Thursday October 24 2019, Weekly News Digest

P2P lending tax rates

News Comments Today’s main news: Judge says OCC cannot issue fintech charters. Kabbage ends Q3 with nearly $100M in revenue. Funding Circle shares up over 10% while loans under management up over 30%. Balboa competes $409M securitization. FundingSecure enters administration. Today’s main analysis: Q3 bank earnings. Today’s thought-provoking articles: 2019 financial fears infographic. Why there […]

The post Thursday October 24 2019, Weekly News Digest appeared first on Lending Times.

P2P lending tax rates

News Comments

United States

United Kingdom

China

Other

News Summary

United States

Fintech unicorn Kabbage ends Q3 with nearly 0 million in revenue amid loan growth (MarketWatch), Rated: AAA

Financial technology unicorn Kabbage finished the third quarter with just shy of $100 million in revenue as the company continued to grow its small-business lending platform.

The decade-old company told MarketWatch that it generated $99.4 million in third-quarter revenue as loan originations ticked up 43% on a year-over-year basis. The company said it extended $715 million in loans to customers during the quarter.

US fintech Kabbage launches new payment service to help small businesses get paid quicker (AltFi), Rated: B

Kabbage, a US fintech backed by Softbank which uses AI-based algorithms to help work out the terms of small business lending, is launching a payments service which it says will cut the time it takes small businesses to get paid from 90 days to 24 hours.

Judge Rules OCC Unable to Issue Fintech Charters (Lend Academy), Rated: AAA

Yesterday, a federal judge ruled that the OCC does not have the legal authority to issue bank charters to non-banks. Judge Victor Marrero ruled on the fact that a clause in the National Bank Act’s business of banking requires that only firms which take deposits can receive a national bank charter.

Banking charter remains a long way off for fintechs after court ruling (American Banker), Rated: A

Fintech firms continue to face a murky path into the banking system after a federal court ruling that threw out the Office of the Comptroller of the Currency’s special-purpose charter, observers said.

The charter has already been on unsteady ground. No firm has yet applied with the OCC facing legal challenges. But the decision Monday out of the U.S. District Court for the Southern District of New York shines an even brighter light on potential alternatives for fintech companies seeking a national licensing solution.

Is This the End for the OCC Fintech Charter? (Payments Journal), Rated: B

The story isn’t over yet. The OCC has said it will appeal the decision.

New Jersey bank partners with On Deck Capital (Biz Journals), Rated: A

Marketplace Lending Update #7: This and That (The National Law Review), Rated: A

In striking down the OCC’s interpretation of Section 5.20(e)(1), Judge Marrero reasoned that the National Bank Act “unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC.”

Kabbage Heads to Court (Again)

Non-bank marketplace lender Kabbage joins the growing number of online lenders who are defending Madden and “true lender” claims in New York’s federal courts. Unlike prior lawsuits, such as those recently filed against Capital One and Chase Bank,2 the putative class action against Kabbage targets small business loans, not credit card or other consumer loans.

Q3 Bank Earnings, Venmo & AmEx Card Launch (PeerIQ), Rated: AAA

PayPal is launching a Venmo credit card (expected 2H 2020). Venmo’s credit card launch follows a flurry of launches from Avant, Upgrade, Ollo, Brex and others in recent years. PayPal has a unique edge – the breadth of customers on its payment network. Relatedly, PayPal and Synchrony extending their overall 15-year consumer credit relationship.

Bank Earnings Season Underway

JPM

  • Industry leading ROE of 18% driven by consumer banking ROE 30%+ [!!]
Source: PeerIQ, JPMorgan Chase & Co

Citi

  • Strongest 35% YTD share price gain in KBW index (stock trading below book value)
  • 66% of new deposits coming from areas where they do not have branches

GS

  • ROE in the 12% range, profit drops 26%. ROE will be low for the foreseeable future while GS pours billions in investing in building a consumer franchise
  • CEO David Solomon: “In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” adding “which we believe is the most successful credit card launch ever.”

Bank of America

  • Profits up 8% YOY; NIM robust at 244 bps just shy of recent peak of 251 bps
  • #1 in mobile banking and online banking. Digital banking users have increased by 5% over the past year and number of active mobile users has increased by almost 11%. – Number of branches has decreased by 1.9

Balboa Completes Largest Securitization in Company History at $ 409MM (Monitor Daily), Rated: AAA

Online lender Balboa Capital successfully completed a $409 million asset-backed securitization (ABS) of small and mid-ticket equipment loans and leases, its sixth and largest transaction to date.

ABS Professionals Look to New Financial Partners Amidst Changing Economic Landscape, Capital One (ABL Advisor), Rated: A

Capital One survey conducted at ABS East 2019, a conference convening professionals from across the asset-backed securities (ABS) industry, found more than one-third (38 percent) of professionals plan to engage with new financial partners and implement new technologies, over the next 12 months, to prepare for the changing economic landscape. Additionally, 34 percent of respondents plan on reviewing or reshaping their credit and underwriting risks over the next 12 months.

Of the various challenges facing the industry, ABS professionals elected that regulatory uncertainty (22 percent), increased credit risk (18 percent) and increased competition (18 percent) pose the greatest challenges for their businesses over the next 12 months. Fluctuations in interest rates was listed as the greatest challenge for 15 percent of respondents.

2019 Financial Fears Survey (Wallet Hub), Rated: AAA

Current Mortgage Rates in Iowa (Benzinga), Rated: A

Quick Look: Best Mortgage Lenders in Iowa

  1. Academy Mortgage Corporation: Best Overall
  2. Quicken Loans: Best for Online Lending
  3. Wells Fargo: Best for First-time Home Buyers
  4. Bank Iowa: Best for Customer Service
  5. US Bank: Best for Competetive Rates

1. Best Overall: Academy Mortgage Corporation

You can get in-person service and online loan assistance for conventional, FHA, VA and refinance loans, as well as first-time homebuyer education.

IIRR Management Services Discusses RealtyShares Acquisition (Crowdfund Insider), Rated: A

IIRR Management Services (IRM) claims to be one of the largest crowdfunded real estate investment firms in the world. IRM is owned by RREAF Holdings and iintoo Investments. The company recently took over management of Realtyshares’​ portfolio – once a prominent entrant in the real estate crowdfunding sector that unexpectedly collapsed in 2018 stunning the industry. Today, IRM claims over $1.5 billion in combined assets salvaged from RealtyShares.

CrowdStreet: A Platform that Democratizes Real Estate Investment Opportunities While Diversifying Portfolios (CardRates), Rated: A

CrowdStreet indicates a total average annual return rate of 25.5% across all fully realized deals, according to the company website. The company believes markets are stronger when they are more accessible, transparent, and efficient.

Since CrowdStreet launched in 2014, the company has posted over 360 projects on its Marketplace and has raised more than $800 million from thousands of investors, he said.

The platform allows accredited investors to diversify their portfolios by investing in individual projects or funds for as little as $25,000.

Finitive Receives $ 2M in Venture Debt from Silicon Valley Bank (FINSMES), Rated: A

Finitive, a NYC-based financial technology platform providing institutional investors with direct access to alternative lending investments, closed a $2m venture debt.

Bitcoin IRA to Launch Interest-Earning Crypto Accounts (Altcoin Buzz), Rated: A

Bitcoin IRA has partnered with the leading crypto trading and lending firm Genesis Capital to launch interest-earning cryptocurrency accounts.

The crypto trading firm will accept Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and ZCASH.

Crypto-powered foundation Rippleworks expands its reach (Devex), Rated: A

Galen and Larsen, who built the online lender E-Loan together, are both interested in broadening the perspectives of Silicon Valley executives who might otherwise be detached from ways to make an impact on the rest of the world.

Fintech Innovator Fundbox Named to Prestigious IDC FinTech Rankings by IDC Financial Insights (Yahoo! Finance), Rated: B

Fundbox, the B2B payments and credit network designed to facilitate and accelerate B2B commerce at scale, announced that the company ranked #92 on the 2019 IDC FinTech Rankings.

Beware Online Loan Calculators (WSJ), Rated: B

According to a study published online in the Journal of Behavioral and Experimental Finance in June, borrowers unconsciously could be manipulated into choosing a more expensive loan, depending on the calculator’s default settings.

United Kingdom

Shares in Funding Circle up over 10 per cent, after loans under management jump by more than 30 per cent (AltFi), Rated: AAA

Shares in peer-to-peer lender Funding Circle climbed over 10 percent after its loans under management soared 31 percent to £3.7bn, but the company cautioned of “an uncertain economic environment”.

It said loans under management had grown to £3.7bn compared to £2.8bn the year previous.

Funding Circle reported that loan originations were up from £1.6bn in 2018 to £1.8bn in 2019.

FundingSecure goes into administration (P2P Finance News), Rated: AAA

FUNDINGSECURE, the peer-to-peer pawnbroker and property lender, has gone into administration.

FundingSecure administration not a ‘reflection of P2P as a whole’, claims major platform (Bridging and Commercial), Rated: A

Jonathan Avery-Gee, Edward Avery-Gee and Daniel Richardson at CG & Co have been appointed administrators of the company and are working closely with the FCA.

Stuart Law, CEO at Assetz Capital, claimed that smaller P2P lenders were “clearly struggling to keep up”.

Assetz chief rules out purchase of FundingSecure loanbook

Industry raises concerns as Funding Secure enters administration (Mortgage Introducer), Rated: A

The collapse of the P2P firm has left around 3,500 investors facing an unclear future as the administrator works their way through the loans.

Starling Bank Raises £30 Million to Fund its Expansion as it Approaches its Millionth Account (The Fintech Times), Rated: A

Starling Bank, the UK digital bank, has raised £30 million in a new funding round. Merian Chrysalis Investment Company Limited is leading the round with an investment of £20 million, while Starling’s existing investor, JTC, has added a further £10 million.

Andrew Lawson joins Oodle Car Finance as chief product officer (Asset Finance International), Rated: A

Oodle Car Finance has appointed Andrew Lawson as chief product officer.

He joins from Zopa, the world’s first peer-to-peer lender, where he spent five years as chief product officer responsible for business growth during a period of expansion that saw the brand become the UK’s largest online open market lender.

Celsius Network Now Supports Tether At 12% Interest (CryptoBriefing), Rated: A

Celsius Network will begin supporting Tether (USDT), the largest stablecoin in the market, in its interest-earning wallet. That will enable users to leverage their holdings in order to receive a passive income.

Wayfair, Klarna bring flexible payments to UK shoppers (The Paypers), Rated: A

Klarna’s range of flexible payments are available to shoppers online at Wayfair.co.uk, with additional new features on Wayfair.de. Joining Klarna’s partner list, Wayfair customers across the UK now have control over how and when they pay for their purchases, with payments options such as Pay later and Pay in 3.

Six bids made for stricken reseller (Channel Web), Rated: B

Six offers have been made for welsh education reseller Gaia, which fell into administration earlier this year.

A number of lenders were also revealed to be owed hundreds of thousands of pounds, with White Oak UK and Funding Circle owed £703,000 and £500,000 respectively. HMRC is owed £866,148.

Capitalise.com launches partnership with iwoca and a high street bank to enable instant funding quotes for SMEs (Fintech Finance), Rated: B

Capitalise.com, the business funding platform for accountants, has today announced a partnership with small business lender, iwoca, and a high street bank, to launch Instant Offers. The partnership enables accountants to receive instant quotes on funding applications for their clients. Accountants benefit from offering their clients exceptional customer service with instant quotations and eligibility on suitable financial products whilst lenders can onboard high credit quality businesses, faster.

China

The Meteoric Rise and Spectacular Fall of Peer to Peer Lending in China (Lend Academy), Rated: AAA

I first wrote about the Chinese p2p lending industry later that year and introduced the west to CreditEase, the company that was the largest p2p lending platform in the world. Over the next couple of years the industry thrived with thousands of platforms launching and the total loan volume skyrocketing to over $150 billion in 2015, which was four times the loan volume of 2014.

China’s Biggest Ever Financial Scandal

We got the first inkling that something was not quite right when China was rocked by the biggest financial scandal in its history. Ezubao, one of China’s largest p2p lending platforms, collapsed as it was revealed the business was nothing more than an elaborate Ponzi scheme. Around 900,000 investors collectively lost $7.6 billion in what was the second largest Ponzi scheme the world had ever seen (Madoff being the largest).

There Will Be No LendIt China in 2019

We have held LendIt China every year since 2016 in Shanghai and I am sad to report that in 2019 there will be no event. While we have expanded beyond online lending it still represented a significant part of our business in 2018 but given the recent challenges we expect no lending companies will be interested in speaking, sponsoring or even attending this year. So, we made the difficult decision to cancel the event. We will regroup in 2020 and hopefully will be able to bring our unique event back to China.

Chinese Regulators Forcing More P2P Platform Closures With Stricter Rules (Business Times), Rated: A

The newly imposed rules by the China Banking and Insurance Regulatory Commission (CBIRC) will mainly be targeting online P2P lending companies. These companies often entail high-risk lending activities that result in massive defaults, suicide, deaths, and illegal debt collections.

Since 2017, the country has had an estimated $692.8 billion in bad loans. The sector has tried to dispose of these bad loans as best they can through different methods.

China’s Incredible Shrinking P2P Lending Industry (Caixin Global), Rated: A

The draconian cleanup campaign of China’s scandal-ridden peer-to-peer (P2P) industry has led to a three-year implosion that has put the sector almost back to where it was in 2014.

The number of functioning P2P lending platforms fell to 646 in September, a decline of nine compared with August and the lowest since early 2014 when the industry was booming, data compiled by Wangdaizhijia, an online lending research portal, show. The scale of the drop has been dramatic — at its peak in November 2015, the sector had more than 3,600 platforms.

European Union

Digital lending platform Roostify plots expansion with new investment from Santander (Housingwire), Rated: AAA

Roostify, which powers the digital mortgage platforms of JPMorgan ChaseTD BankGuild MortgageHSBC Bank USA and more, is plotting an expansion in the U.S. and internationally thanks to a new injection of funding from Santander Group and others.

International

Tax Rates on P2P Lending – Low versus High (P2P-Banking), Rated: AAA

In the countries colored in black the income tax rate is applied on interest earned on p2p lending investments. That means the individual rate of taxation depends on the other and overall income of the investor. For example in the UK the tax bands are 20%, 40% and 45% dependent on overall income. In Ireland tax bands are 20% and 40%.

Source: P2P-Banking

Banks That Can’t Keep Pace With Fintech Firms Risk $ 88 Billion Revenue Loss (Forbes), Rated: AAA

Days after it was announced that banks across the world are currently in a ‘do-or-die dilemma,’ Accenture’s 2019 Global Payments Survey reveals that 60 percent of the participants believe they will lose up to 15 percent of payments revenue – $88 billion – in the next three years after being displaced by emerging, competing financial services players.

38 percent of respondents said that big technology companies pose a competitive threat and 32 percent of those surveyed feel the same about fintech firms, which makes sense with the latter attracting nearly $11 billion through over 800 deals between 2016 and 2018.

Asia

Fintech companies need strict law to protect consumers, ensure fair business (The Jakarta Post), Rated: AAA

Indonesia’s growing financial technology (fintech) companies have called on the government and legislators to issue a new law to ensure fair business for and better protection of both the industry and consumers. The Indonesian Fintech Lenders Association (AFPI) said that fintech companies, especially those involved in peer-to-peer (P2P) lending or online lending, needed a stricter regulation to ensure that all the stakeholders, such as borrowers and investors, would receive better protection.

The Explosion of FinTech in Indonesia and how Companies like Gojek and Weyland Tech, Inc. are Winning (Investor Ideas), Rated: A

According to one recent report, “Indonesia’s fintech industry is in the midst of a period of significant growth. P2P lending recorded a triple-digit increase in 2018, while e-payment services have grown more than six-fold since 2012, prompting a surge of new foreign investment into a vibrant and increasingly diverse start-up community.”

Canada

Luge Capital raises $ 85M to invest in Canadian fintech startups (TechCrunch), Rated: AAA

There are 831 financial technology startups headquartered in or operating in Canada, according to data collected by Fintech Growth Syndicate, yet only a handful of venture capital funds specializing in the region and sector.

Luge Capital, a fintech and AI-focused venture capital fund headquartered in Montreal and Toronto, is looking to close that gap. The firm has raised $85 million for its debut fund and plans to make seed investments as small as $150,000 and as large as $2 million.

Authors:

George Popescu
Allen Taylor

The post Thursday October 24 2019, Weekly News Digest appeared first on Lending Times.

Friday April 21 2017, Daily News Digest

mobile payments

News Comments Today’s main news: Wealthfront to start lending money. Orange,telecom and ISP company, is launching a bank. Avant files new ABS-15G form with SEC. RateSetter investors have lent 400M GBP to SMBs in UK.  Yirendai makes progress with ABS loan structure. Today’s main analysis: Alipay, WeChat processed $3T in 2016, 10x the volume of Paypal. Today’s thought-provoking articles: […]

mobile payments

News Comments

United States

  • Wealthfront to lend money. GP:”A very interesting move. SoFi is moving from lending to wealth management. Wealthfront from wealth management to lending. The vision is likely to be a single point of contact for all financial needs of the population segment which prefers to interact digitally with their financial institutions. Other potential services that could be added : life insurances ( SoFi has it), other insurance (nobody has it to my knowledge), payments (combine Paypal and your accounts), checking or cash management, savings, mortgages (SoFi has it again), credit cards for payments (UpLend has it for example for non primes), etc. The opportunities in fintech/online lending are still immense. ” AT: “Personally, I’ve never understood the concept of borrowing your own money, but there is a market for it, I suppose. Life insurance policies and retirement accounts can do it, so why not robo-advisors?”
  • Three steps lenders can take to mitigate synthetic ID fraud. GP:”A must read especially for new lenders. Fraud rings tend to attack new lenders first and the most”. AT: “This may very well be the biggest threat to the online lending industry. I have confidence that some very smart people will figure out how to defeat it. My crystal ball says it will likely be a machine learning algorithm that does the trick.”
  • Avant Loans Funding Trust 2017-A. GP:” ABS market continues to be healthy and growing.”
  • Key trends in equipment finance. GP:” Supply chain financing is relatively untouched and I think a great opportunity for digital lenders.”
  • Yieldstreet surpasses $100M loans funded in less than 8 quarters. GP:”Congratulations.” AT: “Great achievement. Congratulations.”
  • Americans may not know which real estate investment types have performed best. AT: “The general population probably doesn’t know, but I would hope that real estate investors know.”
  • Brelion acquires PeerRealty. GP:” A real estate tech company acquiring a real estate crowd funding company, a very interesting move. Not sure if the acquisition was for cash or just a token acquisition.
  • Harvard recommends consumer finance policy overhaul. AT: “When you have a paradigm shift in technology and business practices, a new look at regulation is necessary.”
  • 4 Fintech tools coming out of New York Tech Day. GP:”Very interesting innovation.” AT: “I like the concept of a kid’s bank.”
  • eOriginal names Brian Maddocks CEO.
  • Trust Stamp invited to Money 20/20 Startup Challenge.

United Kingdom

European Union

  • Orange is launching a bank. GP:”This is a very interesting move for a large company. GE and other large companies have and have had banks to help in their b2b sales of equipment usually. I am not aware of many B2C companies with small ticket items ( phones, phone bills, ISP, etc…) who offers a bank. I do think that they can leverage the data they have , brand, customer reach and much more. Imagine if each Orange cell phone cutomer receives pre-approved offers underwritten by the data from their bill payment history, their phone usage and their meta data…”

International

China

Canada

News Summary

United States

Robo-Adviser Wants to Lend You Money, Not Just Manage It (Bloomberg), Rated: AAA

Wealthfront Inc. said in a blog post Wednesday that it will offer loans, calling the move a first among robo-advisers, which are known for wealth management using automated investing platforms. By providing clearing and custody services with RBC Capital Markets LLC, clients with at least $100,000 in a taxable account can take out loans of as much as 30 percent of their account value, using their portfolios as collateral.

To get a loan, Wealthfront’s clients must meet the balance requirement in a taxable account, which eliminates the majority of its customers. The credit program could introduce more risk for the firm, according to George Pearkes, an analyst at Bespoke Investment Group LLC.

Other robo-advisers have looked into lending as well, but decided to focus on different services first.

Three Steps Your Lending Operation Should Be Taking to Mitigate Synthetic Identity Fraud (Biz Journals), Rated: AAA

Synthetic identity fraud is emerging as a key migration point in the post-EMV era, as criminals refocus on application fraud and exploit easy access to sensitive consumer data.

At an alarming rate, fraudsters are using that data to create fake personas – hybrids of stolen and fabricated personal information – and open new lines of credit. In fact, the share of financial losses stemming from application fraud, which includes the creation of synthetic identities, grew by 42% in the fourth quarter of 2016, according to ACG data. Fraudsters’ migration to application fraud is particularly impactful because perpetrators behave like true customers for months or even years before “cashing out,” leaving lenders with massive losses and little recourse for collection and recovery. To make matters worse, a single fraudster can cultivate tens or even hundreds of high-value accounts, greatly increasing financial exposure.

The lending community is mobilizing against synthetics. But a series of obstacles stand in the way: With no true customer, fictitious accounts can be virtually impossible to pinpoint; conventional countermeasures are ineffective; and reporting is underdeveloped, obscuring the true scope of the problem.

A potential solution – cross-checking applicants’ information against Social Security Administration (SSA) records – is out of the industry’s reach, at least for now. The SSA’s existing verification service requires the written consent of the SSN holder, an impractical condition when dealing with synthetic identities. Regulatory reform to open up SSA records, either to lenders or the credit reporting agencies (CRAs), is moving slowly, and there’s no guarantee it will make the legislative agenda.

“SSA validation is considered the holy grail,” said Ira Goldman, Director of ACG’s Synthetic Identity Fraud Working Group, “but it could take years to orchestrate. In the meantime, the industry needs to find other solutions to mitigate mounting losses.”

Without collaboration with peer institutions, mitigating systemic fraud at this scale is virtually impossible. The good news is that the lending community is banding together to find solutions, as it has with more traditional fraud types. In March, ACG’s Synthetic Identity Fraud Working Group held its second meeting to promote industry collaboration on the issue. The introductory sessions have brought together fraud prevention managers and government relations personnel from more than 20 leading credit card lenders, along with payment network risk executives, the national credit reporting agencies, and industry trade associations.

Here are three risk mitigation strategies from the session you can apply to your lending operation:

1.   Strengthen Front-End Detection and Prevention

Massive credit losses aren’t the only financial risk associated with synthetic identity fraud: By the time a synthetic account defaults, the lender has invested potentially years’ worth of marketing, servicing, and other operational costs. Meanwhile, the fraudster has moved on to the next identity. While collections and fraud departments usually deal with the aftermath, lenders are increasingly looking to marketing, acquisitions, and underwriting teams as the first lines of defense.

“Risk detection is vital at each stage of the account lifecycle,” Goldman said, “beginning with more intelligent prospecting to avoid booking bad accounts in the first place.”

Lenders are refining their pre-screening processes to look for anomalies in applicants’ credit profiles and considering supplementing traditional, credit-based criteria with more robust data. The existence of employment information, payroll accounts, and utility records, for instance, can increase confidence that an identity is legitimate. There’s also a push to strengthen identity verification at account opening with knowledge-based authentication (KBA) and enhanced know-your-customer (KYC) techniques. Based on risk tolerance, lenders may queue suspicious applications for manual review, request additional proof-of-life documentation, or decide not to offer credit.

Lenders are also stepping up monitoring at the acquisition and account management stages to detect high-risk behavioral patterns. Warning signs include the velocity of applications submitted under a single name, requests to add a high number of authorized users to an account, and suspicious retail transaction patterns and money movement activity.

2.   Use Data Analytics to Learn from Synthetic Accounts

While synthetic identity fraud is not a new phenomenon, lenders are still developing and refining data-centric identification strategies. Collections and fraud departments are turning to reverse engineering – analyzing confirmed bad accounts to determine how synthetics are constructed and to identify behavioral patterns that signal malicious activity. This postmortem analysis can shed light on attributes lenders can use in fraud modeling and portfolio scoring to strengthen detection. It can also uncover a wealth of data elements – identity, location, and device information – that can be shared with front-end teams for use in pre-screening (a bad IP address, for instance, may be linked with multiple fictitious identities).

3.   Enrich Reporting and Information Sharing

With more robust internal reporting in place, the next logical step is to share information on bad accounts. In the near term, lenders should document known or suspected synthetic identities and report them to law enforcement and the CRAs, which can use the data to cleanse the ecosystem of known synthetics and investigate fraud rings.

“For lenders, there’s mutual benefit in removing bad accounts from the system,” Goldman said. “Information sharing is key.”

In the long term, fraud prevention managers envision a consortium model housing bad account data across industries, from banking to telecommunications, that lenders can use to cross-check applicants. This type of widespread data sharing, which ACG is working with charter members to develop, will require unprecedented collaboration across the industry and with external stakeholders.

Avant Loans Funding Trust 2017-A (SEC), Rated: AAA

We have performed the procedures described below, which were agreed to by Avant, Inc. (the “Company”) and J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC (collectively, the “Other Specified Parties” and, together with the Company, the “Specified Parties”) related to their evaluation of certain information with respect to a portfolio of unsecured consumer loans in conjunction with the proposed offering of Avant Loans Funding Trust 2017-A, Asset Backed Notes.

On April 14, 2017, representatives of the Company provided us with a computer-generated data file and related record layout containing data, as represented to us by the Company, as of the close of business April 13, 2017, with respect to 41,250 unsecured consumer loans (the “Initial Loan File”). At the Company’s instruction, we randomly selected 200 unsecured consumer loans from the Initial Loan File (the “Sample Loans”).

Further, on April 18, 2017, representatives of the Company provided us with a with a supplemental data file containing, as represented to us by the Company, the “representative mix indicator” and the “payment to discretionary income (PTDI (Looker)) percentage” for each of the Sample Loans (the “Supplemental Loan File”). We were instructed, by representatives of the Company, to append the Initial Loan File with the information set forth on the Supplemental Loan File. The Initial Loan File, as adjusted, is herein referred to as the “Statistical Loan File.”

From EX-99.1.

Key Trends in Equipment Finance – by the Alta Group’s Patricia Voorhees (LendIt), Rated: A

Thursday March 2 2017, Daily News Digest

alternative lending

News Comments Today’s main news: Funding Circle raises $100M . Upstart Raises $32.5M. Lendio offers MPL franchise program. Proplend gains FCA approval.  Monexo to start 1 min loan approval process. Today’s main analysis: FT Partners’ CEO Monthly Alt Lending Market Analysis. Today’s thought-provoking articles: International P2p lending statistics. China to regulate P2P lending platforms. United States FC receives extra $100M from […]

alternative lending

News Comments

United States

United Kingdom

European Union

China

India

Asia

News Summary

United States

Funding Circle Receives Additional $ 100 Million From CIM Through U.S. Business Multi-Year Agreement (Crowdfund Insider), Rated: AAA

SME lender Funding Circle announced on Wednesday that Community Investment Management (CIM), an investment firm focused on marketplace lending, will finance an additional $100 million in loans to businesses originated through Funding Circle in the U.S. According to the online lending platform, the multi-year agreement will allow it to provide further injection of capital into the country’s small business sector.

Since its launch in 2010, investors on Funding Circle, which includes 60,000 individuals, financial institutions, government, and the listed Funding Circle SME Income Fund, have helped more than 25,000 businesses globally access $3 billion in transparent and affordable financing.

Lendio Announces First-of-Its-Kind Marketplace Lending Franchise Program (Benzinga), Rated: AAA

Lendio, the nation’s leading marketplace for small business loans, today announced it is expanding the reach and availability of its small business lending options with the launch of a new franchise program.

The Lendio franchise program complements the company’s core value of helping small business owners fuel the American Dream. Through this program, franchise owners across the country can ease the financial hurdles for small businesses in their local community. Lendio franchisees get access to Lendio’s marketplace and technology, comprehensive training, branded marketing tools and national advertising, partnerships, and access to Lendio’s franchise support team to help coach small business owners through the lending process.

Lendio currently has franchisees in five territories, with significant interest in many others. Partners Kyle Bohrer and Bryan Gealy, in Erie, Pennsylvania, joined Lendio as the first franchise owners. Bohrer has been in the small/mid-sized business marketplace for over 10 years. Located in the Great Lakes region, Bohrer has been working on saving Erie small business owners money on their shipping.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (March ’17) (FT Partners), Rated: AAA

Earlier this week, FT Partners announced one of the largest deals in 2017, Prosper’s $5 billion loan purchasing agreement with a consortium of investors that includes affiliates of Third Point, New Residential Investment and Soros, among others. This highly strategic transaction for Prosper aligns investor interest by including an equity structure tied to loan purchasing volumes. The transaction highlights FT Partners’ continued strong track record in advising on the most significant and complex deals across the FinTech ecosystem.

Introducing the First SaaS Lending Platform (Upstart Email), Rated: AAA

by Jeff Keltner, Head of Business Development, Upstart

Those that know my history at Google will understand why I’m excited to tell you about Powered by Upstart, a Software-as-a-Service offering derived from Upstart’s top-rated consumer lending platform. From rate requests through servicing and collections, this new service brings modern technology and data science to the entire lending lifecycle.

Our beginnings

Anna, Paul, and I founded Upstart to bring the best of Google to consumer lending. Upstart was the first platform to leverage modern data science and technology to power credit decisions, automate verification, and deliver a superior borrower experience. In 2014, we were first to launch next-day funding . As of today, more than 20% of our loans are fully automated and we expect this percentage to increase significantly through 2017. With more than 50,000 Upstart loans originated, we have the highest consumer ratings in the industry and have delivered industry-leading returns to loan investors. With Net Promoter Scores (NPS) in excess of 80, we’re excited about the impact we’re having.

Technology partner

FinTech is disrupting all areas of financial services. As a leading tech platform in marketplace lending, Upstart aims to partner with financial institutions rather than compete with them. Given the pace of change in lending, technology partnerships will be critical in the years to come, and Upstart aims to be a partner the industry can rely on.

But Powered by Upstart is not just software – it’s a turnkey solution that provides all necessary document review, verification phone calls, fraud analysis, and (optionally) customer service, loan servicing and collections.

Software-as-a-Service in lending

SaaS has grown exponentially in the last decade because of its obvious virtues: rather than buying, installing, configuring, hosting, and supporting software yourself, the software is delivered over the cloud. It’s more reliable and always up to date. Delivering cloud software can be challenging in any industry. Usability, reliability, and performance are the minimum to play, and effective change management is critical to success. As the team that delivered Google’s SaaS platform before it was called cloud, we understand these challenges.

Of course, the regulatory environment in lending raises the bar even higher. We’ve long demonstrated our commitment to trustful and compliant lending, and we’re likewise committed to delivering robust and compliant lending software. We’ll be at the LendIt show in New York City next week, so please come visit our booth to learn more about Powered by Upstart!

Klarna: Financing Better Customer Experiences (PYMNTS.com), Rated: A

Swedish payment processor Klarna has recently made news when it expanded the options and the channels that it makes its point of sale financing options available to.

Billingsley explained that in the case of GhostBed, the revolving credit product provided by Klarna helps turn a one-time mattress sale to its customers into a customer who comes back to purchase accessories.

According to Billingsley, that’s possible because it enables eligible consumers to make additional purchases with that same retailer without having to sign up for another loan or go through the financing process all over again for each subsequent transaction made.

Either the new purchases can be added to their existing credit account or they can simply use a different form of payment for the transaction.

Billingsley noted that the financing solution also works without any redirect to an external URL, so the consumer remains on the merchant site and within the brand experience when signing up.

Depending on the customer segment and even the merchant itself, utilizing Klarna’s full checkout solution isn’t exactly what they need. Which is why, Billingsley noted, the company is pushing its payment APIs, which allow merchants to add Klarna’s proprietary payment solutions directly into their existing checkout.

As for Klarna’s power users, the two biggest consumer populations are millennials and females in their mid-30s who are usually in charge of their family’s purchases.

Billingsley pointed out that many millennials today either don’t have a credit card or don’t like using one — their affinity for credit card brands and status is much different from previous generations. This makes millennials much more willing to use a payment option that allows them to break up payments over time for major purchases.

In the case of the young mother who manages her household’s income, also known as the Household CFO, she typically sees it as more convenient to make payments over time on a big purchase rather than putting a transaction on her debit or credit card.

Upstart Raises $ 32.5M (Upstart Email), Rated: A

It’s been three years since we launched the Upstart lending platform, and today we’re pleased to announce we’ve raised $32.5M to take our business to the next level. The funding round was lead by Rakuten, a global leader in internet services and global innovation headquartered in Japan, and by a large US-based asset manager. Existing investors Third Point Ventures, Khosla Ventures, and First Round Capital also participated. We’re particularly excited to have Oskar Mielczarek de la Miel, Oskar Miel, Managing Partner of the Rakuten FinTech Fund join Upstart’s Board of Directors.

With more than 50,000 loans originated, Upstart has the highest consumer ratings in the industry, has Net Promoter Scores (NPS) in excess of 80, and has delivered industry-leading returns to loan investors.

Prominent Fintech Investor & Prosper President Ron Suber Invests in Money360, Joins as Strategic Advisor (Crowdfund Insider), Rated: A

Ron Suber, Prosper Marketplace President and prominent Fintech investor, has taken a stake in Money360 – a fast growing real estate investment marketplace.  Suber will also play an active role as a Strategic Advisor to Money360 to help boost platform growth.

Suber explained;

“I have been investing in the loans from Money 360 for my personal family office for many months. I have enjoyed the risk-adjusted returns, investment structure and liquidity options. Upon completing additional due diligence, I have decided to personally buy equity in the company and become a strategic advisor to the management team/Board of Directors. 

Labor Dept proposes delaying new rule for financial advisers (Reuters), Rated: A

The U.S. Labor Department has taken a first step toward possible derailment or dilution of its controversial rule on retirement advice as it begins to re-examine it at the directive of President Donald Trump, according to a notice made public on Wednesday.

The department proposed a 60-day delay of the fiduciary rule, which requires retirement advisers to put the interests of clients ahead of their own. It was slated to take effect on April 10, but Trump asked the department to review the rule one more time for its impact on investors.

The proposed delay should have a “calming” effect on the marketplace, which had been “hanging in limbo” ahead of the April 10 effective date, said Denise Valentine, a senior analyst with Aite Group, which advises the financial services industry on regulatory issues.

California Hedge Fund Association (CHFA) Announces Rebrand to California Alternative Investments Association (CalALTs) (PRWeb), Rated: A

The California Hedge Fund Association (CHFA) announced that it has adopted CalALTs as its new brand name. The 1,200 member organization, which focuses on fostering growth and advancing the development of California’s alternative investment community, rebranded in response to the strong demand from a broader group of alternative investment managers and a new focus on bringing together and serving a wide range of alternative investment managers across the state of California and beyond.

The alternative investment community in California currently includes over 1,000 firms with approximately $1 trillion in assets under management.

Monroe Capital Selected as the 2016 Lower Mid-Market Lender of the Year by Private Debt Investor (BusinessWire), Rated: B

Monroe Capital LLC was selected as the recipient of the 2016 Lower Mid-Market Lender of the Year Award in the Americas region by Private Debt Investor, a global independent publication based in London covering the private debt and private equity industries. This is the fourth consecutive year that Monroe has been recognized by the Private Debt Investor Awards as a leader in the Lower Mid-Market, Unitranche and Senior Lender categories.

Monroe Capital provides “one-stop” financing solutions for buyout, recapitalization, growth, and refinance transactions in the form of senior and junior loans and equity co-investments, supporting both private equity sponsored and non-sponsored transactions and privately owned businesses. The Private Debt Investor Awards recognize firms in three geographic regions: the Americas; Europe, Middle East and Africa; and Asia-Pacific. Winners were selected by eligible voters among the private debt, private equity and institutional investor communities.

United Kingdom

Proplend gains FCA approval (P2P Finance News), Rated: AAA

COMMERCIAL property peer-to-peer lender Proplend is the latest platform to receive full authorisation from the Financial Conduct Authority (FCA).

Brian Bartaby, chief executive of Proplend, said the firm would now apply for ISA manager status from HMRC but said it was unlikely to have an Innovative Finance ISA (IFISA) ready this tax year.

The lowest risk is tranche A at zero to 50 per cent LTV, tranche B is 51 to 65 per cent LTV and tranche C is 66 to 75 per cent LTV.

Returns on the platform  currently range from five to 12 per cent and borrowers can access loans of between £250,000 to £5,000,000 for up to five years on an interest-only basis. The platform has funded £11.5m of loans so far and has recorded zero defaults.

LandBay, Proplend, & FundingSecure Named Top Three UK Property P2P Lending Platforms (Crowdfund Insider), Rated: AAA

On Tuesday, 4thWay writer, Matthew Howard released his very own assessment on the top three property P2P lending platforms are in the UK. The three he selected were LandBay, Proplend, and FundingSecure.

In his selection, Howard ranked the lenders based on their features and opportunities each platform can provide. He selected LandBay as his first pick because the lender has done over £10 million in P2P loans.

Proplend was selected as Howard’s second pick. He chose the lender due to the lender’s interest rates are even in the lowest-risk “tranche A” range from 5.5% to 7%; more than £10 million has been lent through Proplend; and users may easily identify loans that are for just 50% or less of the property valuation.

FundingSecure was Howard’s third pick. His selection was based on the lender’s record of doing around £100 million in P2P lending, more than half being property loans; offers bridging and property development loans; uses the current valuation, even on development loans; interest rate lenders earn is 12% on all these loans; the minimum that may be lent on each loan is £25.

Fintech startup Yielders becomes first to receive Sharia Compliance Certification in UK (EconoTimes), Rated: A

UK-based fintech startup Yielders announced that it has successfully completed independent Sharia Certification that was conducted by UKIFC and overseen by prominent scholars in the fintech sector.

Britain wants you to be banker, but are you ready for the risk? (The Memo), Rated: A

Plans to bring the risk and returns of peer-to-peer lending into one of Britain’s most popular investment products might provide some welcome relief for entrepreneurs … and some sleepless nights for those taking the plunge.

Following up on a Budget pledge, the government has now published a consultation on including peer-to-peer lending in individual savings accounts (ISAs).

Some 23m people in the UK have ISAs, which make the return from your savings and investments completely (or mainly) tax-free. But 16m people opt to hold just the safer version, cash ISAs, which are tax-free savings accounts with banks, building societies and National Savings & Investments.

Meanwhile, UK households, who hold around 60% of their financial wealth in cash, have borne the brunt of the Bank of England’s low-interest-rate policy. Before the financial crisis, in mid-2007, you could get a return of over 6% a year from a best-buy cash ISA. Today, the best is little over 2%.

However, peer-to-peer lending is more risky than putting your savings in a bank.

This is borne out by a recent poll. peer-to-peer firm Wellesley found that 47% of people surveyed said they would increase their investment in peer-to-peer lending if it could be included in an ISA and 44% if it offered better interest rates than traditional banks.

Another survey, by Opinium in 2012, found 49% of the population would be open to peer-to-peer lending as an alternative to traditional banking.

Advisers’ Robo Face Off (FT Adviser), Rated: B

So last week’s revelation that almost 6,000 people have used LV’s full automated financial advice service since it was launched in summer 2015, maybe shouldn’t be greeted with too much concern by advisers.

Also LV said it was “unable” to reveal how many of the 6,000 customers who paid the £199 for a full statement of advice went on to pay £499 to execute the statement of advice.

That is as maybe, but if our trip to the world of Back to the Future is anything to go by, human beings will – unless they become robotic themselves – still need face-to-face advice.

European Union

International P2P Lending Statistics February 2017 (P2P Banking), Rated: AAA

Funding Circle continues to lead ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 408 million Euro.

  • Funding Circle reaches 2 billion GBP in originations since launch
  • Fellow Finance crosses 100 million EUR since inception
  • Geldvoorelkaar hits 100 million EUR since inception

China

China looks to better regulate online P2P lending platforms (Technode), Rated: AAA

To help regulate the online P2P lending industry plagued by fraud and embezzlement, the China Banking Regulatory Commission published the Guidelines on Depositing and Managing Online Lending Capital (in Chinese, Guidelines for short) on February 24. In January this year, 1.8 million registered users were unable to withdraw their funds from platform operated by Qiyuan (short for 北京起源财富网络科技有限公司 or “Beijing Qiyuan Wealth Online Technology Limited” in English). The owner of the company, Fang Fan, embezzled the funds invested in the company’s eight different online lending platforms.

The Guidelines is the latest effort by the government to regulate the online P2P lending market which handled RMB 204 billion worth of transactions this February alone. It sets out three major basic principles regarding the safekeeping of the capital gained from P2P lending platforms. The first is that funds invested into the platforms by users must be deposited into commercial banks. The second stipulates that any transaction and reconciliation of the invested funds must be expressly approved and verified by both the debtor and creditor. Lastly, banks and online lending companies must carry out daily reconciliations and keep clear records of the transactions.

India

P2P market place Monexo to start 1 min loan approval process (India times), Rated: AAA

Lending marketplace Monexo has become the first peer-to-peer lending company in India to introduce a 1-minute loan approval process.

The company will leverage its proprietary, self-learning analytics platform as well as its tie-up with CRIF to access credit scores and other relevant financial data to aid in the loan disbursement decision making process, Monexo said in a release.

The borrowers can avail a loan of Rs 50,000 to Rs 5 lakh for tenure of 6 months to 60 months. There is no origination fee or prepayment fee. But the borrower must just pay a success fee of 2.5 per cent if the loan to him is approved and he decides to avail it.

The potential of blockchain technology to eliminate physical currency by ushering in virtual currencies like Bitcoin might be overstated, said Reserve Bank of India (RBI) deputy governor R. Gandhi.

While speaking about currencies, the central banker pointed out that to be effective, a currency needs to uphold concepts of confidence and anonymity at all times. However, after the initial rounds of usage, these concepts cannot be sustained in virtual currencies.

Talking about another major innovation in the financial technology space, marketplace lending or crowdfunding, the central banker noted that after the first few rounds of funding and successes, as a larger number of people get attracted to the concept, the system is likely to collapse. This makes marketplace lending unsustainable for a large number of people or amounts.

Asia

Tera Funding loans grow to top 100 bln won in 2 yrs (Yonhap News Agency), Rated: AAA

The chief of Tera Funding, a peer-to-peer (P2P) property financial service provider, said Thursday that the company’s accumulated loans have surpassed 100 billion won (US$87.6 million) since its launch two years ago.

Authors:

George Popescu
Allen Taylor