weeks ago appeared to be headed for a major takedown.
California Attorney General Xavier Becerra on Friday joined attorneys general from 17 other states in calling on the Trump Administration to respect the independence of the Consumer Financial Protection Bureau.
PNC Financial Services Group plans to introduce a consumer lending product that it will market through both its mobile wallet and in new branches.
The $375 billion-asset Pittsburgh company intends for the new loan product to be available on a national scale, Chairman and CEO William Demchak said this week.
Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating Qudian Inc. (“Qudian” or the “Company”) (NYSE:QD) on behalf of investors who purchased Qudian American Depository Shares.
On October 17, 2017, Qudian issued 37.5 million American Depository Shares at $24 per share under a Registration Statement and Prospectus filed with the U.S. Securities and Exchange Commission, for gross proceeds of $900 million.
On November 21, 2017, Chinese media sources began to reveal that the personal information of millions of Qudian customers were allegedly available for sale on the black market. On November 23, 2017, Bloomberg reported that “Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.
VatorNews: How is technology influencing and impacting Ally’s auto business? Why is this technology integral to the company’s future in this arena?
Tim Russi: We’re a company that’s 100 years old, and you don’t become a 100 year old company in today’s world if you don’t have the ability to reinvent yourself.
Ally operates in what we in the lending world refer to as an ‘indirect model,’ so dealers originate the loans and leases and then we purchase them from the dealers. The speed and access of the indirect model has changed significantly in the last 15 years. The industry was very disruptive in creating online portals for dealers to be able to submit applications to lenders, so the lender didn’t have to be on site to do the loans.
VN: How have you seen technology in the auto space evolve in that short amount of time? How quickly is the space changing?
TR: You look at a lot of the lending models today and they’re going direct to consumers, and we’ve even got a direct model, because as you look at digital and the consumers doing shopping online, and wanting to buy, there’s no reason they shouldn’t be able to select and purchase the vehicle and obtain financing right at the ‘point of sale.’ If the sale’s going to be online, not in the dealership, we want to make sure we’re there and then fulfillment can occur at the dealership.
VN: How has SmartAuction changed the way dealers sell and buy vehicles? What kind of ROI have you seen?
TR: SmartAuction, we actually developed in 1999 and we’ve done over 5 million transactions. We have 20,000 vehicles that are available for sale or purchase in the marketplace. It’s a wholesale marketplace so dealers can post and buy.
As peer-to-peer lending and crowdfunding catch mainstream attention, folks looking for greater diversification and passive investment opportunities will engage in factional investing. The last few years have seen some extremely credible startups innovate in this space, and next year could lead to individuals moving away from sole ownership to fractional ownership via crowdfunding. – Sohin Shah, InstaLend
7. On-Demand Access For Renters
We often hear from renters that they are too busy to sweat the small stuff. They want immediate tour confirmations, like booking a restaurant on OpenTable, and near-immediate confirmation that they have leased, like booking a hotel. This real-time service expectation from a new generation of renters is exactly what we plan to cater to in 2018. – Anthemos Georgiades, Zumper
President Donald Trump weighed in on an investigation into scandal-plagued Wells Fargo, tweeting Friday that fines and penalties against the bank would not be dropped, and may actually be “substantially increased.”
Trump’s statement comes a day after Reuters reported that Mick Mulvaney, the president’s budget director and now acting director of the Consumer Financial Protection Bureau, was weighing whether the bank should have to pay tens of millions in fines already levied against it for mortgage lending abuses.
THE FUNDING Circle SME Income Fund (FCIF) is set to double the value of its assets after announcing plans to convert its conversion shares into the ordinary portfolio on 20 December.
The investment trust, which invests in loans on the Funding Circle platform, revealed in its half-year report that the move will increase the fund’s size to around £310m.
Currently the ordinary shares are worth £165.3m and the C shares, launched in April, are worth £142.3m.
Net asset value per ordinary share was 100.55 pence per share, representing an increase in the total NAV to GBP167.0 million from GBP165.0 million at the start of the half, which ended September 30. Net asset value total return was 12%.
For the C shares, net asset value was 99.82p, having only been issued in April. These shares are due to convert to ordinary shares on December 20.
ZOPA investors can now automatically re-direct their repayments into their Innovative Finance ISA (IFISA).
The peer-to-peer consumer lender confirmed this week that customers can gradually move their Zopa money into the tax wrapper without having to sell loans or pay extra fees.
Moving money into the IFISA will contribute to the investor’s annual tax-free allowance, Zopa said. However, once money is in the IFISA and has been lent out, those repayments will not contribute to the IFISA allowance.
Customers of nine of the biggest UK banks have received letters and emails in recent weeks informing them that their information can be shared, securely, with other firms. All they need to do is give their permission.
The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.
Most people stay loyal to their bank. The Competition and Markets Authority (CMA) found that only 3% of personal customers move their accounts each year.The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.
How will it work?
In practice and in time, customers will probably see a dashboard on their bank’s mobile phone app.
This will show them how much money they have in their different accounts, with different banks, and eventually how much they owe on credit cards and store cards too.
A set of computer programming rules in the UK, called Application Programming Interfaces (APIs), will ensure all these new services and banks to talk to each other.
Applications for mortgages could be dealt with more quickly, as providers and brokers could access spending history, rather than ask for printed copies of the last three months of bank statements.
Anne Boden, of mobile-only Starling Bank, says customers will be able to see exactly what they bought for lunch each day, an app could analyse the calorie levels, and then cross-check it with how much exercise that person is doing.
Customers could be bombarded with invitations to try out a new service, and could quickly lose control of their financial data, according to Mick McAteer, of the UK’s Financial Inclusion Centre.
He describes Open Banking as “a daft idea”, which will lead to more financial exclusion for those already on low incomes.
Unscrupulous individuals would be keen to access this data and use it alongside information revealed on social media to build up a complete set of personal information.
The great scramble for yield has seen asset managers hunt down ever more alternative sources of income. Many are starting to move into the world of shadow banking, alternative forms of lending in areas where banks are not competing for business as much as they used to.
But evidence from the US suggests that the biggest opportunity probably lies in what is called direct lending, preferably through a structure that might mimic US business development companies. These BDCs are a large and diverse universe of tax efficient, listed, closed-end funds resident in the US. Collectively they are worth at least $100bn, according to Keefe, Bruyette & Woods, the investment bank, nearly all of which has been lent to mid-market private businesses in the US — capital that has arguably helped to improve the nation’s corporate productivity and profitability. Income-hungry investors have also snapped up these funds, with average yields well over 9 per cent per year.
Direct lending companies will service the mid-market secured lending space for loans above £50m but they, in turn, lack an outlet into the public markets typically afforded by BDCs in the US.
The Cambridge Centre for Alternative Finance’s report, entitled Entrenching Innovation, found the UK online alternative finance market grew 43 per cent in 2016 to £4.6bn.
“Abundance was particularly pleased to see our category (debt securities) confirmed as the fastest growing of all at 1,147 per cent year on year, with an accompanying 40 per cent increase in average deal size to £1.4m. It was also good to see hard evidence of investors in debt securities conducting their own due diligence and being comfortable with the risk/reward offers they found,” he said.
Anil Stocker, CEO and co-founder of fintech business finance firm MarketInvoice, says as awareness increases, which will be propelled by PSD2, so too will the use of alternative finance platforms.
The UK outranked all other major developed economies in terms of the number of businesses established last year, according to figures from accounting group UHY Hacker Young.
It became home to 218,000 more businesses in 2016, a rise of six per cent over year-on-year. Meanwhile, other major developed economies including France, Germany, Italy, Japan and the US saw an average two per cent rise in number of businesses over the year.
The Financial Conduct Authority has said it will introduce its new definition of advice from Wednesday 3 January.
As part of this it has amended its handbook to change the definition of financial advice, meaning only advice which offers a personal recommendation will be considered regulated.
Chinese banks may have insufficient capital to weather potential losses from the nation’s rapidly mounting credit risks, the International Monetary Fund said, in a broad review of China’s financial system.
With Chinese banking-sector assets, at $34.7 trillion, soaring to three times the size of China’s economic output, at $11.2 trillion, the IMF said that “holding more capital would strengthen the banking system and bolster financial stability,” according to a report on Thursday.
The IMF said China should consider boosting risk-weighted assets at its banks by 0.5% to 1% over the coming 12 months.
The Financial Supervisory Commission on Thursday gave its nod to guidelines on collaborations between peer-to-peer (P2P) lending platforms and commercial banks, in a move to support the development of emerging financial services.
Under the guidelines, banks may provide custodian and trust account services to P2P platforms, as well as transaction processing to meet rules against collection of deposits by non-bank entities, the commission said.
However, banks are barred from making recommendations on decisions about loan approval, interest rates and principal amounts.
The guidelines also regulate the so-called peer-to-bank (P2B) model, where banks participate as lenders on P2P platforms.
Ning Tang, Founder and CEO of CreditEase, attended the 2017 Fortune Global Forum on December 6-8 in Guangzhou. With the theme of “Openness & Innovation: Shaping the Global Economy,” the Global Forum convened world leaders, senior executives and prestigious scholars to discuss the dynamic frontiers of international commerce.
Tang stated that the Chinese FinTech industry still sees great potential in the coming decade represented by development in applications such as microloans for SMEs, crowdfunding, robo-advisory, insurance technology, and blockchain products and services.
Mumbai-based fintech start-up Kissht recently raisedUS$10 million in funding primarily from Fosun International, a Chinese investment consortium. The Krishnamurthy & Co team acted for and represented Kissht and its owner OnEMI Technology Solutions, led by Mumbai-based partner Sanket Sethia and associate Vwastav Ghosh.
The performance of small and medium-sized enterprise (SME) asset-backed securities (ABS) will remain stable across all major markets in Europe and issuance volumes will likely increase slightly, according to the 2018 outlook for European SME ABS from Moody’s. However, emerging political risks have created some uncertainty in affected markets, with a limited effect on securitised deals in the United Kingdom (UK), and potentially negative effects in Spain.
Billie is an invoice finance platform that launched earlier this year; the round was led by Creandum with participation from existing investors Speedinvest and Global Founders Capital; the company focuses on complete automation with no human interaction; It was co-founded by Matthias Knecht and Christian Grobe; Billie also secured a refinancing facility from a major German bank.
Trade.io’s solution is to develop an exchange platform for the sharing economy where traders can not only exchange tokens, crypto and fiat currencies and other assets but also share in the risk and revenue of the liquidity pool. To participate in the liquidity pool, members buy 2,500 Trade Tokens secured by financial assets in their trade.io wallets. Crypto and fiat currencies are accepted as collateral.
Trade Token owners share in 50 percent of the gains or losses of the liquidity pool, which are distributed to the wallets of pool participants. Besides trading fees and commissions, revenue is earned from investment banking and P2P lending fees.
Earlier this week, Harmoney announced there has been an increase in Kiwi SMEs that are tapping into peer-to-peer (P2P) lending for business cashflow.
The New Zealand online lender stated it estimates $100 million will be loaned to business accounts through its lending platform within the next six to twelve months. Currently, the average loan amount for business cashflow on its platform is $25,000.
Avoka Technologies, a fast-growing Sydney-based provider of customer acquisition services to financial institutions, has raised $16 million from investors, including prominent venture capitalist Roger Allen, as offshore revenue rises above 75 per cent and the headcount moves towards 300.
Avoka offers a software-as-a-service platform called Transact, which claims to enable institutions to launch new digital products in weeks rather than months, and monitors customer interaction with them once established.
BankWest’s mobile banking app was built on Avoka, while Mr Copeland said HSBC was about to launch new credit cards whose customer interface was developed through the platform.
Asia
Crowdcredit, Inc from Japan (Makoto UJIKE Email), Rated: AAA
Crowdcredit is a cross border online lending platform, which raises funds from Japanese investors and finances overseas financial institutions, SMEs, or individuals.
Crowdcredit, Inc. announced its completion of appx. USD3.5mn financing mainly from Femto Partners, one of the most influential venture capitals in Japan.
Crowdcredit track record;
– Established in January 2013
– Started raising funds since June 2014,
– Finances financial institutions, SMEs, or consumers in Peru, Cameroon, Estonia, Finland, Spain, Latvia, Lithuania, Georgia, etc.,
– Has registered investment user of 8,000+
– Has issued funds in total US$ 45.5mm, and
– Issues funds of US$ 4mm monthly with increasing trend.
Crowd-lending platform New Union has been awarded the full Capital Markets Service license (CMS) by the Monetary Authority of Singapore (MAS), and announced a potential deal flow pipeline of about S$2 million to be launched soon.
VALIDUS Capital announced on Monday that it has been awarded a full Capital Markets Services (CMS) licence by the Monetary Authority of Singapore (MAS), to deal in securities – a move that may give Singapore’s small and medium-sized enterprises (SMEs) more access to financing opportunities.
Moreover, about 41% of banked balance has now abandoned traditional channels.
MAS estimates fintech payments already takes up 20-50% of household consumption if the probability of payments disintermediation is high in the next five years.
A majority of 56% of the banked population is also willing to shift their savings into a pure play digital bank. An average of 41% of total balance has already been shifted.
Equity crowdfunding has become an increasingly popular way for early-stage and early-growth companies to tap investors attracted by the potential for high returns. An investor who has spent the last couple of years lamenting over the lacklustre performance of his stocks sees ECF as an investment channel that claims to offer even better returns.
P2P investing is garnering a lot of interest from would-be investors who are looking for something different and better than banks’ fixed deposits.
ECF means investing in very early stage businesses and as such, there are inherent risks to be aware of such as the likelihood of bankruptcy, in which case, you will not be able to recover your original investment.
With P2P investing, the most obvious risk that comes attached is of course the possibility of the borrower defaulting on the debt. As the reasons for not being able to repay the loan are typically financial, any subsequent attempts to recover your investment may prove futile if the business indeed has gone under.
Key tips to investing
1. Know where ECF and P2P stands in your strategic asset allocation.
2. Ensure you are investing in best of breed by comparing apple to apple when it comes to risk versus returns.
a) Ensure the platform is approved by SC.
b) Research each scheme on the platform as not every one is the same.
c) Read the fine print in the platform operator’s agreement and know the rights and liabilities of each party. Pay particular attention to the risk warnings in the agreement with regards to potential loss of invested capital and the unsecured nature of the investment (for P2P).
3. Diversification is key.
4. Monitor how your investments are performing.
5. Consider the time required before you see your investments come to fruition.
A new omnibus code that amends, amongst others, the Capital Markets Code (“CMC“) has been enacted by the Turkish parliament and published in the Official Gazette on 5 December 2017.
The CMC amendment primarily refers to reward-based crowdfunding (i.e. receipt of goods, reward or pre-sales in return or investment-based or loan-based crowdfunding) while donation-based crowdfunding where the investor donates the money with no return is still subject to aid and donations legislation. The said amendment limits crowdfunding to project or venture financing and only through crowdfunding platforms that are prior-recognised by the Capital Markets Board (“Board“).
Crowdfunding platforms can only operate in Turkey once they obtain the necessary permission from the Board.
Over the past decade, fintech startups in the region have raised over $100 million in funding, and investment is predicted to double by 2020, according to the State of Fintech report. Disclosed investment infintech had jumped 100% to over $35 million by October 2017 — Paytabs ($20million), Souqalmal ($10 million) and Beehive ($5 million) — compared to $18 million last year. The number of fintech startups also increased from 46 in 2013 to 105 in 2015. It is estimated that it will more than double again to 250 by 2020, according to the report.
Aside from the fact that the sector encompasses every tech startup active within the financial services industry, beyond the ones that specialize in online payments or money transfers, e-commerce in the region is set to quadrupleuntil the end of this decade. Additionally, despite the ubiquity of smartphones and internet connectivity, 86% of the adult population in the region is unbanked, while three in four GCC bank customers are ready to switch banks for a better digital experience.
Boosting financial inclusion is crucial for economic diversity and growth across the region. Moussa Beidas, co-founder of Dubai-based startup Bridg, which allows smartphone-to-smartphone payments using bluetooth, says fintech has become an innovative way to bridge the divide and provide cheaper services to the unbanked.
The rapid advancement in innovation is transforming the financial services industry, especially the banks, as technology has become an integral part of the business strategy — from initially being just an enabler to now actually streamlining operating processes.
The Middle East has amassed more than $100 million (Dh367 million) in FinTech start-up funding in the past ten years, with 105 FinTech start-ups launching in 2016, with hopes to raise $50 million in funding by the end of 2017.
Banks in the UAE remain the trendsetters, although other GCC countries are not lagging far behind, with several banks in the region embracing FinTech in many different ways.
Data firm TransUnion has launched Mobile Score Card, a mobile loan information service that enables lending firms to access a loan applicant’s credit status.
Mobile Score Card is a database solution that continually ‘learns’ based on mobile transactional history.
It also provides mobile lenders with customisable and reliable risk view of the mobile loans. The product targets banks with mobile lending solutions, savings and credit cooperative organisation and independent mobile lenders.
News Comments Today’s main news: SoFi completes $769M student loan securitization. Affirm is headed to unicorn status. Funding Circle SME fund to double. Funding Circle SME Income Fund NAV, profit to rise. Zopa investors can move repayments into IFISA automatically. Harmoney says Kiwi SMEs are tapping into P2P for cash flow more. TransUnion launches Mobile Score Card in Africa. Today’s main […]
Why it is easier for small businesses to go global. AT: “Much of this is intuitive. The internet has made the world a smaller place. Access to P2P funding it certainly helping, but internet-based businesses have had an easy go of going global even before the rise of P2P financing. The significance of P2P financing models for global business is that it is now possible for traditional businesses to leverage the capital necessary for expansion.”
How payday apps give workers fast access to wages. AT: “I think the most interesting of these are the ones where workers can access their wages before payday, essentially serving as payday loan apps. Another interesting idea is getting paid by the hour as you work.”
Lenders are exiting the auto niche. AT: “This should create a hole for other lenders to profit from. As supply diminishes, if demand does not also diminish, opportunities will rise for those still in the game.”
Why banks will share financial secrets. AT: “Some of the concerns are valid, but with the right precautions in place, open banking should be a net positive for consumers.”
SoFi announced today the closing of its $769 million offering of SoFi Private Student Loan notes (SoFi 2017-F).
The closing marked the company’s 12th ABS transaction this year, bringing its total issuance in 2017 to $6.9 billion, up from $4.2 billion in 2016. The 2017 total includes six Student Loan ReFi and six Consumer Loan transactions.
Rep. Patrick McHenry (R-NC) sent a letter to the Cleveland Fed accusing them of using their study on peer-to-peer lending to block bill “Protecting Consumers Access to Credit Act” (H.R. 3299). The bill proposes to overturn a decision in the Madden v. Midland Funding case against the “valid when made” clause which allows sales of legally made loans in one state to parties in other states, even if the loan exceeds the interest rate cap in the state of the borrower.
Positioning and Strategy
LendingClub doubled-down on the capital-light marketplace lending model, and emphasized the role of technology, data & analytics, and the “virtuous cycle of scale.” LendingClub also emphasized the new product innovation on the investor side of its business – notably the Exchange Traded Product (ETP) which we think may have been lost in the immediate reaction to revised guidance.
LC sees an addressable market opportunity of $300-350 Bn in the credit card refinance and debt consolidation spaces, and a $38 Tr pool of addressable capital on the investor side of its marketplace.
LC has a two-pronged strategy to attack these markets and meet EBITDA margin goals:
2018: Focus and Invest
Accelerate personal loans growth while prudently managing credit
Invest in auto and leverage secured capabilities for personal loans
Strengthen Investor franchise by expanding securitization and growing new structures
Address legacy issues
2019-2020: Expand and Deepen
Expand lead in personal loans through further data, analytics, and product and testing efforts
Expand role in the borrower journey through new products and services
Expand investor universe to lower cost of funds, improve resiliency, capture more value
Source: Lending Club
As seen in the chart below, LendingClub is positioning MPL loans as a new asset class that offers higher risk-adjusted returns as compared to other fixed incomealternatives, while offering lower interest rate risk. LC has delivered historical annualized loss-adjusted returns of 6.7% on its Prime loans portfolio, and 10.9% on its Near-Prime loans portfolio.
Source: LendingClub
The top question on investors’ minds remains the expected performance of MPL loans thru a recessionary scenario in the chart below, LendingClub published estimates of expected annualized charge-offs on Prime loans in a baseline scenario of 5.5%, in a moderate recession scenario of 7.9%, and in a protracted slump scenario of 11.5%.
It has become significantly easier today to run a multinational business compared to a few years ago. This is down to the increasing adaptation of technological advances to various business operations.
Markets are becoming decentralized and barriers to entry are minimal
The internet is central to the paradigm shift we have witnessed in the business environment over the last couple of decades. For instance, you do not have to live in the U.S. to sell your products or services to the Americans. Even where certain levels of certification are required, these can easily be done online thereby allowing a foreigner to obtain the required credentials for operating a business that targets American citizens. Therefore, market access is global, decentralized and without limits for anyone looking to expand exponentially.
Another thing that is influencing growth strategies among small businesses is the ease of access to financing.
Ideally, most businesses would opt for local lending. However, with the growing popularity of online-based peer-to-peer lending platforms like Lending Club, small businesses can now access financing regardless of whether they have security. But it is not as easy and straightforward as it sounds. According to National Business Capital, the process can be as tasking as trying to apply for a securitized loan with background checks and credit scores playing a crucial role.
Nonetheless, lending institutions are being pressured by the increasing number of peer-to-peer lending platforms. This has forced them to lighten up their lending requirements in a bid to increase their loan portfolios and subsequently interest incomes. In this case, we could say that technological advances and the emergence of alternative lending solutions have forced the hand of the credit market to create a more conducive environment for businesses to thrive.
Affirm, the personal credit startup led by PayPal co-founder Max Levchin, has filed a stock authorization form in Delaware that would allow it to raise up to $210 million in new funding at around a $1.4 billion pre-money valuation.
Q: Are digital payments progressing as quickly as you hoped since you started PayPal?
A: They are moving at a good pace, adjusted for just how large and complicated the market is. It’s highly regulated and there are a lot of things to be careful about. The elephant in the room for the last seven or eight years has been cryptocurrency.
Q: What are some of the most interesting areas of digital payments?
A: A good example is international remittances, where companies can pop up and do well. They’re the guys who figured out how to do it much cheaper and much more transparently with much lower friction to both the recipient and the sender.
And while many workers typically wait anywhere from once a week to once a month to get the money their company owes them, new apps from financial technology startups like DailyPay, FlexWage and PayActiv are giving workers everywhere — including at Goodwill, McDonald’s and Uber — faster access to wages, and sometimes even on the same day they clocked their hours.
Proponents like Shah say faster access to wages can motivate hourly workers to put in longer hours (since they’ll reap the rewards more quickly) and can reduce their reliance on abusive payday loans with sky-high interest rates that can leave borrowers in an unending debt cycle. Indeed, taking out a single $100 payday loan for two weeks could eat up more than $130 out of your next paycheck, once you factor in interest and fees. Repeat that every two weeks and you are down hundreds of dollars for the year — equivalent to a full month’s rent for many.
With DailyPay — which is used by hourly workers at DoorDash delivery service, the Maids residential cleaning service and Kellermeyer Bergensons Services facilities management firm — employees can access 100% of their accrued and unpaid net wages for a fee of $1 to $3 per transaction. The money can be deposited directly into their bank account or put on a prepaid card or payroll card on the same day.
Another app called Earnin lets workers withdraw up to $100 a day and $500 per pay period in advance of receiving their regular paycheck. While it charges no fees, it does give workers the option of “tipping.” The service then withdraws funds directly from your checking account after you’ve been paid.
FlexWage, for example, only lets workers tap up to 70% of their unpaid wages between regular paychecks (for a $3 to $5 fee per transaction). PayActiv gives them access to 50% of their net pay for every 30 hours worked for a $5 fee.
Instant Financial lets employees withdraw half their daily net pay every day at no cost at all: Instead they charge employers $1 per month per employee enrolled in the program.
According to Goldman Sachs, the outstanding student loan balance has reached $1.3 trillion in face value, about the size of the high-yield corporate-bond market. This outstanding debt is not without problems, as it delays homeownership for some millennials and cuts their disposable income.
It’s the $190 billion of outstanding loans that are held within asset-backed securities (ABS) refinanced by private lenders such as SoFi.
“Recent marketplace student loan deals have featured borrower pools with average credit scores above 770 and average borrower incomes above $160k: a very different credit profile than the government guaranteed portfolios.”
The indirect auto business is in a state of transition.
TCF Financial in Wayzata, Minn., surprisingly walked away from the segment on Dec. 1, and others like Regions Financial and Fifth Third Bancorp have tapped the brakes for reasons ranging from competition and credit concerns to regulatory pressure and low yields.
Auto sales are also projected to fall by 7% this year, according to Autodata and the Bureau of Economic Analysis.
America’s financial literacy programs may be failing the very people who need them most, according to newly released research from Elevate’s Center for the New Middle Class (CNMC). Non-prime consumers learn and retain financial education material differently than their prime peers, the research indicated.
To be most effective for a non-prime audience, financial literacy curricula should:
Be trans-media. Use different media types to deliver different messages.
Address the unique challenges of non-prime Americans. A financial wellness program will be more effective for non-prime Americans if it directly addresses their unique challenges – things like income volatility and a lack of available resources. It also needs to identify outcomes that are relevant, attainable, and meaningful to them.
Highlight the next immediate steps.
Focus on building their credit. Non-prime Americans understand that their credit scores affect every part of their financial lives and they are hyper-focused on what they can do to improve them. Anchoring a financial wellness program on credit score management can actually lead non-prime consumers to understand broader financial management principles.
Payday Lenders – Like them or not, the payday lending industry was in for a huge takedown under the CFPB’s final rules that will restrict the way they do business.
Still, the industry now has a friend rather than a foe in the director’s office. And that can’t hurt for an industry that just weeks ago appeared to be headed for a major takedown.
California Attorney General Xavier Becerra on Friday joined attorneys general from 17 other states in calling on the Trump Administration to respect the independence of the Consumer Financial Protection Bureau.
PNC Financial Services Group plans to introduce a consumer lending product that it will market through both its mobile wallet and in new branches.
The $375 billion-asset Pittsburgh company intends for the new loan product to be available on a national scale, Chairman and CEO William Demchak said this week.
Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) is investigating Qudian Inc. (“Qudian” or the “Company”) (NYSE:QD) on behalf of investors who purchased Qudian American Depository Shares.
On October 17, 2017, Qudian issued 37.5 million American Depository Shares at $24 per share under a Registration Statement and Prospectus filed with the U.S. Securities and Exchange Commission, for gross proceeds of $900 million.
On November 21, 2017, Chinese media sources began to reveal that the personal information of millions of Qudian customers were allegedly available for sale on the black market. On November 23, 2017, Bloomberg reported that “Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.
VatorNews: How is technology influencing and impacting Ally’s auto business? Why is this technology integral to the company’s future in this arena?
Tim Russi: We’re a company that’s 100 years old, and you don’t become a 100 year old company in today’s world if you don’t have the ability to reinvent yourself.
Ally operates in what we in the lending world refer to as an ‘indirect model,’ so dealers originate the loans and leases and then we purchase them from the dealers. The speed and access of the indirect model has changed significantly in the last 15 years. The industry was very disruptive in creating online portals for dealers to be able to submit applications to lenders, so the lender didn’t have to be on site to do the loans.
VN: How have you seen technology in the auto space evolve in that short amount of time? How quickly is the space changing?
TR: You look at a lot of the lending models today and they’re going direct to consumers, and we’ve even got a direct model, because as you look at digital and the consumers doing shopping online, and wanting to buy, there’s no reason they shouldn’t be able to select and purchase the vehicle and obtain financing right at the ‘point of sale.’ If the sale’s going to be online, not in the dealership, we want to make sure we’re there and then fulfillment can occur at the dealership.
VN: How has SmartAuction changed the way dealers sell and buy vehicles? What kind of ROI have you seen?
TR: SmartAuction, we actually developed in 1999 and we’ve done over 5 million transactions. We have 20,000 vehicles that are available for sale or purchase in the marketplace. It’s a wholesale marketplace so dealers can post and buy.
As peer-to-peer lending and crowdfunding catch mainstream attention, folks looking for greater diversification and passive investment opportunities will engage in factional investing. The last few years have seen some extremely credible startups innovate in this space, and next year could lead to individuals moving away from sole ownership to fractional ownership via crowdfunding. – Sohin Shah, InstaLend
7. On-Demand Access For Renters
We often hear from renters that they are too busy to sweat the small stuff. They want immediate tour confirmations, like booking a restaurant on OpenTable, and near-immediate confirmation that they have leased, like booking a hotel. This real-time service expectation from a new generation of renters is exactly what we plan to cater to in 2018. – Anthemos Georgiades, Zumper
President Donald Trump weighed in on an investigation into scandal-plagued Wells Fargo, tweeting Friday that fines and penalties against the bank would not be dropped, and may actually be “substantially increased.”
Trump’s statement comes a day after Reuters reported that Mick Mulvaney, the president’s budget director and now acting director of the Consumer Financial Protection Bureau, was weighing whether the bank should have to pay tens of millions in fines already levied against it for mortgage lending abuses.
THE FUNDING Circle SME Income Fund (FCIF) is set to double the value of its assets after announcing plans to convert its conversion shares into the ordinary portfolio on 20 December.
The investment trust, which invests in loans on the Funding Circle platform, revealed in its half-year report that the move will increase the fund’s size to around £310m.
Currently the ordinary shares are worth £165.3m and the C shares, launched in April, are worth £142.3m.
Net asset value per ordinary share was 100.55 pence per share, representing an increase in the total NAV to GBP167.0 million from GBP165.0 million at the start of the half, which ended September 30. Net asset value total return was 12%.
For the C shares, net asset value was 99.82p, having only been issued in April. These shares are due to convert to ordinary shares on December 20.
ZOPA investors can now automatically re-direct their repayments into their Innovative Finance ISA (IFISA).
The peer-to-peer consumer lender confirmed this week that customers can gradually move their Zopa money into the tax wrapper without having to sell loans or pay extra fees.
Moving money into the IFISA will contribute to the investor’s annual tax-free allowance, Zopa said. However, once money is in the IFISA and has been lent out, those repayments will not contribute to the IFISA allowance.
Customers of nine of the biggest UK banks have received letters and emails in recent weeks informing them that their information can be shared, securely, with other firms. All they need to do is give their permission.
The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.
Most people stay loyal to their bank. The Competition and Markets Authority (CMA) found that only 3% of personal customers move their accounts each year.The UK’s competition watchdog says this so-called Open Banking regime will revolutionise many people’s financial lives, helping them get better deals.
How will it work?
In practice and in time, customers will probably see a dashboard on their bank’s mobile phone app.
This will show them how much money they have in their different accounts, with different banks, and eventually how much they owe on credit cards and store cards too.
A set of computer programming rules in the UK, called Application Programming Interfaces (APIs), will ensure all these new services and banks to talk to each other.
Applications for mortgages could be dealt with more quickly, as providers and brokers could access spending history, rather than ask for printed copies of the last three months of bank statements.
Anne Boden, of mobile-only Starling Bank, says customers will be able to see exactly what they bought for lunch each day, an app could analyse the calorie levels, and then cross-check it with how much exercise that person is doing.
Customers could be bombarded with invitations to try out a new service, and could quickly lose control of their financial data, according to Mick McAteer, of the UK’s Financial Inclusion Centre.
He describes Open Banking as “a daft idea”, which will lead to more financial exclusion for those already on low incomes.
Unscrupulous individuals would be keen to access this data and use it alongside information revealed on social media to build up a complete set of personal information.
The great scramble for yield has seen asset managers hunt down ever more alternative sources of income. Many are starting to move into the world of shadow banking, alternative forms of lending in areas where banks are not competing for business as much as they used to.
But evidence from the US suggests that the biggest opportunity probably lies in what is called direct lending, preferably through a structure that might mimic US business development companies. These BDCs are a large and diverse universe of tax efficient, listed, closed-end funds resident in the US. Collectively they are worth at least $100bn, according to Keefe, Bruyette & Woods, the investment bank, nearly all of which has been lent to mid-market private businesses in the US — capital that has arguably helped to improve the nation’s corporate productivity and profitability. Income-hungry investors have also snapped up these funds, with average yields well over 9 per cent per year.
Direct lending companies will service the mid-market secured lending space for loans above £50m but they, in turn, lack an outlet into the public markets typically afforded by BDCs in the US.
The Cambridge Centre for Alternative Finance’s report, entitled Entrenching Innovation, found the UK online alternative finance market grew 43 per cent in 2016 to £4.6bn.
“Abundance was particularly pleased to see our category (debt securities) confirmed as the fastest growing of all at 1,147 per cent year on year, with an accompanying 40 per cent increase in average deal size to £1.4m. It was also good to see hard evidence of investors in debt securities conducting their own due diligence and being comfortable with the risk/reward offers they found,” he said.
Anil Stocker, CEO and co-founder of fintech business finance firm MarketInvoice, says as awareness increases, which will be propelled by PSD2, so too will the use of alternative finance platforms.
The UK outranked all other major developed economies in terms of the number of businesses established last year, according to figures from accounting group UHY Hacker Young.
It became home to 218,000 more businesses in 2016, a rise of six per cent over year-on-year. Meanwhile, other major developed economies including France, Germany, Italy, Japan and the US saw an average two per cent rise in number of businesses over the year.
The Financial Conduct Authority has said it will introduce its new definition of advice from Wednesday 3 January.
As part of this it has amended its handbook to change the definition of financial advice, meaning only advice which offers a personal recommendation will be considered regulated.
Chinese banks may have insufficient capital to weather potential losses from the nation’s rapidly mounting credit risks, the International Monetary Fund said, in a broad review of China’s financial system.
With Chinese banking-sector assets, at $34.7 trillion, soaring to three times the size of China’s economic output, at $11.2 trillion, the IMF said that “holding more capital would strengthen the banking system and bolster financial stability,” according to a report on Thursday.
The IMF said China should consider boosting risk-weighted assets at its banks by 0.5% to 1% over the coming 12 months.
The Financial Supervisory Commission on Thursday gave its nod to guidelines on collaborations between peer-to-peer (P2P) lending platforms and commercial banks, in a move to support the development of emerging financial services.
Under the guidelines, banks may provide custodian and trust account services to P2P platforms, as well as transaction processing to meet rules against collection of deposits by non-bank entities, the commission said.
However, banks are barred from making recommendations on decisions about loan approval, interest rates and principal amounts.
The guidelines also regulate the so-called peer-to-bank (P2B) model, where banks participate as lenders on P2P platforms.
Ning Tang, Founder and CEO of CreditEase, attended the 2017 Fortune Global Forum on December 6-8 in Guangzhou. With the theme of “Openness & Innovation: Shaping the Global Economy,” the Global Forum convened world leaders, senior executives and prestigious scholars to discuss the dynamic frontiers of international commerce.
Tang stated that the Chinese FinTech industry still sees great potential in the coming decade represented by development in applications such as microloans for SMEs, crowdfunding, robo-advisory, insurance technology, and blockchain products and services.
Mumbai-based fintech start-up Kissht recently raisedUS$10 million in funding primarily from Fosun International, a Chinese investment consortium. The Krishnamurthy & Co team acted for and represented Kissht and its owner OnEMI Technology Solutions, led by Mumbai-based partner Sanket Sethia and associate Vwastav Ghosh.
The performance of small and medium-sized enterprise (SME) asset-backed securities (ABS) will remain stable across all major markets in Europe and issuance volumes will likely increase slightly, according to the 2018 outlook for European SME ABS from Moody’s. However, emerging political risks have created some uncertainty in affected markets, with a limited effect on securitised deals in the United Kingdom (UK), and potentially negative effects in Spain.
Billie is an invoice finance platform that launched earlier this year; the round was led by Creandum with participation from existing investors Speedinvest and Global Founders Capital; the company focuses on complete automation with no human interaction; It was co-founded by Matthias Knecht and Christian Grobe; Billie also secured a refinancing facility from a major German bank.
Trade.io’s solution is to develop an exchange platform for the sharing economy where traders can not only exchange tokens, crypto and fiat currencies and other assets but also share in the risk and revenue of the liquidity pool. To participate in the liquidity pool, members buy 2,500 Trade Tokens secured by financial assets in their trade.io wallets. Crypto and fiat currencies are accepted as collateral.
Trade Token owners share in 50 percent of the gains or losses of the liquidity pool, which are distributed to the wallets of pool participants. Besides trading fees and commissions, revenue is earned from investment banking and P2P lending fees.
Earlier this week, Harmoney announced there has been an increase in Kiwi SMEs that are tapping into peer-to-peer (P2P) lending for business cashflow.
The New Zealand online lender stated it estimates $100 million will be loaned to business accounts through its lending platform within the next six to twelve months. Currently, the average loan amount for business cashflow on its platform is $25,000.
Avoka Technologies, a fast-growing Sydney-based provider of customer acquisition services to financial institutions, has raised $16 million from investors, including prominent venture capitalist Roger Allen, as offshore revenue rises above 75 per cent and the headcount moves towards 300.
Avoka offers a software-as-a-service platform called Transact, which claims to enable institutions to launch new digital products in weeks rather than months, and monitors customer interaction with them once established.
BankWest’s mobile banking app was built on Avoka, while Mr Copeland said HSBC was about to launch new credit cards whose customer interface was developed through the platform.
Asia
Crowdcredit, Inc from Japan (Makoto UJIKE Email), Rated: AAA
Crowdcredit is a cross border online lending platform, which raises funds from Japanese investors and finances overseas financial institutions, SMEs, or individuals.
Crowdcredit, Inc. announced its completion of appx. USD3.5mn financing mainly from Femto Partners, one of the most influential venture capitals in Japan.
Crowdcredit track record;
– Established in January 2013
– Started raising funds since June 2014,
– Finances financial institutions, SMEs, or consumers in Peru, Cameroon, Estonia, Finland, Spain, Latvia, Lithuania, Georgia, etc.,
– Has registered investment user of 8,000+
– Has issued funds in total US$ 45.5mm, and
– Issues funds of US$ 4mm monthly with increasing trend.
Crowd-lending platform New Union has been awarded the full Capital Markets Service license (CMS) by the Monetary Authority of Singapore (MAS), and announced a potential deal flow pipeline of about S$2 million to be launched soon.
VALIDUS Capital announced on Monday that it has been awarded a full Capital Markets Services (CMS) licence by the Monetary Authority of Singapore (MAS), to deal in securities – a move that may give Singapore’s small and medium-sized enterprises (SMEs) more access to financing opportunities.
Moreover, about 41% of banked balance has now abandoned traditional channels.
MAS estimates fintech payments already takes up 20-50% of household consumption if the probability of payments disintermediation is high in the next five years.
A majority of 56% of the banked population is also willing to shift their savings into a pure play digital bank. An average of 41% of total balance has already been shifted.
Equity crowdfunding has become an increasingly popular way for early-stage and early-growth companies to tap investors attracted by the potential for high returns. An investor who has spent the last couple of years lamenting over the lacklustre performance of his stocks sees ECF as an investment channel that claims to offer even better returns.
P2P investing is garnering a lot of interest from would-be investors who are looking for something different and better than banks’ fixed deposits.
ECF means investing in very early stage businesses and as such, there are inherent risks to be aware of such as the likelihood of bankruptcy, in which case, you will not be able to recover your original investment.
With P2P investing, the most obvious risk that comes attached is of course the possibility of the borrower defaulting on the debt. As the reasons for not being able to repay the loan are typically financial, any subsequent attempts to recover your investment may prove futile if the business indeed has gone under.
Key tips to investing
1. Know where ECF and P2P stands in your strategic asset allocation.
2. Ensure you are investing in best of breed by comparing apple to apple when it comes to risk versus returns.
a) Ensure the platform is approved by SC.
b) Research each scheme on the platform as not every one is the same.
c) Read the fine print in the platform operator’s agreement and know the rights and liabilities of each party. Pay particular attention to the risk warnings in the agreement with regards to potential loss of invested capital and the unsecured nature of the investment (for P2P).
3. Diversification is key.
4. Monitor how your investments are performing.
5. Consider the time required before you see your investments come to fruition.
A new omnibus code that amends, amongst others, the Capital Markets Code (“CMC“) has been enacted by the Turkish parliament and published in the Official Gazette on 5 December 2017.
The CMC amendment primarily refers to reward-based crowdfunding (i.e. receipt of goods, reward or pre-sales in return or investment-based or loan-based crowdfunding) while donation-based crowdfunding where the investor donates the money with no return is still subject to aid and donations legislation. The said amendment limits crowdfunding to project or venture financing and only through crowdfunding platforms that are prior-recognised by the Capital Markets Board (“Board“).
Crowdfunding platforms can only operate in Turkey once they obtain the necessary permission from the Board.
Over the past decade, fintech startups in the region have raised over $100 million in funding, and investment is predicted to double by 2020, according to the State of Fintech report. Disclosed investment infintech had jumped 100% to over $35 million by October 2017 — Paytabs ($20million), Souqalmal ($10 million) and Beehive ($5 million) — compared to $18 million last year. The number of fintech startups also increased from 46 in 2013 to 105 in 2015. It is estimated that it will more than double again to 250 by 2020, according to the report.
Aside from the fact that the sector encompasses every tech startup active within the financial services industry, beyond the ones that specialize in online payments or money transfers, e-commerce in the region is set to quadrupleuntil the end of this decade. Additionally, despite the ubiquity of smartphones and internet connectivity, 86% of the adult population in the region is unbanked, while three in four GCC bank customers are ready to switch banks for a better digital experience.
Boosting financial inclusion is crucial for economic diversity and growth across the region. Moussa Beidas, co-founder of Dubai-based startup Bridg, which allows smartphone-to-smartphone payments using bluetooth, says fintech has become an innovative way to bridge the divide and provide cheaper services to the unbanked.
The rapid advancement in innovation is transforming the financial services industry, especially the banks, as technology has become an integral part of the business strategy — from initially being just an enabler to now actually streamlining operating processes.
The Middle East has amassed more than $100 million (Dh367 million) in FinTech start-up funding in the past ten years, with 105 FinTech start-ups launching in 2016, with hopes to raise $50 million in funding by the end of 2017.
Banks in the UAE remain the trendsetters, although other GCC countries are not lagging far behind, with several banks in the region embracing FinTech in many different ways.
Data firm TransUnion has launched Mobile Score Card, a mobile loan information service that enables lending firms to access a loan applicant’s credit status.
Mobile Score Card is a database solution that continually ‘learns’ based on mobile transactional history.
It also provides mobile lenders with customisable and reliable risk view of the mobile loans. The product targets banks with mobile lending solutions, savings and credit cooperative organisation and independent mobile lenders.
News Comments Today’s main news: 400K UK consumers may have been affected by Equifax breach. Independent Community Bankers of America letter opposing ILCs. RateSetter launches consumer hire-purchase product. Klarna partners with Wacom. Google enters digital payments in India. Payday type loans come to e-tailers in India. Today’s main analysis: Analysis of SoFi deal SCLP 2017-5 and Lending Club deal CLUB 2017-P1. […]
Did lending just change permanently? AT: “A must-read. This really gets to the heart of what the CFPB no-action letter means for alternative lending. An interesting question for me is, how could this impact the ILC discussion. Long-term, if this analysis is correct, the prospects could be good for online lenders to own banks.”
Former SEC head says SoFi may have mussed up chances to become a bank. AT: “I hope their decision doesn’t hinge on SoFi’s corporate culture under Cagney. The company will get a new CEO, and with that, a change in culture is likely to occur. More importantly, the decision needs to be based on the rule of law.”
Fat cat frat boys ape the worst of banking and tech. AT: “Interesting comparison between the SoFi incident and past bank problems focusing on SoFi’s lending practices that have been questioned, which is where the focus should be.”
As you may be aware, ICBA recently filed a comment letter with the FDIC objecting to the deposit insurance application of SoFi Bank, an industrial loan corporation to be chartered by the state of Utah. In our letter, we urged FDIC, for safety and soundness reasons and to maintain the separation of banking and commerce, to not only deny SoFi Bank’s application but also impose a moratorium on ILC deposit insurance applications. Furthermore, we said that Congress should close the ILC loophole because it not only threatens the financial system but creates an uneven playing field for community banks.
The news that Square also intends to apply to the FDIC for deposit insurance as an industrial loan corporation has significantly increased our concerns and made it even more urgent that the FDIC immediately impose a moratorium on approving deposit insurance applications for ILCs. As we noted in our SoFi Bank letter, the ILC charter is nothing more than a loophole in the law to circumvent the legal prohibitions and restrictions under the Bank Holding Company Act.
SoFi Bank and Square are applying as ILCs and not as commercial banks because their parent companies and their affiliates do not want to be subject to the legal restrictions and supervision attendant to the BHCA. Square, for instance, already owns a point-of-sale hardware appliance business and a food delivery service and therefore could not own a commercial bank without divesting its commercial activities. For safety and soundness 2 reasons and to maintain the separation of banking and commerce, the FDIC should deny SoFi Bank’s application and impose a moratorium for at least two years on future ILC deposit insurance applications, including any application by Square.
Bank lending regulations have rarely been thought of as dynamic or exciting but last night’s ruling by the Consumer Financial Protection Bureau (CFPB) to allow a lender to begin using alternative data in their underwriting could herald the beginning of a new era in lending and how banks work.
Why is this significant?
US banks have traditionally been guided by three key pieces of legislation, the Truth in Lending Act of 1968, the Equal Credit Opportunity Act of 1974 and the Community Reinvestment Act of 1977.These three acts were created before the era of personal computers yet still guide bank lending today.Since the rise of marketplace lending, which began in 2006, where borrowers go through a platform and investors fund those loans, it is becoming increasingly apparent that many of these regulations are in need of updating.
In an overly simplistic interpretation (and I am not an attorney), the regulator is giving an online consumer lender the right to underwrite loans using ‘alternative data’ which before was not in line with how the Equal Opportunity Act is interpreted by lenders.It is not clear what data will be allowed but in a CNBC interview, Upstart co-founder Paul Gu suggested that SAT scores, college grades and even college majors are data points which are helpful in predicting loan defaults.
So assuming the change stands, what is next?
As alternative lenders have more scope to use alternative data, machine learning complex data analysis is opening up an entirely new space for investors.Gone are the days where banks only competed against each other with marketplace lenders now allowing investors to allocate capital in a similar way to banks, choosing loans to fund based on their own ideas and risk profile. For now, this is mostly impacting consumer credit, but in the years to come, look for marketplace lending to impact all areas of lending as investors get more comfortable investing in this space regulations start to adapt.
SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive, says a close adviser and former chairman of the Securities and Exchange Commission.
But last week’s departure of Mike Cagney, the co-founder, chairman and chief executive, has effectively killed the application, said Arthur Levitt, a former chairman of the SEC, who began advising the company two years ago.
“This departure of Mike makes that a very questionable attainment,” Mr Levitt said, referring to the charter.
He noted that the FDIC had turned down this type of application “many times” before.
We turned first to SoFi, a consumer-finance unicorn that has raised more than a billion in equity, and over $2 billion in total. The company is now down a CEO after allegations of misconduct brought censure upon its CEO, Michael Cagney, and the company’s culture.
The article also described employee concerns about lending practices and alleged that investors had been misled over a 2012 financing.
SoFi complained in a public blog about “inaccuracies” in the Times report, but focused on defending its lending practices.
If the allegations are true, SoFi and LendingClub have many of banking’s worst attributes with Silicon Valley’s warts layered on top.
Meanwhile, the allegations of doctored loans and conflicts of interest at LendingClub were reminiscent of some of the excesses of the bankers who fed the subprime mortgage market.
Goldman Sachs has been pilloried for lackluster results from its trading division (paywall), so this week the bank gave investors a peek into its plans (pdf) for making more money. Surprisingly, the Wall Street powerhouse thinks it can generate as much revenue from online consumer loans—a market targeted by many fintech startups—as from buying and selling securities.
Specifically, Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations. Combined with new lending for the wealthy and companies, the bank expects to bring in $2 billion in additional sales from loans. Goldman co-chief operating officer Harvey Schwartz said it’s one of the fastest-growing lending platforms ever launched, even though he says the bank is taking its time with the nascent business. The bank’s digital consumer-lending arm called Marcus is expected to have lent out $2 billion by the end of the year.
Meanwhile, big banks have access to cheaper funds than peer-to-peer lenders like Lending Club or Zopa. With consumer deposits and the billions of dollars they routinely borrow in credit markets, banks can undercut the loan rates offered by smaller companies.
That said, Schwartz acknowledged that consumer lending isn’t immune to economic downturns, and analysts cited by Bloomberg were skeptical about Goldman jumping into a market outside its core expertise.
It might seem like it is only a matter of time before the tech giants knock on banking’s door. In fact, a recent World Economic Forum report posited that big tech companies present a greater challenge to banks than fintech startups. The report notes that regulators will accept a more “oligopolistic distribution of financial services products by tech firms.” Already, the fintech providers Social Finance and Square have applied for FDIC-insured banking charters, just as the Office of the Comptroller of the Currency continues work to develop its limited-purpose fintech charter. Are the largest tech firms next in line?
Incumbents still hold the upper hand. The risk of an Amazon or Google or Apple dominating the traditional banking sector is nowhere near a slam dunk.
In every scenario, the tech giants would need to persuade regulators to grant them some kind of charter access in order to effectively compete and level the playing field on funding costs. This would involve easing traditional limits on commercial firms owning banks, and potentially navigating opposition from members of Congress.
But more fundamentally, tech giants have had mixed experiences in rolling out financial services such as Google Wallet and Apple Pay. And despite the reported consumer skepticism of legacy institutions, banks still continue to maintain a high volume of customer relationships.
In the fallout of the Equifax breach, the leading credit bureaus are dealing with an overwhelming volume of credit freeze requests from consumers. While it is still too early to tell, it seems that the genie is out of the bottle. The breach is sparking additional focus on FinTech innovation to protect consumers (e.g., digital identity verification, disposable card numbers, etc.).
Beyond the headlines, SoFi’s growth engine continues. In Q2 2017 alone, SoFi funded $3.1 Bn in loans with $134 Mn in revenue and $61.6 Mn in adjusted EBITDA. Revenue and adjusted EBITDA were up 67% and 60% year over year respectively. The news of Cagney’s resignation coincided with SoFi marketing its latest personal loan deal which priced this Friday. Interest in SCLP 2017-5 was initially strong, however the bond priced somewhat wider than guidance.
SoFi’s Latest Consumer Lending Deal: SCLP 2017-5
After Mike Cagney’s resignation on Friday, the lead underwriter re-launched SCLP 2017-5. Since guidance was released before the critical NY Times article on Tuesday, we have a close (but imperfect) control to study the consequences of management upheaval on deal execution.
ABS investors reacted negatively to the news; the bonds priced 10 to 15 bps wider than guidance on Monday.
Source: PeerIQ, Company Filings, S&P, Kroll Bond Rating Agency
LendingClub’s Self-Sponsored Prime Consumer Deal: CLUB 2017-P1
This is the second self-sponsored deal from LendingClub, and it follows the success of CLUB 2017-NP1. LendingClub expects to alternate between prime and near-prime securitizations at least once a year going forward. Of the $363 Mn outstanding, approximately $100 Mn came from LendingClub’s balance sheet (a shift from prior management’s business practice); the remaining loans were contributed from investors.
The CLUB 2017-NP1 and CLUB 2017-P1 deals total to approximately $628 Mn in loans, yet LendingClub has facilitated almost $29 Bn in loans on its platform as of Q2 2017 making it a small part of LendingClub by dollars loaned but a meaningful portion of EBITDA.
Source: PeerIQ, Company Filings, Kroll Bond Ratings Agency
DiversyFund, a real estate crowdfunding marketplace, is selling pre-IPO shares in a Series A crowdfunding round through a Reg D 506(c) offering.
The Form D filed with the Securities and Exchange Commission (SEC) indicated that Diversyfund had sold $200,000 of a $6 million funding round as of August 31st. Minimum investments of $100,000 are being accepted from accredited investors only.
Fintech has become a major force over the decade since the financial crisis, with $12.8 billion in venture capital flowing into the sector in 2016 alone. But of the nearly 500 deals that took place in the U.S. last year, less than a dozen went to companies founded by women.
“It’s lonely to be a woman in fintech, especially as a CEO,” says Rachel Mayer, cofounder and CEO of Trigger, an automated tool for investing alerts.
At Anthemis, based in London, 56% of employees are women, a remarkably equitable gender breakdown that is consistent at every level.
Former banking executive Sallie Krawcheck is following a similar playbook with her female-focused investing service, Ellevest. Since founding the company three years ago she has raised over $50 million in venture funding.
A survey of U.K.-based fintech firms published last week revealed that women represented just 3 in 10 employees. Of fintech board directors globally, just 8% are women.
In an interview Friday, Upstart co-founder and CEO Dave Girouard explained why the fintech applied for the letter and how it works.
Is it fair to think of a no-action letter as a stay-out-of-jail-free card?
DAVE GIROUARD: We’re careful about not trying to interpret it in any way that is different than what the CFPB says it is. The letter makes it clear that they have reviewed what we do and how we do what we do and that they don’t find issue with it.
How do you feel about the agreement?
We’re pleased that the CFPB recognized the consumer advantage of alternative data and machine learning, the fact that it could make affordable credit more broadly available to more people.
So it’s not just about Upstart for sure — it’s the acceptance of these more modern techniques because they can and will benefit consumers broadly over time.
The new hire is accompanied by the completion of the company’s SOC 2 Type 2 Certification, which affirms that Sharestates now meets the security requirements and parameters for storing information on the cloud as laid out by The American Institute of CPAs (AICPA).
ReliaMax®, the complete private student lending solutions provider for banks, credit unions and alternative lenders, today announced at the 23rd Annual ABS East 2017 Conference a new whole loan trading service, ReliaMax Portfolio Placement, as an extension of its existing capital markets and liquidity programs. The ReliaMax Portfolio Placement service will facilitate qualified existing private student whole loan portfolios for sellers and buyers.
The ReliaMax Portfolio Placement service provides unique value to the private student lending marketplace in multiple ways including insurance, default prevention, credit analysis, and servicing. Some benefits include:
State-of-the-art servicing through ReliaMax helps buyers maximize the value of their portfolio, providing compliance and regulatory support and staffing to manage student loan-specific servicing requirements.
Loan insurance through ReliaMax Surety Company covers 100% principal and interest and mitigates risks, reduces defaults, and provides better cash flow.
Portfolio review and credit analysis provides guidance around the price at which the portfolio might transact.
ReliaMax has been involved in many third-party portfolio transactions. For example, in December 2106, MetaBank acquired a $151 million student loan portfolio which ReliaMax Surety Company now insures. The transaction also included the conversion of the portfolio servicing onto the ReliaMax Platform. Over the last three years, ReliaMax has provided insurance and/or servicing on 12 portfolio placement transactions.
Lendio, the nation’s leading marketplace for small business loans,today announced a partnership with Ocrolus, the emerging leader in bank statement review automation. The PerfectAudit API, powered by Ocrolus, analyzes uploaded bank statements with 99+% accuracy, replacing manual review with automation. Ocrolus technology allows lenders, for the first time, to review every potential borrower’s bank statement data automatically, regardless of whether or not the borrower provides sensitive bank login credentials.
In April, Lendio became the first lending marketplace to integrate with Ocrolus, whose clients include banks, alternative lenders, accounting firms, law firms, and government entities. The PerfectAudit API gives Lendio the ability to systematically combat bank statement fraud and conduct a hyper-accurate review for every potential borrower.
From peer-to-peer lending to online banking, the fintech industry is a rapidly growing area for technology investment. In the first quarter of 2017 alone, U.S. venture capital-backed fintech start-ups raised $1.1 billion across 90 deals, according to CBInsights Global Fintech Report. The only region to outdo the U.S. during this same period was Asia, which reported for the same group investment of $2.7 billion across 226 deals.
There exists a wide range of technologies that fall under the definition of fintech, and each is seeing significant growth. One such technology is artificial intelligence, which, according to the PricewaterhouseCoopers 2017 Global Fintech Report, 30 percent of large financial institutions are investing in. For example, another factoid from a separate PricewaterhouseCoopers report, projects that, by 2020, AI will automate a considerable amount of underwriting.
Mobile payments are another rapidly growing area of fintech, with TechCrunch reporting that there will be an estimated $60 billion worth of payments made on mobile platforms in 2017. The site also predicts that, by 2020, 90 percent of smartphone users will have made a mobile payment, which serves to underscore just how commonplace this fintech will be within a very short time.
A new report from Aon discusses the contemporary market for alternative risk premia: where it is, how it got here; where it may be headed.
The authors, Matthew Towsey and Chris Walvoord, begin with some very basic considerations of what ‘risk premia’ are. They are, on the one hand, the payments one receives for taking on a risk that others do not wish to hold (providing insurance), or they are on the other the winnings one pockets on strategies that take advantage of market anomalies.
How does NerdWallet create its content and recommendations? Do data and algorithms play a role in your platform? I’m curious about the company from a fintech perspective.
It’s actually a mixture of both — algorithms and incredibly smart, financially savvy humans power our recommendations, reviews and expert advice.
The company seems to simplify financial information for everyday consumers. Do you think NerdWallet has helped to democratize the space?
That’s the goal! I truly believe that a person that has spent no time at all thinking about personal finance and can’t afford a financial advisor, should be able to make the same quality of choice as the most financially savvy person in the country
Experts deliver new alternative investment advice and resources for individuals being impacted by the giant 2017 Equifax data breach. This includes all new episodes of SDIRA TV with national finance experts and investment advisors, as well as a side by side comparison white paper on retirement investing options.
Deeper concerns have surfaced as it was discovered three Equifax executives sold off substantial amounts of personally held stock before making the breach known.
Peer-to-peer lending involves a group of people coming together to lend money to each other. You can look for an entrepreneur peer who is willing to fund ideas similar to yours.
Online Lending
There are several online lending service providers. Good examples are Kabbageand OnDeck.These online lenders will process your application within hours as opposed to traditional lenders.
In general, those are new untested platforms, which may or may not do well for you over time. These investments have not been time tested during a recession. In addition, I do not understand very well how investment assets are segregated in those platforms, and how things would work out if a project you invested in fails miserably.
He’s talking about fintech, which has leveled the playing field for non-New Yorks to flourish in financial services. Inspired by emerging tech trends, Raznick and Benzinga are taking stakes in Michigan’s future by spearheading the new Detroit Fintech Association.
The nonprofit trade organization will enhance the community’s exposure, connect startups with national leaders and mentors, support talent recruitment and magnify the Detroit voice in U.S. regulatory discussions. The DFA also aims to improve financial literacy in the city through work with Detroit high schools and higher education institutions.
Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS), a provider of real estate, mortgage and technology services, today issued the results of its inaugural Default Servicing Survey, a survey of over 200 mortgage default servicing professionals. According to the study, nearly three-quarters (71 percent) of servicing professionals surveyed predicted FHA/VA loan volumes would increase within their organizations in the next 12 to 24 months; 41 percent believed FHA loans will offer their organizations the most portfolio growth over the same time period.
According to the U.S. Department for Housing and Urban Development, FHA loans accounted for over 17 percent of newly originated mortgages in 20161 and currently constitute 35 percent of all loans delinquent for 30 or more days2. As the issuance of FHA loans grows, so does the potential increase in volume of default assets. Thus, it is not surprising that 93 percent of servicing professionals surveyed stated that foreclosure/trustee and Claims Without Conveyance of Title (CWCOT) capabilities are important factors to consider when evaluating a vendor to manage growing default portfolios.
Servicing Professionals Cite Challenges Stemming from Costs of FHA Conveyance and Managing CWCOT Programs
Servicing professionals (29 percent) cited remitting fees, costs and financial obligations associated with FHA conveyance as the greatest challenge for effective CWCOT programs. For servicing professionals working with third-party vendors to manage CWCOT portfolios, 15 percent said overall vendor management is a challenge associated with managing CWCOT programs while another 15 percent pointed to timeline delays and increased costs due to attorney oversight; 11 percent cited not having enough in-house personnel on staff to effectively manage the program.
Third-Party Expertise and Central Coordination are Critical to Successful CWCOT Program Administration
In order to overcome the financial, regulatory and oversight challenges associated with their vendors’ CWCOT programs, servicers must carefully evaluate their third-party vendor strategy to ensure vendors possess the right expertise and resources to execute the program. Most servicing professionals surveyed (97 percent) said they are exploring options including a single-vendor approach to help achieve their objectives; 91 percent identified FHA asset management experience as an important criterion for vendors. When specifically evaluating single vendors, 72 percent of servicing professionals surveyed said consistency and efficiency in managing REO properties is a very important consideration; 69 percent also pointed to compliance management.
Equifax, the US credit-reporting company at the heart of a cyber-security scandal, has admitted that as many as 400,000 UK consumers may have had their personal information stolen.
The company said that while its UK systems were not affected by the massive cyber raid that targeted information for as many as 143m Americans, UK customer data “may potentially have been accessed”, because it was stored on US systems between 2011 and 2016.
If Equifax’s forecast is borne out, the data breach will be the biggest in UK cyber history, bypassing that of payday lender Wonga, which affected more than 250,000 customers.
RATESETTER has launched a hire-purchase (HP) product for individuals looking to buy vehicles.
Consumers will be able to borrow up to £25,000, but the peer-to-peer lender expects the agreements typically to be around £6,000. The terms range between 12 and 60 months, with APRs going from 19.9 per cent to 49.9 per cent depending on the customer’s creditworthiness.
Peer to peer lender Assetz Capital is reporting it has seen a year-on-year increase of 175% in the number of property development projects funded around the UK. The online lender says this rise comes following sustained growth in the funding pool for property developments, as investors hunt for a piece of the development market.
But as new types of Isa have emerged and new rules have been introduced, the situation has become more complicated.
And some Isa features – notably “flexibility”, which allows account holders to make withdrawals and then pay the money back in during the same tax year while keeping the tax benefits – have not been introduced by all providers, which has further muddied the waters.
A Help to Buy Isa, a type of cash Isa, is also an option. First-time buyers can deposit £1,200 in the first month and £200 a month thereafter to put towards a home purchase. The Government then tops up savers’ money by 25pc.
However, you can’t pay into a normal cash Isa and Help to Buy Isa in the same year, unless you choose a provider that allows you to split the cash. Nationwide and Aldermore both offer this option; they pay 2pc and 1.75pc respectively.
Lifetime Isas
The Lifetime Isa is the newest addition to the Isa family.
Consumers between the ages of 18 and 40 can use the accounts to save towards their first home or retirement. Up to £4,000 can be put away each year into either a cash Lisa or a stocks and shares version. Eligible savers can continue to contribute until the age of 50.
Hargreaves Lansdown, Britain’s biggest fund shop, and rivals including AJ Bell, The Share Centre and Nutmeg, an online wealth manager, offer investment Lisas.
Innovative Finance Isas
These Isas shield peer-to-peer investments, which allow consumers to offer unsecured loans to individuals and businesses through online platforms such as Zopa and Ratesetter, and certain “crowdfunding” investments, from tax.
Lending Works was the first to offer the new Isa, paying the same return as the firm’s existing accounts.
Zopa allows existing customers to sell their loans and buy them back within the Isa. They can also transfer their Isas with other providers to Zopa.
There are a lot more people in the world that can collectively lend micro loans on a regular basis than there are corporations that can regularly distribute loans above the value of a thousand dollars.
“A network of independent lenders committed to distributing micro loans could potentially rival long established financial organisations in terms of the combined value of peer to peer loans serviced to borrowers on a world wide scale” says Richard Ochieze, Managing Director at Ledgermark, LTD.
The case for Digital Collateral
The internet makes non repayment of loans a marvellously simple task for borrowers and as such; organisations like the Funding Circle, a peer to peer lending firm, are left wide open to have the profits of their retail investors depleted due to this lingering risk.
Traditional financial institutions have been able to maintain a fortress of checks and balances such as strict collateral requirements for both business and personal loans in order to provide themselves with a means of recourse should a borrower fail to repay his debt.
In this digital age in which peer to peer transactions are becoming the norm, this same form of protection must be made available to the average individual who wishes to loan his money out to borrowers in return for profit.
However, the question must be asked: how can a borrower pledge his house or farm as collateral via an online loans application?
Prior to the invention of the Blockchain such an asset did not exist and now that it does, the door has been opened to allow individuals based anywhere in the world to distribute and/or become the recipient of a secured micro-loan.
Robo-adviser Wealth Wizards, for example, typically charges £65 for advice on investments of up to £30,000, and 0.30%, or £300, for guidance on what to do with a £100,000 retirement savings pot.
A typical financial adviser, meanwhile, charges about £580 for telling you how to invest a £200-a-month pension contribution, or between £1,000 and £2,000 for at-retirement advice on your £100,000 pot, according to figures from UK adviser network Unbiased.
China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.
The China Insurance Regulatory Commission (CIRC) will step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the finance and accounting department of the CIRC.
Shanghai-based BTCC is the largest and first domestic bitcoin exchange in China. On September 14th, BTCC announced that it would immediately stop new user registration and close operation in China on September 30th.
The 2nd China Fintech Conference (2017) will be held on September 17th, 2017 in Beijing.
IDC Financial Insights announced the 2017 Fintech Rankings and Real Results at Finovate Fall New York 2017. This year, 4 Chinese companies won the honor to be named in the 2017 IDC Fintech Rankings. They are Ping An Technology (38), Hundsun Technologies Inc. (54), Pactera Technology International, Ltd. (55) and ECCOM Network System, Ltd. (64).
Last week, China’s financial and educational regulators announced to ban online lenders from offering loans to college students, and encouraged commercial banks to offer micro-credit products for the campus market. As a response to the call, Industrial and Commercial Bank of China (ICBC) has launched its own student loan product Rong e Loan this week.
Sofort has been bought by Klarna. Although everything should function as normal according to Klarna, since the switch the order is not going into “pending” after checkout — order status is “in checkout”.
commented
This is a good place trying to get this sorted. My questions are:
Is this a new shop or one that runs for a while and worked OK before?
From the screenshot it looks like Sofort sends notifications pretty often, is that true?
The expectation is that the first of those notifications should switch the status to pending and confirming that to Sofort so that they know you got it and then they wouldn’t notify you again, right?
commented
That’s exactly why this is failing. The Ubercart payment module wants to write into its table the value Aus sofort-Überweisung wird Klarna into the field method.
You should notify Sofort AG about this problem and I will do the same.
Today we are proud to announce a new partnership with global technology company Wacom® that further accelerates Klarna’s expansion in the U.S. Wacom is now bringing our simple retail financing solution to the world of creative interface technology and software.
Financing a purchase over time has historically been optimized for brick and mortar stores. But the online equivalent can often be an ordeal, with redirects, lengthy forms and unclear information. Our process only requires a few fields of information, and lets consumers know instantly if they qualify for the financing solution.
Digital technology has changed financial services. It has facilitated innovation, increased competition and made the mobile customer experience the key differentiator.
This embodies a strategic threat with McKinsey estimating that legacy financial institutions will see profits decline by up to 60% by 2025 if they fail to evolve, a figure which should be motivating incumbents to look outside of traditional practices for growth and sustainability.
Millennials and digital natives have turned away from traditional banks in search of mobile alternatives. They are drawn to the best products and experience, and banks with the right level of service can win over this large market. Mobile-only banks like N26 are leading the way.
SME lending also offers a significant opportunity for growth. The European Commission’s SME Performance Review estimated just under 23 million small and medium enterprises generated €3.9 trillion in value add and employed 90 million people in 2016-2016, and McKinsey has identified a $350 billion untapped lending opportunity within this sector.
One path is acquisition, which banks like BBVA have followed by acquiring companies like Finland’s Holvi and neobank Simple. This is an expensive option complicated by having to find a company with the right fit for the business.
Given the technology available, a cleaner option would be to build a digital banking spinoff which can operate like a FinTech.
The far reaching nature of the internet has allowed the myriad of local economies that exist in the world to become merged into one, global, interwoven marketplace.
Despite this, it is still incredibly difficult for people to get a loan from an international organisation – without offering some form of collateral and/or proving credit worthiness.
The average size of deposit needed to get a mortgage is 62% of annual income, and in London, it’s 131%.
As a result, only 20% of 25-year-olds own their home today compared with 46% 20 years ago – less than half.
If you have a bad (or no) credit history, it is virtually impossible to borrow from a mainstream lender.
Banks and building societies advertise temptingly low rates, but they only need to apply to 51% of successful applicants, so almost half of all borrowers pay a different rate – probably higher.
Director of Ledgermark LTD, Richard Ochieze, explains:
An alternative should be offered to people who are being let down by the traditional banking system. We believe that the Meridian system can do a lot to alleviate some of the problems that exist in today’s online lending market.
The Meridian service offers users the opportunity to procure a loan of up to one Bitcoin at a time.
To qualify for a loan users must pledge a certain amount of Meridian tokens as collateral.
Meridian tokens can be purchased during the ICO on 12 October 2017 and will then become tradable on all alternative currency exchanges.
Google is expected to launch a mobile payments app in India next week, according to several news reports. Google Tez, which means “fast” in Hindi is the anticipated name of the payments service, which Indian news outlet The Ken says is “largely fashioned on the company’s global product – Android Pay“.
As TechCrunch notes, “this is a big deal because Google hasn’t made a big push into payments outside of the US.”
In a first of its kind for India, ICICI Bank will partner with e-commercefirms to provide automated payday loan-type credit to customers at the bottom of the digital pyramid. Unlike other software-based loans, the digital credit planned by the bank will be available to non-customers and new-to-credit borrowers.
Speaking to TOI, Anup Bagchi, executive director, ICICI Bank, said that the bank would price these loans similar to credit card advances. In the West, payday loans are advances that fund the low-income individuals to make up for cash shortfalls until their salary. The difference in the ICICI Bank loan is that for the first month, the buyer will get free credit for up to 45 days. It is only if they do not pay on the due date that borrowers will be charged interest at close to credit card rates.
The bank will lend to new-to-credit customers based on their track record with the e-commerce provider.
“The RBI is concerned that this can go big and get out of control,” says Harish.
Faircent—which is backed by financial institutions like JM Financial, venture fund Aarin Capital and Mohandas Pai-promoted 3one4 Capital—is seen as the largest online P2P lender in India. Other names include Lendbox, Rupaiya Exchange and LenDen Club.
There are typically three models through which such lenders operate, says Aditya Kumar, founder and chief executive officer at Qbera.com, an online lender that began operations in February this year and claims to have a Rs 10 crore loan book. “While there are at least 30-40 P2P players, who connect lenders to borrowers, 15-20 do marketplace lending (where money is raised from banks and other financial institutions) and then there are loan aggregators who have been around for longer,” says Kumar.
While Kumar says the total P2P lending market size would be around Rs 25 crore, Rajat Gandhi, founder and CEO at Faircent, puts the figure at Rs 50-70 crore on an annualised basis.
Figures available with Peer2Peer Finance Association (P2PFA) suggest that the global P2P lending market saw cumulative lending of £8.5 billion during the first quarter of 2017, against £5.8 billion three quarters before. In the same period, the number of lenders grew by a fifth from 1.5 lakh to just over 1.8 lakh.
The discourse around P2P lending has always been centered around what it means for borrowers and the advantages they can derive. However, what gets missed is that P2P lending has the potential to be a great source of investment for the lenders contributing to their retirement fund.
P2P lending is an investment delivering multiple benefits when building a retirement plan:
1. Add Lending to your Portfolio Mix: The adage that talks of not putting all your eggs in one basket still holds true. An investor should not limit his portfolio to only a few asset class, but focus on investing across investment opportunities so that market fluctuations do not have a huge negative impact on their retirement funds.
2. Steady and high returns not Linked to Stock Markets: P2P lending adds to building such a diversified investment portfolio while delivering returns that are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, and SIPs.
Lenders on Faircent.com are earning gross returns to the tune of 18% to 24% per annum on an average by building a diversified loans portfolio.
3. Income Generation & Power of Compounding: Another reason that P2P investment does well is because investors can compound their earnings. Lenders are earning back part of their investment, both principal and return, every month.
MicroMoney co-founder and CEO Anton Dzyatkovsky on attracting new customers, recruitment issues and risks in greenfield countries.
Now that we’ve opened new offices in Myanmar, Thailand and Sri-Lanka, our decision to start with Cambodia can be seen as a definitive step which enabled us to embrace the largest community of unbanked people in the region, bringing the advantages of Blockchain as the key technology for global financial inclusion.
Cambodia is all about banks
For us as Europeans, the first surprise was the population’s absolute trust in local banks.
The US dollar is as used in Cambodia as the local currency is, and the exchange rate has remained stable for over 20 years. State regulators do not exercise particular pressure on the financial industry, and by the time we stepped into the game, 50 organizations had been involved in the consumer loan industry, each with an average capital of $1.5 mln and an ARPU of $5,000.
30-day overdue loans in Cambodia account for only 0.9 percent of the total, so the PAR ratio (portfolio at risk) is quite profitable (according to the local Central Bank).
Our Cambodian lessons
A growing share of the middle class due to the growth of GDP. For instance, Cambodian GDP grew six percent in 2016.
A market capable of generating cheap leads. We discovered all Cambodians belonging to the target audience have at least one active Facebook account, and for them Facebook often equals Internet in general: every national mobile operator provides free access to Facebook.
Dormant or non-existent competition. in Cambodia there were no paperless lending services without an escrow of land or real estate property.
Eager audience in need of a product. when we were checking out the market, we found only five percent of the population had a credit record. According to McKinsey, the number of ‘unbanked’ people in Asian region overall ranges from 65 to 80 percent of the adult population.
Collaboration at the local level. It helped us understand local customers and comply with local regulations (in this case you must be ready to assign 51 percent of your newly established company to a local partner).
Funding Societies, which started in Singapore in 2015, is one of the first peer-to-peer (P2P) financing companies to open its doors here in Malaysia in February this year. It is also present in Indonesia.
Wong, who learned about alternative financing while studying at Harvard Business School, says P2P is well-suited for the Malaysian and South-East Asian markets where there is a big gap in SME financing. He estimates financing needs for small businesses in Malaysia to be at RM80bil.
According to Research and Markets, the global P2P lending market was valued at US$26bil in 2015 and is projected to reach US$460bil by 2022, growing at a compound annual growth rate of 51.5% from 2016 to 2022.
Funding Societies has made it to the Fintech 250 list, which is recognised and regulated by Securities Commission Malaysia, to provide financing to SMEs. The company also provides flexible investment opportunities with rigorous risk assessment and returns of up to 14% per year for investors, says Wong.
So far, the company has done more than 800 deals and disbursed more than RM180mil in financing to SMEs in Malaysia, Singapore and Indonesia.
Taiwanese could soon be able to open bank accounts denominated in foreign currencies on the Internet after the central bank on Thursday gave its go-ahead to the plan.
Local banks could seek approval for the new accounts by the end of this year, or 60 days after the introduction of the new regulations, the central bank said in a statement.
Taishin, the banking arm of Taishin Financial Holding Co (台新金控) and the nation’s largest online lender by the number of accounts, told reporters that it aims to be the first applicant when the notification period begins.
Outsurance is to acquire a 25% stake in passive investment manager CoreShares, as the insurance company’s robo-adviser, Outvest, goes live.
The acquisition complemented Outvest, an online, automated advice business, the companies said in a statement on Monday.
In SA, financial advisers, to more effectively service their clients, are predominantly using these platforms, although there are platforms available to retail investors.
News Comments Today’s main news: Equifax cybersecurity breach. Goldman to take on UK retail banks. China cracks down on online lenders, cryptocurrency dealers. Klarna is testing credit cards with employeees. Today’s main analysis: CECL overview. Today’s thought-provoking articles: Consumers who go to Equifax for help after data breach may not be able to sue. The data behind Zopa’s lowered return […]
The Equifax cybersecurity incident. AT: “A letter sent to Equifax customers regarding the cybersecurity breach, and where to go for assistance.”
Consumers who seek help from Equifax may lose right to sue. AT: “Arbitration clauses are in place for a reason: They are an insurance policy for corporations against class-action lawsuits, and could save companies millions of dollars. If consumers sign them, they could be giving up their right to join a class-action lawsuit at a later date. Evidently, Equifax wants consumers to sign an arbitration agreement before it helps them rebound from data breach. I think the more important thing is that you get your privacy and security back.”
Square becoming a bank is brilliant. AT: “If it makes sense for any company to become a bank, it’s got to be Square. This article brings out the one huge benefit for companies like Square: If they become a bank, they may not longer need to partner with Fintech is no longer a boutique financing optiona bank. This could be why banks are so vociferous in opposing them. It would give Square a fair advantage.”
Goldman Sachs to take on UK retail banks. AT: “Might as well. The UK market is the one to beat, so if your plans are to be the premier international online investment bank, then you should compete against the early leaders. They’re in the UK.”
Online lenders, cryptocurrency deals feel the heat. AT: “It’s interesting that Chinese regulators are banning crypto-products, but not online lending where the biggest problem has been. Could this be about something else? Maybe their worried about how it will impact fiat currency.”
Klarna is reportedly testing credit cards with employees. AT: “This is an interesting approach. First, issue credit to your employees. If it goes over well, expand it to your existing customers, then go beyond those to the wider world. Klarna is getting serious about this banking thing.”
At Equifax, we recognize that consumers and customers expect us to provide superior data security, and we work hard to do that every day. Unfortunately, on September 7th, 2017, we announced a cybersecurity incident involving consumer information. This cybersecurity incident strikes at the heart of who we are and what we do. Above all else, our first priority is to support consumers and you, our customers, by doing what we can to make this right.
What happened?
On July 29, 2017, Equifax identified a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Equifax discovered the unauthorized access and acted immediately to stop the intrusion. We promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. We also reported the criminal access to law enforcement and continue to work with authorities.
What information may be impacted?
The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Criminals also accessed credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.
Additional Information:
We have found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases. In addition, we have found no evidence that this cybersecurity incident impacted Equifax’s core consumer or commercial credit reporting databases, including, ACRO, Workforce Solutions, including The Work Number payroll data, NCTUE, IXI and CFN.
To see if you are potentially impacted, you can click on the Potential Impact Tab
To enroll in complimentary identity theft protection and credit file monitoring services and how to find out if your personal information may have been impacted, you can click on the Enroll Tab.
To learn more about the complimentary offering, you can click on TrustedID Premier Tab. TrustedID Premier provides you with copies of your Equifax credit report; the ability to lock your Equifax credit report; 3-Bureau credit monitoring of your Equifax, Experian and TransUnion credit reports; Internet scanning for your Social Security number; and identity theft insurance.
To speak to someone directly, we have also established a call center at 866-447-7559, available every day (including weekends) from 7 a.m. – 1 a.m. EST, for individuals to ask questions.
On Thursday credit bureau Equifax said a data breach put personal information of 143 million people at risk. Now its response is drawing more outrage, as lawmakers and others accuse it of encouraging consumers who come to it seeking answers to sign away their chance to seek recourse in the courts.
Following the breach, which compromised tens of millions of Social Security numbers and other valuable data, Equifax set up a website to help worried consumers determine whether or not their information was at risk. That website encouraged visitors to sign up for a program known as TrustedID Premier, the company’s credit monitoring service, which provides automated alerts to credit changes and up to $1 million in ID theft insurance. That’s where the trouble began.
TrustedID’s terms of service include an arbitration clause, insisting that customers agree “all claims, disputes, or controversies…shall be finally settled by arbitration” rather than a court of law. Such clauses aren’t unusual for credit monitoring services — or indeed many other consumer products. But in this circumstance, it created the impression that Equifax was asking consumers it had harmed to surrender their legal rights — including becoming part of a class-action law suit — before it would agree to help them.
One key legal avenue that arbitration clauses typically close off for consumers is the class-action lawsuit. That could be significant for Equifax — at least on one proposed class-action lawsuit was already filed against the company late Thursday, according to Bloomberg.
The 143 million Americans whose information was compromised by the Equifax data breach may still be on edge even with the free credit monitoring service being offered by the company.
Everything from names, addresses, social security numbers and credit card numbers were hacked in the Equifax data breach.
Kuehner said right now the company is sending out letters letting people know if they have been potentially affected. They can also check online at equifaxsecurity2017.com.
However, it is not only the breach that has consumers concerned, it is the company’s response.
“We’re taking unprecedent step of offering every U.S consumer in the country a comprehensive package of identity theft protection, ecredit file monitoring at no cost,” said Rick Smith, Equifax Chairman, and CEO, in a statement released online.
This past Wednesday, FASB released an update to the current expected credit losses methodology (CECL) for estimating credit loss allowances. This new accounting standard, which was initially published in June 2016 (in conjunction with regulators such as the FDIC, OCC, and NCUA), will apply to financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt. Once in place, these assets must be held on the balance sheet net of an expected loss account. Changes are effective for fiscal years beginning after Dec 15, 2019, for all for-profit companies that file with the SEC.
Once firms adopt CECL, management will have increased discretion around forecasts and ultimately net asset carrying value. This represents a dichotomy for investors. Assets should be carried at more accurate levels and better reflect the organization’s financial position. However, management estimates will significantly affect the balance sheet and income statement.
The major change with the CECL methodology is that organizations are expected to include forward looking information when determining credit losses. Banks will need to calculate expected credit loss at the loan level for the entire life of the loan and then aggregate with similar instruments.
Since ECL is calculated for the life of the financial asset, rather than the annual rate, almost all held-to-maturity instruments that are not risk-free will have a credit loss allowance. These long-dated assets may appear more volatile than financial statement users are accustomed to because their impairment has large implications for the balance sheet and income statement. Under the new regulation it will be more important to have correct, auditable, and explainable expected credit losses.
Source: PeerIQ, FASB, FDIC
Overall, we applaud the coming changes to US GAAP and expect investors to respond favorably.
However, there is much more to this story. In fact, this strategic decision could be one of the best moves the company has made. Square’s decision could start a revolution and revamp the entire financial institution structure to address the changes in the transaction and lending environment.
Although the banking sector has tried, most banks still have too many fees and capital requirements to provide business accounts with their needs. Numerous freelancers or startups just can’t satisfy those requirements because banks are still designed with the larger business in mind.
More small businesses need smaller sized loans to tap into for their launches and expansion. Recognizing how peer-to-peer lending has grown together as an entire industry illustrates how ripe the financial industry is for more competition. Peer-to-peer lending is more personal, with a much needed boost to the financial sector in watching to find new ways to provide the much-needed financial support of smaller entities and businesses.
With these products, it makes sense that the company could become a one-stop shop for financial needs. To become a one-stop service requires obtaining a bank charter, which is what the company has now applied for under the moniker, Square Financial Services Inc.
While your average American doesn’t have much in the way of savings, the younger “millennial generation” is actually saving at a higher rate than any other generation. More than 80% of those “investment professionals” will then go on to underperform the market and get paid anyway.
If all of this sounds too daunting already and you want the easy way out, use Betterment.
Founded in 2013, Los Angeles startup PeerStreet has taken in just over $21 million in funding from investors that include Andreessen Horowitz to build “a marketplace that provides unprecedented access to high quality real estate loan investments“. Before you start getting too excited, take note that you’re going to need some cash to bring to the table. PeerStreet shows you some dropdown boxes when you create your account and unless you choose the one that says you make $300,000 a year or the one that says you have $1 million in assets, you’re not going to be allowed in. Those of you who were smart enough to major in a STEM subject are more likely to be squared away here while those of you who majored in underwater basket weaving should probably just stop reading right now.
Right away we can see that this is a property that is out of reach for the majority of Americans with a hefty $3.78 million price tag.
This means that the amount of money we could get from selling our property falls to around $3 million which still makes it very easy to pay off a $2 million loan. In fact, the only point we would start to worry is if property prices fell more than -53% over an 18-month period. This would represent a “black swan” type of event which has a very low probability of occurring. Of course there’s always the risk of PeerStreet going under but then you still have the property as collateral for the loan and you are first in line to receive payback should their property portfolio be liquidated. For providing everyone with this great service, PeerStreet takes a reasonable .75% fee which is paid each month alongside the interest payments.
The first thing to note here is that the price of entry is an extremely attractive $1,000. You’d be joining the 295 other investors who have already plunked down an average amount of $6,169 which brings the loan up to 91% funded. If you then went out and found 9 other properties to invest in, you’d have a nice little diversified portfolio of 10 various property investments that are transparent and relatively simple to understand (provided you took the time to understand the risks as we have done with this example), all for just $10,000.
The early days of peer to peer lending have morphed into a far more complex and data driven credit service that is competing against not just innovative Fintech startups but traditional lenders seeking to maintain relevance. Crowdfund Insider recently asked Lend360 organizers a few questions on their perspective of the online lending industry and what has changed – and what they expect going forward.
What has changed in the lending environment in the past 12 months?
The biggest change is that Fintech is no longer just viewed as a boutique financing option, but a key component of today’s lending market. For proof of this change one only needs to look at the push for a national Fintech charter.
Where do you see current opportunities?
As long as there is a demand for credit, there will be an opportunity for Fintechs to step up and fill the void.
New research, “The unGolden Years: Non-prime Baby Boomers,” from the Elevate Center for the New Middle Class indicates that non-prime Boomers are borrowing against their 401k accounts three times as frequently as prime Boomers do. The survey found that 4% of prime Boomers have 401k loans, while 13% of non-prime Boomers have borrowed against these retirement plans.
Less than half—43%—of the non-prime Boomers in the company’s research feel comfortable with their ability to manage their day-to-day finances, let alone prepare for retirement. Not that prime Boomers all feel confident, either, with 76% saying they can manage daily financial needs.
Elevate’s study, based on a survey of over 1,000 prime and nonprime consumers, found that non-prime Boomers are 14 times as likely as prime Boomers to have difficulty predicting monthly income—and 4 in 10 say they live paycheck to paycheck. They also tend to have difficulty predicting monthly expenses and are therefore more likely to experience unexpected expenses, the research says.
Among non-prime boomers, 7 in 10 run out of money at least once a year, in spite of generally decent employment levels—frequently, in fact, with more than one job apiece.
The study asked respondents how they would meet an emergency need for $1,200. Among the non-prime Boomer respondents, nearly half had difficulty coming up with a source of funds—1 in 8 could think of no solution at all.
22% of non-prime Boomers could cover the $1,200 surprise through savings—about half of the portion of prime Boomers who could do so.
22% said they could use a credit card to cover the surprise, but less than a third said they could pay off that borrowing before it began to accrue interest.
11% said they could tap family or friends for the money. Interestingly, only 2% of prime Boomers would go that way.
A small portion—4.4%—of non-prime Boomers would use payday lenders, deposit advances, or overdraft programs. Interestingly, in a separate question, 13% of non-prime Boomers said they’d used a payday loan in the previous 12 months.
HedgeCoVest is pivoting away from being a platform to help investors access hedge funds in favor of being a turnkey asset management platform. To reflect the change, the company is rebranding as SmartX Advisory Solutions.
And as part of the change, SmartX is bringing on 27 new investment strategies from firms like Blackrock, Morningstar Investment Management and Nasdaq Dorsey Wright. The models will cover strategies including ETFs, income portfolios, international equities, global/macro investing and U.S. equity strategies.
RIA in a Box Introduces Trade Monitoring
The technology company has a new employee trade-monitoring tool for its MyRIACompliance software platform that RIA in a Box says will help firms comply with Rule 204A-11, which requires the submission of securities holdings and transaction reports. The new tool digitizes the process, provides an interface for employees to electronically link applicable personal brokerage accounts, and provides chief compliance officers with supervision, administration and reporting capabilities.
Cryptocurrency IRAs
CoinIRA, a subsidiary of Goldco focused on digital currencies, is launching Digital IRA Bundles, new investment products that come prepackaged with combinations of popular cryptocurrencies such as Bitcoin, Litecoin and Ethereum.
Commonwealth Selects Quovo for Aggregation
Commonwealth Financial Network announced the completion of an upgrade to the account-aggregation features within Investor360 using Quovo.
We all know payday lenders, loan sharks, and credit cards profit when you go into debt and, therefore, they can be dangerous. But many of these companies conceal their danger with clever marketing. Beware: a debt trap by any other branding is just as dangerous.
Over at the Outline, writer Gaby Del Valle discusses one such company, Affirm. v
The difference between this service and a typical subprime loan seems to mostly lie in the marketing. Unlike other loans, Affirm is a bit more upfront about the terms you’re getting into.
Everyone is picking on Affirm here, but the issue is not unique to them. This reminds me of the recent fiasco with Navient, the student loan servicer that was sued by the Consumer Financial Protection Bureau (CFPB) over shady business practices like misapplying student loan payments. In the lawsuit, Navient said they have no obligation to act in their customers’ best interest. But that’s not exactly the message that comes across on their “Financial Tips Blog.” These companies use financial literacy to hook you into making bad financial moves.
High-interest debt, such as credit cards, sometimes seems impossible to pay off.
Peer-to-peer loans are unsecured — you don’t have to tie any collateral to them. They’re attractive to borrowers with high-interest rate debt because they provide concrete payoff dates and an option for a fixed — and potentially lower — interest rate.
In fact, according to peer-to-peer platform Lending Club, its borrowers — on average — secure a 24% lower interest rate when using its peer-to-peer loans to consolidate debt.
SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced the availability of Precision LM™ 3.0, the latest version of the company’s loan origination, servicing, accounting and asset management solution. The new version marks the culmination of significant input and engagement from Precision LM clients as well as SS&C’s proven ability to execute on its comprehensive development roadmap.
Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as “the world’s first [artificial intelligence] financial advisor.” The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.
“I started Pefin mainly because when you think about less affluent people, there’s really no access to financial advice aside from robos,” Joseph told CNBC in an interview recently.
“Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we’ll help you if we think it’s the right move for you” rather than generating fees for the company, she told CNBC.
Pefin, the world’s first Artificial Intelligence (AI) financial advisor, welcomed Catherine Flax as Chief Executive Officer today.
Flax has had a multi-decade, distinguished career on Wall Street, as the Managing Director and Head of Commodity Derivatives, Americas at BNP Paribas and as Chief Marketing Officer of J.P. Morgan. She was named the Most Influential Woman in European Investment Banking in 2012 and one of the 100 most influential women in European Financial Markets in 2010 and 2011. Flax has been a leader in the FinTech space, as a Board Member of leading blockchain company, Digital Asset Holdings, and for the last two years, as an Advisor to Pefin in matters of Marketing, Regulation, Business Development and International Growth.
CoverWallet, the winner of Best Insurtech Solution at the 2017 Benzinga Global Fintech Awards, has hired Paul Rosen, formerly the chief sales officer at On Deck Capital IncONDK, as its chief operating officer.
Insurtech reminds Rosen of what fintech looked like five to six years ago, he told Benzinga.
Pearl Capital Business Funding, a provider of direct financing to small and midsize businesses, announced Jared Kogan joined the company as chief revenue officer.
Kogan joined Pearl following a 10 year career in the fintech space, most recently serving as the director of OnDeck’s broker division where he funded 10,000 loans for over $650 million in volume and was able to grow production from $14 million to over $40 million per month. Prior to OnDeck, Kogan served as vice president at Newtek, the largest non-bank SBA lender in the country.
Typically, these lenders operate only on the web and promise quick assessment and disbursal with less bureaucracy. Some specialist bad credit lenders are ready to structure loans according to your convenience. You can also look at peer-to-peer lending platforms that give you access to individuals who are looking to invest their money in different ventures. Again, these platforms can get cash relatively more quickly into the system.
Goldman Sachs is looking to expand its retail banking business to the UK, replicating its mass-market offering in the US, as it continues a steady march from Wall Street to Main Street.
The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.
Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.
The data behind Zopa’s lowered return projections (AltFi Data Email), Rated: AAA
Zopa has an enviable track record of delivering net returns as evidenced by a more than 10 year track record of delivering 4-7% returns (after losses and fees).
INVESTORS rank the expected rate of return as the most important factor when choosing an investment provider, research shows.
Analysis by bond provider Minerva Lending, based on a poll of 1,000 adults with more than £50,000 to invest, found 61 per cent consider the rate of return as the most important factor when choosing who to trust their money with.
The research, released on Friday, does not refer to peer-to-peer lending but investors appear to be looking for many factors that P2P firms offer.
THE UK is facing a technology skills shortage that may worsen because of Brexit, Zopa’s co-founder and chairman has warned.
Giles Andrews (pictured) said that the peer-to-peer consumer lender’s decision to open a hub in Barcelona was partly due to a concern that it would be harder to recruit top tech talent following the UK’s departure from the EU.
Assetz Capital, part of the Manchester-based Assetz Group, has relocated from Newby Road in Hazel Grove where it occupied 3,000 sq ft of a 6,000 building, to take the newly refurbished Building 3 on a 10-year lease.
On Friday, Caixin, a Chinese business news outlet, reported that financial authorities have decided to shut down virtual currency exchanges.
Beijing appears eager to eliminate money laundering and choke off capital outflows by shutting down bitcoin exchanges and other virtual currency trading platforms. It is also tightening its grip on peer-to-peer lending, in which individuals privately contract to borrow and lend.
Some exchanges have temporarily halted trading in response to the report. Investors rushed to sell their digital currencies for cash, sending bitcoin about 20% lower versus the yuan at one point on Saturday, compared with the day before, to below 24,000 yuan ($3,703).
Regulators in China are said to be considering a move to close all domestic bitcoin and cryptocurrency exchanges.
As of now, no official announcements from regulators have been seen. However, there are reasons to believe the report may be authentic.
The work group was first launched by China’s State Department in 2016 to tackle market risks in the country’s financial technology industry such as p2p lending.
According to report from the Central Bank, in the second quarter of 2017, banking financial institutions have handled 36.247 billion electronic payment services, amounting to 545.58 trillion RMB, which was down about 4.4% from the same period of last year.
Actually, non-bank payments including Alipay and wechat Pay are growing rapidly. The Central Bank’s data also shew that in the second quarter of 2017, the scale of non-bank payment market reached to 570.95 trillion RMB. Compared to the amount of 23.35 trillion in the same period last year, it has significantly increased 34.87 percent.
On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China.
On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China. According to WeChat Pay, users of the new product will be able to make payments and transfer, send Hongbao, pay back credit card debt and be awarded with interest on their digital wallet balances.
As response to the latest regulation, NEO Council announced it would offer refunds for NEO purchased through its ICO.
On September 4th, China’s leading digital payment service Alipay announced to expand its operation to Norway.
Early this week, Proptech BBT announced that the platform had managed to secure RMB 60 million Pre-A funding from Hongdao Capital at the beginning of August.
Since Klarna received its full banking license this summer, there have been many questions as to how exactly it would be leveraged. One among many speculative scenarios includes launching the company’s very own credit- and bank cards.
Now there are some initial reports indicating that the credit card rumours are for real. Referring to internal documents it has been able to access, Breakit reports that the Swedish e-invoicing giant, valued at $2,5 bn, is testing credit cards in-house.
A memo sent through the company’s intranet has supposedly given Klarna’s Swedish employees the opportunity to test proprietary payment cards for a limited amount of time.
SME lender Grid Finance is expanding its offering to include a digital pension product targeted at the owners of small businesses. The company has engaged Conexim to provide the back office infrastructure on the product – as well as the regulatory umbrella – while Grid will act as distributor.
It is the latest piece of innovation being undertaken by the company, which is looking to build what chief executive Derek F Butler calls “a small business bank in all but name”.
The 10 selected entrepreneurs reflect the acceleration of the Swiss fintech scene in the recent years and the impressive quality of its startups. They will join the intense journey taking place from September 10 – 16 in New York.
Advanon, Phil Lojacono: Advanon in its basic version is an online platform that allows SMEs to pre-finance their open invoices directly through financial investors.
Algo Trader, Andy Flury: The startup provides an algorithmic trading software that allows automation of complex, quantitative trading strategies.
Creditgate24, Teddy Amberg: CreditGate24 is an independent Swiss company and a fully automated platform for lenders and borrowers which offers efficient, transparent and scalable credit processing at high quality.
KiWi (eBOP), Christian Sinobas: KiWi transforms merchant’s phone into a smart point of sale.
Monito (Global Impact Finance), François Briod: Sending money abroad? Monito is the Booking.com for money transfers, helping migrants and expatriates find, review and compare money transfer services.
OneVisage, Christophe Remillet: OneVisage is a leading cyber-security company developing biometric solutions to help financial services eliminating identity theft and increasing user’s digital experience.
SONECT, Sandipan Chakraborty: SONECT enables every shop in the neighborhood to act as a virtual ATM.
Consultancy firm Accenture found that 68% of global consumers would be happy to use robo-advice to plan for retirement, with many feeling it would be faster, cheaper, and more impartial than human advice.
Joe Ziemer, vice president of communications at Betterment, a US robo-adviser with more than $9bn under management, says: “The Betterment service takes your information and uses a series of algorithms to create an asset allocation plan, which might be, for example, 90% equities and 10% bonds for a retirement saver.”
Wealth Wizards, for example, typically charges £65 for investments up to £30,000, and 0.30%, or £300, on a £100,000 investment pot. Betterment charges 0.25% a year.
That’s peanuts compared to human advisers’ fees, which come in at about £580 for advice on a £200-a-month pension contribution, or £1,000-£2,000 for guidance on what to do with your £100,000 pot when your retire, according to UK adviser network Unbiased.
The young lender says the total amount of investments now exceed €1.8 million. Approximately €400,000 in loans were added in August. The average invested amount per investor gained 2.2% to the previous month at €3,270 in August. In regards to the number of investors using the platform, in August Robo.cash added 188 users. Currently, there are more than 900 investors in total who have joined the platform in the first six months of operation.
For the first time at FinovateFall, Mitek (NASDAQ:MITK) (www.miteksystems.com), a global leader in mobile capture and identity verification software solutions, will demonstrate Mobile Verify® for Lending. This new, five step digital lending experience enables lenders to verify identity and bank account information in real time for fast loan decisions with a simple process for borrowers.
When applying for a consumer loan from a desktop computer, the borrower will first log into their online bank account and agree to have their account information shared with the lender. A text message is then sent to the borrower’s smartphone directing them on how to take four photos: front and back of their driver’s license, a selfie and a photo of their pay stub or other trailing document, to complete the loan application process. This new digital experience is quick and easy for the borrower and provides the lender with real-time identity and bank account verification.
Moroku lands on the BNP Paribas Radar (Moroku Email), Rated: A
Dear friends
Last week Moroku was identified as one of the top 4 Fintech’s globally best positioned to take on the battle for Millennials
The financial technology boom has transformed the way over a billion people engage with financial services, particularly when it comes to making payments, but Larry Fink, chief executive of BlackRock, the world’s largest money manager, said that no company has yet managed to use technology successfully to get people investing for the long term.
Both in China, and in Europe and North America, a plethora of investment platforms and robo advisory services are evolving, but none has yet reached critical mass.
Eurasia, the platinum, palladium, iridium, rhodium and gold production company, is pleased to announce it has entered into a Memorandum of Understanding with GoldMint PTE (“GoldMint”), a Singapore based Limited Company.
More brokers will diversify into the SME loan space due to increased competition in traditional markets and growing demand from clients, the lender’s head of sales Michael Burke said.
“Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times.”
As well as providing a digital platform to facilitate the loan process, OnDeck’s underwriting policy also helps ease the broker’s burden, Burke told Australian Broker.
PledgeMe, the equity crowdfunding and peer-to-peer lending platform, has joined rival Equitise in signalling plans to enter the Australian market ahead of a law change coming into effect across the Tasman this month.
Co-founder Anna Guenther will relocate to Brisbane for six months to establish the Wellington-based company’s Australian arm, according to a PledgeMe blog post. PledgeMe will participate in the Queensland government’s HotDesQ programme, which provides networks, support, and funding for companies to relocate to the state.
SoftBank Vision Fund, the world’s largest pool of private capital, placed its second major bet on an Indian startup in a span of two months with its investment in OYO Rooms. The $250-million funding has taken OYO’s valuation from $460 million in August last year to between $850 million and $900 million.
Allow me to set the scene: in the wider region of Southeast Asia that surrounds Singapore, where Lattice80, our not-for-profit fintech hub that we launched last year is based, there is a huge unbanked population. KPMG estimates put the number at about 438 million. In poor countries like Cambodia, the population with a bank account falls to just 5 percent.
McKinsey did a similar study in 2010 on the world’s 2.5 billion unbanked. Asia’s emerging markets were identified as a hotbed of unbanked. The same study suggests that reaching the unbanked population in ASEAN could increase the economic contribution of the region from US$17 billion to US$52 billion by 2030.
Q WHAT IS THE ATTRACTION OF MULTI-ASSET INVESTING?
A It is the ability to combine a range of asset classes with different and largely independent economic drivers in order to achieve consistent return and reduce downside risk.
Years of central bank intervention in markets have depressed interest rates and left investors hunting for reliable yield. More asset classes beyond traditional equities and bonds have become more accessible in the past decade.
Q WHAT IS THE COMPOSITION OF YOUR MULTI-ASSET PORTFOLIOS?
More recently, we added peer-to-peer lending, mortgage and corporate funds that offer excess return over corporate bonds for a similar level of risk, litigation financing and credit funds. The world’s largest institutional investors have already diversified into these assets. Now, smaller institutions and individual investors can too, through our multi-asset strategies.
News Comments Today’s main news: PayPal invests in LendUp. KBRA upgrades SoFi Consumer Loan Program 2016-1. Revolut spent 7M GBP on incredible sales growth. Today’s main analysis: VCs may face cash crunch as more tech startups stay private longer. Today’s thought-provoking articles: FSB issues report on fintech. Inside Ping An’s massive expansion. Chinese players pursue $3.4T international digital payments opportunity. Auto manufacturers leverage […]
PayPal invests in LendUp. GP:”An outstanding partner to have for LendUp. With a little luck maybe Paypal and LendUp can also partner on customer acquisition.”AT: “I wonder why PayPal isn’t in the top 25 largest Internet companies. They’ve always had such great potential, but they never make the lists. Perhaps they aren’t diversified enough.”
Venture capitalists may face cash crunch, tech startups stay private longer. GP:”This could also be a hint that the companies private VC-driven valuations are not in line with the general public’s perception of their value”AT: “Not specific to online lending or fintech companies, but there is certainly an application to the alternative lending space. I can’t help but wonder if this is a long-term or shorter-term trend, but it seems to have started in the middle of last year some time.”
Global Debt Registry develops blockchain-based proof of concept for online lending. GP:”Slowly but surely we are starting to see the first blockchain applications that make sense.”AT: “There hasn’t been a single public ledger make a breakout, so these kinds of initiatives make me wonder if developments are based on demand or high hopes. I like this particular one, it’s interesting and innovative, but how many online lenders are asking for it?”
SEC’s robos handling is a big charade. GP:”The workings of a government are often obscure. I would call it politics. Perhaps one shoudl watch House of Cards TV series more often.”
Better Mortgage empowers consumers with a better price guarantee. GP:”I am not sure if this was necessary in order to convince people that a simpler and faster application is needed. In fact I usually advise companies not to price cheapest but to price as expensive as they can get away with as long as they provide real value to the users. Cheap has many issues: low margins, no profits, perceived lack of value, etc.”
Why Square is the ‘Tesla of payments’. GP:”I personally am not convinced that a Tesla car makes sense economically or practically over a gas or hybrid car at this time. There is a lot of hype and fashion into Tesla. I do have to recognize the Tesla cars look great though. I don’t think there is a hype behind Square, as it offers a really easy solution to accept credit card payments. Setting up credit card payments has always been a nightmare for all small businesses for no aparent reason. I am glad Square solved that.”
Revolut spent 7M GBP last year to fuel growth. GP:”What one needs to look at is not how much money was spent but what was gained and built through that. I am happy with a company spending 100mil GBP if they build 200mil GBP in revenue per year. A ration of spending 7mil for a revenue of 2.3mil is not impressive, however lets see the impact of this spent the following year.”AT: “Customer acquisition costs money. Remember, it took Amazon 10 years to make a profit. Now they’re the largest Internet company on the planet. While Revolut’s sales went up more than 500% in one year, they spent over half of their equity capital to do it. I see another funding round on its way.”
Are alt lenders ready to publish APRs? GP:”Many of them already are publishing APRs on their websites. I am not sure why this is a question. While it is not a requirement I think it’s good practice and the serious ones are publishing it.”
Building a bank is not easy. GP:”Nobody ever said building a company , a startup , or a bank was easy. This is why often people with no experience and who don’t know what it takes are better position to take such a project. They are not afraid of what they don’t know and often they even find new solutions and innovate withotu being constrained of the existing established solutions to known problems. Many VCs, because of this reason, invest in inexperienced CEOs seeing it as a strenght. “
PayPal Holdings Inc has invested in LendUp, a San Francisco-based startup that offers loans online to consumers who have been traditionally overlooked by banks because they are considered too risky.
LendUp said it had secured a strategic investment from the payments company on Wednesday. It did not disclose terms of the deal. PayPal confirmed in a statement that it had made an investment.
PayPal has been expanding partnerships and acquiring new services to gain advantage over rivals in a highly competitive digital payments market.
KBRA Upgrades the Ratings on SoFi Consumer Loan Program 2016-1 (KBRA Email), Rated: AAA
Kroll Bond Rating Agency (KBRA) upgrades the rating on the Class A notes issued under the SoFi Consumer Loan Program (SCLP 2016-1), a consumer loan ABS transaction which closed on June 27, 2016. The credit enhancement has built for the Class A notes since closing. While cumulative net losses are slightly above KBRA’s initial loss expectations, the transaction has breakeven loss multiples which are sufficient for an upgrade of the Class A rating.
The collateral in the SCLP 2016-1 deal currently includes $382.3 million of loans, as of May 31, 2017. The collateral in the transaction has amortized from the initial pool balance of $506.4 million at closing. The current credit enhancement levels are 31.66% for the Class A notes. Credit enhancement consists of overcollateralization, cash reserves, and excess spread.
Please click on the link below to access the report:
Private equity research firm Pitchbook reports startup exits—sales or mergers of companies delivering returns to shareholders—has fallen in recent years. The number and value of startup exits were down about 70% last year from their 2014 peak. Despite big IPOs of companies such as Snap, 2017 has yet to yield a bumper crop of new exits as companies stay private longer.
It’s not a new problem, says Scott Jordon, managing director at Glynn Capital, but it’s now more acute. The time it takes for technology firms time to IPO has stretched (pdf) from around five to eight years in 2000 to about 11 years today. Pitchbook’s Nizar Tarhuni says they’re seeing venture firms extend funds or negotiate longer periods than the standard 10 years to return money to their limited partners such as pension funds.
A resurgence in IPOs is still possible. Public investors extended a (mostly) warm welcome to the 11 or so tech companies that have gone public so far this year, including Appian, Carvana, Cloudera, Elevate Credit, Netshoes, Okta, Veritone, and Yext.
Loan data specialist Global Debt Registry has completed a proof-of-concept that utilizes the blockchain to provide investors with an immutable audit trail and a single source of core loan data.
The firm’s inaugural blockchain proof-of-concept (POC) lays the groundwork for providing investors and senior lenders in the online lending space with a safe and secure way to confirm loan ownership and collateral interests across companies within the ecosystem, GDR said.
In developing the blockchain POC, GDR worked with three leading blockchain platforms – Hyperledger, Ethereum and Chain.
Shortly after wrapping up its acquisition ofStonegate Mortgage Corp., Home Point Financial Corp. already announced it’s expanding its third-party origination channel.
The lender plans to increase its wholesale client base by expanding the geographic reach and number of third-party originators the channel will serve.
Home Point finalized its $211 million acquisition of Stonegate Mortgage back at the beginning of the month.
The rising popularity of robo-advisors is bringing increased scrutiny by regulators. At the same time, industry lawyers say they don’t foresee any substantive changes coming in the form of new rules.
This year for the first time, the SEC put online advice-giving on its list of examination priorities, raising concerns about “heightened risk to investors and/or the integrity of the U.S. capital markets.”
A key issue securities lawyers like Fein raises is that if the SEC insists its current rules adequately apply to robos – yet there seem to be shortcomings in how some robos execute their fiduciary duty – then any perceived enforcement gap will only widen.
But MacKillop, whose startup indie RIA manages about $50 million, scoffs at notions that computer-based investing can live up to the same sort of “best interest” standards for individual clients as brick-and-mortar advisors.
Better Mortgage officially rolled out the Better Price Guarantee — a promise to all of its borrowers that it will beat any competitor’s loan estimate by $1,000. If not, Better will actually give the borrower $1,000.
Better’s mission is to embolden consumers to confidently shop around while also de-risking one of the largest financial transactions they’ll ever make. According to a report published by Oliver Wyman, 71% of customers only get a loan estimate from one lender, which could mean that many home buyers aren’t actually getting the best price on their mortgage.
How the Better Price Guarantee works:
If the customer thinks another lender has a more competitive price, they can send Better the competitor’s Loan Estimate(LE) within three business days from the date on the loan estimate. If Better can’t beat the competitor’s LE by at least $1,000, Better will give the borrower $1,000 in cash when they fund with the other lender.
An LE is a standard form that all lenders are required to provide a consumer.
Better Mortgage may extend this guarantee to non-standard rate sheets.
What do you call a financial-technology company whose stock is up 75% this year as investors bank on its ability to bring a disruptive product into the mainstream? The “ Tesla of Payments,” apparently.
That’s the way to describe Square, according to Mizuho analyst Thomas McCrohan, who began covering the company on Tuesday. The key question for Square is whether it can scale its business up to serve larger customers, and McCrohan is optimistic about the payment processor’s ability to do so while still making money.
Tesla happens to be up 74% this year. Tesla and Square are the top two performers in the Barron’s Next 50 index.
Pros: Works across several types of mobile devices and bank accounts. Funds can immediately be used to shop with Venmo.
Apple
Pros: Service works with Apple’s iMessage, so users don’t need to download a separate app.
Zelle
Pros: Will work within the apps of the biggest banks such as J.P. Morgan Chase, Bank of America and Wells Fargo. Funds are deposited directly into bank accounts within minutes.
London-based Revolut, which offers a pre-paid international currency card, made a pre-tax loss of £7.1 million in 2016, its first full year of operations. Revenue was £2.3 million in the year to December 31, accounts filed with Companies House show.
The loss was largely down to “card scheme costs, acquiring costs, and user acquisition costs,” the company’s directors write in the accounts. In plain English, that means the cost of processing payments done on its cards, and the cost of getting people to sign up for the cards in the first place. The cost of sales jumped from £1.5 million to £7.8 million.
Staff numbers jumped from 7 in 2015 to 32, with staffing costs climbing from just under £300,000 to £1.5 million.
The startup has raised £12.1 million in equity capital to date.
The Financial Stability Board (FSB) has weighed in on the burgeoning Fintech sector of finance. The FSB has been analyzing “financial stability implications” potentially created by Fintech innovation. The FSB says it is specifically seeking to identify “supervisory and regulatory issues that merit authorities’ attention”.
The FSB stated there are currently no compelling financial stability risks from emerging Fintech innovations.
According to the FSB, ten areas of interest have been identified of which the following three are seen as priorities for international collaboration. These three priorities are viewed as “essential” to supporting financial stability “while fostering more inclusive and sustainable finance.” The three priorities are:
The need to manage operational risk from third-party service providers;
Mitigating cyber risks; and
Monitoring macro financial risks that could emerge as Fintech activities increase.
The other areas that merit attention include:
Cross-border legal issues and regulatory arrangements.
Governance and disclosure frameworks for big data analytics.
Assessing the regulatory perimeter and updating it on a timely basis.
Shared learning with a diverse set of private sector parties.
Further developing open lines of communication across relevant authorities.
Building staff capacity in new areas of required expertise.
Studying alternative configurations of digital currencies.
In May of last year, the Competition & Markets Authority (CMA) published its rather hefty “Retail banking market investigation” report. Buried among its “proposed remedies” was a provisional decision to require lenders specialising in unsecured loans and overdrafts of up to £25k for SMEs to use annual percentage rates (APRs) to show the cost of these products. The proposed measure is set to become a reality in August, according to multiple sources. But are the UK’s alternative lenders ready?
The impending APR directive will not affect merchant cash advance firms, such as Liberis, because merchant cash advance is not technically considered lending. Nor will it affect asset-backed finance firms like MarketInvoice.
GrowthStreet is another business lending platform that would be affected by the directive, had it not taken the decision some time ago to publish APRs of its own accord.
UK Challenger banks, like Atom, Starling, Tandem and Monzo, are building from the ground up to do things differently.
But building a bank is not easy. Sophisticated and diverse product offerings, consumer trust, and security are three vital components. And in this regard, the incumbents often have a head start.
In our portfolio, we have seen AukaPay partnering with Sparebank1 in Norway to provide a white label payments app, MarketInvoice joining forces with BNI Europa to enable SMEs to access more working capital on its platform, Crosslend working with institutions to provide investment opportunities in consumer loans, and iZettle in successful partnership with Santander.
And when talking challenger banks, we can’t forget to mention BBVA’s acquisition of Holvi last year.
While P2P lending still represents a small proportion of total lending volumes, in the UK, origination grew 36% year on year in 2016.
Zopa is approaching bank building from a different base to the other challenger banks, and a case in point of collaboration with the incumbents.
Hargreaves Lansdown has dropped its plans to set up a peer-to-peer lending platform.
The company, which was expected to launch both a P2P lending platform and a cash management service to clients this year, has now decided it will solely focus on the cash management service.
Hargreaves Lansdown chief executive Chris Hill tells Money Marketing that despite P2P being “interesting”, the firm would rather focus on the new savings proposition because it is “a much bigger market”.
P2P lending seems to be a novel and definitely, profitable investment opportunity. It is becoming more and more popular and so there is a constant boost in the number of lenders who are getting profitable returns from this investment option. Here are a few essential steps for making money from the P2P investment.
Step No.1: P2P investment should be treated as an extra element in the overall financial portfolio
You must do ample research, deliberate and then come to a decision about what all should be included in your financial portfolio. You must possess a diversified and comprehensive financial portfolio. P2P lending seems to be a wonderful addition to this portfolio.
Step No. 2: Set a target and attain it
A profit of 2 percent over a 12-month deposit seems to be realistic. The two percent would be paying for the risk factors including investment in time.
Step No.3: Fortify your financial foundation
In order to make an impressive profit in your P2P investment, you must have a fantastic and truly solid financial foundation. This is certainly not a getting rich fast scheme but eventually, you could expect good returns.
Step No.4: Create a comprehensive system
Create a comprehensive system for investing in borrowers that is based on important information which is available, and is relating to the borrower.
Almost 30 years after founding Ping An, Ma is ambitiously broadening his supermarket of financial products, much like U.S. financier Sandy Weill did as chief executive officer of Citigroup from 1998 to 2003.
Ma founded Ping An in 1988 in Shenzhen, the financial hub of southern China, which lies just north of Hong Kong’s border with the mainland. Over the past five years, the company has climbed onto the list of the world’s ten largest insurers, now ranking No. 4 behind France’s AXA, Germany’s Allianz, and U.S.-based MetLife in terms of assets, according to Relbanks.com. Though Ping An’s insurance assets rose 17 percent in 2016, to $802 billion, the company’s double-digit profit growth is benefiting in part from a diverse group of revenue streams, including banking, securities, asset management, wealth management, private equity, and, more recently, China’s booming arena of Internet finance.
Ping An saw 11.7 percent revenue growth, with gross earnings reaching a record high of 774 billion yuan ($112 billion), and a 15 percent growth in profits; net earnings rose to 62 billion yuan. About 56 percent of the group’s profits were derived from insurance, down from more than 80 percent a decade ago. The rest came from banking (20.6 percent), asset management (15.5 percent), and Internet finance (8.3 percent).
Among the company’s most touted technology successes is the 2011 founding of peer-to-peer lender Shanghai Lujiazui International Financial Asset Exchange Co. Lufax, as the company is known, has become an e-commerce giant for finance in China, the world’s second-largest economy. It’s the country’s biggest online marketplace for wealth management products: Last year more than 7.4 million individual and corporate investors used Lufax to purchase 6 trillion yuan worth of investment products from Ping An and thousands of other Chinese financial institutions.
A new study from Juniper Research highlights the increasing dominance of Chinese companies in digital payments, with players such as Alibaba, Tencent and UnionPay seeking to bolster their revenues through international expansion.
The research includes the latest Juniper Leaderboards, highlighting best-in-class players in key payments arenas, including PayPal (for eWallets), Worldpay (for payment service providers) and Vodafone (for telco payments in emerging markets).
The complimentary whitepaper, Who will Own the Digital Payments Sector in 2021?, is available to download from the Juniper website together with further details of the full research and the attendant IFxl (Interactive Forecast Excel).
Hong Kong’s role as a global financial hub may be under threat unless the city can embrace technology and adapt quickly to the tectonic changes that have taken place in the financial landscape in the two decade since its return to Chinese rule, experts say.
Hong Kong’s greatest moment of innovation was in 1997 with the Octopus card, a smart-card payment system that is now a ubiquitous part of daily life. Two decades since, the city has not made further progress and has lagged mainland China in exploring new forms of electronic payment such as Tencent Holdings’ WePay or Alibaba Group Holding’s Alipay.
Hong Kong’s existing banking model would change dramatically with the rise of fintech, similar to how Amazon.com revolutionised America’s retail industry, he said.
For Hong Kong to succeed as a fintech hub, regulators should license more companies to handle clients’ money to accelerate innovations in fintech and wealthtech, or the use of technology for wealth management and investing, he said.
“More than 70 of the world’s largest 100 banks are in Hong Kong, and this gives the city a big advantage because in fintech, the majority of the customers are going to be banks,” he said.
As many as 82 per cent of incumbent banks and financial institutions plan to increase partnerships with fintech companies in the next three to five years, according to a fintech survey in Hong Kong by PwC this year.
The People’s Bank of China (PBoC) is releasing new details about a forthcoming five-year development plan focused on its strategy for advancing technology use in the country’s domestic financial industry.
According to the announcement by the central bank, the PBoC intends to actively push forward the development of new technologies such as blockchain and AI. It also plans to strengthen its research on applications of fintech in regulation, cloud computing and big data.
In fact, the FinTech Association of Hong Kong (FTAHK) had its official launch on June 28, underscoring the point that financial IT innovation is no longer restricted to New York City and its concrete canyons or Silicon Valley in Northern California.
There will be committees taking on key sectors such as:
The thinning margins in the automotive industry are making a strong case for vehicle original equipment manufacturers (OEMs) to explore revenue streams beyond sales and periodic maintenance. As customers become accustomed to digital transactions, OEMs will look to tap the hitherto underutilised fintechservices segment to generate additional revenues. Active partnerships with fintech companies will enable OEMs to offer multiple use cases that enrich in-vehicle experience, which will ultimately influence customers’ purchase decisions.
Fintech in the Global Automotive Industry, Forecast to 2025 is part of Frost & Sullivan’s Automotive & TransportationGrowth Partnership Subscription. The study examines key application areas of fintech in the automotive industry: leasing and finance, insurance, digital retailing, digital payments, and automotive services. Europe, followed by North America, is anticipated to lead in digitising finance, and North America, followed by Europe, in automotive service investments. The average investment in fintech is estimated to grow from $16 million in 2016 to $230 million by 2025with the emergence of digital car retailing and new business models in insurance.
The synergies between automakers and technology companies will power next-generation financial service infrastructure. Even though fintech partnerships with big banks slow down transactions, it is important to note that banks manage almost 32% all new vehicle financing in North America. Besides:
The competition for market share between banks and captives finance companies is expected to digitise new car sales and result in a $1 trillion auto financing market; and
Fintech will monetise services based on subscription models and on-demand vehicle features.
The LHoFT, Luxembourg House of Financial Technology, and LATTICE80, the world’s largest Fintech Hub located in Singapore, are excited to have signed a Memorandum of Understanding (“MOU”) at Money 2020 Europe, setting a foundation for collaboration between the two centres.
This Memorandum of Understanding provides a framework to intensify the cooperation between two leading financial centres with a specific focus on Fintech and driving digital transformation in financial services.
Splendit is a Swiss fintech firm dedicated to broker loans to students paid for by financiers.
The company has decided to link up with Blockchain-fintech Lykke, Splendit said in a statement today.
Thanks to the deal with Lykke, Splendit henceforth will be able to finance foreign students by sending them their loans via the Lykke Wallet. Florian Kuebler, the co-founder of Splendit, says that this will save transaction costs and enable crowdlending across the globe.
Willis Towers Watson (WTW) and Workinvoice have signed a collaboration agreement exclusively with the aim of bringing more and more Italian companies on the commercial credit market run by the Italian Fintech company.
The Workinvoice activities enable companies ‘ access to a particular market to obtain immediate liquidity, and to protect themselves from payment risks through the sale of its trade receivables to Italian and international institutional investors “ .
MPOWER Financing (), an innovative fintech company and provider of educational loans to high-potential, international students, recently appointed Rohan Tibrawalla to the position of Country Director-India to oversee the company’s operations in the region from its soon-to-be-opened office in Bangalore.
In his new position, Tibrawalla is responsible for expanding and executing MPOWER Financing’s operations, marketing and business development strategies as well as for managing the loan portfolio and debt and equity capital sourcing.
MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing loans and other resources necessary for students to complete their undergraduate or graduate studies.
Nadeem Syed, who heads mega fintech firm Finastra, believes regulators worldwide will need to evolve guidelines for the emerging sector (fintech) but the challenge for many financial services firms would be to navigate the new environment and also scale services.
What are your plans in Asia Pacific in terms of expansion and growth after the merger and how has the journey been in Asia so far in terms of revenues and capturing markets?
We have long been committed to Asia Pacific and continue to see great opportunity across the region with double-digit growth rates. Developed and growth markets of Asia Pacific are successfully riding the digital wave especially with the tremendous opportunities that lie ahead of us in Indonesia, Myanmar, Thailand and China to name a few.
Misys has over 400 customers that cut across from Japan to Australia and we see tremendous opportunity to leverage our strength in the region to bring the D+H products to market, especially payments and cash.
Over the years, how have you seen Asia’s competitiveness in fintech being transformed? Has that been affected by the rivalry between region’s financial centres – Singapore and Hong Kong?
The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on.
The challenge for all financial services companies is to navigate each jurisdiction’s new or upcoming regulations on fintech while translating their various innovations into services that can be scaled up and rolled out in a safe and reliable manner.
What kind of competition do you see from the internet giants like Baidu or Alibaba are fast emerging as fintech players worth noticing. What future do you see for Chinese fintech industry?
China’s internet giants are increasingly looking at fintech as it is a complementary sector that helps create a tighter online ecosystem for their customers. They are mostly focused on personal banking and payments solutions, which means traditional banks need to concentrate on evolving their own digital and online presence.
As the fastest growing region, do you see Asia emerging as a digital champion anytime soon. If yes, what will help to bring it and where are the major challenges?
Many countries in Asia are seeing exponential growth in the number of Internet and mobile device users – this has a direct correlation to the boom in digital or online banking, as well as other services being carried out online. Digital platforms mean that rural populations now have easy access to services previously unavailable to them, but the challenge is always how to ensure these platforms are safe and secure as cyber criminals get more sophisticated.
Fujitsu today announced it is commencing sales in Japan of cloud-based solutions for lending and leasing businesses. Developed by US-based Cloud Lending Solutions and known as the CL Series, the solutions will be deployed and operated as Software as a Service (SaaS) with the support and operations services of Fujitsu technicians with expertise in financial systems. This is the first time services from Cloud Lending Solutions will be available in Japan.
ALT Corporation, a subsidiary of Yayoi Co., Ltd., Japan’s largest accounting software company, has decided to become the first Japanese customer for these solutions. ALT is using these solutions to set up a unique online lending business, with plans to begin trial lending in October 2017.
With the goal of offering solutions to transform business using Fintech to customers at financial institutions around the world, on July 12, 2016, Fujitsu signed a Memorandum of Understanding (MOU) with Cloud Lending Solutions for a strategic partnership.
The CL Series is a set of cutting-edge cloud services offered as SaaS, which digitize a suite of business processes for lending and leasing businesses, from applications to reviews, contracts and collections.
Canadian FinTechs that made the list include Wealthsimple, which recently announced its UK expansion and raised a $50 million Series B; Montreal-based Blockstream, which raised a $55 millionSeries A in February 2016; and Toronto-based Wave, which raised $32 millionfinancing round from RBC, Portag3, and other investors in May.
The list also includes Vancouver-based Trulioo, which produces ID verification software for compliance and to fraud risk mitigation; Toronto-based Financeit, a cloud-based point-of-sale platform; and Toronto-based Street Contxt, which raised a fresh round of funding from 8VC, Point72 Ventures, Palm Drive Capital, and Portag3 Ventures in April.
News Comments Today’s main news: SoFi to apply for ILC. FC exposes 6K US SSNs. Alipay launches in US. CFA finance exams to gauge knowledge of AI, big data, robo-advice. LendInvest shutting out retail investors. PayU invests 110M Euro in Kreditech. Today’s main analysis: OnDeck’s recovery plan is paying off. Today’s thought-provoking articles: 92% of finance pros not confident advising on […]
SoFi to apply for bank charter in the next month. AT: “This is interesting. I wonder if the controversy over the OCC Fintech Charter had anything to do with the decision to pursue this route at this time.”
Funding Circle exposes 6,000 US SSNs. AT: “Data breaches are one thing. Mishandling data is completely avoidable and a sad testimony to how important it is to guard personal information. This is a sacred trust. While it’s possible to win back the trust and loyalty of customers after such an incident, it is difficult. This is the type of carelessness that puts a stain on the entire industry.”
OnDeck’s recovery plan is paying off. AT: “I have to hand it to Business Insider. They are getting very creative, and clever, in approaching how they sell their reports.”
Alipay launches in the US. AT: “Digital payments competition in the US is about to heat up, big time.”
With an eye on providing banking services later this year, online lending startup SoFi is planning to apply for an industrial bank charter in the next month, according to CEO Mike Cagney. If approved, it would become the first company to receive a new industrial loan company (ILC) charter in a decade.
Industrial bank charters, or ILCs, provide a way for companies that aren’t banks to provide banking-like services to customers. And while ILCs have been around for more than 100 years, they’ve fallen out of vogue in the last decade due to increased regulation against them.
According to Cagney, that’s because companies like John Deere and Harley-Davidson used ILCs as a way to take advantage of FDIC-insured deposits to fund the financing arms of their businesses.
By combining a banking option with its lending products, Cagney said SoFi could offer discounted rates to members who set up auto-pay between their accounts. And with a SoFi-issued credit card, he said the company could potentially use its reward program as a way to help users pay down student loans.
As a result, the company is working on other ways that it could begin offering a SoFi-branded banking product later this year. Even if the company is not able to get approval for an industrial bank charter, it would still be able to offer checking, deposit and credit card services through a regional banking partner.
An upcoming London-based business loans provider, Funding Circle, left a database containing 6,000 social security numbers of American clients exposed to anyone on the internet, it emerged Wednesday.
The company, which has helped companies bypass banks to borrow more than $3.5 billion from its peer-to-peer investor network since its founding in 2010, also admitted a misconfigured Amazon Web Services database exposed more than 13 million marketing email addresses for individuals, businesses and government organizations in the U.S., as well as more than 45,000 notes summarizing conversations with customers and partners.
According to the firm that uncovered the unsecured database, Kromtech Security, credit scores and business loan histories of clients were also available to anyone who knew the eight IP addresses of Funding Circle’s American branch.
Additionally, private data sets Funding Circle had purchased from third parties and credit agencies including Dun & Bradstreet, Experian and Powerlytics were left open.
Alipay, part of internet conglomerate Alibaba (NYSE:BABA), has launched its payments platform in the US thus challenging other established players in the space such as Apple Pay. Alipay is partnering with First Data (NYSE:FDC) on the US expansion.
Alipay is currently used by more than 450 million people globally and 200 financial institution partners. . Well established in Asia, Alipay is now crossing the Atlantic following the recent announcement by competitor WeChat Pay, owned by Tencent, that is expanding into the US as well.
Fending off a challenge from dissatisfied hedge fund investors, OnDeck Capital Chairman and CEO Noah Breslow was re-elected to the company’s board Tuesday by an 84% to 16% margin.
A $530m consumer loan offering from online lender SoFi is expected to garner interest from a bigger group of investors, with S&P Global Ratings tapped to rate an offering from the issuer’s consumer loan shelf for the first time.
Upstart — a five-year-old online lender — bets you can (and you must).
In fact, more than 25% of Upstart’s current loans are fully automated, Bank Innovation has learned.
The lender utilizes AI and machine learning algorithms to analyze consumer data points, including education history, employment history, social media, and even web behavior (during the online application process), in order to make underwriting decisions. The company has originated almost $700 million to date, from about 60,000 loans.
Lin founded the company in 2007, with the goal of creating a customer-friendly alternative to trickster credit score services. He has since raised $386 million, vaulting Credit Karma into the ranks of Silicon Valley’s startup unicorns, and figured out how to turn a profit while helping nearly 70 million Americans discover financial services products that meet their needs.
Create a Credit Karma account, and you can monitor your credit score for free. Based on your credit history, the company then generates targeted offers for financial services including credit cards, student loans, and auto loans. If you opt in to one of those offers, Credit Karma gets paid by a referral fee by the bank or lender—a new credit card customer, for example, could be worth as much as $700. In 2015, the company made around $350 million.
Now Lin is embarking on mortgage refinancing recommendations, Credit Karma’s second major launch in less than six months (a free tax service launched in January, in time for April 15 filing).
The company is operating the service in 26 states, with plans to expand nationwide in the coming months. By Lin’s reckoning, 20% of U.S. mortgage debt is represented on the Credit Karma platform, and roughly one-third of homeowners would benefit from refinancing—a major opportunity.
Assume for a moment that most of the services legacy financial companies provide today could get competed away as innovators extend reach and scale across the landscape of financial products. If so, big financial institutions will look to re-establish a foothold. Their only sure competitive advantage seems to be the regulatory compliance (i.e. anti-money-laundering and know-your-customer capabilities) that the government has forced them to develop.
Bain & Co. estimates “governance, risk and compliance (GRC) costs account for 15% to 20% of the total ‘run the bank’ cost base of most major banks.” That, combined with the long and difficult process to establish and validate credibility with regulators, makes the challenge to potential competitors even more imposing.
That’s right, instead of making money from lending out deposits, or investment banking or capital markets … people will pay banks to simply hold their money and validate their identities and sources of funds.
Application programming interfaces will put a twist on this tried-and-true model. Banks will look to compete. When they do, as always, winning will come down to pricing and service. To do so, they’ll set up “financial malls.”
Conversely, in the financial mall ecosystem, fintech partners (providers with requisite core competency and scale) will open up shop and link with the banks via robust APIs. How this relationship manifests will vary as established players ponder the decision to build, buy or partner. Regardless, front-facing service providers — the fintechs — will operate in the most efficient manner and will lead the charge.
For purposes of our procedures and at your instruction:
·
with respect to our comparison of Characteristics 9. and 13., for any first payment date or original maturity date falling on the 29th, 30th or 31st day of the month (as set forth on or derived from the Servicing System), we were instructed to assume the first payment date or original maturity date, as applicable, as the 1st day of the succeeding month;
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with respect to our comparison of Characteristic 11., differences of $1.00 or less are deemed to be “in agreement;” and
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with respect to our comparison of Characteristic 19., for those Sample Loans with a “borrower income” amount, derived from the Transactions Summary, (i) less than $80,000 (as determined above), differences of 10.0% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement” or (ii) greater than or equal to $80,000 (as determine above), differences of 20.0% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement.” Further, for those Sample Loans with a “borrower income” amount, derived from Income Verification Documentation, differences of 2.5% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement.”
From the company’s filed EX-99.1 Charter, which can be read at Edgar.
Stellar uses a consensus mechanism known as Stellar Consensus Protocol. This particular feature is outlined in the project whitepaper, for those who want to know more technical aspects about the mechanism.
Furthermore, Stellar’s native currency is known as Lumens – which we discussed here – whereas Ripple uses XRP. Stellar is mainly designed to target individuals and focuses strongly on technology, rather than making a name for themselves among financial institutions.
Ripple is a project designed to target financial institutions and provide a distributed ledger-based solution to facilitate cross-border payments.
It is also worth noting Ripple has a deflationary currency model. The number of XRP tokens in circulation will gradually decrease as it is used more often to facilitate cross-border currency transactions. Additionally, Ripple has formed several partnerships with banks and other financial institutions all over the world.
Social Worth Technologies Pvt. Ltd, which runs online lending platform EarlySalary, has raised $4 million (Rs 26 crore) in its Series A funding from IDG Ventures India and mortgage lender Dewan Housing Finance Corp.
The startup, which offers salary advances and loans to young working professionals, will use the capital to build products and increase its lending book, it said in a statement.
It will also use the money to expand team, specifically in skill sets of machine learning, as well as to grow customer base and provide 200,000 loans in this financial year.
TrueEX sued its rival and interest rate swap trading provider MarkitSERV on Monday, accusing it of using its monopoly in the trade processing services industry to crush the financial technology company by refusing to provide a critical service.
The CFA Institute, the organisation that hands out the coveted designation of “Chartered Financial Analyst” to people who make it through three rounds of exams, more than 300 hours of study and four years of work experience, is to revamp its tests to include questions on artificial intelligence, big data and robo-advice.
The new curriculum will appear in exam papers from 2019, as the global association of investment professionals tries to reshape its course to meet demand from employers for practical fintech skills.
But big data analysis, machine learning, robo-advice and blockchain have shaken up the investment industry in recent years, as investors compete against low-cost passive fund trackers to deliver market-beating returns after fees.
Exam entrants will need to know how to back-test investment algorithms, work out the limits of big data analysis and appreciate the impact of wider trends on the industry, such as how blockchain technology affects trading and how robo-advisers may shape the way financial advice is given.
Peer-to-peer (P2P) finance is in the ascendancy, yet many brokers still appear to be in the dark about the range of products on offer from this new wave of lenders.
However, a recent poll conducted by Bridging & Commercial found that 92% of financial professional respondents do not feel confident advising their clients on P2P products at the time of writing.
“I don’t know why it is, but in all my years, I’ve only had one approach from a P2P lender,” explained Stephen Burns of specialist finance brokerage Adapt.
This sentiment was echoed by Liam Brooke, co-founder of P2P platform Lendy, which has recently invested heavily in boosting marketing and communications efforts to improve the understanding of the sector.
“It is the P2P companies themselves that need to take responsibility for improving the public’s understanding of their products.
“This can be achieved in a number of ways, including building more one-to-one relationships with brokers and reaching them through different media.”
LendInvest, the UK’s largest property-focused online lender, is refocusing and restructuring its investment platform. The firm is shutting out retail investors with the introduction of a qualification test, which investors will have to pass in order to lend through the platform.
The average balance for individual investors on the LendInvest platform is roughly £30k.
LendInvest is right on the cusp of crossing the £1 billion mark in cumulative loan originations – a feat that has been accomplished by just four UK-based marketplace/online lenders to date.
Investors in “peer-to-peer” loans are in danger of sleepwalking into accounts that are sold as “easy access” but have no guarantee money will be returned quickly.
A report from 4thWay, an analyst of the sector, warned “easy access” accounts offered by providers could not guarantee the quick return of cash.
Landbay, a property specialist, calls this its “tracker fund”, Assetz Capital has a “quick access” account while Ratesetter offers a “rolling market” option as part of its “everyday account”.
It added in some cases, perversely, it was less risky for investors to tie their money up for longer in a fixed-term deal offering higher interest rates.
The average interest rate offered by early access accounts is 3.2pc, compared to an average of 4.9pc on other types of accounts, according to 4thWay.
Commenting on the firm’s “rolling market” account, a spokesman for Ratesetter, one of the largest peer-to-peer providers, said: “When we launched our account in 2016 40pc of our investors had cited access to their money as a key priority when making investment decisions, and since then, it has become one of our most popular products.”
He added that of the 15,000 requests for customers to withdraw their money Ratesetter has received so far, 99.6pc completed within one working day.
Innovate Finance has published a report today on industry sandboxes in the Fintech startup community.
According to the authorKey findings of the report include:
Addressing Cost and Inefficiency in Validating Innovative Solutions: Responses indicated that there is significant friction, both in terms of resources required and length of process, for startups and institutions in developing multiple Proof’s of Concept or “POCs” bilaterally.
Addressing Cost and Inefficiency in Developing Collaborations: Industry feedback has been that an Industry Sandbox could be helpful in bringing participants together in the resolution of shared challenges.
Supporting Efficiency in Compliance and Regulatory Engagement: The process revealed that within the startup community, understanding of the need for authorisation and compliance requirements in local and foreign markets could benefit from being accelerated.
In the third quarter of this year, if all goes to plan, ClearBank will go into business as the first new UK clearing bank to open its doors to customers for 250 years.
What distinguishes ClearBank from the mass of fintech newcomers and challenger banks is that its customers won’t be small or medium-sized enterprises (SMEs) that the big banks refuse to lend to at other than punitive rates; they won’t be looking for working capital finance advanced against invoices to be paid by bigger corporations, neither will they be retail investors looking for a better return on their cash than zero-rate bank savings accounts, or wealthier individuals looking for a low-fee allocation to a mainstream asset class.
Some 41% of small businesses surveyed said they would vote Conservative in the general election, followed by Labour with 13%, Liberal Democrats on 9% and UKIP on 3%.
The survey found that 40% of small businesses believed that tax was the most important policy area, followed by Brexit (26%).
Funding Circle’s research also found that most small businesses are optimistic about their future turnover prospects despite the current uncertainty, with nearly 70% saying they expected it to increase within the next 12 months.
China
P2P Industry News (Xing Ping She), Rated: A
SAC Recommended Fintech as one of the research direction of next year
On May 8th, Securities Association of China (SAC) issued the notice about next year’s research project application, and announced the research theme “Opportunities and Challenges of stable development of Securities Industry”. Fintech is among one of the 8 topics specified by the Notice.
Sharing economy is sweeping China! Public charge pal company Raised 300M RMB within 10 Days. JUMEI invested 300M RMB in charge pal sharing
On May 4th, JUMEI announced an investment of 300m RMB in a Mobile power leasing company——Shenzhen Street Electrical technology co., LTD(Anker Box). After the financing, JUMEI will hold 60% shares of Anker Box. The money will be used for the upgrade of production lines of charge pal sharing and cabinet etc., as well as the R&D of new series of product. It was also revealed that Leo Chen, the CEO of JUMEI, would become the chairman of Anker Box after this round of strategic investment, and JUMEI would continue to increase its investment amount.
Attitudes on Charge Pal: “National Husband” vs “Headstrong CEO”
Charge Pal sharing becomes the second popular sharing product after Bicycle-sharing. Sicong Wang, the son of Wanda Group’s chairman Wang Jianlin(China’s Richest man), and Leo Chen, the CEO of JUMEI, holding different views on it.
Sicong Wang takes a negative attitude on the future of charge pal sharing, while Leo Chen think small probability is the feature of venture investment, the sharing project of Street Electricity could be a public welfare even it failed. He also showed his appreciation for Sicong Wang but warned him that personal preference should not be the factor of decision making.
Kreditech, the leading technology group for digital consumer credit using machine-learning based underwriting, has closed EUR 110 million in investment from global online payment service provider PayU.
The landmark investment is the largest ever equity investment in a German FinTech company and builds on a successful 12-month pilot program in Poland.
The announcement follows a successful pilot program managed by Kreditech and PayU, offering Polish consumers improved access to credit in a real-time online process. The pilot program issued more than EUR 10 million in credit.
Through this major growth financing, PayU has acquired a significant minority stake in Kreditech, joining existing prominent FinTech investors including JC Flowers, Varde, Blumberg Capital, HPE, Peter Thiel, Rakuten and the World Bank’s IFC.
This week we saw one of our own, Alexandra Strömberg, recognized as one of Sweden’s top 75 future female leaders (28th actually!).
Can you give me a little timeline on your life at Klarna?
I started at Klarna 4 years ago building up a new function and team named Customer Relations. Today we have an average customer satisfaction of 88% – that is better than best practice!
In recent years I’ve also been part of other Klarna projects. For instance I’m part of the Klarna Executive X network.
It’s been 4 years since you joined Klarna, a lot has changed. Where do you see yourself and Klarna in a further 4 years?
In 4 years I think Klarna will be a global player that not only fosters more and more talents, but also makes life a little bit easier for consumers and merchants by offering an even better and more innovative service. We will continue to disrupt and change. If I am at Klarna in 4 years, it’s because I still bring value to the company and that Klarna does the same for me I enjoy going to work knowing that I am part of this journey.
However, fintech has ushered in new ways of viewing and handling money and has become a gray area for regulation. This is something that has been drawing the attention of lawmakers, especially in fintech companies’ charter applications to be “special purpose national banks.” This isn’t as straightforward as it seems since some fintech services such as peer-to-peer lending operate using new models.
In addition, these regulations may vary per market depending on the state, country or region in which you seek to operate. In Europe, there’s the impending implementation of the Revised Payment Services Directive (PSD2).
2. Competition from institutions
While banks have acknowledged the disruption fintech has created, this doesn’t mean that they will just accept defeat and step aside for the new guys. It isn’t exactly banks as institutions that are under threat as much as it’s the way we do banking.
3. Customer trust
Data breaches and cyberattacks are still rampant. With the nature of the information fintech companies handle, they are becoming an optimal target for cybercriminals.
4. The need for a strong team
This might seem obvious, but fintech isn’t exactly an area where there are turnkey tools and free scripts one can use to come up with an app or service. This isn’t like some other tech ventures where barriers to entry are relatively low. Financial, technological and business expertise are all required to develop fintech.
5. Unique and valuable service
The fintech industry is starting to get crowded now that many pioneers have done enough for new ventures to follow. Still, a key entrepreneurial question to ask is if your venture will be able to offer something unique and high value.
6. Technology choices
As a startup, you may have to bet on technologies that would power the service. On the plus side, technologies such as machine learning and analytics engines are now being offered as a service by cloud platform providers like Microsoft Azure and Google Cloud Platform, which lowers the barrier for development. However, these technologies have yet to fully mature. You should be prepared for growing pains and hiccups when using them.
7. Funding
Global venture capital investment was $17.4 billion in 2016. However, this excitement only means that competition for funding is also increasing. VCs are getting more selective, seeking out companies with truly game changing offerings, thus making your value proposition all the more important.
The fintech firm yesterday announced the launch of its World Account – an international payments platform for small businesses and online sellers. The firm says that the new account delivers “international banking functionality”, stripping administrative burden and cost out of operating cross-border.
The opportunity for WorldFirst could be significant. Its own research shows that over 1.5 million UK SMEs are trading £76bn globally every month (see infographic below).
The way will be cleared for robo advice to be given on financial investments and services in NZ for the first time, when the reforms of the Financial Advisers Act (2008) are complete. MBIE’s consultation on a draft bill paving the way for robo advice closed on 31 March.
‘Under the current timeline, the law won’t be changed until at least 2019. While MBIE and NZ’s Financial Markets Authority will be scratching their heads for ways to expedite the reforms, the FinTech industry is fast moving and there is a real risk that New Zealand firms looking to operate in the robo-advice area will be left behind by their overseas competitors if the reforms don’t happen sooner,’ he says.
Mr Ward-Marshall says that once robo advice is fully implemented in law and regulation in NZ, it is likely existing financial advisers will team up with clever technology companies to provide it.
MobiKwik is set to raise funds from investors including BlackRock Inc. which will value the innovative Indian Fintech company at about $1 billion, according to Bloomberg.
The company with over 55 million users has been in talks these last months to raise funding that would give the startup this $1 billion valuation, and has forged new ties with banks and offering new financial services on its growing platform, Currently MobiKwik investors include Sequoia Capital, Taiwan’s MediaTek, Japan’s GMO Venture Partners and hedge fund Tree Line Asia.
Droom—an online marketplace for used vehicles has launched India’s only loan marketplace for used vehicles, named as Droom Credit. The company has partnered with many non-banking financial companies and finance firms. It has also tied up with various lenders such as HDFC Bank, Kotak Prime, Faircent, and Tata Capital.
The creditworthiness of the applicants will be analyzed by Droom Technology Pvt. Ltd. through its credit risk engine. The loan approval procedure will be processed within 30 seconds based on the credit score validation, Aadhar details, PAN verification, and other credit evaluation platforms.
Aggarwal also revealed about its revenue generation models, which will be bifurcated in multiple ways.
First
The applicant will have to select the take rates that will be dependent on the lenders, borrower profile, and commission structures.
Second
The company will charge Rs 999 from borrowers that include Rs 299 as Cibil score checking fees and rest of the amount will be charged if the borrower makes his or her move toward next step with his loan approval.
News Comments Today’s main news: Banks pull back on car loans as used-auto prices plummet. Trump’s expected OCC pick, a banker, signals paradigm shift. Elevate Credit rated a buy. RateSetter rejigs relationships with former wholesale lending partners. China Rapid Ffinance raises $60M in IPO. Today’s main analysis: Goldman Sachs embraces banking’s bland side. Global money transfer. Today’s thought-provoking articles: German […]
Banks pull back on car loans, used-auto prices plummet. GP:”This is bug news. It’s more like a drop in origination.”AT: “Will this lead to a surge in alternative lenders picking up the auto loan slack? My bet is, it will.”
Mimecast Limited vs. Yirendai Ltd. GP:”I am not very familiar with Mimecast. Mimecast is an international company specializing in cloud-based email management for Microsoft Exchange and Microsoft Office 365. Not sure why they are being compared to Yirendai. “AT: “Interesting head-to-head comparison.”
Goldman Sachs embraces banking’s bland side: Lending money. AT: “Instead of funding the lenders, GS is beginning to lend money to business itself. I think the most interesting part of this is extending credit to consumers to make online purchases. If that is true, Goldman could be positioning itself to compete directly with Klarna, Amazon, and other big online retailers and software companies. A good example of a bank trying to make the most of the 21st century.”
State regulators mount counter-offensive on OCC fintech charter. AT: “I agree, but I don’t see it happening. The one thing state power holders and federal power holders have in common is the need for control and hunger for a fight. There will be a major battle over who regulates fintech going forward.”
Colorado vs. Fintech. AT: “This is mostly a rehash of the developments in the Colorado vs. Avant, Best Egg and WebBank, CRB vs. Colorado lawsuits. The most interesting parts are where OLPI sheds some light on parts of the briefs filed in court, particularly regarding whether Avant or WebBank is the true lender.”
Wells Fargo & Co., one of the largest U.S. auto lenders, last month reported a 29% fall in its auto loan originations for the first quarter from a year earlier. The decline, the biggest for the San Francisco-based bank in at least five years, was part of a common refrain in quarterly announcements from lenders including J.P. Morgan Chase & Co.,Ally FinancialInc. and Santander Consumer USA HoldingsInc.
Bankers’ caution is increasingly showing up in car sales, which Tuesday came in worse than expected for April. The declines are mostly occurring in lending to riskier borrowers, in particular those with low credit scores, where lending had ramped up for years.
When lenders repossess cars, they resell the vehicles and use the proceeds from the sale to recover as much of the unpaid balance as possible. Declining values mean that lenders are recouping a smaller share of those balances. Lenders who are repossessing cars tied to prime auto loans that were securitized in 2015 are recovering about 51% of the unpaid loan balances on average, down from 56% for 2014 loans and 65% for 2011 loans, according to S&P Global Ratings.
Car loans have been among the fastest-growing consumer lending categories since the last recession.
The firm has been opening its checkbook for the past several years to finance corporate takeovers, lend against mansions and art, and make personal loans for things such as kitchen remodels and fixing broken windshields.
It is exploring new credit businesses such as trade finance, equipment leasing and extending credit that consumers use for online purchases, according to people familiar with the discussions.
Loans outstanding across Goldman have doubled to $95 billion since 2011, filings show. Real-estate loans are up 10-fold. Business lending has tripled, while loans in its private-wealth division, secured by everything from stock portfolios to rare artwork, have quadrupled. Goldman doesn’t report revenues tied to lending, which remains a small part of its overall business.
They set a “buy” rating and a $12.00 price objective for the company. Compass Point reissued a “neutral” rating and set a $9.00 price objective on shares of Elevate Credit in a report on Tuesday, April 18th. One analyst has rated the stock with a hold rating and four have assigned a buy rating to the stock. The company has an average rating of “Buy” and a consensus price target of $11.00.
Shares of Elevate Credit (NASDAQ:ELVT) opened at 7.64 on Monday. Elevate Credit has a one year low of $7.00 and a one year high of $8.86. The firm’s 50 day moving average is $8.05 and its 200-day moving average is $8.05. The firm’s market capitalization is $99.33 million.
Clearly, CSBS is mounting a legal counter-offensive to the OCC’s attempt to license entities historically regulated by the states. While state and federal regulators currently are arguing as to who should control the regulatory sandbox, the true focus of regulatory concern should be on the development of innovative financial services, consistent with safe and sound operations, with viable and effective consumer protections. While, historically, payments companies and lenders have been regulated by the states, the OCC’s SPNB Charter has sparked a dialogue as to whether the current regulatory system for fintech operations is viable. Innovation of financial services may also require innovation of financial services regulation. Rather than trying to pigeon-hole financial services into traditional regulatory models, perhaps it is time for regulators, at both the federal and state level, to act in concert to develop a system of licensing, regulation, and enforcement for financial products and services that is efficient, not redundant, and minimizes the regulatory burden on financial institutions while it provides for the continued protection of consumers. Setting aside the merits of the pending suit, the right policy prescription will likely involve the federal and state governments working together to minimize the regulatory burden while appropriately protecting the safety and soundness of FinTechs and provide necessary consumer protection.
President Donald Trump’s expected move to replace the Comptroller of the Currency signals a change in direction at the bank regulator that could ripple through the financial markets, from private-equity buyouts to financial technology—and even municipal securities.
Comptroller Thomas Curry, whom people familiar with the matter say could be replaced as soon as this week, is a career regulator appointed by President Barack Obama. Mr. Curry used his office to tamp down on what he viewed as overly risky lending practices in the banking industry.
His expected replacement—Joseph Otting, a former chief executive of OneWest Bank—would be the first former banker to hold the comptroller’s job since the 1990s.
A committee of Wall Street advisers is pouring cold water on a proposal by U.S. Treasury Secretary Steven Mnuchin to issue superlong 50-year and 100-year U.S. government bonds, arguing that the big pension funds and insurers expected to buy the securities won’t have much interest.
The committee meets quarterly, in advance of a regular release by the Treasury on its plans for financing the U.S. debt. Currently, the U.S. Treasury issues no debt longer than 30 years. Mr. Mnuchin has argued that ultralong bonds could be a useful tool for locking in today’s low borrowing costs for a very long time. Last month, the Treasury requested the advisory committee analyze the viability of bonds longer than 30 years.
The 30-year bond strengthened Wednesday, after the advisory committee cast doubt on the idea 50- and 100-year bonds. The yield on the 30-year Treasury dropped to 2.963% from 2.982% on Tuesday, according to Tradeweb. Yields fall as bond prices rise.
A key question for the Treasury is what types of investors would buy ultralong bonds, especially if the members of its advisory committee aren’t interested. Relatively few individual investors have 100-year or even 50-year investing horizons.
Crowd Invest Summit, the country’s largest crowdfunding investment conference, taking place on September 6 th and 7th at the Los Angeles Convention Center, has today announced that it will be expanding its focus on Real Estate crowdfunding.
Since the signing of the JOBS Act in 2012, Real Estate Investing has been the fastest growing segment of the new Crowdfunding Industry. According to Fundingtree.com, over $3 Billion Dollars has been raised so far.
Crowd Invest Summit is the largest investment focused crowdfunding event in the country. It was founded by pioneers in the equity crowdfunding sector Josef Holm and Alon Goren. The conference was developed with the vision that every American – whether accredited or not – can now become equity investors.
Goldman Sachs is leading a $13 million investment in Nav, a startup that helps small businesses with financial advice and credit scores. Billionaire Steven Cohen’s Point72 Ventures is also investing, along with Clocktower Ventures and the CreditEase Fintech Investment Fund.
This follows $25 million that was invested in the company last year, and is considered part of the same Series B round, bringing the total to $38 million.
Characterizing Nav as a Credit Karma for small businesses, King believes his startup will “materially decrease the death rate of small businesses in the U.S.” They currently have over 200,000 customers, most of whom don’t pay anything for their credit score, but can opt to pay about $20 per month for added financial advice.
68% of mobile payments users are using Venmo most often.
Venmo processed $6.8B in mobile payments in Q1.
Rapid smartphone adoption, alongside a large unbanked population, makes the theme of mobile payments an attractive investment.
In the days leading up to the quarter, a new survey of 2,170 Millennials found that Venmo is leading the category. The researchers asked the following question: “Which of the following mobile payment apps do you use most often?”
Researchers found that 44% of respondents answered “Venmo”, 1% of respondents answered “Square Cash”, 14% of respondents answered “My bank’s mobile payment app”,and 4% of respondents answered “Other”. However surprisingly, 35% of respondents answered “I don’t use a mobile payment app”.
On February 15, 2017, the Administrator of the Uniform Consumer Credit Code for the State of Colorado (“Colorado”) sued Avant and Best Egg (in separate actions), claiming in both actions that they violated Colorado’s usury rate and entered into loan agreements containing a governing law provision other than Colorado.
Shortly after, WebBank and Cross River separately sued Colorado seeking Declaratory Judgement and Injunctive Relief.
On April 25, 2017, Colorado filed a Motion to Dismiss both Complaints for Declaratory Judgment and Injunctive Relief.
Colorado initially argues that WebBank’s action for declaratory judgement should be dismissed based on the well-pleaded complaint rule. There seems to be two issues with this position: (1) WebBank was purposely left out of Colorado’s initial complaint (although this theory might apply if Avant brought the federal action for declaratory judgment), and (2) diversity jurisdiction does apply as to Avant and WebBank vis-a-vis Colorado.
Second, Colorado argues that WebBank’s action should be dismissed because WebBank’s injury is too attenuated. Colorado does not directly address WebBank’s contention that the suit challenges WebBank’s overall business model.
Finally, Colorado argues that “interest exportation does not preempt the application of state usury laws to non-banks as a matter of law.” Colorado seems to acknowledge WebBank’s right to preempt Colorado’s usury rate based on DIDA (the Depository Institutions Deregulation and Monetary Control Act of 1980 – extending the National Bank Act’s preemption to FDIC-insured state banks). Colorado argues that WebBank is trying to assign its preemption to Avant – that Avant is the lender.
Colorado also argues that the valid when made doctrine is not applicable because “there is no ‘subsequent usurious transaction’ between WebBank and Avant that is alleged to invalidate a consumer’s loan obligation. Instead, Avant merely purchased the subject consumer loans from WebBank.” This is a difficult argument to follow. Colorado sued Avant claiming that Avant loans are usurious and Avant, and not WebBank, is the true lender. Colorado points out that Avant buys the loans from WeBank within two business days of the loans being made. Relying on Midland in the Avant action, Colorado states that Avant cannot “enforce a bank’s federal interest rate exportation rights when they purchase loans from banks (or purchase loan receivables) because banks cannot validly assign such rights to non-banks.” It seems to imply that Colorado is not saying the loans are invalid (due to Avant having a Supervised Lender’s License), but rather the loans just need to be limited to the Colorado usury rate –yet, as noted, the argument is difficult to follow.
Fintech is ultimately about taking away frictions.
I guessed that there was a 25 or 30 per cent chance that 10 years from now, there was about a 25 per cent chance that there would be a fintech company with the kind of $250bn market cap that some big American banks have. I do not expect that in the foreseeable future fintech will have the kind of existential impact on banks that Netflix has had on Blockbuster. But I do think in some areas fintech companies are likely to have the kind of effect Skype has had on the big telephone companies — forcing drastic reductions in pricing and profit margins on some key products.
I was quite serene about the impact of fintech on financial stability.
By providing for faster settlements, more transparency, and diversification, fintech is likely to have as many stabilising as destabilising effects.
If the large banks of today are not as large five or 10 years from now, I think it is more likely to be because of bad lending, heavy regulation or market pressures to break up because the whole is valued less than the sum of the parts than because of disruption from fintech. I say this because much of what fintech does depends on the banking system and because I doubt that over this horizon banks can be completely disrupted.
In the report from data provider CB Insights, The Global FinTech Report: Q1 ’17, it found that during the first three months of the year, fintech funding to venture capital-backed New York companies dropped by 35 percent on a quarterly basis. However, while financial technology deals in the state rose by 26 percent from Q4 ’16, it registered a 33 percent drop below the same quarter last year.
During the first three months there were three New York City companies – Namely, Trumid, and Payfone – who were among the top ten U.S. financial technology backed deals.
Namely raised $50 million in Series D funding from Altimeter Capital, Scale Venture Partners, Sequoia Capital, Four Rivers Group, Matrix Partners, and Greenspring Associates.
Trumid raised $27.6 million in Series D funding from Thiel Capital, and Payfone raised $23.5 million in Series E funding from BlueCross Blue Shield and Andrew Prozes.
First Associates has announced today that it has implemented A.I. enabled speech analytics as part of its third-party loan and lease servicing. The speech analytics platform facilitates higher quality customer interactions while ensuring compliance with financial industry regulations.
Using speech analytics, First Associates monitors, scores and provides agent feedback on 100% of voice interactions with consumers using data-driven benchmarking. Traditional loan servicing management techniques call for a 1% sample size of voice interactions using human quality assurance agents to assess quality and effectiveness. The company has already seen significant improvements across quality and performance metrics from the implementation.
Adams Business Credit, a national asset-based lender, will rebrand as Context Business Lending, bringing the firm in unison with the family of businesses and affiliates under Context Capital Partners, an alternative investment firm. The newly named Context Business Lending will continue to focus on providing flexible working capital solutions for businesses that do not qualify for traditional bank financing.
Context Business Lending typically provides loans of up to $15 million for lower middle-market businesses that may be experiencing some type of challenge, which may include: rapid growth; seasonal fluctuations; supply chain and vendor pressure; operating losses/negative net worth; turnaround and restructuring; merger or acquisition and debtor-in-possession financing. The firm is sector agnostic and works with businesses in the manufacturing, distribution, wholesaling and service sectors.
Investors who rely on “robo-only” investment models are making a big mistake, financial advisor tells InsuranceNews.Net.
McElwee provides three specific reasons why that’s the case:
Robo advice assumes that the past is destined to repeat itself.
People make bad financial decisions when they are under financial stress.
Questions, questions, questions. Robo advisors build financial profiles of clients based on a set of questions designed to reveal how a client thinks about risk, return, and financial planning.
MoneyLion Shortlisted for Top Industry Award (MoneyLion Email), Rated: B
Usage of MoneyLion’s app nearly quadrupled in the second half of 2016, allowing them to track $12bn in transactions from more than one million users. To date, users have saved over $5 million in rate reductions through MoneyLion.
RealtyShares, a leading online marketplace for real estate investing, has just announced an $800,000 commercial equity investment in Mesa, Arizona, funded through the company’s network of accredited investors. The deal is sponsored by De Rito Partners, one of Arizona’s largest retail investment and brokerage firms.
De Rito Partners acquired the property in 2016, and is seeking to capitalize on a temporary tenant turnover in a formerly fully-leased retail property. The firm intends to use the funds raised through RealtyShares to invest in tenant improvements and implement a leasing strategy to achieve market-level rents.
The property is shadow-anchored by a Fry’s Marketplace, one of the largest grocers by sales in the Phoenix metropolitan area according to Chain Stores Guide. The shopping center is comprised of more than 20,000 square feet of rentable retail space, and is currently leased to tenants including Starbucks, H&R Block and Subway. It is located at the intersection of two major thoroughfares, four miles from downtown Mesa.
De Rito Partners owns 20 properties, manages approximately 1.9 million square feet of retail space, represents 180 shopping centers in a leasing agency capacity, and is currently developing a Fry’s Marketplace-anchored shopping center and a strip center located in Chandler, AZ.
The acquired motor finance companies are Vehicle Stocking Limited and Vehicle Credit Limited. Both firms were acquired out of their parent company’s administration, and both have previously received wholesale funding from RateSetter. RateSetter will now lend directly to these companies’ customers.
The size of these two motor finance firms’ combined loanbooks is roughly £30m. These portfolios are said to be “performing well”, and we’re told they would have continued to be serviced had RateSetter not stepped in.
Another of RateSetter’s former wholesale lending partners is George Banco, a guarantor lender with a representative APR of 49.7 per cent. RateSetter has now taken an equity stake in the company, and will lend directly to its 10,000 customers.
Lendy, a UK based peer to peer lending platform in the secured property sector, believes 2017 is the year for P2P lending to finally mature. Management says that P2P will shift from alternative finance to “main challenger to the traditional banks.” But to accomplish this goal, P2P lending platforms must build upon best practices and operate more like mainstream lenders while providing rigorous due diligence and superlative service.
Lendy advocates on four key steps in providing a better service than traditional financial firms:
Initial due diligence – carry out an extensive ‘know your customer’ (“KYC”) process when they first source a loan.
Legal panel – after the loan has passed the first stage it is then reviewed by a legal panel. Solicitors ensure that a legal charge is properly made against each security property, and that each of the security properties has good title.
Valuation – use a highly rated independent firm to value security properties.
Credit checks – put each lending proposition under extensive scrutiny to determine its viability.
Robo-advice has become a widely-known concept in the financial advice community over the past 12 months, as more and more firms launch their own proposition.
In addition, it is important to have someone understanding the algorithm from the client experience, and for advisers to grasp the inputs into the algorithms.
One of the areas that needs to be tackled, according to Mr Strachan, is the grey area between fully automated guidance and full-on advice.
The report, The Next Frontier: The Future of Automated Financial Advice, outlines the amount people will be prepared to pay for the use of a robo-adviser. By the far the largest cohort said they would be prepared to pay £125, with popularity rapidly declining the more the price goes up.
Automated advice on investing £11,000 charged at £225 only received support from 16 per cent of people, while a £360 fee saw support from 6 per cent.
London fintech startup Curve has made its first PR and comms hire with the appointment of Burson-Marsteller’s Callum McCaig, as the business prepares to scale out of ‘beta’ and launch its digital banking platform to the mass market.
Curve has raised £3m in seed funding from investors, including Seedcamp and the founders of Transferwise, Betfair, Azimo and Google Wallet, and plans to announce a Series A funding round later this year.
MarketInvoice, the world’s largest peer-to-peer online invoice finance marketplace, has joined the UK FinTech Financial Crime Exchange (FFE), a joint initiative by think tank RUSI and risk consultancy FINTRAIL, launched today.
The FFE brings together FinTech firms who have agreed to collaborate, by sharing best practice and pooling information on financial crime typologies to protect their customers and strengthen their sector’s ability to detect and counter the global threat of financial crime, including money laundering, terrorist financing, bribery and corruption, tax evasion and market manipulation.
The UK FinTech sector is at the forefront of the global FinTech revolution, contributing £7b to the UK economy.
Invited to defend their views vis-à-vis the financial commission of the parliament, representatives of the German Crowdfunding Association have challenged the government’s position and presented substantial counterarguments.
As a reminder: crowdfunding regulation at European Union (EU) level was so far deemed “premature” by EU authorities and is therefore not included in the Capital Markets Union, the EU’s effort to harmonize capital market regulations at EU level. Hence, each EU country currently issues its own regulation which creates a legal patchwork and hinders cross border deals.
The German government’s report firstly notes that German real estate projects represent 10% of the successful projects and 33% of the capital raised through crowdinvesting, that is €36 million. Projects are typically residential property development, mostly construction, the reminder being renovations. German real estate crowdinvesting nearly doubled in size last year while the growth of startup crowdfunding slumped.
The government finds this trend negative. It justifies its proposal to exclude real estate from the scope of the crowdfunding exemptions as follows:
The large share of real estate in crowdinvesting represents a deviation from the intention of the legislator which was to foster the funding of high-growth startups.
There is no lack of funding for real estate projects. Social real estate, for example, can be funded through schemes that are specific to social housing.
Real estate crowdinvesting could be considered as a form of deregulation of real estate finance which could, bearing in mind the role played by real estate in the 2008 financial crisis, create a price bubble, and ultimately pose a threat to financial stability.
The Crowdfunding Association and crowdinvesting platform leaders found many of the government’s arguments “incomprehensible” and offered point-by-point rebuttals:
Crowdfunding counters price bubbles and real estate overheating. The current real estate market boom is in no way due to crowdfunding, which is much too small to influence market prices, but rather to macroeconomic factors such as the currently low interest rates.
Crowdfunding helps finance real estate SMEs and innovative entrepreneurs. There is no sensible criterion for distinguishing real estate financing from other types of business financing.
The risk of subordinated debt instruments is not specific to real estate. It would therefore be more appropriate to open crowdinvesting to all securities, including profit sharing securities, rather than to exclude real estate from crowdinvesting.
Currently, the German crowdfunding market is disproportionately small. It is surpassed on the Continent by the French market (28% smaller GDP) and dwarfed by the UK market (15% smaller GDP).
Johan Tjärnberg is quietly building a fintech business that may prove as successful as Klarna. During 2016, his payments company, Bambora, grew 20% to revenues of SEK 2 billion.
Bambora is a platform that aggregates hundreds of payments services, and it’s currently available in 65 markets. Bambora’s clients can even choose to use Klarna as their payment service.
During 2017 the business will expand to North America, where the number of merchants using the service will increase by 10,000 over the year. That will boost the sales of the group by 30% to EUR 260 million, Johan Tjärnberg said to Bloomberg News.
Currently, the company has about 100,000 clients, of which 30,000 are located in the US and Canada.
In 2010, Klaus Regling, the head of the euro-area rescue fund for the European Stability Mechanism (ESM), asked me to join the board. I agreed, and said that I wanted to build the Google of the public sector. He looked at me and asked: “Why Google? We can be better than that.” And of course, he was right.
The ESM provides financial assistance to Eurozone countries that have lost market access. It was set up at the height of the euro crisis. Without the ESM, countries such as Greece would have defaulted, and the euro would have broken up. The ESM is the institution that kept the euro together during the crisis. Our total lending capacity is $742 billion. We have provided assistance to five countries: Greece, Ireland, Spain, Portugal and Cyprus. In all, we have provided $281 billion in loans, which is three times as much as the IMF over the same period of time.
Here is how we are planning to move forward to build a modern public institution.
Digital at Heart
First of all, we wanted a lean model, and so we kept only the strategic functions in-house, like funding, economics and investments. We outsourced support functions and non-strategic functions as much as we could. We were the first financial institution worldwide to use a fully cloud-based trading system.
Secondly, we wanted to leverage new technology where possible.
Finally, our workforce of tomorrow, made up of millennials, is the first in our field to consist almost entirely of technology natives.
A Public Sector-driven Fintech solution
Europe has launched the capital markets union, an ambitious effort to harmonize corporate, tax, and bankruptcy laws across the countries of Europe. The differences between these laws are vast because of centuries of history in the 28 members of the European Union. Now we hope to make the laws more similar, because it would create a truly pan-European financial market. For example, the union would break down borders for private equity investment and venture capital, and open up an alternative channel of funding for small- and mid-sized enterprises. Thus, it would reduce Europe’s heavy reliance on bank lending.
The ECB idea is about the centralization of settlement and payment processes for securities. This is a very important initiative, and one that could be complemented by a similar initiative for the primary issuance of securities. It is worth considering a European public sector issuance platform to help distribute debt more efficiently: a fintech solution, driven by the public sector.
One could even think of using new technologies, such as blockchain, to set up the new issuance platform.
A new study by Juniper Research has found the value of digital payments will approach $3.9 trillion this year, representing an increase of more than 14% on last year’s total. While the bulk of transaction value (55%) will be accounted for by online retail purchases for physical goods, P2P (Person to Person) money transfers will see the largest year-on-year net increase in value ($200 million).
The new research – Digital Payment Strategies: Online, Mobile & Contactless 2017-2021 – argued that the US would see particularly strong growth, with the bank-backed Zelle Network expected to build on its successful debut in 2016 as additional banks come on board.
The research also emphasised that the demonetisation policies employed by India’s government had encouraged a surge in mobile wallet adoption and, with it, sharp increases in both P2P and mobile retail transactions.
The CFA Institute believes artificial intelligence, fintech and robo-advice will have the greatest impact on the financial services industry – to the extent it is considering including such topics in its examinations.
An overwhelming majority (70%) of CFA members globally who took part in a study said affluent investors will be positively affected by automated financial advice tools in the form of reduced costs, improved access to advice product choices.
Respondents (46%) however, were concerned about automated financial advice algorithms being the biggest risk emanating from robo-advice, followed by mis-selling (30%) and data protection concerns (12%).
China Rapid Finance (CRF), a VC-backed peer-to-peer (P2P) lending platform, is trading up 32% on its IPO price following an offering on the New York Stock Exchange that raised $60 million.
The stock closed on May 2 at $7.90, giving the entire company a market capitalization of around $448 million.
India’s P2P Lending sector is poised to grow at a rapid pace thanks to favourable demographics, rising computer literacy, internet connectivity and the ongoing wave of digitalisation among others. With the higher economic growth, the credit-backed consumption growth may jump too.These could be the possible triggers for the growth of P2P Lending Industry.
There is no official assessment suggesting the size of the market in India. But it is estimated to be around Rs 200 Cr. The P2P lending industry may grow 25 to 30 times over next 5-6 years. Talking about the interest rate, the yield on 10-Year Sovereign benchmark bond hovers in the range of 6.45% to 6.95%.
However, it is also important to note that the P2P Lending sector is unregulated.
On the other hand, in P2P lending projects, investors can earn in the range of 14% p.a. to 30% p.a. on a reducing balance method. In P2P Lending, interest rates are decided depending upon the creditworthiness of borrowers.
Blocko is a blockchain technology startup that developed the platform called CoinStack v3.0 and was able to raise $1.3 million in their series A funding led by Samsung Venture Investment Corporation.
Korean fintech startup company Honest Fund is a P2P crowdfunding company that raised over $6 million in funding led by KB Investments, Shinhan Capital, Hanwha Investment, and others. It is a peer to peer personal loan lending service that connects borrowers and lenders directly without the need of banks. These funds will not impact the borrower’s credit rating and will charge between 5% to 15%with the average being 9%. They offer a different personal credit review model compared to the banks that only look at a person’s credit rating.
PeopleFund is the first Peer-to-Peer lending platform through a Bank in Korea focused on unsecured personal loans. In 2015 alone PeopleFund has processed over $13 million in loans.
8 percent is a P2P lending company that raised over $13 million. Their APR is set at 8 percent which is why the company is called 8 percent. Established in late 2014 this P2P lending company has become the pioneer in this industry. 8 percent reviews an application and based on credit score and other measures. It is cheaper for clients to use 8 percent than a bank and therefore 8 percent has been able to grow every month. Loans for startup employees and a bridge for big companies have been their new model in 2016. They made news in 2016 for getting funding of $10 million from KG Inicis, one of the leading payment gateway companies in Korea. Bringing together investors and creditworthy borrowers are what 8 percent brings to the table.
Viva Republica runs a money transferring service called TOSS which raised over $48 million in funding from Altos Ventures, Goodwater Capital, Paypal, and KTB Network. They are known for Toss, which is a financial services platform that makes payment system easier by only asking users for 1 password to go along with three easy steps. The max they can transfer per transaction is $430 which makes everyday payments easy. Now they have over 6 million registered users in Korea and Toss has already processed over $3 billion in transactions. Toss now does credit scoring as well as micro-loans and is looking into cross-border money transfers and loan brokerages.
