Monday November 27 2017, Daily News Digest

fintech TransUnion

News Comments Today’s main news: Ant Financial bans high-interest consumer loan products. Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS. Funding Circle to launch Isa next week. Zopa reforms how returns are displayed. Robo-advisors in China must be licensed. CreditEase to pioneer fund of funds for direct real estate purchases. New Zealand publishes first P2P/crowdfunding statistical returns. Today’s main […]

fintech TransUnion

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS (Asset Securitization Report), Rated: AAA

LendingClub’s third self-sponsored securitization of online marketplace loans is benefiting from the company’s recent tightening of credit standards.

The loans backing the $330 million Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 involve borrowers with higher FICO scores that have allowed LendingClub to reduce its credit enhancement levels on the deal.

CLUB Credit Trust 2017-P2 has a collateral pool of 22,062 prime, consumer loans with a cumulative net balance of $368 million, or an average balance of $16,681.

TransUnion Study On FinTech Market; PayPal Enters Robo Advice Market (PeerIQ), Rated: AAA

The Federal Reserve Bank of New York reports that household debt totaled $12.95 Tn last quarter – the 13th straight quarterly increase. As a share of GDP however, household debt stands at 66% below a peak of 87% in early 2009.

PayPal continues to expand the range of its consumer offerings. PayPal started with payments initially, moved to personal and small business loans, and is now delivering asset management solutions. The partnership will offer Acorns a unique channel for customer acquisition and allow Acorns to compete with Betterment and Wealthfront. Paypal led a $30 Mn investment round in Acorns Grow in April 2016.

FinTechs are Growing and Taking Market Share

FinTech’s market share has grown from virtually zero in 2012 to 30% in 2016. The outstanding balances on personal loans have doubled to over $100 Bn in 2017 from late 2013, with 128 lenders making more than 10,000 personal loans annually. FinTechs compete with banks to originate loans to prime consumers, and FinTech’s originate 30% of their loans to non-prime consumers where there is less competition from banks.

Source: TransUnion

FinTechs Have The Most Robust, Risk-Based Pricing

Source: TransUnion

Brian Dally of Groundfloor (Lend Academy), Rated: A

In this podcast you will learn:

  • Where the idea for Groundfloor come from.
  • Why Brian decided to start in the real estate asset class.
  • How many states they are operating in today for both borrowers and investors.
  • How they go about sourcing real estate deals.
  • Why they decided to focus on non-accredited investors.
  • How their securities offering is structured.
  • The minimum investment allowed per deal.
  • How returns have been for investors.
  • Which side of the marketplace is constraining growth today.
  • How they differentiate themselves from their competition.
  • The performance of their loan book to date.
  • Their business model and how they make money.
  • Details of their first institutional investor and why this is good for retail investors.
  • Their goal for an institutional/retail investor mix.
  • What the future holds for Groundfloor.

Online lenders pull out the popcorn, as the Trump administration fights to control the CFPB (TechCrunch), Rated: AAA

Republican lawmakers have long sought to reduce the CFPB’s oversight. Now dueling appointments put its immediate future in question. Last night, President Trump named his budget director, Mick Mulvaney, as acting director of the agency hours after its current leader, Obama-appointed Richard Cordray, announced he would leave the job.

To counter the administration’s plans, on his way out the door, Cordray named his chief of staff, Leandra English, as the agency’s deputy director.

Under the law, the appointment should make English the agency’s acting director, though the White House says that Mulvaney plans to show up at the CFSB Monday morning anyway. The White House further says Mulvaney will keep his current job as head of the Office of Management and Budget.

If the Trump administration follows through on its threats, Mulvaney will lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate.

Nobody Knows Who the Consumer Financial Protection Bureau’s New Boss Is (New York Magazine), Rated: A

On his way out, he appointed his chief of staff, Leandra English, to take over the CFPB, citing the Dodd-Frank Act, which states that the agency’s deputy director will take over the agency if the director leaves. Trump responded by naming Mulvaney as expected, pointing to the Federal Vacancies Reform Act as justification for his move.

The eventual director must be confirmed by the Senate; Trump’s pick is expected within weeks.

3 trends powering the rise of financial robo-advice (VentureBeat), Rated: A

1. Availability of data

We generate more than 2.5 billion GB of data every day.

In one notable example, JP Morgan and Intuit earlier this year announced their companies will make data available via the Open Financial Exchange API. Their goal is to make it easier and more secure for consumers to use their data across various financial apps and websites.

2. Increased power and storage

  • Google Tensor Processing Unit.
  • Nvidia Volta.
  • Huawei Kirin.

3. Advancements in AI

In particular, deep learning and boosting models enable significant leaps forward in the application of machine learning. These include design concepts such as Google’s Capsule Network, which offers an alternative to traditional neural nets, and replicative and transfer learning, which enable pattern discoveries and accuracies impossible by human counterparts.

The results of studies using these ideas are impressive. In one example, University of Mannheim researchers showed how ontologies help some machine learning models validate data 50 times faster. And Google’s AutoAI demonstrated it can create better machine learning code than the researchers who made it.

Student debt relief trumps other benefits (Employee Benefit Adviser), Rated: A

Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.

Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.

Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.

The Most Well-Funded Fintech Startup In Each State (CB Insights), Rated: A

State Company Total Equity Funding ($M)
Arizona CampusLogic $ 17.5
Arkansas LumoXchange $ 0.2
California SoFi $ 2,040.5
Colorado IP Commerce $ 54.7
Connecticut PayVeris $ 14.2
DC Fundrise $ 52.6
Delaware College Avenue Student Loans $ 50.0
Florida YellowPepper $ 34.0
Georgia Kabbage $ 490.0
Idaho VisitPay $ 18.4
Illinois Avant $ 655.0
Indiana Allied Payment Network $ 2.6
Iowa Dwolla $ 39.1
Kansas C2FO $ 99.7
Kentucky Inked Brands $ 4.0
Louisiana Zlien $ 7.2
Maryland Regent Education $ 39.7
Massachusetts Toast $ 138.0
Michigan Clinc $ 7.5
Minnesota Bright Health $ 240.0
Missouri Clearent $ 27.5
Nebraska D3 Technology $ 35.6
Nevada Filament $ 31.8
New Jersey Billtrust $ 104.5
New York Oscar Insurance Corporation $ 727.5
North Carolina AvidXchange $ 558.2
Ohio Aver $ 23.2
Oklahoma CreditPoint Software $ 1.1
Oregon NVoicePay $ 21.5
Pennsylvania InstaMed Communications $ 101.9
Rhode Island Upserve $ 191.5
South Carolina Ceterus $ 10.2
South Dakota ReliaMax $ 3.9
Tennessee Digital Reasoning Systems $ 75.6
Texas BigCommerce $ 164.5
Utah MX $ 54.1
Virginia StreetShares $ 18.9
Washington Avalara $ 253.0
Wisconsin Dynamis Software Corporation $ 4.3
Source: CB Insights

Bridge loan helps borrowers as they pursue graduate degrees (SFGate), Rated: B

The sellers wanted to accept the offer but were concerned about the VA financing with an online lender who was unresponsive to the listing agent’s calls. The Realtor advised the couple that if they could find a local lender who could preapprove them with conventional financing, their offer would be accepted.

Wyatt held a video conference with the couple to clarify the structure of the file and learned that both clients were pursuing their graduate degrees and took time off work to attend classes. In addition, the co-borrower had recently received an employment offer for a salaried position.

United Kingdom

Funding Circle Isa to launch next week (Bridging&Commercial), Rated: AAA

Peer-to-peer platform Funding Circle has announced that it will start rolling out its Isa account to all current investors from next Thursday (30th November).

UK peer-to-peer lenders plan to raise millions from ISAs (Financial Times), Rated: A

Britain’s largest peer-to-peer lenders plan to raise hundreds of millions of pounds from savers in the coming weeks even as many of them say they will reduce higher risk lending in case there is a downturn.

“We expect a lot of demand,” Samir Desai, chief executive of Funding Circle, told the Financial Times. “We have done lots of surveys and a huge proportion of the base told us they would like to put all of the money they invest with us through the ISA.”

Zopa addresses default concerns by reforming how returns are displayed (P2P Finance News), Rated: AAA

ZOPA is working on improving the way long-term returns are displayed so investors do not become overly concerned with monthly defaults in their portfolio.

The peer-to-peer lender said it is working on a prototype that would show investors their current portfolio performance, a range of what their returns will be and what their target rate is.

The display, currently in testing, includes a graph showing portfolio growth, and the net cash earnings after losses, a range of what the returns will be that narrows closer to maturity and what the target rate is in comparison to what was advertised.

Welendus launches new £150,000 crowdfunding campaign (P2P Finance News), Rated: A

PEER-TO-PEER payday loan platform Welendus has launched a new crowdfunding round on Seedrs this morning to raise an additional £150,000.

The lender, which raised £100,000 from investors during a Seedrs fundraise in March, has already reached 92 per cent of its target by attracting funding from the existing crowdfunding backers.

NatWest joins the robo-advisers (This is Money), Rated: A

High-street bank NatWest has launched a fully regulated robo-advice proposition charging £10 for customers seeking to invest sums as low as £500.

Unlike some rival robo-advisers that offer guidance based on responses to just a few questions, or simplified advice that doesn’t factor in your complete financial position, NatWest said its process will offer full-fat advice akin to the traditional face-to-face process but online.

57% of SMEs support European Free Trade Agreement (Bridging&Commercial), Rated: A

More than half of small business owners (57%) are supportive of joining the European Free Trade Agreement (EFTA), a new survey has revealed.
Research by peer-to-peer platform Funding Circle has found that the key reasons cited by businesses for wanting to join the EFTA included the ease of exporting and importing (59%), a larger customer base (46%) and lower tariffs (42%).

 

Was the Budget boom or bust for personal finance? (P2P Finance News), Rated: A

PEER-TO-PEER lenders are split about the outcome of the Budget for people’s finances.

RateSetter said there was “a notable absence of measures to help people put away more for the future” in Wednesday’s fiscal event, but Lending Works called it “a boost for personal finance”.

Rethinking bricks and mortar: alternatives for property investors (Your Money), Rated: B

A mismatch of supply and demand has made UK property more unaffordable than ever for would be buyers. Property investors pursuing the buy-to-let route are also facing challenges due to a recent crackdown in tax legislation. Against this backdrop, peer to peer (P2P) and equity crowdfunding have grown in popularity as alternative ways to access the property market.

Key considerations before picking an investment route

 

  • Investment risk
  • Debt or equity
  • Liquidity
  • Who’s the provider

RateSetter Appoints Richard Steele Regional Manager of Midlands (Crowdfund Insider), Rated: B

UK-based peer-to-peer lending platform RateSetter announced on Friday it has appointed Richard Steele as its regional manager for the Midlands. According to the online lender, Steele has more than 15 years of business lending experience and prior to joining RateSetter, he held the relationship manager position at Barclays and business development manager at BCRS Business Loans.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

On November 17th, top financial regulators in mainland China (including PBOC, CBRC, CSRC, CIRC and SAFE) released a new set of rules covering the country’s asset management market. It is the first time that the regulators designated one of the articles to Robo-advisors.

According to the article, financial institutions that conduct Robo-advisory services or AI-driven investment programs should be granted license from financial regulator before carrying out any operations.

Here Comes Tencent Credit

Two years ago, Ant Financial, the financial affiliate of Alibaba, launched its own credit scoring system Sesame Credit. This week, Tencent, Alibaba’s main rival in China, finally followed suit by launching a similar and competitive product, Tencent Credit. The credit score ranges between 300 and 850.

Sesame Credit Ceases Cooperation with Cash Loan Platforms

On November 21st, a cash loan platform told the media that they had received a notification from Sesame Credit, the credit scoring services of Ant Financial. According to the notification, Sesame Credit will cease to cooperate with cash loans from December 12th of 2017 due to some of its illegal behavior regarding interest rate setting and debt collection.

Chinese fintech firm CreditEase to pioneer funds of funds as alternative to direct real estate purchases (SCMP), Rated: AAA

CreditEase, one of China’s largest financial technology companies, has set its sights on funds of funds focusing on real estate projects as founder and chief executive Tang Ning anticipates a new property investment scenario.

At present, high-net-worth individuals in China seeking returns from property investment often directly buy and own residential or commercial units, betting on the appreciation of assets.

CreditEase, which specialises in lending to small businesses and consumers as well as wealth management for affluent investors, plans to set up a clutch of funds of funds that will allocate capital to leading global real estate funds managed by big names such as Blackstone and KKR.

China Online Lender Qudian’s Latest Plunge Knocks CEO From Billionaire Ranks (Forbes), Rated: A

Qudian lost 24.3% on Friday to end at $12.22, the worst close since it listed at $24 on Oct. 18.  Friday’s decline left Luo’s fortune at $776 million.

Luo, 34, ranked No. 255 on the 2017 Forbes China Rich List published on Nov. 16 with an estimated fortune of $1.48 billion.

Shares in Qudian, which is 11% owned by Alibaba Group affiliate Ant Financial, and other Chinese online lenders have been falling on reports that regulators plan to tighten restrictions on microlenders. On Friday, Qudian said it would cap charges and costs to customers linked to Alipay at an annual interest rate of 24% (see announcement and details here).  Qudian also said it is working to extend credit through its own app where it can charge up to an annual rate of 36%.

Alibaba Affiliate Bans High-interest Consumers Loan Products (ValueWalk), Rated: AAA

Ant Financial, the financial arm of Alibaba, has barred consumer loanswith an annual interest rate above 24% on its Alipay platform.

Ant Financial stated that it has increased monitoring of the financial service providers on Alipay and its credit platform, Sesame Credit, and found some inappropriate collection methods and interest rates above legal limits, according to Reuters. Further, Alibaba’s Ant Financial stated that it would withdraw cooperation with some cash loan providers. Sesame Credit is a proprietary credit scoring system, which gives Alipay e-wallet users a credit score.

China Fintech Firm Is Said to Mull Fate of $ 500 Million IPO (Bloomberg), Rated: A

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people.

Yirendai Awarded ISO 27001 Certification (Business Insider), Rated: A

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that it has been awarded certification to the international standard for Information Security Management (ISO 27001) from British Standards Institution.

The ISO 27001 certification is an internationally recognized best practice framework for an information security management system (“ISMS”) and specifies the requirements for establishing, implementing, maintaining and improving information security management within an organization. It also takes into account risk assessment and risk treatment with regards to security of information.

Tencent to set up fintech lab in Xiongan (ECNS.cn), Rated: B

Tencent Holdings Ltd, Asia’s most valuable firm, is planning to set up a financial technology lab and digitize public medical services in the Xiongan New Area, as part of a broader push to gain a foothold in China’s latest economic zone.

European Union

One Idea to Make Europe Bigger in Tech Is to Pay Employees More (Bloomberg), Rated: AAA

Europe isn’t producing the kind of large, globally-influential technology companies like those coming out of the U.S. and China. A perennial question is why?

One reason might be that European startups don’t give employees as much of a chance to strike it rich, according to a new study by the European venture capital firm Index Ventures. While startup employees in the U.S. are often rewarded with stock options — allowing them to cash out handsomely if a company is sold or goes public — young firms in Europe don’t offer the same scale of incentives.

In an analysis of 73 companies, Index found that European employees own on average about 10 percent of the startup where they work, compared to 20 percent for U.S. workers. European companies often skew stock options to executives rather than rank-and-file employees.

A tech VC explains why Revolut is such a hot ticket as the fintech app hits 1 million users (Business Insider), Rated: A

Revolut announced the milestone on Friday, saying that customers have now completed 42 million transactions on its app worth a combined $6 billion (£4.5 billion). The company began as a foreign exchange app linked to a pre-paid card but has since branched out into broader financial services, such as current accounts, insurance, and investments.

Revolut, which is applying for a full European banking license, said that 42% of its customers are aged 25-35, “a clear indication that traditional banks are no longer meeting the needs of younger, tech-savvy generations.”

Flender closes in on £2m funding round (Independent), Rated: A

Dublin-based peer-to-peer lending business Flender is close to raising more than €2m in its latest funding round.

Some €400,000 of the money has been raised from its own platform – the first peer-to-peer equity investment on an Irish platform. Terms are close to being agreed for the remaining balance of a £2m (€2.25m) round.

CS Invests in Swiss Fintech (finews), Rated: B

Credit Suisse has bought a majority stake in Tradeplus24, a Zurich-based fintech firm specialized in small- and mid-sized business loans. The Swiss bank bought into a series A1 financing through its subsidiary, SVC, the bank said in a statement.

International

2 investment trusts for income investors seeking reliable high yields (The Motley Fool), Rated: AAA

With interest rates still near historic lows, it can be hard to find mainstream investments that will pay out a significant yield.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

ETHLend – A Fully Decentralized & Democratized P2P Lending Platform On The Ethereum Blockchain (Chipin), Rated: A

The main feature of ETHLend is the financing options available in ETH, which allows users to borrow or lend ETH using ETHLend’s digital tokens in an efficient manner or by using ENS domains as a collateral.

The ETHLend platform can be also used as a tool for both B2B and B2C transactions.

An interesting aspect of ETHLend is that both borrowers and lenders will receive 0.1 credit tokens (equal to 1 ETH) each for every loan that is repaid successfully.

These credit tokens can then be used as collateral for loans on the platform or sold for profit.

Here are the details of the upcoming LEND token sale:

Token name: LEND

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th November, 2017 – 27th December, 2017

Token sale target: 37,600 ETH (hard cap)

Token exchange rate: 1 ETH = 25,000-27,500 LEND (depending on period of sale)

Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology (Chipin), Rated: A

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Celsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

There are 4 types of loans in the Celsius platform:

    • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
    • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
    • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks. Finally, members can borrow cryptocurrencies in a secure and transparent manner
    • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Australia/New Zealand

Why SocietyOne needs more than its billionaire backers (Financial Review), Rated: AAA

The other is it’s in the midst of what is expected to be its last funding round before listing the business, raising up to $20 million in equity based on a valuation of up to $200 million, which is based on a multiple of one times its loan book.

The raising, managed by Venture Advisory and due to close late this month, is part of a long-term, highly anticipated plan to target a sharemarket listing in 2018.

SocietyOne is expected to need a book worth $500 million or so before it starts breaking even.

Chief executive Jason Yetton has said previously the company is eyeing a 2 per cent to 3 per cent share of the $105 billion consumer finance market in the long term, of which credit card debt comprises $42 billion.

Fortress backs $ 120m capital raising by MoneyMe (Financial Review), Rated: AAA

Global credit investor Fortress Investment Group will invest $100 million in debt capital to support MoneyMe’s consumer lending growth as the fintech considers an initial public offering in early 2019.

Fortress’s investment is part of a $120 million asset-backed securitisation deal, which also includes a $20 million bond, issued by Evans & Partners, which was oversubscribed.

MoneyMe, which has made $150 million in personal loans to 70,000 customers in the past four years, is both cash flow positive and profitable, very rare for an Australian fintech.

Of its $150 million in lending, $80 million has been advanced in the past 12 months.

New Zealand’s Financial Markets Authority Publishes First Peer-To-Peer/Crowdfunding Statistical Returns (MondoVisione), Rated: AAA

The Financial Markets Authority (FMA) today published its first statistical reporton peer-to-peer lending and crowdfunding in New Zealand.

The data shows $259.9 million is currently loaned to individuals and $29.5 million loaned to businesses through peer-to-peer lending in the year ending 30 June 2017.

A total of $74.2 million was raised from investors through crowdfunding, including wholesale investors, in the same period.

Tic:Toc to undercut broker distribution in white label play (TheAdviser), Rated: A

Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.

The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.

Financial regulator shines light on P2P lending, crowdfunding (Stuff), Rated: A

Kiwis have nearly 17,000 loans through “peer-to-peer” lending platforms, but more than one in 12 borrowers were behind on repayments, according to the Financial Markets Authority.

There were 16,977 loans outstanding with P2P lenders at the end of June, it said, of which 1469 were in arrears. The average size of loans being taken out was $8771.

During the year, 833 loans with a total value of $8.5 million were written off.

Why banks and fin-techs need each other (NZ Herald), Rated: B

Chris Russell, HSBC New Zealand chief executive, said history was littered with banks who had spent large sums of money on developing new technology, only to find it had gone in another direction while it was working on it.

Globally Russell said HSBC was setting up innovation labs to work with financial technology firms and it was China and India where it saw the biggest sources of development.

In New Zealand it is also partnering with a local fin-tech, although Russell won’t name who yet.

India

The quick and safe way to build a credit score (livemint), Rated: A

If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd.

Alternative credit scoring

While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.

However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said.

Asia

Considering an ICO… then read this (The Star), Rated: AAA

The ICO euphoria is likely being fuelled by the fact that despite all the negative news surrounding ICOs and cryptocurrencies, the price of bitcoin has generally kept soaring, despite the many mini crashes it tends to suffer.

For sober markets like Malaysia and Singapore, the regulators’ stance is clear. They are not outlawing ICOs but making a simple statement: if fund-raising is your main objective, then please take note of existing securities laws, which have been built and refined over a very long time.

Malaysia should not become a hotbed for dodgy ICOs.

Asian regulators should focus on light touch for ICOs (Asian Review), Rated: A

China banned initial coin offerings in September as “a form of unapproved illegal public financing behavior.” South Korea followed suit a few weeks later. Regulators in Hong Kong, Singapore, the U.S. and other countries have also expressed concerns. What is it that has them so worried?

Africa

A Digital Transactions Takeover right under our nose – Cassava Fintech (Newsday), Rated: AAA

Cassava Fintech is a specialized Pan-African Fintech company that delivers innovative digital transaction solutions across the mobile ecosystem. Sounds fancy right? Not quite. Simply put Econet’s vision has expanded beyond Telecoms and our Zimbabwean borders. Econet’s premise sits within an inclusive connected future that leaves no African behind.

Fintech SMEs to drive 72% of bank innovation (The Star), Rated: A

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.

Authors:

George Popescu
Allen Taylor

Monday September 25 2017, Daily News Digest

Federal Reserve Balance Sheet

News Comments Today’s main news: Prosper closes on $50M funding round at $550M valuation. SmartBiz Loans hits $500M in SBA loans. Labour proposes debt cap that would force credit card companies to write off billions. European Central Bank considering requiring fintechs to hold more capital. RateSetter raises $10.5M. FinEX Asia’s private equity fund manager invests $50M in Prosper. Today’s main […]

Federal Reserve Balance Sheet

News Comments

United States

United Kingdom

European Union

International

India

Asia

News Summary

United States

Prosper Closes on a $ 50 Million Funding Round at a $ 550 Million Valuation (Lend Academy), Rated: AAA

Earlier this week Prosper closed on a Series G transaction where they raised $50 million from an investment fund co-managed by FinEx Asia and LPG Capital based in Hong Kong. While Prosper would not confirm their new valuation sources said the post money valuation was $550 million. This represents a 70.5% drop in value from their high in 2015. So the rumors from last month are true.

On April 2, 2015 Lending Club was trading at $19.26 a share. Yesterday the shares closed at $6.10 which is a 68% decline in valuation. This is pretty much in line with the decrease in valuation at Prosper.

A spokesperson for Prosper told me that the money will not be used for operations but rather for new projects. Prosper is now cash flow positive with liquid assets of around $42 million as of Q2 2017. There was no dire need to get this funding round done but it will be helpful for them as they look to grow in a sustainable way.

FT Partners Advises Prosper on its $ 50,000,000 Financing Round (FT Partners Email), Rated: AAA

FT Partners is pleased to announce our role as sole strategic and financial advisor to leading marketplace lender 
Source: FT Partners

Download and read the full transaction announcement here.

Fed News, Prosper Financing, ABS East Highlights (PeerIQ), Rated: AAA

Source: PeerIQ
Source: PeerIQ

Fed Reducing Balance Sheet and Not Offering Regulatory SandBox

Source: PeerIQ

On heels of 70% plunge in valuation, Prosper CEO defends latest fundraisings (Biz Journals), Rated: A

After pocketing $50 million in a huge down round and another deal that could give an investor group a 30 percent stake in the marketplace lender, there’s really only one question for the CEO: Are you giving away the store?

SmartBiz Loans Hits $ 500 Million Mark in SBA Loans for Small Businesses (Small Biz Trends), Rated: AAA

Small business lending platform SmartBiz Loans has announced surpassing $500 million in funded Small Business Administration loans.

SmartBiz Loans says it ranked as the leading facilitator of traditional SBA 7(a) loans under $350,000 for the 2016 fiscal year. This means SmartBiz surpassed Wells Fargo and other major banks in relation to SBA lending.

Small Business Loans Are Still An Option For Struggling Business Owners (Inquisitr), Rated: A

Small business loans are helpful for business owners who have no other financial options. SmartBiz Loans has announced that it surpassed $500 million in funded Small Business Administration loans. A fifth bank has joined its software platform.

According to the Buffalo News, M&T Bank leads a federal small business lending program in the Buffalo-Rochester region. The program’s overall totals have decreased from a year ago. The Small Business Administration reported 806 of the SBA 7(a) loans were originated through August. That’s down 21 percent from the previous period a year ago. Its amount of dollars were down 7 percent from last year, down to $132 million.

M&T Bank used to lead the way until August. Its number of loans dropped down to 41 percent. Its total dollars declined 11 percent to $25 million. It’s still well ahead of Wells Fargo. However, Biz2Credit, Fundera, and others have been catching up.

Matic Insurance Services Debuts Integration with Roostify, Advances to Final Round of TechCrunch Startup Battlefield (PR Newswire), Rated: A

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, has forged a partnership with automated lending technology provider Roostify. The company announced the news Tuesday afternoon from the stage of TechCrunch’s Startup Battlefield, part of the TechCrunch Disrupt SF conference held in San Francisco this week. Matic was one of just six elite startups chosen to advance to the final round of the competition.

YC wants to let people invest in its startups through the blockchain  (TechCrunch), Rated: A

“We are interested in how companies like Y Combinator can use the blockchain to democratize access to investing,” said Sam Altman, who leads the accelerator, onstage at Disrupt yesterday. “We should try to figure that out.”

Our sources tell us YC is actually a little further along than that. Like a growing number of venture groups that are jumping into the digital currency world, the group is actively sussing out how it might use cryptocurrency to expand the investment pool.

Millennials still don’t like robo-advice (AltFi), Rated: B

A survey from online marketplace LendEDU found that 46 per cent of people between the ages of 18 and 34 who are saving for retirement use a financial adviser. In comparison, only 24 per cent of the 500 surveyed have used a robo-advice platform.

Around 75 per cent of respondents said they have never used an automated wealth management service, but 62 per cent of those said it was because they had never heard of robo-advice before.

Even so, millennials do not seem to trust automated wealth platforms. Of those surveyed, 51 per cent think a robo-adviser is more likely to make a mistake while managing money, while only 48 per cent think a traditional adviser is more likely to make an error.

Millennials Still Gravitate Toward Human Advisors over Robos: Survey (Advisor Hub), Rated: B

More than 46% of respondents in a survey of 502 millennial investors saving for retirement said they had sought advice from a human advisor, according to LendEDU, a student loan refinancing company. That is almost double the 24.3% who said they had used a robo-advisor either in addition to a human advisor or exclusively, according to the survey, which was released September 19.

AIC taps KKR’s Gopalan as CEO (PE Hub), Rated: B

Angel Island Capital (“AIC”), a San Francisco-based alternative investment advisor and credit manager, today announced the appointment of Dev Gopalan as Chief Executive Officer. A seasoned financial services executive, Mr. Gopalan joins Angel Island Capital from leading global investment firm Kohlberg Kravis Roberts (“KKR”), where he served as Head of US Private Credit and was a member of the Global Private Credit Investment Committee and KKR Credit Portfolio Management Committee.

United Kingdom

Concern at scale of peer-to-peer lender’s defaults (Telegraph), Rated: AAA

A rapidly growing peer-to-peer lender has exposed investors to a bankrupt for a second time, while a quarter of its loan book is considered to be in default, raising fresh concerns about regulation in the booming new finance market.

Sources close to Lendy Finance, which earlier this year became the title sponsor to the sailing regatta Cowes Week, spoke to The Sunday Telegraph after becoming concerned that the level of defaults revealed an ongoing weakness in underwriting checks, which is putting investors at risk to losses. The FCA is investigating how peer-to-peer lenders disclose default rates as part of a delayed consultation into the burgeoning industry.

A study of Lendy’s loan book reveals that almost 25pc of loans, worth £47.2m, are outside original terms, meaning repayments can be one day to 434 days overdue.

However, Lendy says that just 14.5pc of its loan book is “currently in default as defined by our agreements with lenders, and in line with the wider bridging and development finance market”.

Labour proposes debt cap that would see credit card companies forced to write off billions of pounds owed by customers (Telegraph), Rated: AAA

Credit card companies would be forced to write off billions of pounds in long-term customer debts if Labour got into power under a policy to be unveiled at the party’s conference.

John McDonnell, the shadow chancellor, will propose capping the amount of money lenders can charge in interest so that no one has to pay back more than double what they borrowed.

But with £14 billion owed by those classed as being in “persistent debt”, the policy raises questions over whether the cost of the policy would end up being passed onto other borrowers.

The average credit card debt owed by those in persistent debt – classed as people who have paid more interest charges and fees than their original borrowing – is £3,464 per person.

The Financial Conduct Authority has estimated that lenders would lose up to £1.3 billion per year as a result.

My Bondmason Result After Exit – Yield was Mediocre (P2P-Banking), Rated: AAA

Last year in September I signed up at UK platform Bondmason in order to test first-hand how an investment of 1,000 GBP would develop.

What was bad, was that it became clear to me, that the interest level in combination with the non-performing loans would make it very unlikely for Bondmason to reach the projected return – at least for my portfolio. Especially with the Invoice Discounting loans there were issues.

In April 2017 Bondmason announced it would require a larger minimum investment amount of 5K (previously 1K) and raise fees for small portfolios to 1.5% (previously 1%). Dang. I was in no way interested to deposit more money. So my portfolio did not even get to celebrate 1st anniversary. In July I gave them notice to liquidate my portfolio/account. Since then I withdrew 1,013.94 GBP – only slightly more than I deposited. My account still exists as there is 20 GBP stuck in two property loans in default and also 1.41 GBP in cash.

Source: P2P-Banking

Starling is looking to raise £40 million in a new funding round (Business Insider), Rated: A

Startup bank Starling is seeking to raise £40 million from investors in a new funding round to drive international expansion.

The bank, which opened to the public earlier this year, has appointed advisory firm Quayle Munro to oversee the fundraising, according to Sky News.

According to the report, Starling plans to use the money to expand into other European markets, with the first of these likely to be Ireland, where it recently gained a passport — which will allow it to access EU markets after Brexit.

Shadow Chancellor John McDonnell vows to cut interest payments on debt-laden Brits – but it could cost the City £13bn (The Sun), Rated: A

Mr McDonnell will today outline plans for a 100 per cent ceiling for three million owing on average £3,464 in a move that could cost the City £13billion.

The plan, in which someone borrowing £1,000 would pay back no more than £2,000 in total, would bring credit cards into line with current rules on payday loan firms.

It would also apply to in-store credit cards.

What Goldman Sachs Retail Banking Will Look Like (The Market Mogul), Rated: A

Goldman Sachs already has a mass-market offering in the US, after launching its online lender Marcus 18 months ago. Since its inception, Marcus has supervised over $1bn worth of loans to businesses.

Goldman Sachs will start taking deposits in the UK, but in the long run, the bank has plans to lend UK customers money through Marcus like in the US.

NatWest recently announced its plans to launch an online lender Esme Loans, allowing SMEs to quickly take unsecured loans of up to £150,000. Online lending is likely to become more crowded as Santander has also announced plans to incorporate digital banking in its services.

Can an app really change the way we buy houses by dragging lawyers into the tech age? (The is Money), Rated: A

Conveyancing – the legal process of transferring ownership of land and property from one party to another – has changed considerably over the past 10 years.

Technology has so far failed to make inroads to improve the process – and no matter how slick your online lender or mortgage broker tries to be, everyone’s held to ransom by the law.

What is When you Move ?

Simon: Frustrations we’ve seen our clients navigate, in addition to our personal experiences, triggered something of an obsession to develop a tech solution for an industry deep-rooted in some of the most archaic practices still in use  in modern-day business.

When You Move is an app that allows home buyers and sellers to see easily in real time where everyone is up to in the process – be that you, the lawyer, the mortgage broker, the valuer or the lender.

Adopting fintech is saving UK businesses £4.6bn, according to MarketInvoice (City A.M.), Rated: A

The survey found 65 per cent of 3,482 UK businesses have adopted at least one fintech solution, with 19 per cent making use of four services. These fintech products are helping the firms to save on average over £5,500 a year.

MarketInvoice estimates that 65 percent of 1.3m UK businesses are therefore making this average saving, meaning a total of £4.6bn is being saved thanks to fintech.

Ex-Goldman, Barclays and Lloyds MD has just jumped to a fintech firm after 30 years in banking (efinancialcareers.com), Rated: B

Adam Barrett, the head of institutional sales at Lloyd Banking Group has joined the exodus from banking to fintech. After more than 30 years in investment banking, at UBS, Goldman Sachs and Barclays, he’s just gone to peer to peer lending platform Invest & Fund.

Fintech “critically important” for future of UK financial services (P2P Finance News), Rated: B

MAINTAINING the UK’s position as a leading fintech and innovation hub is “critically important”, according to a survey of City firms.

The CBI/PWC financial services survey, released on Monday, questioned 94 companies, including banks, finance houses, securities traders, fund managers and the insurance industry.

Banks in particular saw a need to ensure that the UK remains a leading fintech and innovation hub.

European Union

European Central Bank could ask fintech banks to hold more capital (AltFi), Rated: AAA

The European Central Bank is considering requiring banks involved in financial technology to hold more capital buffers.

Cawley to chair peer-to-peer lender Linked Finance (Irish Times), Rated: A

Former Ryanair deputy chief executive Michael Cawley has been appointed chairman of peer-to-peer lending platform Linked Finance, which hooks up companies requiring capital with individuals and institutions looking to lend.

As of this month, it says it has 16,000 registered lenders on the site. Businesses to have availed of loans through the platform include Viking Splash Tours, the Irish Fairy Door Company and tech company Big Red Cloud.

Linked Finance has set a target to facilitate lending of up to €250 million in coming years. It says its lending was up by more than 240 per cent in the first half of this year. SMEs can borrow up to €250,000 on its platform.

How CrossLend is changing the game for European investors (LendIt), Rated: B

By November 2016, we were engaged in a strategic pivot, actively shifting our focus from B2C to B2B, so we could offer our single-loan securitisation solution to major players on Europe’s lending stage.

The good news is that investors also stand to benefit from the opportunities inherent in CrossLend’s single-loan backed notes, and here’s how:

  1. Simplified access
  2. Flexibility
  3. Ease of diversification
  4. Transparency
  5. Favourable regulatory treatment
  6. Liquidity
  7. State-of-the-art investment tools
International

ConsenSys And Tapscotts Are Warming Up To Global Ethereum-Based CarbonX Platform (ETHNews), Rated: A

On September 21, 2017, blockchain software company ConsenSys announced the launch of a peer-to-peer (P2P) trading company, CarbonX, which will employ the Ethereum blockchain to tokenize carbon credits.

CarbonX is backed by a co-founding group that includes co-authors of best-selling book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the WorldDon and Alex Tapscott. The company intends to purchase Certified Emission Reduction Credits, also called carbon credits, to be tokenized with the Ethereum blockchain. CarbonX will also tokenize investments it makes in reduction projects.

Report: There are 214 Unicorns in the World. A Good Number of them are Fintech (Crowdfund Insider), Rated: A

CBInsights has just published an updated report, along with some accompanying slides, tallying the number of Unicorns globally and outside the US.

According to their numbers there are 214 Unicorns in the world. There are 24 countries with Unicorns and the US leads the way with 52% and China follows in second place with 23%.

E-commerce is number one and Internet Software & Services take second place. Fintech Unicorns are in 3rd place.

Fintech names like SoFi, Stripe, Credit Karma, Prosper, Kabbage, Avant, are on the list. Outside the US, Fintech names include Lu.com, ZhongAn, Saxo Bank, One 97 Communications, Klarna, Funding Circle, Transferwise are there.

Australia/New Zealand

Sydney fintech RateSetter just raised $ 10.5 million after blitzing peer-to-peer rivals (Business Insider), Rated: AAA

Peer-to-peer online lender RateSetter Australia has secured a $10.5 million capital raising round and has doubled its loan levels on 12 months ago.

Peer-to-peer online lender RateSetter Australia has secured a $10.5 million capital raising round and has doubled its loan levels on 12 months ago.

Australian banks drop ATM fees (Financial Times), Rated: A

Australian consumers will no longer face charges when using another bank’s cash point after the country’s four major banks dropped ATM withdrawal fees for domestic users amid greater regulatory scrutiny for the industry.

Wealth management still key for banks (The Sydney Morning Herald), Rated: A

Former Commonwealth Bank chief executive David Murray says there remains a strong case for bank involvement in wealth management, despite the recent trend of lenders offloading life insurance and funds management assets.

CBA last week became the latest bank to retreat from “manufacturing” wealth products, selling its life insurance arm for $3.8 billion and saying it may spin off the investment business of Colonial First State in an initial public offering.

PledgeMe founder Anna Guenther hopes to take crowdfunding to Australia (NZ Herald), Rated: B

Anna Guenther is planning to take PledgeMe across the Ditch with the Australian Government set to legalise equity crowdfunding next week.

Two new high-profile digital wallet partnerships and the Australian alternative finance market ranks second in the Asia Pacific (Finder), Rated: B

Commonwealth Bank has announced it will be giving its 4.4 million app users access to Android Pay. The bank will also be allowing its customers to make contactless payments with their Garmin smartwatches in early October, with Apple Pay becoming available by the end of the year.

Australian fintech lender Waddle has announced the expansion of its invoice financing and factoring services to New Zealand. The lender is looking to meet the “significant demand” from small businesses in the New Zealand market.

Woolworths customers will be able to use their iPhones to collect and redeem Woolworths Rewards points when shopping at the supermarket or its partners from next month. Find out how much you can collect and redeem here.

India

P2P lending: Direct selling agents may come under RBI regulatory ambit as NBFCs (The Hindu Business Line), Rated: AAA

The Reserve Bank of India’s recent move to regulate peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) has created a grey area of sorts, spelling trouble for thousands of direct selling agents (DSA) or direct marketing agents (DMAs).

The Finance Industry Development Council (FIDC) says it is “very much possible” that DSAs/DMAs who have been providing loan facilitation (offline) services to retail and corporate borrowers, from banks and NBFCs (with whom they have signed a written contract) for the past many years, may also fall under the ambit of RBI’s P2P regulatory framework as NBFCs.

Start-up funding crawls: 20 months, Rs 70 crore (The Indian Express), Rated: A

Since it was floated in January 2016, the government’s Rs 10,000-crore Fund-of-Funds for start-ups (FFS), launched in line with the Start-up India Action Plan of the Government, has made slow progress with only about Rs 70 crore having been disbursed to start-ups until the beginning of this month.

The 17 funds include Mumbai-based early-stage investor Kae Capital, which raised its second $30-million fund in February last year and is reported to have got a commitment of Rs 45 crore from the FFS. Kae Capital has investments in about 16 start-ups, including Truebil, a used-car marketplace owned by Paix Technology; peer-to-peer business loan marketplace startup Loanzen; second-hand products marketplace ListUp promoted by Gijutsu Solutions and shopping portal Fynd run by Shopsense Retail Technologies.

Asia

FinEX Asia’s Private Equity Fund Manager Announces US$ 50 Million Investment in Prosper Marketplace (ACN Newswire), Rated: AAA

FinEX Asia is pleased to announce that its private equity fund manager closed an investment of US$50 million in Prosper Marketplace, a U.S. online marketplace lending platform for consumer loans.

“FinEX Asia is excited to complete the Series G financing into Prosper, a leader in marketplace lending in the U.S.,” said Maggie Ng, CEO of FinEX Asia. “Our team’s expertise is in fintech and consumer lending. Our investment strategy starts with the U.S. because of our strong network with online marketplace lenders. In parallel we are considering investment opportunities in other verticals globally.”

Founded earlier this year by Maggie Ng, a former Consumer Lending Head and Chief Risk Officer at Citibank, FinEX Asia aims to help Asian investors look for quality investment opportunities, both in fixed income and equity investments, by using its fintech platform and know-how. The investment made into Prosper is a good illustration of how such opportunities are welcomed by Asian investors and that FinEX Asia’s investment strategies are well recognized by the capital it represents.

Singapore’s FinMomenta to lend to low-income employees (The Hindu Business Line), Rated: A

Singapore-based fin-tech start-up FinMomenta, which entered the Indian online P2P (peer to peer) lending market early this year with its product called Tachyloans, will soon be lending to salaried professionals working in small and mid-size firms.

Called Corporate HR loans, FinMomenta aims to make lending easier for the working class. The loan size ranges from ₹50,000 to ₹5 lakh.

Blockchain Fintech Firm, MicroMoney Starts a Private Presale for Early Birds (PR Newswire), Rated: A

MicroMoney, a global fintech blockchain company and lending services provider, announces a private presale for its token-generating event for the early birds among funds and big contributors. This presale started on September 15th, 2017.

MicroMoney is a fast-growing company founded in 2015 with the offices in five Asian countries – ThailandMyanmarIndonesia, Sri Lanka, and Cambodia. The company plans to expand its presence to 5 more countries by 2018. MicroMoney was established as a company focused on micro-financing in the money lending industry, providing customers with online loans without any collateral requirements using machine learning algorithms.

There are still more than 2 billion of the unbanked in the world, especially in the emerging market.

Japanese firm eyes expansion in PH (Sunstar), Rated: A

CROWDCREDIT, a Japanese cross-border marketplace lending company which promises to fill in lending gaps by providing funds for lending and financial institutions including banks, is currently studying the market and possibility of business expansion in the Philippines.

In other countries, such as the United Kingdom, for example, banks receive loan applications more than their existing deposit or more than the loans that they can cater to. The case is opposite with Japan’s banks with more excess deposits than loans. With this, the basic concept of Crowdcredit is to provide this excess fund for loan to other countries that would need them.

Crowdcredit has a vast network of global partners which includes Mfx, Kobranzas, Fellow Finance, Savy, Cream Finance, Ovamba, Bondora, Mogo, Mintos, and Prestiamoci.

New LendingCalc White Paper Examines Opportunities in SE Asian Marketplace Lending (LendingCalc Email), Rated: A

Author Terry Tse Provides Practical Advice About How to Select Best P2P Platforms

LendingCalc, Inc., a direct investment platform providing global access to digital specialty finance for institutional investors, has released a new white paper examining the investment opportunities within the growing marketplace lending sector in Asia. The paper was written by newly appointed strategic adviser, Terry Tse, who served as Chief Risk Officer at the China-based P2P giant, Dianrong, and is currently Senior VP of International Development at the largest B2B payment company in China, Lian Lian Pay.

In the paper, Tse contrasts U.S. and Asian regulations and explains how the regulatory regimes in Asia impact the lending opportunities abroad. He also describes the emerging P2P business environment in Asia, which appears to be extremely well positioned for growth. In addition, Tse explains the key structural incentives Asian P2P lenders have implemented to discourage borrowers from defaulting.

The paper concludes with a number of practical suggestions to help investors navigate the socalled “Wild East” that is marketplace loan investing in Asia.

Authors:

George Popescu
Allen Taylor