- Today’s main news: SoFi battles its first PR crisis. Small businesses braced for higher costs post-Brexit. ID Finance sees potential in Brazilian market, sees 82% revenue growth in 2017 first half.
- Today’s main analysis: Pullback in subprime loans. Prosper’s Q2 numbers.
- Today’s thought-provoking articles: New fintech lenders encroaching on business banking turf. Pullback on subprime loans. Hongling Capital the worst victim of China’s P2P lending regulatory crackdown. Where is China’s Silicon Valley?
- SoFi battles its first major PR crisis. AT: “Based on the press received so far, there doesn’t seem to be that much interest, but it could be because the news was overshadowed by other current events. Whether this truly develops into a PR crisis for SoFi or not depends on whether it continues to make headlines. It’s still early development, but it seems complicated because of the nature of the allegations. One thing that doesn’t make sense is the canceling of loan applications. I’m not sure why SoFi would reward employees for that.”
- Pullback on subprime loans observed. AT: Data from TransUnion. This is a must-read.”
- Prosper reports strong Q2 results. AT: Analysis from Lend Academy.”
- New fintech lenders encroaching on business banking turf. AT: “Much of this has been seen before, but the survey data is still interesting. It does suggest that community banks and credit unions should not give up small business lending.”
- Goldman tops banks betting on new type of hedging. AT: “If you consider adopting new and innovating technology as a type of hedging.”
- Personal Capital manages $4.9B for people who provide their bank logins.
- What you should know about financial services fraud.
- Community banks can gain from pooling resources into the blockchain. AT: “The only reason I can see not to right now is cost effectiveness, but if any bank show can profitability by using the blockchain, then that will be proof that it is a viable delivery system for financial services. We’re still looking for that first use case.”
- Top and best P2P lending sites for online loans.
- CFPB says tribal online lender case should be in Illinois.
- HoneyFi lets couples hide finances from each other.
- Small banks’ fintech efforts held back by Volcker Rule.
- Buying a Surface through Klarna financing.
- Alan Gellman joins Credible as CMO.
- RealtyeVest chosen for townhome project.
- Small businesses braced for higher costs.
- House Crowd hits 50M GBP.
- 4thWay criticizes other comparison sites for publishing inaccurate information.
- The Start Up Loans Company, NatWest to help UK firms access alternative finance.
- Restricted advice like buying an ill-fitting suit.
- Why Hongling Capital is a victim of China’s P2P lending regulation.
- Where is China’s Silicon Valley?
- Hitting the moving fintech target in China.
- ID Finance reports 82% revenue growth, sees potential in Brazil.
- Uber talking to SoftBank, Tencent about funding.
- Five trends shaping commercial real estate’s future.
- United States
- SoFi battles its first major PR crisis (Tearsheet), Rated: AAA
- Start of a New Trend? Pullback in Subprime Loans Observed (GlobeNewswire), Rated: AAA
- Prosper Reports Strong Q2 Numbers – Is Cash Flow Positive Again (Lend Academy), Rated: AAA
- New Fintech Lenders Encroaching On Business Banking Turf (The Financial Brand), Rated: AAA
- Goldman Tops Banks Betting on a New Type of Hedging (Bloomberg), Rated: A
- A hot fintech startup has amassed nearly $ 5 billion from people willing to hand over their bank logins (Business Insider), Rated: A
- What you need to know about financial services fraud (Tearsheet), Rated: A
- Community banks stand to gain from blockchain — if they work together (American Banker), Rated: A
- Top and The Best Peer-To-Peer (P2P) Lending Sites For Online Loans (FX Daily Report), Rated: A
- CFPB Says Tribal Online Lender Case Belongs In Illinois (Law360), Rated: A
- Why fintech startups love advertising on the New York City subway (Tearsheet), Rated: A
- Charlotte fintech startup targets couples who don’t merge finances (Charlotte Agenda), Rated: A
- Small banks’ fintech efforts held back by Volcker Rule (American Banker), Rated: A
- I bought a new Surface with the Surface Plus program (onmsft.com), Rated: A
- Alan Gellman Joins Credible as Chief Marketing Officer (PR Web), Rated: B
- New Leaf Communities, in Partnership With RealtyeVest, to Build 35 Unit Townhome Project Near Amazon Fulfillment Center (GlobeNewswire), Rated: B
- United Kingdom
- Funding Circle: Small businesses braced for higher costs after Brexit (P2P Finance News), Rated: AAA
- Buy-to-let property platform hits £50m milestone (Property Industry Eye), Rated: A
- 4thWay Criticizes Competitors: “Comparison Websites Display Wildly Inaccurate Information About Peer-to-Peer Lending” (Crowdfund Insider), Rated: A
- The Start Up Loans Company and NatWest to help UK firms access alternative finance (Startups.co.uk), Rated: A
- Robo roundtable: Restricted advice like buying an ill-fitting suit (Citywire), Rated: A
- Hongling Capital: The Worst Victim of China’s P2P Lending Regulatory Crackdown (Lend Academy), Rated: AAA
- Where is China’s Silicon Valley? (SCMP), Rated: AAA
- Fintech In China: Hitting The Moving Target (Oliver Wyman), Rated: A
- European Union
- Review of My Linked Finance Investment After 6 Months (P2P-Banking), Rated: A
- The Destiny of European Corporate Banking (TechBullion), Rated: A
- ID Finance sees “huge potential” for online lending in Brazil as it reports 82% revenue growth in first half of 2017 (ID Finance Email), Rated: AAA
- Captain’s Log, Aug 16 (e27), Rated: A
- Five trends that will shape commercial real estate in future (Lanka Business Online), Rated: B
- Tic:Toc Wants To Bust The Big Bank Myth About Online Home Loans (Which-50), Rated: AAA
- Capital Float in advance talks to raise Rs 300-crore (India Times), Rated: AAA
- Funding Societies is First P2P Lender to Join International Association of Credit Portfolio Managers (Crowdfund Insider), Rated: B
- The future of banking in Southeast Asia (HERO), Rated: A
SoFi battles its first major PR crisis (Tearsheet), Rated: AAA
In a wrongful dismissal suit filed last week, a former employee reportedly claimed he was let go after he told management he had seen female employees subjected to lewd and inappropriate comments and that managers canceled loan applications when internal errors were made — a tactic to secure quarterly bonuses of up to $15,000. There’s also talk of a second class-action lawsuit alleging broader mistreatment of employees at the company.
But experts said the extent of the damage to the SoFi brand will center on whether other employees come forward to corroborate the allegations.
Jim Prosser, vp of communications and policy at SoFi, said the company carried out an internal investigation into the matter and challenged the notion that loan applications could be arbitrarily cancelled.
Based on sentiment expressed on Twitter, the lawsuit hasn’t made a big dent in SoFi’s brand reputation. Since the news broke Friday, 119 tweets mentioned the SoFi Twitter handle, 53 percent of which were positive and 47 percent were negative, according to Brandwatch. Compared to the past month, the SoFi handle attracted 920 mentions, 75 percent of which were positive. Still, Terry maintains that it’s not a massive conversation, and the news may have gotten less play with the violence in Charlottesville, Virginia, capturing headlines.
Start of a New Trend? Pullback in Subprime Loans Observed (GlobeNewswire), Rated: AAA
For the first time since 2012, originations to subprime consumers declined year-over-year for a number of major credit products, according to TransUnion’s (NYSE:TRU) Q2 2017 Industry Insights Report. The report, powered by PramaSM analytics, found that 4.63 million subprime consumers originated an auto loan or lease, personal loan or credit card in Q1 2017. Comparatively, 4.89 million subprime consumers originated one of these products in Q1 2016.
In Q1 2017, subprime personal loan originations declined 10.6% year-over-year, compared to a positive annual growth rate of 11.0% in Q1 2016. This marks three straight quarters of year-over-year declines in originations. More than 100,000 fewer subprime consumers opened a personal loan in Q1 2017 than in Q1 2016.
In fact, personal loan originations declined for all risk tiers, but at lower rates than for subprime originations. Total originations dropped 6.9% from 2.99 million in Q1 2016 to 2.78 million in Q1 2017.
In the credit card market, subprime originations declined by 1.8% to start 2017, the second consecutive quarter of decline. Since 2014, subprime originations had increased at a rapid rate, averaging growth of 29.2% in the first quarters of 2014, 2015 and 2016. In Q1 2017, subprime originations declined at nearly the same rate as total originations (down 1.9%).
As subprime consumers gained access to credit cards, lenders kept subprime credit lines low. In Q1 2017, subprime consumers held just 2.6% of total credit lines.
Auto loan originations declined 8.9% year-over-year from Q1 2016 to Q1 2017. Originations to subprime consumers dropped to 1.10 million in Q1 2017, down from 1.20 million in the first quarter of 2016. At the same time, total originations declined just 2.9% to 6.73 million in Q1 2017.
Mortgage Delinquency Rate Drops to New Low since Recession
The mortgage delinquency rate reached the lowest level since the recession in the second quarter of 2017, dropping below 2% for the first time in almost 10 years. The mortgage delinquency rate was 1.92% in Q2 2017, down 16.5% from 2.30% in Q2 2016.
Viewed one quarter in arrears, mortgage originations remained relatively steady year-over-year in the first quarter of 2017. Up slightly from 1.46 million in Q1 2016, mortgage originations reached 1.49 million in Q1 2017. Largely due to the rise in interest rates, originations declined 28.3% between Q4 2016 and Q1 2017. A year prior, originations only declined 9.4% between Q4 2015 and Q1 2016.
More than 83% of mortgage originations were in the prime and above risk tiers in the first quarter of 2017. Market share of prime and above risk tiers has remained roughly in that range since Q4 2013.
The average new account balance, also viewed one quarter in arrears, declined 1.6% from $223,262 in Q1 2016 to $219,743 in Q1 2017.
Total Credit Card Balances Rise Following Rich Credit Offers in 2016
The latest TransUnion Industry Insights report found that total credit card balances continued their steady year-over-year increase in the second quarter of 2017. Total card balances reached nearly $714 billion, up 7.8% from $662 billion in Q2 2016. The average balance per consumer grew 3.3% to $5,422, up from $5,247 in Q2 2016.
The credit card delinquency rate reached 1.46% in Q2 2017, up 13.2% from 1.29% in Q2 2016. This brings the card delinquency rate above the average Q2 delinquency reading of 1.27% for the last three years.
Auto Delinquency Rate Rises after Years of Non-prime Origination Growth
TransUnion’s latest Industry Insights Report found that the auto delinquency rate reached 1.23% in Q2 2017, an increase of 10.8% from 1.11% Q2 2016.
Viewed one quarter in arrears, auto originations declined to 6.73 million in Q1 2017, down 2.9% from 6.93 million in Q1 2016. This marks the third consecutive quarter of year-over-year declines in auto originations and the first decline in origination growth in any first quarter since 2010.
Total auto balances achieved a new high in Q1 2017, reaching $1.145 trillion. The total balance was up 6.9% from $1.072 trillion in Q1 2016.
Personal Loans Reach New Milestones as Balances Grow and Delinquencies Drop
In the second quarter of 2017, the personal loan delinquency rate declined to the lowest level since 2009. The delinquency rate was 3.02% in Q2 2017, an 8.5% decline from 3.30% in Q2 2016.
Personal loan balances achieved a new milestone of nearly $107 billion in Q2 2017, growing 10.8% over Q2 2016, when total balances were $96 billion. While balances increased, the growth rate was lower than the average Q2 growth rate of 24.7% for the past three years. The average balance per consumer also reached a new high at $7,781 in the second quarter, up slightly from $7,745 in Q2 2016.
Personal loan originations, viewed one quarter in arrears, declined 6.9% to 2.78 million in Q2 2017, compared to 2.99 million in Q2 2016.
Prosper Reports Strong Q2 Numbers – Is Cash Flow Positive Again (Lend Academy), Rated: AAA
As you can see in the graphic above Prosper had a rocky 2016. They went from a quarterly origination high of over $1.1 billion in Q4 2015 to a low of $312 million in Q3 2016. Since that time they have shown some solid growth with originations in Q2 2017 coming in at $775 million up from $586 million in Q1. They still have a long way to go before they reach record levels but growth has returned to the first US marketplace lender.
- Total originations from inception through June 30, 2017 was $9.7 billion.
- Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
- Whole loans represented 94% of total loan volume in Q2.
- Adjusted EBITDA was $6.7 million up from a loss of $11.6 million in Q2 2016.
New Fintech Lenders Encroaching On Business Banking Turf (The Financial Brand), Rated: AAA
Small and micro businesses struggle to get the cash they need. According to the Federal Reserve’s small business credit survey, 60% of applicants obtained less financing than they needed.
And they need money. The top challenge facing small businesses, says the Fed, is credit availability or securing funds for expansion (44%), followed by paying operating expenses (36%), making payments on debt (25%), and purchasing inventory or supplies to fulfill contracts (17%).
Unfortunately, size makes these loans unattractive to many banking providers. More than half (55%) of small businesses needed $100,000 or less and three-quarters sought $250,000 or less.
Can Smaller Banks and Credit Unions Compete? And Should They?
First, while online lender websites may be alluring, small business owners are still concerned about data security and privacy — particularly with these neo-lender startups. Second, the product features among fintechs are not always clearly stated, making it difficult to compare product offerings and costs.
These issues mean many small businesses still prefer to get a loan from a bank. Half (50%) seek financing from a large bank, and 21% from online lenders. And their preference is for loans not credit cards; 86% say they applied for a loan or a line of credit vs. only 31% who just applied for a credit card.
Smaller loans can be profitable, if you approach them in new ways using new tools.
- Reengineer the Process with Big Data. With so much data available on small business owners and more computing power, banks can use big data in innovative ways to decision loans. No longer limited to a credit score, big data can analyze the behavior of the business and predict its ability to pay back the loan. Big data also means that fewer applications must be sent to a human for decisioning. Real-time decisioning cuts costs for the bank and since so much customer data is already digitized, there’s less need to require borrowers to submit reams of documentation.
- Partner with Fintech. Rather than try to compete with online alternative lenders, consider joining them. IN 2015, J.P. Morgan Chase & Co. announced a partnership with On Deck Capital to create online small business loans. Called Chase Business Quick Capital, it provides Chase customers with faster access to cash than a traditional bank loan. Chase states that the capital can be available in the same day. In the past, a small business loan could take weeks to decision and then fund.
Goldman Tops Banks Betting on a New Type of Hedging (Bloomberg), Rated: A
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading big banks in plowing record funds into outside ventures trying to disrupt their industry, a role typically dominated by venture capital firms, according to a report from Opimas, a management consultancy.
Goldman Sachs has invested in about 15 so-called fintech firms focusing on capital markets businesses this year, while JPMorgan has bet on nine, the report shows. Altogether, banks and other established companies will probably pump a record $1.7 billion into the sector through 44 deals in 2017, Opimas estimated.
A hot fintech startup has amassed nearly $ 5 billion from people willing to hand over their bank logins (Business Insider), Rated: A
- Personal Capital is a startup known for its free platform, which allows people to plug in their bank and investment accounts to see all their financials at once.
- CEO Jay Shah says Personal Capital has been monetizing the business by getting richer clients to pay for financial advice.
- The startup recently raised an additional $40 million in outside funding.
The company is managing assets for Americans worth about $4.9 billion, and increasingly the customers are more affluent, Personal Capital’s CEO, Jay Shah, told Business Insider in a recent interview.
Shah declined to say how many of the company’s estimated 1.5 million free users convert to paying for financial advice from the free platform.
What you need to know about financial services fraud (Tearsheet), Rated: A
In finance, there are three distinct patterns of fraud: transaction fraud, application fraud and account takeover fraud.
Card issuers lost $15.72 billion (72 percent) in gross fraud losses in 2015 and merchants and acquirers lost the remaining $6.12 billion (28 percent), according to the Nilson Report.
Application fraud is the fastest-growing type of fraud in financial services and happens when a fraudster actually pretends to be you using actual account credentials to open new lines of credit. We can break it down even further into three types:
- Third party fraud: when someone gets enough of someone’s personal information from a compromised data set to go to a bank and pretend to be that person to apply or a loan or credit card
- First party fraud: when the person coming to the bank (or other service) really is the person he or she claims to be but intends to not pay back the loan or credit card; in instances of first party fraud, the bank or business is the victim, not the customer
- Synthetic fraud: when someone creates a persona using fake or borrowed information, like a social security number, and adds other, made-up elements of personally identifiable information like a name, address or date or birth
Account takeover fraud is the final type of fraud (for the purposes of this primer, at least). It happens to people when fraudsters obtain their various user IDs and passwords to be able to access other accounts that involve financial transactions.
Did those new chip cards I got help?
Kind of! Account takeover incidents increased 61 percent to $2.3 billion from 2015 to 2016, according to research by Javelin published in February. Victims pay an average of $263 out of pocket and spent 20.7 million hours to resolve it in 2016 – six million hours more than in 2015.
Community banks stand to gain from blockchain — if they work together (American Banker), Rated: A
Blockchain is most widely known as the platform to house virtual currencies such as bitcoin,ethereum and litecoin. But the uses for blockchain are going well beyond virtual currencies. The Republic of Georgia, for example, voted in April 2016 to implement a land ownership registry that relies on blockchain to verify ownership of property. If the United States did something similar with blockchain, banks could close real estate loans more quickly. Think about a world where ownership interests in real estate can be verified immediately and with certainty.
In this world, the expansive role of the title agent would essentially dissipate (or be greatly minimized), the time taken to verify title would be eliminated and, most important, the cost associated with confirming a title interest through title insurance would be dramatically reduced. All of these results would improve the closing process, both from an efficiency standpoint for banks and from a cost standpoint for the customer.
Technologists are also using blockchain to try to replace our needlessly difficult residential mortgage loan origination processes so that the process, from application to closing, can be reduced from a few weeks to a few days.
To realize these kinds of opportunities, community banks in a region should collaborate on strategies to bring blockchain into the banking industry.
Top and The Best Peer-To-Peer (P2P) Lending Sites For Online Loans (FX Daily Report), Rated: A
A PriceWaterhouseCoopers report noted that though the P2P industry is in its infancy loans to the tune of $5.5 billion have been disbursed by the P2P websites in the U.S. in 2014 alone. According to PriceWaterhouseCoopers, P2P lending could be more than $150 billion by 2025.
#1: Funding Circle
Funding Circle has disbursed more than $1 billion in loans to over 8,000 businesses in the world. Along with the growth in terms of the number of businesses borrowing from the company, Funding Circle has seen a substantial growth in the number of investors too. In fact, Funding Circle’s investor base includes banks, other financial institutions, and more than 40,000 retail investors. Even the U.K. government is an investor.
#2: Lending Club
As leading online lending marketplace, the company that connects borrowers and lenders has disbursed loans to the tune of $11,167,217,348 as of mid-2015.
The minimum amount you can borrow is $3,000 and the maximum is $35,000. The annual percentage rate or APR starts at 4.7 percent. They offer loans for just about everything.
#4: CircleBack Lending
Loans are offered by CircleBack Lending for tenures of 3 or 5 years and amounts ranging from $3,001 to $35,000. The APR ranges from 6.63 percent to 36 percent.
#5: Prosper Marketplace
The company has registered tremendous growth since its inception and currently has a client base of more than 250,000. Prosper has disbursed loans worth more than $4 billion so far.
This popular lending marketplace offers 3-year loans ranging from $1,000 to $25,000 with an APR of 7.12 percent to 29.99 percent. Peerform does not look at the FICO score alone in order to measure the risk of lending. The company’s Loan Analyzer carries out the evaluation on a case to case basis. According to Peerform, the Loan Analyzer was developed in consultation with leading economists and it follows a differentiated method for determining the creditworthiness of each borrower. As a result, even individuals whose credit scores are in the range of 600 may be able to secure loans.
SoFi’s offers loans starting from $5,000 and up to $100,000, which is higher compared to the standard amount of $35,000 offered by many other players in the peer-to-peer marketplace.
CFPB Says Tribal Online Lender Case Belongs In Illinois (Law360), Rated: A
The Consumer Financial Protection Bureau urged an Illinois federal judge Monday not to transfer a suit claiming four Native American tribe-owned companies charged excessively high interest for online loans, saying there’s much more reason to keep the suit in Illinois than to move it to the companies’ preferred Kansas venue.
Golden Valley Lending Inc. and three other online lenders owned by the California-based Habematolel Pomo of Upper Lake Tribe had asked U.S. District Judge Thomas M. Durkin in June to transfer the CFPB’s suit to Kansas,….
Why fintech startups love advertising on the New York City subway (Tearsheet), Rated: A
For a consumer fintech startup, it’s the perfect place to put some advertising dollars. TransferWise has built its business around the ability to let people send money overseas at a low cost. Sixty percent of its users are immigrants; 40 percent are American-born. Its employees represent more than 50 countries. Its user base and prospective customer pool looks a lot like the people of New York.
Even if they’re American-born, theres still a chance they moved to New York from someplace else. TransferWise wants to send the message that it celebrates that diversity.
The subway is a hot destination for startups in general, looking to stretch their marketing budgets. E-commerce startups like Thinx and Casper both love advertising on the subway, calling them “conversation starters” and a way to be in a city where “trends are set.” They’re also effective, say these companies: David Zhang, Casper’s CMO, told Tearsheet’s sister site, Digiday that subway ads are highly effective to target local audience because when riders get stuck on the train, they have nowhere to look except at those ads.
Three years ago Venmo ran an ad campaign around the New York subway featuring an everyday millennial called “Lucas” (who, it turns out, was a Venmo engineer). Venmo’s message to subway riders was the same (although less nostalgic and bittersweet): we do the same things you do, we understand you. The campaign sparked a lot of frustration and confusion for consumers — but the company was engaging with them.
Charlotte fintech startup targets couples who don’t merge finances (Charlotte Agenda), Rated: A
Couples today are getting married later.
And when they do get hitched, they’re much less likely to combine their finances. Only one-third of millennial couples are putting everything in a joint bank account and fully merging their money. That’s down from about half of couples overall, according to research from TD Bank.
Honeyfi, an app planning a formal beta launch later this week, is designed to allow couples to blend finances to the extent they’re willing to — and figure out how to manage things accordingly.
Both sides load in all their financial accounts but can choose what’s visible to their significant other — both at the account level and at the individual transaction level. If you want to keep your shopping spree under wraps, you can do that with Honeyfi.
Small banks’ fintech efforts held back by Volcker Rule (American Banker), Rated: A
The Dodd-Frank Act’s Volcker Rule was meant to protect the financial system by prohibiting banks from engaging in certain risky activities. But it may also be stopping community banks from being able to reap significant benefits from the fintech revolution.
I bought a new Surface with the Surface Plus program (onmsft.com), Rated: A
Here’s a couple of things to note: In order to be considered for the Surface Plus Program, you are required to purchase Microsoft Complete and you will be required to do a credit check through KLARNA. KLARNA handles the financing and you will have to make your monthly payments through KLARNA and NOT Microsoft. After choosing the Surface Pro (fan-less Intel Kaby Lake i5 processor, 8 GB RAM, 256 SSD)I found that my 24-month payment plan is similar to a AT&T phone payment plan.
I have not started making payments yet, but my payments will be about $63 a month, with an option to upgrade after 18 months.
Funding Circle: Small businesses braced for higher costs after Brexit (P2P Finance News), Rated: AAA
MORE THAN two thirds of small businesses that import goods and services expect costs to increase when Britain leaves the European Union, Funding Circle claims.
A poll of 1,325 small business borrowers by the peer-to-peer platform found 69 per cent of firms expect their average costs to increase by £5,300 per month resulting in £60,000 per year of extra spending.
Businesses were also deflated by the overall result of the general election with only 12 per cent stating that they feel positive about the outcome, while 41 per cent were concerned.
Buy-to-let property platform hits £50m milestone (Property Industry Eye), Rated: A
Founded in 2012 with an initial focus on Manchester, the House Crowd claims to offer investors returns of 8-10% to fund property projects, known as peer-to-peer (P2P) lending.
There have been 307 projects funded so far, all of which are secured on the underlying property.
4thWay Criticizes Competitors: “Comparison Websites Display Wildly Inaccurate Information About Peer-to-Peer Lending” (Crowdfund Insider), Rated: A
The worst inaccuracies were found to be:
- Five of the six are presenting peer-to-peer lending as “savings” rather than “investing” a year after the Financial Conduct Authority expressed well-founded concerns about this practice.
- The two money sites that compare P2P investments in their comparison tables include P2P lending in savings account comparison tables rather than separate investment comparison tables.
- Risk of fraud and negligence were not mentioned by any of the money sites.
- Just one of the six mentioned the risks to investors of concentrating their pots on just one P2P lending platform.
- Risks identified in behavioral investing theory (such as poor investing results from those who are too greedy or fearful) were not mentioned by any of the sites.
- None of the six explained the full costs to investors of using P2P services, typically covering just a smaller part of the costs (the lending fee), while sometimes leaving the impression that lending is completely free. (It is never free for investors due to hidden costs.)
- No money sites made clear the vast difference in risks between the various P2P lending platforms.
- Just one generic money site explains that bad debts might be higher in a financial downturn.
- While all showed the risk of losses if a P2P lending platform goes out of business, five did not explain that you could experience delays in getting your money back.
- Five out of six relied heavily on provision funds and on the level of interest rates to assess whether a P2P lending platform is safe, assuming safety is always correlated. (Interest rates are an unreliable measure of risk and provision funds are a secondary risk-control or risk-measurement devices. Much more important factors include such things as solid underwriting and credit-risk models, good security and low bad debt history.)
- Some of the money sites did not explain that provision funds might not always be sufficient to cover losses.
- All six fail to mention that you might not in all circumstances be able to get your money back as soon as you expect, even if there is an option to sell your loans and exit early.
The Start Up Loans Company and NatWest to help UK firms access alternative finance (Startups.co.uk), Rated: A
The government-backed Start Up Loans Company joins six other finance providers on the Capital Connections scheme including Seedrs, Funding Circle, Assetz Capital, iwoca, Together and NatWest Social & Community Capital.
Robo roundtable: Restricted advice like buying an ill-fitting suit (Citywire), Rated: A
New Model Adviser® sat down with the heads of three robo firms, or ‘digital wealth managers’.
- Adam French, chief executive, Scalable Capital
- Johann Bornman, director of product, ETFmatic
- Giovanni Dapra, chief executive, Moneyfarm
News Comments Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round. Today’s main analysis: Affordability of houses in U.S. cities relative to income. Today’s thought-provoking […]
- Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round.
- Today’s main analysis: Affordability of houses in U.S. cities relative to income.
- Today’s thought-provoking articles: List of Europe’s fastest-growing companies. China’s new illegal fundraising topped $36B last year. Mapping robos around the world.
- Wela launches mobile app pairing AI with real financial advisors. GP:”In online lending the equivalent would be mixing AI underwriting and human underwriting. “AT: “It won’t be long before everyone is managing their finances with mobile apps: Household income, investments, savings, college education expenses, you name it. Artificial intelligence will be a major part of that movement.”
- Kroll assigns preliminary ratings to Avant Loans Funding Trust 2017-A. GP:”Avant continues to securitize and the securitization continues to perform well. This is great news for Avant and their peers.”
- Affordability of houses in major U.S. cities relative to income. GP:”Afforability of housing, as it is the largest budget item in most people’s budget, is correlated with all kind of useful parameters like affordability,etc. However, the correlation is not always in the direction one would expect: if housing is cheap it could mean people have no credit/only expensive credit options/no good income , etc. “AT: “While interesting data, this says nothing about whether these markets are good investment markets for real estate. Rather, its says a lot more about whether John Q. Homeowner can afford to buy a home in these markets. Looking at median incomes, I’d say the majority of income earners all across the country would have a difficult time buying a home in most of these markets. But the data can also be misleading. For instance, in Dallas, the median house value is $162,300, but the average middle-class home purchaser can get a home for half that. Medians don’t give a realistic view of on-the-ground reality, in my opinion.”
- Upgrade to hire up to 300 in Phoenix. GP:”Renaud Laplanche is hiring up to 300 people after barely opening doors. Lending Club I believe has about 1,000 employees. In my personal experience in growing companies I made the mistake of hiring too many too fast and I now prefer to see what I can do with as few people as possible.” AT: “Upgrade is expanding fast. I wonder why they chose Phoenix.”
- Reliamax now services $275M in private student loans. GP:”A decent size portofolio. We encourage as much transparency as possible. I wish more companies published their portofolio size and numbers.”
- RIP MPL? AT: “This is an apologia for Misys, which I think is trying too hard to convince people that banks can compete with fintech companies on technology. One problem: They haven’t proven it yet, and it doesn’t appear as if they are working at it real hard. In order for the premise to be true, community banks will have to follow the larger banks in adopting emerging technologies, and very few of them are. I don’t even think it’s on their radars.”
- Lending Technologies introduces Leads2Lend. GP:”We have on our database close to 20 tech companies who provide platforms to lenders. How many more will enter this space? Is this a crowded space yet?”
- Banks to overhaul their technology. AT: “There are some valiant efforts here, but big banks are not agile. I don’t see these changes happening as rapidly as their digital competitors in fintech can operate.”
- How the CRE industry is adapting to fintech.
- Comparative look at REITs and MPL. GP:”REIT is very tax efficient.”
- Roostify names Frank Gelbart as CRO.
- Assetz Capital to launch property-only, longer-term accounts. GP:”I believe that listening to customer requests and needs is the way to go. A very good step if the customers demand this offering.”
- Mint Bridging ups development lending as FC exits. GP:”Funding Circle most likely exited the market due to bad performance of the product. I hope Mint Briging has considered this and is using a very strong underwriting and anti fraud model built on reliable large amounts of data. “AT: “I see more companies filling the gap with FC’s absence.”
- P2PGI keeps NAV growing through asset-backed market. GP:”Main reason: shit away from US and unsecured assets.”
- Growth Street reports rapid growth as 600 investors sign up in 5 months. GP:”Please keep in mind that Zopa never paid to acquire lenders in the p2p model as the numbers don’t add up. They always relied only on word of mouth.”
- An MBA grad left traditional banking to launch online lender. AT: “You have to move to where the opportunities are.”
- The House Crowd celebrates five years of property crowdfunding.
- Lend and earn up to 6% with Kuflink.
- 1000 fastest growing companies in Europe. AT: “Several are fintechs, including RateSetter, iZettle, Trustly, and Prepaid Financial Services.”
- China Creation Ventures leads $16M round for IceKredit. GP:”IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China. The interesting part is that it’s hard to underwrite SMEs and individuals in a market like China. “
- China’s illegal fundraising topped $36B last year. AT: “That’s larger than some countries’ total fintech volume.”
- Dianrong prepares full blockchain integration. GP:”Keep in mind that Dianrong’s founder and CEO is a co-founder of Lending Club and an advisor of Renaud Laplanche’s Upgrade which is already using Blockchain for internal controls. “AT: “I’ll be anxious to see how this works out.”
- P2P lending news in China. GP:”We are not publishing part of our Chinese news in English and in Chinese. Today’s news: P2P lending fair in Chengdu, P2Ps may acquire bank like license in the future, cahs loans over 600bil RMB. “AT: “In English and Chinese.”
- Half-hearted crackdown dents case for Chinese P2P. AT: “I agree that the crackdown doesn’t seem to be as aggressive as initially presented.”
- E. Sun launches AI chatbot to offer financial advice.
- Mapping robo-advisors around the globe. GP:”Robos market is well correlated with online lending.” AT: “That the wealthiest nation in the world would lead in WealthTech funding is not surprising. But this is about investment. U.S. consumers have not adopted robo-advice as quickly as consumers in other nations, especially Asia.”
- Fintech patents jump, U.S. leads. GP:”I am surprised China comes in as #2.” AT: “I think U.S. creators care more about protecting their intellectual property than creators in other parts of the world, or it could be that the U.S. mechanism for protecting patents is much more sophisticated and effective than in other parts of the world. Either way, you can’t judge the size of the fintech sector by patents alone. Otherwise, the UK would be way down the list.”
- United States
- Wela Launches World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors (Yahoo! Finance), Rated: AAA
- KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2017-A (Yahoo! Finance), Rated: AAA
- Affordability Of Houses In Major U.S. Cities (Relative To Income) (Investment Zen), Rated: AAA
- California finance startup opening downtown Phoenix office, hiring up to 300 (Biz Journals), Rated: A
- ReliaMax Now Services $ 275 Million in Private Student Loans (Yahoo! Finance), Rated: A
- Marketplace lending RIP? (Bankless Times), Rated: A
- Lending Technologies Corp Introduces Leads2Lend CAM Solution (PR Newswire), Rated: A
- An omnichannel overhaul in 5 steps (American Banker), Rated: A
- How is the CRE Industry Adapting to the Emergence of Fintech Solutions? (NREI Online), Rated: A
- Comparative look into REITs and Marketplace Lending (Realty Biz News), Rated: B
- Roostify Names Frank Gelbart as Chief Revenue Officer (Yahoo! Finance), Rated: B
- United Kingdom
- Assetz Capital to launch property-only and longer-term accounts (P2P Finance News), Rated: AAA
- Mint Bridging ups development lending as Funding Circle exits market (Financial Reporter), Rated: AAA
- P2PGI keeps NAV growing through UK asset-backed market (P2P Finance News), Rated: A
- Growth Street Reports Rapid Growth as 600 Investors Sign Up in Just 5 Months (Crowdfund Insider), Rated: A
- High earners log-on for robo-advice (Finextra), Rated: A
- An MBA Graduate Left Banking To Launch Online Lender Spotcap Overseas (BusinessBecause), Rated: A
- The House Crowd Celebrates Five Years of Property Crowdfunding (Crowdfund Insider), Rated: A
- Lend and earn annual returns of up to 6% with Kuflink (Property Investor Today), Rated: B
- European Union
- The FT 1000: The complete list of Europe’s fastest-growing companies (Financial Times), Rated: AAA
- China Creation Ventures Leads $ 16M Round In SME Credit Firm IceKredit (China Money Network), Rated: AAA
- China’s new illegal fundraising topped $ 36 billion last year (Daily Mail), Rated: AAA
- P2P Giant Dianrong is Preparing for Full Blockchain Integration (Coindesk), Rated: A
- P2P Lending News (Xing Ping She Email), Rated: A
- Half-hearted crackdown dents case for Chinese P2P (NASDAQ), Rated: A
- E.Sun launches new AI chabot to offer futuristic financial advice (The China Post), Rated: B
- Mapping Robo-Advisors Around The Globe (CB Insights), Rated: AAA
- Fintech patents jump in “arms race” between banks and startups: These are the 10 countries filing the most (City A.M.), Rated: B
- Fintech firms that walk the talk (The Australian), Rated: A
Wela Launches World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors (Yahoo! Finance), Rated: AAA
Wela today announces its free mobile app changing the way financial advice is delivered by pairing real financial advisors with Artificial Intelligence (AI) through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps on the market, Wela pairs AI capabilities with a human touch, offering access to real financial advisors via phone, video chat or in-person at no additional cost.
The Wela iOS app enables users to track all their financial accounts in one place, protecting user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Wela’s digital advising algorithm, Benjamin, uses linked account information to run a complete analysis, helping users take steps toward financial health based on three main pillars: creating an emergency reserve, paying off debt, and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.
Wela’s in-app budgeting tool, Benjamin, makes budgeting tangible and prevalent on a day-to-day basis. Once Benjamin is activated, the onboarding process begins with the creation of a personalized ‘Daily Spend Limit’. Benjamin then compares that number to actual daily spending and other transactions so users can understand how they are progressing toward the customizable goals they have set for themselves within the app. With real-time analysis of daily spending, rather than an end-of-month review, users are empowered with a better budgeting method and reassurance in their progress.
“Wela is the first free app to give comprehensive financial advice in real time in real-world scenarios personalized for you,” said Matt Reiner, Wela CEO and co-founder.
KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2017-A (Yahoo! Finance), Rated: AAA
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-A (“AVNT 2017-A”). This is a $192.6 million consumer loan ABS transaction that is expected to close on May 4, 2017.
This transaction represents Avant, Inc.’s (“Avant”, the “Servicer” or the “Company”) fourth rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated through its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.
Avant has a strategic partnership with WebBank, whereby WebBank, a Utah chartered industrial bank, originates loans through the Avant Platform. Avant utilizes technology and customized scoring models to assign credit grades. The Avant website is designed to provide customers with an easy interface and quick online loan decisions at competitive rates compared to traditional lending platforms.
Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.
Affordability Of Houses In Major U.S. Cities (Relative To Income) (Investment Zen), Rated: AAA
Using median income data from the U.S. census and median home prices from Zillow, this map shows how many years of median income it costs to purchase a median house in each of these cities.
- Median House Value: $38,200
- Median Household Income: $25,764
- Amount of Income Needed to Purchase: 1.5x
- Median House Value: $1,147,300
- Median Household Income: $81,294
- Amount of Income Needed to Purchase: 14.1x
California finance startup opening downtown Phoenix office, hiring up to 300 (Biz Journals), Rated: A
San Francisco-based financial services startup Upgrade Inc. is opening its first expansion office in downtown Phoenix, with plans to potentially hire up to 300 people.
The startup is opening an operations center in July on two floors of the Renaissance Square Building One at 2 N. Central Ave.
ReliaMax Now Services $ 275 Million in Private Student Loans (Yahoo! Finance), Rated: A
ReliaMax, the complete private student lending solutions provider for banks, credit unions and alternative lenders, says it services $275 million in loans, an increase of nearly 670 percent from the close of 2015, driven by portfolio conversions that helped banks, credit unions and alternative lenders enter the private student loan asset class.
The ReliaMax loan servicing platform was built with the latest technology and exclusively for private student loans, making it unencumbered by the infrastructure constraints facing other student loan servicers whose platforms were designed to principally serve federal student loans or other consumer loans.
Marketplace lending RIP? (Bankless Times), Rated: A
Once banks master financial technology, the marketplace lending industry is in deep trouble, Jean-Cedric Jollant believes. And the bad news is that’s starting to happen.
“The (fintech) challengers made the move by trying to build a hybrid model where they may not own 100 per cent, 50 per cent or even zero per cent of a loan, but the need the technology to do that,” Mr. Jollant said. “They need new underwriting material and servicing software which they don’t necessarily have.”
Once more banks embrace new technology, they will be able to capitalize on a long list of advantages they have over marketplace lenders, Mr. Jollant said. Their abilities to process payments, service credit and onboard customers are superior. Close the technology gap and the banks can provide much better service at competitive rates.
“So (the marketplace lenders) are just intermediaries. Eventually they will not be able to compete with banks. The only difference between what the marketplace lenders are doing today and the banks really is the underwriting model and that gap will be breached really fast.”
Mr. Jollant believes the venture capital industry will soon begin to sour on marketplace lenders, possibly as soon as later this summer. Those surviving that will then have to withstand the next downturn, which many models have yet to be tested by.
Lending Technologies Corp Introduces Leads2Lend CAM Solution (PR Newswire), Rated: A
B2B fintech firm Lending Technologies Corp, a pioneer in loan origination technology, announces Leads2Lend, its new marketing platform for alternative lenders. Produced in cooperation with Lead One Marketing, Inc. the Leads2Lend program provides alternative finance companies with an all-in-one digital solution to identify and engage with potential new customers—ultimately leading to a stronger bottom line.
The Leads2Lend platform combines Lending Technologies Corp’s white-label customer acquisition management (CAM) technology with a digital marketing program that connects alternative finance firms with new clients. Using Lending Technologies Corp’s proprietary digital onboarding and loan building tools, designated agents can individually download leads and create bespoke lending solutions for the clients. Other functionalities include tools to expedite credit decisions and facilitate loan package construction.
Lending Technologies Corp’s white-labeled CAM technology, serving customers in the U.S. and Switzerland, provides a fully digital, mobile-responsive, end-to-end process for banks and alternative finance companies that allows lenders to save time and money while reducing the risk associated with underwriting loans to small- and medium-sized enterprises. Lending Technologies Corp provides a seamless, paperless solution to all users and gives loan officers the latest digital tools for lenders to issue credit decisions—all with a comprehensive back end.
An omnichannel overhaul in 5 steps (American Banker), Rated: A
U.S. Bank and Bank of Montreal have begun multiyear overhauls of their websites, mobile apps, call centers and ATMs.
Fix what’s broken. Both U.S. Bank and Toronto-based BMO are starting with the “dissatisfiers” — the things that vex customers or make them give up on one channel (say, mobile) and switch to another (such as the call center). JPMorgan also made this part of its approach when it rewrote its mobile app last year.
Make incremental enhancements.
U.S. Bank’s mobile app was improved 27 times in the past two years, with the help of so-called agile development methods.
BMO also has adopted agile development. “Gone are the days when our tech people took months and months and built detailed requirements,” Badarinath said.
Create a “unified customer experience.” For years, banks have talked about having a consistent experience across mobile apps, websites, branches, ATMs, video kiosks, call centers and text messages. Yet you would not want to talk with a teller the same way you tap on a mobile app or withdraw cash from an ATM.
This fits with recent Javelin research that found most consumers would prefer to apply for credit cards in digital channels: 48% said online, 13% mobile, and 34% said they would prefer a branch. For a checking account it was 41% online, 8% mobile and 49% in a branch.
Today, only 8% of successful applications start and finish in a smartphone or tablet.
Establish an innovation team.
BMO has a group whose job is to look for interesting fintechs the bank can partner with to augment his group’s work.
Test emerging technologies.
And it is exploring options for using chatbots to let people use text messages to request and perform transactions.
Gaston envisions using augmented reality to help customers who want to purchase a car, a house or a boat understand their options.
He foresees using machine learning in the bank’s decisions about online accounts.
How is the CRE Industry Adapting to the Emergence of Fintech Solutions? (NREI Online), Rated: A
NREI recently spoke with Frank Muhlon, head of transactions at CrediFi Corp., to hear more about what’s ahead for this segment of the market.
Frank Muhlon: For sales and financing, technology allows for faster and broader market reach, meaning you have the ability to get to multitudes of investors and lenders. Being able to get to those people faster is really helping to drive the business.
The other area is risk mitigation and the opportunity to reduce your risk, which goes hand-in-hand with more transparency and more information.
Frank Muhlon: At its heart, it has always been a people business and I really don’t foresee that changing. But tech and innovation have been a hallmark of commercial real estate for some time. Eight to 10 years ago we went through a significant and humbling downturn and going through that adversity brought innovation and numerous opportunities. Institutional capital, debt and equity capital got reshuffled, and it presented some opportunities in the marketplace.
I think there is a segment of our industry that is not completely convinced that tech is necessarily disrupting our business in the way that it is disrupting other industries.
Frank Muhlon: In the last five years, the crowdfunding space has grown. There were fewer than 10 pioneering real estate platforms focusing mostly on equity investment. Now there are arguably over 100 sites covering the entire capital stack.
Five years ago, crowdfunding as a whole was a few billion [dollars] in activity globally. In 2016, it was well over $50 billion. Real estate is a more modest piece of that, but it has grown substantially as well. There was about $3.5 billion in activity on real estate crowdfunding sites in 2016. That has been a tremendous growth market, and alternative financing and lending is seeing similar trends.
The online lending industry was about $40 billion last year and it could be upwards of $1 trillion in the next five years.
Frank Muhlon: CredifX is the first cloud-based and data-driven commercial real estate financing marketplace for borrowers, brokers and lenders. The platform focuses on loans of $1 million and up across all major property types nationally. We leverage technology to match loan applicants with financing based on their criteria and the extensive loan product offerings in our lender network.
Comparative look into REITs and Marketplace Lending (Realty Biz News), Rated: B
One reason to invest in REITs is the favorable tax treatment and dividend payouts. Unlike investing in businesses where you expect to see increasing profits from continued growth, 90% of the profits have to be issued in dividends from investments in REITs. Instead of waiting for a business venture to show profits before receiving a dividend, investors get their share quarterly or annually in regular dividend checks.
With Marketplace lending, investors can expect to receive monthly disbursements throughout the lifetime of the loan. Principal investments are typically returned to investors between 6 months to 24 months, depending on loan payoff dates and loan extensions. Servicing fees vary by marketplace lending platform, but typically range from 1% – 3%, compared to REIT management and servicing fees from 3% – 15%.
Finally, REITs instantly diversify your portfolio resulting in better returns. In one REIT you may be invested in a commercial building, an apartment building, and a couple of warehouse distribution centers. The more diverse the portfolio, the better the returns, and the better the hedge against volatility.
While this style of diversification may work to the benefit of experienced REIT investors. marketplace lending allows portfolio diversification controlled by the investor.
Roostify Names Frank Gelbart as Chief Revenue Officer (Yahoo! Finance), Rated: B
Roostify, a provider of automated mortgage transaction technology, today announced it has named Frank Gelbart as Chief Revenue Officer. Frank will be responsible for driving new and existing revenue streams as well as managing partner relationships for Roostify.
Assetz Capital to launch property-only and longer-term accounts (P2P Finance News), Rated: AAA
ASSETZ Capital is launching two new investment accounts to capitalise on the surge of demand it has experienced on both the investor and the borrower side.
The peer-to-peer lending platform is expanding its account range to seven offerings, adding a longer-term and a purely property-backed account to its existing 30-day access, quick-access, green-energy, “great British business” and manual loan accounts, it told Peer-to-Peer Finance News.
The longer-term account will offer investors an interest rate of about 4.75 per cent over one-year investments, while the new specialist account, which caters for investors who want to focus exclusively on loans secured against property rather than other assets, will target returns of around five per cent.
Mint Bridging ups development lending as Funding Circle exits market (Financial Reporter), Rated: AAA
Mint Bridging has reported an “influx” of development finance business after Funding Circle announced plans to stop lending in this area earlier in the month.
Its product ranges can accommodate up to £5,000,000 at 80% LTV, with heavy refurbishment projects up to 100% of the purchase price & 100% of the refurbishment costs.
P2PGI keeps NAV growing through UK asset-backed market (P2P Finance News), Rated: A
P2P GLOBAL Investments (P2PGI) continued to shore up its finances in March, posting a 0.55 per cent increase in net asset value, from 0.38 per cent in February, which brings first-quarter growth to 1.17 per cent.
The P2P investor’s shift away from US and unsecured assets, as well as a share buyback last month, was the main driver of the improvement.
US consumer assets now dropped to 45.1 per cent of the London-listed fund’s portfolio, down from 46 per cent a month earlier and 48.4 per cent at the start of the year.
The firm is targeting a further reduction to 30 per cent of total investment, to boost its focus on UK property and asset-backed products, where it said new origination from partnering with P2P lenders has increased significantly in the last quarter
Growth Street Reports Rapid Growth as 600 Investors Sign Up in Just 5 Months (Crowdfund Insider), Rated: A
Peer to peer lender Growth Street is reporting solid growth. The online lender said it has captured over 600 investors since platform launch at the end of 2016. Growth Street is a platform that provides online financing options for UK SMEs. The company also touted its review on 4thWay that categorized the P2P lender as one of the lowest risk platforms in the industry.
High earners log-on for robo-advice (Finextra), Rated: A
The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.
Deloitte’s research shows over half (51%) of people earning £45,000 to £70,000 would use a robo-adviser for investments, compared with just 30% of those on incomes under £15,000.
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43%) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24%) for the 45-54 year olds and a fifth (21%) of those aged 55 and above. Also, 35% of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45%) among those with the smallest pensions pots, many of whom cannot afford traditional advice.
An MBA Graduate Left Banking To Launch Online Lender Spotcap Overseas (BusinessBecause), Rated: A
When Niels Turfboer enrolled in the MBA program at IE Business School in Madrid, he looked beyond a traditional career in banking. He decided to join the fast-growing fintech industry instead.
Having worked at institutional lenders for over a decade, his MBA training enabled him to spot an opportunity in the business banking space. Four years after graduation, he joined fintech startup Spotcap as managing director.
Spotcap offers working capital lines of credit — up to £250,000 — to small and medium-sized companies online. Spotcap has a run rate of £100 million in loans per year. The company operates in Spain, the Netherlands and Australia. Spotcap also opened a branch in the UK last year, despite Brexit. The business employs 100 people and has raised €75 million in venture capital.
Q. Did you know you wanted to work in fintech before the MBA?
I’m a traditional banker. I worked for over a decade in the banking industry. But I wanted to be more entrepreneurial. There were opportunities to be entrepreneurial in banking, but after the crisis, this was gone. I chose a very particular school — IE — because it is known for having a strong focus on innovation and for being entrepreneurial. A large part of the MBA course is focused on teaching people to build and run a company.
Q. You’ve launched in the UK. After the Brexit uncertainty, are you reconsidering?
No. We moved in after Brexit. We were surprised at the result, but having analysed the situation, we concluded it’s not a negative. I see downsides, but not for our business model. We know there will be two years of deal making and uncertainty over trade barriers and freedom of movement. It tends to be bad for the economy, and this has had an impact. But we already had this knowledge moving into the market. We might be able to be more selective about lending to companies in industries that are hit hardest by the uncertainty. We are not going to do cherry picking, but we might take precautions in lending money. At the same time, during uncertainty banks are risk-averse and take a step back, and that opens up opportunities for the alternative finance sector to fill that gap.
Q. Is the MBA curriculum relevant to entrepreneurs?
Yes, at least the MBA I’ve done. At IE, 30% of the courses I did had an entrepreneurial focus.
The House Crowd Celebrates Five Years of Property Crowdfunding (Crowdfund Insider), Rated: A
Manchester property crowdfunding, the House Crowd, is celebrating five years of operations having raised more than £44 million since it launched it 2012. According to the platform, the House Crowd now serves over 15,000 investors who have received over £9 million in returns. The House Crowd received the ‘Crowdfunding Platform of the Year’ award at this year’s inaugural Property Wire Awards, in recognition of its position in the alternative finance industry.
Lend and earn annual returns of up to 6% with Kuflink (Property Investor Today), Rated: B
The Kuflink Group is offering investors an opportunity to earn up to 6% a year through its peer-to-peer (P2P) lending platform, while also providing short-term finance for those looking to invest in property.
When it comes to the option to lend against various properties on Kuflink’s P2P platform and earn up to 6% gross pa for short-terms, up to 12 months usually, interest is paid monthly.
Secondly, Kuflink offer short-term lending against property for business purposes for terms of up to 24 months.
The FT 1000: The complete list of Europe’s fastest-growing companies (Financial Times), Rated: AAA
|46||Epos Now||United Kingdom||Fintech||1,579%|
|335||Prepaid Financial Services||United Kingdom||Fintech||367%|
|763||Smart Currency Exchange||United Kingdom||Fintech||114%|
China Creation Ventures Leads $ 16M Round In SME Credit Firm IceKredit (China Money Network), Rated: AAA
China Creation Ventures, a newly founded venture firm established by several former KPCB executives, has led a RMB110 million (US$16 million) series A round in IceKredit Inc., a Shanghai-based credit assessment service provider catering to small and medium-sized enterprises (SMEs).
Founded in 2015, IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China.
Its products include an SMEs credit evaluation system and an individual credit assessment system, which consists of an anti-fraud engine, personal credit portrait and missing customer contact information restoration.
China’s new illegal fundraising topped $ 36 billion last year (Daily Mail), Rated: AAA
Chinese authorities vowed on Tuesday to step up a crackdown on illegal funding scams, after reporting 5,197 new criminal cases last year involving 251.1 billion yuan ($36.5 billion), state-run Shanghai Securities News reported.
More than 30 percent of illegal fundraising cases were related to private investment and financial intermediaries, including unlicensed investment advisers and providers of third-party wealth management products, the report said.
Moreover, financial fraud spread last year from China’s east to rural areas, where funds approached unsophisticated Chinese farmers, the office of the joint meeting said.
Last year China approved the arrest of 9,441 people on suspicion of illegal soliciting public deposits and prosecuted 14,745, according to a separate Shanghai Securities News report on Tuesday.
P2P Giant Dianrong is Preparing for Full Blockchain Integration (Coindesk), Rated: A
Already, Dianrong has co-founded a blockchain lending platform called Chained Finance; now, less than a week after the firm hired IPO expert Yawen Cui, he has revealed comprehensive plans to swap over much of the startup’s services to a blockchain.
By January of this year, Dianrong had released a statement showing that 3.62 million investors had originated a total of ¥16.2bn in loans last year alone, a 148% increase over the previous year, and its fourth year of growth.
Then, last month the firm revealed it had joined Taiwan-based Foxconn to launch Chained Finance, a blockchain trade finance platform built using technology from the Linux Foundation-led Hyperledger Project.
P2P Lending News (Xing Ping She Email), Rated: A
P2P Lending Funds Depository Cooperation Fair was held in Chengdu
On 24th April, “P2P Lending Funds Depository Cooperation Fair”was held in Chengdu by NIFA. The Fair is aiming at building bridges between P2P Lending institutions and banks.
Owing to the Fair, over 11 commercial banks, including Xingwang Bank, Ping An Bank, Beijing Bank, Shanghai Bank, Baoshang Bank, etc., reached agreements with over 50 P2P Lending institutions and five fintech companies. Officials from People’s Bank of China (Chengdu branch), Bureau of Finance of Sichuan Province, Chengdu financial services office and other relevant departments attended the Fair, with nearly 170 participants.
P2P Lending industry may acquire a bank-like license in the future
On April 22nd, China Fintech 50 Forum(CFT50) was found in Beijing. According to Yang Dong, the vice president of Renmin University Of China Law School and the director of Fintech and Internet Security Research Center（FTCS）, who involved in making CBRC Regulations on P2P lending industry, revealed that although P2P is currently playing the role of Internet information intermediary, it may develop to a bank-like institution acquiring a new type of license and the industry also has huge space in the future.
The scale of cash loan over 600billion RMB, who will be knocked down by regulations?
Due to the low threshold, lacking of supervision and disorderly development, problems such as violent collection, high commissions and usury, etc., cast a shadow on cash loan.
According to the instructions of the State Council and the requirements of Internet Financial Risk Special Rectification Office, cash loan has been incorporated into the rectification work of controlling Internet financial risk. In addition, Notice on carrying out the rectification work of “cash loan” business activities and its supplementary documents have been issued. Regulators also began to start the cash loan risk investigation.
Half-hearted crackdown dents case for Chinese P2P (NASDAQ), Rated: A
A half-hearted crackdown dents the investment case for Chinese peer-to-peer lending. While P2P lender China Rapid Finance is set for a $100 million initial public offering in New York, the timing looks bad. Sector heavyweight Lufax, last valued at $18.5 billion, is unlikely to list soon.
Instead, lending has accelerated and there are still more than 2,000 online platforms in operation, according to industry tracker Wangdaizhijia. Loan volumes in March hit a new record of 251 billion yuan ($36 billion), bringing the total outstanding to 921 billion yuan – up 83 percent in a year.
Shoddy local enforcement is the obvious culprit. Provinces and cities interpret the rules differently, according to an industry insider.
Investors are cautious too. China’s only U.S.-listed lender, Yirendai <YRD.N>, trades at just above 6 times forward earnings, down from more than 15 times last summer.
E.Sun launches new AI chabot to offer futuristic financial advice (The China Post), Rated: B
E.Sun Bank’s (玉山銀行) AI Chatbot (玉山小i) is the latest artificial intelligence financial advisor that Taiwan-based banks have launched to assist locals with any finance-related issues.
The AI Chatbot utilizes the IBM Watson Conversation Service to interpret commands and generate responses, local media reported.
At this stage, the AI Chatbot’s responses are limited to inquiries regarding exchange rates, mortgage assessments, and credit card recommendations. It has yet to acquire the knowledge to answer questions regarding personal financing.
Mapping Robo-Advisors Around The Globe (CB Insights), Rated: AAA
Since 2012, private robo-advisors have raised over $1.32B globally across 119 equity investments. Robo-advisors make up the largest sub-category of companies in wealth tech and account for roughly 30% of total funding.
Three of the earliest robo-advisors firms and largest in terms of total funding are Betterment, Personal Capital, and Wealthfront. Though they lead in the US, expanding internationally is a challenge because of the complex international regulatory environment, differing investment practices, and other barriers to entry.
US-based robo-advisors have received 57% of the global deal share since 2012. Germany took second with 9%, followed by the United Kingdom, and China.
The two largest robo-advisor deals outside the US went to Wacai, a robo-advisor and personal wealth management technology company based in China.
The third and fourth biggest deals went to UK-based Nutmeg, with a $37.5M Series C in Q4’16 preceded by a $32M Series B in Q2’14 that included Armada Investment Group, Balderton Capital, Pentech Ventures, and other investors.
Fintech patents jump in “arms race” between banks and startups: These are the 10 countries filing the most (City A.M.), Rated: B
Global fintech patents have grown by 49 per cent in the past five years, reaching 9,545 in 2016 according to official global filings.
The US led the way in terms of numbers of fintech patents with 4,523, more than double the number of the next country, China. The UK boasted more fintech patents than any other country in Europe, ranking seventh with 89 patents, in areas such as banking, exchanges, investment, insurance and payments architecture.
The top 10 countries filing fintech patents
Fintech firms that walk the talk (The Australian), Rated: A
The rush to judgment about the disruptive power of fintech is premature, given it’s not even clear which part of the financial services value chain will be most affected.
Also, no matter how you cut it, the fact remains that by the end of last year there were 39 fintech companies around the world with valuations in excess of $US1bn, including Xero, which offers cloud-based accounting software for small and medium-sized businesses and is the sole Australasian representative.
Not surprisingly, the dominant vertical where 16 of the 39 companies with valuations in excess of $US1bn ply their trade, is so-called alternative finance, which includes marketplace lending and crowd-funding.
“Consumer lending in the US is a $US1.5 trillion opportunity, and in Australia it’s $100bn and the leading players are yet to crack $1bn.