Thursday June 7 2019, Weekly News Digest

economic downturn

News Comments Today’s main news: SoFi completes first rated pass-through certificates offering. Y Combinator backs Monzo for U.S. expansion. Funding Circle set for largest securitization. Dianrong shifts strategy. Funding Circle inks 50M Euro deal with Avida Finans. Open raises $30M. Today’s main analysis: Chance for recession is rising (A MUST-READ PeerIQ analysis). Today’s thought-provoking articles: […]

The post Thursday June 7 2019, Weekly News Digest appeared first on Lending Times.

economic downturn

News Comments

United States

United Kingdom

International

China

APAC

News Summary

United States

SoFi Completes First Offering of Rated Pass-Through Certificates (PR Newswire), Rated: AAA

SoFi announced today that it completed a $200 million offering of post-graduate student loan asset-backed certificates issued by SoFi Alternative Trust 2019-C (SAT 2019-C). The Certificates are rated single-A by DBRS and mark the first rated pass-through certificate transaction issued by SoFi and the first publicly rated student loan pass-through transaction in the securitization market.

Unlike traditional student loan ABS transactions, SAT 2019-C does not use overcollateralization or bond subordination as forms of credit enhancement.  The A rating assigned to the certificates by DBRS reflects the strong credit attributes of the borrowers. The portfolio has a weighted average credit score of 783 and a weighted average annual income of $175,746.

Y Combinator says Monzo’s community will help it succeed in the US where others have failed (AltFi), Rated: AAA

Leading US startup backer Y Combinator has become the latest high-profile backer of Monzo, on the eve of the bank’s American expansion.

Today Monzo confirmed it had raised £113m in a round led by Y Combinator’s Continuity fund, along with Latitude, General Catalyst, Stripe, Passion Capital and others.

Recession Risks; OCC Charter + Big Tech (PeerIQ), Rated: AAA

Weak economic data continue – inflation expectations tumble, manufacturing has moved into recession, and the 10y/3m yield curve remains mildly inverted. Although the FOMC took no rate action this week, dovish signaling has led market participants to expect a 70% chance of 3 or more rate cuts in 2019.

Source: WSJ, PeerIQ

CPI Since 1879 During Business Cycles

Source: Deutsche Bank, PeerIQ

How A Former J.Crew And Pillsbury Exec Is Applying His CFO Expertise At A Financial Unicorn (Forbes), Rated: AAA

Scott Rosenberg: Kabbage represented a great opportunity for me to apply my prior experiences and help architect the future vision of a fast-growing company. Every role in my career has allowed me to lead or influence multiple divisions within a company, which makes my operational approach similar to that of a COO or General Manager. Beyond leading the CFO office in previous roles, I led Marketing at J. Crew, Operations at Pillsbury and most recently was the President of Purchasing Power. This broad vantage point lets me ensure financial growth as the CFO, but also identify opportunities to establish operational efficiencies more broadly across the organization. I take the same approach at Kabbage as I lead multiple disciplines, including Capital Markets and Legal. It encourages transparency across teams which allows us to move faster. With more than 175,000 customers accessing over $7.0 billion to-date, it’s an exciting role to drive hyper growth and deliver the best products and experiences for U.S. small businesses.

According to a survey released today by Kabbage that polled more than 500 companies across multiple industries, 80% of American entrepreneurs said they felt confident in their readiness to weather another economic crisis.

H&M and Klarna Grow Partnership to US (Yahoo! Finance), Rated: A

H&M and Klarna announced that they have expanded their current partnership agreement to also include the US market, in the development of an unrivalled payments and shopping experience across touchpoints. Together, H&M and Klarna are aiming at further integrating H&M’s digital and physical stores to give customers a seamless, personalised and engaging shopping experience no matter where, when and how they shop.

This Commercial Real Estate Marketplace Provides Direct Investment Opportunities (TheStreet), Rated: A

CrowdStreet, which launched in 2014, is the leading player in the fast-growing field of online commercial real estate investing. The company’s online Marketplace allows individual investors to reap the rewards of investing in the $6 trillion commercial real estate sector, investing in everything from multifamily apartment buildings to self-storage facilities and senior-living centers.

The average return on the first 14 deals financed on CrowdStreet’s platform — those which have fully wrapped up, yielding final returns to investors — is 31.7%, with a 1.6x equity multiple and a holding period of two years.*

MassMutual, CommonBond Team Up to Tackle Student Debt in the U.S. (Mass Mutual), Rated: A

Total student loan debt in the U.S. is now over $1.5 trillion, which prevents many people from passing financial milestones and saving for the future.

Massachusetts Mutual Life Insurance Company (MassMutual) has teamed up with CommonBond to offer a new student loan refinancing program through CommonBond with a rate advantage to help people take control of their student debt. This program – available online to all individuals with student debt today — is among the first of its kind in the student lending and insurance industries. The program is becoming available on a rolling basis in local communities across the U.S. through MassMutual’s network of financial advisors, currently 9,000 strong.

Ocrolus Raises $ 24M to Modernize Workflows with a Human Touch (PR Newswire), Rated: A

Ocrolus today announced $24M in Series B funding led by Oak HC/FT, a premier venture growth equity fund with deep fintech expertise. Ocrolus is powered by an elegant blend of artificial intelligence and crowdsourced human quality control, enabling firms across the financial sector to automate high-stakes business processes with precision. The company will use its new funding to automate underwriting workflows for lenders and banks, and expand into new verticals.

How Citizens Bank is rethinking mobile and online banking (American Banker), Rated: A


Robos are getting political. Will Wall Street follow? (FinancialPlanning), Rated: A

Forged in the wake of the financial crisis and political movements like Occupy Wall Street, digital advisory firms have become decidedly open about their political agendas. By advocating for the democratization of financial advice and stronger consumer protections, digital investment platforms have become the face of progressive politics in the market. That’s attractive to young investors — assets managed on digital platforms are expected to soar to $1.26 trillion by 2023, according to a report by Aite Group.

Cross River gets onboarding system it coveted in fintech deal (American Banker), Rated: A

The $1.5 billion-asset bank agreed on Monday to buy Seed for an undisclosed amount. The 5-year-old fintech offers a mobile account for small businesses, complete with bill payment, remote deposit and an attached debit card.

“It’s About Time” Documentary Sheds Light on Earned Wage Access (PR Newswire), Rated: A

Today, PayActiv, Inc., the leader in employer-sponsored, holistic financial wellness service for employees, unveiled its documentary made in collaboration with Early Light Media and Roundtable Companies about the direct benefits of timely earned wage access. Now available at ItsAboutTimeTheFilm.com, the documentary, titled It’s About Time, looks at pay timing and its correlation with epidemic financial stress being experienced by millions of working Americans.

Fintech MX gets $ 100 million in funding to expand operations (American Banker), Rated: B

The data company MX is set to announce Tuesday an infusion of $100 million from a host of partners, including National Bank of Canada and Washington Federal.

Neighborhood Ventures Closes on Third Investment Property Near Old Town Scottsdale (Yahoo! Finance), Rated: B

Arizona’s first real estate crowdfunding company, Neighborhood Ventures, recently closed on its third investment property, an eight-unit apartment building in Old Town Scottsdale. Ninety Arizona residents invested a total of $550,000 into the purchase of the property, which will be renovated with a plan to operate it as an Airbnb.

United Kingdom

Funding Circle set for its largest ever securitisation (P2P Finance News), Rated: AAA

DEUTSCHE Bank has unveiled more details on Funding Circle’s fourth securitisation, revealing it will be the highest-value package of loans it has offered so far.

The investment bank, which has been mandated as sole arranger and lead manager, said the deal will comprise 3,030 loans, with an aggregate balance of £244m and an average interest rate of 9.91 per cent.

FTSE 250 movers: Funding Circle falters (ShareCast), Rated: A

London’s FTSE 250 fell 0.14% lower to 19,260.07 in afternoon trade on Wednesday, with Funding Circle leading the index lower.

The peer-to-peer lending marketplace was accompanied by fellow financial stocks, with Amigo HoldingsCharter Court Financial ServicesPlus500 and Onesavings Bank all featuring among the top fallers.

OakNorth completes £60m facility for three new retirement schemes (Development Finance Today), Rated: A

OakNorth has completed a £60m loan to Affordable Housing & Healthcare Group (AHH) for the development of three new affordable retirement living schemes.

He said that in retirement he will continue to be a school governor, and that he intended to devote more time to the two charities he is involved with (the other one being Lendwithcare – peer to peer lending to entrepreneurs in a number of Third World countries).

China

Top Chinese peer-to-peer lender to shift strategy after latest fundraising (ETPrime), Rated: AAA

Wu Yujian and Liu Jiefei Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, said it’s planning a shift in strategy to focus on cooperating with traditional financial institutions as China’s regulators continue to tighten their grip over the industry. The move was revealed on Thursday as the Shanghai-based company confirmed (link in Chinese) it had completed a new

Government Asks Victims of P2P Fraud Case to Register for Compensation (Caixin Global), Rated: A

An intermediate court in Beijing overseeing the Ezubo case said on Wednesday that victims could detail their cases to authorities at local registration sites between July 2 and Aug. 30.

European Union

A very Nordic fintech revolution (Pitchbook), Rated: AAA

Europe is a hotbed of activity when it comes to fintech investments, as the sector continues to mature. Year after year, billions of euros are plowed into promising startups, with last year seeing more than €2.8 billion raised across 438 deals, per the PitchBook Platform.

Below is a list of some of the most innovative fintech companies founded in the Nordics, together with noteworthy investments and backers.

EU Moves Closer To New Bloc-Wide Crowdfunding Rules (Law360), Rated: A

European lawmakers floated new rules on Wednesday to make it easier for businesses and investors to ask the public to fund their projects, bringing the European Union a step closer to forging a common set of rules for national regulators overseeing crowdfunding.

International

Funding Circle strikes €50m loans deal with Sweden’s Avida Finans (AltFi), Rated: AAA

Funding Circle has struck a deal with Swedish finance house Avida Finans to lend an initial €50m to small firms in Germany and the Netherlands this year.

How DeFi startups are providing an alternative to traditional lending (Sociable), Rated: AAA

DeFi lending startups are leveraging blockchain to shake-up the traditional money lending industry.

Digital Assets Kept as Collateral

Salt is one company which has been borne out of the cryptocurrency sector.  Through its platform, digital assets are kept as collateral but returned upon repayment of the loan.

Automated P2P Lending Agreements on Blockchain

ETHLend is another DeFi platform built on top of the Ethereum network.  It creates a means for lenders and borrowers from around the world to establish peer to peer lending agreements over blockchain.

Blockchain Catering to the Unbanked in Latin America

A Blockchain-Driven Lending Circle

A completely different approach is being taken by startup, WeTrust.

When it comes to lending, users can establish a ‘lending circle’ on the platform.

Australia

P2P lender expands presence in third-party space (TheAdviser), Rated: AAA

Peer-to-peer lender RateSetter has announced its new partnership with Choice Aggregation Services (Choice), providing accredited brokers with access to the lender’s personal loan offerings.

P2P lender joins aggregator panel (Broker News), Rated: A

The partnership will make RateSetter’s unsecured personal loan product available to Choice Aggregation Service’s network of more than 1,600 brokers, in line with the trend towards servicing a more diverse array of client needs.

Recognising SMEs’ contribution to the economy (AustralianBroker), Rated: A

Prospa research has highlighted how lending to small business positively affects the economy through contributing to GDP and creating and supporting jobs.

Data released this week by accounting software firm Xero, analysed invoices from 150,000 Australian SMEs and concluded that 53% of trade credit invoices are paid late by big business suppliers and customers – on average 23 days after their due date. Squeezing SMEs, Xero calculates these late payments are worth $115bn.

Technology boosting financial literacy (Financial Review), Rated: A

Technology will need to play a bigger role in boosting the financial literacy of Australians as a large number of financial planners leave the profession, says Bronny Speed, financial advice leader at Chartered Accountants Australia New Zealand.

Speed says as increased educational and licensing standards for Australia’s 29,000 financial advisors will push some out of the market, it will leave a gap in the profession’s ability to provide financial advice and boost literacy.

India

India’s Open ‘neo-bank’ raises $ 30 million to help businesses automate their finances (TechCrunch), Rated: AAA

Open, a Bangalore-based startup that operates a “neo-bank” to help businesses automate and run their finances, has bagged $30 million in a new funding round as investors look to replicate a globally tried and tested business idea in emerging markets.

Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it (Entrepreneur), Rated: A

In today’s age of digitisation, it is all about the customer and improving his/her experience. To achieve this goal, banks and fintech companies have to support each other. This change in the ecosystem has invented the concept of neo banking which can be rightly dubbed as the new era of the banking industry.

Govt should look at alternative financing option like P2P lending to solve MSMEs’ credit woes (MENAFN), Rated: A

As Budget is about to come in few weeks, it’s time for the government to look at alternative financing option like P2P lending to solve the credit crisis in Micro Small and Medium Enterprises (MSME) sector, said Rajiv M Ranjan, Founder & CMD, Paisa Dukan.

While sharing the budget expectations, he said, ‘Getting access to institutional credit has been one of the major problems of the MSMEs and to maintain the wealth of the Indian middle class, P2P lending can turn a milestone.

Is fintech reeling under new challenges? (DNA India), Rated: A

The super exciting fintech segment in the start-up ecosystem has been encountering a host of challenges in the recent past. Following a move by the Reserve Bank of India (RBI) to start a regulatory sandbox for the beta-testing of new fintech products in a controlled environment prior to their release, comes the issue of a liquidity crunch in the non-banking finance companies (NBFC) space.

STEADY GAINS

  • Over 1,300 new fintech ventures had cropped up in the sector between 2015 to 2018, according to a data
  • Fintech is a broad sector. It is wrong to connect the NBFC crisis to the whole fintech space
  • For a peer-to-peer (P2P) lending player who is dependent on retail investors for funding loans, maintaining trust is the key challenge
Asia

Singapore is ‘actively studying’ virtual banking licences, says country’s prime minister (SCMP), Rated: AAA

Singapore is actively studying whether to allow companies with no banking parentage to set up virtual banks, paving the way for start-ups like on-demand services operator Grab to potentially enter the formal financial services industry.

KoinWorks Closes $ 12M In Series B Funding Round (PYMNTS), Rated: A

KoinWorks announced that it has raised $12 million in a Series B funding round. The round was co-led by EV Growth and Quona Capital, with participation from existing investors. The funding will be used to expand the KoinWorks team and partnerships, as well as further develop the company’s systems and technology.

Business environment needs strong Gov’t actions: VBF 2019 (Vietnam News), Rated: A

The American Chamber of Commerce in Việt Nam (AmCham) expressed its desire for a highly standardised, transparent and stable business environment so all investors are treated equally.

Concerns were also raised by the Korea Chamber of Commerce in Việt Nam (Kocham) and the Japanese Chamber of Commerce and Industry in Việt Nam (JCCI).

The limit of foreign ownership in local financial firms has also prevented fintech and P2P firms from calling for foreign capital, making them unable to hire talent and keeping their businesses less competitive.

PT ALAMI Fintek Sharia (Alami) came in as the runner-up position in the TaqwaTech Pitch Pit organised by Gobi Partners Venture Capital.

Three companies from Indonesia qualified for the top ten, namely Alami, as well as two marketplace startups for pilgrimage services PergiUmroh.com and Umroh.com.

Authors:

George Popescu
Allen Taylor

The post Thursday June 7 2019, Weekly News Digest appeared first on Lending Times.

Thursday June 7 2019, Weekly News Digest

economic downturn

News Comments Today’s main news: SoFi completes first rated pass-through certificates offering. Y Combinator backs Monzo for U.S. expansion. Funding Circle set for largest securitization. Dianrong shifts strategy. Funding Circle inks 50M Euro deal with Avida Finans. Open raises $30M. Today’s main analysis: Chance for recession is rising (A MUST-READ PeerIQ analysis). Today’s thought-provoking articles: […]

The post Thursday June 7 2019, Weekly News Digest appeared first on Lending Times.

economic downturn

News Comments

United States

United Kingdom

International

China

APAC

News Summary

United States

SoFi Completes First Offering of Rated Pass-Through Certificates (PR Newswire), Rated: AAA

SoFi announced today that it completed a $200 million offering of post-graduate student loan asset-backed certificates issued by SoFi Alternative Trust 2019-C (SAT 2019-C). The Certificates are rated single-A by DBRS and mark the first rated pass-through certificate transaction issued by SoFi and the first publicly rated student loan pass-through transaction in the securitization market.

Unlike traditional student loan ABS transactions, SAT 2019-C does not use overcollateralization or bond subordination as forms of credit enhancement.  The A rating assigned to the certificates by DBRS reflects the strong credit attributes of the borrowers. The portfolio has a weighted average credit score of 783 and a weighted average annual income of $175,746.

Y Combinator says Monzo’s community will help it succeed in the US where others have failed (AltFi), Rated: AAA

Leading US startup backer Y Combinator has become the latest high-profile backer of Monzo, on the eve of the bank’s American expansion.

Today Monzo confirmed it had raised £113m in a round led by Y Combinator’s Continuity fund, along with Latitude, General Catalyst, Stripe, Passion Capital and others.

Recession Risks; OCC Charter + Big Tech (PeerIQ), Rated: AAA

Weak economic data continue – inflation expectations tumble, manufacturing has moved into recession, and the 10y/3m yield curve remains mildly inverted. Although the FOMC took no rate action this week, dovish signaling has led market participants to expect a 70% chance of 3 or more rate cuts in 2019.

Source: WSJ, PeerIQ

CPI Since 1879 During Business Cycles

Source: Deutsche Bank, PeerIQ

How A Former J.Crew And Pillsbury Exec Is Applying His CFO Expertise At A Financial Unicorn (Forbes), Rated: AAA

Scott Rosenberg: Kabbage represented a great opportunity for me to apply my prior experiences and help architect the future vision of a fast-growing company. Every role in my career has allowed me to lead or influence multiple divisions within a company, which makes my operational approach similar to that of a COO or General Manager. Beyond leading the CFO office in previous roles, I led Marketing at J. Crew, Operations at Pillsbury and most recently was the President of Purchasing Power. This broad vantage point lets me ensure financial growth as the CFO, but also identify opportunities to establish operational efficiencies more broadly across the organization. I take the same approach at Kabbage as I lead multiple disciplines, including Capital Markets and Legal. It encourages transparency across teams which allows us to move faster. With more than 175,000 customers accessing over $7.0 billion to-date, it’s an exciting role to drive hyper growth and deliver the best products and experiences for U.S. small businesses.

According to a survey released today by Kabbage that polled more than 500 companies across multiple industries, 80% of American entrepreneurs said they felt confident in their readiness to weather another economic crisis.

H&M and Klarna Grow Partnership to US (Yahoo! Finance), Rated: A

H&M and Klarna announced that they have expanded their current partnership agreement to also include the US market, in the development of an unrivalled payments and shopping experience across touchpoints. Together, H&M and Klarna are aiming at further integrating H&M’s digital and physical stores to give customers a seamless, personalised and engaging shopping experience no matter where, when and how they shop.

This Commercial Real Estate Marketplace Provides Direct Investment Opportunities (TheStreet), Rated: A

CrowdStreet, which launched in 2014, is the leading player in the fast-growing field of online commercial real estate investing. The company’s online Marketplace allows individual investors to reap the rewards of investing in the $6 trillion commercial real estate sector, investing in everything from multifamily apartment buildings to self-storage facilities and senior-living centers.

The average return on the first 14 deals financed on CrowdStreet’s platform — those which have fully wrapped up, yielding final returns to investors — is 31.7%, with a 1.6x equity multiple and a holding period of two years.*

MassMutual, CommonBond Team Up to Tackle Student Debt in the U.S. (Mass Mutual), Rated: A

Total student loan debt in the U.S. is now over $1.5 trillion, which prevents many people from passing financial milestones and saving for the future.

Massachusetts Mutual Life Insurance Company (MassMutual) has teamed up with CommonBond to offer a new student loan refinancing program through CommonBond with a rate advantage to help people take control of their student debt. This program – available online to all individuals with student debt today — is among the first of its kind in the student lending and insurance industries. The program is becoming available on a rolling basis in local communities across the U.S. through MassMutual’s network of financial advisors, currently 9,000 strong.

Ocrolus Raises $ 24M to Modernize Workflows with a Human Touch (PR Newswire), Rated: A

Ocrolus today announced $24M in Series B funding led by Oak HC/FT, a premier venture growth equity fund with deep fintech expertise. Ocrolus is powered by an elegant blend of artificial intelligence and crowdsourced human quality control, enabling firms across the financial sector to automate high-stakes business processes with precision. The company will use its new funding to automate underwriting workflows for lenders and banks, and expand into new verticals.

How Citizens Bank is rethinking mobile and online banking (American Banker), Rated: A


Robos are getting political. Will Wall Street follow? (FinancialPlanning), Rated: A

Forged in the wake of the financial crisis and political movements like Occupy Wall Street, digital advisory firms have become decidedly open about their political agendas. By advocating for the democratization of financial advice and stronger consumer protections, digital investment platforms have become the face of progressive politics in the market. That’s attractive to young investors — assets managed on digital platforms are expected to soar to $1.26 trillion by 2023, according to a report by Aite Group.

Cross River gets onboarding system it coveted in fintech deal (American Banker), Rated: A

The $1.5 billion-asset bank agreed on Monday to buy Seed for an undisclosed amount. The 5-year-old fintech offers a mobile account for small businesses, complete with bill payment, remote deposit and an attached debit card.

“It’s About Time” Documentary Sheds Light on Earned Wage Access (PR Newswire), Rated: A

Today, PayActiv, Inc., the leader in employer-sponsored, holistic financial wellness service for employees, unveiled its documentary made in collaboration with Early Light Media and Roundtable Companies about the direct benefits of timely earned wage access. Now available at ItsAboutTimeTheFilm.com, the documentary, titled It’s About Time, looks at pay timing and its correlation with epidemic financial stress being experienced by millions of working Americans.

Fintech MX gets $ 100 million in funding to expand operations (American Banker), Rated: B

The data company MX is set to announce Tuesday an infusion of $100 million from a host of partners, including National Bank of Canada and Washington Federal.

Neighborhood Ventures Closes on Third Investment Property Near Old Town Scottsdale (Yahoo! Finance), Rated: B

Arizona’s first real estate crowdfunding company, Neighborhood Ventures, recently closed on its third investment property, an eight-unit apartment building in Old Town Scottsdale. Ninety Arizona residents invested a total of $550,000 into the purchase of the property, which will be renovated with a plan to operate it as an Airbnb.

United Kingdom

Funding Circle set for its largest ever securitisation (P2P Finance News), Rated: AAA

DEUTSCHE Bank has unveiled more details on Funding Circle’s fourth securitisation, revealing it will be the highest-value package of loans it has offered so far.

The investment bank, which has been mandated as sole arranger and lead manager, said the deal will comprise 3,030 loans, with an aggregate balance of £244m and an average interest rate of 9.91 per cent.

FTSE 250 movers: Funding Circle falters (ShareCast), Rated: A

London’s FTSE 250 fell 0.14% lower to 19,260.07 in afternoon trade on Wednesday, with Funding Circle leading the index lower.

The peer-to-peer lending marketplace was accompanied by fellow financial stocks, with Amigo HoldingsCharter Court Financial ServicesPlus500 and Onesavings Bank all featuring among the top fallers.

OakNorth completes £60m facility for three new retirement schemes (Development Finance Today), Rated: A

OakNorth has completed a £60m loan to Affordable Housing & Healthcare Group (AHH) for the development of three new affordable retirement living schemes.

He said that in retirement he will continue to be a school governor, and that he intended to devote more time to the two charities he is involved with (the other one being Lendwithcare – peer to peer lending to entrepreneurs in a number of Third World countries).

China

Top Chinese peer-to-peer lender to shift strategy after latest fundraising (ETPrime), Rated: AAA

Wu Yujian and Liu Jiefei Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, said it’s planning a shift in strategy to focus on cooperating with traditional financial institutions as China’s regulators continue to tighten their grip over the industry. The move was revealed on Thursday as the Shanghai-based company confirmed (link in Chinese) it had completed a new

Government Asks Victims of P2P Fraud Case to Register for Compensation (Caixin Global), Rated: A

An intermediate court in Beijing overseeing the Ezubo case said on Wednesday that victims could detail their cases to authorities at local registration sites between July 2 and Aug. 30.

European Union

A very Nordic fintech revolution (Pitchbook), Rated: AAA

Europe is a hotbed of activity when it comes to fintech investments, as the sector continues to mature. Year after year, billions of euros are plowed into promising startups, with last year seeing more than €2.8 billion raised across 438 deals, per the PitchBook Platform.

Below is a list of some of the most innovative fintech companies founded in the Nordics, together with noteworthy investments and backers.

EU Moves Closer To New Bloc-Wide Crowdfunding Rules (Law360), Rated: A

European lawmakers floated new rules on Wednesday to make it easier for businesses and investors to ask the public to fund their projects, bringing the European Union a step closer to forging a common set of rules for national regulators overseeing crowdfunding.

International

Funding Circle strikes €50m loans deal with Sweden’s Avida Finans (AltFi), Rated: AAA

Funding Circle has struck a deal with Swedish finance house Avida Finans to lend an initial €50m to small firms in Germany and the Netherlands this year.

How DeFi startups are providing an alternative to traditional lending (Sociable), Rated: AAA

DeFi lending startups are leveraging blockchain to shake-up the traditional money lending industry.

Digital Assets Kept as Collateral

Salt is one company which has been borne out of the cryptocurrency sector.  Through its platform, digital assets are kept as collateral but returned upon repayment of the loan.

Automated P2P Lending Agreements on Blockchain

ETHLend is another DeFi platform built on top of the Ethereum network.  It creates a means for lenders and borrowers from around the world to establish peer to peer lending agreements over blockchain.

Blockchain Catering to the Unbanked in Latin America

A Blockchain-Driven Lending Circle

A completely different approach is being taken by startup, WeTrust.

When it comes to lending, users can establish a ‘lending circle’ on the platform.

Australia

P2P lender expands presence in third-party space (TheAdviser), Rated: AAA

Peer-to-peer lender RateSetter has announced its new partnership with Choice Aggregation Services (Choice), providing accredited brokers with access to the lender’s personal loan offerings.

P2P lender joins aggregator panel (Broker News), Rated: A

The partnership will make RateSetter’s unsecured personal loan product available to Choice Aggregation Service’s network of more than 1,600 brokers, in line with the trend towards servicing a more diverse array of client needs.

Recognising SMEs’ contribution to the economy (AustralianBroker), Rated: A

Prospa research has highlighted how lending to small business positively affects the economy through contributing to GDP and creating and supporting jobs.

Data released this week by accounting software firm Xero, analysed invoices from 150,000 Australian SMEs and concluded that 53% of trade credit invoices are paid late by big business suppliers and customers – on average 23 days after their due date. Squeezing SMEs, Xero calculates these late payments are worth $115bn.

Technology boosting financial literacy (Financial Review), Rated: A

Technology will need to play a bigger role in boosting the financial literacy of Australians as a large number of financial planners leave the profession, says Bronny Speed, financial advice leader at Chartered Accountants Australia New Zealand.

Speed says as increased educational and licensing standards for Australia’s 29,000 financial advisors will push some out of the market, it will leave a gap in the profession’s ability to provide financial advice and boost literacy.

India

India’s Open ‘neo-bank’ raises $ 30 million to help businesses automate their finances (TechCrunch), Rated: AAA

Open, a Bangalore-based startup that operates a “neo-bank” to help businesses automate and run their finances, has bagged $30 million in a new funding round as investors look to replicate a globally tried and tested business idea in emerging markets.

Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it (Entrepreneur), Rated: A

In today’s age of digitisation, it is all about the customer and improving his/her experience. To achieve this goal, banks and fintech companies have to support each other. This change in the ecosystem has invented the concept of neo banking which can be rightly dubbed as the new era of the banking industry.

Govt should look at alternative financing option like P2P lending to solve MSMEs’ credit woes (MENAFN), Rated: A

As Budget is about to come in few weeks, it’s time for the government to look at alternative financing option like P2P lending to solve the credit crisis in Micro Small and Medium Enterprises (MSME) sector, said Rajiv M Ranjan, Founder & CMD, Paisa Dukan.

While sharing the budget expectations, he said, ‘Getting access to institutional credit has been one of the major problems of the MSMEs and to maintain the wealth of the Indian middle class, P2P lending can turn a milestone.

Is fintech reeling under new challenges? (DNA India), Rated: A

The super exciting fintech segment in the start-up ecosystem has been encountering a host of challenges in the recent past. Following a move by the Reserve Bank of India (RBI) to start a regulatory sandbox for the beta-testing of new fintech products in a controlled environment prior to their release, comes the issue of a liquidity crunch in the non-banking finance companies (NBFC) space.

STEADY GAINS

  • Over 1,300 new fintech ventures had cropped up in the sector between 2015 to 2018, according to a data
  • Fintech is a broad sector. It is wrong to connect the NBFC crisis to the whole fintech space
  • For a peer-to-peer (P2P) lending player who is dependent on retail investors for funding loans, maintaining trust is the key challenge
Asia

Singapore is ‘actively studying’ virtual banking licences, says country’s prime minister (SCMP), Rated: AAA

Singapore is actively studying whether to allow companies with no banking parentage to set up virtual banks, paving the way for start-ups like on-demand services operator Grab to potentially enter the formal financial services industry.

KoinWorks Closes $ 12M In Series B Funding Round (PYMNTS), Rated: A

KoinWorks announced that it has raised $12 million in a Series B funding round. The round was co-led by EV Growth and Quona Capital, with participation from existing investors. The funding will be used to expand the KoinWorks team and partnerships, as well as further develop the company’s systems and technology.

Business environment needs strong Gov’t actions: VBF 2019 (Vietnam News), Rated: A

The American Chamber of Commerce in Việt Nam (AmCham) expressed its desire for a highly standardised, transparent and stable business environment so all investors are treated equally.

Concerns were also raised by the Korea Chamber of Commerce in Việt Nam (Kocham) and the Japanese Chamber of Commerce and Industry in Việt Nam (JCCI).

The limit of foreign ownership in local financial firms has also prevented fintech and P2P firms from calling for foreign capital, making them unable to hire talent and keeping their businesses less competitive.

PT ALAMI Fintek Sharia (Alami) came in as the runner-up position in the TaqwaTech Pitch Pit organised by Gobi Partners Venture Capital.

Three companies from Indonesia qualified for the top ten, namely Alami, as well as two marketplace startups for pilgrimage services PergiUmroh.com and Umroh.com.

Authors:

George Popescu
Allen Taylor

The post Thursday June 7 2019, Weekly News Digest appeared first on Lending Times.

What’s Going On With China’s P2P Lending Crisis?

P2P lending China

According to a Bloomberg article, China houses the biggest P2P lending industry in the world, an achievement that has now become an albatross around the country’s neck. According to one report, outstanding P2P loans in China are worth an estimated $217.96 billion. This is more than the combined outstanding loans for the rest of the […]

P2P lending China

According to a Bloomberg article, China houses the biggest P2P lending industry in the world, an achievement that has now become an albatross around the country’s neck. According to one report, outstanding P2P loans in China are worth an estimated $217.96 billion. This is more than the combined outstanding loans for the rest of the world. But the high-flying industry is now facing an existential crisis in China.

It is first important to understand the fundamental difference in the P2P lending ecosystem in the China versus the U.S. In the U.S., the platform is not on the hook if the borrower defaults. In China, P2P lenders provide explicit guarantees in the majority of the cases. This was the reason for the common sense-defying growth of P2P lending, and now it has become the iceberg that could sink the entire industry.

The Current P2P Lending Scenario in China

In 2018, nearly 247 Chinese P2P lenders defaulted in June and July, and around 2,305 platforms suffered from some kind of financial and operating issues. The count of operating P2P lenders has shrunk from 3,383 in 2016 to just 1,645 in August 2018. The flunked P2P platforms include those who ceased operations because either they were not able to repay investors or operators absconded with investors’ funds. A ‘domino’ effect is now taking place due to the collapse of these P2P lending platforms.

It all started in June 2018 when the number of platforms having problems was just 63. In July, this figure surged to 118. The initial months before June had only a paltry 20 firms facing such issues. Contributing to the downturn were outright scams. The biggest happened in 2016: Ezubao scammed investors over $7.6 billion through its well-known Ponzi scheme.

According to an estimate by the China International Capital Corp., only 10% of current P2P lending platforms would be able to survive the coming three years. Liquidity issues is one of the major reasons responsible for the failure of approximately 73% of the P2P lending platforms. As per analysts, the number of failures have risen primarily due to three factors:

  • Panicked withdrawals from investors
  • Increasing compliance costs
  • And a stiffening credit environment, which prompted defaults

The Regulation Perspective

A critical reason for this meltdown is the harsh regulations ushered in post-Ezubao. The new rules set by authorities were intended to give existing surviving players a tough set of prerequisites for operating in the industry. China Banking and Insurance Regulatory Commission (CBIRC) has transformed the role of P2P lending platforms to something that will only assist lending between parties and will not engage directly in handling the funds. Promising any kind of guarantee has been expressly disallowed.

CBIRC has proposed several measures to keep a check on the business of P2P lending platforms. The new measures include:

  • A mandate for P2P companies to self-review and report statistics like unpaid and non-performing loans.
  • Inspection powers are vested with the National Internet Finance Association and local industry associations.
  • Penalties have been set for deterrence.
  • Setting up of communication windows to assist customers with complaints.
  • Carrying out compliance inspections on platforms.
  • A ban has been imposed on setting up of a new P2P lending company.
  • P2P borrowers who fail to repay loans will be penalized in China’s social credit rating system.
  • Platforms now cannot use independent capital pools to fund the business. They have to count on real investors who want to fund loans.
  • Platforms are bound to make detailed disclosures with respect to their working.
  • Legal consequences for operators of Ponzi schemes.

An Analytical Overview of P2P Lending in China

These new regulations issued by the Chinese regulators were termed by Moody’s as “credit positive.” According to the agency, the changes made to the system and the regulations introduced will provide better protection to individual lenders and help in avoiding risk spilling over into the overall financial system.

The regulations have had a positive effect in the sense that weaker and/or dodgy online platforms will not be able to survive in the industry. This will rehabilitate the image of P2P lending in China and allow strong genuine players to grow the P2P lending market again. Though the P2P lending industry has been known for its over-exuberance, it was many times the only source of borrowing for small businesses and individuals.

But the mess still remains for millions of investors who have been left high and dry by such errant platforms. These investors had hoped government will step in and make them whole. Instead, the government’s measures have centered only on policy changes. This has led to mass protests and have been covered extensively by local and international media.

Conclusion

Regulators have framed measures to tackle the online lending crisis, but there is still no official guideline on how to recover already lost assets. It is unlikely that investors will be able to recoup their invested money. The write-offs are devastating for some. Reports of investor suicides are common on Chinese social media platforms. The new regulations address the issues at hand, but an awareness campaign educating investors about the pros and cons of investing in P2P lending attempts to curb a similar showdown in the future. It has become all the more critical as, now, risk consolidates into fewer (though, hopefully, regulated and well-managed) players as the industry continues to shrink.

Author:

Written by Heena Dhir.

Wednesday August 22 2018, Daily News Digest

Elevate Credit

News Comments Today’s main news: Elevate Credit expected to announce $203.49M in sales. Ant Financial delays IPO again. SocietyOne getting close to $500M in total lending, six years in. ClearScore to offer credit scores in India. Capital Float buys Sequoia and Walnut. Today’s main analysis: 10 years after financial crisis, credit market on upward curve. Today’s thought-provoking articles: New […]

Elevate Credit

News Comments

United States

China

International

India

Other

News Summary

United States

Brokerages Anticipate Elevate Credit Inc (ELVT) Will Announce Quarterly Sales of $ 203.49 Million (Baseball Daily Digest) Rated: AAA

Equities research analysts forecast that Elevate Credit Inc (NYSE:ELVT) will post $203.49 million in sales for the current fiscal quarter, Zacks reports. Two analysts have issued estimates for Elevate Credit’s earnings, with estimates ranging from $201.00 million to $205.97 million. Elevate Credit reported sales of $172.85 million during the same quarter last year, which indicates a positive year-over-year growth rate of 17.7%. The firm is expected to report its next quarterly earnings report on Monday, October 29th.

According to Zacks, analysts expect that Elevate Credit will report full-year sales of $803.23 million for the current financial year, with estimates ranging from $801.00 million to $805.45 million. For the next financial year, analysts expect that the company will report sales of $927.09 million per share, with estimates ranging from $926.97 million to $927.20 million. Zacks’ sales calculations are a mean average based on a survey of research firms that follow Elevate Credit.

Financial Crisis – 10 Years Later: Consumer Credit Market on an Upward Curve (Nasdaq) Rated: AAA

Ten years after the biggest financial crisis to hit the United States since the Great Depression, much has changed in the consumer credit marketplace. Serious delinquency rates have recovered since that period, and the credit quality of consumers has broadly improved. Yet the crisis has had a profound effect on consumer access to credit and the relationship they have with it.

TransUnion’s (NYSE:TRU) just-released Q2 2018 Industry Insights Report allows for comparisons between Americans’ credit preferences today versus 2008, specifically in the auto finance, credit card, mortgage and unsecured personal loan markets.

Source: TransUnion

Lawmaker Questions FinTech Industry Over Lending Practices (Govtech) Rated:A

Rep. Emanuel Cleaver (D-Mo.) released a report Friday detailing the lending practices of some prominent fintech companies, finding that some companies could be discriminating against minorities and calling for more transparency from the fintech sector.

Fintech companies are somewhat controversial because many engage in traditional banking practices, and some consumers and regulators are calling for them to be regulated like traditional banks.

Small banks need big data to maintain customer service edge (American Banker) Rated: A

Big data isn’t just for big banks.

The modern banking customer wants advanced online and mobile banking options, and delivering such services requires even the smallest community bank to get a handle on customer data, said Corey LeBlanc, chief technology officer and vice president at Origin Bank.

Blockchain Meets REIT – A New Era in Real Estate Investing (Market Insider) Rated: A

Building Block, Inc. announced today it is the first North American REIT (Real Estate Investment Trust) to embrace the emerging efficiencies of blockchain technology and provide a new way to invest in one of the world’s most well-known and trusted assets, real estate.   Blockchain technology will enable Building Block REIT to virtually eliminate friction in REIT shareholder communication by allowing direct dividend disbursement, secure user voting, and smart contract functions that execute automatically when pre-set parameters are met.

Building Block REIT plans to raise funds in the form of a digital initial public offering (Digital IPO) accepting payments via U.S. Dollars or fractional Ethereum cryptocurrency.  Investors worldwide will be able to purchase shares in Building Block REIT on SEC compliant alternative trading systems (ATS) or peer-to-peer exchanges with whitelisted parties to invest in US commercial office, multi-family and mixed-use real estate.

JPMorgan launching Roar platform for crowdsourced data (Business Insider) Rated: A

JPMorgan’s corporate and investment bank is best known for advising businesses on billion-dollar acquisitions, helping private unicorns tap into the public markets, and managing the cash of Fortune 500 companies.

But now it is quietly working on a new platform that would go far beyond anything the firm has previously done, using crowdsourcing to accumulate massive amounts of data intended to one day help its clients make complex decisions about how to run their businesses, according to people familiar with the project.

The platform, called Roar by JPMorgan, would store sensitive private data, such as hospital records or satellite imagery, that’s not in the public domain. Typically, this type of information is exchanged between firms on a bilateral arrangement so it is not improperly used. But Roar would allow clients to tap into this data, which they could then use in a secure fashion to make forecasts and gain business insights.

New Report Shows Identity Verification a Priority for eCommerce and Online Lending Businesses (Global News) Rated: A

A new report from Whitepages Pro shows that an overwhelming majority of North American companies in ecommerce and financial services surveyed consider identity verification to be a top business priority but many still don’t believe they do it well or have all the data and tools they need to be successful. For the report, “The State of Identity Verification Maturity in North America,” businesses were asked, among other things, to rank themselves on a 4-stage scale of identity verification maturity for how they use identity data to combat fraud and improve the customer experience.

Among the report’s key findings:

  • Driven by the belief that fraud attempts are increasing in frequency and sophistication, identity verification is a priority for most organizations (93 percent). While they vary in the degree to which they use advanced techniques, most organizations want to improve their identity verification methods and outcomes. Just 2 percent believe they are completely successful at identity verification.
  • Organizations want access to more data points (just 13 percent say they have all the data they need) and see data linkages (the relationships between data elements) as a way to improve their identity verification processes. While access to traditional data (like a street address) is common, many still don’t have or use digital data (like an IP address). Most of the survey respondents believe linking data reduces fraud with 77 percent believing it increases confidence in a customer’s identity.
  • Organizations want more and improved identity verification automation. However they often rely on in-house (such as historical data and white/black lists) that make it difficult to expand the use of automation, resulting in an over reliance on costly and time consuming manual reviews. A large majority (71 percent) believe machine learning can play a role in reducing manual reviews and making identity verification more effective.

Bank of the West exec bolts for startup, sees chance ‘to redefine retail banking’ (American Banker) Rated: A

Thibault Fulconis, who until recently was chief operating officer of Bank of the West, has joined the fintech digital banking startup Varo Money as its chief financial officer.

Varo Money is a mobile-first challenger bank that aims to help Americans achieve financial health. It is in the same league as Chime, Digit, Moven, MoneyLion, Qapital and N26.

White Oak Healthcare Finance Closes $ 40 Million Financing for LifeCare Holdings, Inc. (Business Wire) Rated: A

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as lead lender and administrative agent on the funding of a $40 million asset based senior credit facility for LifeCare Holdings, Inc. (“LifeCare”). The funds were primarily used to refinance existing indebtedness. White Oak previously announced the financing of LifeCare Home Health LLC, the home health entity owned by LifeCare.

TradeStation Launches New Fully Paid Lending Program (GlobeNewswire), Rated: A

TradeStation, a Monex Group company and award-winning online broker-dealer and futures commission merchant, today announced the launch of its Fully Paid Lending Program. This program allows qualified equities account holders the opportunity to earn interest income on lendable securities in their accounts.

Under the Fully Paid Lending Program, TradeStation identifies stocks in qualified accounts that are eligible for lending. Based on market demand, some or all of a qualified client’s fully paid positions or excess-margin securities may be lent out to other financial institutions to satisfy their customers’ position requirements. While their stocks are on loan, clients automatically receive 50% of the net proceeds earned by TradeStation for lending out the shares, which is accrued daily and automatically posted monthly to their accounts. Daily income ceases to accrue when the client sells a lendable stock or the stock is no longer on loan.

US wakes up to SME cybersecurity needs (Fintech Futures) Rated: B

US President Donald Trump has signed the National Institute of Standards and Technology (NIST) Small Business Cybersecurity Act, a bill which will provide a set of resources for small businesses to best protect their digital assets from cybersecurity threats.

United Kingdom

Private credit offers an escape from miserly bond yields (Citywire) Rated: AAA

For reasons that are quite clear if you follow my writings on a regular basis, equities and bonds will most likely deliver disappointing returns for many years to come.

My central forecast is an annual average inflation-adjusted return of 0-2% on a global portfolio consisting of 40% bonds and 60% equities between now and 2050.

The good news next.  Fortunately, there are many things you can do to improve on those lacklustre numbers. Those returns are for the lazy investor; someone who invests passively.

China

Ant Financial IPO plans pushed back again (Financial Times) Rated: AAA

A blockbuster listing of Ant Financial, the fast-growing electronic payment affiliate of China’s leading tech group Alibaba, has again been delayed as it continues to burn through cash and come under pressure from Beijing’s crackdown on non-traditional financial institutions.

Ant was valued at $150bn in its last private fundraising in June, a round that bankers said paved the way for an initial public offering as early as this year.

Moody’s: China’s new measures on P2P lending are credit positive (ECNS) Rated: AAA

The global credit rating agency Moody’s called China’s newly-issued regulations on peer-to-peer lending platforms are “credit positive”, because they will strengthen protections to individual lenders and prevent risk spilling over to the broader financial system.

Moody’s commentary came after Chinese regulators announced 10 measures to address risks related to P2P lending platforms on August 12. The P2P platforms enable individuals to lend directly to borrowers through the Internet.

The new regulations clarified responsibilities of P2P platforms and their shareholders, stipulated conditions for orderly liquidation of failed platforms, outlined penalties for borrowers that escape their debt obligations and prohibited registration of new platforms.

Next Step to Regulating P2P Lending Platforms — Figuring Out Who Owns Them (Caixin Global) Rated: A

Months into the crisis in China’s online lending industry, regulators want to know who actually owns the country’s peer-to-peer (P2P) lending platforms.

The National Internet Finance Association of China (NIFA) issued a notice on Monday designed to help it keep tabs on key stakeholders in China’s online P2P lending platforms as financial and legal difficulties continue to engulf the business.

The effort to bring greater clarity to the workings of P2P platforms comes after hundreds of online platforms have encountered financial and legal troubles in the last few months. In July, at least 165 P2P platforms had difficulties meeting cash-withdrawal demands, saw their owners abscond with investor funds, or were investigated by police, according to a report by internet lending research firm Wangdaizhijia. The number was nearly triple that in June, Wangdaizhijia said.

In-Depth: Police Launch Global Hunt for ‘Solar King’ Caught Up in P2P Bust (Caixin Global) Rated: AAA

Peng Xiaofeng was once China’s youngest billionaire and a rising star in the solar industry. But the founder of now-bankrupt LDK Solar has been put on China’s most-wanted list, hunted by law enforcement agencies for illegal fund-raising by his peer-to-peer (P2P) lending platform Solarbao.com.

Police in the city of Suzhou, where Solarbao.com is registered, want Interpol to issue a Red Notice against 43-year-old Peng, who is accused of swindling more than 5,000 investors and leaving a trail of debt amounting to 220 million yuan ($32.1 million). They have also branded the platform, a subsidiary of Nasdaq-listed SPI Energy Co. Ltd., a fraud.

HuaAn Finds Itself Target of Investor Ire After P2P Company Accused of Fraud (Caixin Global) Rated: A

The Shanghai office of fund manager HuaAn Future Asset Management Co. Ltd.was surrounded on Monday by throngs of angry investors who blame the company for what they perceive to be its role in an online-lending fraud. HuaAn denies any involvement.

Monday’s protest centered on P2P site PPMiao.com, which was accused of illegal fundraising by police in the eastern city of Hangzhou, where PPMiao.com operator Guangxi PPMiao Internet Technology Co. Ltd. is registered. HuaAn held a 37.5% stake on behalf of an asset management plan in PPMiao.com’s former operator, Hangzhou Fuqian Network Technology Co. Ltd., as of June 30, making HuaAn the target of investor ire when PPMiao.com’s financial problems surfaced.

International

Many countries don’t use credit scores like the US — here’s how they determine your worth (Business Insider) Rated: AAA

In the US, a good credit score can feel like a key determinant of success. It defines how good an interest rate you can get on a car loan or mortgage, the quality of credit card you can get approved for, or if you’ll get approved for any credit at all.

The better your score, the better the perks. A bad score can become a black mark that leads to missing out on the home you want (credit checks are a common aspect of apartment applications), higher car insurance rates, or even difficulty getting a cell phone, according to Nerdwallet.

But as monolithic as the credit score seems, many countries in the world handle credit very differently — with many having no credit score system at all.

Blockchain Can Help Peer-To-Peer Car Lending Schemes Gain Traction (Market News) Rated: A

Blockchain technology can help car-sharing companies to track a person using the car any time. According to industry analysts, the car sharing economy is expected to hit $335 billion by the year 2025.

The car sharing idea has been gaining a lot of interest among car drivers over the recent years. According to estimates by Global Market Insight, the peer-to-peer car sharing sector will amount to $11 billion. The growth has largely been attributed to raising cost of owning a car.

The biggest challenge with the Peer-to-peer lending system is trust. The car owner has to have total trust in the person hiring the car. Additionally, the car owner has to be sure that the hirer has enough money to cover the period the car is hired. The owner of the vehicle would also like to track where the car is as well as the condition in which it is being driven. On the side of the hirer, they would love to know if they are hiring the car from the original owner and that the data exchanged between the two parties is secure.

Australia

SocietyOne Celebrates Sixth Anniversary; Total Lending Now Approaching $ 500 Million (Crowdfund Insider) Rated: AAA

Australia-based marketplace lender SocietyOne announced celebrated its sixth anniversary of operations as total lending since inception approaches $500 million.

SocietyOne also reported it has more than 20,000 customers and since the beginning of 2016, total lending has grown nearly 6 times and the lender’s loan book now totals over $220 million, up from $41 million at the start of 2016.

India

UK’s fintech startup ClearScore set to offer credit scores in India (Economic Times) Rated: AAA

UK-headquartered fintech startup ClearScore is all set to start its business in India offering credit scores to Indian consumers in partnership with Experian, free of cost, to improve the awareness levels of the consumers regarding credit. India is their second international market after the company started operations in South Africa last year.

ClearScore will be available on Google Play Store and will provide details of the credit score, giving alerts about changes in the score and provide details about how consumers can improve the score.

Capital Float buys Sequoia & SAIF-backed Walnut for $ 30 mn (VC Circle) Rated: AAA

Bengaluru-based digital lending platform Capital Float has acquired personal finance management app-maker Walnut for $30 million (Rs 209 crore) in a cash and stock deal, a company statement said. Both the companies count Sequoia Capital and SAIF Partners as common venture capital investors.

Walnut allows users to track spends, check on credit and bank balance, bill payments and split expenses within a group. In July 2017, it launched a small ticket credit line for its users called Walnut Prime based on user data and consumer behaviour. The platform has so far disbursed Rs 100 crore in consumer loans.

OfBusiness Raises INR 200 Crore in Series C Financing (FinSMEs) Rated: A

OfBusiness, a Gurgaon, India – based technology enabled SME financing platform, raised INR 200 crore (approx $29m) in Series C financing.

The round was led by Creation Investments and Falcon Edge with participation from existing investors Matrix Partners India and Zodius Capital. With this new round of funding, the company has raised a total of INR 500 crore of equity and debt funding to date. It has also raised debt lines from Kotak, Tata Capital, RBL Bank and Northern Arc amongst other lending partners.

The capital will be used for continued rapid growth and model scaling.

Five Star Business Finance Raises USD$ 100M in Funding (FinSMEs) Rated: A

Five Star Business Finance Limited, a Chennai, India–based fully-secured small business financing company focused on South India, raises USD$100M in funding.

The round was led by alternative asset firm TPG, with participation from existing investors Norwest Venture Partners, an investment fund managed by Morgan Stanley, and Sequoia Capital. The company’s first investor, Matrix Partners India, continues to stay invested in the company.

Led by D. Lakshmipathy, Chairman and Managing Director, Five Star is a non-bank finance company providing loans to nearly 40,000 customers.

P2P Online Lending Startup Finzy Completes $ 2.3 Mn Pre-Series A Fund Raise (Indian Web) Rated: A

Bangalore-based peer to peer (P2P) lending platform Finzy on Monday announced raising funds worth USD 2.3 million in Pre-Series A round, including USD 1.3 million raised in the first tranche in March 2018.

This funding round has been funded by senior professionals from BFSI industry and successful entrepreneurs. The startup plans to use the freshly raised capital for geographical expansion, technology investment and stronger distribution networks.

Founded in 2016, by Abhinandan Sangam, Amit More and Vishwas Dixit, Finzy is a premier P2P lending solution in India that connect borrowers with investors and make the entire process simple and easy so that one can get a loan in as little as 48 hours.

Five things you should know before lending on P2P platform (Economic Times) Rated: A

Don’t let greed cloud your judgment. If you are in a tearing hurry to pocket double-digit returns, you are likely to overlook many warnings signs. That is why it is always better to start with a small amount, learn the ropes, before going for the kill.

Different platforms have different ticket size for lending. With companies like Faircent offering as low as Rs 750 per loan. The ROI would vary as per the borrower profile and loan tenure. The total amount invested by a lender across all P2P-NBFCs is capped at Rs 10 lakh, as per the existing RBI norms.

The RBI came out with regulations for P2P companies in October. There are around 30 online P2P companies in India, of which only eight have received a certificate of registration (CoR) from the RBI to carry out P2P lending activities.

Asia

Singapore police recover S$ 27 million linked to China Ponzi scheme (Channel News Asia) Rated: AAA

Singapore police said on Tuesday (Aug 21) they have recovered more than S$27 million linked to one of the biggest Ponzi schemes in China, which saw 1.15 million investors cheated out of 38 billion yuan (S$7 billion).

Ezubao, once China’s biggest peer-to-peer lending platform, folded in 2016 after it turned out to be an online scam that concocted fake projects to attract investment and pocketed funds instead of passing them to borrowers to generate returns.

Latin American

Mexico’s new government wants fintech, banks to help financial inclusion (Channel News Asia) Rated: AAA

Mexico’s next government will look to fintech companies and large corporate banks to increase financial inclusion in the country, where only one-third of adults have a bank account, senior officials said on Tuesday.

Arturo Herrera, one of two future deputy finance ministers, said in an interview that the lack of financial inclusion was one of the biggest obstacles in the new government’s fight against poverty, inequality and slow economic growth.

Authors:

George Popescu
Allen Taylor

Review of Indian Regulation on P2P market

india p2p lending regulation

Today, there are approximately 60 million small businesses in India looking for funding, out of which only 33 percent are able to access any kind of institutional credit. The situation is similarly dire in the case of individuals. Almost 80% of MSMEs self-finance themselves, 32% rely on their friends and relatives for credit, and an additional 12% […]

india p2p lending regulation

Today, there are approximately 60 million small businesses in India looking for funding, out of which only 33 percent are able to access any kind of institutional credit. The situation is similarly dire in the case of individuals. Almost 80% of MSMEs self-finance themselves, 32% rely on their friends and relatives for credit, and an additional 12% try raising funds from informal banking networks. All these numbers highlight the extent of shortcomings in the Indian lending system and the mega “bottom of the pyramid” opportunity for the young P2P sector.

P2P Market overview

The P2P lending market in India originated around 2012 when Shankar Vaddadi and his team launched the first social peer-to-peer lending platform, i-Lend. Lack of proper regulation governing the P2P ecosystem has proven to be the biggest stumbling block in the growth of this industry, but having said that, it is widely expected that the P2P lending space will grow into a $4-$5 billion industry by 2023.

The Indian P2P lending industry has approximately 63 players including Faircent, Lendbox, LenDen Club, Monexo, LoanBaba, CapZest, i2ifunding, and many more, all of which have been carving their own niche in the lending industry by serving a diversified customer base.

P2P Regulations in India

Rules and regulations in India with respect to lending have always been stringent making it difficult for new players to enter the market. India’s central bank, Reserve Bank of India (RBI), has always prioritized protecting the interests of all the stakeholders involved in the lending process (especially the borrowers). One such act, Usurious Loan Act, allows the judiciary to intervene in case the lending platform or lender is charging an unrealistically high-interest rate. The primary lenders in India, banks, are exempted from the scope of this law, but P2P lenders fall under the ambit of this regulation.

In India, even the states have the right to pass laws on regulating money lending, and 22 states have passed legislation to this effect. One such recent example is Maharashtra Money Lending Act of 2014. As per the guidelines prescribed in the Act, it is mandatory for all lenders to register and acquire a license before they start operating. Furthermore, this act can restrict the operation of money lenders to a specific district and empowers state government to decide the rate of interest to be charged.

In reality, the Indian P2P sector also benefited from a lack of government policies as it allowed them to experiment and launch multiple products without considering any repercussions of the law. This changed in 2016 when RBI released a consultation paper on P2P lending. This paper has been used as a yardstick by RBI to frame regulation to govern the P2P lending market.

The Reason Behind RBI Regulations

Although the P2P market helps in financial inclusion of the economically disenfranchised sections of the society, multi-billion dollar Ponzi schemes like Ezubao in China are too big of a risk to ignore. The main reason cited behind the Ezubao scam was “lack of enforceable regulations.” With the industry starting to spread its wings in the country, RBI stepped up its regulatory efforts in a bid to avoid such a scam in the country.

RBI initiated P2P regulations with the main motive to bring in a new age of economic reform and financial inclusion in India wherein every individual can have access to credit with better terms and transparency without risking the hard earned money of the lender on the platform.

P2P Lending: A Throw Down on RBI Regulations

RBI consultation paper clearly outlined the risk of money laundering attached with P2P lending and will also try to cap the interest rates charged at P2P platforms. The new framework will incorporate the following norms:

  • Recognition as NBFCs – All P2P lending platforms will come under the review of RBI and will be compulsorily registered as a Non-Banking Financial Corporation (NBFC).
  • Permitted Activity – P2P lenders will be permitted to serve only as mediators who would be responsible for matching and originating loan deals between lenders and borrowers. Besides that, all online portals must specify the adequate regulatory framework governing that portal and are further prohibited from giving any assured returns. To reduce the risk of money laundering, the funds must be transferred directly from the lender´s account to the borrower´s account. Under the guidelines of Foreign Exchange Management Act (FEMA), a law has been imposed on P2P lenders that strictly prohibit them from entering into cross-border transactions.
  • Prudential Regulations – RBI has mandated a capital requirement of $312,000 (INR 20 Million) for all P2P lenders. In order to avoid indiscriminate expansion, RBI will prescribe a leverage ratio and also put a limit on the contribution made by a single lender towards a particular loan.
  • Government Regulations – It was reported that RBI has made it mandatory for all P2P lending portals to adopt a company structure. As a result, this notification will render all the services provided by other organizational structures such as sole proprietorship, partnership, or LLP (Limited Liability Partnership) as non-compliant.
  • Business Continuity Plan (BCP) – In order to ensure smooth flow of operations, the platforms are required to integrate efficient risk management systems and proper backup processes. Moreover, to ensure that operations do not cease due to any event, companies should prepare a Business Continuity Plan (BCP).
  • Customer Interface – All P2P platforms must give top most priority in ensuring confidentiality of customer data and to offer complete transparency in its operations. Also, platforms must install a proper grievance handling mechanism to address complaints of lenders and borrowers.
  • Reporting Requirements – All online P2P platforms are required to submit a regular report on their financial position, loan arrangement deals, and summary of complaints, if any, filed by borrowers or lenders with RBI.

Impact of RBI Regulations

Guidelines and regulations proposed by RBI are expected to impact the P2P lending space in the following ways:

  • More at Stake for P2P Lending Platforms – The new $312,000 (approx) capital requirement will lead to small players shutting shop. This will allow serious players to emerge and restrict operations of fly-by-night operators looking to dupe the general public.
  • Opportunities for Growth – RBI guidelines would help minimize the risk of money laundering, and moreover, would help stabilize the industry by introducing streamlined and standard procedures for loan origination. Investors in such platforms would not need to worry if they are compliant with the law.
  • Higher Quality of Credit – RBI has made it compulsory for lenders to maintain a database of loan deals originated and a proper record of borrowers who failed to meet their financial commitments. This database is the first step in controlling fraud. It will also help in reducing loan stacking, a common problem plaguing the P2P industry all over the world.
  • Greater Transparency and Accountability – Platforms would need to report to RBI on a regular basis. Anyone found non-compliant would risk RBI snatching its license or face heavy penalties. This would ensure greater transparency and accountability for the entire ecosystem.

Conclusion

What once used to be a relatively small part of the fintech industry has turned into a viable option for Indian lenders as well as borrowers. The fact that RBI has framed regulations for P2P lending goes to show that the industry is ready to move to the next level of market adoption. Regulations will surely help all the stake holders involved but the biggest winner will be the underserved Indian population who can finally step on the credit ladder.

Author:

Written by Heena Dhir.

Tuesday September 12 2017, Daily News Digest

Lending Club

News Comments Today’s main news: SoFi CEO Mike Cagney to step down by end of year. Goldman Sachs invests 100M GBP in Neyber. PayJoy raises $6M investment. Groundfloor announces $100M expansion of lending capital with Direct Access Capital. Zopa customers battle loan sale delays.  Former Ezubao lead gets life sentence. Lenda raises $5.25M to fund expansion Today’s main analysis: LendingClub launches next generation […]

Lending Club

News Comments

United States

United Kingdom

China

International

Australia

India

News Summary

United States

SoFi Chief Executive to Step Down (The New York Times), Rated: AAA

Mike Cagney, the co-founder and chief executive of Social Finance, is to step down from the online lender by the end of the year.

  • Several former employees said that Mr. Cagney had inappropriate relationships with SoFi employees.
  • In 2012, Mr. Cagney sent sexually explicit text messages to an executive assistant named Laura Munoz. The company and its board agreed to pay Ms. Munoz a $75,000 settlement.
  • A former employee of SoFi filed a lawsuit in August saying that he had witnessed female employees being harassed by managers and was fired after he reported it. The lawsuit did not initially name Mr. Cagney, but he was added later.
  • Mr. Cagney may have been overaggressive in expanding the business, skirting risk controls and compliance rules.
  • The company said it had raised $90 million in debt financing for one of the loan products that it sold to investors in 2012, but that financing never took place. SoFi eventually bought the loans back from investors.
  • Employees who spoke to The Wall Street Journal also described a culture in which they felt pressure to work extra hours for fear of being fired. These employees also described angry executives breaking furniture and throwing telephones.

SoFi Reportedly Comprehends The Meaning Of “Sexual Harassment” As Well As Everyone Else Comprehends The Meaning Of “Fintech” (Dealbreaker), Rated: A

It used to be that financial services firms would respond to accusations of sexual harassment inside their company with denials, followed by investigations and inevitably a spate of firings and public apologies.

In Silicon Valley, the whole thing seems to be strangely flipped. Harassment is so seemingly rampant in tech that companies are on the offense, attempting to prove a negative and paint themselves as the rare “Woke” tech firm. More often than not, the whole thing unravels.

According to the WSJ, the online lender SoFi is denying widespread sexual harassment inside the company by willfully misunderstanding what sexual harassment is.

So like a Fantasy Football thing, or was this another example of a touching-based-yet-non-sexual dispute? It seems like nothing at SoFi is ever sexual, which is hard to believe at a place that offers such great rates!!!

SoFi Announces ‘SoFi Accelerate’, A Career Retreat For Young Professionals (PR Newswire), Rated: AAA

SoFi today announced its first-ever ‘SoFi Accelerate’ event series for ambitious millennials looking to break away, look beyond, and get ahead in their careers. SoFi Accelerate is a series of one-day retreats taking place just outside ChicagoNew York City, and San Francisco that will give event attendees the time and space to think big—as well as the tools and structures to make their career goals happen.

Launching in September, the retreats will consist of creative visioning and leadership exercises, career strategy sessions with SoFi career advisors, and inspirational talks from unconventional thinkers like criminal justice reform advocate Adam FossStanford professor and co-founder of Electronic Arts Dave Evans, and Gretchen Rubin, author of New York Times bestseller The Happiness Project, among others on how to set and achieve professional goals.

The event also includes transportation to and from the retreat venues, complimentary breakfast and lunch, and a concluding cocktail reception. Both members and non-members can learn more about the program here and sign up via links to each city: www.sofi.com/blog/introducing-accelerate-sofis-first-ever-career-retreat/

UNCONVENTIONAL VENUES
SoFi Accelerate will offer its programming in unconventional retreat settings to encourage expansive views and open minds. These venues include the Chicago Botanic Garden (Glencoe, IL), Grounds for Sculpture (Hamilton Township, NJ), and Montalvo Arts Center (Saratoga, CA).

UNEXPECTED SPEAKERS
A panel of experts from unexpected (i.e. outside of the financial planning realm) and highly relevant disciplines discuss how to create and execute on life, career, and financial goals. These speakers will include:

Chicago – September 24, 2017

  • Ryan Holiday: Writer, media strategist, entrepreneur, and editor-at-large for the New York Observer
  • Adam Foss: Criminal justice reform advocate; co-founder of Roxbury CHOICE Program, a collaborative effort between defendants, the court, the probation department, and the D.A. to recast probation as a transformative experience rather than a punitive process

San Francisco – October 1, 2017

  • Dave Evans: Former tech executive at Apple and Electronic Arts, Stanford d. School professor, and co-author of the New York Times Bestseller Designing Your Life
  • Irene Au: Operating partner at venture capital firm Khosla Ventures, former head of User Experience at Google

New York City – October 15, 2017

  • Gretchen RubinNew York Times bestselling author of The Happiness Project and Happier at Home, and most recently, Better Than Before
  • Coss Marte: Ex-drug dealer, ex-convict, and founder of ConBody, a “prison-style” fitness boot camp with a loyal following of 10,000+ clients that employs formerly incarcerated individuals, giving ex-convicts stability and breaking down barriers between them and the general population

Lending Club Announces Launch of Next Generation Credit Model (Lend Academy), Rated: AAA

Today, Lending Club announced a new credit model in an email to investors. According to the email, this is the most advanced and predictive credit model ever used on the Lending Club platform. This is Lending Club’s fifth generation model that began to go in effect on September 8, 2017 and will roll out to all borrowers in the coming days.

The company outlines that the model further leverages machine learning along with the 10 years of data on 1.5 million borrowers they have accumulated. The new model is 24% better at differentiating the likelihood of a borrower charging off compared to the fourth generation model. It also includes more data points, and uses new custom attributes that Lending Club states are predictive in assessing risk.

  • Instead of using aggregates, the new model uses very granular views of credit data which discern individual borrower actions vs. a simple aggregate (e.g. a borrower’s credit card balance per credit card vs. his total credit card balance).
  • The model makes more extensive use of trended data, which provides insight into a borrower’s credit behavior over time rather than a snapshot into a borrower’s credit behavior at a point in time. Dozens of new custom variables like these improve the model’s predictive power and are proprietary to Lending Club.
Source: Lend Academy

What critics of fintech ILC bids aren’t saying (American Banker), Rated: AAA

The bids by tech firms Social Finance and Square for industrial loan company charters and federal deposit insurance have rekindled debate over two questions: What is the appropriate regulatory oversight for industrial loan companies, and should fintech platforms be allowed to compete with traditional banks?

Many of the arguments in this debate have less to do with either applicant’s qualifications than with traditional banks’ fear of new, innovative competitors, and with a decades-old turf war between the Federal Deposit Insurance Corp. and the Federal Reserve over the regulation of ILCs.

ILCs face greater restrictions on the types of deposits they are allowed to offer compared to commercial banks.

SoFi and Square are actually asking for more regulation, not less, by seeking a charter. This would put leading nonbank fintech providers on more equal regulatory ground with banks — something that mainstream financial institutions say they want. Getting an ILC would add yet another agency — the FDIC — to the regulatory labyrinth the companies must navigate. This should be considered a win for banking industry and consumer advocates who favor more transparency and oversight of fintechs.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (“CLUB 2017-P1”). This is a $363.098 million consumer loan ABS transaction that is expected to close September 28, 2017.

Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1

Class Preliminary Rating Expected Initial Class Principal
A A- (sf) $244,234,000
B BBB- (sf) $57,362,000
C BB- (sf) $61,502,000

Groundfloor Announces $ 100 Million Expansion Of Lending Capital With Direct Access Capital (Business Insider), Rated: A

Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced that it has entered into a whole loan purchase relationship with Direct Access Capital (DAC), a specialty finance company focused on providing liquidity to non-bank lenders of short term residential backed business loans. This marks Groundfloor’s first institutional partnership to enable the company to scale its loan origination volume and expand its product offerings over the next year. The shared target is $100 million in loans through 2018.

Online mortgage lender Lenda raises $ 5.25 million to fund expansion (Housingwire), Rated: A

Lenda, an online mortgage lender based in San Francisco, announced Monday that it closed its Series A round of funding, raising $5.25 million from a group of investors.

According to the company, the funding round was led by SF Capital Group, along with CreditEase Fintech Investment Fund and inside investor, Rubicon Venture Capital.

Fintech Startup PayJoy Bags $ 6 Million Investment (Bank Innovation), Rated: A

It’s been a busy few days for fintech startup PayJoy, which today announced that it closed a $6 million investment, only a few days after it reached another milestone.

Based in San Francisco, PayJoy hopes to make the smartphone a mainstream financial tool for those who cannot afford these devices. Established in 2015 at Stanford University, PayJoy provides payment plans to purchase smartphones for people with limited or no access to credit.

Square’s ILC bid may open floodgates for fintechs (American Banker), Rated: A

Trends pick up fast in Silicon Valley and for financial innovators, the up-and-coming regulatory strategy is to seek a bank charter.

In June, the online lender Social Finance, or SoFi, applied for an industrial loan company charter in Utah to process certain depository accounts and credit cards.

Betterment for Business Survey Shows that Majority of Employees Do Not Receive Advice on their Retirement Investments (Business Insider), Rated: A

Betterment for Business, the technology-led 401(k) provider that aims to deliver better retirement outcomes and personalized advice, today announced the results of its new consumer retirement survey, the State of Consumer Retirement Advice. The results of the survey show that alongside the expansion of digital and employer-sponsored retirement advice resources, a majority of respondents (53 percent) report receiving absolutely no advice on their retirement investments. For the 47 percent of consumers who do seek retirement advice, 65 percent of this group utilize a financial advisor, the top source of advice among those consumers.

Less than half of respondents (42 percent) correctly identified the definition of a fiduciary; 20 percent of respondents believed that the terms “fiduciary” and “financial advisor” are synonymous, and 27 percent did not know what one was at all.

Nearly all (94 percent) of respondents in a 401(k) with auto-enrollment, which allows an employer to “enroll” an eligible employee in their plan unless the employee affirmatively elects otherwise, currently make contributions to their plan. In fact, for those who remained enrolled, 49 percent of respondents increased the contribution rate. Millennial respondents were most likely to remain enrolled in the plan after auto-enrollment. 78 percent of respondents that have access to an auto-escalation feature, which gradually increases plan contribution amounts over time, use it.

Targeted education could go a long way in setting consumers on the right path–given that 89 percent of respondents were offered a 401(k) match by employers, but 23 percent didn’t take full advantage of it. Of those 23 percent, 16 percent don’t max out their match, and 7 percent don’t know if they do.

LendUp Recognized by Fast Company for 2017 Innovation by Design Awards (Business Insider), Rated: A

LendUp, a socially responsible financial services firm for the emerging middle class, was selected as a finalist in the Social Good category of Fast Company‘s 6th annual Innovation by Design Awards.

“We believe there are two types of financial products: chutes and ladders. Ladders help you up, chutes push you down. We’ve used design to create loan and credit card ‘ladder’ products for the more than half of Americans who’ve traditionally been shut out of mainstream banking due to poor credit or income volatility,” said Sasha Orloff, co-founder and CEO of LendUp.

According to Fast Company, the award—one of the most sought-after in the design industry—is based on seven core factors of innovation: functionality, originality, beauty, sustainability, depth of user insight, cultural impact and business impact.

Studies have shown that 56 percent of Americans don’t have access to traditional financial services due to low credit scores or thin credit files1, and nearly half of U.S. families don’t have enough savings to cover a $400emergency expense2. As workplace trends shift from careers to jobs to the gig economy, 40 percent of Americans blame irregular work schedules for volatile monthly incomes, with paychecks sometimes varying by more than 30 percent3.

Congress should reject rent-a-bank predatory lending legislation (CUInsight), Rated: A

Today, the Center for Responsible Lending (CRL), the National Consumer Law Center (NCLC), and more than 150 national and state organizations sent a 

Fintech Opens Opportunities for Small Business Lenders – and Borrowers (Small Biz Trends), Rated: A

Small business lenders have unprecedented opportunities ahead of them, according to Rohit Arora, the CEO of Biz2Credit.

The only thing is, not all lenders are positioned to seize these opportunities. The ones that are, says Arora, are the lenders that understand two things. “They understand the changing expectations of today’s borrowers. They also understand how to leverage new technology,” Arora explains.

Biz2Credit recently analyzed 30,000 small business credit applications. Based on the analysis, one of the top expectations small business borrowers have is for 24/7 customer availability. In fact, 51 percent of customer application activity occurred outside of regular banking hours or on weekends.

In other words, banks and other financial institutions that are not available 24/7 may be losing out on potentially half of their future customer base.

The 4 Big FinTech Trends of the Year (Newsmax), Rated: B

  1. Advanced Credit Repair Technology – Last year alone, Lexington Law helped clients remove more than 9 million negative items from their credit reports. This wouldn’t have been possible without advanced technology.
  2. Growing Focus on Artificial Intelligence
  3. Biometric Security
  4. Emergence of Challenger Banks – If there’s one thing we know about Millennials, they’ve shown an affinity for online banking and “challenger banks.” On a related note, there’s been a massive increase in the use of virtual wallets and alternative forms of payment. These two trends go hand-in-hand and will support each other.

Pittsburgh Tech Council Names Real Estate Crowdfunding Platform Small Change Tech 50 Awards Finalist (Crowdfund Insider), Rated: B

On Monday, real estate crowdfunding platform Small Change announced the Pittsburgh Technology Council has named it a Tech 50 Awards Finalist in the “Start-Up of the Year” Category.

Small Change revealed that the Pittsburgh Technology Council’s annual Tech 50 Awards recognize southwestern Pennsylvania’s most successful, innovative, and thought-leading technology companies.

Who Are The Major Shareholders In China Rapid Finance Limited (XRF)? (Simply Wall Street), Rated: B

XRF’s 14.61% institutional ownership seems enough to cause large share price movements in the case of significant share sell-off or acquisitions by institutions, particularly when there is a low level of public shares available on the market to trade.

XRF insiders hold a significant stake of 16.89% in the company.

A big stake of 38.57% in XRF is held by the general public.

Private equity firms hold a 29.92% stake in XRF.

United Kingdom

Zopa users are reporting significant delays when trying to sell their loans, with the firm battling against slow speeds on its platform.

At present, users trying to sell their loans on the site are currently told to expect delays beyond the standard 20-day sales window. The platform says: “We will continue to try and sell your loans for 20 days, but there is no guarantee that you will be able to access your money before your loans mature.”

Fellow Moneywise reader John Mitchell is an existing Zopa customer and wished to transfer his holdings to its IF Isa. When the Isa product was launched, customers were told they would soon be able to sell their existing Zopa loans – without incurring a 1% sales fee – before purchasing new loans within the Isa wrapper.

Three months on, and Zopa is yet to offer these fee-free sales to its customers.

Moneywise reader Jonathan Yonge, who manages his own portfolio of assets for a living, is one of the customers that has been affected by the issue. He currently has around £220,000 invested in the Zopa Access product and a further £100,000 in Zopa Plus. Zopa Access has now been closed to new investors and he has been unable to sell most of his loans.

Funding Circle, Zopa and RateSetter named among fastest growing tech firms (P2P Finance News), Rated: AAA

THE ‘big three’ peer-to-peer lending platforms have been recognised among Great Britain’s fastest growing technology firms.

Zopa, Funding Circle and RateSetter have been included in latest Tech Track 100, featured in the Sunday Times.

Funding Circle was the highest ranked out of the ‘big three’ lenders, placed at number 27.

The list was topped by personalised children’s books company Wonderbly, while former P2P platform LendInvest ranked at 37, with average sales over three years of 97.9 per cent.

Goldman Sachs invests £100m in UK consumer lender Neyber (Financial Times), Rated: AAA

Goldman Sachs is making its first investment in the British consumer lender market by providing £100m of debt and equity financing to Neyber, a fintech start-up providing loans that are repaid out of people’s salaries.

Founded by two former Goldman Sachs investment bankers five years ago, Neyber partners with companies to offer their employees loans at lower rates than credit cards or payday lenders.

The company says its loans are less likely to default because of the security of deducting repayments directly from a borrower’s salary, and the extra information it gains about its customers by tapping into their employer’s payroll systems.

From regulation to securitisation, a year in the life of Peer2Peer Finance News (P2P Finance News), Rated: A

September 2016
Peer2Peer Finance News launched just a month after interest rates had been cut to record lows amid uncertainty following the shock Brexit vote.

October 2016
Lending Works became the first major P2P lender to gain full authorisation from the Financial Conduct Authority (FCA).

November 2016
The structure of some of the UK’s most high profile P2P lenders came under the spotlight.

December 2016
The FCA revealed its long-awaited interim feedback as part of a post-implementation review of regulation of the P2P sector.

January 2017
The P2P sector was given a New Year boost with the government-backed British Business Bank pledging a further £40m for lending through Funding Circle.

February 2017
The first Innovative Finance ISAs (IFISA) from more established P2P firms began to get released, starting with Lending Works, which saw an inflow of funds of more than £1m in 24 hours, followed by Landbay.

March 2017
Zopa showed how popular P2P had become by having to create a waiting listto cope with demand from investors on the platform.

April 2017
There were plenty of shifts in strategy during April.

Funding Circle announced it was winding down its property lending to refocus entirely on its original small- and medium-sized enterprise (SME) target market.

May 2017
Zopa became the first of the ‘big three’ platforms to gain full FCA approval, later joined by Funding Circle.

June 2017
It was an interesting month for dropping plans.

One of the early members of the P2PFA, LendInvest, announced it had cancelled its application for FCA authorisation.

July 2017
A freedom of information request by Peer2Peer Finance News showed regulation has cost the sector up to £2m.

August 2017
Funding Circle announced a re-brand and the end of manual lending on the platform and RateSetter departed the P2PFA amid transparency concerns over its approach to wholesale lending.

September 2017
We are barely halfway into the month but have already seen a high-profile departure, with Jane Dumeresque leaving Folk2Folk.

How to invest in renewable energy (IG.com), Rated: B

The government launched the Innovative Finance ISA last year to give savers a tax-efficient way to participate in peer-to-peer lending. Official figures for the last tax year showed low take-up of the new ISA so far, with just £17 million invested. But there are renewable projects available through this route so it could be worth a look.

A crowdfunding platform called Abundance Investments launched what it said was the UK’s first green energy ISA in 2016. It allowed customers to invest directly in renewable energy projects through a range of bonds, and predicted a 6% annual return.

China

Leader of China’s $ 9 Billion Ezubao Online Scam Gets Life; 26 Jailed (U.S. News), Rated: AAA

A Beijing court on Tuesday sentenced the architect of the $9 billion Ezubao online financial scam to life imprisonment, and handed down jail time to 26 others, marking the close to one of the biggest Ponzi schemes in modern Chinese history.

Beijing First Intermediate People’s Court sentenced Ding Ning – chairman of Anhui Yucheng Holdings Group that launched Ezubao in 2014 – to life in prison and fined him 100 million yuan ($15.29 million) for crimes including illegal fundraising, illegal gun possession and smuggling precious metals.

Ding Dian, the chairman’s brother, was also sentenced to life, while Zhang Min, Yucheng’s president, and 24 others were sentenced to imprisonment for 3 to 15 years, according to an article on the Beijing Courts social media account.

International

B2BPay, PayJoy & Pineapple Payments (Paybefore), Rated: A

Pittsburgh-based Pineapple Payments, which offers omnichannel payment processing technology, has secured a $35 million growth equity commitment from Providence Strategic Growth (PSG), the an affiliate of Providence Equity Partners, a global private equity firm with more than $50 billion in assets under management.

PayJoy, which offers smartphone financing for underserved consumers, has closed $6 million of new investment with strategic partners that will help the San Francisco-based company, which has offices in Mexico City, to further expand throughout Latin America, Asia and Africa.

Finnish B2BPay earned the top spot among hundreds of entries in its segment in BBVA’s Open Talent competition “because of the way their solution enables SME businesses to grow internationally and trade with greater ease.”

Australia

NAB’s wealth builder vows to lift the game, restore trust (The Australian), Rated: AAA

In his first interview since being appointed chief executive of the nation’s largest retail superannuation fund, MLC Super, Matthew Lawrance told The Australian that the industry needed to lift its standards.

He also called for more balanced media commentary that would help to inform the public rather than instil fear.

“Our customers want more targeted support and advice across banking and wealth management, and so we need to invest to develop new and innovative solutions that give them the ability to engage us — whenever, however, and through whatever means suits them, whether it be digital or face-to-face,” Mr Lawrance said.

NAB is currently developing its robo-advice capabilities, with more details to be released in the coming months, but Mr Lawrance says it won’t replace traditional face-to-face advice. Rather, the two will complement each other.

India

How fintech startups can help banks bridge the gap in SME Lending in India (Moneycontrol), Rated: A

There is no doubt that future growth would also be sustained by the performance of the 50-million plus strong SME sector, which employs close to 40 percent of India’s total workforce and contributes 45 percent of the total industrial output.

A major challenge that could stymie SME sector growth is the lack of adequate and timely funding.

Fintech lenders use non-conventional data sources for underwriting

This movement makes available data pertaining to these businesses which new-age Fintech lenders can use to accurately assess the SMEs. For instance, an SME registered under GST files documentation that reveals their sales trajectory, income sources, inventory sold, credit cycles, etc.

Banks want to diversity loan books without scaling OPEX

Banks have large balance sheets from which they churn loans, catering to millions of customers. However, traditional underwriting practices have prevented them from effectively underwriting certain SME segments.

Authors:

George Popescu
Allen Taylor

Analysis of the P2P Market in China After the Regulatory Crackdown

p2p lending China

China is the second largest economy in the world with a GDP of $11.8 trillion, and it’s the home to many mega banks and lenders. Like the US, savers investing in bank deposits were not getting good enough returns and small borrowers were being crowded out of the formal lending system by big corporations. P2P […]

p2p lending China

China is the second largest economy in the world with a GDP of $11.8 trillion, and it’s the home to many mega banks and lenders. Like the US, savers investing in bank deposits were not getting good enough returns and small borrowers were being crowded out of the formal lending system by big corporations. P2P lending looked like the perfect solution; it cut out the middlemen and democratized borrowing. As a result, China rapidly became the largest P2P market in the world. But the explosive growth of the P2P market in recent years has exposed the gulf of problems that have been plaguing the online lending market in China.

Numbers don’t lie

According to Beijing Bureau of Financial Work, nine out of 10 P2P lending platforms will find it difficult to survive 2017 once the government fully rolls out its stiff regulatory supervisions. Only 500 (approx 10%) P2P companies out of the total 4,856 across the country are expected to remain in operation after this year, according to the same report.

Chinese regulators have introduced tougher requirements for P2P lenders to stay in business. Every P2P lender now needs to appoint a custodian bank and needs to provide a full disclosure of the use of deposits. There are other variables like risk management, shareholder credibility, and the scale of business in play, as well. A lender not passing the review will eventually have to liquidate.

Raison d’être

In the beginning of 2016, Ezubao was one of the largest P2P lending platforms in the country. It was launched in 2014, but because it offered a lucrative rate of return (9%-15%) it quickly managed to attract a lot of investors. The company was actually running a Ponzi scheme and scammed 900,000 investors out of over $7.6 billion. It was the biggest Ponzi scheme in Chinese financial history. Reports said 95% of all listed borrowers were fraudulent. Such a massive fraud obviously woke up the regulators, and they came cracking down on the entire industry.

Fall of the giant: Hongling Capital

Hongling Capital was founded in 2009; it was one of the earliest and biggest P2P lending platforms in China. The pioneer P2P lending platform, once considered a benchmark in the industry, declared it will exit the online lending business and pay off investors by selling collateral properties. Though Hongling Capital was the largest P2P platform in terms of trade volume, the platform has barely made any profits. In 2016, the platform lost 183 million Yuan ($27.4 million).

Hongling Capital was established to provide small and medium enterprises easy access to capital, something they were not able to get from traditional banks and financial institutions. But it was its “guarantee of principal and interest” which set the platform apart from its contemporaries.

“Big Loan Model”

Another bet that went wrong for Hongling Capital was its “Big Loan Model.” Projects which required financing over 100 million CNY were considered “Big Loans” and Hongling matched the investor money with big projects. Considering that the majority of these projects had been rejected by traditional banks and were subprime meant it was a risky proposition from the get-go. The company, for example, granted 50 million Yuan in loans to China Huishan Dairy Holding. The company defaulted on its debt in late March. Loans like these were a major reason for Hongling Capital’s deep troubles.

The platform now has over 20 billion Yuan ($3 billion) assets to settle, which includes 5 billion Yuan ($750 million) of non-performing assets and 800 million Yuan ($120 million) of bad debts. As of August, Hongling Capital has 1.85 million investors, and the accumulated trade volume is 274.7 billion Yuan ($41 billion).

Regulation by Chinese Banking Regulatory Commission (CBRC)

In August 2016, CBRC released “Interim Measures for the Management of Business Activities of Internet Lending Information Agencies.” The report clearly stated “on a single platform, the personal borrowing balance shall not exceed 200,000, and the enterprise shall not exceed one million” and “p2p platform must not provide vouching or principal and interest warranty for investors.”

This regulation hit the two cornerstones of Hongling- guaranteed payments and big loan models and rendered the company’s business model obsolete.

The online lending industry knows there are more restrictions to follow. People’s Bank of China and 17 other regulatory authorities issued a notice in July stating: “Effective measures must be taken to ensure that the number of internet financial entities and the scale of business operation are cut down.”

This goes to show that there is a concerted effort by the regulators to curb the P2P lending sector and ensure that all non-serious and fraud actors are removed from the ecosystem

Conclusion

Well, it is clear that Ezubao is not the only bad apple in the system. There are hundreds of P2P lenders which have evaporated in thin air and the existing regulations will lead to a major shakeup. Though this might be detrimental in the short term, it was necessary for the survival of the industry in the long run. Now investors will understand the risks facing them while investing in such schemes, and would be focused on collaborating with only compliant P2P lenders. It will force platforms to re-look at their business models and ensure sustainability is given precedence over growth.

Author:

Written by Heena Dhir.

Friday June 9 2017, Daily News Digest

uk house prices election

News Comments Today’s main news: April US consumer credit rises $8.2B. China Rapid Finance targets 3 million new users by end of year. TSB Bank lent $50M unsecured consumer loans through Harmoney. Today’s main analysis: UK house prices fall for three months in a row. Today’s thought-provoking articles: Amazon lent $1B to merchants in last 12 months. SBA enabled on […]

uk house prices election

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

News Summary

United States

LendingClub Operated Aggregator Note (LOAN) NP I, LLC (SEC), Rated: AAA

On June 1, 2017, representatives of the Company provided us with a computer-generated data file and related record layout containing data, as represented to us by the Company, as of the close of business on May 25, 2017, with respect to 46,766 unsecured consumer loans (the “Statistical Loan File”).
At the Company’s instruction, we randomly selected 115 unsecured consumer loans (the “Sample Loans”) from the Statistical Loan File and performed certain comparisons and recomputations for each of the Sample Loans relating to the unsecured consumer loan characteristics (the “Characteristics”) set forth on the Statistical Loan File and indicated below.
Characteristics
1.          Loan number (for informational purpose only)
2.          Origination date
3.          Original principal balance
4.          Maturity date
5.          Loan term (months)
6.          Borrower interest rate
7.          Contractual monthly payment
8.          State of residence
9.          Current principal balance
10.        FICO score low (at issuance)
11.        FICO score high (at issuance)
12.        Loan age (months)

April US Consumer Credit Rises $ 8.2bn, Weakest Reading For Over 5 Years (Economic Calendar), Rated: AAA

US consumer credit increased $8.2bn in April following a revised increases of $19.5bn which was originally reported as $16.4.bn.

The April increase was lower than consensus forecasts of around $16.0bn and the weakest reading since August 2011.

The annual increase slowed to 2.6% from 6.2% the previous month. Revolving credit slowed to an annual rate of 1.8% from 6.5% previously while there was a slowdown in non-revolving credit to 2.9% from 6.1%.

Amazon has lent $ 1 billion to merchants in an effort to help boost sales (Business Insider), Rated: AAA

Amazon.com Inc has stepped up lending to third-party sellers on its site who are looking to grow their business, a company executive said in an interview on Wednesday.

The e-commerce giant has doled out more than $1 billion in small loans to sellers in the past 12 months, compared with more than $1.5 billion it lent from 2011 through 2015, said Peeyush Nahar, vice president for Amazon Marketplace. Sellers have used the money to expand their inventory or discount items on Amazon, he said.

More than 20,000 small businesses have received a loan from Amazon and more than half of those have taken a second loan from the company, it said.

Loans range from $1,000 to $750,000. Sellers have said interest rates are between 6 percent and 14 percent.

Amazon Has Secretly Become a Giant Bank (The Street), Rated: AAA

Amazon.com (AMZN) said Thursday that its Amazon Lending service has surpassed $3 billion in loans to small businesses since it was launched in 2011.

“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan, because we know that an infusion of capital at the right moment can put a small business on the path to even greater success,” Amazon Marketplace VP Peeyush Nahar said.

SBA enabler on sprouting more loans (Banking Exchange), Rated: AAA

When your largest client asks for a favor, you tend to do everything you can to help. For fintech company SmartBiz, that led to completely changing its business model.

The San Francisco-based company began life as an online consumer lender in 2010. However, three years in, the company switched gears to focus on small business lending.

Thus began a transition that culminated in SmartBiz selling off its consumer lending business. In place of that, SmartBiz built a bank-centric marketplace—an “ecosystem” in Singer’s words—in which SmartBiz refers qualified SBA loan applications to a network of banks. Currently the company works with five banks in the U.S.

Banking Exchange: Can you explain further why you made the switch from the consumer loan business to the small business loan market?

Singer: The stores typically needed $50,000 to $200,000, but were having a hard time obtaining financing at a decent rate. When we dove deeper, we found that starting in 2008 with the recession, many banks pulled out of the smaller end of the small business lending market.

They left for many reasons. The main one, though, is that it cost them just as much to originate a $200,000 loan as it did a $2 million loan.

We felt we could convert our existing base technology for use in small business lending. The concept, and what we have been working on since, is three-fold.

• First, it was key that we be able to tap into banks with their low cost of capital to provide well-priced loans to small business. But we had to make it economically feasible for the banks to make these loans, so we developed software that enables banks to auto-underwrite and auto-originate SBA loans quickly and easily.

• Second, small businesses want it to be easy to apply for a loan. SBA loans are typically very difficult to get—they can take months and months. So we made the process easier, automating a lot of the more difficult work, and put it online.

• Third, one of the most important things for a small business is get to a “yes.” So we created the first online SBA loan marketplace, in which we have multiple banks [currently five] looking at the loans.

BE: Do you concentrate on SBA 7(a) loans?

Singer: Yes. We’ve been focused on 7(a) loans in the sub $350,000 market for working capital. About six months ago we launched commercial real estate loans up to $5 million on the platform—also 7(a) loans.

BE: How is the underwriting handled working with the banks in your marketplace?

Singer: Unlike a traditional fintech company, which brings its underwriting model to a bank and says “Use this,” we do the opposite. We take the bank’s underwriting and digitize it. So we customize the underwriting software that each bank uses. That way we can refer the right borrower to the right bank.

BE: What percentage of applications that come into your system don’t make the cut?

Singer: I don’t think we’ve published anything on that. [SmartBiz is a private company.] It would be interesting for a new bank to note, however, that a little over 90% of what we refer to our bank partners they fund.

BE: In general, how do terms and rates in your network compare with others in the online marketplace?

Singer: All of our loans under $350,000 have a ten-year term. Most of the other players in the market—OnDeck or Funding Circle, for instance—are going to have somewhere between a one- and five-year term—most typically it’s two or three years, and at much higher cost. Our average APR is between 7% and 8%—prime plus 275 [basis points], compared with other online marketplace lenders where the average APR is as much as 44%.

BE: Are you reaching out to other potential bank partners?

Singer: Well, I’m not sure we want to add hundreds of banks. We’re picky and choosy about which bank we’re going to add on the platform. They’ve got to be a PLP [Preferred Lending Partner] with the SBA. Essentially the SBA establishes PLP banks as having delegated authority so they can make a loan decision without sending the file to SBA for approval.

What’s critical is that the bank wants to embrace technology; is focused on SBA lending; and has the mindset at the top where they want to partner with a fintech company.

Banks cede market share in auto lending (American Banker), Rated: A

New industrywide data confirms what bank CEOs have been saying for months: The banking sector is retreating in automobile finance.

During the first quarter of 2017, banks provided 32.5% of the financing for U.S. auto loans and leases, down from 34.8% in the same period a year earlier, according to an Experian report.

Attention New Mexico Lenders: New Regulations Coming Soon (Clarity Services Email), Rated: A

New Mexico House Bill 347 overhauls the state’s regulatory oversight of small-dollar lending. If you conduct business in New Mexico, these regulations will apply to you.

Effective January 1, 2018

The  bill includes the following components:

  • Complete Repeal of Payday Lending
  • Dollar Threshold Changes – All loans of $5,000 or less shall be made under the Small Loan Act or the Bank Installment Loan Act.
  • Mandatory Credit Reporting – Loans of $5,000 or less must be reported to a credit reporting agency. We have your back!
  • Limits on Loan Terms – Loans of $5,000 or less:
    • Must not have an APR that exceeds 175 percent.
    • Must have minimum maturity period of at least 120 days.
    • Must be repayable in a minimum of four substantially equal payments.

Fintech Company Raises $ 300 Million to Help Businesses Stop Using Checks (WSJ), Rated: A

AvidXchange Inc., a firm that automates bill-payment processes for businesses, said Thursday that it raised $300 million in equity from a group of new investors to bring its service to new industries, potentially acquire smaller competitors and to expand internationally.

Investors in the funding round include Mastercard Inc., Singaporean state investment firm Temasek Holdings Pte Ltd., Canadian pension fund Caisse de dépôt et placement du Québec and and Peter Thiel, the investor and co-founder of payments company PayPal Holdings Inc.

Since its founding, Charlotte, N.C.,-based AvidXchange has raised over $500 million, more than amounts raised by Stripe Inc., Credit Karma Inc. and other well-known fintech players.

The latest investment, one of the largest for a fintech company since lender Social Finance Inc. announced a $500-million fundraising in February, values AvidXchange at around $1.4 billion, according to people familiar with the matter.

VA Loan Captain Announces Partnership with EXIT Realty (PR Newswire), Rated: A

EXIT Realty Corp. International and VA Loan Captain (www.valoancaptain.com), the #1 VA Loan Marketplace, have announced a partnership to help educate veterans on their VA Home Loan benefit. As part of the partnership, EXIT Realty will offer veterans unbiased educational content in the form of an eBook, The Ultimate Guide to VA Loans, a VA Loan Learning Center on www.exitrealty.com, and a VA Loan Marketplace powered by VA Loan Captain to increase awareness of the 0% down home loan benefit available to all those who have served in the United States Military.

In addition to educating veteran home buyers, beginning on July 4th, 2017, EXIT Realty will also offer VA Loan Captain’s VA Loan Certification (VALC) to all of its agents. The VALC Certification provides real estate agents and lenders comprehensive knowledge of the VA Home Loan benefit to establish themselves as a local expert for the largely untapped military real estate market while simultaneously helping those who served the country.

Reg A+ Crowdfunding Conference Exclusive Savings Inside (Financial Research Associates Email), Rated: B

Exclusive Discount Code: SAVE 25% w/code FMP206
Early Bird Savings End 6/16/17

You are invited to attend July 19-20th at the LA Athletic Club in Los Angeles.

CONFIRMED SPEAKERS INCLUDE:
  • Dara Albright, President, Dara Albright Media
  • Brent Brague, Vice President of Sales, CrowdEngine
  • Craig Denlinger, Managing Partner, Artesian CPA
  • Andres Diana, Managing Director, SeedInvest
  • Peter Duggan, Senior Vice President, Computershare
  • David Gosselin, Principal, DBBMcKennon
  • Samuel Guzik, Founder, Guzik & Associates
  • Charles Kaufman, Counsel, Homeier Law PC
  • Anthony Lin, Founder, Endeavor, PC
  • Darren Marble, Chief Executive Officer, CrowdfundX
  • Gene Massey, Chief Executive Officer, MediaShares
  • Scott Purcell, Founder and CEO, FundAmerica
  • Mark Roderick, Shareholder, Flaster/Greenberg P.C.
  • Chadwick Sahley, CEO, Social Bluebook
  • Jillian Sidoti, Attorney, Trowbridge Sidoti LLP
  • Richard Swart, Chief Strategy Officer, NextGen Crowdfunding
  • Amy Wan, Founder & CEO, Bootstrap Legal

Money360 Closes $ 17 Million Bridge Loan for an Office Property in Morris County, New Jersey (Money360 Email), Rated: B

Loan Details

Loan Type: Bridge
Loan Amount: $17 million
Term: 3 Years

Amortization: Interest Only
Recourse: Non-Recourse
LTV: 72.34%

United Kingdom

UK house prices fall for third month in a row for first time since financial crisis (The Guardian), Rated: AAA

House prices in Britain have fallen for the third month in a row, for the first time since the height of the financial crisis in 2009.

The fall further dragged down the annual growth rate in May, to 2.1%, the lowest in nearly four years, providing further evidence that the housing market is losing steam, according to Nationwide, the UK’s biggest building society.

Its closely watched monthly house price index showed that the average price of a home fell by 0.2% between April and May, to £208,711. This compares with monthly declines of 0.4% in April and 0.3% in March. The annual growth rate of 2.1% is the lowest since June 2013, and compares with 2.6% in April.

The UK’s other main house price index, from mortgage lender Halifax, is also on a downward trend. It showed a 0.1% fall in April, taking the average property price to £219,649 – nearly £3,000 below the peak in December 2016.

Peer-to-peer lenders have their say ahead of election (AltFi), Rated: A

Funding Circle, which recently overtook Zopa as the UK’s largest P2P lender by total lending, said that ensuring continued access to capital for small businesses throughout the Brexit process is critical.

Carmen Dixon, vice-president of PR and Communications at LendInvest, echoed Funding Circle’s sentiments on the British Business Bank.

“Whatever the background or make-up of the new government, we will be urging it progress the (already fairly advanced) commitment made by Theresa May’s government to partner with alternative lenders to lend more,” she said. “That means empowering state-backed vehicles like the British Business Bank to put more money onto alternative lending platforms that will in turn lend more into the economy.”

Meanwhile, RateSetter, one of the UK’s “big three” peer-to-peer lenders, has also called on the next government to be active in its support of the fintech sector:

“The next government must steer the country through a series of huge challenges, not least keeping us safe and managing Brexit.  As it does so, it should make the most of opportunities to get behind businesses so that they can thrive, leading to more jobs, output and economic growth.”

OakNorth, the ‘bank for entrepreneurs,’ lent £300 million last year (Business Insider), Rated: A

Entrepreneur-focused startup bank OakNorth lent £300 million to small businesses last year and is expecting to lend out £800 million in 2017.

OakNorth’s annual accounts, filed with Companies House this week, show the bank made net income from its lending of £7.1 million last year, up from £156,000 in 2015, its first year of operation.

Notable deals include £19 million lent to healthy fast food chain LEON in August to fund expansion.

Lendy to sponsor world-famous sporting event (Bridging&Commercial), Rated: B

The peer-to-peer lending platform will begin sponsoring the world-famous sailing regatta – which will now be called Lendy Cowes Week – from 29th July 2017.

China

China Rapid Finance targets 3 million new users by year’s end (SCMP), Rated: AAA

China Rapid Finance (CRF), the Chinese financial technology business that recently listed in New York, expects to add up to 3 million users on its lending platform this year despite the government’s push to tighten restrictions on the burgeoning online lending sector.

In the first quarter of this year, the company attracted 545,000 new borrowers who obtained credit ranging from 500 yuan to 6,000 yuan (US$73.50 to US$882.50) per transaction.

Why Alibaba is eyeing India’s payments market (The Asset), Rated: AAA

To say digital payment volume in India has grown dramatically over the past few months would be an understatement. Since Modi’s demonetization policy in November 2016 the monthly digital payment volume via India’s Unified Payments Interface (UPI) has increased by almost 2300% as of March 2017.

Most P2P Lending platforms have finished bank depository before the deadline (Xing Ping She Email), Rated: A

China’s p2p regulator requires platforms must finish bank depository before the end of June. Currently, some platforms have signed depository agreement with banks. According to the latest news, Xeenho announced that they have signed the bank depository. The bank depository system docking is undergoing, which is expected to operate online in the late June.

Under the wave of Internet financial compliance, more and more fintech platforms attach importance to bank depository. According to data, 433 normal operating platforms have signed bank depository up to the end of May, accounting for 20.16% of the total. Among these platforms, 221 of them have finished the docking of depository system used online.

In response to the regulatory policy, Xeenho Wallet signed the bank depository to guarantee the independent management between funds of platform and users, so as to eliminate the risk of misappropriation.

Dr. Yang Li, CEO of Xeenho, said that the agreement of bank depository has laid a solid foundation for the future development of the company, and they will continue to proactively response to regulatory policies, aiming at achieving the goal of universal finance.

EZUBAO THE ONLINE LENDER BILKED INVESTORS OF OVER $ 7.6 BILLION (Petro Global News), Rated: A

An online finance company in China bilked its investors of over $7.6 billion, that was spent on lavish gifts, salaries and buried that evidence according to authorities who described it as being a huge Ponzi scheme.

These accusations throw a big shadow over the online China finance industry, a lucrative sector that has nurtured global leaders. However, it is one that authorities are saying also has seen a number of flameouts and frauds.

How late payments help create a billion-dollar market (The Asset), Rated: A

In China, there has been an increase in long-term overdue payments. From 2015 to 2016 the number of corporates experiencing average payment delays of between 90-119 days increased by 25% (from 21% to 26.3%), according to a survey of Chinese corporates, conducted by Coface. The survey also shows that corporates dealing with overdue payments of 150 days or more grew by 60% from 2015 to 2016 (from 9.9% to 15.9%).

In Asia-Pacific (ex-China) invoice trading volume grew from almost nothing in 2013 to a US$116.95 million market in 2015, as noted in the Asia-Pacific Alternative Finance Benchmarking report. Within China, invoice trading in 2015 represented a US$1.46 billion market compared to only US$25.59 million in 2013.

European Union

The Future of Finance (The Portugal News), Rated: A

Crowdfunding and Peer-to-Peer lending appear to be the areas which are bringing real business and willing investors together.

The World Bank has predicted the Crowdfunding industry will be worth $95 billion by 2025 and Goldman Sachs said in a report $1.2 trillion of opportunities could be addressed by Crowdfunding in the coming years.

Camden Town Brewery raised £1.5m in Equity Crowdfunding in July 2015, valuing the business at £28m. By December the company had been bought by AB InBev for £85m, netting investors a healthy return.

International

Peer to Peer Lending Market Expected to Reach $ 460,312 Million, Globally, by 2022 (Digital Journal), Rated: A

According to a new report published by Allied Market Research, titled, Peer to peer Lending by End-User Types and Business Model type: Global Opportunity Analysis and Industry Forecast, 2014-2022, the peer to peer (P2P) lending market was valued at $26,064 million in 2015 and is projected to reach $460,312 million by 2022, growing at a CAGR of 51.5% from 2016 to 2022. In 2015, small business loans dominated the market, whereas consumer credit loans is anticipated to grow at a robust rate, in terms of market share.

North America is leading the peer to peer lending market, followed by Asia-Pacific.

Asia- Pacific would witness the highest CAGR of 54.1% mainly led by China, owing to emergence of a number of small scale peer to peer lending service providers.

Australia/New Zealand

TSB Bank says it has lent $ 50 mln in unsecured consumer lending through P2P lender Harmoney (Interest.co.nz), Rated: AAA

TSB Bank has finally acknowledged that it’s lending money through peer-to-peer (P2P) lender Harmoney.

The bank has disclosed this in its annual report, released on Friday, saying it has lent $50 million through Harmoney to date.

Heartland Bank, which holds a 12.59% stake in Harmoney, also lends money through the P2P lender. By December 31 last year Heartland had lent $62 million through Harmoney’s online platform. TSB has not disclosed a shareholding in Harmoney.

Report on rapid growth in P2P lending – what does it mean for New Zealand? (Lexology), Rated; A

The key takeaways from the FSB’s report (which can be found here) are:

  • A growing sector: In absolute terms, the largest FinTech credit market is China, followed at a distance by the United States and the United Kingdom.
  • Benefits: The benefits include lower transaction costs, convenience for users, increased credit access for underserved segments of the population or business sectors, and (in relation to financial stability) a lower concentration of credit with traditional banks and more pressure on those banks to increase efficiency.
  • Risks: The risks include: increased financial risk in platforms due to a greater credit risk appetite; untested risk processes and relatively greater exposure to cyber-risks; swings in investor confidence impacting the financial performance of platforms; and (in relation to financial stability) lower lending standards, incumbent banks taking on more credit risk in response to competition, securitisation increasing the connection between traditional and FinTech credit and the challenges posed to the regulatory perimeter.
  • Business models: The nature of activity varies greatly across and within jurisdictions due to the diverse business models used. These models include: the ‘traditional P2P lending’ model (a borrower-lender matching service with the platform often providing a risk assessment); the ‘notary’ model (a matching service where the loan is originated by a partnering bank – Germany and Korea); the ‘guaranteed return’ model (the platform guarantees a return to lenders – prevalent in China); the ‘balance sheet’ model (the platform originates and retains the loans on its own balance sheet – Australia and Canada); and the ‘invoice trading’ model (factoring services to manage cash flow for the start-up and small business segments).
  • Sources of funding: Securitisation capital markets have become an important source of funding for FinTech credit platforms in the US. Cross-border funding is higher in Asia Pacific (ex-China). The average retail investment is around US$8,000 in China but, due to regulatory caps, only €500 in France.
  • Borrowers: The available data suggests that consumer loans are typically in the range of US$5,000 to US$25,000 with the US at the top end of that range. Average loans in China are much larger, at more than US$50,000.
Asia

Path clear for robo advisers in financial services (Nation Multimedia), Rated: A

The Monetary Authority of Singapore (MAS) has proposed to make it easier for digital advisory services providers to operate by offering some major concessions under the financial regulatory framework.

One is to allow digital or robo advisers operating as fund managers under the Securities and Futures Act to offer their services to retail investors. This could happen even if robo advisers do not meet track-record requirements, as long as they provide certain safeguards.

A MAS consultation paper released on Wednesday proposed that there would not be separate licensing for digital advice. But firms offering these services would have to comply with some safeguards.

One is that portfolios must be diversified and comprise non-complex assets.

Authors:

George Popescu
Allen Taylor

Tuesday May 9 2017, Daily News Digest

Lending Club

News Comments Today’s main news: OnDeck reports Q1 2017 results. dv01 partners with SoFi. Elevate Credit announces Q1 2017 results. SoFi lets employees sell 20% of vested stock. Crowd2Fund announces new venture debt product. Klarna, Trustly fight EBA on bar screen scraping. Today’s main analysis: LC may  have hit a dead end. The real returns for Prosper investors. Today’s thought-provoking articles: […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

India

Canada

News Summary

United States

OnDeck Reports First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK) today announced first quarter 2017 financial results, additional planned cost savings, and a target to achieve GAAP profitability in the second half of 2017.

Loans Under Management increased to $1.2 billion, up 25% from the comparable prior year period, driven primarily by the growth of originations over the period.  In the first quarter of 2017, originations were $573 million, up 1% from the prior year period, primarily reflecting the impact of credit tightening implemented during the quarter.

Gross revenue increased to $92.9 million during the first quarter of 2017, up 48% from the comparable prior year period.  The increase in gross revenue was primarily driven by higher interest income, partially offset by lower gain on sale revenue. Interest income increased to $87.1 million during the quarter, up 63% from the comparable prior year period, and primarily reflected the growth of average loans, which increased 66% versus the comparable prior year period.  The Effective Interest Yield for the first quarter of 2017 was 33.9%, down from 34.5% in the comparable prior year period, primarily reflecting changes in portfolio mix over the period, partially offset by recent price increases.

Gain on sale was $1.5 million during the first quarter of 2017, down 79% from the comparable prior year period. The decline primarily reflected a lower Gain on Sale Rate during the quarter and the decision to reduce the amount of loans sold through OnDeck Marketplace.  OnDeck sold $42.0 million1 of loans through OnDeck Marketplace at a 3.5% Gain on Sale Rate during the first quarter of 2017, compared to $123.7 million1 of loans at a 5.7% Gain on Sale Rate in the first quarter of 2016.  Loans sold or designated as held for sale through OnDeck Marketplace represented 9.0% of term loan originations in the first quarter of 2017 compared to 25.9% of term loan originations in the comparable prior year period.  To optimize long-term financial performance, OnDeck plans to reduce the percentage of term loan originations sold through OnDeck Marketplace to less than 5% for the remainder of 2017.

Net revenue was $35.4 million during the first quarter of 2017, down 13% versus the comparable prior year period. The decline in net revenue reflected the reduction of OnDeck Marketplace sales, which led to lower gain on sale revenue, and higher provision expense in the first quarter of 2017 versus the prior year period.

Provision for loan losses during the first quarter of 2017 increased to $46.2 million, up from $25.4 million in the comparable prior year period.  The increase in provision expense primarily reflected a 20% increase in originations of loans designated as held for investment in the period and the comparatively lower original loss estimate for loans originated in the prior year period. The Provision Rate in the first quarter of 2017 was 8.7% compared to 5.8% in the prior year period, reflecting that the credit tightening in the first quarter of 2017 was not in effect for the full quarter and the previously mentioned lower loss estimates in the prior year period.  The Provision Rate decreased sequentially from 10.2% in the fourth quarter of 2016.  OnDeck expects the Provision Rate for the remainder of 2017, taken as a whole, to be approximately 7%.

The 15+ Day Delinquency Ratio increased to 7.8% in the first quarter of 2017 from 5.7% in the prior year period and from 6.6% in the fourth quarter of 2016 due primarily to the continued seasoning of the portfolio.  At the end of the first quarter of 2017, the average term loan age in OnDeck’s portfolio was 4.5 months, up from 3.3 months in the prior year period and 3.9 months in the fourth quarter of 2016.  The Net Charge-off rate increased to 14.9% in the first quarter of 2017 from 11.2% in the prior year period and increased sequentially from 14.2%.

The Cost of Funds Rate during the first quarter of 2017 increased to 5.9% from 5.5% in the prior year period primarily due to the increase in short-term rates.

Operating expense was $46.7 million during the first quarter of 2017, up 5% over the comparable prior year period.  Operating expense in the first quarter of 2017 was favorably impacted by the company’s previously announced cost rationalization plan which is expected to produce approximately $20 million of annual savings relative to its 2016 exit operating expense run rate.  Additionally, operating expense in the first quarter of 2016 benefited from a $1 million release in the reserve for unfunded loan commitments and a $1 million gain related to changes in foreign currency values.  Without these benefits, operating expense between the two periods would have been relatively flat.  The company is implementing an additional $25 million of operating expense run rate savings compared to OnDeck’s 2016 exit run rate, the majority of which will be implemented over the remainder of 2017.  The savings are focused on the company’s U.S. lending operations and will be achieved primarily through a workforce reduction to be implemented in the second quarter of 2017.  Combined with the company’s prior workforce reduction, total headcount at the end of the second quarter of 2017 is expected to be approximately 27% lower than December 31, 2016 levels, due to both involuntary terminations and actual and scheduled attrition.

GAAP net loss attributable to On Deck Capital, Inc. common stockholders was $11.1 million, or $0.15 per basic and diluted share, for the quarter, which compares to GAAP net loss attributable to On Deck Capital, Inc. common stockholders of $12.6 million, or $0.18 per basic and diluted share, in the comparable prior year period.

Adjusted EBITDA* was negative $5.2 million for the quarter, versus negative $7.3 million in the comparable prior year period.  Adjusted Net Loss* was $7.6 million, or $0.11 per basic and per diluted share for the quarter versus Adjusted Net Loss of $8.8 million, or $0.13 per basic and per diluted share, in the comparable prior year period.

Unpaid Principal Balance was $1.03 billion at the end of the first quarter, up 57% over the prior year period.  The increase primarily reflected originations growth over the year and OnDeck’s decision to retain more loans on its balance sheet in connection with reducing OnDeck Marketplace loan sales.

Total Funding Debt at the end of the first quarter of 2017 was $788 million, up 69% over the prior year period, which primarily  reflected the growth of Unpaid Principal Balance as well as the increased utilization of debt facilities during the period.  OnDeck continued to expand its funding capacity in 2017. During the first quarter of 2017, OnDeck extended the maturity date of its asset-backed revolving debt facility with Deutsche Bank to March 2019 and increased the facility’s borrowing capacity to approximately $214 million. During the first week of May 2017, OnDeck extended the maturity date of its asset-backed debt facility that finances OnDeck’s line of credit offering to May 2019, increased the facility’s borrowing capacity to $100 million, and decreased the funding costs by 200 basis points.

At the end of the first quarter of 2017, cash and cash equivalents were $73 million, as compared to $80 million at December 31, 2016.

Guidance for Second Quarter and Full Year 2017

Second Quarter 2017

  • Gross revenue between $85 million and $89 million.
  • Adjusted EBITDA between negative $3 million and positive $1 million.

Full Year 2017

  • Gross revenue between $342 million and $352 million.
  • Adjusted EBITDA between positive $5 million and $15 million.

Adjusted EBITDA guidance for the second quarter and full year 2017 includes an approximately $3.5 million charge to be recognized in the second quarter of 2017 associated with the planned workforce reduction.

On Deck Goes From Hot Tech Startup to Dull Lender (WSJ), Rated: AAA

The online lender said Monday that it would put a renewed focus on achieving profitability by slowing growth and cutting costs. Shares fell by nearly 7% in response. Fundamentally, investors are finally waking up to the fact that On Deck is more of a niche financial company than a revolutionary technology platform.

Loan originations may decline by a fifth next quarter, and total originations will be lower this year than last.

If these sound like the business objectives for an ordinary bank, that’s no coincidence. The company plans to sell less than 5% of its loans through its online marketplace this year, Chief Financial Officer Howard Katzenberg said, down from 18% in 2016 and 34% in 2015. Of the rest, some will be securitized, but most will be held on its balance sheet.

On Deck’s shares are down 79% from their initial public offering in December 2014. At 1.2 times book value, it is now valued like a financial company and roughly in line with the average bank. This still looks a bit rich because it has no profits.

Lending Club may have hit a dead end (Business Insider), Rated: AAA

Despite the aftermath of a governance

Lending Club Keeps Pushing Its Comeback (PYMNTS.com), Rated: AAA

The last 12 months have undoubtedly been a difficult period for marketplace lending pioneer Lending Club.

But, as Q1 earnings hit last week, it seems clear that progress is happening — albeit at a fairly slow pace.

Retail investors also expanded, though more slightly — reaching 15 percent, up from 13 percent in the prior quarter.

Lending Club also announced $2 billion originations, surpassing $26 billion in total loans since inception almost ten years ago and 2 million total consumers served on its platform.

Moreover, investing in marketplace lending is not so profitable as it has been in the recent past, and returns to investors have dropped sharply.  Competition has forced down interest rates in the marketplaces to attract consumers with cheaper underwriting, and charge-offs have risen.

According to data from Orchard, a technology provider to the industry, total returns from an index of U.S. consumer loans came to 3.95 per cent last year, down from 8.71 per cent in 2014.

Lending Club’s stock performance has been flat over most of the last year, though it has lost roughly 60 percent of its stock value.

The firm has also seen a massive change-over in its staffing and leadership since its more scandalous days a year ago.  CEO Scott Sanborn cut and rehired 179 jobs and brought on a new CFO, COO, general counsel and chief capital officer.

Leading FinTech Analytics Platform dv01 Announces Reporting Partnership with SoFi (PR Newswire), Rated: AAA

dv01, the reporting and analytics platform that brings transparency to lending markets, today announced a reporting partnership with SoFi, a modern finance company taking an unprecedented approach to lending and wealth management. Institutional investors who use dv01 to conduct analysis on consumer loans and bonds will now have access to all SoFi securitizations, including student and personal loans.

Under the first phase of the partnership, dv01 will receive securitization data directly from SoFi, which it will normalize, format, and roll up for monthly level reporting. The data, which includes 23 historical deals, will be available through the Securitization Explorer, dv01’s online reporting and analytics portal for consumer securitizations.

Investors who have been approved to view SoFi data will have 24/7 access to updated loan level performance and composition details, as well as a suite of reporting and analytics tools. dv01 will be responsible for updating deal collateral data monthly, so investors can continue to track the evolution of a pool over time, even after the deal has closed.

dv01 has provided similar reporting services for several other online lenders, overseeing an aggregate securitized collateral balance in excess of $7 billion. The company launched its dedicated Securitization Explorer tool in February, and since then has also announced its role as Loan Data Agent for the Prosper Marketplace loan purchase consortium led by Jefferies LLC, Soros Fund Management, Third Point LLC, and New Residential Investment Corp, a Fortress Investment Group REIT.

Elevate Credit Announces First Quarter 2017 Results (Stockhouse), Rated: AAA

Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”) today announced results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights

  • 20% year-over-year revenue growth: Revenues totaled $156.4 million, a 19.6% increase from $130.7 million for the prior-year period.
  • Nearly 40% year-over-year growth in loans receivable: Combined loans receivable – principal, were $444.5 million, a 38.6% increase from $320.7 million for the prior-year period.
  • Stable credit quality: Loan loss provision was 52.9% of revenues and within our targeted range of 45%-55%. The ending combined loan loss reserve, as a percentage of combined loans receivable, was 15.7%, slightly lower than the 16.3% we reported for the prior-year period.
  • Record low customer acquisition costs: The total number of new customer loans for the first quarter of 2017 was approximately 53,000 with an average customer acquisition cost of $198, compared to approximately 41,000 customer loans and an average customer acquisition cost of $235 for the prior-year period.
  • Positive net income: Net income of $1.7 million, or $0.06 per pro forma diluted share, which was based on a 2.5 to 1 stock split and all preferred stock converting into common stock upon the IPO but it excludes the 14.3 million common shares issued in the IPO since this happened after quarter end.
  • Continued improvement in Adjusted EBITDA margin: Adjusted EBITDA was $24.9 million and the resulting Adjusted EBITDA margin was 15.9%.

Financial Outlook

For the full year 2017, the Company expects total revenue of $680 million to $720 million, net income of $13 million to $19 million and Adjusted EBITDA of $95 million to $105 million.

With an IPO on the shelf, SoFi lets employees sell 20 percent of vested stock (CNBC), Rated: AAA

Online lender SoFi is letting employees cash out a portion of their holdings to give them liquidity as the company waits to go public.

Last month, SoFi employees and ex-employees were permitted to sell 20 percent of their vested options in a secondary share sale that totaled $336.5 million, according to sources familiar with the matter. The offering priced the shares at $16.30, said one source, who asked not to be named because the deal was confidential.

The real returns for Prosper Marketplace investors (AltFi), Rated: AAA

Yesterday we learnt that leading US marketplace lender Prosper has been misstating investor returns, due to a system error.

The system error did not affect the money received by investors, only the calculation of their annual return.

Prosper has recently been equipping itself to represent its performance more accurately. The firm signed a deal with analytics firm AltFi Data in March, thus opening itself up to third-party scrutiny.

AltFi Data’s returns methodology gives Prosper a net return of 48.8 per cent over 5 years (up to 28 February 2017), equivalent to an annualised compound rate of 8.3 per cent.
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Square is rolling out its first debit card (recode), Rated: A

Last month, Jack Dorsey teased the launch of a Square debit card. Today, the company started allowing some users of its Square Cash money-transfer service to order one of these cards for themselves.

The prepaid card isn’t linked to your bank account, but instead to the Square Cash app. That means you can only use it to spend money that you are holding in your Square Cash account.

A Square spokesperson said these signatures are screened before printing to prevent inappropriate words and drawings from making their way onto the cards. But there is obviously wiggle room to include your Twitter handle, if you want to be like Jack, or just a first name, too. The cardholder’s first and last names are printed on the back of the card.

Creating a deeper relationship with Square Cash customers might also open up other business opportunities in personal finance for the $7 billion payments company. Lending, anyone?

AI may just create the illusion of good credit decisions (American Banker), Rated: A

AI is also second only to blockchain technology as the most overused and overhyped term referring to technologies that are taking over banking and finance, particularly in credit decisions.

The reality is AI will make lending more consistent and efficient; however, it remains to be seen if it will make lending safer.

How will regulators ever know if the AI algorithms are performing in a nonbiased way? Humans are the programmers of the algorithms, and therefore human biases and tendencies cannot but leak into the overall decision process.

We know the saying “bad data in means bad data out.” AI should help to solve that challenge as it more accurately identifies the “bad” or not useful elements. However, the challenge with AI may not be with “bad data” but rather a lack of necessary data as the economic environment changes.

To this end, neural networks, which are self-learning and so complex that the humans who create them are unable to describe them, also present a number of problems. The foremost problem is: If you don’t know how the decision is made, you cannot be confident that the decision is being made correctly. Yes, you can judge by credit performance. But when a lender runs afoul of a regulation, the regulators won’t accept “We just don’t know how it works” as an excuse.

Affirm Looks To Launch Everyday-Use Virtual Cards (Bank Innovation), Rated: A

Affirm, the lending startup that provides loans at the POS, is looking into launching everyday-use virtual credit cards, Bank Innovation has learned.

The company, launched by a PayPal cofounder Max Levchin, provides point-of-sale loans that allow customers, particularly millennials, to finance purchases with participating merchants. Once approved, consumers receive a one-time use virtual card via Affirm’s app, which they can use for the purchase. Then, depending on individual consumers, Affirm splits the bill into monthly payments.

The Future of Fintech and the importance of payments to a SaaS business: WePay’s Week in Payments (Wepay), Rated: A

Scanning the news in the payments world this week was an interesting exercise because the two standout themes are very much aligned with what we do here at WePay and with the future of digital payments. The first theme is around the future of Fintech and where the nascent industry is headed and the second is around the huge impact of delivering payments as a an integrated part of a solution rather than as an afterthought.

David Dunn, of Braintree Europe, has a piece in ITProPortal about why payments are more than plumbing. It’s a good piece and makes a great case for integrating payments. He says that you can help your business by making it easier for your customers to get to a checkout and by making it easier to scale. We would argue that a SaaS business can go even further by using payments to better retain existing customers and help them grow, better adding new customers by scaling as Dunn mentions and also by optimizing revenue for the platform itself. The way to achieve these goals is via white-label payments.

Kabbage’s Next Growth Phase (deBanked), Rated: A

When you consider the recent milestones Kabbage has achieved it makes it difficult to think of the fintech lender as a startup. In recent weeks Kabbage surpassed a couple of major milestones comprised of extending $3 billion in funding to 100,000-plus small businesses. More than half of those loans were directed toward existing credit lines. Kabbage also recently priced a $525 million private securitization, which tips the company’s hand on strategy.

Kabbage is pursuing its growth plans all while performing a confidential search for a new chief technology officer, details for which are expected to unfold in the coming months.

At the LendIt USA 2017 event, Kabbage co-founder & CEO Rob Frohwein alluded to the online lender’s plans to reach new territories, details for which were scarce. Treyger shared, however, that Kabbage’s global growth plans are somewhat tied to the company’s pipeline of banking partnerships.

Kabbage already counts as partners household names including Santander, ScotiaBank, and ING, all of which license software from Kabbage. Meanwhile, as big banks are accessing smaller businesses, Kabbage’s growth blueprint includes serving larger ones.

How fintech startup Elsen helps anyone become a data whiz (Built in Boston), Rated: A

With less than $1 million in total funding, fintech startup Elsen may not have much by way of investments, but a recent partnership with Thomas Reuters should bring some star power to the burgeoning company.

Founded in 2013 by three Northeastern grads, Elsen is a platform-as-a-service company that enables anyone at large financial institutions to harness massive quantities of data for better decision making and problem solving.

Besides offering data storage to some of the largest vendors in the world, Elsen’s product uses machine learning and AI to speed up the testing of financial algorithms by way of backtesting, a process that sifts through historical financial data to see how an algorithm would perform at tasks like automatically picking stocks, for example.

Interim OCC chief should put fintech charter on ice (American Banker), Rated: A

One thing that Keith Noreika, the new acting head of the Office of the Comptroller of the Currency, could tick off of his to-do list is to pause the OCC’s efforts to develop a fintech charter. Noreika should then take some time to assess whether the charter is developing in a way that best serves the public.

Former Comptroller Thomas Curry deserves major credit for getting the OCC to think about how to encourage innovation in the banking sector. The fintech charter is an important piece of this effort. Unfortunately, based on the most recent information put out by the OCC, it appears that the previous leadership wasn’t thinking sufficiently outside of the box. The charter is shaping up to needlessly mimic many of the requirements of traditional depository institutions, even though those requirements do not make sense in the nondepository context.

For example, requiring firms to get OCC permission to change business plans, and to convince the agency that the firm will not fail, are not necessary.

However, the OCC should not press pause on its response to the lawsuit filed by the Conference of State Bank Supervisors challenging the charter.

‘If you change the rules we’re going to disconnect you, fintech’ (American Banker), Rated: A

As one of the banking industry’s largest vendors, FIS says it might be well suited to help banks effectively navigate the world of fintech.

ANTHONY JABBOUR:  When Apple Pay came out, banks weren’t running to Apple Pay because they thought it would drive new streams of revenue for them. A lot of them did it because they were afraid the bank across the street would offer it and they would suffer by not offering it.

One thing we’re trying to do that’s a little different is, if we believe there’s value for our customers, we want to have the disruptor connect to the FIS network and have our banks connect to it from the FIS network, so we can leverage our banks’ negotiating power with the fintech.

What are some of the types of companies you’re thinking of—alternative lenders, PFM app providers, billing companies?

JABBOUR: Payments would be one. The banks that I speak to look at lending and they say banks lost the lending franchise and exclusivity and other companies popped up over the years and took a major portion of that. And they look at payments right now and they feel strongly they can’t lose the payments franchise.

Do you think that banks can take back market share in U.S. person-to-person payments with Zelle?

JABBOUR: We think that has a lot of potential. We offer Zelle to our clients. I believe we can create a capability for P-to-P for our banks that would be better than any fintech’s because we could make it real-time and it would be accessible from an ATM. I could send you money and you can go to an ATM with your mobile phone and withdraw the cash without having a bank account. We could also tie it with prepaid cards, so instead of me sending you $500, I could send you a $500 Home Depot gift card as a housewarming gift. It’s P-to-P, but it’s more thoughtful because we’re integrating it with prepaid.

What does it take for a payment platform to work? It takes brand recognition so people know it exists, and it needs ubiquity, it needs to work in every place you would want it to work. It’s never about the technology. I like with Zelle that banks said look we have to find a way to solve the brand issue, and if we all use the brand Zelle, that’s going to help. And I think it will.

I could see that argument, but you could argue that banks are late to this P-to-P payment party and that PayPal’s Venmo is the clear leader. Do you think the Zelle brand can win hearts and minds?

JABBOUR: Without question, banks are late to a number of capabilities. When you look at P-to-P, Venmo is the brand, it’s a verb. Whether or not banks can catch up with Venmo comes down to how compelling they make the offer, what else they can wrap around it, how much do they ultimately invest in it. What I know is, if they hadn’t pursued Zelle, they would have fallen further behind.

Crowdfunding: Now Anyone Can Own a Skyscraper! (Inside Indiana Business), Rated: A

Have you ever wanted to own a skyscraper? How about an entire apartment complex? Well, good news, now you can! And, you don’t have to meet “accredited investor” requirements. How? It’s called crowdfunding!

According to the University of Cambridge Judge Business School, in 2015 crowdfunding real estate transactions topped $1.2 billion; over three times the amount in 2014.

Research the Crowdfunding Platform: Currently, more than 125 crowdfunding platforms exist. According to Jason Best, a partner at Crowdfund Capital Advisors, you’ll want to consider comparing associated fees, the quality of property management, and the sustainability of the platform. As with any new industry, it’s safer to choose among the larger more-established companies such as Realty Mogul, Realty Shares, and iFunding, to name a few.

If you’re interested in learning more about this topic, I suggest you listen to podcast Episode #108, “Investing in Real Estate Via Crowdfunding Platforms,” on J. David Stein’s website, Money for the Rest of Us.

Listen to the podcast below:

Robot or human financial advice field is changing (VC Star), Rated: A

What if a visit to the financial adviser was more like an impromptu coffee grab than a dental checkup?

Instead of a boring annual visit, imagine a quick call from you adviser in which he makes a couple simple suggestions to keep your portfolio on track.

That’s the future, according to Michael Kitces, research director for Pinnacle Advisory Group in Columbia, Maryland. Speaking to financial advisers attending last month’s Morningstar Investment Conference in Chicago, Kitces tried to reassure them that investors, rather than turning their money over to automated investment platforms, will continue to pay for advice if it’s relevant and timely.

In a future aided by software tracking customer portfolios and everyday spending, advisers will already know their clients’ problems and will use more frequent chats to figure out fixes, he said.

Is Fintech creating Neo-Luddites demanding a “robot-tax”? (Daily Fintech), Rated: A

A (hypothetical) documentary titled “Software has been eating the world” about Microsoft, would have to cover the first decade (‘75-‘86) before the company went public and the stunning and difficult to replicate nowadays fact that about 12,000 Microsoft employees became millionaires, in addition to the 3 billionaires.

So, when Bill Gates spoke in February about the idea of “the robot that takes your job should pay taxes”, the world reacted.

Just recently, the city of San Francisco announced a change in its public policy framework that will make it the first city to implement a robot tax (Business Insider May 2, San Francisco is considering a once unthinkable measure to offset the threat of job-killing robots).

In financial services, there were no such issues raised when ATMs, online brokerage and e-banking transformed the financial industry.

In this second wave that follows the accelerated pace of tech innovation of other sectors, we all agree that we don’t want a world in which no bank submits candidacy for the Global Finance awards  Call For Entries: Digital Bank Awards 2017. Or a world that has an increased tax for the winner and those shortlisted in the Euromoney Best Digital bank awards: for 2016, Singapore’s DBS Bank, and the short list included BBVA, Citi, and ING.  Or a world that taxes more startups providing the “picks and shovels” for the future of Invisible Finance, like:

–       Cloud banking platforms offering Banking as a Service, like Mambu

–       Cloud based investment financial app stores, like Investcloud

–       AI chatbot technology providers like Kasisto

–       Self-Sovereign identity solutions, like Uport

–       Mortgage enterprise solutions providers like Roostify

The Fintech ecosystem is still relatively un-bundled and it would seem even more problematic to develop and apply a framework for a “robot tax” for the Fintech space.

Billionaire investor Draper to participate in blockchain token sale for first time (Reuters), Rated: B

Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed to now: buying a new digital currency offered by a technology startup.

Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called “initial coin offering” (ICO) of Tezos slated later this month.

Tezos, a new blockchain platform launched by a husband and wife team with extensive Wall Street and in hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc, the creator of Tezos, but did not disclose details.

Insight, JG Wentworth among top-rated on online marketplace (Mortgage Professional America), Rated: B

Insight Loans, JG Wentworth Home Lending and CBC National Bank have taken the top three spots in an annual ranking of mortgage lenders.

The league table from online loan marketplace LendingTree rates the lenders on its platform in three categories – mortgages, personal loans and auto finance – based on customer reviews.

CVC Credit Partners provides financing to support Wastewater Specialties, LLC (PE Hub), Rated: B

CVC Credit Partners (“CVC”) announced today that CVC’s U.S. Middle Market Private Debt business acted as Administrative Agent on a first lien senior secured debt facility provided to Wastewater Specialities, LLC (“WWS”). The proceeds were used to refinance existing debt and support future growth through equipment purchases.

United Kingdom

Crowd2Fund Announces New Venture Debt Product (Crowdfund Insider), Rated: AAA

On Friday, crowdfunding platform Crowd2Fund announced the launch of its new venture debt product, which is targeted towards early stage businesses that have a short term requirement to access cash to facilitate growth. The funding portal noted that the interest rates for the product’s loans range from 10% to 15%, with a borrow time period of normally no more than 12-18 months.

Crowd2Fund also noted those businesses that are suitable for the venture debt will be able to increase their value during the loan duration.

MOBILE BIOMETRIC PAYMENT VOLUMES TO TRIPLE IN 2017 TO NEARLY 2BN (Juniper Research), Rated: A

A new study by Juniper Research has found that the number of mobile payments authenticated by biometrics will rise to nearly 2 billion this year, up from just over 600 million in 2016.

The new research – Mobile Payment Security: Biometric Authentication & Tokenisation 2017-2021 – found that while Apple Pay had provided the catalyst for initial growth, other leading wallets including Android Pay and Samsung Pay were increasingly offering biometric solutions for authentication.

Furthermore, the size of the opportunity has been boosted by the greater availability of fingerprint sensors. According to the new research, around 60% of smartphone models are expected to ship with such sensors this year, with many Chinese vendors incorporating them into mid-range models.

The research emphasised the increasing momentum behind alternative biometric solutions. It recognised Mastercard as an early leader in this space through its Identity Check Mobile capability, due to go live later this year. Informally known as “selfie pay”, this allows users to scan their fingerprints and/or take selfies to validate their identities and thereby make payments.

PwC appoints leaders for Analytics, AI, Cybersecurity and FinTech arms (Consultancy.uk), Rated: A

In a bid to expand its footprint in the rapidly growing digital and technology-led innovation space, PwC, one of the major players in the field, has in recent weeks appointed a number of new senior technology positions in the UK wing of their group.

In another appointment aimed at driving growth in technology and financial technology (FinTech), Zubin Randeria, a PwC partner for 23 years non-consecutively, was unveiled as the new lead for around 200 cyber security experts in the UK, as the firm continue to focus on advising companies how to resist digital threats; a key concern of modern business.

Mark Leaver, PwC’s head of Financial Services Consulting since 2015, will meanwhile expand his existing role to include the multi-billion pound FinTech market in his scope. The FinTech space is growing fast, with interest in services particularly high among younger tech savvy users, and on the back of the spike global investments in FinTech companies grew to $25 billion last year, according to data from KPMG.

Bank of England criticised for fintech faux pas (Financial News), Rated: A

The Bank of England has come under fire for working with a fintech startup that was fined $700,000 by a US regulator for breaking banking secrecy laws.

Players in the fintech field have accused the central bank of appearing not to have conducted proper due diligence when selecting its partners after it emerged that Ripple, the startup chosen by the Bank of England to help research new blockchain technology, was fined for “willfully violating” several requirements of the Bank Secrecy Act.

RESCUE DEAL FOR MOTOR FINANCE PROVIDER (Insider Media), Rated: A

A Leicester-headquartered vehicle finance provider has been acquired out of administration.

Vehicle Trading Group called in administrators from Grant Thornton on 2 May 2017.

The company provided finance via its subsidiaries Vehicle Stocking Ltd and Vehicle Credit Ltd, which have now been sold to RateSetter.

China

11 Of The Largest Companies In China Dominate Chinese Fintech (Lend Academy), Rated: AAA

Of the 1.4 billion people in China, only about 300 million are in the national credit bureau, which means that more than a billion people have no credit profile.  Hundreds of millions of Chinese “unbanked” consumers are middle class, have high discretionary income, and would be considered prime or super prime borrowers. On top of that, the large Chinese banks have no history in making consumer and small business loans and were never designed for that purpose (they make infrastructure and commercial real estate loans).

We are seeing the leading Chinese companies from a diverse set of industries muscle their way into the fintech sector.  This article highlights some of the key players that have made the horizontal jump into fintech.

Ant Financial Services Group is owned by Alibaba Group, the largest e-commerce firm in the world.  Ant Financial is focused on serving small and micro enterprises as well as consumers. Ant Financial is the largest fintech company in the world.

JD Finance Group operates seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth management, payment services, insurance and securities trading. JingBaobei is their microlending platform and Baitiao is their crowdfunding platform.

Baidu Jinrong is focused on many different verticals under different brands including consumer finance (Baidu Umoney), wealth and fund management (8 Baidu), payments (Baidu Wallet) and financial asset transaction platform services.

Greenland Group (Stock Code: 337.HK) is one of the world’s largest publicly traded real estate development companies with more than 15 million clients. They are the largest Chinese developer in the US. Greenland Financial was formed in December 2015 and it includes three main business sectors: an online wealth management platform for individual investors; a professional asset allocation and wealth management service for middle-class clients; and a cloud platform to provide internet technology and data analysis services.

Wanda Internet Finance Group leverages Wanda’s offline commercial platform to form a business division comprising of four activities: data application, credit service, online lending and payment, and creating an innovative financial offline-to-online model.

Lufax Holdings is one of the world’s largest and most successful fintech firms.  It is owned by Chinese insurance giant Ping An Group. The business consists of three divisions: Shanghai Lujiazui International Financial Assets Commodity Exchange Co (Lufax), Shenzhen Qianhai Financial Asset Exchange Company Ltd (QEX), and Puhui Financial.  Lufax offers wealth management and insurance services to its 23 million registered users, QEX focuses on institutional business and cross-border business, and Puhui Financial provides loans to consumers and micro-businesses.

Zhong An is China’s first Internet-based insurance company utilizing Big Data analytics.

Tencent has recently created Tencent FiT (Financial Technology Group), which includes TenPay (payments), WeChat Pay, Mobile QQ Wallet, Tencent Credit Services, and Tencent Licaitong, its money market fund and wealth management platform.

Tencent also launched WeBank, the first online-only bank in China, a joint venture that also includes Shenzhen Baiyeyuan Investment and Shenzhen Li Ye Group.

SinaPay is a social payments solution. Weiquanbao is a social wallet focused on mobile payments. Weicaifu is their Internet financial services company with a focus on personal financial management.

Phoenix Finance is an online platform, established by Phoenix Satellite Television Holdings, to provide intelligent financial services for Chinese investors worldwide.

Ezubao P2P Lending Fraud Update: 26 on Trial (Crowdfund Insider), Rated: A

Do you remember the Ezubao Ponzi scheme that ended in the single largest peer to peer lending fraud of all time? Investors, saw approximately 50 billion CNY or about USD $7.2 billion flushed down the tube. Reportedly 900,000 investors were impacted as an astounding 95% of the loans listed on the P2P lender’s site were said to be totally bogus.  Well process kicked off at the end of last year and according to a report from Xinhua, 26 Ezubao executives are now on trial. Proceedings are taking place in No. 1 Intermediate People’s Court in Beijing. Ezubao executives Anhui Yucheng and Yucheng Global and 10 company executives, including Yucheng chairman Ding Ning, have been charged with fraud.

European Union

Fintechs fight plan to bar screen scraping and protect European banks (CNBC), Rated: AAA

A coalition of 62 financial technology (fintech) firms including Klarna and Trustly and lobbying organizations such as the European Fintech Alliance (EFA) are fighting plans by the European Banking Authority (EBA) to ban screen scraping of customer data from online banking interfaces.

The screen scraping ban would come into force as part of the draft regulatory technical standards (RTS) rule under the European Union’s (EU) revised Payment Services Directive (PSD2) regulation.

Screen scraping is the process of collecting screen display data from one application and translating it so that another application can display it. This is normally done to capture data from a legacy application, such as an IBM mainframe computer for instance, in order to display it using a more modern user interface such as a PC or mobile. However, it can also be used to steal data or, depending on your point of view, legitimately gather business intelligence.

The EBA proposals are meeting fierce resistance from European fintechs that have signed a manifesto to fight the plan.

International

Introduction To P2P Lending Marketplace (Code Brahma), Rated: A

One of the biggest advantages of using an online P2P lending platform is that the loans are usually cheaper as the platforms operate with lower overheads and software powered automation. The P2P lenders charge money for the platform and doing credit checks for borrowers.

So, if a platform decides the unit note to be valued at $10 and an investor decides to invest $10,000 she’ll end up with 1000 notes to invest in borrowers.

One loan is typically funded by multiple investors. An investor willing to invest 1000 notes can choose to fund 10 different loans with 100 notes each or can mix and match the amount with loans.

According to a PwC report, the P2P lending platforms in the United States issued loans worth $ 5.5 Billion approximately. The global P2P market was estimated at $26.16 Billion in the year 2015. Transparency Market Research predicts the market to grow by CAGR of 48.2% year on year, reaching a whopping $897.85 Billion by the year 2024. Research and Markets expects the P2P market to grow at a CAGR of 53.06% between the years 2016 and 2020. Morgan Stanely predicts the market to be valued at $490 Billion by 2020.

Fintech vs Bank: Roles And Advantages Of Both Parties (ValueWalk), Rated: B

Globally, fintech funding was US$5.5 billion since 11 years ago and can be up to US$78.6 billion now.

According to TechinAsia, the reasons why consumers can adopt fintech are because of it is easy for them to set up an account, in fact, rates and fees that fintech offered are more attractive and cheap. On the other hand, fintech helps SMEs to acquire some funds.

Banks provide many services such as savings, loans, transfer of funds and much more. Some said that banks would disappear in the future. However, as long as bank dominates on lending, investing and deposits, they will sustain in the market. Banks basically will keep the customer’s information and will not easily give it to other parties. So the customer will feel more secure and safe doing the transaction with the bank.

India

Fintech Forging The Future For Cashless Economy (Techstory), Rated: AAA

When Prime Minister Narendra Modi announced on November 8 that over 80% of our paper currency would be obsolete thereon, most of the country was left spell bound. While this was a move to discourage and partially halt the flow of counterfeit currency in a supposedly invisible economy, also crippling most industries and investors, there was one industrial sector that sat by the side and smirked – FinTech.

While the ripples of the move are still being felt every now and then, the financial climate is much more stable now than it was 5 months ago.

The first challenge, aided in part by the recent Demonetisation announcement, is that of making the population aware of the ease and comfort associated with online banking and cashless transactions. Not only does this involve an ideological shift, it also requires the population to cross a mental barrier – security.

Looking at it through this lens, it comes as no surprise that a report by Finextra Research Ltd. states that 69% of existing FinTech firms plan on raising their expenditures on content marketing. The scope of development for an online app of such a sort can be exponential, as has been witnessed by the growing popularity of Paytm!

In fact, certain projections point to a 30% decrease in banking employment over the next decade, as the concentration of delivering banking services in person decline with time.

While we have always been used to being dependent on our banking corporations to provide the chunk of capital services that we have always required, over time, it will be these fintech apps that will do the job, with banks holding safe, liquid assets and deposits. The borrowers and savers will now all be available on your smartphone.

While the landscape of lending and borrowing might change when it comes to user experience, the degree and scope of investments will only increase. However, the way we read and process it may change over time. As cryptocurrencies becomes easier to process and handle worldwide, other technologies supporting the development of transactions in such currencies will develop.

As innovation takes the lead while the scope of integration broadens, startups can create a real impact in society through different mediums like the P2P marketplace.

Take Kiva, for example, a wonderful peer-to-peer micro finance website that aims to alleviate poverty by allowing everyday people in developed nations to finance budding entrepreneurs in developing nations. Kiva allows you to make a loan to an entrepreneur across the globe for as little as $25. It is one of the world’s first online lending platform connecting online lenders to entrepreneurs across the globe.

PayActiv is another app that encourages better ways and modes of saving regularly, thereby increasing the independence of many of its users over time.

10 tips to get personal loans despite having low credit score or CIBIL score (Plunge Daily), Rated: B

Banks do not give unsecured loans like personal loans as easily as they do secured loans like home loan or auto loan. They take various parameters into consideration and not everyone can pass the stringent eligibility criteria. Credit score is where most applicants lose out on, especially when half of them have no idea what credit score is in the first place. Lenders are totally dependent on CIBIL (country’s biggest credit bureau) among others to understand customers’ past credit behavior and hence, credit worthiness.

Meanwhile, here are ways to get personal loans despite having low credit score:

  1. Approaching non-traditional or alternate lenders – Qbera offers one such personal loan product that is specifically designed for salaried employees above age 23 with high earning potentials. They offer emergency loans if your CIBIL score is 625 and above.
  2. Having a good salary at present
  3. Getting the help of spouse or other close family member or friend
  4. Applying with the same lender
  5. Applying to lenders that caters to people with low CIBIL Scores – Many online lenders understand that a low credit score doesn’t necessarily translate to low credit worthiness. There could be plenty of reasons for a less-than-ideal score due to technicalities.
  6. P2P lending for personal loans – Quite a popular lending trend in developed countries is peer-to-peer lending, it is not that common in India. Customers haven’t taken to it because the loan amount offered is small while the rates are high.
  7. Work on improving your credit score
  8. Mixing it up wisely – If you have taken more loans, please ensure that you have a wise mix of secured and unsecured loans rather than having only one kind.
  9. Paying taxes
  10. Getting loan against collateral
Canada

Home Capital suspends dividend, taps credit line, bolsters board (Reuters), Rated: AAA

Home Capital Group Inc on Monday suspended its dividend, tapped its credit line and added new directors, the latest attempts from Canada’s biggest non-bank lender to restore investor confidence and stem the flow of customer withdrawals.

The company also estimated that the balance in its high-interest savings accounts (HISA) halved in the past week and said it has withdrawn from its C$2 billion ($1.5 billion) credit line for the second time. Home Capital said the balance in its HISAs is expected to slump to about C$192 million on Monday, down 50 percent from a week ago.

Authors:

George Popescu
Allen Taylor

Friday December 16 2016, Daily News Digest

digital-only banks

News Comments Today’s main news: LendIt partners with 500 startups on PitchIt 2017. Victory Park Capital provides $100M credit facility and $3M preferred equity to Cognical. Today’s main analysis: Report details UK’s consumer credit picture. Today’s thought-provoking articles: The future of banking is digital. China begins execution of P2P fraud case. Where are the women in alternative investing? […]

digital-only banks

News Comments

United States

United Kingdom

European Union

Australia

China

Asia

Ukraine

Africa

 

News Summary

United States

LendIt and 500 Startups Partner on PitchIt 2017 to Identify Fintech’s Next Stars (PR Newswire), Rated: AAA

LendIt, the world’s largest show in lending and fintech, today announced its partnership with 500 Startups for PitchIt 2017, a leading global competition for fintech startups who can earn mentorship, endorsement and exposure to leading institutions, investors & press. Online applications also officially opened to qualifying fintech startups.

This year’s competition is slated to see hundreds of applicants all vying for a prestigious spot in the finals, and a chance to present on the keynote stage in front of thousands of members and high ranking executives from the fintech industry. This year’s Exclusive PitchIt Partner will be global venture capital fund 500 Startups, the world leader in investing in and mentoring early-stage fintech startups. The finalists will present to a panel of expert judges and thousands of conference attendees at LendIt USA on March 6, 2017 in New York City.

PitchIt @ LendIt attracts hundreds of investors, asset managers, funds and entrepreneurs, bringing together a community of influencers in the lending marketplace. To apply to PitchIt 2017, firms must meet the following criteria:

  • Must be a fintech company
  • Two or more full-time co-founders/employees
  • 2-10 full-time employees
  • Less than 3 years in business (companies founded before 2014 not eligible)
  • Raised less than 4 million USD since launch date
  • Must have a professional business website
  • Everyone registering on behalf of a specific company must have an email with that company’s domain

Any company that applies for PitchIt and fits the criteria automatically qualifies for our startup ticket pricing of only $295 per ticket.  Also, prior to the event, shortlisted companies will receive coaching from 500 Startups as well as industry leaders and other mentors. Eight selected finalists will receive a free all-access pass to attend the entire LendIt USA conference, up to $1,000 for travel to PitchIt, and a 50% discount Startup Zone booths. The overall PitchIt winner will receive a Bronze level sponsorship to future LendIt events, promotion and media support.

BlackRock to lead funding round for fintech startup (Reuters), Rated: AAA

BlackRock Inc plans to lead the next funding round for the startup iCapital Network, which gives individual investors access to private equity funds, hedge funds, and other alternative investments, the two companies said on Thursday.

Last year BlackRock bought FutureAdvisor, a robo-adviser that manages savings for individual investors.

Roofstock Expands its Single-Family Rental Real Estate Investment Marketplace to Dallas (BusinessWire), Rated: A

Roofstock (), the leading online marketplace and transaction platform in the $2 trillion single-family rental sector, today announced that it has expanded into the dynamic Dallas real estate market. In addition to strong home price appreciation forecasts, Dallas is expected to have robust rent and employment growth making it an excellent market for single-family rental investors. Recent measures estimate annual rent growth in Dallas of 5.1%, which is significantly ahead of the national average of 3.7%, and employment growth of 4.3% compared to the national average of 1.8%.

Roofstock has developed a proprietary marketplace for investors to find, evaluate and invest in single-family rentals online with tools and transparency never before available to either retail or institutional investors. With the addition of Dallas, Roofstock has now expanded to include 11 markets since its public launch in March of this year. The marketplace currently has over 130 exclusive investment properties available, representing a variety of investment characteristics, with new properties being made available daily. Roofstock differentiates its real estate investing marketplace by focusing on single-family rental properties that are fully leased, allowing buyers and sellers to benefit from immediate rental income from the date of purchase.

Roofstock’s revolutionary model features a proprietary marketplace of certified, cash-flowing homes for sale. Listings include detailed inspection, valuation and title reports, as well as information about the tenants and local property managers who have also been certified by Roofstock. The company stands behind its marketplace with a bold 30-day Money-Back Guarantee which investors can exercise if they are unhappy with the purchase for any reason. The unique technology tools and platform allows investors to purchase U.S. rental properties with confidence online from anywhere in the world.

Tech start-ups target financial services (Gulf News), Rated: A

It may not be much longer before bank branches join video-rental stores and record shops as relics of a bygone era.

At this point, the fintech sector hasn’t proven it can be a viable or trustworthy alternative to traditional banks and stock brokerages. Few of the start-ups have ever posted a profit, and one of the biggest, the Lending Club, is trying to recover from a breakdown that triggered the resignation of CEO Renaud Laplanche earlier this year. The Justice Department is investigating the events that led to Laplanche’s abrupt departure.

Banks, meanwhile, have demonstrated their resiliency and resourcefulness.

A recent survey of the financial services industry by the research firm Gartner Inc. found that 70 per cent of respondents considered fintech start-ups to be a bigger threat than their traditional rivals.

With their guard up, the much bigger banks are more likely to drive many of the fintech start-ups out of business if they don’t acquire them first, says Gartner analyst Rajesh Kandaswamy.

Although many consumers rarely expect big banks to act in their best interests, they typically consider them to be a safer place to keep money because of their long histories in business, says Forrester’s Berdak. Like the big traditional banks, most digital-only banks also offer government-backed insurance on deposits, but Berdak says that is not enough to overcome lingering doubts about their long-term prospects.

4 Real Estate Investment Types to Consider for 2017 (Equities.com), Rated: A

The good news for investors is that you can find projects that fall into each of these categories within the real estate crowdfunding (RECF) sector. RECF usually offers higher returns and lower fees than traditional investment classes, which makes it attractive for investors serious about growing their income.

Another benefit to RECF is that it allows investors the opportunity to partially fund projects they are interested in.

The World of Alternative Investing Is Exploding — Where Are the Women? (Observer), Rated: A

Remarkably, women even outperform men in their investments — when they invest, that is. Traditional equity market investing data indicates virtually no differencebetween men’s and women’s participation rates. If you look only at standard investment products, such as 401(k) accounts, stocks, ETFs, and retirement plans, the participation rates of the sexes appear to be equal. However, alternative investing tells a different story.

So I was surprised to find, when my team analyzed our user data, that our investor base was 90 percent male. This didn’t make sense to us. Alternative platforms also provide ways to make socially conscious investments, which we know matter deeply to women. In a 2015 survey, 95 percent of women said that helping others through their investing is important to them, and 90 percent prioritized environmental responsibility.

Alternative investing should also appeal to those who prefer stable investments, and women tend to mix or re-balance their portfolios less frequently than men do. There is no re-balancing or trading involved in alternatives, as they’re often set for a fixed duration, making them a more predictable option.

Fintech-led alternative platforms should emphasize the character of their investments. Opportunities to create jobs or have a positive social impact are particularly attractive to Millennial women. Not only do such investments make an economic impact on the community, but they also increase the amount of capital available to entrepreneurs who don’t fit into traditional bank underwriting.

Keeping It Real And Thinking Consumer First Is The NerdWallet Way (TechDay), Rated: A

Amongst the many challenges of being a fully functioning adult, responsibly managing finances is one of the most confounding. From choosing the right credit card to understanding what the heck a 401(k) truly is, personal finance can be a daunting and complicated struggle.

The millennial struggle of #adulting is driven a great part through the generation not having a firm understanding of finances. How does NerdWallet play into this discourse and thrive because of it?

The majority of people, including millennials, make financial decisions in the dark so we want to provide consumers with expert, honest and personalized information to empower them to make the best possible decisions- everything from selecting a credit card, mortgage lender to how to save and invest.

How did your own experiences influence the inception of NerdWallet and how have these continued to impact the brand as it’s grown into what it is today?

The inspiration for NerdWallet spurred when my sister, Kim –another Internet entrepreneur- asked for my help in finding a credit card at the same time my parents were put into a mutual fund, which was full of hard-to-understand terms.  It took me (a trained financial professional) over a week to make a recommendation after spending weeks researching available financial products and seeing firsthand how many complicated financial products were out there vying for consumer mindshare with no regards to consumers’ well-being. That’s when I realized how much of a barrier the complexity of information out there is for consumers. I put all of the credit card information into a spreadsheet and from there NerdWallet’s first credit cards tool was built in 2009. We saw the clarity we could provide with credit cards, which got us thinking about all the other financial decisions consumers have to face. Today, NerdWallet spans across 11 personal finance topics (Credit Cards, Banking, Investing, Mortgages, Household Spending, Education, Personal Loans, Life, Health and Auto Insurance, SMB, Taxes and Estate Planning) and has grown from 50 employees to more than 400.

Within fintech, regtech gets the spotlight (The Asset), Rated: A

In 2016 the likes of Credit Agricole, HSBC and J.P. Morgan were fined collectively US$521 million for rigging the Euribor rate breaching European Union anti-trust rules. More infamously Deutsche Bank this September was fined US$14 billion for mis-selling mortgage securities in the US.

Aside from avoiding fines, the cost of banking compliance is on the rise. According to the Federal Financial Analytics, a policy analysis firm, in 2013 the six largest banks in the US spent US$70.2 billion on compliance compared to US$34.7 billion spent in 2007.

Victory Park Capital provides $ 100 million credit facility and $ 3 million preferred equity to Cognical, Inc. (BusinessWire), Rated: B

Victory Park Capital (VPC), an investment firm focused on private middle market debt and equity investments, announced today it has provided a $100 million senior secured credit facility to Cognical, Inc. (d/b/a Zibby), to expand its omnichannel lease-to-own payment platform for in-store and online shopping. The credit facility, along with the accompanying equity investment, will help the company grow and scale its lease portfolio, providing underbanked consumers with an affordable alternative for acquiring durable consumer goods such as furniture, appliances and electronics.

3 Ways to Invest without the Stock Market (Modest Money), Rated: B

Lending Club is a part of the new wave of investing called peer-to-peeSo I was surprised to find, when my team analyzed our user data, that our investor base was 90 percent male. This didn’t make sense to us. Alternative platforms also provide ways to make socially conscious investments, which we know matter deeply to women. In a 2015 survey, 95 percent of women said that helping others through their investing is important to them, and 90 percent prioritized environmental responsibility.r lending, which is exactly what it sounds like. There is a person that needs money, and there is a person that is willing to lend money. As a borrower, there are several different reasons that you would want to use a site like Lending Club. With these peer-to-peer avenues, you don’t have the complications of going through all of the hoops of working with banks. You can complete the application on your terms. Additionally, borrowers will be able to secure better rates and will also have more flexibility on the requirements to secure the loan. As a borrower, you’ll be allowed to apply for a loan for just about any reason. You can use the money for home repairs, car loans, refinancing, or just to buy a pool for your children.

On the other side of the coin is the lenders. While there is never a “sure thing” when it comes to investing, Lending Club boasts excellent average return rates. According to their website, they typically see ROIs around 5.06% and over 8%, which is very attractive rates. Additionally, as a new investor, Lending Club is extremely easy to get started and has all of the risks laid out in front of you without the complicated jargon that scares new investors.

With Lending Club, you can open up a self-directed IRA, which means you will have full control of the investments inside of the account. Don’t worry, it’s not as difficult as it sounds. On the site you’ll be able to look through the variety of loans that are being requested and see the specific details of the loan and what the money is going to be used for. Once you find a loan that you want to participate in, you can decide how much money that you want to invest in that person’s application.

Exploring the Future of Digital Financial Advice: New Findings from CFP Board, Financial Services and Technology Leaders (PR Newswire), Rated: B

The CFP Board Center for Financial Planning today announced the findings of its blue-ribbon panel of experts who explored the future impacts of digital advice on the financial planning profession.

Known as the Digital Advice Working Group, thought leaders and senior executives from the worlds of technology and finance gathered to explore the future of digital advice and the role humans will play in delivering financial advice. The goal was to stretch the professional’s way of thinking about how future environments and events may lead the industry down several conceivable paths.

United Kingdom

Growth Capital Ventures gets £1.1m investment from Maven Capital Partners for new P2P platform (altfi), Rated: AAA

Maven Capital Partners (“Maven”), has completed a £1.1m investment in Growth Capital Ventures (“GCV”), funded through its managed Venture Capital Trusts. GCV is a leading developer and operator of specialist online investment and capital crowdfunding platforms.

GCV will use the investment to develop a new P2P lending platform. The new platform will focus on providing access to pre-vetted, quality investment opportunities that have the potential to deliver strong investment growth, and support syndication between institutional, professional and retail investors.

New report shares details about UK’s consumer credit for 2016 (WhaTech), Rated: A

Key findings:

  • Average credit quality has reached its lowest point in over four years, and default rates have been on an upward trend over the last two years.
  • Lower credit scoring criteria has been priced in by providers, resulting in average interest rates on loans of £5,000 rising 1.9% in a year.
  • P2P remains the fastest-growing sector. The P2P lending market is showing signs it is starting to consolidate, with synergistic partnerships with other sectors being used to increase the scale of operations.

We estimate that P2P lending will comprise 0.42% of total consumer credit in 2016, rising to 1.2% in 2020.

European Union

I Started a Zlty Melon Test Portfolio (P2P Banking), Rated: AAA

A few weeks ago I decided to start a small test portfolio investing in p2p loans at Zlty Melon. Zlty Melon is a p2p lending marketplace in Bratislava, Slovakia (see earlier articles about the Slovakian market). The marketplace lists loans to borrowers in Slovakia in Euro currency and to Czech borrowers in CZK. On the investor side Zlty Melon is open to residents of the European Economic Area. The website is available in English, Czech and Slovak languages.

I deposited 400 Euro via SEPA transfer. If you need currency conversion during a deposit, it might be cheaper to use Transferwise or Currencyfair than to do a direct bank transfer.

I set up an autoinvest (called ‘Investment Manager’) to automatically bid 25 Euro on each new cashfree housing loans, as these seem the most secure loans and so far according to Zlty Melon’s statistics for this loan type there have not been any defaults. I set it up to invest in Slovak loans only as I didn’t want any currency risk.

THE FUTURE OF BANKING: Growth of innovative banking fintech services (Business Insider), Rated: A

Banking is a rapidly changing industry, and the biggest paradigm shift that has occurred is the move to digital-only banks.

Millennials, in particular, are moving more frequently toward digital banking. And as a result, they’re walking into their banks’ traditional brick-and-mortar branches less often than ever before.

Digital-only bank Ally launched in the U.S. in 2008 and at the time, it was one of the first of its kind. But multiple new players have entered the scene in the last few years. These include Monzo, Tandem, N26, and Fidor in Europe, along with Digibank in India and B1NK in Kazakhstan.

These banks hold key advantages over traditional institutions, such as freedom from historical tech restrictions and the fees associated with brick-and-mortar branches. And in many nations, financial regulations also help these banks flourish. In Europe, these digital-only banks will soon be able to access customer data from traditional banks.

There are very few options for digital-only banks in the U.S. but in Europe, the options are plentiful. Digital-only banks across the pond are competing both with legacy banks and with each other for customers. So in order to lure clients away from their existing bank, they have to offer a significantly better product than their competition.

The payments segment is much more mature than other fintech areas, and a small handful of companies now dominate the business-to-consumer (B2C) space in particular.

Australia

$ 126 million year heralds significant market challenge from peer to peer lender SocietyOne (Mozo), Rated: AAA

Peer to peer lender SocietyOne has finished a record-breaking year on a high thanks to massive investment and borrowing growth, with November registering $15.3 million worth of lending alone.

With a total of $126 million in lending already in 2016, the company has now recorded $200 million in loans since its inception – a benchmark Managing Director and CEO Jason Yetton attributed to the growing appeal of the peer to peer lending sector.

The latest figures from SocietyOne highlight an increase in the number of borrowers entering the peer to peer lending market, with a 25% increase since August this year.

Default rates among borrowers using the company’s marketplace have also shown to be lower than the market average, sitting at 1.1% as of the end of November 2016 compared to a sector average of 2-3%.

China

China’s $ 8.6 billion P2P fraud trial starts (Reuters), Rated: AAA

Criminal prosecution of 26 people involved in China’s biggest alleged online fraud – a nearly 60 billion yuan ($8.64 billion) case involving online peer-to-peer lender Ezubao – has started in Beijing, the official Xinhua news agency reported on Friday.

Ten individuals, along with Ezubao’s parent companies Yucheng Holdings and Yucheng Global, are charged with fraudulent fund-raising, the news agency said. Sixteen other individuals face charges of illegally taking public deposits.

Ezubao, once China’s biggest P2P lending platform, allegedly collected 59.8 billion yuan of funds from investors through fake investment projects it advertised on its website and failed to repay 38 billion yuan. It collapsed in February, with executives saying the firm was “a complete Ponzi scheme”, which used investor funds to support lavish lifestyles for its executives.

An emerging Asia-Pacific fintech hub: Hong Kong (South China Morning Post), Rated: A

For decades, Hong Kong made its mark as the region’s leading financial centre, vying with New York and London for supremacy as a global nexus of money. Shaken by the Asian financial crisis, SARS, and the rise of Shanghai, gloomy predictions about Hong Kong swirled during the early years of the new millennium.

Two recent events however, may swing momentum back in favour of Hong Kong: The United Kingdom’s vote to leave the European Union in June 2016, and the election of Donald Trump as the incoming 44th president of the United States.

Confirming the growing prominence of financial technology (fintech) startups, InvestHK hosted the inaugural Hong Kong Fintech Week last month (November 7 to 11). More than 2,500 participants took part during the week, taking advantage of the high-calibre speakers and the array of events on offer. Notable participants included China’s biggest peer-to-peer lending and wealth management platform Lufax, online insurer Zhong An, JD Finance, WeBank, and Hong Kong-based bitcoin exchange BTCC.

Asia

Why banks need to be smarter than fintechs (The Asset), Rated: A

According to an Accenture, Asia-Pacific based fintechs as of September 2016 have raised US$10.5 billion from investors. A far cry from the US$103 million the region generated 10 years ago.

The banking opportunity especially in Asia is too significant to miss out on, McKinsey & Company data reveals that out of industry’s US$1.1 trillion 2015 profits close to half was originated from the Asia-Pacific region compared to only 28% in 2005.

Ukraine

P2P lending in Ukraine reaches UAH 5 bln (Interfax), Rated: A

The volume of the P2P lending market since the launch of this service in Ukraine has reached UAH 5 billion, Head of the National Bank of Ukraine (NBU) Valeriya Gontareva has said.

Africa

AlliedCrowds Prepares for P2P Platform AlliedExchange Launch (Crowdfund Insider), Rated: A

London-based AlliedCrowds is preparing to launch its P2P service AlliedExchange soon as it has begun the search for a new Managing Director.

AlliedCrowds/AlliedExchange is backed and funded by FSD Africa, which in turn is backed by the British government.

This proposed platform will use P2P lending technology to present a range of sub-Saharan Africa loans to both retail and institutional investors, including diaspora, HNWIs, hedge funds, family offices, banks, development institutions, etc. The platform will have the ability to transact trades and manage accounts. Initially, the platform will be regulated by the FCA, but regional authorization will be sought in due course.”

Authors:

George Popescu
Allen Taylor