Friday January 5 2018, Daily News Digest

small business lending

News Comments Today’s main news: Wealthfront gets backing from Tiger Global. Funding Circle partners with Kansas bank. Elevate customers see rise in credit scores. NextCapital raises $30M for digital advice platform. London tops tech funding. HMT Treasury says P2P lending not deposit-taking. Yields lower in Euro zone as MiFID II begins. Today’s main analysis: FT Partners’ CEO monthly alt lending market […]

small business lending

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United Kingdom

European Union

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India

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News Summary

United States

An investing startup that grew by $ 100 million in a single day just got some big name backing (Business Insider), Rated: AAA

Wealthfront, a robo-adviser with more than $9 billion under its management, announced Thursday that Tiger Global, the New York investment firm, would lead a $75 million fundraising round.

Wealthfront plans to use the new capital to enhance its Path platform, which allows users to view all of their financial accounts.

“Path’s appeal to young people propelled our growth such that people under 45 now represent 85% of our clients,” Wealthfront cofounder Andy Rachleff said in a statement.

FT Partners’ CEO Monthly Alternative Lending Market Analysis  (FT Partners), Rated: AAA

As FT Partners wraps up 2017 and looks forward to 2018, we are extremely proud of our accomplishments. Celebrating over 16 years in business, we executed a record number of deals, significantly expanded our team, continued our global expansion and won a number of industry awards during the past twelve months. We are confident that 2018 will be another successful year for the Firm and we are incredibly thankful to our clients and friends across the industry.

In case you missed it, we recently published our latest in-depth, 200+ page industry report: “

Source: FT Partners

Read the full report here.

Business-Loan Growth Fell Off a Cliff in 2017 and No One Can Figure Out Why (WSJ), Rated: AAA

Business-loan growth fell to its lowest levels since the aftermath of the financial crisis in the final weeks of 2017, a puzzling development that could weigh on bank earnings later this month.

Bank loans to companies grew 1.1% from a year earlier as of Dec. 20, up slightly from a 0.8% rate the prior week, according to Federal Reserve data. That Dec. 13 level was the lowest since spring 2011, when banks were just starting to lend to companies again after the financial crisis.

The readings likely cement 2017 as the worst year for this type of lending in recent history. The average weekly rate of business-loan growth was 2.7% for 2017 through Dec. 20, compared with 9.3% in 2016 and double-digit growth in the two years before that.

Looking at 2018: A Discussion with Ron Suber (Crowdfund Insider), Rated: AAA

“[People] from the banking industry from the tech industry. We have grown up,” said Suber. “We had some people that were great from the early days but were not good for long term growth. There has bee a major turnover in the leadership at many of these companies. My call is that companies are focusing on cash flow, profitability and EBITDA for the first time. Earnings on GAAP basis … I think that is great for the industry. You are seeing companies generate cash. [In the past] Prosper did $400 million in month and it lost money. Now it is doing, say $200 million a month and it is making money. They are being run to be profitable businesses. That is the takeaway from 2017.”

Suber says that today, Prosper makes money every quarter. They have $100 million on the balance sheet and it gets higher every month.

“We are seeing lots of money coming in from Asia to buy loans now. More than ever,” added Suber.

LendingClub, a reporting company, has had a tough two years as its stock has tanked while Wall Street looked elsewhere for growth.

ELEVATE ANNOUNCES BOOST IN CUSTOMER FINANCIAL HEALTH (BusinessWire), Rated: AAA

More than 140,000 customers of Elevate’s RISE product have seen an improvement in their credit scores. Additionally, more than 35,000 RISE customers are now eligible to receive at least a 50 percent reduction in their APR and more than 13,000 customers are eligible to receive RISE’s lowest rate.

More than 160 million Americans are either non-prime or “credit invisibles,” without any credit score. These customers account for almost two-thirds of the U.S. population, yet are significantly underserved by the traditional financial industry.

RISE loans are originally priced to risk. Customers are eligible to receive 50 percent off of their rate on subsequent loans after 24 months of payments, eventually achieving a further reduction to 36 percent. Today, more than 35,000 customers have received or are eligible to receive a 50 percent rate reduction and more than 13,000 customers are eligible for an APR of 36 percent.

About the Data

Elevate worked with a major credit bureau to which it reports, gathering anonymized data on RISE customers. Elevate reviewed credit scores of customers from the customer acquisition point up to two quarters after loan completion.

The number of customers who have reached the necessary number of payments to receive a rate reduction was calculated by tabulating the number of accounts at the number of payments necessary.

  • 24 months of payments are required to receive 50 percent off of the customer’s original APR
  • 36 months of payments are required to reach 36 percent

NextCapital Raises $ 30M for its Digital Financial Advice Platform (ChicagoINNO), Rated: AAA

NextCapital officially announced Thursday that it has raised $30 million in new funding to grow its enterprise digital advice platform.

The Series C round brings the company’s total funding to more than $52 million. The round was led by Oak HC/FT, and included additional investments by Manulife Financial, Transamerica Ventures, Vermont Seed Capital Fund and Route 66 Ventures.

FSOC Annual Report on Financial Stability Highlights Marketplace Lending (Lend Academy), Rated: A

Last month the Financial Stability Oversight Council (FSOC) released their annual report. This 165-page report highlights potential risks to our financial system by looking at new developments and providing recommendations to improve financial stability.

Section 4.14 of this year’s report deals with new financial products and there is an entire section on marketplace lending. Here is their conclusion about our space:

Although marketplace lending has the potential to reduce costs and expand access to credit, the extent to which these benefits have been realized thus far is unclear. Furthermore, the marketplace lending model has not been tested through a full credit cycle. There are risks that misalignment of incentives could exist on these platforms.

Can blockchain technology revive peer-to-peer lending? (American Banker), Rated: A

The original premise of online peer-to-peer lending platforms was simple and democratic: A single mom from Kalamazoo, Mich., could post her story explaining why she needed $5,000 to pay off her credit card, and a retired electrician in Illinois could read it, decide to fund her loan and receive interest far exceeding what he could get on his savings account.

LendingClub and others that proffered this people-helping-people model quickly found they needed to make changes.

 

Unbanked vs. Underbanked: Who they are and how they differ (MicroBilt), Rated: A

Slightly more than two-thirds of households in America frequently make use of traditional banking services, according to the Federal Deposit Insurance Corporation. But that leaves 33 percent of people in the U.S. who don’t, a significant percentage by any measure.

Unbanked

As the title implies, unbanked Americans are those who don’t make use of any banking services whatsoever. This includes debit cards and checking accounts, as well as savings accounts. In 2015 – the most recent year for which data is available – the unbanked represented 7 percent of U.S. households, translating to approximately 23 million individuals, including children, the FDIC reported. The percentage of unbanked households in the U.S. is down slightly from 2013, when it was 7.7 percent.

Families have a plethora of rationales for why they opt to go without banking services, but it’s usually due to what they do not have in terms of savings. Nearly 57 percent of unbanked households cite this as their prime reason, according to the FDIC report.

Underbanked

Around 20 percent of Americans are underbanked, according to the FDIC, which means they have either a checking or savings account, though rarely both. Households are also usually given the underbanked distinction if they’ve used alternative financing options during the previous year, such as money orders or rent-to-own services. Around 67 million Americans are underbanked, or the equivalent of 24.5 million households, based on 2015 figures from the most up to date FDIC survey.

As far as demographics are concerned, millennials are among the most likely to be underbanked, with 31 percent of them under the age of 24, according to federal figures.

‘We don’t need to stay in the student market’: How BankMobile wants to grow its offering and replicate its model (Tearsheet), Rated: A

BankMobile, the digital-only bank that offers checking accounts to students, wants to start offering them credit.

The three-year-old Customers Bank subsidiary launched a personal loan product for its customers at the end of December, but that was just the first of a suite of credit products the bank plans to roll out this year as part of its “customer-for-life” strategy, according to Luvleen Sidhu, president and chief strategy officer.

BankMobile has 1.8 million customers to date and has opened about 300,000 new accounts each year in the student demographic through its university partnerships.

Why are you expanding into credit now?
We’re just looking at our demographic. Many in our current customer base are living paycheck to paycheck — that’s why personal loans make sense.

How do you plan to expand your products after the personal loan?
We have a lot of products to introduce on the credit side: credit cards in the second quarter, student refinancing in the second quarter, auto loans and home equity by the second half of next year.

You’re partnering with Upstart on credit products. What are the advantages of that approach?
In the longterm you could say it’s more expensive to partner but those costs outweigh the fact that we get to market much faster.

How has competition changed since BankMobile launched?
It’s accelerated. Challenger banks and Neobanks like Moven, GoBank, Simple and Varo continue to flourish and grow. Digital banks like Ally, USAA and Captial One 360 have really done a push in 2017 attracting millennials, tweaking their product, tone, messaging, branding to make sure they start penetrating that segment. Traditional banks are finally realizing the branch based customer acquisition model is not sufficient.

Banks compete for tech talent by helping on student loans (American Banker), Rated: A

Banks spend not only a lot of time thinking about how to attract millennial customers, but also how to get millennials to work for them.

Though banks might be hard-pressed to offer similar wages — average starting salaries at Uber, Pinterest, and Airbnb are all over $220,000, according to Paysa — they can offer something most tech companies don’t: a student loan repayment benefit plan.

Inside Citizens Bank’s branch redesign strategy (Tearsheet), Rated: A

Banking giants like Citi and Capital One with much more money and resources at hand have been making branches look more like lounges, coffee shops or museums as they figure out what to do with them with less foot traffic, but in 2018, smaller institutions could start to make a move on their plans.

The Providence, Rhode Island bank is transforming its branches into digitally-connected community centers, Johnson said.

Citizens currently has 1,200 branches, and the bank is in the second year of a 10-year plan to reduce its branch footprint as lease expiries take effect. It’s replacing paper pamphlets with digital tools, like a digital retirement checkup platform customers can use while meeting with bankers. The bank can also project digital content onto the walls of a meeting room — a nod to the digital-first habits of some younger customers. Citizens is on an ambitious track to reduce its retail footprint by as much as 50 percent — a “do more with less” approach that over the long term that will save occupancy costs, CEO Bruce Van Saun said in an earnings call last year.

How banks use behavioral economics to win over customers (American Banker), Rated: A

When a major international bank was looking to improve the response rates for its credit card mailers in 2017, rather than changing the graphics or upgrading the paper stock, it turned to a firm that could offer guidance on how consumers make decisions.

It was trying to tap into the insights of behavioral economics, a discipline that uses psychological observations about human behavior to analyze and predict how people will act.

A Fight Over the Credit Score Lenders Use for Your Mortgage (WWJ), Rated: A

Banks and rival lenders are butting heads over the credit scores used to decide millions of mortgage requests by U.S. home buyers.

Now, a federal agency is weighing whether to step into the fight, which revolves around a longtime requirement for lenders who sell mortgages to Fannie Mae FNMA -3.17% and Freddie Mac FMCC -3.31%to gauge most borrowers using FICO scores. The Federal Housing Finance Agency’s ultimate decision could have wide-reaching ramifications for the mortgage market and home buyers across the U.S.

Many nonbank lenders, which in some recent quarters have accounted for more than half of the mortgage dollars issued in the U.S., want the ability to use a credit score provided by a company owned by credit-reporting firms Equifax Inc., EFX +0.00% Experian EXPGY 0.23% PLC and TransUnion . TRU 0.80% These lenders argue the alternative score would open the mortgage market to a greater number of people and lead to more mortgage approvals, helping to boost home sales and the economy.

That is where VantageScore Solutions LLC, the scoring firm that Experian, Equifax and TransUnion launched in 2006, says it can step in.

The company says it can assign a credit score to about 30 million more consumers than FICO. Roughly 7.6 million of those consumers would potentially be eligible for a Fannie or Freddie mortgage, VantageScore says.

Envestnet Finalizes Acquisition of FolioDynamix for $ 195 Million (Finovate), Rated: A

Wealth management intelligence solutions company Envestnet has finalized its acquisition of Actua Corp’s FolioDynamix, a wealth tech solutions company, this week.

PropertyMetrics helps real estate investors create more accurate proformas (Realty Biz), Rated: A

With that in mind, a company called PropertyMetrics has built a web based platform that’s designed to help investors come up with a proforma that includes evaluation and analysis. With PropertyMetric’s software it’s possible to analyze any property in minutes, from any device. This means investors can quickly generate a quick cash flow proforma, perform a cash flow analysis and generate PDF reports from anywhere, in a matter of minutes.

10 favorite stocks for 2018 from top-ranked stock newsletter writers (MarketWatch), Rated: A

Michael Brush, Brush Up on Stocks

I also recently suggested Lending Club Corp. LC, +0.98% in part because of the huge buying by Chinese technology and internet expert Tianqiao Chen, who founded the online gaming company Shanda Interactive Entertainment years ago while he was in his 20s.

He owns around 20% of Lending Club, an online peer-to-peer lending platform. LendingClub recently tightened its lending standards, which hurt loan growth, so the company missed earnings estimates and guided down. But it still expects 15%-20% annual revenue growth over the next few years. This seems plausible given how many people with OK credit would like to refinance their credit card debt with loans. Lending Club estimates $300 billion to $350 billion in credit card debt could potentially be refinanced in this way.

An Online Lending Task Force is Coming to New York (deBanked), Rated: A

An online lending task force DFS study will be coming soon to New York, according to legislative records.

Chippewa Cree Tribe Settles BEH Gaming Ltd Lawsuit (PRWeb), Rated: B

Plain Green, LLC, the online resource for the short-term financial needs of underbanked and subprime consumers, today announces a successful settlement with BEH Gaming Ltd related to loans to the Chippewa Cree Tribe and Chippewa Cree Tribe Development Corporation. Plain Green’s settlement and payment of the debt to BEH releases the Chippewa Cree Tribe and Chippewa Cree Tribe Development Corporation from all liability. The settlement amount is under seal of court order.

The agreement settles a lawsuit filed by Florida-based BEH Gaming Ltd in 2014 (Case # DV-14-142 in the 12th Judicial District Court in Hill County, Montana) to repay loans to expand Northern Winz Hotel and Casino.

Portland ad agency lands $ 126M LendingTree account (Biz Journals), Rated: B

Advertising agency R2C inked a deal late last month to become the new media partner for LendingTree Inc.

LendingTree is an online loan marketplace for financial needs like auto loans, small business loans and credit cards headquartered in Charlotte, N.C. AdWeek reports that the company had a media budget of $126.5 million in 2016, and spent nearly $61 million during the first half of 2017, though R2C won’t manage LendingTree’s entire media budget.

Growing your business? These 3 financing mistakes can cost you big (News-Journal), Rated: B

1. Not understanding the true cost of your loan

When shopping for a business loan, it’s easy to become overwhelmed by fast-talking salespeople, endless strings of acronyms and confusing terms. If it’s unclear how much you’ll really pay for financing, that’s a good sign you should walk away, Hodges cautions.

2. Getting trapped in daily or weekly repayment cycles

Term loans are often the better option, Hodges says. They allow businesses to borrow a set amount of money for a specific purpose, like hiring new staff or stocking up on inventory. The funds are then paid back over a set amount of time, with consistent monthly payments and no surprise fees.

3. Not knowing what you deserve

After seeing countless small businesses get stuck with credit products they couldn’t afford or understand, a coalition of small business advocates, lenders and online credit marketplaces came together to launch the Small Business Borrowers’ Bill of Rights. As the first-ever gold standard for responsible business lending, the Bill of Rights outlines the rights and safeguards that small businesses should expect from finance providers.

3 Behaviors To Keep Credit in Good Standing (MicroBilt), Rated: B

Source: MicroBilt
United Kingdom

London was top destination for tech funding in 2017 (Reuters), Rated: AAA

London was the top city in Europe for technology investment last year, with more funding going into companies in the British capital than into firms based in Paris, Berlin and the next seven cities combined, data showed on Friday.

Tech firms in London attracted 2.45 billion pounds ($3.3 billion) in venture capital funding in 2017, about 80 percent of the 2.99 billion pounds invested in Britain as a whole, according to data compiled by funding database PitchBook for London & Partners.

Fintech, or financial technology, was the most popular segment for investors, attracting a record 1.34 billion pounds in venture capital, the data showed, led by major rounds for TransferWise, Funding Circle and Monzo.

London’s tech scene pulls in record £2.5bn in 2017 venture capital bonanza (City A.M.), Rated: AAA

London’s tech venture capital investment reached another all-time high in 2017 as firms raked in four times more cash than Paris, the nearest European rival.

Softbank’s $502m (£392m) investment in game development platform Improbable was the biggest single investment during the year, but it was London’s burgeoning fintech firms which led the way with a record haul of investments.

European cityLondon Total funding raised (£)

2.45bn

European cityParis Total funding raised (£)

564.97m

European cityBerlin Total funding raised (£)

456m

European cityStockholm Total funding raised (£)

360.27m

European cityMadrid Total funding raised (£)

65.38m

European cityAmsterdam Total funding raised (£)

212.18m

European cityDublin Total funding raised (£)

117.45m

European cityHelsinki Total funding raised (£)

56.98m

European cityCopenhagen Total funding raised (£)

40.23m

European cityLisbon Total funding raised (£)

2.43m

Treasury clarifies whether P2P lending constitutes deposit-taking (AltFi), Rated: AAA

HMT Treasury has passed an order confirming that straight-forward peer-to-peer lending does not constitute deposit-taking.

The order relates to the now-infamous “Dear CEO” letter, sent in March 2017, in which the FCA effectively ordered P2P platforms to cease and desist with all wholesale lending activities. The rationale was that a business borrowing money in order to lend that money on constitutes a form of deposit-taking. This was deemed illegal, per article 5, paragraph 1 of the regulated activities order.

How angel investors support UK start-ups (Growth Business), Rated: A

Investing in start-ups is becoming increasingly popular and accessible in the UK. The attractiveness of that market has come from two main factors: the success of a number UK start-ups built over the past two decades (ASOS, Just Eat, Zoopla, Funding Circle) which are showing the way for many more to come and the supportive policies implemented by the various governments over the same period to encourage investment in ventures.

These schemes have proven to be extremely popular with private investors who every year invest over £1.5 billion into high growth ventures under SEIS and EIS.

So how do you get started with investing in start-ups if you are new to this market?

Your first option is to invest through online equity crowdfunding platforms (ECF) such as Seedrs, Crowdcube and Syndicate Room, which showcase dozens of investment opportunities from start-ups looking to raise equity funding from the public. The advantage of ECF websites is that they are convenient and accessible to anyone with investment tickets starting at £10.

If you consider yourself to be a more sophisticated type of investor looking to build a portfolio of investments with tickets of more than £5,000 per company, then you should probably think about joining an angel syndicate.

A third option to get started is to invest through a start-up fund.

High numbers using expensive credit to buy basic household appliances (Ekklesia), Rated: A

Research found almost 60 per cent of people on a low income turn to more expensive forms of credit to purchase home appliances because they do not have the means to pay up front or access to affordable credit. Seventeen per cent say they used a credit card to make the purchase, 10 per cent used an overdraft and 10 per cent used a store card. More worryingly, significant numbers said that they used high cost credit to buy home appliances, with 13 per cent relying on hire-purchase and eight per cent saying that they used a payday loan.

Blockchain-based banking startup Babb names Paul Johnson as CIO (Finextra), Rated: B

Blockchain-based banking startup BABB (Bank Account Based Blockchain) has appointed banking technology veteran, Paul Johnson who previously lead one of the UK’s leading challenger banks, Aldermore, as CIO to spearhead the development of the world’s first decentralised bank.

European Union

Euro zone yields edge lower as MiFID II kicks in (Reuters), Rated: AAA

Germany’s 10-year government bond yield fell 2 basis points to 0.44 percent DE10YT=TWEB, off two-month highs hit on Tuesday after weekend comments from the European Central Bank’s Benoit Coeure that there was a “reasonable chance” ECB stimulus will not be extended this year.

Most core euro zone bond yields were down 1-4 bps on the day, with the gap between Italian and German 10-year bonds yields tightened to 160 basis points as Italian yields dropped as much as 6 bps to 2.03 percent. IT10YT=TWEB

Ireland meanwhile kicked off its annual funding drive by raising 4 billion euros with a syndicated 10-year bond, covering around a quarter of its issuance target just three days into the year.

P2P platform bosses offer cautious support for pan-EU licences (AltFi), Rated: A

“Opt-in passports” are the way forward, says Lendix co-founder Patrick de Nonneville.

The EU Commission is laying the groundwork for a licence that will allow European crowdfunding and peer-to-peer lending platforms to operate across the bloc.

“We think it’s a great development that will be useful for us,” said Patrick de Nonneville, chief operating officer at French marketplace lender Lendix.

Raffael Johnen, CEO and co-founder of leading German marketplace lender auxmoney, offered his thoughts.

“Getting closer to a single digital market will further boost the creation of true European fintech champions.”

International

Online lender Funding Circle inks partnership with Kansas bank (American Banker), Rated: AAA

Funding Circle, an online lender that operates in four countries, is partnering for the first time with a U.S. bank.

On Thursday, the 7-year-old company announced a deal with Intrust Bank in Wichita, Kan., under which it will sell $20 million worth of its small-business loans to the $5 billion-asset institution.

This Cryptocurrency Inventor Has Suddenly Become One of the World’s Richest Men (Money), Rated: A

Cryptocurrency has a new king. His name is Chris Larsen, and he’s the co-founder and former CEO of Ripple, which created the digital token known as XRP. He’s now one of the world’s richest billionaires, thanks to XRP’s incredible hot streak.

XRP, a cryptocurrency intended for international transactions, has had a meteoric rise this winter. Its value went from $0.25 a coin in mid-December to $3.16 as of Wednesday, according to Coinmarketcap. It’s currently the second biggest cryptocurrency behind Bitcoin.

Forbes reports that, as a result, Larsen almost instantly became worth $37.3 billion (based on XRP’s Monday exchange rate).

India

BCCL invests in fintech company FinREQ in an ads-for-equity deal (Medianama), Rated: AAA

Bennett, Coleman & Co Limited (BCCL), the publisher of the Times Of India and the parent of Times Internet, has acquired an undisclosed stake in online loan company FinREQ.

As such, it looks like the investment in FinREQ is an ads-for-equity deal.

FinREQ was founded in 2011 and has tie-ups tie-ups with nationalized, co-operative, foreign, private banks, NBFCs and Housing Finance Companies. The company provides a variety of loans ranging from overdrafts, import & export finance, supply chain financing, loans against property (LAP), loans against share, lease rental discounts and others.

Online lending platform EarlySalary raises $ 15.7 mn in Series B round (VC Circle), Rated: A

Pune-based Social Worth Technologies Pvt. Ltd, which runs online lending platform EarlySalary, has raised Rs 100 crore ($15.7 million) in a Series B funding round led by Eight Roads Ventures India, a company statement said.

Invest smart with these asset class investment options (ANI), Rated: B

Fixed Depositsinvestment in goldReal Estate and many other traditional options are losing grounds when trying to woo the new age investors.

A research from the Transamerica Center for Retirement Studies indicated that nearly three-quarters of millennials are saving for retirement and that we started doing so at an earlier age than previous generations.

Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.

Asia

Commencement of Online Lending Service for Small Businesses That Leverages Accounting Big Data and AI Technology (Orix), Rated: A

ORIX Corporation (“ORIX”) and Yayoi Co., Ltd. (“Yayoi”) announced today that the ALTOA Online Lending Service, which leverages accounting big data and AI technology, will commence its operation through the jointly established entity, ALTOA, Inc. (“ALTOA”).

The ALTOA Online Lending Service is an online lending service that provides small amount, short-term loans for small businesses through a new credit model that leverages the credit know-how of ORIX, the accounting big data of Yayoi, and the AI technology of d.a.t. Inc., who is a partner in this venture.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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United States

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China

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News Summary

United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Wednesday September 27 2017, Daily News Digest

small business alternative loan originations

News Comments Today’s main news: SoFi’s lawsuits not affecting brand. Zopa to reopen to investors. Funding Circle revenue hits 50M GBP. CFPB sues over illegal online lending in Canada, Malta. Today’s main analysis: Why Square is entering the banking business. Today’s thought-provoking articles: Prosper loses unicorn status. Banks tell Equifax to get it together. Job loss concerns amid digital disruption […]

small business alternative loan originations

News Comments

United States

United Kingdom

International

India

Asia

Canada

News Summary

United States

SoFi’s lawsuits don’t seem to be affecting its brand (Tearsheet), Rated: AAA

The resignation of the company’s co-founder and former CEO, Mike Cagney, amid lawsuits from employees stemming from sexual harassment allegations and other workplace issues has thrown into question whether the brand can continue to be known as a “different kind of finance company,” as it markets itself. But despite the bad news so far, the damage to the company’s standing seems to have been contained — the result of being in the shadow of bigger scandals in Silicon Valley and the company’s actions in the aftermath of the scandal.

Based on online sentiment expressed on Twitter, Facebook, Instagram, blogs, forums and news sites between Aug. 12 and Sept. 23 (when the news of lawsuits first emerged), 71 percent of categorized mentions of the brand were positive, according to social media analytics firm Brandwatch. While sentiment dips Sept. 12-16 (reaching the level of 86 percent negative on Sept. 16, coinciding with Cagney’s resignation), feelings quickly rebound by Sept. 19, showing a certain resilience despite the negative press.

In addition, the quick timing of Cagney’s resignation reduced the effects of the negative news, said Crenshaw.

“I guess I don’t really care as it pertains to my loan,” said Alex Nocella, 27, a SoFi customer since 2013. “It damages my view with the way they’re operating their business, but it doesn’t change the relationship I have with them. It wouldn’t stop me from getting another loan with them.”

In addition, he said, the company was proactive about informing customers of Cagney’s resignation prior to the news becoming public by giving them a heads-up on the customer-only Facebook group.

Source: Tearsheet

Why Square Is Entering the Bank Business (Market Realist), Rated: AAA

Square Capital has distributed more than $1.8 billion in loans to over 140,000 merchants since its inception in 2014. In 2Q17, Square Capital loan volumes rose at 68% year-over-year to $318 million.

In the business of supplying alternative financing to merchant customers, Square competes with PayPal (PYPL), Amazon (AMZN), and LendingClub (LC). PayPal says it has distributed $3.0 billion in small business loans through its credit arm, while Amazon says it has supplied more than $2.5 billion in credit to its merchant clients.

Why Square Is Pursuing a Bank Charter

Square is pursuing its application for a bank charter because it’s seeking more independence in its financial services business. Square Capital head Jacqueline Reses told the Wall Street Journal, “As we scale, it’s becoming increasingly important that we have direct relationships with regulators.”

While a partnership with Celtic Bank has helped Square Capital grow, Square prefers running a financial services operation that it controls. The US (SPY) small business alternative lending market is forecast to originate $52 billion in loans by 2020 compared to $5.0 billion in 2015, according to BI (Business Insider) Intelligence.

 Why Square Opted for an Industrial Bank Model 

Square (SQ) is seeking an industrial bank license rather than a traditional bank license. Why? In deciding to go for an industrial bank license as opposed to a traditional bank license, Square chose the easy way out.

Source: Market Realist

How SFS Could Change Square Capital

Square has applied for an industrial bank charter so that it can take its lending business to a higher level and potentially unlock more growth.

However, Square intends to keep its consumer-facing financial services separate from its main bank unit.

Through Square Cash, Square is targeting the multibillion-dollar P2P (peer-to-peer) payments market. According to Forrester Research, global P2P transactions will reach $17 billion by 2019. According to Javelin Strategy and Research, the number of Americans using the P2P payment service will increase to 126 million by 2020 from 69 million in 2016.
$1 trillion alternative financing market

SFS, to be capitalized with $56 million in cash, will provide credit and offer deposit account services to merchants. The Polsky Center estimates that US (SPY) alternative loan volume rose to $34.5 billion in 2016 from $28.3 billion in 2015. Globally, the alternative financing market is forecast to grow to $1.0 trillion in the coming decade.

Square’s bank CEO will be Lewis Goodwin, an executive who recently joined the company from Green Dot (GDOT). Goodwin was CEO and president of Green Dot for several years.

Green Dot is a provider of prepaid debit card services. In 2016, Goodwin’s last full year as the company’s head, Green Dot’s revenue grew to $718.8 million from $694.7 million in the prior year.

Prosper raises $ 50 million but loses unicorn status (Business Insider), Rated: AAA

In another sign that the US marketplace lending industry has successfully 

Source: Business Insider

Banks To Equifax: Get It Together (Or Else) (PYMNTS), Rated: AAA

Equifax has been the Bad News Bears of financial services lately. First there was the massive data breach that sent the personal information of most of the U.S. adult population to the dark web for exploitation. Then there was the fake phishing site to which the credit rating agency accidentally referred a bunch of recently breached people, as they could not distinguish their own site from a cloned version of it. Thankfully, that site was actually set up by a security researcher to illustrate a flaw, not a real cybercriminal – but still, it hasn’t been a good fortnight for Equifax.

And now the banks – i.e. the lenders who supply credit rating agencies like Equifax with the data they need to feed their scoring model – are making loudly discontented noises in Equifax’s direction.

“If there’s only two players, then they have less ability to play them against one another” in negotiating prices for credit reports, Thomas said.

But the willingness of lenders to support Equifax is damaged by the firm’s handling of the hack so far, which has failed to impress anyone.

U.S. CFPB suing over alleged illegal online payday loan business (Biv.com), Rated: AAA

The U.S. Consumer Financial Protection Bureau (CFPB) is seeking the BC Supreme Court’s help to compel a group of former employees of a Langley company that allegedly ran an illegal online payday loan business through a web of affiliated companies in Canada and Malta.

The U.S., on behalf of the bureau, filed a petition in BC Supreme Court on September 8, naming Roo Chang, Annie Wang, Juila Zhu, May Chan, Doug Patton, Andrew Hung, Michelle Duncan and the Bank of Montreal as respondents.

The petition is related to a lawsuit filed by the bureau in New York in July 2015 over alleged violations of the Consumer Financial Protection Act “by using a series of interrelated Canadian and Maltese companies … to operate an illegal online payday lending business targeting U.S. consumers in all fifty states.”

The Second Annual Online Lending Policy Summit in Washington (Lend Academy), Rated: A

Yesterday, I attended the second annual Online Lending Policy Summit in Washington DC. It was headlined by the Acting head of the OCC, Keith Noreika, Congressman Greg Meeks (D-NY), Congressman Tom Emmer (R-MN) and William Isaac, the former head of the FDIC.

William Isaac was the head of the FDIC under President Reagan and he painted a stark picture of the US today where 60% of the population cannot get a bank loan. He said that we have to do better and figure out a way to lend to a broader cross section of the population.

I found Congressman Meeks to be the most engaging speaker of the day. His enthusiasm for financial innovation was infectious. He said that fintech should focus more on being an enabler than a disruptor. We need to enable more access to credit through partnerships with traditional financial institutions. He brought up the idea that fintech platforms could partner with black-owned banks that are struggling to keep up with the technological changes happening today.

Top 10 Jungle Releases Top 10 Small Business Loan Award to OnDeck Capital (PR Newswire), Rated: A

Digital media powerhouse Top 10 Jungle has just released its Top 10 Small Business Loan Reviews for 2017 and has given the top spot to New York City-based OnDeck Capital.

Acting Comptroller Noreika Comments On Madden “Fix,” Other OCC Initiatives (The National Law Review), Rated: A

In Madden, the Second Circuit ruled that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge.  Yesterday, at the Online Lending Policy Summit in Washington, D.C., Acting OCC Comptroller Keith Noreika advocated a Madden “fix” as an example of an action Congress could take “to reduce burden and promote economic growth.”  Mr. Noreika stated that the OCC supports proposed legislation that would codify the “valid when made rule” and provide that a loan that is made at a valid interest rate remains valid at that rate after it is transferred.

Mr. Noreika also was asked whether, as we have previously suggested, the OCC would address the risk posed by the theory that a bank making loans is not the “true lender” if a nonbank marketing and servicing agent acquires the “predominant economic interest” in the loans.  Unfortunately, Mr. Noreika stated that “true lender” guidance might be unnecessary at this time due to prior guidance issued during the tenures of former Comptrollers Hawke and Duggan.

With regard to the OCC’s special purpose national bank (SPNB) charter proposal, Acting Comptroller Noreika stated that the OCC is continuing to consider the proposal and intends to defend its authority to grant an SNPB charter to a nondepository company in the lawsuits filed by the NY Department of Financial Services and the Conference of State Bank Supervisors.

Mr. Noreika also indicated that the OCC intends to revisit its guidance on deposit advance products, observing that its views on such products are not necessarily consistent with those of the CFPB.

First-of-its-Kind Online Subscription-based Golf Club Upgrade and Instant Financing Program Powered by Klarna (PR Newswire), Rated: A

An innovative new online golf club upgrade and financing program, developed by TaylorMade Golf (www.taylormadegolf.com) in collaboration with Klarna (www.klarna.com), provides golfers access to the newest and most advanced equipment as soon as it is released.

In the first five months since its inception, the program has experienced significant success, with a 30 percent overall lift in conversions and a five percent increase in average order value.

‘The Turn’ is a first-of-its-kind upgrade program for purchasing golf clubs. It is named for when golfers finish the ninth hole of a round of golf and then ‘turn’ for home. The program allows TaylorMade Golf fans to finance their purchases over 18 or 30 months on the TaylorMade Golf website, and keep or exchange their clubs for the latest models toward the end of the payment period. If a customer chooses to upgrade, payments on the existing clubs will stop and payments on the new clubs will begin.

The program is powered by Klarna, a global leader in providing instant financing solutions to e-tailers and customers. Customers opt-in to the program by applying for financing at the point of checkout through a simple, instant credit approval process that provides them with an open line of credit that may be used wherever Klarna is accepted.

ArborCrowd Announces $ 40.8 Million Multifamily Real Estate Deal (Crowdfund Insider

Commercial real estate crowdfunding platform ArborCrowd announced on Tuesday it is now offering a $40.8 million multifamily real estate deal to investors. The property, Quarry Station Apartments, is located in San Antonio, Texas.

Deloitte says it was hacked (American Banker), Rated: A

Another hack: Deloitte said Monday it suffered a cyberattack. But the hacker accessed data affecting only a “very few” of the big accounting firm’s clients and “no disruption has occurred to client businesses, to Deloitte’s ability to continue to serve clients, or to consumers,” the firm said.

ReliaMax Acquires Assets of FUTR Corporation (BusinessWire), Rated: A

ReliaMax, the complete private student lending solutions provider for banks, credit unions, schools and alternative lenders, today announced it has acquired the assets of FUTR Corporation, a San Francisco- and Texas-based private student loan servicing provider. The acquisition brings over 40 new lenders and $55 million in borrower servicing to The ReliaMax Solution, the only fully-integrated private student loan solution that includes borrower acquisition, origination, servicing, insurance, and capital markets/portfolio liquidity support.

Fidelity Axes Suit Over High-Cost Investments, Robo-Adviser Fees (BNA.com), Rated: A

The participants’ claim that Fidelity breached its fiduciary duties by selecting and hiring Financial Engines—an online financial advice provider commonly known as a robo-adviser—also fails, Burroughs wrote. The allegations were premised on the notion that Fidelity, rather than the plan sponsor Delta, hired and selected Financial Engines, but the plan’s language contradicts this premise, Burroughs concluded, granting Fidelity’s motion to dismiss.

LEND360 Partners with LendingTree to Award a $ 10,000 Prize to Winner of the LEND360 Startup Innovators Program (PRWeb), Rated: B

LEND360 announces LendingTree, the nation’s leading online loan marketplace, will award a $10,000 prize to the winner of the LEND360 Startup Innovators Program, an on-site competition where fintech startups will present cutting-edge solutions that are propelling the online lending ecosystem forward.

Startups in the fintech space will pitch solutions on the LEND360 Innovation Floor Spotlight Stage. Each company will have approximately five minutes to make their pitch followed by a brief Q&A session. All LEND360 attendees are invited to attend.

Members of the LEND360 Investor Advisory Board will judge all presentations and attendees will submit their choice via our conference app. The winner will be announced on Friday morning, October 13, and will have the opportunity to pitch their solution on the mainstage.

Check Into Cash founder pulls ads from NFL games, denounces league as ‘unpatriotic’ (Times Free Press), Rated: B

But after NFL players and coaches challenged President Donald Trump and many took a knee during the national anthem played before their games over the weekend, Jones said he is through sponsoring the wardrobes or advertising on stations that air the National Football League.

“Our companies will not condone unpatriotic behavior!” said Jones, CEO of the payday lending chain Check Into Cash and owner of Hardwick Clothes — America’s oldest suit maker.

Envestnet to buy FolioDynamix for $ 195 mln (PE Hub), Rated: B

Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today announced that it will acquire FolioDynamix, a provider of integrated wealth management technology solutions.

How Do You Refinance Your Student Loans? It’s Actually So Much Easier Than You Think (Bustle), Rated: B

In February, Forbes reported that the total student loan debt had reached $1.13 trillionspread out across almost 45 million borrowers in the United States.

According to SoFi’s own refinancing calculator, people who refinance with SoFi save on average almost $23,000 total, or $288 a month — not an insignificant chunk of change. (Other lenders boast similar returns.) “If you’re paying an 8 or 9 percent [interest rate], and you can refi down to 4 percent, and you can lower the term — take it from 15 years to 10 years — you’ve cut the interest rate, you’ve cut the length, you would have been paying double the interest for a longer period of time,” Bradford explains.

By combining your all federal and private loans into one new private loan, you lose out on certain protections that come with federal loans, like income-based repayment or student loan forgiveness, according to the Consumer Financial Protection Bureau.

Research by LendEDU found that 57 percent of applicants qualify, so there’s little excuse not to at least try. And according to Student Loan Hero, across the top six student loan refinancers, it takes on average less than 20 minutes total to check your rates and apply online (or even on an app).

United Kingdom

P2P lender Zopa set to reopen to new investors (Financial Times), Rated: AAA

Zopa, the UK’s first peer-to-peer lender, is aiming to reopen to new investors by the end of this year following a long-running imbalance between those who want to lend money via the platform, and those who want to borrow.

Zopa’s website offers annualised projected returns of up to 4.5 per cent to those prepared to lend money to individuals via its platform for five years. However, high demand meant Zopa stopped taking new client money last December. After re-opening temporarily, it stopped again in March, and started a waiting list which has details of 15,000 potential investors waiting to lend.

Andrew Lawson, Zopa’s chief product officer, said the company was growing its book of new loans at 50 per cent year-on-year but was finding it harder to lure appropriate borrowers due to declining credit quality and fierce competition among peer-to peer lenders.

The platform’s existing investors have also been hit by long delays after a surge in demand for Zopa’s Innovative Finance Isa, which allows peer-to-peer loans to be held within the popular tax-free wrapper.

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Online small business lender Funding Circle lifted the lid on business performance on Wednesday, showing revenue passed £50 million for the first time last year.

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

Graham Wellesley hits back at critics (P2P Finance News), Rated: A

Earlier this year, a series of media reports highlighted a report from auditor BDO which stated that Wellesley & Co was “dependent on raising further capital to continue to operate for 12 months”. This statement referred to the firm’s performance as at December 2015.

However, Graham Wellesley told Peer2Peer Finance News that these reports were misleading as they referred to the firm’s mini-bonds only, and not its peer-to-peer lending platform.

LendInvest and NACFB launch broker development finance course (Financial Reporter), Rated: A

LendInvest has launched its first property development course for brokers, in partnership with the NACFB.

Aimed at providing brokers with a better understanding of how to add more value to clients that require development finance, the courses outline in detail what it takes to make sure small-scale developments run smoothly.

Can you trust the bonds that pay 8.5%? We run the rule over five deals wooing savers with juicy rates (This is Money), Rated: B

QuidCycle — 6.1 per cent

QuidCycle is a so-called peer-to-peer lending company, which brings together borrowers and savers.

There is just one bond available now, paying 6.1 per cent for five years. You must invest at least £500 and your money isn’t accessible until the fixed term expires.

THE RISKS: The worry is that the borrower won’t be able to make repayments. QuidCycle has a Provision Fund, a pot of money set aside in case borrowers can’t pay.

Your money is spread across at least five borrowers to limit your risk exposure, and there’s an option to lend a maximum of £100 to any single borrower.

Former Swift chief Campos joins Scottish financial technology vendor ID Co (Finextra), Rated: B

A leading UK financial technology company has strengthened its position in the market with the appointment of new chairperson, Lazaro Campos, and chief technology officer, Scott Leckie.

The Edinburgh headquartered business, established in 2010, has won some major clients in the UK and North America. These include a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance. Over the last 12-months alone, the volume of transactions facilitated by the company has grown by 15% month over month.

New chairperson Lazaro Campos brings over 30-years C-level experience in banking technology, having previously served as a non-executive director of The ID Co. from 2014. He is also co-founder of innovation ecosystem company FinTechStage, member of the advisory board of financial services company Payoneer and Senior Advisor to management consulting firm Booz Allen Hamilton. Elsewhere Lazaro served at SWIFT, the global banking network, in various executive roles and was its CEO from 2007 until 2012.

International

Avalon is Inviting Investments in Its Initial Coin Offering to Reshape The Trends of Online Lending (Digital Journal), Rated: A

Avalon Capital Group, Inc. has announced that it is inviting investors from around the world to make investments in its initial coin offering. With a well-established base of research, development and operations, the company is introducing cryptocurrency and initial coin offerings as a new way of transaction for its valued customers. In addition, the rising private investment company is backed by HSBC bank with 4,000,000 USD investment already.

This blockchain based crypto lending model will open new possibilities of lending money online safely and easily. Furthermore, this decentralized peer to peer lending platform will enable anyone to lend and borrow money is a safe and secure environment online.

India

How Fintech Players can Help Banks Bridge the Gap in SME Lending in India (BW Disrupt), Rated: A

The SME business opportunity in India can be seen in possibly every sector – financial services, telecom, education, automobiles, media, food, real estate and so on. SME businesses are the biggest contributor to the economy of any country and the same goes with India. After agriculture, small business in India is the second largest employer of human resources. Also, in recent years, this sector has been weaving some of the most inspiring business success stories. In fact, MSMEs were found to account for 46% of the industrial production and 95% of the total industrial units.

From inefficacy of measures in credit flows (such as credit scoring for SMEs) to information asymmetry faced by banks and financial institutions, there are plentiful challenges that have impacted the contribution and performance of small and medium enterprises in the Indian economy. More than 80% MSME entrepreneurs are forced to resort to other unorganized avenues of financing to obtain credit assistance.

Fintech lenders can change that.

P2P Lending – A twist or a stick? (India Times), Rated: A

Although still in its infancy as a market, P2P lending firms in the US and UK in 2010 generated cumulative lending of USD 1.5m and this increased to USD 7bn in 2015 so unprecedented rise in the demand. In the US alone, in 2015, P2P platforms issued approximately $6bn in loans and based on our global analysis, this is expected to grow to $150bn by 2025 (25 times or 2400% over 10 years).

The estimated P2P lending to be generated in India over the next 5 years is pegged at circa USD 4bn (160 times the current lending size). Still this is way too low compared to China where there are circa more than 2000 P2P lending firms with a lending book size north of circa USD15bn indicating the potential to grow exponentially in India.

What are the risks involved in P2P lending?

1. Weak underwriting process resulting in bankruptcy of the P2P firm due to poorly executed business model resulting in granting loans to scrupulous borrowers with poor credit history

4. Data privacy laws could be breached if the platform firms disclose the names of the borrowers and lenders in their website.

5. If KYC and AML checks are not carried out robustly, the platform firms could be used for money laundering and routing illegal sources of funding.

Our perspectives

1. Platform based lending will invariably gain huge momentum over the next 3-5 years due to competitive interest rates and ease of making finance available.

2. Secured lending may have a better preference from a risk averse investor stand point due to the fact that this business has progressed very well since the past 5 years and there are established RBI regulations governing this type of lending.

4. Over a period of time, if unsecured P2P lending is well established like in the developed markets (e.g. Funding Circle in the UK), banks and institutional investors will potentially look to buy blocks of P2P loans to add to their portfolios.

Kae Capital backs consumer lending startup CrediFiable (VC Circle), Rated: A

Online consumer lending platform CrediFiable, which is operated by Bengaluru-based OneFiable Technologies Pvt. Ltd, has raised an undisclosed amount of funding from Kae Capital, the startup said in a statement.

Asia

Job loss concerns raised amid digital disruption in Indonesia (Straits Times), Rated: AAA

Disruptive innovation in digital technology is on the horizon, with bankers and toll road operators beginning to replace manual jobs with digital machines, raising concerns that millions of jobs in the finance and service sectors will be replaced.

Meanwhile, banks are opening fewer physical branches, putting more money into developing digital banking and digital offices.

State lender Bank Mandiri, the largest bank in terms of assets, has announced that it plans to open only 100 branches this year, far fewer than the annual plan of 400 to 600. Such a move will lead to a reduction in the number of new recruits taken on.

Other lenders joining the digital wave include private lender BTPN, which spent 1.3 trillion rupiah (S$131 million) on developing a digital platform, dubbed Jenius, over the past three years, while DBS Indonesia launched Digiland, an entirely paperless and signature-free banking experience.

Southeast Asia’s fintechs: Target the underbanked (Euromoney.com), Rated: A

But southeast Asia isn’t China. While Ant Financial knows China like the back of its hand, and vice versa, the company recognizes the limits in its abilities outside the country. Because of that, Ant Financial and Alipay’s work in southeast Asia is done through local partners.

It’s the Facebooks and Googles of the world that really keep the banks up at night, not the explicit fintech companies, says Yew.

CIMB says more than 90% of its total banking transactions are done through digital and self-service channels at this point.

Aquaculture investment platform GrowPal wins G-Startup Indonesia 2017 (e27), Rated: B

Global startup competition G-Startup Worldwide announced aquaculture investment platform GrowPal as the first-place winner of G-Startup Indonesia 2017.

GrowPal is a P2P lending platform that aims to help freshwater fishermen raise funding for their business.

Canada

Fear of financial loss limits investors’ opportunities (Investment Executive), Rated: A

Specifically, 72% of investors surveyed said they feel financially secure in the current economic climate and 68% said they are comfortable taking risks to get ahead. However, if investors were forced to choose between safety and performance, 83% would choose safety.

76% of investors surveyed believe that some fund managers charge high fees for just tracking an index, which investors say they can also do and at a lower cost.

Another area in which investors could benefit from good advice is alternative investment strategies that go beyond stocks and bonds. Although many investors are open to alternative investments, the Natixis study suggests a lack of education in this area may be a roadblock. For example, 71% of investors believe alternative investing is too complex and 65% say these investments are riskier than traditional asset classes.

Authors:

George Popescu
Allen Taylor

Wednesday June 14 2017, Daily News Digest

nonprime mortgages

News Comments Today’s main news: Misys, D+H team up to launch Finastra. Fundrise intros first real estate robo-advisor. UK businesses find it harder to get a loan. Singapore Life gets insurance license. Faircent offers online lenders ‘What-If’ scenario simulations. Today’s main analysis: Does anyone remember how to make a subprime mortgage? The most up-to-date numbers for Prosper, RateSetter. Today’s thought-provoking […]

nonprime mortgages

News Comments

United States

United Kingdom

Asia

European Union

International

Australia

India

MENA

Canada

News Summary

United States

Launch of Finastra (D+H), Rated: AAA

Today Misys and D+H have joined forces to create a diversified global financial software provider, unmatched in terms of depth and breadth of solutions. Operating under the new company name Finastra (www.finastra.com), the combination will create the third largest financial services technology company in the world. The company has approximately 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally. This follows the acquisition of D+H by Vista Equity Partners, which already owns Misys, creating a merger of two highly complementary financial technology providers.

Finastra will be led by Nadeem Syed in the role of Chief Executive Officer. Mr. Syed was previously CEO of Misys and has over 27 years of experience leading global technology companies through transformation and growth. The company has U.S. $2.1 billion* in revenues and has offices in 42 countries around the world. It will be headquartered in London, UK, maintaining North American headquarters in Toronto, Canada.

Finastra offers the broadest set of retail banking, transaction banking, lending, and treasury and capital markets software capabilities available in the world. The company’s open architecture and approach enable financial institutions to harness the power of software ecosystems and will be delivered on premises, hosted or via the cloud. With the increased scale and geographic reach, Finastra will be able to serve customers better, regardless of their size or geographic location – from global banks, to community banks, credit unions, and corporations. Using the company’s secure and reliable solutions, customers will be empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to deliver a superior customer experience, both now and in the future.

Having long pursued a progressive vision of innovation within both businesses, Finastra will strive to further unlock the potential of people and businesses by executing the product strategy of ‘Protect, Extend and Innovate’. This includes protecting our customers’ investments in all of our solutions; extending the value of our solutions by integrating new products and services; and innovating to create the best-in-class solutions. Finastra will work in partnership to help customers transform their business, and become more agile, innovative, and resilient to better meet their evolving needs.

Finastra will be privately held.

Retailpocalypse: Bank branches are closing in droves (Tearsheet), Rated: AAA

There may be no physical institution as historically revered as a bank.

Nice try. Banks these days are hardly elegant or imposing. Most have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period and Citi closed 302 (28.5 percent).

Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience.

While those in the banking industry feel there will always be brick-and-mortar branches, in large part because the business of banking is grounded in trust, and in knowing the person with whom you’re working, the move to digital technologies is expected to grow exponentially.

Fundrise Revamps Service with First Ever Robo-Advisor for Real Estate (Crowdfund Insider), Rated: AAA

Fundrise, one of the leading online investment platforms for real estate, has launched the “2.0” version of their platform. Fundrise has created a Robo-Advisor focused on real estate thus providing an investing tool to match individual investor needs.

The Fundrise Robo-advisor enables individual investors to create a highly diversified real estate portfolio accessing Fundrise’s growing number of eREIT’s. The service provides an estimate based on submitted variables to extrapolate potential returns. Fundrise estimates users will save up to 40% on fees versus traditional services.

Does Anyone Remember How to Make a Subprime Mortgage? (WSJ), Rated: AAA

Brokers willing to learn the lost art of making risky mortgages are in demand again.

Mr. Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of efforts to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis.

Brokers are a key part of a mortgage chain that starts with a borrower going to a broker for a loan. The broker surveys lenders for the best loan to fit the customer. The lender then funds the borrower’s loan.

While brokers before the crisis served banks and independent lenders, today they are working largely for nonbank lenders who make up a critical part of the mortgage market.

In the first quarter, nonbank lenders accounted for about half the mortgages originated in the U.S., according to industry publication Inside Mortgage Finance.

In the first quarter, nearly a decade after the start of the housing crisis, lenders originated just $6 billion in loans to borrowers with less than stellar credit scores or who are using alternative documentation to prove income, a category now known as “nonprime,” according to Inside Mortgage Finance.

In all of 2016, they originated $22 billion in loans, according to Inside Mortgage Finance. Back in 2005, at the peak for such loans, lenders made about $1 trillion of these mortgages.

Meanwhile, the volume of loans produced by mortgage brokers dropped to $37 billion in this year’s first quarter, down about 34% from the last three months of 2016. Loans from brokers peaked at around $1.1 trillion in 2003.

‘Fintech’ startup SoFi moving into traditional banking (Seattle Times), Rated: A

NEW YORK (AP) — Online lender and financial startup SoFi has taken the first step toward competing with the nation’s biggest banks on their home turf: the checking account.

The company, however, will have back-office operations in both Delaware and Salt Lake City, Utah.

In its application to the Federal Deposit Insurance Corporation, SoFi plans to fund its new bank subsidiary with $166 million in capital.

Student Loans Are Holding Back Entrepreneurs. SoFi Is Changing That (Inc.), Rated: A

All your life, you’re told that an education will set you up to fulfill the American dream. But once you graduate, you’re faced with onerous payments that seem to hardly dent the principal. You need a steady job, stat. It’s terrifying to forgo a salary to start something new, let alone invest your assets, when you’re obligated to make monthly payments that can reach thousands of dollars.

One startup is helping its users get ahead of their debt and start the new ventures that our economy needs to thrive. SoFi (short for Social Finance) is largely known as the startup that will refinance your student loans, though it aspires to encompass its members’ entire financial lives.

Nevertheless, student loans are SoFi’s bread and butter, a reflection of the generation of Millennials saddled with insurmountable-feeling debt. That’s why, in addition to its unemployment support and career coaching, SoFi has an entrepreneurship program. The benefits include six months of loan deferment, mentorship resources such as connections to investors, and networking with other entrepreneur members.

Of course, SoFi can’t single-handedly revive American entrepreneurship, not least because the cohorts of accepted entrepreneurs are limited, and the types of businesses that SoFi favors skew toward scalable tech startups rather than conventional small businesses. But student loan relief has a definite impact on the participating SoFi members’ ability to launch companies.

Fundrise Offering Circular (Disclosure Quest), Rated: A

We are offering up to 5,000,000 shares of our Class B Common Stock to the public at $5.00 per share. This offering commenced on February 1, 2017 and as of May 30, 2017, we had settled approximately 2,884,129 shares of our Class B Common Stock of the 3,000,000 shares that we had previously qualified for sale. We are including in the offering an additional 2,000,000 shares of our Class B Common Stock to be sold pursuant to this offering circular.

Disruptor Alert: These 2 Companies Are Changing Banking (The Motley Fool), Rated: A

Square (NYSE:SQ) has disrupted the mobile payment market, and could still be in its early innings of growth. Over the past year, Square’s stock has more than doubled, thanks to its impressive and better-than-expected growth and optimistic forecast.

Over the past year alone, Square’s payment volume increased by 33% to over $13.6 billion, and the company is on the verge of becoming profitable. Plus, Square’s services and subscription revenue more than doubled year-over-year, and has tremendous long-term growth potential.

P2P lenders aren’t the only players in the unsecured lending space anymore — some of the biggest names in the industry are getting involved, which could certainly shake things up in the years to come.

One in particular I have my eye on is Goldman Sachs (NYSE:GS).

Goldman first announced its intention to get into the consumer lending business in 2015, and after a couple of years of development, the company recently launched Marcus (named for Marcus Goldman, one of the bank’s founders), its new lending platform that offers personal loans of up to $30,000.

According to a report by TransUnion, nearly 16 million people took out an unsecured loan in 2016, the highest on record. With an average balance of $7,640 and average interest rate of 12%, this translates into a billion-dollar revenue stream if Goldman can build its market share to just 7%.

IMAGE SOURCE: LENDING CLUB INVESTOR PRESENTATION.

Cadre Raises $ 65 Million in Series C Financing, Led by Andreessen Horowitz (BusinessWire), Rated: A

Cadre, an online investment marketplace providing access and insight into institutional quality alternative assets, today announced a $65mm Series C financing round led by Andreessen Horowitz, with additional participation from Jim Breyer of Breyer Capital, Ford Foundation, General Catalyst, Goldman Sachs, Khosla Ventures, and Thrive Capital. Cadre’s existing investors include DST, Founders Fund, SL Green, and others.

Envestnet | Yodlee Unveils Personal Financial Wellness Solution Powered by Data Intelligence (PR Newswire), Rated: A

Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced the launch of its Personal Financial Wellness Solution at the Digital Banking Summit. The Envestnet | Yodlee Personal Financial Wellness Solution is a suite of applications and APIs that leverages enriched data and artificial intelligence to move beyond organizing historical financial data, helping financial institutions and fintech developers provide actionable, financial guidance to their customers across a spectrum of devices, user interfaces and platforms.

The Envestnet | Yodlee Personal Financial Wellness Solution enables financial institutions and fintech developers to provide actionable tools to help consumers identify their projected OK to Spend balance and easily Save for a Goal. By applying Envestnet | Yodlee’s advanced data intelligence to its enriched transaction data of over 15,000 data sources, financial service providers can derive actionable information from consumers’ financial data in order to measure, guide and improve consumers’ financial health.

OK to Spend

Core to the Personal Financial Wellness Solution is OK to Spend, which synergizes predictive analytics and user feedback to deliver smart financial forecasting. OK to Spend can be consumed as a financial application or a fully RESTful API framework that enables financial service providers to create forward-looking forecasts that organize and predict recurring income and financial obligations along with personalized notifications for financial events and projected balances. OK to Spend analytics is run across the consumers’ primary spending accounts (cash and credit card) regardless of which financial institution they primarily bank with, in order to provide a holistic view of their finances.

Patent-protected machine learning and data analytics enable the OK to Spend algorithms to identify sources of recurring income and accurately predicts future income, accounting for anomalies. Similarly, OK to Spend identifies recurring and forecasted financial obligations, while accounting for fluctuations determined from historic data.

Save for a Goal

The Save for a Goal application allows consumers to easily set and track savings goals. The application facilitates money movement across different accounts at a specific time frequency and allows customers to better track their goals by allowing consumers to allocate multiple goals to a single account, or spread a single goal across multiple cash and investment accounts. Save for a Goal provides visual data and notifications such as progress bars, charts, graphs and alerts, engaging customers with the option to flex and prioritize between goals.

The First In-Depth Report of the Single Family Real Estate Investor – the Iceberg Report (Newswire), Rated: A

The role of the individual and institutional single-family residential investor is highly undervalued and tremendously under-appreciated. About 10 million individuals, businesses and institutions provide secure housing and jobs for millions of average Americans. 67 million souls live in single-family rentals, a million more properties are added each year employing millions of individuals, to buy, renovate, lease and maintain as safe housing for tenants in affordable to luxury markets.  Single-family rentals have been discovered as a low-risk passive income revenue source and a growth asset in a balanced portfolio or personal retirement plan.

Using Harris Poll, single-family real estate investors were surveyed nationwide to understand why, where, what and how they invest and manage these properties to provide stable housing and realistic returns on their personal and company investments.

The report touches several other critical components that shape this market. Key among these are how the single-family real estate investor effects the economy, how investors view their properties (as added rental income or as an intentional business goal), investor decision points, and the investor as a customer,” says Steve Murray, Founder & CEO Real Trends.

To download your free copy of the Iceberg Report Executive summary, please go to

Want to Bring More Services to Your Clients? There’s A FinTech for That (CPA Practice Advisor), Rated: A

These days, there are few “typical” CPA firms left. As they seek to diversify, differentiate and grow by offering their clients value added services, firms are engaging in a much wider range of activities.

With the rise of a new generation of B2B financial technology companies, or Fintechs, the opportunities for CPA firms to offer new services have never been better.

Fintechs are infiltrating every aspect of B2B financial services, and venture investment continues to pour in. Where people used to look to QuickBooks, Oracle and SAP, now there are cloud-based accounting and ERP options like Xero and Freshbooks and NetSuite and Workday. But you probably know about those.

What you might not know is that Fintechs are moving into e-invoicing, expense reporting, data sharing and protection, compliance, tax management and fraud control. They’re executing specific parts of the banking value chain better, cheaper and faster, including lending, trade finance, and payments. Some are even considering becoming banks themselves.

Fintech solutions solve the whole thing– all types of payments and all the work that goes along with the payments. Companies can make 80 percent or more of their payments electronically, and that saves a lot of resources, especially if you’re a BPO writing hundreds of thousands of checks on behalf of your clients. You could be helping them get a lot more card rebates instead.

But what visibility really does is open up more opportunities for CPA or audit or BPO firms down the road. If you’re a BPO, visibility into payments could potentially help you work better with vendors.

The more you can help clients automate, the more nimble they are and the more nimble you are.

Goldman Sachs Bank Aggressively Going After Deposits (Lend Academy), Rated: A

So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.

For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays.

Allstate, Marketplace Lending Association and others fly in (Politico), Rated: A

All sorts of interest groups are flying in this week to nab some time with lawmakers before the July 4 recess.

The Marketplace Lending Association, a trade group that represents digital financial and lending startups, is in town this week for its first-ever fly-in, meeting with lawmakers and regulators. “The goal is to bring Washington up to speed on the growth of the sector, as well as the emerging partnerships between the fintech member firms and banks,” according to the group. Its member companies include Lending Club, Prosper, Funding Circle, Avant, Marlette Funding and Affirm.

FINRA Establishes Innovation Outreach Initiative For FinTech (ETH News), Rated: A

On June 13, 2017, The Financial Industry Regulatory Authority (FINRA) declared the establishment of the Innovation Outreach Initiative, in order to properly assess FinTech‘s industry impact.

FINRA’s Innovation Outreach Initiative comes after the launch of its FinTech site that’s dedicated to emergent topics in the field, and literature on blockchain technology and digital investing.

The initiative will consist of program elements, such as enhancing FINRA’s processes, timely publication of regulatory technology applications, regional outreach roundtable discussions (comprised of FINRA members and nonmembers), and the creation of a FinTech Industry Committee. The committee will help to assist with ongoing discussions about how FINRA’s programs and rules will intersect with FinTech innovations.

Online Lending Policy Institute Names Board of Governors (OLPI Email), Rated: B

The Online Lending Policy Institute (OLPI), a voice for policy analysis, in-depth research, and education for the online lending industry, today announced its Board of Governors, a group of industry experts ranging from academics to lawyers to executives from twelve leading organizations. This newly elected group joins founding members of OLPI: Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans.

The Board of Governors are:

  • Frank Borchert, General Counsel, Marlette Funding/ Best Egg
  • Colin Darke, General Counsel/Chief Compliance Officer, RocketLoans
  • Dr. Michael Dooley, Chief Economist, SoFi; professor of economics UC Santa Cruz
  • Marc Franson, Managing Partner, Chapman and Cutler LLP
  • Michael Freedman, General Counsel, BorrowersFirst, Inc.
  • Gilles Gade, CEO, Cross River Bank
  • Adam Goller, Chief Credit Officer, Cross River Bank
  • Cornelius Hurley, Director, OLPI; professor Boston University
  • John Kromer, Partner, Buckley Sandler LLP
  • Robert Linderman, General Counsel, Freedom Financial Network, LLC
  • Tim Li, CEO, Kuber Inc.; professor Fintech School
  • Marshall Lux, Senior Fellow, Harvard Kennedy School
  • Marty Mitchell, Managing Director, ProBank Austin (formerly Professional Bank Services)

DiversyFund Announces New Luxury Investment With Roman James Design Build (Digital Journal), Rated: B

DiversyFund, Inc., a fast-growing full-service online real estate investment platform, announced the next ground-breaking real estate investment project that their partnership with Roman James Design Build will undertake. DiversyFund and Roman James will be building a new ultra-luxury in Hollywood Hills, one of the most exclusive neighborhoods in Los Angeles.

This investment opportunity is located at the end of Granito Drive in the prestigious Hollywood Hills community of Los Angeles, California, home to Hollywood celebrities, professional athletes and Fortune 500 CEOs.

Congressional Testimony on Fintech Innovation: “Today We Are Following Not Leading” (Crowdfund Insider), Rated: B

This past week the House Subcommittee on Digital Commerce and Consumer Protection, part of the Energy and Commerce Committee, held a hearing on Fintech innovation as part of their disruptors series.

Van Valkenburg called on Congress to “rationalize the chaos of financial regulation,” pointing to the horrifying reality there exists a byzantine environment of state and federal regulators that, well simply put, doesn’t make sense.

United Kingdom

London leads European fintech investment despite Brexit (Financial News), Rated: AAA

London-based fintech companies attracted more than three times as much capital in the first quarter as Berlin – Europe’s second largest fintech investment hub – and maintained its market share despite moves by other cities in the region to gain from the UK’s departure from the EU.

New research from data provider FinTech Global found six cities that stand out in Europe’s fintech arms race, with companies based in London, Berlin, Stockholm, Paris, Barcelona and Amsterdam raising $823m in the first three months of 2017.

Overall European investment stood at $1.2bn, with London claiming a 36% share at $421m — more than treble the $140m investment in Berlin-based companies, according to the research.

Over the previous three years, London accounted for 39% of European investment, suggesting that the impact of last year’s Brexit vote has been slight.

UK businesses looking for finance are finding it harder to get a loan (Business Matters), Rated: AAA

With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance reveals how credit conditions look to be tightening again, with over 400,000 small businesses now interested in finding an alternative to the banks for a loan.

When asked, 32 per cent of SMEs that had considered raising finance said that it was now harder than six months ago.

As banks are progressively closing their branches and cutting back on front-line staff, businesses now need to go elsewhere to benefit from face-to-face contact before borrowing money. With over a third of small businesses preferring to seek advice in person, the move to online-only offerings and the closure of physical branches is a concern.

Hive ICO – the first crypto currency invoice financing platform for SMEs (Daily Fintech), Rated: A

Hive claims it will be the first crypto currency invoice financing platform for SMEs, with its ICO opening in 4 days and closing at the end of July.

From what I can gather – and I’d say you’re best to verify this yourself – Hive tokens give holders the right to participate in the network and generate a return by funding invoices. The carrot for small business owners is the speed of execution of the financing element.

And while I was lucky enough to get a master class in person, if you haven’t yet got your head around tokens and ICO, these articles are worth a read:

Asia

OBTAINING DIRECT LIFE INSURANCE LICENSE BY SINGAPORE LIFE (Credit China Fintech Holdings Limited), Rated: AAA

This announcement is made by Credit China FinTech Holdings Limited (“Company”) on a voluntary basis.

Reference is made to the announcement of the Company dated 26 April 2017 in relation to the Investment in Singapore Life (the “Announcement”). Unless otherwise defined, the capitalised terms used herein shall have the same meaning as those defined in the Announcement.

The board of directors of the Company is pleased to announce that Singapore Life has been approved as a fully licensed direct life insurer by the Monetary Authority of Singapore.

Singapore Life will also soon offer life insurance solutions to customers through its online platform www.singlife.com and financial advisers.

European Union

French Fintech Under Macron’s Presidency One Month On (Forbes), Rated: A

On the other hand, as Grossman points out, ‘since Macron has publicly stated that innovation and disruption is key for France’s growth potential, his intention for closer integration with Europe has been broadly welcomed by the fintech industry.’ Macron seems to be pro-PSD and has invited those affected by Brexit to work in the technology sector in France, all are welcome under En Marche. The French president is also very supportive of SME growth and is interested in helping French Tech.

Macron’s initiatives so far are clearly in favour of the development of fintech in France and with billions promised for innovation, the president is returning to supporting this space, as he did with The Family in Paris, as Grossman points out.

International

What do the most up-to-date numbers in marketplace lending tell us? (AltFi), Rated: AAA

Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.

In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.

 

RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.

Sovereign wealth funds ramp up private debt investment (AltFi), Rated: A

Gargantuan sovereign wealth portfolios are increasingly turning to private debt exposure with almost two-fifths of portfolios now actively investing in the asset class due to its potential for stable risk-adjusted returns and portfolio diversification benefit.

The report found that 39 per cent of sovereign wealth funds now invest in the asset class, an increase of five percentage points over the past 12 months. The majority of sovereign wealth funds with over $10bn in assets now allocate to the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.

Libyan Investment Authority is one such investor in private debt that allocates to the asset class as part of its private equity portfolio. The fund targets distressed debt and mezzanine funds in Europe, North America and MENA.

Mezzanine investments are the private debt fund type most appealing to sovereign wealth funds, with 70 per cent targeting the strategy over the next 12 month and direct lending is sought by 53 per cent.

Australia

Australia and Hong Kong seal fintech cooperation agreement (ZDNet), Rated: A

The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.

Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.

India

Now online money lenders can simulate ‘What-if’ scenarios on Faircent (Techseen), Rated: AAA

India based Peer-to-Peer lending website, Faircent, has announced the launch of what it claims to be a first-of-its-kind Portfolio What-if Analysis (PWA) tool on its platform. According to the company the tool will allow lenders to simulate different loan scenarios and understand how multi-loan portfolios in peer-to-peer lending operate through a ‘What-if’ analysis.

Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).

Rupaiya Exchange Receives Award for Best Peer-to-Peer Lending Platform in India (PR Newswire), Rated: A

Rupaiya Exchange received the award for Best Peer-to-Peer Lending Platform in India in The Asian Banker Financial Peer-to-Peer Audit Awards Programme 2017. The awards ceremony was held in conjunction with the prestigious Asian Banker Future of Finance Summit 2017, the foremost annual meeting for decision makers in the financial services industry in the Asia Pacific region, held at the Asian Civilisations Museum, Singapore.

The awards evaluation criteria were based on multiple dimensions including financial performance, risk management processes, technology, innovation and strategy.

Online Peer-To-Peer Lending (BusinessWorld), Rated: A

Facilitating simple, fast, and tech-enabled banking services, the emergence of fintech is forcing banks to rethink old business models and delivery mechanisms to adopt a more technology-driven and consumer-centric approach to retail banking.

Leading this ‘uberisation’ of financial services is the online P2P (peer-to-peer) lending sector, which is driving disruption in the institutional lending space through its simplified, tech-enabled approach. What this also means is that online P2P lending will play a significant role in driving the Indian economy.

The adoption of technology means that loan approvals and disbursals can be facilitated in as little as 24 hours from the request origination, whilst digitised operations and processes allow for minimisation of overhead costs. This translates to greater benefits for all stakeholders; while borrowers pay lower interest rates and processing fees, lenders earn higher margins and returns on their investments.

MENA

MBRF, Beehive to offer start-up finance solutions (Gulf News), Rated: AAA

Dubai SME’s financial arm and peer-to-peer lending platform Beehive had signed a memorandum of understanding (MoU) to aid financing for small and medium enterprises (SMEs).

The MoU between Beehive and the Mohammad Bin Rashid Fund (MBRF) will make it easier for SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.

Under the deal, MBRF would act as a guarantor for credit of up to Dh500,000 on SME financing for a period up to 36 months.

Canada

Calgary-Based POS Lender LendingArch Expands into Quebec (Crowdfund Insider), Rated: A

LendingArch, a Calgary-based online and point-of-sale lending platform, announced its expansion to Quebec. LendingArch has partnered with medical clinics and home improvement contractors in Quebec to offer POS financing options, enabling LendingArch to become a fourth in-store payment method by applying online to finance products or services for up to 36 months.

Authors:

George Popescu
Allen Taylor

Streamlining Data Gathering For Lenders

data aggregation for lenders

For any lender looking to gather information, the data gathering process can be cumbersome. Digital processing allows financial institutions to streamline how data is brought into the business model and consumed by lending platform. This is of value to both the customer and the financial institution because the data can be looked at more granularly. […]

data aggregation for lenders

For any lender looking to gather information, the data gathering process can be cumbersome. Digital processing allows financial institutions to streamline how data is brought into the business model and consumed by lending platform. This is of value to both the customer and the financial institution because the data can be looked at more granularly. With more details, more insights behind the details, and the ability to understand the trend of the data, there will be a deeper understanding of the customer’s financial situation. A credit score of 680 going up indicates a completely different trajectory than a credit score of 680 going down.

Terry McKeown is the practice manager for Envestnet/Yodlee. For 17 years, Yodlee has been acting as a data aggregator company for different financial institutions, mostly in the credit space. “For the first 15 years, it was used a lot for investment needs.” McKeown said. “It was used for insight in credit lending by providing additional info on assets, verification on those assets, income, employment, savings and investment accounts, and more, from a variety of data sources.”

Yodlee’s core competency is data aggregation and account verification.

Yodlee was acquired by Envestnet about a year ago. A pioneer in the industry, Yodlee has brought over 70 patents and a wide breadth of data — 15,000 different data sources including checking accounts, brokerages, 401Ks, and more — to the lending ecosystem. Seventy-five percent of the data comes through direct feed. While they have been aggregating data for years, doing so in lending is a newer side of the business. Yodlee does business currently in 16 countries.

“It’s all customer-permissioned,” McKeown said. “We are doing it on their behalf. This isn’t a traditional credit bureau process.”

The process is quite helpful in subprime. If the customer’s file is thin and unscorable, Yodlee can get additional information to provide more insight to the lender. In the prime category, it provides a more holistic view of the borrower’s financial situation, because knowing what assets they have helps in the size and type of loan. For a small business, Yodlee can pull up to a year of data.

“This gives seasonality so the lender has more insight into the health of the business over a long time period,” McKeown said.

The customer inserts their information directly into the lending portal and Envestnet/Yodlee gathers that information then provides the lender with a data file, a report, HTML view, PDF format, and multiple other formats. This streamlining helps lenders make better credit decisions because they have a comprehensive understanding of the applicant’s financial health.

“We’re providing what the industry needs,” McKeown said, “not so much what we can provide, but what the industry is asking for. We can be more timely with credit decisions and more precise with decisions to assist the lender in any format they ask for.”

Yodlee pulls data on borrowers from bank accounts (savings, CDs, money market accounts, checking accounts, business accounts, and more), investment accounts from brokerages to trusts, retirement accounts, insurance products like annuities, life insurance, auto insurance, and health, and liabilities, which includes mortgages, home equity loans, HELOC, credit cards, student loans, e-billers, and more. This means lenders can get most of their data from a single source rather than doing all the legwork themselves. This is data aggregation for the 21st century.

Authors:

Written with Nicki Jacoby.

Allen Taylor