Thursday July 11 2019, Weekly News Digest

Asset-backed securities

News Comments Today’s main news: Morningstar completes DBRS purchase. Figure issues $85M in loans per month. Zopa chief says banks are trying to put fintech lenders in a box. DBRS praises Funding Circle. Yirendai’s Q1 results. Octopus expands into Germany. Today’s main analysis: Over 60% of purchase borrowers received mortgage rates under 4.5% last week (A […]

The post Thursday July 11 2019, Weekly News Digest appeared first on Lending Times.

Asset-backed securities

News Comments

United States

United Kingdom

China/Hong Kong

European Union

International

Other

News Summary

United States

Former SoFi CEO Mike Cagney’s New Blockchain Startup Is Issuing $ 85 Million In Loans A Month (Forbes), Rated: AAA

Since the streamlined HELOC Mike Cagney, the co-founder and former CEO of fintech unicorn Social Finance (SoFi), knows that it is essential to focus on customer experience to build a loyal client base. Today, he is using that knowledge to create a platform aimed at driving mainstream adoption of blockchain technology in the financial sector.

Over 60% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week (LendingTree), Rated: AAA

Mortgage Rate Distribution

  • For 30-year, fixed-rate mortgages, approximately 60.1% of purchase borrowers received offers of 4.25% or less. That is up from 57% of borrowers the previous week. A year ago, 0.06% of offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4.125% was the most common interest rate. This rate was offered to 14.3% of borrowers.
  • Of 30-year, fixed-rate mortgage refinance borrowers, 72.8% received offers of 4.25% or less, which is up from 70.4% the previous week. A year ago, no refinance offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 3.875%, offered to 18.9% of borrowers.

Mortgage Rate Competition Index

  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 1.19, down from 1.22 the previous week.
  • How big of a deal is it to get a mortgage APR that’s 1.19 percentage points lower than the competition? Over 30 years, that could translate to $56,826 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
  • The index was wider in the refinance market at 1.35, up from 1.34 the previous week. Refinance borrowers could have saved $65,108 by shopping for the lowest rate.
Source: LendingTree

It’s Taking Less Time to Close on a Mortgage in 2019 (LendingTree), Rated: AAA

  • The time to close in new purchase transactions has been steadily declining, from 74 days in 2017 to 51 days in 2018 and just 40 days thus far in 2019.
  • For refinances, the decline has been less dramatic: from 55 days in 2017 to 43 days in 2018 and just 38 days so far in 2019.
  • Some of the decline can be attributed to lower mortgage volumes, as refinancings have been on a downward trend. But increased digitization is also playing a major role.
  • Closing times vary based on the characteristics of the mortgage type and borrower. Having a higher credit score can knock a few days off: Purchase borrowers with scores above 760 averaged 38 days in 2019 compared with 45 days for those below 720. Refinancings did not show much variation by credit score.
  • Loan-to-value ratios below 80% had shorter closing times for refinances, at 37 days compared with 42 days on mortgages with a ratio above 95% in 2019.
  • Loan amounts also affect closing times, with lower amounts, perhaps surprisingly, taking the most time. Loans under $150,000 averaged 47 days compared with 39 days for those above the conforming limit ($484,350 in 2019). Why? Higher loan amounts are typically being made to more credit-worthy borrowers. Lower-priced homes may be in some form of distress or have some type of damage; lenders thus may require more extensive appraisals to better estimate the home’s value and this adds time to the process.

Mortgage Fintech Innovation (PeerIQ), Rated: AAA

In broad-brush strokes, mortgage innovation centers on:

  • Customer experience (Better, Roostify, Blend, HomeCaptain) solutions are re-inventing the onerous mortgage with a digital experience, speeding decision times and opening up the lending buy box in the process.
  • Intermediation (OpenDoor, HomeLight, Zillow) – Some platforms are stepping in between buyers and sellers to provide liquidity, capturing transaction fees in the process
  • Data (House Canary, Zillow, Atom Data) – are amassing large data sets to providing accurate, standardized pricing models for investment decisioning
  • Banking 2.0 (SoFi, ZeroDown) – seek to provide a range of banking or investing services to consumers
Source: PeerIQ

Guaranteed Rate Companies Breaks 15 Company Records with Exceptional June Production Volume (Yahoo! Finance), Rated: A

Guaranteed Rate Companies, one of the largest retail mortgage lenders in the nation, announces 15 new company milestones—breaking its monthly total locked volume for the fourth consecutive month in June.

Breaks its record of total locked volume with $5.31 Billion earned across more than 15,000 units

Can Commercial Real Estate Investment Truly Be Democratized? (Commercial Observer), Rated: AAA

Most real estate crowdfunding sites continue to highlight the equalizing benefits of the model. Fundrise provides “access to a once-unattainable investment class,” and Rich Uncles, which has a minimum of $5, wants to “level the playing field” for the average investor. The sites offer investments in funds that focus on income-producing assets, like single-tenant office, multifamily housing and convenience centers nationwide.

Jeff Holzmann, the former COO of crowdfunding site iintoo, says the definition of an accredited investor is very divisive: “You can have an economics degree, and if you make $199,000 a year, you can’t invest, but Kim Kardashian can walk right on up and buy a multifamily building for $200 million. Should our bar be set by how much money you make?”

Ryan Williams Is Bringing the ‘Proptech’ Revolution to Real Estate Investing (Fortune), Rated: A

Real estate is an industry notoriously stuck in its ways and slow to change. Cash-generating, bricks-and-mortar assets are at the very heart of the enterprise, and in many ways, business is conducted the same way it was 100 years ago. Until recently, real estate owners, investors and brokers had little patience for the kinds of technological advances that have swept through myriad other industries.

But that’s all changing now. Just as there’s fintech, medtech, edtech and regtech, so is there proptech—and there are few companies in the realm of real estate technology as closely watched as Cadre, led by a 31-year-old Blackstone Group and Goldman Sachs alum named Ryan Williams.

7 Reasons Why Long Distance Investing Isn’t As Risky As You Think (Forbes), Rated: A

In 2019 we have many ways we can verify the information we are provided when we invest outside of our own market. These methods will be the focus of this article. By the time you’re done with this, I think you’ll have a much better understanding of how to conduct due diligence, why out out state investing isn’t as risky as you thought, and why I’m such a big proponent of it

1.The Internet

There is very little you can’t find out with a little online searching.

2. You Can Find Rent Estimates Easily

Websites like Rentometer and Craigslist make a preliminary rent search fast and easy.

7. You Can Find Comps Yourself Online

BlueVine Reaches $ 2 Billion In Total Funded Volume (Bluevine), Rated: A

This past month, BlueVine achieved a major milestone, having provided access to more than $2 billion in total working capital to businesses across the nation.

Finitive Announces $ 100 Million Credit Facility For Platinum Auto (Crowdfund Insider), Rated: A

Finitive announced on Monday its client Platinum Auto of Tampa Bay secured a $100 million credit facility through its platform. Platinum notably purchases auto loan contracts from a network of over 300 auto dealers in the southeast region of the U.S.

Affirm lets you pay off a large online purchase over time — here are 35 stores that accept it (Business Insider), Rated: A

You can apply for a loan as you’re shopping at one of many Affirm’s partner stores, which include women’s and men’s fashion, furniture, sports and fitness, electronics, jewelry, and watch brands.

You can see which online retailers accept Affirm below.

They’re divided by category and we’ve also designated which ones offer loans starting at 0% APR with an asterisk.

Will Abercrombie & Fitch’s “Buy Now, Pay Later” Plan Lock in Gen Z Shoppers? (The Motley Fool), Rated: AAA

Abercrombie & Fitch (NYSE:ANF) recently partnered with payment solutions provider Klarna to let U.S. shoppers split purchases into up to four interest-free payments over two months. A&F is aiming this “buy now, pay later” system — which its rival Urban Outfitters (NASDAQ:URBN) has also adopted — at younger shoppers with less spending power.

But will “buy now, pay later” work?

Only a third of millennials have credit cards according to Bankrate. The average millennial in the U.S. also has a net worth of just $8,000 according to Deloitte, which gives them significantly less spending power than previous generations. Most Gen Z shoppers don’t have credit cards yet. They mostly use debit cards or linked payment apps, which restrict purchases to the amount of cash in their bank accounts.

rue21 is Totally on Trend with the Addition of Klarna (Yahoo! Finance), Rated: A

Klarna, the global alternative payments provider, is getting trendy with the Millennial favorite fashion brand rue21. Customers can choose to pay with four equal payments collected bi-weekly – with no interest or fees. With Klarna, these cool customers get the ability to stay ahead of trends even faster with a smooth checkout and a payment option that boosts flexibility and purchase power.

The necessity for businesses to keep up with the customer is increasingly important considering that U.S. shoppers admit to buying clothes and accessories online an average of 10 times a year. For Gen Z shoppers, aged 16-24, this number increases to 18 times per year, with nearly a quarter (23%) of them admitting to shopping online 1-3 times per month. Millennials are shown to shop online 14 times per year and the 55+ age group, 8 times per year. Considering these Millennial and Gen Z demographics are credit card averse and debt conscious, Klarna delivers an appealing and accessible method for shoppers to take control of their finances in a manageable way.

Metro Denver businesses mostly seeing green, not red (Denver Post), Rated: A

Of 42,610 businesses in metro Denver, 29,560 or 69.4 percent reported turning a profit, according to an analysis from online lender LendingTree.

That placed fifth out of the 50 metro areas that LendingTree ranked based on Census Bureau data. Seattle had a business profitability rate of 70.9 percent, making it the leader nationally. The only other cities ahead of Denver were Louisville, Ky.; Indianapolis and Portland, Ore.

U.S. Consumer Borrowing Climbs on Bigger Credit Card Balances (Bloomberg), Rated: A

U.S. consumer debt climbed in May at about the same pace as a month earlier, led by the largest advance in revolving debt outstanding since October, suggesting Americans’ favorable economic outlook is underpinning continued spending.

Total credit rose $17.1 billion from the prior month, in line with the median estimate of economists, following a $17.5 billion gain in April, Federal Reserve figures showed Monday. While credit card and other revolving debt outstanding increased at a faster rate, non-revolving credit posted the smallest increase in almost a year.

Small Business Loan Approvals at Big Banks Hit Record Highs (Yahoo! Finance), Rated: A

Approval rates for small business loan applications inched up to yet another record high of 27.6% at big banks ($10 billion+ in assets) in June, while the approval percentage also climbed at small banks, hitting 50% for the first time in 2019, according to the Biz2Credit Small Business Lending Indexreleased today.

Small bank approvals of small business loan applications climbed one-tenth of a percent from 49.9% in May to 50% in June.

Small business loan approval rates among alternative lenders dropped one-tenth of a percent to 57.0% in June, down a notch from 57.1% in May.

LendingTree Survey Finds 45% of Newlyweds Went into Debt for Their Wedding (PR Newswire), Rated: A

Approximately 45% of newlyweds between the ages of 18 and 53 went into debt to pay for their wedding. And once married, nearly half of the newlyweds who obtained wedding-related debt said money has caused them to consider divorce. On the flip side, only 9% of couples without wedding-related debt contemplate divorce.

LendingTree released its study on newlyweds and wedding expenses.

How Using Fintech Can Help Pay Off Student Loans (Yahoo! Finance), Rated: A

Companies like SoFi, Laurel Road and Splash Financial are just a few of the fintech industry names that have made their way into the student lending world.

Credible. This is a platform that allows you to compare student loan refinance rates from eight different lenders.

LendKey. Similar to Credible, Lendkey is a platform that allows the borrower to compare refinance rates side by side.

CommonBond. CommonBond for Business offers a flex contribution program that includes an option to directly contribute to paying down employee student loans, or to work with employees on financial literacy techniques for reducing their debt.

Gradifi. Gradifi is another fintech offering refinance options, bundled with employee benefits packages called SLP, or “student loan paydown”.

Earnest. This fintech offers refinance options to individuals with a more limited credit history that may not qualify for other traditional options.

FutureFuel. FutureFuel uses behavioral economics, which is the study of human behavior to explain economic decisions people make.

3 Alternative Financing Options for Small Businesses in 2019 (Digital Journal), Rated: B

Online finance is a very popular option to emerge of late. A few click on the website can bring about quick processing and loan approval.

Another alternative financing option is that of merchant cash advance.

Crowdfunding is an innovative and extremely popular way to raise money for new ideas, concepts, prototypes and creative products.

New Study on Digital Identity Shows Changing Consumer Behaviors (Lend Academy), Rated: A

Today, according to Pew Research Center more than 50 million American adults are mobile-only consumers.

Each year, IDology publishes a Consumer Digital Identity Study aimed at giving businesses visibility into how consumer preferences and opinions related to identity and fraud are shifting. This year’s study confirms the continued movement toward mobile, finding that in the last 12 months, for the first time, consumers opened more new accounts online with their mobile devices than on computers. A closer look at the data shows that 50 million American consumers (20% of all online adults) registered for new accounts exclusively on a mobile phone, up 10% from last year. This growing number has implications for financial service providers as they strive to keep fraud out while giving consumers a seamless digital experience.

Online Lending Startup Tries To Push Usury Suit To Arbitration (Law360), Rated: B

Online lending startup MoneyLion told a North Carolina federal court Tuesday that a suit over alleged unlicensed payday lending belongs in arbitration, arguing the proposed class of borrowers had signed valid arbitration agreements when taking out their loans.

United Kingdom

Zopa boss Jaidev Janardana: big banks are trying to ‘put fintech lenders in a box’ (The Telegraph), Rated: AAA

In just a few months, a string of Zopa’s rivals in peer-to-peer lending have collapsed. Others have exited the sector altogether.

The latest company to fall into administration, Lendy, resulted in £165m of customer cash being put on the line and affected more than 20,000 investors.

Zopa survey finds Brits are more open about bank balance than Netflix password (P2P Finance News), Rated: A

A survey of 2,000 adults by the peer-to-peer lender found that 47 per cent of respondents felt more comfortable revealing details about their bank accounts with their partner than their most intimate secret, while the same percentage would prefer to give an insight into their finances over their Netflix password.

Zopa looks to grow secured car finance offering (P2P Finance News), Rated: B

ZOPA is readying to launch its secured car finance product as a direct offer on its website, as it looks to expand this segment of the business.

Ratings agency backs Funding Circle strategy to tighten lending (AltFi), Rated: AAA

SME focused peer-to-peer lender Funding Circle was correct to proactively take the decision to tighten its lending criteria in pulling back from higher-yielding lower-quality loans, according to ratings agency DBRS.

Investor fintech demand drives record six months for Crowdcube (AltFi), Rated: A

Crowdcube saw revenues soar 39 per cent to £3.72m in the first half of 2019, compared to the same period in 2018, with £103.4m pledged to companies through the platform.

NatWest-backed Esme hits £60m lending milestone (AltFi), Rated: A

Esme Loans said it has hit over £60m of lending to UK small businesses just two years after its launch.

The small business lender unit said its loans have leapt 20 per cent since the end of April.

Habito launches buy-to-let mortgages (Which), Rated: A

Online mortgage broker Habito has launched a comprehensive range of buy-to-let mortgages, as it makes its first foray into lending.

The brokers offers a range of two and five-year loans for landlords, as well as more niche three, seven and 10-year fixed terms.

FCA misconduct probes into retail financial services firms increase by a third (P2P Finance News), Rated: A

THE NUMBER of Financial Conduct Authority (FCA) cases opened into misconduct in retail financial services has increased by 29 per cent in the past year.

The number of cases has increased to 101 for the 12 months ended 31 March, up from 78 the previous year, the FCA said in its annual report on Tuesday.

The regulator also said that the overall number of enforcement cases it is undertaking is up by 31 per cent over the past year – rising to 650 from 496 at the beginning of the year.

OakNorth lends £19.5m to Care Concern Group (Fintech Finance), Rated: B

Klarna teams up with UK festival We Out Here (Retail Tech Innovation Hub), Rated: B

PayTech venture Klarna has announced a partnership with new jazz and electric festival We Out Here.

It will unveil a ‘Smoooth Sanctuary’ at the event, which will be held in Cambridgeshire in August.

China/Hong Kong

Yirendai Reports First Quarter 2019 Financial Results, Closing of Business Realignment Transactions with CreditEase (GlobeNewswire), Rated: AAA

First Quarter 2019 Operational Highlights

Consumer Credit—Yiren Credit

  • Total loan originations in the first quarter of 2019 reached RMB 10.9 billion (US$1.6 billion), representing a decrease of 45% from RMB 19.8 billion in the first quarter of 2018.
  • Cumulative number of borrowers served reached 4,404,812, representing an increase of 15% from 3,824,341 in the first quarter of 2018.
  • Number of borrowers in the first quarter of 2019 was 149,715, representing a decrease of 48% from 287,166 in the first quarter of 2018.
  • The percentage of loan volume generated by repeat borrowers was 38.8% in the first quarter of 2019.
  • Total outstanding principal balance of loans reached RMB 63,213.8 million (US$9,419.2 million) as of March 31, 2019, representing a decrease of 16% from RMB 75,271.5 million March 31, 2018.

Reviewing China Rapid Finance Limited (XRF)’s and X Financial (NYSE:XYF)’s results (NBO News), Rated: A

This is a contrast between China Rapid Finance Limited (NYSE:XRF) and X Financial (NYSE:XYF) based on their analyst recommendations, profitability, institutional ownership, risk, dividends, earnings and valuation. The two companies are Credit Services and they also compete with each other.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Rapid Finance Limited 1 0.27 N/A -0.85 0.00
X Financial 5 0.00 N/A 0.85 6.34

Table 1 shows the top-line revenue, earnings per share (EPS) and valuation for China Rapid Finance Limited and X Financial.

Court Upholds Ruling That Sent Two Peer-to-Peer Lending Executives to Prison for Life (Caixin Global), Rated: AAA

Shanghai Kuailu Investment Group Co. Ltd., along with two affiliated companies, and 15 defendants were convicted of fraudulent fundraising or illegal fundraising or both, according to the final ruling (link in Chinese) made by the Shanghai High People’s Court on Tuesday.

Kuailu, along with its affiliates, illegally raised more than 43.4 billion yuan ($6.3 billion) from the public, causing 40,000 people to take financial losses, the court said.

Foreign Investment Restrictions in P2P Lending Intermediaries (Lexology), Rated: A

The Interim Administrative Measures for the Business Activities of Peer-to-Peer Lending Information Intermediaries define “peer-to-peer lending” as direct lending/borrowing realized between peers on an internet platform. Peers include natural persons, legal persons and other organizations.

Bitmain’s Affluent Co-Founder Establishes the New Crypto Startup Matrixport (All Stocks), Rated: A

With the hope of capitalizing on the recent rise of the Bitcoin price, the co-founder of the mining giant Bitmain, Wu Jihan, has organized a group to develop “Matrixport,” a financial services startup for cryptocurrencies. According to its CEO Ge Yuesheng, Matrixport will function as a one-stop-shop for not just safekeeping of digital assets but also for crypto lending and over-the-counter trading.

European Union

Online Lender October Pushes into Germany as it Continues Expansion (Crowdfund Insider), Rated: AAA

Marketplace lending platform October, which is based in France, has expanded in Germany, according to a blog post by CEO and founder Oliver Goy.

October has selected Thorsten Seeger, a Funding Circle veteran, as CEO of October Deutschland as its plots its ongoing expansion across Europe. October currently operates in France, Spain, Italy, and the Netherlands.

Investors are putting £9bn to work in P2P Lending across Europe, UK still dominating (AltFi), Rated: A

The peer-to-peer lending market is now funding more than £9bn of loans across Europe each year with two thirds (67 per cent) of this funding coming through UK platforms.

Revolut brings the fintech battle to Berlin with a new hub (Yahoo! Finance), Rated: A

British fintech startup Revolut is opening a new European tech centre in Berlin, the home turf of its online-banking rival N26.

Lagan Investments takes 10% stake in Property Bridges (Irish Times), Rated: A

Lagan Investments, a fund founded by the North’s biggest house-builder, Kevin Lagan, has taken a 10 per cent stake in peer-to-peer lender Property Bridges and is to supply it with €5 million in lending capital.

International

Morningstar Names Detlef Scholz President of Expanded Credit Ratings Organization (Morningstar), Rated: AAA

Morningstar, Inc. (Nasdaq: MORN) has named Detlef Scholz as president of its expanded, global ratings organization. The leadership announcement comes as Morningstar today completes its previously announced acquisition of DBRS, the world’s fourth largest credit ratings agency, for a purchase price of US$669 million.

Scholz will assume his new role Aug. 1, 2019 and report to Morningstar Chief Executive Officer Kunal Kapoor.

Source: Morningstar

View the Morningstar/DBRS overlapping ratings.

Deutsche Bank in partnership talks with SoftBank-backed OakNorth (Reuters), Rated: A

Deutsche Bank (DBKGn.DE) is in talks with SoftBank-backed (9984.T) British fintech firm OakNorth to use the latter’s credit analysis and monitoring platform, a source with knowledge of the discussions told Reuters.

CoVEX Exchange — A Single Platform to Complete the Entire Crypto Lifecycle (Coinfomania), Rated: B

P2P loan: The CoVEX platform also implementing a decentralized p2p lending service. This allows users across the world to receive loans in lesser time and even reduces the repayment fee while at the same time protecting the interests of the lender.

Australia/New Zealand

An alternative loan scheme could help 2.1 million Australians in financial distress (UNSW Sydney), Rated: AAA

A social lending scheme could help bridge the gap between traditional lenders and government welfare for the 2.1 million Australians under high levels of financial stress.

Alexa Chung partners with Klarna challenger Laybuy (AltFi), Rated: A

Payments platform Laybuy has struck a new retail partnership with fashion brand of Alex Chung  – called ALEXACHUNG – allowing customers to spread the cost of purchases over six equal weekly payments.

New Zealand’s largest digital buy now, pay later app launched in March with its first partnership with Footasylum.

The true role of the SME broker (Australian Broker), Rated: A

Yet SMEs are being stiffed by traditional lending practices: 44% of small businesses have been knocked back for finance in the last 12 months. Put simply, SMEs are being underserved and ignored by the banks.

India

‘NiYO’ Raises US$ 35 Mn in Series B Round led by Horizons Ventures & Tencent (Yahoo! Finance), Rated: AAA

Indian new-age digital banking start-up NiYO Solutions has raised US$ 35 million in Series B funding round from Horizons Ventures, Tencent and existing investor, JS Capital. NiYO is founded by banking veteran Vinay Bagri and technology veteran Virender Bisht. NiYO had previously raised US$ 14 million in funding rounds led by Prime Venture Partners. With the current round the total fund raised by NiYO is US$ 49 million.
Authors:

George Popescu
Allen Taylor

The post Thursday July 11 2019, Weekly News Digest appeared first on Lending Times.

Revolutionizing the UK Digital Mortgage Market

uk digital mortgage marketplace

There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker. Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional […]

uk digital mortgage marketplace

There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker.

Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional brokers and established price comparison websites. They had been running their own mortgage brokerage in Macclesfield, Cheshire for a decade, also selling life insurance and income protection. Their experience as a traditional broker helped them understand what was missing in the market. As a result, they’ve made it easier for customers to access the best mortgage offers in less than a minute, once they’ve gained some basic information from the user.

Now Nuvo Works

The focus was on user accessibility and speed of providing quotes. But the platform’s USP is its AI-powered chatbot technology, which helps users chat in real time and suggests the best mortgage products suited to their finances. The platform was established with 1 million GBP in a seed round, and it recently raised 1 million GBP in a second round of funding.

Historically, if a customer wanted advice on mortgages, he would rush toward a broker or any other independent financial advisor and, in turn, the advisor charged a fees for their advice. However, recent research conducted by Nuvo revealed that nearly 40% of Britons rely on their own research once they get a list of prices from comparison websites. But the problem is most comparison sites don’t give the full picture and can’t answer queries accurately. This passive information overload did not really solve the user problem. Thus, Nuvo was born of the need to marry the traditional mortgage broker experience with the convenient of free comparison websites.

Nuvo has digitalized large parts of the mortgage application process through incorporating real-time sourcing. With an emphasis on transparency, customers can put their queries online with the help of a laptop or other mobile device and get an instant response. Instead of collecting data from the customer through a lengthy form, Nuvo provides a platform that allows the customer to provide details to a chatbot. Customers can also opt to chat with a qualified human financial advisor via the website or by booking a telephonic interview. It means the process is a two-way process, so the customer can ask specific questions at any point if there is something they do not understand.

What Artificial Intelligence Brings to the Table

Artificial intelligence and machine learning add substantial value by bridging the data, information, and context gap so that the virtual assistant and its human counterparts can deliver a seamless customer experience. If the platform lacks data, or the customer provides insufficient data, then it implements sentiment analysis to ascertain intent. Sentiment analysis identifies the customer attitude, emotions, and opinions. If the platform feels like customers are unhappy and/or confused, they can quickly add it to their processing and allow the virtual assistant to interact without sacrificing user experience. There is no need on the part of the customer to wait for a response if the virtual assistant is unable to answer a complex question. Nuvo removes the uncertainty and interjects with a human being.

The first version of the product launched was a Facebook chatbot with some basic functionality that helped people find the best deals on mortgages. Soon, Nuvo will launch the new version integrated on their site with a state-of-the-art user interface, better communication technology, and a next-gen interaction process. Nuvo utilizes its access to endpoints for a better user experience. It also ensures that APIs match the products the platform is offering to users.

The platform launched after the review by UK’s regulator, The Competition and Market Authority (CMA), which recommended that customers use a variety of sites for comparing the best deals. But there are no other companies giving real insight into the market and products.

The UK Mortgage Market Has Not Caught Up With Technology

Most digital brokers are startups and not evolved from traditional brokers. Products and prices are changing constantly. Nuvo allows customer to find the most suitable offer by updating information on a daily basis. Customers can see and compare all the options to make sure they are getting the best deal, eliminating the need for a traditional broker. Also, the founders’ traditional brokers’ practice became a competitive advantage for Nuvo as it enables the company to combine domain expertise and knowledge in their aim to better serve customers.

The UK is one of the largest marketplaces for mortgage deals. Habito and Trussle are other startups aiming for a slice of UK’s lucrative mortgage market. But Nuvo is in for the long haul and believes it can achieve a market share of 5%-10% of the online mortgage market in the next five years.

According to Nuvo founders, they have 10,000 more deals on their platform than Habito at this moment. There is an in-house team of financial experts that assist the customer in solving complicated financial decisions at zero cost. Nuvo does not charge fees to customers like traditional brokers. Instead, they get a commission from the insurer or the mortgage provider.

Founder Richard Hayes said, “Millennials are now willing to transact digitally, so we have an opportunity to resonate with anyone who is willing to engage digitally.”

So far, the mortgage sector has not been able to innovate to meet the demands of customers, but Nuvo, with its AI-powered chatbot, is attempting to simplify the on-boarding process. They are also focused on first-time buyers to build trust and confidence in the mortgage ecosystem.

A major tailwind for digital brokers is the slow but steady death of brick-and-mortar mortgage advisors. In 1985, there were over 120k independent financial advisors in the mortgage space, but now it’s under 20k. Correspondingly, there has been a massive increase in people seeking mortgages. This suggests that the market is consolidating and scale will be an important element in winning the sweepstakes.

How Nuvo is Capturing the Future Digital Mortgage Market

“2018 will see a full mortgage journey on our platform,” Hayes said. Nuvo is incorporating new features to speed up the application process and using APIs to enhance the customer experience at large. “We all know that buying a house is a costly and long process.” Thus, the platform assimilates all the information about property such as value, construction details, and more, from different sources to help the customer get the best mortgage deal and insights about the property itself.

The platform is focused on its journey to help borrowers find the best mortgage and other financial products. It is looking to raise further funding to grow aggressively in this massive market space with its proprietary AI technology.

Author:

Written by Heena Dhir.

Monday October 2 2017, Daily News Digest

marketplace lending uk

News Comments Today’s main news: CEO-less SoFi will have to wait to get a bank. Zopa partners with Saffron Building Society. Zopa updates credit risk model. Assetz Capital lowers commercial mortgage interest rate to 6.9%. RateSetter reports 56% of investors switch from cash. Beehive raises $5M. African billionaire invests in digital bank. Today’s main analysis: UK marketplace lenders struggle to find […]

marketplace lending uk

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

MENA

South Africa

News Summary

United States

SoFi’s CEO Hiatus Stalls Its Big-Time Banking Ambitions (The New York Times), Rated: AAA

One of the most valuable private financial technology startups in the United States, SoFi’s $4.3 billion valuation was based on expectations it could develop into a major lender but Cagney’s departure this month and the circumstances around his exit complicate efforts to create a new-generation bank that could compete against JPMorgan or Bank of America.

The company has hired headhunters over the past few days to help find his replacement, but an appointment is not expected to take place until the end of the year, a source familiar with the matter told Reuters.

The gap at the top is likely to stall SoFi’s application for a banking license, according to the source, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

A banking license was a key part of Cagney’s push to grow SoFi beyond its core business of student loans and unsecured personal loans.

But without Cagney at the helm, the emphasis is expected to shift.

The company will be more disciplined about testing new products before selling them widely, a source close to the company said.

Square Wants To Be A Bank, And Real Banks Are Pissed (BuzzFeed), Rated: AAA

Small businesses love Square because it charges them less than the bigger, bank-owned payment processors, and the little white card-swipes that plug into a smartphone are easier and more convenient than handheld credit card terminals. Square also — through a partnership with a tiny bank in Utah — makes loans to small companies and entrepreneurs banks would turn away.

As much as small merchants love Square, smaller banks distrust it, particularly now that the company, which is based in San Francisco, has applied to become an industrial loan company (ILC), a controversial type of banking license offered in Utah and a few other states.

And while Square insists it only wants to make small loans to the merchants it serves, banks see this as a backdoor way into their bread-and-butter business of taking deposits and making loans, both to businesses and consumers.

And Square, with its at least 2 million merchant customers, may look to today’s bankers a lot like Walmart did a decade ago. The company has been aggressively soliciting the merchants who use it as a payment processor, offering them small-dollar loans by email.

Take Courtney Foster, who runs a one-chair salon in the Murray Hill neighborhood of Manhattan and has used Square to accept payments for years. One day she got an email from Square Capital with an offer of a loan of $1,000 to $1,500, which would be paid back directly out of her payments processed through Square.

She has since borrowed about $3,000 in total from Square using the money (supplied by Celtic Bank) to start her own line of hair products.

The average loan approved by Square is about $6,000, and the company has either advanced or loaned almost $2 billion since 2014. The amount due back is typically 10% to 16% more than the amount loaned out — which is on the low end for similar types of small business finance  with payments coming out of a fixed percentage of the merchant’s receipts received through Square. The whole balance is due after 18 months, though Square customers can repay early.

Utah has 16 industrial banks, and most fall into the latter category, while some are retailers that issue their own loans, like BMW. Other companies that operate Utah industrial banks include American Express, USAA, UBS, and Sallie Mae.

Acting OCC Head Noreika Comments on FinTech Charter and Online Lending (PeerIQ), Rated: A

Also, in a major shift from prior OCC Head Tom Curry, Noreika affirmed that the proposed FinTech charter could be granted to commercial firms. Former Chair of the FDIC, William Isaac, was also constructive on the concept of enabling commercial firms to engage in banking to drive greater competition, customer choice, and expand access to credit to the 60% of Americans that cannot access a loan from a US bank. Historically, the separation of banking and commerce under the Bank Holding Company Act has prevented commercial firms (outside the ILC charter) from offering banking services. Our interpretation of the above is that, under the FinTech charter, commercial firms such as Walmart, Amazon, Google, and Facebook would have a path to offering banking services.

Cross River Bank CRO Adam Goller moderated a panel including PeerIQ (Ram Ahluwalia), Affirm (Alex Karram), Marlette Funding (Jeff Meiler), and former Massachusetts Commissioner of Banks, David Cotney. PeerIQ cited data and research from Columbia and Harvard Law concluding that the lack of regulatory clarity stemming from Madden-Midland has reduced the availability of credit in District 2.

On Timing for Issuing Charters:
“Interest also remains in the possibility of the OCC offering special purpose national bank charters to nondepository fintech companies engaged in the business of banking. … We have not, however, decided whether we will exercise that specific authority to issue special purpose national bank charters to nondepository fintech companies. We will keep you posted.”

PeerIQ Context: The Conference of State Bank Supervisors and NYS Dept of Financial Services have challenged the OCC’s authority to issue charters. Also, the OCC may be waiting for the nominee of Head of OCC Joseph Otting to be confirmed by the US Senate before introducing the FinTech Charter. Otting was approved by the Senate Banking Committee in early September.

Will They or Won’t They: The OCC’s Fintech Charter (Payments Journal), Rated: A

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 non- depository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.”

“Acting U.S. Attorney Joon Kim, representing the defendants, argued that DFS lacks standing in the complaint because the OCC’s regulations addressing the special-purpose national bank charter have resulted in no injury-in-fact, because the office has not reached a final decision on whether it will offer the specific type of national bank charter that does not take deposits and conducts activities other than fiduciary activities. The U.S. Attorney’s Office also argues that the complaint should be dismissed for failure to state a claim.”

Scott Robinson of Plug and Play Fintech (Lend Academy), Rated: A

One of the leading accelerator programs today is Plug and Play, they claim to be the world’s largest startup accelerator. Lending Club and many other big names have gone through their program. In 2014 they started a dedicated fintech accelerator program, founded by Scott Robinson, who is our latest guest on the Lend Academy Podcast.

The Massive Hedge Fund Betting on AI (Bloomberg), Rated: A

Man Group, which has about $96 billion under management, typically takes its most promising ideas from testing to trading real money within weeks.

What spooked him was an experiment at his firm, Man Group Plc.Engineers at the company’s technology-centric AHL unit had been dabbling with artificial intelligence—a buzzy, albeit not widely used, technology at the time. The system they built evolved autonomously, finding moneymaking strategies humans had missed. The results were startlingly good, and now Ellis and fellow executives needed to figure out their next move.

The program stayed in quarantine until 2014, when a senior portfolio manager with a Ph.D. in mathematical logic named Nick Granger decided it was time to take it out of testing. He gave the AI system a small amount of money from a portfolio he was managing—then more, then more again. At each step, the program was profitable.

Source: Bloomberg

Matic Insurance Services and LendingQB Team Up to Eliminate Stress, Mortgage Delays Related to Homeowner’s Insurance (PR Newswire), Rated: B

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, today announced a new partnership with LendingQB, a provider of “lean lending” loan origination technology. Matic announced the news as part of a live demonstration at San Francisco’s Digital Mortgage conference.

Matic’s integration with LendingQB’s flagship loan origination software (LOS) makes it easy for borrowers to upload or secure a homeowner’s insurance policy during the mortgage application process. The result is a less stressful experience for borrowers and the elimination of costly insurance-related delays for LendingQB’s lender clients.

Is Yahoo a fintech company now? (Quartz), Rated: B

Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.

The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product.

Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.

United Kingdom

Zopa searches for new borrowers through Saffron Building Society loan partnership (City A.M.), Rated: AAA

Zopa is partnering with a building society to offer its loans as it seeks to add more borrowers to the platform.

The online peer-to-peer lender will provide loans at 11 bricks-and-mortar branches of Saffron Building Society across Hertfordshire, Essex and Suffolk, as well as online.

Zopa Announces Credit Risk Model Update (Crowdfund Insider), Rated: AAA

On Friday, online lending platform Zopa announced the latest update of its credit risk model. This news comes just a few weeks after the lender announced updated on improving loan sale time progress, rebate period, and ISA transfer-in. Chief Product Officer at Zopa, Andrew Lawson, revealed he and his team are continuing to monitor leading macroeconomic indicators carefully alongside how Zopa’s loans are performing compared to expectation:

Marketplace lenders struggle to find borrowers (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers. These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans.

Source: Financial Times

According to Mr Zhang, institutional investors such as hedge funds, asset managers, pension funds and family offices now account for between 30 and 40 per cent of peer-to-peer consumer and business lending, compared with less than 5 per cent before 2014. BlackRock, the world’s largest asset manager, made its first significant retail investment in peer-to-peer loans last year when it bought a stake in Funding Circle’s investment trust.

So far, however, they have struggled to attract borrowers to match this demand. Competition is increasing from traditional banks — Goldman Sachs has its own online lending platform — especially for prime and super-prime debt that is less likely to default.

Source: Financial Times

Assetz Capital Lowers Commercial Mortgage Interest Rate From 7.9% to 6.9% (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the UK’s fastest growing peer-to-peer finance platforms and the largest property backed peer-to-peer lender, announced on Friday it has lowered its entry interest rate for commercial mortgages from 7.9% to 6.9% in an unprecedented move to give access to even lower rates for lower-risk borrowers looking for commercial mortgages. This is one of the lowest rates available from any alternative finance providers.

Three million small businesses still don’t accept cards, despite move away from cash (The Telegraph), Rated: AAA

Around three million of Britain’s small businesses do not accept card payments, despite the UK rapidly becoming a nation of card-only shoppers.

One in six British shoppers now uses cards only to pay. A further 38pc would typically try to pay with a card first before they have to pay with cash, according to a study by Square, the payment company belonging to Twitter founder Jack Dorsey.

Small companies could be missing out on millions of pounds’ worth of business by not offering card payment facilities, Square warned.

Card payments overtook cash payments as the main method of purchases in the UK for the first time in July this year, according to the British Retail Consortium. The average Brit has just £32.54 in cash in their purse or wallet right now – not enough to cover more than one of the average transaction size of £18.42.

Wonga on course for profit this year after major changes (Express), Rated: A

The company, which has been overhauled under new management after being accused of targeting the vulnerable and being forced to compensate nearly 200,000 borrowers who overpaid owing to “system errors”, cut its annual pre-tax loss from £80.2million to £64.9million.

Revenue grew by 18 per cent to £76.7million as more products boosted customer numbers by 6 per cent.

Wonga confirms £64.9m loss in year it ended Newcastle United sponsorship (ChronicleLive), Rated: A

Britain’s biggest payday lender Wonga has revealed it remained deep in the red last year with losses of £64.9m, but confirmed plans to return to profit in 2017.

Nutmeg loss widens to £9.3m as it develops advice offer (Citywire), Rated: A

Nutmeg’s 2016 losses have widened £9.3 million as it continued to invest heavily, as it presses ahead with developing the ‘most approporate’ advice proposition for its customers.

The loss, revealed in its accounts published on Companies House, follows the £8.9 million loss it posted in 2015. Its operating expenses rose from £10.8 million to £11.9 million over the year.

At the end of the year Nutmeg managed around £600 million in assets under management on behalf of 25,000 clients.

Turnover rose by almost 50% from £1.72 million to £2.56 million.

Wealthtech is coming to the High Street (Banking Technology), Rated: A

One area of fintech that is of interest is wealthtech. This sub-sector is likely to become more visible over the next few months. Wealthtech has become defined as utilising technology to enhance wealth management and the retail investment process.

The most visible players in the UK are the robo-advisors with Nutmeg the best known (and RiskSave following behind!) but other concepts are also deserving of attention, such as Munnypot.

These developments will soon be more visible at branch level.

An offering of automated financial advice from the retail banks could go a long way towards alleviating this. Santander and HSBC have already launched product offerings in this space, RBS is trialling a service through its Coutts’ sub-brand and Lloyds (with a quarter of the UK market) are sitting on the sidelines awaiting the results of the regulator’s Financial Advice Market Review (FAMR).

Fintech start-up Curve adds cloud-based accounting software to its app to simplify expenses (CNBC), Rated: A

Fintech start-up Curve will now let users claim business expenses across multiple bank cards through its app.

The London-based firm’s app allows its users to link all of their bank cards to one contactless MasterCard. Curve said it hopes to automate the tedious process and remove any friction associated with business expenses. It is predominantly targeted at small business owners and the self-employed.

Curve said Monday it would add online accounting software developer Xero to the app, meaning users will now be able to claim business spending across all their accounts.

The hottest startups in London (Wired), Rated: A

As London’s startup community awaits the result of Brexit negotiations – and its impact on single-market access – one might think tech would have ground to a halt. But growth continues: the last 18 months have seen billion-dollar valuations for TransferWise, Funding Circle and Improbable, and a near-unicorn valuation for Deliveroo.

Monzo

Monzo wants to make banking smarter. Founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, it offers pre-paid cards connected to an app that tracks spending and lets its customers analyse their financial activity.

Nested

One of a growing number of UK property – or proptech – startups, Nested guarantees that it will sell your house within 90 days, or buy it themselves.

Habito

Habito scours more than 15,000 mortgage products to suggest the best option, and takes a commission from the eventual lender. In January 2017, the startup raised £5.5 million in a Series A round led by Ribbit Capital.

Ravelin

Founded in 2014, Ravelin analyses online behaviour in real time to reduce payment-related fraud. According to its clients – including Deliveroo, Karhoo, and Easy Taxi, its technology reduces fraud incidence by more than 50 per cent. The company has raised £4.3 million to date from backers including Passion Capital and Errol Damelin.

P2P needs the FSCS stamp of approval (Citywire), Rated: B

Some commentators estimated nearly half a million new investors would try their hand at P2P lending when the Innovative Finance ISA brought eligible platforms into the ISA fold.

This is unsurprising given that, according to government statistics, British consumers have around £500 billion either saved or invested in ISAs.

However, the stampede has not arrived yet.

Plenty of people think the FSCS offers an insurance policy against poor investment performance. It does not. If a share portfolio tanks, for example, the scheme will not be there to save you. That is the risk you run by choosing to invest in the equity markets.

The FSCS is, however, on hand to compensate investors if a provider has been shown to mismanage its product, and has subsequently gone bust. Only then does it offer up to £50,000 (2017/18 tax year), not the larger amount doled out to savers.

Hull has fast become a profitable city for buy-to-let landlords (Mortgage Introducer), Rated: B

LendInvest’s buy-to-let index ranked the city as the fifth best buy-to-let postcode for landlords in the third quarter of 2017, up from 33rd in the second quarter.

“Cities such as Hull and Nottingham making significant gains in the Index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

The top 10 areas for investors in order of ranking are Luton (#1), Colchester (#2), Manchester (#3), Rochester (#4), Hull (#5), Stevenage (#6), Romford (#7), Southend-on-Sea (#8), Ipswich (#9) and Ilford (#10).

China

Wealth-Management Industry at Turning Point (Caixin), Rated: AAA

China’s wealth-management industry is undergoing profound changes, shifting away from short-term, fixed-income products to longer-term, equity-based investment, said Tang Ning, chief executive of Beijing-based fintech conglomerate CreditEase.

Last year, the Forbes listed a record 400 billionaires from the Chinese mainland, compared to 335 a year ago. The listed members held a total of $947 billion assets, a 14% rise from the previous year. Meanwhile, China’s per-capita GDP exceeded $8,123 in 2016, up from $8,069 a year earlier, according to the World Bank.

Unlike investors in the U.S. and other developed market, Chinese investors have long favored most the fix-income products like bonds and bank bills, betting on governments’ implicit payment guarantee. But as China’s economy slows and its financial market liberalizes, the government has become increasingly hesitant to offer such sweeping guarantees.

A number of wealth management companies including CreditEase have launched private equity FOF over the past few years. In early September, the China Securities Regulatory Commission (CSRC) approved the first batch of six firms including China Asset Management, China Southern Fund Management and Manulife Teda Fund Management to set up publicly offered FOF products.

Tang estimated that there are 200 million active investors in China who do not have access to human advisers and asset managers because of their hefty fees.

Alibaba’s Jack Ma places bet on China’s online insurance market (Asian Review), Rated: A

When the heads of three of China’s most prominent companies join hands to launch a start-up, investors notice.

Jack Ma Yun of Alibaba Group HoldingTencent Holdings‘ Pony Ma Huateng, and Peter Ma Mingzhe of Ping An Insurance Group — collectively known as the “three Ma’s” — did just that. Looking to turn Ping An into a full-blown financial technology company within ten years, Peter also enabled the growth of Lufax, which started as a peer-to-peer lending platform in 2011 and became one of the most valuable e-finance company worldwide as of September.

Four years ago they founded China’s first online-only insurer. It was a company with an untested business model and making no money, but it sparked an investor frenzy.

Source: Asian Review

HSBC: Mobile banking in China begins with your face (Enterprise Innovation), Rated: A

Mobile banking continues to soar in China. According to China Internet Watch, total transactions of China mobile banking clients totaled 55.63 trillion yuan (US$44 trillion), up 5.1% quarter on quarter. China Construction Bank (26.1%) and Industrial and Commercial Bank of China (21%) have a combined market share of close to half of mobile banking in Q2 2017.

European Union

French Real Estate Crowdfunding Grows Steadily and Delivers (Crowdfund Insider), Rated: AAA

The French real estate crowdfunding market grew by 50% in 2016 and keeps growing at the same linear growth pace in 2017. While new platforms continue to join, first entrants strongly dominate the nascent market. With €160 million worth of real estate projects funded, the French platforms have a positive record of delivering expected returns.

It has since grown at a fast, but more linear pace of +53% to reach €68 million in 2016, and is expected to grow by 50% again in 2017.

French real estate crowdfunding attracts new platforms. In 2016, their number grew from 26 to 42, with 19 new entrants and 3 withdrawals. Indeed, more than 90% of real estate crowdfunds are raised by the top 10 platforms and 75% by the top 5. Between them, the two leaders, WiSeed and Anaxago, account for more than 50% of the market.

Top 10 French real estate crowdfunding platforms
Platform

Regulatory Status

Regulated Real estate since

Projects

Value

Repaid

Wiseed

PSI

2014

123

€53,197,600

33 %

Anaxago

CIP

2014

83

€38,908,333

18 %

Lendix

IFP

2014

14

€15,875,000

7 %

Clubfunding

CIP

2015

30

€10,075,500

27 %

Lymo.fr

CIP

2015

29

€8,196,500

45 %

Fundimmo

CIP

2015

23

€7,734,900

26 %

Homunity

CIP

2016

22

€6,732,200

18 %

Koregraf

CIP

2015

17

€4,935,500

47 %

Proximea

CIP

2015

5

€3,490,000

20 %

Immovesting

CIP

2016

7

€2,932,000

Source : , September 2017

 

Source: Crowdfund Insider

WINNERS ANNOUNCED FOR INVESTOR ALLSTARS EVENT (BusinessCloud), Rated: A

The winners of the 15th annual Investor Allstars awards were announced this week, with Funding Circle co-founder and CEO Samir Desai being crowned Entrepreneur of the Year and CoderDojo winning the Tech4Good award.

The Entrepreneur of the Year award went to Samir Desai of Funding Circle and online property lending and investment platform LendInvest was announced as Europe’s Allstar Company.

The full list of award winners is:

  • Exit of the Year: Skyscanner (Scottish Equity Partners)
  • Growth and Buyout Fund of the Year: Livingbridge
  • Entrepreneur of the Year: Samir Desai (Funding Circle)
  • VC Fund of the Year: Idinvest Partners
  • Europe’s Allstar Company: LendInvest
  • Corporate Development Team of the Year: Sage Group
  • Investor of the Year: Benoist Grossmann (Idinvest Partners)
  • VCT of the Year: Octopus Ventures Specialist
  • Debt Provider of the Year: Kreos Capital
  • Seed Fund of the Year: LocalGlobe
  • Service Provider of the Year: Orrick
  • Tech4Good Award: CoderDojo Foundation (part of Raspberry Pi Foundation)
  • Digital Innovation in Art: Articheck

That viral ‘mermaid dog’ video was too good to be true (The Daily Dot), Rated: B

It seemed too good to be real. A hairy creature, which some people guessed was an afghan hound, effortlessly floats underwater and moves its arms with the grace of a ballet dancer. It’s pure euphoria, captured in a video that lasts only a few seconds.

When Klarna, a tech bank with a focus on online shopping, posted the video to its Instagram account on Sept. 17 with the caption, “When you’re swimming into the weekend like… #noworries,” many people assumed it was a video of a real animal swimming in a pool. Or maybe they just wanted to believe.

It’s an animation that is part of an ad campaign for Klarna, which is trying sell people on the company’s “smooth” payment system.

International

Regtech Startups On Pace For Record Deals, Against Backdrop Of Shifting Regulatory Landscape (CCB Insights), Rated: AAA

Deals to regtech startups have increased steadily (if at times slowly) over the past few years, from 83 deals in 2013 to 147 last year. At the current run rate, deals in 2017 are on track to hit a new high, while funding is on pace to grow 14% to nearly match record funding levels set in 2015.

In 2017 YTD, regtech startups have seen 103 deals worth $894M in disclosed equity funding. At the current run rate, deals in 2017 are on track to reach a new high of 148 (up slightly from 147 in 2016). Funding is also on pace to grow, potentially bringing total disclosed equity investment over the last 5 years to more than $5B.

Source: CB Insights

Last quarter saw 34 deals, dipping 13% from Q1’17 to hit a 6-quarter low. Though deals were down, funding was up 14% from the previous quarter — and grew 64% year-over-year — to reach $326M.

H1’17 has seen 73 investments, up 3 deals from H1’16, while funding is up approximately 54% over the same period.

Source: CB Insights
Australia/New Zealand

Yield-hungry investors switch their cash to peer-to-peer lenders (The Sydney Morning Herald), Rated: AAA

Peer-to-peer lender, RateSetter, says 56 per cent of money invested with it is from savers withdrawing their money from their bank savings accounts.

Yield-hungry investors are understandably frustrated with earning next-to-nothing on their cash held at their banks, with interest rates at historic lows and likely to stay that way for the foreseeable future.

With the the advent of peer-to-peer (P2P) lenders, online platforms that match investors and borrowers, investors can get up to  three times the interest paid by term deposits.

NZ named Asia Pacific’s fintech champ (NZ Adviser), Rated: A

New Zealand has the highest per capita fintech lending volumes of any country in the Asia Pacific, and has embraced fintech faster than any other neighbouring Asia Pacific countries.

According to the research, peer-to-peer consumer lending forms the bulk of market activity in here. The second largest was donation-based crowdfunding, for which US$16.8 million was raised in 2016 – an increase of around 100% over the previous year. Equity-based crowdfunding was the third largest model in New Zealand with US$13.85 million across 2016 – up from US$11.86 million in 2015.

Appetise’s ASX listing; Study Loans & RateSetter close funding (Deal Street Asia), Rated: A

UK startup Appetise looks to list on the ASX, Study Loans has secured seed funding and P2P lender RateSetter Australia has closed additional funding from a private equity (PE) fund.

Melbourne-based fintech Study Loans, which offers a credit engine targeted at the student loans sector, has raised A$2 million ($1.56 million) in seed funding from investors that include the Simonds family and RMY Corp, as well as A$5 million ($3.9 million) in debt equity.

RateSetter Australia, a peer-to-peer (P2P) lending platform, has secured A$8.5 million ($6.65 million) from private equity fund Five V Capital. The deal values the company in excess of A$100 million. Existing equity investors in RateSetter are RateSetter UK, Carsales and Strattons.

India

Chqbook – Gurgaon Based Fintech Startup Raised Funds (Bizztor), Rated: B

Chqbook – a fintech startup that allows customers to explore, compare, book and get personal finance products like home loans, personal loans and credit cards, raises undisclosed funds from Youwecan backed Startup Buddy, Apurva Chamaria, global head of corporate marketing, HCL, Sachin Arora, ex-CTO Myntra, Bharat Gupta, Founder of Net Asset Consulting LLP, Amit Manocha, Private equity professional based out of Singapore, and others.

APAC

Indonesian P2P lending platforms recorded 496.5 per cent year-to-date growth of funding allocation (e27), Rated: AAA

Indonesian Financial Services Authority (OJK) revealed that peer-to-peer (P2P) lending platforms in Indonesia in total has channeled up to IDR1.4 trillion (US$106 million) in funding for small and medium enterprises (SMEs) in the country. The number is a 496.5 per cent year-to-date (YTD) growth from December 2016’s number of IDR242.48 billion (US$17.9 million).

Funding Societies Dubbed First Southeast Asian Company to Win Global SME Excellence Award from United Nations’ ITU Telecom (Crowdfund Insider), Rated: A

Singapore’s and Southeast Asia’s SME crowdfunding platform Funding Societies announced on Friday it was named the first southeast Asia company to win the Global SME Excellence Award from United Nations’ ITU Telecom, which was held this year in Busan, South Korea. 

PLDT unit disrupts businesses (Manila Standard), Rated: A

Vea, 67, now heads Voyager Innovations Inc., the digital arm of PLDT and the one behind digital platforms such as Smart Padala (mobile remittances), PayMaya Philippines Inc. (formerly Smart e-Money), Freenet (free sponsored data platform), VYGR (digital performance-based marketing), Tackthis! (electronic commerce platform), Hatch, (marketing technology and innovations platform), Lendr (digital consumer loan platform), FINTQ (financial technology unit) and Voyager DX (digital transformation).  Voyager, which has 600 employees, introduces solutions that allow customers to participate in the digital economy such as by using digital money.

Marzan presented data showing that 60 million or 58 percent of the Philippines’ 103 million people are Internet users.  Active social medial users are 60 million as well.

“In the Asia-Pacific region with 4.2 billion population, 46 percent are already Internet users and active social media users are 1.5 billion or 36 percent.  Mobile connection is 3.99 billion and active mobile social users are 1.44 billion. This is exponentially growing and we have to prepare for it,” Marzan said.

How FinTech uses technology to help the ‘unserved’ (Manila Bulletin), Rated: B

TrueMoney, a new financial technology player, seeks to have one TrueMoney center in each of the country’s more than 42,000 barangays to serve those who need a remittance network but have no bank accounts.

To meet that goal, TrueMoney teams up with cooperatives and groups in different regions. Its latest partnership is with Cebu People’s Multi-Purpose Cooperative (CPMPC), a community-based savings and credit cooperative with over 55,000 members to-date.

At this point, TrueMoney has over 5,000 centers in the Philippines.

MENA

Fintech Peer to Peer Lending Platform, Beehive, Raises $ 5m Investment (PR Newswire), Rated: AAA

Beehive, MENA’s leading peer to peer lending (P2P) platform, has secured $5m investment as part of a Series A round led by Riyad TAQNIA Fund and supported by the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, as well as several other regional investors. This latest fundraise brings the total raised by Beehive to $10.5m since its launch.

To date, Beehive has successfully facilitated finance over $35 million (AED 130 million) to more than 200 business funding requests and registered more than 5000 international investors.

South Africa

African Billionaire Patrice Motsepe Invests In Digital Bank (Forbes), Rated: AAA

South Africa’s first black billionaire Patrice Motsepe has reportedly invested in TymeDigital, an online lender that has recently been awarded an operating license by the South African Reserve Bank.

African Rainbow Capital (ARC), an investment firm founded by Patrice Motsepe, recently acquired a 10% stake in TymeDigital, which is a subsidiary of the Commonwealth Bank of Australia, one of the world’s largest banks.

Authors:

George Popescu
Allen Taylor

Tuesday September 5 2017, Daily News Digest

OneMain

News Comments Today’s main news: OnDeck celebrates 10 years of online lending with $7B+ milestone.SoFi responds to sexual harassment allegations, wage lawsuits.RateSetter hires Dave Bibby for North of England.Assetz Capital gets FCA approval.Zopa vows to improve loan sale times.China bans ICOs. Today’s main analysis: OneMain deal analysis.International P2P lending volumes for August 2017. Today’s thought-provoking […]

OneMain

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Latin America

News Summary

United States

OnDeck Provides Over $ 7B in Capital to Small Businesses in 10 Years (ABL Advisor), Rated: AAA

In 2007, the first online loans from OnDeck to small businesses in the United States created a new type of commercial lender, one that believed the Internet could revolutionize how small business owners access capital.  Today, OnDeck celebrates a decade of innovation on behalf of entrepreneurs, having emerged as the nation’s largest online lender to small businesses. To date, OnDeck has provided over $7 billion in capital to more than 70,000 customers in 700 different industries across the United States, Canada and Australia.

Flash forward to 2017 and the company has now provided small businesses more than $7 billion in capital. In the retail industry alone, OnDeck has lent more than $1 billion online.

OnDeck Celebrates 10 Years of Online Lending (Crowdfund Insider), Rated: AAA

Noah Breslow, CEO of OnDeck, stated:

“OnDeck started lending online to small businesses ten years ago with a customer-first philosophy and a relentless commitment to providing capital online with speed, efficiency and top-quality service to America’s small business owners. This is still the hallmark of our business today as we celebrate a decade of innovation on behalf of small business owners, truly the lifeblood of our economy.”

Source: Crowdfund Insider

On Deck Capital, Inc. (ONDK) Downgraded by Zacks Investment Research (Stock News Times), Rated: A

Zacks Investment Research downgraded shares of On Deck Capital, Inc. (NYSE:ONDK) from a buy rating to a hold rating in a report published on Saturday.

SoFi responds to sexual harassment and wage lawsuits (TechCrunch), Rated: AAA

Now, SoFi CEO Mike Cagney is sharing more information about those suits, which were filed by the same lawyer, Robert Ottinger. In a new post, he also stresses that he’s taking the complaints seriously, writing:

“While we’re confident in our positions in these cases, we take these types of claims seriously. Our legal team is hard at work preparing our responses, and as part of that work, we’ve had many discussions with current and former employees about these issues.

Based on these discussions, we’ve discovered that the same lawyer has been trying to collect information relating to alleged sexual harassment at the company, and that he has several people who are prepared to formally allege they were the victims of or witnesses to improper activity at our Healdsburg operations office.

To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it.”

Online lender SoFi investigating sexual harassment claims (L.A. Times), Rated: A

Social Finance Inc., the hot online lender known as SoFi, has launched an internal investigation into claims of sexual harassment at the San Francisco company.

In a post on the company blog, co-founder and Chief Executive Mike Cagney wrote Friday that outside attorneys are conducting an investigation in response to a lawsuit filed last month and amended this week by a former employee.

The executive board of ride-hailing company Uber recently hired a new chief executive to replace Travis Kalanick, who left amid complaints of sexual harassment, discrimination, bullying and retaliation at the San Francisco-based firm.

OneMain Deal Analysis (PeerIQ), Rated: AAA

In our recent earnings overview, we highlighted OneMain Financial as the pack leader across non-bank lenders. And it shows – initially slated for $639 Mn, OneMain increased the deal size by almost 50% to $947 Mn due to strong investor demand. OneMain differentiates via their high touch approach, unique distribution channels, and strong servicing, and decades of historical underwriting data.

Source: Kroll Bond Ratings Agency, PeerIQ

OneMain Financial continues to deliver some of the safest bonds in the consumer lending space. For instance, the KBRA net loss range is 115 bps better (6.85% to 8.85%)–a lower loss-rate than even the super-prime borrowers in SoFi’s SCLP 2017-4 (not shown).

Capital Structure and Pricing

Although OMFIT 2017-1’s structure is much closer to SLFT 2017-A than OMFIT 2016-3, its senior tranche has a much shorter WAL than both. OMFIT 2017-1’s A-2 floater pays LIBOR + 80bps with no floor or cap. This introduces a layer of interest rate risk because the underlying loans are not variable rate. At the same time, the floater enables investors to guard against rising rates.

Source: Kroll Bond Ratings Agency, PeerIQ

Amortization Triggers and Revolving Period

An early amortization event will be triggered if OMFIT’s ANL is greater than 17% for any rolling 3-month period. As you can see, OneMain typically has a generous cushion between its 1-month ANL and the 17% trigger.

Source: OneMain Financial, PeerIQ

Amex releases mobile feature in bid to challenge personal lenders (American Banker), Rated: A

American Express unveiled a new mobile feature Wednesday that allows customers to make small installment payments on individual purchases.

Has the marketplace lending sector fully recovered in the USA? (AltFi), Rated: A

The year 2016 will be forever remembered as the annus horribilis in the marketplace lending industry in the US.

According to Pitchbook, online lending equity investment was $2.3 billion in the USA in 2016. Through August 3rd of this year the total stood at $2.5 billion. While this is still down from the heady days of 2015 when $5.6 billion came flowing into the industry we are having a much better year in 2017 than in 2016.

Here are some interesting deals that have closed so far in 2017:

  1. SoFi raised $500 million in a Series F round led by Silver Lake.
  2. Kabbage raised $250 million in a Series F led by SoftBank.
  3. Bread raised $126 million in a Series B led by Menlo Ventures.
  4. Funding Circle raised $100 million in a Series F led by Accel Partners.
  5. Upgrade raised $60 million in a Series A, the largest ever Series A for a US fintech company.

The biggest segment of online lending is still unsecured consumer loans. And with millennials now coming into their peak borrowing years this will provide a significant tailwind for the industry in the US.

There is Bad News: Returns are Dropping

Read the rest.

Adapt, Automate, Accelerate: AI and the Future of SME Lending (Let’s Talk Payments), Rated: A

One of the struggles when lending to an SME is the cost that goes into making a lending decision. It is estimated that at regional and community banks, $4-5K in operational costs go into processing each loan under $100K, leaving very little margin for bad loan decisions. In fact, these small loans take nearly as much time and manpower to process as much bigger loans. This is where automation and artificial intelligence (AI) can come into play.

Unlike traditional models of underwriting, which focus on only a handful of credit attributes, machine learning can analyze thousands of data pointsfrom various sources, which allows for a bank to model credit risk for SMEs more accurately than ever before. These machine learning techniques are able to radically outperform traditional scorecards in SME lending. In the not-distant future, a bank could use robots and predictive AI to 100% automate lending decisions in cases where the SME is under a certain amount and the predictive analytics give the applicant a certain baseline score.

Upgrade Loans In-Depth Review – Read This Before Applying for an Upgrade Loan (Supermoney), Rated: A

Upgrade’s founders are Renaud LaPlanche and Soul Htite. This may not be the first time you’ve heard these names used together because they were both co-founders of LendingClub, America’s largest loan marketplace.

LendingClub has arranged over 28 billion dollars in loans to over 1.5 million customers. Htite also founded one of China’s largest marketplace lending platforms, Dianrong.

So, both founders have a good track record in the online lending business.

Upgrade’s application process is online, and the personal loan structure is pretty standard. It offers term loans with fixed interest rates and charges an origination fee. All loans are unsecured, so no collateral is required.

A differentiating factor about the company is in their plan to help people manage and improve their credit. If applicants are denied, they will have the necessary support to help them improve their credit and work towards getting approved in the future.

 Pros

  • Easy and fast online application which doesn’t hurt your credit score
  • Plans to provide credit monitoring, alerts, and mentoring
  • Can pick your payment due date
  • No prepayment penalties
  • Founders very successful in past online lending ventures
  • Competitive fixed interest rates
  • Funds are quickly transferred to bank account upon approval

 Cons

  • Company is still very new
  • Charges an origination fee
  • Doesn’t offer lowest-advertised interest rate range on the market
  • Only offers fixed interest rates, no variable rates

Ohio has highest U.S. payday lending interest rates (Star Beacon), Rated: A

Local officials are supporting efforts to limit interest rates on advance or “payday” loans in Ohio, which are the highest on average in the country — close to 600 percent; two or three times higher than neighboring states.

That bill — currently in committee in the Ohio Statehouse — modifies the Short-Term Loan Act of 2008, which capped interest rates at 28 percent but also contained a loophole allowing lenders to keep charging whatever fees they want through another loan law.

One in 10 Ohioans — about a million people — have borrowed from a payday lender, according to a May study from the Pew Charitable Trusts. In Ohio, the average APR is 591 percent, meaning a $300, five-month loan could end up costing Ohioans between $780 and $880, according to the study.

How a bank bet on fintech for its digital reboot (American Banker), Rated: A

When Kevin Karrels first joined the digital team at First Tennessee, he knew a drastic overhaul was in order.

“I inherited a broken and weak digital platform,” said Karrels, senior vice president and digital channel strategy executive at the $29.4 billion-asset bank.

Karrels also realized the online and mobile experience was not up to snuff, especially when it came to meeting the expectations of digital-savvy millennial consumers.

For that reason, First Tennessee ditched its multiple vendor relationships to revamp both online and mobile with D3 Banking, a relatively new entrant in the banking technology space; it was founded in 2008.

 

Richard Cordray could step down soon, leaving the Consumer Financial Protection Bureau in limbo (L.A. Times), Rated: A

The Republican push to oust Richard Cordray as director of the Consumer Financial Protection Bureau soon might get a boost from an unexpected source: Cordray himself.

Cordray’s term as the bureau’s first and only director doesn’t expire until next summer. But there is widespread speculation that he will run for the Democratic nomination for governor of his home state of Ohio.

His departure could leave the controversial watchdog agency, created in the aftermath of the 2008 financial crisis, in limbo for months and jeopardize regulations covering consumer arbitration clauses and payday lending.

I ditched my financial advisor for an app, and saving money has never been easier (Business Insider), Rated: A

At the risk of sounding cliché, I’m a millennial with almost no investing experience. I have a 401(k) retirement account, but all my non-retirement savings has been stashed in a standard savings account from Bank of America.

Plus, I knew there was a possible alternative. As someone plugged into the tech world (and someone who listens to a lot of podcasts with ads), I’d been hearing about so-called robo-advisors, apps that automatically manage and invest your money for you. The meeting with the financial advisor got me intrigued about whether these apps might offer a better alternative. So I went home that night and downloaded the two most popular ones, Wealthfront and Betterment.

Not only did the apps take much less time than the human advisor to offer similar advice, they came with a big cost advantage. Wealthfront manages your first $10,000 for free. After that, both Betterment and Wealthfront charge an annual fee equal to 0.25% of your investments.

One other benefit: You can start an account with either service by investing just $500, which is significantly less than what traditional financial advisors typically require.

$ 2B Trial Puts Tribal Payday Lending In Spotlight (Law360), Rated: A

Race car driver Scott Tucker and lawyer Timothy Muir are slated to stand trial soon on charges they ran an illegal $2 billion payday loan operation that they tried to hide behind the sovereign immunity of three Native American tribes, proceedings that are expected to intensify scrutiny of how tribes participate in the business of high-interest online lending.

Optimal Blue’s Digital Marketplace leverages largest investor database (Housingwire), Rated: B

For originators, Optimal Blue delivers an Enterprise Secondary Marketing Solution that completely automates their operations including product and pricing, lock desk workflow, pipeline risk management, secondary market commitment and delivery, and more.

For investors, Optimal Blue provides an Investor Network Management Solution that automates compliance, product and pricing distribution, marketing, and business intelligence capabilities.

For providers, Optimal Blue’s best-in-class eCommerce platform leverages state-of-the-art API capabilities to integrate with their leading technology and service solutions used by originators and investors throughout the loan life cycle – wherever, whenever it matters most.

Rep. Hensarling seeks answers from CFPB’s Cordray on payday loan rule (Financial Regulation News), Rated: B

Responding to reports that the Consumer Financial Protection Bureau’s (CFPB) final payday loan rule will be narrower in its coverage than originally proposed, Rep. Jeb Hensarling (R-TX) is questioning CFPB Director Richard Cordray on the reported change.

The CFPB’s original proposal established limitations for a “covered loan” which could be either a short-term consumer loan with a term of 45 days or less or a loan with a term of more than 45 days where the total cost of credit exceeds an annual rate of 36 percent along with other qualifications.

SoFi’s Career Incubator SoFi Accelerate Is Heading to Chicago (Crowdfund Insider), Rated: B

Online lender SoFi announced this week its program, SoFi Accelerate, will be heading to Chicago later this month. According to the lending platform, SoFi Accelerator is the first-of-its-kind career incubator that gives “ambitious” professionals the time and space to think big – and the tools and structures to make it happen.

How Crowdfunding is Finding Its Way Into Real Estate (Tech.co), Rated: A

Nowadays, we are seeing an increase in platforms providing investors with the chance to join forces and capitalize on real estate properties to diversify and enhance their investment portfolio.

Not only are you able to join other investors in launching a new company and receive the benefits from those companies, now “you are also able to choose from multiple investment opportunities and gain the full return on investment targeted at the beginning of your investment process” says, Craig Cecilio, CEO at DiversyFund.

You want to look for a platform with tools that allow you to:

  • Analyze an investment opportunity the same way the platform is analyzing it. Trust a company that shows you all their research, pictures, market studies, etc.
  • Keep a close eye on the development process of an investment property. Make sure they send you regular updates, so you can feel comfortable every month until payout time.
  • Have a profile dashboard where you can keep track of your earnings as well as new opportunities in the market. A platform you can trust is always creating new ways to help its investors grow their earnings.
  • Be virtually anywhere in the world, but still able to invest when the time is right for you. The world is a lot smaller these days, thanks to technology itself. Your investments should be able to be with you and travel with you anywhere you go.

Research Finds Fintech Enhances Financial Inclusion at Lower Cost (JD Supra), Rated: A

The report concluded that fintech lending has “penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets,” and that the use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore receive lower-priced credit.

The report relied upon five sources of information for its analysis: data on loans that were originated through an online alternative channel (specifically, loan-level data from the Lending Club platform), data on loans that were originated from traditional banking channels, consumer credit panel data, banking market concentration data and bank branch information, and economic factors.

The Federal Reserve Bank of Philadelphia noted an increasing disparity between the rating grades of Lending Club and FICO scores. While the lender’s rating grades initially tracked the FICO scores of borrowers (with roughly 80 percent correlation in 2007), the similarities have dropped to only 35 percent in 2016, seeming to indicate that Lending Club is relying more on other information.

Overall, the study found that Lending Club’s rating grades have served as a good predictor for the borrowers’ probability of becoming at least 60 days past due within the 12-month period following the loan origination date, “despite the fact that the rating grades have a low correlation with the FICO scores.”

To read the working paper, click here.

Why Online Investing Makes It Easy to Diversify Your Real Estate Portfolio (Crowdfund Insider), Rated: A

Diversification is important because it spreads risk across multiple types of investments within a single portfolio.

Asset allocation is important because it reduces the risk of an outsized impact on an investor’s portfolio from a market moving change in one asset class. In addition, asset allocation takes into account each individual investor’s risk tolerance, time horizon and investment goals.

Real estate is an important part of a well-diversified portfolio, and the advent of online real estate investing makes it easy, convenient, and transparent for all investors to add real estate to their investment strategy.

Online lending firm LendUp sees growth opportuniity in Richmond area (Richmond Times-Dispatch), Rated: B

Since opening its first East Coast office in Chesterfield County in late 2015, LendUp Global Inc. has hired 50 employees locally, and company officials say they expect to add more jobs in the area as the company grows.

Nelson and other LendUp managers say the company expects to broaden its hiring in the Richmond area soon to include more engineers and technology specialists.

A Better Model for Lending to the Poor (Bacon’s Rebellion), Rated: A

California-based LendUp Global Inc., is an example of a social justice enterprise that has the potential to help ameliorate the lives of millions of poor people — without a single dollar of government funding.

They conceived the idea of tapping the emerging FinTech industry to make small loans to an estimated 100 million Americans, mostly poor with low credit ratings and income volatility, who cannot get loans from traditional banks. In early 2016, LendUp raised $150 million in venture capital with the goal of becoming a better small-loan provider.

As with payday lenders, LendUp’s interest rates are extremely high on small, short-term loans. A $250 loan repayable within a month would carry a finance charge of $44, equivalent to an annualized interest rate of 214 percent. Interest payments must cover the transaction costs of making the loans, after all. They also reflect the increased risk on non-payment by low credit-score borrowers.

Earlier this year, LendUp passed the $1 billion mark in loans provided. It has made more than 3.5 million loans.

LendingTree announces changes to senior management, board of directors (Housingwire), Rated: B

LendingTree recently announced a pair of changes to its management, promoting its chief financial officer to its board of directors and replacing him with the company’s senior vice president of corporate development.

Gabe Dalporto, who served as the LendingTree’s CFO since 2015 and who previously served as the company’s chief marketing officer from March 2011 to June 2015, was promoted to the company’s board of directors.

Replacing Dalporto as CFO will be J.D. Moriarty, who joined the company earlier this year as SVP of corporate development.

Fintech Robinhood chooses Orlando for regional headquarters, 200 jobs (Biz Journals), Rated: B

Stock-trading app Robinhood is joining the stampede of Bay Area fintechs heading to lower-cost cities to create jobs. Utah and Florida are among the big winners.

United Kingdom

RateSetter hires Dave Bibby to boost property lending in North of England (P2P Finance News), Rated: AAA

RATESETTER has hired high street banking veteran Dave Bibby (pictured) to join its specialist property development team.

The ‘big three’ peer-to-peer lender said that this was a newly created role and that Bibby would have responsibility for developing its property finance business across the North of England.

Bibby has more than 30 years of experience in the banking sector, having worked at NatWest and Santander.

Assetz Capital’s P2P lending platform gets FCA approval (Finextra), Rated: AAA

Today, Assetz Capital, one of the UK’s largest Peer-to-Peer platforms, announced it has received full authorisation from the UK regulator, the Financial Conduct Authority (FCA).

As the UK’s second largest peer-to-peer business and property lending platform, to date it has lent more than £316 million to businesses nationwide. Following its successful FCA application, Assetz Capital is now in the final stages of completing its work on its Innovative Finance ISA (IFISA), which will be ready for roll out in Q4 2017.

Full steam ahead! RateSetter backs Flying Scotsman restorer (P2P Finance News), Rated: A

RATESETTER has helped fuel a locomotive repair specialist best known for overhauling the famous Flying Scotsman.

Investors on the peer-to-peer platform have helped fund a £420,000 loan to restorer Riley and Son to help restructure existing debt and improve cashflow.

The company – one of only three in the UK able to carry out locomotive repair work on the scale of The Flying Scotsman – which is 70ft long, 13ft high and weighs around 10 tonnes – had been given 18 months’ notice to move premises.

Zopa vows to improve loan sale times (P2P Finance News), Rated: AAA

ZOPA has promised a “large change” to address investor concerns about the time it is taking to sell loans.

Investors have been complaining about loan sale times in recent weeks, with some on the P2P Independent Forum claiming it can take weeks to sell out.

The peer-to-peer consumer lending platform has now recognised there is an issue.

Peer to peer Isa fails to take off (Money Observer), Rated: A

Peer-to-peer Isas failed to gain much popularity in their first year, while the amount held in cash Isas fell by nearly £20 billion.

Just 2,000 Innovative Finance Isa accounts were opened in the tax year 2016/2017, according to the latest statistics from HMRC.

Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

Overall, the amount held in Isas in 2016/17 fell to £61.5 billion, compared with £80 billion the previous tax year. This decline was largely driven by a steep fall in the amount held in cash Isas. In 2015/16, a total of £58.7 billion was held in cash Isas; in the latest tax year this fell by a third to £39 billion.Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

How P2P lenders should counter “black box” accusations (AltFi), Rated: A

The UK’s peer-to-peer lenders are shifting towards passive investment strategies. Funding Circle, the leading online marketplace for small business loans, called a halt to manual loan selection at the end of August. Henceforth it will funnel customers into one of two passive investment accounts, with a view to generating more consistent returns for all of its investors.

The change has earned the platform a number of disgruntled investors. One investor, commenting on an AltFi article, called it “the last straw”. “I’ll be withdrawing all my funds from FC and placing them on more attractive P2P platforms,” he wrote.

Canaccord: P2P Global faces long road to recovery (Citywire), Rated: A

Investors in P2P Global Investments (P2P) are no longer being compensated for the risks they are taking, according to Canaccord.

Alan Brierley and Brian Newell, analysts at Canaccord, have downgraded the peer-to-peer lending trust from ‘hold’ to ‘sell’ because they expect returns will stay below the 6% to 8% target until the end of 2018.

Proptech startup Habito lands £18.5m to make mortgages digital (City A.M.), Rated: A

Atomico, the venture fund set up by Skype founder Niklas Zennstrom, led the £18.5m series B round with existing investors Ribbit Capital, Mosaic Ventures and Revolutionary (ad)Ventures also participating.

It brings total funding for the startup – which is also backed by the entrepreneurs behind Transferwise and Funding Circle Taavet Hinrikus and Samir Desai respectively – to £27.5m. City A.M. exclusively revealed its first major round of funding earlier this year.

Atomico, the venture fund set up by Skype founder Niklas Zennstrom, led the £18.5m series B round with existing investors Ribbit Capital, Mosaic Ventures and Revolutionary (ad)Ventures also participating.

It brings total funding for the startup – which is also backed by the entrepreneurs behind Transferwise and Funding Circle Taavet Hinrikus and Samir Desai respectively – to £27.5m. City A.M. exclusively revealed its first major round of funding earlier this year.

PayPal picks five FinTech startups for its year-long incubation program (The News Minute), Rated: A

Global online payments leader PayPal has inducted five new FinTech startups into its PayPal Incubator in Chennai.

The give startups to be selected are Finbox, Neoeyed, Paymatrix, Scalend and Tybo.

“In its 5th year, the PayPal Incubator has received an overwhelming response with over 250 applications from early stage FinTech startups – a 150% growth from last year, reflecting both the need for an incubation program, as well as the FinTech industry’s potential,” said Guru Bhat, GM Technology & Head of Engineering – PayPal.

How do you invest yours? The P2P platforms offering auto-bid or manual lending (P2P Finance News), Rated: A

FUNDING Circle’s upcoming shift away from manual lending will soon mean the three biggest peer-to-peer lenders in the UK only offer auto-bid options, but there is still plenty of choice for investors still looking to self-select their loans.

The manual versus auto-bid debate is important in P2P as it dictates the level of due diligence and diversification an investor will need to conduct.

P2P “unlikely to become primary lending source” (P2P Finance News), Rated: A

PEER-TO-PEER lending poses little threat to the traditional banking business model, new research claims.

A report by the Bank for International Settlements – an international financial institution owned by central banks – looks at ways in which fintech could change how mainstream lenders and regulators operate.

The report suggests this scenario, where P2P becomes a primary source of lending, is unlikely to become significant in the short to medium term.

Abundance made up majority of IFISAs in the last tax year (P2P Finance News), Rated: A

RENEWABLES and ethical investment peer-to-peer platform Abundance took the biggest slice of the Innovative Finance ISA (IFISA) market in the last tax year, figures show.

HMRC data last week revealed that 2,000 IFISAs had been opened in the first tax year of the scheme, with £17m subscriptions.

Now Abundance has revealed that its customers opened 1,436 IFISA accounts last year, equating to total investment of £10.5m.

P2P lenders insist Isa take-up will increase (FT Adviser), Rated: A

Peer-to-peer lenders have said the Innovative Finance Isa will prove much more popular this year as more providers enter the market.

Figures published yesterday (31 August) by HM Revenue & Customs revealed only 2,000 of this type of Isa had been openedin 2016 to 2017.

This compared to 2.5 million stocks and shares Isas and 8.4 million cash Isas during the same year.

Building trust by raising standards—a path to fair treatment of SMEs (Prospect Magazine), Rated: A

It is worth reminding ourselves what an important part SMEs play in the UK economy. At the start of 2016, there were approximately 5.5 million private sector businesses in the UK, of which 99.9% fell within the SME definition. These businesses employ 15.7 million people, accounting for 60% of all private sector employment in the UK.

The launch of the government portal, enabling SMEs declined by high street banks to be referred to an alternative lender, will hopefully help in terms of access, although the Treasury has commissioned an early review of bank referrals to the portal as usage has been lower than anticipated. Meanwhile, banks stand ready to lend and there are also many new lenders on the market—start ups, peer to peer platforms, crowdfunders, fintechs—offering innovative products, with a desire to provide finance for SMEs and encourage entrepreneurs.

New Developments Highlight Manchester As Buy To Let Hotspot (Residential Landlord), Rated: A

Manchester has been flagged as the UK’s new buy to let hotspot following a boost from new developments, according to the latest report from LendInvest.

Following the decline that has marred the buy to let sector in London, investors have been seeking a new location to turn to. Manchester has seen strong growth in both culture and economy, as well as through infrastructure. The report found that Manchester has the fastest rental growth in the UK, with rental prices up 7.53 per cent in the last year. The city is also ranked number one for rental yields in the UK, offering average returns of 6.11 per cent for landlords and buy to let investors.

Debt mess leaves innocent bystander struggling with system (Express), Rated: A

Now in her 70s and caring for her husband, she always has a lot on which is why she didn’t immediately scrutinise the name on a letter that arrived in July.

It turned out to be from agency Pastdue Credit Solutions chasing £588.60 on behalf of its client, payday lender Wonga.

While it detailed Ann’s address correctly, it named not her but a relative who had not lived there for over 20 years.

Ann’s ignorance about the laws governing credit and the way the sector operates led her to fear both for her relative and her home being blacklisted, so she decided to settle the account.

She adds: “They accept my money no problem, but have never explained how they got my address or the issue of any double payment.

SA lending platform Prodigy Finance chose London for ‘pro-business regulation’ (Ventureburn), Rated: B

Cape Town founder of multi-million dollar lending platform AlphaCode and a global investment bank.

So what if the banks leave? We’re the fintech capital (Property Week), Rated: B

I didn’t vote for Brexit. But is all this doom and gloom justified?

Traditional banks might be looking elsewhere today, but we only need to pay attention to office lettings to realise that London is already the place to be for tomorrow’s leaders.

In FinTechCity’s latest annual Fintech50 list, which profiles the European businesses that are transforming financial services, 31 of those listed are based in London.

China

China hits booming cryptocurrency market with coin fundraising ban (Reuters), Rated: AAA

China on Monday banned and deemed illegal the practice of raising funds through launches of token-based digital currencies.

Individuals and organizations that have completed ICO fundraisings should make arrangements to return funds, said a joint statement from the People’s Bank of China (PBOC), the securities and banking regulators and other government departments that was posted on the central bank’s website.

In total, $2.32 billion has been raised through ICOs, with $2.16 billion of that being raised since the start of 2017, according to cryptocurrency analysis website Cryptocompare.

By creating and issuing digital tokens, entrepreneurs can raise large sums quickly — sometimes hundreds of millions of dollars in minutes — with little or no regulatory oversight. But unlike traditional fundraising, token holders are generally not given any share in the particular project, nor any security.

China’s Internet Finance Association Issues ICO Warning (Coindesk), Rated: A

In a statement yesterday, the National Internet Finance Association of China warned that ICOs may be using misleading information as part of fundraising campaigns, urging investors to proceed with extreme caution. The group, which works with government agencies on regulatory matters, further stated its intention to toughen security measures.

What is the development of financial technology in the United States? Please see IDF from the front of the report. (Sohu), Rated: A

To promote the exchange of financial and technological fields between China and the United States, local time from August 23 to 24, by the Peking University Digital Finance Research Center (IDF) and the Shanghai New Financial Research Institute (SFI) organized by the US financial technology delegation , To San Francisco financial technology enterprises and regulatory agencies to visit and study.

Chinese Online Lender Fincera Changes Ticker to YUANF (Crowdfund Insider), Rated: B

Fincera Inc. has received FINRA approval to change its ticker symbol to “YUANF“.  Previously, the China based online lender had traded under “AUTCF”.

European Union

Klarna’s CEO: These two things will make or break a fintech startup (Business Insider), Rated: AAA

This week, as Sthlm Tech Fest gathered the Swedish tech elite under one roof, fintech stood out as a key theme. Recent breakthroughs by homegrown payment giants like iZettleKlarna and Bambora catalyzed a vivid discussion.

Izettle co-founder and CEO Jacob de Geer pointed towards key fintech trends: increased consolidation, lower startup valuations, and the importance of making money on other things than just payments.

This week, as Sthlm Tech Fest gathered the Swedish tech elite under one roof, fintech stood out as a key theme. Recent breakthroughs by homegrown payment giants like iZettleKlarna and Bambora catalyzed a vivid discussion.

Izettle co-founder and CEO Jacob de Geer pointed towards key fintech trends: increased consolidation, lower startup valuations, and the importance of making money on other things than just payments.

Small Businesses Fear Spike in Cost of Capital After Brexit (WSJ), Rated: A

Banks operating in the U.K. could face approximately €15 billion ($17.8 billion) in restructuring expenses, plus potentially another €40 billion in extra capital requirements, according to a study by Boston Consulting Group Inc. and Clifford Chance LLP. Some of these costs could be passed on to companies.

Small and medium-size enterprises are particularly exposed to higher charges, as they often rely on a single bank and lack contingency plans to deal with the fallout from the U.K.’s departure from the European Union. Firms with annual revenue of up to €10 million are defined as small businesses. Medium-size ones earn maximum revenue of €50 million, according to the EU Commission.

U.K. banks in June charged SMEs an average of 3.89% for an overdraft facility and 3.12% for a loan, according to the Bank of England. A year ago, the rates were 4.11% and 3.36%, respectively.

MiFID II: How It Will Impact FinTech’s Future (The Market Mogul), Rated: A

New legislation on the European financial markets, MiFID II, is expected to come into force on January 3rd 2018 and will impact Fintech’s future. Through regulating trading activities and enhancing investors protection, it will aid the creation of more transparent and robust financial markets. It will also extend the regulatory coverage to non-equity products, including cash and derivative instruments in fixed income, foreign exchange and commodities.

The amended directive will also apply to more industry stakeholders engaged in investment services, such as investment banks, portfolio managers, brokers and market makers.

International

International P2P Lending Volumes August 2017 (P2P-Banking), Rated: AAA

Milestones reached this month are:

  • Bondora reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

*Prosper and Lending Club no longer publish origination data for the most recent month.

Lender of Last Resort (Handelsblatt Global), Rated: A

Kreditech has a controversial business model. The company’s 29-year-old chief executive Alexander Graubner-Müller spends a good deal of time explaining how the company rates clients and gives them credit.

Kreditech looks at potential borrowers’ Facebook friendships, among other factors, to score their credit. Based on that score, the company might offer them a loan – but in some cases with double-digit interest, which critics say is excessively high.

But that hasn’t kept Kreditech from securing the kind of high-caliber investors few German fintech firms can match. Besides World Bank’s IFC, the company counts US private equity firm J.C. Flowers among its backers, as well as Paypal founder and Donald Trump supporter Peter Thiel.

Payment services provider PayU, owned by the South African media conglomerate Naspers, spent €110 million ($129.9 million) on a roughly one-third stake.

Australia

Timelio Receives Investment from Anthony Thomson, founder of Atom Bank & Metro Bank (Crowdfund Insider), Rated: AAA

Timelio, an online invoice financing marketplace operating in Australia, has received the backing of Anthony Thomson – a leading Fintech entrepreneur who is founder and Chairman of Atom Bank and founder and former Chairman of Metro Bank. Atom Bank is a digital only platform that received a banking license in 2015 establishing itself as a “Branch-free, Paper-free and Stress-free Bank.” Specific details on the investment were not made available.

To date, Timelio has now funded over $100 million in invoices since platform launch, just over 2 years ago.

Picking your peer-to-peer platform provider to invest (The Australian), Rated: A

Disruption is not just happening to retail, hospitality and taxis. It’s also happening in financial services, especially banks, where borrowers and lenders are finding ways to engage, cutting traditional players out of the picture.

At best, in this scenario, both investors and borrowers can end up winning, with better lending rates and higher returns.

The lenders

Funds are available for personal commitments such as car and housing loans and refinancing existing debts as well as those seeking small business loans.

One of the largest companies in the market is SocietyOne. It offer consumer loans from $5000 up to $50,000 for up to five years with principal and interest repayments fortnightly or monthly. It also lends to the agricultural sector. SocietyOne does not pool loans like some industry rivals; rather investors can select individual loans in which to invest.

At RateSetter, supply and demand for products determine the rates of return. Minimum investment is just $10, for terms of 1 month out to five years.

ThinCats Australia deals in secured business loans for Australian companies. Lenders bid for amounts for fixed rate loans, with a minimum bid of $1000, the maximum being the value of the loan.

Fintech for pets and the rise of alternative business lending (Finder), Rated: B

New research from Businessloans.com.au has found that small businesses are embracing peer-to-peer lending, crowdfunding and online loans. However, while businesses are looking outside the traditional and applying with fintech lenders, not all SMEs are getting the loans they hope for.

Household payment platform easyshare last week ran a promotion for those house sharing in Sydney’s inner west. The first 100 share houses to sign up would be personally delivered a case of beer.

Good Money Microfinance Celebrates Five Years of Three-Way Partnership (Probono Australia), Rated: B

Not for profit Good Shepherd Microfinance says the fifth anniversary of its low or no-interest Good Money shops, now operating in three states, has proved the worth of the three-way partnership between business, community and government.

Since beginning as a pilot store in Victoria, Good Money has grown to seven Australian stores located in Victoria, South Australia and Queensland and is the result of a partnership between banking group NAB, state governments and community organisation Good Shepherd Microfinance.

Good Shepherd Microfinance CEO Adam Mooney told Pro Bono News the stores had provided more than 5,800 low or no-low interest loans to “vulnerable Australians” living on a low income.

Currambine school catches student’s hearing impairment (Community News), Rated: B

IT was not until moving to Perth a couple of years ago that Alyssa Cranston’s hearing impairment was discovered.

The initial test was expensive and the device costed $2500, compounded by the fact Mrs Cranston had been struggling with her own health issues and about the same time was told she needed hearing aids.

They decided their “last resort” was to take out a personal loan through SocietyOne, which uses marketplace lending that connects borrowers with private investors.

India

Company Name : Square Capital (Business Wire India), Rated: AAA

Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards has underlined its market dominance by becoming the largest organized distributor of secured mortgages in the country. It is currently facilitating USD 30- 40Mn (INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, home against property and business loan.

Startup Street: An Incubator For Non-Profit Startups (Bloomberg Quint), Rated: A

An incubator for non-profit startups, backed by big names like MakeMyTrip founder Deep Kalra and Paytm chief Vijay Shekhar Sharma, has picked 10 early-stage startups for a six-month programme.

The applicants include non-profit startups by graduates from top institutions such as Harvard, Yale, Princeton, Stanford, Oxford, Indian Institutes of Technology and Indian Institutes of Management, the statement said.

Source: Bloomberg Quint

Banks lag in fintech, startup acquisitions will make them relevant (YourStory), Rated: AAA

It was early 2016 and Rajiv Anand, the Executive Director of Retail Banking at Axis Bank, was hard at work with his team to figure out the impact of the digital world on banking. Among the questions he asked his team was whether the present day consumers know how a bank would look in the future.

His team realised that the answers are not going to come from their bank, but from the people outside his company. Young people in urban centres are no longer going to be in a physical bank branch, but are going to be exploring the bank digitally.

One can say that in July 2017, the marriage between Axis Bank and startups was the best move that happened in the banking sector since a decade. Axis Bank’s acquisition of mobile wallet company FreeCharge for Rs 385 crore in an all-cash deal has taken that relationship further, quite possibly opening the doors to more such deals in the future.

Therefore Axis Banks’s first bunch of startups which are S2Pay, FintechLabs, Perpule, Pally, Paymatrix, and Gieom are indeed defining how banks should function in the future. Of these startups Pally, FintechLabs and Gieom have been selected for long-term engagements with the bank.

YES Bank has tied up with BankBazaar to showcase loan products, including personal loans, home loans, and car loans. The big daddy of them all, State Bank of India, whose balance sheet size is Rs 41 lakh crore, has also entered into the agreement with BankBazaar to display its home loan products on bankbazaar.com and initiate door-step delivery.

Mobile payments and loans startup ftcash too has launched Unified Payment Interface(UPI) for merchants in association with ICICI Bank.

Source: YourStory

9 Indian Startup News That You Don’t Want To Miss This Week (Inc42), Rated: A

WikiLeaks recently published a report claiming that the Central Intelligence Agency, the CIA, in its cyber spying efforts may have compromised Aadhaar data. The report alleges that the CIA is using tools devised by US-based technology provider Cross Match Technologies for cyber spying. However, the official sources have rubbished the reports.

A Mumbai-based firm, Global E-services, has reportedly dragged Amazon India to Bombay High Court over non-payment of rental dues.

After receiving backlash by the government-operated India Post over the unsanctioned use of the term ‘postcard’ Indian startup Paytm has rebranded its cash envelopes to lifafa.

DIPP has, for the first time, included a section dedicated to Indian startups.

Indian startup OYO announced the launch of OYO Asset Management Service. The service is geared towards building a nationwide network of hotels through a partnership with real estate asset owners.

Mumbai-based technology company Zeta has started partnering with banks to deploy solutions around BharatQR, Unified Payments Interface, and card payments to capitalise on the spurt in digital transactions for retail payments.

XSTOK PayLater card is a “Purchase Now, Pay Later” payment option enabled through a line of credit sanctioned to a buyer (member), for making purchases on XSTOK.com.

Fintech helps banks disburse more loans (ET Markets), Rated: A

Two years of fin tech driven reach has helped banks grow about 15 to 20 per cent indicating that banks’ dependence on `feet-on-street’ to campaign for loans may recede in a few years. Bankers said nearly a third of their customers below 30 years were on-boarded through the digital platform.

Reserve Bank of India data showed retail loans grew 15 per cent while overall banking credit grew 4.7 per cent on a year-on-year (YoY) basis. Personal loans grew the most at 35.7 per cent followed by credit card outstanding at over 32.5 per cent. Loans to weaker sections also grew over 11 per cent on a YoY basis.

Future of Fintech: India in 2050 (Busisiness World), Rated: A

If Fintech is such a big revolution, why not seize the opportunity? This is exactly what the emerging start-ups of India are doing and consequently, providing efficient and cheaper financial services with Paytm, Mobikwik, Freecharge, Bank Bazaar etc. leading the way and several others following in to test their Fintech ideas. To share some numbers, the first quarter of 2017 saw global investments in Fintech, to the tune of approximately $3 billion which includes a $1.4 billion investment in Indian giant- Paytm! PwC estimates that within the next 3-5 years, the total investment in Fintech would rise to a whopping $150 bn globally. Needless to say, the age of Fintech entrepreneurs is here to stay!

Let us now explore the Fintech ecosystem and the sectors in Fintech which will roll the next set of innovations!

  • Blockchains
  • Alternate lending- Traditional banking industry found it unprofitable to lend to small entrepreneurs. Fintech entrepreneurs took advantage of this opportunity by diving into Peer to peer (P2P) based lending and building web platforms to bring together the lenders and borrowers at lower interest rates.
  • Robo advisory- Earlier intermediaries played an important role between the stock market and the investors. Many times this led to non-traceable and inefficient transactions. Robo advisory will make the stock market easier to access, transparent and traceable and give more value addition to the smarter investors.
  • Digital payments- Fintech start-ups have increased the speed and convenience of payments. Mobile wallets have already replaced traditional wallets in a lot of places and will penetrate further with better and faster payment options.
  • Insurance sector- Currently, we can find various online market places where consumers can compare their insurance policies and take prudent decisions.

Indian online fintech startups ill-prepared to handle cyberattacks (Gadgets Now), Rated: A

Indian organisations rank quite low in cybersecuritypreparedness, with online fintech startups being the worst performer among them, a report said on Friday.

According to a report by Bengaluru-based cybersecurity startup FireCompass, the online fintech startups scored eight out of 100 as per security benchmark.

Most industries performed moderate, like telecom (61%), IT (52%), manufacturing (51%), insurance (45%) and small banks (43%).

Asia

Indonesian Online Lender UangTeman Raises $ 12m in Equity Funding for Consumer Loans (MicroCapital), Rated: A

UangTeman, an Indonesian firm offering online loans of up to USD 350, recently announced it has secured USD 12 million in Series A funding from Thailand’s K2 Venture Capital, US-based Draper Associates, Indonesia’s Alpha JWC Ventures, Malaysian angel investor Terrence Teong Chee Hooi and multiple unidentified local investors. Hong Kong-based STI Financial Group also lent the firm an undisclosed amount. UangTeman plans to invest a portion of the funding in research and development offices in India and Singapore.

Web operator offers loan refinancing (The Nation), Rated: A

BORROWERS are finding themselves with more options from a financial technology (fintech) startup that aims to secure loan refinancing business worth Bt3.4 billion in transaction value by the end of this year.

The operator, refinn.com, is looking to get 1,700 debtors on board to secure the year-end goal.

Latin America

Three Colombian Fintech Startups Chosen for Village Capital’s Latin American Accelerator Program (Finance Colombia), Rated: A

Three Colombian fintech startups have been selected to participate in an exclusive accelerator program coordinated by Washington-based venture capital firm Village Capital that will award a $75,000 USD investment to top-performing early-stage Latin American companies.

Payment platform ePayco, short-term loan provider RapiCredit, and tuition savings facilitator ESCALA Educación are the three Colombian companies that have been chosen to compete in the first ever regional “Village Capital FinTech – Latin America 2017” program.

Along with these finalists, eight other fintech startups from across Latin America were picked out of the nearly 100 companies that applied for the program, which is supported by PayPalCitibanamex, and BlackRock in addition to Village Capital.

Authors

George Popescu
Allen Taylor

Monday January 23 2017, Daily News Digest

FinTech

News Comments Today’s main news: Funding Circle stops originating loans in Spain. Today’s main analysis: LendInvest opens property development academy. FinTech predictions for 2017 Today’s thought-provoking articles: Yirendai bullish on lending prospects. P2P needs big data. United States VCs in FinTech pivoting toward insurance & RegTech. GP:”We clearly see that the fintech VCs are now focused […]

FinTech

News Comments

United States

United Kingdom

European Union

  • Funding Circle stops originating loans in Spain. AT: “Interesting. I didn’t see a reason for the decision. It could just be a shift in focus on other markets, which is mentioned in the article.” GP:” We can speculate, without any particular knowledge, that it is likely due to regulation.”
  • Influential entrepreneurs. AT: “Several of these are in marketplace lending and FinTech.”

China

  • Yirendai bullish on lending prospects. GP:” Their stock continue to perform unbelieavably. We continue to be unsure about the solidity of their business, default rates and underwriting quality. We seem to be in the minority though. “

India

  • P2P lending needs big data to have a future. GP:” Underwriting, underwriting, underwriting. If one has 5 rating grades and 5 subgrades per grade, that is 25 categories. One needs at least a few hundred defaults per category to know what a default looks like. We are talking 25*300= 7500 defaults. With a default rate of , lets assume 5%, that means 150,000 loans. So one really has data once it originated 150,000 loans. And once you modify the underwriting parameters the counter resets before you know if your modifications worked or not…”

United States

VCs in Fintech Pivoting Toward Insurance & RegTech in 2017 (10Fold), Rated: A

The panelists agreed that the fintech market is getting oversaturated and over-funded. This means that the pressure is on to seek original ideas that leapfrog entire processes in financial services as opposed to just digitizing existing services. They pointed to payments and lending as two areas where the market has defined clear winners, but as credit becomes more expensive, this could shake loose new opportunities for entrepreneurs.

But confidence in insurance and regulatory technology (RegTech) is high. Kapoor Collins encouraged entrepreneurs to think about regulations on two levels. At a basic level, founders should factor in regulatory policies and changes into their business plans.

Fintech predictions for 2017 (TechCrunch), Rated: A

2017 will continue to be the year where the top players pull away from the pack. At the beginning of 2016, there were an estimated 400+ fintech lenders in the U.S. – in 2017, I expect the supermajority of the lending to come from just 10 or so platforms.

Fintechs looking to disrupt core banking products like checking and savings accounts, and the products attached to them like debit cards will likely become more prominent in 2017.

Most of this will come in the form of partnerships – fintech front ends, traditional bank back ends – but partnership might not be the “construct du jour” much beyond 2017.

Acquisition will be the answer for some traditional players. I can’t tell you how many transactions there will be, but I can tell you the conditions have never been more ripe.

As investors in newer markets get hip to fintech, they may also want to invest in the U.S., where the fintech market is stable, large, and growing. We’ve already started to see it happen on the equity investment side, and we’ll likely see it happen on the credit investment side too – that is, investment in the loans of fintech lenders. Interest rates in some international markets are significantly lower, making yields found in the U.S. that much more attractive. The stability of the U.S. market remains a large draw relative to local markets as well.

P2P Lending, Crowdfunding to Drive Business Growth in 2017 (Finance Magnates), Rated: A

The P2P business model is starkly different from that of traditional banks. As their name implies, P2P sites began as ways for individuals to borrow from other individuals but now several of the sites have evolved into places where small business owners can borrow from individuals and even institutional investors.

P2P loans are unsecured, so you don’t have to tie up precious collateral, the funding process is faster than a bank and requires less paperwork.

Now that P2P sites are also open to institutional funders, the line between P2P and marketplace lending isn’t as clear as it once was. Marketplace lenders have created websites where small businesses can get offers from multiple funders on a wide range of capital needs, from short-term funding to equipment finance and even long-term loans backed by a guarantee from the U.S. Small Business Administration.

On a crowdfunding site, you can use words, pictures and even videos to sell people—many of whom won’t know you or your business—on your business idea and include how much you need and what you’ll use the money for.

Ilan Investments Closes on Mixed-Use Property Development (PR Web), Rated: A

Capitalization for Ilan’s newest acquisition resulted partially from real estate equity crowdfunding, which as a sub-industry in real estate, topped $2.5 billion in 2015, according to Massolution, an industry research and advisory firm. For this project, Ilan turned to Crowdstreet, a real estate crowdfunding platform.

Ilan’s new property is located within the heart of the Texas Medical Center in Houston and several shopping and dining choices, and is positioned to draw residents employed in the Medical Center, Uptown, Downtown and EaDo areas of Houston, according to Michael Harger, Adara’s vice president of marketing and development.

United Kingdom

LendInvest opens property development academy (Mortgage Introducer), Rated: AAA

Online mortgage lender LendInvest launched its second property development academy in London today – a two day course teaching students how to build residential properties.

The non-profit course is provided in collaboration with the University of Reading and covers the whole development process, including land valuation, planning permission and final sale.

Exeter-based peer-to-peer lender Bricks Finance gains FCA authorisation (Exeter Express and Echo), Rated: A

Exeter and East Devon-based Bricks Finance has been authorised by the Financial Conduct Authority.

The peer-to-peer lending business, which made its first loan in May 2015, has a loan book of over £5million and has made loan offers over its first two years of £14million.

Back innovation and benefit from tax perks (The Times), Rated: A

LandlordInvest, a peer-to-peer lending platform, this week received Isa manager approval from Revenue & Customs, even though other platforms, including Funding Circle, Zopa and RateSetter, are still waiting for the go-ahead.

By October 2016 only 15 companies had been approved to offer such Isas to peer-to-peer and crowdfunding investors, although the market finally seems to be growing.

Welendus Live on Seedrs (Welendus Email), Rated: A

Welendus fundraising campaign is now live on Seedrs. You can click here to access the campaign and watch the video.

Welendus are raising £300k for equity.

In short peer-to-peer lending allows investors to make money by helping borrowers to escape the bad practice of payday lenders like Wonga, and the high overdraft rates charged by banks.

This peer-to-peer lending market reached £3.2bn in 2015 and is due to reach £19bn by 2020, fueled by increasing demand and supportive government policies designed for a low interest rate, post-Brexit economy.

The short-term lending market is a huge market that is let down by existing players.

Seedrs do accept international investors with a strong pre-existing connection.

LendInvest to grow development finance (Mortgage Introducer), Rated: A

LendInvest wants to double its development finance lending this year which it views as an underserved and growing area, its chief commercial officer Matthew Tooth has revealed.

Tooth (pictured) said development finance makes up around 20% of its lending by value as it stands, but by the end of the year it should make up a third.

Digital mortgage adviser Habito on cusp of realtime lender approvals as it secures £5.5m investment (IB Times), Rated: A

Habito, the digital mortgage adviser which uses AI technology, has just raised millions in funding from investors in Silicon Valley – and says it is on course to have processed half a billion pounds’ worth of mortgage applications by the end of 2017.

Ribbit Capital, which has invested in Funding Circle and Robinhood among other fintech companies, backed Habito with £5.5m.

European Union

Funding Circle Stops Originating Loans in Spain (Crowdfund Insider), Rated: AAA

Following big news of a $100 million funding round, Funding Circle has announced it will stop issuing new loans in Spain. The online lender has made the decision to concentrate its Continental Europe resources on the Netherlands and Germany.

Since launching in Spain, Funding Circle has helped 217 Spanish businesses raise money with the help of 579 active investors. The platform has managed a meager €16 million in loans in Spain, approximately 0.1% of its global volume.

Debrett’s 500 List: Entrepreneurs (The Telegraph), Rated: B

An in-depth look at the most influential people in…

  • Dr Ismail Ahmed, Founder and CEO, WorldRemit
  • Giles Andrews, OBE, Co-Founder and Executive Chair, Zopa
  • Taavet Hinrikus, 35, and Kristo Käärman, 36, Founders, Transferwise
  • James Meekings, Co-Founder and UK Managing Director, Funding Circle
  • Ambarish Mitra, Co-founder and CEO, Blippar, 37
  • Darren Westlake, 46, and Luke Lang, 38, Co-founders, Crowdcube
China

Yirendai bullish on lending prospects despite tighter rules (South China Morning Post), Rated: A

China’s strict vigil on the peer-to-peer lending sector may have crimped fortunes for several companies, but opened the doors for organised players like Yirendai. The New York-listed firm, unlike its peers, has not only been expanding its business rapidly, but also set its sights on disbursing loans worth 100 billion yuan (HK$112.8 billion) a year by 2020.

According to available information, loan transactions on the Yirendai platform was about 20 billion yuan in 2016, and Tang’s ambition is to achieve annual transactions of 100 billion yuan by 2020.

India

Peer-to-peer lending needs big data to have a future (The Jakarta Post), Rated: A

When it comes to profitability, Indonesian banks are the envy of Asia. Their robustly handsome margins are a dream for banks in Malaysia, Thailand, Philippines and India.

That’s even more remarkable given that the archipelago of 18,000 islands has almost 120 banks while its peers in ASEAN have merely one-third of that number. Clearly the number of competitors has not impacted profits. After years of peaceful co-existence, it seems finally there is pressure at the periphery. A new phenomenon is underway in Indonesia in the form of peer-to-peer (P2P) banking.

Indonesia is wisely being cautious. The Financial Services Authority (OJK), the regulator, has laid out regulations for the same which includes conditions like foreign ownership being restricted to 85 percent, loan size capped at US$150,000 and the fact that foreigners can only be lenders.

Authors:

George Popescu
Allen Taylor