Solving Cryptocurrency Volatility With Hedge Lending

cryptocurrency payments

There are currently two major issues with crypto payments – currency volatility and network transmission time. The recipient wants to receive the exact amount owed them. But, because cryptocurrencies are volatile and experience rapid price changes multiple times every day, that’s a difficult task to handle for crypto payment providers. Price swings can be more […]

cryptocurrency payments

There are currently two major issues with crypto payments – currency volatility and network transmission time. The recipient wants to receive the exact amount owed them. But, because cryptocurrencies are volatile and experience rapid price changes multiple times every day, that’s a difficult task to handle for crypto payment providers. Price swings can be more than 20% a day, so many merchants don’t accept crypto assets payments. Also, the merchant wants the payment instantaneously and is not willing to wait for it under any circumstance.

To solve these issues, Ben Way, CEO of Digits, conceptualized a new instrument he calls a hedge lending network. This is a service that provides instant loans thereby enabling its users to pay with fiat currency using their cryptocurrency. Its framework runs on a machine learning algorithm and is the first time the concept of hedging and lending has been combined together in a financial instrument.

How Hedge Lending Works

In the process, the user swipes his Digits registered card for making a transaction. Let’s say $100 is turned into a smart contract-backed loan, which is paid for by the hedge lending network. The merchant receives the money instantaneously. The $100 becomes a loan for the customer for a period of 366 days. If the consumer does not pay back the loan, the crypto is taken out of her wallet after the 12 months, gets liquidated, and the lender is paid back.

The customer is able to save almost 33 percent in capital gains if she is able to wait out the one-year period for holding a crypto asset. She can pay the loan back within 12 months and get her currency back. If she had spent $100 while her crypto asset doubled in price, she can pay the original $100 and take her cryptocurrency back. It’s similar to an escrow account in that it can  either be liquidated or paid back. At the end of 366 days, the transaction is liquidated and the lender gets the money or the borrower pays it off, taking the difference.

The Hedge Lending Network uses the lender’s invested fiat currency in exchange for the Digits user’s cryptocurrency-backed smart contract. In doing this, Digits can overcome the payment issues faced when customers pay in cryptocurrency. The main objective is to find the lowest interest rates and reduce the cost of the network to the minimum possible level. Apart from this, the lending network accounts for volatility, as wel.

If a cryptocurrency price goes up during the transmission time, Digits takes the gain and puts it in the buffer to account for the decreases in crypto prices during transmission. Being currency agnostic, the firm supports every cryptocurrency the interacting exchange supports. Currently, Digits works with Coinbase with relationship expected soon for other crypto exchanges. The company has its own wallet system and does not need to prepay for transactions. This is important in its journey to scale up and support the payments ecosystem.

The Benefits of Paying Through Digits

Way estimates that, by 2025, five percent of the population will be using a crypto wallet. Digits turns any credit or debit card in the world into a means to pay with cryptocurrency assets. The solution is extremely elegant as it settles on the MasterCard and Visa Network and allows any existing card to be converted into a crypto card. The user just needs to type in his credit card details and connect it to Coinbase for making the crypto payments. The Digits technology interrupts the payment, executes the necessary conversions and then settles the transaction on the existing network only. This allows the merchant and MasterCard/Visa to not deal with cryptocurrencies, a major hurdle in the growth of crypto payments thus far.

The Founders

Way and Co-Founder Laura Wagner founded Digits in September 2017 in the San Francisco Bay Area. Way had been a tech prodigy from a very young age. When he was six, he received a laptop that helped him enter the world of technology. At 15, he was earning good money online consulting with people to solve their computer issues. He later founded Pulsar, an e-commerce search engine that went on to raise $33 million.

That company eventually failed during the dotcom bust of 2000-2001. He lost everything he had, but he was able to start over and launched multiple companies and projects over the years since.

During the Clinton years, Way was a senior consultant to the White House on matters of technology. He is currently the CEO of Rainmakers, one of the first incubators in Europe and has helped launch around 200 companies.

Priot to starting Digits, Way was associated with a traditional payments company where he learned a lot about the payments industry and its inherent complexity. Being there, he realized how difficult it was to use cryptocurrency in the real world and came up with an idea to build a crypto payments company to make paying with cryptocurrency as easy as paying with a credit or debit card. This led to the launch of Digits.

For the last six months, he and his team have been building the platform and the technology. Currently, they are in the Pre-ICO stage on their way to raising $50 million.

Future goals

Digits is currently in the alpha phase and Way expects a product release in the next six months. He believes there is little competition in this space right now. There are a few crypto lenders and hedgers, but no one has been able to combine the two in a way Digits has accomplished. He wants his competitors to use his technology stack to build new products for their clients and believes this will allow for the entire space to grow.

Conclusion

Cryptocurrencies were expected to change the way our payment systems work. But almost nine years after the creation of Bitcoin, the ability to pay via crypto assets is restricted in the real world. Ben Way has come up with an innovative solution that will end the difference between a debit/credit card payment and a crypto card payment without interfering in the present debit/credit card system.

Digits is looking to capture a segment that has some major competition. But the company’s ability to transmit payments instantaneously without having the merchant or payment processors touch cryptocurrences and simultaneously create a potential 33 percent capital gain tax savings for the user is a win-win for all involved.

Authors:

Written by Heena Dhir with Allen Taylor.

Allen Taylor

Wednesday April 25 2018, Daily News Digest

banking the nonbanks

News Comments Today’s main news: Wells Fargo still the largest bank to lend to nonbanks. Digit adds credit card payments to app. UK finance chief calls for regulatory crackdown on tech giants. Humaniq implements smart biometrics identification. Today’s main analysis: World Bank releases Global Findex Database. Today’s thought-provoking articles: Credit history, debt ratio are biggest constraints for would-be homeowners. Lending […]

banking the nonbanks

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Wells Fargo Leaves a Potential Subprime Smudge on Its Way to Squeaky Clean (Bloomberg) Rated: AAA

Sloan provided some evidence for that argument last week when the bank paid a $1 billion fine to regulators to close an investigation into abusive practices in its auto lending and mortgage unit.

But a look at one of its lending businesses suggests that exposure to questionable practices isn’t so much an oversight as a business decision. Wells Fargo, according to reports over the past few years, is by far the largest lender among the big banks to payday loan companies and others that make high-interest loans to subprime borrowers, including some that regulators have accused of predatory practices.

Source: Bloomberg

Banks don’t have to report how much they lend to subprime lenders, which falls broadly into the category of nonbank lenders. Wells Fargo, at the end of last year, had by far lent the most to nonbank lenders, with $81 billion in outstanding loans. Citigroup was the bank with next largest exposure, with just $30 billion outstanding.

Source: Bloomberg

Credit History and Debt Ratio are Biggest Constraints for Would-Be Homeowners (PR Newswire) Rated: AAA

LendingTree today released the findings of its study on the cities with the highest rates of denied mortgage applications and why mortgage shoppers in those areas have been denied.

Since the financial crisis, mortgage lending standards have tightened as underwriting has become more stringent. There are numerous reasons why a lender could deny a loan, from poor credit score to prior bankruptcies, but other reasons can include a lender’s inability to verify a borrower’s employer.

Source: Lending Tree

LendingTree delved into data from more than 10 million mortgage applications using the most recent available Home Mortgage Disclosure Act data set to find out the main reasons would-be borrowers were rejected, and to see if location has any correlation for rejection.

Fintech firm Digit adds credit card debt payment to savings app (American Banker) Rated: AAA

Digit, maker of one of the first apps to help people save by automatically sweeping modest amounts of money from checking into savings, is turning its attention to credit card debt.

The app can now be set to automatically make an extra payment every month on a user’s credit card, the fintech announced Tuesday.

At the end of January, the Federal Reserve reported that U.S. consumers had $1.03 trillion in credit card debt.

Breaking Away From The Bi-Weekly Payroll Tradition (PYMNTS) Rated: A

Today, this payroll schedule means an estimated 70 percent of employees in the U.S. live paycheck-to-paycheck – and many struggle to make necessary purchases or payments in the days leading up to payday. It’s also linked to the rise in the payday loan industry, which has more U.S. storefronts today than McDonald’s, according to data from Pew. Lenders make a collective $7 billion in fees, according to analysts, and they stem from more than $46 billion worth of payday loans issued each year.

According to Steve Barha, CEO of Instant Financial, the rise of the payday loan industry and overdrafts certainly comes with its controversies, but it’s no mistake that the industry exists in the first place.

Unison Reports 1000% Growth Year over Year in Home Ownership Origination Volume (Crowdfund Insider) Rated: A

Unison, a unique financing platform for home ownership investments, is reporting strong year-over-year growth. According to the company, following a solid 2017, the origination volume for the first quarter of 2018 has grown and increased 1000 percent over the comparable period last year. This is due in part to an expansion of the management team and the availability of their service in ten new states.

Unison says these new hires will help extend their company into more states. In April alone, Unison HomeOwner and HomeBuyer programs will be available in 10 additional states including Florida, Georgia, Ohio, Michigan, Minnesota, Nevada, Colorado, North Carolina, Missouri and Delaware, bringing its total footprint to 22 states plus Washington D.C. Unison expects to broaden its reach over the course of 2018 to over 70 percent of U.S. single family residential housing units.

Mulvaney response to CFPB data security gaps baffles cyber experts (American Banker) Rated: A

Acting Consumer Financial Protection Bureau Director Mick Mulvaney has repeatedly pointed to data security as a defect in the agency’s supervisory program, but security experts are scratching their heads over the bureau’s response to such problems.

Mulvaney has said hundreds of CFPB-related data breaches justified his announcement in December that the agency would halt collecting personally identifiable information from companies it supervises.

Elevate vs. LendUp Payday Loans: Everything You Need to Know (Student Loan Hero) Rated: A

Pros of a LendUp payday loan
Getting cash fast is the main reason you’d choose a company such as LendUp. But they have some other benefits, as well.

  • If you pay your installment loan on time, you could boost your credit score.
  • The lender has an incentive program called the LendUp Ladder. You’re awarded points as you take out LendUp loans and repay them on time. As you accumulate points, the lender will reward you by allowing you to borrow at progressively lower rates.

For the sake of a side-by-side comparison, we’ll focus on Rise. Here are some pros of a Rise loan.

  • You can apply for a seven-day payment extension if you can’t pay on time.
  • The company will provide you with free access to your TransUnion credit score.
  • If you borrow from the company more than once, your interests rates could decrease.
  • Rates are lower than those offered by payday loans.
Source: Student Loan Hero

Chase customers can now use their voices to unlock their accounts (Tearsheet) Rated: A

Chase card members’ voices will soon be their passwords when they call for help.

The bank is debuting a voice-authentication feature for credit card customers dialing the call center this spring to reduce the customer burden of having to remember multiple passwords and answer cumbersome security questions. The initial launch would only be for credit card customers, but the bank plans to expand the feature to all customers by the end of the year, a spokeswoman said.

 

Hedge fund billionaire Steve Cohen’s venture capital group is on a fintech tear (CNBC) Rated: B

On Tuesday, Point72 Ventures will announce it led a $3 million investment in a startup called Extend, which has built mobile technology business owners can use to share their corporate credit cards with employees and freelancers without handing over the actual cards.

Earlier this month, the venture capital arm was a co-lead in a $29.4 million round for a New Jersey startup, DriveWealth, that has developed a mobile site for investing in exchange traded funds and stocks, and it led an $18.5 million investment in Silicon Valley-based DeepScale, which is developing autonomous driving technology.

United Kingdom

UK finance chiefs call for regulatory crackdown on tech giants Financial Times) Rated: AAA

Two of the financial technology executives involved in the FT debate — Funding Circle chief executive Samir Desai and Rhydian Lewis, his opposite number at RateSetter — agreed that GDPR was a welcome protection for consumers.

UK Fintech Humaniq Implements Smart bioID System to Further Strengthen Outgoing Transaction Security (Crowdfund Insider) Rated: AAA

UK-based fintech Humaniq announced on Tuesday it has implemented additional bioID settings that will act as an extra safeguard be integrated into Humaniq app, which the company reports has already had more than 100,000 downloads in the Google Play store.

Humaniq also revealed that the total transaction volume has reached 400,000 HMQ in more than 250,000 transactions per month. The company noted with the introduction of an additional layer of biometric authentication, this means over 10,000 transactions will be totally secured from fraud, benefitting over 100,000 users of Humaniq App.

Regtech start-up ClauseMatch lands £3.6m funding (Fintech Futures) Rated: A

ClauseMatch, a UK-based start-up in the regtech space, has raised £3.6 million ($5 million) in its Series A funding round.

ClauseMatch, specialises in smart document management. It is a graduate of Barclays’ accelerator programme, Techstars, and has Barclays and Intesa Sanpaolo on its customer list.

Could a credit card cap protect chronically broke Brits? (Guardian) Rated: B

A credit card cap is needed to protect “chronically broke” Britons struggling to make repayments on high interest loans, ministers have been told.

Labour’s Stella Creasy warned that credit card firms were pushing millions into debt in the same way payday lenders did before action was taken to prevent anyone having to pay back more than double what they borrowed.

The Walthamstow MP made the comments as she moved an amendment to the Financial Guidance and Claims Bill which would require the Financial Conduct Authority (FCA) to take tougher action on credit card firms.

Ministers must extend cap on payday loans to other high credit that’s targeting poor, vulnerable Brits, MPs say (The Sun) Rated: B

MINISTERS should “learn the lessons” of the payday loan cap and extend it to cover other forms of high-cost credit such as credit cards and doorstep lending, MPs have demanded.

In a boost for The Sun’s campaign to stop millions of families falling prey to doorstep and legal high street loan sharks, MPs called on the Government to take tough action to stop the nation “drowning in debt” and protect “chronically broke” Brits.

China

Hong Kong Approves Dual-Class Shares, Paving Way for Tech Titans (Yahoo Finance) Rated: AAA

Hong Kong Exchanges & Clearing Ltd. approved the biggest change to its initial public offering rules in two decades, putting it in a position to battle New York for some of the world’s hottest companies.

Technology firms that have shares with different voting rights will now be allowed to go public in Hong Kong, overturning rules that barred the likes of Alibaba Group Holding Ltd. from considering the former British colony. Businesses will be able to apply under the new regime starting April 30, HKEX said Tuesday.

 

European Union

Swedbank invests €3m in banking tech vendor Meniga (Fintech Future) Rated: AAA

Meniga, a white-label digital banking solutions provider, has received a €3 million equity investment from its customer, Swedbank.

The two firms partnered in 2017 to improve Swedbank’s digital customer experience through a personal finance activity feed and data aggregation platform. The new solution is intended to “give customers better control over their daily finances and a more personal, engaging experience than today”, according to Meniga.

The bank’s view of Open Banking (The Finanser), Rated: A

Another conversation about Open Banking, and an interesting point was raised by one bank. They said that they had been mapping financial moments – getting married, buying a house, having a baby, crashing your car, etc – and had started to reimagine the whole customer experience in those moments using APIs.

For example, I bring up my banking app 3-4 times a day. The bank probably thinks it’s love them as I bring up their app so often. Well I don’t love them at all. I’m just going into the app so regularly because, as a small business, I want to see if my customers have paid yet.

International

World Bank Releases the Latest Global Findex Database (Lend Academy) Rated: AAA

The Global Findex Database and accompanying report give a clear indication of how fintech is impacting access to financial services globally.

Source: World Bank

Globally, about 1.7 billion adults remain unbanked—without an account at a financial institution or through a mobile money provider. Because account ownership is nearly universal in high-income economies, virtually all these unbanked adults live in the developing world. Indeed, nearly half live in just seven developing economies: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan.

Fifty-six percent of all unbanked adults are women. Women are overrepresented among the unbanked in economies where only a small share of adults are unbanked, such as China and India, as well as in those where half or more are, such as Bangladesh and Colombia.

Read the full report here.

US fintech funding boomed at the start of 2018 — but early-stage funding is drying up in Europe (Business Insider) Rated: A

VC-backed fintech companies raised $5.4 billion across 323 deals globally in the first quarter, according to CB Insight’s latest fintech report, released on Monday.

The figures were supported by a big uptick in deal-making activity in the US. US fintechs raised $2.1 billion across 147 deals. Notable investments include a $165 million funding round for insurance startup Oscar in March and a $110 million capital injection for San Francisco’s Collective Health in February.

Source: CB Insights

While deal activity spiked in the US and Asia, it fell to a 5-quarter low in Europe with just 63 first quarter deals.

The slump was largely down to a decline in early-stage funding deals and came despite several $100 million-plus funding rounds for European challenger banks N26 and Atom. European fintechs raised $933 million in the first quarter.

 

Will Beijing Manage to Survive the US-Chinese Trade War? (Sputnik International) Rated: A

Beijing has kicked off a number of measures aimed at bolstering its economic growth, Chinese researcher Liu Dan told Sputnik. According to Liu, the country’s internal difficulties have not been triggered by the US tariff war unleashed by the Trump administration on China.

One should not overestimate the impact of Sino-American trade frictions on China’s economy, says Liu Dan, a researcher at the Chongyang Institute for Financial Studies (RDCY) of Renmin University of China.

Australia

Lending continues to rise Down Under for RateSetter Australia (Peer2Peer Finance) Rated: AAA

PEER-TO-PEER lending platform RateSetter continues to pass lending milestones in Australia as its loanbook reached A$250m (£136.5m).

The firm, which is the only Australian P2P lender open to retail investors, also announced that it now has more than 10,000 registered users on its site.

RateSetter has doubled its investor base in the country within a year, which it says is due to customer dissatisfaction with Australian banks.

P2P lender’s growth due to consumer ‘rebellion’ (Australian Broker) Rated: A

Peer-to-peer lender RateSetter has attributed its recent rapid growth to consumers actively rebelling against the big banks.

The amount invested by these investors has increased by 14% over the last 12 months, with average investment now sitting at close to $40,000.

Asia

House hunting? Soon you can crowdsource your downpayment via blockchain and smart contracts (E27) Rated: AAA

For millennials, this presents a major barrier to homeownership. While 70% of Chinese millennials have already managed to purchase their first real estate, only 35% of their Malaysian peers have followed suit according to HSBC data. For 64% of millennials around the world a combination of low income and soaring property prices make the prospects of owning a house rather gloomy. A lot of them also do not qualify for traditional loans and do not have the family support for making that downpayment.

Add to this new concept the technology of blockchain, and you have a method by which borrowers can access an alternative down payment funding source, and an immutable record of each borrower-lender agreement is permanently recorded. This serves four purposes:

  1. Blockchain eliminates the traditional borrowing method, with its middlemen and fees. The repayment details are worked out between the borrower and the individual lender.
  2. Blockchain democratises borrowing, because credit scores, history, etc., are not factors in obtaining the loans. If a borrower can show basic ability to repay, an individual lender will be willing to put up the money at an interest rate that is mutually agreed upon.
  3. The borrower-lender arrangement is codified and recorded in a blockchain that is secure and permanent. Both borrower and lender have the security of knowing that their agreement cannot be changed except by mutual agreement.
  4. Re-payments are also recorded in the blockchain environment, so there is never a question about the amount or the ultimate meeting of a borrowing obligation to any individual lender.

Authors:

George Popescu
Allen Taylor

Friday March 30 2018, Daily News Digest

Friday March 30 2018, Daily News Digest

News Comments Today’s main news: LendingClub grows short interest. Larry Summers resigns from LendingClub board. RealtyShares intros gap financing for projects under $20M. Mark Davies steps down from RateSetter board. Today’s main analysis: Heap’s behavior attribution platform. Today’s thought-provoking articles: Can Noto sell mortgages at his new SoFi post? China banks report drop in bad loans. Chinese families rack up […]

Friday March 30 2018, Daily News Digest

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingClub Corp (LC) Sees Significant Growth in Short Interest (the Ledger Gazette), Rated: AAA

LendingClub Corp (NYSE:LC) was the recipient of a large increase in short interest during the month of February. As of February 28th, there was short interest totalling 31,244,316 shares, an increase of 11.0% from the February 15th total of 28,142,392 shares. Based on an average daily volume of 9,132,224 shares, the days-to-cover ratio is presently 3.4 days. Currently, 11.3% of the company’s stock are short sold.

Larry Summers Has Resigned From the LendingClub Board (Lend Academy), Rated: AAA

Yesterday, we learned that after nearly six years Mr. Summers will be leaving the board of LendingClub. He is being replaced by leading economist and Stanford professor Susan Athey. While she is not nearly as well known as Larry Summers she still brings serious economics clout to the board.

Heap launches behavioral attribution platform (Venture Beat), Rated: AAA

Source Heap

Heap is aiming to automate insights and is starting today with the launch of Heap Behavior Attribution. The new product is the industry’s first attribution product that measures behavior and does so in a way that requires no data science or engineering resources, the company said.

The Heap Behavioral Attribution measures standard marketing channels (i.e. Google and Facebook), and also ties in a set of broad user behavior, including email, customer relationship management (CRM), shopping cart, customer success, and either-or testing platforms. Examples include user behaviors stored in Salesforce, Marketo, Shopify, Autopilot, Optimizely, Oracle, and more.

Source Heap

It has more than 100 employees and 6,000 customers, including Twilio, Lending Club, App Annie, Morningstar, Monotype, and Casper.

 

RealtyShares Introduces Gap Financing Program For Projects Under $ 20 Million (Business Wire), Rated: AAA

RealtyShares today announced a gap financing program that delivers subordinated financing solutions to commercial real estate owners seeking higher leverage on the financing of projects under $20 million. The suite of solutions, which includes preferred equity, mezzanine debt, and second lien loans, helps commercial real estate operators get the capital they need to buy, refinance, or renovate commercial properties.

He Can Fix Your Student Debt, but Can He Sell You a Mortgage? (Bloomberg), Rated: AAA

As chief operating officer of Twitter Inc., Anthony Noto did a lot to calm the company’s perpetually anxious shareholders. On Feb. 26, however, Noto took over as chief executive officer of a financial technology startup, Social Finance Inc., or SoFi.

He’ll be facing increasingly tough competition. SoFi sees Marcus, the consumer-lending business started by Goldman Sachs Group Inc. in 2016, as the biggest threat, according to people familiar with SoFi’s thinking.

One question Noto will have to navigate is how much SoFi should use its own balance sheet—that is, hold on to the loans it originates as opposed to selling them to other investors. It currently keeps a slice of loans but sells off most of them. Holding loans allows a company to earn a stream of interest income, but investors generally put a lower value on financial firms than tech platforms.

SoFi says it plans to hold 500 events in 2018, up from 41 in 2015.

The wealth management unit, fully launched in May 2017, had $42.3 million in assets under management as of Jan. 18, according to Prosser.

 

Instant Financing Offers Drive Sales, Decrease Cart Abandonment (Retail Touchpoints), Rated: AAA

E-Commerce retailers in the U.S. recognize the value of instant financing offers, and 64% believe providing financing options through their online store is important to driving new and increased sales, according to a survey from Klarna. Another 46% believe such services decrease cart abandonment, which is a pressing concern for retailers.

Instant financing is a revolving line of credit that shoppers can apply for during online checkout, letting them spread payments out over time with low annual percentage rate (APR) offers. The option is particularly appealing to Millennials, as fewer than 33% of them carry credit cards, according to a 2016 Bankrate survey.

Retailers’ enthusiasm for online financing is shared by shoppers, and a 2017 Researchscape International survey conducted on behalf of Klarna found that consumers:

  • Prefer online merchants that offer instant financing (75%);
  • Want to be presented with an instant financing option when shopping online (47%);
  • Would spend more if given instant credit options when making a purchase (39%); and
  • Are very or completely likely to change retailers to use instant financing (28%).

FINANCE THEORY, LISTED EQUITIES, AND LIQUIDITY (AllAboutAlpha), Rated: A

A recent paper from Robeco discusses whether a liquidity premium exists in the stock market. The authors, David Blitz, Jean-Paul van Brakel, and Milan Vidojevic, conclude that “the evidence for such a premium is, at best, weak.”

Less politely, these authors refer to the whole notion of a liquidity premium as having been “challenged and debunked in various studies.”

Theory and Practice

In a sense there “should” be a liquidity premium. The more illiquid a stock, the more difficult it is to trade it, which on some models means that illiquid stocks are less attractive than liquid stocks, and should command a premium. One should have to be bribed to hold an illiquid stock just as one has to be bribed to hold a risky one.

BLACK ENTREPRENEURS, SMALL BUSINESS OWNERS NOT TAKING ADVANTAGE OF SBA OFFERINGS (Black Enterprise), Rated: A

Here is a surprising statistic: Over 80% of small business owners have never visited their local U.S. Small Business Administration office.

The finding was revealed as part of a random survey of 409 owners and senior leadership at small businesses by national online lender Fundera and online research firm Qualtrics.

Fundera also offers a list of other resources black entrepreneurs can tap into to help them get help with everything from how to run a small business to becoming a certified minority business.

Marketplace Lending Update #2: Another Rocky Mountain Remand (The National Law Review), Rated: A

In our prior Clients & Friends Memo “Who’s My Lender?” published on March 14, 2018, we analyzed two actions brought against marketplace lenders, one against Kabbage Inc. (“Kabbage”) in federal court in Massachusetts1 and the other against Avant in federal court in Colorado.2 In that memo, we noted that the Massachusetts action against Kabbage is proceeding to arbitration, while the action against Avant was remanded to state court.

Last week, Colorado courts issued several new rulings related to marketplace lending. First, the federal court in Colorado remanded another enforcement action brought by the Administrator of the Colorado Consumer Credit Code against Marlette Funding (“Marlette”),3 which had been doing business as a marketplace lender in Colorado under the name Best Egg. Following the reasoning in the Avant decision discussed in our prior memo, the court rejected the marketplace lender’s argument that Colorado’s usury laws were subject to complete preemption under federal law and therefore the court granted plaintiff’s motion to remand. As a result, Avant and Marlette will be forced to make their arguments that a bank is the “true lender” and that the Colorado Administrator’s usury claims are therefore preempted by federal law, and any other defenses, in Colorado state court.

KBRA Comments on Cross River Bank’s Settlement with the FDIC (Business Wire), Rated: A

The FDIC announced yesterday that it had reached settlements with Cross River Bank (“Cross River”) and Freedom Financial Asset Management (FFAM). Kroll Bond Rating Agency (KBRA) believes that the settlement and related consent order have a low likelihood of adverse impact upon the credit profile of Cross River and that of its parent, CRB Group, Inc. (CRB). While FFAM represents a very small portion of Cross River’s customer base, KBRA believes any adverse regulatory action draws heightened scrutiny to Cross River and the MPL industry, a factor already considered in the current ratings. Furthermore, KBRA believes that the matters cited by the FDIC were isolated instances and is not representative of pervasive issues with Cross River’s Compliance Management System (CMS). Nonetheless, we believe that has Cross River has since adopted enhanced compliance and reporting requirements consistent with FDIC guidance and incorporated enhancements to their CMS.

Enacomm and VOX Network Solutions to Provide Financial Institutions with Data-Driven Phone and Digital Assistant Banking (Global Newswire), Rated: B

VOX Network Solutions (VOX) has announced a partnership with Enacomm, Inc. (Enacomm) to bring Enacomm’s self-service solutions to VOX clients.  Through the reseller agreement, financial institutions will be equipped with VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

Crypto Asset Expert David Drake Joins Advisory Board of Digits (Nothing in Particular Blog), Rated: B

Digits, a leading crypto company using technology aimed to combine the convenience of credit and debit card payments with the utility of cryptocurrency payments and to easily allow the consumer the ability to effortlessly pay for goods and services with crypto via their existing credit or debit card, announced today the addition of a highly respected crypto expert, David Drake, to its advisory board team.

United Kingdom

Betfair founder Mark Davies steps down from RateSetter board (Peer2Peer Finance), Rated: AAA

MARK Davies has stepped down from the board of RateSetter after more than six years.

Davies, who was part of the founding management team at e-gaming company Betfair, joined the board of the peer-to-peer lender as a non-executive director in November 2011 – just 13 months after the company’s launch.

Data gatherers should be regulated like financial advisers (Financial Times), Rated: A

There was a time in the UK when most people were under the impression that financial advice was free. They went to see an adviser. He gave them advice. They handed over their money to him to be looked after. They never got a bill.

Only when the government changed the laws in 2012 did they realise they were paying. A lot. They just hadn’t noticed for the simple reason that they did not physically pay it to the adviser.

Deal maker Numis on the front foot after M&A numbers surge (Evening Standard), Rated: A

The City broker, which worked on the Trinity Mirror takeover of the Daily Express, and the sale of cocktail bar Revolution, said sales would be “significantly ahead” of £53 million recorded last year.

Since September, the company has worked on big deals like  the Mirror-Express takeover, the £600 million float  of car insurer Sabre and  the Aveva tie-up with Schneider’s electrical business.

Numis is also lined up to work on AJ Bell’s £500 million float and Funding Circle’s £1.5 billion float later in the year.

Shares rose 1.5%, gaining 5.5p to 365p.

One year to Brexit: How to protect you finances (Money Observer), Rated: A

Brexit is officially one year away and the impact it is having, and will continue to have, on our financial lives is filling the pages of our newspapers and TV screens daily.

Foreign currency

Since the Brexit vote in June 2016, sterling has fallen significantly in value against the euro. The pound reached a high of €1.42 in October 2015, but at the time of writing on 20 March 2018, it was worth 21 per cent less at €1.14, according to currency specialist Moneycorp.

Typical transaction costs for using your card abroad are between 2.75 and 2.99 per cent, and you will be charged a non-sterling purchase fee of up to 1.25 per cent on top.

Each time you use an ATM abroad, you can also be charged anything from £1.50 to £2 a time, so it is wise to withdraw larger sums in one go or to get a specialist overseas card that allows fee-free spending and cash withdrawals, according to Nick England, chief executive of travel money firm EasyFX.

Where are the current UK BTL hot spots? (Property Reporter), Rated: B

The latest UK buy-to-let index from property finance experts, LendInvest, has shown that the Midlands appears unaffected by the UK’s current house price growth slowdown, sending three of its largest cities into the top 5 places to invest – but where came out top?

  1. 1.  Colchester
  2. 2.  Northampton
  3. 3.  Leicester
  4. 4.  Luton
  5. 5.  Birmingham
  6. 6.  Manchester
  7. 7.  Ipswich
  8. 8.  Brighton
  9. 9.  Rochester
  10. 10.  Norwich

Together appoints new regional development director (Bridging & Commercial), Rated: B

Together has expanded its professional sector team with the appointment of Mel Fourie as its new regional development director.

Mel joins the specialist lender from RateSetter, where she was its strategic partnership manager covering the North of England.

China

Big four China banks report first drop in bad loans in 6 years (Asian Review), Rated: AAA

Industrial and Commercial Bank of ChinaChina Construction BankAgricultural Bank of China and Bank of China had a total of 765.7 billion yuan ($122 billion) in non-performing loans on their books at the end of 2017, marking a 0.2% drop on the year.

Non-performing loans ratios — a gauge of asset quality — averaged 1.57% at the four state-owned lenders, 0.15 percentage point less than at the end of 2016. “Special mention” loans with an elevated potential for default decreased 0.9% to 1.59 trillion yuan. All four banks had reported 2017 results as of Thursday.

Famous for hoarding cash, Chinese families are now racking up debt on an unprecedented scale (South China Morning Post), Rated: AAA

Chinese families with their long tradition of saving money are now accumulating debt at a rate never been seen before, according to data compiled by a state-backed think tank in Beijing.

The country’s household leverage ratio – or the ratio between debt incurred by families and gross domestic product – surged to 49 per cent at the end of last year from 17.9 per cent at the end of 2008, going up about 3.5 percentage points annually, the think tank said in a report released on Thursday.

So in the period from 1993, when the data became available, to 2008, the household debt ratio went from 8.3 per cent to 17.9 per cent, with an annual rise of 0.65 percentage points.

According to its report, average disposable income could cover standard loan interest and mortgage repayments, while households were still sitting on 70 trillion yuan (US$11.13 trillion) worth of bank deposits and cash overall – enough to offset the 40 trillion yuan in outstanding bank debt.

Dianrong and Sino Guarantee Announce Lenders Protection Plan (PR Newswire), Rated: A

Dianrong and China United SME Guarantee Corporation, known as Sino Guarantee, one of China’s leading guarantee companies, today announced a new lenders protection plan for Dianrong customers. The plan, which went into effect at the beginning of 2018, is designed to provide third-party protection in the event of a loan default.

Dianrong’s borrowers now have the option to purchase the Sino Guarantee lenders protection plan, which further improves the borrower’s risk and credit profile. Sino Guarantee will then use a dedicated fund account to pay lenders the loan principal and any outstanding interest in the event of a loan default covered by the plan.

European Union

Spotcap Roundtable: Customers Expect More as Fintech Boosts User Expectations (Crowdfund Insider), Rated: A

Spotcap, an SME focused online lender based in Berlin, recently held a roundtable on the future of finance. Individuals from prominent firms joined with the Fintech lender to assess progress made so far. Representatives from Deutsche Bank, Figo, GP Bullhound, McKinsey along with Spotcap debated how the financial ecosystem model will evolve, the implications for the customer, and the challenges and opportunities for Fintechs and more traditional financial service firms.

International

Alt.Estate To Become an Industry Standard for Blockchain-Based Real Estate Transactions (the Merkle), Rated: A

Using the blockchain technology to disrupt the real estate market, Alt.Estate has a strong potential to become an industry standard for the blockchain-based real estate transactions. A strong technology stack, a go-to-market strategy with 10X leverage, a working prototype with three tokenized apartments in key geographies, strong community support, and a solid pipeline of enterprise deals all position Alt.Estate as a win-win solution for real estate developers and investors.

Estimated at $217 trillion, the real estate market is worth nearly 2.7 times the global GDP.

“ERC-20” FOR REAL ESTATE

Developed two years ago, ERC-20 has quickly become a significant industry standard for all the tokens on Ethereum. Inspired by the approach of ERC-20 developers, Alt.Estate’s Protocol aims to become an industry standard for the tokenized real estate.

 

Asia

This Startup Combines FinTech And Traditional Lending Circles To Empower Women (Forbes), Rated: AAA

When Fonta Gilliam joined the foreign service out of school, she didn’t expect it would lead her to entrepreneurship. But after seeing community lending in practice throughout her work in East Asia and Africa, Gilliam wondered what would happen if she combined these traditional practices with new financial technology.

It all started when Gilliam was working in the visa department at the embassy in South Korea.

The practice of a lending circle is a kind of informal savings program. Say you have 10 members who each put $100 into the lending club each month. One member collects the full 1,000 each month and each month the total amount rotates until 10 months has passed and the circle starts back at the beginning.

Proptech – the emerging disruption in real estate (The Business Times), Rated: A

In proptech, three forms of technologies are particularly pertinent and pervasive: blockchain, augmented reality (AR) and artificial intelligence (AI). In Singapore, these technologies are already making their impact felt in the real estate industry with their adoption by startups, global corporations and the government.

Blockchain: facilitating real estate transactions

A form of distributed ledger, the blockchain is distributed across nodes, locations and even countries. Being decentralised, it eliminates the need for an intermediary to process, validate or authenticate transactions.

Artificial intelligence: extracting insights from data

The most valuable tech companies (Facebook, Amazon, Netflix, Google) are where they are today because of the trove of consumer data they possess and continue to accumulate. In the realm of technology, data is wealth, and AI is the key to unlocking this wealth. AI, as the name suggests, is teaching the computer to think like a human, making sense of the data fed to it.

Proptech: transforming real estate in Singapore

Cognisant of the need to keep up with change, the Singapore government has introduced an Industry Transformation Map (ITM) for the real estate industry. The ITM is focused on using automation, digitised contract templates, and predictive systems to streamline processes for property transactions and facilities management.

MENA

How GISC LoanCoin Network (GIS) is democratizing Credit with its Blockchain P2P, B2B & Altcoin Lending Platform (MenaFn), Rated: AAA

GISC uses a strict proprietary model composed of a fundamental and technical analysis strategy. So when their analysts suggested that cryptocurrency are poised to outperform in developing nations for some years to come, the company dedicated to coming up with a solution that would basically democratize lending of blockchain digital assets on a global scale.

GISC LoanCoin Network platform is designed with an aim of bridging traditional lending services to the blockchain and opening access to the non-banked. GISC LoanCoin Network is a Ethereum blockchain utility token based lending platform that will support P2P and B2B lending by eliminating intermediaries like banks and other financial institutes. It’s a platform where borrowers can interact and deal directly with the lender and GIS token holders can earn income by becoming Lenders or Guarantors.

GISC differs from other lending platforms like ETHLend and SALT in a way that GLN lends against Altcoins and this feature is yet to be introduced by any other lending platform. The platform usually takes a low, around 2% transaction fee for credit assessment/KYC-AML/ ID verification and connection through the network.

Authors:

George Popescu
Allen Taylor