Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering […]
Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering effects of the rising interest rates on three of the biggest P2P markets in the world: the UK, US, and China.
Last year, Bank of England (BoE) reduced the interest rate by 0.25 percent along with a sling of monetary policies to encourage growth. But in October of this year, BoE increased the interest rate, though only marginally by 0.25%. Both of these times, banks and other financial institutions immediately reviewed the mortgage and saving rates, and the effect was passed on to customers. But the change is too small to have any damaging effect on P2P lenders.
News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]
The Fed is thinking about its own cryptocurrency. AT: “If governments everywhere created their own cryptocurrencies, there would be a global realignment of economies. There’d be no reason to peg state currencies to foreign money unless a country only had fiat currency that tended to fluctuate wildly. It could even lead to the dollar and other fluctuating currencies pegging once again to gold. What would that then do to lending? It would like benefit alternative lenders a great deal.”
Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.
Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.
“We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”
According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.
Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA
In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?
The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:
Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.
Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.
Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.
Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.
If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.
Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.
While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.
The Magnificence of Micro Loans
Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.
Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.
Small Business Domination
Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.
The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.
Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.
A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.
Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.
English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.
In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.
Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?
A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.
Q: What sort of future do you see for blockchain technology in the Fintechpersonal loanmarket? What sort of challenge would its implementation pose to Fintechlenders?
A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.
Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.
Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.
In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.
Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.
According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.
Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.
Erin:On what other elements of your YieldStreet street vision are you currently working?
Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.
Erin: How do you expect YieldStreet to grow? How do you source deals?
We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.
Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?
Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.
Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025? How do you predict the sector will change and be disrupted?
Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.
It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.
SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.
Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.
In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”
But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”
Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.
Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.
A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.
Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.
U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.
That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.
The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.
Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.
Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.
KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.
Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.
Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.
The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.
There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.
Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.
BORROWERS: EXHAUST OTHER OPTIONS FIRST
When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.
Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.
LENDERS: ASSESS THE REASON FOR THE REQUEST
If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?
Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.
The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.
The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.
The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.
It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?
Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.
The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.
In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.
Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.
With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.
Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.
While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.
Decline of P2P, robo-advisors
One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.
KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.
This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.
The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.
Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.
The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.
The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.
A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.
Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.
A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.
The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.
American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.
Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.
A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.
The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.
On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.
Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.
Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.
Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.
Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.
KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.
Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.
For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.
WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.
In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.
At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.
He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.
Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.
Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.
News Comments Today’s main news: Revolut sings 1 millionth customer. KBRA assigns preliminary ratings to Lending Club’s Consumer Loan Underlying Bond Credit Trust 2017-P2. Funding Circle to launch Isa. Orca is launching investment platform. Chinese regulators investigating potential Qudian data leak. China cracks down on shadow banking. China tells provincial goverments to halt microlender approvals. Swiss consortium adopts single digital identity for […]
Peter Renton’s MPL results for Q3. AT: “I wonder why Lending Club’s investments are struggling while Prosper’s are doing well. The interesting part of this read are the new investments for this quarter.”
Assault on microlenders threatens U.S. IPO listings. AT: “Chinese lenders need U.S. capital more than Wall Street needs Chinese companies. But if China wants to compete on the world stage for capital fundraising, they’ll need to consider the protection of consumer interests.”
As Goldman Sachs Group Inc. lends more money to Main Street, one question won’t go away: How many borrowers will pay them back?
A recent example it gave suggests the firm expects loan losses to be lower than what some rivals are seeing, and half of what many credit-card lenders experienced the last time the economy went south.
The bank is counting on its consumer push to deliver $1 billion in revenue growth over the next three years. While the firm looks to attract borrowers with better credit than many rivals, others think it may be underestimating the risks of a business where it’s the upstart.
If you have been reading these posts in the past year or so you will have noticed a steady decline in my returns, primarily caused by underperformance in my LendingClub accounts.
Earlier this year I adjusted my strategy and started investing across the entire risk spectrum but it is a bit like steering a battleship. Given my many thousands of notes it takes a while for any changes to show up in my portfolio returns.
My trailing 12 month returns for the year ended September 30, 2017 across all my accounts was 6.64%.
My main LendingClub account has performed poorly over the past 12 months. My TTM return is at a paltry 1.64%, my lowest return ever. All of my LendingClub accounts are below 5% and all have shown reduced returns over the past year.
Prosper continues to perform quite well. My three accounts are all returning between 7% and 8% which I consider quite respectable. My average interest rate of the loans I have invested in is just under 20% but returns have been quite consistent recently in the 7-8% range.
PeerStreet is a real estate platform focused on fix and flip properties. These are short term loans, typically between 6 and 24 months, and they are backed by the property. I use their automated investment tool to invest in only those loans that are paying 8% or more, up to a 75% LTV and a duration up to 24 months.
My first new entrant this quarter is AlphaFlow. They are a real estate platform that build diversified portfolios of fix and flip properties for you. What I like about AlphaFlow is that they deploy your money quickly, my entire investment was fully deployed in a matter of days. And they diversify across 75-100 properties, my own portfolio currently has 83 investments in 22 states with an average LTV of 68%.
Finally, as I do every quarter I want to end by highlighting the net interest number which for the last 12 months stands at $46,631.
Get the lowdown on the full range of Peter Renton investments here.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (“CLUB 2017-P2”). This is a $330.0 million consumer loan ABS transaction that is expected to close December 6, 2017.
This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) third rated sponsored securitization and the second sponsored securitization consisting of “prime” unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com (the “LendingClub Platform” or the “Platform”).
The transaction has initial credit enhancement levels of 35.45%, 26.05% and 10.83% for the Class A, Class B and Class C notes, respectively.
Chinese President Xi Jinping’s campaign to reduce risk in the financial system is being felt in New York. The assault on the sector threatens to stymie any new listings of such lenders on New York’s stock exchange — as well as spelling trouble for investors in the handful of companies that have already listed.
One-third of small business owners work at least three of the six major holidays in the US.
Kabbage’s new survey reveals several work/life balance issues related to the sacrifices small business owners are willing to make. The research involved surveying 400 small business owners, with 67 percent stating they expect to increase revenues by the end of the year. More than half of the small business owners interviewed said they anticipate an increase in revenue of 10 percent or higher.
The survey found that 60 percent of small business owners only take one full vacation a year, while 23 percent take less than two holidays off annually. Furthermore, when on holiday, 75 percent of small business owners continue working.
Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging consumers exorbitant interest rates while hiding behind tribal sovereign immunity.
Plaintiffs Jessica Gingras and Angela Given accused the firm, Victory Park Capital Advisors LLC, of striking a deal with payday lender Plain Green and the Chippewa-Cree Tribe of the Rocky Boy’s Reservation to use the tribe’s name in exchange for a small…
The same deception that hides the real cost of predatory, consumer loans is reflected in the title of pending legislation in both the House of Representatives and in the Senate. The Protecting Consumers’ Access to Credit Act of 2017 (H.R. 3299 and S. 1624) would allow payday lenders, high-cost online lenders, and other predatory lenders to partner with banks to make loans that surpass existing state interest rate limits.
The next Chairman of the Federal Reserve System (Fed) confronts a deep and growing problem: rising inequality. A new Fed Chair could combat this problem in an unexpected way by implementing real-time payments. The few days between checks clearing are a major driver of why it is so expensive to be poor. They are also unnecessary given technology and easily removable with some regulatory will. Real-time payments could save billions of dollars for American families living paycheck to paycheck.
The check casher costs $20, but two overdrafts cost $70. Check cashing is a $2 billion a year business and represents yet another cost born by those who have less.
The technology for real-time payments has been around for a long time. The United Kingdom adopted real-time payments in 2008. Japan, Poland, Mexico and South Africa all have the technology in place today. Financial technology (FinTech) firms like PayPal are offering real-time payments for customers who exist on both ends of their system. But unless your employer will migrate to using a FinTech for payroll, you need the banking system to modernize.
The Federal Reserve’s eggheads are usually a pretty reliable bunch. So when researchers at the central bank’s Cleveland branch recently published a study asserting that peer-to-peer loans were defaulting at rates reminiscent of subprime mortgages a decade ago, it seemed to confirm the worst fears about the budding online-lending market. But industry critics and academics questioned the researchers’ data, forcing the Fed to pull the paper.
It’s not easy to come by good data for this nascent field of finance, which makes the botched study all the more regrettable.
Duracell and personal finance company SoFi have “snapped up” some of the six-second spots Fox has set aside for its Thanksgiving broadcast of Vikings-Lions, while Disney will “air a mini trailer for ‘Star Wars: Episode VIII The Last Jedi,'” according to Anthony Crupi
Revolut, an app-based banking alternative which has over 50,000 customers in Ireland, has now signed up 1 million customers globally and claims it has saved users over £120 million (€134 million) in fees.
London-based Revolut said it is now signing up between 3,000 and 3,500 new users every day, an increase of 50 per cent growth from three months ago.
Users have now made over 42 million transactions since the company officially launched in July 2015 with a total transaction volume of $6.1 billion.
In an email to its customers seen by Moneywise and confirmed directly with Funding Circle, the provider says it will allow existing customers to invest in an Isa from Thursday 30 November.
It has yet to announce a launch date for new customers and says this is because it is anticipating strong demand for the product. For the same reason, customers will not be able to transfer existing Isas to Funding Circle when the product is launched.
Customers must deposit at least £1,000 to open an Isa.
MORE THAN half of small business owners want the UK to join the European Free Trade Agreement (EFTA) once Brexit is complete, Funding Circle research has found.
A survey of 1,254 borrowers on the peer-to-peer lending platform found 57 per cent would support EFTA, also known as the ‘Norway option,’ as it provides a regional free trade area comprising of Iceland, Liechtenstein, Norway, and Switzerland.
ThinCats unveiled a new brand last week at an event attended by more than 100 business leaders. The gathering took place at the National Space Centre in Leicester but the new branding will not be officially launched until mid-December.
Effectively, FG17/8 is the new bible for everyone interested in developing a new automated (digital /robo /telephone-based) advice solution. Or it is a checklist for those who have already trodden down this well-worn path.
Do note though – as if you did not already know – the paper “contains general guidance and is not binding”, is not “exhaustive”, must not be read in isolation of the handbook, and does not address any potential changes that might arise from the implementation of the Insurance Distribution Directive. (Heaven forbid anyone would actually take any accountability for what is between the covers).
Two years. Two years. To pull together in one document the working practices that professional firms already follow with their eyes closed?
New research shows that 78% of financial advisers are confident robo-advice offers no threat to their business, despite nearly half expecting more demand for robo-advice over the next 12 months.
The research from Aegon found that the degree of concern felt by advisers correlates to the typical size of their client portfolios, with advisers whose client portfolios are at the lower end of the scale more alert to the threat from the lower cost option of robo-advice.
For advisers with client portfolios of more than £200k, 88% feel it offers no threat to their business, and even for portfolios of up to £100k, the figure remains high at 73%.
While the majority of advisers believe robo-advice is no threat to their business, a third (31%) do point to robo-advice and similar digital services as one of the top challenges to the wider industry over the coming two years, a little behind Brexit (40%).
Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.
Officials are probing allegations that data from more than a million students who are clients of Beijing-based Qudian was leaked and possibly sold online, said the people, who asked not to be named discussing private information.
The probe’s initial findings show that at least part of the leaked data match information clients had provided to Qudian, the people said. Investigators are checking whether the data came from Qudian, if the company was aware of the breach, and whether it took necessary measures to ensure the safety of personal information it collects.
Chinese regulators introduced major rules on Nov. 17—the scale of which has been compared to the U.S. Dodd-Frank Act—to unify regulations for the asset managementindustry and curtail shadow banking activities.
The rules are broad-based, covering China’s $15 trillion of asset management products issued by all financial institutions.
For example, the rules will prohibit asset managers from promising guaranteed rates of return to investors, and require issuers to set aside 10 percent of their fees from managing client assets in escrow, to serve as a buffer against losses.
For publicly offered funds, total assets cannot exceed 140 percent of the funds’ net asset value. The same ratio is set at 200 percent for privately offered funds.
According to the International Financial News, China plans to purge the country’s 157 online micro-lenders, leaving only large state-owned companies and the biggest internet firms intact with licenses. Few of the existing lenders will survive, said the newspaper, which is managed by the official People’s Daily.
A comprehensive cleansing of the industry, which offers almost immediate unsecured loans over the Internet, often at high interest rates, would escalate earlier moves to crack down on the sector and its estimated $152 billion of loans. News that China has halted further approvals for online micro-lenders has already pummeled the New York shares of firms like Qudian Inc. and PPDAI Group Inc.
“It would seem to be an enormous, enormous risk to try an IPO with that hanging over your head,” said Christopher Balding, an associate professor at Peking University HSBC School of Business. “It would most likely put a halt to any IPO plans of these companies now.”
The listing of online lender Qudian at the New York Stock Exchange on Oct. 18 heralded the birth of a new China billionaire, 34-year-old chairman and CEO Luo Min. The stock rose by as much as 43% that day, giving Luo a fortune worth $2.2 billion amid optimism about industry prospects.
Five weeks later, more than half of Qudian’s value has been wiped out and he’s on the verge of dropping from the ranks of the world’s billionaires altogether. Qudian fell 16% last night and at yesterday’s closing price, Luo’s fortune (which he shares in a trust with family) was worth $1.02 billion. Investors in other China fintech stocks got socked yesterday, too. Jingpu Technology plunged 12.9% to $5.75, way below it IPO price of $8 from last week. China Rapid Finance fell 6% yesterday and PPDai fell a whopping 24%.
WeLab Ltd. has picked banks to advise on a Hong Kong initial public offering that could raise about $500 million, according to people with knowledge of the matter. The China-focused lender, whose backers also include billionaire Li Ka-shing, is aiming to list as soon as next year, the people said, asking not to be identified because the information is private.
Stop panicking about China’s online lenders. The real target of the crackdown is rogue local governments.
Financial News said government entities can’t issue new licenses for internet micro-lending beyond the 157 institutions that already have them. The consequences were immediate: Zhejiang Busen Garments Co., for one, said in a filing Thursday it’s terminating plans to set up an online lender.
As of September, there were 8,610 micro-lenders with 970 billion yuan ($147 billion) of loans outstanding. Many of those weren’t licensed by national regulators such as the People’s Bank of China or the China Banking Regulatory Commission, which have strict rules.
Rather, authorization was handed out by local governments, most of which have no fintech expertise, to companies claiming to be affiliated with state-owned enterprises.
Ant Financial, Alibaba’s financial affiliate, has announced that China now has more than 520m mobile payment users, reports state-owned news agency Xinhua.
A report released by the People’s Bank of China detailing the country’s payment system in the second quarter of 2017, notes that Chinese banks dealt with 8.6bn payments from mobile services during that period – up 33.84 percent from last year.
The combined value of mobile payments increased by 33.8 percent to 39.2tn yuan (around US$6tn).
IN China, an alternative capital market is taking shape with the rise of fintech companies, where fintechs are the intermediaries linking borrower and lenders. Moreover, fintechs are edging into the credit rating space, leveraging on their big data capabilities.
One core competence of fintech companies is their IT stability in the areas of payments and cloud computation. The strength of their IT infrastructure makes the technology players resilient under extreme conditions. During the recent Singles’ Day sale on November 11 – China’s online shopping bonanza equivalent to that of the US’ Black Friday – Alibaba’s Alipay processed a peak of 256,000 transactions per second and Alibaba Cloud processed as many as 42 million instructions per second.
A consortium of nine large companies — including UBS, Credit Suisse, Swisscom, Swiss Post, SIX, Raiffeisen, Swiss Railways, Zuercher Kantonalbank and Mobiliar — will enable Swiss consumers to use a single digital identity when making eCommerce purchases.
According to a report in Reuters, the idea behind the project is to get to a point where consumers can use one login to make purchases at shops, buy train tickets and engage in banking activities online. The group aims to create a joint venture in 2018.
Lendoit is a Decentralized P2P lending platform, which connects borrowers and lenders from all over the world in a trusted, fast and easy way using the advantages of Smart Contracts and the Blockchain technology.
What do you think is the biggest problem Lendoit will solve and why is it important?
The lending industry is not efficient because it’s controlled by centralized financial organizations that set the interest rates according to their own interest. It’s not fair that honest borrower from Brazil is paying 60% interest rate while borrower from Japan pays around 1%.
Lendoit uses three types of scoring:
Local rating provided by a local supplier from the borrower’s state. Lendoit is working to create cooperation with some entities in various countries to provide this service.
International scoring providers that are using innovative methods such as scanning social networks and scanning the borrower’s e-mail.
Lendoit is working to create cooperation with these International entities.We have already signed / in the process of signing with several companies in the scoring area, such as FriendlyScore, BLOOM, LENNO, and others, as noted in Lendoit’s WhitePaper.
In the Lendoit eco-system platform, there is a special Smart Contract: a Reputation contract that retroactively checks each borrower who takes a loan, and set reputation score according to his or her historical activities within the platform
5 years have passed since I first started to invest into p2p lending at Bondora in October 2012. I still have 604 loans in my Bondora portfolio with an outstanding principal of 7,467 Euro at an average interest rate of 23.78%. Of these 2,746 Euro are in current loans, 778 Euro in overdue loans and 3,941 Euro in 60+ days overdue loans.
Bondora shows a net return of 19.0% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.2% return. Even if I assume total loss on all outstanding loans that are 60+days overdue my ROI calculation results in 15.6%.
Banks – local banks, in particular – have traditionally been the main and sometimes the only source of external capital for SMEs. However, increasing regulatory requirements have lowered the probability for SMEs to obtain access to bank financing.
P2P lending is part of the wider universe of crowdfunding. This is a bigger market than many people expect. For example, a 2016 paper for the European Commission reported that crowdfunding expanded by 167pc in 2014 and reached $16.2bn. North America remains the largest market ($9.5bn), followed by Asia ($3.4bn) and Europe ($3.3bn). While there are no accurate figures on the Irish market, Orca Money reports that the UK P2P market had £9.6bn cumulative lending since 2010, £1bn of which was in Q1 2017. In 2016, Orca Money reported that the UK P2P market comprised 177,000 retail investors with consumer (46pc), business (35pc) and property (19pc) borrowers.
P2P platforms have been very cautious about the loans they offer to investors, with most of them being classified as low-risk. This has resulted in low default rates and acceptable positive returns for investors. The potential for positive returns has attracted institutional and professional investors (eg investment banks, venture capitalist etc) into the game and created a disproportionate capital supply and demand. Such a trend is particularly visible in the US and UK, the two largest P2P markets, but it has recently emerged in smaller markets like Australia and New Zealand and is likely to occur, to a greater or lesser extent, in all regulated markets, including Ireland.
The lack of a clear regulation has arguably prevented the growth of the Irish P2P lending market by discouraging both investors and small businesses to participate. A clear regulatory framework is necessary to ensure transparency and to increase investors’ confidence in P2P lending markets.
On 12 September 2017, FCA published a consumer warning on initial coin offerings (ICOs), stating that they are ‘very high-risk, speculative investments’, and that ‘there is a good chance of losing your whole stake’ as a purchaser.
Earlier in September, the People’s Bank of China had denounced ICOs as ‘illegal fundraising’ and issued a ban that caused the value of cryptocurrencies such as Bitcoin to plummet. The following day, Canadian regulators accepted a firm offering ICOs into its regulatory sandbox as part of its broad goal of supporting innovative fintech projects. The European Securities and Markets Authority has been the latest to denounce ICOs, echoing the FCA’s warning to consumers that ICOs are ‘very risky and highly speculative investments.’
By applying the conditions from SEC vs Howey, the US Supreme Court test for determining whether transactions qualify as investment contracts (and by extension, securities), the investigation found that the tokens emergent from the DAO’s ICO are securities and thus could fall within the US regulatory perimeter.
The SEC made the classification by fulfilling the following criteria from the Howey test:
The FintruX Network has been established to transform unsecured loans to highly secured loan without any hurdles to borrowers and investors. The platform has unique blockchain approach of global P2P lending highways which proposed to raise $30 million by selling digital tokens.
The FintruX Network aims to enhance credit enhancements by introducing cascading levels which involves:
It should not be a problem if the three judges have no background or experience in fintech, cryptocurrencies, blockchain, peer-to-peer lending, equity crowd funding and payment systems riding off messaging services such as those offered by WeChat, Facebook, Apple and Google.
After all, this is not about the future. This inquiry is about spending more than $200 million looking in the rear view mirror.
Futurist and chief executive of global consultancy firm Tomorrow, Mike Walsh, told the 2017 Financial Planning Association Professionals Congress that sweeping technological change driven by complex algorithms is nothing to fear as it’s simply “not unique.”
Walsh said financial planners’ fear-based thinking that technology will replace jobs must shift to ask how will jobs need to change.
INDIA’s fifth-largest private sector bank, YES Bank, is raising a total of US$400 million in two transactions in the offshore syndicated loan markets as it further diversifies its funding sources.
The first transaction is a five-year loan amounting to US$250 million raised from a group of Taiwanese banks, led by CTBC Bank, Bank of Taiwan, Mega International Commercial Bank and Land Bank of Taiwan. The deal was upsized from the initial target of US$200 million as YES Bank exercised the green shoe option following an oversubscription of US$355 million from 13 other banks.
Adhil Shetty, CEO of BankBazaar, was recognized by the India FinTech Awards 2017 earlier this month. Shetty was named Fintech Leader of the Year at the event, which featured more than 200 attendees, more than 40 speakers, and 20 shortlisted startups from six countries.
The migrant and their unbanked families in emerging and frontier markets have been suppressed for the longest time without any access to basic services, financial or otherwise. Approximately 2.4 billion people in poverty worldwide are often excluded from free movement or basic rights which often leads them to corruption and crime, including slavery, human trafficking and in extreme cases, death. Migrants far too often are denied basic financial tools.
LALA World (“LALA”) is a wholesome ecosystem for the unbanked, starting with the migrants and their families back home. The base of this ecosystem is the LALA Wallet platform. By creating a whole new peer-to-peer infrastructure, LALA aims to revolutionize the way individuals, small businesses and micro-entrepreneurs transact, make domestic and cross-border payments, borrow money and associated products like insurances, cards, wealth and other general banking products.
LALA World Products from their Ecosystem
LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat. LALA Bill Pay – Local and International bill payments for you and your family. LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses. LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally. LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.
News Comments Today’s main news: Experian buys, integrates Clarity Services. Think Finance files for bankruptcy. PayPal offers robo-investing. Assetz Capital achieves 1.5M GBP funding through Seedrs. Elevate launches industry research repository. Nav Athwal steps down as CEO of RealtyShares. Ping An Insurance prepares for Lufax IPO. TransferWise doubles revenue. Today’s main analysis: LendingTree releases monthly mortgage offer report. Today’s thought-provoking articles: The […]
PayPal to offer robo-investing. AT: “This is big news for PayPal customers. The payments service has increasingly become more like a traditional finance company with acquisitions and interest in technology that will expand its core business. A welcome development indeed.”
The payments company was connecting its website and smartphone apps with those of Acorns Grow, a five-year-old automated savings and investment service, the two companies said on Monday.
PayPal users would be able to use their accounts to make contributions to Acorns and would be able to monitor and manage their Acorns investments from the PayPal app, said Joanna Lambert, the company’s vice-president of consumer financial services.
PayPal is rolling out the Acorns offerings in phases, with the first batch of users getting access on Monday and all US users by early 2018.
The Center for the New Middle Class, a research-focused body developed by Elevate to engage and educate the public about the growing needs of individuals who do not have access to traditional credit options, today announced it has launched an industry research repository for researchers, reporters, policy makers and the general public. Known as the Resource Database, it is a curated collection of the best research on non-prime Americans and their challenges, attitudes, and needs.
In addition to containing external research and editorial content from sources such as Pew, the National Bureau of Economic Research and “The Atlantic,” the database will house research and commentary from the Center for the New Middle Class regarding economic conditions that affect America’s New Middle Class.
By visiting the database here users can search for entries, filter the results, and see the full bibliographic reference of information provided.
The shame of all this is that all the sensational headlines have already been written and confirmed in many people’s minds the supposed shady nature of our industry. It would have been far better for everyone if the authors of this report had done their homework and produced a thoroughly researched report in the first place.
As Todd Baker pointed out, “we really should know which online lenders are adding to consumer financial health and which ones are detracting from it.”
“[These borrowers] are not underbanked, they’re sort of overbanked,” observed Yuliya Demyanyk, a Cleveland Fed economist and co-author of the report. “Defaults on [marketplace] loans have been increasing at an alarming rate, resembling pre-2007 crisis increases in sub-prime mortgage defaults, where loans of each vintage perform worse than those of prior origination years.”
The authors of the Nov. 9 report “have received several questions about the composition of the underlying data set they used in their analysis,” the Cleveland Fed said on its website, and are “revising their paper to further clarify the data sample they used” and will post the new version as soon as it’s ready.
So, what happened?
One theory is that they may have stretched the definition of online lending so far as to make an accurate and credible apples-to-apples comparison implausible.
Karen Webster spoke with Lending Club’s head of government relations, Richard Neiman, to get a better sense of the source of discrepancy, since even Googling the definition of marketplace loan, Webster commented, might have saved the Cleveland Fed economists a lot of grief.
“The industry is so big now,” Neiman said, “that it is not easy for policymakers to fully understand the divergences between different platforms, the different products, the different modeling and the differences in levels of transparency that are now defined as online lending.”
October’s best loan offers for borrowers with the best profiles had an average APR of 3.75% for purchase and 3.70% for refinance, on conforming 30-year loans.
For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were down 3 bps month over month, to 4.31%, the lowest since November 2016. In contrast, the loan note rate of 4.18% was up 7 bps to the highest since July.
Consumers with the highest credit scores (760+) saw an average APR offer of 4.18% vs 4.44% for consumers with scores of 680-719. The APR spread of 22 bps between these score ranges was 1 bps lower than in September. The spread represents nearly $12,600 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $228,730. Additional costs are due to higher interest rates, larger fees or a combination of the two.
Refinance APRs for conforming 30-yr fixed loans were up 10 bps to 4.26%. The credit score bracket spread widened to 16bps from 15 bps, nearly $7,500 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $235,844.
The average proposed down payment for purchase mortgages have been rising for 7 months and reached $59,680 in October.
Average monthly payments were little changed at just over $1,100 for both purchase and refinance. The credit score bucket spread was $241 for purchase and just $77 for refinance.
Let’s take a look at an often-repeated idea that is popular in the gold and alternative investing communities. The government possesses a printing press. Therefore, it will never default. It will just inflate its way out of the debt. It will devalue the dollar.
The government does not set the value of the dollar. And it has no mechanism to set it. So, logically, it has no mechanism to reset it. It cannot devalue it. In the same way, you cannot lower yourself down by your bootstraps since you are not lifting yourself up by them in the first place.
We must emphatically state that the government does not print. It borrows. Congress does not have a printing press, to create greenbacks. It has a Treasury that can sell bonds to cover whatever payments the government is obligated to make that it has not got tax revenues for. Over the past year, for example, the government increased its debt by over 630 billion dollars.
Like any bank, the Fed borrows to fund its purchases of interest-paying assets. It earns a spread between what it pays (currently about 1.25%) and what its asset portfolio pays (over 2%). The commercial banks currently deposit over $2.1 trillion in excess reserves, and the Fed’s total liabilities are over $4.4 trillion including Federal Reserve Notes (on which the Fed pays zero). Unlike any commercial bank, there is a law that obligates us to treat the Fed’s liabilities as if they were money.
Right now speculative mania is occurring in crypto currencies so that may (but not necessarily, beware correlation!) shunt such capital flows away from gold. As to default risk, there are signs of rising stress in high yield credit markets, but it’s early yet.
Nav Athwal, one of the more prominent founders in the real estate crowdfunding space, has announced his decision to step down from the CEO role at RealtyShares, a platform he founded four years ago.
Ed Forst, RealtyShares Board Member and former CEO of Cushman and Wakefield, has been selected as the interim CEO while the company searches for a permanent replacement.
Crowdfund Insider spoke to Athwal regarding his decision to change his leadership role at RealtyShares and he explained he would continue to be engaged with the company;
“RealtyShares is in the strongest position it’s ever been in. The company is moving from the build phase to the scale phase of its lifecycle. To best position RealtyShares for the future, I made the decision to transition out of my role as CEO to a new role on the Board of Directors. I asked Ed Forst to take on the role of interim CEO, while we look for a permanent CEO who will fit the culture and profile we’re seeking. I am still very much a part of RealtyShares and will be actively involved in strategic decision-making. I am looking forward to supporting the company in this new capacity and getting back into principal real estate investing and agribusiness. As I begin to work on additional projects, I will be sure to let you know.”
I started RealtyShares four years ago with the idea of creating a company that would make real estate more accessible, efficient, and transparent. RealtyShares has come a long way since those early days in my living room. It is now a 100-person operation and the leading platform for online real estate investing and capital formation.
My primary focus has always been to best position RealtyShares for future success. RealtyShares is now at an inflection point. I will remain on the Board of Directors supporting the company as it continues on its journey to build a global marketplace for real estate investing.
Kabbage Inc., a global financial services, tech and data platform serving small businesses, released new data reporting on the similarities that connect all small business owners (SBOs), including personal sacrifices, professional challenges and growth expectations. Featuring responses from 400 SBOs, the data shows more than 67 percent expect to increase revenues by the end of 2017, with more than half anticipating an increase of 10 percent or higher.
In partnership with Bredin, a leading small-business market research firm, Kabbage polled small business owners across industries, including retail, education, manufacturing, food and beverage, healthcare, automotive, energy and finance.
RealtyMogul has been awarded the Gold Stevie Award in the Consumer Services category during the 14th annual Stevie Awards for Women in Business.
The Stevie Awards for Women in Business are the world’s top honors for female entrepreneurs, executives, employees and the organizations they run. All individuals and organizations worldwide are eligible to submit nominations – public and private, for-profit and non-profit, large and small. The 2017 awards received entries from 25 nations and territories.
Fewer than two thousand people live in Bluff, but any one of them can walk into the post office and cash a check or apply for a loan.
Meanwhile, the United States is riddled with what are called banking deserts — inhabited areas, many of them urban, where residents have no access to a bank.
One in four US households is unbanked or underbanked, meaning they’re fully or partially boxed out of traditional financial services. Those 68 million people represent a growing market for payday loan sharks, and spend an average of 10 percent of their yearly income on the high interest and fees that go with alternative financial services — roughly the same proportion they spend on food.
But there’s a collective solution to the banking desert: we could set up a public postal banking system like New Zealand’s.
But one day last year Mr. Hansen was complaining to his mother, an avid investor, about the high fees he was paying on his investment account. She suggested he look into an online investment company called Betterment that markets itself as a low-fee alternative to traditional financial advisers.
Some of the most popular robo-advisers — such as Betterment, Wealthfront and Charles Schwab’s Intelligent Portfolio — use exchange-traded funds to keep costs low. Betterment charges an annual fee of 0.25 percent of the account value. Wealthfront charges no fee for accounts $10,000 or less. Schwab’s robo-advising platform limits its fees to the operating expenses included in the ETF, which range between 0.07 percent and 0.21 percent of the fund balance.
Citizens Bank, a Providence, R.I.-based bank that claims the third-largest deposit market share in the Pittsburgh region, introduced a new digital investment and advisory platform on its online banking home page in September.
A July report by S&P Global Market Intelligence predicts that digital advice assets will grow from $98 billion at the end of 2016 to $460 billion at the end of 2021.
Digital asset-based lender, InterNex Capital (“InterNex”) is pleased to announce their Velocity platform for small and medium-sized businesses. Velocity provides borrowers on demand liquidity through the InterNex Line of Credit and delivers real-time access for working capital management. Velocity empowers accelerated growth and powerful analytics, traditionally only available to large enterprises.
On Nov, 14th, Wells Fargo announced Overdraft Rewind, a new feature to help customers avoid fees for overdrawing their checking accounts right before payday, when overdrafts most commonly occur.
Going forward, the bank will not charge overdraft or insufficient funds fees if a direct deposit large enough to cover those charges is received by 9 a.m. local time the day after the account goes negative.
You don’t need to opt in; if you have a Wells Fargo account, you’re covered by default.
Global Debt Registry (GDR), the asset certainty company, today announced it has developed a collateral pledge registry, the first of its kind in the structured credit space, using Hyperledger Fabric, one of the Hyperledger blockchain framework implementations hosted by The Linux Foundation.
Among those quoted in the story is Mark Kvamme, a top venture capitalist in Silicon Valley who now heads Columbus-based Drive Capital. The firm has raised $550 million and invested in 26 companies, betting, The Timessays, that “the middle of America amounts to an undervalued asset, rich in markets, new business ideas and budding entrepreneurs.”
Even so, three-quarters of all venture capital invested in America goes to California, New York and Massachusetts, the National Venture Capital Association estimates, and Ohio gets less than 1%.
For the many Americans who face unmanageable credit card debt, it’s time to get their financial lives in order, says Andrew Housser, co-founder and CEO of Freedom Debt Relief– and if they need outside help, time to know how to find the right firm.
Atomist is formally launching with the Developer Automation Platform, an open source client and API. The new Development Automation Platform is designed to bring automation into the development and delivery process so that developers can focus on more important tasks.
Companies such as NVIDIA, Pivotal, Kyyti Group, Marlette Funding and Barclays Africa use Atomist for automation.
Smart environments with Pervasive Human and Machine Networks
Predictive Analytics driven Customer 360
Artificial Intelligence driven Multi-structured analytics – Cognitive Intelligence can enable insurance companies in analysing contact centre as well as chat data interactions in real time to predict propensity for fraud based on voice, video and text analysis and correlating the same with other similar fraudulent customer behaviors. The long term objective in such scenarios is to build machine learning based intelligent systems which learn on an ongoing basis based on historical pattern based analysis of billions of user and machine data points and predicts events.
Less than a month after launching its latest equity crowdfunding campaign on Seedrs, peer-to-peer lending platform Assetz Capital has successfully secured £1.5 million from more than 700 investors. The online lender took to the funding portal to raise £1 million for expansion.
NatWest has launched a chatbot that allows customers to seek financial advice from the comfort of their sofa.
The bot will determine the best way for customers to invest their money by asking questions such as what they want to achieve from investments, their current financial situation, what they can afford, their debts and other personal information, plus their attitude to risk.
It will then suggest ISA products they could consider for investment, plus how much they should consider investing and the most effective way to use their ISA allowance.
Three directors of an insolvent payday loan firm which received cash from pension liberation schemes have been disqualified.
Speed-e-Loans.com (SEL), used £1.2 million from private investors via the schemes to meet its existing debts.
Directors Philip Miller, Robert Alan Davies and Daniel Jonathan Miller have been banned from acting as directors for nine, six and five years respectively for breaching fiduciary duties and the duties of care, skill and diligence.
The London-based firm’s annual revenue has grown by 140 per cent since last year, coming in at £67m this year compared to £28m in 2016. Its audited results show an adjusted operating profit of £2m, and an overall profit for the fiscal year of £7.4m.
As a result, TransferWise’s operating loss has decreased from £17m in 2016 to £56,000 in 2017.
According to data provider Coinschedule, $3.3 billion has been raised in more than 200 ICOsover the past 12 months alone and the popularity of this innovative ICO form of crowdfunding shows no signs of relenting.
The Reserve Bank of India’s (RBI) guidelines for peer-to-peer (P2P) lending will attract more people to these platforms and help bring down the interest rates for borrowers, Bhavin Patel, founder and CEO of LenDen Club, told Shritama Bose. Players in the segment have sought the regulator’s clarifications on the permissibility of institutional lenders on P2P platforms, he added.
Will the RBI guidelines have an impact on the lending rates?
In the current scenario, the P2P lending market is a minuscule percentage of the huge lending market in India. But, due to the sentimental impact of the regulation, many more lenders may take to P2P lending, resulting in higher liquidity on such platforms. This will eventually lead to reduction of the interest rates offered to borrowers in this segment.
Traditional banking institutions have changed very little in the last hundred years. Most offer online banking and mobile apps these days, but behind the scenes, very little has changed.
In total, $49.7 billion was invested in fintech between 2012-16, which indicates just how important fintech is.
Fintech innovators are more cost-effective than traditional lenders. Their technology and business models are low cost. A traditional lender may have operating costs of around 7% compared to an online lender whose operating costs are as low as 2%.
A staggering 38% of customers no longer visit banks. The rise of online banks has proven that traditional bank branches are not essential. Online lenders such as Atom have become firmly embedded in the banking ecosystem.
Two cities thrive in this new world. Singapore and Abu Dhabi. Long before renewable energy was pervasive, Abu Dhabi had established Masdar. It has brought in the magic of the Louvre from Paris. Singapore has consistently been ahead of the curve of change. The world’s largest vertical botanical garden paves the way for urban farming. The Marina Reservoir is a masterpiece of engineering and vision that turned an inlet of the sea into a strategically critical freshwater resource for the “Little Red Dot”.
Recently, the Abu Dhabi Global Market (ADGM) held its inaugural FinTech Abu Dhabi Summit.
Two major announcements were made at the event. The first was the launch of the ADGM FinTech Innovation Centre by the first half of 2018.
The second was about a collaboration. ADGM and Plug and Play, the world’s largest startup accelerator based in Silicon Valley, signed a new partnership to launch a startup acceleration programme in Abu Dhabi, focused on FinTech. The programme, first of its kind in the Mena region, will be housed within the ADGM FinTech Innovation Centre. The partnership was signed by Ahmed Al Sayegh, chairman of ADGM, and Saeed Amidi, CEO, Plug and Play. Some of Plug and Play’s success stories include Google, Paypal, Dropbox and Lending Club.
News Comments Today’s main news: PayPal to sell $6B in consumer loans. Cleveland Fed retracts study on P2P lending. China Citic, Baidu launch direct bank. Flender to expand into eastern Europe, Spain. Douugh partners with Choice Financial. Today’s main analysis: Orchard Platform says how hurricanes affect unsecured consumer loans. Is LendingClub shifting to higher quality borrowers permanently? Today’s thought-provoking articles: […]
Are banks, credit unions prepared for the new mobile era? AT: “Interesting read. And it’s even more interesting that young smartphone users are concerned about how much time they spend on their phones while those 55+ are not. Will banks and credit unions begin to target older customers for mobile products?”
PayPal announced today it has agreed to sell $5.8 billion in consumer credit receivables to Synchrony Financial, in an expanded relationship between the companies. The deal also includes Synchrony’s acquisition of $1 billion in participation interests in PayPal receivables held by certain investors and a chartered financial institution, the company said.
As a result of today’s deal, the two companies will expand their partnership by making Synchrony Bank the exclusive issuer of the PayPal Credit online consumer financing program available to PayPal customers in the U.S. for the next 10 years, replacing Comenity.
In a recent blog, Orchard Platform posted initial research how much Hurricanes Harvey and Irma affected the U.S. unsecured consumer lending industry. According to Orchard Platform, approximately 91% outstanding loans in Florida were in designated FEMA disaster areas including metropolitan areas Tampa, Orlando, Miami and Jacksonville.
“The population of loans in the areas affected by Harvey experienced a 3x increase from July 2017 to September 2017,” according to Orchard Platform Credit Analytics Manager Nicholas Del Zingaro. “All consumer unsecured loans in Texas experienced a 170 bps increase in Current to 30 Roll Rate over the same period. Irma made landfall on September 10th, but the Florida and Irma designated areas within Florida and Southern Georgia already show signs of distress, with the Current to 30 Rate increasing from 1.5% to 2.5%. The total population had an uptick of 30 bps from August to September.”
The Marketplace Lending Association is calling upon the Federal Reserve Bank of Cleveland to temporarily retract and revise its report on online lending due to what we see as serious flaws in the authors’ reliance on certain underlying data.
In our view, this paper — “The Taste of Peer-to-Peer Loans” — and its accompanying materials show that a lack of precision and understanding of subject matter can result in significant inaccuracies. The report’s authors presented findings that seemed to reflect issues with the P-to-P industry, but they actually relied on data from a much broader category of loans. The result was a misleading and brutally critical report about the P-to-P industry that was actually based in part on data from more traditional loans.
Earlier this month Crowdfund Insider posted a research report published by the Cleveland Federal Reserve that was highly critical of the peer to peer lending industry (marketplace lending) in the US. The report, authored by Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, has since disappeared from the Federal Reserve site.
Marcus, was launched in October 2016 amidst mixed perceptions from market participants. One-year later, however, Marcus has achieved its $2 Bn origination objective – making it the fastest growing lending platform that PeerIQ tracks.
GS CFO Marty Chavez notes that Marcus has an aggressive ~3.5% ROA objective. By comparison, Discover’s ROA is currently ~2.4% and has only achieved a quarterly 3.5% ROA once in the last ten years.
Although the statistics look similar, each lender is measuring loss-rates somewhat differently:
Lending Club and Prosper cumulative loss rates on 36-month prime term loans are ~12% – as estimated by ratings agencies during a base case (not thru cycle) scenario.
GS projects thru-the-cycle annual credit losses of 4.0%. Therefore, GS is betting that it will outperform on losses thru-the-cycle.
Discover’s 3.2% loss-rate is a realized statistic from the most recent 10-Q.
Discover management notes that loss rates are re-normalizing to higher levels. Indeed, Discover’s loss rate was 2.1% two year ago in 3Q 2015 and management expects losses will continue to re-normalizing going forward.
We believe a comparable thru the cycle loss-rate for Discover would meet or exceed 4%. By way of comparison, the Discover loan portfolio experienced a peak charge-off rate during the financial crisis of ~7%. (and continued to deliver a positive ROA).
A recent post on the Lend Academy Forum spurred a discussion about the potential future of LendingClub, particularly as it relates to the types of borrowers they serve. While we don’t have insight into what LendingClub’s plans are, there are several things that have happened over the last two years that help us hypothesize that LendingClub’s strategy may be shifting.
LendingClub recently sent an email titled “How LendingClub Notes May Help You Generate Long-Term Wealth”. In it, they tout returns in the 4-6% range, a far cry from the returns some investors saw in LendingClub’s early days. The 4-6% range they present is footnoted, clarifying that this includes only grades A-C.
After I began writing this article LendingClub coincidentally announced in their recent earnings call that loan grades F and G would no longer be available to investors These loans have an average interest rate of 24.16% on LendingClub’s platform. Moving forward, the loans will be brought in house as part of a test portfolio for LendingClub.
You can clearly see the expansion of C grade loans, which has increased to 36.09% of total originations in 2017, the most ever.
C grade loans currently make up just shy of 50% of 60 month loans.
After years of strong mobile growth being driven by younger demographic segments, the majority of recent, more modest growth can be attributed to the 55 and older generation. In fact, consumers in the 55+age group have a three-year compound annual growth rate (CAGR) of nearly 8% compared to only 2% for the 18 to 34 segment, according to a study from Deloitte.
As in 2016, close to 90% of consumers viewed their phone within an hour of waking up, with roughly 80% doing the same within an hour of going to sleep.
Interestingly, the Deloitte research found that over 70% of younger demographic groups believe they are using their phones too much and are looking for ways to limit dependence. Alternatively, only 13% of consumers over 55 had the same concerns.
When consumers were asked about the way they communicated on mobile phones, all options increased in 2017, including text messaging (91%), voice calls (86%), email (81%), social messaging (72%) and video calls (30%). The increase in voice calls reversed a four-year decline.
The survey found a significant growth in use of mPayments in 2017, albeit against a rather low base number. According to Deloitte, consumers who said they made an in-store mobile payment with a smartphone or other device in 2017 reached 29%, which is a 50% increase over 2016. Those who used mPayments weekly also increased by 50% in 2017, (from 8% to 12%).
The PeerStreet platform lets accredited private investors access the huge market of real estate loans, backed by big data and advanced underwriting to identify loans that can give consistent returns.
Brett Crosby, Co-Founder and COO of PeerStreet, has extensive experience in analytics from his time working at Googleas Director of Product Marketing.
What did you do before this?
I was the co-founder of a company called Urchin, which was early in the web analytics space. We were acquired by Google in 2005, and turned Urchin into Google Analytics. I stayed at Google for 10 years, building and launching Google Analytics, launching mobile ads, local ads, the go-to market on social initiatives at Google, and Google Drive. After that, I was running global growth on Chrome, Gmail Docs and Drive.
If President Trump taps Office of Management and Budget Director Mick Mulvaney as interim head of the Consumer Financial Protection Bureau, as is widely expected, he will be a sea change from outgoing head Richard Cordray.
Mulvaney, a former congressman from South Carolina, was a fierce critic of the bureau when in Congress and he sat on the Financial Services Committee.
The CFPB’s final payday loan rule was published in today’s Federal Register. Lenders covered by the rule include nonbank entities as well as banks and credit unions. In addition to payday loans, the rule covers auto title loans, deposit advance products, and certain high-rate installment and open-end loans. For a summary of the rule, see our legal alert.
At issue is the different ways that states try to handle payday lenders. Some states try to crack down on them with caps on interest rates. But other states are more lenient. And the situation is further complicated by big national banks, which operate under federal law and only have to comply with interest rate caps in the state they’re chartered in.
That loophole enables national banks to engage in “rent-a-charter” schemes. Since these banks aren’t subject to an interest rate cap (or are subject to a more lenient one), they can issue a predatory loan, then immediately sell that loan to a smaller payday lender barred by state law from issuing it on its own.
Pavaso Inc. has announced that it has selected eOriginal to support lenders in the digital mortgage process. Specifically, Pavaso will utilize eOriginal’s electronic promissory note (eNote) and electronic vaulting (eVault) services.
Some 2.7 billion people worldwide today have zero access to capital. Despite lacking any credit history or verifiable economic identity, these so-called unbanked or under-banked individuals can now access global capital markets with a $10 Android phone, thanks to blockchain-based economic identity platforms like BanQu or Humaniq that create a unique hash of verifiable authenticity — similar to a social security number — from a simple retina scan or selfie. The total market opportunity this group represents is a staggering $380 billion, according to a recent report.
On Thursday, Coinbase, the San Francisco-based cryptocurrency exchange, announced a new platform that might quell the anxieties of big money investors looking to invest in crypto. The platform, called Coinbase Custody, was built specifically to meet the needs of such investors, including hedge funds and family offices, according to a Medium post by Coinbase CEO Brian Armstrong.
Just last week, an unidentified user accidentally deleted the code library required to use recently created digital wallets within Parity, a popular digital-wallet provider, and cryptocurrencies have long been associated with the chasms of the deep, dark web.
The service will charge users a $100,000 startup fee. Armstrong said there will also be a monthly fee based on assets.
Because index funds pose little competitive threat, expense ratios for the leading alternative funds are far higher than elsewhere in the industry. These days, the vast majority of conventional fund sales go into funds that have expense ratios of less than 0.60%–usually much less. With alternatives, on the other hand, a 1% expense ratio is considered low-cost. Most of the larger funds have expense ratios approaching 1.5%, which would doom them were they not alternatives.
Given all these differences, it’s not surprising that, for alternatives, industry leadership is upside down. The giants are absent. Among them, Vanguard, BlackRock, Fidelity, Capital Research, and T. Rowe Price run a grand total of $7 billion in alternative mutual funds. In contrast, the management firm AQR controls $29 billion.
RealEstateInvestingProfits.com, a strategic consulting and real estate investing educational platform that is responsible for a combined 1,000 closings and nearly a 100m in total sales volume focused on wholesale/flips with their partners and affiliates, are making a compelling argument, suggesting that real estate and Bitcoin should be natural partners and doing their best to open eyes to possibilities in this area.
With the Real Estate Market Size growing from $7.1 trillion in 2015 to $7.4 trillion in 2016, currency movements effectively reduced the size of the global real estate investing market by approximately 2.3% in the dollar (USD) terms according to MSCI Research, the question many are asking – Can Bitcoin be a positive disruptor to save on third-party fees and high transactions exchanges from lending?
Affirm makes it easy to repay the loan, send out email and SMS text messages to remind the customer of upcoming payments. Users can pay theur Affirm bills online, by debit card or ACH transfer, and sign up for autopayment.
The company makes money the same way that a credit card does: by charging interest of between 10 percent and 30 percent.
There’s a problem with shadow banking and alternative finance. It’s called what to do when bad stuff happens.
Whereas most consumer lenders will struggle to provide 5%, platforms such as Funding Circle,Assetz and ThinCats can easily provide a net yield in excess of 5%, even after allowing for losses.
This deeper understanding of the lending process and defaults is all for the good but I think it raises a much more critical issue, especially relevant for SME lending – how do lenders cope with problem borrowers?
But Funding Circle also has a sweet spot in lending tens and hundreds of thousands of pounds which means they tend to avoid lending large sums in the £500k to £50m bracket (in fact nothing towards to the top end).
Which? Money analysed 43 advice firms which are listed on on Unbiased.co.uk – a comparison service that allows you to find a financial adviser – which stated they employed certified financial planners. These are advisers who hold a specific certification from the Chartered Institute of Securities and Investment (CISI).
Some 63% of them (27 firms), however, did not actually employ any such advisers.
Seven out of 24 firms (29%) were also falsely claiming to be accredited by the Society of Later Life Advisers (SOLLA), and 14 out of 72 firms (19%) claimed to have advisers with chartered financial planner status, despite not employing anyone who was, in fact, chartered.
London-based Glint has been pretty stealthy about what it planned to offer, despite several funding rounds and a vague description that it wanted to a create new “global currency” based on gold. Well, today the fintech startup is finally de-cloaking with a staggered launch of its multi-currency account, app and card that does indeed let you store your money in gold and convert it back to fiat currency at the point of payment.
Komodo (KMD) has a much smaller market cap at $233 million. Komodo promises to be a block chain interoperable network to allow transactions across coins to help financial institutions bring banking to freelancers, small business owners, and other underserved customers accept and send payments.
Monaize is now teaming up with Komodo for the first dICO to facilitate financial transactions using cryptocurrency.
China Citic Bank Corp (601998.SS) and search engine giant Baidu Inc (BIDU.O) launched on Saturday a direct banking joint venture, dubbed AiBank, to capitalize on China’s rapidly growing fintech sector.
Consumer lending is booming in China, thanks to a less thrifty younger generation who have cast off the save-at-all-costs mentality of their parents.
China’s unsecured consumer loans amounted to just 9 percent of gross domestic product in the first nine months of this year, compared with 15 percent in the U.S., according to consultants Oliver Wyman. The educated 18- to 36-year-old borrowers LexinFintech targets tend to be ignored by banks, even though their job prospects mean that they’re unlikely to default.
Auto financing, meanwhile, has exploded to account for more than a third of car purchases last year from 8 percent in 2011, according to CLSA Ltd. data.
Peer-to-peer lender PPDAI Group Inc., which listed in New York last week, also said that its rates exceeded 36 percent once fees are included. The company’s shares are trading below their offer price.
People’s Bank of China, China’s central bank, has made plans to launch a united platform by the end of 2017 for collecting personal credit information and assessing people’s credit ratings.
The new platform is expected to cover data from non-traditional market participants, especially Fintech industry (e.g. peer to peer lending), which will complement the existing credit data mechanism, increase supervision over non-traditional financial sectors and effectively reduce systematic risks.
Third-party credit service agencies may also become shareholders in the new platform with a ratio of 8% respectively.
On November 16th, Jianpu Technology Inc. announced it would be listed on the NYSE. Goldman Sachs, Morgan Stanley and JP Morgan are the bookrunners for the deal.
On November 16th, Xiamen Financial Affairs Office released the first P2P lending firms fillings in China. However, what drew the media’s attention more in the fillings is a firm called Jing Dong Xu Hang Online Lending Information & Intermediary Service Ltd. This company is a wholly owned secondary subsidiary of JD Finance.
As reported in May, peer-to-peer lending start-up Flender was seeking to get €1 million in funding and is targeting a UK launch after getting full authorisation from the Financial Conduct Authority.
Over in Israel, Tipigo Ventures, which offers an artificial intelligence (AI) powered wealth management platform, has raised $1 million in seed funding. The firm says this puts its valuation at $10 million.
Kuants, an algorithmic trading platform, will “co work” and “co live” at IA’s start-up academy during a three-month long acceleration programme.
Staying in India, Sumeru Enterprise Tiger Business Solutions, a Bengaluru-based banking software start-up, has raised $900,000 from unnamed investors in India and the US.
As part of the open banking partnership, Douugh will launch an integrated bank account and debit card with the bank, giving it the ability to accept deposits. Choice Financial has also invested in Douugh, as part of a $2.5 million seed round.
Amongst those startups who have been simplifying digital lending are Rubique, InCred, ZestMoney, Qbera, Loan Singh etc.
Working as a medium for a customer and financial institutions, data analytics performed on hundreds of data points on Rubique’s platform assess the creditworthiness of the customers (loan origination qualification), bringing predictability by giving them eligible offers to choose from.
Using real-time processing is also part and parcel for Zest Money, based in Bangalore since 2015, whose USP is its simple digital process, fast approval time and flexible products, with the benefit of multiple options to pay EMIs.
Using cutting-edge technology and proprietary credit underwriting algorithms, based on alternative data sources, Loan Singh enables frictionless lending to creditworthy and underserved borrower segments. It mainly provides personal loans (for salaried individuals), Professional Certification Loans (for students pursuing skill development and certification programmes), and Small Ticket Unsecured Personal and Consumer Loans (through third-party associations).
Others like InCred, founded in January 2017 and based out of Mumbai, focus on giving credit to those customers who have traditionally been underserved by large banks and NBFCs.
While contributing eight percent to the nation’s total GDP, micro, small and medium enterprises (MSMEs) also provide for 40 percent of the total export. Producing over 10,000 different types of products, these small-scale ventures are also responsible for 45 percent of the entire manufacturing output.
However, given a favourable environment and a slew of radical changes, there is still a huge credit deficit that is still unmet for the sector. This is exactly where the number of mushrooming fintech startups step in. To disrupt the status quo and level the playing field, a number of fintech lenders are supporting these small-scale ventures. The fact was made evident by McKinsey, claiming that nearly 75 percent of the emerging fintech lenders are helping MSMEs with lending, payment systems, retail banking, wealth management and more.
For the better part of a decade, banks have relaxed their lending conditions, too, so small businesses are finding more success with being approved for a loan.
But banks are not the only ones providing funding to small businesses, as they are actually reluctant to lend money to such enterprises in some jurisdictions. In China, for example, state-owned banks are not too fond of lending to individuals and small businesses. However, here P2P lending is a booming market, with around 2,200 p2p lenders and a market valued at US$100 billion.
Not all small businesses have the capability to launch their own ICOs, nor build their own blockchains over Ethereum, however. For this purpose, a startup called Starbase will empower any business or individual to crowdfund using cryptocurrencies and tokens without building their own network.
It is based on this point of view that MAS and the Hong Kong Monetary Authority decided to collaborate on a Blockchain-based cross-border trade finance platform. The platform, which is called Global Trade Connectivity Network (GTCN), is an open-sourced Blockchain platform and will be launched at the start of 2019.
The authority noted that as of September this year, 24 P2P lending companies consisting of 16 local companies and 8 foreign companies have been registered and licensed in OJK. Meanwhile 31 P2P lending companies are in the process of registration.
News Comments Today’s main news: Kabbage secures $200M credit facility from Credit Suisse for AI-based lending expansion. Consumer Financial Protection Bureau (CFPB) files suit against Think Finance. Royal Bank of Scotland to launch robo under NatWest brand. Hexindai names Citi depository bank for American Depository Receipt Program. ICICI Bank, Paytm partner on short-term credit. Today’s main analysis: PeerIQ Lending […]
Kabbage gets $200M credit facility. AT: “Congratulations! Another great achievement from Kabbage, one of the leading small business lenders in the alternative space. They’re planning to use the funds for expansion of AI-based loans.”
Beyond the bank. AT: “The interesting thing is that there is still speculation that online lenders will become white label tech providers to banks. Personally, I don’t think this will define the industry.”
After picking up $250 million in equity funding from Softbank earlier this year, the small business loans and finance company Kabbage — which uses only algorithms and machine learning (no humans) to determine an applicant’s eligibility — is announcing another big infusion of money. The company is picking up $200 million from Credit Suisse in a revolving credit facility that it will use for loans.
Specifically, Kathryn Petralia, who is the COO and co-founded the company with Rob Frohwein, said the funding will help the company increase the number of loans it can make to larger companies in the US. The average size of those loans will grow to “north of $200,000,” she said.
Thanks in part to the rise of fintech companies that make loans online, more than 16 million Americans now have personal loans — an increase of 64 percent in the last five years.
Payoff — a personal lender that specializes in helping consumers tackle credit card debt — says its internal data shows borrowers who paid off at least $5,000 in credit card balances between August 2016 and January 2017 saw a 40-point increase in their FICO score within four months.
Cleveland Fed study: a cautionary tale
One year after taking out a P2P loan, borrowers had credit scores that were 16 points lower than those of the non-P2P borrowers they were matched to, on average — an impact that persisted for four years, the authors said in their working paper.
The study found no evidence that P2P lenders are providing access to credit for “underbanked” consumers — borrowers taking out P2P loans were obtain other credit from traditional banks at rates similar to other consumers.
But a number of companies on the list, including Lightstream, BestEgg, LendingPoint, Earnest, and RocketLoans weren’t around in 2012, when the most recent loans studied by the Cleveland Fed researchers were made. Several others — including Avant, CommonBond, Pave, and Upstart — were just getting off the ground at the time.
The growth in fintech lending has been a driver in overall personal loan growth, with 16.1 million consumers owing $106 billion in personal loan debt as of June 30, 2017. That’s up from the 9.8 million borrowers who owed $45 billion in personal loan debt in mid-2012.
ABS participants, speaking with GlobalCapital this week, hit back at the report, written by Yuliya Demyanyk, senior research economist, Daniel Kolliner, research analyst, both of the Cleveland Fed; and Elena Loutskina a professor of business administration at the University of Virginia’s Darden School of Business, and contributing author at the Cleveland Fed.
The authors challenge the belief that peer-to-peer (P2P) loans have expanded credit to borrowers with limited access to debt since the financial crisis.
A central argument of the Fed’s report was that sector has not done much to expand access to debt for borrowers with low credit scores.
In securitization, subprime consumer ABS has thinned since the crisis. For the five major credit card issuers, the years 2008-2016 saw revolving credit available to US borrowers with a Fico score of less than 660 reduced by approximately $142bn, according to data published by online lender Elevate earlier this year.
Even portfolios backing recent marketplace loan ABS have a weighted average Fico score above 680, the level that defines so-called ‘near prime’ credits, despite the notable dip in collateral quality. Marlette, for example, had an average score of 705 for its most recent transaction which was priced in October, while Prosper had a weighted average Fico score of 709, according to data from Kroll Bond Rating Agency.
Below are some of the main themes that we explore in this tracker:
Large banks continue to retrench. Wells Fargo’s loan portfolio is down $13 Bn YOY. Loss reserves are down at all major banks except at GS due to the ramp-up in their consumer lending portfolio. Goldman Sachs expects lending initiatives to add $2 Bn in revenue in the coming years. GS loan loss reserve increased 50% and GS had the highest improvement in ROE across its peer group.
Credit re-normalization trend continues remains a recurring theme across all major lending groups. Overall, loss-rates on recent vintages are increasing versus prior recent vintages, although performance remains stronger than pre-crisis levels. Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Discover and American Express increased loan loss provisions ~50% although loan growth is at 9% and 14% respectively.
Consumer installment lenders do not anticipate an increase in loss rates, after having recalibrated loss expectations and increased reserves in 2016.OneMain had the smallest increase in loss reserves at 4%.
Consumers now have access to greater supply of credit and credit demand continues to grow. Consumer average debt-to-incomes are below pre-crisis levels.
Several lenders cited the shifting competitive landscape and the role of technology in driving innovation and risk management.
LendingTree, the nation’s leading online loan marketplace, recently conducted its Holiday Shopping Survey among 1,050 Americans aged 25 to 55 with at least one child. The results show that people generally expect to give more than they expect to receive, and although only 55 percent of respondents have a set budget this holiday season, 76 percent plan to spend the same amount or more on holiday shopping compared to last year.
According to the survey, the average holiday shopping budget across all age groups was $943, although 45 percent of respondents say they don’t have a set budget for holiday shopping this year. LendingTree’s 2016 holiday survey found that 56 percent of respondents planned to shop for the holidays without a pre-set budget.
Additionally, 29 percent say they plan to spend more on holiday shopping in 2017 than they did in the 2016 holiday season.
Parents are setting a low bar for their children’s gift giving abilities in 2017, with 68 percent of parents expecting to receive no gifts from or on behalf of their kids.
Most parents (80 percent) plan to spend at least $100 per child this year while 37 percent of parents plan to spend at least $250 per child. Although 62 percent of parents say they try to spend the same amount on each child, younger children have a slight advantage with 12 percent of parents admitting to spending more on younger children and only 6 percent of parents use a child’s behavior to dictate how much money is spent on their gifts.
A debit card is the primary form of payment for holiday shopping for 46 percent of respondents, as well as the primary form of payment for across all groups. Second to debit cards, 29 percent designated cash as their primary form of payment, and only 21 percent are primarily credit card users – although credit cards are considered more secure than cash or debit cards. A recent CompareCards by LendingTree survey found that 66 percent of Americans think debit cards are as safe or safer than credit cards for payments, when in fact debit cards don’t offer the same consumer protections as credit cards.
Respondents expect to do 50 percent of their shopping online and 34 percent of their shopping on their mobile phone. Millennials (age 35 and under) expect to do 40 percent of their shopping on their phone, the largest of any other age group.
Shares of LendingTree Inc. (TREE) broke into a new 52-week high yesterday, hitting a peak of $281.80. Shares closed at $279.40 after opening at $271.75 for a move of 2.83%. The company now has a market cap of $3.34 billion.
Sharestates, an online real estate investment marketplace, announced today the launch of its new One Click Closing tool, a feature that will allow return borrowers to visit a page where they can upload all the details and documents required for a new loan, allowing for a seamless transfer of closing date information without further communications. The launch of this new tool coincides with the company’s overarching goal of providing borrowers with a streamlined funding process, while providing them the opportunity to solely focus on identifying viable real estate investment opportunities.
A survey of 564 American bitcoin users by the online loan marketplaceLendEDU, revealed more than 35 percent didn’t plan to report bitcoin-related gains or losses on their tax returns. On average, respondents said the current fiat value of their bitcoin holdings were $2,930.85, although that will probably continue to rise along with bitcoin’s market price.
Some of the most common requirements for a personal loan are:
Minimum credit score: Most lenders require that you have at least fair or good credit when applying for a personal loan. Each lender sets its own cutoff for what it considers to be excellent, good, fair or bad credit. In general, fair credit is a FICO score between 580 to 669 and good credit is a score between 670 to 739. Most companies require a score of at least 600, but some have greater requirements. A higher score will increase your ability to be approved, and the higher your score, the lower interest rate you’ll qualify for too.
Clean credit history: Lenders don’t like to see defaults, collections or bankruptcies. If you have one or more of these on your credit report, you might not be approved for a personal loan. If you’re approved, you may have to pay an exorbitant interest rate.
Stable employment: A lender needs to know that if it lends you money, you’ll have the means to repay it over time. Without a stable job, you could miss payments or default on the loan. Proof of employment validates your loan application.
Proof of identification: Lenders usually need to see proof of identification, such as a copy of your driver’s license or passport, before approving your loan. Identity theft is common and they want to prevent thieves from taking out loans under another person’s credit.
Choosing a Personal Loan Company
There are two types of lenders you can choose from: banks and peer-to-peer lenders. Banks offering personal loans include SoFi and LightStream and peer-to-peer lenders include Upstart, LendingClub, Prosper and Peerform.
Marketplace-based lenders usually have less strict credit score requirements than their bank-based counterparts. For example, LendingClub and Peerform only require a FICO score of 600 while bank-based companies such as SoFi and Payoff have minimum FICO scores of 660.
Every lender has a minimum and maximum loan amount. For example, SoFi will lend up to $100,000 while Payoff lends up to $35,000. If you need to borrow $45,000, then only look at lenders who offer that amount or more.
Best Personal Loan Companies of 2017
Best for very good credit, low APR and no origination fees: LightStream
Best for very good credit, low APR, no origination fees and a range of offerings: SoFi
Best for very good credit and low APR with merit-based qualifications: Earnest
Best marketplace for fair to good credit with merit-based qualifications: Upstart
Best bank for fair to good credit with merit-based qualifications: LendingPoint
Best for fair to good credit with a co-signer option: LendingClub
Some alternative payday loan companies market themselves as more socially responsible than traditional payday lenders because they offer better terms. They also want to help consumers rebuild their shaky credit and make payments on time. For instance, LendUp provides financial education and rewards existing borrowers who repay their loans to be eligible for loans at larger amounts and lower rates. Fig Loans only charges fees to cover the costs of the loan.
Choosing a Bad Credit Lender
Consumers should evaluate lenders based on the following criteria:
According to the National Small Business Association, 69 percent of small businesses used financing in 2016, including loans, credit cards, venture capital and crowdfunding. The remaining 31 percent were not able to obtain adequate financing.
According to data from the U.S. Small Business Administration, small business bank loans totaled nearly $600 billion in 2015. At the same time, lending from alternative sources such as finance companies and peer-to-peer, or P2P, marketplace lenders amounted to $593 billion.
There are two categories of alternative lenders, direct and peer-to-peer lenders:
1. Direct lenders: Direct lenders are finance companies that fund your loan with capital other than a bank and without a middleman such as a broker, investment bank or private equity firm. Some direct lenders, such as LiftFund, offer SBA loans. Typically, small to midsize businesses borrow from direct lenders.
2. Peer-to-peer lenders: Onlinepeer-to-peer lending directly connects you with investors who usually have a diversified loan portfolio made up of small portions of loans. A loan is often divided among several investors.
YieldStreet, the alternative investment platform that is working to change the way wealth is created, announced that it has surpassed $200 million in originations and has added two new executives to its leadership team: Volfi Mizrahi as Managing Director of Originations and Ivor Wolk as General Counsel. Their additions come on the heels of the appointment of Hrishi Dixit as CTO earlier this year.
The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court against Think Finance, a Fintech that leverages its technology to power online lending platforms. The CFPB says the suit was filed for its “role in deceiving consumers into repaying loans that were not legally owed.”
The CFPB alleges that Think Finance illegally collects on loans that are void under state laws governing interest rate caps or the licensing of lenders.
The actual filing states:
“From 2011 through at least 2015, Defendant has performed critical functions for three separate lending businesses owned by Native American Tribes: (1) Great Plains Lending, LLC (Great Plains); (2) MobiLoans, LLC (MobiLoans); and (3) Plain Green, LLC (Plain Green) (collectively, the Tribal lenders). Defendant is therefore a “service provider” under CFPA. 12 U.S.C. § 5481(226).”
As recently as a decade ago, the U.S. had no single regulator tasked with looking out for the interests of consumers in financial markets. Fragmented oversight allowed all kinds of bad behavior to fall through the cracks. Mortgage brokers hid the true terms of loans in piles of nearly indecipherable documents. Banks changed the order of transactions to extract the maximum overdraft fees from poor customers. Payday lenders offered products designed to trap people in an unending cycle of debt.
Cordray has accomplished a lot. The CFPB designed new, simpler mortgage-loan disclosures. It shed light on banks’ overdraftpractices. It created the first federal rules to make payday lending less predatory. It gave the public reams of valuable information, such as a database that allows consumers to compare credit-card agreements. Its practice of publishing complaints pushed financial institutions to be more responsive. Its investigation of Wells Fargo brought national attention to the fake-accounts issue.
Some of its practices (in particular, preferringdiscretionary enforcement over explicit rule-making) are less than ideal and ought to be revisited; in other areas (such as auto lendingand credit reporting) its authority should be expanded.
The regulator, the Office of the Comptroller of the Currency, which oversees the nation’s biggest banks, has made it easier for Wall Street to offer high-interest, payday-style loans. It has softened a policy for punishing banks suspected of discriminatory lending. And it has clashed with another federal regulator that pushed to give consumers greater power to sue financial institutions.
One category of alternative investments includes hedge and private equity funds. I am not in favor of such investments, especially for the average investor, and I am not alone.
Typically, hedge fund fees are 2 percent plus an incentive, or “carry,” of 20 percent of the profits. The result is billions of dollars for the managers and far less for clients.
In 2015, Buffett lagged his hedge fund rival for the first time since 2008, gaining 1.4 percent versus Protégé’s 1.7 percent. However, 2016 saw Buffett gain 11.9 percent to Protégé’s 0.9 percent. At the end of 2016, Buffett’s index fund gained 7.1 percent per year, or $854,000 in total, compared with 2.2 percent per year, or $220,000, for Protégé.
Royal Bank of Scotland is launching robo-advice for more than 5m customers as banks return to the investment market after a string of fines and as regulators attempt to plug the UK’s wide “advice gap”.
The state-backed lender is claiming to be the first in the UK to launch automated online investment advice when it opens on Monday under its NatWest brand. The service is designed for the majority of customers and for people with as little as £500 to invest as a lump sum.
The process, which costs £10 plus fees for the investment, is aimed at customers who lack the confidence to invest alone but do not wish to pay higher charges for full-blown financial advice, such as tax and inheritance planning.
Five high street banks remain responsible for more than 80 percent of business lending, prompting calls for greater market choice both from challenger banks and from emerging FinTech (financial technology) firms. However, the introduction of new platforms and new players raises questions of integration, innovation and regulation.
Launched seven years ago, Funding Circle has since hosted 70,000 lenders and is responsible for 2 percent of total UK business lending. While going head-to-head with the banks it is worth noting that Funding Circle is also growing the market.
So what next for financial services? Will the disruptors get disrupted? Possibly. One attendee suggested that FinTech firms would soon be providing ‘white label’ versions of their services to traditional banks that would then offer those services to customers. Others suggested that the likes of Amazon and Google would provide the biggest future threat not just to banks but to today’s FinTech leaders.
FEMALE employees at RateSetter, Funding Circle, Zopa and Landbay have all made this year’s Women in Fintech Powerlist, which celebrates the achievements and talent of women across the sector.
RateSetter’s entrants are: Alexa McAlister, head of partnerships; Angela Yotov, head of legal; Joanna Wright, chief risk officer; Katie Brown, corporate counsel; Laurence Perrin, head of compliance; Lucy Bott, head of customer operations; and Maud Holma, finance counsel.
Women from Funding Circle who made the list are: Alysha Randall, global finance director; Lisa Jacobs, chief strategy officer; Lucy Vernall, global general counsel and global head of compliance; Maria Weaver, chief people officer; Panni Morshedi, managing director of international; Swati Lay, chief information security officer; and Vittoria Reimers, VP loan operations.
LendInvest said it will be offering buy-to-let loans through intermediaries ranging between £50,000 and £5m, with rates starting at 3.69 per cent depending on whether borrowers take a two, three or five-year fixed rate.
In comparison, Landbay facilitates fixed rate and tracker buy-to-let loans of between £70,000 and £500,000 from 3.55 per cent.
And fellow P2P lender LandlordInvest offers loans of between £30,000 and £300,000 from five per cent.
In an advertisement for a new Chief Financial Officer, Monzo has let on about its plans for an IPO within three to four years time.
The posting, published today on Monzo’s job site, says:
“Alongside the CEO, you’ll be heavily involved in future capital raising – pitching to investors and negotiating the best terms. In the next 3-4 years, it’s likely you’ll be responsible for taking the company through an IPO.”
The UK fintech sector has enjoyed a record year of investment in 2017 with more than £2 billion invested across 182 deals, according to research body FinTech.Global.
Additionally, the compound annual growth rate (CAGR) of 10.7% experienced by firms valued below £75 million between 2014 and 2016 was supplemented with a further investment of £1.2 billion for this bracket in 2017. As for companies valued above the £75 million figure, a further £877.1 million has been committed across eight deals.
Investment in the UK’s top-10 fintech firms accounted for nearly 46.7% of the total investment between Q1 and Q3 2017. The largest of these deals went to Gryphon Insurance in June, valued at £179.6 million. Of the top 10 deals, four went to lending firms – Prodigy Finance, 1stStop Group, Neyber and Funding Circle, valued at £457.5 million. Of the remaining six deals, two went to challenger banks Tandem and Atom, two went to enterprise software companies Options Technology and Darktrace, and the final two went to insurtech companyies Gryphon Insurance and Revolut.
Millennials view financial advice as an industry of “exclusivity, inaccessibility and high cost,” according to research carried out by the financial advice trade body.
The poll of 178 millennials found 78 per cent of them believed they could only receive advice if they had investible wealth in excess of £50,000 but a significant number wanted advice when they had £10,000 or less.
Online-only options appealed to just 12 per cent of those surveyed.
On Wednesday, Chinese peer-to-peer (P2P) lending platform Hexindai announced it has appointed Citi’s Issuer Services business as the depositary bank for its American Depositary Receipt (ADR) program. According to the online lender, the program was established through an initial public offering of its American Depositary Shares (ADSs), priced at $10 per ADS, which raised approximately $50 million.
A unified platform for collecting personal financial information and assessing people’s credit ratings is being planned, and it is expected to be launched soon as a part of the central bank’s regulatory framework, experts told China Daily.
It will complement the existing credit center of the People’s Bank of China, the nation’s central bank.
Compared with the ranking last year, two more Chinese firms were added to the top 50 list. Online marketplace lending company Dianrong and credit card and online financial service firm U51.com, or 51Xinyongka, rose to top 50. Among the 100 fintech companies, lending and payments focused companies lead in terms of sectors.
WeShareBonds, an AMF-registered crowd lending platform, has raised €12 million to continue financing French SMEs. The new funding includes both the closing of WeShareBonds’ second credit fund (Prêtons aux PME 2018) to finance French SMEs for €10 million and an equity increase of €2 million to finance platform growth.
The overall size of the NBFC sector in India has grown significantly during the last few years with increasing share of NBFC total assets to bank total assets (approximately around 15 per cent of the total banking assets).
P2P Lending in UK: In UK, the P2P market has seen active retail investor participation. The outstanding loan book in the UK industry is approximately around £2.9 billion (~Rs.25,000 crore) as on Q3-2017 as compared to £0.75 billion (~Rs.6,500 crore) as on Q4-20142 . Based on the outstanding loan book as on Q3-2017, the key players in the segment are Funding Circle, Zopa, FolktoFolk, Ratesetter and ThinCats capturing majority of the market.
P2P Lending in USA: P2P industry in USA is around $20 billion (~Rs.1.3 trillion) in 2016 up from $18 billion in 20153 . P2P lending in the USA has seen active participation of institutional investors (approximately 70 per cent of the total investor volumes) lending to borrowers through the platforms. In the USA, three dominant players capture majority of the market which include Lending Club, Prosper and Sofi.
P2P Lending in China: Globally, China has the largest market size of P2P lending which started in 2006. As of January 2017, there were total 2388 P2P platforms in China4with trading volume in 2015 touching $67 billion (~Rs.4.4 trillion) which is ten times that of UK and four times bigger than USA. However unlike USA and UK, the China P2P market is dominated by large number of small and medium size firms.
P2P Lending in India: Globally P2P lending has been in existence for more than ten years; however, it has been evolving in India in the last couple of years. Given the recent RBI guidelines, companies will now need to obtain NBFC–P2P license and will come under the purview of the regulator. There are more than 50 P2P online platforms operating in India. I-Lend, LenDenClub, Faircent, Lendbox, i2iFunding, Monexo, India Money Mart, Rupaiya Exchange are some of the leading P2P platforms operating in India. Currently, some of the leading P2P platforms claim to disburse loans amounting to ~Rs.1 to 2 crore a month. Outstanding loans under P2P model is estimated to have reached ~Rs.50-60 crore.
United Kingdom’s leading peer to peer cryptocurrency lender Taurus Coin today launched its online lending marketplace with USD 150M lending capital, bringing the world’s fastest growing form of lending to the South-East Asia, Gulf, Africa, Europe, and India investors.
Start-up fund distribution platform Sharesies will develop a plan to provide personalised, automated financial advice, known as robo-advice, once there is more clarity about regulatory exemptions.
Last month the Financial Markets Authority decided to grant an exemption to enable the provision of robo-advice services under the current financial advice regime and said it aims to finalise the exemption and be open for applications in early 2018.
ICICI Bank and Paytm have partnered to offer short-term credit to users. The credit given to customers will be interest-free for 45 days and the bank says that it will give loans up to Rs 20,000. Initially, this will be allowed for select ICICI Bank customers who are on Paytm and will be extended to other bank customers as well who use Paytm.
Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.
In August, the bank launched product called Instant Credit Card where certain pre-approved customers of the bank will be able to get a virtual credit card much before the physical card is delivered to them. A physical card will be sent to the customer’s address in 5-7 days.
Meanwhile, the bank’s rival, HDFC Bank said that it would start offering a virtual credit card for customers through its PayZapp wallet, as indicated by this Financial Express report. HDFC Bank has the maximum number of credit cards in circulation with 9.03 million. Meanwhile, ICICI Bank has 4.34 million credit cards.
Paytm’s rival in the wallet space, MobiKwik has partnered with Bajaj Finance to to bring in credit facilities to a wallet business.
In April this year, PayU Indiawill be investing $50 million in its product LazyPay over the next few years. The credit facility could extend for amounts from Rs 3,000 and even up to Rs 10,000, depending upon customer behaviour.
For the recently concluded festival season, e-commerce player Flipkart started to offer EMIs on debit cards on high-value purchases.
The most heartening takeaway from last week’s public sector bank executive jamboree was the discussion around differentiated lending structures. The ThinkShop (earlier editions were called Gyan Sangams) suggested that large banks focus on corporate lending, while smaller lenders focus on retail loans or specific geographies.
Taking differentiated lending to its logical end, the time has come to consider converting the worst performers among state-owned lenders to narrow banks, which won’t lend at all.
Narrow banks are safe banks. By not lending, and using their deposits to buy government bonds, they carry virtually no credit risk. There is no danger of non-performing loans and frequent injections of equity capital that has to be funded by taxpayers. For the Reserve Bank of India (RBI) too, supervision gets easier. There is no need for deposit insurance.
Singapore-based fintech platform Active-.Ai has raised $8.25 million in a series-A round, which was led by Vertex Ventures, Creditease Holdings and Dream Incubator. Existing investors Kalaari Capital and IDG Ventures also participated.
News Comments Today’s main news: PayPal launches P2P funding platform.True Accord lands $22M in funding.Lendable hits 100M GBP lending milestone.P2P Global Investments fund sees huge reduction in U.S. consumer loan exposure.Yirendai’s Q3 results.Klarna, PPRO partner on credit payment across Europe. Today’s main analysis: The latest trends in consumer credit.The corporate bond market suffers indigestion. Today’s […]
Marcus is winning the personal loans arms race. AT:”We must ask why Marcus seems to be winning. Are the leading alternative lenders losing market share to Marcus’s attack on fees? Is it simply because they’ve got the backing of Goldman Sachs. For sure, there does seem to be a competitive play going on, but is that the total picture?”
Why customer acquisition is difficult for financial startups. AT: “Customer acquisition costs are important for long-term profitability. A company can take a short-term loss in exchange for the long-term benefit, but it’s a risky proposition. Interesting that Wealthfront reduces its marketing budget every year.”
A tale of two Fed studies. AT: “Online lenders up in arms over the recent Cleveland Fed study should remember that the study is based on different data than a previous Fed study that was favorable. In truth, one cannot base a conclusion on the study of a single online lender. I think the real picture is what lies beyond both Fed studies.”
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Personal Loan Balances Reach All-Time High as Delinquency Rates Decline
Q3 2017 Unsecured Personal Loan Trends
Personal Loan Metric
Number of Unsecured Personal Loans
Borrower-Level Delinquency Rate (60+ DPD)
Average Debt Per Borrower
Prior Quarter Originations*
Average Balance of New Unsecured Personal Loans*
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Corporate bond market suffers bout of indigestion (Morningstar), Rated: AAA
The corporate bond market suffered a bout of indigestion last week. Between absorbing a healthy amount of new issues and profit-taking from early year-end window-dressing, corporate credit spreads widened, albeit from levels that are still near multiyear lows. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) widened 5 basis points to +104. In the high-yield market, the BofA Merrill Lynch High Yield Master Index widened 24 basis points to end the week at +376.
Energy Companies’ Credit Quality Expected to Continue to Improve;
2018 Oil Forecast $55-$60
A confluence of global events recently drove the crude oil futures price curve into backwardation, a condition in which a commodity’s market price today (or spot price) is higher than the price for further-out month contracts. As of this writing, the spot price for West Texas Intermediate crude is $56.90/barrel and the December 2018 contract is priced at $55.70/barrel. Typically, the oil market trades in contango, which is the opposite of backwardation. In contango, a commodity’s spot price is below the price for further-out month contracts.
Marcus by Goldman Sachs said it was going to lend $2 billion to customers by the end of this year. As of late Monday, it had already done that.
Lending Club has reported losses exceeding $200 million over the last six quarters; Prosper has lost $210 million since the start of 2016, despite various cost-cutting measures, and lost its unicorn status. Even OnDeck Capital, which focuses on small businesses, is struggling to become profitable, having reported losses over eight consecutive quarters.
Goldman sees a $13 billion lending opportunity with Marcus over three years, CFO Marty Chavez said Tuesday in remarks at the Bank of America Merrill Lynch Future of Financials Conference.
San Francisco based TrueAccord, announced today that is has closed $22M in additional funding led by Arbor Ventures, with participation from existing and new investors. The Series B funding follows a period of sustained and rapid growth for the company.
Customer acquisition is expensive. For a large bank it could cost between $1,500 and $2,000 to acquire a retail banking customer, according to Ciaran Rogers, director of marketing at StratiFi, an early stage startup that helps advisors manage portfolio risk. In credit cards the cost could be in the hundreds, not thousands — according to David True, a partner at PayGility Advisors. An expensive customer could be as high as about $800, which would include the cost of teasers and bonus loyalty points. At startups it could be between $5 to about $300 for one customer. Fintechs want to spend less money on that — Wealthfront, for example, decreases its marketing budget year after year.
Partnerships with bigger brands have been one way to bring that cost down. For example, Canada’s fifth largest bank, CIBC, is reportedly in talks with robo-adviser Wealthsimple over a referral deal in which the bank would send some of its customers to the digital investment startup.
At MoneyLion, the cost of customer acquisition is about $5 or less, said chief marketing officer Tim Hong. MoneyLion launched in 2013 and now touts about 1.5 million customers. Earlier this year, Luvleen Sidhu, president and chief strategy officer of the all-digital BankMobile, said it spends about $10 to acquire an account.
CleanCapital, an online marketplace for clean energy investing, announced today that it closed its Series A with a total investment of $3.7 million. This investment came through 50 investors to include FinTech and cleantech leaders as well as SeedInvest’s Selections Fund in this latest round.
As Black Friday Nears, a Record 196 Million Consumers Now Have Access to Various Forms of Credit Cards and Other Revolving Lines of Credit (TransUnion Email), Rated: A
With the holiday shopping season officially kicking off during Black Friday next week, TransUnion’s (NYSE: TRU) just released Q3 2017 Industry Insights Report found that 195.9 million consumers now have access to revolving credit such as bank-issued and private label credit cards. According to the report, this is the highest level of revolving credit access since TransUnion began measuring the variable and is greater than the 192.6 million consumers who had access to such credit products in Q3 2016.
TransUnion’s analysis found that average private label card originations in the holiday season (defined as November and December) for 2016 was 148% of the average originations for the January through October timeframe. This is tracking in line with recent rises observed in 2015 (156%) and 2014 (164%).
Other Consumer Credit Headlines from the Industry Insights Report:
Total Credit Balances Rise despite Slowdown in New Credit Card Accounts
Auto Loan Market Shifting Toward Less Risky Consumers
In 2010, digital lenders originated $249 million in unsecured personal loans, and by 2016 that number had grown ninety-fold.
Cleveland’s Dark Outlook
That detail alone isn’t necessarily bad news – after all, having more debt doesn’t necessarily mean the online lending customers are doing worse. But paired with other data, the news looks pretty grim. According to the Cleveland Fed survey, the online lending customers also showed lower credit scores on average, more delinquent debt and more total debt outstanding.
The findings further suggest that in some cases, the three- to five-year installment loans of up to $30,000 to $40,000 often offered by online lending sites are not being used for their intended purpose of consolidating credit card debt into a single, lower-interest loan. Instead, customers were using those loans to rack up more debt and maxing out the cards they used to pay off the loans.
Philly, Chicago And A Very Different Result
The earlier report did note that outcomes varied depending on the specific borrower profile and their precise lending requirements. However, because of the expanded and more inclusive credit ranking criteria, consumers who might otherwise be “credit invisible” or appear to have a sub-prime score are able to get a more complete evaluation that considers a wider array of factors.
The lack of regulatory clarity raises concerns, they said, over whether customers are treated fairly, have “equal access to credit, and receive offers that can be easily compared and understood,” suggesting that alt lenders need to compete on a level playing field with their regulated bank counterparts.
Why The Discrepancy?
The Cleveland Fed study examined data from TransUnion for consumers who had been identified as having taken out “online bank-based loans.” That includes a much wider set of businesses and lenders than is technically defined by the more traditional online lenders.
The Philly-Chicago study focused entirely on data from Lending Club, a marketplace lender.
The Cleveland Fed study goes even further. It claims that P2P lending is a ticking time bomb in which loose lending and cascading defaults could lead to another crash like the one the US suffered in 2008 when the subprime lending bust took down major banks and insurers, disabling the housing market for years.
Astrada points specifically to the high interest rates that prospective borrowers with poor credit could have to pay. Many websites offering P2P loans advertise 5 percent loans with terms of one to five years. This may look good to those who would like to roll their credit card debt of 25 percent into a P2P loan.
But the reality is that for many borrowers, the interest rate is much higher. He emphasizes that one up and coming P2P lender about to go public claims that its average loan portfolio across its business model is nearly 150 percent.
In the seventh installment of the “Kill the Check” series, PYMNTS’ Karen Webster sat down with Ingo Money CEO Drew Edwards to get a sense of how airlines can use push payments to quell misfires and compensate passengers for their troubles when things go awry.
The digital nature of push payments also helps airlines as they can better control when, where and how such monies are spent. In addition, Edwards noted, push payments are instantly reconciled with the airline’s own accounting functions as they are being used.
On Monday, home ownership investment platform Unison announced 2018 expansion plans.
The platform reported that in 2017 alone it has expanded into five additional states including Illinois, New York, Arizona, New Jersey and Pennsylvania, bringing its total footprint to twelve states plus Washington D.C.
In addition to announcing 2018 expansion plans, Unison also revealed multiple promotions and additions to its management team. These are the following:
Jim Riccitelli assumed the role of President focusing on facilitating Unison’s rapid expansion and supporting Unison’s trademark focus on consumer education and financial literacy.
Bill Walker and Brian Elbogen, former Managing Directors, have been promoted to Chief Revenue Officer and Chief Strategy Officer
Laura Wensleyhas been brought on as Director of Finance
Rayan Rafay has been promoted to Chief Operating Officer of Unison’s investment management business
John Arens, who is General Counsel at Unison, has taken on additional responsibilities as Managing Director of Business Operations
Heather Phillips has joined as Associate General Counsel
The Consumer Financial Protection Bureau is seeking more information about consumers’ experience with free access to credit scores.
In two separate notices published in the Federal Register on Monday, the CFPB said it wants more data on which companies consumers are using to obtain their free scores. The bureau also said it is updating a public list of companies that offer free access to a credit score.
I can sense that most of the folks attending the conference that got hurt by Operation Chokepoint feels a bit vindicated by the latest roll back of many new proposals laid out by the CFPB, Consumer Finance Protection Bureau. Just recently the United State senate overruled the CFPB’s arbitration rule. The overruling by CFPB and essentially a no-confidence vote happened about a week after Lend360 concluded in Dallas, Texas.
I attended Dan Quan’s “The Regulator’s View of Fintech” session on the last day of the conference. Dan manages the small dollar lender desk at the Consumer Financial Protection Bureau, at his panel, Dama Brown from FTC and Shamoil Shipchandler from SEC all spoke about an era of collaboration with lenders. The tones from all three regulatory representative is vastly different than that of five years ago where mass regulation and penalties were the topic of discussion.
I feel like the industry has finally evolved from a cat and mouse game with the regulators to a more collaborative marketing participants as this industry continues to mature.
The National Retail Federation predicts the average per-person tab this holiday season will reach $967, up nearly 3.4 percent since 2016.
Americans are on track to end 2017 with more than $60 billion in additional credit-card balances, according to WalletHub’s projections. That figure puts us perilously close to the nearly $1 trillion grand total recorded at the height of the Great Recession.
Holiday Budget by City
Sugar Land, TX
League City, TX
Maple Grove, MN
In order to determine the cities with the biggest holiday budgets, WalletHub’s analysts compared 570 cities across five key metrics: 1) Income, 2) Age, 3) Debt-to-Income Ratio, 4) Monthly Income-to-Monthly Expenses Ratio and 5) Savings-to-Monthly Expenses Ratio.
Magilla Loans, a search engine for loans which connects borrowers to banks without requesting personal information, has been recognized by National Real Estate Investor (NREI), a leading authority on trends in the commercial real estate market, as one of the 2017 Top Financial Intermediaries for commercial real estate loans arranged within the last calendar year. The ranking identifies Magilla Loans as a reliable and efficient service which satisfies the needs of commercial real estate developers and executives.
CreditShop and Värde Partners today announced that Värde will acquire Austin-based CreditShop. CreditShop is a specialty finance company focused on providing consumer friendly credit products and personal loans to prime and near-prime consumers. CreditShop is the 25th largest MasterCard and Visa credit card issuer in the United States.
In March 2017, CreditShop acquired a $1.6 billion MasterCard credit card portfolio from Barclaycard. The company expects to launch its own credit card products in 2018.
A new report from Equiniti finds that 30 per cent of consumers aged 18-25 have borrowed more than £1,000 over the past year. This equates to approximately 2 million people, according to estimates: the highest proportion of any generational group.
The report draws on data from a survey of 2,001 UK consumers in August 2017. 32 per cent were classified millennials, 34 per cent generation-x and 34 per cent baby boomers. 52 per cent were women, 48 per cent were men.
Since 2015, borrowing (of over £1,000) has increased by 17 per cent among millennials, 9 per cent for generation-x and just 1 per cent for baby boomers.
Speaking at a fintech summit in Leeds, Mr Letts also questioned whether the challenger banks were radically different from mainstream banking, positing that some had simply “put new clothes on the emperor”.
“On other the other side are what I call the ‘neobanks’, people coming in with much hurrah and hysteria and telling everyone that the big banks are finished and that they are going to take over the world .
“If you set up a fund, from Government, that invested in fintechs and you had a billion pound fund where do you think businesses will come to? It is very simple.”
The Royal College of Nursing’s (RCN) workforce survey found that 6% of nurses have been forced to take out one of the high interest rate loans in the last year to meet their daily bills and living expenses.
Meanwhile, one in four has borrowed money from friends, family or their bank, 23% have taken on an additional paid job and half did overtime to cover their bills and expenses, according to the poll of 7,720 nurses from across the UK.
Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) today announced its unaudited financial results for the quarter ended September 30, 2017
For Three Months Ended
in RMB million
Amount of Loans Facilitated
Total Net Revenue
Total Fees Billed (non-GAAP)
Adjusted EBITDA(1) (non-GAAP)
Adjusted Net Income (2) (non-GAAP)
In the third quarter of 2017, Yirendai facilitated RMB 12,185.4 million (US$1,831.5 million) of loans to 192,725 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 117%; 75.7% of the borrowers were acquired from online channels; 57.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.
In the third quarter of 2017, Yirendai facilitated 214,967 investors with total investment amount of RMB 13,510.0 million(US$2,030.6 million), 100% of which was facilitated through its online platform and 92% of which was facilitated through its mobile application.
For the third quarter of 2017, total net revenue was RMB 1,513.9 million (US$227.5 million), an increase of 28% from the previous quarter and 73% year-over-year; net income was RMB 303.0 million (US$45.5 million), and increase of 13% from the previous quarter and a decrease of 12% year-over-year. The decrease of net income is mainly because that, in the third quarter of 2016, the Company recognized a tax credit of RMB 151.7 million because one of its subsidiaries became qualified as a software enterprise which makes it eligible for an exemption of enterprise income tax for 2015 and 2016. Excluding the impact of the tax credit, adjusted net income in the third quarter of 2016 was RMB 192.6 million.
An online lender targeting spendthrift 24 to 36 year olds is the latest fintech firm from China to bet on the willingness of Chinese youth to go into debt for the newest smartphone – and on the willingness of US investors to bid up its shares.
Shenzhen-based Lexin Fintech Holdings, which operates an online e-commerce platform offering instalment shopping, is following in the footsteps of Chinese microcredit providers Qudian and Hexindai which raised US$900 million and US$50 million in their US IPOs in October and November, respectively.
They were also out in force for the recent Singles’ Day shopping festival, which saw sales on Alibaba’s e-commerce platforms reach 168 billion yuan (US$25.3 billion). During the first hour of the 24 hour shopping spree the number and value of orders on the Fenqile platform rose three and six times respectively compared with the same period last year.
Hui Ying Financial Holdings Corp. (OTCQB: SFHD) (“Hui Ying” or the “Company”), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises (“SMEs”) and individual borrowers in China, today announced its financial results for the three and nine months ended September 30, 2017.
Third Quarter 2017 Highlights
For the Three Months Ended September 30,
($ millions, except per share data)
Loan origination service fee
Loan repayment management fee
Financing income from entrusted loans
Other income (expenses)
EPS – diluted
Total loans facilitated through our platform increased by 73.3% to RMB 2.6 billion for the third quarter of 2017, from RMB 1.5 billion for the same period of last year, as China’s online peer-to-peer lending platform industry continued to grow significantly during the third quarter, coupled with the increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace.
Total revenues more than doubled to $14.28 million for the third quarter of 2017 from $7.07 million for the same period of last year, as a result of increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fee, loan repayment management fee and financing income from entrusted loans were $8.39 million, $5.25 million and $0.64 million, respectively, for the third quarter of 2017 compared to $5.11 million, $1.97 million and nil, respectively, for the same period of last year.
Net income was $4.76 million, or $0.06 per diluted share, for the third quarter of 2017, compared to $1.46 million, or $0.02 per diluted share, for the same period of last year.
PPRO Group and Klarna have announced an agreement aimed at enabling PSPs to offer credit-based payments through PPRO`s payment hub to European merchants.
The partnership will be marketed to PPRO’s payment service providers customer base and will provide access to Klarna’s services and consumers across Sweden, Norway, Finland, Denmark, the Netherlands, Germany, Austria, and the UK.
Banco BNI Europa and Belgian Fintech EDEBEX celebrate a partnership to support Portuguese SMEs (BNI Europa Email), Rated: A
Banco BNI Europa and Edebex have announced today the celebration of a new partnership for immediate availability of an online platform for the purchase and sale of invoices to Portuguese companies with cash requirements, offering an innovative alternative to financial credit and traditional factoring.
A number of areas have been established or significantly impacted by FinTech; Peer-to-Peer (P2P) lending, mobile payments, and instant payment notifications, to name a few.
The ongoing bank branch closures across Ireland and the UK demonstrates the changing climate.
With a reduction in branches, banks are investing heavily in technology to reduce costs, to improve their customer experience and to increase customer self-service in an attempt to ward off the threat of FinTech start-ups.
The blockchain is another example of FinTech and one which has been a hot topic across multiple industries for a number of years.
A digital future: financial services and the generation game is a report sponsored by Banco Santander for presentation at the Tenth Santander International Banking Conference, written by The Economist Intelligence Unit.
It assesses how people’s expectations of their financial services providers are changing and how technology must be deployed to meet them. The report is based on extensive desk research and in-depth interviews, conducted in August-October 2017 with 14 representatives of financial institutions and companies.
PayPal has launched Money Pools, a service that allows its users to create fundraising pages where their contacts can contribute money for a shared item or event, like a group gift or trip, Source: Business Insider
In the latest Data Drivers installment, Steve Villegas, vice president of Partner Management at PPRO Group, told PYMNTS’ Karen Webster that “alternative payments are going to drive the future of eCommerce.” But between the promise and the reality, some connectivity is on order, bringing consumers payment options – and merchants toward better conversion rates when it comes to online commerce.
Data Point One: 17.6 Percent
This is the percentage of credit card penetration worldwide – a lot of cards, but not a lot of penetration on a global stage.
As has been widely reported, Alibaba grabbed as much as $25 billion in sales to 225 countries and regions. Roughly 90 percent of transactions were completed on mobile devices.
Data Point Two: Three Billion
This is the number of people estimated worldwide to be without a bank account – and yet, armed with mobile devices, can be brought into the world of digital transactions and can participate fully in the global economy.
Data Point Three: 38 Percent
This is the average rate of eCommerce growth of the 11 fastest growing countries globally. That far outpaces the 12 percent a year eCommerce growth seen in the U.S.
China provides a stark reminder of the explosive boost to eCommerce, at 64 percent year over year. Other areas that have high eCommerce growth rates include Indonesia and Malaysia. Growth is high both in bank payment-related transactions and with eWallet. Russia is also showing growth, Villegas stated.
New research from Celent (commissioned by Finastra) which examines the future transformation of capital markets, identifies six key drivers of change over the next five years to 2022:
Digitalization of the trade and client lifecycle
The Fintech revolution
The need to integrate with an evolving ecosystem
The trend for banks to focus on core capabilities and outsourcing of non-core functions
Advances in big data, machine learning and data analytics
The rise of open APIs and micro-services in helping banks deliver increased agility
The report, ‘The Great Transformation in Capital Markets – Revolution to Evolution’, examines the changes that have already taken place in capital markets since the 2008 crisis, the wave of big transformation projects undertaken since 2011-12 designed to optimize operations and reduce costs, and expected trends in the transformation journey over the next five years. It incorporates the findings of detailed discussions conducted with 17 tier one and two global capital markets institutions, predominantly in the US and Europe but also across Asia and Latin America.
In this table we have set out what each lender says you must repay for borrowing $500. (We targeted 30 days but not every lender offers that.) Then we calculated the effective annual interest rate for entering into that deal. This is different to the interest rate the lender discloses because we bundle up that interest rate with any set-up loan fees into an effective rate. But we haven’t included any fees if you default; this analysis assumes the borrower meets all payments on time.
Ex-bankers Brahma Mahesh, Naveen Madgula, and a techie for 17 years at Hexaware – Praveen Krishnam founded FinMomenta last year, launching its loans platform Tachyloans in May.
The startup borrows from the emerging trend of servicing small-ticket loans online for individuals and SMEs.
“The loan approval process in banks is very subjective. It is dependent on a human perception of the loans officer. It kills the whole idea of credit scoring. That’s the reason banks are able to service just about 2%-5% of the huge working class of about 60 crore population. Others just depend on money lenders. Banks don’t touch these people because they don’t have a credit history,” says FinMomenta co-founder Brahma Mahesh.
The interest rates on Tachyloans range from 11.5% to 25% depending on the FinMomenta credit rating – the better the credit score, the lower the interest rate.
By the end of 2018, the company is targeting to service 1,500 loans and 34,000 loans in next 5 years, which will increase its loan portfolio to about Rs 500 crore.
Consumers will be able to sign up for new digital-identity system developed by SecureKey Technologies Inc. and underpinned by IBM Corp.’s blockchain technology in the first half of 2018. They’ll be able to instantly prove who they are to banks, telecom providers and governments using apps on their phones and Windows devices, according to Greg Wolfond, chief executive officer of Toronto-based SecureKey.
Canada’s six-largest lenders, including Toronto-Dominion Bank and Royal Bank of Canada invested C$30 million ($24 million) in the project.
The Dubai International Financial Center (DIFC) it has established a $100 million fund to invest in fintech start-ups, the latest move in the freezone’s bid to position itself as the regional centre for the fast-growing and disruptive sector.
In the June 1 issue of Lending-Times, we highlighted a TransUnion report on how to identify and fight online fraud. A typo suggested we didn’t recommend report, however, we highly recommend it and you can download it here. News Comments Today’s main news: After buying George Banco RateSetter will not lend to its customers. Amartha receives regulatory […]
In the June 1 issue of Lending-Times, we highlighted a TransUnion report on how to identify and fight online fraud. A typo suggested we didn’t recommend report, however, we highly recommend it and you can download it here.
Where incumbents are making investments in wealth tech. GP:” For instance, Goldman Sachs and JP Morgan Chase are co-investors in Motif, Northwestern Mutual and Citi Ventures are co-invested in Betterment, and UBS and Santander InnoVentures are co-investors in SigFig.”. “AT: “Some of the world’s largest financial institutions invest in wealth tech startups and robo-advisors.”
P2P platforms facing hybrid dilemma. GP:”THE PEER-TO-PEER finance industry could be on its way to becoming a polarised market, where the biggest firms stick to their core P2P lending activities and the rest are forced to evolve into hybrid models.”
The US economy generated a seasonally adjusted 138 K jobs last month (vs. expectation of 185K) bringing the jobless rate to 4.2% and another step closer to full employment. As inflation risks emerge, the Fed is widely expected to increase rates another 25 bps at the upcoming FOMC meeting on June 14th.
On the regulatory front, the US House will vote on a bill sponsored by Jeb Hensarling (R-TX) to reform and repeal portions of the landmark Dodd-Frank financial reform bill.
On the securitization front, student lending originator CommonBond priced its $232 Mn private student loan ABS. Goldman Sachs was the structuring lead, and co-leads include Barclays and Citi. Also, AB Alert reports that Lending Club is preparing a multi-seller deal which includes collateral from multiple originators including potentially loans from Lending Club’s own balance sheet. As PeerIQ noted in the summer of last year, we believe marketplace lenders that can offer whole loan investors a reliable path to liquidity and low-cost permanent financing can generate a competitive advantage.
PeerIQ is pleased to present the PeerIQ Loan Performance Monitor. The monitor tracks interest rates, delinquency, and charge-off rates for both platforms across vintages and grades.
Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced Charlie Moore, the firm’s Chief Commercial Officer, has been named President as former Chairman and CEO Mark Parsells returns to his FinTech consultancy practice.
As President, Moore will be focused on the continued delivery of loan level diligence services to the investment community, leading the daily operations of the company. Moore previously led the firm’s commercial operations including business development, partnerships and marketing and has over 20 years of experience building financial services technology businesses in the U.S. and Europe.
“Institutional multifamily” typically means dozens, if not hundreds, of distinct units within a single property, managed by a seasoned professional management firm. These properties have many different tenants, with a diversity of employment situations and lease structures. If one tenant leaves abruptly, many others will remain in place, and overall rental income will suffer only marginally. Multifamily managers can further mitigate vacancy risk by structuring leases to end on a rolling basis. Single family investments don’t carry the same benefit – a tenant living in a single-family home constitutes 100% economic loss for as long as the property remains vacant.
Investing through online crowdfunding platforms gives individual investors the opportunity to invest in a small piece of large multifamily projects that are institutional grade and have passed the underwriting of well-established lenders and co-investors who often have decades and billions of dollars of investing under their belt. The same can’t be said of most single-family investments.
While these benefits are most apparent for direct owners of (investors in) property, this benefit of multifamily investing should be passed along to individuals who co-invest via an online (crowdfunding) platform.
GTCR, a leading private equity firm, announced today that it has entered into a definitive agreement to acquire Sage Payment Solutions, Inc. (“SPS” or the “Company”) for $260 million. SPS, headquartered in Reston, Virginia, is a leading provider of payment processing and merchant acquiring solutions in North America. GTCR is acquiring SPS from The Sage Group plc (LSE: SGE) (“Sage”), a global provider of integrated accounting, payroll and payment solutions headquartered in the UK. GTCR is partnering with SPS management to pursue organic growth initiatives and fund future acquisitions in the payment processing industry. To support this strategy, GTCR has committed up to $350 million of equity capital to the platform. The transaction is expected to close in the third quarter following receipt of regulatory approvals and other consents.
SPS provides credit card, ACH, check, gift and loyalty card processing services to small and medium-sized businesses (“SMBs”) in the United States and Canada.
Deals to wealth tech startups hit a record of 30 investments in Q1’17 amid a number of new early-stage entrants globally. In particular, robo-advisors have been gaining prominence and taking on incumbents in nearly 20 countries around the world.
Since 2012, several banks and wealth management firms have made co-invests in wealth tech. For instance, Goldman Sachs and JP Morgan Chase are co-investors in Motif, Northwestern Mutual and Citi Ventures are co-invested in Betterment, and UBS and Santander InnoVentures are co-investors in SigFig.
AutoGravity, a FinTech pioneer revolutionizing car shopping and financing with the power of the smartphone, has unveiled an innovative mobile application to help car buyers in the Garden State finance any new or used car in minutes in just four easy steps.
With its unique platform, the AutoGravity app guides car buyers through an intuitive four-step process:
Choose a car – Select any make, model and trim of any new or used car.
Find a dealer – Choose from AutoGravity’s proprietary national dealership database; geolocation helps quickly identify nearby dealers that sell the car the selected.
Search for financing – Car buyers can scan their driver’s license and connect to social media to quickly pre-fill the finance application.
Select a lender – Receive up to four binding finance offers in minutes, then select a loan or lease offer and head to the dealership to complete the purchase.
In a recent speech at the Northwestern Kellogg Public-Private Interface Conference, Federal Reserve Board Governor Lael Brainard indicated that the relationships between banks and data aggregators within the “fintech stack” may present safety and soundness concerns that warrant oversight by the FRB (and perhaps other prudential regulators).
Governor Brainard indicated that banks will need to apply significant resources to update their data infrastructure to allow access to real-time data for third-party developers.
Governor Brainard explained that because banks are more tightly regulated than the average fintech company, consumer protection and safety and soundness considerations should supersede experimental innovation.
While some banks may elect to give access to data aggregators, Governor Brainard observed that other banks may be unwilling or unable to provide permissioned access to third parties due to fears about compliance with laws and regulations and the ability to monitor and control the use and access to data. She then noted that the Fed’s supervisory role should focus on ensuring that financial institutions subject to its supervision operate safely and follow applicable law. At the same time, she stated that the Fed has “a strong interest in permitting socially beneficial innovations to flourish, while ensuring the risks that they may present are appropriately managed, consistent with the legal requirements.”
PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that its VP of Strategy, Jessica Murray, has been named to HousingWire’s 2017 Rising Stars list of young leaders to watch in the housing industry. HousingWire’s 2017 Rising Stars list recognizes talent that demonstrate leadership and innovation, inspiring not only those within their company, but also their communities and the industry at large.
In her time at PeerStreet, Murray established the company voice through social media, content marketing, customer communications and placed media while serving as the Head of Communications. In her current role, Murray maintains many strategic and operational responsibilities, which also include managing PeerStreet’s capital markets and hiring.
Roostify, a provider of automated mortgage transaction technology, today announced it has named Sandeep Aji as Vice President of Products. Aji will be responsible for overseeing the continued development of Roostify’s mortgage technology platform – from enabling more API-driven capabilities to improving user experience for lenders and consumers.
Prior to Roostify, Aji was Co-Founder and CEO of Impartus, a cloud-based, SaaS platform for higher education.
Despite a higher cost of capital, an online loan may be necessary for a small business. The reason: There has been a continued downtrend in lending from banks to small businesses. “Together, 10 of the largest banks issuing small loans to business lent $44.7 billion in 2014, down 38% from a peak of $72.5 billion in 2006,” reports The Wall Street Journal. Meanwhile, nonbank lenders have seized the opportunity and captured 26% market share up from 10%.
RATESETTER has announced that it has decided not to lend directly to George Banco’s customers as there are “better uses of our development resources”.
The ‘big three’ peer-to-peer lender bought a stake in the guarantor loan provider, which was a former wholesale lending partner, last month. It had also agreed to lend directly to its 10,000 customers, with George Banco acting as introducer.
THE PEER-TO-PEER finance industry could be on its way to becoming a polarised market, where the biggest firms stick to their core P2P lending activities and the rest are forced to evolve into hybrid models.
A wide range of industry onlookers have told Peer2Peer Finance News that it will be impossible for smaller firms to achieve profitability without either expanding into balance sheet lending, merging with direct lenders or morphing into a business model closer to that of a collective investment scheme.
“It’s intrinsically more profitable to arrange and lend rather than only arrange. We’re going to start seeing hybrid loans emerge.”
P2P is ultimately just a subset of direct non-bank lending, he argued, but with different technology in place and different market access. When a direct lender sets up a P2P platform, its return on capital goes up exponentially and it can immediately recycle those returns to originate more lending.
“Hybrid lending from some providers will increasingly be the chosen solution. This is not an issue or a problem for investors in and of itself, ” added 4th Way analyst Neil Faulkner.
It was probably with sound money and sound banking in mind that Goldmoney recently announced a tie-up with a British-based and regulated peer-to-peer lender, which enables owners of gold and silver bullion to use it as collateral to raise funds.ii The purpose of this article is to explain how honest banking worked before fractional reserve banking was devised. This is the logic behind the recently announced collaboration between Goldmoney and Lend & Borrow Trust Company Ltd.
On 23rd May, Goldmoney announced an investment and collaboration in and with the UK-based peer-to-peer lending platform, Lend & Borrow Trust Company Ltd. LBT is unique, being the only peer-to-peer facility in Western financial markets that allows businesses and individuals to use their investment-grade physical bullion as collateral against loans, without the loan obligations and collateral being comingled with other customer business.
At no time is LBT a principal in the transaction, so lenders and borrowers can agree an interest rate without having to take LBT’s creditworthiness into account, based solely on physical gold or silver as collateral.
The logic of a collaboration between Goldmoney and LBT is obvious, in that it enables customers to raise finance using bullion. But there is an underlying sound-money logic as well. Between them, Goldmoney and LBT are the template for sound-money banking as it existed before fractional reserve banking became the standard banking model, after Britain’s Bank Charter Act of 1844.
When James Patterson invested £1,000 in the peer-to-peer (P2P) lender Funding Circle back in 2015, his hope was that his money would grow a bit faster than the pitiful rates of interest offered by his bank. At the time, the relatively new lender was promising returns of 5-6% a year – 10 times more than his bank.
However, almost a year and a half on, his investment is now worth just £988 – a loss of £12. It’s because one of the firms that 10% of his money was lent to defaulted, leaving his account £128 in the red – a sum that his other investments at the platform have struggled to make up.
It has delivered some impressive returns to savers in recent years but, Patterson says, after his experience, he will not be investing anymore.
James Meekings, co-founder and managing director of Funding Circle, says Patterson will be back in the black in the next couple of months as the firm expects to recover some of his losses which, in turn, will be passed on to him.
Recently I opened an account at p2p lending marketplace Assetz Capital to gain some first hand experiences. Assetz Capital offers secured business loans to small and medium British SMEs. I decided to start with the 30 days access account as it is mostly hands off and deposited a tiny amount, which was credited within an hour.
Assetz Capital has a minimum investment amount of 1 GBP. Assetz is open to international investors, but a UK bank account is required.
Assetz also offers a quick access account with 3.75% target rate, designed to provide immediate access to cash, in normal market conditions, for investors. Currently 19 million GBP are invested in this account. Further account types are the ‘Great British Business Account’ (GBBA) with 7% target rate, the ‘Green Energy Income Account’ (GEIA) with 7% target rate and the ‘Manual Loan Investment Account’ (MLIA) with 5.5% to 18% gross rate. See comparison of Assetz accounts. Assetz also features a secondary market without fees providing liquidity.
We are. And so is Funding Circle. The banks have been completely useless.
What advice would you give other entrepreneurs trying to secure that kind of finance?
It depends on how much you’re looking for and how long you’ve been trading, but if you need money, I’d go crowd funding, 100 per cent. If you are well under the table with trading, I’d take a look at funding circle.
Search engine giant Baidu Inc. is to quit crowdfunding market and pay more attention on artificial intelligence”]. Users will not see the “Baidu Crowdfunding” channel when they log in their Baidu Finance account, but will still be able to check the crowdfunding history.
On May 25, China Rapid Finance Limited, a leading online consumer lending marketplace in China, reported its unaudited financial results for the quarter ended March 31, 2017.
Transaction and service fees
Number of new borrowers added in the first quarter of 2017 was approximately 545,000. As of March 31, 2017, the Company had reached approximately 2 million unique borrowers on its marketplace since inception, and the total number of loans facilitated on the Company’s platform grew to approximately 15 million.
Total loan volume facilitated on the Company’s marketplace in the first quarter of 2017 increased to USD485 million, primarily driven by the rapid expansion of consumption loans, which accounted for USD405 million of the total loan volume.
Total number of consumption loans facilitated in the first quarter of 2017 was 4 million, while total number of maintenance loans facilitated was 6,000.
Ant Financial, the financial arm of Chinese e-commerce giant Alibaba, became the latest player in Hong Kong’s competitive mobile payments market after it announced the launch of its mobile wallet for Hong Kong users on May 24.
On May 25, Ant Financial announced to launch the car insurance rating mechanism for the insurance industry to improve the risk management capability.
From 2017, the number of cash loan companies have increased tremendously in China. Various kinds of cash loan firms have mushroomed, including CashBus, MagicCash, GoldBar of JingDong, Ants Borrow of Alibaba, WeiliDai of Tencent, etc. So far, there are already thousands of small cash loan platforms exists in China, and many of them have received fund financing from top VC investors such as Sequoia Capital, Innovation Works, and ZhenFund.
Why cash loan growth explosively in a short period? The following three reasons may explain.
Reason 1: The lower threshold of credit system by Big data method.
In the past, credit system was mainly referred to Central bank credit system, however, it could not cover most people. The information of vast majority of low-income, unregistered social groups have not been collected in the credit system, but they have extensive borrowing needs.
As big data technology developing fast these years, many data companies are growing rapidly, and they acquired data for business use. Owing to the big data credit system, cash loan platforms are able to evaluate the borrower’s credit situation from multi-dimensions: traits of character, consumption habits, loan demand, repayment willingness, etc. In this way, the problem of information asymmetry between the investors and borrowers is eliminated, making the cash loan business prosper in the broadest social group.
Reason 2: Vertical specialization of cash loan industry provides more business opportunities
The division of the cash loan industry is now divided into receipt, audit, lending and collection, each process are served by independent and professional companies or teams. With the booming of cash loans, an ecological chain around the industry has been derived, including data processing companies, business consulting companies, law office specialized in collection, etc.
The vertical specialization of the industry made cash loan platforms extremely convenient in obtaining customers, audit management and collection, so that the platforms can save more costs and gain more business opportunities.
Reason 3: Changing of the public consumption concept stimulated loan demands
With the improvement of people’s living standards and the popularization of deficit spending concept, the public consumption concept has been changing a lot.
Consumer demand is beginning to diversify. There are not only the need for food and clothing, but also spiritual needs of learning, fitness and travel, etc. And the consumers’ attitudes are gradually transforming from rational consumption to perceptual advanced consumption. Spending “future money” at “the present” is becoming a common social spending habit, for example, more and more people choose to purchase cars, houses and 3C electronic products on installment. The growing advanced consumption has stimulated the loan demand across society.
Under Soviet rule Lithuania became known as a center for laser technology and bioscience, the latter of which now accounts for 1% of GDP and is growing at almost 25% annually. Last year businessmen, scientists and the government signed an agreement to make Lithuania the European hub for health and biotech innovation by 2020.
But it is fintech that has taken the strongest grip on the country’s tech scene. TransferGo, WoraPay, Blender, Simplex and IBS are just a few of a small but growing clique of firms taking advantage of strong local talent, low wages and public pledges.
Lithuania is the only jurisdiction in the EU to have a special-purpose banking license, allowing the foundation of a bank with registered capital of just €1m ($1.1m).
Vaidas Adomauskas first imagined WoraPay, a payment platform, while waiting to pay for food at a restaurant. Now it is backed with almost $1m in funding and is headquartered in London–which many believe to be Europe’s fintech capital.
Capitalizing on the Lithuanian fintech craze, Rise, the Barclays-backed Rise coworking franchise, opened a location in capital city Vilnius last year. It has 50 working spaces, an auditorium and conferencing facilities for entrepreneurs trying to get a foothold in financial tech.
Leading small business loans marketplace Funding Circle announced that it would be winding up its property-secured lending in April, with a view to stopping entirely by mid-2018.
AltFi Data’s analytics engine shows that only one quarterly cohort of Funding Circle’s property-backed lending resulted in any bad debt. This came in the third quarter of 2015. Bad debts for this cohort have reached 4.67 per cent – but it’s important to note that recoveries may still be made, and that this is just one of 17 quarterly cohorts. The size of this cohort is about £34m.
Well, since unveiling the new product in February, MarketInvoice has posted back-to-back monthly origination records (versus all previous months in its existence), with £42m in March and £35m in April.
But this isn’t yet feeding through in terms of outstanding principal per month, which is hovering at around £25m per month, versus an all-time high of £35m.
Investors are falling over themselves for Zopa loans, but should they be?
The net returns delivered to Zopa investors has been fairly consistent at between 4.5 and 5.0 per cent for the past two and a half years. But the rate being paid by its borrowers is climbing.
Zopa’s average gross interest rate has steadily increased from 5.3 per cent at the outset of 2015 to 8.4 per cent in April 2017. The reason for this is simply that a higher proportion of Zopa’s loans are now being made to “riskier” borrowers. But the returns being offered by the platform haven’t yet adjusted to reflect this.
Interestingly, real estate crowdfunding is not limited to the US market. It is actually one of the hottest trends in the overall global realty market today. Realty crowdfunding platforms are continuously being launched in the UAE, Asia and even Egypt. In fact, a leading Singapore-based realty crowdfunding platform recently raised around S$1 million (AU$0.98 million) in the first funding round for a company.
If crowdfunding is the signature trend of real estate in 2017, the rise of millennial home buyers is a close second. The oldest millennials are now in their mid-30s and are planning to have their own houses. Marriage is on the cards for most of them, further creating the urgency for a new home. Most jobs have been designed for the 25 to 34 age bracket, with wages happily rising. Overall, it is a highly favourable situation for millennials to think of a new house this year.
On the other hand, the recent Brexit fallout has had a major impact in the contemporary real estate scene. With UK realty currently going through an uncertain phase, the US real estate scene is fast hogging the limelight in the global property market. The Chinese market, too, is currently moving along a slow tide, which presents an advantage for US developers. The American commercial real estate is to benefit in particular, and speculations are on the rise about steady foreign investments in the country.
Zopa, the world’s first and one of the largest peer-to-peer (P2P) lenders, has lent in excess of £2.3 billion to customers in the UK, and the addition of its data set will deepen Crowdsurfer’s insight into the global alternative finance market.
Cambridge-based Crowdsurfer analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions to provide the most in-depth take on global trends and patterns in alternative finance.
Will robo advice spark a price war? We crunched the numbers looking at how much platforms charge compared to a typical multi asset fund.
Vanguard, a U.S. based passive fund manager, is planning to sell its index funds directly to UK consumers, charging just 0.23 per cent annually. Previously, individuals had to invest in funds through an intermediary or, more recently, via robo advisor to get access to the company’s funds.
Taking a look at the top UK robo advice platforms, we found that an investment of £10,000 would cost an average of £6.79 a month in both management, platform, and fund fees.
A £10,000 investment in 2015 held in the average fund in the IA’s 20-60% Shares sector would have cost an average £9.83 per month for a mixed fund, while the average fund in the IA’s 40-85% Shares sector would cost £10.25, according to data on the average ongoing charges figure from the Investment Association.
Putting this all together, for the average robo advice platform a £10,000 portfolio amounts to approximately 0.81 per cent fees, or £81 over a year. In comparison, the average multi-asset fund charges between 1.18 per cent and 1.23 per cent over the course of the year, with IA’s 40-85% Shares sector the higher of the two. This amounts to £118-£123 on £10,000, or approximately £40 more than the average robo advice portfolio.
Pre-RDR fees would have cost £15.42 and £14.92 on a £10,000 investment.
Moneyfarm, a robo advisor based in the UK and Italy, stands out because it doesn’t charge a management fee for any investments under £10,000, just the fund fee. Investments over £10,000 are charged 0.6 per cent.
Trov has launched its on-demand insurance platform in the UK, in partnership with AXA Insurance. Users are provided with a personalized quote and can quickly turn insurance on (or off) for an item without the need for any interaction with a traditional insurance agent.
FinTech Australia has announced the election of its new Board of Directors. The new Board is said to align with constitutional changes regarding gender diversity and representation from a broad number of states.
The new board members are:
David Ball – CEO and co-founder of HyperBank (Queensland representative)
Natalie Dinsdale – Director of Marketing at Tyro (NSW representative)
Luke Howes – Co-founder and CEO of Proviso (South Australian representative)
Lucy Liu – Chief Operating Officer of Airwallex (Victorian representative)
Alan Tsen – CEO of The Week in Bitcoin (Victorian representative)
Emma Weston – Co-founder and CEO of AgriDigital (NSW representative)
Our business structure focuses on P2P lending to three segments of borrowers – salaried individuals, practising professionals, and small and medium enterprise (SME). Right now, however, we focus only on the salaried individual segment.
Our typical borrower profile is salaried, aged 25-30 years, with an average salary of Rs 25, 000 for which the average borrowing works out upto Rs 1.50 lakh. Such a working population today is much more independent and amenable to migration. This in turn brings a lot of minor expenses and there such loans are very useful. Such borrowers are often under the under the banks’ lending radar who offer them Rs 8-10 lakh loans to start with but we create options for them (based on the amount requirement). The borrowers that we target are usually digitally savvy and appreciates the benefits that we bring to the table.
What are the benefits offered to borrowers?
First and foremost is time-saving. The borrower is made known in a minute if the loan is available or not.
Another benefit of Monexo is that it is active in the entire activity chain of P2P lending – origination, screening, profile-grading, pricing of each application, disbursement, client servicing and lastly debt collection. This is right now a key differentiator among our contemporaries.
Describe the business structure and how it would attract lenders?
Our fees are taken out of repayments made to lender (2.5 per cent) based on their actual EMI receipts.
Borrowers are graded in categories from M1 down to M8. They get an automatic upgrade when they create a repayment track record. One key criteria is that debt should not be more than 60 per cent of the borrowers’ income.
Our typical business process is approval of only 25 per cent of the applications submitted. This is because most of the 75 per cent are already defaulters somewhere.
Fintech company Gadai Pinjam Indonesia is gearing up for a growth spurt this year in a mission to expand the reach of financial services to unbanked small and medium enterprises.
The company, which provides pawnshop services and micro-loans through its online platform Pinjam.co.id, eyes to disburse between Rp 100 billion ($7.52 million) and Rp 200 billion this year, increasing up to 10 times its loan outstanding.
Pinjam will cooperate with state-owned post Pos Indonesia as well as some gold shops, to increase the number of outlets where their customers can pawn their goods. It plans to have more than 100 points in Jakarta by the end of this year.
Jakarta based Amartha (PT Amartha Micro Fintek) a peer to peer lending platform launched in 2010, is now officially registered with the Directorate of Institutional and Product IKNB (Financial Industry Non Bank) Financial Services Authority ( FSA).
Amartha said the approval by the financial regulators will boost public confidence in the platform and investing. Currently Amartha claims to have successfully financed over 34,000 micro businesses in parts of Indonesia to more than 10,000 registered investors, with total funds distributed to 87 billion rupiah (USD $6.5M).
In 2015 the Singapore-based bank, DBS, surveyed 600 local mothers in their 30s about retirement. The results were revealing. Three-quarters had not started planning for their retirement. Only 25 percent thought they would have sufficient funds to retire on. The average Singaporean household, headed by a 45-year-old, spends US$3,800 per month. However, 69 per cent believe they would be able to retire on less than US$2,200 a month, while 38 per cent believe it would be less than US$1,500.
According to a 2015 Nielsen survey, six out of 10 Singaporeans only start saving for their retirement once they reach 45. They believe they will just need to double their current savings to retire comfortably with peace of mind.
In China, the social pension is the primary source of retirement income. However, 43 percent of respondents in a survey conducted by the Society of Actuaries in 2016 believe the government or their company will cut their benefits in the future. With an estimated 329 million Chinese turning 65 by 2050, it is projected there will be a US$118 trillion pension deficit.
At 55, the average male has US$98,000 and female has US$85,000, bringing the total household retirement assets at around US$183,000. However the couple now has only 12 years until retirement.
Big banks are putting a lot of effort in to improve their customer experience. WeChat Pay might not be big right now, but Alibaba bought Lazada, so Alipay’s coming. That’s going to change a lot of things. Banks are trying hard to capture their customers’ attention and build strong ties. Small-to-medium enterprise lending and security is big, particularly in Singapore. How do you protect your data? Singapore is a very strong private banking hub: a lot of money is parked here from very strange people. You don’t want to have this information leaked, so the regulation techspace is being upgraded.
Jaco van Tonder, the director of advisory services at Investec Asset Management, says robo-advisers are useful to clients who cannot afford to pay for face-to-face professional financial advice.
Personal Finance looks at three offerings in the South African market:
1. Sygnia RoboAdvisor. The service was launched last year by listed asset manager Sygnia. Depending on your investment requirement and risk appetite, RoboAdvisor will expose you to unit trusts, exchange traded funds (ETFs), money market funds or cash.
• Minimum investment amounts: lump sum of R10 000 or a monthly debit order of R500.
3. Bizank. The company is independently owned and has appointed Anchor Capital as the asset manager of its robo-adviser. The robo-adviser, which was launched last year, creates a portfolio to meet your investment goal (for example, retirement or buying a house) based on your responses to its questions.
• Minimum investment: a lump sum of R10 000 or a monthly debit order of R1 000.
• Management fees: between 1% and 1.5% excluding VAT.
October 17 is going to be a big day for global USD money markets. It’s the deadline by which prime money market reforms must adjust to floating NAV models, leaving only those funds investing in government securities able to offer par value protection. …
October 17 is going to be a big day for global USD money markets. It's the deadline by which prime money market reforms must adjust to floating NAV models, leaving only those funds investing in government securities able to offer par value protection. The likes of Zoltan Pozsar at Credit Suisse are expecting banks to lose a significant whack of unsecured bank funding as a result.
Central bankers in Europe have been thinking a lot about The Death of Banks lately. Not so much in the US.
There’s good reason for that, of course. Europe has been bleeding out banks with negative rates, so policy makers there have become painfully awa…
Central bankers in Europe have been thinking a lot about The Death of Banks lately. Not so much in the US.
There's good reason for that, of course. Europe has been bleeding out banks with negative rates, so policy makers there have become painfully aware of the banks' role implementing monetary policy.
The US Federal Reserve, on the other hand, has been keeping banks alive with a steady drip of interest on excess reserves, or IOER, to control rates in a financial system awash with liquidity. The Fed's releasing a policy statement today (we understand if you forgot about that in the heli-frenzy before the BoJ on Friday).
Of course, keeping banks on life support with IOER doesn't help net interest margins. NIM is a key measure of bank profitability. It's also closely tied to the US yield curve -- which is unfortunate for banks, because that sucker has been positively steamrolled lately by the combination of low yields abroad, low inflation expectations and rising US policy rates.