Tuesday October 2 2018, Daily News Digest

delinquencies by vintage

News Comments Today’s main news: Renaud Laplache banned from securities industry for 3 years. Varo Money pulls bank charter application. Funding Circle completes IPO. Marcus enters the UK. OnDeck Australia expands equipment finance. Today’s main analysis: Delinquency/Loss Trends, yield curve. Today’s thought-provoking articles: Americans prefer humans over robo-advisors. Global P2P lending market expected to reach $898B by 2024. AltFin’s path to […]

delinquencies by vintage

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Lending Club founder settles; banks fear weak third quarter (American Banker), Rated: AAA

Renaud Laplanche, the co-founder and former CEO of online lender LendingClub, agreed to pay $200,000 and be banned from the securities industry for three years to settle Securities and Exchange Commission fraud charges. In addition, LendingClub Asset Management (LCAM), an investment management unit of LendingClub, will pay a $4 million fine while Carrie Dolan, the company’s former chief financial officer, will pay $65,000.

LendingClub Responds to DOJ and SEC Settlements (PR Newswire), Rated: A

“We are pleased to have resolution and closure,” said LendingClub Chairman Hans Morris. “Following an internal review in 2016, LendingClub’s Board of Directors accepted the resignation of Renaud Laplanche as Chairman and CEO of the Company. The Board’s decision was not made lightly but the violation of the Company’s business practices, along with a lack of full disclosure by Mr. Laplanche during the review, was unacceptable. The allegations made by the DOJ and the findings of the SEC further support the Board’s decision to take swift and decisive action. We have full confidence in our new management team and we are a better company today.”

Why this fintech pulled its FDIC charter application (American Banker), Rated: AAA

Varo Money is inching closer to having a bank — the next step will require a major leap.

The fintech, which aims to offer consumer banking services with no fees, applied for a national bank charter over a year ago. While it recently received preliminary and conditional approval from the Office of the Comptroller of the Currency, Varo has been unable to secure the blessing of the Federal Deposit Insurance Corp.

Delinquency/Loss Trends; Yield Curve One Hike from Inversion (PeerIQ), Rated: AAA

The range of Fed Funds Rate is now between 2% – 2.25%. A super-majority of committee members indicated that they would like to hike rates by another 25 bps in DecemberUS GDP growth of 4.2% in the 2nd quarter was the fastest since 2014 Q2, and US consumer confidence reached an 18-year high in September.

 

Source: Federal Reserve, Bloomberg, PeerIQ
Source: PeerIQ, Bloomberg

Delinquencies by Vintage

Source: PeerIQ

Bank of America is luring top talent from Apple and Disney to fuel its billion digital ambition (Business Insider), Rated: A

Like its competitors, Bank of America Merrill Lynch is spending a colossal amount of money to stay competitive in the financial tech race: Its $10 billion annual tech budget sits just behind JPMorgan’s $10.8 billion and ahead ofCitigroup’s $8 billion.

A large chunk of that spending goes to the firm’s profit-driving consumer-banking operation, which accounts for $34.5 billion in revenue and $8.2 billion in net income, which is 38% of the firm’s total.

SoftBank Invests $ 400M in Home-Selling Startup Opendoor (Coverager), Rated: A

Online real estate marketplace Opendoor  has announced a $400M investment from the SoftBank Vision Fund, bringing its total funding to date to over $1b. The company also announced it has secured access to more than $2b in debt financing from top banks.

Governor Brown Signs Bill That Expands Access to Capital for the Underbanked (BusinessWire), Rated: A

INSIKT, a CDFI-certified fintech company disrupting the predatory lending industry, today celebrated a major step forward for working families and small businesses in California with the signing of Assembly Bill 237 (AB237), following unanimous approval by the CA Legislature. Sponsored by Lorena Gonzalez Fletcher (D-San Diego), this new law significantly expands access to lower cost loans for Californians who are part of the 66 million underbanked in America ensnared in endless cycles of predatory debt.

AB237 builds on the success of California’s Pilot Program, established in California in 2010 to provide affordable credit for loans below $2,500. The Pilot Program has many consumer protections, including rate caps, mandated underwriting, credit education and reporting of payback information to credit bureaus so that consumers can build their credit score.

The Pilot Program has been working, with the volume of payday lending declining in California by almost 7% from last year, the third consecutive annual decline. AB237 extends all of the Pilot Program’s consumer protections to larger loans of up to $7,500. It also adds new protections, including a 36% maximum debt-to-income ratio, minimum loan terms of one year, and mandatory rate reductions on second and third loans for borrowers in good standing.

Compass Raises $ 400M in Series F Funding (Finsmes), Rated: A

Compass, a NYC-based real estate technology company, raised $400m in Series F financing round.

The round – which will bring the total capital raised to nearly $1.2 billion – was led by the Softbank Vision Fund and Qatar Investment Authority (QIA), with participation from Wellington, IVP and Fidelity.

Americans Prefer Humans over Robos for Financial Advice (Wealth Management), Rated: AAA

Americans are relatively comfortable with automating financial advice but the majority still want a human to consult, according to Charles Schwab’s latest Consumer Digital Demands report.

The report, which surveyed 1,000 U.S. adults this summer, including 391 current robo advisor users, showed Americans are more open to technology performing some tasks than others. For example, 75 percent of respondents said they’re comfortable with more human assistance than automation when it came to performing surgery. They also are overwhelmingly more comfortable with humans over technology when it comes to driving a car (74 percent), diagnosing a major health issue (73 percent) and flying an airplane (66 percent).

Source: Charles Schwab

Read the full report here.

46 percent of millennials think it takes $ 1,000 to start investing—here’s how much you actually need (CNBC), Rated: A

recent survey from financial services app Twine found that 46 percent of millennials believe they need at least $1,000 to start investing. Another 17 percent believe they need at least $10,000 before they’re able to invest.

Overall, 56 percent assume they don’t have enough money to become investors themselves.

It’s simply not true. There are plenty of ways to get into the market with as little as $1, including contributing to an employer-sponsored 401(k) plan, opening a Roth IRA or using a robo-advisor such as Betterment, Wealthsimple or Ellevest, which offer $0 account minimums.

CREDIT WITH A CONSCIENCE (Petal Email), Rated: B

We’re thrilled to announce today that the Petal credit card is now publicly
available on our website at www.petalcard.com.

Meet Klarna (Missy Farren & Associates, Ltd. Email), Rated: B

We’re excited to let you know we are now working with 

Real Estate Mogul And Owner of Flipnerd.com, Mike Hambright, Has Been Published In Forbes (MENAFN), Rated: B

Flipnerd.com continues to grow and make its mark in the real estate world due to the versatility and expertise of its owner, Mike Hambright. In recognition of his expertise, business acumen and dedication to succeeding in his carved niche, the founder of this real estate company has been published on one of the greatest platforms in the world, Forbes.

United Kingdom

Funding Circle Goes Public on the London Stock Exchange (Lend Academy), Rated: AAA

It was a landmark day for fintech in London as Funding Circle became the first UK marketplace lender to complete an IPO.  The company raised £300 million at a valuation of around £1.5 billion. They began trading on the London Stock Exchange (LSE: FCH) this morning with an initial price of 440 pence (at the lower end of the forecasted price range of 420p to 530p). While rising early in the day to 460p it closed the exactly flat at 440p.

Funding Circle valuation ‘reflects brand and growth opportunity’ (P2P Finance News), Rated: A

The peer-to-peer business lender, which listed on the London Stock Exchangeon Friday, was originally targeting a market value of £1.8bn. But after narrowing its IPO price range, it subsequently priced at 440p, implying a market capitalisation of £1.5bn.

Some market commentators argue the company is overvalued as it is still loss-making, although revenues surged from £51m in 2016 to £94.5m last year.

Goldman Sachs Enters U.K. Savings Market, Continuing Consumer Push (WSJ), Rated: AAA

Goldman Sachs Group Inc. entered Britain’s £700 billion ($922 billion) cash savings account market Thursday with the U.K. launch of its consumer bank Marcus, adding a fresh source of funding for the U.S. investment bank.

Online-only Marcus offers savings accounts paying interest of 1.5%, the highest rate for instant-access savings products, according to price-comparison websites.

Zopa customers vote Bond’s Aston Martin as most iconic screen car (P2P Finance News), Rated: A

THE ASTON Martin DB10 driven by Daniel Craig in the James Bond films has been voted the most iconic car in film and television.

The car won 35 per cent of votes in a poll conducted by peer-to-peer platform Zopa.

Inspector Morse’s maroon MK II Jaguar followed in second place with 14 per cent, while Dominic Toretto’s Dodge Charger from The Fast and The Furious came third.

Relendex increases max loan size to £5m (Development Finance Today), Rated: A

Relendex has announced that it has increased its maximum loan size from £3m to £5m.

Loans will also be available on commercial and industrial assets, where circumstances allow, as Relendex plans to reach a lending target of £100m in 2019.

UK in debt: how it looks in figures (London Loves Business), Rated: A

The research briefings provided by the UK Parliament itself show that student debt stands at £105 billion by the end of March 2018.

The Guardian reports that only 5% of the graduates remain unemployed six months after graduating. In addition to that, 74% of professionals who enter the workforce are full-time first degree graduates. In terms of the pay that they get, males more than females tend to benefit from getting a degree. The men’s average pay rise to £24000.

The Guardian reports that by the end of July 2017, unsecured credit had risen to a level not seen since September 2010. Specifically, unsecured debt has reached £201.5 billion.

70% believe low credit scores or zero hour contracts would prevent borrowing (Financial Reporter), Rated: A

Just 31.6% of the 2,400 respondents recognised that none of the reasons listed automatically prevent someone from getting a mortgage.

A massive 47.5% believed a low credit score could stop someone getting a mortgage, 33.4% thought a zero hour contract would be a barrier and 15.6% said a payday loan would stop an application from being accepted.

Fintech iwoca responds to £775m RBS competition package briefing (iwoca Email), Rated: B

The CEO of one of Europe’s fastest growing business lenders has a cautiously optimistic outlook for the £775 million RBS Alternative Remedies Package following a briefing by Banking Competition Remedies this morning.

“Funds from Pools C and D of the package’s Capability and Innovation Fund, would enable iwoca to bring innovative new technology to the market, making it easier for small businesses to secure finance on their terms, whenever and wherever they need it. What’s more, we would be that much closer to achieving our target of funding 100,000 small and micro businesses in the next five years.”

China

China Rapid Finance Announces Submission of Regulatory Report and Board Change (Markets Insider), Rated: AAA

China Rapid Finance Limited (the “Company” or “XRF”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it submitted its P2P Compliance Self-Inspection Report (the “Report”) to its local P2P regulatory office. The Report is the first of three steps mandated in the inspection process, a key element in demonstrating compliance with industry reforms being promulgated by the National P2P Rectification Office.

Golden Bull Reports 75% Revenue Rise for First Half; Up 6% on Wall Street (Capital Watch), Rated: A

The stock of Golden Bull Ltd. (Nasdaq: DNJR) rose more than 6 percent by Monday afternoon after the Chinese P2P lending company posted a 75 percent increase in revenue for the first half of 2018.

Revenue jumped to $4.9 million compared with $2.8 million during the first six months of 2017, the Shanghai-based company said, thanks to an increase in borrowers. According to its statement, Golden Bull has facilitated 3,000 loans with total volume of $77.8 million during the first half compared with 2,200 loans in the amount of $53.7 million processed a year ago.

Chinese Household-Debt Levels Reach Record High (The Epoch Times), Rated: A

While its overall household wealth has increased, China’s household debt-to-GDP ratio reached a record high of 49.1 percent in 2017, according to a new report on global wealth by German insurance giant Allianz. Since the beginning of 2008 to the end of last year, Chinese household debt jumped an average of 27 percent annually, according to separate but corroborating data from the Bank of International Settlements.

Samoyed Holding Files For $ 80 Million U.S. IPO (Seeking Alpha), Rated: A

Samoyed Holding (SMY) intends to raise gross proceeds of $80 million from a U.S. IPO, according to an F-1 registration statement.

The firm provides technology-driven credit services to credit-proven millennials in China.

SMY is growing revenues and weighted-average APR but is also seeing sharply increased charge-off rates for its credit card balance transfer marketplace.

European Union

Younited Credit expands to Portugal (AltFi), Rated: A

The Paris-based consumer lending platform Younited Credit has increased its potential customer base by launching in Portugal, its sixth European market. Already distributing loans in Germany and Austria, it has 35 per cent of its loans in Italy and Spain.

Telia Sweden overhauls organisational structure, brings in Klarna customer service head on 01 January (Telecompaper), Rated: B

Johan Andersson will lead the strategy division, Fredrik Sidmar will be in charge of professional services, Piero Trivellato will be responsible for digital and analytics, and Sandra Alenius will lead customer service delivery. Alenius will join Telia from Swedish payments specialist Klarna.

International

Global peer-to-peer lending market set to reach $ 898bn by 2024 (P2P Finance News), Rated: AAA

THE GLOBAL peer-to-peer lending market will grow to $898bn (£688bn) by 2024, according to new research.

The report predicted that this will allow the P2P market to achieve a compound annual growth rate of 48.2 per cent over the next eight years.

AltFin’s Inconsistent Path To SMB Adoption (PYMNTS), Rated: AAA

In the U.K., $248.9 million was lent to SMBs via alternative lending platforms in Q2, according to the U.K. Peer-to-Peer Finance Association (P2PFA). The P2PFA highlighted that the statistic means net lending to SMBs, via member alternative lending players, surpassed that of high-street banks, which lent about $169.4 million to SMBs during the year’s second quarter. New lending to small firms, among member marketplace lending portals, increased by nearly $130.3 million, the association noted.

In the U.K., 30 percent of small firms need external financing simply to survive, according to new Liberis data.

In the U.S., 63 percent of SMBs sought a loan for working capital needs last year, including payroll, inventory and supplies, according to new data from S&B Global Market Intelligence.

In Mexico, 44 percent of small businesses that have been in operation for five years haven’t seen their incomes rise, according to Moody‘s Senior Credit Officer Felipe Carvallo in an interview with Euromoney. According to Moody’s data, small businesses accounted for just 9.1 percent of all loans in Mexico as of last March — equivalent to only 2 percent of total GDP, reports said.

Skynet Controversy: Similarly Named Tezos dApp Promises Enhanced Peer-to-Peer Lending (BTC Manager), Rated: A

Skynet Open Network seems to promise all things to all people – fastest blockchain implementation, AI on Blockchain, Healthcare on Blockchain and more. Some of the 17,000 people on the SkynetOpen telegram channel were understandably furious about the similarities in the name when Skynet World announced their project on September 26, 2018.

According to the Skynet World whitepaper, they are the first DAPP on the Tezosblockchain.

Skynet World aims to disrupt the bank lending space by offering peer to peer lending through their app. According to Skynet World:

“Banks are the major source of debt finance for both households and businesses, accounting for about three-quarters and two-thirds respectively of all debt finance provided to those sectors… Banks charge most of the interest up front, a practice known as amortization. Through amortization, 70% of the total interest is paid by the halfway point of the mortgage period.”

Australia

SME lender expands equipment finance (AustralianBroker), Rated: AAA

An online lender has expanded its offering of equipment finance, saying it is providing a solution for the “underserved” market of small business owners.

OnDeck Capital Australia said it had received feedback from small businesses and brokers about the length of the loans.

India

MODI OPERANDI (All About Alpha), Rated: A

What’s your liquidity M.O.? If you are less than certain, it is time to look east toward the country of India and the land of Modi. After all, when 1.3 billion people cough there is a decent chance the rest of the world just might get sick, or maybe just sick of being gated, PIK-ed, or having their holdings marked down 10% or more in a single trading session.

In September an unlisted India company that relied on debt funding for various infrastructure projects defaulted and the spillover into the listed equity markets was contagious and quick. The poster child this time around was Dewan Housing Finance Corp. Their commercial paper, which was issued to fund their longer term capital needs, ticked up 50 basis points when a mutual fund went to liquidate some of that holding, and the stock ended up dropping by more than half in a single trading session. Despite management claims of good health and solid liquidity, many investors could not process or hear it as they ran from the fire. Some other names in this sector suffered similar fates, and the damages (or buying opportunities) are still being sorted out. In India, the publicly traded mutual funds are estimated to own 60% of the commercial paper issued by these non-bank finance companies.

Uttam Prakash Agarwal joins PaisaDukan as independent director (Business Standard), Rated: B

Former Uttam Prakash Agarwal has joined NBFC-lending major as 

APAC

Belt Road Capital invests $ 3m in Vietnamese P2P lending startup Tima (Deal Street Asia), Rated: AAA

Mekong-focused venture capital firm Belt Road Capital Management (BRCM) has injected $3 million in a Series B funding round of Tima, a Vietnamese P2P lending platform incepted in 2015.

The latest investment values the company at $20 million. Tima raised a series A round in 2016 from Dunearn Singapore Fund and G Capital.

First Circle, a Philippine-based Fintech, Preps to Launch New SME Targeted Credit Facility with Support of Government (Crowdfund Insider), Rated: A

First Circle, a Philippine Fintech, is expected to announce a new credit facility for SMEs nationwide. This new facility has gained the support of the Philippine Department of Trade and Industry (DTI) and the Bangko Sentral ng Pilipinas (BSP).

First Circle is an online lender that provides supply chain financing to SMEs.

Authors:

George Popescu
Allen Taylor

Friday April 14 2017, Daily News Digest

millennial asset allocation

News Comments Today’s main news: Marathon Partner calls for change at OnDeck. LC releases mobile app. Ranger slumps after the collapse of Argon Credit. College Ave secures $30M in a fourth equity round. Droom launches first used auto MPL in India. First Circle secures funding to expand into SE Asia. Today’s main analysis: High-Net-Worth Millennials want advice from humans. Ranking the […]

millennial asset allocation

News Comments

United States

  • Marathon Partners calls for change at OnDeck. GP:”There is an entire industry, especially in New York, of funds who buy a minor number of shares in public companies and then mount a public campaign to impose their views to the companies. Examples are Karl Icahn, Bill Ackman, Dan Loeb and Herbalife.  Their objective is a quick appreciation of the share value and not the long-term success of the company. They typically encourage the company to sell assets to quickly raise cash for the share prices to increase quickly. They then sell their shares at a large profit, having double or tripled their investment in months to a year. And over time, the company is left on its own, now without the assets, it sold. All companies have issues and I am sure plenty of people disagree with the choices made at OnDeck. But from there to saying that OnDeck is in big trouble I think the leap is too large. Many companies have the exact same board structure as OnDeck, common CEO and Chairman and more. I see this campaign as a pressure campaign, unfortunately, picked up by WSJ,  who probably saw some pieces of truth and some sensationalism in it but is likely exaggerated. The real issue at OnDeck: they need cash, and soon. Let’s see how they solve that issues while keeping control. Being a public company opens the doors to this kind of attacks. “AT: “More and more, it’s looking like OnDeck may be headed for a sale. It could at least see a changeover in leadership. That new leadership will be expected to turn the company around, and if they can’t, we could see a buyer emerge in the near- to mid-term future.”
  • Activist steps up pressure on OnDeck. GP:” See comment above.” AT: “One influential person is all it takes to impact a change.”
  • LendingClub releases mobile app for investors. GP:”As many of our readers we are surprised they didn’t have a mobile app yet. There is a difference between a mobile responsive website and a native app. When will people be able to apply for a loan using just the app? While the core of Lending Club’s applicants are baby boomers and Gen X, I still think that mobile apps open the door to new features like taking pictures of your IDs and documents in real time, using the mobile phone’s info for underwriting and applying even faster.” AT: “I wonder why they hadn’t already.”
  • SoFi intros new two-step verification process. GP:” A small important step, focused on security. We discussed recently the importance of security, especially of borrower’s data.”
  • HNW Millennials are hungry for advice from humans. AT: “This is interesting since we’ve been hearing a lot about how millennials prefer robo, or at least want a mix of human-robo advice. High-net-worth individuals are different, though, and I think that’s across generations. Significant is the fact that many HNW millennials are in charge of their families’ fortunes, or at least a part of it. I would imagine they would not want to be responsible for losing what their fathers and grandfathers built, therefore, it makes sense they’d want advice from a human mentor in some respects.”
  • Ranking all 50 states by average credit score of citizens. AT: “The interesting thing about this to me is there seems to be a cultural attitude at play here. The top states and bottom states in the ranking are clumped together in regions, which says to me that attitudes toward credit, and behavior driven by those attitudes, are at work within the cultures. Of course, you also can’t deny economic indicators such as unemployment, which tends to be higher in certain areas, probably due to certain industries losing out to automation and other paradigm-shifting forces.”
  • College Ave secures $30M in a fourth equity round. GP:” Student Lending continues to attract nice investments. Congratulations !”
  • CrediFi launches CredifX MPL for commercial real estate lending. AT: “We’re beginning to see the growing RECF market branch out into specialization. It’s an exciting time to be a marketplace lender in the real estate sector.”
  • Startup helps Chinese investors put money into U.S. funds.
  • Could fintech enable a resurgence in predatory lending. AT: “Yes, but this is a scare tactic aimed at borrowers. This thinking takes away from personal responsibility. It’s important for lenders to take note of this attitude and develop responsible-but-profitable lending practices. Anything else could land lenders in the same hot water as those caught up in the S&L crisis and mortgage default crises.”

United Kingdom

European Union

International

Australia

China

India

Asia

Africa

News Summary

United States

Marathon Partners Calls for Change at OnDeck (Yahoo! Finance), Rated: AAA

Marathon Partners Equity Management, LLC, together with its affiliates (“Marathon Partners”), announced today that it has released a letter that was sent to the board of directors of OnDeck Capital, Inc. (“OnDeck” or the “Company”) last month expressing concerns about the direction of the Company and making recommendations on steps to improve shareholder value.  Marathon Partners also announced today its intention to vote against the three incumbent directors up for election at OnDeck’s upcoming Annual Meeting scheduled to be held on May 10, 2017.

In its letter to the Board, Marathon Partners recommended two courses of action for OnDeck:

  • Fully rationalize the Company’s cost structure in order to rapidly achieve GAAP profitability and reduce the pressure on the organization to grow its loan portfolio
  • Seek the sale of the Company to a stable partner where OnDeck can thrive without the risks of destabilizing confidence in the business from shareholders and the capital markets.

In addition to the concerns expressed in the letter, Marathon Partners is also disappointed with OnDeck’s corporate governance and executive compensation practices, as exemplified by ISS’s Governance QuickScore of ’10’ – indicating the highest level of concern – at the 2016 Annual Meeting.  OnDeck’s current practices, including plurality voting for director elections, a classified board structure, no special meeting rights for shareholders, and combined CEO and Chairman roles, among others, serve to disenfranchise their shareholders’ rights. Marathon Partners also has concerns around the metrics believed to denote success for the Company, such as adjusted EBITDA that ignores stock-based compensation and is blind to increased balance sheet risk.

Given Marathon Partners’ lack of confidence in the Board’s ability to represent the shareholders’ best interests, it plans on voting against the entire class of directors up for election at the 2017 Annual Meeting.

Activist Steps Up Pressure on On Deck Capital (WSJ), Rated: AAA

Marathon Partners Equity Management LLC, which owned 1.75% of On Deck’s shares as of the end of 2016 according to FactSet data, also publicly released the text of a letter it sent to the company’s board and lead independent director in March urging them to slash expenses and explore a possible sale of the business.

The three directors up for re-election are Noah Breslow, who also serves as On Deck’s chief executive; Jane Thompson, a former financial-services executive at Wal-Mart Stores Inc. WMT -0.39% ; and Ron Verni, a former CEO of Sage Software Inc.

On Deck’s shares, which fell 3.3% Thursday afternoon, are down more than 35% over the past 12 months following the reporting of wider losses and cooler investor demand for its loans.

The LendingClub Investor Mobile App Has Arrived (LendingClub), Rated: AAA

Today, with more than $24 billion invested through the platform, LendingClub is thrilled to introduce its new iOS mobile application – LendingClub Invest.

Investors said that some of the most important functionality they use on a regular basis is checking their account summaries and investing in Notes. Armed with this insight, the team crafted a visually-attractive user interface that consolidates the investor’s total account value, available cash, returns and holdings on the first page.

SoFi Introduces New Two-Step Verification Feature to Offer Users Next Level of Account Protection (Crowdfund Insider), Rated: AAA

Online lender SoFi recently announced the launch of its new two-step verification feature that will offer users the next level of account protection. The company revealed that two-factor authentication (or 2FA) would provide an additional layer of security to help protect accounts from unauthorized access.

HNW Millennials Are Hungry For Advice… From Humans (Wealth Management), Rated: AAA

High-net-worth millennials enjoy growing influence in the management of their families’ portfolios, but few are fully satisfied with their investment objectives. They have strong opinions, but are hungry for advice and don’t seem particularly excited about getting it from a computer.

Only 32 percent of millennials rate their values-based investment knowledge highly, with roughly a quarter deeming their knowledge either poor or very poor. That being said, there is a continuing hunger for investment knowledge, with 42 percent claiming they would like to learn more about the area.

The other potential reason for this discontent is that millenials simply have differing philosophies on investment than previous generations.

Ranking All 50 States by Average Credit Score of its Citizens (Statistical Future), Rated: AAA

Scores range from 300 to 850, the data comes from Experian. The national average ends up being 673, this is kind of shocking to me since my banker seemed to stress the necessity of a 720 credit score to get a loan with the best rate. Obviously, not everyone owns their home, but even in the state with the highest average – Minnesota – the average is only 706.5. Even then, the state ranks a full 7 points ahead of the runner up – Wisconsin.

Someone has to bring up the rear and for this metric, that someone is the state of Georgia, with an average credit score of 642.

At first glance, the aspect that pops out the most is that the top four states are all bundled in the upper Midwest while 5 of the 6 lowest are basically neighbors in the south.

High unemployment + low wages = lower than average credit scores.

College Ave Student Loans Secures $ 30 Million During Fourth Equity Round (Crowdfund Insider), Rated: A

Student loan marketplace, College Ave Student Loans, announced on Thursday it secured $30 million during its fourth equity round. Investors of the funding round included new and existing participants, which included Comcast Ventures and Leading Edge Ventures.

First data-driven marketplace for commercial real estate loans speeds process to finance commercial properties (PR Newswire), Rated: A

CrediFi Corp., the leading source of data and analytics for commercial real estate (CRE) finance, has announced the launch of CredifX, its online marketplace for financing commercial properties.

CrediFi has already made the commercial real estate market more transparent, by providing data about more than two million properties and thirteen trillion dollars in loans across the U.S. Now CredifX is taking that transparency revolution one step further. In addition to accessing information about commercial real estate finance through the CrediFi platform, CRE borrowers, brokers and lenders will now have unprecedented access to financing opportunities allowing them to close real estate deals through CredifX, CrediFi’s latest fintech solution.

The launch of CredifX follows just weeks after CrediFi secured $13 million for its Series B funding, helping drive the launch of CredifX.

Chinese Fintech Startup Helps Mainlanders Invest Money in US Funds (Crowdfund Insider), Rated: A

The last method mentioned above, utilizing the $50,000 limit on transfers, is being utilized by Chinese fintech startup, Niu Jiao Suo, to help Chinese investors to move their money overseas. Niu Jiao Suo operates by connecting Chinese investors with foreign mutual funds. Its mobile app allows users to invest in foreign mutual funds like Blackrock, Vanguard, JP Morgan, and Goldman Sachs with a minimum investment amount of $400. Users are limited to $50,000 in total investments per year in accordance with China’s annual threshold. A $400 investment may not sound attractive to funds by itself, but Niu Jiao Suo is able to attract such prestigious funds by bundling their users’ smaller investments together into a larger investment package.

Could Fintech Enable a Resurgence in Predatory Lending? (Tech.co), Rated: B

The average household carries $134,643 in combined debt which includes mortgage, credit cards, auto loans, and student loans. A good chunk of household income go into servicing these loans as illustrated in how Americans spend their paychecks. The biggest chunks of people’s monthly spending correspond to housing, transportation, and education. For other expenses, Americans continue to rely on plastic. While not necessarily a bad thing, many fail to pay charges in full and carry a balance on their cards, further exposing them to compounded interest and other fees.

Credit card debt is at its highest since 2008. Americans added $60.4 billion to the outstanding credit card debt as 2016. Worse is that, 69 percent of Americans have less than $1,000 in savings. 34 percent of respondents revealed that they don’t have any savings at all. When emergency strikes, many are left with little choice but to get more loans. However, with bad credit scores, borrowers are resort to getting them from predatory lenders.

For cash-strapped consumers, the promise of fast and easy money is always enticing. The payday loan industry alone is a $38.5 billion industry.

Late last year, the Office of the Comptroller for Currency started to accept applications from fintech companies that would subject them to federal banking rules. Chartered companies will face controls to prevent money laundering and have to abide by consumer protection rules. However, some argue that a federal charter would also enable fintech companies to bypass state-specific provisions such as interest rate caps. Such flexibility may be abused by enterprising lenders.

You should always go with numbers. Know how much the loan will totally cost you. Calculate the annual percentage rate (APR). Many predatory loans would have APRs of three digits meaning you could pay triple, quadruple, or even more of the loan amount in a year’s time if you fail to pay. While many of these loans are designed to be short term, it’s really dependent on your capacity to pay.

United Kingdom

Ranger slumps as collapsed lender forces write-down (Citywire), Rated: AAA

Shares in Ranger Direct Lending (RDL) have slumped after the investment trust was forced to write down 4% of its portfolio following the collapse of US peer-to-peer lending platform Argon Credit.

Shares in the trust are trading at 996p, down 6.9% since the write-down was announced yesterday, languishing at a 17.3% discount to net asset value.

The £172 million trust holds a position in Princeton Alternative Income, which gives the trust indirect exposure to $28.3 million of a $37.5 million credit facility Princeton has supplied to Argon, which went bust in December.

Numis analyst Charles Cade said the entire position in Princeton represented 12.1% of net assets in December and as Ranger could not determine the exact impact ‘we would not be surprised to see further writedowns’.

RateSetter channels £120k to Essex foster care SMEs (P2P Finance News), Rated: AAA

A £120,000 loan arranged by RateSetter boosted child care placements in an Essex-based foster care company by almost a quarter.

The peer-to-peer lending platform helped Brighter Futures Foster Care increase the number of new foster households from 67 to 83, making its foray into a sector where it found “finance is desperately needed”.

The borrower works with local authorities in the South East to find foster families for young people amidst a national shortage of 10,000 foster places, and is looking to raise further finance to bring the number of placements to 110-120.

P2P lending platform Assetz Capital to raise interest rates for limited time (Finextra), Rated: AAA

Assetz Capital, one of the UK’s largest and fastest growing peer-to-peer finance platforms, today announced it was raising the interest rate on its popular 30 Day Access Account (30DAA) by 0.5% to 4.75% for a limited time.

Investors will have until midday on 11 May to take advantage of the new rate and will benefit from a capped return of 4.75% for up to 90 days after an investment is made. After this, the account will return to its original rate of 4.25%.

Investors can automatically invest any amount from £1 in a diverse portfolio of secured business loans that have passed Assetz Capital’s strict credit checks.

A quiet crash in bank lending? March industry news (Funding Circle), Rated: A

Bank of England statistics reveal that since the EU referendum, net lending (that’s total lending minus repayments) to British small businesses by 22 of the largest banks dropped from £1 billion in the second quarter of 2016, down to just £220 million in the last three months of the year. Meanwhile, Funding Circle investors lent £167 million on a net basis in Q4 alone!

It was also great to see Samir Desai, Funding Circle CEO, featured in the The Sunday Times Maserati 100 list, which recognises influential entrepreneurs who are disrupting the business world.

And finally, our US business announced that Community Investment Management, an impact investment firm focused on direct lending, is now lending an additional $100 million to American small businesses.

FCA accused of hampering P2P market (FT Adviser), Rated: A

The Financial Conduct Authority’s decision to define peer-to-peer lending too narrowly has hampered the market, it has been claimed.

According to one compliance expert, the FCA’s decision has meant only 40 per cent of the P2P loans which HM Treasury had intended to be covered by the legislation were actually captured by the regulator’s definition.

Chinese firm Hywin Financial buys UK wealth manager (Fund Strategy), Rated: A

Hywin Financial Holding Group has acquired UK wealth manager Azure Wealth, which will now be known as Hywin Wealth.

Shangjia Monica Lin has been appointed chair of the board following the acquisition.

Banks favour lending to the owner-occupier market (Bridging and Commercial), Rated: A

Lendy believes that regulations such as Basel III have incentivised banks to take risks in the owner-occupier market and cut exposure to property developers.

This comes after the peer-to-peer secured lending platform found that the number of new residential mortgages worth over £1m increased by 24% in the 12 months to 30th September 2016.

Lendy discovered that the number of new £1m plus mortgages written by banks in 2015/16 increased to 4,844, up from 3,896 in 2014/15, while the total value of these mortgages grew by 18% from £7.59bn to £8.95bn in the same period.

When blockchain meets online lending: The business using one to improve the other (City A.M.), Rated: A

Sydney-based platform Othera goes a step further: the blockchain lending platform allows lenders and investors to access digital loans. It then chops up those loans – which are backed by businesses’ cashflows – in a process called tokenisation. These tokens can then be sold on an exchange, turning a traditionally fairly illiquid asset into a highly liquid digital asset.

Why did you launch Othera?

The overarching reason for launching Othera and building a blockchain lending platform is to unlock the alternative investment asset class and help it become mainstream.

You use blockchain to provide ongoing credit analysis of borrowing firms. How does that work and why is that so useful?

The blockchain provides what I call “total asset provenance” which means that every single interaction between the borrower and the lender is logged on it.

How does tokenisation work?

When we talk about tokenisation in the context of our platform, I am talking about the process of linking the rights to loan repayment cashflows (the principal and interest of the loan) to a digital cryptographic token similar to a bitcoin. So if you hold (own) the token, you will receive the pro rata portion of the loan repayment that your token represents. Tokens represent a digital form of fixed-income alternative investment. Tokens can be bought and sold just like an equity or bond or cryptocurrency.

Tell us about the importance of the secondary market.

Creating a vibrant secondary market for alternative investment assets is key to the growth of an industry or product sector for several reasons:

  • First, at a basic level, investors will only ever commit a relatively small portion of their investable funds into an asset class or a market with no liquidity.
  • Second, secondary markets are also a very good barometer of the performance of an asset class or specific investment, as the market quickly builds the strength or weakness of an investment into the current market price of that asset.
  • And third: liquidity.

Carney Says Crisis Lessons Are Why BOE Keeps Up With Fintech (Bloomberg), Rated: B

Bank of England Governor Mark Carney said the crisis shows why regulators and the banking industry must stay on top of the rapid developments in financial technology so that the system is solid enough to withstand shocks.

European Union

Online Lender 4finance Prices $ 325 Million Over-Subscribed Bond Issue (Crowdfund Insider), Rated: A

Riga-based 4finance Holding S.A., a large online and mobile consumer lending group, has placed and priced $325 million of senior unsecured 5 year fixed rate notes. These notes mature in 2022 and were issued with a 10.75% yield, at par.

The new 5 year issue was described as representing a liquid benchmark offering, with the scale to attract over 50 investors and secures 4finance’s long term funding.

These senior notes have a 5 year maturity with a 2 year non-call period and were offered on a Rule 144A / Reg S basis with ISINs XS1597295838 / XS1597294781 respectively. The bond was priced on April 12th, closing is expected on 28 April 2017.

International

FMS.next Alternative Finance platform enhanced with more FinTech functionality (Bob’s Guide), Rated: B

Profile Software, an international financial solutions provider, today announced the latest upgrade in the FMS.next Alternative Finance platform, to offer enhanced capabilities for “Auto-investing” that further boost the marketplace lending processes.

Australia

LendEx, Australia’s leading peer-to-peer marketplace lending platform for direct commercial property lending, appoints new board members (LendIt Blog), Rated: B

LendEx, Australia’s leading marketplace lender, today announced the appointment of Mr Brian Benger and Ms Kim Jenkins to its board as non-executive directors.

Mr Benger is on a number of the Australian subsidiary boards of Mercer Australia.

Ms Kim Jenkins is CEO of the Australian Retail Credit Association (ARCA), the peak body for organisations involved in the disclosure, exchange and application of credit reporting data in Australia.

China

CHINA: THE WORLD’S NEW FINTECH LEADER (International Banker), Rated: AAA

In November 2016, a report jointly produced by professional-services firm Ernst & Young (EY) and leading Singaporean bank DBS stated in no uncertain terms that China has now leapfrogged ahead of global technology hubs such as Silicon Valley and London to become “the undoubted centre of global fintech innovation and adoption”. Multiple fintech hubs have now emerged in China alone, most prominently in Shanghai, Hangzhou, Beijing and Shenzhen, which has led to EY and DBS concluding that the country now clearly leads the way in fintech and is “revolutionising many aspects of financial services”.

China also dominates the fintech “unicorn” space—those startups valued in excess of $1 billion. The country is home to eight of the world’s 27 unicorns.

Firstly, the sector has been well supported by the country’s regulatory framework.

Secondly, China’s population appears to be increasingly open to using online finance, with evidence mounting that they are eager to incorporate the support provided by various fintech services into many different aspects of their lives, including online banking, payments, transfers, crowdfunding, investing and shopping. Indeed, e-commerce in China is estimated to be a RMB 16 trillion market, and is now transforming the consumption habits of a rapidly growing number of Chinese people.

A significant chunk of China’s fintech success in recent years can be credited to Baidu, Alibaba and Tencent. Collectively referred to as BAT, the three tech giants control an intimidating share of China’s e-commerce landscape, as well as online messaging and Internet search platforms. They also control approximately half of the Chinese third-party payments market; whereas their US equivalents—Alphabet, Apple, Facebook and Amazon—control a mere 2 percent, as per recent analysis by Citigroup.

Payments/e-wallets is the dominant sector at present, with China having 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

The popularity of online banking is also exploding, with both China’s tech companies and its existing banks making a foray into this world, often in joint initiatives.

P2P (peer-to-peer) lending also deserves a mention, with China almost exclusively leading Asia’s growth in platforms designed to deliver credit to individuals and SMEs.

China P2P lender Dianrong sees market shakeout driving its growth (Reuters), Rated: AAA

Chinese online lender Dianrong.com expects to grow rapidly in the next few years, benefiting from tightening regulation driving a shake-out in the nation’s $100 billion-plus peer-to-peer (P2P) industry and pent-up demand for credit and investment.

Loan originations at the P2P lender, which is backed by investors including U.S. investment firm Tiger Global and Standard Chartered’s private equity unit, more than doubled to 16.2 billion yuan ($2.3 billion) in 2016 from the previous year.

Dianrong.com matches investors with individuals and small and medium-sized businesses in real-time, with loan sizes ranging from 500 yuan to 200,000 yuan for individuals and a maximum of one million yuan for small and medium enterprises.

Nearly half of the 4,000-odd online lending platforms in China were “problematic”, China’s banking regulator said in August when it unveiled the rules.

The P2P lender, founded in 2012 by Guo, a former lawyer, and Soul Htite, a co-founder of LendingClub Corp, is looking to grow loan origination by 50 percent annually over the next three to five years. It expects to broker about 30 billion yuan in loans this year.

India

Droom launches loan marketplace for used automobiles (VC Circle), Rated: AAA

Droom, an online platform for buying and selling used vehicles, has launched Droom Credit, a loan marketplace for pre-owned automobiles it claims is the country’s first.

For the initial rollout, it is going live with a dozen lenders, including HDFC Bank, Kotak Prime, Tata Capital, Faircent, i2i Lending and Capital First, a company statement said.

The platform, which guarantees loan approval within 30 seconds, uses the government-backed Aadhaar stack, apart from PAN verification, credit score validation and several other variables for credit evaluation.

There are three ways we are going to earn money, he said.

“First, the take rate, which will depend on who the lender is (different take rates and commission structures for different lenders). It will also depend on the category and profile of the borrower, and on the fulfilment and disbursal of the loan.”

Second, Droom will charge Rs 999 from borrowers.

Third, it will also charge the lender Rs 999 upon successful loan disbursal.

Droom Credit will initially restrict lending to borrowers purchasing vehicles from Droom. Going forward, however, it plans to open it to other platforms too.

Asia

Crowd Genie Receives Regulatory Approval from MAS (Crowdfund Insider), Rated: AAA

Crowd Genie, a small business lending platform, has received regulatory approval from the Monetary Authority of Singapore (MAS). Crowd Genie was granted a Capital Markets Services (CMS) license from MAS, an important development for the peer to peer lending platform. Crowd Genie has been in operation since mid-2016.

First Circle Secures Funding from Global Investors to Expand Access to Credit in Southeast Asia (Yahoo! Finance), Rated: AAA

First Circle today confirmed investments from Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Deep Blue VC. First Circle has now reported equity funding of $2.5m USD – from Accion Venture Lab, Deep Blue VC, 500 Startups, IMJ, and Key Capital – along with an undisclosed sum of debt funding.

The investment funds will be used to further develop First Circle’s technology and data analytics platform.

Africa

South Africa’s FSB to rule on crowdfunding by June 30 (Ventureburn), Rated: AAA

South Africa’s Financial Services Board (FSB) has set a date of 30 June by which it plans to rule on whether to craft specific rules or not for equity crowdfunding, an FSB spokesman said this week.

The African Crowdfunding Association has been calling for the FSB to craft a specific regulatory framework on crowdfunding.

“It’s not that it (equity crowdfunding) is illegal – it’s just that there’s no clarity,” he said.

Thundafund chief executive Patrick Schofield said he was not waiting for any regulatory certainty from the FSB and was going ahead with setting up a platform to facilitate equity crowdfunding in South Africa.

His idea is to use venture capital funds to vet deals and provide a certain percentage of the total equity injection, before placing these on the platform to attract investors.

Meanwhile a new lending threshold which came into effect in November under the National Credit Regulations is also likely to limit the ability of peer-to-peer lending platforms to fund startups.

Authors:

George Popescu
Allen Taylor