Monday January 22 2018, Daily News Digest

California triple-digit APR loans

News Comments Today’s main news: SoFi seeks to poach Twitter  COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]

California triple-digit APR loans

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United States

SoFi Offers CEO Spot to Twitter Executive Anthony Noto (WSJ), Rated: AAA

Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.

The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs Group Inc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.

Twitter’s Noto offered CEO spot at SoFi (SeekingAlpha), Rated: A

He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.

How Your Business’s Online Brand Can Help You Get A Loan (Forbes), Rated: AAA

An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.

Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.

Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.

How super high-interest loans have boomed in California (Los Angeles Times), Rated: AAA

Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.

These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.

In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.

The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.

Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.

CFPB To Reconsider Payday Lending Rules (Forbes), Rated: A

Within this large document, there are four key actions being proposed:

  • Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
  • Limit payday rollovers
  • Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
  • Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.

The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:

  • Risks are high: The people using payday loans are very high risk borrowers.
  • Price competition is absent: For a payday loan, people value speed and access.
  • Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.

Consumer protection bureau drops payday lender lawsuit (KYMA), Rated: A

The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.

Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.

Bank of America’s digital investments pay off (Business Insider), Rated: A

  • BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
  • Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.

BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.

The Biggest Myths About the Underbanked (MicroBilt), Rated: A

Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:

Bank Earnings, GS Enters Home Improvement loan market, PeerIQ Hires (PeerIQ), Rated: A

in 6 years as its trading revenue was impacted by losses in commodities trading. GS, continuing on its strategic objective to generate $13 Bn in loans in 3 years, also announced that 

Zelle’s anti-fraud efforts trip up key group: Its users (American Banker), Rated: A

The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.

Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.

Loanable is Working to Disrupt Student Loan Industry (The Student Loan Report), Rated: A

One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.

According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.

This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.

The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:

  • The full amount of the loan
  • Each lender’s name, address and email
  • The borrower’s name, address and email
  • The interest rate – which is usually between 2% and 10% for friends and family loans
  • The loan term (normally 36 months)
  • A designated late fee
  • The start and end dates of the lending schedule

SoFi Parent Loan vs. Parent PLUS Loan: Which Is the Better Option? (Student Loan Hero), Rated: A

SoFi Parent Loans Parent PLUS Loans
Eligibility requirements Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible non-citizen
Application process Apply for an instant rate quote with a pre-approval application (soft credit pull); submit full application when you choose a loan (hard credit pull) Submit the FAFSA; work with your college financial aid office to request a Parent PLUS Loan
Credit requirements SoFi considers your credit score, debt-to-income ratio, income, career, education, and other factors. Another parent or guardian can cosign You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits $5,000 minimum, up to the total cost of attendance Up to the total cost of attendance, minus any other financial aid received
Rates Fixed APRs from 3.25% – 7.25%; variable APRs from 2.58% – 7.07% Fixed interest rate of 7.00% for the 2017-2018 school year
Origination fees None 4.264 percent for the 2017-2018 school year
When repayment begins Immediate repayment Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options Five- or 10-year terms Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)

Tax Preparation Firms Use Zero Interest Loans As Lead Generator (Lend Academy), Rated: A

With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.

H&R BlockJackson HewittLiberty Tax Service and more recently Credit Karma all market interest free advances on your tax refund. The process is simple and the loans are paid back to the tax preparer when your refund comes back from the government.

CSBG Applauds Senate Introduction of the Small Business Credit Availability Act (Coalition for Small Business Growth Email), Rated: B

The “The introduction of the Heller-Manchin Small Business Credit Availability Act is welcome news for America’s small and mid-sized businesses. The legislation recognizes that business development companies (BDCs) have become an important source of capital for Main Street businesses and modernizes the way BDCs are regulated. If passed, this bill could quickly result in billions of dollars of credit availability for companies often overlooked by traditional lenders,” said Joe Glatt, co-founding member of CSBG.

Learn more about the Small Business Credit Availability Act (H.R. 3868) here.

State of New York Poised to Empower New York Department of Financial Services to Study Online Lending (Crowfund Insider), Rated: B

There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS).

This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.

NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly.

Read the New York Senate Act here.

United Kingdom

Peer to Peer Lender Zopa Increases Interest Rates Paid to Investors (Crowdfund Insider), Rated: AAA

Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.

Bankers in fight to lure Softbank float to City (The Times), Rated: AAA

Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.

The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.

8 in 10 SMEs still prefer traditional bank loans over alternative finance (growth business), Rated: A

Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.

UK Open Banking crew call on Contego to verify you (Fintech Futures), Rated: A

Contego, a regtech and compliance firm, has been chosen by the Open Banking Implementation Entity (OBIE) to verify its users and support open banking development in the UK.

Envestnet | Yodlee unveils API solution for PSD2 compliance (Fintech Futures), Rated: A

Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).

Tech drives financial sector consultancy in the post-crisis era (Financial Times), Rated: A

“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.

LendInvest seals £17m deal for first phase of 5,750 home site (Specialist Lending Solutions), Rated: B

LendInvest has been named the exclusive development finance lender on the first phase of a long-term development scheme that aims to build up to 5,750 new homes outside Dover in Kent.

The lender is funding the first 216 units on the first section of the site to be developed by Halsbury Homes – the largest number of units it has funded so far.

Astute investments for under $ 1,000 (Bankless Times), Rated: B

In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
China

Shake-up in China’s online P2P lending sector (China.org.cn), Rated: A

The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.

Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.

On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.

However, the company owner, Yang Yinghua, went missing the next day.

European Union

Orange Bank: is a phone company the future of fintech? (Financial Times), Rated: A

And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.

The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.

 

Springhouse Receives MOR RV2 Residential Vendor Ranking from Morningstar Credit Ratings, LLC for Asset Valuation (Yahoo! Finance), Rated: A

Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.

As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.

EUROPEAN DIGITAL LENDING AWARDS (Eiffel Investment Group), Rated: A

Eiffel Investment Group actively supports the development of digital lending throughout Europe.

We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.

The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at contact@eiffel-ig.com (advanced registration is mandatory).

See voting categories here.

International

Transferwise Launches Borderless Bank Account (CLNews), Rated: AAA

Launched in January, the company’s ‘borderless’ account – coupled with a debit card –  allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.

But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.

Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals –  last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.

To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.

Today’s Banks Need a Millennial Banking Technology Framework (Finextra), Rated: AAA

According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.

According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.  

Embrace the Millennial Banking Revolution

59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.

Spotcap partners up with major bank to offer same-day financing (Spotcap), Rated: AAA

Spotcap has entered into a market-leading strategic partnership with BAWAG Group to give Austrian small and medium-sized enterprises (SMEs) access to same-day financing.

More than 99 percent of Austrian businesses are small or medium-sizedand access to finance is a key challenge for SMEs in Austria, as it is for SMEs globally.

We will now provide Lending as a Service to major institutions in addition to our direct SME loan offering in the United Kingdomthe NetherlandsSpainAustralia & New Zealand.

AlfaToken ICO to Make Smart Contracts Accessible Even for Those with Zero Coding Skills (BTC Manager), Rated: A

AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.

Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.

Australia

 

Eight big things coming to finance in 2018 (finder), Rated: A

1. Blockchain

Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.

94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.

2. Biometric payments

Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.

3. The end of our low-interest world

Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.

4. The declining human face of banking

A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.

5. The rise of one-to-one lending

For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.

6. The disappearance of ATMs and cheques

The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.

7. Savings innovations for children

Finder’s 2017 Banking Innovation award went to Spriggy – an app which allows parents to pay pocket money onto debit cards.

8. And finally… instant banking and the New Payments Platform (NPP)

By far the biggest change to the financial industry in Australia will be the New Payments Platform (NPP), which will be switched on in phases from February 2018.

India

More millenials borrowing to travel; take micro loans (The New Indian Express), Rated: AAA

It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.

According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.

Pre-budget 2018 Reaction Mr. Rajat Gandhi Founder & CEO, Faircent.com (Technuter), Rated: A

In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.

Asia

OJK Set to Issue Regulation on Crowdfunding (Netral News), Rated: AAA

The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.

 

Building wealth management strategies for this year (The Star), Rated: A

Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.

Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.

  • Review your holistic financial plan
  • Review your cashflow statement
  • Review your strategic asset allocation statement

Axiata invested US$ 200m in digital ventures (New Straits Times), Rated: B

Axiata Group Bhd is in the process of building one of the largest fintech companies in Asia to include five micro services – payments, remittance, lending, savings, and insurance.

President and group chief executive Officer Tan Sri Jamaludin Ibrahim said since 2013, Axiata had invested some US$200 million for its digital and internet ventures.

Out of the US$200 million, RM50 million worth of investment went into Axiata’s fintech business.

Russia

Russia’s Sberbank plans crowdinvesting platform for small firms, say sources (Gulf Times), Rated: AAA

Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.

The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.

It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.

Authors:

George Popescu
Allen Taylor

Thursday December 7 2017, Daily News Digest

Robinhood

News Comments Today’s main news: Credible raises $50M in Australian IPO. Kabbage considers IPO. Blockchain project gives New York homeless a digital identity. Funding Circle surpasses $5B global lending, $1B to U.S. businesses. RateSetter publishes 2016-17 accounts. Starling Bank gets full FCA, PRA approval. N26 launches premium debit card, partners with WeWork. Revolut rolls out bitcoin services. Vietnam gets first P2P lending platform. IOU […]

Robinhood

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United States

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News Summary

United States

Kabbage Mulling An IPO (Seeking Alpha), Rated: AAA

According to FT Partners, the FinTech market saw a record 412 financial deals during the third quarter of 2017. One of the largest deals in the quarter involved a $250 million investment by Softbank (OTCPK:SFTBY) in billion-dollar unicorn Kabbage (Private:KBGE).

Kabbage generates revenue from the fees on the loans. It expects revenue of over $200 million in 2017, roughly double the revenue in 2015. The company claims to have a loss rate lower than the rest of the industry, and that its direct lending business had turned profitable in the fourth quarter of 2016. It expected the whole business to be profitable in the second half of this year.

Kabbage plans to use the funds for expansion into Asia and build new products like insurance and payroll services. It will also be positioning the company for a possible IPO.

Securitizations Securing the Future (Lending Club), Rated: AAA

As we near year’s end, we’re excited to announce that LendingClub has closed its third self-sponsored securitization. The $330 million transaction saw immediate traction and has further increased access to consumer credit for the stable and scalable pool of investor capital in the liquid Asset-Backed Securities (ABS) investor market.

Of note, with 48 total securitization investors this year, over two-thirds 34 are new to LendingClub, including insurance companies, hedge funds, a bank and a pension fund.

We Analyzed 7 Of The Fastest-Growing Personal Finance Apps Of All Time To Figure Out The Secrets To Their Success (CB Insights), Rated: AAA

Ninety-two million millennials will soon be in what Goldman Sachs calls their “prime spending years.” In aggregate, they command $1.3 trillion in annual spending.

(Bankrate found 83% of millennials don’t think they’ll ever retire: they simply “don’t think they’ll have the money” to do so.)

Source: CB Insights

For three of the tools we looked at — Mint, Level Money, and Check — we studied how their product evolved all the way up to their acquisition (by Intuit, Capital One, and Intuit, respectively).

Source: CB Insights

What follows are the results of our analysis — six secrets to success in the world of personal finance management.

1. Use pre-launch marketing to build both trust and hype

Mint had by far the most significant growth in its valuation — from $0 to $170M in just two years.

Source: CB Insights

2. Making the first experience valuable

Keeping users around is hard: according to Localytics, the average mobile app loses 80% of its users within just three days of download.

The best apps retain about 70% of users after three days. The next-best retain about 60%.

Source: CB Insights

3. Design for The Specific User You Want

Source: CB Insights

Millions Are Hounded for Debt They Don’t Owe. One Victim Fought Back, With a Vengeance (Bloomberg), Rated: AAA

A few minutes later, Therrien’s phone buzzed. It was the same guy. He gave his name as Charles Cartwright and said Therrien owed $700 on a payday loan. But Therrien knew he didn’t owe anyone anything. Suspecting a scam, he told Cartwright just what he thought of his scare tactics.

Therrien had been caught up in a fraud known as phantom debt, where millions of Americans are hassled to pay back money they don’t owe. The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

The problem is as simple as it is intractable. In 2012 a call center in India was busted for making 8 million calls in eight months to collect made-up bills. The Federal Trade Commission has since broken up at least 13 similar scams.

This New Blockchain Project Gives Homeless New Yorkers A Digital Identity (Fast Company), Rated: AAA

Three thousand homeless people in New York are about to receive a special holiday gift: a free smartphone that allows them to manage their digital identity, access shelters and food pantries, and make use of financial services.

The project comes from Blockchain for Change, a New York City startup that has developed a mobile app called Fummi that’s preloaded on the phone. It has teamed up with Life Wireless, which provides phones to low-income groups using federal subsidies. Also involved are NYC service providers like Urban PathwaysPart of the Solution (POTS), Hakook, and the Robin Hood Foundation.

Life Wireless is distributing the phones, starting in the Bronx. The service groups create the blockchain identities for individuals. Once on the system, they can then open an account, receive money, and track their activity.

Blockchain for Change has raised more than $500,000 in a seed round, but it’s also planning a public initial coin offering where it hopes to raise up to $50 million. It generates revenue by charging fees to users at a rate of $3 per month.

On Earnings Calls, Which Tech Company Are Senior Execs Most Obsessed With? (CB Insights), Rated: A

More than Google, Apple, or Facebook, there’s one company that CEOs and public company execs are talking about the most. We analyzed earnings call transcripts to identify the new king of technology.

Amazon has been mentioned nearly 3000 times in the last year.  That’s more than Facebook, Apple, and Microsoft combined.

Source: CB Insights

 

Global Debt Registry joins Wall Street Blockchain Alliance (Finextra), Rated: A

Global Debt Registry (GDR), the asset certainty company, today announced its membership to The Wall Street Blockchain Alliance (WSBA).

WSBA is an industry non-profit trade association created for financial market professionals, by financial market professionals. The alliance engages market participants, regulators, policymakers and technology innovators to advocate the adoption of blockchain’s distributed ledger technology.

Discover Enables Apple Pay Cash (PYMNTS), Rated: A

Discover has announced that transactions made with Apple’s new Apple Pay Cash card will leverage the Discover Network.

The card is part of the new Apple Pay functionality, which allows U.S. customers to quickly, easily and securely send and receive money among friends and family. When Apple customers receive money on a supported device, the money is added to their new Apple Pay Cash card. They can use the money instantly to pay someone or to make purchases using Apple Pay in stores, apps and on the web.

Payday lender Curo to launch in New York with $ 620m valuation (Financial Times), Rated: A

One of America’s biggest payday lenders is launching on the stock market with a $620m valuation, cashing in on mounting hopes that the Trump administration and Republicans in Congress will ease regulatory restrictions on the sector.

Curo Group, which targets “underbanked” consumers and is behind WageDayAdvance in the UK as well as Speedy Cash in the US, begins trading on the New York Stock Exchange on Thursday.

Shares in the private equity-backed company were priced on Wednesday evening at $14 per share, according to Bloomberg data.

Jury Convicts Online Lender Of $ 220M (Mondaq), Rated: A

Recently, a Manhattan federal jury convicted Richard Moseley Sr., the head of an online network of payday lenders and loan servicers, on charges of wire fraud, aggravated identity theft, and violating the Racketeer Influenced and Corrupt Organizations Act and Truth in Lending Act, among other counts.

Moseley was convicted due to his leadership role over a vast and complicated system of interrelated companies that collected over $220 million from more than 600,000 borrowers and deceived regulators in the process. Convincing state and federal regulators and even his own lawyers that his companies were based offshore and not bound by U.S. law, Moseley coordinated a network of lenders and loan servicers that routinely misled both consumers and regulators.

Instamotor Customers Can Now Apply for Financing While Shopping For A Used Car (BusinessWire), Rated: A

Instamotor, the free online used car marketplace, announced today that its customers can now apply for and receive financing for vehicles on its platform.

An estimated 54% of used car buyers need financing according to Experian. By working with leading direct-to-consumer automotive lenders, Instamotor will become one of the few true automotive marketplaces to enable its users to shop for a used car and secure the financing more than half of them will need, all conveniently integrated in one place.

Loans enabled through Instamotor will be available to consumers with FICO scores as low as 500, which are people who commonly have trouble receiving optimal loan terms through traditional financing methods. Also, the application is optimized to be completed entirely in the comfort of one’s home rather than in a dealership office or credit union.

Lendio Opens New Franchise in Nashville (Crowdfund Insider), Rated: A

Marketplace lending platform Lendio, recently announced its has opened its new franchise located in Nashville, Tennessee. Lendio revealed that its franchise program makes accessing business loans easy by helping small business owners skip the legwork of looking for a small business loan.

Progressive Leasing and Marqeta Partner to Power New Lease-to-Own Financing Experience (BusinessWire), Rated: A

Marqeta, the open API payment card issuing platform, and Progressive Leasing, a virtual lease-to-own company and a division of Aaron’s, Inc., today announced a technology partnership that will enhance the checkout process for Progressive Leasing customers.

As one of the largest players in the lease-to-own industry, Progressive Leasing sought a partner who could support their needs today and provide innovative solutions to help build their future payment checkout roadmap. Through the partnership, Marqeta will enable Progressive Leasing to issue virtual cards at the point of sale and work with them to create additional innovative payment offerings.

With the partnership, Marqeta will enable Progressive Leasing to take advantage of a wide range of modern features, including virtual card issuance, tokenization, and its patent-pending Just-in-Time (JIT) Funding, allowing Progressive Leasing to authorize and reconcile transactions in real time.

Real estate crowdfunding expands into more niche markets (Curbed), Rated: A

To those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds online, crossing Kickstarter with construction. A pair of six-story towers connected by a skybridge, the commercial project does in fact resemble a hand weight, with an ostentatious, colorful Italianate pattern sprawled across the facade for extra impact.

Funded in part by investors who pooled money via the Crowdstreet crowdfunding platform, the building, located in a former industrial neighborhood called Burnside Bridgehead, is also open for business and looking for tenants. It’s the city’s first crowdfunded building, and a sign that the growing world of real estate crowdfunding has developed and matured since a 2012 change in investment regulations made these platforms possible.

While reliable numbers about this growing and fragmented market prove difficult to come by, research firm Massolution estimated the global market for real estate crowdfunding surpassed $3.5 billion in 2016.

Hope grows that a larger SEC crackdown on ICOs is coming — and soon (TechCrunch), Rated: A

More than $3 billion has been raised through so-called initial coin offerings so far in 2017.

That wait-and-see stance looks to evolve into much more action in 2018, suggest those who’ve either spoken with the Securities and Exchange Commission or otherwise have a vested interest in its rulings. (The SEC isn’t commenting publicly on its specific plans.)

Just Friday, a new division of the agency that’s focused on ICOs filed charges against an outfit called PlexCoin that reportedly raised $15 million from thousands of investors by promising a 1,354 percent return in 29 days or less.

Credit score row as FICO chief hits out at banks over ‘Fako’ rivals (Financial Times), Rated: A

A row has erupted over credit scoring after the head of FICO, the company whose metric underpins trillions of dollars in lending decisions in the US, hit out at some lenders for supplying customers with a rival measure he dismissed as “Fako”.

The group that supplies lenders with the rival assessment, VantageScore, hit back, saying Mr Lansing was spreading “misinformation aimed at discrediting FICO’s only real competitor”.

The spat points to the opacity of credit scoring, a crucial part of America’s consumer finance economy that is in the spotlight after the huge data loss at the credit reporting company Equifax.

Tips for Reducing College Costs (Earnest Email), Rated: B

Source: Earnest

Roostify to Integrate With Black Knight’s LoanSphere Empower Loan Origination System (BusinessWire), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced that it has signed an agreement with Black Knight, Inc. (NYSE:BKI) to integrate its platform with Black Knight’s LoanSphere Empower loan origination system (LOS). The integration will enable Empower users to add further efficiency and transparency to the loan origination process – from application to closing.

Envestnet | Yodlee Incubator Unveils New Class of Fintech Disruptors (Business Insider), Rated: B

Envestnet | Yodlee(NYSE: ENV) today announced the members of the newest Envestnet | Yodlee Incubator class.

The members of the 2017–2018 Envestnet | Yodlee Incubator class are:

  • Amplifunds helps donors find non-profits that match their interests and performance expectations.
  • Datasine turns transactional data into psychometric insights, allowing banks to better serve their customers.
  • Golden helps families care for their senior parents’ financial health, wealth and security.
  • Peanut Butter offers a cloud-based software to help employers attract college-educated talent by managing student loan assistance programs.
  • Starbutter AI makes text and voice chat Artificial Intelligence (AI) agents that help consumers pick financial products like credit cards and mortgages.
  • Stessa enables property owners to manage, track, and communicate performance of their real estate assets.
  • Tangello improves home affordability by bridging the gap between renting and buying and offering a flexible, lower cost, and quicker way to finance homes, directly from mobile devices.
  • Veryfi provides mobile-first bookkeeping software that empowers business owners by automating the tedious parts of accounting through AI and machine learning.

AutoGravity Names Sheng Wang As Chief Technology Officer (PR Newswire), Rated: B

AutoGravity has announced the appointment of Sheng Wang as Chief Technology Officer (CTO) to drive the company’s global engineering efforts. Wang joins AutoGravity’s executive team with responsibility for leading product and engineering to deliver a trustworthy and innovative car buying experience that empowers the consumer.

Prior to her appointment as CTO, Wang led AutoGravity product development as the company’s first Director of Product, building cross-functional teams to develop and launch the award-winning AutoGravity platform, as well as branded platforms for Volkswagen Credit and Kia Motors Finance. Wang joined AutoGravity with more than fifteen years of leadership experience in the technology industry and an uncompromising dedication to building dynamic teams and high-impact products that people love.

QCash Financial Wins Financial Times Future of Fintech Awards for the Innovation Category (BusinessWire), Rated: B

QCash Financial, a Credit Union Service Organization (CUSO) providing automated, cloud-based small-dollar lending technology for financial institutions, announced that it was selected as the winner of Financial Times Future of Fintech Innovation Award.

The FT Future of Fintech awards recognize pioneering companies able to demonstrate innovative ideas capable of creating lasting change in the financial services sector on a global scale. Financial Times offers an Innovation Award for newer Fintech companies that are bringing out novel solutions. QCash Financial was awarded the Innovation Award.

United Kingdom

Funding Circle passes $ 5 billion lent globally, including $ 1 billion lent to US businesses (PR Newswire), Rated: AAA

Funding Circle today announced that investors have lent more than $5 billion globally to small businesses through the Funding Circle platform. This has supported a network of 40,000 businesses across the UK, USAGermany and the Netherlands and helped to create more than 100,000 new jobs.*

Today’s news follows a record November for Funding Circle globally with the business facilitating more than $260 million of lending, including $175 million in the UK (£130m), $70 million in the US and $15 million in Continental Europe (€14.5m). Together this has helped thousands of business owners to access fast, transparent finance to grow their businesses, and will lead to an estimated 7,500 new jobs.

With US businesses now having accessed more than $1 billion in funding through the platform, Funding Circle becomes the first lending platform anywhere in the world to have facilitated more than $1 billion across two markets.

Your December Review – Insight and Analysis (Funding Circle), Rated: AAA

Your lending has reached £3 billion in the UK! November was also a record month, with £129 million lent to small businesses in the UK.

Over half of Brits (56%) think they have the skills to run their own business, but only 13% believe they’re entrepreneurial.

Source: Funding Circle
Source: Funding Circle

RateSetter Publishes 2016-2017 Accounts (Crowdfund Insider), Rated: AAA

On Wednesday, UK peer-to-peer lending platform RateSetter released its accounts for the year ending on March 31, 2017. The online lender reported that revenues were £23.7m, up 38 percent from 2015-16; loans under management grew by 23 percent, from £581m to £714m; the number of active lenders grew by 36 percent from 31,036 to 42,049; and, over the same period, the number of active borrowers grew 27 percent from 161,000 to 204,000.

Peer-to-peer lender RateSetter’s losses jump as it takes a hit from bad loan to ad company (Business Insider), Rated: A

RateSetter booked a pre-tax loss of £23.3 million in the year to March 2017, compared to a £5.3 million in the previous year. The company operates a peer-to-peer platform that matches retail investors with individuals looking to borrow money.

Operating losses were £9.2 million last year but the figure was pushed higher by a one-off write-down relating to a loan the platform made to Adpod Limited, an advertising business RateSetter lent £12 million.
‘A resilient business’
RateSetter’s accounts also show that revenue rose by 38% to £23.7 million. Loans under management rose by 23% to £714 million. The number of active lenders on the platform rose by 36% to 42,049 and the number of borrowers rose by 27% to 204,000.

Goodwill impairment helps push Ratesetter further into to the red (Verdict), Rated: A

A goodwill impairment pushed pre-tax losses for RateSetter down to £23m in the year ending March 2017, despite revenue growth of 38% to £23.7m.

The company, which launched a consumer vehicle and commercial assets HP offer this year, saw a rise of 36% in the number of lenders and 27% of borrowers. However, operating losses of £9.2m were further weighed down by a £14.1m goodwill impairment on a loan to advertising company Adpop.

In 2015 Vehicle Trading Group, a company operating in motor finance for consumers and dealerships, used a wholesale facility from RateSetter to lend £12m to Adpop. Both Vehicle Trading Group and Adpop subsequently went into financial difficulties, and RateSetter then bought the two companies.

RateSetter thus decided to back Adpop’s repayments of third party loans, preventing its provision fund from absorbing the hit, as it normally would in case a borrower defaults.

Starling Bank Receives Full Regulatory Approval from FCA & PRA to Offer Broad Portfolio of Financial Products (Crowdfund Insider), Rated: AAA

Starling Bank has been granted approval by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to offer customers a wide array of financial products by the mobile only bank.  Starling Bank received a licence to operate as a bank by the Bank of England in 2016. The digital only challenger bank will now be able to provide; mortgages, consumer loans, ISAs, and other investment products via their App. No bricks and mortar necessary.

Barnett backs P2P Global Investments for recovery (Citywire), Rated: A

P2P Global Investments (P2P), the largest of the listed alternative lending funds, has won the backing of Invesco Perpetual’s Mark Barnett, its largest shareholder, for the turnaround plan it outlined last week.

The future of advice is ‘Fintegration’ (Professional Adviser), Rated: A

The financial advisory sector has seen much change in the past few years, much of it driven by new technologies and a wave of new market entrants. While we are seeing consolidation and innovation in response, this is just the start. So if you thought the merry-go-round was slowing down, then grab hold tightly because it is only going to accelerate.

‘Fintegration’ – the integration with fintech services – is emerging as an important factor.

What is common to both groups is their appetite for financial online and digital services – from online banking and mortgage management to peer-to-peer lending platforms. There is no doubt we will shortly see the fully integrated dashboard becoming commonplace.

China

China targets booming online lending as crisis fears build (Hong Kong FP), Rated: AAA

The 24-year-old secretary is among millions of Chinese who have turned to proliferating online companies that dish out quick loans — and are worrying the country’s leadership.

Jia started accumulating her debt when she was in college, turning to tech titan Alibaba when she could not get a credit card.

The ease of a few taps on her phone and a four minute wait led Jia to borrow and borrow and when she was finally able to take out a card, she used it to repay Alibaba’s affiliate Ant Financial.

But her debt reached roughly US$9,000 this summer, and her monthly interest payments eclipsed her meagre salary.

‘Lending nirvana’ 

Alternative lending, with loans that can be wired to accounts within minutes, has taken off in China and accounts for 85 percent of the global market, according to a University of Cambridge report.

European Union

N26 launches a premium debit card for ‘the digital customer,’ partners with WeWork (TechCrunch), Rated: AAA

N26, the European mobile banking service, today announced the launch of N26 Metal, the company’s premium MasterCard-affiliated debit card “tailored to the needs of digital customers” at TechCrunch Disrupt Berlin. N26 Black customers in Germany, France, Italy and Austria will be able to sign up for the new NFC-enabled card, which obviously features a metal core made from tungsten and that makes the card weigh a lot, starting December 14.

It’s also worth noting that this is the first metal card in Europe that supports contactless payments.

What better company to partner with then than co-working and real estate startup WeWork. Using the N26 Metal service, N26 customers will also be able to join the WeWork network and get credits to reserve workspaces and conference rooms.

International

Currency trader Revolut’s offer to those champing at the bitcoin (The Times), Rated: AAA

Revolut, which provides foreign currency services to consumers and small businesses, said that from today its users would be able to buy bitcoin and other “cryptocurrencies” using 25 conventional currencies.

BFS Capital has Extended Over $ 1.7 Billion in Financing to Businesses across the US, UK and Canada (BusinessWire), Rated: A

Marking its 15th anniversary year, BFS Capital, a leading small business financing platform, announced it has now extended over $1.7 billion in financing since funding its first deal in 2002. The company also reported that over 75 percent of its originations have occurred in the last five years and more than 25 percent took place in the last 18 months. For full year 2017, BFS Capital expects to generate more than $300 million in originations, a new annual high.

Recent Origination Milestones in Online Lending (Lend Academy), Rated: A

Today, Kabbage announced they had crossed the $4 billion mark. They have now lent to more than 130,000 small businesses which they claim is the largest customer base of any online small business lender.

This week LendingHome announced it had crossed $2 billion in mortgage loans for homeowners and real estate investors.

Funding Circle UK crossed the £3 billion (approx. $4 billion) mark in small business lending for their UK business.

LendingClub quietly announced total small business originations of $500 million since 2014 in a recent blog post.

Emerging markets are under pressure, but I’m buying the dip (CNBC), Rated: A

The Chinese government instituted tough new regulations on online consumer lending platforms, which are made up of payday loans and peer-to-peer lending. Some of them are associated with large holdings in the emerging markets exchange-traded fund like Ant Financial, an Alibaba Group affiliate.

While much of this is a continuation of the Chinese debt bubble, the move suggests that it has gotten out of the regulators’ control.

We see a global trade boom continuing to drive emerging markets as global Purchasing Manager indexes show continued growth in demand for manufactured goods. For example, Korea is already registering signs of slowing Chinese demand but is still showing 9.6 percent year-on-year growth for November exports. However, we continue to watch the tone out of Washington, since a shift toward more protectionism could put a dent in this.

Viola FinTech is a new $ 100M Israel-based VC fund targeting fintech startups around the world (TechCrunch), Rated: B

Viola, the Israel-based technology investment group, is launching new independent VC fund targeting fintech startups from anywhere in the world. Dubbed Viola FinTech, the “cross-stage venture fund” has an initial closing of $100 million but will extend that towards $120-150 million. It is backed by global banks, insurance companies and asset managers from North America, Europe, APAC and Israel, including Scotiabank, The Travelers Companies, Inc and Bank Hapoalim.

Australia/New Zealand

San Francisco’s Credible Raises $ 50 Million in Australian IPO (Bloomberg), Rated: AAA

San Francisco-based financial technology company Credible Labs Inc. is going public, but not on a U.S. exchange.

The startup, a consumer loans marketplace, raised $50 million (A$66 million) in an initial public offering on the Australian Securities Exchange, according to a statement Thursday.

The IPO values Credible at A$300 million, about 50 percent higher than the valuation it got in its last fundraising round, according to people familiar with the matter, who asked not to be identified as the details aren’t public.

Yellow Brick Road Adds Prospa to Lending Panel in Boost to Aussie Small Business (Crowdfund Insider), Rated: A

Yellow Brick Road has added online lender Prospa to its lending panel. The move was described as an effort to diversify its lending offerings for Australian small business customers. Yellow Brick Road is a full service wealth management company that offers products and services for home loans, financial planning, insurance, superannuation, and investments.

Marketplace lenders must ‘start educating’ SMSFs on opportunities, discipline (Nestegg), Rated: A

Speaking to Nest Egg, CEO of fully licensed marketplace lender Zagga, Alan Greenstein said that self-directed investing is now a “very, very big part of SMSF investment” and that according to Zagga research, well over 30 per cent of SMSFs at a sophisticated wholesale level are self-directed investors.

Pointing to a recent whitepaper produced by Zagga, Mr Greenstein said SMSFs tend to be invested at either end of the spectrum; very high risk and high yielding opportunities, or very low risk opportunities.

He said that Zagga’s newly launched ZAG Fund offered a middle ground, with a targeted net return of 6.5 per cent.

Ngā Tangata Microfinance breaking hold of predatory lenders (Scoop), Rated: A

With loan capital provided by Kiwibank, Ngā Tangata Microfinance (NTM) provides no-interest loans to qualifying clients for family well-being and relief from high-interest debt.

An evaluation conducted by the University of Auckland’s Centre for Applied Research in Economics found NTM’s no-interest loans were crucial in helping low-income clients break the cycle of debt caused by predatory payday and fringe lenders.

Partnering with local budgeting advisors, NTM has now disbursed more than $660,000 in no-interest loans to more than 300 clients, with 70% of the support being for relief from high-interest debt. It is estimated these loans had potentially saved clients a total of more than $1 million in interest and additional costs. Requests for help continued to trend up – 30% more NTM loans were approved in the past 12 months compared to the previous year, amounting to nearly 130 loans worth $275,000.

India

Loans are easy to get, but are they for you? (livemint), Rated: AAA

When you buy a phone, you have the option to pay for it then or pay later. You have this option even when you are buying grocery or paying bills. Credit these days can be available relatively easily, even for amounts as low as Rs1,000. In fact, in a country where you need to have a good credit history and credit score to get loans from banks, you can now get loans on your phone—even if a bank would not lend to you.

According to data from the Centre for Monitoring Indian Economy Pvt. Ltd (CMIE), personal loans (incremental numbers) increased 179% and credit card outstanding rose 34.63% in value during April to October period in FY 2017-18. In comparison, incremental numbers during the same period for housing loans showed negative 32.7%.

Source: livemint

HDFC Bank Ltd saw a 35.75% growth in personal loans and 44.50% growth in credit card business in the second quarter (on a year-on-year basis). ICICI Bank, in its second quarter results this financial year said that its personal loan book saw a 40.1% year-on-year growth and the credit card business grew by 36.5%. And this is true for the non-banking finance companies (NBFCs) as well. Bajaj Finance Ltd saw a 42% growth in consumer lending in the same period.

Asia

Vietnam launches first peer-to-peer lending platform (XinhuaNet), Rated: AAA

Vietnam has launched its first peer-to-peer lending service Vay Muon, enabling people to borrow and lend money without having to go through a financial institution.

Matching lenders and borrowers via a smartphone application, the lending platform does not require mortgages and one-on-one meetings, local VTV online newspaper reported on Thursday.

First-time loan requests will be reviewed and disbursed within four hours and subsequent requests will be handled in just half an hour.

‘Korean startups should do what they are good at to get funding’ (The Investor), Rated: A

Korean startups flock to Silicon Valley hoping to become the next Facebook or Google. However, setting up a business from scratch where thousands of new startups come and go every year, is not easy, and becoming a “unicorn” is near impossible.

One fundamental reason is because they can’t get enough funding, according to Tim Chae, head of the Korean unit of US accelerator 500 Startups.

First of all, a company should either run a business in a certain sector for which Korea is widely famous worldwide, such as beauty and e-sports segments, rather than roll out me-too services and products.

Datarius Cryptobank Participates at BlockShow Asia 2017 (Digital Journal), Rated: B

On November 29–30 a large-scale event — Block Show Asia 2017 — was held, and Datarius Cryptobank participated in this event.

Datarius Cryptobank is a unique project. This is a first social cryptobank built on base of the distributed register technologies using neural networks and artificial intelligence. The main attractive features of the project for investors and future customers are the lowest transaction fees, as well as P2P-lending.

Canada

IOU Financial Surpasses US$ 500 Million in Loans Originated (Cision), Rated: AAA

IOU Financial Inc. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that it has facilitated more than US$500 million in financing to thousands of merchants and small businesses across the United States and Canada since launching its lending platform.

Authors:

George Popescu
Allen Taylor

Tuesday October 24 2017, Daily News Digest

fraud transactions

News Comments Today’s main news: OnDeck collaborates with Ingo Money, Visa on real-time SMB lending. Affirm’s new mobile app allows consumers to borrow money for almost any online purchase. N26 readies for launch in the UK. P2PFA reports over 700M GBP in Q3 new lending. Fincera issues $1B in Q2 lending. Kabbage automates SMB lending in France, Italy with ING partnership. […]

fraud transactions

News Comments

United States

United Kingdom

China

European Union

International

India

Africa

News Summary

United States

OnDeck Collaborates with Ingo Money and Visa to enable real-time Loan Funding to Small Businesses (PR Newswire), Rated: AAA

OnDeck (NYSE: ONDK), the nation’s largest online lender to small business, announced today agreements with Ingo Money and Visa to enable real-timefunding of loans to small businesses via their debit cards, powered by Visa Direct. OnDeck will be the first company in the online lending industry to offer real-time access to capital via a customer’s existing small business debit card.

The move by OnDeck comes in response to small business demand for improved cash flow and faster payment experiences. A recent survey found 70% of small business owners report they have a small business debit card, and of those without debit cards, 87% of them said they would get a new debit card to take advantage of real time transfers. The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app.2OnDeck plans to use Visa Direct through Ingo Money’s technology platform to disburse loan proceeds securely in real time to its line of credit customers via their existing small business debit cards. Visa Direct is Visa’s real-time push payments platform allowing companies to leverage Visa’s global scale to develop faster payments solutions for ubiquitous reach to consumers or small businesses with a debit card.

Ingo Push, the turnkey push payments service from Ingo Money, allows OnDeck customers to receive funds via a vast network of eligible debit or prepaid card accounts, including eligible Visa cards; online and mobile wallets; and a network of more than 40,000 cash-out distribution points.

SoFi priced itself at double its valuation during recent M&A talks (Pitchbook), Rated: AAA

SoFi reportedly mulled a potential sale earlier this year, but the talks evaporated over a hefty asking price. After receiving a non-binding offer of $6 billion from a foreign bank, the online lender pegged its target acquisition price at $8 billion to $10 billion as it negotiated with several US companies, including Charles Schwab, per the Financial Times. That price would have ranked the deal among the second most valuable VC-backed fintech companyin the US. It’s also one of eight American startups that have raised $500 million+ rounds this year.

But while SoFi could likely fetch a relatively high acquisition price, the $8 billion to $10 billion figure is far more than it appears to be worth. In February, the online lender raised a $500 million round at a valuation of $4.4 billion—and since then, its value has likely dropped amid sexual harassment allegations at the company.

Source: Pitchbook

Why Charles Schwab Held Talks to Buy Online Lender SoFi (Investopedia), Rated: AAA

Citing people familiar with the matter, the Financial Times (paywall) reported the deal talks with Schwab were prompted by a $6 billion offer from a foreign bank after SoFi raised $500 million in funding led by Silver Lake. With a more than $4 billion valuation after that, the unnamed foreign bank expressed interest in acquiring SoFi. That prompted the online lender to reach out to other potential suitors aiming to fetch $8 billion to $10 billion in a sale.

At first blush, a deal with Charles Schwab may not make sense, given it isn’t in the online lending business. But SoFi does have a wealth management unit that would give the San Francisco discount brokerage access to more customers and thus more assets under management. It’s also a low-cost provider on that front, something very much in Schwab’s wheelhouse. According to SoFi’s website, the company doesn’t charge customers for the first $10,000 invested and charges 0.25% per year. It also has a team of live advisors that give customers advice and ETF portfolios that are curated by the company. SoFi also has a large customer base, particularly of millennials, that would be attractive to Schwab. Earlier this year ex-CEO Cagney predicted SoFi would end the year with 500,000 customers.

Affirm’s new mobile app lets you borrow money for almost any online purchase (The Verge), Rated: AAA

Lending startup Affirm, founded by PayPal and Yelp co-founder Max Levchin, is out to destroy the credit card, or at the very least make a noticeable dent in its utter ubiquity. The company, which began in 2012 by offering simple and transparent loans for web purchases, is today launching a mobile app to the public that acts as a virtual credit card, so it can be used as a line of credit with no strings attached for pretty much any online purchase. The app is available now for iOS and Android.

The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app. To use the service, you need to provide proof of your identity, but credit is extended only for the item you want to buy, with the company determining your likelihood to pay back the loan based on your current credit and the total amount being lended.

You’ll need approval for every purchase you try to make, up to a maximum of $10,000. In total, Chou says Affirm has made more than 1 million loans for a total amount of more than $1 billion since it started roughly five years ago. It also now counts as over 1,000 merchants as partners, including mattress maker Casper, furniture site Wayfair, and Expedia.

Now, Affirm wants to extend its services to anyone and any merchant, by going directly to the consumer with a virtual card.

Although Affirm may offer as low as 10 percent APR, or in some cases zero percent for select partner merchants, you still run the risk of paying more for a purchase using the company’s virtual card than if you had a standard credit card. For those who are simply bad with money and borrowing, it has the same pitfalls as a credit card, though with a few more speed bumps and warning signs built in.

LexisNexis Risk Solutions True Cost of Fraud in Lending (LexisNexis), Rated: AAA

For every dollar of fraud, lending companies incur $2.82 in costs, which includes chargebacks, fees, interest, merchandise replacement and distribution, according to the LexisNexis Risk Solutions Fraud Multiplier. Large digital lenders, with over $50 million in annual revenue, are hit hardest by fraud in this space. These large digital lenders face a higher risk of successful fraud attempts than others within the lending space, but it really is a problem across the digital lending space, even with small and midsized digital lenders.

Source: LexisNexis

Get the full report here.

The Rise of Robo Advisors and the Death of Traditional Financial Advice (The Epoch Times), Rated: AAA

When BlackRock, the world’s largest asset manager with USD 5.7 trillion in AUM, decided to layoff talented stock pickers in favor of machines for portfolio management in March, it was a sure sign that times are changing.

The top performer in a group of the five leading robo advisors in the first eight months of 2016 generated returns that were encroaching on double-digit territory, and in some cases outperformed their more expensive mutual fund counterparts.

Source: The Epoch Times

And it’s not just BlackRock that’s demonstrated a willingness to favor machines over stock pickers. Robo advisors as a category, which is comprised of approximately 100 firms, oversee USD 60 billion in AUM as of year-end 2016 across 15 countries, according to Deloitte. That amount is expected to balloon more than fivefold to USD 385 billion in a half decade, according to Cerulli Associates research.

A recent Capital One Investing survey says in times of extreme market volatility, millennials are the least likely generation to turn to a person for financial advisory services at 69%. In fact, millennials are the generation that place the highest value on robo-advisory services, evidenced by 65% of them saying automated financial advice “enhances their financial peace of mind,” according to the poll.

Bloom seems to be the Vanguard of the robo advisory market, undercutting its competitors on fees and charging as little as USD 10 per month to manage a 401(k) or 403(b) account.

Leading the charge is robo-advisory firm Betterment, which boasts 270,000 usersand USD 10 billion in AUM.

FS Card Inc. Closes $ 150 Million Credit Facility to Continue its Build Card Product Expansion (FS Card Inc), Rated: A

FS Card Inc., an emerging financial services leader for underserved consumers, today announced it has raised $150 million in financing to fund future growth.  Through its Build Card product, FS Card will expand access to traditional credit and create an on-ramp into the financial mainstream for small-dollar loan customers.  The new credit facility closing comes as FS Card wraps up a year of rapid growth with Build Card portfolio expansion of nearly 500 percent in 2017.

The funding will be used for sustained portfolio build as part of the company’s ongoing commitment to financial inclusion in a market where a new rule from the Consumer Financial Protection Bureau is likely to impact access to alternative credit products.

According to Prosperity Now and The Federal Reserve, more than half of Americans are credit invisible or subprime, while 47 percent do not have $400 to pay for an emergency expense.  FS Card leverages its proprietary machine learning algorithms to actively meet the increasing demand of underserved consumers for fairly priced credit with a prime-like experience.

These 11 startups are re-inventing how money works and they’re worth more than $ 1 billion (Business Insider), Rated: A

Fintech is a multi-billion dollar industry, with startups in the US raising around $18 billion since 2015, according to PitchBook and nearly 1,400 venture capitalist-backed deals. Two of the most valuable startups in the country — Stripe and SoFi — are in the fintech sector. And there are 11 fintech startups valued at more than $1 billion.

10. Kabbage — $1.3 billion

Kabbage is valued at $1.3 billion, according to PitchBook estimates, thanks to a $250 million investment round in August 2017.

9. Robinhood — $1.3 billion

The zero-commission, US-focused stock brokerage is valued at $1.3 billion following a $110 million funding round in April 2017.

In total, Robinhood has raised $176 million, which is quite a lot considering the founders were initially rejected by 75 different venture capitalists.

5. Avant — $2 billion

Avant was valued at $2 billion after a $325 million funding round in September 2015.

Though its valuation makes it the fifth most valuable fintech startup in the US, it’s seen some rocky shores in the years since. In June 2016, the company reportedly laid off staff and lowered its monthly lending by half.

3. Credit Karma — $3.5 billion

Credit Karma scored a $3.5 billion valuation on a $175 million funding round in June 2015 which brought the company’s total funding to $368 million.

2. SoFi — $4.4 billion

SoFi was valued at $4.4 billion during its most recent round of funding in February 2017, which brought the company $500 million from investors. In total, the company has raised over $2 billion, including a $1 billion round led by SoftBank in 2015.

1. Stripe — $9.2 billion

Stripe was valued at $9.2 billion in its most recent $150 million funding round in November 2016. The company has raised a total of $440 million since its founding in 2010.

Groundfloor Launches Loan Origination Network As Investor Demand Surges (PR Newswire), Rated: A

In response to overwhelming investor demand, Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced the launch of its Loan Origination Network for mortgage brokers and third-party originators interested in tapping additional real estate loan opportunities. The company has opened up its innovative real estate financing platform to brokers nationwide who now have the opportunity to provide customers with low cost capital for fix and flip projects.

According to a recent report from ATTOM Data Solutions, the estimated total dollar volume of financing for homes flipped in Q2 2017 was $4.4 billion, up from $3.9 billion in the previous quarter and up from $3.4 billion a year ago to the to the highest level since Q3 2017, a nearly 10-year high. Also, more than 35 percent of homes flipped in Q2 2017 were purchased by the flipper with financing, up from 33.2 percent in the previous quarter.

Key benefits for mortgage brokers and third-party originators:

  • Competitive rates from six percent
  • Unique deferred payment option
  • Low documentation
  • Closing in as little as seven days
  • Costs rolled into loan principal
  • Discounted fees for high volume partners
  • Partners assigned dedicated Business Development Manager

Mortgage industry veteran Debora Valentine joins the team as Senior Vice President, Business Development. Valentine brings more than 25 years of experience in sales to Groundfloor’s senior leadership team.

Marqeta Partners with Alipay for US Transactions (Crowdfund Insider), Rated: A

Alipay has partnered with Marqeta on real-time payment processing for millions of Chinese travelers visiting North America.

Yesterday, Alipay announced  it had teamed up with smart terminal provider Poynt to enable its Chinese users to pay with its services through all Poynt devices in North America.

Alipay makes inroads into US with JPMOrgan Chase deal (Finextra), Rated: A

Alipay, the world’s leading third-party payment platform, today announced they are working with JPMorgan Chase, a global financial leader, toward a relationship by which Chinese consumers traveling in North America would be enabled to pay using their Alipay Mobile Wallet at Chase merchant clients.

The proposed relationship between JPMorgan Chase and Alipay would enable its acceptance at many of Chase’s merchants in North America. Through Alipay’s geolocation-based “Discover” function and push notifications within the Alipay app, Chinese travelers can locate merchants nearby, receive promotion information, and make purchase decisions. It also enables local merchants to better target and connect with Chinese consumers.

The Number of Consumers Opening HELOCs May Double During the Next Five Years (Globe Newswire), Rated: A

Approximately 10 million consumers are expected to originate a home equity line of credit (HELOC) between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016). The projection is part of a new TransUnion (NYSE:TRUstudy that evaluated recent dynamics in the HELOC industry, and was released today during the Mortgage Bankers Association’s Annual Convention & Expo.

TransUnion projects 1.4 million new HELOC borrowers in 2017 and 1.6 million in 2018, about a 30% increase from the previous two-year period of 2015 (1.1 million) and 2016 (1.2 million).

HELOC Originations – 2017-2022 Include Projections
Year 2012 2013 2014 2015 2016 2017 2018 2019-2022
HELOC Originations (In Millions)  0.7 0.8 1.0 1.1 1.2 1.4 1.6 8.4

The TransUnion HELOC study found that rising home prices and the resulting increase in equity is beginning to fuel interest in HELOCs. The Case-Shiller home price index rose as high as 180 in 2005 and 185 in 2006 before dropping to 134 in 2012. By July 2017 it had risen again to 194, and is expected to rise in the next few years to well over 200.

According to the study, there were 4.9 million HELOC originations in 2005 when home equity stood at $13.3 Trillion.  HELOC originations dropped to a mere 600,000 in 2011 as home equity declined to $6.3 Trillion.  Home equity has once again risen to $13.3 Trillion in 2016, yet HELOC originations continued to be low at 1.2 million.

Who are the HELOC borrowers?

The study explored the primary reasons why consumers open HELOCs and estimated the percentage of HELOCs opened under each motivating reason.

Types of HELOC Borrowers
HELOC Category Defining this Type of HELOC Borrower Percentage of
HELOCs
Debt Consolidation “Consolidate balances from other credit products, usually to a lower interest rate” 30 %
Large Expense “Finance a large credit need (e.g., home renovation project)” 29 %
Refinance “Refinance a HELOC, often to change terms or to get a better rate” 25 %
Piggyback “Concurrent with a mortgage origination, often used as part of a down payment” 9 %
Undrawn “Standby, undrawn line of credit for a ‘rainy day’” 7 %

Online Small Business Lending Provides Benefits to Small Business Owners, Finds New Survey (Electran), Rated: A

Four leading trade associations – Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association, and the Small Business Finance Association – commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence.  The survey conducted by Edelman Intelligence found that a large majority (70%) of small business owners believe there are more credit options today when compared to five years ago, and 97% of those feel that the growing number of financing options is a good thing.

Key findings of the study include:

  • 70 percent of small- and medium-sized business owners say there are more lending options now, and 97 percent of those believe that the increase in options is a positive thing for their businesses.
  • Most small business owners reported using online small business lenders to help them expand their locations, make necessary hiring and equipment purchases, and help manage cash flow.
  • Of the small business owners considering taking out a loan in the next 12 months, close to 40 percent say they will consider borrowing from an online lender.
  • According to the study, 98 percent of small business ownerswho have used online lenders say they are likely to take out another loan with an online lender.
  • For many small business owners, online small business lending platforms are a popular alternativeto asking friends and family for a loan.
Source: Electran.org

PeerStreet Launches Affiliate Blogger Program (BusinessWire), Rated: A

PeerStreet, a marketplace for investing in real estate-backed loans, is excited to announce its affiliate program at FinCon 2017. Backed by Andreessen Horowitz, PeerStreet’s platform provides investments in high-yield, short-term real estate loans. The newly launched program will allow PeerStreet to partner with the personal finance community to better serve both current and future investors.

PeerStreet aims to reach more investors through the affiliate program by working with financial writers and influencers to share thought leadership and market information about this unique space. In addition to high-conversion advertising opportunities, affiliate program partners will also have access to PeerStreet’s dedicated Affiliate Director, who can provide deep insight into PeerStreet’s service and offer tailored support.

Mastercard Takes Blockchain Mainstream with API (Finovate), Rated: A

Mastercard announced it has tested and validated its blockchain and will be opening access to it via a set of three APIs published on the Mastercard Developers website. The APIs include the Blockchain Core API, the Smart Contracts API, and the Fast Pay Network API.

Mastercard will pilot the blockchain for use in the business-to-business space, implementing it to increase speed and transparency in payments and decrease costs for cross-border payments.

Mastercard’s blockchain operates independently of a digital currency.

Fannie Mae Introduces New Tech Solutions to Lower Costs & Shorten Mortgage Processes (Crowdfund Insider), Rated: A

Online lender Fannie Mae announced on Monday the launch of its new single source validation, new API platform, and servicing marketplace for servicing transfers. 

Single Source Validation saves lenders time and money

  • Allows lenders to validate a borrower’s income, assets, and employment with a single report from a single approved vendor that the lender chooses.
  • Uses source data for validation (a borrower’s bank account, including pay stream and direct deposit information).
  • Reduces the number of paper documents borrowers need to provide.
  • Amplifies savings already being realized by lenders who currently use Day 1 Certainty validation services.

New API platform levels the playing field for lenders

  • Provides lenders with all the information they need from Desktop Underwriter to originate a loan.
  • Allows lenders to access information that they can customize to their needs.
  • Uses industry-standard data formats and protocols so lenders can integrate the Fannie Mae API to their systems quickly and easily.

Servicing Marketplace 

  • Provides sellers greater access to servicers when they sell loans to Fannie Mae and creates more efficiencies in managing co-issue transactions with Fannie Mae.
  • Offers transparent pricing, a standardized process, and standardized data requirements when a loan is sold to Fannie Mae.
  • Improves data quality and simplifies the servicing rights transfer process for sellers and servicers.

Envestnet | Yodlee to Integrate Risk Insight Solutions With Fannie Mae’s Desktop Underwriter Validation Service (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 its integration with Fannie Mae through a pilot program to digitally validate borrowers’ assets. Fannie Mae will leverage Envestnet | Yodlee’s Risk Insight Solutions to fuel the Day 1 Certainty™ validation of assets offering, which gives lenders a faster and simplified borrower experience.

We’re doing fine . . . (CU Insight), Rated: A

Over a four-decade career in financial services I have witnessed, experienced and participated in transformational change.  The conversations around emerging technology like the ATM caused industry debate – consumers would never use a machine to make a withdrawal from their account.  Credit cards not tied to a specific gasoline brand, local merchant or one of the giants of the catalogue sales world – Montgomery Wards, Sears and that upstart JC Penney – would never be accepted.  Consumers would never do their banking over the telephone, and of course never accept online banking – remember the first versions using a floppy disk? And checks would always be the only way, other than cash, to pay for things (bill pay, PayPal, debit cards and other payment methods…all have dispelled that).

We should be concerned about the FinTechs.  They are not a fad nor are they going away.  They are very well capitalized, and they have revolutionized how to leverage big data in ways we can only dream of.  They have challenged credit score lending structures by leveraging their ability to engineer data.  They are mobile optimized, in fact they are mobile prevalent, and they strive for immediate decisions and funding.  Where traditional lenders are still caught up in past practices making it difficult to refinance student debt, underwrite small business loans in minutes, grant signature loans at the point of purchase, or embrace new credit models, the FinTechs are quickly gaining ground in market share because they can do those things today.

And we have not evolved our cornerstone lending program, the signature loan, to compete not only at the POS for autos, but for personal improvements and major retail purchases as SOFI, Lending Club and so many other FinTechs have.

Arizona seeks $ 250K from partners accused of defrauding investors in payday-loan venture (AZ Central), Rated: A

Robin Erickson, an Arizona snowbird, remembers the pitch she got from her life-insurance agent about LoanGo, a startup internet payday-loan company.

The Mount Vernon, Washington, resident said she was told that the investment would generate an 18 percent return, and she “more than likely” would get her money back in a year.

“I loaned him $30,000, and I haven’t heard from him since,” Erickson, a retired elementary-school teacher, told The Arizona Republic in a phone interview.

The Arizona Corporation Commission’s Securities Division alleges that Erickson and four other older investors were defrauded of a combined $250,000 after making investments in 2011 and 2012 with LoanGo.

Administrative Law Judge Scott M. Hesla on Oct. 10 sided with state regulators and ordered the men to pay a total of $250,000 in restitution to the five investors. The judge also ordered the men to pay penalties of up to $15,000 each for “multiple violations” of the state’s anti-fraud provisions.

The judge, in his ruling, noted that Billingsley failed to inform investors that their money would be used to repay business startup loans of $10,000 each to himself and Peterson. The judge also wrote that investors were not told Billingsley received a $15,000 commission for obtaining their investments.

The judge noted that Billingsley was repaid his startup loan the same day one person invested $45,000 in LoanGo, and that Peterson was repaid the same day a different person invested $25,000 in the company.

AIMA’S NEW DUE DILIGENCE TEMPLATE (All About Alpha), Rated: A

It has been 20 years since the Alternative Investment Management Association published its first due diligence questionnaire, a template designed to standardize the diligence process by which investors decide if a particular management is right for them.

Now it has published a new questionnaire/template, covering a broader range of entities/strategies. Specifically, for the first time there are questions specifically covering private credit and private equity strategies. The new document also integrates what were formerly separate questionnaires specific to commodity trading advisers and fund of funds managers.

A CFPB policy everybody seems to like (really) (American Banker), Rated: A

Banks have welcomed the statement of principles because they are non-binding, while fintechs are encouraged by the CFPB’s recognition of key issues in the debate.

Yet the principles could also lay the groundwork for future regulation if banks and fintechs cannot work out some outstanding issues on their own.

Screen scraping

The most controversial aspect of data sharing is screen scraping. Banks loathe data aggregators’ practice of asking a consumer to provide their online banking login credentials, so the firm can scrape their account data. They argue it’s unsafe to hand out banking credentials and that aggregators bombard their servers with these requests, preventing actual customers from accessing their accounts.

The CFPB’s principles seem to discourage screen scraping without banning it.

Knight said the principle may encourage banks to directly provide data to third parties.

Informed consent

The CFPB’s principles around informed consent appeared the most stringent, suggesting that it’s not enough to just disclose what a company is doing, but disclosures must be done in language anyone can understand.

The principle may pose a challenge for banks and fintechs. How many companies send notifications about how they’re using and storing consumers’ data, in easy to understand language?

OCC head discusses the fintech ecosystem (Business Insider), Rated: B

However, while Noreika again defended the OCC’s right to license non-depository companies on Thursday, he also said the agency has not decided whether it will “exercise that specific authority.” This is more ambiguous than the OCC’s previous stance, perhaps suggesting the regulator believes the measure won’t survive such strong opposition.

Noreika said there’s been progress here, as federal regulators are now more willing to engage in dialogue with each other and with fintechs.

Source: Business Insider

The Robo Report Announces 2 Year Return Numbers for Robo Advisors In New Q3 Report (Business Insider), Rated: B

The Robo Report, the first and only report on the performance and portfolios of robo advisors, published by BackEndBenchmarking, has been released for the third quarter 2017, the company announced.

The expanded Report now offers a first look two full years of a few robo advisors performance data, along with new sections that include interviews with WiseBanyan, Personal Capital and Betterment; the addition of Sofi, TIAA and WealthSimple; and upside/downside capture ratios for more specific quant on risk tolerance, as well as more detailed asset allocation and style analysis.

The company currently tracks Acorns, Betterment, eTrade, Fidelity Go, Future Advisor, Personal Capital, Schwab, SigFig, Tradeking, Vanguard, WiseBanyan, TD Ameritrade, Ellevest, Hedgeable and Merrill Edge, Sofi, TIAA and WealthSimple.

First Associates to Host Industry Networking Event in New York (PR Web), Rated: B

First Associates Loan Servicing announced today that they will be hosting an industry networking breakfast for Marketplace Lending and Investment Banking professionals the day prior to the American Banker Digital Lending + Investing Conference.

Hosted at Aureole Restaurant in Manhattan, this event will include a panel of marketplace lending superstars, including speakers from Prospect Capital, Macquarie, MoneyLion and more, who will discuss the state of the industry.

If you have interest in attending panel discussion and event, please click here to learn more.

CoinList spins out of AngelList (Axios), Rated: B

CoinList, a provider of financial services for staging and managing initial coin offerings (ICOs), is spinning out of AngelList as a standalone company that will be led by former Sidewire CEO Andy Bromberg, it tells Axios.

United Kingdom

German app-only bank N26 gears up for UK launch as it recruits country manager (Business Insider), Rated: AAA

Closely-watched German fintech startup N26 is recruiting a country manager to spearhead its launch into the UK.

A job listing on N26’s website says it is looking for someone to take “charge of the market entry of N26 in the UK.” The successful applicant will be “responsible for the operational setup and development of N26 in the UK market,” and should “build up the branding for N26 within the UK market in order to successfully attract and win new customers.”

P2PFA reports over £700m of new lending in third quarter (P2P Finance News), Rated: AAA

THE PEER-TO-PEER Finance Association (P2PFA) has reported that new lending among its members equated to more than £700m in the third quarter of 2017, despite losing ‘big three’ platform RateSetter during the period.

The self-regulated trade body said on Monday that cumulative lending by the existing P2PFA platforms came in at more than £7.1bn by the end of September 2017.

Peer to Peer Lending Exhibits Steady Growth in Q3 2017 (Crowdfund Insider), Rated: AAA

The UK Peer to Peer Finance Association (P2PFA) has published their quarterly numbers on sector growth for the third quarter of 2017. Covering the period between July and September 2017,  the P2PFA says the numbers confirm continued steady growth in levels of new lending and in the number of borrowers facilitating loans through peer-to-peer lending platforms.

P2PFA Q3 2017 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Cumulative lending £4,888,231,038 £5,708,635,402 £6,391,925,730 £7,168,727,657
o/w lending to businesses £2,922,779,264 £3,487,208,822 £3,924,226,666 £4,440,151,180
o/w lending to individuals £1,965,451,774 £2,221,426,580 £2,467,699,064 £2,728,576,477
Base stock of loans (outstanding loan book) £2,132,049,663 £2,497,408,800 £2,745,490,796 £2,958,326,435
o/w lending to businesses £1,213,693,991 £1,470,605,094 £1,630,765,546 £1,754,510,098
o/w lending to individuals £918,335,672 £1,026,803,706 £1,114,725,250 £1,204,816,337
New Lending £603,011,422 £703,047,838 £666,096,755 £733,270,490
o/w lending to businesses £404,171,535 £447,073,032 £419,818,940 £472,393,077
o/w lending to individuals £198,839,887 £255,974,806 £246,277,815 £260,877,413
Capital repaid £370,158,773 £401,358,998 £411,834,014 £508,891,428
o/w lending to businesses £249,776,784 £253,832,226 £253,477,742 £337,105,103
o/w lending to individuals £120,381,989 £147,526,772 £158,356,272 £171,786,325
Net Lending Flow £237,151,881 £305,679,840 £254,262,739 £228,055,356
o/w lending to businesses £158,793,983 £197,231,806 £166,341,195 £138,964,268
o/w lending to individuals £78,457,898 £108,448,034 £87,921,544 £89,091,088
Number of current lenders 121,476 128,000 140,098 134,658
Number of current borrowers 191,055 214,631 231,189 246,813
o/w are businesses 29,594 34,566 39,043 43,425
o/w are individuals 161,461 180,065 192,146 203,388


Q4 2016 Q1 2017 Q2 2017 Q3 2017
Folk2Folk £139,344,302 £176,419,805
Funding Circle £1,524,427,000 £1,830,397,245 £2,158,457,107 £2,747,357,362
Landbay £42,948,000 £43,142,119 £43,975,419 £59,561,822
Lending Works £33,636,000 £39,368,050 £48,864,686 £71,699,386
MarketInvoice £754,325,000 £837,793,900 £918,450,994 £1,201,857,191
ThinCats £196,907,000 £211,446,000 £226,981,000 £254,955,000
Zopa £1,731,685,000 £1,926,038,724 £2,172,561,894 £2,656,877,091
Total £4,888,231,038 £5,708,635,402 £6,391,925,730 £7,168,727,657

What getting servicing right really means (Mortgage Strategy), Rated: A

Earlier this year LendInvest received the highest possible rating for the quality of our loan servicing from ARC Rating, a regulated European credit agency, for the third straight year. It’s a big achievement for any lender, but particularly an online lender.

Here are some of the things that ARC looks for when rating a lender’s servicing standards:

  • Corporate governance and structure
  • Due diligence
  • Internal controls
  • Industry-standard technology
  • Data backup
  • Financial condition

A guide to Open Banking (Lexology), Rated: A

Open Banking refers to an open source technology that allows anyone to create apps and websites for the financial services sector. Developers use an application programme interface (API) to create software that allows customer data to be shared securely between banks and trusted third parties – with the customer’s consent.

The Open Banking Standard is publically available and can be accessed by developers when creating apps and websites. The final version of the Open Banking Standard is due to be in use by 2019.

Examples of Open Banking apps

  • Yolt is a money management app owned by ING Bank and launched in beta format in June 2017. Yolt allows users to view all their bank accounts, credit cards, bills etc. in one place – even if they are from different providers. Users can compare prices, including energy prices, and set budgets on their phone.
  • HSBC announced in September 2017 that it was testing an Open Banking platform that will allow its customers to view their current accounts, credit cards, loans, mortgages and savings from up to 21 different providers.
  • Wave offers a service for businesses to give clients access to all of their finances in one place. It acts as an invoicing service; tracks income and expenses to make accounting easier; allows for streamlined payment of staff and will leverage data from as many sources as possible. It also offers loans to clients by connecting with the online lender OnDeck.
  • DueDil is an app which uses data to make online due diligence passports for its clients so that they can prove their financial credentials.
  • Tandem collects the banking data of its customers from their banks, analyses their spending habits and provides suggestions for how they can save money.

Why buy-to-let investors are focusing on graduates in the London suburbs (The Telegraph), Rated: A

As rents continue their inexorable rise, the appeal of living in inner London boroughs such as Camden – where the average monthly rent is £2,219 – is starting to lose its shine.

According to peer-to-peer lending platform Landbay, the central areas popular among students are being eschewed by graduates, who are looking to make the capital their long-term base.

Faced with spending up to 75 per cent of their take-home pay on rent, graduates looking to work in London are choosing to live in areas where they can remain in commuting distance but pay less. And with average student loan debts of more than £50,000 according to the Institute of Fiscal Studies, any savings are welcome.

Top ten outer London boroughs | Average rent and yield

Year ending 31 August 2017

1 Bexley (YoY% 1.98 / Av.£ 1,004)

2 Sutton (YoY% -0.23 / Av.£ 1,056)

3 Havering (YoY% 1.59 / Av.£ 1,072)

4 Croydon (YoY% 0.02 / Av.£ 1,125)

5 Bromley (YoY% 0.47 / Av.£ 1,169)

6 Hillingdon (YoY% 0.38 / Av.£ 1,192)

7 Barking and Dagenham (YoY% 1.49 / Av.£ 1,203)

8 Lewisham (YoY% -0.16 / Av.£ 1,232)

9 Redbridge (YoY% 1.08 / Av.£ 1,249)

10 Enfield (YoY% 0.88 / Av.£ 1,252)

Source: Landbay

Fitbit Pay arrives in UK and Arcadia offers host of new ways to pay (Internet Retailing), Rated: B

Users of Fitbit can start to use their devices to pay contactlessly in stores a la Apple Pay from today.

Starling Bank, a mobile bank which offers money management and payment tracking through its app, is also the first UK bank to launch with Fitbit Pay, Apple Pay and Android Pay.

China

Fincera Reports $ 1 Billion in Loans for Q2 2017 (Crowddfund Insider), Rated: AAA

Fincera Inc. (OTCQB: YUANF), a provider of online financing and e-commerce services for small and medium – sized businesses and individuals in China, has reported financial results for the second quarter ended June 30 , 2017.

According to their numbers, loan transaction volume across both CeraPay and CeraVest platforms for Q2 2017 totaled approximately RMB 6.9 billion (USD $ 1.0 billion ).

Source: Crowdfund Insider

Chinese issuers prepare ‘supercycle’ of technology IPOs (Financial Times), Rated: AAA

Chinese companies have raised $38.6bn through IPOs in the year to date, according to Dealogic.

Issuers in financial services — which, like education and leisure is at the confluence of the hot segments of consumer services and tech — include Ppdai, which is raising $350m in New York, Yixin, Lexin and Jianpu Technology.

Yixin illustrates another trend: many of those coming to market are backed by China’s tech royalty including Tencent, Alibaba, Baidu and JD.com. Auto financier Yixin, backed by the latter trio, is expected to raise about $200m.

Like Qudian, which listed last week, fellow online lender Lexin is heading to the US and is expected to raise around $600m, according to bankers. Jianpu Technology, a financial comparison site akin to Lending Tree in the US or MoneySuperMarket in the UK, filed for its IPO last Friday.

Source: Financial Times

Rong360 starts listing process in USA, whose revenue nearly tripled in two years (Xing Ping She), Rated: A

Recently, Rong360’s JianPu Technology has filed an IPO prospectus to U.S. Securities and Exchange Commission. Rong360, which started with a diversion business, this time takes the VIE model to list in US. Its business scope covers loans, credit cards and finance, as well as big data risk controls. However, it is noteworthy that Rong360 is still in the red, and its big data risk control business has also led to a compliance controversy.

According to the prospectus, the company plans to go public in the U.S. with a maximum of $200 million deal for it, and the underwriters are Goldman Sachs, Morgan Stanley, JP Morgan and Huaxing Capital. Rong360 was founded in 2011 and has finished four round of equity finance. The listed entity is a wholly owned subsidiary of Rong360, which was registered in the Cayman Islands in June 1st this year.

With the net loss of $7.2 million in the first half of 2017, Rong360 is still in the red. However, the deficit of JianPu Tech has been shrinking. The prospectus shows that the company’s revenue has increased from 168.4 million RMB in 2015 to 182.1 million RMB in 2016. And in the first half of 2017, its revenue has grown to 393.4 RMB, nearly tripled in less than two years.

Criticism, regulatory tightening to weigh on share price (Global Times), Rated: A

Chinese online lender Qudian Inc is under fire in China after what observers said was a less-than-impressive interview by its CEO Luo Min Sunday that was aimed fending off criticism of the company’s business practices. The critics said it could instead exacerbate the company’s domestic image and hurt its share price.

Following its splashy debut in the US, Qudian was the subject of many negative news reports, mostly from popular social media accounts, about its business model, with some questioning its practice of targeting students for loans and others even describing the company as a “loan shark” – lending money at usurious rates.

“Our bad loan ratio is below 0.5 percent, that’s very low. So we can afford it when those people don’t pay up… Losses have been contained at a low level,” Luo said.

But part of the interview drew much attention and even mockery. Luo said, “Loans that weren’t paid on time were considered dead accounts. We never pushed people to pay back. We don’t even call. If you don’t pay back, then never mind, we’ll just give it to you as a gift.”

European Union

ING Partners with Kabbage, Inc. to Expand Automated Small Business Lending into France and Italy (Kabbage Email), Rated: AAA

Kabbage Inc., a global financial services, technology and data platform serving small businesses, and ING, a global bank, are expanding their strategic partnership into France and Italy to provide small businesses with real-time access to working capital. Building on ING’s successful launch in Spain with the Kabbage Platform TM , this partnership allows millions of small businesses throughout France and Italy to easily apply, qualify and access ongoing lines of credit up to €100,000 with ING in under 10 minutes.

IRELAND’S FIRST SYNDICATED PROPERTY FINANCE PLATFORM LAUNCHED WITH €1.5 MILLION CROWD-LENDING LOAN (Irish Tech News), Rated: A

Initiative Ireland has today announced the launch of Ireland’s first syndicated property finance platform.

The launch coincides with the company’s pre-approval of a €1.5 million secured loan, which has been approved for funding via the platform. The largest crowd-lending loan approved to date in Ireland, the loan will fund the development of 10 social housing apartments and a ground floor restaurant on the North Strand Road, Dublin.

International

Empowering the Unbanked through Fintech and Microfinance (Huffingtong Post), Rated: AAA

One angle that needs to be discussed more is how the introduction of these new services is also lowering barriers to most financial activities.

For instance, the rise of cashless options has given the unbanked access to financial services especially in regions that banks find unserviceable. So, it is quite refreshing then that some new Fintech efforts are focused on this particular area since financial inclusion is considered as a key aspect to poverty reduction.

I recently spoke with Sharone Perlstein who is currently working on delivering microfinance services to emerging markets.

What attracted you to microfinance?

There are about 2.5 billion people in the world who are unbanked. Microfinance bypasses the banking system and can help unbanked people develop their own personal economy that will enable them to support their families, their communities, and ultimately the economy of their country.

What are the key challenges in microfinancing and how do you think they can be overcome?

Human resources: Until now, a very large workforce was required to provide this service to those who need it. Today, with automation and smarter information systems, we can significantly reduce manpower and streamline processes to make loans more economically viable for borrowers and lenders.

Most microfinance companies operate where they are most needed, namely in rural areas where the technological infrastructure is unadvanced and unstable. These areas are usually far from urban centers and transportation is inconvenient and expensive. As a result, communication between the microfinance service provider and its potential customers is complex and challenging.

Granting loans to people without a bank account may be risky from a business point of view, since it is difficult to know whether potential borrowers are trustworthy or will be able to meet the terms of the loan. It is also difficult to monitor their business and economic activity. In other words, it is very difficult to build a financial profile for a borrower with no banking activity. Here, too, mobile technology changes the picture.

Some argue that microfinance loans, supposedly meant to help poor people succeed financially, often leave them with debts they can’t afford because of the high-interest rates. What is your opinion on this matter? Is this a real problem? What causes it? And how can it be solved?

I think the best solution is to ensure that:

A. Potential borrowers understand the terms of the loan in depth.

B. The Microfinancier knows the potential borrower in depth.

Why do you choose to focus on Indonesia?

I researched the region’s economy a bit and discovered that there were more than 50 million small and medium-sized businesses, representing about 97% of the business sector in Indonesia and responsible for 30%, if not more, of its GDP growth. However, many of these businesses don’t have enough money to realize their full potential, especially in rural areas, and the banks do not provide the right solution. For this reason, the Bank of Indonesia has enacted a law according to which banks will have to devote at least 20% of their loans portfolio to microloans by 2018, thus opening a window of opportunity for businesses and other microfinance companies wishing to enter the local ecosystem.

Will Your Next Loan Be in Bitcoin? (The Street), Rated: A

Bitcoin could have you covered on your next home loan.

In this line, the longstanding contribution of traditional banks in the worldwide economy is undeniable. But due to their credit selectiveness, renowned bureaucracy and transactional costs, the question is: Can this system can be improved to better serve the 2 billion underbankedaround the world? Greater financial inclusion provides benefits far beyond improved economic health for underserved societies; it is also way for governments to reduce corruption and fraud and promote entrepreneurship and growth.

Anecdotally, at the end of 2015, Lending Club had a total loan volume of $15.9 billion. Year-end of 2016 shows a total volume of $24.6 billion so the annual volume for 2016 is the difference or $8.7 billion.

Just last year, Ripio Credit Network, which wrapped up a $31 million Ethereum ICO, entered the credit service market using Bitcoin as the transaction vehicle. A year later, BitPagos launched Ripio as a digital wallet that enables consumers to send, receive, store, and buy or sell Bitcoin in local currency and to make online payments. In January 2017, BitPagos rebranded as Ripio, with around 100,000 users in tow across North and South America.

Mambu: A Truly Global SaaS Banking Platform for Traditional Finance & Fintechs (Crowdfund Insider), Rated: A

Mambu is a Software as a Service (SaaS) platform that has quickly differentiated its product as a leader in the white label global online banking space.

Mambu is operating in 45 different countries indicating its ability to quickly adapt to diverse regulatory regimes.

Co-founded by CEO Eugene Danilkis and COO Frederik Pfisterer, Mambu is Berlin based Fintech, a standout in the emerging German Fintech scene. Danilkis started his career developing NASA-certified software for the International Space Station.

Can you please provide an update on Mambu and global utilization? How many different companies are using your digital banking services? Which countries are you operating in?

Mambu is live on 6 continents, countries of operation include the UK, Netherlands, Germany, Sweden, the US, Kenya, Australia, Philippines, China and Argentina, to name a few.

We have more than 180 live operations in over 45 countries, our solution powers over 5000 loan and deposit products which serve over 4 million end customers.

Our clients range from FinTech revolutionaries to traditional banks.

  • Oaknorth
  • N26
  • New10, ABN AMRO’s newly launched SME lending Fintech, went from concept to launch in 10 months and is offering a fast and fully digital loan application process for Dutch businesses.
  • Globe Telecom’s lending business Fuse
  • PayU Colombia

Is online lending, including P2P, marketplace and balance sheet lending, the most demanded service right now?

Eugene Danilkis: Across all lending verticals, consumer, business and marketplace, there is significant demand for digital and customer centric loan products.

That being said, we have experienced a rise in demand from institutions looking to launch new digital banking services, offering both deposit and loan products.

We’ve also seen a growth in institutions looking to explore a different approach and take a marketplace model similar to that of N26.  They want to collaborate with product providers to offer clients a wider range of products and services.

There appears to be more traditional lenders (IE banks) more inclined to go it alone and launch their own platforms. Goldman Sachs launched Marcus which they developed in house. Is this a trend? Or an opportunity for Mambu?

Eugene Danilkis: As mentioned above, this is a trend that is gathering momentum and it is an opportunity for Mambu.

From Bitcoin To Equity: Fintech Terms Explained (International Business Times), Rated: B

Cryptocurrency: A digital currency that uses cryptography, the art of coding messages to keep them secure.

Blockchain technology: A type of software pioneered by the bitcoin community. It is a new way to structure data by spreading it out across the network so no single party can meddle with the records.

Ethereum: A type of open source blockchain network created by a Russian-Canadian programmer named Vitalik Buterin.

Smart contracts: A piece of software that runs on a blockchain platform and is programmed to automatically complete transactions based on specific circumstances.

Mining: The process of verifying transactions on decentralized cryptocurrency networks is called “mining.”

ICO: An initial coin offering is a type of fundraising campaignwhere a high-tech project raises cryptocurrency by selling tokens, usually a new token unique to this project or startup.

P2P: This stands for peer-to-peer, direct transfers between two people. If you send a friend money through the Venmo mobile app, that’s a P2P money transfer.

Altcoin: A generic term for almost any cryptocurrency that isn’t bitcoin, short for alternative coin.

Cryptocurrency wallet: In the crypto space, a wallet is a piece of software that manages your coins and assets.

Utility token: A cryptocurrency that activates a product or service, grants access to a community or network, or otherwise spurs the blockchain-based project’s development.

India

Connect adds State Bank of India to panel (Mortgage Introducer), Rated: B

Mortgage network Connect for Intermediaries has added State Bank of India – the largest bank in India – to its panel.

The bank offers limited company and special purpose vehicle buy-to-let mortgages with rates starting from 2.59% to 60% LTV and 2.89% to 75% LTV.

It also offers buy-to-let mortgages for individuals from 2.09% to 60% LTV, while it accepts applications from first-time landlords if they have a residential mortgage.

Connect now has a panel of more than 100 lenders, with Octane, West One and Funding Circle being added this year.

Africa

Mastercard Foundation Announces Fifth Annual Symposium on Financial Inclusion (BusinessWire), Rated: AAA

The Mastercard Foundation today announced that its fifth annual and largest Symposium on Financial Inclusion (SoFI) will take place in Accra, Ghana, on November 7 – 9, 2017. The Symposium champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.

Each year since 2013 the Foundation has convened hundreds of industry professionals to focus on barriers to greater financial inclusion around the world.

This year’s event will reflect on progress made over the past five years, explore challenges that still lie ahead, and plan how to expand and deepen financial inclusion for the world’s most underserved people.

Attendees will hear from an impressive lineup of keynote speakers, including:

  • Opening Keynote Address: Juliet Anammah, Chief Executive Officer, Jumia Nigeria
  • Keynote Address II: Dr. Ernest Addison, Governor, Bank of Ghana

The Mastercard Foundation first awarded the Clients at the Centre Prize in 2015 to the Swedish mobile microinsurance firm BIMA. Last year, the Prize was presented to the South African international remittance company, Hello Paisa. Each year draws nearly 100 applicants from companies around the globe. The three 2017 finalists are:

  • Jumo, a large-scale, low-cost financial services marketplace that uses behavioral data from mobile usage to create financial identities for micro, small, and medium-sized enterprises;
  • ftCash, one of India’s fastest growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans; and
  • Destacame, a free online platform that empowers users by giving them control over their data to build their financial capabilities and to access financial products.

Authors:

George Popescu
Allen Taylor