European Overview The alternative lending market in continental Europe is still in its nascent stage but has been demonstrating strong growth. The European online alternative market, including the UK, grew by 92% in 2015 to €5.4 billion while, excluding the UK, the European alternative lending market reached approximately €1 billion in 2015. The average growth […]
The alternative lending market in continental Europe is still in its nascent stage but has been demonstrating strong growth. The European online alternative market, including the UK, grew by 92% in 2015 to €5.4 billion while, excluding the UK, the European alternative lending market reached approximately €1 billion in 2015. The average growth of the online alternative lending market between 2013 and 2015 was 73%.
Although the UK is the pioneer as far as alternative lending is concerned, continental Europe is catching up rapidly. In the first three quarters of 2016 the total market volume of the European alternative lending market stood at €623 million.
France’s Alternative Lending Market
After Brexit, France is battling Germany for the position as the biggest alternative lending market in Europe. The volume of French online lending market grew from a paltry €76 million in 2013 to €319 million in 2015. In 2016, the number of fintech companies in France stood at 55 with Younited Credit being one of the biggest with loan originations amounting to $600 million. In 2015, France Fintech Association was established in order to stimulate the fintech market.
Fintech lenders in France are growing aggressively owing to the measures taken by the French government and the regulatory authorities overseeing the alternative lending market. AMF (Financial Market Authority) and ACPR (Prudential Control Authority and Resolution) are the two regulators that regulate the French alternative lending market. These bodies launched the Fintech Forum, a joint initiative to gain a clear view of regulatory and supervisory challenges faced by fintech companies. After Brexit, they launched “Agility Program” to attract UK fintech companies to France. The program will guide financial firms through the French authorization process and will provide other such services to help UK’s financial firms to set up in France.
Top Alternative Lending Companies in France
The French market is buzzing with new lending startups, but there are some stalwarts who have created a strong position in the French market for themselves. Though the sector has currently seen no listing, there are many potential unicorns.
Founded in 2009, Younited Credit is one of the biggest fintech lenders in France. It was founded by Thomas Beylot, Charles Egly, and Geoffroy Guigou. The company operates as a peer-to-peer lending platform and is recognized by the French Central Bank. It allows investors to lend money to the borrower directly with the help of a secured bond market place. So far, the company has managed to raise US$122 million in funding and is currently working to expand across Europe. Since its launch, Younited Credit has helped fund almost 60,000 projects for a total origination of more than €433 million.
Lendix is a peer-to-peer lending platform founded in 2014 by Olivier Goy. It is an online marketplace for business loans where investors are allowed to lend money directly to small and medium enterprises (SMEs). Lendix has raised approximately US$27 million to date. The company also bagged the 32nd position in the global ranking of the 2016 FINTECH 100.
Founded in 2013 by Nicolas Lesur, Unilend is the leader in participative financing for SMEs. It is the
first French site which allows anyone to lend money directly to SMEs. The startup has raised more than €10 million in funding. NewAlpha Asset Management led its latest funding round.
FinexKap is a web-based platform founded in 2012 by Cedric Teissier and Arthur de Catheu. The company provides short-term capital solutions to SMEs. SMEs can simply sell their receivables and gain access to short-term funds. FinexKap has raised €7 million in equity since inception. It recently raised €12 million in debt for further expansion.
Founded in 2014, Lendosphere is a niche platform dedicated to renewables and environment-friendly projects. Currently, the company has 70 projects under its ambit out of which 66 are completed while fundraising is going on for the remaining 4. Total loans originated by the company is more than €19 million.
French banks loaned out €2.169 trillion in 2016. Almost 50% of it went to households, and consumer credit accounted for €161 billion in outstanding loans. Outstanding loans to small businesses stood at almost €400 billion.
French banks accounted for 20% of overall bank credit in the Eurozone. These statistics highlight the tremendous market opportunity for alternative-lending entrepreneurs. It is one of the last developed markets that have not been tapped aggressively by online lenders and where regulators have been supportive of alternative financing. The sector is sure to see upheaval with the category maturing and Brexit creating an opportunity for startups to capture the trillion dollar French market as well as use Paris as a springboard for the entire European credit market.
News Comments Today’s main news: Lending Club plots two ABS before end of year. Scott Sanborn speaks to Lending Club’s Q3 results. Alibaba funds WeLab. Aegon sees strong Q3. Prospa originates over $500M. Jumo wins Mastercard Foundation prize. Today’s main analysis: Top cities maxed out on credit card debt. Today’s thought-provoking articles: Did Lending Club just land another blow to […]
Cities maxed out on credit cards. AT: “LendingTree has some of the most interesting studies. This one looks at credit card balances. It appears folks in San Diego are maxed out to the max while Greenville, South Carolinians are looking pretty good.”
Lending Club is looking to price two more ABS deals this quarter, as the company plans to shrink its proportion of bank funding in the year ahead, executives said on a third quarter earnings call this week.
In Q3, we delivered $154 million in revenue, the highest in the company’s history, and up 34% year-over-year, and 10% sequentially. As importantly, we generated an EBITDA of $21 million. That’s almost 5x the level of last quarter. And we’ve narrowed our GAAP losses by almost $19 million, down to $6.7 million.
We processed a record number of applications, bringing the total borrowers served by Lending Club to over 2 million since launch and an improved efficiency from last quarter.
To put that into perspective, it took 8 years for us to reach our first 1 million, and we’ve helped an additional 1 million borrowers in just the last 2 years.
Although we anticipate some short-term volume effects as we calibrate our targeted marketing to the new model, the 58% annual growth in applications we saw in Q3, combined with the conversion efforts we now have in testing, give me confidence about our outlook in 2018.
Separately, we continue to broaden our mix of investors. As part of that, we delivered on our goal to complete a second securitization that included a total of 33 investors, 10 of which were new to the LendingClub platform.
Lenders should be judged not on how fast they grow during good times, but how they perform in periods like today when consumer defaults are ticking up. On that basis, LendingClubLC -15.93% looks unprepared and investors are right to be skeptical of the online lender.
LendingClub, the most prominent of the online lenders, said loans to certain borrowers at the low end of the prime credit spectrum “are not currently meeting our expectations.” It will start limiting these loans, which account for around 3% of total loans, and temporarily halt their sale to investors. It will also temporarily halt this lending, which accounts for around 3% of its total loans, and also adopt a new credit model that tightens criteria for these borrowers.
Online lenders’ credit models, which analyze various factors beyond traditional credit scores, are supposedly one of their core strengths. That loans are performing worse than expected at LendingClub is a sign the models might be flawed.
LendingTree®, the online loan marketplace personified by Lenny the little green guy who has the banks crawling to him, released on Wednesday the findings of its study on which cities have the dubious distinction of containing the most consumers with signs of being maxed-out with their credit cards.
#1 San Diego, California Maxed-out score: 98
San Diego residents carry $6,629 in credit card balances on average. Nearly one in five (18%) have at least one card maxed-out. That’s second only to Oklahoma City, where 18.5% of residents have a maxed-out card. San Diego residents also use more of their credit lines overall, with 32.8% utilization.
#2 Los Angeles, California Maxed-out score: 93
Los Angeles residents also push their credit further than most, with 17.5% of residents having at least one maxed-out card. Those that do have a maxed-out card have 1.33 maxed-out cards on average. Balances average $6,472, a touch lower than their neighbors to the South in San Diego, helping utilization come in at 32.0% versus San Diego’s 32.8%.
#3 San Antonio, Texas Maxed-out score: 92
San Antonio residents don’t face the same high cost of living that Southern Californians deal with, but they share an affinity for using their credit cards. The study findings revealed that 17.2% of San Antonio residents have a maxed-out credit card, and their total credit card balances average $6,474, similar to those among Southern Californians.
LendingClub is facing two parallel securities litigation cases stemming from alleged false statements it made in connection with its initial public offering (“IPO”).
With respect to the motion to intervene, the federal court granted the motion, for the limited purpose of allowing the state court case plaintiffs the opportunity to “set forth their argument for why they are the better representative” of the class. Additionally, the federal court granted the motion to intervene “on the condition that they remain under this Court’s jurisdiction so that the undersigned judge may coordinate their action with the federal action to avoid any prejudice to absent class members.”
The California state court plaintiff then argued that class certification should be denied in the federal court case because certain theories of recovery that were dismissed in the federal court case remained active in the California state court case, making the state court case “superior.”
The federal court plaintiffs responded that their proposed class was in fact superior because the price of LendingClub’s stock was lower on the day they brought the federal suit.
The federal court declined to enjoin the California state court case. However, it did express “concerns” with “the current form of state plaintiffs’ class notice, which fails to notify class members of the parallel federal action, the pendency of Cyan and its potential effect on their case, or the potential that the filing date of their suit could substantially limit damages.”
Lastly, the federal court addressed an issue of first impression raised by LendingClub and the individual defendants regarding the traceability of the federal plaintiffs shares.
Because of this trading pattern, the traceability of the lead plaintiffs shares turned on whether the court adopted a “last-in, first-out” (“LIFO”) or “first-in, first-out” (“FIFO”) method to calculate holdings.
If the lead plaintiff’s transactions were accounted for using LIFO, all of its holdings as of the end of the lock-out period would remain traceable to the lock-up period. If, however, the court adopted a FIFO calculation, the lead plaintiff would have been deemed to have owned no shares traceable to the IPO. First, the court noted that “[w]hether LIFO or FIFO applies is a matter of first impression in the Section 11 traceability context.” The court ultimately held that LIFO applied because the majority of courts use the LIFO method to estimate losses under the PSLRA when determining a putative lead plaintiff’s stake in the litigation, and “[i]t would be incongruous to measure losses by one method, yet measure traceability by the opposite method.”
Is Square considering a move into crowdfunding? A patent filed in March 2015 and granted in September 2017 suggests that might be the case.
The patent, titled “Mobile point-of-sale crowdfunding,” outlines a method for merchants to request crowdfunding from patrons based on their processing history.
The patent reads:
“Thus, the merchant has conveniently acquired a new espresso machine, customers may benefit from the new espresso machine, and investors have received a return on investment with the added security that the techniques described herein provides (e.g. underwriting of the crowdfunding project by the payment processing system and direct repayment to the investors from POS transactions processed for the merchant by the payment processing system).”
Wela today announces it has passed $1 million in annual recurring revenue (ARR), one of several achievements to mark 2017 as a record year of growth for the personal finance app. In the last two quarters, Wela doubled its total users and amount of linked accounts. Additionally, Wela Strategies, an extension of the app that manages investment accounts, passed $135 million in assets under management. Wela’s growth is evidence of a demand among millennials and young families for a personal finance solution that delivers advice in the way they want to receive it — through the convenience of an app that incorporates artificial intelligence (AI), through the skill provided by a human advisor, or a combination of the two offerings.
In 2017, Wela’s staff doubled in size, adding key management roles, including a chief technical officer, product manager and user experience manager. In an effort to better serve its rapidly growing user base, Wela plans to hire additional support for its customer experience, financial advisory and development teams in the next few months.
Death can be a frightening thought. But, according to a survey from financial-advice website Credible, there’s one thing that scares millennials even more: having credit-card debt.
Of the 500 Americans polled who are currently in credit card debt, more than 33 percent said debt is the scariest aspect of their daily lives.
The findings make sense, according to Credible. Americans hold more than $1 trillion in credit card debt and, among the respondents, the average debt is a whopping $5,290.
When asked how they got into debt, 34 percent said it was due to an emergency expense, 32 percent said their debt is due to a large one-time purchase and 4 percent said they choose not to pay their debt despite having the resources to do so.
Based on the latest research conducted at our annual ELEVATE fee-based advisory conference, one of the most important ways for independent firms to help advisers succeed in this kind of asset gathering is to help them lead with behavioral finance, and to complement that effort with client segmentation that captures qualitative and emotional factors for the adviser.
Aging pre-retirees and retirees need enhanced guidance in navigating the emotionally charged life planning decisions many of them increasingly face. Meanwhile, the highest long-term growth potential client segment, Millennials, generally opt for advice from individuals who build a truly personal connection with them, in a relationship that is as much social as it is professional.
Loans to small business owners backed by U.S. Small Business Administration guarantees increased 36 percent in number and 15 percent in dollar amount in the SBA’s New York district in the 2017 federal fiscal year, putting the district office over $1 billion in annual loan program lending for the first time.
In the seven-county lower Hudson Valley region, the SBA guaranteed 500 loans worth $191 million.
Goldberg said 36 percent of the region’s SBA loans were under $50,000; 42 percent went to minority-owned businesses; and 16 percent, or $160 million, went to women-owned businesses.
The top five lenders by dollar amount in the Hudson Valley were Empire Certified Development Corp. $40,726,000; Manufacturers and Traders Trust Co., $11,393,800; Noah Bank, a minority-owned bank headquartered in Elkins Park, Pennsylvania, $9.12 million; Celtic Bank Corp., based in Salt Lake City, $7,886,400; and Cross River Bank, based in Fort Lee, New Jersey, $7,768,100.
In Westchester County alone, the top five SBA lenders in number of loans were TD Bank, with 42; JPMorgan Chase Bank, 39; Wells Fargo, 14; Citibank and Manufacturers & Traders Trust Co., both with 11; and New Millennium Bank, headquartered in Fort Lee, with nine loans.
The top five lenders in Westchester County by dollar amount were Empire State Certified Development Co., $8,866,000; Newtek Small Business Finance Inc. in New York City, $5,917,400; Live Oak Banking Co., of Wilmington, North Carolina, $5,165,000; TCF National Bank, based in Wayzata, Minnesota, $4,995,500; and NewBank, $4,540,000.
There’s any number of reasons megabanks are rolling out mobile-first banking offerings, from evolving consumer demand to increased competition from fintechs to a significant generational transfer of wealth.
But the biggest motivation for banks like Wells Fargo to develop new smartphone apps may be to ensure they get clients early in their financial lives and keep them.
I’ve been saying for so long now that banks need to replace core legacy systems that I’m boring myself, but here I go again. The reason I’m talking about it again is that, even though some disagree and think they can fudge the issue with plug-ins, I believe that the new competition will decimate banks that don’t replace their core systems.
If you are tech first, your singular focus is on agility. It’s about fast change cycles in a microservices architecture using a SDK (software developer kit) network of APIs (Application Programming Interfaces). It’s about speed, change, service, updates, vision.
If you are finance first, your singular focus is on stability. It’s about slow change cycles in a monolithic architecture using control systems and sign-off structures that avoid any exposures. It’s about risk, security, stability, control, management.
Acting Comptroller of the Currency Keith Noreika delivered a speech today discussing the US banking industry. In the speech, Noreika makes an important point: US banks need more competition, not less. He also intimates that mixing commerce and banking can deliver benefits to consumers. Take this one step further, and Noreika is indicating big tech, like Amazon, Apple, Google, Facebook and more, should be allowed to become banks.
“Meaningful competition could have a number of other positive effects besides tempering the risk concentrated in having just a few mega banks. It could make more U.S. banks globally competitive and promote economic opportunity and growth domestically. For banking customers, particularly those underserved by traditional banks, more competition could result in better banking services, greater availability, and better pricing. If a commercial company can deliver banking services better than existing banks, we hurt consumers by making it hard for them to do so.”
Mr. Cooper, the nation’s largest non-bank mortgage servicer, today announced that it has led the Series A funding round in Matic Insurance, a digital insurance agency whose technology enables homebuyers to obtain homeowner’s insurance seamlessly during the mortgage process .
Matic’s insurance marketplace will enable Mr. Cooper to provide customers a convenient and modern way to shop for insurance while helping them obtain competitive insurance policy quotes and bind within minutes instead of days, all part of a digital mortgage application interface planned to launch in 2018.
LendUp Hires First Chief Financial Officer, Announces Significant Growth Milestones (PR Newswire), Rated: A
LendUp today announced that Bill Donnelly, former VP of Global Financial Services for Tesla, has joined as its first CFO. The company further strengthened its leadership team with the addition of a General Manager for its loans business and a Chief Data Scientist.
Donnelly is a 30-year consumer credit veteran with extensive experience in credit cards and loans products. Donnelly spent the last four years with Tesla as VP of Global Financial Services, responsible for providing financing solutions for Tesla’s customers across 29 countries. He also served as President of Tesla’s captive finance company, Tesla Finance LLC, which offered an industry-leading leasing program innovative for its consumer-friendly agreement and for being the first end-to-end electronic lease with the ability to execute contracts on a vehicle’s touchscreen.
In addition to Donnelly, Anu Shultes has joined as General Manager of the company’s loans business, which recently surpassed $1.25 billion in originations.
Dr. Leonard Roseman has joined LendUp as Chief Data Scientist, to lead a growing team that uses Machine Learning to improve financial inclusion through expanded credit access and lowering the cost of credit to borrowers.
Concord Servicing Corporation, a leading force in the financial portfolio servicing industry, has announced a strategic reorganization of its senior management team. Changes at Concord include the promotion of Executive Vice President Shaun O’Neill to President and Chief Operating Officer, and the addition of financial industry veteran Stephen Bertrand to serve as Chief Financial Officer.
The Economist reports that, nationally, banks have closed over 10,000 branches in the past decade. In the first six months of 2017, 869 branches closed across the U.S.
Mobile banking apps on phones have become the new ‘branches’ even as some brick-and-mortars have shuttered, continued Roger Shumway, EVP of Bank of Utah. “I don’t think branches have declined, they’re just in your hand,” he said. “For community banks, the niche you see in Utah is that they can talk to a real decision-[making] person. If they get into an issue, there’s a face, and [an app on] a phone that they love.”
“We see overall that there’s been a 30 percent drop in branch transactions, but if you look at the overall transactions including electronic, transactions are actually up,” said Zupon.
A combination of the rise of robo-advice and the habits of millenials could mean social media platforms such as Facebook could become major players in the financial advice market in the future, according to Coutts.
He noted that Facebook already has a service allowing individuals to make payments, and said financial advice may be a next step for the social media giant as it seeks to grow.
Analysis from IRN Consultants highlighted recent research which showed each new robo-advice customer signed up is losing the company £162.50 on average in the first year and only making £17.50 in subsequent years.
One of the companies the report pointed to was Nutmeg, whose accounts for 2014 showed revenues of £635,000 compared with operating expenses of £5.9m.
Under existing Financial Conduct Authority (FCA) guidelines, peer-to-peer (P2P) lenders operate within a virtually unregulated space. While this is not damaging in itself, it does create a number of risks, as the FCA has acknowledged. The most significant of these risks are that as companies become more sophisticated, their resemblance to traditional financial institutions increases, but their regulatory obligations do not.
Over the past year, there has been a noticeable rise in the number of P2P lenders using low rates as an advertising measure. Unlike credit card providers that must give 50 percent of all applicants the headline rate they advertise, P2P providers can simply pick a rate and then advertise it, as, unlike their counterparts, it is very difficult for the legitimacy of their offer to be checked.
It is clear that there is a requirement for greater industry guidelines, so it can sometimes seem mystifying that bespoke regulations have not already been put in place. Simply put, this is because the P2P industry is developing at a much faster rate than the regulatory bodies are acting.
The Fair By Design fund will invest in companies tackling the so-called “poverty premium” — the extra costs the poorest pay for essential goods and services, such as energy, credit and food. About 6m households pay an average of £500 a year in higher charges.
The £20m fund was launched on Wednesday and hopes to raise £11m from companies, charitable foundations and rich individuals.
It will invest in companies tackling four areas: energy, finance, insurance — where the poor pay more because they cannot get credit or live in high-crime areas — and so-called “geo-based premiums” based on location.
Fair for You, an online lender, is one business seeking investment. The not-for-profit company offers cheaper loans to those with bad credit records, who go to rent-to-own providers such as BrightHouse, which an independent survey found charged more than £1,000 over three years for its cheapest washing machine. The regulator in October forced it to pay £14.8m compensation to 249,000 customers.
COUNCILLOR Ros Kayes is calling on Bridport Town Council to support the local Citizens Advice Bureau as the roll out of Universal Credit in the town draws closer.
Cllr Kayes reported that Universal Credit would be rolled out in Bridport on December 4th and it is then when those claiming benefits will have to start the process of receiving the credit and will no longer receive any money from existing credit.
The committee will review a strategic plan of financial reforms; coordinate China’s monetary policy and financial regulation; and forge policies on financial risk management so as to maintain country’s financial stability, Xinhua said.
The outlook for reforming China’s developing financial markets and the banking system remains obscured, in part, by a lag in the timing for key appointments such as a successor for Zhou Xiaochuan, longtime head of the People’s Bank of China. Some newly appointed party leaders, including Xi’s close economic adviser Liu He, are thought to support more market-oriented reforms.
With the economy still growing at an annual pace of over 6% and financial markets seemingly on an even keel, Xi’s team can claim to have weathered the post-2008 financial crisis with few major hiccups. But rising levels of corporate, banking and government debt have prompted the International Monetary Fund to raise the alarm. Estimates of the ratio of non-performing loans to total lending in the banking sector range as high as 35%. Most economists and banking analysts say the real level is likely much lower.
The level of debt in the Chinese economy skyrocketed after Beijing unleashed record amounts of stimulus — at least 17.5 trillion yuan ($2.6 trillion) — to help fend off the worst impact of the 2008 financial crisis. That credit binge has not yet been fully digested. In the years since, the level of debt surged further, much of it as “off balance sheet” lending by so-called shadow banks that operate outside the state-dominated formal banking industry.
Moody’s Investor Service estimates that the size of shadow bank lending has more than doubled since 2012, growing more than 20% in 2016 to reach 64 trillion yuan ($10 trillion), or about 86.5% of China’s GDP.
On 8 November 2017, the French Crowdfunding Association Financement Participatif France released the common set of performance indicators that member platforms specializing in loans, mini-bonds (a debt instrument specific to SME lending marketplaces) and bonds are invited to publish.
Key indicators give a clear picture of crowdlending risk and its cost:
The share of borrowed capital already repaid. The older the loans, the higher the portion already repaid.
The portion of interest due already paid. The older the loans, the higher the share of interest already paid.
The net internal rate of return representing the annual profitability of the loans, net of known or proven losses at the date of calculation.
The maximum possible internal rate of return representing the annualized yield of loans if all loans were repaid in accordance with the original schedule.
The annual cost of risk represents the decrease in profitability caused by delays and defaults relative to the maximum possible rate of return. This is the difference between (4) and (3).
Growing restrictions imposed on foreign banks operating in developing countries since the 2007/9 global financial crisis are hampering better growth prospects by limiting the flow of much-needed financing to firms and households, a World Bank report warned on November 7.
Rise of Developing Economy Banks
As advanced economy banks retrenched after the crisis, developing country banks stepped into the void and expanded across borders, accounting for 60 percent of new bank entries since the downturn. The result has been an increase in banking relationships between developing countries and regionalization of international banking operations.
For example, Africa’s Ecobank started in Togo and now has operations in 33 countries across the continent. It also has offices in Paris, Beijing, Dubai, Johannesburg, and London, which allows it to attract capital from wealthy countries to invest across Africa.
At the same time, the total asset size of the world’s largest banks increased by 40 percent, raising concerns that regulatory efforts since the crisis have failed to address the risk of banks that are too big to fail. Nearly 30 percent of developing countries have put in place restrictions on foreign bank branches. These curbs are depriving many economies of opportunities to access global credit that could benefit businesses and households.
There is a long string of middlemen (think brokers, titling agencies, inspectors, etc.) who slow down the process, amplify human error, and drive up the costs of doing business.
A public, distributed blockchain ledger that acts as a living database for all deals, negotiations, and settlements in the industry can overcome many of these shortcomings and reduce the need for “trust managers.”
One of the most exciting companies in the space is REALISTO, who employs the Ethereum blockchain to overcome many of these inefficiencies. Every investment made via their crowdfunding platform is mirrored on their blockchain and verified via smart contracts.
With the formation of blockchain consortia – or groups of financial institutions that collaborate to develop blockchain solutions – blockchain is already set to affect the way financial institutions process payments and handle settlements.
Traditionally, settlements between merchants and banks can take up to days. As consumers, you would have to wait three to five days for your payments to be cleared and verified behind the scenes after swiping your debit card at a local merchant.
By digitizing payments on a secured network, blockchain can serve the 2 billion unbanked people ignored by institutional banks. To use cryptocurrencies, all you need is a smartphone – no minimum account balance, credit history, or banks.
Blockchain lending is a development that is growing in popularity and offering alternative and less stressful ways of acquiring loans quicker and more efficiently even at lower interest rates.
Lendoit offers a robust system which overlaps between blockchain technology and conventional verification systems. Therefore, prior to borrowing, intending borrowers are subjected to standard KYC verification during application, while other aspects of the loan acquisition and repayment processes are based on an Ethereum Smart Contract.
Prospa has claimed first in the race to originate over half a billion in small business loans. The online lender states that over the past 12 months, Prospa has experienced dramatic growth, doubling the size of its loan book. Prospa has now provided credit to more than 12,000 SMEs in Australia and is the number one online lender in the country. Prospa will provide loans of up to $250,000 with a term of 3 to 24 months.
Queenstown Lakes District Council’s (QLDC) announcement and vote to amend its District Plan, restricting the number of days some houses can be used for short term peer to peer lending through sites such as AirBnB, will go a long way to improving rental affordability and shortages for workers in the region.
The report commissioned by QLDC from Infometrics shows AirBnB occupied 14% of the District’s housing stock in the June 2017 quarter.
Asia experienced a solid increase in fintech investment in Q3 2017, with $1.21 billion raised across 41 deals. China accounted for more than 50 per cent of all Asian fintech investment at $745 million.
Notably, corporate participation in Asia fintech venture capital (VC) deals remained high at 22 per cent of overall round counts, although actual direct investment was minimal in 2017 with just $840 million invested YTD in associated deal value.
In Singapore, an Indo-Asia Pacific business hub, the fintech sector saw $25.3 million over six deals in Q3 2017, with the Monetary Authority of Singapore (MAS) continuing to be the key driver of the city-state’s fintech ecosystem.
Dubai-based investment company National Bonds is moving into the financial advisory space with a new digital app offering low-cost investment options, its chief executive has revealed.
The company plans to challenge poor advice, offered by UAE financial advisory firms, by launching an upgraded app in the second quarter of next year to offer customers access to a variety of investment choices – not just National Bonds, Mohammed Al Ali, its chief executive told The National.
The Mastercard Foundation today presented its third annual Clients at the Centre Prize to Jumo. The US$150,000 prize recognizes the innovative work of the South African-based company as a large-scale, low-cost financial services marketplace that serves poor people.
The Prize highlights best practices in financial services where client satisfaction is a priority. Close to 100 financial service companies around the world submitted entries to the competition.
The other two Prize finalists were ftcash, one of India’s fastest-growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans, and Destacame, a free online platform in Latin America that empowers users by giving them control over their data to build their financial capabilities and to access financial products.
The Mastercard Foundation is hosting its fifth annual and largest Symposium on Financial Inclusion (SoFI) in Accra, Ghana.
The symposium, which ends today, champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.
Uganda launched its National Financial Inclusion Strategy (NFIS) 2017 – 2022 which seeks to reduce financial exclusion from 15 to five per cent by 2022.
Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A
Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. George Popescu
News Comments Today’s main news: BlackRock bets on robots to improve stock picking. Orca launches beta platform to stream P2P market investment. Quint raises 10M GBP for recapitalization. Monzo raises 2.5M GBP via Crowdcube. RegTech Association launches in Australia. Lending fraud trial begins in China. Yirendai announces intent on performance bond agreement with PICC P&C. Today’s main analysis: The strategic case […]
BlackRock bets on robots to improve stock picking. AT: “Kudos to BlackRock for identifying a competitive weakness and seeking to gain an advantage by addressing that weakness. My bet is they’ll see an improvement, but will it catapult them to the front of the line? Time will tell.”
Does triggering Article 50 put London FinTechs at risk? AT: “I’d say it really depends on how the EU responds. If the countries of the EU can band together and aggressively pursue attracting FinTech companies, then it’s likely. Frankly, I’d be more concerned with Asian countries like Singapore.”
BlackRock Inc.BLK +0.96% has started a shake-up of its stock picking business, relying more on robots rather than humans to make decisions on what to buy and sell.
Seven stock portfolio managers are among several dozen employees who are expected to leave the firm as part of the revamp, a person familiar with the matter said.
The changes are the most significant attempt yet to rejuvenate a unit that has long lagged behind rivals in performance. Clients have pulled money from the actively managed stock business in three of the past four years even as BlackRock’s total assets climbed to a record $5.1 trillion. BlackRock had $275.1 billion in active stock assets under management at the end of December, down from $317.3 billion three years earlier.
On Deck Capital Inc. is unlikely to be tempted by a takeout offer from privately held competitor Kabbage, but a combination of the two digital lenders could make strategic sense.
A combination of these two companies would create the largest digital lender focused on small and medium enterprises in the U.S., with an estimated combined 2016 loan origination amount of $3.82 billion.
While a few years ago this would have seemed like an odd pairing, recent changes to On Deck’s business model have moved it closer to Kabbage. On Deck itself has had a tough time as a publicly traded company, with shares falling about 80% since its IPO. The company has struggled to rework its business strategy and create a clear path for profitability, despite growing annual originations from an estimated $15.9 million in 2008 to $2.40 billion in 2016.
By leveraging their existing technology to develop white-label solutions for banks, both companies have found a new source of higher-margin revenue. A combination of what are arguably the most advanced underwriting systems in the SME lending space would only accelerate licensing deals, which could eventually become a significant portion of revenue.
A federal appeals court may offer guidance on “true lender” analysis and how it affects bank partnerships with marketplace lenders and fintech companies ( Cons. Fin. Protection Bureau v. CashCall Inc. , 9th Cir., 17-cv-80006, petition for interlocutory appeal 1/13/17 ).
At issue is a petition by CashCall Inc., an online lender based in Orange, Calif., that’s now before the U.S. Court of Appeals for the Ninth Circuit. CashCall wants the Ninth Circuit to hear a mid-case appeal from an August ruling in a deceptive practices case that said it was the “true lender” in an arrangement with Western Sky Financial, a self-described tribal loan company.
In general, “true lender” analysis scrutinizes relationships between banks and nonbanks to discern which party actually makes the loan to a consumer.
PeerStreet, an award-winning platform for investing in real estate backed loans, has announced an integration with Wealthfront, the most trusted automated investment service among young people with nearly $6 billion assets under management. This integration was made possible by the rollout of Wealthfront’s new financial planning experience, Path, which allows Wealthfront clients to receive financial advice and planning for all of their accounts.
As customers’ financial lives become increasingly complex, having all investments across platforms in one place provides consumers with more comprehensive information. PeerStreet users have sought out integrations with platforms like Wealthfront. Both PeerStreet and Wealthfront were able to quickly respond to their clients’ needs using Quovo, the industry leader in financial account connectivity. Using its account aggregation engine, customers investing on both platforms can view their PeerStreet positions within the context of their greater Wealthfront investment portfolio.
Rodrigo Niño is founder and CEO of a platform called Prodigy Network, which uses crowdfunding to build commercial real estate, like the tallest skyscraper in his home country of Colombia. Marketplace’s Molly Wood talked with Niño about crowdfunding.
Niño: I have to say that it is different because you would argue that traditional equity funding is easier because you deal only with one institution that gives you a check for the total equity that you require for a building, and you don’t need to deal with thousands of investors like we do. On the other hand, the top-down approach was one of the bigger issues in the crisis of 2007. We learned that the model of giving your money to experts that would know better didn’t work. So we like to believe that we act as curators of that collective wisdom of the crowd, and that they need to understand what they do.
Niño: I think that the model will spread and because this industry was ripe for disruption. You know, I think that the commercial real estate industry in the United States is even larger than the stock market. And now, thanks to technology and the JOBS Act, I believe that the public has access to incredible assets because it’s very understandable and very predictable. If you think about it, people cheat and lie and bricks don’t. So, that was exclusive to a select few, and now it is available to everybody.
Airbnb currently lists over 2.3 million homes, averaging more than 500,000 nightly stays across 65,000 cities. In 2016, the home-sharing giant snatched headlines after raising over $555 million from Google Capital and Technology Crossover Ventures, in pursuit of a reported $850 million round, raising the company’s valuation to $30 billion. This valuation positioned Airbnb as the second most profitable tech startup after Uber.
Founded in 2011 by Bill Lyons, Revestor is a digital real estate search engine that uses proprietary data and live listings to help sync realtors and potential investors with desired residential properties. While other services allow users to search real estate based on specific property details, Revestor lets users search based on investment criteria. This approach works to ensure the most profitable use of available funds, helping homebuyers track the projected resale value of their property over time. Thus, real estate investors can use various tools to determine whether a property matches their firm investing goals.
Bill Lyons: Per a 2016 National Association of Realtor’s study, 51% of home buyers found their home without using an agent. Additionally, over 90% used the internet to research the home they were buying.
Bill Lyons: The riches are in the niches. Everyone has their niche, and Revestor’s niche is that 25% of the business is investors.
Bill Lyons: Crowd funding for real estate is on the rise with companies like Patch of Land and RealtyMogul. I can see Revestor playing a key role in analyzing investments for private groups of individuals.
But a new study by consulting firm Accenture finds that clients across all ages and economic brackets want robots and humans together, not one instead of the other.
The findings follow news on Tuesday that BlackRock(BHK, +0.08%), the world’s biggest money manager, was laying off some portfolio managers in favor of spending more on data-mining techniques that could improve investment performance.
However, the market is changing so rapidly that study respondents said online tools they considered to be “bells and whistles two years ago” are now expected, Thompson said.
John Ndege, founder and CEO of Pocket Risk, is predicting a collapse in the world of robo-advisors.
On Tuesday, Ndege announced a complete re-launch of his software, Pocket Risk 2, a digital risk tolerance questionnaire that attempts to holistically measure an individual’s risk tolerance and capacity.
Rather than an engine of efficiency, Ndege presents Pocket Risk as a tool to make financial advice more effective. According to Ndege, trust and awareness are the largest barriers between the advice industry and new client acquisition, not technology. Thus, advisors would be better served focusing on delivering financial plans rather than building the next great client portal or onboarding application.
Clarity Services, the subprime industry’s largest credit reporting agency, today announced the release of its 2017 Subprime Lending Trends report. More than just a demographics report, it offers exclusive insight into emerging consumer trends that can help lenders reach the consumer where they are.
The report is based on a dataset containing exclusive performance data on 16 million loans from the past four years.
Orca, an independent data, research and analysis provider in the UK P2P lending market, launched a new platform which aims to help financial advisers and sophisticated investors to better “seize” opportunities within the P2P market. The platform, by offering unique standardized metrics to compare P2P investments, will allow users to perform in-depth due diligence on P2P investments, benchmark them, and make risk-adjusted, informed investment decisions or recommendations.
The Belfast-based platform noted that the P2P market has seen tremendous growth in the past two years, increasing by 40% in 2016 and estimates that by 2020 around 2.7 million people will be investing in P2P.
Through Orca’s relationships with UK P2P lending providers, the platform has translated millions of loans, covering 90% of the UK P2P professional market.
NORTH West headquartered Quint Group, a leading international, highly innovative fintech group operating in the consumer finance market, has secured a £10m financing deal from Manchester based Tosca Debt Capital to fund its recapitalisation.
Quint is the company behind the UK’s fastest growing consumer price comparison site MoneyGuru.com*. It also owns and operates a portfolio of mutually beneficial and strategically aligned financial technology businesses in the consumer credit sector, including business-to-business lending marketplace and platform, Monevo, consumer credit reporting and financial management services such as Credit Angel, as well as its data business, Monevo Data Services which develops and provides cutting edge credit, risk, marketing and analytical data to the financial services sector.
Digital bank Monzo has broken a platform record on Crowdcube. The challenger bank has raised £2.46 million supported by 6,800 plus investors. The offer on Crowdcube is for 2.83% equity at a valuation of £84.75 million. The number of investors that have participated in the Monzo offer is the most ever on Crowdcube.
The challenger bank is raising a total of £22 million in the Series C investment round, including a £19.5 million investment from Thrive Capital, £5 million from Passion Capital and £1.5 million from Orange Digital Ventures, alongside the £2.5 million of equity crowdfunding on Crowdcube.
What was formerly Saving Stream is now called Lendy. The operator of the marketplace has been Lendy Ltd. already, it was just trading as Saving Stream for investors. Now under the new domain Lendy.co.uk the company has brought together its services for investors and borrowers citing feedback by users.
The announcement email sent, reads:
Following feedback from users, we are integrating the Saving Stream platform under the Lendy brand. This is in order to simplify the brand and make accessing the crowdfunding platform easier for all our clients.
Theresa May has signed the letter that will formally separate the UK from its 43 year membership in the European Union. As the UK initiates Article 50, Lawrence Wintermeyer, CEO of Innovate Finance – the advocacy group that supports all things Fintech – is out with a cautionary statement. Wintermeyer fears that Brexit may undermine the UK’s dominance in disruptive finance as it may be unable to attract the necessary skills to remain the global leader in financial innovation.
Editor’s note: The EU was organized on November 1, 1993, making it 23 years old.
If you want to feel thoroughly depressed about your future financial prospects, we have a disheartening new stat for you: according to a new survey from peer-to-peer lending platform Lending Works, 24 percent of single adults believe that they will never be financially secure enough to retire in their old age.
After surveying over 1,500 UK adults who are yet to reach retirement age, Lending Works found that financial security is more of a worry for those of us who aren’t in a relationship.
19 percent of those who are married or living with their partner reported the same concern. More drastically, 40 percent of the singles said they are currently unable to save money each month to plan for the future, in comparison to 29 percent of those who are married or co-habiting.
A recent report released by the lab examines the insurtech sector specifically, and explores the investment landscape in the sector. The report analyzed over 450 deals conducted over the last three years, and reveals a particular focus in the sector on technologies such as AI and IoT. Indeed, deals in these two areas alone increased by 79% in 2016.
The insurance industry is targeting technologies such as AI and the IoT specifically to help it deliver more personalized service to increasingly demanding customers. The technologies both help provide insurers with more data to assess risk, and then help them do the calculations to underpin that assessment.
Ron Suber, the President of the US marketplace lender Prosper, was interviewed today by Cédric Teissier, the CEO of the French factoring platform Finexkap, at the annual conference of the France Fintech association, titled “Fintech Revolution 2017 – Here to Stay”. Cédric Teissier asked Ron Suber as head of a worldwide pioneering and leading online lender to share his advice and his vision for the benefit of French fintech startups.
Asked about consolidation in the US market. Ron Suber pointed out that there are 3,000 online lenders in China and 300 in the US. These lenders serve diverse categories of borrowers from student to larger SMEs, from super-prime to subprime. Consolidation will happen because it is all but easy to master the three legs of online lending: the investors, the borrowers and the platform’s operational efficiency in risk management.
There are 14 different ways to find borrowers such as direct mail, partnerships, promotion etc. But out of ten prospects, only two will come to loan origination. Startups must focus on conversion efficiency to start making money. Prosper is 10 years old and next quarter will be its first profitable quarter. Generating cash is the most powerful way to dissipate doubts.
“My vision of where we are going is that of a portal where any of us can go to invest in any currency and any country, a portal similar to the Amazon or Priceline of finance. We are only in the first or second inning of this revolution. I used to buy CDs. My kids never do. Soon they will say: “I can’t believe that you used to go to the bank to get money.”
Between 2010 and 2015, total global investment in FinTech amounted to $49.7 billion. The most popular FinTech areas are those of payment and lending services (consumer and retail), block-chain services, such as bitcoin, and cybersecurity and cloud-based services, such as market monitoring and tracking.
Compliance with the Distance Marketing of Consumer Financial Services Directive is regulated by the Malta Financial Services Authority (MFSA). Failure to comply with the provisions in the Distance Marketing of Consumer Financial Services Directive may result in an administrative fine of up to €93,000 on the supplier, or the manager, secretary, director or other person responsible for the supplier’s activity.
Under the Electronic Commerce (General) Regulations, implemented through S.L. 426.02 in Malta, the financial institution shall only send direct marketing by electronic means if certain conditions are met.
The First Hall of the Civil Court in Malta may fine up to €4,658.75 for any breach of the provisions relating to comparative and misleading advertising.
Financial institution websites must ensure compliance with the Data Protection Act and the EU Directive on the Protection of Personal Data, and the Directive on Privacy and Electronic Communications. In Malta, the Data Protection Commissioner may impose fines of up to €23,300 for breach of any provisions within the Data Protection Act, and €50 for each day the violation persists, and/or to imprisonment of up to six months.
The RegTech Association has officially launched in Australia and is aiming to aid the regulation technology sector just like fintech is changing financial services.
According to a report from Finder, the Association will promote good corporate practice in compliance management and boost regulatory compliance outcomes.
Fintech investment in Australia increased in 2016 while the rest of the globe saw a decrease in funding. In a report from KPMG, last year saw total fintech investment amount to $US656 million across 25 deals compared to $US185 million across 23 deals in 2015.
The RegTech Association, which aims to shine a light on regulation technology, officially launched last night with an industry-first event in Sydney for key industry influencers including stakeholders from major banks, start-ups and industry regulators.
“What we’re really looking to do is facilitate collaboration between a group of Australian financial services stakeholders who we think can use these new technologies, and this growing crop of innovators who are building regtech businesses. And we hope that by bringing them together we can create a bit of an ecosystem in Australia around regtech,” Symons said.
A high-profile financial fraud trial — involving 1.5 billion yuan (US$220 million) of investor savings — started at Xuhui District People’s Court of Shanghai yesterday.
Fifteen former employees of the now-defunct online peer-to-peer lender Jinxing Investment were on trial. Ji Jianhua, the company’s chief financial officer, was accused of illegally raising funds, and 14 senior managers have been accused of illegally absorbing public savings.
Prosecutors said there were still 400 million yuan of repayments that weren’t made in the wake of the case being exposed.
More than 200 investors gathered in court in Xuhui for the hearing yesterday, many of them elderly investors. Trials of the 14 senior managers would be held at a later date, the court said.
Chinese marketplace lending platform Yirendai (NYSE: YRD) announced on Thursday it has entered into an agreement of intent with the Beijing branch of PICC Property and Casualty Company Limited (PICC P&C).
Yirendai reported that under this new agreement, PICC P&C would provide Yirendai with a performance bond for certain loans facilitated through the online marketplace. PICC P&C will also reimburse lenders within the agreed scope should any losses incur due to the Company’s failure to perform adequate due diligence during the credit underwriting process.
by Matt Burton, Co-Founder & CEO, Orchard Platform
Let me just begin by saying that I’m no expert on China or Southeast Asia, but I am committed to learning and keeping up. The market is incredibly complex and is advancing very fast. Based on my last two trips, I’m floored by how quickly the market is developing.
It’s also pretty clear that the development in the region, particularly in the financial services and technology sectors, is happening at a staggering pace and scale. As of September 2016, China had 8 of the 27 current fintech “unicorns” at an estimated US$96.4 billion total valuation with US$9.4 billion in capital raised—including the four largest valuations globally: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion), and Qufenqi (US$5.9 billion). To help put those numbers in perspective, the U.S. is home to 14 fintech “unicorns” at an estimated US$31 billion combined valuation with US$5.7 billion in capital raised.
The region is also seemingly light-years ahead in terms of innovation and adoption of these new technologies by a large base of underbanked and unbanked consumers—something I learned first-hand by being on the receiving end of scowls from the various vendors I interacted with when I tried to pay with cash. Mobile payment is everywhere, and is the preferred method of transacting at the point of sale.
China’s approach to fintech has been to focus on financial inclusion over financial protection, and this has led to rapid innovation and incredible growth.
Another takeaway? A significant area where the U.S. is ahead of China in this space is on the capital markets side. Most lending platforms in China are still funding loans using the peer-to-peer model. However, in my discussions with lenders, that does seem like something that is shifting. Some of the bigger platforms indicated that they are now seeing 20% to 30% of their originations purchased by institutional investors.
Marvelstone Capital, a Singapore-based data-driven asset management company, has announced the launch of a licensed ‘robo advisor’ platform for family offices in Asia in Q3 this year. The platform is being developed in partnership with Smartfolios, a Singapore-based fintech startup and will be available on desktop and mobile for Marvelstone’s clients.
News Comments Today’s main news: U.S. justice dept. seeks to restructure CFPB. LC increases borrower rates on riskiest loans. Goldman building robo-advisor. Funding Circle closes funding round, valued at $1B. Today’s main analysis: Southeast Asia Fintech deals hit new record. Today’s thought-provoking articles: Happy 1st birthday, Zopa Plus. First Lithuanian P2P lender. WeiyengX Fintech Review. United States U.S. justice department […]
U.S. justice department seeks to restructure CFPB. AT: “I saw this one coming, but who didn’t? This is one of those cases where it seems like the right thing to do legally, but not quite so politically. Being structured the way it is takes politics out of the mix as the CFPB is not subject to presidential whim as other executive branches are. On the other hand, the Trump Administration has a good argument that there is no Constitutional provision for independent overseers. It will be interesting to see how the courts decide. Either way, there will continue to be a fight over regulatory oversight of the industry–whether it’s necessary and who has the authority.”
Lending Club increases borrower rates on riskiest loans. AT: “More evidence that the industry is changing. This isn’t really revolutionary as other platforms have gone this route. It’s evident, however, that the problem of defaults has to be addressed. On the other hand, doesn’t this move make online lenders more like traditional lenders?”
The Trump administration took aim at a consumer finance regulator created after the 2008 financial crisis, backing a legal effort to have the structure of the Obama-era agency declared unconstitutional.
The Justice Department, now under Trump administration leadership, filed court papers on Friday opposing the Consumer Financial Protection Bureau, an independent regulator, asking a federal appeals court to order the restructuring of the agency.
The CFPB is fighting to keep its current setup, which gives its director protection from political interference from the White House. The administration in February said that President Donald Trump believes the bureau as currently organized is unaccountable to the public.
The Justice Department said the CFPB’s structure creates separation-of-powers problems under the Constitution because the bureau director isn’t sufficiently answerable to the president.
LENDING Club has made its largest borrowing rate increases on its riskiest loans, with further hikes expected in line with the US Federal Reserve.
The US peer-to-peer lender – the world’s largest with over £20bn of funds channelled to date – has increased the cost of borrowing most significantly for loans in the E, F and G grades, following interest rate hikes by the central bank.
Rival platform Prosper has increased borrowing rates at a “mild” pace in comparison and more evenly across risk grades, according US alternative lending research firm PeerIQ’s latest quarterly performance monitor.
Goldman Sachs Group Inc (GS.N), known for advising the world’s richest and most powerful, is building a so-called robo-adviser geared to mass affluent customers, according to a job listing posted Monday on the bank’s website.
The robo platform would sit within the bank’s rapidly growing investment management division, according to the ad. The unit, which Goldman has been trying to build out in recent years to diversify its revenue, posted a record $1.38 trillion in assets under supervision at the end of 2016.
Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, without diluting the brand of its private wealth business which is considered a jewel within the bank, according to people familiar with the matter. Goldman’s U.S. private wealth business typically advises clients with an account size of around $50 million.
You’ve been at Citi almost 30 years and now you’re leading Citi FinTech. How has “fintech” evolved?
There’s a common misconception that large banking organizations aren’t able to operate like a startup, that they don’t have that mentality, that they’re too big too change. The word fintech without a doubt applies to startups in the space but a lot of that is how you pull in these startup-type organizations with the big banks to create a set of financial services that are orientated to the customer.
What has that blend of different talent and experience done for your work culture?
We’ve spent a lot of time creating a nontraditional banking culture. We operate in a very agile manner with the product, development, design teams so they work together and are completely integrated. They do their work through stand-up meetings on a daily basis, we don’t have offices – I do not have an office, I sit on the floor. We celebrate failure – if someone makes a mistake they actually win prizes for sharing that, all they have to do is demonstrate they learned something from it – to really create an environment of creativity and ambition for the product and how we serve our product.
The Developer Hub also sort of brings those different talents together.
[The Developer Hub] actually covers 85 percent of the core services a customer performs. We wanted to expose many of our APIs to a much larger community, to be exposed to the services they’re working on and give them the opportunity to come to Citi to uncover and unveil where those hidden gems are, those additional opportunities.
OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today that it will be adding Jim Rosenthal, the former chief operating officer of Morgan Stanley, to its board of directors, effective April 3, 2017.
During his tenure at Morgan Stanley, Rosenthal served in a variety of roles, including as COO of the company from 2011 to 2016 and as chairman and chief executive officer of Morgan Stanley’s approximately $130 billion national bank. In his role as COO, Mr. Rosenthal was responsible for overseeing firm-wide technology and operations, Morgan Stanley’s wealth management digital business, corporate strategy, re-engineering and expense management, technology company relations, and cybersecurity. He remains a senior advisor to Morgan Stanley.
Rosenthal has more than two decades of experience across a wide spectrum of financial services. He joined Morgan Stanley in March 2008 from the global real estate company, Tishman Speyer, where he served as chief financial officer. Prior to that, he worked at Lehman Brothers, serving as head of corporate strategy and execution and as a member of the firm’s management committee. Rosenthal began his career with McKinsey & Company, where he was a senior partner, specializing in financial institutions.
Two developments, one in the US and one in the UK, signaled a potential shift in the banking world and Fintech.
Chris Skinner wrote about a new national bank charter in the US issued by the Office of the Comptroller of the Currency which opens the way for all kinds of organizations to try to set up banks, including big consumer brands like Walmart and Apple. Essentially they have just shown the way for these kinds of organizations (as well as payments companies like Square, WePay or Stripe) to apply for a banking license.
Investor interest in the peer-to-peer lending industry shows no sign of slowing; British site Funding Circle have just closed another round of funding, taking their total raise to $300 million.
Funding Circle recently closed another round of venture capital funding to the tune of $150 million, valuing the company at $1 billion. The new round was led by DST Global, BlackRock, and Temasek, a fund backed by the Singaporean government.
A year to the month after we launched Plus, our higher return and higher risk investment offering, investors have lent out more than £100 million. That’s nearly 9,000 people investing on average £12,000.
Plus is performing in line with expectations. Individual investors will have different individual experiences, however, 73% of investors invested for an average of at least 6 months, with no loan sales, have achieved actual returns of at least 6% to date.
AIM-listed IFA Frenkel Topping has completed a suitability review which has seen £253 million of client assets transferred to its own in-house discretionary fund management (DFM) offering.
In May last year the national advice firm received discretionary permission from the Financial Conduct Authority (FCA), meaning it could transfer clients to its new investment company which acts as a DFM.
This review has seen £253 million of clients assets transferred to its in-house offering. The firm had £745 million of assets under advice at the end of 2016.
It’s no secret that we aren’t building enough homes in this country.
There are a host of reasons for this, from an over reliance on large builders to a paucity of funding. The second-class status of property SMEs – compared to SMEs in other industries – is also a huge rod for housebuilders’ backs, and it’s an issue LendInvest has been keen to highlight.
But there is also a fundamental issue – often overlooked – which is serving to hamper efforts to deliver more homes. To quote Tony Blair: education, education, education.
That’s why last year LendInvest launched the Developer Academy, a two-day course for those with some property experience allowing them to hear from – and build contacts with – experts across everything from planning permission to marketing the finished properties. We have now held two separate academies in London, with further sessions planned this year: four in London and four across the regions. So far 50 prospective developers have benefitted from these courses.
With limited access to funding, small businesses in Lithuania have struggled to expand, limiting the growth of the economy. Recognising this, the Lithuanian government recently established the legislation needed to allow Peer to Peer Lenders to provide business finance loans and FinBee played an active role in its development.
Laimonas Noreika, CEO of FinBee, explained: “We were delighted to be the first P2P platform to receive our licence to help small businesses borrow to finance their growth. Our technology helped us to achieve this. When we first launched consumer lending, we chose Madiston’s software because it was ready to go with what we needed but also gave us the ability to add functionality as we grow. The first step in our expansion plan was to add business lending and the technology was there for us, Madiston has been a supportive partner throughout.”
It was announced today that Article 50 will be triggered on March 29th. I recently wrote about Berlin’s potential to become fintech capital of the world after Brexit, but with French officials in London scouting finance and technology companies, Paris could become the hotspot for startups.
Without passporting rights, many businesses may have to set up subsidiaries in other European countries, which is why last month, French senior lobbyists and politicians started to woo companies in the same way Nasrou is, according to Business Insider.
At the start of this year, French digital minister Axelle Lemaire did the same and in a recent interview with Business Insider, she highlighted how although British startup investment fell, investment in French technology has soared by 71% from January to September in 2016. “In the third quarter of 2016 alone, funding obtained by French startups reached €857 million ($921 million), double the amount invested in Germany and almost equaling the €919 million ($988 million) invested in the UK,” Lemaire said.
French fintech Lemon Way is going after Stripe in the e-commerce payments arena with the launch of the payments service across France, Germany, Spain, Italy and the Benelux region.
Real time electronic payments provider ACI Worldwide also announced at the end of last month that French company PSP would be targeting the SME market with the ACI PAY.ON Payments Gateway, with the goal of expanding internationally.
It is important to note how interesting all of this action is being taken so close to the time Brexit was in the process of being triggered.
Financial compliance education and training programmes provider, Mentor Education has entered into an alliance with Suitebox in order to help financial planners become more ‘tech savvy’.
Stage 3 would provide an education portal available to students, the financial planning community and educators to promote and engage the development of new initiatives in financial services education.
The central bank highly encourages and supports the development of Fintech. At the press conference, Governor Zhou Xiaochuan stressed that China has made great achievements on financial technology, and the central bank was actively working on digital currency and new technologies such as blockchain, which would promote the development of the whole finance market.
In particular, he emphasized that the development of technology would boost the payment industry by providing more payment channels.
UnionPay Launches Blockchain-Based Credit Integration and Sharing System
On March 8, China UnionPay Data Services and Gingkoo jointly launched a blockchain based credit integration and sharing system.
The system uses blockchain technology to improve inter-bank credit card points management, and it enables clients to redeem points across banks.
The system is built on Gingkoo’s Xingchain, which replaces the original credit card points management system.
CBRC to Regulate Micro-Credit Companies
China Banking Regulatory Commission (CBRC) is formulating new regulations to strengthen the supervision towards micro-credit companies.
NEXTDATA raises $10 million in Series A Funding from multiple investors
Big data company NEXTDATA has raised $10 million in Series A funding from Shunwei Capital, Crystal Stream Capital, Baidu Ventures. Previous investor 360.com also invested in this round.
The founder of NEXTDATA Tang Huijun said the fund would be used for product development, technological innovation, market development and talent introduction.
Auto Fintech Platform Daikuan Raises 20 Billion Yuan from Zhongtai Securities
On March 8, Auto Fintech platform Daikuan.com and Zhongtai Securities reached a strategic partnership. The two sides signed a strategic framework agreement involving 20 billion yuan, and they would jointly develop a batch of financing projects as asset securitization, bond issues, and structural financing.
Deals to venture-backed fintech companies in Southeast Asia — specifically Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — rose 29% last year, from 55 in 2015 to 71 in 2016. Meanwhile, dollars fell 12%, from $177M in 2015 to $158M in 2016 as deal growth was largely driven by seed/angel stage investments.
In terms of funding dollars, 2016 averaged about $40M per quarter, down from $44M in 2015. The largest deal of 2016 went to Vietnam-based mobile payments platform MoMo, in a $28M Series B that included Goldman Sachs and Standard Chartered as investors. Other deals included a $17.5M investment to Thailand-based payments enabler Omise, a $2M investment to Singapore payments provide Coda Payments, and a $3M investment to Malaysia-based financial comparison startup Jirnexu.
Looking at deal share by country, over half of all Southeast Asian fintech deals went to Singapore-based companies, which is not especially surprising given the city-state’s position as a global financial hub.
Funding Societies, a P2P lending platform for small and medium enterprises, received one of the country’s larger 2016 rounds: a Q3’16 $7.5M Series A that included Sequoia Capital India and Alpha JWC Ventures as investors.
After Singapore, the Philippines took the next greatest share of deals at 14%.
Bank Negara Malaysia plans to engage the public to get their ideas or wish list on what aspects of the financial services that can be improved using technology.
The bank’s Financial Technology Enabler Group (FTEG) chairman Aznan Abdul Aziz said it was initiating a call for participation known as “Fintech Hacks”.
Last year, Bank Negara issued the Financial Technology Regulatory Sandbox Framework for financial institutions and fintech players to experiment with new solutions in a live, contained environment within specified parameters and timeframes. The framework came into effect on Oct 18, 2016.
News Comments Today’s main news: dv01 creates new securitization portal. China requires P2P lenders to keep money in banks. Today’s main analysis: France’s online alt finance doubles in size. Today’s thought-provoking articles: Robo-advice to go mainstream in 2017. China Rapid Finance to target U.S. IPO as early as 2017. Is ‘peer’ being muscled out of P2P investment? United […]
dv01 announces new securitization portal. GP:” PeerIQ is often seen as the main ABS data source. It’s healthy for us and for everybody to have alternatives and to encourage competition.” AT: “This is an excellent move and could be what the industry needs to advance the securitization market.”
Orchard CEO discusses MPL. GP:” Key number: Orchard handled $40bil in volume on 20 platforms to date.” AT: “Interesting insights into the secondary market and banks getting into online lending.”
2017 will be the year robo-advice goes mainstream. GP:” Given how many large firms launch their own RoboAdvisors I wouldn’t be surprised if the growth in 2017 in AUM for Roboadvisors jumps.” AT: “Bold prediction, and I don’t think it’s off-base. Interest will largely build due to growth in understanding and awareness of artificial intelligence technology.”
P2P lenders required to keep funds in banks. GP:” What is important to know here is that it is very hard for a p2p lender to find a bank who will accept to bank for them, so this is in fact a way to shut them down more or less. Which is unfortunate because this in desperation people take desperate measures. And wewould all be better off if the p2p lenders did hold all their money in a bank, if banks would accept them. ” AT: “Considering the business climate in China, I think this is the right move.”
dv01, the reporting and analytics platform that brings transparency to lending markets, today announced the launch of Securitization Explorer, a new web portal dedicated to providing investors with increased insights into securitizations of consumer loans.
Institutional investors have long used dv01’s cloud-hosted web application to gain real-time insight into consumer loans, analyzing over $50 billion of loans to date. With the launch of Securitization Explorer, dv01 leverages superior data, analytical, and visualization tools to deliver a comprehensive application dedicated to the needs of investors in consumer loan securitizations. The new application is fully integrated into the dv01 environment and allows seamless transition from whole loan pool analysis to securitization analysis.
dv01 is the Loan Data Agent on numerous securitizations, overseeing an aggregate securitized collateral balance in excess of $1 billion. The company has aggregated performance data from marketplace lenders including SoFi, Lending Club, Prosper, Marlette Funding, Avant, and CommonBond. By normalizing data across lenders, dv01 simplifies comparison and analysis, enabling institutional investors to study both pool and individual loan performance, as well as quickly detect issues within portfolios.
Matt Burton: Like many startups, Orchard began as a small circle of friends with unique perspectives and complementary skill sets. In 2013, we created a Meetup in NYC for people interested in the emerging online lending industry. I met with a number of institutional investors who were investing in online loans and what I discovered was that most of them needed a system capable of purchasing and tracking large portfolios of small loans from multiple lending platforms. Since one didn’t exist, they were trying to cobble something together on their own, and most were struggling with it. Rather than becoming an investor or launching another lending platform, it occurred to me that someone should build the infrastructure to connect these two sides of the market at scale. On the flight home, I decided to launch Orchard and had just the right team of co-founders in mind to do it.
To date, we’ve on-boarded over $40 billion of loans to our platform across 20+ lenders, covering a diverse range of consumer and small business credit products.
We believe that an efficient, diversified method of selling and reselling whole loans and loan portfolios is critical to the industry’s growth and longevity over multiple credit cycles.
We are excited about the possibilities that come with more and more traditional lenders adopting a ‘fintech’ approach to providing services and how that may help underserved segments of the market access the credit they need. The opportunity will likely be even more pronounced in other regions of the world where these underserved segments of the market have almost no access to traditional banking services but wide access to smartphones and mobile-only services.
Let’s not forget that lending is still the primary business activity of banks, credit unions, and specialty finance companies. Most of them are in the process of converting their lending operations to the online model—or quickly evaluating whether to build their own platform or partner with an existing lender or technology provider.
The broader convergence of banking and financial technology feels inevitable at this point.
Alternative lending swooped in to fulfill the needs of consumers and small business owners during the credit pinch after 2008, and every sign points to the industry scaling up. By 2020, some estimate that 1 in 5 small business loans will be made by an alternative lender. That share of the pie will be $52 billion, compared to $5 billion today.
1. Multi-product offerings.
Our nation’s largest financial institutions are full-service banks, offering credit cards, personal loans, student loans, mortgages and small business loans, among other financial products. But to date, most online lenders have stuck to one side of the market, with some notable exceptions like Lending Club, which operates both in the personal loan and small business loan sectors. Over the next few years, we’ll probably see more online lenders offering multiple kinds of loans themselves.
2. Bank partnerships.
Banks have large customer bases, low cost of capital, and scale on their side. Alternative lenders have speed, better user experiences, and a regulatory vacuum to operate in.
While they’re natural competitors, they don’t have to be. Indeed, a number of partnerships are beginning to form between banks and online lenders that will define how the credit needs of small businesses are met in the future.
Regulators aren’t blind to the potential that alternative lenders have to innovate—and to the possibility that misregulation could quickly lead to the death of an important new industry. But, online lending is brand new, and it’s disrupting what’s traditionally been a highly regulated industry. So, expect more news coming out of Washington as regulators look to get up to speed on the innovation that’s happening in online lending, and seek to build first principles on what an appropriate regulatory framework should look like.
VeriComply, a company that automates the verification of marketplace loans for the secondary market, announced on Thursday it appointed former LendingClub executive, Roger Dickerson as its new president as it prepares to expand into the marketplace lending industry.
According to VeriComply, Dickerson served as Vice President of Finance Operations at LendingClub where he oversaw investor operations.
Students in the U.S. congressional district that encompasses the Texas Panhandle hold, on average, more loan debt than the state average. But on the other hand they also default on student loans at a lower rate.
The average student debt per borrower in the district is $29,122, according to a student debt analysis released Thursday by LendEDU, a student loan marketplace.
That amount is about $2,100 more than the state average.
The loan default rate in the congressional district is 7.27 percent, the study found. Statewide, the rate is 7.39 percent.
It is anticipated that by the mid-point of this year there will be between 50 and 70 players offering an automated advice solution in the UK, including several major providers.
A human element is crucial to the approach of these more complex online financial advisers. Many are also routing online customers to a human if it is apparent that the need is complex or the customer may not have properly understood the questions asked during the process.
But a human element is only part of the solution; additional safeguards will also be required. We would not allow a human adviser, however well trained, to operate without a system of checks, balances and oversight, and the same is true of an automated model.
Once safeguards are in place, EY believes that a robo-adviser would be expected to have fewer biases and a better audit trail than any human.
The peer-to-peer business lending market has reached over £4bn. Nearly a quarter of all equity investments last year were made through Seedrs and Crowdcube, the two largest crowdfunding platforms.
Yet in both cases, the future depends not on the retail investors – Joe Public – that made their name but on market-shaping institutional investors.
“Around 10% of all businesses funded on our platform have some form of VC, institutional or corporate investment involved at some point in their history, and that rises to 50% when it comes to growth-stage business,” he said.
Seedrs echoes the sentiment. Rich Mason, its business development director, says they’ve seen a “surge” in co-investment with institutions and later stage investors.
At the other end of the spectrum, 25% of Funding Circle’s investment is from institutions (including the securitisation of loans).
ThinCats’ Caley says changes to its lending criteria due to the demands of institutional investors, cut 20-25% of loans last year.
Whether this is a good thing or not seems split between the two leading forces of alternative finance. On one hand, everyday investors now have access to big funding rounds like Monzo, something that would have been impossible in the past.
Budding entrepreneurs looking for a career in the fast-growing financial technology industry can now sign up to the UK’s first fintech undergraduate degree course at Wrexham Glyndwr University.
The new BSc (Hons) Financial Technology Management course has been designed with the input of fintech startups and support from North American investment firms Franklin Templeton and State Street.
Course leader Anna Sung, lecturer at Wrexham Glyndwr University, says: “Rather than teaching students the technologies behind the rise of fintech, the course will teach them how to generate new business ideas and create their own startup using the technologies available to them.”
Global investment in fintech ventures in the first quarter of 2016 was £4.1 billion and it’s estimated that 100,000 new jobs in the sector will be created in the UK by 2020.
A look at some headline numbers from Funding Circle, the most well known in the SME lending P2P space, is telling. It operates a pooling system where a retail investor lends to a portfolio of, typically, 100 businesses, with no more than 1 per cent exposure to any one loan. Given average SME default rates, this is a significant risk mitigation tool. And when you overlay this with risk banding, quality underwriting and proactive arrears management and collection, it becomes a pretty tightly controlled environment. The upshot is that investors have received a 7.1 per cent return after fees and bad debts.
Nevertheless, the head of the Financial Conduct Authority (FCA) Andrew Bailey has said that he’s “pretty worried” about some aspects of the P2P market. Speaking to the Treasury select Committee, he was referring to attempts by some platforms to draw direct comparisons between their offerings and the returns from bank deposit accounts – implying that the two products are comparable, when they are not.
Bailey’s caution should be taken as a warning. While the concept and principles of P2P have political and regulatory recognition, behaviours that are seen to be misleading investors will not be tolerated. Absolute transparency about risk, return and redress are essential if the sector wishes to avoid damaging itself. Moreover, while banks exist under increasing levels of scrutiny, platforms can currently operate under lighter regulation.
So is there really a problem with P2P? I think there is, but not in the investor protection/regulatory space, or in its customer outcomes (which are largely excellent). The problem lies with the business model itself.
Robo-advice still has its limits, Richards cautioned, however, and advisers should be careful not see it as a ‘one size fits all’ solution.
“Mis-selling scandals of the past have generally been based on formulaic sales processes so it is important not to repeat history. The individual review and tailored recommendation process of financial advisers protects the market from systemic failure.”
Romford has replaced Luton as the postcode offering the greatest return for buy-to-let investors, after seeing rental prices grow 8% in the year to November.
The city climbed six places to knock Luton off the top spot, after it posted a capital gains growth of 17% and a buy-to-let yield of 5%.
Luton still remains a desirable market for investors, however, where continued growth in the rental market has offset the shrinking of yields, LendInvest said. The city posted a respectable 5% yield and a capital gains rate of 15% on rental price growth of 8%.
Last in the latest ranking of top 10 postcodes was Stevenage, where, despite 10% rental growth – the highest of all – capital gains were comparatively low at 9% on yields of 4%. Overall, Northampton remained the only postcode in top 10 to be located outside the South East.
The French Crowdfunding Association (Financement Participatif France) released today the 3rd edition of its annual industry Barometer. For the first time, the data was compiled by auditing and consulting firm KPMG, which lends to the Barometer additional weight.
As it stands, the 2016 Alternative Finance Barometer reports that:
French alternative finance overall raised €668 million, a 112% increase from 2015.
French crowdfunding raised €234 million, a 40% increase from 2015.
I draw two conclusions from these numbers:
The rapid growth of alternative finance comes from models fueled by institutional investors.
The French alternative finance market is catching up, but is still dwarfed by the UK’s.
The Barometer focuses in more detail on the narrowly defined category of crowdfunding that remains closer to the original roots of “funding by the crowd”. The three segments of this category show:
Donation and rewards-based crowdfunding show a sustained 37% growth to €69 million.
Debt financing and crowdlending grew by +46% to €97 million. The strong 125% growth stated in the 2015 barometer is not directly comparable to the 46% growth rate stated for 2016. The latter is based on comparable data, retro-fitted to a smaller parameter of SME, real estate and green debt funding and crowdlending.
Equity crowdfunding decelerates to +36% to €69 million.
In conclusion, while 40% is a very healthy growth number by common standards, it is not enough to sustain some 100 startups in the crowdfunding category. Many will jump ship or consolidate. The winners will most likely go for more hybrid models to get a nudge of acceleration from institutional investors.
Marketlend, Australia’s leading peer-to-peer trade credit platform, today announced that it has appointed Brad Pattelli as a non-executive member of its board of directors. Pattelli brings decades of experience as an investor in a broad range of businesses, multiple prior public and private board roles, and significant expertise in the P2P arena as the former President of LC Advisors, a subsidiary of LendingClub, the award-winning online platform.
Founded in 2014, Marketlend provides investors with a unique opportunity to invest in supply chain or debtor lending facilities secured by short-term receivables, primarily from small to medium sized Australian businesses. An A+ rated global insurance company protects Marketlend investors against insolvency of the borrower and its debtors, enabling uninterrupted principal repayment on the majority of Marketlend’s lending facilities, providing investors with significant credit enhancement whilst enabling borrowers to receive better interest rates. Marketlend has recently secured a mandate from an undisclosed institutional investor to invest on its platform.
CHINA’S banking regulator yesterday issued a new rule requiring peer-to-peer lending platforms to use third-party banks for custody of funds as it enhanced a national campaign to curb financial fraud.
The bank requirement seeks to strengthen fund security and prevent capital embezzlement, the China Banking Regulatory Commission said in a statement yesterday.
A P2P lending platform should sign an agreement with only one commercial bank to safeguard the funds, and all P2P lenders should meet the custody requirement in six months, the regulator said.
As of yesterday, 209 operating online P2P platforms have signed such agreements with commercial banks, accounting for 8.8 percent of all P2P lenders, according to data compiled by Online Lending House, a portal that tracks the sector.
China Rapid Finance, a Shanghai-based peer-to-peer lender, is planning to raise at least $100 million in an initial public offering in the U.S., people familiar with the matter said.
The company, which raised $20 million at a pre-money valuation of $1 billion in November, could hold the IPO as soon as this year, the people said, asking not to be identified because the information is private. The money will be used to fund expansion in China, one of the people said. The company declined to comment in an e-mailed statement.
Crowdfund Insider had the opportunity to interview the co-founder of Canadian real estate crowdfunding platform, RealStarter.
Jean-Sébastien Drolet: RealStarter stands for a reachable start in the real estate investment. As you might know, buying property is not accessible to everyone because one encounters many costs and fees. Also, real estate investment can be challenging if you don’t have enough knowledge regarding the market and market trends.
JSD: I would say our main challenge in 2017 will be to build trust with our users. I say that for two reasons that go hand in hand with each other: real estate crowdfunding is not very well known in Canada, especially in Quebec, and people are distrustful about investing money in real estate through a web platform. (It was only legalized in 2015 in Canada.)
JSD: I don’t think so — things are moving quite slowly in terms of regulations but they are still moving forward. In 2017, the Canadian regulators across Canada will be looking at what is going on in other jurisdictions to amend the regulatory regime actually in place in order to make it more efficient with the new emerging fintech business models. For example, the AMF (Quebec regulator) recently announced the creation of a technological Innovation Advisory Committee on which RealStarter will be. Its primary mandate will be to analyze technological innovations in the financial sector and anticipate regulatory, market efficiency and consumer protection issues.
JSD: Yes, it takes time to build a real estate crowdfunding market. After reading a few market studies about the US and the UK market, we can see it took about three years to achieve good growth in terms of investment volume made through crowdfunding platforms. We predict it is going to take less time in Canada since we now have positive results from these jurisdictions. Also, we like the E-Reit model adopted by certain US crowdfunding platforms, such as Fundrise. We are currently working toward doing something similar available if the regulation is flexible enough.
There are lots of good reasons to study history, but perhaps the best is to avoid being misled by people who claim to have “learned the lessons” from the past when they don’t actually know what they’re talking about. For example, the policy mistakes exacerbating the euro crisis may have been partly caused by a profound misunderstanding of the causes of the French Revolution.
There are lots of good reasons to study history, but perhaps the best is to avoid being misled by people who claim to have “learned the lessons” from the past when they don’t actually know what they’re talking about. For example, the policy mistakes exacerbating the euro crisis may have been partly caused by a profound misunderstanding of the causes of the French Revolution.