- Today’s main news: Kabbage secures $200M credit facility from Credit Suisse for AI-based lending expansion. Consumer Financial Protection Bureau (CFPB) files suit against Think Finance. Royal Bank of Scotland to launch robo under NatWest brand. Hexindai names Citi depository bank for American Depository Receipt Program. ICICI Bank, Paytm partner on short-term credit.
- Today’s main analysis: PeerIQ Lending Earnings Insight Report. P2P lending in India.
- Today’s thought-provoking articles: Borrowers bungle credit card debt consolidation. LendingTree’s holiday shopping survey results. The best personal loans of 2017. The best bad credit loans of 2017. The best small business loans of 2017. Beyond the bank.
- Kabbage gets $200M credit facility. AT: “Congratulations! Another great achievement from Kabbage, one of the leading small business lenders in the alternative space. They’re planning to use the funds for expansion of AI-based loans.”
- DBRS assigns ratings to Kabbage Asset Funding 2017-A-LLC.
- Are borrowers bungling credit card debt consolidation? AT: “The focus is on the Cleveland Fed study recently published, but this is a good read.”
- Fed flags online lending.
- PeerIQ Lending Earnings Insight Report. AT: “A must-read.”
- Marcus is booming.
- What LendingTree’s holiday shopping survey suggests about consumers. AT: “Judging from this survey, the economy is doing well–parents are planning to spend more for Christmas this year.”
- LendingTree breaks 52-week high.
- Sharestates launches one-click closing.
- Why people ignore bitcoin tax laws.
- The best personal loans of 2017. AT: “Consumer-facing, but a must-read for personal lenders with comparisons.”
- The best bad credit loans of 2017. AT: “Consumer-facing, but a must-read for bad-credit lenders with comparisons.”
- The best small business loans 2017. AT: “Consumer-facing, but a must-read for small business lenders with comparisons.”
- Square letting users buy and sell bitcoin through cash mobile app.
- YieldStreet surpasses $200M in originations. AT: “Congratulations.”
- Goji receives $15M funding.
- CFPB aims for Think Finance, accuses service company of deception. AT: “This is huge. Regulation is no longer aims at lenders but at service companies that provide the underlying architecture.”
- CFPB has done a good job.
- CFPB needs a Cordray-like watchdog.
- Opportunities, challenges for digital lending.
- Traditional banks should help govern fintech.
- Office of the Comptroller of the Currency takes tamer stance.
- Alternative investing fees matter.
- Royal Bank of Scotland to launch robo.
- Beyond the bank. AT: “The interesting thing is that there is still speculation that online lenders will become white label tech providers to banks. Personally, I don’t think this will define the industry.”
- Big 3 feature Women in Fintech powerlist.
- Victory Park Capital takes majority ownership of Borro.
- How LendInvest’s buy-to-let offer compares to other lenders.
- Crowdproperty pitches to raise 600K GBP through equity crowdfunding.
- Monzo planning an IPO.
- UK fintech sets new funding record.
- Millennials say advisors are inaccessible, expensive.
- Cardiff to host new network of tech hubs.
- Hexindai names Citi a depository bank.
- Unified credit rating system expected soon.
- Fintech companies dominate top 10 global firms.
- P2P lending in India disrupting traditional finance. AT: “With comparisons to other nations.”
- Taurus Coin opens for business.
- ICICI Bank, Paytm partner on short-term credit.
- Narrow banking: An idea whose time has come.
- Reserve Bank of India planning p2p lending norm clarifications.
- United States
- Kabbage gets $ 200M from Credit Suisse to expand its AI-based business loans (TechCrunch), Rated: AAA
- DBRS Assigns Ratings to Kabbage Asset Funding 2017-A LLC (DBRS), Rated: A
- Study suggests many borrowers bungle credit card debt consolidation (Credible), Rated: AAA
- Fed flags online lending as subprime redux, but market hits back (Global Capital), Rated: A
- PeerIQ Lending Earnings Insights Report (PeerIQ), Rated: AAA
- Goldman Sachs’ lending platform is booming (Business Insider), Rated: A
- LendingTree Holiday Shopping Survey Suggests Bigger Budgets, Selfless Spending and Mobile Shopping Among Parents this Holiday Season (Business Insider), Rated: AAA
- LendingTree Inc. (TREE) Breaks into New 52-Week High on November 16 Session (Equities.com), Rated: A
- Sharestates, America’s Private lender, Launches Their One Click Closing Option (PR Newswire), Rated: A
- Bitcoin Tax Laws Are A Nightmare So People Ignore Them (International Business Times), Rated: A
- The Best Personal Loans of 2017 (U.S. News), Rated: AAA
- The Best Bad Credit Loans of 2017 (U.S. News), Rated: AAA
- The Best Small Business Loans of 2017 (U.S. News), Rated: AAA
- Square Now Letting Some Users Buy & Sell Bitcoin Through Cash Mobile App (Crowdfund Insider), Rated: A
- YieldStreet Surpasses $ 200M in Originations, Bolsters Leadership Team and Launches New Website amid Period of High Growth (BusinessWire), Rated: A
- $ 15 Million Investment Round Fuels Accelerated Growth at Goji (PR Newswire), Rated: A
- CFPB Guns for Think Finance. Files Suit Alleging Consumer Deception in Repaying Loans Not Legally Owned (Crowdfund Insider), Rated: AAA
- Richard Cordray’s CFPB Has Done Its Job Well (Bloomberg), Rated: A
- We need a watchdog at Consumer Financial Protection Bureau (Washington Post), Rated: A
- Five opportunities and challenges in digital lending (American Banker), Rated: A
- Traditional banks should help govern fintech (Reuters), Rated: A
- Under Trump, Banking Watchdog Trades Its Bite for a Tamer Stance (The New York Times), Rated: A
- Buffett’s ‘Million-Dollar Bet’ shows how much fees matter (Herald Tribune), Rated: A
- United Kingdom
- Royal Bank of Scotland to launch robo-advice under NatWest brand (Financial Times), Rated: AAA
- Beyond the bank (Prospect Magazine), Rated: AAA
- RateSetter, Funding Circle, Zopa feature in Women in Fintech Powerlist (P2P Finance News), Rated: A
- VPC takes majority stake in online lender Borro (P2P Finance News), Rated: A
- How does LendInvest’s buy-to-let offering stack up to P2P rivals? (P2P Finance News), Rated: A
- Crowdproperty Pitches to Raise 600K GBP through Equity Crowdfunding (P2P-Banking), Rated: A
- Digital bank Monzo sizes up IPO (AltFi), Rated: A
- UK FinTech Beats Brexit Blues with New Funding Record (Digit), Rated: A
- Millennials say advisers are inaccessible and too expensive (Financial Times), Rated: A
- Cardiff will host one of the first a new network of tech hubs being set up in a £21m investment (Wales Online), Rate: B
- P2P Lender Hexindai Names Citi As Depositary Bank for American Depositary Receipt Program (Crowdfund Insider), Rated: AAA
- Unified credit rating system expected soon, say experts (China Daily), Rated: A
- China Fintech Companies Dominate Top-10 List of Global Innovators (China Money Network), Rated: B
- European Union
- Online Lender WeShareBonds Raises €12 Million in Mission to Help Finance French SMEs (Crowdfund Insider), Rated: A
- Peer to Peer (P2P) Lending in India: A positive disruption to traditional financing, albeit cautious approach required (CARE Ratings), Rated: AAA
- TAURUS COIN OPENS FOR BUSINESS GLOBALLY (EIN News), Rated: A
- Australia/New Zealand
- Sharesies to look at robo-advice once regulator rules on exemptions (The National Business Review), Rated: A
- ICICI Bank and Paytm partner for short term credit for users (Medianama), Rated: AAA
- Narrow banking is an idea whose time has come (livemint), Rated: A
- RBI likely to issue clarifications on P2P lending norms soon (Money Control), Rated: B
- Active.Ai raises over $8 million in Series-A round (India Times), Rated: A
- WEALTHSIMPLE, LEAGUE AMONG KPMG’S TOP 50 FINTECH COMPANIES (Betakit), Rated: B
Kabbage gets $ 200M from Credit Suisse to expand its AI-based business loans (TechCrunch), Rated: AAA
After picking up $250 million in equity funding from Softbank earlier this year, the small business loans and finance company Kabbage — which uses only algorithms and machine learning (no humans) to determine an applicant’s eligibility — is announcing another big infusion of money. The company is picking up $200 million from Credit Suisse in a revolving credit facility that it will use for loans.
Specifically, Kathryn Petralia, who is the COO and co-founded the company with Rob Frohwein, said the funding will help the company increase the number of loans it can make to larger companies in the US. The average size of those loans will grow to “north of $200,000,” she said.
DBRS Assigns Ratings to Kabbage Asset Funding 2017-A LLC (DBRS), Rated: A
DBRS, Inc. (DBRS) assigned ratings to the following classes of loans extended by a group of lenders to Kabbage Asset Funding 2017-A, LLC (the Facility):
— Up to $148,150,000 of Class A Loans rated A (sf)
— Up to $24,868,000 of Class B Loans rated BBB (sf)
The Facility is a warehouse financing arranged for the benefit of Kabbage, Inc. (Kabbage) to support originations of small business loan receivables. Kabbage acts as servicer for the Facility.
Study suggests many borrowers bungle credit card debt consolidation (Credible), Rated: AAA
Thanks in part to the rise of fintech companies that make loans online, more than 16 million Americans now have personal loans — an increase of 64 percent in the last five years.
Payoff — a personal lender that specializes in helping consumers tackle credit card debt — says its internal data shows borrowers who paid off at least $5,000 in credit card balances between August 2016 and January 2017 saw a 40-point increase in their FICO score within four months.
Cleveland Fed study: a cautionary tale
One year after taking out a P2P loan, borrowers had credit scores that were 16 points lower than those of the non-P2P borrowers they were matched to, on average — an impact that persisted for four years, the authors said in their working paper.
The study found no evidence that P2P lenders are providing access to credit for “underbanked” consumers — borrowers taking out P2P loans were obtain other credit from traditional banks at rates similar to other consumers.
But a number of companies on the list, including Lightstream, BestEgg, LendingPoint, Earnest, and RocketLoans weren’t around in 2012, when the most recent loans studied by the Cleveland Fed researchers were made. Several others — including Avant, CommonBond, Pave, and Upstart — were just getting off the ground at the time.
The growth in fintech lending has been a driver in overall personal loan growth, with 16.1 million consumers owing $106 billion in personal loan debt as of June 30, 2017. That’s up from the 9.8 million borrowers who owed $45 billion in personal loan debt in mid-2012.
Fed flags online lending as subprime redux, but market hits back (Global Capital), Rated: A
ABS participants, speaking with GlobalCapital this week, hit back at the report, written by Yuliya Demyanyk, senior research economist, Daniel Kolliner, research analyst, both of the Cleveland Fed; and Elena Loutskina a professor of business administration at the University of Virginia’s Darden School of Business, and contributing author at the Cleveland Fed.
The authors challenge the belief that peer-to-peer (P2P) loans have expanded credit to borrowers with limited access to debt since the financial crisis.
A central argument of the Fed’s report was that sector has not done much to expand access to debt for borrowers with low credit scores.
In securitization, subprime consumer ABS has thinned since the crisis. For the five major credit card issuers, the years 2008-2016 saw revolving credit available to US borrowers with a Fico score of less than 660 reduced by approximately $142bn, according to data published by online lender Elevate earlier this year.
Even portfolios backing recent marketplace loan ABS have a weighted average Fico score above 680, the level that defines so-called ‘near prime’ credits, despite the notable dip in collateral quality. Marlette, for example, had an average score of 705 for its most recent transaction which was priced in October, while Prosper had a weighted average Fico score of 709, according to data from Kroll Bond Rating Agency.
PeerIQ Lending Earnings Insights Report (PeerIQ), Rated: AAA
We are pleased to release our inaugural Lending Earnings Insights report.
Below are some of the main themes that we explore in this tracker:
- Large banks continue to retrench. Wells Fargo’s loan portfolio is down $13 Bn YOY. Loss reserves are down at all major banks except at GS due to the ramp-up in their consumer lending portfolio. Goldman Sachs expects lending initiatives to add $2 Bn in revenue in the coming years. GS loan loss reserve increased 50% and GS had the highest improvement in ROE across its peer group.
- Credit re-normalization trend continues remains a recurring theme across all major lending groups. Overall, loss-rates on recent vintages are increasing versus prior recent vintages, although performance remains stronger than pre-crisis levels. Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Discover and American Express increased loan loss provisions ~50% although loan growth is at 9% and 14% respectively.
- Consumer installment lenders do not anticipate an increase in loss rates, after having recalibrated loss expectations and increased reserves in 2016. OneMain had the smallest increase in loss reserves at 4%.
- Consumers now have access to greater supply of credit and credit demand continues to grow. Consumer average debt-to-incomes are below pre-crisis levels.
- Several lenders cited the shifting competitive landscape and the role of technology in driving innovation and risk management.
- Where are we in the credit cycle?
Goldman Sachs’ lending platform is booming (Business Insider), Rated: A
Other banks may be tempted to emulate Goldman Sachs’ move into lending, but they should proceed with caution. Although consumer credit demand in the US
LendingTree Holiday Shopping Survey Suggests Bigger Budgets, Selfless Spending and Mobile Shopping Among Parents this Holiday Season (Business Insider), Rated: AAA
LendingTree, the nation’s leading online loan marketplace, recently conducted its Holiday Shopping Survey among 1,050 Americans aged 25 to 55 with at least one child. The results show that people generally expect to give more than they expect to receive, and although only 55 percent of respondents have a set budget this holiday season, 76 percent plan to spend the same amount or more on holiday shopping compared to last year.
According to the survey, the average holiday shopping budget across all age groups was $943, although 45 percent of respondents say they don’t have a set budget for holiday shopping this year. LendingTree’s 2016 holiday survey found that 56 percent of respondents planned to shop for the holidays without a pre-set budget.
Additionally, 29 percent say they plan to spend more on holiday shopping in 2017 than they did in the 2016 holiday season.
Parents are setting a low bar for their children’s gift giving abilities in 2017, with 68 percent of parents expecting to receive no gifts from or on behalf of their kids.
Most parents (80 percent) plan to spend at least $100 per child this year while 37 percent of parents plan to spend at least $250 per child. Although 62 percent of parents say they try to spend the same amount on each child, younger children have a slight advantage with 12 percent of parents admitting to spending more on younger children and only 6 percent of parents use a child’s behavior to dictate how much money is spent on their gifts.
A debit card is the primary form of payment for holiday shopping for 46 percent of respondents, as well as the primary form of payment for across all groups. Second to debit cards, 29 percent designated cash as their primary form of payment, and only 21 percent are primarily credit card users – although credit cards are considered more secure than cash or debit cards. A recent CompareCards by LendingTree survey found that 66 percent of Americans think debit cards are as safe or safer than credit cards for payments, when in fact debit cards don’t offer the same consumer protections as credit cards.
Respondents expect to do 50 percent of their shopping online and 34 percent of their shopping on their mobile phone. Millennials (age 35 and under) expect to do 40 percent of their shopping on their phone, the largest of any other age group.
LendingTree Inc. (TREE) Breaks into New 52-Week High on November 16 Session (Equities.com), Rated: A
Shares of LendingTree Inc. (TREE) broke into a new 52-week high yesterday, hitting a peak of $281.80. Shares closed at $279.40 after opening at $271.75 for a move of 2.83%. The company now has a market cap of $3.34 billion.
Sharestates, America’s Private lender, Launches Their One Click Closing Option (PR Newswire), Rated: A
Sharestates, an online real estate investment marketplace, announced today the launch of its new One Click Closing tool, a feature that will allow return borrowers to visit a page where they can upload all the details and documents required for a new loan, allowing for a seamless transfer of closing date information without further communications. The launch of this new tool coincides with the company’s overarching goal of providing borrowers with a streamlined funding process, while providing them the opportunity to solely focus on identifying viable real estate investment opportunities.
Bitcoin Tax Laws Are A Nightmare So People Ignore Them (International Business Times), Rated: A
A survey of 564 American bitcoin users by the online loan marketplaceLendEDU, revealed more than 35 percent didn’t plan to report bitcoin-related gains or losses on their tax returns. On average, respondents said the current fiat value of their bitcoin holdings were $2,930.85, although that will probably continue to rise along with bitcoin’s market price.
The Best Personal Loans of 2017 (U.S. News), Rated: AAA
Some of the most common requirements for a personal loan are:
- Minimum credit score: Most lenders require that you have at least fair or good credit when applying for a personal loan. Each lender sets its own cutoff for what it considers to be excellent, good, fair or bad credit. In general, fair credit is a FICO score between 580 to 669 and good credit is a score between 670 to 739. Most companies require a score of at least 600, but some have greater requirements. A higher score will increase your ability to be approved, and the higher your score, the lower interest rate you’ll qualify for too.
- Clean credit history: Lenders don’t like to see defaults, collections or bankruptcies. If you have one or more of these on your credit report, you might not be approved for a personal loan. If you’re approved, you may have to pay an exorbitant interest rate.
- Stable employment: A lender needs to know that if it lends you money, you’ll have the means to repay it over time. Without a stable job, you could miss payments or default on the loan. Proof of employment validates your loan application.
- Proof of identification: Lenders usually need to see proof of identification, such as a copy of your driver’s license or passport, before approving your loan. Identity theft is common and they want to prevent thieves from taking out loans under another person’s credit.
Choosing a Personal Loan Company
There are two types of lenders you can choose from: banks and peer-to-peer lenders. Banks offering personal loans include SoFi and LightStream and peer-to-peer lenders include Upstart, LendingClub, Prosper and Peerform.
Marketplace-based lenders usually have less strict credit score requirements than their bank-based counterparts. For example, LendingClub and Peerform only require a FICO score of 600 while bank-based companies such as SoFi and Payoff have minimum FICO scores of 660.
Every lender has a minimum and maximum loan amount. For example, SoFi will lend up to $100,000 while Payoff lends up to $35,000. If you need to borrow $45,000, then only look at lenders who offer that amount or more.
Best Personal Loan Companies of 2017
- Best for very good credit, low APR and no origination fees: LightStream
- Best for very good credit, low APR, no origination fees and a range of offerings: SoFi
- Best for very good credit and low APR with merit-based qualifications: Earnest
- Best marketplace for fair to good credit with merit-based qualifications: Upstart
- Best bank for fair to good credit with merit-based qualifications: LendingPoint
- Best for fair to good credit with a co-signer option: LendingClub
The Best Bad Credit Loans of 2017 (U.S. News), Rated: AAA
Bad credit usually is a FICO score below 640. FICO is the main scoring system for consumer credit, with credit score rangesdefined as:
- Exceptional (800 to 850)
- Very Good (740 to 799)
- Good (670 to 739)
- Fair (580 to 669)
- Very Poor (300 to 579)
Payday Loans Versus Personal Loans
|Payday Loans||Personal Loans for Bad Credit|
|Lenders||Online, brick-and-mortar||Online, brick-and-mortar|
|Loan Amounts||Typically less than $500||$1,000 to $50,000|
|Loan Terms||Two to four weeks||One to five years|
|Interest Rates||200 to 400 percent APR||36 percent APR or less|
Some alternative payday loan companies market themselves as more socially responsible than traditional payday lenders because they offer better terms. They also want to help consumers rebuild their shaky credit and make payments on time. For instance, LendUp provides financial education and rewards existing borrowers who repay their loans to be eligible for loans at larger amounts and lower rates. Fig Loans only charges fees to cover the costs of the loan.
Choosing a Bad Credit Lender
Consumers should evaluate lenders based on the following criteria:
- Type of lending company
- Credit history and general qualifications
- Co-signer option
- Additional eligibility qualifications
- Employment requirements
- Interest rates and types
- Loan terms
- Fees and penalties
- Repayment options
The Best Small Business Loans of 2017 (U.S. News), Rated: AAA
According to the National Small Business Association, 69 percent of small businesses used financing in 2016, including loans, credit cards, venture capital and crowdfunding. The remaining 31 percent were not able to obtain adequate financing.
According to data from the U.S. Small Business Administration, small business bank loans totaled nearly $600 billion in 2015. At the same time, lending from alternative sources such as finance companies and peer-to-peer, or P2P, marketplace lenders amounted to $593 billion.
There are two categories of alternative lenders, direct and peer-to-peer lenders:
1. Direct lenders: Direct lenders are finance companies that fund your loan with capital other than a bank and without a middleman such as a broker, investment bank or private equity firm. Some direct lenders, such as LiftFund, offer SBA loans. Typically, small to midsize businesses borrow from direct lenders.
2. Peer-to-peer lenders: Online peer-to-peer lending directly connects you with investors who usually have a diversified loan portfolio made up of small portions of loans. A loan is often divided among several investors.
Choosing a Small Business Loan
- Minimum credit score
- Minimum years in business
- Minimum annual revenue
Best Small Business Loans of 2017
- Best for very small businesses: Kabbage
- Best for borrowers with low credit scores: OnDeck
- Best for new businesses: Accion
- Best for low APR: LendingClub
- Best for invoice financing: Fundbox
Square Now Letting Some Users Buy & Sell Bitcoin Through Cash Mobile App (Crowdfund Insider), Rated: A
YieldStreet Surpasses $ 200M in Originations, Bolsters Leadership Team and Launches New Website amid Period of High Growth (BusinessWire), Rated: A
YieldStreet, the alternative investment platform that is working to change the way wealth is created, announced that it has surpassed $200 million in originations and has added two new executives to its leadership team: Volfi Mizrahi as Managing Director of Originations and Ivor Wolk as General Counsel. Their additions come on the heels of the appointment of Hrishi Dixit as CTO earlier this year.
$ 15 Million Investment Round Fuels Accelerated Growth at Goji (PR Newswire), Rated: A
Goji announced a $15 million investment round led by Hudson Structured Capital Management Ltd., doing business as HSCM Bermuda.
CFPB Guns for Think Finance. Files Suit Alleging Consumer Deception in Repaying Loans Not Legally Owned (Crowdfund Insider), Rated: AAA
The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court against Think Finance, a Fintech that leverages its technology to power online lending platforms. The CFPB says the suit was filed for its “role in deceiving consumers into repaying loans that were not legally owed.”
The CFPB alleges that Think Finance illegally collects on loans that are void under state laws governing interest rate caps or the licensing of lenders.
The actual filing states:
“From 2011 through at least 2015, Defendant has performed critical functions for three separate lending businesses owned by Native American Tribes: (1) Great Plains Lending, LLC (Great Plains); (2) MobiLoans, LLC (MobiLoans); and (3) Plain Green, LLC (Plain Green) (collectively, the Tribal lenders). Defendant is therefore a “service provider” under CFPA. 12 U.S.C. § 5481(226).”
Read the filing here.
Richard Cordray’s CFPB Has Done Its Job Well (Bloomberg), Rated: A
As recently as a decade ago, the U.S. had no single regulator tasked with looking out for the interests of consumers in financial markets. Fragmented oversight allowed all kinds of bad behavior to fall through the cracks. Mortgage brokers hid the true terms of loans in piles of nearly indecipherable documents. Banks changed the order of transactions to extract the maximum overdraft fees from poor customers. Payday lenders offered products designed to trap people in an unending cycle of debt.
Cordray has accomplished a lot. The CFPB designed new, simpler mortgage-loan disclosures. It shed light on banks’ overdraftpractices. It created the first federal rules to make payday lending less predatory. It gave the public reams of valuable information, such as a database that allows consumers to compare credit-card agreements. Its practice of publishing complaints pushed financial institutions to be more responsive. Its investigation of Wells Fargo brought national attention to the fake-accounts issue.
Some of its practices (in particular, preferringdiscretionary enforcement over explicit rule-making) are less than ideal and ought to be revisited; in other areas (such as auto lendingand credit reporting) its authority should be expanded.
We need a watchdog at Consumer Financial Protection Bureau (Washington Post), Rated: A
Cordray’s departure gives President Trump an opportunity to appoint a new leader, and I’m concerned that this will derail the watchdog agency’s consumer-first mission.
In Cordray’s parting statement, he wrote that the agency has recovered $12 billion for nearly 30 million consumers.
Five opportunities and challenges in digital lending (American Banker), Rated: A
Despite the rapid growth of online and mobile lending in recent years, many banks are still just getting started.
Traditional banks should help govern fintech (Reuters), Rated: A
Traditional lenders should demand that online financial companies protect consumer privacy and money interests, Federal Reserve Governor Lael Brainard said on Thursday.
Banks often pay tech companies for the information they gather on borrowers. For that reason, Brainard said, those lenders can set high standards in consumer protection and privacy.
Under Trump, Banking Watchdog Trades Its Bite for a Tamer Stance (The New York Times), Rated: A
The regulator, the Office of the Comptroller of the Currency, which oversees the nation’s biggest banks, has made it easier for Wall Street to offer high-interest, payday-style loans. It has softened a policy for punishing banks suspected of discriminatory lending. And it has clashed with another federal regulator that pushed to give consumers greater power to sue financial institutions.
Buffett’s ‘Million-Dollar Bet’ shows how much fees matter (Herald Tribune), Rated: A
One category of alternative investments includes hedge and private equity funds. I am not in favor of such investments, especially for the average investor, and I am not alone.
Typically, hedge fund fees are 2 percent plus an incentive, or “carry,” of 20 percent of the profits. The result is billions of dollars for the managers and far less for clients.
In 2015, Buffett lagged his hedge fund rival for the first time since 2008, gaining 1.4 percent versus Protégé’s 1.7 percent. However, 2016 saw Buffett gain 11.9 percent to Protégé’s 0.9 percent. At the end of 2016, Buffett’s index fund gained 7.1 percent per year, or $854,000 in total, compared with 2.2 percent per year, or $220,000, for Protégé.
Royal Bank of Scotland to launch robo-advice under NatWest brand (Financial Times), Rated: AAA
Royal Bank of Scotland is launching robo-advice for more than 5m customers as banks return to the investment market after a string of fines and as regulators attempt to plug the UK’s wide “advice gap”.
The state-backed lender is claiming to be the first in the UK to launch automated online investment advice when it opens on Monday under its NatWest brand. The service is designed for the majority of customers and for people with as little as £500 to invest as a lump sum.
The process, which costs £10 plus fees for the investment, is aimed at customers who lack the confidence to invest alone but do not wish to pay higher charges for full-blown financial advice, such as tax and inheritance planning.
Beyond the bank (Prospect Magazine), Rated: AAA
Five high street banks remain responsible for more than 80 percent of business lending, prompting calls for greater market choice both from challenger banks and from emerging FinTech (financial technology) firms. However, the introduction of new platforms and new players raises questions of integration, innovation and regulation.
Launched seven years ago, Funding Circle has since hosted 70,000 lenders and is responsible for 2 percent of total UK business lending. While going head-to-head with the banks it is worth noting that Funding Circle is also growing the market.
So what next for financial services? Will the disruptors get disrupted? Possibly. One attendee suggested that FinTech firms would soon be providing ‘white label’ versions of their services to traditional banks that would then offer those services to customers. Others suggested that the likes of Amazon and Google would provide the biggest future threat not just to banks but to today’s FinTech leaders.
RateSetter, Funding Circle, Zopa feature in Women in Fintech Powerlist (P2P Finance News), Rated: A
FEMALE employees at RateSetter, Funding Circle, Zopa and Landbay have all made this year’s Women in Fintech Powerlist, which celebrates the achievements and talent of women across the sector.
RateSetter’s entrants are: Alexa McAlister, head of partnerships; Angela Yotov, head of legal; Joanna Wright, chief risk officer; Katie Brown, corporate counsel; Laurence Perrin, head of compliance; Lucy Bott, head of customer operations; and Maud Holma, finance counsel.
Women from Funding Circle who made the list are: Alysha Randall, global finance director; Lisa Jacobs, chief strategy officer; Lucy Vernall, global general counsel and global head of compliance; Maria Weaver, chief people officer; Panni Morshedi, managing director of international; Swati Lay, chief information security officer; and Vittoria Reimers, VP loan operations.
VPC takes majority stake in online lender Borro (P2P Finance News), Rated: A
VICTORY Park Capital Specialty Lending (VPC) has continued its expansion into balance sheet lending by upping its investment in online secured lender Borro.
The alternative finance-focused investment trust now has the largest stake in the firm, which provides loans secured on luxury assets, owning around 49 per cent.
How does LendInvest’s buy-to-let offering stack up to P2P rivals? (P2P Finance News), Rated: A
LendInvest said it will be offering buy-to-let loans through intermediaries ranging between £50,000 and £5m, with rates starting at 3.69 per cent depending on whether borrowers take a two, three or five-year fixed rate.
In comparison, Landbay facilitates fixed rate and tracker buy-to-let loans of between £70,000 and £500,000 from 3.55 per cent.
And fellow P2P lender LandlordInvest offers loans of between £30,000 and £300,000 from five per cent.
Crowdproperty Pitches to Raise 600K GBP through Equity Crowdfunding (P2P-Banking), Rated: A
UK p2p lending marketplace Crowdproperty is currently pitching on Seedrs to raise 600K GBP from the crowd at a pre-money valuation of 5.9M GBP.
Digital bank Monzo sizes up IPO (AltFi), Rated: A
In an advertisement for a new Chief Financial Officer, Monzo has let on about its plans for an IPO within three to four years time.
The posting, published today on Monzo’s job site, says:
“Alongside the CEO, you’ll be heavily involved in future capital raising – pitching to investors and negotiating the best terms. In the next 3-4 years, it’s likely you’ll be responsible for taking the company through an IPO.”
UK FinTech Beats Brexit Blues with New Funding Record (Digit), Rated: A
Additionally, the compound annual growth rate (CAGR) of 10.7% experienced by firms valued below £75 million between 2014 and 2016 was supplemented with a further investment of £1.2 billion for this bracket in 2017. As for companies valued above the £75 million figure, a further £877.1 million has been committed across eight deals.
Investment in the UK’s top-10 fintech firms accounted for nearly 46.7% of the total investment between Q1 and Q3 2017. The largest of these deals went to Gryphon Insurance in June, valued at £179.6 million. Of the top 10 deals, four went to lending firms – Prodigy Finance, 1stStop Group, Neyber and Funding Circle, valued at £457.5 million. Of the remaining six deals, two went to challenger banks Tandem and Atom, two went to enterprise software companies Options Technology and Darktrace, and the final two went to insurtech companyies Gryphon Insurance and Revolut.
Millennials say advisers are inaccessible and too expensive (Financial Times), Rated: A
Millennials view financial advice as an industry of “exclusivity, inaccessibility and high cost,” according to research carried out by the financial advice trade body.
The poll of 178 millennials found 78 per cent of them believed they could only receive advice if they had investible wealth in excess of £50,000 but a significant number wanted advice when they had £10,000 or less.
Online-only options appealed to just 12 per cent of those surveyed.
Cardiff will host one of the first a new network of tech hubs being set up in a £21m investment (Wales Online), Rate: B
A new tech hub will be set up in Cardiff as part of a UK-wide network of regional hubs under a £21m investment announced by the UK Government.
P2P Lender Hexindai Names Citi As Depositary Bank for American Depositary Receipt Program (Crowdfund Insider), Rated: AAA
On Wednesday, Chinese peer-to-peer (P2P) lending platform Hexindai announced it has appointed Citi’s Issuer Services business as the depositary bank for its American Depositary Receipt (ADR) program. According to the online lender, the program was established through an initial public offering of its American Depositary Shares (ADSs), priced at $10 per ADS, which raised approximately $50 million.
Unified credit rating system expected soon, say experts (China Daily), Rated: A
A unified platform for collecting personal financial information and assessing people’s credit ratings is being planned, and it is expected to be launched soon as a part of the central bank’s regulatory framework, experts told China Daily.
It will complement the existing credit center of the People’s Bank of China, the nation’s central bank.
China Fintech Companies Dominate Top-10 List of Global Innovators (China Money Network), Rated: B
Compared with the ranking last year, two more Chinese firms were added to the top 50 list. Online marketplace lending company Dianrong and credit card and online financial service firm U51.com, or 51Xinyongka, rose to top 50. Among the 100 fintech companies, lending and payments focused companies lead in terms of sectors.
Online Lender WeShareBonds Raises €12 Million in Mission to Help Finance French SMEs (Crowdfund Insider), Rated: A
WeShareBonds, an AMF-registered crowd lending platform, has raised €12 million to continue financing French SMEs. The new funding includes both the closing of WeShareBonds’ second credit fund (Prêtons aux PME 2018) to finance French SMEs for €10 million and an equity increase of €2 million to finance platform growth.
Peer to Peer (P2P) Lending in India: A positive disruption to traditional financing, albeit cautious approach required (CARE Ratings), Rated: AAA
The overall size of the NBFC sector in India has grown significantly during the last few years with increasing share of NBFC total assets to bank total assets (approximately around 15 per cent of the total banking assets).
P2P Lending in UK: In UK, the P2P market has seen active retail investor participation. The outstanding loan book in the UK industry is approximately around £2.9 billion (~Rs.25,000 crore) as on Q3-2017 as compared to £0.75 billion (~Rs.6,500 crore) as on Q4-20142 . Based on the outstanding loan book as on Q3-2017, the key players in the segment are Funding Circle, Zopa, FolktoFolk, Ratesetter and ThinCats capturing majority of the market.
P2P Lending in USA: P2P industry in USA is around $20 billion (~Rs.1.3 trillion) in 2016 up from $18 billion in 20153 . P2P lending in the USA has seen active participation of institutional investors (approximately 70 per cent of the total investor volumes) lending to borrowers through the platforms. In the USA, three dominant players capture majority of the market which include Lending Club, Prosper and Sofi.
P2P Lending in China: Globally, China has the largest market size of P2P lending which started in 2006. As of January 2017, there were total 2388 P2P platforms in China4with trading volume in 2015 touching $67 billion (~Rs.4.4 trillion) which is ten times that of UK and four times bigger than USA. However unlike USA and UK, the China P2P market is dominated by large number of small and medium size firms.
P2P Lending in India: Globally P2P lending has been in existence for more than ten years; however, it has been evolving in India in the last couple of years. Given the recent RBI guidelines, companies will now need to obtain NBFC–P2P license and will come under the purview of the regulator. There are more than 50 P2P online platforms operating in India. I-Lend, LenDenClub, Faircent, Lendbox, i2iFunding, Monexo, India Money Mart, Rupaiya Exchange are some of the leading P2P platforms operating in India. Currently, some of the leading P2P platforms claim to disburse loans amounting to ~Rs.1 to 2 crore a month. Outstanding loans under P2P model is estimated to have reached ~Rs.50-60 crore.
Read the full report here.
TAURUS COIN OPENS FOR BUSINESS GLOBALLY (EIN News), Rated: A
United Kingdom’s leading peer to peer cryptocurrency lender Taurus Coin today launched its online lending marketplace with USD 150M lending capital, bringing the world’s fastest growing form of lending to the South-East Asia, Gulf, Africa, Europe, and India investors.
Sharesies to look at robo-advice once regulator rules on exemptions (The National Business Review), Rated: A
Start-up fund distribution platform Sharesies will develop a plan to provide personalised, automated financial advice, known as robo-advice, once there is more clarity about regulatory exemptions.
Last month the Financial Markets Authority decided to grant an exemption to enable the provision of robo-advice services under the current financial advice regime and said it aims to finalise the exemption and be open for applications in early 2018.
ICICI Bank and Paytm partner for short term credit for users (Medianama), Rated: AAA
ICICI Bank and Paytm have partnered to offer short-term credit to users. The credit given to customers will be interest-free for 45 days and the bank says that it will give loans up to Rs 20,000. Initially, this will be allowed for select ICICI Bank customers who are on Paytm and will be extended to other bank customers as well who use Paytm.
Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.
In August, the bank launched product called Instant Credit Card where certain pre-approved customers of the bank will be able to get a virtual credit card much before the physical card is delivered to them. A physical card will be sent to the customer’s address in 5-7 days.
Meanwhile, the bank’s rival, HDFC Bank said that it would start offering a virtual credit card for customers through its PayZapp wallet, as indicated by this Financial Express report. HDFC Bank has the maximum number of credit cards in circulation with 9.03 million. Meanwhile, ICICI Bank has 4.34 million credit cards.
- Paytm’s rival in the wallet space, MobiKwik has partnered with Bajaj Finance to to bring in credit facilities to a wallet business.
- In April this year, PayU India will be investing $50 million in its product LazyPay over the next few years. The credit facility could extend for amounts from Rs 3,000 and even up to Rs 10,000, depending upon customer behaviour.
- For the recently concluded festival season, e-commerce player Flipkart started to offer EMIs on debit cards on high-value purchases.
Narrow banking is an idea whose time has come (livemint), Rated: A
The most heartening takeaway from last week’s public sector bank executive jamboree was the discussion around differentiated lending structures. The ThinkShop (earlier editions were called Gyan Sangams) suggested that large banks focus on corporate lending, while smaller lenders focus on retail loans or specific geographies.
Taking differentiated lending to its logical end, the time has come to consider converting the worst performers among state-owned lenders to narrow banks, which won’t lend at all.
Narrow banks are safe banks. By not lending, and using their deposits to buy government bonds, they carry virtually no credit risk. There is no danger of non-performing loans and frequent injections of equity capital that has to be funded by taxpayers. For the Reserve Bank of India (RBI) too, supervision gets easier. There is no need for deposit insurance.
RBI likely to issue clarifications on P2P lending norms soon (Money Control), Rated: B
The Reserve Bank of India is soon likely to issue clarifications on the guidelines for peer-to-peer (P2P) lending platforms relating to the lending limits, trusteeship and other operational norms.
Active.Ai raises over million in Series-A round (India Times), Rated: A
Singapore-based fintech platform Active-.Ai has raised $8.25 million in a series-A round, which was led by Vertex Ventures, Creditease Holdings and Dream Incubator. Existing investors Kalaari Capital and IDG Ventures also participated.
WEALTHSIMPLE, LEAGUE AMONG KPMG’S TOP 50 FINTECH COMPANIES (Betakit), Rated: B
Toronto-based Wealthsimple, League, and SecureKey were among the company recognized in the top 50 category. In the emerging stars category, Toronto-based Borrowell, Wave, and Sensibill were recognized.
The list was put together by FinTech investment firm H2 Ventures and KPMG FinTech.