Monday February 5 2018, Daily News Digest

Nav financing

News Comments Today’s main news: Banco BNI starts lending through Fellow Finance. eBay drops PayPal for Adyen. Aviva exec backs robos. OneConnect secures $650M funding. Stripe sets up engineering hub in Dublin. EBANX gets $30M in funding from FTV Capital. Today’s main analysis: FT Partners’ Alternative Lending Market Analysis for January, and an interview with Nav CEO. Today’s thought-provoking articles: […]

Nav financing

News Comments

United States

United Kingdom

China

European Union

International

India

APAC

MENA

Latin America

News Summary

United States

eBay ditches PayPal for Adyen (Fintech Futures), Rated: AAA

What the good fintech can giveth, it can taketh away. eBay has given PayPal the boot and turned to Dutch firm Adyen as its primary processing partner.

Looking to sweeten this bitter pill, eBay says PayPal, a “long-time” partner, will be an option at the checkout for its buyers.

PayPal powers BofA Merrill digital payments (Fintech Futures), Rated: A

Bank of America Merrill Lynch’s (BofA Merrill) US-based commercial clients can now make payments in local currencies to payees who hold PayPal accounts.

Strong Job Gains, Marcus Acquihires, MLA Testimony (PeerIQ), Rated: AAA

Janet Yellen chaired her last Fed meeting as the committee kept interest rates on hold in January. Futures are pricing in a 93% probability of a rate hike in March and 3 rate hikes for 2018. The recent sell off on the long end of the curve has seen 10-year treasury yields edge past 2.85%, providing respite to banks who were seeing their loan margins compress as the curve flattened.

In securitization news, Marlette completed its largest securitization to date, with MFT 2018-1 coming in at $464 Mn. The deal was significantly over subscribed and eventually upsized continuing the trend of larger deal size that we pointed out in ourQ4 securitization trackerThe senior tranches were rated AA by Kroll. The collateral pool has 40,303 loans with an average loan balance of $12k, weighted average coupon of 14.3% and a FICO score of 703. All the loans were originated by Cross River Bank.

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

This month’s report features an exclusive interview with Levi King, Co-founder and CEO of Nav, which is a data aggregation platform and marketplace that bridges the gap between small businesses and financial institutions. In the interview, Levi discusses the motivation behind founding Nav and how the company solves the challenges small businesses face managing their credit and securing financing solutions, among other topics.

Source: FT Partners

Download and read the full report here.

Open banking’s early adopters bet on ‘tremendous gains in value’ (American Banker), Rated: AAA

Only a few banks have embraced open banking and offer APIs to almost anyone. But they are betting on having a head start on competitors, as trends in the industry, such as increased bank-fintech partnership and evolving regulation, will push the banking-as-a-platform movement toward reality.

Operating as BBVA Compass in the U.S. in Birmingham, Ala., in 2016 it named a head of open APIs, and has engaged in several data-sharing agreements with fintechs. It is one of a handful of U.S. banks engaged in open banking — Capital One, Silicon Valley Bank, Citi and CBW Bank in Weir, Kan., also have such programs.

Last May, BBVA opened up its API Marketplace and made commercially available eight APIs so companies, startups and developers would be able to build new products and services by accessing and integrating customer’s banking data — with their permission — into their applications.

Source: American Banker

Fiserv Has Largest U.S. Marketshare of Top Bank Core Processors (Bank Innovation), Rated: A

According to data gathered by FedFis.com, the top processor is Brookfield, Wis.-based Fiserv. With more than 37% of the market share, Fiserv is well ahead of its competitors. The second, Monett, Mo.-based Jack Henry & Associates, has just half Fiserv’s market share with 17.6%. Close behind JHA is Fidelity National Information Services Inc., better known as FIS.

Enova Reports Fourth Quarter and Full Year 2017 Results (PR Newswire), Rated: A

Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter and year ended December 31, 2017.

Fourth Quarter 2017 Summary

  • Total revenue of $243.7 million in the fourth quarter of 2017 increased 20.4% from $202.4 million in the fourth quarter of 2016.
  • Gross profit margin was 47.7% in the fourth quarter of 2017 compared to 51.8% in the fourth quarter of 2016, driven by growth in the installment loan and receivables purchase agreement segment as well as a higher mix of new customers, which requires higher loan loss provisions.
  • Net income was $6.9 million, or $0.20 per diluted share, in the fourth quarter of 2017 compared to net income of $8.7 million, or $0.26 per diluted share, in the fourth quarter of 2016.
  • Fourth quarter 2017 adjusted EBITDA of $38.1 million, a non-GAAP measure, increased from $35.1 million in the fourth quarter of 2016.
  • Adjusted net income of $8.9 million, or $0.26 per diluted share, a non-GAAP measure, in the fourth quarter of 2017 increased from adjusted net income of $8.5 million, or $0.25 per diluted share, in the fourth quarter of 2016.

Full Year 2017 Summary

  • Total revenue of $843.7 million in 2017 increased 13.2% from $745.6 million in 2016.
  • Gross profit margin was 53.0% in 2017 compared to 56.0% in 2016.
  • Net income was $29.2 million, or $0.86 per diluted share, in 2017 compared to net income of $34.6 million, or $1.03per diluted share, in 2016.
  • Full year 2017 adjusted EBITDA of $157.8 million, a non-GAAP measure, increased from $142.3 million in 2016.
  • Adjusted net income of $46.9 million, or $1.37 per diluted share, a non-GAAP measure, in 2017 increased from adjusted net income of $37.5 million, or $1.12 per diluted share in 2016.

No Credit? No Problem! Microlender for Women Uses Novel Approach (WSJ), Rated: A

Daniela Morales’s lender is demanding. Every Friday morning, at 9:45 sharp, she has to visit a small apartment in Woodside, Queens, to make her weekly payment—currently $293 plus $17 interest on a $6,900 balance.

Ms. Morales’s lender is Grameen America, a nonprofit microlender for women entrepreneurs. To get a Grameen loan, you don’t need any collateral or credit history, just the support of a small group of Grameen loan recipients who can vouch for you. It is, essentially, a reputation-based loan.

There are other nonprofit microlenders operating in the city, including Accion and BOC Capital Corp. But Grameen America, modeled on a Bangladeshi microlender, is unique in its peer support and loan-approval model.

The loans, which start at $500 and command an interest rate of 18% on a declining balance, must be repaid in six months. The interest rate falls as the loan is repaid. Members who establish a good track record qualify for larger sums.

How This Founder Is Using Fintech To Give Women More Financial Control (Benzinga), Rated: A

Morty is an online mortgage broker. Our mission is to empower homebuyers to make smarter home financing decisions. With a modern tech stack and a marketplace of lenders, we offer customers the most options, great rates, and a transparent process.

What surprised you the most in the fintech industry in 2017?

That there wasn’t more innovation in the mortgage space. It’s the only lending vertical that hasn’t moved online- credit cards, student loans, small business loans, personal loans- all have a big online presence. There is still so much to be done in mortgage, it’s exciting.

Hackers Targeting Payroll Direct Deposit (PYMNTS), Rated: A

In an article penned for JD Supra by law firm Ogletree, Deakins, Nash, Smoak & Stewart, P.C., experts warned of a type of payroll scam that sees fraudsters diverting direct deposits from employee accounts to criminal accounts.

According to the firm, fraudsters use a phishing scam by sending an email from an address similar to a legitimate company account.

Ogletree Deakins warned that not only does this scam result in lost funds, but it is ultimately a data breach, with scammers gaining access to corporate systems and data. The report also noted that scammers are targeting all types of businesses using all types of payroll providers.

Will Markets Ever Live Up to Our Expectations (Guru Focus), Rated: A

The fintech industry is the powerhouse behind the meteoric rise of the peer-to-peer lending market. After several platforms launched online payments, it was only a matter of time before new ones emerged offering lending services that are offered by and to registered members.

LendingClub Corp (NYSE:LC) has been one of the most notable players in this space and its popularity pushed it public in 2014. However, since then, the company has struggled to live up to expectations, reflecting the actual picture of the status of the peer-to-peer lending.

According to critics, while peer-to-peer lending is an attractive option for borrowers looking for alternative financing solutions, it appears to have growth limitations due to lack of funding for new products. Peer-to-peer lending platforms do not take deposits and this is a limiting factor, but analysts suggest that if they are to grow to the point of rivaling the mainstream lending market, then they may have to start taking customer deposits.

How to Win Man vs. Machine Advice Game (ThinkAdvisor), Rated: A

TD Ameritrade put the competitive pressures tied to robo-advisors and other technology left, right and center at its LINC 2018 RIA conference this week in Orlando. Industry leaders highlighted the power and threat of technology and how to address these trends in the advice business.

The dealmakers financing top adviser technology (InvestmentNews), Rated: A

It’s impossible to look at the landscape of modern adviser technology without seeing Steve Lockshin’s footprints.

As an early investor in Betterment, Mr. Lockshin, 41, was instrumental in encouraging the robo-adviser to pivot from competing against advisers to partnering with them.

Brad Bernstein could see the role of advisers was changing.

What was once an industry of investment managers and salespeople was shifting to financial planning. Driving the change was technology — automating and commoditizing many of the ways advisers traditionally added value for clients. Mr. Bernstein, 51, managing partner at growth equity firm FTV Capital, believed there was a demand for products that helped advisers better articulate their value to clients.

That’s what attracted Brooks Gibbins, 45, to the industry when he founded FinTech Collective with his partner, Gareth Jones, in 2012. The venture capital firm has been one of the most active early-stage fintech investors over the past five years, seeding some of the biggest names on the adviser fintech scene.

Seeing the opportunity for adviser fintech startups to get acquired by, or partner with, financial institutions, Ian Sheridan decided to draw on his more than 25 years of experience in the financial services industry — working in wealth, retirement and investing in startups — to identify which technology would be part of the next wave of innovation.

Fidelity rocked the adviser fintech world in 2015 when it acquired eMoney, one of the most popular financial planning and client portal tools among independent advisers. The reported $250 million price tag proved there was money to be made in adviser fintech.

“Prior to that, there was good technology out there, but there wasn’t this stream of new business models, this new equity flowing in,” said Mike Durbin, 50, the president of Fidelity Institutional who spearheaded the deal. “The pace has clearly quickened.”

After a career that took him from E.F. Hutton to founding the Lockwood family of companies, Len Reinhart turned toward private investing in retirement.

American Association of Private Lenders Opposes Florida Mortgage Licensing Bills (PR Newswire), Rated: A

The Florida legislature kicked off its legislative session by introducing Florida Senate Bill 894 and House Bill 935, legislation that could cover private mortgage lenders. The bills, introduced by Sen. Rene Garcia (R-Miami) and Rep. Jeanette Nunes (R-Miami), would eliminate a longstanding business purpose exemption for loans secured by a Dwelling.

On January 18, the bill passed the House Insurance and Banking Subcommittee with a 13-1 vote. On January 24, the House Commerce Committee passed the bill on a unanimous vote. The Senate similarly passed the bill on a unanimous vote in the Senate Banking and Insurance committee on January 23.

American Association of Private Lenders’ (AAPL) position is that the proposed regulation would harm Florida residents, business and the state’s economic growth by consolidating power to a few licensed parties. Private lenders provide much needed capital to a marketplace which is underserved by large financial institutions. Professional business parties need to be able to work with each other without significant regulatory intervention. The proposed regulation would result in less market competition, translating to higher interest rates, a higher cost of credit and would force business out of Florida and into neighboring states including Alabama, Georgia, Tennessee, North and South Carolina, all of which exempt business purpose loans from licensing requirements.

Amy Johnson Named as Chief Operating Officer at dv01 (PR Newswire), Rated: B

dv01, the data management, reporting, and analytics platform that provides institutional investors insight into lending markets, today announced the appointment of Amy Johnson as Chief Operating Officer. Johnson will report to dv01 founder and CEO, Perry Rahbar.

As COO, Johnson will be responsible for dv01’s finance, legal, and sales efforts, including helping execute the company’s vision and scale its operations.

The 10 D.C. Area Startups That Raised Capital in January (DC Inno), Rated: B

Reston, Va.-based online lender StreetShares closed $23 million in equity funding on Jan. 24. The lender focuses on veteran-owned small businesses and relies on a peer-to-peer lending model. About $20 million of the new round is from Bethesda, Md.-based firm Rotunda Capital Partners. Previously, StreetShares had raised $8.3 million between three rounds.

United Kingdom

Aviva executive backs robo-advisers in call for financial advice shake-up (New World News), Rated: AAA

An Aviva executive has backed the rise of robo-advisers and called for a shake-up of financial advice to help open up the industry to the mass market.

Andy Briggs, chief executive of Aviva UK Insurance, said the current regime is freezing out large swathes of the population because only the upper echelons can afford the hefty fees.

Mr Briggs said robo-advisers could also be more powerful and beneficial to customers if the artificial intelligence did not have to carry out full financial assessments.

Treasury begins SME finance inquiry (Bridging&Commercial), Rated: A

The Treasury committee has launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS’s Global Restructuring Group (GRG).
The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.

The committee will also consider the regulation of SME lending and whether banks should be bound by a broader set of duties when dealing with SMEs.

The pros and cons of each of the six types of ISA on the market (Your Money), Rated: A

6) Innovative Finance ISA

An Innovative Finance ISA (IFISA) is a peer-to-peer lending or crowdfunding product. In some instances, you can generate returns of around 8 – 9% by lending to private borrowers or by taking stakes in ‘crowdfunded’ investments. The IFISA is also subject to the same £20,000 annual ISA allowance so you can split your money between this ISA, as well as cash and stocks and shares.

While this is regulated by the FCA, peer-to-peer lending is not covered by the FSCS meaning your capital is at risk.

Things can only get better, says Christie & Co (The Caterer), Rated: B

Easily available debt from banks, financial institutions, peer-to-peer lending and even crowdfunding, together with forecasts of revpar growth of 2.4% in London and 2.3% in the regions, will help drive investments. Strong leisure business enjoyed by hotels last year – up 20% – is expected to continue to grow, depending on a continued weak pound.

Sainsbury’s and British Land chairmen join late payments start-up (Financial Times), Rated: B

A UK start-up that is aiming to end the culture of late payment that plagues British business has recruited two FTSE 100 chairmen as investors and advisers.

David Tyler, chairman of supermarket chain J Sainsbury, and John Gildersleeve, chairman of property group British Land, have joined the advisory board of Previse.

The London-based business pays supplier invoices instantly and collects the money from customers later. By analysing years of payment data it uses artificial intelligence to calculate the likelihood it can collect from the big customer. It has pilots running with two large corporations and is in talks with dozens more, Mr Gildersleeve told the Financial Times.

China

Ping An OneConnect fintech subsidiary raises $ 650 million in financing (Finextra), Rated: A

OneConnect is the only one-stop FinTech-empowered solutions provider in China. Financing of the three subsidiaries received positive responses, particularly from international institutional investors, including the SoftBank Vision Fund (which invested in Ping An Good Doctor and Ping An Healthcare Technology), International Digital Group (IDG) and SBI Group etc., proving that the capital market fully recognizes Ping An’s technological innovation, the business model for its technology as well as the growth potential and business value of the Group.

European Union

Banco BNI Europe Starts to Lend on Multiple P2P Lending Platforms (P2P-Banking), Rated: AAA

Today Banco BNI Europe announced it will start lending on Fellow Finance.

‘Investing via Fellow Finance in consumer and SME loans offers us a great opportunity to easily expand our operations and we are very satisfied with the analytical and professional approach of Fellow Finance in credit intermediation’ echoes Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa.

U.S. Fintech Stripe Picks Dublin for New Engineering Hub (U.S. News), Rated: AAA

U.S. payments firm Stripe said on Monday it would place its first engineering center outside its home market in the Irish capital Dublin, attracted by the city’s growing technology workforce and global outlook.

Robo Advisers Start to Take Hold in Europe (WSJ), Rated: AAA

Estimates differ, but according to TechFluence, a technology research firm with offices in Frankfurt and London, the European market had assets under management of about $3.5 billion at the end of 2017. That compares with an estimated $200 billion to $250 billion in the U.S., according to Burnmark, a fintech research firm. Estimates of the number of services range from 98 to 126 in Europe, compared with about 200 in the U.S.

The cost of entry is also much lower: generally €5,000 to €10,000 (about $6,200 to $12,400), versus hundreds of thousands at least for a discretionary service through a bank, says Timo Pfeiffer, head of research and business development at Solactive AG, an index provider that has researched the growth of robo advisers in Europe.

Popular with banks

This has led to a number of banking groups preparing robo-adviser offerings, Mr. Mellinghoff says. One example is Comdirect, a subsidiary of Commerzbank , CRZBY -3.17% which launched a robo-advisory platform in May. This service, called Cominvest, had gained assets of more than €200 million as of end of December and is expected to grow rapidly in the coming years, says Sabine Schoon, head of corporate strategy and consulting at Comdirect.

The European market has also attracted interest from major U.S. providers; BlackRock Inc. BLK -2.98% announced in June 2017 that it was taking a minority stake in Scalable Capital, a robo-adviser specialist that operates mainly in the German and British markets.

BBVA’s digital push helps drive 20% profit rise (Financial Times), Rated: A

Spanish bank BBVA’s dash to get customers to buy products digitally rather than in branches helped it report a 20 per cent rise in underlying full-year profits, with results boosted by lower costs as well as higher revenues.

Top P2P Cryptocurrency Token Etherecash Gets Listed on QRYPTOS, Following Successful Crowdsale (The Daily Telescope), Rated: A

Top P2P cryptocurrency startup Etherecash has announced that its ECH token will be listed on popular cryptocurrency exchange QRYPTOS on 6th of February 2018, following a successful crowdsale in which the company raised over 40 million USD. This news comes as The Estonian-based lending startup saw a very successful Q4 to 2017 as it gears up for its token distribution in early 2018.

Crypto-lending ICO Etherecash recorded contributions of over 40 million USD and over 46000 new registrations.

GN Compass Creating More Liquidity for its Token, GNCT (PR Web), Rated: B

GN Compass is the first peer-to- peer lending platform for Cryptocurrency-Backed Loans.

All transactions are verified and distributed on the Ethereum Blockchain. GN Compass is joining an expanding group of pioneering projects integrating the Bancor Protocol to maximize the trading liquidity of GN Compass tokens.

Mifid tips balance against active funds in favour of ETFs (Financial Times), Rated: B

New business inflows almost doubled for Europe’s exchange traded fund industry in 2017, in the run-up to the EU’s introduction of rules designed to improve market transparency and strengthen investor protection.

Net inflows into European-listed ETFs reached a record $108bn last year, up from $55.7bn in 2016, according to ETFGI, a London-based consultancy.

International

Disruptive innovation in equity crowdfunding (Deloitte), Rated: AAA

A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” studies the disruptive forces shaping the future of equity crowdfunding.

View the infographic here.

Disruptive innovation in digital banking (Deloitte), Rated: AAA

A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” examines disruptive innovation in digital banking.

View the infographic here.

IdentityMind Global Introduces KYC and Anti-Money Laundering Plug-in for ICOs (Crowdfund Insider), Rated: A

IdentityMind Global, Digital Identities You Can Trust, an SaaS platform that builds, maintains and analyzes digital identities worldwide, allowing companies to perform identity proofing, risk-based authentication, regulatory identification, and to detect and prevent identity fraud, announced the immediate availability of its KYC Plug-in for ICOs which provides a turnkey solution for customer onboarding functionality and user experience to walk ICO participants through the know your customer (KYC) process to meet regulations worldwide.

BFB partners with US real estate fintech start-up (Trade Arabia), Rate: A

Bahrain FinTech Bay (BFB) and the Fintech Consortium (FTC) have announced a strategic partnership with OffrBox, a New York City-based Fintech start-up that has developed an end-to-end real estate transaction platform on which one can buy and sell residential properties online.

India

How early-stage startups raise money (Times of India), Rated: A

The first ’round of funding’ Abhishek Latthe got when he was setting up his wearable device startup SenseGiz in 2013 was from his family and friends. The next year, he set up a crowdfunding page on Kickstarter and raised $47,000. Late in 2014, he took out a bank loan. It was only two years later in 2015, that he could convince Karnataka Semiconductor Venture Capital Fund to back him with Rs 3 crore.

Banks do not back companies without collateral and since the business model is unproven, other investors too hesitate. So, funding options include getting help from friends and family, crowdfunding, or dipping into one’s savings, but how do founders decide on the path to take?

Gadkari says peer-to-peer lending and bridge funding, which fulfil a company’s short-term working capital needs, have also become popular. Choosing the best funding option depends on the company’s need. The next step for an entrepreneur is to negotiate the company’s valuation.

FinTech will revolutionise lending in India, says Faircent CEO (money control), Rated: A

Lending is one of the oldest professions in the world and is one of the pivotal reasons for the banking system to take shape.

There is evidence of lending activities dating back to 2,000 BC between merchants, farmers and traders.

However, up till now, lending as an activity has been largely limited to financial institutes such as banks and Non-banking Financial Companies (NBFCs).

For instance, lenders on Faircent.com usually avail average gross returns of 18% to 26% per annum. This makes online P2P loans a lucrative alternative investment avenue for them.

What makes online P2P lending even more lucrative as an asset class for potential investors is the fact that it offers lenders the opportunity to diversify their investments across multiple risk buckets and loan requirements.

Source: money control

Everything you need to know as pressure mounts on cryptocurrencies (GK Men), Rated: B

Sapan Gupta a Practice-Head at Shardul Amarchand Mangaldas said, “capitalising on the blockchain technology could open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors”.

APAC

After a Successful Crowdsale Campaign, Karma (KRM) Begins Trading With Blockchain (Coin Idol), Rated: AAA

Decentralized p2p lending platform Karma has just announced trading as well as access to its platform and blockchain solutions. The project has now been backed by Danish fintech startup OpenLedger. Karma’s p2p lending platform can be used on the OpenLedger DEX platform and the Korean exchange CoinLink.

Why Blockchain’s Growing Pains Could Benefit Underbanked SMBs (PYMNTS), Rated: AAA

According to a report released earlier this month by EY, 21 percent of people in the world — about 1.6 billion people — are underbanked. More than 200 million micro and SMBs fall into the underbanked category, too, with access to finance the largest hurdle for many of these firms.

EY pinpointed the APAC region as a particularly wide opportunity for financial services players to address this gap: Bank revenue in this market, researchers said, could reach $88 billion by 2020. If traditional banks don’t step in, alternative financial services firms will.

“A lot of smaller, private small businesses are under-funded,” Tran noted. “It’s not like here [in the U.S.], where we have an established financial and banking system. If you implement something like a decentralized blockchain, a P2P lending system, that would enable [SMBs] to get funded a lot easier than going through the normal banking system. With blockchain technology, you can put a platform together that is smart contract-based, allowing individual investors to participate in a growing economy. On the other hand, you allow [SMBs] to get funded very quickly.”

MENA

Top 20 Fintech Startups In The Middle East (Forbes), Rated: AAA

1 PayTabs
Online payment processing solutions

2 Souqalmal.com
Financial products comparison site

4 Beehive
SME focused peer2peer lending platform

5 Yallacompare
Financial products comparison site

8 liwwa
Peer-to-peer lending platform

StartAD launches on February 18 for fintech startups (Arabian Business), Rated: A

Innovation platform startAD will host a ten-day entrepreneurship programme, Venture Launchpad, at New York University Abu Dhabi (NYUAD), from February 18-27.

It will see ten fintech startups pitch their business ideas to investors. UAE-based early-stage startups are encouraged to apply by February 12, 2018, the application deadline.

The programme will equip them with the tools and knowledge to develop a scalable and capital efficient scheme. These include insights into crowdfunding, peer-to-peer lending, blockchain, algorithmic trading, credit scoring, cryptocurrency, payments, insurance tech and money transferrals.

Latin America

Brazilian Fintech EBANX Secures $ 30 Million Investment From FTV Capital (Crowdfund Insider), Rated: AAA

Brazilian fintech EBANX announced on Wednesday it has secured a $30 million investment from FTV Capital.

EBANX also processes payments for major merchants from 50 different countries, including the U.S. and China. The company reported that just last year it processed $1.2 billion in cross-border transactions and achieved the milestone of helping more than 30 million users from the region gain full access to major international e-commerce merchants.

Authors:

George Popescu
Allen Taylor

Thursday December 14 2017, Daily News Digest

online lender delinquency rates

News Comments Today’s main news: LexinFintech relaxes on IPO funding goal. Welendus exceeds Seedrs funding target. LendingTree provides 2018 guidance prior to Investor Day. Yirendai invests in Lion Rock. Mercer delivers financial advice with AI through Facebook Messenger. Today’s main analysis: Online lenders test the faith of investors. Today’s thought-provoking articles: Why Google, Amazon scare BlackRock, Fidelity. A new chapter […]

online lender delinquency rates

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

South America

News Summary

United States

Why Google and Amazon Keep Fidelity and BlackRock Up at Night (Bloomberg), Rated: AAA

“Alexa…will I meet my retirement goal?”

“You are not on track to meet your retirement goal,” replies Amazon.com Inc.’s voice-activated digital assistant, with not a bit of sugar-coating. Then she suggests turning over $76 a month to Fidelity Investments and its advisers.

This won’t actually happen if you try it on your Amazon Alexa device at home. It’s a demonstration put on by EMoney Advisor LLC, a company owned by Fidelity, in its offices in Radnor, Pa. Amazon provides software for third-party developers to experiment with new functions. Fidelity is trying to find ways to apply artificial intelligence, computer algorithms, and voice-­recognition software to the hidebound world of money management and investing.

Earlier this year, Boston-based Acadian Asset Management LLC struck a deal so its portfolio managers could use Microsoft Corp.’s Bing Predicts, which makes forecasts using search and social media data, to help pick stocks; that agreement later ended.

BlackRock, led by chief executive officer Larry Fink, in recent years has been buying stakes in other companies, particularly technology firms. Through these purchases, the company is pushing into new lines of business.

Fidelity bought EMoney in 2015. It sells software to investment advisers that’s designed to make it easier to interact with their customers on budgeting for weddings, college, or retirement.

Online lending platforms test investors’ faith (Financial Times), Rated: AAA

Tianqiao Chen still wants to be part of Lending Club. Last week, while shares in America’s biggest listed online lender were tumbling after another cut to profit forecasts, the chief executive of Shanda Group bought 4m more of them, further cementing his position as the company’s biggest shareholder.

Many operators are feeling the effects of a big push for market share in the latter half of 2015 and early months of 2016, says David Snitkof, chief analytics officer at Orchard. As the platforms rushed to offer new loans, credit quality suffered, and loans originated during that period are among the worst performers, with loss rates well ahead of projections.

Across the sector, valuations have fallen. Earnest, a San Francisco-based student loans specialist, sold itself in October to Navient, the loan-servicing company, for $155m, or about 40 per cent of its peak valuation. Personal lender Prosper, once a “unicorn”, saw its pricetag drop from a peak $1.9bn to $550m in a fundraising last month.

That meant platforms had to spend heavily to bring compliance and controls systems up to scratch. Lending Club’s latest quarterly filing, for example, shows it had $1.21 of operating expenses for every dollar of fee income over the first nine months — up from $1.03 at the same point two years ago.

LendingTree Introduces 2018 Guidance Ahead Of Investor Day (Business Insider), Rated: AAA

Business Outlook – 2018

  • Revenue is anticipated to be in the range of $770 – $790 million, representing growth of 27% – 30% over the high-end of full-year 2017 guidance of $608 million.
  • Variable Marketing Margin is anticipated to be $270 – $280 million.
  • Adjusted EBITDA is anticipated to be in the range of $145 – $150 million, up 28% – 33% over the high-end of full-year 2017 guidance of $113 million.

The Analyst and Investor event is being hosted in New York at the Nasdaq MarketSite in Times Square.  The presentation will begin promptly at 10:30 a.m. ET.  A live audiocast with accompanying slides will be made available on the company’s investor relations website at investors.lendingtree.com.

 

Does the ICO Open a New Chapter for RE Crowdfunding? (Lexology), Rated: AAA

An ICO is simply the initial public sale of a new type of digital “coins”, or “cryptocurrency”.

Judging from the prolific way these new cryptocurrency ICOs are popping up, like mushrooms after a spring rain, one might imagine any clever techie could spin one up at the kitchen table with little more than an internet connection and some well-caffeinated daring-do. Yes, ICOs are easier than crowdfunding, they have that special “blockchain” cachet going for them, and the “regulators talons” have not yet sunk deep.

In a real-life example, on September 29, 2017, the SEC filed a civil complaint in federal district court against ICO promoter Maksim Zaslavskiy and two companies run by Mr. Zaslavskiy. According to the complaint, between July and October Mr. Zaslavskiy and his companies raised at least $300,000 in an ICO touting a new cryptocurrency called “REcoin” — “the first ever cryptocurrency backed by real estate.” According to the SEC complaint, Mr. Zaslavskiy and his companies have been peddling unregistered securities. Furthermore, the complaint alleges, the companies never had any real operations even though Mr. Zaslavskiy told investors in REcoin they could expect sizeable returns from those company’s operations; the securities he sold weren’t backed by any real estate or other assets as he claimed they were; and no “REcoin” digital tokens ever actually existed.

ICOs and Crowdfunding

Circling back to the original crowdfunding thesis, we should also expect this disruptive new technology to begin surfacing in even more impactful nextgen “killer apps” for commercial real estate investment. That’s right, real estate crowdfunding may actually make a comeback by dint of being co-opted into the blockspace. New-age real estate crowdfunding ecosystems are already forming; for instance, the Real Estate Asset Ledger (“REAL”) is one application currently being talked up as a real estate crowdfunding network built on blockchain infrastructure.

The Rise of the ICO (Coinlist), Rated: AAA

Zeus CrowdFunding Earns Top-Ten Ranking in Real Estate Crowdfunding Industry (PR.com), Rated: B

Zeus CrowdFunding earned high marks recently from an independent ranking and reviews portal. The Real-Estate Crowdfunding Review named Zeus CrowdFunding the #7 real estate crowdfunding site on the Web based on its “incredible volume” and other impressive advantages.

The ranking also lauded Zeus CrowdFunding’s low default rate and semi-liquidity option and guarantee and called the company “one of the few platforms offering conservative loans below 65% LTV.”

To read The Real-Estate Crowdfunding Review’s ranking and review of Zeus CrowdFunding, visit

Open Banking Trends Shift to US Market (Lend Academy), Rated: A

Open Banking is set to launch in Europe next month. As banks and fintech firms rush to ensure compliance we wanted to explore the effects on the US fintech market. Recently the CFPB set forth data sharing guidelines for banks and fintech firms to share information. There has since been a number of articles in the news pointing to frustration among fintech companies as banks have not been forthcoming with data sharing.

The current process is clumsy and requires consumers to login many times across many different services. This has also been something banks have complained about to agencies like the CFPB. Services such as Personal Capital and Mint constantly ping bank accounts for information that users have open access to. Setting up a similar initiative in the US could not only allow for a better experience but will undoubtedly be safer for the banks and fintech firms.

LendingUSA Secures $ 60m Credit Facility (Finsmes), Rated: A

LendingUSA, a Sherman Oaks, CA-based point-of-need financing company, secured a $60m credit facility.

The funding was provided by CapitalSource, a division of Pacific Western Bank, and a provider of commercial lending and banking solutions.

 

U.S. Fintech Simility Secures $ 17.5 Million During Latest Funding Round Led By Accel With Participation From PayPal (Crowdfund Insider), Rated: A

Simility, a provider of machine learning–powered adaptive fraud prevention solution, today announced it has secured $17.5 million during its latest funding round. PayPal, Inc. also participated in the round as a new strategic investor along with existing investors The Valley Fund and Trinity Ventures.

First National Bank Plans Online SMB Lending Portal (PYMNTS), Rated: A

First National Bank and Trust Company is planning the launch of a digital small business lending portal and has tapped a partner to create the solution.

The financial institution (FI) said Tuesday (Dec. 12) that it is working with FinTech firm RCGILTNER Services to deploy the digital platform, which will launch in the first quarter of 2018.

Aspiration Taps $ 47 Million for Conscientious Banking (WSJ), Rated: A

Conscientious consumption and online banking services don’t typically go hand in hand. Andrei Cherny, co-founder and chief executive of Aspiration, aims to change that.

Aspiration, which offers online banking with optional fees and no penalties, provides its customers insights on how companies treat the environment and their employees, informing spending decisions.

Aspiration now boasts more than 200,000 account holders since launching in February 2015. On Tuesday, the Los Angeles company said it raised a $47 million Series B to further fuel its ambitions.

Will 2018 Be the Year of the Bank of Amazon? Experts Weigh In (Fortune), Rated: A

Payments

Matt Harris, Bain Capital Ventures: “SoftBank buys 20 percent of Stripe for $3 billion. PayPal continues to push itself down the path of being the leading financial services company for millennials and the mass market.” Dion Lisle, Capgemini SA: “‘Alexa, buy this’ or ‘Siri, I need an Uber, pay for it with my AmEx.’ Payments are going to be activated by that voice because that’s a great security method.”

Lending

Spencer Lazar, General Catalyst Partners: “Potential changes to the Consumer Financial Protection Bureau (CFPB) under the Trump Administration will likely turn back the clock on Obama-era regulations on non-bank lenders. This will be a boon to startup lenders, making it far easier to dole out capital. The fear is that rates could potentially become predatory.”

Amazon vs. JPMorgan

Andy Weissman, Union Square Ventures: “Some combination of Amazon, Google, Facebook, Apple, etc. will move deeper into online financing of small businesses.”

M&A

Tyler Sosin, Menlo Ventures: “Stripe and Adyen will merge, forming a $20 billion plus enterprise-value business and API-driven merchant processor.”

Funding

Charles Birnbaum, Bessemer Venture Partners: “Valuations in the alternative-lending space were overly optimistic in our opinion over the prior five years, but we do feel that the pendulum has likely swung back too far in the other direction following the recent pullback” leaving the sector ripe for potential funding or M&A.

Braviant Holdings Announces Launch of Chorus Credit Personal Loans (PR Newswire), Rated: A

Braviant Holdings, a leading fintech startup that offers analytics and technology-driven credit solutions for underserved Americans, is now offering personal loans up to $10,000 in Californiathrough its Chorus Credit online lending platform. Chorus will complement Braviant’s existing installment lending business, Balance Credit, by offering higher loan amounts at lower rates to the estimated 26% of California consumers who are underserved by traditional banks.

2017 YEAR-IN-REVIEW (Wunder Capital), Rated: A

In 2017, we increased our solar project pipeline by an order of magnitude. This is due in large part to more resources dedicated to pipeline development, advancements in our lending practice, and – at a macro level – a rapidly growing solar market and commercial sector.

Source: Wunder Capital

See the full report here.

Not “ripe,” says judge dismissing N.Y. fintech charter challenge (Banking Exchange), Rated: A

Yesterday U.S. District Judge Naomi Reice Buchwald of the Southern District of New York dismissed one of those lawsuits, Vullo v. Office of the Comptroller of the Currency. The judge dismissed the suit of the New York State Department of Financial Services, headed by Maria Vullo, against OCC on the grounds that the matter is not “ripe” for a decision on the legal ability of the Comptroller’s Office to issue such specialized charters.

Indeed, at the recent RegTech Enable conference in late November, OCC’s Beth Knickerbocker, chief innovation officer, characterized the proposal as “on hold.”

Why New York’s claim isn’t ripe

Judge Buchwald’s decision recapped the history of the proposal at length. Her decision came down to this sentence: “Claims are not ripe if they depend on the occurrence of contingent future event that may never occur at all.”

She pointed out that no injury would occur if OCC never issues such a charter to a fintech company.

Vanguard, the fund giant with nearly $ 5 trillion in assets, is using blockchain to underpin its mutual funds (Business Insider), Rated: A

Vanguard is moving to use blockchain to simplify how it updates index data underlying mutual funds, executives said on Monday, an important sign of confidence for the new financial technology.

Closely-held Vanguard, the top mutual fund firm with nearly $5 trillion under management, has successfully tested blockchain to automatically update data like the names and share prices of companies in index funds, processes that must currently be closely overseen by individuals, said Warren Pennington, a principal in Vanguard’s investment management group, in Pennsylvania.

UNOPPOSED MOTION FOR LEAVE TO FILE AMICIUS CURIAE BRIEF (U.S. District Court, D.C.), Rated: A

Further, to date, the parties have not raised an important argument that this Court should consider, namely, that restricting the President’s authority over the CFPB Director’s replacement only exacerbates the serious constitutional questions currently before the D.C. Circuit with respect to the CFPB’s structure. As CUNA explains, such questions could be avoided by adopting Defendants’ position in this case. Thus, CUNA’s perspective on the central issues in this case is invaluable and unrepresented by the parties.

Read the motion in full here.

(Coindesk), Rated: A

The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model.

Specifically, accredited investors purchase Simple Agreements for Future Tokens (SAFTs), with the tokens set to be delivered at a later date. The mode has been used by a number of ICOs in recent months, and according to the page on MicroVentures, $915,000 has been raised from nine investors thus far in the new ICO.

Mastercard targets millennial clients with digital money management service (American Banker), Rated: B

The payments company today announced it is launching a new service called Assemble, which it calls a “prepaid innovation hub” designed to allow Mastercard partners or issuers to provide checking, budgeting, and payment features, as well as additional money management tools.

Longfin Corp. Becomes the First Public-listed FinTech Company Under Reg A+ on Nasdaq (GlobeNewswire), Rated: B

Longfin Corp. (NASDAQ: LFIN) announces that it will be traded on the Nasdaq market for the first day after its initial public offering (IPO) under Reg A+ closing on December 8, 2017.

U.S. News & World Report Names LendingPoint One of 2017’s Best Personal Loan Companies (BusinessWire), Rated: B

LendingPoint was named one of nation’s six best personal loan companies by U.S. News & World Report.

The media company evaluated personal loan companies in five key areas, reviewing data on eligibility, loan terms, fees, repayment methods and additional features. LendingPoint was cited as 2017’s top lender for people with fair to good credit, who have merit-based qualifications beyond FICO scores that make them worthy loan candidates.

Quesnay’s Female Founders in Tech Program Awards Goalsetter First Place (PR Newswire), Rated: B

Quesnay is pleased to announce that Goalsetter is the winner of the inaugural Female Founders in Tech, spotlighting female founders that positively impact the financial services and/or insurance technology industries.

The winners represented cutting-edge businesses that were also socially conscious:
– Goalsetter – Goalsetter is a goal-based savings and gifting platform, targeting millennials.
– Marinus Analytics – Marinus uses technologies to help identify and fight crimes like human trafficking and money laundering associated with it and other illicit activities
– LENDonate – LENDonate provides a marketplace lending platform for non-profits and supporters.

Approximately 100 women-led startups registered for the program with solutions ranging from artificial intelligence to blockchain to creative financial literacy and savings solutions. Seven finalists presented in New York to a panel of judges which included industry leaders from the sponsoring organizations: John HancockMassMutualRGAxSterling National BankTD Bank and Thomson Reuters.

 

United Kingdom

Welendus exceeds Seedrs fundraising target (P2P Finance News), Rated: AAA

WELENDUS, the peer-to-peer payday loan provider, has announced that its latest crowdfunding round on Seedrs has reached over 130 per cent of its target.

The firm had been seeking £150,000 but has already raised £197,991, according to Seedrs’ website.

Welendus said on Thursday that the funding round had attracted more than 250 investors.

Investec Provides U.K. Fintech With $ 67 Million for Online Loans (Bloomberg), Rated: A

London-based MarketInvoice, which arranges loans for small companies secured by accounts receivable, will handle the underwriting for Investec customers in the partnership, according to the bank’s website. Investec will provide 50 million pounds ($67 million) in the first year to fund the loans, Anil Stocker, the startup’s co-founder and chief executive officer, said in an interview.

The rise of the payday-style business loan (City A.M.),  Rated: A

British banks have been mired in criticism for not lending as much as they could.

Many businesses have meanwhile found that alternative lenders lack the data to provide products that are tailored to their needs.

Creative credit

Rate hikes typically result in an increase in lending profitability, and so the increase often stimulates the appetite to lend.

But an increased appetite to lend doesn’t always follow an increased ability to price risks on all loan applicants, and herein lays the risk: lenders become creative with the ways in which they entice borrowers and mitigate their risks.

These loans from mainstream lenders look like the payday loans that flooded the market in the height of the recession. They take minutes to apply for, turnaround is within one day, and command interest rates of up to 23 per cent APR – five times more than some personal loans.

Data shows increase in demand for alternative finance services (Londons School of Business Finance), Rated: A

The figures showed growth across the UK’s alternative finance market, including crowdfunding, invoice trading, and marketplace lending. The date found a year-on-year rise of 43 per cent in 2016 from £3.2 billion to £4.58 billion.

Business marketplace lending grew by 28.5 per cent from £881 million in 2015 to £1,232 million in 2016, placing it ahead of consumer marketplace lending, which previously had the biggest share.

LendInvest’s Latest Buy-to-Let Index Reveals: Manchester Tops Charts & Hull is Named Biggest Climber (Crowdfund Insider), Rated: A

On Wednesday, specialist property lender LendInvest released its latest LendInvest Buy-to-Let Index report, which ranks all 105 postcode areas around England and Wales based ona combination of four metrics, which are capital gains, transaction volumes, rental yields, and rental price growth.

The Index report’s key findings include:

  • Manchester, leader of the Northern Powerhouse, takes top spot
  • Leicester breaks into the Top 10 and Birmingham climbs 8 places from #18 to #11, signaling upward mobility in the Midlands markets
  • Hull marks itself as biggest climber for 2017, rising 93 places to #6
  • Enfield tumbles from Top 10 in February to Bottom 10 in December
Source: LendInvest

Download the full report here.

One in two advisers ‘fire’ clients with less than £50,000 (Money Observer), Rated: A

Those with pot sizes of less than £50,000 are increasingly being turned away by their financial adviser. In 2014 just under a quarter of clients were shown the door, whereas in 2017 this figure rose to 50 per cent.

Artificial intelligence is guiding venture capital to start-ups (Financial Times), Rated: A

Mr Bonanzinga thought he could combine internet data and machine learning to do a better job of ferreting out prospects. It took two years and £5m in investment for InReach Ventures to create the software, which has so far trawled through 95,000 European start-ups, picking out 2,000 that Mr Bonanzinga might be interested in.

The software determines this based on the people they are hiring, the products they are developing and the traffic on their website, among other things.

Tifosy: The sports crowdfunding platform that wants to help small teams grow and big teams reconnect with fans (City A.M.), Rated: B

The company has already partnered with 15 clubs in England and Italy, raising £2.9m from “fanfunders” for a variety of different projects.

So rather than owners selling equity stakes to unfamiliar outside investors, crowdfunding solutions such as mini-bonds or equity shares have emerged as alternative solutions to many sports franchises.

Top-flight rugby clubs Harlequins and Wasps raised £15m and £35m respectively by issuing their own bonds, while Surrey County Cricket club raised £5m in seven days in 2015.

China

Chinese Online Lender LexinFintech Shrinks U.S. IPO Fundraising Goal (WSJ), Rated: AAA

LexinFintech Holdings Ltd., a Chinese online lender that is planning to go public in the U.S., scaled back its fundraising ambitions after regulatory changes in China sparked a rout in shares of similar companies.

Lexin, a four-year-old company whose backers include Chinese online-retail giant JD.com Inc., is planning to raise $120 million in an initial public offering, according to a Wednesday filing with the Securities and Exchange Commission.

JD.com-backed micro lender slashes IPO by 70pc after China’s internet finance crackdown (SCMP), Rated: A

Lexin Fintech plans to offer 12 million American depositary shares at an indicative price range of US$9 to US$11 a share, raising as much as US$132 million, the company said in an updated filing on Thursday to the US Securities and Exchange Commission.

The fundraising value is sharply down from an originally planned US$500 million, as mentioned in the IPO prospectus issued last month.

Noncompliant P2P Lenders to Be Out by Mid-2018 (Caixin), Rated: AAA

Local banking regulators have until the end of June to weed out noncompliant peer-to-peer (P2P) lenders, according to a circular issued by a special working group led by the China Banking Regulatory Commission (CBRC).

Yirendai Announces Strategic Investment in Lion Rock (Business Insider), Rated: AAA

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”), a leading fintech company in China, announced today that it has made a strategic investment in Lion Rock, a comprehensive financial services platform that is focused on global asset allocation, through Lion Rock’s Series A financing of HK$50 million.

Lion Rock is headquartered in Hong Kong and offers a wide-variety of high-quality financial products, financial news, robo-advisory services as well as asset allocation services through its online platform.

Hong Kong Fintech Start-Up Lion Rock Raises $ 6.4M Led By Marathon Venture (China Money Network), Rated: A

Lion Rock FinTech Ltd., a Hong Kong-based fintech company, has raised HK$50 million (US$6.4 million) in an equity financing led by Marathon Venture Partners.

In addition, 9F Inc., the strategic investor who backed Lion Rock’s last round of financing, continued to invest in this round.

European Union

The Culture of p2p Investors Across the EU (FastInvest), Rated: AAA

FastInvest, a p2p fintech platform, recently studied data from over 8500 EU investors daily and came across a really unexpected finding. Highly specific traits and behaviors were driven by nationality over and above other individual factors when looking at big data.

From traditional investment metrics like risk aversion, to outside the box items like nationalistic tendencies and compulsive behaviors.  Across numerous areas, national cultural traits could be seen solely based on country to country locales.

Source: FastInvest

Poland
Even with the EU offering a bit of a more stable currency, only 1.76% of residents prefer to invest in Euro based currency loans.

Belgium
Only 2.20% of Belgian investors choose PLN (Polish) currency based loans as opposed to their own Euro.

Germany
Germans appear to be the most open minded of EU countries, with 15.73% making investments in PLN currency.

Netherlands
The Netherlands followed behind Germany in diverting from the euro, with 9.08% of investors choosing PLN based loans.

Download the full report here.

iZettle Grabs $ 47M Additional Funding, Eyes Market Expansion (PYMNTS), Rated: A

iZettle has grabbed €40 million in funding (the equivalent of $47 million) that the Stockholm-based payments firm will use to expand into new markets.

International

Disruptive Startup, Etherecash, Concludes ICO Ahead Of Schedule (Coinidol), Rated: B

Etherecash is one step closer to actualizing its vision of bridging the financial divide between the banked and the unbanked with the successful conclusion of its ICO ahead of schedule. The ICO is now scheduled to finish on 12th Dec 6:29 PM (GMT) after four impressive bonus rounds that outperformed expectations.

With over $30 million raised and 45000 registered participants, Etherecashcan now set its sight on eliminating traditional borders, intermediaries and prejudices in the way money is lent, spent, and sent.

Australia/New Zealand

MERCER LAUNCHES SUPERBOT, ARTIFICIAL INTELLIGENCE DELIVERING FINANCIAL ADVICE VIA FACEBOOK MESSENGER (Mercer), Rated: AAA

Australia’s 17 million active Facebook users spend on average 1.4 hours a day liking, commenting and sharing stories with family and friends. Moreover, with roughly 17% of the earth’s population being active users of Facebook Messenger, there is irony in the fact that the smartphone generation is spending more time engaging on Facebook rather than thinking about their future financial readiness.

Accessed through Facebook Messenger, SuperBot represents the ultimate opportunity to scale financial advice across a very large proportion of the population.

Non-bank lenders lift profit 10% in 2017 (NBR), Rated: A

Eighteen of the 25 participants in the KPMG non-bank financial institutions performance survey posted increased earnings in 2017, generating a total net profit of $216.7 million, up from $196.6 million a year earlier. Total assets grew 12 percent to $10.96 billion, with lending boosted by the nation’s strong demand for new vehicles and several non-bank institutions testing the waters in the mortgage space as the major banks become more reticent in some of their credit criteria.

HNWI financial advice demand falls (Financial Standard), Rated: A

The use of financial advice among high-net-worth investors (HNWI) has fallen to a five-year low, according to the insights, which show 435,000 millionaires own more than $1 million of investable assets.

Almost 75% of HNWIs relied on the expertise of a financial advice professional in 2013 – but this has declined to 68% in 2017.

Credit Suisse found the number of Australian millionaires rose by 200,000 in the year to June, marking the third-largest increase after the US and Germany in its global wealth ranking.

CCR to help business financing (InvestorDaily), Rated: B

Indeed, interest rates on small business loans have “remained relatively high” due to a lack of competition – leaving banks as the major provider of lending to small businesses (80 per cent).

But a CCR regime would offer lenders more information about potential borrowers’ credit history than just negative credit information, as per the current standard.

The Australian government has determined a mandatory credit reporting regime to come into effect in July 2018, but a number of financial institutions such as NAB have already announced it will roll out such a regime.

Other forms of accessing finance for smaller firms or entrepreneur were large technology firms and alternative financing platforms, such as marketplace lending and crowdfunding, he added.

India

Online loans marketplace FinBucket gets funding from Impanix Capital (VC Circle), Rated: A

FinBucket Pvt. Ltd, which runs an eponymous online marketplace for loans and investments, has raised Rs 12 crore ($1.8 million) from Delhi-based early-stage venture capital firm Impanix Capital.

The startup plans to use the funds to increase its staff strength to 200 and expand operations.

‘Fintech can help assess credit score ’ (The Hindu), Rated: A

Financial technology firms that generate credit scores based on digital footprints of individuals will have a major role to play as banks begin to focus on lending to first generation customers who do not have credit history, former Deputy Governor of Reserve Bank of India H.R. Khan said here on Wednesday.

Fintech startup CapitaWorld raises funding (VC Circle), Rated: B

Mumbai-based fintech startup CapitaWorld Platform Pvt. Ltd has raised an undisclosed amount through convertible equity from high-net-worth individuals, corporate honchos and investors from Hong Kong and the Middle East.

The investors who participated in the latest round include former chief executive of Indian Banks’ Association Mohan Tanksale, Swift India CEO Kiran Shetty, Madhu Silica’s managing director Darshak Shah and former JP Morgan executive Mandar Mhatre, the startup said in a statement.

Asia

BHSI Launches Financial Institution Professional Indemnity Insurance in Asia (Insurance Journal), Rated: A

Berkshire Hathaway Specialty Insurance Co. (BHSI) announced it has introduced Financial Institution Professional Indemnity (FIPI) insurance in Asia.

The new BHSI policy is designed to cover a range of claims, from allegations of failure to disclose information, to misleading financial advice and breach of contracts, the company said in a statement. The policy combines coverage for civil liability, pre-investigations, mitigation expenses, bail bond costs, court attendance, loss of documents, and more.

The policy is designed for medium to large financial institutions, including securities dealers, regional banks, insurance companies, reinsurance companies, diversified institutions, and financial technology (fintech) and corporate advisory firms.

South America

Brazilian fintech Nubank starts international tech talent hunt (ZDNet), Rated: B

Brazilian fintech Nubank has launched an engineering center in Berlin as part of a plan to boost its software engineering function internationally.

Nubank has expatriated four of its engineers to Berlin to kickstart the European operations. It has also already started to hire local experts such as Gavin Bell, a senior engineer who previously managed the core data infrastructure platform at Soundcloud.

Authors:

George Popescu
Allen Taylor

Tuesday December 5 2017, Daily News Digest

credit-to-cash ratio

News Comments Today’s main news: Prosper’s top concern next year is liquidity. Affirm seeks new funding at $1.5B valuation. LendingHome surpasses $2B in loan originations. ThinCats delays IFIsa launch. Funding Circle hits 3B GBP in lending. Dianrong planning $500M IPO. Today’s main analysis: Acorns puts up a fight to upscale. Mobile credit and financial inclusion. Today’s thought-provoking articles: Is Lending Club […]

credit-to-cash ratio

News Comments

United States

United Kingdom

China

International

India

APAC

News Summary

United States

Prosper’s Top Concern in 2018 is Liquidity, CEO Says (Bank Innovation), Rated: AAA

Marketplace lender Prosper will make liquidity a top priority as the company moves into 2018, company CEO David Kimball said during a lending conference that took place last week.

“Our main concern… it’s always liquidity, and I think most people in this room understand that the best way to get to liquidity is to have a lot of different options,” Kimball said to attendees of the Investors Conference in Marketplace Lending on Friday, December 1st. “And so I think you’ll see our toolkit expand [in 2018] versus where it is now.”

Is Lending Club Misleading New Investors About Past Performance? (deBanked), Rated: AAA

New retail investors interested in the Lending Club platform are greeted with a friendly statistic, that “99% of portfolios with 100+ Notes have seen positive returns.” That’s a slippery statement, which is probably why they footnoted it.

Affirm Is Said to Be Raising Funding at $ 1.5 Billion Valuation (Bloomberg), Rated: AAA

Affirm Inc., an online lender run by PayPal co-founder Max Levchin, is in advanced talks for a financing round that would earn it a place in the unicorn startup club.

The San Francisco-based startup is discussing an investment of about $150 million, said people familiar with the matter. The deal would value the company at $1.5 billion, about double the valuation from the last round in April 2016, said the people, who asked not to be identified because the terms aren’t finalized. Affirm declined to comment.

Acorns Teardown: The Most Popular Robo-Advisor Faces A Fierce Fight As It Goes ‘Upmarket’ (CB Insights), Rated: AAA

The micro-investing app has grown an of army of 2.2M accounts. But making money off these first-time, lower-income investors won’t be easy. To do so, Acorns is building out higher-tier investment services and moving into the highly saturated $40T retirement planning market.

With over 2.2M investment accounts in the US since launch, the company has proved there is a clear niche for its product. It is already the largest robo-advisor by client accounts.

Acorns’ service isn’t free, but it is cheap — the company charges $1 a month or .25% for accounts over $500. At $12 annually for many accounts, that’s not a lot of revenue.

Acorns is making a number of important moves:

  • It is launching its own retirement savings plan in 2018 called Acorns Later, which could help it reach new users and push up current users’ account size.
  • It has formed a strategic partnership with investor Paypal to extend its product to Paypal’s huge user base. In addition, its partnership with Paypal could ultimately help Acorns get into bank account services, a move similar to what low-income investing competitor Stash has done.
  • A B2B offering may also be in the works, based on recent acquisition activity. B2B products have helped other robo-advisors see big jumps in AUM.
Source: CB Insights

Acorns manages approximately $528M in AUM and approximately $407 per account as of September 2017. Compare that to Betterment which manages approximately $28.5K per client account and Wealthfront which averages $42.3K.

Source: CB Insights

Mortgage Marketplace Lender LendingHome Surpasses $ 2 Billion in Loan Originations (Crowdfund Insider), Rated: AAA

On Monday, mortgage marketplace lender LendingHome announced it has originated more than $2 billion in mortgage loans for homeowners and real estate investors. The online lender revealed that the first billion of originations occurred over the course of 30 months, while it took just 12 months for the company to originate its second billion. In the process, LendingHome crossed the major milestone of financing more than 10,000 homes nationwide.

How Cross River Bank plans to bring mobile payments to business customers (Tearsheet), Rated: A

How and when employees get paid should be their choice, Isaacson said. The technology to make that happen is already in the market — Uber and Lyft drivers are taking advantage of it, for example — but the systems aren’t in place at most companies, and there’s a mental barrier for businesses to overcome to begin creating mobile payout experiences.

It’s also too inflexible for some businesses, like a restaurant or store that may need more or fewer cases of Coca Cola than the originally ordered 10. They need to be able to make adjustments like that in real time, Isaacson said. With a mobile device, people can manage and initiate payments in real time and remotely.

Cross River Bank is a business bank, whose clients are some of the biggest fintech companies. Behind the scenes, CRB has developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe — which counts Lyft as a customer.

Morgan Stanley is getting in on the hottest trend in investing (Business Insider), Rated: A

The New York-based investment bank announced Monday the launch of Access Investing, an online roboadviser designed to capture a younger clientele.

The goal of Morgan Stanley’s new offering is to serve as a stepping stone, so to speak, for younger savers who one day might want to tap into the bank’s broader suite of wealth-management services when they are wealthier and older.

2017’s Best & Worst Cities for Wallet Fitness (WalletHub), Rated: AAA

Wallet Fitness levels vary widely across the U.S. As we prepare to make resolutions for self-improvement, it’s fair to wonder who’s best positioned for financial success and who has the most work to do. To find out, we compared more than 180 U.S. cities based on 29 key indicators of Wallet Fitness.

Source: WalletHub
10 Best Cities for Wallet Fitness 10 Worst Cities for Wallet Fitness
1 Fremont, CA 173 Oxnard, CA
2 San Francisco, CA 174 Miami, FL
3 Madison, WI 175 New Orleans, LA
4 Columbia, MD 176 Gulfport, MS
5 San Jose, CA 177 Santa Ana, CA
6 Seattle, WA 178 Brownsville, TX
7 Minneapolis, MN 179 San Bernardino, CA
8 Sioux Falls, SD 180 North Las Vegas, NV
9 Bismarck, ND 181 Newark, NJ
10 Warwick, RI 182 Hialeah, FL
Source: WalletHub

See the rest of the results here.

Rich Uncles Announces New CFO, COO, and Corporate Headquarters (Business Insider), Rated: A

Leading crowdfunding real estate investment platform, Rich Uncles, LLC, today announced the appointment of John H. Davis as its new chief financial officer and Jean Ho as its new chief operating officer and chief compliance officer.

Mr. Davis comes to Rich Uncles after more than four decades with KPMG LLP, one of the world’s four largest accounting firms, where he had served as a partner since 1988.

Ms. Ho joined Rich Uncles, LLC in 2016 as the company’s chief financial officer, where she has helped lead the acquisitions of 29 commercial properties across two Rich Uncles-sponsored REITs: Rich Uncles Real Estate Investment Trust I and Rich Uncles NNN REIT, Inc. Prior to joining Rich Uncles, LLC, Ms. Ho held positions as chief operating officer and chief financial officer of Soteira Capital, LLC, chief financial officer of MKA Capital Advisors, LLC, and with KPMG LLP, where she specialized in real estate, financial services, and high net wealth personal financial and estate planning.

Perkins Coie Law Firm Boosts Fintech Bench with SEC Attorney Hire (Crowdfund Insider), Rated: A

Perkins Coie, a law firm that is very active in the Fintech / Blockchain space, has announced the hiring of a former SEC attorney. Michael S. Didiuk has joined the firm’s Investment Management practice group as a partner in the San Francisco office where he will represent clients on various federal securities laws and complex regulatory issues raised by Blockchain technology and with the emergence of digital asset sales and digital securities.

Barclaycard building digital bank in US (Banking Technology), Rated: A

Barclaycard is rebranding itself to Barclays in the US as part of its retail digital banking strategy in 2018.

According to Tearsheet, Barclaycard says since last November it has been targeting prime and super-prime borrowers with an online personal loan offering on a test-and-learn basis to a small group of customers. Barclaycard plans to launch the same offering publicly by the middle of 2018.

Mass firings at top digital currency investment bank (New York Post), Rated: A

The largest investment bank catering to the red-hot cryptocurrency sector was in total disarray on Friday after management fired nine employees — including the entire tech team, The Post has learned.

The Argon Group had been battling internal turmoil recently as many of its investment bankers had grown disenchanted over the direction of the company, sources said.

Atlantic Capital Bank expands into Fintech Banking with strategic new hire (GlobeNewswire), Rated: A

Chris Stanley joins Atlantic Capital Bank as Vice President of Fintech Industry Banking, to lead Atlantic Capital’s Fintech Banking practice.

Expanding on a successful payments industry line of business, the new fintech banking practice will focus on emerging growth and growth-stage companies in this evolving technology segment. This will bolster Atlantic Capital’s core deposit gathering strategy.

Want to Learn 8 Secrets for Getting a Business Loan? Here are 2 (Small Biz Trends), Rated: B

Secret #1:  Yes, You CAN Improve Your Personal Credit Score

  • Pay down your credit cards. As a yardstick, you’ll want all your cards under 50 percent  of their limits. This means no more maxing out cards — for personal or business.
  • Lower your debt compared to your income. A good benchmark is keeping debt to 30 percent of less of your income. Rather than taking a second mortgage on your home and increasing your debt load, you might be better served to apply for a business loan.
  • Monitor your credit score. Errors are more common than most people realize. Besides you’ll learn which creditors report to credit agencies and what they report on.

Secret #2:  Your Business Credit History May Be Incomplete, But It’s Not Hard to Change That

  • Establish free profiles with the three major business credit bureaus: D&B, Experian, Equifax
  • Apply for a business credit card and use it to establish a timely repayment history.
  • Do business with vendors (“trades”) that report to credit bureaus regularly.
United Kingdom

ThinCats delays IFIsa launch (Bridging&Commercial), Rated: AAA

ThinCats has announced that it will now be launching its Innovative Finance Isa (IFIsa) early next year.

The peer-to-peer lending platform had hoped to launch its IFIsa by the end of this year and thanked investors for their patience.

It is currently building the new systems needed to handle the different aspects of accepting and administering Isa investments safely.

Funding Circle hits £3bn lending milestone (P2P Finance News), Rated: AAA

FUNDING Circle has become the first UK peer-to-peer platform to reach the £3bn cumulative lending milestone.

The business finance provider said on its website that “30,948 UK businesses have financed their goals by borrowing £3bn through Funding Circle”.

Zopa, which lent out a record £100m last month, said it expects to reach the £3bn mark in January.

Micro-lender Oakam secures £35 million debt facility from Victory Park Capital (Finextra), Rated: A

Digital micro-lender, Oakam today announced that it has secured a £35 million debt investment from Victory Park Capital Advisors, LLC (VPC), an investment firm focused on private middle market debt and equity investments.

LandlordInvest publishes loan book (P2P Finance News), Rated: A

LANDLORDINVEST, a peer-to-peer lending platform for residential and commercial real estate mortgages, has published its entire loan book to mark its one-year anniversary.

It reveals that LandlordInvest lent a total of £2.7m between December 2016 and December 2017, with an average loan amount of £210,535.

The average loan term was 7.6 months, the average LTV was 63.7 per cent and the average annual gross return to investors was 11.1 per cent.

Welendus launches beta platform for investors (P2P Finance News), Rated: A

WELENDUS, the peer-to-peer payday lender, has launched a beta version of its platform for investors after its latest funding round exceeded its target in under 24 hours.

The fully-authorised platform, which aims to re-define the short-term lending market with cheaper rates and no hidden costs, is now inviting investors to create an account.

Six ways fintech startups could hurt incumbent banks (Econsultancy), Rated: A

For years, there has been much talk about the impact of fintech startups like Mondo and Atom Bank on incumbent banks but little has been done to quantify the actual effects fintechs are having on big banks.

New data from The Bank of England (BoE), published as part of its 2017 stress test of the UK banking system, however, is shedding light on this subject.

  • Reduced overdraft revenue
  • Reduced fees from payment services
  • Higher customer acquisition and retention costs
  • More difficulty cross-selling
  • Increased liquidity risk
  • Increased cyber security risk

Five (more) UK startups to watch: Were we right? | Fintech Recap 2017 (Bob’s Guide), Rated: B

Where they were then: Trussle, the online mortgage trading company, is a rising star in the fintech industry. The start-up company provides solutions and answers to those looking to invest with a hassle-free process.

Where they are now: Following their funding round in early February to raise £4.5m ($5.68m) backed by Orange and Growth Capital, and existing investors LocalGlobe, Zoopla and Seedcamp, Trussle went on to join forces with Revolut in April to give users direct access to their mortgage brokering services.

Total equity funding: $7.38m (now $7.6m) +2.98%*

Where they were then: Iwoca was created to help make credit and loans of up to £100,000 available to small businesses.

Where they are now: 8 days after the time of writing the previous bio, Iwoca partnered with NatWest through Capital Connections to provide SMB loans, a significant collaboration for the six year-old startup.

Total equity funding: $58.5m (now $90m) +54%*

Where they are now: They currently boast a 6.6% annual return for investors and have earned £156m in interest for investors. They’ve lent £3 billion to UK businesses in a total of 43,251 loans (since 2010).

Total equity funding: $373.2m (now flat) –%*

Where they were then: Crowdcube is an investment crowdfunding platform that lets customers hand pick the businesses they want to back and invest in.

Where they are now: In the third quarter of 2017, Crowdcube registered £1m in company revenue, with 70 pitches.

Funds raised to date: $18.69m (now $28.3m) +51.42%*

Where they were then: Based in the heart of the UK capital, LendInvest is the UK’s leading online property lending and investing businesses.

Where they are now: In September, LendInvest announced the strategic partnership with Clever Lending, a specialist lending solution.

Total equity funding: $58.6m (now $393m) +570%*

China

Chinese Online Lender Dianrong Eyes 2018 IPO, Could Raise at Least $ 500 Million (WSJ), Rated: AAA

Dianrong.com, a Chinese online lending platform started and run by a co-founder of LendingClub Corp. , is planning an initial public offering as soon as next year that could raise at least $500 million, according to people familiar with the matter.

China Is Set to Implement a System of Ranking Its Citizens (Interesting Engineering), Rated: AAA

China is set to implement a social credit system that will rate each of its citizens on a publicly available scale. Officially known as the Social Credit Score or SCS, the system is likely to be implemented by 2020.

It works by giving each citizen a score based on their daily interactions and financial decisions, the score can be affected by debt, spending habits and even social interactions. Obviously, to get this kind of score that will be somewhat compared to a person’s trustworthiness, there will need to be a huge amount of individual monitoring and data collection. The SCS is expected to be rolled out in 2020, but there will be a large scale trial period from now until then so the system can be at optimal functionality when it goes live on its 1.3 billion citizens.

Micro-lender China Rapid Finance spots opportunity in new rules (Reuters), Rated: AAA

China Rapid Finance will make any adjustments needed to its business practices and the fees it charges in response to Bejing’s new requirements to clean up fast-growing online micro-lenders, its chief executive Zane Wang said on Monday.

Online micro-lenders have come under scrutiny as “problems such as over-lending, repeat borrowing, improper collection, abnormally high interest rates, and privacy violations have become prominent”, Chinese financial regulators said last week.

Banks’ robo-advisers are facing increasing scrutiny (China Daily), Rated: A

With financial institutions increasingly employing roboadvisers, China’s central bank and financial regulators issued draft regulations for comment recently, requiring financial institutions to receive regulatory approval for offering such services.

The regulatory authorities said financial institutions should create rational investment strategies and algorithm models, as well as remind investors of the flaws and risks associated with algorithm-based robo-advisory models.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

The project that Pinganfang.com was caught up in is a sharing working place project called Bar Works. Every work place was sold at $25,000 and the minimum purchase quota per investor was two each. The expected annual rate of return was between 12% to 15%.  On June 30th 2017, the SEC charged Renwick Haddow (the planner of Bar Works project) with multiple counts, including illegal fundraising $36 million from the Bar Works investors. 

On November 30th, JD Finance and China UnionPay co-launched a Blockchain-based risk information sharing mechanism.

On December 1st, Alibaba officially set up a poverty alleviation fund. As planned, the fund will invest 10-billion-yuan in the next five years to establish a comprehensive security system and help people fight against poverty. At the fund launch ceremony, Jack Ma, the executive chairman of Alibaba Group, told the media that Ant Financial would suspend plans for an initial public offering.

Change of pace ahead for fintech (China Daily), Rated: A

China has emerged as a leading fintech market globally, with analysts estimating the market size to have exceeded $243 billion by the end of last year, accounting for about 85 percent of the global market share.

The sector’s fast and furious growth was also illustrated by the surge of fintech investment in the country, which attracted capital of $8.8 billion between July 2015 to June 2016, equivalent to an increase of 252 percent since 2010, according to a report by Singaporean banking giant DBS Group and global accounting firm Ernst & Young.

International

Why Mobile Credit Can Be the Entry Ticket to Financial Inclusion (Let’s Talk Payments), Rated: AAA

Think for a moment of what your life would be like with no access to credit. Chances are you wouldn’t own a home or a car. Most of us could not have afforded our college education. The entrepreneurs among us would be hard-pressed to build successful businesses. And what about the ways we take advantage of credit cards – basically small-time loans that exist to allow us to pay for emergencies and unexpected expenses? Our financial identity is tied up in our access to these credit opportunities.

The good news, however, is that mobile devices – along with the existence of the cloud – are providing an entirely new landscape for the developing world. This landscape involves assigning a financial identity to those who have largely remained anonymous, reaching these populations through their smartphones. There are scores of creditworthy people on the planet, and we’ve proven before through data science that worthiness has little to do with income or wealth, but instead with the opportunity to demonstrate responsibility.

With this understanding in mind, we reviewed activity in the wake of recent hurricanes that rocked the Caribbean and observed a spike in prepaid mobile users topping up their phone allowances via on-demand credit extensions prior to hurricanes making landfall.

Source: Let’s Talk Payments

The following image shows the ratio of airtime credit extensions to cash top-ups as the eye of Hurricane Irma hit the Leeward Islands as well as Turks & Caicos.

Source: Let’s Talk Payments

As Irma made landfall, purchasing airtime from shops become extremely difficult, if not impossible. The graph above shows what happens when cash based-top ups are not possible.

For these reasons, creating a mobile financial identity in order to provide mobile credit remains the best place to start to address financial exclusion in many parts of the world and smartphones are the most logical vehicle for providing it. Nearly 80% of people all across the globe have prepaid phones, and there are nearly $1 trillion in transactions taking place every day.

Anger and confusion as crypto traders lose thousands in ‘flash crash’ on $ 54 billion exchange (Business Insider), Rated: A

A “flash crash” on the world’s biggest cryptocurrency exchange has left customers demanding answers and refunds, with many claiming to have lost thousands of dollars.

The price of cryptocurrencies NEO, OMG, and ETP crashed as much as 90% in minutes on the Bitfinex exchange on Wednesday before quickly bouncing back to former levels.

The price crash led Bitfinex, the world’s largest cryptocurrency exchange by daily volume, to close the positions of many traders who had placed leveraged bets on these digital currencies. Leveraged trading involves borrowing money to increase exposure.

Brett Kruger, a Bitfinex user affected by the “flash crash”, told Business Insider he is unhappy with Bitfinex because he claims the website was “lagging, unresponsive” at the time of the crash. He said he was also repeatedly logged out of the website, blaming recent DDoS attacks. Bitfinex announced last Sunday that it had been hit by a distributed denial of service (DDoS) attack, a malicious attack meant to bring down the service.

Etherecash Provides Lawyer-backed Platform to Secure Loans Against Your Own Cryptocurrency (Coinspeaker), Rated: B

EthereCash, is a three prong financial platform, wants to eliminate borders, intermediaries and prejudices, providing access to bank services for everybody. It makes all the tedious and lengthy bank operations simple, transparent and secure.

ID Finance strengthens board with ex-CEO of 4finance (ID Finance Email), Rated: A

ID Finance, the emerging markets fintech company, has strengthened its board with the appointment of Kieran Donnelly, ex-CEO of, 4finance, as a board advisor. The appointment will support ID Finance as it continues rapid expansion and further diversification of its business.

Kieran Donnelly served as CEO at 4finance, the European online and mobile consumer lending group for three years. He brings over 30 years of management experience to ID Finance having also held senior roles at Standard Bank Group, MDM Bank and Renaissance Group.

India

India’s Small Businesses Are Ready To Boom, Thanks To Fintech (Forbes), Rated: AAA

In 2017, India ranked second in the growth rate of fintech adoptionamong digitally active consumers across the globe; this surge was paralleled by the rise in fintech funding — receiving over $200 million in the first half of the year.

The financial services market in India is primarily untapped, with 40% of the population having no association with any bank, and more than 80% of the transactions carried out through cash.

Economic analysts predict that the next impetus for growth in the Indian economy will come from SMBs and startups.This is a great opportunity for the fintech industry, especially startups, to make it easier for SMBs, including kirana and mom-and-pop stores that are looking to gain access to capital and grow their business, by providing services where traditional banks and lenders have failed to reach, or have done so at a far higher cost. For example, Mumbai-based online loan platform, SMECorner.com, offers business loans to SMBs with virtually zero collateral.

Online lifestyle renting firm Rentickle.com raises $ 4 M in equity and debt (YourStory), Rated: A

Delhi-NCR-based lifestyle products rental portal Rentickle.com today announced it has raised $4 million in a fresh funding round. The fundraising is a combination of equity and debt.

The equity portion was led by Ajay Relan, Founder and Chairman, CX Partners, and ThinKuvate, a Singapore-based VC firm, with participation from existing investors. Delhi-based NBFC, DMI Finance Pvt Ltd, extended the company a debt line. Rentickle.com had raised $250,000 seed funding in early 2016.

P2P Easy Extends Services As The Fastest Growing Peer-to-Peer Money Lending Platform In India (Digital Journal), Rated: B

‘P2P Easy’ is a recently founded online platform that works hand in hand with borrowers and lenders for fast loan processing & acceptance.

Although the idea of loaning money dates back to the time when the first bank was established, the core issues are more or less the same to date – i.e. 90% borrowers are rejected, and lenders are skeptic due to a lack of any reasonably acceptable guarantee.

APAC

Culum Capital launches online platform for alternative investment (HedgeWeek), Rated: A

Culum Capital, a Singapore-based receivables and supply chain financing provider, has launched a new investor platform, which is aimed at accredited and institutional investors around the globe, and provides invoice financing to SMEs as an alternative to traditional financing sources.

The platform uses its proprietary credit scoring and on-going risk measurement to identify optimum investment opportunities and provide transparency. The transactions carry a short tenor of maximum 120 days, with the average transaction at 70 days. Annualised gross returns are between 10 and 25 per cent, with a strong SME diversification.

Fintech versus financial inclusion: What’s the difference? (DevEx), Rated: A

Mobile phones have introduced a sea of opportunities in every sector imaginable, and that includes in finance. Today, anyone with a cellphone can engage in one form or another of cashless transaction, be it paying bills, sending phone credit, transferring cash, or buying goods and services — even in flea markets.

But what makes this a game changer in the financial sector is how it has penetrated different levels of society. This applies particularly to the unbanked, who are unable to access formal financial institutions and often borrow money from informal lenders who may charge high interest rates and where there is no guarantee of consumer protection.

In recent years, new technologies have emerged that are being used to complement and further what mobile money has achieved: machine learning, peer-to-peer lending, biometric technology, cloud computing, and blockchain, among others.

A conscious effort to ensure all these innovations work for the unbanked

But just because it’s fintech doesn’t necessarily mean it covers financial inclusion.

In fact, a number of the technologies being adopted in the sector are largely aimed at consumer convenience instead of the unbanked.

Authors:

George Popescu
Allen Taylor

Friday December 1 2017, Daily News Digest

interest rate sensitivity

News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]

interest rate sensitivity

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

Affirm Joins Forces With Shopify Plus to Help High Growth Retailers Rapidly Scale Online Store Sales (BusinessWire), Rated: AAA

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.

Affirm App Gives Loans For Designer Jeans, Holiday Flights And More (International Business Times), Rated: A

Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.

“We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”

According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.

Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA

In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?

The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:

  • Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
  • Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
  • Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
  • U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
  • Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
  • The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.

Read the full report here.

Dudley Says Fed Has Started Thinking About Official Digital Currency (WSJ), Rated: AAA

Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.

Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.

Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.

THE FINTECH EFFECT: AMAZON, GOOGLE, AND THE DISRUPTION OF SMALL BUSINESS LENDING (The Boss Magazine), Rated: AAA

If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.

Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.

While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.

The Magnificence of Micro Loans

Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.

Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.

Small Business Domination

Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.

Payday lending group plans to sue the Consumer Financial Protection Bureau (USA Today), Rated: AAA

The Community Financial Services Association of America plans to challenge one of the federal watchdog’s signature achievements could signal how the consumer bureau’s previous enforcement policies will shift under new Trump administration leadership.

The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.

Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.

Federal judge refuses to block Trump’s designation of Mulvaney as interim head of CFPB (Legal NewsLine), Rated: A

A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.

Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.

English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.

Payday lender going public as new sheriff takes over at CFPB (Seeking Alpha), Rated: B

Curo Group is looking to raise about $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each. Prospectus here

Marlette Funding President Offers Insight on Personal Loan Market (LendEDU), Rated: A

Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?

A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.

Q: What sort of future do you see for blockchain technology in the Fintech personal loanmarket? What sort of challenge would its implementation pose to Fintech lenders?

A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.

For Workers In A Pinch, Start-Ups Experiment With No-Interest Loans (Forbes), Rated: A

Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.

Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.

In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.

Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.

According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.

YieldStreet CEO Milind Mehere: Excited about Growth and YieldStreet’s Future (Crowdfund Insider), Rated: A

Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.

Erin: On what other elements of your YieldStreet street vision are you currently working?

Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.

Erin: How do you expect YieldStreet to grow? How do you source deals?

We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.

Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?

Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.

Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025?  How do you predict the sector will change and be disrupted?

Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.

Innovative Approaches to Expanding Home Availability and Affordability (Lend Academy), Rated: A

It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.

SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.

Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.

PWC CHARGE: ASSET MANAGERS ARE DIGITAL TECH ‘LAGGARDS’ (AllAboutAlpha), Rated: A

In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”

But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”

Lincoln Financial Network Launches Integrated Technology Platform to Drive Greater Client Engagement and Collaboration in Financial Planning (BusinessWire), Rated: A

Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.

Banks resist pressure to raise rates, but for how long? (American Banker), Rated: A

Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.

A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.

U.S. regional banks delve deeper into advisory services to boost growth (NASDAQ), Rated: A

Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.

U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.

That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.

RICH PICKINGS

The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.

Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.

Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.

KeyBank Forms Strategic Partnership With Snapsheet To Provide Powerful Insurance Claims Payment Solutions (PR Newswire), Rated: A

KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.

Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.

Concord President & COO Shaun O’Neill to Lead Panel at Marketplace Lending Conference in New York City (PRWeb), Rated: B

Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.

LendingTree Logo To Appear On Greensboro Swarm Jerseys As Part of Company’s Partnership With Hornets (NBA.com), Rated: B

The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.

Family loans: How to dodge the drama (Work IT, SOVA), Rated: B

There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.

Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.

BORROWERS: EXHAUST OTHER OPTIONS FIRST

When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.

Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.

LENDERS: ASSESS THE REASON FOR THE REQUEST

If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?

United Kingdom

Funding Circle IFISA motors ahead with instant sign-ups (P2P Finance News), Rated: AAA

Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.

The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.

The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

Assetz Capital Announcement: Soon to Launch IFISA Set to Include Manual Lending (Crowdfund Insider), Rated: AAA

The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.

Digital banking: a tough way to make money (Financial Times), Rated: A

It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?

Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.

P2PGI unveils new strategy that speeds up timetable for target returns (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) has brought forward its timetable for reaching its target returns of six to eight per cent after unveiling its new portfolio strategy on Thursday morning.

The investment trust said it now expects to provide a dividend of at least 15p per quarter by the end of the second quarter of 2018, which analysts say reflects an annualised yield of 7.8 per cent.

LendInvest: How our BTL launch will fill the portfolio landlord lending gap (Mortgage Solutions), Rated: A

The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.

In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

Three reasons why investors must consider alternative lending (Money Observer), Rated: A

With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.

Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.

China

Was 2017 the year that Chinese fintech grew up? (Ecns.cn), Rated: A

While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.

Decline of P2P, robo-advisors

One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.

China leverage and shadow banking biggest threats to growth (The Asset), Rated: A

FINANCIAL system leverage and shadow banking pose the biggest threat to China’s economic growth, according to a live poll of attendees at the Fitch on China Forum.

The forum was organized by The Asset in association with Fitch Ratings and held on November 30 at the Four Seasons Hotel in Hong Kong.

Source: The Asset

Ant Financial and QCash scoop FT fintech awards (Financial Times), Rated: B

A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”.

European Union

KappAhl first to offer mobile payments in store with Klarna (NB Herard), Rated: AAA

KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.

This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.

The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.

Fintech company Deposit Solutions raises $ 20 million from existing investors (Tech.eu), Rated: A

Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.

The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.

Why Scandinavia’s Biggest Bank Is Setting Up Its Own Fintech Startup Fund (Forbes), Rated: A

The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.

A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.

Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.

Nordea invests in fintech company Betalo (Nordea), Rated: B

Nordea is investing in the fintech company Betalo. This takes our partnership with the Swedish company to the next level after a cooperation agreement was signed in March 2017.

PSD2 BRINGS DELAYED DISRUPTION TO THE FINTECH ECOSYSTEM (TechSavvy), Rated: A

A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.

The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.

American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.

Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.

International

Blockchain P2P Lending, Sending, and Spending: Etherecash Garners Support from Over 40,000 Contributors During Pre-ICO (Digital Journal), Rated: AAA

A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.

The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.

On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.

Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.

Australia

Treasurer of Australia Scott Morrison Visits Online Lender Prospa’s New Office in Darlinghurst (Crowdfund Insider), Rated: AAA

Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.

Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.

India

KrazyBee looks to expand in Tamil Nadu (The Times of India), Rated: A

Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.

KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.

Asia

Asian banks’ operating income could be hit by fintech disruption (Channel News Asia), Rated: A

Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.

For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.

 

Mobile wallets taking hold in Asia (The Asset), Rated: A

WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.

In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.

Canada

Activists across Canada demand fair banking for low-income people (TheStar), Rated: AAA

At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.

He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.

Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.

Mobetize’ CEO to speak at first BC Tech Association FinTech Day (Globe Newswire), Rated: B

Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.

Authors:

George Popescu
Allen Taylor

Wednesday November 22 2017, Daily News Digest

delinquent credit cards

News Comments Today’s main news: Ron Suber shares lessons learned from his first 120 days in ‘rewirement’. Paytm invests in CreditMate. Faruqi & Faruqi law firm investigates Qudian. China clamps down on microlending. Australian alternative lenders make Fintech 100. Today’s main analysis: Americans having trouble paying off credit cards. Today’s thought-provoking articles: Alt lenders accuse banks of not following […]

delinquent credit cards

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

LESSONS FROM THE FIRST 120 DAYS OF REWIREMENT (Ron Suber), Rated: AAA

The first 120 days were filled with new languages, cultures, histories, beliefs, and people. I visited four foreign lands that were completely new to me, and no, New York and Silicon Valley were not on the itinerary.

Here are some lessons I’ve gained from the journey.

  • LESSON 1: Being first, ahead of your time and unique doesn’t guarantee success and longevity.
  • LESSON 3: The USA credit card and payments industry has a long way to go to catch up. No one (and I mean no one) swipes a credit card nor inserts a chip credit card in a machine and then signs a paper receipt in Australia and Singapore.
  • LESSON 4: There is still a huge opportunity to disrupt the currency exchange market. Upon arriving in Australia, I went to change US dollars to AU currently and was faced with: “No, you are not a customer” or “Yes, no problem” followed by a bad conversion rate and a 12% fee!
  • LESSON 8: New and old global giants are awakening to the FinTech Golden Age and responding accordingly, albeit slowly. Singapore is now a major global financial center that has come a long way very fast, and generally not focused on the short term.

The big successes are coming to those thinking long term (Bezos/Musk), the balance of power is shifting globally and the best is yet to come!!

P.S. Two young new FinTech companies to watch: Finch and Friendly Transfer. (No, I am not invested…yet)

US law firm launches investigation into star Chinese payday loan lender Qudian (SCMP), Rated: AAA

Qudian, the Chinese online payday loan platform, could be facing a rash of class-action lawsuits in the US after its share price tumbled drastically this week on the New York Stock Exchange, triggering concerns over the integrity of the firm.

New York-based law firm Faruqi & Faruqi, is now encouraging investors in Qudian to get in contact with it, as it is now “investigating potential claims against Qudian”, it said in a statement. Qudian was unavailable for comment.

Shares in the leading provider of online small consumer credit in China tumbled 5.28 per cent on Monday to close at US$20 in New York, 16.7 per cent down from its IPO price of US$24, and more than 40 per cent down from a historic intraday high of $35 reached on its trading debut on October 18.

Source: South China Morning Post

Americans are having trouble paying off their credit cards — and it could spell trouble for the economy (Business Insider), Rated: AAA

US credit-card debt recently surged to record highs, surpassing peaks seen before the 2008 financial crisis. Several large US banks and credit-card companies reported a rise in credit-card delinquency rates for August, the second consecutive monthly rise.

Source: New York Fed
Source: New York Fed

Fed funds is just 1% to 1.25% after four increases starting in December 2015, and yet many Americans pay credit-card rates well into the double digits.

Banks aren’t following CFPB data-sharing guidance, fintechs say (American Banker), Rated: AAA

Some fintechs are accusing financial institutions of not following either the spirit or letter of the data-sharing principles the Consumer Financial Protection Bureau released in October.

One of fintechs’ primary accusations is that banks are selectively choosing fintechs to work with — leaving the rest out in the cold. Though the CFPB data-sharing principles do not spell out that banks should work with everyone equally, the spirit of the document suggests financial institutions should work with all trusted third parties.

Capital One has signed agreements with five fintechs and data aggregators—Clarity Money, Intuit, Abacus, Xero and Expensify—since introducing its data-sharing application programming interface in February. It says more are in the pipeline.

Banks have too many conflicting requirements

Another issue cited by fintechs is that it’s tough dealing with each bank’s different set of standards and requirements.

“Some of those standards may be in conflict,” Petralia said. “It can take years to comply with a bank’s requirements and it probably eliminates access to newer startups, to smaller businesses that don’t have a lot of cash sitting on their balance sheet, to support that kind of long lead time for legal requirements.”

Early Stage Investing vs. Real Estate Investing: Similarities and Differences (Crowdfund Insider), Rated: A

Both venture capital (VC) investing and real estate investing involve some level of risk assessment, they both have the potential for big returns, and investors have the opportunity to help someone else reach a desired goal. Despite this common ground, there are some distinct differences.
Private Equity Investing
To realize returns on this type of investment, investors must understand the different stages of the startup cycle, how to evaluate a business plan, understand how to assess talent, technology, and business processes to determine whether a startup has the potential to succeed, and know how to judge market forces that could have an impact on the startup company.
Real Estate Investing
Real estate investments can be structured in many ways to benefit investors who are looking for specific types of returns. For instance, house flipping (Fund That Flip and Peerstreet) or commercial or multifamily flips (Sharestates and Patch of Land) offer short-term gains while rental properties (Roofstock and HomeUnion) offer long-term passive income. Commercial real estate investing (CrowdStreet and RealtyShares) may involve property development or long-term leasing with spans of three, five, ten years or more. New REITs (FundRise eREITs and MogulREIT) offer investors a way to invest in multiple properties or types of real estate through a single vehicle. Real estate funds or portfolios (AlphaFlow) also allow investors to diversify their debt investments through a single vehicle.
How to Evaluate an Early Stage or a Real Estate Crowdfunding Opportunity
Due diligence in real estate investing is also important. Basic criteria for evaluation include:

  • The platform – Does it have a strong financial position and available capital? Is the underwriting done in-house or outsourced? What is the background and experience of management team? What is their plan for insolvency, recouping losses, and managing risk?
  • Fees – Every investment involves opportunity cost. Is there an ongoing management fee, or does the investor pay a percentage based on returns or total portfolio size?
  • Borrowers – How does the platform assess borrower track record and credit? 
  • The investment – What is the developer’s business plan? What are the expected cashflows, expenses and projected returns? What is the loan-to-value before repairs and after repairs? Are investors in a first-lien position or second? Where is the property located?

CFPB, CashCall Spar Over Possible $ 287M In Restitution (Law360), Rated: A

The Consumer Financial Protection Bureau squared off against CashCall Inc. and its affiliates in California federal court on Monday about whether it would be appropriate to make the online lender pay as much as $287 million for deceiving consumers, with the CFPB calling the company’s loans “financial snake oil” and CashCall saying its business was legitimate.

JPMorgan, Goldman Sachs Trial DLT for Equity Swaps (Coindesk), Rated: A

A group of major financial firms including JPMorgan Chase and Goldman Sachs has trialed the exchange of equity swaps over a distributed ledger (DLT) system.

By carrying out trades across a network where all parties use the same valuation data and share the same books, in theory, payments can be processed nearly instantaneously and disputes over transactions will be less likely.

Small Business Saturday: Why Banks And Businesses Need To Start Playing Offense (Forbes), Rated: A

Similarly, while I do believe the banking industry has made strides in embracing technology over the past few years, the reality is that far too many bankers are still “playing defense” when it comes to fully integrating technology into every aspect of their business.

Finastra Universe introduces Sophia the humanoid robot (Finastra Email), Rated: B

I wanted to invite you attend Finastra Universe in New York on Tuesday, December 5thFinastra Universe is a one-day global executive event series focusing on fintech and the future of financial services.

The event will include panel and Q&A sessions, where Finastra experts and guest speakers will explore how financial firms can leverage new, more dynamic technologies within lending and other areas to improve internal efficiencies, deliver connected customer experiences and enhance business outcomes.

I’ve included a link to the full agenda Where: Marriott Marquis Times Square, 1535 Broadway, New York

When: Tuesday, December 5th, 2017
 
Click 

Financial tech is a big business. What Charlotte’s doing to become a larger player. (Charlotte Observer), Rated: B

More than 125 people attended the inaugural Southeast Fintech Venture Conference on Monday to hear presentations from investors, fintech success stories such as small-business lender Kabbage and new firms just getting off the ground, including some from Charlotte. Sponsors included investment firm Frontier Capital and asset manager Barings, which hosted the event at its new Tryon Street headquarters.

According to the National Venture Capital Association, Charlotte-area companies brought in about $393 million in venture capital investments in 2017, led by a $300 million round for payments company AvidXchange.

United Kingdom

Consumer credit – walking the regulatory tightrope (Lexology), Rated: AAA

Subprime and near prime lending have been subject to intense regulatory scrutiny during the aftermath of the financial crisis. The global economic crisis that took hold in 2007 has largely been attributed to the widespread practice of irresponsible lending to consumers, often with no means of repayment. In 2013, StepChange Debt Charity reported that the average payday loan debt of its clients was £1,657, whereas the same clients’ average net monthly income was a much lower £1,379.

Following the transition in regulatory regimes from the OFT to the FCA, a series of tougher measures have been introduced to move staunchly away from the lending practices which allowed firms such as payday lender Wonga to maintain a representative APR of 5,853% in 2013. The FCA has made it clear that it regards non-standard finance as a “high risk” activity and as such dedicates special resources to intensively monitoring businesses in this sector.

Almost half of SMEs have never checked their credit score (Bridging&Commercial), Rated: A

Nearly half of SMEs (44%) have never checked their credit score, according to the latest research from RateSetter’s business finance division.

RateSetter’s research also found that a further 6% of businesses had not checked their credit score within the last 12 months and only 18% had viewed their score within the last six months.

Never mind the Brexit: Alternative finance offers a route to prosperity (Startups.co.uk), Rated: A

It is a little over a decade since Northern Rock became the first UK bank in 150 years to fail because of a run on its deposits. For a brief moment it looked as if the entire global financial system might collapse overnight, with only government intervention and billions in bail-outs preventing a worst-case scenario.

According to data from the Office for National Statistics (ONS), the number of small businesses that were successful in their attempt to get a loan fell from 90% in 2007, to 65% in 2011.

According to our latest research, just 43% of small business owners see trading conditions improving in the coming year. Meanwhile 52% of start-up business owners say they do not think banks will continue to lend at the same levels in 2018.

More than half of the 1,000 small business owners we surveyed say they are planning to grow or expand their business in 2018.

These alternatives to traditional forms of lending are proving particularly popular among the 96% of UK businesses that employ fewer than 10 people.  According to our research, 40% of start-ups and younger business owners say the growth of alternative finance options has made them less reliant on banks for funding.

Investment Committee: Arnaud Gandon, Heptagon Capital (Citywire), Rated: A

One area of credit we find attractive, however, is lending to small businesses in the UK and Europe. The opportunity set for companies such as Funding Circle is growing fast, due to the retreat of traditional banks in providing loans for smaller companies. During the last quarter, Funding Circle outstripped the major high street banks for net new loans. We see the company essentially as a technology platform enabling the efficient issue of small loans to thousands of companies. It has a solid management team and is looking to expand its successful business model to other geographies.

Here’s what the UK’s fintech community is most concerned about over Brexit (Verdict), Rated: A

Fintech is now worth over £7bn to the UK economy every year and employs around 60,000 people, according to the Treasury office.

Marta Piekarska, director of ecosystems at Linux Foundation’s Hyperledger project, said she believes Brexit will impact fintech in the UK because it will make things harder for collaboration.

“About half of our developer workforce today are non-UK European nationals. Already it is hard to find great developer talent in the UK.  Obviously, if freedom of movement isn’t as easy and non-UK EU nationals feel that it’s not really a nice environment to come to the UK to work, then we will have a problem.”

Open Banking: How can customer centricity drive innovation? (City A.M.), Rated: A

The Payments Services Directive (PSD2) is a major piece of UK/EU legislation that will ensure that all payment service providers (PSPs) that operate in the single market are subject to rigorous supervision and adhere to the appropriate transformative rules to create a fair, open-banking framework.

In practical terms, a customer will be able sign up for a loan, credit card or a mortgage by using a log-in that looks and feels a little bit like Facebook Connect and authorises the provider to see all of the customer’s financial transactions from the previous 36 months. The main gatekeepers and one of the leading innovators in this space are London-based FinTech company TrueLayer. As the go-between between a customer, their bank and the product or service provider, they ensure real-time, secure connectivity of the customer’s data.

Blockchain Based Building Platform BitRent Announces Token Sale (The Merkle), Rated: B

BitRent has given itself a mission: to make real estate investing easy, transparent and profitable all over the world. The platform uses a combination of techniques that will allow its users to control construction processes. These techniques include BIM open modeling and computer aided monitoring using RFID chips, to make investing in commercial and residential shared-equity construction more transparent and predictable. On the platform, investors can invest in real estate, without a minimum entry threshold. The online mode allows them to control construction processes and receive dividends when the construction has been completed. Moreover, users can receive data on free area or items of commercial property.

The BIM (Building Information Modeling) technology that the platform uses, allows all users of the platform to monitor a project at any stage.

The platform will release its RNT tokens, based on Ethereum. The token sale will start on the 1st of December 2017, 11:00 UTC and will last till March 1, 2018.

China

China clamps down on online micro lending; U.S.-listed shares plunge (Reuters), Rated: AAA

China took steps to rein in the rapidly growing and lightly regulated market for online micro-lenders in the government’s latest crackdown on internet finance, sending shares of U.S.-listed Chinese financial firms into a tailspin.

A top-level Chinese government body issued an urgent notice on Tuesday to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders, sources who had seen the notice told Reuters.

The multi-department body, tasked by the central government to rein in risks in the internet finance sector, also told local regulators to restrict granting of new approvals for micro-loan firms to conduct lending across regions, according to the sources.

Shares Of Chinese Online Credit Providers Crash Over Crackdown Fears (NASDAQ), Rated: A

Shares of Qudian ( QD ), Yirendai ( YRD ) and other China-based providers of online credit plunged Tuesday on reports that China’s Internet Financial Risk Management Group had ordered a suspension of online small-loan approvals, but some stemmed their losses by session’s end and others even gained ground.

In addition to Qudian and Yirendai, also falling were China Rapid Finance ( XRF ) and PPDAI Group ( PPDF ).

U.S.-listed Chinese financial firms dive on regulatory action (Reuters), Rated: A

Shares in online lender Qudian (QD.N), whose shares only debuted last month, sank by as much as 20 percent in early trading.

Shares of China Commercial Credit Inc (CCCR.O) fell 6.4 percent, those in PPDAI Group (PPDF.N) some 17.8 percent. Jianpu Technology (JT.N), which also debuted just this month, fell 9.5 percent and China Rapid Finance (XRF.N) slipped 12.92 percent.

From Drone Hackers to Cyber Bodyguards, China Cyber Security a Growing Concern (China Money Network), Rated: A

Q: What major trends are you seeing in China’s cybersecurity market?

A: I think the major trend in China is similar to what is happening in the rest of Asia. The frequency and extent of cyber-attacks are increasing rapidly.

Q: What Chinese business sectors are most vulnerable, or need to do more to protect themselves?

A: Tech companies with lots of portals to its websites, especially like peer-to-peer lending, or any tech companies with valuable intellectual property are prime targets of cyber attacks.

Q: What should Chinese tech companies be doing to defend themselves, or at least reduce the damage done by cyber attacks?

A: Firstly, employee education is important. Over 90% of hacking is conducted through phishing and spear phishing. We have worked with a Chinese company with 20,000 employees, and we sent 20,000 emails to them with a link offering a chance to win iPhone. 30% of the staff clicked on the link, which actually is a quite regular percentage. In a real-life scenario, if 30% of your 9000 staff were to click, that’s 3000 cases of malware potentially downloaded into your systems. But after phishing training, finishing the exercises, the number was reduced to 5%.

Q: There are reports saying cyber security experts “cyber bodyguards” is one of the hottest jobs in China. What particular specialty expertise faces the greatest shortage?

The “cyber bodyguards” are in a booming industry, particular for providing preventative measures. Firstly, there are the penetration testers; also known as ethical hackers or white hat hackers. They replicate what a real hacker would do; not stealing any data or doing anything bad, but will scan systems for any gaps and weaknesses in the company’s defenses that may be exploitable during a cyber attack. They will then advise on remediation measures.

European Union

EBA weighs up risk and rewards of Fintech in new Discussion Paper (FinanceJobs.ie), Rated: AAA

The European Banking Authority takes a cautious and carefully balanced view in its deliberations on how it should approach FinTech in its latest Discussion Paper. In reviewing the FinTech landscape in Europe the EBA raises many more questions than it answers, concluding that it should undertake much more detailed follow-up work in a number of areas. But it does raising warning flags about possible unevenness in the playing fields offered by different jurisdictions, in the area of sandboxing and innovation hubs, for example.
Overall, the The European Banking Authority says, FinTech may increase competitiveness in the Single Market by lowering barriers to entry for newcomers while preserving fair competition and incentives to innovate.

The EBA says a significant increase in overall operational risk has been witnessed in the last few years, including higher conduct risk, increased cybersecurity issues and digital fraud issues, and increased outsourcing risk. ‘At the same time new or previously immaterial risks, such as the risk of mismanagement of personal data / lack of data privacy, seem to be amplified by the lack of expertise of human resources and the inadequacy of technology infrastructures.’

It points out that alternative lending platforms such as peer-to-peer lending can put pressure on the interest income from loans of existing credit institutions while new entrants offering commoditised products and services at lower costs, such as money transfers and brokerage, can reduce the fees and commission income of established players.

DreamQuark beefs up financial services through artificial intelligence (TechCrunch), Rated: A

Meet DreamQuark, a French startup that wants to help banks, insurance companies and asset management firms with all of their artificial intelligence needs. DreamQuark crunches your data, creates models based on machine learning and lets you apply those models on all past and future data points.

International

Robeco launches fintech investment fund (Finextra), Rated: A

Robeco has launched a Global Fintech Equities fund to give wholesale and retail investors exposure to companies that are transforming the financial sector.

The actively managed fund will invest in three distinct segments, labelled ‘today’s winners’, ‘fintech enablers’ and ‘challengers’. Today’s winners include companies that already have a competitive advantage in this space, fintech enablers provide the digital backbone for emerging companies, and challengers are the companies that have the breakout potential to stand out from the pack.

Following a successful pre-ICO, Etherecash has announced a public ICO that launched November 15th and will end December 19th. Focusing on the 2.5 billion unbanked, Etherecash looks to excel in both spending and sending, as well as providing a peer-to-peer lending platform, to enable those with little or no credit history the ability to access funds.

The ICO sale will auction off 144,000,000 tokens, which will help support ongoing development of the platform and can be purchased with Bitcoin or Ethereum. A bonus of 12% is available for participants in the first week, which goes to 3% in week four, and finally to 0% in week five.

The ICO has a soft cap of $15 million, which if not reached, will conclude the ICO as a failure with funds returned to the respective investors. The hard cap is set at $100 million. 40% of funds will be used for further core development; 25% in growth and marketing; 20% for legal, accounting, and advisory feeds; and the remaining 15% for admin and operational costs.

57% of internal frauds are carried out by senior and middle management, according to the whitepaper.

Australia/New Zealand

Aussie lenders make Fintech 100 list (TheAdviser), Rated: AAA

Ten Australian companies have been listed in KPMG’s Fintech 100 list, which identifies the top 50 fintech firms and an “emerging 50” list of companies “seeking to boldly push the envelope in financial services”.

Online SME lender Prospa was the highest ranked Australian company at number 24. It also placed second on the Australian Financial Review’s Fast 100 list after averaging a 239 per cent revenue growth since 2013–14 and holding $50 million in equity and debt funding in 2017.

US-based lender OnDeck, which broke into the Australian market in 2015, placed 28th in the ranking, up two places from last year’s report, while German fintech Spotcap (which also has operations in Australia) came in at number 32.

How I’m Saving a Week (or ,500 This Year) on My Home Loan (Mozo), Rated: A

Fast forward to three months ago, when I suddenly realised my rate of 4.27% was more than 60 basis points higher than the best on the market. I had become a victim of that time honoured tradition of banks fattening profit margins and it was time to do something about it.

I knew there were now stacks of lenders offering rates below 4.00%, and after comparing the best loans decided to go with an online lender to take advantage of their super low variable rate of 3.64%.

India

Paytm invests in online lending startup CreditMate (VC Circle), Rated: AAA

One97 Communication Ltd, which runs mobile wallet firm Paytm, said on Tuesday it has picked up a stake in Mumbai-based fintech startup CreditMate.

CreditMate helps two-wheeler dealers and financiers assess and approve vehicle loans to customers with no formal credit history, Paytm said in a statement.

8 ‘blockhain hacks’ which NITI Aayog, AWS, Microsoft, Accel, Coinbase believe are beneficial for society (YourStory), Rated: AAA

Anshul said that there is a lot of hype and misconceptions related to blockchain. He explained that outside of a small group of crypto-savvy investors and developers, blockchain is often synonymous with cryptocurrency, and erroneously so. Their goal with this hackathon was to give developers (with or without past blockchain experience) a chance to envision how the same distributed ledger technology that powers Bitcoin might be able to improve transparency, efficiency, and honesty in enterprise and government processes, particularly in regions of the world suffering from high corruption.

Anshul added that another objective of the event was to explore use cases for concepts like IndiaChain — a blockchain infrastructure for a Digital India, building on existing initiatives like Aadhar, the world’s largest biometric identity project with unique 12-digit IDs for 1.2 billion Indian residents.

Gif credit- Proffer

Here are eight hack projects recognised by the partners.

  • 1. SWASHchain: a battery SWApping and SHaring infrastructure verified on the blockchain
  • 2. AgroChain: tracking farm products from farmer to consumer
  • 3. chAIn: decentralised AI with Homomorphic Encryption to guarantee data privacy
  • 4. Betoken: decentralised Hedge Fund for social impact investing
  • 5. Open Complaint Network: crowdsourcing issues and rewards
  • 6. 0xSHG: zero-interest loans for rural microfinance – Hence the team believes that blockchains are a unique solution which address both issues by organising not just financial capital but also social capital. The team has created an Aadhar-linked capital-pooling network.

  • 7. SureFly: last-minute crowdfunded insurance for flight delays – Insurance premium is calculated as a function of the probability that a passenger will miss a flight which is in turn a function of flight time, insurance seeker’s distance from the airport, traffic on the roads, length of airport lines, etc.
  • 8. MyH2OBot for “Habit Economics”

Sharing economy: creating opportunities in the digital era (livemint), Rated: A

The rise of the sharing economy is commonly attributed to culture or ideology. It’s assumed that millennials don’t want to be trapped by houses, cars and other expensive belongings, for example, or that they believe sharing is good for the environment.

Research conducted by the BCG Henderson Institute (BHI) indicates that economics, not attitude, is driving the sharing economy.

Among respondents who use sharing services, 40% of Germans, 57% of Americans and 67% of Indians said that well-priced, convenient offers could convince them to abandon ownership altogether.

Aside from physical assets, investors have also poured $5.7 billion into peer-to-peer lending ventures.

Start-ups by no means have a lock on the sharing market, however. In fact, 55% of consumers in India said they would prefer dealing with established operators—the highest among the countries surveyed.

Asia

Banyuwangi Regent Anas Connects MSME with Fintech Startups (Netral News), Rate: A

Banyuwangi Regional Government will again partner with digital platform startups to develop the region.

After with Gojek ride-hailing service provider, there are several more similar companies that will be embraced. One of them is the startup of financial technology (fintech), especially for financing facilities to micro, small and medium enterprises (MSME).

Canada

CANADIAN PAYMENTS INNOVATION FORUM SAYS COLLABORATION CONTINUES TO DRIVE FINTECH INNOVATION (Betakit), Rated: A

At the third annual Canadian Payments Innovation Forum in Toronto, over 100 payments and banking executives gathered to examine how FinTech is transforming the Canadian financial services industry, and what providers can do to prepare.

After launching with Samsung Pay earlier this year, Gamble indicated that ‘cash alternatives’ would continue to be a focus and something to watch in the market. Due to Interac’s smaller size (the company has about 250 employees), Gamble said they just don’t have the “bandwidth” to do everything themselves, so turning to partnerships is key.

“We strive to deliver alternatives to cash, and as a community, we’ve done an amazing job of delivering contactless capabilities at POS. Canadians moved more than $90 billion in etransfers this year, so our little country is significantly leading the space in P2P transfers.”

AI is already moving forward quickly in financial advice and management, and the use of financial technology, or fintech, seems to be growing among older Canadians.

“Our average client is 47 years old and our second largest demographic group is baby boomers,” says Randy Cass, CEO and founder of Nest Wealth, a Canadian financial robo-advisor that was founded in 2013.

“For retirement planning, the AI isn’t necessarily cutting the financial advisor out of the process. What we’re likely to see is AI helping the financial advisor to get faster and more comprehensive data analysis and provide more seamless client support,” Mr. Narvey says.

Authors:

George Popescu
Allen Taylor

Monday November 13 2017, Daily News Digest

p2p lending credit score

News Comments Today’s main news: SoFi cancels plans for Australia, Canada. SoFi completes largest consumer loan securitization to date. Elevate launching credit card for sub-prime consumers. Funding Circle posts record month. Zopa developing IFISA transfer features. PPDai debuts weakly in New York. WeLab raises $220M for expansion. Australia upgrades RateSetter. Today’s main analysis: Three Myths of Peer-to-Peer Lending. Today’s thought-provoking articles: Cleveland […]

p2p lending credit score

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

MENA

Africa

News Summary

United States

SoFi drops plans to enter Australia, Canada (Death Rattle Sports), Rated: AAA

Online lender Social Finance Inc said on Thursday it is pulling back from expanding into Australia and Canada as previously planned, choosing instead to focus on improving its core lending products like student loans and mortgages in its home market.

The San Francisco-based company will also drop its plans to push into asset management, according to a letter from its interim CEO to shareholders and seen by Reuters.

SoFi Completes Largest Consumer Loan Securitization to Date (Crowdfund Insider), Rated: AAA

On Friday, SoFi announced it has completed a $727 million issuance of SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”) notes, making it the largest offering of securities backed by consumer loans and is SoFi’s 11th ABS transaction this year, bringing the lender’s total issuance for 2017 to $6.1 billion. 

Fintech Company Elevate Launching a Credit Card for Sub-Prime Consumers (LendEDU), Rated: AAA

Elevate, a fintech lender from Texas, recently announced it wants to try out the credit card business according to Business Insider. On Monday, the company released its plans for 2018 which included a variety of new products and a possible partnership with a bank.

One of the products that Elevate is looking to release is a credit card with a third-party bank by next year. The card would be potentially geared toward subprime borrowers, which constitutes a large group of Elevate’s customer base.

Another company, Petal, is trying to offer a new credit card in 2018. It’s goal is to increase the availability of credit cards to consumers who are lacking credit.

Fed researchers compare P2P lending to subprime mortgages (Finextra), Rated: AAA

The peer-to-peer lending industry has the potential to destabilise consumer balance sheets, with loan performances bearing a striking resemblance to the subprime mortgage market before the 2007 crisis, warns a new paper from the Cleveland Federal Reserve.

And things could get much worse, warn the Fed researchers after looking through credit bureau data on 90,000 people who took out P2P loans between 2007 and 2012 and comparing them to 10 million traditional borrowers.

The researchers conclude that, in fact, P2P loans do not achieve these things and actually resemble “predatory loans” in terms both of who takes them out and the impact on borrowers’ finances.

Source: Finextra

Peer-To-Peer Loans Remind The Cleveland Fed Of An Obscure Historical Episode Known As ‘The Subprime Mortgage Crisis’ (Dealbreaker), Rated: A

Are consumers really better off skipping the local BofA branch and instead filling in a few online forms and having an algorithm spit out an interest rate? Are all these newfangled credit-rating tools helping to serve those traditionally brushed aside by the big boys? Is P2P good?

Researchers at the Cleveland Fed have an answer to all these questions: No.

Source: Dealbreaker

The pattern is worse for those with credit card debt; compared to the control group, P2P borrowers see a 47 percent increase in credit card debt after getting an online loan.

Meanwhile LendingClub has posted exactly two quarters of profit since going public in 2014. Its last earnings report sent shares down 20 percent.

Federal Reserve Cautions on Peer to Peer Lending (Crowdfund Insider), Rated: AAA

According to the authors, Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, peer to peer loans resemble predatory loans in terms of the consumer market they serve and impact on consumer finances.

Among their findings:

  • Credit scores of P2P borrowers fall substantially after taking out a loan when compared to peers who did not take out a P2P loan.
  • Loan delinquency rates are more than 50% higher for P2P borrowers two years after the loan origination when compared to peers who did not take out a P2P loan.
  • P2P borrowers exhibit a 47% increase in credit card balances after obtaining P2P credit when compared to similar non-P2P borrowers.

Read the full document here.

Federal Reserve of Cleveland Makes Some Dubious Claims in a Report on P2P Lending (Lend Academy), Rated: AAA

[Side note: This report seems to be using P2P lending to mean the broader online lending industry beyond just Lending Club and Prosper so keep that in mind when you see me using the P2P lending term in this article].

One of the things I disliked most about this new report was the how opaque their analysis was. They just said they used data provided by TransUnion “in which we observe about 90,000 distinct individuals who received their first P2P loan between 2007 and 2012.”. They provide no indication as to which platforms this data is based upon and then we see this very strange chart below showing supposed delinquency rates by year.

In 2006, the only consumer P2P lending (or any significant online lending) platform in existence in this country was Prosper and their 2006 vintage was terrible. This data was all publicly available at one point and I reported that of the 28,936 loans issued during those initial two and a half years 10,456 loans defaulted, a 36% default rate. Subsequent vintages at Prosper performed much better. When I see the table above showing those numbers I have to question the entire data set of the report because obviously their 2006 data is wrong.

Online loans leave consumers deeper in debt, Fed research says (American Banker), Rated: A

The study, published Thursday, is likely to spark intense debate. One of its findings is that consumers who take out online loans, sometimes called peer-to-peer loans or marketplace loans, likely have access to traditional banking services.

“We are scratching our heads,” Nathaniel Hoopes, executive director of the Marketplace Lending Association, an industry trade group, said in an email, “because the Philadelphia and Chicago Federal Reserve recently conducted a more granular study and reached the opposite conclusion as this Cleveland Fed research.”

In 2010, digital lenders originated $249 million in unsecured personal loans, according to a recent study by the credit bureau TransUnion. By last year, the annual loan volume had grown more than ninetyfold.

The study finds that the consumers who took out online loans grew their other debts by about 35% more over the next two years than did their counterparts who did not take out the loans.

Source: American Banker

 

Square’s new strategy is paying off. Its stock is up 175% this year (KITV), Rated: A

Square is trying to upend the way people pay for stuff and change the way businesses handle money.

Clearly, its strategy is working: Square’s stock is up 175% this year. That’s more than 11 times the S&P 500’s 15% growth.

The company cashed in on those subscription services, which generated around $65 million in revenue — up more than 80%.

It is also making big money from its largest merchants. Almost half of the $17.4 billion in payments Square handled last quarter came from merchants with more than $125,000 in annual sales.

It has lent small businesses more than $300 million.

The CFO of Goldman Sachs keeps talking about becoming the Google of Wall Street (Business Insider), Rated: A

A Harvard Business School case study on the bank’s digital strategy was presented as part of the executive MBA program last week.

The case study runs through some of the history of Goldman Sachs’ efforts to switch to thinking like a tech company, some of the tension it has caused, and the payoffs.

Travel Companies Start Lending Consumers Money to Book Trips (Skift), Rated: A

Several major sellers of travel, such as Expedia, United, JetBlue, Southwest, and Lufthansa, are testing extending credit to U.S. consumers to enable them to pay for their vacations over time rather than up-front.

Paying for a trip in monthly payments primarily appeals to consumers with average credit ratings who are willing to accept short-term, interest-based loans.

But consumers with high credit scores also appear to be getting tempted into splurging on luxury trips if companies lend them credit on attractive terms.

The new installment products — called layaway when paid off prior to trip and a loan if paid off after — have been common in developing countries.

A few fintech startups — most prominently Affirm, Airfordable, and UpLift — are hoping that their services will make delayed payment for travel fashionable.

THE DOWNLOW ON UPLIFT

This year, UpLift said that its average 12-month travel loan through travel brands was $2,420, said CEO Brian Barth in an interview. For “highly-qualified” borrowers, it has typically charged 8.99 percent annual percentage rate, he said.

Consumers participating in UpLift’s loans had an average FICO (Fair Isaac Corp.) score of 692. Scores range from 300 to 850. UpLift has lent money to customers with FICO scores as low as 475.

AFFIRM’S PROMISE

Affirm said that its travel partners see a 20 percent increase in customer conversions, on average, by offering its product.

PeerIQ’s Q3 Public Lender Tracker (PeerIQ Email), Rated: A

The tracker, a new release from PeerIQ’s research and analytics team, examines credit performance trends across publicly traded banks, FinTechs, and card issuers. We also deep-dive into the earnings of Lending Club and OnDeck. Stay tuned for a release this week and scroll down for an excerpt.

Real Estate Crowdfunding Platform Groundfloor Preps for Reg A+ Offer (Crowdfund Insider), Rated: A

Groundfloor has filed a Form 1-A with the Securities and Exchange Commission indicating its intent to sell shares in the real estate crowdfunding platform.  According to the filing, GroundFloor is offering up to 2.5 million in Common Stock at $10 per share. Interestingly, the Groundfloor offering circular indicates the company intends to limit the offer and sale solely to accredited investors – even though under Reg A+ issuers may sell to both accredited and non-accredited investors alike (although in other parts of the document it appears they will accept non-accredited investors).

Real Estate Crowdfunding: Trends to Watch in 2018 (Realty Biz News), Rated: A

Real estate crowdfunding is a growing industry of great interest for realtors and investors. A report on Crowdfunding for Real Estate by crowdsourcing.org anticipated a $3.5 billion growth for real estate crowdfunding in 2016, and experts project that the industry will grow to over $300 billion by 2025.

Source: Realty Biz News

Digital mortgages advancing, but borrowers still want more speed (National Mortgage News), Rated: A

Despite digital mortgage advances, borrowers think it still takes too long to get a loan, J.D. Power finds in its annual customer satisfaction ranking of originators.

The most frequently used method for submitting a mortgage application for both refinances and purchases was online for the first time, according to the survey. Forty-three percent applied digitally, up from 28% a year ago.

But satisfaction with online submissions declined 8 points and borrowers also gave online submission a satisfaction score 10 points below that of in-person applications.

Online Lender Pioneer, SellersFunding Launches Algorithm to Streamline Funding for Amazon Merchants (Sys-Con), Rated: A

As sales from Marketplace outpace Amazon’s own sales, sellers need increased funding for things like, advertising and purchasing inventory.

The SellersFunding model interprets data like products, prices, payments, customer reviews and feedback. With more than fifteen billion single data points on tap, all rigorously tasked, the company’s model can boast high levels of accuracy.

Small Banks Vow To Protect Regulations Keeping Retailers And Tech Giants Off Their Turf (PYMNTS), Rated: A

But those laws may be up for reconsideration, as Keith Noreika, the acting Comptroller of the Currency, has raised the possibility that those laws are in need of review and possibly revision.

Needless to say, the nation’s small banks and their representatives are less than thrilled.

“If Walmart wants to be a bank, that’s fine, as long as they make the appropriate investments to protect the parts of the banking system that are so critical,” said Kelly King, chief executive at regional lender BB&T Corp.

King added that he was “absolutely opposed” to the idea of a limited banking license.

LendingTree, Inc. to Host Analyst and Investor Event on December 13, 2017 (Business Insider), Rated: B

LendingTree, Inc. (NASDAQ: TREE) today announced it will host an Analyst and Investor Event on Wednesday, December 13, 2017 in New York.  The company will host in-person attendees at the Nasdaq MarketSite, 4 Times Square, New York, NY10036. Doors will open for registration at 10:00 a.m. Eastern Time and presentations will begin promptly at 10:30 a.m.

United Kingdom

Funding Circle posts record month (Bridging&Commercial), Rated: AAA

Funding Circle is celebrating a global record month after lending over £120m to businesses throughout October in the UK alone.

In total, 1,721 UK businesses accessed finance last month via the lending platform, which directly and indirectly created 4,400 jobs.

More than 8,900 small businesses have accessed finance through Funding Circle in the last six months, totalling over £630m in loans.

Funding Circle: Investors can expect 5pc returns in a recession (P2P Finance News), Rated: A

A FUNDING Circle loan portfolio would still deliver returns of close to five per cent in a severe recession, the platform claims.

The peer-to-peer business lender has stress-tested its loan book, using a model similar to what the Prudential Regulation Authority (PRA) uses for banks, to see how two example portfolios would stand up against a severe recession similar to the one in 2007/08.

Even with these assumptions, the projected annual returns after fees and bad debt but before tax were 5.3 per cent for portfolio A, and 4.9 per cent for portfolio B, Funding Circle said.

Unusual ways to invest when you don’t have much money (AOL.com), Rated: A

Microinvesting

The Money Box mobile app launched this time last year, allowing savers to invest in stocks including Netflix, Unilever and Disney with as little as £1 to spend.

There are, though, fees to pay: after three months, users must pay £1 a month to subscribe to the service, plus 0.45% a year on the value of their investments.

Other services for investing small amounts are available from Nutmeg, which has a minimum of just £500, while Hargreaves Lansdown has a minimum ISA investment of £25 a month.

Peer-to-peer lending
Peer-to-peer lending schemes can offer a high return, with some claiming rates of more than 7%.

Crowdfunding

Two of the bigger equity crowdfunding operators are Seedrs and Crowdcube, both of which allow a minimum investment of just £10.

Funding Circle joins Women in Finance Charter (P2P Finance News), Rated: B

FUNDING Circle is among the latest round of firms to have signed the Treasury’s Women in Finance Charter, which aims to tackle gender inequality in senior roles.

The Treasury announced on Friday that a further 26 companies have signed up to the Charter, increasing the number of employees covered by the Charter to over 600,000.

Zopa developing IFISA transfer features (P2P Finance News), Rated: AAA

ZOPA is working on ways to let investors transfer their existing holdings into its Innovative Finance ISA (IFISA).

Andrew Lawson (pictured), chief product officer for Zopa, said some investors have already been selling old loans and buying new ones to fund the tax-free product.

However, the lender is now working on a one-off option for customers with more than £1,000 in its Classic or Access account to move that money into an IFISA, keeping the Safeguard coverage intact and without paying sale fees.

How do P2P platforms balance investor and borrower numbers? (Bridging&Commercial), Rated: A

New peer-to-peer platforms should put as much effort into attracting borrowers as they do promoting and obtaining inward investment, according to Kuflink.

Stuart Law, chief executive at Assetz Capital, claimed: “A number of long-established peer-to-peer platforms have more investors than borrowers, meaning they have been closed to new investment, while the company tries to find more loans.

Stephen Findlay of BondMason added: “I think there is generally an oversupply of capital for the available investment opportunities, across most markets.”

Peer-to-peer lending: is it too late to profit? (The Telegraph), Rated: A

Peer-to-peer (P2P) lending has grown dramatically since the financial crisis. In 2005 when Zopa, the first lending “platform” was launched, loans totalled just £1.5m.

But last year total lending was £3.2bn with Zopa, Funding Circle (which counts the British government as an investor) and RateSetter controlling two-thirds of the market.

Rates offered by P2P firms have dropped: investors can earn 3.7pc with Zopa Core and 4.5pc with Zopa.

Risks are also rising. When Zopa launched it only offered loans to 0.5pc of applicants, said Neil Faulkner of 4thWay. Now its approval ratings are in line with traditional banks, which give loans to 20pc of applicants.

UK tech founders planning swift exits (AltFi), Rated: A

A new report from equity crowdfunder VentureFounders has found that most tech founders in the UK intend to exit within 2-5 years, despite recognising the risks of exiting too early. Fully 56 per cent of the entrepreneurs surveyed by VentureFounders expect to sell their business for £50m or less.

The UK Robo-Advice Innovation Forum: key takeaways (Banking Technology), Rated: B

Conclusions

  • The banks are coming and will quickly take market share. With Nutmeg claiming majority market share with less than 50,000 customers, banks accessing millions of customers will quickly grow the market.
  • Exchange-traded fund (ETF) providers and investment managers interacting with advisors can create even more value. The “man and machine” approach may be best.
  • Developing a pensions or SIPP product could triple the total addressable market (TAM) showing a clear route to profitability for the currently loss-making robo-advice community.
  • A pension offering could see LDI frameworks finally reach the retail market.
  • The digital asset management community doesn’t like the term “robo-advisor” as confusingly many do not give “regulated advice” and of course and disappointingly, there are no robots!
China

Ppdai Makes Weak Debut in New York (Caixin), Rated: AAA

Ppdai, which operates an online platform connecting small investors and lenders, priced its initial public offering at $13 a share, well below the $16-$19 target. At that level, the company raised about $220 million, compared with its maximum goal of $350 million.

The shares then opened higher and rose as much as 10% in early trading in New York. Ppdai finished its first day trading at $13.06.

Online Lender WeLab Raises $ 220 Million for Expansion (Caixin), Rated: AAA

WeLab, an online lender in Hong Kong and the Chinese mainland, said it has raised $220 million in new funds from investors including Alibaba Hong Kong Entrepreneurs Fund and International Finance Corp.

Part of the new funds will be used to expand outside Greater China, WeLab said in a statement.

China Fintech IPO Fever Wanes as Regulators Weigh Crackdown (Bloomberg), Rated: AAA

PPDAI priced its offering a week after news that Chinese regulators are considering a crackdown on the country’s cash microlenders in response to claims that some have charged excessive interest rates. The initial public offering of Qudian helped trigger the regulator’s review of the sector, people with knowledge of the matter said earlier this month.

PPDAI priced its sale of 17 million American depositary shares at $13 apiece, after marketing them at $16 to $19 each. The stock started trading Friday in the U.S.

While Chinese law already limits lending rates to 36 percent annually, regulators are considering drafting rules to specify the cap applies to the cash microlending sector, people with knowledge of the matter said this month. In its IPO prospectus, PPDAI said total borrowing costs for some of its loan products exceed that level after adding in transaction fees.

ZhongAn shares have risen 28 percent from their IPO price, outpacing the 5.3 percent gain in the Hang Seng Index over the same period.

CreditEase CEO Ning Tang Discussed Fintech-Driven SME Economy at APEC CEO Summit 2017 (Business Insider), Rated: A

CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated in the annual Asia-Pacific Economic Cooperation (“APEC”) CEO Summit event, in Da Nang, Vietnam on November 9.

“Over the next decade, tens of millions of SMEs in China will focus more on the quality of their growth, technological innovation, and sustainable development. We at CreditEase has been committed to empowering these SMEs as well as the real economy with technology breakthroughs and new business models ever since the company’s establishment,” said Mr Tang. “Going forward, we will continue to leverage our FinTech strengths in inclusive finance and wealth management to enhance SMEs’ overall financial capabilities and create more value for society.”

Higher rates for addresses in caps – online lender WeLend reveals how it determines your creditworthiness (SCMP), Rated: A

If you are looking to take out a loan from online lending platform WeLend to buy the iPhone X, be warned – should you use only upper-case letters when filling out the address field in your application, you could be charged a higher interest rate.

“We actually match how people fill out addresses with the probability of [them] declaring bankruptcy after a certain number of years,” said Simon Loong, the founder and chief executive of WeLab, the Hong Kong company that operates WeLend.

“The probability of [an applicant] declaring bankruptcy is highest when they fill in their address in capital letters,” he said.

n Hong Kong, the company relies primarily on a user’s credit history and interaction data. In mainland China, where less than 30 per cent of the population has a credit score, WeLab relies much more on unstructured, mobile data.

Yet another observation WeLab has made is that delinquency rates tend to correlate with loan application times – if a user applies for a loan between 1am and 6am, they are more likely to default on a payment than users who apply in the day, Loong said.

Food Delivery Platform Ele.me is Heading to the Micro Lending Market (Crowdfund Insider), Rated: B

On November 8th, Chinese leading food delivery platform Ele.me quietly marched into the micro lending market. The loans ranges from RMB 500 yuan to RMB 2000 yuan with terms of either 7 days or 14 days. This is a collaborative product with Lixiadai.com which means borrowers apply this loan on Ele.me will be directly led to Lixiadai.com. 

Nearly two months ago, the stock app jointly set up by JD Finance and four other brokerages stopped operating. According to JD.com, the suspension of the operation is due to a system upgrade. Yet, as reported by the media, the app was actually halted for procedural noncompliance in account opening and trading.

Chinese FinTech CFO on IPO Day: Mobile, Blockchain Will Drive Industry Innovation (Cheddar), Rated: B

Ho fills Cheddar in on why there is such a massive opportunity in peer-to-peer lending in China. He notes that companies capitalized on the governments unwillingness to hand out small loans to individuals.

European Union

Klarna adds pay-later feature at Swedish stores (PaymentsSource), Rated: AAA

Sweden’s Klarna made its mark with a pay-later model for e-commerce shopping that’s spread to other European countries and the U.S., and now it’s piloting the same concept for in-store purchases.

In partnership with the Danish payments technology firm Nets, Klarna has developed a feature that appears on payment terminals at certain stores giving consumers the option to pay for a purchase later—fully or in part—before completing the transaction, Klarna said in a recent blog post.

FinScience Closes €1M Seed Funding Round (FINSMES), Rated: A

FinScience, a Milan, Italy-based fintech startup, closed €1m seed funding round.

FinScience has developed a platform that gives simple access to alternative data to people who work in financial industry.

USING AI TO FIND THE NEXT TECH UNICORN (BusinessCloud), Rated: A

A technology-focused venture capital firm is using artificial intelligence (AI) to look for new European investment opportunities and find the next tech unicorn.

Andreas Thorstensson is tech partner and investment adviser at EQT Ventures, which went live in 2016 and is part of global private equity group EQT.

EQT Ventures has been using Motherbrain internally for almost two years, with the platform now responsible for up to 30 per cent of the fund’s deal flow.

ETHERECASH TOKEN PRE-SALE A HUGE SUCCESS (Bitcoinist), Rated: B

Some of the Etherecash features and benefits:

  • Peer to Peer Lending Crypto Backed: Lend to borrowers internationally with Border Free Loans.
  • Get Higher Returns Than Typical Bank Deposits.Borrow 70-80% of crypto value, without needing to liquidate any assets.
  • Worldwide Money Transfer: Send money to anywhere in the world using Etherecash. Money transfer has never been easier, more secure and most of all private.
  • Multi-Crypto Debit Card:Etherecash is the first of its kind, enabling users to put multiple currencies on a single debit card. Use it just like a normal debit card for making payments, shopping online or ATM withdrawals in local currencies. It can be used in any country while traveling to mitigate international charges and conversion fees.
International

Disruptive innovation in equity crowdfunding (Deloitte), Rated: A

A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” studies the disruptive forces shaping the future of equity crowdfunding. Read on to explore key takeaways for the equity crowdfunding segment, and consider what these findings mean for your business.

Get the full document here.

Kony Announces Digital Banking Marketplace Expansion (Crowdfund Insider), Rated: A

Kony, Inc., the leading enterprise mobility and digital applications company, today announced it is expanding its global partner ecosystem with financial technology solutions featured on the Kony Digital Banking Marketplace.

4 Emerging Fintech Trends Relevant to Every Entrepreneur (Elevator Pitch), Rated: B

FinTech is disrupting the traditional financial services, such as: money transfers, loans, mobile payments, asset management and fundraising. According to Statista, Transaction Value is expected to show an annual growth rate (CAGR 2017-2021. of 20.5 percent resulting in the total amount of U.S.$6.9 billion in 2021.

1. Multi-currency digital wallets

A recent example is CashDash, a mobile app that allows you to buy, collect and return foreign currency.

2. Payments security advances using biometrics

3. Cryptocurrencies

4. Robo-advisors and automated wealth management services.

According to the consulting firm A.T. Kearney, assets under management by robo-advisors will grow by 68 percent annually to a whopping $2.2 trillion in the next five years.

How Fitness Pros Are Pushing Payments (PYMNTS), Rated: A

In an effort to offer rideshare workers faster access to their wages, First Data recently launched a new solution that delivers the money directly onto a debit card.

collaboration between Ingo Money, Visa and digital lending platform OnDeck will allow SMBs that request loans through OnDeck to have the funds disbursed directly to their business debit cards in real time.

A group of 13 Australian banks announced a joint effort to allow customers to get real-time payments beginning on January 26, the nation’s Australia Day holiday. With the service in place, bank customers can exchange money between contacts in a matter of seconds using identifiers such as mobile numbers and email addresses, instead of sensitive data like bank accounts.

YES Bank’s fintech survey to study ecosystem worldwide (The Hindu Business Line), Rated: B

YES Bank is all set to launch a first-of-its-kind fintech survey. Called India Fintech Opportunities Review, the study will cover India and a few major fintech markets in the world.

A research initiative of YES FINTECH, which is the bank’s innovation programme to accelerate fintech start-ups, the survey will cover more than 1,000 firms globally, said Amit Shah, Head-Strategy, Yes Bank.

Australia

RateSetter gets upgraded Down Under (P2P Finance News), Rated: AAA

RATESETTER’S Australian operations have been given a higher rating by SQM Research.

The independent ratings agency upgraded the peer-to-peer lending platform to a “favourable” rating and described its lending product as “approved investment grade.”

This puts it just one step below SQM’s top rating of ‘high investment grade.’

Credible Labs wants to be an ASX tech darling (Financial Review), Rated: A

US-based online student loans marketplace owner Credible Labs Inc is seeking an Australian Securities Exchange listing which would value the company at more than $300 million.

Credible is expected to seek to raise $67.5 million in a deal valuing the company’s equity at $306.6 million. If successful, it would be Australia’s biggest tech IPO this year.

India

Fisdom Raises $ 4M in Series B Funding (FINSMES), Rated: A

Fisdom, a Bangalore, India-based personal finance management startup, raised $4m in Series B funding.

The round was led by Accion Frontier Inclusion Fund, managed by Quona Capital with participation from existing investor Saama Capital.

Fintech company Payoneer to support e-commerce exports from India (The Hindu Business Line), Rated: A

Payoneer, a global cross border B2B digital payments provider, has decided to expand the scope of its offering in the Indian market to e-commerce related export businesses, it’s visiting CEO Scott Galit has said.

Galit said that India is the fastest growing digital market in the world and that more people are going digital in India than anywhere in the world.

India will move faster than China for a while, but on much smaller scale. The B2C e-commerce exports in India is around $ 500 million a year, while in China it is $ 400 billion, according to industry insiders.

Asia

The Future of Branch.. Banking? (Fintech News), Rated: A

My opinion is that both views are problematic in its own way, branch banking is still quite a distance away from being dead largely fueled by face to face KYC requirements and the need to serve different segments of the customer.

However, there’s one reality that bankers cannot escape from, banks are increasingly under pressure to close their branches.

The Digitised Branch

The whole idea of digital banking is the ability to perform banking on-the-go, to go to the bank to perform banking-on-the-go (what a tongue twister) seems to defeat the point entirely.

This approach enables bankers to still serve the segment of their customers prefer to conduct their banking activities through the branch or customers who for whatever reason need to visit branch all while still keeping the costs at bay.

Fintech investors striking a match (Business Times), Rated: A

Among the fresh fintech funds that have come into this space is GTR Ventures (GTRV), the venture capital arm of trade finance intelligence firm Global Trade Review. Operating in both Singapore and London, it is the world’s first investment platform targeted specifically at fintechs operating in the global trade ecosystem.

Kelvin Tan, co-founder and chief investment officer, told The Business Times that the fund screens fintechs that can help to close the annual US$1.5 trillion trade finance gap, particularly for SMEs.

MENA

How 690-million customer China Construction Bank has digitally transformed (Tahawul Tech), Rated: A

China Construction Bank’s name may not be a household one in the Middle East, but the stats speak for themselves in evoking the bank’s vast resources and influence within China, and across the world. With 363,000 employees on its books, CCB is consistently ranked in the top 30 of the Global Fortune 500 and currently has over $3 trillion worth of assets. In 2015, it was the second largest bank in the world by market capitalisation, and the sixth largest company in the world by revenue.

Africa

KiaKia launches alternative credit scoring, virtual lending platform (Vanguard), Rated: AAA

Aside its numerous products that are void of the usual financial bureaucracy and also offer easy access capital to SMEs and individuals, KiaKia, a licensed online peer to peer and direct lending platform, has introduced ‘Mr. K’, an artificial intelligence (AI) and machine learning powered alternative credit scoring, customer service, Direct and P2P lending virtual agent.

Speaking further on the new product, Abiola said 80 percent of KiaKia high scoring borrowers access the same loans at between 7.5 percent and 15 percent as against the 30 percent of its competitors, as well as, connecting credible borrowers with lenders offering loans as low as 5.5 percent interest rate for longer tenured loans.

Authors:

George Popescu
Allen Taylor