Monday August 28 2017, Daily News Digest

artificial intelligence

News Comments Today’s main news: Blend lands $100M investment. Funding Circle achieves ISA manager status. Hive raises over $8M. Innovate UK invests 700K GBP in Paybase. China Life, Baidu launch $1B internet fund. Klarna’s profits increase 138 percent. Today’s main analysis: Bank of America Merrill Lynch to implement AI. Today’s thought-provoking articles: Congresswoman asks FDIC to hold public hearing on […]

artificial intelligence

News Comments

United StatesFlipkart, Amazon pose new competition for fintech lenders.

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

LendingClub Hit with Lawsuit (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has been hit with a lawsuit that names former CEO Renaud Laplanche alongside current and former board members and former CFO Carrie Dolan. The complaint, filed in the Court of Chancery in Delaware, states;

“Throughout the period December 11, 2014 and continuing through May 9, 2016 (the “Relevant Period”), the Individual Defendants breached their fiduciary duties to LendingClub by failing to institute adequate internal controls regarding financial disclosures, related party transactions, and data integrity and security, all while causing LendingClub to represent in the Registration Statement and a series of subsequent filings that such controls were sufficient.”

The suit has been filed by two shareholders; Kelvin Farley and Jay Fink.

Waters Calls on FDIC to Hold Public Hearing on SoFi’s Application for Bank Charter (House.gov), Rated: AAA

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, sent a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, calling for the FDIC to hold at least one public hearing on Social Financial, Inc.’s (SoFi) application to establish an Industrial Loan Company (ILC).

In the letter, Ranking Member Waters states that changes in the financial services industry and financial regulation necessitate a public hearing to examine the policy and legal implications of granting federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (fintech) company like SoFi.

I am writing to request that the Federal Deposit Insurance Corporation (“FDIC”) hold at least one public hearing on Social Finance, Incorporated’s (“SoFi”) application to establish an industrial loan company (“ILC”) to provide FDIC-insured Negotiable Order of Withdrawal (“NOW”) accounts and credit card products. As you know, because de novo ILC formations have been affected by regulatory and statutory moratoria for several years, the FDIC has not approved a deposit insurance application for a new ILC charter for some time. Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), changes in the financial regulatory regime and financial services industry justify a public hearing to examine the policy and legal implications of granting Federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (“fintech”) company like SoFi, a number of which I will discuss in more detail below.

Appropriate regulatory oversight of any ILC is an essential prerequisite to approving any application for deposit insurance backed by taxpayers. The FDIC has previously acknowledged the importance of strong oversight of any insured bank and its parent company when discussing oversight of ILCs.[1] In reaction to a number of concerns previously raised on the regulation of ILCs, the FDIC even went so far as imposing several moratoria on its ability to approve ILC applications for deposit insurance in 2006 and 2007 to, in the words of former FDIC Chairman Sheila Bair in testimony before the House Financial Services Committee, “allow the FDIC to carefully weigh the safety and soundness concerns that have been raised regarding commercially-owned ILCs. At the same time… the moratorium provides an opportunity for Congress to consider the important public policy issues regarding the ownership of ILCs by commercial companies.”[2]

While some experts have touted the possibility that fintech firms can help promote financial inclusion, others have underscored the challenges posed for our current regulatory regime to oversee these types of companies and have underscored the need for policymakers to carefully evaluate the consequences of allowing them access to deposit insurance and the Federal Reserve discount window.[11] Thus, Federal regulators have taken a varying degree of actions focused on fintech companies and services. For example, while the Office of the Comptroller of the Currency (“OCC”), under its “Responsible Innovation” initiative, has proposed a Special Purpose National Bank Charter for fintech companies (“fintech charter”)[12] questions have been raised about whether the benefits to consumers for this new charter will be widely and fairly shared, and whether there is adequate legal authority, let alone a clearly defined and modern regulatory framework, for such a fintech charter.[13] Indeed, a lawsuit has been filed by state banking regulators challenging the OCC’s authority.[14] As should be the case with the OCC and its proposal to use its authority to federally charter fintech companies, the FDIC should thoroughly consider the implications of offering access to the deposit insurance fund for ILCs that will result in expanding the type of institutions to it, like fintech firms. Fintech firms, whose operations cross state and international boundaries, and may exist entirely online, were undoubtedly beyond original congressional intent in permitting ILCs to access deposit insurance and it is appropriate for stakeholders to weigh in on whether it is appropriate for these firms to have this access without proper oversight of their parent companies.

The chartering of a fintech company as an ILC also raises a number of consumer protection concerns that the FDIC should consider. For example, the California Reinvestment Coalition (“CRC”) has opposed SoFi’s application on the basis of concerns with the institution’s Community Reinvestment Act (“CRA”) plan, as well as its intended approach to financial inclusion, fair lending, and consumer protection.[17] CRC notes that SoFi’s business model targets “students from elite universities that have strong earnings and wealth potential,” and offers products and services “designed to exclude working class households.” CRC also notes that SoFi’s CRA plan is grossly inadequate, considering that: (1) SoFi’s assessment area will be limited to areas in Utah, but the company will accept deposits and operate nationally; (2) SoFi’s current core products are not designed to serve the “convenience and needs” of low- and moderate-income (“LMI”) communities in which the bank would operate,[18] but rather are focused on serving SoFi’s members; and (3) SoFi’s CRA plan does not encompass measurable commitments to lending, investments, and services for LMI communities.

The full letter is here.

Bank of America Merrill Lynch has become the latest bank to implement AI (Business Insider), Rated: AAA

Bank of America Merrill Lynch (BAML) has 

Bo Brustkern and Emmanuel Marot (Lend Academy), Rated: A

On this episode of the Lend Academy Podcast I brought together both CEOs to talk about this merger; what it means for their respective customers as well as the industry as a whole.

In this podcast you will learn:

  • The original idea that led to the founding of both companies.
  • The strengths of both companies and why they are a complementary fit.
  • Why they decided to come together and merge companies now.
  • The scale and profitability of the combined company.
  • The unique aspects of the LendingRobot Series investment offering.
  • The platforms that the LendingRobot Series invests on.
  • The different funds that make up the Lending Robot Series.
  • The choices for non-accredited investors on the combined platform.
  • Their value proposition today for investors.
  • Who the target customer is today for the combined company.
  • How the two brands will operate going forward.
  • What the combined company will look like in 12 months time.
  • Where marketplace lending is going in the future.

LendKey, Earnest Alter Student Loan Refinancing Rates (LendEDU), Rated: A

Two student loan refinancing companies, LendKey and Earnest, have changed their student loan refinancing interest rates in recent weeks, according to LendEDU.

Effective August 10th, LendKey’s variable interest rate range for their student loan refinance product was altered slightly. LendKey, a leading lending partner of both banks and credit unions, now offers a variable rate range between 2.67 and 6.31 percent for student loan refinancing.

This new variable rates for LendKey mark an increase on both the low and high ends of the range. Previously, the online lending partner offered a variable interest rate range between 2.52 and 6.16 percent since June.

Online Mortgage Lender Blend Lands $ 100 Million Investment Led by Greylock (Crowdfund Insider), Rated: A

Blend has landed a significant funding round to the tune of $100 million. The funding was led by Greylock Partners with participation by Emergence Capital. Existing investors joined in the round as well.

Wells Fargo, U.S. Bancorp Turn to Startup to Speed Up Mortgage Applications (WSJ), Rated: A

Wells Fargo & Co. and U.S. Bancorp have signed deals with mortgage-software startup Blend Labs Inc. to move more of their loan applications online.

Ethereum-Based Invoice Finance Platform Hive Raises Over US$ 8 Million (Coin Journal), Rated: A

The Hive Project, which intends to build the world’s first cryptocurrency-based invoice financing platform, has raised 2,087 BTC, or over US$8.9 million, from 2,234 investors through its initial coin offering (ICO).

Using invoice finance, the business “sells” its outstanding invoices at a small discount to a financier. The business immediately receives up to 85% of the value of the invoice instead of having to wait the usual 30 to 90 days to get paid by customers.

Hive uses the Ethereum blockchain and smart contracts to assign a unique fingerprint to every invoice issued. These invoices are then tokenized and published on a blockchain, and made available as a shared source of liquidity for factoring and invoice financing.

Debate on Regulatory Reform (PeerIQ), Rated: A

JP Morgan CEO Jamie Dimon in his annual letter would agree that the banking system is safer and stronger today. Nevertheless, Mr. Dimon believes that economic growth and lending is below potential. For instance, JPM estimates $1 Tn in loans could have been generated in recent years generating an additional 50 bps in annual GDP growth thru regulatory reform.

The specific regulatory reform areas Mr. Dimon identified include:

  • Simplification of the annual stress-testing process
  • Release or enable banks to deploy excess capital towards small business loans, lower middle market, and near-prime mortgages
  • Rationalization of supplementary leverage ratios and operational risk capital
  • National servicing standards for the mortgage servicing market
  • Federal Housing Administration (FHA) reform
  • Complete securitization standards to encourage private capital and reduce exposure to taxpayers

Role for 3rd party risk infrastructure to strengthen markets

Large banks are increasingly playing the role of financial intermediaries that connect non-banks to the capital markets. Banks are providing liquidity facilities (“lending to the lenders”) and capital-light securitization programs. Although Yellen is right that lending continues to grow, critically, the nexus of credit formation–including for a majority of personal loans, auto loans, student re-fi loans, and even mortgages–now takes place between a consumer and a non-bank.

Under this new landscape, the soft underbelly of the credit markets has shifted from bank wholesale funding to non-bank wholesale funding. And when investor confidence seizes, the transmission mechanism connecting policy to the real economy can break down. Spreads widen, funding costs increase, and markets freeze exactly when policymakers seek to ease financial conditions.

Q&A with Head of Alternative Lending at Fintech Marqeta (Crowdfund Insider), Rated: A

Recently, Crowdfund Insider published an article about Marqeta signing a partnership with Visa on payments and loans. The marriage is designed boost innovations in commercial and consumer payments and online lending. Visa also made a strategic investment in Marqeta at that time to the tune of $25 million. Total investments in Marqeta now stand at over $70 million.

Isn’t this just all about borrowers getting a better interest rate [and investors earning more]?

Candace: Lenders are looking to increase renewals (repeat borrowers are easier to sell than new borrowers), beat out the stackers (top of wallet, top of mind) and decrease risk (new data on spending reduces risk for future loans). On the heels of 2016, these have become as important as the interest rate for the lender.

For the borrower, speed to funds has become increasingly important, and distributing loan funds to a  card allows a way to immediately spend the funds without waiting for the funds to be deposited into the borrower’s bank account.

If Credit Cards drop their rates then they can become competitive. For Visa to partner with Marqeta – isn’t it just how the debt is carried? For the consumer / business, they are indifferent?

Candace: The rates apply to the underlying loan per the agreement between the lender and the borrower, not to a prepaid card that is used to assist with making purchases. The prepaid card bears no interest charge. The terms for the loan (from which the loan proceeds are distributed to the card) continues as agreed upon between the lender and the borrower. That debt does not change.

How Riskalyze Won The Hearts Of Financial Advisors And Upgraded The Advice Industry (Benzinga), Rated: A

Ahead of Riskalyze CEO Aaron Klein’s speaking engagement at the Benzinga Fintech Summit in San Francisco, Benzinga caught up with him to learn more about how the company is upgrading financial advice.

BZ: How did you go about identifying this need for financial advisors? What kind of research did you do?

What’s interesting is that we invented a new space. There was no risk-alignment platform that helped advisors do that. There were questionnaire products that answered half the question, there were a few portfolio analysis tools that would answer the other half, but we invented the concept of the risk number. We can help advisors pinpoint the client’s risk number and then we score portfolios using that number.

Klein: I’ll talk about the two different sides of the coin. A lot of the innovation was figuring out those sides of the coin and bridging the two together. On the one hand, we took some concepts that had really never made it out of academia and into everyday use. They’re centered around the economic framework called prospect theory, which won the Nobel Prize for economics in 2002. We took prospect theory and built a bunch of proprietary technology on top of it to understand how to move up and down a client’s personal financial spectrum to understand when they prefer risk and when they prefer certainty.

Once we do that, we built a mathematical formula behind the scenes that lets advisors turn that into the client’s risk number. That’s how the client-side works.

On the flip side, we need to match that up with a portfolio. So, the inputs for that piece of the technology are largely market data. We effectively take daily pricing data for nearly a quarter-million securities — every U.S. stock, ETF, mutual fund, variable-annuity sub accounts, SMA third-party money managers, proprietary non-traded strategies, all kinds of different products. We take all the data for those, we have new data streaming into our systems every night on those securities.

 

This Week In Retail: Funding, Finance And Tech (PYMNTS), Rated: A

This week in retail, we’ve seen news coming in from multiple sides, including that of Apple’s projected increase in smartwatch salesU.K. online lender Prodigy’s funding news for expansion into the U,S.,  Walmart’s two new partnership announcements, and the news that the CFPB is ordering American Express to pay out money to those hurt by unfair practices.

American Express is in the hot seat this week as the Consumer Financial Protection Bureau (CFPB) ordered the credit card company to pay out a very large amount to consumers in Puerto Rico and the U.S. Virgin Islands. It’s being confirmed that over a 10-year period, American Express  provided inferior card offerings to people in those territories than what was being offered in the U.S.

Here are the numbers:

  • $240 million | Amount Prodigy Finance raised in its venture capital equity funding round
  • $96 million | Amount CFPB ordered American Express to pay out to affected Puerto Rico and the U.S. Virgin Islands consumers
  • $200 | Starting point for potential Walmart installment loans

5 Trends That are Changing the Millennial Economy (Huffington Post), Rated: A

According to statistics from the U.S. census bureau, Millennials make up about 83 million of the nation’s current population. The unique experiences of the Millennials will shape the way we buy and sell, forcing companies and businesses to adjust their business strategy for decades to come.

For example, a growing number of Millennials are choosing to live with their parents. They have been reluctant to buy items such as cars, music, and luxury goods. Luxuries that used to be important for previous generations are not as important for Millennials. They are reshaping the real estate market and are responsible for the growth of the sharing economy.

A recent survey of Interns conducted by Goldman Sachs in 2013, found out that 30% of millennials do not intend to purchase a car in the future. 25% said they will only buy one if there is a need for it, otherwise they are indifferent. Another 25% said buying a car is important but not a big priority. 15% said purchasing a car is extremely important. And the last 5% do not feel strongly about it.

recent report shows that student loans have increased by 84% over ten years with an average student having a loan balance of $29,000.

How to choose and switch to a better bank for you (WPXI), Rated: B

Online banks are now offering much higher rates on savings accounts — significantly higher than the current rates at traditional, bigger banks. So with that in mind, why not just move your savings to take advantage of the bigger return?

To give you some context, online bank ally recently increased the rates on its savings accounts to 1.15% — while the rate on a regular savings account at Bank of America currently sits at only 0.01%.

United Kingdom

Funding Circle receives ISA manager status (P2P Finance News), Rated: AAA

FUNDING Circle has received ISA manager status from the HMRC, Peer2Peer Finance News can reveal.

Approval was granted in July, less than two months after the platform won full FCA authorisation.

However, the platform has no immediate plans to launch its IFISA product, telling customers earlier this week that it intended to roll out the tax-free investment wrapper “before the end of the tax year.”

How Funding Circle is helping small businesses face the challenges of Brexit (Prospect Magazine), Rated: A

Fast forward to today, we’ve originated over £3.2 billion worth of loans through the platform. In the UK, that lending has helped create about 60 thousand jobs, and the £2.5 billion of loans has created about £5 billion of GDP or gross economic value added, according to an independent survey by the Centre for Economics Business Research.

In fact, we think we make up about 2 per cent of the total money that’s going to gross-lending small businesses. And if you actually look at the money going into the economy, we make up about a third of net new lending— which is the preferred Bank of England measure. We did about 300 million versus 600 million in the entire banking system in the first half of this year.

Say a small business decides to come to you: what is it they’re getting that they don’t get with a bank?

We turn around loan applications specifically within 24 hours. We are better in that we give better service; everyone can find an account manager.

We’re cheaper, in that our prices are very, very competitive, and often we’re often providing cheaper loans than businesses would be able to get at the bank. We also don’t have the overheads that banks have.

We all know that Brexit is going to shake up the financial sector. What can Funding Circle do to help businesses rise to the challenge?

Net lending by banks fell by 220 million in Q4 last year. Ours actually rose to 167 million.

On top of that, we’ve also had large insurance companies like Aegon, which is a big Dutch insurer, commit to fund £160 million in year one, but actually committed over a four-year period to purchase our loans. The fact a large foreign insurer would want to do that shows that actually, despite Brexit, there’s a vote of confidence in the UK economy, particularly in small business.

FinTech startup Paybase gets £700,000 from Innovate UK (UK Tech), Rated: AAA

London-based FinTech startup Paybase has received a grant of almost £700,000 from innovation agency Innovate UK.

Expected to launch later this year, Paybase has developed an ‘end-to-end solution for payments, compliance and risk’, which can be accessed through a unified API.

Why P2P is still the crowd despite passive lending (AltFi), Rated: A

There’s been much collective gnashing of teeth over the last few months at the evolution of peer to peer lending, as practised by ZopaRatesetter and most latterly Funding Circle. The big bone of contention has been a shift amongst all three – with FC falling into line just a matter of days ago – to a passive lending model. This means that lenders on said platforms now lend passively to a full slice of borrowers rather than picking their borrowers individually. To the critics this implies that the traditional peer to peer (P2P) model is slowly dying out. If you’re not lending to your peers, don’t you just sound like any other finance business such as a bank?

I’m not convinced by this criticism. Collectively a crowd – many peers – are still lending to another crowd, but just in a format that looks closer to a passive, collective fund basis rather than one on one. There is no bank balance sheet lurking around and the ‘crowd’ still sets the rate at which it’s happy to lend. Credit scoring has always been a feature of all the platforms, whether they be ‘pure’ P2P or passive P2P. Someone, somewhere at the centre of the online marketplace needs to set the lending criteria and make decisions about who to lend to.

What about peer to peer? (Library of Things), Rated: A

In this week’s bonus episode co-founder Emma looks at the sharing economy, peer to peer lending, and explains why Library of Things have chosen to operate from a physical space.

Listen to the podcast here.

How Risky Is Borrowing Money Online Through Peer-to-peer Lending (FX Daily Report), Rated: B

It is almost true that borrowing money from traditional financial institutions is a thing of the past.

It has been observed that P2P online lending platforms are not the source of the problem or the risk. However, it seems to be the ease with which loans are available that causes the problems.

Online P2P lenders also offer student loans. It is very important to realize that student loans these days are available everywhere. But what is ultimately the truth is that the loans are burdensome. Any student that avails of such a P2Ponline student loan emerges as a graduate burdened with a heavy debt.

If an individual wants to apply for a P2P online loan, it is best to start with checking credit reports. It is a good idea to fix any errors that may be found on these reports. Otherwise, the interest rates may be hiked up. It is also a good idea to do some research prior to applying for the loan. It is worthwhile to find out as to which lender offers a lower rate of interest even if they fall outside the ring of online P2P lenders. Never decide on which loan to pick up by looking at the monthly amount to be paid. The total amount that you are going to repay and the time period of the repayment are the more important factors to be considered. This gives the total cost of the loan.

China

Big banks strike partnerships with technology companies as part of fintech wave (South China Morning Post), Rated: AAA

Bank of Communications, the nation’s fifth biggest lender, joined with Suning Holdings and its financial affiliate Suning Finance as strategic partners last week, the latest of the big five banks to ally with internet firms.

So far, all big-five banks, accounting for more than one-third of China’s banking assets, have allied with technology giants.

Industrial and Commercial Bank of China allied with e-commerce major JD.com for cooperation in sectors including fintech, retail financing, corporate credit and asset management. Agricultural Bank of China agreed to work together with dominant search engine operator Baidu. Bank of China and Tencent Holdings jointly set up a fintech lab, focusing on cloud computing, big data, block chain and artificial intelligence.

Earlier this month, mid-sized Industrial Bank and JD.com’s financial affiliate JD Finance launched a debit card in Beijing and most cities in affluent Zhejiang province.

China Life and Baidu to launch $ 1 billion internet fund (Reuters), Rated: AAA

China Life Insurance Group Co and Baidu Inc will form a 7 billion yuan ($1 billion) private equity fund, targeting internet and other technology investments, China Life’s listed arm said on Thursday.

The Baidu Fund Partnership will be capitalized by China Life through a special partnership, which will contribute up to 5.6 billion yuan, China Life Insurance Co Ltd said in a Hong Kong Stock Exchange statement.

Baidu, the Chinese language internet search provider, will contribute as much as 1.4 billion yuan.

Ant Financial’s “TechFin” vs JD Finance’s “FinTech” (ASEAN Today), Rated: A

Alibaba’s Ant Financial Services Group and JD Finance are at loggerheads in the Chinese, and increasingly, global e-commerce scene. In 2015, JD Finance recommended the use of “FinTech.” In December 2016, Ma Yun coined the ”TechFin” as a rebuttal, and as a show of thought leadership.

Ant Financial’s unveiling of “TechFin” shows the firm’s focus on building technology rather than financial products.

Critics believe there is not much difference between TechFin and FinTech. Critics believe Ant Financial coined TechFin to gain a foothold from the conceptual standpoint; a counteroffensive to JD Finance’s aggressive marketing of FinTech. This is inevitable considering “FinTech” as a term already achieved credibility within the finance and other related industries.

Ant Financial and JD Finance are more complementary than competitive

Onlookers see Ant Financial and JD Finance as longstanding rivals. JD.com’s recent sale of JD Finance for US$2.1 billion in cash was seen part of a deal to spin off its burgeoning finance arm and raise its game against Ant Financial.

Ant Financial focuses on the traditional model of the Internet while JD Finance focuses on product innovation, for a start. Each business model has its advantages.

Ant Financial also seeks to leverage on Ant Check Later (花呗), a virtual credit card, to open up a whole new road map for credit distribution in Internet finance. In contrast, JD Finance aims to boost user’s consumption through its products. Its Jingxiaodai (京小贷) appeals to merchants who need fuss-free and almost instant access to credit.

European Union

Klarna just posted some impressive half-year figures — profits soar by 138 percent (Business Insider), Rated: AAA

The Swedish e-invoicing giant posted 2,05 billion Swedish crowns ($254,2m) in revenue for the first two quarters of 2017. Meanwhile, operating profits jumped to 228 million ($28m) from last year’s 96 million ($11,9m), reports tech site Di Digital.

Yesterday, Breakit reported that the company is teaming up with Stripeto boost growth in the U.S.

Credit Suisse Eyes 2018 Launch for Blockchain Loans Platform (Coindesk), Rated: AAA

A group of banks led by Credit Suisse is eyeing the launch of a commercial platform for blockchain-based syndicated loans, according to reports.

The group involved finished the second phase of their testing in March.

Using smart contracts to reduce those turnaround times could increase the market’s appeal to potential lenders and investors, according to Aidoo.

Worldcore Payment Institution Announces ICO (Coin Idol), Rated: A

Worldcore announces an Initial Coin Offering (ICO), as part of their wider expansion plans.

The company envisions to become a worldwide reference for the financial tomorrow, by integrating its successful payment solution into the blockchain sector of economy.

Worldcore ICO starts on October 14 of 2017. In total, a maximum supply of one billion WRC tokens at $0.10 USD each, will be available for purchase.

Corlytics named by Allen & Overy in its regtech programme (Finextra), Rated: B

Magic Circle law firm, Allen & Overy, has named Corlytics as one of the eight companies selected to move into its Fuse programme. Fuse is a newly launched innovation space where its lawyers and technology firms team up to develop legal, regulatory and deal-related improvements.

International

Ten Fintech Conferences to Attend This Fall (Lend Academy), Rated: AAA

FinovateFall

When: Sept 11-14, 2017
Where: New York City Hilton Midtown
Link:  /> Discount code: F17FALLLAT

LendIt Europe 2017

When: Oct 9-10, 2017
Where: London
Link:  /> Discount code: LENDACADEMYVIP

American Banker’s Digital Lending & Investing

When: November 2-3, 2017
Where: New York, NY
Link: 

AltFi Global Summit

When: November 7, 2017
Where: Amsterdam
Link: 

Marketplace Lending & Alternative Financing Summit 2017

When: December 3-5, 2017
Where: Dana Point, CA
Link: 

This event is put on by the Opal Group and is the only west coast event this fall. This is its second year and while I did not attend last year I heard it was a good event with a focus on the investor side of marketplace lending.

Digital Banking – Old Wine in New Bottle? (Fintech Weekly), Rated: A

There was a time when digital banking was perceived as synonymous with online banking and mobile banking. Financial services industry, along with other sectors, is experiencing an explosion of digitization thanks to smartphones, tablets and access to affordable high-speed internet. The number of smart phone users is expected to equal the number of bank accounts in near future as all mobile users link their bank accounts to their smart phone and get onboard with mobile-based digital wallets and savings platform.

Given this, it is imperative to take a fresh look at whether digital banking means the same as it did a decade ago – both for banks as well as customers – especially since there does not seem to be a consensus on the definition of ‘digital banking’.

Customers today do not have the patience to navigate through multiple screens. They do not want to fill the same KYC details over and over for each product. Presenting paperwork at the branch to support an online application is a big no-no. They expect to resume the application they started on Smart phone on their home computer and may want to talk to the customer care executive on phone while doing that. They do not want to be bothered with cold calls and random sales pitches; they prefer to see only personalized and contextual cross-sell offers with direct purchase links. In short, digital customer today wants one-touch, one-click, personalized and integrated user experience across channels.

On the flip side, while customers enjoy the convenience of digital banking for routine tasks, they also want to continue using the branch when they need some face time with a seamless switch between digital and personal interaction. They do not want to forego the privilege of walking into the local branch despite being able to do all their banking via the web or smartphone.

Australia/New Zealand

Fintech startup shares $ 7m of investment (NZ Adviser), Rated: AAA

Since its launch in June, fintech startup Ilumony has reported more than $7 million in financial investments. Of the $7 million, it has charged no fees for advice on $1 million worth of customer KiwiSaver money.

India

Fintech lenders have new competition: Flipkart and Amazon (The-Ken), Rated: AAA

Though Flipkart launched in 2007, it was only in 2013 that e-commerce really took off in India. That was the year Amazon entered India through a marketplace model, and Flipkart too launched its own marketplace model.

From selling smartphones, books, and apparel to customers, the two of them now started offering warehouses, packaging, and logistics to sellers.

No Flipkart or Amazon for EzCred; this startup wants to pursue offline shoppers (India Times), Rated: A

When ecommerce companies like Flipkart and Amazon wanted to expand to the nooks and corners of the country, they borrowed the idea and recently started offering “No cost EMI” option on selected products. Taking a step further, you now have many fintech companies that have lined up on ecommerce platforms to offer loans to consumers.

Launched in January 2017, EzCred is an alternate lending startup which offers loans to consumers who walk into shop at offline stores.

“Offline is a much larger play than online. A majority of transactions are still done offline,” says Maheshwari.

The startup now has plans to roll out an app for customers to enable them to apply for loans directly. The platform has a credit assessment system which enables the startup to assess the borrowers’ repayment capabilities. This involves various data sources like the borrowers’ CIBIL score, bank statements, information provided by customers, which are then matched with the credit policy of EzCred.

India’s draft data protection law to hinge on user consent; will be ready only next year (Factor Daily), Rated: A

A draft data protection law, which is at the core of the Indian government’s stance that Aadhaar does not violate citizen privacy, will have user consent as its mainstay with a few exceptions.

The draft legislation is expected to be ready in about a year.

This was revealed in interviews with a member of the committee set up by the government to come up with the draft framework — B N Srikrishna, a former Supreme Court judge who is heading it, and a second person with knowledge of the committee’s thinking.

P2P lenders may be allowed to operate offline (The Hindu BusinessLine), Rated: A

In a bid to impart vibrancy to the fledgling peer-to-peer (P2P) lending space and also further the cause of financial inclusion, the Reserve Bank of India is believed to be looking at allowing players in the sector to have an offline presence besides an online one.

On-the-ground presence may help the platforms reach out to those who are currently not being served by banks/non-banking finance companies and also help break the vice-like grip of money lenders on local lending, especially in rural areas and small towns.

Asia

Why e-commerce firms could replace banks as the region’s leading lenders (Southeast Asia Globe), Rated: A

Peer to peer lending (P2P lending) first entered the wider public’s consciousness when it rose from the ashes of the global financial crisis in 2007. By cutting out traditional intermediaries, such as banks, the lending platforms, were able to offer borrowers lower interest rates and lenders higher returns. They were populist alternatives to the casino capitalism that had brought Wall Street to its knees.

According to a 2015 report by Deloitte, in Indonesia, Malaysia, the Philippines, Singapore and Thailand there exists “a clear disparity between what SMEs want and expect from banks and what the banks can deliver”. In Indonesia, the report found as few as 6% of SMEs were able to access bank loans.

Recent statistics from the Asian Development Bank show that the situation is similar in Myanmar, which the bank says suffers from a $2 billion shortage in available credit, a shortfall that Brad Jones, CEO of Wave Money, attributes to the country’s excessively cautious banking regulations.

According to data from Singapore-based venture capital fund Dymon Asia Ventures, less than 0.1% of loans in the region currently originate from P2P lending sources, compared with 10% in China and 2-3% in the UK and US. There is, therefore, sufficient growth potential for the Southeast Asian P2P lending market.

Peer-to-peer lending bears risk of bad debt (The Jakarta Post), Rated: A

Despite the rising trend of peer-to-peer (P2P) lending in Indonesia, an economist believes that online-based businesses have increased risk of bad debt if the lenders ignore the importance of supervision.

The credit application mechanism in P2P lending is risky. There is no integrated costumer blacklist data-base like in the banking industry, said Samuel Aset Manajemen economist Lana Soelistianingsih said in Jakarta on Friday.

Moreover, she said P2P lending offered annual interest rates of up to 18.5 percent to investors, adding that such aggressive offers could increase the risk of business failure.

Canada

FLINKS PARTNERS WITH MERCHANT ADVANCE CAPITAL (Betakit), Rated: B

Flinks, a financial API for banks and credit unions, announced a partnership with Merchant Advance Capital, an online lender for small and medium-sized businesses.

Merchant Advance Capital partnered with Flinks to reduce loan approval time for its customers. Flinks will allow Merchant Advance Capital to connect its app directly with customers’ banks, allowing the company to validate account ownership, account balances, and transaction histories.

Authors:

George Popescu
Allen Taylor

Wednesday July 5 2017, Daily News Digest

abs market overview

News Comments Today’s main news: SoFi to shut down Zenbanx. Red Ventures to buy Bankrate website for $1.24B. BofE to get tough on consumer lending. UK P2P lending surpasses 10B GBP. China re-thinks social credit. Korean P2P lending passes 300B won. LendInvest out of P2P lending. Today’s main analysis: US ABS market overview. Traditional wealth management challenged by robo boom. Today’s thought-provoking […]

abs market overview

News Comments

United States

  • SoFi to shut down Zenbanx. GP:”We do not know the details of the acquisition but we assume part of the due diligence SoFi was aware of this issue and therefore they didn’t purchase Zenbank for their customers or services, but perhaps for their team and know how?”AT: “I suspected this would happen. If they have the technology and the talent, what else do they need?”
  • US ABS market overview. GP:”steady growth in all segments except maybe auto”
  • How the market pushed Realty Mogul out of residential fix and flips. GP:”I continue to believe that fix and flip is highly correlated with the economic cycle and if a company relies on it there will be years with no origination in that market at some point.”AT: “Markets, and market conditions, change. This looks like a smart move for Realty Mogul. A good rationale, at least.”
  • Ally Bank online savings APY increases to 1.15%. GP:”Goldman Sachs online Bank increased it, Ally increased it… perhaps the FED rate adjustment is having an impact or perhaps the competition for savings dollars is increasing. Or both.  “AT: “If consumers can get better savings interest rates at online banks, why wouldn’t they?”
  • Inside the arms race between banks and startups. AT: “Focuses on negatives for banks. Seems a bit one sided. I don’t believe banks are out of the picture just yet, but we will likely see a steady decline soon. The survivors will be those banks that adapt and adopt the technology of online lenders.”
  • LendingTree, LeadsCon unveil first $25K startup innovation spotlight.
  • Tide raises $14M. GP:”Congratulations!”
  • Lifshitz&Miller investigate LendingClub. GP:”All public companies have an ongoing litany of lawsuits as soon as their stock does something un-usual. This is normal life for a public company in the US.” AT: “I don’t understand why now, a full year after the Renaud Laplanche issues.”
  • Red Ventures to buy Bankrate website for $1.24B. GP:”This is big news, and an amazing valuation. There is money in customer acquisition for fintech.”
  • Goldman raises $1B for real estate fund. GP:”Goldman has been in the real estate funding business for long time. focused on large commercial properties. Perhaps a good usage of the savings capital from Goldman Sachs bank could be real estate crowdfunding as well in the same way as Marcus works for unsecured personal lending? $1B for Goldman is not much money, this is not big news anyway. “
  • Suretly launched initial chocolate offering. GP:”Very amusing, but looks a little desperate.”

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

News Summary

United States

Six months after acquisition, SoFi is shutting down Zenbanx (TechCrunch), Rated: AAA

Online lending company SoFi is closing down Zenbanx, the online banking provider it bought earlier this year. In an email sent to Zenbanx customers, the company announced that it will close all accounts at the end of next month.

According to a SoFi spokesperson, Zenbanx had a partnership with Wilmington Savings Fund Society (WSFS) that expired this month and, rather than renew it or find another partner, the company decided to just close existing accounts.

US ABS Market Overview (Finsight.com), Rated: AAA

Recent New Issue

The Market Pushed Us Out of Residential Fix and Flip (Realty Mogul), Rated: AAA

If you are like many investors, you loved our residential loan product. Short term investments with high yield (9-12%) and monthly distributions, what’s not to love? And as much as our investors love them, you will no longer find them on RealtyMogul.com. We stopped originating them.

The purely local nature of fix and flip lending changed with online lenders having nationwide reach and access to tremendous amounts of capital, either from retail or institutional investors. At one point, RealtyMogul.com had in hand nearly $1 billion in capital commitments to purchase fix and flip loans from institutional buyers – that’s a lot of homes!

In late 2015 we started to notice a market shift. Fix and flip loan pricing started to drop. First it was 11%, then 10%, then 9%, and in many major markets it dropped to 8%. Throw in the cost of servicing these loans and on an 8% loan, investors’ estimated return is 7%.

At 8%, there should be a relatively lower risk profile to a loan. But in fact, the opposite was true. The dramatic increase in capital in the market meant that riskier loans were demanding lower and lower rates. Borrowers with great experience, credit and lower leverage were able to get rates in the 4-5% range from banks, whereas the 9-12% loans were only available in markets where there were no alternatives and the risk was fairly high.

Ally Bank online savings APY increases to 1.15% (Reddit), Rated: A

Chat rep said that my account should reflect the new rate by the end of today.

Peek Inside The Fintech Arms Race Between Banks And Startups (International Business Times), Rated: A

Capital One is opening Capital One Cafes in major cities across the U.S., with hip decor and more laidback consulting vibes than traditional branches. JPMorgan is trying the same idea with its Manhattan technology hub. Bloomberg reportedthe bank’s $9.6 billion technology budget coincided with new startup-style offices featuring foosball tables, open workspaces and snacks. But it might be too little, too late.

While, money transfer apps like Apple Pay, Venmo and WorldRemit garner widespread adoption, some experts predict banks could also lose well over half their retail profits to fintech startups. Flashy offices won’t change the fact that the days of traditional banking are over.

Nubank looks beyond traditional credit scores, using cellphone data and driver’s license information to find creditworthy customers who would never meet the requirements of a traditional bank. Like SoFi mortgages in the U.S., Nubank interest rates are flexible and can change as the customer’s financial security increases. Combine that with a lack of fees plus a smooth mobile experience, and traditional credit cards seem very outdated by comparison.

According to a Gallup poll, the amount of Americans who feel confident in U.S. banks dropped from 49 percent in 2006 to just 27 percent by 2016.

A nationwide survey of 500 chief financial officers byWEX Virtual Payments found 55 percent consider mobile payment options very important, in addition to 54 percent who say to same of blockchain solutions.

53 million Americans aren’t served by the current credit score market,  but have great cash flow,” Thomas told IBT. Nubank in Brazil and the fintech startup Tala, which has distributed around 2 million micro-loans in places like in Kenya and Tanzania, prove there’s no need to restrict loan eligibility to traditional metrics.

LendingTree, LeadsCon Unveil First-Ever $ 25,000 Startup Innovation Spotlight (IT Business Net), Rated: A

LendingTree, the online loan marketplace, and Access Intelligence, a business information and marketing company, today announced a new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The “LendingTree Startup Innovation Spotlight” at LeadsCon’s Connect to Convert will recognize the most innovative fintech startups across the consumer lead generation, call center and customer experience sectors. Startups around the world can apply today at  a chance to receive exposure, bragging rights and $25,000 in cash. Finalists will be announced in August and selected live on stage amid 1,000 industry executives at LeadsCon’s Connect to Convert industry conference and expo, August 21-23 at the New York Hilton Midtown.

Banking startup Tide raises $ 14 million to ‘give small businesses back their time (Business Insider), Rated: A

Banking startup Tide raised $14 million in one of the largest Series A funding rounds closed by a fintech company this year.

Tide, a digital-only banking app aimed at small businesses, has also partnered with online lender iwoca, in a move to allow small companies access to loans of up to £100,000.

The funding round was led by specialist fintech investor Anthemis, along with Passion Capital, LocalGlobe and Creandum, the company that backed Spotify.

Lifshitz&Miller LLP Announces Investigation of LendingClub Corporation (PR Newswire), Rated: A

Lifshitz & Miller announces investigation on behalf of LC investors concerning whether LC’s former CEO, Renaud Laplanche, engaged in improper loan transactions and personal investments as a result of material weaknesses in LC’s internal controls.

If you are an LC investor, and would like additional information about our investigation, please complete the Information Request Form or contact Joshua Lifshitz, Esq. by telephone at (516)493-9780 or e-mail atinfo@jlclasslaw.com.

Bankrate website to be bought by Red Ventures for $ 1.24bn (Financial Times), Rated: A

Bankrate, the US personal finance website, is to be bought for $1.24bn by Red Ventures, a digital marketing company which is expanding its footprint in financial services.

Private equity-backed Red Ventures has agreed to pay $14 per share in cash for Bankrate, which produces online content focused on financial advice and research, such as mortgage and savings calculators and credit card and insurance comparison tools.

Goldman Raised $ 1B For A Real Estate Fund (Bisnow), Rated: B

Documents filed with the Securities and Exchange Commission show that the investment bank has raised $1B for a new real estate fund, Broad Street Real Estate Credit Partners III. Further documents show it is on the road looking to raise more capital for the fund, with a source indicating to Bisnow that it is looking to pull in the same amount again over the coming months.

Around $600M came from U.S. investors and the rest from overseas, the documents show. Goldman typically puts around 20% of the equity into the funds it manages.

Suretly launched an Initial Chocolate Offering (Newsbtc), Rated: B

NYC-based startup Suretly, which raised $350K during preICO round this May, launched an Initial Chocolate Offering.

The event took place in Copenhagen, Denmark during Money2020 conference. All guests, who has visited Suretly’s booth, were gifted with a chocolate souvenirs shaped in SUR-token. Each token was packed in the individual memorable wrapping with the future Suretly ICO information.

United Kingdom

The Bank of England is preparing to get tough on consumer lending (Business Insider), Rated: AAA

The Bank of England ordered British banks and other lenders on Tuesday to prove by September that they are not taking on too much risk with their increased lending to consumers.

The BoE’s Prudential Regulation Authority did not set out any new rules on Tuesday but its move was the first time it has ordered firms it supervises to apply consumer credit rule more conservatively.

The PRA said it was “requesting evidence from all firms with material exposures to consumer credit of how they will – across consumer credit portfolios- ensure” they are not taking too much risk after years of low interest rates.

Lenders will have until September to respond and could then be asked to fix any specific areas of weakness by the PRA.

ORCA celebrates peer to peer lending uk surpassing £10 billion mark (Orca Money), Rated: AAA

Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms. In the first half of 2017 alone, over £2 bn was invested through P2P.

Take a look at the UK alternative lending ecosystem.

Traditional wealth management challenged by robo-adviser boom (Raconteur), Rated: AAA

Survey after survey shows that millennials, and indeed most potential investors aged under the age of 60, are happy to entrust their savings to a digital platform or mobile app, so long as it’s credible, secure, trustworthy, capable of offering them a range of low-cost funds and some personal investment advice.

Of the robo-advisers in the UK, the largest is Nutmeg. Launched in 2012, it has so far raised £71 million in five funding rounds from venture capitalists and others. Nutmeg has more than £600 million under management, though it remains loss making, and escalating marketing and advertising costs meant that in 2015 its losses widened from 2014.

Other UK players include Wealthify, launched in 2015; MoneyFarm, launched in Italy in 2012, and in the UK in 2016; and Scalable Capital, launched in 2016.

Brewin Dolphin has launched a robo-adviser that allows customers with between £10,000 and £200,000 to invest in one of six model portfolios at a cost of 0.7 per cent of invested assets, plus underlying charges of between 0.11 per cent and 0.16 per cent.

 

LendInvest out of P2P sticks to managing funds (Anonymous Email), Rated: A

Our sources reported that LendInvest cancelled their FCA application due to their decision to completely exit the p2p lending space.

As can be seen on the FCA website:

Firm name: Lendinvest Limited
Interim Permissions reference number: 658890

 

Permission Description Status Limitation Against Permission Permission End Date
Consumer credit business Entering into a regulated credit agreement as lender; and exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement. Inactive 02/06/2017
Credit brokerage Credit broking
Or
Credit broking limited to credit intermediation
Inactive 02/06/2017
No right to canvass off trade premises

It appears that this decision was due to the 36(H) legal rules around peer top peer in the UK . It has apparently become “more difficul to stay within the new 36(H) rules without becoming a bank or fund manager”. As LendInvest was already a fund manager, the company has decided to remain a fund manager and focus on that structure as opposed to applying for FCA p2p regulation.

In a similar fashion the online lender Wellesley has taken a similar approach having ‘paused’ P2P yet still shows as active.

This change makes Assetz Capital the 2nd largest business and property lender who is P2P in Europe. See

Of £295m lent, c £290m is P2P retail investors.

Kuflink Debuts Property-Backed Innovative Finance ISA & New Investment Options (Crowdfund Insider), Rated: A

UK-based peer-to-peer lending platform Kuflink has launched its Innovative Finance ISA (IFISA) and also two investment options. This news comes just a few months after the online lender received full authorization from the Financial Conduct Authority (FCA).

Assetz Capital bids to lend £300m after profitable year (Bridging&Commercial), Rated: A

Assetz Capital has revealed that it made a seven-figure pre-tax profit during the 2016/17 financial year, while revenues have now reached over £10m pa.
The peer-to-peer lending platform saw a total of £126m lent through it to SMEs between April 2016 and March 2017 with £38m of that total being achieved in the final quarter.

Assetz Capital claimed it would lend over £60m during the first quarter of this current financial year as it bids to reach £300m of lending for the whole of the year.

It’s time to bring ghost houses back to the land of the living – Lendinvest (Mortgage Solutions), Rated: A

As the Council of Mortgage Lenders has previously pointed out, even if the government managed to push the building industry into producing 300,000 homes across the UK each year, 90% of the housing stock that will exist by 2025 has already been built. If we are to tackle the housing issues we face, it’s not just down to increasing the rate at which new developments spring up – we need to make far better use of the houses we already have, too.

An obvious problem with some of these ‘ghost homes’ is that in their current condition nobody would want to live in them. They may have been ignored for years, falling into disrepair to the extent that they may actually be unlivable.

But these are exactly the sorts of properties that savvy investors may be looking for, the worst house on the street which can be done up, turned into a nice, respectable home and then sold on at a profit.

Londoners Borrowed £17B in New Mortgages in 2016, Wimbledon & Wandsworth Top Borrowers (Crowdfund Insider), Rated: A

Londoners borrowed another £17 billion in new mortgages last year as the affluent southwest London neighbourhoods of Wimbledon and Wandsworth topped the borrowing league table and and 17 of the top 20 areas for new mortgage lending last year are in London, reported European P2P lending platform Lendy.

The highest non-London area among for new mortgages is Maidenhead, which placed 11th out of the 2,717 postcode areas in the study.

AI savings platform launches £700,000 crowdfunding campaign (P2P Finance News), Rated: A

AN ARTIFICIAL intelligence platform that has partnered with RateSetter to help people save and invest is looking to raise £700,000 through crowdfunding.

The fintech firm, Plum, has launched a crowdfunding campaign on Seedrs, to build its team and platform.

NatWest trials AI compliance tool to ensure financial advice is spot on (Internet of Business), Rated: A

The UK bank will use the Recordsure compliance tool based on artificial intelligence (AI) from regulatory risk specialist TCC Group in order to record face-to-face and telephone conversations between the bank and its customers – with those customers’ consent, naturally.

The AI technology is able to analyze an interaction and then classify sections of the conversation, according to Recordsure’s creators. For example, it could determine which aspects of the conversation were general chitchat, which involved financial advice, and what topics were discussed.

P2PFA Announces New Associate Membership, Publishes Names of First New Members (Crowdfund Insider), Rated: A

The Peer-to-Peer Finance Association (P2PFA) has created a new category of membership to boost its ranks and add perspective to the association that represents the UK’s top online lenders.

These new members include:

  • Alterest – Provides non-bank lending markets with loan intelligence infrastructure that enables: seamless exchange of lending data in a secure and timely manner, and flexible analysis of performance and risk of any loan pool or exposure.
  • Altus Consulting: A specialist provider of consultancy services to the financial services sector.
  • Equifax: A global information solutions company that uses data, analytics, technology and industry expertise to power organisations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.
  • Fox Williams LLP: A City law firm with one of the leading Fintech practices in the UK, acting for over fifteen P2P lending platforms.
  • Grant Thornton UK LLP: A global consultancy that is part of a network of over forty-thousand people in 130 countries. In the UK they are led by 185 partners and more than 4,500 people.
  • Orca Money: A platform that is driving the mainstream adoption of peer-to-peer lending by providing research, analysis and tools to empower investors.
  • Simmons & Simmons: An international law firm with a Fintech team that comprises a range of multi-disciplinary lawyers from across their European, Middle Eastern and Asian offices.
  • TLT LLP: Supports large corporates, public institutions and high-growth businesses on their strategic and day-to-day legal needs.

Hive Project Launches Blockchain-Based Invoice Financing Platform, Targets SMEs (Finance Magnates), Rated: A

Despite being the backbone of every economy, small and medium-sized businesses have traditionally faced challenges in securing access to short-term financing from traditional lenders. To resolve this issue, the Hive Project today announced the development of a cryptocurrency invoice financing platform to help SMEs overcome the hurdles they face when trying to get the financing they need.

WiseAlpha Founder & CEO Rezaah Ahmad Comments on Successful Crowdcube Round (Crowdfund Insider), Rated: B

WiseAlpha, a UK first online lending platform that gives investors access to high yield institutional bond and loan investments, has overfunded its £500k target on Crowdcube by 258%, raising £1.29 million.

The largest single investment was £150K.

“We’re thrilled to have overfunded our original target and glad that the 1452 people who have invested in us so far are backing our vision of a fairer investment world where everyday investors aren’t shut out from accessing the biggest and best investments.”

UK P2P Lender RateSetter Update: Targets New Business Borrowers (Crowdfund Insider), Rated: B

Now the lender is planning to boost its direct marketing methods to diversify its new business borrowers sources, according to Peer2Peer Finance News.

Lewis appointed on b2b brief for p2p lending platform (PR Week), Rated: B

Lewis has been appointed by ArchOver, a peer-to-peer lending platform for UK SMEs, to run a campaign aimed at business audiences.

China

China changes tack on ‘social credit’ scheme plan (Financial Times), Rated: AAA

Beijing has pulled back on plans to license big technology companies to develop “social credit” scores for consumers, based mainly on their online activity, because of concern over conflicts of interest, industry analysts said on Tuesday.

The People’s Bank of China, the central bank, selected eight tech companies in 2015 — including e-commerce group Alibaba’s Ant Financial and game developer Tencent — to develop pilot programmes to give consumers credit scores.

The pilots, which monitored spending patterns but also personal behaviour and social media activity, initially raised concerns about consumer privacy. Some of their metrics were seen as irrelevant, including proposals to factor in exercise routines or what time of day people went online. Others were considered more sinister, such as efforts to rate “honesty” or “trustworthiness” by linking credit scores to friends’ social media posts.

Beijing has now decided not to award any licences this year after regulators expressed increasing concern about the potential for conflicts of interest.

MYbank Deepens Push for Business Big Banks Won’t Touch (Bloomberg), Rated: AAA

MYbank, the two-year-old Chinese online lender that already has 3.5 million small-business customers, plans to push deeper into a segment that’s long been shunned by the country’s largest banks.

MYbank wants to capitalize on its links to billionaire Jack Ma’s Alibaba Group Holding Ltd. by offering loans to the more than 10 million smaller merchants that use the company’s e-commerce platforms, MYbank President Huang Hao said in a June 29 interview. Ant Financial, Alibaba’s financial affiliate, owns 30 percent of the online lender.

Formally known as Zhejiang E-Commerce Bank Co., MYbank was able to more than quadruple its lending through 2016, taking its outstanding loans to 33 billion yuan ($4.9 billion).

Its nonperforming-loan ratio was around 1 percent, Huang said, lower than the national average of 1.74 percent. The bank’s technology, which runs loan applications through more than 3,000 computerized risk-control strategies, has kept delinquencies in check, he said.

Still, last year’s lending explosion came at a cost, dragging its capital adequacy ratio down to 11.07 percent by December from 18.51 percent a year earlier.

Chinese tourists are driving mobile payments across the globe (IBS Intelligence), Rated: A

The number of Chinese tourists abroad hit 122 million in 2016, with a vast majority of them paying via their mobile phones. That’s according to a new study from Kapronasia and CANCAN. The survey pool contained 1,000 Chinese consumers abroad and 60 global merchants.

While 67% of respondents reported that they use Alipay or WeChat Pay for overseas purchases. This represents about 41% of overseas consumption and tourists used mobile payments for more than 10% of total transactions.

The report also highlights how Chinese tourists are spending more and more in retail ($900 on average in 2016), instead of luxury items. Only 5.7% spent more than $6,288, with a total amount of $109.8 billion throughout 2016.

80% of merchant respondents cited consumer demand as one of the main reasons for adopting mobile payments, with 70% adding that mainland Chinese consumers were their largest source of global revenue. Clothing, makeup, skincare, food and beverages top the list of goods purchased with mobiles, with travel and accommodation not far behind.

UAV Startup Clobotics Raised its First Round of Financing from GGV Capital (Xing Ping She), Rated: A

Recently, a Shanghai-based Unmanned Aerial Vehicle (UAV) startup—— Clobotics finished its first round of financing from GGV Capital, the amount was not disclosed. According to George Yan, the founder and CEO of Clobotics, this round of financing will focus on developing and iterating their products and technology, expanding the marketing layout, and accelerating the development of Clobotics in the key vertical field.

Set up in November 2016, Clobotics is a provider of business intelligence (BI) and visualizing data, focus on the research of UAV machine vision, industrial big data acquisition, and cloud big data processing and analysis. Unlike many of the domestic manufacturers that focus on hardware plane, Clobotics is good at using leading software, technology and platforms to embed advanced technologies in the field of artificial intelligence, so as to fully explore the value of UAV-collected data.

Police Arrest 32 Employees of Company Behind ‘Straddling Bus’ (Sixth Tone), Rated: B

The test site of China’s fantastical traffic-straddling bus was dismantled in June, and now the peer-to-peer financing company that backed the project is being investigated for illegal fundraising.

Following reports of unlawful conduct, a total of 32 suspects at Beijing-based Huaying Kailai Asset Management Co. Ltd. have been arrested, according to an announcement Sunday by Beijing police on their Weibo microblog.

European Union

Investor protection vs Access to Finance: The Growth of Alternative Finance (Crowdfund Insider), Rated: AAA

Clearly in Europe (Brexit aside) the UK has led sector growth. A combination of a culture of entrepreneurship and risk taking has combined with a supportive government and a regulatory body tasked with a mission of fostering competition – perhaps to the frustration of traditional financial firms. The rise of internet finance in the UK has engendered few occurrences of fraud to date. Growth has been sustained. Perhaps the Brits have gotten the balance right so far?

But which country has the largest alternative finance market in the world? China, of course.

Kleverlaan points to Italy as a country that has stumbled out of the gate. Something the country is attempting to rectify with recent rule changes specifically targeting equity crowdfunding.

View the full report on alternative finance here.

The European Investment Bank Pledges €18.5 million to Finance Continental European SMEs through Lendix (Crowdfund Insider), Rated: A

The European Investment Bank Group (EIB) through the European Investment Fund (EIF) has announced that it will provide €18.5 million to back a joint investment fund designed to lend money to SMEs through crowdlending platform Lendix.

Swedish tech elite’s darling startup Karma just bagged $ 4 million for its hyper-growing food waste app (Business Insider), Rated: A

Swedish startup Karma has built an app that helps restaurants, grocers and cafés reduce their food waste by selling their surplus to consumers at reduced prices.

The company has now raised between 30 and 40 million SEK ($3,5 – $4,7m) to take on Europe after a booming start in its Swedish home market.

The seed round comes from Swedish investor Eequity and global VC fund e.ventures, which has also backed the hyped Swedish fertility app Natural Cycles.

P2P Lender VIAINVEST Hits €10 Million in Funded Loans (Crowdfund Insider), Rated: A

Newly launched peer to peer lending platform VIAINVEST has announced topping €10 million in loans. The 7 month old Latvian platform said consumer loans issued by VIA SMS Group, came from the Czech Republic, Poland, Latvia and Spain.

Australia/New Zealand

Xpress Super and Australian P2P lender RateSetter announce partnership (Finder.com), Rated: A

RateSetter, Australia’s largest peer-to-peer lender, and self-managed-superannuation-fund (SMSF) administrator Xpress Super have today announced a partnership.

Through the partnership, SMSF investors will now have direct access to their RateSetter account via the Xpress Super platform, making it easier for SMSF investors to lend to creditworthy borrowers.

Introducing HashChing – an online marketplace for home loan deals (sa real estate news), Rated: A

Based in the heart of Sydney, HashChing is Australia’s first online home loans marketplace for broker-negotiated home loan deals.

All mortgage brokers are verified and rated through the website Artificial Intelligence Algorithm, selecting the brokers who offer the best services and then recommending them to borrowers in their area. Similar companies that had paved the way before HashChing had simply listed rates to the consumer through the bank or lender’s website.

Home loan rates on HashChing start from 3.59% p.a. and consumers can browse through the home loan deals page to see what offers are available.

Currently the company has helped over 14,500 borrowers with their home loan enquiries, all worth more than $7 billion dollars combined. Of which, $6 billion has come in the last 12 months alone, and the company also currently lists more than 600 verified mortgage brokers – including 30 mortgage brokers from SA.

Colliers’ alternative to bank funding (True Commercial), Rated: B

A new Colliers International service is providing an alternative to traditional bank funding by matching commercial property investors to development and investment opportunities.

The Capital Sourcing unit was established by Tim Lichtenstein, who has a track record in capital raising for commercial real estate assets.

India

UrbanClap Raises $ 21M in Series C (BW Disrupt), Rated: A

Home services start-up firm UrbanClap has raised $21 million in a series C funding round led by Internet investment fund Vy Capital. Led by Alexander Tamas, Dubai-based Vy Capital is a major investor in Zomato.

Early investors SAIF Partners, Accel Partners and series B investor Bessemer Venture Partners also participated in the round. Existing investors also spent approximately $1 million more to buy shares held by some employees and a part of stakes of angel investors Kunal Bahl and Rohit Bansal, the founders of Snapdeal, UrbanClap co-founder Abhiraj Bhal told LiveMint.

Reliance Capital arm invests $ 1 mn in P2P lending platform Billionloans (VC Circle), Rated: A

Billionloans Financial Services Pvt. Ltd, a Bengaluru-based fintech startup that operates a peer-to-peer (P2P) lending platform, has raised $1 million (around Rs 7 crore) in seed funding from Reliance Corporate Advisory Services Ltd, a wholly owned subsidiary of Reliance Capital Ltd.

Asia

Peer-to-peer loans pass 300 billion won for first time (Korea JoongAng Daily), Rated: AAA

The number of peer-to-peer loans more than doubled in just six months, going from 96.9 billion won ($84.5 million) in June last year to over 300 billion won in December.

The change represents a 220.5 percent increase, according to data provided by the Financial Supervisory Service and Financial Services Commission.

The number of users also surged 116.6 percent to 6,632 in June compared to December’s 3,062.

Singapore fintech startup Instarem raises $ 13 mn to expand payment infra (VC Circle), Rated: A

Instarem, a Singapore-headquartered cross-border payments company founded by Indian-origin entrepreneur Prajit Nanu, has raised $13 million in a Series B funding round led by Chinese venture capital firm GSR Ventures, a company statement said.

Singapore fintech startup Validus Capital raises US$ 2.9M to grow SME lending platform (e27), Rated: A

Singapore-based fintech startup Validus Capital has raised S$4 million (US$2.9 million) from Vertex Ventures.

It will use the newly-raised round to expand regionally and grow its online lending platform.

Chinese investors eye Indonesia’s P2P lending marketplace Investree for Series B (udaipur kiran), Rated: A

Indonesian peer-to-peer lending marketplace Investree announced recently that Chinese investors have initiated discussions for an investment in the company for its next Series B round.

If successful, the deal will become one of the first international investments in Indonesia’s fintech space. Previously, the startup has raised an undisclosed Series A round in 2016 from local venture capital Kejora which typically invest US$2 to US$5 million in their portfolio firms.

Authors:

George Popescu
Allen Taylor

Wednesday June 14 2017, Daily News Digest

nonprime mortgages

News Comments Today’s main news: Misys, D+H team up to launch Finastra. Fundrise intros first real estate robo-advisor. UK businesses find it harder to get a loan. Singapore Life gets insurance license. Faircent offers online lenders ‘What-If’ scenario simulations. Today’s main analysis: Does anyone remember how to make a subprime mortgage? The most up-to-date numbers for Prosper, RateSetter. Today’s thought-provoking […]

nonprime mortgages

News Comments

United States

United Kingdom

Asia

European Union

International

Australia

India

MENA

Canada

News Summary

United States

Launch of Finastra (D+H), Rated: AAA

Today Misys and D+H have joined forces to create a diversified global financial software provider, unmatched in terms of depth and breadth of solutions. Operating under the new company name Finastra (www.finastra.com), the combination will create the third largest financial services technology company in the world. The company has approximately 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally. This follows the acquisition of D+H by Vista Equity Partners, which already owns Misys, creating a merger of two highly complementary financial technology providers.

Finastra will be led by Nadeem Syed in the role of Chief Executive Officer. Mr. Syed was previously CEO of Misys and has over 27 years of experience leading global technology companies through transformation and growth. The company has U.S. $2.1 billion* in revenues and has offices in 42 countries around the world. It will be headquartered in London, UK, maintaining North American headquarters in Toronto, Canada.

Finastra offers the broadest set of retail banking, transaction banking, lending, and treasury and capital markets software capabilities available in the world. The company’s open architecture and approach enable financial institutions to harness the power of software ecosystems and will be delivered on premises, hosted or via the cloud. With the increased scale and geographic reach, Finastra will be able to serve customers better, regardless of their size or geographic location – from global banks, to community banks, credit unions, and corporations. Using the company’s secure and reliable solutions, customers will be empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to deliver a superior customer experience, both now and in the future.

Having long pursued a progressive vision of innovation within both businesses, Finastra will strive to further unlock the potential of people and businesses by executing the product strategy of ‘Protect, Extend and Innovate’. This includes protecting our customers’ investments in all of our solutions; extending the value of our solutions by integrating new products and services; and innovating to create the best-in-class solutions. Finastra will work in partnership to help customers transform their business, and become more agile, innovative, and resilient to better meet their evolving needs.

Finastra will be privately held.

Retailpocalypse: Bank branches are closing in droves (Tearsheet), Rated: AAA

There may be no physical institution as historically revered as a bank.

Nice try. Banks these days are hardly elegant or imposing. Most have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period and Citi closed 302 (28.5 percent).

Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience.

While those in the banking industry feel there will always be brick-and-mortar branches, in large part because the business of banking is grounded in trust, and in knowing the person with whom you’re working, the move to digital technologies is expected to grow exponentially.

Fundrise Revamps Service with First Ever Robo-Advisor for Real Estate (Crowdfund Insider), Rated: AAA

Fundrise, one of the leading online investment platforms for real estate, has launched the “2.0” version of their platform. Fundrise has created a Robo-Advisor focused on real estate thus providing an investing tool to match individual investor needs.

The Fundrise Robo-advisor enables individual investors to create a highly diversified real estate portfolio accessing Fundrise’s growing number of eREIT’s. The service provides an estimate based on submitted variables to extrapolate potential returns. Fundrise estimates users will save up to 40% on fees versus traditional services.

Does Anyone Remember How to Make a Subprime Mortgage? (WSJ), Rated: AAA

Brokers willing to learn the lost art of making risky mortgages are in demand again.

Mr. Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of efforts to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis.

Brokers are a key part of a mortgage chain that starts with a borrower going to a broker for a loan. The broker surveys lenders for the best loan to fit the customer. The lender then funds the borrower’s loan.

While brokers before the crisis served banks and independent lenders, today they are working largely for nonbank lenders who make up a critical part of the mortgage market.

In the first quarter, nonbank lenders accounted for about half the mortgages originated in the U.S., according to industry publication Inside Mortgage Finance.

In the first quarter, nearly a decade after the start of the housing crisis, lenders originated just $6 billion in loans to borrowers with less than stellar credit scores or who are using alternative documentation to prove income, a category now known as “nonprime,” according to Inside Mortgage Finance.

In all of 2016, they originated $22 billion in loans, according to Inside Mortgage Finance. Back in 2005, at the peak for such loans, lenders made about $1 trillion of these mortgages.

Meanwhile, the volume of loans produced by mortgage brokers dropped to $37 billion in this year’s first quarter, down about 34% from the last three months of 2016. Loans from brokers peaked at around $1.1 trillion in 2003.

‘Fintech’ startup SoFi moving into traditional banking (Seattle Times), Rated: A

NEW YORK (AP) — Online lender and financial startup SoFi has taken the first step toward competing with the nation’s biggest banks on their home turf: the checking account.

The company, however, will have back-office operations in both Delaware and Salt Lake City, Utah.

In its application to the Federal Deposit Insurance Corporation, SoFi plans to fund its new bank subsidiary with $166 million in capital.

Student Loans Are Holding Back Entrepreneurs. SoFi Is Changing That (Inc.), Rated: A

All your life, you’re told that an education will set you up to fulfill the American dream. But once you graduate, you’re faced with onerous payments that seem to hardly dent the principal. You need a steady job, stat. It’s terrifying to forgo a salary to start something new, let alone invest your assets, when you’re obligated to make monthly payments that can reach thousands of dollars.

One startup is helping its users get ahead of their debt and start the new ventures that our economy needs to thrive. SoFi (short for Social Finance) is largely known as the startup that will refinance your student loans, though it aspires to encompass its members’ entire financial lives.

Nevertheless, student loans are SoFi’s bread and butter, a reflection of the generation of Millennials saddled with insurmountable-feeling debt. That’s why, in addition to its unemployment support and career coaching, SoFi has an entrepreneurship program. The benefits include six months of loan deferment, mentorship resources such as connections to investors, and networking with other entrepreneur members.

Of course, SoFi can’t single-handedly revive American entrepreneurship, not least because the cohorts of accepted entrepreneurs are limited, and the types of businesses that SoFi favors skew toward scalable tech startups rather than conventional small businesses. But student loan relief has a definite impact on the participating SoFi members’ ability to launch companies.

Fundrise Offering Circular (Disclosure Quest), Rated: A

We are offering up to 5,000,000 shares of our Class B Common Stock to the public at $5.00 per share. This offering commenced on February 1, 2017 and as of May 30, 2017, we had settled approximately 2,884,129 shares of our Class B Common Stock of the 3,000,000 shares that we had previously qualified for sale. We are including in the offering an additional 2,000,000 shares of our Class B Common Stock to be sold pursuant to this offering circular.

Disruptor Alert: These 2 Companies Are Changing Banking (The Motley Fool), Rated: A

Square (NYSE:SQ) has disrupted the mobile payment market, and could still be in its early innings of growth. Over the past year, Square’s stock has more than doubled, thanks to its impressive and better-than-expected growth and optimistic forecast.

Over the past year alone, Square’s payment volume increased by 33% to over $13.6 billion, and the company is on the verge of becoming profitable. Plus, Square’s services and subscription revenue more than doubled year-over-year, and has tremendous long-term growth potential.

P2P lenders aren’t the only players in the unsecured lending space anymore — some of the biggest names in the industry are getting involved, which could certainly shake things up in the years to come.

One in particular I have my eye on is Goldman Sachs (NYSE:GS).

Goldman first announced its intention to get into the consumer lending business in 2015, and after a couple of years of development, the company recently launched Marcus (named for Marcus Goldman, one of the bank’s founders), its new lending platform that offers personal loans of up to $30,000.

According to a report by TransUnion, nearly 16 million people took out an unsecured loan in 2016, the highest on record. With an average balance of $7,640 and average interest rate of 12%, this translates into a billion-dollar revenue stream if Goldman can build its market share to just 7%.

IMAGE SOURCE: LENDING CLUB INVESTOR PRESENTATION.

Cadre Raises $ 65 Million in Series C Financing, Led by Andreessen Horowitz (BusinessWire), Rated: A

Cadre, an online investment marketplace providing access and insight into institutional quality alternative assets, today announced a $65mm Series C financing round led by Andreessen Horowitz, with additional participation from Jim Breyer of Breyer Capital, Ford Foundation, General Catalyst, Goldman Sachs, Khosla Ventures, and Thrive Capital. Cadre’s existing investors include DST, Founders Fund, SL Green, and others.

Envestnet | Yodlee Unveils Personal Financial Wellness Solution Powered by Data Intelligence (PR Newswire), Rated: A

Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced the launch of its Personal Financial Wellness Solution at the Digital Banking Summit. The Envestnet | Yodlee Personal Financial Wellness Solution is a suite of applications and APIs that leverages enriched data and artificial intelligence to move beyond organizing historical financial data, helping financial institutions and fintech developers provide actionable, financial guidance to their customers across a spectrum of devices, user interfaces and platforms.

The Envestnet | Yodlee Personal Financial Wellness Solution enables financial institutions and fintech developers to provide actionable tools to help consumers identify their projected OK to Spend balance and easily Save for a Goal. By applying Envestnet | Yodlee’s advanced data intelligence to its enriched transaction data of over 15,000 data sources, financial service providers can derive actionable information from consumers’ financial data in order to measure, guide and improve consumers’ financial health.

OK to Spend

Core to the Personal Financial Wellness Solution is OK to Spend, which synergizes predictive analytics and user feedback to deliver smart financial forecasting. OK to Spend can be consumed as a financial application or a fully RESTful API framework that enables financial service providers to create forward-looking forecasts that organize and predict recurring income and financial obligations along with personalized notifications for financial events and projected balances. OK to Spend analytics is run across the consumers’ primary spending accounts (cash and credit card) regardless of which financial institution they primarily bank with, in order to provide a holistic view of their finances.

Patent-protected machine learning and data analytics enable the OK to Spend algorithms to identify sources of recurring income and accurately predicts future income, accounting for anomalies. Similarly, OK to Spend identifies recurring and forecasted financial obligations, while accounting for fluctuations determined from historic data.

Save for a Goal

The Save for a Goal application allows consumers to easily set and track savings goals. The application facilitates money movement across different accounts at a specific time frequency and allows customers to better track their goals by allowing consumers to allocate multiple goals to a single account, or spread a single goal across multiple cash and investment accounts. Save for a Goal provides visual data and notifications such as progress bars, charts, graphs and alerts, engaging customers with the option to flex and prioritize between goals.

The First In-Depth Report of the Single Family Real Estate Investor – the Iceberg Report (Newswire), Rated: A

The role of the individual and institutional single-family residential investor is highly undervalued and tremendously under-appreciated. About 10 million individuals, businesses and institutions provide secure housing and jobs for millions of average Americans. 67 million souls live in single-family rentals, a million more properties are added each year employing millions of individuals, to buy, renovate, lease and maintain as safe housing for tenants in affordable to luxury markets.  Single-family rentals have been discovered as a low-risk passive income revenue source and a growth asset in a balanced portfolio or personal retirement plan.

Using Harris Poll, single-family real estate investors were surveyed nationwide to understand why, where, what and how they invest and manage these properties to provide stable housing and realistic returns on their personal and company investments.

The report touches several other critical components that shape this market. Key among these are how the single-family real estate investor effects the economy, how investors view their properties (as added rental income or as an intentional business goal), investor decision points, and the investor as a customer,” says Steve Murray, Founder & CEO Real Trends.

To download your free copy of the Iceberg Report Executive summary, please go to

Want to Bring More Services to Your Clients? There’s A FinTech for That (CPA Practice Advisor), Rated: A

These days, there are few “typical” CPA firms left. As they seek to diversify, differentiate and grow by offering their clients value added services, firms are engaging in a much wider range of activities.

With the rise of a new generation of B2B financial technology companies, or Fintechs, the opportunities for CPA firms to offer new services have never been better.

Fintechs are infiltrating every aspect of B2B financial services, and venture investment continues to pour in. Where people used to look to QuickBooks, Oracle and SAP, now there are cloud-based accounting and ERP options like Xero and Freshbooks and NetSuite and Workday. But you probably know about those.

What you might not know is that Fintechs are moving into e-invoicing, expense reporting, data sharing and protection, compliance, tax management and fraud control. They’re executing specific parts of the banking value chain better, cheaper and faster, including lending, trade finance, and payments. Some are even considering becoming banks themselves.

Fintech solutions solve the whole thing– all types of payments and all the work that goes along with the payments. Companies can make 80 percent or more of their payments electronically, and that saves a lot of resources, especially if you’re a BPO writing hundreds of thousands of checks on behalf of your clients. You could be helping them get a lot more card rebates instead.

But what visibility really does is open up more opportunities for CPA or audit or BPO firms down the road. If you’re a BPO, visibility into payments could potentially help you work better with vendors.

The more you can help clients automate, the more nimble they are and the more nimble you are.

Goldman Sachs Bank Aggressively Going After Deposits (Lend Academy), Rated: A

So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.

For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays.

Allstate, Marketplace Lending Association and others fly in (Politico), Rated: A

All sorts of interest groups are flying in this week to nab some time with lawmakers before the July 4 recess.

The Marketplace Lending Association, a trade group that represents digital financial and lending startups, is in town this week for its first-ever fly-in, meeting with lawmakers and regulators. “The goal is to bring Washington up to speed on the growth of the sector, as well as the emerging partnerships between the fintech member firms and banks,” according to the group. Its member companies include Lending Club, Prosper, Funding Circle, Avant, Marlette Funding and Affirm.

FINRA Establishes Innovation Outreach Initiative For FinTech (ETH News), Rated: A

On June 13, 2017, The Financial Industry Regulatory Authority (FINRA) declared the establishment of the Innovation Outreach Initiative, in order to properly assess FinTech‘s industry impact.

FINRA’s Innovation Outreach Initiative comes after the launch of its FinTech site that’s dedicated to emergent topics in the field, and literature on blockchain technology and digital investing.

The initiative will consist of program elements, such as enhancing FINRA’s processes, timely publication of regulatory technology applications, regional outreach roundtable discussions (comprised of FINRA members and nonmembers), and the creation of a FinTech Industry Committee. The committee will help to assist with ongoing discussions about how FINRA’s programs and rules will intersect with FinTech innovations.

Online Lending Policy Institute Names Board of Governors (OLPI Email), Rated: B

The Online Lending Policy Institute (OLPI), a voice for policy analysis, in-depth research, and education for the online lending industry, today announced its Board of Governors, a group of industry experts ranging from academics to lawyers to executives from twelve leading organizations. This newly elected group joins founding members of OLPI: Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans.

The Board of Governors are:

  • Frank Borchert, General Counsel, Marlette Funding/ Best Egg
  • Colin Darke, General Counsel/Chief Compliance Officer, RocketLoans
  • Dr. Michael Dooley, Chief Economist, SoFi; professor of economics UC Santa Cruz
  • Marc Franson, Managing Partner, Chapman and Cutler LLP
  • Michael Freedman, General Counsel, BorrowersFirst, Inc.
  • Gilles Gade, CEO, Cross River Bank
  • Adam Goller, Chief Credit Officer, Cross River Bank
  • Cornelius Hurley, Director, OLPI; professor Boston University
  • John Kromer, Partner, Buckley Sandler LLP
  • Robert Linderman, General Counsel, Freedom Financial Network, LLC
  • Tim Li, CEO, Kuber Inc.; professor Fintech School
  • Marshall Lux, Senior Fellow, Harvard Kennedy School
  • Marty Mitchell, Managing Director, ProBank Austin (formerly Professional Bank Services)

DiversyFund Announces New Luxury Investment With Roman James Design Build (Digital Journal), Rated: B

DiversyFund, Inc., a fast-growing full-service online real estate investment platform, announced the next ground-breaking real estate investment project that their partnership with Roman James Design Build will undertake. DiversyFund and Roman James will be building a new ultra-luxury in Hollywood Hills, one of the most exclusive neighborhoods in Los Angeles.

This investment opportunity is located at the end of Granito Drive in the prestigious Hollywood Hills community of Los Angeles, California, home to Hollywood celebrities, professional athletes and Fortune 500 CEOs.

Congressional Testimony on Fintech Innovation: “Today We Are Following Not Leading” (Crowdfund Insider), Rated: B

This past week the House Subcommittee on Digital Commerce and Consumer Protection, part of the Energy and Commerce Committee, held a hearing on Fintech innovation as part of their disruptors series.

Van Valkenburg called on Congress to “rationalize the chaos of financial regulation,” pointing to the horrifying reality there exists a byzantine environment of state and federal regulators that, well simply put, doesn’t make sense.

United Kingdom

London leads European fintech investment despite Brexit (Financial News), Rated: AAA

London-based fintech companies attracted more than three times as much capital in the first quarter as Berlin – Europe’s second largest fintech investment hub – and maintained its market share despite moves by other cities in the region to gain from the UK’s departure from the EU.

New research from data provider FinTech Global found six cities that stand out in Europe’s fintech arms race, with companies based in London, Berlin, Stockholm, Paris, Barcelona and Amsterdam raising $823m in the first three months of 2017.

Overall European investment stood at $1.2bn, with London claiming a 36% share at $421m — more than treble the $140m investment in Berlin-based companies, according to the research.

Over the previous three years, London accounted for 39% of European investment, suggesting that the impact of last year’s Brexit vote has been slight.

UK businesses looking for finance are finding it harder to get a loan (Business Matters), Rated: AAA

With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance reveals how credit conditions look to be tightening again, with over 400,000 small businesses now interested in finding an alternative to the banks for a loan.

When asked, 32 per cent of SMEs that had considered raising finance said that it was now harder than six months ago.

As banks are progressively closing their branches and cutting back on front-line staff, businesses now need to go elsewhere to benefit from face-to-face contact before borrowing money. With over a third of small businesses preferring to seek advice in person, the move to online-only offerings and the closure of physical branches is a concern.

Hive ICO – the first crypto currency invoice financing platform for SMEs (Daily Fintech), Rated: A

Hive claims it will be the first crypto currency invoice financing platform for SMEs, with its ICO opening in 4 days and closing at the end of July.

From what I can gather – and I’d say you’re best to verify this yourself – Hive tokens give holders the right to participate in the network and generate a return by funding invoices. The carrot for small business owners is the speed of execution of the financing element.

And while I was lucky enough to get a master class in person, if you haven’t yet got your head around tokens and ICO, these articles are worth a read:

Asia

OBTAINING DIRECT LIFE INSURANCE LICENSE BY SINGAPORE LIFE (Credit China Fintech Holdings Limited), Rated: AAA

This announcement is made by Credit China FinTech Holdings Limited (“Company”) on a voluntary basis.

Reference is made to the announcement of the Company dated 26 April 2017 in relation to the Investment in Singapore Life (the “Announcement”). Unless otherwise defined, the capitalised terms used herein shall have the same meaning as those defined in the Announcement.

The board of directors of the Company is pleased to announce that Singapore Life has been approved as a fully licensed direct life insurer by the Monetary Authority of Singapore.

Singapore Life will also soon offer life insurance solutions to customers through its online platform www.singlife.com and financial advisers.

European Union

French Fintech Under Macron’s Presidency One Month On (Forbes), Rated: A

On the other hand, as Grossman points out, ‘since Macron has publicly stated that innovation and disruption is key for France’s growth potential, his intention for closer integration with Europe has been broadly welcomed by the fintech industry.’ Macron seems to be pro-PSD and has invited those affected by Brexit to work in the technology sector in France, all are welcome under En Marche. The French president is also very supportive of SME growth and is interested in helping French Tech.

Macron’s initiatives so far are clearly in favour of the development of fintech in France and with billions promised for innovation, the president is returning to supporting this space, as he did with The Family in Paris, as Grossman points out.

International

What do the most up-to-date numbers in marketplace lending tell us? (AltFi), Rated: AAA

Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.

In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.

 

RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.

Sovereign wealth funds ramp up private debt investment (AltFi), Rated: A

Gargantuan sovereign wealth portfolios are increasingly turning to private debt exposure with almost two-fifths of portfolios now actively investing in the asset class due to its potential for stable risk-adjusted returns and portfolio diversification benefit.

The report found that 39 per cent of sovereign wealth funds now invest in the asset class, an increase of five percentage points over the past 12 months. The majority of sovereign wealth funds with over $10bn in assets now allocate to the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.

Libyan Investment Authority is one such investor in private debt that allocates to the asset class as part of its private equity portfolio. The fund targets distressed debt and mezzanine funds in Europe, North America and MENA.

Mezzanine investments are the private debt fund type most appealing to sovereign wealth funds, with 70 per cent targeting the strategy over the next 12 month and direct lending is sought by 53 per cent.

Australia

Australia and Hong Kong seal fintech cooperation agreement (ZDNet), Rated: A

The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.

Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.

India

Now online money lenders can simulate ‘What-if’ scenarios on Faircent (Techseen), Rated: AAA

India based Peer-to-Peer lending website, Faircent, has announced the launch of what it claims to be a first-of-its-kind Portfolio What-if Analysis (PWA) tool on its platform. According to the company the tool will allow lenders to simulate different loan scenarios and understand how multi-loan portfolios in peer-to-peer lending operate through a ‘What-if’ analysis.

Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).

Rupaiya Exchange Receives Award for Best Peer-to-Peer Lending Platform in India (PR Newswire), Rated: A

Rupaiya Exchange received the award for Best Peer-to-Peer Lending Platform in India in The Asian Banker Financial Peer-to-Peer Audit Awards Programme 2017. The awards ceremony was held in conjunction with the prestigious Asian Banker Future of Finance Summit 2017, the foremost annual meeting for decision makers in the financial services industry in the Asia Pacific region, held at the Asian Civilisations Museum, Singapore.

The awards evaluation criteria were based on multiple dimensions including financial performance, risk management processes, technology, innovation and strategy.

Online Peer-To-Peer Lending (BusinessWorld), Rated: A

Facilitating simple, fast, and tech-enabled banking services, the emergence of fintech is forcing banks to rethink old business models and delivery mechanisms to adopt a more technology-driven and consumer-centric approach to retail banking.

Leading this ‘uberisation’ of financial services is the online P2P (peer-to-peer) lending sector, which is driving disruption in the institutional lending space through its simplified, tech-enabled approach. What this also means is that online P2P lending will play a significant role in driving the Indian economy.

The adoption of technology means that loan approvals and disbursals can be facilitated in as little as 24 hours from the request origination, whilst digitised operations and processes allow for minimisation of overhead costs. This translates to greater benefits for all stakeholders; while borrowers pay lower interest rates and processing fees, lenders earn higher margins and returns on their investments.

MENA

MBRF, Beehive to offer start-up finance solutions (Gulf News), Rated: AAA

Dubai SME’s financial arm and peer-to-peer lending platform Beehive had signed a memorandum of understanding (MoU) to aid financing for small and medium enterprises (SMEs).

The MoU between Beehive and the Mohammad Bin Rashid Fund (MBRF) will make it easier for SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.

Under the deal, MBRF would act as a guarantor for credit of up to Dh500,000 on SME financing for a period up to 36 months.

Canada

Calgary-Based POS Lender LendingArch Expands into Quebec (Crowdfund Insider), Rated: A

LendingArch, a Calgary-based online and point-of-sale lending platform, announced its expansion to Quebec. LendingArch has partnered with medical clinics and home improvement contractors in Quebec to offer POS financing options, enabling LendingArch to become a fourth in-store payment method by applying online to finance products or services for up to 36 months.

Authors:

George Popescu
Allen Taylor