When an industry develops at a breakneck speed, the law can take some time to catch up. Existing regulations usually do not fit new paradigms, and it can stifle innovation. A regulatory sandbox is the perfect solution because it allows for the testing of new innovations in a controlled environment. The term “sandbox” refers to […]
When an industry develops at a breakneck speed, the law can take some time to catch up. Existing regulations usually do not fit new paradigms, and it can stifle innovation. A regulatory sandbox is the perfect solution because it allows for the testing of new innovations in a controlled environment.
The term “sandbox” refers to the box of sand where small children play in a confined boundary. The term has received a new connotation in a commercial sense and refers to a closed environment used for experimenting and testing projects or new ideas. Regulatory sandboxes help in testing business proposals and prototypes under a regulator’s supervision. These testing grounds have an advantage of not being governed by current rules and, therefore, the business can explicitly experiment the validity of their projects without the danger of getting caught on the wrong side of existing law.
Such regulatory sandboxes are critical for the development of the alternative lending industry. The gist of having regulatory sandboxes in this sector is to comply with the regulatory directives that complement the growth of fintech companies without compromising on users’ safety and protection. The existence of suitable safeguards assists players in executing a live trial in the market without having to worry about the legal consequences.
The Dawn of the Regulatory Sandbox
Financial regulators across the globe understand the challenges and opportunities presented by innovations like digital-only banking, P2P lending, robo-advisors, and other fintech innovations. Some countries have taken the lead in ensuring that an ecosystem is created which helps startups experiment with their products and services without running afoul of current rules.
United Kingdom- The Pioneer
Seeing massive investor interest in this industry, the Financial Conduct Authority (FCA) proposed a regulatory sandbox as a part of its Project Innovate. It started accepting applications in mid-2016.
The UK has completed the successful testing of models from 18 out of 69 firms in the first phase and 24 out of 77 firms in the second phase. The sandbox has accepted 18 out of 61 firms for the third phase, and 29 out of 69 applications received qualified to the testing stage in the fuurth phase.
Participants in the UK sandbox came from sectors like retail banking, general insurance, retail lending, and wholesale lending. Around 35 percent of the participants in the secnd phase were from other countries, including the US and Singapore. The fourth cohort has almost 40 percent of startups experimenting with distributed ledger technology for disrupting traditional finance.
The UK regulatory sandbox includes:
A positive reaction from other global regulators.
The startup community’s eagerness is evident from each phase being oversubscribed.
It has reduced the time to get an idea to market. FCA claims that, during the first year itself, 90 percent of the firms were able to go for a commercial market launch of their product.
Also, many of the approved fintech companies were able to attract VC investment for their projects.
The second jurisdiction to launch the concept of a regulatory sandbox is Singapore. The Monetary Authority of Singapore (MAS) introduced its sandbox in June 2016. It has launched a range of schemes for interested startups. Till date, the country has the maximum regulatory alliances and has entered into co-operation arrangements with eight countries including UK, Australia, and Japan.
Since its launch, the MAS has guided over 140 applicants from around the globe. About one in five applications has been approved for experimentation.
Startups in crowdfunding, financial advisory, artificial intelligence, cross-border funding, distributed ledgers, and more were able to experiment under the MAS scheme. The sandbox has helped Singapore attract overseas startups to come and do business in the country. And it is contributing positively in making Singapore a Smart Financial Hub by allowing these young startups to form partnerships with traditional financial institutions.
The Consumer Protection Financial Bureau (CPFB) initiated the concept of regulatory sandboxes to ensure global compliance and to stimulate innovation in the fintech industry.
Arizona became the first state to open a fintech sandbox in the US by passing a legislation to create a Regulatory Sandbox Program. This program will enable finetch players to test their financial products without being subjected to the licensing provisions of the state. The move will come under the supervision of the Arizona Attorney General. Another state, Illinois, also on the footsteps of Arizona, has a separate regulatory bill (currently on hold) on the horizon.
Along with the regulatory sandbox, the US has also launched an ‘office of innovation’, which primarily focuses on blockchain and cryptocurrency technologies. The aim is to stimulate competition in the industry and expedite consumer advancement.
The participants included payment start-ups, financial technology companies, credit agencies, and lending companies.
The startups in the Arizona sandbox will be allowed to experiment with their financial products for a period of up to two years. The sandbox has promoted investment and job creation in the state. It will help improve the competitive position of the country in the global fintech industry. The concept has also helped early stage entrepreneurs surpass the legal hurdles with access to a trillion dollar opportunity.
The Ontario Securities Commission (OSC) launched its sandbox “LaunchPad” in February 2017. The government is said to create a “super sandbox” that will help foster communication between fintech players, financial institutions, regulators, and the government. It is a part of its 2016-2019 Business Plan to understand how technology affects the markets. An agency by the name Ontario Fintech Accelerator Office will also be instituted to provide assistance to start ups. The government plans to develop the retail payment and financial sector framework at the national level.
It has given a push to Canada’s innovation market as earlier, due to the domination of a few financial companies in the industry, innovation was slow. Now, it has allowed Canadian fintech companies to come forward and grow both locally and internationally. The new idea will benefit Canadian SMEs who could not access funding from traditional lenders.
The concept of regulatory sandboxes is currently running in over 20 nations. Apart from the countries mentioned above, Australia, Indonesia, Hong Kong, Malaysia, Denmark, and Thailand have sandboxes running to join the race. To promote interaction among participants at a global level, a GFIN (Global Financial Innovation Network) has been launched, aimed at knowledge sharing and facilitating cross-border testing of ideas. It is a joint effort of FCA and 11 other regulatory authorities. Organizations such as the US CFPB, Hong Kong Monetary Authority, UK FCA, MAS, and others, are a part of this network. The goal is to go past the idea of a sandbox and ensure that regulators are able to support the advancements in the fintech industry.
News Comments Today’s main news: Prosper to introduce HELOCs. Affirm to rebrand, get into travel. Elevate Credit misses earnings estimates. Zopa says parents borrow from children’s piggy banks. Revolut wants to raise $500M through SoftBank. LexinFintech shares jump 8% on 363% earnings increase. Fintonic, Amazon partner in Spain. Today’s main analysis: Are we in an online lending bubble? Today’s thought-provoking articles: […]
Affirm to rebrand. This is probably a smart move. Affirm wants its name known. It won’t become a household name, like PayPal, sitting under the hood of everyone else’s vehicle. The idea is to move the brand front and center and let consumers know who is powering their financing at the point of sale.
Prosper noted that according to a 2017 TransUnion Study an estimated 10 million consumers will take out HELOCs between 2018 and 2022 which would be more than double the number originated from 2012-2016.
The new HELOC product will launch officially in early 2019.
Prosper also reported their Q3 2018 results today. Originations were $640.3 million, down 22% over the prior year period. Prosper attributed the decrease to credit tightening as well as the increase of interest rates to borrowers. The company has now originated $13.4 billion since inception. Net revenues also decreased as a result of decreased originations, with net revenue falling from $28.8 million in Q3 2017 to 20.6 million in Q3 2018. Below is a summary of Prosper’s other financial highlights that are availing in the company’s 10-Q.
FUNDING Circle US has found that the majority of US consumers still make the effort to shop at independent small businesses and would be willing to pay more for the same item than it costs at e-commerce giant Amazon.
The peer-to-peer business lender, which recently floated on the London Stock Exchange, published the results of a survey on US consumers’ support for small businesses.
It found that 77 per cent of 2,171 US adults surveyed said they were willing to pay more for items at small businesses in order to keep money within their communities and support local jobs.
60 per cent of respondents said they would pay a 10 per cent premium or more on Amazon prices.
PayPal co-founder Max Levchin has built a $1.8 billion business offering installment plans to American consumers. The problem: most shoppers have no idea they’re using his company, Affirm, when they choose how to pay at checkout.
Now, in an effort to make its name synonymous with online installment plans, Affirm is rebranding. Besides a new logo, the firm will list all the retailers it works with on its website. Affirm will also focus on travel, letting consumers pay for vacations over time.
Elevate Credit (NYSE:ELVT) announced its earnings results on Monday, October 29th. The company reported ($0.10) earnings per share for the quarter, missing the consensus estimate of $0.13 by ($0.23), MarketWatch Earnings reports. Elevate Credit had a positive return on equity of 12.69% and a negative net margin of 0.49%. The business had revenue of $201.48 million for the quarter, compared to analyst estimates of $201.71 million. During the same quarter last year, the company posted $0.01 EPS. Elevate Credit’s quarterly revenue was up 16.6% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.23-0.32 EPS.
Real estate investment platform Fundrise says it has been quietly accumulating property near the area Amazon (NASDAQ:AMZN) has just announced they will be establishing a new headquarters. Amazon’s east coast headquarters will create a huge economic impact for the DC/Northern Virginia market, not to mention increased demand for housing and apartments. Fundrise says it has invested in 30 different buildings in expectation of rising demand. Fundrise is offering a new investment fund for this purpose: HQ2 DC eFund.
According to Fundrise, the fund already features residential properties – ranging from houses, townhomes and condominiums – with plans to invest as much as $50 million in the area. This eFund, issued under Reg A+, allows any investor the opportunity to capitalize on expected local real estate growth in the wake of Amazon’s announcement.
The website started out strong. From 2014 to 2016, venture capital was pouring in from crowdfunding firms. However, investors became less interested in the portal as the investment minimum started to ramp up steadily. Company founder Nav Athwal, who had left the company’s board earlier this year, is still a minority shareholder. He also has no idea what happened to the company he helped found.
He, however, has a few words for startups. “Don’t let your burn rates get really large, strive for cash-efficiency or profitability sooner rather than later. Build a resilient business that can continue growing, regardless of where the venture capital markets are.” He adds that a startup should understand its investors and its growth limit as well.
We’re in an interesting time in online lending. After years of fits and starts and boatloads of money flowing into the sector, record originations are being set all over the industry. We recently explored online lending trends going into 2019 and what participants in the sector are expecting in the near future.
Both consumer and business lenders are tracking strongly:
While personal loans have surged to a record as the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion, it’s fintech firms that are driving a lot of that growth.
The fintech firm packages up the loans the into securities, which it then issues as bonds to financial institutions, foundations and private investors. Its latest $26 million securitizationattracted Amalgamated Bank, a B-corp-certified commercial bank that went public on the NASDAQ stock exchange in June.
The issuance marks Insikt’s fifth securitization this year, backed by 21,000 loans. INSIKT’s total securitization volume across 16 issuances reached $273 million.
JPMorgan Chase last month predicted a 60% chance of recession by 2020, and that increases to an 80% chance by 2021. It’s not clear how traumatic an event it would be for the U.S. economy, but considering all the new players that have jumped onto the financial scene since the last downturn a decade ago.
CrowdOut Capital announced the completion of a $20 million facility to Punch Bowl Social, the L Catterton–backed restaurant group that is defining the evolving category of experiential dining. The proceeds will enable the leader in the “eatertainment movement” to open multiple new locations throughout the U.S. This marks the second time Punch Bowl Social has worked with CrowdOut, choosing its flexible debt over traditional loans from financial institutions.
Figure Technologies, Inc. (Figure), a FinTech company creating innovative products and tools that empower homeowners to improve their finances, announced today Figure Home Advantage, a smart sell-and-leaseback alternative to reverse mortgages for retirees and a new way for Baby Boomers to lock in record housing prices as they plan their retirement. With Figure Home Advantage, homeowners convert their home equity into cash they can put to use now while continuing to enjoy life at home without the ongoing burden of property taxes, repairs, and maintenance.
Roughly 10,000 Baby Boomers turn 65 years old in the U.S. every day. A study by the National Conference of State Legislators and AARP found that 90 percent of people over age 65 want to stay in their home for as long as absolutely possible. Yet, most older Americans don’t have enough savings to cover retirement expenses or realize the lifestyle they’d imagined. According to a survey by the Insured Research Institute (IRI), only 25 percent of Baby Boomers believe they will have enough money in retirement.
Auto loans, credit cards and personal loans all saw year-over-year growth in subprime originations this past quarter, a sign that lenders are returning to this space following several consecutive quarters of declining originations. The latest TransUnion (NYSE: TRU) Industry Insights Report includes insights into consumer credit trends around personal loans, auto loans, credit cards and mortgage loans through the third quarter of 2018.
TransUnion’s report found that origination growth in the subprime risk tier grew at a significant rate across auto, personal loans and credit cards following declines in 2017. Subprime originations in the personal loan category grew 28% between Q2 2017 and Q2 2018 (originations are viewed one quarter in arrears to account for reporting lag), compared to a yearly decline of 7.1% over the prior year. Auto showcased a similar trend, as independent lenders began issuing new loans to subprime consumers following industry pullback in 2016 and 2017. Subprime auto originations increased 7.3% year-over-year, after falling 7.8% year-over-year in Q2 2017.
It’s not just bank loan officers with racial biases who discriminate against black and Latino borrowers. Computer algorithms do, too.
That is the groundbreaking conclusion of University of California at Berkeley researchers who found that algorithmic credit scoring using big data is no better than humans at evening the playing field when it comes to determining home mortgage interest rates.
Both online and human lenders earn 11 to 17 percent higher profits off minority borrowers by charging African Americans and Latinos steeper rates, the study said. Black and Latino consumers pay 5.6 to 8.6 basis points higher interest on home purchase loans than their white or Asian counterparts with similar credit profiles — no matter whether they obtained their loans through a face-to-face process or online. The effect is smaller when it comes to refinancing, with black and Latino borrowers paying 3 basis points more.
AI-Driven Lead Distribution for Mortgage Lending Helps Loan Officers Deliver Faster Results (Verb Factory Email) Rated: A
ProPair, an innovative mortgage-industry technology start-up based in Silicon Valley, today launched an AI-based lead distribution solution that eliminates the uncertainty of the lead assignment process while optimizing results and ensuring fairness in the assignment process. Using artificial intelligence to correlate lead data with information about individual loan officers, ProPair facilitates the lead assignment process to allow lenders to distribute leads to maximize the performance of the entire loan team.
White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as administrative agent and lead lender on the funding of a $190 million senior credit facility of 17 skilled nursing facilities for BM Eagle Holdings, LLC (“BM Eagle”), a joint venture led by affiliates of BlueMountain Capital Management, LLC (“BlueMountain”). The facilities are located in Northern California and New England.
UK neobank Revolut is currently in talks with the Softbank fund, which is worth $92 billion, for its next funding round, according to City AM. The talks are still early on, but the funding round could be as high as $500 million. It’s not clear whether existing investors, including Draper Esprit and Index Ventures, would participate in the next round.
PayPoint has announced today that challenger bank, Monzo, has chosen PayPoint’s cash payments solution for its current account holders. Beginning Wednesday 21 November, customers will be able to deposit up to £300 cash directly into their Monzo account in a single transaction at any of PayPoint’s 28,000 convenience stores nationwide.
Starling Bank, the mobile-only bank, has secured £10 million of new capital from Bahamas-based hedge fund manager Harald McPike.
According to the Daily Telegraph, the funding is in preparation for a £80 million round to keep up, or perhaps surpass, other mobile challengers like Monzo, which recently raised £85 millionto reach a £1.5 billion valuation, and getting over 1.1 million customers.
In today’s challenging financial market businesses need to utilize every available resource and technology to reduce risk when processing payments and credit applications. One area in particular that is often talked about, but still either under or incorrectly utilized, is data science.
While many financial institutions are working towards implementing data science within their risk decisioning processes many are still working on creating an environment and culture that allows data scientists to be fully effective.
In a recent webinar Ken Schultz, VP of data science at Elevate Credit – better known under their brand Sunny in the UK -discussed the benefits data science can bring to a financial services organization, including the opportunity to increase accuracy, expand your market, and reduce fraud, all of which can be used to drive business growth.
Peer to peer lender Lending Works has selected three new members for their Board of Directors. The online lender has appointed; Simon Waugh, former Chairman of CMC Markets, Deputy CEO of British Gas, Paul Noble, CEO of Honeycomb Finance, a Pollen Street Capital business, and Melanie Goward, Investment Director of Maven Capital Partners.
MarketInvoice and Barclays today announced a partnership deal that is set to transform the way small and medium enterprises (SMEs) in the UK manage cash flow and accelerate growth.
The bank has committed to a significant minority stake in MarketInvoice to give Barclays’ SME clients seamless access to innovative forms of finance. The new partnership is a key part of Barclays’ plans to invest in new business models for growth, and MarketInvoice’s ambition to broaden its reach across the UK.
LexinFintech Holdings Ltd. (Nasdaq: LX) saw its shares jump more than 8 percent in early trading Wednesday after the company, an online peer-to-peer lending platform in China, posted better-than-expected earnings for the third quarter with net income increasing more than fourfold.
Despite recent market uncertainty, the Shenzhen-based lender said its operating revenue for the third three months increased more than 13 percent year-over-year to $246.7 million thanks to a 404 percent jump in income from its loan facilitation and servicing fees.
Net income for the quarter was $46 million, or 25 cents per fully diluted ADS, up from $9.93 million a year ago.
China’s Tencent Holdings handed investors a much-needed profit recovery in the third quarter as revenue rose beyond online games, but the company warned that stricter regulation by Beijing on online advertising could sap growth.
The social media and online game group, which has lost about 40% of its market value since March as China has stalled approval of new games, beat market forecasts thanks to contributions from ads and cloud computing.
China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it plans to release its third quarter 2018 financial results on Tuesday, November 20, 2018, after U.S. market closes.
China Rapid Finance’s management will host an earnings conference call at 8:00 p.m. Eastern Time on November 20, 2018, (9:00 a.m. Beijing/Hong Kong Time on November 21, 2018).
How big is China’s fintech sector? I would say, Britain’s peer-to-peer (P2P) lender Funding Circle plus payday lender Wonga times 100. In addition to giants such as Alibaba’s Ant Financial, Pingan’s Lufax and Tencent’s WeBank, a dozen mid-size operators have gone public in the US and Hong Kong in the past 18 months alone. There are also 40 to 50 serious players that are waiting in the wings to go public. However, as the year-long official clampdown has revealed, there are far too many also-ran operators and Ponzi schemes about.
In just five to six years, fintech has surged to levels over US$200 billion in terms of total assets.
Some local governments have ordered cash-strapped peer-to-peer (P2P) lending platforms to begin repaying their investors to head off growing turmoil in the industry.
Hangzhou-based P2P lending platform Yucaiyuan recently announced that the company “did not meet regulatory requirements and was ordered to start repaying (investors),” according to a post on the lender’s website (link in Chinese). The firm will have to repay the principal and interest on all outstanding loans until investors are fully repaid. It has 12 months to do so.
Regulators in the eastern city want to rein in what had once been runaway growth in the industry. They plan to do this by clearing out small and midsize platforms one step at a time, a P2P lender told Caixin.
Personal finance app Fintonicannounced today it will collaborate with Amazon in Spain. Starting next week, Fintonic customers in Spain will be able to finance their Amazon.es purchases ranging from $225 to $1,100 (€200 to €1,000) at a rate of 0% interest for up to four months.
A crowdlending campaign has, for the first time, raised a total of €1.5 million in Belgium.
The announcement came on Wednesday from the platform Look&Fin, which specialises in such participative finance loans. The company, Carimat Matériaux, based in Braine-le-Château and active in construction, has raised this record amount.
In total, 483 individuals have invested in Carimat Matériaux, for a global total of €1.5 million. The group, which has specialised in construction since 1988, recorded a turnover of €56 million in 2017 and employs more than 170 people.
Want to apply for a loan, but you’re unsure about your credit score? The Berlin-based startup Bonify provides free, easy-to-read credit reports. Users can use the startup’s platform or app to check and correct their scores, monitor changes, and receive tips on personal finance and how to optimise their scores.
Bonify evaluates consumers real-time creditworthiness, enabling them to improve their financial wellbeing through tailored financial and non-financial recommendations. The app delivers recommendations for how consumers can save money, for instance by switching to a different loan or energy provider. Bonify is also able to predict six to eight weeks in advance when its users might go into their overdraft, and provide personalised suggestions for how to avoid this.
Creditshelf Aktiengesellschaft, a Germany based online lender, announced on Wednesday it has appointed Fabian Brügmann as its new CFO, effective on January 15, 2019. The lender reported that this appointment continues its planned expansion of its management team and in the newly formed position, Brügmann will be responsible for Finance and Investor Relations and directly report to Dr. Tim Thabe, Chairman of the Management Board and CEO of Creditshelf. He will not serve as a member of the Management Board himself.
According to Creditshelf, Brügmann previously worked as Director of Investor Relations at Commerzbank AG, where he was the contact for shareholders, fixed-income investors, and sell-side analysts. He joined the bank’s Corporate Development and Corporate Finance team in 2012. As IR Manager, Brügmann worked on the capital market communication for the “Commerzbank 4.0” strategy. He previously spent six years with the U.S. bank Goldman Sachs in Frankfurt and London.
Online lender iwoca has selected Seema Desai as their new Chief Operations Officer (COO). iwoca provides loans of up to £200,000 to small and micro businesses across the UK, Germany, and Poland via its website and through partner integrations using its proprietary Lending API.
Desai joined iwoca in January 2017 as Head of People, developing the company’s organizational capabilities. Prior to joining iwoca, Seema led the development of the Innovative Finance ISA at peer-to-peer lender Zopa as Head of Product.
As COO, Desai is expected to help scale customer service that has helped propel iwoca to become one of the fastest growing business lender in the UK.
Prodigy Finance, the pioneer in cross-border finance, announces the launch of a loan refinance product for international working graduates looking to reduce their student debt. The product will allow these alumni, who previously had limited options available to them, to save at least US$20,0001 over the life of the loan, by accessing lower rates and choices of terms.
Challenger bank entrepreneur Anthony Thomson has had several lives in banking and fintech.
In 2010, with Commerce Bank founder Vernon Hill, he co-founded Metro Bank, which started with one location in London and now has more than 56 branches and 2,800 employees. Thomson founded a second challenger bank in 2014 called Atom Bank, the first mobile-only bank in the U.K. As of March, it had 1.3 billion pounds of deposits and lent 1.2 billion pounds in mortgages and small-business loans.
Thomson is currently working on his third institution, called 86,400, a mobile-first challenger bank slated to launch in Australia in early 2019.
So it’s fair to say Thomson has learned a lot about what it takes to raise money and how to make it as a neobank entrepreneur.
The crypto lending platform Nexo says it’s exploring Ripple’s xRapid, which uses XRP to boost the speed and lower the cost of cross-border payments. The announcement comes from Antoni Trenchev, the co-founder and managing partner of Nexo.
The company is backed by TechCrunch founder Michael Arrington and calls itself a “decentralized lending ecosystem that facilitates open access to credit anywhere and anytime.” It uses a long list of banking and exchange partners to deliver loans.
Nexo follows the payment company and Ripple partner TransferGo, which also revealed its interest in xRapid this week. Nexo recently added XRP to its platform, becoming one of the first lenders to use XRP as collateral.
MSTS, a global B2B payment and credit solutions provider, today announced that its innovative Credit as a Service solution is now available to mid-market and small businesses.
The original enterprise product, with a record of accelerating sales growth for companies by as much as 500 percent, has been optimized to meet the needs of businesses with simpler payment and credit processes. The cloud-based Credit as a Service solution for mid-market businesses can issue credit lines in less than a minute, automate the customer onboarding process and apply unique B2B customer invoicing, accounts payable and payment term requirements – providing customers flexibility and an enhanced experience.
MSTS works with B2B companies across transportation, manufacturing, retail and eCommerce.
The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.
However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.
The report found more than 40% of Australians do not believe the financial services and banking industries are meeting their obligations to everyday citizens.
But regulatory experts warned the government must avoid taking too much financial risk and not weaken bank rules in its quest to stimulate SME funding via a separate proposed bank-financed Australian Business Growth Fund.
A national firm has added a financial services team, including a new partner in Sydney.
Andrea Beatty has commenced at Piper Alderman as a partner. She brought to the firm two other lawyers and an administrative assistant from NewLaw outfit Keypoint Law, where she was a consulting principal since 2016.
With more than 20 years’ experience in financial services regulation and corporate finance, Beatty is a former partner at legacy Mallesons Stephen Jaques and then at K&L Gates.
Under the revised draft Law on Securities, the foreign ownership ratio in a public company is expanded up to 100 per cent. Previous regulations had capped foreign ownership at 49 per cent. However, this ratio in commercial banks, which is a much-concerned issue recently, was not mentioned in the draft. Why?
The draft has removed limits on how many voting shares foreign investors can buy in public Vietnamese companies. This indicates that the Government has sped up the equitisation process in State-owned enterprises, especially in non-essential sectors that are not too sensitive to the economy. However, under the draft, some conditional business lines, such as commercial banks, would retain their existing 30 per cent limit. I agree with this provision of the drafting agency.
While banks have not been immune to the technology bug that has spread in the last few decades, digitization in the industry has only largely been implemented “for purpose in the back end,” according to Michael Gorriz, group chief information officer at Standard Chartered Bank.
“Fifty years ago, we introduced mainframes. We took paper ledgers and put them into computers,” the CIO explains.
But the emergence of a tech-savvy millennial generation is bringing about “the first real massive change in banks since the inception of banking,” he says. As such, banks like Standard Chartered have to digitize front-facing processes or risk losing their customers.
Automated peer to peer platform Robo.cash has issued a note saying Russian microfinance company MFC Zaymer is joining their platform. The company operates Zaymer.ru that offers short-term (payday) loans with interest rates for investors of 14% in Euros and up to 18% for loans originated in Rubles.
Nigeria’s central bank is looking to increase access to millions of people by opening up the banking system to non-financial companies for the first time; South African telecom operator MTN is set to be the biggest beneficiary with more than 50 million customers located in Nigeria; MTN is planning to apply for a banking license soon with the hopes of having their Mobile Money product available in country by Q2 2019; more than 60 million people in Nigeria do not have bank accounts, showing there is an enormous opportunity for telcos to expand the banking footprint.
News Comments Today’s main news: Betterment adds financial advice packages. Funding Circle the fastest growing P2P lender in UK. TransferWise revenue almost doubles. China’s P2P lending problems hit consumer spending. Lending Club CEO says U.S., China need clearer P2P lending regulations. Today’s main analysis: Funding Circle’s IPO, and aggregate excess payment. Today’s thought-provoking articles: How China tech companies are […]
Chinese tech giants are dominating the North American VC market. This is a first, but does it signal a shift in the global balance of power? Not really. China still has a way to go. But it does signal that China has a lot to offer the rest of the world in financial services. The interesting thing is, this historic first happened at a time when China is going through a P2P lending crisis and cracking down on scams.
Where millennials carry the most debt. Of the top 6 highest in terms of median balance, 4 of the metro areas are in Texas. Yes, Dallas and Houston are among them, but not at the top of the list. Interesting.
Betterment, the largest, independent online financial advisor, today announced it will be piloting a new line up of financial advice packages, expanding its access to personalized advice from licensed financial experts. This new service furthers Betterment’s commitment to making advice more accessible and personalized.
Early this week, Funding Circle announced plans to raise £300Mn on the London Stock Exchange through an IPO, valuing the company at up to £1.65 billion. To date, Funding Circle has originated over £5 billion in loans across Europe and the United States. Funding Circle has grown revenue by a 54% CAGR to £63 Mn in the first half of 2018. Funding Circle charges 100bps for servicing and estimates it receives revenue equal to almost 5% of loan value originated.
Hu Liming from Tencent Financial Cloud talked about the importance of the AI offerings within their cloud computing platform. AI is powering their anti-fraud offerings, their lending process, their collections and customer service efforts. More than 20 of the largest banks and insurance companies in China are using Tencent Financial Cloud for their core services.
LendingTree, the nation’s leading online loan marketplace, today released its study on the places where millennials carry the most debt. The study found that student loans make up the biggest share of millennial debt, but auto loans are close behind. The study revealed that the typical urban millennial carries significant debt; the average debt balance for millennials living in the 50 biggest U.S. cities is $23,064.
Millennials in San Antonio, Pittsburgh, and Austin, Texas, shoulder the largest debt burdens of the 50 biggest metros, with median non-mortgage debts of $27,122, $26,403 and $26,164, respectively.
Three California cities — San Jose, Sacramento and Los Angeles — have the lowest median balances on the list at $18,376, $18,691 and $19,299, respectively.
In the top 10 cities, more than half of millennials have outstanding debts totaling $25,000 or more (not including mortgages), and roughly 1 in 4 millennials living in these cities owes more than $50,000.
The 10 Places Where Millennials Carry the Most Debt
For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.
Sometimes we overlook the companies that hail from the era that precedes the current wave of fintech fascination, a vertical which has accumulated over $100 billion in global investment capital since 2010.
PeerStreet, an award-winning platform for investing in real estate backed loans, today announced the addition of a new investment option, Cash Offer Loans. Cash Offer Loans are a new investment option that provides PeerStreet investors with a shorter duration than typical bridge loans.
Finitive (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today the closing of a $50 million senior secured warehouse credit facility for Bungalow (bungalow.com). This transaction was the first of its kind in the co-living sector.
Lending clubs have revolutionized how small businesses get money and act as a third party between individuals who want to lend money and people who need it. You can think of it as a peer-to-peer lending system that’s normally backed up and insured. You could get around 7% with one of these investments.
FUNDING Circle has unveiled more details of its plan to raise £300m through a listing on the London Stock Exchange’s main market in October.
The peer-to-peer lending platform said retail investors will be able to apply for shares via intermediaries such as Hargreaves Lansdown, AJ Bell Youinvest and The Share Centre, with a minimum application size of £1,000.
Funding Circle will test investor demand for British peer-to-peer lenders in a listing scheduled for October and expected to value it at more than 1.5 billion pounds (US$1.94 billion).
Capitalising on high-street banks’ retreat from lending to that sector since the financial crisis, it has facilitated more than 5 billion pounds in loans to more than 50,000 companies across Britain, the United States, Germany and the Netherlands.
Crypto lending or digital asset backed loanis comparatively a new concept used in earning profits without much effort. It revolves around the concept of shorting. Perhaps, you do not understand how shorting works, do not worry because all you need to know is that you are lending fund to others who are making short trades. In exchange for the funds, you get an interest rate that goes from 5% to 50% each year.
ACORN OakNorth, a UK-based alt lender focused on small- and medium-sized businesses (SMBs) and property financing, has secured a £78 million ($100 million) funding round from the EDBI of Singapore, NIBC Bank, Clermont Group, and Coltrane Asset Management. OakNorth’s loans have helped create 8,500 homes in the UK and 8,000 jobs.
The UK payday loan industry grew rapidly from 2008-2012, coinciding with the global financial crash and the pauperisation of millions of people in the UK. The numbers of loans issued in this period were 10.2 million per year, with a value of £2.8 billion.
Wonga’s posted pre-tax profit losses in 2016 of nearly £65 million, after recording huge profits just a few years before.
In its 2014 review of the payday loans industry, the FCA found that the average income of a payday lender was £16,500 a year, far below the UK’s median wage of £26,500 at that time.
The CMA found most recipients (52 percent) of payday loans have experienced financial problems in the recent past, with 38 percent of all customers having a bad core/credit rating and 10 percent of customers having had a bailiff or debt collector visit to their home. Over half (53 percent) use payday loans to pay for living expenses, food, utility bills—with 7 percent having to use these loans to pay for general shopping such as clothes and household items.
The Chinese government legalized peer-to-peer lending platforms in 2015. P2P sites attract money from individual investors – mostly savers – by offering them extraordinarily high yields. They lend this money at high interest rates to borrowers who have trouble getting loans elsewhere – classic subprime. By the end of 2017, there were over 8,000 P2P platforms, according to the People’s Bank of China, with over 50 million registered users. By the end of June, in a little over two years, the industry had gone from zero to $190 billion in outstanding loans.
In May, new vehicle sales still surged 7.9% from a year ago. Through the first five months of the year, sales were up 5.1%. But in June, the year-over-year sales increase eased to 2.3%. And in July, sales actually fell 5.3% year-over-year.
That 5.3% decline in July was a big, sudden, and unexpected swing from the 7.9% surge in May.
Around 4 a.m. on Sept. 7, construction workers in Jinhua, a city in eastern China’s Zhejiang Province, found the body of a woman hanging from a tree in a park. She was Wang Qian, a 31-year-old single mother who had lost her savings in China’s recent peer-to-peer (P2P) lending crash.
Wang worked as an individual seller on Taobao, a Chinese shopping site similar to eBay. She lost about 260,000 yuan ($37,990). She had invested her money in P2P platform PPMiao, which collapsed on Aug. 6. She lost about 260,000 yuan ($38,000).
Launched in 2013, N26 is a German neo-bank and one of the fastest growing banks in Europe. It serves more than 1 million customers, both businesses and individuals, across 17 European markets, and intends to enter the UK market in 2018 and the US market in 2019.
Smava is a loan portal that aims to make personal loans transparent, fair and affordable for consumers. Based on digital processes, Smava provides a market overview of 70 loan offers from 25 banks. As of January 2018, Smava had originated over US$3 billion in loans through its platform since inception.
Raisin is a fintech startup providing savings and investments marketplaces across Europe. The company operates several localized platforms for the German, French, Spanish, and Austrian markets, and more. These allow savers to shop and compare rates European-wide. In February, it launched a dedicated UK site, enabling savers to access deposit accounts in GBP, and another platform dedicated to the Dutch market in August.
SolarisBank is a platform with a full banking license which enables companies to offer their own financial products. Through APIs, partners gain access to SolarisBank’s modular services including payments and e-money, lending, digital banking as well as services provided by integrated third party providers.
Launched in 2014, CrossLend is a B2B marketplace lending platform that specializes in flexible refinancing via a capital market structure. CrossLend also offers cross-border credit intermediation through cooperation with a partner bank. The company aims to facilitate the borrowing, investing, and trading of money across the globe.
Founded in 2016, Billie offers a fully automated invoice financing platform that aims to “revolutionize small business financing.” Based on big data analytics, fully digitalized processes and a highly scalable state of the art tech platform, the company offers a simple and fast way for small businesses to access capital.
The idea became popular when it was first proposed around a decade ago. The then fast-growing sector fostered a series of unicorns. US P2P pioneer Lending Club was valued at $5.4 billion in its 2014 IPO and its peer Prosper was valued by private investors as worth $1.9 billion in its prime. Although a few years later than its foreign counterparts, Chinese P2P platforms have grown rapidly with leaders in the sector such as Hexindai who has gone public, and the likes of Lufax and Dianrong poised for an IPO.
Merely three years ago, peer to peer (P2P) lending in China was hailed as the banks of tomorrow and the harbinger of financial innovation. Powered by technology and ever burgeoning rounds of funding and valuation, P2P lending was set to disrupt financing the world’s 2nd largest economy dominated by state owned (or sponsored) banks. The new elites in jeans and T-shirts would show the suited up old guard how finance is supposed to work. Here came the new finance, Silicon Valley style – with Chinese characteristics.
Fair was its blossom; and wretched is its downfall. By June 2018, the Chinese financial information provider 01Cajing reported only 1504 functioning P2P platforms, down from over 3000 in the heydays. The change in fortune is as swift as it is bizarre. Is this an omen of darker times to come for South East Asian marketplace lending? Before this question can be addressed, it is necessary to disentangle how the crisis precipitated in China, and the confluences of forces behind the calamity.
On Monday, the Preparatory Committee of the Digital Finance Association announced a series of self-imposed regulations that it plans to apply to all member companies when the association kicks off later this year.
Lendit, 8percent and Popfunding, the three P2P firms in the preparatory committee, left the older Korea P2P Finance Association in May along with other firms due to disagreements over its management direction.
News Comments Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M. Today’s main analysis: OnDeck’s Q2 2018 earnings presentation. Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation. United States SoFi reports […]
OnDeck today announced second quarter 2018 Net income of $5.8 million, Adjusted Net income of $10.0 million and Gross revenue of $95.6 million.
Review of Financial Results for the Second Quarter of 2018
Net income was $5.8 million, or $0.07 per diluted share, improved from the Net loss of $1.5 million, or $0.02 per diluted share, in the year-ago period.
Adjusted Net income was $10.0 million, or $0.13 per diluted share, compared to Adjusted Net income of $4.7 million, or $0.06 per diluted share, in the year-ago period.
Unpaid Principal Balance grew 3% sequentially and 8% from a year ago to $1,027 million. Originations of $587 million were consistent with the prior quarter reflecting an increase in the number of loans funded and decrease in the average loan size. Originations increased 26% from a year ago with growth in both term loans and lines of credit.
Gross revenue increased to $95.6 million, up 6% from the prior quarter and 10% from the year-ago quarter, driven by higher Interest income. The Effective Interest Yield was 36.1%, up from 35.6% in the prior quarter and 33.5% in the year-ago quarter, primarily reflecting increases in average loan pricing.
Guidance for Full Year 2018
OnDeck increased its guidance for the full year ending December 31, 2018:
Gross revenue between $380 million and $386 million, up from between $372 million and $382 million,
Net income between $10 million and $16 million, up from between $0and $10 million, and
Adjusted Net income between $30 million and $36 million, up from between $18 million and $28 million.
See OnDeck’s full Q2 2018 earnings presentation here.
Shares of On Deck Capital(NYSE:ONDK) were soaring by nearly 25% as of 1 p.m. EDT on Tuesday as the company beat consensus earnings expectations in the second quarter and raised its outlook for the remainder of the year.
Now, the top-line numbers are improving. Second-quarter figures released after market close on Tuesday showed record net revenue, up 27 per cent from a year earlier at $177m, from record quarterly loan originations of $2.8bn.
On top of all that, there was a big writedown this quarter of an acquisition made four years ago, during an ill-fated push into supplying loans to medical patients. Over the first six months, total expenses came to $1.28 for every dollar of net revenue.
GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.
OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues.
CEO Scott Sanborn noted that LendingClub’s core business is firing on all cylinders with record revenue and originations. The company has seen a 50% increase in applications year over year. Originations were $2.8 billion, up 31% year over year and up from $2.3 billion in the previous quarter. For context, the company originated their last high water mark of $2.75 billion in the first quarter of 2016. Revenues came in at $177 million, up 27% year over year.
Even Financial, a fintech startup that connects the disparate entities of the financial services industry, recently raised a $18.8 million Series A round led by GreatPoint Ventures with participation from Goldman Sachs, Canaan Partners, F-Prime Capital, Lerer Hippeau and others.
Although the OCC emphasizes that it’s holding these special-purpose charters to standards equivalent to those demanded of national banks, this is only sort of true with regard to the named prudential requirements, and it looks to be completely incorrect on critical restrictions on competitive and financial risk. These omissions have significant consumer protection, safety and soundness and structural impacts. Absent egregious violations, a charter granted cannot be revoked. The OCC should be sure it isn’t a shadow-bank enabler before it hands out these high-powered charters.
Rahul Chadha follows peer to peer mobile banking for the research organization eMarketer. His firm says Zelle will overtake Venmo this year. Chadha spoke with Marketplace’s Lizzie O’Leary about the two payment systems.
BankMobile A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.
It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.
Chime Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.
Endeavor Bank Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.
Finn Finn is a digital bank account for smartphones created by JP Morgan Chase.
GoBank GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.
Iam Money Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.
It has secured $3 million of funding, and plans to have $20 million when it launches.
Marathon International Bank A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.
Marcus An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.
Moven Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.
N26 A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.
PurePoint Financial PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).
Revolut European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.
Simple Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.
In early 2014, it was acquired by BBVA Compass for $117 million.
In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.
In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).
Studio Bank In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.
Varo Money San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank.
The Treasury Department’s recent report on how to regulate nonbanks drew praise not just from tech startups but also from mortgage industry insiders.
In addition to recommendations for a new federal fintech charter and that regulators pull back from payday lending rules, the report contained a section that might be music to a mortgage banker’s ears, including support for the industry’s automation efforts and another call to soften the use of the False Claims Act against lenders.
Mortgagetech company Blend is venturing into insurance. The San Francisco-based company launched Blend Insurance Agency, an extension of its digital mortgage platform that offers borrowers a range of options for homeowners insurance.
The first property is a 1,242-unit self-storage facility in Fayetteville, NC. It was acquired in December 2013 and sold in January 2018. It was acquired for $6,750,000 and sold for $9,645,000, representing a 43% increase in capital value from acquisition.
The second property is a 40,000-square foot office building in Tamarac, FL. It was acquired in May 2016 and sold in February 2018. It was acquired for $4,150,000 and sold for $4,900,000, representing an 18% increase in capital value from acquisition.
The third property is a 72-unit multifamily apartment building in Ogden, KS. It was acquired in July 2013 and sold in April 2018. It was acquired for $4,000,000 and sold for $4,450,000, representing an 11% increase in capital value from acquisition.
The fourth property is a 208-unit multifamily apartment building in Euless, TX. It was acquired in February 2015 and sold in May 2018. It was acquired for $12,375,000 and sold for $20,900,000 after a value-add renovation program, representing a 69% increase in capital value from acquisition.
DriveWealth Holdings, Inc. (“DriveWealth”), a fintech company providing brokers, digital advisors and mobile online financial services companies seamless access to the U.S. securities market, and Bambu, a global provider of robo-advisory technology, today announced the launch of a white-label, end-to-end robo-advisory platform solution for the wealth management industry.
To be considered for admission, applicants must complete the nine-page application and pay a $500 application fee. Each application must be for an innovative financial product or service as defined by the enabling legislation.
The emergency fundraising is the latest episode in Wonga’s rapid rise and fall. Just six years after the company was touted for a flotation that would have valued it at more than $1bn (£770m), it is reported to be worth just $30m.
WHEN PAYDAY LENDER Wonga launched in 2007, it was tipped to become a £1bn success story. Today, the company is worth just £23m and has only managed to avoid insolvency thanks to a last-minute £10m boost from investors. So what went wrong?
They are winding up their largest survey ever right now. In the past they have produced multiple reports targeting the various regions around the world including: the United Kingdom, Europe, the Americas, Asia and Africa. This year they are combining everything into one big study.
If you have not participated in the survey yet time is running out (while the survey says it closes on July 22nd, they have extended the deadline for another week or so). We need every platform in this country and around the region to participate. To learn more you can read more about this comprehensive piece in
Chinese P2P lending platform Dianrong announced that it has raised $40 million of funding from Dalian Financial Investment Group Co. Ltd. The current round will increase the company’s total funds raised to date to over $500 million. Its previous investors include big titles such as Standard Chartered, GIC Private Limited, Singapore’s sovereign wealth fund, CMIG Leasing, Simone Investment Managers, etc.
Prime Trust, a blockchain driven trust company, announced on Monday it has launched a new technology that enables real estate syndicators and securities issuers to accept funds from investors in the form of Bitcoin and Ethereum, frictionlessly and with zero crypto-market risks to the syndicator or issuer. According to Prime Trust, the technology enables holders of these virtual currencies to invest in real estate, crowdfunding and other private and public securities offerings without having to go through the cumbersome and often confusing process of liquidating tokens and then wiring funds in USD to an escrow account at Prime Trust.
TransUnion TRU, +0.56% announced today it is partnering with global technology and analytics company EXL EXLS, +0.93% to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.
As the revelations from the Royal Commission continue to pour in, the Australian Securities and Investment Commission (ASIC) has revealed that, in total, Australian financial advice institutions will refund customers over $800 million in reparations over fees for no service (FFNS) programs.
Launched in June 2018, the bank is led by former ANZ Japan CEO, Robert Bell, and ex-Cuscal Payments CIO Brian Parker. Joining as incoming chairman is Anthony Thomson, co-founder and former chairman of Atom Bank and Metro Bank.
For its tech, it uses a variety of different vendors. Unifii’s Business Transformation Platform is used for its technical infrastructure. For its small business lending platform, it will use one from Realtime Computing, based in Perth, Australia.
Digital banking start-up Pelikin aims to reshape the way people save, send and spend their money in Australia and while travelling abroad. The company’s slogan is “spend like a local”. The founder is Sam Brown.
Unveiled in 2008 and developed and supported by National Australia Bank (NAB). It operates under NAB’s banking licence, and offers home loans, online savings accounts, and term deposit accounts. UBank has more than 400,000 customers.
News Comments Today’s main news: Square pulls bank license application. Lendio facilitates 5K loans for California small businesses. Crowdfunding.de pass 500M Euro mark. Wisr doubles personal loan originations. Today’s main analysis: Deep dive into GreenSky. Today’s thought-provoking articles: How Kabbage’s president is shaking things up. Online lenders expected to increase exposure to ABS. Interview with PolicyBazaar CEO. United States Square […]
Square withdraws bank license application. There isn’t a solid reason given other than they want to “strengthen some areas” of their FDIC insurance application, and they intend to re-apply in the future. It’s an interesting move, nonetheless. It makes me wonder what they’ll gain.
Though Square has reportedly withdrawn its application to create a deposit-taking bank, the payments processor intends to file the application again in the future. The firm had applied for an “industrial loan company (ILC)” license with the Federal Deposit Insurance Corporation (FDIC), Reuters reported.
The news comes as it was reported in September that Square intended to submit an application to form a wholly owned and operated bank in Utah. That business unit would be called Square Financial Services Inc. and would be designed to offer loans and deposit accounts to small businesses. The bank would be capitalized with around $56 million in cash.
A study by the New York Fed found that online lenders reduced mortgage processing time and experienced lower overall delinquencies. The study found that mortgages offered by fintech companies closed about 20% faster and showed that default rates were 38% lower for purchase loans and 29% lower for refinance loans.
GreenSky Company Profile
GreenSky, headquartered in Atlanta, is led by CEO David Zalik. GreenSky has a $4 Bn market cap, 2017 revenues of $326 MM, and employs ~900 employees.
GreenSky has funded over $12 Bn in loans for over 1.7 Mn customers. The company funded $1 Bn in loans in Q1 2018.
GreenSky has shown impressive growth in its sales YoY. As seen in the charts below, GSKY had net income of $139 Mn in 2017, up from $124 Mn in 2016, while sales grew by 24% YoY to $326 Mn.
Online small business lender Lendio announced on Thursday it has helped facilitate nearly $120 million in growth capital through more than 5,0000 to small businesses in the state of California. The lending platform has reportedly funded more loans in California than in any other state and the funding milestone comes just after a 169% increase in loans originated through Lendio’s platform in California during the last fiscal year.
Lendio also reported that according to a Federal Reserve Bank of Cleveland report, nearly half of small businesses need additional funding each year; however, since 2008, it’s been a challenge for small business owners to access financial capital. The lender noted that continued growth and innovation in online lending platforms is transforming the funding landscape. Lendio helps California small businesses get loans fast, with 70 percent of businesses getting loan offers within three days of submitting an application.
Credit unions love an auto lending boom – what’s not to like? According to one analyst, however, there could be more happening than meets the eye.
Vehicle sales continue to hover around the 17 million mark, according to the latest Credit Union Trends Report from CUNA Mutual Group, and CU auto loans amounted to more than $354 billion as of April 2018 – an increase of nearly $80 billion from just two years prior. Auto lending at credit unions has grown by double digits (as a percentage) for the last two years.
A survey of 57 institutional investors by Managing Partners Group, released on Friday, found 60 per cent expect their exposure to ABS to rise over the next three years.
25 per cent of respondents said strong growth in fintech companies, including alternative lenders that prefer to raise capital via ABS, was a factor driving increased supply.
Rating agencies predicted a boom in P2P securitisations, but the only activity in 2017 was a £208.9m Zopa deal, led by investment trust P2P Global Investments.
Moody’s recently told Peer2Peer Finance News it expects more securitisations this year, while fellow ratings agency S&P Global has predicted a 30 per cent increase in securitisations from marketplace lenders during 2018.
Fintech is changing the financial services landscape. It is improving customer service, increasing financial inclusion and making banking just plain simpler, easier and more accessible.
Traditional banks around the world have been fearing the inevitable for quite a while now – and although some of them are starting to invest and acquire startups, many smaller, agile companies are still stealing a lead on the financial megaliths.
One of the most dynamic and innovative markets for fintech is the UK. And here are six companies that are radically disrupting financial services – and making life easier for us in the process.
China is home to the largest P2P industry in the world – an accomplishment that was aided by the fact that at the beginning, few rules were in place to regulate the online lending industry. But during the past year, Chinese authorities have tightened the rules pertaining to platforms who operate P2P sites.
As recently as last month, two P2P lenders, lianbijr.com and txslicai.com.cn, were investigated by Chinese authorities.
P2P lender Yilongcaifu reportedly collapsed with its parent company Fuxing Group shut down as it fell under a police investigation.
Xzgjf.com, another struggling online lender, promised returns of 8% to 14%. Since June 19, investors have been “finding it hard to withdraw money” as borrowers are not paying back their loans.
Early-days monitor of the German crowdfunding market, Crowdfunding.de announced in its latest quarterly report that Germany passed the half billion-euro mark in cumulated in SME crowdfunding at the end of June 2018.
The report monitors only equity crowdfunding and crowdlending on marketplaces open to German retail investors such as Exporo, Funding Circle and Companisto. It does not include private platforms such as SME lender Creditshelf.
Real estate accounts for more than half of the SME crowdfunding market (53,3%). It is the fastest growing segment, set to more than double in size this year, after having tripled in size in 2017.
Enterprise funding represents 42.6% of the market. Renewable energy project crowdfunding remains small at 3.8%.
Kleros, a new decentralized dispute resolution ‘layer’ for virtually any transaction, has partnered with MARKET Protocol, a company building an open source foundation for decentralized derivatives markets, an industry worth over 500 trillion.
The rankings are featured in a recent report published by Chartis, titled Technology Solutions for Credit Risk 2.0, 2018, which assesses the technologies that are addressing the speed, flexibility and risk profile of the lending market.
According to Chartis, there has been a structural shift in the way that credit is provided, consumed, and analyzed in recent years. Now, following the impact of Basel II on the way financial institutions systemized their credit assessment and analysis, a digital revolution is once again transforming the credit risk market. Chartis is calling this new normal ‘Credit Risk 2.0.’ In the wake of this transformation, new operational issues and challenges are impacting liquidity management. Financial institutions must reassess how vendors are able to meet their needs and demands. Based on specific credit risk capabilities, including data management and stress testing, Finastra earned Category Leader status for both the banking book and the trading book.
Financial inclusion probably won’t narrow the gap between the rich and the poor. In fact, some of the greatest inequalities exist in some of the wealthiest countries. But it can give the poor a means of building a better life and taking advantage of the social and economic benefitsthat access to banking brings.
So how can we accelerate financial inclusion through technology? Here are the top 5 ways.
ASX-listed lender Wisr (formerly known as DirectMoney) has revealed that the overall value of loan originations in the second half of the 2018 financial year increased by 136 per cent compared to the first half, while the number of new customers rose by 118 per cent over the half.
Further, the lender achieved a 66 per cent quarter-on-quarter (QoQ) growth in loan origination value and 40 per cent QoQ growth in loan origination volume in Q4 FY2018. This is up from the 42 per cent QoQ growth in originated loans recorded in Q3 FY2018.
Wisr said that its average loan amount also rose by 17 per cent QoQ to $22,670 by the end of Q4 FY2018.
Lodex, co-founded by Agrinio native Bill Kalpouzanis who is now its co-CEO alongside Mic Phillipou, uses sophisticated technology to get customized quotes for their customers who are looking for a loan.
It was Australia which presented an opportunity to put his model into practice, with banks showing growth for 15 years and the regulatory environment being kind to the kind of business Lodex wanted to become.
However, despite these tailwinds, the take up of digital advice in Australia has been relatively modest. This compares to the United States where a significant proportion of investors are embracing technology-enabled advice solutions, such as Betterment and Wealthfront.
Home-grown Australian providers, such as Clover and Stockspot, have made inroads with their low cost, automated investment offerings. The challenge remains for consumers to create a human connection with digital investment advice. That is what makes the story of former Essendon and Sydney Swans premiership player Ted Richards and his collaboration with robo adviser Six Park so interesting.
With $100 million earmarked for DocPrime for the next two years, Yashish Dahiya, Co-founder and CEO of PolicyBazaar, speaks about the architecture of the new venture and how they plan to cross-leverage product from their existing companies.
And fuelling this ambition was Softbank’s Vision Fund, which along with parent Softbank, has invested overall $8 billion in the Indian internet ecosystem over the last five years. Softbank wasn’t alone in leading this Series F round of $200+ million. The Japanese conglomerate was joined by existing investor InfoEdge, which runs Naukri.com and reportedly invested close to $45 million in the deal.
With traditional investments like savings and fixed deposits she found that returns were just too low. To invest in real estate, she needed upfront and large amount of capital and investment in gold was not yielding returns like it used to. While she dabbled in mutual funds and SIPs (systematic investment plans) she realised that to earn 12-15 per cent returns, she had to be invested for 3-4 years, if not more.
Tokyo-based Maneo Market overlooked misuse of funds that a client collected from investors, according to regulators.
The Securities and Exchange Surveillance Commission recommended on Friday that the Financial Services Agency impose administrative penalties on Maneo Market.
On behalf of a client named Green Infra Lending, Maneo Market raised roughly 13 billion yen ($117 million) from 3,084 investors to finance projects inside and outside Japan, promising annual returns of 11% to 14%.
The Securities Commission Malaysia (SC) is inviting interested parties to apply to operate investment crowdfunding platforms and peer to peer lending sites. SC states that applicants may submit their applications for registration now with a deadline of September 7th, 2018.
Prague-headquartered investment banking firm Benson Oak is setting up a dedicated investment fund for the Israeli market, the firm announced Sunday. The fund, which will focus on blockchain and consumer-facing companies, has already raised $25 million with the intention of raising a total of $100 million by the end of the year.
Benson Oak’s capital comes from private investors, strategic companies, and family offices, and the firm does not partner with institutional investors. The new fund will target seed-stage companies and is expected to announce two portfolio companies in the upcoming days.
News Comments Today’s main news: Money360 surpasses $750M in commercial real estate loans closed. Attorneys defend $16M LendingClub fee. Funding Circle lending unlocked 75K jobs in 2017. Westpac ends Prospa relationship. Today’s main analysis: Should financial advice be tailored along credit and gender lines? Today’s thought-provoking articles: GreenSky look fairly valued, but there are competitive risks. 4 companies driving […]
Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced it has surpassed $750 million in loans closed since inception. This includes $82.5 million in loans closed in May 2018.
Notable loans closed in 2018 include:
A $26 million bridge loan for a specialty retail center in Punta Gorda, FL, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
A $15.6 million bridge loan for an office building in Houston, TX, brought to Money360 by Rich Perry at Churchill Commercial Capital
A $17.25 million bridge loan for a medical office in Newport Beach, CA, brought to Money360 by Scott Monroe at NorthMarq Capital, Inc.
A $7.9 million bridge loan for Raytheon’s industrial space in Albuquerque, NM, brought to Money360 by Jake Clopton at Clopton Capital
A $9.2 million bridge loan for a neighborhood center in Tulsa, OK, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
A $5 million bridge loan for an office park property in South Bend, IN, brought to Money360 by Dean Giannakopoulos at Marcus & Millichap Capital Corp.
A $5 million bridge loan for a manufactured housing property and park in West Sacramento, CA, brought to Money360 by Jake Clopton at Clopton Capital
A $3 million bridge loan for a mid/high rise multifamily building in Detroit, MI, brought to Money360 by Robert Krupka at Gelt Financial
A $2.3 million bridge loan to a self-storage building in Panama City Beach, FL, brought to Money360 by Doug Brooks at Marcus & Millichap Capital Corporation
A $1.6 million bridge loan to a multifamily building in Macon, GA, brought to Money360 by Naveed Khan
Attorneys seeking $16 million for representing LendingClub Corp. investors in securities class actions against the peer-to-peer lending company defended their fee bid Monday to a California federal judge who previously said the amount “shocked” him, saying their work produced an “outstanding result under any measure.”
The 28-page motion filed by attorneys for Robbins Geller Rudman & Dowd LLP, lead counsel for the lead plaintiff, argues that the requested 13.1 percent cut of the $125 million settlement is reasonable in light of the results achieved, the risks…
GreenSky followed through with its plans to go public within weeks of confidentially filing with the SEC last month – making it the largest fintech IPO in the country since LendingClub and OnDeck went public nearly four years ago. The company offered 38 million shares at $23 per share to raise $874 million (with the actual proceeds being $830 million after underwriting fees). The company’s shares have largely traded around this level since then. This points to a valuation of $4.4 billion for GreenSky – around the figure .
GreenSky’s role as an intermediary between lenders and potential borrowers with strong credit histories makes its overall business model a risk-averse one, as it bears negligible credit risk. At the same time, the relationships it has built with banks, home improvement companies and healthcare providers promise to drive growth at a steady pace over the foreseeable future, even as the company explores other growth segments.
Facebook, Apple, Amazon, Netflix and Google garner so much attention that they have their own collective shorthand, FAANG. But at American Banker’s Digital Banking conference this week, a mostly different set of companies were top of mind: Call them SASA, or Starbucks, Amazon, Sears and Acorns.
More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through Starbucks’s app, and that just over 23 million consumers over the age of 14 will use the Starbucks app to make a point-of-sale purchase at least once every six months, according to Gavin Michael, head of technology for Citigroup’s Global Consumer Bank, citing data from research firm eMarketer.
Women with credit scores below 700, according to an analysis conducted by Elevate’s Center for the New Middle Class, an independent research arm of the online lender.
Fifty-six percent of women with subprime scores say their finances cause them significant stress. About 45% of men with subprime credit scores say the same, as well as only 23% of women with prime ratings and 16% of men with prime ratings.
Seventy percent of women with subprime credit scores work full time, versus 62% of women with prime scores.
The woman with subprime credit is 41% more likely to have children in her home than a prime woman. She is also 79% more likely to have an elderly parent living with her.
Most surprisingly, only 39% of this group believe they have the skills to manage their finances, despite the fact that ongoing research from myriad sources have found women to be the primary financial stewards of their households.
Key findings in the research include:
Two-thirds of non-prime women live paycheck to paycheck.
They are 3x more likely to have lost a job in the last year compared to prime women
Only 34% of non-prime women hold salaried jobs
They are 4x more likely to have trouble predicting next month’s income compared to prime women
More than 4 out of 5 non-prime women admit to running out of money at least once a year
More than one quarter admit to running out of money every month
They are 24% more likely to say their finances cause them stress compared to non-prime men
Only 13% of non-prime women would have money on-hand to cover an emergency of $1200
Non-prime women are 6x more likely to have used a payday loan
But another myth persists: Seasonal businesses suffer most of all. SBA’s data doesn’t bear this out, showing companies across varied industries tend to follow similar patterns in terms of failure. Manufacturing-based businesses, for example, are no more protected from failure than seasonally driven businesses like restaurants and retail stores, meaning other factors determine companies’ likelihood of long-term success.
An Ohio State University study indicated that of restaurants don’t make it past the first year. Another 2005 study amended that, saying that the 60 percent figure applied to the first three years.
With CB Insights finding that of small business failures can be attributed to cash flow problems, it’s imperative that seasonal business owners find ways to “spread the wealth.”
Kabbage, for example, ties its line of credit to a small business’s live data, allowing the company to adjust lines of credit in real time to match a business’s seasonal needs.
In the early days of online lending, the big appeal was access to funds for potential borrowers with few, if any, options for securing capital.
According to recent reports, some of the largest marketplace lending players in the field — SoFi, LendingClub, Avant, Prosper — are being pushed by their investors to batten down their credit hatches and demand better credit scores from their borrowers, as well as shorter maturities so they can make more attractive offerings to investors as they look to repackage those loans into asset-backed securities.
According to KBRA, the weighted average of FICO credit scores of Prosper’s loans, packaged in ABS, increased to 717 in a March 2018 deal from 704 in a sale two years earlier. And they weren’t the only lender to see its average score go up — SoFi, increased the weighted average of its FICO credit scores to 744 in a sale earlier this year from 732 in a deal at the start of last year.
Optimal Blue and Finastra have announced an expansion of their relationship under which Optimal Blue will be integrated Finastra’s Fusion MortgagebotPOS product.
The new integration enables banks and credit unions to provide mortgage applicants with Optimal Blue’s live pricing searches via any point-of-sale channel. Fusion MortgagebotPOS is a web-based platform that allows lenders to receive applications through every point-of-sale channel: consumer-direct via the internet, in the branch or call center, or through professional loan officers.
A new online platform is now available for accredited investors seeking direct access to Section 1031 exchange investment opportunities with the launch of real estate investment sponsor Direct 1031 Exchange. The company provides Section 1031 exchange offerings directly to investors using the Delaware statutory trust structure under SEC Rule 506(c).
Through Direct 1031 Exchange’s online investment portal, accredited investors can participate in 506(c) DST offerings sponsored by the firm with no upfront load or commission paid by the investor.
LendStreet is a lender that works with consumers who are experiencing financial difficulties. These are people who have taken on too much debt and find themselves in a hole, unable to pay it all back. But rather than declaring bankruptcy, these people want to work things out and reduce their debt through a debt settlement.
This is the point when the debt settlement companies come in. LendStreet lends only to customers whose debt is being or will be negotiated by a debt settlement company. Most of LendStreet’s customers are already enrolled with debt settlement companies before getting to LendStreet. Those who come directly to LendStreet are paired with a debt settlement company to negotiate down their debt, which will be funded by a LendStreet loan.
Chris Sugden is the Managing Partner of Edison Partners, a growth equity firm based in Princeton, New Jersey. They provide growth capital for small business doing $5 million to $20 million in annual revenue, typically based on the east coast between DC and Boston. They have never invested in a Silicon Valley startup.
In this podcast you will learn:
The history of Edison Partners and their unique New Jersey location.
The difference between East Coast and West Coast entrepreneurs.
The three different verticals they cover.
The impact that Marcus will have on the broader fintech space.
The shift Chris has seen with the banks as they embrace fintech.
The interesting fintech trends Chris is focused on right now.
Radius Bank in Boston has lined up its next fintech project.
The $1.2 billion-asset online bank is working with a Treasury Prime, a San Francisco startup, to create a business checking account. The Tailored Checking Account will allow business owners around the country to quickly open accounts online.
An internet lending company and others have engaged in a plot to charge illegally high interest rates on loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit, a group of borrowers said in a proposed class action filed in California federal court Monday.
Four plaintiffs from various states claimed in their complaint that even though Big Picture Loans LLC said it was owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, loans made in Big…
Daniel Kahneman, a Nobel Prize-winning economist, said Tuesday financial advisors still play a major role in the finance world — despite recent technological disruptions in the industry — as they act as therapists for investors.
Robo-advisors are growing at a very fast rate, surpassing $200 billion in assets under management last year, according to BackEnd Benchmarking, which releases quarterly data on robo-advisors.
Lending Express, an AI-powered marketplace for business loans, has opened a new Silicon Valley office in San Mateo, as well as the appointment of Moshe Kazimirsky to VP of Strategic Partnerships and Business Development to support the West Coast team. The announcement comes on the heels of Lending Express’ May $2.7 million seed funding round led by Entrée Capital, iAngels, and existing investors.
Although the online marketplace model had been proven to work – Amazon and eBay had been established over a decade earlier – LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play.
The path to success is littered with unforeseen obstacles, good days can follow bad, tailwinds become headwinds. LendInvest is no exception. When the company was young, raising debt finance often felt like an uphill struggle. It took many air miles and international calls, but eventually an eastern European bank offered a £2m funding line, later increased to £6m.
Ranger Direct Lending operates a £128 million investment company which has faced pressure from activist investors who own almost 30% of the company.
The board proposed yesterday of winding down the company as Ares Management withdrew itself from consideration to manage the trust. Ranger’s board also suggested shareholders vote against newly nominated directors by activist investors.
Ranger Direct Lending has struggled as defaults have crept up in the sector.
Personal finance apps offer customers insights into their budgeting and spending habits, but U.K.-based digital bank Monzo is taking that a step further by letting its customers design their own rules on how they want to interact with their money.
Monzo’s tie-up with If This Then That, rolled out in early June, lets customers automate tasks using their financial data through personalized rules. IFTTT is a web and app-based platform to help customers get apps and devices to work together. It lets users set up “if, then” rules; for example, “if I post an Instagram, post it as a native photo on Twitter,” or “if I add a new task to an Amazon Alexa to-do list, add it to the iPhone reminders app,” and so on. IFTTT’s integration with consumer financial data lets them experiment with new use cases for financial data and lets the bank learn more about customer preferences and behavior.
COLLATERAL investors may end up having to recoup any unpaid interest owed as a creditor of the company, the administrator of the closed peer-to-peer lending platform has revealed.
An update from BDO said its initial view was that due to section 26 of the Financial Services and Markets Act – which deems that agreements with unregulated parties are unenforceable – investors would be treated as creditors.
This means they would have to submit documentation to BDO on what they are owed and wait to see what funds can be recouped through the administration.
Venture capitalist (VC) firm Index Ventures is on its way to earn $1.6 billion from its early investments in B2B FinTech, according to Forbesreports Monday (June 11). Index Ventures’ portfolio includes iZettle and Adyen, with unconfirmed reports of a Funding Circle initial public offering (IPO) that could push Index Ventures into the $2 billion mark.
LendInvest, the UK’s leading online marketplace platform for property finance, has become a fellow of the Luxembourg House of Financial Technology (LHoFT), the country’s leading FinTech innovation hub.
LendInvest has had a presence in Luxembourg since 2014 when it established its first Luxembourg-domiciled fund.
Writing an opinion piece for the FT BBVA Executive Chairman Francisco Gonzalez talks about the rise of fintech and big tech in banking. He explains that banks still have an advantage when it comes to security, privacy and compliance.
A new regulatory model is needed for the new era of digital banking and data. Banks need to build on what they do best and evolve to ensure they stay relevant. He believes there is a paradigm shift occurring in banking and that banks need to find a new way to support customers and build out their assets
Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.
Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.
Dover Financial Group lured financial advisers by offering to postpone payment of annual licence fees for a year or more, but the collapsed company is now calling for immediate payments of those debts, leaving planners, who are already worried about their future, furious.
Basing only 20 percent of its risk assessment engine on the CIBIL score, the platform assesses a borrower’s credit-worthiness based on their social, professional, behavioural analysis, including their salary expenditure trends and limits on credit card. The founders claim that the platform takes close to 130 data points into consideration before deciding on a suitable interest rate.
The borrowers are then classified between A1 (A2 and A3) and B3, with the rate of interest ranging from 12 to 36 percent.
Ekmeet says that close to 85 percent of loan requests are denied by the platform, and only 20 percent of their total users are from Tier II towns and cities.
Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025.
Credit defaults have been the main factor keeping Brazilian banks from cutting interest rates to households and companies, the central bank said on Tuesday, even as benchmark rates have fallen to all-time lows.
The average cost of credit fell 1.3 percentage points in 2017 to 21.3 percent, according to a central bank report, compared with a 6.75 percentage point decline in the benchmark Selic interest rate. Spreads fell 3.8 percentage points to 18.9 percentage points.
Defaults, which reached 3.2 percent at the end of 2017 according to a widely used metric, forced banks to keep interest rates high to account for potential losses, the central bank said.
Defaults were behind an average 37.4 percent of banking spreads in 2015-2017, the largest contributor to bumping up credit costs to consumers. Other reasons were administrative expenses, taxes and financial margins, a central bank report showed.
News Comments Today’s main news: Online lenders tighten rules against default wave. UK P2P lenders join effort to overturn Brexit. Consumer credit sees the most financial complaints in UK. Today’s main analysis: Where is the most student debt? Today’s thought-provoking articles: How regulations will impact Ant Financial. The 7 most innovative fintech companies. Where is the fintech innovation right […]
It’s gotten a lot harder to borrow money from the raft of fintech firms looking to bring online lending into the mainstream.
Besieged by a wave of defaults after several years of rapid growth, the biggest online lenders have been forced by bond investors to tighten underwriting standards. Social Finance, Prosper, LendingClub and Avant now demand higher average credit scores and offer shorter maturities to boost the quality of loans they repackage into asset-backed securities.
The shift in the $30 billion market comes after a swarm of borrower defaults in the past three years rattled ABS investors. It also marks a coming of age of sorts for the fintech startups that offered cut-rate loans to build a customer base. Now, with rates rising and a potential economic slowdown looming, the move toward higher-quality from the push for quantity has taken on added urgency.
According to Kroll, the weighted average of FICO credit scores of Prosper’s loans packaged in ABS increased to 717 in a March 2018 deal from 704 in a sale two years earlier.
LendingTree today released its study on the places with the most student debt. To determine whether there are geographic variations in student debt, LendingTree analysts looked at a sample of anonymized users who logged into My LendingTree in the first quarter of 2018 and calculated how many had student loans, as well as the other reported statistics related to their balances.
Wells Fargo & Co. expects to increase its auto lending again. In mid-2017, Wells Fargo decided to reduce car financing and tighten its underwriting standards. In February 2018, the firm said it intended to finish consolidating its regional car loan centers by April, and that lending would expand within two quarters, reported Bloomberg.
For lenders in a $1.2 trillion U.S. auto loan market, they face a landscape with falling vehicle resale prices, making it difficult for them to soften losses from repossessing cars when borrowers default.
Principal Financial Group is acquiring financial technology startup RobustWealth to improve its own technology offering and expand distribution capabilities among the banking, broker-dealer and registered investment adviser channels.
Principal also sees the RobustWealth’s platform — which includes digital advice, goal-based investment tools and client onboarding — as providing the foundation for a direct-to-consumer robo-adviser in the future.
Like many people, Entrepreneur Network partner Jeff Rose once has convinced himself it was a good idea to loan money to a family member. In reality, the situation can get messy when this close personal connection cannot return the investment. This does not mean Rose has given up on peer-to-peer lending, which is a helpful tool that can streamline the loan process.
Online lender and service provider OppLoans has been listed as one of the country’s 2018 Best Workplaces by Inc. Magazine. The award determination was based on employee survey results in areas like benefits, perks, executive leadership and opportunities for career development.
Boston-headquartered car financing service Lendbuzz Funding LLC has raised $30 million in financing, the company announced Tuesday. The round was led by BHI, the U.S. division of Israel-based Bank Hapoalim, by Viola credit, the growth and venture lending arm of Israel-based Viola Group, and by U.S.-based ConnectOne Bank.
The company, which currently offers its services in most U.S. states, says it reviews loan requests within 24 hours and transfers money immediately upon approval. Since its establishment, the company raised $43 million in both debt and equity funding.
For the next week, a large bus operated by Fifth Third Bank will travel throughout Toledo, offering residents free money management advice and job-searching services.
The bus, called the Fifth Third Bank Financial Empowerment Mobile, or eBus, was located at the Lucas Metropolitan Housing Authority on Wednesday, and though it’s operated by Fifth Third, its services can be used by any residents no matter which bank they use, said Loretta Humphrey-Cruz, community development relationship manager.
The third location of PLI’s 23rd Annual Consumer Financial Services Institute will take place in PLI’s San Francisco Conference facility and via concurrent live Webcast on June 25-26, 2018. This will be the first time in many years that the Institute will take place in San Francisco. Since the first location of this event in NYC on March 26-27 was well-attended, and the second location in Chicago on May 7-8 was sold-out, anyone interested in attending the program in San Francisco is encouraged to act quickly to register.
Could Britain’s leading technology entrepreneurs derail Brexit? More than 80 innovators and investors from across the UK’s tech sector have launched a new group, Tech for UK, which will campaign for a meaningful vote on the final terms of the Brexit agreement that the British Government is currently negotiating with the European Union. Such a vote should give Britons the option to vote for the UK to remain in the EU, Tech for UK argues.
The group boasts a string of high-profile business leaders from the tech sector, including Martha Lane-Fox, best-known as the co-founder of Lastminute.com, Giles Andrews, one of the founders of peer-to-peer lending pioneer Zopa, and George Bevis, the CEO of Tide Bank. It also features leading venture capital and private equity investors, such as Simon Murdoch, the managing partner of Episode 1 Ventures.
The FOS annual report for 2017/2018 found consumer credit products, which includes some peer-to-peer lending as well as payment protection insurance, accounted for the most complaints at 36,349 last year, up 40 per cent.
The Ombudsman upheld 47 per cent of complaints, up from 45 per cent a year before.
There was also an eight per cent increase in complaints about unsecured loans to 6,909, while credit card complaints were up 15 per cent to 11,073.
The FCA reviewed seven firms offering online discretionary investment management services and three firms giving automated advice.
It found service and fee-related disclosures at most online discretionary investment management firms in its sample were unclear.
Some firms did not make clear whether their service was advised, non-advised, discretionary or non-discretionary. Others also compared their fee levels with their peers in a “potentially misleading way”. For example, they compared a non-advised, non-discretionary service with a discretionary service solely on a cost basis without explaining the difference in the nature of the service.
With the proliferation of data on the internet, there are many pain points for individuals. Since you do not own your data, someone can sell you information and personal data without sharing profits. In addition, data is often scattered among multiple platforms, making it difficult to manage. Finally, data is difficult, if not impossible, for individuals seeks to monetize and earn from it. They don’t know how the blockchain could be applied in this scenario to better their lives.
GXChain solves these pain points by obtaining user consent before collecting and storing user data on a blockchain.
GXChain wants to be the data trading network that protects user privacy and offers copyright protection and usability at the same time. It has real-world applications in insurance, online lending, consumer loans and banks.
China is also at the forefront of innovation. The government is actively cultivating fintech there.
Fintech companies like Qudian, LuFax, and ZhongAn (owned by Ant Financial), China’s first online-only insurer, are now emerging. Investment bank CLSA ranks ZhongAn as the sixth most valuable e-finance company in the world. The Chinese government has also designated development zones, such as Zhongguancun and Shenzhen, for innovation industries.
Banks are set to refund “significantly” more than the $220 million already set aside for financial advice clients who were charged for services that were never provided, as institutions search their files for customers who were ripped off.
A recent survey by online lender State Custodians found 52 per cent of people would be open to a renovation project for their next purchase but only 19 per cent of people would be keen on tackling a full fixer-upper.
On the other hand, a quarter of respondents would prefer taking on a partially renovated home as a project, with Millennials in particular more open to the idea of buying a half-renovated house.
In mid-2017, B Madhivanan, the chief technology and digital officer of ICICI Bank, met Rohan Angrish, the chief technology officer of online lender Capital Float. Madhivanan had questions about online lenders’ small-ticket loans. Fintechs like Capital Float lend to underserved segments like kirana stores that banks don’t normally touch.
United Overseas Bank (Malaysia) Bhd has partnered with regional peer-to-peer financing platform Modalku Ventures Sdn Bhd (Funding Societies) to connect startups and small businesses with alternative financing solutions.
Through the partnership, startups and UOB Malaysia’s small business customers will be able to raise up to RM500,000 directly from individual and institutional investors using Funding Societies’ platform without the need to pledge collateral.
The fintech (financial technology) sector is facing difficulties of capital mobilisation shortage, inadequate legal framework and banks’ hesitance in co-operation, said Lê Minh Hưng, Governor of State Bank of Việt Nam (SBV).
Hưng told the Việt Nam fintech forum 2018 held in Hà Nội on Wednesday that fintech and banks could contribute to expand financial universalisation, and promoting hunger eradication and poverty reduction while enhancing social equality and sustainable economic development.
Japanese mobile games publisher gumi today launches a fund to invest in promising global cryptocurrency companies. With USD 30 million in initial investment secured, the venture capital fund is moving to open up the Japanese crypto startup market to international investors, honing in on a target that has, up to now, been a struggle to access and understand.
While the Japanese yen accounts for over 56 percent of Bitcoin volume, gumi believes that there is lack of understanding of Japan’s crypto market and the project’s leaders are keen to fill a void in the country that was also the first to legalize bitcoin.
He has helped to raise over USD 250 million to date for companies such as Bee Token, the Decentralized AirBnB and crypto lending platform Celsius Network.
According to EcoBank, more than 57% of all mobile money accounts globally can be found in sub-Saharan Africa, with the African fintech market set to grow from $200m currently to $3bn by 2020.
A recent study by McKinsey found room for growth in meeting unmet banking needs in Africa. These include borrowing, saving, and investing across the continent. South Africa alone is set to see an increase in banking revenues of $4bn over the next five years.
A boom in lending by fintech firms in Kenya has led to an increase in predatory lending practices, the country’s central bank governor said yesterday, calling for the sector to be regulated.
Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.
One set of borrowers at greater risk are Canada’s 1.14 million small businesses, defined as companies that employ up to 99 workers. Statistics Canada reports that small businesses represented 98 per cent of all businesses, employed 70 per cent of workers, and generated 30 per cent of each province’s GDP on average. This category includes startups and high-growth firms, which represent Canada’s best hope for job creation and economic growth.
Fortunately, small businesses now have an alternative source for loans called peer-to-peer (P2P) lending. These online platforms match borrowers and investors directly and can provide loans cheaper and faster than traditional sources. How can that be? The answer is technology.
Fintech Select Ltd. is pleased to announce that its financial statements for the Q1 ending March 31 2018 have resulted in a net profit of $986k. Q1 2018 Financial Statements and Management Discussion & Analysis (“MD&A”) have been filed on SEDAR.
By the very definition of FinTech, online lenders have been using technology to transform financial services. In the early days, this equated to moving the mountains of paperwork into digital forms and automating manual processes. Rather than optimizing transactions and speeding approvals, the same inefficient processes were often recreated. The same documents were required — […]
By the very definition of FinTech, online lenders have been using technology to transform financial services. In the early days, this equated to moving the mountains of paperwork into digital forms and automating manual processes.
Rather than optimizing transactions and speeding approvals, the same inefficient processes were often recreated. The same documents were required — now in a PDF format rather than paper. In fact, some lenders made the mistake of modernizing the front-end customer experience but didn’t link their digitization efforts to the back office.
User-Focused Design and Branding
What’s changed? Now, consumers are demanding more security, privacy and personalization from their banks and financial service providers. Online lenders and financial institutions must upgrade their user experience by speeding transactions, providing personalized pricing and integrating data sources to reduce documentation requirements.
Evolving end-to-end workflows and processes
This long-running trend to simplify and streamline the often arduous loan approval process is now including new data sources. Financial institutions are re-thinking the requirements to originate a loan and reworking their customer experience and internal workflow to deliver a frictionless lending experience.
Friendly Financial Advice Delivered Digitally
Borrowers value personal advice and often require 24/7 access to answers. Fortunately, digital tools are becoming more acceptable with the flexibility of self-service and collaborative models to deliver information quickly and efficiently.
The next generation of digital lending will engage consumers in new ways, such as digitally-augmented human support, voice interaction, AI-powered virtual assistants and chatbots, wearables, and augmented and virtual reality.
Since online-only lenders don’t have storefronts to develop in-person relationships, clear communications are critical for building trust. Opportunities to better serve online customers include:
Discrete Research and Application Process
Plain Green Loans recently conducted another round of focus groups with customers and received feedback about the need for protecting their privacy. As a provider of short-term loans to consumers during emergencies, Plain Green’s customers require discretion as they research loan options online. Customers also expressed appreciation for a simplified and streamlined loan approval process. The consumers seeking emergency loans are on tight deadlines and need immediate responses to determine next actions. A fast review of applications and loan approvals are imperative to these consumers. In fact, a recent PwC survey of more than 1,600 adults with full-time employment found that 46 percent of those in the study – which typically has more stable finances than other groups – stated that financial challenges are the number one source of stress in their lives. The study concluded that lenders have tremendous opportunities to assist consumers in understanding their financial options and help them choose the best solution based on their personal situation.
Building Consumer Confidence
Feedback from the Plain Green customer focus groups emphasized the need for authenticity, being real and believable.Creative Bloq’s list of big branding trends in 2018 cited the recent massive data breaches and natural disasters occurring one after the other as the reason consumers want extra assurance from brands that they will provide security. They say, “consumers are looking for clues to determine whether a brand can be trusted, from the overall design quality and experiential thoughtfulness, to ratings and feedback on social media. Brands have to view all of their activities through the lens of a skittish public and a tumultuous world; particularly online.”Online reviews were a major topic of discussion during the focus groups. Several customers said they don’t believe the reviews on websites because the testimonials are all positive or have high ratings. Instead, they preferred to research customer feedback on their own using Yelp, Google or other platforms to give them a broader understanding of experiences the general population may have encountered.
Brand Images Reflecting Diversity
Focus group participants expressed a desire for more diversity in branding images. They want real people shown on websites and in communications that reflect wider demographic groups.Customers stated that they distrust images of people looking too happy, too sad or with fake, over the top emotions. Especially when making a financial decision, the customers want to see people with expressions that underscore the serious nature of the transaction.The focus groups provided meaningful insights that will inform our customer care team, website development, and acquisition and loyalty programs.
It’s clear that online lenders and other financial services providers must continuously seek customers’ feedback to align product development and business strategies to customers’ needs.
With more than 12 years of experience designing groundbreaking marketing strategies for Fortune 500 companies and financial technology brands, Guy Dilger, Guy Dilger, VP of Marketing, Plain Green, LLC, is known for generating engaging content and compelling concepts that resonate with targeted consumers. Prior to Plain Green, Dilger held senior positions within fintech and retail spaces where he managed national marketing campaigns and customer-centric loyalty initiatives for Sears and Kmart. Previously, he was part of the management team at Limited Brands, where his marketing work in support of Express brand included CRM, email, web-based programs and the redesign and relaunch of a private label credit card. Dilger has an MBA, as well as a bachelor of science in economics, from Southern Methodist University.
News Comments Today’s main news: Robinhood raises $363M. Americans on pace to amass $4T in consumer debt by end of year. Zopa to boost regulatory clout. Reserve Bank of India regulations create P2P lending road blocks. How China struggles to create a credit scoring system. Today’s main analysis: LendingClub earnings overreaction. LendingTree Personal Loan Offers Report for April 2018. Today’s […]
Robinhood raises $363 million. AT: “Robinhood has already established itself as a leading alternative investing mobile app. Now they want to take on the largest cryptocurrency exchange, Coinbase, and this raise should help them get there and be more competitive.”
SoFi, which recently confirmed it had 500,000 members, is on a customer acquisition push.
The company, which initially offered student loan refinancing for high-earning top-tier graduates and has since expanded its offerings, differentiates with VIP-style “member” benefits.
It’s a customer-for-life strategy other digital banking upstarts are pursuing. Luvleen Sidhu, CEO of BankMobile, recently told Tearsheet that a “customer for life” strategy is underpinned by the reality that “every customer is a potential customer,” with product offerings tailored for different life stages. SoFi has been known to pay a high price to gain customers; last year, it reportedly acquired customers at $756 apiece. The non-financial member services are valued at $795 per customer, according to the company.
Hey Future SoFi Money Member (SoFo Money Email), Rated: A
Higher interest (1.09% for May—21x the national checking account average of 0.05%!)
Reimbursed ATM fees worldwide (up to 6 per month)
No foreign transaction fees
No overdraft fees or account fees whatsoever!
Easy-to-use mobile app
SoFi Money Visa Debit Card
Mobile check deposit
Top notch customer support
Send money to friends and family with easy P2P at no cost
PLUS access to SoFi membership including complimentary career coaching and member events when you set up direct deposit
Did we mention that if you sign up for an account and set up direct deposit you’ll get $200?
Such a strong reaction to LendingClub hasn’t happened in years. The company is still down 20% year to date, and more than 40% in the last twelve months. LendingClub has struggled to find its footing ever since the ouster of its CEO, Renaud Laplanche, after controversy over the parking of LendingClub notes in a related third-party firm. More recently, in the wake of Wells Fargo’s (WFC) fake-account scandal, the FTC has also charged LendingClub with charging improper fees to borrowers, sending the stock to new all-time lows of $2.57.
But with this earnings quarter – the first time in a long time that LendingClub has rallied to earnings news (in Q4, LendingClub dropped 9% after missing revenue estimates; the quarter before that, it tanked 17% for doing the same). What’s interesting is that even in this quarter, LendingClub continued a three-quarter streak of missing analysts’ revenue expectations.
As the housing market has gone from recovering to roaring over the last five years, home flipping has also increased.
According to data provided by ATTOM Data Solutions, a real estate data provider, some 138,410 flippers invested $56 billion in home flipping in 2017, 34.8 percent of which was financed as opposed to executed in all cash. Prior to the housing bust, the same type of easy credit that infected the traditional mortgage market was also present in home flipping. At the peak of the housing bubble in 2005, more than $100 billion worth of homes were flipped by 287,929 investors, and 66 percent of those home flips were financed with loans.
Koizumi won his fight, his party crushing all opposition in a landslide, and his plan was set in motion, though the process has taken more than a decade. The company’s initial public offering in 2015 was the world’s biggest in that year. The government still owns most of Japan Post Holdings Co., and periodically sells off shares, with the goal of eventually reducing its stake to only a third from more than half now. But privatization hasn’t shrunk Japan’s postal bank itself, which remains one of the largest and most important in the world:
The problem was that Japan’s postal bank didn’t just take deposits — it also lent money, including to so-called zombie companies, or inefficient enterprises that survive due to below-market-rate loans.
Bond Fund Inflows, Dollar Rally and Buyback Surge (INTL FCStone Email), Rated: AAA
U.S. equity ETFs have lost $35 billion since the Nasdaq index peaked in mid-March. This is the longest stretch of ETF outflows I can remember since the end of the great financial crisis. Inflows into bond funds accelerated to $16 billion over the same time. Jumping from stock to bond funds at the first sign of volatility was a logical reaction when bond yields were falling to record lows amidst the deflationary fears of the beginning of 2016.
It makes a lot less sense when corporate earnings are soaring, when deficit-related treasury issuance is exploding, and when the New York Fed underlying inflation gauge is clocking above 3%. Last but not least, the equity selloff was in large part driven by a bond market rout that pushed 10-year yields above the economically meaningless but psychologically symbolic 3% level.
Zeus CrowdFunding, Zeus Hard Money and Zeus Mortgage Bank—made the switch to monotheism. The three successful businesses are now united under a single brand: ZeusLending.com.
Zeus Founder and Chief Acceleration Officer Steven Kaufman claims to have consolidated all three financing businesses into a single organization to better serve the community of real estate buyers and investors who rely upon fast, no-hassle loans to conduct timely transactions.
LendingTree today released its first Consumer Debt Outlook for May 2018. Americans are on pace to amass a collective $4 trillion in consumer debt by the end of 2018. Collectively, Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010.
Incomes growing, but consumer borrowing growing faster Overall, the percentage of total non-housing debt, at 26 percent of Disposable Personal Income, is now even higher than during the credit boom in the mid-2000s.
Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.35% in April.
The average best APR offered to all borrowers with credit scores of 760 or above was 7.35%, a decrease of 7 basis points from the prior month and 2 basis points from the same period one year ago.
At $22,774, the average loan amounts offered with the best APRs to all borrowers with a score of 760, up 0.57% ($130) from last month, and over 17.86% ($4,067) from the same period one year ago.
The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 4.87% on average, and loan amounts of $33,931. A borrower with this APR and loan amount would save $2,877 by consolidating debt with a 10% APR over a three-year term.
Recently, CI had a chance to catch up with Eric Malley, founder & CEO of MG Capital Management during the Crypto Invest Summit in Los Angeles. While not quite there yet, Malley is interested in the potential of blockchain. He is looking at the options of how crypto and property can make sense for both investor and issuer.
MogulREIT I, as part of its diversified income strategy, recently completed two preferred equity investments in community-based retail centers. Community-based retail centers are centrally located within their respective population centers and focus on durable tenancy that serves the needs of the working community, thereby being less susceptible to internet retailing. The transactions include a $3 million preferred equity investment in a retail center in Waterbury, CT, consisting of three multi-tenant strips with 17 suites across 50.5 acres and a $1.9 million preferred equity investment in a retail center comprised of two lots with over 27,000 square feet located in Orange County, CA. CoStar reports that within a one-mile radius of the property, average household income is over $116,000.
Apple Inc. and Goldman Sachs Group Inc. are preparing to launch a new joint credit card, a move that would deepen the technology giant’s push into its customers’ wallets and mark the Wall Street firm’s first foray into plastic.
The planned card would carry the Apple Pay brand and could launch early next year, people familiar with the matter said. Apple will replace its longstanding rewards-card partnership with Barclays PLC, the people said.
Guaranteed Rate, one of the nation’s largest retail mortgage lenders, reached $3 billion in total locked loan volume for the month of April and eclipsed records previously broken in March. In a highly-competitive housing market, the retail mortgage lender showed it’s the home purchase expert by achieving the following records: 9,387 in total locked units, $2.5 billion in locked purchase volume and 8,041 in locked purchase units.
Nationwide is shutting down its retail bank, returning to its historical core business lines including insurance and retirement; part of this plan is to invest more resources in reaching the fee-only adviser community.
The move to wind down banking operations was a strategic decision to focus on trust operations that support retirement plans, a company spokesman said. Gaining scale and becoming competitive in retail banking would have required a “significant investment.”
We are now seeing an evolution of the online lending model: version 2.0. This version looks in many ways like a traditional bank, albeit a much lighter and digital one, with multi-product platforms and a variety of custom offerings for consumers. With non-traditional models like Barclays and Goldman Sachs entering the market, online lenders are either partnering up or learning from the players they sought to disrupt. In digital lending 2.0, it will be important to take an open collaborative approach, broaden offerings and deepen customer relationships through more customized solutions.
A recently filed California lawsuit raises the stakes in the ongoing challenge to the “bank origination model.” The lawsuit, Barnabas Clothing, Inc. v. Kabbage, Inc., was filed on March 22, 2018 in Superior Court in Los Angeles and recently removed to the federal court.1 Barnabas alleges violations of state usury, false advertising, and unfair competition laws, and asserts two federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act claims. Barnabas seeks to certify a class on behalf of all California-based Kabbage borrowers and requests various relief, including that the court void the Kabbage loans.
CreditCards.com, the average FICO credit score was 699 in 2016, which is just a step above fair credit. About 30 percent of Americans have poor credit, making it difficult for them to function in the financial world.
Get Creative with Loans
Peer to Peer Lending: Since 2005, peer to peer (P2) lending has been a staple for those seeking funding with bad credit. Rather than going through an institution, you apply for and receive funds over a member-funded platform.
ZOPA is recruiting staff to bolster its regulatory expertise and influence ahead of industry changes and developments such as Brexit.
The peer-to-peer lender is advertising for a public and regulatory affairs officer who will be responsible for building relationships with key regulatory and political stakeholders and industry bodies.
According to LendInvest, when asked what will have the biggest effect on house prices in the next five years, nearly half (40%) of those surveyed viewed national economic growth as having the greatest impact. Only a quarter of respondents (24%) reportedly believe political developments, such as further elections and impending Brexit, will affect house price growth the most. And a shortage in supply of housing is the biggest concern affecting house prices for only a fifth (20%) of those surveyed, while 16% of aspiring developers cited the construction of new infrastructure such as the new HS2 and Crossrail lines as the key influencing factor.
CYBG recently made a takeover approach of rival Virgin Money as challenger banks look for solutions in what has become a tough market; challenger banks are dealing with increased competition by digital entrants, not to mention the big four UK banks, rising funding costs and bigger rivals in the mortgage market; M&A activity among challengers is increasing as companies look to consolidate and digitize to compete.
China’s government has tried for many years to establish a credit system that rivals the U.S. and Europe, but has found it a struggle to get there.
In 2015 China’s Central Bank contracted eight companies, including affiliates of Tencent, Ping Anand Alibaba, to help build a credit system that could rival what other developed economies use. The experiment up until today has not fared well as lenders and e-commerce firms continue to use their own proprietary systems to determine risk of the borrower.
One of the main drivers behind the failure is companies were reluctant to share the data they collected. Also, conflicts of interest arose as users could be rewarded by using certain companies to drive their score up.
Splitit, a competitor to lending companies like Affirm and Klarna, is bringing its point-of-sale financingproductto debit card users in the U.S. and Europe, targeting fashion and jewelry websites in particular, like Vestiaire Collective and Philip Stein.
Unlike its competitors, however, the company is focused on making the retail industry better for everyone involved — banks, processors, consumers and merchants — rather than displacing credit cards, said Gil Don, CEO of Splitit.
It might be decades before credit cards disappear, but different industries are already seeking ways to sidestep the fees that come with today’s credit card payments.
The GetLine network is a peer-to-peer lending platform that is built on the Ethereum blockchain. By leveraging distributed ledger technology, the objective of this project is to disrupt the lending sector, which is currently valued at a whopping $1 trillion. Therefore, transactions will be processed instantly thanks to the direct connection between lenders and borrowers. Moreover, the platform will rely on an advanced credit risk prediction mechanism, making the entire lending process safer and accessible to lenders and borrowers respectively.
Is non-bank lending a form of access to credit for those in need or an investment asset class for the well-to-do? That is the question that India’s central bank perhaps grappled with while framing the regulations for the nascent peer-to-peer (P2P) lending companies.
While the regulations were put up only in November last year, a handful of companies have exited business and many others have changed tack after looking at the guidelines.
Indonesian peer-to-peer (P2P) lending startup Julo has raised $5 million in a Series A funding round led by Skystar Capital and East Ventures.
Other investors that joined the round include Gobi Partners, Convergence Ventures, Provident Capital, Central Capital Ventura, Heyokha Brothers and other strategic investors, Julo announced on Thursday.
The new round of funding comes only a year after Julo raised an undisclosed amount in a seed round, also led by Skystar Capital.
News Comments Today’s main news: OnDeck closes $100M credit facility. LendingClub expected to announce quarterly sales of $152.18M. Affirm expands to cover smaller purchases. Funding Circle lends 80M GBP through IFISA. China Construction Bank opens robot-only branch. Today’s main analysis: Originator league table. UK P2P lending nears 9B GBP. Today’s thought-provoking articles: Top fintech investors by stage. Interview with […]
OnDeck closes $100M credit facility. “The new facility provides the longest revolving funding period of any of OnDeck’s funding sources, and the lowest interest margin of any of OnDeck’s variable-rate funding facilities to date.”
OnDeck announced today the closing of a $100 million asset-backed revolving credit facility with Pioneers Gate LLC, a lending vehicle of a leading life insurance company managed by 20 Gates Management. The new facility provides the longest revolving funding period of any of OnDeck’s funding sources, and the lowest interest margin of any of OnDeck’s variable-rate funding facilities to date.
Wall Street brokerages expect that Lending Club (NYSE:LC) will announce sales of $152.18 million for the current fiscal quarter, according to Zacks. Three analysts have provided estimates for Lending Club’s earnings. The lowest sales estimate is $150.00 million and the highest is $154.53 million. Lending Club posted sales of $124.48 million during the same quarter last year, which suggests a positive year-over-year growth rate of 22.3%. The firm is scheduled to announce its next earnings results after the market closes on Tuesday, May 8th.
On average, analysts expect that Lending Club will report full-year sales of $688.45 million for the current financial year, with estimates ranging from $680.00 million to $693.30 million. For the next fiscal year, analysts expect that the company will post sales of $803.61 million per share, with estimates ranging from $773.00 million to $858.31 million. Zacks Investment Research’s sales averages are an average based on a survey of sell-side research analysts that cover Lending Club.
Affirm, Inc., the company founded by entrepreneur Max Levchin to provide fair and honest financial products, today announced Affirm will partner with brands and retailers to offer shoppers a simple, no-interest payment option on purchases of any size via three easy, monthly payments. Now, Affirm’s financial products are available for purchases of any size, marking an expansion for the company. Affirm will continue to offer shoppers the option to buy now and make simple, transparent payments over time for purchases up to thousands of dollars, with terms ranging from 3 to 36 months.
The expansion of Affirm’s capabilities will be especially valuable to fashion and apparel brands and retailers that want to offer a quick and convenient payment method that better aligns with shoppers’ cash flows and are more transparent than traditional credit.
The most recent report stated that PeerIQ has observed an “unprecedented 21 months of non-stop issuance. Markets remain in a “risk-on” mode and MPL investor appetite continues to grow. This is a very bullish statement for online lenders coming at a time when interest rates are rising as is competition in the sector is increasing.
Crunchbase News recently took a deep dive into the U.S. FinTech industry’s Q1 2018 venture activity. We found that deal volume in 2017 amounted to more than $7 billion in venture funding for seed, early, and late-stage startups. As 2018 came to a head, the number of deals in the space declined slightly, while venture capital dollars increased by 37 percent quarter over quarter.
The firm has made more than 690 investments in technology companies, with lead investments in 24 startups. Plug and Play also made an early bet on PayPal, now a public company with a market cap over $90 billion. California-based Hippo Insurance picked up an investment by Plug and Play in its $25 million Series B in January 2018. Hippo Insurance was coincidentally also mentioned in our Crunchbase News analysis of startups that have weird names.
MogulREIT I today announced that it has completed an investment in a $6.69 million mixed use building in San Francisco, California, its 15 th acquisition since inception. MogulREIT I was designed to offer investors potential cash flow through managing a diversified portfolio of commercial real estate investments, including, but not limited to medical office buildings, multifamily apartment complexes, office spaces and retail shopping centers.
Texas-based lender Ascentium Capital announced last week that it had surpassed $4 billion in origination volume since the company was founded in 2011.
The other business channel is a direct channel where Ascentium makes direct loans to small and medium sized businesses of up to $250,000. Depping told deBanked that the company’s direct channel makes up about 30 to 40 percent of its business.
Q: It looks like you co-founded Upgrade with a total of 6 co-founders. How has starting Upgrade been unique from a team building perspective?
A:Over the last year we’ve on-boarded more than 250 team members across our three offices – San Francisco, California headquarters, Phoenix, Arizona operations center and Montreal, Quebec, Canada development center. It has been an incredible year, especially looking back at the team we’ve formed.
Q: How did the challenges of starting LendingClub compare to the unique challenges of starting Upgrade?
A:The challenges are quite different because the launch of each company stands about decade apart, so the landscape is very different.
Q: Beyond credit monitoring, how is Upgrade helping to educate consumers about their finances?
A:We believe helping people get smarter about credit can enable them to access more affordable credit in the future, and that’s why we launched Credit Health. Credit Health comprises of a range of tools that we think can help people understand their credit profile and what they can do to improve it. In addition to credit monitoring and alerts we offer Credit Health Insights – a library of educational articles and videos. Credit Health also features a credit simulator that gives you customized advice and tips tailored to your unique credit history. We haven’t seen other credit monitoring platforms offer this the same way we do.
Harbor, a blockchain startup backed by billionaire bitcoin bull Peter Thiel, has received an additional $28 million investment that it hopes will make blockchain real-estate investing a reality.
This latest cash infusion was led by Thiel’s Founders Fund, venture-capital fund Andreessen Horowitz, and cryptocurrency investment firms Pantera Capital and Craft Ventures. The San Francisco-based Harbor secured $10 million in Series A financing in February 2018, raising its total investments to $40 million.
In recent years, there’s been rising interest in peer-to-peer (P2P) lending. A report from Research and Markets estimates that P2P lending could grow by 53.06% between 2016 and 2020, while Transparency Market Research projects that the global P2P market will be worth $897.85 billion by 2024.
For example, if you’re looking for a small loan — say, around $500 — you should skip online lenders. Most don’t provide loans for less than $1,000 or $2,000. Also remember that your credit score is vital to the approval process, so if you can’t get one on your own, consider getting a cosigner.
To get a sense of why Ally Bank wants the Community Reinvestment Act rewritten, look at its situation in Utah.
Since it has no retail branches, the $137 billion-asset Ally is assessed for CRA compliance for its lending in Salt Lake City, where its bank is headquartered. But Ally gets no CRA credit for lending in Detroit, where its holding company is based and where nearly four in 10 households are living in poverty.
Education Loan Finance (ELFI), a division of SouthEast Bank, focusing on student loan debt refinancing and consolidation, announces the close of its inaugural securitization of refinanced student loans. Education Loan Finance is the first student loan refinancing lender to receive the AAA rating from both Standard & Poor’s and DBRS on its senior notes in its first securitization transaction comprised of this type of education loan product.
The $200 million transaction was comprised of $24.784 million of variable rate Class A-1 Notes, $158.65 million of fixed rate Class A-2 Notes, and $16.566 million of Class B Notes. The Class B Notes are rated A by DBRS. Citi and Credit Suisse served as joint lead managers on the transaction.
Funding Circle has announced that approximately £80m has already been lent to thousands of businesses through its Innovative Finance Isa (IFIsa).
The Isa offers an estimated tax-free projected return of 7.2% and is a flexi Isa which allows investors to take money out of their account and put it back later in the tax year without losing their tax-free entitlement.
There is an initial minimum investment of £1,000 and investors will be able to transfer exiting Isas into the Funding Circle Isa later this year.
The UK Peer to Peer Finance Association (P2PFA) has released Q1 data for its member platforms. According to the industry association, P2P lending is nearing £9 billion in loan originations having provided finance for approximately 50,000 business and 221,000 individuals. Total investors stand at around 150,000.
And digital-only banks with a license, like Monzo, Starling, Tandem and OakNorth, are growing market share.
What are the biggest problems with banking today?
Banking as it is today sucks — it’s hard to easily manage account openings, and [until recently] to send payments to friends. That’s why Venmo has been so successful, but this should be a thing banks do. You shouldn’t have to read an FAQ to use the mobile app or set up a bill pay.
LendInvest reported that in a new report entitled Putting Finance First: the alternative route to funding Britain’s SME housebuilders, the online lender recognizes that while the government is trying to help improve the outlook for property SMEs, but then argues that not enough is being done to put rhetoric into action. The report focuses on three proposed initiatives that combine existing government-backed funding mechanisms with the experience and expertise of alternative lenders, like LendInvest, to speed up and increase the supply of finance to property SME businesses:
Homes England: Should deploy its £2.5 billion Home Building Fund through funding lines agreed with alternative lenders.
Local authorities: Should co-invest with alternative lenders in local developments, utilizing the Public Works Loan Board mechanism to provide discounted capital for SMEs.
The British Business Bank: Should appoint more alternative lenders to use the ENABLE Guarantee programme to underwrite property investment and development loans.
Blockchain services provider Decentralized Ventures on Tuesday announced its official launch, with the objective of bolstering Malta’s crypto communities.
A partnership between initial coin offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin Inc., Decentralised Ventures is designed to support the Maltese government’s plans to create the world’s first fully regulated market for ICOs, DLT and virtual currencies, a statement said.
According to the South China Morning Post (SCMP), the branch has no human staff and instead uses facial recognition, artificial intelligence (AI) and virtual reality (VR) to provide the bank services.
SCMP says it is hyped as a first for the Chinese banking industry, and the Beijing-based bank says it has installed 1,600 smart machines at its 360 branches in the city to ramp up its appeal to tech-savvy customers and trim staff costs.
Two global studies — a study of 150,000 consumers polled by Gallup for the World Bank for its Global Findex Database, and a survey of 5,200 consumers by the tech giant Oracle — found complementary trends in the use and adoption of digital banking.
For example, 60% of customers globally want to open a bank account online, according to Oracle’s survey.
Many are already there: Sixty-seven percent of customers globally are on digital banking platforms now, according to Oracle; the World Bank reports that 515 million customers worldwide opened a banking account through a mobile money provider in the last three years.
Data from EMVCo shows that 54.6 percent of all cards issued globally by the end of 2017 were EMV-enabled.
In addition, the number of EMV payment cards in circulation around the world increased by 1 billion over the previous 12 months — to a total of 7.1 billion.
“Both EMV chip card issuance and EMV chip transactions surpassing 50 percent globally is testament to the increasing maturity of the worldwide infrastructure, and [is] a significant milestone for the payments community,” EMVCo Executive Committee Chair Jack Pan commented.
Australia’s top bank has admitted to charging fees to clients it knew had died years previously.
Commonwealth Bank of Australia (CBAUF) told a government inquiry Thursday that the practice of billing deceased customers for financial advice stretched back years. In one instance, an adviser at the bank’s financial planning business was collecting fees from a client more than a decade after they had died.
The revelations emerged as part of a Royal Commission, or public inquiry, into malpractice in Australia’s financial services industry.
Online lender ME has announced it is increasing home loan interest rates across its variable mortgage range effective today, citing increased funding costs as the reason – and it’s not the first to do so.
ME hiked its standard variable rate for existing owner-occupier principal-and-interest borrowers with an 80% LVR by 6 basis points, bringing it to 5.09% p.a. (5.11% comparison rate).
Existing investor principal-and-interest borrowers were hit with a bigger increase of 11 basis points, while interest-only borrowers saw the biggest increase of 16 basis points.
Your Series B round is likely the largest for a P2P lender in the region. Is that a measure of how strong the investor interest in this space and the potential for the sector in Southeast Asia?
P2P lending is a promising sector in Southeast Asia. We see strong investor interest, but perhaps too much, especially for emerging markets like Indonesia where the fear-of-missing-out (FOMO) is high. SME lending is a technical and a very localized business, and Southeast Asia apparently is not easily understood. We did not realize the significance of them until we started speaking to investors for Series B. In all candour, it was slightly painful to interact with investors who do not know Southeast Asia and/ or lending business.
Is $25 million the amount that you were looking to raise?
We have a trust-based relationship with our shareholders. Our early discussion with our Series A lead investor Sequoia was to raise US$ 10M – 15M.
Access to and use of formal financial services is low in Việt Nam compared with other countries in the region, with only 31 per cent of all adults having formal bank accounts in 2016, according to the World Bank.
In 2016, 14.6 per cent of Vietnamese had saved money with a formal financial institution, 18.4 per cent had a loan with a formal financial institution, and only 26.5 per cent had access to a debit card. Interestingly, about 30 per cent of adults borrowed from friends or family in 2016 in Việt Nam, against 18.4 per cent who have borrowed from a financial institution.
Santander InnoVentures, the fintech venture capital fund of Santander Group, announced today an investment in the startup Creditas, a Brazilian secured lending platform. This is Santander InnoVentures’ first investment in Brazil and second in Latin America.
Creditas also announced today an increase of its Series-C funding round to $55 million with the addition of Santander InnoVentures and Amadeus Capital Partners. The round was led by Vostok Emerging Finance (VEF), a company focused on early and growth stage fintech companies across emerging and frontier markets, based in Sweden. Current investors also participated in the round, including Kaszek Ventures, Quona Capital, QED Investors, International Finance Corporation and Naspers Fintech.