News Comments Today’s main news: Prosper launches HELOCs with BBVA. LendingClub beats profit estimates. Pennsylvania fines SoFi subsidiary $110,000. Kabbage partners with GoDaddy. Zopa makes banking debut. RateSetter rolls out investor self-certification. Today’s main analysis: LendingClub Q3 earnings. International P2P lending volumes. Today’s thought-provoking articles: The hot stuff at Money 2020. China’s slowing economy. International […]
Kabbage, GoDaddy partner on providing capital to SMBs. This is an interesting partnership, and it should be a boon to Kabbage’s already thriving business. Partnerships, the right partnerships, have a way of propelling a business forward and Kabbage understands this.
Online lending pioneer LendingClub Corp (LC.N) beat analysts’ estimates for third-quarter profit on Tuesday and forecast current-quarter largely above estimates, sending its shares up 4% in after-hours trading.
Transaction fees jumped 17% at the company, which helps connect customers looking for loans to individuals or institutional investors, such as banks, through its online marketplace.
Loan originations soared 16% to $3.35 billion in the third quarter, with total revenue rising 11% to $204.9 million.
Revenue also topped records at $204.9 million, up 11% year over year. Losses narrowed to a GAAP net loss of just $400,000 compared to the prior year period where they lost $22.8 million. Adjusted net income came in at $8 million, up from a loss of $7.3 million in the prior year period.
SoFi and Prosper are two companies that offer personal loans with competitive interest rates and no prepayment penalties. However, there are some major differences between the companies that could affect your decision on which one to choose.
The healthy Friday jobs report supports the ‘wait and see’ Fed view (although it is a backward looking indicator). The report indicated growth in employment of 128K in October and a tick-up in unemployment to 3.6%.
The partnership: Kabbage’s online lending platform is now available to GoDaddy’s U.S. customers to access a business line of credit in minutes.
Customers can access flexible lines of credit of up to $250,000 in minutes after filling out a short application.
Existing GoDaddy customers can get $100 off their first month’s fees
“We know that a lack of capital for marketing and other core activities remains a major roadblock to accelerate growth. Our partnership with Kabbage is key in our ongoing mission to empower our customers and provide them with the resources they need to fuel their business needs,” said Melissa Schneider, GoDaddy’s vice president of global marketing operations.
Ron Suber is one of the better-known names in the Fintech sector. Originally, Suber’s role as the President of the marketplace lending platform Prosper Marketplace brought Suber’s name to prominence as the Fintech emerged as an early leader in the US online lending market. Since departing Prosper’s management team several years ago, Suber has been associated with multiple Fintech’s as an investor, advisor or, perhaps, a board member. Today, Suber has invested in more than a dozen Fintech companies
CrowdStreet, a Portland-based commercial real estate crowdfunding startup, has raised a big new funding round, with a twist. Instead of relying solely on venture capital investors, the startup turned to its own community of real estate investors and developers to raise the bulk of the money for its Series C round.
The result: CrowdStreet this morning announced it has raised $12 million, primarily from the users of its platform, bringing lifetime funding to $25 million.
Robert Stiles, former chief financial officer at LendingHome, joined as CFO/COO. Londa Quisling was named chief technology officer, after serving as chief product officer at Treehouse. And John Havens, previously of BNY Mellon, joined as vice president of capital markets.
Many consumers do not have funds readily on hand to make big purchases like electronics or furniture and prefer turning to instant loan apps like Affirm, a point-of-sale installment lender established in 2013, rather than going into debt with a bank or credit card provider. Customers may feel thankful to be able to pay off a purchase over a year, but not at the cost of losing their identities to fraudsters or scammers.
A new digital banking platform promising to help reward people for positive financial behaviour has closed a $3.5 million seed round led by Accomplice Ventures and Walkabout Ventures nd joined by PayPal founder Max Levchin’s startup studio.
According to Moody Analytics, an average person under the age of 35 saves -1.8% of their income. HMBradley is promising to tackle this by increasing awareness and rewarding people for saving more.
Add HMBradley to the list of Los Angeles-based startups looking to shake up the world of high finance typically dominated by East Coast giants with names like JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs.
Minus the CEOs at the top-10 largest banks in the U.S., whose main concern is probably figuring how to deal with their trillions of dollars’ worth of assets, nearly the entirety of bank CEOs outside that tier have one primary concern, according to Bruhnke: How do they grow deposits? Meanwhile, he noted, bank customers also have a singular desire: How do they make the most money on the funds they have deposited?
The Office of the Comptroller of the Currency (OCC) recently faced another setback in its attempt to issue a special purpose national bank charter tailored to fintech companies (fintech charter). A federal district court in New York held that the OCC does not have the authority to grant charters to companies that do not accept deposits. The ruling is a blow to the OCC’s efforts to provide new avenues for innovation in financial services. The fintech charter would allow fintech companies, which do not accept deposits like traditional banks, to benefit from the same preemption of state laws and licensing requirements as national banks.
The other is Varo, which initially considered going for an OCC special purpose charter but then decided to apply for a full-service charter. Varo has preliminary approval from OCC and awaits approval of its FDIC deposit insurance application. Below, we look at how Lending Club, the online marketplace consumer loan platform, is exploring chartering options.
The Trading APIs service provides one Unified API that has integrated multiple crypto exchanges. Thus, users will now be able to link multiple exchange accounts to their profile, collect data and execute their portfolio management trades from a single point.
Crypto APIs is used by thousands of developers to create products like Crypto exchanges, Crypto wallets, Trading bots, Crypto PSP, Arbitrage solutions, Crypto Lending solutions and many more.
Brex, the fintech credit card startup, is teaming up with Bank of the West, the subsidiary of BNP Paribas, to roll out a co-branded credit card. It marks the first co-branded credit card to come out of Brex which caters to startups and entrepreneurs.
In one instance, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency angered borrower advocates by siding in court with a high-cost business lender. In the other, the Consumer Financial Protection Bureau signaled its intention to move forward with a small-business lending rule that has languished for nine years amid sharp disagreements over its proper scope.
On the global fintech scene, the US has been amongst the top leaders, accounting for 57% of the fintech market in 2018, according to a Mordor Intelligence research.
Fintech continues its momentum this year, with investment in US fintech companies surging to US$12.7 billion in the first half of 2019. That represents a 60% increase in value of deals and signals a trend of larger deals in already the world’s biggest and most active fintech market, according to data from Accenture.
Legitimate Shoppers Take Advantage of Deals, Outpacing Seasonal Growth in Fraudsters (Riskified Email), Rated: A
Elevate Credit, Inc. (NYSE: ELVT) today announced that its Interim Chief Executive Officer, Jason Harvison, and Chief Financial Officer, Chris Lutes, will attend the Stephens 2019 Nashville Investment Conference on November 14th at the Omni Nashville Hotel. Mr. Harvison and Mr. Lutes will be available for 1×1 meetings with investors.
Year-on-year growth has fallen by 0.2 percentage points per quarter this year, from 6.4 per cent in the first quarter to 6.2 per cent in the second quarter and to 6 per cent in the most recent quarter.
Recent data showed that the number of online P2P platforms plummeted to just 427 – a 59 percent drop compared to 2018-end. The total outstanding loan value and the number of borrowers also dropped correspondingly by 49 percent and 55 percent, respectively.
China is making rapid inroads towards reducing peer-to-peer lending risk to meet the 2020 target deadline but expects to keep alive the few remaining with strong fintech expertise and shareholder support.
China has been warned to avoid the same mistakes with blockchain that it made with its peer-to-peer lending, as the government vowed a “thorough revamping” of the controversial lending platforms as part of a continuing battle against financial risk amid the domestic economic slowdown and the trade war with the US.
From adopting unique business models to routing investments through Singapore, Chinese lenders are trying every trick in the book to win the Indian fintech-lending space. But getting money to India, deploying it, and dealing with stringent KYC norms is easier said than done.
The wave of closures of P2P platforms in China in the summer of 2018 garnered national attention. The latest blacklist for P2P lending published by “P2PEYE.COM” ( shows that as of the end of March 2019, the number of problematic P2P platforms reached 5,388.
On Wednesday 6th November at 05:00 CEST, we will perform an important technical maintenance which will prevent customers from seeing some order details within the Klarna app for a short time. We expect this maintenance to take approximately 15 minutes, after which time full details of orders will become accessible again.
Chinese firms have raised just $3 billion from American exchanges so far this year, less than a third of the 2018 total. In the last week of October, however, half a dozen companies filed for initial public offerings in New York, bringing the total backlog of Chinese floats to 24, according to data from Refinitiv. Rising trade uncertainties, tougher listing requirements on the NASDAQ and an upcoming U.S. presidential election have sparked fears that 2020 may prove even more volatile for debutants.
SMEs make up 97 per cent of Vietnam’s enterprises, but only account for 22 per cent of total bank lending. To meet a US$21 billion SME financing gap in the country, Validus Vietnam will partner corporates to provide SME growth financing to their vendors and subcontractors.
Joey Kim, chief executive officer at PeopleFund, discusses what his company does, the growth drivers for his company, his latest funding round, P2P lending in South Korea, regulation, the possibility of consolidation in the industry and how the Korean economic headwinds are impacting his business. He speaks exclusively on “Bloomberg Daybreak: Asia.”
Vietnam’s fintech industry is expected to reach US$7.8 billion in revenue by 2020. A rising middle class, growing internet usage, and a young population present a great combination for the fintech sector to thrive. An estimated 120 companies and brands cover a wide range of services, from digital payments to wealth management and blockchain.
Instead of competing against each other, banks and financial technology (fintech) companies are joining hands and combining their resources to tap into the country’s growing financial services market.In an effort to keep up-to-date with recent technology and stay relevant amid the latest changes in financial services, many banks have signed partnership deals or bought into nimble start-ups as an alternative to building costly technology projects.For the banks, the logic behind a partnership with fintech companies is simple: It gives them the opportunity to reach a wider customer base, unlock their technological capabilities without having to buy one of their own and penetrate the country’s unbanked population — all without having to spend too much money.“We are partnering with 12 fintech companies from peer-to-peer [P2P] lending and payment apps to SME [small, middle, enterprise]…
News Comments Today’s main news: FTC makes final decision on SoFi. OnDeck extends two revolving credit facilities. LendingPoint sees drop in debt management loans, increase for new purchases. LendInvest to float 500M GBP. Lufax hits $39.4B valuation. Klarna adds GooglePay as payment option. Today’s main analysis: Unemployment rate and GreenSky’s earnings. Today’s thought-provoking articles: Earnest vs. SoFi for student loan […]
OnDeck, a small business online lending platform, announced on Wednesday extensions to its existing credit facilities with Credit Suisse and Deutsche Bank on improved terms. According to OnDeck, the amended facilities provide an aggregate of $360 million of committed funding capacity and are available to finance OnDeck’s term loans and revolving lines of credit. The scheduled maturity dates for the facilities were extended three years to March 2022.
Earnest and SoFi are two of the best student loan refinancing companiesout there. They both offer fixed as well as variable rate loans, a 0.25% autopay rate discount, and certain unemployment protections to help in the event of involuntary job loss, but they also have their differences.
Here’s a side-by-side comparison of both lenders to help you make an informed decision.
It turns out that, over the past two years, the proportion of our borrowers who say they are earmarking their loans for debt consolidation has decreased markedly, from about 60% in 2017 to about 54% in 2018. The percent using loans to pay for new merchandise or services has grown during those two years. Home improvement jumped from 6% to 8%; loans for medical expenses rose from 2% to 7%.
In 2017, the percent of millennial consolidators was about 61%. In 2018, that dropped a full 10%, down to 51%, a bigger decrease than any other age cohort.
A new affinity banking service developed by Green Dot proposes to tap one of the most potent — and controversial — sources of distribution in the digital economy: social media influencers.
The digital banking and payments provider is developing what it calls Bank OS, a simpler version of its enterprise banking-as-a-service platform already used by the likes of Intuit, Stash, Uber and Walmart. It would enable partners to develop their own financial products just as those brands do, including offering credit cards, debit cards with loyalty programs or even a mobile app.
But while small businesses still struggle with cash flow, how they shop for loans and their level of financial education about their options are changing. On Tearsheet’s recent webinar with leaders at Kabbage, BlueVine, and Intuit’s QuickBooks Capital, we discussed the changing nature of the SMB borrower and how their firms have evolved to keep up.
Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.
About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (), a cash flow optimization platform.
The PayNet Small Business Lending Index (SBLI) rebounded with a 17.2 point jump to 150.7 in January, climbing to its second-highest level ever. On an annual basis, the SBLI increased 4.9%. The SBLI 3-month moving average also rose in January and currently stands 1.5% above its year-ago level.
The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due edged up one basis point to 1.45% in January, and is up six basis points on an annual basis — its 33rd consecutive year-over-year increase. The SBDI 91–180 Days Past Due was unchanged at 0.38% but is three basis points above its year-ago level.
Salt Financial, which currently offers one ETF, has filed plans with regulators to launch a low volatility that would pay investors, but there’s a catch.
“During the first year, holders will receive 50 cents for every $1,000 in a new low-volatility stock ETF — until it grows to $100 million when the cash-back benefit will be capped and shared with all investors,” reports Bloomberg. “The rebate is until at least April 2020, when a $2.90 management fee could kick in.”
Equifax Inc. failed to preserve key internal discussions over its massive 2017 data breach, U.S. senators said Thursday at a hearing where elected officials grilled the credit reporting giant’s CEO and the…
Despite record-high levels,new home equity line of credit (HELOC) originations have been steadily declining as a perfect storm of rising interest rates, new tax laws and growing competition from alternative lenders has crimped traditional HELOC growth. According to the J.D. Power 2019 U.S. Home Equity Line of Credit Satisfaction Study,released today, HELOC customers are more likely than ever to shop for alternative sources of funding and HELOC providers are falling short on digital offerings.
New York-based DDG, Chicago-based Marc Realty and Ruttenberg Gordon announced plans for a 13-story hotelwith 250 rooms in Fulton Market. The developers are raising $55 million to fund the project through Prodigy Network, a New York-based real estate crowdfunding platform. The hotel will be located at 1234 West Randolph Street and will be operated by New York-based Standard Hotels. It’s set to be completed within two years.
PeerStreet has announced the hiring of two executives with extensive experience in the financial services and real estate sectors: Ellen Coleman and Bob Brown. Ms. Coleman joins as Executive Vice President of Finance, and Mr. Brown joins as Executive Vice President of Finance & Corporate Development.
CoreLogic, a global property information, analytics and data-enabled solutions provider, today released an enhanced Verification of Employment and Income(VOE/I) product. The comprehensive new VOE/I product takes time, touch and cost out of traditional employment and income verification through a three-step ‘waterfall workflow’ process, ensuring that every mortgage applicant can be verified.
The enhanced VOE/I product features a three-step ‘waterfall workflow’ that ensures each borrower’s employment and income is verified as efficiently as possible.
Step One: Instant verification via a direct integration to The Work Number (TWN)
Step Two: Automated verification leveraging dozens of third-party data sources
Step Three: Manual verification by a team of dedicated CoreLogic verification experts
CoreLogic today announced the integration of its CondoSafe product with the Ellie Mae Encompass® all-in-one mortgage management solution. CondoSafeis a one-stop condo project review tool that enables lenders to have a single, consistent, standardized review process, allowing them to determine eligibility earlier in the process, resulting in quicker approvals.
ArborCrowd, the first crowdfunding platform launched by a real estate institution, today announced a new offering that allows investors to acquire equity interests in the Sioux Falls Multifamily Portfolio, a collection of class-B apartment communities located in Sioux Falls, S.D. The properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.
The investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to five-year hold period. Tzadik has budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces.
LendPro’s Female Leaders Celebrated on International Women’s Day (LendPro Email), Rated: B
As the financial technology (fintech) industry continues to grow, innovators are increasingly looking for leadership and expertise to grow their companies and stand out from competitors. LendPro, a Lending-As-A-Service (LaaS) fintech company, prides itself in hiring strong talent. Women make up 50% of staffing at LendPro’s Charlottesville corporate office, versus 37% female staffing at most fintech companies.
The online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market.
Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.
Eight out of ten SME loan applications were approved by banks in the third quarter of 2018, according to the latest figures from trade association UK Finance. While this is a far cry from the days of the global financial crisis, when SME lending all but dried up in part due to regulatory pressures to shore up capital, smaller companies are still citing challenges in securing funding from traditional players, according to Stuart Chalmers, commercial banking lead for Accenture UK.
Alternative lenders understand the hunger for a seamless customer experience and have built credit journeys that align to business expectations
Almost 30,000 companies used non-traditional channels over the year, with peer-to-peer lending and equity-based crowdfunding now established investment vehicles for seed, startup, early-stage and fast-growth companies seeking capital. In fact, CCAF estimates that 29 per cent of all new loans issued in 2017 to small businesses with annual turnovers less than £2 million came from alternative finance.
In a letter to chief executives (4 page / 352KB PDF) sent last week, the FCA said a recent supervisory review of firms’ current arrangements against current requirements “strongly suggests” some P2P firms were falling short of the standards required by its rules.
It has been recently revealed that the number of compensation claims made against the failed payday lender Wonga, which filed for administration in August 2018, has ended up increasing four-fold. The initial figure given by the Financial Ombudsman Service in a Treasury Committee in January this year suggested that there were around 10,500 customers who had open complaints with the short-term credit, high-interest company.
Now, it turns out that the number of redress claims that have been made against Wonga is considerably higher, totalling over 40,000. It is potentially the case that these people will not end up getting their money back after having been mis-sold loans.
According to the most recent HMRC statistics, overall ISA savings fell from £79.8bn in 2015/16 to £61.5bn in 2016/17. Meanwhile, Bank of England statistics found that the amount of money that Brits were saving (both within and outside of the ISA wrapper) fell by £7bn in 2018 alone.
Crowdfunding and peer to peer lending grew out of the banking crisis of 2008. According to the European Central Bank, the availability of bank loans to SMEs declined 23 percent immediately following the crash, causing a devastating impact on the economy.
Over 100 Finastra customers were upgraded to the latest compliant versions of its transaction banking software, Fusion Trade Innovation, ahead of the new SWIFT standards deadline of 17 November 2018. The new ‘Standards MT Release’ included significant changes to category 7 messaging standards used in trade finance – the most significant set of changes to the SWIFT trade finance messaging interface in over 30 years.
Chinese peer-to-peer (P2P) lender Lufax is not in a hurry to list on the stock markets, said an executive of its biggest shareholder, Ping An Insurance, during its earnings call, Chinese media reported (in Chinese) on Wednesday.
Ping An Insurance Group deputy CEO Jessica Tan said after Lufax’s latest round of funding, Ping An still holds approximately 41% of its shares.
Today, Klarna, the global payments provider “smoothing” out kinks in the checkout process for retailers, announced a partnership with GooglePay. Available for Klarna customers in Sweden, the intention is to make mobile payments “even easier and more secure.”
CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its direct investment arm, CreditEase FinTech Investment Fund (CEFIF), participated in wefox Group’s $125million USD Series B, a fast-growing Berlin-based insurtech firm together with Mubadala’s newly created European Ventures Fund. The investment is the largest Series B round for a European insurtech and Goldman Sachs International is acting as the private placement adviser to wefox Group in connection with the transaction.
The investment will help spearhead the company’s expansion into the European broker market. It also paves the way for wefox Group to accelerate growth and create the world’s most innovative product and engineering team applying advanced data analytics to create an all-in-one insurance platform in which all interactions are personalized. The company, which was founded in 2014, has grown its revenue to around $40million USD, while serving more than 1500 brokers and over 400,000 customers, making it Europe’s number one insurtech platform.
Luna Connect is a new digital lending platform primarily aimed at those lending to SMEs. It is designed to fit into the rapidly evolving financial services ecosystem and its founder, Brian D’Arcy, drew the inspiration for his business from the disruption currently underway in the financial services sector.
The company’s target market are lenders offering loans of under €200,000, whose borrowers typically require a fast decision on their application and want a more transparent lending process. The initial focus will be on Ireland and the UK with Europe and the US to follow. Investment in the project to date has been around €120,000 which was self-funded with support from the NDRC and Enterprise Ireland through the competitive start fund.
The new U.S. ambassador to Australia said Wednesday that he’s concerned about the way China lends money to developing Pacific nations in what he describes as “payday loan diplomacy.”
China categorically rejects accusations that it uses loans, grants and other financial inducements to extend its diplomatic and political reach, saying it is merely acting in the best interests of both sides in such transactions.
As distrust of the nation’s big banks and mortgage brokers swells amongst the wreckage of the banking royal commission, online lenders are emerging as real challengers in the home loan, business loan and personal lending markets.
The CEO of National Australia Bank subsidiary UBank, Lee Hatton, says future retail depositors will want more control over where banks lend their money, prompting it to launch a “green” term deposit targeting environmentally concerned Millennial customers.
However, it’s also true that today’s investors face a risk environment of unprecedented complexity. In 2018, the S&P/ASX200 declined by 6.8%. Residential property values are falling and bank deposit rates fail to match inflation. In the last year, the Australian media landscape was dominated by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with its revelations of duplicitous lending practices, improper fees, and general misconduct that, by the banks’ own admission, fell far short of community expectations.
MSMEs play a major role in Economic development of India. There are around 63.4 million units and they contribute to 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities and 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India. The sector grows at a rate faster than the large ones at more than 10% pa.
About 20% of the MSMEs are based out of rural areas.They provide employment to more than 130 million people and contribute to 45% of exports. MSMEs are also the largest employment generator every year. As of Sep18, the total credit in India was Rs 105.5 Lakh crores and MSMEs had borrowed Rs 24.7 cr. Large and Mid Caps borrowed Rs 44.4 cr. Year on Year the growth of overall commercial credit was at 13.5%.
Micro loans which are less than Rs1 cr grew 22.2% year on year and SME loans between Rs1 cr – Rs 2.5 cr grew at 18.3%.The growth was faster than the overall growth. Share of NBFCs in SME credit increased from 13% in Sep 15 to 17% in Sep 18. The number of NBFCs lending more than Rs 100 cr to MSMEs stood at 77 at the end of Sep 18.
The Investment Alert Task Force has suspended the operation of 168 entities allegedly running peer-to-peer lending services without a legal business license from the Financial Service Authority (OJK).
The task force has also suspended the operation of 47 illegal investment entities which has the potential to harm the public.
“Based on the monitoring on website and application in Google Playstore, the Investment Alert Task Force has stopped the operation of 168 entities that have violated OJK regulation no. 77/POJK.01/2016 on fintech peer-to-peer lending services, which has the potential to harm the public,” head of the task force Tongam L Tobing said in a statement here on Wednesday.
A group of financial technology (fintech) lenders wants to help develop a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.The Indonesian Fintech Lenders Association (AFPI) will help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other thing…
During a recent meeting with relevant ministries and agencies to discuss P2P lending, Hue instructed that during the pilot operation, P2P lending would be restricted to connecting lenders and borrowers as currently being run by most P2P lending companies in Viet Nam. P2P lending companies would not be allowed to mobilise capital, but act as intermediaries to connect lenders (investors) and borrowers.
The development of P2P lending will also create a new capital supply channel. Research conducted by Transparency Market Research showed that P2P lending would surge by 48.2 per cent annually in the 2016-24 period, while Morgan Stanley forecast the business model would reach a growth rate of 53.5 per cent globally by 2020.
News Comments Today’s main news: Prosper to introduce HELOCs. Affirm to rebrand, get into travel. Elevate Credit misses earnings estimates. Zopa says parents borrow from children’s piggy banks. Revolut wants to raise $500M through SoftBank. LexinFintech shares jump 8% on 363% earnings increase. Fintonic, Amazon partner in Spain. Today’s main analysis: Are we in an online lending bubble? Today’s thought-provoking articles: […]
Affirm to rebrand. This is probably a smart move. Affirm wants its name known. It won’t become a household name, like PayPal, sitting under the hood of everyone else’s vehicle. The idea is to move the brand front and center and let consumers know who is powering their financing at the point of sale.
Prosper noted that according to a 2017 TransUnion Study an estimated 10 million consumers will take out HELOCs between 2018 and 2022 which would be more than double the number originated from 2012-2016.
The new HELOC product will launch officially in early 2019.
Prosper also reported their Q3 2018 results today. Originations were $640.3 million, down 22% over the prior year period. Prosper attributed the decrease to credit tightening as well as the increase of interest rates to borrowers. The company has now originated $13.4 billion since inception. Net revenues also decreased as a result of decreased originations, with net revenue falling from $28.8 million in Q3 2017 to 20.6 million in Q3 2018. Below is a summary of Prosper’s other financial highlights that are availing in the company’s 10-Q.
FUNDING Circle US has found that the majority of US consumers still make the effort to shop at independent small businesses and would be willing to pay more for the same item than it costs at e-commerce giant Amazon.
The peer-to-peer business lender, which recently floated on the London Stock Exchange, published the results of a survey on US consumers’ support for small businesses.
It found that 77 per cent of 2,171 US adults surveyed said they were willing to pay more for items at small businesses in order to keep money within their communities and support local jobs.
60 per cent of respondents said they would pay a 10 per cent premium or more on Amazon prices.
PayPal co-founder Max Levchin has built a $1.8 billion business offering installment plans to American consumers. The problem: most shoppers have no idea they’re using his company, Affirm, when they choose how to pay at checkout.
Now, in an effort to make its name synonymous with online installment plans, Affirm is rebranding. Besides a new logo, the firm will list all the retailers it works with on its website. Affirm will also focus on travel, letting consumers pay for vacations over time.
Elevate Credit (NYSE:ELVT) announced its earnings results on Monday, October 29th. The company reported ($0.10) earnings per share for the quarter, missing the consensus estimate of $0.13 by ($0.23), MarketWatch Earnings reports. Elevate Credit had a positive return on equity of 12.69% and a negative net margin of 0.49%. The business had revenue of $201.48 million for the quarter, compared to analyst estimates of $201.71 million. During the same quarter last year, the company posted $0.01 EPS. Elevate Credit’s quarterly revenue was up 16.6% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.23-0.32 EPS.
Real estate investment platform Fundrise says it has been quietly accumulating property near the area Amazon (NASDAQ:AMZN) has just announced they will be establishing a new headquarters. Amazon’s east coast headquarters will create a huge economic impact for the DC/Northern Virginia market, not to mention increased demand for housing and apartments. Fundrise says it has invested in 30 different buildings in expectation of rising demand. Fundrise is offering a new investment fund for this purpose: HQ2 DC eFund.
According to Fundrise, the fund already features residential properties – ranging from houses, townhomes and condominiums – with plans to invest as much as $50 million in the area. This eFund, issued under Reg A+, allows any investor the opportunity to capitalize on expected local real estate growth in the wake of Amazon’s announcement.
The website started out strong. From 2014 to 2016, venture capital was pouring in from crowdfunding firms. However, investors became less interested in the portal as the investment minimum started to ramp up steadily. Company founder Nav Athwal, who had left the company’s board earlier this year, is still a minority shareholder. He also has no idea what happened to the company he helped found.
He, however, has a few words for startups. “Don’t let your burn rates get really large, strive for cash-efficiency or profitability sooner rather than later. Build a resilient business that can continue growing, regardless of where the venture capital markets are.” He adds that a startup should understand its investors and its growth limit as well.
We’re in an interesting time in online lending. After years of fits and starts and boatloads of money flowing into the sector, record originations are being set all over the industry. We recently explored online lending trends going into 2019 and what participants in the sector are expecting in the near future.
Both consumer and business lenders are tracking strongly:
While personal loans have surged to a record as the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion, it’s fintech firms that are driving a lot of that growth.
The fintech firm packages up the loans the into securities, which it then issues as bonds to financial institutions, foundations and private investors. Its latest $26 million securitizationattracted Amalgamated Bank, a B-corp-certified commercial bank that went public on the NASDAQ stock exchange in June.
The issuance marks Insikt’s fifth securitization this year, backed by 21,000 loans. INSIKT’s total securitization volume across 16 issuances reached $273 million.
JPMorgan Chase last month predicted a 60% chance of recession by 2020, and that increases to an 80% chance by 2021. It’s not clear how traumatic an event it would be for the U.S. economy, but considering all the new players that have jumped onto the financial scene since the last downturn a decade ago.
CrowdOut Capital announced the completion of a $20 million facility to Punch Bowl Social, the L Catterton–backed restaurant group that is defining the evolving category of experiential dining. The proceeds will enable the leader in the “eatertainment movement” to open multiple new locations throughout the U.S. This marks the second time Punch Bowl Social has worked with CrowdOut, choosing its flexible debt over traditional loans from financial institutions.
Figure Technologies, Inc. (Figure), a FinTech company creating innovative products and tools that empower homeowners to improve their finances, announced today Figure Home Advantage, a smart sell-and-leaseback alternative to reverse mortgages for retirees and a new way for Baby Boomers to lock in record housing prices as they plan their retirement. With Figure Home Advantage, homeowners convert their home equity into cash they can put to use now while continuing to enjoy life at home without the ongoing burden of property taxes, repairs, and maintenance.
Roughly 10,000 Baby Boomers turn 65 years old in the U.S. every day. A study by the National Conference of State Legislators and AARP found that 90 percent of people over age 65 want to stay in their home for as long as absolutely possible. Yet, most older Americans don’t have enough savings to cover retirement expenses or realize the lifestyle they’d imagined. According to a survey by the Insured Research Institute (IRI), only 25 percent of Baby Boomers believe they will have enough money in retirement.
Auto loans, credit cards and personal loans all saw year-over-year growth in subprime originations this past quarter, a sign that lenders are returning to this space following several consecutive quarters of declining originations. The latest TransUnion (NYSE: TRU) Industry Insights Report includes insights into consumer credit trends around personal loans, auto loans, credit cards and mortgage loans through the third quarter of 2018.
TransUnion’s report found that origination growth in the subprime risk tier grew at a significant rate across auto, personal loans and credit cards following declines in 2017. Subprime originations in the personal loan category grew 28% between Q2 2017 and Q2 2018 (originations are viewed one quarter in arrears to account for reporting lag), compared to a yearly decline of 7.1% over the prior year. Auto showcased a similar trend, as independent lenders began issuing new loans to subprime consumers following industry pullback in 2016 and 2017. Subprime auto originations increased 7.3% year-over-year, after falling 7.8% year-over-year in Q2 2017.
It’s not just bank loan officers with racial biases who discriminate against black and Latino borrowers. Computer algorithms do, too.
That is the groundbreaking conclusion of University of California at Berkeley researchers who found that algorithmic credit scoring using big data is no better than humans at evening the playing field when it comes to determining home mortgage interest rates.
Both online and human lenders earn 11 to 17 percent higher profits off minority borrowers by charging African Americans and Latinos steeper rates, the study said. Black and Latino consumers pay 5.6 to 8.6 basis points higher interest on home purchase loans than their white or Asian counterparts with similar credit profiles — no matter whether they obtained their loans through a face-to-face process or online. The effect is smaller when it comes to refinancing, with black and Latino borrowers paying 3 basis points more.
AI-Driven Lead Distribution for Mortgage Lending Helps Loan Officers Deliver Faster Results (Verb Factory Email) Rated: A
ProPair, an innovative mortgage-industry technology start-up based in Silicon Valley, today launched an AI-based lead distribution solution that eliminates the uncertainty of the lead assignment process while optimizing results and ensuring fairness in the assignment process. Using artificial intelligence to correlate lead data with information about individual loan officers, ProPair facilitates the lead assignment process to allow lenders to distribute leads to maximize the performance of the entire loan team.
White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as administrative agent and lead lender on the funding of a $190 million senior credit facility of 17 skilled nursing facilities for BM Eagle Holdings, LLC (“BM Eagle”), a joint venture led by affiliates of BlueMountain Capital Management, LLC (“BlueMountain”). The facilities are located in Northern California and New England.
UK neobank Revolut is currently in talks with the Softbank fund, which is worth $92 billion, for its next funding round, according to City AM. The talks are still early on, but the funding round could be as high as $500 million. It’s not clear whether existing investors, including Draper Esprit and Index Ventures, would participate in the next round.
PayPoint has announced today that challenger bank, Monzo, has chosen PayPoint’s cash payments solution for its current account holders. Beginning Wednesday 21 November, customers will be able to deposit up to £300 cash directly into their Monzo account in a single transaction at any of PayPoint’s 28,000 convenience stores nationwide.
Starling Bank, the mobile-only bank, has secured £10 million of new capital from Bahamas-based hedge fund manager Harald McPike.
According to the Daily Telegraph, the funding is in preparation for a £80 million round to keep up, or perhaps surpass, other mobile challengers like Monzo, which recently raised £85 millionto reach a £1.5 billion valuation, and getting over 1.1 million customers.
In today’s challenging financial market businesses need to utilize every available resource and technology to reduce risk when processing payments and credit applications. One area in particular that is often talked about, but still either under or incorrectly utilized, is data science.
While many financial institutions are working towards implementing data science within their risk decisioning processes many are still working on creating an environment and culture that allows data scientists to be fully effective.
In a recent webinar Ken Schultz, VP of data science at Elevate Credit – better known under their brand Sunny in the UK -discussed the benefits data science can bring to a financial services organization, including the opportunity to increase accuracy, expand your market, and reduce fraud, all of which can be used to drive business growth.
Peer to peer lender Lending Works has selected three new members for their Board of Directors. The online lender has appointed; Simon Waugh, former Chairman of CMC Markets, Deputy CEO of British Gas, Paul Noble, CEO of Honeycomb Finance, a Pollen Street Capital business, and Melanie Goward, Investment Director of Maven Capital Partners.
MarketInvoice and Barclays today announced a partnership deal that is set to transform the way small and medium enterprises (SMEs) in the UK manage cash flow and accelerate growth.
The bank has committed to a significant minority stake in MarketInvoice to give Barclays’ SME clients seamless access to innovative forms of finance. The new partnership is a key part of Barclays’ plans to invest in new business models for growth, and MarketInvoice’s ambition to broaden its reach across the UK.
LexinFintech Holdings Ltd. (Nasdaq: LX) saw its shares jump more than 8 percent in early trading Wednesday after the company, an online peer-to-peer lending platform in China, posted better-than-expected earnings for the third quarter with net income increasing more than fourfold.
Despite recent market uncertainty, the Shenzhen-based lender said its operating revenue for the third three months increased more than 13 percent year-over-year to $246.7 million thanks to a 404 percent jump in income from its loan facilitation and servicing fees.
Net income for the quarter was $46 million, or 25 cents per fully diluted ADS, up from $9.93 million a year ago.
China’s Tencent Holdings handed investors a much-needed profit recovery in the third quarter as revenue rose beyond online games, but the company warned that stricter regulation by Beijing on online advertising could sap growth.
The social media and online game group, which has lost about 40% of its market value since March as China has stalled approval of new games, beat market forecasts thanks to contributions from ads and cloud computing.
China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it plans to release its third quarter 2018 financial results on Tuesday, November 20, 2018, after U.S. market closes.
China Rapid Finance’s management will host an earnings conference call at 8:00 p.m. Eastern Time on November 20, 2018, (9:00 a.m. Beijing/Hong Kong Time on November 21, 2018).
How big is China’s fintech sector? I would say, Britain’s peer-to-peer (P2P) lender Funding Circle plus payday lender Wonga times 100. In addition to giants such as Alibaba’s Ant Financial, Pingan’s Lufax and Tencent’s WeBank, a dozen mid-size operators have gone public in the US and Hong Kong in the past 18 months alone. There are also 40 to 50 serious players that are waiting in the wings to go public. However, as the year-long official clampdown has revealed, there are far too many also-ran operators and Ponzi schemes about.
In just five to six years, fintech has surged to levels over US$200 billion in terms of total assets.
Some local governments have ordered cash-strapped peer-to-peer (P2P) lending platforms to begin repaying their investors to head off growing turmoil in the industry.
Hangzhou-based P2P lending platform Yucaiyuan recently announced that the company “did not meet regulatory requirements and was ordered to start repaying (investors),” according to a post on the lender’s website (link in Chinese). The firm will have to repay the principal and interest on all outstanding loans until investors are fully repaid. It has 12 months to do so.
Regulators in the eastern city want to rein in what had once been runaway growth in the industry. They plan to do this by clearing out small and midsize platforms one step at a time, a P2P lender told Caixin.
Personal finance app Fintonicannounced today it will collaborate with Amazon in Spain. Starting next week, Fintonic customers in Spain will be able to finance their Amazon.es purchases ranging from $225 to $1,100 (€200 to €1,000) at a rate of 0% interest for up to four months.
A crowdlending campaign has, for the first time, raised a total of €1.5 million in Belgium.
The announcement came on Wednesday from the platform Look&Fin, which specialises in such participative finance loans. The company, Carimat Matériaux, based in Braine-le-Château and active in construction, has raised this record amount.
In total, 483 individuals have invested in Carimat Matériaux, for a global total of €1.5 million. The group, which has specialised in construction since 1988, recorded a turnover of €56 million in 2017 and employs more than 170 people.
Want to apply for a loan, but you’re unsure about your credit score? The Berlin-based startup Bonify provides free, easy-to-read credit reports. Users can use the startup’s platform or app to check and correct their scores, monitor changes, and receive tips on personal finance and how to optimise their scores.
Bonify evaluates consumers real-time creditworthiness, enabling them to improve their financial wellbeing through tailored financial and non-financial recommendations. The app delivers recommendations for how consumers can save money, for instance by switching to a different loan or energy provider. Bonify is also able to predict six to eight weeks in advance when its users might go into their overdraft, and provide personalised suggestions for how to avoid this.
Creditshelf Aktiengesellschaft, a Germany based online lender, announced on Wednesday it has appointed Fabian Brügmann as its new CFO, effective on January 15, 2019. The lender reported that this appointment continues its planned expansion of its management team and in the newly formed position, Brügmann will be responsible for Finance and Investor Relations and directly report to Dr. Tim Thabe, Chairman of the Management Board and CEO of Creditshelf. He will not serve as a member of the Management Board himself.
According to Creditshelf, Brügmann previously worked as Director of Investor Relations at Commerzbank AG, where he was the contact for shareholders, fixed-income investors, and sell-side analysts. He joined the bank’s Corporate Development and Corporate Finance team in 2012. As IR Manager, Brügmann worked on the capital market communication for the “Commerzbank 4.0” strategy. He previously spent six years with the U.S. bank Goldman Sachs in Frankfurt and London.
Online lender iwoca has selected Seema Desai as their new Chief Operations Officer (COO). iwoca provides loans of up to £200,000 to small and micro businesses across the UK, Germany, and Poland via its website and through partner integrations using its proprietary Lending API.
Desai joined iwoca in January 2017 as Head of People, developing the company’s organizational capabilities. Prior to joining iwoca, Seema led the development of the Innovative Finance ISA at peer-to-peer lender Zopa as Head of Product.
As COO, Desai is expected to help scale customer service that has helped propel iwoca to become one of the fastest growing business lender in the UK.
Prodigy Finance, the pioneer in cross-border finance, announces the launch of a loan refinance product for international working graduates looking to reduce their student debt. The product will allow these alumni, who previously had limited options available to them, to save at least US$20,0001 over the life of the loan, by accessing lower rates and choices of terms.
Challenger bank entrepreneur Anthony Thomson has had several lives in banking and fintech.
In 2010, with Commerce Bank founder Vernon Hill, he co-founded Metro Bank, which started with one location in London and now has more than 56 branches and 2,800 employees. Thomson founded a second challenger bank in 2014 called Atom Bank, the first mobile-only bank in the U.K. As of March, it had 1.3 billion pounds of deposits and lent 1.2 billion pounds in mortgages and small-business loans.
Thomson is currently working on his third institution, called 86,400, a mobile-first challenger bank slated to launch in Australia in early 2019.
So it’s fair to say Thomson has learned a lot about what it takes to raise money and how to make it as a neobank entrepreneur.
The crypto lending platform Nexo says it’s exploring Ripple’s xRapid, which uses XRP to boost the speed and lower the cost of cross-border payments. The announcement comes from Antoni Trenchev, the co-founder and managing partner of Nexo.
The company is backed by TechCrunch founder Michael Arrington and calls itself a “decentralized lending ecosystem that facilitates open access to credit anywhere and anytime.” It uses a long list of banking and exchange partners to deliver loans.
Nexo follows the payment company and Ripple partner TransferGo, which also revealed its interest in xRapid this week. Nexo recently added XRP to its platform, becoming one of the first lenders to use XRP as collateral.
MSTS, a global B2B payment and credit solutions provider, today announced that its innovative Credit as a Service solution is now available to mid-market and small businesses.
The original enterprise product, with a record of accelerating sales growth for companies by as much as 500 percent, has been optimized to meet the needs of businesses with simpler payment and credit processes. The cloud-based Credit as a Service solution for mid-market businesses can issue credit lines in less than a minute, automate the customer onboarding process and apply unique B2B customer invoicing, accounts payable and payment term requirements – providing customers flexibility and an enhanced experience.
MSTS works with B2B companies across transportation, manufacturing, retail and eCommerce.
The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.
However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.
The report found more than 40% of Australians do not believe the financial services and banking industries are meeting their obligations to everyday citizens.
But regulatory experts warned the government must avoid taking too much financial risk and not weaken bank rules in its quest to stimulate SME funding via a separate proposed bank-financed Australian Business Growth Fund.
A national firm has added a financial services team, including a new partner in Sydney.
Andrea Beatty has commenced at Piper Alderman as a partner. She brought to the firm two other lawyers and an administrative assistant from NewLaw outfit Keypoint Law, where she was a consulting principal since 2016.
With more than 20 years’ experience in financial services regulation and corporate finance, Beatty is a former partner at legacy Mallesons Stephen Jaques and then at K&L Gates.
Under the revised draft Law on Securities, the foreign ownership ratio in a public company is expanded up to 100 per cent. Previous regulations had capped foreign ownership at 49 per cent. However, this ratio in commercial banks, which is a much-concerned issue recently, was not mentioned in the draft. Why?
The draft has removed limits on how many voting shares foreign investors can buy in public Vietnamese companies. This indicates that the Government has sped up the equitisation process in State-owned enterprises, especially in non-essential sectors that are not too sensitive to the economy. However, under the draft, some conditional business lines, such as commercial banks, would retain their existing 30 per cent limit. I agree with this provision of the drafting agency.
While banks have not been immune to the technology bug that has spread in the last few decades, digitization in the industry has only largely been implemented “for purpose in the back end,” according to Michael Gorriz, group chief information officer at Standard Chartered Bank.
“Fifty years ago, we introduced mainframes. We took paper ledgers and put them into computers,” the CIO explains.
But the emergence of a tech-savvy millennial generation is bringing about “the first real massive change in banks since the inception of banking,” he says. As such, banks like Standard Chartered have to digitize front-facing processes or risk losing their customers.
Automated peer to peer platform Robo.cash has issued a note saying Russian microfinance company MFC Zaymer is joining their platform. The company operates Zaymer.ru that offers short-term (payday) loans with interest rates for investors of 14% in Euros and up to 18% for loans originated in Rubles.
Nigeria’s central bank is looking to increase access to millions of people by opening up the banking system to non-financial companies for the first time; South African telecom operator MTN is set to be the biggest beneficiary with more than 50 million customers located in Nigeria; MTN is planning to apply for a banking license soon with the hopes of having their Mobile Money product available in country by Q2 2019; more than 60 million people in Nigeria do not have bank accounts, showing there is an enormous opportunity for telcos to expand the banking footprint.
News Comments Today’s main news: Marcus may reign in new loans, but not SoFi, LendingClub. Fellow Finance goes public. Aereal Bank invests in BrickVest. Aussie borrowers dump banks for P2P lenders. Figure launches HELOCs on blockchain. Today’s main analysis: PeerIQ’s Q3 2018 marketplace lending securitization tracker. Today’s thought-provoking articles: How every day can be payday. Older Americans are most creditworthy. Corporate […]
Marcus could reign in new loans next year. SoFi and LendingClub came to prominence doing things differently than banks, and Marcus is quite a departure for the traditional finance firm of Goldman Sachs. The latter is talking about pulling back on new lending while SoFi and LendingClub plan to press in.
How every day can be payday. Americans are strapped living paycheck to paycheck and payday loan companies make it worse, but a new brand of online payday loans is changing how low-income Americans pay their bills and receive their paychecks.
Older Americans are more creditworthy. There are way too many factors at play here to narrow this down to one or two criteria. Older Americans built their credit scores in the 1970s, 1980s, and 1990s. Many of those years were boom economic cycles. It is difficult to build a credit history when banks have pulled back on personal lending. Millennials and Gen Xers have had different challenges.
Figure launches HELOCs on blockchain. It will be interesting to see how Figure does in the marketplace. One good thing they have going for them is the experience of their founder, Mike Cagney. One successful venture behind him, he’s on the move again.
A total of eight marketplace lending securitizations were issued in the third quarter, totaling $3.5 billion. This is the fifth highest level of quarterly issuance which is noteworthy given that the summer is typically a slower period for issuance. This is an increase of 35% from the prior year period. It’s hard to believe that total marketplace lending issuance to date stands at $41.9 billion across 134 deals.
There has been a shift with spreads tightening and yields falling on new deals, a reversal from prior quarters. PeerIQ noted that all-in yields on consumer deals decreased 2 basis points from 3.72% to 3.7% and student deals decreased 100 basis points from 4.5% to 3.5% over the previous quarter.
“Citigroup, Deutsche Bank, and Credit Suisse continue to top the issuance league tables with 57% of MPL ABS transaction volume. Citi and CS are increasing their activity in the Fintech space, with CS also offering risk retention solutions on securitizations.”
Teresa Long, an assistant manager at a Walmart near Dallas, is like many Americans: She sometimes struggles to pay her monthly bills on time, especially when her biweekly paycheck fluctuates.
Occasionally, when she was not able to budget correctly for the month, she would default on a bill, miss a payment or send in a check late. Sometimes Long would take out a payday loan, but the fees were crippling. “You’re taking a $300 loan, and, by the time you pay it off, it’s probably $1,000 or $1,500,” said the 40-year-old mother of four. “It’s extra money you could have been saving.”
So when she saw information on an internal Walmart website about a new service from an Oakland, Calif.-based company called Even, Long was intrigued. It promised to pay her up to half her wages in advance, on demand, for an average $6 monthly subscription fee.
LendingTree today released its study on Americans’ credit scores by generation that found that the older someone is, the better their credit tends to be. On average, members of the silent generation (the oldest cohort) have credit scores 100 points higher than those of millennials.
Millennials and Gen Xers have, on average, “fair” credit scores.
Baby boomers have “good” scores.
Members of the silent generation have “very good” scores.
Why older people have higher credit scores
One possible reason for higher scores among older people is cultural. In general, they may use credit less and may be more disciplined savers and spenders, said Kali McFadden, senior research analyst at LendingTree.
Another reason is that older Americans are more settled financially, with lower monthly costs. In general, the older someone is, the lower their mortgage payments and student loan debts are (or they don’t have such payments at all). Older Americans may also not need new furniture or have child care costs. That means they are less likely to have urgent financial costs that can result in delinquencies, which can hurt credit scores.
Millennials and Gen Xers may have to pay more for loans
Banks, credit card issuers and other lenders make lending decisions based on a borrower’s creditworthiness. They offer much better rates to borrowers with higher scores.
Boomers aren’t much better off
While the higher credit score of baby boomers (average credit score: 696) is a sign of better financial stability than the younger generations, there’s still room for improvement. The average boomer score trails that of the elder generation by 38 points.
Robinhood, the zero-fee stock trading app that helped kickstart a race to the bottom in brokerage fees, has a new weapon in its arsenal as it fights to become the Amazon of personal finance: an in-house clearing system.
The $5.6 billion startup announced Wednesday that it has completed a two-year effort to build and launch its own in-house clearing provider that will allow it to save money and improve trading for its 6 million customers, cofounder and CEO Vlad Tenev told Business Insider.
Figure rolled out the first of those products yesterday: a digitally processed home equity loan that it claims can cut approval time to five minutes. According to Cagney, those Figure loans can range between $15,000 and $100,000, with funds made available to users in five days — down from the 45 days that such products usually take.
Crowdfunding has captured the imagination—and money—of investors throughout the United States. While it is used for everything from charitable campaigns to launching startup businesses or paying legal fees, commercial real estate may be the largest online investment opportunity for crowdfunding to date, according to a panel at the 2018 ULI Fall Meeting in Boston.
“This $14 trillion market is the nation’s third-largest investment asset class behind stocks and bonds. Crowdfunding allows real estate firms to reach beyond friends and family to investors anywhere,” he said.
I worked for seven years in a company run exclusively by men — no women on the leadership team at all. The executive suite was physically walled off, a literal boys’ club, and no matter how valuable my performance, I wasn’t going to be a “cultural fit” for the all-male back room. Even now, 84% of venture-backed companies lack even a single female founder.
Significant, rigorousresearch proves women in leadership make companies more profitable, and diverse leadership teams make better business decisions.
Roostify, a digital lending solution, announced that its platform now offers a bidirectional integration with Ellie Mae’sEncompass digital mortgage lending platform. The seamless integration allows lenders to easily pass information between the two systems, driving quality and efficiency in the loan origination process.
A senior Treasury Department official said he was disheartened by state regulators’ negative response to its fintech report, which supported the Office of the Comptroller of the Currency’s plans to create a national fintech charter.
INVESTORS seeking a higher rate of return – and who want to use their money to help victims of things like professional negligence – will be interested in a new bond by Just, held through an Innovative Finance ISA called Just ISA.
Launched in summer 2018, the Just ISA offers tax-free returns of 8% by investing in a bond that is ultimately used to fund legal cases on behalf of people who are seeking redress from things such as professional negligence by individuals and corporations.
Two diverging trends here. China, on a national level, is requiring more and more cash to service its debts. Not good news for those concerned about the Republic’s burgeoning debt burden, estimated to be anywhere between 300 to 350 per cent of GDP, depending on who you ask and what mood they’re in.
This hasn’t deterred bond buyers however, as the IMF recorded a circa $40bn flow into yuan-denominated bonds over the second quarter of this year, according to Brad Setser at the CFR:
The platform is expected to raise approximately €10m. With a valuation of €55m at the close of the IPO on Tuesday, the platform anticipates rapid growth. The IPO saw 1.3 million new shares in the company on offer for an 18.3 per cent stake in the company. The offer was 2.2 times oversubscribed.
In addition to the new shares on offer, just under 1.3 million in existing shares in the company will go on sale too.
Nasdaq (Nasdaq: NDAQ) announce that trading in Fellow Finance Plc shares (short name: FELLOW) commence today on Nasdaq First North Finland. The company belongs to the Financials sector. Fellow Finance is the 61st company to be admitted to trading on Nasdaq’s Nordic markets* in 2018, and it represents the 9th listing on Nasdaq Helsinki in 2018.
On Tuesday, German blockchain banking group Bitwala announced it has teamed up with solarisBank to launch its new cryptobanking services. According to Bitwala, nearly 35,000 customers have already pre-registered to be among the first to get access to new service, which helps customers to manage cryptocurrencies with unprecedented convenience and benefit from the high level of security and deposit protection commanded by German banking laws.
The announcement by SALT coin to accept Litecoin (LTC)as collateral in their blockchain lending platform led to an explosion in the price of their ERC-20 token. In a 24 hour shake-up that rocked the altcoin market just before the weekend, this crypto-lending favorite rose over US $0.82 on Friday morning. SALT (SALT) shot up 55% overnight while the rest of the market stagnated in a prolonged malaise.
The platform now offers USD loans at a 5.99% interest rate(for loans less than US$75,000) and has removed the cap on maximum loan amounts.
After a prolonged period of sideways movement throughout the month of September, staying just below $0.050, the currency started growing around 21st. The slow rise lasted until 30th, when the daily trade volume sharply dropped off from $984,935 to $230,742. The same way it dropped, the volume soared back up on October 1st. NEXO price followed suit and grew to$0.0933 on a daily trade volume of $1,765,517. After a short correction of both parameters, the price and volume spiked up once again on the 5th, this time reaching $0.1143 and $1,936,530 respectively.
According a recent CommSec Economic Insights Report, the number of Aussies borrowing from non-bank financial institutions rose by 10.3% over the year to August.
“Banks are facing greater competition from non-banks. At the same time bank deposits are only lifting at a 2.5% annual rate, putting greater reliance on external funding. It is clearly a competitive and challenging environment for financial institutions,” said CommSec chief economist, Craig James.
Ualá, the one-year-old mobile banking startup, raised $34 million in its series B round led by Goldman Sachs Investment Partners, along with existing investors including a private fund managed by Soros Fund Management, Jefferies, the venture arm of Steve Cohen’s Point72, and entrepreneur Kevin Ryan, according to an announcement seen by Business Insider.
Over 50% of people in Argentina had never had a card before and are only operating in cash, so the company aims to provide these people financial inclusion by giving them access to financial system, he added.
Latin America is undergoing somewhat of a transformation in the world of global finance. With the state of the banking industry in many countries in the region, people are turning to one another to solve their problems. From neighborhood initiatives to cross-border peer-to-peer lending platforms and online-only independent banking solutions, Latin America is exploring new ways to approach their personal finances.
As the world becomes ever more interconnected, as does the financial system. Borrowers and lenders are no longer confined by the parameters of a localized system. In fact, many lenders are branching out to the internet, through online companies such as FundKo.
News Comments Today’s main news: Citi launches mortgage platform. Credit card debt hits all-time high. The House Crowd receives FCA authorization. Apples for Oranges, an Isa comparison site, launches. Ant Financial dupes users into joining credit system, then apologizes. Ant Financial halts consumer loan sales. P2P lending association launches in India. TD Bank acquires AI company Layer 6. Today’s main analysis: LendingTree’s […]
Citi launches mortgage platform. AT: “This is a smart move. Mortgage online lending is still early on its development and a bank getting in before any real established alternative players have begun to dominate means Citi can throw its financial might behind the platform. That doesn’t mean it will emerge as a major contender. The platform still has to compete on service and technology, but getting an early start is a boon.”
LendingTree Personal Loan Offers Report for December 2017. AT: “Is this a sign that prime lending is increasing? When you consider that the two most frequent inquiries for personal loans are debt consolidation and credit card refinance, it just may mean exactly that. When consumers improve their credit scores, they tend to see out refinancing and consolidation to take advantage of lower interest rates.”
LendingClub (NYSE: LC) today announced that on January 2, 2018, its Board of Directors (the ‘Board’) received another letter from IEG Holdings Corporation (‘IEG’), which had previously commenced an unsolicited tender offer for LendingClub’s stock in July 2017 and withdrew the tender offer less than a month later. IEG’s letter states its intention to acquire up to 4.99% of the outstanding common stock of LendingClub on the basis of 13 shares of IEG common stock for each share of LendingClub common stock. On January 5, 2018, IEG announced the commencement of its proposed exchange offer. The Board believes there is no rational economic basis upon which LendingClub stockholders should accept IEG’s proposed exchange offer, which appears intended to mislead investors into mistakenly tendering into a discounted offer. The Board has unanimously concluded the offer is grossly inadequate, is not in the best interests of LendingClub and its stockholders and urges stockholders not to be misled into tendering into the offer.
Citi has made dual agreements to integrate its suite of US mortgage products into a single digital platform for its clients.
A new front-end digital solution, LoanFx, from Digital Risk, a provider of technology platforms and services, will be complemented by a new loan origination system, LoanSphere Empower, from Black Knight.
The bank says this development will enable its mortgage clients to go through the full loan cycle, from research to application, processing, scheduling appraisals, handling title, to closing, “through the channel of their choice – and at their own pace”.
Since a HELOC is backed by an asset, interest rates are typically lower than an unsecured loan, such as the ones offered by LendingClub and Prosper. There was an added benefit to a HELOC with the ability to deduct the interest, something that differentiated HELOCs from pretty much all other loan products. Now that this benefit is, in many cases, removed with the new tax code, we may see homeowners opt for other loan types. It is important to remember that the interest deduction only benefited individuals who itemize their deductions, which tend to include individuals with higher incomes.
Unsecured Lenders May Benefit
As the deduction benefit is removed, other options which offer a pleasant user experience look even better. Platforms like Goldman Sachs’ Marcus charge no origination fee and currently offer fixed rates as low as 6.99% for the best borrowers. Another player in the unsecured consumer lending space called LightStream offers loans as low as 2.49% depending on the use of proceeds. This could lead to the very best borrowers moving to products offered by these companies while borrowers with a less than perfect credit history, who would qualify for a higher rate, may rely on HELOCs.
Community banks approved 49 percent of SMB loan applications in November, according to the latest data from the Biz2Credit Small Business Lending Index.
But small business lending is only one part of the banking puzzle. SMBs demand access to robust solutions, from mobile banking to advisory services.
The Fed released a report, “Community Banking in the 21st Century,” last October, which surveyed more than 600 FIs. While analysts found small business lending dropped by 2.2 percent in 2016, the decline was significantly smaller than that at larger banks, which reduced SMB lending by 5.1 percent.
On Monday, TD Bank released its 2017 Treasury Management Survey, which revealed that technological innovation and disruption is set to greatly influence the investment priorities and business plans of financial executives.
The survey noted that disruptive technologies are top of mind for the participants, who also cited that they are preparing for changes in the treasury management industry by:
Leveraging solutions from fintech providers (31%)
Developing in-house technology for competition (23%)
Criticism of payday lenders is well-earned. They have devised a system that rolls customers into one 300% annual interest loan after another, until those customers very often reach a point of serious financial desperation — they may lose their bank accounts and are more likely to declare bankruptcy than nonpayday borrowers.
In 2015, over 83% of Florida payday loans went to borrowers stuck in seven or more loans, based on data from the office of the regulator himself. The average annual interest rate is still 278%, and these unscrupulous lenders drain $311 million out of the economy every year, disproportionately affecting African-American and Latino communities and a growing number of seniors.
This webinar series provides a guided tour of the various borrowing options available to businesses, from both a business and legal perspective. Major topics covered include asset-based lending, P/O Finance, Factoring, Merchant Cash Advances, and Market Place Lending / Fintech.
The first episode of the series, Understanding the Lending Landscape, airs on January 17th at 2:00 PM CST (Register Here) and features Moderator Jonathan Friedland of Sugar Felsenthal Grais & Hammer.
Future episodes in the series include “Asset-Based Lending,” airing on February 21st, “Purchase Order Finance” airing on March 21st, “Factoring,” airing on April 18th, “Merchant Cash Advances” airing on May 23rd, and “Marketplace Lending/Fintech,” aring on June 20th.
Marlette Funding, LLC, the parent company of Best Egg, is pleased to announce the appointment of Mark Elbaum as the company’s new chief financial officer (CFO). As CFO, Elbaum will join the executive management team and lead the finance, accounting and capital markets activities from the company’s headquarters in Wilmington, DE.
Most recently, Mark was the CFO of Merrill Lynch, Bank of America’s Wealth Management business. Prior roles included 18 years in the mortgage industry as CFO of Bank of America’s mortgage lending division, appointed to the position after the company’s acquisition of Countrywide Financial. At Countrywide he held the position of CFO of the Residential Lending Division. After starting his career at Price Waterhouse, Mark worked at Aames Financial Corp, a midsize consumer finance company, where he helped upgrade the finance capabilities to post IPO requirements. Mark has a Masters in Accountancy from University of Southern California and is a CPA and experienced in FP&A as well as capital markets.
LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in Needham & Company’s 20th Annual Growth Conference at the Lotte New York Palace Hotel in New York City.
The Company is scheduled to present on Wednesday, January 17 at 10:00am ET.
Enacomm, Inc., a provider of intelligent interactions and customer authentication technologies for banks, credit unions and credit card companies, has teamed up with Advantel, a technology solutions provider deploying integrated voice and data solutions for clients around the world. Through the partnership agreement, Advantel will make available to financial institutions both VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.
A new Isa comparison site, including Innovative Finance Isas, has been launched directly to potential investors.
Apples for Oranges will allow customers to shop around for Isas and be able to see the different returns from stocks and shares, cash and innovative finance Isas in the same place.
Figures last Autumn showed that investors had put just £17m into Innovative Finance Isas in their first year in existence, according to data from HM Revenue & Customs, significantly less than both stocks and shares Isas and cash Isas, which had £22bn and £39bn put into them respectively during 2016 to 2017.
Released today and based on a survey of 70 alternatives investors, “How to Meet Operational Challenges while Pursuing Opportunities in Alternative Investing” illustrates the alignments and disconnects between those investors and the managers with whom they allocate capital.
The trend toward greater transparency is well established, but expectations continue to outpace reality, as many investors remain dissatisfied with the level of transparency available to them. While 67 per cent of managers surveyed thought existing levels of transparency surrounding operating expenses were sufficient, only 25 per cent of investors agreed. Additionally, almost nine out of 10 investors say it was important (or extremely important) that they are given the opportunity to negotiate fees, yet this negotiation occurred far more often with the larger investor than with those at lower asset levels: 73 per cent of investors with more than USD25 billion of assets reported they had success negotiating fees compared to only 29 per cent of those with less than USD1 billion of assets.
Ant Financial, the internet finance behemoth controlled by billionaire Alibaba founder Jack Ma, has apologized for roping unsuspecting users into its fledgling but fast-growing credit-score system.
Ant Financial’s Alipay kicked off a free service this week to help users generate a consumption profile based on their shopping history. But buried at the bottom of its landing page was a small box — checked by default — that automatically enrolled users to its Sesame Credit unless they opted out. The subsequent online uproar prompted Ant to change that setting and to call the move “extremely idiotic,” according to a post on its official social media account.
After selling billions of dollars of debt backed by consumer loans last year, Chinese billionaire Jack Ma’s Ant Financial is pausing such fundraising as the government steps up curbs on micro lending.
The company hasn’t sold any asset-backed securities since early December, according to data compiled by Bloomberg and China Securitization Analytics. That marks an abrupt shift after it issued a record 238 billion yuan ($37 billion) in 2017 of such securities backed by consumer loans.
China is moving to eradicate the country’s bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities’ judgment that cryptocurrencies are not a strategic industry.
Money transfer company TransferWise has begun a private launch of its “Borderless account” for consumers. It marks the first time the European unicorn has offered a debit card (pictured below), a move that is bound to draw further comparisons with newer fintech upstarts such as Revolut.
Initially rolling out to a thousand customers, with several thousand more to be invited in the coming weeks and a full public launch pegged for Q1 this year, the online banking account gives you local bank details for the U.K., U.S., Australia and Europe, and lets you hold and convert 28 currencies.
If, like me, you receive income from abroad and in a different currency to your home bank account (as a contractor for TechCrunch, I’m paid in U.S. dollars), then you are very likely hit by extra bank charges and an uncompetitive exchange rate by your existing bank. This could be avoided if you had a local bank account in the country and currency you are paid in, and could then choose when and how to do the currency exchange.
The companies were selected from a pool of 2,000+ startups based on several criteria, including investor profile, tech innovation, team strength, patent activity, mosaic score, funding history, valuation, and business model.
Nets Group, the largest Nordic-based payment service provider, announced its newest strategic partnership with Plug and Play, a global matchmaker for startups, corporations, and investors. They joined Plug and Play FinTech’s innovation platform to engage in both the European and North American startup ecosystem. This collaboration will introduce Nets Group to top tier startups that align with their innovation strategy.
India’s leading peer-to-peer lending companies on Wednesday said they have come together to form the Association of P2P Lending Platforms. The first-of-its-kind association will act as a representative for its members, as well as the country’s P2P lending industry. In addition, the association will work in conjunction with the government and regulatory authorities in matters of compliance, and to further the cause of financial inclusion in the country.
The association also intends to undertake research and development, collect data and conduct surveys that will further the development of the P2P lending industry in India. The research and its findings will be shared publicly, and exchange of ideas will be encouraged through various conferences, lectures and sponsored events.
Other founding members include Bhavin Patel, Founder and CEO, LenDenClub and Bhuvan Rustagi, Co-Founder and COO, Lendbox.in who will be the association’s Secretary and Treasurer respectively.P2P lending, Vinay Mathews,Faircent.com,Shankar Vaddadi, i-lend.in, Bhavin Patel, LenDenClub,Bhuvan Rustagi, Lendbox.in
Private sector lender ICICI Bank and ride-sharing app Ola have signed an agreement to offer a range of integrated services to their customers.
Through this alliance, ICICI Bank customers can book Ola and pay the fare by using the bank’s mobile banking applications, ‘iMobile’ and ‘Pockets’.
The facility will also help Ola customers to get small ticket digital credit instantaneously from ICICI Bank, on the Ola platform, a statement said, adding it will also enable digital payments to driver partners.
i2ifunding applies for NBFC-P2P licence
Peer-to-peer lending platform i2ifunding has applied for registration certificate from RBI to operate as non- banking financial company-peer-to-peer lending (P2P).
The other pending issue is completing the formation of a Payments Regulatory Board, which was set up through an amendment to the Payment and Settlement Systems Act.
Finally, RBI’s guidelines on peer-to-peer (P2P) lending need further refinement to bolster the nation’s growing fintech credentials. The rules have confusing eligibility criteria, are ultra-conservative in lender exposure limits and allocate too much discretionary power to the central bank without spelling out specific trigger points for regulatory action.
Muthoot Pappachan Group, a Kerala-based lending and financial services conglomerate, plans to make strategic investments in fintech start-ups as part of a larger digital transformation exercise to drive synergies and profitability among its business units, as it chalks out a plan to list its flagship lending arm Muthoot Fincorp Ltd, a top company executive said.
The group may look to invest $1-5 million in each deal, he added.
A key focus is technology solutions that will help the organisation disburse loans faster and conveniently to its target low-income customers. This will be achieved by exploring non-traditional data sources for credit appraisal, innovative repayment models and assistive technology solutions at branches.
Muthoot Pappachan recently invested in two start-ups: peer-to-peer lending platform Faircent and RemitGuru, that offers online money transfer service to Indians settled abroad.
Koichi Saito, the Founder and Partner of KK Fund, a Singapore-based venture fund with roots in Japan, is bullish on the opportunities that ASEAN offers, with the inflow of Chinese and Japanese capital into the region providing more opportunities for deal flow and exits.
In terms of the KK Fund, can you discuss the funds it currently manages?
We started fund one in early 2015, which has a corpus of a few million dollars, so it was a micro fund. From that fund, we made 13 investments in online marketplaces in the e-commerce space. At the time, we were investing between $50,000 and $200,000. Then we closed a second fund at the end of 2016, a $20-million fund. We’re still focusing on seed-stage startups.
P2P lending platforms are a proven model in the US, China and Japan, as well as in Southeast Asia. However, there is a lack of credit scoring data, so with the need for alternative financing solutions in the region, there are substantial opportunities.
Besides the founders, what do you look for in terms of the business concepts?
Let’s say, in the Philippines, there are a lot of remittances players. Now, I reckon only about 10 per cent of people in the Philippines have a bank account. They need a platform for admittance to a bank. If there is a solution that addresses such an issue not only in the Philippines but across Southeast Asia, then I am impressed.
Egypt-based fintech startup Moneyfellows has raised a $600,000 investment from a group of investors led by Dubai Angel Investors and 500 Startups, the company’s founder Ahmed Wadi revealed.
Moneyfellows is a web and mobile-based platform allowing users to create, manage and track money circles online with members of their social networks. The startup makes money by charging users a small fee when they withdraw their payout from their money circle.
Although rarely recognized by mainstream financial institutions, money circles have long given people who lack access to the formal banking system the ability to save money and take small loans. This type of finance is known by many different names. In Egypt, it’s called gameya while in India, it’s a chit fund. In North America, it would be a rotating credit and savings association, or ROSCA.
To date, Wadi reports Moneyfellows has had 2,600 paying users and about 240 active circles.
So many fintech companies have birthed, including , Startcredits.com, to provide online loan marketplace for entrepreneurs to fund their start-ups, promoting financial inclusion in the bid to fix the access to credit problems. A fintech to watch is Social Lender, a digital lending solution based on social reputation on mobile, online and social media platforms. Social Lender is designed to bridge the gap of immediate fund access for people with limited access to formal credit. Social Lender uses its own proprietary algorithm to perform a social audit of the user on social media, online and other related platforms. Loans are guaranteed by the user’s social profile and network allowing users to then borrow from banks and other financial institutions based on their social reputation.
Flutterwave, a payments platform is making it easier for banks and businesses to process payments across Africa. U.S. investors have invested $10 million into it.
TD Bank just bought its first technology firm, Toronto-based artificial intelligence startup Layer 6.
The Canadian banking giant, also based in Toronto, invested an undisclosed amount in Layer 6 to help it “continue to transform itself” in the industry shift from mobile-first to AI-first customer experiences, said Rizwan Khalfan, TD’s chief digital and payments officer. The transaction was completed Tuesday morning.
News Comments Today’s main news: OnDeck collaborates with Ingo Money, Visa on real-time SMB lending. Affirm’s new mobile app allows consumers to borrow money for almost any online purchase. N26 readies for launch in the UK. P2PFA reports over 700M GBP in Q3 new lending. Fincera issues $1B in Q2 lending. Kabbage automates SMB lending in France, Italy with ING partnership. […]
SoFi priced itself at twice its valuation. AT: “But why? Did SoFi really believe it was worth $8B, or was this a fishing expedition to see who may be interested down the road when the company could command that valuation?”
Why Charles Schwab held talks on SoFi. AT: “Very interesting. Schwab likely sees the technology writing on the wall. If they are to remain relevant in the 21st century, the company will either have to develop new technology on its own or partner with a company that already has the technology. So this makes me wonder, will they go looking for another company?”
OnDeck (NYSE: ONDK), the nation’s largest online lender to small business, announced today agreements with Ingo Money and Visa to enable real-time1 funding of loans to small businesses via their debit cards, powered by Visa Direct. OnDeck will be the first company in the online lending industry to offer real-time access to capital via a customer’s existing small business debit card.
The move by OnDeck comes in response to small business demand for improved cash flow and faster payment experiences. A recent survey found 70% of small business owners report they have a small business debit card, and of those without debit cards, 87% of them said they would get a new debit card to take advantage of real time transfers. The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app.2OnDeck plans to use Visa Direct through Ingo Money’s technology platform to disburse loan proceeds securely in real time to its line of credit customers via their existing small business debit cards. Visa Direct is Visa’s real-time push payments platform allowing companies to leverage Visa’s global scale to develop faster payments solutions for ubiquitous reach to consumers or small businesses with a debit card.
Ingo Push, the turnkey push payments service from Ingo Money, allows OnDeck customers to receive funds via a vast network of eligible debit or prepaid card accounts, including eligible Visa cards; online and mobile wallets; and a network of more than 40,000 cash-out distribution points.
SoFi reportedly mulled a potential sale earlier this year, but the talks evaporated over a hefty asking price. After receiving a non-binding offer of $6 billion from a foreign bank, the online lender pegged its target acquisition price at $8 billion to $10 billion as it negotiated with several US companies, including Charles Schwab, per the Financial Times. That price would have ranked the deal among the second most valuable VC-backed fintech companyin the US. It’s also one of eight American startups that have raised $500 million+ rounds this year.
But while SoFi could likely fetch a relatively high acquisition price, the $8 billion to $10 billion figure is far more than it appears to be worth. In February, the online lender raised a $500 million round at a valuation of $4.4 billion—and since then, its value has likely dropped amid sexual harassment allegations at the company.
Citing people familiar with the matter, the Financial Times (paywall) reported the deal talks with Schwab were prompted by a $6 billion offer from a foreign bank after SoFi raised $500 million in funding led by Silver Lake. With a more than $4 billion valuation after that, the unnamed foreign bank expressed interest in acquiring SoFi. That prompted the online lender to reach out to other potential suitors aiming to fetch $8 billion to $10 billion in a sale.
At first blush, a deal with Charles Schwab may not make sense, given it isn’t in the online lending business. But SoFi does have a wealth management unit that would give the San Francisco discount brokerage access to more customers and thus more assets under management. It’s also a low-cost provider on that front, something very much in Schwab’s wheelhouse. According to SoFi’s website, the company doesn’t charge customers for the first $10,000 invested and charges 0.25% per year. It also has a team of live advisors that give customers advice and ETF portfolios that are curated by the company. SoFi also has a large customer base, particularly of millennials, that would be attractive to Schwab. Earlier this year ex-CEO Cagney predicted SoFi would end the year with 500,000 customers.
Lending startup Affirm, founded by PayPal and Yelp co-founder Max Levchin, is out to destroy the credit card, or at the very least make a noticeable dent in its utter ubiquity. The company, which began in 2012 by offering simple and transparent loans for web purchases, is today launching a mobile app to the public that acts as a virtual credit card, so it can be used as a line of credit with no strings attached for pretty much any online purchase. The app is available now for iOS and Android.
The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app. To use the service, you need to provide proof of your identity, but credit is extended only for the item you want to buy, with the company determining your likelihood to pay back the loan based on your current credit and the total amount being lended.
You’ll need approval for every purchase you try to make, up to a maximum of $10,000. In total, Chou says Affirm has made more than 1 million loans for a total amount of more than $1 billion since it started roughly five years ago. It also now counts as over 1,000 merchants as partners, including mattress maker Casper, furniture site Wayfair, and Expedia.
Now, Affirm wants to extend its services to anyone and any merchant, by going directly to the consumer with a virtual card.
Although Affirm may offer as low as 10 percent APR, or in some cases zero percent for select partner merchants, you still run the risk of paying more for a purchase using the company’s virtual card than if you had a standard credit card. For those who are simply bad with money and borrowing, it has the same pitfalls as a credit card, though with a few more speed bumps and warning signs built in.
For every dollar of fraud, lending companies incur $2.82 in costs, which includes chargebacks, fees, interest, merchandise replacement and distribution, according to the LexisNexis Risk Solutions Fraud Multiplier. Large digital lenders, with over $50 million in annual revenue, are hit hardest by fraud in this space. These large digital lenders face a higher risk of successful fraud attempts than others within the lending space, but it really is a problem across the digital lending space, even with small and midsized digital lenders.
When BlackRock, the world’s largest asset manager with USD 5.7 trillion in AUM, decided to layoff talented stock pickers in favor of machines for portfolio management in March, it was a sure sign that times are changing.
The top performer in a group of the five leading robo advisors in the first eight months of 2016 generated returns that were encroaching on double-digit territory, and in some cases outperformed their more expensive mutual fund counterparts.
And it’s not just BlackRock that’s demonstrated a willingness to favor machines over stock pickers. Robo advisors as a category, which is comprised of approximately 100 firms, oversee USD 60 billion in AUM as of year-end 2016 across 15 countries, according to Deloitte. That amount is expected to balloon more than fivefold to USD 385 billion in a half decade, according to Cerulli Associates research.
A recent Capital One Investing survey says in times of extreme market volatility, millennials are the least likely generation to turn to a person for financial advisory services at 69%. In fact, millennials are the generation that place the highest value on robo-advisory services, evidenced by 65% of them saying automated financial advice “enhances their financial peace of mind,” according to the poll.
FS Card Inc., an emerging financial services leader for underserved consumers, today announced it has raised $150 million in financing to fund future growth. Through its Build Card product, FS Card will expand access to traditional credit and create an on-ramp into the financial mainstream for small-dollar loan customers. The new credit facility closing comes as FS Card wraps up a year of rapid growth with Build Card portfolio expansion of nearly 500 percent in 2017.
The funding will be used for sustained portfolio build as part of the company’s ongoing commitment to financial inclusion in a market where a new rule from the Consumer Financial Protection Bureau is likely to impact access to alternative credit products.
According to Prosperity Now and The Federal Reserve, more than half of Americans are credit invisible or subprime, while 47 percent do not have $400 to pay for an emergency expense. FS Card leverages its proprietary machine learning algorithms to actively meet the increasing demand of underserved consumers for fairly priced credit with a prime-like experience.
Fintech is a multi-billion dollar industry, with startups in the US raising around $18 billion since 2015, according to PitchBook and nearly 1,400 venture capitalist-backed deals. Two of the most valuable startups in the country — Stripe and SoFi — are in the fintech sector. And there are 11 fintech startups valued at more than $1 billion.
10. Kabbage — $1.3 billion
Kabbage is valued at $1.3 billion, according to PitchBook estimates, thanks to a $250 million investment round in August 2017.
9. Robinhood — $1.3 billion
The zero-commission, US-focused stock brokerage is valued at $1.3 billion following a $110 million funding round in April 2017.
Avant was valued at $2 billion after a $325 million funding round in September 2015.
Though its valuation makes it the fifth most valuable fintech startup in the US, it’s seen some rocky shores in the years since. In June 2016, the company reportedly laid off staff and lowered its monthly lending by half.
3. Credit Karma — $3.5 billion
Credit Karma scored a $3.5 billion valuation on a $175 million funding round in June 2015 which brought the company’s total funding to $368 million.
2. SoFi — $4.4 billion
SoFi was valued at $4.4 billion during its most recent round of funding in February 2017, which brought the company $500 million from investors. In total, the company has raised over $2 billion, including a $1 billion round led by SoftBank in 2015.
1. Stripe — $9.2 billion
Stripe was valued at $9.2 billion in its most recent $150 million funding round in November 2016. The company has raised a total of $440 million since its founding in 2010.
In response to overwhelming investor demand, Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced the launch of its Loan Origination Network for mortgage brokers and third-party originators interested in tapping additional real estate loan opportunities. The company has opened up its innovative real estate financing platform to brokers nationwide who now have the opportunity to provide customers with low cost capital for fix and flip projects.
According to a recent report from ATTOM Data Solutions, the estimated total dollar volume of financing for homes flipped in Q2 2017 was $4.4 billion, up from $3.9 billion in the previous quarter and up from $3.4 billion a year ago to the to the highest level since Q3 2017, a nearly 10-year high. Also, more than 35 percent of homes flipped in Q2 2017 were purchased by the flipper with financing, up from 33.2 percent in the previous quarter.
Key benefits for mortgage brokers and third-party originators:
Competitive rates from six percent
Unique deferred payment option
Closing in as little as seven days
Costs rolled into loan principal
Discounted fees for high volume partners
Partners assigned dedicated Business Development Manager
Mortgage industry veteran Debora Valentine joins the team as Senior Vice President, Business Development. Valentine brings more than 25 years of experience in sales to Groundfloor’s senior leadership team.
Alipay, the world’s leading third-party payment platform, today announced they are working with JPMorgan Chase, a global financial leader, toward a relationship by which Chinese consumers traveling in North America would be enabled to pay using their Alipay Mobile Wallet at Chase merchant clients.
The proposed relationship between JPMorgan Chase and Alipay would enable its acceptance at many of Chase’s merchants in North America. Through Alipay’s geolocation-based “Discover” function and push notifications within the Alipay app, Chinese travelers can locate merchants nearby, receive promotion information, and make purchase decisions. It also enables local merchants to better target and connect with Chinese consumers.
Approximately 10 million consumers are expected to originate a home equity line of credit (HELOC) between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016). The projection is part of a new TransUnion (NYSE:TRU) study that evaluated recent dynamics in the HELOC industry, and was released today during the Mortgage Bankers Association’s Annual Convention & Expo.
TransUnion projects 1.4 million new HELOC borrowers in 2017 and 1.6 million in 2018, about a 30% increase from the previous two-year period of 2015 (1.1 million) and 2016 (1.2 million).
HELOC Originations – 2017-2022 Include Projections
HELOC Originations (In Millions)
The TransUnion HELOC study found that rising home prices and the resulting increase in equity is beginning to fuel interest in HELOCs. The Case-Shiller home price index rose as high as 180 in 2005 and 185 in 2006 before dropping to 134 in 2012. By July 2017 it had risen again to 194, and is expected to rise in the next few years to well over 200.
According to the study, there were 4.9 million HELOC originations in 2005 when home equity stood at $13.3 Trillion. HELOC originations dropped to a mere 600,000 in 2011 as home equity declined to $6.3 Trillion. Home equity has once again risen to $13.3 Trillion in 2016, yet HELOC originations continued to be low at 1.2 million.
Who are the HELOC borrowers?
The study explored the primary reasons why consumers open HELOCs and estimated the percentage of HELOCs opened under each motivating reason.
Types of HELOC Borrowers
Defining this Type of HELOC Borrower
“Consolidate balances from other credit products, usually to a lower interest rate”
“Finance a large credit need (e.g., home renovation project)”
“Refinance a HELOC, often to change terms or to get a better rate”
“Concurrent with a mortgage origination, often used as part of a down payment”
“Standby, undrawn line of credit for a ‘rainy day’”
Four leading trade associations – Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association, and the Small Business Finance Association – commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence. The survey conducted by Edelman Intelligence found that a large majority (70%) of small business owners believe there are more credit options today when compared to five years ago, and 97% of those feel that the growing number of financing options is a good thing.
Key findings of the study include:
70percent of small- and medium-sized business owners say there are more lending options now, and 97 percent of those believe that the increase in options is a positive thing for their businesses.
Most small business owners reported using online small business lenders to help them expand their locations, make necessary hiring and equipment purchases, and help manage cash flow.
Of the small business owners considering taking out a loan in the next 12 months, close to 40 percent say they will consider borrowing from an online lender.
According to the study, 98 percent of small business ownerswho have used online lenders say they are likely to take out another loan with an online lender.
For many small business owners, online small business lending platforms are a popular alternativeto asking friends and family for a loan.
PeerStreet, a marketplace for investing in real estate-backed loans, is excited to announce its affiliate program at FinCon 2017. Backed by Andreessen Horowitz, PeerStreet’s platform provides investments in high-yield, short-term real estate loans. The newly launched program will allow PeerStreet to partner with the personal finance community to better serve both current and future investors.
PeerStreet aims to reach more investors through the affiliate program by working with financial writers and influencers to share thought leadership and market information about this unique space. In addition to high-conversion advertising opportunities, affiliate program partners will also have access to PeerStreet’s dedicated Affiliate Director, who can provide deep insight into PeerStreet’s service and offer tailored support.
Mastercardannounced it has tested and validated its blockchain and will be opening access to it via a set of three APIs published on the Mastercard Developers website. The APIs include the Blockchain Core API, the Smart Contracts API, and the Fast Pay Network API.
Mastercard will pilot the blockchain for use in the business-to-business space, implementing it to increase speed and transparency in payments and decrease costs for cross-border payments.
Mastercard’s blockchain operates independently of a digital currency.
Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced its integration with Fannie Mae through a pilot program to digitally validate borrowers’ assets. Fannie Mae will leverage Envestnet | Yodlee’s Risk Insight Solutions to fuel the Day 1 Certainty™ validation of assets offering, which gives lenders a faster and simplified borrower experience.
Over a four-decade career in financial services I have witnessed, experienced and participated in transformational change. The conversations around emerging technology like the ATM caused industry debate – consumers would never use a machine to make a withdrawal from their account. Credit cards not tied to a specific gasoline brand, local merchant or one of the giants of the catalogue sales world – Montgomery Wards, Sears and that upstart JC Penney – would never be accepted. Consumers would never do their banking over the telephone, and of course never accept online banking – remember the first versions using a floppy disk? And checks would always be the only way, other than cash, to pay for things (bill pay, PayPal, debit cards and other payment methods…all have dispelled that).
We should be concerned about the FinTechs. They are not a fad nor are they going away. They are very well capitalized, and they have revolutionized how to leverage big data in ways we can only dream of. They have challenged credit score lending structures by leveraging their ability to engineer data. They are mobile optimized, in fact they are mobile prevalent, and they strive for immediate decisions and funding. Where traditional lenders are still caught up in past practices making it difficult to refinance student debt, underwrite small business loans in minutes, grant signature loans at the point of purchase, or embrace new credit models, the FinTechs are quickly gaining ground in market share because they can do those things today.
And we have not evolved our cornerstone lending program, the signature loan, to compete not only at the POS for autos, but for personal improvements and major retail purchases as SOFI, Lending Club and so many other FinTechs have.
Robin Erickson, an Arizona snowbird, remembers the pitch she got from her life-insurance agent about LoanGo, a startup internet payday-loan company.
The Mount Vernon, Washington, resident said she was told that the investment would generate an 18 percent return, and she “more than likely” would get her money back in a year.
“I loaned him $30,000, and I haven’t heard from him since,” Erickson, a retired elementary-school teacher, told The Arizona Republic in a phone interview.
The Arizona Corporation Commission’s Securities Division alleges that Erickson and four other older investors were defrauded of a combined $250,000 after making investments in 2011 and 2012 with LoanGo.
Administrative Law Judge Scott M. Hesla on Oct. 10 sided with state regulators and ordered the men to pay a total of $250,000 in restitution to the five investors. The judge also ordered the men to pay penalties of up to $15,000 each for “multiple violations” of the state’s anti-fraud provisions.
The judge, in his ruling, noted that Billingsley failed to inform investors that their money would be used to repay business startup loans of $10,000 each to himself and Peterson. The judge also wrotethat investors were not told Billingsley received a $15,000 commission for obtaining their investments.
The judge noted that Billingsley was repaid his startup loan the same day one person invested $45,000 in LoanGo, and that Peterson was repaid the same day a different person invested $25,000 in the company.
It has been 20 years since the Alternative Investment Management Association published its first due diligence questionnaire, a template designed to standardize the diligence process by which investors decide if a particular management is right for them.
Now it has published a new questionnaire/template, covering a broader range of entities/strategies. Specifically, for the first time there are questions specifically covering private credit and private equity strategies. The new document also integrates what were formerly separate questionnaires specific to commodity trading advisers and fund of funds managers.
Banks have welcomed the statement of principles because they are non-binding, while fintechs are encouraged by the CFPB’s recognition of key issues in the debate.
Yet the principles could also lay the groundwork for future regulation if banks and fintechs cannot work out some outstanding issues on their own.
The most controversial aspect of data sharing is screen scraping. Banks loathe data aggregators’ practice of asking a consumer to provide their online banking login credentials, so the firm can scrape their account data. They argue it’s unsafe to hand out banking credentials and that aggregators bombard their servers with these requests, preventing actual customers from accessing their accounts.
The CFPB’s principles seem to discourage screen scraping without banning it.
Knight said the principle may encourage banks to directly provide data to third parties.
The CFPB’s principles around informed consent appeared the most stringent, suggesting that it’s not enough to just disclose what a company is doing, but disclosures must be done in language anyone can understand.
The principle may pose a challenge for banks and fintechs. How many companies send notifications about how they’re using and storing consumers’ data, in easy to understand language?
However, while Noreika again defended the OCC’s right to license non-depository companies on Thursday, he also said the agency has not decided whether it will “exercise that specific authority.” This is more ambiguous than the OCC’s previous stance, perhaps suggesting the regulator believes the measure won’t survive such strong opposition.
Noreika said there’s been progress here, as federal regulators are now more willing to engage in dialogue with each other and with fintechs.
The Robo Report, the first and only report on the performance and portfolios of robo advisors, published by BackEndBenchmarking, has been released for the third quarter 2017, the company announced.
The expanded Report now offers a first look two full years of a few robo advisors performance data, along with new sections that include interviews with WiseBanyan, Personal Capital and Betterment; the addition of Sofi, TIAA and WealthSimple; and upside/downside capture ratios for more specific quant on risk tolerance, as well as more detailed asset allocation and style analysis.
The company currently tracks Acorns, Betterment, eTrade, Fidelity Go, Future Advisor, Personal Capital, Schwab, SigFig, Tradeking, Vanguard, WiseBanyan, TD Ameritrade, Ellevest, Hedgeable and Merrill Edge, Sofi, TIAA and WealthSimple.
First Associates Loan Servicing announced today that they will be hosting an industry networking breakfast for Marketplace Lending and Investment Banking professionals the day prior to the American Banker Digital Lending + Investing Conference.
Hosted at Aureole Restaurant in Manhattan, this event will include a panel of marketplace lending superstars, including speakers from Prospect Capital, Macquarie, MoneyLion and more, who will discuss the state of the industry.
If you have interest in attending panel discussion and event, please click here to learn more.
CoinList, a provider of financial services for staging and managing initial coin offerings (ICOs), is spinning out of AngelList as a standalone company that will be led by former Sidewire CEO Andy Bromberg, it tells Axios.
Closely-watched German fintech startup N26 is recruiting a country manager to spearhead its launch into the UK.
A job listing on N26’s website says it is looking for someone to take “charge of the market entry of N26 in the UK.” The successful applicant will be “responsible for the operational setup and development of N26 in the UK market,” and should “build up the branding for N26 within the UK market in order to successfully attract and win new customers.”
THE PEER-TO-PEER Finance Association (P2PFA) has reported that new lending among its members equated to more than £700m in the third quarter of 2017, despite losing ‘big three’ platform RateSetter during the period.
The self-regulated trade body said on Monday that cumulative lending by the existing P2PFA platforms came in at more than £7.1bn by the end of September 2017.
The UK Peer to Peer Finance Association (P2PFA) has published their quarterly numbers on sector growth for the third quarter of 2017. Covering the period between July and September 2017, the P2PFA says the numbers confirm continued steady growth in levels of new lending and in the number of borrowers facilitating loans through peer-to-peer lending platforms.
Earlier this year LendInvest received the highest possible rating for the quality of our loan servicing from ARC Rating, a regulated European credit agency, for the third straight year. It’s a big achievement for any lender, but particularly an online lender.
Here are some of the things that ARC looks for when rating a lender’s servicing standards:
Open Banking refers to an open source technology that allows anyone to create apps and websites for the financial services sector. Developers use an application programme interface (API) to create software that allows customer data to be shared securely between banks and trusted third parties – with the customer’s consent.
The Open Banking Standard is publically available and can be accessed by developers when creating apps and websites. The final version of the Open Banking Standard is due to be in use by 2019.
Examples of Open Banking apps
Yolt is a money management app owned by ING Bank and launched in beta format in June 2017. Yolt allows users to view all their bank accounts, credit cards, bills etc. in one place – even if they are from different providers. Users can compare prices, including energy prices, and set budgets on their phone.
HSBC announced in September 2017 that it was testing an Open Banking platform that will allow its customers to view their current accounts, credit cards, loans, mortgages and savings from up to 21 different providers.
Wave offers a service for businesses to give clients access to all of their finances in one place. It acts as an invoicing service; tracks income and expenses to make accounting easier; allows for streamlined payment of staff and will leverage data from as many sources as possible. It also offers loans to clients by connecting with the online lender OnDeck.
DueDil is an app which uses data to make online due diligence passports for its clients so that they can prove their financial credentials.
Tandem collects the banking data of its customers from their banks, analyses their spending habits and provides suggestions for how they can save money.
As rents continue their inexorable rise, the appeal of living in inner London boroughs such as Camden – where the average monthly rent is £2,219 – is starting to lose its shine.
According to peer-to-peer lending platform Landbay, the central areas popular among students are being eschewed by graduates, who are looking to make the capital their long-term base.
Faced with spending up to 75 per cent of their take-home pay on rent, graduates looking to work in London are choosing to live in areas where they can remain in commuting distance but pay less. And with average student loan debts of more than £50,000 according to the Institute of Fiscal Studies, any savings are welcome.
Top ten outer London boroughs | Average rent and yield
Fincera Inc. (OTCQB: YUANF), a provider of online financing and e-commerce services for small and medium – sized businesses and individuals in China, has reported financial results for the second quarter ended June 30 , 2017.
According to their numbers, loan transaction volume across both CeraPay and CeraVest platforms for Q2 2017 totaled approximately RMB 6.9 billion (USD $ 1.0 billion ).
Chinese companies have raised $38.6bn through IPOs in the year to date, according to Dealogic.
Issuers in financial services — which, like education and leisure is at the confluence of the hot segments of consumer services and tech — include Ppdai, which is raising $350m in New York, Yixin, Lexin and Jianpu Technology.
Yixin illustrates another trend: many of those coming to market are backed by China’s tech royalty including Tencent, Alibaba, Baidu and JD.com. Auto financier Yixin, backed by the latter trio, is expected to raise about $200m.
Like Qudian, which listed last week, fellow online lender Lexin is heading to the US and is expected to raise around $600m, according to bankers. Jianpu Technology, a financial comparison site akin to Lending Tree in the US or MoneySuperMarket in the UK, filed for its IPO last Friday.
Recently, Rong360’s JianPu Technology has filed an IPO prospectus to U.S. Securities and Exchange Commission. Rong360, which started with a diversion business, this time takes the VIE model to list in US. Its business scope covers loans, credit cards and finance, as well as big data risk controls. However, it is noteworthy that Rong360 is still in the red, and its big data risk control business has also led to a compliance controversy.
According to the prospectus, the company plans to go public in the U.S. with a maximum of $200 million deal for it, and the underwriters are Goldman Sachs, Morgan Stanley, JP Morgan and Huaxing Capital. Rong360 was founded in 2011 and has finished four round of equity finance. The listed entity is a wholly owned subsidiary of Rong360, which was registered in the Cayman Islands in June 1st this year.
With the net loss of $7.2 million in the first half of 2017, Rong360 is still in the red. However, the deficit of JianPu Tech has been shrinking. The prospectus shows that the company’s revenue has increased from 168.4 million RMB in 2015 to 182.1 million RMB in 2016. And in the first half of 2017, its revenue has grown to 393.4 RMB, nearly tripled in less than two years.
Chinese online lender Qudian Inc is under fire in China after what observers said was a less-than-impressive interview by its CEO Luo Min Sunday that was aimed fending off criticism of the company’s business practices. The critics said it could instead exacerbate the company’s domestic image and hurt its share price.
Following its splashy debut in the US, Qudian was the subject of many negative news reports, mostly from popular social media accounts, about its business model, with some questioning its practice of targeting students for loans and others even describing the company as a “loan shark” – lending money at usurious rates.
“Our bad loan ratio is below 0.5 percent, that’s very low. So we can afford it when those people don’t pay up… Losses have been contained at a low level,” Luo said.
But part of the interview drew much attention and even mockery. Luo said, “Loans that weren’t paid on time were considered dead accounts. We never pushed people to pay back. We don’t even call. If you don’t pay back, then never mind, we’ll just give it to you as a gift.”
ING Partners with Kabbage, Inc. to Expand Automated Small Business Lending into France and Italy (Kabbage Email), Rated: AAA
Kabbage Inc., a global financial services, technology and data platform serving small businesses, and ING, a global bank, are expanding their strategic partnership into France and Italy to provide small businesses with real-time access to working capital. Building on ING’s successful launch in Spain with the Kabbage Platform TM , this partnership allows millions of small businesses throughout France and Italy to easily apply, qualify and access ongoing lines of credit up to €100,000 with ING in under 10 minutes.
Initiative Ireland has today announced the launch of Ireland’s first syndicated property finance platform.
The launch coincides with the company’s pre-approval of a €1.5 million secured loan, which has been approved for funding via the platform. The largest crowd-lending loan approved to date in Ireland, the loan will fund the development of 10 social housing apartments and a ground floor restaurant on the North Strand Road, Dublin.
One angle that needs to be discussed more is how the introduction of these new services is also lowering barriers to most financial activities.
For instance, the rise of cashless options has given the unbanked access to financial services especially in regions that banks find unserviceable. So, it is quite refreshing then that some new Fintech efforts are focused on this particular area since financial inclusion is considered as a key aspect to poverty reduction.
I recently spoke with Sharone Perlstein who is currently working on delivering microfinance services to emerging markets.
What attracted you to microfinance?
There are about 2.5 billion people in the world who are unbanked. Microfinance bypasses the banking system and can help unbanked people develop their own personal economy that will enable them to support their families, their communities, and ultimately the economy of their country.
What are the key challenges in microfinancing and how do you think they can be overcome?
Human resources: Until now, a very large workforce was required to provide this service to those who need it. Today, with automation and smarter information systems, we can significantly reduce manpower and streamline processes to make loans more economically viable for borrowers and lenders.
Most microfinance companies operate where they are most needed, namely in rural areas where the technological infrastructure is unadvanced and unstable. These areas are usually far from urban centers and transportation is inconvenient and expensive. As a result, communication between the microfinance service provider and its potential customers is complex and challenging.
Granting loans to people without a bank account may be risky from a business point of view, since it is difficult to know whether potential borrowers are trustworthy or will be able to meet the terms of the loan. It is also difficult to monitor their business and economic activity. In other words, it is very difficult to build a financial profile for a borrower with no banking activity. Here, too, mobile technology changes the picture.
Some argue that microfinance loans, supposedly meant to help poor people succeed financially, often leave them with debts they can’t afford because of the high-interest rates. What is your opinion on this matter? Is this a real problem? What causes it? And how can it be solved?
I think the best solution is to ensure that:
A. Potential borrowers understand the terms of the loan in depth.
B. The Microfinancier knows the potential borrower in depth.
Why do you choose to focus on Indonesia?
I researched the region’s economy a bit and discovered that there were more than 50 million small and medium-sized businesses, representing about 97% of the business sector in Indonesia and responsible for 30%, if not more, of its GDP growth. However, many of these businesses don’t have enough money to realize their full potential, especially in rural areas, and the banks do not provide the right solution. For this reason, the Bank of Indonesia has enacted a law according to which banks will have to devote at least 20% of their loans portfolio to microloans by 2018, thus opening a window of opportunity for businesses and other microfinance companies wishing to enter the local ecosystem.
Bitcoin could have you covered on your next home loan.
In this line, the longstanding contribution of traditional banks in the worldwide economy is undeniable. But due to their credit selectiveness, renowned bureaucracy and transactional costs, the question is: Can this system can be improved to better serve the 2 billion underbankedaround the world? Greater financial inclusion provides benefits far beyond improved economic health for underserved societies; it is also way for governments to reduce corruption and fraud and promote entrepreneurship and growth.
Anecdotally, at the end of 2015, Lending Club had a total loan volume of $15.9 billion. Year-end of 2016 shows a total volume of $24.6 billion so the annual volume for 2016 is the difference or $8.7 billion.
Just last year, Ripio Credit Network, which wrapped up a $31 million Ethereum ICO, entered the credit service market using Bitcoin as the transaction vehicle. A year later, BitPagos launched Ripio as a digital wallet that enables consumers to send, receive, store, and buy or sell Bitcoin in local currency and to make online payments. In January 2017, BitPagos rebranded as Ripio, with around 100,000 users in tow across North and South America.
Mambu is operating in 45 different countries indicating its ability to quickly adapt to diverse regulatory regimes.
Co-founded by CEO Eugene Danilkis and COO Frederik Pfisterer, Mambu is Berlin based Fintech, a standout in the emerging German Fintech scene. Danilkis started his career developing NASA-certified software for the International Space Station.
Can you please provide an update on Mambu and global utilization? How many different companies are using your digital banking services? Which countries are you operating in?
Mambu is live on 6 continents, countries of operation include the UK, Netherlands, Germany, Sweden, the US, Kenya, Australia, Philippines, China and Argentina, to name a few.
We have more than 180 live operations in over 45 countries, our solution powers over 5000 loan and deposit products which serve over 4 million end customers.
Our clients range from FinTech revolutionaries to traditional banks.
New10, ABN AMRO’snewly launched SME lending Fintech, went from concept to launch in 10 months and is offering a fast and fully digital loan application process for Dutch businesses.
Globe Telecom’s lending business Fuse
Is online lending, including P2P, marketplace and balance sheet lending, the most demanded service right now?
Eugene Danilkis: Across all lending verticals, consumer, business and marketplace, there is significant demand for digital and customer centric loan products.
That being said, we have experienced a rise in demand from institutions looking to launch new digital banking services, offering both deposit and loan products.
We’ve also seen a growth in institutions looking to explore a different approach and take a marketplace model similar to that of N26. They want to collaborate with product providers to offer clients a wider range of products and services.
There appears to be more traditional lenders (IE banks) more inclined to go it alone and launch their own platforms. Goldman Sachs launched Marcus which they developed in house. Is this a trend? Or an opportunity for Mambu?
Eugene Danilkis: As mentioned above, this is a trend that is gathering momentum and it is an opportunity for Mambu.
The Mastercard Foundation today announced that its fifth annual and largest Symposium on Financial Inclusion (SoFI) will take place in Accra, Ghana, on November 7 – 9, 2017. The Symposium champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.
Each year since 2013 the Foundation has convened hundreds of industry professionals to focus on barriers to greater financial inclusion around the world.
This year’s event will reflect on progress made over the past five years, explore challenges that still lie ahead, and plan how to expand and deepen financial inclusion for the world’s most underserved people.
Keynote Address II: Dr. Ernest Addison, Governor, Bank of Ghana
The Mastercard Foundation first awarded the Clients at the Centre Prize in 2015 to the Swedish mobile microinsurance firm BIMA. Last year, the Prize was presented to the South African international remittance company, Hello Paisa. Each year draws nearly 100 applicants from companies around the globe. The three 2017 finalists are:
Jumo, a large-scale, low-cost financial services marketplace that uses behavioral data from mobile usage to create financial identities for micro, small, and medium-sized enterprises;
ftCash, one of India’s fastest growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans; and
Destacame, a free online platform that empowers users by giving them control over their data to build their financial capabilities and to access financial products.