Wednesday January 31 2018, Daily News Digest

eloans

News Comments Today’s main news: Spreads narrow on SoFi’s SCLP 2018-1 consumer loan ABS. DiversyFund raises $1M. Ranger Direct Lending sees arbitration delay. Klarna partners with Maplin. BNI Europa partners with Funding Circle on German SME lending. Western Union opens tech center in India. Today’s main analysis: Banco Popular reboots Eloan. Today’s thought-provoking articles: Marketplace Lending Association executive director’s testimony […]

eloans

News Comments

United States

United Kingdom

China

European Union

International

APAC

News Summary

United States

Spreads narrow on SoFi’s 1st consumer loan ABS of 2018 (Asset Securitization Report), Rated: AAA

Strong demand and higher credit enhancement allowed Social Finance to offer lower spreads on its first consumer loan securitization of the year, even after upsizing the deal to $850 million from $650 million originally.

Four tranches of rated were issued, resulting in an advance rate of 91%, according to a person familiar with the transaction. The amount of overcollateralization in the deal will gradually build from 9% to 16%.

Two senior tranches of notes rated AA + by KBRA were issued. The Class A-1 tranche, which has a shorter expected life, pays 50 basis points over the Eurodollar synthetic forward curve, in from 57 basis points on the comparable tranche of the previous transaction. The Class A-2 tranche pays 75 basis points over the interpolated swaps curve, in from 90 basis points on the previous deal.

 

Ranger Direct hit by arbitration delay and manager uncertainty (Citywire), Rated: AAA

The New Year rally in Ranger Direct Lending (RDL) shares has come to an abrupt halt after the listed loan fund, which is backed by fund manager Mark Barnett, said arbitration to settle the legal dispute between it and Princeton Alternative Finance had been extended by around two months.

The £119 million investment trust has been locked in an argument with Princeton, a New Jersey-based investment fund in which it is the leading investor, over its exposure to Argon Credit, a US peer-to-peer lending platform that collapsed in December 2016.

Uncertainty over the exposure to Argon – which represents 14% of its £217 million net assets – and doubts over the due diligence by its adviser Ranger Alternative Management (RAM) have hobbled the shares. They fell over 23% last year but had rallied since the end of December when they hit a record low discount of 32% below net asset value. From 704p at the start of the year they recovered to 767p last week but have dropped 4% or 31p today after yesterday’s announcement. Although still wide, the discount has narrowed to just under 13%.

Relx pays £580m for digital identity company (Financial Times), Rated: A

Relx, the UK-listed information and analytics group formerly known as Reed Elsevier, has struck its biggest deal in a decade with the £580m purchase of ThreatMetrix, an online identify verification business.

ThreatMetrix has one of “largest repositories of online digital identities”, according to UBS analysts, and has built a database containing 1.4bn unique online digital identities from 4.5bn devices in 185 countries.

GLI Finance scores £50m funding line from HoneyComb fund (AltFi), Rated: A

The funding line has a term of 3 years and comprises a £50m revolving credit facility, of which £20m will be drawn and deployed immediately.

Ezbob Raises £15M in Expansion Capital (Finsmes), Rated: A

Ezbob, a London, UK-based E-lending company, raised £15M in funding.

Da Vinci Capital Management Ltd. reportedly made the investment at a post money valuation of £100m.

Meet The Lenders That Need Your SME’s Money More Than You Need Theirs (Forbes), Rated: A

in particular, the UK’s peer-to-peer lending platforms are now crying out for new customers.

Today, however, more than 30 lending platforms, including all the large small business lenders, offer their own IFISA or are on the verge of launching a product. For investors, moreover, the returns available from these schemes looks very attractive: annual yields of 10 per cent or more in some cases look phenomenal when set against the backdrop of bank and building society accounts typically paying less than 0.5 per cent a year, even if there is a risk of losses on IFISAs if borrowers default.

Augmentum Capital to seek public listing to back fintech start-ups (Financial Times), Rated: B

Augmentum Capital, the venture group backed by Lord Rothschild, is planning to list a financial technology investment fund in what would be one of the sector’s biggest initial public offerings in a decade.

It is understood to be applying for admission to London’s main market in March and will seek to raise up to £125m with the sale of new shares.

China

China’s financial risk worse than in US before financial crisis, says former finance minister (Today Online), Rated: AAA

The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.

“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”

According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (S$34.75 trillion), or 203 per cent of China’s nominal GDP in 2017.

Chinese P2P lending platform Senmiao Technology sets terms for $ 14 million US IPO (NASDAQ), Rated: A

Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, announced terms for its IPO on Tuesday.

The Chengdu, China-based company plans to raise $14 million by offering 3.3 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Senmiao Technology would command a market value of $109 million.

European Union

Klarna signs Maplin for online pay-later (Finextra), Rated: AAA

Today, leading payments provider Klarna has announced a partnership with Maplin – the UK’s number one specialist technology retailer. Maplin customers will now be able to use Klarna’s Pay later and Slice It services, allowing them to order online and receive the very latest Smart Home tech, security/CCTV products, top quality drones and so on, and then pay for them either at a later date or spread the cost over time.

Pay later enables online and mobile Maplin customers making purchases of £200 or less to receive their products and pay for them 30 days later, with no interest or fees.

BNI Europa to fund German SME loans via Funding Circle (Finextra), Rated: AAA

The Portuguese online bank Banco BNI Europa and Funding Circle have entered into a strategic partnership to support the growth of small and medium-sized businesses in Germany.

Investment will support the funding needs of c. 600 companies and thereby help to create c. 1,500 new jobs

Banco Popular reboots Eloan for new era in online lending (American Banker), Rated: AAA

Banco Popular is relaunching E-loan (it dropped the hyphen from the name) to serve as its “fintech arm,” a stand-alone brand offering solely digital products.

Launched in 1997, Eloan re-enters a market where fintechs now account for over 30% of personal loan originations, according to TransUnion. The brand will compete for clients alongside well-financed upstarts like LendingClub as well as new offerings from banks such as Marcus from Goldman Sachs.

 

Spendesk Raises €8 Million to Expand Its Platform for All Company Purchases (Payments Journal), Rated: A

Spendesk, a fintech solution that helps businesses manage their spending, has raised an €8 million Series A round led by Index Ventures, with participation from existing investors. The funds will be used to accelerate product development and expand across Europe.

ABN Amro, ING and Rabobank hit by cyberattacks (Fintech Futures), Rated: B

Three Dutch banks, ABN AmroING and Rabobank, suffered a series of DDoS attacks last weekend (27 and 28 January).

During the attack, internet banking, mobile banking, its website and Ideal were unavailable or extremely slow on 27 January from around 8pm to 12.15am CET and on 28 January from 12pm to 2pm CET and after 7pm CET.

International

 

CHECQIT, the P2P Lending Platform Aiming to Empower the Unbanked (The Merkle), Rated: A

According to the World Bank’s Global Findex report, nearly 2 billion adults and 160 million small businesses from all over the world do not have bank accounts. Efforts to approach them to traditional financial institutions have not been enough, limiting their economic growth potential.

Only 14% of adults living in the Middle East hold a bank account, opposed to the 94% of citizens from first world western countries that do. Developing regions with underserved communities such as India and sub-Saharan Africa comprise, when combined, nearly 32% of the world’s unbanked and underbanked population.

As a response to this issue, Nassim Benzekri and his team developed CHECQIT, an Ethereum-based, decentralized, peer-to-peer lending platform that allows users to grow their collaterals against a fast-guaranteed loan.

Finastra acquires Olfa Soft SA (Realwire), Rated: B

Finastra has acquired Olfa Soft SA and its cutting edge FX e-trading platform for banks and financial institutions. The move enables Finastra to deliver a unique end-to-end real-time eFX trading solution for banks’ treasury departments, covering distribution, position-keeping, post-trade and payments.

India

Western Union Opens Tech Center In India (Bank Innovation), Rated: AAA

Cross-border payments company Western Union is opening a technology center in India, which will focus on biometrics, machine learning, and robotics, the company announced yesterday.

The center, located in Pune, Maharashtra, will have over 1,000 employees all focused on building these “innovative digital and retail customer experiences globally,” the company said in a press release.

Rubique announces strategic partnership with Optacredit (Outlook), Rated: AAA

Rubique, a marketplace lending platform for individuals and SMBs, entered into a strategic partnership with OptaCredit, an Artificial Intelligence-powered, data-driven online lending platform focused on providing unsecured credit to salaried professionals across India.

With its Online PLUS technology led model and proprietary matchmaking algorithm, Rubique will enlist the company on its online marketplace for applicants to avail viable loan products from OptaCredit’s offerings.

P2P Lending Set to Explode in 2018 (PR Newswire), Rated: AAA

RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders. The NBFC-P2Ps will act as an intermediary to provide an online platform to lenders and borrowers to transact on mutually agreeable terms. RBI has defined P2P lending as a form of crowdfunding that entails issuing unsecured loans to borrowers via an online portal in its 2016, ‘Consultation Paper on Peer to Peer Lending’. However, P2P lending is different from other crowdfunding activities in being a purely debt product, in which multiple lenders fund borrowers as personal loans or small business loans. Most of the P2P platforms in India such as IndiaMoneyMart curate their borrowers after conducting KYC checks, credit assessment, and due diligence before listing them on their loan exchanges.

On the positives, the regulation has made P2P lending platforms accountable to furnish credit repayment/non-repayment information to all 4 credit bureaus, thereby increasing transparency in the credit rating system. The credit rating agencies have records on about 150 million population but P2P lending platforms are also going to bring customers hitherto relying on private money lenders. This presents a huge opportunity to close the credit information gap. It will also reward sub-prime borrowers with a better credit score for showing improvement in loan repayment behaviour.

As many first time or retail borrowers take loans from money lenders or payday companies which charge interest as high as 5% to 20% per month, P2P platforms like IndiaMoneyMart are bridging the gap by making credit not only accessible but affordable. Bangalore-based IT consultant, Tanmay Thorat* (name changed) was paying over 300% interest to payday loan companies and approached IndiaMoneyMart for a small ticket size loan of INR 1 Lakh secured at rate of 13% annualized interest in March 2016required to settle his credit card debt and pay rent deposit.

The expectation from the Union Budget 2018 is immense in the BFSI segment, especially after RBI regulation. Experts hope that essential financial services will have GST rates revised from 18% to 5% or nil.

Budget 2018: how can we enhance the growth of startups in India? (YourStory), Rated: A

Most importantly, the fund of funds for startups (FFS) has begun to take shape with as much as Rs 1,100 crore being disbursed to SIDBI for allocation to venture funds. As of September 15, 2017, 17 venture funds have raised Rs 605 crore from SIDBI and as many as 72 startups have received about Rs 318 crore funds. The Department of Industrial Policy and Promotion (DIPP) has also recently announced that this number will be increased to Rs 2,400 crore by the end of the next fiscal.

For instance, the startup space has reportedly seen a decline of 53 percent in seed funding and 25 percent in venture funds in 2017.

Listed below are four suggestions for Budget 2018.

  1. Abolish angel tax
  2. Encourage Indians to fund India
  3. Extend tax holiday
  4. Standardise and simplify   

10 things FM Arun Jaitley can do to boost access to capital via digital lenders (Financial Express), Rated: A

  1. Allow a lower MHP for servicing short-term needs of MSMEs
  2. Raise rate caps under MUDRA scheme: The RBI currently has capped the final rate that can be charged above the refinance rate offered by MUDRA at 3% for banks, 6% for NBFCs and 10%-12% for MFIs, depending on portfolio size. Since most of the new lenders incur high opex, this cap should be increased in the Budget 2018 to 10-12% in line with MFIs, for loans up to Rs 5 lakhs, and 8-10% for loans from Rs 5-25 lakh value.
  3. Extend the SIDBI net
  4. Make P2P platforms more attractive: A cap of 5% of net worth for lenders and a maximum individual loan amount of Rs 25 lakh for the borrowers would make these platforms attractive for both lender and borrower.
  5. Expand access to MSMEs
  6. Introduce PSU Banks turndown program
  7. Raise eKYC-based lending limit: The cap for lending through OTP based eKYC should be increased from Rs 60,000 to Rs 5 lakh.
  8. Promote eSign
  9. Mandate eMandate
  10. Increase the flow of data for lending
APAC

Lancers raises $ 9.2m venture round (Deal Street Asia), Rated: AAA

Tokyo-based Lancers, which operates a crowdsourcing platform under the same name, has closed a JPY 1 billion ($9.2 million) round from Tokyo-listed enterprises Persol Holdings and Shinsei Bank.

The investment sees Lancers concluding business partnership contracts with both companies concurrently and will also see it commence its new financing business targeting freelance workers, which the company claims comprise 17 per cent, or 11.22 million workers of Japan’s entire working population.

The addition of Shinsei Bank as an investor will see Lancers, Persol and Shinsei collaborate to develop and provide a new loan service to individual workers who need equipment investment or education/training upon starting a new business.

Crowd Realty closes $ 5.2m Series A (Deal Street Asia), Rated: A

Tokyo-based property crowdfunding portal Crowd Realty has closed its Series A round at JPY 580 million ($5.2 million) from Tokyo-listed Mitsubishi Estate, Shinsei Corporate Investment, Shinsei Bank, and Mizuho Capital, based on an account from The Bridge.

The Series A round saw two tranches: a follow-on investment of JPY 230 million subsequent to a JPY 350 million investment from Mitsubishi Tokyo UFJ Bank, Mitsubishi UFJ Capital, and Kabu.com Securities.

SSC warns against investing in cryptocurrencies (Viet Nam News), Rated: B

In a notice issued on its website on Monday, SSC said that the market now had companies operating in fintech, including cryptocurrency, initial coin offering, crowdfunding, peer-to-peer lending and blockchain. These were new products that had not been regulated, SSC said, thus posing high risks.

 

Authors:

George Popescu
Allen Taylor

Tuesday June 13 2017, Daily News Digest

credit card charge-offs

News Comments Today’s main news: KBRA assigns preliminary ratings to Lending Club securitization. Ant Financial extends online credit service to retailers. Credit Peers secures 45 million GBP credit line. Today’s main analysis: A significant increase in US credit cards defaults. Today’s thought-provoking articles: 4 in 10 Brits are shunning savings. Why India’s fintech startups are flocking to the […]

credit card charge-offs

News Comments

United States

  • KBRA assigns preliminary ratings to Lending Club securitization. GP:”The securitization volumes continue to increase. This is a package of near prime unsecured consumer loans.”
  • Lending Club markets first sponsored deal. GP:”This should be a teamplate for further securitizations. Why is this important? Because this further diversifies the sources of capital available to Lending Club and also probably makes their capital even cheaper. This should also perhaps enable Lending Club to increase their revenue by turning some profit on these securitizations. All in all, I think it’s a very bullish sign for Lending Club.”
  • Americans are suddenly defaulting on credit cards. GP:”The increase is still not out of the channel bounds we have seen since beginning 2014 for the average credit card company except for Capital One. The question is: Is Capital One ahead of the pack in noting defaults or are they a special case? Further analysis  seems to point that underwriting standards have recently degraded in fact. Would this be seen this quickly in the default performance? “AT:”Excellent analysis. Remember the mortgage crisis? The S&L crisis? Bank failure bailouts? The controversial CFPB was created to solve some of the problems associated with consumer financial management behavior. Could we be headed toward another political crisis? If it is perceived that banks are using poor risk assessment metrics or issuing credit card debt to people who shouldn’t have it, then we may see more headlines soon.”
  • CommonBond closes $231M securitization. GP:”Aa3 from Moody’s. CommonBond’s fourth and largest, and was more than three times oversubscribed by investors.”
  • Marketplace Lending: The Next 10 Years GP:”Most industries follow the same bell curve of solution and no problem, problem found, exponential increase, margin collapse, consolidation, new innovation. I don’t see why online lending is any different.”
  • The next industry Amazon could dominate. GP:”Amazon will probably dominate lending to Amazon vendors. That is not an industry, just a small and growing piece of it. Will Amazon dominate retail commerce in its entirety? I hope not, as in general, we don’t think that monopolies are good for society.” AT: “An overstatement. Amazon is a product retailer. While there may be a good business case for Amazon having a lending vertical, Amazon will never be a specialist in online lending, to small businesses or otherwise. But there are some good points made in this article, one of which is the cost of the loans themselves–not exactly competitive.”
  • Rubicon adds Bond Street for financing options. GP:”Growth through partnerships continues to be the  best way for good cost of customer acquisition which is one of the two pain points (together with cost of capital).”
  • Corporate America has lost control of your wallet. AT: Interesting comparison of PayPal and Bitcoin. All to say that banks may not be necessary, which is arguable despite Bill Gates’ prescient wisdom.”
  • PeerStreet offers new way to bet on housing. GP:”PeerStreet offers p2p investment in debt in real estate. Is the yield sufficient to justify it?”
  • The best way to beat robos: Be more human. GP:”In my experience in capital markets the robos work until the market type changes. And markets change types, due to the underlying source driving source changing, every few months. “AT: “I’m seeing more and more of this type of advice for financial advisors.”
  • Marketplace lending and the future of consumer bitcredit. AT: “Interesting podcast interview.”
  • Fundbox launching new product for SMBs. GP:”A line of credit”
  • SoFi has applied for a bank charter. GP:”Here is the application.”
  • Elevate launches analytics team in San Diego.
  • Lendio Pilots Online Lending Platform with Comcast Business Customers GP:”Growth through partnerships continues to be the  best way for good cost-of-customer-acquisition which is one of the two pain points (together with the cost of capital).”

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-NP1 (Digital Journal), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-NP1 (“CLUB 2017-NP1”). This is a $279.388 million consumer loan ABS transaction that is expected to close June 22, 2017.

This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) first sponsored transaction and the second rated securitization of near prime unsecured consumer loans facilitated by LendingClub’s proprietary technology platform. All loans in this securitization are whole loans that were purchased through a pro-rata allocation of the near prime loans originated on the platform by seven third parties unaffiliated with LendingClub.

Lending Club markets first sponsored deal (Global Capital), Rated: A

San Francisco-based online platform Lending Club is sponsoring its first multi-seller securitization, which is backed by a portfolio of near-prime consumer loans.

“A club deal program enables Lending Club to drive standardisation in offering docs, covenants, structure, servicing, collateral consistency, and offering cadence,” wrote Ram Ahluwalia.

Americans are suddenly defaulting on their credit cards (Business Insider), Rated: AAA

The American economy has looked pretty robust of late — unemployment just hit a 16-year low, and stocks recently reached an all-time high.

This makes it all the more curious that Americans have suddenly stopped paying off their credit-card bills at a rapid rate.

In the past two fiscal quarters, banks reported a steep rise in credit-card charge-offs — debt that companies can’t collect from their customers — according to a report from Moody’s.

The sharp increase, the largest since 2009, is especially unusual given how strong the US employment market has been, Moody’s noted. It suggests that American consumers haven’t fallen on hard times so much as banks have started to loosen their standards and issue credit more aggressively.

Charge-offs and unemployment tend to be related: When people lose their jobs, credit cards tend to be one of the first bills people stop paying, as compared with loans for a home or a car in which people risk losing those crucial assets.

CommonBond Closes $ 231M Securitization (CommonBond Email), Rated: A

Of the transaction, CEO David Klein said:

“Our highest-rated and largest deal yet clearly reflects both the growing investor and customer demand for CommonBond’s products. By maintaining maniacal focus on our category, and delivering the best possible experience for our members, we’ve been able to consistently provide investors with superior credit quality assets. We’re pleased to welcome a standout group of investors to this transaction. And as a programmatic issuer, we look forward to continuing to bring opportunities to market for investors over time.”

Highlights include:

  • The offering achieved AA ratings from Moody’s and DBRS – Aa3 and AA, respectively – which are our highest ratings to date.
  • The transaction was CommonBond’s fourth and largest, and was more than three times oversubscribed by investors.
  • CommonBond and Goldman Sachs acted as co-sponsors for the transaction. Goldman Sachs served as structuring agent, co-lead manager, and book-runner.
  • Barclays and Citi served as co-lead managers and book-runners on the transaction as well. Guggenheim Securities served as co-manager.
  • CommonBond’s inaugural securitization from 2015 was also recently upgraded by DBRS.

Marketplace Lending: The Next 10 Years (deBanked), Rated: A

The marketplace for consumer and small-business loans has come a long way over the last 10 years. Since the early days of peer-to-peer lending, there has been a great proliferation of new types of intermediaries creating new layers of distribution for the risk involved with the lending process. Now marketplace lending has reached an inflection point that will create a much different scenario with fewer players and more partnerships.

The linchpin holding this model all together is technology including machine learning, which is driving more efficient distribution. “Technology is what has made marketplace lending so rich and competitive. But technology firms must now compete within the market they’ve created. And typically technology – once it exists can be commoditized,” said Hadden, adding that technology will eliminate intermediaries, not create new ones.

Meanwhile, growth for the software providers will be through partnerships.

The Next Industry Amazon Could Dominate (Fortune), Rated: A

Amazon revealed last week that it loaned $1 billion to merchants on its marketplace in the past 12 months. Square and PayPal have adopted similarly successful models. As of November, Square’s two-year-old lending arm had lent $1 billion to businesses. PayPal’s small business lending is growing at a rate of $4.5 million a day.

These tech giants’ emergence and momentum in this burgeoning industry might be the boost online lending needs to become a mainstream option for small businesses.

They’re well positioned to succeed for a few reasons. First, the tech giants have massive, active customer bases; Amazon has 2 million potential lending customers already selling products on its own marketplace.

Second, while there are certainly well-known players inside the online lending space, from OnDeck to Lending Club, there’s no direct lender that’s a household name.

Third, companies like Amazon, Square, and PayPal know who they’re lending to. Since their core business model encompasses their customers’ business transactions, they know exactly how much money their customers are making and when that money comes into their business. This information makes the tech giants better prepared and more likely to underwrite loans for businesses that might have been denied elsewhere.

While Amazon’s pricing is particularly attractive, with estimated annual interest rates between 10.9 and 12.9%, PayPal’s annual percentage rate (APR) is estimated to be between 15 and 40% and Square’s is estimated between 30 and 35%. This pricing is competitive for short-term loans, but if business owners have larger, longer-term, or revolving credit needs, they could qualify for more cost-efficient options.

Rubicon adds Bond Street for financing options (Waste Today Magazine), Rated: A

Rubicon Global, Atlanta, has announced online lender Bond Street, New York, has joined as a partner in its RubiconPro consortium buying program. The program delivers fuel, equipment, maintenance and financial benefits for independent waste hauling companies and truckers across North America.

Rubicon says Bond Street is an affordable option for companies to finance growth investments such as hiring additional employees, purchasing inventory or equipment or refinancing a business credit card. An online lender, Bond Street provides one-year to three-year term loans that range from $25,000 to $ 1 million, with rates starting at 6 percent, according to the company.

These loans were created to help homeowners, but for some they did the opposite (Los Angeles Times), Rated: A

Now her mother, who receives $11,600 a year from Social Security and suffers from dementia, is struggling with a roughly $50,000 loan paid through a $5,500 annual tax assessment — an increasingly popular form of home-improvement financing known as PACE.

Edwards said the contractor explained that “a government program” would help the octogenarian afford the improvements, but never explained how the payments would work or warned them Hill could lose her house if payments were missed.

The total amount lent for residential PACE projects topped $1.5 billion in 2016, up from $350 million just two years earlier, according to trade group PACENation.

The loans are secured by a property lien and if unpaid a borrower can be foreclosed upon. Consumers put no money down and usually don’t pay anything for at least six months. Eligibility is largely based on home equity. Credit score and income are not a factor.

Many consumers simply know their loans as the HERO program, the name of the PACE program from the industry’s biggest lender, Renovate America in San Diego.

Critics say PACE can serve a worthy purpose, but worry too many consumers are agreeing to loans they don’t need or understand after being contacted by aggressive contractors, who often make cold calls or engage in door-to-door marketing.

According to lawsuits and interviews with borrowers and their advocates, some contractors are inflating the cost of their services and misrepresenting how much the loans cost or how they are paid back.

Contractors can get consumers approved on the spot, having them sign documents on a tablet computer — an experience advocates say can be confusing, particularly for elderly homeowners. Lenders then send final financing documents to homeowners for their signature, with the process taking a few hours to several days.

The three major private lenders — Renovate America, Renew Financial of Oakland and Ygrene Energy Fund of Petaluma, Calif., — say most of their customers come away happy and point to low default and delinquency rates as evidence the programs are working.

Across the nation, less than 1% of all securitized PACE loans that Kroll Bond Rating Agency tracks have defaulted, said Cecil Smart, a senior director at the company.

Renovate America said over the last five years, none of its clients have been foreclosed on for not paying their PACE loan, but nearly 80 homeowners with such financing, or 0.08% of the total, have been foreclosed upon after they didn’t pay their mortgage.

Corporate America Has Lost Control Of Your Wallet, Thanks To These Innovators (Huffington Post), Rated: A

For as long as there have been big banks, Wall Street has controlled your money. They’ve chosen who gets loans, how much they cost, who gets access – they’ve basically hand picked the economic winners and losers of the world. But not anymore, thanks to the rise of the sharing economy, financial technology, and the disruption of the traditional banking system.

The democratization of money starts with decentralizing control over that money. And that means more peer-to-peer payments, greater convenience, and a simple, easy-to-use electronic payments system working behind the scenes. Wirecard AG is a leader on all these fronts, helping consumers break free of big bank control.

We’ve had a pretty convenient way of sending money abroad, paying for odd jobs and transferring money online for goods and services for a while now. All by using an email address. PayPal came onto the scene breaking down the need for costly bank transfers and setting up recipients.

Like payment company, Square. Their convenient app, Square Cash, lets you send money from email to email.

Peer to peer lending companies like Lending Club, Prosper, and Upstart, now provide individual loans of up to $35k and business loans of up to $300k.

And for those of you comfortable with an unregulated, digital type of platform, now you can buy and sell in Bitcoin.

In fact, a report by Goldman Sachs found that one third of millennials don’t believe they’ll need or have a bank account within the next five years! And that makes Wall Street traders tremble.

PeerStreet Offers New Way to Bet on Housing (Investopedia), Rated: A

Whether he stills feels this way or not, Burry has placed a different bet on the U.S. housing market by taking a seat on the board of PeerStreet, a peer to peer marketplace that allows investors to buy into the debt of real estate investments. Think Lending Club, but for real estate, where investors can access prime traunches of real estate debt. It’s real estate loan securtization by any other name, but by investing in the debt of a real estate investment at low loan to value ratios, PeerStreet is offering what it calls a ‘safer type of real estate investment’. If things go sour, debt investors are paid off ahead of equity investors, thereby cushioning the risk. Furthermore, PeerStreet advertises 6-12% annualized returns, and the loan periods are as short as 6 months to a just a couple years, but only for accredited investors.

The best way to beat robos: Be more human (Financial-Planning), Rated: A

Anything in an adviser’s daily routine that can be automated should be outsourced to technological tools, says Alan Moore, co-founder of XY Planning Network. According to Bloomberg, 58% of an adviser’s role can be automated with artificial intelligence.

Fava agrees, suggesting that rather than trying to best robo advisers, advisers should shift their focus to aspects of their organization that requires a human touch.

Virtual meetings can take place anytime via video chat and chat bots can help answer routine questions. In his research McDermott says he’s found a growing number of advisers using video chat for initial consultations and their clients are satisfied with telephone consultations afterwards.

Another easy automation is password management software, McDermott says. Using that tool is simpler than trying to remember 70 passwords or having to input and look them up individually on a spreadsheet, he says.

Marketplace Lending and the Future of “Consumer Bitcredit” (American Bankruptcy Institute), Rated: A

A podcast interview with Profs Andrew Dawson and Christopher Odinet.

Marketplace Lending and the Future of “Consumer Bitcredit” – Episode 203

Fundbox Launching New Product for SMBs (Fundbox Email), Rated: B

Tomorrow, Fundbox, the leading cash flow optimization platform for small businesses will unveil its newest product, Direct Draw – a revolving line of credit (up to $100,000) that offers business owners instant access to working capital, without using personal credit scores and we wanted to give you an early look. The company will also reveal survey findings indicating the widespread industry need for the Direct Draw product; 65 percent of business owners don’t believe that FICO should be tied to business credit.

Direct Draw enables Fundbox to help the 18M SMBs in the U.S. that are underserved by existing funding options, most of which rely on personal credit, something that is unpopular with many SMBs. For Direct Draw, customers are approved using bank account data.

Would you like to see the embargoed release and / or speak with Eyal Shinar, Founder & CEO? Eyal has often said that he aims to be the next Visa, and they are on well on their way. Also, Direct Draw is possible because of the company’s deep investments in artificial intelligence and Eyal can speak to that as well.

SoFi has applied for a bank charter (Tech Crunch), Rated: B

In May, SoFi CEO Michael Cagney told TechCrunch the company would be applying for a bank charter “in the next month.” Well, it’s about a month later, and — surprise! — the company has actually done so.

On June 6, SoFi applied for a de novo (or “new”) bank charter, according to a filing notice on the FDIC website. There will be an open comment period on the application for the next month, which will close July 6. The company confirmed it submitted the application, which TechCrunch has received a copy of.

The company is applying for an industrial loan charter under the name SoFi Bank in Utah, listing a Salt Lake City location as its proposed depositary address.

Elevate Launches Analytics Team In San Diego (SocalTech), Rated: B

San Diego-based Elevate Credit, a fintech startup aimed at providing credit to non-prime customers, said it has launched a new “Advanced Analytics” center in San Diego. The company said the San Diego team has more than 35 data scientists, including more than 25 member with advanced degrees, and eight with PhDs.

Lendio Pilots Online Lending Platform with Comcast Business Customers, (Email), Lendio

Lendio, a marketplace for small business loans, today announced a pilot agreement with Comcast Business designed to provide its small business customers with quick and easy access to capital. Through the collaboration, Comcast Business customers will have more streamlined access to Lendio’s marketplace and network of more than 75 lenders, where they can get matched with the financing they need to help them start, grow and thrive.

According to the Small Business Administration (SBA), there are more than 28 million small businesses in America, accounting for 48 percent of U.S. employees. Many of these businesses face obstacles getting a loan, like researching an overwhelming number of potential lenders, soliciting financing offers, and determining what loan is right for them. The collaboration between Lendio and Comcast Business will seek to resolve these challenges by providing more direct access to capital through an established set of lenders offering a wide range of loan offerings, and personal attention from small business loan experts.

Comcast Business customers participating in the pilot will be able to choose from various loan products such as lines of credit, working capital loans, Small Business Administration (SBA) loans, term loans, equipment loans, accounts receivable financing, and more.

United Kingdom

Four in 10 Brits shunning savings, RateSetter warns (P2P Finance News), Rated: AAA

ALMOST four in 10 Brits failed to save a penny in the three months to April, RateSetter research has found, with the peer-to-peer lender warning that this could lead to financial difficulties down the line.

37 per cent of UK adults did not put any money away, and just 21 per cent expected to be able to save more over the next 12 months, data from the platform showed on Tuesday.

Almost half of respondents to a survey commissioned by RateSetter blamed the non-existent returns currently available on cash, with the higher rate of inflation compressing income opportunities.

Credit Peers Secures £45 million Credit Line (PR Newswire), Rated: A

Credit Peers, one of the first peer-to-business (P2B) secured property lending platforms in the UK, announced today that it has secured a credit line of £45 million from a European investment management firm.

The financing should allow Credit Peers to expand its growing business by providing fast-tracked debt funding to experienced property investors and developers on investment grade property transactions across the UK.

Earlier this year Credit Peers launched its loan-based P2B platform offering property transactions to the public that were previously only available to institutions and banks. Credit Peers aims to significantly speed up the process of property financing compared to the traditional model.

Fintech CEO on how to create Buzz in a start-up (CNBC), Rated: A

A fintech can effectively become a ‘concierge’ directing its customers to insurance, or any other financial service if they control the data. However, linking to established insurers or banks, which often have legacy IT systems and data silos that cannot interact with newer formats, messaging standards and more modern IT, can be problematic for any start-up looking to partner with a financial institution (FI). This may be an issue for BuzzGroup in the future as it attempts develop a data-centric ‘concierge’ business and scale up.

The spin-off BuzzVault insurtech digital inventory and app, which stores and protects belongings on the blockchain, takes a fee from insurers for its services, effectively acting a sales channel. But it offers insurance partners a fresh approach to customer acquisition and retention that they would not otherwise possess.

Many older fintech firms see insurance as another vertical in which they can use the same artificial intelligence (AI) techniques, big data analysis, blockchain or other technologies that they’ve already used in the investment or retail banking arena , to disrupt a new area. Other newer start-ups are focusing on insurtech as a standalone vertical because they believe the younger unploughed field has more scope for growth. BuzzGroup falls into this later group.

BuzzGroup has so far raised $9.2m in five rounds of equity fundraising from a mix of nine angel, seed and accelerator investors.

  • Wayra contributed €532,610 ($579,865) in February 2015, having been part of an earlier €597,129 ($650,000) BuzzGroup fundraising round in March 2014 that included Andrew Weisz, Justin Peters, Tom Singh and Avonmore Developments.
  • Wayra also contributed €60,000 ($65,000) at the birth of BuzzGroup in May 2013, alongside money from the founder.
  • The last round of investment in August 2016 raised £6 million ($7.75m) from White Mountains Insurance Group – the largest insurtech seed investment at that time in Europe – and emanated from the SBC InsurTech London.

One possible way around the recruitment challenge is to hire hungry youngsters who want to be part of an innovative new company and to perhaps offer them an equity stake in exceptional circumstances to help retain and motivate them.

As start-ups grow the ability to hand out equity stakes naturally diminishes, especially as angel and seed fund investors will be hungry for their cut.

Venture capitalists jamming on the brakes in 2017 (CNBC), Rated: A

The tidal wave of venture capital (VC) money that flowed into global financial technology (fintech) investments during 2016 has already shown signs of receding, according to the U.K.’s fintech chief.

Continuation of such momentum is critical given than once the U.K. has left the EU – with the clock already ticking down to a March 2019 deadline – the domestic fintech industry will lose access to the European Investment Fund. This EU body provides financing to small and medium sized enterprises and contributed around EUR 2.3 billion ($2.6 billion) to U.K. VC funds between 2011 and 2015.

Two institutional investors increasing stakes in Funding Circle and Honeycomb investment trusts (AltFi), Rated: A

Two newer entrants include the £405m Funding Circle SME Income fund, launched November 2015, and £300m Honeycomb, launched December 2015. The two portfolios differ greatly but both are products of the bank-deleveraging trend and have seen their assets grow as high investor demand has also prompted new issuance of shares.

The Railways Pension Trustee Company recently increased its stake in Funding Circle SME Income to fund to a 26.18 per cent of total share capital making their holding worth – according to today’s prices – more than £100m.

Invesco Perpetual, which backed Honeycomb since launch, recently increase its stake following an oversubscribed share issuance of more than £100m. It now has 37.8 per cent held in the fund, representing £113m at today’s share price.

China

Ant Financial extends online credit service to retailers (China Daily), Rated: AAA

Ant Financial Services Group, the online finance firm backed by billionaire Jack Ma, will extend its online consumer credit service to four million retail businesses across the country to boost sales and encourage spending-as China’s consumers increasingly feel more comfortable shopping with borrowed money.

iang, vice-president of Alipay Business Unit at Ant Financial, said that sales surged by an average 41 percent per client year-on-year from 2015 to 2016 after a number of retailers adopted Huabei, or Ant Check Later, a loan and installment service.

Credit score by Alibaba applicable for visa applications to Japan or Luxembourg (ECNS.com), Rated: A

Sesame Credit, a credibility scoring system used on Alibaba’s Ant Financial platforms, could be used as supporting documents for visa applications to Japan and Luxembourg, the People’s Daily reported on Thursday, citing the company’s announcement.

Ant Financial users with a score of at least 750 for Japan, or 700 for Luxembourg, on the scale which ranges from 350 to 900, will be “exempt from the normally required process of submitting bank records when applying through Alibaba’s travel-booking service provider for visas,” said the statement.

Interview with Co-founder and CEO of Monaco, Kris Marszalek (Urban Crypto), Rated: A

KM: We’ve certainly seen a number of people questioning this approach, I think it remains to be seen whether the decision was right or not. Our initial plan was to follow the advice of TokenMarket and launch in July, after at least a month of pre-marketing. We decided to go with an accelerated timeframe when we found out a competing project, that also does FX+Crypto was getting ready to launch their ICO in June.

UC: Can you tell us where are you guys based?

KM:  The only physical presence we have is in Hong Kong at the moment.

UC: What is the status of the Visa connection?

KM: We’re in the process of becoming a VISA program manager. Our card designs were not approved yet, so you can’t see any VISA logos on the website and apps. We’re just following the protocol here. Another reason we want to be extra careful is that TKN case showed VISA and other companies are not really keen on being associated with ICOs at this moment.

European Union

Revolut expands into business market (CNBC), Rated: AAA

Revolut, a financial technology (fintech) firm that offers foreign currency to consumers abroad at the interbank rate available on the financial markets is to expand into the business sector with claimed interest from large European corporations such as Virgin Atlantic.

Users of the new Revolut for Business app can set up an account within five minutes and hold, exchange or transfer money from 25 currencies, including British pounds, euros or U.S. dollars from this home bank account.

Three packages ranging from £25 up to £1,000 per month are available to business end users, who get additional features such as real-time spending notifications and data analysis alerts, plus dedicated customer support.

International

Real Estate & Alternative Investments in Bulgaria & Around the World (Novinite), Rated: A

The latest innovation in smart investing comes from stREITwise with their use of new legislation to provide one of the first crowdfunded office REITs. The idea behind their launch was to deliver private real estate crowdfunding into the hands of a younger group of investors who enjoy crowdfunding sites and would like to invest using the same technology.

Instead of relying on buying private REITs through financial advisors with hefty sales commissions and REIT fees added on, their new REIT keeps fees around 2% while avoiding joint venture deals that tend to add an additional layer of costs. New property deals are sourced directly to avoid outside consultants. Their first REIT specializes in acquiring and managing office space in central business districts and other neighborhoods in the U.S. where there is a need.

India

Why India’s Fintech Startups Are Flocking To Disrupt The UAE (Forbes), Rated: AAA

According to the Associated Chambers of Commerce & Industry in India (ASSOCHAM), India now stands third after the UK and USA in fostering the growth of technology startups.

Sandeep Jhingran, co-founder of cross-border payment start-up Remitr, says, “UAE has a high appetite for innovation. Investors here are ready to pay for creativity, and disruptive companies stand a fair chance to thrive.”

With more than 2.6 million members and a 30% population share, Indians constitute the largest expatriate community in the UAE. Specifically, there is a growing need for diverse financial services. While India’s fintech sector peaked in 2015, with investment reaching USD$2 billion, UAE’s fintech sector is showing signs of steady growth. A report titled State of Fintech by Wamda says that the number of fintech startups launched in the MENA region will reach 250 by 2020 from the current 105, and will be predominantly involved in offering payment solutions, P2P lending or raising capital. Notably, most of the startups surveyed in the report originated from the UAE.

India’s top court halts plan to link for biometric ID to tax (SMH), Rated: A

Indian citizens cannot be forced to enroll for a 12-digit unique identity number to be able file tax returns, the country’s top court said in a ruling that may be a hurdle for Prime Minister Narendra Modi’s plan to move transactions online.

The Supreme Court partially stayed a law that made the Aadhaar card mandatory for filing returns or for obtaining a 10-digit alpha-numeric code the Income Tax Department issues to tax payers. The stay is needed till a question on the right to privacy under Indian laws is decided by a constitution bench of the top court with at least five judges, a two-judge panel ruled.

Asia

PT INVESTREE Radhika Jaya (Investree), a pioneer peer-to-peer lending (P2P) marketplace in Indonesia, officially registered with the Financial Services Authority (OJK) on May 31 with the registration number of S -2492 / NB.111 / 2017 as indicated on the “Investee Radhika Jaya Registered Evidence” letter from OJK.

Investree is registered as an Information-Technology-based Lending and Borrowing Service Provider under the Directorate of Institutional and Products of Non-Bank Finance Industry (IKNB) administration.

As of June 5, 2017, Investree had successfully disbursed loans amounting 148 billion rupiah with 592 total loans, a 17.5% average rate of yield, and no defaults.

3 Western Governments Partnering With Asian FinTech Intitatives (Edgy Labs), Rated: A

The OCC feels it is high time to create a regulatory framework for FinTech banking institutions as the number of FinTech companies in the U.S. has soared. Investment in FinTech companies has increased more than ten times in the last five years, currently around $24 billion USD worldwide.

Meanwhile, FinTech Investment in Other Parts of the World

According to Nikkei again, soon, 10 new cryptocurrency platforms will be in use in Japan. This is all building on top of Japan’s already significant FinTech investment. Both legally and financially, Japan laid the groundwork in the spring of 2016 when they passed bills to recognize cryptocurrencies as the digital equivalent of money.

Singapore has FinTech Investment deals with South Korea, the UAE, France, and Japan, and their unique position in Asia makes them an ideal partner for FinTech-friendly countries in other regions.

In an effort to make intellectual Fintech investment, the Australian Securities and Investments Commission signed an agreement with Indonesia in order to share information of FinTech market trends and regulatory developments.

Swift, operator of the global interbanking platform, recently chose Hyperledger Fabric as the core tech for its blockchain proof-of-concept.

Nostro accounts make international transactions for the global banking system possible. Simply put, banks put their money into nostro accounts that are closer to a transaction destination so that funds are available to make global transactions more efficient.

The Australia and New Zealand Banking Group (ANZ), BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo will all be participating in testing the Swift PoC.

Authors:

George Popescu
Allen Taylor

Friday June 2 2017, Daily News Digest

alternative lending mergers & acquisitions

News Comments Today’s main news: OCC policy on exam treatment of violations goes into effect July 1. Comparisons of Zopa’s IFISA to others. RateSetter hits highest valuation. Seedrs, NatWest partner to offer alternative funding options. Zhong An seeks Hong Kong IPO. Today’s main analysis: Alternative Lending Market Analysis. International P2P lending volumes. Today’s thought-provoking articles: Under the hood of asset-level […]

alternative lending mergers & acquisitions

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

Nutter Bank Report, May 2017 (JD Supra), Rated: AAA

Supreme Court Rules That Cities Can Sue Lenders Under the Fair Housing Act

The U.S. Supreme Court has issued a decision that reaffirms the standing of municipalities to sue lenders, including banks, for certain discriminatory mortgage lending practices that violate the federal Fair Housing Act (“FHA”). The Court’s decision stated that this provision of the FHA “reflects a congressional intent to confer standing broadly,” and held that the city’s claimed injuries are within the FHA’s zone of interests. Click here for a copy of the Court’s decision.

Nutter Notes: Despite the Court’s ruling in favor of the city on the issue of standing, the Court’s ruling on the issue of proximate cause may make it more difficult in the future for cities to sue lenders for FHA violations.

OCC Issues Updated Guidance on Exam Treatment of Violations of Laws and Regulations

The updated policies and procedures direct OCC examiners to communicate violations to supervised institutions using a consistent format consisting of legal citation and description, a summary of relevant statutory or regulatory requirements, facts supporting the violation and root causes, corrective actions required, and board and management’s commitments to corrective action. The updated policies and procedures also emphasize the importance of timely and thorough follow-up and tracking of management’s corrective actions and related milestones. This policy will become effective on July 1, 2017. Click here for a copy of the OCC Bulletin.

Nutter Notes: Specifically, the OCC’s updated policy requires that examiners communicate all substantive violations to the bank in a report of examination (“ROE”) or supervisory letter, including substantive self-identified violations in certain circumstances. Examiners will be required to communicate less substantive OCC-identified violations in a separate written document if the examiners decide not to include them in an ROE or supervisory letter. The updated policy gives examiners discretion to determine whether less substantive, self-identified violations may be communicated separately. The OCC stated that it expects the bank’s board and management to take timely and effective correction of all violations regardless of how they are communicated. According to the updated policy, if management fails to correct a violation previously communicated in a separate written document by the OCC, the examiner should include the violation in the next ROE or supervisory letter. The updated policy also requires examiners to identify violations as “New,” “Self-identified,” or “Repeat,” as applicable.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

FT Partners is pleased to present you with the latest installment of our “CEO Monthly Alternative Lending Market Analysis.”

FT Partners served as the sole strategic and financial advisor to:

  • here.

    Source: FT Partners’ CEO Monthly Alternative Lending Market Analysis June 2017

    Looking under the hood of Asset-Level Disclosures: Income Verification is just the beginning (LinkedIn), Rated: AAA

    Bloomberg published an article last week focusing on a recent auto loan securitization by Santander Consumer USA Holdings, where only 8% of loans in the ~$1Bn collateral pool had income verification on the borrower.

    At Aspire Financial Technologies, we’re already believers in the power of loan level data to give Investors better visibility, understanding, and decisioning around huge volumes of consumer loans, having created the Aspire Gateway platform for Alternative and Marketplace Lending participants. In this sector, loan-level data is paramount to understanding and decisioning for Investors, and Banks providing credit facilities. So, when we learned of the new securitization ALD data files being made available this year, and a requirement from Investors to be able to consume this data, we saw an opportunity for our data engineers to clean, vet and normalize the XML (text-based) data files and load them into our infrastructure API, which is well-suited to accommodating loan level data. The result of this, was our release of the ALD Explorer in April. (Free access to the ALD Explorer is available here.)

    Although our numbers differ from Moody’s as to the % of loans where income was verified (13% vs. 8%), we note a similar conclusion: the vast majority of ~90k loans had no income verification, and were given to low credit score borrowers (WAVG score = 559).

    This is borne out through looking at another ALD Explorer report on a prime auto securitization: Ford Credit Auto Owner Trust 2017-A. This deal has less than 2% of the loans with income verification, but had a WAVG credit score of 740 (note that we have excluded in this table Credit Score Types that were either Commercial (9,437 occurrences) and Unknown/None (2,276 occurrences)).

    To Deliver on its Promise, Crowdfunding Needs Better Language (Crowdfund Insider), Rated: A

    In Part 1 of this series on How To Fix Crowdfunding Education, I made the case for beginning all crowdfunding education by teaching the core fundamental that cuts across all forms of crowdfunding: participation.

    To begin, we need to be more careful in our use of the word “crowdfunding.”

    Since the passing of the Title III equity crowdfunding rules in the U.S., many who write and speak about equity crowdfunding have stopped using the “equity” part of the phrase. Among other impacts, I’ve watched conversations on LinkedIn forums about rewards crowdfunding strike terror into the hearts of project creators as someone offhandedly introduces the terms “investor” and the “SEC” into the discussion of their campaigns. “Investor” is a particularly problematic word when it is used interchangeably to describe both the people who back rewards campaigns (often described as “investing in a creator’s ideas”) and investment in equity or debt offerings. Even the word “equity” itself is confusing since many securities are not actually equity, but debt. And “rewards” doesn’t come close to expressing the power of this kind of crowdfunding to galvanize communities around ideas.

    Then there is the issue of jargon.

    So if “online” is what distinguishes equity crowdfunding from an IPO (Initial Public Offering), does that mean online lending and online donation are crowdfunding, too? To add to our alphabet soup, there’s the DPO (Direct Public Offering) U.S. investment crowdfunding that predates the JOBS Act, and the CPO (Community Public Offering) the acronym used to describe intrastate crowdfunding offerings in Oregon. And then, there’s the “crowdfunding IPO” the term being floated about in publications the likes of The Wall Street Journal and Fortune to describe Spotify’s potential Direct Public Offering (DPO).

    We need consistency in our language to build trust. Looking around the industry, there is language already in use that we could adopt and use consistently. For example, a recent Forbes article by Devin Thorpe was titled “Investment Crowdfunding: What Works And What Needs Fixing” rather than “equity crowdfunding.” By using the word “investment” or “crowdinvesting” instead of “equity” we can make a clear distinction that participants in this type of crowdfunding are investors, but that not all of these investments result in an equity stake in a business.

    Goldman Sachs’ new online lending business is changing the bank’s culture (Business Insider), Rated: A

    Omer Ismail, the chief operating officer of Marcus by Goldman Sachs, described the online lending business as “more casual” in an interview on the Lend Academy Podcast.

    Ismail believes that some of that more relaxed, creative culture is beginning to find its way into other parts of Goldman Sachs.

    “I was with the chief technology officer of Goldman and I went down to his office a couple of days ago and I noticed that now he has white walls so it’s actually really cool to see how folks at Marcus are actually influencing other parts of Goldman.”

    Top 9 most active VC investors in fintech (Pitch Book), Rated: A

    Since the beginning of last year, 605 US venture investors have participated in at least one fintech transaction, spreading a total of

    NEW FINTECH LEADERS JOIN THE CONSUMER FINANCIAL DATA RIGHTS GROUP (Yodlee), Rated: B

    The Consumer Financial Data Rights (CFDR), an industry group formed by leading companies in the financial sector to support the consumer’s right to access their financial data, has expanded its membership to now include 27 companies. Recent additions include ActiveHours, Clarity, DataCoup, Draft, LifeLock, Morningstar, NextCapital, Onist, Oportun, Petal, Quovo, SnapCheck, Vested, and WorldRemit.

    Kushner-backed Cadre wants to raise $ 65M at $ 800M valuation (The Real Deal), Rated: B

    The Jared Kushner-backed real estate investment platform Cadre is looking to raise $65 million in venture funding.

    The funds, if raised, would give Cadre a valuation of more than $800 million, the Information reported.

    The Token Fund – Enter the Digital Mutual Fund (The Merkle), Rated: B

    The Token Fund is akin to a traditional market mutual, index, or hedge fund.

    So this is a digital fund management group that is aiming to bring non-crypto savvy traders and investors into the digital market, while also providing a service to the veterans users and traders of crypto.

    Disclaimer: This is a sponsored post and does not necessarily reflect the views of any employees of The Merkle.

    United Kingdom

    Zopa Innovative Finance ISA: how it works, rates and how it compares (Love Money), Rated: AAA

    Zopa, one of the major peer-to-peer lenders in the UK, has announced it will roll out its Innovative Finance ISA (IFISA) from 15 June offering returns of up to 6.1%.

    The new Zopa Core deal will join Zopa Plus, while the Zopa Access (offering returns of up to 2.9%) and Zopa Classic (3.7%) deals will close by 1 December 2017.

    Product Risk Markets Target return Minimum Investment Amount*
    Zopa Core IFISA A*, A, B, C 3.9% £1,000
    Zopa Plus IFISA A*, A, B, C, D, E 6.1% £1,000

    The new Zopa Core product will lend in the same risk markets (A*-C) as Access and Classic did, but, crucially – like Zopa Plus which launched in March 2017 – it will not be covered by the Safeguard fund.

    Zopa says it’s scrapping Safeguard as tax laws have changed, allowing investors to claim tax relief from bad debts, so it’s no longer needed, plus it emphasises retiring Safeguard will provide greater expected returns and make products easier to understand.

    Lending Works is Zopa’s closest rival with an IFISA option. It also allows investors to lend to individuals, but it expects lower returns of 3.3% over three years and 4.4% over five years, after fees and bad debts.

    The Crowd for Angels IFISA for example offers returns of up to 9%. This crowdfunding platform raises cash for companies wanting to expand, diversify or develop their business through crowd bonds and shares.

    Rivals in this space include the Crowd2fund IFISA , which can earn you 8.7%, the Crowdstacker IFISA offering rates between 5-7% and LendingCrowd IFISA offering 6% returns.

    Peer-to-peer platforms in this market include Landlord Invest (offering rates of up to 12%), Relendex (10%) and Landbay (3.75%).

    If you’re happy to take on more risk you could try Abundance, an ethical peer-to-peer platform raises money from investors for green energy projects.

    RateSetter hits highest valuation at £200m after recent funding round (Growth Business), Rated: AAA

    RateSetter raised £13 million from existing shareholders, including Woodford Investment Management and Artemis on Tuesday. Since this round of funding, the London-based peer-to-peer lender announced that its valuation now exceeds £200 million. The investment formed its eighth fundraising round, and took RateSetter’s total amount raised in equity to £41.5 million.

    Seedrs teams up with NatWest to offer alternative funding options (London School of Business & Finance), Rated: AAA

    Through the programme, the crowdfunding platform will be joining a panel of funders to provide alternative finance solutions to business and commercial customers of NatWest and RBS in the UK who are unable to access the financial support they need through traditional funding routes.

    Seedrs is currently the only equity-based finance provider on the panel, which features other finance providers such as iwoca, Assetz Capital, Funding Circle, Royal Bank of Scotland Social & Community Capital and Together.

    LendInvest Capital Announces Montello Real Estate Opportunity Fund Milestone (Crowdfund Insider), Rated: A

    LendInvest Capital, a UK-based specialist real estate lender and fund manager, has announced that its flagship private debt fund, the Montello Real Estate Opportunity Fund, is now managing over £100 million ($128m) on behalf of private and institutional clients.

    The Fund hit its three-year track record in January 2017 and surpassed the £100 million milestone at the end this past April, reported LendInvest, “the culmination of a very active year” during which the Fund more than doubled in size (up 113% from  £47m AUM at 30 April 2016 to c. £100M AUM at 30 April 2017). The Fund also had a record quarter for fundraising between January and March of this year, receiving £30 million of new investment.

    Basset & Gold unveils four-year marketplace lending bond (P2P Finance News), Rated: A

    BASSET & GOLD is launching a new four-year bond backed by marketplace lending deals, with regular reinvestment of the interest stream set to deliver higher yields.

    The new debt offering from the direct lending and alternative finance specialist will return a compounding fixed yield of 30.9 per cent at the end of the term, equivalent to an annual return of 7.72 per cent.

    Honeycomb raises £105m from oversubscribed share placing (P2P Finance News), Rated: A

    HONEYCOMB Investment Trust has raised £105m from an oversubscribed share placing, which it will use to capitalise on new business opportunities.

    The alternative finance-focused investment fund said on Wednesday that it had successfully completed its placing of 10 million shares, issued at £10.50 per share.

    Finimize allows you to create a free financial plan from your mobile (This is Money), Rated: A

    Quick, simple, jargon-free – the Finimize My Life plan seeks to sort your finances out, giving you sensible savings goals, investment options and easy plans to pay off debt.

    As many as two-thirds of those aged 18 to 34 wish they had received more money advice at a younger age, according to research from Santander.

    Do you think financial literacy remains a problem then?

    Max: I do. We’ve done some research with YouGov and the results speak for themselves: 59 per cent of millennials could not confidently explain what an Isa is, 84 per cent couldn’t tell you what the term ‘equity’ means and 90 per cent couldn’t confidently explain what ‘asset management’ is.

    Of the 1,000 people surveyed, 50 per cent were not confident explaining ANY of the financial terms listed in the survey.

    Why do you think managing our personal finances has been hard for millennials? 

    Max: It is unsurprising that financial literacy levels are so low amongst my generation. We were never taught these terms in school and it can be daunting to try and plan your financial life when you feel in the dark about how the industry works.

    Do millennials have money to save and invest? 

    Max: Yes. It comes down to confidence: of the millennials we surveyed, 52 per cent of those with between £10,000 and £24,999 of savings do not feel confident explaining what an Isa is.

    How does it work?

    Max: Once you’ve registered with Finimize you enter a few simple personal details.

    These include your country of residence, age, salary, savings, passive income, spare income, whether you own a house (this is a yes or no question), if you have income protection and whether you have any bad debt such as credit cards or personal loans.

    Once a user has provided the basic inputs, the platform generates a financial plan for someone like you.

    Would you take financial advice from a robot at your bank? (The Telegraph), Rated: A

    HSBC has become the latest of the major banks to announce a low-cost online investment service that will use algorithms to match customers to an investment portfolio.

    The service is aimed at those with less than £15,000 to invest, and the bank promised costs would be “far lower than industry standards”.

    The services typically take customers through a questionnaire online to get a picture of their finances and determine how much risk they are willing to take, before advising which investments to put their money in.

    NatWest launched its Invest service in February to its existing customers. The service offers five funds run by Coutts & Co, each with a different portion in stocks, bonds and cash. It charges investors 0.95pc on the first £500,000 they invest and then 0.7pc on any investments above that amount.

    Barclays users pay 0.2pc on money held in funds and 0.1pc on all other investments, with a minimum fee of £4 a month and maximum of £125 per month. Fund and other investment trading costs £3 and £6 respectively if completed online.

    P2P Lender Wellesley Retrenches After Departure of CFO Alasdair Lenman (Crowdfund Insider), Rated: B

    Wellesley has entered a period of retrenchment as CFO Alasdair Lenman has departed the company after less than a year on the job. The Wellesley Group consists of Wellesley & Co Ltd, Wellesley Finance Plc and Wellesley Group Investors Ltd.

    Stephen Bell, Wellesley’s Chief Risk Officer, updated on the performance of their loans including non-performing assets;

    “The Wellesley loan book continues to evolve and now stands at 65 loans with combined committed facilities of £271 million. During 2016 the drawn balanced increased by 10% to £163.6 million which was made up of new loans and additional drawdowns on existing loans of £118.6 million.”

    China

    China’s Zhong An aims to raise at least $ 1 billion in Hong Kong IPO – sources (Reuters), Rated: AAA

    Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, has resumed a plan to raise $1 billion or more in a Hong Kong initial public offering (IPO) in the second half of this year, said two people with knowledge of the matter.

    Zhong An, whose major shareholders include Tencent Holdings Ltd (0700.HK) and Alibaba Group Holding Ltd (BABA.N) affiliate Ant Financial, plans to apply for listing in the coming weeks, said one of the people, who declined to be identified as the matter is confidential.

    The Shanghai-based insurer chose Credit Suisse, JPMorgan and UBS in October to lead the IPO, but later suspended the plan to explore a mainland listing.

    Research on Financial Inclusion and Poverty Reduction in China (Lend Academy), Rated: AAA

    Case study 1: CFPA MicroFinance

    • As of Dec 2016, CFPA Microfinance currently has branches in 229 counties and 18 provinces throughout China, and 85% of the branches are located in areas designated by the Central or Local Governments as poverty stricken counties.
    • As of Nov 2016, CFPA Microfinance has disbursed loans valued at RMB CNY 18.4 billion ($2.7 billion) to 1.61 million clients, with average loan size of CNY 11,000 ($1,620). 62% of all loans have been deployed for the purpose of raising livestock, breeding fish and farming and etc.
    • Approximately 3 million low-income villagers have received microloans from CFPA Microfinance for improving their livelihood and raising local production.

    Social development:

    • 91% of all CFPA Microfinance clients are women
    • At least 80% of CFPA Microfinance clients would not have been able to borrow from anywhere else, according to a survey by the China Agriculture University and China Academy of Social Sciences
    • 49 out of the 53 CFPA Microfinance operating outlets are in China’s Nationally Designated Poverty Countries, the poorest areas in the country.

    Case study 2: Ant Financial

    When it comes to poverty alleviation, Ant Financial chose CFPA Microfinance to partner with.

    With the two parties cooperation in technology and channels, it is possible that when a farmer needs to borrow money, the lending decision would be made based on big data, rather than the information collected by loan officers.

    Research shows that, by the measure of “digital financial inclusion index” created by Prof. Huang Yiping, the condition of underdeveloped areas in China in 2015 are relatively better off compared with five years ago.

    Case study 3: CreditEase

    CreditEase’s efforts in financial inclusion to reduce poverty can be best illustrated by the example of Yinongdai.

    What Yinongdai does is that it helps to match “charitable lenders” with impoverished credible rural borrowers. To be more specific, “charitable lenders” can choose a farmer’s project and “donate” at least RMB 100 ($14.70), and lenders can get roughly 2% return annually.

    For over the seven years, Yinongdai has collected over 200 million RMB ($29 million) from 150,000 lenders, and helped about 20,000 needy farmers, Tang Ning said in an interview in Apr 2017.

    The shortage of financial services in China’s rural areas amounts to $ 447 billion. (Xing Ping She Email), Rated: A

    According to data from Chinese Academy of Social Sciences, the market space of rural finance in China reached to $447 billion since 2014. With policy supports on rural finance and the maturing and saturation of the urban financial market, there comes up an attractive blue ocean market in rural finance.

    In recent years, many participants have flooded into rural market, including traditional financial institutions, agriculture service providers, as well as e-commerce platform and internet finance companies, but few of them succeed.

    Up to now, the traditional institutions such as rural credit cooperatives are still the main force to serve rural areas, however, it could not meet the capital needs of farmers’ production and livelihood.

    Source

    Blockchain Startup Wyre Acquires Remitsy for China Market Push (CoinDesk), Rated: B

    Blockchain payments startup Wyre has acquired industry startup Remitsy in a cash and equity deal of an undisclosed amount.

    According to CEO Michael Dunworth, it was Remitsy’s close proximity to China’s market that was the chief factor prompting the move. (Remitsy uses a combination of blockchain technology and banking relationships to convert user currencies for China-based users).

    European Union

    Robo-Advisor Ginmon receives asset management license (EXtra Magazin), Rated: A

    The Frankfurt-based Robo-Advisor Ginmon has now received the license from the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) for financial portfolio management pursuant to section 32 of the German Banking Act (KWG). Up to now, the digital asset management had only one permission for financial intermediaries according to §34f of the trade regulations.

    International

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

    Milestones reached this month are:

    • Assetz Capital crosses 250 million GBP lent sinch launch
    • Lendinvest reaches 1 billion GBP in origination since launch

    Australia

    Robo-advice for SMSFs: what accountants need to know (In the Black), Rated: A

    Accountants referring clients to robo-advice tools need to be wary of licensing constraints.

    We understand that a number of accountants who have chosen to operate without an AFS licence authorisation have entered into arrangements with digital financial advice providers (or “robo-advisers”) to allow their clients to access digital advice about SMSFs.

    Under these arrangements, accountants refer their clients who need financial product advice (for example, about whether or not to establish an SMSF), to a digital advice tool which can provide that advice.

    While digital advice providers might indicate that their tools can be used in such a way that unlicensed accountants who refer clients to the tools would not be providing financial services, this may not always be the case.

    India

    Flipkart will soon offer customers financial products and services (VC Circle), Rated: A

    Homegrown e-commerce major Flipkart is mulling over providing financial products and services online, a segment that has seen tremendous growth in India in the last few years.

    A dedicated team for financial services and products is already in place and lead product manager for fintech and consumer credit products at Flipkart, Monomita Roy Avasarala, has already initiated talks with online lending startups, the report said.

    Flipkart would offer mutual funds and insurance products besides credit and loans, the publication reported citing undisclosed sources.

    Google Launchpad picks 6 startups from India, shows love for AI (Tech in Asia), Rated: B

    This is the only fintech startup from India to make it to the latest Launchpad batch. IndiaLends – like the name suggests – is a lending product.

    It offers personal loans, free credit reports, home loans, and credit cards to consumers. You can check your loan eligibility using the IndiaLends app, which can also alert you when an EMI is due and help you manage and track all your credit accounts as well as monthly spending. IndiaLends uses artificial intelligence tech for credit rating, loan eligibility, and so on.

    Asia

    e-payments make advances in Malaysia, Singapore, Hong Kong (The Asset), Rated: A

    Bank Negara Malaysia, the central bank, on May 22 announced the merger of Malaysian Electronic Clearing Corporation (MyClear) and Malaysian Electronic Payment System (MEPS) to form Payments Network Malaysia or PayNet.

    On May 5 DBS introduced its Smart Nation Ambassador Programme (SNAP). The programme will see DBS recruiting up to 1,000 ambassadors that will encourage small, cash-based merchants to adopt DBS PayLah! QR codes as a payment method in Singapore.

    Bank of China Hong Kong and WeChat Pay Hong Kong announced a collaboration to promote mobile payments in Hong Kong, on May 19.

    Swift introduced a new cross-border payments tracker that enables international payments to be traced in real-time on May 23.

    Japan looks to double cashless payments in 10 years (Nikkei Asian Review), Rated: A

    Cash-heavy Japan aims to double digital payments to 40% in the next decade by helping metropolitan-area businesses afford cashless services to better attract foreign visitors and open their wallets.

    The goal, set by the Financial Services Agency and the industry ministry, will be part of a plan to promote fintech, the intersection of finance and information technology, in a growth strategy to be compiled in June. The move is also a step toward better accommodating foreign tourists, with an eye toward the 2020 Tokyo Olympics.

    Japan’s current 19% rate of cashless payments is less than half the over-50% level seen in nations including South Korea and China, but the targeted 40% rate would put it roughly on par with the U.S.

    Broken down by industry, around 90% of Japan’s lodging facilities accept card payments, compared with roughly 70% of supermarkets and just half of taxis.

    Authors:

    George Popescu
    Allen Taylor