News Comments Today’s main news: OnDeck prices $225M securitization. Prosper is looking for new whole loan contributors for securitizations. Funding Circle lends 123M GBP to businesses in March. Funding Circle SME considers new equity raise. Ant Financial to raise $9B. Today’s main analysis: Competition among lenders worth $27K to borrowers last week. The grad degrees that deliver more debt than […]
OnDeck Capital prices $225M securitization. AT: “It’s good to see OnDeck getting back in the game. I also think 2018 is shaping up to be the year of securitizations, which had a good year last year. It could shape up to be better this year.”
Prosper seeks new whole loan contributors for securitizations. AT: “As the big online lenders–like OnDeck, Prosper, and SoFi–continue to roll out securitizations, we could very well see new entrants in the alt lending securitization market in 2018.”
The grad degrees that deliver more debt than income. AT: “This is very interesting. Optometrists pay the more of their income to student loans than dentists, lawyers, scientists, engineers, and nurses. Actually, more than anyone. However, veterinarians have the highest median loan balance as a percentage of annual income. This is a must-read for lenders that offer student loans for graduate study, and for specialist loans based on professions.”
OnDeck announced today that it has priced $225 million initial principal amount of Series 2018-1 Fixed Rate Asset-Backed Notes (the “Notes”) in a private securitization transaction. The Notes, which will be issued in four classes, were priced with a weighted average fixed interest rate of 3.75% per annum. It is expected that DBRS, Inc., in satisfaction of one of the closing conditions, will rate the Notes at closing. The anticipated DBRS rating for the Class A Notes would be the highest rating ever for a class of notes in an asset-backed securitization of small business loans in the online lending industry.
The Notes will be issued by OnDeck Asset Securitization Trust II LLC (the “Issuer”), a wholly-owned subsidiary of OnDeck. The Notes will be secured by and payable from a revolving pool of OnDeck small business loans. The Issuer will be the sole obligor of the Notes; the Notes will not be obligations of or guaranteed by OnDeck or any of its other subsidiaries. OnDeck will act as the servicer of the loans securing the Notes.
The net proceeds from the Notes offering will be used by the Issuer together with other available funds to optionally prepay in full a prior notes issuance (the “Old Notes”) that had a weighted average interest rate of 4.7% at December 31, 2017.
Prosper will continue to issue ABS from its long standing PMIT shelf, but is looking for new whole loan contributors for its securitizations as it eyes the end of a loan consortium agreement inked last February.
Prosper’s securitizations will retain the multi-seller deal format, in which whole loan investors contribute collateral to the securitizations, said three people speaking with GlobalCapital on the sidelines at the LendIt Fintech USA 2018 event in San Francisco.
Former Twitter chief operating officer Anthony Noto just finished his first month on the job as CEO of SoFi, the “unicorn” financial services company whose former CEO was booted late last year after allegations of sexual misconduct.
Axios spoke to Noto about the new job, growth plans, recruitment and that long-rumored IPO. The quick read:
He had always wanted to be a CEO, and felt he had accomplished what he set out to do at Twitter.
He believes SoFi is a cultural reclamation project, but that the core business is strong.
SoFi wants to launch a membership-type credit card.
The firm has no plans to either IPO or fundraise in 2018.
On joining SoFi as CEO, after stops at Twitter and Goldman Sachs:
“This opportunity leverages all of my professional background as a tech person, as a consumer-facing person and from a financial industry perspective.
“A reckoning is coming. The US is ground zero.There is a 37 trillion dollar shortfall in the retirement sector. This is coming and we cant just think we have 32 years to solve this problem.”
Omer Ismail, Chief Commercial Officer of Marcus:
“Since we launched 18 months ago we have done $3 billion in loans and we have $20 billion in deposits and about 500,000 in customers.”
Max Levchin, CEO and founder of Affirm:
“There are 10 to 15 million people in this country who need money and can probably borrow responsibly yet they end up at payday lending.”
Jay Farner, CEO of Quicken Loans:
“If a mortgage can be done in 10 [days] a personal loan can be done in 1 [day]”
Coming off one of the worst months in recent memory, March saw big declines in the public equity markets. The SCP SMB Index was the least impacted, retreating 4.1% compared to all other major indices, which declined more than 5% during the month.
The SCP SMB Index declined 4.1% in March. The S&P 500, Nasdaq, and Dow Jones all experienced losses during the month of 5.1%,5.2%, and 6.1%, respectively.
Returns since inception (indexed at Jan 4, 2016)
Since the inception of the SCP SMB Index in January 4, 2016 (where 100% is no change), here are the returns through March 29, 2018:
We calculate the Mortgage Rate Competition Index weekly as the median spread between the lowest and highest APR offered by lenders in our marketplace. By calculating this spread, we hope to show consumers how much they stand to save by comparing rates during the lending shopping process.
Purchase loans
Across all purchase loan applications on LendingTree for the week ending April 8, the index was 0.59, up 0.03 from the previous week.
How big of a deal is it to nab a mortgage rate that’s 0.59% lower than the competition? Over 30 years, that could translate to $27,339 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
Refinances
The index was wider in the refinance market at 0.65, up from 0.63 the prior week.
Borrowers shopping for refi loans could have saved $30,329 by shopping for the lowest rate.
Credible’s analysis of student loan debt levels and salaries across 16 graduate school majors shows that the most important consideration isn’t how much debt you’ll take on to obtain an advanced degree — or how much you’ll earn after graduation — but achieving the right balance between the two.
Key highlights
A Credible analysis of more than 91,000 graduate degree holders with student loans found significant debt and income differences across 16 graduate degree majors.
Dentists, optometrists, and veterinarians tend to have student loan debt that’s the most out of balance with their earnings soon after graduation.
Even years out of school, optometrists, veterinarians, physician assistants, dentists and pharmacists devote more than 10 percent of their monthly income to their student loan payments.
Computer scientists, MBA holders, people with masters in finance degrees (not MBA) and nurses allocate the smallest proportion of their monthly earnings to pay down their student loan debt (between 6.4 and 7.1 percent).
AutoGravity, a FinTech pioneer that empowers car shoppers to buy and finance any new or used car in minutes from their smartphone, today announced a partnership with Westbon, the first lending platform for international students in the U.S. Through this unique partnership, Westbon financing options are now accessible to international students who use AutoGravity to finance their vehicle in the United States.
Finitive LLC (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today the launch of its zero-fee platform.
Finitive, which commenced operations in August 2017, has received commitments for transactions with an aggregate capacity of $1.3 billion. Several asset managers and banks have committed capital for transactions in the consumer, renewable energy and commercial real estate lending sectors.
Lend Core Inc., parent company to NSR Invest and LendingRobot, announced today the close of its first external financing round with FinSight Ventures. The investment will help the company expand its investor outreach, accelerate product development and strategic partnerships. FinSight Ventures General Partner, Alexey Garyunov, and Investment Director, Maxim Nazarov, will join Lend Core’s Board of Directors.
The company’s core technologies drive innovation through interactive analytics, custom modeling, algorithmic investing, order execution, portfolio management, and transparency through blockchain application.
One blockchain startup, Alchemy, is using the technology to create a peer-to-peer (P2P) lending system that ensures transparency and guarantees security to its participants.
Alchemy works by matching lenders and borrowers for the requested amount of capital. Because of the instant, global, and secure peer-to-peer interactions that blockchain facilitates, costs of service are kept incredibly low. Interest rates are kept as close to a free market determination as possible, ensuring a fair consumer experience that often eludes customers of big banks.
Quovo, a data platform that provides connectivity to consumer financial accounts, announced today at LendIt Fintech USA, new products that equip lenders with insights to streamline and improve key processes in the lending value chain, adding to Quovo’s ability to assist with underwriting, funding, and ongoing servicing workflows.
Income + Expense analyzes and summarizes recurring and irregular income and expense streams, creating a fuller picture of cash flow in linked accounts. Balance Estimator uses historical cash flows to predict future account balances up to 30 days in advance, giving loan servicers a key perspective on when customers can most
effectively meet their payment obligations.
Income + Expense and Balance Estimator provide valuable cash-flow-based insights that can be combined with Quovo’s core data products—such as Aggregation and Authentication—to create end-to-end solutions for lending, from the first loan application to the last servicing event.
MoneyLion today announced that it will be expanding its popular MoneyLion Plus membership with a full suite of checking and savings capabilities. With these additions, the new MoneyLion Plus membership will provide a comprehensive banking option for anyone with access to a smartphone, becoming the one and only financial membership consumers need to build wealth, improve credit and manage day-to-day spending.
DebtBench: We are creating an Open Banking marketplace structure where business borrowers can connect and gain access to capital at lower rates, in far less time, than they would by going to a brick-and mortar institution. According to our estimates, banks, credit cards and other lending institutions generate $870B+ each year in fees and interest from over $3.2 trillion in lending activity. The interest rate spreads gained by financial institutions can be minimized.
Intrinio, a fintech company providing access to over 200 financial data feeds, will be releasing their API v2 this quarter.
Intrinio’s API v2 is built on the OpenAPI specification, which is a community-driven, open source, standardized API spec within the OpenAPI Initiative (OAI), a Linux Foundation Collaborative Project. This allows both humans and computers to discover and understand the capabilities of a service without requiring access to source code, additional documentation, or inspection of network traffic.
The Office of the Comptroller of the Currency (OCC) is getting ready to release its position on a proposed charter for online lenders and other FinTech companies in the next three months.
An Aite Group study finding has the answer. More than 75 percent of 22- to 49-year-old consumers are interested in this kind of advice and guidance around reducing debt, achieving savings goals, and tracking their finances, as well as optimizing their overall financial health.
Companies like the Lending Club, make it easy for you to apply for small business loans online. You can receive several thousand dollars towards your business expenses.
Although many people turn to credit cards to help them build credit, there are other tools individuals can use to improve their credit scores. Since some people have trouble managing credit card debt and do not want to pay high-interest rates, they often turn to alternatives to help them build a solid credit history. Here are a few of those alternatives.
Loans to Help Build Credit
Some banks and credit unions will offer their members what are known as credit builder loans. The goal is to pay off the loan before the maturity date.
Peer-to-Peer Lending
Instead of going through a traditional financial institution, borrowers can apply for loans offered by individual investors. Known as peer-to-peer loans, consumers can apply using a reputable P2P lending website or service. The loans typically offer reasonable interest rates, and this type of financing is completely legitimate.
The company announced in its monthly review that in March it provided 1,831 businesses with access to finance and created 4,670 jobs (directly and indirectly) via its platform.
Funding Circle lent over £701m from September 2017 to March 2018 and more than 10,500 small businesses accessed finance through the platform in the same period.
THE FUNDING Circle SME Income Fund is considering a potential equity raise as it assesses its growth options.
Any issue of shares or sale from treasury would be priced at NAV plus a premium to cover all issue costs, the fund said in a stock exchange announcement on Monday.
NatWest has added invoice finance platform MarketInvoice to its Capital Connections panel, which helps SMEs unable to borrow from banks get access to alternative sources of money.
Liberis, the London-based fintech that provides finance for small businesses, has raised £57.5 million in new funding to help support the company’s growth. The alternative finance provider makes loans against a company’s future credit and debit card sales.
The majority of the new capital being raised by Liberis is debt, which in turn will enable it to issue more loans. The facility is being provided by British Business Investments (the commercial arm of the tax payer-funded British Business Bank), Paragon Bank, and BCI Finance.
In addition, Blenheim Chalcot has made an equity investment into Liberis. The so-called “digital venture builder” also previously backed Clearscore, the credit scoring startup recently acquired by Experian.
■ Peer-to-peer lending is becoming popular in low interest times, but it’s controversial
Peer-to-peer remains controversial, especially since the government approved a new type of Isa, the Innovative Finance Isa (Ifisa), in April 2016 that allows customers to receive income from the peer-to-peer loans they make free of tax.
There are many questions you will need to ask before lending your cash. Here are some of the most important:
What returns can I really get?
When faced with the best-buy rate on an instant access current account (around 1.3 per cent according to Moneyfacts), or on a five-year, fixed- rate bond (2.75 per cent), it’s hard not to find the headline rate you would receive from a peer-to-peer lending site very attractive.
Is the platform a member of a reputable association?
The Peer-to-Peer Finance Association is the main trade body, though not all companies involved are members. Check membership at p2pfa.org.uk. Robert Pettigrew, director of the association, says: ‘Investors should understand the nature and level of risk to which they are exposed, so that they can ensure that it is commensurate with their individual risk appetite.
Ant Financial Services Group, carved out of his e-commerce giant Alibaba Group HoldingLtd.BABA -0.52%seven years ago, is preparing to raise $9 billion in a private funding round, according to people familiar with the matter. That ups a previous fundraising target of $5 billion.
Ant, which owns popular mobile payments network Alipay and is one of China’s largest non-bank lenders, is currently in talks with potential investors and demand for its shares has so far been strong, the people familiar said.
The latest funding round could value Ant at close to $150 billion, according to the people, making it by far the world’s largest unicorn—a term used to describe private companies valued at over $1 billion.
“Fintech is playing animportant role in China. Given the demands for consumer finance are not yet fully satisfied and credit system is not perfect, financial technology has a golden development opportunity in China, which leads the world in data mining and processing capabilitiesin the mobile Internet market.” said Simon Cheng, President of X Financial, a leading fintech company in China at LendIt USA recently.
The popularity of blockchain technology has grown over the last several years as the hype surrounding the cryptocurrency market has thrived. Nearly every industry is currently exploring options on how they can use this disruptive technology to make a difference in the market. Its impact on various sectors has attracted big technology companies like Microsoft Corp. (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM). They ventured into distributed ledger technology architecture to augment their existing businesses while simultaneously trying to exploit emerging opportunities in the industry.
Over the last two decades, the financial services sector has experienced a major technological shake-up, with emerging industries like fintech playing a vital role. PayPal Inc. (NASDAQ:PYPL) disrupted the payments industry by introducing online methods of payment. While some said credit cards and checks would be phased out in due time, they are still crucial products. It remains to be seen how long they will last, though.
On the other hand, peer-to-peer lending platforms like LendingClub Corp. (NYSE:LC) and Zorpa reinvented lending and, in the process, sparked debates on whether they could eventually overtake traditional lending in the credit market. Nothing of the sort has come to pass, yet. In fact, after peaking in the first half of the current decade, peer-to-peer lending may have started to experience a slowdown in growth.
In this article, we explore two areas that have attracted significant interest by FinTech innovators:
Marketplace lenders (MPLs) that are disrupting traditional credit-underwriting models with lower overhead, higher transparency, faster loan approval and higher returns on capital.
Blockchain-based supply chains with the potential to disrupt entrenched payments and credit processes by managing the physical and financial flows associated with commerce. In addition, we discuss approaches to IT spending and innovation that banks can take in response.
Ezira will utilize the delegated proof of stake decentralized consensus algorithm used by Bitshares, EOS, and Steem. Ezira will operate on a new public blockchain, will provide a flagship user application, and a multi-token circular economic model. It will have a fairer token distribution and will share drop 10% of the EZIRA asset onto the cryptocurrency community.
The Ezira network will offer users access to a suite of cryptocurrency and social media features during its release.
Content Rewards
Users will receive content rewards for posting according to the number of votes and views that each post receives. Once per day, a content reward payment will be distributed according to the stake weight of the accounts that upvoted and viewed the content.
Ezira Cryptocurrencies
Payments using Ezira currencies will have zero transaction fees and will receive confirmation within the 3 second block time. Users send EziraCoin to a stealth address and send payments using a ring signature, and use ring confidential transactions to conceal the payment amount.
Decentralized Exchange
Users will be able to use peer to peer lending to earn interest by lending their funds to other users, based on collateral, independent verification processes, and established creditworthiness.
Last year Prospa passed a milestone of providing more than A$500m ($385m) in loans to 12,000 businesses.
The company offers loans of between A$5,000 and A$250,000, over a term of three to 24 months, with no security required for amounts of up to A$100,000. Its platform enables business owners to apply within 10 minutes, receive approval on the same day and funding within 24 hours.
Annual interest rates on Prospa loans vary depending on risk but typically start at roughly 12 per cent and stretch into the mid-20s.
Prospa’s growth has been supported by venture capital backers, with AirTree leading a A$25m funding round last year that valued Prospa at A$235m. The funds enabled the lender to boost its staff to 165, build a direct distribution channel and sign up 7,000 intermediary partners.
New survey results from US technology firm Oracle suggest Australians are less open, compared with consumers in other large economies, to engaging with the fintech revolution.
The survey, released on Wednesday, shows only 6.25 per cent of Australians regularly use a “fintech” bank, compared with 10 per cent in the United States, 12 per cent in Britain, and 40.5 per cent in India.
Despite a growing number of digital “robo advisers”, 9.75 per cent of local respondents said they used fintech wealth advisers services frequently, compared with 16 per cent in Britain and 21.5 per cent in United States.
P2P lending firm Faircent.com will soon be opening its API platform for developers. The move will enable new fintech entrants and offline businesses to leverage the company’s technological infrastructure to build new digital lending products, as well as to integrate existing solutions into their offerings.
Faircent.com’s technology stack offers a wide range of solutions pertaining to online lending such as borrower and lender verification, credit evaluation and underwriting, and payment collection and recovery, among others.
Loanzen, a peer to peer business loan marketplace startup, has raised an undisclosed amount of sum from Kae Capital. The Bengaluru-based digital lending platform had earlier raised an undisclosed seed funding from Angels through TracxnSyndicate.
The fintech firm will deploy fresh funds to expand operations. It also holds NBFC licence by RBI.
Fintech firms have exploded onto the financial scene in Singapore and other mature markets in Asia in recent times. Focusing on disruptive technologies like peer-to-peer lending, affordable digital payment solutions, and more accurate risk analysis among other things, these startups are winning over customers by replacing the service delivery model used by traditional banks with user-friendly technologies.
Fintech Companies Are Changing the Process of Loan Offtake
Have you ever heard about Crowdo, Capital Springboard, FundedHere, or MoolahSense? These are peer-to-peer online lending sites through which you can raise funds by sharing your story. These crowdfunding sites are revolutionising the alternative lending space through disintermediation, cost optimisation, quicker delivery, and technology modernisation.
Players like Skolafund provide deserving students a chance to get funded by potential funders for pursuing education in an affordable manner. They can match profiles and ensure that the right student meets the right funder.
SMEs, often ignored by traditional banking channels, have found their go-to source for funds. Crowd Genie, which started in 2016, is helping SMEs get loans through crowdfunding.
After witnessing the 2011 Egyptian revolution, former journalist Ahmed Moor decided to launch Liwwa, a peer-to-peer funding platform that would address the MENA region’s $240bn SME funding gap by lending money to growing businesses.
Together with co-founder and CTO Samer Atiani (former senior software developer at New York-based online retailer Etsy), Moor has managed to lend over $8m to SMEs across the region since the establishment of the Amman-based firm in 2013.
