Wednesday March 21 2018, Daily News Digest

fintechs

News Comments Today’s main news: Mike Cagney’s Figure is out of stealth. CommonBond raises $50M. Airbnb features RealtyShares as multifamily financing solution. Monzo hits 500K current accounts. LexinFintech falls short on Q4 earnings. N26 raises $160M. Today’s main analysis: Mortgage Rate Competition Index widens. Today’s thought-provoking articles: The death of cash could be overstated. The most popular cities for millennial homebuyers. The […]

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United States

Ex-SoFi CEO Mike Cagney’s new startup, Figure, is out of stealth (Fast Company), Rated: AAA

SoFi cofounder Mike Cagney, who resigned as CEO last year, has been quietly working on a new project involving home improvement financing and home equity lines of credit (HELOCs) for the last several months. Now, that project is out of stealth, with a live website: Figure.com.

According to Cagney’s LinkedIn profile, the startup plans to leverage blockchain-based technology and AI “to unlock new access points for consumer credit products that can transform the financial lives of our customers.”

The death of cash might be overstated (Business Insider), Rated: AAA

The decline of cash in the US might be exaggerated, according to Cardtronics and PYMNTS’ Global Cash Index (GCI).

Cash still sees healthy usage in the US: The share of cash in 2016 accounted for 12.6% of the country’s gross domestic product (GDP), and the study forecasts that it will account for 11.2% of the US GDP by 2021.

Here are three factors that might contribute to the endurance of cash in the US:

Source Business Insider

Cash persists for low-value transactions. Nearly two-thirds of US consumers said they prefer to rely on cash for purchases of $10 or less. That could be partly because it’s expensive for merchants to accept card payments, which leads to card transaction minimums that encourage cash usage for these purchases. This could help keep cash alive in consumers’ day-to-day lives.

Des Moines, Pittsburgh and Buffalo Among Most Popular Cities for Millennial Homebuyers (PR Newswire), Rated: AAA

LendingTree has released the findings of its study on the most popular cities for millennial homebuyers.

Young homebuyers are at the forefront of an increasing number of buyers returning to the housing market. The largest single-age population in the U.S. is 27-year-olds at almost 4.8 million, suggesting that millennials’ influence on the housing market has years to run before it peaks.

Millennial homebuyers make up one-third of mortgage requests. 32.5 percent of all mortgage requests through LendingTree between Feb. 1, 2017 and Feb. 1, 2018 came from consumers 35 years and younger. The average loan amount requested from this age group is $166,863.

Where millennials aren’t vying for homeownership. At the other end of the scale, Sarasota, Fla.Fort Myers Fla. and Honolulu had lowest shares of millennial buyers at 17.9 percent, 19.8 percent and 21.8 percent respectively.

Source: Lending Tree

CommonBond Secures $ 50M Series D Equity Round, Led by Fifth Third Bancorp (MarketWatch), Rated: AAA

CommonBond, a leading financial technology company that empowers students and graduates to pay for higher education, today announced a $50M Series D financing round.

Fifth Third Capital Holdings, LLC, a wholly-owned subsidiary of Fifth Third BancorpFITB, -0.69% led the round, with First Republic Bank FRC, -0.49% and Columbia Seligman Investments also participating, in addition to existing investors including Neuberger Berman, August Capital, and Nyca Partners. Individual investors in CommonBond include Vikram Pandit, former CEO of Citigroup, and Tom Glocer, former CEO of Thomson Reuters. This latest round brings CommonBond’s total funding raised to over $130M. CommonBond will use this new funding to accelerate its growth and invest further in technology.

Airbnb Features RealtyShares as First Multifamily Financing Solution (Business Wire), Rated: AAA

RealtyShares, a leading online marketplace for commercial real estate investing, today announced it is featured by Airbnb as a financing resource in its Multifamily Properties Toolkit, a website that gives owners, operators and developers of multifamily buildings resources to support long-term tenants who wish to share their space with travelers. RealtyShares provides experienced multifamily building owners and operators financing to buy, refinance, and renovate their buildings.

Landlords can now manage Airbnb activity in their buildings and share in the additional rental income with the Airbnb Friendly Buildings Program. As a result, multifamily property owners have become increasingly interested in helping their tenants improve and share their space on Airbnb.

OnDeck Appoints Kenneth Brause As New Chief Financial Officer (Crowfund Insider), Rated: A

Online lending platform for small businesses OnDeck (NYSE: ONDK) announced it has appointed Kenneth Brause as its new Chief Financial Officer, effective March 26th, as part of a mutually agreed upon transition process. The lender reported that current Chief Financial Officer, Howard Katzenberg. Katzenberg will serve as an advisor to OnDeck until April 13th, working closely with Brause to facilitate a smooth transition.

According to OnDeck, Brause brings more than 30 years of experience in the financial services industry to the lender’s team.

 

 

Average Cost of College Statistics for 2018 (Lend EDU), Rated: AAA

No matter whether you attend a public or private school, or whether you attend a 2-year or 4-year college, you can expect to pay more than those who attended before you.

By checking out the graph to the right (which does​ not account for inflation) you can see that in the past 20 years, tuition at all types of colleges has more than doubled, and in some cases has more than tripled.

Source: Lend EDU

Though the graph does not account for inflation, the rate of tuition increase has greatly outpaced the inflation rate – by at least 3 times for most school types.

The following is the average cost-of-attendance for the 2017-18 school year by school type including tuition & fees, room & board, books & supplies, transportation, and any other expenses.

  • Private 4-Year Not-for-Profit: $50,900   
  • Public 4-Year Out-of-State: $40,940  
  • Public 4-Year In-State: $25,290  
  • Public 2-Year In-District:​ $17,580   
  • Private For-Profit: $16,000 (tuition only)
Source: Lend EDU
Source: Lend EDU

 

Mortgage Rate Competition Index Widens (Lending Tree) Rated: AAA

  • Homebuyers could have seen median savings of $27,980 by comparison shopping for the best mortgage rates last week, up 4.5% from the prior week.
  • This week’s Mortgage Rate Competition Index was 0.60 for purchase mortgages, up 0.15 from a year ago, and up 0.02 from last week. The Index measures the median spread between the highest and lowest APR available on the LendingTree platform.

Purchase loans

  • Across all purchase loan applications on LendingTree for the week ending March 18, 2018, the index was 0.60, up 0.02 from the previous week.
  • How big of a deal is it to nab a mortgage rate that’s 0.60% lower than the competition? Over 30 years, that could translate to $27,980 in savings on a $300,000 loan
Source: Lending Tree

Mortgage fintech company completes capital raise (National Mortage News), Rated: B

Home Captain, a fintech company that looks to increase mortgage-lead conversion rates, completed a Series A financing round led by Spring Mountain Capital.

Spring Mountain joined Second Century Ventures, the strategic investment arm of the National Association of Realtors, as an institutional investor in Home Captain, which pairs prequalified homebuyers with real estate agents.

Ken Rees, CEO of Elevate, to Speak at LendIt Fintech Conference (Business Wire), Rated: A

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced today that their Chief Executive Officer, Ken Rees, will address the audience at LendIt Fintech 2018 along with CNBC’s Ari Levy.

Rees will be joined by Levy, senior technology reporter at CNBC, who will lead the discussion through a variety of themes, including:

  • How banks and fintech companies can partner to take advantage of the opportunity in non-prime lending
  • What it takes to build winning products for non-prime consumers
  • Predictions for the biggest areas of innovation in non-prime lending in 2018 and beyond

Covr Financial Technologies announces Michael Kalen as Chief Executive Officer (PR Newswire), Rated: B

Michael Kalen has joined Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, as its chief executive officer, Covr Board Chairman Brian Finn announced.

U.S. Online Merchants Believe Instant Financing Will Drive Increased Sales (PNY), Rated: A

Online merchants in the U.S. are increasingly recognizing the importance of offering instant financing to shoppers, according to a new online e-commerce survey. Nearly two-thirds of retailers polled (64 percent) believe providing online financing options through their store is important to driving new and increased sales. Forty-six percent indicate it would decrease cart abandonment still one of the most critical challenges for online retailers today.

The survey was released here by Klarna, a leading global payments provider, at Shoptalk in Las Vegas.

Franklin Resources to Acquihire Random Forest Capital (Street Insider), Rated: B

Franklin Resources, Inc. (NYSE: BEN), which operates as Franklin Templeton Investments, today announced the acquisition of Random Forest Capital, LLC (“Random Forest”), an investment firm with expertise in data science and non-bank marketplace lending. Following the acquisition, the Random Forest team will join the Franklin Templeton Fixed Income Group investment team. Terms of the transaction were not disclosed.

New Florida law will loosen small-dollar lending rules (American Banker), Rated: B

Florida Gov. Rick Scott signed a bill Monday that will loosen the state’s rules for small-dollar consumer lending.

The law, which sailed through both houses of the Florida Legislature, authorizes 60- to 90-day loans of up to $1,000, while continuing to allow 30-day payday loans.

United Kingdom

Monzo Milestone: Challenger Bank Hits Half A Million Current Accounts (Crowdfund Insider), Rated: AAA

On Monday, UK-based challenger bank Monzo announced it has achieved half a million current accounts. The company launched its current accounts in October last year and since then, thousands of users have upgraded their accounts or signed up to start using Monzo’s banking products.

Monzo also reported that it will close the prepaid Beta on April 4th, so if users have not upgraded, their card will stop working and they won’t be able to use your Monzo app to make or receive payments.

Welendus goes live with interest-free loan offer (Peer2Peer Finance), Rated: A

PEER-TO-PEER payday lender Welendus has launched its first product, offering borrowers an interest-free loan if the debt is repaid in one day.

Individuals can borrow up to £500 using the new facility, which is aimed at those faced with unexpected or emergency bills, Welendus said. The borrower does not have to pay any interest if they pay the loan back within 24 hours.

There are no early repayment fees and borrowers can get a decision within five minutes.

Investors will receive returns ranging between five and 15 per cent to fund the loans.

Fintech referral platform bags series A fundraise (AltFiNews), Rated: A

Funding Xchange, one of a handful of platforms designated by HM Treasury to refer businesses declined credit by the banks to other sources of funding, has closed a £1.5m series A round.

The round was led by Calibrate Management Ltd and Kimera. The money will be used to continue the development of Funding Xchange’s automated decisioning technology, as well as for the incorporation of live transactional data sources.

Inflation finally falls but still beats savings returns (Peer2Peer Finance), Rated: A

INFLATION hit a seven-month low last month but there is little sign of respite for interest-starved savers as ISA season approaches, figures show.

Official for National Statistics (ONS) data shows consumer price inflation (CPI) grew by 2.7 per cent in February, finally falling from its five-year high of three per cent but still above the Bank of England’s two per cent target.

 

“But still, with inflation sitting at 2.7 per cent, savers’ cash is being eroded in real terms. In comparison to last year, savers would have found it difficult to get one per cent on an easy access ISA.”

Senior RBS fintech investment banker re-emerges at startup (Financial News), Rated: B

A former Royal Bank of Scotland investment banker, who led its coverage of fintech deals, has quit his private equity job after just five months to join a peer-to-peer lending startup staffed by former Goldman Sachs and HSBC analysts.

Rory McHugh, a former managing director at RBS, has joined Lendable, a UK-focused personal loans platform. Set up in 2014, the firm offers loans of up to £20,000 and raised £300m to lend to new customers in November.

Be a venture capitalist with an Innovative Finance Isa (The Times), Rated: A

Compared with cash Isas, Ifisas are as much a high-risk option as any loan that is not protected by the Financial Services Compensation Scheme (FSCS). This means that lenders cannot seek money from P2P borrowers that are unwilling or unable to pay money owed, whereas the scheme protects savings and investments offered by FSCS-authorised banks and other companies.

Source: The Times

There are more than 30 providers jostling for space and support from subscribers, with typical rates of return of between 3 and 7 per cent, as well as some offering up to 16 per cent. The interest rates on offer comfortably outstrip the 2 to 3 per cent attached to cash Isas. See our table, below, for a range of Ifisas presently available to new customers.

FCA calls for global effort to speed up fintech growth (NAI500), Rated: B

The Financial Conduct Authority has called for the creation of a global alliance of regulators that would encourage growth in fintech by allowing companies to test new products without going through a full approval process.

Speaking at the Innovate Finance Global Summit in London, Mr Woolard said expanding such a programme internationally would be “an immense undertaking”, but said “we’re up for the challenge”, having already seen “lots of interest” from other regulators.

China

Hot Chinese IPO LexinFintech Falls Short On Q4 Earnings, Revenue (Investors Business Daily), Rated: AAA

LexinFintech (LX) reported weaker-than-expected fourth-quarter earnings and revenue as the Chinese online lender issued its first quarterly report since its December IPO.

LexinFintech earned 4 cents per U.S. share diluted on revenue of $244.95 million. Analysts had expected EPS of 13 cents on revenue of $279.7 million, according to Yahoo Finance.

Shares tumbled 12.4% to close at 15.98 on the stock market today after rallying 5.3% on Monday to 18.25.

Loan originations rose 115% vs. a year, customer balances swelled 95% and registered users 99%. Acquisition costs per customer fell 22%.

Dow Jones Leads Morning Rally, But This FANG Stock Falls Further (Investors Business Daily), Rated: A

IPO Leader LexinFintech (LX) fell over 8% after the Chinese online lender reported weaker-than-expected Q4 earnings and sales results. The new issue has been volatile after a short-lived breakout above an 18.39 IPO-base entry on March 9. Just days later, the stock would trigger the 7%-8% sell signal before rebounding.

Golden Bull Limited Announces Pricing of Initial Public Offering (PR Newswire), Rated: A

Golden Bull Limited (“Golden Bull” or the “Company”) (NASDAQ: DNJR), an online finance marketplace that connects individual lenders with individual and small business borrowers, today announced the pricing of its initial public offering of 1,550,000 ordinary shares at a public offering price of $4.00 per share, for total gross proceeds of approximately $6.2 million before underwriting discounts and commissions and offering expenses. In addition, Golden Bull has granted the underwriters a 45-day option to purchase up to an additional 232,500 common shares at the public offering price, less underwriting discount and commissions.

 

European Union

The challenger bank N26 raises $ 160M ahead of U.S. launch (American Banker), Rated: AAA

The mobile-first bank N26 in Berlin has raised $160 million in preparation for its launch of a challenger bank in the United States.

All told, N26 has raised $215 million. Previous investors have included Peter Thiel’s Valar Ventures, Earlybird Venture Capital and Li Ka-Shing’s Horizons Ventures.

Part of the $160 million will be used on product development for the existing offering in Europe, according to U.S. CEO Nicolas Kopp. The rest — and he would not say how much this is — will be used for international expansion, most immediately into the U.K. and U.S. markets.

Swedish banks risk losing tens of billions of euros to fintech startups – here are the ones leading the charge (Business Insider), Rated: A

On Monday, the startup Enkla launched, causing a stir in the market. Their interest rate of 0,95 percent is well below the banks’ average interest rates and according to their CEO, Alexander Widegren, Enkla received about 2 billion euros (SEK 20 billion) in applications their first day, Di Digital reported.

Enklas goal is set to lend out 10 billion euros within 18 months.

The four largest Swedish banks, SEB, Nordea, Handelsbanken and Swedbank – which have a combined 75 percent share of the country’s mortgage market – all had a rough day on the stock market on Monday, which may have been caused in part by the emerging threat.

Australia

Australian SMEs favor alternate lending to fund business (Enterprise Innovation), Rated: AAA

Australian small and medium size enterprises (SMEs) are turning to non-banks to secure funding for their business. The latest issue of the Scottish Pacific SME Growth Index revealed that, between 2014 and 2018, the proportion of SMEs intending to use banks for funding has dropped from 38% to 24%. It also found that non-bank funding is now the first option for 22% of SMEs, up from 11% in 2014.

Moreover the report noted that 47.6% of SMEs, who have not used any non-banking lending options in the last 12 months, would be interested in using these options in the future.

There is an estimate 2.1 million SME businesses in Australia employing more than 7.3 million people or about 68% of Australia’s overall workforce.

Source: Enterprise Innovation

FinTechs To Surpass Banks As Aussie SMBs’ Top Finance Choice (PYMNTS), Rated: A

The “Scottish Pacific SME Growth Index,” released twice a year, found the portion of small businesses that said they would use banks for funding declined from 38 percent in 2014 to 24 percent in 2018.

Nearly half (47.6 percent) of SMBs that said they never used a non-bank to access financing said they would be interested in doing so in the future.

Asia

PT INVESTREE Radhika Jaya (Investree), a pioneer peer-to-peer lending (P2P) marketplace in Indonesia, is eyeing to close its Series B funding by the first half quarter of this year.

The company received an undisclosed amount of funding from Kejora Ventures in June 2016.

Investree has facilitated 600 billion rupiah (US$45 million) in loans to 330 SMEs, with 16,000 registered lenders, 5,000 active lenders between 21 to 40 years of age and has a return rate of 16.6% with no defaults.

In terms of business growth, Investree has seen 14% to 15% growth in revenue since 2016.

 

Latin America

Alipay breaks ground in Mexico (Finextra), Rated: AAA

Alipay, the world’s leading digital payments platform, operated by Ant Financial Services Group, today announced that it is further expanding its footprint in the Americas through a partnership with Openpay in Mexico.

Now, Alipay’s more than 600 million active users in China will be able to use Alipay to make purchases from Openpay’s affiliated businesses in Mexico. Alipay is China’s leading payment provider and the primary means of online and mobile payment for Chinese consumers.

Authors:

George Popescu
Allen Taylor

Wednesday July 26 2017, Daily News Digest

Lending Club loans

News Comments Today’s main news: Seedinvest cancels Sharestates’ Series A Offering. LendInvest bond issue. How Samoyed Financial is outsmarting Tencent, Alipay. Faircent launches auto-invest. MoneyMatch to replace 5-6 scheme in Philippines. Today’s main analysis: The state of business lending. Fintech lending: Financial inclusion, risk pricing, and alternative information. Today’s thought-provoking articles: How Goldman Sachs is disrupting consumer lending. How FCA consultations will […]

Lending Club loans

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News Summary

United States

Seedinvest cancels Sharestates Series A Equities (Anonymous Email), Rated: AAA

Seedinvest gave the investors this explanation, according to our anonymous source:

The closing was held up and we subsequently discovered new material information. Sharestates’ offering (i.e. the ability to make new investments) came to a close during Q1 of this year. As we were working through closing operations, we requested a final set of offering documents from Sharestates’ counsel. This request in and of itself took months to be satisfied. While reviewing the red-line version of these updated documents, our counsel discovered that Sharestates had begun distributing quarterly management bonuses using cash they were generating through normal course of operations. As a result, we do not recommend proceeding with an investment. We are also withdrawing our fund’s commitment. 

How Goldman Sachs Is Disrupting This Trillion Industry (The Motley Fool), Rated: AAA

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

In addition, there’s no legacy credit card business to worry about, unlike most banks that also make personal loans.

According to Talwar, Marcus customers enjoy rates that are 300 to 500 basis points lower than credit card interest rates, and Marcus’ loans come with no origination, prepayment, or late fees — a rarity in consumer lending.

The State of Business Lending in 2017, According to Small Business Owners (Fundera), Rated: AAA

The biggest factor that’s presently clouding small business lending is the post-financial crisis surge of alternative small business lenders. Fundera’s VP of Strategy, Brayden McCarthy (along with Karen Mills, former head of the Small Business Administration) identifies in his working paper on small business lending that tighter restrictions on lending were imposed on banks after the 2008 financial crisis. Because of these tighter restrictions, banks had their hands tied when it came to providing loans to small businesses—providing a space within the small business lending market.

Main Takeaways

  • Small businesses are mainly applying for offensive financing rather than defensive financing.
  • Small businesses are still overwhelmingly going to brick-and-mortar banks to apply for financing.
  • A disconnect exists between small businesses owners and educational resources made specifically for them.

When you look at the business owners we surveyed, they are, by-and-large, successful. 56% of the businesses surveyed had a revenue of greater than $100,000 a year, and 60% of those surveyed ran businesses that had been in business for five years or more.

Furthermore, 80.6% of the small business owners reported having a personal credit score of 650 or above, one of the most important parts of the business loan application, and 68% reported having a business credit score of 80 or above.

One of the more shocking results was that a mere 5.94% of the respondents sought business financing in order to refinance a loan.

Meanwhile, only 10.89% of respondents said they applied for small business financing with an online lender. 

That being said, our respondents demonstrated a preference for the experience of applying online. 57.23% applied for a business credit card online directly while another 16% applied online through an affiliate like Creditcards.com, Nerdwallet, or The Points Guy.

Our poll found that 89.73% of those polled checked their personal credit at least once a year. Meanwhile, within the same sample of small business owners, 58.19% don’t check their business credit score at all.

Even more, when we asked respondents if they would be interested in a free business credit check, 34.23% said that they were “not at all interested.”

FINTECH LENDING: FINANCIAL INCLUSION, RISK PRICING, AND ALTERNATIVE INFORMATION (Philadelphia Fed), Rated: AAA

In this paper, we explore the advantages/disadvantages of loans made by a large fintech lender and similar loans that were originated through traditional banking channels. Specifically, we use account-level data from the Lending Club and Y-14M bank stress test data. We find that Lending Club’s consumer lending activities have penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets. We also find a high correlation with interest rate spreads, Lending Club rating grades, and loan performance. However, the rating grades have a decreasing correlation with FICO scores and debt-to income ratios, indicating that alternative data is being used and performing well so far. Lending Club borrowers are, on average, more risky than traditional borrowers given the same FICO scores. The use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore get lower priced credit. Also, for the same risk of default, consumers pay smaller spreads on loans from the Lending Club than from traditional lending channels.

Download the white paper here.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2017 (PR Newswire), Rated: A

LendingTree today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the second quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

Mortgage Category

#1 Winner: Busey Bank

Personal Loans Category

#1 Winner: Avant

Business Loans Category

#1 Winner: RapidAdvance

Auto Loans Category

#1 Winner: RefiJet

Mobile banking startup Varo Money has applied for a bank charter (TechCrunch), Rated: A

But Varo Money, which provides a mobile-first banking product to consumers, is up to that challenge. In an effort to offer similar — but better — checking, savings and lending products to consumers, the company has applied for a national bank charter with the Office of the Comptroller of the Currency.

To get the company off the ground, Walsh raised $27 million from Warburg Pincus and spent the last two years creating a mobile-first competitor to existing checking accounts.

Meet the World’s First Robo-Lawyer for Real Estate Investing (PR Newswire), Rated: A

Bootstrap Legal, a legaltech and fintech startup, today launched software that automates the drafting of complex legal paperwork for those raising capital for real estate projects of $2 Millionand under. For the first time, real estate investors can draft their own legal offering documents using artificial intelligence. The new online service was launched in recognition of the changing marketplace of real estate investing. More and more smaller investors are able to access investment opportunities online. For platforms and issuers originating these offers, a streamlined and low cost service to provide necessary legal documents is vital.

This first-of-its-kind legaltech product both undercuts the legal fees associated with real estate capital raises and expedites the process. Real estate investors typically have limited time to raise capital for their project, and Bootstrap Legal’s new software allows users to control the legal process, so that they can have extra time to raise capital. Users who require additional assistance are connected to a real estate securities attorney to get questions answered.

These Bay Area FinTech Companies Are Revolutionizing The Lending Space (Benzinga), Rated: A

BeSmartee: BeSmartee is an artificial intelligence-powered lending and mortgage platform that originates documents, credit checks, and other financial information in just minutes.

Capsilon: Capsilon builds technology solutions for the mortgage industry’s most imperative challenges.

Credit Sesame: Credit Sesame is a fintech company that operates in the fields of education, credit, and personal finance.

Home Captain: Home Captain is a lending company that pairs clients with a pre-screened realtor in their area with the help of a real estate concierge throughout the way.

SuperMoney: SuperMoney compares financial products and services to give people the information they need to make better financial decisions.

CoinList Attempting to Standardize & Self-Regulate ICOs (Crowdfund Insider), Rated: A

CoinList, founded as a partnership between Angel List and Protocol Labs, is quietly trying to standardize initial coin offerings (ICOs) by self-imposing similar restrictions as the SEC imposes on companies that conduct certain private offerings under Regulation D.

CoinList, which was founded in part by AngelList, appears ready to launch token offerings on its site that are similar to the offerings available on AngelList’s site; that is, offerings regulated by the SEC under Regulation D. In order to invest in the offerings on CoinList, investors have to be “accredited” which is the same requirement that investors on Angel List have to meet as imposed by Rule 506(c) of Regulation D. However, since the SEC hasn’t come out with any guidance on ICOs and token sales yet, the requirement that investors be accredited on CoinList is one that is self-imposed by CoinList.

Why This Co-Founder Keeps His Calendars Public to His Employees (Entrepreneur), Rated: A

From client meetings to doctor appointments to family time, most things Sam Hodges does is public knowledge to his employees. All they have to do is check out his online calendar, which is set to “public” for employees. So why is this co-founder and managing director OK with letting others in on even his private life? Because at Funding Circle, Hodges says he fosters a culture of openness and transparency — in every respect.

“The first really crucial trait is around vision. As a leader your job is to understand the market, understand the business’ capabilities and then come back to the organization with a view on what you need to do in order to become successful.

“A second really vital skill is communication — being able to communicate in the right way with many different types of stakeholders.

“A third really important skill is problem-solving. In a leadership position, oftentimes what you face day to day are the things that are not going well and the opportunities that exist — so comfort with ambiguity, the ability to put structure around problems and the ability to be calm in the face of things blowing up.”

The Emotional Robo-Counselor For Your 401(k) (NASDAQ), Rated: A

So he co-founded Dream Forward, a 401(k) supplier that offers, as its website says, “Emotional Advisor A.I. technology.”

Easterbrook: The super high level of what we do is we’re selling 401(k) plans, fix all the obvious problems, lower the cost, make it easier to use, cause less headaches, no conflicts of interest, and then add conversational AI that employees can talk to about whatever they don’t understand, whatever the issues are.

Easterbrook: It looks like an online chat. It’s a chatbot. It’s designed to basically have 24/7 chat available to employees on whatever they don’t understand, whatever their issues are, whatever concerns they have. It talks to them in plain English in a way that we call it almost an emotional advisor instead of a robo-advisor.

AI 100: The Artificial Intelligence Startups Redefining Industries (CB Insights), Rated: A

Google can take on Amazon’s cloud dominance: PayPal co-founder (Fox Business), Rated: A

Tech companies are increasingly becoming more mobile and cloud based. According to Affirm and PayPal co-founder Max Levchin, Google’s (GOOGL) best bet to rival Amazon (AMZN) is through the cloud services business.

In his opinion, Google should diversify and focus on its cloud storage services as a means of competing and catching up to Amazon’s AmazonDrive.

A quick guide to what’s at stake in the SoFi charter controversy (American Banker), Rated: A

Social Finance’s application for an industrial loan charter has not only drawn opposition from a coalition of incumbent banks and community activists. It also serves as a microcosm of several perennial debates in financial services policy.

From complaints about an unlevel playing field to warnings about systemic risk, from giving back to the community to fostering innovation, here’s a rundown of the issues.

Why I Am Joining Affirm (LinkedIn), Rated: B

I’m excited to share that I recently joined Affirm as Head of Product to help build honest financial products that improve lives.

Affirm presents a new and unique opportunity for me at the intersection of technology, user experience, and financial services. If we’re successful, Affirm has the potential to be the most innovative and globally loved financial institution in the world.

4 Fintech Companies That Might Replace Your Bank One Day (Benzinga), Rated: B

Based in San Francisco, SoFi has changed the lending and wealth management space of fintech.

Wealthfront has introduced to the automated financial advisor to the world. Based in Redwood City, the company has deployed high tech software to follow market trends and create analysis for good investments. The automated financial investor manages risk, lowers taxes, and minimizes fees. Wealthfront’s trademark product, PassivePlus, combines high-level research experts with high-level technology to create a speedy and precise automated financial advisor.

Nerdwallet is the hub for free information on credit cards, banking, investing, mortgages, loans, credit scores, and more.

LendingClub Corp LC, based in San Francisco, allows people to invest and borrow money. The company offers personal loans, small business loans, auto refinancing, and now loans for medical treatments. Investors make monthly payments in order for investors to make a monthly return. Scott Sanborn is the CEO of the company, which has lent $26 billion and has over 1.5 billion customers.

United Kingdom

LendInvest Bond Issue (SyndicateRoom), Rated: AAA

Property investment platform LendInvest is launching a five year retail bond, offering investors a fixed rate of 5.25 per cent. The Bond is due to reach maturity in August 2022.

The bonds will bear interest at a fixed annual rate of 5.25 per cent, payable semi-annually on 10th February and 10th August. The minimum initial subscription is £2,000, each Bond has a face value of £100. Once launched, investors will be able to sell their bonds on the open market at any time during market hours. The offer period is now open and is expected to close at 12 noon (London time) on 4 August 2017.

Upcoming FCA consultations will shape future of UK P2P lending (AltFi), Rated: AAA

Peer-to-peer (P2P) lending will continue to go from strength to strength, with low interest rates still squeezing bank margins, a trend towards fintech and a requirement for rapid decision making. P2P lending is establishing its position in the market even with an uncertain economic and political climate. As a result, myriad of opportunities and challenges must be considered across the sector.

The regulator has also expressed concern that P2P firms’ wind-down plans may not be adequate and is planning to strengthen the rules around this. Firms should therefore expect to see an increase in capital requirements.

Another cause of concern, which requires further exploration, is around potential conflicts of interest. There’s a risk that large investors will have greater access to preferential deals, over small investors, which creates problems for effective competition within the sector. Given the regulator’s mandate to promote competition more generally across financial services, it will be interesting to see how this gets applied to the new rules.

Is new retail bond from LendInvest a buy? (AltFi), Rated: A

That looks a smart move because it’s now planning to return to the retail market but this time via bond – Funding Circle, by contrast, chose to use an investment trust to raise money from the stock market, with a target annual yield of around 6.5%.

Compared with the rates on offer from rival P2P platforms such as Zopa and Ratesetter, the yield of 5.25% is not bad and unlike its nearest rivals the investor also get secured assets to work against. That’s important when comparing the Lendinvest yield of 5.25% against the Funding Circle SME Loan income fund yield of around 6.5%. The latter is not secured and is mostly invested in risky SME loans.

Also, Lendinvest has a sensible average LTV ratio at 63% which should give private investors some comfort although I would observe that if house prices fell more than 15% across the board, the bond might be in danger of breaching its covenant. I don’t think that is likely but it is always possible.

The damaged reputation of asset-backed securities is on the road to recovery (City A.M.), Rated: A

It’s been a decade since the collapse of two hedge funds managed by Bear Stearns. The funds were backed by subprime mortgages, and they failed when hoards of borrowers defaulted on their loans. This sparked a chain reaction which culminated in the global financial crisis of 2008.

“ABS could therefore represent the future of crowdfunding more generally, but real estate crowdfunding in particular. This long-suffering acronym could very well make a comeback to help revolutionise the market for real estate investment as we know it.”

Growth Street bolsters team with new sales and relationship management hires (LendIt), Rated: B

SME lender Growth Street has brought on board a new Director of Sales, Head of Relationship Management and Business Development Manager as the firm’s expansion continues.

The new appointments bring a wealth of sector experience to Growth Street. Chan Purewal, formerly of Boost Capital and Bibby Financial Services, has joined the business as Director of Sales.

Nicola Weedall, previously of GE Capital and latterly Head of Risk and Compliance at invoice financing specialist DueCourse, has joined Growth Street as Head of Relationship Management. Her role will be split between London and Manchester.

Meanwhile, Nick Owers, formerly Head of Banking Relationships at iwoca, becomes a Business Development Manager. Nick has also worked for Lombard and Royal Bank of Scotland in the past.

VC investment into UK FinTech ‘fell by 40% in Q2 2017’ (Tech City News), Rated: A

According to CB Insights’ ‘The Global FinTech Report: Q2’17′, venture capital-backed deals in UK FinTech fell by 40% during the second quarter of this year.

The report says funding plummeted by 52% after a temporary surge in the first quarter of the year following Atom Bank’s and Funding Circle’s $100m deals.

How to boost your retirement income with Peer-to-Peer? (Radio Times), Rated: B

Over the past ten years, peer-to-peer lending has taken the UK by storm and has become a viable option for many people looking for a potential retirement income. To date, more than £10 billion has been invested through UK peer-to-peer lenders, returning on average 7.17% total gross interest. (source: AltFi Data)

With the right peer-to-peer loans that are backed by tangible assets like property, such as ones offered by Assetz Capital, the risk of loss can be reduced as those assets may be sufficient to recover lent funds should the loan default.

Creditors set to miss out in Morgan Tucker administration (The Business Desk), Rated: B

Morgan Tucker, the Nottinghamshire-based consulting engineering firm, went into administration at the end of May owing over £3m to creditors, according to papers seen by TheBusinessDesk.com.

The business’s expansion into the Middle East caused significant losses, it emerged in June.

Among some of the firm’s biggest creditors were Funding Circle which was owed £218,513 and Vendor Loans which was owed £112,000. The firm also owed HMRC £286,513.

China

This Chinese Credit Card Company Plans On Outsmarting Tencent And Alipay With A More Secure Product (Forbes), Rated: AAA

Startup firms like Samoyed Financial, a Chinese online credit card issuer, are on the cutting edge of consumer lending.

Samoyed Financial offers prime consumers credit cards online at below-market interest rates. While so many consumers require loans to make larger purchases, online lending firms in China (particularly peer to peer lending firms) have in the past struggled to control risk.

Credit card use in China has risen from five million in 2002 to 300 million at present.

Because China lacks a complete credit risk credit rating system like FICO, firms have been forced to rely on their own credit risk assessments in the burgeoning consumer lending market. Lin’s firm uses data taken from the consumers’ phone records and online behavior, with consumers’ authorization. The data is then used to build a credit risk model.

Samoyed Financial also incorporates artificial intelligence in the form of the Alpha S robot to review information and determine whether an applicant looks suspicious.

China declares war on get-rich schemes, citing risk of social unrest (SCMP), Rated: A

Chinese police will strike hard against shady financial schemes because of the risk of social unrest from such fundraising ploys, according to the Public Security Ministry.

Guo said at a nationwide meeting with local police authorities on Sunday that law enforcers must use “big data” technology to uncover and stop such crimes as early as possible.

Chinese Fintechs Use Big Data To Give Credit Scores To The ‘Unscorable’ (Forbes), Rated: A

Last November 11, China’s so-called Singles’ Day, sales across Alibaba platforms reached new heights: RMB 120 billion, or $17.9 billion.

Offline borrowing, however, is still largely absent. Hua Bei is basically a virtual credit card, but 60% of the users have never owned a physical credit card. Traditional banks are not lending money to individuals because they lack a reliable credit score. In fact, most Chinese people, by Western standards, are simply “unscorable”–only 25% of the population have a credit history.

With spending increasing, credit card use per capita actually declined from 0.34 in 2014 to 0.29 at the end of 2015, according to People’s Bank of China. In that same year, however, mobile payment users grew 65%. For the whole year, $5.5 trillion third-party mobile payments were completed in China.

Chinese P2P Neo Online Helps Children Realize Football Dream with International Champions Cup (Markets Insider), Rated: B

Neo Online, a leading Chinese peer-to-peer lending platform under Neo Capital Management Group Co., Ltd. (“Neo Group”), joined with the 2017 International Champions Cup China to hold a public interest meeting under the theme “Big big kids in a big big world”.

In January 2017Neo Online launched the public welfare program “Kids Are Awesome”, which supports adolescent development and growth in such areas as culture, sports, arts, and health.

European Union

P2P lending platforms poised to join Nutmeg and Seedrs on Fidor marketplace (AltFi), Rated: AAA

One of the most interesting and recent of these partnerships is between challenger bank Fidor and host of other players such as digital wealth manager Nutmeg.  Fidor’s UK commercial customers can now access a whole suite of investment opportunities through the digital marketplace, including access to alternative investment opportunities via a number of the most respected fintech companies in the UK.

Fidor Bank is a digital bank with over 100,000 users across Germany and UK.

Interview with Loit Linnupõld, CEO of Crowdestate (P2P-Banking), Rated: A

What are the three main advantages for investors?

Pre-vetted real estate investment opportunities – Our experienced real estate and finance team evaluates thoroughly each aspect of every project and picks the best investment opportunities to be published for crowdfunding.
Low minimum investment amount – the minimum investment on our platform is just 100 euros, meaning basically anyone can afford to invest into real estate with Crowdestate.
Everyone can invest – Crowdestate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.

There are many different types of investment opportunities on Crowdestate. Debt, equity, secured, unsecured… Why did you decide to use so many different types for the offers?

What ROI can investors expect?

The historical money-weighted average internal rate of return on our exited investment currently at 29.59%. However, as the fast-increasing money supply is driving the expected returns down, the investors’ annual returns are probably going to remain between 10-20%.

Stock loan falls short for buy side as liquidity source (Securities Lending Times), Rated: A

In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.

The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.

International

ID Finance’s chatbot cuts client services workload by a third (ID Finance Email), Rated: AAA

ID Finance, the digital finance, credit scoring and emerging markets company has developed and introduced a self-learning chatbot for MoneyMan, its online lending platform serving customers in Spain, Georgia, Russia, Poland, Kazakhstan and most recently Brazil.  Since launch at the beginning of July, over a third of customer requests are already being processed automatically.

The chatbot interacts with new customers at the loan application stage and with registered users when they log in to their personal account. The chatbot helps to locate the information required to determine loan eligibility, and provides recommendations of relevant products tailored to the individual’s requirements and financial prudence. General advice on personal budget planning and financial literacy is also offered.

The chatbot works within the NLP (Natural Language Processing) and NLU (Natural Language Understanding) AI frameworks. Information is processed based on statistical matches covering a wide range of frequently asked questions. And the NLU platform enables analysis of messaging flow so the meaning of the information can be sought out in context.

Additional capabilities include finding non-trivial links in dialogue with users and providing relevant answers to questions unrelated to credit and finance. Thanks to the machine learning technology, the number of questions the chatbot is able to answer increases by 20 per cent daily. The average response time is around ten seconds and if a question cannot be answered the message is automatically forwarded to an available client support operator.

Australia

Former big bank CIO joins fintech board (Broker News), Rated: B

Online loan marketplace and fintech HashChing has welcomed two new financial services heavyweights to its advisory board.

Paul Rickard, managing director of CommSec and former executive at Commonwealth Bank of Australia, and Marty Switzer, chief operating officer of the Switzer Financial Group both joined the board in June earlier this year.

India

Faircent.com launches fully-automated ‘Auto Invest’ feature (DNA India), Rated: AAA

In a pioneering development for the country?s fintech sector, Faircent.com, India?s largest peer-to-peer lending platform has launched a new Auto Invest feature for registered lenders.

It eliminates the need for lenders to browse through several borrower profiles by automating the entire process.

As per its latest Data and Analytics report, 90 percent of the lenders on the platform are earning 18 percent to 26 percent gross returns.

Softbank to pick up 20% stake in Paytm’s parent company One97 Communications (Money Control), Rated: A

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The target launch is August 15, 2017.

Why India’s Hike messaging app adding payment services matters (Kapron Asia), Rated: A

Hike messenger, a popular phone messaging service app in India, has recently decided to introduce payment services on its platform.

The payment service includes both peer to peer payments that do not require bank accounts and use in-app wallets, and bank to bank payments using the UPI platform introduced by the National Payments Corporation of India (NPCI).

Hike has been able to beat Whatsapp to providing in-app payment services.

Asia

‘Flexible’ Regulations Give Indonesia’s Peer-to-Peer Lending Startups Room To Grow (Forbes), Rated: AAA

It’s been seven months since the Indonesian government issued regulations for the peer-to-peer (P2P) lending industry, and the mood in the sector is optimistic.

Suleiman said the market is dominated by local companies that engaged with regulators as the guidelines were being created and were primed to grow once the legal structure was in place.

Indonesia’s Financial Services Authority (OJK)stipulated that startups must have $200,000 in capital before they can be approved for an operating licenses as lenders, and capped loan values at $150,000. For now, that amount suits most P2P lenders just fine, Suleiman said.

Suleiman said that most SMEs fail to secure traditional bank funding because they don’t have enough collateral, which he said is especially problematic in creative industries.

One company meeting the demand for SME financing is Investree, a P2P marketplace startup that launched in 2016.

Ant gold service together Malaysia’s second largest bank to build local version of Alipay (Tech.Sina.com.cn), Rated: A

The ant gold service today announced an agreement with Touch’n Go (TNG), a subsidiary of CIMB, to form a joint venture to provide electronic wallet solutions for local users.

At present, millions of Malaysians use the Touch’n Go card for electronic payments every day in retail stores, car parks and public transport systems. In the future, new e-wallet will help TNG’s new and old customers to get more services on their mobile phones, including electricity providers.

Indonesian FinTech Launches App For Individual SME Investors (PYMNTS), Rated: B

Reports Friday (July 21) said Mitrausahua Indonesia Group, which operates a peer-to-peer lending platform, has launched a mobile app for individual investors of small businesses.

The app joins Mitrausahua’s flagship offering Modalku. For small businesses, interest rates range from 12 to 26 percent. For investors, Modalku promises returns higher than those of commercial bank deposit and fixed investment products.

The app offers a feature, Automatic Funding, which automates the process by which investors can find SME borrowers suitable to lenders’ preferences. Investors can start investing at $75 but must have $750 deposited into their accounts.

Middle East

Middle East women seed crowdfunding campaigns attract more backers (Khaleej Times), Rated: AAA

A total of 97 campaigns were successfully funded in the region in 2015 and 2016, 24 of which were female-led and 73 male-led. And while the number of campaigns funded in the region is still relatively low vis-a-vis more established territories, however, seed crowdfunding is still relatively new to the region. Average pledge amounts to female-led campaigns are 29 per cent higher than male-led campaigns, compared with a difference of only 5 per cent globally, said PwC and The Crowdfunding Centre report – Women Unbound: Unleashing female entrepreneurial potential.

Seed crowdfunding generated a total financing of $ 3.25 million (with $527,300 going to female led campaigns) in the Middle East for 2015 and 2016, with female-led campaigns in the Middle East generating an estimated 5,320 backers, compared with 4,240 for those that were male-led, it added.

Canada

Despite recent gains, Canada lags in fintech adoption (The Globe and Mail), Rated: A

Although the percentage of Canadians using new financial technology has doubled over the past 18 months, Canada lags much of the rest of the world in adopting services offered by online providers.

In Canada, only 18 per cent of digitally active Canadians have used two or more fintech services in the past six months, compared with 33 per cent globally, according to Ernst & Young LLP’s FinTech Adoption index. And while the Canadian rate has almost doubled from 8 per cent in 2015, Canada remains in the bottom of world rankings along with Japan and Belgium.

China has the highest adoption rate at 69 per cent, while India and Britain are close behind with 52 per cent and 42 per cent, respectively.

Philippines

New lending platform to replace ‘5-6’ scheme (The Standard), Rated: AAA

MoneyMatch, an online peer-to-peer lending platform developed by local company FinTech Global Inc., aims to provide Filipinos an alternative to “5-6” scheme, or moneylenders charging exorbitant interest rates on loans.

Bautista said a borrower could apply for loan from P10,000 to P2 million which could be used to start to a small business, get a housing loan, or a new car, and pay for their loan at terms that they could afford.

The interest rate for the loans will range from 15 percent to 36 percent depending on creditworthiness of the borrower.

Authors:

George Popescu
Allen Taylor