Tuesday May 1 2018, Daily News Digest

Pace of Mobile Payment Adoption in China

News Comments Today’s main news: Former SoFi CEO Mike Cagney raises $50M for blockchain-based Figure. RateSetter IFISA attracts ‘high tens of millions’ of GBP. Brazilian online lender Agibank files for IPO in São Paulo. Today’s main analysis: The cities with the highest rates of mortgage denials. Today’s thought-provoking articles: Hedge funds are down in Q1. MPL’s new ways look […]

Pace of Mobile Payment Adoption in China

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United States

SoFi’s Former CEO Harnesses the Blockchain for Home Loan Startup (Bloomberg) Rated: AAA

Mike Cagney, who built SoFi into America’s biggest student loan refinancer before quitting amid allegations of sexual harassment at the fintech firm, is preparing for his second act: a startup offering home-equity loans.

Cagney has raised $50 million for San Francisco-based Figure, which plans to use the blockchain to help expedite loan approvals in minutes rather than days, according to people familiar with the matter. Two global banks have agreed to finance loans and several firms have agreed to purchase them, say the people, who requested anonymity to discuss a private matter.

CHINA-US TRADE WAR AND OTHER WORRIES (All About Alpha) Rated: AAA

The Eurekahedge April 2018 report says that hedge funds were down in the first quarter of the year (-0.13%). This is the industry’s worst performance since Q1 2016.

The steepest performance-based losses by regional mandate were those of the North American funds, they lost $1.2 billion. Meanwhile, asset inflows remained net positive but were lower (17% lower) than were the net asset inflows for the first quarter 2017.

The highest performance gains by regional mandate were those of the Asia ex-Japan funds. (+0.5%). But those hedge funds were down in March, largely on rumblings of a US/China trade war.

Total assets under management for the global hedge fund industry are now at $2.48 trillion.

Marketplace Lending’s New Ways Look a Lot Like the Old Ones (Bloomberg) Rated: AAA

Last week, the Federal Trade Commission accused LendingClub, the largest of the peer-to-peer lenders, of misleading consumers with hidden fees and continuing to charge borrowers even after they had paid off their loans. Shares of the online lender fell to nearly $2.50, its all-time low.

Source Bloomberg

In the first quarter, peer-to-peer lenders sold $4.3 billion in asset-backed securities, according to industry tracker PeerIQ. That was slightly down from $4.4 billion in issuance in the last three months of 2017, which was a quarterly high for the industry. PeerIQ estimates that peer-to-peer ABS securitization will hit $18 billion this year, up from $14 billion in 2017.

Source: Bloomberg

 

LendingTree Reveals the Cities With the Highest Rates of Denied Mortgage Applications (Lending Tree) Rated: AAA

LendingTree delved into data from more than 10 million mortgage applications using the most recent available Home Mortgage Disclosure Act data set to find out the main reasons would-be borrowers were rejected.

Key findings:

  • Nearly one in 10 borrowers get denied for mortgages. On a national level, 8% of loan applications were denied.
  • Credit history and debt are the biggest barriers. The leading reasons for denial were credit history (which includes credit score) and debt-to-income ratio, which were each responsible for 26% of denied loans. These were followed by collateral at 17% and incomplete applications at 14%. All other reasons for denial were cited in less than 10% of denied mortgage applications.
  • Debt is a huge barrier to borrowers living in California. We found three California cities (Los Angeles, San Francisco, San Jose) had the highest share of borrowers who were denied because of their debt-to-income ratio.
  • Credit history is holding borrowers back in Louisville, Ky., Memphis, Tenn. and Philadelphia. Among failed applications in these three metros, we found the highest rates of denied borrowers due to their credit history.


Memphis among top 10 cities for highest rates of denied mortgage applications, study says (Bizjournal) Rated: A

Memphis-area mortgage applications are denied at a rate of 12 percent, the third-highest out of 50 cities in a study by LendingTree Inc., an online loan marketplace based in Charlotte, North Carolina.

Houston among top 10 cities for highest rates of denied mortgage applications (Bizjournal) Rated: A

The top reason for a mortgage denial in Houston was debt-to-income ratio, which is the share of monthly debt obligations in relation to monthly gross income. Most lenders want this number to be 43 percent or lower, per the report.

Other Texas cities ranked quite lower than Houston on the list. San Antonio was No. 18 with an 8.05 percent rate, Dallas was No. 21 with a 7.58 percent rate, and Austin was No. 27 with a 7.05 percent.

What’s next for Citi’s mobile app (Tearsheet) Rated: A

Banking apps are now among the most widely and frequently used apps, along with weather and social media, according to Citi’s second annual mobile banking study, released Thursday.

If that’s true — the study examines the behavior of some 2,000 U.S. adult consumers — that would mean people are checking their bank accounts more frequently than they use music, news and dating apps. Although, 20 percent of millennials actually use their mobile banking app while on a date, Alice Milligan, the chief digital client experience officer for Citi’s U.S. consumer bank, pointed out in a presentation of the results.

Could the USPS Be a Short-Term Lender for the Underbanked? (Nonprofit Quarterly) Rated: AAA

In this age of electronic communications, we often take the post office for granted, but it remains a powerful institution. As the US Postal Service (USPS) website indicates, 47 percent of the world’s mail volume is handled by the USPS; the website adds that if it were a private sector company, “the Postal Service would rank 37th in the 2017 Fortune500. In the 2017 Global Fortune 500 list, we ranked 99th.” The business employs over 500,000 career employees, has annual revenues of $69.6 billion, and operates 30,825 “retail offices” nationwide.

It is this last aspect—the ubiquity of post offices across the nation—that has spurred legislation (Senate Bill 2755), introduced last week by US Senator Kirsten Gillibrand (D-NY), that would require every post office to provide basic banking services. Interestingly, the idea of post offices offering banking services is not new. From 1911 to 1967, post offices offered savings and deposit services for Americans (although not loan products). At one time, Americans held more than $3 billion in deposits through postal banking ($30 billion in inflation-adjusted 2018 dollars). Other countries, including Japan, Germany, China, and South Korea, continue to offer banking services through their postal networks.

Daniel Maran of the Huffington Post explains that, “Under Gillibrand’s proposal, Americans could cash paychecks and deposit money in accounts free of charge at each post office location. Deposits would be capped at the larger of two amounts―$20,000, or the median balance in all American bank accounts. The postal banks would be able to distribute loans to borrowers of up to $1,000 at an interest rate slightly higher than the yield on one-month Treasury bonds, currently about 2 percent.” By contrast, a Pew Charitable Trusts report found that average payday loan of $375 typically costs a borrower $520 in interest and fees.

Financial Engines Sold To PE Firm For $ 3 Billion, Plans To Combine With Edelman (Financial Advisers) Rated: A

Financial Engines announced on Monday that it will be acquired by private equity firm Hellman & Friedman and combined with Edelman Financial Services.

According to the announcement, Hellman & Friedman will make the acquisition in an all-cash transaction that values Sunnyvale, Calif.-based Financial Engines at $3.02 billion. Financial Engines shareholders will receive $45 per share in cash upon closing.

Leading Robo-Advisors Post Negative First Quarter Returns (Financial Adviser) Rated: A

The best taxable robo-advisor performers in the first quarter for total portfolios were SoFi, which posted a loss of 0.14 percent; Schwab, which returned a negative 0.33 percent; and TIAA’s socially responsible portfolios, which posted a 0.45 percent loss.

The top-performing taxable robo-advisors for total portfolios over the two-year duration of Backend Benchmarking’s study are Schwab, offering 10.98 percent annualized two-year returns; SigFig, which returned an average of 10.71 percent annually over two years; and Betterment, which returned 10.24 percent.

MetaBank, CURO to offer flexible credit to underbanked (Bankless Times) Rated: A

MetaBank, a provider of payment, community banking and financing solutions, today announced an agreement with CURO, a facilitator of short-term credit to underbanked consumers. Together, the organizations will launch a new line of credit product the parties believe will be more flexible and transparent than others in the market, and well-suited for US-based underbanked consumers. CURO and Meta expect to unveil the new, joint brand and a timeline for the pilot launch later this year.

Through the credit option expected to be launched by CURO and Meta, underbanked consumers would be able to access credit with a flexible timeline for repayment. These consumers would also be able to control their cost of borrowing through transparent fees that would apply only when credit is drawn. Estimates indicate 67 million adults are considered un- or underbanked. Many of these adults typically have poor credit ratings and, as such, have difficulty securing credit or loans — this product is expected to provide a responsible credit option for many of those consumers.

LendingTree, Inc. to Present at SunTrust Robinson Humphrey Internet & Digital Media Conference (Benzinga) Rated: B

LendingTree, Inc. (NASDAQ:TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in the SunTrust Robinson Humphrey Internet & Digital Media Conference at The Palace Hotel in San Francisco, California.

Trent Ziegler, Vice President of Investor Relations and Treasurer at LendingTree, is scheduled to present on Tuesday, May 8, at 9:10am PT and will participate in one-on-one meetings throughout the course of the day. The presentation will be webcast live and archived at 

8 Side Hustles You Can Start Today (NAV) Rated: B

If you’re looking for a way to grow income over time, and don’t mind the risk and reward nature of investment, peer to peer (P2P) can be a great way to earn some passive income on the side.  Operating much like a bank loan — but without the bank – P2P lending connects people with money (even if it’s only a few hundred dollars) with people who need it.

United Kingdom

 

RateSetter IFISA has attracted ‘high tens of millions’ of pounds (Peer2Peer Finance) Rated: AAA

RATESETTER has revealed that its Innovative Finance ISA (IFISA) has already attracted “high tens of millions” of pounds from investors, in less than three months since launch.

RateSetter opened its IFISA to existing customers on 8 February and to new customers on 1 March. The platform previously reported that it had seen over 5,000 IFISA accounts opened in the first month.

TransferWise founder Taavet Hinrikus invests in fintech chatbot Cleo (Tech Crunch) Rated: A

Cleo, the London-based fintech that offers an AI-powered chatbot as a replacement for your banking apps, continues to put together an impressive list of backers. The startup’s early investors already include Entrepreneur First, Moonfruit founder Wendy Tan White, Skype founder Niklas Zennström, Wonga founder Errol Damelin, and LocalGlobe, the seed VC firm founded by father and son duo Robin and Saul Klein, amongst others. Now TechCrunch can reveal that TransferWise founder Taavet Hinrikus has become a Cleo  investor and advisor.

Family Building Society And LendInvest Reduce Buy To Let Investment Rates (Residential Landlord) Rated: B

Family Building Society and LendInvest have each reduced rates on a number of buy to let mortgage deals.

Family Building Society slashed interest rates across its entire buy to let product range, whilst LendInvest has reduced rates on several of its buy to let deals.

CrowdProperty names Mike Bristow as chief executive (Peer2Peer Finance) Rated: B

CROWDPROPERTY co-founder Mike Bristow has been appointed as chief executive of the peer-to-peer property lender, taking over the reins from fellow co-founder Simon Zutshi.

Bristow, who was also a non-executive director at CrowdProperty, had been acting as interim chief executive for around two months before taking on the role on a permanent basis, effective from 1 May.

Zutshi has now been appointed as chairman of CrowdProperty.

China

Lessons From A Mobile Payments Revolution (American Banker) Rated: AAA

According to the research firm eMarketer, 76% of Chinese smartphone users made a mobile point-of-sale purchase in 2017, compared with 25% of American users. In total, 61.8% of all such transactions globally are Chinese.

Source: American Banker

In the first 10 months of last year, China processed a whopping $12.8 trillion in mobile payments, according to the state-run news agency, Xinhua — 38% higher than for all of 2016.

Though it’s not exactly an apples-to-apples comparison, the U.S. market in 2017 had just $49.3 billion in mobile point-of-sale transactions, according to Shelleen Shum, eMarketer’s forecasting director.

Start with an oligopoly

More than 90% of Chinese mobile payments run through Alipay and WeChat Pay, rival platforms backed by China’s two largest internet conglomerates — Alibaba, essentially the Amazon of China, and Tencent Holdings, owner of WeChat, the nation’s must-have messaging and social-media app with more than 1 billion users.

Peering into the murky world of China’s online P2P sector (Asia Times) Rated: A

During an 18-month period, Ezubo swindled up to 900,000 investors out of 50 billion yuan (US$7.7 billion).

In one of the country’s highest-profile court cases, the founders of what was once China’s largest peer-to-peer lending platform, Ding Ning and his younger brother Ding Dian, were jailed for life last September.

Another 24 executives were sentenced to prison terms, ranging from three to 15 years, after disbelieving depositors mounted unprecedented protests in fintech’s biggest scandal.

“[Just] 500 P2P companies, out of the total 4,856, are likely to maintain their operations this year,” it added.

Fincera Reports 2017 Year-end Financial Results (Digital Journal) Rated: A

Fincera Inc. (”Fincera” or the ”Company”) (OTCQB: YUANF), a leading provider of web-based financing and ecommerce services for small and medium-sized businesses and individuals in China, today reported financial results for the year ended December 31, 2017.

Full-year 2017 Financial Highlights

  • Income for the year ended December 31, 2017, increased 16.9% to RMB1.0 billion (US$156.7 million) from RMB875.9 million in the prior year.
  • Net loss improved to RMB8.4 million (US$1.3 million), from net loss of RMB12.3 million in the prior year.
  • Net cash provided by operating activities increased 148.4% to RMB2.1 billion (US$326.6 million) for the year ended December 31, 2017, from RMB859.2 million in the prior year. This increase resulted in a 63.6% improvement in the Company’s overall cash position to RMB1.3 billion (US$191.5 million) at the end of 2017, compared to RMB764.8 million at the end of 2016.

Operational Highlights

Loan transaction volume across all loan types for 2017 totaled approximately RMB26.8 billion (US$4.1 billion), compared to approximately RMB24.4 billion in 2016.

Source: Digital Journal
International

Can FinTech Walk The FinTalk? (PYMNTS) Rated: AAA

BLOCKCHAIN

In January, the International Data Corporation (IDC) reported worldwide spending on blockchain solutions would increase to $2.1 billion in 2018 from $945 million in 2017 and will grow more than 80 percent year over year to reach $9.7 billion by 2021. Most of that spend will be concentrated in the U.S., with supporting use cases mostly related to financial services and cross-border settlement, for a grand total of $242 million in 2018.

To put that into context, the IDC projected worldwide growth and spending on mobility solutions at 15 percent a year from a 2018 base of $1.6 trillion; on security-related hardware, software and services at 10 percent a year from a 2018 base of $91.4 billion growing to $120.7 billion in 2021 and on the Internet of Things at 14 percent a year from $772.5 billion in 2018 growing to $1.1 trillion in 2021.

MARKETPLACE LENDING

LendingClub was hit with a lawsuit by the Federal Trade Commission (FTC) last week over claims of “deceptive” practices.

Following that news, LendingClub’s stock price took a nosedive. Yesterday, it was trading at an all-time low of $2.70.

Launched in October of 2016, Marcus is Goldman’s $2 billion annual hedge on threats to its core commercial banking and trading businesses. Goldman Sachs reported on its Q1 earnings call that Marcus, since it launched, has originated $3 billion of new loans and taken in $9 billion of new retail deposits.

DIGITAL BANKS

If the blockchain is all about replacing the global financial system and marketplace lending is all about replacing traditional lenders, digital banks in the developed world are about upending the traditional banking ecosystem.

Crypto lending may be risky, but these firms say they’ve solved the riddle (American Banker) Rated: A

A new crypto lender, Nexo, will launch Monday in a market where existing participants have already withstood trial by fire.

Such lenders extend credit to those who want to own digital currency, such as bitcoin and ether, and hold onto it long-term while investing it in real estate and elsewhere. But crypto lenders have been severely tested of late as digital currency prices dropped about 70% between December and February.

Source: American Banker, Coindesk

Nexo

The team behind Switzerland-based Nexo runs a consumer lending operation called Credissimo that has made more than a million loans to consumers of up to $2,000 in Europe.

Salt Lending

Denver-based Salt Lending, which started crypto lending earlier this year, has made just under $40 million in loans and has had no losses, according to co-founder Blake Cohen.

Unchained Capital

Unchained Capital, which publicly launched in November, is originating “single-digit million dollars of loans per month,” according to CEO Joe Kelly. The typical loan size is $120,000; the average interest rate is 12%.

RCN Partners with IdentityMind Global to Provide KYC and AML Compliance for Its Protocol (PRWeb) Rated: B

IdentityMind Global today announced that Ripio Credit Network (RCN), a global peer-to-peer credit network based on co-signed smart contracts that connect lenders and borrowers located anywhere in the world, has partnered with IdentityMind to provide KYC and AML compliance support.

Australia

Research shows savings at online lenders (Broker News) Rated: A

The company’s research shows the average customer of one of the big four banks can save more than $2,500 a year by switching to an online deal. This has increased from a year ago, when the potential annual savings were $2,250.

Despite these savings and the fact most other services have migrated online, only 27% of consumers said they would take out a home loan with an online lender.

India

Fintech Startup MyLoanCare Raises Series A Funding (Inc42) Rated: AAA

Gurugram-based B2C online loans marketplace MyLoanCare has secured $977.7K (INR 6.5 Cr) equity Series A funding from Ncubate Capital Partners, a private investment arm of SAR Group family office.

The startup plans to use the funding for branding, technology augmentation and growth. MyLoancare also plans to enter new segments of the market including cards, savings and investments.

 

 

Asia

INDONESIAN fintech startup EmasDigi enables the investing in as well as buying and selling of gold through mobile applications with easy processes that require little time.

The idea began with EmasDigi chief executive officer and founder Claudia Kolonas selling vouchers which gave people easier access to the gold trading market.

EmasDigi is affiliated with PT PG Berjangka, which is registered and supervised by the Trade Ministry’s Futures Exchange Supervisory Board (Bappebti). This affirms EmasDigi’s commitment to consumer protection and ensures compliance with legal provisions in Indonesia.

Fintech microfinance, the next opportunity (Prothom Alo) Rated: A

Bangladesh is widely known as the origin of microfinance. The pioneer two NGOs, Grameen Bank and BRAC, have taken this poverty reduction tool to different places in the world, especially in Asia and Africa. This has been acclaimed by the United Nations and other international organisations. Certainly the objectives of microfinance have undoubtedly already been achieved.

Microfinance was inaugurated in the 1980s for a specific, target group of people (given their poverty level). It doesn’t have the generalised character required to reach all people.

Latin America

Brazilian online lender Agibank files for IPO (Reuters) Rated: AAA

Brazilian online lender Banco Agibank SA on Monday filed for regulatory clearance to launch an initial public offering (IPO), according to a securities filing.

Agibank follows Banco Inter SA’s (BIDI11.SA) strategy of raising capital to fund its expansion and IT investments. On Monday, Inter made its debut in São Paulo stock exchange, in the first IPO by a Brazilian retail bank in nearly a decade. In late afternoon, Inter’s units were stable at 74 reais.

The bank and its owner, Marciano Testa, will sell an undisclosed amount of preferred shares in the IPO.

Canada

Fintech Select Earns a Net Profit of $ 435k and Reduces Liability by $ 7.6m for the Year Ending Dec 31 2017 (Globe Newswire) Rated: AAA

Fintech Select Ltd. (“Fintech Select” or the “Company”) (TSX-V:FTEC) is pleased to announce that its financial statements for the year ending December 31 2017 have resulted in a net profit of $435k. 2017 Financial Statements and Management Discussion & Analysis (“MD&A”) will be filed on SEDAR shortly.

2017 Highlights

  • Reduced the Company’s liability by $7.6M including our unfavourable high-interest loan
  • Made a net profit of $435k for the year due to the reduced liability
  • Reduced interest rate of 24% per annum plus management fee to 12% on April 1, 2017, and further to 6% plus management fee on May 16 2017.
  • Raised $3.4M through two private placements in April and June of the year, and had access to un-restricted cash of $915k by December 31 2017
  • Increased its customer care service revenue
  • Established an advisory board with high skill sets in business and Cryptocurrency space
  • Filed a patent-pending for Cryptocurrency POS platform.
  • Developed and launched the Company’s first phase of the Cryptocurrency POS solution, which simplifies buying cryptocurrecny to the mass of consumers
  • Acquired software for P2P Micro Lending and initiated the project to work on required changes and enhancements to meet the regulatory required standards

Authors:

George Popescu
Allen Taylor

Wednesday June 28 2017, Daily News Digest

china big banks

News Comments Yesterday, Lending-Times incorrectly stated that Zopa would charge all borrowers the same rates with its planned bank. In actuality, the plan is to price the book the same between new and existing customers, and not make a difference between new and existing customers as other banks do. Today’s main news: MarketInvoice, Funding Circle, […]

china big banks
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United States

Elevate’s RISE Credit Enters a Sixteenth State, Offering Lines of Credit in Kansas (BusinessWire), Rated: AAA

Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced today that its RISE product, traditionally offering installment loans, will now offer lines of credit. Kansas will be the sixteenth state where RISE’s products are available and the first state in which RISE’s line of credit is available to non-prime consumers.

RISE is a state-licensed online lender offering unsecured installment loans and lines of credit. RISE is designed to meet the needs of the millions of non-prime Americans with less than prime-credit, who do not have access to traditional sources of credit. RISE is a path toward a brighter financial future with features such as fast approval, flexible loan terms, lower rates than other non-prime lenders, rates that can go down over time, credit bureau reporting, free credit score monitoring and financial literacy courses.

Take These 9 Steps Early To Make The Most Of Your Company’s Regulation A+ IPO (Forbes), Rated: AAA

When online peer to peer lending was new, consumers were the first investors to step in while accredited and institutional investors stayed on the sidelines until later – they now dominate the peer to peer lending business, which has grown to be a huge multi-billion dollar market.

1. If you have an enthusiastic following in your industry:

If you have a large enough network, this group might fund your entire capital raise. Take steps to build a working contact list of them. And make sure to establish a regular habit of emailing them so that when you later send out an email suggesting that they consider investing in your Reg A+ offering, your email will be opened and read.

2. Build a large and enthusiastic customer base.

VidAngel emailed their most active 30k customers andraised $10 mill in 5 days live to investors, setting the record for the fastest rate of onlineinvestor capital raise in Reg A+ to date.

3. Establish a direct sales relationship with your customers.

When your customers find it normal that you send them an email message, they are far more likely to respond favorably when you send them an email offering them the opportunity to become an investor and part owner of your company.

4. Add a consumer appealing product or service;

5. Build a large social media fan base;

A fan base of 100k people is a good start.

6. Combine product and investment marketing;

This combination can save marketing expense and also emphasizes the brand building and product sales synergy that can be levered in a Reg A+ offering.

7. Leverage your existing investors;

As an example, a sizable portion of the recent MYONYSE IPO and the ADOMNASDAQ IPO investments were from existing investors and their friends.

8. Prepare consumer investment rewards:

Line up your reward packages ahead of time to ensure that you have long lead time items ready and on hand in quantity when your Reg A+ goes live.

9. Assemble the proof points that you will need;

Gather and build the market size and total available market evidence you will need to make credible claims that your market is large enough to justify the attention of investors.

Larry Raffone is racing to ‘lock up’ the 401(k) market by combining robo with a semi-national RIA (RIABiz), Rated: A

Financial Engines Inc. CEO Larry Raffone is seeking to give his company a second date with destiny by combining the biggest 401(k) robo-advisor and one of the larger national RIAs — and coming out of it with a true national RIA that can take on the accounts of Fortune 500 companies at the retail as well as the pension-plan level.

Raffone plans to open new Financial Engines offices in more populous areas such as Southern California, where Financial Engines is already on-site at corporations where participants use its managed account 401(k) service.

The pricing model is still TBD, but William Blair equity analyst Robert Napoli said in an April 6 report that he expects Personal Advisor to come in at 80 basis points. He notes that compares to 35 basis points for FE’s managed account 401(k) program.

LendingOne Closes Series A Funding, Investors Include Ron Suber, Richard Vague, Sidney Brown, Michael Heller (Latest Share News), Rated: A

LendingOne, one of the nation’s fastest growing online lenders for real estate investors, announced today it closed a Series A financing round.

Investors include Ron Suber, a prominent fintech investor and President of Prosper Marketplace, Richard Vague, co-founder and former CEO of two credit card companies, First USA and Juniper Financial, Sidney Brown, CEO of NFI Industries and former Chairman of Sun National Bank, Michael Heller, CEO of Cozen O’Conner, a national full-service law firm, along with LendingOne founder and CEO, Bill Green.

College Ave Closes First Securitization, SoFi Finalizes Its Fourth (Lendedu), Rated: A

College Avenue Student Loans, an online student loan refinancing and origination company, has closed its first securitization of private student loans, according to Global Capital.

Getting into the asset-backed securities (ABS) business for the first time, College Ave’s securitization is a $160.89 million offering backed by private student loans. Barclays is the only underwriter on the company’s first ABS transaction.

Credit research and ratings company DBRS has assigned provisional ratings for the various classes of notes issued by College Ave. The Class A-1 notes worth $95,320,000 have been given an A rating, while the Class A-2 notes worth $43,470,000 have also been an A rating. The Class B notes worth $10,760,000 have been given a BBB rating, and, finally, the Class C notes worth $11,340,000 have been given a BB rating, according to DBRS.

Disruption Brings Great Opportunities — and Risks — to the Middle Market (PR Newswire), Rated: A

Most executives of middle-market companies not only expect their business to experience disruption in the near future, but welcome it, according to Disruption in the Middle Market, a report released today by Capital One Commercial Bank. However, this optimistic view does not always translate into action; only a small portion of middle market companies have taken a full range of defensive measures to protect against disruption’s potentially destructive consequences.

Capital One surveyed more than 300 senior executives from companies with annual revenues ranging from $100 million to $3 billion to determine their views on disruption—a significant interruption to an existing business arising from innovative technology, a new business model, or political, economic and environmental forces.

The study revealed that attitudes toward disruption correlated to size.  Smaller middle-market companies are more likely than their larger counterparts to be unprepared for disruption. The report also highlighted a series of steps, such as strengthening financial relationships, that smaller companies can take to catch up.

Disruption in the Middle Market provides a detailed picture of the views of middle-market executives about disruption and the steps they are taking to address it. Eighty-eight percent of respondents reported that their companies have already experienced disruption or expect to experience it during the next three years.  However, only one-sixth of those surveyed believe they are prepared to deal with a disruptive event. Despite this lack of preparation, four-fifths of middle-market executives view disruption as an opportunity, not a threat.  Many of these executives believe that disruption threatens their industry—but not their own company.  Forty-three percent said that their industry is vulnerable to disruption, while just 18 percent reported that their own company is vulnerable.

Size proved the key determinant in a company’s preparedness and attitude toward disruption. Companies with revenue between $2 billion and $3 billion are much more likely to see a disruptive event as an opportunity than companies in the $100 million to $499 million range. In addition, larger companies are more likely to have insulated themselves from the effects of a disruptive event and to be pursuing a disruptive strategy of their own that could lead to a competitive advantage.

Financial Preparation Is Critical

The study revealed that a strong relationship with a stable financial institution could play a critical role in helping a middle-market company respond to disruptive forces. Sixty-eight percent of those with an ongoing banking relationship expect to need additional funding in the face of a disruption. These companies will find it easier to arrange than the 32 percent without a strong banking relationship.  Here again, smaller companies are at a disadvantage.  Many lack the holistic banking relationship needed to confront disruption, and instead are willing to consider alternative sources of capital like peer-to-peer lending and even crowdfunding.

Attitude toward disruption varies considerably by industry
Middle market executives in some industries have adopted a much more proactive approach to disruption than those in others.

  • Financial services and insurance companies are archetypical disruptors. Forty-seven percent are quite or extremely prepared for disruption, and 83 percent are pursuing a disruptive strategy. The overall middle-market averages for the survey are 16 percent and 60 percent, respectively.
  • Energy, resources, and chemicals companies tend to be classic delayers. Eighty-three percent are slightly or not at all prepared for a disruptive event (compared to 53 percent for the full survey), and only 37 percent are pursuing a disruptive strategy (compared to 60 percent overall).

Plaid puts out a ‘request for startups’ in nine underserved fintech sectors (TechCrunch), Rated: A

Plaid wants to make it easier for financial services companies to serve consumers and businesses, but it also sees significant holes in the fintech ecosystem. As a result, the company has issued a Y Combinator-like “request for startups” to tackle particular issues where it believes significant innovation is lacking.

Like Yodlee before it, Plaid enables startups and other tech companies to more easily connect with banks, credit card companies and other financial institutions, both to authenticate consumer accounts and access their financial data.

  1. Better bills.
  2. Consumer-centric loan servicing.
  3. Hardware + software for branches.
  4. Tax preparation.
  5. Mobile bank account opening.
  6. Abstractions from the core.
  7. Brokerage-as-a-Service.
  8. “Exotic” insurance.
  9. Compliance-as-a-Service.

Easiest Path to Riches on the Web? An Initial Coin Offering (The New York Times), Rated: A

A new crop of technology entrepreneurs is forgoing the usual routes to raising money. The entrepreneurs are not pitching venture capitalists, selling stock in an initial public offering or using crowdfunding sites like Kickstarter.

Instead, before they even have a working product, they are creating their own digital currencies and selling so-called coins on the web, sometimes raising tens of millions of dollars in a matter of minutes.

Since the beginning of the year, 65 projects have raised $522 million in these offerings, according to Smith & Crown, a research firm focused on the new industry.

Last month, a small team of computer engineers in Lithuania raised $14 million in 45 minutes by selling a coin, known as Mysterium, that is intended to give access to an encrypted online data service that is still being built.

The next day, a group of coders in the Bay Area pulled in $35 million in under 30 seconds of online fund-raising. The coders were offering Basic Attention Tokens, which will one day work on a new kind of ad-free web browser.

Then this week, a team in Switzerland raised around $100 million for a coin that will be used on an online chat program that has not yet been released, known as Status.

Last year, the first blockbuster coin offering, the Decentralized Autonomous Organization, quickly raised more than $150 million. But the project blew up after a hacker manipulated the code and stole more than $50 million worth of digital currency.

Private SLABS upgrades anticipated (Structured Credit Investor), Rated: A

Moody’s has placed on review for possible upgrade the ratings of 41 private student loan ABS bonds – totalling approximately US$2.56bn worth of securities across 19 securitisations – issued by three marketplace lending platforms. At the same time, Fitch has released an exposure draft of criteria for rating US private student loan ABS that could result in multiple-category upgrades for …

Insurance Tech Rising: 135+ Insurance Startups Across P2P, Life, Commercial & More in One Chart (CB Insights), Rated: A

The map focuses on 11 categories, as follows.

  • Life/annuity: Private startups providing distribution of life insurance products including term life and annuities including Abaris and PolicyGenius
  • Auto insurance (split into distribution, usage-based insurance/telematics, and claims): Startups ranging from aggregators including CoverHound and Goji to white label auto claims apps (Snapsheet) to per-mile managing general agents like Metromile.
  • P2P insurance: Private peer-to-peer insurance and mutual-based startups include Lemonade, Guevara, Friendsurance, and others.
  • Small business insurance: Private tech companies serving as commercial insurance brokers and managing general agents to SMBs  include Insureon, Embroker, and Next Insurance.
  • Insurance industry software/analytics/IaaS: Insurance-specific software across the value chain providers range from BI and data-warehousing startup Quantemplate to insurance fraud detection firm Shift Technology to re-insurance SaaS analytics startup Analyze Re to claims inspection startup Spex.
  • Mobile insurance management: Startups focusing on allowing consumers to manage and purchase insurance policies via their mobile device including Knip and GetSafe.
  • Product insurance: Companies insuring or tracking products — i.e. smartphones, laptops — for insurance applications.
  • Renters/homeowners: Startups providing distribution of renter’s insurance and homeowner’s insurance as well as lease default insurance programs.
  • Sharing economy: Startups working on new insurance products in coverage areas including short-term rental marketplaces and for sharing economy 1099 workers.
  • Health insurance: Across new carriers like Oscar as well as healthcare insurance startups targeted at individuals (Stride Health) and employers (Zenefits).
  • Pet insurance: Startups include Embrace Pet Insurance and Figo Pet Insurance.
Source: CB Insights

 

The Fiduciary Rule And Investment Advisers: Why It Matters (AlphaFlow), Rated: A

One of the most hotly contested aspects of the Fiduciary Rule is around the standard of suitability as a determinant for an investment choice made by a registered representative. Today, a registered representative must only ensure that an investment is ‘suitable’ for a client. This suitability is determined by factors including investment risk tolerance, time frame, and goals. However, there is no determination made as to whether the investment is in the client’s best interests.

To illustrate, let’s say the registered representative (RR) has a choice of offering two different mutual funds to a client. Both invest in similar stocks and have relatively similar returns (before fees), but one charges higher fees and also pays the RR’s firm based on the total dollar investments made into that particular fund.  The RR only offers the client the one for which they get compensated, even though the other mutual fund option may be a better option for the client (because it charges lower fees).  The reason the RR can do this is that both mutual funds are considered “suitable”: meaning as long as the recommendation meets the client’s risk profile and investment goals, then they can offer that product to their client.

In contrast, an investment adviser representative (IAR) must act as a fiduciary.  In the same situation, if the IAR wanted to offer the same mutual fund that the RR did, they would need to disclose to the client that they are getting compensated for sales of that fund and that the lower cost option makes more sense for the client.  So, instead of simply offering a suitable choice for the client, the IAR must: 1) disclose conflicts of interest and, 2) act in the best interest of the client rather than in their own best interest.

What The Fiduciary Rule Would Change

Staying with the scenario above, the Fiduciary Rule would require an RR to act like the IAR in when selling any products related to, or be advising on anything related to retirement.

The rule would also apply to anyone dually-registered (meaning they are registered both as an RR and an IAR).  Currently, the dually-registered representative can decide what ‘hat’ they wear (RR or IAR) when suggesting investments for retirement.

A new way to estimate your home equity (Chicago Tribune), Rated: B

LendingTree, the popular mortgage site, which debuted its own valuation model earlier this month, can tell you why: Because none of the other value estimators calculate your home equity or suggest how and when you might want to tap into it.

If you’re not quite ready to move ahead but instead prefer to track your equity, credit and mortgage situation on a regular basis, you can sign up for a more comprehensive “My LendingTree” service, for which there is no charge. It provides you with monthly updates plus periodic alerts on your home equity movement. You get an alert when there’s “an actionable opportunity” for you to tap into your equity on favorable terms, based on “real-time market data,” changes in your credit files and equity levels, according to the website. There’s no requirement that you take any action.

OppLoans Welcomes Daniel Fell as VP of Business Development and Partnerships (Digital Journal), Rated: B

OppLoans, the nation’s leading socially responsible online lender serving non-prime consumers, has announced the appointment of Daniel Fell to the role of Vice President of Business Development. Fell will oversee all strategic business development and partnership objectives at the high-growth, profitable firm.

6 things that will help cut the cost of your business debt (TD Daily), Rated: B

1. Choosing the right product

Debt works really well when you choose the right type of debt for your business. You can reduce what you pay for business debt by making a well-informed choice. For example, peer-to-peer lending may be an option if you’re unable to get a loan or finance from a traditional bank and can be cheaper too.

2. Nurturing your cashflow/credit score

If your business doesn’t have great creditworthiness, or is too new to have any credit history, then a lender will look at the credit score of someone able to guarantee the business’ debts.

3. Shopping around for the best deal

If you need finance consider all the options – the high street bank, the online lender, the peer-to-peer lender and the government-backed lender.

4. Staying on top of the repayments

5. Consolidating debts

6. Pay your debts off more quickly

United Kingdom

MarketInvoice, Funding Circle, Zopa, LendInvest make Fintech 250 (P2P Finance News), Rated: AAA

MARKETINVOICE, Funding Circle, Zopa and LendInvest have made CB Insights’ Fintech 250 list for 2017, which awards the companies worldwide that are leading the transformation in financial services.

The list of 250 emerging private companies from 23 countries, which was chosen out of a longlist of more than 2,000 entrants, was revealed by the research firm’s chief executive and co-founder Anand Sanwal during The Future of Fintech conference in New York on Tuesday.

The Fintech 250 companies (in alphabetical order):

51Xinyongka

Axoni

Canopy Tax

55 Capital

Behalf

Capital Float

Acorns

Beijing LaKala Billing Services

Captable.io

Activehours

Better Mortgage

Chain

Addepar

Betterment

Circle Internet Financial

Adyen 

Billtrust

CircleUp

Affirm

BIMA

Clarity Money

Airwallex

bitFlyer

ClearTax

Algomi

BitPesa

Cloud9 Technologies

AlphaSense

Blend

Clover Health

AngelList

Blockstack Labs

Coinbase

Ant Financial Services Group

Blockstream

Coins.ph

Artivest Holdings

BlueVine

ComplyAdvantage

Assembly Payments

bonify

Credit Benchmark

Atom Bank

Branch International

Credit Karma

AutoGravity

Brave Software

Creditas

Auxmoney

Bright Health

CreditEase Insurance Agency

Avalara

C2FO

CreditMantri

AvidXchange

Cadre

Cross River Bank

Crowdcube

IEX Group

Nongfenqi

CurrencyCloud

Indiegogo

Nubank

CurrencyFair

Indifi Technologies

Numerai

Cyence

iyzico

Nutmeg

Dadao Financial

iZettle

One97 Communications  

Deposit Solutions

JD Finance

Onfido

DianRong

Juvo

OpenFin

Digit

Juzhen Financials

OpenGamma

Digital Asset Holdings

Kabbage

Oportun

Digital Reasoning Systems

Kakao Pay

Orchard Platform

Droit Fintech

Kasisto

Oscar Health Insurance Co.

Earnest

Kensho Technologies

Paga

Easynvest

Kickstarter

Parasut

Ebury

Klarna

Paymax

Ellevest

Kreditech

PayNearMe

Embroker

Kyriba

Payoneer

eShares

Ladder

Paystack

Even Respsonsible Finance

Lemonade

Paytm Payment Bank

EverCompliant

LendingHome

PeerIQ

Ezetap Mobile Solutions

Lendingkart

PeerStreet

Factom

LendInvest

Perfios

Fenergo

LendUp

Personal Capital

Fenqile

LevelUp

Ping++

figo

Lu.com

Plaid Technologies

FinanceIt

M-DAQ

Point Digital Finance

FinancialForce.com

Magento Commerce

Polychain Capital

Finrise

MarketInvoice

Ppdai

Flywire

Marqeta

Propel

Folio

Merlon Intelligence

Property Partner

freee

MetroMile

Prospa

Fundbox

MobiKwik

Qapital Insight

Funding Circle

MoMo

QFPay

Funding Societies

MoneyFarm

Qingsongchou

Futu5

Moneytree

Quantopian

GoCardless

Monzo

Qudian

GoFundMe

Mynt

Quovo

GreenSky

N26

Raisin

GuiaBolso

Namely

RealtyShares

Guideline

Nav

Red Dot Payment

Gusto

Neighborly

Reorg Research

Habito

NerdWallet

Revolut

hibob

New York Shipping Exchange  

Ripple Labs

IceKredit

Next Insurance

Riskalyze

Robinhood

THEO

Weidai

Rong360

Tiger Brokers

WeLab

Roofstock

Tink

WorldCover

Roostify

Token

WorldRemit

Seedrs

Tradeshift

Xapo

Shenzhen Kingdee

Trading Ticket

Xiaoyusan Insurance

Suishou Technology

TransferWise 

Xignite

Signifyd

TravelBank

Xishan Information Technology

Silverfin

Trov

YapStone

simplesurance

TrueAccord

Yoco

SirionLabs

Trulioo

YongQianBao

Smava

Trumid

Yuanbaopu

SocietyOne

Tyro Payments

Zeitgold

Socure

Upgrade

ZestFinance

SoFi

VATBox

ZestMoney

solarisBank

Veem

Zhong An Insurance

Stash Invest

Verato

Zoona

Street Contxt

Viva Republica

Zooz

Stripe

Wave Accounting

Zopa

Symphony Communication

Wealthfront

Zuora

Services Holdings

WealthNavi

Tala

Wealthsimple

Tally Technologies

WeCash

Fifty years of the ATM: How long can cash survive in a digital world? (International Business Times), Rated: AAA

Fifty years of using the hole in the wall

  • As of 2015 there were 70,270 cash points in the UK, more than 52,000 of which were free to use.
  • 48 million of us use cash machines and 89% use them at least once a month.
  • In 2015 the amount of average withdrawal was £69.
  • On average each cash machine dispensed £7,576 per day in 2015 – and that figure is on an upward trend.
  • The daily record for cash withdrawals was £730m, which was set on 23 December 2016.
  • 46% of cash machines are in supermarkets, shops and shopping centres, 27% are in banks and 4% in Post Offices.
  • HSBC has the UK’s busiest cash machine by Cambridge Circus in central London.
  • The original cash machine was designed by Scottish inventor John Adrian Shepherd-Barron who came up with the idea of a machine dispensing cash, rather than chocolate bars, while in his bath.
  • ATMs in temples in India let you make religious donations.
  • Vatican City has the only ATM that gives instructions in Latin.

TransferWise CEO talks about Brexit worries for fintech companies (CNBC), Rated: A

 

The Profitability Challenge for Fintech Startups (Finextra), Rated: A

The evidence from a sample of 20 fintech startups in the UK is that there are substantial profitability challenges that still need to be overcome. As of June 2017, the total equity investment in the sample companies I have looked at has been £852m. The total valuation of the sample at the last valuation round for each company was £2.6bn, but none are profitable and cumulative losses have been £211m.

Only one company in the whole sample has reported a single year of profitability, but this has since fallen back into loss.

However, the median losses are: £0.3m in year 1, £1.3m in year 2 and £2.0m in year 3. One company, Atom Bank, is already losing £22.5m in the third year of operation, substantially more than any of the others.

RateSetter exec sees opportunity in Brexit (Bankless Times), Rated: A

While the head of one of the United Kingdom’s largest P2P sites understands why small business owners are hesitant to make big decisions in Brexit’s wake, he cautions them to not miss the opportunities either.

“The door is open for business leaders to redefine Brexit so that it is seen as an opportunity, rather than a threat.”

Increasing options on low-yielding properties (Bridging & Commercial), Rated: A

Property investors have had to deal with a host of government and regulatory changes over the last couple of years.

These new rules have resulted in many buy-to-let lenders requiring much more significant interest rental coverage, often looking for as high as 145%.

For example, in the last LendInvest Buy-to-Let Index we found that Southampton offered an average yield of 4.08% – significantly lower than landlords can enjoy in other areas of the UK. Yet it has seen solid capital price growth at 5.47%,  its excellent transport links into the capital regularly see it named as a future house price hotspot, while the presence of two large universities boosts its appeal to landlords.

FT PARTNERS CONTINUES EXPANSION WITH ESTABLISHMENT OF EMEA PRESENCE IN LONDON (LendIt.com), Rated: B

Financial Technology Partners (FT Partners), the only global investment banking firm focused exclusively on FinTech, is pleased to formally announce its planned expansion into the Europe, the Middle East and Africa (EMEA) markets. This announcement is a direct response to the global demand the Firm is seeing for its highly specialized and deep domain focused advisory capabilities from EMEA clients and further highlights the Firm’s strong activity in cross-border FinTech deals globally. FT Partners’ global team of FinTech focused investment bankers will continue to serve its clients and its EMEA operations will be based out of London in the United Kingdom. The Firm is also announcing the continued expansion of its senior team with the addition of Timm Schipporeit, former FinTech investment banker at Morgan Stanley and FinTech investor at Index Ventures, who joins as Managing Director in our London office

Women In Fintech 2017 Powerlist: Innovate Finance Opens Nominations (Forbes), Rated: B

UK organisation and global fintech representative Innovate Finance has announced today the opening for submissions to its 2017 Women in Fintech Powerlist.

Innovate Finance is calling on both men and women to submit names of female colleagues (CxOs, managers, lawyers and journalists) to be included in the 2017 Powerlist.

China

Fintech No Threat for China’s Big Banks (Bloomberg), Rated: AAA

Concerns that bad-loan levels are worse than lenders are confessing to, combined with fears the country’s fintech giants, including Alibaba Group Holdings Ltd. affiliate Ant Financial, are disrupting operations, have weighed on stocks.

For one, bad-debt figures, if you believe them in the first place, are coming down. And even if you do think nonperforming loans have been understated, what’s undeniable is that the country’s big banks have been shifting into mortgage lending, which has a lower default rate than the state-firm lending that’s long been their bread and butter. The nonperforming loan ratio of a mortgage in China is 0.37 percent, one sixth of a corporate advance, according to CIMB Securities Ltd. analyst Michael Chang.

Of course, fintech companies getting into the lending business is cause for concern. Alipay’s consumer credit site Ant Check Later will lend up to a certain amount without needing to see bank records, while e-commerce outfits like JD.com Inc. allow monthly payment installments that blur the line between bank and retailer.

However, it’s worth noting that lending is a business with thin margins, and figuring out default risk is crucial, especially considering many fintech startups cater to those people the big banks won’t touch.

FinTech Wave Revolutionizes Financial World (SCMP), Rated: A

According to Morgan Stanley, online loan volume in the US market is expected to reach US$120 billion in 2020, up from US$20 billion in 2015.

Among others, one important promise of FinTech is that there will be greater reliance on algorithmically-determined financial decisions in areas such as loan, insurance and stock picking. The advancement of artificial intelligence methods has been the propeller facilitating the transition in such a direction.

The overall implication here is that a machine can replace a human in processing large amounts of text in a much more efficient way. This information extraction procedure also helps us understand more about the interplay between investors and various types of information. Interestingly, we find that investors react more strongly to negative than to positive text, and that analyst report text is more useful when it places more emphasis on non-financial topics, is written more assertively and concisely, and when the perceived validity of other information signals in the same report is low.

One common feature of the above two research studies is that computer algorithms are used to extract and quantify some otherwise fuzzy concepts: analyst sentiment in the first study, and analyst information discovery and interpretation effort in the second one. The computer achieves it by aggregating a huge amount of data which is surely beyond any human’s ability to process. Even though humans can understand intuition through very limited observations, it is hard for them to transfer the intuition or knowledge to other people. The computational limitation and the qualitative nature of the human knowledge are the underlying reasons why computers will eventually outperform humans in more and more settings.

FinTech does not come as a free lunch, however. Algorithm-based decisions are not immune to anomalies and manipulations. On 6 May, 2010, the Dow Jones Industrial Average dropped 998.5 points (about 9%), mostly within minutes. This sudden market crash was later attributed to the algorithm trading systems being manipulated by a trader.

European Union

Visa takes a strategic stake in Klarna, the finance startup out of Sweden (TechCrunch), Rated: AAA

Klarna, the $2 billion+ startup out of Sweden that works with some 70,000 e-commerce sites to enable payments and provide flexible financing to make purchases, is adding one more key investor to help take its next steps into a wider range of services. Today it announced that credit card giant Visa is making an equity investment in the company, and as part of it, the two are forging a strategic partnership to roll out new products.

Visa and Klarna are not disclosing the size of the stake — following the same pattern Visa took when it invested some years ago in two other fast-growing financial startups, Square and Stripe — and Klarna is not specifying what form the strategic partnership will take.

Brexit upheaval prompts French entrepreneurs to dream of home (Financial Times), Rated: A

In 2014, I moved to London to launch an asset management firm investing in loans originated by marketplace lending platforms.

Starting the business in London made sense. The UK boasted a business environment in which risk-taking was encouraged and entrepreneurial success valued and rewarded. Simple rules such as entrepreneurs’ relief, which reduces capital gains tax on the sale of a business, are very attractive for budding entrepreneurs.

However, the vote in last year’s referendum for Britain to leave the EU has caused me to reconsider my decision to live in and operate my business from London.

Gaël de Boissard joins the winner of last year’s Money20/20 Europe Startup Competition (deBanked), Rated: A

Exactly one year after winning Money20/20 Europe Startup Competition, James (a FinTech in Credit Risk, formerly known as CrowdProcess) returns to Copenhagen after closing an oversubscribed investment round led by Ex-Credit Suisse Board Member Gaël de Boissard. This round also included ex-Deutsche Bank COO, Henry Ritchotte, and BiG Start Ventures, a VC focused on FinTech and InsurTech. As a result of this deal, Mr. de Boissard has now joined James’s Board of Directors, after having previously been at the board of Credit Suisse.

Blockchain technology is moving into the financial mainstream with IBM and seven European banks (CNBC), Rated: B

IBM is building blockchain technology that will be used by seven of Europe’s largest banks, including HSBC and Rabobank, to facilitate international trade for small and medium-size enterprises, the company said on Tuesday.

International

Kiva.org Reaches $ 1 Billion Milestone in Crowd-Funding Loans Disbursed Globally (BusinessWire), Rated: AAA

Today Kiva.org, the world’s first and largest crowdfunding platform for social good, announced that it surpassed $1 billion USD in loans supporting borrowers around the world. More than 2.4 million entrepreneurs, farmers and students globally have been able to launch and expand viable businesses or pursue an education thanks to loan support from 1.6 million people, lending just $25 dollars at a time.

Recently on World Refugee Day (celebrated globally on June 20), Kiva launched a new World Refugee Fund, a $250K matching fund to be followed by a rotating fund of up to $9M in loan capital to provide support to refugees and host communities in countries including Lebanon, Jordan, and Turkey.

The World Refugee Fund seeks to fill this lending gap and is being developed by Kiva and the Alight Fund, along with founding partners the Tent Foundation and USA for UNHCR. To date, Kiva has crowdfunded $4.3 million in loans to 4,544 refugee borrowers globally.

Can Cash be Crushed? Multi-Country FinTech Survey Finds Many Adults Still Rely on Paper Money (IT News Online), Rated: AAA

According to KPMG’s 2016 global Pulse of Financial Technology (FinTech) Report (source), Venture Capital (VC) investment in the FinTech sector reached an all time high with a total of $13.6 billion across 840 financings in 2016. While FinTech investment proved to be “hot” in 2016, has this massive investment translated into consumer adoption? Today, at Money 20/20 Europe, early-stage venture capital firm Blumberg Capital released the results of its recent survey conducted online by Harris Poll in France, Germany, Israel, United Kingdom (U.K.), and the United States (U.S.), which found that FinTech appears to be gaining traction with Israel emerging as a leader in early-adoption. Despite investment and adoption progress, cash still remains king for most of these countries such as Germany, where 75 percent of adults still use paper currency and coins to make purchases at least once a week. Can cash ever be crushed? To see the full findings, please visit globalfintech.blumbergcapital.com.

Israel Embraces FinTech Early but Cash is Still König in Germany
The findings indicate Israel as a leader in early FinTech adoption as this country is more likely than other countries surveyed to use mobile banking apps and mobile wallets to make a purchase at least once per month. Additionally, nearly one in 10 Israeli adults say they have used alternative financing/lending services within the last 12 months. While many may believe cash to be an antiquated form of payment, the survey revealed paper money is still regularly in use.

  • Israeli adults are most likely to use a mobile banking app at least once a month (e.g., to check account balances, transfer funds, make a mobile deposit) (50 percent vs. 38 percent in U.S., 37 percent in U.K., 35 percent in France, 28 percent in Germany).
  • Israeli adults are more likely than French, British, and American adults to use mobile wallet apps to purchase goods/services at least once a month (27 percent of Israeli adults vs. 21 percent of French adults, 18 percent of American adults, and 17 percent of British adults).
  • Seven percent of Israeli adults have used alternative financing/lending services (e.g., peer-to-peer lending, online lender, lease-to-own) within the last 12 months.
  • German adults are most likely to use cash to make purchases at least once a week (75 percent vs. 64 percent of British adults, 58 percent of American adults, 48 percent of French adults, 47 percent of Israeli adults).

What is Fraud Anyway?
As cybersecurity continues to dominate the headlines, there was a surprisingly low level of concern among most countries surveyed given the current risk landscape. In Blumberg Capital’s 2017 State of Cybersecurity Report, findings revealed a gross overconfidence in cybersecurity knowledge and safety despite $15 billion being stolen from 13.1 million American consumers in 2015 in the U.S. alone (source). This disregard for fraud risk could indicate that consumers generally have confidence in the products and services they choose, suggesting that FinTech companies have the opportunity to educate new users on the security measures they have in place and why they are important.

  • British, American and Israeli adults are more likely than French and German adults to worry about being defrauded (e.g., getting scammed, having identity stolen, having accounts hacked) when they make financial transactions online (43 percent, 39 percent, and 38 percent vs. 31 percent and 23 percent, respectively).

Nationalism vs. Globalization: Are transactions crossing borders?
The survey also looked at how often people make online cross border purchases at least once a month. Again, Israeli adults lead the charge in cross-border transactions which could reflect on the narrower range of product choice available locally in Israel compared to other countries or Israel’s acceptance and wider adoption of FinTech and international eCommerce. Additionally, people were polled regarding the costs related to cross-border transactions, which revealed a budding anticipation of increased costs for these types of purchases in the future, especially in  the U.K. This belief in the U.K could be related to Brexit.  Findings include:

  • Israeli adults are most likely to make online purchases outside of the country they live in at least once a month (44 percent vs. 17 percent of French adults, 14 percent of German adults, 13 percent of British adults, and 9 percent of American adults).
  • 21 percent of British adults believe making online purchases outside of the country they reside will become more expensive (i.e., goods/ services will cost more and/or there will be additional fees) in the future. (Vs. 16 percent of American adults, 14 percent of German adults, 11 percent of French adults, 9 percent of Israeli adults).

Methodology
This survey was conducted online by Harris Poll on behalf of Blumberg Capital from May 16-22, 2017 among 2,166 American adults ages 18+, 1,046 German adults ages 18+, 1,048 French adults ages 18+, 1,050 British adults ages 18+, and 550 Israeli adults ages 18+. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For additional information about the survey results and methodology please contact: blumberg@sparkpr.com

What’s Next For Fintech After 50 Years Of The Cash Machine (Forbes), Rated: A

For the 50th anniversary of the first ATM, YouGov has conducted a global poll of 8000 consumers on behalf of ACI Worldwide to survey the usage of automated teller machines.

The survey found that only 42% of British consumers use ATMs just as much as they always have, while 48% in Germany, 47% in Spain and 40% in France believe the same, perhaps because of the widespread availability of alternative digital payments. 29% of UK consumers, 31% of French, 38% of Spanish and 43% of Italian would prefer this as well as a more secure way of payment authentication.

Zurawski does not see an ATM retirement any time soon as many still prefer using hard cash because it is a deliberate way of controlling spending.

The survey presented that customers want mini-statements, alerts for upcoming payments or overdraft fees plus the ability to dispense a new credit or debit card.

G20 watchdog says fintech doesn’t pose threat to financial stability (Reuters), Rated: A

The rise of fintech does not pose any compelling risks to financial stability, according to a review by global regulators, but this may change as the sector grows.

While financial technology is changing how financial services and information are being delivered, there is no evidence that services like crowdfunding, “robo” advice and cloud computing will fundamentally change underlying activities such as lending, the Financial Stability Board (FSB) said in a report published on Tuesday.

Australia

While money transfers and payments services still lead the fintech charge with an adoption rate of 50 per cent in 2017, insurance has come in a surprise second with a 24 per cent global adoption rate.

The adoption level for insurance fintech services in Australia stands at four per cent higher than the global average (29 per cent), linked to the upswing of personalised wearables with in-built abilities which allow for prediction of claim probability and lifestyle trends by insurance firms.

India

i2iFunding emerges as first P2P lending player (Outlook India), Rated: AAA

While many players try to attract investors by offering high-interest rates and leave them in the lurch in the case of default, i2iFunding has walked the talk by making the first payment from the Principal Protection Fund, and reiterated its commitment to shore up investors’ confidence.

Deteriorating asset quality has become an inevitable problem of the banking sector these days. Bad loans skyrocketed 135 percent over the last two years, and now, they constitute close to 11 percent of the advances of Public Sector Banks (PSBs).

The P2P lending industry is no immune to this trend.

i2iFunding has become the first P2P lending platform in India to compensate investors for the loss of outstanding principal amount incurred on the defaulted accounts.

Principal Protection programme will also be strengthened further, and many new features will be included. As of now, the level of principal protection depends on the category of the loan. Default in the category “A” qualifies for 100% protection of outstanding principal. This falls by 10% for the every next category and default in the “F” category offers you 50% protection. The functioning of the Principal Protection Fund will be further rationalised and smoothened. i2ifunding will primarily provide 50% and 100% principal protection options in each category from ‘A’ to ‘F’. There will also be the third option of ‘zero’ protection. Depending on the option selected by the investor, he/she will have to settle in for lower EMIS. The fee for offering principal protection service would be deducted through EMIs, but won’t be collected upfront. It’s noteworthy that, this may proportionately reduce the returns earned on lending projects but would make lending at i2iFunding safer and more secure.

Rubique breaks the language barrier; goes local to create earning opportunities for all (Outlook India), Rated: A

Always ahead of the innovation curve, Rubique has yet again demonstrated its focus on making financial solutions accessible to as many users as possible. The one-stop online marketplace providing technology enabled end-to-end solutions to financing needs of individuals and SMEs has just localised its Rubique Associate app.

The interactive app now live in Hindi, Marathi and Bengali language will now enable more number of potential Business Associates to register with Rubique and earn a commission for every reference search for loans or credit cards.

Authors:

George Popescu
Allen Taylor