Modern Small and Medium Enterprises (SMEs) represent a significant part of the global economy, accounting for nearly 90% of all modern businesses. Modern SMEs are large contributors to the creation of workplaces and economic growth, especially in developing countries. Although they’ve become a vital part of the financial ecosystem, these businesses are facing extreme difficulties […]
Modern Small and Medium Enterprises (SMEs) represent a significant part of the global economy, accounting for nearly 90% of all modern businesses. Modern SMEs are large contributors to the creation of workplaces and economic growth, especially in developing countries.
Although they’ve become a vital part of the financial ecosystem, these businesses are facing extreme difficulties in accessing finances. SMEs are often associated with higher risks, sizeable transaction costs, and a lack of collateral—about 50% of small business loans get rejected.
Many business owners cite this financial exclusion as a key obstacle to the growth of their venture. The common hurdles in obtaining a loan include burdensome processes, low level of transparency, and the high costs associated with searching for a loan. For instance, the research by the Federal Reserve indicates that small business borrowers spend nearly 24 hours on paperwork alone during the loan application process at a bank.
The problem is global: businesses from East Asia and Pacific regions represent the largest share (46%) of the total number of underbanked SMEs worldwide, followed by Latin America and the Caribbean (23%) and Europe and Central Asia (15%). In 2018, the finance gap between the needs of global SMEs and available funds reached $5.2 trillion, according to SME Finance Forum.
Following the financial crisis of 2008, with the idea of de-risking their balance sheets, large banks started to avoid lending to SMEs by introducing stricter requirements to receive funds. For instance, in the UK, where SMEs represent a tremendous 99.9% share of the 5.7 million businesses, the value of issued bank loans fell to £55.6 million in Q4 of 2018, a 78% drop from its maximum of £255 million in 2009.
The other reasons include the variety of regulations banks have to cope with, insufficient credit history, and the high transaction costs of underwriting and onboarding customers. All in all, providing loans to small businesses has become less of a priority for banks. “If you look at the great recession, what you’ve seen is a bounce-back of commercial lending, but lending to small businesses really hasn’t come back,” sums up Darrell Esch, Vice President of global credit at PayPal. The majority of banks are not interested in lending relatively small amounts of money on a frequent basis. Some banks have introduced a sort of a loan threshold (commonly around $100,000 to $250,000), and won’t engage in loans below this level. The others will not address requests from SMBs with less than $2 million in revenue.
But technology changed the scenery for many small and medium-sized enterprises. In comparison to traditional financial institutions, digital lending companies provide favorable terms on credits. With low-interest margins, faster approval, and without initial fees, they are scaling up quickly and already capitalizing on new scoring methods.
On the Path to Digitalization
Top decision-makers in the banking sphere are aware of the success of alternative lending companies. However, still slowed down by legacy systems, banks are only dipping their toes in digital lending. The outdated technology at banks isn’t the sole issue. At the recent Lending Fintech Europe in London, lga Zoutendijk, a career banker with several decades of experience, said that “legacy culture is a bigger problem at large banks than legacy tech and a much more difficult challenge to overcome.”
For traditional lenders, fintech is an opportunity to innovate and modernize. However, one can’t fight legacy culture alone: on their path to embrace digitalization, bank institutions need a fintech partner to bring technology, speed, and flexibility to the table.
Fintechs are looking for such partnerships as well. With all the improvements in customer experience, they predictably lack the expertise in areas such as risk management, loan monitoring, and servicing that banks have in spades. This mutual knowledge gap creates partnership opportunities. Denise Leonhard from Paypal is sure that “nobody is going to be able to do it alone. To get to the next evolution of payments, it’s going to be really partnership-driven.”
Addressing the Challenge
But what is the biggest challenge in initiating the loan process for banks? Moody’s Analytics, a financial intelligence provider, conducted a poll among bank institutions. The results revealed that 56% of bankers consider manual collection and data processing to be the greatest obstacle in the process of underwriting.
These outdated methods lack consistency, accuracy, and auditability, not to mention, they are time-consuming. This results in additional work for risk officers at a bank, and assessing an SME’s creditworthiness becomes a challenging and unprofitable task. Traditional players just can’t compete with agile, fast-moving alternative lenders and their “time-to-money” credit decisions which take less than a day.
Lending to SMEs is not profitable for banks unless they change their operational approach. The solution lies in the automation of manual processes. Banks have to adopt such solutions for enhanced data collection, scoring, and further rule-based decisions, and solve the problem of the data’s inconsistency and delay. Igor Pejic, the renowned author of Blockchain Babel, sums it up: “It is simply not possible to offer the customers the speed they need in today’s economy with manual processes.”
But what’s more important for banks, those changes mean investing in the future: alternative lending options make customer experience of SMEs convenient, transparent, and adapted to the way those businesses operate.
The Future of SME lending
Partnerships between banks and fintechs are one of the most-discussed topics in the industry as they have the immense potential to impact long-term growth, customer experience and client retention for both parties. Industry professionals agree that bank-fintech collaboration is evolving as a common industry practice that will shape the future of the lending domain.
By partnering with alternative lenders, traditional players fight the challenges associated with the process of credit risk assessment, increase the quality of the loan portfolio, and stay competitive in the SME lending sector. More importantly, they have the opportunity to offer small businesses a shortcut to finance with fast access to cash, less paperwork, and fewer rejected applications.
In return, alternative lenders benefit from partnerships by getting experience in handling a complex regulatory environment, reaching new markets, and scaling quickly. In regards to this, old-fashioned “collaboration” is the new industry trend, while “disruption” is regarded somewhat as a thing of the past. Effectively, change is almost impossible without industry-wide cooperation and consensus.
The question: is how will banks and fintechs manage their respective strengths to proceed with deeper integration in a newly-formed system? It’s important to note that these integrations shouldn’t be regarded as acquisitions by any means. In other words, the technological vision of fintechs shouldn’t be at odds with the slow processes within banking institutions: one needs to convince multiple stakeholders and departments that the partnership makes sense. Here’s Chris Skinner on the partnerships: “Banks are slow to move, particularly at the beginning. Realistically, you should consider allowing at least 12-months from the moment you engage to the moment you have a partnership agreement signed.”
However, the financial industry holds little pessimism about collaborations: 82% of top executives at banking institutions have plans to partner with a fintech within the next 5 years. That’s only a matter of time before both parties streamline their processes to completely change the dynamics of SME lending.
All in all, given the competitive advantages that come with strategic partnerships, banks and fintechs have better chances to achieve their scale ambitions and reinvent their business models.
According to the CGAP report, the global opportunity for SME credit is estimated to be around $8 trillion. At the same time, more than 50% of overall applications are being rejected regularly. If banks want to take their share of the lucrative market, they need to modernize, and that’s totally good news for small businesses, technological partners, and the whole fintech ecosystem.
Dmitri Koteshov is the digital content marketer at HES (HiEnd Systems), a fintech company behind comprehensive lending and credit scoring solutions. As a seasoned professional, Dmitri maintains a longstanding interest in providing insights on fintech software development and analyzing current technology trends.
Consumer lending in the US reached nearly 1.5 trillion dollars in 2018, according to the Federal Reserve Board of Governors, and European banks reported a demand growth of 25% in the second quarter of 2018. Needless to say, it’s a good time for lending. While banks are still paying out the lion’s share of the […]
Consumer lending in the US reached nearly 1.5 trillion dollars in 2018, according to the Federal Reserve Board of Governors, and European banks reported a demand growth of 25% in the second quarter of 2018. Needless to say, it’s a good time for lending.
While banks are still paying out the lion’s share of the loans, alternative lenders are gradually moving in to fill holes in the ever-increasing lending market.
Fintechs Exploit the Growing Market
The traditional banking sector is entrenched in their old way of doing business. Banks and customers alike expect a certain customer experience and style of operational management. While this may appeal to some customers and lending institutions, it comes at a significant cost. Each teller or call-agent interaction at a traditional bank costs an average of four dollars compared to merely ten cents for a mobile interaction.
While the profits of running a fintech are clear, the process of getting up and running is not without its challenges.
Practical Steps for Setting up a Lending Company
Lending markets vary from country to country depending on regulations, legislation, and consumer behavior. This simple roadmap outlines the general process to get started.
Point One: Becoming A Legitimate Enterprise
In order to start lending online, business owners need to create a legal entity. This is the vehicle that all lenders will use to navigate red tape. As this process varies greatly from business to business, it may take as little as 1% or as much as 20% of your initial startup budget.
One possible way of circumventing this is to purchase an already existing bona fide legal entity or lending franchise. For example, the largest franchise lender in the US is Liquid Capital. The short-term costs may run a bit higher, however, the long-term benefits of using an existing household name could potentially pay large dividends.
In addition to the unique requirements for lending entities, regular business costs will often crop up as well. Among others, these could include hiring and administrative overhead and office rental. On average, these costs could take anywhere from 10%-12% of your startup budget.
Point Two: Raising Funds
Raising capital to lend out is the primary operational challenge for any lending startup.
Usually the best way for a startup to begin lending is with their own capital, but when that is not possible (or favorable) funds can be raised in the marketplace. Recently, institutional lenders have become much more comfortable with providing capital to lending startups following the rise of the P2P model.
Any lending company funded by public investors will have to factor in the cost of hiring a Certified Public Accounting firm to perform an audit to certify all financial data including their business plan, valuation, and other financials.
Point Three: Using the Right Technology Platform
The core of any modern lending company is the technological platform it runs on. The platform is the brain of the business and takes time to nurture and grow. It is best to do this in parallel with the other points as it is the primary capital asset of the operation.
When it comes to platforms, there are two main options: building your own from scratch or purchasing an existing platform from a vendor. This crucial decision will have a long-term impact on the business and will greatly affect setup and operational costs. Each option comes with pros and cons:
Building a lending system from scratch is more time-consuming, and can take up to 12 months. It requires a substantial upfront investment as you will need both financial and technological expertise to pull it off. Additionally, time-sensitive shifts in the market could be a factor, so timing your release is of paramount importance. While this option could be risky, it gives lenders full control over the product they build.
Purchasing an existing lending platform is generally less expensive and faster. There are a wide range of solutions both out-of-the-box and fully-customizable. The options fall into two general categories: traditional core banking systems (eg. Oracle, Temenos, and Infosys) or fintech-focused solutions (eg. HES Lending Software).
There are number of software challenges that digital lender should consider when choosing a platform:
In order to optimize productivity, systems often require further customization.
Some systems only cover a single or hand-full of loan management aspects like underwriting, loan origination, or loan servicing, and do not support many back-office functions.
Systems often do not integrate with the majority of third-party services, so lenders might end up needing to mix and match software to run their business.
Some systems do not extend well into new markets or product segments.
Some systems require license upgrades to increase the loan volume or number of user accounts.
With a good understanding of the industry, thorough planning, and about $200,000 to $1,000,000 of startup capital, a state-of-the-art lending business can be launched. Not only do these businesses financially benefit their owners and investors, but they come with the satisfaction of knowing that every loan issued has great potential for improving the lives of the borrowers and their communities.
Natalie Pavlovskaya is the Chief Marketing Officer at HES (HiEnd Systems), a fintech company behind comprehensive lending and credit scoring solutions. She is a Marketing Executive with international business experience in CIS, EMEA, and US, working for more than 7 years in digital marketing.
Contemporary borrowers want to be able to price, decide. and act on loans from their phones. Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you. Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders […]
Contemporary borrowers want to be able to price, decide. and act on loans from their phones.
Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you.
Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders based on their ability to answer their questions and deliver a product through a language of graphics and swipes.
The ads have a young couple sitting in an office across the desk from a bald, middle-aged loan officer. “Yeah,” he says, “you can get a mortgage that avoids PMI, but there’s no way to avoid MIP on an FHA. Now there’s—“
Mr. Key rolls out on a desk chair from behind the couple and shows them a cell phone. “Hey, this will help.”
The next frame shows the Rocket Mortgage home page, as the narrator intones, “Rocket Mortgage by Quicken Loans makes the complex, simple. Understand the details and get approved in less than 8 minutes.” The message here is clear, your competition understands that borrowers want clarity and convenience, and your challenge is to be sure that you are meeting those expectations.
The reality for some credit unions and community banks is that they can’t afford to adapt their processes to fit into the palm of a smart phone user’s hand. But the costs of avoiding the expense can be even greater than a line item in an operations budget. Lenders risk their reputation. A bad mobile experience tells your customers that their needs aren’t your priority. How many of those customers can you afford to lose?
Technology is not about being trendy. It’s a requirement to stay ahead of the market and meet your customers expectations. Lenders with online lending programs optimized for mobile phones are following advice their grandparents might have given: Meet people where they are—not where you want them to be. Does your loan origination system maximize your customers’ online experience, allowing you to lend anywhere and at any time? This is something you need to consider when starting or improving your online lending experience.
Mobile Lending and Smart Phone Usage
Mobile lending has become the method of choice for many young affluent customers who will soon be the backbone of your portfolio. A Federal Reserve Study found that 38% of all bank customers in 2015 were using mobile phones to at least get information about their accounts. The base for that comparison included customers who didn’t even own a phone, and other Fed studies indicate that number surpassed 50% in 2018.
A 2018 study by the Pew Research Center found more than three quarters of adults have a smart phone. While distribution is roughly even between men and women, and among racial and ethnic groups, the distribution by age, income, and education shows wide gaps. Smartphone ownership is:
94% of ages 18-29
89% of ages 30-49
73% of ages 50-64
46% of ages 64 and over
Those with college degrees or annual incomes over $75,000 have smartphone ownership rates exceeding 90%, while those without any college education or incomes below $30,000 have ownership rates below 70%.
A 2018 study by the University of Southern California’s Center for the Digital Future found that more than one in three bank customers under age 45 would switch their primary bank for “better online/mobile services.”
Among most age groups, interest rates and fees were by far the biggest reason to switch, but among those ages 25 to 34, the gap was narrow: 47% would switch for online/mobile services, compared with 54% for lower fees and rates. If you require a driver’s license as a stipulation for a loan, these borrowers expect to be able to take a picture of it with their phone and send it to you within a few seconds. It would not be wise to expect them to stop by your branch or even scan-and-email stipulated documents.
Maximizing customer convenience is just as important as advertising low rates and fees. And while age matters, these studies are also showing that mobile usage is increasing sharply among all age categories and incomes, including older consumers. Your institution’s future is at stake if you’re not keeping up with the convenience borrowers expect, and providing that level of service requires advanced technology. You want to meet your customers where they live. And if they’re moving, you want to be the first to greet them.
These trends are clear. How are you addressing them?
News Comments Today’s main news: SoFi cancels plans for Australia, Canada. SoFi completes largest consumer loan securitization to date. Elevate launching credit card for sub-prime consumers. Funding Circle posts record month. Zopa developing IFISA transfer features. PPDai debuts weakly in New York. WeLab raises $220M for expansion. Australia upgrades RateSetter. Today’s main analysis: Three Myths of Peer-to-Peer Lending. Today’s thought-provoking articles: Cleveland […]
Online loans leave consumers deeper in debt. AT: “Well, what kind of loans don’t leave consumers ‘deeper’ in debt? There will certainly be an intense debate around this report, and members of the Marketplace Lending Association weigh in on that debate in this article.”
Online lender Social Finance Inc said on Thursday it is pulling back from expanding into Australia and Canada as previously planned, choosing instead to focus on improving its core lending products like student loans and mortgages in its home market.
The San Francisco-based company will also drop its plans to push into asset management, according to a letter from its interim CEO to shareholders and seen by Reuters.
On Friday, SoFi announced it has completed a $727 million issuance of SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”) notes, making it the largest offering of securities backed by consumer loans and is SoFi’s 11th ABS transaction this year, bringing the lender’s total issuance for 2017 to $6.1 billion.
Elevate, a fintech lender from Texas, recently announced it wants to try out the credit card business according to Business Insider. On Monday, the company released its plans for 2018 which included a variety of new products and a possible partnership with a bank.
One of the products that Elevate is looking to release is a credit card with a third-party bank by next year. The card would be potentially geared toward subprime borrowers, which constitutes a large group of Elevate’s customer base.
Another company, Petal, is trying to offer a new credit card in 2018. It’s goal is to increase the availability of credit cards to consumers who are lacking credit.
The peer-to-peer lending industry has the potential to destabilise consumer balance sheets, with loan performances bearing a striking resemblance to the subprime mortgage market before the 2007 crisis, warns a new paper from the Cleveland Federal Reserve.
And things could get much worse, warn the Fed researchers after looking through credit bureau data on 90,000 people who took out P2P loans between 2007 and 2012 and comparing them to 10 million traditional borrowers.
The researchers conclude that, in fact, P2P loans do not achieve these things and actually resemble “predatory loans” in terms both of who takes them out and the impact on borrowers’ finances.
Are consumers really better off skipping the local BofA branch and instead filling in a few online forms and having an algorithm spit out an interest rate? Are all these newfangled credit-rating tools helping to serve those traditionally brushed aside by the big boys? Is P2P good?
Researchers at the Cleveland Fed have an answer to all these questions: No.
The pattern is worse for those with credit card debt; compared to the control group, P2P borrowers see a 47 percent increase in credit card debt after getting an online loan.
Meanwhile LendingClub has posted exactly two quarters of profit since going public in 2014. Its last earnings report sent shares down 20 percent.
According to the authors, Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, peer to peer loans resemble predatory loans in terms of the consumer market they serve and impact on consumer finances.
Among their findings:
Credit scores of P2P borrowers fall substantially after taking out a loan when compared to peers who did not take out a P2P loan.
Loan delinquency rates are more than 50% higher for P2P borrowers two years after the loan origination when compared to peers who did not take out a P2P loan.
P2P borrowers exhibit a 47% increase in credit card balances after obtaining P2P credit when compared to similar non-P2P borrowers.
[Side note: This report seems to be using P2P lending to mean the broader online lending industry beyond just Lending Club and Prosper so keep that in mind when you see me using the P2P lending term in this article].
One of the things I disliked most about this new report was the how opaque their analysis was. They just said they used data provided by TransUnion “in which we observe about 90,000 distinct individuals who received their first P2P loan between 2007 and 2012.”. They provide no indication as to which platforms this data is based upon and then we see this very strange chart below showing supposed delinquency rates by year.
In 2006, the only consumer P2P lending (or any significant online lending) platform in existence in this country was Prosper and their 2006 vintage was terrible. This data was all publicly available at one point and I reported that of the 28,936 loans issued during those initial two and a half years 10,456 loans defaulted, a 36% default rate. Subsequent vintages at Prosper performed much better. When I see the table above showing those numbers I have to question the entire data set of the report because obviously their 2006 data is wrong.
The study, published Thursday, is likely to spark intense debate. One of its findings is that consumers who take out online loans, sometimes called peer-to-peer loans or marketplace loans, likely have access to traditional banking services.
“We are scratching our heads,” Nathaniel Hoopes, executive director of the Marketplace Lending Association, an industry trade group, said in an email, “because the Philadelphia and Chicago Federal Reserve recently conducted a more granular study and reached the opposite conclusion as this Cleveland Fed research.”
In 2010, digital lenders originated $249 million in unsecured personal loans, according to a recent study by the credit bureau TransUnion. By last year, the annual loan volume had grown more than ninetyfold.
The study finds that the consumers who took out online loans grew their other debts by about 35% more over the next two years than did their counterparts who did not take out the loans.
Several major sellers of travel, such as Expedia, United, JetBlue, Southwest, and Lufthansa, are testing extending credit to U.S. consumers to enable them to pay for their vacations over time rather than up-front.
Paying for a trip in monthly payments primarily appeals to consumers with average credit ratings who are willing to accept short-term, interest-based loans.
But consumers with high credit scores also appear to be getting tempted into splurging on luxury trips if companies lend them credit on attractive terms.
The new installment products — called layaway when paid off prior to trip and a loan if paid off after — have been common in developing countries.
A few fintech startups — most prominently Affirm, Airfordable, and UpLift — are hoping that their services will make delayed payment for travel fashionable.
THE DOWNLOW ON UPLIFT
This year, UpLift said that its average 12-month travel loan through travel brands was $2,420, said CEO Brian Barth in an interview. For “highly-qualified” borrowers, it has typically charged 8.99 percent annual percentage rate, he said.
Consumers participating in UpLift’s loans had an average FICO (Fair Isaac Corp.) score of 692. Scores range from 300 to 850. UpLift has lent money to customers with FICO scores as low as 475.
Affirm said that its travel partners see a 20 percent increase in customer conversions, on average, by offering its product.
PeerIQ’s Q3 Public Lender Tracker (PeerIQ Email), Rated: A
The tracker, a new release from PeerIQ’s research and analytics team, examines credit performance trends across publicly traded banks, FinTechs, and card issuers. We also deep-dive into the earnings of Lending Club and OnDeck. Stay tuned for a release this week and scroll down for an excerpt.
Groundfloor has filed a Form 1-A with the Securities and Exchange Commission indicating its intent to sell shares in the real estate crowdfunding platform. According to the filing, GroundFloor is offering up to 2.5 million in Common Stock at $10 per share. Interestingly, the Groundfloor offering circular indicates the company intends to limit the offer and sale solely to accredited investors – even though under Reg A+ issuers may sell to both accredited and non-accredited investors alike (although in other parts of the document it appears they will accept non-accredited investors).
Real estate crowdfunding is a growing industry of great interest for realtors and investors. A report on Crowdfunding for Real Estate by crowdsourcing.org anticipated a $3.5 billion growth for real estate crowdfunding in 2016, and experts project that the industry will grow to over $300 billion by 2025.
Despite digital mortgage advances, borrowers think it still takes too long to get a loan, J.D. Power finds in its annual customer satisfaction ranking of originators.
The most frequently used method for submitting a mortgage application for both refinances and purchases was online for the first time, according to the survey. Forty-three percent applied digitally, up from 28% a year ago.
But satisfaction with online submissions declined 8 points and borrowers also gave online submission a satisfaction score 10 points below that of in-person applications.
As sales from Marketplace outpace Amazon’s own sales, sellers need increased funding for things like, advertising and purchasing inventory.
The SellersFunding model interprets data like products, prices, payments, customer reviews and feedback. With more than fifteen billion single data points on tap, all rigorously tasked, the company’s model can boast high levels of accuracy.
But those laws may be up for reconsideration, as Keith Noreika, the acting Comptroller of the Currency, has raised the possibility that those laws are in need of review and possibly revision.
Needless to say, the nation’s small banks and their representatives are less than thrilled.
“If Walmart wants to be a bank, that’s fine, as long as they make the appropriate investments to protect the parts of the banking system that are so critical,” said Kelly King, chief executive at regional lender BB&T Corp.
King added that he was “absolutely opposed” to the idea of a limited banking license.
LendingTree, Inc. (NASDAQ: TREE) today announced it will host an Analyst and Investor Event on Wednesday, December 13, 2017 in New York. The company will host in-person attendees at the Nasdaq MarketSite, 4 Times Square, New York, NY10036. Doors will open for registration at 10:00 a.m. Eastern Time and presentations will begin promptly at 10:30 a.m.
A FUNDING Circle loan portfolio would still deliver returns of close to five per cent in a severe recession, the platform claims.
The peer-to-peer business lender has stress-tested its loan book, using a model similar to what the Prudential Regulation Authority (PRA) uses for banks, to see how two example portfolios would stand up against a severe recession similar to the one in 2007/08.
Even with these assumptions, the projected annual returns after fees and bad debt but before tax were 5.3 per cent for portfolio A, and 4.9 per cent for portfolio B, Funding Circle said.
ZOPA is working on ways to let investors transfer their existing holdings into its Innovative Finance ISA (IFISA).
Andrew Lawson (pictured), chief product officer for Zopa, said some investors have already been selling old loans and buying new ones to fund the tax-free product.
However, the lender is now working on a one-off option for customers with more than £1,000 in its Classic or Access account to move that money into an IFISA, keeping the Safeguard coverage intact and without paying sale fees.
New peer-to-peer platforms should put as much effort into attracting borrowers as they do promoting and obtaining inward investment, according to Kuflink.
Stuart Law, chief executive at Assetz Capital, claimed: “A number of long-established peer-to-peer platforms have more investors than borrowers, meaning they have been closed to new investment, while the company tries to find more loans.
Stephen Findlay of BondMason added: “I think there is generally an oversupply of capital for the available investment opportunities, across most markets.”
Peer-to-peer (P2P) lending has grown dramatically since the financial crisis. In 2005 when Zopa, the first lending “platform” was launched, loans totalled just £1.5m.
But last year total lending was £3.2bn with Zopa, Funding Circle (which counts the British government as an investor) and RateSetter controlling two-thirds of the market.
Rates offered by P2P firms have dropped: investors can earn 3.7pc with Zopa Core and 4.5pc with Zopa.
Risks are also rising. When Zopa launched it only offered loans to 0.5pc of applicants, said Neil Faulkner of 4thWay. Now its approval ratings are in line with traditional banks, which give loans to 20pc of applicants.
A new report from equity crowdfunder VentureFounders has found that most tech founders in the UK intend to exit within 2-5 years, despite recognising the risks of exiting too early. Fully 56 per cent of the entrepreneurs surveyed by VentureFounders expect to sell their business for £50m or less.
Ppdai, which operates an online platform connecting small investors and lenders, priced its initial public offering at $13 a share, well below the $16-$19 target. At that level, the company raised about $220 million, compared with its maximum goal of $350 million.
The shares then opened higher and rose as much as 10% in early trading in New York. Ppdai finished its first day trading at $13.06.
WeLab, an online lender in Hong Kong and the Chinese mainland, said it has raised $220 million in new funds from investors including Alibaba Hong Kong Entrepreneurs Fund and International Finance Corp.
Part of the new funds will be used to expand outside Greater China, WeLab said in a statement.
PPDAI priced its offering a week after news that Chinese regulators are considering a crackdown on the country’s cash microlenders in response to claims that some have charged excessive interest rates. The initial public offering of Qudian helped trigger the regulator’s review of the sector, people with knowledge of the matter said earlier this month.
PPDAI priced its sale of 17 million American depositary shares at $13 apiece, after marketing them at $16 to $19 each. The stock started trading Friday in the U.S.
While Chinese law already limits lending rates to 36 percent annually, regulators are considering drafting rules to specify the cap applies to the cash microlending sector, people with knowledge of the matter said this month. In its IPO prospectus, PPDAI said total borrowing costs for some of its loan products exceed that level after adding in transaction fees.
ZhongAn shares have risen 28 percent from their IPO price, outpacing the 5.3 percent gain in the Hang Seng Index over the same period.
CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated in the annual Asia-Pacific Economic Cooperation (“APEC”) CEO Summit event, in Da Nang, Vietnam on November 9.
“Over the next decade, tens of millions of SMEs in China will focus more on the quality of their growth, technological innovation, and sustainable development. We at CreditEase has been committed to empowering these SMEs as well as the real economy with technology breakthroughs and new business models ever since the company’s establishment,” said Mr Tang. “Going forward, we will continue to leverage our FinTech strengths in inclusive finance and wealth management to enhance SMEs’ overall financial capabilities and create more value for society.”
If you are looking to take out a loan from online lending platform WeLend to buy the iPhone X, be warned – should you use only upper-case letters when filling out the address field in your application, you could be charged a higher interest rate.
“We actually match how people fill out addresses with the probability of [them] declaring bankruptcy after a certain number of years,” said Simon Loong, the founder and chief executive of WeLab, the Hong Kong company that operates WeLend.
“The probability of [an applicant] declaring bankruptcy is highest when they fill in their address in capital letters,” he said.
n Hong Kong, the company relies primarily on a user’s credit history and interaction data. In mainland China, where less than 30 per cent of the population has a credit score, WeLab relies much more on unstructured, mobile data.
Yet another observation WeLab has made is that delinquency rates tend to correlate with loan application times – if a user applies for a loan between 1am and 6am, they are more likely to default on a payment than users who apply in the day, Loong said.
On November 8th, Chinese leading food delivery platform Ele.me quietly marched into the micro lending market. The loans ranges from RMB 500 yuan to RMB 2000 yuan with terms of either 7 days or 14 days. This is a collaborative product with Lixiadai.com which means borrowers apply this loan on Ele.me will be directly led to Lixiadai.com.
Nearly two months ago, the stock app jointly set up by JD Finance and four other brokerages stopped operating. According to JD.com, the suspension of the operation is due to a system upgrade. Yet, as reported by the media, the app was actually halted for procedural noncompliance in account opening and trading.
Ho fills Cheddar in on why there is such a massive opportunity in peer-to-peer lending in China. He notes that companies capitalized on the governments unwillingness to hand out small loans to individuals.
Sweden’s Klarna made its mark with a pay-later model for e-commerce shopping that’s spread to other European countries and the U.S., and now it’s piloting the same concept for in-store purchases.
In partnership with the Danish payments technology firm Nets, Klarna has developed a feature that appears on payment terminals at certain stores giving consumers the option to pay for a purchase later—fully or in part—before completing the transaction, Klarna said in a recent blog post.
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Kony, Inc., the leading enterprise mobility and digital applications company, today announced it is expanding its global partner ecosystem with financial technology solutions featured on the Kony Digital Banking Marketplace.
FinTech is disrupting the traditional financial services, such as: money transfers, loans, mobile payments, asset management and fundraising. According to Statista, Transaction Value is expected to show an annual growth rate (CAGR 2017-2021. of 20.5 percent resulting in the total amount of U.S.$6.9 billion in 2021.
1. Multi-currency digital wallets
A recent example is CashDash, a mobile app that allows you to buy, collect and return foreign currency.
2. Payments security advances using biometrics
4. Robo-advisors and automated wealth management services.
In an effort to offer rideshare workers faster access to their wages, First Data recently launched a new solution that delivers the money directly onto a debit card.
A collaboration between Ingo Money, Visa and digital lending platform OnDeck will allow SMBs that request loans through OnDeck to have the funds disbursed directly to their business debit cards in real time.
A group of 13 Australian banks announced a joint effort to allow customers to get real-time payments beginning on January 26, the nation’s Australia Day holiday. With the service in place, bank customers can exchange money between contacts in a matter of seconds using identifiers such as mobile numbers and email addresses, instead of sensitive data like bank accounts.
YES Bank is all set to launch a first-of-its-kind fintech survey. Called India Fintech Opportunities Review, the study will cover India and a few major fintech markets in the world.
A research initiative of YES FINTECH, which is the bank’s innovation programme to accelerate fintech start-ups, the survey will cover more than 1,000 firms globally, said Amit Shah, Head-Strategy, Yes Bank.
Payoneer, a global cross border B2B digital payments provider, has decided to expand the scope of its offering in the Indian market to e-commerce related export businesses, it’s visiting CEO Scott Galit has said.
Galit said that India is the fastest growing digital market in the world and that more people are going digital in India than anywhere in the world.
India will move faster than China for a while, but on much smaller scale. The B2C e-commerce exports in India is around $ 500 million a year, while in China it is $ 400 billion, according to industry insiders.
My opinion is that both views are problematic in its own way, branch banking is still quite a distance away from being dead largely fueled by face to face KYC requirements and the need to serve different segments of the customer.
However, there’s one reality that bankers cannot escape from, banks are increasingly under pressure to close their branches.
The Digitised Branch
The whole idea of digital banking is the ability to perform banking on-the-go, to go to the bank to perform banking-on-the-go (what a tongue twister) seems to defeat the point entirely.
This approach enables bankers to still serve the segment of their customers prefer to conduct their banking activities through the branch or customers who for whatever reason need to visit branch all while still keeping the costs at bay.
Among the fresh fintech funds that have come into this space is GTR Ventures (GTRV), the venture capital arm of trade finance intelligence firm Global Trade Review. Operating in both Singapore and London, it is the world’s first investment platform targeted specifically at fintechs operating in the global trade ecosystem.
Kelvin Tan, co-founder and chief investment officer, told The Business Times that the fund screens fintechs that can help to close the annual US$1.5 trillion trade finance gap, particularly for SMEs.
China Construction Bank’s name may not be a household one in the Middle East, but the stats speak for themselves in evoking the bank’s vast resources and influence within China, and across the world. With 363,000 employees on its books, CCB is consistently ranked in the top 30 of the Global Fortune 500 and currently has over $3 trillion worth of assets. In 2015, it was the second largest bank in the world by market capitalisation, and the sixth largest company in the world by revenue.
Aside its numerous products that are void of the usual financial bureaucracy and also offer easy access capital to SMEs and individuals, KiaKia, a licensed online peer to peer and direct lending platform, has introduced ‘Mr. K’, an artificial intelligence (AI) and machine learning powered alternative credit scoring, customer service, Direct and P2P lending virtual agent.
Speaking further on the new product, Abiola said 80 percent of KiaKia high scoring borrowers access the same loans at between 7.5 percent and 15 percent as against the 30 percent of its competitors, as well as, connecting credible borrowers with lenders offering loans as low as 5.5 percent interest rate for longer tenured loans.
News Comments Today’s main news: Prosper closes on $50M funding round at $550M valuation. SmartBiz Loans hits $500M in SBA loans. Labour proposes debt cap that would force credit card companies to write off billions. European Central Bank considering requiring fintechs to hold more capital. RateSetter raises $10.5M. FinEX Asia’s private equity fund manager invests $50M in Prosper. Today’s main […]
Prosper closes $50M funding rounding at $550M valuation. AT: “Everyone is talking about Prosper’s 70% reduced valuation, but that may not be as negative as it seems. Lend Academy compares this with Lending Club’s decline in valuation in 2015–68%. There were some speed bumps for the industry last year, and the recent SoFi scandal will undoubtedly mar the industry this year. We’re due for market corrections, but keeping heads cool will lead to more increases down the road. Ride the waves.”
Earlier this week Prosper closed on a Series G transaction where they raised $50 million from an investment fund co-managed by FinEx Asia and LPG Capital based in Hong Kong. While Prosper would not confirm their new valuation sources said the post money valuation was $550 million. This represents a 70.5% drop in value from their high in 2015. So the rumors from last month are true.
On April 2, 2015 Lending Club was trading at $19.26 a share. Yesterday the shares closed at $6.10 which is a 68% decline in valuation. This is pretty much in line with the decrease in valuation at Prosper.
A spokesperson for Prosper told me that the money will not be used for operations but rather for new projects. Prosper is now cash flow positive with liquid assets of around $42 million as of Q2 2017. There was no dire need to get this funding round done but it will be helpful for them as they look to grow in a sustainable way.
FT Partners Advises Prosper on its $ 50,000,000 Financing Round (FT Partners Email), Rated: AAA
FT Partners is pleased to announce our role as sole strategic and financial advisor to leading marketplace lender Source: FT Partners
Download and read the full transaction announcement here.
After pocketing $50 million in a huge down round and another deal that could give an investor group a 30 percent stake in the marketplace lender, there’s really only one question for the CEO: Are you giving away the store?
SmartBiz Loans says it ranked as the leading facilitator of traditional SBA 7(a) loans under $350,000 for the 2016 fiscal year. This means SmartBiz surpassed Wells Fargo and other major banks in relation to SBA lending.
Small business loans are helpful for business owners who have no other financial options. SmartBiz Loans has announced that it surpassed $500 million in funded Small Business Administration loans. A fifth bank has joined its software platform.
According to the Buffalo News, M&T Bank leads a federal small business lending program in the Buffalo-Rochester region. The program’s overall totals have decreased from a year ago. The Small Business Administration reported 806 of the SBA 7(a) loans were originated through August. That’s down 21 percent from the previous period a year ago. Its amount of dollars were down 7 percent from last year, down to $132 million.
M&T Bank used to lead the way until August. Its number of loans dropped down to 41 percent. Its total dollars declined 11 percent to $25 million. It’s still well ahead of Wells Fargo. However, Biz2Credit, Fundera, and others have been catching up.
Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, has forged a partnership with automated lending technology provider Roostify. The company announced the news Tuesday afternoon from the stage of TechCrunch’s Startup Battlefield, part of the TechCrunch Disrupt SF conference held in San Francisco this week. Matic was one of just six elite startups chosen to advance to the final round of the competition.
“We are interested in how companies like Y Combinator can use the blockchain to democratize access to investing,” said Sam Altman, who leads the accelerator, onstage at Disrupt yesterday. “We should try to figure that out.”
Our sources tell us YC is actually a little further along than that. Like a growing number of venture groups that are jumping into the digital currency world, the group is actively sussing out how it might use cryptocurrency to expand the investment pool.
A survey from online marketplace LendEDU found that 46 per cent of people between the ages of 18 and 34 who are saving for retirement use a financial adviser. In comparison, only 24 per cent of the 500 surveyed have used a robo-advice platform.
Around 75 per cent of respondents said they have never used an automated wealth management service, but 62 per cent of those said it was because they had never heard of robo-advice before.
Even so, millennials do not seem to trust automated wealth platforms. Of those surveyed, 51 per cent think a robo-adviser is more likely to make a mistake while managing money, while only 48 per cent think a traditional adviser is more likely to make an error.
More than 46% of respondents in a survey of 502 millennial investors saving for retirement said they had sought advice from a human advisor, according to LendEDU, a student loan refinancing company. That is almost double the 24.3% who said they had used a robo-advisor either in addition to a human advisor or exclusively, according to the survey, which was released September 19.
Angel Island Capital (“AIC”), a San Francisco-based alternative investment advisor and credit manager, today announced the appointment of Dev Gopalan as Chief Executive Officer. A seasoned financial services executive, Mr. Gopalan joins Angel Island Capital from leading global investment firm Kohlberg Kravis Roberts (“KKR”), where he served as Head of US Private Credit and was a member of the Global Private Credit Investment Committee and KKR Credit Portfolio Management Committee.
A rapidly growing peer-to-peer lender has exposed investors to a bankrupt for a second time, while a quarter of its loan book is considered to be in default, raising fresh concerns about regulation in the booming new finance market.
Sources close to Lendy Finance, which earlier this year became the title sponsor to the sailing regatta Cowes Week, spoke to The Sunday Telegraph after becoming concerned that the level of defaults revealed an ongoing weakness in underwriting checks, which is putting investors at risk to losses. The FCA is investigating how peer-to-peer lenders disclose default rates as part of a delayed consultation into the burgeoning industry.
A study of Lendy’s loan book reveals that almost 25pc of loans, worth £47.2m, are outside original terms, meaning repayments can be one day to 434 days overdue.
However, Lendy says that just 14.5pc of its loan book is “currently in default as defined by our agreements with lenders, and in line with the wider bridging and development finance market”.
What was bad, was that it became clear to me, that the interest level in combination with the non-performing loans would make it very unlikely for Bondmason to reach the projected return – at least for my portfolio. Especially with the Invoice Discounting loans there were issues.
In April 2017 Bondmason announced it would require a larger minimum investment amount of 5K (previously 1K) and raise fees for small portfolios to 1.5% (previously 1%). Dang. I was in no way interested to deposit more money. So my portfolio did not even get to celebrate 1st anniversary. In July I gave them notice to liquidate my portfolio/account. Since then I withdrew 1,013.94 GBP – only slightly more than I deposited. My account still exists as there is 20 GBP stuck in two property loans in default and also 1.41 GBP in cash.
According to the report, Starling plans to use the money to expand into other European markets, with the first of these likely to be Ireland, where it recently gained a passport — which will allow it to access EU markets after Brexit.
Goldman Sachs already has a mass-market offering in the US, after launching its online lender Marcus 18 months ago. Since its inception, Marcus has supervised over $1bn worth of loans to businesses.
Goldman Sachs will start taking deposits in the UK, but in the long run, the bank has plans to lend UK customers money through Marcus like in the US.
NatWest recently announced its plans to launch an online lender Esme Loans, allowing SMEs to quickly take unsecured loans of up to £150,000. Online lending is likely to become more crowded as Santander has also announced plans to incorporate digital banking in its services.
Conveyancing – the legal process of transferring ownership of land and property from one party to another – has changed considerably over the past 10 years.
Technology has so far failed to make inroads to improve the process – and no matter how slick your online lender or mortgage broker tries to be, everyone’s held to ransom by the law.
What is When you Move ?
Simon: Frustrations we’ve seen our clients navigate, in addition to our personal experiences, triggered something of an obsession to develop a tech solution for an industry deep-rooted in some of the most archaic practices still in use in modern-day business.
When You Move is an app that allows home buyers and sellers to see easily in real time where everyone is up to in the process – be that you, the lawyer, the mortgage broker, the valuer or the lender.
The survey found 65 per cent of 3,482 UK businesses have adopted at least one fintech solution, with 19 per cent making use of four services. These fintech products are helping the firms to save on average over £5,500 a year.
MarketInvoice estimates that 65 percent of 1.3m UK businesses are therefore making this average saving, meaning a total of £4.6bn is being saved thanks to fintech.
Adam Barrett, the head of institutional sales at Lloyd Banking Group has joined the exodus from banking to fintech. After more than 30 years in investment banking, at UBS, Goldman Sachs and Barclays, he’s just gone to peer to peer lending platform Invest & Fund.
Former Ryanair deputy chief executive Michael Cawley has been appointed chairman of peer-to-peer lending platform Linked Finance, which hooks up companies requiring capital with individuals and institutions looking to lend.
As of this month, it says it has 16,000 registered lenders on the site. Businesses to have availed of loans through the platform include Viking Splash Tours, the Irish Fairy Door Company and tech company Big Red Cloud.
Linked Finance has set a target to facilitate lending of up to €250 million in coming years. It says its lending was up by more than 240 per cent in the first half of this year. SMEs can borrow up to €250,000 on its platform.
By November 2016, we were engaged in a strategic pivot, actively shifting our focus from B2C to B2B, so we could offer our single-loan securitisation solution to major players on Europe’s lending stage.
The good news is that investors also stand to benefit from the opportunities inherent in CrossLend’s single-loan backed notes, and here’s how:
On September 21, 2017, blockchain software company ConsenSys announced the launch of a peer-to-peer (P2P) trading company, CarbonX, which will employ the Ethereum blockchain to tokenize carbon credits.
According to their numbers there are 214 Unicorns in the world. There are 24 countries with Unicorns and the US leads the way with 52% and China follows in second place with 23%.
E-commerce is number one and Internet Software & Services take second place. Fintech Unicorns are in 3rd place.
Fintech names like SoFi, Stripe, Credit Karma, Prosper, Kabbage, Avant, are on the list. Outside the US, Fintech names include Lu.com, ZhongAn, Saxo Bank, One 97 Communications, Klarna, Funding Circle, Transferwise are there.
Australian consumers will no longer face charges when using another bank’s cash point after the country’s four major banks dropped ATM withdrawal fees for domestic users amid greater regulatory scrutiny for the industry.
Former Commonwealth Bank chief executive David Murray says there remains a strong case for bank involvement in wealth management, despite the recent trend of lenders offloading life insurance and funds management assets.
CBA last week became the latest bank to retreat from “manufacturing” wealth products, selling its life insurance arm for $3.8 billion and saying it may spin off the investment business of Colonial First State in an initial public offering.
Woolworths customers will be able to use their iPhones to collect and redeem Woolworths Rewards points when shopping at the supermarket or its partners from next month. Find out how much you can collect and redeem here.
The Reserve Bank of India’s recent move to regulate peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) has created a grey area of sorts, spelling trouble for thousands of direct selling agents (DSA) or direct marketing agents (DMAs).
The Finance Industry Development Council (FIDC) says it is “very much possible” that DSAs/DMAs who have been providing loan facilitation (offline) services to retail and corporate borrowers, from banks and NBFCs (with whom they have signed a written contract) for the past many years, may also fall under the ambit of RBI’s P2P regulatory framework as NBFCs.
Since it was floated in January 2016, the government’s Rs 10,000-crore Fund-of-Funds for start-ups (FFS), launched in line with the Start-up India Action Plan of the Government, has made slow progress with only about Rs 70 crore having been disbursed to start-ups until the beginning of this month.
The 17 funds include Mumbai-based early-stage investor Kae Capital, which raised its second $30-million fund in February last year and is reported to have got a commitment of Rs 45 crore from the FFS. Kae Capital has investments in about 16 start-ups, including Truebil, a used-car marketplace owned by Paix Technology; peer-to-peer business loan marketplace startup Loanzen; second-hand products marketplace ListUp promoted by Gijutsu Solutions and shopping portal Fynd run by Shopsense Retail Technologies.
FinEX Asia is pleased to announce that its private equity fund manager closed an investment of US$50 million in Prosper Marketplace, a U.S. online marketplace lending platform for consumer loans.
“FinEX Asia is excited to complete the Series G financing into Prosper, a leader in marketplace lending in the U.S.,” said Maggie Ng, CEO of FinEX Asia. “Our team’s expertise is in fintech and consumer lending. Our investment strategy starts with the U.S. because of our strong network with online marketplace lenders. In parallel we are considering investment opportunities in other verticals globally.”
Founded earlier this year by Maggie Ng, a former Consumer Lending Head and Chief Risk Officer at Citibank, FinEX Asia aims to help Asian investors look for quality investment opportunities, both in fixed income and equity investments, by using its fintech platform and know-how. The investment made into Prosper is a good illustration of how such opportunities are welcomed by Asian investors and that FinEX Asia’s investment strategies are well recognized by the capital it represents.
Singapore-based fin-tech start-up FinMomenta, which entered the Indian online P2P (peer to peer) lending market early this year with its product called Tachyloans, will soon be lending to salaried professionals working in small and mid-size firms.
Called Corporate HR loans, FinMomenta aims to make lending easier for the working class. The loan size ranges from ₹50,000 to ₹5 lakh.
MicroMoney, a global fintech blockchain company and lending services provider, announces a private presale for its token-generating event for the early birds among funds and big contributors. This presale started on September 15th, 2017.
MicroMoney is a fast-growing company founded in 2015 with the offices in five Asian countries – Thailand, Myanmar, Indonesia, Sri Lanka, and Cambodia. The company plans to expand its presence to 5 more countries by 2018. MicroMoney was established as a company focused on micro-financing in the money lending industry, providing customers with online loans without any collateral requirements using machine learning algorithms.
There are still more than 2 billion of the unbanked in the world, especially in the emerging market.
CROWDCREDIT, a Japanese cross-border marketplace lending company which promises to fill in lending gaps by providing funds for lending and financial institutions including banks, is currently studying the market and possibility of business expansion in the Philippines.
In other countries, such as the United Kingdom, for example, banks receive loan applications more than their existing deposit or more than the loans that they can cater to. The case is opposite with Japan’s banks with more excess deposits than loans. With this, the basic concept of Crowdcredit is to provide this excess fund for loan to other countries that would need them.
Crowdcredit has a vast network of global partners which includes Mfx, Kobranzas, Fellow Finance, Savy, Cream Finance, Ovamba, Bondora, Mogo, Mintos, and Prestiamoci.
New LendingCalc White Paper Examines Opportunities in SE Asian Marketplace Lending (LendingCalc Email), Rated: A
Author Terry Tse Provides Practical Advice About How to Select Best P2P Platforms
LendingCalc, Inc., a direct investment platform providing global access to digital specialty finance for institutional investors, has released a new white paper examining the investment opportunities within the growing marketplace lending sector in Asia. The paper was written by newly appointed strategic adviser, Terry Tse, who served as Chief Risk Officer at the China-based P2P giant, Dianrong, and is currently Senior VP of International Development at the largest B2B payment company in China, Lian Lian Pay.
In the paper, Tse contrasts U.S. and Asian regulations and explains how the regulatory regimes in Asia impact the lending opportunities abroad. He also describes the emerging P2P business environment in Asia, which appears to be extremely well positioned for growth. In addition, Tse explains the key structural incentives Asian P2P lenders have implemented to discourage borrowers from defaulting.
The paper concludes with a number of practical suggestions to help investors navigate the socalled “Wild East” that is marketplace loan investing in Asia.
Shift expanding the reach of tech-enabled lenders As the U.S. and global economies continue to expand and recover from the Great Recession of 2007-2009, the consumer, a key driver of the U.S. economy, is spending again and tapping into different types of credit. The rapid growth of online lenders, expansion of digitally enabled lending technologies […]
Shift expanding the reach of tech-enabled lenders
As the U.S. and global economies continue to expand and recover from the Great Recession of 2007-2009, the consumer, a key driver of the U.S. economy, is spending again and tapping into different types of credit. The rapid growth of online lenders, expansion of digitally enabled lending technologies (e.g. point of sale solutions at the home or online), and growth in lending to subprime borrowers are all catalysts for the rise in demand.
Furthermore, increases in M&A activity in the consumer lending space demonstrate that the consumer is back and ready to borrow. Just this year, Elevate Credit completed their long-anticipated IPO, ECN paid $304 million to acquire Service Finance, and Prosper announced a $5 billion loan program.
Total consumer borrowing, which includes both loans and revolving credit accounts, rose by $18.4 billion in May 2017. This rise in borrowing is the highest since November 2016 when it increased by $25.1 billion. Additionally, total household debt reached a record $12.7 trillion in March 2017 — a $50 billion increase over its peak just prior to the height of the market in 2008.
The increase in demand for consumer credit in the U.S. is the result of three factors influencing the economy. We see these factors as key to expansion and further growth in the consumer lending segment:
1) Improved credit scores
Equifax, Experian, and TransUnion implemented a new credit rating process on July 1, 2017, which excluded certain civil debts and tax liens. As a result, FICO estimates that approximately 7 percent of consumers now have credit scores up to 20 points higher than they did previously. Many of those consumers who did not have the necessary credit score to access capital (loans, credit cards) now qualify due to higher FICO scores. This development, coupled with the general improvement of credit scores as bankruptcies roll off credit reports, will enable higher levels of consumer borrowing.
At the same time, many consumers who suffered through bankruptcies and foreclosures during the real estate collapse, which peaked in early 2010, are recovering from the blow to their credit. According to a recent report released by Barclays PLC, more than six million Americans will see personal bankruptcies disappear from their credit reports within the next five years. These consumers will soon have greater purchasing power through access to credit.
And finally, credit score education programs are proving effective at getting consumers to change behaviors that negatively impact their credit scores. FICO reports that its consumer education initiative, Open Access, now provides over 200 million consumers with free access to their credit scores and actions they can take to improve the score.
These factors alone will accelerate growth for prime consumer finance names such as Synchrony Financial and Ally Financial, but also for other companies including Elevate Credit, Prosper, and LendingClub.
2) Confidence in the economy is on the rise.
In March 2017, U.S. consumer confidence in the economy hit a 16-year high and has remained at elevated levels. This leap followed the election of President Donald Trump, whose pro-business and pro-deregulation agendas have experts predicting significant economic gains for the housing, job, and stock markets in the near future.
Furthermore, the Federal Reserve has raised interest rates only three times since the economic crisis, but now has plans to raise rates at least two — if not three — more times this year. The rise in interest rates is a key indicator of a successful economic recovery.
When consumers are confident that the economy is on an upswing, they often make large purchasing decisions again — buying homes, cars, and other substantial assets. Consequently, their credit needs increase, which contributes to the rise in demand for consumer loans. Consumers may also increase spending on smaller luxury items that require short-term credit, such as vacations and holiday gifts. We’re in the middle of vacation season now and the holiday shopping season is just around the corner. We anticipate increasing demand for consumer credit through the remainder of the year.
Companies that stand to benefit from the increase in consumer confidence and its subsequent positive effect on consumers’ demand for credit run the gamut from traditional banks; disruptive players in the online lending space such as LendingTree, Quicken Loans, and SoFi; and smaller “Main Street” businesses that are so vital to local economies.
3) Unemployment rate is declining.
The upswing in the economy has brought with it a welcome dip in the unemployment rate. In May 2017, unemployment hit a 16-year low of 4.3 percent. In the same month, disposable income reached an all-time high of $14.49 billion. Both of these numbers are highly influential on activity in the consumer lending space. After all, when more consumers are employed and potentially earning disposable income, their spending increases along with their demand for credit.
Also interesting from a lending standpoint is the creation of what experts are calling the New Middle Class, which has been caused in part by the gradual reentry of Americans into the workplace post-recession. This term applies to roughly 160 million consumers in the U.S. population, and describes the large segment of the population who were negatively affected by the financial crisis and now have near-prime or subprime credit as a result and will continue to have less-than-prime credit despite the changes in FICO score qualifications.
The New Middle Class have been largely underserved since the recession, but are gaining access to the capital they require as non-banks, online lenders, and fintech-powered alternative loan providers work to meet consumer demands. As this segment of the population’s credit needs increase, non-banks’ influence in the lending space is becoming increasingly significant. As of 2016, six non-banks — including Quicken Loans, loanDepot, and PHH Mortgage — were included in the top 10 largest lenders by volume; in 2011, non-banks made up just two of the 10.
Lenders Must Quickly Ready Themselves to Serve More Consumers
As demand for consumer credit increases, providing a highly efficient means of accessing that credit is important. Evidence indicates that the rise in demand for consumer loans and credit cards has created a unique opportunity for online lenders and other fintech-powered loan providers to meet the needs of this market — and that credit providers that leverage fintech to facilitate the application and approval processes can successfully compete with traditional lenders who still use time-consuming, antiquated processes. The door is open and the time is right for innovative solutions in the consumer lending space.
Alex Koles, Founder, CEO, Managing Director, Evolve Capital Partners Alexander Koles is a Managing Director and Founder of Evolve Capital Partners, based in New York City. He has over 14 years of investment banking and advisory experience working with regional and multinational corporations on merger and acquisition strategies and execution, restructurings, and complex financings.
Prior to founding Evolve Capital Partners, he worked at a number of leading investment banks in leadership roles focused on restructuring deals. His restructuring career began at BDO where he provided restructuring advisory and transaction services for distressed companies and their stakeholders, notably in the sustainability space.
He started his career at Merrill Lynch as an investment banking analyst in the corporate finance group.
Koles is qualified as a FINRA Investment Banking Representative (Series 79), Private Securities Offering Representative (Series 82) and Uniform Securities Agent (Series 63). He received a Bachelor of Arts in Economics from Macalester College in St. Paul, Minnesota.
News Comments Today’s main news: SoFi wants to steal banks’ most coveted customers. Biggest online lenders don’t always check key borrower data. Fed issues FOMC statement. RateSetter puts aside George Banco partnership. Alibaba’s first fintech investment in Hong Kong. Investree enters Vietnam. Today’s main analysis: How fintech startups are transforming banking in Indonesia (A MUST-READ). Today’s thought-provoking articles: Real estate […]
SoFi on the way to stealing banks’ most coveted customers. AT: “There’s really nothing new about this. SoFi hasn’t made it a big secret that they want to take on banks. The audacity of CEO Mike Cagney forcing banks to change their business model is still worth noting even after being stated thousands of times. The interesting thing here is that Mad Money host Jim Cramer says if BofA or Citi had the Internet when they started, they’d be doing it like SoFi is doing it now. That’s a serious poke.”
SoFi is drawing flames from activists. AT: “Any disruptor is going to spark some heat. The fact that this is happening in the financial sector–people get antsy when their money is at stake–is the, ahem, cool part. Banks will change, but they may not like it. Pass the queso, please.”
Don’t look now, but the ‘in your face’ fintech firm, SoFi, is moving from offering just student and personal loans to providing wealth management and opening checking accounts. And their target market is one of the most coveted by banking … the educated, affluent, digital-first Millennial.
In an interview with Mike Cagney, “Mad Money” host Jim Cramer said, “If Bank of America or Citi had the Internet when they were forming, this (the SoFi model) is what they would have started.” Cagney responded saying, “Absolutely. I think what’s going to happen is the banks are going to move toward our model over time. And we certainly don’t have the hubris to expect that we’re going to change all of banking, but we are going to drag them into a different kind of service model. One that’s a lot more aligned to the customer.”
The company is also developing financial planning services, which it expects to launch this summer. These include joint financial planning for couples and first-time home buying.
“If you look at SoFi, we run over 65 percent contribution margin across our three lending businesses. We’re the most profitable fintech company in the marketplace. And there’s huge opportunity to expand from that, and it comes down to cost of acquisition. If you build really strong brand, really strong evangelism, really strong what I call ‘cross-buy,’ you can drop that cost of acquisition significantly and that drives margins,” Cagney said.
In its early days, Social Finance made loans only to borrowers who had attended name-brand universities. Graduates of elite colleges were paying relatively high interest rates on federal student loans even though they represented a low risk, and the Silicon Valley startup saw in that mispricing a chance to make money.
SoFi CEO Mike Cagney noted in a 2013 interview that traditional banks were aware of this opportunity but were unwilling to pursue it.
Back in 2012, I borrowed money to purchase a house I planned to fix-and-flip. I contributed 20% of the purchase price as a down payment. For the privilege of borrowing the other 80%, I paid a local “hard money lender” a 3.5% origination fee plus interest only payments at a 13% APR.
I started doing some more research into the market that was originating a majority of these types of fix-and-flip loans, which is called “hard money lending”. There were a few things that became quickly apparent to me.
The market was highly-fragmented. There wasn’t a single lender that controlled any significant amount of the national market.
The use of technology was virtually non-existent. The ability to apply online for a hard money loan didn’t exist. The lender I borrowed from didn’t even have a website.
Capital formation was very analog. This put them in a perpetual cycle of originating new loans to keep their funds working while also raising additional capital to meet the demands of their borrower base.
Hard Money Lenders, generally speaking, had a very negative reputation among the borrower community. This was in part due to the high interest rates. However, upon further digging, the real cause of dissatisfaction among borrowers was the lack of service and transparency.
Much like the early days of peer-to-peer lending, the new online real estate originators won business by providing a better borrower experience. Online applications with instant feedback on pricing and terms provided better transparency to borrowers. Quick funding decisions that are augmented by large data sets, rather than relying 100% on appraisals, allows these new lenders to provide more certainty around closing. Online dashboards where borrowers can order construction draws and make interest payments make the loan servicing experience easier for the borrower. Regardless of the financial innovation that is to follow, these technology platforms have improved the level of service provided to borrowers.
That said, the five largest online originators still only write between 5-8% of the total loan volume in the fix-and-flip market. We are still in the very early days of what is likely to be a massive consolidation of a previously fragmented market.
Prosper Marketplace Inc. doesn’t verify key information like income and employment for around a quarter of the loans it makes, according to documents tied to bonds that Prosper sold last month. LendingClub Corp. said it only verified income about a third of the time for one of the most popular loans it made in 2016, according to company data seen by Bloomberg. If either lender finds mistakes in a borrower’s application, such as overstated income, they may still go ahead with the loan, according to disclosures linked to bond sales from the companies, including documents for securities that LendingClub is offering now.
Online loans usually don’t have collateral, so when they go bad, investors can lose out. Traditional consumer finance companies and banks tend to check incomes and employment on closer to 100 percent of new customers before making these kinds of loans, according to industry executives. Online lending competitor Social Finance Inc. checks income on 100 percent of its borrowers, according to a report from Kroll Bond Rating Agency.
Investors in LendingClub loans earn average annual returns of around 4.3 percent, about three percentage points higher than the yield for two-year U.S. Treasuries. Those kinds of returns helped nonbank startups arrange more than $36 billion of loans in 2015, mainly for consumers, according to a report from KPMG.
LendingClub verified income on 35.6 percent of one of its most popular types of loans in 2016, according to company data obtained by Bloomberg. That figure has bounced around over time: it was 16 percent in 2008, and 47 percent in 2013.
LendingClub has had to write off a growing percentage of its loans — 8.5 percent, annualized, in the first three months, compared with 5 percent the same quarter a year ago.
Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.
In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent.
The SEC says many financial advice firms are falling short when it comes to cybersecurity, with investment advice firms being less prepared than broker-dealers, Reuters writes.
As part of its second stage of cybersecurity exams initiated in 2014, the SEC analyzed 75 firms and found that 26% of the companies don’t conduct risk assessments on a continuous basis and 57% of the firms fail to carry out vulnerability and penetration tests with simulated attacks on critical systems, according to the newswire.
The SEC has concluded that investment advice firms have had more issues with cybersecurity than broker-dealers, according to the newswire. On the other hand, the SEC learned that almost all investment advisors practiced regular system maintenance as part of their cybersecurity process, namely by consistently installing security patches, Reuters writes.
Only 4% of the companies examined were missing essential patches or updates, according to the newswire.
On June 2, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to 29,806 unsecured consumer loans (the “Statistical Loan File”). At your instruction, we randomly selected 125 unsecured consumer loans (the “Initial Sample Loans”) from the Initial Statistical Loan File using the following criteria provided to us by the Company:
3 unsecured consumer loans with a seller identified as “Seller #1” on the Initial Statistical Loan File;
21 unsecured consumer loans with a seller identified as “Seller #2” on the Initial Statistical Loan File;
1 unsecured consumer loan with a seller identified “Seller #3” on the Initial Statistical Loan File;
23 unsecured consumer loans with a seller identified as “Seller #4” on the Initial Statistical Loan File;
15 unsecured consumer loans with a seller identified as “Seller #5” on the Initial Statistical Loan File;
62 unsecured consumer loans with a seller identified as “Seller #6” on the Initial Statistical Loan File;
In addition, on June 13, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to an additional 4,203 unsecured consumer loans (the “Subsequent Statistical Loan File”). At your instruction, we randomly selected 8 unsecured consumer loans from the Subsequent Statistical Loan File with an origination date (as set forth on the Subsequent Statistical Loan File) on or before March 31, 2015 (the “Subsequent Sample Loans”). The Initial Sample Loans and the Subsequent Sample Loans are collectively and hereinafter referred to as the “Sample Loans”
Ingo provides risk-management services to financial institutions, such as banks and payment networks. Investors include Baltimore-based Camden Partners, Philadelphia-based MissionOG, and Bethesda, Md-based CNF Investments.
Notice of Class Action Settlement (Google AdWords Email), Rated: A
In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD
U.S. District Court Northern District of California
A $22,500,000 class action settlement has been preliminarily approved by the U.S. District Court for the Northern District of California, in the case In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD. Your rights may be affected and you may be entitled to a portion of this settlement if you are an eligible Class Member.
Who Is Included in the Settlement?
You may be a Class Member if during the period of July 11, 2004 and March 31, 2008, you: 1) were a U.S. resident; 2) had a Google AdWords Account; and, 3) were charged for clicks on advertisements appearing on parked domains or error pages.
What Is This Case About?
This case alleges that Google failed to disclose to its AdWords customers that it placed ads on websites known as parked domains and error pages. The lawsuit alleges this conduct violates California laws against unfair competition and false advertising. Google denies these claims.
The Court will hold a Final Fairness Hearing on July 27, 2017 at 9:00 am PST at the following location: U.S. District Court for the Northern District of California, San Jose Courthouse, Courtroom 4 – 5th Floor, 280 South 1st Street, San Jose, CA 95113. At this hearing, the Court will consider whether: 1) the settlement is fair, reasonable, and adequate; 2) to approve the service awards to the class representatives; and 3) to approve the award of attorneys’ fees and expenses to the attorneys for the class.
Under newly confirmed Chairman Jay Clayton, the SEC is setting its sights on expanded protections for retail investors, planning a series of RIA sweep exams exploring areas like robo advisers and money market funds.
Slated to launch this year is an exam sweep looking at how firms are deploying robo advisers, or using automated services to augment the provision of investment advice.
Levine said that the sweep will likely run along the lines of the guidance on digital advice platforms that the SEC issued in February, when it affirmed that robo advisory services still have a fiduciary duty, and warned of potential issues around disclosure and client communications.
Also this year, the SEC is planning to launch a sweep looking at how firms that traffic in money market funds are incorporating the rules the SEC adopted to shore up that sector following the destabilizing run in 2008.
As part of a broader focus on retail investors saving for retirement, the commission is also planning to launch a sweep exam looking at how firms are adhering to the schedules laid out in the disclosures of target-date funds, and another probing the controls advisers have in place on fixed-income cross trading relating to retirement accounts.
Today, we’re excited to announce that the Chan Zuckerberg Initiative (CZI), has invested $5,000,000 to create a Landed down payment support fund that will make it easier for educators in the Redwood City, Ravenswood City, and Sequoia Union High School districts in California — districts which face some of the highest housing costs in the country — to buy homes.
Eligibility: Any district or public school employee within the boundaries of Sequoia Union High School District, Redwood City School District and Ravenswood City School District.
Support: Up to half of a down payment (max $120,000), for the purchase of a primary residence.
Terms: Participants share up to 25% of the appreciation (or loss) in the price of the home upon sale, or after 30 years, whichever is sooner. There are no monthly payments.
Other: Participants can choose to end their relationship with Landed at any time. Financial coaching support will also be made available to participants.
AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, has announced the launch of real-time inventory on the Fletcher Jones Drive (FJ Drive) smartphone app powered by AutoGravity. Car shoppers now have access to the largest selection of Mercedes-Benz inventory in the nation, a seamless auto financing application and Mercedes-Benz Financial Services offer presentment – all in the palm of their hand through the AutoGravity powered FJ Drive app for iOS and Android.
AutoGravity joined forces with the Fletcher Jones Auto Group to launch FJ Drive, the nation’s first and only mobile app that allows customers to secure financing for any new Mercedes-Benz right on their smartphone. Real time inventory extends the partnership by empowering users to shop for specific vehicles sitting on the dealership lot. Guests can choose any Mercedes-Benz model and browse all available cars for their store of choice. Easy to use filters, including model year, body type and color, make finding cars simple and intuitive. Guests apply for financing and review their lease or loan offer in the app before picking up their car at the Fletcher Jones showroom.
Centana is hoping to differentiate itself from other venture capital firms by pursuing “workhorses” — essentially, companies that will help incumbent companies improve on existing business models, Cukier said.
Wealth Migrate, an online real estate investment marketplace, announces the global opening of its #LikeAMillionaire luxury condo give-a-way. The competition, which is open to all new users who sign up on the WealthMigrate.com platform, is another example of how Wealth Migrate is putting quality real estate within reach of middle class investors throughout the globe, who typically do not have access to these types of deals.
The Zero-2-One Tower, standing 42 stories tall, is set to be the tallest building in Cape Town upon completion in 2020.
The FinTech and InsurTech company IATAI Enterprises (IATAI), which specializes in making mobile transactions, communications and other interactions quicker and easier across platforms, has joined forces with the payment solutions enabler BPP to develop Handy U, a universal and customizable payment, rewards and insurance solution for consumers, businesses and merchants.
Handy U is a reloadable Visa virtual/digital account that enables IATAI’s travel and insurance clients to instantly make and receive payments, access benefits and redeem rewards generated by their loyalty programs. Handy U is hosted on IATAI’s digital wallet, onepocket, which lets users combine several payment methods in a single transaction, both online and in-store.
This Financial Poise webinar series explores the purchase of ownership shares in private companies via crowdfunding websites.
Episodes in the series address
the modes of angel investing in a company during its early stages,
the opportunities and perils of crowdfunding real estate investments,
the money-raising entity’s perspective and
a close look at crowdfunding options under federal and state law.
The 3rd episode of the “Equity Crowfunding” series is available now on demand! “Investing in Real Estate through Equity Crowdfunding Websites” (Register Here) features Moderator Chris Cahill of Lowis & Gellen. Chris is joined by Jordan Fishfeld of CFX Markets, Marty Coyne of Connected Investors Inc. and Lynda Davey of Avalon Net Worth.
FinMason, a Boston-based fintech and investment analytics firm, announced on Thursday the launch of its new fintech accelerating program, FinSpring, which is described as an initiative that will provide free access to FinRiver, a set of flexible and lightning-fast investment analytics APIs.
Last month, RateSetter announced it was entering a partnership with George Banco and acquiring an equity stake in the personal loan provider company. Unfortunately, RateSetter revealed earlier this month that it has decided to pull out of the partnership after all.
“We have subsequently decided not to go ahead with this new arrangement with George Banco. After further examination of the infrastructure required to do this, we concluded there were better uses of our development resources which may be deployed more effectively to source other borrowers. Therefore, we will not facilitate lending directly to George Banco’s customers, and accordingly we have updated our Principles of Lending document which sets out our lending criteria. The existing wholesale loans to George Banco will continue to be repaid in accordance with the schedule of the existing loan contracts. The total of these existing loans currently stands at £31.5 million.”
To see the updated Principles of Lending document, click here.
The top ten buy-to-let postcodes in England and Wales are evenly split between locations that voted for the Conservatives or Labour.
Luton has been identified as the best buy-to-let investment location across England and Wales, with an average yield of 4.54% and rental price growth of 7.37%.
According to LendInvest, which analyses data from Zoopla and the Land Registry to compile its Buy-to-Let Index, Stevenage is the best performing buy-to-let postcode out of areas that voted Conservative last week.
The Hertfordshire town has recorded capital gains of 11.64% and rental price growth of 7.5% over the last quarter.
Luton is the top performing Labour-voting postcode.
Assure Hedge, a provider of foreign exchange technology to protect businesses from currency fluctuations, has received a boost from the UK Financial Conduct Authority under a programme aimed at drawing financial technology (fintech) under its regulatory oversight.
Aiming to fix cash flow issues for companies operating in Hong Kong, Andy Chan along with his partner Winston Wong, set out on a mission to craft Hong Kong’s first invoice trading platform, Qupital.
Since its inception less than a year ago, the company has started to gain attention from companies including Chinese e-commerce giant Alibaba.
In terms of generating revenue, Chan shares that when an invoice is purchased, Qupital would take between 25-75 basis points of the total invoice value. Moreover, the company would take 20% of net gains made by funders.
With fresh capital from high-profile backers, Chan has his sights on deepening his business in Hong Kong with an eye on expansion to other markets in 2018 such as Thailand and Vietnam.
Baidu Inc. is among China’s tech giants looking to get a leg up in the competitive financial-services market. Credit-rating companies aren’t so sure it’s a good idea.
Fitch recently placed Baidu on negative watch, citing “significantly higher” business risks as it moves into making unsecured consumer loans and selling uninsured investments known as wealth-management products, which Fitch said are “part of the shadow banking system in China.”
Moody’s decided last month to place Baidu’s bond ratings on review for a downgrade, citing concerns over the firm’s short history in the financial-services business.
Baidu’s financial services, which also include its mobile payment platform, now account for about 12% of its assets, or 25 billion yuan ($3.7 billion)—representing rapid growth for a firm that formed its financial-services group only about a year ago. That has significantly changed Baidu’s credit profile, said Moody’s vice president and senior credit officer Lina Choi.
HSBC has its own tech teams designing new platforms and products, and they are absolutely brilliant. But we need to be humble and recognise that we don’t have all the answers. We invest in and work with fintech start-ups where we think they can help.
Our partnership with Tradeshift is making it easier for business customers to manage their accounts and their relationships with suppliers online, saving time and cutting down paperwork.
Retail customers in the UK can now download an HSBC SmartSave app, developed in partnership with a start-up called Pariti. It helps them save money without even having to think about it.
We have invested in a start-up which is developing technology that can sift through large amounts of financial transactions to pinpoint suspicious patterns. This will help us tackle financial crime more effectively, and, ultimately, keep our customers safer.
ASX-listed fintech zipMoney has put the finishing touches on its A$260 million debt warehouse with big four bank NAB and could become one of the few all-Australian fintechs to make a profit.
The money raised will go to the “immediate refinance of $70 million of existing receivables”, ZipMoney told the ASX, resulting in lower interest rates across the board. It will also allow the company to increase volumes and hire more staff.
ZipMoney provides a ‘buy now, pay later’ service, offering shoppers loans between $1000 and $10,000 for up to eight months.
An ASIC investigation found that between January 2011 and November 2012 Mr Hutchison dishonestly:
banked cheques he received from his clients for advice fees directly into his personal bank account, when he knew he was obliged to remit or report them to RI Advice. Mr Hutchison then deducted additional fees from his clients’ investment platform or financial product for payment to RI Advice; and
banked cheques he received from his clients for advice fees directly into his personal bank account and failed to record the receipt of the cheques on RI Advice’s payment system.
Mr Hutchison misled or deceived his clients by failing to disclose to them that they had been double charged advice fees and failed to comply with the proper process for remitting and reporting the fees. He also misled or deceived RI Advice by failing to disclose that he had deposited the advice fees into his own account and did not comply with RI Advice’s relevant fees policies and procedures.
SMC Capital and EPC developer REPL group have come together to launch a Rs 1,000-crore real estate fund, SMC IM Capital. The fund has already got commitments from global investors based in the US and Middle East and will look at a first close by end of this month.
The fund will invest between Rs 50 crore and Rs 80 crore in the middle segment affordable housing projects in tier I and II cities.
In India, real estate is the second largest employer after agriculture, and is slated to grow at 30% over the next decade. The real estate sector comprises four sub sectors — housing, retail, hospitality, and commercial.
Indonesian peer-to-peer (P2P) lending startup Investree announced on Thursday that it is set to begin expansion to Vietnam in 2018, DailySocialreported.
The Jakarta-based startup said it is currently undergoing the process of setting up a joint venture with an undisclosed local financial institution.
Investree also announced that it is going to launch a sharia-based lending service in July; the startup is currently on the process of applying for certification from the National Sharia Board (DSN).
Gunadi cited strong demand from both borrowers and lenders to set up a lending practice based on the Islamic law, and by far three small businesses from Jakarta and Surabaya have agreed to join in the pilot project.
India, November 2016. PM Modi launched a demonetisation drive to eradicate black money, fostering a new wave of digitisation in India. Consequently, there was a tremendous rise in the adoption of e-wallets, launch of new fintech startups, and the average Indian became familiar with a new financial entity, bitcoin.
From local grocery shops to petrol pumps to movie theatres, digital wallets have captured each and every day-to-day business which requires payments. Not only this, digital wallets have even seen a massive adoption for payment chores like booking air tickets or buying movie tickets or paying bills (DTH, Water, Electricity).
Be it digital payments, online lending, or remote banking, Indonesia has seen a surge of startups that have developed products to solve the current needs of the population.
At the same time, the country remains a challenging market for fintech industry to grow with only 40% of adults in the country having access to banks. 49 Mn SMEs unit are still not bankable, because of low credit score and little or no financial history.
It is estimated that only 40% of Indonesia’s 250 Mn populationcurrently have access to services provided by banks.
Thirdly, due to Indonesia’s peculiar geography, its traditional banking system suffers. The number of bank branches, which is estimated at 10 banks (branches) per 1,000 square kilometersis far too low to serve Indonesia’s vast geography.
The major areas that startups are capturing and disrupting are payments, insurance, stock markets, investments, PoS, comparison, and online lending. Major startups in the payments sector include Mandiri, T-Cash, PayPro, IPayMu, Xenditi among others.
Digital payments have become so big in the archipelago that the total transaction value in the “Digital Payments” segment amounts to $18 Mn in 2017. Additionally, the total transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 18.4 %, resulting in the total amount of $36 Mn in 2021. Popular fintech categories in Indonesia are lending platforms, capturing 17% and marketplaces for financial products that have occupied 13%.
Deposits, Lending, And Capital Raising
The online lending space is dominated by players included Modalku, Taralite, and Investree. The online lending segment has a huge market demand in the country, owing to the fact that a major population of the country has a low credit score and SMEs can benefit from these alternative services.
Taralite: Launched in 2016, the startup sanctions financial loans with relatively low interest, starting from 1%, for education, marriage, childbirth, house renovation, vehicle purchase, property & housing. It also provides loans without collateral. It recently secured $6.3 Mn from Japanese financial services provider, SBI Group.
MODALKU: Founded in 2016, it is an online lending platform, that provides loans up to IDR. 2 Bn, with relatively affordable interest. Its focus areas are SMEs looking for working capital, with minimum one year of operations.
Cekaja.com: Launched in 2013, the platform allows users to compare various financial products at one place.
Investment & Risk Management
JOJONOMIC: JOJONOMIC digitises the entire employee reimbursement process for an employee.
RajaPremi: Founded in 2014, RajaPremi is an online insurance marketplace.
Bareksa: Founded in 2016, it is an online and integrated marketplace for mutual funds.
Kudo: Launched in 2014, the startup has a website and a mobile application that enables anyone to be an online entrepreneur without having to personally stock the items.
DOKU: A 2007 founded startup, Doku is the biggest player in the Indonesian payments scene. Functioning as an online and offline payment gateway for businesses and individuals, DOKU is an e-wallet equipped with links to credit card and electronic money.
t-cash: Founded in 2011, it is an electronic money service provided by Telkomsel (a telecom giant). Users are required to install the T-Wallet app on their mobiles and equip their mobiles with the t-cash stickers.
Ayopop: Launched in 2016, Ayopop is an app that specialises in bill payments.
POS (Point-Of-Sales Startups)
Pawoon: Launched in 2013, Pawoon is a cloud-based Point of Sales (POS) application for SMEs.
DealPOS: DealPOS is a cloud-based point-of-sale ( POS ), inventory and accounting software for business which was also launched in 2013.
Wondering in the halls of an incredible conference in Shanghai a few days later at LendIt Conference China, I was consumed with anxiety. Every platform I saw in China easily had 30 million plus active users. Whether it was credit, payment, insurance or investments, the conference in China was filled with eager entrepreneurs, seasoned executives and hunger investors.
Out of necessity, with a series of coincidences and a ton of luck I founded a company called MaxDecisions, Inc. with an old colleague and friend Henry Wang. We didn’t think too much of it and we didn’t really know where we will end up with it.
In the same month, I founded another company called Kuber Financial, LLC. and later Kuber Inc. with two other co-founders. Both of them left in the middle of the project, one early on and one late later year.
Fluid App came to me because I wanted to build something that’s truly different from all other platforms. A fun, mobile only, credit building product that could truly change lives of millions of young Americans. A FinTech, AdTech mesh up, that a lot of people are now starting to understand and appreciate my vision for this product.
With our 10th employee coming onboard at www.maxdecision.com next week, we’ve officially broke our first million dollars in sales.
June 14, Shenzhen Internet Finance Association, THE FINLAB PTE LTD and the Hong Kong Internet Professional Association in the World Youth Entrepreneurship Forum officially signed a tripartite cooperation memorandum, at the same time announced at the forum, Shenzhen – Singapore – Hong Kong Financial Technology Alliance was formally established.
Payments and remittances startups account for the majority of Africa’s over 300 fintech startups, though blockchain companies are the more likely to secure funding.
Payments and remittances is the most populated of nine sub-sectors addressed in the report, with 125 startups across the continent focused on making the process of sending and receiving money easier. Lending and financing – with 65 startups – is the next most popular category; indeed, over 60 per cent of all Africa’s fintech startups are focused on these two crucial spaces.
African blockchain startups are the most successful in percentage terms, with almost 40 per cent of the blockchain-focused startups on the continent securing funding.
The continent’s fintech startups have secured over US$92.5 million in investment since 2015, the report finds, while the data shows fintech startups are spread across the African continent. Southern Africa and West Africa are fintech leaders – with 34.2 per cent and 34 per cent respectively based in those regions respectively. South Africa has the most fintech startups (94), followed by Nigeria (74) and Kenya (56).
News Comments Today’s main news: Funding Circle US to bolster capital markets team. US investors in Yirendai try to preserve lawsuit. Fed wants a say in fintech rules. Ablrate gains ISA manager status. Mizuho commits to fintech partnerships. Today’s main analysis: AI fintech startups offer loans on new credit. Global fintech report from CB Insights. Today’s thought-provoking articles: Multi-seller ABS […]
Ten MPL options for accredited investors. AT: Virtually all MPL opportunities are for accredited investors. I think it would be more interesting to highlight the few that non-accredited investors can pursue.”
Shareholders in Chinese peer-to-peer lending company Yirendai Ltd. asked a California federal judge on Thursday to keep their securities fraud suit against the company and its executives alive, saying their request to dismiss the case rested on mischaracterizations and factual arguments the court couldn’t consider.
The investors sued Yirendai in 2016 after news that Chinese regulators were cracking down on the peer-to-peer lending business sent its stock tanking.
We’ve found more than a dozen AI fintech firms through our friends at CB Insights that claim their machine-learning algorithms can evaluate loan applications in milliseconds while minimizing defaults.
Many of these companies target so-called thin-file borrowers—people with little credit history—who are usually trying to consolidate debt from high-interest credit cards.
CB Insights reported in its 2016 Global Fintech report that investments dropped from an all-time high of $14.6 billion in 2015 to $12.7 billion last year. Online loan companies, in particular, took something of a hit in 2016. The last quarter was particularly tough, with a 31 percent tumble in loan originations. (However, overall, the top online loan sharks companies tracked by S&P Global Market Intelligence improved their bottom-dollar on loan originations by 15 percent from year-to-year, mostly on the backs of small businesses and students.)
Avant offers direct unsecured personal loans ranging from $1,000-$35,000 with funding delivered as soon as the next business day. It has served more than 500,000 customers worldwide, though last year’s downturn for digital lenders also hit Avant. Its year-to-year loan originations were down 12 percent to about $1.7 billion.
Led by a bevy of former Google-ites, including former Google CIO and ZestFinance CEO and founder Douglass Merrill, ZestFinance has raised $62 million in equity financing, including an undisclosed amount last July. Total funding is $262 million thanks to a couple of additional rounds of debt financing. Peter Thiel’s name again appears on the long list of investors.
Upstart is an AI fintech version of Lending Club. Meaning it provides peer-to-peer lending. Like ZestFinance, it particularly markets to the skinny jeans crowd, offering loans of up to $50,000 to help consolidate debt, pay off student loans and build credit history for those living in hipster cities like Portland and Brooklyn. The machine learning bit involves taking less tangible variables like education, college major and astrological sign into account.
Federal Reserve wants a say on U.S. fintech rules -Brainard (NASDAQ), Rated: AAA
The Federal Reserve wants to give input on future rules governing how technology companies move into consumer lending markets, Fed Governor Lael Brainard said on Friday.
Policymakers will have to determine whether financial technology, or fintech, companies may tap the Fed for services that large, traditional banks enjoy.
“The OCC’s proposal raises interpretive and policy issues for the Federal Reserve regarding whether charter recipients would become Federal Reserve members or have access to Federal Reserve accounts and services,” Brainard told a conference at Northwestern University in Evanston, Illinois.
LendingHome launched in 2014 but quickly established themselves as the leader in the category. They are the only real estate crowdfunding platform to have reached $1 billion in total loans issued, a milestone they crossed in December, 2016 just two and half years after launching.
PeerStreet were founded just 18 months ago but they are already making a name for themselves. They are also focused on the fix & flip market providing loans ranging from 6-24 months in length. They target 6-12% returns and they maintain a conservative maximum LTV (loan-to-value) of 75%.
Sharestates has offered both debt and equity investments, although the vast majority of their deals are for debt. These deals are similar to other platforms with loan terms typically 6-24 months targeting 8-12% returns.
RealtyMogul is one of the most established players in the space having launched in 2013. They have done around $260 million in deals and today they focus primarily on commercial property.
Patch of Land is 100% focused on debt deals tied to mainly residential properties but with a small number of commercial properties as well.
RealtyShares is a “full stack” capital provider, meaning they offer both debt and equity deals on a single project for borrowers. They have done some large deals including this $5.9 million deal for a 132-unit apartment complex in Ohio.
The world leader in marketplace lending for small business loans offers US accredited investors a solid option. Loan terms range from 12 – 60 months and interest rates from 5.49% – 27.79%. Loans are rated from A+ for least risky down to D grade. They have a marketplace where you can browse the loans on offer or you can setup automated investing strategies based on loan grade. As I wrote this there were 12 loans available on their marketplace. Funding Circle provides financials and other details about each company although they don’t provide the company name.
Streetshares is a relatively new small business lender, they launched in 2014, and they are focused primarily on providing funding for military and veteran community businesses. Run by two veterans they provide three different products: term loans (3 – 36 months), lines of credit ($5,000 – $100,000) and government contract financing (for companies dealing with federal or state government contracts).
P2Binvestor, or P2Bi for short, is an asset backed lender providing revolving lines of credit typically backed by accounts receivables. These lines of credit range from $250,000 to as much as $10 million.
Upstart has been something of a quiet achiever when compared to some of their well-established competitors. Founded by ex-Googlers they have a very data-centric approach to their business. One of the things that makes Upstart unique is they were the first platform to look at a borrower’s education and factor that into the lending decision. Interest rates range from 6.37% – 29.99% APR, loan terms are three or five years and amounts range from $1,000 – $50,000.
In Wilmington, N.C., a high-tech company called Lapetus Solutions has developed a technology it calls Chronos that interprets facial characteristics such as baggy eyes, rosy cheeks and double chins to estimate a person’s life expectancy. One purported use of this futuristic-sounding software is to help insurance companies assess risk quickly and inexpensively. Customers could then purchase life insurance online in record time, perhaps circumventing the usual medical examination altogether.
In theory at least, insurance carriers want to provide coverage only to those less likely to need it. The better the carriers understand and predict risks, the better they can manage their liabilities. So if facial recognition technology identifies risks that were previously unknown or unknowable, it could render some consumers uninsurable, an advantage perhaps for the insurance company but not the consumer.
But Erin Ardleigh, president and founder of Dynama Insurance, an independent insurance brokerage based in New York City, isn’t so sure. “How would facial recognition technology help underwriters? I suppose if it could identify clients [who were] engaging in risky behavior, such as smoking or skydiving,” she says.
Rodgers, though, contends that the decision of whether to try this or any other new technology may ultimately come down to dollars and cents.
A leading House Republican on financial technology issues said April 25 he is working with a Senate Democrat on a revised “permanent beta test” bill to prod regulators to foster fintech innovation.
“You must have a default ‘yes’ to new innovation,” Rep. Patrick McHenry (R-N.C.) said in a speech at the American Action Forum in Washington.
McHenry said the 2017 version of the act would include “significant changes and revisions,” but he declined to discuss those. He also declined to identify the Democratic senator with whom he is working. He said he hopes to introduce the new bill in two months.
Global Debt Registry Wins FinTech Breakthrough Award (GDR Email), Rated: A
Global Debt Registry (GDR), the asset certainty company known for itsloan validation expertise, today announced it has won the FinTech Breakthrough Award for ‘Best Business Lending Product’. The
Karla Friede was first an executive with depth in sales and marketing and a passion for innovating. As the president and CEO of a company who had developed a new offering, a B2B payment technology, she was excited about getting to market.
Friede admits it wasn’t easy launching and scaling at that time. But, it taught them to be very smart with every penny. And, they had to prove their business case as they went along because investors weren’t throwing money at every shiny object.
Many B2B organizations don’t accept credit cards. And, managing ACH transfers require a lot of manual processes and the collection of sensitive financial data.
Friede says she was a little naïve in tackling the launch because the B2B payments space was so large. It’s one thing tackling Billion Dollar industries, it’s another thing dipping your toe into a market in the tens of Trillions.
Friede encourages founders to partner with people that think differently but complement your skills.
As Friede puts it, investors are looking for reasons not to invest in you…rather than reasons to invest in you. Don’t give them those reasons, give them a proven business model and secure set of customers.
Only 9% of VC-backed companies have woman CEOs so you won’t ‘look and feel like them.’ Instead, look and feel like someone who knows what they are doing and has proven it. That’s a shorthand all investors respond to.
If you are a female founder and you’re concerned about bias, she has this advice:
Target women-lead VCs or those with a woman partner.
Make it easy for the VC to relate to you.
Talk like the men around you.
She considers it a point of pride that they’ve raised $25M and it’s taken them to Series F to do it.
Real estate crowdfunding platform Small Change announced this week the launch of Pittsburgh’s Liberty Bank Building real estate offering. The funding portal noted that the project is seeking $300,000 to fund development of the building into co-working operator Beauty Shoppe’s flagship location.
Picker also noted that the next reincarnation of the Liberty Bank Building is having difficulty getting funds because it is considered to be the first full co-working building in Pittsburgh:
“Why is it so difficult to finance projects that bring innovation and new life to neighborhoods and cities? Must we rely on traditional financial institutions that are not very innovative at their core?”
Small Change added there is a 10% projected return on debt instrument. A full return of interest and capital is anticipated in 36 months. This is not an offer to sell securities.
As we reported last fall, New York Department of Financial Services Superintendent Maria T. Vullo stated that she was “ardently opposed” to the Office of the Comptroller of the Currency’s (OCC’s) intention to process applications for a new financial technology (fintech) company charter. We now see just how much her counterparts in other states share that view, as the state bank regulators recently came together under the Conference of State Bank Supervisors (CSBS) banner to ask the federal courts to stop the OCC’s fintech charter initiative.
In turn, we believe that the CSBS action will act as a further disincentive for at least some fintech companies to pursue a national bank charter at this time.
Rather than having a “real” human being as your financial adviser, you can now hire a robot, or robo-adviser. The automated adviser will then manage your investment funds through the use of mathematical rules called algorithms. There is almost no human interaction.
While there may be cost savings, it is important to understand their risks and limitations before using them. First, what level of human interaction is important to you? While limited human interaction may result in reduced fees, many people feel more comfortable having often complex investment decisions explained by a person they trust. Before you decide to create an account with a robo-adviser, it’s important that you understand how the system works. Robo-adviser systems are limited to the information provided, and do not seek out new information or research potential options in the same way that a human adviser would.
Therefore, remember that even if you are not dealing with a human, you still need to verify the license of the service and the registration of the product or offering with the proper authorities.
PayJoy is a FinTech company based in San Francisco, CA. PayJoy is bringing consumer finance to people who otherwise could not afford modern electronics such as smartphones. Today, PayJoy’s unique locking technology enables us to offer monthly installment payment plans to millions who otherwise would be unable to afford a quality smartphone. PayJoy’s ambition is to deliver affordable consumer finance to 1B+ people worldwide to obtain a smartphone and join the modern digital, mobile economy.
Unfortunately, Poloniex Lending Bot cannot do much about issuing loans at very low rates when the market spikes. Additionally, the bot negates any opportunity to benefit from high long-term rates. Moreover, there is a 10% fee for using the bot, which can negate some of the profits earned rather quickly. It is a convenient lending bot, granted, but it should not necessarily replace manual, lending activities for anyone who knows what they are doing.
This also means one needs to buy small amounts of said coin to effectively issue the loan. If the coin suddenly plummets in value, that can cause losses in a cryptocurrency portfolio. Then again, a lending bot would not be able to protect users from falling currency values either by any means.
David Bradley-Ward, CEO at Ablrate, said: “Following our successful application for full authorisation from the FCA we now have the necessary approvals from HMRC to offer an Innovative Finance ISA. We hope to be able announce the launch of our IFISA soon after integrating the necessary technology.”
However, the asset backed lender is taking a cautious attitude towards the new product.
Marketplace loan ABS involving a multi-seller approach is expected to become more commonplace, due to the extra control that online lending platforms can exert over the securitisation process. Investors and loan sellers also benefit from a consistent securitisation programme, but a degree of expertise is required to handle the greater complexity involved in executing such transactions effectively.
VPC Specialty Lending Investments PLC on Friday said its net asset value increased significantly over the course of 2016 but said its NAV per share declined after its share capital swelled, while it reported negative total return in the period.
VPC said its net asset value at the end of 2016 stood at GBP363.1 million versus GBP201.8 million at the close of 2015, but the NAV per share fell to 95.26 pence from 100.90 pence after 182.6 million new shares were issued throughout the year.
Total shareholder return in the period was -17% versus the total return in 2015 of -5.5%. Revenue return was 6.0% versus 4.3% the year before.
FUNDING Circle is closing its community forum on Tuesday, as it says that some investors are “asking questions about a narrow range of technical topics” that would be better dealt with through its investor support team.
A thread on short-term property loans has now attracted 1,300 replies and more than 59,000 views. Lenders on the platform expressed their concerns around a tranche of London-based property loans that are going into default.
The platform suggested that its investors share their views on another website called the P2P Independent Forum instead.
For a start, you are probably wondering what future jobs will be available in fintech, as banking as we know it transforms into an online entity and long-standing financial institutions are shapeshifting for a new era.
If you want to work in this sector, you’ll need to brush up on the latest goings-on in the industry, and what better way to do that than to follow the experts online? To save you some trouble, we’ve provided you with a list of 10 people to follow on Twitter if you want to work in the fintech sector.
Note: the deal was done in CHF which is about parity with USD, so you can read that as $100m.
A $100m Fintech raise in Switzerland in 2014 would have been inconceivable. In 2017 it is noteworthy as another sign of a rapidly maturing Fintech community in Switzerland.
I could only find the Tradeplus24 news on German language sites, so if that is an issue for you, here are the key facts:
– they raised CHF100m debt
– The debt is for lending to Swiss SME (note: they refer to KMU which translates to SME). This makes them a balance sheet lender, like Avant, not a marketplace lender like Lending Club. This means they have assured capital to offer rather than simply matching on a best efforts basis (our take is the latter is the better model long term but that you need balance sheet based lending to get a market going).
The Tradeplus24 approach is different. It brings Insurance into the mix. AsOceanoOne put it “An insurance or equal protection of investment grade quality against credit loss and fraud is in place for all pre-financed receivables. The purchase of the receivables occurs only when a credit insurance or an equal protection is in place and confirmed by the relevant protection provider.”
Twenty-six executives of a Chinese online peer-to-peer lender stood trial in Beijing on Wednesday and Thursday after allegedly cheating the public out of a huge amount of money.
The local procuratorate charged that the defendants had used two online P2P platforms, Ezubao and Sesame Financial, to illegally raise funds and then spent lavishly on luxury gifts and salaries between June 2014 and December 2015.
While fintech covers a diverse array of companies, business models, and technologies, companies generally fall into several key verticals, including:
Lending tech: Lending companies on the list include primarily peer-to-peer lending platforms as well as underwriter and lending platforms using machine learning technologies and algorithms to assess creditworthiness.
Payments/billing tech: Payments and billing tech companies span from solutions to facilitate payments processing to payment card developers to subscription billing software tools.
Personal finance/wealth management: Tech companies that help individuals manage their personal bills, accounts and/or credit, as well as manage their personal assets and investments.
Money transfer/remittance: Money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.
Blockchain/bitcoin: Companies here span key software or technology firms in the distributed ledger space, ranging from bitcoin wallets to security providers to sidechains.
Institutional/capital markets tech: Companies either providing tools to financial institutions such as banks, hedge funds, mutual funds, or other institutional investors. These range from alternative trading systems to financial modeling and analysis software.
Equity crowdfunding: Platforms that allow a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.
Insurance tech: Companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software-as-a-service to help insurers deal with legacy IT issues.
ASIC targets $ 200m in fee for no service (Money Management), Rated: AAA
The Australian Securities and Investments Commission (ASIC) anticipates getting over $200 million returned to consumers out of its so-called “fee for no service” remediation projects plus $30 million out of quality-of-advice work with the large institutions.
It said that in the financial advice space in the last 12 months it had extracted six enforceable undertakings; banned 41 individuals from providing financial advice; had four infringement notices and had undertaken seven criminal actions.
“In our fee-for-no-service remediations, we have got up to just over $60 million, and we anticipate getting over $200 million returned to consumers out of that project. We will have about $30 million in the backward-looking quality-of-advice work that we have done with the large institutions,” Bird said.
As the programme director for New Zealand’s first fintech-focused business accelerator programme, the pressure is on in the countdown to demo day. That’s when the teams will pitch their business plans and – they hope – attract the crucial dollars that will enable them to forge ahead.
The 39-year-old expat Canadian moved to Wellington six years ago with her husband and two pre-school children after falling in love with the country when the couple honeymooned here.
One of the largest banks in Japan, Mizuho Financial Group, has been in the news recently for several partnerships involving fintech. According to Nikkei Asian Review, the bank is in talks to co-develop a fintech incubator that will be focused on virtual currencies, like bitcoin, and AI-based loan screening ventures. The discussions are with World Innovation Labs (WiL), a firm based out of Silicon Valley that helps US and Japanese startups raise capital, to co-found the incubator by as early as June of this year.
The creation of an incubator is not Mizuho’s first foray into fintech. Just last week, it was reported that Mizuho partnered with Cognizant (one of the world’s leading professional services companies, a member of the Nasdaq-100, and Fortune 500 company) to develop a distributed ledger solution for more efficient and secure trade financing.
Just two days after the partnership with Cognizant was reported, it was announced that Mizuho had also partnered with IBM to create a blockchain-based trading platform.
Both agreements must be drawn up in an electronic form. Providers are restricted by the following rules:
Providers must be established as a legal entity in the form of a limited-liability company as meant by Law No. 40 of 2007, or in the form of a cooperative as meant by Law No. 25 of 1992.
The maximum direct or indirect foreign share ownership in Providers in the form of a limited-liability company which are established and owned by foreign citizens and/or legal entities is 85% of the total issued capital.
Providers are required to have IDR 1 billion in capital (i.e. paid-up capital for a limited-liability company and self-capital for a cooperative) at the time they apply for registration and IDR 2.5 billion at the time they apply for the license. Limited-liability companies or cooperatives intending to engage in the P2P Lending Services business are required to register with and subsequently apply for a license to the OJK.
Providers are prohibited from conducting other businesses outside the P2P Lending Services, such as acting as lender or borrower, providing security or guarantee for other parties’ debt and issuing bonds.
An exclusive pan-African post-acceleration programme, XL Africa has been launched by the World Bank Group for African digital startups.
XL Africa aims at supporting enterprises in any sector that are making smart use of digital solutions and connect these businesses with angel investors and venture capital firms in a bid to raise growth capital estimated at US$1.5 million.