- Today’s main news: PayPal is on an acquisition binge. Financial advisers eschew P2P lending. Ant Financial to go all in on the blockchain. 51 Credit Card IPO priced at HKD 8.50 per share.
- Today’s main analysis: Consumer debt increases in May.
- Today’s thought-provoking articles: Business loan drought ends for banks. Germany’s crowdfunding market hits $588M. Brazil leaders want investments to make social impact. Consumer debt increases in May.
- PayPal leads an acquisition binge. PayPal is a forerunner to the modern fintech company, but for a long time it rested on its laurels. Now, the company is snatching up smaller fintechs left and right. This should improve the company’s financial position and make it a real competitor globally.
- Business loan drought ends for banks. The question for alternative lenders is, will this rally eat into industry profits, or can alternative lenders rise with the tide?
- Consumer debt increases in May. Total consumer debt looks to be down from two years ago, but outstanding debt as a percentage of disposable income is going up at quite a pace. At first glance, this looks like disposable income may be going down. If that is the case, how will it affect consumer lending in the next 2-5 years?
- Insolvent insurer causes headache for Virginia bank’s student lending.
- Is Finn better than a real bank?
- The past, present, and future of ILCs.
- How to invest $100 regularly and come out ahead.
- Can you turn $100K into $1 million in 10 years?
- Credibly hires former CIO of FBI.
- Advisers eschew P2P lending.
- Is open banking a complete failure?
- Oblix gets FCA authorization to be a P2P lending platform.
- CrowdProperty gets new CEO.
- Ant Financial goes all in on the blockchain.
- 51 Credit Card IPO priced at HKD 8.50 per share.
- Neat grabs $2 million in funding.
- Auto sales hit a lending roadblock.
- Will tighter rules trigger a P2P lending shakeout?
- Dianrong names new CTO.
- LendLedger hits the decentralized crypto lending market.
- Etherisc launches blockchain consortium for crypto lenders.
PayPal is leading a payment company acquisition binge (Quartz) Rated: AAA
PayPal is tearing through a flurry of payment company acquisitions, having snapped up four in just a five-week period this year.
This year has already been a record for payment company deals, with $46 billion in acquisitions (paywall) though June, according to Dealogic. That compares with $33 billion in total for last year
Recent acquisitions include iZettle, a Swedish mobile payments company, and Hyperwallet, which businesses can use to pay employees around the world (the deal size is only shown if it has been verified by Pitchbook):
Business-Loan Drought Ends for Banks (Wall Street Journal) Rated: AAA
Preliminary second-quarter data from the Federal Reserve indicate the year-over-year growth rate of business loans rose to 5.5% in late June from less than 1% near the end of 2017. The upturn marks the reversal of a prolonged slump in business-loan growth that began in earnest about two years ago.
For banks, the acceleration in lending may help lift results when firms report quarterly results this month. Profits from lending are a major component of bank earnings and grow when total loans increase or rates on loans rise. Business-loan growth often helps on both fronts because these credits typically carry floating rates that allow banks to capture rate increases.
Consumer Debt Increases In May (PYMNTS) Rated: AAA
New data shows that U.S. consumer debt rose in May by the most in six months, showing that Americans were more comfortable with spending midway through the second quarter. The data from the Federal Reserve shows an increase in revolving debt, which includes credit cards, as well as a boost in non-revolving debt that includes educational and auto loans.
This latest news comes after LendingTree, the nation’s leading online loan marketplace, released its first Consumer Debt Outlook in May 2018, finding that Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010. That means Americans are on track to accumulate a collective $4 trillion in consumer debt by the end of this year. In fact, over the past five years, Americans have been accumulating more debt, and for nearly two years, consumer credit has grown at a steady rate of 5 to 6 percent annually.
See the full results of the study here.
Insolvent insurer causes headache for Va. bank’s student lending (American Banker) Rated: A
Virginia National Bankshares in Charlottesville, Va., will increase the loan-loss allowance for its student loan portfolio after an outside insurance carrier was shut down.
The $625 million-asset Virginia National said in a regulatory filing Thursday that ReliaMax Surety, a South Dakota insurer that issued surety bonds tied to purchased student loans, is insolvent and was placed into liquidation last month.
JPMorgan Chase launched an online bank for millennials called Finn, and I prefer it to the real thing (Business Insider) Rated: A
Finn, a mobile bank built by Chase, recently rolled out nationwide. And I gave it a try.
In addition to offering bread-and-butter checking and savings account functionality, it also offers services many firms in the personal finance startup space have built their businesses around. These include automatic saving tools and charts to see where you are spending money.
Personally, I think the app is a better experience than my traditional Chase mobile bank, since it more easily allows you to send checks from the app, save money in an easy and fun way, and keep track of your spending. It’s also free. And there’s no overdraft fees. But it’s not without flaws.
The Past, Present and Future of the ILC Bank (DeBanked) Rated: A
Last Thursday, Square confirmed that it withdrew its application to the FDIC for depository insurance, which would allow it to take deposits from customers in all 50 states. The company said it plans to refile.
Regardless of the reason for withdrawing the application, this news revives the debate over whether fintech companies should be allowed to become banks in the first place – at least in the manner that Square and SoFi have sought to attain bank status.
How to invest $ 100 regularly and make it a fortune? (Global Banking and Finance) Rated: A
Don’t let your money sit, let it work for you. I know I sound bit weird, but you can put your money to work. No! you do not need the fortune to invest in, just $100 is all that is required. Though investing an amount may appear bit difficult in starting but once you get a hold on the things, it will become easy eventually. Investing is all about making a choice, you can invest $100 and can earn thousands in future or you can just spend this amount on a dinner.
This could be another great option to make the investment in. Lending Club is basically a peer-to-peer lending, where borrowing and lending takes place between the ordinary folks. This is one of the largest online market in the world, that connects the investors and borrowers.
Can I turn $ 100k into $ 1 million in a decade? (Money Rates) Rated: A
A decade is a fairly short period of time, so think about what it will take to grow your initial investment by a factor of ten in ten years. With no additional investment, turning $100K into 1 million would require a compound average annual return of 25.9 percent, which is pretty unrealistic. Historically, the U.S. stock market has averaged a return on investment of about 10 percent per year.
Peer-to-peer lending has created a relatively new form of income investing in which you can invest by making personal loans. Higher risk loans produce higher income yields but are also more likely to default. You can manage your risk somewhat by choosing lower risk loans, focusing on shorter term loans and diversifying by funding small amounts of many different loans.
Credibly Hires Former CIO of FBI to Drive Information Technology Strategy (Crowdfund Insider) Rated: B
Credibly, a small and medium-sized business lending platform, announced on Tuesday it has hired Jerome Pender to drive its information technology strategy. According to the online lender, Lender is a seasoned professional more than three decades of experience in information technology. He has experience in business systems, enterprise architecture, technology, and governance.
Prior to joining Credibly, Pender was the Chief Information Officer, Operating Partner, and Managing Director at Z Capital Partners. He also spent more than a decade at the FBI, serving as Chief Information Officer and Executive Assistant Director, as well as Deputy Assistant Director. Before the FBI, he held several leadership positions at UBS AG.
Advisers eschewing P2P due to insurance ‘grey area’ (Peer2Peer Finance) Rated: AAA
FINANCIAL advisers are avoiding giving advice on peer-to-peer lending because they are worried it will not be covered by their professional indemnity insurance (PII).
Max Lehrain, chief operating officer at P2P property lender Relendex, said P2P investing is a “grey area” when it comes to PII.
Brendan Llewellyn, co- founder and director of communications platform Adviser Home, suggested PI insurers will decide whether or not to cover P2P investments on a case-by-case basis.
Open Banking – a complete failure? (The Finanser) Rated: A
PwC recently delivered a report on open banking – Open Banking market could be worth £7.2bn by 2022: PwC – PwC UK. Some notable points raised;
The principle growth areas are projected as account aggregation, analytics of expenditure and financial product comparisons. This is difficult to understand given that none of these areas is new – in fact the information is being delivered differently – that is all that has changed. And in most cases (relative to challenger banks) the data delivered is very limited, preventing innovation on these pre-existing services. The major market comparison engines pull richer data through a combination of private means and screen scraping, and have made clear that open banking APIs will not replace this in their current form.
Oblix secures FCA authorisation for P2P lending platform (Bridging & Commercial) Rated: A
Oblix Capital Technologies has been granted authorisation as a P2P firm by the FCA.
The authorisation allows the subsidiary to the London-based specialist lender Oblix Group to operate a regulated electronic lending platform.
Oblix has enjoyed a strong period of growth and hopes the launch of its P2P lending platform will supplement this.
NEW CHIEF EXECUTIVE FOR PROPERTY LENDER (Insider Media) Rated: B
A new chief executive has taken the helm at a Birmingham-based peer-to-peer property lender. Michael Bristow has assumed the role at CrowdProperty after acting as a non-executive director.
Bristow was previously managing partner at Growth Strategy, a property technology investor and private equity advisory business.
150 Billion Dollar-valued Firm Ant Financial Will Go All in on Blockchain (Toshi Times) Rated: AAA
Ant Financial: you may never have heard of it if you don’t live in Asia, but its payment platform Alipay is one of the biggest payments facilitators in the region, bigger than Samsung Pay, Apple Pay, and Android Pay in most Asian countries.
It is part of Jack Ma’s $450+ billion valued Alibaba empire and recently raised significant investment from investors worldwide pumping its own value up to a whopping $150 billion.
51 Credit Card’s IPO priced at HKD 8.50 per share (KrASIA) Rated: AAA
China’s 51 Credit Card, an online credit card management platform, is set to price its IPO at HKD 8.5 per share at the bottom of its indicative range of between HKD8.5 – 11.5, according to various reports.
The company is set to raise an estimated US$129 million in the flotation, according to a Tencent report.
Its net profit is up nearly 1304% in 2017 from a year earlier, standing at $112 million (RMB 744 million). However, it has been operating in a negative cash-flow for the last three years and its cash and cash equivalents dropped to 1.26 billion yuan in 2017 from 2.1 billion yuan in 2016.
Hong Kong digital bank Neat nabs tidy $ 2m funding (FinTech Futures) Rated: A
Hong Kong-based digital bank Neat has secured a new round of $2 million funding from Dymon Asia Ventures and Portag3 Ventures.
According to Neat, this investment will be used to unveil some new features and tools; and for recruitment.
For the features and tools, it offers a vote option on its website to create a “wishlist”. (A common ploy among new firms and banks.)
Chinese Auto Sales Run Into a Lending Roadblock (Wall Street Journal) Rated: A
China’s crackdown on shadow banking has caused some high-profile blowups. Now it’s driving the country’s car makers off course.
One big target for Beijing has been the proliferation of peer-to-peer lending platforms—total transactions on these ballooned to 2.8 trillion yuan ($423 billion) last year, more than 10 times the total in 2014, according to industry website wdzj.com. The worry is that such platforms have become a hotbed for embezzlement, or could simply run out of money. Local media reported dozens of them collapsing.
Tighter rules may trigger P2P industry shakeout (ECNS) Rated: A
Only one out of the nine peer-to-peer lending companies in China might be able to survive as top financial regulators are stepping up the pace of scrutiny to curb risks caused by the massive unregulated sprawl in the past few years.
The central government plans to maintain “pressing posture of severe attack” to clamp down on activities violating laws and regulations in internet finance, extending the ongoing nationwide crackdown for another year, Pan Gongsheng, deputy governor of the People’s Bank of China, the central bank, said during a meeting on Monday.
Dianrong Names Tony Zhang Chief Technology Officer (PR Newswire) Rated: B
Dianrong today announced the appointment of Tony Zhang as Chief Technology Officer (CTO). Mr. Zhang will report to Long Hsiang Loh, CEO of Dianrong.
Mr. Zhang has nearly two decades of experience in science and technology, with in-depth knowledge of financial and internet technology as well as company management. He worked in Silicon Valley for 11 years, including eight years at PayPal in various leadership roles. He provided recognized technical and business leadership across a range of PayPal’s core product features and functionalities.
LendLedger (LOAN Token): Decentralized Blockchain Crypto Lending Market? (Bitcoin Exchange Guide) Rated: A
LendLedger hopes to be the solution to these problems by opening up global lending markets. The platform is changing the face of lending to the underserved segments. Already this platform has processed tens of millions of dollars in loan requests in India, which has led to the provision of loans to hundreds of thousands of borrowers in the informal and small business sectors in 40 Indian cities. This platform is opening up new financial markets across the globe.
The platform unlocks data on informal and small business borrowers making it possible for lenders to offer loans to the informal traders. LendLedger seeks to bridge the $2.6 trillion lending gap between the institutional lending capital and informal borrowers. The aim of the platform is to come up with a lending market that is both inclusive and profitable for all the participants.
Leading Crypto-Backed Lending Networks Join Forces To Unlock Mass Adoption (Payment Week) Rated: B
Etherisc, the global, decentralized insurance platform for collectively building insurance products, has announced the launch of a blockchain consortium to create Collateral Protection Insurance (CPI) for the crypto lending market. The consortium aims to address a current, significant barrier to mass adoption by facilitating safe participation in crypto lending, clearing the way for more institutional players to enter the market.
The founding members of the lending consortium include bZx, formerly b0x, a decentralized margin lending protocol and liquidation oracle marketplace; Celsius Network, a peer-to-peer decentralized borrowing and lending platform; Colendi, a comprehensive credit scoring protocol and microcredit platform; ETHLend, a peer-to-peer lending smart contract on the Ethereum blockchain for lending ether; Lendroid, a unique non-custodial lending platform working to enable a range of collateralized loans, advanced auction markets and trust-independent margin trading; Libra Credit, a lending ecosystem that facilitates open access to credit; Nexo, a platform for instant crypto-backed loans, powered by the 10-year-old leading European FinTech group Credissimo; Ripio Credit Network, a protocol based on smart contracts and blockchain technology, which brings enhanced transparency and reliability in credit and lending; and Sweetbridge, a blockchain-based economic framework that transforms supply chain, logistics, and unleashes working capital.
Germany’s crowdfunding market reaches $ 588 million (Business Insider) Rated: AAA
At the end of June 2018, small- and medium-sized businesses (SMBs) in Germany had raised €500 million ($588 million) using equity crowdfunding and crowdlending marketplaces, according to a report from crowdfunding.de.
Here are a couple of key takeaways from the report:
- Real estate companies use crowdfunding most. Real estate accounted for over half, 53.3% of all the crowdfunding in Germany, making it the most common segment to opt for this funding method. It was followed by enterprise with a 42.6% share of funding raised and energy at 3.8%. Other segments combined only had a 0.3% share, showing that crowdfunding is largely dominated by two areas. However, as crowdfunding becomes more popular, we might see other sectors increasingly choosing it.
- Unsurprisingly, a digital real estate investment provider had the largest share of funding among platforms. Germany-based Exporo raised 32.3% of the total, followed by UK-based Funding Circle with 14.4%. This shows that foreign companies also have a lot to gain from Germany’s crowdfunding market.
Read the full report here.
Robo-advice users in for the long haul (Financial Standard) Rated: A
Insights from the automated investment platform show 36.5% of its users are attempting to grow wealth outside of super, while 28.6% are using it to accrue retirement savings.
The top reasons driving use of automated investment and advice platforms were lower fees and investment diversification, highlighted by 18.3% and 16.7% of users respectively.
Viewing the data through a gender lens, half of Six Park’s female clients are checking the progress of their portfolios at least once a month and their most common goal is the ability to purchase a property in the near-term; 25% of females flagged this, compared to just 10% of men. In contrast, more than half of Six Park’s male clients are checking their portfolios on a daily or weekly basis.
Local leaders in Brazil look for investments in social impact (Impact Alpha) Rated: AAA
At the country’s first social finance forum in 2014, you could count the participants on one hand. All of them were in Rio and Sao Paulo. Equity crowdfunding and peer-to-peer lending were still in regulatory review. Few universities included social finance in their curriculum. All of that has changed. Today:
- São Paulo-based Vox Capital scored a 26% IIR in an exit from affordable healthcare network TEM, marking one of the country’s first impact investment exit. Vox has raised two funds totaling more than 200 million-real and backed more than 20 social ventures since 2009;
- More than 30 Brazilian family offices, corporations, venture capital funds and subsidized lenders have made impact investments, in women-focused taxi companies, blockchain-enabled small business lenders and education technology startups.
- Brazil is one of 17 countries to add a National Advisory Board to the Global Steering Group for Impact Investing to educate investors about and promote impact investing in the country.
- Equity crowdfunding syndication has been used to fund several social entrepreneurs.
Credit manager AsiaCollect picks up $ 4.5m funding (FinTech Futures) Rated: AAA
Singapore-based credit management services (CMS) provider AsiaCollect has raised $4.5 million to date after closing its recent investment round led by SIG Asia Investments.
Dymon Asia Ventures, the venture capital arm of Dymon Asia Capital, a Singapore-based alternative investment management firm, returned to co-invest in this round after investing $1 million in AsiaCollect’s pre-series A equity round in August last year.
AsiaCollect offers CMS outsourcing, CMS advisory services, debt purchasing, and Software-As-A-Service (SaaS).