Thursday October 20 2016, Daily News Digest

UK P2P spending

News Comments Today’s main news: Orchard announces deal to provide OnDeck with institutional reporting product. Fundrise’s $250m eREITs. CommonBond’s A1 rated securitization. LandBay volume drops 95% on London real estate crisis. Today’s main analysis : P2P lending in the UK grew again in the third quarter. Today’s thought-provoking articles: Claim of evidence it’s time to hedge on short-term […]

UK P2P spending

News Comments

United States

  • Orchard Platform and OnDeck strike a deal. AT: “Small business lending is a big deal and will only get bigger. As banks have tightened their lending, small business owners have sought alternative funding vehicles, and they’ve found it through platforms like OnDeck.”
  • Why you should hedge on short-term debt. GP “I don’t think that LC defaults increase is a relevant sign of the overall credit market cycle turning. LC is not correlated with the overall market. Their defaults are more influenced by the sub population of applicants they see which is not a homogenous sample of the overall credit market.”
  • Why the FinTech sector will continue to grow. HINT: It’s about P2P lending. AT: “Every day, FinTech–and P2P lending in particular–gets more and more mainstream. This is a sure sign that the sector is growing and will only grow larger. It won’t be long that it will be the main driver of the financial sector.”
  • Fundrise’s new eREITs are poised to raise $250 million. AT: “This is an indication that no part of the financial sector can’t be touched by technology.”
  • CommonBond secures A1 rating from Moody.

United Kingdom

European Union

Latin America

Asia

India

News Summary

United States

OnDeck Inks Agreement with Orchard (Investors Hangout), Rated: AAA

Orchard Platform, the technology and data provider for online lending, today announced an agreement with OnDeck® (NYSE: ONDK), the leader in online lending for small business to provide OnDeck with an automated and scalable solution to manage reporting for institutional investors purchasing OnDeck loans through OnDeck Marketplace. Orchard’s technology also helps drive operational efficiencies by providing a universal view of standardized data through a suite of analytic and reporting tools.

The agreement also provides OnDeck with access to the entire Orchard for Originators product suite. This proprietary technology comprises dynamic investor dashboards, portfolio benchmarking, automated daily holdings reports, and a custom report builder for internal and third-party analytics.

“OnDeck Marketplace is an important part of our funding model, and we are constantly looking for ways to enhance our reporting and analytics capabilities to better serve our investors,” said OnDeck CFO Howard Katzenberg. “Orchard helps us and our Marketplace investors monitor their loan portfolios by providing access to high-quality data and the tools required to easily understand that data. We considered multiple vendors, as well as building an in-house solution, and we selected Orchard because their technology was the most comprehensive.”

“We’re excited to strengthen our relationship with OnDeck by providing enhanced portfolio reporting and analytics to their marketplace,” said Matt Burton, CEO of Orchard. “This represents an important milestone for Orchard and our technology, as we continue to build world-class products that help originators scale their businesses.”

By working with Orchard, OnDeck can better focus on what it does best — providing small businesses across the United States with access to much-needed financing. Through this agreement, Orchard demonstrates its commitment to developing best-in-class technology for originators and investors alike. Recently, Orchard announced the launch of the

The Second Sign In As Many Days That The Market Is Ready To Roll Over (Seeking Alpha), Rated: AAA

We have been continuously monitoring the market for two signs of what we believe will be the credit cycle turning lower at a quick pace. The first we wrote about yesterday in an article talking about Lending Club’s (NYSE:LC) rising delinquencies. Today, we want to address the other point. In sum, our case for the credit cycle turning looks to be on point and accurate, and we think now is the time to batten down the hatches and hedge your portfolio.Today we wanted to update our ongoing thesis as to why we believe the stock market has peaked and another prime indicator to us that the short term debt cycle has turned over and that we are getting ready for both a downturn in the economy and a correction in equity markets.

For the better part of the last year, we have been writing about two things we are watching to prompt us to believe that the short-term debt cycle has ended. The first thing we were watching was attrition in the automobile sector. It has now been widely known that there is a bubble in the United States automobile market and recent exposes about subprime financing and recent commentary from dealerships about heavily discounted and incentivize selling have led us to this conclusion in a relatively straightforward fashion.

We also believe that the first loan default cracks would show in peer-to-peer lending, a riskier and lower credit worthy form of lending that exists in the spot where bankers simply used to not lend. (our emphasis)

It was reported yesterday that Ford was slowing production in the United States due to lack of demand.

This was always a two pronged thesis: peer to peer lending and the auto market. (again, our emphasis) With the second piece now falling into the puzzle, we think this is a great time to reiterate our notion that the market has hit its peak and that we think this is a great time to get hedged. In addition to having about 60% of our portfolio long and about 40% short at this time, we have also added some short-term S&P 500 puts to further hedge our long positions.

Here’s Why Fintech Will Continue to See Rapid Growth (Investopedia), Rated: AAA

Recent growth of the fintech sector results from efficient business models and strategic competition. This is especially true of the peer-to-peer (P2P) lending segment. Fintech companies offer more efficient business models. Plus, their management is more nimble. Executives understand the importance of identifying underserved markets.This allows for innovative financial products at lower costs, which creates new markets instead of competition with banks.

P2P lenders first came on the scene 10-12 years ago.

Now the industry is maturing, which keeps costs lower.

P2P real estate platforms dealt only with commercial properties until a few years ago. Now they are spreading to residential real estate. Fundrise launched loans for single family homes after a trial run in 2014, and others are getting into this market too. Most of these P2P home loans are for larger loans to borrowers with excellent credit.

Fintech firms in the insurance sector are either insurance brokers or carriers. The brokers now reduce costs by pooling policyholders into “affinity groups.” This way, those with fewer claims will earn discounts on their premiums, and P2P firms are now underwriting their own policies.

A wave of P2P insurance brokerage firms have launched across the globe in the last few years, including Guevara, Friendsurance, InsPeer, and Bought By Many. Lemonade is the first US-based firm with a P2P insurance funding model. The firm began the process of becoming a licensed insurance provider in New York State late last year.

Fintech is rapidly becoming a part of the mainstream financial market. P2P firms have many innovative new products. This is both creating new markets and driving prices down in segments where P2Ps compete with banks.

Fundrise is “On Track” to Raise $ 250 Million with New eREITs (Crowdfund Insider), Rated: B

As expected, Fundrise has officially launched three new eREITs described as a “revolutionary direct to investor crowdfunding model.”  These new real estate investment vehicles will put Fundrise “on track” to raise a quarter of a billion dollars during the coming year.

Fundrise launched its first eREIT using updated rules under the JOBS Act of 2012 in November of 2015.

Fundrise was the very first company to crowdfund a real estate property in 2012.  Fundrise was also the first online real estate marketplace to leverage Reg A+ to launch a REIT-like structure. These non-exchange traded funds are said to deliver higher returns at a lower cost point for investors.

CommonBond Completes 8 MM Securitization, Secures ‘A1’ Moody’s Rating (Press Release), Rated: A

CommonBond, a leading online lender that uses data and technology to lower the cost of student loans, today announced it has completed a $168 million securitization of refinanced student loans, backed by $178 million in collateral. The transaction’s highestrated senior notes received a rating of ‘A1’ from Moody’s and ‘AA (low)’ from DBRS. Barclays and Goldman Sachs served as joint-lead managers and bookrunners on the transaction. Barclays also served as structuring agent, and Deutsche Bank served as co-manager on the deal.
The securitization is the company’s second transaction this year, and third overall. In April 2016, CommonBond completed a $150 million securitization. In June 2015, the company issued its first securitization, and, in the process, became the first inaugural issuer in marketplace lending to receive an investment-grade rating from Moody’s.

“CommonBond has built a sterling reputation in the capital markets due to our meticulous, data-driven underwriting,” said Morgan Edwards, Chief Financial Officer of CommonBond. “As with our previous deals, this securitization was oversubscribed among name-brand investors, and the A1/AA (low) ratings from Moody’s and DBRS are a further testament to the quality of CommonBond’s portfolio. We continue to be excited to see new investors participate with each transaction we bring to the market and expect to see the diversity of investors increase with subsequent deals.”

This securitization follows a period of strong growth for CommonBond. In July 2016, the company announced more than $300 million in new funding across equity and lending capital, including an equity round led by Neuberger Berman Private Equity. This brought CommonBond’s total funding to date across equity and lending capital to more than $1 billion. Also in July, CommonBond announced the acquisition of Gradible, a personal finance platform that provides users with unbiased, personalized recommendations on how to better manage and repay their student loans. With the Gradible acquisition, CommonBond now offers employers a full suite of student loan repayment products for their employees, including student loan assessment, student loan refinancing and direct contribution to employee’s student loan payments (a “401(k) platform for student loans”).

Latin America

Retail FX Sector In Latin America (Forex News Now), Rated: B

Once shunned by major forex firms for its political instability and a lack of net worth among its people, Latin America is now seeing a surge in interest from forex firms seeking to invest in the region. A rapidly expanding middle class economy and growing awareness of alternative investing opportunities are among the factors fueling the growth of forex industry in Latin America countries such as Brazil, Chile, Argentina, and Colombia.

But the Latin American forex market is still sparsely served as forex brokers are only beginning to pitch tent in the market. With the ongoing regulatory purge in the forex operator market, analysts say brokers with a reputation will make it big in Latin America, partly because of limited competition in the early stages.

The other factor that is making Latin American region attractive for forex firms that wouldn’t give the region a thought in the past is the deep penetration of Internet. Nearly 70% of Latin American’s households now have Internet connection and that is exposing them to more opportunities such as online forex trading.

However, some of the forex firms making a foray into Latin America, especially those with a long-term view of the market, are combining online and offline trading platforms.

United Kingdom

Peer to peer lending grows for yet another quarter (City A.M.), Rated: AAA

In the last quarter alone, peer to peer lenders have provided £700m of new funding according to the figures, which are prepared by the Peer to Peer Finance Association (P2PFA).

The number of borrowers and lenders have both increased, with businesses accessing the majority of funding.

Telegraph: how can I get 8pc for the least risk? | Weekly Lending Review (Funding Circle), Rated: A

There are currently 12 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £23,743,340, averaging at £82,398 per loan. The largest loan value was £500,000 and the smallest loan value was £5,000.

Fintech lenders to challenge UK banks’ business using securitisation (International Banking Times), Rated: A

Fintech or Market Place Lenders (MPLs) will increasingly turn to securitisation, to fund their businesses as they tough it out with UK banks in the sphere of consumer loans, according to Moody’s.

Moody’s said the temporary financing that institutional lenders provide to MPLs could be converted to a “securitisation structure once the facilities expire, offering a supply of potential structures to securitise.”

Moody’s said British demand for MPL consumer loans has been strong, as annual lending volumes surged by 85% between 2015 and 2014.

Year-on-year growth of amounts outstanding of UK consumer lending is now solidly positive, at 6.56% in June 2016, from wallowing in negative territory, at -1.05% in June 2013, the ratings agency added.

While unsecured consumer loans currently account for less than 10% of total UK bank lending, it’s an attractive segment of the lending market, as lenders can earn high margins.

Adviser attitude towards robo-advice changing (FT Advisor), Rated: A

Financial advisers see robo-advice as a tool which could help them, according to global research.

The Financial Planning Standards Board has published a report into robo-advice which it will use to establish how the profession should address the issue.

To put together the report it carried out a consultation with advisers around the globe, from New Zealand to Canada, including the UK.

“A year later, financial planners are less concerned about the disruptive potential of fully automated advice, and are talking about fintech more as a complement to their businesses: automated advice and fintech tools enable financial planners and financial advisers to increase practice efficiencies or cost-effectiveness; serve clients who are younger, lower-income and with fewer investable assets; and free financial planners to devote more time to activities that bring added value to clients.”

PropTech: lending collapse for firm partnered with Zoopla (Estate Agent Today), Rated: B

A business publication says figures from a PropTech peer-to-peer lending firm which markets its products through Zoopla show a 95 per cent drop in lending in just three months.

Business Insider says figures from the P2PFA, the industry association for online lenders, show that Landbay saw a huge drop in lending in the third quarter of this year – it lent just £283,000 in that period compared to £5.3m in the second quarter and £16.7m lent in the first quarter of 2016.

“Over this time we successfully launched our strategic partnership with Zoopla, which together with the recent base rate cut, has led to record investor inflows. Combine this with the launch of our updated technology platform last week and we’re in a strong position to rapidly scale our lending through 2017.”

Some 50 per cent of Landbay’s loans are reported to be in London where the property market is suffering stagnation or worse; yesterday, Estate Agent Today carried news that Foxton’s sales revenue had slumped by a third in the third quarter of the year.

BAE Systems lifts the lid on how dirty money moves (Finextra), Rated: A

Money laundering funds criminal activity and is growing and evolving at a faster pace than many organisations can detect and prevent.

The report, titled How Dirty Money Moves: What you can do to fight the latest evolution of money laundering, serves to provide an analysis and benchmark of the current critical situation. It also proposes remedies and suggests how all those involved in the fight against money laundering can work together towards a positive outcome.

“Criminals are diversifying their tactics through peer-to-peer lending, casino gambling, real estate, fake invoicing – the list goes on. In doing so they can spread their risk and avoid the area under most scrutiny: banks. It’s time for the other ‘gatekeepers’ to the financial industry to start to combat these fraudsters too.”

European Union

Zopa’s Giles Andrews Named One of Digital Banking Club’s Power 50 (Crowdfund Insider), Rated: B

Peer-to-peer lending platform Zopa recently announced its co-founder Giles Andrew was named one of Digital Banking Club’s Power 50. The list notably features the most innovative and influential people in European digital financial services.

Zopa revealed that the list was selected by members of the Digital Banking Club along with subscribers of the Retail Banker International and a panel of judges, which included business journalist/author Chris Skinner, RBS Global Mobile creator Roy Vella, and Fujitsu Digital’s director Mike Stewart.

Online peer-to-peer platform LendingCrowd offers joining bonus to attract new investors (Herald Scotland), Rated: A

PEER-to-peer platform LendingCrowd is offering new investors a 2.5 per cent joining bonus as it seeks to increase the pot of cash it has available to lend to small and medium sized enterprises.

The Edinburgh-based firm, which matches investors with small businesses seeking finance, will pay the bonus to anyone investing £5,000 via its site by the end of November.

LendingCrowd lends money mainly to SMEs, with loans tending to be in the £250,000 and below bracket.

Fintech: Switzerland Is More Attractive Than London (Finews), Rated: A

The IFZ financial services institute based in Zug, Switzerland, published a report today saying that Switzerland offered a better ecosystem for fintech than London

The conditions have been divided up into sub-dimensions (politics, economy, society, technology, environment and legal system), which in turn were awarded different indicators.

Based on these conditions, IFZ compared the regions and concluded that the Swiss fintech environment convinced by the right balance.

The Banking Scramble for Fintech Talent (universum), Rated: B

STEM students looking to break into the financial industry have very different aspirations and goals compared to those who will venture into other industries. Therefore, rather than developing recruitment programs for the current pool of students as a short-term fix, a more insightful and measured adaptation is needed to secure the digital talent for the years to come.

The banking industry is now, more than ever, experiencing a high turnover of young professionals who seem to be leaving their positions well before the two year mark.

Also, bear in mind that with Britain’s decision to leave the EU, the number of financial service industry workers based in the UK are now searching for jobs in other European locations, most notably Berlin, a flourishing city within the Fintech scene.

Berlin based FinTech Startup Bitbond receives BaFin Licence (Bitcoin News), Rated: A

Bitbond received its own licence by German financial regulator BaFin as the first blockchain based financial services provider. The Startup from Berlin connects small business owners who need a loan with investors and uses the bitcoin blockchain for payment processing.

Bitbond enables individual and institutional investors to invest in various interest rate regions. The BaFin licence enables Bitbond to be active independently of banks and by that the company is also geographically independent.

Investors finance small business loans via Bitbond and by that get access to attractive interest rates. Bitbond has users from over 120 countries and originated over 1,400 loans to date. Most of the platform’s borrowers are online sellers who run a shop on sites like eBay or Amazon. Bitbond conducts a credit check based on the revenue data of the merchants. The borrowers use the funds for inventory and working capital financing.

Thereby Germany is one of the few countries where there is a clear regulatory framework for blockchain based services.

Asia

How robots are changing financial advice in Asia (The Asset), Rated: AAA

The robo-advice service in particular has a chance to flourish with millennials (persons aged 18-34) who tend to be more tech savvy and are aware of the advantages planning ahead financially. “Robo-advisers are mainly targeting millennials who are people that were born into technology and the internet,” says Keir Veskiväli founder & CEO of Singapore-based robo-advisor Smartly. “They [millennials] use technology a lot more differently than generation X.”

While the US has led the charge in robo-advisory space for companies such as Wealthfront and Betterment, Asia has stood out as another prime location for robo-advice due to the growing prominence of the region’s millennial segment. Already millennials make up half of the population in India and just under a quarter of China’s population.

On a wider level, robo-advice also allows for greater investor participation into capital markets.

Despite the industry enthusiasm around robo-advice, Asian financial regulators still need to clarify AML (anti-money laundering) and KYC (know-your-customer) rules before most retail investors become comfortable to regularly use this service. However, that’s not to say regulators are ignoring this emerging trend, this March for example Singapore’s MAS (Monetary Authority Singapore) announced the central bank’s plans to use API (application programming interface) processes, a procedure that makes it easier for third party entities (such as robo-advisers) to connect with government systems.

Two start-ups aim to help bring together investors and mid-sized Asian businesses seeking growth (Straits Times), Rated: A

It is no secret that Asia is where the growth is. And investors who are truly savvy also know that some of the best growth opportunities lie among mid-sized Asian firms.

The problem, however, is that it is tough for an investor to get to know such firms, many of which are family-run and tend to keep a low profile. Conversely, it is also difficult for many mid-sized Asian companies to find investors within their limited networks.

Technology is about to change all that. Two start-ups, Finquest and Opportunity Network, recently set up operations in Singapore, seeking to create a more efficient marketplace for businesses and investors to meet and strike deals.

Finquest’s platform connects three groups – institutional investors, corporate advisers and mid- sized Asian firms.

Opportunity Network, meanwhile, began when its founder Brian Pallas was still getting his MBA at Columbia Business School.

His solution was to create a monthly newsletter where members of the club could anonymously list the business transactions they were interested in.

The newsletter quickly grew to include members of similar clubs from other top global MBA programmes such as the London Business School, Insead and Harvard Business School , and soon Mr Pallas was looking at turning his idea into a global business.

Opportunity Network is building business development teams in Singapore and eight other countries across the region and is starting conversations with top banks in each of these countries, he added.

India

P2P firms to form an association for a fair code ahead of RBI guidelines (The Economic Times, India Times), Rated: AAA

Ahead of the final RBI guidelines to regulate peer-to-peer lending startups, which is expected to be released by the end of this month, P2P companies are in the process of forming an association with an aim to create a fair practice code within the industry players and grapple with ethical issues together.

Tentatively named as the Alternate Finance and P2P Lenders Association, the members of the association plan to register it in Chennai and finalise the formalities by the end of this month, according to Shankar Vaddadi, founder of Hyderabad-based i-lend.

Experts think that while this is a positive sign that the players will now have a collective voice and a platform to share their learnings, it is too early to tell if this step would foster the growth of this sector.

Authors:

George Popescu
Allen Taylor

Thursday October 13 2016, Daily News Digest

microsoft brazil fintech

News Comments Most interesting : Microsoft, as you can see below, is testing entering the Fintech space via an experiment in Brazil. Worth to check out for our US readers who typically don’t look at the other regions. Many large companies are wondering how to enter fintech, and doing a controlled experiment in a limited […]

microsoft brazil fintech

News Comments

United States

South America

United Kingdom

European Union

Australia

New Zealand

India

Malaysia

Japan

News Summary

United States

Why It’s Critical to Get Fintech Regulation Right (Institutional Investor), Rated: AAA

The right fintech tools would go a long way toward encouraging innovative and healthy development in the finance sector.

American lawmakers are proposing such a solution, following in the footsteps of the United Kingdom, which unveiled a similar initiative earlier this year.

This sandbox, part of a bill that was introduced in the House of Representatives on September 22, is meant to facilitate the growth of finance technology in the U.S. by giving fintech companies special exemption from certain regulations (namely, permitting them to roll out products to consumers on a trial basis without having to put them through the full regulatory wringer before launch).

Some argue that regulations stifle growth; others say they are critical to it. To me, regulation; specifically, sensible, nonobstructive regulation; is crucial to the success of the free market system; nonetheless, as Raghuram Rajan and Luigi Zingales wrote in their 2003 book Saving Capitalism from the Capitalists , the key to maintaining the free market system is not a question of more or less regulation but a matter of getting the regulations right.

McHenry’s bill is coming at a critical time in the life of the fintech industry, as interest in finance technology has increased and companies are starting to deliver. There’s no question that fintech businesses are going to make significant changes to the financial services sector worldwide.

Of course that means the fintech industry is already on the radar of regulators and lawmakers, as insiders know. (This is perhaps because American finance technology infrastructure trails that of other developed nations.)

Regulations specifically targeting fintech should seek to reduce the asymmetry of financial information between those on Wall Street and those on Main. They should also strive to make human interactions with the technologies safe. Fintech is too important to the future of the American and global economies to get wrong.

‘More transparent forex is a race to the bottom’: How Kantox’s technology automates FX exposure for SMBs (Tradestreaming), Rated: A

Multinational companies transacting in multiple currencies have more to manage than the average SMB. Owners of ecommerce, travel, and digital advertising companies not only have to run a profitable business, but also develop strategies to limit forex risk to secure profits.

But figuring out when to sell Pounds or when to exchange Euros for Dollars is only half the battle. Relying on a bank or employee to execute complex strategies leaves a margin of error that can lead to hard earned profits disappearing.

Trying to tackle forex exposure tactics à la Transferwise or WorldRemit would only offset price. But for SMBs, lower costs are a good thing, but not everything. Moving $500 to your wife’s account in Estonia is a lot different than paying 11 vendors in four different currencies by midnight or you’re out of business.

IT’S OFFICIAL: Goldman Sachs is ready to lend you money (Business Insider), Rated: B

Goldman Sachs is officially launching its consumer loan platform, Marcus. The online lending tool, which you can find at Marcus.com, will offer fixed-rate, no-fee personal loans of up to $30,000 for two- to six-year periods.

Marcus has no fees and allows customers to choose their monthly payment date and customize payment options.

Dara Albright Launches Fintech Video Channel (Crowdfund Insider), Rated: A

FinTechREVOLUTION.tv is described as featuring the leadership and technologies that are shaping the future of personal finance. The channel will stream both live as well as on-demand video programming aimed at helping investors of all sizes, businesses in all stages of growth, and financial services providers to stay on the forefront of the FinTech revolution.

FinTechREVOLUTION.tv is scheduled to officially launch on November 15, 2016. The launch coincides with Albright’s forthcoming FinTech Revolution cocktail event being held in New York City. The program is expected to include non-exchange traded investments, legislation, self-directed IRA’s and retail distribution and more.

Plug and Play Fintech adds Netki to accelerator programme (Finextra), Rated: B

Plug and Play Fintech announced on Monday that is has selected Los Angeles based financial technology startup, Netki, to be as one of only twenty four startups to join the fourth batch of its accelerator program.

As part of the twelve week accelerator program, Netki and the other selected companies will be able to engage closely with key decision makers from Plug and Play’s strong network of partner companies and financial institutions, including Bank of the West , BanRegio, BNP Paribas, Capital One Growth Ventures, Credit Suisse, Deutsche Bank , Finstar Labs, Intuit, JCB, MUFG, Santander, Sumitomo Mitsui Banking Corporation, TD Bank, USAA, and others.

Capital One Adds to Its Growing List of Fintech Deals (American Banker), Rated: A

The McLean, Va., company announced last week it is expanding its mobile portfolio with the acquisition of Paribus, a startup based in New York that helps digital shoppers get price adjustments. In the past two years, Capital One has acquired several startups, such as the digital design firm Adaptive Path, the personal financial management provider Level Money and the mobile startup BankOns.

The acquisition price was not disclosed.

Which Startups Will Succeed in the Future of FinTech [Q&A] (Sift Science), Rated: A

Get in the habit now of posting friends, colleagues, mentors (heck, anyone that will listen) on your progress.  Email a monthly recap of what you’ve accomplished, what’s next, and most importantly, how they can help.  Everyone around you wants to help – give them that opportunity!

Sure, tech is complicated, and FinTech is as nuanced as they come. However, a 12-page executive summary is a sign that you simply can’t articulate your value proposition. It’s critical that a CEO is able to convey complex concepts succinctly and eloquently to a wide audience.

Startups that build technology that results in a better customer experience overall – both product and service – will be the future of FinTech.

Financial Poise™ Premieres “Investing in Multi-Family Real Estate,” Ep. #2 of the Webinar Series “Real Estate Investing 2016,” (Benzinga), Rated: B

This Financial Poise webinar series will cover several types of real estate classes that one may choose to invest in, explaining where to look for opportunities; how to diligence them; and best practice for execution.

Financial advice could be employee recruiting tool (Benefits Pro), Rated: B

But for employers, providing financial advice as part of a benefits package, at no cost to the employee, could prove to be a recruiting and retention tool: 75 percent of respondents said they’d be more likely to consider a job that offered such a benefit.

Among GenY respondents, the number was even higher: 87 percent said they’d consider a job that offered them that benefit.

The richest advisers are targeting millennials now (Financial Planning), Rated: A

The net worth of the millennial generation is projected to increase from $4 trillion in 2015 to $20 trillion by 2030. But according to Jefferson National’s 2016Advisor Authority, a comprehensive survey of 1,400 RIAs, fee-based advisers and individual investors, nearly half of this generation does not work with an adviser to manage their finances.

The door is open for advisers to engage with this emerging market of untapped clients who are starting their careers — and starting to build more wealth.

The most successful advisers are a step ahead by focusing on this next generation of younger investors. High-earning advisers with personal incomes of $500,000 or more say that millennials are their primary target.

Even though 51% of millennial investors who work with a financial professional prefer their adviser to provide a low-touch approach to overall engagement, these digital natives still say their preferred form of communication with their adviser is face-to face. This surpasses phone calls, and all other digital channels such as emails, text messages, video chat and social media. For millennials, the human touch still wins, hands down.

T-Minus Six Months Until the DOL Rule (WealthManagement.com), Rated: AAA

Exactly six months from Monday, one of the most significant regulatory changes to impact the financial advice industry will take effect.

On April 10, 2017, the Department of Labor (DOL) will officially apply its fiduciary standard that requires all providers of investment advice or recommendations regarding a financial plan or retirement account to serve the “best interests” of clients.

Those that do not comply could be on the hook for a review from the DOL, as well as litigation filed on behalf of investors. In fact, the new rule has already spurred a flurry of fiduciary-related lawsuits as firms struggle to come to terms with their responsibilities outlined under the new rules.

Small Business Lending Remains Strong At Big Banks, Institutional Lenders Ahead Of Next Fed Meeting (Forbes), Rated: AAA

It is appearing more imminent that the Federal Reserve will institute an interest rate hike at its mid-December 2016 meeting, exactly one year after it implemented its first interest rate increase in nearly a decade.

For the fourth consecutive month, job growth improved substantially, according to the latest Jobs Report released by the U.S. Dept. of Labor earlier this month. Total non-farm payroll employment improved by 156,000 last month as the unemployment rate remained at about 5 percent, which most economists consider to be full employment.

Banks have been holding out hope for an interest rate increase, and once it does take place, will part with their money more freely once interest rates rise and lending becomes more profitable. When rates go higher, there is more of an incentive for financial institutions to grant loans. This often results in a boost of the economy.

Loan approval rates at big banks ($10 billion+ in assets) improved for the seventh time in the last eight months in September 2016, according to the Biz2Credit Small Business Lending Index™, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com.

Institutional lenders — credit funds, insurance companies, family funds, and other yield-hungry, non-bank financial institutions – have emerged as major players in the marketplace lending space and granted 63 percent of loan requests, also a new benchmark, last month.

Meanwhile, alternative lenders, mainly providers of asset-based and cash advance loans have been on the decline over the last several years due to the emergence of institutional lenders and a recovering economy with low interest rates.

Loan approval rates at credit unions (41.3%) and small banks (48.7%) dropped last month, in part, because of their failure to digitize their small business loan application process.

Crowdsourcing Firms Starting to Rack Up Noticeable Volume in CRE Financing (Costar), Rated: A

Marketplace lending platforms reported rapid growth in 2015, with an estimated $28.6 billion in loans originated, according to the Office of the Comptroller of the Currency. While most of that growth was for consumer lending, some of the funds raised went into CRE lending.

Marketplace lenders received a boost from a 2013 federal law that allowed businesses to publicly solicit investments from accredited investors.

Currently, such lenders address the full spectrum of debt investments, though the bulk of CRE debt is still originated by portfolio lenders, Moody’s Philipp noted in a report issued last week.

The sweet spot for marketplace lenders offering CRE funding is currently loans of less than $5 million, which to some extent overlaps with CMBS loan originations, as well as originations from portfolio lenders.

Why Investors Prefer Advisors with Banking Ties (Investopedia), Rated: A

A survey of 1,000 adults age 18 and over that was conducted by TIAA in August revealed that most Americans are looking for one-stop shopping, including banking services, when it comes to managing their finances. About 84% of respondents said that they want their financial advisor to offer banking services in addition tomoney management.

The survey showed that over a quarter of the respondents cited fee transparency as a high priority, saying that they need to know exactly what their advisor will charge them for services rendered. Another quarter of respondents said that they would follow the advice of a friend or family member when it comes to finding an advisor, and about 20% of respondents replied that they want to know that their advisor is qualified to manage their money. Another 20% of respondents also said that they did not want an advisor who would pressure them to buy a specific product or service.

The survey also indicated that a greater percentage of consumers would purchase financial advice if it were to become affordable to them.

Ron Suber, President of Prosper Marketplace, Delivers Keynote at Context Summits Alt Lending 2016 (YouTube), Rated: A

United Kingdom

Klarna rolls out online retailer financing (Finextra), Rated: A

Some of the world’s leading e-commerce platforms, including Shopify, Worldpay, BigCommerce, and CyberSource will now be able to make financing easily available to millions of British consumers through their network of online merchants.

Financing a purchase over time has historically been optimised for brick and mortar stores. But the online equivalent can often be an ordeal, with redirects, lengthy forms and unclear information. Klarna’s process only requires a few fields of information, and lets consumers know instantly if they qualify for the financing solution.

Lord Turner’s P2P U-turn: Ex-Regulator Thinks Platforms Will Boost Financial Stability Not Wreck It (Forbes), Rated: B

Lord Turner, formally of the Financial Services Authority, the Bank of England and McKinsey & Co, could not have been clearer – the crowdfunding sector was an accident waiting to happen.

Naturally, peer-to-peer lending platforms protested. Zopa, the first such platform, pointed it out it had been facilitating lending for more than a decade, through good times and bad, without a blow-up. Funding Circle, Ratesetter and others pointed to their low default rates. Industry associations also attempted to defuse the tension, highlighting the regulation introduced in the sector a year previously.

This week, eight months after his last public uttterances on peer-to-peer lending, Lord Turner has been speaking about the sector once more. And guess what? He’s changed his mind – the former regulator now thinks the peer-to-peer lending sector might actually be a force for good, with its growth playing a role in making the credit system less risky.

What explains this u-turn? The short answer is that since those first remarks, Lord Turner has actually spent some time finding out more about an industry he previously appeared to completely misunderstand.

Robo-advice done right will be bespoke and regulated (Portfolio Adviser), Rated: A

Though robo-advice in the UK is a booming business with start-ups and industry stalwarts alike rushing to capitalise on a new opportunity, EValue founder Bruce Moss fears that the line between advice and guidance remains somewhat blurred.

Findings from a new whitepaper published by EValue, shared during its roundtable event chaired by Nationwide, revealed that most consumers do not differentiate between guidance and advice.

Personalisation of robo-advice, which delegates said will be key to enhancing consumer engagement, was identified as an area where the nascent industry’s technology is currently lagging behind.

The three surprising advantages of bitcoin powered peer-to-peer lending (altfi news), Rated: A

Bitcoin’s unique characteristics give it three advantages over governmental currencies and conventional payment networks, making it an attractive proposition for peer-to-peer lenders.

  1. Bitcoin enables cross-border lending
  2. Bitcoin lending does not require a bank account
  3. Bitcoin’s efficiency is perfect for lean startups and budding entrepreneurs

Conclusion – Bitcoin powered lending is the next step of innovation

P2P Lending seen increasing competition on UK lending markets – study (SMN Weekly), Rated: A

Peer-to-peer (P2P) lending is more likely to increase competition within the UK lending markets, rather than to distort competition, according to a study of the Peer-to-Peer Finance Association (P2PFA) conducted by economic consulting firm Oxera and published on Monday.

New P2P loans accounted for 0.8% of the total consumer and small business loans provided in 2015, according to the filing. The study analyzed the risks, costs and benefits of P2P lending and focused on the eight platforms which comprise the membership of the P2PFA – Funding Circle, ThinCats, RateSetter, Lending Works,Zopa, MarketInvoice, Landbay, and LendInvest.

Overall, P2P lending poses little risk to the wider financial system due to its small size and the fact that investors look at P2P platforms as a source for long-term investments. The study also indicated that the credit risk assessments of P2P lending platforms are in line with those used by traditional lenders, and these produce similar outcomes in terms of losses due to default.

P2P lending is regulated in the UK by the Financial Conduct Authority (FCA) since April 2014. To see some of the leading UK market participants, follow this link.

The full report can be view here.

Government to launch new financial advice service (Loan Talk), Rated: A

Economic secretary Simon Kirby MP and the minister for pensions Richard Harrington MP have judged favourably plans to develop a public guidance service that will provide, debt, money budgeting and pensions advice.

The government had initially consulted on replacing the current Money Advice Service with a new body, while also merging the Pensions Advisory Service with Pension Wise.

However, industry and consumer finance groups raised concerns over whether the two bodies would work together effectively.

European Union

Online Payments Are Simple and Secure With Fintech App Trustly (Tcch.co), Rated: A

Shopping on the internet is common place for most users, but online payments still scare a lot of people, particularly payments made with credit cards.

There’s still another aspect that sends people away from credit cards: all the related security problems that arise from time to time. Nevertheless, this can be avoided, as Trustly, a Swedish fintech company, provides a way to pay online. It allows you to go directly from your secure bank account to merchants, consumers and other banks in the click of a button.

In addition to all that simplicity and security, you don’t have to sign up for any new accounts or remember other login information.

For the moment, Trustly operates in 29 countries, all of them in Europe.

Startup of the month: Twino (IBS Intelligence), Rated: A

Jevgenijs Kazanins: I am the CEO of Twino, Europe’s fastest growing peer-to-peer lending marketplace. The platform was launched in 2015 and I joined the company in October 2015.

Twino offers investors the chance to earn premium returns from unsecured consumer loans across Georgia, Denmark and Poland. It has an industry-leading BuyBack Guarantee, which protects investors against default. Its advanced risk screening model means that it only lends to carefully-vetted, approved borrowers.

One of the main reasons for Twino being the fastest-growing peer-to-peer lending marketplace in Europe is that we have a highly competitive product offering for investors in terms of the risk and return. One of the key factors that sets us apart from other platforms is the geographical focus of our lending. We operate in Poland, Georgia and Denmark, which allows us to offer double digit returns to investors, which is unprecedented for the European market.

Our vision is to unite borrowers and investors through a single pan-European platform. You will definitely see Twino expanding into new countries for borrowers and launching new products in the existing geographies.

Australia

Sydney AI-focused fintech startup readies for AUm ASX listing (ZDNet), Rated: A

Flamingo is taking the road less traveled by startups, waving goodbye to the venture capital model and instead becoming a publicly listed company before the month is over.

Based out of Sydney’s fintech accelerator hub Stone & Chalk, Flamingo deals with conversational commerce, delivering what founder and CEO Dr Catriona Wallace described as a Software-as-a-Service intelligent online guided selling platform for large financial services companies.

Women in Fintech Meetup (Spark Festival Sydney), Rated: B

This is a networking event for individuals (male or female) interested in both increasing the amount of women working in Fintech and supporting the ones that already are.

DATE AND TIME
6:00pm — 8:00pm
LOCATION
Stone & Chalk, Level 2, 50 Bridge St, Sydney, 2000
PRICE
$15.00

Are DIY super trustees up to the job? (The Sydney Morning Herald), Rated: A

The SMSF segment is large – it accounts for about 30 per cent of Australia’s $2 trillion superannuation system. And while SMSFs have a greater margin for error since theaverage balance a member is more than $500,000, if this cohort gets it wrong it could place considerable pressure on the age pension system.

There are no accreditation, ongoing professional development or education requirements to be an SMSF trustee. Basically, anyone can manage their own fund and do a dismal job, safe in the knowledge that in a worst-case scenario they have the age pension as a backstop.
According to the 2016 Vanguard and Investment Trends Self-Managed Super Fund Report, the number of SMSF trustees with unmet financial advice needs grew by more than 20 per cent in the last year.
Financial planners and accountants need to partner to properly cater to this segment’s unmet advice needs.

Perth startup CrowdfundUP raises .1 million to fund a big international expansion (Startup Smart), Rated: A

A Perth-based real estate crowdfunding platform has closed a $2.1 million funding round as it readies for a big expansion into China.

CrowdfundUP, Australia’s first real estate crowdfunding startup, secured the equity funding with Positive Investment Enteprise.

The platform offers investment selection and management tools for all levels of investors to access property investment opportunities online.

New Zealand

Anti-loan shark scheme funded by BNZ hits Invercargill (The Southland Times), Rated: A

A low- and no-interest loans scheme trialled in Auckland is being rolled out to Invercargill.

The Community Finance Partnership, which is funded by BNZ, is designed to make small loans to low income families to help them improve their lives.

It’s also hoped the no-interest loans (NILs) and low-interest loans (StepUp loans) will keep more people out of the hands of loan sharks and expensive third tier lenders.

The loans are funded by BNZ, which has committed $60million to the scheme on a not-for-profit basis.

ACT’s leader tells Commerce & Consumer Affairs Minister Paul Goldsmith to overrule ‘over zealous’ regulator and make a law change for P2P lender Harmoney (interest.co.nz), Rated: AAA

ACT Party leader David Seymour is effectively accusing the Government of putting 45 jobs at peer-to-peer (P2P) lender Harmoney on the line by not overruling the Commerce Commission and pushing through a “small amendment” to the Credit Contracts and Consumer Finance Amendment Act.

Seymour’s questioning also suggested a difference of opinion between the Financial Markets Authority (FMA), which licences P2P lenders, and the Commerce Commission, which oversees consumer lending laws. The Commerce Commission has filed civil proceedings in the Auckland High Court seeking clarification over whether the “platform fee” charged by Harmoney to borrowers is a credit fee under the CCCFA.

Harmoney, which says it has now facilitated $330 million of lending, launched in September 2014. From launch until December last year Harmoney charged borrowers a platform fee of between 2% and 6% of their loan amount, based on the loan’s risk grade. However, last December – against the backdrop of a Commerce Commission probe – the fee was changed to a one-off flat fee of $375.

India

P2P lenders tying up with insurance cos to offer cover for borrowers (Economic Times, India Times Tech), Rated: A

MicroGraam, ilend, LenDenClub and several other peer-to-peer lending platforms are tying up, or considering to do so, with insurance companies to offer cover for borrowers against unforeseen events such as accidents or death that can affect loan repayments.

These platforms are partnering with insurers like HDFC Life Insurance and ICICI Prudential Life Insurance. While most of them plan to unveil the offers after the Reserve Bank of India issues guidelines on such covers -companies said they expect the central bank to come up with the regulations later this month -some have already started offering such products.

Venture Catalysts-funded i2iFunding last month partnered with HDFC Life Insurance to offer insurance plans to borrowers.

MicroGraam, which so far focused on providing peer-to-peer lending services in rural India, has a similar cover embedded into the loan itself. It provides cover to the rural poor through two forms, livestock insurance and personal insurance.

The great divide (The Hindu Business Line), Rated: A

Having tightened the ground rules for securities market constituents in the last few years, the Securities and Exchange Board of India has been training its guns on intermediaries.

Today, mutual funds in India are sold through a mix of banks, corporate agents and over 10,000 individual distributors who earn a percentage commission on the funds they sell. A few (515) of these are also registered as official ‘investment advisers’ under the 2013 regulations and charge an advisory fee. SEBI is now proposing a black-and-white structure where all existing distributors (within three years) must define themselves either as one or the other.

Malaysia

What awaits in peer-to-peer lending (The Star), Rated: B

Will P2P lending create a new class of debt that could spiral out of control and impact the whole financial system?

In China P2P lending has boomed with some fallout. Still the size of P2P lending in China topped a massive US$150bil as at the end of last year, some reports stated.

In the US, detractors point to the Lending Club episode that tarnished the image of P2P but the situation with that company is likely to be a specific case. It does indicate though the need for more regulation over the industry, perhaps part of the reason why the SC in Malaysia is taking that approach.

Incidentally, P2P platforms also provide micro financing to individuals and really small fruit seller type business people. Notably, the World Bank is all praise for fintech innovations that are making financial services available to the 2 billion unbanked population of the planet.

In Malaysia, though, one obstacle could in the form of the lack of enforcement of bankruptcy laws or at least the perception of that. P2P operators may be hard pressed to find lenders willing to participate on the fear of losing their money to dodgy individuals scheming up nice sounding business plans only with the intention of taking the money and running.

Japan

A reckoning awaits Japan’s banks in fintech age (Nikkei Asian Review), Rated: AAA

Even as Japanese banks eagerly embrace financial technology, they must also confront the question of what to do with the legacy systems and jobs made obsolete.

Fintech will replace nearly all retail services banks now provide, a specialist from American consulting company A.T. Kearney told an advisory panel to the Financial Services Agency on Oct. 5. Retail remittance and lending services will be taken over by fintech companies, which will offer enhanced convenience and lower costs, the specialist predicted, noting the challenge to existing financial institutions in earning fees.

South America

Microsoft, Banco Votorantim partner on Brazil fintech investments (Business Insider), Rated: AAA

Microsoft Corp and Brazilian lender Banco Votorantim are investing together in financial technology startups, executives said in a Monday interview, as the U.S. tech company adds a new specialty to its venture capital portfolio in Brazil.

Votorantim will invest an initial 3 million reais ($930,000) in the BR Startups fund created by Microsoft, with an expectation of funding about a half dozen young firms with investments ranging between 250,000 reais and 1.5 million reais.

Those young companies are likely to fall in a “valley of death” between early seed capital and the larger rounds led by traditional venture capital firms, according to Franklin Luzes, chief operating officer of Microsoft Participações, the U.S. company’s Brazilian investment arm.

Microsoft set up BR Startups in 2014 to fill that niche and the fund has now grown to 17 million reais, backing about 70 startups and steering six to acquisitions, Luzes said.

Authors:

George Popescu
Allen Taylor