Thursday July 11 2019, Weekly News Digest

Asset-backed securities

News Comments Today’s main news: Morningstar completes DBRS purchase. Figure issues $85M in loans per month. Zopa chief says banks are trying to put fintech lenders in a box. DBRS praises Funding Circle. Yirendai’s Q1 results. Octopus expands into Germany. Today’s main analysis: Over 60% of purchase borrowers received mortgage rates under 4.5% last week (A […]

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Asset-backed securities

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United Kingdom

China/Hong Kong

European Union

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News Summary

United States

Former SoFi CEO Mike Cagney’s New Blockchain Startup Is Issuing $ 85 Million In Loans A Month (Forbes), Rated: AAA

Since the streamlined HELOC Mike Cagney, the co-founder and former CEO of fintech unicorn Social Finance (SoFi), knows that it is essential to focus on customer experience to build a loyal client base. Today, he is using that knowledge to create a platform aimed at driving mainstream adoption of blockchain technology in the financial sector.

Over 60% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week (LendingTree), Rated: AAA

Mortgage Rate Distribution

  • For 30-year, fixed-rate mortgages, approximately 60.1% of purchase borrowers received offers of 4.25% or less. That is up from 57% of borrowers the previous week. A year ago, 0.06% of offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4.125% was the most common interest rate. This rate was offered to 14.3% of borrowers.
  • Of 30-year, fixed-rate mortgage refinance borrowers, 72.8% received offers of 4.25% or less, which is up from 70.4% the previous week. A year ago, no refinance offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 3.875%, offered to 18.9% of borrowers.

Mortgage Rate Competition Index

  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 1.19, down from 1.22 the previous week.
  • How big of a deal is it to get a mortgage APR that’s 1.19 percentage points lower than the competition? Over 30 years, that could translate to $56,826 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
  • The index was wider in the refinance market at 1.35, up from 1.34 the previous week. Refinance borrowers could have saved $65,108 by shopping for the lowest rate.
Source: LendingTree

It’s Taking Less Time to Close on a Mortgage in 2019 (LendingTree), Rated: AAA

  • The time to close in new purchase transactions has been steadily declining, from 74 days in 2017 to 51 days in 2018 and just 40 days thus far in 2019.
  • For refinances, the decline has been less dramatic: from 55 days in 2017 to 43 days in 2018 and just 38 days so far in 2019.
  • Some of the decline can be attributed to lower mortgage volumes, as refinancings have been on a downward trend. But increased digitization is also playing a major role.
  • Closing times vary based on the characteristics of the mortgage type and borrower. Having a higher credit score can knock a few days off: Purchase borrowers with scores above 760 averaged 38 days in 2019 compared with 45 days for those below 720. Refinancings did not show much variation by credit score.
  • Loan-to-value ratios below 80% had shorter closing times for refinances, at 37 days compared with 42 days on mortgages with a ratio above 95% in 2019.
  • Loan amounts also affect closing times, with lower amounts, perhaps surprisingly, taking the most time. Loans under $150,000 averaged 47 days compared with 39 days for those above the conforming limit ($484,350 in 2019). Why? Higher loan amounts are typically being made to more credit-worthy borrowers. Lower-priced homes may be in some form of distress or have some type of damage; lenders thus may require more extensive appraisals to better estimate the home’s value and this adds time to the process.

Mortgage Fintech Innovation (PeerIQ), Rated: AAA

In broad-brush strokes, mortgage innovation centers on:

  • Customer experience (Better, Roostify, Blend, HomeCaptain) solutions are re-inventing the onerous mortgage with a digital experience, speeding decision times and opening up the lending buy box in the process.
  • Intermediation (OpenDoor, HomeLight, Zillow) – Some platforms are stepping in between buyers and sellers to provide liquidity, capturing transaction fees in the process
  • Data (House Canary, Zillow, Atom Data) – are amassing large data sets to providing accurate, standardized pricing models for investment decisioning
  • Banking 2.0 (SoFi, ZeroDown) – seek to provide a range of banking or investing services to consumers
Source: PeerIQ

Guaranteed Rate Companies Breaks 15 Company Records with Exceptional June Production Volume (Yahoo! Finance), Rated: A

Guaranteed Rate Companies, one of the largest retail mortgage lenders in the nation, announces 15 new company milestones—breaking its monthly total locked volume for the fourth consecutive month in June.

Breaks its record of total locked volume with $5.31 Billion earned across more than 15,000 units

Can Commercial Real Estate Investment Truly Be Democratized? (Commercial Observer), Rated: AAA

Most real estate crowdfunding sites continue to highlight the equalizing benefits of the model. Fundrise provides “access to a once-unattainable investment class,” and Rich Uncles, which has a minimum of $5, wants to “level the playing field” for the average investor. The sites offer investments in funds that focus on income-producing assets, like single-tenant office, multifamily housing and convenience centers nationwide.

Jeff Holzmann, the former COO of crowdfunding site iintoo, says the definition of an accredited investor is very divisive: “You can have an economics degree, and if you make $199,000 a year, you can’t invest, but Kim Kardashian can walk right on up and buy a multifamily building for $200 million. Should our bar be set by how much money you make?”

Ryan Williams Is Bringing the ‘Proptech’ Revolution to Real Estate Investing (Fortune), Rated: A

Real estate is an industry notoriously stuck in its ways and slow to change. Cash-generating, bricks-and-mortar assets are at the very heart of the enterprise, and in many ways, business is conducted the same way it was 100 years ago. Until recently, real estate owners, investors and brokers had little patience for the kinds of technological advances that have swept through myriad other industries.

But that’s all changing now. Just as there’s fintech, medtech, edtech and regtech, so is there proptech—and there are few companies in the realm of real estate technology as closely watched as Cadre, led by a 31-year-old Blackstone Group and Goldman Sachs alum named Ryan Williams.

7 Reasons Why Long Distance Investing Isn’t As Risky As You Think (Forbes), Rated: A

In 2019 we have many ways we can verify the information we are provided when we invest outside of our own market. These methods will be the focus of this article. By the time you’re done with this, I think you’ll have a much better understanding of how to conduct due diligence, why out out state investing isn’t as risky as you thought, and why I’m such a big proponent of it

1.The Internet

There is very little you can’t find out with a little online searching.

2. You Can Find Rent Estimates Easily

Websites like Rentometer and Craigslist make a preliminary rent search fast and easy.

7. You Can Find Comps Yourself Online

BlueVine Reaches $ 2 Billion In Total Funded Volume (Bluevine), Rated: A

This past month, BlueVine achieved a major milestone, having provided access to more than $2 billion in total working capital to businesses across the nation.

Finitive Announces $ 100 Million Credit Facility For Platinum Auto (Crowdfund Insider), Rated: A

Finitive announced on Monday its client Platinum Auto of Tampa Bay secured a $100 million credit facility through its platform. Platinum notably purchases auto loan contracts from a network of over 300 auto dealers in the southeast region of the U.S.

Affirm lets you pay off a large online purchase over time — here are 35 stores that accept it (Business Insider), Rated: A

You can apply for a loan as you’re shopping at one of many Affirm’s partner stores, which include women’s and men’s fashion, furniture, sports and fitness, electronics, jewelry, and watch brands.

You can see which online retailers accept Affirm below.

They’re divided by category and we’ve also designated which ones offer loans starting at 0% APR with an asterisk.

Will Abercrombie & Fitch’s “Buy Now, Pay Later” Plan Lock in Gen Z Shoppers? (The Motley Fool), Rated: AAA

Abercrombie & Fitch (NYSE:ANF) recently partnered with payment solutions provider Klarna to let U.S. shoppers split purchases into up to four interest-free payments over two months. A&F is aiming this “buy now, pay later” system — which its rival Urban Outfitters (NASDAQ:URBN) has also adopted — at younger shoppers with less spending power.

But will “buy now, pay later” work?

Only a third of millennials have credit cards according to Bankrate. The average millennial in the U.S. also has a net worth of just $8,000 according to Deloitte, which gives them significantly less spending power than previous generations. Most Gen Z shoppers don’t have credit cards yet. They mostly use debit cards or linked payment apps, which restrict purchases to the amount of cash in their bank accounts.

rue21 is Totally on Trend with the Addition of Klarna (Yahoo! Finance), Rated: A

Klarna, the global alternative payments provider, is getting trendy with the Millennial favorite fashion brand rue21. Customers can choose to pay with four equal payments collected bi-weekly – with no interest or fees. With Klarna, these cool customers get the ability to stay ahead of trends even faster with a smooth checkout and a payment option that boosts flexibility and purchase power.

The necessity for businesses to keep up with the customer is increasingly important considering that U.S. shoppers admit to buying clothes and accessories online an average of 10 times a year. For Gen Z shoppers, aged 16-24, this number increases to 18 times per year, with nearly a quarter (23%) of them admitting to shopping online 1-3 times per month. Millennials are shown to shop online 14 times per year and the 55+ age group, 8 times per year. Considering these Millennial and Gen Z demographics are credit card averse and debt conscious, Klarna delivers an appealing and accessible method for shoppers to take control of their finances in a manageable way.

Metro Denver businesses mostly seeing green, not red (Denver Post), Rated: A

Of 42,610 businesses in metro Denver, 29,560 or 69.4 percent reported turning a profit, according to an analysis from online lender LendingTree.

That placed fifth out of the 50 metro areas that LendingTree ranked based on Census Bureau data. Seattle had a business profitability rate of 70.9 percent, making it the leader nationally. The only other cities ahead of Denver were Louisville, Ky.; Indianapolis and Portland, Ore.

U.S. Consumer Borrowing Climbs on Bigger Credit Card Balances (Bloomberg), Rated: A

U.S. consumer debt climbed in May at about the same pace as a month earlier, led by the largest advance in revolving debt outstanding since October, suggesting Americans’ favorable economic outlook is underpinning continued spending.

Total credit rose $17.1 billion from the prior month, in line with the median estimate of economists, following a $17.5 billion gain in April, Federal Reserve figures showed Monday. While credit card and other revolving debt outstanding increased at a faster rate, non-revolving credit posted the smallest increase in almost a year.

Small Business Loan Approvals at Big Banks Hit Record Highs (Yahoo! Finance), Rated: A

Approval rates for small business loan applications inched up to yet another record high of 27.6% at big banks ($10 billion+ in assets) in June, while the approval percentage also climbed at small banks, hitting 50% for the first time in 2019, according to the Biz2Credit Small Business Lending Indexreleased today.

Small bank approvals of small business loan applications climbed one-tenth of a percent from 49.9% in May to 50% in June.

Small business loan approval rates among alternative lenders dropped one-tenth of a percent to 57.0% in June, down a notch from 57.1% in May.

LendingTree Survey Finds 45% of Newlyweds Went into Debt for Their Wedding (PR Newswire), Rated: A

Approximately 45% of newlyweds between the ages of 18 and 53 went into debt to pay for their wedding. And once married, nearly half of the newlyweds who obtained wedding-related debt said money has caused them to consider divorce. On the flip side, only 9% of couples without wedding-related debt contemplate divorce.

LendingTree released its study on newlyweds and wedding expenses.

How Using Fintech Can Help Pay Off Student Loans (Yahoo! Finance), Rated: A

Companies like SoFi, Laurel Road and Splash Financial are just a few of the fintech industry names that have made their way into the student lending world.

Credible. This is a platform that allows you to compare student loan refinance rates from eight different lenders.

LendKey. Similar to Credible, Lendkey is a platform that allows the borrower to compare refinance rates side by side.

CommonBond. CommonBond for Business offers a flex contribution program that includes an option to directly contribute to paying down employee student loans, or to work with employees on financial literacy techniques for reducing their debt.

Gradifi. Gradifi is another fintech offering refinance options, bundled with employee benefits packages called SLP, or “student loan paydown”.

Earnest. This fintech offers refinance options to individuals with a more limited credit history that may not qualify for other traditional options.

FutureFuel. FutureFuel uses behavioral economics, which is the study of human behavior to explain economic decisions people make.

3 Alternative Financing Options for Small Businesses in 2019 (Digital Journal), Rated: B

Online finance is a very popular option to emerge of late. A few click on the website can bring about quick processing and loan approval.

Another alternative financing option is that of merchant cash advance.

Crowdfunding is an innovative and extremely popular way to raise money for new ideas, concepts, prototypes and creative products.

New Study on Digital Identity Shows Changing Consumer Behaviors (Lend Academy), Rated: A

Today, according to Pew Research Center more than 50 million American adults are mobile-only consumers.

Each year, IDology publishes a Consumer Digital Identity Study aimed at giving businesses visibility into how consumer preferences and opinions related to identity and fraud are shifting. This year’s study confirms the continued movement toward mobile, finding that in the last 12 months, for the first time, consumers opened more new accounts online with their mobile devices than on computers. A closer look at the data shows that 50 million American consumers (20% of all online adults) registered for new accounts exclusively on a mobile phone, up 10% from last year. This growing number has implications for financial service providers as they strive to keep fraud out while giving consumers a seamless digital experience.

Online Lending Startup Tries To Push Usury Suit To Arbitration (Law360), Rated: B

Online lending startup MoneyLion told a North Carolina federal court Tuesday that a suit over alleged unlicensed payday lending belongs in arbitration, arguing the proposed class of borrowers had signed valid arbitration agreements when taking out their loans.

United Kingdom

Zopa boss Jaidev Janardana: big banks are trying to ‘put fintech lenders in a box’ (The Telegraph), Rated: AAA

In just a few months, a string of Zopa’s rivals in peer-to-peer lending have collapsed. Others have exited the sector altogether.

The latest company to fall into administration, Lendy, resulted in £165m of customer cash being put on the line and affected more than 20,000 investors.

Zopa survey finds Brits are more open about bank balance than Netflix password (P2P Finance News), Rated: A

A survey of 2,000 adults by the peer-to-peer lender found that 47 per cent of respondents felt more comfortable revealing details about their bank accounts with their partner than their most intimate secret, while the same percentage would prefer to give an insight into their finances over their Netflix password.

Zopa looks to grow secured car finance offering (P2P Finance News), Rated: B

ZOPA is readying to launch its secured car finance product as a direct offer on its website, as it looks to expand this segment of the business.

Ratings agency backs Funding Circle strategy to tighten lending (AltFi), Rated: AAA

SME focused peer-to-peer lender Funding Circle was correct to proactively take the decision to tighten its lending criteria in pulling back from higher-yielding lower-quality loans, according to ratings agency DBRS.

Investor fintech demand drives record six months for Crowdcube (AltFi), Rated: A

Crowdcube saw revenues soar 39 per cent to £3.72m in the first half of 2019, compared to the same period in 2018, with £103.4m pledged to companies through the platform.

NatWest-backed Esme hits £60m lending milestone (AltFi), Rated: A

Esme Loans said it has hit over £60m of lending to UK small businesses just two years after its launch.

The small business lender unit said its loans have leapt 20 per cent since the end of April.

Habito launches buy-to-let mortgages (Which), Rated: A

Online mortgage broker Habito has launched a comprehensive range of buy-to-let mortgages, as it makes its first foray into lending.

The brokers offers a range of two and five-year loans for landlords, as well as more niche three, seven and 10-year fixed terms.

FCA misconduct probes into retail financial services firms increase by a third (P2P Finance News), Rated: A

THE NUMBER of Financial Conduct Authority (FCA) cases opened into misconduct in retail financial services has increased by 29 per cent in the past year.

The number of cases has increased to 101 for the 12 months ended 31 March, up from 78 the previous year, the FCA said in its annual report on Tuesday.

The regulator also said that the overall number of enforcement cases it is undertaking is up by 31 per cent over the past year – rising to 650 from 496 at the beginning of the year.

OakNorth lends £19.5m to Care Concern Group (Fintech Finance), Rated: B

Klarna teams up with UK festival We Out Here (Retail Tech Innovation Hub), Rated: B

PayTech venture Klarna has announced a partnership with new jazz and electric festival We Out Here.

It will unveil a ‘Smoooth Sanctuary’ at the event, which will be held in Cambridgeshire in August.

China/Hong Kong

Yirendai Reports First Quarter 2019 Financial Results, Closing of Business Realignment Transactions with CreditEase (GlobeNewswire), Rated: AAA

First Quarter 2019 Operational Highlights

Consumer Credit—Yiren Credit

  • Total loan originations in the first quarter of 2019 reached RMB 10.9 billion (US$1.6 billion), representing a decrease of 45% from RMB 19.8 billion in the first quarter of 2018.
  • Cumulative number of borrowers served reached 4,404,812, representing an increase of 15% from 3,824,341 in the first quarter of 2018.
  • Number of borrowers in the first quarter of 2019 was 149,715, representing a decrease of 48% from 287,166 in the first quarter of 2018.
  • The percentage of loan volume generated by repeat borrowers was 38.8% in the first quarter of 2019.
  • Total outstanding principal balance of loans reached RMB 63,213.8 million (US$9,419.2 million) as of March 31, 2019, representing a decrease of 16% from RMB 75,271.5 million March 31, 2018.

Reviewing China Rapid Finance Limited (XRF)’s and X Financial (NYSE:XYF)’s results (NBO News), Rated: A

This is a contrast between China Rapid Finance Limited (NYSE:XRF) and X Financial (NYSE:XYF) based on their analyst recommendations, profitability, institutional ownership, risk, dividends, earnings and valuation. The two companies are Credit Services and they also compete with each other.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Rapid Finance Limited 1 0.27 N/A -0.85 0.00
X Financial 5 0.00 N/A 0.85 6.34

Table 1 shows the top-line revenue, earnings per share (EPS) and valuation for China Rapid Finance Limited and X Financial.

Court Upholds Ruling That Sent Two Peer-to-Peer Lending Executives to Prison for Life (Caixin Global), Rated: AAA

Shanghai Kuailu Investment Group Co. Ltd., along with two affiliated companies, and 15 defendants were convicted of fraudulent fundraising or illegal fundraising or both, according to the final ruling (link in Chinese) made by the Shanghai High People’s Court on Tuesday.

Kuailu, along with its affiliates, illegally raised more than 43.4 billion yuan ($6.3 billion) from the public, causing 40,000 people to take financial losses, the court said.

Foreign Investment Restrictions in P2P Lending Intermediaries (Lexology), Rated: A

The Interim Administrative Measures for the Business Activities of Peer-to-Peer Lending Information Intermediaries define “peer-to-peer lending” as direct lending/borrowing realized between peers on an internet platform. Peers include natural persons, legal persons and other organizations.

Bitmain’s Affluent Co-Founder Establishes the New Crypto Startup Matrixport (All Stocks), Rated: A

With the hope of capitalizing on the recent rise of the Bitcoin price, the co-founder of the mining giant Bitmain, Wu Jihan, has organized a group to develop “Matrixport,” a financial services startup for cryptocurrencies. According to its CEO Ge Yuesheng, Matrixport will function as a one-stop-shop for not just safekeeping of digital assets but also for crypto lending and over-the-counter trading.

European Union

Online Lender October Pushes into Germany as it Continues Expansion (Crowdfund Insider), Rated: AAA

Marketplace lending platform October, which is based in France, has expanded in Germany, according to a blog post by CEO and founder Oliver Goy.

October has selected Thorsten Seeger, a Funding Circle veteran, as CEO of October Deutschland as its plots its ongoing expansion across Europe. October currently operates in France, Spain, Italy, and the Netherlands.

Investors are putting £9bn to work in P2P Lending across Europe, UK still dominating (AltFi), Rated: A

The peer-to-peer lending market is now funding more than £9bn of loans across Europe each year with two thirds (67 per cent) of this funding coming through UK platforms.

Revolut brings the fintech battle to Berlin with a new hub (Yahoo! Finance), Rated: A

British fintech startup Revolut is opening a new European tech centre in Berlin, the home turf of its online-banking rival N26.

Lagan Investments takes 10% stake in Property Bridges (Irish Times), Rated: A

Lagan Investments, a fund founded by the North’s biggest house-builder, Kevin Lagan, has taken a 10 per cent stake in peer-to-peer lender Property Bridges and is to supply it with €5 million in lending capital.

International

Morningstar Names Detlef Scholz President of Expanded Credit Ratings Organization (Morningstar), Rated: AAA

Morningstar, Inc. (Nasdaq: MORN) has named Detlef Scholz as president of its expanded, global ratings organization. The leadership announcement comes as Morningstar today completes its previously announced acquisition of DBRS, the world’s fourth largest credit ratings agency, for a purchase price of US$669 million.

Scholz will assume his new role Aug. 1, 2019 and report to Morningstar Chief Executive Officer Kunal Kapoor.

Source: Morningstar

View the Morningstar/DBRS overlapping ratings.

Deutsche Bank in partnership talks with SoftBank-backed OakNorth (Reuters), Rated: A

Deutsche Bank (DBKGn.DE) is in talks with SoftBank-backed (9984.T) British fintech firm OakNorth to use the latter’s credit analysis and monitoring platform, a source with knowledge of the discussions told Reuters.

CoVEX Exchange — A Single Platform to Complete the Entire Crypto Lifecycle (Coinfomania), Rated: B

P2P loan: The CoVEX platform also implementing a decentralized p2p lending service. This allows users across the world to receive loans in lesser time and even reduces the repayment fee while at the same time protecting the interests of the lender.

Australia/New Zealand

An alternative loan scheme could help 2.1 million Australians in financial distress (UNSW Sydney), Rated: AAA

A social lending scheme could help bridge the gap between traditional lenders and government welfare for the 2.1 million Australians under high levels of financial stress.

Alexa Chung partners with Klarna challenger Laybuy (AltFi), Rated: A

Payments platform Laybuy has struck a new retail partnership with fashion brand of Alex Chung  – called ALEXACHUNG – allowing customers to spread the cost of purchases over six equal weekly payments.

New Zealand’s largest digital buy now, pay later app launched in March with its first partnership with Footasylum.

The true role of the SME broker (Australian Broker), Rated: A

Yet SMEs are being stiffed by traditional lending practices: 44% of small businesses have been knocked back for finance in the last 12 months. Put simply, SMEs are being underserved and ignored by the banks.

India

‘NiYO’ Raises US$ 35 Mn in Series B Round led by Horizons Ventures & Tencent (Yahoo! Finance), Rated: AAA

Indian new-age digital banking start-up NiYO Solutions has raised US$ 35 million in Series B funding round from Horizons Ventures, Tencent and existing investor, JS Capital. NiYO is founded by banking veteran Vinay Bagri and technology veteran Virender Bisht. NiYO had previously raised US$ 14 million in funding rounds led by Prime Venture Partners. With the current round the total fund raised by NiYO is US$ 49 million.
Authors:

George Popescu
Allen Taylor

The post Thursday July 11 2019, Weekly News Digest appeared first on Lending Times.

Thursday May 2 2019, Weekly News Digest

fintech deals india china

News Comments Today’s main news: OnDeck publishes Q1 financial results. LendingClub to move 350 jobs out of San Francisco to Utah. Salary Finance picks SoFi co-founder Dan Macklin as CEO. Klarna rolls out payment plans for physical stores in UK. HeZhong International sets terms for IPO. India tops China as Asia’s top fintech funding source. Today’s […]

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

fintech deals india china

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United States

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United States

OnDeck Reports First Quarter 2019 Financial Results (PR Newswire), Rated: AAA

OnDeck today announced first quarter 2019 net income of $5.9 million, Adjusted Net Income of $8.3 million and gross revenue of $110.2 million.

Net income was $5.9 million, or $0.07 per diluted share, and decreased from the prior quarter’s net income of $14.0 million, 0.18 per diluted share, primarily due to higher loan loss provision, higher operating expenses and an accrual for income taxes.  Net income significantly improved from a loss of $1.9 million, or $0.03 per diluted share, in the year-ago period reflecting higher interest income from asset growth.

Adjusted Net Income was $8.3 million, or $0.10 per diluted share, and decreased from $15.9 million, or $0.20 per diluted share, in the prior quarter and increased from $6.4 million, or $0.08 per diluted share, in the year-ago period, reflecting the  aforementioned drivers.

Loans grew 3% sequentially and 19% from a year ago to $1.2 billion. Originations were $636 million, down from $658 million in the fourth quarter and up 8% from $591 million in the year-ago quarter.  The annual growth was broad-based with increases from both domestic and international operations as well as in both term loan and line of credit offerings. The average term loan size was unchanged sequentially at $53 thousand and was down from $58 thousand a year ago. Unit volume decreased 5% sequentially and increased 15% from the year-ago quarter.

Gross revenue was $110.2 million, essentially unchanged from the prior quarter, and up 22% from the year-ago quarter driven by higher interest income. Loan Yield of 35.6% decreased from 36.6% in the prior quarter reflecting a decline in portfolio performance while pricing was generally stable, and was unchanged from the year-ago quarter.

Interest expense of $11.3 million was essentially unchanged sequentially and decreased from a year ago despite a higher debt balance as borrowing rates improved. The Cost of Funds Rate continued to improve to 5.4%, a 20 basis point sequential improvement and a 140 basis point improvement from the year-ago quarter, as we refinanced debt at lower costs. First quarter financing activity included the extension and upsizing of four debt facilities aggregating to $595 million with improved terms.

Net Interest Margin was 29.5%, down from 30.0% the prior quarter as lower asset yields more than offset the impact from improved borrowing costs.  The increase in Net Interest Margin from 27.8% in the year-ago quarter was driven by improved borrowing costs.

Provision for loan losses increased to $43.3 million and the Provision Rate increased to 6.8%. The 15+ Day Delinquency Ratio increased 120 basis points sequentially to 8.7%.  Approximately half of the increase was in loans 15-89 days delinquent reflecting credit testing and economic trends, and the balance was in loans 90-days or more delinquent reflecting the change in our collection strategy for late-stage delinquencies. The Net Charge-off Rate increased to 12.2% and remains near the low end of our 12%-14% target range. The Reserve Ratio increased 30 basis points sequentially and 50 basis points from a year ago to 12.5%, reflecting portfolio quality trends and a higher proportion of 90-day plus delinquent loans, which have higher reserves.

Operating expenses increased from the comparable periods to $48.3 million, reflecting growth in the business and investments in our strategic initiatives, primarily technology and analytics. The Efficiency Ratio was 43.8%, up from 41.1% the prior quarter but improved from 49.3% in the year-ago quarter, while our Adjusted Efficiency Ratio* of 41.0% increased from 39.4% in the prior quarter and 40.1% in the year-ago quarter.

Provision for income taxes was $1.7 million compared to zero in 2018 when taxable income was completely offset by operating loss carryforwards. The effective tax rate was 24% and reflected a 21% U.S. federal rate, local and state income taxes, and losses in international subsidiaries.

Total assets increased 5% sequentially and 18% from a year ago to $1.2 billion primarily reflecting loan growth. Cash and cash equivalents was unchanged from year end at $60 million and decreased from $70 million a year ago. Other assets and other liabilities increased over the comparable periods as we recorded a net $28 million right-of-use asset in other assets and an equivalent increase in other liabilities stemming from the adoption of a new lease accounting standard. The 3% sequential increase in debt to $842 million was consistent with the growth in loans.

Total OnDeck stockholders’ equity of $309 million increased $10 million, or 3%, from year end and $45 million, or 17%, from a year ago.  Book value per diluted common share outstanding of $3.89 increased from $3.77 at year end and $3.40 a year ago.

Food Truck Satisfies as OnDeck Small Business of the Month (Yahoo! Finance), Rated: B

OnDeck today announced that Me So Hungry, a food truck business based in California, is its Small Business of the Month for April 2019. Owned by brothers Cory and Mike Ewing, Me So Hungry is the first food truck business to receive the OnDeck recognition.

LendingClub to slash San Francisco office, move 350 jobs to Utah (Mercury News), Rated: AAA

LendingClub, the online-loan marketplace, plans to wind down customer support operations in its home city of San Francisco and shift staff to Utah as it seeks to trim costs.

In an internal memo to staff reviewed by Bloomberg, Chief Executive Officer Scott Sanborn said LendingClub aims to have its teams completely out of San Francisco by December.

About 350 jobs will shift to Lehi, Utah, where LendingClub recently opened a new office.

SoFi Co-Founder Steps Back Onstage with Salary Finance (newKerala), Rated: AAA

Salary Finance announces SoFi co-founder Dan Macklin will be joining as CEO, Salary Finance Inc. (the US arm of the group).

Strong GDP Growth Continues (PeerIQ), Rated: AAA

Source: Bloomberg, PeerIQ

LendingTree Study Finds Tesla Drivers Have Highest Average Credit Scores (Yahoo! Finance), Rated: AAA

LendingTree today released its study ranking car brands by their buyers’ average credit score. Tesla buyers have the highest with a score of 740. Chrysler buyers have the lowest scores, with an average score of 656.

Key findings

  • Luxury brand buyers occupied the top spots. TeslaPorsche and Lexus lead with average credit scores of 740, 727 and 699 respectively.
  • Chrysler buyers had the lowest average credit score at 656, but it’s worth noting that this still falls in the “fair” range. It’s also right around the average credit score for all used car purchases.
  • For most auto makes, a credit score in the good range (670-739) was enough to be approved for an auto loan. Of the 30 different makes analyzed, 22 had an average approved credit score fall into that range

Read the full report here.

Understanding Sequential Pay Structures (DBRS), Rated: AAA

In a January 2019 newsletter, DBRS discussed the Evolution of the Shifting Interest Structure in residential mortgage-backed security (RMBS) transactions. Another common structure in RMBS transactions is the sequential pay structure.

The sequential pay structure is one of the most elementary and straight-forward structures in RMBS. Post-crisis, the sequential pay structure and its variations have been widely used in seasoned re-performing loan (RPL) and non-Qualified Mortgage (QM) transactions. Such structure largely benefits the senior classes in payment priorities over the subordinates.

Source: DBRS

Read the full report here.

Finitive Raises $ 6 Million Series Seed Round Led By Atomic Labs (PR Newswire), Rated: A

Finitive (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today that the firm raised approximately $6 million in a series seed financing. The round was led by Atomic Labs with participation from Ninepoint Partners – one of Canada’s leading private credit fund managers – as well as other investors and members of the management team.

Goldman Sachs, Regions help raise $ 55M for construction-lending fintech (American Banker), Rated: A

Built Technologies, a construction lending fintech platform, has raised $55 million in funding through Goldman Sachs and a handful of investors including Regions Financial, the company said Monday.

The Nashville, Tenn., company finished $31 million in series B funding through Goldman Sachs with the remainder amount raised by venture capitalists and Regions. The funding will help the 5-year-old fintech invest in research and development while building out its national client base, according to the firm’s CEO and co-founder, Chase Gilbert.

A busy month for fintech funding (American Banker), Rated: A

Novo, a challenger institution in the field of small-business banking, and the no-code platform provider Unqork held Series A funding rounds.

The online lender Upstart, which raised $50 million in a Series D round, says it can both lower loan loss rate and increase the number of customers underwritten.

Extend is building a platform to distribute digital cards by partnering with payment networks and card issuers. Another startup, MotoRefi, claims it can save consumers an average of $100 a month on vehicle refinancing by connecting them to trusted credit unions and community banks.

Moving Beyond Financial Literacy to Financial Empowerment (Lend Academy), Rated: A

Some of my thinking was prompted by this recent column in American Banker by Jennifer Tescher, the CEO of the Center for Financial Services Innovation (CFSI).

There are several companies in this space doing great work in creating high quality products: EvenPayActivTrueConnect and HoneyBee all offer options to employers that help their employees who need access to quick financing. Even has a groundbreaking deal with Walmart that has resulted in 300,000 employees using their pay advance app.

MoneyLion has four million users and they are focused on ending financial stress for all Americans by taking a holistic approach and being proactive in providing help. Dave helps the 30 million people who are hit by overdraft fees each year by advancing $75 from their next paycheck. Tally is a fully automated debt manager to help consumers get out of credit card debt.

Inside Varo Money’s three-year quest for a bank charter (American Banker), Rated: A

Just ask Colin Walsh, the co-founder and CEO of Varo Money, who began discussions with regulators three years ago to charter a national bank. Though the fintech won approval from the Office of the Comptroller of the Currency last year to move forward, it is still waiting on an answer from the Federal Deposit Insurance Corp.

Cross River Teams Up With RS2 To Offer New Digital Banking Experience (Crowdfund Insider), Rated: B

Cross River, a bank that delivers advanced financial and compliance products/services to the fintech industry, announced on Monday it has teamed up with RS2 to offer a new digital banking experience. Through the collaboration, Cross River and RS2 will provide merchants with a global payment experience for processing credit and debit card transactions, as well as digital banking for their workers and consumers.

Blend’s Erin Collard: Mortgages are the data superset of every other financial product (Tearsheet), Rated: A

Financial technology company Blend began building its platform by helping traditional institutions digitize mortgages, working with firms like Wells Fargo, US Bank and some regional banks and credit unions.

New York launches its own ‘mini CFPB’ (American Banker), Rated: A

New York has created a statewide financial protection division that will focus solely on corporate compliance and consumer issues, following similar efforts by New Jersey and Pennsylvania.

The New York State Department of Financial Services on Monday named Katherine A. Lemire, a former assistant U.S. attorney, to be executive deputy superintendent of the agency’s newly created Consumer Protection and Financial Enforcement division.

Think Finance to Pay CFPB $ 7 for Loan Violations (Bloomberg Law), Rated: A

A bankrupt payday lender will have to pay a $7 civil penalty to the Consumer Financial Protection Bureau over nearly $50 million in loans it issued in states where they were not legal, according to bankruptcy court filings.

Judge Brian Morris of the U.S. District Court for the District of Montana granted a stay in the CFPB’s litigation against Think Finance LLC on April 30, pending activity in the bankruptcy court.

Capital One drives auto finance deal with CarGurus (Finextra), Rated: A

CarGurus today announced a partnership with Capital One Auto Finance that will benefit both consumers and dealers.

The Most Powerful Women in Banking (American Banker), Rated: A

Camille Burckhart, Popular Inc.

Chief information and digital officer

Jacqueline Howard, Ally Financial

Senior director, corporate citizenship

Carrie Lichter, Fifth Third

Chief operational risk officer

Now you can pay for your flights in instalments with these booking companies (Lonely Planet), Rated: A

Online travel apps CheapOair and OneTravel will soon operate a new feature that allows customers to pay for their airfare in instalments. It means that customers don’t have to pay for the full cost of their flight upfront and can instead spread the cost out into more manageable payments that suit individual budgets, choosing between three-, six- or 12-month instalments. Fareportal, the company that operates CheapOair and OneTravel, said its partnering with online lender Affirm to introduce the new feature.

For example, a $300 (£230) purchase at 10% APR spread out over three months would cost $101.69 (£78) per month.

A recent study by the U.S. Chamber of Commerce revealed that Mississippi, Nebraska and Maine are the three states where small to medium businesses have grown the most year over year. This is according to sales in Amazon stores, specifically. More than half of the items sold in Amazon stores are from small to medium businesses.

The top 10 fastest-growing states breaks down as follows:

  1. Mississippi
  2. Nebraska
  3. Maine
  4. Texas
  5. Indiana
  6. Colorado
  7. North Dakota
  8. Vermont
  9. Wisconsin
  10. Missouri

The third-party physical product sales, which is what gets sold on Amazon stores primarily, passed $160 billion in 2018. Nearly 20% of rural small businesses generate 80% of their revenue by selling products online.

Unlocking the Digital Potential of Rural America (American Innovators), Rated: AAA

Unlocking the digital potential for rural small businesses across the country could add $47 billion to the U.S. GDP per year.

Increased adoption could grow annual revenues of rural small businesses by more than 21% over the next three years – the equivalent of $84.5 billion per year – with states in the South seeing the greatest benefit

Online tools and technology have the highest potential impact on rural small businesses with revenue under $100,000

Read the full report here.

Proof of Work: the slow but steady process of institutional adoption (The Block), Rated: A

Antonio from dYdX

dYdX is a decentralized exchange for margin trading, borrowing, lending, and eventually derivatives. dYdX allows traders to trustlessly short and get leverage on crypto assets.

  • DAI lending rate has been high due to strong demand to go leveraged long on ETH, peaking at over 77% APR returns for lenders over the weekend

Brendan from Dharma

Dharma is the easiest place to borrow and lend cryptocurrencies. It enables non-custodial peer-to-peer lending through smart contracts on Ethereum.

  • #ReFi with #DeFi continued in full force, leading to over 1.7m in borrow volume (nearly all Dai-denominated)

Lendio Franchise Opens in Erie to Expand Access to Capital for Local Businesses (Lendio), Rated: B

Lendio has announced the opening of a new Lendio franchise in Erie. Through the Lendio franchise program, John Fee, a local business owner himself, will help other entrepreneurs in the community apply for loans, review their options and secure funding, easing their financial hurdles.

Fundbox Selected By Brandwise To Power Net Terms For Suppliers, Agencies, And Retailers (Yahoo! Finance), Rated: B

Today Fundbox announced that the sales technology leader Brandwise and Fundbox have entered into an exclusive agreement whereas Fundbox will be Brandwise’s business-to-business (B2B) trade financing partner.  Brandwise will leverage Fundbox’s business capital platform to power financing terms within the Brandwise ecosystem of 250,000 retailers.

White Oak Commercial Finance Adds to its ABL Originations Team (Yahoo! Finance), Rated: B

White Oak Commercial Finance, LLC (“White Oak”), an affiliate of White Oak Global Advisors, LLC, announced today the appointment of Michael Goletz to Director of ABL Originations, covering the Midwest U.S. region. Mr. Goletz joins from WNB Specialty Finance, a division of Woodforest National Bank, where he was responsible for sourcing and structuring asset-based lending debt facilities ranging from $5 million to $25 million.

Urjanet Announces 2019 SPARK Award Winners (PR Web), Rated: B

Urjanet, the global leader in utility data aggregation, today announced the winners of its 2019 SPARK Awards: AvidXchange, Bright Power, SimpleBills and Guppy – four companies at the forefront of using utility bill data to better serve their customers, community partners, and the environment.

  • Most Innovative Use of Utility Data: SimpleBills. In addition to utility bill management, residents can use SimpleBills to report their utility bill payment history to credit bureaus through a unique opt-in service.
  • Leader in Financial Inclusion: Guppy. Through its partnership with Urjanet to acquire user-permissioned utility data, Guppy enables greater access to financial services for consumers, as well as background and ID checks for businesses, all while keeping the end user in control of their own data.
United Kingdom

Klarna gets physical: All UK payment methods now available in-store (Fintech Finance), Rated: AAA

Global payments provider Klarna has today announced that all its alternative payment options are available both in-store as well as online.

Klarna’s alternative payment options include:

  • Shoppers can pay later, up to 30 days after delivery of goods
  • Shoppers can pay for purchases in 3 equal instalments collected monthly
  • For higher-ticket items, consumers can use Klarna’s consumer finance in 6-36 month payment plans

£1bn debt fund launched for UK non-bank lenders (P2P Finance News), Rated: A

EUROPEAN Risk Capital (ERG) has launched a £1bn multi-client debt programme for UK-based, mid-market non-bank lenders.

The programme – titled ‘CreditStream’ – has a minimum deal target size of £10m, making it primarily suited to mid-sized lenders including bridging and development lenders, second charge mortgagees, consumer and SME funders, auto/equipment finance companies, and fintech lenders. The maximum deal size can be in excess of £100m.

Lendy execs launch wage advance firm (P2P Finance News), Rated: A

Companies House documents show Brooke and Kelly, whosecurrent role at Lendy remains a mystery, set up a firm called Copious Capital in July 2018.

Copious Capital’s launch product is Pay Me Today, described as an “antidote to payday lending,” which lets companies approve and arrange salary advances for staff who need access to money before payday.

Lendy’s operations manager Pamela Guillamón owns between 25 per cent and 50 per cent of Pay Me Today, according to Companies House documents.

Woodford’s peer-to-peer exodus continues with VPC sale (Citywire), Rated: A

Fund manager Neil Woodford has followed his £88 million sale of his stake in peer-to-peer lending trust P2P Global Investments (P2P) by offloading his entire £40 million stake in rival VPC Specialty Lending (VSLV).

Relendex ‘very keen’ to get behind modular housing (Development Finance Today), Rated: A

Relendex is “very keen” to get behind modular housing, according to its chief operating officer Max Lehrain.
Development Finance Today recently reported on the difficulties lenders faced when funding modular builds, however Fintan explained some ways Relendex was able to feel comfortable with supporting such schemes.

OakNorth continues supporting British SMEs with senior lending hires (Fintech Finance), Rated: B

OakNorth – the bank for entrepreneurs, by entrepreneurs – is bolstering its regional presence with the appointment of four senior team members in Manchester, the Midlands and the South West.

Christopher Swarbrick, who has 18 years’ banking experience, joins as a Senior Director, Debt Finance. 

Christopher Richards joins from RBS where he spent 11 years and most recently held the role of Senior Relationship Manager, managing a portfolio of 40 complex banking relationships.

Mother tells of ‘devastating’ impact caused by collapse of Eridge firm London Capital & Finance (Times Local News), Rated: B

THE mother of two sons, one of whom is autistic, has told of the impact on their lives brought about by the collapse of a Tunbridge Wells based investment firm.

Around 11,500 people are set to lose a total £237million following the demise of the company based at Eridge Park.

LCF were selling unregulated mini-bonds, offering investors an eight per cent return for money that was purportedly being lent to a range of businesses.

China

HeZhong International sets terms for $ 5 million US IPO (Nasdaq), Rated: AAA

HeZhong International Holding, which operates a peer-to-peer lending marketplace in China, announced terms for its US IPO on Wednesday.

The Shenzhen, China-based company plans to raise $5 million by offering 1.3 million shares at a price of $4. At $4, HeZhong International Holding would command a market value of $55 million.

European Union

Which digital banks have the best overdrafts? (AltFi), Rated: AAA

Starling Bank

The London-based challenger bank charges 15 per cent equivalent annual rate for arranged overdrafts.

Charges £2 a month for unarranged overdrafts as well as the standard rate of interest. Will waive charges if your monthly overdraft interest comes to less than 10p for the month. Operates a monthly fee cap of £2.

Runner up

Monzo

Customers with arranged overdrafts are charges a 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month.

The Rest

B

The digital lender, launched by Clydesdale and Yorkshire Banks in 2016, charges a 12.5 per cent equivalent annual rate on arranged overdrafts. On top of this it charges a fee of £6 a month. The bank charges £6 a day for unarranged overdrafts.

N26

The Berlin-based app-only bank, with more than 2 million customers in 24 countries, said it will launch an overdraft facility for its 200,000 UK account holders “soon.”

55 Investors Become the Co-Owners of a Building in Western Switzerland (Yahoo! Finance), Rated: A

Foxstone (www.foxstone.ch) announces the acquisition, in crowdinvestment, of a residential building in Concise (VD) by 55 investors, of all ages and all backgrounds. They acquired a share of the building in co-ownership with a minimum amount of CHF 50’000.-

The total amount raised in co-ownership was CHF 3,250,000 for an acquisition price of the building of CHF 6,800,000, the remaining balance being financed by a mortgage. The net return on equity is 6.53%, which represents an annual return of CHF 3,265 for a CHF 50’000 investment. The Régie du Rhône takes care of the day-to-day management of the building.

How BBVA overhauled its mobile banking app (American Banker), Rated: A


International

Global fintech investment doubled in 2018 (HousingWire), Rated: AAA

Total global fintech investment increased from $50.8 billion in 2017 to a full $111.8 billion in 2018, according to KPMG’s The Pulse of Fintech, a biannual report that highlights key trends in fintech across the globe.

But the report showed something interesting when it comes to fintech – payments and lending continued to attract the most significant investment dollars globally.

China’s fintech funding dipped significantly in Q1 2019 (Business Insider), Rated: AAA

Global fintech funding was down 13% from $7.3 billion in Q4 2018 to $6.3 billion in Q1 2019, according to a new report from CB Insights.

However, deal numbers increased from 427 in Q4 2018 to 445 in Q1 2019, despite early stage funding dipping, while mid- and late-stage funding increased. Moreover, funding actually ticked up 1.5% year-over-year (YoY) from $6.2 billion in Q1 2018.

P2P Industry is Likely to Shine Despite Troubles in China (Learn Bonds), Rated: A

According to a PWC report, the U.S. P2P market is likely to reach $150 billion by 2025. Another report from Allied Market Research indicates that Peer to Peer (P2P) market could grow at a CAGR of 51.5% from 2016 to 2022.

Efma White Paper Covers Potential of SME Ecosystem (Monitor Daily), Rated: A

Drawing insight from recent research, case studies and observations from bankers working closely with SMEs, this digest outlines the main challenges facing banks today when trying to attract SME customers, such as intense competition from new entrants like Alibaba-backed online lender MYbank and Tencent-backed WeBank in China. In other markets, like the UK, 63% of financial services players in 2018 didn’t exist a decade before.

Authors of the 2019 Geneva Report on the World Economy seek market participant input (Fintech Policy), Rated: B

The topic of this year’s Geneva Report on the World Economy will be “the future of banking.”

The authors of the report (Kathryn Petralia, Kabbage; Thomas Philippon, NYU Stern School of Business; Tara Rice, Bank for International Settlements and Nicolas Veron, Peterson Institute for International Economics and Bruegel) are asking for input from market participants.

Asia

India unseats China as Asia’s top fintech funding source (TechCrunch), Rated: AAA

China’s massive fintech industry took a beating in recent months as the government continued to wind down online lending nationwide, rattling investor confidence.

Funding for fintech startups shrank 87.6 percent year-over-year to $192.1 million during the first quarter of 2019, a new reportfrom data provider CB Insights shows. India, which recorded $285.6 million raised for fintech startups in the period, overtook China to be Asia’s top fundraising hub for financial technology. Both countries clocked in 29 fintech deals, suggesting a cooling investor sentiment in China which saw its height of 76 deals just three quarters ago.

Source: CB Insights
India

Coming Together of Traditional Lenders and Fintech Players, Creating Better Opportunities (Entrepreneur), Rated: AAA

Fintech driven alternative lending is the second most funded and one of the fastest growing segments in the Indian fintech space. At last count, there were over 20 plus digital, alternative lending companies, each with their version of the truth, and probably another twenty in the stealth mode.

One thing common with most new age lending companies is that they rightly understand that they have a better chance of succeeding by collaborating with the existing lenders like Banks and NBFCs.

Canada

MOGO: A Rapidly Growing Canadian Fintech Provider (Yahoo! Finance), Rated: AAA

Mogo (MOGO) is a rapidly growing Canadian fintech company with over 800K members that generates revenues from a series of innovative products to help consumers manage & control their financial health.

  • Mogo is a high growth disruptor. Was the company not fighting the headwinds of strategically exiting the short-term loan business that it phased out throughout 2018, it would have shown 71% revenue growth on what it calls “core revenues” or revenues of continuing operations. Core revenue, excludes the company’s legacy short term lending revenue which Mogo fully exited at the end of Q3 2018. In 2018, the company generated $61 million in total revenues representing 26% growth, spurred by a doubling of its subscription and services business to $27 million. In the most recently reported quarter, Q4 2018, Mogo’s core revenue increased 75% versus the same period in 2017 with Subscription & Services revenue having its fourth consecutive quarter of at least 100% year over year growth. In 2018, it added more than 210,000 new members to reach 756,000 members on December 31, 2018 (up 39%), and on March 21st it announced it has surpassed 800,000 members.
  • Based on a combined value of the company’s lending business and its subscription services and fee generation business we believe the company is worth $7.67 per share when compared with other companies in these spaces.
Africa

The Legal and Regulatory Framework Governing Financial Technology (Fintech) in Nigeria (Lexology), Rated: AAA

FinTech is also gaining traction in the areas of lending and alternative financing (such as peer-to-peer lending, business-to-consumer lending, and so on), as well as financial and insurance products.

Pursuant to the Banks and Other Financial Institutions Act, Chapter B3 LFN 2004, an entity that wishes to provide marketplace lending may do so by registering as a bank or Other Financial Institution (“OFI”).

The use of airtime for the repayment of loans to a mobile lender could constitute a premium rated service, the provision of which requires the approval of the NCC.

Authors:

George Popescu
Allen Taylor

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

Thursday October 4 2018, Daily News Digest

Wealthfront clients who engage with Path save 28% more

News Comments Today’s main news: Funding Circle tumbles. SoFi partners with Kukun. Petal raises $34M on launch day. China is losing its grip on P2P lending risks. ID Finance Mexico profitable after 8 months. Today’s main analysis: Wealthfront: Clients who engage with automated financial advisors save more. Today’s thought-provoking articles: The difference between LendingClub’s, Funding Circle’s valuations. Venture capital investment […]

Wealthfront clients who engage with Path save 28% more

News Comments

United States

United Kingdom

International

India

Other

News Summary

United States

Lending Club weighs in on Funding Circle’s float (Altfi News) Rated: AAA

Funding Circle’s landmark float is done. Its shares are now trading on the main market of the London Stock Exchange.

The stock closed at 364p yesterday, down almost 20 per cent. This was the result of trading during the period between its float last Friday and the stock’s official market debut yesterday.

Having first narrowed its share price to 440-460p per share, Funding Circle ultimately raised £300m at a valuation of around £1.5bn, approximately 15 times its 2017 revenues of £95m.

In an interview, Lending Club’s communications lead Anuj Nayar pointed to what he sees as an ‘incredible difference’ in the way that Funding Circle and Lending Club are currently valued.

SoFi Forms New Partnership With Kukun to Help Homeowners Understand the Remodeling Cost (Crowdfund Insider) Rated: AAA

On Tuesday, online lending platform SoFi announced it has formed a new partnership with home improvement platform Kukun to offer advanced new tools to help homeowners gain a greater understanding of how much their home improvement project could cost and how it can affect the resale value of their home.

SoFi reported that the tools will help homeowners estimate costs and returns on investment for over 28 project types that range in price from $10,000 to $300,000, including renovations and expansions. These are notably the first tools SoFi is offering related to its home improvement loans. Financial calculators that are built by Kukun are notably based on highly normalized and granular property condition marketplace data, in addition to normalized construction permit data (fresh and historic), as well as customer intent from the Kukun marketplace

Petal Card Announces $ 34 Million Round on Launch Day (Lend Academy) Rated: AAA

Petal, a startup aims to deliver on what we’ve often called the real promise of fintech: financial inclusion. The company describes itself as “credit with a conscience” and announced a new fundraising round of $34 million on the same day that they officially launched their credit card product to the public. Backing the vision is Jefferies and Silicon Valley Bank.

The funding will aid the roll-out to a waitlist which includes 100,000 people. The card is aimed at the tens of millions of Americans who have no credit score at all or a short credit history.

Wealthfront Research Shows Clients Who Regularly Engage With Automated Financial Advice Save More (PR Newswire) Rated: AAA

Today, Wealthfront released the 2018 Savings Report detailing the impact their automated advice engine, Path, has on their clients’ savings patterns. In the last year, the company has observed that consistent engagement with Path correlates with a 28% increase in a client’s savings rate. For a 32-year-old client with a $130,000 income and $100,000 in savings, this could mean an additional $1.25 million dollars at retirement.

Source: Wealthfront

Wealthfront’s goal is to fully automate financial decisions to what some people have called, “self-driving money.” Clients will be able to automatically deposit their paycheck into their Wealthfront account and the company will route their money appropriately based on the lifestyle and goals they’ve set. Bills will be automatically paid, emergency funds and 401(k)s will be topped off and Wealthfront will invest the rest in the most tax efficient way. To date the company offers a suite of automated financial planning, investment management and banking related services. To read the full report visit  to start saving and investing today download the app on iOS or Android.

Worldwide Business with kathy ireland Discusses Blockchain Empowered Real Estate Lending with Lending Coin (Digital Journal) Rated: A

Worldwide Business with kathy ireland is pleased to announce an exclusive interview with The Lending Coin’s CEO Sam Warren and CMO Mindy Ngo to discuss their new real estate blockchain program.

“We provide peer-to-peer lending around the world,” says Ngo. “By using the blockchain, we don’t have high overhead costs or errors like traditional financing. That’s why we are able to offer such low interest rates.”

Backed by Popular Bank, the platform is fully operational. With Highly experienced private banking professionals and dedicated office suites in each of its principal New York and Miami markets, the Popular private client program is well-positioned to cater to current and prospective clients.

U.S. Small Business Lending Keeps Rolling in August, According to PayNet (Business Wire) Rated: A

Small business lending continued its blistering pace in August, according to the latest Strategic Insights Report from PayNet, the leading provider of small business credit data and analysis. The Thomson Reuters / PayNet Small Business Lending Index (SBLI) seasonally adjusted originations increased 7% from 145.1 in July 2018 to 154.7 in August 2018, its second-highest reading ever. Year-over-year, the index is up 16%, marking its 11th consecutive increase over the prior year and the fourth double-digit year-over-year gain in the last five months. The rolling three-month index at 148.3 is relatively flat compared to July 2018 but is up 12% on the year.

The SBLI remained above 140 for the eighth consecutive month. The majority of industries experienced lending growth on an annual basis in August, led by Transportation & Warehousing (+20.4% Y/Y) and Mining (+9.7% Y/Y). Lending in Arts & Entertainment (+4.6% Y/Y) climbed to an all-time high in August, and more than half of industries achieved index readings in the top 25th percentile of all readings since 2005. Construction (+8.0% Y/Y) saw its strongest annual growth since November 2016 (despite weakening residential investment) due to strong investment in commercial and industrial structures. Regionally, lending increased across all ten of the largest states in August, continuing the widespread expansion seen in July. On an annual basis, regional growth was led by Texas (+15.3% Y/Y), Illinois (+12.3% Y/Y), North Carolina (+9.9% Y/Y) and Michigan (+9.4% Y/Y) — each of which saw lending reach record highs in August. Meanwhile, Pennsylvania (+7.9% Y/Y) and New York (+6.2% Y/Y) experienced their fastest year-over-year growth since mid-2015.

Making business analytics as easy to use as a smartphone (American Banker) Rated: A

A constant drumbeat in banking is that businesses require ever more data analytics to remain informed and competitive. Yet Envestnet|Yodlee acknowledged its data offerings were out of tune with customer expectations.

Its Envestnet Envision IQ platform, launched in May, offered up a variety of information concerning a bank’s customers and products, but it had no focus, according to a top executive at the data aggregator.

Branch managers will be able to create their own “playlist” of questions to be answered daily, he said, and the system will record and categorize questions asked into favorited questions and most-asked questions.

Source: American Banker

NetSuite angles for speed-to-market advantage over fintechs (American Banker) Rated: A

The biggest bank technology providers are revamping their most popular platforms to offer new features and reach more financial service sectors — all in the name of protecting market share from insurgent fintechs and pivoting peers.

Oracle joined the fray last week, announcing it was adding banking as a service to NetSuite, the venerable cloud-based enterprise resource planning platform it acquired for $9.3 billion in 2016.

San Jose, San Francisco and Boston are the Best Places for Boomer Entrepreneurs (PR Newswire) Rated: A

Key findings

  • San Jose – the seat of the Silicon Valley – is by far the best place for boomer entrepreneurs, with a final score of 93.6. In addition to representing high business income, San Jose boasts the largest share of boomer business founders.
  • San Francisco comes in second with a score of 86.5, thanks to remarkable earnings potential, relative to the other metros on the list, indicating that boomers are sharing in the general prosperity of self-employed entrepreneurs there.
  • Boston earned the third place on the list, with a score of 74.1.
  • New OrleansMiami and Orlando ranked last on the list, with scores of 16.4, 20.5 and 21.1, respectively.

See the full study here.

U.S. Bank Simple Loan 2018 Review (Nerdwallet) Rated: A

Cost: The Simple Loan costs $12 for every $100 borrowed, which translates into an annual percentage rate of 71%. That’s much cheaper than typical payday loans, where the average rate is 391%, and it’s due after three months, not the two-week cycle that is common of payday loans.

Auto-pay discount: U.S. Bank allows both auto-payments and manual payments. Manual payments cost extra, $15 per $100 borrowed, which is equal to 88% APR.

Payments are reported to the credit bureaus, so your score can increase if you make on-time payments.

RPA: the new tech transforming banking (Kyron Systems email) Rated: A

The number of U.S. banks has almost halved since 2007, from 8,400 to about 5,500 in 2017, and the reason is that it costs more. Rising AML and KYC compliance costs combined with regulatory fines are continuously putting banks out of business, especially small banks; U.S. Fed research indicates that adding just two new employees to a small bank’s compliance team would make a third of these banks unprofitable.

In response, banks are turning to a new field of virtual assistants: RPA, which stands for ‘robotic process automation’ but there are no actual, physical robots, rather virtual bots that run in the background on employee computers, learning what processes the bots can do instead, and then doing exactly that. Although RPA is being implemented in almost every industry, it dovetails particularly well with banking because there are so many repetitive processes that can be automated, everything from risk exposure calculations to compliance reports.

More information on RPA can be found here.

White Oak Healthcare Finance Closes Subsequent SNF Portfolio Financing for Granite Investment Group (Business Wire) Rated: B

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as sole lender and administrative agent on the funding of a $28 million senior credit facility for Granite Investment Group (“Granite”). Secured by three skilled nursing facilities in Texas, the funds refinanced existing debt and provided a dividend for investors. White Oak recently announced it financed a separate portfolio of four skilled nursing facilities in Texas for Granite.

“We are happy to have had another opportunity to work with Granite. This transaction materialized as an opportunity to provide a bridge-to-HUD financing for an under-levered portfolio. As an active lender in the space, we can optimize our offerings to meet each company’s unique business needs,” said Isaac Soleimani, Managing Director and Partner at White Oak.

Granite Investment Group is a privately held, real estate investment firm focused on multi-family, senior housing, and post-acute care.

Volunteer Organization Tackling the Crippling Student Debt Facing Americans (Crazy Good Turns email) Rated: B

A new non-profit, Shared Harvest Fund has created an impactful way to pay down student debt.  Shared Harvest Fund has created a program that partners non-profit organizations in need of workers, with students looking to not only pay down their debt, but do something with purpose as well.  Once the connection is made, students volunteer a set amount of hours per month, and the non-profit organization in turn sends a check directly to the lender of the student’s choice.

The founders of Shared Harvest Fund; Dr. Briana DeCuir, Dr. Joanne Moreau and Dr. NanaEfua B.A.M,  will be featured on the October 17th Crazy Good Turns podcast, a non-profit podcast that shines a light on people and organizations making a positive impact in the world, to share the in’s and out’s of their platform and discuss in detail how students looking to pay down debt—or non-profits looking for volunteers—can be a part of the Shared Harvest Fund community.

Podcast Topics Include:

  • The founders discuss how and why they created the platform
  • The negative physical and mental consequences that carrying debt has on borrowers and the positive effects of volunteering to help others.
  • How unaware most students are about the length of time it takes to pay off student loans.
  • How corporations can increase their corporate responsibilities goals by supporting the Shared Harvest Fund.

Early-Stage Financial Technology Firms to Benefit from TransUnion and FinTech Sandbox Partnership (Business Wire) Rated: B

FinTech Sandbox today announced it has entered into a partnership with TransUnion to help early-stage financial technology firms launch in the marketplace. As part of the partnership, TransUnion’s Startup Credit Kit will enable startups to test business model concepts and refine their go-to-market strategies.

United Kingdom

Funding Circle rallies as it makes official market debut (The Telegraph) Rated: AAA

Shares in Funding Circle rallied as it made its official market debut on the London Stock Exchange today, in a move likely to quell fears over market uncertainty.

The peer-to-peer lender tumbled as much as 8pc in the company’s first official day of trading, falling well below the 440p per share it had floated at last week, before later jumping back up.

Around 20pc had been wiped off their value during conditional trading, which began last Friday and ran through to Tuesday evening. Shares dropped as low as 340p on Wednesday, before later rising to 390p.

Intrust Bank driving small business opportunities with Funding Circle partnership (Witchita Business Journal) Rated: A

The original partnership was announced in January. It expanded in June and Intrust increased its commitment to more than 500 loans.

Brian Heinrichs, CFO at Intrust, says the bank is now at around 400 of those commitments, though he declined to say what amount of lending that represented for the bank.

Heinrichs says Intrust is the only bank partnered in such a way with U.K.-based Funding Circle.

Funding Circle’s Desai makes top 10 of ‘Tech 100’ list (Peer2Peer Finance) Rated: B

FUNDING Circle’s chief executive Samir Desai has been named as one of the top 10 most influential people in the British tech industry.

The peer-to-peer pioneer appears alongside fellow fintech leaders such as Starling Bank chief executive Anne Boden, and Tom Blomfield, chief executive of Monzo.

The Tech 100 list is compiled by Business Insider and aims to celebrate “the 100 coolest and most ground-breaking people in the UK tech industry over the past 12 months”.

British banks shudder at Goldman Marcus launch (financial Times) Rated: A

Marcus by Goldman Sachs recently launched in the UK and the biggest high street banks are only beginning to grapple with what the new competitor means for the market.  Marcus has seen significant success in the U.S. market and is hoping to bring that to the UK, they currently have a savings rate offer 3 times the traditional powers and have plans to launch more products soon.

The news is not all bad for high street powers as data has shown customers thus far have stayed loyal to their bank and regulations around use of deposits make it a bit trickier for Marcus to repeat their U.S. model.

Keith Horowitz, analyst at Citigroup, tells the FT where the biggest opportunity could exist, “The big key for Goldman ultimately is customer data, that’s the holy grail for banking, creating an open financial marketplace platform that can also utilise their huge balance sheet.”

Orca Money opening up the peer-to-peer lending market to investors (Proactive Investors) Rated: A

LendInvest announce new bridging rate cuts (Property Reporter) Rated: A

Online property finance platform, LendInvest, has announced that it has cut rates across its Bridging product range and introduced a new Bridge to Term transition service.

The lender has cut rates on its Residential and Commercial Bridging, Development Exit and Auction Finance products. Monthly interest rates now start from 0.55% for Residential Bridging, Auction and Development Exit and 0.79% for Commercial Bridging.

A new Bridge to Term service has also been introduced that offers borrowers looking to purchase residential property at auction, undertake refurbishment or carry out minor development the opportunity to then switch to one of LendInvest’s Buy-to-Let mortgages.

Property Fintech LendInvest Adds CFO to Board of Directors (Crowdfund Insider) Rated: B

LendInvest, an online lending platform for property finance, has announced the addition of Chief Financial Officer, Angelie Panteli, to the board of directors.

China

China doesn’t yet have a grip on P2P lending risks (East Asia Forum) Rated: AAA

China’s online peer-to-peer (P2P) lending platforms have been falling like dominos. This has sparked investor panic, exposing deeper risks long hidden in China’s shadow finance sector. It is yet to be seen if Chinese regulators will be able to manage the risks and effectively regulate P2P in the same way they have done in other areas of shadow banking.

Shadow banking from institutions supervised by empowered central regulators is shrinking. One of the best ways to measure shadow credit funded by banks is through their lending to non-bank financial institutions. It rose 80 per cent year-on-year in February 2016, but over the last year has shrunk by 4 per cent.

The number of surviving P2P platforms has been on a gradual decline since November 2015, but regulators were caught off guard when failures suddenly accelerated in mid-June 2018. Investors began to panic and tried to pull their money out, sparking yet more failures. Many protested for government help when they found that their savings had been stolen or sunk into bad loans.

Outstanding loans then plummeted by 300 billion RMB (US$44 billion), from 1.3 trillion RMB (US$190 billion) to just under 1 trillion RMB (US$146 billion). They fell again in August, but the outflows and failures moderated. The storm may have passed, leaving most platforms intact for now.

European Union

German Challenger Bank Kontist Secures Series A Investment (Crowdfund Insider) Rated: A

Kontist, a Berlin-based challenger bank, announced on Tuesday it secured a Series A investment to expand the financial services available to freelancers, small businesses, and entrepreneurs. The round was led by Haufe Group, one of Germany’s providers of digital workplace solutions and services with participation from existing investor Danish company builder, Founders.

International

VC Investment in Blockchain Startups Is Up 280% So Far This Year (CoinDesk) Rated: AAA

As the crypto industry sees a decline in initial coin offerings (ICOs) amid regulatory concerns and major losses across token markets, traditional VC investment is once more on the rise.

In its latest report, blockchain research group Diar reports that blockchain and cryptocurrency-focused startups have raised nearly $3.9 billion through VC investments in the first three quarters of the year – that up 280 percent when compared to the whole of 2017, it says.

Based on data from Pitchbook, the report indicates that number of deals also nearly doubled this year.

Source: CoinDesk

Alongside the increase in VC deals, the average size of crypto and blockchain investments has increased by over $1 million in 2018. Ten of the largest blockchain and crypto investments in 2018 saw the recipient companies raise more than $1.3 billion in total venture capital. While one of the firms has a native token (DFINITY), the rest represent equity investment, says Diar.

Source: CoinDesk

Tencent-backed mobile bank N26 launches in the UK and plans US expansion by early 2019 (CNBC) Rated: A

German app-only bank N26 has launched in the U.K. and is eyeing another expansion to the U.S. in the first quarter of 2019.

The Berlin-based firm, which is backed by Chinese tech giant Tencent, German insurer Allianz and PayPal co-founder Peter Thiel, said on Thursday that its services are now available in Britain, on a limited basis.

Initially, a select number of “early adopters” will be given access to the app in the U.K. More than 50,000 people who have signed up to a waiting list for the U.K. launch will be on-boarded on a phased basis, and a broader launch is planned for next month.

India

Here is Why Flipkart is Keen to Enter the Financial Services Sector (Entrepreneur) Rated: AAA

Looks the Indian startup’s ecosystem is smitten by the opportunities fintech industry is benefiting of. No wonder, we have unicorn startup companies such as the Flipkart looking into tap the market.

Market buzz says that Flipkart is in the middle applying for an NBFC license to extend the line of credit to its sellers and customers. With time, it would expand its financial services offerings beyond its e-commerce platform.

The credit problem in India is beyond surreal. For example, the small and medium enterprises sector (SMEs), which contributes between 30-40 per cent in the country’s GDP, suffers majorly because of its unattended financing need and the gap is as big as around USD 650 billion.

Giving an example of the consumer lending space, Gaurav Chopra, Founder & CEO, IndiaLends says this segment is expected to be a USD 1.2 trillion opportunity for the organised lenders, implying a 22 per cent compound annual growth rate over the next three years.

Credit Card EMI vs P2P Loan: Which one should you opt for? (Economic Times) Rated: A

Credit cards can be extremely handy when it comes to making an impulsive high-ticket purchase. All you have to do is to flash the card and walk away with your purchase. Many credit card companies would immediately offer you an option to pay back the money in equated monthly instalments or EMIs.

Compared to credit cards, personal loans can be cheaper. “Credit cards can charge somewhere around 0.1% every day. Making the annual charges go up to 36% in some cases,” says Tanwir Alam, Founder & CEO, Fincart.

P2P loans, unlike the usual bank loans, offer short-term tenures starting 3-36 months and can be looked as an alternative to credit cards, depending on the requirement of the borrower. The interest rates are anywhere between 12 and 28%.

Aadhaar verdict sends fintech players back to the drawing board (The Week) Rated: A

The recent Supreme Court verdict on Aadhaar may bring in tough times for the fintech companies who used to conduct eKYC (electronic Know Your Customer) via Aadhaar. Not mandating Aadhaar for the verification process has sent some fintech players back to the drawing board to work out strategies for physical verification, which is usually a time-consuming and expensive process. Experts and industry representatives with whom THE WEEK spoke to feel that verification of customers will eventually move to a traditional mode of verifying individuals through physical ID proof.

Bhavin Patel, CEO and co-founder of LenDenClub, a P2P digital lending platform, says that a physical KYC check takes around 24 hours or more now in an ideal scenario and this change in processing will result in longer disbursal time and higher cost for the consumer.

Asia

VN Central Bank working on framework for P2P lending (Vietnam Net) Rated: AAA

Anh spoke at a recent workshop on international experiences in P2P lending held in Ha Noi with the participation of more than 100 representatives, including financial management authorities from China, Singapore, Thailand and Indonesia.

With the rapid proliferation of mobile devices, artificial intelligence and big data, P2P lending—the practice of lending money to individuals or businesses through online services that match lenders with borrowers—has developed rapidly around the world in recent years.

Although P2P can create enormous socio-economic benefits, it also contains potential risks for the relevant parties, he said, adding that it is necessary to strictly monitor this field to mitigate the risks and improve awareness of the relevant parties.

Through this model, lenders can earn higher returns than they can get from banks while borrowers, especially individuals and micro businesses, can get money at lower rates. But the lending is also fertile ground for high-tech crimes. China had to eliminate some 160 online lending companies as they were in fact high-tech criminals working to cheat investors.

Latin America

ID Finance Mexico operations reaches profitability within eight months of launch (Finextra) Rated: AAA

The Mexico operations of ID Finance, the emerging markets fintech company, has reached profitability in just eight months since launching in the region.

The announcement represents a key milestone for the business as it continues its rapid expansion across Latin America. It currently operates in Mexico and Brazil.

Authors:

George Popescu
Allen Taylor

Tuesday September 18 2018, Daily News Digest

Student Loan Balance by Servicer and Loan Status

News Comments Today’s main news: Funding Circle U.S. sees loan defaults go up. OnDeck sales expectations. LendInvest raises $39.5M. Zopa boosts target interest rates on all products. UnionPay launches European expansion. Qatar Investment Authority could invest in Lufax. Today’s main analysis: Navient, Nelnet and the student loan market. Today’s thought-provoking articles: This former Googler, Facebook employee is running with SoFi. What’s […]

Student Loan Balance by Servicer and Loan Status

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Funding Circle Fund Sees US Loan Defaults Rise (PYMNTS) Rated: AAA

In August, more corporate borrowers defaulted on their loans issued by Funding Circle‘s U.S. operations than they did previously in 2018. According to Peer2Peer (P2P) Finance News reports on Friday (Sept. 14), the Funding Circle SME Income Fund (FCIF) revealed there were seven corporate loan defaults in during the month, up from the year’s average so far of six per month.

Still, the company noted, the value of those defaults has inched higher, too. Reports said the FCIF’s net asset value return for August dropped to 0.1 percent from 0.4 percent a month prior, with analysts citing rising impairment charges as a result of the U.S. loan defaults.

How This Former Google And Facebook Employee Is Helping People Reach Their Financial Goals (Forbes) Rated: AAA

Libby Leffler, vice president of membership at Social Finance (SoFi), negotiated with the tooth fairy as a child. “Looking back, I think this lighthearted family story speaks volumes about the way I think about negotiating or knowing one’s worth. Throughout my entire career, I’ve never been shy to ask for a raise or promotion – or both,” she says.

As an adult, Leffler continues to “lean in” and was even business lead to Sheryl Sandberg, the woman who started the Lean In movement. Leffler worked at Google and Facebook before attending Harvard Business School and working at SoFi, a San Francisco-based lending and wealth management company founded in 2011. Now the 

Brokerages Expect On Deck Capital Inc (ONDK) Will Announce Quarterly Sales of $ 94.63 Million (Baseball Daily) Rated: AAA

Equities research analysts expect On Deck Capital Inc (NYSE:ONDK) to announce sales of $94.63 million for the current quarter, Zacks Investment Research reports. Four analysts have made estimates for On Deck Capital’s earnings, with the lowest sales estimate coming in at $83.41 million and the highest estimate coming in at $98.74 million. On Deck Capital reported sales of $83.67 million during the same quarter last year, which indicates a positive year over year growth rate of 13.1%. The firm is scheduled to report its next quarterly earnings results on Monday, November 5th.

On average, analysts expect that On Deck Capital will report full year sales of $373.98 million for the current year, with estimates ranging from $331.20 million to $385.61 million. For the next year, analysts forecast that the firm will post sales of $417.35 million per share, with estimates ranging from $361.41 million to $435.88 million. Zacks Investment Research’s sales averages are an average based on a survey of research analysts that that provide coverage for On Deck Capital.

Navient & Nelnet and the Student Loan Market, OnDeck milestone (Peer IQ) Rated: AAA

As discussed in a recent piece in American Banker, Navient and Nelnet are increasing their role in the private student loan market. Both companies are big players in the market for servicing federally funded student loans. Together, they service $405 Bn with approximately 38% of the market share as of March 31, 2018. Nelnet, which currently focuses on servicing student loans, recently applied to for an industrial bank charter.

Source: Peer IQ

In April 2014, Navient was spun out of Sallie Mae, splitting the business in two. Sallie Mae continued its consumer banking business as well as origination of private student loans. Navient continued with loan management, servicing, and asset recovery. After the split, Navient kept 99% of the legacy company’s FFELP loans and 83% of the legacy company’s private loans. In October of last year, Navient acquired Earnest, a student, and personal loan lender, for $155 Mn in cash. The acquisition allowed Navient to begin originating student loans under the Earnest brand (as they were previously not allowed to make loans under any brand due to a non-compete with Sallie Mae). Starting in 2019, Navient will be allowed to compete directly with Sallie Mae under the Navient brand.

Lehman Brothers – What It Can Teach The Cryptocurrency Business About Lending (Block Tribune) Rated: A

It was all thanks to a niche security asset that had exploded in popularity: collateralized debt obligations (CDO), which packaged individual loans, such as credit card debt and mortgages, into a secondary market product for investors. In just six years, from 2000 to 2006, the CDO market exploded with sales multiplying from $69B to $500B.

Lehman Brothers, the fourth largest investment bank in the US, invested heavily into these securities, and enjoyed incredible profits as a result. In 2007, Lehman reported net income of $4.2B on $19.3B revenue.

The majority of CDOs were comprised of subprime mortgages. Rated triple-B, at the bottom of investment-grade bonds, these mortgages had been distributed to borrowers with higher-than-average credit risk. Computer models had packaged these CDOs into “tranches” based on interest rate and risk, making CDOs incredibly opaque and complex. These models also assumed that the housing market would continue its upward trajectory.

Property Genius Harnesses Big Data to Help Investors Capitalize on (oaoa) Rated: A

Property Genius announces the launch of its proprietary, end-to-end research and marketing platform which harnesses big data to streamline the entire process of finding and investing in Off-market and Wholesale real estate. Built specifically with the real estate professional and investor in mind, Property Genius aims to solve a long-standing problem for the industry by organizing extensive amounts of assessor data from numerous sources into one convenient and customizable dashboard to improve investment opportunities. The company’s initial launch utilizes property data in Colorado – with more states soon to follow – helping investors find, purchase, and reap the rewards on opportunistic properties including foreclosures, absentee owners, and other distressed properties.

The founder of LendingClub, ousted two years ago, pledges not to make the same mistakes with his new company (CNBC) Rated: A

More than two years after his ouster from LendingClub, Renaud Laplanche still owns millions of dollars worth of stock in the company he created, even though he’s since started a rival online lender that’s rapidly growing.

For his second act in financial services, Laplanche is focused on avoiding past mistakes. He was forced to resign suddenly from LendingClub in May 2016 for a convoluted set of events involving the questionable sale of certain loans by the company and a lack of transparency with the board.

Laplanche started his new company, Upgrade, in August 2016, three months after leaving LendingClub. His start-up passed $100 million in monthly loan originations in April. By way of comparison, LendingClub, founded in 2006, averaged almost $1 billion in monthly originations in the second quarter.

Charles Anderson of Currency (Lend Academy) Rated: A

One of the largest verticals in all of lending is equipment finance. There is $1.1 trillion worth of equipment financed each year and yet only a tiny fraction of this number is financed in an all digital process.

Our next guest on the Lend Academy Podcast has made it his mission to change that. Charles Anderson is the CEO and Co-Founder of Currency, the world’s first digital equipment finance platform. They are applying technology, often for the first time, to all phases of the equipment buying process.

CoreLogic Launches AutomatIQ Borrower (Corelogic) Rated: B

CoreLogic (NYSE: CLGX) today announced AutomatIQ Borrower, phase one of a comprehensive new underwriting solution designed to help lenders streamline their current mortgage workflows by digitizing, standardizing and automating borrower analysis and verification. By pulling all of the disparate borrower verification tools together into one integrated solution delivered from one provider, AutomatIQ Borrower will help lenders:

  • Reduce underwriting costs and time to close
  • Improve overall loan quality and user experience
  • Increase trust at each step of the borrower underwriting workflow

Hurricane Florence / Lendr (Lendr Email) Rated: B

“All of our clients have been contacted or we will continue to try and get in contact with them and support them in any way we can. We will suspend payments for the rest of September for any client that is affected by Hurricane Florence. Most clients will come back on a reduced payment schedule for a short period of time. In the past we have provided additional funding for clients in need to help get their business back on track due to these types of natural disasters.”  – Tim Roach, CEO of Lendr. 

United Kingdom

LendInvest raises $ 39.5M to grow its P2P property finance platform (TechCrunch) Rated: AAA

Today, LendInvest, a peer-to-peer platform that connects property buyers in the UK with people willing to finance those purchases (bypassing traditional mortgage lending infrastructure in the process), announced that it has raised around $39.5 million (around £30.5 million) in a Series C round of funding led by existing investor Atomico, which participation also from GP Bullhound and Tiger Management (founded by hedge fund investor Julian Robertson).

The plan will be to use this funding to continue to develop its technology and grow business into more the traditional (and bigger) mortgage business. A spokesperson for the company says there are no plans to extend beyond the UK market for now.

LendInvest Is Gearing Up To Be London’s Second Peer-To-Peer IPO (Forbes) Rated: A

Just weeks after Funding Circle launched its $2 billion IPO plans, London’s next peer-to-peer lender is gearing up to follow suit.

LendInvest, the online platform, which matches investors and institutions with borrowers looking for property finance, today announced a “pre-IPO” funding round of $39.5 million.

Since launching in 2008, LendInvest has facilitated over $1.9 billion in loans to buy, build or renovate some 5,000 homes across the U.K., turning a profit consecutively over the last four years.

With fresh capital raised from existing backer Atomico, along with new investors GP Bullhound and Tiger Management, its management seems to be signaling that they’re finally ready to float the business.

Zopa boosts target interest rates across all products (Peer2Peer Finance) Rated: AAA

ZOPA has boosted its lender returns in response to the recent Bank of England interest rate rise.

The peer-to-peer lender is now offering target returns of 4.5 per cent on its Core product and 5.2 per cent for its Plus account, both of which can be held in an Innovative Finance ISA (IFISA) wrapper.

Target returns were previously four per cent and 4.6 per cent respectively.

Church of England considers Wonga rescue (Charity Finance Week) Rated: A

The Church of England is considering bringing together a group of interested parties to buy the £400m loan book of collapsed company Wonga.

Payday loan company Wonga entered administration at the end of August, with Grant Thornton appointed to conduct an “orderly wind down” of the business and sale of assets.

In response to this announcement, Labour MP Frank Field wrote to the Archbishop of Canterbury Justin Welby, urging him to build a consortium of “people of good will” to buy the loan book “in a way which protects poorer people”.

Orca Money to Raise 500K via Equity Crowdfunding – Interview with CEO Iain Niblock (P2P Banking) Rated: A

Orca Money is currently running an equity crowdfunding campaign on Seedrs to raise 500K GBP at a premoney valuation of 1.7M GBP. Anybody can invest in Orca Money shares with a minimum investment amount of 10 GBP applicable. I interviewed the Orca CEO Iain Niblock

You are currently raising money. Who are you raising from and what do you plan to use the capital for?

Our investment is open to the public on the Seedrs equity crowdfunding platform. Investors across the EU can register and invest in the Orca business. The proceeds will allow us to expand our userbase, integrate with more lenders and to further develop the functionality of our platform.

Prior to launching the crowdfunding campaign, we secured a portion of this investment from two institutional funds based in Northern Ireland and a number of leading angel investors. It’s great to be combining these investors with crowd investors.

CTO on our doorstep: David Genn, CTO at Goji, on bridging the gap between the technology team and stakeholders (Information Age) Rated: A

When the regulator comes knocking, companies had better be ready. So it is with the peer-to-peer lending sector which was recently the subject of a 156-page review on the part of the Financial Conduct Authority (FCA) which has proposed a new set of rules for the still formative P2P lending sector.

The issues being addressed by the FCA are as much a technology challenge as they are a regulatory one, particularly when the companies involved are very young and the technology they are utilising is quite new and innovative.

Lenders flock to Scotland as P2P sector takes off (Peer 2 Peer Finance) Rated: A

SCOTLAND looks set to become a peer-to-peer lending hotspot despite fears about the potential impact of Brexit and another independence referendum.

This year has seen lenders such as Assetz Capitaland The House Crowd expanding their presence in the country, while professional services firms Pinsent Masons and Deloitte have formed partnerships with Fintech Scotland to drive the financial technology sector’s growth. LendingCrowd already has its headquarters in Edinburgh, as does ShareIn, which provides a white label crowdfunding technology solution.

China

Platform registers 94 mln online loans (CGTN) Rated: AAA

Online loans worth 116 billion yuan (16.97 billion US dollars) had been registered by the end of August on a unified platform operated by an industry association in China, amid a nationwide campaign to reduce financial risks.

The volume was up 18 percent from a month ago, the National Internet Finance Association (NIFA) has said.

The platform, established in June 2017 had recorded 94.31 million lending deals submitted by 66 online agents, which involved a total of 3.6 million borrowers.

Online registration starts for victims of illegal fundraising cases (Infosurhoy) Rated: A

China’s Ministry of Public Security has started registering investors of 50 illegal fundraising cases involving online peer-to-peer lending platforms to better protect their legitimate interests.

Investors of these platforms can register their information and obtain the latest development of related cases at .

Public security authorities will ensure utmost transparency in their investigation and do their best to recover the losses of investors, an official with the ministry’s economic crime department said.

Registration will open for investors of more cases, the official added.

European Union

China UnionPay kicks off European expansion with UK launch (Financial Times) Rated: AAA

China UnionPay is the biggest payment card issuer in the world and is now launching their cards in the UK, the move will challenge Visa and MasterCard and is the first step in a planned European expansion. The company has struggled to compete with Alipay and WeChat Pay in China

Klarna Bank to acquire UK’s Close Brothers Retail Finance (Compelo) Rated: A

Payment provider Klarna Bank has agreed to acquire Close Brothers Retail Finance (CBRF) from UK merchant banking group Close Brothers Group for an undisclosed sum.

Klarna said that the acquisition of CBRF will enable the payments firm to expand its retail financing services for customers in the UK market.

Banks jump on to the fintech bandwagon (Financial Times) Rated: A

The Treasury Report on fintech released a few weeks ago talks about the promise of data sharing between big bank and technology. The author in the FT questions this enthusiasm, wondering if these tech companies can be trusted with financial data. The article points out that while the EU started allowing data sharing earlier this year it comes with several provisions to protect consumers.

International

Qatar Fund Is Near Investment in China’s Top Online Lender (Bloomberg) Rated: AAA

The Qatar Investment Authority is in advanced talks about an investment in Lufax, China’s biggest online lender, as the sovereign wealth fund seeks to tap into the world’s second-largest economy, people familiar with the matter said.

QIA has been negotiating the potential purchase of a minority stake in Lufax, which is an arm of China’s Ping An Insurance (Group) Co., according to the people. It could spend about $500 million to $1 billion, the people said, asking not to be identified because the matter is private.

A deal could be announced as soon as the next few weeks, the people said. Shanghai-based Lufax, which became profitable for the first time last year, completed a fundraising in 2016 that valued it at $18.5 billion.

What is happening in the IPO market? (Alpha Street) Rated: AAA

The IPO market is abuzz as usual, with many companies inching closer to public listing, while a few have backtracked from their plans. Let’s take a quick look at what you can expect in the coming days.

Cloud-based financial planning company Anaplan Inc. intends to raise up to $100 million through an IPO to meet the working capital and fund operations. The company has roped in former Tesla (TSLA) CAO David Morton as its CFO. It is currently working with an exchange to list the shares under the “PLAN” ticker. It was founded in 2006 as a cloud-based business planning and performance management platform based on a single hub.

Funding Circle Holdings is inching closer to a public listing as the company plans to raise gross proceeds of about 300 million pounds. Shares will be listed on the London Stock Exchange. Funding Circle is a small and medium enterprise loans platform with operations in the UK, US, Germany, and the Netherlands.

Australia

ASIC warns all fintech business lenders over contracts (AFR) Rated: AAA

The corporate regulator wants all online business lenders to remove unfair terms from their contracts just like Prospa has done, indicating start-ups that want to compete against banks will be held to similar regulatory standards as community expectations lift following the royal commission.

In a letter sent last week to Brad Kitschke, CEO of industry lobby group FinTech Australia, the Australian Securities and Investments Commission declared “action [is] required”.

Why this small business owner used a peer-to-peer personal loan for funds (Finder) Rated: A

One of these owners is Mel Flannagan, owner of software and design company Nook Studios. Flannagan’s work is project based and primarily with government departments, so cash flow needs to be managed carefully.

“Sometimes contracts just take a little bit of time to come through,” Flannagan says. But while Nook Studios is a unique business, she says their cash-flow situation is quite common, with the cyclical nature of waiting for invoices to be paid just being “the nature of having a small business”.

To ensure she had the funds to keep her business going, Flannagan didn’t even consider a traditional business loan because she knew she wouldn’t qualify.

Asia

Going international is nice on PowerPoint but difficult to execute, says Grab president Ming Maa (Deal Street Asia) Rated: AAA

“I suspect going international is a nice thing on PowerPoint, but the actual execution of that is very difficult,” Grab president Ming Maa said in a fireside chat at DEALSTREETASIA‘s Asia PE-VC Summit 2018 last week.

Drawing parallels with Meituan-Dianping’s tumultuous ride-sharing journey, Maa said, “We saw that Meituan spent somewhere around $500 million in two different cities in China. In that process, they spent a tremendous amount of capital on subsidies. What that tells me is – for a company to spend so much on subsidies means there are natural barriers to entry for this business.”

E-Commerce Platform KinerjaPay Launches P2P Lending Platform “KFUND” (Crowdfund Insider) Rated: A

KinerjaPay Corp., (OTCQB: KPAY), a digital payment and e-commerce platform, announced on the launch of its new peer-to-peer (P2P) lending platform, KFUND. According to Kinerjapay, PT. Kinerja Simpan Pinjam has been officially registered and will manage KFUND brand as an online lender that focuses on micro-lending activities.

Kinerjapay reported that KFUND will mainly target consumer sectors to provide micro-lending facilities in the range of $100 to $1,000 on biweekly or monthly term loans.

Africa

The Digital Transformation of Banking – Driving Constructive Economic Outcomes from the FinTech Ecosystem in Africa (Global Banking and Finance) Rated: AAA

The hugely successful events in our Finnovation Africa Series in Uganda, Ethiopia, Kenya and South Africa saw more than 800 thought leaders, FinTech pioneers and bankers representing the foremost financial institutions from across the continent gather to address how FinTech can contribute to the positive and profitable transformation of financial services in Africa. From banking powerhouses to start-up FinTech disruptors, Finnovation World sets the stage for the positive and profitable transformation of financial services –and Ethico Live! is now excited to announce the expansion of the conversation to Finnovation Ethiopia 2018for the 2nd year at the Radisson Blu Addis Ababa on the 1st of November 2018. The event will seek to harness the FinTech revolution to boost strategic economic priorities such as financial inclusion and deepening – and how FinTech can make a positive and profitable difference in Africa.

With a focus on the most significant technologies driving the financial services paradigm shift, including Blockchain & Cryptocurrencies, Open Banking & APIs, Payments innovation and Mobile Money, Finnovation Africa: Ethiopia 2018 also features a number of innovative sessions such as The Wolves’ Den, Sheba Valley: Harnessing Ethiopia’s FinTech boom, Inside the Investor’s Mind,and live-on-stage interviews with international Finnovators and African FinTech pioneers.

Authors:

George Popescu
Allen Taylor

Monday July 23 2018, Daily News Digest

securitization

News Comments Today’s main news: OnDeck completes two international credit facilities. Elevate launches prime credit card for non-prime customers. RateSetter backtracks on Rolling Market rate changes. China’s P2P lender are falling like dominoes. Banco BNI Europa invests in US consumer loans. Today’s main analysis: Deloitte’s survey on fintech lenders. Today’s thought-provoking articles: An inside look at SoFi-Promontory Interfinancial Network […]

securitization

News Comments

United States

United Kingdom

China/Hong Kong

International

India

Other

News Summary

United States

Elevate launches prime credit card for non-prime consumers (Bankless Times) Rated: AAA

Elevate and Capital Community Bank of Utah announced the launch of Today Card powered by Mastercard. As the first non-prime credit card with a full suite of prime features, Today Card will be issued by Capital Community Bank of Utah and will specifically help expand access to credit for members of the New Middle Class, the nearly 160 million non-prime Americans who are too often overlooked by mainstream financial institutions.

An Inside Look at Bank/Fintech Partnerships: Promontory Interfinancial Network and SoFi (Lend Academy) Rated: AAA

The recent surge in financial innovation has caused many community banks to rethink how they are serving their customers and what they can do to improve that experience. I recently spoke with two community banks about their decision to buy SoFi loans using Promontory Interfinancial Network’s service.

I spoke with Brian Plum, CEO of Blue Ridge Bank, which is a Virginia based community bank with mortgage offices in North Carolina, and Nicole Austin, Chief Lending Officer of Pioneer Bank, which is a New Mexico-based community bank.

Both banks had experience in looking at fintech partnerships before moving ahead with their decision on the SoFi program. They both said that as lending and banking changed, they needed to better understand how new technology could help their businesses.

Lowest Jobless Claims since 1969, Strong Bank and Card Issuer Earnings (PeerIQ), Rated: AAA

Blackstone is launching a $10 Bn direct lending fund focused on middle-market corporate credit opportunities. The search for yield has pushed investors into higher-yielding middle-market lending, with direct lending funds raised $54 Bn in 2017. Consumer, small-business and middle-market lending have been a consistent theme among investors starved for yield by low global interest rates.

Deloitte’s Survey on Fintech Lenders

The main take-aways from the study:

1. 7% of respondents listed cost of funding as one of the top 3 concerns, with liquidity and an inability to diversify rounding out the top 3.

Source: Deloitte, PeerIQ

PeerIQ view: Securitization remains the cheapest source of large-scale financing. MPL bonds continue to go mainstream as credit spreads tighten vs comparable consumer credit issuers. Emerging issuers continue to take efforts to build a brand in the ABS markets via repeat issuance.

Source: Deloitte, PeerIQ

3. Investors remain interested in the online lending space with $11 Bn in equity capital expected to flow into the sector in 2018. The number of startups has decreased, suggesting a maturing market and some consolidation.

Why You Should Bank Without a Branch (US News) Rated: AAA

The first online banks hit the U.S. market more than 20 years ago, attracting customers with higher interest rates and lower fees. While some early innovators are no longer operating, others have evolved. Take ING Direct, for example, which was acquired by Capital One and transformed into Capital One 360 in 2012, or Ally Bank, which is one of the most dominant names in the online banking market.

Today, however, these banking institutions face competition from new direct banks as well as traditional banks that are looking to expand using the online-only model. For instance, Finn by Chase and Marcus by Goldman Sachs bring digital banking to areas in which the companies have no physical presence.

Long-Term Business Loans Available Today (LendEDU) Rated: A

Fortunately, some lenders offer long-term small business loans, which give borrowers the opportunity to repay the loan over a longer period of time (typically up to 25 years).

Long-term business loans certainly do exist but if you’re hoping to score one, you’ll need to have an established business (i.e., no startups or new businesses) and have good business credit.

There are a variety of lending institutions, both traditional and non-traditional, that offer long-term financing, so it’s always best to review all your options, including those offered by your chosen banking institution. However, there are a few lenders that consistently top the charts, and those that follow are known to offer competitive rates, flexible terms, quick access to funds, and positive customer feedback.

Compare Long-Term Business Loans

Loan Amounts

$5,000 – $300,000

$25,000 – $500,000

Term Lengths

Up to 60 months

Up to 60 months

APR Range

10% – 35.5%

4.99% – 26.99%

Walmart’s pay-advance app Even used by 200,000 employees (American Banker) Rated: A

Walmart’s experiment with offering Even.com’s money management and pay-advance app to employees appears to be off to a good start.

The retailer launched the app to employees in December. On Thursday, Walmart and its fintech partner announced that 200,000 Walmart employees are now using it. (The retailer employs 1.5 million people in the U.S.)

About 75% of associates use the app every week and 46% use it every day.

DFS Report Indicates Increased Level Of Online Lending In New York (Mondaq) Rated: A

The New York State Department of Financial Services (“DFS”) found that online marketplace lending has increased dramatically since 2015. In the newly published report, DFS analyzed responses from a “New York Marketplace Lending Survey” along with comments from relevant stakeholders.

Based on data from 2017, DFS found that:

  • the total number of loans increased approximately 118% and the total dollar amount of all loans increased approximately 42% as compared to 2015 levels;
  • many more individuals were being served in this market than small businesses;
  • lenders generally charge a variety of fees (e.g. origination fees, closing fees, processing fees, maintenance fees, transactional fees, and penalty fees), with origination fees being the most common;
  • delinquent loans (both to individuals and businesses) represent approximately 11% of the total number of loans outstanding as of the end of 2017; and
  • respondents used “internal models with various inputs provided by the applicant such as employment history, business history, bank statements and tax records” to determine whether a borrower qualifies for a loan.

LendKey, Gradifi Help U.S. Employers Offer a Student Loan Refinance Benefit to Employees (Business Wire) Rated: A

Gradifi today said it is now offering access to LendKey’s nationwide network of lenders through Gradifi Refi, a student refinance program for employers seeking to help their employees save money or reduce the monthly payment on their student loans.

Gradifi Refi is one of three employee benefit solutions from Gradifi that enable employers to positively impact their employees’ financial well-being. Gradifi’s SLP Plan (Student Loan PayDown) benefit helps employees pay off their student loans faster through employer-sponsored contributions to their student loan provider. The College SaveUp benefit helps employees save for their children’s education and avoid further student debt through employer contributions to an employee’s 529 college savings plan account.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2018 (Markets Insider) Rated: B

Mortgage Category

#1 Winner:
loanDepot, LLC

Personal Loans Category

#1 Winner:
LendingClub

Home Equity Loans Category

#1 Winner:
First MidWest

P2Bi partners with Amalgamated Bank (Bankless Times) Rated: B

P2Binvestor (P2Bi), a marketplace lending platform offering crowdsourced, asset-secured lines of credit to growing companies, today announced a partnership with Amalgamated Bank, a socially responsible bank based in New York.

The P2Bi bank partnership program gives growing businesses a way to quickly access capital while allowing banks to increase their addressable market and improve their conversion rates. This particular alliance will enable Amalgamated Bank to continue to help fund emerging socially responsible businesses.

Colonial Partners with Roostify for Superior Online Mortgage Experience (PR Newswire) Rated: B

Starting today, Roostify’s online, mobile-friendly application and loan collaboration tools will be available to all of Colonial retail mortgage branches and its Home Loan Center national call center.

United Kingdom

RateSetter backtracks on Rolling Market rate changes (Peer2Peer Finance) Rated: AAA

RATESETTER has reversed its decision to stop investors setting their own rate for capital reinvesting on its Rolling Market.

The peer-to-peer lender implemented an overhaulof its popular Rolling Market product on 6 June, no longer allowing investors to set their own rate on reinvested money.

In an email to customers, the lender said feedback demonstrated how much investors valued the option to set their own rate for capital reinvesting.

Some challenger banks are challenging (The Finanser) Rated: AAA

The UK’s challenger banks are busy getting on with it. They’ve got their licences, they’ve deployed their services, they’re partnering with third parties and creating marketplaces. Much of this was cited in a report by CBInsights, comparing the features of the five most notable new ones: Atom, Starling, Monzo, Revolut and Tandem.

N26 were also included, but is not a UK start-up and their report builds on the one I blogged about last month from Optima. The thing I took from the CBInsights report is the massive numbers of users that Revolut and Monzo have already gained. At that time, it was 1.5 million for Revolut and 500,000 for Monzo.

Starling marketplace grows with Growth Street addition (FinTech Futures) Rated: A

Growth Street will be the first SME finance provider on Starling Bank’s in-app marketplace, giving users access to services like pensions, insurance and loyalty schemes.

This partnership is Growth Street’s first marketplace integration, and represents the first live use of its third-party API. The firm is a P2P platform that matches investors’ funds with growing SMEs.

MarketInvoice looks to bolster its financial crime prevention (Peer2Peer Finance) Rated: A

MARKETINVOICE is looking to bolster its financial crime prevention with the appointment of dedicated anti-money laundering (AML) officer.

All regulated firms have to have someone in the business with responsibility for AML monitoring, with some choosing existing staff and others making it a dedicated role.

The peer-to-peer business finance platform is advertising for a AML/financial crime officer to sit within its legal unit.

The IFISA Phenomenon – The New Way to Invest (Dispatch Weekly) Rated: A

There are different types of ISAs including Cash ISAs and Stock & Shares ISAs but the Innovative Finance ISA (IFISA) is fast becoming the new trend in the ISA market.

Source: The Weekly Dispatch

Home loans turned us into a hot property, says Christian Faes, founder of lendinvest (The Sunday Times) Rated: A

Christian Faes could hardly have picked a worse time to get into mortgage lending. It was 2008, financial markets were in free fall and most people were more concerned about putting food on the table than buying a house.

That did not deter Faes, a former lawyer who had moved to London from Australia’s Gold Coast 10 years earlier. He co-founded Montello Bridging Finance in a “windowless serviced office” in the City and set about cold-calling potential investors. “The idea was really sound, but it wasn’t the best moment to be setting up a mortgage lending company,” said Faes, 41.

China/Hong Kong

China’s Peer-to-Peer Lenders Are Falling Like Dominoes as Panic Spreads (Bloomberg) Rated: AAA

The shakeout in China’s $192 billion peer-to-peer lending industry is accelerating at a rapid clip.

At least 118 platforms have failed this month through early Friday, according to Shanghai-based Yingcan Group, whose tally for July stood at 57 just three days ago. The number of failures, which includes platforms that have halted operations or come under police investigation, is already the highest in two years with more than a week left in the month.

China’s clampdown on financial risk has weighed on P2P platforms for the past two years, but the pressure has intensified in recent months after the country’s credit markets tightened and the banking regulator issued an unusual warning to savers that they should be prepared to lose all their money in high-yield products. While that has triggered bouts of panic among users of smaller P2P platforms, there’s little evidence that the turmoil has spread to more systemically important parts of China’s financial sector.
Source: Bloomberg

Chinese Investors Reel as Internet Lenders Close (Wall Street Journal) Rated: AAA

A string of Chinese internet lenders have shut their doors in recent weeks, stranding investors as the economy slows and regulators tighten controls over an unruly side of the fintech sector.

Across China, more than 200 internet-based fund managers since late June have either shut down, closed parts of their operations or are reeling from cash crunches, missing executives and other problems, according to industry tracker Wangdaizhijia.

The tide began to turn against the sector as an end-of-June deadline for new stringent registration regulations approached. With a slowing economy making it difficult for some companies to pay back loans, some lenders decided to shut down, analysts said. Investors, already souring on the sector, began pulling out funds, further pinching the lending platforms.

Source: Wall Street Journal

Distributed Credit Chain wants to use blockchain to prevent the next financial crash (Tech World) Rated: A

Figures from Bloomberg Economics based on data from the People’s Bank of China indicated that three major assets of shadow banking – trust lending, entrusted loans and banks’ acceptances – increased by $555 million in 2017. Entrusted loans, for example, are when businesses loan money to each other, using banks as intermediaries. Meaning that larger (state owned) companies may lend money to smaller companies and make a profit from the differences in interest.

Micro-lending is another phenomenon that has ballooned in recent years, with a proliferation of online lending or peer-to-peer lending platforms springing up. Outstanding debts on these sites increased by 256 percent between October 2015 and October 2017, topping 1.2 trillion yuan (over $179 million).

These issues have been acknowledged by the Chinese government, with China’s top banking regulator, Guo Shuqing, promising the shadow banking industry will be ‘dismantled’.

Shanghai vows to ramp up enforcement of P2P lending platform regulations (Global Times) Rated: A

The Shanghai municipal government has announced it will soon launch a campaign to enforce compliance of financial regulations on the city’s peer-to-peer (P2P) online lending platforms, according to a report by domestic website the Shanghai Observer, in a sign that local authorities will put order into China’s troubled fintech sector.

The Shanghai Office of the Leading Group for the Special Campaign against Internet Financial Risks said that it will  investigate the local online lending industry and severely punish those committing illegal fundraising and financial fraud, as well as fugitive owners. The authorities have reasserted their support of law-abiding firms in a bid to promote a more orderly internet finance industry.

In the last 50 days, up to 163 P2P lending platforms have essentially gone out of business, stopping cash withdrawals from customers, and many have seen their owners run away and declared fugitives,  chinanews.com reported.

Jim Rogers-backed ITF to miss August deadline for virtual bank licence in Hong Kong (South China Morning Post) Rated: B

ITF, a fintech company backed by US veteran investor Jim Rogers, plans to apply for a virtual bank licence in Hong Kong, but will not rush to meet the first application deadline on August 31.

The fintech firm would prefer to wait for more details about regulations, according to its adviser Ignious Yong.

European Union

Creditshelf raises €16.5m through landmark IPO (AltFI News) Rated: AAA

German mid-market lending platform Creditshelf has successfully closed its IPO, raising €16.5m at the fixed price €80.00 per share.

In the end, the company had no need of its €15m backstop order, provided by Hevella Capital GmbH & Co. KGaA, part of a group controlled by Rolf Elgeti. But Obotritia Capital KGaA, which is also part of the group, subscribed for an additional amount of €1.5m, underlining its support for the firm.

International

OnDeck Completes Two New International Credit Facilities (PR Newswire) Rated: AAA

OnDeck (NYSE:ONDK) announced today the closing of an AUD75 million asset-backed revolving credit facility with Credit Suisse, and the closing of a CAD50 million asset-backed revolving credit facility with Crédit Agricole, to finance OnDeck originations in Australia and Canada, respectively.

The new Credit Suisse facility will be used to refinance OnDeck Australia’s current loan book at a significantly lower cost, as well as to fund future originations. The Crédit Agricole facility is the first for OnDeck Canada and provides the business with access to CAD25 million of committed capacity and an additional CAD25 million of capacity available at the discretion of the lenders.  Both facilities are floating rate and have an initial weighted average interest rate of approximately 5.6%. The Credit Suisse facility and Crédit Agricole facility are scheduled to mature in June 2020 and June 2021, respectively.

Banco BNI Europa invests in US consumer loans via Fintex and Upgrade, Inc (Fintech Finance) Rated: AAA

European challenger bank Banco BNI Europa and Fintex have entered into a strategic partnership to invest in Upgrade’s consumer loans and expand access to affordable credit to consumers in the United States. Banco BNI Europa, which is active across Europe, now invests in US consumer loans through Upgrade, one of the fastest growing platforms in the US. This loan purchase programme was implemented by Fintex Capital, which issued a bond to Banco BNI Europa backed by the portfolio and Fintex acts as asset manager for the underlying loans.

As part of the agreement, Banco BNI Europa committed an initial sum of USD 30 million. Banco BNI Europa has already invested in US consumer loans originated on platforms like Lending Club and Prosper through a third-party fund.

How the Blockchain is Helping Redefine Business Financing (Equities) Rated: A

In fact, one report by CB Insights found that about 29 percent of startups failed because they ran out of working capital, which speaks volumes about the morbid state of business financing for startups and budding businesses.

Consequently, business financing has become one of the many areas of fintech that could benefit immensely from blockchain, the decentralized ledger that has been disrupting industries for over a decade.

Here are a few ways that showcase why blockchain could change the way enterprises access funding.

Credit Rating Firm Backs $ 8 Million Fundraise for Crypto Alternative (CoinDesk) Rated: A

A startup looking to build a credit scoring protocol on top of the recently-launched Ontology blockchain has raised $8 million in seed funding.POINTS, founded in 2017, said it drew funding from a mix of traditional venture capitalists including Danhua Capital and Ceyuan Ventures, a backer of OKCoin. Other participants in the seed round include the Ontology Foundation as well as Zhong Cheng Xin Credit Technology, China’s first nationwide credit rating agency.The new capital will be used to expand the company’s engineering team in an effort to speed up its development of blockchain-based know-your-customer (KYC) and credit scoring applications. The idea is to build its protocol on top of a decentralized network and empower apps that can eliminate repetitive processes around identity.

Bitcoin Holds the Line, Salt Slumps, Dash Drives Onward (Blockonomi) Rated: A

The crypto lending platform Salt Lending just got a dose of some strange news when the company suddenly released an announcement stating the appointing of what they call an interim CEO. The former CEO ,who was essentially the face of the company and one of the cofounders, Shawn Owen, appears to have left the company.

But the circumstances under which he left are unclear.

Salt tokens (that run on Ethereum) have been on a strong downward slide for the last few months, and are currently sitting at just over one dollar each. The tokens entered the market at the three dollar range and so are down by more than 66% post ICO. It is also unclear as to whether or not Salt Lending is still operating or giving out new crypto-to-cash loans.

RAD Lending: The Future of Crypto-Assets Backed Lending (News BTC) Rated: A

The growing user base of cryptocurrency and related products has skyrocketed, with the highest number originating from countries like New Zealand, Denmark and Belgium. The community growth is expected to follow the upward trajectory to hit 100 million users soon.

RAD Lending platform might just be the push the market needs to fill the gap between crypto holdings and real-life fiat spending. The P2P lending platform from RAD will act as a matchmaker between loan requests and funding proposals.

India

Digital lending to become $ 1 tn opportunity in India over next 5 years (Money Control) Rated: AAA

A Boston Consulting Group (BCG) report suggests that digital lending in India will become a $1 trillion opportunity in the next five years.

According to the report, four fundamental drivers that pushed the space are internet giants that changed the way consumers behave, rapid growth in technological advances including the proliferation of smartphones and consequent increase in the consumption of data. Also the digital market lending prospered under supportive regulatory conditions across the globe.

Funding in Indian startups this week (16 July-21 July) (EnTrackr) Rated: AAA

This week 16 startups received funding, of which 10 received a total sum of about $228.5 million. Among them, BookMyShow raised the highest investment of $100 million, followed by Cars24 which raised about $50 million.

Meanwhile, funding for six of the total funded startups remained undisclosed.

Source: EnTrackr

Lending platform LenDenClub gets NBFC-P2P certification from RBI (MediaNama) Rated: A

P2P lending platform LenDenClub has received its NBFC-P2P certification from the Reserve Bank of India (RBI), the Economic Times said. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

RBI’s registry will help solve problem of credit shortage: iSpirt’s Sharad Sharma (Livemint) Rated: A

Out of the 8.8 million businesses in India that file taxes, at least 6.6 million businesses do not have access to the credit sources such as banks, non-banking financial companies (NBFCs), and upcoming online lenders. This is a problematic situation for both lenders, and for businesses (especially small businesses), looking for capital loans.

The problem of credit shortage for small businesses is daunting, but the regulators in India have already set things in motion to address the issue. According to Sharma, the revamped goods and services tax (GST) structure, the Reserve Bank of India’s (RBI’s) new public credit registry (PCR) initiative, and UPI (Unified Payments Interface) 2.0 will solve the shortage of data for lenders.

Here’s a look at some brands that are making India artificially intelligent (Business Standard) Rated: A

The rise of promising tech-startups has been successful in ushering India into a dawn of technology.

While AI is believed to revolutionize the current modus operandi and bring about fast-paced automation and efficiencies, it still remains an abstract topic, palled by a lack of nuanced understanding amongst the general public.

Here are some enterprises that are integrating AI in everyday tasks:

Faircent: Making Lending more conducive with AI & Machine Learning

If you think AI is only limited to the IT industry, think once again. Faircent, India’s largest P2P (peer-to-peer) lending platform, has been utilizing the technology to provide users with money during your financial crunch. Doing away with methodologies of conventional lenders (which can often prevent a creditworthy applicant from securing a loan,) the platform leverages Machine Learning and Artificial Intelligence to enhance the effectiveness of its credit profiling and assessment.

Ebix acquires enterprise lending software company Indus for $ 29 M (Your Story) Rated: A

Global on-demand software provider Ebix Inc on Friday announced the acquisition of Indus Software Technologies Pvt. Ltd. (Indus), a global provider of enterprise lending software solutions to financial institutions, captive auto finance and telecom companies, for approximately $29 million, including $5 million of contingent earn-out.

Further to this acquisition, key Indus business executives will become a part of the combined EbixCash senior leadership. The acquisition will increase the employee strength of Ebix in India by 900, to approximately 7,200 employees.

Canada

Fintech OnDeck Canada lines up $ 50-million credit facility from Crédit Agricole (Financial Post) Rated: AAA

OnDeck Canada, the local online arm of the U.S. headquartered OnDeck now has a $50-million asset-backed credit facility, provided by Crédit Agricole, to fund its loans. According to a recent ranking of assets, the French bank is the world’s ninth largest. Its Montreal office offers commercial and investment banking services.This is the first time that OnDeck Canada — which has originated $180 million in small business loans since 2014, all made using a “wide spectrum of data, technology and analytics” — has arranged funding from a source other than its parent.There are two parts to the three-year facility that will finance loan originations created by OnDeck Canada: a $25-million committed facility and an extra $25 million that can be drawn if needed. OnDeck provides term loans up to $250,000 and revolving lines of credit of up to $50,000 to small business.

Authors:

George Popescu
Allen Taylor

Loan Amounts

$5,000 – $300,000

$25,000 – $500,000

Term Lengths

Up to 60 months

Up to 60 months

APR Range

10% – 35.5%

4.99% – 26.99%

on LendingClub’s secure website

on Funding Circle’s secure website

Thursday May 31 2018, Daily News Digest

places that owe the most in student debt

News Comments Today’s main news: Online lenders tighten rules against default wave. UK P2P lenders join effort to overturn Brexit. Consumer credit sees the most financial complaints in UK. Today’s main analysis: Where is the most student debt? Today’s thought-provoking articles: How regulations will impact Ant Financial. The 7 most innovative fintech companies. Where is the fintech innovation right […]

places that owe the most in student debt

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Online lenders tighten rules as default wave rattles investors (American Banker) Rated: AAA

It’s gotten a lot harder to borrow money from the raft of fintech firms looking to bring online lending into the mainstream.

Besieged by a wave of defaults after several years of rapid growth, the biggest online lenders have been forced by bond investors to tighten underwriting standards. Social Finance, Prosper, LendingClub and Avant now demand higher average credit scores and offer shorter maturities to boost the quality of loans they repackage into asset-backed securities.

The shift in the $30 billion market comes after a swarm of borrower defaults in the past three years rattled ABS investors. It also marks a coming of age of sorts for the fintech startups that offered cut-rate loans to build a customer base. Now, with rates rising and a potential economic slowdown looming, the move toward higher-quality from the push for quantity has taken on added urgency.

According to Kroll, the weighted average of FICO credit scores of Prosper’s loans packaged in ABS increased to 717 in a March 2018 deal from 704 in a sale two years earlier.

LendingTree Study: Which Places Have the Most Student Debt? (PR Newswire) Rated: AAA

LendingTree today released its study on the places with the most student debt. To determine whether there are geographic variations in student debt, LendingTree analysts looked at a sample of anonymized users who logged into My LendingTree in the first quarter of 2018 and calculated how many had student loans, as well as the other reported statistics related to their balances.

Source: Lending Tree

Wells Fargo Plans to Expand Auto Lending Again (Lend EDU) Rated: A

Wells Fargo & Co. expects to increase its auto lending again. In mid-2017, Wells Fargo decided to reduce car financing and tighten its underwriting standards. In February 2018, the firm said it intended to finish consolidating its regional car loan centers by April, and that lending would expand within two quarters, reported Bloomberg.

For lenders in a $1.2 trillion U.S. auto loan market, they face a landscape with falling vehicle resale prices, making it difficult for them to soften losses from repossessing cars when borrowers default.

Principal Financial acquires digital advice startup RobustWealth (Investment News) Rated: A

Principal Financial Group is acquiring financial technology startup RobustWealth to improve its own technology offering and expand distribution capabilities among the banking, broker-dealer and registered investment adviser channels.

Principal also sees the RobustWealth’s platform — which includes digital advice, goal-based investment tools and client onboarding — as providing the foundation for a direct-to-consumer robo-adviser in the future.

What to Do When You Lend Family Money But They Can’t Pay You Back (Entrepreneur) Rated: A

Like many people, Entrepreneur Network partner Jeff Rose once has convinced himself it was a good idea to loan money to a family member. In reality, the situation can get messy when this close personal connection cannot return the investment. This does not mean Rose has given up on peer-to-peer lending, which is a helpful tool that can streamline the loan process.

OppLoans Named One of the Country’s Best Workplaces by Inc. Magazine (Markets Insider) Rated: A

Online lender and service provider OppLoans has been listed as one of the country’s 2018 Best Workplaces by Inc. Magazine. The award determination was based on employee survey results in areas like benefits, perks, executive leadership and opportunities for career development.

OppLoans enjoys a rating of 4.9 out of 5 stars on Glassdoor as well as a 98 percent retention rate and 99 percent approval rating for CEO Jared Kaplan. Last December, Glassdoor rated the Chicago-based startup as the sixth-best place to work nationally for small-to medium-sized businesses. The firm was named #219 on the 2017 Inc. 500 list of fastest-growing companies and the third-fastest growing technology company in Chicago by Built in Chicago.

Autoloans Company Lendbuzz Secures $ 30 Million in Funding (CTech) Rated: A

Boston-headquartered car financing service Lendbuzz Funding LLC has raised $30 million in financing, the company announced Tuesday. The round was led by BHI, the U.S. division of Israel-based Bank Hapoalim, by Viola credit, the growth and venture lending arm of Israel-based Viola Group, and by U.S.-based ConnectOne Bank.

The company, which currently offers its services in most U.S. states, says it reviews loan requests within 24 hours and transfers money immediately upon approval. Since its establishment, the company raised $43 million in both debt and equity funding.

Fifth Third Bank eBus offers free financial advice (The Blade) Rated: B

For the next week, a large bus operated by Fifth Third Bank will travel throughout Toledo, offering residents free money management advice and job-searching services.

The bus, called the Fifth Third Bank Financial Empowerment Mobile, or eBus, was located at the Lucas Metropolitan Housing Authority on Wednesday, and though it’s operated by Fifth Third, its services can be used by any residents no matter which bank they use, said Loretta Humphrey-Cruz, community development relationship manager.

PLI 23rd Annual Consumer Financial Services Institute (JD Supra) Rated: B

The third location of PLI’s 23rd Annual Consumer Financial Services Institute will take place in PLI’s San Francisco Conference facility and via concurrent live Webcast on June 25-26, 2018.  This will be the first time in many years that the Institute will take place in San Francisco.  Since the first location of this event in NYC on March 26-27 was well-attended, and the second location in Chicago on May 7-8 was sold-out, anyone interested in attending the program in San Francisco is encouraged to act quickly to register.

United Kingdom

Tech Entrepreneurs Launch Campaign to Reverse Brexit Vote (Forbes) Rated: AAA

Could Britain’s leading technology entrepreneurs derail Brexit? More than 80 innovators and investors from across the UK’s tech sector have launched a new group, Tech for UK, which will campaign for a meaningful vote on the final terms of the Brexit agreement that the British Government is currently negotiating with the European Union. Such a vote should give Britons the option to vote for the UK to remain in the EU, Tech for UK argues.

The group boasts a string of high-profile business leaders from the tech sector, including Martha Lane-Fox, best-known as the co-founder of Lastminute.com, Giles Andrews, one of the founders of peer-to-peer lending pioneer Zopa, and George Bevis, the CEO of Tide Bank. It also features leading venture capital and private equity investors, such as Simon Murdoch, the managing partner of Episode 1 Ventures.

Consumer credit made up the bulk of financial complaints last year (Peer2Peer Finance) Rated: AAA

The FOS annual report for 2017/2018 found consumer credit products, which includes some peer-to-peer lending as well as payment protection insurance, accounted for the most complaints at 36,349 last year, up 40 per cent.

The Ombudsman upheld 47 per cent of complaints, up from 45 per cent a year before.

There was also an eight per cent increase in complaints about unsecured loans to 6,909, while credit card complaints were up 15 per cent to 11,073.

How to invest in property without buying a home (City A.M.) Rated: A

Over the past few years, property-oriented investment companies have been coming in thick and fast, bolstered partly by the launch of the Innovative Finance Isa (IFISA).

The minimum investment can be as little as £10, which isn’t a patch on the huge deposits needed to buy a house (the average deposit in London is more than £90,000).

Robo-rumble: Will FCA scrutiny stop digital services moving further towards advice? (Money Marketing) Rated: A

The FCA reviewed seven firms offering online discretionary investment management services and three firms giving automated advice.

It found service and fee-related disclosures at most online discretionary investment management firms in its sample were unclear.

Some firms did not make clear whether their service was advised, non-advised, discretionary or non-discretionary. Others also compared their fee levels with their peers in a “potentially misleading way”. For example, they compared a non-advised, non-discretionary service with a discretionary service solely on a cost basis without explaining the difference in the nature of the service.

FIVE SPEAKERS JOIN ‘FUTURE OF FINTECH’ EVENT LINE-UP (Business Cloud) Rated: B

Five speakers from the world of FinTech have been confirmed for BusinessCloud’s The Future of FinTech event in London on 12 July.

Nicola Horlick, a former investment banker turned high-profile player in the peer-to-peer (P2P) lending market, is the headline speaker for the breakfast event.

China

How Will Ant Financial, China’s Fintech Giant, Be Impacted By New Regulations? (Forbes) Rated: AAA

Regulations are expected to be implemented on money market funds. Ant Financial’s main money market fund, Yu’e Bao, has been rated as much weaker than its 

GXChain (GXS) Review – A Blockchain-based Commercialized Data Marketplace (Chain Bits) Rated: A

With the proliferation of data on the internet, there are many pain points for individuals. Since you do not own your data, someone can sell you information and personal data without sharing profits. In addition, data is often scattered among multiple platforms, making it difficult to manage. Finally, data is difficult, if not impossible, for individuals seeks to monetize and earn from it. They don’t know how the blockchain could be applied in this scenario to better their lives.

GXChain solves these pain points by obtaining user consent before collecting and storing user data on a blockchain.

GXChain wants to be the data trading network that protects user privacy and offers copyright protection and usability at the same time. It has real-world applications in insurance, online lending, consumer loans and banks.

International

7 most innovative Fintech companies right now (Forex News Now) Rated: AAA

Stripe-is one of the most valuable Fintech startups. It was worth over $9 billion in 2016.

Ant Financial-has a market capitalization of $60 billion, which makes it the most valuable Fintech company in the world.

Atom Bank-has raised over $290 million in financing.

Robinhood-Valued at $5.6 billion, offers its customers a mobile wallet that allows trading shares and exchange-traded funds without paying commissions.

Lufax-is an online peer-to-peer lending platform. It matches borrowers with investors for a fee of 4% and is valued at over $18.5 million.

SoFi-is valued at over $4.4 billion.

Coinbase-has over 13 million users and makes more than $1 billion in revenue a year.

Where In the World Is Fintech Innovation? (Bank Innovations) Rated: AAA

China is also at the forefront of innovation. The government is actively cultivating fintech there.

Fintech companies like Qudian, LuFax, and ZhongAn (owned by Ant Financial), China’s first online-only insurer, are now emerging. Investment bank CLSA ranks ZhongAn as the sixth most valuable e-finance company in the world. The Chinese government has also designated development zones, such as Zhongguancun and Shenzhen, for innovation industries.

Source: Bank Innovation
Australia

Banks’ $ 220m bill for dudding customers to rise ‘significantly’ (The Canberra Times) Rated: A

Banks are set to refund “significantly” more than the $220 million already set aside for financial advice clients who were charged for services that were never provided, as institutions search their files for customers who were ripped off.

What you should look for when buying a partially renovated house (Domain) Rated: A

A recent survey by online lender State Custodians found 52 per cent of people would be open to a renovation project for their next purchase but only 19 per cent of people would be keen on tackling a full fixer-upper.

On the other hand, a quarter of respondents would prefer taking on a partially renovated home as a project, with Millennials in particular more open to the idea of buying a half-renovated house.

India

ICICI Bank also wants to be a fintech (The Ken) Rated: A

In mid-2017, B Madhivanan, the chief technology and digital officer of ICICI Bank, met Rohan Angrish, the chief technology officer of online lender Capital Float. Madhivanan had questions about online lenders’ small-ticket loans. Fintechs like Capital Float lend to underserved segments like kirana stores that banks don’t normally touch.

Asia

Funding Societies partners with UOB Malaysia to accelerate small business growth (Deal Street Asia) Rated: AAA

United Overseas Bank (Malaysia) Bhd has partnered with regional peer-to-peer financing platform Modalku Ventures Sdn Bhd (Funding Societies) to connect startups and small businesses with alternative financing solutions.

Through the partnership, startups and UOB Malaysia’s small business customers will be able to raise up to RM500,000 directly from individual and institutional investors using Funding Societies’ platform without the need to pledge collateral.

Fintech firms need support from banks: SBV (Vietnam News) Rated: A

The fintech (financial technology) sector is facing difficulties of capital mobilisation shortage, inadequate legal framework and banks’ hesitance in co-operation, said Lê Minh Hưng, Governor of State Bank of Việt Nam (SBV).

Hưng told the Việt Nam fintech forum 2018 held in Hà Nội on Wednesday that fintech and banks could contribute to expand financial universalisation, and promoting hunger eradication and poverty reduction while enhancing social equality and sustainable economic development.

Japan’s Gumi Games Founder Launches $ 30M Crypto Fund (Blockchain News) Rated: A

Japanese mobile games publisher gumi today launches a fund to invest in promising global cryptocurrency companies. With USD 30 million in initial investment secured, the venture capital fund is moving to open up the Japanese crypto startup market to international investors, honing in on a target that has, up to now, been a struggle to access and understand.

While the Japanese yen accounts for over 56 percent of Bitcoin volume, gumi believes that there is lack of understanding of Japan’s crypto market and the project’s leaders are keen to fill a void in the country that was also the first to legalize bitcoin.

He has helped to raise over USD 250 million to date for companies such as Bee Token, the Decentralized AirBnB and crypto lending platform Celsius Network.

Africa

Fintech in Africa: what investors are looking for (Fin24) Rated: AAA

According to EcoBank, more than 57% of all mobile money accounts globally can be found in sub-Saharan Africa, with the African fintech market set to grow from $200m currently to $3bn by 2020.

A recent study by McKinsey found room for growth in meeting unmet banking needs in Africa. These include borrowing, saving, and investing across the continent. South Africa alone is set to see an increase in banking revenues of $4bn over the next five years.

Kenya calls for regulation of fintech lenders (IT Web) Rated: A

A boom in  by fintech firms in Kenya has led to an increase in predatory lending practices, the country’s central bank governor said yesterday, calling for the sector to be regulated.

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.

Canada

One set of borrowers at greater risk are Canada’s 1.14 million small businesses, defined as companies that employ up to 99 workers. Statistics Canada reports that small businesses represented 98 per cent of all businesses, employed 70 per cent of workers, and generated 30 per cent of each province’s GDP on average. This category includes startups and high-growth firms, which represent Canada’s best hope for job creation and economic growth.

Fortunately, small businesses now have an alternative source for loans called peer-to-peer (P2P) lending. These online platforms match borrowers and investors directly and can provide loans cheaper and faster than traditional sources. How can that be? The answer is technology.

Fintech Select Records a Net Profit of $ 986k for Q1 Ending March 31 2018  (GlobeNewswire) Rated: A

Fintech Select Ltd. is pleased to announce that its financial statements for the Q1 ending March 31 2018 have resulted in a net profit of $986k. Q1 2018 Financial Statements and Management Discussion & Analysis (“MD&A”) have been filed on SEDAR.

Authors:

George Popescu
Allen Taylor

Wednesday March 7 2018, Daily News Digest

marketplace lending categories

News Comments Today’s main news: Citigroup may open a national digital bank. Marcus to open in UK, Goldman recruiting engineers. Robo.Cash posts 2017 results. Tera Funding to hedge P2P project finance risk. Today’s main analysis: Preparing taxes for LendingClub, Prosper investments. Today’s thought-provoking articles: Why institutional investors turn to marketplace loans. Branches are still disappearing despite Chase’s investment. Credit card […]

marketplace lending categories

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

Citigroup moving toward ‘national digital bank’ (Business Insider), Rated: AAA

Citigroup Inc is laying the foundation, through a growing network of mobile banking tools, to support the launch of a national digital consumer bank sometime within the next three years, its chief financial officer said on Tuesday.

Citigroup, the fourth-biggest U.S. bank by assets, had fewer than 700 U.S. branches at year-end compared with more than 4,000 at the three biggest banks, JPMorgan Chase & Co, Bank of America Corp and Wells Fargo & Co.

Citigroup, Kabbage Form Consortium on Fintech Cybersecurity (WSJ), Rated: A

Four financial companies including Citigroup Inc.C -0.48% and online lender Kabbage Inc. said Tuesday they have formed a consortium to address fintech firms’ cybersecurity risks, a sign of the industry’s growing links to traditional banks and insurers.

 

Why institutional investors are turning to marketplace loans (LendingClub), Rated: AAA

Greenwich Associates, an unaffiliated research company, conducted a study to better understand how marketplace lending is perceived and the current state of adoption within the institutional investing community.

Study Finding #1: Higher yields drive investment.

Sixty-seven percent of institutional investors cited the higher yield that marketplace loans tend to offer as their primary reason for investing.

Study Finding #2: Different investors use the asset for different things.

Because marketplace loans can be used for many different reasons, one of the first questions that investors may face when considering marketplace loans is how to categorize them. For over two-thirds of surveyed institutional investors currently invested in MPL (see chart below), they fall in the category of structured products, putting them alongside ABS and collateralized loan obligations (CLOs). Almost half of current investors reported viewing them as short-duration instruments and one-third as high-yield bonds.

Almost 40% of institutional investors who are not yet invested in marketplace loans said they didn’t know how to characterize them.

Study Finding #3: The path to institutional adoption will be driven by a few key catalysts.

Since mid-2017, however, each new issuance was rated by at least one rating agency, removing this obstacle and further broadening exposure to the asset class.

Investors deeply value data and analytics, which are key to understanding the credit profile of borrowers on marketplace lending platforms.

While the secondary market for marketplace loans is illiquid, there is a more active secondary market for the securitized offerings.

Study Finding #4: Marketplace lending is here to stay.

A majority of current investors, 52%, believe that marketplace lending will be a significant player in the financial system in the next 10 years. This is another meaningful vote of confidence in the industry.

New phase of growth and development for ‘Peer-to-Peer’ lending (IBS Intelligence), Rated: A

Among the investors participating in a new Greenwich Associates study, 30% of institutions not currently investing in marketplace loans (MPL) are watching the space or conducting research and due diligence on the asset class—a level of interest that suggests future institutional involvement is on the horizon.

The first marketplace loans were securitised in September 2013, and the trend has accelerated rapidly since then. Cumulative issuance now stands at $28.2 billion, with $4.4 billion issued in Q4 2017.

LendingClub and Prosper Tax Information for 2018 (Lend Academy), Rated: AAA

Note that investors who invest through a retirement account do not have to worry about tax reporting. Here at Lend Academy we believe there is a strong case for investing in marketplace lending through a product like an IRA.

Copied below is how LendingClub summarizes the tax treatment of investing in loans on the platform:

Generally, gains and losses from recoveries, sales or charge-offs related to LendingClub Notes are reported for tax purposes as capital gains or losses, rather than ordinary gains or losses. Generally, LendingClub Notes are considered capital assets because they are owned for the purposes of investment (similar to a stock or a bond). Generally, realized capital losses are first offset against realized capital gains. For individuals, any excess capital losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately). Capital losses in excess of this limit may be carried forward to later years to reduce capital gains or ordinary income until the capital losses are fully utilized.

Source: Lend Academy

I had $12.21 in proceeds (recoveries) from loans that were charged off which is offset by the cost basis of charged off loans, $204.33. This resulted in a net loss of $192.12.  On my 1099-B outlining long-term transactions I had proceeds of $109.64 with a cost basis of charged off loans of $1,469.02 resulting in a net loss of $1,359.39. The short and long-term transactions roll up on the 1099-B summary shared above (middle box). Ignoring taxes, I earned a profit of about $500 on my LendingClub account for the year.

Source: Lend Academy

Filing Taxes for a Prosper Account

Below is my 1099-OID which includes the net interest of $840.62 I received for the year.

Source: Lend Academy

My losses totaled $834.71 which means I earned a net return of around $100 for the year.

How would regulators react to Amazon-JPM checking partnership? (American Banker), Rated: A

The negotiations between Amazon and big banks like JPMorgan Chase and Capital One to offer a checking-account-like product pose significant questions for regulators about the e-commerce giant pushing further into the banking space.

Who owns the customer?

If the bank “owns the customer,” then “the rules governing banks protect the consumer,” said Karen Shaw Petrou, managing partner of Washington-based financial services consultant, Federal Financial Analytics. “If the bank doesn’t own the customer, then the rules — not just the consumer protection rules but the safety and soundness rules — are both different.”

What is Amazon’s role in the accounts?

If JPMorgan is “contracting with Amazon to do the marketing and customer intake, in that case, Amazon is subject to the regulation for those activities,” similar to other bank partnerships, said Brian Knight, director of the program on financial regulation and a senior research fellow at the Mercatus Center at George Mason University.

Who, if anyone, would regulate Amazon?

Another tricky question is which agency would regulate the partnership depending on how it is structured. For example, if Amazon were to act as a vendor to the bank, the e-commerce company would fall under a wide range of bank regulations involving partnerships and data security. However, if JPMorgan were to be a vendor to Amazon, those regulators would have limited influence over the deal.

Branches are still going away, despite Chase’s flashy investment (Tearsheet), Rated: AAA

Earlier this year JPMorgan Chase announced it’s investing $20 billion in 400 new branches and last week at the company’s Investor Day CFO Marianne Lake said 75 percent of its deposit growth comes from customers that visit its branches. Research published last month by Novantas shows 60 percent of Americans would still prefer opening a checking account at a branch than on digital channels and a September report by Deloitte similarly found 56 percent of people prefer to open bank accounts in branches (based on a survey of 3,000 consumers who had opened a deposit wealth management or consumer loan between January 2016 and May 2017).

JPMorgan Chase may be opening hundreds of new branches, but that hardly suggests every bank will follow.

Source: Tearsheet

Legacy vendors have been losing revenue
Global financial services and ATM producer NCR has been watching revenue fall over the past year where ATM sales and software licenses are concerned as revenue from services and cloud has shown a slight uptick. Diebold Nixdorf, another manufacturer of connected commerce and self-service products in the banking and retail industries, reported a 9.6 percent decline in revenue from banking sector services to $3.4 billion from 2016 to 2017.

Reimagining Lending Risk Management for the Digital Era (Lend Academy), Rated: A

As of February 2018, US bank lending of various kinds – auto loans, commercial credit, mortgages, credit cards or small business lending – constituted $11.7 Trillion, representing around 60% of US GDP and 70% of commercial banking assets.

A tale of two startups with ‘superstore’ ambitions: Robinhood and Cadre (TechCrunch), Rated: A

“If you think about Amazon, they took the book model, built brand equity, trust, credibility and now they are a superstore for any retail product,” Cadre’s co-founder and CEO Ryan Williams told attendees at an industry event in San Francisco last week. “We’re doing the same for the investments world.”

Robinhood’s co-founder and CEO, Vlad Tenev, speaking at the same event later in the evening, had much the same messaging. “Five years from now,” Tenev told the crowd, Robinhood will be a “full service financial institution” with every product one can find at a “local bank branch and more.”

‘PIN on glass’ is still a novel concept for U.S. retailers (Tearsheet), Rated: A

Though common in Europe, chip cards with PIN numbers still haven’t caught on in the U.S. But a mobile chip-and-PIN terminal could nudge more retailers to get on board.

TransUnion Introduces New IDVision Alerts to Mitigate Rise of More Sophisticated, Emerging Risks (Nasdaq), Rated: A

A new TransUnion (NYSE:TRU) analysis found that the growth in outstanding balances of suspected synthetic fraud in the credit card market is slowing in large part due to recently focused efforts by issuers to prevent such instances of fraud.

Outstanding suspected synthetic fraud balances rose 5.2% between Q4 2016 ($276.01 million) and Q4 2017 ($290.37 million). This was a far smaller percentage rise than what was observed the previous year when such balances rose 68.5% between Q4 2015 ($163.77 million) and Q4 2016. Despite the slowing of fraud balance growth in the credit card space, TransUnion found that the incidence of such fraud on credit applications remains similar to last year, moving from 0.59% at the end of 2016 to 0.60% in 2017.

While the growth of synthetic fraud in the credit card market is slowing due to proactive measures being taken by issuers, outstanding balances of suspected synthetic fraud identities increased 6.6% to $885.42 million in Q4 2017, up from $830.25 million in Q4 2016 for auto loans, credit cards, personal loans and retail cards combined.

TransUnion today introduced 25 new IDVision Alerts and data enhancements to its current collection of alerts, including new alerts for possible synthetic fraud, new or recently created identities and social security numbers that may be compromised. In total, TransUnion IDVision Alerts now provide more than 65 notifications to businesses about high risk, suspicious identities and other potentially fraudulent activities.

 

Varo Money Helps Americans With High-Yield Savings Accounts & SMS Alerts (Varo Email), Rated: A

Mobile banking startup Many Americans Are Struggling to Achieve Good Financial Health

A recent survey of more than 1,000 U.S. adults age 18+, conducted by Propeller Insights on behalf of Varo Money, determined that 85 percent of American adults sometimes feel stressed out about money, and a full 30 percent feel stressed out about money constantly.

  • About 1 in 5 Americans (19 percent) are living paycheck to paycheck
  • More than two-thirds of Americans (69 percent) report having had to dip into their savings to make it to the next payday at least once in the past two years
  • 55 percent of millennials have dipped into their savings in the past few months
  • About a third (31 percent) of millennials understand what their finances will look like from month to month only “somewhat” or “not at all”

Helping Customers to Make More from Their Money

Varo’s 1.25% APY Savings Accounts have no fees or minimum balances and offer a rate that is more than 60x the average rate offered by traditional banks. According to Varo’s two new features are part of its continued expansion of features and focus on financial health for Varo customers:

  • 1.25% APY High-Yield Savings Account: All Varo customers can easily open an online savings account with a few taps through the Varo app and receive a rate of 1.25% APY. Customers can access funds 24/7 and easily transfer money from their checking into savings. There are no fees or minimum balances required.
  • SMS Alerts: Customers can receive notifications based on aggregated financial activity across all linked accounts that let them know how they’re doing on income, saving, and if they are at risk of overspending so they can stay on top of their money effortlessly. Standard text messaging and/or data rates from the wireless service provider may apply.

Startup, Rentlender Revolutionizes the Rental Market, Offering Finance Options for Renters (PR Newswire), Rated: A

According to a Harvard University housing report, over 110 million Americans, or about 36 percent of households, now live in rental units — an increase of 9 million renters over the past decade — the largest 10-year gain on record.

Unfortunately, other records are being smashed too: the number of cost-burdened renters — that is, households paying more than 30% of their income on housing — jumped to 21.3 million. And a record 11.4 million Americans are spending more than half their income on rent. The news is even worse for New Yorkers, who last year spent 65.2%, or two-thirds of their total income, on rent2.

With upfront rental deposits and fees at move-in costing over $3,000 (more if you live in New York City, where comparable costs typically top $20,000); there has never been a greater need for finance options for renters.

Beginning today, New York City-based startup Rentlender is partnering with Upstart to provide modern financing solutions for renters.

Renters must meet a minimum set of requirements to qualify for a loan including having a minimum credit score of 620 and a maximum debt-to-income ratio of 45%.  All loans are originated by Cross River Bank, an FDIC insured New Jersey state chartered commercial bank, and lending terms and fees are as follows:

  • Loan amounts: $1,000 to $50,0003
  • Loan duration: 3 or 5 years
  • Annual percentage rate: 7.436.25% to 29.99%4
  • Origination fee: 0% – 8% of loan amount
  • No prepayment fee

Renters can use these loans to ease the burden of renting in a number of ways:

  • Upfront costs – Pay first month, last month, security deposit and broker fees
  • Individual Months of Rent – Finance one or two months rent
  • A Full Year’s Rent – Finance a full year’s rent in addition to up-front costs

The loan application process is Powered by Upstart and provides renters with a fast, easy and paperless application process:

  1. Check Your Rate –  With a quick form, renters can see the loan options for which they qualify.
  2. Submit an Application – Complete the application online and indicate the bank account where funds should be sent.
  3. Accept Your Loan – Upon approval, log in and digitally sign loan documents. Funds can be available as quickly as the next business day.

Crowdfunding enters the New York City real estate scene (Born2Invest), Rated: A

These two problems are big hurdles for investors, but StraightUp is offering a solution to these woes. Crowdfund Insider notes that it is a new real estate crowdfunding platform that provides backers and investors an “unbeatable opportunity” on properties in New York City.

Capital markets tech firm Capitolis snagged $ 29 million in VC (New York Business Journal), Rated: A

Who gets: Capitolis, a New York-based technology provider for the capital markets, secured new funding.

Amount raised: $20 million in series A financing, plus $9 million in seed funding.

Credible Appoints Jobe Danganan as General Counsel and Corporate Secretary (BusinessWire), Rated: B

Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Jobe Danganan as general counsel and corporate secretary, effective immediately.

GDS Link to Exhibit at LendIt Fintech USA 2018 (PRWeb), Rated: B

GDS Link, a global provider of credit risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending for both consumer and small business, point of sale retail finance, alternative financial services, credit card, auto and leasing, will be attending LendIt Fintech USA 2018, April 9-11 at the Moscone West in San Francisco.

Upgrade Inc. Named a 2018 ‘Best Place to Work in the Bay Area’ (PR Newswire), Rated: B

Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, announced that it has been named a ‘Best Place to Work in the Bay Area’ finalist in the small company category by the San Francisco Business Times and Silicon Valley Business Journal.

United Kingdom

Goldman Sachs is recruiting at least 6 people for the UK launch of its online lender Marcus (Business Insider), Rated: AAA

Goldman Sachs is recruiting engineers in London to help build and launch its online lender, Marcus, in the UK.

Credit Card Customers Prepare for Debt Crackdown (Market Oracle), Rated: AAA

The Financial Conduct Authority (FCA) has, as of this month, given credit card providers six months to adhere to the new rules that tackle the issues surrounding persistent debt*.

From September 2018, credit card providers must review the last 18-month history of a borrower’s repayment records, if they are in persistent debt, and assess whether they are subject to the new rules.

Source: Market Oracle

Investors flock to Assetz Capital IFISA (P2P Finance News), Rated: A

ASSETZ Capital has had almost 3,000 investors start the process of setting up an Innovative Finance ISA (IFISA), with those who have already started investing putting an average of nearly £12,000 into the product.

Business borrowers should think outside the bank (Insider.co.uk), Rated: A

SMEs are the backbone of the Scottish economy, making up 99% of the business population and accounting for more than half of all private sector employment.

The unemployment rate in Scotland rose to 4.5% in the final three months of last year, slightly higher than the rate of 4.4% for the UK as a whole, but there are grounds for optimism. Independent forecasts suggest that growth in the Scottish economy will be slightly higher than last year.

According to research from the British Business Bank , published on 20 February, net bank lending remained “relatively flat” in 2017, while P2P business lending volumes rose by 51% to almost £1.8 billion.

Why SME banking may spawn the industry’s next big winners (Euromoney), Rated: A

Small businesses, which account for more than 99% of private businesses in the UK and in aggregate contribute more than half of turnover and employment, are particularly poorly served by big banks.

The big five high street lenders are built for serving either retail customers or medium-size and larger companies with collateral to back three-year and longer term loans that the banks like to hawk to companies that do not really need them as a way to sell associated risk management.

Small businesses want short-term, flexible working capital with no punishing fees for low usage or early repayment. This is expensive for banks to underwrite – especially for new startups and sole traders lacking several years’ worth of financial history – and to administer. Few small businesses want the interest-rate hedging and FX facilities that banks like to bundle up with term loans for medium-size and larger corporate customers.

The market is at last now producing non-bank competitors looking to provide the right kinds of services and products for small businesses – ones that give these challengers a shot at the £2 billion of annual revenue the British Bankers Association suggests SMEs now pay for financial services.

Wealth Wizards launches AI robo system (FT Adviser), Rated: A

Wealth Wizards, the robo-adviser majority owned by LV, has launched an artificial intelligence service which will learn how advisers serve their clients and replicate that house view.

China

Chinese IPOs In US Continue To Disappoint Investors (China Money Network), Rated: AAA

Industry watchers foresee a 25% to 30% increase in the the number of Chinese IPOs in the U.S. in 2018, versus 2017. That’s a significant gain given that the number of Chinese IPOs in the U.S. in 2017 was more than double the number in 2016.

Peer-to-peer lending company Qudian Inc. raised more than a billion dollars when it went public on the New York Stock Exchange in last October. Today the stock is down just over 50%, according to data from Dealogic, a loss of more than US$500 million for investors.

The average PE ratio for profitable Chinese companies listing in the U.S. reportedly rose to 50 in 2017, versus 31 a year earlier, driven in part by the marketing efforts of the three banks behinds most of the IPOs, Morgan Stanley, Credit Suisse AG, and Goldman Sachs Group Inc.

Another problem has been the Chinese government’s crack down on online consumer lending. This has hurt the businesses of financial technology companies, which made up the largest group of IPOs in 2017.

European Union

Online Lender Robo.Cash Posts 2017 Stats (Crowdfund Insider), Rated: AAA

Robo.cash outlined the results of its first year in operation on the European P2P lending market: 2,000 investors from the EU and Switzerland invested over €3M in the issue of 330,000 short-term PDL-loans in Kazakhstan and Spain. The average inflow of investments is €240,000 with 150 new investors joining the platform monthly.Robo.Cash views the results and platform dynamics as proving the growing demand for complex automated solutions in the global alternative fintech.

The European investors financed 330 thousand short-term PDL-loans (Financial IT), Rated: A

The European P2P-platform Robo.cash was launched in Latvia on February 21, 2017. It has achieved to attract over €3 million and 2.000 investors from 29 European countries (the EU and Switzerland) in one year. The average inflow of investments is €240 000 with 150 new investors joining the platform monthly.

International

The Pro-Growth Magic of Inflation Anchoring: Eco Research Wrap (Bloomberg), Rated: AAA

Credit-constrained industries grow faster in countries with well-anchored inflation expectations, based on an IMF analysis of data covering 22 manufacturing industries for 36 advanced and emerging-market economies between 1990 and 2014. It seems to be the anchoring – not the level – that matters for growth. So while most advanced economies angle for 2 percent, there’s nothing magical about that number.

Killing zombies

The share of global zombie firms – low-productivity companies that struggle to meet their interest payments – has more than tripled in the past two decades, climbing to 2 percent of companies in 2016 from 0.6 percent in 1996. Early, incomplete data for 2017 indicate that the may finally be disappearing, suggesting that climbing interest rates are making it harder for the laggard firms to hang on.

Websites for Bitcoin (BTC) Borrowing and Lending (Hade Platform), Rated: A

1) Bitbond

They have more than 100,000 happy borrowers and investors. The peer to peer Bitcoin borrowing community has offered loans to more than 2500 borrowers. The loan application process is simple, and the loans can be received within one hour. Investors receive up to 13% interest on the loans they give, with some investors having a history of loaning to more than 100 borrowers. The duration of the loans, which are generally to help finance small businesses, range from 6 months to 3 years. Bitbond has users from more than 120 countries, and has an investment volume above $1million.

2) Btcpop

With a large user base above 20,000, from more than 60 countries, Btcpop holds a volume above $1million.

3) BTCjam

BTCjam has more than 100,000 users from more than 200 countries. The website supports peer to peer lending and has a volume of more than $13 Million BTC in their holding.

Australia

RateSetter CEO: Comprehensive credit reporting and open banking to help Australia play catch-up (mozo), Rated: AAA

For many Australians hearing the words ‘credit history’ may well elicit a shudder down their spine – especially if they’re looking at taking out a finance option such as a personal loan, credit card or home loan. But in just under four months that could well change, with the impending implementation of mandatory Comprehensive Credit Reporting (CCR).

From July 1, the big four banks will be required to have at least 50% of their credit data – both positive and negative – available to be shared, which Daniel Foggo, Australian CEO of peer-to-peer lender RateSetter, suggests will help Australia catch up to the rest of the world.

Promontory says AI for banking compliance ‘a long game’ (Financial Review), Rated: A

The inaugural chairman of the Australian Prudential Regulation Authority says it will take “massive investment” before regulators let banks use artificial intelligence to meet their multimillion-dollar compliance obligations.

While AI is being used to deliver personalised banking experiences to customers via “chatbots” and helping bank staff make more customer-centric decisions, the technology which Promontory thinks has the capacity to cut sky-high compliance costs is still a work in progress.

The company is combining its regulatory prowess with IBM’s artificial intelligence technology known as “Watson” to cut costs, but also to improve accuracy for regulators.

Verrency, a global Australian payments platform and fintech marketplace, has been accepted into the latest fintech cohort of Silicon Valley-based technology accelerator Plug and Play Tech Center.
India

Women are Looking at Alternative Forms of Investments and Tech is Here to Help (Entrepreneur), Rated: AAA

More and more women are taking charge of their financial decisions and moving beyond the usual investment routes and looking at P2P lending, mutual funds as options.

Rajat Gandhi, Founder and CEO, Faircent, believes that gone are the days when women investors looked only at traditional tools of investments as part of their financial planning. “These ambitious go-getters are increasingly ditching the traditional tools of savings and investments and exploring the relatively new and more lucrative forms of investments,” said Gandhi.

At Faircent, 14% of the lenders registered are women and they account for 21% of the total amount disbursed through the platform.

“Female lenders on our platform are earning an average NAR of approx. 20% p.a proving that women tend to invest wisely; know how to take calculated risks, can meticulously diversify their investment portfolio across different borrowers and hence, end up enjoying better returns,” asserted Gandhi.

Meanwhile, Keerti Kumar Jain, founder and CEO, of Anytime Loan, shared the following statistics from their platform regarding female lenders.

Blockchain: a new technology or a new kind of enterprise? (YourStory), Rated: A

Let us imagine a new kind of enterprise that is designed to create value through a self-regulating method that is both decentralised and auto-incentivising. This is in direct contrast to the conventional top-down hierarchical, command and control enterprise.

We will do this in a two-step process.

First, we set up an initial monetary policy (“the white paper”) in the form of a finite number of digital tokens that represents the overall value of the enterprise. This also creates the requisite economic scarcity to start with that is essential to this approach.

Second, we set up clear encodable rules for how the participants who generate value in the enterprise will “earn” in tokens. This incentivises the participants to “do the right thing” to generate value for the enterprise, which in turn increases the value of the tokens.

Distributed ledgers

One basic requirement for setting up such an enterprise, is the use of a transparent immutable Distributed Ledger to establish trust between all participants of the enterprise.

Examples of the new kind of enterprise

A Distributed P2P Lending Network in which Lenders and Borrowers are joined by a network of Verifiers, Hosting providers and Developers, all incentivised to build, maintain and use the distributed lending platform that is hosted on a blockchain technology.

Asia

Tera Funding sets out to hedge risks of P2P project finance (The Korea Herald), Rated: AAA

The high return — often at above 10 percent — that the instrument promises to the lenders, triggered a rush into the sector, and roughly a third of loans on P2P platforms went into project financing as of September.

As such, the default rate of the average local project financing P2P platform operators is relatively higher at 1.7 percent, over threefold that of other P2P platforms, according to an estimate by the Financial Services Commission.

The returns are roughly estimated 8-15 percent of investment per a year, without tax deducted, depending on the level of risk.

Fintech lenders hit back at OJK (The Jakarta Post), Rated: A

Indonesia’s financial technology (fintech) players were in shock when they found out that their main regulator, the Financial Services Authority (OJK), had some disconcerting views about their businesses despite having a relatively close relationship.

Executives of peer-to-peer (P2P) lending fintech firms on Tuesday voiced their concerns about a controversial statement from OJK chairman W…

Funding for RedDoorz, Hotelogix, and 23Mofang (Tech in Asia), Rated: A

Online lender Finova Capital secures US$6 million Sequoia Capital backing (India). The startup provides loans to small businesses in India’s tier-2 cities and rural areas. Finova will use the funding for technology development and hiring talent. Sequoia India made its investment in two tranches, the first taking place late last year.

Paytm Mall in talks with SoftBank to raise US$600 million (India).

Canada

Katipult Named Finalist For Most Promising Partnership Award at Lendit Fintech Industry Awards (Crowfund Insider), Rated: B

Canadian fintech Katipult announced last week it has been nominated, alongside Polymath Inc., for the Most Promising Partnership Award at the second annual Lendit Fintech Industry awards in April. According to Katipult, the partnership will be competing against some of the world’s finance and fintech giants including partnerships involving Goldman Sachs, Macquarie Group, Swedbank, and Lending Club.

Authors:

George Popescu
Allen Taylor

Friday November 3 2017, Daily News Digest

p2p lending volumes

News Comments Today’s main news: Kabbage sued over true lender doctrine. Orchard to launch online lending industry page on Bloomberg terminal. KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-6. DBRS assigns provisional ratings to SoFi Consumer Loan Program 2017-6. RateSetter changes approach to property loan defaults. Lendy breaks another record. MarketInvoice enters business loan market. Today’s main analysis: FT Partners’ […]

p2p lending volumes

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

Small Business Borrower Sues Kabbage (PYMNTS), Rated: AAA

A small business (SMB) in Massachusetts borrowing funds via marketplace lender Kabbage has sued the platform, igniting new debate in the conversation over the definition of a “true lender,” according to reports in the National Law Review on Tuesday (Oct. 31).

The small business that sued the parties is reportedly arguing that Celtic let Kabbage “rent” that bank charter to originate loans with excessive interest rates, despite Kabbage being the “true lender,” because Kabbage, not Celtic, bears the risk of loss. The plaintiffs are using state usury and consumer protection statutes, the publication said, as well as the federal RICO statute and Lanham Act.

Orchard to Launch Online Lending Industry Page on the Bloomberg Terminal (PR Newswire), Rated: AAA

Orchard Platform’s online lending industry data and insights will be made available to Bloomberg terminal subscribers, providing a wealth of information on an asset class that offers a number of potential investment opportunities.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-6 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”). This is a $591 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-6

Class Preliminary Rating Initial Class Principal
A-1 AA+ (sf) $315,000,000
A-2 AA+ (sf) $175,000,000
B A (sf) $75,000,000
C BBB (sf) $26,000,000

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-6 LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-6 LLC (SCLP 2017-6):

— $315,000,000 Class A-1 Notes at AA (sf)
— $175,000,000 Class A-2 Notes at AA (sf)
— $75,000,000 Class B Notes at A (sf)
— $26,000,000 Class C Notes at BBB (sf)

FinTechs Taking Larger Share of Personal Loan Market While Increasing Portfolio Risk-Return Performance (Globe Newswire), Rated: AAA

FinTech lenders continue to gain market share in the personal loan space while maintaining their portfolio risk-return performance. Results from TransUnion’s “Fact versus Fiction: FinTech Lenders” study were released today during the Digital Lending + Investing Conference in New York.

To better understand the personal loan market, TransUnion studied unsecured personal loan originations over the past several years, as well as more detailed portfolio performance between 2014 and 2016. The analysis differentiated between those loans issued by banks, credit unions, FinTechs and traditional finance companies to compare performance across lender types. The study found that the balance share of these loans originated by FinTechs had dramatically risen in recent years. At the end of 2016, FinTechs represented 30% of all personal loan balances, up from about 4% in 2012 and less than 1% in 2010. This trend continued through the first six months of 2017, with FinTechs now representing 32% of personal loan balances.

Share of Originated Personal Loan Balances

Timeframe/Lender Banks Credit Unions FinTechs Traditional Finance
2017 (Through June) 29 % 24 % 32 % 15 %
Full year 2016 26 % 23 % 30 % 21 %
Full year 2015 27 % 22 % 28 % 23 %
Full year 2012 35 % 32 % 4 % 29 %

As part of this study, TransUnion developed a coarse risk-return metric*. While loans provided by FinTechs experienced higher delinquencies than competitors, specifically within the lower credit risk tiers, TransUnion’s study found that they generated effective portfolio risk-return ratios that exceeded those of banks and credit unions. As of Q2 2017, FinTechs averaged an 8.7% return compared to 6.7% for banks and 6.3% for credit unions. Traditional finance companies average the highest return at 11.5%.

The study demonstrated how FinTechs focus their originations in the near prime and prime risk tiers.  As of Q4 2016, 59% of FinTech balances originated were in those two risk tiers. This is slightly higher than the 57% rate in Q1 2014.

Personal Loans Continue to Grow

The study also observed general personal loan trends. Personal loan total balances and consumer participation have both grown considerably. As of Q2 2017, 16.1 million consumers possessed a personal loan, compared to 14.8 million in Q2 2016 and 13.1 million in Q2 2015. Just five years ago in Q2 2012, approximately 9.8 million consumers had a personal loan. Total outstanding balances have risen from about $45 billion in Q2 2012 to $106 billion in Q2 2017.

While conventional wisdom holds that personal loan borrowers fall in the subprime risk bucket, TransUnion data through Q2 2017 show that personal loan adoption is greatest in the near prime (26%) and prime and above (49%) risk levels. Subprime constituted only 25% of such loans.

The most recent TransUnion data show that the number of lenders issuing personal loans has decreased in recent years from 7,245 in 2012 to 6,896 in 2015 and 6,680 in 2016. However, the number of lenders issuing large volumes of personal loans (at least 10,000 annually) has nearly doubled in the last 5 years from 68 in 2012 to 128 in 2016.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

October was another very active month for the FT Partners team as we announced seven significant FinTech transactions. We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    6th Avenue Capital Secures $ 60 Million Commitment For Merchant Cash Advance Funding (AltFi), Rated: A

    6th Avenue Capital, LLC (“6th Avenue Capital”), a provider of small business financing solutions, announced today its securement of a $60 million commitment from a large institutional investor. The investor made their commitment based on 6th Avenue Capital’s industry-leading underwriting, compliance standards and processes. 6th Avenue Capital will draw from this commitment to offer merchant cash advances to small businesses through its nationwide network of Independent Sales Organizations (“ISOs”) and other strategic partnerships, such as banks and small business associations.

    Success of CFPB data-sharing guidance relies on how it is enforced (American Banker), Rated: A

    This month, the Consumer Financial Protection Bureau took an important step toward making that potential a reality with its release of consumer-authorized data-sharing and aggregation principles. In the principles, the bureau reiterated consumers’ right to share data, recognizing that connectivity is the underlying magic fueling the consumer fintech revolution. The guidelines will promote innovation, competition and consumer control.

    Data sharing often requires consumers to provide their bank account usernames and passwords to third parties. In the guidance, the CFPB clarified that granting consumers access to their data does not necessarily mean sharing login credentials. At the same time, the bureau made it equally clear that if banks and others want to prevent the sharing of credentials, they need to find another, more secure way to provide access. Both banks and data aggregators should have an incentive to eliminate the use of credentials.

    Third, banking regulators could update their third-party vendor risk management guidelines to clarify the kinds of due diligence banks are required to conduct on parties with whom they share data.

    Elevate Credit Third Quarter 2017 Earnings Release Available on Its Investor Relations Website (CNBC), Rated: A

    Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”), today announced financial results for the third quarter ended September 30, 2017. Elevate has posted its third quarter earnings release to its Investor Relations webpage at 

    Fintech Brokerage Robinhood Launches Spotify-Like Web Platform (Benzinga), Rated: A

    Robinhood, the fintech brokerage that offers commission-free trading through a mobile app, announced Wednesday it’s launching a web platform.

    Bhatt says the web trading platform is primarily geared towards informing people who are interested in investing about the stock market. However, the company faces an interesting product design challenge, in that about half of its users have invested previously on another platform.

    LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q3 2017 (Business Insider), Rated: A

    LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the third quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

    Mortgage Category

    #1 Winner:
    Busey Bank

    Personal Loans Category

    #1 Winner:
    Best Egg

    Auto Loans Category

    #1 Winner:
    RefiJet

    Online lenders shrug off scandals to increase US market share (Financial Times), Rated: A

    The online lenders set up to upend US retail banking in the wake of the financial crisis are still expanding in spite of scandals and setbacks at some of the biggest names in the business.

    Financial technology groups originated $15bn of personal loans in the first half of the year, according to figures published on Thursday by TransUnion, the credit bureau whose database covers the borrowing habits of 220m consumers.

    That was almost a third of the total US market for new personal loans — a bigger share than banks or credit unions or other traditional consumer finance companies — and compares with just 4 per cent in 2012 and 28 per cent in 2015.

    R3 to take on Ripple with cross-border payments blockchain (American Banker), Rated: A

    R3 is working with 22 of its member banks to build a real-time, cross-border payments solution on Corda, the consortium’s “blockchain inspired” distributed ledger.

    The banks include U.S. Bank, TD Bank, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank and Woori Bank, R3 said Tuesday.

    What type of data is fair in credit models? (American Banker), Rated: A

    It’s long been a mantra in the fintech community: Traditional underwriting models that rely heavily on conventional credit scores leave out people who haven’t built up a credit history. A percentage of these people are creditworthy, but without a history to go on, the credit bureaus haven’t created profiles of them yet.

    To assess whether unscored people can repay loans, lenders are increasingly looking at “alternative data” — information that comes from someplace besides a traditional credit bureau that can help predict how a potential ….

    Foundation Capital Leads CoverWallet Series B Financing (Foundation Capital), Rated: A

    Which is why we’re excited to have led the Series B for CoverWallet, an online insurance broker for small businesses which is upending the industry.

    Small-to-medium business (SMB) insurance is a profitable, but highly fragmented $100 billion/year market. At the present, SMB insurance is sold through 40k+ brick-and-mortar insurance brokers, which employ 500k+ agents and move 99% of premiums. The typical SMB insurance application has 27 pages, and is completed while having “the talk” with the agent, which will include many upsell & cross-sell attempts. The typical SMB insurance quote takes 7-10 days. For SMB owners, this process is time consuming and painful.

    Affirm Now on Apple and Android (NewsCenter.io), Rated: A

    Affirm, a popular web service that allows users to buy online and pay off their purchases in fixed monthly payments, has launched their Android and iPhone app.

    Remitly Raises up to $ 115M in Series D Funding (FINSMES), Rated: A

    Remitly, a Seattle, WA-based independent digital remittance company, is to raise up to $115m in Series D funding.

    The financing – subject to applicable third party and regulatory approvals – will be led by Naspers’ fintech investment division PayU, a global online payment service provider, with participation from existing investors Stripes Group, DFJ, and DN Capital. In conjunction with the funding, Laurent le Moal, PayU CEO, will join Remitly’s board of directors.

    New, New Real Estate Crowdfunding Platform (Business Insider), Rated: A

    When you see prominent investors such as George SorosLarry Silverstein and Goldman Sachs participating in the real estate crowdfunding business – it means something. So, let’s follow the smart money. The real estate crowdfunder that everyone is talking about now is CityVest, which claims a top pedigree of founders and investors. And CityVest.com is living up to its mission – Smarter Real Estate Investing.

    CityVest provides wealthy individuals with online access to institutional real estate funds and the higher rates of return they generate.

    Which States Do Home Buyers Want to Move to—and From? (Realtor.com), Rated: A

    Prospective home buyers overwhelmingly want to head south, according to a recent LendingTree analysis. The online loan marketplace looked at the 1.5 million mortgage requests it received from October 2016 to October 2017 to come up with the results.

    Which state do home buyers most want to move to?

    But of all the Southern states, which was the most desirable? Drumroll please … that would be Florida. The Sunshine State was the top destination for folks from 18 states, or about 9.14% of those looking at loans on LendingTree.

    Which state do home buyers most want to leave?

    Vermont residents were the most likely to want to hightail it out of the Green Mountain State. Despite its popular ski resorts, only about 76% of locals were looking for in-state mortgages.

    Which state do home buyers most want to stay in?

    Texans were the most happy of any state’s residents to stay put. About 92.5% of folks looking for potential mortgages wanted to stay within Texas, according to LendingTree’s report.

    Real Estate Investing For The Tech-Minded (Forbes), Rated: A

    So as a techie, how does one go about evaluating not just the real estate but also the platform offering the investment?

    That’s why it’s critical for real estate investing platforms to be willing and able to answer questions from prospective investors — even those would-be investors without a ton of prior real estate knowledge. These companies should take a page out of Amazon’s book and develop a customer obsession.

    Be leery of any cliché claims of leveraging big data to automate underwriting. Underwriting is as much science as it is intuition/experience, and the best commercial real estate professionals have a carefully tailored mix of both.

    In the long run, the track records of the platforms will speak loudest.

    Steven Dupree was SoFi’s first marketing executive and VP of marketing for 3 years. He and his growth-oriented team took SoFi from originating 10 loans a day to over 1000.

    The three most basic ingredients for being able to succeed in FinTech are:

    1) “Good enough” technology

    2) Tremendous capital markets expertise

    3) Some sort of customer acquisition strategy

    Companies like Experian and Equifax know if you have loan balances, and specifically they know if you have student loan balances. We sent pre-screened offers to prospects with outstanding student loan debt through physical mail about how SoFi could help them with those loans.

    Plan Would Take Payday Lending Interest Rates From As High As 600% to 28% (StateNews.org), Rated: A

    Several community groups rallied to show their support for a bipartisan bill they think is needed reform against predatory lending.

    The bill would cap the interest rate of payday lenders at 28% and close any loopholes around that cap.
    <

    Filene, QCash Financial, CFSI Offer Free Webinar on the Benefits of Small-Dollar Lending (BusinessWire), Rated: A

    QCash Financial, a CUSO providing automated, cloud-based, omni-channel small-dollar lending technology for financial institutions, announces it will co-host a free webinar with Filene Research Institute and the Center for Financial Services Innovation to discuss the opportunities for credit unions in offering small-dollar lending on November 14.

    During the webinar, QCash Financial will address our industry’s impact and opportunity to deliver small dollar loans. QCash Financial, the Center for Financial Services Innovation and Filene will collaborate to discuss the omni-channel lending solution that serves members in search of small, short-term unsecured loans.

    Registration information can be found at filene.com. The webinar is scheduled from 2 p.m. CST / 12 p.m. PST until 3 p.m. CST / 1 p.m. PST.

    Ken Rees, CEO of Elevate, to Speak at Dallas Techweek Conference (BusinessWire), Rated: A

    Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will speak on a panel session at Dallas Techweek on Thursday, November 2, at 9:15am CT. The panel will focus on data intelligence, breaking down the hype around data science, and exploring ways companies can turn that hype into actionable business intelligence.

    Rees will be joined by local tech talent and founders, including Clarisa Lindenmeyer, Chief of Strategy/Partnerships at Launch DFW; Sravan Ankaraju, President of Divergence.Academy, CEO of Divergence.AI; Dave Copps, CEO of Brainspace; and Steve Hebert, Co-Founder & CEO of Nimbix, Inc.

    Elizabeth Warren Warns: Navient Deal A Danger To Student Loan Borrowers (International Business Times), Rated: A

    U.S. Sen. Elizabeth Warren warned Wednesday that the nation’s largest student loan servicer has positioned itself to stealthily strip consumer protections from unwitting borrowers across the country. In an interview with International Business Times, she also said the loan servicer, Navient, should not be permitted to be a government contractor handling student loans on behalf of the U.S. Department of Education.

    The Massachusetts Democrat was sounding an alarm about Navient’s recent acquisition of online lender Earnest. She said the transaction opened up the possibility that the company will try to boost its profits by selling debtors on refinancing their current federal student loans with the company’s own private loans — the kind that she said to do not necessarily permit income-based repayment options.

    BrightPlan Launches ‘Hybrid-Robo’ Advisory Service (Plan Adviser), Rated: B

    A new robo-advisory platform has hit the market, under the moniker BrightPlan.

    Important to note, according to the firm, clients are not required to invest through BrightPlan in order to receive financial planning advice. They can manually input external account balances or link external accounts from more than 10,000 financial institutions to BrightPlan, which will monitor goal progress and provide advice to stay on track.

    Will a robot take your job? These startups hope so (PitchBook), Rated: B

    Avant wants to replace loan officers

    Avant has created an online lending platform that uses Big Data and machine learning algorithms to streamline the loan decision process helping borrowers consolidate debt through personal loans. The company, led by CEO and co-founder Al Goldstein (pictured), raised $325 million in Series E financing back in September 2015, with General Atlantic leading a round at a $2 billion valuation.

    Avant isn’t alone, with competitors like publicly traded Lending Club (NYSE: LC) and VC-backed Kabbage using a similar strategy: automating the credit creation process.

    Dreiling and Stamets join Attune (Royal Gazette), Rated: B

    Two new appointments have been made at data-enabled platform Attune, the company jointly created last year by American International Group, Hamilton Insurance Group and Two Sigma Investments.

    Martha Dreiling takes on the role of head of analytics and corporate operations, while Richard Stamets has been appointed head of underwriting strategy.

    United Kingdom

    RateSetter changes approach to property loan defaults (P2P Finance News), Rated: AAA

    RATESETTER is changing the way it deals with defaulted property development loans, which could involve taking control of the project and completing it itself.

    The peer-to-peer lender said on Wednesday that if a property development is only partially completed and has gone into default, it will now examine whether maximum value would be delivered via an immediate sale or by completing the development and then selling it.

    Lendy Update: Breaks Previous Monthly Loan Repayment Record; Recovers £20 Million in October 2017 (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer property platform Lendy announced on Thursday it has broken all previous records for loan repayments generated in any one month, recovering £20 million in total in October 2017 alone. The online lender reported that this exceeds its previous September 2016 high of £14.5 million. The record figure includes repayments on P2P loans on three caravan parks in Christchurch, Dorset, totaling £7.6 million and a Manchester mill of £1.35 million.

    This UK fintech is taking on big banks with business loans — and one key EU law is driving it (CNBC), Rated: AAA

    A digital invoice finance platform in the U.K. will provide business loans to its customers for the first time, it was announced Wednesday.

    The firm said it would expand into the business lending market, pitting it against established players such as U.S. listed peer-to-peer lender LendingClub and Britain’s Funding Circle. The latter raised £82 million ($100 million) in funding from venture capital investors earlier this year.

    CEO and co-founder Anil Stocker told CNBC that MarketInvoice will take advantage of an incoming European Union regulation called the Second Payment Services Directive (PSD2), which forces banks to open up data about their customers to third party companies.

    Citigroup Bets Millions on U.K. Mortgage Lender (Bloomberg), Rated: A

    Brexit may be roiling Westminster and inflating prices on supermarket shelves, but don’t tell that to financial institutions eyeing the U.K.’s burgeoning online-lending industry.

    In the latest sign of confidence in the sector, Citigroup Inc. has agreed to provide a fintech firm called LendInvest Ltd. with funding for mortgages, the startup said in a statement Wednesday.

    Citi Provides Warehouse Facility to LendInvest in Buy to Let Expansion (Crowdfund Insider), Rated: A

    LendInvest, a Fintech marketplace platform for property finance, has agreed a long-term warehouse facility with Citi boosting its entry into the UK’s £40 billion buy-to-let (BTL) market.

    The perils and profits of of peer-to-peer lending (The Spectator), Rated: AAA

    ‘We’re taking business from the banks, from the invoice discounters and from the traditional suppliers of finance, in ever larger amounts,’ says Angus Dent, chief executive of ArchOver, a P2P lender that launched in September 2014. ‘We only lend to companies with strong balance sheets and we only lend against accounts receivable (ARs). We will loan up to 80 per cent of the value of the ARs. Once the loan is made the ARs must be maintained at 125 per cent of the value of the loan, monitored by us on a monthly basis. This provides a quickly realisable asset for our investors in case the borrower gets into difficulties over repaying for the loan.’ The minimum amount that ArchOver expects clients to invest is £1,000 per project.

    For Anil Stocker, chief executive and co-founder of MarketInvoice, P2P lending against receivables (amounts owed to a business) offers a particularly interesting investment class ‘because it’s of short duration, a liquid product, with invoices typically taking 45 to 50 days to be paid.

    Source: The Spectator

    Lenders must help brokers meet specialist challenge – LendInvest (Mortgage Solutions), Rated: A

    IMLA found that lending by specialists has grown by an average of 19% each year from 2009 to 2016, with a total of almost £17bn lent last year. That’s enormous growth from a sector that was particularly badly dented by the effects of the financial crisis.

    Even with these enormous annual increases in lending, the market share of these specialists remains modest. According to IMLA it has grown from 3.5% in 2009 to 6.8% in 2016, and that still lags significantly below the levels seen before the onset of the financial crisis.

    UK fintechs take market share from dominant high-street banks (Financial Times), Rated: A

    Britain’s leading financial technology start-ups are celebrating a record-setting week as they accelerate their push to take market share from high-street banks in areas such as payments and lending.

    TransferWise will on Thursday announce that it has collected $280m from investors, a record fundraising round for a UK fintech, to finance expansion of its cross-border payments service into more countries around the world.

    Meanwhile, Funding Circle has for the first time outstripped net new lending by the major high-street banks to UK small businesses, according to figures released by the Bank of England this week and data provided by Europe’s largest peer-to-peer lender to SMEs.

    Britain’s small businesses bank on alternative finance options (Finextra), Rated: A

    Of 1000 small biz owners quizzed by WorldPay, more than half say that they are planning for growth in 2018, yet 52% admit to being concerned that the traditional routes to finance, such as bank loans, are not going to be as easily available in the coming year.

    While 21% of business owners aged 44 or under say they’re still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17%) say they’re more likely to look at crowd-funding, while 11% prefer P2P lending, and six per cent say they favour business cash advance.

    HSBC unveils robo-advisor plans (Business Insider), Rated: A

    HSBC’s head of retail wealth, Dean Butler, provided his perspective on automated advice, and the bank’s plans for new products in the area, at the UK Robo-Advice Innovation Forum on Wednesday, attended by BI Intelligence.

    Source: Business Insider

    Landbay & Buy to Let Club Complete Lending to New Southgate Building in Less Than Two Months (Crowdfund Insider), Rated: A

    Earlier this week, Landbay and Buy to Let Club completed lending to a new building in Southgate, a suburban area of north London, in under two months. The initial case was reportedly submitted on the broker portal by Buy to Let Club on August 24th.

    Fintech firm MarketInvoice enters business loans market (Asset Finance International), Rated: A

    Fast-growing fintech firm MarketInvoice has launched a new business loans service that expands its solutions beyond invoice finance.

    Businesses will now be able to obtain unsecured business loans from £10,000 to £100,000 over a 12-month term, with no early repayment fees.

    By expanding into the £35 billion business loans sector, MarketInvoice aims to increase support for businesses which need working capital around their invoice finance requirements.

    Natural evolution (P2P Finance News), Rated: A

    Stuart Lunn, co-founder and chief executive of Edinburgh-based P2P business lender LendingCrowd, sees the benefits of both.

    “For P2P investing to become truly mainstream, it’s essential to simplify the products on offer and enable greater comparability between opportunities,” he asserts.

    “Passive products force greater diversification and I think that will benefit the sector as a whole.”

    Funding Circle and RateSetter make LinkedIn’s ‘Top 25’ companies list (P2P Finance News), Rated: A

    Funding Circle and RateSetter have been placed at number eight and number 21, respectively, in the ‘LinkedIn Top 25 Companies – Startups’ list, which was released on Thursday morning.

    Funding Circle was the highest-ranking P2P platform, and it was praised for funding more than 28,800 companies over the past seven years, with more than £2.8bn allocated to borrowers.

    CEO switch for online lender Patch of Land (AltFi), Rated: A

    Jason Fritton returns to his former post as CEO, as Paul Deitch steps down.

    P2P firm Assetz continues profitability (AltFi), Rated: A

    Assetz Capital notches seven figure pre-tax profit during the six months from April to September 2017.

    Durham’s Atom Bank named by LinkedIn as one of UK’s top 25 start-ups (ChroncleLive), Rated: A

    A North East company has been named by social media site LinkedIn as one of the country’s 25 most disruptive companies.

    Durham ’s Atom Bank, which is shaking up the banking world with its mobile-based app and personalised services, is named alongside companies including Deliveroo, Uber and Airbnb, on a list of start-ups which LinkedIn says are changing the UK business landscape.

    Online retailer Asos offers buy now pay later option with Klarna (Finextra), Rated: B

    Today, leading European payments provider Klarna has announced a UK partnership with ASOS – one of the world’s leading destinations for fashion loving 20-somethings.

    The news means that UK customers with the iOS or Android ASOS app can now use Klarna’s ‘Pay later’ solution to pay for their items up to 30 days later – with no interest or fees.

    Alternative lender Sancus announces new managing director (AltFi), Rated: B

    The alternative finance services firm has announced that Dan Walker will take over from current MD Caroline Langron in January 2018.

    The group is part of GLI Finance, which acquired peer-to-peer lending platform FundingKnight in 2016. Earlier this year, FundingKnight was moved into Sancus BMS Group, was awarded full FCA authorisation in July.

    China

    Chinese Listed Banks still create more profits than BAT (Xing Ping She), Rated: AAA

    In recent years, with the rise of Internet financial and the change of macroeconomic environment, the traditional commercial banks did go through a “severe winter”. Since 2011, banking climate index has been down all the way. It is not until 2017 that the new season of spring is coming.We selected 38 listed Chinese Banks in exchange of Shanghai, Hong Kong and Shenzhen as the performance comparison samples, and analyzed their comprehensive profitability based on the financial data of the first half of 2017.During this time, the total net profit of the 38 banks selected in this paper was 823.93 billion RMB, up 4.14 percent from the same period last year. The chart below described the profit data of all the 38 banks in the first half of 2017.


    Profitability Banks Ranking
    Among the 38 listed banks, we can also find the Top10 earning banks as follows, including 5 large-scale commercial banks and 5 joint-equity commercial banks. In addition, the net profit of Ping An Bank and Beijing Bank has reached the threshold of 10 billion RMB.


    Chinese listed banks VS internet giants in profitability
    According to the total value and earning data of the selected 38 listed banks as follow, their total market capitalization is about 10 trillion RMB, and the total net profit was 823.93 billion RMB. That means the net profit ratio was about 0.082.

    As for the BAT giants which are closely watched in the Internet industry, the three Internet companies are worth about 6.5 trillion RMB in total for the first half of 2017, and the net profit reached 52 billion RMB. That means their net profit ratio was just 0.008, much lower than the listed banks. Obviously, Banks still have an advantage over emerging Internet companies in terms of profit creation.

    In fact, research shows that the rise of the Internet financial companies has little impact on the profitability of large commercial Banks and rural commercial Banks, while has a great influence on city commercial Banks, and Joint-stock commercial Banks have been promoted instead because they can seize the Internet financial opportunities. In general, though the development of Internet finance has brought adverse effects on the profitability of commercial Banks, and also forced it to actively adjust the profit model and promote the diversified development of the profit structure.

    Data resource: Wind Database

    Another Chinese P2P lender! Senmiao Technology files for a $ 20 million IPO (NASDAQ), Rated: A

    Senmiao Technology, a early-stage Chinese marketplace for peer-to-peer lending, filed on Monday with the SEC to raise up to $20 million in an initial public offering.

    China pours millions into facial recognition start-up Face++ (Financial Times), Rated: A

    Chinese facial recognition start-up Megvii Face++ has raised $460m in an investment round led by a government fund, as the country pours money into efforts to become an artificial intelligence superpower to rival the US.

    The Beijing-based Face++ said on Wednesday that it had raised money from China State-Owned Venture Capital Fund and the China-Russian Investment Fund, which is backed by the sovereign wealth funds of both countries. Private investors including Alibaba’s payments affiliate Ant Financial also participated.

    Chinese listed company transferred shares of Wei Dai Network, making over 1B RMB (Xing Ping She), Rated: A

    On October 17, Handing Yuyou(300300.SZ), a listed company that was suspended from trading, began to transfer its assets of internet finance continuously. On October 30th, the company announced that it would transfer a 2 percent stake in the Wei Dai Network for 170m RMB, and then they announced to transfer a 1.5 percent stake in the Wei Dai Network for 127.5 million RMB. Through the two deals, Handing Yuyou(300300.SZ) will receive nearly 300 million RMB in cash. Deducting the previous investment costs, Handing Yuyou(300300.SZ) won over 100 million RMB in less than half a year. In the past three years, according to the company’s history of the investment in Wei Dai Network, we can find that the company has earned at least 10 times to the original investment.

    The transferee of this transaction is Beijing Qianshan Xinyuan Investment Management co., LTD. According to the public information, Beijing Qianshan Xinyuan Investment Management co., LTD. was established in 2015 with the registered capital of 10 million RMB. Its parent company, Qianshan Capital Management co., LTD is a private company registered in 2016. The parent company also have the other several subsidiary corporations, including Qianshan Venture Investment Management co., LTD., Beijing Qianshan Wealth Management co., LTD., etc. Currently, the parent company has a total capital size of 1 billion RMB.

    European Union

    Mintos Scraps Secondary Market Fees (P2P-Banking), Rated: AAA

    Starting from today, November 1, 2017, we have removed the 1% fee for selling loans on the secondary market of the Mintos marketplace. This means from now on, there are absolutely no fees for investing through Mintos.

    Source: P2P-Banking

    Orange is the new bank? Telecoms giant ventures into lending (Business Insider), Rated: A

    Telecoms giant Orange launches its own bank on Thursday, aiming to win 25 percent of France’s online banking market by capitalizing on the rising use of smartphones to steal share from established lenders with inferior technology.

    Orange is starting from a small base – Coisne says it has 25,000 customers have expressed interest ahead of the launch, a tiny fraction of the company’s 21 million mobile clients. But the timing of its entry gives some room for optimism.

    In France, 793.4 million online banking e-payments were made last year according to the European Central Bank, up from 586.2 million in 2014.

    INFOGRAPHIC: FINTECH AND THE FUTURE (Irish Tech News), Rated: A

    The GetLine Network  a decentralized P2P lending platform, recently reached out to us with one of their infographics on FinTech, and we thought it was appropriate and timely for our audience.

    Financing and loans are even being re-thought of with new forms of capital raising, such as ICOs, crowdsourcing/crowdfunding, and P2P lending, making banks and legacy financial institutions even less needed.

    Source: Irish Tech News
    International

    Lendio Gives supports Kiva borrowers (Bankless Times), Rated: AAA

    Small business loan marketplace Lendio announced it has provided more than $25,000 in loans to over 1,200 small business owners in 75 countries around the world through its employee-based Lendio Gives program in partnership with Kiva.

    The top five sectors supported by Lendio’s funding are agriculture, food, retail, clothing, and services. Of the loans Lendio has funded, 86 percent have gone to women or women’s groups. The top countries Lendio has supplied funding to include Zimbabwe, Peru, Haiti, the Democratic Republic of Congo, Ecuador, the Philippines, Kenya, El Salvador, and Senegal.

    International P2P Lending Volumes October 2017 (P2P-Banking), Rated: AAA

    Thincats reached the milestone of 250 million GBP loans originated since launch.

    This month I added Bolden.

    Source: P2P-Banking

    Fintech and Cross-Border Payments (IMF), Rated: AAA

    To gauge the IMF’s most recent analysis: A speech last month, at the Bank of England, by the IMF’s Managing Director—Christine Lagarde—analyzed potential challenges posed by fintech innovations to central banking.

    In my remarks here today—focusing on implications of fintech for cross-border payments—I’ll explore three broad areas: [1]

    • First, a sketch of the economic framework on how fintech applications will affect financial services and the market structure.
    • Second, the current landscape of cross-border payments, and the possible evolution of cross-border payment systems; and
    • Third, the role of central banks, themselves, and the possible reasons for them to issue their own digital currencies.

    Alternatives assets such as P2P loans to double in volume by 2025 (AltFi), Rated: B

    Alternative asset classes – in particular, real assets, private equity and private debt – will more than double in size, reaching $21.1trn by 2025, accounting for 15 per cent of global AuM as investors diversify to reduce volatility and target specific return and risk outcomes, according to research by PwC.

    Zelle adds major tech partners to roster (Banless Times), Rated: B

    Zelle – a new, real-time payments network from bank-owned Early Warning Services – has added ACI Worldwide, CGI, D3 Banking Technology, and IBM to its growing list of technology partners.

    India

    One Size Fits All? Regulating Peer-To-Peer Lending Platforms (India Corporate Law), Rated: A

    Briefly, as per the Master Directions:

    • It is now mandatory for entities proposing to undertake this business to be registered as ‘NBFC-P2P Lending Platforms’ with the RBI (NBFC-P2P). To ensure business continuity, existing players have been given a period of three months to apply for this licence. Applicants will be scrutinised for scalable and secure technological capabilities, financial standing as well as fit and proper management.
    • Fundamentally, the NBFC-P2P is expected to operate only as an intermediary and not undertake any lending activities itself or hold any funds of its participants (lenders or borrowers) on its books. Towards this end, an escrow mechanism for movement of funds has also been envisaged.
    • The exposure of each lender and loans (not exceeding a three year maturity period) availed by each borrower across all NBFC-P2Ps has also been capped at INR 10 lakhs, with each borrower not permitted to avail more than INR 50,000 per lender.
    • In addition, directions also prescribe that NBFC-P2Ps adopt minimum standards of transparency, disclosure requirements and fair practices.

    Impact on Aggregators

    • To the extent P2P lending platforms are servicing individuals and/or unregulated entities, there is merit in regulating such operators to contain any systemic risks. However, there are existing players in the market who primarily service regulated financial institutions (viz. banks and NBFCs) as lenders. The Master Directions fail to recognise this distinction.
    • Separately, banks and NBFCs today use distribution channels including web-based loan aggregators.

    SBI partners with Primechain Technologies and Intel to adopt blockchain-driven KYC (The Times of India), Rated: A

    PrimechainTechnologies announced on Wednesday that the country’s largest bank, State Bank of India (SBI), will adopt blockchain technology to manage the mandatory Know Your Customer (KYC) details in its system. Intel Corporation will act as a technology provider to facilitate the implementation.

    Asia

    P2P lender PeopleFund aims to change landscape (The Investor), Rated: A

    Korea’s accumulated peer-to-peer lending reached 1.47 trillion won (US$1.31 billion) by end-September as more and more borrowers are embracing the new, more convenient platforms for connecting with investors.

    Considering that the figure accounts for only 60 members of the Korea P2P Finance Association among the industry estimates of 130 lenders, the market is actually bigger. It also reflects a sharp upward trend; back in June 2016, when the association first began compiling data, accumulated loans granted by 22 members stood at just 152 billion won.

    Against this background, Kim founded PeopleFund in March 2015. Since then, the bank has been on a roll. On Nov. 1, its accumulated loans stood at 121 billion won, compared to 19 billion won in February. It’s the No. 3 player in the local industry.

    Africa

    SME failure rate set to spike unless funding issue is addressed (Engineering News), Rated: AAA

    The South African SME sector is set for a major crisis unless access to adequate business funding can be ensured as a matter of urgency. This was the key takeout from the just-released Key Funding Challenges for South African SMEs 2017 report developed by online lenderLulalend.

    “76% of respondents to our national survey of SMEs said they had undergone a tedious months-long paperwork-heavy process in applying for businessfunding from traditional lenders, only to have their applications denied.

    Considering access to credit was the #1 business challenge for nearly three out of every five SMEs surveyed, this disconnect between the needs of business owners and the lenders that have traditionally supported them is creating conditions of high risk and volatility.”

    Authors:

    George Popescu
    Allen Taylor

Thursday October 5 2017, Daily News Digest

roboadvisors aum

News Comments Today’s main news: Aspire Fintech is closing. Navient buys Earnest for $155M. Schwab creates robo-advisor, hires ex-Betterment GM to run it. Atom Bank nears 1B GPB in deposits. SoFi’s plan to become a bank isn’t going so well. Rubique has issued 50K credit cards. Reserve Bank of India (RBI) issues P2P lending platform directions. Today’s main analysis: Nutmeg sees […]

roboadvisors aum

News Comments

United States

United Kingdom

European Union

International

India

Canada

News Summary

United States

SoFi’s Plan to Become the Bank of the Future Isn’t Going So Well (Bloomberg), Rated: AAA

Now, with Cagney felled by a flurry of sexual harassment allegations, the question is whether SoFi has any chance of building the financial supermarket he envisioned. This was always going to be a tall order given the intense competition from entrenched players and fintech startups alike, but now the SoFi brand has been tarnished as well.

“There are a lot of question marks,” says Alois Pirker, research director at advisory firm Aite Group. “The new CEO will need to find his or her bearings there and that will tell which direction they’ll be going.”

Some members of the board consider the moves into life insurance and wealth management Cagney “pet projects,” according to a person familiar with their thinking. Directors prefer to focus on more mature businesses such as personal loans and mortgages that are more predictable and established, said the person, who requested anonymity to discuss a private matter.

The firm reported revenue of $134 million in the second quarter, according to an email from Cagney to investors in August. It had adjusted earnings before interest, taxes, depreciation and amortization of $61.6 million and extended over $3.1 billion in student loans, personal loans and mortgages during that time frame. Personal loans are the most profitable, the person said, followed by student loans and then mortgages.

The wealth management unit had just $12 million in assets under management as of early September, according to a filing. This is far short of the more than $100 million the firm had set as an internal goal, people familiar with the matter have said.

SoFi readies 1st student loan bond post-management shakeup (Asset Securitization Report), Rated: A

Social Finance is returning to the securitization market with $626.4 million of bonds backed by loans used to refinance the student debt of borrowers with advanced degrees and high incomes.

The transaction, SoFi Professional Loan Program 2017-E (internal link; not in original source article), comes just weeks after the marketplace lender experienced a management shakeup; its chief executive officer and chief financial officer both resigned.

SoFi hosts party at Front & Palmer (Metro), Rated: B

Most people are not fans of student loan debt, but last week, SoFihosted a party at Front & Palmer in Philadelphia to celebrate it as a means of opening doors to education and more opportunities.

Recent college grads were invited to attend for free and to gain admittance, only needed to bring a proof of their student loan debt.

Source: Metro.com

Earnest, An Online Student Lender, Bought By Navient For $ 155 Million (Forbes), Rated: AAA

Financial technology start-up Earnest has agreed to be acquired by student loan servicing giant Navient for $155 million in cash, the companies said on Wednesday.

Earnest, an online lender that has focused on refinancing student loans, will remain a distinct brand and will continue to be led by its current management team, including founder and CEO Louis Beryl.

The acquisition will be a launching pad for Navient to begin originating its own student loans.

Schwab creates robo-exec slot and fills it with ex-Betterment unit chief (RIABiz), Rated: AAA

As its robo-assets soar to seemingly effortless heights, Charles Schwab & Co. is hiring an intriguing ex-Betterment talent to ensure that its good fortune holds.

The San Francisco-based investments giant, with $24 billion* of assets under automated management in Schwab Intelligent Portfolios and Schwab Intelligent Advisor, hired Cynthia Loh, the ex-general manager of Betterment for Business, the division that oversees the New York-based robo‘s 401(k) unit.

The Schwab robo-launch’s differentiators were its “zero” fee, its 24/7 access to service personnel and its national advertising. Yet the look and offering of the Schwab Intelligent offering are considered plain-vanilla in scope.

How tough can Schwab get with digital upstarts? (FinancialPlanning), Rated: AAA

Outlining his firm’s strategy for battling digital disruption, Schwab CEO Walt Bettinger envisioned it would push client asset revenues lower, while relying on its brand and established market share to grow.

Reacting to his statement, industry observers expect an uphill slog for independents as the largest firms gear up for a price war on three fronts: financial advice, online trading and ETFs.

An early study by A.T. Kearney predicted incumbents would slash prices to compete with robo advice upstarts. While that never came to pass, the 2015 study still predicted industry revenues would drop by as much as $12 billion by 2020.

“[Schwab has] $3 trillion in client assets. They have very positive brand recognition and customer satisfaction scores that are the envy of most of the industry. They have demonstrated a willingness to cut price to gain market share, as seen with their recent commission cuts in online trading. So yes, they can throw their weight around.”

The wisdom of possessing a trifurcated digital advice offering — Schwab Intelligent Portfolios, a digital-only service, an institutional platform for RIAs, and the hybrid robo advisor Schwab Intelligent Advisory — also becomes clearer, McDermott notes. (Schwab’s robo now has $20 billion in AUM).

Robo advice is expected to collectively top $1 trillion in assets under management in fewer than five years, according to Boston-based consulting firm Aite Group. But micro-investing will partly feed such growth, it predicts, noting over 60% of millennials already are subscribed to such apps.

FinTech Lenders and Banks Take Note (VedderPrice), Rated: AAA

While Upstart’s No-Action Letter has narrow applicability, it may serve as a tool for other FinTech lenders in implementing innovative products and services and establishing relationships with banks.

According to Upstart, its underwriting technology uses traditional underwriting methodologies in combination with other variables that are correlated with financial capacity and “repayment propensity.” Upstart states that its model understands and quantifies risk associated with all borrowers—both those with credit histories and those without credit histories. As a result, the Upstart loan program is able to offer credit to segments of the population with limited credit or work histories at more favorable rates. In other words, it appears Upstart is underwriting consumer loans without reliance upon traditional criteria, such as credit scores and length of employment history.

  • The No-Action Letter is only applicable to Upstart’s automated model for underwriting applicants for unsecured non-revolving credit, as described in Upstart’s original Request.
  • The No-Action Letter will expire three (3) years after its issuance, at which time Upstart may seek to renew the No-Action Letter.
  • The No-Action Letter is subject to modification or revocation at any time at the discretion of the CFPB staff for any reason, including where the CFPB’s staff determines that such modification or revocation is appropriate to protect consumers or is otherwise in the public interest.

On one hand, a no-action letter may be particularly useful for a FinTech company, utilizing innovative technology and operations, to obtain guidance concerning the permissibility of its business model under specific regulatory constructs. A no-action letter may also be useful for a FinTech company seeking to establish joint ventures with banks.

On the other hand, a CFPB-issued No-Action Letter has narrow applicability as it is only applicable to the requesting applicant, a specific regulatory issue and the facts and circumstances identified by the applicant in its request submitted to the CFPB. Should a fact or circumstance fail to be conveyed accurately, or should a fact or circumstance change, the No-Action Letter may be rendered useless.

Online housing investment platform Roofstock raises $ 35M in Series C (The Real Deal), Rated: A

Housing investment platform Roofstock raised $35 million in a Series C funding round as it looks to cash in on growing interest in single-family rental housing.

Roofstock CEO Gary Beasley said the firm will use the money to hire and to expand into new markets. The company has raised a total of $68 million from investors, according to Beasley.

From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (Business Insider), Rated: A

LendingTree, an online loan marketplace, has released the findings of its study on shopping timelines for purchase mortgages. The study analyzed data from a sampling of more than 5,000 closed loans from March 2016 through May 2017 and reviews the timeline for the entire mortgage shopping experience – from first submitting a loan request and being matched with a lender to the date of the mortgage loan closing. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.

From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.

Congress is Trying to Get the IRS to Modernize (Lend Academy), Rated: A

Back in December 2013 Renaud Laplanche testified on Capitol Hill on small business lending. He was CEO of Lending Club back then and when a Congressman asked Laplanche a question as to how the government can best help he said to make IRS data more easily accessible to online lenders.

Fast forward four years and there appears to finally be some movement on this. Last week Congressman Patrick McHenry (R-NC) along with Senator Cory Booker (D-NJ) introduced a billthat would help the IRS move into the modern age and allow the automated retrieval of tax information through an API.

The IRS Data Verification Modernization Act of 2017 as it is called will require the IRS to create an API that will allow lenders to verify income in real time.

RealtyShares – New Small Balance Multifamily Program (RealtyShares), Rated: A

RealtyShares is now financing Small & Large Balance Commercial Multifamily, Apartment, Retail, & Hotel Assets.

Typical dwellings/ deal structure:

  • Class A, B & C+ dwellings
  • Typically like properties within a 30 mile radius of a popular MSA (but not necessarily a deal breaker as long as the project looks good)
  • The minimum loan financed needs to meet 1MM (Acquisition w/ renovation)
  • Asset Based Lender but having an experienced client who has done deals in the particular area is a great compensating factor

Project Summary

Loan Information

  1. Loan Amount
  2. Duration (term)
  3. Closing deadline
  4. Reason for deadline

Lien Information

  1. Amount of existing first lien
  2. Amount of other liens

Collateral Information

  1. Collateral Type
  2. Number of Units
  3. Total Square Footage
  4. Street Address
  5. Purchase Price and Purchase Date (if refi)
  6. “As Is” Real Estate Value
  7. Date of “as is” Appraisal/BPO
  8. Net Operating Income (NOI)
  9. Capital Expenditures since Purchase ($)
  10. Vacancy (%)

Guarantor(s) Information

  1. Net Worth of Guarantor(s)
  2. Estimated liquid assets of Guarantor(s)
  3. FICO Score of Guarantor(s)
  4. Guarantor(s) investment in collateral – current or proposed
  5. Sponsor’s Website

Use of Proceeds:
Please provide a concise description, a few sentences, on the Use of Proceeds (i.e., discuss: acquisition, refinance, site improvement, tenant improvements, planning, design/permitting, carry costs and etc.)

Exit Strategy:
Please provide a concise description, a few sentences on the Exit Strategy (e.g. discuss prospective buyer, prospective permanent financing).

What to Watch for When It Comes to Alternative Investing Opportunities (Madison.com), Rated: A

When you are working in the equity crowdfunding space, particularly as a company that is private, you certainly don’t have the liquidity that you would for a publicly traded stock that’s on the exchange.

On this episode of Industry Focus: Technology, host Dylan Lewis is joined by Motley Fool contributing writer Daniel Kline to talk about the dangers of this type of investing. They break down all the risks associated with purchasing shares in a company that does not have to report as much financial data as a traditional publicly traded company.

Watch the full video discussion here.

Elevate to Release Third Quarter 2017 Earnings on Monday, October 30, 2017 (Financial Times), Rated: B

Elevate Credit, Inc. today announced that it will release its third quarter 2017 financial results after the market closes on Monday, October 30, 2017. Ken Rees, Chief Executive Officer, and Chris Lutes, Chief Financial Officer, will also host a conference call on the day of the release (October 30, 2017) at 5:00 pm ET to discuss Elevate’s financial results.

Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Third Quarter 2017 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at 

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on November 13, 2017, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13671832, or by accessing Elevate’s website.

Citi FinTech’s Customer-Driven Journey: Our Latest Mobile Enhancements (Citi), Rated: B

These new mobile investment features include a dividend reinvestment plan (DRIP), fund screener, consolidated search functionality and enhanced visualization. Through the Citi Mobile App for iPhone, any Citi client with a brokerage account now enjoys one-touch access to their financial advisors and the ability to manage their investments personally, without switching to another channel.

Dividend Reinvestment Plan: Now clients can enroll eligible securities in a dividend reinvestment plan (DRIP) right within the app. Once a customer has opted in, this feature helps our clients put their cash dividends to work, instead of idling in their accounts.

Investment Search: This consolidated search function makes investing easier for clients interested in managing their portfolios themselves.

Performance Visualization: An enhanced visualization enables clients to track their portfolio’s performance and make adjustments right within the app.

United Kingdom

App-only bank Atom nears £1 billion in deposits (Business Insider), Rated: AAA

Startup, app-only bank Atom has passed £900 million in deposits less than two years after launching its first savings product.

The disclosure comes as Atom’s annual accounts show that the startup had £538 million in deposits from over 17,000 customers at the end of March. It means the app-only bank has attracted around £400 million in four months.

The bank’s accounts, filed with Companies House this week, show Atom has received over £300 million of small business loan applications and lent out close to £100 million in loans and mortgages by March this year.

Atom had a net interest loss of £1 million for the year, due to paying out interest on its 1.95% and 2.5% fixed savings accounts, at the time market-leading interest rates, before the launch of its lending products.

UK’s biggest robo-advisor Nutmeg sees losses widen (Business Insider), Rated: AAA

Nutmeg, the UK’s biggest automated investment fintech in terms of assets under management (AUM), released 

Source: Business Insider

P2P lending on course for 20 per cent jump (FT Adviser), Rated: A

Lending across all of the peer-to-peer platforms in 2017 to date is already higher than in the whole of 2016, according to data from research agency 4thWay.

According to the data, total lending across all peer-to-peer platforms is likely to be at least 20 per cent higher this year than last with the largest platforms, Funding Circle and Zopa, leading the way.

Funding Circle has lent £865m in 2017 to date, compared with £825m in the whole of 2016.

European Union

The 8 Biggest Startups in Europe by Funding (Nanalyze), Rated: AAA

Zee Germans are leading the pack with 4 unicorns and we also see that fintech and ecommerce make up half of all the sector allocations.

Company Name Funding Country Sector
Spotify $8.53 Sweden Internet Software & Services
Otto Bock HealthCare $3.50 Germany Healthcare
Auto1 Group $2.80 Germany eCommerce/Marketplace
Klarna $2.50 Sweden Fintech
VistaJet $2.50 Malta On-demand
Adyen $2.30 Netherlands Fintech
Hellofresh $2.09 Germany eCommerce/Marketplace
CureVac $1.65 Germany Healthcare
BlaBlaCar $1.60 France On-Demand
Saxo Bank $1.45 Denmark Fintech
Global Fashion Group $1.10 Luxembourg eCommerce/Marketplace
OVH $1.10 France Big Data
Avaloq Group $1.01 Switzerland Fintech
AVAST Software $1 Czech Republic Cybersecurity
letgo $1 Netherlands eCommerce/Marketplace
MindMaze $1 Switzerland VR/AR

Big Brand Payments, Part 1

Another big player from Sweden is Klarna, founded in 2005 and now valued at $2.5 billion. With $521.44 million in funding from investors like Sequoia and Visa, Klarna is one of the most popular e-commerce payment solutions in Europe, used by Burberry, Overstock.com, J.Crew, Nike, Lenovo, and hundreds more.

Adlibris, one of Europe’s largest booksellers, used Klarna to improve its mobile checkout solution, resulting in an 80% conversion increase.

Big Brand Payments, Part 2

With a valuation just shy of its Swedish colleague Klarna, Netherlands-based Adyen (valued at $2.3 billion), has established a firm foothold in the world of merchant payments by providing a “friction-less payment experience”. Founded in 2006 and funded with $266 million to date, Adyen has some huge customers in its corner, including Netflix, Uber, Etsy, Spotify, Groupon, and LinkedIn. The secret is in its platform, which features support for a wide variety of payment options (250 worldwide, to be exact) in a single system, including Apple and Android Pay, all major credit cards, direct debit for recurring payments, in-app purchases, and much more. The Cambridge Satchel, a UK handbag company, saw its Black Friday sales rocket by 124% after switching to Adyen’s platform. In addition to one-time purchases, the platform also facilitates subscriptions and recurring payments more seamlessly.

Trelix Approved as a Third-Party Due Diligence Provider by DBRS (Business Insider), Rated: A

Trelix, a provider of due diligence, quality control, licensed fulfillment and non-licensed fulfillment products and services across the origination and securitization lifecycle, today announced that it has been approved as a third-party due diligence provider for DBRS-rated transactions. DBRS is a full-service credit rating agency respected for its independent, third-party evaluations of corporate and government issues. DBRS’s approval process, before adding a company as an accepted provider, includes an on-site review to assess companies’ staffing, infrastructure and capabilities relevant to securitization-related services.

As part of Altisource’s Origination Solutions platform, Trelix offers clients a unique combination of technology and risk management tools that position it to have a meaningful impact on the securitization market.

Dutch fintech company InvoiceFinance raises €6 million in funding (Tech.eu), Rated: A

InvoiceFinance, a fintech startup based in Amsterdam, has raised €6 million from Peak Capital.

The new funds will be invested in marketing purposes and hiring for the sales and development team.

New10 Partners With Mambu To Redefine Dutch SME Lending (Bob’s Guide), Rated: A

Mambu today announced that New10, ABN AMRO’s newly launched FinTech, has selected the SaaS engine to power a range of small and medium enterprise (SME) lending products in the Netherlands. New10, which aims to provide credit decisions within 15 minutes, went from concept to launch within 10 months, in line with ABN AMRO’s vision of digitisation and innovation.

Mambu took a collaborative approach working with the New10 team in order to complete implementation within four months. In a highly regulated environment, Mambu’s partnership with Amazon Web Services (AWS) which has received Dutch regulatory approval, helped smooth the path to market. New10 launched on 21 September 2017 with a fully digital SME lending platform with plans to broaden the portfolio and potentially expand into new markets.

collectAI manages 25m Euro in Receivables (Otto Group), Rated: A

collectAI, the service for digital receivables, has processed receivables at a volume of 25m Euro since its foundation in 2016. collectAI automates and digitises invoices, dunning and debt collection processes and is the first digital end-to-end provider in receivables management.

Examples of successful KPIs on the clients’ side include: Introducing digital communication channels lead to an increase of the collection rate of 33 percent, while processing costs have been reduced by up to 41 percent.

While 23 percent of invoices are overdue Europe-wide (EHI 2016 – online retail only), the invoice remains the most popular payment method in Germany with a market share of 30,5 percent (EOS 2016). Even though returns from receivables and debt collection are essential for revenue and thus liquidity, only 18 percent of companies have digitised their receivables to date (EOS/Kantar 2017).

Papering Over the Cracks (LendIt), Rated: A

In 2016 there were a reported 5.4 million SMEs in operation in the UK alone and our economy depends heavily on the success of these “little guys”.

Fintechs and banks are now lending faster than the speed of light, but when it comes to uncovering fraudulent activity, are they actually left standing in the dark?

Invoice finance lenders have to be particularly vigilant when it comes to a different type of fraud: fresh air invoicing.

One way to avoid being stung by paper fraud is to lend against accurate financial data extracted directly from a company’s accounting package, rather than lending against a PDF or excel file that can be amended. Advances in technology means lenders are now able to access this level of data directly, securely and efficiently, so they can be sure they’re providing fair financial support to loan applicants.

International

BitProperty Announces Upcoming Token Sale, Beta Release of Real Estate Investment Platform (Bitcoinist), Rated: AAA

BitProperty, the blockchain-powered real estate investment platform, has announced that it will launch a closed beta release on October 5, 2017. Ten days later, on October 15, it will kick off a token sale to raise funds for further development of the platform.

The BitProperty platform is built on the Ethereum blockchain and uses two different types of tokens. The first type is an asset token that represents a share of a particular asset. When a real estate owner lists a property on the platform, the number of asset tokens issued against the property represents its value. Investors can purchase these asset tokens and will then receive income based on the performance of the asset (property) and the size of the stake that each investor holds.

The second type of token is the BTP token, which represents the inherent value of the platform backed by the pool of the company’s managed assets.

India

Rubique crosses over 50,000 credit cards customers (India.com), Rated: AAA

Mumbai-based FinTech startup Rubique continues to embark upon its fast-paced growth across sectors, including Retail and SME financing.

Rubique has till date successfully crossed over 50,000 Credit Cards customers.

RBI issues directions for peer-to-peer lending platforms (India Times), Rated: AAA

The Reserve Bank of India (RBI), on October 4, issued directions for non-banking financial companies (NBFC) that operate peer-to-peer (P2P) lending platforms. According to the directions, from now on no NBFC can start or carry on the business of a P2P lending platform without obtaining a Certificate of Registration. Every company seeking registration with the bank as an NBFC-P2P shall have a net owned funds of not less than Rs 20 million or such higher amount as the bank may specify.

They have been asked to apply for registration as NBFC-P2Ps within 3 months.

NOTIFICATIONS (Reserve Bank of India), Rated: AAA

3. Scope

These Directions provide a framework for the registration and operation of NBFC-P2Ps in India.

(2) Process of Registration

(i) Every existing and prospective NBFC-P2P shall make an application for registration to the Department of Non-Banking Regulation, Mumbai of the Bank, in the form which will be specified by the Bank for the purpose. Existing NBFC-P2Ps shall apply within three months from the issuance of these Directions.

(ii) The Bank, for the purpose of considering the application for registration, shall require the following conditions, among others, to be fulfilled:

  1. The company is incorporated in India;
  2. The company has the necessary technological, entrepreneurial and managerial resources to offer such services to the participants;
  3. The company has the adequate capital structure to undertake the business of Peer to Peer Lending Platform;
  4. The promoters and the Directors of the company are fit and proper;
  5. The general character of the management of the company is not prejudicial to the public interest;
  6. The company has submitted a plan for, or implemented, a robust and secure Information Technology system;
  7. The company has submitted a viable business plan for conducting the business of Peer to Peer Lending Platform;
  8. Public interest shall be served by the grant of CoR;

Any other condition as may be specified by the Bank, fulfillment of which, in the opinion of the Bank, is necessary to ensure that the commencement of or carrying on the business in India shall not be prejudicial to the public interest.

6. Scope of Activities

(1) An NBFC-P2P shall-

  1. act as an intermediary providing an online marketplace or platform to the participants involved in Peer to Peer lending;
  2. not raise deposits as defined by or under Section 45I(bb) of the Act or the Companies Act, 2013;
  3. not lend on its own;
  4. not provide or arrange any credit enhancement or credit guarantee;
  5. not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted;
  6. not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9;
  7. not cross sell any product except for loan specific insurance products;
  8. not permit international flow of funds;
  9. ensure adherence to legal requirements applicable to the participants as prescribed under relevant laws.
  10. store and process all data relating to its activities and participants on hardware located within India.

(2) Further, NBFC-P2P shall-

  1. undertake due diligence on the participants;
  2. undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders;
  3. require prior and explicit consent of the participant to access its credit information;
  4. undertake documentation of loan agreements and other related documents;
  5. provide assistance in disbursement and repayments of loan amount;
  6. render services for recovery of loans originated on the platform.

(3) NBFC-P2P shall not undertake any activity other than those stated in paras 6(1) and 6(2) of these Directions. Deployment of investible funds by an NBFC-P2P in instruments specified by the Bank, not for trading, shall however be permitted.

11. Transparency and Disclosure Requirements

(1) An NBFC-P2P shall be required to disclose the following:

(i) to the lender

  1. details about the borrower/s including personal identity, required amount, interest rate sought and credit score as arrived by the NBFC-P2P.
  2. details about all the terms and conditions of the loan, including likely return, fees and taxes;

(ii) to the borrower – details about the lender/s including proposed amount, interest rate offered but excluding personal identity and contact details;

(iii) publicly disclose on its website:

  1. overview of credit assessment/score methodology and factors considered;
  2. disclosures on usage/protection of data;
  3. grievance redressal mechanism;
  4. portfolio performance including share of non-performing assets on a monthly basis and segregation by age; and
  5. its broad business model.

(2) NBFC-P2P shall ensure that the providing of services to a participant, who has applied for availing of such services, is backed by appropriate agreements between the participants and the NBFC-P2P. The agreements shall categorically specify all the terms and conditions among the borrower, the lender and the NBFC-P2P.

(3) The interest rates displayed on the platform shall be in Annualized Percentage Rate (APR) format.

Finance Ministry Welcomes RBI Move On P2P Lending (Bloomberg Quint), Rated: A

The finance ministry today welcomed the central bank’s move to treat peer-to-peer, also known as P2P, lending platforms as non banking financial companies, saying it would improve financing for smaller firms.

RBI To Observe P2P Lenders As Well As Invest in Security Frameworks (Industry Daily News), Rated: A

The government has declared RBI (Reserve Bank of India) as the watchdog for P2P (peer to peer) lending marketplaces that have been segmented as NBFCs (non-banking finance companies). While this might elevate prices for online lenders via compliance needs, most have greeted the decision claiming that it provides them identification.

RBI To Allow Funds Transfer Among Mobile Wallets (Bloomberg Quint), Rated: A

The Reserve Bank of India will make prepaid payment instruments like e-wallets, gift cards and meal coupons interoperable for customers complying with the central bank’s know your customer guidelines.

Inter-operability among KYC compliant prepaid instruments will be implemented in six months after the RBI issues its revised norms within a week by October 11, the central bank said as part of its developmental and regulatory policies.

What startup entrepreneurs should learn from sports (MoneyControl), Rated: B

The so-called unicorn startups and their founders have become role models for the millennials. Hardly any town or city in India is left untouched by the startup fever and its multi-million funding stories.

1. Sport helps build character: Sanjay Darbha, the founder of Peerlend, a peer-to-peer lending platform and a sports enthusiast who competes in Senior Men’s circuit tournaments of the International Tennis Federation (ITF), explains, that sports inculcates attributes such as discipline, focus, and patience.

2. Sports lets you, be yourself: If entrepreneurs want to know the better or bitter side of their team members – make them play a sport.

3. Sport is a medium to connect beyond business: Ecosystem players should find innovative ways to connect with each other to get a better understanding of other’s needs and challenges.

4. Sport helps in building lasting bonds: A playground in an excellent incubator that helps in the construction of robust and long-lasting relationships.

Startups could use games to let their team members explore possible synergies between them.

Canada

Aspire FinTech is closing down (Aspire Email), Rated: AAA

Hey all,

I wanted to share the news today that Aspire Financial Technologies will be officially shutting down this week.  Sadly, the search for a strategic partner we started in the summer wasn’t successful, and our funding has now run out.  As a result, we no longer have the resources to continue the build of our loan data and analytics infrastructure solutions.

I’ll be running a sale process of Aspire’s IP (Aspire Gateway and ALD Explorer solutions) over the next month or so, looking for a quick outcome.  Feel free to contact me to discuss.

Thanks to all that have supported Aspire over the past two years.  Despite the odds, we made it this far, with your help.  Unfortunately, expensive and complex build requirements, with long institutional sales cycles, combined with a lack of scalable professional seed-stage funding in Canada, have been our undoing.  Any one of these being different would likely have yielded a better outcome, but all three together have proved to be terminal.

Mark and I have had a great team to work with.  We thank them for all the hard work and long hours, and wish them well as they move on to their next challenges (and hopefully a bit more stability!).

For me personally, I’ve made and consumed a great deal of  “FinTech Kool-Aid” over the past two years, which has permanently altered by view of the future, and the role that technology will play in the delivery of financial services to consumers, small businesses and corporations going forward.  I’m excited to see this play out, and the role I can play in making it happen.

Best regards,

David A. Fry, MBA, CFA
Co-Founder and CEO
Aspire Financial Technologies Inc.

Authors:

George Popescu
Allen Taylor

Wednesday August 16 2017, Daily News Digest

unsecured personal loan market

News Comments Today’s main news: SoFi battles its first PR crisis. Small businesses braced for higher costs post-Brexit. ID Finance sees potential in Brazilian market, sees 82% revenue growth in 2017 first half. Today’s main analysis: Pullback in subprime loans. Prosper’s Q2 numbers. Today’s thought-provoking articles: New fintech lenders encroaching on business banking turf. Pullback on subprime loans. Hongling Capital […]

unsecured personal loan market

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

SoFi battles its first major PR crisis (Tearsheet), Rated: AAA

In a wrongful dismissal suit filed last week, a former employee reportedly claimed he was let go after he told management he had seen female employees subjected to lewd and inappropriate comments and that managers canceled loan applications when internal errors were made — a tactic to secure quarterly bonuses of up to $15,000. There’s also talk of a second class-action lawsuit alleging broader mistreatment of employees at the company.

But experts said the extent of the damage to the SoFi brand will center on whether other employees come forward to corroborate the allegations.

Jim Prosser, vp of communications and policy at SoFi, said the company carried out an internal investigation into the matter and challenged the notion that loan applications could be arbitrarily cancelled.

Based on sentiment expressed on Twitter, the lawsuit hasn’t made a big dent in SoFi’s brand reputation. Since the news broke Friday, 119 tweets mentioned the SoFi Twitter handle, 53 percent of which were positive and 47 percent were negative, according to Brandwatch. Compared to the past month, the SoFi handle attracted 920 mentions, 75 percent of which were positive. Still, Terry maintains that it’s not a massive conversation, and the news may have gotten less play with the violence in Charlottesville, Virginia, capturing headlines.

Start of a New Trend? Pullback in Subprime Loans Observed (GlobeNewswire), Rated: AAA

For the first time since 2012, originations to subprime consumers declined year-over-year for a number of major credit products, according to TransUnion’s (NYSE:TRUQ2 2017 Industry Insights Report. The report, powered by PramaSM analytics, found that 4.63 million subprime consumers originated an auto loan or lease, personal loan or credit card in Q1 2017. Comparatively, 4.89 million subprime consumers originated one of these products in Q1 2016.

In Q1 2017, subprime personal loan originations declined 10.6% year-over-year, compared to a positive annual growth rate of 11.0% in Q1 2016. This marks three straight quarters of year-over-year declines in originations. More than 100,000 fewer subprime consumers opened a personal loan in Q1 2017 than in Q1 2016.

In fact, personal loan originations declined for all risk tiers, but at lower rates than for subprime originations. Total originations dropped 6.9% from 2.99 million in Q1 2016 to 2.78 million in Q1 2017.

In the credit card market, subprime originations declined by 1.8% to start 2017, the second consecutive quarter of decline. Since 2014, subprime originations had increased at a rapid rate, averaging growth of 29.2% in the first quarters of 2014, 2015 and 2016. In Q1 2017, subprime originations declined at nearly the same rate as total originations (down 1.9%).

As subprime consumers gained access to credit cards, lenders kept subprime credit lines low. In Q1 2017, subprime consumers held just 2.6% of total credit lines.

Auto loan originations declined 8.9% year-over-year from Q1 2016 to Q1 2017. Originations to subprime consumers dropped to 1.10 million in Q1 2017, down from 1.20 million in the first quarter of 2016. At the same time, total originations declined just 2.9% to 6.73 million in Q1 2017.

Source: TransUnion

Mortgage Delinquency Rate Drops to New Low since Recession

The mortgage delinquency rate reached the lowest level since the recession in the second quarter of 2017, dropping below 2% for the first time in almost 10 years. The mortgage delinquency rate was 1.92% in Q2 2017, down 16.5% from 2.30% in Q2 2016.

Viewed one quarter in arrears, mortgage originations remained relatively steady year-over-year in the first quarter of 2017. Up slightly from 1.46 million in Q1 2016, mortgage originations reached 1.49 million in Q1 2017. Largely due to the rise in interest rates, originations declined 28.3% between Q4 2016 and Q1 2017. A year prior, originations only declined 9.4% between Q4 2015 and Q1 2016.

More than 83% of mortgage originations were in the prime and above risk tiers in the first quarter of 2017. Market share of prime and above risk tiers has remained roughly in that range since Q4 2013.

The average new account balance, also viewed one quarter in arrears, declined 1.6% from $223,262 in Q1 2016 to $219,743 in Q1 2017.

Source: TransUnion

Total Credit Card Balances Rise Following Rich Credit Offers in 2016

The latest TransUnion Industry Insights report found that total credit card balances continued their steady year-over-year increase in the second quarter of 2017. Total card balances reached nearly $714 billion, up 7.8% from $662 billion in Q2 2016. The average balance per consumer grew 3.3% to $5,422, up from $5,247 in Q2 2016.

The credit card delinquency rate reached 1.46% in Q2 2017, up 13.2% from 1.29% in Q2 2016. This brings the card delinquency rate above the average Q2 delinquency reading of 1.27% for the last three years.

Source: TransUnion

Auto Delinquency Rate Rises after Years of Non-prime Origination Growth

TransUnion’s latest Industry Insights Report found that the auto delinquency rate reached 1.23% in Q2 2017, an increase of 10.8% from 1.11% Q2 2016.

Viewed one quarter in arrears, auto originations declined to 6.73 million in Q1 2017, down 2.9% from 6.93 million in Q1 2016. This marks the third consecutive quarter of year-over-year declines in auto originations and the first decline in origination growth in any first quarter since 2010.

Total auto balances achieved a new high in Q1 2017, reaching $1.145 trillion. The total balance was up 6.9% from $1.072 trillion in Q1 2016.

Source: TransUnion

Personal Loans Reach New Milestones as Balances Grow and Delinquencies Drop

In the second quarter of 2017, the personal loan delinquency rate declined to the lowest level since 2009. The delinquency rate was 3.02% in Q2 2017, an 8.5% decline from 3.30% in Q2 2016.

Personal loan balances achieved a new milestone of nearly $107 billion in Q2 2017, growing 10.8% over Q2 2016, when total balances were $96 billion. While balances increased, the growth rate was lower than the average Q2 growth rate of 24.7% for the past three years. The average balance per consumer also reached a new high at $7,781 in the second quarter, up slightly from $7,745 in Q2 2016.

Personal loan originations, viewed one quarter in arrears, declined 6.9% to 2.78 million in Q2 2017, compared to 2.99 million in Q2 2016.

Source: TransUnion

Please visit  more charts and details about TransUnion’s Q2 2017 Industry Insights Report or to register for TransUnion’s Q2 2017 Industry Insights Webinar.

Prosper Reports Strong Q2 Numbers – Is Cash Flow Positive Again (Lend Academy), Rated: AAA

Source: Lend Academy

As you can see in the graphic above Prosper had a rocky 2016. They went from a quarterly origination high of over $1.1 billion in Q4 2015 to a low of $312 million in Q3 2016. Since that time they have shown some solid growth with originations in Q2 2017 coming in at $775 million up from $586 million in Q1. They still have a long way to go before they reach record levels but growth has returned to the first US marketplace lender.

  • Total originations from inception through June 30, 2017 was $9.7 billion.
  • Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
  • Whole loans represented 94% of total loan volume in Q2.
  • Adjusted EBITDA was $6.7 million up from a loss of $11.6 million in Q2 2016.
Source: Lend Academy

New Fintech Lenders Encroaching On Business Banking Turf (The Financial Brand), Rated: AAA

Small and micro businesses struggle to get the cash they need. According to the Federal Reserve’s small business credit survey, 60% of applicants obtained less financing than they needed.

And they need money. The top challenge facing small businesses, says the Fed, is credit availability or securing funds for expansion (44%), followed by paying operating expenses (36%), making payments on debt (25%), and purchasing inventory or supplies to fulfill contracts (17%).

Unfortunately, size makes these loans unattractive to many banking providers. More than half (55%) of small businesses needed $100,000 or less and three-quarters sought $250,000 or less.



Can Smaller Banks and Credit Unions Compete? And Should They?

First, while online lender websites may be alluring, small business owners are still concerned about data security and privacy — particularly with these neo-lender startups. Second, the product features among fintechs are not always clearly stated, making it difficult to compare product offerings and costs.

These issues mean many small businesses still prefer to get a loan from a bank. Half (50%) seek financing from a large bank, and 21% from online lenders. And their preference is for loans not credit cards; 86% say they applied for a loan or a line of credit vs. only 31% who just applied for a credit card.

Smaller loans can be profitable, if you approach them in new ways using new tools.

  1. Reengineer the Process with Big Data. With so much data available on small business owners and more computing power, banks can use big data in innovative ways to decision loans. No longer limited to a credit score, big data can analyze the behavior of the business and predict its ability to pay back the loan. Big data also means that fewer applications must be sent to a human for decisioning. Real-time decisioning cuts costs for the bank and since so much customer data is already digitized, there’s less need to require borrowers to submit reams of documentation.
  2. Partner with Fintech. Rather than try to compete with online alternative lenders, consider joining them. IN 2015, J.P. Morgan Chase & Co. announced a partnership with On Deck Capital to create online small business loans. Called Chase Business Quick Capital, it provides Chase customers with faster access to cash than a traditional bank loan. Chase states that the capital can be available in the same day. In the past, a small business loan could take weeks to decision and then fund.

Goldman Tops Banks Betting on a New Type of Hedging (Bloomberg), Rated: A

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading big banks in plowing record funds into outside ventures trying to disrupt their industry, a role typically dominated by venture capital firms, according to a report from Opimas, a management consultancy.

Goldman Sachs has invested in about 15 so-called fintech firms focusing on capital markets businesses this year, while JPMorgan has bet on nine, the report shows. Altogether, banks and other established companies will probably pump a record $1.7 billion into the sector through 44 deals in 2017, Opimas estimated.

A hot fintech startup has amassed nearly $ 5 billion from people willing to hand over their bank logins (Business Insider), Rated: A

  • Personal Capital is a startup known for its free platform, which allows people to plug in their bank and investment accounts to see all their financials at once.
  • CEO Jay Shah says Personal Capital has been monetizing the business by getting richer clients to pay for financial advice.
  • The startup recently raised an additional $40 million in outside funding.

The company is managing assets for Americans worth about $4.9 billion, and increasingly the customers are more affluent, Personal Capital’s CEO, Jay Shah, told Business Insider in a recent interview.

Shah declined to say how many of the company’s estimated 1.5 million free users convert to paying for financial advice from the free platform.

What you need to know about financial services fraud (Tearsheet), Rated: A

In finance, there are three distinct patterns of fraud: transaction fraud, application fraud and account takeover fraud.

Card issuers lost $15.72 billion (72 percent) in gross fraud losses in 2015 and merchants and acquirers lost the remaining $6.12 billion (28 percent), according to the Nilson Report.

Application fraud is the fastest-growing type of fraud in financial services and happens when a fraudster actually pretends to be you using actual account credentials to open new lines of credit. We can break it down even further into three types:

  • Third party fraud: when someone gets enough of someone’s personal information from a compromised data set to go to a bank and pretend to be that person to apply or a loan or credit card
  • First party fraud: when the person coming to the bank (or other service) really is the person he or she claims to be but intends to not pay back the loan or credit card; in instances of first party fraud, the bank or business is the victim, not the customer
  • Synthetic fraud: when someone creates a persona using fake or borrowed information, like a social security number, and adds other, made-up elements of personally identifiable information like a name, address or date or birth

Account takeover fraud is the final type of fraud (for the purposes of this primer, at least). It happens to people when fraudsters obtain their various user IDs and passwords to be able to access other accounts that involve financial transactions.

Did those new chip cards I got help?
Kind of! Account takeover incidents increased 61 percent to $2.3 billion from 2015 to 2016, according to research by Javelin published in February. Victims pay an average of $263 out of pocket and spent 20.7 million hours to resolve it in 2016 – six million hours more than in 2015.

Community banks stand to gain from blockchain — if they work together (American Banker), Rated: A

Blockchain is most widely known as the platform to house virtual currencies such as bitcoin,ethereum and litecoin. But the uses for blockchain are going well beyond virtual currencies. The Republic of Georgia, for example, voted in April 2016 to implement a land ownership registry that relies on blockchain to verify ownership of property. If the United States did something similar with blockchain, banks could close real estate loans more quickly. Think about a world where ownership interests in real estate can be verified immediately and with certainty.

In this world, the expansive role of the title agent would essentially dissipate (or be greatly minimized), the time taken to verify title would be eliminated and, most important, the cost associated with confirming a title interest through title insurance would be dramatically reduced. All of these results would improve the closing process, both from an efficiency standpoint for banks and from a cost standpoint for the customer.

Technologists are also using blockchain to try to replace our needlessly difficult residential mortgage loan origination processes so that the process, from application to closing, can be reduced from a few weeks to a few days.

To realize these kinds of opportunities, community banks in a region should collaborate on strategies to bring blockchain into the banking industry.

Top and The Best Peer-To-Peer (P2P) Lending Sites For Online Loans (FX Daily Report), Rated: A

A PriceWaterhouseCoopers report noted that though the P2P industry is in its infancy loans to the tune of $5.5 billion have been disbursed by the P2P websites in the U.S. in 2014 alone. According to PriceWaterhouseCoopers, P2P lending could be more than $150 billion by 2025.

#1: Funding Circle

Funding Circle has disbursed more than $1 billion in loans to over 8,000 businesses in the world. Along with the growth in terms of the number of businesses borrowing from the company, Funding Circle has seen a substantial growth in the number of investors too. In fact, Funding Circle’s investor base includes banks, other financial institutions, and more than 40,000 retail investors. Even the U.K. government is an investor.

#2: Lending Club

As leading online lending marketplace, the company that connects borrowers and lenders has disbursed loans to the tune of $11,167,217,348 as of mid-2015.

#3: Upstart

The minimum amount you can borrow is $3,000 and the maximum is $35,000. The annual percentage rate or APR starts at 4.7 percent. They offer loans for just about everything.

#4: CircleBack Lending

Loans are offered by CircleBack Lending for tenures of 3 or 5 years and amounts ranging from $3,001 to $35,000. The APR ranges from 6.63 percent to 36 percent.

#5: Prosper Marketplace

The company has registered tremendous growth since its inception and currently has a client base of more than 250,000. Prosper has disbursed loans worth more than $4 billion so far.

#6: Peerform

This popular lending marketplace offers 3-year loans ranging from $1,000 to $25,000 with an APR of 7.12 percent to 29.99 percent. Peerform does not look at the FICO score alone in order to measure the risk of lending. The company’s Loan Analyzer carries out the evaluation on a case to case basis. According to Peerform, the Loan Analyzer was developed in consultation with leading economists and it follows a differentiated method for determining the creditworthiness of each borrower. As a result, even individuals whose credit scores are in the range of 600 may be able to secure loans.

#7: SoFi

SoFi’s offers loans starting from $5,000 and up to $100,000, which is higher compared to the standard amount of $35,000 offered by many other players in the peer-to-peer marketplace.

CFPB Says Tribal Online Lender Case Belongs In Illinois (Law360), Rated: A

The Consumer Financial Protection Bureau urged an Illinois federal judge Monday not to transfer a suit claiming four Native American tribe-owned companies charged excessively high interest for online loans, saying there’s much more reason to keep the suit in Illinois than to move it to the companies’ preferred Kansas venue.

Golden Valley Lending Inc. and three other online lenders owned by the California-based Habematolel Pomo of Upper Lake Tribe had asked U.S. District Judge Thomas M. Durkin in June to transfer the CFPB’s suit to Kansas,….

Why fintech startups love advertising on the New York City subway (Tearsheet), Rated: A

For a consumer fintech startup, it’s the perfect place to put some advertising dollars. TransferWise has built its business around the ability to let people send money overseas at a low cost. Sixty percent of its users are immigrants; 40 percent are American-born. Its employees represent more than 50 countries. Its user base and prospective customer pool looks a lot like the people of New York.

Even if they’re American-born, theres still a chance they moved to New York from someplace else. TransferWise wants to send the message that it celebrates that diversity.

The subway is a hot destination for startups in general, looking to stretch their marketing budgets. E-commerce startups like Thinx and Casper both love advertising on the subway, calling them “conversation starters” and a way to be in a city where “trends are set.” They’re also effective, say these companies: David Zhang, Casper’s CMO, told Tearsheet’s sister site, Digiday that subway ads are highly effective to target local audience because when riders get stuck on the train, they have nowhere to look except at those ads.

Three years ago Venmo ran an ad campaign around the New York subway featuring an everyday millennial called “Lucas” (who, it turns out, was a Venmo engineer). Venmo’s message to subway riders was the same (although less nostalgic and bittersweet): we do the same things you do, we understand you. The campaign sparked a lot of frustration and confusion for consumers — but the company was engaging with them.

Charlotte fintech startup targets couples who don’t merge finances (Charlotte Agenda), Rated: A

Couples today are getting married later.

And when they do get hitched, they’re much less likely to combine their finances. Only one-third of millennial couples are putting everything in a joint bank account and fully merging their money. That’s down from about half of couples overall, according to research from TD Bank.

Honeyfi, an app planning a formal beta launch later this week, is designed to allow couples to blend finances to the extent they’re willing to — and figure out how to manage things accordingly.

Both sides load in all their financial accounts but can choose what’s visible to their significant other — both at the account level and at the individual transaction level. If you want to keep your shopping spree under wraps, you can do that with Honeyfi.

Small banks’ fintech efforts held back by Volcker Rule (American Banker), Rated: A

The Dodd-Frank Act’s Volcker Rule was meant to protect the financial system by prohibiting banks from engaging in certain risky activities. But it may also be stopping community banks from being able to reap significant benefits from the fintech revolution.

I bought a new Surface with the Surface Plus program (onmsft.com), Rated: A

Here’s a couple of things to note: In order to be considered for the Surface Plus Program, you are required to purchase Microsoft Complete and you will be required to do a credit check through KLARNA. KLARNA handles the financing and you will have to make your monthly payments through KLARNA and NOT Microsoft. After choosing the Surface Pro (fan-less Intel Kaby Lake i5 processor, 8 GB RAM, 256 SSD)I found that my 24-month payment plan is similar to a AT&T phone payment plan.

I have not started making payments yet, but my payments will be about $63 a month, with an option to upgrade after 18 months.

 

It takes about a week. I placed my order on August 1, got order on August 8. It is annoying that there is no tracking, but they don’t next-day a device to you when you order online through KLARNA. It can be frustrating I know, I checked my status every day freaking out. Going to a Microsoft Store is a better option.

Alan Gellman Joins Credible as Chief Marketing Officer (PR Web), Rated: B

In the latest move to capitalize on its expanded offerings and accelerate recent growth, personal finance marketplace Credible.com today announced that former Esurance CMO Alan Gellman is joining Credible as its first chief marketing officer.

Gellman who, prior to Esurance, led digital marketing at Wells Fargo, said joining Credible will allow him to pursue his goal of helping a consumer-centric growth-stage company realize its potential.

After launching as the first personal finance marketplace to provide instant, personalized offers for student loans, Credible expanded its offerings to include personal loans, and this month announced the pilot of its credit card marketplace. In the first half of 2017, more than 80,000 people qualified for loan offers through the Credible marketplace.

In his most recent position as chief marketing officer at Esurance, a leader in the self-directed insurance market, Gellman was named one of “The 50 Most Innovative CMOs in the World” by Business Insider. His appointment follows an announcement earlier this month that Ron Suber joined Credible as executive vice-chairman and a member of the board of directors.

New Leaf Communities, in Partnership With RealtyeVest, to Build 35 Unit Townhome Project Near Amazon Fulfillment Center (GlobeNewswire), Rated: B

New Leaf Communities, in partnership with RealtyeVest, announced plans today to raise capital for the new construction of Camden Crossing, a 35-unit townhouse development located in thriving northeast Jacksonville, FL. Online retail giant, Amazon, has plans to open a fulfillment center which will add approximately 1,200 new jobs located less than 2 miles away from the planned property. Additionally, Camden Crossing will be located less than 2 miles from River City Marketplace (a large, bustling outdoor shopping center) and Jacksonville International Airport (JIA). Forbes named Jacksonville one of America’s fastest growing cities in 2017. The 1,495 square foot townhouses will have 3 bedrooms, 2.5 baths, single car garages, and will be located on 6.15 acres.

According to Lee Arsenault of New Leaf Communities, Camden Crossing will offer investors an opportunity to earn an above market return while being secured in a hard asset like real estate.

RealtyeVest was chosen exclusively to raise capital for this project due to their powerful real estate crowdfunding platform, which allows individuals to review and invest in real estate online.

United Kingdom

Funding Circle: Small businesses braced for higher costs after Brexit (P2P Finance News), Rated: AAA

MORE THAN two thirds of small businesses that import goods and services expect costs to increase when Britain leaves the European Union, Funding Circle claims.

A poll of 1,325 small business borrowers by the peer-to-peer platform found 69 per cent of firms expect their average costs to increase by £5,300 per month resulting in £60,000 per year of extra spending.

Businesses were also deflated by the overall result of the general election with only 12 per cent stating that they feel positive about the outcome, while 41 per cent were concerned.

Buy-to-let property platform hits £50m milestone (Property Industry Eye), Rated: A

Founded in 2012 with an initial focus on Manchester, the House Crowd claims to offer investors returns of 8-10% to fund property projects, known as peer-to-peer (P2P) lending.

There have been 307 projects funded so far, all of which are secured on the underlying property.

 

4thWay Criticizes Competitors: “Comparison Websites Display Wildly Inaccurate Information About Peer-to-Peer Lending” (Crowdfund Insider), Rated: A

The worst inaccuracies were found to be:

  • Five of the six are presenting peer-to-peer lending as “savings” rather than “investing” a year after the Financial Conduct Authority expressed well-founded concerns about this practice.
  • The two money sites that compare P2P investments in their comparison tables include P2P lending in savings account comparison tables rather than separate investment comparison tables.
  • Risk of fraud and negligence were not mentioned by any of the money sites.
  • Just one of the six mentioned the risks to investors of concentrating their pots on just one P2P lending platform.
  • Risks identified in behavioral investing theory (such as poor investing results from those who are too greedy or fearful) were not mentioned by any of the sites.
  • None of the six explained the full costs to investors of using P2P services, typically covering just a smaller part of the costs (the lending fee), while sometimes leaving the impression that lending is completely free. (It is never free for investors due to hidden costs.)
  • No money sites made clear the vast difference in risks between the various P2P lending platforms.
  • Just one generic money site explains that bad debts might be higher in a financial downturn.
  • While all showed the risk of losses if a P2P lending platform goes out of business, five did not explain that you could experience delays in getting your money back.
  • Five out of six relied heavily on provision funds and on the level of interest rates to assess whether a P2P lending platform is safe, assuming safety is always correlated. (Interest rates are an unreliable measure of risk and provision funds are a secondary risk-control or risk-measurement devices. Much more important factors include such things as solid underwriting and credit-risk models, good security and low bad debt history.)
  • Some of the money sites did not explain that provision funds might not always be sufficient to cover losses.
  • All six fail to mention that you might not in all circumstances be able to get your money back as soon as you expect, even if there is an option to sell your loans and exit early.

The Start Up Loans Company and NatWest to help UK firms access alternative finance (Startups.co.uk), Rated: A

The Start Ups Loans Company, headline sponsor of the Startups Awards 2017, has announced a partnership with NatWest to help UK businesses access alternative sources of funding.

The government-backed Start Up Loans Company joins six other finance providers on the Capital Connections scheme including Seedrs, Funding Circle, Assetz Capital, iwoca, Together and NatWest Social & Community Capital.

Robo roundtable: Restricted advice like buying an ill-fitting suit (Citywire), Rated: A

New Model Adviser® sat down with the heads of three robo firms, or ‘digital wealth managers’.

  • Adam French, chief executive, Scalable Capital
  • Johann Bornman, director of product, ETFmatic
  • Giovanni Dapra, chief executive, Moneyfarm