- Today’s main news: Zuckerberg, Bezos, Gates back Wagestream. Funding Circle plans 300M GBP IPO. P2P lenders take in 300M GBP in second year of IFISA. Hong Kong receives 29 bids for virtual bank licenses.
- Today’s main analysis: Does fintech has a vicious funding circle?
- Today’s thought-provoking articles: Samir Desai discusses Funding Circle’s IPO as plan to conquer America. Q3 lending earnings insights. Sub-prime lenders shrug off Wonga’s political cloud. China’s fintech giants have the clout to dominate.
- Zuckerberg, Gates, Bezos back UK-based Wagestream. This makes sense, but I wonder if they may be thinking that their own employees will be the ones to take advantage of what Wagestream has to offer.
- Samir Desai on Funding Circle’s IPO as a path to conquer America. This is an excellent article with a lot of detail and critical perspective. It discusses more than Funding Circle and UK lending. There is also much to say about international competition, including China, U.S., Asia, and the rest of Europe. A great read.
- Does fintech have a vicious funding circle? This is a great quetion, and an excellent exploration into its answer.
- Q3 2018 Lending Earnings Insights. From PeerIQ.
- Scratch intros loan servicing platform that align interests of lenders and borrowers.
- Funding Circle to raise 300 milliong GBP in London IPO. This is an important IPO. Not just for Funding Circle, but for the online lending industry as a whole. Could it take Funding Circle beyond Europe?
- Funding Circle’s IPO will be open to existing investors.
- Don’t be blinded by Funding Circle’s wizardry.
- Funding Circle to host cryptocurrency event to promote women in fintech.
- Sub-prime lenders shrug off Wonga’s political cloud. After Wonga’s collapse, will there be another online lender to step up and take over the market?
- Kreos Capital is first in line for Wonga payout.
- P2P lenders record taking in 300 million GBP in IFISA’s second year.
- Cash ISA accounts are at an 18-year low.
- County Down Developments gets 250,000 GBP credit facility from Blend Network.
- Casper offered Klarna credit without permission.
- Fintech giants have the clout to dominate. And with the continued crackdown on smaller firms, they are the likely beneficiaries of the clamp down.
- Hong Kong Monetary Authority gets 29 bids for virtual bank licenses.
- Airwallex to seek virtual bank license.
- Banks expect stable earnings growth.
- State banks to boost lending.
- Australia: Wong’a collapse is a warning to Aussie fintechs.
- India: FinUp backs SlicePay.
- Indonesia: Kredivo hits speed bumps on Series B funding.
- International: Robo-advice is not dead.
- Sweden: Instantor opens up bank API.
- Australia: Micro lender makes a big difference.
- Israel: Tel Aviv on top 10 list for entrepreneurial undergrad programs.
- United States
- As Wonga Collapses, Zuckerberg, Bezos & Gates Back A Fairer Alternative To Payday Loans (Forbes), Rated: AAA
- Samir Desai On Funding Circle’s $ 2 Billion IPO And His Plan To Conquer America (Forbes) Rated: AAA
- The Risk of a Vicious Funding Circle in Fintech (Bloomberg) Rated: AAA
- Lending Earnings Insights (2018 Q3) (PeerIQ) Rated: AAA
- Scratch Introduces First Loan Servicing Platform To Align Financial Interests of Lenders and Borrowers (Scratch Email) Rated: A
- United Kingdom
- Funding Circle plans to raise £300m in London IPO (Financial Times), Rated: AA
- Funding Circle IPO will be open to platform’s existing investors (Peer2Peer Finance) Rated: A
- Don’t be blinded by the wizardry of tech darling Funding Circle (London Evening Standard) Rated: A
- Funding Circle to host cryptocurrency event to promote women in fintech (Peer2Peer Finance) Rated: B
- UK sub-prime lenders shrug off political cloud (Nasdaq), Rated: AAA
- Hedge fund Kreos Capital is first in line for Wonga payout deal after lending the collapsed payday loan company around £34m (This is Money) Rated: A
- P2P lenders record £300m intake in second year of the IFISA (P2P Finance News), Rated: AAA
- The end of the Cash Isa? Number of new accounts hits 18-year low (Moneywise), Rated: A
- P2P marketing clampdown ‘may restrict IFISA takeup’ (P2P Finance News), Rated: A
- Northern Irish housebuilder secures £250,000 from P2P platform (Development Finance Today), Rated: A
- Mattress start-up Casper offered credit in UK without permission (Financial Times), Rated: B
- China/Hong Kong
- China’s Fintech Giants Have The Money And Means To Dominate Despite The Wider Slowdown (Forbes), Rated: AAA
- HKMA Receives 29 Bids for First Round of Virtual Bank Licences (Regulation Asia) Rated: AAA
- Tencent-backed Airwallex to join push for Hong Kong virtual bank license (SCMP) Rated: A
- Stable earnings growth expected by mainland banks, but bad-loan worries linger (SCMP), Rated: A
- China’s state banks to boost lending as Beijing fans economy (Nikkei), Rated: A
- European Union
- INSTANTOR OPENS UP BANK API – PROVIDING UNIQUE ACCESS TO HALF A BILLION PEOPLE (Fintech Finance), Rated: B
- Robo-advice not dead: GlobalData (Financial Standard) Rated: A
- Collapse of UK payday lender Wonga sounds warning for Aussie fintech vigilance (Australian Financial Review) Rated:AAA
- Micro lender makes big difference (Latrobe Valley Express) Rated: A
- China’s FinUp, existing investors back digital lending startup SlicePay (VC Circle) Rated: AAA
- Southeast Asia’s startups suffer from Series B funding crunch, says Kredivo’s Gar (Deal Street Asia), Rated: AAA
- Tel Aviv Climbs on List of Top 10 Undergraduate Programs for Entrepreneurs (CTech) Rated: B
As Wonga Collapses, Zuckerberg, Bezos & Gates Back A Fairer Alternative To Payday Loans (Forbes), Rated: AAA
Samir Desai On Funding Circle’s $ 2 Billion IPO And His Plan To Conquer America (Forbes) Rated: AAA
Funding Circle has already facilitated over £5 billion ($6.37 billion) in loans since launching in 2010, mostly from its home U.K. market.
Funding Circle facilitated over £1 billion in loans to small businesses during the first six months of 2018 alone.
It’s now on track to become London’s biggest fintech IPO since global payments giant WorldPay’s bumper £4.8 billion ($6.1 billion) listing in 2015.
In the U.K. just 5% of businesses say Funding Circle when asked where they would go for finance, according to the company’s data, and 95% continue to chose their banks.
The Risk of a Vicious Funding Circle in Fintech (Bloomberg) Rated: AAA
There are fintechs, and then there are fintechs. Cheerleaders point to payments startups like Jack Dorsey’s Square Inc., whose stock has soared 242 percent in a year, as evidence of a Silicon-Valley-style revolution in the making. But there are sob stories, too: loan platforms LendingClub Corp. and On Deck Capital Inc. are still trading well below their IPO prices. Promises of break-neck expansion often crash into the reality of regulated finance.
Lending Earnings Insights (2018 Q3) (PeerIQ) Rated: AAA
We remain in the late stages of the credit cycle. The US consumer has benefitted from record low unemployment, rising incomes and home prices, and a lower tax rate. The supply of credit and competition to offer loans is increasing. Lenders are optimistic about consumer spending and debt levels, and are reserving for potentially higher losses in the future.
We see divergent credit performance across FinTech asset classes. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. LendingClub also increased its charge-off estimates across loan grades by ~40 bps QoQ.
Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Loan loss provisions are increasing at roughly twice the rate of loan growth across card issuers, but overall reserve levels are still low.
Scratch Introduces First Loan Servicing Platform To Align Financial Interests of Lenders and Borrowers (Scratch Email) Rated: A
Scratch, a new financial technology company started in 2015 to transform the antiquated business of getting America’s $13 trillion household debt repaid, introduced the first loan servicing platform to align the financial interests of lenders and borrowers.
The Scratch loan servicing platform empowers borrowers with a simple web application for understanding, managing and paying back their loans while providing lenders accurate, real-time portfolio insights. And, by automating the back-office complexities of loan management, Scratch can devote more resources to giving borrowers the attention and guidance they deserve.
Loan Servicing Crisis Persists
U.S. household debt composed of mortgages, student loans, auto loans, credit cards, home equity lines of credit, and other consumer loans, is at an all-time high and growing daily.
Today, household debt is at a high of $13 trillion and 8 out of 10 Americans carry some type of debt, including mortgages, credit cards, student loans, and auto loans. And everyone who has a loan has a loan servicer.
Funding Circle plans to raise £300m in London IPO (Financial Times), Rated: AA
Funding Circle has announced plans to become the first of Britain’s new generation of financial technology companies to go public, in a deal expected to raise £300m and value the peer-to-peer lender at more than £1.5bn.
The initial public offering of Britain’s biggest peer-to-peer lender will provide a significant test of investor appetite for the breed of fintechs that have sprung up in the past decade to challenge high-street banks. Funding Circle has arranged £5bn of loans to small companies in the UK, the US, Germany and the Netherlands since its launch in 2010 by connecting businesses looking to borrow money with retail and institutional investors willing to lend them money.
However, the company’s prospective value of more than £1.5bn is above the current value of US-listed peers OnDeck and Lending Club, which have both suffered tumbling share prices since their lPOs.
Funding Circle IPO will be open to platform’s existing investors (Peer2Peer Finance) Rated: A
FUNDING Circle has said it expects its existing investors will be able to become shareholders in the company after it goes public.
Funding Circle said that its initial public offering (IPO), if it goes ahead, would aim to raise around £300m, with at least 25 per cent of the company’s issued share capital to be placed on a free float.
In a blog post on its website, also on Monday, the P2P lender said that its customers would have the opportunity to apply to participate in the IPO and become a shareholder in Funding Circle via an intermediaries offer.
Don’t be blinded by the wizardry of tech darling Funding Circle (London Evening Standard) Rated: A
Given that Funding Circle’s flotation comes just days after the collapse of that other trailblazing fintech, Wonga, it’s hard not to compare the two.
Both were launched to fill the gaps in the lending market where traditional banks feared to tread. Both used tech wizardry to check they were lending to the right people at the right price. Both brilliantly deployed digital technology to make their services simple and fast to use.
Hopefully, for future investors, the similarities end there.
Funding Circle to host cryptocurrency event to promote women in fintech (Peer2Peer Finance) Rated: B
FUNDING Circle is to host a panel event focusing on cryptocurrency, described by the organisers as “one of the most interesting but least understood areas of fintech.”
The event is being held in connection with FinTechWomen, a London-based meet-up group, and is sponsored by Funding Circle.
UK sub-prime lenders shrug off political cloud (Nasdaq), Rated: AAA
UK sub-prime investors are shrugging off Wonga’s cloud. Customer complaints and a regulatory clampdown forced the payday lender to stop making loans. The likes of Amigo Holdings and Non-Standard Finance have different models, and regulators’ blessing. Yet, with Wonga out of the picture, they too risk becoming the focus of public ire.
Investors love it. Amigo’s return on equity will be around 40 percent this year, using Thomson Reuters I/B/E/S, while it and Non-Standard Finance should grow revenue on average by more than 20 percent each year up to 2021, analysts reckon. NSF, which has a more diversified business including unguaranteed loans, is valued at over 17 times forward earnings. Amigo’s shares were priced at 12 times forward earnings even after a selloff promoted by disappointing results on Thursday. The consumer finance sector on average trades at less than 11 times forward earnings, according to Eikon.
Hedge fund Kreos Capital is first in line for Wonga payout deal after lending the collapsed payday loan company around £34m (This is Money) Rated: A
A Mayfair hedge fund is at the front of the queue to be paid by collapsed Wonga as fears grow that thousands of its hard-up customers will get nothing.
Kreos Capital lent Wonga about £34million two years ago and is understood to be still owed around £10million by the payday loan company.
Under the arrangement, it is thought to be in line to collect that sum ahead of other creditors.
P2P lenders record £300m intake in second year of the IFISA (P2P Finance News), Rated: AAA
ALMOST £300m was invested across Innovative Finance ISAs (IFISA) in the previous tax year, HMRC data reveals.
The latest ISA statistics from the taxman shows £290m of subscriptions in IFISA for the 2017/2018 tax year across 31,000 accounts.
P2P lenders saved £9,355 on average.
Zopa revealed it received more than £150m in its IFISA during the previous tax year.
The end of the Cash Isa? Number of new accounts hits 18-year low (Moneywise), Rated: A
The data shows that savers subscribed to 10.8 million Isa accounts during the 2017-18 tax year, down from 11.1 million in the previous tax year. This represents a fall of 10%.
P2P marketing clampdown ‘may restrict IFISA takeup’ (P2P Finance News), Rated: A
Stuart Law, who heads up the business P2P lender, warned that the strong take-up of the IFISA could be hampered by the FCA’s proposed marketing restrictions for the sector.
Under the proposed changes, platforms would be restricted to marketing to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P agreements.
Northern Irish housebuilder secures £250,000 from P2P platform (Development Finance Today), Rated: A
The loan from Blend Network came after the housebuilder was turned down for a loan by Barclays.
Mattress start-up Casper offered credit in UK without permission (Financial Times), Rated: B
A US online mattress start-up backed by rapper 50 Cent has been forced to stop offering credit to UK customers, after it emerged it had been doing so without permission from the regulator.
Casper, a five-year-old company that is on a major European expansion drive, was allowing UK customers to buy on credit from Swedish bank Klarna.
China’s Fintech Giants Have The Money And Means To Dominate Despite The Wider Slowdown (Forbes), Rated: AAA
HKMA Receives 29 Bids for First Round of Virtual Bank Licences (Regulation Asia) Rated: AAA
Standard Chartered, WeLab, Zhong An Bank and HKT among several banking, technology and telecom firms applying for virtual banking licenses.
Twenty-nine financial and technology firms, including Standard Chartered and WeLab have submitted applications to obtain Hong Kong’s first online-only banking licenses.
The company shifted its headquarters to Hong Kong from Melbourne earlier this month as it prepares to submit a virtual banking license application, along with partners, ahead of Friday’s deadline.
Airwallex co-founder and chief executive Jack Zhang said the company will team up with a traditional bank and other local partners as part of the application process, although he declined to reveal their identities.
Another reason for the relocation to Hong Kong is proximity to major clients, including Tencent, online travel operator Ctrip, e-commerce JD.com as well as traditional lender Bank of East Asia.
And Beijing’s crackdown on the peer-to-peer lending sector – the shadow banking system that saw rampant illicit and risky behaviour continue in the first half of this year – has helped increase demand for corporate lending levels too.
The country’s big four banks – Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of Chinaand Bank of China – reported profit rises of between 5.2 and 7.9 per cent in the three months ending June.
China’s state banks to boost lending as Beijing fans economy (Nikkei), Rated: A
First-half earnings showed the lenders rallying after several years of low growth. Collective net profit rose 5.7% year on year to 532.1 billion yuan ($77.9 billion), while the lenders’ average ratio of bad debt fell 0.06 percentage point in six months to 1.52% at the end of June.
INSTANTOR OPENS UP BANK API – PROVIDING UNIQUE ACCESS TO HALF A BILLION PEOPLE (Fintech Finance), Rated: B
Today Instantor, the Swedish fintech company making financial decisions easy, announces, WDSK, The World Domination Starter Kit. The WDSK is an initiative to support start-ups and scale-ups to develop next-generation products by giving them access to Instantor´s Bank API with no associated costs for new Instantor customers. By using Instantors bank API, developers will have access to transactional data from over 300 banks in 25 countries, with the potential to reach half a billion people. Instantor´s bank API has an unrivaled reach, and the WDSK initiative includes access to several markets outside new Open Banking legislation. The authentication and the end user’s interaction with banks are handled by Instantor, and the data can be accessed once the end user has given their consent.
Robo-advice not dead: GlobalData (Financial Standard) Rated: A
The analyst suggested robo-adviser may be ahead of their time, given high net-worth demand for robo-advice is on the rise among the next generation of investors.
“While robo-advice is here to stay, it will take time to cement itself. The digitally-savvy next generation will embrace an automated service and big banks should capitalize on this. However, a big brand is not enough to justify much higher fees,” Woldemichael said.
To succeed, incumbents will have to provide a level of service, and prices, that are genuinely competitive with those offered by startups.”
Collapse of UK payday lender Wonga sounds warning for Aussie fintech vigilance (Australian Financial Review) Rated:AAA
The collapse of Wonga, one of Britain’s most high-profile fintech lenders, provides salient lessons for Australia, which considers the UK a template for financial technology policy and where tighter laws to protect vulnerable customers from payday lenders appear to have stalled.
Wonga, built around a slick app allowing customers to get expensive loans via their mobile phone, was “notorious for its extortionate interest rates and was a toxic symbol of Britain’s household debt crisis”, said The Guardian last week.
The payday lender “failed because it was too greedy and at times crossed the ethical line”, it said, quoting prominent UK financial columnist Martin Lewis, who described Wonga’s loans as “the crack cocaine of debt – unneeded, unwanted, unhelpful, destructive and addictive”.
Micro lender makes big difference (Latrobe Valley Express) Rated: A
Her heartfelt story was told at Good Money’s one-year anniversary last week during what Carol described as a “life-changing event” after borrowing money to buy essential appliances like a new fridge and washing machine.
The low to no-interest lender was set up in July last year in partnership with Good Shepherd Microfinance and the National Australia Bank, following a $2.3 million investment from the state government.
More than 2900 people made enquiries in the hub’s first year, and the store has provided more than 500 no and low-interest loans for household appliances, car-related expenses, household furniture and costs such as medical and education expenses.
China’s FinUp, existing investors back digital lending startup SlicePay (VC Circle) Rated: AAA
SlicePay, a digital lending platform which caters to college students and young professionals, has raised an undisclosed amount in an extended Series A round of funding led by Chinese firm FinUp Finance Technology Group.
The company said in a statement that existing investors Blume Ventures, Japan’s Das Capital, and Russia’s Simile Ventures had also participated in the round.
A person close to the development who did not wish to be named pegged the deal at $14.9 million (around Rs 105 crore at current exchange rates).
Southeast Asia’s startups suffer from Series B funding crunch, says Kredivo’s Gar (Deal Street Asia), Rated: AAA
Having recently raised what is estimated to be the largest Series B funding round for a fintech firm in Southeast Asia, Indonesia-focused lending platform Kredivo says the process was far from smooth sailing.
The company was forced to look beyond the region to raise the majority of its fund, as it found that there were simply very few investors in the region that specialized in doing Series B investments.
Tel Aviv University is among the top ten global undergraduate programs in terms of producing venture capital-backed entrepreneurs, according to a report published last week by Seattle-based market research company Pitchbook. Pitchbook ranked Tel Aviv in eighth place, up from ninth last year, above Yale, Princeton, and Brown.
Two other Israeli universities made the top 50 list: the Technion-Israel Institute of Technology came in at 14, while the Hebrew University of Jerusalem placed at 35.
News Comments Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%. Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ). Today’s thought-provoking articles: Credit score improvement […]
- Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%.
- Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ).
- Today’s thought-provoking articles: Credit score improvement on My LendingTree. GreenSky IPO offers litmust test for online lenders. Is decentralized lending too good to be true?
- Kabbage to launch payment services. AT: “Expansion is a good thing, and Kabbage has been making some great strides lately. Of course, there are a few ways to expand. Expanding services is just one of them, but a very important one.”
- MFT 2018-2 vs. AVNT 2018-A. AT: “A very good, deep look at Marlette’s MFT 2018-2 securitization and Avant’s AVNT 2018-A. A great comparison. A must-read.”
- Avant continues to benefit from tighter underwriting.
- My LendingTree users improve credit scores. AT: “LendingTree provides proof of the value of its services better than anyone in the industry.”
- GreenSky’s IPO is online lending litmus test. AT: “A very good look at GreenSky’s value versus LendingClub’s and Prosper’s. We can debate why the two latter have had struggles since their IPOs, but the industry is maturing now and GreenSky’s IPO could signal a new wave of online lending IPOs. If it does well, a floodgate could open. If not, the doors may shut for a long time.”
- How to responsibly invest in Bitcoin. AT: “If you want to invest responsibly, don’t take a loan.”
- Is Mulvaney targeting fintechs or nonbanks?
- Banking overhaul could be heading to Congress.
- Hedge funds, PE firms are main street banks’ new lending competitors.
- How small banks can make tech the solution.
- Vota turns credit card transactions into recommendations and spots fraud.
- Optimal Blue offers pipeline & lock management APIs.
- Mastercard unveils initiative aimed at digital banking.
- Funding Circle SME Income Fund limited force signal moves past key line.
- Zopa stake boosts TruFin results.
- UK watchdog says robo-advice falls short.
- Jamieson Blake joins Basset and Gold.
- DEPO helps lenders accept digital assets as collateral. AT: “This is a great idea. If agnostic toward type of lender, this service, if it catches on, could bring about new competition in online lending.”
- Interview with Matthias Setzer of PayU. AT: “Lend Academy podcast.”‘
- Instantor wants to change your views on data.
- Bricknode, Lendytech unite under Untie Group banner.
- Decentralized lending: Is it too good to be true? AT: “A sober look at a new buzzword. Lenders should be cautious about jumping on the decentralized bandwagon and throwing about a word that might be misleading or confusing. If your lending business is truly decentralized, fine, but is that really a distinction that can drive value?”
- Automation, ‘platformization’ could take hold in banking.
- New lending models in fintech.
- United States
- Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA
- Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA
- Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A
- LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA
- New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA
- How to responsibly invest in bitcoin (Bankrate) Rated: A
- Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A
- Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A
- Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A
- Making technology the solution, not the problem, at small banks (American Banker) Rated: A
- Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A
- Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B
- Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B
- United Kingdom
- Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line (Concordia Review) Rated: AAA
- Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA
- UK watchdog says automated financial advice falls short (Rueters) Rated: A
- Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B
- Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA
- European Union
- European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA
- Matthias Setzer of PayU (Lend Academy) Rated: A
- New Insight will change the way you think about data (Instantor Email) Rated: A
- Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B
- Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA
- Automation, ‘platformisation’ tipped to take hold in banking (AltFi News) Rated: A
- Fin-tech changes the loan process: Meet new lending models (Bankless Times) Rated: A
- Kieran Arasaratnam to Join Credify Founding Team as CFO (Digital Journal) Rated: B
Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA
Kabbage Inc, a U.S. online lender for small businesses, plans to launch payment processing services by year-end, President Kathryn Petralia said on Monday, helping it to diversify and compete more directly with industry leaders PayPal Holdings Inc and Square Inc.
The Atlanta-based startup will offer tools to enable clients, mostly brick-and-mortar businesses, to accept card payments in-store and online, Petralia said in an interview.
Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA
This week we compare 2 very different MPL personal loan securitizations – Marlette’s MFT 2018-2 Prime deal and Avant’s AVNT 2018-A Near Prime deal.
AVNT 2018-A has lower average loan size by $6,435, shorter weighted average loan terms by 9 months and higher WAC by 16.28%. This is a reflection of the quality of borrowers that Avant and Marlette target. Marlette’s prime borrowers have higher weighted average FICO scores by 59 points than Avant’s near prime borrowers. The geographic distribution is quite similar between the two deals.
Bond Characteristics and Pricing
The significantly higher WAC on AVNT 2018-A leads to a 14.8% pickup in excess spread. KBRA’s base case loss estimate is 7.4% higher on AVNT 2018-A, which leads to a 7.4% higher loss-adjusted excess spread on AVNT 2018-A.
AVNT 2018-A has 3.3% lower O/C which is compensated by 14.8% higher excess spread. The A tranches have similar CE in both deals but Marlette’s A is rated one notch higher.
Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A
The introduction of tighter underwriting criteria continues to pay off for the online consumer lender Avant.
The company, which was founded in 2012 and is based in Chicago, was able to lower the credit enhancement, again, on its latest securitization, the $221.9 million Avant Loans Funding Trust 2018-A.
Kroll Bond Rating Agency assigned an A- to the $149 million senior tranche of notes to be issued, which benefit from 38.42% credit enhancement. That’s down from 41.8% on the comparable tranche of its prior transaction, completed last year.
LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA
LendingTree today released its study on the top places with rising credit scores. With credit scores being a crucial component of personal financial stability and opportunity, LendingTree analysts decided to look at anonymized My LendingTree users who logged into their accounts in both the first quarter of 2017 and the first quarter of 2018 to determine the top metros for rising credit scores among the 50 largest in the United States.
Below are some of the key takeaways from the study.
- Jacksonville, Indianapolis, Denver and Tampa saw the highest rate of rising credit scores among the 50 biggest metros from Q1 2017 to Q1 2018.
- Virginia Beach, Va., Los Angeles and Birmingham, Ala., had the lowest rate of rising credit scores, with 47 percent of Virginia Beach users raised their credit scores.
- San Jose (Silicon Valley) saw the most dramatic rises in credit scores, with the highest rates of people who raised their score by more than 75 points and 100 points.
- In the majority of the 50 metros analyzed, more than 50 percent of users improved their credit scores between Q1 2017 and Q1 2018.
- About one in three increased their scores by over 20 points, and 3.5 percent were able to improve their scores by 100 points or more.
New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA
It wasn’t long ago that online lenders were ascendant. More than $3 billion in capital from investors as diverse as Japanese conglomerate SoftBank Group Corp. and celebrity chef David Chang gushed into lending startups in 2015, according to Dow Jones VentureSource. Analysts at Morgan Stanley predicted that year that the nascent industry would account for 10% of all unsecured consumer and small-business loans by 2020.
How to responsibly invest in bitcoin (Bankrate) Rated: A
Recently, Bank of America, Chase, and Citigroup joined Capital One and Discover in banning cardholders from using them to buy cryptocurrencies. Credit cards were one of the most popular payment methods because of their relatively low fees and instant transaction rates, and investors are having to look at other options to make their investments.
You can borrow money from a family member or friend, or you can use a peer-to-peer lending platform like SoFi to leverage funds for Bitcoin investments. However, be cautious when borrowing money for an investment. Interest rates can eliminate any gains you get from the investment, and the risk of losing money in such a volatile market is high.
Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A
The acting director also responded to a question about qualified mortgages which has left the industry scratching its head since. Was Mulvaney separating fintech marketplace lending from traditional mortgage lending, or was he drawing a line between depository mortgage and non-depository mortgages?
Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A
Legislation that would ease banking regulations — and modify rules governing credit reports and some consumer loans — is headed for likely passage in Congress any day now.
The bill cleared the Senate in March with some bipartisan support and is expected to be voted on by House lawmakers this week, perhaps as early as Tuesday.
The measure rolls back some of the regulations imposed by the Dodd-Frank Act of 2010. That legislation came on the heels of the financial meltdown that rocked the U.S. economy a decade ago, when risky and unaffordable mortgages contributed to millions of homeowners losing their houses to foreclosure.
Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A
Main Street banks are feeling squeezed by competition from new rivals: nonbanks like hedge funds and private-equity firms that are elbowing into business loans.
Growth in business lending has picked up recently—it was up 3.3% year over year as of May 9, according to Federal Reserve data released Friday, after falling below 1% earlier this year. But the growth rate is still far below where it’s been in recent years, when loans to businesses grew at a double-digit clip for much of 2014, 2015 and 2016.
Making technology the solution, not the problem, at small banks (American Banker) Rated: A
The board members of R Bank in Round Rock, Texas — who include the Hall of Fame fireballer Nolan Ryan, a co-founder of the bank — hold accounts there, and they, like most other patrons, knew its old technology made for clunky customer service.
So, says president and CEO Steve Stapp, he channeled those irksome experiences into board support for an investment in a systems overhaul at the $455 million-asset bank.
For community banks in highly competitive markets, service with a personal touch can be a differentiator to win and keep customers. But when legacy technology hampers the customer experience, all the cups of coffee in the world won’t help.
Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A
Blippy, which was hyped up to a $46.2 million valuation back in 2010 before the world realized that almost nobody wanted a dedicated network for sharing and viewing each others’ purchases. Well, guess what? Someone’s trying a Blippy-like thing again — this time, in the form of a new app called Vota, which automatically records your credit card purchases and the places you visit so you can share them with friends or family, or view them privately for your own reference.
As a byproduct of this data collection, you may spot credit card fraud or other errant charges, too, or just get a handle on your spending.
Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B
Optimal Blue is proud to recognize enterprise SaaS digital mortgage solution leader, Capsilon, as its first strategic partner to complete certification with the highly anticipated Pipeline & Lock Management APIs. By debuting these innovative system-to-system API interfaces in the mortgage industry, Optimal Blue has enabled Capsilon’s digital mortgage platform to fully support the creation, management, registration, and locking of first-lien mortgages instantaneously with Optimal Blue. As a result of this advanced integration, a completed application and pre-approval are done in half the time of the traditional back-and-forth processes, empowering loan officers to be more competitive in today’s purchase market and win more business from real estate agents.
Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B
The company on Monday announced the creation of Accelerate, a new initiative to drive growth at scale for the fast-evolving fintech industry, reflecting the company’s ongoing commitment to this sector.
Designed to operate alongside its successful Start Path program, Accelerate will broaden Mastercard’s engagement with the payment fintech community including the next generation of digital banks.
Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line (Concordia Review) Rated: AAA
Checking on current RSI levels on shares of Funding Circle Sme Income Fund Limited (FCIF.L), the 14-day RSI is currently standing at 58.31, the 7-day is at 65.97, and the 3-day is resting at 83.22.
Funding Circle Sme Income Fund Limited (FCIF.L) currently has a 14-day Commodity Channel Index (CCI) of 148.41.
Shares of Funding Circle Sme Income Fund Limited (FCIF.L) have a 200-day moving average of 103.52. The 50-day is 104.93, and the 7-day is sitting at 104.82.
Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA
TruFin, the AIM listed fintech lender and payments provider, has released its first set of annual results following on from its public listing back in February. The numbers show a 7.67 per cent uptick in its valuation of its stake in p2p lender Zopa in 2017.
TruFin, which says it used an external company to aid the valuation of Zopa, re-valued its holding upwards by £2.6m to £36.5m over the course of the year. The firm, which was spun out of hedge fund Arrowgrass’ fintech holdings, holds a c.15 per cent stake in Zopa bought by Arrowgrass in 2014 for £15m. TruFin was set up by Henry Kenner, one of the founders of Arrowgrass, who is also its CEO and chairman. The hedge fund itself was launched by a group of Deutsche Bank traders in the wake of the financial crisis, including Kenner.
UK watchdog says automated financial advice falls short (Rueters) Rated: A
Advice doled out online or via smartphone apps, referred to in the industry as “robo advice”, aims to cut costs for customers looking to save or invest. It also seeks to foster innovation and increase competition in financial services.
But the Financial Conduct Authority (FCA) said two reviews of the industry uncovered problems among early entrants.
Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B
Following our exclusive report from earlier this month that Jamieson Blake, Head of Client Experience at the FCA regulated London based arm of ADS Securities, had resigned from the company, LeapRate has now learned that Mr. Blake has landed – at specialty lending and retail investment firm Basset and Gold, as Head of Relationship Management.
Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA
Shares of Qudian (NYSE:QD) closed down 16.5% on Monday after the Chinese online lender announced earnings that fell short of expectations.
Qudian reported “diluted adjusted net income per share” of $0.16 but GAAP diluted net income per share of only $0.15 per share. Whichever yardstick you use, though, these numbers appear to be lower than the $0.17-per-share estimate quoted on Yahoo! Finance. Revenue, on the other hand, came in at $273.7 million, significantly above consensus expectations for $214.6 million.
European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA
Following a similar model as traditional depository services, DEPO gives lenders the freedom to accept digital assets as loan collateral. The platform also allows borrowers to keep ownership of their digital asset during the entire loan period. The platform also protects future financial gain of the asset for borrowers with its decentralized design.
By employing the DEPO platform, lenders will be able to accept cryptocurrency as collateral for loans. To be protected, lenders can request additional collateral, or a partial sale of the asset should the market become excessively volatile at any time during the loan period.
Matthias Setzer of PayU (Lend Academy) Rated: A
In this podcast you will learn:
- The history of Naspers, the parent company of PayU.
- What PayU does and the markets where it operates.
- Why Matthias decided to leave PayPal after 12 years and move to PayU.
- How PayU approaches going into a new international market.
- The Naspers investment in Chinese giant Tencent and the PayU footprint in China.
- Why the number one country PayU is focused on today is India.
- Why they invested €110 million in Kreditech and how they are leveraging that partnership.
- The point of sale lending product they have launched in India with Kreditech.
- The biggest growth drivers for PayU over the next 12-18 months.
New Insight will change the way you think about data (Instantor Email) Rated: A
Today Instantor, the Swedish fintech company making financial decisions easy, announces Insight. A new product that will transform the way financial organisations assess risk for loan applicants. By using robust machine learning, Insight analyses more than 70 predictive features and insightful patterns in historical banking, and can be used to make better risk and opportunity decisions. Instead of having a risk team spending months testing risk models, Insight ́s intelligent features will build the most optimal risk model using the clients own data and can be up and running within a week.
Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B
Untie Group used to be several companies, the largest of which were Bricknode and Lendytech. They had a common founder in Stefan Willebrand and used, at least to a degree, the same self developed software. Also a number of people have gone from one firm to the other over the years.
Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA
Since the rise of cryptocurrencies, the term “decentralized” seems to be everywhere. Decentralization has been proposed in many industries as a way to heighten transparency and make transactions simpler. One field in particular which has shown great potential for the application of decentralization is money lending. As many might rightly ask, don’t we need banks who are willing to take the financial risk and approve loans? As it turns out, maybe we don’t.
For lenders, the use of smart contracts allows for much easier assessments of the counter-party’s trustworthiness. Something that would take traditional audits weeks, not to mention the costs of such a traditional audit. Validating transactions and follow-up can become fully automated. Collateral is automatically returned at the end of the loan period or liquidated if the loan is defaulted on, removing many of the time-consuming actions that come with it.
Automation, ‘platformisation’ tipped to take hold in banking (AltFi News) Rated: A
The report, entitled Whose customer are you? The reality of digital banking, shows that 73 per cent of bankers believe retail banking will be at least 80 per cent automated in the next two years. A further 78 per cent see ‘platformisation’ steering the market in the future.
71 per cent of respondents are focusing their digital investment budget on cyber security, up from 34 per cent last year. Yet a mere 17 per cent are thinking about the risks of third-party integrations under Open Banking.
Fin-tech changes the loan process: Meet new lending models (Bankless Times) Rated: A
The new FinTech lending model opens new opportunities to people who were not able to borrow from traditional banks and other financial institutions because of the poor credit history and other factors. Such loans are now available to the new groups of people who need an instant funding, for instance, small business owners, students etc. In particular, entrepreneurs got a chance to get a loan without collateral, which a while ago was a real obstacle for many business owners.
Millennials Choose FinTech
Millenials are the first generation to accept the real advantages of new technologies and ready to use them for their own convenience. When it comes to lending process, millennials no longer wish to visit bank branches personally, stand in lines, deal with unnecessary paperwork and wait for months to get the approval.
End of the Line…
Today we are already witnessing a drastic change in the lending model that existed for centuries. Consumers want to have a more flexible way to lend money but most importantly, they want this process to be quick. The FinTech industry already gave us this opportunity and hopefully, the following changes will be for the better.
Kieran Arasaratnam to Join Credify Founding Team as CFO (Digital Journal) Rated: B
Credify Inc., a pioneer in decentralised reputation systems, is pleased to announce that Kieran Arasaratnam is joining the founding team as Chief Financial Officer.