Wednesday May 17 2017, Daily News Digest

developed ex-us vs usa total market etf

News Comments Today’s main news: Earnest is looking for a buyer. SoFi gets into wealth management. DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-C LLC. Prosper issues new securitization backed by George Soros. Lending Club hires PayPal exec as new president. TransferWise reaches profitability. Renren announces 2016 results, unaudited. Today’s main analysis:  Capital One forays into digital ID. Today’s […]

developed ex-us vs usa total market etf

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

South America

News Summary

United States

SoFi gets into wealth management (TechCrunch), Rated: AAA

SoFi wants to be at the center of its members’ financial lives, and believes the best way to do so is to provide new products that complement its existing portfolio of student loan, mortgage and other loans. Today the company is announcing the launch of SoFi Wealth, a product it believes will compete with Wealthfront, Betterment and other low-cost wealth management platforms.

But the company is looking to go a step further than just creating yet another roboadvisor. SoFi Wealth will offer access to non-commissioned, licensed financial advisors that members can reach by phone or by chat to answer investment questions or just help them improve their overall financial health.

Wealth management customers will get the same benefits as other members, including access to community events, career coaching and discounts on other SoFi products. Management fees will be waived for SoFi loan borrowers, but otherwise are just 0.25 percent and will be waived for the first $10,000 invested.

People interested can sign up with as little as a $500 initial investment or monthly recurring deposit of $100 for access to any of its low-cost ETFs.

Capital One forays into digital ID, aiming to leverage KYC know-how (American Banker), Rated: A

Capital One Financial is trying to turn the expense of thoroughly vetting bank customers into a moneymaker with new digital identity products.

In so doing, Capital One is one of the first in the U.S. to test if businesses will pay banks to check users’ identities, and if consumers will sign into websites through their banks the way they use social media accounts. Since banks already have to collect and verify sensitive information, to comply with know-your-customer regulations and to prevent fraud, they theoretically could leverage this work and expertise for other businesses. Consumers, in turn, would have fewer passwords and usernames to remember and would not have to give out sensitive information such as Social Security numbers quite as often. Banks in Europe and Canada have begun to offer such services.

It is a market that several U.S. banks are dipping their toes into. One of the most prominent is USAA; in the past several years it has acquired multiple digital identity firms. This year it also granted development rights to some of its patented security technologies to Persistent Systems to create digital authentication tools.

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-C LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of Post-Graduate Loan Asset-Backed Notes (the Notes) issued by SoFi Professional Loan Program 2017-C LLC (SoFi 2017-C):

— $96,069,000 Class A-1 rated AAA (sf)
— $230,156,000 Class A-2A rated AAA (sf)
— $175,653,000 Class A-2B rated AAA (sf)
— $41,000,000 Class B rated AA (sf)
— $18,000,000 Class C rated A (sf)

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-1 Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-2A Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-2B Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class B Provis.-New AA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class C Provis.-New A (sf) May 16, 2017 US

Lending Club hires Paypal global credit head as new president (Financial Times), Rated: AAA

Lending Club has hired the head of Paypal’s global credit business as its new president, amid efforts to get on the front foot after last year’s loan mis-selling scandal.

Steve Allocca, PayPal’s vice-president of global credit, will start work at Lending Club next week, the company said in a statement on Tuesday, reporting to Scott Sanborn, chief executive. He will lead Lending Club’s efforts to deliver credit to more people across an expanding range of product categories, the company said.

PayPal Credit is the successor to BillMeLater, which PayPal’s then-parent, eBay, bought in 2008. The idea was to expand the company’s financial offerings, help merchants get more business and beef up its fraud detection tools.

Before joining PayPal in 2013, Mr Allocca had various consumer-facing roles at Wells Fargo after training as a banker at First Chicago, a bank bought by Bank One and then JPMorgan Chase.

US marketplace lender Prosper issues new securitization backed by George Soros (AltFi), Rated: A

US marketplace lender Prosper is prepping a $450.5m consumer loan ABS transaction that is expected to close on May 24, 2017.

Prosper announced it had agreed a $5bn programme of securitizations backed by a consortium of investors including credit Suisse and George Soros’  Soros Fund Management LLC.

Online Lender Earnest Said to Be For Sale (Crowdfund Insider), Rated: A

According to a report by Bloomberg, Earnest is up for sale. The San Francisco based online lender is said to have an asking price of $100 million. Founded in 2013, Crunchbase reports Earnest has raised over $99 million not including an undisclosed sum in a VC round in January 2016 and $200 million of debt financing.

DBRS Confirms Ratings on Three OnDeck Asset-Backed Securities Transactions (DBRS), Rated: A

DBRS, Inc. (DBRS) has today conducted a review of the outstanding public ratings of five securities from three structured finance asset-backed securities transactions: OnDeck Asset Securitization Trust II LLC, Series 2016-1; OnDeck Account Receivables Trust 2013-1 LLC; and Prime OnDeck Receivables Trust II, LLC. Of the five ratings reviewed, all were confirmed at their current rating levels.

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
OnDeck Asset Securitization Trust II LLC, Series 2016-1 Series 2016-1 Asset Backed Notes, Class A Confirmed A (sf) May 16, 2017 US
OnDeck Asset Securitization Trust II LLC, Series 2016-1 Series 2016-1 Asset Backed Notes, Class B Confirmed BBB (low) (sf) May 16, 2017 US
OnDeck Account Receivables Trust 2013-1 LLC Class A Revolving Loan Note Confirmed A (low) (sf) May 16, 2017 US
OnDeck Account Receivables Trust 2013-1 LLC Class B Revolving Loan Note Confirmed BBB (low) (sf) May 16, 2017 US
Prime OnDeck Receivables Trust II, LLC Class A Loans Confirmed A (low) (sf) May 16, 2017 US


SoFi’s CEO wishes the US had less student loan debt
(TechCrunch), Rated: A

SoFi was founded on the business of helping high-earning graduates refinance their student loans. But perhaps ironically, CEO Michael Cagney thinks today’s record amount of student loan debt is a bad thing.

“When you go to a school and take a loan out, no one explains what you can afford, how much money you’re going to make when you graduate and how much you’re able to pay back,” he explained.

Meanwhile, universities aren’t incentivized to provide that education because it’s in their interest to have students matriculate, and there’s no downside to the college when a graduate is unable to pay back their loans.

Money360 Closes $ 45M in Commercial Real Estate Loans in April, Breaks Monthly Record (Marketwired), Rated: A

Money360, a commercial real estate marketplace lending platform, closed more than $45 million in loans in April, the company announced today. This brings the company’s total production to over $250 million in closed loans, with an expected $500 million in transactions by year-end. Money360’s recent loan closings span properties nationwide and provide a variety of borrowers with quick funding to purchase or refinance income-producing properties.

The more than $45 million in loan closings, all of which have loan-to-value ratios of not more than 75 percent, include:

  • A $9.70 million bridge loan for a two-story, 198-room hotel property in Fayetteville, North Carolina. The 131,000 square foot property was built in 1983 and renovated in 2011.
  • A $7.70 million bridge loan for a multi-tenant, medical office building in San Jose, California containing 20,341 square feet of rentable space.
  • An $8.50 million bridge loan for a five-story, multi-tenant office property in Orange County, California containing 58,755 square feet of rentable space.
  • A $4.90 million bridge loan for a two-tenant, 19,107 square-foot anchored retail property in Ocean County, New Jersey.
  • A $6.00 million permanent loan for a one-story, 10-tenant retail property in Johnson County, Kansas containing 39,483 square feet of rentable space.
  • A $3.48 million permanent loan for a one-story, four-tenant retail property in Johnson County, Kansas containing 21,450 square feet of rentable space.
  • A $5.00 million permanent loan for an anchored retail center containing 202,219 square feet of rentable space, located in San Bernardino County, California.

Automation Drives Retirement Savings to New Heights (Financial Advisor IQ), Rated: A

Financial advisors may want to pay closer attention to automation in retirement savings accounts. Auto-escalation and auto-enrollment played major roles in how Fidelity retirement savings accounts reached new highs this year, Bloomberg writes.

Among the 27% of employees who raised their contribution, 50% did so in such auto-escalation accounts, Jeanne Thompson, a senior vice president at Fidelity, tells the news service. And for workers under 30, automated increases accounted for a whopping 68% of the rise in savings rates, according to Fidelity’s analysis.

SoFi CEO explains how his fintech company will make banks ‘more… (CNBC), Rated: A

CBC National Bank Ranked 3rd Highest Customer-Rated Mortgage Lender in First Quarter by LendingTree (PR Web), Rated: A

CBC National Bank, headquartered in Fernandina Beach and with branches in Fernandina Beach, Ocala and The Villages, Fla., and Beaufort and Port Royal, S.C., today announced that it has been named by LendingTree as the 3rd highest customer-rated mortgage lender in the first quarter of 2017.

Online loan marketplace LendingTree said its rankings feature top lenders in multiple loan product categories, including mortgages, personal loans, business loans, and auto loans. CBC National Bank earned the 3rd highest ranking in the mortgage category.

Can financial technology unite Republicans and Democrats? (The Hill), Rated: A

Last year, the Office of the Comptroller of the Currency (OCC) set a course for the future of financial services. Now it appears that the agency is adrift without a captain, and a storm is upon it.

The fintech charter proposal may not survive legal challenge. The OCC has said that it has authority to issue fintech charters to non-depository companies if they engage in other “core banking activities,” such as paying checks or lending money. But that position is based only on the OCC’s own 2003 regulation, which the state regulators are also challenging. And, as Sens. Merkley and Brown noted, other SPNBs that do not accept deposits (bankers’ banks, credit card banks, and trust banks) are specifically authorized by Congress under the National Bank Act.

Congressional Republicans and Democrats have both recognized the importance of the issue, and Congress is the right institution to explore the implications for the burgeoning fintech industry and the federal-state banking system. And unlike the highly partisan warfare over the Dodd-Frank Act, the SPNB charter provides a rare opportunity for members of both parties to work together to fully examine the risks and benefits of providing a national bank charter to fintech companies.

Finra chairman John Brennan says DOL rule has raised standard for financial advice (Investment News), Rated: A

Finra chairman John J. Brennan said on Tuesday that even if the Labor Department’s fiduciary rule is repealed, it has elevated and put into plain language the idea of providing investment advice that’s better for clients’ returns than for financial advisers’ revenue.

The DOL regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts, was supposed to be implemented on April 10. That date was pushed back to June 9 so that the agency can reassess the measure under a directive from President Donald J. Trump that could lead to its modification or repeal.

If the DOL rule meets its demise, the concept will live on at the Securities and Exchange Commission and at Finra, the broker-dealer self-regulator, Mr. Brennan said.

Finra president and CEO Robert Cook said he supports the concept of raising advice requirements for brokers.

Clayton’s SEC Likely to Roll Back Enforcement (Financial Advisor IQ), Rated: A

The SEC’s new chief is likely to focus on well-functioning capital markets and capital formation rather than enforcement, Todd Cipperman writes in the Hill.

But Clayton’s “Wall Street pedigree” and his opening statement to the Senate Banking Committee suggests that he will not spearhead enforcement to the same extent as his predecessor, Mary Jo White, Cipperman writes.

As a securities lawyer to Wall Street firms, Clayton will likely focus on broader policy goals and regulations vetted by the financial industry, in part by putting more emphasis on the Division of Investment Management and the Division of Trading and Markets rather than enforcement, according to Cipperman.

But Clayton’s reign isn’t likely to result in unregulated markets. Clayton cites as role models former SEC chairmen Arthur Levitt and William Donaldson, both of whom were tough on the industry despite being insiders, according to Cipperman. Because of that — and because regulatory change occurs slowly — advice firms should stay focused on compliance, he writes.

Real estate crowdfunding firm graduates to first apartment property (IBJ), Rated: A

A local startup that uses crowdfunding to invest in residential real estate is starting to make bigger acquisitions by progressing from rental homes to apartment complexes.

Jacob Blackett and Sterling White launched Holdfolio in October 2014 by attracting investors to collectively purchase run-down rental houses that the company could renovate with hopes of turning a profit.

Now the company has acquired its first apartment property, in the Garfield Park neighborhood on the city’s near-south side, and has another under contract in Beech Grove.

Holdfolio buys properties and bundles them into a portfolio. The residential properties are renovated, and outside investors can buy equity stakes in the properties via an online platform. They receive returns from rents paid for the properties.

The company so far has drawn about 100 investors who have forked over a minimum of $10,000 each. Holdfolio says they have reaped an 8 percent average annual return on their contributions.

The company targets properties that are considered distressed and in areas of the city that can benefit from the company’s investment. Holdfolio typically purchases the homes it targets for roughly $25,000.

Elevate Appoints Denise Russell as Head of Enterprise Risk Management (BusinessWire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the appointment of Denise Russell as Chief Risk Officer, effective immediately.

As Chief Risk Officer, Russell will oversee internal audit, regulatory compliance and enterprise risk management operations including risk identification and mitigation activities. She will work closely with the Elevate executive and legal teams to identify opportunities for enterprise risk reduction in support of the company’s strategic plan. Russell will lead a team of more than 15 compliance, audit and risk management professionals.

United Kingdom

Fintech unicorn TransferWise reaches profitability, planning ‘new financial services (TechCrunch), Rated: AAA

Six years after launch, TransferWise, the London-headquartered international money transfer startup, which was most recently valued at a reported $1.1 billion, has announced that it has finally reached profitability this calendar year and is “cash-generating”.

Breaking this down a little, the company says it’s currently seeing £8 million per month in revenue, which extrapolates to a £100 million revenue run-rate, and is growing 150 per cent year-on-year and expecting to do the same this year. It also says over £1 billion is being moved every month, saving its customers what it claims to be over £1.5 million per day in foreign exchange fees.

With that said, let me speculate on what products I think the company could quite easily move into, should it choose to do so. Friend-to-friend or P2P payments within the same country, along the lines of Paypal’s Venmo or Barclays Pingit, doesn’t seem a stretch, given that TransferWise already has much of that infrastructure already in place. It also seems odd that the company doesn’t offer its own debit card with low cost currency exchange when spending abroad, for example.

Were TransferWise to do the latter, that would see it go up against Revolut, and a ton of other much more recent fintech startups that utilise MasterCard’s low exchange rate, including all-your-cards-in-one app Curve, of which Hinrikus himself is an investor.

P2P Property Lender Lendy Tops £300 Million. (Crowdfund Insider), Rated: AAA

Peer to peer property lender Lendy has surpassed £310 million in originations with £50 million coming in last 100 days. The P2P lender states that investors and developers are responding to post-Brexit slowdown in bank lending.  Lendy adds that quick turnaround, security and low Loan to Value (LTVs) are key to their growth. Lendy says there are over 16,000 registered users on their site.

Lendy highlighted several UK property investments recently listed on their platform:

  • £7.5 million for the purchase and redevelopment of a commercial building in Marylebone, central London
  • £5.7 million for the development of a major residential building at Liverpool waterfront
  • £2.4 million for the development of a major student accommodation complex in Huddersfield

CreditEase’s Tang Joins Oxford Said’s New Global Leadership Council (PR Newswire), Rated: A

CreditEase announces today that its founder and CEO Ning Tang has been appointed to the University of Oxford’s Said Business School’s (“Oxford Said”) new Global Leadership Council. This council of senior global leaders will provide independent advice and guidance to the school.

Said Business School is a vibrant and innovative business school embedded in the historic and prestigious University of Oxford. The school offers programs and research opportunities that have global impact and help individuals and organizations find ideas and valuable network to tackle world-wide problems. As one of the fastest growing business schools in the world, the school is ranked 1st in the UK in the FT’s ranking of open enrollment programs in 2016, and 2nd globally for aims achieved in the FT ranking of MBA programs in 2017.

BondMason looks to non-P2P investments (P2P Finance News), Rated: A

PEER-TO-PEER investment manager BondMason is increasing its exposure to non-P2P lenders to broaden its offering.

The firm aims to get its clients a seven per cent return by selecting P2P loans across approved platforms on their behalf, but chief executive Stephen Findlay says he is now looking outside the industry to provide more diversification for investors.

BondMason is also working to increase awareness among financial advisers and recently partnered with professional body the Chartered Institute of Securities and Investment (CISI) to compile a report on the P2P sector.

Fintech competition heating up in money transfer space (AltFi), Rated: B

Revolut has quietly allowed users to make international money transfers in roughly 3-5 days for some time. These transfers are free for amounts of up to £5,000, with a 0.5 per cent charge applying for larger amounts.

Now there is a new Turbo option, which will see international transfers delivered in 1-2 business days, for a flat rate fee of £5 for amounts of up to £5,000, again with a 0.5 per cent fee applied for larger sums.

China

Renren Announces Unaudited Fourth Quarter and Fiscal Year 2016 Financial Results and Update on Proposed Transactions (PR Newswire), Rated: AAA

Fourth Quarter 2016 Highlights

  • Total net revenues were US$20.3 million, a 49.8% increase from the corresponding period in 2015.

    • Advertising and Internet Value-Added Services (IVAS) net revenues were US$10.8 million, a 31.4% increase from the corresponding period in 2015.
    • Financing income was US$9.5 million, a 77.8% increase from the corresponding period of 2015.
  • Gross profit was US$4.4 million.
  • Operating loss was US$16.4 million, compared to an operating loss of US$29.0 million in the corresponding period in 2015.
  • Net loss attributable to the Company was US$93.3 million, compared to a net loss of US$53.0 million in the corresponding period in 2015.
  • Adjusted net loss (1) (non-GAAP) was US$87.9 million, compared to an adjusted net loss of US$43.2 million in the corresponding period in 2015.

Fiscal Year 2016 Highlights

  • Total net revenues were US$63.4 million, a 54.1% increase from 2015.
    • Advertising and IVAS net revenues were US$34.0 million, a 4.7% increase from 2015.
    • Financing income was US$29.4 million, compared to US$8.6 million in 2015.
  • Gross profit was US$11.6 million, compared to US$4.4 million in 2015.
  • Operating loss was US$73.0 million, compared to an operating loss of US$105.3 million in 2015.
  • Net loss attributable to the Company was US$185.4 million, compared to a net loss of US$220.1 million in 2015.
  • Adjusted net loss (1) (non-GAAP) was US$161.8 million, compared to an adjusted net loss of US$193.3 million in 2015.

(1) Adjusted net loss is defined as loss excluding share-based compensation expenses and amortization of intangible assets. See “About Non-GAAP Financial Measures” below.

CDB Capital Leads $ 42M Round In Chinese Fintech Firm Wacai (China Money Network), Rated: A

China Development Bank Capital, an investment unit under China Development Bank, has led a US$42 million strategic investment in Chinese financial technology firm Wacai.

Chinese investment firms CBC Capital, New Horizon Capital, Qiming Venture Partners and Ally Bridge Group also participated in the financing round, the company announced today. Today’s investment brings the company’s total fundraising to over US$200 million cumulatively.

The company has cumulative users of 160 million and has facilitated wealth management product transactions in the range of RMB100 billion (US$14.5 billion) annually, it says.

European Union

Twino and KPMG publish European alternative lending index (Finextra), Rated: AAA

TWINO, Europe’s fastest growing peer-to-peer (P2P) lending platform, has today released the first ever Alternative Lending Index (ALI) in conjunction with KPMG.

The report compares lending environments across Europe over the period 2010- 2016.
Highlights
· Highest ranked countries for alternative lending in Europe are: Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland
· Countries with largest potential in terms of overall lending market size and alternative lending environment are: Poland, Greece and Ireland
· In 2010-2016 total density of credit institutions per 1 million inhabitants decreased from 19 to 15
· Aggregate European credit gap has increased from close to breakeven in 2010 to 12 percentage points of GDP
· Significant differences in availability of financing for household and corporate borrowers across countries:
· UK significantly higher for corporate borrowers than for households
· Credit gap for the UK and France is negative, indicating lending demand is met with a surplus
· Germany is lending market leader – total outstanding loans reach EUR 2.5 trillion, followed by France, where outstanding loans are EUR 2.1 trillion
· Ireland top country by number of credit institutions per 1 million inhabitants, followed by Austria and Finland
Currently the countries ranked as the most favourable for the expansion of alternative lending are Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland whilst France, Germany, Netherlands, Austria, Finland and Sweden show highly efficient lending markets and therefore the lowest ALI.

Interview with the Founders of DoFinance Janis and Viesturs Kulikovoskis (P2P-Banking), Rated: A

What are the three main advantages for investors?

  • Potential investment risks for investors are well-balanced and brought to minimum: all loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away;
  • You have access to your money at any timeif you decide to withdraw invested money before the due date, you can receive your money starting from 14 to 28 days after your request with (or without) accumulated interest, depending on your chosen investment plan and preferred withdrawal term;
  • Your money never sits still; it is always earning. Auto Invest program on DoFinance reinvests funds the moment the borrower returns the loan and the investor’s money becomes available.

According to the press release Alfa Finance Group has invested 2 million Euro in launching DoFinance. Can you please describe what the money was used for?

The money was invested in technologies to create the platform and in building our loan portfolio.

What was the greatest challenge so far in the course of launching DoFinance?

The greatest challenge was to develop a risk assessment tool that would minimize the risk of failure to repay the loan, be effective and secure. Risk assessment and management is our strength, and all our loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away.

Another challenge was becoming available also to Asian investors. DoFinance is the first European-based P2P lending platform to open customer center in Indonesia, bringing together European customer centered approach and Asian investors. We are happy to be the first ones to offer such individual approach to all our customers and give the chance to Asian investors to invest in Europe.

Is DoFinance open to international investors?

Yes, DoFinance is available to private individuals holding a bank account in EU, EEA countries as well as Asian countries which are not included in the lists of high-risk and non-cooperative jurisdictions and international sanctions (Indonesia, Singapore, Vietnam etc.).

What is your opinion on the planned upcoming regulation in Latvia for p2p lending?

Fintech industry has a potential to become Latvia’s success story which would contribute to both image and prosperity of the country, thus there must be healthy balance between industry regulation and its self-regulation. The entire financial industry and eventually the consumer will benefit from the development of FinTech as banks and FinTech companies will start cooperating when it comes down to providing financial services, customer service etc. Therefore, it is the state’s responsibility to create environment where these companies will stand and where intellectual capacity of labor will increase and taxes will be paid. At the same time, the regulation must ensure transparency and monitoring – simply because then dishonest entrepreneurs wouldn’t be able to harm investors.

International

US AND GLOBAL STOCKS REMAIN STRONG – WEEK OF MAY 16, 2017 (SoFi), Rated: AAA

U.S. stocks are strong; developed world stocks are rallying, but still uncertain; and despite some investors’ fears, emerging markets are still appealing. Here’s what’s been happening in the market over the past few weeks.

U.S. equities remain strong
United States equities are continuing to look very attractive after a positive jobs report and an impressive earnings season. The hiring report in early May was more positive than expected with 211,000 jobs added in April, bringing unemployment to a 10-year low. There was also continued wage growth, meaning that, on average, households were getting a bump in income. This increased spending power in the economy bodes well for U.S. equities (stocks).

Earnings season has also revealed impressive corporate earnings growth. While it’s relatively easy to have nowhere to go but up after negative earnings growth in the first two quarters of last year, it’s still reassuring to see higher company earnings and sales growth pushing stock prices up.

Developed world equities still uncertain despite rally
Over the past two weeks, stocks of companies in the developed world outside the U.S. are catching up after lagging behind for much of the post-U.S. election rally. This is largely because European equities were held back due to uncertainty about which way the French election would go. With Macron’s victory and a smooth election in the Netherlands back in March, developed world (excluding U.S.) equities have begun to close the gap.


In Japan, equities remain reliant on Japanese policy makers to lead the country out of its current disinflationary state, but current efforts inspire little confidence based on the failure of similar policies in the past.

Emerging markets hold potential
The cyclical recovery story in emerging markets is still holding our attention. After years of lagging behind the developed world with recessions in Brazil and Russia, we are finally seeing growth at a faster pace. Global trade is accelerating once more, and the positive growth in the U.S. and E.U. is expected to further boost emerging market economies as demand for exports increases.

There have been some recent signs of slowed growth in China. This is mostly due to the fact that China recently raised interest rates in order to curb property price inflation.

Backed by Chinese gov, Silk Ventures is a new $ 500M fund to invest in European and U.S. ‘scale-ups’ (TechCrunch), Rated: A

European and U.S.-based tech ‘scale-ups’ with Asia ambitions, rejoice. Outing today is a new $500 million VC fund from Silk Ventures, and backed in part by the Chinese government.

It plans to invest across all stages from Series-A upwards, and says that, although it will remain open to tech startups from any sector, a key focus will be “deep tech and science, industry 4.0 technologies, such as Internet of Things and robotics, fintech and medtech companies”. I’m told that the first investments from the fund will be announced in July.

Headquartered in London but with offices in Menlo Park, Beijing and Shenzhen, too, Silk Ventures took its tentative first steps as what it describes as a “digital accelerator,” consisting of an online platform connecting startups to corporates, thus facilitating links to Asia.

Meanwhile, the new $500 million fund is backed 50 per cent by the Chinese state-owned Assets Supervision and Administration Commission (SASAC) Shenzhen, who is acting as both an LP and Strategic Partner.

Is Fintech a Disruptor or an Enabler for the Big Banks? (Finance Magnates), Rated: A

Ever ubiquitous, in 2016 the term ‘fintech’ appeared in the global print media 90,000 times and multiple times that in social media. In a study conducted by Citigroup in 2015, they found that fintech investments topped $19 billion, which represents a tenfold increase from 2010.

The argument towards fintech being perceived as a disruptor is largely due to the fact that fintech start-ups have the freedom to be a lot more nimble. They are not burdened down with legacy technology systems and restrictive regulations.

For example mobile-based banks have emerged in the past year, such as Monzo, Starling, Tandem and Atom, all of which offer accounts that allow customers to manage their money and lifestyle.

Yet, there are many who are of the contrasting opinion that fintech developments are set to be an enabler for established financial service companies. In possession of enormous capital, they are in a position to invest in these technologies and take a more innovative approach towards attracting new customers, cut costs and boost profits.

The emergence of fintech has motivated banks to consider their pain points, in ways which may be solved through technological innovation.

Additionally, banks can look to fintech as a means to enable their revenue growth with higher margin and through less capital-intensive programs, such as insurance or wealth management. By incorporating fintech applications such as robo-advisers and automation into their operational model, they then have the means to scale their business more rapidly to provide services to clients that beforehand were not profitable or were too taxing on their customer service systems.

Australia/New Zealand

Small Business Lender OnDeck Launches #turnthatNOaround Campaign (Bandt.com.au), Rated: AAA

The campaign, which is already running on radio in Sydney, Melbourne and Brisbane, is scheduled to run across outdoor, social (LinkedIn and Facebook) and digital media to encapsulate an integrated multi-channel outreach.

With the #turnthatNOaround campaign, OnDeck aims to reach small business owners who have experienced a “no” from their banks, giving them an opportunity to secure a loan that is much faster than the banks – taking just one business day.

Australian expert’s robo advice warning (NZ Herald), Rated: A

The founder of an Australia’s robo-advice business says a law change may not be enough to allow such companies to operate in New Zealand.

Under the current law only “natural persons” may give financial advice in New Zealand but a change to the Financial Advisers Act is expected to make robo-advice legal here by 2019.

In New Zealand there are growing concerns about an advice gap after research by the Financial Markets Authority found most people who got professional financial advice had assets of more than $200k, leaving question marks over how people with less money, including those with savings in KiwiSaver, get advice.

Chris Brycki, who founded robo-advice business Stockspot in 2014 and now has several thousand customers, said he was keen to enter the New Zealand market but could not do so because the company could not find a suitable banking partner.

Asia

Singapore fintech firm says launches first digital platform for trade finance assets (Euro News), Rated: AAA

A Singapore central bank-backed fintech firm, CCRManager Pte Ltd, on Tuesday launched what it says is the first digital platform for the distribution of international trade financing, transactions now handled mainly by phone and email. CCRManager Pte Ltd, which received a grant from the Monetary Authority of Singapore’s Financial Sector Development Fund, is supported by 16 financial institutions, including Bank of China, DBS Bank, Standard Chartered Bank, Mitsubishi UFJ Financial Group, Spain’s BBVA and the commercial insurance arm of Swiss Re.

CCRManager charges a transaction fee on every successful deal. The Singapore-based company said its users will be able to list assets for distribution, negotiate deals, and manage supporting documentation in a secure environment. The web-based platform will enable members to manage the entire process of distributing trade finance internationally to other banks, credit insurers, and fund managers.

South America

Brazil’s Central Bank Plans FinTech Regulations for Recession Respite (Cryptocoins News), Rated: AAA

The Central Bank of Brazil is eyeing regulations for the FinTech sector this year to help industry startups and companies to enter and expand in the country currently reeling from a recession.

According to a Reuters report today, the Banco Central do Brasil (BCB) – the country’s monetary authority- is looking at implementing these regulations within this year to fuel the growth of FinTech firms and services in Latin America’s biggest economy.

As of March 2017, Brazil’s economy was 8% smaller than it was in December 2014.

While details are scarce, some of the new regulations will help financial technology companies and startups in areas including:

  • Financing via peer-to-peer lending platforms connecting borrowers directly with individual investors
  • A wider playground, by facilitating foreign banks to enter Brazilian shores without the need for a presidential decree
  • Diversification, by helping financial technology companies team up with banks to offer loans or ‘securitized credit from institutional investors.’

Authors:

George Popescu
Allen Taylor

Wednesday April 19 2017, Daily News Digest

FinTech MENA

News Comments Today’s main news: SoFi raised new $105M fund.Landbay unveils March 2017 UK Rental Index.P2P-Banking launches IFISA comparison database.Personal loan applications surge in Australia. Today’s main analysis: Development of fintech in Hong Kong.Fintech startups in MENA raise $100M last decade. Today’s thought-provoking articles: OCC fintech plan uncertain as comptroller term expires.Goldman’s internal fintech revolution can’t […]

FinTech MENA

News Comments

United States

United Kingdom

European Union

International

Australia

China

MENA

Africa

News Summary

United States

Online lender SoFi has a new $ 105 million fund for yield-hungry investors (CNBC), Rated: AAA

SoFi, the online lending start-up sporting a lofty $4.3 billion valuation, has just raised a $105 million fund to give outside investors another way to buy into the company’s loans.

In a regulatory filing Monday afternoon, SoFi Prime Income Fund is listed as the issuer of equity in a limited partnership. According to the filing, the fund has 33 investors that put in a minimum of $500,000 each.

Nino Fanlo, SoFi’s chief financial officer, said the fund is the first of its kind for SoFi and provides another avenue to raise capital for issuing loans. Returns after fees are expected to be in the low double digits, he said.

OCC Fintech Plan Faces Uncertainty as Comptroller Term Expires (Credit Union Times), Rated: AAA

As the term of Comptroller of the Currency Thomas Curry expires and with no replacement in sight, the OCC could be headed toward a showdown with Congress over the agency’s decision to issue special charters to fintech companies.

In March, the OCC published a draft supplement to its licensing manual, which contains existing regulations for chartering national banks.

And although Curry said the OCC will issue charters to fintech companies, his own future is in doubt. His term expired this month and President Trump has not nominated a replacement, although Joseph Otting, a former associate of Treasury Secretary Steven Mnuchin at OneWest Bank ,has been mentioned as a possible nominee.

Sens. Sherrod Brown (D-OH), ranking Democrat on the Senate Banking Committee and Jeff Merkley (D-OR) said earlier this year that authority to issue such charters must come from Congress.

Meanwhile, traditional banking and credit union trade groups are divided over the charter proposal.

Earlier this year, NAFCU said that the OCC must ensure that online lenders are subject to the same consumer protections and data standards as banks and credit unions.

The American Bankers Association has said it supports the concept of the OCC issuing fintech charters, but wanted it to ensure that companies meet the same standards as traditional banks.

For Goldman, the Fintech Revolution Can’t Come Soon Enough (NYT), Rated: A

Goldman Sachs’s internal technology revolution cannot come soon enough.

Goldman’s fledgling Main Street operation is a bright spot. With more than $115 billion in deposits, it’s already one of the top 25 banks in the United States by that measure. Marcus, as the online consumer-lending unit is called, is experiencing “demand more robust than we thought,” the unit’s boss, Harit Talwar, said recently.

Consumer lending can earn at least a 3 percent return on assets — triple what Goldman has been managing as a whole of late.

For now, lending through new web platforms remains a small industry, with just $40 billion of credit extended over a decade, according to Deloitte.

CREATING A BETTER TOMORROW (NYSE), Rated: A

Texas-based Elevate Credit (NYSE: ELVT), which recently held its IPO at the exchange, exists because of what it sees as an opportunity in the financial services market.

In between are working people, roughly 170 million residents of the U.S. and the U.K., whom Elevate refers to as “the New Middle Class.” These are people with low or no credit scores, who often have to resort to non-prime lenders in moments of personal or medical emergency.

Elevate offers three products. The first, called Rise, is an unsecured, online loan vehicle; Sunny is its U.K. counterpart, and Elastic is a line of credit issued by Kentucky-based Republic Bank, Member FDIC. While the company’s customers have credit scores typically in the 560 to 600 range, those with lower credit or no credit can also be approved, depending on what Elevate’s data analysis reveals about their reliability.

Elevate’s analytics platform, DORA, is home grown. It’s based on open-source software tools that enable model development and risk analytics. DORA inputs and outputs are monitored and evaluated to help ensure legal and regulatory compliance. Elevate’s IQ platform deploys business logic and algorithms. And driving the analytics and decision-making technology is the very human decision to create specific data sets, generated from sources that monitor non-prime customers.

The platforms draw on more than 10 different sources of consumer information, including the big three credit bureaus as well as other bureaus that specialize in non-prime customers. In addition, Elevate acquires data from LexisNexis, ID Analytics and other unique data sources to validate the applicant’s identity and to draw inferences about the applicant’s intent to repay. Elevate uses this data in ongoing tests to optimize its underwriting, to ensure that fraud and serious credit risks are more easily distinguished from acceptable risks.

In the last year, Elevate’s charge-off rates have remained steady, while its customer acquisition costs have dropped, says Rees.

Elevate also uses its nimble, data-driven underwriting model to reward its best customers. Borrowers who establish a history of on-time repayment, and who take advantage of online financial literacy tools and videos, will see their APRs drop over time. Currently, the most responsible Elevate customers pay APRs as low as 36 percent.

Is An OnDeck Acquisition On Deck? (PYMNTS), Rated: A

When OnDeck completed its IPO in 2009, it entered the public markets with a massive amount of buzz, ending the day with a share price north of $20 dollars and a valuation around $1.9 billion.

Two years out, and the banks’ lunch remains uneaten — because those alternative lenders like OnDeck have had a rather bumpy two years.  OnDeck’s share price is down 75 percent since its 2014 IPO — in the last 12 months the firm has shed 37 percent of its value.

Today OnDeck’s market cap stands at $330 million.

Marathon Partners Equity Management, LLC has owned 1.75 percent of OnDeck since the end of 2016 — and the activist investor is now pushing for a new direction, preferably one that involves a sale.

That letter apparently did not get quiet enough of a reaction from the board — OnDeck’s official response was that they “value dialog with their shareholders,” and so as of the end of last week, the campaign ramped up.

Whether or not very drastic changes are coming soon to OnDeck remains to be seen — the annual meeting for shareholders will likely be spirited.

Not Everyone Is Happy About Latest Fintech Charter Proposal (Corporate Counsel), Rated: A

Public comments are now available from companies, regulators, advocacy groups and individuals weighing in on the Office of the Comptroller of the Currency’s licensing manual draft supplement for special purpose national bank charters.

The OCC received only 17 total comments on its March 15 supplement for evaluating bank charter applications from financial technology companies, far from the 120 it received on the broader whitepaper Exploring Special Purpose National Bank Charters for Fintech Companies, which introduced the idea of the OCC granting fintech companies these bank charters back in December 2016.

“While many states have made admirable efforts to align their regulations with technological innovation, state laws by and large were drafted for a physical branch banking environment that did not envision online delivery of financial services,” wrote Robert Lavet, general counsel of San Francisco-based personal finance company Social Finance, or SoFi, in his comments to the OCC.

In her comments, personal lending company Oportun Inc.’s chief compliance officer Joan Aristei voiced no concerns with the financial inclusion standards. She wrote the guidance on this type of plan will “inform our discussions regarding how we can modify and enhance the efforts we have already undertaken,” adding that she “appreciates the OCC’s willingness to innovate and look beyond traditional measures of financial inclusion.”

New York State Department of Financial Services superintendent Maria Vullo called the OCC’s proposal for fintech charters a “hasty and misguided effort.” She said that regulation for the financial technology providers is better left to the states, not the OCC.

The Tax Implications of Real Estate Crowdfunding (Alpha Flow), Rated: A

The first thing to understand is that an equity investor in a syndication is actually a partner in partnership. Investments in syndications will generally be considered “passive” activities.

When combining all passive activities, if the investor has a net passive loss, then the remaining net loss is effectively “suspended” whereby they are carried forward to future years and subject again to the passive activity rules. If an investor has passive income then that is taxed at the taxpayer’s marginal tax rate.

In the subsequent tax year, any passive losses that carried over can offset passive income that is generated.

Crowdfunding syndications offer one additional special tax advantage and that is favorable long-term capital gains rates. When a property (apartment building, retail center, etc.) is acquired through a syndication and is held for longer than one year, the sale of the property would typically result in long-term capital gains. These gains are taxed at a rate of 15% (with certain exceptions). Any depreciation that was deducted on the property would be subject to tax rates not to exceed 25%.

MortgageHippo raises $ 2.25M to help lenders give you a mortgage online (Chicago Tribune), Rated: A

MortgageHippo, a mortgage-technology startup based in Chicago, has raised about $2.25 million in seed funding, the company announced Tuesday.

CMFG Ventures, based in Madison, Wis., led the $1.5 million round that closed last week, Saportas said. CMFG is the venture capital arm of CUNA Mutual Group, which sells insurance and investment products to credit unions. The investment closed MortgageHippo’s seed funding.

Inside Bond Street’s content marketing strategy (Tearsheet), Rated: A

Jones said the company is “passionate about building a brand,” which it does by creating editorial content. It has a blog that profiles business owners Bond Street serves across the country, like the guys behind the Two Hands cafes and restaurants or the women that launched Sky Ting Yoga in New York City; and an online magazine that looks at the cultural and economic impact of independent businesses in New York (celebrity restaurateur Daniel Boulud and artist Baron von Fancy are among many interviews that address the importance of supporting local businesses). It also has a podcast called the Nitty Gritty that features the entrepreneurs behind brands like Sweetgreen, charity:water, McNally Jackson and Smitten Ice Cream; and a series of city-specific resources for female entrepreneurs.

Jones declined to share Bond Street’s annual content marketing budget, but said the company has two dedicated employees working on content marketing, out of about 40 total employees.

Marketing has become expensive for online lenders because of the high cost of customer acquisition. Partnerships are an easy way to bring that cost down, Benton said. To date, Bond Street has partnered with WeWork to offer loans to member companies of the co-working space company; SMB-focused software companies like Booker and Front Desk to offer their clients discounted loans; and most recently, with NerdWallet, the comparison shopping site for credit cards and other financial services, to help provide small business owners with financing options.

Payix and Nortridge Software Announce Strategic Alliance (BusinessWire), Rated: B

Payix® and Nortridge Software announce they have formed a strategic alliance to help lenders connect with their borrowers and improve their ability to collect payments. The alliance allows Payix to offer real-time integration between its suite of collections tools and the Nortridge Loan System (NLS).

Payix’s collections tools include its intuitive, engaging and affordable mobile collections application, as well as web, interactive voice response (IVR), text, and collector portal applications. Nortridge clients can add the Payix solutions to their existing collections tools with virtually no IT work on their part and in just a few weeks’ time.

The Nortridge and Payix teams collaborated in the development of the seamless web services interface between the Nortridge Loan System and the Payix payment system, ensuring that transactions could be carried out in real-time and without interruption.

Payix’s collections tools are white-labelled to help lenders promote their own brands with their borrowers, and they were specifically designed for any size lender to use easily and affordably.

China Rapid Finance will be the Fifth Online Lender to IPO in the US (Lend Academy), Rated: B

In late March, 2017 we learned that Chinese online lender China Rapid Finance filed to go public, hoping to raise up to $100 million. They will list on the New York Stock Exchange under the ticker symbol XRF and will be the second Chinese online lender to go public in the United States.

Milbank Advises FinTech Lending Company College Ave Student Loans in Its $ 30 Million Capital Raise (Milbank), Rated: B

Milbank, Tweed, Hadley & McCloy LLP advised College Ave Student Loans on a $30 million capital raise.

The Milbank team was led by Corporate partner Roland Hlawaty with Corporate associate Joanne Luckey.

$ 3M Raised for Clarendon Park Apartments in Phoenix Through RealtyShares (Yahoo! Finance), Rated: B

RealtyShares, a leading online marketplace for real estate investing, today announced that its network of accredited investors has collectively funded a $3 million investment for the acquisition of Clarendon Park Apartments, a 138-unit multifamily property in Phoenix, Ariz.

The deal is sponsored by Rincon Partners, an Arizona-based owner and operator of multifamily properties focused primarily on the Southwestern United States. Rincon Partners intends to use the funds to rehabilitate and modernize the apartment interiors and amenities to potentially improve its position within the market.

The property is located in midtown Phoenix, between the city’s two largest employment corridors and close to shops, restaurants and newly developed amenities. The property itself features a swimming pool, spa, clubhouse and fitness center, as well as access to light rail within two blocks.

United Kingdom

Landbay Unveils March 2017 UK Rental Index (Crowdfund Insider), Rated: AAA

Last week, UK-based peer-to-peer lending platform Landbay released the March 2017 Rental Index. This report reveals details about the country’s rental market.

“Since March 2016, average rents in the UK have risen by 0.9% to £1,191. In England, rents were up 0.87% to £1,222; in Northern Ireland, they rose by 0.07% to £557; meanwhile in Scotland rents rose to £723 following annual growth of 1.25% and in Wales, the average rent is up 1.41% to £636. Average rents for one, two and three-bed properties hit £1,012, £1,152 and £1,321 respectively in March 2017.”

P2P-Banking Launches Database to Enable Investors to Compare IFISA Providers Easily (P2P-Banking), Rated: AAA

P2P-Banking launches a new IFISA database, that enables investors an easy comparison of offers by IFISA providers. UK taxpayers can invest up to 20,000 GBP per year tax-free in ISAs. This amount is per tax year, so a person could invest 20,000 GBP this tax year and invest 20,000 GBP in a different ISA next year. The Innovative Finance ISA, short IFISA, was introduced in 2016 with most offers becoming approved by HRMC only in the 2017/2018 tax year.

The new database of IFISA offers allows speedy selection and sorting to review IFISA products by different providers and then links to the provider’s website for in detail information. Investors can filter by interest rate, term, loan type, minimum investment amount, possibility of transfers in and out, flexible IFISA, bonus & cashback promotions and several other criteria.

Fintech synergy as challenger bank teams up with robo advice app (AltFi), Rated: A

Starling Bank is partnering with app-based wealth manager Moneybox for real-time savings.

Moneybox’s savings and investment services will be now offered by digital-only bank Starling to enable customers to easily open ISAs and round up their spending in real time.

The service will be available to Starling customers as early as the end of April.

The new service is made possible through Starling’s open APIs. The integration has two distinct features. Firstly, it allows customer data to be securely shared between the two apps, meaning transactions will appear within the Moneybox app in real time as customers spend.

Secondly, the integration with Starling means that customers will be able to set up round ups from their Starling account in a matter of seconds.

Starling Bank publicly launched its API and developer platform to enable external developers and technology companies to integrate with the banking app earlier in April, and Moneybox is the first to launch a live integration on this API.

CEO Stephen Findlay Comments on BondMason’s New SIPP Service (Crowdfund Insider), Rated: A

In response to growing demand from investors in search of better investment returns for their pensions, UK P2P service provider BondMason has launched a new Self-Invested Personal Pension (SIPP) service.

The new SIPP service offers a flexible, tax-efficient way to save for retirement and allows investors to access returns from a diverse set of approved P2P Lending opportunities. Investors can open with a lump sum from £5,000 and there is no tie-in – an investor can typically exit in full within 48 hours. The service also aims to allow SIPP administrators to easily and compliantly grant their clients access to returns from P2P Lending.

Social P2P venture hindered by wholesale crackdown (P2P Finance News), Rated: A

THE FOUNDER of ThinCats has said that the regulator’s clampdown on wholesale lending will affect projects that can be funded through his social peer-to-peer lending platform Community Chest.

Kevin Caley (pictured) launched the social enterprise last year and it funded its first loan in February 2017 for £130,000. The debt facility went to a local Birmingham finance company called ART Business Loans, which supports West Midlands enterprises.

But Caley says the Financial Conduct Authority (FCA)’s tighter restrictions on wholesale lending mean that loans like these will no longer be possible, as the money was lent to another lender.

ClearBank: a MSFT Azure B2B Fintech (Daily Fintech), Rated: A

A well kept secret of the UK B2B banking sector, is now public. Clear Bank, a clearing Bank in the UK, is ready to compete with the four UK clearing banks,

  • Barclays
  • HSBC
  • Lloyds
  • Royal Bank of Scotland (RBS).

Clear Bank is the fifth UK clearing bank and the only one that is pure B2B since it does not offer services direct to the consumer.

Back in the 60s there were 16 clearing banks in the UK. Consolidation in this part of transactional banking has left the UK currently with 4 clearing banks that process over 80 Trillion pounds annually worth of payments in the UK.

Clear Bank will be helping Challenger banks to access the payment system at the Bank of England level, at the same level as incumbents.

Clear Bank will help the 44 UK Building societies offer current account services in a cost effective way. Right now, only 2 out of the 44 offer such capabilities to their members due to prohibitive costs.

Clear Bank will boost indirectly retail banking by reducing the substantially processing costs, which will facilitate competition for incumbents in the UK.

Clear Bank will help Fintechs by providing Banking as a service through the Cloud at a very low cost. Clear Bank will be offering an API so that Fintechs can interconnect to the ClearBank Fabric.

UK Firms VC Funding Holds Steady Despite Brexit (PYMNTS), Rated: A

According to Venture Beat, U.K.-based startups raised $1.04 billion in venture capital (VC) during the first three months of 2017. That’s a slight decrease from the $1.17 billion raised during same period one year ago, but it’s above the amounts raised in each of the last three quarters.

The U.K. remains number one in Europe for VC raised, with Germany second at $779 million and France third at $665 million.

Peer-to-peer lending service Funding Circle helped push the U.K. into the number one spot, raising $97 million in VC funding and $43 million in debt funding during the first three months of 2017.

Which fintech stocks does Neil Woodford own? (The Motley Fool), Rated: A

The fintech — financial technology — sector has emerged rapidly over the last decade. The Confederation of British Industry expects it to be worth £300bn in the UK alone by 2020.

Given Neil Woodford’s long-prevailing dislike of the big banks, it’s perhaps not surprising that he’s attracted by the relatively simple business models and exciting investment opportunities in the fintech sector.

Woodford is invested in some unquoted fintech companies, such as RateSetter, a peer-to-peer lending platform, and Seedrs, which opens up venture capitalism “to anyone with an internet connection”. However, he also has two holdings that are listed on the stock market — and very interesting they are too.

P2P Global Investments (LSE: P2P) is a FTSE 250 firm with a market cap of around £700m.

VPC Specialty Lending Investments (LSE: VSL) is in the FTSE SmallCap index but is a decent-sized company with a market cap of around £290m. Its business is similar to P2P’s and like the FTSE 250 firm, considerable quantities of cash flow into shareholders’ pockets.

George Banco appoints RateSetter co-founder to board (Loantalk), Rated: A

Guarantor lender George Banco has appointed the co-founder of peer-to-peer platform RateSetter as a non-executive director.

Peter Behrens (pictured above) – who also serves as the chief operating officer at RateSetter – co-founded the platform in 2010, and has seen more than £1.8bn of loans facilitated through the company in this time.

Alternative funding options come into focus (Works Management), Rated: B

Alternative funding options will be a major theme at Business, Innovation, Technology and Efficiency (BITE) 2017 hosted by MHA Carpenter Box at the Amex Stadium, Brighton on Thursday 27 April.

Andy Davis (pictured), former editor of FT Weekend and author of the ‘Beyond the Banks’ report on alternative finance, will be one of the industry experts forming an ‘alternative funding panel’ at the free one-day conference, where he will share his expertise with local business leaders.

European Union

Why EU Passporting Is Vital For Britain’s Fintech Firms (Forbes), Rated: AAA

The impact on fintech could be significant, as an Emerging Payments Association (EPA) report Passport to the Future makes clear: “HM Treasury estimates the UK fintech market employs 60,000 people and is worth £6bn to the UK economy. Fintech is part of the UK’s financial services sector that employs 1.9 million people and contributes 10 per cent of the UK’s GDP. Payments represents over 40 per cent of financial services in revenue terms and in 2016, 40 per cent of all fintech investments were in payments companies, amounting to £10bn globally.”

In a recent survey of its members, the EPA found that 88 per cent of its members think that passporting rights are important or very important to their current businesses, while over 91 per cent think passporting is important or very important to the UK’s fintech sector and its continued growth.

As the EPA’s report states: “This could see the flight of some or part of the 5,500 licensed companies abroad and have a significantly negative impact on the UK economy.”

Alfa Finance Launches New P2P Lender DoFinance (Crowdfund Insider), Rated: A

Latvia based Alfa Finance Group has launched a new peer to peer lending platform named DoFinance.  The company stated it had invested €2 million to get the P2P lender up and running. The online lender is said to be available in all EU and EEA countries.

International

Simplex Partners with Beacon – Risk Magazine’s FinTech Start-Up of the Year (BusinessWire), Rated: A

Simplex Inc., one of Asia’s leading financial services technology firms, announced a strategic partnership with Risk Magazine’s FinTech start-up of the year, Beacon Platform, Inc.

The partnership combines Simplex’s expertise in implementing trading and risk management solutions with Beacon’s experience in building cross-asset trading and risk management platforms for industry leaders including Goldman Sachs, JP Morgan and Bank of America Merrill Lynch.

Australia

Personal loan applications surge as credit cards wane (The Sydney Morning Herald), Rated: AAA

Australians are shunning high interest credit cards and turning to personal loans for large purchases.

Driving the switch are tech-savvy consumers taking up loans from peer-to-peer (P2P) lenders, a new breed of online competitors to banks.

Credit card applications fell by almost 4 per cent in the March 2017 quarter compared with the same quarter last year, the latest report on consumer credit by credit bureau Equifax shows. That’s the biggest fall since September 2012 quarter.

Reserve Bank figures suggest that more frequent but lower value transactions are being made on credit cards.

One P2P lender is showing an interest rate on its website of 10.3 per cent on a $10,000 unsecured personal loan paid back over three years.

Banks would typically charge 13.02 per cent for a loan on the same terms, while credit cards are higher still – typically 14.15 per cent for a non-rewards credit card and 19.6 per cent for a rewards card, plus annual fees.

China

Development of Financial Technologies (Legislative Council Panel on Fiancial Affairs), Rated: AAA

This paper provides an update on the local financial technologies (Fintech) landscape and measures to support the development of the industry.

The number of Fintech start-ups operating in co-working spaces and incubator/accelerator programmes in Hong Kong increased by 60% between August 2015 (86) and August 2016 (138), according to Invest Hong Kong (InvestHK)’s Start-up Profiling Survey.

Hong Kong attracted about US$400 million of venture capital (VC) investment in Fintech companies during 2014-2016, lower than the Mainland and India (both of which are economies with huge domestic markets) but ahead of regional peers such as Australia, Japan and Singapore1 .

Universities such as The Chinese University of Hong Kong and The Hong Kong Polytechnic University will launch dedicated, publicly-funded firstyear first-degree and senior year programmes in Fintech starting from the 2017/18 academic year. Moreover, The University of Hong Kong’s School of Professional and Continuing Education has been offering a part-time, four-month programme, Executive Certificate in Internet Finance.

For payment services, the general public is increasingly receptive to new products and services, as Stored Value Facility (SVF) operators are launching new services while banks are rolling out new payment services (such as a note-issuing bank’s mobile App which enables cross-bank P2P fund transfer through mobile messaging). Building on the momentum from the introduction and development of various new payment channels in the market, the Government will strive to provide more convenient means for settling government bills and fees, such as making on-line credit card payment through digital wallets in mobile phones. HKMA will also work with the Government to explore with the industry ways of improving the payment infrastructure (such as introducing the Faster Payment System in 2018) and encouraging more standardisation in payment applications across various services providers, including the use of QR codes in streamlining the payment process, and facilitating the development of new electronic and mobile payment channels by the Government for various government services.

Read the full report here.

Alibaba’s Ant Financial Increases Bid for MoneyGram (Crowdfund Insider), Rated: A

Dallas based MoneyGram (NASDAQ:MGI), a global provider of money transfer services, has become quite popular. This past January, Alibaba’s Ant Financial subsidiary announced it had offered the firm $13.25 per share to acquire the company. The two companies had entered into a definitive agreement to merge.  Today, it appears that agreement was not quite as definitive as thought as Ant Financial has now increased the share offer to $18/share.

Last night, MoneyGram and Ant Financial announced they had updated the agreement in an effort to fend off a competing bid by Kansas based Euronet Worldwide.

Dianrong Announces New Financial Leadership Appointments (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform, Dianrong, announced on Tuesday the following financial leadership changes, effective immediately: Xuxia Kuang, the lender’s CFO, has been named COO. Yawen Cui has joined Dianrong as the new CFO. Kuang and Cui will report to Dianrong founder and CEO Soul Htite.

MENA

‘Fintech startups in Middle East, North Africa raised $ 100m last decade’ (Venture Burn), Rated: AAA

Fintech startups in the Middle East and North Africa have raised $100-million over the last decade, yet 28% fail in their initial years, says a new report by business support organisation Wamda and online payment gateway Payfort.

The region was home to 105 fintech startups by the end of 2015 (see featured image), with half of these having been launched since 2012. In all 30 firms are situated in North Africa. The UAE leads with 30 fintech startups, followed by Egypt with 17 and Jordan and Lebanon with 15 each.

Just 10% of fintech startups in the region account for 43% of investments and employ 55% of the 1600 employees in the sector.

Africa

How to make sure your crowdfunding campaign is successful (Destiny Man), Rated: AAA

“The vast majority of the South African market activity – $13,8m – came from peer-to-peer consumer and business lending, with the remaining $1.2 million spread across microfinance, donation-based and reward-based crowdfunding,” according to a report published by the Cambridge Centre for Alternative Funding.

In order to reap the benefits of crowdfunding, it’s important to launch a great campaign. Patrick Schofield, CEO and founder of Thundafund, a crowdfunding platform that has helped several companies start or expand, says there are several things you can do to increase the chances of success for your business.

“Spend as much time on pre-campaigning planning as you would on your actual campaign. If you’re thinking of [running a campaign] for up to 45 days spend, 45 five days getting your ducks in a row,” he says.

Approaching journalists and key influencers will get you enough people who can make noise about what you’re doing.

‘Crowdfunding is the future’(Times Live), Rated: A

In an alternative funding benchmarking report by the UK’s Cambridge Centre for Alternative Finance, published last month, South Africa was identified as the potential leader in the growth of online and peer-to-peer lending models in Africa.

In 2015 South Africa represented 18% of the total African online alternative finance market, raising more than $15-million. Kenya was the only African country ahead of it, with $16.7-million raised. South Africa’s online alternative finance market focused more on business activity and less on charitable causes.

Local IT firm Khonology has partnered with the UK’s White Label Crowdfunding to develop bespoke crowdfunding platforms for entrepreneurs here.

Authors:

George Popescu
Allen Taylor