German Alternative Lending Market: An Overview

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it […]

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it is growing at a compound annual growth rate of 51.5% from 2016 to 2022, according to Research and Markets. North America is the largest P2P market in the world followed by Europe.

In 2015, the European alternative finance market grew by 92% to €5.4 billion.Though the UK is head and shoulders above the rest of Europe (representing 81% of the overall market in 2015 with a volume of €4.4 billion), continental Europe is rapidly catching up. Leading the charge for the rest of Europe are France, Germany, and Sweden.The combined market volume of the 3 countries was estimated close to 461.5 million Euros, representing roughly 74% of continental Europe’s P2P market.

Germany’s Alternative Lending Market

Post-Brexit, continental Europe has been in a frenzy as they try to attract beleaguered London-based fintech companies to establish a presence in their respective countries. Germany is trying to dethrone France from the top spot as the biggest alternative lending market in continental Europe. From 2013 to 2015, Germany’s alternative finance market volume increased from a meager €65 million to a healthy €249 million.

Source:

Most popular P2P Models

  • Peer 2 Peer consumer-lending – The most promising and fast growing model has been the consumer-lending model. From 2013-2015, this model has witnessed an average annual growth of 95%.
  • Peer 2 Peer business lending – Booming export-oriented economy and growing number of SMEs has allowed this model to witness significant growth in recent years.It grew by almost seven times in a span of one year, from a paltry €6.1 million in 2014 the transaction volume increased to € 48.2 million in 2015.
  • Equity-based crowdfunding – This is one P2P model that has endured quite a rough time lately and regulatory unrest has been the chief reason. This led to a fall from € 29.8 million in 2014 to €17.3 million in 2015.
Source:

Germany’s P2P Regulatory Environment

Though Germany is one of the biggest EU credit markets, the country has only very recently seen a surge in the alternative lending segment. The biggest factor for its slow growth stems from the stern and complex regulatory framework. Under German law (‘Kreditwesengesetz’), only banks may originate loans. To comply with this regulation, each P2P lending service has to partner with a bank that formally originates the loan and right away has to sell the rights to proceeds to the investors via the platform. This requires a complex legal (and technical) structure in which no direct contractual relationship is forged between the investor and borrower. This has also led to Germany’s P2P players being absent from the secondary loan market.

Apart from this, another challenge P2P players face is competition from traditional banks in terms of interest rates offered for unsecured installment loans. Currently, the monthly average real interest rate varies between 5.62% and 6.06 % p.a. in 2017. This hardly leaves any room for P2P lenders to compete with the banks. Use of credit cards is not as prominent as in the US or UK, so there is less opportunity to do high-interest refinancing.

But having said that, since the post-2008 financial crisis, traditional banks have lost public trust, and customers are now open to trying other financing alternatives. The rise of millennials and their reliance on smartphones and tablets is another reason the P2P market is beginning to thrive in Germany.

Leading P2P lenders in Germany

  • Auxmoney – A financial services company that provides an online peer-to-peer loan marketplace. It has raised $198 million in various rounds of funding. It is the largest P2P platform in the country. As of January 31st, 2016, the company had originated 441 million EUR in loans since launch with a monthly loan origination volume of 10.6M. It was founded by Philip Kamp, Raffael Johnen, and Philipp Kriependorf. It offer loans up to €25,000 with loan terms ranging from 12 to 60 months. They assign a proprietary credit score to each borrower and the rate of interest is based on that score.
  • Lendico – Founded in December 2013 by the incubator and venture capitalist Rocket Internet. Lendico is a multinational company that operates a peer-to-peer lending platform. The platform links lenders and borrowers with interest rates starting at 2.99 percent. Loans are available to borrowers for amounts between $1,360 and $34,000. Loan terms range from 6 months to 60 months. It also allows German investors to lend cross-border via Spanish loan listings. Arrowgrass Capital acquired it in July this year. It also operates in Spain, the Netherlands, Austria, Poland, and South Africa.
  • Zencap – Founded in 2014 by Dr. Matthias Knecht and Christian Grobe. Zencap used to offer business loans of up to €250,000 for durations ranging from 6 months to 60 months, and at the end of 2015 it was acquired by UK-based Funding Circle. Since inception, it has originated loans worth €66 million (approx).
  • SpotCap – Founded in 2014 by Jens Woloszczak and is based in Berlin. Rocket Internet backed Spotcap offers online business loans to companies in Spain, the Netherlands, the UK, and Australia. It has secured over €100 million in funding in various rounds. It has a high-profile list of investors that includes Rocket Internet, Access Industries, Holtzbrinck Ventures, Kreos Capital, Finstar Financial Group, and Heartland Bank.
  • Smava – Smava GmbH is a Berlin-based credit broker and founded by Alexander Artope. Since its launch in 2007, more than 15,000 investors and 6,000 borrowers have done business with each other through the smava.de credit market. It has raised almost $67 million in funding.
  • Main Funders – Commerzbank also launched its own P2P platform last year under the name Main Funders. It offers SME loans ranging from EUR 200 thousand to EUR 10 million for a maximum period of 5 years. Main Funders charges 0.45% of the loan amount from the borrowers and charges 0.2% from investors.

Apart from this, players from other countries are beginning to show interest in the German market. Recently, Finnish P2P credit marketplace Fellow Finance collaborated with Wirecard AG to offer loans to consumers in Germany. Likewise Advanon, a Switzerland-based P2P player, has started operating in the German market as well.

Conclusion

Even though the German fintech market is still in its infancy, the size of the economy makes it extremely lucrative. Considering it is one of the largest markets in EU, it is quite ironical that it is still untapped. But online lenders now seem to be focusing on Germany and are aggressively investing to lure borrowers. It is safe to say that the next few years will be very interesting for the German alternative lending market.

Author:

Written by Heena Dhir.

Thursday November 9 2017, Daily News Digest

credit cards

News Comments Today’s main news: Lending Club plots two ABS before end of year. Scott Sanborn speaks to Lending Club’s Q3 results. Alibaba funds WeLab. Aegon sees strong Q3. Prospa originates over $500M. Jumo wins Mastercard Foundation prize. Today’s main analysis: Top cities maxed out on credit card debt. Today’s thought-provoking articles: Did Lending Club just land another blow to […]

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News Summary

United States

Lending Club plots two ABS before year end (Global Capital), Rated: AAA

Lending Club is looking to price two more ABS deals this quarter, as the company plans to shrink its proportion of bank funding in the year ahead, executives said on a third quarter earnings call this week.

LendingClub Corp’s (LC) CEO Scott Sanborn on Q3 2017 Results – Earnings Call Transcript (Seeking Alpha), Rated: AAA

In Q3, we delivered $154 million in revenue, the highest in the company’s history, and up 34% year-over-year, and 10% sequentially. As importantly, we generated an EBITDA of $21 million. That’s almost 5x the level of last quarter. And we’ve narrowed our GAAP losses by almost $19 million, down to $6.7 million.

We processed a record number of applications, bringing the total borrowers served by Lending Club to over 2 million since launch and an improved efficiency from last quarter.

To put that into perspective, it took 8 years for us to reach our first 1 million, and we’ve helped an additional 1 million borrowers in just the last 2 years.

Although we anticipate some short-term volume effects as we calibrate our targeted marketing to the new model, the 58% annual growth in applications we saw in Q3, combined with the conversion efforts we now have in testing, give me confidence about our outlook in 2018.

Separately, we continue to broaden our mix of investors. As part of that, we delivered on our goal to complete a second securitization that included a total of 33 investors, 10 of which were new to the LendingClub platform.

Another Blow to Online Lenders (WSJ), Rated: AAA

Lenders should be judged not on how fast they grow during good times, but how they perform in periods like today when consumer defaults are ticking up. On that basis, LendingClub LC -15.93% looks unprepared and investors are right to be skeptical of the online lender.

LendingClub, the most prominent of the online lenders, said loans to certain borrowers at the low end of the prime credit spectrum “are not currently meeting our expectations.” It will start limiting these loans, which account for around 3% of total loans, and temporarily halt their sale to investors. It will also temporarily halt this lending, which accounts for around 3% of its total loans, and also adopt a new credit model that tightens criteria for these borrowers.

Online lenders’ credit models, which analyze various factors beyond traditional credit scores, are supposedly one of their core strengths. That loans are performing worse than expected at LendingClub is a sign the models might be flawed.

Source: The Wall Street Journal

TOP MAXED-OUT CITIES (Builder Online), Rated: AAA

LendingTree®, the online loan marketplace personified by Lenny the little green guy who has the banks crawling to him, released on Wednesday the findings of its study on which cities have the dubious distinction of containing the most consumers with signs of being maxed-out with their credit cards.

Credit card balances in the U.S. are now almost $800 billion, the highest since 2009, according to Federal Reserve data.

The Most Maxed-Out Places

#1 San Diego, California
Maxed-out score: 98
San Diego residents carry $6,629 in credit card balances on average. Nearly one in five (18%) have at least one card maxed-out. That’s second only to Oklahoma City, where 18.5% of residents have a maxed-out card. San Diego residents also use more of their credit lines overall, with 32.8% utilization.

#2 Los Angeles, California 
Maxed-out score: 93
Los Angeles residents also push their credit further than most, with 17.5% of residents having at least one maxed-out card. Those that do have a maxed-out card have 1.33 maxed-out cards on average. Balances average $6,472, a touch lower than their neighbors to the South in San Diego, helping utilization come in at 32.0% versus San Diego’s 32.8%.

#3 San Antonio, Texas
Maxed-out score: 92
San Antonio residents don’t face the same high cost of living that Southern Californians deal with, but they share an affinity for using their credit cards. The study findings revealed that 17.2% of San Antonio residents have a maxed-out credit card, and their total credit card balances average $6,474, similar to those among Southern Californians.

Federal Court Grants Class Certification in the LendingClub Case, But Denies Motion to Enjoin the State Court Case (The National Law Review), Rated: A

LendingClub is facing two parallel securities litigation cases stemming from alleged false statements it made in connection with its initial public offering (“IPO”).

With respect to the motion to intervene, the federal court granted the motion, for the limited purpose of allowing the state court case plaintiffs the opportunity to “set forth their argument for why they are the better representative” of the class.  Additionally, the federal court granted the motion to intervene “on the condition that they remain under this Court’s jurisdiction so that the undersigned judge may coordinate their action with the federal action to avoid any prejudice to absent class members.”

The California state court plaintiff then argued that class certification should be denied in the federal court case because certain theories of recovery that were dismissed in the federal court case remained active in the California state court case, making the state court case “superior.”

The federal court plaintiffs responded that their proposed class was in fact superior because the price of LendingClub’s stock was lower on the day they brought the federal suit.

The federal court declined to enjoin the California state court case.  However, it did express “concerns” with “the current form of state plaintiffs’ class notice, which fails to notify class members of the parallel federal action, the pendency of Cyan and its potential effect on their case, or the potential that the filing date of their suit could substantially limit damages.”

TRACEABILITY

Lastly, the federal court addressed an issue of first impression raised by LendingClub and the individual defendants regarding the traceability of the federal plaintiffs shares.

Because of this trading pattern, the traceability of the lead plaintiffs shares turned on whether the court adopted a “last-in, first-out” (“LIFO”) or “first-in, first-out” (“FIFO”) method to calculate holdings.

If the lead plaintiff’s transactions were accounted for using LIFO, all of its holdings as of the end of the lock-out period would remain traceable to the lock-up period.  If, however, the court adopted a FIFO calculation, the lead plaintiff would have been deemed to have owned no shares traceable to the IPO.  First, the court noted that “[w]hether LIFO or FIFO applies is a matter of first impression in the Section 11 traceability context.”  The court ultimately held that LIFO applied because the majority of courts use the LIFO method to estimate losses under the PSLRA when determining a putative lead plaintiff’s stake in the litigation, and “[i]t would be incongruous to measure losses by one method, yet measure traceability by the opposite method.”

Square Patent Suggests Potential Move Into Crowdfunding (CB Insights), Rated: A

Is Square considering a move into crowdfunding? A patent filed in March 2015 and granted in September 2017 suggests that might be the case.

The patent, titled “Mobile point-of-sale crowdfunding,” outlines a method for merchants to request crowdfunding from patrons based on their processing history.

The patent reads:

“Thus, the merchant has conveniently acquired a new espresso machine, customers may benefit from the new espresso machine, and investors have received a return on investment with the added security that the techniques described herein provides (e.g. underwriting of the crowdfunding project by the payment processing system and direct repayment to the investors from POS transactions processed for the merchant by the payment processing system).”

Source: CB Insights

Square Filed a Crowdfunding Patent that was Granted in September 2017 (Crowdfund Insider), Rated: A

Will Square ever pursue this concept? Probably not, at least not in the near term. They are still too busy figuring out vendor loans, which is probably are far more profitable vertical.

Wela Announces Record Year of Growth, Passes $ 1 Million in ARR (Marketwired), Rated: A

Wela today announces it has passed $1 million in annual recurring revenue (ARR), one of several achievements to mark 2017 as a record year of growth for the personal finance app. In the last two quarters, Wela doubled its total users and amount of linked accounts. Additionally, Wela Strategies, an extension of the app that manages investment accounts, passed $135 million in assets under management. Wela’s growth is evidence of a demand among millennials and young families for a personal finance solution that delivers advice in the way they want to receive it — through the convenience of an app that incorporates artificial intelligence (AI), through the skill provided by a human advisor, or a combination of the two offerings.

In 2017, Wela’s staff doubled in size, adding key management roles, including a chief technical officer, product manager and user experience manager. In an effort to better serve its rapidly growing user base, Wela plans to hire additional support for its customer experience, financial advisory and development teams in the next few months.

Acorns Buys Retirement Savings Fintech Startup Vault (Benzinga), Rated: A

Acorns, the fintech app that lets users automatically invest small amounts, announced Tuesday the purchase of Portland-based fintech startup Vault, which sells automated retirement investment plans to small businesses.

One financial fear scares millennials even more than death (CNBC), Rated: A

Death can be a frightening thought. But, according to a survey from financial-advice website Credible, there’s one thing that scares millennials even more: having credit-card debt.

Of the 500 Americans polled who are currently in credit card debt, more than 33 percent said debt is the scariest aspect of their daily lives.

The findings make sense, according to Credible. Americans hold more than $1 trillion in credit card debt and, among the respondents, the average debt is a whopping $5,290.

When asked how they got into debt, 34 percent said it was due to an emergency expense, 32 percent said their debt is due to a large one-time purchase and 4 percent said they choose not to pay their debt despite having the resources to do so.

Source: CNBC
Source: CNBC

Behavioral finance can attract fee-based assets (Investment News), Rated: A

Based on the latest research conducted at our annual ELEVATE fee-based advisory conference, one of the most important ways for independent firms to help advisers succeed in this kind of asset gathering is to help them lead with behavioral finance, and to complement that effort with client segmentation that captures qualitative and emotional factors for the adviser.

Aging pre-retirees and retirees need enhanced guidance in navigating the emotionally charged life planning decisions many of them increasingly face. Meanwhile, the highest long-term growth potential client segment, Millennials, generally opt for advice from individuals who build a truly personal connection with them, in a relationship that is as much social as it is professional.

Small Business Administration’s New York office tops billion in guaranteed loans (Westfair Online), Rated: A

Loans to small business owners backed by U.S. Small Business Administration guarantees increased 36 percent in number and 15 percent in dollar amount in the SBA’s New York district in the 2017 federal fiscal year, putting the district office over $1 billion in annual loan program lending for the first time.

In the seven-county lower Hudson Valley region, the SBA guaranteed 500 loans worth $191 million.

Goldberg said 36 percent of the region’s SBA loans were under $50,000; 42 percent went to minority-owned businesses; and 16 percent, or $160 million, went to women-owned businesses.

The top five lenders by dollar amount in the Hudson Valley were Empire Certified Development Corp. $40,726,000; Manufacturers and Traders Trust Co., $11,393,800; Noah Bank, a minority-owned bank headquartered in Elkins Park, Pennsylvania, $9.12 million; Celtic Bank Corp., based in Salt Lake City, $7,886,400; and Cross River Bank, based in Fort Lee, New Jersey, $7,768,100.

In Westchester County alone, the top five SBA lenders in number of loans were TD Bank, with 42; JPMorgan Chase Bank, 39; Wells Fargo, 14; Citibank and Manufacturers & Traders Trust Co., both with 11; and New Millennium Bank, headquartered in Fort Lee, with nine loans.

The top five lenders in Westchester County by dollar amount were Empire State Certified Development Co., $8,866,000; Newtek Small Business Finance Inc. in New York City, $5,917,400; Live Oak Banking Co., of Wilmington, North Carolina, $5,165,000; TCF National Bank, based in Wayzata, Minnesota, $4,995,500; and NewBank, $4,540,000.

Wells, JPM go mobile-only in pursuit of millennials (American Banker), Rated: A

There’s any number of reasons megabanks are rolling out mobile-first banking offerings, from evolving consumer demand to increased competition from fintechs to a significant generational transfer of wealth.

But the biggest motivation for banks like Wells Fargo to develop new smartphone apps may be to ensure they get clients early in their financial lives and keep them.

The ten-year ticking timebomb (The Finanser), Rated: A

I’ve been saying for so long now that banks need to replace core legacy systems that I’m boring myself, but here I go again. The reason I’m talking about it again is that, even though some disagree and think they can fudge the issue with plug-ins, I believe that the new competition will decimate banks that don’t replace their core systems.

If you are tech first, your singular focus is on agility. It’s about fast change cycles in a microservices architecture using a SDK (software developer kit) network of APIs (Application Programming Interfaces). It’s about speed, change, service, updates, vision.

If you are finance first, your singular focus is on stability. It’s about slow change cycles in a monolithic architecture using control systems and sign-off structures that avoid any exposures. It’s about risk, security, stability, control, management.

The good reason why banks make bad fintech partners (American Banker), Rated: A

Banks admit it — they are annoying fintech partners.

But, bank executives counter, fintechs are no treat either.

To manage risk and protect customers, a big part of the bank’s job is to build a “governance structure” on top of the technology that fintech executives have built.

Bankers also said that a key part of their role in fintech partnerships is simply educating tech executives about what, exactly, banks do.

Keith Noreika from OCC: The US Banking Industry Needs More Competition, Not Less #Fintech (Crowdfund Insider), Rated: A

Acting Comptroller of the Currency Keith Noreika delivered a speech today discussing the US banking industry. In the speech, Noreika makes an important point: US banks need more competition, not less. He also intimates that mixing commerce and banking can deliver benefits to consumers. Take this one step further, and Noreika is indicating big tech, like Amazon, Apple, Google, Facebook and more, should be allowed to become banks.

“Meaningful competition could have a number of other positive effects besides tempering the risk concentrated in having just a few mega banks. It could make more U.S. banks globally competitive and promote economic opportunity and growth domestically. For banking customers, particularly those underserved by traditional banks, more competition could result in better banking services, greater availability, and better pricing. If a commercial company can deliver banking services better than existing banks, we hurt consumers by making it hard for them to do so.”

Mr. Cooper Invests in Homeowner’s Insurance Platform Matic Insurance (CoverageR), Rated: B

Mr. Cooper, the nation’s largest non-bank mortgage servicer, today announced that it has led the Series A funding round in Matic Insurance, a digital insurance agency whose technology enables homebuyers to obtain homeowner’s insurance seamlessly during the mortgage process .

Matic’s insurance marketplace will enable Mr. Cooper to provide customers a convenient and modern way to shop for insurance while helping them obtain competitive insurance policy quotes and bind within minutes instead of days, all part of a digital mortgage application interface planned to launch in 2018.

LendUp Hires First Chief Financial Officer, Announces Significant Growth Milestones (PR Newswire), Rated: A

LendUp today announced that Bill Donnelly, former VP of Global Financial Services for Tesla, has joined as its first CFO. The company further strengthened its leadership team with the addition of a General Manager for its loans business and a Chief Data Scientist.

Donnelly is a 30-year consumer credit veteran with extensive experience in credit cards and loans products. Donnelly spent the last four years with Tesla as VP of Global Financial Services, responsible for providing financing solutions for Tesla’s customers across 29 countries. He also served as President of Tesla’s captive finance company, Tesla Finance LLC, which offered an industry-leading leasing program innovative for its consumer-friendly agreement and for being the first end-to-end electronic lease with the ability to execute contracts on a vehicle’s touchscreen.

In addition to Donnelly, Anu Shultes has joined as General Manager of the company’s loans business, which recently surpassed $1.25 billion in originations.

Dr. Leonard Roseman has joined LendUp as Chief Data Scientist, to lead a growing team that uses Machine Learning to improve financial inclusion through expanded credit access and lowering the cost of credit to borrowers.

Concord Servicing Corporation Names New President and COO, and Adds New CFO (PRWeb), Rated: B

Concord Servicing Corporation, a leading force in the financial portfolio servicing industry, has announced a strategic reorganization of its senior management team. Changes at Concord include the promotion of Executive Vice President Shaun O’Neill to President and Chief Operating Officer, and the addition of financial industry veteran Stephen Bertrand to serve as Chief Financial Officer.

Finance Professionals Consider Bank Branch Closings, Fintech (Utah Business), Rated: B

The Economist reports that, nationally, banks have closed over 10,000 branches in the past decade. In the first six months of 2017, 869 branches closed across the U.S.

Mobile banking apps on phones have become the new ‘branches’ even as some brick-and-mortars have shuttered, continued Roger Shumway, EVP of Bank of Utah. “I don’t think branches have declined, they’re just in your hand,” he said. “For community banks, the niche you see in Utah is that they can talk to a real decision-[making] person. If they get into an issue, there’s a face, and [an app on] a phone that they love.”

“We see overall that there’s been a 30 percent drop in branch transactions, but if you look at the overall transactions including electronic, transactions are actually up,” said Zupon.

United Kingdom

Coutts claims Facebook is financial adviser of the future (FT Adviser), Rated: AAA

A combination of the rise of robo-advice and the habits of millenials could mean social media platforms such as Facebook could become major players in the financial advice market in the future, according to Coutts.

He noted that Facebook already has a service allowing individuals to make payments, and said financial advice may be a next step for the social media giant as it seeks to grow.

Analysis from IRN Consultants highlighted recent research which showed each new robo-advice customer signed up is losing the company £162.50 on average in the first year and only making £17.50 in subsequent years.

One of the companies the report pointed to was Nutmeg, whose accounts for 2014 showed revenues of £635,000 compared with operating expenses of £5.9m.

Taming the beast – the need for regulation in peer-to-peer lending (Financier Worldwide), Rated: A

Under existing Financial Conduct Authority (FCA) guidelines, peer-to-peer (P2P) lenders operate within a virtually unregulated space. While this is not damaging in itself, it does create a number of risks, as the FCA has acknowledged. The most significant of these risks are that as companies become more sophisticated, their resemblance to traditional financial institutions increases, but their regulatory obligations do not.

Over the past year, there has been a noticeable rise in the number of P2P lenders using low rates as an advertising measure. Unlike credit card providers that must give 50 percent of all applicants the headline rate they advertise, P2P providers can simply pick a rate and then advertise it, as, unlike their counterparts, it is very difficult for the legitimacy of their offer to be checked.

It is clear that there is a requirement for greater industry guidelines, so it can sometimes seem mystifying that bespoke regulations have not already been put in place. Simply put, this is because the P2P industry is developing at a much faster rate than the regulatory bodies are acting.

Challenger bank teams up with direct lending fund (AltFi), Rated: A

The RM Secured Direct Lending investment trust has signed a Revolving Credit Facility of £10m with challenger bank OakNorth.

Yolt announces integration with Starling Bank (AltFi), Rated: A

The money management app backed by ING has integrated with its first mobile-only bank, adding Starling Bank to its platform alongside incumbents.

Starling Bank marks the 29th bank, and first digital bank, to partner with Yolt using API integration.

New £20m fund to invest in companies helping the poor (Financial Times), Rated: A 

The Fair By Design fund will invest in companies tackling the so-called “poverty premium” — the extra costs the poorest pay for essential goods and services, such as energy, credit and food. About 6m households pay an average of £500 a year in higher charges.

The £20m fund was launched on Wednesday and hopes to raise £11m from companies, charitable foundations and rich individuals.

It will invest in companies tackling four areas: energy, finance, insurance — where the poor pay more because they cannot get credit or live in high-crime areas — and so-called “geo-based premiums” based on location.

Fair for You, an online lender, is one business seeking investment. The not-for-profit company offers cheaper loans to those with bad credit records, who go to rent-to-own providers such as BrightHouse, which an independent survey found charged more than £1,000 over three years for its cheapest washing machine. The regulator in October forced it to pay £14.8m compensation to 249,000 customers.

Committee considers how to help during Universal Credit roll out (ViewNews), Rated: B

COUNCILLOR Ros Kayes is calling on Bridport Town Council to support the local Citizens Advice Bureau as the roll out of Universal Credit in the town draws closer.

Cllr Kayes reported that Universal Credit would be rolled out in Bridport on December 4th and it is then when those claiming benefits will have to start the process of receiving the credit and will no longer receive any money from existing credit.

China

Alibaba funds lending startup WeLab to help it break out of China (Tech in Asia), Rated: AAA

Lending startup WeLab is flush with cash today after announcing US$220 million in its latest funding round. It operates WeLend in Hong Kong and Wolaidai in mainland China.

Online shopping giant Alibaba is among the investors, throwing in cash from the Alibaba Hong Kong Entrepreneurs Fund it set up in 2015.

China Financial Super Regulator Begins Operations (Caixin), Rated: A

A new cabinet-level committee that will coordinate various regulators to oversee China’s sprawling financial industry started operating, according to the state-run Xinhua News Agency.

The committee, known as the Financial Stability and Development Committee, held its first meeting on Wednesday, Xinhua said.

The committee will review a strategic plan of financial reforms; coordinate China’s monetary policy and financial regulation; and forge policies on financial risk management so as to maintain country’s financial stability, Xinhua said.

Will President Xi Jinping Let Markets Decide China’s Future? (Wharton), Rated: AAA

The outlook for reforming China’s developing financial markets and the banking system remains obscured, in part, by a lag in the timing for key appointments such as a successor for Zhou Xiaochuan, longtime head of the People’s Bank of China. Some newly appointed party leaders, including Xi’s close economic adviser Liu He, are thought to support more market-oriented reforms.

With the economy still growing at an annual pace of over 6% and financial markets seemingly on an even keel, Xi’s team can claim to have weathered the post-2008 financial crisis with few major hiccups. But rising levels of corporate, banking and government debt have prompted the International Monetary Fund to raise the alarm. Estimates of the ratio of non-performing loans to total lending in the banking sector range as high as 35%. Most economists and banking analysts say the real level is likely much lower.

The level of debt in the Chinese economy skyrocketed after Beijing unleashed record amounts of stimulus — at least 17.5 trillion yuan ($2.6 trillion) — to help fend off the worst impact of the 2008 financial crisis. That credit binge has not yet been fully digested. In the years since, the level of debt surged further, much of it as “off balance sheet” lending by so-called shadow banks that operate outside the state-dominated formal banking industry.

Moody’s Investor Service estimates that the size of shadow bank lending has more than doubled since 2012, growing more than 20% in 2016 to reach 64 trillion yuan ($10 trillion), or about 86.5% of China’s GDP.

European Union

Aegon Reports Strong Increase in Earnings and Capital Ratio in 3Q 2017 (Guru Focus), Rated: AAA

Net income increases by 31driven by US

  • Underlying earnings up by 20% to EUR 556 million reflecting favorable claims experience, higher fee revenue as a result of favorable equity markets, and lower expenses in US
  • Gain from fair value items of EUR 159 million driven by positive real estate revaluations and hedging gains in US
  • Charge from assumption changes and model updates of EUR 198 million caused by conversion of the largest block of universal life business to a new model
  • Higher underlying earnings, fair value items and realized gains drive increase in net income to EUR 469 million
  • Return on equity for the quarter increases to 8.9%

Strong increase in Solvency II ratio to 195%

  • Solvency II ratio increases by 10%-points compared with last quarter to 195%. Capital generation and benefit from divestment of UK annuity book more than offset interim 2017 dividend
  • Capital generation of EUR 809 million including favorable market impacts and one-time items of EUR 485 million
  • Holding excess capital temporarily decreases to EUR 0.9 billion driven by capital injection into Dutch business
  • Gross financial leverage ratio improves by 20 basis points sequentially to 29.2% as a result of retained earnings

Strategic highlights

  • Aegon launches mutual fund joint venture in Mexico
  • Robot processes customer requests to improve administrative efficiency in Dutch business
  • Aegon Asset Management receives top ratings for responsible investment
  • Launch of mobile- and user-friendly global careers site

French Lending Platforms Adopt Common Performance Indicators (Crowdfund Insider), Rated: A

On 8 November 2017, the French Crowdfunding Association Financement Participatif France released the common set of performance indicators that member platforms specializing in loans, mini-bonds (a debt instrument specific to SME lending marketplaces) and bonds are invited to publish.

Key indicators give a clear picture of crowdlending risk and its cost:

  1. The share of borrowed capital already repaid. The older the loans, the higher the portion already repaid.
  2. The portion of interest due already paid. The older the loans, the higher the share of interest already paid.
  3. The net internal rate of return representing the annual profitability of the loans, net of known or proven losses at the date of calculation.
  4. The maximum possible internal rate of return representing the annualized yield of loans if all loans were repaid in accordance with the original schedule.
  5. The annual cost of risk represents the decrease in profitability caused by delays and defaults relative to the maximum possible rate of return. This is the difference between (4) and (3).
Source: Crowdfund Insider

German fintech company TIS raises $ 12 million from 83North (Tech.eu), Rated: B

Treasury Intelligence Solutions (TIS), a German fintech company, has raised $12 million in funding from 83North with Target Partners and Zobito.

International

Post-crisis restrictions on international banking can blunt growth prospects in developing countries (The Financial), Rated: AAA

Growing restrictions imposed on foreign banks operating in developing countries since the 2007/9 global financial crisis are hampering better growth prospects by limiting the flow of much-needed financing to firms and households, a World Bank report warned on November 7.

Rise of Developing Economy Banks

As advanced economy banks retrenched after the crisis, developing country banks stepped into the void and expanded across borders, accounting for 60 percent of new bank entries since the downturn. The result has been an increase in banking relationships between developing countries and regionalization of international banking operations.

For example, Africa’s Ecobank started in Togo and now has operations in 33 countries across the continent. It also has offices in Paris, Beijing, Dubai, Johannesburg, and London, which allows it to attract capital from wealthy countries to invest across Africa.

At the same time, the total asset size of the world’s largest banks increased by 40 percent, raising concerns that regulatory efforts since the crisis have failed to address the risk of banks that are too big to fail. Nearly 30 percent of developing countries have put in place restrictions on foreign bank branches. These curbs are depriving many economies of opportunities to access global credit that could benefit businesses and households.

How blockchain will change major industries (The Next Web), Rated: A

Real estate

There is a long string of middlemen (think brokers, titling agencies, inspectors, etc.) who slow down the process, amplify human error, and drive up the costs of doing business.

A public, distributed blockchain ledger that acts as a living database for all deals, negotiations, and settlements in the industry can overcome many of these shortcomings and reduce the need for “trust managers.”

One of the most exciting companies in the space is REALISTO, who employs the Ethereum blockchain to overcome many of these inefficiencies. Every investment made via their crowdfunding platform is mirrored on their blockchain and verified via smart contracts.

Banking

With the formation of blockchain consortia – or groups of financial institutions that collaborate to develop blockchain solutions – blockchain is already set to affect the way financial institutions process payments and handle settlements.

Traditionally, settlements between merchants and banks can take up to days. As consumers, you would have to wait three to five days for your payments to be cleared and verified behind the scenes after swiping your debit card at a local merchant.

By digitizing payments on a secured network, blockchain can serve the 2 billion unbanked people ignored by institutional banks. To use cryptocurrencies, all you need is a smartphone – no minimum account balance, credit history, or banks.

A Combination of Blockchain and Standard Verification for Effective Decentralized Lending (Live Bitcoin News), Rated: B

Blockchain lending is a development that is growing in popularity and offering alternative and less stressful ways of acquiring loans quicker and more efficiently even at lower interest rates.

Lendoit offers a robust system which overlaps between blockchain technology and conventional verification systems. Therefore, prior to borrowing, intending borrowers are subjected to standard KYC verification during application, while other aspects of the loan acquisition and repayment processes are based on an Ethereum Smart Contract.

Australia/New Zealand

Australian Online Lender Prospa Tops Key Milestone as it Originates Over $ 500 Million in Loans (Crowdfund Insider), Rated: AAA

Prospa has claimed first in the race to originate over half a billion in small business loans. The online lender states that over the past 12 months, Prospa has experienced dramatic growth, doubling the size of its loan book. Prospa has now provided credit to more than 12,000 SMEs in Australia and is the number one online lender in the country. Prospa will provide loans of up to $250,000 with a term of 3 to 24 months.

Peer-to- peer home lending restrictions in Queenstown welcomed (Voxy), Rated: A

Queenstown Lakes District Council’s (QLDC) announcement and vote to amend its District Plan, restricting the number of days some houses can be used for short term peer to peer lending through sites such as AirBnB, will go a long way to improving rental affordability and shortages for workers in the region.

The report commissioned by QLDC from Infometrics shows AirBnB occupied 14% of the District’s housing stock in the June 2017 quarter.

Asia

Asian fintech funding exceeds $ 1b in 2017 (Deal Street Asia), Rated: AAA

Asia experienced a solid increase in fintech investment in Q3 2017, with $1.21 billion raised across 41 deals. China accounted for more than 50 per cent of all Asian fintech investment at $745 million.

Notably, corporate participation in Asia fintech venture capital (VC) deals remained high at 22 per cent of overall round counts, although actual direct investment was minimal in 2017 with just $840 million invested YTD in associated deal value.

In Singapore, an Indo-Asia Pacific business hub, the fintech sector saw $25.3 million over six deals in Q3 2017, with the Monetary Authority of Singapore (MAS) continuing to be the key driver of the city-state’s fintech ecosystem.

Source: Deal Street Asia
Middle East

National Bonds challenges UAE’s ‘financial advice dilemma’ with new investment app (The National), Rated: A

Dubai-based investment company National Bonds is moving into the financial advisory space with a new digital app offering low-cost investment options, its chief executive has revealed.

The company plans to challenge poor advice, offered by UAE financial advisory firms, by launching an upgraded app in the second quarter of next year to offer customers access to a variety of investment choices – not just National Bonds, Mohammed Al Ali, its chief executive told The National.

Africa

Jumo Wins Third Annual Mastercard Foundation Clients at the Centre Prize (BusinessWire), Rated: AAA

The Mastercard Foundation today presented its third annual Clients at the Centre Prize to Jumo. The US$150,000 prize recognizes the innovative work of the South African-based company as a large-scale, low-cost financial services marketplace that serves poor people.

The Prize highlights best practices in financial services where client satisfaction is a priority. Close to 100 financial service companies around the world submitted entries to the competition.

The other two Prize finalists were ftcash, one of India’s fastest-growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans, and Destacame, a free online platform in Latin America that empowers users by giving them control over their data to build their financial capabilities and to access financial products.

Uganda: Accra Summit to Pave Way for Financially Empowered World (The Monitor), Rated: A

The Mastercard Foundation is hosting its fifth annual and largest Symposium on Financial Inclusion (SoFI) in Accra, Ghana.

The symposium, which ends today, champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.

Uganda launched its National Financial Inclusion Strategy (NFIS) 2017 – 2022 which seeks to reduce financial exclusion from 15 to five per cent by 2022.

Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

George Popescu
Allen Taylor

Monday February 6 2017, Daily News Digest

Germany crowdinvesting

News Comments Today’s main news: Fundrise IPO is over-subscribed. P2P lenders prevented from offering wholesale finance. Today’s main analysis: Online lending student loans favor the rich. Today’s thought-provoking articles: Dodd-Frank Retention Rule. Orchard’s online lending snapshot. Lend Academy interview with SoFi’s Mike Cagney. Seniors’ income boosted by sharing economy. United States Fundrise IPO over-subscribed. GP:” […]

Germany crowdinvesting

News Comments

United States

United Kingdom

European Union

Australia

China

United States

Fundrise IPO Over-Subscribed, Increases Max Share Offer Under Reg A+ (Crowdfund Insider), Rated: A

In a solid indication of confidence of the young real estate crowdfunding platform, Fundrise has received solid investor interest in its self-crowdfunding IPO under Reg A+. Demand was sufficient to compel management to increase the maximum funding round from 2 million shares to 3 million shares of Class B Common Stock. At a price per share of $5.00, this means Fundrise may now raise up to $15 million.

The offer was only made available to individuals that had previously invested via the Fundrise platform. As of today, the platform indicates  the “offering is paused due to high demand.”

Even Good-Guy Student Loan Startups Still Favor the Rich (BuzzFeed), Rated: AAA

Last February, the online lending company SoFi paid $5 million for a 30-second ad during the Super Bowl.

That wasn’t where it always landed. The original version of the ad included three more words: “You’re probably not.” But at the last minute, SoFi cut them. The message, a spokesperson told Adweek, wasn’t “authentic” to the company’s image.

The line may have sounded too crude for national TV, but it was actually a perfect encapsulation of SoFi’s brand. Most people aren’t in great financial shape, and SoFi was built around identifying the best and rejecting the rest.

The problem these startups purport to solve is, inarguably, a huge one. Forty-four million Americans currently owe more than $1.4 trillion in student debt. That’s $1.4 trillion dollars hanging over 44 million heads, and, for those who can’t repay their loans, it’s a lifetime of ruined credit scores and dodging collections agencies.

But although the marketing has changed, the demographics have not. Ratings reports from the past four months show that the average Earnest borrower is a 32-year-old with an annual income of $143,447 and monthly free cash flow after expenses of $4,524. CommonBond’s average borrower is 33 years old with an annual income of $159,028 and $5,996 in monthly free cash flow. SoFi’s average borrower, in the new bond with the AAA rating from S&P, is 34 years old, with an annual income of $170,260 and free cash flow of $7,088. (Most graduates saddled with student loan debt don’t fit that description, which is why applicants for private refinancing often need their creditworthyparents to cosign, a caveat that doesn’t get mentioned in the ads.)

Kevin Reed, chief operating officer at Peer IQ, a risk analysis firm focused on online lending, said the emphasis on new metrics is aimed at venture capital investors, not institutional investors. “When you’re pitching Silicon Valley, you need an angle, some competitive differentiation,” he said.

In fact, one of the strongest signals that these online lenders are focusing on elite borrowers is the fact that banks like Citizens, which jumped in to compete in the refinancing ring, have a similar customer base but don’t use cutting-edge technology to find them.

In marketing documents obtained by the Financial Times, the company told investors that refinancing is “how they find the best and brightest and prevent them from attaching to a bank or broker.” In the same documents, SoFi also stressed it has the regulatory freedom to zero in on niche markets such as “the ‘next five percent.’” (That’s a term for the wealth bracket just a couple of rungs below the “1%.”) The company has already become a “one-stop shop for high earners,” focused on offering HENRYs more products, like mortgages, and personal loans.

High ratings have driven the refinancing boom. But Jon Riber, senior vice president at the ratings agency DBRS, told BuzzFeed News that the new metrics are unproven and haven’t been through a full credit cycle, so DBRS determines ratings looking at traditional data like FICO scores: “When it comes to free cash flow and income, we consider that but it doesn’t go into our model for forecasting defaults,” he said.

When you drill down into the ratings reports, there are some signs that the type of borrower is changing. For example, although 65% of the borrowers in Earnest’s latest securitization are making more than $100,000, the largest category is $50,000 to $99,000, which represents 32% of the securitization.

Dan Macklin, the SoFi co-founder, also said he didn’t think it was fair to describe SoFi clients as rich. Although SoFi borrowers earn salaries above the national average, many of them live in expensive cities, so they are not as well off as they seem.

DeGisi from CommonBond acknowledged that the average new borrower looks similar to the average old one, but claimed that CommonBond has been able to substantially broaden its customer base.

Dodd-Frank Risk Retention (RR) Rule Effective Now (PeerIQ), Rated: AAA

President Trump signed a memorandum to review Dodd-Frank Act on Friday. Loosening bank regulation, as noted by WSJ, would return

  • a 5% interest in each class of the securitization (an “eligible vertical interest,” or “EVI”);
  • a 5% of the fair value of the securitization in a first loss, subordinate tranche (an “eligible horizontal residual interest,” or “EHRI”);
  • any combination of an EVI and an EHRI such that the sum of the fair value of the EHRI and the percentage of the EVI are equal to at least 5 percent of the securitization (a “L-shaped” retention interest).
  • The transfer and hedging restrictions for RMBS are different from those of non-RMBS securitization. For RMBS, they expire on or after the date that is (1) the latest of (a) five years after the date of the closing of the securitization or (b) the date on which the total unpaid principal balance (UPB) of the securitized assets is reduced to 25 percent of the original UPB of the transaction, but (2) in any event no later than seven years after the date of the closing of the securitization.

    For all ABS deals other than RMBS, the transfer and hedging restrictions expire on or after the date that is the latest of (1) the date on which the total UPB of the securitized assets that collateralize the securitization is reduced to 33 percent of the original UPB at deal close, (2) the date on which the total UPB under the ABS interests issued in the securitization is reduced to 33 percent of the original UPB at deal closing, or (3) two years after the date of the closing of the securitization transaction.

    The risk retention rule also contains an exemption for securitizations that consist solely of qualifying high-quality loans that satisfied specific underwriting criteria.

    We highlight two important benefits from issuer’s perspective for QM designation. Issuers are 1) insulated from claims and defenses by borrowers due to safe harbor, and 2) are not required to retain 5% of capital structure per the credit risk retention rule. For example, all loans in Majority owned affiliate (MOA) – CLO managers raise equity capital from 3rd party investors through the creation of MOA to finance the purchase of risk retention securities. MOA holds the retention interest, but the securitizers control the major economic decisions of the MOA in relation to the retention interest and any other assets owned by the MOA. Control is measured by ownership of 50% or more of the equity of an entity or ownership of any other controlling financial interest under GAAP.

    Capitalized Majority owned affiliate (C-MOV) – The C-MOA can function as an originator and comply with both US and European retention requirements. The C-MOA has an option to act as the asset manager. As the asset manager, it can originate a small proportion of the assets owned by the CLO and still earn a management fee. The first CLO of the year, Venture XXVI, employs C-MOA.

    Capitalized Manager Vehicle (CMV) – In this solution, instead of CLO Managers serving as asset managers, the CMV is the primary asset manager. The CMV then hires CLO Managers as sub‐advisors. The CMV receives management fees on retained interest. The key accounting consideration is ensuring the CMV is not consolidated by the CLO Manager. 

     

    Weekly Online Lending Snapshot – February 03, 2017 (Orchard), Rated: AAA

    Interest in the space has been accelerating since the first of the year. Late last week it was reported that the American Banker’s Association is looking for an online lending platform to help its members expand their digital lending offerings, and it was reported that Citigroup Inc., has launched its own online lending offering which will make loans of up to $1 million available to small businesses. Also, in small business lending news, Credibility Capital announced this week that it successfully sold a pool of whole loans using Orchard’s software to share and affirm the data of a seasoned loan portfolio with its regional bank client.

     

    Podcast 89: Mike Cagney of SoFi (Lend Academy), Rated: AAA

    In many ways SoFi has become the leading company in all of fintech at least in this country. They raised $1 billion in Q3 of 2015, the largest equity round ever in our industry by a considerable margin. Since then they have continued to add new products, break records and execute flawlessly.

    • How Mike explains what SoFi does today.
    • The part of the business that Mike is most excited about.
    • Where they are at in their student loan business today.
    • Why their unsecured consumer loan product is very different to others in the market.
    • The killer product they have in the real estate market.
    • How SoFi views their wealth management product.
    • Why they decided to move into life insurance.
    • How Mike feels about the Superbowl ad they did in 2016.
    • How they have been raising money recently.
    • What is it about SoFi that makes their securitizations so successful.
    • How they would handle a shutdown in the securitization market.
    • Where SoFi is focusing their resources when it comes to tech.
    • What SoFi customers have in common.
    • The international plans for SoFi and their expansion to Australia.
    • The future vision for SoFi and their place in financial services.

    OnDeck Capital COO James Hobson to step down (Reuters), Rated: A

    James Hobson, the chief operating officer of marketplace lender OnDeck Capital Inc, will resign from his role on March 15 to become chief executive of online insurance startup Attune, according to an OnDeck statement.

    Jason Altieri, Former GC at Lending Club, Lands at Roofstock (Crowdfund Insider), Rated: A

    Roofstock, an online marketplace that facilitates direct purchases of rental property, has announced the appointment of Jason Altieri as Chief Legal and Compliance Officer. Altieri was previously General Counsel at publicly traded marketplace lending platform Lending Club (NYSE:LC).

    Altieri left Lending Club last October where, according to his LinkedIn profile, he remains an advisor.

    Orchard Platform Predicts Super Bowl Outcome (Crowdfund Insider), Rated: B

    The population of New England, at approximately 14.7 million is 1.45 times the population of Georgia, approximately 10.1 million.  New total loan volume in the New England region has been proportionally somewhat higher since 2010; In 2016 through September, New England had 1.58 times the loan volume that Georgia does.

    Winner: Patriots

    Parteger says that during 2016 borrowers from New England had higher incomes and FICO scores, with lower debt-to-income ratios. Borrowers in Georgia had one percent lower revolving credit utilization.

    A larger percentage of borrowers in New England rent their home, a lower percentage have mortgages.

    Winner: Patriots

    During 2016, both regions experienced similar sized loans. Interest rates were slightly higher in Georgia. Loans in New England were graded slightly higher but loans in Georgia had lower risk grades.

    Winner: Tie

    Using 2014 vintage loans, Pargeter says the Georgia has a slightly higher charge-off rate and a big higher average interest rate so overall returns are a bit better in Georgia.  Falcons get the edge on this one.

    Winner: Falcons

    Orchard says the Falcons will win!

    United Kingdom

    Peer-to-peer lenders prevented from offering wholesale finance (This is Money), Rated: AAA

    Peer-to-peer lenders are to be prevented from offering wholesale finance because it is considered too risky for private individuals.

    But the City watchdog, the Financial Conduct Authority, is thought to fear this would mimic banking – but without the same protection for individuals or regulations for the firms involved.

    LendInvest Responds to the UK Government’s Modern Industrial Strategy (Crowdfund Insider), Rated: A

    Last week, UK Prime Minister Theresa May unveiled a modern Industrial Strategy proposal to help build on the country’s strengths and take on its weaknesses.

    LendInvest’s team noted they plan to get behind four pillars to help kickstart the country’s productivity:

    • Technology and innovation: LendInvest noted that the strategy makes a significant investment in research and development for nascent UK sectors, which includes an Industrial Strategy Challenge Fund.
    • Infrastructure: The online lender shared that there were some commitments, including investments towards road, rail and digital infrastructure to enhance mobility and connectivity for citizens and businesses across the country. 
    • Developing skills: LendInvest stated it encouraged the government to invest in skills initiatives for small and medium enterprises (SMEs) property professionals to ensure that would-be property entrepreneurs are equipped with the tools to get projects off the ground.
    • Supporting businesses to start and grow: The website that while the government has already established the Patient Capital Review, it also welcomes further funding from the British Business Bank and a commitment to helping the BBB in providing finance businesses outside of London and the South East. It also encourages the government to use the review into entrepreneur to better understand how to support property developers to grow their businesses.
    European Union

    Germany: Investment Crowdfunding Grew by 39% in 2016 (Crowdfund Insider), Rated: AAA

    In a publication created by Crowdfunding.de, the report, entitled “Marktreport 2016: Crowdinvesting in Deutschland,” states that investment crowdfunding grew by 39% during 2016 reaching €63.8 million.

    The sector was largely powered by a sharp increase in real estate crowdfunding that captured €40.3 million growing by 92.5% during the year. Platforms like Exporo, Zinsland, Zinsbuastein, Bergfürst and IFunded closed 48 real estate crowdfunding rounds in 2016. Exporo led the group with €21.4 million in funding.

    Funding for SMEs and start-ups hit €18.8 million which is approximately at the same level of 2015.  Companisto led this sector with just over 50% of funding or €9.4 million in total.

    Wonga strikes £60m deal to sell European unit to Swedish suitor (Sky News), Rated: A

    Sky News has learnt that Wonga will confirm that it has decided to offload BillPay, one of its most valuable units, to Klarna, a Swedish provider of e-commerce solutions.

    Talks between Wonga and Klarna have been taking place for several months, although they had appeared to falter several weeks ago owing to a number of domestic issues faced by the Swedish purchaser.

    The sale of BillPay will be the most significant international disposal undertaken by Wonga, which is striving to rebuild its business in the wake of a string of scandals and a regulatory crackdown in the UK.

    Wonga’s losses have totalled nearly £120m in the last two years following a string of scandals and costs associated with cutting hundreds of jobs.

    Australia

    Seniors enjoy significant income boost from the sharing economy (News.com.au), Rated: AAA

    New research by peer-to-peer lender RateSetter has found that 44 per cent of over-55s earn money through sharing economy services such as online marketplaces, ride sharing, renting out rooms to travellers and lending money via online platforms.

    RateSetter’s research found that over-65s are the fastest growing group of spenders in the sharing economy, paying an average $82 a month, but younger generations aged below 44 remain the biggest spenders at more than $110 a month.

    Online marketplaces such as eBay and Gumtree remain the most popular part of the sharing economy, with 54 per cent of people using them.

    China

    Company Slammed by Short Seller Over Deals Says More Coming (Bloomberg Markets), Rated: AAA

    Credit China FinTech Holdings Ltd. is planning more investments as it aggressively expands beyond its original loans and lease-financing businesses into online payments and peer-to-peer lending.

    The company, part of a consortium that offered to buy a stake in Ping An Securities Group Holdings Ltd. last month, is currently in talks with “multiple” financial-services companies based in Asia outside China, Chief Executive Officer Phang Yew Kiat said in an interview in Hong Kong on Wednesday.

    The firm’s acquisition strategy — which is now focused outside China — has been driven by HK$4.3 billion ($554 million) of funds that it raised over the past three years, Phang said.

    The acquisitions put Credit China onto the radar of short seller Anonymous Analytics, which expressed doubts over some of the investments in December, as it rated the company a “strong sell.” In a report, Anonymous alleged Credit China had engaged in “a number of questionable” investments, including the purchase of a stake in payment provider Shanghai Jifu, which the short seller said was linked to a “key individual” within Credit China.

    About 480,000 investors involved with problematic P2P lenders by Jan (Global Times), Rated: A

    Over the last three years, a growing number of investors have got involved with problematic P2P lending platforms, according to the report. The figure reached 478,000 by the end of January, accounting for 4.5 percent of P2P investors in China.

    About 64 platforms reported problems or suspended their business in January, including three lenders whose managers disappeared, the report said.

    Authors:

    George Popescu
    Allen Taylor

    Thursday September 29th 2016, Daily News Digest

    Thursday September 29th 2016, Daily News Digest

    News Comments Mail bag, from our community 1) I think far fewer people will read your content if you have to get it from a website rather than reading an email. For example, I read it on the underground when I can’t access the web. Why did you change it?” Lending Times answer: We have […]

    Thursday September 29th 2016, Daily News Digest

    News Comments

    Mail bag, from our community

    • 1) I think far fewer people will read your content if you have to get it from a website rather than reading an email. For example, I read it on the underground when I can’t access the web. Why did you change it?”
    • Lending Times answer: We have not made any changes that we are aware of lately. All the content should be in the email. If people are having issues please let us know and we will tackle it.
    • “2) You say on September 28th that the content on the Zopa securitization is only a “B” as it had been so well covered before. Until today most of the coverage, except the Fitch report, has been uninformed rubbish, such as the Business Insider piece. The really interesting stuff, like the pricing, which is at record low spreads, only came out that day but you didn’t cover it, or at least not that we saw. “
    • Our reader is entirely right and I apologize. Indeed  I had not seen the interesting data our reader is mentioning here. I did search for it and found nothing. Please, when important content comes out do not hesitate to point it out to us. We will make sure to cover it. And in the meantime we are redoubling our efforts to cover Zopa’s securitization data today.

    The Rush Summary

    United States

    United Kingdom

    European Union

    Canada

    Hong Kong

    India

    News Summary

    United States

    Goldman Says It Can Beat Fintech Ventures With Online Loan Terms, (Bloomberg), Rated: AAA

    Goldman Sachs Group Inc., the Wall Street investment bank pushing into online consumer lending, expects it can make loans on more competitive terms than Silicon Valley upstarts that pioneered and dominate the business.

    Using deposits to fund loans — rather than drawing on outside investors — will give the firm more leeway when setting terms and fees, Stephen Scherr, head of the company’s banking operations, told an industry conference in New York on Tuesday.

    “We view this as a balance-sheet activity,” he said. “That will avail us of a certain flexibility in the design of the product.”

    In April, it completed the purchase of General Electric Co.’s online bank, adding $16 billion of deposits. The securities firm has since started a website where customers can open an account with as little as $1.

    Its lending platform plans to make unsecured loans online to consumers with strong credit histories for purposes such as debt consolidation, a person familiar with the matter said last month.

    RiverNorth Launches U.S. Pure Play Marketplace Lending Closed-End Interval Fund, (Business Wire), Rated: A

    RiverNorth Capital Management, LLC (“RiverNorth”), a boutique investment management firm specializing in opportunistic strategies, today announced the launch of RiverNorth Marketplace Lending Corporation (NASDAQ:RMPLX) (the “Fund”), a registered 1940 Act closed-end interval fund dedicated to the rapidly growing marketplace lending (“online lending”) asset class.

    The Fund will invest in a diverse mix of marketplace lending sectors, including unsecured consumer, small business, and specialty finance loan segments. The Fund’s investment objective is to seek a high level of current income.

    RiverNorth Capital Management, LLC is an investment management firm founded in 2000. With approximately $3.4 billion in assets under management, RiverNorth specializes in opportunistic investment strategies in niche markets where the potential to exploit inefficiencies is greatest. RiverNorth is the investment manager to multiple registered and private funds.

    Pursuant to Rule 23c-3 of the 1940 Act, the Fund must make a quarterly repurchase offer of at least 5% of the Fund’s outstanding shares. The Fund’s Board of Directors will set the actual level of the quarterly repurchase offers. It is possible that a repurchase offer may be oversubscribed, in which case shareholders may only have a portion of their shares repurchased.

    IMC’s Berring Prepping New Structured Credit Hedge Fund, (Fin Alternatives), Rated: A

    Former IMC Asset Management portfolio manager Simon Berring is launching a new structured credit hedge fund that will focus on securitized consumer and residential credit assets in esoteric, and under-invested segments of the structured credit market.

    Berring will look to take advantage of technical weaknesses in credit niches where strong fundamentals and weak prices have created investment opportunities, according to information provided to FINalternatives by a person familiar with the matter. The fund’s opportunity set is further driven by declining participation from major dealers and missteps/retrenchment among several of the larger hedge funds that were focused on less liquid credit markets.

    Berring reached an agreement to lift the credit strategy team, IP and track record out of Chicago-based IMC Asset Management earlier this year, the source said.

    The new company is currently investing $40 million of initial anchor capital into its strategy, and hopes to raise an additional $100 million for its flagship Ayin Credit Opportunities Fund, the person added.

    Ayin plans to launch the new fund in the fourth quarter of this year. While at IMC, Berring’s IMC Credit Fund booked annualized returns of 13% with relatively low volatility of 5% since 2009, and was up 4.4% last year.

    Inside Capital One’s new retirement product for SMBs, Spark 401k, (Tradestreaming), Rated: AAA

    The company rolled out Spark 401k, the evolved version of its online product for SMBs, ShareBuilder 401k, in August 2016.

    “We knew that ShareBuilder 401k was not a website that would be mobile-responsive for some time,” explained Robertson. “We knew we needed to be there.”

    Small business owners have some deep-seated fears when it comes to implementing a 401(k) plans for their employees. These preconceptions translate into problematic retirement savings statistics for SMB employees. Only 45 percent of companies with fewer than 100 employees had 401(k)s in March 2016.

    What has changed over the past decade, however, is financial technology, and it’s shaking up the slumbering SMB 401(k) industry.

    The upcoming DOL fiduciary rule will have a major impact on how companies of all sizes interact with their financial advisors, and companies founded with this ruling in mind could have an edge over more traditional 401(k) providers.

    “The good news for SMBs is that [some] fintech players … have been built from the ground up to provide the level of fiduciary coverage that the DOL is mandating,” said David Ramirez, chief information officer at ForUsAll, an online 401(k) platform for SMBs.

    Capital One found that no matter how simple or intuitive its technology is, SMB owners still want to speak to a human before they buy.

    AltFi Global Summit 2016 – Opening Keynote, (Video), Rated: AAA

     

    How Private Bank of Buckhead brings a human face to banking, (Tradestreaming), Rated: A

    “We are small enough that we can make decisions customer by customer,” said Charlie Crawford, president and CEO of Private Bankshares, the parent company of the Private Bank of Buckhead. “There is a role in our industry for megabanks and a nice role for banks like ours that can be smaller, nimbler and more customized for the clients.”

    “The role of the branch for us is more a place to house our employees and give a launching point to go out and take care of customers in their places of business and homes,” Crawford said.

    Relationship banking is usually understood as a marketing tactic meant to increase cross-selling to customers. In the case of the Private Bank of Buckhead, relationships are strategic, rather than tactical.

    Community banks have taken a hit in recent years, and consolidation trends continue to increase since the financial crisis. Market share for small banks  fell since 2010. They now hold 22 percent of the commercial and industrial lending market, 8 percent in the individual lending market, and 2 percent in the small business lending market, according to a Council of Economic Advisors paper from last August.

    How Consumer Sentiment Has Changed the Dynamic of Financial Disruption, (Crowdvalley), Rated: A

    “In the U.S., 33 percent of millennials (ages 15-34) believe that within next five years they will not even need a bank”. – McKinsey & Company. Global Payments 2015: A Healthy Industry Confronts Disruption.

    It is difficult to conceive a reality where banks stand redundant and, while the probability of such a happening is highly unlikely, a large number of individuals globally are adopting a new set of expectations for the infrastructure that supports their pecuniary activities on a p2p, p2b level, e-commerce, or for cross border transactions.

    In terms of advice from financial services firms, consumers don’t want to talk face to face with an advisor but they want to feel special & have the ability to switch seamlessly between personal and hands-off options.

    While the focus seems to be on convenience, professionals in the sector indicate that the fundamental driver in consumer behavior is, in fact, cost.

    It is in this quality and security that Matos sees the continuity of the physical bank: “People do recognize, as a setback, the time it takes to go to the branch or to use traditional banking channels, however many of them still think that’s the more secure way to do it.” 

    Irfan Khan, CEO of UK based real estate investing portal, Yielders, talks about how it’s no longer about ‘Fin’ but about ‘Fintech’ in addressing how Yielders addresses the demands of clients and partners on providing fast, secure and transparent transacting infrastructure.

    Essentially, the traditional banking channels are finding it difficult to keep up with the current pace of disruption.

    While banks have always faced attackers, history is a testament to the idea that most startups will never gain solid footing. During the dot.com boom of 1997 to 2000, fewer than 10 of more than 450 payments startups survived, with PayPal being the most notable.

    To succeed, financial institutions will need to dramatically increase their customer insights and understanding allowing for a tailored and unique experience for each customer interaction.

    Online Lending’s Rapidly Changing Future to be Main Focus at LendIt USA 2017, (Email from Lendit), Rate: A

    LendIt USA will be the world’s biggest show in online lending and fintech with more than 5,000 expected attendees and will be held in New York at the Javits Center from March 6 – 7, 2017. The conference will focus on the rapidly changing online lending industry, including the state of the industry to date and factors that will affect the industry going forward.

    “Online lending as we know it is going through an evolution, shifting considerably since LendIt USA 2016,”

    A featured addition to this year’s conference will be an industry awards event which will celebrate and recognize leading companies, emerging innovators and top executives within alternative lending and fintech. The awards dinner and ceremony, to take place on March 7, will be judged by a distinguished panel of 20 industry experts, representing a diverse cross-section of the industry. Confirmed judges include Don Potts – Senior Vice President at Capital One; Brian Korn – Partner at Manatt; Manish Gupta – Executive Vice President at American Express, Angela Ceresnie – Chief Operating Officer at Climb Credit and George Popescu – Editor-in-Chief of Lending Times.

    CMBS Surveillance: Delinquency Report – August, (Morning Star Email), Rated: A

    The delinquency rate for CMBS loans remained steady at 2.95%, down 1 basis point from July. While the delinquent unpaid balance declined just $200.6 million, the UPB of outstanding CMBS fell by $3.45 billion.

    Liquidations fell to $792.9 million from $1.03 billion in July; however, August’s weighted average loss severity jumped to 51.4% after falling below 30% last month.

    By collateral type, weakness has been concentrated in office and retail, both of which continue to underperform with delinquency rates of more than 5% of each property type’s balance.

    Open Energy monthly newsletter, focus on the solar energy debt market, (Email), Rated: A

    First-Ever SEC Fintech Forum, (JD Supra), Rated: AAA

    On the SEC announced it will host a public forum to discuss financial technology (Fintech) innovation in the financial services industry.

    The press release notes that the forum is designed to foster greater collaboration and understanding among regulators, entrepreneurs and industry experts into Fintech innovation and evaluate how the current regulatory environment can most effectively address these new technologies.

    The panels will discuss issues such as blockchain technology, automated investment advice or robo-advisors, online marketplace lending and crowdfunding, and how they may impact investors. The forum will be on November 14, 2016. See more information here.

    Crowdfunding ‘bridges’ the gap between real estate lenders and borrowers, (Tradestreaming), Rated: A

    Patch of Land, an LA-based crowdfunding platform, is one of the few [Comment: Lending Times ecosystem database contains about 30 platforms focuses on the same or similar markets, not a few] platforms focused on bridge loans. Founded in 2013, POL has loaned out over $180 million to developers. Real estate crowdfunding platforms are a dime a dozen, but POL has found a twist to differentiate themselves from the rest of the market through their pre-funding process.

    “If a loan doesn’t get fully funded, it still remains on the site,” said AdaPia d’Errico, chief marketing officer of Patch of Land. “We’re not like traditional crowdfunders where borrowers need to wait for full funding to get their money.

    Choosing to focus on the debt side of investments is also a unique way to approach real estate crowdfunding. Underwriting a bridge loan isn’t as sexy as providing equity to build a project that includes higher upside. But loan terms are easier to understand, something d’Errico feels is important for investors.

    Investing in debt may be easier to understand, but it’s still not without its risks.

    Another issue is the nature of development. Rehabbing is an art, not a science, and all sorts of issues can slow up projects.

    Yield Street crosses $ 9mil in principal and interest payments distributed to investors, (Email), Rated: A

    Comment: Yield Street is interesting because they offer some unusual cash flow investments like fleet car leases, pre-settlement litigation portfolios, as well as real-estate.

    With this occasion Yield Street quarterly investor updates:  the status of closed offerings will be sent at the end of each quarter.

    United Kingdom

    MOCA gets away, senior tranche priced 75bps better than SBOLT, (Alt Fi), Rated: AAA

    MOCA 2016-1, the inaugural securitisation of Zopa loans, has priced. The pricing makes Fitch’s landmark rating of AA official, while also confirming Moody’s Aa3 rating. The complete breakdown of the pricing is available below.

    Funding Circle pulled off the UK’s first securitisation, SBOLT 2016-1, in April of this year. Moody’s again assigned the senior tranche a rating of Aa3, while S&P rated the same tranche BBB.

    The disparity in pricing between the UK marketplace lending sector’s debut securitisation and its second (SBOLT and MOCA respectively), notwithstanding the differences in underlying collateral, could suggest that European ABS investors are gradually becoming more comfortable with marketplace loans as an investable asset class.

    Simon Champ, CEO of MW Eaglewood Europe, the manager of P2P GI – the original investor in the securitised Zopa loans, also weighed in:“This transaction marks a positive step in enabling us to deliver on our objective to both diversify the sources and reduce the cost of our funding. The funds raised by the issue will now be progressively deployed in line with the investment strategy and our intention remains to steadily increase our leverage ratio to 100%.”

    Speaking exclusively to AltFi, Champ added that there was “very strong demand” for the deal, as is reflected in the pricing. “I think this a watershed moment in terms of opening up the asset class to European institutions who don’t necessarily want to buy P2PGI,” said Champ.“Hopefully this will further institutional adoption and lower the cost of leverage.” 

    Three firms withdraw from P2P authorisation process, (Bridging and Commercial), Rated: AAA

    A freedom of information request submitted by Bridging & Commercial to the FCA has uncovered that no peer-to-peer lenders have had their authorisation applications declined to date.

    In March, the industry watchdog reported that eight P2P firms had been fully authorised. The FCA has since confirmed that a further four firms have been authorised, bringing the total to just 12.

    Last month, data from the Peer to Peer Finance Association, which represents over 90% of the market, revealed that new P2P lending had taken a hit in Q2, with some lenders blaming it on economic uncertainty and the battle to gain full regulatory authorisation.

    Earlier this week, Jonathan Davidson, director of supervision – retail and authorisations at the FCA, stated that it was assessing 85 additional applications, with 39 of those operating under interim permission.

    LendingClub Founder Renaud Laplanche featured on stage at TechCrunch Disrupt London, (TechCrunch), Rated: A

    In December at our Disrupt London event, Laplanche will make his first public appearance since leaving the company to talk about the past year, and what the future may hold for both him and LendingClub.

    European Union

    The Rise of the German Fintech Ecosystem, (Crowd Valley), Rated: A

    The UK paid for uncertainties of the Referendum vote, which now represents a challenge and an opportunity for the whole European market. We agree with Anna Scally Partner, Head of Technology, Media and Telecommunications, and Fintech Leader, at KPMG in Ireland, when she says that: “Market access and the ability to passport services across the EU are hugely important for fintechs, regardless of their origin or stage of development. Post-Brexit, maintaining a pro-business approach in Europe is critical and these issues will likely feature strongly in discussions between the EU and UK.”

    It’s interesting to note that in Germany it’s not just Berlin that does well with technology, Munich plays also an important part, as well as Hamburg, that is where Finanzcheck, one of the fastest growing fintech company in Germany, is located, and Frankfurt, home of the Frankfurter Wertpapierbörse (Frankfurt Stock Exchange), the world’s 10th largest stock exchange by market capitalization, and that is now growing as the country’s fintech hub.

    here were no mega rounds of financing in Europe, in both the first and the second quarter, but we have anyway seen some considerable investments, including:

    • $46  million in a Series C round, raised by Finanzcheck, a consumer loans marketplace,
    • $40 million in a Series B round, raised by N26 (previously known as Number26), a mobile online bank,
    • $34.1 million through Private Equity, raised by AEVI, a cashless payments solutions provider.

    These were the three biggest rounds of financing in Europe, and all the companies mentioned are based in Germany (see the image below).

    Another interesting aspect is the increase of corporate participation in fintech investments. Corporations participated in 28% of the deals conducted, a percentage that’s much higher than the 12% registered in the same period of 2015.

    The industry is now growing and evolving, not just in Europe but all over the world. Germany is building up what it seems to be a solid financial technology ecosystem, with the appetite to involve key cities and not just a single location, and it is now well positioned to play a bigger role in the financial technology industry in the future.

    Deutsche in deep trouble, but a collapse is not on cards, (The Australian), Rated: A

    The good news about the Deutsche Bank crisis is that the world has learnt its lesson from the 2008 collapse of Lehman Brothers, so it won’t allow a disorderly failure of the German banking colossus.

    This is a bank tagged by the International Monetary Fund last June as the most significant contributor to global systemic risk, ahead of HSBC and Credit Suisse.

    It’s a counterparty to almost every bank of meaningful size, far more so than Lehman, so it simply doesn’t bear thinking that governments and regulators would invite a prolonged nuclear winter by closing the bank’s doors.

    While Deutsche has never really recovered from its 2008 losses, the latest round of volatility causing the share price to sink to its lowest level in decades followed news two weeks ago that the US Justice Department wanted $US14 billion ($18bn) to settle allegations of mis-selling of mortgage-backed securities (MBS).

    Deutsche has said it has “no intention” of handing over anything like that amount. The penalty almost matches the bank’s $US16bn market capitalisation.

    German Chancellor Angela Merkel has ruled out state aid for Deutsche, and Cryan said overnight he hadn’t asked for it.

    Canada

    Lendified subsidiary Vault Circle receives exempt market dealer license from OSC, (Betakit), Rated: A

    Small business loan provider Lendified announced today that its subsidiary Vault Circle has received regulatory approval for marketplace lending from the Ontario Securities Commission (OSC).

    “The OSC approval represents a historic leap forward for Canada’s FinTech sector,” said Marcel Schroder, the managing director and chief compliance officer of Vault Circle. “Once launched, our platform will provide accredited investors with access to an exciting alternative investment option not available in Canada today.”

    Lendified’s announcement also comes shortly after the OSC’s announcement of a LaunchPad Hub to help FinTech startups navigate the provinces’ regulatory framework. The cooperative approach taken by the OSC might be considered a good signal for fellow Canadian FinTech startup Lending Loop, which voluntarily halted new loan requests on its platform after questions of compliance with the Ontario Securities Act.

    While the OSC approval applies to Ontario only, Lendified is planning to expand into other markets in the future. The announcement comes shortly after Lendified announced that it secured $24 million in funding for its online lending activities. The company also recently announced an increase in its lending capacity from $35,000 per loan to a maximum of $150,000 per loan for small business owners.

    Hong Kong

    Hong Kong Creates a Fintech Sandbox for Banks, (Crowd Valley), Rated: A

    The Hong Kong Monetary Authority (HKMA) last week announced the launch of a financial technology sandbox, to allow banks to test new innovative products that do not yet meet compliance standards. The new regime is valid as of September 6.

    The announcement comes a few months following similar action by various governments around the world, including the UK, Singapore, Australia and France, but more recently also in other countries in the area, including Malaysia, Thailand and last but not least Japan.

    Within the Sandbox, banks can try out their new Fintech products without the need to achieve full compliance with the HKMA’s usual supervisory requirements.

    The full speech of Norman Chan is available on the HKMA website

    India

    P2P firms in talks with NPCI for better integration with UPI, (Livemint), Rated: A

    UPI is an interoperable system launched by the Reserve Bank of India (RBI) and NPCI, which will allow peer-to-peer and peer-to-entity payments by unifying the mobile number, Aadhaar number and the bank account number. The threshold of a single UPI transaction, which is currently Rs.1 lakh will also be a limiting factor for the P2P lending space as the loan amounts required are of higher values.

    The newly launched Unified Payments Interface (UPI) may not currently be useful for peer-to-peer (P2P) online lending platforms like Peerlend, Faircent and I-lend, but this may soon change.

    At present, even if lenders and borrowers transact with each other through UPI , the required information is not disseminated to these third-party platforms.

    These companies are in talks with the National Payments Corp. of India (NPCI) so that these platforms can be integrated into the system.

    The Need for Facilitating Electronic Payments in the Peer To Peer Lending Sector, (Barandbench), Rated: A

    In order to facilitate the use of electronic modes of payment in P2P lending transactions, the following structure may be considered for the purpose of the Regulations to ensure such transactions are not in violation of the Money Lending Acts.

    a) The P2P lenders would transfer monies that they intend to loan to borrowers firstly to the P2P Platforms (“Investment Amounts”) as investments into the P2P Platforms (“Investments”), and the Investment Amounts would be utilized by the P2P Platforms to grant loans to borrowers. The amounts received by the P2P Platforms from the borrowers (towards repayment of the loans granted) would be transferred to the lenders as repayment for the Investments. This structure would in effect render the P2P Platforms as ‘lenders’ to the borrowers. The reason we are suggesting this structure is because, if the P2P Platforms are regarded as ‘lenders’ (and since they are to be classified as NBFCs as stated above), then the Money Lending Acts would not be applicable ab initio in respect of the P2P lenders and hence would facilitate the use of electronic modes of payment in the P2P Lending Transactions.

    b) Further, to avoid risk of mismanagement/diversion of the amounts payable to/receivable by the lenders and the borrowers as part of the P2P lending transactions (“P2P Amounts”), it can be stipulated that the P2P Amounts would be routed through a specific bank account (“Account”) in the name of the P2P Platforms.

    c) Additionally, in this structure, the P2P Platforms’ role is to be limited to aggregating the transactions between lenders and borrowers, conducting KYC checks on the borrowers and the lenders, facilitating the execution of the transaction documents for the P2P lending transactions and transferring the monies received in the Account inter se between the lenders and borrowers.

    d) In terms of documentation for this structure, there can be two options that can be considered:

    i) the P2P Platforms would execute investment agreements with each of the lenders in terms of which the lenders would make the Investments, and the P2P Platforms would execute loan agreements with each of borrowers in terms of which the P2P Platforms grant loans to the borrowers using the Investment Amounts; OR

    ii) the P2P Platforms would execute tripartite agreements with the lenders and the borrowers, in terms of which the lenders would make the Investments and the P2P Platforms would grant loans (using the Investment Amounts) to the borrowers.

    Author:

    George Popescu