How QuantmRE Tokenizes Real Estate on the Blockchain

blockchain real estate eqre

Though the 2008-09 crisis scarred a lot of real estate investors, the fact is that the US real estate sector has been on a secular growth spree in this decade. The sector plays an integral role in the US economy and contributed $1.15 trillion to the country’s economic output in 2018, which is 6.2% of the nation’s […]

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blockchain real estate eqre

Though the 2008-09 crisis scarred a lot of real estate investors, the fact is that the US real estate sector has been on a secular growth spree in this decade. The sector plays an integral role in the US economy and contributed $1.15 trillion to the country’s economic output in 2018, which is 6.2% of the nation’s GDP. As a matter of fact, till Q3 2018, individuals owned US$25.6 trillion in real estate, and total mortgages amounted to US$10.3 trillion, which implies that home equity stood at US$15.2 trillion until Q3 2018. That’s a record in itself. Approximately 14.7 million homes have 50% or more of their total equity in their houses.

This represents a massive untapped financial asset for American homeowners. But wary of piling on more debt and with selling the house not an option, homeowners need a new solution to monetize their homes. QuantmRE has brought to market a win-win framework with its shared equity contract agreements. In conversation with Matthew Sullivan, founder/CEO of the company, Lending Times gets a front seat view on how the blockchain-powered solution will help millions of homeowners generate additional liquidity without taking on debt.

The QuantmRE Solution

The fundamental concept behind the company’s platform is “the home owner has equity and wants cash, whereas, the investor has money and wants equity.” QuantmRE’s solutions enable an individual to realize the value of their home’s equity without incurring any further debt. QuantmRE’s funds will purchase a fraction of the owner’s home equity and then tokenize it, building a marketplace for both owners and investors, with new financial opportunities. How?

The explanation lies ahead.

Structure of the Contracts

The QuantmRE contracts are flexible to cater to the needs of different stakeholders and are built to suit varied interests of the homeowners – with some contracts having a 10-year commitment attached to them and some contracts committing for 20-30 years. Along with this, the equity ownership framework will rely on risk profiles of the different contracts.

To illustrate, when the owner wants to part with 10% of the current value of their home, they are selling the future rights to its appreciation. When the owner sells the house in the future, they will provide the investor with a 15%-18% of the value of house. Thus, the company is buying 15%-18% of the future value of the owner’s house at 10% of the present value. This 10% is the shared equity. The company will cap the return in the initial years and the ROI will also be capped at 18%-20% per year.

These are strictly real estate contracts and not loans; here the homeowners simply agree to share the present or future appreciation or depreciation of the value of their real estate. The investor is investing in a real estate option and not investing in any debt.

Under the scenario where the house owner does not sell the house, the contract shall either be refinanced under the same terms as before or shall be renewed on new agreeable terms on all sides.

What are the returns for the investors?

Investor in the funds: The fund will buy the equity instruments from individual homeowners, and the investors will benefit from the overall diversification of the fund. The returns are usually asymmetric and are geared for strong positive alpha and downside protection (due to the structure where it pays for 10% on Day One but receives 15%-18% of future value). Even in the scenario where the house prices remain flat or fall marginally, the funds shall still deliver positive returns. But there is still risk involved, as the downside buffer is limited to an extent.

EQRE Tokens

The company is developing a cryptocurrency token with real intrinsic value: EQRE. These tokens shall be backed by audited pooled real estate assets; the tokens derive their value from the equity interests in the single-family owner-occupied homes. These tokens will be launched in the near future.

It provides a platform to the owners and investors to tap the previously illiquid real estate asset class in a stock market environment enabling the fractional interests in the real estate investments to be traded on the blockchain. The tokenization of real estate will allow small mom and pop investors to diversify their real estate holdings and provide institutional players a platform for liquidity in their real estate investments.

QuantmRE To Date

QuantmRE was founded in December 2017 and has successfully originated close to 100 transactions of over $25 million across a few states. Albeit, currently these transactions are not all QuantmRE contracts. Since its inception, the company has developed its technology, contracts, and design. and is just a few weeks away from launching its EQRE token.

As far as funding goes, the company raised close to US$2 million in 2018 in a seed round. The company plans to raise $5 million for working capital and expansion.

Conclusion

The company offers homeowners an opportunity to liquidate a part of their house without taking on more debt. Investors get to partake in the growth of single-family residential units. This is structured through a shared equity contract. These contracts will further back the token of the company that can be traded. The token of the company (EQRE) is being developed and shall be soon launched. QuantmRE plans to integrate the blockchain and cryptocurrency technology with the real estate sector allowing for liquid profitable real estate investments. The company has its eyes on the $15 trillion unmortgaged equity in US homes and is poised to leverage blockchain tech to make it a strong investment proposition.

Author:

Written by Heena Dhir.

The post How QuantmRE Tokenizes Real Estate on the Blockchain appeared first on Lending Times.

Thursday May 23 2019, Weekly News Digest

young credit card delinquents

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Consumer Loan Program 2019-3 Trust. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2019-3. Funding Circle seeds shareholder input on wind-down plans for investment trust. TransferWise valuation doubles to $3.5B. Today’s main analysis: High income, super prime borrowers take bigger share of […]

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

young credit card delinquents

News Comments

United States

United Kingdom

European Union

Other

News Summary

United States

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2019-3 Trust (DBRS Email), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by SoFi Consumer Loan Program 2019-3 Trust (SCLP 2019-3):

— $420,000,000 Class A Notes at AAA (sf)
— $31,100,000 Class B Notes at AA (sf)
— $62,500,000 Class C Notes at A (sf)
— $35,600,000 Class D Notes at BBB (sf)

View the full report here.

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2019-3 (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Prosper Marketplace Issuance Trust 2019-3 (PMIT 2019-3). This is a $380.99 million consumer loan ABS transaction.

Class Rating Initial Class Principal
A A- (sf) $270,750,000
B BBB- (sf) $51,470,000
C BB- (sf) $39,720,000
D B- (sf) $19,050,000

Millennial DQs on the rise; GreenSky earnings; OCC on a fix for Madden? (PeerIQ), Rated: AAA

US consumer debt rose by 0.9% QoQ in 1Q to $13.7 Tn.

Source: Bloomberg, PeerIQ

Mixed FinTech Earnings

FinTech issuers saw growth in revenues and loans. Pace of loan growth weakened slightly as originations fell at Enova and grew by less than 10% YoY at OnDeck and OneMain. Stock price performance post earnings was mixed. Enova saw its stock price increase by 18% post earnings while OnDeck’s stock price dropped by 16%.

Source: Bloomberg, PeerIQ

High Income and Super Prime Borrowers Taking Bigger Share of Personal Loans on LendingTree Marketplace (Lending Tree), Rated: AAA

Over the past 10 years, the amount of outstanding personal loan debt has increased by 75%.

Key findings

  • The share of personal loan inquiries from those with incomes over $108,000 increased by 77% between the second quarter of 2017 and the first quarter of 2019, while the share of inquiries from people earning over $84,000 increased by 65%.
  • The share of personal loan inquiries from super prime borrowers (740 and higher) increased by 47% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime and super prime borrowers (680 and higher) rose by 36%.
  • The share of personal loans closed by borrowers with incomes over $108,000 on the LendingTree marketplace increased by 38% between the second quarter of 2017 and the first quarter of 2019, and the share of borrowers earning over $84,000 increased by 26%.
  • The share of closed personal loans from super prime borrowers (740 and higher) increased by 37% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime borrowers (680 and higher) rose by 19%.
  • Borrowers with incomes up to $24,000 decreased their share of closed loans by 22%, and those with incomes up to $48,000 decreased their share by 17%.
  • The share of loans closed by borrowers with scores below 560 increased by 28%, but the share of closed loans from borrowers with scores between 560 and 619 dropped by 24%.
  • The share of inquiries from people with incomes up to $24,000 dropped by 27% during the same period, while inquires from those with incomes up to $48,000 dropped by 16%.
  • The share of loan inquiries by borrowers with scores below 560 decreased by 12%, and the share of closed loans from borrowers with scores below 620 decreased by 9.2%.

For example, in the SoFi Consumer Loan Program 2017-3 LLC, securities show that the average gross income of borrowers as of May 2017, was $141,780, with an average FICO score of 731, and an average VantageScore of 682. The most recent offering, reported in February 2019, showed borrowers had an average income of $151,144, an average 753 FICO score, and a 713 VantageScore.

Job Loss and Medical Expenses Leading Causes of Bad Credit (Yahoo! Finance), Rated: AAA

Job loss and medical expenses are the leading factors causing Americans’ credit scores to drop, according to new research by Elevate’s Center for the New Middle Class (CNMC).

According to the new report, 55% of respondents cited job loss or reduction in work hours as the reason why their credit score dipped below 700. Nearly a quarter (24%) cited medical bills as the primary cause. Following these leading factors, a variety of typical, seemingly innocuous expenses follow, including repairing a car (11%), leaving home for the first time (6%), and putting a child through college (5%).

Non-prime consumers are 86% more likely to experience multiple factors that negatively affect their credit score compared to just one. For example, of the 23% who mention a medical reason, about three-quarters (75%) also experienced an income drop, severely complicating their ability to manage and cover medical expenses.

Americans Use Short-Term Loans to Pay Off Debt (Lexington Law), Rated: A

American debt is at an all-time high. How did we manage to dig ourselves into a steep $13 trillion hole? Credit card debt alone accounts for $1 trillion of this debt, with the average balance over $6,000 per capita.

  • 33% of Americans are going into debt to pay off debt
  • Generation X is most likely to incur short-term debt to pay down long-term debt
  • Women who use debt to make other debt payments tend to do so multiple times

Bernardo Martinez of Funding Circle USA (Lend Academy), Rated: A

In this podcast you will learn:

  • The knowledge that Bernardo brought with him from PayPal.
  • What he has learned in his first year on the job at Funding Circle.
  • The range of terms for their small business loans.
  • The types of investors they have on their platform today.
  • How and why 72% of their customers came to Funding Circle first.
  • How their offering compares to what is offered at banks today.
  • Who Bernardo sees as their biggest competitors.
  • How they view the SBA and their loan guarantee program.
  • How the LendingClub partnership came together.
  • Why no other online platform has reached significant scale in term loans for small business.
  • How they expanding their business into Canada.
  • Who they are hiring for their new Denver office.
  • How they are approaching their relationships with regulators in DC these days.
  • How they helped get SB-1235 passed in California.
  • How Funding Circle is monitoring their risk as it pertains to the economic cycle.
  • What is most exciting for Bernardo today at Funding Circle.

How a Silicon Valley startup is trying to rebrand payday loans (Vox), Rated: AAA

Once every few weeks, Myra Haq withdraws $100 or so from Earnin, an app that lets people borrow small sums of money.

The app lets her withdraw up to $100 a day, and never more than what she actually makes in a pay period, and then withdraws the money from her checking account once her direct deposit hits.

Unsurprisingly, payday lenders typically target low-income people — a 2013 Pew report found that 58 percent of people who use payday loans have trouble meeting monthly expenses at least half the time and usually borrow to deal with “persistent cash shortfalls rather than temporary emergencies.”

The average American household with student debt owes almost $48,000, and experts believe that student loan debt has held millennials back from major life milestones like marriage, homeownership, and having children.

How One Company Wants to Reduce or Even Eliminate Your Unpaid Medical Bills (Forbes), Rated: A

Relying on personal savings or insurance may not even be enough to pay off expensive medical bills. As a result, .

Earnin invited some community members to try HealthAid and was able to find savings for about 90% of people.

In one case, Earnin was able to get a patient’s $48,000 bill fully forgiven.

Figure Technologies loan platform secures $ 1B financing facility (CoinGeek), Rated: A

Figure Technologies looks to be profiting from increased interest in the cryptocurrency industry. Specifically, in a press release dated May 9, it was announced that the company had secured a $1 billion line of credit on the Provenance.io blockchain. The agreement also involves two other companies, Jefferies and WSFS Institutional Services, which will provide the line of credit.

LendKey’s Vince Passione on partnering with banks and credit unions and the future of lending as a service (Tearsheet), Rated: A

Vince joins us on the show to talk about his partnership model and the challenges and opportunities of working alongside banks and credit unions, which have deployed more than $2 billion in lending capital on the digital platform.

Small-business fintech launches lending platform for banks (American Banker), Rated: A

Spurred by bank interest, small-business lending platform Biz2Credit has unveiled a software-as-a-service version of its loan management, servicing and risk analytics product.

After HSBC and New York-based Popular Bank contracted with Biz2Credit to use the software, the company decided to launch the platform for all banks to use.

At a cramped desk on the 22nd floor of a downtown Manhattan office building, Gary Roth spotted a looming disaster.

An urban planner with two master’s degrees, Mr. Roth had a new job in 2010 analyzing taxi policy for the New York City government. But almost immediately, he noticed something disturbing: The price of a taxi medallion — the permit that lets a driver own a cab — had soared to nearly $700,000 from $200,000. In order to buy medallions, drivers were taking out loans they could not afford.

Prodigy Finance Aims to Bridge Healthcare Gap with New Loan Offering (University Business), Rated: A

Prodigy Finance today announces it will be supporting international students pursuing Master of Public Health (MPH) and Master of Science in Public Health (MSPH) degrees, Master of Science in Nursing (MSN) degrees, as well as those enrolling in Advanced Standing Dental programs and Select Certificate Dentistry programs in the U.S.

Crypto Lending Startup BlockFi Slashing Interest Rates on Ether Deposits (CoinDesk), Rated: A

Cryptocurrency lending startup BlockFi is almost halving the interest rates it offers on ether (ETH) deposits, while some bitcoin (BTC) rates will increase slightly.

From June 1, customers with 25–100 ETH balances in a BlockFi Interest Account (BIA) will see the interest rate drop from the current 6.2 percent annual percentage yield (APY) to 3.25 percent, the startup announced Tuesday. Those holding over 100 ETH balances will earn just 0.2 percent APY.

Some BTC balances, on the other hand, will see a slight interest rate increase – up to 2.15 percent from the current 2 percent – for deposits of over 25 BTC. Those holding 0.5–25 BTC will continue to earn 6.2 percent APY, BlockFi said.

Find the Right Loan Among 300+ Lending Partners for Credit Card Consolidation and More (CardRates), Rated: A

In a Nutshell: LoanStart helps consumers in search of a loan find a lender that suits their funding needs within just five minutes after submitting a simple, fee-free loan request form. Working securely with more than 300 trusted lending partners, including conveniently located storefront providers, the service makes finding a suitable lender easy. In today’s connected world where loan options abound, LoanStart cuts through the clutter to connect consumers in need of funds with lenders willing to provide financing.

Maxex Closes Series B Funding (FinSMEs), Rated: A

Maxex, LLC, an Atlanta, GA-based residential mortgage loan exchange, closed a Series B funding round of undisclosed amount.

CFPB Sues Debt-Collection Agency Over Deception Allegations (PYMNTS), Rated: A

The Consumer Financial Protection Bureau (CFPB) said Friday (May 17) that it has filed a lawsuit in federal court against a debt-collection agency that, the agency said, violated the Fair Debt Collection Practices Act.

The lawsuit targets Forster & Garbus, LLP, a debt-collection law firm based in New York.

Plaid gives digital banks and fintech a new tool to bypass traditional finance (CNBC), Rated: A

Start-up Plaid, recently valued at $2.7 billion, already connects bank accounts to fintech apps like Venmo, Robinhood, Coinbase and Acorns. It announced “Plaid Direct” on Wednesday, which lets users more easily connect to newer digital banks like Chime.

Capital Markets Veteran Joins PeerStreet to Manage Institutional Sales (BusinessWire), Rated: A

PeerStreet, a marketplace for investing in real estate backed loans, has announced the appointment of Deepa Salastekar as the Vice President of Institutional Sales. Ms. Salastekar joins PeerStreet to expand the company’s relationship base of institutional partners across all investment types available through PeerStreet.

Dharma now supports peer-to-peer lending in USDC to attract mainstream investors to DeFi (The Block Crypto), Rated: B

Defi startup Dharma announced Wednesday that it will start to support peer-to-peer lending of USDC, in a push to engage mainstream investors.

United Kingdom

Funding Circle investment trust asks shareholders to approve wind-down plans (P2P Finance News), Rated: AAA

FUNDING Circle is set to begin a managed wind-down of its dedicated investment trust, the Funding Circle SME Income Fund (FCIF), once it gets the green light from shareholders.

The FTSE 250-listed peer-to-peer business lender said last month that shareholders had backed plans to stop investing in new assets and begin the process of returning capital to investors.

Funding Circle Sets Hard Limit To Incentive Pay For Senior Executives (Morningstar), Rated: A

Funding Circle Holdings PLC clarified its director pay policy Wednesday following “feedback from shareholder advisory bodies”.

The small and medium enterprise loan platform said the amount granted in each year for a three year period under the company’s long-term incentive plan to can now no longer exceed GBP2.0 million and GBP1.1 million for the company’s chief executive and chief financial officer, respectively.

Span A Higher Than Span B for Funding Circle Sme Income Fund Limited (FCIF.L) (Williams Business Review), Rated: B

After a recent indicator scan, we have noted that Span A is currently higher than Span B for shares of Funding Circle Sme Income Fund Limited (FCIF.L). Traders may be paying close attention as this signal may indicate a possible bullish move.

TransferWise doubles its valuation to $ 3.5bn (Fintech Futures), Rated: AAA

UK-based international payments fintech TransferWise has doubled its value to $3.5 billion after raising $292 million in secondary funding, Jane Connolly writes.

Call for ‘credit curfew’ to help late-night borrowers (The Times), Rated: A

Banning borrowers from accessing high-cost credit websites between 11pm and 7am would ease the numbers of people spiralling into debt as activity peaks during these hours, according to researchers at Newcastle University.

Monzo hits 2m customers, adding 1m in eight months (AltFi), Rated: A

Monzo has hit 2 million current account customers in just two years since getting a banking license, and just eight months after it hit 1 million accounts.

It launched its current accounts less than 18 months ago with customers having spent £10.7bn through Monzo so far.

Arbuthnot Specialist Finance reveals offering (Bridging and Commercial), Rated: A

Arbuthnot Latham & Co has officially launched its specialist finance division.

Arbuthnot Specialist Finance will offer short-term residential finance up to 70% of market value (MV), with rates from 0.65% per month.

For this product, it will offer loans between £30,000–£3m-plus.

For commercial properties, it will offer up to 65% of MV, including interest and fees (up to 85% of the 90-day MV, or 95% of the purchase price, whichever is the lower), with rates available from 0.75%.

New peer-to-peer lender targets 7.5% return with education loans (Your Money), Rated: A

Lendwise plans to offer borrowers loans of up to £100,000, with interest rates ranging from 7.5% to 12%. Pricing will be based on a range of factors, which the peer-to-peer lender said go beyond the applicant’s financial profile and credit record. They include the specific postgraduate or professional qualification course they are taking, the length of study and the repayment period.

Finastra’s open cloud platform drives collaboration and innovation in financial services (Fintech Finance), Rated: A

Today ahead of its FusionONE developer conference, co-hosted with Microsoft, Finastra unveiled the latest developments to its FusionFabric.cloudopen platform for innovation.

The 61 new open APIs (and more than 200 Endpoints) span many of Finastra’s solutions, including retail and corporate banking (both enterprise and North American community markets), consumer lending and mortgage, payments and treasury and capital markets. These are now available in the FusionFabric.cloud API catalog for developers to harness in building financial services applications. Some of these powerful APIs are already enabling:

China

A fintech revenue surge helped Tencent smash quarterly expectations (Business Insider), Rated: AAA

Tencent posted record quarterly profits and smashed market expectations in Q1 2019, driven largely by surges in its fintech and cloud revenue, per Reuters.

Fintech and business services is now Tencent’s second largest division, responsible for a quarter of its revenue. This was the first time the tech giant broke out earnings for the unit, which brought in revenue of Rmb21.79bn ($3.2 billion), a 44% year-over-year (YoY) spike. Key in driving this growth is its payments wallet for WeChat, whose 1.11 billion users make it the largest social media platform in China, as well as its insurance services, which include a 20% stake in Aviva Hong Kong, and its cloud computing service.

Tencent’s online advertising grew 25% YoY, compared with 55% YoY in the same period last year, suggesting that China’s slowing economy and continued trade tensions with the US are hitting the firm.

Source: Business Insider Intelligence

DBS Bank Expects a Boost in Chinese P2P Lending Market from the Greater Bay Area (LearnBonds), Rated: A

Greater Bay Area could be the key to reviving the struggling P2P lending market in China, according to DBS Bank.

The Singaporean bank estimates that P2P lending will experience a 17% annual growth rate by 2030.

European Union

Identity technology and Dublin’s draw for fintech firms post-Brexit (Forbes), Rated: AAA

According to 

1 in 10 European banks to vanish by 2023 (AltFi), Rated: A

Bumper banking profits disguise an underlying weakness in traditional banks, as their per customer income has tumbled over the past decade.

That’s the finding of a report by consultants A.T. Kearney, which found data across 92 European banks revealed income per client had fallen 11% since 2008.

Australia/New Zealand

Commerce Commission’s court case against payday lender Ferratum scheduled for next year (Interest), Rated: AAA

A backlog of cases in the Auckland High Court means the next hearing in the Commerce Commission’s legal action against online payday lender Ferratum New Zealand won’t be held until June next year.

Asia

Indonesian fintech association sanctions lending platform that sets high interest rate (KrAsia), Rated: AAA

Two Indonesian lending platforms regulated under the country’s financial services authority (OJK) have been penalized by the ethics council of AFPI, the industry association for fintech lenders in Indonesia.

The organization revealed that one of the companies in question is P2P lender Do-It, which charged an interest fee rate of 1% per day.

Africa

Onefi is Expanding Carbon’s Digital Banking Services to Ghana (Technext), Rated: AAA

Nigerian digital financial platform, Carbon (formerly Paylater) is taking big steps to introduce its revamped financial services into Ghana. The online lender is looking to hire a new country manager for Ghana and this suggests the company is looking to introduce its new services like PayVest into Ghana.

Authors:

George Popescu
Allen Taylor

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

Thursday May 16 2019, Weekly News Digest

consumer debt

News Comments Today’s main news: iintoo picks the meat off the bones of RealtyShares. Kabbage, Affirm, SoFi among CNBC’s Disruptor 50. LendInvest cuts rates, product fees. Tencent profits, revenues surge. Pleo raises $56M. Prospa closing in on IPO. Paytm offers credit card. Today’s main analysis: LendingTree Personal Loan Offers Report. Is POS trend putting pressure […]

The post Thursday May 16 2019, Weekly News Digest appeared first on Lending Times.

consumer debt

News Comments

United States

United Kingdom

Asia

Other

News Summary

United States

This crowdfunding firm just picked the carcass of RealtyShares (The Real Deal), Rated: AAA

New York-based iintoo acquired RealtyShares’ assets, Inman reported. The move boosts the company’s portfolio size to $2.5 billion assets under management from $1 billion, according to the company.

Current and former investors in RealtyShares will be able to access iintoo’s crowdfunding platform, the report said. The deal — terms of which were not disclosed — is a joint venture between iintoo and Texas-based real estate firm RREAF Holdings, LLC, which will manage the investment porftolio.

Meet the 2019 CNBC Disruptor 50 companies (CNBC), Rated: AAA

14. Kabbage

Founders: Rob Frohwein (CEO), Kathryn Petralia (President), Marc Gorlin
Launched: 2009
Headquarters: Atlanta
Funding:
 $489 million
Valuation: $1.2 billion (PitchBook)
Key technologies:
 Artificial intelligence, cloud computing, machine learning
Industry: 
Credit, financial services, lending

26. SoFi

So far, 600,000 members, $30 billion in loans

33. Affirm

Founders: Max Levchin (CEO), Nathan Gettings, Jeff Kaditz
Launched: 2012
Headquarters: San Francisco
Funding:
 $800+ million
Valuation: $3 billion (PitchBook)
Key technologies:
 Machine learning, software-defined security
Industry: 
e-commerce, financial services, fintech

New LendingClub Account Performance – Q1 2019 (Lend Academy), Rated: AAA

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

Source: Lend Academy

Personal Loan Offers Report – April 2019 (LendingTree), Rated: AAA

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 9.23% in April.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 9.23%, an increase of 13 basis points from the prior month and an increase of 188 basis points from the same period one year ago.
  • At $20,810, the average loan amounts offered with the best APRs to all borrowers with a score of 760 was up 0.33% ($69) from last month, and down 9.44% ($1,964) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 5.15% on average, and loan amounts of $19,489. A borrower with this APR and loan amount would save $1,565 by consolidating debt with a 10% APR over a three-year term.

Is the Point-of-Sale Trend Putting Pressure on Plastic? (Markets Insider), Rated: AAA

The latest entrant to the credit market, point-of-sale loans, may be shaking up how consumers finance large purchases. According to the TransUnion (NYSE: TRU) Q1 2019 Industry Insights Report, this phenomenon, combined with the popularity of credit card reward programs, may be particularly taxing for the private label card category.

Year-over-Year Origination Growth

Card Type Q4 2018 Q4 2017 Q4 2016 Q4 2015 Q4 2014 Q4 2013
Private Label -5.5% -6.7% -3.8% -0.1% 4.1% 9.2%
 Bankcard 2.9% 0.1% -4.4% 15.1% 7.4% 18.1%

Q1 2019 Credit Card Trends

 

Credit Card Lending Metric

Q1 2019 Q1 2018 Q1 2017 Q1 2016
 Number of Credit Cards 432.8 million 416.5 million  405.8 million 386.4 million
Borrower-Level Delinquency Rate (90+ DPD)  1.89%  1.78%  1.69%  1.50%
Average Debt Per Borrower $5,554 $5,472 $5,332 $5,193
Prior Quarter Originations* 16.5 million 16.0 million 16.0 million 16.7 million
Average New Account Credit Lines* $5,296 $5,283 $5,262 $5,091

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Growth in Personal Loans Led by Super Prime Consumers

Personal loan balances continued to climb in Q1 2019, growing 19.2% year over year to a new high of $143 billion. Over the past four years total balances have nearly doubled, growing from $72 billion in Q1 2015. Growth is occurring across all risk tiers with originations increasing 9.7% to 5.0 million in Q4 2018.  Super prime borrowers had the largest growth on the origination front with an increase of 22.5% year-over-year, compared to 19.5% over the same period last year.

Q1 2019 Unsecured Personal Loan Trends

 

Personal Loan Metric

Q1 2019 Q1 2018 Q1 2017 Q1 2016
 Total Balances $143 billion $120 billion $102 billion $93 billion
Number of Unsecured Personal Loans  21.4 million 19.2 million 16.9 million 15.4 million
Number of Consumers with Unsecured Personal Loans  19.3 million 17.6 million 15.7 million 14.7 million
 Borrower-Level Delinquency Rate (60+ DPD) 3.47%  3.51% 3.72% 3.59%
 Average Debt Per Borrower $8,618 $7,986 $7,603 $7,544
 Prior Quarter Originations* 5.0 million 4.6 million 3.7 million 4.1 million
Average Balance of New Unsecured Personal Loans* $5,432 $5,044 $5,132 $5,077

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Credit Card Loan Performance (PeerIQ), Rated: AAA

US consumer credit grew by $10.3 Bn in March, at a 3.1% annualized rate, the slowest in nine months. Revolving credit outstanding decreased by $2.18 Bn indicating that consumers ended the quarter more cautious about borrowing. US GDP growth has been propelled by rising consumer spending and a slowdown could put a dampener on growth.

Source: Bloomberg, PeerIQ

30 and 90-day delinquency rates from credit card master trust data

Source: Bloomberg, Bank Credit Card Trust Data, PeerIQ

Declining Credit Enhancement in US MPL ABS is Unwarranted (Crowdfund Insider), Rated: A

Fitch is out with a report on marketplace lending (MPL) asset-backed securities (ABS) stating declining credit enhancement is unwarranted.

Fitch states that credit enhancement (CE) levels of ‘Asf’ category rated US MPL ABS have meaningfully declined since 2017, while asset quality remained relatively steady. As a result, bondholders of more recently issued transactions have less loss protection for the same amount of asset risk.

PeerStreet Reports Accelerating Growth as the Real Estate Platform Tops $ 2 Billion in Property Lending (Crowdfund Insider), Rated: A

This past March, PeerStreet, a real estate crowdfunding platform, announced that it had topped $2 billion in transactions and over $1 billion in Assets Under Management. Three months early in January, that transaction number stood at $1.7 billion. If that pace holds, PeerStreet should be nearing $3 billion in transactions by the end of the year thus firmly establishing itself as a leading property lending platform. While some sectors of real estate crowdfunding have struggled, PeerStreet does not appear to be one of them.

WealthStone Announces Real Estate Platform (Yahoo! Finance), Rated: A

WealthStone LLC announces the formation of its new real estate platform.

Typical investments require between $10 million to $100 million in total capitalization per project, including prudent leverage. These assets are expected to provide a total annualized return of 10% to 12%, including an annual cash dividend of 5% to 8% to the equity invested in its projects.

WealthStone aims to allocate approximately $300 million of equity capital for an estimated $700 million of total investments in a variety of real estate ventures during its current deployment phase.

Fintech seeks to help customers avoid overdrafts — with assist from a big bank (American Banker), Rated: A

The savings app provider Digit on Tuesday unveiled an instant withdrawals feature that will let users move money from their Digit account to their bank account instantly. This can help them meet emergencies and avoid incurring overdraft fees and resorting to payday loans.

Startup Launches To Combine All Of Your Credit And Debit Cards Into One Digital Card (Forbes), Rated: A

Forget checking your balance on your mobile phone. Startup Binji wants you to use your debit card instead.

In stealth mode for the past twelve months, the Irvine, California fintech is launching a debit Mastercard that enables consumers to consolidate as many as twenty-four credit cards and debit cards into a single account.

Connecting the Unbanked to A Friendlier Ecosystem (Cryptopolitan), Rated: A

P2P lending platforms like AssetStream are introducing significant improvements in the world of financing, which makes lending and borrowing friendlier and more easily accessible services.

How do We Empower a Growing Number of Small Enterprises? (Cryptopolitan), Rated: A

To be exact, if a company with relatively worse credit score applies for a large loan, let’s say $1 million, they’re more likely to be approved than a smaller, more trustworthy company that applied for a $100,000 on the same terms.

Data privacy, AI, regulation: Small-business lending is changing fast (American Banker), Rated: A

“We used to have 14,000 banks. When I started at the SBA, we were down to about 8- or 9,000 banks. Now we’re down to 5,000 banks.”

Much of the technology that is transforming how small-business lending gets done is coming from fintechs, and Mills sees “the next wave of the fintech evolution” as a partnership between these innovators and banks. “Particularly small banks,” she says.

Listen to the podcast here.

Goldman Sachs execs are opening up about their plans for Marcus (Business Insider), Rated: A

The bank has made more than $5 billion in consumer loans since making the first loan in October 2016. It has also attracted more than $46 billion in deposits.

Talwar’s comments may foreshadow the next phase of Marcus’ growth, which will center on three pillars:

1. Free financial-management software offered by Clarity Money, which was bought by Goldman last year and is likely to be rebranded at some point.

2. Direct-to-consumer products such as loan and deposit products, potentially in addition to wealth-management and insurance products.

3. Strategic partnerships.

Walmart Offers Even.com To Improve Employee Financial Health (Forbes), Rated: A

Although Even.com can let Walmart employees access their wages ahead of payday, that is its least important features, according to its CEO, Jon Schlossberg. For $8 a month — like many employees Walmart pays a share of the fee — it aims to improve financial wellness. It shows  users with a glance at a smart phone how much they have left to spend safely and helps them save for specific goals.

Millennials Are Helping to Sound the Credit Card Alarm (Bloomberg), Rated: A

First, the charge-off rate among card issuers in the first quarter increased to the highest level in almost seven years. The figure is effectively a gauge of “bad debt” — it reflects the percentage of loans companies have concluded will never be repaid. As Bloomberg News’s Jenny Surane noted last month, executives like Capital One Financial Corp. CEO Richard Fairbank chalked that up to the length of this economic expansion causing some negative credit events during the financial crisis to disappear from credit bureau reports, essentially making risky borrowers look stronger.

Crypto Startup Launches Bitcoin Term Deposit Offering 9% Annual Interest (CryptoGlobe), Rated: A

A Delaware-based cryptocurrency startup called BitLeague has recently launched a Bitcoin term deposit product designed to bring mainstream-like services to the crypto economy and attract new users.

The move was announced at Consensus 2019 and, according to a press release, the term deposit will offer 9% annual interest, with a lock-in period of 3 to 36 months.

Human Rights Watch Comment on CFPB Proposal (HRW.org), Rated: A

According to research by the Pew Charitable Trusts, approximately 12 million Americans take out payday loans and 2.5 million take out vehicle-title loans each year.[3] The short-term nature of these loans and their repayment structure drive about 80 percent of borrowers to re-borrow frequently and repeatedly pay fees to refinance their accumulated debt.[4]  The 2017 rule establishes logical baselines for consumer protection, including by requiring lenders to verify that borrowers have the ability to repay the loan and its associated fees prior to issuing a loan.

The vast majority, around 73 percent, of survey respondents reported household incomes under US$40,000, with an average of two children each, and nearly half had taken out a payday, auto title, or both types of short-term loans. People reported taking out loans most often to cover unexpected expenses, but also for their everyday expenses and groceries. More than half of those who took out a loan said they had trouble repaying their loans and associated fees.[8]

Fintech charter delayed following court ruling: Otting (American Banker), Rated: A

In a recent sit-down with American Banker, Otting said he no longer expects to have a fintech firm formally apply for the new special purpose bank charter in the second quarter of the year, after a federal judge ruled May 2 that the New York State Department of Financial Services could continue with its case to invalidate the charter.

Accomplished Human Resources Executive Joins Online Small Business Lender (OnDeck), Rated: B

OnDeck today announced the appointment of Deb Stroff as the company’s Chief People Officer.  Ms. Stroff will be responsible for leading all aspects of people strategy, including overseeing organizational design, total rewards, talent management, recruiting, leadership development and learning, as well as driving the talent agenda forward as OnDeck continues to grow in scale and complexity.

Roostify and Docutech Join Forces to Amplify the Consumer Experience (Roostify), Rated: B

Roostify announced the finalization of its integration with Docutech, a provider of document eSign, eClose and print fulfillment technology.

By joining forces with Docutech, Roostify consumers can now view, complete, and eSign documents, all within the Roostify platform.

CrowdStreet Appoints Award-Winning FinTech Innovator Donna Wells to its Advisory Board (Yahoo! Finance), Rated: B

CrowdStreet, Inc., a technology provider with an online marketplace for direct equity investment in commercial real estate (CRE), today announced the appointment of financial technology entrepreneur Donna Wells to its Advisory Board. The news comes on the heels of the company passing the $500 million threshold in total online investments with a record number of new individual investors.

Cadre Expands Executive Team, Appointing Sam Mischner as Chief Commercial Officer (Yahoo! Finance), Rated: B

Cadre announced today that Sam Mischner has joined the company in the role of Chief Commercial Officer. Mischner brings expertise in strategic sales and operational excellence to Cadre, where he will oversee marketing, sales, and operations.

LendingPoint CEO Chosen as Entrepreneur of the Year Finalist Southeast by EY (BusinessWire), Rated: B

LendingPoint is excited to announce that CEO and founder Tom Burnside was selected as a finalist for EY’s Entrepreneur of the Year Southeast. The program recognizes entrepreneurs in more than 145 cities around the world who demonstrate excellence and extraordinary success in areas such as innovation, financial performance, and personal commitment to their businesses and communities.

United Kingdom

LendInvest cuts rates and product fees (Mortgage Introducer), Rated: AAA

LendInvest has dropped its product fees and lowered interest rates for both of its 5-year fixed rate buy-to-let remortgage products for a limited time.  

The products will be available on standard property cases up to 75% loan-to-value and up to £250,000 in loan size.

The products are offered at an interest rate of 3.60%, with the ICR calculated at the pay rate, or at an interest rate of 3.49% with the ICR calculated at 5%. Both products will have zero product fee.

CapitalRise secures new institutional funding line to write larger loans (AltFi), Rated: A

Specialist property lending platform CapitalRise has secured a £30m institutional funding line from a major financial institutional investor, as it looks to expand its loan book.

The new £30 million facility was received from a UK bank, whose name is undisclosed.

OakNorth completes £30m loan-on-loan facility with Hilltop Credit Partners (Fintech Finance), Rated: A

OakNorth – the bank for entrepreneurs, by entrepreneurs – has completed its first finance deal with Hilltop Credit Partners, a specialist funding partner for small and mid-sized residential property developers and housebuilders.

The £30m loan-on-loan facility will be used to support the recently launched real estate development lending platform, led by Paul Oberschneider, who has more than 25 years of experience in property development and asset management. Backed by Round Hill Capital, a global real estate investment firm with a focus on macro-driven residential real estate investment strategies, Hilltop Credit Partners aims to help developers who know their local markets but need access to tailored financing solutions in order to fund their projects.

Crypto lending platform for business launches this month (Yahoo! Finance), Rated: A

London-based financial services firm Mode has announced its first product – a crypto-backed lending platform for businesses – will launch later this month.

The company is aiming to become the UK’s first fully-regulated digital-asset bank as it works on building an ecosystem of products and services designed to bridge the gap between digital and traditional finance.

The service is aimed at companies which hold Bitcoin and Ethereum – whether through direct purchase, investment, or as payment from clients.

How to Build Your Own Startup with Micro-financing? (Cryptopolitan), Rated: A

A report on This is MONEY shows that more than 50% of UK startups with less than 50 employees were rejected for bank loans. More so, 37% of SMEs are likely to give up their search for loans after their first approach is rejected.

P2P investing not always ‘high-risk’ (FT Adviser), Rated: A

Imagine an asset class where investor returns have been overwhelmingly positive every year since its inception and incredibly stable, hovering around the mid-single digits, without the rollercoaster of the stock market.

OakNorth completes £2.5m loan to multi-site specialist school, Cressey College (fe news), Rated: B

OakNorth completes £2.5m loan to multi-site specialist school, Cressey College, to support the groups growth strategy.

Finastra appoints Mark Miller as Chief Financial Officer (Virtual Strategy), Rated: A

Finastra has announced the appointment of Mark Miller as Chief Financial Officer (CFO) effective May 13, 2019.

Mark is a seasoned finance executive, with nearly 25 years of global technology, finance and operational experience. He has worked at several industry-leading companies including, most recently, Marketo, where he was CFO and travel technology firm Sabre Corporation, where he spent 18 years in a number of leadership and executive roles including CFO.

China

Tencent profit tops forecast as fintech and cloud revenues surge (Reuters), Rated: AAA

Tencent Holdings Ltd posted record quarterly profit on Wednesday, smashing market expectations, as the social media and gaming giant booked a rise in the value of its investments while fintech and cloud revenues helped make up for declines in games.

In the three months ended March, Tencent saw 17% growth in net profit to 27 billion yuan ($3.93 billion), beating the 19.4 billion yuan average of 13 analyst estimates compiled by Refinitiv.

Boosting profit was a 46% rise in “net other gains”, such as from investments, to 11.1 billion yuan. Revenue, however, came in just shy of analyst estimates at 85.5 billion yuan, with growth at an all-time low of 16%.

European Union

Business card management platform Pleo raises $ 56m (Fintech Futures), Rated: AAA

Fintech Pleo, the business spending platform based around smart company cards, has raised $56 million in a Series B financing round led by Stripes, a New York-based growth fund.

Pleo will use the funding round to more than triple its headcount, from 120 to 400 employees by the end of 2020 and to accelerate product development as it aims to service the entire purchase process for SMEs across the whole of Europe. This includes adding credit, invoices, mobile payments, a vendor marketplace, VAT reclaim and more.

International

More global banks commit to Finastra’s Fusion LenderComm (Realwire), Rated: A

Finastra has signed three global banks on its Fusion LenderComm platform as part of a coordinated campaign, including BNP Paribas, Natixis and Societe Generale. With NatWest, which joined recently, the ramp up signals a move towards a new era of efficiency in this complex space.

How to capture Gen Z spend (Drapers Online), Rated: A

In a survey, 58% told Klarna that they would pay more than $5 (£3.90) for one-hour delivery – if brands cannot compete, then consumers will take their custom elsewhere.

Leading the way in terms of sustainability, 72% said they would pay more for sustainably sourced products, 55% would abandon a purchase if it was not sustainable, and 83% said it is important that brands prove be “pro-equality”.

Klarna found that most of this generation still frequent the high street, and do so more than any other age group.

Australia

Prospa IPO books close; on track for June 11 listing (AFR), Rated: AAA

Investment banks Macquarie and UBS are set to underwrite Prospa’s $610 million sharemarket float after running a bookbuild to sell the shares.

The brokers closed the bookbuild at 2pm on Wednesday and funds were told the lead managers had secured enough support to raise the $110 million required for Propsa’s initial public offering.

Home loan discount frenzy drives bargains for borrowers (Mozo), Rated: A

Popular online lender Tic:Toc has launched a $1,000 cashback offer for all new customers, while competitor loans.com.au has dropped its variable rate below 3.50% to match Tic:Toc’s ultra low rates. Homestar has a competitive low rate plus fee waiver offer on the market, while Virgin Money is enticing new customers with Velocity rewards points.

India

India’s largest mobile wallet company Paytm now offers a credit card (TechCrunch), Rated: AAA

The firm, operated by One97 Communications, today unveiled Paytm First Credit Card with lofty benefits as it races to bulk up its financial offerings. The cards, issued by Citi Bank, will be the first in the country to offer unlimited, one percent cashback on purchases, Paytm claimed in a statement. The company is hoping to rope in about 25 million credit card customers in the coming months.

The penetration of credit cards remains very low in India with under 50 million peoplepossessing one.

SIDBI’s pilot scheme for fintech NBFCs to boost digital lending (Business Line), Rated: A

To give a fillip to digital lending, Small Industries Development Bank of India (SIDBI) has put together a pilot scheme to extend financial assistance of up to 10 crore to new-age fintech non-banking finance companies (NBFCs) engaged in financing small businesses and other income-generating activities.

Asia

P2P lending in Vietnam (krASIA), Rated: AAA

In Vietnam, where the economy is booming, approximately 79% of the population is unbanked. Without a banking account, it is almost impossible for people to access financial services such as insurance and loans. The phenomenon is called “financial exclusion.”

The country has an internet penetration rate of 67%, higher than the region’s average of 58%, and nearly three-quarters of the adult population owns a smartphone.

Vietnam is fertile ground for massive fintech adoption, particularly in peer-to-peer (P2P lending).

P2P Lending to Overcome Financial Exclusion (SME Magazine), Rated: A

The global P2P market is estimated to be worth US$490 billion in 2020. By then, Vietnam’s own P2P market is expected to be US$7.8 billion, almost doubling from US$4.4 billion in 2017 according to estimates by APAC-focused consulting firm Solidiance. Currently, there are over 40 P2P lenders operating within Vietnam; several of which are prominent due to their size and reach.

Innoven Capital pulls in USD 200 million from Temasek and UOB (krASIA), Rated: A

Singapore-headquartered venture debt firm Innoven Capital received an additional USD 200 million in funding from its shareholders – Temasek Holdings and United Overseas Bank (UOB). The firm said it’s doing this in anticipation of the massive potential that Asia’s venture debt space offers.

Canada

Koho Secures $ 42M in Series B Funding (Finsmes), Rated: AAA

Koho, a Toronto, Canada-based fintech company that provides Canadians with a mobile current account and Visa card, closed a $42m Series B funding round.

Authors:

George Popescu
Allen Taylor

Business card management platform Pleo raises $56m

The post Thursday May 16 2019, Weekly News Digest appeared first on Lending Times.

The Rise of UK Institutional Peer-to-Peer Lending

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively. So, why might this be? Well, […]

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively.

Source: 2015 Nesta Report

So, why might this be? Well, it’s fairly normal for institutional involvement to remain fairly low in the early stages of a new sector. On the most basic level, new sectors are simply not large enough for institutions to invest in, as they often require the ability to write large tickets, in the tens of millions, while also ensuring that they do not represent too large a proportion of a particular provider/platform. Also, until the sector gains the stamp of approval from the regulators and has a decent track record, those in charge of an institution’s wealth are simply unwilling to put their necks on the line for it. Instead, they’d rather invest in well-known, blue chip asset classes which their peers are all invested in too. There’s much less chance someone will get fired for those investments if they get into trouble. Furthermore, the P2P lending ecosystem is still in its early stages, which means that access to independent research and adequate due diligence tools are largely unavailable.

But, the sector is poised for change, and institutional involvement is growing. According to Nesta, in 2013 just 11% of P2P platforms reported some level of institutional funding. By 2015, this had increased to 45%. If we look at the big 3 platforms, which have the scale to accommodate institutions, this trend is certainly clear. Prior to 2014, these platforms had little to no institutional involvement, but institutional lending has increased significantly since then.

Institutional Lending (as a % of total volume)

Source: Orca Analysis and Assumptions. Data unavailable for Zopa in 2017

One of the key milestones for institutional involvement in P2P lending was the involvement of the British Business Bank. The British Business Bank is a UK Government-owned economic development bank established to increase the supply of credit to small and medium enterprises as well as providing business advice services. It has so far invested £135m through a number of P2P platforms including Funding Circle, through which it has invested £100m, Zopa, RateSetter and Market Invoice.

Additionally, there are a number of investment trusts available to investors which raise predominantly from institutions when they launch. Some of the larger investment trusts include P2P Global Investments (£730m), VPC Specialty Lending (£310m) and Ranger Direct Lending (£140m). Institutions have been attracted to these trusts thanks to their promise of high yields in this low yield environment and the belief that the teams involved have the skills to construct the best performing portfolios. Some of these investment trusts ran into a bit of trouble in 2016 when many began to trade at a large discount to NAV (>20%), having previously traded at a premium. Such price to NAV swings can be driven by numerous factors. Although it is likely that lacklustre performance of the underlying loans are a large contributing factor to declining sentiment, other short-term considerations are likely to also be at play. Some short-term explanations were provided by Cormac Leech, a principal at Victory Park Capital, who felt accounting quirks and Brexit / sterling weakening were causing the discount and that that these issues would be ironed out over time. Indeed, since the end of 2016, many of the discounts of the large investment trusts have narrowed by half.

Is this a good, or a bad, thing? There are a few different perspectives to take. Theoretically, institutional involvement is a great thing for borrowers, lenders and aggregators alike. Institutions mean more capital for lending, which in turn helps to grow the sector and stabilise the businesses of the platforms. Institutions help to also raise awareness with other investor groups, thus helping even more capital to flow into the sector. As platforms become larger and more profitable, we may also see cost savings passed on to investors.

This all sounds great, but there are a few snags to be aware of. Relying too heavily on institutional investors may cause investor concentration on the platforms, which leaves platforms vulnerable to being destabilised by just one investor withdrawing. Zopa and Funding Circle have both stated their commitment to retaining a diverse mix of investors, including retail, institutional and government funding. An issue that some of the larger platforms are already facing is that they are struggling to originate enough borrowers to keep up with the supply of lenders. This can cause issues for retail investors, as platforms may reject capital from retail investors (as Zopa has previously done) or platforms may be encouraged to take on riskier loans. The FCA recently stated that they were concerned about potential conflicts of interest that may be created by institutional involvement. The main concern here is that institutions may be able to cherry-pick deals to the detriment of non-institutional investors.

Another issue to be flagged is whether heavy institutional involvement undermines the social purpose surrounding P2P lending (i.e., finance ‘for the people, by the people’), which perhaps undermines the differentiating factor associated with the sector. While this is true to some extent, particularly in P2P equity crowdfunding and donations, P2P lending should ultimately be viewed as an investment opportunity which offers attractive yields with diversifying benefits in a well-constructed portfolio.

There may be some concerns but, on balance, institutional involvement should be seen as a positive sign for the P2P sector. So long as P2P participants remain well-versed on the risks involved and the FCA implements the necessary rules, institutions can help P2P lending to mature and grow in credibility.

Author:

Samantha McBride is a Director at Orca, which provides investors and financial advisors with the research required to perform in-depth due diligence on peer-to-peer investments. Samantha gained her Law degree in 2009 from the London School of Economics and has worked in financial services for the last eight years. Samantha began her career in mergers and acquisitions, working as an Investment Banking Analyst for both Nomura and Deutsche Bank, before moving into Investment Management. Prior to joining Orca, Samantha worked as a Senior Investment Associate at Partners Capital, a global outsourced investment office, and, most recently, a Portfolio Manager & CCO at Elm Partners, a quant-driven, low-cost investment manager.

Wednesday March 22 2017, Daily News Digest

Lending Club Prosper tax filing

News Comments Correction: In yesterday’s Lending Times, March 21s 2017, we have stated that the reason why Lending Club recently increased borrowing rates was due to an increase in defaults. In fact, Lending Club is matching the US FED central rate increase and plans to continue doing so. We, in fact, believe that this is the […]

Lending Club Prosper tax filing

News Comments

Correction: In yesterday’s Lending Times, March 21s 2017, we have stated that the reason why Lending Club recently increased borrowing rates was due to an increase in defaults. In fact, Lending Club is matching the US FED central rate increase and plans to continue doing so. We, in fact, believe that this is the proper decision in order to keep the investors attracted to this investment.

United States

  • Prosper reports wider loss on loan slowdown. GP:” The story here is that in 2016 Prosper revenues came down by 33% while expenses rose by 11%. In the same time Lending Club and OnDeck also lost money. A few thoughts: 2016 was a change year for the industry and Prosper who changed board members, CEOs, CFOs. So the Prosper team were aware changes were needed and they are in place. The second part is that it’s unclear at what scale Prosper needs to be to be profitable. Do they need to originate $2bil per year as they did in 2016 , $20 bil or $200 bil? Zopa and other companies showed that in the billions the scale is enough for profitability. Therefore I think it’s fair to expect 2016 to have been the transition year and 2017 to be the poster child year where Prosper and their competitors probably break even.” AT: “Huge drop. Maybe next year will be better for Prosper since payments on its 2013 settlement of a class action lawsuit were to end after three years.”
  • Sofi,Quovo show off new wealth management API.
  • Fitch upgrades CHAI 2016-PM1 Class A, B. GP:” It’s good news on the Prosper securitizations, the ratings got upgraded. This is a good sign to the overall Prosper notes investors.”
  • LC, Prosper tax information for 2017. AT: “You should consult your tax advisor for more specific information and advice regarding your own marketplace lending investments.”
  • SoFi inks office lease in NYC. GP:” SoFi is clearly hiring in NYC or will very soon. If you read Lending Times and are looking for your next opportunity perhaps you should email them a CV and you may beat the crowd.”
  • Would you trust Goldman Sachs with robo-advice? AT: In a few years, no one will think to ask this question.”
  • Deutsche Bank launches tech startup in NYC. GP:”Possibly a good incubator for fintech startups, worth a discussion.”
  • WorldRemit launches in Hawaii.
  • Brooklyn real estate is attractive to China’s middle class. AT: “I would imagine that American real estate is attractive to Chinese investors, even the middle class.”
  • Jilliene Helman on the future of investing. GP:” RealtyMogul has 110,000 investors on the platform. To me that seems very valuable beyond real estate investing. These investors probably need also fixed income and other asset classes allocation.”  AT: “Mostly about RealtyMogul.”
  • CRB names regulatory expert to BOD.

United Kingdom

European Union

  • Circle, Kabbage expand into Ireland. GP:” I wonder why UK lenders have not leveraged their existing fixed costs by entering the Irish market relatively quickly.”
  • Carrefour launches online banking service. GP:” Possibly this is a play for a cheap source of capital for Carrefour? Would US retailers be interested for something similar? How about a fintech startup to help any large corporation launch an online bank? “

International

China

News Summary

United States

Online Lender Prosper Reports Wider Loss on Loan Slowdown (WSJ), Rated: AAA

San Francisco-based Prosper reported an annual loss of $118.7 million, compared with a loss of $26 million for 2015. The company said the bigger loss was due to lower loan volumes and higher costs related to restructuring efforts and a legal settlement.

Prosper’s loss compared with $85.5 million red ink for 2016 at online small-business lender On Deck Capital Inc. and a $146 million loss at online consumer lender LendingClub Corp.

Prosper’s loan volume fell 41% to $2.2 billion as a result of money managers “pausing or significantly reducing” their purchases of the company’s credits,” according to the filing. Prosper makes money mostly from fees it charges borrowers who take out unsecured personal loans, and the slowdown contributed to revenue falling by one-third to $132.9 million.

Meanwhile, expenses rose 11% to $254.2 million.

Sofi, Quovo Show Off New Wealth Management API (Bank Innovation), Rated: AAA

The alternative lender demoed its new Authentication API, built in partnership with Quovo, a financial data aggregator for wealth management, at the FinDEVr conference today.

The API service is available primarily for the U.S., but it does support international accounts; Quovo has served customers in Canada and Australia, as well as clients in Europe.

Fitch Upgrades CHAI 2016-PM1 Class A and B; Affirms Class C (Fitch Ratings), Rated: AAA

Fitch Ratings-New York-20 March 2017: Fitch Ratings has taken the following rating actions on Citi Held for Asset Issuance 2016-PM1 (CHAI 2016-PM1), which is backed by marketplace loans originated via the Prosper platform:

–Class A upgraded to ‘Asf’ from ‘A-sf’; Outlook Stable;
–Class B upgraded to ‘BBBsf’ from ‘BBB-sf’; Outlook Stable;
–Class C affirmed at ‘Bsf’; Outlook Stable.

CE and Liquidity Support: Hard CE for class A, B, and C is 52.7%, 39.4%, and 17.3%, respectively. Liquidity support is provided by a non-declining reserve account, which is currently 0.84% of the pool balance. While subordination available to the class A and B notes will grow as the transaction pays down, overcollateralization (OC) is at its target release level of 16.5%, and will not grow until it hits its floor of 2% of the initial balance ($6.29 million). In addition, a growing proportion of the OC consists of delinquent assets. As a result, the class C notes are particularly exposed to defaults occurring later in the transaction life, which is currently the key constraint to their ratings.

Lending Club and Prosper Tax Information for 2017 (Lend Academy), Rated: AAA

Lending Club has made the process easy if you use TurboTax to file your taxes. They have dedicated part of the help section of their website to outline the step by step process of how to accomplish the import. If you’re not a TurboTax customer, Lending Club has provided a 2016 update to their Tax Guide for Retail Investors.

 

My 1099-B shows proceeds of $151.17. This is the total amount of proceeds I received from charged off loans. The “Cost or Other Basis” is the cost basis for the loans that have charged off. If you take any proceeds and subtract it from the basis you calculate the losses which is broken down by loan in the tax statement and also totaled at the bottom. In my case I had $366.62 short term losses and $980.52 long term losses totaling $1,347.14 in total losses for the year.

Generally, gains and losses from recoveries, sales or charge-offs related to Lending Club Notes are reported for tax purposes as capital gains or losses, rather than ordinary gains or losses. Generally, Lending Club Notes are considered capital assets because they are owned for the purposes of investment (similar to a stock or a bond).

Filing Taxes on Prosper Loans

Filing your taxes if you’re an investor on Prosper is similar to that of Lending Club. Your Prosper tax documents can be found by clicking on “History” under your name. Next, click “Statements”. Prosper provides each document separately instead of a consolidated report. In my case I received a 1099-OID and two 1099-B documents (one for short term and one for long term). Prosper breaks down what documents you will receive on the help section of their website.

My 1099-OID outlined the interest received of $1,226.42 and below that is my 1099-B outlining proceeds and losses from charged off loans. Although these documents look different than the ones Lending Club provides, the information and how it should be reported on your taxes is the same.

 

Capital losses first offset capital gains. With no capital gains, the losses will be deducted from ordinary income. Depending on your ordinary income tax rate, this means that your capital losses may be offset first by long-term gains that have more favorable tax treatment, usually 15% (depending on your income), as opposed to your potentially higher ordinary income tax rate. Short-term gains on the other hand have a higher tax rate, similar to the ordinary income tax rates (see Capital gains tax in the U.S.).

Online lender SoFi inks pricey office lease at 860 Washington (The Real Deal), Rated: A

The $4.3 billion startup inked a lease at the Meatpacking District’s 860 Washington Street covering the full second floor, which sits level with the High Line and the millions of visitors who traverse the trendy park each year, sources told The Real Deal.

The 10-year lease covers 13,000 square feet of space in the 10-story building developed by Property Group Partners and Romanoff Equities, with 280 feet of frontage along the High Line and West 13th Street. Asking rent in the deal was $155 per square foot.

Goldman Sachs: Would you trust its robo advisors with your money? (Independent), Rated: A

It’s almost always close to the top of the list when companies are seeking advisors to help them out with deals. And it’s not just wealthy and powerful corporations that beat a path to its door. The wealthy and powerful individuals that run them also seek its advice when it comes to their personal finances.

There are a lot of people lower down the food chain that might quite like the idea of showing off about the performance of an investment portfolio created for them by Robo Sachs. Yeah, this new set of golf clubs? Robo-Sachs came through for me. You should try it!

However, a lot of finance houses are working on similar projects, so if Goldman is planning to create Robo Sachs to advise the mass market, it wouldn’t be alone.

Deutsche Bank launches tech startup lab in New York City (Reuters), Rated: A

Deutsche Bank AG (DBKGn.DE) has opened a new center in New York to work with financial technology startups that can help it improve its technology.

Based in Lower Manhattan’s Fulton Center, the lab’s team will help the bank deploy technology in artificial intelligence, cloud and cyber security and other areas, the German bank said on Tuesday.

London-based fintech company WorldRemit launches in Hawaii (Biz Journals), Rated: A

WorldRemit, which was founded in 2010, is available in more than 50 countries and allows users to send money to more than 140 countries.

For China’s middle class, Brooklyn real estate offers more than a green card (CNBC), Rated: A

Since the Great Recession, snapping up prime real estate in coastal American cities, sometimes sight unseen, has become an increasingly popular sport with China’s wealthy. In 2014, for the first time, the Chinese bought more Manhattan apartments than did the Russians, according to Reuters. The strength of the U.S. dollar compared to the fragile yuan is making China’s middle class a major force in the Brooklyn real estate market. The existing cultural infrastructure of its Chinatowns aside, the potential profit margin of owning property in Brooklyn’s up-and-coming areas is hard to beat.

Despite the $50,000 cap, China’s foreign direct investment in the United States hit a record $45.6 billion in 2016, according to a report by the Rhodium Group, a policy group that tracks global economic trends. That figure is triple the recorded amount of FDI that flowed from China to the United States in 2015, making the United States the world’s largest recipient of Chinese foreign direct investment.

For Chinese real estate investors who can’t reach the $50,000 level, or the combined $500,000 that often leads to working with a broker, smaller sums can now be invested through real estate crowdfunding platforms.

RealtyMogul’s Cofounder & CEO Jilliene Helman On The Future Of Investing (Forbes), Rated: A

Since launching, the company has funded more than $260 million in real estate transactions and raised more than $45 million from notable investors, including Canaan Partners and Sorenson Capital.

Helman has underwritten over $5 billion of real estate and was previously a vice president of Union Bank, where she spent time in wealth management, finance and risk management.

Jilliene Helman:We’ve done $260 million in transactions and we share the results of all of those transactions. Newer platforms don’t have the track record and history, nor the processes, as a result.

We’ve built our own internal real estate software to help analyze the credit quality of real estate investments.

We have over 110,000 investors on our platform which allows us to have more capital to place with real estate companies.

Our first REIT, MogulREIT I, is a public non-traded REIT. That means that it is registered with the Securities and Exchange Commission, but is not traded on a stock exchange.

We spend over $1 million annually on data and technology to bring the most thorough credit analysis and underwriting to each investment opportunity.

All investments are carefully analyzed across four dimensions:

  1. People
  2. Location
  3. Property
  4. Third Parties

Cross River Names Regulatory Expert David Cotney to Board of Directors (BusinessWire), Rated: B

Cross River today announced the appointment of David Cotney to the bank’s Board of Directors. Mr. Cotney joins a team of experienced banking, regulatory, business and technology leaders who work with Cross River’s executive management team to provide the bank’s strategic direction and regulatory compliance framework.

Mr. Cotney holds a Masters of Public Administration from the John F. Kennedy School of Government at Harvard University, and an MBA from Boston University. He is a graduate Tufts University where he earned a BA in Political Science.

United Kingdom

What’s an IFISA? Many UK Investors Don’t Have a Clue (Crowdfund Insider), Rated: AAA

Crowdstacker, a peer to peer lender that has received the necessary regulatory approval and is offering the IFISA, says that recent research indicates that about half of investors have never heard of an IFISA.

Crowdstacker found at the top of the list of investment priorities included fixed income (17%), the opportunity to self-select how and where their money is invested (18%), and tax efficiency (24%). About 50% of savers are unaware of IFISAs with 29% uncertain as to what an IFISA is (but may have heard the name) and 5% indicating they understand the IFISA well enough to explain it to others.

UK bank Tandem loses licence after funding blow (Financial Times), Rated: AAA

Tandem, which is set to launch in the coming months as a mobile app-based bank, was due to receive £29m from House of Fraser, the UK department store chain that was bought by China’s Sanpower Group in 2014.

However, the bank said on Monday that House of Fraser had pulled its funding due to “uncertainty about whether China’s State Administration of Foreign Exchange would approve the transaction”.

Tandem said it was still planning to unveil its app in the coming months, with the aim of helping people manage their money by categorising their spending. The bank is planning to offer credit cards later this year.

How a rise in institutional funds has changed the P2P lending landscape (Bridging&Commercial), Rated: A

A many-to-many model that works well and in which – much like the US experience – the lender base has changed quite a bit since it started. These online exchanges mostly appeared following the 2008 financial crisis to alleviate the shortfall in lending to individuals and were viable as a result of low-cost technology and fair margins. P2P today embraces lending to SMEs, student loans, personal credit and real estate lending.

Relendex launched its platform in 2013, so can claim to be one of the veterans. When platforms first start, they need to attract retail lenders (individuals) because institutions aren’t interested in these platforms until they scale up.

In the US, Lending Club started out with only retail lenders: the man or woman in the street looking for a return on their capital. Eventually the institutions began to take an interest in the space, and for good reason. First, the returns were good (averaging around 9% back then). Second, there was a good portfolio spread across thousands of personal loans (mostly from refinanced credit card debt) and the institutions didn’t need to do any administration to achieve that return. What’s not to like?

In the UK, that trend towards institutional lenders has also become evident. Some platforms even have the UK government or local authority funds as co-lenders. Investment trusts have been created just to lend through P2P platforms.

RateSetter recruits Richard Sollis as business development manager (P2P Finance News), Rated: A

RATESETTER’S commercial and residential property arm has appointed Richard Sollis as a business development manager.

Sollis (pictured) joins RateSetter Property Finance from Santander and will be based at the platform’s London office, taking on responsibility for the South and South West England.

RateSetter signs up to Women in Finance Charter (P2P Finance News), Rated: B

RATESETTER is among the latest round of firms to sign up to the government’s Women in Finance Charter, which aims to tackle gender inequality in financial services.

The ‘big three’ peer-to-peer lender is one of 122 firms that have now signed up to the Charter, employing over half a million people in the UK and covering almost 50 per cent of the financial services sector.

RateSetter is the second P2P lender to sign up to the Charter, alongside Landbay who joined last year.

Headache for savers as inflation soars to three-and-a-half year high (P2P Finance News), Rated: B

Figures from the Office for National statistics showed that UK inflation rose to 2.3 per cent in February, up from 1.8 per cent in January, exceeding analyst forecasts of 2.1 per cent.

“This might prompt more people to consider putting their money to work, by taking on some risk in order to earn a better return through peer to peer lending.”

European Union

Ireland’s fintech community grows as Circle and Kabbage to expand (Irish Times), Rated: AAA

Ireland’s fintech community is set to expand as social payments firm Circle announced plans to double its Irish workforce, while US firm Kabbage said it intends to base its European headquarters in Dublin.

Kabbage, a Georgia-based online financial technology company that provides funding through its automated lending platform, on Tuesday confirmed plans to set up shop in Ireland after one of its key investos secured a €50 million investment from a major State fund.

US private investment firm Reverence Capital Partners said it intends to create a number of high-quality financial services jobs in Ireland through its portfolio of companies following the investment from the Irish Strategic Investment Fund (ISIF), a State body controlled and managed by the National Treasury Management Agency (NTMA).

Separately, digital currency start-up Circle is to double staff numbers at its Dublin office over the next two years following a 300 per cent quarter-on-quarter increase in new customer acquisitions in the wake of its recent international expansion.

French retailer Carrefour launches new online banking service (Reuters), Rated: A

French retailer Carrefour on Tuesday joined the crowded French online banking field with the launch of C-zam, a current account for anyone over 18 that can be opened on presentation of two identity cards and activated online in 10 minutes.

Plassat said this month that Carrefour targeted a group business volume of 4 billion euros ($4.3 billion) from E-commerce by 2020 against 1.2 billion in 2016.

International

Klarna Brings Instant Financing Options To Shopify’s Online Merchants (Payment Week), Rated: AAA

Good news for thousands of online merchants in the U.S., U.K., and several other European countries, as they can now offer instant financing options to their customers courtesy of an integration between Klarna and Shopify.

Depending on the particular country involved, these options include flexible or fixed rate monthly payments, promotional interest rates and in Europe, the chance to delay payment for nearly 14 additional days at no extra cost.

According to PaymentsSource, countries include the U.S., U.K., Austria, Sweden, Norway, Finland, Denmark and the Netherlands.

China

Marketplace lending ABS in China and US show different credit challenges and strengths (Moody’s), Rated: AAA

Moody’s Investors Service says that the marketplace lending sectors in both China and the US have shown differences in their development and prevailing characteristics, while both have also experienced a string of governance and misconduct issues over the past two years that have marred investor confidence.

Moody’s Investors Service says that the marketplace lending sectors in both China and the US have shown differences in their development and prevailing characteristics, while both have also experienced a string of governance and misconduct issues over the past two years that have marred investor confidence.

In China, marketplace lending ABS may be exposed to commingling risk, while in the US, deal structures include features to mitigate such risk. In addition, in China, such ABS are exposed to set-off risks, while in the US, such risks do not exist.

Furthermore, peer-to-peer (P2P) lending is still a significant part of the Chinese marketplace lending sector, but less so in the US.

Explaining the recent drop in P2P lending in China (The Asset), Rated: AAA

Authors:

George Popescu
Allen Taylor

Tuesday February 14 2017, Daily News Digest

Tuesday February 14 2017, Daily News Digest

News Comments Today’s main news: New York looks to further regulate FinTech lenders. BofA testing employee-less digital bank branches. Today’s main analysis: PeerIQ’s interpretation for Marketplace Lending of Trump’s Trump’s Executive Order on Core Principles for Regulation the United States Financial System Today’s thought-provoking articles: Banks look to replace ATM cards with cellphones. When will Innovative Finance Isas […]

Tuesday February 14 2017, Daily News Digest

News Comments

United States

United Kingdom

European Union

India

  • Monexo to rope in strategic partner. GP:” I personally don’t believe in news that state getting close to signing a partnership. I would recommend announcing it after it’s signed. There are so many ways for these partnerships not to happen.”

Asia

 

United States

NEW YORK LOOKS TO FURTHER REGULATE FINTECH LENDERS (Goodwin Law), Rated: AAA

Tucked away in the Transportation, Economic Development and Environmental Conservation Bill portion of the New York State 2018 Executive Budget is a proposed amendment to New York’s Licensed Lender Law that would “[a]llow the Department of Financial Services . . . to better regulate the business practices of online lenders.”

The Bill would make three significant changes to the Licensed Lender Law:

1.  Licensing would be required for making consumer loans of $25,000 or less and business loans of $50,000 or less at any interest rate.

2.  Potentially Implicate Licensing for Marketplace Lending Platforms Using a Bank Partnership Model. In a bank partnership model, platform companies may both solicit loans made by the bank partner and later purchase some of the platform loans.

3.  Potentially Cover Merchant Cash Advances and Invoice Factoring. The Bill would also expand the meaning of “engaging in the business of making loans in New York” to a person that “solicits [covered] loans . . . and, in connection with such solicitation . . . purchases or . . . acquires . . . other forms of financing.”

If the bill is passed by the legislature and signed by the governor, these changes would take effect January 1, 2018.

Bank of America is testing employee-less branches to serve digital-first customers (Tradestreaming), Rated: AAA

Enter the stripped-down, employee-less branch with just an ATM and a meeting room for video conferences with bank employees. The yet-to-be-named mini-branches are part of a Bank of America pilot program, with two located in Denver and one in Minneapolis. After a senior executive mentioned the concept at an investor conference last week, rumors proliferated as to whether this was a sign that the bank branch may be going the route of the bricks-and-mortar bookstore, the CD shop or the mall. The Washington Post even suggested bank branches may become what it calls “robo-banks” – automated and impersonal.

To ensure everything goes smoothly, the bank deploys “digital ambassadors,” or customer service agents who answer customers’ questions about the technology. Pace said that the digital ambassador – a role that’s only been around for a year – is focused on making sure customers are comfortable with the technology and can use the mobile app.

Weekly Industry Update: February 12, 2017 (PeerIQ Email), Rated: AAA

Federal Reserve Governor, Daniel Tarullo, announced his plan to resign in the spring, providing Trump with a clear path to accelerate his deregulatory agenda.

Jeb Hensarling (R-TX), introduced plans to relieve banks from annual stress tests and remove key powers from the CFPB.

U.S. Representatives Ed Royce (R-CA)., Kyrsten Sinema (D-AZ)., and Terri Sewell (D-Al). reintroduced the Credit Score Competition Act. The bill seeks to end the “government-backed monopoly in credit scoring” by enabling GSEs to use competitive scoring models to FICO when underwriting mortgage loans.

Potential Impact of Trump’s Executive Order on Financial Regulation

Trump’s Executive Order on Core Principles for Regulation the United States Financial System was issued on February 3rd.

We highlight Principle (c) in the Executive Order–concerning market failures, systematic risk, and information asymmetries–whose concerns are consistent with the spirit of several Dodd-Frank regulations.

Ram Ahluwalia of PeerIQ Shares the Future of Online Lending (Crowdfund Insider), Rated: A

As online lending has morphed from a novelty to the future of debt, PeerIQ has been there chronicling the growth with its deep dive analysis of securitization and portfolio monitoring.

Ram Ahluwalia: Last year highlighted that securing access to a diverse mix of low-cost capital is necessary to compete and win. Lenders that could tap many channels saw little to no slowdown in origination growth and maintained a healthy differentiation in funding cost and access to capital from their peers.

The effects we’ve seen has been tremendous. ABS issuances grew 60% in 2016 versus prior year, and virtually every major platform has established a securitization program and a bank partnership.

Ram Ahluwalia: The decline in originations is overstated and misunderstood.  The third quarter saw some origination decline, particularly for a couple of originators who encountered funding crunches, but year over year originations are still up across the industry.

Ram Ahluwalia: We project securitization to continue to be a favored funding channel, with total ABS issuance volumes growing 50% in 2017. 

Further, as consumer credit trends remain positive, there is a lot of demand for this ABS paper; the majority of deals remain oversubscribed.

Ram Ahluwalia: The OCC Charter is not a panacea. It does not address other financing and liquidity challenges for the industry. As a result, we believe partner funding banks such as WebBank and Cross River Bank will continue to have an important role to play.

Ram Ahluwalia: Scaling up origination operations that can compete with online lenders (who have established brands now) requires significant investment in marketing, technology, servicing, and risk management.

While there is a large opportunity here for traditional financiers (with their noted cost of capital advantages), on balance, we predict most banks will try to partner with nimble lending platforms, acquiring benefits from the partnerships, while minimizing risks associated with such a major strategic push.

Banks Look to Cellphones to Replace A.T.M. Cards (The New York Times), Rated: A

Customers who don’t want to fumble around in their wallet for their A.T.M. card — or who have misplaced it for the umpteenth time — will soon be able to unlock cash dispensers’ coffers by using their phone.

JPMorgan Chase, which has more A.T.M.s in the United States — 18,000 — than any other bank, has activated this technology on a few hundred machines in four test cities, including Miami and San Francisco. Six thousand more are already upgraded and ready to go.

For decades banks have battled “skimming,” in which criminals sabotage A.T.M.s to steal the information off a card and use it to clear out people’s accounts. The replacement of magnetic stripe cards with chip cards significantly reduced that problem, but mobile access brings in new worries.

One Chase customer recently had $2,900 stolen from her account through the bank’s new cardless system — which she had never used.

At Bank of America, customers with compatible phones and a digital wallet app can tap their phone on the cash machine’s wireless pad to authenticate their identity. From there, customers enter their personal identification numbers and carry out transactions in the usual way.

Some banks have gone further and let customers ditch even their phones. With biometrics, a unique body part is enough to unlock cash.

At Banco Bradesco, one of Brazil’s largest banks, customers can gain access to an A.T.M. by tapping their palm on a scanner, which reads the pattern of their veins. (The system handled more than 700 million transactions without any reported fraud, according to Fujitsu, which built the technology.) Banks in Japan, India and elsewhere have used fingerprints for authentication.

A compromised bank card can be reissued. If a hacker figures out how to imitate someone’s eyeball — which has been done in laboratory settings — it can’t be replaced.

About 2.5 percent of the 425,000 A.T.M.s in the country are currently set up for cardless access, according to an estimate from Crone Consulting, which researches the payments industry. By the fall, it expects that number to rise to 25 percent.

Venmo, the digital payment system of choice for many millennials, is owned by PayPal. Giving PayPal and Venmo customers direct access to their money through A.T.M.s is not currently in the works, but it “isn’t something I would rule out,” said Chris Gardner, the product head for PayPal’s mobile wallet software.

31 FinTech Companies Transforming Institutional Investments and Trading (Let’s Talk Payments), Rated: A

DarcMatter is an online investment platform that provides transparent institutional-level access to private investment opportunities such as venture capital, private equity, hedge funds and commercial debt products.

DealMarket is a global online platform enabling Private Equity buyers, sellers, and advisors to maximize opportunities around the world – a one‐stop-shop for Private Equity professionals. DealMarket counts more than 15,000 users, over 3,000 deals and service providers listed on the platform.

EquityZen is a marketplace for private secondary investments in companies worth more than $50 million.

ForwardLane is a cloud-based investment advisory platform that enables investors to invest in particular hedge funds using machine intelligence software.

Orchard provides products and services for institutional investors to understand, execute and manage marketplace lending investments.

PeerIQ provides a credit risk analytics platform that helps institutional investors analyze, access and manage consumer credit risk. It aggregates P2P lending marketplace players and provides high-end analytical analysis of the player’s loan portfolio.

Quantopian is a crowdsourced hedge

RealtyShares describes itself as the Lending Club for real estate. They have created a marketplace for real estate investing through which individual and institutional investors can purchase shares in pre-vetted residential and commercial real estate properties for as little as $5,000 from the convenience of a laptop or tablet. fund that provides the world’s first browser-based algorithmic trading platform.

Venovate Marketplace is an online platform that matches investment advisors, qualified purchasers, accredited investors, institutions and investing companies with a curated selection of alternative assets.

A US online lender keeps its millennial customers by helping them find jobs (and friends and life partners) (Quartz), Rated: A

When Joanna Mathews was laid off from her job as an advertising strategist in Dallas, Texas, she called her online lender to get forbearance on her credit consolidation loan. The lender agreed, but only one condition: It would have to let it help her find a new job.

Mathews, 31, and the counselor provided by SoFi, a US online finance company, spoke at least once a week as she looked for work. She also took advantage of SoFi webinars on how to write resumes and interview. Her conversations with her coach focused on job-search strategies and, eventually, salary negotiation. With her coach’s help, she landed 15 interviews. After three months of searching, she found a position at another firm in Seattle, a city where she once lived and where was eager to return.

How Investors Can Earn 7% Returns In A 2.5% World (Forbes), Rated: B

A new asset class that offers investors market-beating returns is Peer-to-Peer (P2P) Lending. The P2P sector has grown rapidly in recent years and is an excellent new source of fixed income.

In 2016, P2P investors earned net annualized returns north of 7%. Even those who took the most conservative approach saw returns of 5%. That’s more than double the average S&P 500 yield.

Although the industry started out as peer-to-peer, the likes of Citibank and Morgan Stanley now fund around two-thirds of P2P loans.

Avoiding loans in Oroville flood zone (zip code 959xx) (LendingCalc), Rated: B

On Sunday evening, February 12, authorities issued evacuation orders below Oroville Dam because of a hazardous situation involving the northern California dam’s emergency spillway.

In the meantime, we would obviously avoid exposure to any loans in zip codes starting with 959. Investors without access to personal identifiable information (PII) typically view only the first 3-digits of borrowers’ zip code. Drilling down further, the 5-digit zip codes are: 95965, 95966, 95917, 95948.

United Kingdom

When will Innovative Finance Isas actually be available? (BT), Rated: AAA

Recently published figures from the Peer-to-Peer Finance Association (P2PFA) show that its eight members, including the UK’s three biggest providers, collectively lent £843.9 million in the final quarter of last year, with a total of almost £3 billion lent across the whole of 2016.

We spoke to Neil Faulkner, managing director of 4thWay, a comparison and information site devoted to peer-to-peer.

“They’re coming, they really are,” he says. “There are currently four platforms offering them: Abundance, Crowd2Fund, Crowdstacker and LandlordInvest; and there are two more coming very soon, both Lending Works and Landbay have their approval.”

Neil predicts that over the next year or so we’re likely to see a new platform a month announcing it is ready to offer Innovative Finance Isas.

Interestingly, Neil hypothesises that the reason none of the ‘big three’ P2P platforms – Zopa, RateSetter and Funding Circle – have yet been approved is that the regulator will wait until they are all ready for approval so as not to give one a competitive advantage.

Investors sneeze at P2P trust’s ‘seasoning’ (Citywire), Rated: A

P2P Global Investments (P2P +) has pinned some of the blame for its poor performance on the maturing or ‘seasoning’ of its £840 million loan portfolio.

P2P, the largest of the alternative lending investment trusts on the London Stock Exchange, saw its share price plunge 20.7% last year. This was bad news for shareholders, including star fund managers Mark Barnett and Neil Woodford, who in the previous two years pumped over £700 million into the fund, which invests in loans from peer-to-peer lending platforms.

Even including its quarterly dividends the total loss to P2P shareholders in 2016 was just over 16%.

The performance of the underlying portfolio was much better, but with a total return of just 4.1% from its assets falling short of its 6-8% dividend target, investors grew disillusioned and de-rated the shares, which now trade at a 20% discount below net asset value.

P2P’s run of sub-par monthly returns saw it make a return of only 0.67% in the last quarter of 2017.

The increase in defaults in the last three months of 2016 was largely in US consumer loans, which makes up 56% of the portfolio.

European Union

Interview with Eduards Lapkovskis, CEO of VIAINVEST (P2P-Banking), Rated: A

What are the three main advantages for investors?

VIAINVEST is a truly customer-oriented company, and we strive to provide the most satisfying investing experience possible. Great deal of investors’ concerns are related to investment safety, so all loans listed on VIAINVEST are secured with a Buyback Guarantee. Also, to guarantee that one investor will never be 100% committed to particular loan, originators keep 5% “skin in the game” for each loan.

What ROI can investors expect?

Currently investors can choose to invest in loans originated in the Czech Republic with 12% annual ROI and Spain – up to 12,2% annual ROI depending on the loan.

VIA SMS Group is active in more countries than in Spain and the Czech Republic. Will loans from other countries be listed on the VIAINVEST marketplace soon?

This is actually the next update planned for VIAINVEST – in following weeks we will publish loans originated in Poland and Latvia, Sweden will also follow in the nearest future.

Is VIAINVEST open to international investors?

VIAINVEST is open to any investors holding a bank account within the European Union or other country to which the requirements arising from European Union legislation on the prevention of money laundering and terrorism financing apply. Currently there is no legislation in Latvia regulating operations of peer-to-peer lending platforms, but it may be developed in 2017, so VIAINVEST is already implementing existing regulations.

Equator Celebrates 2016 Successes Highlighted by New Products and Customers (Yahoo! Finance), Rated: B

Equator, a leading provider of default software solutions for many of the country’s top servicers (including four of the top five largest servicers and a leading GSE), real estate agents and vendors, today released its end-of-year performance metrics. Equator’s REO, short sale and loss mitigation modules have now processed transactions totaling more than $315 billion since its inception with more than 2.2 million distressed properties sold to date.

India

Peer-to-peer lender Monexo to rope in strategic partner to fund growth (BusinessLine), Rated: AAA

Monexo — an online peer-to-peer lending marketplace — is close to roping in a “local strategic partner” to fund its growth in the Indian market, Mukesh Bubna, its Founder-CEO, has said.

In its journey so far, Monexo India has, through its high-end digital platform, processed loans worth ₹24 crore with most of the applicants being salaried 25-30-year-olds.

Going forward, the Chennai-headquartered Monexo plans to start offering small and medium enterprise (SME) loans from the third quarter (July-September).

Bubna said Monexo was not looking at foreign venture capital or a foreign private equity fund, but was closing a conversation with a domestic investor.

Asia

BetaSmartz Automated Investment Launches in Asia (Yahoo! Finance), Rated: A

BetaSmartz, the B2B automated investment platform for all sizes of investors, from institutional to retail, today announced it had opened offices in Hong Kong.

BetaSmartz offers ‘hybrid ‘ digital investment or ‘robo’ advice that combines automated and face-to-face financial advice. Newly appointed Managing Director Asia, Zak Allom, said this model had been well received since its launch in 2015, with several clients now live including two in the U.S.

BetaSmartz will run sales and service from the Hong Kong office, complementing its headquarters in Singapore.

Authors:

George Popescu
Allen Taylor