Wednesday July 18 2018, Daily News Digest

Major US Banks' Active Mobile Banking Users

News Comments Today’s main news: SoFi partners with Ladder to offer life insurance. LendingClub has a new chief lending officer. BlueVine offers credit to QuickBook customers. Tencent, Alipay lose $1B due to payment rules. CreditEase Fintech Investment Fund ranked 3rd globally. Today’s main analysis: PeerIQ Marketplace Lending Loan Performance Monitor, May 2018. Today’s thought-provoking articles: JPMorgan, Wells Fargo mobile […]

Major US Banks' Active Mobile Banking Users

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Exclusive: SoFi teams up with Ladder to offer revamped life insurance (Fast Company) Rated: AAA

Social Finance (SoFi) today began offering life insurance to customers through a partnership with Ladder, a Palo Alto, California, startup. Customers who sign up for the co-branded service will be eligible for fully underwritten term life coverage worth up to $8 million. Most will get a policy quote instantly, sidestepping the hassle of a doctor’s appointment.

SoFi previously offered life insurance to its 500,000-plus members through Protective. But the customer experience was relatively traditional, and the value of connecting the service to SoFi was unclear. With Ladder, SoFi customers will be able to increase or decrease their coverage over time, as their needs change. SoFi, with its knowledge of customers’ overall finances, will be well-positioned to recommend such adjustments

LendingClub turns to outsider to oversee credit operations (American Banker) Rated: AAA

LendingClub has a new chief lending officer.

The San Francisco online lender said in a press release Monday that it had hired Ronnie Momen to oversee its credit strategy, including credit data use, analytics and innovative products. Momen will report directly to Steve Allocca, LendingClub’s president.

Momen previously was chief credit officer at the fintech company GreenSky. He was also chief credit officer for consumer unsecured products at Wells Fargo, where he was in charge of building risk capabilities for the company’s card and private-label products.

PeerIQ MPL Loan Performance Monitor: May 2018 (PeerIQ) Rated: AAA

  • Redesigned MPL Loan Performance Monitor tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders.
  • Show delinquencies (%), cumulative losses (%) and cumulative prepays (%) on this data set, broken out by annual vintages from 2013 – 2017. We further break the performance out by original loan terms of 36 and 60-months.
  • The right-hand axes show the outstanding loan balances broken out by either vintages or loan terms, which allows analysis of performance metrics in conjunction with the pool factor.
  • Overall, we notice that delinquencies and cumulative losses on newer vintages are higher while cumulative prepayments are lower than those seen on older vintages at the corresponding loan age.
Source: PeerIQ

OnDeck Announces Date of Second Quarter 2018 Earnings Conference Call (PR Newswire) Rated: A

OnDeck announced today that it will report financial results for the second quarter of 2018 on Tuesday, August 7, at approximately 7:00 a.m. ET. The company will host a conference call to discuss the results at 8:00 a.m. ET that same day.

The conference call will be webcast live on the company’s Investor Relations website and it can also be accessed toll free by dialing (866) 393-4306 for calls within the U.S., or by dialing (734) 385-2616 for international calls. The Conference ID # is 7156659.

JPMorgan Chase, Wells Fargo earnings calls show mobile banking trend (Business Insider) Rated: AAA

JPMorgan Chase and Wells Fargo announced their Q2 2018 earnings on Friday, which echo the trend of ongoing but decelerating growth in mobile banking as the market matures.

  • JPMorgan Chase counts 31.7 million active mobile customers, up 12% from 28.4 million in Q2 2017. That marks a slowdown in growth, both from the 13% annual growth it posted last quarter and from the 15% it posted in Q2 2017.
  • Wells Fargo counts 28.9 million total active digital users, 22 million of whom use mobile banking. That demonstrates slow annual growth of just 4% year-over-year (YoY) from its 27.9 million total active digital customers in Q2 2017, as well as a slight uptick from 28.8 million users in Q1 2018, which could indicate recovery of active users in the wake of the bank’s fake account scandal.
Source: Business Insider

This slowdown is likely because of saturation in the digital banking market. Eighty-three percent of consumers use mobile banking, making it nearly ubiquitous, according to Business Insider Intelligence’s Mobile Banking Competitive Edge Report (enterprise only). That saturation, not a decline in interest, is causing firms to add digital customers at a slower rate; they’re seeing customers new to banks rather than those new to mobile offerings.

LendingTree Study: Where Home Price Inequality is Highest (Guru Focus) Rated: AAA

LendingTree today released a study on where home price inequality is highest.

Key Findings:

  • Detroit, Birmingham, Ala. and Indianapolis have the highest home price inequality in the nation, with a level of inequality twice that of the most equal markets.
  • Salt Lake City, Portland, Ore. and Denver have the least home price inequality. The 95th percentile of home values is 3x the value of the 5th percentile in these markets, compared with over 10x the value in the most unequal markets.
  • High home prices don’t necessarily mean high inequality. The San Jose and San Francisco metros, with the highest values for the 95th percentile of homes ($2.7 million and $2.3 million respectively) ranked No. 41 and No. 33 out of 50 for inequality.
  • The metros with the most inequality tended to have very low prices for the 5th percentile of home values.Of the 10 most unequal markets, none had a 5th percentile home value of $100,000 or more, and averaged $48,500. The most equal markets had a $242,100 average value for the 5th percentile of homes.
  • The World Bank lists the income GINI for the U.S. at 0.415 in 2016. Only our top ranked city, Detroit at 0.446, was above this level. So income inequality is greater than home value inequality, a phenomenon also reflected in the fact that wealthier households don’t need to spend as high a portion of their earnings on housing.
Source: Lending Tree
Source: Lending Tree

Why financial companies are giving customers the velvet rope treatment (Market Watch) Rated: A

More than 1 million people waited to get access to a cryptocurrency trading platform on Robinhood. (The company did not respond to MarketWatch’s request for comment.) And over 100,000 people have signed up in the last year for the waiting list for Petal, a no-fee credit card that has not yet launched, the company said. SoFi Money, a bank account through the lender SoFi, would not disclose an official number on its waiting list, but said it was “multiple tens of thousands.”

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2018-3 (Business Wire) Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2018-3 (MFT 2018-3). This is a $402.31 million consumer loan ABS transaction.

This transaction represents the eighth securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.

Preliminary Ratings Assigned: Marlette Funding Trust 2018-3

Class Preliminary Rating Initial Class Principal
A AA (sf) $292,588,000
B A (sf) $56,689,000
C BBB- (sf) $53,032,000

‘You get out what you put in’: Fintechs find success in QuickBooks Online’s ecosystem (TearSheet) Rated: AAA

Intuit essentially runs two different partner platforms: one open and one closed. Intuit’s closed platform generally consists of one to three, hand-picked partners in a few categories. For a handful of lucky lenders, Intuit offers the QuickBooks Financing Platform.

Limited in number, these integration partners were offered early access to the growing QuickBooks community of business owners. In 2016, Intuit tapped BlueVine, a business lender known for its factoring product, to offer credit to QuickBooks customers.

Source: Tearsheet

As CRE Lending Landscape Shifts, Nonbank Lenders Step Up (Forbes) Rated: A

Even though CRE loans celebrated a record-breaking year in 2017, according to a Mortgage Bankers Association (MBA) 

United Kingdom

Investment trust listings struggle in 2018 (Financial Times) Rated: A

Investment trusts raised £230m in June, 65 per cent less than the £654m raised in May and 81 per cent less than the amount raised in June 2017.

Twelve investment companies have come to market in the year to date, raising £1.1bn — 40 per cent less than the £1.7bn raised at the same point in 2017, when nine new trusts listed, but raised far more.

Fintechs such as P2P lenders can reduce risks of banking system (Peer2Peer Finance) Rated: A

PEER-TO-PEER lending has been cited by the Treasury as an example of fintech’s ability to reduce risk in the financial sector by reducing concentration.

The government released a response on Tuesday to the 2017 fiscal risks report, which outlines the actions it is taking to address the 57 risks outlined by the UK’s fiscal watchdog, the Office for Budget Responsibility.

The response noted “the comparatively large and highly concentrated UK banking system” as a financial risk to the UK.

Why the UK’s digital banks enhance its status as a global fintech hub (AltFi Opinion) Rated: A

Progressive regulation, government support, access to talent, to funding and to sophisticated capital markets infrastructure – these are the strengths most commonly cited in explaining London’s emergence as a global fintech hub. But there’s another, less-vaunted reason that is becoming increasingly important.

In part as a result of the factors listed above, London boasts perhaps the world’s most active digital banking sector. Between Monzo, Revolut, Starling, Tandem, Atom, Loot, Curve and Tide – to name but a few – it’s already a very competitive market, featuring at least a few billion dollar businesses and spanning several million customers.

PROPERTY P2P LENDING: A NEW CHOICE FOR INVESTORS (Raconteur) Rated: A

Take peer-to-peer (P2P) lending, for example. By connecting those with money to invest with those looking to borrow, it allows you to target what could amount to a healthy, inflation-beating return, with less of the ups and downs of the stock market. And transaction costs are often minimal, too, with many platforms totally free to use.

Property-backed P2P lending in particular has proven popular because the loans are secured on bricks and mortar. It means, should the borrower be unable to repay the loan, the property can be sold to help pay the debt, ultimately reducing the risk to the investor.

UK challenger BankNorth preps for launch (FinTech Futures) Rated: A

The new bank, based in Leeds in the north of England, is the creation of five founders – all with plenty of experience with the old order and one challenger bank in particular.

Nancy Butler (commercial director) has worked at Atom, Santander and RBS. Craig Iley (chairman) did a stint at Atom; while Jonathan Thompson (CEO) has experience at Santander.

Jon Hogan (director) worked at Atom. In addition, Richard Baker (MD savings) was employed at Atom and Metro.

On its website the bank says it is “aiming to transform the way SME lending is delivered”.

In terms of specifics, it asks for a minimum investment of £25,000 and interested parties can download an investment memorandum. It is also looking for expressions of interest and people can reserve their allocation in its investment round.

Swoon adds Klarna Slice It solution (Retail Technology Innovation Hub) Rated: B

UK-based online furniture retailer, Swoon, is rolling out Klarna’s consumer financing solution, Slice it.

This enables shoppers to buy items and make payments of £500 or more over six months and those of £1,000+ over 12 months.

China/Hong Kong

Panic Roils China’s Peer-to-Peer Lenders (Bloomberg) Rated: AAA

China’s savers are rushing to pull money from peer-to-peer lending platforms, accelerating a contraction of the $195 billion industry and testing the government’s ability to maintain calm as it cracks down on risky shadow-banking activities.

In some cases, savers are turning up at the offices of P2P operators to demand repayment, spooked by reports of defaults, sudden closures and frozen funds. At least 57 platforms have failed in the past two weeks, adding to 80 cases in June, the biggest monthly tally in two years, according to Shanghai-based Yingcan Group.

Tencent and Alipay set to lose $ 1bn in revenue from payment rules (Financial Times) Rated: AAA

New rules set by China’s central bank have the potential to wipe out more than $1bn in revenue for Alipay and Tencent; third party payment groups now need to hold all customer funds in reserve.

Previously payments groups were able to invest customer funds at banks to earn interest; the PBoC has been slowly implementing changes requiring 20 percent of funds to be held, then 50 percent and now 100 percent; the move is meant to protect fraud and protect customers according to the PBoC.

The changes do not affect mutual funds like Yu’E Bao.

HKMA and seven banks to jointly launch blockchain-based trade finance platform in September (South China Morning Post) Rated: A

The Hong Kong Monetary Authority and seven local lenders will launch a trade finance platform using blockchain technology in September, reflecting efforts by the city to bolster fintech development and close the gap with regional rival Singapore.

Lenders taking part in the project include HSBC and Standard Chartered Bank, Bank of East Asia, Australia and New Zealand Banking Group Limited, Hang Seng Bank, and DBS Bank, according to a statement.

Sina-Backed Fintech Platform Pintec Filed For U.S. IPO (Crunchbase News) Rated: A

Pinduoduo made waves this week after aiming for a $1.63 billion IPO in the United States. The Chinese company is only three years old. Following the Pinduoduo news, two-year-old Sina-backed fintech startup Pintec also filed for a United States-based IPO, hoping to raise $70 million.

The Beijing-based startup is a technology platform that provides financial services that connect businesses to their end users. Its software covers installment loans, personal loans, SME loans, wealth management, and insurance brokerage services. One of its most popular offerings is online lending, which facilitated RMB 3.9 billion loans for over 1.1 million unique borrowers by the end of 2017, per its filing.

European Union

Klarna prepares for launch of payment card and for expansion (Financial Times) Rated: AAA

Not many companies end up inspiring their own verb like Google. But there are small signs, at least in the UK, that it is happening to Klarna, the Swedish financial technology start-up.

“Klarna it,” a young woman urges her friend on Twitter who is hesitating about a purchase with online retailer Asos. Asos offers Klarna’s “pay later” function, which gives shoppers 30 days to settle their purchases and allows them to return items without ever having paid for them.

International

P2P Lender CreditEase’s Fintech Investment Fund Ranked 3rd Globally (Crowdfund Insider) Rated: AAA

CreditEase, a China based peer to peer lending platform, has been recognized for its Fintech venture fund by a CB Insights report. According to the report, the CreditEase Fintech Investment Fund is number three in the world when it comes to ranking the most active Fintech VCs in the world.

While CreditEase started life as an online lender, the company has morphed into a Fintech conglomerate providing robo-advisory services, crowdfunding, Insurtech and more. Additionally, CreditEase, and their Wealth Management Fund of Funds, is a limited partner in many Fintech VCs.

The Fund invests in five subcategories within Fintech: Lending, Payments, Personal Finance / Wealth Management, Enterprise Solutions, and Insurtech.

Venmo: how the payment app exposes our private lives (The Guardian) Rated: AAA

Anyone can track a Venmo user’s purchase history and glean a detailed profile – including their drug deals, eating habits and arguments – because the payment app lacks default privacy protections.

This was the finding of a Berlin-based researcher, Hang Do Thi Duc, who analysed the more than 200 million public Venmo transactions made in 2017. Her aim was to highlight the privacy risk from using a seemingly innocuous peer-to-peer app.

By accessing the data through a public application programming interface, Do Thi Duc was able to see the names of every user who hadn’t changed their settings to private, along with the dates of every transaction and the message sent with the payment. This allowed her to explore the lives of unsuspecting Venmo users and learn “an alarming amount about them”.

Source: Public By Default / Hang Do Thi Duc & The Guardian

Billion Reasons to bring Financial Inclusion with a frictionless Ecosystem (Global Coin Report) Rated: A

Globally, 1.7 billion adults remain unbanked, which means more than one-third of the world’s population does not have formal financial services. It is believed that bringing unbanked adults and businesses into the formal financial platform could generate about $380 billion in new revenues for banks.

LALA world is hoping to create a financial ecosystem for all, where services including low-cost remittances, cashless payments, peer-to-peer lending, fiat lending, etc.prevail under one umbrella. It is opening the door to regulated financial services stating that it has great potential to protect up to $42 billion from what it calls “the grey market.”

LALA world has the vision to reach people with limited resources through blockchain, without needing to understand the underlying technology.

India

5Paisa.com plans to raise ₹103.5 crore via rights issue to enter P2P lending business (Live Mint) Rated: AAA

Discount broker 5Paisa.com is planning to raise about ₹103.5 crore through a rights issue to enter the peer-to-peer (P2P) lending business, said chief executive Prakarsh Gagdani in an interaction with Mint.

5Paisa.com is a discount broker, which was listed in November 2017. The company is backed by the IIFL group, which is engaged in distribution of financial services and broking. It plans to use the funds for investing in improvisation of technology platform, scaling up its business operations and invest in alternative businesses.

Finzy to Trigger Pan-India Channel Tie-ups for P2P Lending Visibility: Amit More (Business World) Rated: A

Bangalore-based finzy is the premier peer-to-peer (P2P lending solution in India. It connects borrowers with investors and makes the entire process simple and easy. finzy makes the entire borrowing process simple and user friendly.  You can get your loan funded in as little as 48 hours.

Amit More, founder and CEO, finzy, tells us more. Excerpts:

Who are your borrowers, typically? Also, how do you determine profiles of lenders?

Around 80 percent of our borrowers are salaried and 20 percent are self-employed. Contrary to the perception that the P2P industry is the lender of last resort and only cater to borrowers not served by banks and NBFCs, we, at finzy, offer loans, starting at a best-in-class rate of 10.99 percent per annum.

Asia

Vemanti Group Announces Investment In eLoan, JSC (Vemanti Group) Rated: AAA

Vemanti Group, Inc. (OTC PINK:VMNT), a technology-driven holding company, today announced that it has entered into a definitive agreement to take 20% equity interest in eLoan, JSC (“eLoan”), a Fintech company based in Vietnam whose focus is to build a decentralized ecosystem of financial services starting with its business-centric online Peer-to-Peer (P2P) lending marketplace.

Based in Ho Chi Minh City, Vietnam, eLoan () is a P2P lending marketplace that match investors with borrowers, allowing anyone to lend money directly to small and medium-sized enterprises (SMEs). Established in December 2017, the company is operational and post-revenue.

eLoan is the brainchild of CEO Trung Vo, a respected C-level banking veteran, and CTO Tom Tran, a seasoned Internet commerce executive and serial entrepreneur. eLoan is the first P2P lending company in Vietnam focusing purely on serving SME clients with short-term loans. Businesses can borrow up to $250K for up to 6 months. The company determines the loan rate based on risk category and loan term. Unlike traditional banks, the approval process is much quicker with decision made in as little as 24 hours. Whole or fractional loans are participated by individual and institutional investors. Investors make money from the interest charged on participated loans which currently stands at 12%-20% annually while eLoan earns revenues by charging borrowers an origination fee on each funded loan. There is no fee charged to the investors.

Canada

Cadre, partially owned by Kushners, opens Toronto office (Real Estate News Exchange) Rated: B

Cadre, an online startup which makes commercial real estate investments, recently expanded into Canada through the opening of a Toronto office focused exclusively on software product development.

The Canadian office of the fintech firm is strictly for research, engineering, and product development and “we are not raising money or signing deals in the area,” says Raj Singh, director of product and head of Canadian operations at Cadre. Singh joined Cadre in December to run the Toronto office.

Authors:

George Popescu
Allen Taylor

Monday April 30 2018, Daily News Digest

LendingClub

News Comments Today’s main news: GreenSky files for IPO. LendingTree hits $181M consolidated revenues. KBRA assigns preliminary ratings to Morgan Stanley resecuritization. Zopa says savers are abandoning cash ISA. KBRA assigns first European ratings. Today’s main analysis: FTC vs. LendingClub, dueling unicorns. Today’s thought-provoking articles: JD Supra on LendingClub’s FTC issues. Aussie borrowers should embrace for rate hike. Brazil’s amended payment […]

LendingClub

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Fintech Firm GreenSky Files for IPO (Wall Street Journal) Rated: AAA

Financial-technology firm GreenSky Inc., a provider of point-of-sale financing and payments technology, disclosed plans to go public.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, filed preliminary documents Friday for an initial public offering with the Securities and Exchange Commission.

FTC Sues Lending Club For Deceptive Advertising (JD Supra) Rated: AAA

According to the FTC, this deception is made worse by the fact that Lending Club never adequately discloses the up-front fee to consumers during the entire online application process.  The fee is only mentioned once—inside an explanatory “pop-up bubble” that only appears if the applicant happens to click or tap on a relatively small and inconspicuous icon. Because applicants are not required to click or tap on the icon in order to move forward with their loan application, many applicants never saw the disclosure at all.

LendingTree’s 1Q consolidated revenue grows to record $ 181m (Mortgage Professional American) Rated: AAA

Online loan marketplace operator LendingTree saw its consolidated revenue rise to a record $181m during the first this year – up 37% from the same period in 2017, according to a financial statement released Thursday.

January to March revenue from mortgage products stood at $73.5m, up 17% from the first three months of 2017. In particular, purchase and refinance revenues went up 13% and 18%, respectively. Citing the Mortgage Bankers Association, LendingTree said originations industry-wide were projected down 4% in the comparable period.

KBRA Assigns Preliminary Ratings to Morgan Stanley Resecuritization Pass-Through 2018-SC1 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Morgan Stanley Resecuritization Pass-Through Trust 2018-SC1 (“MSRP 2018-SC1”). This transaction represents the securitization of the consumer loan asset-backed trust certificates issued by SoFi Consumer Loan Program 2015-1 Trust (“SCLP 2015-1”) and supported by a portfolio of prime unsecured personal loans (“Underlying Loans”) that were originated by SoFi Lending Corp (“SoFi”).

Preliminary Ratings Assigned: Morgan Stanley Resecuritization Pass-Through 2018-SC1

Class Preliminary Rating Initial Class Principal
B BBB (sf) $36,700,000

 

Diversify Into Real Estate With Your IRA Or 401(k) (Forbes) Rated: A

The IRS does allow 

Navient Reports Greater Earnings and Fewer Student Loan Charge-Offs (Lend EDU) Rated: A

On April 24, Navient stated from its earnings report in the first quarter that it had $500 million of originations in private education refinance loans, a 43 percent fall in private education loan charge-offs and a 32 percent jump in business processing fee revenue year over year, according to a press

Business processing earnings: Earnings were $10 million in the first quarter, compared to $3 million in 2017’s first quarter.

Consumer lending earnings: Earnings were $50 million in the first quarter, up from $38 million in 2017’s first quarter. This jump came from a $7 million increase in net interest income, an $18 million decline in loan losses provision and a $9 million fall in income tax expense.

Federal Education Loans earnings: Earnings were $141 million, up from $129 million in 2017’s first quarter.

Unitus Ventures Marks The First Close Of Its $ 45.2 Mn Fund II With $ 15 Mn (Inc42) Rated: A

Unitus Ventures (formerly known as Unitus Seed Fund), an impact venture fund investing in early-stage startups, has announced to have raised $15 Mn (INR 100 Cr) towards the first close of its $45.2 Mn (INR 300 Cr) Unitus Ventures Fund II.

The fund will be utilised for onward investing of $753K – $2.2 Mn (INR 5 Cr -INR 15 Cr) each to 25 to 30 startups specialising in education, healthcare and inclusive fintech.

Yolande Piazza of Citi Fintech (Lend Academy) Rated: A

In this podcast you will learn:

  • The origins of Citi Fintech and the goal of their group within Citi.
  • How they have created a new and innovative culture within Citi Fintech.
  • Why Citi Fintech released a global open banking API.
  • Citi’s Canvas platform that is their internal sandbox product.
  • How they create these products hand in hand with their customers.
  • Why this is about more than just creating mobile offerings.
  • What Citi’s newly announced national digital bank means for the overall bank.
  • How Citi will help non-bank customers as well as their own customers.

 

Mastercard: Serving The Financial Needs Of The ‘New Middle Class’ (PYMNTS) Rated: A

Whether an applicant has recently immigrated and lacks the background data to be approved, or is recovering from a drastic life event such as a divorce or death of a spouse, demonstrating their creditworthiness is often impossible by traditional means – i.e. the FICO score – leaving as many as 160 million Americans up the creek with no paddle.

Haymond said Mastercard has already put its philosophy into practice by partnering with CreditStacks, a FinTech that focuses on providing credit to new Americans, as well as launching its Inclusive Futures Project in December 2017 to address the needs of gig and on-demand workers.

Mastercard Meets Elevate

Some of the features of the new product will include purchase and fraud alerts, credit score monitoring, a full-service mobile app and on/off functionality for the credit card. Cards will be awarded based on the analysis of data from alternative sources, Haymond said, which can fill in the blanks to evaluate a customer’s creditworthiness when traditional data points are not present or don’t meet requirements.

Millennials now more bullish about finances than baby boomers — study (Spears Magazine) Rated: A

Almost nine in ten (88 per cent) HNW millennials feel more confident about their finances than a year ago- but less than half of baby boomers (47 per cent) shared the same sentiment.

A new study from SunTrust Bank also found that millennials are more confident than their generation X counterparts, of whom 66 per cent are more confident than last year.

Some 16 per cent of those surveyed attributed their increased optimism to ‘having a great investment firm’, while 13 per cent cited increases in income and assets.

Possible Finance launches with small, short-term loans designed for low-income borrowers (Geek Wire) Rated: B

Tony Huang was inspired to create Possible Finance because “it’s so damn expensive to be poor.”

Possible Finance customers can apply for small loans and receive approval quickly using a mobile app. Customers can build credit when they make payments, unlike traditional payday loans, which typically do not report to credit agencies unless a borrower misses payments.

LendingPoint is the fastest-growing company in metro Atlanta (Atlanta Business  Chronicle) Rated: B

Being a successful financial technology (fintech) lender requires focusing more on the lender portion of your business than the fintech portion. That’s the way Tom Burnside, CEO and founder of LendingPoint, runs his company, the number-one overall fastest-growing private company in the metro area.

 

 

United Kingdom

Zopa executive: “Savers are abandoning the cash ISA en masse” (Peer2Peer Finance) Rated: AAA

SAVERS are “abandoning the cash ISA en masse”, as the personal savings allowance (PSA) makes the tax-free wrappers less relevant for consumers, a Zopa executive has said.

New data from UK Finance showed that investment in cash ISAs fell from £773m in March 2017 to just £332m in March 2018 – a decrease of 42 per cent.

Immigration rules ‘could choke fintech’, says lobby group Innovate Finance (The Times) Rated: A

The prospect of tighter immigration rules after Brexit risks choking off a boom in Britain’s burgeoning fintech industry, according to a new study by lobby group Innovate Finance.

The report says the financial technology sector is on course to top 100,000 employees by 2030, with 30,000 jobs set to be created.

The result would be a shortfall of 3,200 highly skilled workers by 2030, at a cost to the fintech sector of £361m, the report said.

Investment trusts back “substantial opportunity” in alternative lending (Peer2Peer Finance) Rated: A

Victory Park Capital Specialty Lending (VPC) and P2P Global Investments (P2PGI) released their annual reports on Friday morning, insisting there were still opportunities for online lending and consumer credit as banks continue to scale back.

VPC reported a NAV return of 3.07 per cent for 2017, up from 0.95 per cent in 2016 but below its eight per cent target.

Similarly, P2PGI posted NAV total returns of 3.03 per cent for 2017, down from 4.1 per cent in 2016 and below its target of six to eight per cent.

Is there still life left in P2P investment trusts? (Peer2Peer Finance) Rated: A

But four years on from the launch of P2PGI, the investment trust has admitted in its 2017 annual report that historic performance was ”more volatile than we would like.”

But P2PGI still sits at a discount to NAV of 17.5 per cent and VPC is at 12.5 per cent.

Putting Your Bitcoin Investments to Work (Coinspeaker) Rated: A

One pioneer in the field to consider is Nebeus, a crypto bank that brings together cryptocurrency opportunities and a standard bank service. Its Nebeus trading platform supports peer-to-peer (P2P) lending and a multi-cryptocurrency wallet. The platform enables customers to buy, sell, store, remit, lend and borrow cryptocurrency funds.

Nebeus offers two cards that allow holders to spend their cryptocurrency at their convenience online, offline, or to get cash at ATMs, and the convenience and protection this card offers is hard to beat.

The Nebeus Exo Card lets users top up their card with all major cryptocurrencies and spend that money with over 30 million merchants online. Users can make $1,500 ATM withdrawals per day, worldwide. And they get 3% cashback In NBTK tokens monthly. There is no monthly fee for the card for NBTK holders.

China

China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA

On April 23, China’s leading financial inclusion platform FINUP filed a listing application for the Hong Kong Exchanges and Clearing Limited (HKEX).

Ant Financial Invests in Bangladesh-based Fintech Startup bKash

On April 26, Bangladesh-based mobile financial service provider bKash and Ant Financial jointly announced a strategic partnership to promote the development of financial inclusion for the unbanked and underbanked communities in Bangladesh.

NIFA Establishes e-Contract Standards for Online Lending

On April 23, the National Internet Finance Association of China released a draft of standards on “Safety Regulations for Internet Finance Contracts”.

With $ 1.9 Billion Investment, Former Baidu Unit Challenges Fintech Rivals (Wall Street Journal) Rated: A

Baidu Inc.’s former financial-services unit has attracted a $1.9 billion investment from firms including U.S. private-equity giants TPG and the Carlyle Group, giving it fresh ammunition to compete in China’s increasingly crowded financial-services space.

Chinese VC Firm Sky9 Capital Reaches Final Closing Of $ 200M For New Fund (China Money Network) Rated: B

Sky9 Capital, a venture capital firm founded by a former partner at Lightspeed Venture Partners, announced today that it has completed the final closing of a new fund with total commitments of US$200 million.

Sky9 Capital Fund III, L.P. will invest mainly in China-based businesses with a focus on early-stage companies in the Internet, enterprise, and deep technology sectors.

European Union

KBRA Issues First European Ratings (Business Wire) Rated: AAA

Kroll Bond Rating Agency Europe Limited (KBRA) is pleased to announce its first published European Structured Finance ratings. KBRA issued its inaugural published European ratings on Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”), a £206.6 million ABS transaction collateralized by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”). This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”). The full rating report can be accessed here.

This is KBRA’s first publicly rated European ABS securitisation after being registered as a Credit Rating Agency by ESMA in November 2017.

International

The FTC vs LendingClub, Banking through the Post Office, Dueling Unicorns (PeerIQ), Rated: AAA

On Thursday, Amazon reported $3.27 EPS earnings well above the $1.26 estimates. The stock jumped 7% to record highs in reaction to the beat. The news comes just days after Amazon invested $22mm into Capital Float, India’s self-proclaimed largest online lender. We recently discussed Amazon’s path to the banking sector via its reported partnership with JP Morgan.

The lines between tech and banking continue to blur. Square announced the acquisition of Weebly for $365 Mn.

Dueling Unicorns

Source: PeerIQ, Company Websites, Crunchbase

FTC vs LendingClub

On Wednesday, the FTC charged LendingClub with deceiving borrowers.

In response to the lawsuit, LendingClub posted a detailed rebuttal, refuting the FTC’s claim. As seen in the image below from LendingClub’s blog post, the company believes they provide borrowers multiple opportunities to understand the Origination Fees mentioned in the FTC’s lawsuit. LendingClub goes on to refute each claim made by the FTC individually.

Source: LendingClub

In a post on Lend Academy, Peter Renton questions the cause of this lawsuit, and points to the fact that only two of the five FTC Commissioner seats were occupied at the time of the complaint, and one of the two left on Friday. Renton’s understanding is that LendingClub and the FTC were cooperating and this lawsuit “came out of left field.”

Are You Ready To Give Fintech A Try? (Forbes) Rated: A

In just three years, Germany’s 

Blockchain Startup ShareRing is Facilitating the Adoption of Cryptocurrency (Coinspeaker) Rated: A

ShareRing will achieve this by employing a dual-coin mechanism through its own ShareLedger blockchain that will operate with two distinct tokens. The first – ShareToken (SHR) – will be the utility token of ShareRing. SHR will drive the consensus algorithm and act as a tradable coin on cryptocurrency exchanges.

The second currency, SharePay (SHRP) will be pegged to fiat and can be purchased directly from the ShareRing app using a credit card. A user can then use their SHRP to buy sharing services within the ShareRing application. ShareRing foresees a wide range of partners for the platform, sharing not just apartments and cars, but time, labor, as well as peer-to-peer lending and group tours.

FintruX Network (FTX) Will Be Listed In 3 Exchanges in their first week of token unlock (satPRNews) Rated: B

Qryptos exchange was the first exchange to list FintruX (FTX) On April 22, Bancor network quickly followed suit by listing Fintrux on April 24.

Potential investors, who missed their ICO, will now be able to buy the tokens on Qryptos, Bancor Network and HitBTC as well.

Australia

Borrowers should ‘brace’ themselves for rate hikes (The Adviser) Rated: AAA

After online lender ME claimed that it was “forced” to hike interest rates on its owner-occupier and investor loans as a result of increased funding costs, comparison site finder.com.au asked a panel of economists whether they believed other banks would follow.

According to the finder.com.au survey of 17 economists, 78 per cent said that they expected more lenders would raise their rates out of cycle as a result of rising US interest rates.

 

India

Fintech Startup Rubique Raises Fresh Round Of Funding (Inc42) Rated: AAA

Kalaari Capital-backed online lending marketplace Rubique has raised fresh funding led by Japan’s Recruit Group and Russian venture capital management company Emery Capital.

Blacksoil and existing investor Kalaari Capital also participated in the funding round. Apart from this round, the startup is also in the final stages of closing another tranche’ of funding, to be led by a couple of marquee investors

The startup plans to use the funds to hire more data scientists, enhance technology and reach a monthly revenue of $1.8 Mn (INR 12 Cr) by September.

Crowd Genie Opens India Office to Expand Asia-Pacific Asset Exchange (BC Focus) Rated: A

Crowd Genie Financial Services Pte. Ltd. is incorporated in Singapore and was granted a “Dealing in Securities” license by Monetary Authority of Singapore (MAS) in March 2017. This makes Crowd Genie one of the handful licensed platforms in Singapore.It is a peer-to-peer lending online platform that lets Singapore-based SMEs obtain financing from investors.

Crowd Genie is contemplating to establish a blockchain based Asia-Pacific asset exchange. It recently started an office in Bangalore, India and named Kunwar Singh as its Chief Technology Officer. The company completed its CGCOIN token sale in March this year. It intends to work on the regulatory elements to drive India centric assets onto its exchange.

A primer on crowdfunding (The Hindu BusinessLine) Rated: A

P2P lending is when individuals lend to small businesses/individuals for either a social or a commercial initiative. P2P lending can also be for non-income-generating activities. The consideration here is the interest on the amount lent. The return varies with the risk associated with the business and the individuals running the business — higher the risk, higher the return. Some of the prominent P2P platforms include Milaap, Kiva, Faircent and Cashkumar.

P2P platforms insist on KYC fulfilment for both lenders and borrowers. Diligence exercise is done on borrowers to assess credit-worthiness, genuineness and repayment capability.

Crowdfunding for non-financial consideration is of two types — social lending/donation crowdfunding and reward crowdfunding. Here the return or consideration may or may not be commensurate with the money raised.

 

Latin American

Brazil: Amended payment method regulation (IFLR.com) Rated: A

On March 26 2018, the Brazilian Central Bank enacted amendments to the existing regulation on payment methods, proposing more flexible rules on payment arrangements, payment institutions and on interchange fees charged to issuers of debit cards. The Central Bank expects these changes to foster competition among market players and as a result provide reduced debit card costs for end users.

This new regulation follows an international trend already observed in several developed and developing countries. In the US and Mexico, for instance, maximum limits for interchange fees charged in debit cards transactions led to average cost reductions on such fees of 40% and 50%, respectively.

Authors:

George Popescu
Allen Taylor

Monday November 27 2017, Daily News Digest

fintech TransUnion

News Comments Today’s main news: Ant Financial bans high-interest consumer loan products. Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS. Funding Circle to launch Isa next week. Zopa reforms how returns are displayed. Robo-advisors in China must be licensed. CreditEase to pioneer fund of funds for direct real estate purchases. New Zealand publishes first P2P/crowdfunding statistical returns. Today’s main […]

fintech TransUnion

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS (Asset Securitization Report), Rated: AAA

LendingClub’s third self-sponsored securitization of online marketplace loans is benefiting from the company’s recent tightening of credit standards.

The loans backing the $330 million Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 involve borrowers with higher FICO scores that have allowed LendingClub to reduce its credit enhancement levels on the deal.

CLUB Credit Trust 2017-P2 has a collateral pool of 22,062 prime, consumer loans with a cumulative net balance of $368 million, or an average balance of $16,681.

TransUnion Study On FinTech Market; PayPal Enters Robo Advice Market (PeerIQ), Rated: AAA

The Federal Reserve Bank of New York reports that household debt totaled $12.95 Tn last quarter – the 13th straight quarterly increase. As a share of GDP however, household debt stands at 66% below a peak of 87% in early 2009.

PayPal continues to expand the range of its consumer offerings. PayPal started with payments initially, moved to personal and small business loans, and is now delivering asset management solutions. The partnership will offer Acorns a unique channel for customer acquisition and allow Acorns to compete with Betterment and Wealthfront. Paypal led a $30 Mn investment round in Acorns Grow in April 2016.

FinTechs are Growing and Taking Market Share

FinTech’s market share has grown from virtually zero in 2012 to 30% in 2016. The outstanding balances on personal loans have doubled to over $100 Bn in 2017 from late 2013, with 128 lenders making more than 10,000 personal loans annually. FinTechs compete with banks to originate loans to prime consumers, and FinTech’s originate 30% of their loans to non-prime consumers where there is less competition from banks.

Source: TransUnion

FinTechs Have The Most Robust, Risk-Based Pricing

Source: TransUnion

Brian Dally of Groundfloor (Lend Academy), Rated: A

In this podcast you will learn:

  • Where the idea for Groundfloor come from.
  • Why Brian decided to start in the real estate asset class.
  • How many states they are operating in today for both borrowers and investors.
  • How they go about sourcing real estate deals.
  • Why they decided to focus on non-accredited investors.
  • How their securities offering is structured.
  • The minimum investment allowed per deal.
  • How returns have been for investors.
  • Which side of the marketplace is constraining growth today.
  • How they differentiate themselves from their competition.
  • The performance of their loan book to date.
  • Their business model and how they make money.
  • Details of their first institutional investor and why this is good for retail investors.
  • Their goal for an institutional/retail investor mix.
  • What the future holds for Groundfloor.

Online lenders pull out the popcorn, as the Trump administration fights to control the CFPB (TechCrunch), Rated: AAA

Republican lawmakers have long sought to reduce the CFPB’s oversight. Now dueling appointments put its immediate future in question. Last night, President Trump named his budget director, Mick Mulvaney, as acting director of the agency hours after its current leader, Obama-appointed Richard Cordray, announced he would leave the job.

To counter the administration’s plans, on his way out the door, Cordray named his chief of staff, Leandra English, as the agency’s deputy director.

Under the law, the appointment should make English the agency’s acting director, though the White House says that Mulvaney plans to show up at the CFSB Monday morning anyway. The White House further says Mulvaney will keep his current job as head of the Office of Management and Budget.

If the Trump administration follows through on its threats, Mulvaney will lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate.

Nobody Knows Who the Consumer Financial Protection Bureau’s New Boss Is (New York Magazine), Rated: A

On his way out, he appointed his chief of staff, Leandra English, to take over the CFPB, citing the Dodd-Frank Act, which states that the agency’s deputy director will take over the agency if the director leaves. Trump responded by naming Mulvaney as expected, pointing to the Federal Vacancies Reform Act as justification for his move.

The eventual director must be confirmed by the Senate; Trump’s pick is expected within weeks.

3 trends powering the rise of financial robo-advice (VentureBeat), Rated: A

1. Availability of data

We generate more than 2.5 billion GB of data every day.

In one notable example, JP Morgan and Intuit earlier this year announced their companies will make data available via the Open Financial Exchange API. Their goal is to make it easier and more secure for consumers to use their data across various financial apps and websites.

2. Increased power and storage

  • Google Tensor Processing Unit.
  • Nvidia Volta.
  • Huawei Kirin.

3. Advancements in AI

In particular, deep learning and boosting models enable significant leaps forward in the application of machine learning. These include design concepts such as Google’s Capsule Network, which offers an alternative to traditional neural nets, and replicative and transfer learning, which enable pattern discoveries and accuracies impossible by human counterparts.

The results of studies using these ideas are impressive. In one example, University of Mannheim researchers showed how ontologies help some machine learning models validate data 50 times faster. And Google’s AutoAI demonstrated it can create better machine learning code than the researchers who made it.

Student debt relief trumps other benefits (Employee Benefit Adviser), Rated: A

Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.

Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.

Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.

The Most Well-Funded Fintech Startup In Each State (CB Insights), Rated: A

State Company Total Equity Funding ($M)
Arizona CampusLogic $ 17.5
Arkansas LumoXchange $ 0.2
California SoFi $ 2,040.5
Colorado IP Commerce $ 54.7
Connecticut PayVeris $ 14.2
DC Fundrise $ 52.6
Delaware College Avenue Student Loans $ 50.0
Florida YellowPepper $ 34.0
Georgia Kabbage $ 490.0
Idaho VisitPay $ 18.4
Illinois Avant $ 655.0
Indiana Allied Payment Network $ 2.6
Iowa Dwolla $ 39.1
Kansas C2FO $ 99.7
Kentucky Inked Brands $ 4.0
Louisiana Zlien $ 7.2
Maryland Regent Education $ 39.7
Massachusetts Toast $ 138.0
Michigan Clinc $ 7.5
Minnesota Bright Health $ 240.0
Missouri Clearent $ 27.5
Nebraska D3 Technology $ 35.6
Nevada Filament $ 31.8
New Jersey Billtrust $ 104.5
New York Oscar Insurance Corporation $ 727.5
North Carolina AvidXchange $ 558.2
Ohio Aver $ 23.2
Oklahoma CreditPoint Software $ 1.1
Oregon NVoicePay $ 21.5
Pennsylvania InstaMed Communications $ 101.9
Rhode Island Upserve $ 191.5
South Carolina Ceterus $ 10.2
South Dakota ReliaMax $ 3.9
Tennessee Digital Reasoning Systems $ 75.6
Texas BigCommerce $ 164.5
Utah MX $ 54.1
Virginia StreetShares $ 18.9
Washington Avalara $ 253.0
Wisconsin Dynamis Software Corporation $ 4.3
Source: CB Insights

Bridge loan helps borrowers as they pursue graduate degrees (SFGate), Rated: B

The sellers wanted to accept the offer but were concerned about the VA financing with an online lender who was unresponsive to the listing agent’s calls. The Realtor advised the couple that if they could find a local lender who could preapprove them with conventional financing, their offer would be accepted.

Wyatt held a video conference with the couple to clarify the structure of the file and learned that both clients were pursuing their graduate degrees and took time off work to attend classes. In addition, the co-borrower had recently received an employment offer for a salaried position.

United Kingdom

Funding Circle Isa to launch next week (Bridging&Commercial), Rated: AAA

Peer-to-peer platform Funding Circle has announced that it will start rolling out its Isa account to all current investors from next Thursday (30th November).

UK peer-to-peer lenders plan to raise millions from ISAs (Financial Times), Rated: A

Britain’s largest peer-to-peer lenders plan to raise hundreds of millions of pounds from savers in the coming weeks even as many of them say they will reduce higher risk lending in case there is a downturn.

“We expect a lot of demand,” Samir Desai, chief executive of Funding Circle, told the Financial Times. “We have done lots of surveys and a huge proportion of the base told us they would like to put all of the money they invest with us through the ISA.”

Zopa addresses default concerns by reforming how returns are displayed (P2P Finance News), Rated: AAA

ZOPA is working on improving the way long-term returns are displayed so investors do not become overly concerned with monthly defaults in their portfolio.

The peer-to-peer lender said it is working on a prototype that would show investors their current portfolio performance, a range of what their returns will be and what their target rate is.

The display, currently in testing, includes a graph showing portfolio growth, and the net cash earnings after losses, a range of what the returns will be that narrows closer to maturity and what the target rate is in comparison to what was advertised.

Welendus launches new £150,000 crowdfunding campaign (P2P Finance News), Rated: A

PEER-TO-PEER payday loan platform Welendus has launched a new crowdfunding round on Seedrs this morning to raise an additional £150,000.

The lender, which raised £100,000 from investors during a Seedrs fundraise in March, has already reached 92 per cent of its target by attracting funding from the existing crowdfunding backers.

NatWest joins the robo-advisers (This is Money), Rated: A

High-street bank NatWest has launched a fully regulated robo-advice proposition charging £10 for customers seeking to invest sums as low as £500.

Unlike some rival robo-advisers that offer guidance based on responses to just a few questions, or simplified advice that doesn’t factor in your complete financial position, NatWest said its process will offer full-fat advice akin to the traditional face-to-face process but online.

57% of SMEs support European Free Trade Agreement (Bridging&Commercial), Rated: A

More than half of small business owners (57%) are supportive of joining the European Free Trade Agreement (EFTA), a new survey has revealed.
Research by peer-to-peer platform Funding Circle has found that the key reasons cited by businesses for wanting to join the EFTA included the ease of exporting and importing (59%), a larger customer base (46%) and lower tariffs (42%).

 

Was the Budget boom or bust for personal finance? (P2P Finance News), Rated: A

PEER-TO-PEER lenders are split about the outcome of the Budget for people’s finances.

RateSetter said there was “a notable absence of measures to help people put away more for the future” in Wednesday’s fiscal event, but Lending Works called it “a boost for personal finance”.

Rethinking bricks and mortar: alternatives for property investors (Your Money), Rated: B

A mismatch of supply and demand has made UK property more unaffordable than ever for would be buyers. Property investors pursuing the buy-to-let route are also facing challenges due to a recent crackdown in tax legislation. Against this backdrop, peer to peer (P2P) and equity crowdfunding have grown in popularity as alternative ways to access the property market.

Key considerations before picking an investment route

 

  • Investment risk
  • Debt or equity
  • Liquidity
  • Who’s the provider

RateSetter Appoints Richard Steele Regional Manager of Midlands (Crowdfund Insider), Rated: B

UK-based peer-to-peer lending platform RateSetter announced on Friday it has appointed Richard Steele as its regional manager for the Midlands. According to the online lender, Steele has more than 15 years of business lending experience and prior to joining RateSetter, he held the relationship manager position at Barclays and business development manager at BCRS Business Loans.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

On November 17th, top financial regulators in mainland China (including PBOC, CBRC, CSRC, CIRC and SAFE) released a new set of rules covering the country’s asset management market. It is the first time that the regulators designated one of the articles to Robo-advisors.

According to the article, financial institutions that conduct Robo-advisory services or AI-driven investment programs should be granted license from financial regulator before carrying out any operations.

Here Comes Tencent Credit

Two years ago, Ant Financial, the financial affiliate of Alibaba, launched its own credit scoring system Sesame Credit. This week, Tencent, Alibaba’s main rival in China, finally followed suit by launching a similar and competitive product, Tencent Credit. The credit score ranges between 300 and 850.

Sesame Credit Ceases Cooperation with Cash Loan Platforms

On November 21st, a cash loan platform told the media that they had received a notification from Sesame Credit, the credit scoring services of Ant Financial. According to the notification, Sesame Credit will cease to cooperate with cash loans from December 12th of 2017 due to some of its illegal behavior regarding interest rate setting and debt collection.

Chinese fintech firm CreditEase to pioneer funds of funds as alternative to direct real estate purchases (SCMP), Rated: AAA

CreditEase, one of China’s largest financial technology companies, has set its sights on funds of funds focusing on real estate projects as founder and chief executive Tang Ning anticipates a new property investment scenario.

At present, high-net-worth individuals in China seeking returns from property investment often directly buy and own residential or commercial units, betting on the appreciation of assets.

CreditEase, which specialises in lending to small businesses and consumers as well as wealth management for affluent investors, plans to set up a clutch of funds of funds that will allocate capital to leading global real estate funds managed by big names such as Blackstone and KKR.

China Online Lender Qudian’s Latest Plunge Knocks CEO From Billionaire Ranks (Forbes), Rated: A

Qudian lost 24.3% on Friday to end at $12.22, the worst close since it listed at $24 on Oct. 18.  Friday’s decline left Luo’s fortune at $776 million.

Luo, 34, ranked No. 255 on the 2017 Forbes China Rich List published on Nov. 16 with an estimated fortune of $1.48 billion.

Shares in Qudian, which is 11% owned by Alibaba Group affiliate Ant Financial, and other Chinese online lenders have been falling on reports that regulators plan to tighten restrictions on microlenders. On Friday, Qudian said it would cap charges and costs to customers linked to Alipay at an annual interest rate of 24% (see announcement and details here).  Qudian also said it is working to extend credit through its own app where it can charge up to an annual rate of 36%.

Alibaba Affiliate Bans High-interest Consumers Loan Products (ValueWalk), Rated: AAA

Ant Financial, the financial arm of Alibaba, has barred consumer loanswith an annual interest rate above 24% on its Alipay platform.

Ant Financial stated that it has increased monitoring of the financial service providers on Alipay and its credit platform, Sesame Credit, and found some inappropriate collection methods and interest rates above legal limits, according to Reuters. Further, Alibaba’s Ant Financial stated that it would withdraw cooperation with some cash loan providers. Sesame Credit is a proprietary credit scoring system, which gives Alipay e-wallet users a credit score.

China Fintech Firm Is Said to Mull Fate of $ 500 Million IPO (Bloomberg), Rated: A

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people.

Yirendai Awarded ISO 27001 Certification (Business Insider), Rated: A

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that it has been awarded certification to the international standard for Information Security Management (ISO 27001) from British Standards Institution.

The ISO 27001 certification is an internationally recognized best practice framework for an information security management system (“ISMS”) and specifies the requirements for establishing, implementing, maintaining and improving information security management within an organization. It also takes into account risk assessment and risk treatment with regards to security of information.

Tencent to set up fintech lab in Xiongan (ECNS.cn), Rated: B

Tencent Holdings Ltd, Asia’s most valuable firm, is planning to set up a financial technology lab and digitize public medical services in the Xiongan New Area, as part of a broader push to gain a foothold in China’s latest economic zone.

European Union

One Idea to Make Europe Bigger in Tech Is to Pay Employees More (Bloomberg), Rated: AAA

Europe isn’t producing the kind of large, globally-influential technology companies like those coming out of the U.S. and China. A perennial question is why?

One reason might be that European startups don’t give employees as much of a chance to strike it rich, according to a new study by the European venture capital firm Index Ventures. While startup employees in the U.S. are often rewarded with stock options — allowing them to cash out handsomely if a company is sold or goes public — young firms in Europe don’t offer the same scale of incentives.

In an analysis of 73 companies, Index found that European employees own on average about 10 percent of the startup where they work, compared to 20 percent for U.S. workers. European companies often skew stock options to executives rather than rank-and-file employees.

A tech VC explains why Revolut is such a hot ticket as the fintech app hits 1 million users (Business Insider), Rated: A

Revolut announced the milestone on Friday, saying that customers have now completed 42 million transactions on its app worth a combined $6 billion (£4.5 billion). The company began as a foreign exchange app linked to a pre-paid card but has since branched out into broader financial services, such as current accounts, insurance, and investments.

Revolut, which is applying for a full European banking license, said that 42% of its customers are aged 25-35, “a clear indication that traditional banks are no longer meeting the needs of younger, tech-savvy generations.”

Flender closes in on £2m funding round (Independent), Rated: A

Dublin-based peer-to-peer lending business Flender is close to raising more than €2m in its latest funding round.

Some €400,000 of the money has been raised from its own platform – the first peer-to-peer equity investment on an Irish platform. Terms are close to being agreed for the remaining balance of a £2m (€2.25m) round.

CS Invests in Swiss Fintech (finews), Rated: B

Credit Suisse has bought a majority stake in Tradeplus24, a Zurich-based fintech firm specialized in small- and mid-sized business loans. The Swiss bank bought into a series A1 financing through its subsidiary, SVC, the bank said in a statement.

International

2 investment trusts for income investors seeking reliable high yields (The Motley Fool), Rated: AAA

With interest rates still near historic lows, it can be hard to find mainstream investments that will pay out a significant yield.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

ETHLend – A Fully Decentralized & Democratized P2P Lending Platform On The Ethereum Blockchain (Chipin), Rated: A

The main feature of ETHLend is the financing options available in ETH, which allows users to borrow or lend ETH using ETHLend’s digital tokens in an efficient manner or by using ENS domains as a collateral.

The ETHLend platform can be also used as a tool for both B2B and B2C transactions.

An interesting aspect of ETHLend is that both borrowers and lenders will receive 0.1 credit tokens (equal to 1 ETH) each for every loan that is repaid successfully.

These credit tokens can then be used as collateral for loans on the platform or sold for profit.

Here are the details of the upcoming LEND token sale:

Token name: LEND

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th November, 2017 – 27th December, 2017

Token sale target: 37,600 ETH (hard cap)

Token exchange rate: 1 ETH = 25,000-27,500 LEND (depending on period of sale)

Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology (Chipin), Rated: A

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Celsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

There are 4 types of loans in the Celsius platform:

    • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
    • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
    • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks. Finally, members can borrow cryptocurrencies in a secure and transparent manner
    • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Australia/New Zealand

Why SocietyOne needs more than its billionaire backers (Financial Review), Rated: AAA

The other is it’s in the midst of what is expected to be its last funding round before listing the business, raising up to $20 million in equity based on a valuation of up to $200 million, which is based on a multiple of one times its loan book.

The raising, managed by Venture Advisory and due to close late this month, is part of a long-term, highly anticipated plan to target a sharemarket listing in 2018.

SocietyOne is expected to need a book worth $500 million or so before it starts breaking even.

Chief executive Jason Yetton has said previously the company is eyeing a 2 per cent to 3 per cent share of the $105 billion consumer finance market in the long term, of which credit card debt comprises $42 billion.

Fortress backs $ 120m capital raising by MoneyMe (Financial Review), Rated: AAA

Global credit investor Fortress Investment Group will invest $100 million in debt capital to support MoneyMe’s consumer lending growth as the fintech considers an initial public offering in early 2019.

Fortress’s investment is part of a $120 million asset-backed securitisation deal, which also includes a $20 million bond, issued by Evans & Partners, which was oversubscribed.

MoneyMe, which has made $150 million in personal loans to 70,000 customers in the past four years, is both cash flow positive and profitable, very rare for an Australian fintech.

Of its $150 million in lending, $80 million has been advanced in the past 12 months.

New Zealand’s Financial Markets Authority Publishes First Peer-To-Peer/Crowdfunding Statistical Returns (MondoVisione), Rated: AAA

The Financial Markets Authority (FMA) today published its first statistical reporton peer-to-peer lending and crowdfunding in New Zealand.

The data shows $259.9 million is currently loaned to individuals and $29.5 million loaned to businesses through peer-to-peer lending in the year ending 30 June 2017.

A total of $74.2 million was raised from investors through crowdfunding, including wholesale investors, in the same period.

Tic:Toc to undercut broker distribution in white label play (TheAdviser), Rated: A

Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.

The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.

Financial regulator shines light on P2P lending, crowdfunding (Stuff), Rated: A

Kiwis have nearly 17,000 loans through “peer-to-peer” lending platforms, but more than one in 12 borrowers were behind on repayments, according to the Financial Markets Authority.

There were 16,977 loans outstanding with P2P lenders at the end of June, it said, of which 1469 were in arrears. The average size of loans being taken out was $8771.

During the year, 833 loans with a total value of $8.5 million were written off.

Why banks and fin-techs need each other (NZ Herald), Rated: B

Chris Russell, HSBC New Zealand chief executive, said history was littered with banks who had spent large sums of money on developing new technology, only to find it had gone in another direction while it was working on it.

Globally Russell said HSBC was setting up innovation labs to work with financial technology firms and it was China and India where it saw the biggest sources of development.

In New Zealand it is also partnering with a local fin-tech, although Russell won’t name who yet.

India

The quick and safe way to build a credit score (livemint), Rated: A

If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd.

Alternative credit scoring

While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.

However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said.

Asia

Considering an ICO… then read this (The Star), Rated: AAA

The ICO euphoria is likely being fuelled by the fact that despite all the negative news surrounding ICOs and cryptocurrencies, the price of bitcoin has generally kept soaring, despite the many mini crashes it tends to suffer.

For sober markets like Malaysia and Singapore, the regulators’ stance is clear. They are not outlawing ICOs but making a simple statement: if fund-raising is your main objective, then please take note of existing securities laws, which have been built and refined over a very long time.

Malaysia should not become a hotbed for dodgy ICOs.

Asian regulators should focus on light touch for ICOs (Asian Review), Rated: A

China banned initial coin offerings in September as “a form of unapproved illegal public financing behavior.” South Korea followed suit a few weeks later. Regulators in Hong Kong, Singapore, the U.S. and other countries have also expressed concerns. What is it that has them so worried?

Africa

A Digital Transactions Takeover right under our nose – Cassava Fintech (Newsday), Rated: AAA

Cassava Fintech is a specialized Pan-African Fintech company that delivers innovative digital transaction solutions across the mobile ecosystem. Sounds fancy right? Not quite. Simply put Econet’s vision has expanded beyond Telecoms and our Zimbabwean borders. Econet’s premise sits within an inclusive connected future that leaves no African behind.

Fintech SMEs to drive 72% of bank innovation (The Star), Rated: A

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.

Authors:

George Popescu
Allen Taylor

Monday August 21 2017, Daily News Digest

Bulge Bracket Banks

News Comments Today’s main news: Prodigy Finance raises $240M in debt and equity. RateSetter withdraws from UK Peer to Peer Finance Association. OCC motions to dismiss lawsuit. Funding Circle offers manual investment in Self Selected Loans. Lufax turns profit ahead of IPO. N26 has half a million customers. Today’s main analysis: Regulatory clarity RE: Madden v. Midland; Q2 earnings season […]

Bulge Bracket Banks

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

Middle East

Africa

News Summary

United States

OCC Motion to Dismiss Regarding Conference of State Bank Supervisors Lawsuit (Crowdfund Insider), Rated: AAA

In a motion to dismiss the lawsuit, the OCC states;

“The Complaint by the Conference of State Bank Supervisors represents a fatally premature attempt to invoke the jurisdiction of this Court to remedy a speculative harm that CSBS alleges may arise from future action by the Office of the Comptroller of the Currency – action that the OCC may never take. The CSBS Complaint challenges:

(1) provisions of an OCC regulation amended in 2003 to authorize special purpose charters that have, to date, never been used to charter a bank; and

(2) a series of public OCC statements as part of an ongoing policy initiative that CSBS alleges to be a final decision by the OCC to make charters available to “nonbank” financial technology (“fintech”) companies.

CSBS’s denomination of these public statements as a “Nonbank Charter Decision,” Compl. ¶ 52, is wrong in two fundamental respects: it ignores that the proposal contemplates a form of national bank charter and that no final decision has been reached.”

Read the full memorandum here.

Student Online Lender Prodigy Finance Raises $ 240 Million in Equity and Debt (The New York Times), Rated: AAA

UK-based online lender Prodigy Finance has raised $240 million in equity and debt funding, as it seeks to speed up its expansion in the United States.

The funding round comprises of $40 million in equity led by venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode, and $200 million in a debt facility led by a global investment bank, Prodigy Finance said on Monday.

Regulatory Clarity in Sight for Madden V. Midland; Q2 Earnings Season Highlights (PeerIQ), Rated: AAA

Congress may clear up the regulatory uncertainty introduced via Madden V. Midland before year end. Representatives Gregory Meeks, (D-NY) and Patrick McHenry (R-NC) introduced Protecting Consumer’s Access to Credit Act of 2016. The bill reaffirms the “valid when made” doctrine, which holds that interest rates originated by a national banks are legal even after a loan is assigned to a third-party. Political insiders assign favorable odds to the passage of the bill due to its bipartisan support.

Research has shown that the Madden V. Midland district court ruling has “significantly reduced credit availability for riskier borrowers”. PeerIQ has also observed a significant reduction in the willingness of warehouse lenders to finance loans subject to “Madden Midland” risk.

Bulge Bracket Banks

Compared to a year ago, all of the banks have increased their focus on lending business lines as revenue from trading continues to come under pressure.

Source: PeerIQ; Bloomberg

Non-Bank Lenders & FinTech 

  • OneMain is leading the pack in YTD stock performance by a large margin. OMF has improved ROE and NIM while keeping charge-off rates to mid-single digits.
  • Except for Enova, all of the non-bank lenders increased their reserves as a % of total loans outstanding.
  • We see a trend of higher net-charge off rates and increased reserves. We believe this reflects prudent risk management and responsiveness to changing borrower behavior (e.g., stacking, greater access to credit, late stage credit cycle dynamics, etc.)
Source: PeerIQ; Bloomberg

Has Fintech Industry Growth Just Begun? (The Motley Fool), Rated: AAA

However, recent earnings releases from each of three public fintech stocks — Lending Club (NYSE:LC)OnDeck Capital (NYSE:ONDK), and Elevate Credit, Inc. (NYSE:ELVT) — show the tide may be turning. Here are three positives each company showed in the quarter.

Improving credit

While Lending Club began tightening standards well over a year ago, OnDeck did so more recently. While originations declined 19% sequentially, loss provisions also declined from 8.7% to 7.2%. That, combined with a $45 million cost-reduction plan, led to an adjusted net loss of only $1.5 million, a huge improvement over the $16 million loss in the prior-year quarter.  If not for a $3.2 million severance charge, the company would have recorded positive GAAP income.

Increasing acceptance

In Lending Club’s case, tightening credit attracted banks back to its platform in a big way. Banks funded 44% of loans in the quarter, compared with 13% in the third quarter of 2016.

Trending up

While Lending Club took a year to repair controls and rebuild investor trust, last quarter’s loan originations were up 10%, both sequentially and year-over-year. Even better, revenue was up 35% year over year, as the company was able to earn more revenue per loan.

And while OnDeck deliberately slowed down in a big way this quarter, the company still grew revenues 25% year-over-year.

Finally, while Elevate’s revenue growth slowed to 19%, this is mainly due to the rapid growth of its Elastic product, which carries a lower interest rate than its other products; however, Elastic typically has a better-quality customer, with lower chargeoff rates. Originations grew 29% year over year, which is still very healthy.

ActiveProspect Announces Partnership with LendingTree to Independently Certify Web Leads (Benzinga), Rated: A

ActiveProspect, a SaaS provider of lead acquisition solutions, is partnering with LendingTree, the nation’s leading online loan marketplace, to independently certify its web leads using ActiveProspect’s TrustedForm product.

Venture Capitalists Wary Of Online Lenders (PYMNTS), Rated: A

According to a news report in CNBC, BlueVine CEO Eyal Lifshitz said that when meeting venture capitalists in recent years, the company has had to have a good story as to why it is different from other online lenders in order to get funding — something it didn’t have to deal with three years ago.

BlueVine, which is an online lender that is focused on the small business market, raised funding last year and has secured a total of $188 million in venture capital funding since 2013.

Investors have become skeptical about online lending since early pioneers flamed out (CNBC), Rated: A

Online lending startups looking to raise money now have to answer one important question that didn’t get asked much in the past: how do avoid the fate of early pioneers like Lending Club or On Deck, which have lost nearly 80 percent of their value since going public in 2014.

According to CB Insights, the number of funding rounds in the online lending space is on pace to hit a 5-year low in 2017. The dollar amount is also expected to drop to $2 billion in 2017, less than half of the $4.4 billion the sector saw in 2015.

Kabbage raised $250 million at a reportedly higher valuation than its last round, while Prosper is reported to be raising at a valuation that’s 70 percent below its previous round. Both companies last raised in 2015.

BLOCKCHAINS, INNOVATIONS, AND INTERMEDIARIES (AllAboutAlpha), Rated: A

One investment fund that intrigues Kaal is LendingRobot, which invests in lending marketplaces such as Prosper Funding Circle and Lending Home.  What fascinates him is that its trading is automated, an algorithm based on investor risk preference. Due to blockchain technology, all transactions are a matter of public record, in compliance with best execution obligations. This facilitates the location and auditing of trades, internal investigation, and reporting to regulators.

Blockchain might very well diminish the role of banks in the asset management industry. As Kaal writes, banks charged $1.7 trillion in processing fees in 2014. But with blockchain “financial transactions can be executed instantaneously at near zero transaction costs, increasing the efficiency for businesses and individuals exponentially.”

Online loan marketplace DebtX to accept bids on nearly $ 1.1 billion in loans tied to First NBC collapse (The Advocate), Rated: A

DebtX, which operates an online marketplace for loans, plans to accept bids starting next month on nearly $1.1 billion in loans tied to First NBC Bank’s collapse.

On Sept. 12, DebtX plans to accept bids on a $117 million, single-relationship loan pool secured by energy-related assets in Louisiana. Bidding ends Sept. 29.

Data-sharing debate grows contentious as fintechs vent grievances (American Banker), Rated: A

A recently formed group representing 31 data aggregators and fintech companies, called Consumer Financial Data Rights, says banks still aren’t forking over as much data as they should be. The group is meeting with bank regulators to plead their case and trying to get consumers to petition regulators on their behalf, urging them to send a Tweet that says, “.@CFPB protect Americans’ ability to grant access to their financial information. #handsoffmyfinancialdata.”

The leaders of the CFDR accused banks of pushing bilateral agreements that restrict the types of data that will be shared and the use cases under which it can be shared. They also said large banks refuse to even talk with them about these issues. They say they would like to see the industry coalesce around a set of principles such as the European Union’s General Data Protection Rule.

Banks say they have no intention of restricting data sharing, that they want to let customers decide with whom their bank account data should be shared, and that they want to make sure that data is secure.

Marketplace Lending News Roundup – August 19 (Lend Academy), Rated: A

PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings from PeerIQ – The weekly PeerIQ newsletter delves into the recent LendingClub and OnDeck earnings.

SoFi Is Being Sued by an Employee Claiming He Was Fired for Reporting Sexual Harassmentfrom Fortune – Bad news for SoFi. A former employee is suing the company and a class action lawsuit is coming.

Daylight Transparency: A Win/Win for Lenders and Investors from eOriginal – Transparency is so important in marketplace lending and eOriginal weighs in on recent comments from Ron Suber.

Why cybercriminals like AI as much as cyberdefenders do from American Banker – Penny Crosman takes an interesting look at the competition in AI between cybersecurity and criminals.

Five Key Things To Know About LendingClub Notes from LendingClub – This week LendingClub released a paper to help retail investors understand what is important.

Original Tech helps banks offer better loan applications (TechCrunch), Rated: A

Americans apply for more than 250 million new financial products each year, but the majority of those applications are completed on paper or over the phone. A startup called Original Tech wants to change that by providing white-label software to improve loan applications completed online.

It enables borrowers to apply for loans on desktop, tablet or mobile devices without needing to go through the manual process of filling out paper applications or fax documents to the financial institution.

For lenders, Original Tech takes care of the data collection, fraud prevention and compliance enforcement. But its system is designed to work within lenders’ existing workflows and allows them to apply all their own underwriting rules.

United Kingdom

RateSetter Withdraws From the UK Peer to Peer Finance Association (Crowdfund Insider), Rated: AAA

n Friday, P2P lending platform RateSetter announced it has withdrawn from the Peer-to-Peer Finance Association (P2PFA). This news comes less than a month after the online lender was hit with a series of significant operational challenges as several large loans have struggled.

As previously reported, RateSetter hit an operational hurdle that culminated in approximately £80 million worth of loans being taken over by the platform. The online lender apparently lent £36 million to the Vehicle Trading Group Limited and the company has since fallen into administration (bankruptcy) after taking on too much debt. Additionally, £12 million was lent to an advertising company Adpod and £8.5 million of the loans are still outstanding and should not have cleared its own credit policy.

Funding Circle Stops to Offer Manual Investment in Self Selected Loans (P2P-Banking), Rated: AAA

UK p2p lending Marketplace Funding Circle announced today that from September 18th, there will be an important change to how investors can invest on the marketplace. From that date Funding Circle will withdraw the option to manually choose which businesses to lend to and which loan parts to sell. Instead Funding Circle says it will launch a significantly improved and upgraded version of existing Autobid and Autosell lending tools.

Investors will be able to choose one of two new lending options based on their personal preference. Both options will be available as a Funding Circle ISA, which Funding Circle intends to launch later this tax year.

  • Balanced: you will automatically lend to the full range of creditworthy businesses (A+ to E), aiming to achieve an attractive, stable return. This will allow you to build a balanced portfolio similar to the makeup of small businesses in the UK today. The projected return is estimated to be 7.5% per year after fees and bad debt.
  • Conservative: you will focus on lending to businesses that have been assessed as lower risk (initially A+/A) but with a lower projected return. The projected return is estimated to be 4.8% per year after fees and bad debt.
Source: P2P-Banking

The ‘finance franchise’ and fintech (Part 1) (FT Alphaville), Rated: AAA

To the authors, there are three ways finance operates through the economy: 1) credit intermediation 2) credit-multiplication and 3) credit generation.

Source: FT Alphaville

“Credit-multiplication” they note is the most familiar counter-example. This encapsulates the theory of fractional reserve banking, the idea that the banking system lends out more than it receives in investor deposits and holds only enough of the latter to handle anticipated daily withdrawals. The rest is continuously lent out.

 

 

 

If banks are free to create money from thin air, what then are the limitations?

The authors argue since credit outstanding is not fundamentally dependent upon—or, therefore, limited by— pre-accumulated investment capital, it must be limited only by investment opportunities which are viewed as potentially profitable. “In other words, credit is endogenous rather than subject to exogenously given, pre-accumulated funds.” If the opportunities are there, banks will generate the funds (on effectively maximum leverage by way of an accounting trick) to find ways to finance them.

Source: FT Alphaville

The ‘finance franchise’ and fintech (Part 2) (FT Alhpaville), Rated: A

What’s really interesting, however, is how it applies to the budding fintech sector, which aims to increase its independence from the official sector by recreating models based on loanable funds (credit intermediation) assumptions.

While the authors note it’s probably too early to decisively write off fintech, the way things are proceeding seems to support their theory. In short, they believe that if these systems are to expand beyond their peripheral place, they will have to reintegrate into the core finance franchise system eventually.

Why security is king in P2P lending (FT Adviser), Rated: A

The Peer to Peer (P2P) lending market has risen from zero, around 10 years ago, to an outstanding investment level of more than £8.7bn of loans in the UK alone.

An obvious point perhaps, but the first thing to understand about P2P platforms is that no two operate the same model. Despite residing in a busy market-place, every platform takes a different approach to security, risk assessment and its lending processes.

1) Pre-approval of loan: The checks put in place to ensure that high-quality loans are approved, where the loan can be afforded by the borrower but still recoverable in case one day it is not.

2) Post-approval of loan: The measures put in place to deal with loans defaulting and the recovery of capital in that situation.

LendingCrowd is offering both new and existing investors the chance to earn £150 cashback when they invest £2,500 or more before 31 August.Lending Crowd offers two investment products, which are both eligible for the £150 cashback offer.Both can be included within the company’s Innovative Finance ISA.The Growth Account automatically invests funds in a diversified portfolio, which offers a target rate of 6% a year (after fees and bad debt). You need a minimum of £1,000 to invest.The Growth ISA and Self-select ISA allow you to invest up to £20,000, with the target returns being tax-free. The platform also allows transfers in from existing ISAs.

Croydon is high-risk mortgage hotspot (Mortgage Finance Gazette), Rated: A

According to new research by peer to peer secured lending platform Lendy, Croydon saw a 35.6% rise in the number of high-risk mortgages, up from 309 in 2015.

Across the UK, 88,057 high-risk mortgages were taken out last year, equating to 8.1% of all home loans. The percentage of high-risk mortgages taken out in Croydon was more than double this at 16.5%.

Lendy says that lower LTVs play a big role in ensuring that risk is reduced for their investors and it offers LTVs of 70% or below on its properties.

Source: Mortgage Finance Gazette

Two alt lenders land major business-boosting deals (Business Insider), Rated: A

Two of the UK’s biggest names in small- and medium-sized business (SMB) alt lending, 

Chatbots, application-free lenders and consumer hubs – Moving the mortgage tech debate on (Mortgage Solutions), Rated: A

Advancements in mortgage technology have been made but it seems they have yet to revolutionise the mortgage process – but every one knows they will.

The ideal is a digitally joined up housing, mortgage and legal process allowing the consumer to transact in a way which is convenient to them, and in a shorter time frame – but this has yet to be achieved.

Full online integration of APIs in the UK mortgage lending market is being worked on by a handful of stakeholders, although attendees said that behind closed doors a lender is close to rolling out its application-free mortgage process.

2 discounted investment trusts for income investors (AOL), Rated: A

Investing in peer-to-peer lending is one way to improve the return on your savings, but for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform and micro-managing each debt investment, P2P Global Investments (LSE: P2P) offers an alternative route for savers to gain access to the sector.

Shares in the investment trust have gained 12% since April, after the fund manager announced a review of its performance in light of falling returns.

At a current price of 861p a share, P2P Global Investments currently trades at a dividend yield of 5.6%.

KeyBank partners with Invesco’s robo-adviser (Robo Advice News), Rated: B

Invesco, the parent company of UK-based Invesco Perpetual, is continuing to expand into robo-advice and passive investing.

Digital start-up Starling taking financial services by storm (CNBC), Rated: B

Boden founded her British fintech start-up in 2014, shortly after she left one of Ireland’s biggest financial institutions, Allied Irish Bank, where she worked as the chief operating officer.

“I started thinking about a bank that really focused on doing a couple of things well, that was all about everyday transactional banking, the daily banking business, and what (would happen) if you used the information on each transaction, to give people insight into their overall lives.”

Boden believes that the challenger bank’s smaller scale operation gives it an edge over larger players, by significantly reducing the costs of running a bank.

China

Ping An’s online lending platform Lufax turns profit ahead of IPO (Asian Review), Rated: AAA

Shenzhen-based financial conglomerate Ping An Insurance Group said Friday that its online lending operator Lufax Holdings was no longer loss-making as it prepares for an initial public offering.

Established in 2011 with the help of Shanghai municipal government, Lufax, or Shanghai Lujiazui International Financial Asset Exchange, is currently the largest peer-to-peer lending platform in mainland China in terms of outstanding loans, totaling 1.5 trillion yuan ($225 billion) as of Friday, according to industry consultant WDZJ.com.

Of Ping An’s nonstandard debts, 56.9% were exposed to infrastructure investments, followed by 27.7% to non-bank financials and 12.3% to real estate.

Compared to last year when Ping An netted 9.5 billion yuan from a restructuring, net profit of its internet finance business fell 94.7% to 420 million yuan in the first half. That represented 0.9% of the wider group’s net profit, which totaled 43.43 billion yuan in the first half, up 6.5% from a year ago.

Greg Gibb of Lufax (Lend Academy), Rated: A

Lufax has gone from a simple peer to peer lending platform that launched in 2012 to a diversified wealth management platform with over $60 billion in assets under management. They are a true success story and how Greg and his team have done this is simply fascinating.

  • How Greg, an American, ended up in China becoming the CEO of a fintech company.
  • What was the opportunity that Greg and the Ping An chairman saw that led to the founding of Lufax.
  • What they really wanted to do and why they ended up deciding to start with a P2P lending platform.

Jack Ma-backed Yunfeng leads $ 1.7 billion purchase of MassMutual Asia unit (Reuters), Rated: A

Yunfeng Financial Group (0376.HK) said it would be the main investor in a $1.7 billion acquisition of insurer MassMutual International’s Hong Kong unit – a deal that sent shares in the Jack Ma-backed finance firm soaring as much as 30 percent.

Yunfeng will own 60 percent of MassMutual Asia. The rest will be owned by other investors such as Ant Financial Services, an affiliate of billionaire Jack Ma’s Alibaba (BABA.N), as well as Singapore sovereign wealth fund GIC Private Ltd and Chinese Internet and telecoms firm SINA Corp (SINA.O).

Students failing to learn debt-control lessons (China Daily), Rated: A

In April, a sophomore in Xiamen, Fujian province, killed herself because she was unable to repay 570,000 yuan ($85,448) she had obtained via a peer-to-peer lender, according to reports in Fujian Daily.

Earlier this year, the Inner Mongolia Morning Post reported that about 900 university students in the autonomous region were cheated out of more than 9 million yuan after they signed up for a “promotion” that purported to offer iPhones for 800 yuan, rather than the usual price of about 2,000 yuan. In fact, they had unwittingly applied for loans from a peer-to-peer platform and were quickly pressured to repay the money at high rates of interest.

Although there are no nationwide statistics related to criminal incidents linked to peer-to-peer lending, a number of provinces and regions have released data that illustrate the gravity of the situation.

In May, police in Jilin province said they had handled 193 cases related to the issue, busted three gangs and detained 31 people suspected of using the system to defraud would-be recipients.

Online Automobile Leasing Platform ‘Come Use a Car’ Wins RMB 100 Series A (Marbridge Consulting), Rated: A

Tianjin-based Gongming Zhongtai International Assets Leasing, operator of online and mobile automobile leasing platform Laiyongche (literally “Come Use a Car”), has won RMB 100 mln in Series A funding, according to an announcement from CEO Lu Yuquan at a press conference in Beijing. The round was led by P2P lending platform Meili Jinrong (Meili Finance) and mobile gaming company Jinke Culture Industry (300459.SZ), with participation from Xingyi Capital and Xu Xuepeng, founder of Yuehui Capital.

Techies don’t always want to work in Hong Kong banking. Here’s why they should (efinancial careers), Rated: B

As blockchain, AI and other emerging technologies become ever more prevalent in Hong Kong finance, demand for specialist tech candidates is heating up and firms have to offer more – both financially and in terms of career development – to prospective employees.

In short, we need to build a larger financial technology talent base in Hong Kong – not just developers and engineers, but also fintech entrepreneurs and creative thinkers.

European Union

N26 now has 500,000 customers for its bank of the future (TechCrunch), Rated: AAA

Fintech startup N26 is getting more and more customers. The company reported 300,000 customers back in March. It now has 500,000 customers across Europe.

More importantly, growth seems to be accelerating as the startup announced that it was adding a thousand customers every day back in March. Now, around 1,500 customers sign up every day.

International

IVC Poised to Invest in Fintech Unicorn Transferwise (Crowdfund Insider), Rated: AAA

IVC, one of the original venture capital firms on Sand Hill Road in Silicon Valley, is poised to take a substantial stake in Fintech unicorn Transferwise. This is a according to a report by Sky News that indicated IVP would invest approximately $60 million in the young firm that is an express route to disrupt the banking industry.

Fintech Funding Roundup: Instamojo, AnyPay, Aegon, Funding Circle (Paybefore), Rated: A

Options, a provider of cloud-enabled managed services to capital markets, has received nearly $100 million in investment from New York-based private equity firm Bregal Sagemount. The money will be used for growth and platform innovations.

Instamojo, an India-based digital payments platform for SMEs, has raised undisclosed pre-Series B funding from Japanese payments company AnyPay.

Dutch financial services provider Aegon is partnering with online lending platform Funding Circle.

Australia

Loans rebound but APRA caps could limit short-term growth (Courier Mail), Rated: AAA

BUNDABERG-based Auswide has criticised how lending regulatory caps are impacting small banks, saying they will partially suppress its own loan growth in the next six months.

The comments come as the 23-branch lender reports a rise in profits and dividends.

Auswide accelerated lending in the second half, and its loan book rose 4.01 per cent for the year to $2.773 billion. That remains off industry averages of 5.4 per cent, according to Reserve Bank of Australia statistics.

Auswide profits rose from $11.7 million to $15.1 million – expenses from merger activity in fiscal 2016 were not repeated. On its preferred underlying result, earnings rose from $14 million to $15.6 million.

India

Fintech startup Capital Float raises $ 45 mn in Series C round led by Ribbit Capital (VC Circle), Rated: AAA

Bengaluru-based digital lending platform Capital Float has raised $45 million (Rs 293 crore) in its Series C round of funding led by Silicon Valley-based fintech-focussed venture capital firm Ribbit Capital.

Existing investors SAIF Partners, Sequoia India and Creation Investments also participated in the round, Capital Float said in a statement.

Finding the right balance on crowdfunding (livemint), Rated: A

There are currently two crowdfunding models that are of interest to regulators. The equity-based model allows for a stake in the venture via private placement. And peer-to-peer (P2P) lending, which falls under the Reserve Bank of India’s (RBI’s) purview, connects lenders and borrowers who may mutually agree upon either a fixed interest rate or a variable one. Both operate via third-party digital platforms.

Other benefits are less obvious. In a 2016 paper for the US government’s small business administration, Research On The Current State Of Crowdfunding: The Effect Of Crowdfunding Performance And Outside Capital, Venkat Kuppuswammy and Kathy Roth found that crowdfunding success served as proof of concept and made it easier to subsequently access capital from more traditional sources such as banks, venture capitalists and angel investors.

The immaturity of digital crowdfunding globally and the start-up sector in India mean that these come with plenty of caveats, however.

APAC

Vietnam Startup Ecosystem (Vietnam-Briefing), Rated: A

Fintech has emerged as the most attractive sector in which to invest with remarkable growth figures in 2016, having received USD$ 129 million in investments. M&A activity has also been intense lately, which contributed to the overall progress of the ecosystem. Payment still accounts for the largest pool of fintech startups. Foreign and local startups could easily break into new sectors, namely InsurTech (insurance), Wealthtech (wealth), and Regtech (regulation). Vietnam has even set up a steering committee on fintech led by the Central Bank with the purpose of supporting the State Bank of Vietnam Governor in his policies.

BSP readies rules on fintech platforms (Inquirer), Rated: A

The Bangko Sentral ng Pilipinas (BSP) is studying new digital solutions as financial technology platforms proliferate, opening up new markets and access for broader segments of society while also increasing the risk of harm to unwitting consumers and investors.

Espenilla said the BSP was considering two solutions: An API system, which streamlines the reporting requirements between the BSP and regulated entities such as banks, and an automated complaint handling portal, which establishes a direct link with customers.

Middle East

Funding squeeze hastens take-off of non-bank lending in Middle East (Reuters), Rated: AAA

Middle East investment companies are ramping up their lending to businesses, providing a lifeline for small and medium-sized firms struggling to secure finance from banks that tightened credit after a suffering rise in bad loans.

Industry participants estimate non-bank lenders in the region could provide around $1 billion over the next three to five years, including secured loans, mezzanine debt, preferred shares and convertible loans and bonds.

Africa

Sanlam buys into EasyEquities (IOL), Rated: AAA

Sanlam Investment Holdings has acquired shares in financial technology business EasyEquities.

Authors:

George Popescu
Allen Taylor

Thursday June 22 2017, Daily News Digest

German real estate crowdfunding

News Comments Today’s main news: PayPal, Venmo rolling out instant bank transfers. Sindeo goes out of business. SoFi’s new filing. Wealthsimple expands into UK. PayPal advances 400M GBP to UK businesses. Today’s main analysis: A look at Lending Club’s competition. Today’s thought-provoking articles: Many P2P lenders attract investors by raising interest rates. German RECF booms. International expansion of alternative lending. United […]

German real estate crowdfunding

News Comments

United States

United Kingdom

China

European Union

International

  • Alternative lenders spread their wings internationally. AT: “International expansion could become the big story of 2017 and 2018.”
  • Amazon and the future of fintech, part 2. AT: “Interesting theory. I suppose technology can facilitate more diverse business assets for true technology companies like Amazon, Apple, Klarna, et.al. But I don’t see how this is a lot different than traditional holding companies that expand businesses into multiple sectors other than the fact that the companies themselves are predicted to be the holding companies. Isn’t this what Google’s rebranding into Alphabet was all about? Perhaps Amazon could do the same. That would actually make sense.”
  • Global mobility.

Australia

Canada

News Summary

United States

Instant bank transfers are coming to PayPal and Venmo (TechCrunch), Rated: AAA

PayPal announced this morning a plan to speed up money transfers between its service, Venmo and users’ bank accounts for those with supported MasterCard and Visa debit cards. This new “instant transfers” service will be available at a rate of $0.25 per transaction, and will deliver funds in a matter of minutes, instead of the day or so it typically takes when using PayPal or Venmo.

The company says the feature will be available to the vast majority of cardholders, save for a handful of very small institutions.

In most cases, the funds transferred between PayPal or Venmo and the end user’s bank account (via the supported debit card) will arrive in a matter of minutes. However, some banks may take up to 30 minutes, PayPal notes.

The instant transfer service is now launching into beta with select PayPal users, as a result of these deals, as well.

Lending Club: Take A Look At The Competition (Seeking Alpha), Rated: AAA

CreditKarma is a personal finance website. They provide a list of online personal loan options, given some basic information. I put in $10,000 as my desired loan amount and selected a credit score of 700-749. I got the following list of offers:

That’s eleven online, unsecured personal loan providers. The list does not include some others, like SoFi and Lightstream. Try it yourself here.

Lending Club vs. Marcus

Lending Club is an originate-to-distribute lender, while Marcus is a balance-sheet lender. Lending Club gives much of the profit of a loan to its investors, along with default risk and prepayment risk. Marcus keeps the risks and the profit. If we assume that Marcus’s loans look like Lending Club’s, with interest rates averaging 14% and defaults averaging 6%, then the income from each loan looks approximately like this:

LC: 5% origination fee + 1% servicing fee = 6% of loan principal

GS: 14% interest – 6% default – 1% cost of funds = 7% of loan principal

More importantly, it is a lot more painful for Lending Club to cut back on loan originations, for example in a downturn, and it doesn’t necessarily control the pace of lending. If Lending Club stops originating loans, the lion’s share of its income dries up immediately.

Sindeo closes shop (Sindeo), Rated: AAA

But, startups are hard and simplifying the highly regulated, complex business of mortgages is even harder. I believed we had overcome the biggest hurdles, but unfortunately, we didn’t. Today, we made the difficult decision to wind down Sindeo.

While Sindeo as a startup has failed, our people did not. As a matter of fact, we did what everyone said couldn’t be done.

  • We built a place where people could shop and apply for a mortgage from a robust marketplace of over 1000 loan programs, with one single application and one credit check.
  • We secured partnerships with some of the top real estate and consumer finance brands.
  • We helped our clients save millions of dollars on their home loans.
  • We built a people-centric brand, putting the needs of Sindeo’s clients first.

Sindeo’s Net Promoter Score (NPS) this year is 81, compared to an average of negative three from the top banks.

I am devastated for our employees, their families, our partners and our investors who believed in us, and worked so hard to build Sindeo. We have very talented people who need jobs today. Hire them.

Nick Stamos
CEO, Sindeo

SoFi Lending Corp. (Filer) (SEC), Rated: AAA

We (“us” or “PwC”) have performed the procedures enumerated below, which were agreed to by Social Finance, Inc., Deutsche Bank Securities, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., J.P. Morgan Securities LLC, and SoFi Securities, LLC, who are collectively referred to herein as the “Specified Parties”, solely to assist you in performing certain procedures relating to the accuracy of certain attributes of the private consumer loans with respect to the SoFi 2017-4 securitization transaction (the “Transaction”). Social Finance, Inc. (“SoFi” or “Company”) is responsible for the accuracy of certain attributes of the private consumer loans with respect to the Transaction (the “Responsible Party”). The sufficiency of these procedures is solely the responsibility of the Specified Parties. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Where Major US Banks Have Invested in Fintech (CB Insights), Rated: A

Key takeaways

  • Since 2012, the top ten US banks by assets under management have participated in 72 rounds totaling $3.6B to 56 fintech companies.
  • Ranked by the number of unique portfolio companies, the cohort’s three most active investors are Citi, Goldman Sachs, and JP Morgan Chase — in that order. Citi (including Citi Ventures) participated in 29 rounds to 24 companies, Goldman Sachs in 30 rounds to 22 companies, and JP Morgan Chase in 14 rounds to 13 companies.
  • Goldman Sachs is focusing on payments, investing in six companies in the space.
  • All ten banks have blockchain investments.
  • Although the second largest bank by assets, Bank of America takes the sixth spot on this list, with only six fintech companies in its portfolio.
  • Kensho saw lots of overlapping interest, with six of the cohort investing in its $50M Series B, which valued the company at $500M.

Robos get the press, but adviser tech is getting the money (Financial-Planning), Rated: A

Take the $140 million in funding that Silicon Valley-based Addepar recently raised from sources including SpaceX backer Valor Equity Partners.

Addepar CEO Eric Poirier says the eight-year old performance reporting platform has seen the number of assets its clients hold grow from $300 billion last year to $700 billion.

That’s not to say that there isn’t money for robo advice platforms — blending impact investing and robo advice garnered OpenInvest $3.25 million in seed funding from high-profile VC firm Andreessen Horowitz in May.

LendingPoint founders share recipe for success (Bankless Times), Rated: A

During the financial crisis both said they worked with large balance sheets which helped them understand how to position themselves in the marketplace. That experience also taught them that marketplace lenders cannot simply be technology companies, they also need to apply the lessons learned working in different environments, geographies and at different points in the cycle.

What they saw was a space where near prime consumers, those with credit scores between 600 and 700, were in need of better credit products, with many resorting to payday lenders and their ilk.

When lenders place too much emphasis on arbitrary measure such as FICO scores, they miss so much underneath. In one case the employee of a partner company saw her credit score quickly drop after she paid off a loan early. Even though she had fewer debt obligations, by traditional underwriting methods she was deemed a higher risk.

Alternative data sources can play a role in telling those unique stories while protecting everyone from fraud, Mr. Tavares said. Something as simple as how long a phone number has been active can help validate an applicant’s identity.

LendingPoint also believes it is crucial for marketplace lenders to originate and hold assets on their balance sheets, Mr. Burnside said.

LendingPoint offers personal loans up to $20,000 that can be paid back in twice-monthly installments over 24 to 48 months.

American Express invests in insurance startup Next Insurance (Reuters), Rated: A

American Express Co has invested in Next Insurance, a Palo Alto-based technology startup that sells customized insurance for small businesses online, as Silicon Valley companies look to shake up the insurance sector.

Next Insurance will use the new cash injection, which brings the investment round to $35 million, to expand the products it offers and target new business sectors, the company said.

Office of the Comptroller of the Currency Issues Third-Party Relationship Frequently Asked Questions (Lexology), Rated: A

Focusing on bank-fintech relationships, which likely were a key driver for the FAQs, the OCC notes that when “a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship” that should be subject to the bank’s third-party risk management process. Akin to any other third-party service provider, a fintech company arrangement may or may not be considered a critical activity in this regard.  In an important acknowledgement of the diligence challenges banks face from time to time in conducting diligence of third parties, the FAQs also specifically address situations where a bank does not receive sufficient information from a third-party service provider that supports a critical activity. In that situation, the OCC expects a bank board and management to:

  • develop appropriate alternative ways to analyze these critical third-party service providers;
  • establish risk-mitigating controls;
  • prepare to address delivery interruptions;
  • make risk-based decisions that despite the lacking information, these critical third-party service providers remain the best service providers available;
  • retain appropriate documentation of all efforts to obtain information and related decisions; and
  • ensure that contracts meet bank needs.

The FAQs also specifically address marketplace lending arrangements with nonbank entities and relationships to facilitate mobile payments. In the marketplace lending context, the FAQs assert that a bank board and its management should understand the relationships among the entities involved and the risks specific to marketplace lending relationships, including reputational, credit, concentration, compliance, market, liquidity and operational risks. Management must also ensure it has proper personnel, processes and systems to monitor and control these risks, including, for example, adequate loan underwriting guidelines and appropriate board-adopted policies that include concentration limits. The FAQs direct banks to work with mobile payment providers “to establish processes for authenticating enrollment of customers’ account information that the customers provide to the mobile payment providers” as mobile payment environments become more ubiquitous and as customer expectations dictate that transaction accounts as well as credit, debit or prepaid cards issued by banks are able to be used in mobile wallets.

How The Blockchain Can Create A True Peer-To-Peer Sharing Economy (NASDAQ), Rated: A

One of the blockchain’s most prominent features is that it can bestow trust in a network without the need for a central authority.

The sharing economy refers to a new socio-economic phenomenon in which individuals share products or services with other individuals on a peer-to-peer basis for a fee. However, even though the sharing economy is built on a peer-to-peer model, there are intermediaries who charge a fee for facilitating the transactions.

Enter Blockchain Technology

In a true peer-to-peer sharing economy, there should never be an intermediary who dictates the terms and conditions of a transaction or takes a cut of the payment.

Say you want to rent a car for a short trip from one side of town to the other. To do so, you could use a mobile app to identify vehicles that are available in your vicinity. Then, after verifying the digital identities of both yourself and the vehicle owner, you agree to terms and conditions, such as the fee and duration of the rental, and buy a micro-insurance policy  covering the ride, via an immutable smart contract. Once the terms and conditions are agreed upon and the smart contract is created and verified, you can open the car using your smartphone and the payment is directly deducted from your digital wallet and transferred to the vehicle owner upon completing your trip.

While the above example is purely theoretical at this stage, there are two startups aiming to leverage blockchain technology to create a fairer peer-to-peer economy in the rideshare sector. Austin, Texas-based Arcade City and Israel-based La ‘Zooz both aim to take the “Uber out of Uber” by offering ride sharing without a company acting as a fee-charging intermediary. Instead, drivers and riders deal directly with one another and payments are automatically conducted in cryptocurrency once the ride is completed.

FT 300: full 2017 list of top US registered investment advisers (Financial Times), Rated: A

The FT invited qualifying RIA companies — more than 2,000 — to complete a lengthy application that gave us more information about them. We added this to our own research into their practices, including data from regulatory filings. Some 725 RIA companies applied and 300 made the final list.

The formula the FT uses to grade advisers is based on six broad factors and calculates a numeric score for each adviser. Areas of consideration include adviser AUM, asset growth, the company’s age, industry certifications of key employees, SEC compliance record and online accessibility. The reasons these were chosen are as follows:

• AUM signals experience managing money and client trust.

• AUM growth rate can be a proxy for performance, as well as for asset retention and the ability to generate new business. We assessed companies on one- and two-year growth rates.

• Companies’ years in existence indicates reliability and experience of managing assets through different market environments.

• Compliance record provides evidence of past client disputes; a string of complaints can signal potential problems.

• Industry certifications (CFA, CFP, etc) shows the company’s staff has technical and industry knowledge, and signals a professional commitment to investment skills.

• Online accessibility demonstrates a desire to provide easy access and transparent contact information.

 

An AboveLoans.com Review: A Simple Way to Borrow (Saving Advice), Rated: B

Compared to other online lender-matching agencies, AboveLoans doesn’t really stand out among other online lenders. The only part that may seem a bit different is the simplicity aspect. Because AboveLoans only gives out smaller amounts ($35K and less) getting a loan can be a pretty swift process but there is more to getting a loan than how quick it happens.

Loans can range from $500 to $35K and you’ll have anywhere from six to 72 months for repayment.

Applying from anywhere sounds great but how secure is AboveLoans.com? AboveLoans isn’t a lender. It is a lender matching site. The entire process is secure but if you’d prefer a group of lenders not have your information you may want to consider using another site. Once you’ve accepted the lender’s terms, etc. funds will be deposited directly into your bank account.

You can apply for each of the following loans through AboveLoans:

  • Debt Consolidation Loans
  • Emergency Loans
  • Auto Repair Loans
  • Auto Purchase Loans
  • Moving Loans
  • Home Improvement Loans
  • Medical Loans
  • Business  Loans
  • Vacation Loans
  • Tax Loans
  • Rent/Mortgage Loans
  • Wedding Loans
  • Major Purchase Loans
  • General Personal Loans
United Kingdom

WEALTHSIMPLE TAKES SERVICE TO ANOTHER FINTECH HUB WITH UK EXPANSION (Betakit.com), Rated: AAA

Wealthsimple is officially expanding its service to the UK with an invitation-only beta.

The UK expansion comes just four months after Wealthsimple announced its US expansion. The company had been working on its US expansion over the past year.

“Ultimately, our ambition is to be a global financial services company. The UK has a lot of similarities to Canada — similar language and culture, the financial services industry is in a similar place — so it felt like the next logical step,” says Mike Katchen, CEO of Wealthsimple.

Toby Triebel, who previously co-founded online lending platform Spotcap, will lead Wealthsimple’s UK business.

PayPal hits £400m mark in advances to UK businesses (AltFi), Rated: AAA

PayPal Working Capital, PayPal’s small business lending arm in the UK, has hit £400m in cumulative cash advances made to British businesses. Over 22,000 business owners have now taken out an advance from PayPal Working Capital since it launched in 2014. The £400m milestone comes after a 116 per cent increase in total cash advances made by the firm over the past year.

PayPal’s small business lending activities are considerably further advanced in the US, where it topped $2bn in cash advances in the summer of 2016.

The high-yielding trusts more popular than ever (interactive investor), Rated: A

Trust purchases by advisers and wealth managers hit an all-time high over the 12 months to the end of March at £777 million. That’s up 11% on calendar year 2015, when £698 million was piled into closed-ended vehicles.

In addition, Q1 2017 was the second-highest quarterly period for purchases of trusts at £246 million. That’s a year-on-year increase of 85% and 25% more than the previous quarter.

Specialist debt was the most popular sector with advisers and wealth managers in first-quarter 2017. It’s the first time it’s topped the list, accounting for 14% of all investment trust purchases during the period.

He continues that, with the likes of peer-to-peer lending relatively new innovations, another potential risk is that trusts investing in it, which tend to be even newer concepts, are unproven over different economic and investment environments.

The sector average payout is above 6%, with some of the highest-yielding, including Carador Income (CIFU), Ranger Direct Lending (RDL) and Fair Oaks Income, paying over 10%.

SafeCharge reveals research urging fintech innovation for marketplace payments (SafeCharge), Rated: A

According to a study from the Ecommerce Foundation, almost 40% of the world’s online retail market will be controlled by marketplaces by 2020.

This difference creates complex challenges:

  • Regulation – The impending Payment Services Directive 2 regulation requires certain marketplaces which retain funds between a seller and a buyer to hold a payment institution license.
  • Seller Onboarding – Manual processes and Know Your Customer regulatory requirements create friction, which discourages sellers from registering with marketplaces.
  • Payment Checkout – A critical component for any business. Localisation, buyer experience, payment method offering, all must be optimised for conversion.
  • Split Payments – Marketplaces need to split transactions between multiple parties, both for marketplace commission and where a single checkout experience involves multiple sellers.
  • Seller Settlement – Marketplaces are in competition for sellers. Sellers demand frequent settlement of funds, often daily, in their local currency, and using a local payment method.
  • Unique Fraud – Marketplaces face new forms of fraud unique to the sector such as ‘collusion fraud’ where fake buyers and sellers facilitate the sale of non-existent goods with stolen payment cards.

The pros and cons of P2P lending (Bridging & Commercial), Rated: B

Peer-to-peer platforms have revolutionised lending, allowing retail investors to benefit from what was once the preserve of financial institutions and high-net-worth investors.

Pros

1.    Potential returns are excellent, and much higher than can be achieved with dividend yields.
2.    Returns are fixed, and don’t fluctuate like returns from equity investments or the stock market.
3.    Lenders are not charged fees, so the amount stated is the net amount investors receive.
4.    Platforms no longer have to deduct tax at source, so investors will be paid gross and account for their own tax.
5.    Investment terms are typically under 12 months.
6.    Legal charge holders will be paid out as a priority before any owners/equity shareholders.
7.    It is FCA regulated, so platforms must be transparent and are legally obliged to be upfront about risks. Platforms must have contingency plans in place, such as a significant financial buffer.
8.    The launch of the Innovative Finance Isa means peer-to-peer loans can be held within an Isa, so returns are tax free.

Cons

1.    While regulated by the FCA, peer-to-peer lending is not covered by the Financial Services Compensation Scheme, so losses are not underwritten by the government.
2.    Peer-to-peer loans are likely to be tied-in until the borrower has repaid, unless the platform can find a buyer.
3.    Loan periods are short, but investors may have to wait for the loan to complete before they start earning interest. One alternative is for investors to lend money to the finance company and get a fixed return for a fixed period. The rate will be less, but interest will be continuous, so investors can end up with approximately the same return, without having to select individual loans to invest in.
4.    If the borrower does not repay on time, investors need to wait until they have repaid – although they should continue to earn interest in the meantime.
5.    If the borrower defaults, the property will have to be repossessed. If that’s the case, there could be delays of at least several months. The property may not achieve a sale price that allows lenders to be repaid all their capital and/or the interest owed.
6.    While investors will receive a fixed rate of interest that may be higher than average dividends, they will not benefit from capital growth.

China

Many P2P Lending platforms attract investors by increasing interest rate  (Xing Ping She Email), Rated: AAA

Recently, in the background of surging market capital interest rates, the yield of money fund and bank financial products both rose markedly. P2P lending institutions no longer have the advantages in interest rates. In order to attract investors, there comes a new wave of raising interest rates in P2P lending industry.

On June 21st, Tuandai launched a notice of welfare activity, raising the interest rate of product “Futoubao 36”by 0.5%-1.4%.

Recently, Yirendai issued several promotion activities of raising rates, such as rebating 4% for inviting a new user.

On June 17th, JiMu Box announced from that day to June 23rd, if a customer successfully invited new user to invest in the platform, the inviter would receive a coupon of 6% growth in interest rates, in addition to the regular cash coupon and interest rate hikes.

Besides, Ma Tianshuai, the founder & CEO of JieYue United, said they also operated a welfare feedback activity of raising interest rates during the company’s 4th anniversary on June 18th.

Cash and carry (Breaking Views), Rated: A

A Hong Kong Monetary Authority study shows the former British colony is oddly cash-intense. The average person held nearly $6,000 in 2014 – second only to Switzerland.

The first licenses for mobile-wallet apps were granted to Apple, Android Pay, Tencent and others in 2016. Alibaba’s Alipay launched its localised app in May, more than a decade after starting on the mainland. Twenty years after Hong Kong’s reunification with the mainland, in consumer-facing fintech at least, the city looks a decade behind.

European Union

German Real Estate Crowdfunding Market Booms (Crowdfund Insider), Rated: AAA

The road ahead for the German real estate crowdfunding market has been cleared. The threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), was taken off the table last month. The crowdfunding market can move ahead on its exponential growth path.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke.

Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann.

Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann.

Next to the three leaders, around ten new entrants try to carve a market for themselves:

  • Zinsbaustein, launched in 2016, is the number 4 with 8 projects financed to the tune of €9 million.

Others have only financed a few projects so far:

  • iFunded started in 2015 and open for business in 2016, iFunded intends to attract German and international investors who want to invest in Berlin. Its average size of projects is €800K.
  • Home Rocket, started in 2015, Home Rocket operates from Austria but addresses both the German and Austrian investors and developers.
  • immofunding started in 2015, also operates from Austria.
  • Renditefokus started in 2015.
  • ReaCapital started in 2017.

LendIt Partners with Startupbootcamp FinTech For Its PitchIt Europe 2017 Competition (PR Newswire), Rated: A

LendIt, Europe’s largest global show in lending and fintech, today announced its Pitchit @ LendIt contest partnership with Startupbootcamp FinTech for PitchIt @ LendIt Europe 2017, a leading platform for fintech startups who can earn mentorship, endorsement and exposure to leading institutions, investors & press. Online applications also officially opened to qualifying fintech startups.

This year’s competition is slated to see hundreds of applicants all vying for a prestigious spot in the finals, and a chance to present on the keynote stage in front of over 1,000 members and high ranking executives from the global fintech industry at LendIt Europe (9-10 October, Intercontinental O2 Hotel, London.)

This year’s exclusive PitchIt Contest Partner will be Startupbootcamp FinTech, the leading global FinTech accelerator focused on innovation for the financial services industry. The finalists will present to a panel of influential VC judges and mentors, including those from Balderton Capital, Commerz Ventures, Thiel Capital, Index Ventures and Target Global VCs,and other high profile investors in the fintech capital of the world, London.

To apply to PitchIt @ LendIt Europe competition, firms must meet the following criteria:

  • Must be a fintech company
  • Two or more full-time co-founders/employees
  • 2-10 full-time employees
  • Less than 3 years in business (companies founded before 2014 not eligible)
  • Raised less than 4 million GBP since launch date
  • Must have a professional business website
  • Everyone registering on behalf of a specific company must have an email with that company’s domain
  • Past PitchIt Europe finalists are ineligible
International

Alternative Lenders Spread Their Wings Internationally (deBanked), Rated: AAA

As alternative lending gains global traction, a growing number of U.S-based alternative lenders are exploring international growth, with large companies like OnDeck, Kabbage and SoFi leading the way.

To be sure, international expansion requires extensive time, money and regulatory know-how, and some U.S. alternative lenders may never reach the critical scale to be able to compete effectively. Nonetheless, as globalization proliferates, industry observers expect that additional forward-thinking companies will push beyond the limits of their current geographical borders.

Affirm—which works with more than 900 retailers and recently announced that it had processed its 1 millionth consumer installment loan—has focused on domestic growth so far, but the company is now considering a number of options for international expansion, Metcalf says.

Europe, for instance, has seen substantial growth over the past few years, with the U.K. leading the way in alternative finance. It has four times higher volumes in aggregate than the rest of Continental Europe, according to a 2016 report from KPMG and TWINO, one of the largest marketplace lending platforms in Europe. (P2P consumer lending is the largest component of alternative online lending in Europe, capturing 72 percent of the total in the first through third quarters of 2016, according to the report.)

After the U.K., France, Germany and the Netherlands are the top three countries for online alternative finance by market volume in Europe, according to a September 2016 report by the Cambridge Centre for Alternative Finance.

Asian markets, meanwhile, show significant promise for alternative finance players to make their mark due to the sizeable population of digitally savvy consumers who are still largely underbanked. China is by far the largest market for alternative lending in Asia. It’s also the world’s largest online alternative finance market by transaction volume, registering $101.7 billion in 2015, according to the March 2016 Cambridge Centre for Alternative Finance report.

Although there are many possible international markets to explore, U.S. lenders have to tread carefully before planting roots elsewhere, observers say. Some smaller U.S. lenders may find domestic expansion easier and more cost-effective because of the time, regulatory and financial commitment that goes along with exploring international markets.

What’s more, foreign banks looking for alternative lending partners typically prefer to work with larger, more established players.

Within the past several years, OnDeck has begun offering small business loans to customers in Canada and Australia. Frequently Canada is a first step for U.S. companies that want to expand internationally because of the shared language and similarities between the economies, Young explains.

After the Canadian operation was successfully underway, the opportunity arose for the online lender to expand to Australia—which shares several similarities with the Canadian market.

U.S.-based alternative lenders also need to be careful to create products that fit the culture and needs of a particular market.

Take Kabbage, for example. The small business lender expanded into the U.K. in 2013, two years after its U.S. debut. But the company found that having its own small business lending business in the U.K. was too challenging for regulatory and capital reasons. It no longer offers new loans from this platform.

Instead, the funding company decided that a better global strategy was to license its technology to financial institutions in international markets a less capital-intensive, yet economically sound way of doing business.

Kabbage—which recently announced the establishment of its European headquarters in Ireland—has licensing arrangements with Santander in the U.K., Kikka Capital in Australia, Scotiabank in Canada and Mexico and ING in Spain.

For its part, SoFi has announced plans to expand to Australia and Canada this year. The company’s chief executive has also talked about European and Asian expansion in the future.

LendingClub, meanwhile, last November announced a significant partnership with National Bank of Canada and its U.S. subsidiary Credigy.

Amazon And The Future Of FinTech: Part II (Seeking Alpha), Rated: A

The model of the new information age is connectivity and this connectivity comes from building platforms that transcend industries.

But, let’s get back to the FinTech issue. In my previous post, I argued that Amazon, as well as Apple (NASDAQ:AAPL) and PayPal (NASDAQ:PYPL), has entered into the “payments” space and that this is their inroad into the banking field. And the payments space is definitely a “platform market.”

Now, we learn that a major European player in the payments space has actually received its banking license. Klarna is one of Europe’s largest financial technology groups, valued in 2015 at $2.25 billion.

And, now they have a banking license. But don’t expect mortgages from them right away. Expect “payment cards and accounts.”

In other words, they are building a platform that will transform banking, one that works through many different companies and industries. Is that what Mr. Bezos and Amazon are working on?

Global mobility: supporting your business (Relocate Magazine), Rated: A

Transferwise has become one of the world’s biggest fintech companies, valued at $1 billion with 700 employees.

Nilan offered a number of benchmarks for his company’s success since it was established in 2011 – its expansion from two to 200 markets, its ever-growing list of international HQs, its boom from 60 employees to 700 – but the one that’s made headlines most recently is the announcement that customers are now sending $1 billion per month using the service.

The threat of Brexit looms, however, and Transferwise is concerned about the impact it will have on the company’s ability to access talent.

Australia

Need a loan? Then ask a peer (Yahoo! Finance), Rated: A

Interestingly, a finder.com.au survey revealed that the majority of Australians think that a good credit score should come with perks. That is, 67% of people believe that a good financial history should mean better interest rates on products like loans.

Here are four things you need to know about P2P loans: 

When reviewing your options, keep a close eye on the fees involved to ensure that you’re not paying more than you can afford.

As P2P lending isn’t backed by a large corporation, do your due diligence by researching the reputation of the platform you’re thinking of signing up with. A quick way to do this is to check for a credit license.

P2P platforms typically offer lower loan amounts, so you may only be able to borrow up to $50,000 for a personal loan. This could be restrictive, depending on your loan purpose and the amount you need to borrow.

Once you’ve wrapped your head around the ins and outs of P2P lending, decide whether this is the right type of finance for you.

Canada

Alternative investing requires more transparency: survey (Benefits Canada), Rated: B

The survey, which polled 200 institutional investors and asset managers, found respondents cited transparency as the leading investment consideration, for both alternative investments (62 per cent) and traditional investments (62 per cent).

According to the survey, risk management is the most important driver for transparency in both traditional and alternative investments. Nearly three-quarters (73 per cent) of respondents said portfolio risk management was the most important element, while about half said regulatory requirements (53 per cent) and competitive considerations (43 per cent) were the most important elements.

Authors:

George Popescu
Allen Taylor

Tuesday June 13 2017, Daily News Digest

credit card charge-offs

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

credit card charge-offs

News Comments

United States

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

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

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

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

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

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

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

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

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

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

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

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

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

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

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

Of the transaction, CEO David Klein said:

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

Highlights include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A podcast interview with Profs Andrew Dawson and Christopher Odinet.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

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

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

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

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

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

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

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

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

UC: What is the status of the Visa connection?

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

European Union

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

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

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

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

International

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

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

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

India

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

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

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

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

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

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

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

Asia

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

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

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

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

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

Meanwhile, FinTech Investment in Other Parts of the World

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

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

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

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

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

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

Authors:

George Popescu
Allen Taylor