Thursday April 26 2018, Daily News Digest

Hong Kong IPO

News Comments Today’s main news: FTC says LendingClub misled customers on fees. Credit Karma expands ID theft monitoring to include dark web data. Two startup robos were top performers in Q1. Shanlin Finance leaders charged with operating Ponzi scheme. TransferWise launches borderless accounts in European nations. Today’s main analysis: Small-dollar loans. Today’s thought-provoking articles: Elevate’s safe credit. Hong Kong makes […]

Hong Kong IPO

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United Kingdom

China

European Union

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News Summary

United States

Lending Club misled customers about hidden fees, regulators say (CNN Money) Rated: AAA

The Federal Trade Commission said the company, which connects borrowers to investors without banks in the middle, “lures” customers with the promise of no hidden fees.

Instead, Lending Club deducts money up front — hundreds and sometimes thousands of dollars, the FTC said.

The FTC also accused Lending Club (LC) of falsely leading customers to believe they have been approved for a loan.

The FTC further accused Lending Club of withdrawing double payments from the accounts of its customers and charging customers who had canceled auto-payments or already paid off their loans.

LendingClub (LC) Said FTC Allegations are Unwarranted (Street Insider) Rated: A

Following an inquiry that began in May 2016, the U.S. Federal Trade Commission (FTC) brought an action against LendingClub(NYSE: LC) earlier today in the Northern District of California alleging that certain LendingClub practices do not, or in the past did not, comply with the requirements of the FTC and Gramm-Leach-Bliley Acts.

LendingClub believes that the allegations in the FTC’s complaint are legally and factually unwarranted. The company is disappointed that it was not possible to resolve this matter constructively with the agency’s current leadership and intends to oppose the claims and work towards an early resolution of the matter in Federal Court. Additional information about the complaint and LendingClub’s response are on its blog.

Why LendingClub Corp Stock Plunged Today (Motley Fool) Rated: B

Shares of peer-to-peer (P2P) lending company LendingClub Corp (NYSE:LC) are down by about 15% as of 3:30 p.m. EDT after the Federal Trade Commission charged the company with deceiving customers.

Elevate Provides Safe Credit To People Banks Can’t Serve With FICO (Forbes) Rated: AAA

Providing credit to 160 million Americans who are being ignored by banks sounds like a great business. And indeed, Elevate, which does just that, has been growing faster than Lending Club, SoFi, or OnDeck and is more profitable than any of them, said Ken Rees, the company’s CEO .

“Forty percent of Americans show monthly income swings of 30%. The majority of Americans need access to emergency credit but the banks have pulled back. Credit is particularly important because they have very low savings.”

Credit Karma expands its identity theft monitoring tool to include dark web data (Tech Crunch) Rated: AAA

After introducing a free identity monitoring tool for its users late last year, Credit Karma is widening the scope of its fraud-fighting scans to include data from the dark web.

Credit Karma’s  existing ID-monitoring tool searches 4.5 billion public breaches for a user’s personal data, but the improved service will scour additional breaches culled from the dark web. Added up, the tool will now search through 13 billion data breaches.

The company estimates that 65 percent of its users have experienced a data breach, whether they know it or not, so Credit Karma is well-positioned to issue a wake-up call about protecting identifying information online.

2 New Robo-Advisors Among the Top Performers in Q1 (ThinkAdvisor) Rated: AAA

Two relative newcomers to the robo-advisor space are among the industry’s top three performers in the first quarter, according to the latest Robo Report from BackEnd Benchmarking.

SoFi Wealth Management, which launched in May 2017 as an offshoot from the SoFi online lending platform, took first place; TIAA SRI, the socially responsible investment portfolio of its TIAA Personal Portfolio robo, placed third; and sandwiched between the two was Schwab Intelligent Portfolios.

All three robos lost money in the first quarter in their taxable, balanced portfolios, split roughly 60/40 between stocks and bonds, but they performed better than other digital advisors and the overall stock market, which was down 0.76%, for the S&P 500. Their losses ranged from 0.14% for SoFi and 0.45% for TIAA SRI.

Schwab Intelligent Portfolios excelled largely because of its fixed income allocation, which included high-yield bonds and international debt, according to the Robo Report. It placed first for fixed income performance not only for the first quarter of 2018 but for the one-year and two-year trailing periods.

Source: Think Advisor

Small-dollar loans (Lexology) Rated: AAA

The Trump Administration has also taken notable steps to ease the burden placed on the payday lending industry. These include terminating the Obama-era “Operation Choke Point,” which was designed to discourage banks from doing business with payday lenders,11 as well as removing payday-bank partnership restrictions for at least one payday lender.12 This signals a significant departure from regulatory constraints put in place a decade ago prohibiting affiliations between national banks and payday lenders that sought to circumvent state interest rate caps.13

In addition to established market participants targeting borrowers with high credit scores, new internet-based startups are offering small-dollar loans to non-prime borrowers, directly targeting the payday lenders’ customer base. Fintechs aim to compete with traditional payday lenders by marketing a more customer-centric approach, as well as flexible terms and lower fees. These new market entrants generally rely on the use of AI-driven scoring products and non-traditional data analytics to assess a borrower’s creditworthiness. In addition to fair lending considerations, these new online startups generally rely on mobile devices and related technology to host their software and undertake lending decisions, thereby raising privacy and cybersecurity concerns.

Source: Lexology

Navient reports higher earnings in first quarter (Delaware Business Now) Rated: A

Wilmington-based Navient reported higher earnings in the first quarter as the company expanded its segment reporting to reflect a broader array of businesses.

Results that included the origination of $500 million of private education refinance loans, a 43 percent decrease in private education loan charge-offs and a 32 percent increase in business processing fee revenue from the year-ago quarter.

For the first-quarter 2018, GAAP (Generally Accepted Accounting Principles) net income was $126 million compared with $88 million ($0.30 diluted earnings per share) for the year-ago quarter.

California merchant accuses lender of ‘rent-a-bank’ scheme (Rueters) Rated: A

Utah-based Celtic Bank and Georgia-based lender Kabbage Inc have been hit with a proposed class action accusing them of creating a “rent-a-bank” arrangement to issue high-interest loans to small businesses in California and evade the state’s usury laws.

The case was removed by Celtic Bank to federal court in Los Angeles on Tuesday after being filed last month in Los Angeles County Superior Court.

How employees build and shape the rock-solid cultures at 5 local tech companies (Built In Chicago) Rated: A

What is the foundation of Enova’s culture?

If I may grossly generalize and speak for the majority of the millennial workforce, workplace culture is a big job-hunting factor. Of course, we want to make decent salaries and have access to good health insurance. We also want to be spending those 40 or more hours per week with people we enjoy working with, tackling independent and collaborative work, constantly learning new things, and developing our skills — all of which Enova does a great job of cultivating.

What is the foundation of Avant’s culture?

Avant’s culture is based a lot around letting the best idea win. No matter what part of the business someone is in, if they have an idea that really shines through and will resolve the issue at hand, they are heard. In my experience, even if you’re not in your domain, people will listen to you as long as you come in with a clear spec. If you ask for something and have a good explanation as to why it’s needed, you can get it.

 

 

CEO of student loan marketplace LendEDU admits the name of the founder of a partner site is fake (CNBC) Rated: A

A spokesman cited in publications, including a CNBC story in March about students using their financial aid money to invest in cryptocurrencies, is a fake, the CEO of a partner website has admitted.

Nate Matherson, CEO of student loan refinancing company, LendEDU, said he started The Student Loan Report — studentloans.net — in 2016.

 

Where to Get a Loan of $ 5,000 or Less (Student Loan Hero) Rated: A

Many online lenders have personal loans that offer more flexibility. Some lenders set borrowing minimums as low as $1,000.

Pros: Some online lenders offer flexible repayment plans. For example, Avant allows you to make changes to your upcoming payments online, including the amount and date of your current or future payments. The company says it’s willing to work with you if you’re unable to make a payment, making it easier to repay your loan.

Kirsten Gillibrand Unveils A Public Option For Banking (Huffington Post) Rated: A

Sen. Kirsten Gillibrand (D-N.Y.) is introducing legislation Wednesday that would require every U.S. post office to provide basic banking services, an ambitious step aimed at improving the lives of Americans with limited financial resources.

The postal system’s 30,000 locations touch every community. A majority ― 59 percent ― are in so-called banking deserts, or zip codes that have either no bank branches or just one.

Upgrade Personal Loans Review: Low Rates and Free Credit Monitoring (Student Loan Hero) Rated: A

Upgrade is an online lender that primarily offers unsecured personal loans between $1,000 and $50,000. You can use these loans for a variety of purposes, including home improvement, debt consolidation, or a big purchase.

As unsecured loans, these personal loans don’t require any collateral.

Source: Student Loan Hero

How to Cope With the High Costs of Infertility (US News) Rated: A

According to the National Survey of Family Growth by the Centers for Disease Control and Prevention, one in eight couples have trouble getting pregnant or sustaining a pregnancy and more than 85,000 women in the U.S. undergo in vitro fertilization each year.

According to a 2015 study about the sentiment, costs and financial impact of fertility treatments in the U.S. by Prosper Marketplace, a peer-to-peer lending marketplace, nearly half of those polled said that prices impacted the level of treatment they sought. Almost 34 percent of those women surveyed had to stop treatment due to the financial burden. Meanwhile, 70 percent of participants reported acquiring some degree of debt in their quest to conceive with more than 26 percent taking on over $30,000 of debt. The cost of treatments was also the single largest factor for those respondents who initially decided to delay fertility treatment at nearly 82 percent.

Washington Wants to Weaken Bank Rules. Not Every Regulator Agrees. (The New York Times) Rated: A

In recent weeks, federal banking regulators have proposed softening a requirement that puts a hard limit on how much the largest banks can borrow. The rule, known as the supplementary leverage ratio, requires that banks prepare for a disaster by maintaining a certain level of capital on their balance sheets based on their total size.

Banks have long complained that the rule is too restrictive and makes it harder for them to do business, including lending, in important markets. They have asserted that the ratio is too blunt of an instrument and often the strictest of the various capital requirements that were put in place after the crisis.

Which Is Best: REITs or Real Estate Crowdfunding? (US News) Rated: A

Who can invest in REITs and real estate crowdfunding? The best investors for REITs and real estate crowdfunding might not be the same. Joseph Hogue, chartered financial analyst and owner of Crowd 101, a crowdfunding website, says that although real estate crowdfunding is less work than direct investment in properties, it still involves more due diligence than REIT investing.

What are the advantages and disadvantages of REITs and real estate crowdfunding? For hands-on investors, who want to customize their real estate investing, crowdfunding fits the bill, says Javier Benson, senior vice president of strategy and implementation at crowdfunding site RealtyShares. RealtyShares specializes in funding commercial real estate projects valued at more than $50 million, certainly not a market for the individual investor.

Benson summarizes the benefits of real estate crowdfunding: “lower fee loads, increased transparency and the opportunity to select individual projects.”

Lenders reject 9% of CT loan applications (Hartford Business) Rated: A

Mortgage lenders rejected 9 percent of loan applications in recent years from Greater Hartford borrowers, which is the nation’s 10th worst denial rate, according to a recent study.

The study by national lending exchange marketplace Lending Tree said lenders denied mortgage shoppers in Hartford, West Hartford and East Hartford at a high rate mainly due to insufficient debt-to-income ratios and collateral.

Hartford’s would-be borrowers ranked second in the nation for cities where collateral issues resulted in their mortgage denial, which amounts to 24 percent of its denials.

LendingTree and COMPLY2018 Announce the Kraken Innovation Award (PR Newswire) Rated: B

COMPLY2018 announces that LendingTree, the nation’s leading online loan marketplace, will award one company as The Most Innovative Company during the annual RegTech and Compliance Conference May 16-17 in New York City.

United Kingdom

Growth Street Celebrates Full FCA Authorization & New GrowthLine Lending Product: Need to Borrow £2M? (Crowdfund Insider) Rated: AAA

UK alternative finance firm Growth Street has been granted full FCA authorization,  a significant milestone for Growth Street, which had been operating as an Appointed Representative of Resolution Compliance Limited since 2016.

Growth Street has simultaneously rolled out an update to its flagship business lending product, GrowthLine. The firm is now accepting applications from businesses looking to borrow up to £2M, a substantial increase from the previous maximum limit of £1M.

Borrowers unaware of how to check loan providers as scams increase (Peer2Peer Finance) Rated: A

A THIRD of personal loan applicants have admitted they weren’t confident about how to check if their provider was legitimate, the Financial Conduct Authority (FCA) has revealed.

Research by the City watchdog found 36 per cent of those who took out a loan product in the past three years didn’t do any checks to ensure the legitimacy of their loan provider.

The FCA has revealed that more than £3.5m has been lost to loan fee fraud and said reports to its consumer helpline on this issue had increased by 44 per cent.

China

Eight charged in China over ‘Ponzi scheme posing as P2P lender’ that took US$ 9 billion (China Morning Post) Rated: AAA

Eight ringleaders of the Shanghai-based Shanlin Finance have been charged with illegally obtaining deposits and taken into custody, according to local public prosecutor the Shanghai Pudong district People’s Procuratorate, the official Xinhua News Agency reported on Tuesday.

The scheme was disguised as a peer-to-peer lending platform, police said. Shanlin’s online lending platforms and mobile apps have been suspended from service.

Big Bang Means Buyer Beware in Hong Kong IPOs (Bloomberg) Rated: AAA

Hong Kong Exchanges & Clearing Ltd. will allow innovative companies that use shares with weighted voting rights to apply for IPOs starting April 30, and will also admit unprofitable biotech firms. That’s a landmark departure from the exchange’s longstanding adherence to the one-share-one-vote principle and the requirement for a three-year profit track record.

China has also opened the door for companies listed on its National Equities Exchange and Quotations market – an over-the-counter trading venue that’s developed something of a reputation as a casino – to sell H shares in Hong Kong.

Looser entry rules will create a vastly different market.

The Fall of Peer-to-Peer Lending in China (Caixin Global) Rated: A

P2P lending, which was designed to bypass traditional lending by matching individual borrowers and lenders, began to flourish on the Chinese mainland in 2011 as the government encouraged the wider use of technology to expand financial services to small businesses and individuals. At P2P lending’s peak in late 2015, there were more than 3,300 platforms operating, according to Wandaizhijia, a portal site that tracks the sector.

However, due to the absence of unified regulations, a great proportion of P2P lenders began collecting cash from investors, offering high returns. A market worth more than 1 trillion yuan ($158 billion) quickly developed.

China’s online lenders reel from industry shake-out (Financial Times) Rated: A

A survey by FT Confidential Research shows the online lending industry in China continues to consolidate from new regulations; the days of significant growth and platform expansion have ended as the government looks to weed out the smaller players; since 2016 the government has capped borrowing limits, shut down secondary markets and forced platforms to file with local regulators

European Union

Fintech unicorn Transferwise launches a ‘borderless’ account in Sweden, Finland and Denmark (Business Insider Nordic) Rated: AAA

Transferwise is today rolling out a “borderless” consumer account and linked debit card, which will let people hold money in multiple currencies.

The service, which Transferwise says is the first one of its kind, has been openly trialed among a few thousand customers since January, and goes live globally including in Sweden, Denmark and Finland. Norway will follow later on.

This means that people will be able to transfer and spend money abroad, with little or no exchange or mark-up fees. They will also be able to make withdrawals through a Mastercard debit card. The debit card will me made available for larger businesses later in 2018.

RBS plans to move 1m users to new challenger bank, says report (AltFi News) Rated: A

According to an insider at the Royal Bank of Scotland, the bank has set an internal target of switching more than 1m users from Natwest to its latest project, a “next generation mobile-only bank”, in time for its debut in the third quarter of 2018.

In another interesting move, the insider has said that RBS’ mobile-only bank will be pursuing a marketplace business model, aiming to forge third-party partnerships as its primary source of revenue over lending. This is a model that is now well-known in the digital banking sector, hailed by dominant players like Monzo and Starling Bank as the future of next generation banking.

GDPR and financial advice: Processing data on children (Professional Adviser) Rated: A

The General Data Protection Regulation (GDPR) makes special mention of children and, for the purposes of the regulation, consent cannot be granted without parental approval by anyone under the age of 13. Upon their 13thbirthday, data subjects can freely consent to how their data is processed – in other words, they can sign up to newsletters and appropriate alerts.

Unlikely as it may be that a 13-year-old will be signing up for newsletters from financial advisers, advice firms will still be processing large amounts of data on under-13s. Taking Intelligent Office as an example, there are currently more than 75,000 records of people under the age of 13 and so it is important that appropriate checks are in place and that parental consent has been granted at the beginning of the process.

Deposit Solutions shows potential of open banking (Euromoney) Rated: A

However, don’t tell that to Deposit Solutions. The Hamburg-based provider of an open-banking platform that lets deposit-rich banks offer their account holders insured savings products from other banks is growing fast. It launched its own business-to-consumer marketplace Zinspilot in September 2015 and by the end of 2016 had transmitted $1 billion in deposits.

Deposit Solutions also has 50 banks in 16 European countries on its B2B platform. These include Deutsche Bank, FFB – the German subsidiary of Fidelity – and MünchenerHyp in Germany, and Atom Bank and Close Brothers in the UK.

So-called product banks, such as Atom, that are seeking funding, but don’t want to invest in a traditional deposit-gathering infrastructure, can offer terms to so-called client banks, such as Deutsche, with lots of customers, but already an excess of deposits.

International

Inside Santander’s plans to digitize money (Tearsheet) Rated: AAA

The Spanish banking giant’s U.K. arm recently launched One Pay FX, a mobile payments service for its U.K. debit card holders that want to send payments to people in Euro Zone countries and the U.S. It’s the first market-ready product built on blockchain technology, Ripple’s xCurrent protocol, for retail customers. It had been running as a pilot for employees for the last 18 months.

Santander, one of the founding members of R3 CEV, a prominent consortium of banks investing in the company’s blockchain technology for financial applications, soon became one of the first members to exit the group as it concentrated on other payments-focused group work like the Utility Settlement Coin — “a tokenized version of central bank money,” in Faura’s words — and the Global Payments Steering Group.

Source: Tearsheet

This MBA Loan Provider Is Helping International Students Start New Careers Abroad (Business Because) Rated: A

According to BusinessBecause data, 90% of MBA applicants would consider studying abroad. At the same time, over 60% say they wouldn’t be able to pursue an MBA without financial aid.

Prodigy Finance has lent more than $505 million in loans to over 10,300 students globally. Those loans have enabled international students such as Alex Brack, originally from Brazil and a recent MBA graduate for The F.W. Olin Graduate School of Business at Babson College, to thrive.

ZPER Secures Crypto Mobile Wallet with Trustonic (Global Banking and Finance Review) Rated: B

Following an increase in incidents such as the January 2018 theft of $425 million from Coincheck Inc, ZPER, the decentralised peer-to-peer (P2P) financial ecosystem, is launching the most secure cryptocurrency wallet available. ZPER is achieving this by embedding advanced security solutions from app and device security leader, Trustonic, to provide best-in-class protection. This move is in response to growing concerns about the vulnerability of cryptocurrencies when stored in exchanges.

Australia

 

Instant cash loan machines may target most vulnerable with quick dollars, financial counsellor says (Australian Broadcasting Corporation) Rated: A

The emergence of instant cash loan machines across parts of New South Wales has sparked fears about low-income families being potentially caught in a debt trap.

The machines, which look like ATMs, only require identification and bank details before users are approved for cash loans almost immediately.

Financial counsellors have expressed concern about the devices, which they say appear to be popping up in low socio-economic areas.

India

 

RentoMojo is using machine learning to create credit profiles of users (Tech Circle) Rated: AAA

It raised $10 million (Rs 64.3 crore) in a Series B round of funding led by Bain Capital Ventures and Renaud Laplanche, a French-American entrepreneur. The company had earlier raised $2 million in a pre-Series A round from Accel Partners and IDG Ventures India in November 2016.

Asia

Emerging Asian leaders in Blockchain and Cryptocurrency to watch out (Finextra) Rated: A

Crowd-Genie, an Asia-wide cross-border lending platform, concluded its ICO on March 1, raising over $5.5 million. Under the stewardship of CEO and Co-Founder,Akshay Mehra, Genie is aiming to build a private capital hub using smart contracts to make borrowing safer, cheaper and more efficient. Mehra is certified in CMFAS by the MAS and has over 15 years industry experience. His goal of creating a tokenized lending platform puts him at the forefront of blockchain and cryptocurrency technology in Asia.

Under Mehra’s leadership, Crowd Genie’s goal is to develop a Business Loans Asset Exchange on which lenders can enhance their liquidity by transferring asset ownership. Crowd Genie Financial Services Pte. Ltd. is one of a handful of licensed platforms in Singapore to hold a ‘Dealing in Securities’ license by MAS and GenieICO’s token – CGC – was listed on the Cobinhood exchange on March 19.

Latin America

Brazilian bank IPO tests disruption potential of fintech firms (Reuters) Rated: AAA

The first initial public offering (IPO) by a Brazilian retail bank in nearly a decade, set to price on Thursday, will test if investors expect new technologies to give smaller lenders a fighting chance against Brazil’s dominant big four banks.

Banco Inter SA, a tiny mortgage lender that has reinvented itself as a purely online bank, is the first in a wave of feisty digital challengers planning to go public – and looking to trade at higher multiples than many of Brazil’s largest lenders.

Authors:

George Popescu
Allen Taylor