The Summit seeks to create opportunity for responsible industry participants to share insights, propose standards and provide regulators and policymakers with consensus viewpoints on the regulation of online lending. The Online Lending Policy Summit will include participants from across the Online Lending Industry, including: online lenders, academics, lawyers, banks, consumer advocates, servicers and regulatory agencies, […]
The Summit seeks to create opportunity for responsible industry participants to share insights, propose standards and provide regulators and policymakers with consensus viewpoints on the regulation of online lending. The Online Lending Policy Summit will include participants from across the Online Lending Industry, including: online lenders, academics, lawyers, banks, consumer advocates, servicers and regulatory agencies, amongst others.
U.S. Congressman Gregory Meeks
U.S. Congressman Trey Hollingsworth
Paul Watkins, Director of the Office of Innovation, Consumer Financial Protection Bureau
Maria T. Vullo, Superintendent, New York State Department of Financial Services
Joanne Barefoot, CEO, Barefoot Innovation Group & Cofounder, Hummingbird Regtech
Frank Borcher, MD, General Counsel & Secretary, Marlette Funding LLC
Gordon Watson, Partner, Victory Park Capital Advisors
Peter Renton, Founder, Lend Academy
Michael Koenitzer, Director of Business Development, Global Debt Registry
News Comments Today’s main news: Prosper tops 1 million loans. KBRA assigns preliminary ratings to SoFi Consumer Loan Program (2018-3) Trust. Elevate Credit earnings preview. Zopa CEO on FCA regulatory review. 60 firms apply for Hong Kong banking license. Today’s main analysis: Credit bureau earnings. Today’s thought-provoking articles: FCA to crack down on UK P2P lenders. What to expect in […]
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-3 (“SCLP 2018-3”). This is a $546.00 million consumer loan ABS transaction.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-3
Seeking a fresh start in Silicon Valley, former Social Finance Inc. chief and co-founder Mike Cagney now admits that an affair with a subordinate was a reason for his abrupt departure last year from the firm.
Now, Mr. Cagney is adding another reason for deciding to leave a startup he led for six years. In an interview with The Wall Street Journal, he said that he had consensual sexual relationships with female subordinates, something he had previously denied publicly. He also said he had misled SoFi’s board of directors about one of the affairs.
Yet just months after Mr. Cagney departed SoFi, two venture capitalists who had been on the company’s board and knew many details of his actions invested $17 million in his new start-up, called Figure. Since then, Mr. Cagney has raised another $41 million from others for the lending start-up, which will open soon.
Mr. Cagney’s swift comeback — from ouster to new company took four months — provides one of the starkest illustrations of the speed with which the technology industry is moving past the sexual harassment allegations that swept Silicon Valley and many other industries over the last year.
In recent years, investors have started putting their money into peer-to-peer lending companies. By lending out your own money to peers in the form of personal loans, you are able to earn interest – similar to the way that banks and other lenders produce income. On sites such as Lending Club and Prosper, you can open an account and begin investing in this passive income venture.
Like all investments, the ROI varies, but Lending Club and Prosper boast an average investment return of about 5 – 10%. Both of these platforms also give opportunities for users to make their investment semiautomatic, meaning you wouldn’t need to constantly monitor your investments or reinvest returns. But there would still be some work involved. If you want this to be a completely passive income stream, Lending Club offers a PRIME account, in which you’ll have a fully managed account. You’ll need to have a minimum investment of $5,000, though, and it will be subject to a one-time .8% fee.
According to recent findings from Kabbage, a financial services and data platform, 85 percent of small business owners believe that being your own boss and owning a business is achieving the American Dream. In addition, 84 percent said they hope their children will also one day become small business owners.
The survey, which consists of responses from more than 1,000 small business owners, found that 38 percent of those who hope their children become entrepreneurs feel that way because they want them to turn their passion into a career. 24 percent appreciate that being their own boss allows them to create a flexible schedule. And 22 percent feel that building a small business is rewarding, and they want their kids to feel that sense of pride.
ArborCrowd targets IRRs from 12 percent to 15 percent in top-tier markets and IRRs in the mid-teens or low 20s in secondary and tertiary markets, according to Adam Kaufman, co-founder and managing director of the online crowdfunding platform.
Millennium Trust Company, LLC, (“Millennium Trust”) a leading retirement and custody services provider to advisors, financial institutions, businesses and individuals, announced today the launch of its enhanced education platform on the Millennium Alternative Investment Network (MAIN). MAIN is a free research, education and alternative investment resource to help investors and advisors increase their understanding of alternative assets, and invest through simplified and streamlined investment processes.
This past Friday, the UK Financial Conduct Authority (FCA) finally released their reviewof the crowdfunding industry regulations. While the investment crowdfunding sector (equity crowdfunding) came away mostly unscathed the loan based sector (or peer to peer lending) took a bit of a lashing.
The FCA said the peer to peer lending had become “increasingly complex” and sited occurrences of operations that lacked transparency and instances where interest rates were not matched with the appropriate level of risk. The FCA subsequently announced a new consultation as it looks to firm up compliance for UK online lenders. Gillian Roche-Saunders, a partner at the law firm of Bates, Wells & Braithwaite – and Fintech expert, said this will be “the foundation of a much more sophisticated and targeted supervisory approach from the regulator.“
Zopa CEO Jaidev Janardana welcomed the reappraisal and added scrutiny of P2P operations calling it a positive step. Janardana said they “wholeheartedly agree” with the FCA assessment;
The Financial Conduct Authority is looking to tighten up oversight over crowdfunding platforms, which provide short-term lending for small businesses and consumers, in part to make sure customers have clear information about the rules, terms and conditions.
A 156-page report by the watchdog found that some customers were subject to poor practices by certain online platforms and that they were provided with unsuitable products and poor treatment.
The reform measures have been backed by platforms like Funding Circle, a leading crowdfunding lender, as a way to gain more legitimacy as competition heats up with traditional banks. RateSetter, one of the three-largest P2P lenders in the U.K., has also sought clarity on regulations as a means to better compete against established banks.
The Financial Conduct Authority (FCA) has opened a consultation on loan-based crowdfunding platforms (peer-to-peer) following its original review of the sector in 2016.
It said since then, it’s observed that the new and growing area has become increasingly complex and has found evidence of “poor business practices” that could cause actual or potential harm to investors.
For example, P2P platforms have a much more active role by taking decisions on behalf of investors, structuring the loans they’re exposed to, and splitting loans across a number of investors (lenders) in order to receive a target rate of return.
Rhydian Lewis, chief executive, RateSetter-“I believe peer-to-peer lending will become a part of every investor’s diversified portfolio and the proposals from the FCA do not change that belief.”
James Meekings, co-founder and UK managing director of Funding Circle-“Funding Circle has consistently campaigned for proportionate regulation that protects consumers, whilst allowing innovation to boost choice and competition in the lending and investment markets.”
Stuart Law, chief executive at Assetz Capital-“While we have just received this latest FCA consultation document, and therefore have not as yet fully digested it, we will always be supportive of any regulation that ultimately benefits our investors, borrowers and the wider peer-to-peer industry. Proposals that advocate greater transparency, appropriate investor remuneration and good corporate governance are very much welcome.”
When SagaDigits, a HK$2 million (US$254,820) start-up, wanted to add post-merger shareholders and signatories to its corporate bank account, its chief executive approached a Hong Kong bank for help.
What happened next turned into many months of back-and-forth paperwork and arguments with the lender, said the company’s chief executive officer, Arthur Chan. He even spent a month tracking down his bank relationship manager after the staff was relocated to another branch.
Good news may be at hand for him, as the Hong Kong Monetary Authority (HKMA) is poised to issue the city’s first virtual banking licence by year’s end to promote fintech and offer customers “a new kind of experience.”
Ning Tang, founder and chief executive officer of CreditEase, a Chinese wealth-management firm and the majority owner of U.S.-listed peer-to-peer lending platform Yirendai, talks about China’s P2P lending industry. He speaks with Tom Mackenzie on “Bloomberg Daybreak: Asia.”
Trend #1: Further development of payment and money transfer solutions., FinTech incumbents started historically with niches that were on the one hand abandoned by traditional banks and, on the other hand, not as strictly regulated. That is why there has been more transaction service providers originating in the region, compared to different types of FinTech companies.
Trend #2: Business-to-business. Retail banking requires relatively more effort and brings in lower returns in exchange than servicing Small and Medium Enterprises (SME’s), not to mention large enterprises, which has been one of the remaining strongholds for banks (aside from trading, mortgages and services for corporations). Therefore, FinTech startups began offering their products to individuals but are slowly entering the corporate sector.
This week we took a closer look at the Irish startup scene with the goal to introduce you to some of the most promising startups from there. Below you’ll find 10 Irish startups to look out for in 2018 and beyond.
Flender: Successfully funded through the Seedrs equity crowdfunding platform, Dublin’s Flender is a peer-to-peer (P2P) lending platform for businesses and consumers to borrow and lend money through their existing networks. Flender was launched in early 2017, offering a combination of social network, low-interest rates and an excellent mobile experience. They have so far raised €2 million from investors to formalise the social lending market among friends, family and business connections.
Libra Credit, an online lender in the cryptocurrency space, has received an investment from Binance Labs – the tech incubator and VC portion of Binance – one of the largest cryptocurrency exchanges in the world.
According to a post on Medium, the agreement enables BNB holders to receive loans collateralized by the crypto. So Libra Credit will lend fiat and digital assets to users who pledge BNB.
Known for being the first-ever instant, cryptocurrency-backed loans provider, Nexo took to Twitter to express its offering to acquire what remains of SALT Lending, a membership-based lending and borrowing network and a worthwhile competitor.
The tweet made on July 27, 2018, made it seem as if the Nexo was doing a favor or “lends a helping hand” to its competition, while sharing its willingness to “provide instant liquidity to its community, up to $2,000,000 per client without “proof-of-access” requirements.” To add to this public announcement, the firm also shared what appears to be its letter of intent to SALT Lending.
Global Debt Registry (“GDR”), today announced two new executive hires from the banking industry. Evan Psaropoulos, formerly of Credit Suisse, has joined GDR as CFO, and Patrick Dietz, formerly of BNY Mellon, has joined the organization as Product Director. This follows Charlie Moore assuming the role of Chief Executive Officer, in addition to President, in recognition of his leadership and vision.
In his role as CFO, Evan will oversee the finance function within GDR, including overseeing equity financing and commercial strategy. He will lead investor relations for GDR across the capital markets space leveraging his investment banking and corporate development experience.
Prospa, a leading online lender for Australian SMEs, has received a nice recognition being named National Fintech Lender of the Year in the 2018 MFAA Excellence Awards.
The Mortgage & Finance Association of Australia or “MFAA” is the national body representing finance brokers, mortgage managers, lenders, aggregator/broking groups and other industry participants, in the mortgage and finance industry in Australia.
The MFA also recognised Prospa’s Roberto Sanz as the National Winner of Business Development Manager in the Lender and Support Service Provider category for 2018.
It has been a very active half year in the Australian Alternative Finance (AltFi) market. Since my previous wire on the key themes expected for 2018, the market has continued to grow and evolve. The themes were: 1) Continued Growth, 2) Consolidation of Lenders; and 3) Transparency via Listings.
These themes have been present in the first half, however we have seen two other themes present that will accelerate the development of the Australian Fintech lending market. One being the participation of banks in funding the AltFi lenders, the other, Government support for SME lending.
The Peer to Peer or P2P lending market has doubled in China. Though it might be at a nascent stage in India, according to co-founder of P2P lending platform i2i Funding Raghavendra Pratap Singh, it has a lot of potential. In a chat with The Tech Panda, Singh explained the intricate process and i2i Funding’s plans for the future.
I2i Funding had started with loan amounts of INR 10-15 lakhs per month, and now are doing INR 1.5 crore. Currently, they have around 30,000 registrations for borrowers and around 4000 for investors. They add around 200-300 new investors per month. So far, the company has disbursed over 500 loans of over INR 8 crores.
Many individuals still consider keeping money in their bank savings accounts akin to investing. Yes, it earns an interest rate but over a longer period of time, the earnings heavily fall short of negating the impact of inflation.
Currently, most banks offer 4 percent or even lower return on their savings accounts. It, therefore, becomes important to look out for other better alternatives and investment options to make your money earn you money.
Imran Khan has claimed victory in the 2018 Pakistani election for his PTI party after a campaign that has been marred by violence and allegations of vote rigging. Although Khan’s party is expected to fall short of an overall majority and would have to form a coalition, his economic policies have been questioned.
Can you describe the development of peer-to-peer lending in MENA? Marketplace lending is still a relatively new phenomenon in the MENA region. A big part of what we do is to educate investors in the potential for diversifying their existing portfolios with a different type of investment. It offers them a wide-range of choice as investors are able to browse through campaigns and select the ones that match their criteria best.
Liwwa only lends to small and medium enterprises (SMEs), and we continue to scale up that lending activity. As our underwriting activity grew from $2.3 million in 2016 to $5.2 million in 2017, the level of funding from retail investors nearly doubled. Retail lenders want to see a credible company, a solid portfolio and a low default rate. As long as Liwwa continues to deliver on those three criteria, we can build trust in the platform and hopefully build an ongoing relationship with new and existing investors.
Over the last 18 months banks have significantly scaled back lending activity to the SME sector. How as this affected P2P lending activity in the region? IFRS 9, with its provisioning rules, is one of the main drivers of banks’ reticence to lend to SMEs. The market demand for loans hasn’t appreciably changed, and one could argue that market risk has stabilised in many MENA economies—so the accounting rule change is having an outsized impact. Alternative financing structures such as these are poised to fill a need because much of the debt is treated on an off-balance sheet basis. Retail lenders and non-bank institutions can contribute to filling the SME lending gap given a difference in risk appetites and a more generous perspective on solvency ratios.
When societies were small and closed-off, people lent freely among themselves based on trust. At worst, the lender believed that he could take up his case with the local community. But as globalisation and technology came, people began to migrate, and personal lending became inefficient. The solution? Banks.
At the centre of this story is FINT, a Nigerian online peer-to-peer lender founded in early 2017. The idea is simple. Emeka signs up to the FINT platform and requests for a loan. Chinyere signs up, funds her account, and chooses which loan(s) she wants to finance from a pool of anonymous borrowers. In its simplest form, Emeka wants ₦120,000 for six months, and Chinyere lends it to him and gets monthly payments of the principal (₦120,000) and interest (e.g. 10%) every month – or ₦13,200 each month.
FINT has been pioneering this simple form of lending in Nigeria. Its aim to “empower Nigerians by making loans more accessible and affordable; and lending more rewarding” speaks to the core idea of peer-to-peer lending.
The Central Bank also issued Circular 3,898 in May 2018, which set out the procedural rules for establishing such entities.
The Central Bank has introduced these rules in order to continue the modernisation of Brazil’s financial sector – something which has been ongoing since 2013, with more intensive actions being taken since 2016. The main goals of the rules are to:
News Comments Today’s main news: Consumer debt surpasses mortgage debt. Funding Circle, INTRUST Bank expand partnership. Revolut offers app store for business banking. VPC Specialty Lending hits record monthly returns. Today’s main analysis: Amazon’s big push into lending, and beyond. Today’s thought-provoking articles: The past and future of banking. Should income investors consider P2P lending? Banks can’t partner themselves into […]
Funding Circle, INTRUST Bank expand partnership. This makes me wonder if Funding Circle’s long-term strategy is to expand these types of partnerships nationally, and if they do, will they take INTRUST with them or partner with other regional banks?
Amazon’s push into lending, and beyond. As it stands now, I don’t see Amazon competing with most online lenders. Their niche is lending to small businesses that sell on the Amazon platform. Of course, that could change at any time.
The past and future of banking. This is something every alternative lender should consider. How much of the P2P lending pie will banks ultimately have, and are we willing to give up any of our portion?
Mortgages may represent the largest debt for households, but as a percentage of disposable income, home loans are comprising less of a liability, LendingTree found.
In a research report, the online lender, which analyzed data from the Federal Reserve, said that mortgage-related household debt has declined 5.5%, while consumer credit, which includes revolving credit and installment loans, jumped 45%. Of that, 42% was student loan debt. What’s more, LendingTree found that American household debt is on track to hit $1 trillion above the 2008 peak by the end of June. The debt figure has been increasing at a 3.4% annual rate and includes mortgage debt.
By the end of the second quarter, LendingTree is forecasting total mortgage and consumer debt to reach $15.7 trillion compared with $14.7 trillion 10 years ago.
Funding Circle, the small business loans platform, and INTRUST Bank, a leading US regional bank headquartered in Kansas, today announced the next phase of their strategic partnership to support the growth of US small businesses. Following the successful launch of this partnership earlier this year, the second phase increases INTRUST’s funding commitment and kicks off a targeted, co-branded marketing campaign, giving business owners across Kansas, Missouri, Oklahoma, and Arkansas greater access to fast and flexible financing.
To date, over 150 American small businesses have received loans backed by INTRUST through the Funding Circle platform. The upsized commitment is anticipated to increase this number above 500.
The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.
By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon.
They have had a small business lending operation since 2011 and much fanfare was made about the $3 billion they have loaned through June 2017. But that doesn’t even put them in the top three online small business lenders in that time period. OnDeck, Kabbage and CAN Capital all loaned more.
To be fair Amazon is not trying to be a general purpose lender. Their SMB lending operation is targeted solely at Amazon marketplace sellers as a way to help them grow their business so they will sell more products on Amazon. It is not clear they have a desire to do more than that.
One of the big things that’s happened over the past 25 years is that the big banks have gotten bigger. We now have what are known as the Big Four banks in the U.S. — Citigroup, Bank of America, Wells Fargo and JPMorgan Chase. All of those have grown substantially through acquisitions, not just from the financial crisis, which saw a lot of consolidation, but beforehand. Actually, three of the four were actually acquired themselves, and the acquiring companies just decided to keep the names because they were more recognizable.
Douglass: I believe that peer-to-peer lending will represent at least 25% of total lending spent in 25 years. Now, I only say 25%. For me, it’s very clear that peer-to-peer lending has become a lot more widespread and a lot more feasible than it was previously. I do expect the peer-to-peer lenders — or a bank, perhaps, who hops in — to help solve for one of the current difficulties, which essentially is poor underwriting by some of the peer-to-peer facilitators right now, meaning that the investors who are putting the money in aren’t making the kind of money that they’d hoped to — I believe those will ultimately be solved.
But, I only say 25% because banks have legitimately trillions of dollars to lend, and they will absolutely be looking for ways to deploy that capital effectively. So, I would expect that they will be helping facilitate a lot of these peer-to-peer loans. I believe they will be, in some cases, investing alongside. I think they will often invest in alone, and perhaps then sell it to peer-to-peer lenders for an arbitrage so that they can do it all again, sort of like you see with agency-backed mortgages.
Marcus, the consumer lending arm for Goldman Sachs, wants to become the one-stop shop for many of your financial matters, except for one: credit cards — at least for now. Right now, Marcus is heavily focused on launching a savings platform in the U.K. in the coming months, Talwar said.
When JPMorgan Chase set out to make its digital-only brand Finn, it quickly rejected the idea of using it to lure millennial customers over to the institutional side of the bank.
Finn has also found that for the 27 states where JPMorgan Chase is part of a shared ATM network but has no ATMs or branches of its own, customers have difficulty depositing cash. While those same customers can still withdraw cash and often don’t carry money with them, customers that work for tips have a hard time keeping Finn as their main banking account.
Sharestates announced the launch of a Long-Term Portfolio Loan Program to facilitate the needs of borrowers throughout the life cycle of their real estate projects.
Some highlights of the Long-Term Portfolio Loan Program include 30 and 40-year mortgage terms, interest rates ranging from 5.99 to 7.5%, loans with a 10-year interest only period, followed by 20 or 30 years of amortization, as well as the ability to cover three or more properties under a single loan.
Venmo today is officially introducing its own debit card in partnership with MasterCard, following beta tests of a Visa-branded debit card last year. The new card will allow Venmo users to pay anywhere MasterCard is accepted in the U.S., and will record transactions to the user’s Venmo account for easy splitting with friends. It can also be used at an ATM to withdraw funds from the Venmo’s account’s balance.
Unlike the beta version of the card, the MasterCard-branded Venmo card can be used to withdraw up to $400 per day at ATMs displaying the MasterCard, Cirrus, PULSE, or MoneyPass acceptance marks. No fees apply for U.S. MoneyPass ATMs, while the others will charge a $2.50 ATM domestic withdrawal fee.
There are no fees for using the card for purchases, even if you get cash back at the point of sale. However, if a signature is required to get cash back at a bank, you’ll pay a $3.00 Over the Counter Domestic Withdrawal Fee, the company says.
CrowdOut Capital, the first tech-enabled online marketplace to fund corporate loans for middle market companies, announced it funded more than $112 million in loans in less than two years. Accredited investors choose from the company’s vetted loan offerings on a deal-by-deal basis.
CrowdOut funds loans as small as $3 million to companies with annual revenues between $10 – $500 million to fuel growth.
My next guest on the Lend Academy Podcast has spent his career doing just that. James Gutierrez is the CEO and Founder of Insikt. Since I last had James on the show a lot has changed but their mission is still to improve the financial health of the underserved consumer.
For banks, these partnerships won’t generate the quantum leap they need to move beyond a decades-old, product-centric mentality to deliver next-generation financial services that consumers deserve. At best, financial institutions may gain a workable solution that squats awkwardly in the existing infrastructure and brand. At worst, after a lot of time and effort — and increasing their infrastructure costs — banks will fail to deliver any noticeable difference to customers beyond a flurry of press releases.
StraightUp, an innovative real estate-focused platform giving investors access to previously unavailable development opportunities, announced today a merger with Slice, the first blockchain-based REIT for investors around the world.
StraightUp was designed to democratize access to previously unattainable high-potential investment opportunities in New York City. As a result of merging with Slice, the new and improved platform will give international investors access to premium equity opportunities in desirable cities across the country, including New York City, Los Angeles and San Francisco.
The survey of over 1,000 U.S. respondents, conducted by Affirm, found that Americans typically take their biggest vacations of the year over the summer, and cost is a major factor when planning travel.
55 percent of Americans said it’s very important to have the cost of the vacation paid off before going. The cost of a trip can linger even after the vacation is over: 32 percent of people said they regretted taking a vacation altogether.
What differentiates Depository Network from both of those companies/platforms is the fact that Depository Network is actually not a lending platform. Rather, it is a depository infrastructure that other P2P lending platforms, banks and credit institutions can utilize. Depository Network is the world’s first fully decentralized multi-platform collateral network that connects traditional lending and blockchain technology.
When a business needs to raise capital, the more short-term the borrowing options, the better. For every option, though, business owners must weigh the increased cash flow against the trade-off. Interstate Capital looked at a breakdown of options – from bank loans to savings – invoice factoring comes out on top.
American Financial Resources, Inc. (AFR) announces that it has completed a pilot and will now be providing its broker network with notification when a house for which AFR owns the servicing is listed for sale. This will enable AFR’s broker partners an opportunity to reconnect with the homeowner and, ideally, assist with their next mortgage, on both the relisted property as well as the borrower’s next home.
Two years after JPMorgan Chase & Co. launched an arms race in credit-card rewards with its Sapphire Reserve card, Wells Fargo will now offer three points per dollar spent on dining, travel and streaming services such as Netflix on its Propel card. Other purchases will earn one point per dollar, and points are redeemable at one cent per point.
Revolut, a digital only bank that says it is signing up over 120 businesses per day, has launched a new services for their business customers – Revolut Connect. This new feature is described as an “App store” for businesses to help provide easier access to digital tools.
With more than 60,000 businesses uses their bank now, Revolut Connect is designed to help firms easily connect and build integrations for the most popular business apps, including accounting platforms like FreeAgent, communication tools like Slack, Apps to help with tax, payroll, expense management and more. Revolut adds that many more popular Apps are in the queue. Revolut wants to create a one stop mobile experience where businesses may manage all of their financial needs in a single mobile friendly application.
The £289m VPC Specialty Lending investment trust has recorded its highest monthly return to date for May 2018, according to stock market filings.
Its net asset value [NAV] total return for the month of May, the latest numbers released by VPC, was 1.03 per cent for the month. Returns comprised 0.94 per cent of income gains and 0.09 per cent of capital gains.
Peer-to-peer investment trusts now have around £1 billion of assets under management between them, but the jury is still out on whether or not they are worth backing.
P2P trusts launched four years ago as direct peer-to-peer lenders including Zopa and Funding Circle were fast gaining traction. The trusts promised exposure to hundreds, or even thousands, of different peer-to-peer loans, in return for a juicy dividend yield.
Over half (56%) of brokers said the lenders changing their mind on a deal frustrates them the most about the specialist finance market, LendInvest found from surveying brokers at the NACFB Commercial Finance Expo in Birmingham.
A quarter (24%) identified the lack of good service as their main frustration. Rates not being good enough was an issue for 14% of those surveyed, while only 6% of those surveyed cited lack of choice as their biggest frustration.
According to a recent poll carried out at the Intelliflo Change the Game conferences held in Manchester and London, robo-advice is now regarded as less of a threat to business for advisers than it has been in recent years.
Last year, both options gained equal top share in the poll (37% each of 315 respondents), while this year,’ robo-advice’ dropped to 25.5% (419 respondents), with ‘large product providers going direct’ down slightly but still the top concern at 32.5%.
But the rising popularity of the secondary market and ‘instant access’ accounts have created enhanced liquidity for P2P investors. On an array of platforms, lenders can sign up for long-term loans before selling their stake to others, while some of the bigger platforms allow free or low-fee withdrawals.
We’ve put together a guide to all the platforms offering IFISAs with extra liquidity…
Hui Ying Financial Holdings, which operates an online peer-to-peer lending platform in China, lowered the proposed deal size for its upcoming IPO on Tuesday.
The Shanghai, China-based company now plans to raise $32 million by offering 5.6 million shares at a price of $5.85. The company had previously filed to offer 6.8 million shares at the same price. Hui Ying Financial Holdings will raise -19% less in proceeds than previously anticipated and command a market value of $436 million. Shares are currently listed on the OTCQB under the symbol SFHD.
Fintechs Banco BNI Europa and Raisin have furthered the collaboration between the two firms. Banco BNI Europe says it has entered into a cooperation to allow Portuguese savers to gain access to the best savings rates available from across Europe.
Global Debt Registry (“GDR”)today announced the launch of its loan registry designed to verify and provide transparency on loan data on the cloud-based IBM Blockchain Platform. All loan level collateral positions and verification activity will now be immutably recorded on the decentralized registry with highly secure permissioning and access controls to provide new levels of efficiency to the $400bn asset backed securities (ABS) market.
Mobilum is a cryptocurrency enabled payment processing platform which allows for cryptocurrency payments in real time at points of sale via an already existing debit or credit cards of the customer and the issuer of the Mobilum token. Mobilum recently announced its partnership with EthicHub, an affiliation that is expected to bolster a mutual sharing of investment opportunities for users on both platforms.
EthicHub’s crowd lending projects have provided financial solutions for small projects especially those involving farmers in less economically disadvantaged parts of the world, an accomplishment for which it was awarded the Best financial inclusion project at LaBitConf in Bogota as well as the award of the “Start-up with the Greatest social impact” at Unconference Fintech Awards in Madrid, Spain.
Faircent.com was the first platform in India to meet all guidelines prescribed by RBI and receive the NBFC-P2P certification in May, this year. This is a validation of the business model that we have painstakingly built over the last five years.
All financial transactions on our platform are undertaken through an escrow account under the trusteeship of ITSL (an IDBI Trusteeship Services Ltd). Borrowers are evaluated by our fully-automated credit evaluation mechanism across more than 400 data points to understand their ability, stability and intent to repay before they are listed on the platform.
Finastra today announced that it has entered a definitive agreement to sell its Canadian-based Collateral Management Corporation (CMS) business to Teranet. The transaction is expected to close in July 2018, subject to required regulatory approvals and customary closing conditions.
CMS will join Teranet as a new complementary line of business. Jointly, they will deliver enhanced, integrated solutions to a broad set of financial services customers, leveraging investments in technology, rich insightful data, and market leading electronic registry and workflow platforms.
News Comments Today’s main news: Credible raises $50M in Australian IPO. Kabbage considers IPO. Blockchain project gives New York homeless a digital identity. Funding Circle surpasses $5B global lending, $1B to U.S. businesses. RateSetter publishes 2016-17 accounts. Starling Bank gets full FCA, PRA approval. N26 launches premium debit card, partners with WeWork. Revolut rolls out bitcoin services. Vietnam gets first P2P lending platform. IOU […]
7 fastest-growing personal finance apps of all time. AT: “If you read just one article today, this should be it. CB Insights delves into the fastest-growing personal finance apps including Robinhood, Mint, Check, Level Money, and others and illustrates–better than any case study ever can–how you can grow your own alt lending company. Learn what to do before, during, and after launch by studying these companies.”
Starling Bank gets full FCA, PRA approval. AT: “Huge news. Congratulations. This could be the first step to making digital-only banks legitimate in the UK, and it could be the first step to helping them gain real traction elsewhere in the world–first in Europe, then Asia, and the U.S.”
As we near year’s end, we’re excited to announce that LendingClub has closed its third self-sponsored securitization. The $330 million transaction saw immediate traction and has further increased access to consumer credit for the stable and scalable pool of investor capital in the liquid Asset-Backed Securities (ABS) investor market.
Of note, with 48 total securitization investors this year, over two-thirds 34 are new to LendingClub, including insurance companies, hedge funds, a bank and a pension fund.
A few minutes later, Therrien’s phone buzzed. It was the same guy. He gave his name as Charles Cartwright and said Therrien owed $700 on a payday loan. But Therrien knew he didn’t owe anyone anything. Suspecting a scam, he told Cartwright just what he thought of his scare tactics.
Therrien had been caught up in a fraud known as phantom debt, where millions of Americans are hassled to pay back money they don’t owe. The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.
The problem is as simple as it is intractable. In 2012 a call center in India was busted for making 8 million calls in eight months to collect made-up bills. The Federal Trade Commission has since broken up at least 13 similar scams.
Three thousand homeless people in New York are about to receive a special holiday gift: a free smartphone that allows them to manage their digital identity, access shelters and food pantries, and make use of financial services.
Life Wireless is distributing the phones, starting in the Bronx. The service groups create the blockchain identities for individuals. Once on the system, they can then open an account, receive money, and track their activity.
Blockchain for Change has raised more than $500,000 in a seed round, but it’s also planning a public initial coin offering where it hopes to raise up to $50 million. It generates revenue by charging fees to users at a rate of $3 per month.
Global Debt Registry (GDR), the asset certainty company, today announced its membership to The Wall Street Blockchain Alliance (WSBA).
WSBA is an industry non-profit trade association created for financial market professionals, by financial market professionals. The alliance engages market participants, regulators, policymakers and technology innovators to advocate the adoption of blockchain’s distributed ledger technology.
Discover has announced that transactions made with Apple’s new Apple Pay Cash card will leverage the Discover Network.
The card is part of the new Apple Pay functionality, which allows U.S. customers to quickly, easily and securely send and receive money among friends and family. When Apple customers receive money on a supported device, the money is added to their new Apple Pay Cash card. They can use the money instantly to pay someone or to make purchases using Apple Pay in stores, apps and on the web.
One of America’s biggest payday lenders is launching on the stock market with a $620m valuation, cashing in on mounting hopes that the Trump administration and Republicans in Congress will ease regulatory restrictions on the sector.
Curo Group, which targets “underbanked” consumers and is behind WageDayAdvance in the UK as well as Speedy Cash in the US, begins trading on the New York Stock Exchange on Thursday.
Shares in the private equity-backed company were priced on Wednesday evening at $14 per share, according to Bloomberg data.
Recently, a Manhattan federal jury convicted Richard Moseley Sr., the head of an online network of payday lenders and loan servicers, on charges of wire fraud, aggravated identity theft, and violating the Racketeer Influenced and Corrupt Organizations Act and Truth in Lending Act, among other counts.
Moseley was convicted due to his leadership role over a vast and complicated system of interrelated companies that collected over $220 million from more than 600,000 borrowers and deceived regulators in the process. Convincing state and federal regulators and even his own lawyers that his companies were based offshore and not bound by U.S. law, Moseley coordinated a network of lenders and loan servicers that routinely misled both consumers and regulators.
Instamotor, the free online used car marketplace, announced today that its customers can now apply for and receive financing for vehicles on its platform.
An estimated 54% of used car buyers need financing according to Experian. By working with leading direct-to-consumer automotive lenders, Instamotor will become one of the few true automotive marketplaces to enable its users to shop for a used car and secure the financing more than half of them will need, all conveniently integrated in one place.
Loans enabled through Instamotor will be available to consumers with FICO scores as low as 500, which are people who commonly have trouble receiving optimal loan terms through traditional financing methods. Also, the application is optimized to be completed entirely in the comfort of one’s home rather than in a dealership office or credit union.
Marketplace lending platform Lendio, recently announced its has opened its new franchise located in Nashville, Tennessee. Lendio revealed that its franchise program makes accessing business loans easy by helping small business owners skip the legwork of looking for a small business loan.
Marqeta, the open API payment card issuing platform, and Progressive Leasing, a virtual lease-to-own company and a division of Aaron’s, Inc., today announced a technology partnership that will enhance the checkout process for Progressive Leasing customers.
As one of the largest players in the lease-to-own industry, Progressive Leasing sought a partner who could support their needs today and provide innovative solutions to help build their future payment checkout roadmap. Through the partnership, Marqeta will enable Progressive Leasing to issue virtual cards at the point of sale and work with them to create additional innovative payment offerings.
With the partnership, Marqeta will enable Progressive Leasing to take advantage of a wide range of modern features, including virtual card issuance, tokenization, and its patent-pending Just-in-Time (JIT) Funding, allowing Progressive Leasing to authorize and reconcile transactions in real time.
To those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds online, crossing Kickstarter with construction. A pair of six-story towers connected by a skybridge, the commercial project does in fact resemble a hand weight, with an ostentatious, colorful Italianate pattern sprawled across the facade for extra impact.
Funded in part by investors who pooled money via the Crowdstreet crowdfunding platform, the building, located in a former industrial neighborhood called Burnside Bridgehead, is also open for business and looking for tenants. It’s the city’s first crowdfunded building, and a sign that the growing world of real estate crowdfunding has developed and matured since a 2012 change in investment regulations made these platforms possible.
While reliable numbers about this growing and fragmented market prove difficult to come by, research firm Massolution estimated the global market for real estate crowdfunding surpassed $3.5 billion in 2016.
More than $3 billion has been raised through so-called initial coin offerings so far in 2017.
That wait-and-see stance looks to evolve into much more action in 2018, suggest those who’ve either spoken with the Securities and Exchange Commission or otherwise have a vested interest in its rulings. (The SEC isn’t commenting publicly on its specific plans.)
Just Friday, a new division of the agency that’s focused on ICOs filed charges against an outfit called PlexCoin that reportedly raised $15 million from thousands of investors by promising a 1,354 percent return in 29 days or less.
A row has erupted over credit scoring after the head of FICO, the company whose metric underpins trillions of dollars in lending decisions in the US, hit out at some lenders for supplying customers with a rival measure he dismissed as “Fako”.
The group that supplies lenders with the rival assessment, VantageScore, hit back, saying Mr Lansing was spreading “misinformation aimed at discrediting FICO’s only real competitor”.
The spat points to the opacity of credit scoring, a crucial part of America’s consumer finance economy that is in the spotlight after the huge data loss at the credit reporting company Equifax.
Tips for Reducing College Costs (Earnest Email), Rated: B
Roostify, a provider of automated mortgage transaction technology, today announced that it has signed an agreement with Black Knight, Inc. (NYSE:BKI) to integrate its platform with Black Knight’s LoanSphere Empower loan origination system (LOS). The integration will enable Empower users to add further efficiency and transparency to the loan origination process – from application to closing.
AutoGravity has announced the appointment of Sheng Wang as Chief Technology Officer (CTO) to drive the company’s global engineering efforts. Wang joins AutoGravity’s executive team with responsibility for leading product and engineering to deliver a trustworthy and innovative car buying experience that empowers the consumer.
Prior to her appointment as CTO, Wang led AutoGravity product development as the company’s first Director of Product, building cross-functional teams to develop and launch the award-winning AutoGravity platform, as well as branded platforms for Volkswagen Credit and Kia Motors Finance. Wang joined AutoGravity with more than fifteen years of leadership experience in the technology industry and an uncompromising dedication to building dynamic teams and high-impact products that people love.
QCash Financial, a Credit Union Service Organization (CUSO) providing automated, cloud-based small-dollar lending technology for financial institutions, announced that it was selected as the winner of Financial Times Future of Fintech Innovation Award.
The FT Future of Fintech awards recognize pioneering companies able to demonstrate innovative ideas capable of creating lasting change in the financial services sector on a global scale. Financial Times offers an Innovation Award for newer Fintech companies that are bringing out novel solutions. QCash Financial was awarded the Innovation Award.
Funding Circle today announced that investors have lent more than $5 billion globally to small businesses through the Funding Circle platform. This has supported a network of 40,000 businesses across the UK, USA, Germany and the Netherlands and helped to create more than 100,000 new jobs.*
Today’s news follows a record November for Funding Circle globally with the business facilitating more than $260 million of lending, including $175 million in the UK (£130m), $70 million in the US and $15 million in Continental Europe (€14.5m). Together this has helped thousands of business owners to access fast, transparent finance to grow their businesses, and will lead to an estimated 7,500 new jobs.
With US businesses now having accessed more than $1 billion in funding through the platform, Funding Circle becomes the first lending platform anywhere in the world to have facilitated more than $1 billion across two markets.
On Wednesday, UK peer-to-peer lending platform RateSetter released its accounts for the year ending on March 31, 2017. The online lender reported that revenues were £23.7m, up 38 percent from 2015-16; loans under management grew by 23 percent, from £581m to £714m; the number of active lenders grew by 36 percent from 31,036 to 42,049; and, over the same period, the number of active borrowers grew 27 percent from 161,000 to 204,000.
RateSetter booked a pre-tax loss of £23.3 million in the year to March 2017, compared to a £5.3 million in the previous year. The company operates a peer-to-peer platform that matches retail investors with individuals looking to borrow money.
Operating losses were £9.2 million last year but the figure was pushed higher by a one-off write-down relating to a loan the platform made to Adpod Limited, an advertising business RateSetter lent £12 million. ‘A resilient business’
RateSetter’s accounts also show that revenue rose by 38% to £23.7 million. Loans under management rose by 23% to £714 million. The number of active lenders on the platform rose by 36% to 42,049 and the number of borrowers rose by 27% to 204,000.
A goodwill impairment pushed pre-tax losses for RateSetter down to £23m in the year ending March 2017, despite revenue growth of 38% to £23.7m.
The company, which launched a consumer vehicle and commercial assets HP offer this year, saw a rise of 36% in the number of lenders and 27% of borrowers. However, operating losses of £9.2m were further weighed down by a £14.1m goodwill impairment on a loan to advertising company Adpop.
In 2015 Vehicle Trading Group, a company operating in motor finance for consumers and dealerships, used a wholesale facility from RateSetter to lend £12m to Adpop. Both Vehicle Trading Group and Adpop subsequently went into financial difficulties, and RateSetter then bought the two companies.
RateSetter thus decided to back Adpop’s repayments of third party loans, preventing its provision fund from absorbing the hit, as it normally would in case a borrower defaults.
Starling Bank has been granted approval by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to offer customers a wide array of financial products by the mobile only bank. Starling Bank received a licence to operate as a bank by the Bank of England in 2016. The digital only challenger bank will now be able to provide; mortgages, consumer loans, ISAs, and other investment products via their App. No bricks and mortar necessary.
P2P Global Investments (P2P), the largest of the listed alternative lending funds, has won the backing of Invesco Perpetual’s Mark Barnett, its largest shareholder, for the turnaround plan it outlined last week.
The financial advisory sector has seen much change in the past few years, much of it driven by new technologies and a wave of new market entrants. While we are seeing consolidation and innovation in response, this is just the start. So if you thought the merry-go-round was slowing down, then grab hold tightly because it is only going to accelerate.
‘Fintegration’ – the integration with fintech services – is emerging as an important factor.
What is common to both groups is their appetite for financial online and digital services – from online banking and mortgage management to peer-to-peer lending platforms. There is no doubt we will shortly see the fully integrated dashboard becoming commonplace.
N26, the European mobile banking service, today announced the launch of N26 Metal, the company’s premium MasterCard-affiliated debit card “tailored to the needs of digital customers” at TechCrunch Disrupt Berlin. N26 Black customers in Germany, France, Italy and Austria will be able to sign up for the new NFC-enabled card, which obviously features a metal core made from tungsten and that makes the card weigh a lot, starting December 14.
It’s also worth noting that this is the first metal card in Europe that supports contactless payments.
What better company to partner with then than co-working and real estate startup WeWork. Using the N26 Metal service, N26 customers will also be able to join the WeWork network and get credits to reserve workspaces and conference rooms.
Revolut, which provides foreign currency services to consumers and small businesses, said that from today its users would be able to buy bitcoin and other “cryptocurrencies” using 25 conventional currencies.
Marking its 15th anniversary year, BFS Capital, a leading small business financing platform, announced it has now extended over $1.7 billion in financing since funding its first deal in 2002. The company also reported that over 75 percent of its originations have occurred in the last five years and more than 25 percent took place in the last 18 months. For full year 2017, BFS Capital expects to generate more than $300 million in originations, a new annual high.
Today, Kabbage announced they had crossed the $4 billion mark. They have now lent to more than 130,000 small businesses which they claim is the largest customer base of any online small business lender.
This week LendingHome announced it had crossed $2 billion in mortgage loans for homeowners and real estate investors.
Funding Circle UK crossed the £3 billion (approx. $4 billion) mark in small business lending for their UK business.
LendingClub quietly announced total small business originations of $500 million since 2014 in a recent blog post.
The Chinese government instituted tough new regulations on online consumer lending platforms, which are made up of payday loans and peer-to-peer lending. Some of them are associated with large holdings in the emerging markets exchange-traded fund like Ant Financial, an Alibaba Group affiliate.
While much of this is a continuation of the Chinese debt bubble, the move suggests that it has gotten out of the regulators’ control.
We see a global trade boom continuing to drive emerging markets as global Purchasing Manager indexes show continued growth in demand for manufactured goods. For example, Korea is already registering signs of slowing Chinese demand but is still showing 9.6 percent year-on-year growth for November exports. However, we continue to watch the tone out of Washington, since a shift toward more protectionism could put a dent in this.
Viola, the Israel-based technology investment group, is launching new independent VC fund targeting fintech startups from anywhere in the world. Dubbed Viola FinTech, the “cross-stage venture fund” has an initial closing of $100 million but will extend that towards $120-150 million. It is backed by global banks, insurance companies and asset managers from North America, Europe, APAC and Israel, including Scotiabank, The Travelers Companies, Inc and Bank Hapoalim.
San Francisco-based financial technology company Credible Labs Inc. is going public, but not on a U.S. exchange.
The startup, a consumer loans marketplace, raised $50 million (A$66 million) in an initial public offering on the Australian Securities Exchange, according to a statement Thursday.
The IPO values Credible at A$300 million, about 50 percent higher than the valuation it got in its last fundraising round, according to people familiar with the matter, who asked not to be identified as the details aren’t public.
Yellow Brick Road has added online lender Prospa to its lending panel. The move was described as an effort to diversify its lending offerings for Australian small business customers. Yellow Brick Road is a full service wealth management company that offers products and services for home loans, financial planning, insurance, superannuation, and investments.
Speaking to Nest Egg, CEO of fully licensed marketplace lender Zagga, Alan Greenstein said that self-directed investing is now a “very, very big part of SMSF investment” and that according to Zagga research, well over 30 per cent of SMSFs at a sophisticated wholesale level are self-directed investors.
Pointing to a recent whitepaper produced by Zagga, Mr Greenstein said SMSFs tend to be invested at either end of the spectrum; very high risk and high yielding opportunities, or very low risk opportunities.
He said that Zagga’s newly launched ZAG Fund offered a middle ground, with a targeted net return of 6.5 per cent.
With loan capital provided by Kiwibank, Ngā Tangata Microfinance (NTM) provides no-interest loans to qualifying clients for family well-being and relief from high-interest debt.
An evaluation conducted by the University of Auckland’s Centre for Applied Research in Economics found NTM’s no-interest loans were crucial in helping low-income clients break the cycle of debt caused by predatory payday and fringe lenders.
Partnering with local budgeting advisors, NTM has now disbursed more than $660,000 in no-interest loans to more than 300 clients, with 70% of the support being for relief from high-interest debt. It is estimated these loans had potentially saved clients a total of more than $1 million in interest and additional costs. Requests for help continued to trend up – 30% more NTM loans were approved in the past 12 months compared to the previous year, amounting to nearly 130 loans worth $275,000.
When you buy a phone, you have the option to pay for it then or pay later. You have this option even when you are buying grocery or paying bills. Credit these days can be available relatively easily, even for amounts as low as Rs1,000. In fact, in a country where you need to have a good credit history and credit score to get loans from banks, you can now get loans on your phone—even if a bank would not lend to you.
According to data from the Centre for Monitoring Indian Economy Pvt. Ltd (CMIE), personal loans (incremental numbers) increased 179% and credit card outstanding rose 34.63% in value during April to October period in FY 2017-18. In comparison, incremental numbers during the same period for housing loans showed negative 32.7%.
HDFC Bank Ltd saw a 35.75% growth in personal loans and 44.50% growth in credit card business in the second quarter (on a year-on-year basis). ICICI Bank, in its second quarter results this financial year said that its personal loan book saw a 40.1% year-on-year growth and the credit card business grew by 36.5%. And this is true for the non-banking finance companies (NBFCs) as well. Bajaj Finance Ltd saw a 42% growth in consumer lending in the same period.
Korean startups flock to Silicon Valley hoping to become the next Facebook or Google. However, setting up a business from scratch where thousands of new startups come and go every year, is not easy, and becoming a “unicorn” is near impossible.
One fundamental reason is because they can’t get enough funding, according to Tim Chae, head of the Korean unit of US accelerator 500 Startups.
First of all, a company should either run a business in a certain sector for which Korea is widely famous worldwide, such as beauty and e-sports segments, rather than roll out me-too services and products.
On November 29–30 a large-scale event — Block Show Asia 2017 — was held, and Datarius Cryptobank participated in this event.
Datarius Cryptobank is a unique project. This is a first social cryptobank built on base of the distributed register technologies using neural networks and artificial intelligence. The main attractive features of the project for investors and future customers are the lowest transaction fees, as well as P2P-lending.
IOU Financial Inc. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that it has facilitated more than US$500 million in financing to thousands of merchants and small businesses across the United States and Canada since launching its lending platform.
News Comments Today’s main news: Experian buys, integrates Clarity Services. Think Finance files for bankruptcy. PayPal offers robo-investing. Assetz Capital achieves 1.5M GBP funding through Seedrs. Elevate launches industry research repository. Nav Athwal steps down as CEO of RealtyShares. Ping An Insurance prepares for Lufax IPO. TransferWise doubles revenue. Today’s main analysis: LendingTree releases monthly mortgage offer report. Today’s thought-provoking articles: The […]
PayPal to offer robo-investing. AT: “This is big news for PayPal customers. The payments service has increasingly become more like a traditional finance company with acquisitions and interest in technology that will expand its core business. A welcome development indeed.”
The payments company was connecting its website and smartphone apps with those of Acorns Grow, a five-year-old automated savings and investment service, the two companies said on Monday.
PayPal users would be able to use their accounts to make contributions to Acorns and would be able to monitor and manage their Acorns investments from the PayPal app, said Joanna Lambert, the company’s vice-president of consumer financial services.
PayPal is rolling out the Acorns offerings in phases, with the first batch of users getting access on Monday and all US users by early 2018.
The Center for the New Middle Class, a research-focused body developed by Elevate to engage and educate the public about the growing needs of individuals who do not have access to traditional credit options, today announced it has launched an industry research repository for researchers, reporters, policy makers and the general public. Known as the Resource Database, it is a curated collection of the best research on non-prime Americans and their challenges, attitudes, and needs.
In addition to containing external research and editorial content from sources such as Pew, the National Bureau of Economic Research and “The Atlantic,” the database will house research and commentary from the Center for the New Middle Class regarding economic conditions that affect America’s New Middle Class.
By visiting the database here users can search for entries, filter the results, and see the full bibliographic reference of information provided.
The shame of all this is that all the sensational headlines have already been written and confirmed in many people’s minds the supposed shady nature of our industry. It would have been far better for everyone if the authors of this report had done their homework and produced a thoroughly researched report in the first place.
As Todd Baker pointed out, “we really should know which online lenders are adding to consumer financial health and which ones are detracting from it.”
“[These borrowers] are not underbanked, they’re sort of overbanked,” observed Yuliya Demyanyk, a Cleveland Fed economist and co-author of the report. “Defaults on [marketplace] loans have been increasing at an alarming rate, resembling pre-2007 crisis increases in sub-prime mortgage defaults, where loans of each vintage perform worse than those of prior origination years.”
The authors of the Nov. 9 report “have received several questions about the composition of the underlying data set they used in their analysis,” the Cleveland Fed said on its website, and are “revising their paper to further clarify the data sample they used” and will post the new version as soon as it’s ready.
So, what happened?
One theory is that they may have stretched the definition of online lending so far as to make an accurate and credible apples-to-apples comparison implausible.
Karen Webster spoke with Lending Club’s head of government relations, Richard Neiman, to get a better sense of the source of discrepancy, since even Googling the definition of marketplace loan, Webster commented, might have saved the Cleveland Fed economists a lot of grief.
“The industry is so big now,” Neiman said, “that it is not easy for policymakers to fully understand the divergences between different platforms, the different products, the different modeling and the differences in levels of transparency that are now defined as online lending.”
October’s best loan offers for borrowers with the best profiles had an average APR of 3.75% for purchase and 3.70% for refinance, on conforming 30-year loans.
For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were down 3 bps month over month, to 4.31%, the lowest since November 2016. In contrast, the loan note rate of 4.18% was up 7 bps to the highest since July.
Consumers with the highest credit scores (760+) saw an average APR offer of 4.18% vs 4.44% for consumers with scores of 680-719. The APR spread of 22 bps between these score ranges was 1 bps lower than in September. The spread represents nearly $12,600 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $228,730. Additional costs are due to higher interest rates, larger fees or a combination of the two.
Refinance APRs for conforming 30-yr fixed loans were up 10 bps to 4.26%. The credit score bracket spread widened to 16bps from 15 bps, nearly $7,500 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $235,844.
The average proposed down payment for purchase mortgages have been rising for 7 months and reached $59,680 in October.
Average monthly payments were little changed at just over $1,100 for both purchase and refinance. The credit score bucket spread was $241 for purchase and just $77 for refinance.
Let’s take a look at an often-repeated idea that is popular in the gold and alternative investing communities. The government possesses a printing press. Therefore, it will never default. It will just inflate its way out of the debt. It will devalue the dollar.
The government does not set the value of the dollar. And it has no mechanism to set it. So, logically, it has no mechanism to reset it. It cannot devalue it. In the same way, you cannot lower yourself down by your bootstraps since you are not lifting yourself up by them in the first place.
We must emphatically state that the government does not print. It borrows. Congress does not have a printing press, to create greenbacks. It has a Treasury that can sell bonds to cover whatever payments the government is obligated to make that it has not got tax revenues for. Over the past year, for example, the government increased its debt by over 630 billion dollars.
Like any bank, the Fed borrows to fund its purchases of interest-paying assets. It earns a spread between what it pays (currently about 1.25%) and what its asset portfolio pays (over 2%). The commercial banks currently deposit over $2.1 trillion in excess reserves, and the Fed’s total liabilities are over $4.4 trillion including Federal Reserve Notes (on which the Fed pays zero). Unlike any commercial bank, there is a law that obligates us to treat the Fed’s liabilities as if they were money.
Right now speculative mania is occurring in crypto currencies so that may (but not necessarily, beware correlation!) shunt such capital flows away from gold. As to default risk, there are signs of rising stress in high yield credit markets, but it’s early yet.
Nav Athwal, one of the more prominent founders in the real estate crowdfunding space, has announced his decision to step down from the CEO role at RealtyShares, a platform he founded four years ago.
Ed Forst, RealtyShares Board Member and former CEO of Cushman and Wakefield, has been selected as the interim CEO while the company searches for a permanent replacement.
Crowdfund Insider spoke to Athwal regarding his decision to change his leadership role at RealtyShares and he explained he would continue to be engaged with the company;
“RealtyShares is in the strongest position it’s ever been in. The company is moving from the build phase to the scale phase of its lifecycle. To best position RealtyShares for the future, I made the decision to transition out of my role as CEO to a new role on the Board of Directors. I asked Ed Forst to take on the role of interim CEO, while we look for a permanent CEO who will fit the culture and profile we’re seeking. I am still very much a part of RealtyShares and will be actively involved in strategic decision-making. I am looking forward to supporting the company in this new capacity and getting back into principal real estate investing and agribusiness. As I begin to work on additional projects, I will be sure to let you know.”
I started RealtyShares four years ago with the idea of creating a company that would make real estate more accessible, efficient, and transparent. RealtyShares has come a long way since those early days in my living room. It is now a 100-person operation and the leading platform for online real estate investing and capital formation.
My primary focus has always been to best position RealtyShares for future success. RealtyShares is now at an inflection point. I will remain on the Board of Directors supporting the company as it continues on its journey to build a global marketplace for real estate investing.
Kabbage Inc., a global financial services, tech and data platform serving small businesses, released new data reporting on the similarities that connect all small business owners (SBOs), including personal sacrifices, professional challenges and growth expectations. Featuring responses from 400 SBOs, the data shows more than 67 percent expect to increase revenues by the end of 2017, with more than half anticipating an increase of 10 percent or higher.
In partnership with Bredin, a leading small-business market research firm, Kabbage polled small business owners across industries, including retail, education, manufacturing, food and beverage, healthcare, automotive, energy and finance.
RealtyMogul has been awarded the Gold Stevie Award in the Consumer Services category during the 14th annual Stevie Awards for Women in Business.
The Stevie Awards for Women in Business are the world’s top honors for female entrepreneurs, executives, employees and the organizations they run. All individuals and organizations worldwide are eligible to submit nominations – public and private, for-profit and non-profit, large and small. The 2017 awards received entries from 25 nations and territories.
Fewer than two thousand people live in Bluff, but any one of them can walk into the post office and cash a check or apply for a loan.
Meanwhile, the United States is riddled with what are called banking deserts — inhabited areas, many of them urban, where residents have no access to a bank.
One in four US households is unbanked or underbanked, meaning they’re fully or partially boxed out of traditional financial services. Those 68 million people represent a growing market for payday loan sharks, and spend an average of 10 percent of their yearly income on the high interest and fees that go with alternative financial services — roughly the same proportion they spend on food.
But there’s a collective solution to the banking desert: we could set up a public postal banking system like New Zealand’s.
But one day last year Mr. Hansen was complaining to his mother, an avid investor, about the high fees he was paying on his investment account. She suggested he look into an online investment company called Betterment that markets itself as a low-fee alternative to traditional financial advisers.
Some of the most popular robo-advisers — such as Betterment, Wealthfront and Charles Schwab’s Intelligent Portfolio — use exchange-traded funds to keep costs low. Betterment charges an annual fee of 0.25 percent of the account value. Wealthfront charges no fee for accounts $10,000 or less. Schwab’s robo-advising platform limits its fees to the operating expenses included in the ETF, which range between 0.07 percent and 0.21 percent of the fund balance.
Citizens Bank, a Providence, R.I.-based bank that claims the third-largest deposit market share in the Pittsburgh region, introduced a new digital investment and advisory platform on its online banking home page in September.
A July report by S&P Global Market Intelligence predicts that digital advice assets will grow from $98 billion at the end of 2016 to $460 billion at the end of 2021.
Digital asset-based lender, InterNex Capital (“InterNex”) is pleased to announce their Velocity platform for small and medium-sized businesses. Velocity provides borrowers on demand liquidity through the InterNex Line of Credit and delivers real-time access for working capital management. Velocity empowers accelerated growth and powerful analytics, traditionally only available to large enterprises.
On Nov, 14th, Wells Fargo announced Overdraft Rewind, a new feature to help customers avoid fees for overdrawing their checking accounts right before payday, when overdrafts most commonly occur.
Going forward, the bank will not charge overdraft or insufficient funds fees if a direct deposit large enough to cover those charges is received by 9 a.m. local time the day after the account goes negative.
You don’t need to opt in; if you have a Wells Fargo account, you’re covered by default.
Global Debt Registry (GDR), the asset certainty company, today announced it has developed a collateral pledge registry, the first of its kind in the structured credit space, using Hyperledger Fabric, one of the Hyperledger blockchain framework implementations hosted by The Linux Foundation.
Among those quoted in the story is Mark Kvamme, a top venture capitalist in Silicon Valley who now heads Columbus-based Drive Capital. The firm has raised $550 million and invested in 26 companies, betting, The Timessays, that “the middle of America amounts to an undervalued asset, rich in markets, new business ideas and budding entrepreneurs.”
Even so, three-quarters of all venture capital invested in America goes to California, New York and Massachusetts, the National Venture Capital Association estimates, and Ohio gets less than 1%.
For the many Americans who face unmanageable credit card debt, it’s time to get their financial lives in order, says Andrew Housser, co-founder and CEO of Freedom Debt Relief– and if they need outside help, time to know how to find the right firm.
Atomist is formally launching with the Developer Automation Platform, an open source client and API. The new Development Automation Platform is designed to bring automation into the development and delivery process so that developers can focus on more important tasks.
Companies such as NVIDIA, Pivotal, Kyyti Group, Marlette Funding and Barclays Africa use Atomist for automation.
Smart environments with Pervasive Human and Machine Networks
Predictive Analytics driven Customer 360
Artificial Intelligence driven Multi-structured analytics – Cognitive Intelligence can enable insurance companies in analysing contact centre as well as chat data interactions in real time to predict propensity for fraud based on voice, video and text analysis and correlating the same with other similar fraudulent customer behaviors. The long term objective in such scenarios is to build machine learning based intelligent systems which learn on an ongoing basis based on historical pattern based analysis of billions of user and machine data points and predicts events.
Less than a month after launching its latest equity crowdfunding campaign on Seedrs, peer-to-peer lending platform Assetz Capital has successfully secured £1.5 million from more than 700 investors. The online lender took to the funding portal to raise £1 million for expansion.
NatWest has launched a chatbot that allows customers to seek financial advice from the comfort of their sofa.
The bot will determine the best way for customers to invest their money by asking questions such as what they want to achieve from investments, their current financial situation, what they can afford, their debts and other personal information, plus their attitude to risk.
It will then suggest ISA products they could consider for investment, plus how much they should consider investing and the most effective way to use their ISA allowance.
Three directors of an insolvent payday loan firm which received cash from pension liberation schemes have been disqualified.
Speed-e-Loans.com (SEL), used £1.2 million from private investors via the schemes to meet its existing debts.
Directors Philip Miller, Robert Alan Davies and Daniel Jonathan Miller have been banned from acting as directors for nine, six and five years respectively for breaching fiduciary duties and the duties of care, skill and diligence.
The London-based firm’s annual revenue has grown by 140 per cent since last year, coming in at £67m this year compared to £28m in 2016. Its audited results show an adjusted operating profit of £2m, and an overall profit for the fiscal year of £7.4m.
As a result, TransferWise’s operating loss has decreased from £17m in 2016 to £56,000 in 2017.
According to data provider Coinschedule, $3.3 billion has been raised in more than 200 ICOsover the past 12 months alone and the popularity of this innovative ICO form of crowdfunding shows no signs of relenting.
The Reserve Bank of India’s (RBI) guidelines for peer-to-peer (P2P) lending will attract more people to these platforms and help bring down the interest rates for borrowers, Bhavin Patel, founder and CEO of LenDen Club, told Shritama Bose. Players in the segment have sought the regulator’s clarifications on the permissibility of institutional lenders on P2P platforms, he added.
Will the RBI guidelines have an impact on the lending rates?
In the current scenario, the P2P lending market is a minuscule percentage of the huge lending market in India. But, due to the sentimental impact of the regulation, many more lenders may take to P2P lending, resulting in higher liquidity on such platforms. This will eventually lead to reduction of the interest rates offered to borrowers in this segment.
Traditional banking institutions have changed very little in the last hundred years. Most offer online banking and mobile apps these days, but behind the scenes, very little has changed.
In total, $49.7 billion was invested in fintech between 2012-16, which indicates just how important fintech is.
Fintech innovators are more cost-effective than traditional lenders. Their technology and business models are low cost. A traditional lender may have operating costs of around 7% compared to an online lender whose operating costs are as low as 2%.
A staggering 38% of customers no longer visit banks. The rise of online banks has proven that traditional bank branches are not essential. Online lenders such as Atom have become firmly embedded in the banking ecosystem.
Two cities thrive in this new world. Singapore and Abu Dhabi. Long before renewable energy was pervasive, Abu Dhabi had established Masdar. It has brought in the magic of the Louvre from Paris. Singapore has consistently been ahead of the curve of change. The world’s largest vertical botanical garden paves the way for urban farming. The Marina Reservoir is a masterpiece of engineering and vision that turned an inlet of the sea into a strategically critical freshwater resource for the “Little Red Dot”.
Recently, the Abu Dhabi Global Market (ADGM) held its inaugural FinTech Abu Dhabi Summit.
Two major announcements were made at the event. The first was the launch of the ADGM FinTech Innovation Centre by the first half of 2018.
The second was about a collaboration. ADGM and Plug and Play, the world’s largest startup accelerator based in Silicon Valley, signed a new partnership to launch a startup acceleration programme in Abu Dhabi, focused on FinTech. The programme, first of its kind in the Mena region, will be housed within the ADGM FinTech Innovation Centre. The partnership was signed by Ahmed Al Sayegh, chairman of ADGM, and Saeed Amidi, CEO, Plug and Play. Some of Plug and Play’s success stories include Google, Paypal, Dropbox and Lending Club.
News Comments Today’s main news: SoFi withdraws banking application. SoFi completes largest loan securitization to date. Retailer sues Kabbage. New UK marketplace loan deal mandated. OakNorth achieves unicorn status with 154M GBP raise. PPdai plans $350M U.S. IPO. Linked Finance gets 2M Euro equity investment. Today’s main analysis: Q3 2017 FinTech Insights Report (must-read). New generation of high net worth individuals spur […]
SoFi withdraws banking application. AT: “There has been growing speculation about SoFi’s chances of obtaining a banking license following the exit of CEO Mike Cagney, but did anyone expect the company to withdraw its application? It does make sense. The company needs to re-establish its footing and focus on finding new leadership and decide upon its direction from that. However, this positions Square to potentially be the first alternative lender to be approved to start a bank.”
Student online lender Social Finance Inc said on Friday that it is withdrawing its application for a bank license in the wake of the departure of a number of senior executives, including co-founder and former Chief Executive Mike Cagney.
SoFi announced today the closing of a $776.7 million offering of SoFi Professional Loan Program 2017-E notes.
SoFi 2017-E marks the company’s largest asset-backed securities issue to date and its 10th ABS transaction this year, bringing SoFi’s total issuance for 2017 to $5.375 billion. Since inception, SoFi has closed 30 transactions totaling $12.4 billion in issuance. With the closing of SoFi 2017-E, SoFi maintains its position as a top ten ABS sponsor. The recent transaction was heavily subscribed with orders totaling $2.3 billion.
Q3 2017 financing volume of $5.1 bn was lower than in Q2 2017 ($8.8 bn), but higher than in Q1 2017 ($4.3 bn). This quarter saw the second highest financing deal count ever at 412 transactions, only behind Q1 2016, which had 438.
Financing volume year-to-date is tracking just below 2016’s record level and is on pace for the second strongest year ever. This is even more impressive considering that 2016 was skewed by a handful of megadeals in China.
The Banking sector continues to be the most active sector this year in both the number of transactions (356 year-to-date) and financing volume ($6.3 bn year-to-date).
2017 FinTech financing volume in Europe ($5.3 bn) is already more than 2x the financing volume of 2016 for the region ($2.6 bn).
Q3 2017 M&A volume ($32.9 bn) was the highest since Q4 2015 ($50.5 bn), which included Visa’s $23.4 bn acquisition of Visa Europe. This quarter had eight $1 billion+ M&A deals, which is the most since Q4 2015 (which also had eight).
So far this year, 57% of the total global M&A dollar volume is comprised of international targets, although only 38% of the number of transactions represents international targets.
A Massachusetts clothing and sports retailer filed suit in federal court Thursday alleging that financial technology company Kabbage Inc. evaded state law by offering high-interest loans through an industrial bank based in Utah, which places no ceiling on interest rates for commercial loans, all the while serving as the true lender.
NRO Boston LLC and owner Alice Indelicato accuse Kabbage and Celtic Bank Corp. of devastating the retailer with their “rent-a-bank” scheme, whereby the bank was listed as the lender for loans in order to get….
Renaud Laplanche tries to “keep a positive attitude rather than focus on my frustration” when it comes to Lending Club.
“It was very, very frustrating. I’m not commenting on the story, but the best way to actually understand what really happened is to read the filings. I think the press made it sound a lot worse, a lot more sensational, than it really was.”
Upgrade raised $60 million (£45.7 million) in April, the biggest ever Series A funding round for a US fintech startup. Many of Lending Club’s original investors have backed the business and Jefferies, an investment bank burned by Lending Club’s loan term scandal, has signed up to buy loans from Upgrade — a vindication for Laplanche.
Now he is focused on “what can I learn from it, what can I do better. Upgrade has been part of that.”
Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has exceeded a $1.5 Billion of loans issued by digital lending platforms and verified by the Company’s suite of due diligence solutions. On the heels of the GDR’s announcement of its successful SOC 1 Type 2 and SOC 2 Type 2 attestations last week, this achievement confirms the Company’s role as a leader in online lending’s ongoing expansion, driving capital growth in the sector by providing certainty and transparency around investors’ online lending portfolios and protection against risks surrounding the loan data integrity.
In the digital age, a lot has changed about how businesses operate — and a lot of new data is being generated in the process.
This creates new possibilities for judging a consumer or merchant’s creditworthiness. Square and PayPal have been taking advantage of this for years with models that rely on a merchant’s sales history to determine their likelihood to repay a loan, and American Express is ready to compete.
Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing across an array of asset-based strategies, announced it has entered into two additional Credit Agreements with two separate wholly owned subsidiaries of Elevate Credit, Inc.
Rise Credit Service of Ohio, LLC entered into a Credit Services Agreement with Redpoint Asset Funding Ohio, LLC (“Redpoint Ohio”) whereby Rise Credit Service of Ohio, LLC acts as a credit service organization on behalf of consumers for certain loans originated, funded and collected by Redpoint Ohio.
Furthermore, Rise Credit Services of Texas, LLC, a wholly owned subsidiary of the Company, entered into a Credit Services Agreement with Redpoint Capital Asset Funding, LLC (“Redpoint”) whereby Rise Credit Services of Texas, LLC acts as a credit access business on behalf of consumers for certain loans originated, funded and collected by Redpoint.
In addition to the agreements with Redpoint and Redpoint Ohio described above, Rise Credit Services of Texas, LLC, Rise Credit, LLC and the Company also entered into new guarantees of certain receivables of the Company and its subsidiaries held by Redpoint and Redpoint Ohio.
True Link Financial, the financial services provider for seniors, announced today that it has raised $8 million in a Series A funding round led by QED Investors, with additional investment from Radicle Impact and Initialized Capital. In conjunction with the investment, QED’s Founding Partner Frank Rotman will join True Link’s Board of Directors. With this latest round True Link has raised $15.8 million since the company’s founding in 2012.
The 45 million seniors in America – the largest and fastest-growing segment of the population – are facing new challenges. Average lifespans increased by more than thirty years over the 20th Century, stretching savings further and layering in new medical costs. Since the time today’s retirees entered the workforce, the percentage of workers with a pension has dropped by more than half. 5.5 million Americans have Alzheimer’s today, and more than 16 million will have the disease by 2050. And according to True Link’s groundbreaking 2015 study, financial fraud costs the aging a whopping $36 billion a year. In short, people are living longer with fewer resources and more risks.
The company’s customer base has grown twentyfold in the last three years. Its cards division is the first Silicon Valley startup debit card issuer to turn a profit, and its robo-advisor is Silicon Valley’s first robo-advisor to turn a profit.
When banks resisted expanding credit in the years following the financial crisis and passage of the Dodd-Frank Act, online marketplace lending seized on what seemed like a niche opportunity: targeting the credit markets deserted by banks.
But with issuance of marketplace securitizations now exploding — rising 300% cumulatively in the past two years — the idea of online lending as a niche is quickly deteriorating.
The U.S. Small Business Administration today announced fiscal year 2017 lending numbers showing increasing loan levels in small business lending through the 7(a) and 504 loan programs, as well as increases in lending to women, veterans and emerging communities.
SBA approved over 68,000 loans in the 7(a) and 504 loan programs in FY17. These programs provided over $30 billion to small businesses.
In FY17, the 7(a) program supported a consistent number of loans — more than $25.44 billion combined across 62,430 loans. The SBA continues to streamline and improve access to its loan program for small loans and emerging communities, delivering more than $5 billion in smaller loans of $350,000 or less in FY17.
7(a) lending to women-owned businesses (both majority and minority owned) grew in total dollar and volume. FY17 lending exceeded $7.5 billion, an increase of $298 million from FY16.
FY17 504 lending to women-owned businesses reached $955.2 million, a $277 million increase over the previous fiscal year. Loans to veterans totaled $1.15 billion for 7(a) and 504 lending.
P2B Investor has launched an interesting partnership program that is good for banks, good for borrowers and good for P2Bi. Banks, typically smaller banks, would like to lend more to SMEs but are risk averse due to multiple reasons. P2B Investor’s new program allows the bank to buy the first half of the loan with their low cost of capital, and P2Bi marketplace buys the second half. Thus the SME has a hybrid line of credit to finance its cash needs.
Consumers who are caught in a financial squeeze might one day be able to skip the payday loan store and turn to banks and credit unions for lower-cost, quick-fix loans.
Congress could move to overturn the rule — but some say that’s unlikely.
What could change: Lenders eventually would be required to research upfront whether borrowers could afford to repay all or most of their short-term loans at once — including payday loans and auto title loans — and longer-term loans with “balloon” payments.
What won’t change: People who are cash-strapped still will be looking for ways to cover their bills.
AutoGravity, a fintech platform for car shopping, has been nationally available for less than a year. The app’s been downloaded more than 750,000 times and processed more than $1 billion in financing requests.
Of the 20 largest automotive lenders, AutoGravity has some form of an agreement with 19, said chief marketing officer Serge Vartanov.
The app’s momentum is building: 100,000 of its downloads came in the month of August alone.
AutoGravity is now available in 49 states after kicking off with a soft launch in California.
While AutoGravity doesn’t disclose its overall lender portfolio, it has previously announced partnerships with Mercedes-Benz Financial Services and Hyundai Capital and a $30 million investment from Volkswagen and Daimler Financial Services.
The challenge is that regulatory bureaucracies in Washington, including the Federal Reserve, may be too slow to react to new technology — from cryptocurrencies and blockchain to crowdfunding — in the same way policymakers missed the risks embedded in the “innovations” in mortgage finance that ultimately fueled the worst housing bust and financial crisis in modern history.
“We’re not going to call it banking — we’re going to call it something else,” Bullard said.
Add in the number of people suffering because of the poor economy, especially millennials in the Gig Economy, living from paycheck to paycheck, unable to accumulate enough money for emergency savings, and Americans’ use of businesses such as check cashing companies or payday lenders or other alternate lenders, is entirely rational, in her portrayal, and it’s wrong for policymakers to act as if all Americans need to do is to be told they should get a bank account and that’s that.
Servon’s research for the book consisted, in part, of actually working at a check cashing service and a payday lender.
She then concludes the book by talking about “innovators.” She profiles a start-up that intends to provide an alternate credit-scoring model that takes into account other types of financial behavior that’s not typically incorporated into the mainstream credit bureaus’ credit scores, and a start-up that intends to make it cheaper to transfer money from one person to another, and a bank, KeyBank, that is more mission-oriented than the usual faceless big corporate bank.
One thing she entirely fails to mention is the fact that interest rates have dropped so dramatically.
A second development in the banking world that she neglects to mention is the rise in prepaid debit cards.
And the third missing item is that of competition.
But regardless of what happens to Cordray, the way the CFPB handles enforcement could be changing as we speak, because the CFPB’s enforcement director is apparently leaving the bureau.
Anthony Alexis, the Consumer Financial Protection Bureau’s enforcement chief, is stepping down after more than two years overseeing the agency’s efforts to combat abuses by the financial industry, a departure certain to fuel speculation that Director Richard Cordray will leave soon to pursue the Ohio governorship.
Alexis, a former Mayer Brown partner who was named enforcement director in 2015 after holding the role in an interim capacity, announced his departure plans to CFPB staff Thursday afternoon, according to a former CFPB attorney who is familiar with the matter.
A Manhattan jury on Friday found auto racer Scott Tucker and his attorney Timothy Muir guilty of operating a $2 billion criminal payday loan empire that preyed on millions of vulnerable borrowers and entered into sham deals with Native American tribes.
FINRA was looking to ratchet up engagement with industry players, he said.
To that end, the regulator has hosted roundtable discussions around the country with fintech firms, robos, vendors, and traditional broker-dealers’ technology departments to get a better handle on how the business is changing, Cook said. Later this month, FINRA will convene a new fintech advisory committee.
The transaction, MOCA 2017-1, will be offered in three tranches and is backed by 31,153 Zopa loans with a total outstanding balance of £208.96m. The loans have an average current balance of £6,708 and a weighted average seasoning of 4.5 months. The average interest rate is 7.2%.
OakNorth, a challenger bank focussed on lending to high growth businesses and property developers, has raised £154m in equity money in a round that values the company at £934m (approximately $1.3bn). The fundraise pushes the firm into “unicorn” territory – a term reserved for private tech firms with a valuation north of a billion dollars.
The money comes from The Clermont Group, Toscafund and Coltrane, which together have purchased a 16 per cent stake in the challenger bank. OakNorth says the money will be used to boost its lending by an additional £1.5bn.
Every year, tens of thousands of small businesses see their loan applications refused by the big banks.
In fact, figures from the British Business Bank (BBB) indicate that this amounts to around £4bn in loans annually – a staggering figure when you consider that this is preventing businesses from being able to reach their full potential.
SMEs are expected to contribute £241bn to the British economy by 2025, up 19 per cent from last year’s figure of £202bn, according to research from challenger bank Hampshire Trust Bank and the Centre for Economics and Business Research.
“As for Cost of Capital. Marketplace lending has access to a very wide range of cost of capital. A lot of platforms sell loans to banks. You have Credit Unions buying loans. Credit Unions have a return target of 2 to 3%. Lower than Goldman Sachs. Marketplace Lenders have access to similar cost of capital.”
“The biggest myth of all is that Banks and other financial services are advantaged at this.They have all the data. The truth is the data is fragmented across all different tech stacks and it is difficult to utilize. Very expensive and slow. The data is in the wrong place.”
Antony Jenkins, CEO and founder of 10X Future Technologies
Blockchain platform BitRent announced a revolutionary solution in the area of new-built property: commercial and residential property shared investing at an early stage of construction and total control over construction process in real time by means of modules and structures chipping. The company operates on blockchain technology and smart-contracts protocol. BitRent platform’s mission is to make real estate investing easy, transparent and profitable all over the world.
There are changes ahead for the Peer-to-Peer Finance Association (P2PFA). The self-regulated trade body has been shaping industry standards for six years, but as alternative lending enters the mainstream, even the P2PFA has to be willing to evolve.
However, the next board meeting – set to be held in November – is expected to focus on an update to the P2PFA rules, membership criteria, and the association’s role in the wider regulatory community.
The departure of RateSetter and LendInvest (which no longer defines itself as a P2P lender) has brought the P2PFA’s market share down to around 50 per cent of the UK’s P2P sector. Current members include Funding Circle, Zopa, MarketInvoice, Landbay, ThinCats, Lending Works and newest member Folk2Folk but no new members have joined since February of this year. However, Farnish rejected rumours that the association is “a closed shop”.
For now, the P2PFA is focused on reviewing its own rules and Farnish confirmed that a revised version of these rules will be published before the end of the year.
The asset management industry is currently in a state of flux, and the manner in which individuals and institutions interact with their wealth managers is on the cusp of dramatic change. Digitisation and increased use of technology should mean that we are at the point of a low-cost revolution.
Robo-advice in ten points:
Robo-advice is online
The key is probably cost: Robo-advisors can be 60-70 per cent cheaper than traditional solutions and can provide savings of 1 percentage point per year of assets. Over a lifetime of investing, this would make £100,000s of difference to millions of investors in the UK alone.
Growth is strong: Whilst still only a fraction of the market, the assets under management of major players are growing between 50 and 100 per cent per year, and new entrants and concepts are developing all the time. There are currently over 100 robo-advisors in Europe with most based in either Germany or the UK.
There is a long way to go: Nutmeg, the UKs’ largest robo, has $1bn in assets, but Legal and General, the UK’s largest traditional asset manager, has over $1 trillion – a thousand times larger. Data in the US is similar, with BlackRock having $6 trillion under management and Betterment, the largest US robo, having a fraction of this.
On-boarding is a noted differentiator, but also a concern: The faster process and fact finding may not always be up to date with regulations or as rigorous as it should be.
Millennials are less important than predicted: Most of the original players in this nascent market targeted millennials. But older, wealthier and still tech-savvy baby boomers have become core clients.
Robo-advisors mainly use ETFs
Future robo-advisors will be more sophisticated
Robo-advice aids financial inclusion: Both the regulator and the industry are hoping that robo-advice will improve participation and access to the investment process.
Robo-advisors typically use Modern Portfolio Theory: Robo-advisors typically use mean-variance optimisation for asset selection, but future solutions are likely to use Liability Driven Investment (LDI) frameworks for portfolio construction.
Financial services firms could be missing a £130bn opportunity by not winning over women, according to a new report.
UK financial institutions are failing to connect with female customers at every stage of the buying journey, from advertising to offerings and funds, finds Kantar’s latest research. It shows financial advertising and marketing strategies fail to communicate trustworthiness, dependability or understanding – particularly to women, 65 per cent of whom report low confidence in their financial institutions, compared to 55 per cent of men.
Only 38 per cent of women claim to feel ‘in control of their financial future’ compared to 51 per cent of men.
Chinese peer-to-peer lending platform PPdai.com will seek an initial public offering on the New York Stock Exchange, the company said in a filing, marking the latest Chinese financial technology company to go public. PPdai.com is currently values as a unicorn on China Money Network’s China Unicorn List with a US$2 billion valuation.
This week, China Insurance Regulatory Commission (CIRC) announced that it had grant an operation license to Shenzhen Wei Min Insurance Agency Co. Ltd. Tencent owns a majority stake (57.8%) of this new insurer.
On October 10th, Alipay announced to introduce house rental service in eight cities (Shanghai, Beijing, Shenzhen, Hangzhou, Nanjing, Chengdu, Xi’an and Zhengzhou). Users can enter the credit renting platform by searching “rent” in Alipay. If users’ Sesame Credit is above 650, they can enjoy deposit exemption and pay rent monthly.
Hexindai, a less well-known online consumer finance platform, is going to be listed in the US. Hexindai plans to raise $80 million in this IPO.
October 10th marked the 92th birthday of the world-renowned Palace Museum. It was on the same day that the museum started to embrace a brand new era of digital payment.
The Chinese micro-lending specialist is about to hit the U.S. stock market following an IPO early next week. Millions of Chinese consumers and businesses tap Qudian for credit, but does this make the stock a potential buy?
Qudian’s sweet spot is consumer loans. According to a study from Oliver Wyman commissioned by the company, it was the top small lender in the country in terms of number of active borrowers and volume of transactions as of June 30.
These loans are fairly small, even by local standards, and typically have short durations. There sure are a lot of them, though — in the first six months of this year, the company dispensed a total of around 38.2 billion yuan ($5.8 billion).
Recently, the PINTEC Group has announced a joint venture in Singapore to enter the Southeast Asian market with robo-adviser as its entry point. So far, there are more than 10 Chinese Internet finance companies layout in the Southeast Asian market，including Lufax, Dianrong.com, etc.
Yu-Hang Guo, the co-founder& co-chief executive of Dianrong.com, said that China’s internet finance companies have concentrated on the southeast Asian market, there are active plans as well as passive responses. With Chinese regulations tightening, many of them are looking abroad for growth. It is reported that cash loans, P2P and third-party data services have become the three most promising businesses in the Southeast Asian market.
Actually, before the small and medium-sized internet finance platforms have been set foot, industry faucets such as Ant Financial have already started to move and accelerate into the digital payment market in Southeast Asian.
Ireland-based peer-to-peer lending company Linked Finance announced on Thursday it secured €2m in equity funding to support its plans for expansion. The funding round was led by the company’s original venture capital backers, Frontline Ventures. The platform has now lent over €34.5 million to Irish SMEs since its launch in 2013, with more than €16.9 million already repaid to its lenders.
So far this year, Revolut, which started as a foreign exchange card linked to an app, has launched business accounts, loans, loyalty offers, mobile phone insurance, a bill splitting feature, a subscription “Premium” account, a chatbot, and more. Oh, and raised $66 million.
“The vision is very simple,” Storonsky said. “At the moment in the world, all banks are very local. As a result, you always struggle with international activity. That means you always need to open new bank accounts, issue new cards, set up a new credit profile.
“Nowadays people are all international. Banks are not providing this service. The vision for us is alternative global banking. Anyone in the world can just download the Revolut app and set up a local bank account to access any services they need.”
‘A lot of people work on weekends’
It’s a bold ambition. But can the business sustain this pace? I had heard from people in the industry — startup founders, PRs, former staff — that Revolut’s working culture can be tough: long hours, aggressive targets, burn out.
“We are not about long hours — we are about getting shit done,” Storonsky said. “If people have this mentality, they work long hours because they want it.”
It should be said that all the company’s Glassdoor reviews are five-star reviews, even those that mention the hours. “This company is highly addictive,” one reads.
A credit brokerage platform by the name of Compeon has raised €12m in a series B fundraising round. The round was led by existing investor Tengelmann Ventures, with btov Partners and Dieter von Holtzbrinck Ventures also participating.
Compeon processed a total of €2.5bn in loan requests in 2016, with an average loan request of €700,000.
Lendoit, a new decentralized P2P lending platform, has announced that it has partnered with one of Israel’s biggest institutional investment firms, Migdal Investment Banking. Established in 1965 and part of Migdal Capital Markets Group, it currently manages assets valued at $9 billion for thousands of clients in the Israeli private, business and public sectors.
The Alternative Credit Council, an affiliate of the Alternative Investment Management Association, has put out a paper on the present state of the private credit industry, considering both the demand (from borrowers) for its services and the supply (from investors) of capital to lend.
In preparing this paper, the ACC has partnered with Dechert LLP, an international law firm that specializes in financial and regulatory intricacies, to research and present a discussion of how private credit has managed to “cement its place in the lending landscape globally.”
One of the points of the paper is that private credit so understood is no longer stuck in the midmarket. It is moving outward in both directions.
On the other side of the market, there continue to be a number of borrowers who are good risks yet whose needs are not being met by the banking system, which is undergoing its own uneasy transformation in the face of regulatory pressure.
The top three characteristics of private credit that borrowers value most are: the speed of decision making, the ability to develop complex structures, and the flexibility of terms.
IBM has partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.
The new payment network uses IBM’s Blockchain Platform, a cloud service, to enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.
KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, are backing the new cross-border payments service.
If your bank does not agree to your request, start exploring alternative lenders. Do not limit your options to institutions. Your friends or family members can lend you the cash you need to handle an emergency. Peer to peer lending is a great alternative to banks, which allows you to borrow from individuals instead of institutions.
You can easily access a quick loan with bad credit online if you have a stable and verifiable source of income. Online lenders run your credit history but will approve your loan request with proof that you can repay in time. In most cases, the lenders offer payday loans that fall due on your next payday. You must be careful when applying for a personal loan online. Most of the search results you will get are from marketing companies and not direct lenders.
TSYS’ merchant services company ProPay is expanding into new territory.
The company announced in a press release this week that ProPay has launched in Australia, bringing small- and medium-sized businesses (SMBs) there to its merchant acquiring payment network and enabling them to efficiently accept card payments. The solution is built for direct-selling companies, micro merchants, distributors and payment facilitators.
Australian government agencies are reportedly plagued by company card fraud and misuse, according to new analysis from media company Fairfax Media. By certain accounts, some agencies are seeing more than $100,000 in misspend.
Fairfax analysts found an array of instances in which government purchasing cards were used for personal use, including one that attempted to use a Weather Bureau card for a transaction surpassing $1,000, an Able Seaman who repaid nearly $2,350 after misusing a card and one employee at the Foreign Affairs department who was fired after spending more than $7,000 on the department’s credit card, The Sydney Morning Herald reported.
The ABS had 156 cases of inappropriate spend on its cards, Fairfax found, valuing more than $43,000 in misspend.
Peer-to-peer lending (P2P) platforms in India have requested the Reserve Bank of India (RBI) to allow non-bank trust companies to act as trustees for fund transfers between the participants—investors and borrowers—on their platforms.
“It took us six months to get a trustee. Most of the bank promoted trustees were unwilling to come on board as the industry is nascent,” said Mukesh Bubna, founder and chief executive at Monexo Innovations Ltd, a Mumbai-based P2P platform.
“This creates a monopoly. A limited number of trustees managing transactions for multiple P2P firms may lead to conflict of interest and also a higher fee being charged by the trustees for managing the escrow accounts,” said Raghavendra Pratap Singh, co-founder at i2iFunding.com, a Noida-based P2P platform.
So far, the firms have informally reached out to the regulator, said two people close to the development. They requested anonymity. They are expected to send formal feedback to the regulator soon.
Six months after he founded payment gateway company Razorpay in 2013, Harshil Mathur was looking to shift his headquarters from Jaipur. Of his three options — Delhi, Mumbai or Bengaluru, Mathur chose the tech hub of Bengaluru over the financial capital, Mumbai.
With the rise of tech startups that focus on financial services, the traditional banking landscape is transforming — and Mumbai, Delhi-NCR and Bengaluru are competing to become the country’s fintech capital. Mumbai is still the financial capital as it is home to major banks and financial institutions, but it is technology that is becoming integral to finance.
A marketplace lending platform in India, Rubique empowers individuals and SMBs with an easy and smoother access to finance across a wide range of loan, credit card, and insurance products.
LoanTap is a fintech platform delivering flexible EMI free loan products to salaried professionals.
India’s largest peer to peer lending website, Faircent is a platform where people who have spare money, use the means of lending it directly as a form of loan, thereby eliminating intermediaries and their margins.
Having started as an online mobile recharge and bill payments app. Paytm in a short span of time has scaled to over 250 million registered users.
CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financiers.
HNWIs’ wealth growth remains led by Asia, with ongoing gains from an increasingly affluent middle class, enhanced productivity, and property price gains.
As the largest HNWI market, the US has been the beneficiary of a sustained rally in the equities market, driven by capital inflow and currency appreciation. The recent resurgence in mergers and acquisitions and initial public offerings is also driving wealth growth.
By comparison, Europe remains beset by low yields and flagging economic growth, characterised predominantly by inherited wealth and ‘old money’.
Research from around 940 Asian shows a clear shift towards engagement of financial investment professionals over self-management.
Also notable is the shift in allocation from domestic to international equities. In 2013, there was a 60:40 split favouring domestic equities, but this has reversed to favour international stocks through to 2017.
HSBC, with US$112 billion of private bank client assets under management (AUM) in its core Hong Kong and Singapore markets, is building upon its existing investment platform and network as a new entrant to the Australian market as of November 2016.
Fintech start-up fidentiaX is in the developmental phase of creating the world’s first marketplace for tradable insurance policies by disrupting the status quo by empowering policyholders to monetise policies on the blockchain. fidentiaX will also be setting up fidentiaX Open Source Foundation (fSOF) to proliferate the embracing of blockchain technology for the insurance industry.
In 2016 alone, the total market size for insurance premiums in the 40 OECD reporting countries was estimated to be in the north of $3.86 trillion dollars and Asia is projected to the be fastest-growing market for life insurance with an estimated real annual compounded growth rate of 10.2%.
fidentiaX’s marketplace will be a membership-based ecosystem focusing on the key stakeholders and providing the following services:
Policy ledger – Break traditional reliance on intermediaries by creating a digital ledger for policyholders.
Trustless Marketplace – Provides a platform for buyers and sellers to connect and trade policies via the blockchain.
Ajar Online, a fintech startup based in Kuwait, closed a second investment in a round led by Dubai-based venture firm BECO Capital, followed by an investment from Sharq Ventures, since late 2016.
The service allows tenants to pay their rent online, at anytime and anywhere via SMS and email in less than 60 seconds. Simplifying the rent collection process for landlords and providing efficient property management tools to save time, reduce cost and take the right decisions.
Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, today announced it closed more than $100 million in loans in the third quarter of 2017. This brings the company’s total loan closings to over $450 million, with a target of $600 million in transactions by year-end.
Notable loans closed in the third quarter include:
A $15 million bridge loan for a six-story, 310-room hotel property in Bloomingdale, Illinois.
A $12.5 million bridge loan for a hospitality property in Burr Ridge, Illinois.
A $9.9 million bridge loan for a three-story, multi-tenant office property in Fresno, California.
A $7.6 million bridge loan for a multi-family property in Bemidji, Minnesota.
A $6.9 million bridge loan for an office property in Denver, Colorado.
A $4.4 million permanent loan for a retail property in Mount Olive, New Jersey.
A $1.2 million bridge loan for a two-story apartment building in Miami, Florida.
Amazon is not alone. Others, such as PayPal and Google, have also entertained banking ideas. In fact, they’ve joined forces, creating a lobbying group called “Financial Innovation” together, according to American Banker.
Below are some of the highlights of the Marketplace Lending Securitization Tracker for Q3:
This quarter saw six marketplace lending securitizations with quarterly issuance of $2.6 Bn, representing 7.6% growth in issuance over 3Q 2016. To date, cumulative issuance equals $23.8Bn across 96 deals.
Lending Club (NYSE:LC) issued its first deal with prime loans with borrowers having FICO scores of at least 660. The weighted average FICO score on this deal is 692, which is a shift in borrower profile as MPL lenders seek out higher quality borrowers.
All deals this quarter were rated. DBRS continues to lead the rating agency league table, while Kroll dominates the unsecured consumer sub-segment. We see continued engagement from the top 3 ratings agencies like Fitch, with their rating of PMIT 2017-2A. Goldman Sachs, Deutsche Bank, and Morgan Stanley continue to top the issuance league tables with over 49% of MPL ABS transaction volume. College Avenue, a nascent MPL student loan originator, issued its first securitization CASL 2017 -A, managed by Barclays.
Spreads at issuance are marginally tighter in the consumer space on higher rated tranches. As priced 14bps tighter on average, while Bs and Cs priced 1-2bps wider. In the student space, As priced 51bps wider, while Bs and Cs priced 46bps and 61bps wider respectively.
Credit support requirements remain stable as rating agencies get more comfortable with collateral performance. We see deterioration in credit performance, but investors are well protected due to structural features and senior tranches deleverage rapidly to gain greater protection. Demand remains robust in this sector.
Goldman Sachs purchased $300Mn of solar loans from Mosaic. It would be interesting to see if they would participate in future Mosaic securitizations, as they have in the Marlette transactions. 3Q17 saw a benign macro environment and low volatility. The Fed announced the beginning of its balance sheet reduction program to start in October, and prepared the market for an interest rate hike at the December meeting.
Download the PeerIQ Marketplace Lending Securitization Tracker Q3 here.
For decades, the three major credit bureaus, along with a smaller fourth player, Innovis, have operated in the shadows of Americans’ finances.
Here’s a quick look at a timeline:
1960s: TransUnion’s original business was not compiling credit data on consumers. It bought a data collector, Credit Bureau of Cook County in 1969.
1970: Congress passed the Fair Credit Reporting Act, aimed at regulating the reporting of credit information.
Around 1970: TransUnion started using automatic tape-to-disc transfer to compile data, which was a lot faster than entering data manually. TransUnion later was the first bureau to offer banks, credit card companies and other creditors online access to data.
1988: TransUnion gains a nationwide presence. Credit reporting takes off.
1989: FICO scores as we know them were introduced.
March 2000: FICO creator Fair Isaac Corp. took legal action against an online lender, E-Loan, after E-Loan provided loan applicants with their credit scores.
September 2000: It wasn’t until this time that consumers could pay about $8 to the credit bureaus to get their own FICO credit scores, which had a top score of 850.
2003: Congress amended federal law to require the credit bureaus to give consumers a copy of their credit reports at no cost once a year.
2006: Equifax, TransUnion and Experian formed a joint venture to introduce Vantage scores, which were quite different than FICO scores.
2013: Discover, First National Bank of Omaha and a couple of other major issuers became trendsetters by providing credit card customers with their FICO credit score every month as part of their statement.
2014: The Consumer Financial Protection Bureau, a financial regulator, said it fielded 31,000 consumer complaints in 16 months. About 75 percent of the complaints concerned information in credit files that consumers said was inaccurate.
Jan. 2017: The CFPB said Equifax and TransUnion lied to consumers about the credit scores they were being sold, and ordered Equifax and TransUnion to pay $17.6 million in restitution to consumers and imposed fines of $5.5 million.
March 2017: Experian joined its counterparts and got busted by the CFPB for lying about the credit scores it peddles to consumers.
Sept. 2017: Equifax makes a bombshell disclosure that a cyber thief stole personal information, including Social Security numbers and birth dates, for 145 million people. It’s by far the biggest data breach in U.S. history.
RealtyShares, a leading online marketplace for real estate investing, has deployed more than $10.1 million for a pair of commercial real estate transactions in Texas, collaborating with two different sponsors to provide fast and flexible financing for their projects.
RealtyShares secured a $2.4 million equity investment for a 302-room, full-service Sheraton hotel in Irving, Texas.
The hospitality equity transaction was sponsored by The Buccini/Pollin Group, a real estate acquisition, development and management company with four offices across the U.S. and more than $1 billion under management. Along with its hotel management affiliate, PM Hotel Group, Buccini/Pollin has acquired and developed 40 hotel properties, and possesses experience managing all aspects of project acquisition, finance, development, construction, leasing, operations and dispositions.
Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced the successful completion of its Service Organization Control [SOC] 1 Type II and SOC 2 Type II attestation reports. Performed by KirkpatrickPrice, the independent audit confirms GDR’s internal security controls meet the American Institute of Certified Public Accountants’ (AICPA) applicable Trust Services Principles and Criteria. These latest verifications reaffirm GDR’s position as a leader in the online lending space for security and operational integrity in providing asset certainty and validation through its suite of digital due diligence solutions.
The SOC 1 Type II audit assessed GDR’s consistent application of internal controls and processes to protect consumer data, maintain operational integrity and comply with industry regulations over a six-month period. The SOC 2 Type II review compared the strength of those internal policies and controls with the AICPA’s own Trust Services Principles of security, availability, confidentiality and processing integrity. The SOC 2 Type II attestation provides a comprehensive and integrated assessment of an organization’s data security and integrity control framework to industry stakeholders — and is missing from organizations which choose to obtain a SOC 1 Type II exclusively and point to their cloud provider’s or vendors’ SOC 2 Type II attestation reports.
The new regulation, announced this week, could significantly restrict lenders of short-term, very high-interest loans, known as payday loans. The practice has long been criticized by Consumers Union, the advocacy and mobilization division of Consumer Reports.
Consumers, in fact, may have better alternatives with community banks and credit unions. And experts say the CFPB’s new rule could pave the way for even more lending by these types of financial institutions.
The payday lending rule is set to take effect in July 2019, unless it is rolled back by Congress. The Congressional Review Act gives Congress 60 days from the time a new regulation is published in the Federal Register to rescind it.
Assuming the rule remains in effect, it’s unclear whether the bulk of the payday industry could adapt. Some payday lenders are changing their practices already, creating less risky, longer-term loans.
Regardless, two types of consumer lenders that are exempt from the CFPB rule—community banks and credit unions—could step into the breach to serve payday loan clients.
The nation’s nearly 6,000 community banks are another potential source for small loans. But community banks don’t actively market their small-dollar loans, explains Lilly Thomas, a senior vice president and senior regulatory counsel for Independent Community Bankers of America, based in Washington, D.C. Rather, they respond to inquiries by individual customers.
But, she added, the CFPB rule changes could change that.
By the CFPB’s own estimates, the regulations as written will cut the number of short-term loans in the U.S. by more than half, and industry estimates put that figure closer to 80 percent. Other than perhaps the very largest players in the game, most loan lenders can’t soak that kind of volume loss, since payday lending (contrary to public opinion) is not a high-margin business to start with. The average storefront lender clears about $37,000 in profit – and under the new regulations, that annual profit would become a $28,000 loss, according to an economic study paid for by an industry trade association.
Payday Lending (And Its New Rules At A Glance)
Payday lending is a big segment in the U.S., as storefront short-term loan lenders outnumber McDonald’s locations, and collectively lend out about $46 billion per year in loans to about 12 million borrowers.
The typical payday lending customer, according to the Pew Charitable Trusts, is a white woman aged 25 to 44.
Roughly 22 percent of borrowers renewed their loans at least six times, leading to total fees that amounted to more than the size of the initial loan.
Payday lenders do in fact collect a lot of money in fees – about $7 billion as of last year. Default rates are estimated at 20 percent on the low end, while at a mainstream financial institution (FI), that rate is a lot closer to 3 percent on average.
Cannon, the firm’s global director of research and chief equity strategist, agreed. Today, KBW, traditionally focused on bank equities, also covers firms like PayPal, Square, and Green Dot. And a bit over a year ago, KBW, in cooperation with Nasdaq, launched the KBW Nasdaq Financial Technology Index, an eclectic mixture of 50 publicly traded fintech firms across multiple industry categories.
“We expect that bank M&A will shift over time to bank/fintech M&A with the largest banks looking to acquire successful fintech firms. This will be pushed by the limitations on bank acquisitions by the largest banks, and by the need of fintech firms to partner with banks to expand their operations. While regulators are looking at a new fintech bank charter, we expect that to be limited in scope.”
Banking Exchange:What started you thinking about a bank/fintech M&A trend?
I’ve been puzzled by the lack of new start-ups since the financial crisis. Most of the discussion around this has concerned regulatory constraints. But as I dug into this, I began to think that maybe the historical entrepreneurship in finance—traditionally folks starting new banks to get their economy going—has shifted from the banking sector to Silicon Valley.
Banking Exchange:Do people just not want to invest in new bank charters anymore?
In the wake of the financial crisis, a lot of capital—such as from private equity firms—that might have gone into new charters went into recapitalizing existing banks. Postcrisis, there certainly was a regulatory element, insofar as increased regulation and FDIC’s reluctance to insure new banks. But while people talk about that, I haven’t heard about people applying for charters and getting turned down by FDIC.
Mid-sized banks are looking for creative ways to build loan books. They already have an advantage in lending to small- and mid-sized companies and in doing commercial real estate loans. But they’re starting to see those sources of assets ebb. And they, too, will be looking toward asset generation from electronic delivery through fintech-type operations.
Banking Exchange:There is also the opposite trend—some of the fintechs, such as Varo, SoFi, and Square are seeking bank or industrial bank charters. Do you see that gaining momentum?
A year or so ago, my son-in-law was refinancing his student loans. Now, remember that part of the key to SoFi’s initial, extremely rapid growth was this: They cherry pick the government program borrowers. They will give strong borrowers a 4% loan to replace the government’s 7% all day long.
In the second half of 2016, the fintech-credit bubble began to show signs of losing air when investors and funders signaled declining confidence in fintechs by withdrawing their investments — triggering some fintech closures. In trying to scale up, some providers went outside their core markets and struggled as their credit models failed (e.g., CAN Capital). Some faltered in attempting to diversify into different loan types, while others — which are now retrenching (e.g., LendingClub) — struggled with costs far outrunning revenues.
The market is ripe for consolidation and beneficial partnerships. Indeed, the remainder of 2017 and 2018 will see more partnerships between the banks and fintechs for the following three reasons.
The influx of technology into the alternative lending industry has drastically changed the way small businesses access financing. As the co-founder of the online alternative lending platform Kabbage, Kathryn Petralia has been helping to lead this change.
Q: What drew you to the alternative lending space? Why did you think the market would support a lender like Kabbage?
A: I’ve been in alternative lending since the late ’90s.
Q: When a space is so crowded, like yours, what can you do to differentiate yourself?
A: Additionally, we are the only lender to offer SMBs the option to apply, qualify and draw funds entirely through a mobile app. Our Kabbage card allows qualified customers to draw from their line of credit at checkout or any point of sale (POS).
Kabbage is also unique as we license our technology to global banks, providing them more reach and a better user experience to serve their small business customers in a meaningful, cost-effective way. We have bank partnerships with Santander, Scotiabank and ING.
Q: What makes alternative lending an attractive option for small businesses?
A: It’s much faster and easier than traditional processes, and the anonymity of an online application process takes some of the stress out of what is traditionally a very anxiety-ridden experience.
CommonBond, a financial technology company that helps students, graduates and employees pay for higher education, today launches Women in Tech Week, which runs through October 15. Together with partners including Betterment, Birchbox, Duolingo and others, CommonBond spent the last several months creating Women in Tech Week to recognize the contributions of women in technology and support the next generation of women leaders.
Women in Tech Week consists of three components:
1. A whitepaper on what women want in the tech workplace: CommonBond commissioned a survey of over 600 women in tech to learn what companies can do to attract and retain women, as well as create environments where women can thrive. The research found women want to see their companies implement the following changes, in order:
More women in leadership roles.
Better long-term career planning processes.
Additional training and professional development opportunities.
2. A social media campaign to support the next generation of women in tech: CommonBond has partnered with Girls Who Code to help fund the next generation of women technologists. CommonBond will donate to Girls Who Code for each social media post that:
Answers the question “Why are you proud to be a woman in tech?” or “Why are you proud to support women in tech?”
Includes hashtag #2017WITW.
3. A female founders event to encourage and inspire women in tech: On Ada Lovelace Day, a holiday on October 10 that celebrates the achievements of women in STEM, the co-founders of companies such as The Muse, PolicyGenius and WayUp will share their stories with students and professionals pursuing technology careers at an event in New York City.
New rules issued this past week by the federal Consumer Financial Protection Bureau are meant to rein in payday and auto title lenders. The rules require enhanced credit checks for some loans and cooling off periods after three loans in a row to a single borrower.
“In Ohio, payday and auto title lenders are not operating under the intended statute,” Horowitz says. “They’re using a loophole that lets them operate as loan brokers.”
A 2008 law capped yearly interest rates at 28 percent. But the Ohio Supreme Court has upheld the loophole used by lenders.
Led by tech innovators like Betterment, SigFig and Wealthfront, the more than 200 current U.S. robo-advisors in existence collectively boast some $53 billion in assets under management, with global robo assets poised to surpass $2.2 trillion by 2020. With such explosive growth in this space, many traditional full-service financial advisors feel compelled to beat their drums louder, when meeting prospects and onboarding new clients.
Despite the robo phenomenon, studies show that most individuals still value human interaction over technology. According to a survey conducted by online student loan marketplace LendEDU, 46.41% of millennials are working with a financial advisor, while only 24.30% have used a robo-advisor.
Furthermore, of the three-quarters of millennials who have yet to take the robo plunge, 61.58% say they’re reluctant to do so because they’ve never heard of robo-advisors, suggesting that general awareness still has a way to go. Finally, 68.92% of those polled said they believe financial advisors are more likely to yield greater returns on their investments.
Another program that gets high marks from founders is the Financial Solutions Lab (FinLab), an offshoot of the Center for Financial Services Innovation, a 13-year-old nonprofit focused on serving unbanked and underbanked customers.
Broadly speaking, it’s a 2.5-year-old program that aims to find and nurture fintech startups that are helping Americans save, access credit and build assets, and it is itself fueled by a $30 million, five-year grant from JPMorgan.
Among those startups it has worked with so far is Propel, a startup that helps people who receive food stamps manage their benefits.
Another company that’s currently a part of the program is Dave, an app that alerts consumers ahead of an upcoming overdraft and can advance them money.
Jornaya, the fast-growing consumer journey insights platform, today announced that LendingTree®, the nation’s leading online loan marketplace, has integrated TCPA Guardian from Jornaya to manage compliance risk associated with the Telephone Consumer Protection Act (TCPA).
Jornaya’s TCPA Guardian integrated with LendingTree’s marketplace provides lenders with ability to validate that the consumer was shown necessary and approved disclosures, including monitoring the size, text, and overall visibility of the necessary TCPA disclosure. What’s more, the solution documents the proof of that consent, allowing both LendingTree and its lenders to deter and help defend the costly and rising number of TCPA complaints.
Technology and regulation are intersecting in ways that create uncertainty in a number of areas, but for those who work in compliance, the big question is whether advanced technologies like artificial intelligence and blockchain will ultimately replace people.
When BBVA Compass recently began using robotic process automation to carry out specific pieces of compliance, such as retrieving statements, employees were worried.
New Leaf Communities is seeking $4,500,000 in Preferred Equity. The sponsor is offering a 10% preferred return with 8% as a current pay and 2% accrued. RealtyeVest, who is exclusively housing the offer on their crowdfunding platform, will raise the capital in a series of Class A, B and C stocks of $1.5 million each.
It’s first come first serve as the tranches will close once the total for each is raised. Participants in the Class A tranche will receive an 80/20 waterfall participation after the 10% preferred return. The Class B tranche will receive a 70/30 waterfall participation after a 10% preferred return. Lastly, the Class C tranche will receive a 60/40 waterfall participation after a 10% preferred return.
According to proponents, the new rules are a real positive for consumers. They see the following as pros.
Requiring lenders to ensure that borrowers can repay loans protects them from a cycle of debt.
While some lenders will be prohibited, consumers can still borrow from those that meet the new requirements.
Voters generally prefer stricter guidelines for payday lenders.
The new regulations will stop lenders from exploiting loopholes in the law.
Limiting the number of times a loan can be rolled over limits the effective APR.
Preventing multiple attempts to withdraw from bank accounts will stop excessive overdraft charges for consumers.
The payday lending industry, the Community Financial Services Association of America (CFSA), researchers at Pew Charitable Trusts, the banking industry and even some consumer advocates have pointed out what they see as the cons of these new rules.
The proposal exceeds the authority given CFPB by Congress and will be subject to expensive lawsuits.
The new rules still allow payday loans with interest rates of 300% or higher.
Banks and credit unions will be discouraged or prevented from entering the market with lower-cost loans.
Ultimately, the rules will inhibit consumer access to credit, driving them to far worse alternatives.
Many payday lenders will be forced out of business, costing jobs and creating credit “deserts” in areas where payday lending currently thrives.
Losing the ability to roll over loans will hurt consumers who need more time to pay off debt.
Revenues for the $6 billion payday loan industry will shrivel under a new U.S. rule restricting lenders’ ability to profit from high-interest, short-term loans, and much of the business could move to small banks, according to the country’s consumer financial watchdog.
Under the new rule, the industry’s revenue will plummet by two-thirds, the CFPB estimated.
According to a 2016 Funding Circle survey, about half of small business owners plan to take less than three days off during the entire holiday season; in fact, nearly 70 percent confess that they at least check emails on Thanksgiving Day, when most businesses nationally close.
Speaking at the LendIt conference in London, Jaidev Janardana (pictured), chief executive of Zopa, said banks have focused too much on products that help their business rather than the customer.
He revealed that Zopa Bank would offer unsecured personal loans with no early repayment charges and credit cards with no introductory offers but a flat rate as well as savings and investments that prioritise existing customers.
It will also offer auto-loans, allowing users to do a soft-search for products.
Speaking to ITProPortal, Luke Griffiths, MD of Klarna UK, noted that consumer flexibility in terms of payment methods is helping change merchant habits too.
Griffiths revealed that just shy of three million customers in the UK will have used Klarna’s services in some form, with the company counting the likes of the Arcadia Group and JD Sports as clients here.
This includes a “pay after delivery” option, which allows consumers to order their goods, receive them, but only pay after either 14 or 30 days if they are fully satisfied. Targeted mainly towards the fashion online retail space, Griffiths notes that this service has seen great pick-up from both merchants and customers, with the former seeing increased conversion and a drop in returns (as buyers become more confident that they will only pay for the goods they want to keep) and the latter getting a more successful online transaction and “turning the sitting room into the fitting room”.
FUNDING Circle co-founder Samir Desai (pictured) has ruled out launching a bank as he outlined the advantages of running a peer-to-peer platform over traditional financial models.
He said banks would find it hard to keep up with emerging technology such as artificial intelligence or machine learning due to the level of regulation.
Desai cast doubts on the ability of traditional banks to move into the online small and medium sized (SME) lending lending space, claiming Germany’s Commerzbank had seen loans underperform since entering this area.
Peer-to-peer business lending platform ArchOver announced on Monday it has nearly doubled its overall lending in the first nine months of 2017. The company reported that since 2017 its total lending has reached £21.39 million, bringing its cumulative total that has been lent to date to over £48 million.
Linked Finance, Ireland-based peer-to-peer lending company, announced on Monday the launch of its new type of pension account. The account allows holders of self-managed pensions to make P2P lending to Irish SMEs part of their pension investment portfolio.
One of the UK’s leading financial technology specialists, The ID Co., has announced it is the first software specialist to offer lenders the capability to calculate and base lending decisions on customers’ real earnings, known as verified income.
UK based Fintech, The ID Co., says it is the first software specialist to offer lenders the capability to calculate and base lending decisions based on customers’ real earnings or verified income. The ID Co. has major clients in both the UK and North America including a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance.
Recently, the official WeChat of Shenzhen Internet finance association issued a notice concerning the exit guide of shenzhen’s marketplace lenders (solicitation draft). It was known as the first exist guide for P2P lending platforms in China. According to the notice, this guideline was drafted to direct and standardize the P2P lending institutions to smooth out of the P2P loan industry, as well as to protect the legitimate rights and interests of lenders, borrowers and P2P institutions. Before officially released, the exposure draft of guide is soliciting opinions from the industry.
Already, China has climbed to account for 23% of the world’s total 214 unicorns (compared with the U.S. at 50% and India at 9%). China claims such highly valued companies as ride-hailing service Didi, hardware innovator Xiaomi and online lender Lu.com plus newcomers to the 2017 list: bike-sharing service MoBike, news aggregator Toutiao and e-vehicle maker Neo.
Moreover, China is getting with a new class of billion-dollar valued companies, so-called decacorns or startups with valuations past the $10 billion mark. Of 14 current decacorns, Silicon Valley has 5 and so does China — four in Beijing and one in Shenzhen, according to an analysis by GSR Ventures shared by managing director Richard Lim at the recent HYSTA conference.
How and where will the next generation of unicorns be formed? Research by GSR shows that the unicorn action is in China by Chinese returnees. There were 30 unicorns founded by Chinese in China versus 9 U.S. unicorns founded by Chinese.
Moody’s Investor Service has upgraded 4Finance‘s credit ratings to B2 from B3. The upgrade comes as 4finance says it has passed € 5 billion in loan originations. The 4finance S.A. senior unsecured issuer rating was also upgraded to B2 from B3. The outlook on all ratings is stable.
A recent study from Forex Bonuses finds the countries among the 20 largest economies who are adapting quickest to using cashless systems like phones and contactless cards – revealing that Canada narrowly edges out Sweden for the top position.
Investigating twenty of the world’s most significant markets, the study looks into contactless card saturation, number of debit and credit cards issued per capita, usage of cashless methods, growth of these cashless payments, and the proportion of people who are aware of which mobile payment services are available.
The top position has gone to Canada, who, while only having contactless functionality in 26% of their cards (compared to 41% in the UK and 56% in China) and the lowest number of debit cards per capita included in the research (0.7), were found to have over two credit cards per person, a figure only exceeded by their neighbours in the US, who had just under 3.
Likewise, the majority of their payments were made using cashless means at 57% of transactions, outmatched only by 2% in both Sweden and France. The UK reached 52% on this scale, while China, despite the majority of cards being contactless, used cashless methods in only 10% of transactions. China were also the most educated on mobile payment services, with 77% of survey respondents claiming they were aware of the options available to them in this regard. In comparison, only 47% in the UK claimed the same.
In this week’s B2B venture capital breakdown, alternative lending for small- and medium-sized businesses (and their employees) is the clear winner.
The company, based in the U.K., recently announced about $52.5 million by Legal & General, while Blenheim Chalcot also participated, according to reports. The funding round will need approval from the Financial Conduct Authority, reports added.
This supply chain financing company has been mum about the funding, with reports only catching onto the investment of about $20 million (so far) through a Securities and Exchange Commission (SEC) filing. According to reports, the firm plans to raise a total of $33.29 million, though it is unclear who provided the funding or when Taulia will officially announce the raise.
Colombia’s Siigo, which provides accounting and administrative software for small- and medium-sized businesses, raised an undisclosed sum late last week by Accel-KKR, reports said.
One of the biggest and most profitable sectors of the financial industry is the lending sector. Most financial institutions have used the existing models to create new ones that better fit their business models and reach their profit targets.
Another major role played by banks is to facilitate the transfer of funds between parties. Banks have been rumored to make at least $4 billion annually just from fees obtained during funds transfers.
4. Facilitating speedy payments
For a business to thrive, its invoices should be paid on time and in a prescribed way. One of the things that make businesses go under is the accumulation of bad debt. When invoices are not paid on time, the business suffers because the business owner must find other means of paying his creditors.
Singapore’s OCBC Bank is integrating Siri to help conduct corporate banking across 12,000 customers. Voice commands send payments and can also inquire about account balances. Alexa is now available in India, and will soon debut in Japan later in the year.
Peer-to-peer (P2P) lender SocietyOne has announced three lending milestones for 2017 with the year not even over yet, showing how Australians are embracing this innovative way to borrow and invest.
This is a record for SocietyOne, as it has now originated more than twice the loans of the company’s nearest competitor and had seven successive quarters of growth.
The first three-quarters of 2017 also saw a record amount of funding made available by investor funders. The total number of funders has risen to 320 since SocietyOne’s inception and there is $61 million of committed available funding as at 30 September 2017.
Online lender Spotcap has announced it has issued more than $180 million in credit lines to small- and medium-sized enterprises (SMEs) globally in just three years. The lender offers lines of credit up to $250,000 and has been operating in Australia since 2015.
With the Reserve Bank of India spelling out guidelines for regulating peer-to-peer (P2P) lending, many of these lenders are looking at ways to comply with the norms by restructuring their business models. Further, companies find Rs 10 lakh cap on lending restrictive, given the phenomenal growth of the sector in the past couple of years.
Banks and NBFCs usually offer personal loans to a salaried employees having minimum income salaried between Rs 1.20 lakh – to Rs 2.40 lakh with loan eligibility salaried between Rs 15 lakhs and Rs 20 lakhs.
Bengaluru-based fintech startup SlicePay has raised $2 Mn as part of its ongoing Series A funding round. The investment was led by Japan-based Das Capital, Simile Ventures from Russia and few undisclosed angel investors.
Existing investor Blume Ventures also participated in the round, who earlier invested $500K in association with Tracxn Labs in February 2016. With the raised funds, SlicePay plans to expand in three more cities, as well as make some senior-level hiring.
Lending activity will gather pace on peer-to-peer (P2P) platform with the sector getting NBFC status even as the compliance burden on them may eliminate some entities out of the market, industry players say.
The guidelines from the RBI norms for disclosures are welcome. The disclosures on how companies are calculating credit scores are welcome to borrowers. Right now, with many companies looking to build credit scores through by looking at cash-flows and information on how the platforms collect this information is crucial. Companies such as EarlySalary are building credit profiles based on information on social media. Meanwhile, there are untested methods which profiles people psychologically on seeing if they are eligible for a loan.
Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.
OCBC said in an announcement on Wednesday (Oct. 4) that it is integrating its Business Mobile Banking app with Apple’s voice assistant Siri for more than 120,000 corporate customers. The integration means professionals will be able to initiate B2B payments and funds transfers to other OCBC business accounts using Siri voice commands.Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.
One of South Korea’s leading P2P lending platform operator Lendit appears to have taken advantage of its maturing big data. The accumulated volume of personal loans originated from the firm doubled in six months as of early September to some 70 billion won ($61.6 million), after some 28 months of operation.
The database allows an individual lender to invest 10 million won at maximum in a “customized” package composed of possibly hundreds of bonds in different interest rates, while promising the lender a return of between 6 percent and 10 percent including tax and commission fee.
Kim, 31, believes Lendit could help mitigate the rapid growth of the national household debt, projected to have exceeded 1,400 trillion won in the third quarter. Household debt in Korea is considered a powder keg of the national economy amid looming signs of central banks ending expansionary monetary policies. Consumer loans take up nearly 20 percent of all household debt in Korea.
Argentina-based peer-to-peer (P2P) lending platform Afluenta recently announced during its fifth-anniversary celebration it was launching commercial loans to the fifth version of its lending platform. According to the lender, in the latest version, it will add its own proprietary credit scoring and introduces commercial loans for people with commercial activities, which is noted to usually not served by traditional banks.
Micro-lending and small business financing are a critical component of economic growth around the world, and the need for access to low-cost capital is especially important in developing countries.
The Catch-22 is that these countries are also the ones where the lending markets are the least developed, and where most financial institutions are reluctant to lend money to people who don’t have any credit history (what the industry calls “thin-file” customers).
The problem is especially acute in Mexico, where only 39 percent of the population has a bank account and 75 million people still have no access to the kind of financial services and lending support they would need to start micro- and small- businesses.
In Ontario, the payday-loan industry offers sums of cash of less than $1,500 for short terms — less than 62 days — at very high interest rates: there are currently 657% on an annualized basis on the average 10-day term, down from 766% before the regulations took effect.
These lenders fill a unique niche in Ontario’s lending market for customers known as ALICE — an acronym for Asset-Limited, Income-Constrained, and Employed. More than two-thirds of ALICEs earn less than $50,000 per year. And while payday lenders’ reputation for being the somewhat shifty cousins of banks is not entirely undeserved, they nonetheless provide a real and needed service to people who, for a variety of reasons, can’t or don’t have the cash to meet their needs. The majority of people who take out a payday loan are doing so to avoid late charges, NSF fees, or maintain power in their digs.
As many have reported, online lending is headed into the next phase of its evolution. As with any industry moving from its nascent stage to its adolescent years, we expect consolidation as the strongest players grow their stature, and opportunities to learn what works and what does not. We also expect a focus on powering […]
As many have reported, online lending is headed into the next phase of its evolution. As with any industry moving from its nascent stage to its adolescent years, we expect consolidation as the strongest players grow their stature, and opportunities to learn what works and what does not. We also expect a focus on powering continued growth in the sector fueled by increasing capital investment.
With this in mind, we wanted to provide our readers with a firsthand account from the leading forces for investment in the online lending space about the trends they’re seeing, the challenges they’re facing, and what they have up their sleeves for the industry’s next stage of development.
On July 21, 2017, we hosted an online lending Meetup event, “Risks and Emerging Solutions for Investor Confidence in Online Lending,” at Global Debt Registry’s New York City headquarters. We were hoping for a meeting of the best and the brightest — and that is exactly what we got with panelists from Citi Bank, Global Debt Registry, and PricewaterhouseCoopers among others.
The conversation largely focused on the online lending industry’s need to take a closer look at infrastructural elements in order to substantially grow and attract more mature capital into the space. Under that umbrella, there were four key takeaways from the evening’s conversations that we found particularly noteworthy:
1. The future lies in scalable investor infrastructure
For online lending to continue along its current growth trajectory, industry leaders are taking a close look at the sector’s infrastructure – in particular the reliability and scalability of that infrastructure. As the space seeks to attract continued capital investment to support a growing network of participants, the right risk infrastructure is key to achieving that goal. An optimum risk infrastructure is one that involves fewer manual processes to reduce errors and improve efficiency, provides the highest degrees of certainty around loan data to diminish opportunities for fraud, and offers robust reporting tools and sets industry-wide standards. A structure that delivers on each of these points and can scale on demand will help spur investor confidence that in turn supports broad industry expansion.
2. Investing in online lending is broadening oversight professionals’ scope of work
As online lending increases in popularity as an asset class, auditors and trustees are increasingly being asked to handle a greater breadth of tasks. Exposure to a wider range of investors and an increased level of complexity in the types of players involved in lending activities has caused due diligence to become the tip of the iceberg for compliance professionals. This trend is likely to continue upward as the online lending industry matures.
3. Bolstering the back end can’t take a backseat
The initial focus of the online lending industry was on innovation in the borrower experience — bringing the dream of virtual lending into reality and exploring newly available data sets to support underwriting (e.g. social data and spearheading the total disruption of the preexisting lending paradigm). The less exciting requirement of readying the back end, investor management systems was pushed to the back burner. But if the online lending industry is to continue its growth trajectory, the nitty-gritty details of building out a back end to allow for scalability must become a priority.
4. Blockchain could be big — but it’s too early to predict its full impact.
While blockchain has great potential to become a safe and secure way to keep track of loan ownership and asset integrity, using a single consistent source of core loan data to create an immutable audit trail, it’s still in the nascent stages of development. As such, there is still much debate on which technology platforms will win out. There will also likely be some industry stumbles early on, as there often are when new technology is first adopted. However, the significant need for distributed trust, a single version of the truth, and immutable record keeping make for a compelling blockchain use case across the online lending ecosystem.
“The value of open dialogue among major players in the online lending space is immeasurable,” said Charlie Moore, president of Global Debt Registry. “The entire industry benefits when leaders in the space come together to share and develop industry solutions. Conversations like this help us determine the most effective ways to open more loans, attract more capital, and secure the emerging risk infrastructure requirements — and that’s a very positive thing.”
The event provided a rare and valuable inside look at what online lending industry leaders are really thinking about the state of the rapidly evolving industry.
News Comments Today’s main news: ICBA letter opposing SoFi as a bank. Moody’s upgrades 7 Prosper ABS MPL tranches. UBS invests in iCapital Network. TenX processes Bitcoin with Visa transactions. BNI Europa reaches profitability. Today’s main analysis: SEC focus on capital formation, enforcement in direct lending. Today’s thought-provoking articles: Will U.S. banks dominate consumer lending again? China needs a bigger […]
ICBA publishes letter opposing SoFi becoming a bank. GP:”This is great marketing for SoFi. I see no reason different entities will follow different rules in front of the same regulation and I am entirely certain that SoFi’s bank will have the full capability to follow all the other bank’s rules.”AT: “It doesn’t matter how opposed bankers are to SoFi becoming a bank, it will likely happen. Interestingly, the letter states the association doesn’t think SoFi has done anything wrong. Their position is based on the possibility that SoFi could do something wrong.”
Will U.S. banks dominate consumer lending again? GP:”We have to look at what happened and is happening in the robo advisor space. And that Wells Fargo launched their own small business offering online which is doing well. Or perhaps at Goldman Sachs’ Marcus who also broke quite a few records. “AT: “Peter Renton points out that regional banks are ahead of the Big Four in offering personal lending options. What are they afraid of?”
Betterment raises $70M in Series E. GP:”Many people assume that Betterment is struggling because of the success of the other robo advising products built in house by established financial advisors who are doing very well. This is proof that it is not the case and Betterment does have intrinsic value.”
How P2P lending stacks up against other investments. GP:”I personally really like how p2p is seen as just another investment. Which is what it should be seen as with different risk and rewards of course. P2P has its own unique place in the investment space.”
Last week, the Independent Community Bankers of America (ICBA) sent a letter to the attention of Kathy Moe, Regional Director of the FDIC in San Francisco. The subject of the letter was the ICBA’s vehement opposition to Fintech darling SoFi’s effort to become a licensed bank.
The ICBA asked that Congress close the alleged “ILC loophole” because it not only threatens the financial system but creates an uneven playing field for community banks.
What might a focus on the SEC’s capital formation mandate mean for investors?
Retail investors may have greater access to alternative investments typically reserved for accredited investors. For instance, Piwowar questioned the premise of a distinction between accredited vs. non-accredited investors.
Small businesses may see a reduction in disclosure obligations to encourage small businesses to tap the public capital markets. SEC Chair Clayton identified the reduction of US IPOs (in the wake of SOX and post-Enron regulations) as a serious issue.
ABS investors may have a reduction in the disclosure and liability requirements for publicly registered securitizations. ABS issuance has shifted to Rule 144A private placements – in fact 100% of deals in the marketplace lending market are privately placed – in part, due to the higher disclosure and attestation burdens for public deals.
SEC Enforcement Actions & Investor Protection
After the late-2008 Madoff scandal, the SEC dialed up enforcement activities with the goal of improving investor confidence and market integrity.
A pool of unsecured personal loans may contain thousands of loans with differing and constantly shifting loan and borrower attributes. Unlike, say, a CMBS transaction where a valuation agent can visit a property, speak to an owner, and evaluate a tenant – the sheer volume of hundreds of thousands of loans requires advanced analytics to value a portfolio.
Below we share below our principles for valuation:
Transparency: A well-documented valuation methodology, with clear exposition of prepayment, default, credit spread, and other assumptions.
Auditable: A repeatable and testable valuation framework.
Fair value: Fair value based on a consistent modeling framework that factors in both unobservable and observable valuation inputs from similar assets or adjacent capital markets.
Accounts for major risk factors: The pricing framework accounts for risk factors including default risk, prepayment risk, and credit spread risk.
Forward looking: Loan valuations must be driven off of expected future cashflows, where cashflows are a function of the borrower’s current credit attributes, macro conditions, payment performance, and seasoning.
Loan-level: The pricing framework operates on a loan-level to address granularity in credit risk of loan rather than coarse replines.
SunTrust Bank is an interesting case in point. They are a large 125-year-old bank headquartered in Atlanta. They had total assets on their balance sheet of $204 billion as of December 31, 2016 which makes them a top 25 bank in the US.
From our perspective, what is most interesting about SunTrust is they have an online consumer lending platform. They actually acquired a small online lending platform called FirstAgain a few years ago and relaunched it as LightStream in 2013. They are starting to get some real traction, having done $1.5 billion in loans in 2015 and over $2.3 billion in 2016. Their average interest rate is lower than the marketplace lenders and their biggest categories are auto lending and home improvement.
Discover Bank is most well known in the US for their credit cards but they also have a robust personal loan business. In 2016 they originated $4 billion in new personal loans making them the second largest online lender in the category behind Lending Club. Unlike Lightstream, Discover’s personal loans are focused on debt consolidation so they are going directly after Lending Club and Prosper in this space. I find this a curious decision given that they have a $62 billion dollar credit card loan book (as of December 31, 2016).
The four biggest US banks are still mostly on the sidelines
JPMorgan Chase is the largest credit card issuer in the US with $142 billion in balances outstanding. Possibly because of their dominance in credit cards, they do not offer a personal loan product beyond student loans and a Home Equity Line of Credit.
Bank of America is very much like Chase in their offerings towards personal loans – they offer home equity loans and student loans. Nowhere on their website can you find an offering for personal loans.
Even though Citi is the second largest credit card issuer it does actually offer personal loans. You can apply on Citi’s website for a personal loan up to $30,000 (up to $50,000 if you apply by phone). Rates range from 7.99% to 17.99%.
Fintech’s faithful are putting payments on a pedestal. Square and PayPal shares are near all-time highs – as are those of venerable outfits like Visa, MasterCard and First Data. They’re each chasing what could be a $2.3 trillion revenue business by 2019, according to McKinsey. But they can’t all be winners.
Privately held Stripe kicked off the frenzy last November when it raised $150 million in its fourth funding round. That doubled to $9.2 billion the valuation of the seven-year-old company, which builds software to allow companies to quickly set up and track digital payments.
In this report we focus on one of the insurance industry value chain’s most underestimated modules – claims management. It is a $170 billion global industry currently controlled approximately 90% by incumbents. And it is booming with innovation.
Erin: How is GDR optimising the demand for its loan level diligence solutions? How does the platform source partnerships?
Mike: Most online loans underwriting already undergoes some form of validation. Up until recently, however, most of the industry has relied on manual document validation — it’s taken awhile for the industry to wake up to digital data validation. That’s where we come in – we offer a more efficient and a trusted method of validation than what’s been used in the lending space in the past.
Erin: Leveraging blockchain technology is becoming integral in fintech. Please describe GDR’s new multi-party blockchain proof of concept (POC) that is designed specifically for the online lending industry. What initial issues did/do you face and how did/do you and your team resolve them?
Mike: We see blockchain as perfectly suited to the online lending space and more specifically, the set of solutions we offer our clients, because it offers a single source of data that enables clients to access an immutable audit trail. They can see the state of a given loan across its entire lifetime and that builds confidence and trust. The more certainty investors have, the more likely they are to invest capital in the online lending space.
Erin: Distributed ledger technology is another key fintech innovation. Why has GDR initiated partnerships with the Wall Street Blockchain Alliance and Structured Finance Industry Group (SFIG) Blockchain Task Force for its strategy development?
Mike: Both organizations are naturally aligned with our role in shaping the broader conversation around blockchain adoption and what this technology can do for the online lending sector specifically. Through the Wall Street Blockchain Alliance, we’re connecting with many of the banks we’ve been working with through our portfolio of loan validation tools, and with SFIG, we’re sharing and developing best practices around securitizing those loans, working with the underwriters.
Erin: How do you see marketplace lending evolving overall?
Mike: The space is going to continue growing, but it is also going to consolidate as any industry does during the process of maturation. I also think that there will also be a reality check on how well the online lending platforms underwrote the loans and what was missed if anything in the underwriting process. We have seen and I think we will continue to see a shift from rivalry to increased cooperation and joint ventures between traditional banks and online lenders.
MPOWER Financing, an innovative fintech company and provider of educational loans to high-potential international students, has entered a new partnership with Wisconsin-based Bank of Lake Mills, which enables MPOWER Financing to offer its online lending program to students in all 50 U.S. states.
As a result, MPOWER Financing is now available to thousands more students looking to secure financing across an expanded roster of 223 universities across the nation.
MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing the financial resources necessary for students to attend schools and complete their undergraduate or graduate studies. Founded in 2014, MPOWER Financing provides financial resources to domestic students, DACA students and international students who are often undervalued and do not fit traditional credit criteria.
In a survey released today, the 2017 RICP Retirement Income Literacy Gender Differences Report, from The American College of Financial Services, only 18% of women age 60 to 75 passed. By contrast, 35% of men did (also pretty shabby, if you ask me).
Most of the women surveyed (55%) said they were extremely confident they would have enough money to live comfortably in retirement. Only a quarter of those women passed the financial literacy quiz, however.
Also, the women surveyed were less likely than the men to get financial advice and information from friends: only 27% of women consulted friends vs. 39% of men.
Some 55% of women with advisers said it is extremely important that their money pro educate them about the risks of running out of money in retirement; just 42% of men felt this way. And 60% of women said it’s important to receive education from an adviser about investment management, as opposed to only 47% of men.
The move reflects just how fast the so-called iBuyer market is expanding, as some homeowners opt for a quick sale to Opendoor or its rival OfferPad to forego the time and expense involved in a traditional home sale.
But as P2P enjoys its moment in the sun, it is worth looking at how the sector stacks up against investment and savings products.
P2P vs Exchange Traded Funds (ETFs)
Over the past year, the FTSE 100 has broken a number of records, ending last month 12.43 per cent higher than 30 June 2016.
While the majority of P2P platforms have not been able to beat the unusually strong performance of the FTSE 100, a few have come very close. LandlordInvest and Lendy are both offering up to 12 per cent on a variety of property loans, and Ablrate has listed asset-backed loans on its site for 14 per cent.
P2P vs cash ISAs
As a result, the returns offered by cash ISAs have reached historic lows. By December 2016, there was not a single cash ISA offering more than one per cent, and by May 2017, P2P platforms were noticing a surge of ISA transferswhich they credited in part to low-paying cash ISAs.
Funding Circle is offering a maximum return of 7.2 per cent on its SME loans, while Zopa is offering 6.1 per cent to Zopa Plus account holders, and RateSetter is offering five-year loans at a fixed rate of 4.6 per cent.
The peer-to-peer lending industry is maturing, with the market growing at over 30% per annum, and figures suggesting it will be worth over £5 billion by the end of 2017; as such, the sector is now regulated by the FCA.
investUP is a peer-to-peer lending aggregation platform with the ability to automatically place investments for time-conscious investors. Investors enable a lending robot, driven from criteria provided by the investor, to create a bespoke algorithm which works for them. investUP is authorised and regulated by the FCA.
For non-bankers, shadow banking leaves this perception of illicit financial services that harms economies if not the financial services industry. The reality is that shadow banking, and the non-banks that offer the service, is a welcome source of diversification of the credit supply from the banking system, and provides healthy competition for banks. At least that is what is stated in the Global Shadow Banking Monitoring Report 2016 published by the Financial Stability Board, the Swiss-based international body that monitors and recommends on the global financial system.
Mid-tier banks bear the highest risk as WMPs now account for close to 50% of their deposits, increasing their liquidity vulnerability.
Cash loans platforms-2345 revealed its semi annual report last night. The revenue of the company was $159million during the first half year, increased by 127.1%.
The company’s original businesses were soft and hard ware developement. The huge increse this time due to the popular of internet finance(cash loans).
July 18, Taiwan Fubon gold control vice chairman Cai Mingxing said the company is working with Tencent to set up a joint venture in Shenzhen, the future of Fubon products or other company’s policy, will be in Tencent’s WeChat and other platforms. At the same time, Fubon Financial Control has received the approval of the management of robot management services, and hope that as soon as possible in the domestic launch of no one branch. This cooperation with Tencent, headquartered in Xiamen, Fubon Insurance will be through the WeChat sales insurance business.
Recently, CITIC Bank on the block chain based on the domestic credit information transmission system (BCC) (BCLC) (a), which is the first time the domestic banking sector block technology will be applied to the settlement of credit. As of July 21, CITIC Bank has used BCLC to carry out real domestic letter of credit business, trading volume of more than 100 million yuan.
BNI Europa reaches profitability on its 3rd year anniversary (BNI Europa Email), Rated: AAA
Banco BNI Europa (“BNI Europa”) grew its total assets 36,7% reaching almost 500M€ in June this year. Total revenue grew 146,2% reaching 6,6M€ and the net profit was 2,7M€ allowing the bank to recover losses from 2016.
One year and half after its opening and with a new management team, the bank decided to completely change its strategy and focus on innovative products. Due to its limited resources, it also decided to create several partnerships with Fintech’s to accelerate its growth and product offering.
BNI Europa has been known for its customer centric digital platform and its attractive terms deposits and remunerated accounts. This year it launched with great success “Cereja” the reverse mortgage product for the senior consumer segment and the digital consumer credit platform “Puzzle” focused on independent workers.
The bank has also specialised in the management of alternative lending. So far, BNI Europa established twelve partnerships with European Fintech’s providing funding and credit to Banco BNI Europa across several European countries. Those credit products include consumer loans, student lending, SME medium term lending, SME revolving credit, invoice discounting and bridge lending.
Andrew Davies, VP, Global Market Strategy, Financial Crime Risk Management, Fiserv, talks about how increased speed and convenience in payments increase fraud risk, how financial institutions can address financial crime threats through technology and processes, and how firms can derive further benefits from their investment in fraud prevention – including by leveraging customer transaction information to identify new opportunities.
The Financial Action Task Force (FATF), the global standard-setter for anti-money laundering (AML) and counterterrorist finance (CTF), in May brought together more than 150 delegates for its most in-depth discussion to-date on FinTech and RegTech.
There are, however, potential vulnerabilities inherent in the sector. RUSI’s FinTech FinCrime Exchange (FFE), run in partnership with FINTRAIL, a financial crime risk management consultancy, presented on both the risks and opportunities observed during six months of industry engagement.
According to KPMG’s Pulse of Fintech report, fintech VC activity in Europe has hit a historically high level for successive quarters. In Q1 2017, global investment in fintech companies hit $3.2bn across 260 deals. Q1 2017’s total capital invested soared to $610m, which was noted as the highest tally in years.
TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards. While transactions are capped at $2,000 a year, users can apply to increase the limit if they undergo identify verification procedures.
TenX currently processes about $100,000 of transactions a month. By the end of 2018, it’s targeting $100 million in monthly transactions and a million users.
Ant Financial, the financial services affiliate of Alibaba, has made a strategic investment in VFinance (维金), a Shanghai-based startup providing digital financial infrastructure solutions to enterprises in China, according to VFinance’s announcement.
News Comments Today’s main news: PayPal invests in LendUp. KBRA upgrades SoFi Consumer Loan Program 2016-1. Revolut spent 7M GBP on incredible sales growth. Today’s main analysis: VCs may face cash crunch as more tech startups stay private longer. Today’s thought-provoking articles: FSB issues report on fintech. Inside Ping An’s massive expansion. Chinese players pursue $3.4T international digital payments opportunity. Auto manufacturers leverage […]
PayPal invests in LendUp. GP:”An outstanding partner to have for LendUp. With a little luck maybe Paypal and LendUp can also partner on customer acquisition.”AT: “I wonder why PayPal isn’t in the top 25 largest Internet companies. They’ve always had such great potential, but they never make the lists. Perhaps they aren’t diversified enough.”
Venture capitalists may face cash crunch, tech startups stay private longer. GP:”This could also be a hint that the companies private VC-driven valuations are not in line with the general public’s perception of their value”AT: “Not specific to online lending or fintech companies, but there is certainly an application to the alternative lending space. I can’t help but wonder if this is a long-term or shorter-term trend, but it seems to have started in the middle of last year some time.”
Global Debt Registry develops blockchain-based proof of concept for online lending. GP:”Slowly but surely we are starting to see the first blockchain applications that make sense.”AT: “There hasn’t been a single public ledger make a breakout, so these kinds of initiatives make me wonder if developments are based on demand or high hopes. I like this particular one, it’s interesting and innovative, but how many online lenders are asking for it?”
Better Mortgage empowers consumers with a better price guarantee. GP:”I am not sure if this was necessary in order to convince people that a simpler and faster application is needed. In fact I usually advise companies not to price cheapest but to price as expensive as they can get away with as long as they provide real value to the users. Cheap has many issues: low margins, no profits, perceived lack of value, etc.”
Why Square is the ‘Tesla of payments’. GP:”I personally am not convinced that a Tesla car makes sense economically or practically over a gas or hybrid car at this time. There is a lot of hype and fashion into Tesla. I do have to recognize the Tesla cars look great though. I don’t think there is a hype behind Square, as it offers a really easy solution to accept credit card payments. Setting up credit card payments has always been a nightmare for all small businesses for no aparent reason. I am glad Square solved that.”
Revolut spent 7M GBP last year to fuel growth. GP:”What one needs to look at is not how much money was spent but what was gained and built through that. I am happy with a company spending 100mil GBP if they build 200mil GBP in revenue per year. A ration of spending 7mil for a revenue of 2.3mil is not impressive, however lets see the impact of this spent the following year.”AT: “Customer acquisition costs money. Remember, it took Amazon 10 years to make a profit. Now they’re the largest Internet company on the planet. While Revolut’s sales went up more than 500% in one year, they spent over half of their equity capital to do it. I see another funding round on its way.”
Are alt lenders ready to publish APRs? GP:”Many of them already are publishing APRs on their websites. I am not sure why this is a question. While it is not a requirement I think it’s good practice and the serious ones are publishing it.”
Building a bank is not easy. GP:”Nobody ever said building a company , a startup , or a bank was easy. This is why often people with no experience and who don’t know what it takes are better position to take such a project. They are not afraid of what they don’t know and often they even find new solutions and innovate withotu being constrained of the existing established solutions to known problems. Many VCs, because of this reason, invest in inexperienced CEOs seeing it as a strenght. “
PayPal Holdings Inc has invested in LendUp, a San Francisco-based startup that offers loans online to consumers who have been traditionally overlooked by banks because they are considered too risky.
LendUp said it had secured a strategic investment from the payments company on Wednesday. It did not disclose terms of the deal. PayPal confirmed in a statement that it had made an investment.
PayPal has been expanding partnerships and acquiring new services to gain advantage over rivals in a highly competitive digital payments market.
KBRA Upgrades the Ratings on SoFi Consumer Loan Program 2016-1 (KBRA Email), Rated: AAA
Kroll Bond Rating Agency (KBRA) upgrades the rating on the Class A notes issued under the SoFi Consumer Loan Program (SCLP 2016-1), a consumer loan ABS transaction which closed on June 27, 2016. The credit enhancement has built for the Class A notes since closing. While cumulative net losses are slightly above KBRA’s initial loss expectations, the transaction has breakeven loss multiples which are sufficient for an upgrade of the Class A rating.
The collateral in the SCLP 2016-1 deal currently includes $382.3 million of loans, as of May 31, 2017. The collateral in the transaction has amortized from the initial pool balance of $506.4 million at closing. The current credit enhancement levels are 31.66% for the Class A notes. Credit enhancement consists of overcollateralization, cash reserves, and excess spread.
Please click on the link below to access the report:
Private equity research firm Pitchbook reports startup exits—sales or mergers of companies delivering returns to shareholders—has fallen in recent years. The number and value of startup exits were down about 70% last year from their 2014 peak. Despite big IPOs of companies such as Snap, 2017 has yet to yield a bumper crop of new exits as companies stay private longer.
It’s not a new problem, says Scott Jordon, managing director at Glynn Capital, but it’s now more acute. The time it takes for technology firms time to IPO has stretched (pdf) from around five to eight years in 2000 to about 11 years today. Pitchbook’s Nizar Tarhuni says they’re seeing venture firms extend funds or negotiate longer periods than the standard 10 years to return money to their limited partners such as pension funds.
A resurgence in IPOs is still possible. Public investors extended a (mostly) warm welcome to the 11 or so tech companies that have gone public so far this year, including Appian, Carvana, Cloudera, Elevate Credit, Netshoes, Okta, Veritone, and Yext.
Loan data specialist Global Debt Registry has completed a proof-of-concept that utilizes the blockchain to provide investors with an immutable audit trail and a single source of core loan data.
The firm’s inaugural blockchain proof-of-concept (POC) lays the groundwork for providing investors and senior lenders in the online lending space with a safe and secure way to confirm loan ownership and collateral interests across companies within the ecosystem, GDR said.
In developing the blockchain POC, GDR worked with three leading blockchain platforms – Hyperledger, Ethereum and Chain.
The rising popularity of robo-advisors is bringing increased scrutiny by regulators. At the same time, industry lawyers say they don’t foresee any substantive changes coming in the form of new rules.
This year for the first time, the SEC put online advice-giving on its list of examination priorities, raising concerns about “heightened risk to investors and/or the integrity of the U.S. capital markets.”
A key issue securities lawyers like Fein raises is that if the SEC insists its current rules adequately apply to robos – yet there seem to be shortcomings in how some robos execute their fiduciary duty – then any perceived enforcement gap will only widen.
But MacKillop, whose startup indie RIA manages about $50 million, scoffs at notions that computer-based investing can live up to the same sort of “best interest” standards for individual clients as brick-and-mortar advisors.
Better Mortgage officially rolled out the Better Price Guarantee — a promise to all of its borrowers that it will beat any competitor’s loan estimate by $1,000. If not, Better will actually give the borrower $1,000.
Better’s mission is to embolden consumers to confidently shop around while also de-risking one of the largest financial transactions they’ll ever make. According to a report published by Oliver Wyman, 71% of customers only get a loan estimate from one lender, which could mean that many home buyers aren’t actually getting the best price on their mortgage.
How the Better Price Guarantee works:
If the customer thinks another lender has a more competitive price, they can send Better the competitor’s Loan Estimate(LE) within three business days from the date on the loan estimate. If Better can’t beat the competitor’s LE by at least $1,000, Better will give the borrower $1,000 in cash when they fund with the other lender.
An LE is a standard form that all lenders are required to provide a consumer.
Better Mortgage may extend this guarantee to non-standard rate sheets.
What do you call a financial-technology company whose stock is up 75% this year as investors bank on its ability to bring a disruptive product into the mainstream? The “ Tesla of Payments,” apparently.
That’s the way to describe Square, according to Mizuho analyst Thomas McCrohan, who began covering the company on Tuesday. The key question for Square is whether it can scale its business up to serve larger customers, and McCrohan is optimistic about the payment processor’s ability to do so while still making money.
Tesla happens to be up 74% this year. Tesla and Square are the top two performers in the Barron’s Next 50 index.
London-based Revolut, which offers a pre-paid international currency card, made a pre-tax loss of £7.1 million in 2016, its first full year of operations. Revenue was £2.3 million in the year to December 31, accounts filed with Companies House show.
The loss was largely down to “card scheme costs, acquiring costs, and user acquisition costs,” the company’s directors write in the accounts. In plain English, that means the cost of processing payments done on its cards, and the cost of getting people to sign up for the cards in the first place. The cost of sales jumped from £1.5 million to £7.8 million.
Staff numbers jumped from 7 in 2015 to 32, with staffing costs climbing from just under £300,000 to £1.5 million.
The startup has raised £12.1 million in equity capital to date.
The Financial Stability Board (FSB) has weighed in on the burgeoning Fintech sector of finance. The FSB has been analyzing “financial stability implications” potentially created by Fintech innovation. The FSB says it is specifically seeking to identify “supervisory and regulatory issues that merit authorities’ attention”.
The FSB stated there are currently no compelling financial stability risks from emerging Fintech innovations.
According to the FSB, ten areas of interest have been identified of which the following three are seen as priorities for international collaboration. These three priorities are viewed as “essential” to supporting financial stability “while fostering more inclusive and sustainable finance.” The three priorities are:
The need to manage operational risk from third-party service providers;
Mitigating cyber risks; and
Monitoring macro financial risks that could emerge as Fintech activities increase.
The other areas that merit attention include:
Cross-border legal issues and regulatory arrangements.
Governance and disclosure frameworks for big data analytics.
Assessing the regulatory perimeter and updating it on a timely basis.
Shared learning with a diverse set of private sector parties.
Further developing open lines of communication across relevant authorities.
Building staff capacity in new areas of required expertise.
Studying alternative configurations of digital currencies.
In May of last year, the Competition & Markets Authority (CMA) published its rather hefty “Retail banking market investigation” report. Buried among its “proposed remedies” was a provisional decision to require lenders specialising in unsecured loans and overdrafts of up to £25k for SMEs to use annual percentage rates (APRs) to show the cost of these products. The proposed measure is set to become a reality in August, according to multiple sources. But are the UK’s alternative lenders ready?
The impending APR directive will not affect merchant cash advance firms, such as Liberis, because merchant cash advance is not technically considered lending. Nor will it affect asset-backed finance firms like MarketInvoice.
GrowthStreet is another business lending platform that would be affected by the directive, had it not taken the decision some time ago to publish APRs of its own accord.
But building a bank is not easy. Sophisticated and diverse product offerings, consumer trust, and security are three vital components. And in this regard, the incumbents often have a head start.
In our portfolio, we have seen AukaPay partnering with Sparebank1 in Norway to provide a white label payments app, MarketInvoice joining forces with BNI Europa to enable SMEs to access more working capital on its platform, Crosslend working with institutions to provide investment opportunities in consumer loans, and iZettle in successful partnership with Santander.
And when talking challenger banks, we can’t forget to mention BBVA’s acquisition of Holvi last year.
While P2P lending still represents a small proportion of total lending volumes, in the UK, origination grew 36% year on year in 2016.
Zopa is approaching bank building from a different base to the other challenger banks, and a case in point of collaboration with the incumbents.
Hargreaves Lansdown has dropped its plans to set up a peer-to-peer lending platform.
The company, which was expected to launch both a P2P lending platform and a cash management service to clients this year, has now decided it will solely focus on the cash management service.
Hargreaves Lansdown chief executive Chris Hill tells Money Marketing that despite P2P being “interesting”, the firm would rather focus on the new savings proposition because it is “a much bigger market”.
P2P lending seems to be a novel and definitely, profitable investment opportunity. It is becoming more and more popular and so there is a constant boost in the number of lenders who are getting profitable returns from this investment option. Here are a few essential steps for making money from the P2P investment.
Step No.1: P2P investment should be treated as an extra element in the overall financial portfolio
You must do ample research, deliberate and then come to a decision about what all should be included in your financial portfolio. You must possess a diversified and comprehensive financial portfolio. P2P lending seems to be a wonderful addition to this portfolio.
Step No. 2: Set a target and attain it
A profit of 2 percent over a 12-month deposit seems to be realistic. The two percent would be paying for the risk factors including investment in time.
Step No.3: Fortify your financial foundation
In order to make an impressive profit in your P2P investment, you must have a fantastic and truly solid financial foundation. This is certainly not a getting rich fast scheme but eventually, you could expect good returns.
Step No.4: Create a comprehensive system
Create a comprehensive system for investing in borrowers that is based on important information which is available, and is relating to the borrower.
Almost 30 years after founding Ping An, Ma is ambitiously broadening his supermarket of financial products, much like U.S. financier Sandy Weill did as chief executive officer of Citigroup from 1998 to 2003.
Ma founded Ping An in 1988 in Shenzhen, the financial hub of southern China, which lies just north of Hong Kong’s border with the mainland. Over the past five years, the company has climbed onto the list of the world’s ten largest insurers, now ranking No. 4 behind France’s AXA, Germany’s Allianz, and U.S.-based MetLife in terms of assets, according to Relbanks.com. Though Ping An’s insurance assets rose 17 percent in 2016, to $802 billion, the company’s double-digit profit growth is benefiting in part from a diverse group of revenue streams, including banking, securities, asset management, wealth management, private equity, and, more recently, China’s booming arena of Internet finance.
Ping An saw 11.7 percent revenue growth, with gross earnings reaching a record high of 774 billion yuan ($112 billion), and a 15 percent growth in profits; net earnings rose to 62 billion yuan. About 56 percent of the group’s profits were derived from insurance, down from more than 80 percent a decade ago. The rest came from banking (20.6 percent), asset management (15.5 percent), and Internet finance (8.3 percent).
Among the company’s most touted technology successes is the 2011 founding of peer-to-peer lender Shanghai Lujiazui International Financial Asset Exchange Co. Lufax, as the company is known, has become an e-commerce giant for finance in China, the world’s second-largest economy. It’s the country’s biggest online marketplace for wealth management products: Last year more than 7.4 million individual and corporate investors used Lufax to purchase 6 trillion yuan worth of investment products from Ping An and thousands of other Chinese financial institutions.
A new study from Juniper Research highlights the increasing dominance of Chinese companies in digital payments, with players such as Alibaba, Tencent and UnionPay seeking to bolster their revenues through international expansion.
The research includes the latest Juniper Leaderboards, highlighting best-in-class players in key payments arenas, including PayPal (for eWallets), Worldpay (for payment service providers) and Vodafone (for telco payments in emerging markets).
Hong Kong’s role as a global financial hub may be under threat unless the city can embrace technology and adapt quickly to the tectonic changes that have taken place in the financial landscape in the two decade since its return to Chinese rule, experts say.
Hong Kong’s greatest moment of innovation was in 1997 with the Octopus card, a smart-card payment system that is now a ubiquitous part of daily life. Two decades since, the city has not made further progress and has lagged mainland China in exploring new forms of electronic payment such as Tencent Holdings’ WePay or Alibaba Group Holding’s Alipay.
Hong Kong’s existing banking model would change dramatically with the rise of fintech, similar to how Amazon.com revolutionised America’s retail industry, he said.
For Hong Kong to succeed as a fintech hub, regulators should license more companies to handle clients’ money to accelerate innovations in fintech and wealthtech, or the use of technology for wealth management and investing, he said.
“More than 70 of the world’s largest 100 banks are in Hong Kong, and this gives the city a big advantage because in fintech, the majority of the customers are going to be banks,” he said.
As many as 82 per cent of incumbent banks and financial institutions plan to increase partnerships with fintech companies in the next three to five years, according to a fintech survey in Hong Kong by PwC this year.
The People’s Bank of China (PBoC) is releasing new details about a forthcoming five-year development plan focused on its strategy for advancing technology use in the country’s domestic financial industry.
According to the announcement by the central bank, the PBoC intends to actively push forward the development of new technologies such as blockchain and AI. It also plans to strengthen its research on applications of fintech in regulation, cloud computing and big data.
In fact, the FinTech Association of Hong Kong (FTAHK) had its official launch on June 28, underscoring the point that financial IT innovation is no longer restricted to New York City and its concrete canyons or Silicon Valley in Northern California.
There will be committees taking on key sectors such as:
The thinning margins in the automotive industry are making a strong case for vehicle original equipment manufacturers (OEMs) to explore revenue streams beyond sales and periodic maintenance. As customers become accustomed to digital transactions, OEMs will look to tap the hitherto underutilised fintechservices segment to generate additional revenues. Active partnerships with fintech companies will enable OEMs to offer multiple use cases that enrich in-vehicle experience, which will ultimately influence customers’ purchase decisions.
Fintech in the Global Automotive Industry, Forecast to 2025 is part of Frost & Sullivan’s Automotive & TransportationGrowth Partnership Subscription. The study examines key application areas of fintech in the automotive industry: leasing and finance, insurance, digital retailing, digital payments, and automotive services. Europe, followed by North America, is anticipated to lead in digitising finance, and North America, followed by Europe, in automotive service investments. The average investment in fintech is estimated to grow from $16 million in 2016 to $230 million by 2025with the emergence of digital car retailing and new business models in insurance.
The synergies between automakers and technology companies will power next-generation financial service infrastructure. Even though fintech partnerships with big banks slow down transactions, it is important to note that banks manage almost 32% all new vehicle financing in North America. Besides:
The competition for market share between banks and captives finance companies is expected to digitise new car sales and result in a $1 trillion auto financing market; and
Fintech will monetise services based on subscription models and on-demand vehicle features.
The LHoFT, Luxembourg House of Financial Technology, and LATTICE80, the world’s largest Fintech Hub located in Singapore, are excited to have signed a Memorandum of Understanding (“MOU”) at Money 2020 Europe, setting a foundation for collaboration between the two centres.
This Memorandum of Understanding provides a framework to intensify the cooperation between two leading financial centres with a specific focus on Fintech and driving digital transformation in financial services.
Splendit is a Swiss fintech firm dedicated to broker loans to students paid for by financiers.
The company has decided to link up with Blockchain-fintech Lykke, Splendit said in a statement today.
Thanks to the deal with Lykke, Splendit henceforth will be able to finance foreign students by sending them their loans via the Lykke Wallet. Florian Kuebler, the co-founder of Splendit, says that this will save transaction costs and enable crowdlending across the globe.
Willis Towers Watson (WTW) and Workinvoice have signed a collaboration agreement exclusively with the aim of bringing more and more Italian companies on the commercial credit market run by the Italian Fintech company.
The Workinvoice activities enable companies ‘ access to a particular market to obtain immediate liquidity, and to protect themselves from payment risks through the sale of its trade receivables to Italian and international institutional investors “ .
MPOWER Financing (), an innovative fintech company and provider of educational loans to high-potential, international students, recently appointed Rohan Tibrawalla to the position of Country Director-India to oversee the company’s operations in the region from its soon-to-be-opened office in Bangalore.
In his new position, Tibrawalla is responsible for expanding and executing MPOWER Financing’s operations, marketing and business development strategies as well as for managing the loan portfolio and debt and equity capital sourcing.
MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing loans and other resources necessary for students to complete their undergraduate or graduate studies.
Nadeem Syed, who heads mega fintech firm Finastra, believes regulators worldwide will need to evolve guidelines for the emerging sector (fintech) but the challenge for many financial services firms would be to navigate the new environment and also scale services.
What are your plans in Asia Pacific in terms of expansion and growth after the merger and how has the journey been in Asia so far in terms of revenues and capturing markets?
We have long been committed to Asia Pacific and continue to see great opportunity across the region with double-digit growth rates. Developed and growth markets of Asia Pacific are successfully riding the digital wave especially with the tremendous opportunities that lie ahead of us in Indonesia, Myanmar, Thailand and China to name a few.
Misys has over 400 customers that cut across from Japan to Australia and we see tremendous opportunity to leverage our strength in the region to bring the D+H products to market, especially payments and cash.
Over the years, how have you seen Asia’s competitiveness in fintech being transformed? Has that been affected by the rivalry between region’s financial centres – Singapore and Hong Kong?
The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on.
The challenge for all financial services companies is to navigate each jurisdiction’s new or upcoming regulations on fintech while translating their various innovations into services that can be scaled up and rolled out in a safe and reliable manner.
What kind of competition do you see from the internet giants like Baidu or Alibaba are fast emerging as fintech players worth noticing. What future do you see for Chinese fintech industry?
China’s internet giants are increasingly looking at fintech as it is a complementary sector that helps create a tighter online ecosystem for their customers. They are mostly focused on personal banking and payments solutions, which means traditional banks need to concentrate on evolving their own digital and online presence.
As the fastest growing region, do you see Asia emerging as a digital champion anytime soon. If yes, what will help to bring it and where are the major challenges?
Many countries in Asia are seeing exponential growth in the number of Internet and mobile device users – this has a direct correlation to the boom in digital or online banking, as well as other services being carried out online. Digital platforms mean that rural populations now have easy access to services previously unavailable to them, but the challenge is always how to ensure these platforms are safe and secure as cyber criminals get more sophisticated.
Fujitsu today announced it is commencing sales in Japan of cloud-based solutions for lending and leasing businesses. Developed by US-based Cloud Lending Solutions and known as the CL Series, the solutions will be deployed and operated as Software as a Service (SaaS) with the support and operations services of Fujitsu technicians with expertise in financial systems. This is the first time services from Cloud Lending Solutions will be available in Japan.
ALT Corporation, a subsidiary of Yayoi Co., Ltd., Japan’s largest accounting software company, has decided to become the first Japanese customer for these solutions. ALT is using these solutions to set up a unique online lending business, with plans to begin trial lending in October 2017.
With the goal of offering solutions to transform business using Fintech to customers at financial institutions around the world, on July 12, 2016, Fujitsu signed a Memorandum of Understanding (MOU) with Cloud Lending Solutions for a strategic partnership.
The CL Series is a set of cutting-edge cloud services offered as SaaS, which digitize a suite of business processes for lending and leasing businesses, from applications to reviews, contracts and collections.
The list also includes Vancouver-based Trulioo, which produces ID verification software for compliance and to fraud risk mitigation; Toronto-based Financeit, a cloud-based point-of-sale platform; and Toronto-based Street Contxt, which raised a fresh round of funding from 8VC, Point72 Ventures, Palm Drive Capital, and Portag3 Ventures in April.