Tuesday October 24 2017, Daily News Digest

fraud transactions

News Comments Today’s main news: OnDeck collaborates with Ingo Money, Visa on real-time SMB lending. Affirm’s new mobile app allows consumers to borrow money for almost any online purchase. N26 readies for launch in the UK. P2PFA reports over 700M GBP in Q3 new lending. Fincera issues $1B in Q2 lending. Kabbage automates SMB lending in France, Italy with ING partnership. […]

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United States

OnDeck Collaborates with Ingo Money and Visa to enable real-time Loan Funding to Small Businesses (PR Newswire), Rated: AAA

OnDeck (NYSE: ONDK), the nation’s largest online lender to small business, announced today agreements with Ingo Money and Visa to enable real-timefunding of loans to small businesses via their debit cards, powered by Visa Direct. OnDeck will be the first company in the online lending industry to offer real-time access to capital via a customer’s existing small business debit card.

The move by OnDeck comes in response to small business demand for improved cash flow and faster payment experiences. A recent survey found 70% of small business owners report they have a small business debit card, and of those without debit cards, 87% of them said they would get a new debit card to take advantage of real time transfers. The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app.2OnDeck plans to use Visa Direct through Ingo Money’s technology platform to disburse loan proceeds securely in real time to its line of credit customers via their existing small business debit cards. Visa Direct is Visa’s real-time push payments platform allowing companies to leverage Visa’s global scale to develop faster payments solutions for ubiquitous reach to consumers or small businesses with a debit card.

Ingo Push, the turnkey push payments service from Ingo Money, allows OnDeck customers to receive funds via a vast network of eligible debit or prepaid card accounts, including eligible Visa cards; online and mobile wallets; and a network of more than 40,000 cash-out distribution points.

SoFi priced itself at double its valuation during recent M&A talks (Pitchbook), Rated: AAA

SoFi reportedly mulled a potential sale earlier this year, but the talks evaporated over a hefty asking price. After receiving a non-binding offer of $6 billion from a foreign bank, the online lender pegged its target acquisition price at $8 billion to $10 billion as it negotiated with several US companies, including Charles Schwab, per the Financial Times. That price would have ranked the deal among the second most valuable VC-backed fintech companyin the US. It’s also one of eight American startups that have raised $500 million+ rounds this year.

But while SoFi could likely fetch a relatively high acquisition price, the $8 billion to $10 billion figure is far more than it appears to be worth. In February, the online lender raised a $500 million round at a valuation of $4.4 billion—and since then, its value has likely dropped amid sexual harassment allegations at the company.

Source: Pitchbook

Why Charles Schwab Held Talks to Buy Online Lender SoFi (Investopedia), Rated: AAA

Citing people familiar with the matter, the Financial Times (paywall) reported the deal talks with Schwab were prompted by a $6 billion offer from a foreign bank after SoFi raised $500 million in funding led by Silver Lake. With a more than $4 billion valuation after that, the unnamed foreign bank expressed interest in acquiring SoFi. That prompted the online lender to reach out to other potential suitors aiming to fetch $8 billion to $10 billion in a sale.

At first blush, a deal with Charles Schwab may not make sense, given it isn’t in the online lending business. But SoFi does have a wealth management unit that would give the San Francisco discount brokerage access to more customers and thus more assets under management. It’s also a low-cost provider on that front, something very much in Schwab’s wheelhouse. According to SoFi’s website, the company doesn’t charge customers for the first $10,000 invested and charges 0.25% per year. It also has a team of live advisors that give customers advice and ETF portfolios that are curated by the company. SoFi also has a large customer base, particularly of millennials, that would be attractive to Schwab. Earlier this year ex-CEO Cagney predicted SoFi would end the year with 500,000 customers.

Affirm’s new mobile app lets you borrow money for almost any online purchase (The Verge), Rated: AAA

Lending startup Affirm, founded by PayPal and Yelp co-founder Max Levchin, is out to destroy the credit card, or at the very least make a noticeable dent in its utter ubiquity. The company, which began in 2012 by offering simple and transparent loans for web purchases, is today launching a mobile app to the public that acts as a virtual credit card, so it can be used as a line of credit with no strings attached for pretty much any online purchase. The app is available now for iOS and Android.

The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app. To use the service, you need to provide proof of your identity, but credit is extended only for the item you want to buy, with the company determining your likelihood to pay back the loan based on your current credit and the total amount being lended.

You’ll need approval for every purchase you try to make, up to a maximum of $10,000. In total, Chou says Affirm has made more than 1 million loans for a total amount of more than $1 billion since it started roughly five years ago. It also now counts as over 1,000 merchants as partners, including mattress maker Casper, furniture site Wayfair, and Expedia.

Now, Affirm wants to extend its services to anyone and any merchant, by going directly to the consumer with a virtual card.

Although Affirm may offer as low as 10 percent APR, or in some cases zero percent for select partner merchants, you still run the risk of paying more for a purchase using the company’s virtual card than if you had a standard credit card. For those who are simply bad with money and borrowing, it has the same pitfalls as a credit card, though with a few more speed bumps and warning signs built in.

LexisNexis Risk Solutions True Cost of Fraud in Lending (LexisNexis), Rated: AAA

For every dollar of fraud, lending companies incur $2.82 in costs, which includes chargebacks, fees, interest, merchandise replacement and distribution, according to the LexisNexis Risk Solutions Fraud Multiplier. Large digital lenders, with over $50 million in annual revenue, are hit hardest by fraud in this space. These large digital lenders face a higher risk of successful fraud attempts than others within the lending space, but it really is a problem across the digital lending space, even with small and midsized digital lenders.

Source: LexisNexis

Get the full report here.

The Rise of Robo Advisors and the Death of Traditional Financial Advice (The Epoch Times), Rated: AAA

When BlackRock, the world’s largest asset manager with USD 5.7 trillion in AUM, decided to layoff talented stock pickers in favor of machines for portfolio management in March, it was a sure sign that times are changing.

The top performer in a group of the five leading robo advisors in the first eight months of 2016 generated returns that were encroaching on double-digit territory, and in some cases outperformed their more expensive mutual fund counterparts.

Source: The Epoch Times

And it’s not just BlackRock that’s demonstrated a willingness to favor machines over stock pickers. Robo advisors as a category, which is comprised of approximately 100 firms, oversee USD 60 billion in AUM as of year-end 2016 across 15 countries, according to Deloitte. That amount is expected to balloon more than fivefold to USD 385 billion in a half decade, according to Cerulli Associates research.

A recent Capital One Investing survey says in times of extreme market volatility, millennials are the least likely generation to turn to a person for financial advisory services at 69%. In fact, millennials are the generation that place the highest value on robo-advisory services, evidenced by 65% of them saying automated financial advice “enhances their financial peace of mind,” according to the poll.

Bloom seems to be the Vanguard of the robo advisory market, undercutting its competitors on fees and charging as little as USD 10 per month to manage a 401(k) or 403(b) account.

Leading the charge is robo-advisory firm Betterment, which boasts 270,000 usersand USD 10 billion in AUM.

FS Card Inc. Closes $ 150 Million Credit Facility to Continue its Build Card Product Expansion (FS Card Inc), Rated: A

FS Card Inc., an emerging financial services leader for underserved consumers, today announced it has raised $150 million in financing to fund future growth.  Through its Build Card product, FS Card will expand access to traditional credit and create an on-ramp into the financial mainstream for small-dollar loan customers.  The new credit facility closing comes as FS Card wraps up a year of rapid growth with Build Card portfolio expansion of nearly 500 percent in 2017.

The funding will be used for sustained portfolio build as part of the company’s ongoing commitment to financial inclusion in a market where a new rule from the Consumer Financial Protection Bureau is likely to impact access to alternative credit products.

According to Prosperity Now and The Federal Reserve, more than half of Americans are credit invisible or subprime, while 47 percent do not have $400 to pay for an emergency expense.  FS Card leverages its proprietary machine learning algorithms to actively meet the increasing demand of underserved consumers for fairly priced credit with a prime-like experience.

These 11 startups are re-inventing how money works and they’re worth more than $ 1 billion (Business Insider), Rated: A

Fintech is a multi-billion dollar industry, with startups in the US raising around $18 billion since 2015, according to PitchBook and nearly 1,400 venture capitalist-backed deals. Two of the most valuable startups in the country — Stripe and SoFi — are in the fintech sector. And there are 11 fintech startups valued at more than $1 billion.

10. Kabbage — $1.3 billion

Kabbage is valued at $1.3 billion, according to PitchBook estimates, thanks to a $250 million investment round in August 2017.

9. Robinhood — $1.3 billion

The zero-commission, US-focused stock brokerage is valued at $1.3 billion following a $110 million funding round in April 2017.

In total, Robinhood has raised $176 million, which is quite a lot considering the founders were initially rejected by 75 different venture capitalists.

5. Avant — $2 billion

Avant was valued at $2 billion after a $325 million funding round in September 2015.

Though its valuation makes it the fifth most valuable fintech startup in the US, it’s seen some rocky shores in the years since. In June 2016, the company reportedly laid off staff and lowered its monthly lending by half.

3. Credit Karma — $3.5 billion

Credit Karma scored a $3.5 billion valuation on a $175 million funding round in June 2015 which brought the company’s total funding to $368 million.

2. SoFi — $4.4 billion

SoFi was valued at $4.4 billion during its most recent round of funding in February 2017, which brought the company $500 million from investors. In total, the company has raised over $2 billion, including a $1 billion round led by SoftBank in 2015.

1. Stripe — $9.2 billion

Stripe was valued at $9.2 billion in its most recent $150 million funding round in November 2016. The company has raised a total of $440 million since its founding in 2010.

Groundfloor Launches Loan Origination Network As Investor Demand Surges (PR Newswire), Rated: A

In response to overwhelming investor demand, Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced the launch of its Loan Origination Network for mortgage brokers and third-party originators interested in tapping additional real estate loan opportunities. The company has opened up its innovative real estate financing platform to brokers nationwide who now have the opportunity to provide customers with low cost capital for fix and flip projects.

According to a recent report from ATTOM Data Solutions, the estimated total dollar volume of financing for homes flipped in Q2 2017 was $4.4 billion, up from $3.9 billion in the previous quarter and up from $3.4 billion a year ago to the to the highest level since Q3 2017, a nearly 10-year high. Also, more than 35 percent of homes flipped in Q2 2017 were purchased by the flipper with financing, up from 33.2 percent in the previous quarter.

Key benefits for mortgage brokers and third-party originators:

  • Competitive rates from six percent
  • Unique deferred payment option
  • Low documentation
  • Closing in as little as seven days
  • Costs rolled into loan principal
  • Discounted fees for high volume partners
  • Partners assigned dedicated Business Development Manager

Mortgage industry veteran Debora Valentine joins the team as Senior Vice President, Business Development. Valentine brings more than 25 years of experience in sales to Groundfloor’s senior leadership team.

Marqeta Partners with Alipay for US Transactions (Crowdfund Insider), Rated: A

Alipay has partnered with Marqeta on real-time payment processing for millions of Chinese travelers visiting North America.

Yesterday, Alipay announced  it had teamed up with smart terminal provider Poynt to enable its Chinese users to pay with its services through all Poynt devices in North America.

Alipay makes inroads into US with JPMOrgan Chase deal (Finextra), Rated: A

Alipay, the world’s leading third-party payment platform, today announced they are working with JPMorgan Chase, a global financial leader, toward a relationship by which Chinese consumers traveling in North America would be enabled to pay using their Alipay Mobile Wallet at Chase merchant clients.

The proposed relationship between JPMorgan Chase and Alipay would enable its acceptance at many of Chase’s merchants in North America. Through Alipay’s geolocation-based “Discover” function and push notifications within the Alipay app, Chinese travelers can locate merchants nearby, receive promotion information, and make purchase decisions. It also enables local merchants to better target and connect with Chinese consumers.

The Number of Consumers Opening HELOCs May Double During the Next Five Years (Globe Newswire), Rated: A

Approximately 10 million consumers are expected to originate a home equity line of credit (HELOC) between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016). The projection is part of a new TransUnion (NYSE:TRUstudy that evaluated recent dynamics in the HELOC industry, and was released today during the Mortgage Bankers Association’s Annual Convention & Expo.

TransUnion projects 1.4 million new HELOC borrowers in 2017 and 1.6 million in 2018, about a 30% increase from the previous two-year period of 2015 (1.1 million) and 2016 (1.2 million).

HELOC Originations – 2017-2022 Include Projections
Year 2012 2013 2014 2015 2016 2017 2018 2019-2022
HELOC Originations (In Millions)  0.7 0.8 1.0 1.1 1.2 1.4 1.6 8.4

The TransUnion HELOC study found that rising home prices and the resulting increase in equity is beginning to fuel interest in HELOCs. The Case-Shiller home price index rose as high as 180 in 2005 and 185 in 2006 before dropping to 134 in 2012. By July 2017 it had risen again to 194, and is expected to rise in the next few years to well over 200.

According to the study, there were 4.9 million HELOC originations in 2005 when home equity stood at $13.3 Trillion.  HELOC originations dropped to a mere 600,000 in 2011 as home equity declined to $6.3 Trillion.  Home equity has once again risen to $13.3 Trillion in 2016, yet HELOC originations continued to be low at 1.2 million.

Who are the HELOC borrowers?

The study explored the primary reasons why consumers open HELOCs and estimated the percentage of HELOCs opened under each motivating reason.

Types of HELOC Borrowers
HELOC Category Defining this Type of HELOC Borrower Percentage of
HELOCs
Debt Consolidation “Consolidate balances from other credit products, usually to a lower interest rate” 30 %
Large Expense “Finance a large credit need (e.g., home renovation project)” 29 %
Refinance “Refinance a HELOC, often to change terms or to get a better rate” 25 %
Piggyback “Concurrent with a mortgage origination, often used as part of a down payment” 9 %
Undrawn “Standby, undrawn line of credit for a ‘rainy day’” 7 %

Online Small Business Lending Provides Benefits to Small Business Owners, Finds New Survey (Electran), Rated: A

Four leading trade associations – Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association, and the Small Business Finance Association – commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence.  The survey conducted by Edelman Intelligence found that a large majority (70%) of small business owners believe there are more credit options today when compared to five years ago, and 97% of those feel that the growing number of financing options is a good thing.

Key findings of the study include:

  • 70 percent of small- and medium-sized business owners say there are more lending options now, and 97 percent of those believe that the increase in options is a positive thing for their businesses.
  • Most small business owners reported using online small business lenders to help them expand their locations, make necessary hiring and equipment purchases, and help manage cash flow.
  • Of the small business owners considering taking out a loan in the next 12 months, close to 40 percent say they will consider borrowing from an online lender.
  • According to the study, 98 percent of small business ownerswho have used online lenders say they are likely to take out another loan with an online lender.
  • For many small business owners, online small business lending platforms are a popular alternativeto asking friends and family for a loan.
Source: Electran.org

PeerStreet Launches Affiliate Blogger Program (BusinessWire), Rated: A

PeerStreet, a marketplace for investing in real estate-backed loans, is excited to announce its affiliate program at FinCon 2017. Backed by Andreessen Horowitz, PeerStreet’s platform provides investments in high-yield, short-term real estate loans. The newly launched program will allow PeerStreet to partner with the personal finance community to better serve both current and future investors.

PeerStreet aims to reach more investors through the affiliate program by working with financial writers and influencers to share thought leadership and market information about this unique space. In addition to high-conversion advertising opportunities, affiliate program partners will also have access to PeerStreet’s dedicated Affiliate Director, who can provide deep insight into PeerStreet’s service and offer tailored support.

Mastercard Takes Blockchain Mainstream with API (Finovate), Rated: A

Mastercard announced it has tested and validated its blockchain and will be opening access to it via a set of three APIs published on the Mastercard Developers website. The APIs include the Blockchain Core API, the Smart Contracts API, and the Fast Pay Network API.

Mastercard will pilot the blockchain for use in the business-to-business space, implementing it to increase speed and transparency in payments and decrease costs for cross-border payments.

Mastercard’s blockchain operates independently of a digital currency.

Fannie Mae Introduces New Tech Solutions to Lower Costs & Shorten Mortgage Processes (Crowdfund Insider), Rated: A

Online lender Fannie Mae announced on Monday the launch of its new single source validation, new API platform, and servicing marketplace for servicing transfers. 

Single Source Validation saves lenders time and money

  • Allows lenders to validate a borrower’s income, assets, and employment with a single report from a single approved vendor that the lender chooses.
  • Uses source data for validation (a borrower’s bank account, including pay stream and direct deposit information).
  • Reduces the number of paper documents borrowers need to provide.
  • Amplifies savings already being realized by lenders who currently use Day 1 Certainty validation services.

New API platform levels the playing field for lenders

  • Provides lenders with all the information they need from Desktop Underwriter to originate a loan.
  • Allows lenders to access information that they can customize to their needs.
  • Uses industry-standard data formats and protocols so lenders can integrate the Fannie Mae API to their systems quickly and easily.

Servicing Marketplace 

  • Provides sellers greater access to servicers when they sell loans to Fannie Mae and creates more efficiencies in managing co-issue transactions with Fannie Mae.
  • Offers transparent pricing, a standardized process, and standardized data requirements when a loan is sold to Fannie Mae.
  • Improves data quality and simplifies the servicing rights transfer process for sellers and servicers.

Envestnet | Yodlee to Integrate Risk Insight Solutions With Fannie Mae’s Desktop Underwriter Validation Service (PR Newswire), Rated: A

Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced its integration with Fannie Mae through a pilot program to digitally validate borrowers’ assets. Fannie Mae will leverage Envestnet | Yodlee’s Risk Insight Solutions to fuel the Day 1 Certainty™ validation of assets offering, which gives lenders a faster and simplified borrower experience.

We’re doing fine . . . (CU Insight), Rated: A

Over a four-decade career in financial services I have witnessed, experienced and participated in transformational change.  The conversations around emerging technology like the ATM caused industry debate – consumers would never use a machine to make a withdrawal from their account.  Credit cards not tied to a specific gasoline brand, local merchant or one of the giants of the catalogue sales world – Montgomery Wards, Sears and that upstart JC Penney – would never be accepted.  Consumers would never do their banking over the telephone, and of course never accept online banking – remember the first versions using a floppy disk? And checks would always be the only way, other than cash, to pay for things (bill pay, PayPal, debit cards and other payment methods…all have dispelled that).

We should be concerned about the FinTechs.  They are not a fad nor are they going away.  They are very well capitalized, and they have revolutionized how to leverage big data in ways we can only dream of.  They have challenged credit score lending structures by leveraging their ability to engineer data.  They are mobile optimized, in fact they are mobile prevalent, and they strive for immediate decisions and funding.  Where traditional lenders are still caught up in past practices making it difficult to refinance student debt, underwrite small business loans in minutes, grant signature loans at the point of purchase, or embrace new credit models, the FinTechs are quickly gaining ground in market share because they can do those things today.

And we have not evolved our cornerstone lending program, the signature loan, to compete not only at the POS for autos, but for personal improvements and major retail purchases as SOFI, Lending Club and so many other FinTechs have.

Arizona seeks $ 250K from partners accused of defrauding investors in payday-loan venture (AZ Central), Rated: A

Robin Erickson, an Arizona snowbird, remembers the pitch she got from her life-insurance agent about LoanGo, a startup internet payday-loan company.

The Mount Vernon, Washington, resident said she was told that the investment would generate an 18 percent return, and she “more than likely” would get her money back in a year.

“I loaned him $30,000, and I haven’t heard from him since,” Erickson, a retired elementary-school teacher, told The Arizona Republic in a phone interview.

The Arizona Corporation Commission’s Securities Division alleges that Erickson and four other older investors were defrauded of a combined $250,000 after making investments in 2011 and 2012 with LoanGo.

Administrative Law Judge Scott M. Hesla on Oct. 10 sided with state regulators and ordered the men to pay a total of $250,000 in restitution to the five investors. The judge also ordered the men to pay penalties of up to $15,000 each for “multiple violations” of the state’s anti-fraud provisions.

The judge, in his ruling, noted that Billingsley failed to inform investors that their money would be used to repay business startup loans of $10,000 each to himself and Peterson. The judge also wrote that investors were not told Billingsley received a $15,000 commission for obtaining their investments.

The judge noted that Billingsley was repaid his startup loan the same day one person invested $45,000 in LoanGo, and that Peterson was repaid the same day a different person invested $25,000 in the company.

AIMA’S NEW DUE DILIGENCE TEMPLATE (All About Alpha), Rated: A

It has been 20 years since the Alternative Investment Management Association published its first due diligence questionnaire, a template designed to standardize the diligence process by which investors decide if a particular management is right for them.

Now it has published a new questionnaire/template, covering a broader range of entities/strategies. Specifically, for the first time there are questions specifically covering private credit and private equity strategies. The new document also integrates what were formerly separate questionnaires specific to commodity trading advisers and fund of funds managers.

A CFPB policy everybody seems to like (really) (American Banker), Rated: A

Banks have welcomed the statement of principles because they are non-binding, while fintechs are encouraged by the CFPB’s recognition of key issues in the debate.

Yet the principles could also lay the groundwork for future regulation if banks and fintechs cannot work out some outstanding issues on their own.

Screen scraping

The most controversial aspect of data sharing is screen scraping. Banks loathe data aggregators’ practice of asking a consumer to provide their online banking login credentials, so the firm can scrape their account data. They argue it’s unsafe to hand out banking credentials and that aggregators bombard their servers with these requests, preventing actual customers from accessing their accounts.

The CFPB’s principles seem to discourage screen scraping without banning it.

Knight said the principle may encourage banks to directly provide data to third parties.

Informed consent

The CFPB’s principles around informed consent appeared the most stringent, suggesting that it’s not enough to just disclose what a company is doing, but disclosures must be done in language anyone can understand.

The principle may pose a challenge for banks and fintechs. How many companies send notifications about how they’re using and storing consumers’ data, in easy to understand language?

OCC head discusses the fintech ecosystem (Business Insider), Rated: B

However, while Noreika again defended the OCC’s right to license non-depository companies on Thursday, he also said the agency has not decided whether it will “exercise that specific authority.” This is more ambiguous than the OCC’s previous stance, perhaps suggesting the regulator believes the measure won’t survive such strong opposition.

Noreika said there’s been progress here, as federal regulators are now more willing to engage in dialogue with each other and with fintechs.

Source: Business Insider

The Robo Report Announces 2 Year Return Numbers for Robo Advisors In New Q3 Report (Business Insider), Rated: B

The Robo Report, the first and only report on the performance and portfolios of robo advisors, published by BackEndBenchmarking, has been released for the third quarter 2017, the company announced.

The expanded Report now offers a first look two full years of a few robo advisors performance data, along with new sections that include interviews with WiseBanyan, Personal Capital and Betterment; the addition of Sofi, TIAA and WealthSimple; and upside/downside capture ratios for more specific quant on risk tolerance, as well as more detailed asset allocation and style analysis.

The company currently tracks Acorns, Betterment, eTrade, Fidelity Go, Future Advisor, Personal Capital, Schwab, SigFig, Tradeking, Vanguard, WiseBanyan, TD Ameritrade, Ellevest, Hedgeable and Merrill Edge, Sofi, TIAA and WealthSimple.

First Associates to Host Industry Networking Event in New York (PR Web), Rated: B

First Associates Loan Servicing announced today that they will be hosting an industry networking breakfast for Marketplace Lending and Investment Banking professionals the day prior to the American Banker Digital Lending + Investing Conference.

Hosted at Aureole Restaurant in Manhattan, this event will include a panel of marketplace lending superstars, including speakers from Prospect Capital, Macquarie, MoneyLion and more, who will discuss the state of the industry.

If you have interest in attending panel discussion and event, please click here to learn more.

CoinList spins out of AngelList (Axios), Rated: B

CoinList, a provider of financial services for staging and managing initial coin offerings (ICOs), is spinning out of AngelList as a standalone company that will be led by former Sidewire CEO Andy Bromberg, it tells Axios.

United Kingdom

German app-only bank N26 gears up for UK launch as it recruits country manager (Business Insider), Rated: AAA

Closely-watched German fintech startup N26 is recruiting a country manager to spearhead its launch into the UK.

A job listing on N26’s website says it is looking for someone to take “charge of the market entry of N26 in the UK.” The successful applicant will be “responsible for the operational setup and development of N26 in the UK market,” and should “build up the branding for N26 within the UK market in order to successfully attract and win new customers.”

P2PFA reports over £700m of new lending in third quarter (P2P Finance News), Rated: AAA

THE PEER-TO-PEER Finance Association (P2PFA) has reported that new lending among its members equated to more than £700m in the third quarter of 2017, despite losing ‘big three’ platform RateSetter during the period.

The self-regulated trade body said on Monday that cumulative lending by the existing P2PFA platforms came in at more than £7.1bn by the end of September 2017.

Peer to Peer Lending Exhibits Steady Growth in Q3 2017 (Crowdfund Insider), Rated: AAA

The UK Peer to Peer Finance Association (P2PFA) has published their quarterly numbers on sector growth for the third quarter of 2017. Covering the period between July and September 2017,  the P2PFA says the numbers confirm continued steady growth in levels of new lending and in the number of borrowers facilitating loans through peer-to-peer lending platforms.

P2PFA Q3 2017 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Cumulative lending £4,888,231,038 £5,708,635,402 £6,391,925,730 £7,168,727,657
o/w lending to businesses £2,922,779,264 £3,487,208,822 £3,924,226,666 £4,440,151,180
o/w lending to individuals £1,965,451,774 £2,221,426,580 £2,467,699,064 £2,728,576,477
Base stock of loans (outstanding loan book) £2,132,049,663 £2,497,408,800 £2,745,490,796 £2,958,326,435
o/w lending to businesses £1,213,693,991 £1,470,605,094 £1,630,765,546 £1,754,510,098
o/w lending to individuals £918,335,672 £1,026,803,706 £1,114,725,250 £1,204,816,337
New Lending £603,011,422 £703,047,838 £666,096,755 £733,270,490
o/w lending to businesses £404,171,535 £447,073,032 £419,818,940 £472,393,077
o/w lending to individuals £198,839,887 £255,974,806 £246,277,815 £260,877,413
Capital repaid £370,158,773 £401,358,998 £411,834,014 £508,891,428
o/w lending to businesses £249,776,784 £253,832,226 £253,477,742 £337,105,103
o/w lending to individuals £120,381,989 £147,526,772 £158,356,272 £171,786,325
Net Lending Flow £237,151,881 £305,679,840 £254,262,739 £228,055,356
o/w lending to businesses £158,793,983 £197,231,806 £166,341,195 £138,964,268
o/w lending to individuals £78,457,898 £108,448,034 £87,921,544 £89,091,088
Number of current lenders 121,476 128,000 140,098 134,658
Number of current borrowers 191,055 214,631 231,189 246,813
o/w are businesses 29,594 34,566 39,043 43,425
o/w are individuals 161,461 180,065 192,146 203,388


Q4 2016 Q1 2017 Q2 2017 Q3 2017
Folk2Folk £139,344,302 £176,419,805
Funding Circle £1,524,427,000 £1,830,397,245 £2,158,457,107 £2,747,357,362
Landbay £42,948,000 £43,142,119 £43,975,419 £59,561,822
Lending Works £33,636,000 £39,368,050 £48,864,686 £71,699,386
MarketInvoice £754,325,000 £837,793,900 £918,450,994 £1,201,857,191
ThinCats £196,907,000 £211,446,000 £226,981,000 £254,955,000
Zopa £1,731,685,000 £1,926,038,724 £2,172,561,894 £2,656,877,091
Total £4,888,231,038 £5,708,635,402 £6,391,925,730 £7,168,727,657

What getting servicing right really means (Mortgage Strategy), Rated: A

Earlier this year LendInvest received the highest possible rating for the quality of our loan servicing from ARC Rating, a regulated European credit agency, for the third straight year. It’s a big achievement for any lender, but particularly an online lender.

Here are some of the things that ARC looks for when rating a lender’s servicing standards:

  • Corporate governance and structure
  • Due diligence
  • Internal controls
  • Industry-standard technology
  • Data backup
  • Financial condition

A guide to Open Banking (Lexology), Rated: A

Open Banking refers to an open source technology that allows anyone to create apps and websites for the financial services sector. Developers use an application programme interface (API) to create software that allows customer data to be shared securely between banks and trusted third parties – with the customer’s consent.

The Open Banking Standard is publically available and can be accessed by developers when creating apps and websites. The final version of the Open Banking Standard is due to be in use by 2019.

Examples of Open Banking apps

  • Yolt is a money management app owned by ING Bank and launched in beta format in June 2017. Yolt allows users to view all their bank accounts, credit cards, bills etc. in one place – even if they are from different providers. Users can compare prices, including energy prices, and set budgets on their phone.
  • HSBC announced in September 2017 that it was testing an Open Banking platform that will allow its customers to view their current accounts, credit cards, loans, mortgages and savings from up to 21 different providers.
  • Wave offers a service for businesses to give clients access to all of their finances in one place. It acts as an invoicing service; tracks income and expenses to make accounting easier; allows for streamlined payment of staff and will leverage data from as many sources as possible. It also offers loans to clients by connecting with the online lender OnDeck.
  • DueDil is an app which uses data to make online due diligence passports for its clients so that they can prove their financial credentials.
  • Tandem collects the banking data of its customers from their banks, analyses their spending habits and provides suggestions for how they can save money.

Why buy-to-let investors are focusing on graduates in the London suburbs (The Telegraph), Rated: A

As rents continue their inexorable rise, the appeal of living in inner London boroughs such as Camden – where the average monthly rent is £2,219 – is starting to lose its shine.

According to peer-to-peer lending platform Landbay, the central areas popular among students are being eschewed by graduates, who are looking to make the capital their long-term base.

Faced with spending up to 75 per cent of their take-home pay on rent, graduates looking to work in London are choosing to live in areas where they can remain in commuting distance but pay less. And with average student loan debts of more than £50,000 according to the Institute of Fiscal Studies, any savings are welcome.

Top ten outer London boroughs | Average rent and yield

Year ending 31 August 2017

1 Bexley (YoY% 1.98 / Av.£ 1,004)

2 Sutton (YoY% -0.23 / Av.£ 1,056)

3 Havering (YoY% 1.59 / Av.£ 1,072)

4 Croydon (YoY% 0.02 / Av.£ 1,125)

5 Bromley (YoY% 0.47 / Av.£ 1,169)

6 Hillingdon (YoY% 0.38 / Av.£ 1,192)

7 Barking and Dagenham (YoY% 1.49 / Av.£ 1,203)

8 Lewisham (YoY% -0.16 / Av.£ 1,232)

9 Redbridge (YoY% 1.08 / Av.£ 1,249)

10 Enfield (YoY% 0.88 / Av.£ 1,252)

Source: Landbay

Fitbit Pay arrives in UK and Arcadia offers host of new ways to pay (Internet Retailing), Rated: B

Users of Fitbit can start to use their devices to pay contactlessly in stores a la Apple Pay from today.

Starling Bank, a mobile bank which offers money management and payment tracking through its app, is also the first UK bank to launch with Fitbit Pay, Apple Pay and Android Pay.

China

Fincera Reports $ 1 Billion in Loans for Q2 2017 (Crowddfund Insider), Rated: AAA

Fincera Inc. (OTCQB: YUANF), a provider of online financing and e-commerce services for small and medium – sized businesses and individuals in China, has reported financial results for the second quarter ended June 30 , 2017.

According to their numbers, loan transaction volume across both CeraPay and CeraVest platforms for Q2 2017 totaled approximately RMB 6.9 billion (USD $ 1.0 billion ).

Source: Crowdfund Insider

Chinese issuers prepare ‘supercycle’ of technology IPOs (Financial Times), Rated: AAA

Chinese companies have raised $38.6bn through IPOs in the year to date, according to Dealogic.

Issuers in financial services — which, like education and leisure is at the confluence of the hot segments of consumer services and tech — include Ppdai, which is raising $350m in New York, Yixin, Lexin and Jianpu Technology.

Yixin illustrates another trend: many of those coming to market are backed by China’s tech royalty including Tencent, Alibaba, Baidu and JD.com. Auto financier Yixin, backed by the latter trio, is expected to raise about $200m.

Like Qudian, which listed last week, fellow online lender Lexin is heading to the US and is expected to raise around $600m, according to bankers. Jianpu Technology, a financial comparison site akin to Lending Tree in the US or MoneySuperMarket in the UK, filed for its IPO last Friday.

Source: Financial Times

Rong360 starts listing process in USA, whose revenue nearly tripled in two years (Xing Ping She), Rated: A

Recently, Rong360’s JianPu Technology has filed an IPO prospectus to U.S. Securities and Exchange Commission. Rong360, which started with a diversion business, this time takes the VIE model to list in US. Its business scope covers loans, credit cards and finance, as well as big data risk controls. However, it is noteworthy that Rong360 is still in the red, and its big data risk control business has also led to a compliance controversy.

According to the prospectus, the company plans to go public in the U.S. with a maximum of $200 million deal for it, and the underwriters are Goldman Sachs, Morgan Stanley, JP Morgan and Huaxing Capital. Rong360 was founded in 2011 and has finished four round of equity finance. The listed entity is a wholly owned subsidiary of Rong360, which was registered in the Cayman Islands in June 1st this year.

With the net loss of $7.2 million in the first half of 2017, Rong360 is still in the red. However, the deficit of JianPu Tech has been shrinking. The prospectus shows that the company’s revenue has increased from 168.4 million RMB in 2015 to 182.1 million RMB in 2016. And in the first half of 2017, its revenue has grown to 393.4 RMB, nearly tripled in less than two years.

Criticism, regulatory tightening to weigh on share price (Global Times), Rated: A

Chinese online lender Qudian Inc is under fire in China after what observers said was a less-than-impressive interview by its CEO Luo Min Sunday that was aimed fending off criticism of the company’s business practices. The critics said it could instead exacerbate the company’s domestic image and hurt its share price.

Following its splashy debut in the US, Qudian was the subject of many negative news reports, mostly from popular social media accounts, about its business model, with some questioning its practice of targeting students for loans and others even describing the company as a “loan shark” – lending money at usurious rates.

“Our bad loan ratio is below 0.5 percent, that’s very low. So we can afford it when those people don’t pay up… Losses have been contained at a low level,” Luo said.

But part of the interview drew much attention and even mockery. Luo said, “Loans that weren’t paid on time were considered dead accounts. We never pushed people to pay back. We don’t even call. If you don’t pay back, then never mind, we’ll just give it to you as a gift.”

European Union

ING Partners with Kabbage, Inc. to Expand Automated Small Business Lending into France and Italy (Kabbage Email), Rated: AAA

Kabbage Inc., a global financial services, technology and data platform serving small businesses, and ING, a global bank, are expanding their strategic partnership into France and Italy to provide small businesses with real-time access to working capital. Building on ING’s successful launch in Spain with the Kabbage Platform TM , this partnership allows millions of small businesses throughout France and Italy to easily apply, qualify and access ongoing lines of credit up to €100,000 with ING in under 10 minutes.

IRELAND’S FIRST SYNDICATED PROPERTY FINANCE PLATFORM LAUNCHED WITH €1.5 MILLION CROWD-LENDING LOAN (Irish Tech News), Rated: A

Initiative Ireland has today announced the launch of Ireland’s first syndicated property finance platform.

The launch coincides with the company’s pre-approval of a €1.5 million secured loan, which has been approved for funding via the platform. The largest crowd-lending loan approved to date in Ireland, the loan will fund the development of 10 social housing apartments and a ground floor restaurant on the North Strand Road, Dublin.

International

Empowering the Unbanked through Fintech and Microfinance (Huffingtong Post), Rated: AAA

One angle that needs to be discussed more is how the introduction of these new services is also lowering barriers to most financial activities.

For instance, the rise of cashless options has given the unbanked access to financial services especially in regions that banks find unserviceable. So, it is quite refreshing then that some new Fintech efforts are focused on this particular area since financial inclusion is considered as a key aspect to poverty reduction.

I recently spoke with Sharone Perlstein who is currently working on delivering microfinance services to emerging markets.

What attracted you to microfinance?

There are about 2.5 billion people in the world who are unbanked. Microfinance bypasses the banking system and can help unbanked people develop their own personal economy that will enable them to support their families, their communities, and ultimately the economy of their country.

What are the key challenges in microfinancing and how do you think they can be overcome?

Human resources: Until now, a very large workforce was required to provide this service to those who need it. Today, with automation and smarter information systems, we can significantly reduce manpower and streamline processes to make loans more economically viable for borrowers and lenders.

Most microfinance companies operate where they are most needed, namely in rural areas where the technological infrastructure is unadvanced and unstable. These areas are usually far from urban centers and transportation is inconvenient and expensive. As a result, communication between the microfinance service provider and its potential customers is complex and challenging.

Granting loans to people without a bank account may be risky from a business point of view, since it is difficult to know whether potential borrowers are trustworthy or will be able to meet the terms of the loan. It is also difficult to monitor their business and economic activity. In other words, it is very difficult to build a financial profile for a borrower with no banking activity. Here, too, mobile technology changes the picture.

Some argue that microfinance loans, supposedly meant to help poor people succeed financially, often leave them with debts they can’t afford because of the high-interest rates. What is your opinion on this matter? Is this a real problem? What causes it? And how can it be solved?

I think the best solution is to ensure that:

A. Potential borrowers understand the terms of the loan in depth.

B. The Microfinancier knows the potential borrower in depth.

Why do you choose to focus on Indonesia?

I researched the region’s economy a bit and discovered that there were more than 50 million small and medium-sized businesses, representing about 97% of the business sector in Indonesia and responsible for 30%, if not more, of its GDP growth. However, many of these businesses don’t have enough money to realize their full potential, especially in rural areas, and the banks do not provide the right solution. For this reason, the Bank of Indonesia has enacted a law according to which banks will have to devote at least 20% of their loans portfolio to microloans by 2018, thus opening a window of opportunity for businesses and other microfinance companies wishing to enter the local ecosystem.

Will Your Next Loan Be in Bitcoin? (The Street), Rated: A

Bitcoin could have you covered on your next home loan.

In this line, the longstanding contribution of traditional banks in the worldwide economy is undeniable. But due to their credit selectiveness, renowned bureaucracy and transactional costs, the question is: Can this system can be improved to better serve the 2 billion underbankedaround the world? Greater financial inclusion provides benefits far beyond improved economic health for underserved societies; it is also way for governments to reduce corruption and fraud and promote entrepreneurship and growth.

Anecdotally, at the end of 2015, Lending Club had a total loan volume of $15.9 billion. Year-end of 2016 shows a total volume of $24.6 billion so the annual volume for 2016 is the difference or $8.7 billion.

Just last year, Ripio Credit Network, which wrapped up a $31 million Ethereum ICO, entered the credit service market using Bitcoin as the transaction vehicle. A year later, BitPagos launched Ripio as a digital wallet that enables consumers to send, receive, store, and buy or sell Bitcoin in local currency and to make online payments. In January 2017, BitPagos rebranded as Ripio, with around 100,000 users in tow across North and South America.

Mambu: A Truly Global SaaS Banking Platform for Traditional Finance & Fintechs (Crowdfund Insider), Rated: A

Mambu is a Software as a Service (SaaS) platform that has quickly differentiated its product as a leader in the white label global online banking space.

Mambu is operating in 45 different countries indicating its ability to quickly adapt to diverse regulatory regimes.

Co-founded by CEO Eugene Danilkis and COO Frederik Pfisterer, Mambu is Berlin based Fintech, a standout in the emerging German Fintech scene. Danilkis started his career developing NASA-certified software for the International Space Station.

Can you please provide an update on Mambu and global utilization? How many different companies are using your digital banking services? Which countries are you operating in?

Mambu is live on 6 continents, countries of operation include the UK, Netherlands, Germany, Sweden, the US, Kenya, Australia, Philippines, China and Argentina, to name a few.

We have more than 180 live operations in over 45 countries, our solution powers over 5000 loan and deposit products which serve over 4 million end customers.

Our clients range from FinTech revolutionaries to traditional banks.

  • Oaknorth
  • N26
  • New10, ABN AMRO’s newly launched SME lending Fintech, went from concept to launch in 10 months and is offering a fast and fully digital loan application process for Dutch businesses.
  • Globe Telecom’s lending business Fuse
  • PayU Colombia

Is online lending, including P2P, marketplace and balance sheet lending, the most demanded service right now?

Eugene Danilkis: Across all lending verticals, consumer, business and marketplace, there is significant demand for digital and customer centric loan products.

That being said, we have experienced a rise in demand from institutions looking to launch new digital banking services, offering both deposit and loan products.

We’ve also seen a growth in institutions looking to explore a different approach and take a marketplace model similar to that of N26.  They want to collaborate with product providers to offer clients a wider range of products and services.

There appears to be more traditional lenders (IE banks) more inclined to go it alone and launch their own platforms. Goldman Sachs launched Marcus which they developed in house. Is this a trend? Or an opportunity for Mambu?

Eugene Danilkis: As mentioned above, this is a trend that is gathering momentum and it is an opportunity for Mambu.

From Bitcoin To Equity: Fintech Terms Explained (International Business Times), Rated: B

Cryptocurrency: A digital currency that uses cryptography, the art of coding messages to keep them secure.

Blockchain technology: A type of software pioneered by the bitcoin community. It is a new way to structure data by spreading it out across the network so no single party can meddle with the records.

Ethereum: A type of open source blockchain network created by a Russian-Canadian programmer named Vitalik Buterin.

Smart contracts: A piece of software that runs on a blockchain platform and is programmed to automatically complete transactions based on specific circumstances.

Mining: The process of verifying transactions on decentralized cryptocurrency networks is called “mining.”

ICO: An initial coin offering is a type of fundraising campaignwhere a high-tech project raises cryptocurrency by selling tokens, usually a new token unique to this project or startup.

P2P: This stands for peer-to-peer, direct transfers between two people. If you send a friend money through the Venmo mobile app, that’s a P2P money transfer.

Altcoin: A generic term for almost any cryptocurrency that isn’t bitcoin, short for alternative coin.

Cryptocurrency wallet: In the crypto space, a wallet is a piece of software that manages your coins and assets.

Utility token: A cryptocurrency that activates a product or service, grants access to a community or network, or otherwise spurs the blockchain-based project’s development.

India

Connect adds State Bank of India to panel (Mortgage Introducer), Rated: B

Mortgage network Connect for Intermediaries has added State Bank of India – the largest bank in India – to its panel.

The bank offers limited company and special purpose vehicle buy-to-let mortgages with rates starting from 2.59% to 60% LTV and 2.89% to 75% LTV.

It also offers buy-to-let mortgages for individuals from 2.09% to 60% LTV, while it accepts applications from first-time landlords if they have a residential mortgage.

Connect now has a panel of more than 100 lenders, with Octane, West One and Funding Circle being added this year.

Africa

Mastercard Foundation Announces Fifth Annual Symposium on Financial Inclusion (BusinessWire), Rated: AAA

The Mastercard Foundation today announced that its fifth annual and largest Symposium on Financial Inclusion (SoFI) will take place in Accra, Ghana, on November 7 – 9, 2017. The Symposium champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.

Each year since 2013 the Foundation has convened hundreds of industry professionals to focus on barriers to greater financial inclusion around the world.

This year’s event will reflect on progress made over the past five years, explore challenges that still lie ahead, and plan how to expand and deepen financial inclusion for the world’s most underserved people.

Attendees will hear from an impressive lineup of keynote speakers, including:

  • Opening Keynote Address: Juliet Anammah, Chief Executive Officer, Jumia Nigeria
  • Keynote Address II: Dr. Ernest Addison, Governor, Bank of Ghana

The Mastercard Foundation first awarded the Clients at the Centre Prize in 2015 to the Swedish mobile microinsurance firm BIMA. Last year, the Prize was presented to the South African international remittance company, Hello Paisa. Each year draws nearly 100 applicants from companies around the globe. The three 2017 finalists are:

  • Jumo, a large-scale, low-cost financial services marketplace that uses behavioral data from mobile usage to create financial identities for micro, small, and medium-sized enterprises;
  • ftCash, one of India’s fastest growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans; and
  • Destacame, a free online platform that empowers users by giving them control over their data to build their financial capabilities and to access financial products.

Authors:

George Popescu
Allen Taylor

Friday October 20 2017, Daily News Digest

Chinese IPOs

News Comments Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO. Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the […]

Chinese IPOs

News Comments

United States

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

MENA

Canada

News Summary

United States

Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA

Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.

Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.

EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding.

Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA

PayPal is giving over 2 million retailers in the US the ability to accept Venmo payments, marking the firm’s most aggressive move yet to 

PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA

Sharp growth in mobile payments led PayPal Holdings Inc (PYPL.O) to report a better-than-expected third-quarter profit on Thursday and lift its guidance for earnings through the rest of the year.

The San Jose, California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. Those deals are clearly starting to bear fruit, analysts said.

PayPal shares were up 3.9 percent at $69.89 in after-hours trading following the results.

The company’s adjusted profit rose 32 percent during the third quarter to $560 million, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 21.4 percent to $3.24 billion.

Its mobile payments volume jumped 54 percent during the third quarter compared with the year-ago period, to about $40 billion. Total payments volume rose 31 percent to $114 billion.

Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA

Florida fintech firm Finova Financial announced on Tuesday it has secured $102.5 million in equity and credit facility funding. The financing was led by CoVenture with participation from existing investors.

Finova’s current digital products include its Car Equity Line of Credit (CLOC) and Automobile-Secured Prepaid Card. Its services are available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon and Arizona.

Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A

The Fundrise Equity REIT, or Growth eREIT, has filed with the SEC to raise up to $45,730,440 under Reg A+.  The amount includes $11.8 million from a previous offering circular.

The Growth eREIT most recently paid an 8% dividend.

The first Growth eREIT sold out at the maximum amount under Reg A+ of $50 million.

Investors may purchase shares in the eREIT with at a minimum $1000. Under Reg A+, both accredited and non-accredited investors may participate.

LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options  (PR Newswire), Rated: A

Mota Group’s LILY® division today announced a new flexible time-payment option, partnering with Affirm to offer shoppers in the United States the flexibility of buying now and making simple monthly payments for their purchases.

This new option is in addition to LILY’s existing payment methods of credit and debit cards, Bitcoin, and PayPal, making LILY the only consumer drone company to offer all five methods of payment.

LILY customers may select Affirm at checkout and view their monthly payments up front before making their purchase. More information and purchasing options are available at www.lily.camera/affirm.

Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A

“The number one thing that prevents entrepreneurs from growing big businesses is access to capital,” says tech entrepreneur and CBC Dragon Michele Romanow. She’s looking to change that for e-commerce businesses.

Today, Romanow’s Clearbanc, which provides revenue-based financing to online businesses, announced a new program with Facebook that will give the social media giant’s five million online merchants across Canada and the U.S. access to up to $500,000 in financing without having to give up any equity or fill out any paperwork or even undergo a credit check.

Facebook advertisers that have been operating for more than six months and are looking for money to grow, and have positive economics on ad spends — meaning when they buy an ad they are making a positive margin on selling that product — can apply online through Clearbanc’s Chrged program, which provides tools to help businesses scale, and connecting their Facebook Ad Account and payment processor.

Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A

Sasha Orloff, CEO and Co-Founder of LendUp:

As a socially-responsible lender on a mission to improve credit access for underserved consumers, LendUp shares the CFPB’s goal of reforming the troubled payday lending market. Since our founding, we’ve been a strong advocate for eliminating the predatory practices that have defined the short-term lending market and are pleased that many of these reforms are included in the rule.

At a time when more than half of Americans are unable to access traditional banking products, it is critical that we offer consumers as many safe credit options as possible.

Ken Rees, CEO of Elevate Credit:

We believe the CFPB got it exactly right with the rule.

The rule will dramatically change the landscape of non-bank, non-prime lending in this country. In addition to reducing the number of payday lenders and title lenders, the requirements for advanced underwriting and reporting will push most of the mom-and-pop, primarily brick-and-mortar lenders out of existence.  We believe that the growing need for non-prime consumer credit will be filled by more sophisticated technology-enabled online lenders.

Lisa McGreevy, President & CEO, Online Lenders Alliance (full response here):

The biggest problem with the rule is the very prescriptive nature for a product that is $500 or less. There is no room for any new products or innovation in this space.

APR is an irrelevant measure for very short term loans like this. The CFPB quotes that more than 80% of these loans are rolled over for another loan within the month. That is unacceptable.

CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B

The CFPB has published a notice in the Federal Register announcing that a meeting of its Consumer Advisory Board will be held in Tampa, Florida on November 2, 2017.

Presumably, the loan discussion will focus on the CFPB’s final payday loan rule.

Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A

Climb Credit, a student lending company that expands access to quality education for the new economy, today announced that it has entered into agreements with investors to purchase $130 million of student loans originated by Climb Credit.

The transaction will enable Climb Credit to continue expanding its student loan programs beyond its current network of software development, UI/UX design, robotics, welding, nursing, and other skills-based programs in additional high-earning fields. Climb Credit’s focus is to transform the higher education paradigm by providing better access and affordable funding to students to attend schools that consistently demonstrate a strong return on investment (ROI) for their students.

Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A

Roostify, a provider of automated mortgage transaction technology, today announced the upcoming release of Decision Builder, a new tool that will enable lenders to easily provide their prospective applicants with a clear, easily-digestible view of their loan options, based on the lender’s actual product and pricing system. The company will be offering live demonstrations of Decision Builder for the first time at the upcoming MBA Annual Convention.

The Decision Builder tool can be placed on a lender’s existing website, and features a handful of dropdown questions, such as the desired loan amount, the expected down payment, and the ZIP code of the house to be purchased. With that information, Decision Builder will generate a series of loan options based on the lender’s product and pricing system, showing the consumer what products and rates they would qualify for. Each option is presented in a visual, easy-to-understand interface with clear explanation of the benefit of the loan product – for example, a lower monthly payment or low total interest. From there, the consumer can more easily evaluate which loan product is right for them.

With accurate, realistic loan information from the lender’s website, the consumer can carefully consider their options on their own time, without the pressure of having to decide within the limited window of an appointment with a loan officer. When they’ve made a decision, the interface includes a convenient option to move forward on their chosen loan with the click of a button.

How consumer banking leaders are embracing AI (American Banker), Rated: A

Artificial intelligence is becoming a competitive advantage that will force institutions to incorporate it, according to participants at the BankAI conference this week.

“People will have to adopt artificial intelligence,” said Brian Pearce, senior vice president of artificial intelligence at Wells Fargo. “It will have to become part of everyone’s set of tools.”

What banks are doing

Wells Fargo is piloting several chatbot technologies, though it has yet to suggest a launch date for any of them.

The bank has a team dedicated to bereavement — they take these phone calls and help executors manage the estates of the newly deceased.

Bank of America

Michelle Moore, head of digital banking at Bank of America, shared an update on the virtual assistant it announced a year ago, erica. It’s now in use by 300 employees. Sixty percent of the time, employees choose to interact with erica by voice, though they could also use chat, Moore said.

Ally Bank

Ally Bank was one of the first to launch an AI-based virtual assistant two years ago: Ally Assist, which is based on technology from Personetics.

Most people who commonly interact with Ally Assist are heavier transaction customers, Morais said.

The bank is also using AI in the back office. For instance, the bank used robotic process automation to streamline an exception process that had required back-office staff to navigate multiple screens and type hundreds of keystrokes. It now takes three clicks.

BBVA

Robert Sears, executive vice president and global head of product for new digital businesses at BBVA, said the bank is applying AI in credit decisions and focusing on explainability.

The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A

For those studying abroad, organizations like Prodigy Finance—a borderless, peer-to-peer lending platform—provide international, post-graduate loans.

Student Loan Hero looked at 116 of the top American business schools to identify which programs are most financially affordable, taking into account the average debt of graduates, average starting salaries, and annual tuition fees.

Rank Business School Average Indebtedness Percentage of graduates with debt Annual tuition and fees Average starting compensation
1 Lehigh University $0 0 $19,350 $86,667
2 Oklahoma City University $11,331 9 $16,230 $101,090
3 University of Texas —​ Dallas $7,132 25 $19,048 $83,000
4 Missouri University of Science and Technology $11,386 19 $15,402 $66,667
5 Oklahoma State University (Spears) $18,728 22 $12,121 $70,700
6 University of Missouri (Trulaske) $20,495 20 $14,599 $64,252
7 Florida State University $14,379 31 $18,693 $67,308
8 West Virginia University $18,608 33 $9,450 $58,488
9 Louisiana State University—​Baton Rouge (Ourso) $17,900 27 $17,800 $62,429
10 West Texas A&M $18,500 54 $9,600 $93,625

Jay DesMarteau, head of commercial bank specialty segments at TD Bank, said early-stage businesses will often use their funds for operational necessities such as buying inventory and building products.

Isaac Rodriguez, CEO of Provident Loan Society, notes that as a not-for-profit collateral lender, most of his organization’s loans are made for short-term expenses such as meeting payroll.

David Reiling, CEO of Minnesota-based Sunrise Banks, confirmed this trend, noting that many of the bank’s small business customers now use their borrowed capital for technology purchases.

For example, according to a recent survey from TD Bank, 69 percent of small business owners either believe they do not have a business credit score or believe that business credit scores do not exist.

Of course, an alternative lender may be a better option if you want an even smaller loan or if you don’t qualify for a traditional bank loan.

Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A

Student loan marketplace and refinancing website LendEDU polled 1,000 Americans to discover their personal finance preferences when it comes to dating.

The big question, though, was this one: “Would you consider [annual income, student loan debt, or credit card debt] to be a critical factor when deciding to date someone?”

Just over 30% of respondents said that credit card debt was a critical factor in deciding whom to date, compared with just less than 19% who saw annual income as a critical factor and 12% who saw student loan debt as critical.

OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B

Acting Comptroller of the Currency Keith Noreika today reiterated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks, while emphasizing that a path should exist for these companies to apply for a national bank charter.

Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B

So, in case you want to make sure you aren’t doing anything that might send up red flags, here are some things buyers do that scare off sellers.

For instance, a new, fly-by-night online lender might give some sellers the heebie-jeebies. So make sure to ask your agent (and also the seller’s agent) whether there’s a certain lender they trust.

Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B

Online lender OppLoans announced on Thursday it has appointed Andy Pruitt to the role of CTO. Pruitt is a hands-on technologist who has helped start and grow three Chicago-area software companies. He isfounder of Data Anywhere, a data management company.

State rolls out refund program, checks on the way (KFOR), Rated: B

CashCall refunds are still on the way.

By the time Wanda took action she had already paid online lender, CashCall, $1800 dollars on an $800 dollar loan and she didn’t even get her loan through CashCall.

The agreement gives the state one million dollars to distribute to customers.

United Kingdom

Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA

LENDY has announced that it has returned £100m to investors over the last year alone, as it celebrates its fifth birthday this week.

The peer-to-peer property platform said on Thursday that this was a 120 per cent year-on-year increase and that it has now repaid £183m to investors since launch.

Lendy recently announced the repayment of a £7.92m loan, one of the largest seen in the UK’s P2P sector to date. The facility had been repaid ahead of schedule and delivered annual returns of 12 per cent to investors.

First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A

First Associates Loan Servicing announced that they have received Financial Conduct Authority authorization to undertake debt administration and debt collection in the United Kingdom.

In addition to having a stellar reputation for their loan servicing support and being the only loan servicer in their class to earn Morningstar Credit Ratings’ highest operational assessment ranking1, First Associates also offers lending support solutions to their roster of industry-lending clients including:

  • Capital Markets Support
  • Pre-Funding Support
  • Post-Funding Support

IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A

2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.

Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.

Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.

Othera ​announces ​new ​contract ​with ​U.K.’s ​Lendhaus (LendIt), Rated: A

Announced ​at ​Lendit ​in ​London, ​Othera, ​a ​blockchain ​software ​provider ​for ​the ​financial ​services industry ​has ​just ​signed ​to ​their ​proprietary ​blockchain ​platform, ​Lendhaus, ​a ​London- ​based ​loan originator ​providing ​syndicated ​lending ​for ​the ​commercial ​real ​estate ​sector.

HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A

HSBC UK has announced a partnership with Bud through first direct to offer an integrated offering  of financial services products and tools across the market.

This first direct trial kicks off in December and it includes proprietary algorithms – Market+ – to suggest the most suitable financial and non-financial products and services based on individual needs.

Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A

More than £825million has been pumped into the UK fintech since January – double the amount raised in the same period in 2016 – proving the vote to leave the European Union (EU) has not turned investors off Britain.

In fact, since the EU referendum vote, UK fintech companies have raised more than £1billion, according to research by London & Partners.

The capital has been the major winner from investment, receiving around 90 per cent of all venture capital investment.

London-based firms Funding Circle, Revolut and Receipt Bank each raised tens of millions of pounds of investment this year.

3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B

There are several online lenders available to offer you loans; they use your social media data to take a decision. Kabbage is the most popular loan landers working online. Kabbage offers the loan to the small businesses and keeps the cash flow in the different businesses. Before giving you the loan, they will ask you to get the access to your social media accounts.

Mark Arnold – a branding expert advises the credit unions and banks check a business credibility and see how effectively they are grabbing the market through social media. These businesses primarily look at different business especially at LinkedIn pages to determine the loan eligibility.

Use some crowdfunding websites to raise money for your business-like GoFundMe, Kickstarter, and Indiegogo.Share links to your crowdfunding webpages on your social networks on Twitter and Facebook and motivate people to share on their social networks.

China

Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA

Qudian, one of China’s largest online lenders, had a debut to remember on the New York Stock Exchange this week. Its shares closed up 22 per cent, making a multi-millionaire of founder and chief executive Min Luo.

The company, which raised $900m in the share sale, is the latest to underline investors’ appetite for the collision of lending and technology that has given rise to the Chinese fintech sector. Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to raise $350m in New York, and at least a dozen similar issuers are preparing flotations.

About 40 per cent of consumers in China make payments online, and 14 per cent have gone on the web to borrow money, according to DBS.

Qudian’s IPO — the fourth-biggest in the US this year — comes on the heels of Chinese online insurer ZhongAn’s hotly received $1.5bn IPO last month in Hong Kong. ZhongAn’s stock is up 34 per cent from its debut.

Source: Financial Times

Wary of online lending, regulators have strictly limited online financial products such as high interest “payday loans” and microloans by capping interest rates at 36 per cent. Last May, new restrictions wiped out scores of P2P lending networks in China, after worries that it was fuelling real estate speculation and subprime lending.

Source: Financial Times

A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA

In the past two months at least seven online lenders backed by SOEs have collapsed. It was a business none should have been in, far removed from the industries they were supposed to focus on. The money potentially lost is trivial—roughly 1bn yuan ($150m), compared with government assets worth more than 100trn yuan. Still, these cases highlight how hard it is for the party to stamp its authority on the vast state sector.

The troubled SOEs include distant subsidiaries of the national nuclear company, an aviation company and a big energy company in Shanxi, a northern province. They had acquired stakes, from as little as 20% up to 100%, in online peer-to-peer (P2P) lending platforms.

They were “marriages of convenience”, says Joe Zhang, chairman of China Smartpay, a financial-services company.

Source: The Economist

Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A

China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.

And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.

That 15 trillion yuan figure was calculated by Forward Business, a Shenzhen-based consultancy focusing on studies of IT and other emerging industries, which also suggests mainland banks granted a combined 12.65 trillion yuan in new loans to the budding sector.

But the grim reality remains, that the larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk.

Established in 2013, Tiandihui is an online platform where cargo and trucks are matched.

It s network stretches across 50 mainland cities and it handled some 64 billion yuan worth of transactions last year. The company, which charges fees for its matchmaking, has yet to break even.

European Union

Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA

Israeli fintech startup PayKey has raised $10 million in its Series B round led by MizMaa with participation from SBI Group, Digital Ventures, SixThirty, Fintech71, and The FinLab.

The new funds will be invested in global expansion, namely in the Asian market. Several of the investors in this round are Asian based while the startup graduated from the Singaporean FinLab accelerator.

Mind the GAP in the Lending GAP (AltFi), Rated: AAA

The Lending Gap has been one of the most quoted negative consequences of the financial crisis. Many political efforts have been conducted to stimulate the economy. New business models (e.g., private debt, direct lending, alternative finance, peer to peer) were born with the explicit aim and mission to “fill the gap”.

Where are we today, 10 years after the crisis?  Are borrowers still suffering? What investment opportunities are out there, if any?

  • FACT #1. The lending gap has been reduced, and the drivers have changed.
  • FACT #2. New alternative lending opportunities have opened up.
  • FACT #3. Banks are in better shape today, but exposed to the digital revolution and various structural challenges.
Source: AltFi
  • FACT #4. Credit expansion has resumed since YE 2014.

P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A

THE MOVE towards auto-lending among some peer-to-peer platforms may limit interest rates and be a stumbling block for investors worried about the type of businesses they lend to, a European automated P2P firm has said.

Despite being automated itself, Latvia-based Robo.cash has claimed lenders may be missing out on higher interest rates with a passive investment strategy.

As an example, Funding Circle recently moved from manual to auto-lending,now offering a conservation option at 4.8 per cent or a balanced approach at 7.5 per cent.

Australia/New Zealand

Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA

Online retail marketplace MyDeal.com.au has launched business loan offering MyDeal Marketplace Loans to accelerate the growth of their listed retailers.

Retailers who list their products through the MyDeal Marketplace can now apply for a business loan of up to $250,000 directly through their supplier management system and in many cases receive the funding in under 24 hours.

This offering is in partnership with fintech business Prospa, Australia’s leading online lender for small business.

Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A

“We’ve long seen the potential for technology to deliver better personalised financial advice to Kiwis,” said Ramesh Naran, Senior Manager, Digital and Innovation at Kiwi Wealth. “With this decision by the FMA, we can go through the application process and turn Future You into the powerful, personalised tool we’ve always wanted it to be. It’s already on its way to becoming the platform that’ll set the industry standard.”

Mr Naran said the FMA’s approach recognises the ability of technology to improve financial understanding and outcomes for New Zealanders.

India

What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A

In a much-awaited move, RBI issued guidelines to govern peer-to-peer lending or P2P. This is a landmark decision that will go the distance in achieving the objective of financial inclusion.

For the time being, RBI has advised NBFC P2Ps not to offer or arrange any credit enhancement or credit guarantee. Against this backdrop, the principal protection fund, which has been an exclusive offering of i2iFunding so far, may need some tweaking. At present, we are neither guaranteeing any compensation from the third-party nor are we making a claim of apportioning our capital for the purpose. Therefore, we will approach the regulator to get more clarity on this and would do our best in the interest of members of the platform. Existing investors need not hit the panic button.

Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B

More than 24,000 branches and 42 crore customers make the State Bank of IndiaBSE 0.00 % the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.

“Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“

Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled.

Asia

Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA

Founded and developed in Kazakhstan, the biggest economy of Central Asia, FinTech startup Lendex has announced plans for ICO crowdsale to finance the launch of a cross-border P2P (peer-to-peer) lending platform for underbanked consumers in Central and South East Asia.

MENA

Transitioning to a digital future in the Middle East (TXF News), Rated: AAA

Global fintech investment has risen phenomenally in recent years – from $3 billion in 2013 to $24.7 billion in 2016.

Although less than 0.1% of fintech investment originates in the Middle East, growing influence from a soaring millennial population, and increasing expectations for digital solutions, are giving rise to a burgeoning number of fintech initiatives throughout the region. In fact, the number of fintech companies in the Middle East and North Africa (MENA) region is expected to surge – from 105 at the start of 2016 to 250 by 2020. And fintech investment is predicted to grow by 270% in the Middle East this year, indicating the huge potential for digital change –and a strengthening drive to deliver it.

Payments

The majority of fintech innovation so far has been in the payments sector. Although fintech has already made a mark in the retail payments space – with new companies such as the UAE’s Beehive, an online marketplace for peer to peer lending, and Telr, an online payment gateway for emerging markets – effecting change in the corporate sector is more challenging. This is primarily due to the often more complex, cross-border nature of corporate payments and the accompanying regulations and security requirements.

SWIFT gpi already has the backing of over 110 banks across the globe – including BNY Mellon – which represents over 75% of SWIFT’s global payments traffic. The UAE’s Mashreq Bank was the first Middle Eastern bank to join SWIFT gpi earlier this year.

Trade finance and fintech development

AI, for instance, offers solutions to improve documentation flow and cut the need for time consuming processes. Two types of AI that could benefit trade finance are optimal character recognition (OCR) and intelligent character recognition (ICR). OCR converts images of paper documents into machine-encoded text, enabling documents used in trade transactions to be verified automatically; while ICR is able to learn and identify patterns of behaviour embedded in trade documentation. These capabilities would both help to improve efficiency and reduce costs in the supply chain.

Canada

They launched their Toronto-based venture, MagneTree Books, in the spring of 2015 with the help of a Kickstarter campaign for presales of their inaugural book.

Neither Josie, who was at the end of a maternity leave, nor Ronny, who worked for a humanitarian aid organization, had much savings to fund their startup or the first run of books, which together rang in at more than $65,000. A bank loan wasn’t an option; neither entrepreneur was in a position to cover the debt if something went awry.

Online sales have been slow – just 15 per cent of their books are sold on the web. But corporate gifting and wholesaling has proven fertile. Still, the company has yet to break even. Profit on a run of books rings up at about $7,000.

But they have a big problem: no cash to fund the second book’s production and marketing. Neither sibling is able to personally lend the company money, and they have begun crowdfunding once more.

Expert advice

Mr. Zakharia notes that the amount of money the siblings need to fund their second book is relatively small at between $7,000 and $10,000. Still, their inability to make a personal loan or secure a bank loan will make them unattractive to traditional lenders. “Banks are going to be very conservative,” Mr. Zakharia said.

One option the pair might consider is Lending Loop, a peer-to-peer lending marketplace that might be their fastest route to raising cash. “Because it’s such a small amount, I think it would be pretty easy to raise,” he said.

Authors:

George Popescu
Allen Taylor

Tuesday September 26 2017, Daily News Digest

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News Comments Today’s main news: SoFi’s CTO leaving the company. World Business Lenders buys BizFi assets. Zopa improves loan sale processing times. Fintech startups, banks face off on new European payments rules, data access. Klarna wins international ANDY award. Today’s main analysis: How MoneyTap is tackling the unbanked problem in India. Today’s thought-provoking articles: Fundrise, Wealthfront spar over real […]

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European Union

India

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News Summary

United States

SoFi’s chief technology officer to step down (Daily Mail), Rated: AAA

June Ou, chief technology officer of online lender Social Finance Inc and wife of its former CEO Mike Cagney, plans to leave the company, according to a source familiar with the situation.

The exact date of her departure from SoFi, has yet to be decided, according to the source. Ou did not immediately respond to requests for comment.

Ou, who joined SoFi in 2012 and is also the company’s vice president of engineering, is the latest senior executive to depart the embattled financial technology firm.

A pair of investing startups are in a public spat about the future of real-estate investing (Business Insider), Rated: AAA

It all started when Andy Rachleff, the CEO of Wealthfront, a California-based roboadviser with nearly $8 billion under management, went after the business model of Fundrise, a Washington DC-based real-estate crowdfunding company. , Rachleff said professionals who run managed real-estate funds fare poorly compared with low-cost index-tracking ETFs, such as Vanguard REIT Index Fund.

Fundrise’s CEO Benjamin Miller says this is a misrepresentation of how Fundrise works. “Amateur investors” on the platform aren’t picking individual projects, but rather strategies managed by the company.

“We operate like a Blackstone, but we democratize it and lower costs,” Miller told Business Insider.

Miller points to the recent initial public offering of Invitation Homes (INVH) to illustrate how expensive the public markets can be. INVH priced 215% higher in the public markets than in the private markets, according to data from Google Finance.

Source: Business Insider

Bizfi Survives, Thanks to World Business Lenders Asset Purchase Deal (deBanked), Rated: AAA

The Bizfi marketplace is slated to live on, according to Stephen Sheinbaum who joined World Business Lenders (WBL) as a managing director in July. On Wednesday, WBL purchased several assets from Bizfi including the brand, the marketplace, the Next Level Funding renewal book, and other related pieces of the company, he says. Sheinbaum founded Bizfi (then Merchant Cash and Capital) in 2005.

WBL, a Jersey City-headquartered small business lender will also be a lender on the platform.

The Tech Revolution Has Arrived For Alternative Lending (Bisnow), Rated: A

The growth of alternative sources of capital has opened a door for online and marketplace lenders, combining the availability and flexibility of capital with speed and transparency.

“Upward of $100B in loans are coming due and there is a gap,” Money360 President Gary Bechtel said. “The banks, life insurance companies, agency lenders, can only provide so much capital, and this is the void that nonbank lenders like Money360 are filling. And many of these firms have a technology component to them.”

Marketplace lending has become a popular alternative for student loans, credit card and small-business debt, but the commercial real estate industry has yet to fully participate. For Bechtel, it is a missed opportunity.

Money360 lifts those constraints. Because it does not have the same balance sheet requirements and regulations as traditional lenders, borrowers seeking financing for any asset class can apply for a loan on the platform. The platform offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans utilize 25- to 30-year amortization schedules.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Although yield-starved sophisticated investors have been increasingly allocating more and more of their capital to alternative asset classes such as real estate and private company debt, most retail investors are still unaware that modern technology and a new regulatory regime allows them to access these products online in very small aggregates.

Acting Comptroller of the Currency Keith Noreika Addresses Online Lending & Fintech Innovation (Crowdfund Insider), Rated: A

Speaking at the Online Lending Policy Summit in Washington, DC, Acting Comptroller of the Currency Keith Noreika discussed the online lending industry and his perspective on responsible innovation. Noreika told the conference participants;

“I see the growth of online lending and marketplace lenders as the natural evolution of banking itself. Your industry demonstrates a certain entrepreneurial spirit to seize economic opportunity that begins with your new idea. The idea may be leveraging the lending power of groups or using new data to assess creditworthiness. Or, the idea may be a way to make decisions faster or to give consumers more control of their financial lives.”

Noting that US marketplace lenders have originated about $40 billion in consumer and small business loans in the past ten years, Noreika said that online lending represents a substantial portion of all consumer unsecured credit in the US.  Some prognosticators expect that online lending will top $1 trillion by 2020.

What’s Hot and What’s Not in U.S. Fintech (Finovate), Rated: A

Here are the rules– we shouted out a list of 20 fintech trends and our cocktail-fueled audience shouted their opinion on whether the trend is hot or not*.

The hottest

  • Regtech
    I was fairly surprised to hear the audience react so strongly to this trend, since the U.S. is lagging in regtech startups and adoption.

What’s hot

  • AI  As we close out 2017, players in the fintech sector seem to be in all out hype mode on the subject.
  • Open Banking  Though the U.S. doesn’t have any pending open banking regulation, folks still seemed quite optimistic about this trend.
  • Mobile account opening  Certainly a necessity for mobile-centric onboarding, mobile account opening has been around for awhile. It seems to have received new life with many enabling technology developments and IoT device launches throughout the years.
  • Challenger banks  With the lack of challenger bank launches in the U.S. (that is, compared to the U.K.), it was surprising to see the group cheer on challenger banks so vociferously. Perhaps a sign that more challenger banks are coming to the U.S.?
  • Insurtech – The audience seemed to heavily favor this trend over others, despite the relative lack of insurtechs in the U.S.

Not hot

  • Chatbots
  • Roboadvisory
  • ICO’s
  • Alternative credit scoring
  • Voice banking
  • Mobile wallets
  • Biometric authentication
  • Alternative lending

Payday lender operators forced to forgive $ 12M in loans (New York Post), Rated: A

New York on Monday announced a settlement with two payday lender operators — barring them from working in the state and forcing them to forgive roughly 20,000 loans worth roughly $12 million.

While payday lending is illegal in New York, state residents can fall prey to the predatory loans through out-of-state lenders trolling online.

Vullo called out E-Finance for making “unlawful misrepresentations” to New Yorkers when requesting payments and negotiating payment agreements.

TAR, headed by Jeremy Schaffer, and E-Finance, headed by Joshua Mitchem, according to court papers, will pay a $45,000 penalty plus as much as $15,000 to cover the cost of sending notices to consumers whose loans were forgiven.

After ending payday lending, group looks for alternatives (Argus Leader), Rated: A

South Dakotans for Responsible Lending will hold a meeting Thursday aimed at creating a nonprofit to help South Dakotans get small-dollar loans without taking on debt.

The effort comes months after South Dakota voters opted to cap interest rates on payday lenders, crippling the industry in the state.

The grant and donation-funded Minneapolis group helps participants pay back loans over a 12-month period with no fees or interest. Since 2015, the group has helped 131 loan participants refinance $90,072 and save $355,042 in interest.

Sara Nelson-Pallmeyer, the group’s executive director, said South Dakota voters have already taken a significant step in reducing payday loan debt by eliminating the industry. In its place, banks and credit unions should look to offer additional loans, she said.

The Great “Sexism in FinTech” Debate (FintekNews), Rated: A

Although I would never diminish it or deny its existence, I just don’t see sexism as an escalating problem in FinTech – or anywhere in the developed world for that matter. In fact, what I see trending is the exact opposite.

Extraordinary women in FinTech are all around us. I read about them every single day – not only in leading industry rags like FintekNews, Bankless Times and Crowdfund Insider, but also in long-established financial periodicals. In fact, FintekNews, which is published by Cindy Taylor, an accomplished FinTech visionary in her own right, devotes an entire section just to 

Breaking Banks: How men can support women in fintech (American Banker), Rated: A

Brett King is back on the show, talking about diversity in fintech with Anouska Streets, head of engineering at Finkit, a unit of digital banking software company Monitise, which was recently bought by Fiserv; and Colleen Wilson, founder and CEO of consulting firm Collaborate Chicago.


Women in Banking: The Most Powerful in 2017 (American Banker), Rated: B

The Most Powerful Women in Banking

1. Cathy Bessant, Bank of America
2. Marianne Lake, JPMorgan Chase
3. Ellen Alemany, CIT Group
4. Nandita Bakhshi, Bank of the West
5. Diane Reyes, HSBC

16. Hannah Grove, State Street

23. Teresa Tanner, Fifth Third Bancorp

The Women to Watch

1. Mary Mack, Wells Fargo
2. Thasunda Duckett, JPMorgan Chase
3. Heather Cox, USAA
4. Yolande Piazza, Citigroup
5. Ellen Patterson, TD Bank

19. Jane Russell, TD Bank

Andy Hinrichs of AutoGravity (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is the CEO and co-founder of AutoGravity, Andy Hinrichs. After spending two decades in auto finance Andy decided he wanted to do something to finally bring the car buying experience into the 21st century. He started AutoGravity less than two years ago but they are already seeing great traction.

First Associates Broadens Service Offerings to Offer Additional Client Support (Benzinga), Rated: B

First Associates Loan Servicing announced a new lineup of loan support and lending solutions today to better serve the expanding needs of their industry–leading clients.

New solutions include:

Primary Loan Servicing

  • Reduced delinquencies & defaults
  • Low-risk, cost-effective
  • Omnichannel communication to maximize reach
  • Top-notch investor, credit bureau & regulatory reporting
  • Secure fund flow & control

Capital Markets Support
Backup servicing, Contract Verification, Borrowing Base Calculation or Validation, Custodial Services & Treasury Services (Collateral & Payment Agent)

Pre-Funding Support
To help ensure loans are properly originated and funded: Applications by Phone, Customer Service Call Support, Borrower Verification Calls & Document Verification

Post-Funding Support
Customer Service Call Support, Multi-channel Collections Support & Borrower Verification Calls

Futurist Jack Uldrich to Speak on the Future of Wealth Management and Banking in Four Cities in Four Days (Life Pulse Health), Rated: B

Starting tomorrow, acclaimed financial futurist and best-selling author Jack Uldrich will begin a series of four separate presentations on the future of finance in four consecutive days. His first presentation will be for leaders with Atlantic Trust in Denver, Colorado, followed by presentations in Chicago, Washington D.C., and ending in Toronto on Sept. 29th.

Uldrich is a prolific speaker on future trends in wealth management, finance, and banking, speaking to dozens of finance groups globally each year, including some of the biggest names in these industries.

United Kingdom

Zopa improves loan sale processing times (P2P Finance News), Rated: AAA

ZOPA investors are now able to sell their loans within a few days on the secondary market, after the peer-to-peer lender made improvements to speed up processing times.

Earlier this month, Zopa promised a “large change” to address investor concerns about the time it is taking to sell loans.

UK peer-to-peer lending is about to face its toughest test since the sector was born (Business Insider), Rated: AAA

GLI Finance, a listed investment company that backs fintech businesses, on Monday wrote down the value of its investments in eight peer-to-peer lending platforms by £12.6 million to £28.9 million, citing “concerns over the collectability of some platform loans.”

The disclosure came after concerns were raised above fast-growing peer-to-peer lender Lendy Finance over the weekend.

Meanwhile, Zopa, the UK’s oldest peer-to-peer lender, last month wrote to investors telling them to expect higher-than-forecast losses as a result of deteriorating credit conditions. And peer-to-peer platform Wellesley & Co. last year raised £2.5 million to “absorb impairment losses that would otherwise have been passed on to peer-to-peer investors.”

The backdrop to all these disclosures is a surge in unsecured consumer borrowing and rising inflation in 2017, factors which are combining to fuel fears people may be unable to pay back all they have borrowed. Unsecured consumer borrowing hit £202 billion in July, the highest level since 2008. Meanwhile, inflation is running at 2.9%, well above wage growth.

Can’t afford to buy a property? You can now borrow your deposit (The Sun), Rated: A

Property Pact aims to help those who are struggling to get together a deposit for their first home.

To apply for a loan with Property Pact, you must meet the following:

  • Have a good or excellent credit rating
  • An annual salary of £30,000 or more
  • No County Court Judgements (CCJs) against you
  • Have at at least one year of continuous employment with the same employer
  • Must be employed in a profession or managerial role or a key job leading to a professional qualification or managerial role.

To register your profile on the site, you’ll need to pay £150.

Investors can then browse your profile and decide if they want to lend the money to you.

If an investor then agrees to lend, you’ll pay a 5 per cent arrangement fee – on a loan of £30,000 that would be £1,500.

The loan will be repaid at a rate of 5.5 per cent above base rate – so currently 5.75 per cent.

Britain’s first Small Business Commissioner is needed now more than ever (SME Web), Rated: A

With this in mind, let’s look at the three main challenges that the Small Business Commissioner will need to address in the coming year:

  1. Late payments: Time and time again we are reminded of the late payments crisis damaging small businesses, who are owed a collective £26.3 billion. Research from the FSB shows that poor payment practices are on the rise, causing 50,000 business deaths each year.
  2. Funding: SMEs bring a combined turnover of £1.8 trillion to the UK economy and we must encourage people to follow their dream of running their own business. In addition, some will need educating about using alternative finance methods, such as P2P lending, invoice financing and crowd funding.
  3. Rising costs
China

A Missing Piece in China’s Economy: Consumer Credit Ratings (WSJ), Rated: AAA

The world’s second-largest economy doesn’t have a widely accepted system to gauge creditworthiness among a fast-expanding middle class with growing paychecks, a hunger for consumer products and little or no credit history.

Chinese household debt is growing rapidly, outpacing broad credit growth every year since 2013 and reaching 38 trillion yuan ($5.7 trillion) by the end of the second quarter of this year. But household debt remains relatively low by global standards, at about 44% of gross domestic product, and the absence of a widely used standard of creditworthiness is keeping consumer borrowing from growing even faster, hampering access to credit for some 500 million potential borrowers.

China’s central bank has sought for nearly three years to put in place an answer to the FICO credit-scoring system predominant in the U.S., created in 1989 by data firm Fair Isaac Corp.

Technology giants Ant Financial Services Group and Tencent Holdings Ltd., along with several smaller companies, are developing competing credit-rating systems. Tencent began testing its system in August, two years after Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd. , launched its Sesame Credit personal scores.

But none of these projects has emerged as a single standard that’s widely used and trusted by lenders nationwide.

Paving the way?

Regulators in March set up a new clearinghouse, Wanglian, to centralize the processing of online payments.

Meanwhile, Ant’s Sesame Credit has a head start on its competition. Launched in 2015, Sesame derives a person’s credit score—which the individual can view on Ant’s popular Alipay payment platform—by mining data on the consumer’s e-commerce activity and other online behavior. Higher ratings confer perks such as waived deposits at some hotels and faster security screening at Beijing’s airport.

There are small credit bureaus in major cities including Beijing and Shanghai, but they have never gained traction and often lack access to borrowers’ financial data. Such bureaus reach only a third of Chinese borrowers, compared with 90% of borrowers in the U.S. reached by credit bureaus there, according to consulting firm Oliver Wyman.

Source: The Wall Street Journal

Hong Kong ‘falling behind’ in race to build up automated financial adviser platforms (South China Morning Post), Rated: A

Operators of automated, algorithm-driven financial planning services, or so-called robo-advisers, in Hong Kong need to significantly step up their game if they are to compete with Chinese and US institutions, according to Freeman Tsang, head of China and Hong Kong for asset management firm Legg Mason.

Only a few securities brokerages have entered Hong Kong’s robo-advisory market, which unlike the one in the US, lacks an open, computer interface that allows access to investors’ portfolios across different companies to develop an overall view of their financial status.

Such a foundation is vital for robo-advisers to be able to offer more customisable financial advice and support transactions across different investment tools and firms.

European Union

Fintech startups and banks face off on new rules over European payments and data access (Tech.eu), Rated: AAA

A large group of over 70 European fintech companies are warning that new EU rules on payments processing could unfairly pit them against large banks and decimate the industry if they are passed into law.

The rules are part of the European Union’s Payment Services Directive (PSD) and would ban the practice of “screen scraping,” a common practice used by fintech companies to “scrape” display data from one application (like an online banking service) and display it on their own.

In their manifesto, the 71 fintech firms argue that the ban on scraping is unreasonable and a backdoor method for traditional banks to claw back control as the Fintech revolution threatens to upend their business models.

Revised payment services directive

The European Union’s Payment Services Directive (PSD), originally passed in 2007, built a single market for cashless payments in Europe, making cross-border payments as easy and efficient for European consumers and businesses as domestic transfers.

Most importantly, the revised PSD (also known as PSD2) mandated that banks loosen their grip over customer account data and allow third parties to be able to access it with customers’ permission.

Klarna “Smoooth” Ad Campaign Wins International ANDY Award from Ad Club of New York (PR Newswire), Rated: AAA

Klarna, a global payments provider, has been honored with an International ANDY Award by the ADVERTISING Club of New York for its 2016 “Smoooth” campaign that illustrates how ‘smoooth’ payments can be for consumers and online merchants using its platform.

The award was presented at the 14th annual “Stars of Madison Avenue” luncheon.

The AD Club’s International ANDY Awards jury chose this year’s six honorees for making an impact on marketing, commerce, culture and social responsibility through brave and creative advertising and marketing campaigns.

Klarna’s “Smoooth” campaign kicked off with a series of critically acclaimed ad spots. Samples of the campaign are available here and here.

Europe’s top venture capital investors by country (Banking Technology), Rated: A

 

At the top of the list, High-Tech Grunderfonds has made nearly 200 deals to 150+ German companies since 2012, making it the top investor in European tech VC by a long shot. Notable recent deals include a $3.4 million seed round to POSpulse (shopper intelligence platform) and participation in a $2 million seed round to MoBerries (HR and workforce management company). Since 2012, German tech companies have seen more than 1,600 deals worth over $10 billion.

The UK has seen the highest number of deals and total funding deployed to tech companies, at more than 3,200 deals worth nearly $20 billion since 2012, according to CB Insights.

Top investors in European tech by country (as of 30 August 2017), according to CB Insights:

  • Austria – SpeedInvest
  • Belgium – PMV
  • Cyprus – SingulariTeam
  • Czech Republic – Credo Ventures
  • Denmark – SEED Capital
  • Estonia – SmartCap
  • Finland – Lifeline Ventures
  • France – Alven Capital
  • Germany – High-Tech Grunderfonds
  • Greece – PJ Tech Catalyst
  • Iceland – Frumtak Ventures
  • Ireland – AIB Seed Capital Fund
  • Italy – LVenture Group
  • Latvia – Imprimatur Capital
  • Lithuania – Practica Capital
  • Luxembourg – Mangrove Capital Partners
  • Netherlands – Newion Investments
  • Norway – Investinor
  • Poland – SpeedUp Venture Capital Group
  • Portugal – Portugal Ventures
  • Romania – GECAD Group
  • Slovakia – Neulogy Ventures
  • Spain – Caixa Capital Risc
  • Sweden – Almi Invest
  • Switzerland – Swisscom Ventures
  • Turkey – Aslanoba Capital
  • UK – LocalGlobe

 

New10 open for business! (ABN-AMRO), Rated: B

Starting today, SMEs looking for a loan online can go to New10, an initiative of ABN AMRO. New10 lets them know within 15 minutes whether they qualify for a loan and under what terms and conditions. New10 meets the needs of this group of SMEs that want to take out a loan entirely online.

New10 provides loans ranging between EUR 20,000 and EUR 1 million.

India

Consumer Lending Startup MoneyTap Is Shooting For The Stars (Inc42), Rated: AAA

Ensnared by the allure of entrepreneurship, Bala ventured into the promising world of fintech with MoneyTap, a consumer lending startup that was launched last September.

Touted as India’s first app-based credit line, the fintech startup is working to democratise credit in a country where 19% of the total population is still unbanked.

“The reason we started MoneyTap was that we wanted to solve the problem of consumer credit. Clearly, India is very credit starved. Less than 1% of Indian consumers have access to any form of unsecured credit from a bank or any financial institution. Most people, whether it’s from middle class or lower middle class, need credit, but they have to use informal methods,” explains Bala.

Based on his interactions, he concluded that there are four main reasons behind this pervasive inadequacy of consumer credit in the country:

  1. Historical baggage/legacy
  2. Lack of data
  3. High overhead in small-ticket loans
  4. Finally, the emergence of a new class of demanding consumers

Between 2003 and 2007, a number of banks in India were issuing loans without doing any detailed checked. At the time, there was no credit bureaus or Aadhaar. Even PAN was not widely used. When the subprime crisis hit in 2008, all these banks got burned. In the period prior to that, around 24 Mn credit cards were sanctioned in India, of which nearly 10 Mn crashed.

In a country with a population of over 1.31 Bn, only 220 Mn people have PAN cards. Other forms of KYC (know your customer), including voter ID, Aadhaar and ration cards are not considered as the sole identity proof, especially when it comes to financial activities. Credit information companies (CIC) – such as TransUnion Credit Information Bureau Ltd. (CIBIL), Experian India and Equifax India – still do not have records of a large section of the country’s banked populace.

As per Bala Parthasarathy, the cost of evaluating and issuing a credit line/loan/credit card for a bank is extremely high and thus they prefer to give big-ticket loans to few people rather than small ticket loans for a large group of people. The average loan ticket size in this country is between $4,629 – $7,715 (INR 3 Lakh-INR 5 Lakh).

If you think of India as a pyramid in terms of the net worth of people, all these banks focus on only around 12 to 15 Mn customers at the top of the pyramid because they are capable of applying for a loan worth $4,629 to $7,715. The problem, according to him, arises when someone wants a $463 (INR 30,000) loan because the overhead, in this case, is too high for the bank to make any profit.

The consumer lending startup claims to currently cater to customers with monthly income ranging between $308-$1,080 (INR 20,000-INR 70,000).

On the MoneyTap platform, consumers can borrow anywhere between $46-$7,715 (INR 3,000 to INR 5 Lakh) with an option to choose the repayment duration from as little as two months up to three years.

At present, MoneyTap charges a one-time setup and origination fee of $7.7 (INR 499) plus tax.

Source: Inc42
APAC

Fintech experts to discuss the future of finance in Phnom Penh (Southeast Asia Globe), Rated: AAA

Inspire Asean is back on 29 September at Sofitel Phnom Penh Phokeethra for an afternoon of presentations, exchanges and networking. One of our larger events, this edition will have six engaging presentations from top Fintech startups, infrastructure providers and international banks to discuss digital wallets, big data, blockchain technology, cryptocurrencies and alternative lending models.

The speaker lineup includes:

  • Brad Jones, chief executive officer of Wave Money in Myanmar and previously CEO of Wing in Cambodia.
  • Hong Samarkkeenich, regional sales director at Lenddo, is responsible for bringing the company’s technology to new and underserved market segments in Indochina.
  • Sim Chankiriroth is the founder and CEO of BanhJi, a free and localized online accounting software, built for Asean MSMEs.
  • Vincent Ling, deputy general manager of UnionPay International SEA, is responsible for regional brand and communications as well as the Core Products portfolio.
  • Steve Miller is the founder of CryptoAsia, a growing Bitcoin startup based in Phnom Penh.
  • Tomas Pokorny is the CEO of PiPay, a Cambodia-based fintech company that combines payment and lifestyle (social) application solutions.

Big Data, a Key Factor in Decision-Making (FiNews), Rated: A

A survey conducted by Deloitte showed that the respondents feel that analytics will become more important to their organizations in the next three years and that its greatest benefit is a key factor in making better decisions, and Singaporean companies are picking up on this.

This trend is great news for the local data analytics sector. In Singapore, the industry is expected to contribute at least $1 billion to the economy this year alone according to the Economic Development Board.

However, being in the service industry, these firms often lack significant physical collateral and assets, leaving them unable to turn to banks and similar financial institutions for financing. This results in cash flow issues that could limit the growth of these companies, if not hamstring them completely.

How Can Data Analytics Persevere?

  • P2P Financing
  • Equity Crowdfunding
  • Receivables Financing

10 Fast Growing Fintechs in Philippines (Fintech News), Rated: A

Acudeen

 

Acudeen is an organization opens its business to small and medium enterprises (SMEs) looking to boost cash flows, thereby answering an unsolved business need.

Ayannah

Ayannah is a leading provider of digital financial services to the world’s emerging middle class, most of whom are migrants or unbanked coming from the base of the pyramid.

BloomSolutions

Bloom makes money smarter by combining modern technologies like cryptocurrency with traditional infrastructure such as SWIFT and SMS.

Lendr

Lendr is an end-to-end loans origination and loans management platform that you can access via your desktop or mobile device.

LoanSolutions.ph

Loansolutions provides loans via our network of partner banks and lending companies.

Mynt

Mynt is a leader in mobile financial services focused on accelerating financial inclusion through mobile money, micro-loans, and technology.

PawnHero

PawnHero now lets you pawn online, anytime and anywhere.

PayMaya

PayMaya Philippines, Inc. (formerly Smart eMoney, Inc.) is the pioneer in mobile money and payments, having established brands such as PayMaya, the first prepaid online payment app that enables the financially underserved to pay online without a credit card; PayMaya Business, the company’s system solutions provider that allows businesses to receive online and card payments anytime, anywhere; Smart Money, the world’s first e-wallet linked to a mobile phone; and Smart Padala, the leading remittance network in the Philippines with over 15,000 agents across the country.

Ripple Supports Singapore’s Fintech Hub Aspirations With New Office (Ripple), Rated: B

Singapore has publicly stated ambitions to be the world’s leading fintech and innovation hub. It is also one of the biggest and busiest global trade centers with many large, multinational companies basing their regional treasury offices in the country. For these reasons, and to support our rapidly-growing customer base across Asia-Pacific markets – including Standard Chartered, a Ripple investor, member of the RippleNet Advisory Board, and early adopter of blockchain technology to power payments – we are excited to announce we have opened a new office in Singapore.

Africa

Riby aims to transform the way over 20 million West Africans use co-operatives (Techpoint), Rated: AAA

Mr. Lanre used to be hesitant about loaning his colleagues at work money, having suffered from bad debts. Luckily for him, his organisation launched a co-operative scheme to manage employees’ finance. Among other things, the co-operative allows anyone with an urgent financial need to easily request and get assistance.

It is estimated that 63% of Kenyans derive their livelihoods from co-operatives, while in New Zealand, 22% of the gross domestic product (GDP) is generated by co-operative enterprise. And while 50% of sugar-cane planters are grouped into co-operatives in Mauritius, the co-operative movement in Columbia accounts for as much as 697,006 jobs in the country.

Nonetheless, as CEO of a financial management service platform, Salami Abolore reveals that over a million co-operative bodies exist in Nigeria.

He says this with confidence because his company, Riby, helps co-operatives and their members remotely control both their finance and financial operations.

Riby happens to provide the technology that helps Mr Lanre’s company to manage their (employee) co-operative scheme.

The Riby peer-to-peer lending module allows companies to run internal co-operatives within their fold. A case in point is a savings rotation mechanism that auto-debits employees and credits whoever is due to receive money for the month. For both modules, Riby charges a per-user fee of ₦200 upfront, amounting to ₦2000 per annum and ₦500 on a quarterly basis.

The agent management platform, Riby’s third module, is another exciting proposition that raises an innocent suspicion as to whether Riby is taking the competition to the commercial banks. This is apparent in their overall quest to include everyone in the system.

About 40% of Nigerians are yet to register with any financial institution in the country, according to the Central Bank of Nigeria. Statistics from the Nigeria Inter-Bank Settlement System (NIBSS) further show that there are only about 40 million registered bank accounts across the country. These accounts are enrolled by just 20.8 million customers, some having more than one account. It is therefore apparent that co-operatives can be used to reach the unbanked.

Fintech startup MaTontine wins Seedstars Senegal (Disrupt-Africa), Rated: A

Fintech startup MaTontine was named winner of the Senegal round of the global Seedstars World competition over the weekend, earning the chance to represent the country at the global final in Switzerland next year to compete for up to US$1 million in equity investment.

MaTontine emerged the overall winner for its solution that provides access to small loans and related financial services like microinsurance by digitising traditional savings circles.

Authors:

George Popescu
Allen Taylor

Wednesday September 20 2017, Daily News Digest

low credit scores

News Comments Today’s main news: PayPal to fully integrate Swift Financial after closing acquisition.GoCardless raises $22.5M.Qudian poising for U.S. IPO.Varengold Bank AG to give $61M to MarketInvoice.Bondora hits 100M Euro milestone.Reserve Bank of India to treat P2P lenders as non-banking financial companies. Today’s main analysis: Public distrusts regulators as much as Wall Street.(a must-read) Today’s […]

low credit scores

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Latin America

Africa

News Summary

United States

PayPal will fully integrate Swift Financial ‘over the next year’ after loan provider acquisition closes (VentureBeat), Rated: AAA

A little over one month after revealing plans to acquire Swift Financial, PayPal has announced that the deal is now complete.

PayPal said that it plans to fully integrate Swift Financial into its payment service “over the course of the next year,” according to Darrell Esch, PayPal’s vice president and commercial officer of global credit, in a blog post.

PayPal has actually offered a working capital program for lending money to small businesses since 2013, and it has loaned more than $3 billion through the program to date. This compares to the $3 billion Amazon has loaned SMEs since the launch of Amazon Lending back in 2011, and the $1.5 billion in loans Square has doled out since launching Square Capital in 2014.

Public Distrusts Wall Street Regulators as Much as Wall Street (Cato.org), Rated: AAA

The new Cato Institute 2017 Financial Regulation national survey of 2,000 U.S. adults released today finds that Americans distrust government financial regulators as much as they distrust Wall Street. Nearly half (48%) have “hardly any confidence” in either.

Americans have a love-hate relationship with regulators. Most believe regulators are ineffective, selfish, and biased:

  • 74% of Americans believe regulations often fail to have their intended effect.
  • 75% believe government financial regulators care more about their own jobs and ambitions than about the well-being of Americans.
  • 80% think regulators allow political biases to impact their judgment.

But most also believe regulation can serve some important functions:

  • 59% believe regulations, at least in the past, have produced positive benefits.
  • 56% say regulations can help make businesses more responsive to people’s needs.

Americans want regulators to focus on preventing banks and financial institutions from committing fraud (65%) and ensuring banks and financial institutions fulfill their obligations to customers (56%).

  • 77% believe bankers would harm consumers if they thought they could make a lot of money doing so and get away with it.
  • 64% think Wall Street bankers “get paid huge amounts of money” for “essentially tricking people.”
  • Nearly half (49%) of Americans worry that corruption in the industry is “widespread” rather than limited to a few institutions.
Source: Cato Institute

Few Americans Want “More” Financial Regulations—They Want the Right Kinds of Regulations, Properly Enforced

Polls routinely find that a plurality or majority of Americans want more oversight of Wall Street banks and financial institutions. This survey is no different. A plurality (41%) of Americans think more oversight of the financial industry is needed. However, only 18% think the problem with federal oversight of the banking industry is that there are “too few” rules on Wall Street. Instead, 63% say the government either fails to “properly enforce existing rules” (40%) or enacts the “wrong kinds” of regulations on big banks (23%).

Despite Distrust of Wall Street, Americans Like Their Own Banks and Financial Institutions

  • 90% are satisfied with their personal bank; 76% believe their bank has given them good information about the rates and risks associated with their account.
  • 87% are satisfied with their credit card issuer; 81% believe their credit card issuer has given them good information about the rates, fees, and risks associated with their card.
  • 83% are satisfied with their mortgage lender.
  • Of those who have used payday or installment lenders in the past year, 63% believe the lender gave them good information about the fees and risks associated with the loan.
Source: Cato Institute

Democrats and Republicans Want a Bipartisan Commission to Run CFPB, Divided on CFPB Independence

  • Nearly two-thirds (63%) of Americans think the CFPB should be run by a bipartisan commission of Democrats and Republicans, rather than by a single director. Support is post-partisan with 67% of Democrats and 64% of Republicans in favor of a bipartisan commission leading the agency.
  • A majority (54%) of Americans think that Congress should not set the CFPB’s budget and should only have limited oversight of the agency.
  • Few Americans (26%) believe the CFPB has achieved its mission to make the terms and conditions of credit cards and financial products easier to understand. Instead, 71% say that since the CFPB was created in 2011 credit card terms and conditions have not become easier to understand—including 54% who believe they have stayed the same and 17% who think they have become less clear.

Most Support Risk-Based Pricing for Loans, Say Low Credit Scores are Due to Irresponsibility

Nearly three-fourths of Americans (74%) say they’d be “unwilling” to pay more for their home mortgage, car loan, or student loan to help those with low credit scores access these loans.

Source: Cato Institute

PayPal Officially Adds Swift Financial to Fuel More Dreams (PayPal), Rated: A

The acquisition will expand PayPal’s ability to provide access to business financing options to the millions of small business owners who rely on PayPal and our partner platforms to run their businesses. As we’ve said before, increasing access to capital is vital to the success of small businesses and is a strategic offering for PayPal, which drives merchants’ sales growth, increases processing volume, and reduces merchant churn.

A Manifesto to All Men: We Have to Do Better (Lend Academy), Rated: AAA

Like many of you I was shocked and infuriated by the news out of SoFi last week. I think we all expected better from the company and its leaders. Some of the behavior that has been reported is reprehensible and it points to a much deeper problem that goes way beyond fintech. The problem of sexual harassment in the workplace is bigger than any one company, any one industry or even any one country. It is rampant throughout the globe.

Men: we cannot keep behaving this way.

I have been drinking at the bar late at night at enough conferences to know that many men believe it is still ok to treat women as objects. This kind of attitude has consequences in the workplace. And if the leaders of the company condone this behavior there will be a culture that is at best unwelcoming towards women and at worst so toxic it can endanger the very survival of the company.

Women in Fintech

People often complain to me about the lack of women in fintech. People say that LendIt does not have enough female speakers and there are not enough women in general at our events.

This article is the first step in what I expect will be a long journey towards making fintech a more welcoming place for women. I want to see us do better as an industry. We should do everything we can to make fintech an attractive career choice for young women. We have several initiatives around this that are in the planning stages that we hope to roll out at LendIt USA in San Francisco next year.

Today In Data: SoFi’s Woes (PYMNTS), Rated: A

In addition, there are rumors circulating that improperly funded SoFi loan products were sold to investors.

Here are the numbers:

  • $4 billion | Valuation of SoFi as of Sept. 15
  • $3.1 billion | Value of loans funded by SoFi in Q2 2017
  • $1.9 billion | Total venture capital funding raised by investors like Baseline Ventures, Discovery Capital and SoftBank
  • $134 million | SoFi revenue generated in Q2 2017
  • 350,000 | Number of borrowers who have used SoFi’s lending services, totaling more than $20 billion in loans
  • $75,000 | Settlement SoFi reached with a former executive assistant, as detailed by The New York Times
  • 30 | Number of employees who have leveled accusations against SoFi’s former CEO

Sallie Krawcheck’s Ellevest just landed a big new round of funding (TechCrunch), Rated: A

Ellevest, a nearly three-year-old, New York-based digital investment platform built for women and led by former Wall Street titan Sallie Krawcheck, has raised $34.6 million in fresh funding.

It’s technically a Series A round, according to the company, which says a widely reported $10 million round that closed last year was seed capital.

The round — which was led by Rethink Impact, and includes participation from PSP Growth, Salesforce Ventures, CreditEase Fintech Investment Fund, LH Holdings, SK Impact Fund, Morningstar, Khosla Ventures, Mellody Hobson, Ulu Ventures, Contour Venture Partners and Astia Angels — brings the company’s total funding to $44.6 million.

Ant Financial to try again for U.S. approval of MoneyGram deal (Reuters), Rated: A

Chinese payments company Ant Financial is planning to resubmit its application for U.S. review of its deal to buy MoneyGram International Inc (MGI.O) for $1.2 billion, a source familiar with the matter said on Friday.

Ant Financial and MoneyGram have already refiled for clearance from Committee on Foreign Investment in the United States (CFIUS) when they were unable to secure it within an assessment period after the first application, Reuters reported in July, citing sources.

Ant Financial’s latest attempt for approval would be its third as the maximum time of 75 days for assessing such applications nears completion.

JPMorgan Seeks to Banish Paper Payments With a Fintech Venture (Bloomberg), Rated: A

JPMorgan Chase & Co. is partnering with another fast-growing technology firm, this time to help business clients eradicate paper checks.

The bank is working with Bill.com, the largest U.S. business-to-business payments network, to enable customers to send and receive electronic payments and invoices, according to Stephen Markwell, a product strategy head for JPMorgan’s commercial bank. The New York-based lender will pilot the service in early 2018 and plans to offer it to more business and commercial clients later in that year, Markwell said.

While many consumers already are embracing digital tools for sending money, like PayPal Inc.’s Venmo or the banking industry’s Zelle, more than half of business payments are still via check, according to Markwell. Companies write 8 billion checks a year, each costing about $4 to print and handle, he said.

In an ongoing acquisition streak, LendingTree buys another online loan marketplace (Biz Journals), Rated: A

LendingTree Inc. (NASDAQ:TREE) has acquired an online loan platform for businesses called Snap Capital, known as SnapCap, in a potential $21 million deal. SnapCap is LendingTree’s fifth acquisition since June of 2016.

LendingTree says the acquisition has a potential value of $21 million. The online marketplace will pay $12 million in cash upfront and if SnapCap hits certain performance targets over time, it will receive contingent payments of up to $9 million.

Charlotte-based LendingTree has been diversifying its business over the last several years beyond mortgages. And its stock price has been on the rise as a result. LendingTree’s stock was up about 7% Tuesday afternoon after the acquisition announcement. The company’s shares were trading at $251 Tuesday afternoon, up from about $93 per share a year ago.

LendingPoint Closed On $ 500M Credit Facility In August (PYMNTS), Rated: A

Online lender LendingPoint announced Tuesday (Sept. 19) that it had closed an up to $500 million credit facility on Aug. 22.

In a press release, the company said the credit facility was arranged by Guggenheim Securities. LendingPoint noted it drew down $138.5 million of the facility at the closing, and it took an additional $32.7 million on Sept. 15. The proceeds are being earmarked to bankroll the growth of its consumer installment loan portfolio, a business element which has roughly doubled between August 2016 and August 2017.

According to the company, the up to $500 million credit facility is among the largest credit facilities raised in the online consumer lending market in 2017.

Pine River Capital Shutting $ 1 Billion Flagship Hedge Fund (WSJ), Rated: A

Pine River Capital Management is closing its $1 billion flagship hedge fund after clients asked to withdraw more money than the firm was expecting, according to a person familiar with the matter.

The move will further shrink the Minnetonka, Minn.-based firm’s assets under management to $7.5 billion, half the roughly $15 billion it managed in 2015.

Don’t let court squander online lenders’ chance to reach underserved (American Banker), Rated: A

Most of the country has never heard of Madden v. Midland Funding and the common law doctrine of “valid-when-made,” but the impact of the misguided decision by the 2nd U.S. Circuit Court of Appeals on consumers is far-reaching.

Rate exportation has been key to the rise of standardized nationwide financial products, like credit cards, allowing banks to lend to borrowers across state lines without necessarily establishing a physical presence in every state, giving consumers better choices.

Following the Madden decision, it is unclear in the 2nd Circuit whether certain bank loans transferred to a marketplace lending platform would be ruled valid or not. Are loans bound by the bank’s “home” state rate cap, or the borrower’s “host” state rate cap? No one knows for sure. This legal uncertainty has caused nonbank investors in these loans to pull back, which, in turn, has led to a reduction in responsible and affordable online lending. Borrowers who are still trying to build credit have lost better options. According to an August study by professors at the Columbia, Stanford and Fordham law schools, “the decision reduced credit availability for higher-risk borrowers in affected states.”

Reliant Funding and Merchants Capital Access to be known as Reliant Funding (PR Newswire), Rated: A

San Diego-based Reliant Funding and New York-based Merchants Capital Access are now joined as one under the Reliant Funding name.

Four Facts about Reliant Funding

  • Reliant Funding’s business model provides access to capital for businesses that traditional banking typically does not serve. With innovative pricing and cutting-edge risk management, it gives businesses the fuel they need to penetrate their market and grow.
  • Since its founding, Reliant has funded businesses over thirty thousand times, providing over $900 million in working capital to America’s small businesses.
  • Reliant Funding speaks directly with thousands of American small and medium sized businesses each month and services thousands more. The focus is always on the individual client, their business story and meeting their needs.
  • Reliant Funding’s Wholesale Division currently works with hundreds of partners, providing them with funding for their clients as if those clients were directly originated in-house. The key is a commitment to strategic alliances, ensuring the relationship lasts longer than a single transaction. It’s just one aspect of many which sets Reliant Funding apart from the competition.

Randstad Professionals addresses technology’s impact on finance and accounting (Business Insider), Rated: A

Cloud computing, big data and financial technologies have raised the stakes for finance and accounting professionals according to Randstad Professionals‘ new whitepaper, Technology’s Impact on Finance and Accounting.

There are three broad areas in which emerging technologies and digital tools are causing significant disruption to the way things are done:

 

  • Breaking down big data for strategy: Finance and accounting employees can use big data to their advantage by forecasting trends, pinpointing behavioral patterns and suggesting probable outcomes — all of which can tie into a company’s strategy and impact their bottom line.
  • Leaving repetitive work to the cloud: Cloud actions have the ability to handle inventory management, generate invoices and provide accurate financial data. The software also delivers convenience for employees who want to digitally share company finances among coworkers, financial advisors, customers and other key stakeholders at a moment’s notice.
  • Putting the functionality in finance: Finance is making its way into fixed markets that provide mobile phone applications and access on everyday devices. Over the years, we have revolutionized how we pay, view our bank statements and transfer money through start-ups such as Bitcoin and Linden Dollar. Technologies that also integrate peer-to-peer lending or personal loan requests allow for a frictionless experience for customers.

 

Opponents Ready For US Payday Loan Rule (America Now), Rated: A

The Consumer Financial Protection Bureau (CFPB) is expected in coming days to release a long-anticipated rule curbing payday lending, now that a final review by other regulatory agencies has concluded, three people familiar with the matter said.

The rule pits the country’s consumer financial watchdog against payday lenders who say the new regulation will wipe out much of their established industry, currently overseen by the states, and push poor and rural customers to use illegal loan sharks.

Because the loans can carry interest rates as high as 390 percent, borrowers can become trapped in devastating cycles of taking out new loans to pay outstanding ones, the CFPB said.

When The Payday Lending Rule Drops, Opponents Are Ready To Attack (PYMNTS), Rated: A

Payday and short-term lending is an approximately $6 billion-a-year industry, one that both critics and supporters of payday lending agree will take a major hit if the CFPB’s proposed rules on payday lending go through.

To make that block happen, Republicans in the House of Representatives added a “rider,” or amendment, to a spending bill banning the CFPB from regulating the payday loan industry.

The CFPB rules on payday lending have been in the works for some time and would require lenders to conduct background checks showing borrowers can afford the loans and to limit the number of loans made to a single borrower.

First Associates Loan Servicing Earns Morningstar’s Highest Ranking  (PR Web), Rated: B

First Associates Loan Servicing announced today the release of the Morningstar ranking report certifying their overall excellence in loan servicing. Morningstar awarded First Associates a MOR RV1 ranking of ‘stable’ which is the highest certification possible and deeply assesses risk management, call center performance, quality assurance, technology, security protocols, project management and disaster recovery protocols.

Low-cost loans help hurricane victims rebuild (TheStreet), Rated: B

Since the majority of consumers lacked insurance coverage for flood damage, the costs keep adding up from replacing furniture and appliances to renting another home or apartment until the costly repairs are completed.

The Small Business Administration offers both homeowners and renters disaster loans ranging from 1.75% to 3.5% of up to $40,000 for property damage such as furniture, clothing, cars and appliances and up to $200,000 for repairs to the house.

Using money from your IRA or 401(k) account is likely a better option than asking friends or family or seeking a loan from a payday lender.

RealtyShares Gives Investors Access To Real Estate With Just A Few Clicks (Benzinga), Rated: B

What makes it so diverse? The markets available or the types of real estate?

Amy Kirsch: All of the above. We’ve done deals in 39 states, we offer debt and equity, commercial and residential, and we’ve done basically every asset class.

Do you have a minimum for investment?

The lowest limit we have now is $5,000, but it varies on how large of a fundraise we’re completing.

What’s innovative about RealtyShares? The technology, or what it lets you access?
A combination of both—I’ve invested in real estate in the past, and it’s always come through people I knew, and it was concentrated to where I was living at the time. When you’re looking at middle-market opportunities or don’t have hundreds millions of dollars to invest, the opportunities become a little more rare. So access is definitely a differentiator here.

Prime-Ex Perpetual Launches Pre-ICO for Residential Real Estate Crowdfunding Effort (EIN News), Rated: B

On Monday, Prime-Ex Perpetual‘s real estate crowdfunding effort began in earnest with the launch of their PEX-Token cryptocurrency sale, aimed at generating $25,000,000 in USD equivalent cryptocurrencies. The PEX-Token is a dividend token in which the company will pay 80% of company profits back to the PEX-Token holders. Beginning Monday people purchasing PEX-Tokens will receive 15% bonus PEX-Tokens for purchasing PEX-Tokens early.

United Kingdom

GoCardless, a fintech that makes recurring payments easy for subscription businesses, raises $ 22.5M (TechCrunch), Rated: AAA

Once again, Accel, Balderton Capital, Notion, and Passion are backing GoCardless, this time to the tune of $22.5 million and on the back of what the startup says is record annual growth in the U.K. and strong, early traction in new markets. Outside of Blighty, the company operates its bank-to-bank payments network in the Eurozone and Sweden.

GoCardless isn’t disclosing revenue. Instead the company says it processes over $4bn worth of transactions across more than 30,000 organisations in the U.K. and Europe, working with small startups and large enterprises across a number of industries. It offers an API and off the shelf integrations with over 100 partners including Xero, Sage and Zuora. Customers include Sage, Thomas Cook, Box and The Guardian.

Artificial intelligence: the legal and regulatory challenges (Lexology), Rated: A

Artificial intelligence (AI) will soon be everywhere. The insurance industry is facing huge changes as AI steps boldly into every aspect of its internal operations and external relationships wearing the bright new clothes of InsurTech.

It has brought new players into the insurance market with some, like Lemonade, the world’s first peer-to-peer insurance carrier powered by AI and behavioural economics, experiencing phenomenal growth over a very short time.

It is estimated that around £1.32 billion was invested globally in the InsurTech arena in 2016, up 32% on the previous year. The lion’s share of this was in the United States but the UK and Europe are increasing their investment (see chart below).

Other innovations, such as fractional insurance where customers buy on a pay-as-you-go basis or peer-to-peer insurance, will have a deeper impact.

For Rutter, one of the key cultural challenges for the insurance industry is going to be its cautious approach to regulation.

he Financial Conduct Authority is the lead regulator in this area and it has been trying to engage the industry, setting up a ‘sandbox’ to encourage insurers to work with it to explore the impact of regulation on technological innovation. In particular, it will be aiming to test the boundaries of legislation such as the Insurance Distribution Directive (IDD).

There will be some InsurTech applications that get it wrong, predicts Rutter, potentially selling large numbers of policies to the very people underwriters don’t want on their books: “Insurers need to understand that once automated decisions have been made, you can’t pull back from them by cancelling policies. That is hardly treating customers fairly”.

Source: Lexology

Peer-to-peer lending: should you be worried about falling returns and the poorly-performing Innovative Finance ISA? (love money), Rated: A

Falling returns, big loans going bad and news that new Innovative Finance ISA has failed to attract investors is leaving questions hanging over the future of peer-to-peer lending.

The bad news began last month when RateSetter, one of the biggest peer-to-peer lenders, was forced to cough up nearly £9 million to stop customers losing money after a big loan went wrong.

It’s not just Ratesetter

At the same time, another peer-to-peer lender is coming under fire from its customers. Zopa is being criticised by customers who are seeing falling returns on their investments.

Paltry take up on the Innovative Finance ISA

Finally, interest in the new Innovative Finance ISA (IFISA) has been disappointing. New stats from HMRC shows that just 2,000 IFISAs were opened in the 2016/17 tax year.

Abundance boss joins government’s Green Finance Taskforce (AltFi), Rated: B

Bruce Davis, co-founder and MD of green energy-focused P2P platform Abundance, has been appointed to the government’s Green Energy Taskforce. The group has been set up to help accelerate the growth of green finance and the UK’s low carbon economy.

Abundance is the UK’s biggest green energy-centric peer-to-peer site, with roughly £50m in finance facilitated for projects to date, according to AltFi Data. Its investors are able to invest in debentures for projects such as wind turbines and solar farms, and can hold those investments in an Innovative Finance ISA.

China

Online lender Qudian set for New York IPO (China Economic Review), Rated: AAA

Online consumer microlender Qudian said it plans to raise up to $750 million in a New York IPO, in the second of two major fintech deals this month which are expected to kick off a wave of similar listings by year-end. But a source with direct knowledge of the situation told Caixin the final fundraising amount is likely to exceed $1 billion, possibly making it the largest IPO by a Chinese company in the US this year.

European Union

German Bank Hands $ 61 Million to U.K. Online Lender Amid Brexit (Bloomberg), Rated: AAA

Uncertainty around Brexit may be mounting as political leaders from the U.K. and the European Union clash on the terms of separation, but that isn’t slowing down foreign investors from betting on Britain’s top peer-to-peer lenders.

Varengold Bank AG, a Hamburg-based private banking firm, will provide 45 million pounds ($61 million) in annual funding for loans to small businesses arranged by MarketInvoice Ltd., the British finance company said in an emailed statement.

28,639 investors have already invested EUR 102 million through Bondora and have received EUR 15 million in interest (Bondora), Rated: AAA

2017

Company reaches cash-flow profitability 100 million euro of loans issued.

Source: Bondora

Pan-European P2P Lender Younited Credit Raises €40 million from Historical Investors & the French Public Investment Bank (Crowdfund Insider), Rated: A

Younited Credit, the Paris-headquartered consumer lender announced a capital increase of €40 million subscribed by a panel of the top of the crop growth investors in France. Next to its historical shareholders, EurazeoCrédit Mutuel Arkema, AG2R La Mondiale and Weber Investissements which are already very active in Fintech and alternative finance financing, the startup now takes on board new major investors: Bpifrance, Matmut Innovation, and Zencap Asset Management.

GoldMint, Provider of Gold-Backed Cryptoassets Launches ICO Today (The Merkle), Rated: A

Today, on the 20th of September, GoldMint is launching its ICO.

GoldMint is celebrating the beginning of its ICO by attending 3 major events on the same day the crowdsale kicks off.  One of these events is BlockchainLive in London  – Europe’s leading Blockchain conference bringing together over 75+ global experts in various fields.

Another one is Moscow’s ICO Event which this time mainly focuses on how legislation will impact the cryptocurrency space.

Today GoldMint is also present at the Global Blockchain Summit in Hong Kong gathering iconic speakers from various industries to discuss about the real-world applications of blockchain technology, as well as its potential benefits, risks, and regulatory concerns.

To spread the word about GoldMint in the USA  – GoldMint’s advisor and business developer Evgeniy Volfman has recently completed the official Northern American road trip representing the project in New York, Los Angeles, San Francisco and Miami.

Simultaneously, GoldMint is opting to expand its campaign globally, with the Middle East & Singapore regions being the current primary focus.

International

Nominations open to global Women in Fintech Powerlist (Disrupt-Africa), Rated: A

Nominations are open to Innovate Finance’s Women in Fintech Powerlist, which recognises women shaping the future of fintech around the world.

UK-based membership organisation Innovate Finance compiles its Powerlist of Women in Fintech each year, with the aim of closing the fintech gender gap by showcasing the women driving the global fintech space.

SegWit2x, NYA Bitcoin Agreement Loses Another Signatory (Cryptocoins News), Rated: A

Bitcoin peer-to-peer lending platform Wayniloans has withdrawn its support for the SegWit2x bitcoin scaling proposal and the New York Agreement (NYA).

Wayniloans joins several other companies in withdrawing support for SegWit2x and the NYA. Banking and payment processor Bitwala announced last month it will only follow the SegWit2x blockchain if it receives support from Bitcoin Core, which does not appear likely.

Australia

FinTech loans and payments (Choice), Rated: A

FinTechs are certainly in competition with other FinTechs, but the real competition is the established financial service industry, epitomised by the big four banks. Consumer banking is where FinTechs aim to cause the most disruption – and many would say it’s an area where disruption is long overdue.

One recent startup, Spriggy, is out to grab its fair share of the kids’ bank accounts market, for instance.

Over the past 10 years, consumers have lost about $5.7 billion to financial advisers and financial services providers who put their own interests first. The scandals have included Opes Prime, Storm Financial, Timbercorp/Great Southern, Bridgecorp, Fincorp, Trio/Astarra, Westpoint and Commonwealth Financial Planning.

The size of the market in Australia has grown substantially year on year. In 2014, $9.45 million changed hands by way of P2P consumer lending platforms, for instance; in 2015, the P2P consumer lending figure stood at $43.15m.

And when it comes to money raised through crowdfunding, the figure jumped from $8.2m to $26m over the same time period.

At the moment, there are at least 86 FinTech tools operating in Australia through which you can borrow money, most of which are P2P lending services.

And there are at least 24 crowdfunding services on offer. It’s no surprise, then, that the biggest external challenge for FinTechs these days is finding customers.

Nine Australian FinTech companies made the 2016 list of the top 100 FinTech innovators around the world, an annual roundup compiled by the FinTech investment firm H2 Ventures and KPMG Fintech.

  • Prospa – Offers small business loans from $5000 to $250,000 with payback terms from three to 12 months, “for any business purpose”
  • Tyro – A payment system technology designed for businesses.
  • Society One – A P2P lender that says it provides “simple, investor funded personal loans with low rates based on your good credit history”.
  • Afterpay – Allows you to pay for goods in instalments direct debited from your credit card or other payment option.
  • Brighte – Offers 0% interest loans to approved homeowners for household energy efficiency improvement, such as solar panels or more efficient windows.
  • Data Republic – A customer data exchange service to help businesses better target their services to customers.
  • Identitii – Allows banks and other financial institutions to get more information about where and when payment transactions occur.
  • HashChing – An online home loan service that connects you with mortgage brokers.
  • Spriggy – Allows parents to manage kids’ bank accounts using digital tools.
India

RBI notifies P2P lending platforms as NBFCs: Agencies (India Times), Rated: AAA

The Reserve Bank of India on Wednesday notified that peer-to-peer (P2P) lending platforms would be treated as non-banking financial companies (NBFCs), an agency reported. This suggests the lending interface will now come under the purview of RBIs regulation under the RBI Act.

Company Name : Rubique (Business Wire India), Rated: B

Rubique, India’s leading FinTech company, is now taking giant strides in enhancing the level of education and training in the FinTech domain in India. In view of the highly lucrative opportunities that await young professionals in the landscape, it is leveraging its expertise to co-certify courses in FinTech at the prestigious SP Jain School of Global Management.

Latin America

Fintech Startups Attract Capital In Latin America (Forbes), Rated: A

Many Latin Americans are hard pressed to obtain credit for their businesses or family needs, as 49% of adults do not have bank accounts.

The region’s fintech industry secured $186 million in venture capital investments last year, according to the Latin America Venture Capital Association (LAVCA) – with more than one-third going to startups. Deal count increased by 81%, with 38 transactions.

In Brazil, 160 million adults have some type of banking relationship, but only 55 million are borrowers, according to the country’s central bank. This, combined with more than 20 million unbanked people, turns Latin America’s largest economy into a fertile ground for fintechs, says Jose Prado, founder of Conexao Fintech, an online hub for fintech entrepreneurs and enthusiasts.

Creditas raised $19 million in a Series B funding round. The Sao Paulo-based firm provides asset-backed debt focused on auto and mortgage loans.

In Mexico, where 55.9% of adults have no access to any form of savings deposits, fintechs are offering digital, user-friendly alternatives to traditional banking products, according to Jorge Ortiz, founding president and CEO of non-profit organization Fintech Mexico.

Ripio Credit Network Announces ICO Pre-Sale, Crowd Sale Starts on October 17 (Crowdfund Insider), Rated: A

Ripio Credit Network, a company that has raised $5 million in funding from VC like Tim Draper, Pantera, DCG, Overstock (Medici Ventures) and others. Has launched their Initial Coin Offering pre-sale as they gear up for the crowd sale scheduled to launch on October 17th. This comes just as Ripio has received a nice recognition, along with a check, from the d10e Pitch competition.

Ripio, a prominent crypto-based company in Latin America, is building a global credit network solution that aims to enhance transparency and reliability in credit and lending. Ripio is designed to enable connections between lenders and borrowers located anywhere in the world, regardless of currency.

Africa

FMO and above & beyond launch Fintech platform for African Banks to accelerate financial inclusion (FMO), Rated: AAA

FMO together with Miami based Fintech and digital transformation strategists above & beyond (a&b),  launched “ FinForward”, a marketplace where Fintech companies, Financial Institutions (FIs) and Mobile Money Providers (MMPs) in Africa are matched.

The objective of the new platform is to accelerate the digitization of the financial industry in Africa by supporting innovation of the core business with digital solutions. The matching and integration tool will make global Fintech companies accessible and top-of-mind to African financial institutions in order to help them to reduce costs, innovate, add services, tap into new revenue streams and work towards open banking platforms. It will also enable them to service difficult to reach segments such as the bottom of the pyramid, women and small entrepreneurs.

The matching and integration tool will make global Fintech companies accessible and top-of-mind to African financial institutions in order to help them to reduce costs, innovate, add services, tap into new revenue streams and work towards open banking platforms. It will also enable them to service difficult to reach segments such as the bottom of the pyramid, women and small entrepreneurs.

How does it work?

  • Outreach  – Banks, Mobile Money Providers and Fintechs are invited to join
  • Fintech Opportunity Scan – Participating banks and mobile money providers define their problems and needs
  • Matching – Pairing of Fintechs based on problem definition
  • Acceleration & Integration – Testing of Fintech solutions in a sandbox and integrating the technology into the bank’s operations
  • Showcase – demonstrate success during showcase days

Authors:

George Popescu
Allen Taylor

Friday August 4 2017, Daily News Digest

immediate payments

News Comments Today’s main news: SoftBank invests $250M in Kabbage. SoFi begins search for IPO-focused CFO. MarketInvoice has record trading day. George Banco acquired by Non-Standard Finance. Yirendai made $40M net profits in Q2. ID Finance partners with Da Vinci Capital on $200M fintech fund launch. Lendingkart Group raises $10M in debt funding. Today’s main analysis: Square Q2 shareholder letter. Immediate payments […]

immediate payments

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Israel

News Summary

United States

SoftBank invests in US online lender to small business (Financial Times), Rated: AAA

SoftBank is investing $250m in Kabbage, one of the biggest US online lenders to small businesses, in a deal that could provide the firepower for a potential takeover of OnDeck Capital, a rival digital lender.

Kathryn Petralia, co-founder of Kabbage, told the Financial Times that the deal would finance growth in the company’s direct lending operation, which has provided nearly $3.5bn of funding to more than 100,000 small businesses in the US.

There has been speculation that Kabbage is planning to make a bid for OnDeck, a rival online lender that went public in 2014 and has since suffered an 80 per cent fall in its share price, hit by growing losses, rising defaults and higher funding costs.

SoFi Hints at IPO, Reports Record Results (WSJ), Rated: AAA

Social Finance Inc. posted record earnings and loan volume in the second quarter, as the privately held company’s chief executive hinted that it is moving closer to an initial public offering.

In a letter to investors reviewed by The Wall Street Journal, SoFi Chief Executive Mike Cagney sounded more optimistic about a potential public offering, as opposed to previous forums in which he said no deal would be coming in the foreseeable future.

(LT Editor: Here’s the letter again–in case you missed it yesterday).

Source: SoFi

Goldman Sachs is Going Big on Lending (Lend Academy), Rated: AAA

The firm created GS Select to reach clients of nearly 4,000 independent investment advisors from Fidelity Investments. Clients will be able to borrow from $75,000 to $25 million backed by their investment portfolios.

What’s interesting about this move is that it could be expanded to other RIAs and financial advisors not just through Fidelity. We’ve seen this type of model before with self described “Lending as a Service” fintech companies, but this time it’s a big bank that has built this technology.

Source: Lend Academy

Square  Q2 2017 Shareholder Letter (LendIt), Rated: AAA

In the second quarter, our top-line results reflect our continued ability to attract larger sellers and increase product usage through cross-selling. Total GPV grew 32% year over year, and GPV from larger sellers grew 45% year over year. Transaction-based revenue increased 32% year over year—the same rate as GPV, which is a result of our ability to maintain transaction revenue margin. Subscription and services-based revenue nearly doubled year over year. Strong top-line growth, lower risk loss rates, and ongoing operating expense leverage drove another quarter of significant EBITDA and margin improvement.

We grew Square Capital loan volume 68% year over year and further diversified our investor base.

 

Source: Square Q2 2017 Shareholder Letter

Read the full report here.

An Australian Entrepreneur And Ron Suber Want To Fix America’s Student Debt Crisis With A Fintech Solution (Benzinga), Rated: A

A trillion-dollar black cloud of student debt hangs over multiple generations of Americans. Student debt is delaying marriages, major purchases, home ownership and general enjoyment of life for millions of people. There’s more student debt than even credit card debt.

Enter Credible CEO Stephen Dash. The Australian entrepreneur is taking inspiration from his home country’s approach to offer student borrowers a marketplace of easier options to get and refinance loans. Australia has an income-based debt repayment system, and Credible’s tech helps borrowers refinance to make affordable payments.

loanDepot’s Groundbreaking Tech Spurs Demand for New Innovation Lab (PR Newswire), Rated: A

loanDepot, America’s lender, today announced details of its new standalone tech campus, the mello ™ Innovation Lab. At this unique facility, the LD tech team will continue to innovate and expand mello, the company’s proprietary digital-lending technology.

With loanDepot’s goal to transform the lending industry, its mello ecosystem is shaping lending’s future as it expands its online and offline consumer relationship model. mello’s technology includes an intuitive web-based consumer portal, a state-of-the-art, mobile point-of-sale system, and a fully-digital mortgage loan application experience. The company has invested $80 million to date on its digital-first technology strategy.

loanDepot’s mello exists within a larger next-gen lending ecosystem that is boosted with the integration of digital-marketing tools and by third-party data enrichment that ensure greater accuracy, speed and certainty throughout the origination experience. On a massive scale, mello is changing the loan origination process into a digital consumer experience, making it faster, easier, and more accurate.

USAA lets members bare their financial souls to Alexa (American Banker), Rated: A

USAA went live Wednesday morning with a virtual assistant that works with Amazon’s Alexa voice interaction device and its corresponding shopping app. Now, USAA members — at least the first 400 that sign up at USAA Labs — can ask Alexa a range of questions about their accounts, balances, spending and transactions, and the bot will answer with specific details from the member’s USAA card and bank accounts.

In so doing, USAA is joining a small group of financial institutions — including Capital One, American Express and several credit unions — that have created Alexa Skills, as the chatbots that work with Alexa are called.

US CFTC Launches Initiatives to Promote Fintech in the Futures and Swaps Markets (Lexology), Rated: A

First, the CFTC announced Project KISS—“Keep It Simple, Stupid”—as a forum to examine how its existing rules might be applied in less costly and burdensome ways. Second, the CFTC launched LabCFTC as a way to promote responsible fintech and regulatory technology (“regtech”) innovation. Together, these initiatives appear to be a significant part of the CFTC’s response to calls for streamlined regulation from the industry, the White House and some members of Congress.

Project KISS

The CFTC website specifically invites public input on the following five “KISS Initiatives”:5

  1. Registration—the process of becoming regulated by the CFTC as any of the several entity types that the agency regulates
  2. Reporting—all reporting obligations, including swap data and recordkeeping
  3. Clearing—clearing services in connection with various contracts and transactions
  4. Executing—the execution of futures and swaps transactions
  5. Miscellaneous—any topics not specifically enumerated above

LabCFTC

This initiative is intended to enhance the agency’s involvement in fintech and regtech7 solutions and to support the goals of (1) providing regulatory certainty for fintech innovators and (2) enabling more efficient regulation through the use of emerging technologies. LabCFTC contemplates a variety of means to accomplish these objectives, including:

  1. Proactive outreach to and collaboration with the fintech industry to better understand the strengths and weaknesses of the CFTC’s current regulatory framework as applied to new technologies
  2. Participation in research and engagement with academia and professionals to harness and promote the advantages of fintech/regtech for the CFTC and the markets it regulates
  3. Collaboration with other financial regulators at home and abroad and the sharing of information about promising fintech applications and their potential risks
  4. The tracking of fintech developments to ensure that CFTC regulation supports rather than impedes innovation

Money360’s just getting started (Bankless Times), Rated: A

The company closed $143 million in loans in Q2, bringing its total to more than $350 million. It is on pace to top the $500 million mark before the end of 2017.

Many D.C.-area homeowners are guilty of this financial no-no — financing renovations on credit cards (The Washington Post), Rated: A

A May study by Hearth, a financial technology start-up that provides support for homeowners making renovation decisions, found that 12 percent of Americans planned to finance their renovation with a credit card, which is one of the most expensive ways to finance the cost.

The Hearth Home Renovation Survey, which asked 2,000 homeowners about their remodeling plans for the coming year, found the number of people planning to use a credit card to pay for their renovation is even higher in the Washington region at 16 percent.

In this region, 52 percent of homeowners prefer to pay with savings or cash, compared with 62 percent nationally. D.C.-area residents are also more likely to finance their project with a loan — 32 percent — compared with 26 percent nationally.

Computer says no: robo-advice is growing but we still don’t trust it (The Conversation), Rated: B

People are open to receiving financial advice from robots, our studiesshow, but there might be a way to go to in convincing people to trust them over a human.

We surveyed 138 people about their attitudes to, and preferences for, superannuation advice from a human or a computer. Unsurprisingly, most stated they would prefer to deal with a human across a broad range of financial decisions.

Some did prefer the computer – these tended to be younger people, and those on higher incomes.

Ideas to Help Cash-Strapped or Underbanked Consumers (Southeast Missourian), Rated: B

With the inception of new types of loans, cash-strapped customers can borrow a certain amount from alternative lenders. These loans entail borrowing money against your next paycheck. Unlike traditional payday loans, these lenders allow their customers a fair grace period to make their repayment, making it easier for borrowers to repay and meet their other financial needs. The traditional lenders, on the other hand, require borrowers to repay their full loan amount with their next paycheck.

Peer-to-peer funding is an alternative to acquiring financial aid. This entails letting other businesses invest in your business venture. Finding willing investors is not a hard process itself as you can acquire them by applying online. Small businesses can source one to five-year loans. The loans are available from widely known businesses like Lending Club.

Private Lenders to Gain Insight from Industry Experts (Benzinga), Rated: B

American Association of Private Lenders (AAPL) will hold its eighth annual conference Sunday, November 12 through Tuesday, November 14 at Caesars Palace in Las Vegas. The keynote speaker will be Daren Blomquist, Senior Vice President of Communications at ATTOM Data Solutions, formerly RealtyTrac, curator of the nation’s largest fused property database. The AAPL annual conference is one of the largest national events for private lenders and will include a full slate of speakers, resources, education and networking. More information can be found at .

First Associates Loan Servicing Opens a New 1000-Seat Operations Center in Baja California (Benzinga), Rated: B

First Associates Loan Servicing announced today the opening of their new 1000-seat capacity operations center in Baja California, Mexico. This state-of-the-art center will support the continued global expansion of First Associates and enable the company to continue delivering first-class service and security for their clients.

United Kingdom

RateSetter Milestone: Investors Fund £2 Billion of Loans & Have Earned More Than £76 Million in Interest (Crowdfund Insider), Rated: AAA

RateSetter recently announced its lenders have now delivered more than £2 billion in loans to people and businesses across the UK and in doing so have earned over £76 million in interest. According to the online lender, 94% of its lenders are individuals looking for a decent return on their money by investing, and accepting some degree of risk, rather than settling for the pitiful interest rates offered on bank deposits.

P2P business platform MarketInvoice marks record trading day (AltFi), Rated: AAA

The company had more invoice advances on 1 August than any other day.

The trading platform saw £4.1m  in invoice advances to UK businesses on Monday, a record setting day for the firm.

Usually £3.2m is the average amount that is advanced in a day. The increase in trading is largely do to MarketInvoice Pro, an invoice discounting facility.

RateSetter-backed lender acquired by Non-Standard Finance (P2P Finance News), Rated: AAA

RATESETTER investors are likely to get repaid early by George Banco following the acquisition of the guarantor loans provider by Non-Standard Finance.

Approximately £30m of RateSetter lending is currently outstanding to George Banco and many lenders will be repaid early as a result of the refinancing.

Blend Network launches with vow to be the “Goldman Sachs of P2P” (P2P Finance News), Rated: A

Blend Network will offer asset-backed property loans to retail and high-net-worth individuals, as well as hedge funds and other institutional investors. P2P specialist F&P will act as introducer for all of its loans, although Blend Network’s chief executive Yann Murciano said that he would be open to further partnerships in the future, as the business scales up.

P2P lending looks less than attractive on a forward-looking basis (AltFi), Rated: A

But, and yes, there is an important caveat, I am beginning to sense an important tipping point. Returns of between 4 and 6% pa from the big platforms – with an emphasis on the lower range of that spectrum – haven’t changed too much (in fact they’ve slightly fallen back). But I’m increasingly thinking that these returns are now inadequate for the potential of increased risk.

If one comes from a lending POV (point of view) then I would argue that the current returns are woefully inadequate, given where we are in the lending cycle.

  • The big banks are starting to increase their provisioning for bad debts
  • Here in the UK we’ve probably reached Peak Unsecured Lending with the BoE bearing down on all lenders about risk, worried senseless about a downturn in consumer spending as Brexit grinds on
  • The car lending market is quite clearly close to a systemic meltdown
  • ‘challenges’ are already appearing within the P2P space, most recently at Ratesetter where its wholesale lending capacity is being wound down
  • The housing market looks more vulnerable than ever before, with the very real possibility that we’ll see a steady drip feed of small price declines
China

Yirendai Made $ 40M Net Profits in Q2 and Dividend for the First Time (Xing Ping She), Rated: AAA

Yirendai, the first US-listed Chinese internet finance company, has recently issued its financial report for the Q2, 2017. In the second quarter of 2017, Yirendai has reached the loans volume of $1.22bn, increasing by 18 percent from the last quarter, especially increased 80 percent from the same period in 2016. By the end of second quarter, the accumulated loans transaction of Yirendai was up to $7.1bn.

Yirendai’s main revenue was charged for service fee from borrowers and lenders. As a result, its income scale is increasing rapidly with the fast growth of loans volume. In the period, Yirendai has made net income of $176 million, increasing by 16 percent from the last quarter and 61 percent from the same period of last year.

Tencent and national development banks to practice the national “Internet +” strategy (163.com), Rated: A

(Hereinafter referred to as “National Bank”) and Tencent (hereinafter referred to as “Tencent”) in Shenzhen Tencent headquarters signed the “Internet +” development of financial strategic cooperation agreement. “.. In the future, the two sides will be in the Internet + precision poverty alleviation, Internet financial innovation, domestic and international credit financing, Kechuang enterprise cultivation, information technology applications and many other areas of long-term, stable, in-depth and sustainable strategic cooperation. Chairman of the State Development Bank Party Committee, Vice President Zhang Xuguang, Director of the China Development Bank Shenzhen Branch Wu Liangdong, Vice President of Tencent Xie Qinghua, Tencent Internet + Strategic Cooperation General Manager Zhang Wei attended the signing ceremony of strategic cooperation.

European Union

ID Finance Teams Up With Da Vinci Capital to Launch $ 200 Million Fintech Fund (Crowdfund Insider), Rated: AAA

Marketing fintech firm ID Finance announced on Wednesday it has joined forces with former Elbrus Capital fund manager, Yuri Popov, and asset management Da Vinci Capital to launch FinTech Credit Fund, which is described as a $200 million debt finance fund aimed towards fintech companies with a focus in alternative lending.

ID Finance also reported that the Fund will initially focus on projects within the CIS and European markets. Funding will be provided to companies involved in consumer/SME lending, with balance sheet and marketplace lenders being eligible.  Projects offering analytical solutions for credit scoring based on Big Data, AI and machine learning, as well as SaaS and PaaS solutions and payment services are of particular interest to the Fund and align with the investors’ areas of expertise.

International

GIC to invest in US talent agency (Straits Times), Rated: A

Singapore sovereign wealth fund GIC, along with Canada’s largest pension fund manager, will invest US$1 billion (S$1.4 billion) in American talent management agency WME-IMG.

Canada Pension Plan Investment Board, in a separate statement, said it would invest about US$400 million for an 8 per cent stake in WME-IMG, which owns brands like Ultimate Fighting Championship and the Miss Universe Organisation.

The US firm also counts the SoftBank Group, Silver Lake Partners and Fidelity Investments among its investors. Terms of the transaction were not disclosed.

Australia/New Zealand

Harmoney’s loss is really a gain (AltFi), Rated: AAA

New Zealand peer-to-peer lender Harmoney’s revenue climbed 63 percent this year, edging the company closer to profitability.  While still loss-making, Harmoney has halved its losses from $NZ14 million last year to $7 million this year.

As well as climbing revenue, its financials were helped by a 15 percent drop in marketing costs, suggesting the company has grown out its brand recognition to a point where it feels comfortable paying less for advertising.

To date, Harmoney has lent more money than any other Kiwi P2P platform.

A new whitepaper by CoreData and HUB24 titled ‘The modern face of advice’, argues that while technological tools were reshaping the wealth management industry, the role of advisers remained critical and the relationship they built with their clients remained more relevant than ever.

The paper, which is based on interviews with advisers, said technology used in advice practices continued to mature and costs, including platform fees and management expense ratios were decreasing to boost bottom line results of firms.

Robo-advice could play a role in tapping into the estimated $2 trillion worth of unadvised savings in Australia but awareness was still in its infancy. However, the Australian Securities and Investments Commission’s (ASIC’s) ‘RG255: Providing digital financial product advice to retail clients’suggested robo-advice was here to stay.

India

Lendingkart Group raises $ 10 million in debt funding (Medianama), Rated: AAA

Lendingkart Finance Limited has raised $10 million in debt funding from Kotak Mahindra Bank, Aditya Birla Financial Services, and other financial institutions. The funds will be used to expand its operations to 700 cities and restock its loan book.

Retail banking may lose 55% of business to fintech (livemint), Rated: AAA

The retail banking sector could lose up to 55% of its business to fintech firms if it does not up the ante in terms of investment in digital transformation, according to a new study titled ‘Enterprise Digital Transformation: Evaluating Indian Enterprises’, brought out jointly by research firm Frost & Sullivan and software lobby body, Nasscom.

 

Havas Media bags integrated media mandate of Faircent.com (Exchange 4 Media), Rated: A

Havas Media Group, India has bagged the integrated media duties of Faircent.com, India’s largest peer to peer lending platform. The account will be handled out of the agency’s Gurgaon office.

Digital Disruption: Lending Trends Turn the Next Leaf! (DQ India), Rated: A

Lending in India is hard as only a fraction of people have access to organized credit. Less than 50% of SMEs get access to bank  finance. The lack of access to credit is forcing people to depend on money lenders at high rates of interest. In India, of the over 1.3 bn population, 600 mn is working class, out of which 150 million has access to credit and 20 million have scores acceptable  to banks.

P2P lending provides investors higher returns than investing in mutual funds/ stock markets, which are linked to the stock market and come with a risk of losing money due to their inherent volatile nature. With the lower interest rates, traditional investment tools like FDs and RDs look less attractive to customers.

Peer-to-Peer loans give regular monthly income to the investors in the form of EMIs.

Now own a piece of prime real estate investing a few thousands (India Times), Rated: A

RealX, a pune-based fintech start-up, has completed India’s “first fractional ownership” deal in real estate sector. The platform has bought a commercial property in Karad (Maharashtra) by pooling in investments from about 19 investors, RealX officials claimed.

RealX is an ecommerce platform which will allow property sellers and agents post their saleable property. Registered buyers, on the other side of the platform, could invest in these projects. The minimum investment threshold, currently, is Rs 5 lakh per investor.

Asia

Immediate payments key driver of banking revenue (The Asset), Rated: AAA

Sixty-six percent of banks with live IP systems in place see it as a revenue driver for their institution, which compares to less than 50% for companies without IP systems in place. Moreover, for all banks 53% say that IP will drive revenue growth for their organization, 61% believe that IP will enhance their level of customer service and 60% expect IP to reduce costs.

While 65% of surveyed institutions stated that open APIs would benefit their customer-facing proposition banks differed in their implementation strategy. The majority (55%) of banks opted for immediately creating open APIs and interfaces for developers, while a minority (45%) took a ‘wait and see’ approach.

Source: The Asset

Mastercard and PayPal expand Partnership in Asia (The Asset), Rated: A

The deal will expand PayPal’s presence at the point of sale and enable Masterpass for Braintree merchants in the region. Additionally, both companies will collaborate to create opportunities to leverage Mastercard’s new payment flow technologies, providing increased value to Mastercard cardholders, financial institutions, and PayPal customers. PayPal will also have the opportunity to give consumers and small businesses across Asia-Pacific the ability to cash out funds held in their PayPal accounts to a Mastercard debit card.

Israel

All of Israel’s FinTech innovation geniuses have left the country and taken their brilliant ideas with them (Finance Feeds), Rated: AAA

Israel was never a center of actual trading, but was always synonymous with the brilliant minds that invented every ancillary service from digital marketing and conversion funnels that have brought tremendous efficiency to retail brokerages, Plus500 being a case in point, to social trading networks that have prospered on a gigantic scale across China – read eToro’s efforts with PingAn as very much an example where other social trading ventures wilted and disappeared.

Mr Mandelzis secured $40 million in venture capital from Sequoia Capital and sold the company to ICAP in 2007 for $250 million which became the subject of a Kellog Business School case study.

Where is Mr Mandelzis now? New York.

Optimove consolidates, mines and models customer data, dynamically grouping customers into micro-segments, and forecasting their future behavior and value.

Optimove is headquartered in New York, and is a completely American company.

Social trading has died a death. There is very little evidence of the large firms that used to dominate, and most of that technology came from Israel.

The only one in existence is eToro, which is a social investment platform.

Authors:

George Popescu
Allen Taylor

Thursday May 4 2017, Daily News Digest

auto loan originations

News Comments Today’s main news: Banks pull back on car loans as used-auto prices plummet. Trump’s expected OCC pick, a banker, signals paradigm shift. Elevate Credit rated a buy. RateSetter rejigs relationships with former wholesale lending partners. China Rapid Ffinance raises $60M in IPO. Today’s main analysis: Goldman Sachs embraces banking’s bland side. Global money transfer. Today’s thought-provoking articles: German […]

auto loan originations

News Comments

United States

United Kingdom

European Union

International

Australia

China

India

Asia

News Summary

United States

Banks Pull Back on Car Loans as Used-Auto Prices Plummet (WSJ), Rated: AAA

Wells Fargo & Co., one of the largest U.S. auto lenders, last month reported a 29% fall in its auto loan originations for the first quarter from a year earlier. The decline, the biggest for the San Francisco-based bank in at least five years, was part of a common refrain in quarterly announcements from lenders including J.P. Morgan Chase & Co. , Ally Financial Inc. and Santander Consumer USA Holdings Inc.

Bankers’ caution is increasingly showing up in car sales, which Tuesday came in worse than expected for April. The declines are mostly occurring in lending to riskier borrowers, in particular those with low credit scores, where lending had ramped up for years.

Some banks, including regionals Fifth Third Bancorp and  Citizens Financial Group Inc.,  are beginning to retreat from higher-quality “prime” auto loans as new risks emerge.

Some anticipated the market would cool off after record new car sales in 2015 and 2016. But banks are also posting higher losses on defaulted auto loans, hit by a mix of more borrowers falling behind on payments and the declining value of used cars.

When lenders repossess cars, they resell the vehicles and use the proceeds from the sale to recover as much of the unpaid balance as possible. Declining values mean that lenders are recouping a smaller share of those balances. Lenders who are repossessing cars tied to prime auto loans that were securitized in 2015 are recovering about 51% of the unpaid loan balances on average, down from 56% for 2014 loans and 65% for 2011 loans, according to S&P Global Ratings.

Car loans have been among the fastest-growing consumer lending categories since the last recession.

 

Mimecast Limited versus Yirendai Ltd. Head to Head Compare (CMLVIZ), Rated: AAA

We will compare the two companies on revenue growth, earnings, revenue per employee, operating margins, free cash flow and valuation.

  • Yirendai Ltd. has larger revenue in the last year than Mimecast Limited.
  • YRD is showing a profit while MIME has negative earnings over the last year.
  • YRD generates substantially larger revenue per employee ($344,000) than MIME ($202,000).

  • Both companies are growing revenue. Yirendai Ltd. is growing revenue massively faster than Mimecast Limited.
  • For every $1 in revenue, the stock market prices in $6.42 in market cap for MIME and $3.66 in market cap for YRD.

Goldman Sachs Embraces Banking’s Bland Side: Lending Money (WSJ), Rated: AAA

The firm has been opening its checkbook for the past several years to finance corporate takeovers, lend against mansions and art, and make personal loans for things such as kitchen remodels and fixing broken windshields.

It is exploring new credit businesses such as trade finance, equipment leasing and extending credit that consumers use for online purchases, according to people familiar with the discussions.

Loans outstanding across Goldman have doubled to $95 billion since 2011, filings show. Real-estate loans are up 10-fold. Business lending has tripled, while loans in its private-wealth division, secured by everything from stock portfolios to rare artwork, have quadrupled. Goldman doesn’t report revenues tied to lending, which remains a small part of its overall business.

 

Elevate Credit Inc (ELVT) Now Covered by William Blair (The Cerbat Gem), Rated: AAA

They set a “buy” rating and a $12.00 price objective for the company. Compass Point reissued a “neutral” rating and set a $9.00 price objective on shares of Elevate Credit in a report on Tuesday, April 18th. One analyst has rated the stock with a hold rating and four have assigned a buy rating to the stock. The company has an average rating of “Buy” and a consensus price target of $11.00.

Shares of Elevate Credit (NASDAQ:ELVT) opened at 7.64 on Monday. Elevate Credit has a one year low of $7.00 and a one year high of $8.86. The firm’s 50 day moving average is $8.05 and its 200-day moving average is $8.05. The firm’s market capitalization is $99.33 million.

State Regulators Mount Counter-Offensive Seeking to Stop OCC’s Fintech Charter (Lexology), Rated: A

Clearly, CSBS is mounting a legal counter-offensive to the OCC’s attempt to license entities historically regulated by the states. While state and federal regulators currently are arguing as to who should control the regulatory sandbox, the true focus of regulatory concern should be on the development of innovative financial services, consistent with safe and sound operations, with viable and effective consumer protections. While, historically, payments companies and lenders have been regulated by the states, the OCC’s SPNB Charter has sparked a dialogue as to whether the current regulatory system for fintech operations is viable. Innovation of financial services may also require innovation of financial services regulation. Rather than trying to pigeon-hole financial services into traditional regulatory models, perhaps it is time for regulators, at both the federal and state level, to act in concert to develop a system of licensing, regulation, and enforcement for financial products and services that is efficient, not redundant, and minimizes the regulatory burden on financial institutions while it provides for the continued protection of consumers. Setting aside the merits of the pending suit, the right policy prescription will likely involve the federal and state governments working together to minimize the regulatory burden while appropriately protecting the safety and soundness of FinTechs and provide necessary consumer protection.

Trump’s Expected OCC Pick Signals Shift at Regulator That Could Ripple Through Financial Markets (WSJ), Rated: A

President Donald Trump’s expected move to replace the Comptroller of the Currency signals a change in direction at the bank regulator that could ripple through the financial markets, from private-equity buyouts to financial technology—and even municipal securities.

Comptroller Thomas Curry, whom people familiar with the matter say could be replaced as soon as this week, is a career regulator appointed by President Barack Obama. Mr. Curry used his office to tamp down on what he viewed as overly risky lending practices in the banking industry.

His expected replacement—Joseph Otting, a former chief executive of OneWest Bank—would be the first former banker to hold the comptroller’s job since the 1990s.

Wall Street Pushes Back on Mnuchin’s Idea of Ultralong Debt (WSJ), Rated: A

A committee of Wall Street advisers is pouring cold water on a proposal by U.S. Treasury Secretary Steven Mnuchin to issue superlong 50-year and 100-year U.S. government bonds, arguing that the big pension funds and insurers expected to buy the securities won’t have much interest.

The committee meets quarterly, in advance of a regular release by the Treasury on its plans for financing the U.S. debt. Currently, the U.S. Treasury issues no debt longer than 30 years. Mr. Mnuchin has argued that ultralong bonds could be a useful tool for locking in today’s low borrowing costs for a very long time. Last month, the Treasury requested the advisory committee analyze the viability of bonds longer than 30 years.

The 30-year bond strengthened Wednesday, after the advisory committee cast doubt on the idea 50- and 100-year bonds. The yield on the 30-year Treasury dropped to 2.963% from 2.982% on Tuesday, according to Tradeweb. Yields fall as bond prices rise.

A key question for the Treasury is what types of investors would buy ultralong bonds, especially if the members of its advisory committee aren’t interested. Relatively few individual investors have 100-year or even 50-year investing horizons.

Real Estate Crowdfunding to Take Center Stage at Crowd Invest Summit (Yahoo! Finance), Rated: A

Crowd Invest Summit, the country’s largest crowdfunding investment conference, taking place on September 6 th and 7th at the Los Angeles Convention Center, has today announced that it will be expanding its focus on Real Estate crowdfunding.

Since the signing of the JOBS Act in 2012, Real Estate Investing has been the fastest growing segment of the new Crowdfunding Industry. According to Fundingtree.com, over $3 Billion Dollars has been raised so far.

Crowd Invest Summit is the largest investment focused crowdfunding event in the country. It was founded by pioneers in the equity crowdfunding sector Josef Holm and Alon Goren. The conference was developed with the vision that every American – whether accredited or not – can now become equity investors.

Nav raises $ 13 million to help small businesses with credit scores (TechCrunch), Rated: A

Goldman Sachs is leading a $13 million investment in Nav, a startup that helps small businesses with financial advice and credit scores. Billionaire Steven Cohen’s Point72 Ventures is also investing, along with Clocktower Ventures and the CreditEase Fintech Investment Fund.

This follows $25 million that was invested in the company last year, and is considered part of the same Series B round, bringing the total to $38 million.

Characterizing Nav as a Credit Karma for small businesses, King believes his startup will “materially decrease the death rate of small businesses in the U.S.” They currently have over 200,000 customers, most of whom don’t pay anything for their credit score, but can opt to pay about $20 per month for added financial advice.

Data Suggests That Venmo Is Winning Mobile Payments (Seeking Alpha), Rated: A

  • 68% of mobile payments users are using Venmo most often.
  • Venmo processed $6.8B in mobile payments in Q1.
  • Rapid smartphone adoption, alongside a large unbanked population, makes the theme of mobile payments an attractive investment.

In the days leading up to the quarter, a new survey of 2,170 Millennials found that Venmo is leading the category. The researchers asked the following question: “Which of the following mobile payment apps do you use most often?”

Researchers found that 44% of respondents answered “Venmo”, 1% of respondents answered “Square Cash”, 14% of respondents answered “My bank’s mobile payment app”,and 4% of respondents answered “Other”. However surprisingly, 35% of respondents answered “I don’t use a mobile payment app”.

Colorado versus Fintech (OLPI), Rated: A

On February 15, 2017,  the Administrator of the Uniform Consumer Credit Code for the State of Colorado (“Colorado”) sued Avant and Best Egg (in separate actions), claiming in both actions that they violated Colorado’s usury rate and entered into loan agreements containing a governing law provision other than Colorado.

Shortly after, WebBank and Cross River separately sued Colorado seeking Declaratory Judgement and Injunctive Relief.

On April 25, 2017, Colorado filed a Motion to Dismiss both Complaints for Declaratory Judgment and Injunctive Relief.

Colorado initially argues that WebBank’s action for declaratory judgement should be dismissed based on the well-pleaded complaint rule. There seems to be two issues with this position: (1) WebBank was purposely left out of Colorado’s initial complaint (although this theory might apply if Avant brought the federal action for declaratory judgment), and (2) diversity jurisdiction does apply as to Avant and WebBank vis-a-vis Colorado.

Second, Colorado argues that WebBank’s action should be dismissed because WebBank’s injury is too attenuated. Colorado does not directly address WebBank’s contention that the suit challenges WebBank’s overall business model.

Finally, Colorado argues that “interest exportation does not preempt the application of state usury laws to non-banks as a matter of law.”   Colorado seems to acknowledge WebBank’s right to preempt Colorado’s usury rate based on DIDA (the Depository Institutions Deregulation and Monetary Control Act of 1980 – extending the National Bank Act’s preemption to FDIC-insured state banks).  Colorado argues that WebBank is trying to assign its preemption to Avant – that Avant is the lender.

Colorado also argues that the valid when made doctrine is not applicable because “there is no ‘subsequent usurious transaction’ between WebBank and Avant that is alleged to invalidate a consumer’s loan obligation.  Instead, Avant merely purchased the subject consumer loans from WebBank.”  This is a difficult argument to follow.  Colorado sued Avant claiming that Avant loans are usurious and Avant, and not WebBank, is the true lender.  Colorado points out that Avant buys the loans from WeBank within two business days of the loans being made.  Relying on Midland in the Avant action, Colorado states that Avant cannot “enforce a bank’s federal interest rate exportation rights when they purchase loans from banks (or purchase loan receivables) because banks cannot validly assign such rights to non-banks.”   It seems to imply that Colorado is not saying the loans are invalid (due to Avant having a Supervised Lender’s License), but rather the loans just need to be limited to the Colorado usury rate –yet, as noted, the argument is difficult to follow.

What fintech is going to do to banking (Financial Times), Rated: A

  • Fintech is ultimately about taking away frictions.
  • I guessed that there was a 25 or 30 per cent chance that 10 years from now, there was about a 25 per cent chance that there would be a fintech company with the kind of $250bn market cap that some big American banks have. I do not expect that in the foreseeable future fintech will have the kind of existential impact on banks that Netflix has had on Blockbuster. But I do think in some areas fintech companies are likely to have the kind of effect Skype has had on the big telephone companies — forcing drastic reductions in pricing and profit margins on some key products.
  • I was quite serene about the impact of fintech on financial stability.
  • By providing for faster settlements, more transparency, and diversification, fintech is likely to have as many stabilising as destabilising effects.
  • If the large banks of today are not as large five or 10 years from now, I think it is more likely to be because of bad lending, heavy regulation or market pressures to break up because the whole is valued less than the sum of the parts than because of disruption from fintech. I say this because much of what fintech does depends on the banking system and because I doubt that over this horizon banks can be completely disrupted.

FinTech Funding in New York Declines (Cryptocoins News), Rated: A

In the report from data provider CB Insights, The Global FinTech Report: Q1 ’17, it found that during the first three months of the year, fintech funding to venture capital-backed New York companies dropped by 35 percent on a quarterly basis. However, while financial technology deals in the state rose by 26 percent from Q4 ’16, it registered a 33 percent drop below the same quarter last year.

During the first three months there were three New York City companies – Namely, Trumid, and Payfone – who were among the top ten U.S. financial technology backed deals.

Namely raised $50 million in Series D funding from Altimeter Capital, Scale Venture Partners, Sequoia Capital, Four Rivers Group, Matrix Partners, and Greenspring Associates.

Trumid raised $27.6 million in Series D funding from Thiel Capital, and Payfone raised $23.5 million in Series E funding from BlueCross Blue Shield and Andrew Prozes.

First Associates Implements AI to Enhance Customer Satisfaction and Boost Portfolio Performance (PRWeb), Rated: A

First Associates has announced today that it has implemented A.I. enabled speech analytics as part of its third-party loan and lease servicing. The speech analytics platform facilitates higher quality customer interactions while ensuring compliance with financial industry regulations.

Using speech analytics, First Associates monitors, scores and provides agent feedback on 100% of voice interactions with consumers using data-driven benchmarking. Traditional loan servicing management techniques call for a 1% sample size of voice interactions using human quality assurance agents to assess quality and effectiveness. The company has already seen significant improvements across quality and performance metrics from the implementation.

Adams Business Credit Rebrands as Context Business Lending (PR Newswire), Rated: A

Adams Business Credit, a national asset-based lender, will rebrand as Context Business Lending, bringing the firm in unison with the family of businesses and affiliates under Context Capital Partners, an alternative investment firm. The newly named Context Business Lending will continue to focus on providing flexible working capital solutions for businesses that do not qualify for traditional bank financing.

Context Business Lending typically provides loans of up to $15 million for lower middle-market businesses that may be experiencing some type of challenge, which may include: rapid growth; seasonal fluctuations; supply chain and vendor pressure; operating losses/negative net worth; turnaround and restructuring; merger or acquisition and debtor-in-possession financing. The firm is sector agnostic and works with businesses in the manufacturing, distribution, wholesaling and service sectors.

‘Hybrid’ Approach To Robo Investing Models a Winner (Insurance News Net), Rated: A

Investors who rely on “robo-only” investment models are making a big mistake, financial advisor tells InsuranceNews.Net.

McElwee provides three specific reasons why that’s the case:

  • Robo advice assumes that the past is destined to repeat itself.
  • People make bad financial decisions when they are under financial stress.
  • Questions, questions, questions. Robo advisors build financial profiles of clients based on a set of questions designed to reveal how a client thinks about risk, return, and financial planning.

MoneyLion Shortlisted for Top Industry Award (MoneyLion Email), Rated: B

 May 11th.

Usage of MoneyLion’s app nearly quadrupled in the second half of 2016, allowing them to track $12bn in transactions from more than one million users. To date, users have saved over $5 million in rate reductions through MoneyLion.

De Rito Partners Chooses RealtyShares for Acquisition of Shops at Fry’s Marketplace Shopping Center (Yahoo! Finance), Rated: B

RealtyShares, a leading online marketplace for real estate investing, has just announced an $800,000 commercial equity investment in Mesa, Arizona, funded through the company’s network of accredited investors. The deal is sponsored by De Rito Partners, one of Arizona’s largest retail investment and brokerage firms.

De Rito Partners acquired the property in 2016, and is seeking to capitalize on a temporary tenant turnover in a formerly fully-leased retail property. The firm intends to use the funds raised through RealtyShares to invest in tenant improvements and implement a leasing strategy to achieve market-level rents.

The property is shadow-anchored by a Fry’s Marketplace, one of the largest grocers by sales in the Phoenix metropolitan area according to Chain Stores Guide. The shopping center is comprised of more than 20,000 square feet of rentable retail space, and is currently leased to tenants including Starbucks, H&R Block and Subway. It is located at the intersection of two major thoroughfares, four miles from downtown Mesa.

De Rito Partners owns 20 properties, manages approximately 1.9 million square feet of retail space, represents 180 shopping centers in a leasing agency capacity, and is currently developing a Fry’s Marketplace-anchored shopping center and a strip center located in Chandler, AZ.

Download a complimentary copy – ALTERNATIVE CREDIT GUIDEBOOK (NN Investment Partners), Rated: B

United Kingdom

RateSetter rejigs relationships with former wholesale lending partners (AltFi), Rated: AAA

The acquired motor finance companies are Vehicle Stocking Limited and Vehicle Credit Limited. Both firms were acquired out of their parent company’s administration, and both have previously received wholesale funding from RateSetter. RateSetter will now lend directly to these companies’ customers.

The size of these two motor finance firms’ combined loanbooks is roughly £30m. These portfolios are said to be “performing well”, and we’re told they would have continued to be serviced had RateSetter not stepped in.

Another of RateSetter’s former wholesale lending partners is George Banco, a guarantor lender with a representative APR of 49.7 per cent. RateSetter has now taken an equity stake in the company, and will lend directly to its 10,000 customers.

Lendy: 2017 is the Year that P2P Lending Finally Matures (Crowdfund Insider), Rated: A

Lendy, a UK based peer to peer lending platform in the secured property sector, believes 2017 is the year for P2P lending to finally mature. Management says that P2P will shift from alternative finance to “main challenger to the traditional banks.”  But to accomplish this goal, P2P lending platforms must build upon best practices and operate more like mainstream lenders while providing rigorous due diligence and superlative service.

Lendy advocates on four key steps in providing a better service than traditional financial firms:

  • Initial due diligence – carry out an extensive ‘know your customer’ (“KYC”) process when they first source a loan.
  • Legal panel – after the loan has passed the first stage it is then reviewed by a legal panel. Solicitors ensure that a legal charge is properly made against each security property, and that each of the security properties has good title.
  • Valuation – use a highly rated independent firm to value security properties.
  • Credit checks – put each lending proposition under extensive scrutiny to determine its viability.

Robots and responsibility (FT Adviser), Rated: A

Robo-advice has become a widely-known concept in the financial advice community over the past 12 months, as more and more firms launch their own proposition.

In addition, it is important to have someone understanding the algorithm from the client experience, and for advisers to grasp the inputs into the algorithms.

One of the areas that needs to be tackled, according to Mr Strachan, is the grey area between fully automated guidance and full-on advice.

The report, The Next Frontier: The Future of Automated Financial Advice, outlines the amount people will be prepared to pay for the use of a robo-adviser. By the far the largest cohort said they would be prepared to pay £125, with popularity rapidly declining the more the price goes up.

Automated advice on investing £11,000 charged at £225 only received support from 16 per cent of people, while a £360 fee saw support from 6 per cent.

Fintech startup Curve names Callum McCaig as its first PR hire (Gorkana), Rated: A

London fintech startup Curve has made its first PR and comms hire with the appointment of Burson-Marsteller’s Callum McCaig, as the business prepares to scale out of ‘beta’ and launch its digital banking platform to the mass market. 

Curve has raised £3m in seed funding from investors, including Seedcamp and the founders of Transferwise, Betfair, Azimo and Google Wallet, and plans to announce a Series A funding round later this year.

MarketInvoice joins UK FinTech Financial Crime Exchange (Finextra), Rated: B

MarketInvoice, the world’s largest peer-to-peer online invoice finance marketplace, has joined the UK FinTech Financial Crime Exchange (FFE), a joint initiative by think tank RUSI and risk consultancy FINTRAIL, launched today.

The FFE brings together FinTech firms who have agreed to collaborate, by sharing best practice and pooling information on financial crime typologies to protect their customers and strengthen their sector’s ability to detect and counter the global threat of financial crime, including money laundering, terrorist financing, bribery and corruption, tax evasion and market manipulation.

The UK FinTech sector is at the forefront of the global FinTech revolution, contributing £7b to the UK economy.

European Union

German Crowdfunding Association Urges Regulator Not to Exclude Real Estate from Crowdfunding Regulation (Crowdfund Insider), Rated: AAA

Invited to defend their views vis-à-vis the financial commission of the parliament, representatives of the German Crowdfunding Association have challenged the government’s position and presented substantial counterarguments.

As a reminder: crowdfunding regulation at European Union (EU) level was so far deemed “premature” by EU authorities and is therefore not included in the Capital Markets Union, the EU’s effort to harmonize capital market regulations at EU level. Hence, each EU country currently issues its own regulation which creates a legal patchwork and hinders cross border deals.

The German government’s report firstly notes that German real estate projects represent 10% of the successful projects and 33% of the capital raised through crowdinvesting, that is €36 million. Projects are typically residential property development, mostly construction, the reminder being renovations. German real estate crowdinvesting nearly doubled in size last year while the growth of startup crowdfunding slumped.

The government finds this trend negative. It justifies its proposal to exclude real estate from the scope of the crowdfunding exemptions as follows:

  • The large share of real estate in crowdinvesting represents a deviation from the intention of the legislator which was to foster the funding of high-growth startups.
  • There is no lack of funding for real estate projects. Social real estate, for example, can be funded through schemes that are specific to social housing. 
  • Real estate crowdinvesting could be considered as a form of deregulation of real estate finance which could, bearing in mind the role played by real estate in the 2008 financial crisis, create a price bubble, and ultimately pose a threat to financial stability.

The Crowdfunding Association and crowdinvesting platform leaders found many of the government’s arguments “incomprehensible” and offered point-by-point rebuttals:

  • Crowdfunding counters price bubbles and real estate overheating. The current real estate market boom is in no way due to crowdfunding, which is much too small to influence market prices, but rather to macroeconomic factors such as the currently low interest rates.
  • Crowdfunding helps finance real estate SMEs and innovative entrepreneurs. There is no sensible criterion for distinguishing real estate financing from other types of business financing.
  • The risk of subordinated debt instruments is not specific to real estate. It would therefore be more appropriate to open crowdinvesting to all securities, including profit sharing securities, rather than to exclude real estate from crowdinvesting.

Currently, the German crowdfunding market is disproportionately small. It is surpassed on the Continent by the French market (28% smaller GDP) and dwarfed by the UK market (15% smaller GDP).

This guy is quickly but quietly building Sweden’s next fintech giant – already operating in 65 markets (Business Insider), Rated: AAA

Johan Tjärnberg is quietly building a fintech business that may prove as successful as Klarna. During 2016, his payments company, Bambora, grew 20% to revenues of SEK 2 billion.

Bambora is a platform that aggregates hundreds of payments services, and it’s currently available in 65 markets. Bambora’s clients can even choose to use Klarna as their payment service.

During 2017 the business will expand to North America, where the number of merchants using the service will increase by 10,000 over the year. That will boost the sales of the group by 30% to EUR 260 million, Johan Tjärnberg said to Bloomberg News.

Currently, the company has about 100,000 clients, of which 30,000 are located in the US and Canada.

Can a Public-sector Organization Become a Fintech Disruptor? (ValueWalk), Rated: A

In 2010, Klaus Regling, the head of the euro-area rescue fund for the European Stability Mechanism (ESM), asked me to join the board. I agreed, and said that I wanted to build the Google of the public sector. He looked at me and asked: “Why Google? We can be better than that.” And of course, he was right.

The ESM provides financial assistance to Eurozone countries that have lost market access. It was set up at the height of the euro crisis. Without the ESM, countries such as Greece would have defaulted, and the euro would have broken up. The ESM is the institution that kept the euro together during the crisis. Our total lending capacity is $742 billion. We have provided assistance to five countries: Greece, Ireland, Spain, Portugal and Cyprus. In all, we have provided $281 billion in loans, which is three times as much as the IMF over the same period of time.

Here is how we are planning to move forward to build a modern public institution.

Digital at Heart

First of all, we wanted a lean model, and so we kept only the strategic functions in-house, like funding, economics and investments. We outsourced support functions and non-strategic functions as much as we could. We were the first financial institution worldwide to use a fully cloud-based trading system.

Secondly, we wanted to leverage new technology where possible.

Finally, our workforce of tomorrow, made up of millennials, is the first in our field to consist almost entirely of technology natives.

A Public Sector-driven Fintech solution

Europe has launched the capital markets union, an ambitious effort to harmonize corporate, tax, and bankruptcy laws across the countries of Europe. The differences between these laws are vast because of centuries of history in the 28 members of the European Union. Now we hope to make the laws more similar, because it would create a truly pan-European financial market. For example, the union would break down borders for private equity investment and venture capital, and open up an alternative channel of funding for small- and mid-sized enterprises. Thus, it would reduce Europe’s heavy reliance on bank lending.

The ECB idea is about the centralization of settlement and payment processes for securities. This is a very important initiative, and one that could be complemented by a similar initiative for the primary issuance of securities. It is worth considering a European public sector issuance platform to help distribute debt more efficiently: a fintech solution, driven by the public sector.

One could even think of using new technologies, such as blockchain, to set up the new issuance platform.

International

P2P MONEY TRANSFERS TO DRIVE DIGITAL PAYMENT GROWTH AS MARKET APPROACHES $ 3.9 TRILLION IN 2017 (Juniper Research), Rated: AAA

A new study by Juniper Research has found the value of digital payments will approach $3.9 trillion this year, representing an increase of more than 14% on last year’s total. While the bulk of transaction value (55%) will be accounted for by online retail purchases for physical goods, P2P (Person to Person) money transfers will see the largest year-on-year net increase in value ($200 million).

The new research – Digital Payment Strategies: Online, Mobile & Contactless 2017-2021 – argued that the US would see particularly strong growth, with the bank-backed Zelle Network expected to build on its successful debut in 2016 as additional banks come on board.

The research also emphasised that the demonetisation policies employed by India’s government had encouraged a surge in mobile wallet adoption and, with it, sharp increases in both P2P and mobile retail transactions.

Global Money Transfer (FT Partners), Rated: AAA

Download this must-read report here.

Australia

CFA considers AI, robo-advice in exams (Financial Standard), Rated: AAA

The CFA Institute believes artificial intelligence, fintech and robo-advice will have the greatest impact on the financial services industry – to the extent it is considering including such topics in its examinations.

An overwhelming majority (70%) of CFA members globally who took part in a study said affluent investors will be positively affected by automated financial advice tools in the form of reduced costs, improved access to advice product choices.

Respondents (46%) however, were concerned about automated financial advice algorithms being the biggest risk emanating from robo-advice, followed by mis-selling (30%) and data protection concerns (12%).

China

VC-backed China Rapid Finance raises $ 60m in US IPO (AVCJ), Rated: AAA

China Rapid Finance (CRF), a VC-backed peer-to-peer (P2P) lending platform, is trading up 32% on its IPO price following an offering on the New York Stock Exchange that raised $60 million.

The stock closed on May 2 at $7.90, giving the entire company a market capitalization of around $448 million.

India

P2P funding platforms or traditional banking systems (India Info Online), Rated: AAA

India’s P2P Lending sector is poised to grow at a rapid pace thanks to favourable demographics, rising computer literacy, internet connectivity and the ongoing wave of digitalisation among others. With the higher economic growth, the credit-backed consumption growth may jump too.These could be the possible triggers for the growth of P2P Lending Industry.

There is no official assessment suggesting the size of the market in India. But it is estimated to be around Rs 200 Cr. The P2P lending industry may grow 25 to 30 times over next 5-6 years. Talking about the interest rate, the yield on 10-Year Sovereign benchmark bond hovers in the range of 6.45% to 6.95%.

However, it is also important to note that the P2P Lending sector is unregulated.

On the other hand, in P2P lending projects, investors can earn in the range of 14% p.a. to 30% p.a. on a reducing balance method. In P2P Lending, interest rates are decided depending upon the creditworthiness of borrowers.

Asia

5 Korean Fintech Startups to Watch in 2017 (Seoul Space), Rated: AAA

Blocko is a blockchain technology startup that developed the platform called CoinStack v3.0 and was able to raise $1.3 million in their series A funding led by Samsung Venture Investment Corporation.

Korean fintech startup company Honest Fund is a P2P crowdfunding company that raised over $6 million in funding led by KB Investments, Shinhan Capital, Hanwha Investment, and others.  It is a peer to peer personal loan lending service that connects borrowers and lenders directly without the need of banks.  These funds will not impact the borrower’s credit rating and will charge between 5% to 15%with the average being 9%.  They offer a different personal credit review model compared to the banks that only look at a person’s credit rating.

PeopleFund is the first Peer-to-Peer lending platform through a Bank in Korea focused on unsecured personal loans.  In 2015 alone PeopleFund has processed over $13 million in loans.

8 percent is a P2P lending company that raised over $13 million.  Their APR is set at 8 percent which is why the company is called 8 percent.  Established in late 2014 this P2P lending company has become the pioneer in this industry.  8 percent reviews an application and based on credit score and other measures.  It is cheaper for clients to use 8 percent than a bank and therefore 8 percent has been able to grow every month.  Loans for startup employees and a bridge for big companies have been their new model in 2016.  They made news in 2016 for getting funding of $10 million from KG Inicis, one of the leading payment gateway companies in Korea.  Bringing together investors and creditworthy borrowers are what 8 percent brings to the table.

Viva Republica runs a money transferring service called TOSS which raised over $48 million in funding from Altos Ventures, Goodwater Capital, Paypal, and KTB Network. They are known for Toss, which is a financial services platform that makes payment system easier by only asking users for 1 password to go along with three easy steps.  The max they can transfer per transaction is $430 which makes everyday payments easy.  Now they have over 6 million registered users in Korea and Toss has already processed over $3 billion in transactions. Toss now does credit scoring as well as micro-loans and is looking into cross-border money transfers and loan brokerages.

Authors:

George Popescu
Allen Taylor

Friday February 24 2017, Daily News Digest

French crowdfunding barometer

News Comments Today’s main news: dv01 creates new securitization portal. China requires P2P lenders to keep money in banks. Today’s main analysis: France’s online alt finance doubles in size. Today’s thought-provoking articles: Robo-advice to go mainstream in 2017. China Rapid Finance to target U.S. IPO as early as 2017. Is ‘peer’ being muscled out of P2P investment? United […]

French crowdfunding barometer

News Comments

United States

United Kingdom

European Union

Australia

China

  • P2P lenders required to keep funds in banks. GP:” What is important to know here is that it is very hard for a p2p lender to find a bank who will accept to bank for them, so this is in fact a way to shut them down more or less. Which is unfortunate because this in desperation people take desperate measures. And wewould all be better off if the p2p lenders did hold all their money in a bank, if banks would accept them.  ” AT: “Considering the business climate in China, I think this is the right move.”
  • China Rapid Finance to target U.S. IPO, maybe in 2017. AT: “Interestingly, the source for this story is saying the IPO will be used to raise money for expansion in China. Rumor, or fact?”

Canada

News Summary

United States

Leading FinTech Analytics Platform dv01 Announces New Portal Dedicated to Securitizations (Yahoo! Finance), Rated: AAA

dv01, the reporting and analytics platform that brings transparency to lending markets, today announced the launch of Securitization Explorer, a new web portal dedicated to providing investors with increased insights into securitizations of consumer loans.

Institutional investors have long used dv01’s cloud-hosted web application to gain real-time insight into consumer loans, analyzing over $50 billion of loans to date.  With the launch of Securitization Explorer, dv01 leverages superior data, analytical, and visualization tools to deliver a comprehensive application dedicated to the needs of investors in consumer loan securitizations.  The new application is fully integrated into the dv01 environment and allows seamless transition from whole loan pool analysis to securitization analysis.

dv01 is the Loan Data Agent on numerous securitizations, overseeing an aggregate securitized collateral balance in excess of $1 billion. The company has aggregated performance data from marketplace lenders including SoFi, Lending Club, Prosper, Marlette Funding, Avant, and CommonBond. By normalizing data across lenders, dv01 simplifies comparison and analysis, enabling institutional investors to study both pool and individual loan performance, as well as quickly detect issues within portfolios.

Orchard’s CEO Matt Burton Talks Marketplace Lending (Forbes), Rated: A

Matt Burton: Like many startups, Orchard began as a small circle of friends with unique perspectives and complementary skill sets. In 2013, we created a Meetup in NYC for people interested in the emerging online lending industry. I met with a number of institutional investors who were investing in online loans and what I discovered was that most of them needed a system capable of purchasing and tracking large portfolios of small loans from multiple lending platforms. Since one didn’t exist, they were trying to cobble something together on their own, and most were struggling with it. Rather than becoming an investor or launching another lending platform, it occurred to me that someone should build the infrastructure to connect these two sides of the market at scale. On the flight home, I decided to launch Orchard and had just the right team of co-founders in mind to do it.

To date, we’ve on-boarded over $40 billion of loans to our platform across 20+ lenders, covering a diverse range of consumer and small business credit products.

We believe that an efficient, diversified method of selling and reselling whole loans and loan portfolios is critical to the industry’s growth and longevity over multiple credit cycles.

We are excited about the possibilities that come with more and more traditional lenders adopting a ‘fintech’ approach to providing services and how that may help underserved segments of the market access the credit they need. The opportunity will likely be even more pronounced in other regions of the world where these underserved segments of the market have almost no access to traditional banking services but wide access to smartphones and mobile-only services.

Let’s not forget that lending is still the primary business activity of banks, credit unions, and specialty finance companies. Most of them are in the process of converting their lending operations to the online model—or quickly evaluating whether to build their own platform or partner with an existing lender or technology provider.

The broader convergence of banking and financial technology feels inevitable at this point.

4 Trends Transforming Online Business Lending (Entrepreneur), Rated: AAA

Alternative lending swooped in to fulfill the needs of consumers and small business owners during the credit pinch after 2008, and every sign points to the industry scaling up. By 2020, some estimate that 1 in 5 small business loans will be made by an alternative lender. That share of the pie will be $52 billion, compared to $5 billion today.

1. Multi-product offerings.

Our nation’s largest financial institutions are full-service banks, offering credit cards, personal loans, student loans, mortgages and small business loans, among other financial products. But to date, most online lenders have stuck to one side of the market, with some notable exceptions like Lending Club, which operates both in the personal loan and small business loan sectors. Over the next few years, we’ll probably see more online lenders offering multiple kinds of loans themselves.

2. Bank partnerships.

Banks have large customer bases, low cost of capital, and scale on their side. Alternative lenders have speed, better user experiences, and a regulatory vacuum to operate in.

While they’re natural competitors, they don’t have to be. Indeed, a number of partnerships are beginning to form between banks and online lenders that will define how the credit needs of small businesses are met in the future.

3. Pushes towards self-policing

But over the past few years, we’ve seen the rise of different self-policing initiatives, from trade associations to industry announcements. The Innovative Lenders Platform Association, the Marketplace Lenders Association, the Responsible Business Lending Coalition, the Small Business Borrower Bill of Rights: they’re all attempts at self-regulation.

4. Increased government regulation.

Regulators aren’t blind to the potential that alternative lenders have to innovate—and to the possibility that misregulation could quickly lead to the death of an important new industry. But, online lending is brand new, and it’s disrupting what’s traditionally been a highly regulated industry. So, expect more news coming out of Washington as regulators look to get up to speed on the innovation that’s happening in online lending, and seek to build first principles on what an appropriate regulatory framework should look like.

VeriComply Appoints Former LendingClub Executive Roger Dickerson President, Prepares to Expand Into MPL (Crowdfund Insider), Rated: A

VeriComply, a company that automates the verification of marketplace loans for the secondary market, announced on Thursday it appointed former LendingClub executive, Roger Dickerson as its new president as it prepares to expand into the marketplace lending industry.

According to VeriComply, Dickerson served as Vice President of Finance Operations at LendingClub where he oversaw investor operations.

Panhandle students owe slightly more, but default less (Amarillo.com), Rated: B

Students in the U.S. congressional district that encompasses the Texas Panhandle hold, on average, more loan debt than the state average. But on the other hand they also default on student loans at a lower rate.

The average student debt per borrower in the district is $29,122, according to a student debt analysis released Thursday by LendEDU, a student loan marketplace.

That amount is about $2,100 more than the state average.

The loan default rate in the congressional district is 7.27 percent, the study found. Statewide, the rate is 7.39 percent.

Texas’ colleges and universities

Average student debt per borrower: $27,048

Debt per borrower rank: 22/50

Proportion of grads with student debt: 58%

Student loan default rate: 7.39%

Total college cnrollment: 748,866

District 13’s colleges and universities

Average student debt per borrower: $29,122

Proportion of grads with student debt: 59%

Student loan default rate: 7.27%

Total college enrollment: 76,084

Source: LendEDU

United Kingdom

2017 will be the year that robo-advice enters the mainstream (FT Advisor), Rated: AAA

It is anticipated that by the mid-point of this year there will be between 50 and 70 players offering an automated advice solution in the UK, including several major providers.

A human element is crucial to the approach of these more complex online financial advisers. Many are also routing online customers to a human if it is apparent that the need is complex or the customer may not have properly understood the questions asked during the process.

But a human element is only part of the solution; additional safeguards will also be required. We would not allow a human adviser, however well trained, to operate without a system of checks, balances and oversight, and the same is true of an automated model.

Once safeguards are in place, EY believes that a robo-adviser would be expected to have fewer biases and a better audit trail than any human.

The ‘peer’ is being muscled out of peer-to-peer investment (BusinessZone), Rated: AAA

The peer-to-peer business lending market has reached over £4bn. Nearly a quarter of all equity investments last year were made through Seedrs and Crowdcube, the two largest crowdfunding platforms.

Yet in both cases, the future depends not on the retail investors – Joe Public – that made their name but on market-shaping institutional investors.

“Around 10% of all businesses funded on our platform have some form of VC, institutional or corporate investment involved at some point in their history, and that rises to 50% when it comes to growth-stage business,” he said.

Seedrs echoes the sentiment. Rich Mason, its business development director, says they’ve seen a “surge” in co-investment with institutions and later stage investors.

At the other end of the spectrum, 25% of Funding Circle’s investment is from institutions (including the securitisation of loans).

ThinCats’ Caley says changes to its lending criteria due to the demands of institutional investors, cut 20-25% of loans last year.

Whether this is a good thing or not seems split between the two leading forces of alternative finance. On one hand, everyday investors now have access to big funding rounds like Monzo, something that would have been impossible in the past.

On the other, the future of peer-to-peer lending is less clear. Very few of these platforms make money and several have already struggled after key institutional investors pulled the plug.

New fintech degree course aims to churn out next generation of entrepreneurs (Finextra), Rated: AAA

Budding entrepreneurs looking for a career in the fast-growing financial technology industry can now sign up to the UK’s first fintech undergraduate degree course at Wrexham Glyndwr University.

The new BSc (Hons) Financial Technology Management course has been designed with the input of fintech startups and support from North American investment firms Franklin Templeton and State Street.

Course leader Anna Sung, lecturer at Wrexham Glyndwr University, says: “Rather than teaching students the technologies behind the rise of fintech, the course will teach them how to generate new business ideas and create their own startup using the technologies available to them.”

Global investment in fintech ventures in the first quarter of 2016 was £4.1 billion and it’s estimated that 100,000 new jobs in the sector will be created in the UK by 2020.

Has the P2P halo slipped? (City A.M.), Rated: A

A look at some headline numbers from Funding Circle, the most well known in the SME lending P2P space, is telling. It operates a pooling system where a retail investor lends to a portfolio of, typically, 100 businesses, with no more than 1 per cent exposure to any one loan. Given average SME default rates, this is a significant risk mitigation tool. And when you overlay this with risk banding, quality underwriting and proactive arrears management and collection, it becomes a pretty tightly controlled environment. The upshot is that investors have received a 7.1 per cent return after fees and bad debts.

Nevertheless, the head of the Financial Conduct Authority (FCA) Andrew Bailey has said that he’s “pretty worried” about some aspects of the P2P market. Speaking to the Treasury select Committee, he was referring to attempts by some platforms to draw direct comparisons between their offerings and the returns from bank deposit accounts – implying that the two products are comparable, when they are not.

Bailey’s caution should be taken as a warning. While the concept and principles of P2P have political and regulatory recognition, behaviours that are seen to be misleading investors will not be tolerated. Absolute transparency about risk, return and redress are essential if the sector wishes to avoid damaging itself. Moreover, while banks exist under increasing levels of scrutiny, platforms can currently operate under lighter regulation.

So is there really a problem with P2P? I think there is, but not in the investor protection/regulatory space, or in its customer outcomes (which are largely excellent). The problem lies with the business model itself.

Robo’s opportunities and risks for advisers – Keith Richards (Professional Adviser), Rated: A

Robo-advice still has its limits, Richards cautioned, however, and advisers should be careful not see it as a ‘one size fits all’ solution.

“Mis-selling scandals of the past have generally been based on formulaic sales processes so it is important not to repeat history. The individual review and tailored recommendation process of financial advisers protects the market from systemic failure.”

Romford climbs to top spot for buy-to-let investor returns (Mortgage Solutions), Rated: A

Romford has replaced Luton as the postcode offering the greatest return for buy-to-let investors, after seeing rental prices grow 8% in the year to November.

The city climbed six places to knock Luton off the top spot, after it posted a capital gains growth of 17% and a buy-to-let yield of 5%.

Luton still remains a desirable market for investors, however, where continued growth in the rental market has offset the shrinking of yields, LendInvest said. The city posted a respectable 5% yield and a capital gains rate of 15% on rental price growth of 8%.

Last in the latest ranking of top 10 postcodes was Stevenage, where, despite 10% rental growth – the highest of all – capital gains were comparatively low at 9% on yields of 4%. Overall, Northampton remained the only postcode in top 10 to be located outside the South East.

European Union

France’s Online Alternative Finance Doubles in Size – Crowdfunding Grows 40% (Crowdfund Insider), Rated: AAA

The French Crowdfunding Association (Financement Participatif France) released today the 3rd edition of its annual industry Barometer. For the first time, the data was compiled by auditing and consulting firm KPMG, which lends to the Barometer additional weight.

As it stands, the 2016 Alternative Finance Barometer reports that:

  • French alternative finance overall raised €668 million, a 112% increase from 2015.
  • French crowdfunding raised €234 million, a 40% increase from 2015.

I draw two conclusions from these numbers:

  • The rapid growth of alternative finance comes from models fueled by institutional investors.
  • The French alternative finance market is catching up, but is still dwarfed by the UK’s.

The Barometer focuses in more detail on the narrowly defined category of crowdfunding that remains closer to the original roots of “funding by the crowd”. The three segments of this category show:

  • Donation and rewards-based crowdfunding show a sustained 37% growth to €69 million.
  • Debt financing and crowdlending grew by +46% to €97 million. The strong 125% growth stated in the 2015 barometer is not directly comparable to the 46% growth rate stated for 2016. The latter is based on comparable data, retro-fitted to a smaller parameter of SME, real estate and green debt funding and crowdlending.
  • Equity crowdfunding decelerates to +36% to €69 million.

In conclusion, while 40% is a very healthy growth number by common standards, it is not enough to sustain some 100 startups in the crowdfunding category. Many will jump ship or consolidate. The winners will most likely go for more hybrid models to get a nudge of acceleration from institutional investors.

Australia

Marketlend Appoints Brad Pattelli as Non-Executive Director (Yahoo! Finance), Rated: A

Marketlend, Australia’s leading peer-to-peer trade credit platform, today announced that it has appointed Brad Pattelli as a non-executive member of its board of directors. Pattelli brings decades of experience as an investor in a broad range of businesses, multiple prior public and private board roles, and significant expertise in the P2P arena as the former President of LC Advisors, a subsidiary of LendingClub, the award-winning online platform.

Founded in 2014, Marketlend provides investors with a unique opportunity to invest in supply chain or debtor lending facilities secured by short-term receivables, primarily from small to medium sized Australian businesses. An A+ rated global insurance company protects Marketlend investors against insolvency of the borrower and its debtors, enabling uninterrupted principal repayment on the majority of Marketlend’s lending facilities, providing investors with significant credit enhancement whilst enabling borrowers to receive better interest rates. Marketlend has recently secured a mandate from an undisclosed institutional investor to invest on its platform.

China

P2P lenders to keep funds at banks (Shanghai Daily), Rated: AAA

CHINA’S banking regulator yesterday issued a new rule requiring peer-to-peer lending platforms to use third-party banks for custody of funds as it enhanced a national campaign to curb financial fraud.

The bank requirement seeks to strengthen fund security and prevent capital embezzlement, the China Banking Regulatory Commission said in a statement yesterday.

A P2P lending platform should sign an agreement with only one commercial bank to safeguard the funds, and all P2P lenders should meet the custody requirement in six months, the regulator said.

As of yesterday, 209 operating online P2P platforms have signed such agreements with commercial banks, accounting for 8.8 percent of all P2P lenders, according to data compiled by Online Lending House, a portal that tracks the sector.

China Rapid Finance Said to Target U.S. IPO as Soon as 2017 (Bloomberg), Rated: AAA

China Rapid Finance, a Shanghai-based peer-to-peer lender, is planning to raise at least $100 million in an initial public offering in the U.S., people familiar with the matter said.

The company, which raised $20 million at a pre-money valuation of $1 billion in November, could hold the IPO as soon as this year, the people said, asking not to be identified because the information is private.  The money will be used to fund expansion in China, one of the people said. The company declined to comment in an e-mailed statement.

Canada

Jean-Sébastien Drolet, RealStarter on Making Real Estate Investments Accessible (Crowdfund Insider), Rated: AAA

Crowdfund Insider had the opportunity to interview the co-founder of Canadian real estate crowdfunding platform, RealStarter.

Jean-Sébastien Drolet:  RealStarter stands for a reachable start in the real estate investment. As you might know, buying property is not accessible to everyone because one encounters many costs and fees. Also, real estate investment can be challenging if you don’t have enough knowledge regarding the market and market trends.

JSD:  I would say our main challenge in 2017 will be to build trust with our users. I say that for two reasons that go hand in hand with each other: real estate crowdfunding is not very well known in Canada, especially in Quebec, and people are distrustful about investing money in real estate through a web platform. (It was only legalized in 2015 in Canada.)

JSD:  I don’t think so — things are moving quite slowly in terms of regulations but they are still moving forward. In 2017, the Canadian regulators across Canada will be looking at what is going on in other jurisdictions to amend the regulatory regime actually in place in order to make it more efficient with the new emerging fintech business models. For example, the AMF (Quebec regulator) recently announced the creation of a technological Innovation Advisory Committee on which RealStarter will be. Its primary mandate will be to analyze technological innovations in the financial sector and anticipate regulatory, market efficiency and consumer protection issues.

JSD:  Yes, it takes time to build a real estate crowdfunding market.  After reading a few market studies about the US and the UK market, we can see it took about three years to achieve good growth in terms of investment volume made through crowdfunding platforms. We predict it is going to take less time in Canada since we now have positive results from these jurisdictions. Also, we like the E-Reit model adopted by certain US crowdfunding platforms, such as Fundrise.  We are currently working toward doing something similar available if the regulation is flexible enough.

Authors:

George Popescu
Allen Taylor