Thursday September 12 2019, Weekly News Digest

bank technology

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-4 Trust. Stripe debuts corporate credit cards. College Ave completes $300M securitization of private student loans. Yirendai issues earnings results. Today’s main analysis: Deregulating Fannie and Freddie (A MUST-READ REPORT FROM THE U.S. TREASURY). Today’s thought-provoking articles: Average FICO scores hit […]

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

bank technology

News Comments

United States

United Kingdom

China

International

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News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-4 Trust (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-4 Trust (“SCLP 2019-4”). This is a $465 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-4

Class

Preliminary Rating

Class Principal

A

AAA (sf)

$360,000,000

B

AA+ (sf)

$29,500,000

C

A+ (sf)

$47,500,000

D

BBB+ (sf)

$28,000,000

OnDeck CEO Noah Breslow to Deliver Keynote Address at 2019 LEND360 Conference (GuruFocus), Rated: A

OnDeck today announced that Chairman and CEO Noah Breslow will be a keynote speaker at the LEND360 Conference in Dallas, Texas on Thursday, September 26, 2019. Mr. Breslow will discuss industry trends in alternative data and how they are improving many aspects of online lending to small businesses.

Case activity for On Deck Capital, Inc. vs Beautyshea, LLC on Sept. 9 (Pennsylvania Record), Rated: B

‘Judgment Entered For $6,593.50 On 09-09-2019 236 Notice Of Judgment Sent 09-09-2019’

Payments giant Stripe debuts a credit card in its latest step into the financing fray (TechCrunch), Rated: AAA

Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.

College Ave Student Loans Completes $ 300 Million Securitization of Private Student Loans (Crowdfund Insider), Rated: AAA

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $300 million securitization of private student loans, its third securitization and largest to date. According to College Ave, the transaction was oversubscribed attracting a broad and diverse group of repeat investors and new participants. Barclays and Goldman Sachs were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

The Deregulation of Fannie and Freddie; Rate Cuts; “Full Stack” Banks (PeerIQ), Rated: AAA

This week, the Trump administration released their long awaited housing finance plan that will privatize Fannie Mae and Freddie Mac.

The plan would require a significant recapitalization – up to $180 Bn.

Read the full report here.

Source: Federal Reserve, PeerIQ

Average FICO score hits all-time high (CNBC), Rated: AAA

For the first time, the average national credit score has reached 706, according to FICO, the developer of one of the most commonly used scores by lenders.

Source: CNBC

U.S. Consumer Debt Surges on Jump in Credit-Card Balances (Bloomberg), Rated: A

U.S. consumer borrowing swelled in July by the most since late 2017 as Americans carried larger credit-card balances to fund both everyday and online purchases.

Total credit rose by $23.3 billion from the prior month, exceeding all estimates in a Bloomberg survey of economists, Federal Reserve figures showed Monday. Revolving debt outstanding increased by $10 billion, also the most since November 2017, while the growth of non-revolving credit was little changed from a month earlier.

Kabbage Launches New Small Business Revenue Index (Crowdfund Insider), Rated: A

Global financial service platform Kabbage announced this week the launch of its new Small Business Revenue Index. According to Kabbage, the index has two million live data connections the platform maintains across its customer base of more than 200,000 small businesses.

The Current State of the Small Business Lending Sector (Lend Academy), Rated: AAA

The companies that I view as pioneers in this space are Kabbage and OnDeck.

Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding CircleStreetsharesFundboxBlueVineBiz2CreditFundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.

The Challengers of Small Business Lending

Probably the most recognizable name is PayPal and the Working Capital product which, according to deBanked, has surpassed OnDeck in small business lending volume.

Patriot Financial leads $ 15 million round for Numerated (American Banker), Rated: A

Numerated, the loan technology company that incubated inside Eastern Bank and spun off on its own in May 2017, has raised $15 million from bank investment fund Patriot Financial Partners. Existing investors Venrock, Fintop Capital and Hyperplane also joined the round.

TBF Financial Buys $ 60 Million in Commercial Debt from Major Online Lender (PR Newswire), Rated: A

TBF Financial purchased nearly $60 million in non-performing loans from a major online small business lender in recent transactions, CEO Brett Boehm announced today.

TBF bought the pools of post-charge-off loans as the highest bidder in transactions arranged through multiple brokers. In most cases, the company purchases directly from alternative lenders, equipment leasing companies and banks.

LendingTree Ranks the 50 Most Expensive Towns in America (NewKerala), Rated: A

No. 1 Vineyard Haven, Mass.

Total population 17,321
Median individual income $39,045
Median home value $674,600
Affordable housing costs for a median income earner $911
Calculated mortgage payment for a median priced home $2,767
Median rent payment $1,441
Home affordability deficit -$1,856
Rent affordability deficit -$530

The DeFi trend is accelerating and gaining acceptance, with Coinbase joining the fray. The leading brokerage has created the Coinbase Bootstrap Fund, to boost DeFi projects. Coinbase will invest in two projects, the Compound crypto lending scheme, and the dy/dx crypto derivative exchange.

The 30-somethings guide to creating passive income (Ladders), Rated: A

You might not have $30,000 saved up to buy a rental property right now, but do you have $500? The beauty of REITs like DiversyFund is you can start investing for the amount of money you might drop on a new pair of shoes.

There are public and private REITS as well as funds classified as real estate crowdfunding. Compare your options and find the best one that works for you.

PeerStreet Named CRETech 2019 Real Estate Tech Award Winner (Crowdfund Insider), Rated: B

Real estate investment platform PeerStreet announced on Tuesday it won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs for the Information & Intelligence – Crowdfunding category.

Zillow chooses Impac Mortgage COO Rian Furey to lead mortgage expansion (Housingwire), Rated: B

Zillow announced Monday that it is naming Rian Furey president of Zillow Home Loans.

Balboa Capital Continues Accelerated Growth, Adds 125 New Employees in First Half of 2019 (Yahoo! Finance), Raated: A

Balboa Capital, an online lender that specializes in equipment financing and small business loans, hired 125 new employees during the first six months of 2019 to accommodate the company’s rapid increase in new business and acquisition of several new strategic partners.

United Kingdom

Why crowdfunding may not be the great democratising force in investment after all (The Conversation), Rated: AAA

The digital revolution has had a huge impact on the way new and small companies are financed – and crowdfunding has been at the forefront.

Initially, crowdfunding brought great optimism that it would have a “democratising effect” on finance. On the one hand it would enable entrepreneurs excluded from traditional sources of finance to attract funding. And, on the other, it would provide new opportunities for people with even relatively modest amounts of money to invest. For example, private investors looking for higher returns than those available with high street banks have been attracted to various lending platforms – also known as peer-to-peer (P2P) platforms.

Sonovate raises £110m to drive invoice finance (Fintech Futures), Rated: A

Finance tech provider Sonovate is looking to expand internationally and deploy more working capital to SMEs and mid-market businesses after raising £110 million, reports Jane Connolly.

Spotcap find 77% of SME brokers are upbeat about Brexit (AltFi), Rated: A

Over three-quarters of commercial finance intermediaries in the UK expect the number of loans they broker to increase after Brexit, with more than half saying the number will rise “by a lot”.

In July Berlin-based online lender Spotcap asked 132 UK brokers, accountants and advisers about the future of SME finance in the UK, the results of which it published today as part of a report entitled The State of Commercial Finance in the UK.

FCA urges firms to prepare for no-deal Brexit and launches helpline (P2P Finance News), Rated: A

FIRMS should prepare for the possibility of a no-deal Brexit, says the Financial Conduct Authority (FCA), as it launches a dedicated helpline for businesses.

The City watchdog, which oversees the peer-to-peer lending market as well as the rest of the financial servcies sector, says firms who have not prepared appropriately for the UK leaving the EU without a deal may see an impact on their business.

Foreign firms eyeing P2P market entry (P2P Finance News), Rated: A

REGULATORY consultancy Bovill has reported a steady stream of interest from new entrants to the peer-to-peer lending market, particularly from overseas firms.

Brown attributed the slowdown to the fact that P2P is a more mature market, meaning there was “less of a gold rush” for new players.

H&M extends Klarna ‘buy now, pay later’ service to the UK (Fashion United), Rated: B

Swedish fast-fashion giant H&M has extended its partnership with payment provider Klarna to the UK market, offering Brit shoppers the option to ‘buy now, pay later’.

New SME services added to Starling Bank’s marketplace (AltFi), Rated: B

Digital Risks is an insurance provider for small and medium-sized digital businesses, including cover for specific threats like commercial legal protection, cyber security, management liability, employers liability, public liability and professional indemnity.

While CyberSmart is a platform for SMEs to identify digital weaknesses and achieve their Cyber Essentials Certification, the government-backed accreditation for companies looking to protect against cyber threats.

China

Yirendai (NYSE:YRD) Issues Earnings Results (Mayfield Recorder), Rated: AAA

Yirendai posted its earnings results on Tuesday, September 3rd. The technology company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.24), Morningstar.com reports. Yirendai had a return on equity of 32.93% and a net margin of 15.30%. The firm had revenue of $322.89 million for the quarter.

LexinFintech Secures $ 300 Million Private Placement of Convertible Notes with PAG (Crowdfund Insider), Rated: A

Chinese consumer financing platform LexinFintech announced on Wednesday it has entered into a convertible note purchase agreement with PAG issue and sell convertible notes in an aggregate principal amount of $300 million through a private placement. 

IceKredit Raises $ 47M in Pre-Series C Funding (FINSMES), Rated: A

IceKredit, Inc., a Los Angeles, CA and China-based credit risk and credit management company, raised $47m in pre-Series C funding.

These Chinese Online Lenders Are Not For the Weak at Heart (GuruFocus), Rated: A

Beijing-based online lender Yirendai (NYSE:YRD) and Shanghai-based Paipaidai, or PPDAI Group (NYSE:PPDF), shares have been pummeled down to their lowest levels in the past year. Yet aside from receiving credit lines from large Chinese institutions amid China’s crackdown on fraud lending in their industry, both lenders appear to remain in a healthy state.

PPDAI — the older and bigger of the two lenders — came out strong in its recent quarter, beating earnings expectations. The $1.2 billion online lender reported it had 29% year-over-year growth in loan origination volume to $3 billion, compared to just 1.6% growth a year earlier.

Hexindai Announces Support For Regulators’ Decision to Include P2P Platforms in Central Bank’s Credit System (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Tuesday its support for the decision by industry regulators to include the country’s P2P platforms in the central bank’s credit system. The online lender reported that it believes this as a positive move for the P2P industry.

Sequoia-Backed P2P Lender Huobank Collapses As Beijing Mops Up Online Finance Risks (China Money Network), Rated: A

European Union

Banks raise concerns ahead of ECB meeting (Irish Examiner), Rated: A

The president of Germany’s powerful savings banks association, community lenders that dominate the country’s shopping streets, joined Dutch bank ING yesterday in criticising the ECB’s loose monetary policy.

Its 50 million customers have increased their savings by almost 5% since last year to €965bn which is roughly the size of the Dutch economy. With lending amounting to about €860bn, the banks are left with a chunky unused surplus.

Fintech Europe Selects Eight Startups for its Fourth Batch (Yahoo! Finance), Rated: B

Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the eight startups selected for its fourth batch. The platform has grown its partner base to 11 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, and Finablr, it runs two 12-week innovation programs a year.

CashDirector 

CashDirector SA is a technology company providing SMEs and banks with a Digital CFO integrated with on-line banking, helping with SMEs manage cash flow and accessing financing.

Credit Kudos

Credit Kudos is a credit bureau that uses financial behaviour to measure creditworthiness.

International

Technology Is Banks’ New Battleground (WSJ), Rated: AAA

European banks are spending vast sums on technology—but it may not be enough to defend against the incursions of bigger, richer American rivals.

U.S. lenders already dominate investment banking in Europe. The big risk for the continent’s banks is that slicker tech could give their American rivals a platform to make gains in lending to companies—the Europeans’ traditional stronghold.

This year, Europe’s banks plan to make technology investments worth in aggregate $77 billion, according to consulting firm Celent. That compares with $105 billion for their U.S. rivals. Faster, more seamless trading systems have long been a priority, but tech spending has shifted across business lines and from back office to front office. It can cover everything from maintaining decades-old systems to cutting-edge artificial intelligence.

Source: Celent

Wirecard Teams Up With Credibly to Digitalize Funding Disbursements (Crowdfund Insider), Rated: A

Germany-based global provider of digital payments and commerce solutions Wirecard announced on Wednesday it is partnering with U.S. business funding fintech Credibly to digitalize funding disbursement. Wirecard claims to be one of the largest issuers of payout cards in the U.S. and is now offering fully digitalize solutions.

PwC to AM industry: disrupt yourself or face extinction (City Wire Selector), Rated: A

The European financial services industry is facing an ‘Amazonisation’ moment, in which those offering consumer-first solutions underpinned by sustainable finance will survive and the others will cease to compete.

That is the headline finding of 52-page report co-authored by PwC Luxembourg and Luxembourg for Finance, which investigated underlying industry trends and indicated that the European market is losing ground on its US and Asian peers when it comes to innovation and assets.

State of the Chain: Five Winning Use Cases for Blockchain in 2019 (U.today), Rated: A

Predictably it was Binance that stole the limelight, with the surprise launch of its eponymous lending platform, which was unveiled on Monday, August 26, and then proceeded to fill its initial lending quota of 200,000 BNB and 10 million USDT in a matter of seconds two days later.

Dharma and Compound have announced new products, while Coinbase has hinted that this will be the next vertical it expands into.

Lenders can enjoy annualized interest of up to 15%, which is significantly better than the negative rates they are currently offered on fiat savings and on negatively yielding government bonds.

Australia

Hopes fintech inquiry will ‘validate’ bank competitors (The Sydney Morning Herald), Rated: A

On Wednesday New South Wales senator Andrew Bragg successfully moved to secure a senate committee inquiry into the fintech and regulatory technology spaces, paving the way for a year-long review into how competitive Australia is in these sectors.

Chief executive of small business lender Lumi, Yanir Yakutiel, said the inquiry should focus on expanding the regulatory sandbox program, which is designed to help early stage fintechs test their ideas.

India

Five Ways Artificial Intelligence Is Instigating Paradigm Shift In Online Lending Space (Via.news), Rated: AAA

Currently, digital lending accounts for around 15% to 20% of the total lending market and could surpass 50% in coming years.

Asia

Chinese P2P Lending Companies Ventures to Vietnam (LearnBonds), Rated: AAA

This business model boomed in China, but following a regulatory clampdown by authorities on risky financial practices, the number of fintech and peer-to-peer (P2P) lending platforms in the country dropped from about 1,900 a year ago to just 900 in May.

It now appears that some of these Chinese P2P lending companies have not necessarily disappeared. They simple ventured into new markets and in particular Vietnam.

According to the State Bank of Vietnam (SBV), there were 40 peer-to-peer lending companies operating in Vietnam as of March. Of these, 10 companies are from China.

MENA

The opportunity of peer-to-peer lending in Lebanon (Executive Magazine), Rated: AAA

Through conversations with Lebanese entrepreneurs, business owners, bankers, and politicians, I have had a number of eye-opening discussions into the challenges and opportunities faced by Lebanon’s SME ecosystem. Given the country’s long-standing tradition in financial services and its large banking sector, I believe fintech—with solutions such as peer-to-peer lending, machine learning to personalize insurance solutions, and the use of artificial intelligence for wealth management—stands as a serious contender to unlock the funding challenges faced by Lebanon’s SMEs.

Latin America

SoftBank in talks to invest in Latam venture capital funds (Reuters), Rated: AAA

Japan’s SoftBank Group Corp (9984.T) is in talks with venture capital firms in Latin America to invest hundreds of millions of dollars in their funds, a move likely to speed up spending of a $5 billion regional venture capital fund, three sources with knowledge of the matter said.

So far, SoftBank has only announced direct investments using the fund’s resources, injecting capital into Colombian delivery app Rappi, Brazilian lender Creditas, gym membership app Gympass and Mexican payments firm Clip, for instance.

Proptech Flat raises US$ 4.5 million pre-seed round led by ALLVP (Contxto), Rated: A

Contxto – Not only is the Mexican real estate industry huge but also outdated with many inefficient processes. Counteracting this, a new Mexican startup, Flat, recently raised US$4.5 million in one of Mexico’s largest pre-seed rounds ever.

Africa

Nigerian online-only bank startup Kuda raises $ 1.6M (TechCrunch), Rated: AAA

Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.

Canada

Peer to Peer Lender Lending Loop Tops $ 50 Million in Loans (Crowdfund Insider), Rated: AAA

Canada’s first peer to peer lending platform for SMEs, Lending Loop, has topped CDN $50 million in loans, according to a post by Brendon Vlaar, co-founder and CTO of the company. Lending Loop provides investment opportunities in debt-based securities to both accredited and non-accredited investors.

PayBright Raises $ 34M in Growth Equity Financing (FINSMES), Rated: A

PayBright, a Toronto, Canada-based fintech company, received a $34m equity investment from goeasy.

Authors:

George Popescu
Allen Taylor

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

Creating a New Market for Invoice Financing

invoice financing

We see so many great businesses failing to take off because they are unable to get funding from legacy financial institutions and high-interest rates charged by alternative lenders deter them from seeking credit. Their growth is perennially hampered by slow paying customers, which leads to cash flow issues. Realizing that there is a funding gap […]

invoice financing

We see so many great businesses failing to take off because they are unable to get funding from legacy financial institutions and high-interest rates charged by alternative lenders deter them from seeking credit. Their growth is perennially hampered by slow paying customers, which leads to cash flow issues. Realizing that there is a funding gap for startups and growing companies, Gabriella Krista Morgan, with her father Bruce Morgan, launched P2Binvestor, a crowdfunded receivables finance company operating an investment platform for small- and mid-sized businesses.

P2Binvestor was founded in 2012. Its headquarters is in Denver, Colorado. The firm has raised over $16 million in various funding rounds with Rockies Venture Club taking the lead in Series A. Though the company was launched in 2012, it took two years of groundwork (raise money, infrastructure, legal framework, etc.) to bring the platform to market. CEO and Co-Founder Gabriella Krista Morgan has a degree in economics and political science from McGill University. Prior to founding P2Pinvestor, she was accounts director at SapientNitro.

P2Binvestor’s Business Model

P2Binvestor provides lines of credit (LOC) from $250,000 to $10 million backed by the borrower’s receivables and inventory. Companies that are growing quickly but do not qualify for funding from banks because they do not have several years of operating history and cannot afford high-interest rates charged by online lenders is the target market.

The platform follows an asset-based lending model and has also developed in-house technology to facilitate management of LOCs. Traditionally, managing LOCs has been the Achilles heel for both lenders as well as borrowers. Therefore, P2Binvestors was focused on building a modern borrowing experience and a sophisticated technology that is capable of early detection of problems in underlying invoices. Through constant monitoring, it is able to resolve problems before they snowball into defaults.

It has extensively used machine learning to identify patterns in data and has used its own data for developing an algorithm focused on loan performance rather than upfront underwriting. That means financing offered by P2Binvestor is quite different from the traditional term loan. Since P2Binvestor is constantly lending, its underwriting process is constantly developing and thus minimizing the default risk.

A customer can borrow ranging from $250,000-$10 million, or depending on the value of their invoices. But on average, the firm lends around $1 million on average. Based on outstanding balances, the borrower pays daily interest and APR ranges from 15%-19%. The customer only pays for the amount used and not on the total LOC limit.

Bank Lending Program

The company has also launched a Bank Lending Program. Under this program, it partners with banks to lend to companies that have growth potential. Launched in 2017, the company has found its first partner, New Resource Bank. The bank will provide P2Binvestor’s products using P2Binvestor’s technology. The loans will also be managed by P2Binvestor; the rate of interest ranges from 8%-12%. It’s a 50-50 partnership meaning 50% of the funding is provided by the bank and another half by the P2Binvestor marketplace. Since bank’s funding is cheaper, rates are substantially lower than typical marketplace lending rates.

This program is unique as no one offers such a program. It is particularly beneficial for companies that are growing at a neck-breaking pace. By providing quick funding at bank rates, P2Binvestor is helping to lower the cost of capital for its target market while expediting growth. The lending ratio is 50% to product-oriented companies and 50% to service companies. It typically lends to consumer product companies (mostly new brands), media companies, staffing companies, light manufacturing, and distribution companies. Most of the companies it lends to have consistent payroll and inconsistent payers.

Flexible Lending Practices

Unlike other lenders in the market, the P2Binvestor lending model is fairly flexible. That means the customer can borrow as per their needs and any time they want. Loans are not fixed in nature–for instance, $1 million for three years–rather, they are dependent on the borrower’s invoices. This model does not let the company overstretch, thus ensuring responsible lending.

P2Pinvestor has issued loans in excess of $125 million in LOC in the last three years. Its collection rate is quite high (80% collected) and its default rate is under 2% for the entire portfolio. Having its own in-house collection team does help. It garnered $6.5 million in revenues last year and expects to reach $11 million by the end of this year.

Though there are plenty of alternative lenders, there are not many lenders dealing in a ticket size north of $1 million. Having said that, P2Binvestor’s biggest competition is traditional asset-based lenders. Though there are more than a thousand lenders in the space, the firm’s cutting-edge technology and focused customer service gives them an edge over rivals.

A hybrid lender that syndicates 80% of its portfolio off the balance sheet, P2Binvestor is more of a “deal marketplace” where institutional investors can buy into deals in which they are interested. P2Pinvestor then uses its own balance sheet to fill funding gaps.

Diversity is the Path to Future Lending

The company will look to enter into further partnerships with banks. Traditionally, banks have not been big on invoice financing, but P2Binvestor believes technology will help banks to get comfortable with this new financing vertical. Its long-term goal is to provide a complete set of lending products to its target market.

The CEO wholeheartedly believes in diversity, and that is the reason why 50% of the company’s workforce is female. It is trying to bring a new wave to the corporate world where women get an equal shot at leadership roles. It is just the beginning, but the company is fully committed to its diversity program.

In a short span of time, P2Binvestor has become a leader in its segment. It has constantly stretched the boundaries with technology, innovation, and culture, and that is the reason it is expected to continue redefining lending norms. With groundwork already laid for future expansion, P2Binvestor will be looking to dominate big-ticket alternative lending.

Author:

Written by Heena Dhir.

Thursday February 1 2018, Daily News Digest

software hacks

News Comments Today’s main news: SoFi lays off 5% of workforce. BlueVine doubles invoice financing credit lines. Chime reaches 750K bank accounts, $2.5B transaction volume. SoftBank injects funding into Moven, who could be buying a bank. Zopa hits 3B GBP in lending. Crowd Genie kicks off ICO. Today’s main analysis: Coincheck’s recent hack could mean big changes in crypto lending, […]

software hacks

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Bermuda

News Summary

United States

SoFi Lays Off 5% of Staff (WSJ), Rated: AAA

The San Francisco-based financial-technology company told staffers on Tuesday it is cutting around 65 jobs, roughly 5% of its 1,300-person workforce, the people said. The layoffs are centered in SoFi’s mortgage-operations centers in Healdsburg, Calif., and Cottonwood Heights, Utah.

He added that SoFi is currently looking to fill more than 175 open jobs.

‘A 401(k) of the future’: How SoFi wants to grow student loan refinancing with WeWork (Tearsheet), Rated: A

SoFi wants to sell its loan refinancing products to WeWork and its member companies by offering them an additional 0.125 percent discount.

growing number of companies have been adding student loan repayment as a workplace benefit. With $1.4 trillion in outstanding federal and private student loans, it’s a huge market.

SoFi’s Top 20 Law Schools Producing the Highest Salary Averages (JDJournal), Rated: A

SoFi examined the salary earned upon graduation from different law schools compared to the cost of the education. They looked at 60,000 student loan refinancing applications that had been submitted to them between January 2014 and December 2016. They took that data and formed SoFi’s Return on Education (ROED) Law School Rankings. The ranking uses the average salary and student debt load of the graduates three years out of law school that is reported to them by graduates looking to refinance their loans.

The top 20 law schools with the highest average salaries are:

  1. Cornell University – $183,377
  2. Columbia University – $177,962
  3. New York University – $177,203
  4. University of Chicago – $174,238
  5. Harvard University – $173,578
  6. Georgetown University – $173,464
  7. Northwestern University – $173,204
  8. Yale University – $171,779
  9. University of Pennsylvania – $170,954
  10. Duke University – $169,096
  11. University of Virginia – $166,396
  12. University of Michigan Ann Arbor – $164,713
  13. University of California Berkeley – $163,940
  14. University of Southern California – $161,823
  15. Fordham University – $160,590
  16. Stanford University – $158,088
  17. George Washington University – $153,302
  18. University of California Los Angeles – $152,469
  19. Vanderbilt University – $149,475
  20. University of Texas at Austin – $147,444

BlueVine doubles invoice financing credit lines to up to $ 5 million (Finextra), Rated: AAA

BlueVine has doubled the credit line size for its invoice factoring product to up to $5 million, underscoring the online business lender’s push to offer fast and flexible working capital financing to small and medium-sized businesses.

BlueVine also increased the limit for its business line of credit product to $200,000 from $150,000, making its Flex Credit product an even more attractive financing option for larger or fast-growing companies.

Court upholds constitutionality of Consumer Financial Protection Bureau (Politico), Rated: A

A federal appeals court has upheld the constitutionality of the Consumer Financial Protection Bureau’s structure, a decision that preserves the agency’s independence in the face of challenges from business interests and conservatives.

The D.C. Circuit Court of Appeals ruled 7-3 on Wednesday that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the CFPB director during his or her five-year term does not violate the president’s authority to appoint and remove executive branch officers.

Chime Reaches 750,000 Bank Accounts, $ 2.5 Billion Transaction Volume (Business Insider), Rated: AAA

Chime is on track to open more than 100,000 bank accounts per month and expects to reach 1 million total this quarter. With more than 750,000 bank accounts opened to date and over $2.5 billion in total transaction volume, Chime has emerged as the clear leader in the challenger banking segment.

While most Americans pay more than $27 a month on average in bank fees, Chime doesn’t charge overdraft fees, monthly fees or foreign transaction fees. With its award-winning mobile banking app, Chime members avoided more than $225 million in potential overdraft fees from traditional banks in 2017 alone, while putting over $72 million into savings accounts with help from Chime’s automated savings tools.

Moven to receive funding from SoftBank, plans to buy bank (American Banker), Rated: AAA

Moven, the mobile-first “neobank” founded by Brett King in 2011, is getting a multi-million dollar infusion from the Japanese company SBI Group, owner of SoftBank. At the same time, Moven says it is pursuing the acquisition of a bank.

SBI Group will hold one of the six seats on Moven’s board, and the two companies will set up a joint venture in Japan.

At the same time, Moven is making major changes to its overall business, including splitting the company in two.

On one side will be the software provider that already develops digital banking software for TD Bank in Canada and Westpac in New Zealand.

On the other side will be the neobank, which will be called MovenBank.

Is Marcus Going to Launch a Credit Card? (Lend Academy), Rated: A

Ainsley Harris reported in Fast Company today that Goldman Sachs is acquiring the employees who built Final, a credit card startup based in Oakland. Final offered a unique kind of credit card, one that would create a different virtual card number for every merchant, thereby reducing the risk of credit card fraud.

It has been a busy couple of years for Goldman Sachs when it comes to their consumer facing business. This latest deal follows a long list of acquisitions for Goldman recently:

  1. Acquisition of GE Capital Bank – this jumpstarted GS Bank giving it a huge deposit base.
  2. Acquisition of Honest Dollar – the digital retirement savings app was acquired in March 2016.
  3. Launch of Marcus with debt consolidation loans.
  4. Acquisition of Genesis Capital – not really consumer facing but could add a real estate development arm to the bank.
  5. Bond Street – employees of the online small business lender moved to Goldman Sachs.
  6. Addition of home improvement loans to the Marcus offerings.

Why big financial firms are building robos instead of white labeling (Tearsheet), Rated: A

In November, Wells Fargo launched Intuitive Investor, its digital-human hybrid offering from Wells Fargo Advisors. The following month Morgan Stanley launched Access Investing and JPMorgan Chase launched JPMorgan Digital Investing. Goldman Sachs, Raymond James, YF Financial and ICBC are all currently developing their own.

The start of the robo phenomenon was meant to address small, do-it-yourself investors, said Tom Streiff, special consultant to HBW Partners.

“A lot of these big firms have a lot more small accounts than they’re willing to admit,” he said. “Robos were one answer to that. Now they want to have something that has more of their own mark on it … not just to get the technology but to get the smart people inside.”

Typically, the white label provider will take 15 basis points of the total and leave the rest to the bank for distribution, Saxena said. Pricing from independent players, like Betterment or Wealthfront, is competitive.

SmartBiz Loans Launches AI-powered Digital Advisor Tool for Small Business Owners (Digital Journal), Rated: A

SmartBiz Loans, the SBA loan marketplace and bank-enabling technology platform, today announced the launch of SmartBiz Advisor, the first, AI-driven, online education tool that makes the financial insights and analysis provided by a typical CFO available to small businesses at no cost.

SmartBiz Advisor is an intelligent online platform that allows small business owners to easily and quickly learn how banks typically evaluate their business on key criteria before applying for a loan.

The Future of Real Estate, Part 2: A Crowdfunding Revolution? (GuruFocus), Rated: A

A well-managed crowdfunding platform should provide a range of deals, after having done sufficient due diligence itself so as to not place potential investors in financial jeopardy, and itself in legal jeopardy. When dealing in investment assets, whether equity or real estate, investors are still expected to be sophisticated and have the means to weather losses that are part and parcel with any private investment deal.

A growing cast of players

Interestingly, even as equity crowdfunding in startup companies has been slow to take off (Indiegogo’s platform raised just $7.53 million in equity investments during its first year of operation), real estate crowdfunding platforms have been popping up like weeds. RealtyMogul.com, for example, has an investor community of 150,000 people that have invested $318 million through its platform since it went live in 2012. The crowdfunder claims to have returned $70 million to investors thus far. RealtyShares, founded in 2013, has also posted big numbers, with platform users reportedly investing $700 million across more than a thousand deals.

A new breed of of private REIT

Private REITs are obviously opaque and potentially dangerous, but the crowdfunding platform has forged ahead all the same. Perhaps, with their interactive dashboards and high levels of investor transparency, these crowdfunded REITs will be able to correct some of the ills of their less technologically sophisticated forebears.

This College Grad Found an Affordable Way to Start Investing in Real Estate (The Penny Hoarder), Rated: A

The Fundrise Starter Portfolio would invest her money into two portfolios that support private real estate around the United States. It would do all the heavy lifting for her — and play landlord on her behalf.

She didn’t need to have hundreds of thousands of dollars stashed away, either. She could get started with a minimum investment of just $500.

Fundrise lists an average annualized return of 11.44% in 2017. Investors pay 1% in annual fees — a 0.85% asset-management fee and a 0.15% investment advisory fee.

Breaking down the barriers of real estate investment: A Q&A with Peter Vekselman from WeLend (AtlantaAgent), Rated: A

Q: What sort of problems were you experiencing when it came to financing real estate projects?

The problem is that behind the scenes the money is handled by hedge funds. All of the hedge funds on Wall Street do their own thing and no one knows who they are. So what happens is you have a potential investor and the first problem for them is finding the financing.

Q: How exactly does We Lend work, and how does it help solve some of the problems previously mentioned?

I’ve consolidated and cut deals to put all the hedge funds under one roof, so now investors don’t have to go through this huge undertaking to find the funds. They can came to us, and we can underwrite them and then figure out on the back end the best match.

It’s like LendingTree for the investor world.

Q: What types of projects and people does We Lend work with?

We work with small developers or a mom-and-pop builder that does five properties a year. And we mainly work with residential properties only because there are more residential opportunities than anything else.

In terms of price points, we try to stay as low as $50,000 per project.

On Deck Welcomes Paul Rosen & James Hobson As Two New Senior Vice Presidents (OnDeck), Rated: A

Today, On Deck announced the appointments of Paul Rosen as Senior Vice President of Sales and James Hobson as Senior Vice President of Strategic Partnerships and Platform Solutions.

Santander Consumer USA And AutoFi Team Up To Provide Car Buyers And Dealers With Fast And Easy Online Sales And Financing (PR Newswire), Rated: A

Santander Consumer USA Holdings Inc. (NYSE: SC, or the Company) today announced that it will work with automotive technology leader AutoFi to streamline and simplify the car-buying process for consumers, while giving dealers a robust digital sales channel.

Climb Credit Reveals A Solution To Student Lending Crisis (Climb Credit Email), Rated: A

A few key findings include:

  • The median student saw a 66.7% salary increase
  • For Climb students who have held two different jobs since attending their program, there is a median pay increase of 38.9% from the first to the second job
  • Nearly three out of four students surveyed said they would not have been able to attend their education program if they didn’t have Climb Credit as a financing option

House Approves New Payday Loan With 200 Percent Interest Rate (Indiana Public Media), Rated B

The Indiana House approved legislation Wednesday to create a new type of payday loan – with interest rates of up to 200 percent – that opponents argue amounts to predatory lending.

The legislation creates a loan of between about $600 and $1,500, with a term of up to 12 months.

Consumers warned not to borrow from unlicensed online lenders (International Falls Journal), Rated: B

The Minnesota Commerce Department warns Minnesota consumers not to borrow money from unlicensed lenders that advertise and offer short-term, payday or installment loans through the internet.

United Kingdom

Zopa hits £3bn lending landmark (P2P Finance News), Rated: AAA

ZOPA said that it now has more than 60,000 active investors and more than 300,000 borrowers.

It has now lent out more than £3bn since inception, Zopa said on its website on Wednesday, having lent more than £985m in the past 12 months.

Investors are lending on average £13,000 while the average loan amount is £6,000.

China

Chinese internet users grow to 772 million (Technode), Rated: AAA

China now has 772 million internet users according to a report published by the China Internet Network Information Center (CNNIC) today (in Chinese).

Growth rates of internet users have remained steady. During 2017, a total of 40.74 million new netizens were added with a growth rate of 5.6%. Internet penetration rates have reached 55.8% in China, more than the global average (51.7%) and the average rates for Asia (46.7%).

The number of mobile phone users in China has reached an impressive 753 million. The proportion of internet users using mobile phones rose from 95.1% in 2016 to 97.5% in 2017.

Since the end of 2016, the proportion of internet users that pay with their phones rose from 50.3% to 65.5%.

There was another number that went up at an impressive rate. The number of internet users buying internet financial products in China has reached 129 million, up 30.2% from the same period last year.

Alibaba-backed online lender MYbank owes cost-savings to home-made tech (Reuters), Rated: A

MYbank expects double-digit increases in all growth measures in 2017 due to lower costs enabled by technology, the bank’s president, Huang Hao, said in an interview at his office in Hangzhou, in the eastern province of Zhejiang.

As a result, the cost of approving a small business loan can be as little as 2 yuan, compared to at least 2,000 yuan ($317.97) at a traditional bank, according to data provided by the bank.

European Union

Remarks by Vice-President Dombrovskis at the European Financial Forum 2018 in Dublin (Europa.eu), Rated: AAA

 

Our immediate priority is to complete the Banking Union. For this, we should move in parallel on risk reduction and risk sharing. All elements are on the table. On risk reduction, this includes our November 2016 bank reform package and our ongoing work to reduce Non-Performing Loans. On the risk sharing side, we recently came with ideas on how to unblock negotiations on the European Deposit Insurance Scheme. And we have broad support to finalise the work on the backstop for the Single Resolution Fund. So the time is ripe to move at political level on completing the Banking Union.

The second immediate priority for deepening the EMU is setting up the Capital Markets Union. Deeper capital markets across Europe will increase risk-sharing among private investors and improve the shock-absorption capacity of the economy. In the past three years, we have taken fundamental steps towards deeper and more integrated EU capital markets. Of the 33 actions we announced in 2015, 25 have now been completed.

One strength of Ireland’s financial sector is asset management. As of September last year, Irish fund managers had more than €4.2 trillion assets under management. A true Capital Markets Union would enable Irish fund managers to further benefit from the full scale of the single market. In March of this year, revised rules for the EU venture capital label – EuVECA – will enter into application. Large managers can then run EuVECA funds, providing economies of scale and trusted brands. We have also expanded the range of eligible assets, and decreased the costs associated with cross-border marketing.

We are also looking more broadly at the rules for offering funds across the EU. This market is still predominantly organised along national lines. For example, 70% of the assets under management are held by funds available for sale in only one EU country. The share of alternative investment funds that is marketed in more than three countries is very low – only 3%.

Europe has what it takes to develop a globally competitive Fintech sector. We can rely on our strengths in research and engineering. For example, we have 32 artificial intelligence research institutions in the world top 100, which is more than the US or China. I also see great Fintech potential here in Ireland, with its strong information technology culture.

We will also present a legislative proposal to enable EU-wide crowdfunding and peer-to-peer lending.

The future of finance will not only be digital, it will also have to be green.

• Third, we could boost green investments and loans by introducing a so-called green supporting factor. This could be done at first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or low-carbon cars. However, this exercise would be delicate. Green does not mean risk-free. Any measures would have to be carefully calibrated, and based on a clear EU classification.

CreditEase Founder, CEO Ning Tang Spoke at the World Economic Forum Annual Meeting 2018 (PR Newswire), Rated: B

CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated and spoke at the World Economic Forum Annual Meeting 2018 in Davos-Klosters, Switzerland.

Under the central theme of “Creating a Shared Future in a Fractured World”, this year’s meeting has drawn an estimated 2,500 participants, including a record number of heads of state and leaders from politics, business, academia, and civil society.

“Technology has greatly improved access to financial services for Chinese consumers and small businesses in the past decade, and we expect more progress to be made in the SME lending space with the help of FinTech in coming years,” said Mr Tang. “Financial services like angel investing and VC/PE, powered by technology, will bring more high-quality growth to the Chinese economy.”

International

IOU Financial partners with CDE solutions in funding CDE’S network of 26,000 convenience store owners (PR Newswire), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based POS solutions provider CDE (CDEsolutions.com).  Through this strategic partnership, CDE’s network of 26,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.

Crebit: Blockchain DLT in wave of transforming P2P financing (NewsBTC), Rated: A

Adopting Blockchain and DLT for P2P lending system can facilitate capital mobilization within the financial system through flat-out transfer of monetary values from parties unrestricted by barriers-to-entry. Thus, the potential for P2P lending in support of free international financial flows remains vastly untapped.

Ipsos MORI veracity Index shows 75% of investors complain about banks data provision, but rather P2P investment groups maintain a credible and transparent operation.

Crebit is a blockchain-empowered network provider that offers global microfinance lending collateralized by crypto assets, based on the artificial intelligence credit scoring system. This microfinancing solution leverages blockchain technology to finance through top cryptocurrencies such as Bitcoin, Ethereum and Ripple against up to 80% of investors collateralized crypto assets value. Crebit leads the way into crypto financing by building P2P lending agreements on smart contracts in the secured and decentralized Ethereum blockchain. The platform matches funding gaps for crypto holders, traders as well as multiple exchanges and transaction solutions. Crebit aims to provide businesses and individuals a decentralized credit scoring database for innovative and trustless transaction solutions unrestricted by geographical boundaries.

Australia

Trial by fire in an untested market (CMO.com.au), Rated: AAA

But this is precisely why Rebecca James, Prospa’s new chief marketing and enterprise officer, took the job almost five months ago.

“In just five years, the team has lent over $500m. But there are 2.1 million small businesses in Australia, and over half need cashflow support to take advantage of opportunities, to grow, or to cover an unexpected cost. My hope is to take the Prospa proposition and meet the growing needs of this audience. We’re just getting started.”

Launched six years ago, Prospa is now Australia’s number one online lender for small business, providing loans to more than 12,000 small businesses across the country. In November, it placed second in the AFRFast 100 for 2017 thanks to a 239 per cent average revenue growth since 2013-14. Last year, Prospa secured over $50m in equity and debt funding, and doubled the size of its loan book.

Online Cash Flow Loans Australia Announces Unsecured Cash Flows Loans Up To $ 500k (PRWire), Rated: A

Online Cash Flow Loans is a fast emerging player in the online cash flow loans marketplace. The organization is an arm of Magnolia Finance that specializes in offering low cost business loans to small businesses in Australia.

These cash flow loans are tailored to meet the growing business finance needs of businesses operating in the hospitality, retail, construction, medical and agribusiness. Basically any small business operating in Australian and in need of unsecured business loans can apply for business loan online on the company website.

Loan terms from 3 to 24 months
Same day funding
Flexible repayment options
Redraw facility available
India

Budget Reaction Rajat Gandhi, Founder & CEO, Faircent. com (Faircent Email), Rated: AAA

Hon. Finance minister budget speech reflects the government’s intent to increase the credit access for the MSME sector and women entrepreneurs under MUDRA scheme. P2P lending is using technology and new-age data and diligently working towards taking organised credit to the non and under-banked segments of the Indian economy. This is an opportunity for the government to directly invest or co-fund through registered P2P Lending Platforms and ensure credit access for MSMEs, New-To-Credit as well as female entrepreneurs. P2P lending is an asset class ensuring flow of investments from those with surplus to those in need. Hence it’s important that the lenders are supported through tax incentives. We look forward to working with the govt towards common goal of financial inclusion.

The popular FinTech platforms serving MSMEs in India (KNN India), Rated: A

Keeping in view the credit crunch faced by the micro, small and medium enterprises (MSME) sector in India due to various reasons, new FinTech platforms are coming up to improve loan disbursal to the sector.

According to a media report, there are four popular FinTech platforms that are helping in robust loan disbursal – CreditMantri, Aye Finance, CoinTribe and Faircent.

P2P Lending Set to Explode in 2018 And Beyond (CXO Today), Rated: B

RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders.

Asia

MAS Regulated Peer to Peer Lender Crowd Genie Announces Initial Coin Offering (Crowdfund Insider), Rated: AAA

Crowd Genie Financial Services Pte Ltd, regulated by the Monetary Authority of Singapore (MAS), has announced an initial coin offering (ICO) via their related entity CGSPV Pte. Ltd. The peer to peer lender states that it intends on issuing 60 million Crowd Genie Coins, or CGCoins, for a soft cap of USD $5 million. The public sale commences today and 400 CGCoins may be purchased for a single ETH. Bonus CGCOINs, between an additional 5% and 25%, will be given to early buyers as an incentive.

Coincheck’s recent hack could mean big changes in the crypto space (Business Insider), Rated: AAA

Japanese cryptocurrency exchange Coincheck revealed on Friday that its 

Source: Business Insider

Online lenders join gold rush into SE Asia (Ecns.cn), Rated: A

Chinese online peer-to-peer (P2P) lending companies have been rushing into Southeast Asian countries in recent months to cash in on untapped and lightly regulated markets that feature huge potential, as growth in the domestic market slows amid tightening regulations.

While much of Southeast Asia offers a promising future for these lenders given its huge population and underdeveloped financial services industry, most of the Chinese companies are betting on short-term gains rather than long-term growth, an industry expert noted on Wednesday.

Over 50 Chinese online lenders have launched overseas operations, with Southeast Asian countries such as Indonesia and Cambodia being the top destinations, the 21st Century Business Herald reported on Wednesday.

In Indonesia alone, there are more than 50 Chinese consumer lending apps at the moment, up from 30 just a month ago, the report said.

Here are the new services launched by startups in Indonesia this week (e27), Rated: A

Peer-to-peer (P2P) lending platform Investree on Tuesday officially launched a sharia-based P2P lending programme.

The programme has been tested since November 2017. The startup claied that by January it has managed to channel IDR2.7 billion (US$200,000) worth of loan from 1,340 lenders to 313 borrowers.

Bermuda

Peer-to-Peer Lending & Equity Crowdfunding (Bernews), Rated: AAA

A Bermudian expert on information technology, asset and risk management tools is today celebrating the global launch of her book on peer-to-peer lending and the securities crowd funding industry.

“The book, entitled ‘Peer-to-Peer Lending and Equity Crowdfunding: A Guide to the New Capital Markets for Job Creators, Investors and Entrepreneurs,’ highlights the inequality gap is widening and persists worldwide,” a spokesperson said.

“The book not only describes how debt and equity crowdfunding works but also explains investment approaches, secondary markets, governance and compliance, transparency, and risk models that are necessary for investors to make informed decisions.

The book is available here.

 

Authors:

George Popescu
Allen Taylor

Taking Control of Italian SME Invoice Financing

Italian SME invoice financing

Italy is marginally smaller than the UK in terms of population (60 million vs. UK’s 65 million), and even in terms of GDP ($1.85 trillion vs. $2.69 trillion), Italy is not far behind. Italy has 6 million businesses, out of which 4 million are SMEs. Traditional lenders have not been able to serve these SMEs, […]

Italian SME invoice financing

Italy is marginally smaller than the UK in terms of population (60 million vs. UK’s 65 million), and even in terms of GDP ($1.85 trillion vs. $2.69 trillion), Italy is not far behind. Italy has 6 million businesses, out of which 4 million are SMEs. Traditional lenders have not been able to serve these SMEs, and neither has the alternative lending market developed to fill this gap. Italy is nowhere close to the UK in the peer-to-peer lending industry; as per AltFi data on European marketplace lending volumes, Italy accounts for a meager 0.27% share of the volume originated by the industry since inception, and the UK accounts for 84.80% of the share. With less than a dozen active players in the Italian P2P industry, there is a clear mismatch in terms of demand and supply. Understanding the size of the market opportunity, Anticipay has launched an invoice discounting platform that helps SMEs get short-term financing.

Anticipay: Introduction

Anticipay is headquartered in San Giovanni (MI), Italy and was incepted in May 2017. Initial equity has been pumped in by the founding members. But they plan to have a small capital raise by the end of the year and want to start customer onboarding at the beginning of 2018. The company’s main focus is to successfully bring on board SMEs and their invoices and find investors who will systematically start buying these invoices.

Founding partner Marcello Esposito holds an MSc/MPhil in Economics from the London School of Economics. Prior to this, he worked with leading Italian companies in the asset management sector. Steve Tendon, CTO and founding partner, holds a certificate in Fintech Innovation: Future Commerce from MIT and was a strategic advisor on the National Blockchain Strategy Taskforce in the Office of the Prime Minister. CEO and founding partner Jacopo Moresco previously worked as director at Infonet Srl. Founding partner Bruno Guerri was previously director of CSSB (now known as CSD – Directional Services Center).

Post-2008, financial institutions around the world became stringent when it came to lending, and the SME sector was the most affected. Considering the size of the Italian SME sector and only five participants in the alternative SMB lending segment, the overall market is still at a developmental stage with huge potential. Anticipay is more focused on growing the market and educating clients as compared to poaching business from its competitors.

What is Anticipay?

Anticipay is an invoice discounting platform that helps businesses get short-term financing in lieu of their invoices. SMEs can directly upload their invoices on the platform; Anticipay then evaluates the commercial value of the invoices and assigns a final score to the invoice(s).Once that is done, invoices are published on the platform with the final score for auction and investors have the option to buy the invoices at a discount. For now, it is concentrating on buyers from Switzerland and Italy only.

The technology used to develop the platform is entirely in-house and the team has used Elixir,a functional coding language known for allowing flexibility and scalability. Company is also looking for securitization options for faster cash flow realization. The company is evaluating revolving securitization and structuring a closed-end fund with a 5-year maturity.

The company will operate as a marketplace lender. Once they have a strong foothold, they want to offer services to the entire supply chain–from the initial supplier to the final client. This will enable the company to have greater control over the security (invoices), as it will have more in-depth information about the market and the stakeholders involved in the process.

Anticipay wants to establish itself as a competitive alternative to banks; therefore, the company will charge reasonable fees. Investors can expect to earn a yield in the region of 4%-6%. Considering the low-yield fixed income scenario in Europe, investors will find this a compelling investment. Though the yield will be market driven, the specific discount rate to be charged will be decided on the basis of the credit rating of the debtor.

Anticipay Customers

When it comes to its customers, Anticipay will start conservatively. They want to go after limited companies and SMEs with good credit ratings. But even in this segment, they prefer companies that issue invoices with public information. This allows them to have information about the transaction from both sides of the spectrum.

Industry Tailwinds and Focus Areas

The size of B2B invoice market is estimated to be €430 billion. Lack of short-term financing options means Anticipay has a massive market to target. Factoring revenues for lenders have risen by double digits in the last few years highlighting major tailwinds for the industry as a whole. They are currently concentrating on tying up with investors who can buy these invoices; they are also working with family offices and other clients to fund SMEs. The company will look to onboard institutional investors in the near future.

Anticipay is collating historical data for invoices and similar asset classes for creating an in-house database and track record.

Conclusion

Anticipay is trying to carve its own niche by doing basic things differently. Rather than targeting just individual SMEs or clients, they want to own the entire supply chain. This will reduce the cost of  client acquisition and will ensure deeper understanding of borrowers. They are also adopting a more direct commercial approach, which will have agents on the ground for face-to-face interactions. Anticipay has laid the groundwork to becoming an important player in the Italian SME financing industry.

Author:

Written by Heena Dhir.

Thursday October 5 2017, Daily News Digest

roboadvisors aum

News Comments Today’s main news: Aspire Fintech is closing. Navient buys Earnest for $155M. Schwab creates robo-advisor, hires ex-Betterment GM to run it. Atom Bank nears 1B GPB in deposits. SoFi’s plan to become a bank isn’t going so well. Rubique has issued 50K credit cards. Reserve Bank of India (RBI) issues P2P lending platform directions. Today’s main analysis: Nutmeg sees […]

roboadvisors aum

News Comments

United States

United Kingdom

European Union

International

India

Canada

News Summary

United States

SoFi’s Plan to Become the Bank of the Future Isn’t Going So Well (Bloomberg), Rated: AAA

Now, with Cagney felled by a flurry of sexual harassment allegations, the question is whether SoFi has any chance of building the financial supermarket he envisioned. This was always going to be a tall order given the intense competition from entrenched players and fintech startups alike, but now the SoFi brand has been tarnished as well.

“There are a lot of question marks,” says Alois Pirker, research director at advisory firm Aite Group. “The new CEO will need to find his or her bearings there and that will tell which direction they’ll be going.”

Some members of the board consider the moves into life insurance and wealth management Cagney “pet projects,” according to a person familiar with their thinking. Directors prefer to focus on more mature businesses such as personal loans and mortgages that are more predictable and established, said the person, who requested anonymity to discuss a private matter.

The firm reported revenue of $134 million in the second quarter, according to an email from Cagney to investors in August. It had adjusted earnings before interest, taxes, depreciation and amortization of $61.6 million and extended over $3.1 billion in student loans, personal loans and mortgages during that time frame. Personal loans are the most profitable, the person said, followed by student loans and then mortgages.

The wealth management unit had just $12 million in assets under management as of early September, according to a filing. This is far short of the more than $100 million the firm had set as an internal goal, people familiar with the matter have said.

SoFi readies 1st student loan bond post-management shakeup (Asset Securitization Report), Rated: A

Social Finance is returning to the securitization market with $626.4 million of bonds backed by loans used to refinance the student debt of borrowers with advanced degrees and high incomes.

The transaction, SoFi Professional Loan Program 2017-E (internal link; not in original source article), comes just weeks after the marketplace lender experienced a management shakeup; its chief executive officer and chief financial officer both resigned.

SoFi hosts party at Front & Palmer (Metro), Rated: B

Most people are not fans of student loan debt, but last week, SoFihosted a party at Front & Palmer in Philadelphia to celebrate it as a means of opening doors to education and more opportunities.

Recent college grads were invited to attend for free and to gain admittance, only needed to bring a proof of their student loan debt.

Source: Metro.com

Earnest, An Online Student Lender, Bought By Navient For $ 155 Million (Forbes), Rated: AAA

Financial technology start-up Earnest has agreed to be acquired by student loan servicing giant Navient for $155 million in cash, the companies said on Wednesday.

Earnest, an online lender that has focused on refinancing student loans, will remain a distinct brand and will continue to be led by its current management team, including founder and CEO Louis Beryl.

The acquisition will be a launching pad for Navient to begin originating its own student loans.

Schwab creates robo-exec slot and fills it with ex-Betterment unit chief (RIABiz), Rated: AAA

As its robo-assets soar to seemingly effortless heights, Charles Schwab & Co. is hiring an intriguing ex-Betterment talent to ensure that its good fortune holds.

The San Francisco-based investments giant, with $24 billion* of assets under automated management in Schwab Intelligent Portfolios and Schwab Intelligent Advisor, hired Cynthia Loh, the ex-general manager of Betterment for Business, the division that oversees the New York-based robo‘s 401(k) unit.

The Schwab robo-launch’s differentiators were its “zero” fee, its 24/7 access to service personnel and its national advertising. Yet the look and offering of the Schwab Intelligent offering are considered plain-vanilla in scope.

How tough can Schwab get with digital upstarts? (FinancialPlanning), Rated: AAA

Outlining his firm’s strategy for battling digital disruption, Schwab CEO Walt Bettinger envisioned it would push client asset revenues lower, while relying on its brand and established market share to grow.

Reacting to his statement, industry observers expect an uphill slog for independents as the largest firms gear up for a price war on three fronts: financial advice, online trading and ETFs.

An early study by A.T. Kearney predicted incumbents would slash prices to compete with robo advice upstarts. While that never came to pass, the 2015 study still predicted industry revenues would drop by as much as $12 billion by 2020.

“[Schwab has] $3 trillion in client assets. They have very positive brand recognition and customer satisfaction scores that are the envy of most of the industry. They have demonstrated a willingness to cut price to gain market share, as seen with their recent commission cuts in online trading. So yes, they can throw their weight around.”

The wisdom of possessing a trifurcated digital advice offering — Schwab Intelligent Portfolios, a digital-only service, an institutional platform for RIAs, and the hybrid robo advisor Schwab Intelligent Advisory — also becomes clearer, McDermott notes. (Schwab’s robo now has $20 billion in AUM).

Robo advice is expected to collectively top $1 trillion in assets under management in fewer than five years, according to Boston-based consulting firm Aite Group. But micro-investing will partly feed such growth, it predicts, noting over 60% of millennials already are subscribed to such apps.

FinTech Lenders and Banks Take Note (VedderPrice), Rated: AAA

While Upstart’s No-Action Letter has narrow applicability, it may serve as a tool for other FinTech lenders in implementing innovative products and services and establishing relationships with banks.

According to Upstart, its underwriting technology uses traditional underwriting methodologies in combination with other variables that are correlated with financial capacity and “repayment propensity.” Upstart states that its model understands and quantifies risk associated with all borrowers—both those with credit histories and those without credit histories. As a result, the Upstart loan program is able to offer credit to segments of the population with limited credit or work histories at more favorable rates. In other words, it appears Upstart is underwriting consumer loans without reliance upon traditional criteria, such as credit scores and length of employment history.

  • The No-Action Letter is only applicable to Upstart’s automated model for underwriting applicants for unsecured non-revolving credit, as described in Upstart’s original Request.
  • The No-Action Letter will expire three (3) years after its issuance, at which time Upstart may seek to renew the No-Action Letter.
  • The No-Action Letter is subject to modification or revocation at any time at the discretion of the CFPB staff for any reason, including where the CFPB’s staff determines that such modification or revocation is appropriate to protect consumers or is otherwise in the public interest.

On one hand, a no-action letter may be particularly useful for a FinTech company, utilizing innovative technology and operations, to obtain guidance concerning the permissibility of its business model under specific regulatory constructs. A no-action letter may also be useful for a FinTech company seeking to establish joint ventures with banks.

On the other hand, a CFPB-issued No-Action Letter has narrow applicability as it is only applicable to the requesting applicant, a specific regulatory issue and the facts and circumstances identified by the applicant in its request submitted to the CFPB. Should a fact or circumstance fail to be conveyed accurately, or should a fact or circumstance change, the No-Action Letter may be rendered useless.

Online housing investment platform Roofstock raises $ 35M in Series C (The Real Deal), Rated: A

Housing investment platform Roofstock raised $35 million in a Series C funding round as it looks to cash in on growing interest in single-family rental housing.

Roofstock CEO Gary Beasley said the firm will use the money to hire and to expand into new markets. The company has raised a total of $68 million from investors, according to Beasley.

From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (Business Insider), Rated: A

LendingTree, an online loan marketplace, has released the findings of its study on shopping timelines for purchase mortgages. The study analyzed data from a sampling of more than 5,000 closed loans from March 2016 through May 2017 and reviews the timeline for the entire mortgage shopping experience – from first submitting a loan request and being matched with a lender to the date of the mortgage loan closing. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.

From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.

Congress is Trying to Get the IRS to Modernize (Lend Academy), Rated: A

Back in December 2013 Renaud Laplanche testified on Capitol Hill on small business lending. He was CEO of Lending Club back then and when a Congressman asked Laplanche a question as to how the government can best help he said to make IRS data more easily accessible to online lenders.

Fast forward four years and there appears to finally be some movement on this. Last week Congressman Patrick McHenry (R-NC) along with Senator Cory Booker (D-NJ) introduced a billthat would help the IRS move into the modern age and allow the automated retrieval of tax information through an API.

The IRS Data Verification Modernization Act of 2017 as it is called will require the IRS to create an API that will allow lenders to verify income in real time.

RealtyShares – New Small Balance Multifamily Program (RealtyShares), Rated: A

RealtyShares is now financing Small & Large Balance Commercial Multifamily, Apartment, Retail, & Hotel Assets.

Typical dwellings/ deal structure:

  • Class A, B & C+ dwellings
  • Typically like properties within a 30 mile radius of a popular MSA (but not necessarily a deal breaker as long as the project looks good)
  • The minimum loan financed needs to meet 1MM (Acquisition w/ renovation)
  • Asset Based Lender but having an experienced client who has done deals in the particular area is a great compensating factor

Project Summary

Loan Information

  1. Loan Amount
  2. Duration (term)
  3. Closing deadline
  4. Reason for deadline

Lien Information

  1. Amount of existing first lien
  2. Amount of other liens

Collateral Information

  1. Collateral Type
  2. Number of Units
  3. Total Square Footage
  4. Street Address
  5. Purchase Price and Purchase Date (if refi)
  6. “As Is” Real Estate Value
  7. Date of “as is” Appraisal/BPO
  8. Net Operating Income (NOI)
  9. Capital Expenditures since Purchase ($)
  10. Vacancy (%)

Guarantor(s) Information

  1. Net Worth of Guarantor(s)
  2. Estimated liquid assets of Guarantor(s)
  3. FICO Score of Guarantor(s)
  4. Guarantor(s) investment in collateral – current or proposed
  5. Sponsor’s Website

Use of Proceeds:
Please provide a concise description, a few sentences, on the Use of Proceeds (i.e., discuss: acquisition, refinance, site improvement, tenant improvements, planning, design/permitting, carry costs and etc.)

Exit Strategy:
Please provide a concise description, a few sentences on the Exit Strategy (e.g. discuss prospective buyer, prospective permanent financing).

What to Watch for When It Comes to Alternative Investing Opportunities (Madison.com), Rated: A

When you are working in the equity crowdfunding space, particularly as a company that is private, you certainly don’t have the liquidity that you would for a publicly traded stock that’s on the exchange.

On this episode of Industry Focus: Technology, host Dylan Lewis is joined by Motley Fool contributing writer Daniel Kline to talk about the dangers of this type of investing. They break down all the risks associated with purchasing shares in a company that does not have to report as much financial data as a traditional publicly traded company.

Watch the full video discussion here.

Elevate to Release Third Quarter 2017 Earnings on Monday, October 30, 2017 (Financial Times), Rated: B

Elevate Credit, Inc. today announced that it will release its third quarter 2017 financial results after the market closes on Monday, October 30, 2017. Ken Rees, Chief Executive Officer, and Chris Lutes, Chief Financial Officer, will also host a conference call on the day of the release (October 30, 2017) at 5:00 pm ET to discuss Elevate’s financial results.

Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Third Quarter 2017 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at 

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on November 13, 2017, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13671832, or by accessing Elevate’s website.

Citi FinTech’s Customer-Driven Journey: Our Latest Mobile Enhancements (Citi), Rated: B

These new mobile investment features include a dividend reinvestment plan (DRIP), fund screener, consolidated search functionality and enhanced visualization. Through the Citi Mobile App for iPhone, any Citi client with a brokerage account now enjoys one-touch access to their financial advisors and the ability to manage their investments personally, without switching to another channel.

Dividend Reinvestment Plan: Now clients can enroll eligible securities in a dividend reinvestment plan (DRIP) right within the app. Once a customer has opted in, this feature helps our clients put their cash dividends to work, instead of idling in their accounts.

Investment Search: This consolidated search function makes investing easier for clients interested in managing their portfolios themselves.

Performance Visualization: An enhanced visualization enables clients to track their portfolio’s performance and make adjustments right within the app.

United Kingdom

App-only bank Atom nears £1 billion in deposits (Business Insider), Rated: AAA

Startup, app-only bank Atom has passed £900 million in deposits less than two years after launching its first savings product.

The disclosure comes as Atom’s annual accounts show that the startup had £538 million in deposits from over 17,000 customers at the end of March. It means the app-only bank has attracted around £400 million in four months.

The bank’s accounts, filed with Companies House this week, show Atom has received over £300 million of small business loan applications and lent out close to £100 million in loans and mortgages by March this year.

Atom had a net interest loss of £1 million for the year, due to paying out interest on its 1.95% and 2.5% fixed savings accounts, at the time market-leading interest rates, before the launch of its lending products.

UK’s biggest robo-advisor Nutmeg sees losses widen (Business Insider), Rated: AAA

Nutmeg, the UK’s biggest automated investment fintech in terms of assets under management (AUM), released 

Source: Business Insider

P2P lending on course for 20 per cent jump (FT Adviser), Rated: A

Lending across all of the peer-to-peer platforms in 2017 to date is already higher than in the whole of 2016, according to data from research agency 4thWay.

According to the data, total lending across all peer-to-peer platforms is likely to be at least 20 per cent higher this year than last with the largest platforms, Funding Circle and Zopa, leading the way.

Funding Circle has lent £865m in 2017 to date, compared with £825m in the whole of 2016.

European Union

The 8 Biggest Startups in Europe by Funding (Nanalyze), Rated: AAA

Zee Germans are leading the pack with 4 unicorns and we also see that fintech and ecommerce make up half of all the sector allocations.

Company Name Funding Country Sector
Spotify $8.53 Sweden Internet Software & Services
Otto Bock HealthCare $3.50 Germany Healthcare
Auto1 Group $2.80 Germany eCommerce/Marketplace
Klarna $2.50 Sweden Fintech
VistaJet $2.50 Malta On-demand
Adyen $2.30 Netherlands Fintech
Hellofresh $2.09 Germany eCommerce/Marketplace
CureVac $1.65 Germany Healthcare
BlaBlaCar $1.60 France On-Demand
Saxo Bank $1.45 Denmark Fintech
Global Fashion Group $1.10 Luxembourg eCommerce/Marketplace
OVH $1.10 France Big Data
Avaloq Group $1.01 Switzerland Fintech
AVAST Software $1 Czech Republic Cybersecurity
letgo $1 Netherlands eCommerce/Marketplace
MindMaze $1 Switzerland VR/AR

Big Brand Payments, Part 1

Another big player from Sweden is Klarna, founded in 2005 and now valued at $2.5 billion. With $521.44 million in funding from investors like Sequoia and Visa, Klarna is one of the most popular e-commerce payment solutions in Europe, used by Burberry, Overstock.com, J.Crew, Nike, Lenovo, and hundreds more.

Adlibris, one of Europe’s largest booksellers, used Klarna to improve its mobile checkout solution, resulting in an 80% conversion increase.

Big Brand Payments, Part 2

With a valuation just shy of its Swedish colleague Klarna, Netherlands-based Adyen (valued at $2.3 billion), has established a firm foothold in the world of merchant payments by providing a “friction-less payment experience”. Founded in 2006 and funded with $266 million to date, Adyen has some huge customers in its corner, including Netflix, Uber, Etsy, Spotify, Groupon, and LinkedIn. The secret is in its platform, which features support for a wide variety of payment options (250 worldwide, to be exact) in a single system, including Apple and Android Pay, all major credit cards, direct debit for recurring payments, in-app purchases, and much more. The Cambridge Satchel, a UK handbag company, saw its Black Friday sales rocket by 124% after switching to Adyen’s platform. In addition to one-time purchases, the platform also facilitates subscriptions and recurring payments more seamlessly.

Trelix Approved as a Third-Party Due Diligence Provider by DBRS (Business Insider), Rated: A

Trelix, a provider of due diligence, quality control, licensed fulfillment and non-licensed fulfillment products and services across the origination and securitization lifecycle, today announced that it has been approved as a third-party due diligence provider for DBRS-rated transactions. DBRS is a full-service credit rating agency respected for its independent, third-party evaluations of corporate and government issues. DBRS’s approval process, before adding a company as an accepted provider, includes an on-site review to assess companies’ staffing, infrastructure and capabilities relevant to securitization-related services.

As part of Altisource’s Origination Solutions platform, Trelix offers clients a unique combination of technology and risk management tools that position it to have a meaningful impact on the securitization market.

Dutch fintech company InvoiceFinance raises €6 million in funding (Tech.eu), Rated: A

InvoiceFinance, a fintech startup based in Amsterdam, has raised €6 million from Peak Capital.

The new funds will be invested in marketing purposes and hiring for the sales and development team.

New10 Partners With Mambu To Redefine Dutch SME Lending (Bob’s Guide), Rated: A

Mambu today announced that New10, ABN AMRO’s newly launched FinTech, has selected the SaaS engine to power a range of small and medium enterprise (SME) lending products in the Netherlands. New10, which aims to provide credit decisions within 15 minutes, went from concept to launch within 10 months, in line with ABN AMRO’s vision of digitisation and innovation.

Mambu took a collaborative approach working with the New10 team in order to complete implementation within four months. In a highly regulated environment, Mambu’s partnership with Amazon Web Services (AWS) which has received Dutch regulatory approval, helped smooth the path to market. New10 launched on 21 September 2017 with a fully digital SME lending platform with plans to broaden the portfolio and potentially expand into new markets.

collectAI manages 25m Euro in Receivables (Otto Group), Rated: A

collectAI, the service for digital receivables, has processed receivables at a volume of 25m Euro since its foundation in 2016. collectAI automates and digitises invoices, dunning and debt collection processes and is the first digital end-to-end provider in receivables management.

Examples of successful KPIs on the clients’ side include: Introducing digital communication channels lead to an increase of the collection rate of 33 percent, while processing costs have been reduced by up to 41 percent.

While 23 percent of invoices are overdue Europe-wide (EHI 2016 – online retail only), the invoice remains the most popular payment method in Germany with a market share of 30,5 percent (EOS 2016). Even though returns from receivables and debt collection are essential for revenue and thus liquidity, only 18 percent of companies have digitised their receivables to date (EOS/Kantar 2017).

Papering Over the Cracks (LendIt), Rated: A

In 2016 there were a reported 5.4 million SMEs in operation in the UK alone and our economy depends heavily on the success of these “little guys”.

Fintechs and banks are now lending faster than the speed of light, but when it comes to uncovering fraudulent activity, are they actually left standing in the dark?

Invoice finance lenders have to be particularly vigilant when it comes to a different type of fraud: fresh air invoicing.

One way to avoid being stung by paper fraud is to lend against accurate financial data extracted directly from a company’s accounting package, rather than lending against a PDF or excel file that can be amended. Advances in technology means lenders are now able to access this level of data directly, securely and efficiently, so they can be sure they’re providing fair financial support to loan applicants.

International

BitProperty Announces Upcoming Token Sale, Beta Release of Real Estate Investment Platform (Bitcoinist), Rated: AAA

BitProperty, the blockchain-powered real estate investment platform, has announced that it will launch a closed beta release on October 5, 2017. Ten days later, on October 15, it will kick off a token sale to raise funds for further development of the platform.

The BitProperty platform is built on the Ethereum blockchain and uses two different types of tokens. The first type is an asset token that represents a share of a particular asset. When a real estate owner lists a property on the platform, the number of asset tokens issued against the property represents its value. Investors can purchase these asset tokens and will then receive income based on the performance of the asset (property) and the size of the stake that each investor holds.

The second type of token is the BTP token, which represents the inherent value of the platform backed by the pool of the company’s managed assets.

India

Rubique crosses over 50,000 credit cards customers (India.com), Rated: AAA

Mumbai-based FinTech startup Rubique continues to embark upon its fast-paced growth across sectors, including Retail and SME financing.

Rubique has till date successfully crossed over 50,000 Credit Cards customers.

RBI issues directions for peer-to-peer lending platforms (India Times), Rated: AAA

The Reserve Bank of India (RBI), on October 4, issued directions for non-banking financial companies (NBFC) that operate peer-to-peer (P2P) lending platforms. According to the directions, from now on no NBFC can start or carry on the business of a P2P lending platform without obtaining a Certificate of Registration. Every company seeking registration with the bank as an NBFC-P2P shall have a net owned funds of not less than Rs 20 million or such higher amount as the bank may specify.

They have been asked to apply for registration as NBFC-P2Ps within 3 months.

NOTIFICATIONS (Reserve Bank of India), Rated: AAA

3. Scope

These Directions provide a framework for the registration and operation of NBFC-P2Ps in India.

(2) Process of Registration

(i) Every existing and prospective NBFC-P2P shall make an application for registration to the Department of Non-Banking Regulation, Mumbai of the Bank, in the form which will be specified by the Bank for the purpose. Existing NBFC-P2Ps shall apply within three months from the issuance of these Directions.

(ii) The Bank, for the purpose of considering the application for registration, shall require the following conditions, among others, to be fulfilled:

  1. The company is incorporated in India;
  2. The company has the necessary technological, entrepreneurial and managerial resources to offer such services to the participants;
  3. The company has the adequate capital structure to undertake the business of Peer to Peer Lending Platform;
  4. The promoters and the Directors of the company are fit and proper;
  5. The general character of the management of the company is not prejudicial to the public interest;
  6. The company has submitted a plan for, or implemented, a robust and secure Information Technology system;
  7. The company has submitted a viable business plan for conducting the business of Peer to Peer Lending Platform;
  8. Public interest shall be served by the grant of CoR;

Any other condition as may be specified by the Bank, fulfillment of which, in the opinion of the Bank, is necessary to ensure that the commencement of or carrying on the business in India shall not be prejudicial to the public interest.

6. Scope of Activities

(1) An NBFC-P2P shall-

  1. act as an intermediary providing an online marketplace or platform to the participants involved in Peer to Peer lending;
  2. not raise deposits as defined by or under Section 45I(bb) of the Act or the Companies Act, 2013;
  3. not lend on its own;
  4. not provide or arrange any credit enhancement or credit guarantee;
  5. not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted;
  6. not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9;
  7. not cross sell any product except for loan specific insurance products;
  8. not permit international flow of funds;
  9. ensure adherence to legal requirements applicable to the participants as prescribed under relevant laws.
  10. store and process all data relating to its activities and participants on hardware located within India.

(2) Further, NBFC-P2P shall-

  1. undertake due diligence on the participants;
  2. undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders;
  3. require prior and explicit consent of the participant to access its credit information;
  4. undertake documentation of loan agreements and other related documents;
  5. provide assistance in disbursement and repayments of loan amount;
  6. render services for recovery of loans originated on the platform.

(3) NBFC-P2P shall not undertake any activity other than those stated in paras 6(1) and 6(2) of these Directions. Deployment of investible funds by an NBFC-P2P in instruments specified by the Bank, not for trading, shall however be permitted.

11. Transparency and Disclosure Requirements

(1) An NBFC-P2P shall be required to disclose the following:

(i) to the lender

  1. details about the borrower/s including personal identity, required amount, interest rate sought and credit score as arrived by the NBFC-P2P.
  2. details about all the terms and conditions of the loan, including likely return, fees and taxes;

(ii) to the borrower – details about the lender/s including proposed amount, interest rate offered but excluding personal identity and contact details;

(iii) publicly disclose on its website:

  1. overview of credit assessment/score methodology and factors considered;
  2. disclosures on usage/protection of data;
  3. grievance redressal mechanism;
  4. portfolio performance including share of non-performing assets on a monthly basis and segregation by age; and
  5. its broad business model.

(2) NBFC-P2P shall ensure that the providing of services to a participant, who has applied for availing of such services, is backed by appropriate agreements between the participants and the NBFC-P2P. The agreements shall categorically specify all the terms and conditions among the borrower, the lender and the NBFC-P2P.

(3) The interest rates displayed on the platform shall be in Annualized Percentage Rate (APR) format.

Finance Ministry Welcomes RBI Move On P2P Lending (Bloomberg Quint), Rated: A

The finance ministry today welcomed the central bank’s move to treat peer-to-peer, also known as P2P, lending platforms as non banking financial companies, saying it would improve financing for smaller firms.

RBI To Observe P2P Lenders As Well As Invest in Security Frameworks (Industry Daily News), Rated: A

The government has declared RBI (Reserve Bank of India) as the watchdog for P2P (peer to peer) lending marketplaces that have been segmented as NBFCs (non-banking finance companies). While this might elevate prices for online lenders via compliance needs, most have greeted the decision claiming that it provides them identification.

RBI To Allow Funds Transfer Among Mobile Wallets (Bloomberg Quint), Rated: A

The Reserve Bank of India will make prepaid payment instruments like e-wallets, gift cards and meal coupons interoperable for customers complying with the central bank’s know your customer guidelines.

Inter-operability among KYC compliant prepaid instruments will be implemented in six months after the RBI issues its revised norms within a week by October 11, the central bank said as part of its developmental and regulatory policies.

What startup entrepreneurs should learn from sports (MoneyControl), Rated: B

The so-called unicorn startups and their founders have become role models for the millennials. Hardly any town or city in India is left untouched by the startup fever and its multi-million funding stories.

1. Sport helps build character: Sanjay Darbha, the founder of Peerlend, a peer-to-peer lending platform and a sports enthusiast who competes in Senior Men’s circuit tournaments of the International Tennis Federation (ITF), explains, that sports inculcates attributes such as discipline, focus, and patience.

2. Sports lets you, be yourself: If entrepreneurs want to know the better or bitter side of their team members – make them play a sport.

3. Sport is a medium to connect beyond business: Ecosystem players should find innovative ways to connect with each other to get a better understanding of other’s needs and challenges.

4. Sport helps in building lasting bonds: A playground in an excellent incubator that helps in the construction of robust and long-lasting relationships.

Startups could use games to let their team members explore possible synergies between them.

Canada

Aspire FinTech is closing down (Aspire Email), Rated: AAA

Hey all,

I wanted to share the news today that Aspire Financial Technologies will be officially shutting down this week.  Sadly, the search for a strategic partner we started in the summer wasn’t successful, and our funding has now run out.  As a result, we no longer have the resources to continue the build of our loan data and analytics infrastructure solutions.

I’ll be running a sale process of Aspire’s IP (Aspire Gateway and ALD Explorer solutions) over the next month or so, looking for a quick outcome.  Feel free to contact me to discuss.

Thanks to all that have supported Aspire over the past two years.  Despite the odds, we made it this far, with your help.  Unfortunately, expensive and complex build requirements, with long institutional sales cycles, combined with a lack of scalable professional seed-stage funding in Canada, have been our undoing.  Any one of these being different would likely have yielded a better outcome, but all three together have proved to be terminal.

Mark and I have had a great team to work with.  We thank them for all the hard work and long hours, and wish them well as they move on to their next challenges (and hopefully a bit more stability!).

For me personally, I’ve made and consumed a great deal of  “FinTech Kool-Aid” over the past two years, which has permanently altered by view of the future, and the role that technology will play in the delivery of financial services to consumers, small businesses and corporations going forward.  I’m excited to see this play out, and the role I can play in making it happen.

Best regards,

David A. Fry, MBA, CFA
Co-Founder and CEO
Aspire Financial Technologies Inc.

Authors:

George Popescu
Allen Taylor

Friday September 8 2017, Daily News Digest

mobile payments APAC

News Comments Today’s main news: Square makes big move on banking. Folk2Folk CEO to step down. ZhongAn approved for $1B Hong Kong IPO. KBRA  and DBRS  assigns preliminary ratings to SoFi Consumer Loan Program 2017-5. Assetz Capital to set up in Belfast. ZhongAn approved for $1B Hong Kong IPO. Citi Singapore launches Facebook Messenger banking chatbot. Today’s main analysis: Using digital assets to […]

mobile payments APAC

News Comments

United States

United Kingdom

China

European Union

International

India

APAC

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-5 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-5 (“SCLP 2017-5”). This is a $527.12 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-5

Source: BusinessWire

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-5 (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-5 (SCLP 2017-5):

— $287,200,000 Class A-1 Notes at AA (sf)
— $173,800,000 Class A-2 Notes at AA (sf)
— $66,120,000 Class B Notes at A (sf)

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Consumer Loan Program 2017-5 LLC Class A-1 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class A-2 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class B Notes Provis.-New A (sf) Sep 7, 2017 US
US = USA Issued, NRSRO
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU Endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating

Square Makes Its Big Move On Banking (PYMNTS), Rated: AAA

According to WSJ reports, Square intends to submit an application later today (Sept. 7) to form a wholly owned and operated bank in Utah.

That business unit would be called Square Financial Services Inc. — and it would be designed to offer loans and deposit accounts to small businesses. The bank would be capitalized with around $56 million in cash.

Online lender SoFi made a similar move, as did mobile banking start-up Varo Money Inc. The timing is not quite a surprise — federal regulators have been more open to the idea of new banks recently than they have been at any time since the Great Recession.

Square Wants to Be a Bank, Sort of (Paybefore), Rated: AAA

Mobile point-of-sale pioneer Square Inc. is applying for an Industrial Loan Company (ILC) charter to support the expansion of its lending business, the volume of which grew 123 percent year-over-year in the second quarter to $189 million.

The news was met with immediate rancor by at least one community banking group, which also lodged complaints about blurring the lines between commerce and banking when online lender SoFI applied for the same charter in June.

Before Square made its move, the Independent Community Bankers of America (ICBA) wrote in an August blog post that it would fight “tooth and nail” against attempts to remove the “historic separation of banking and commerce in federal law and regulation.” It reiterated that sentiment in news reports about Square’s plans on Sept. 7.

For more than a decade, CFSI has been conducting research and bringing various stakeholders—industry, regulators, consumer advocates—together around using technology to increase access to financial services. Its 2016 research estimates the size of the financially underserved market in the U.S. to be $140.7 billion.

The Dodd-Frank Act had placed a moratorium on such charters that ended in 2013, but the FDIC has been “gun-shy” since Walmart’s failed attempt to secure an ILC charter in 2006, Moeser notes.

Walmart and Affirm: A match Amazon will find hard to beat (RetailDive), Rated: AAA

At the end of August, news flashed across the wire that Walmart and Affirm were close to finalizing a pilot deal with each other. This is a game changer for three critical reasons:

  1. Affirm was started by PayPal wunderkind Max Levchin – Through a simple online application process, Affirm customers can obtain loan financing with interest rates in the range of 10% to 30% for their desired online purchases. Customers can clearly and easily see what they will owe at the time of checkout online, with no hidden costs or surprises.
  2. Walmart is involved – All indications are that Walmart is aggressively going after scan-and-go/checkout-free shopping in their stores. Scan-and-go quite possibly will be the technology that most impacts physical retail in the next 10-15 years.
  3. Affirm and Walmart are a match made in heaven for budget conscious America – Affirm’s digital financing capabilities and Walmart’s scan-and-go capabilities, when combined, will stretch the bank accounts of all Americans — especially Americans who cannot afford Prime membership fees (uh oh Amazon).

A screen pops up, and what used to be a three-pack of Crest for $5.00 is now suddenly the same three-pack but for $0.83/month for six months, or for $0.42/month for 12 months instead.

Lima One Capital Acquires RealtyShares’ Residential Debt Origination Business (Broadway World), Rated: A

Lima One Capital, the premier lender for residential real estate investors, announced today that it has acquired the residential debt origination business of RealtyShares, an online marketplace for real estate investing and financing.

Lima One Capital began partnering with RealtyShares as an institutional investor in early 2017, drawn by the quality of deals listed on the marketplace platform.

New Credit Card Option for Those With Scant Credit Histories (The New York Times), Rated: A

A New York start-up aims to use everyday financial information to qualify people with scant or no credit histories for its credit cards.

The company, called Petal, considers an applicant’s standard credit scores, when available. But it also analyzes their digital financial records, like checking accounts or, in some cases, prepaid debit cards, to rapidly assess their income and spending habits.

The company plans to target consumers who are “new to credit,” like young adults, recent immigrants and lower-income consumers, as well as others who may lack traditional credit scores, Mr. Gross said.

The idea is that by sharing information about their personal cash flow, consumers can get a quick decision on a card application and access to a low-cost card, even if they don’t fit the traditional profile of a top-tier credit customer.

The company’s Petal Visa card isn’t widely available yet, but is being tested privately starting this month. Consumers can sign up online to receive an invitation to apply.

Introducing Petal — a simple, no-fee credit card (Medium), Rated: A

Today, it’s hard to exist without a credit score.

You need one to get a credit card, finance a car, purchase a home, or qualify for a small business loan. And, increasingly, you need credit to do things that seem to have little to do with credit, like sign a lease for an apartment, set up a cell phone plan, or even get a job — nearly 50% of employers today are checking credit reports as part of a job application.¹

That access is important. The cost of a poor credit score can be as much as $250,000 in additional interest and fees over the course of your lifetime.²

The number of American adults that lack access to credit because they are new to credit is staggering:

Over 65 million, and growing as a percentage of the total population.³

The 65 million credit invisible, unscorable and thin-file consumers in the U.S. are not a snapshot of America. They are disproportionately likely to be young, black and Hispanic, first- and second-generation immigrant, and/or low- and moderate-income. The same groups that have been historically underserved by the banking system are routinely denied access and opportunity because of how the credit system works.

Two years later, we’re launching Petal — a simple, no-fee credit card, designed to make life easier for everyone.

Petal makes money from merchants when customers swipe the card, and on interest when customers carry a balance past their due date. And before customers carry a balance, we show them exactly what it will cost — in dollars, not just in interest rates and APRs. It’s our belief that customers should be able to use credit safely and affordably, without falling into costly debt.

SoFi’s Career Incubator, SoFi Accelerate, Going to Chicago (LendEDU), Rated: A

Social Finance, Inc., a fintech and student loan refinancing company, announced this week that SoFi Accelerate, the company’s career incubator, will be visiting Chicago this September.

On Sunday, September 24th, SoFi Accelerate will head to the Windy City to offer professionals a chance to hear from a couple of speakers and to develop their own path for career success.

The career incubator will only last one day and is open to SoFi members and non-members as well. There will be two speakers, Adam Foss and Ryan Holiday, that guests will have the chance to listen to.

The event will be held at the Chicago Botanic Garden at 1000 Lake Cook Road in Glencoe, Illinois from 9:30 AM to 6:00 PM central time. For SoFi members, the price of admittance will be $75, while non-members will have to pay $125 upon entry. However, the first 50 non-members will receive a special discount so that they only have to pay $100 to attend.

Americans Are Spending Mind-Blowing Money on Lotto Tickets in These Top States (TheStreet), Rated: A

In some states, buying lottery tickets is an extremely popular pastime that borders on obsession. The U.S. generated $66.78 billion from lottery sales with the exception of seven states who have not legalized lotteries — Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming — based on an analysis of data conducted by LendEDU, a Hoboken, N.J.-based student loan marketplace, utilizing 2015 data released by the U.S. Census Bureau. Out of the total amount, $42.27 billion was allocated for prizes, $3.18 billion was allocated for administration and $21.35 billion was allocated for proceeds.

For 2016, the Census Bureau projected there were $323 million people living in the U.S. which means the average amount spent on various types of lottery tickets is $206.69 per year, LendEdu said.

Some residents are diehard fans of playing the lottery, and Massachusetts natives spend the most money per capita at $734.85 annually while Rhode Island follows a close second at $513.75 each year. The third highest amount was spent in Delaware at $420.82, New York with $398.77 and West Virginia at $359.78.

The states with the largest amount of people generated the largest revenue – New York’s total was $7.78 billion, followed by California at $5.52 billion, Florida at $5.27 billion, Massachusetts at $5.01 billion and Texas at $4.28 billion.

Leading Carrier and Reinsurer Partner with Insurtech Startup Bestow on its Highly Anticipated, On-Demand Platform (PR Web), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced a partnership with Munich American Reassurance Company, the U.S. life and disability reinsurance division of Munich Re, and North American Company for Life and Health Insurance®, a top-rated carrier in the United States and member company of Sammons® Financial Group, to develop new life insurance products for Bestow’s anticipated on-demand life insurance platform.

Together, the three brands are actively working on products that will premiere as part of Bestow’s full stack, digital platform later this fall. Upon launch, the platform will give consumers an entirely new way to research, buy, and manage life insurance with product options that are affordable, simple to understand, and seamless to purchase.

Bestow’s partnership with Munich Re and North American follows the company’s recent announcement of closing $2.5 million in seed funding, led by NEA.

How to Leverage Crowdfunding to Invest Like a Millionaire (Inc.com), Rated: A

You probably don’t think of relatively small investments and passive income opportunities when talking about commercial real estate. But the new standards for commercial real estate investing are surprisingly simple and potentially profitable. Here’s what Jilliene Helman shared about the industry-disrupting platform.

Platforms like RealtyMogul let you crowdfund multi-million dollar commercial real estate investments with as little as $1,000 to $5,000. Depending on your cash flow, you can make an investment immediately and continue reinvesting the profits.

Anyone who has ever been a landlord knows that dealing with tenants and all the hands-on work that comes with it is cumbersome. But commercial real estate can be a completely passive opportunity that doesn’t require you to do anything. Jilliene agrees that you don’t need to be active in all of your investments.

Jilliene shares that in RealtyMogul’s case, they’ve now gone through 12 months at 8% distribution annualized. While some investors might take that distribution and spend it, others will take that 8% and keep reinvesting it to turn it into a compounding investment. In the second month of a payout, investors will be earning on that original 8% in addition to interest earned each subsequent month of distribution.

Affirm: The San Francisco Startup Using Fintech To Simplify Lending (Benzinga), Rated: A

Rob Pfeifer, chief risk officer at the San Francisco fintech startup Affirm, remembers the moment the company began lending: 7:57 p.m. on Aug. 21, 2014.

Since going live, Affirm has made more than 1 million loans totaling more than $1 billion.

The platform originally targeted millennials, but has drawn a wider clientele, said Pfeifer, 35, who’s scheduled to speak at the Benzinga Fintech Summit Sept. 28 in San Francisco.

BitX Funding takes online middleman approach to small-business lending (Westfair Online), Rated: A

“About four to five years ago, I worked for OnDeck Capital in Manhattan,” said Rowe, referring to a non-bank lender to small businesses, where he was a senior business development manager. “Back in 2008, when we had the market correction, banks stopped lending and small-business owners had nowhere to go to get funds. OnDeck, at the time, filled that gap.”

In 2013, Rowe in Southport launched BitX Funding as an online marketplace for small-business owners and aspiring entrepreneurs to seek financing for their endeavors.

BitX Funding works with a borrower in fill out data on the company regarding how much money they want to borrow, the time frame they are working in to receive their funds and how long they have been in business. Rowe reviews the information and contacts the applicant to receive more information about the depth and scope of the requested loan. The BitX founder Rowe, who is now working with 20 banks as his company’s financing outlets, determines which applicants have the best chance of moving forward.

To date, Rowe has secured 100 small-business loans for clients. Applicants do not pay him a fee or a commission for the service, he noted, with his revenue coming from the participating lenders.

“I’m actually pre-underwriting the applications. Because of Dodd-Frank and all of the other regulations and paying an underwriter a $100,000 salary for a $50,000 loan, it’s not really in their (lending banks’) wheelhouse.”

Washington DC-based RegTech Startup Securrency Joins Forces With International FinTech Firm Humaniq (PR Newswire), Rated: A

Securrency, a RegTech company with a platform designed to streamline regulatory compliance for token offerings, has just signed an extensive strategic partnership with Humaniq, an Ethereum-based Blockchain ecosystem looking to bring financial inclusion to over 2 billion unbanked people globally.

The partnership included an investment into Securrency by Humaniq as the lead investor of their current investment round. Humaniq will also provide additional technological capabilities which will be used for their collective efforts on a LegalTech platform. This LegalTech platform is designed to efficiently match capital to opportunity in transformational emerging technologies. The platform will provide efficient access to capital for startups, liquidity for frontier markets, and a scalable securitization process for established global industries. By automating certain compliance functions and connecting legacy financial services to the power of the blockchain, the team sees a path to revolutionize technology finance.

Payments firm Baton Systems adds former Citi vice chairman Kaden to advisory board (Finextra), Rated: B

Baton Systems (“Baton”, formerly known as Ubixi), the platform for clearing, settling and managing payments between financial institutions, has appointed former Citigroup Vice Chairman Lewis B. Kaden to its Advisory Board.

He joins Arjun Malhotra, Co-Founder of HCL Technologies and Headstrong, as the newest addition to Baton’s Advisory Board.

Kaden was labeled “The Most Powerful Banker You’ve Never Heard of” by Bloomberg Businessweek in 2009. He joined Citigroup in 2005, where he oversaw the bank’s global functions and advised the CEO on numerous strategic and business matters. Kaden has also served as Chairman of the United States Government Overseas Presence Advisory Panel, as well as Chairman of the Industrial Cooperation Council of the State of New York and Governor Mario Cuomo’s Commission on Competitiveness. He holds degrees from both Harvard College and Harvard Law School.

Home Point Financial Names Ross Gloudeman Chief Compliance Officer (Business Insider), Rated: B

Home Point Financial Corporation (“Home Point”), a national, multi-channel mortgage originator and servicer, today announced that Ross Gloudeman has been named Chief Compliance Officer.

Prior to joining the Home Point team, he was a Principal at AIMD Consulting, LLC, providing advisory and contract risk or compliance expertise to financial services clients. Previously, he was Senior Vice President, Executive Risk and Compliance Officer, at Walter Investment Management Corp.

United Kingdom

Industry reacts to 2,000 IFIsas opened (Bridging&Commercial), Rated: AAA

Data also showed that the average investment into IFIsas during 2016/17 was £8,500, while £17m was invested collectively.

Octopus Choice launched its IFIsa last month, allowing investors to deposit as little as £10 in loans underwritten by Octopus Property.

Folk2Folk launched its IFIsa in July to its existing lenders.

Giles Cross, CMO of Folk2Folk, said: “Since the introduction of our IFIsa in July, we have seen a huge amount of interest from investors looking for an alternative income with tax-free returns.”

Some peer-to-peer platforms have found the HMRC’s figures promising, including Landbay, which launched its IFIsa early in the year.

John Goodall, CEO of Landbay, said the number of accounts that had been opened had exceeded expectations.

Folk2Folk CEO to step down (Bridging&Commercial), Rated: AAA

Peer-to-peer lending platform Folk2Folk has announced the resignation of its chief executive officer Jane Dumeresque (pictured above), who will step down during September.

During her tenure, Folk2Folk opened new regional offices in Yorkshire, Somerset and the Three Counties, built further representation in Cumbria, Dorset, Cheshire and East Anglia and grew the platform’s cumulative loan book from £30m to over £170m.

Peer-to-peer lenders pledge to set up base in Belfast (Irish News), Rated: AAA

PEER-to-peer lending platform Assetz Capital, which to date it has lent more than £300 million to businesses across the UK, is expanding its operations into Northern Ireland.

Get bigger profits from mini bonds (MoneyWeek), Rated: A

But in the past year we’ve seen a steady rise in the quality of these bonds, partly because reputable alternative asset managers have moved in with asset-backed propositions (ie, companies that own physical assets, providing a certain amount of security for lenders). Downing, for instance, has its own “crowd bond” business that provides debt capital to businesses, usually within an Innovative Finance Individual Savings Account wrapper. Currently Downing has two projects that allow instant access (ie, no maturity), paying a 3% yield on an energy-backed business. This is a bit on the low side, but Downing also advertises an imminent bond that involves lending to a pub business for 18 months at 5.5%.

Property lender LendInvest raised £50m when it issued the alternative finance sector’s first retail bond, paying 5.25% a year over five years. The bond issue was oversubscribed, and the bonds now trade at £102 (implying a net yield to maturity of just over 5% a year).

In the news…

• Peer-to-peer lender RateSetter has reignited the debate about transparency after it admitted placing loans via rival platforms without telling its customers, reports The Times. It placed around £10m in property development loans on Wellesley, and an unspecified sum via Archover, which lends to small businesses. Both Wellesley and Archover offer investors a higher return than RateSetter. A spokesman for RateSetter said it would not lend via either platform again. RateSetter withdrew from industry body the P2P Finance Association last month after admitting it had “breached the principles of the Association”, but stressed that “no customer has experienced any loss from our actions”.

A third of financial technology startups expect to IPO within five years (City A.M.), Rated: A

The UK’s ambitious fintech startups are eyeing success on the public markets with a third of them planning an IPO in the next five years, new figures reveal.

Transferwise, Revolut and World Remit are among the country’s innovative financial technology companies with long-term ambitions of going public, signalling the burgeoning industry’s confidence.

Of the 250 fintechs surveyed in fresh research from EY and Innovate Finance on behalf of HM Treasury measuring the health of the industry, more than half also said they expect revenue to more than double over the next 12 months. Collectively, they expect to raise more than £2.5bn in their next funding rounds, having already raised £3.5bn to date.

Digital challenger bank Revolut told City A.M. it has an ambition to go public “later down the line”, while co-founder of “unicorn” startup Transferwise Taavet Hinrikus said over the summer it was time to think seriously about becoming a public company “in a few years”.

Using Digital Assets to Secure a Bitcoin Loan (Cryptocoins News), Rated: A

Ledgermark Ltd develops, markets and issues distributed ledger technology, specifically; various forms and implementations of distributed ledgers that can be used in combination with technologies like Bitcoin.

The company is launching a new digital asset; Meridian (MDN). Meridian represents a fork in the road as it is different from traditional digital assets. Instead of being positioned as a bitcoin alternative, Meridian is being designed to be used in combination with bitcoin. In short, via their Bitcoin Loans Platform, Ledgermark Ltd will be accepting Meridian tokens as collateral for bitcoin loans of higher value.

Is the P2P lending industry working with Bell Pottinger? (P2P Finance News), Rated: B

The P2P industry – and those linked to it – have a relatively small exposure to Bell Pottinger, with most firms opting for smaller PR agencies.

Basset & Gold, which advises and provides financing to P2P platforms and direct borrowers, is still a client of Bell Pottinger as of 6 September 2017, but is reviewing its relationship.

P2P lender Wellesley & Co previously had a relationship with Bell Pottinger, but is no longer using them.

MangoPay – which provides payment technology for P2P lenders – was still a client of Bell Pottinger as of 2 June 2017.

Darktrace in UK’s top three fastest-growing tech companies (Business Weekly), Rated: B

Norwich-based Know Your Money is the other new entrant – in at 97.

Cambridge company CashFlows surges from 94th last time to 58th in the pantheon with annual sales growth of 72 per cent to £37.3m.

Norwich’s strength in FinTech is further demonstrated by the inclusion of  Epos Now, a payment systems developer, which is placed 53rd (down from 32nd) with growth of 81 per cent to £13.9m.

The companies in the East appear with businesses from around Britain, including designer fashion website Farfetch, peer-to-peer lending platform Funding Circle and money transfer provider WorldRemit.

China

Chinese online insurer ZhongAn wins HK approval for $ 1 billion IPO (Reuters), Rated: AAA

ZhongAn Online Property and Casualty Insurance Co Ltd, China’s first internet-only insurer, secured Hong Kong stock exchange approval for its planned initial public offering which could raise more than $1 billion, sources with direct knowledge of the deal said on Friday.

The company plans to start gauging investor appetite for the IPO as soon as Monday after receiving the nod from the listing committee of the Hong Kong stock exchange, added the sources. It plans to launch the IPO and take orders from investors on Sept. 18.

The IPO would be the biggest by a financial technology company (fintech) in the city, which wants to lure more new listings of so-called new economy startups. Hong Kong has had $5.73 billion worth of new listings so far in 2017, compared with $21.3 billion in all of 2016, Thomson Reuters data showed.

Sino Fortune buys $ 2.8m equity interest in online lender TouZhiJia (Deal Street Asia), Rated: A

Chinese fintech solutions firm Sino Fortune Holding Corp has acquired a 4.45 per cent stake in Shenzhen TouZhiJia Financial Information Service Co Ltd (TouZhiJia) for about $2.8 million (RMB19.1 million).

Sino Fortune is making the 4.45 per cent equity interest acquisition through Puhui Equity Investment Co Ltd (Puhui).

Founded in September 2014, TouZhiJia’s main businesses include vertical P2P search engine, private wealth management, and secondary loan exchange services.

TouZhiJia has reportedly accumulated 2.74 million registered users and facilitated 1.98 million transactions with aggregate transaction value of more than $2.30 billion (RMB 15.63 billion). TouZhiJia is an affiliate of Yingcan Group.

European Union

LendIt Europe Agenda Released, Discounted Pricing Ends Soon (Lend Academy), Rated: AAA

The full agenda is on the LendIt website, but here are a few topics I am most excited about:

  • How to Navigate Open Banking (Imran Gulamhuseinwala, Ernst & Young)
  • Digitization of Finance How Customer Expectations are Changing (Anne Boden, Starling Bank, Rhydian Lewis, Ratesetter Giovanni Daprà, Moneyfarm)
  • Implementing AI in Financial Services: Case Study (Francesco Brenna, IBM, Roberto Mancone, Deutsche Bank)
  • How Big Banks Are Approaching the New Connected World (Gilad Amir, Lloyds Banking Group, Benoit Legrand, ING, Raman Bhatia, HSBC, Gustavo Vinacua, BBVA)
  • Renaud Laplanche of Upgrade talking about Online Lending 2.0 and the state of the US fintech market.

Summer pricing of £1,295 ends at midnight on September 8th. After that, ticket prices will rise to £1,495. As always Lend Academy readers can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout.

What Kinds of Fintech Platforms Help Startups with Fundraising (TechBullion), Rated: A

By the way, the alternative funding market in Europe is not just a developed one, but it is often supported by the state in every way. Moreover, crowdlending currently is a major competitor for the conventional banking area. In the future, it will consolidate its position because, due to introducing new Basel lll requirements to banks, including a reduction of risk assets, the requirements to bank lenders will become ever more stringent.

For instance, in 2015, Austria adopted an act that governs and legalizes the operation of companies involved in non-banking lending. But at the same time, in the biggest fintech country in Eastern Europe – Russia – and in several EU countries, there is yet no such document. Germany has a credit rating of companies that protect the investor.

What kinds of non-banking business lending platforms exist?

According to data of KPMG studies, the last 3 years period demonstrated a 131% growth of the share of mutual business lending, with the share of peer-to-peer consumer lending having increased merely by 54%.

  • Crowdfunding– investments for a remuneration from a company.
  • Crowdlending– this is mutual business lending assuming a return on investments (Funding Circle).
  • Crowdinvesting – an investor receives a share in a company with a view to growth of the value of one’s purchased share and, certainly, receiving dividends from company operations (Crowdcube, Seedmatch).
  • Refinancing receivables or online factoring. A loan is provided on collateral in the form of expected payments or accounts receivable.
  • Invoice discounting – this is in essence factoring, but with a somewhat other funding structure. Within its framework, funding is not split into deliveries but is paid in full on spot. In case of assignment of claims, the lender will bear the obligations of reimbursing the factor the funds underpaid by the borrower.

The Microfinance Centre’s (MFC’s) Alternative Finance Forum; October 5, 2017; Warsaw, Poland (MicroCapital), Rated: B

Event Location: Copernicus Conference Centre; Warsaw, Poland

Summary of Event: This forum aims to “introduce new forms of financial services” while covering topics including equity-based crowdfunding, social impact bonds, online lenders to small businesses and peer-to-peer lending platforms. The event has support from the European Union and its European Investment Bank Institute.

Cost: Participation is free of charge

Event Website: 

International

How digital assets are revolutionizing payments (The Asset), Rated: A

Experian, an information services group, estimates that the average error rate of bank account data is around 12.7%, indicating that there is a lack of understanding of foreign bank codes and account numbers.

A key problem with cross-border payments today is the fact that transactions are at the mercy of correspondent banking relationships.

Ripple, a global digital payment provider, has designed its XRP digital asset solely the cross-border transfer of value between enterprises.

Aside from Ripple, other companies have started to look at the usage of digital assets for transactions. Visa for instance recently filed a patent with United States Patent and Trade Office (USPTO) on the creation of a digital asset network to eliminate third parties and simply their transaction process.

Fintech Companies Disrupting Finance, Creating Bank of Tomorrow (Cointelegraph), Rated: B

One popular recent development in the Blockchain community is the creation of multi-crypto/fiat debit cards. These cards allow users to interchange between the given set of currencies in a seamless manner.

Luhaaar notes that fintech companies have consistently delivered better results in individual financial system services. He says that Change Bank wants to bring these companies together to create a global fintech bank of tomorrow.

India

Capital Float Digitally Removes Credit Gap (CXO Today), Rated: A

In an exclusive interaction with CXOToday, Rohan Angrish, CTO, Capital Float, takes us through how they have made it possible with the aid of technology which helped reduce wait times for SMEs, and enabled disbursement of funds in just three days. Last month, the company announced an equity raise of $45 Million (Rs. 293 crores) in Series C funding.

CXOToday: Tell us about your expansion plans across India. Any plans to go global in the near future?

Angrish: Over the past year alone, we have disbursed loans of over Rs. 2,100 crores to 12,000 plus customers across 300 cities. We will continue to identify and serve under-served SME segments. We have also ventured into financing micro-entrepreneurs like taxi drivers, travel agents, and Kirana store owners. Although these are small-ticket loans, the sheer size of these segments indicates immense potential. India will keep us busy for the short term. By the end of the financial year, we expect to have our geographic footprint spread across 500 cities from our current number of 300 cities, without increasing headcount.

CXOToday: Who are your customers?

Angrish: These include SMEs who have traditionally been denied finance due to ineligibility based on credit parameters set by formal financiers, lack of collateral and inability to furnish the required documentation.

CXOToday: Please throw light on your corporate partnerships.

Angrish: The company has partnered with ecosystem leaders across various verticals such as e-commerce (Amazon, Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, etc.), travel and hospitality (VIA and Yatra), retail (Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services) and taxi aggregators (UBER and Ola) etc. Through these partnerships, we are able to effectively expand our reach to SMEs operating on these platforms.

Fintech startup EarlySalary raises Rs 5cr in debt financing from IFMR Capital (YourStory), Rated: A

Fintech startup EarlySalary, which offers instant cash loans and salary advances, has raised debt financing of Rs 5 crore from IFMR Capital. Previously, this past May, the company had raised a Series A round of $4 million (Rs 28 crore) in equity funding from IDG Ventures India and DHFL and plans to leverage its equity multiple times over the next few months.

In an earlier interaction with YourStory, Co-founder and CEO Akshay Mehrotra had said that almost 75 percent of the Rs 28 crore would be utilised for building their lending book. The remaining amount was to go into expanding their team, with a specific focus on machine learning skill sets, and helping grow the customer base.

EarlySalary has already disbursed more than 7,000 loans last month. Currently operating in eight cities including Mumbai, Pune, Chennai, Bengaluru, Hyderabad, New Delhi, Jaipur, and Ahmedabad, it is looking at expanding into other cities as well.

Growth deals drive VC investments in August (The Times of India), Rated: B

Online lender Capital Float attracted $45 million, while Treebo Hotels took $34 million. Bioinformatics company MedGenome attracted $30 million from investors led by Sequoia India and fitness chain operator Curefit raised $25 million from existing investors including Accel Partners and IDG Ventures.

With seed funding becoming more challenging, early stage investors are asking questions on whether the business is viable and if it can raise follow on capital, which is an indication of the market maturing, he adds.

APAC

Citi Launches First Facebook Messenger Banking Chatbot in Singapore that Provides Customer Account Information (Fintech News), Rated: AAA

Citi Singapore today announced the launch of Citi Bot – the bank’s new natural language chatbot on Facebook Messenger. Singapore is the first market for the launch of the chatbot which will be introduced progressively in the Asia Pacific region over the next few months.

This landmark initiative furthers Citi’s open architecture approach to digital banking as the bank taps on its global network to form strategic partnerships and to co-create with leading players in digital ecosystems globally and locally.

Citi Bot will first be made available to some 600 Citi customers and employees who will form Citi Singapore’s Beta Testing Community, referred to as the Citi Beta Community.

The second phase of the Citi Bot will introduce more new features such as card activation, ability to lock and unlock credit cards and transaction alerts for cards among others.

India, Indonesia lead growth in mobile payments (The Asset), Rated: AAA

Asia-Pacific now leads the way in the adoption of mobile payments, according to a report by ACI Worldwide (ACI) entitled “Global Consumer Survey and Consumer Trust and Security Perceptions.”

Within the Asia, India and Indonesia saw the biggest growth of mobile wallet use with 56% of Indian and 47% Indonesian participants of saying that they used mobile wallets. This represents a significant increase from 2014 results which saw 47% of Indian and 32% of Indonesian survey participants using mobile wallets.

Source: The Asset

Authors:

George Popescu
Allen Taylor

Thursday August 10 2017, Daily News Digest

Lending Club

News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA

NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.

The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.

The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.

Q2 2017: An Update from Our CIO (LendingClub), Rated: AAA

Projected investor returns are also largely unchanged from the first quarter and continue to range from approximately 4% to 9% (see below).

A few factors that influence returns on the platform1 are listed below:

  • Economic Backdrop. The American economy remains robust but growth continues to be relatively modest. The unemployment rate has changed little over the past year, measuring at 4.4% as of July 2017. Meanwhile, GDP increased by 2.6% in the second quarter of 2017.
  • Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
Source: LendingClub

Lending Club makes a surprise comeback (Business Insider), Rated: AAA

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal (Bloomberg), Rated: AAA

LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites (BNL Finance), Rated: A

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions.

PFM apps are folding as banks work them into their own apps (Tearsheet), Rated: AAA

Last week,  Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.

PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.

For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.

Chinese Stock That Rallied 4,555% Could Get the Boot From the Nasdaq (Bloomberg), Rated: A

Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.

Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.

Source: Bloomberg Markets

Installment Loan Provider Earns Top Rating from TopConsumerReviews.com (PR Web), Rated: A

TopConsumerReviews.com recently awarded their highest five-star rating to Lending Club, an industry leader among companies offering Installment Loans.

“For Installment Loans ranging from $1000 to $40,000, Lending Club provides incredible customer service with fair interest rates and fees,” according to Brian Dolezal, of TopConsumerReviews.com, LLC.

StreetShares raises $ 10.3m for “Shark Tank meets eBay” approach to P2P lending (Banking Technology), Rated: A

Alternative lending platform StreetShares raised $10.3 million in a venture round this week, writes Finovate(Banking Technology‘s sister company).

The funds come from an undisclosed investor and bring the Virginia-based company’s total funding to almost $20 million since it was founded in 2013.

Real Estate Crowdfunding Platforms Work to Find a Niche (National Real Estate Investor), Rated: A

However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.

Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.

RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.

Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.

Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.

How David Zalik Skipped High School On His Way To Becoming A Billionaire (Forbes), Rated: A

With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.

GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.

From Illinois’ woes to the state of credit: Jamie Dimon lets loose (Crain’s Chicago Business), Rated: A

Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.

What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.

Would you ever see banks getting directly into online consumer lending?

Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable

5 fintech trends disrupting retail banking (and how banks can fight back) (The Financial Brand), Rated: A

  1. Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
  2. Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
  3. Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
  4. Smart Budgeting and Personal Finance Management
  5. Digital Currencies That Don’t Require Central Banks

Fintech expert Maule to join British digital banking startup (American Banker), Rated: A

Fintech expert Sam Maule has been hired by nascent digital banking firm 11:FS to head up its expansion in North America.

Marketplace Lending Abs Fund Form D (Weekly Register), Rated: B

The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.

Online Lending Policy Institute to Host Second Annual Summit in Washington, D.C. (Markets Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.

Capital One VP Joins veteran-focused fintech firm (American Banker), Rated: B

A former Capital One executive has moved to StreetShares, an online lending and investing platform.

Heather Tuason, formerly senior vice president of small business at Capital One, is now the fintech startup’s chief product officer, it announced Tuesday.

EquityBuild Announces Master Class Webinar on Five Years to Wealth Through the Brand New Model (Benzinga), Rated: B

EquityBuild announces a new master class on the Power of Five, highlighting their new five-year investment model.

Here is the upcoming webinar master class to attend August 14, 2017:

EquityBuild Power of Five Master Class – Find out how this unique model changing the way investors view real estate. Join us for this special event here.

Labor Department delays fiduciary rule implementation date (Reuters), Rated: B

The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.

Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.

United Kingdom

LendInvest makes London Stock Exchange debut with £50m raise (Finextra), Rated: AAA

LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).

The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.

The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.

P2P Lending: MarketInvoice Loanbook Snapshot (LinkedIn), Rated: AAA

MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.

Source: Sukhwinder Shoker

MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.

Source: Sukhwinder Shoker

Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.

Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.

Meet Finimize: The fintech startup that turned a popular newsletter into a financial planning platform (Tech World), Rated: A

Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.

Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.

Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.

The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.

The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.

WiseAlpha opens up corporate bond market for investors (AltFi), Rated: A

Online lending platform WiseAlpha is adding corporate bond and loan investments to its platform.

Retail investors can now access Tesco’s £300m institutional bond that has a 4.8 per cent return.

Users can buy the debt for as little as  £100 and cash in their bonds via the secondary market on the platform. The grocers bond matures in 2042.

Six of the best alternative income ideas (IG.com), Rated: A

Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.

Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.

MARKET INSIGHT: OLD MONEY, NEW METHOD (Campden FB), Rated: A

Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:

  • attractive absolute and relative returns compared to other fixed interest instruments
  • ability to create some granular/diverse portfolios through investment in loan parts
  • transparent credit process and loan pricing
  • ability to match maturity profile to desired outcomes

At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.

How can family offices engage with marketplace lenders?

Firstly, investors need to consider the asset class and risk profile they wish to invest in.

Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.

Glint is a stealthy London fintech startup that promises to turn gold into a ‘new global currency’ (TechCrunch), Rated: A

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.

Railsbank, a new fintech startup from founder of Currencycloud, raises $ 1.2M led by Firestartr (TechCrunch), Rated: A

Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.

The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.

China

China targets mobile payments oligopoly with clearing mandate (Financial Times), Rated: AAA

China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.

Big banks on notice that they’re losing ground to China’s fintech giants (SCMP), Rated: AAA

“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.

“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”

The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.

The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.

Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.

Top3 Chinese block chain asset trading platform (the second-tier platforms) (Xing Ping She), Rated: A

First of all, how to define the Chinese second-tier platforms? We refer to the following three factors:

  1. It has been established for a long time, and there is little risk of failure for the company after a long-term market test and trials.
  2. Popular and profitable.
  3. It belong to the major currencies which are the top of the list. And it has certain dominance in a few currencies.

So, the TOP3 Chinese second-tier platforms are finally selected as:

BTC
Online date: May 2013
Website: btc38.com
Registered capital: 10 million
Office address: Shenzhen

CDC CloudCoin
Online date: April 2014
Website: yunbi.com
Registered capital: 10 million
Office address: Beijing

CHBTC
Online date: early 2013
Website:chbtc.com
Registered capital: 10 million
Office address: Zhongshan city, Guangdong province

China Commercial Credit Enters Share Exchange Agreement with Sorghum Investment Holdings Limited (Markets Insider), Rated: A

China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.

Sina Corp Establishes $ 500M Online Finance Fund To Back Chinese FinTech Firms (China Money Network), Rated: A

Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.

Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.

Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.

LendIt Lang Di Fintech Names Omega One PitchIt Competition Winner (PR Newswire), Rated: B

LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.

As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.

Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.

European Union

FinTech Group Counts on BearingPoint RegTech (BusinessWire), Rated: B

Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.

International

Fintech startup brings blockchain and cryptocurrencies to invoice finance (GT Review), Rated: A

New fintech startup Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space.

Having raised more than US$10mn in crowdfunding in just five days, the company has now started piloting its new platform, which lets firms and individuals sell or buy invoices globally.

Australia

Locked out of property market? Five better places for Millennials to put money (The Sydney Morning Herald), Rated: A

Below are five better places to put your money as a young Australian in 2017.

Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.

You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.

Women in Finance finalists revealed (TheAdviser), Rated: B

Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.

India

Just Rent, Don’t Buy (Business Today), Rated: AAA

India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.

There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.

Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).

There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”

Is our banking industry facing existential crisis from fintech boom? (The Jakarta Post), Rated: A

Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.

The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.

On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.

Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.

Asia

Globe Telecom’s Fuse to Provide Loans Powered by Mambu (Markets Insider), Rated: AAA

Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.

Mynt is increasing access to  financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.

Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.

Singaporean fintech hub Lattice80 to launch office in India (Tech Wire Asia), Rated: A

LATTICE80, Singapore’s fintech hub will be opening an India branch at the end of September, as reported by Bloombergmarking the company’s first step in expanding their global operations.

The fintech hub is planning to open offices in world’s financial capitals, especially London, New York and cities in the Middle East.

MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.

Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.

Authors:

George Popescu
Allen Taylor

Tuesday August 8 2017, Daily News Digest

LendingClub

News Comments Today’s main news: OnDeck posts quarterly adjusted profit. OnDeck expands partnership with JPMorgan Chase. More than half Wellesley borrowers are in default or behind on payments. Tencent tests credit scoring. Westpac Banking invests in zipMoney. SoftBank says Q1 profit jumped 50.1% after adding Vision Fund. Fintech investments tripled in Singapore. Today’s main analysis: LendingClub Q2 earnings. Today’s thought-provoking articles: […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Latin America

Africa

News Summary

United States

Online lender OnDeck posts surprise quarterly adjusted profit (NASDAQ), Rated: AAA

Online lender OnDeck Capital <ONDK.N> posted a surprise quarterly adjusted profit on Monday, driven by lower costs and higher interest income.

Excluding items, OnDeck earned 2 cents per share in the second quarter ended June 30, compared with the average analyst estimate of loss of 1 cent, according to Thomson Reuters I/B/E/S.

Net loss attributable to common shareholders narrowed to $1.49 million, or 2 cents per share, in the quarter, from a loss of $17.9 million, or 25 cents per share, a year earlier.

Originations fell 21.3 percent to $464.4 million.

Operating expenses fell about 6.3 percent to $44.6 million.

OnDeck Will Focus on Better Borrowers, Expanded Partnerships to Grow Originations (Bank Innovation), Rated: AAA

The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.

OnDeck Capital up more than 6% after earnings beat (Seeking Alpha), Rated: AAA

  • Adjusted EBITDA of $3.3M vs. a negative $12.4M a year earlier.
  • Full-year guidance is reiterated: Revenue of $342M-$352M, and adjusted EBITDA of $5M-$15M. Q3 revenue is seen at $82M-$86M, with adjusted EBITDA of $1M-$5M.

OnDeck announces expanded partnership with JPMorgan Chase (MarketWatch), Rated: AAA

OnDeck Capital, Inc. ONDK, +18.48% on Monday announced it had expanded a collaboration with JPMorgan Chase, JPM, -0.02% which is providing technology that runs the online lending platform.

Chase extends relationship with OnDeck (Finextra), Rated: A

JPMorgan Chase (NYSE: JPM) and OnDeck (NYSE: ONDK) today announced a contract extension to continue their collaboration on the bank’s digital small business lending product, Chase Business Quick Capital, for up to four years.

Why On Deck Capital Stock Jumped More Than 20% on Monday (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were up more than 21% as of 3:15 p.m. EDT, after the company announced a smaller net loss during the second quarter and a promising expansion in its partnership with JPMorgan Chase (NYSE:JPM). Shares of LendingClub(NYSE:LC), its primary rival in the world of online lending, rose 7%, as investors see On Deck’s recent performance as a good omen for the industry as a whole.

A focus on higher-quality borrowers seems to have relaxed investors’ worries about the company’s loan quality, a perennial concern given that the average On Deck loan carries an APR in excess of 40% per year.

Lending Club Q2 2017 Earnings – Back to Growth (Lend Academy), Rated: AAA

Lending Club’s second quarter earnings marked an important milestone for the company – a return to growth. Originations have been hovering around $1.9 billion since Q2 of last year. This quarter Lending Club announced originations of $2.15 billion for the quarter, up 10% from the prior quarter of $1.96 billion. While this is still down from their previous highs, it shows that the company is back on a growth trajectory.

Source: Lend Academy

Last quarter the company announced banks were funding 40% of loans, but that reached higher in the second quarter to 44%.

Source: Lend Academy

Borrowers

  • Achieved 10% sequential growth to over $2.1 billion in originations, driven by strong borrower demand
  • Successfully launched multiple conversion initiatives, including pricing optimization and a redesigned website
  • Improved sales and marketing efficiency by over 7% sequentially
  • Credit continues to perform in line with expectations as observed in both vintage and portfolio trendsInvestors
  • Successfully executed the first self-sponsored securitization thereby opening a new funding source, expanding the investor base with 20 new investors, and generating a new repeatable revenue stream
  • Record number of managed accounts and institutional investors participating on the platform in the quarter
  • Successfully launched new iOS mobile application for retail investors

LendingClub Shares Soar 13% on Smaller Loss (Fortune), Rated: A

Online lending platform operator LendingClub reported a smaller loss on Monday, helped by higher net interest income and a drop in expenses.

Shares of the company (LC, +12.86%) were up 13.2% at $5.90 in after-hours trading.

LendingClub shares rise 8 percent on positive outlook, higher revenue (Reuters), Rated: A

Online lender LendingClub Corp (LC.N) raised its earnings outlook on Monday after reporting the second-highest quarterly revenue in its history and a drop in costs, sending shares up nearly 8 percent.

LendingClub now expects full-year total net revenue to be in the range of $585 million to $600 million, compared with its earlier forecast of $575 million to $595 million.

Shares of the company, which connects consumers looking for loans with individual or institutional investors such as banks through its website, were up 7.8 percent at $5.46 in after-hours trading.

Online lenders upbeat about turnaround progress, but worries linger (Today Online), Rated: A

LendingClub Corp <LC.N> and OnDeck Capital Inc <ONDK.N> surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.

OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.

Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.

Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.

Online Lenders Clear a Low Bar—Higher Ones Lie Ahead (WSJ), Rated: AAA

The online lending industry regained its footing in the second quarter, more than a year after it was knocked off-balance by severe disruptions in the loan marketplace. But investors’ sky-high hopes for the sector may have been lowered permanently.

Investors also were relieved that On Deck reiterated it would turn profitable later this year. Shares rose a sharp 18.5% Monday, but they fetch only about a fourth of their December 2014 IPO price, a sign of just how much the hype around these lenders has deflated.

Crucially, On Deck has moved on from funding loans through an online marketplace, the aspect of its business model that was truly disruptive. It now funds the vast majority through its own balance sheet, making On Deck more like an ordinary bank.

Both companies have to worry about rising competition. Innovative payment companies like Square and PayPal are extending more microloans to their merchant customers. Meanwhile, giants of finance like Goldman Sachs are extending more unsecured personal loans, which is LendingClub’s sweet spot.

Fintech Firm Fiserv Raises Offer for Monitise to $ 98 Million (The New York Times), Rated: A

U.S. financial technology provider Fiserv made an improved offer for Monitise worth about 75 million pounds ($98 million) on Monday, hoping to secure backing from the British financial services technology group’s investors.

Fiserv’s earlier offer, which valued the group at about 70 million pounds, drew criticism from Monitise’s investors led by Cavendish Asset Management, for being too low, given that the British group was worth over 1 billion pounds three year ago.

Fiserv’s final offer of 3.1 pence in cash per share represents a premium of 34.8 percent over Monitise’s closing price on June 12, the last before the initial offer was made.

Banco Santander, Monitise’s top shareholder with a 4.67 percent stake, had submitted a letter of intent to back the deal, as had Visa Inc, a large customer and investor with a 2.41 percent stake.

LendingRobot Series Second Quarter Report (LendingRobot), Rated: A

LendingRobot Series finished the second quarter with a healthy YTD aggregated return of 2.7%. Each Series’ return and portfolio health is in line with projections. Since April 1st, LendingRobot Series has added over 2,800 loans to its portfolio, more than doubling the number of loans held in each series.

Source: LendingRobot

 

Legislative Update 161 (Experian Email), Rated: A

Highlights this issue:

  • On July 10, the CFPB published a final rule prohibiting the use of mandatory predispute arbitration clauses that prevent class action lawsuits in consumer contracts for a wide array of financial products. The final rule was published in the Federal Register on July 19, and will become effective 60 days after that date, or September 18. All consumer contracts with arbitration clauses will need to comply with the rule within 180 days of the effective date, which will be March 19, 2018.
  • The House of Representatives is working to pass 12 appropriations bills by September 30 to fund federal agencies for the Fiscal Year 2018. The House Appropriations Committee passed the spending bill for financial regulatory agencies on July 13. The measure included several provisions important to Experian and our clients.
  • On July 19, Representatives Patrick McHenry (R-N.C.) and Gregory Meeks (DNY) introduced the Protecting Consumers Access to Credit Act. The bill would codify the legal precedent under federal banking laws that preempts a loan’s interest as valid when made.
  • Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the rule issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.

Read the full update here.

4 Reasons Online Lenders Are Innovating With Purchasing Cards (Entrepreneur), Rated: A

In recent years, Kabbage and others have stepped up to introduce a purchasing card product to their borrowers, and with their early success, many lenders are now following suit for the following four reasons:

  1. Staying on top of the customer’s mind
  2. Speaking the language of large corporate partner targets
  3. Underwriting use of funds
  4. Revenue sharing

New Financial Technology Upgrades Bank’s Credit Review Process (PayNet Email), Rated: A

Enables Banks To Review All Credits and Focus on the Highest Risks

The real challenge is convincing bank management that they do not have to apply the same credit review process to the entire portfolio.  Adopting different processes based upon exposure size and measured risk (APD for example) should be the goal of every bank.  In other words, focus credit review efforts to those accounts that represent the greatest risk to the bank – and that is what you are hoping to do with your credit review process.

Conducting credit reviews are a “waste of time” in most cases because nothing has changed. What form that documentation takes is where PayNet can be most helpful to the prospect.

PayNet is introducing PayNet Credit Review Express, a risk management tool which streamlines the credit review process making credit review easier and less costly.

Credit Review Express assesses the credit risk of each C&I borrower each month. Banks can assign their definition of risk from delinquency to probability of default to assign high, medium or low risk to each borrower. Currently, PayNet sees less than 2% of C&I borrowers as high risk credits. Other features include automated action steps (such as Watch, Restructure, Work-out) and a customized dashboard to monitor and track activity.

FDIC defends right to charter new banks against OCC criticism (American Banker), Rated: A

The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own.

Rumour mill churns in US online lending sector (AltFi), Rated: A

Whispers abound of a major financing round, an acquisition and an IPO within the US online lending space.

Perhaps chief among the rumours was the suggestion that SoFi may at last be on the brink of an IPO that was first mooted by CEO Mike Cagney in 2014.

Meanwhile, SoftBank continued to build on its portfolio-for-the-future with a $250m equity investment in small business lending fintech Kabbage.

Cities where student loan borrowers struggle with debt the most (Credible), Rated: A

So it’s important for borrowers, especially recent grads, to think about the best places to live — the cities in which they’re not only likely to find a well-paying job, but also where rents and other living expenses aren’t so exorbitant so as to add to their pile of debt.

5 cities where student loans borrowers struggle the most with debt:

  • 1. San Jose, California
  • 2. Fort Worth, Texas
  • 3. Boston, Massachusetts
  • 4. Los Angeles, California
  • 5. Denver, Colorado

5 cities where student loans borrowers struggle the least with debt:

  • 1. Dallas, TX
  • 2. Jacksonville, FL
  • 3. Houston, TX
  • 4. Columbus, OH
  • 5. Austin, TX

The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs.

Source: Credible

 

Marketplace Lending Explained (WealthManagement.com), Rated: A

Marketplace lending has grown by nearly 150 percent on a compound annual basis for the last half-decade. Strong growth and real longevity mean that most advisors have to consider the role that marketplace lending plays in their clients’ portfolios.

Source: WealthManagement.com

Refinancing high-rate credit card debt or other hard-money-type loans among high-quality borrowers via a marketplace lender is sensible and provides good value to all parties.

As part of a fixed income allocation, what are the risks in marketplace loans? There is the credit risk of the borrower first and foremost—here the asset can be seen as clearly pro-cyclical; in other words, as the economy improves, the asset strengthens. Correspondingly, as the economy weakens, the credit of the borrower will weaken. Additionally, there has recently been some weakness in consumer credit, primarily in auto loans and credit card defaults, though these have been largely limited to the subprime aspects of these loan categories.

United Kingdom

The Growing Alternative Finance Industry (Business Zone), Rated: AAA

The latest equity crowdfunding statistics released by OFF3R last month revealed that the first half of 2017 was the strongest 6 months for equity crowdfunding to date.

Six of the leading equity crowdfunding platforms that form the OFF3R Index raised nearly £130M in 2017 for UK private companies. This is £2M above the previous half yearly record that was reached back in the second half of 2015. March 2017, where Over £40 million was raised, buoyed the latest data and the period as a whole was characterised by some very large fundraises from Q1 2017.

The data also revealed that peer to peer lendinglevels continue to rise in the UK. The peer to peer lending statistics showed that over £1.8 billion was lent in the first half of 2017 by the nine platforms that make up the OFF3R Index. This is an increase of over £350 million from the previous half year period at the end of 2016.

The data also revealed that Assetz Capital had a record breaking month in June 2017. The total amount lent of over £30 million by the platform was higher than any previous period since the OFF3R Index began.

Toxic loans blight property peer-to-peer lender Wellesley – with more than half its borrowers behind on payments or in default (This is Money), Rated: AAA

More than half of the customers of an internet loan firm run by an aristocratic financier are behind on their payments or in default, the Mail can reveal.

Wellesley, a peer-to-peer lender which allows property developers to borrow cash from savers, is grappling with losses on its loan book.

Online lender Tandem acquires Harrods Bank in bid to expand services (Belfast Telegraph), Rated: A

Start-up lender Tandem has snapped up Harrods Bank in a deal that will bring it closer to launching a savings account.

The undisclosed deal will hand the online-only lender £80 million of additional capital and enable it to regain its banking licence , if it wins regulatory backing.

The institutional investor selling down its stake in VPC Speciality Lending (AltFi), Rated: A

Old Mutual, a sigificant shareholder in the £351m VPC Speciality Lending fund, has further reduced its holding in the closed ended portfolio following previous reductions in exposure earlier in the year.

Its holding in the fund fell below 6 per cent back in March 2017, now it has sold more shares with its stake now less than 4.99 per cent, according to regulatory filings.

VC firm behind Zopa among judges at PitchIt funding competition (P2P Finance News), Rated: B

A VENTURE capital (VC) firm that backed Zopa in its early days has been named among judges for the second annual PitchIt Europe competition.

Rob Moffat, partner at Balderton Capital, an early Zopa backer, will be one of the VC judges alongside Seedcamp’s Reshma Sohoni, Blenheim Chalcot’s Dan Cobley and managing director of CommerzVentures Patrick Meisberger.

China

Tencent credit check takes mobile payments battle to Alibaba (Financial Times), Rated: AAA

Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market.

Ant Financial, Alibaba’s payments affiliate, launched its Sesame Credit two years ago, parlaying its data on consumers into a measure of their trustworthiness, providing comfort for small businesses and consumers alike.

Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country.

Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.

Top 100 List of Chinese Internet firms in 2017: Tencent surpassed Alibaba to become NO.1, and Letv was Out of the List. (Xing Ping She), Rated: AAA

Recently, Internet Society of China (ISA) and the information center of Industry and Information Technology Ministry Jointly issued the list of “China’s Top 100 Internet Companies in 2017”. For this time, Tencent overtook Alibaba to become the No.1. Tencent, Alibaba and Baidu were still the top three for five consecutive years, while Letv was out of the list.

The top 10 of the list were:

  • No.1 Tencent
  • No.2 Alibaba
  • No.3 Baidu
  • No.4 Jingdong
  • No.5 NetEase
  • No.6 Sina
  • No.7 Sohu
  • No.8 Meituan
  • No.9 Ctrip
  • No.10 360

The list of “China’s top 100 Internet Companies” has been published every year since 2013 and has been published five times so far.The evaluation index combines seven core indicators of enterprise scale, profitability, innovation, growth, influence and social responsibility.

Central bank to regulate rapidly growing fintech (China Daily), Rated: AAA

In a report released last weekend, the People’s Bank of China said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment or MPA.

The aim is to prevent cyclical risks and cross-market risk transmission, it said.

Analysts said this is the first time that the PBOC said it will include fintech businesses in its MPA.

With $ 3.58 bn in newly increased loan balance, Weli Dai becomes the largest microcredit platform in China (Xing Ping She), Rated: A

On 7th August, a Webank staff said in WeChat Moments that the loan balance of Weli Dai reached a milestone of over 100 billion RMB (equivalent to $14.91 bn). In a speech at the LendIt on July 16, Fang Zhengyu, the director of retail credit section in Webank, revealed that the loan balance of Weli Dai was $1.13 bn. And it has increased by $3.58 bn within just 22 days. What an amazing growth!

Weli Dai is focused on providing a cash loans product, with the loans amount from ¥500 to ¥300,000, and is operated in pure online pattern. With its white list invitation system, Weli Dai identifies the target customers effectively. The loan period is flexible from one day to twenty months, which makes users borrow and repay money at any time. Many factors contributed to the performance of Webank today, the most important is that Webank developed its business in the huge customer base of QQ and WeChat. Besides, Webank has built partnerships with nearly 40 banks for jointly making loans.

Hong Kong startup close to US$ 500mil valuation (The Star), Rated: A

TNG FinTech Group Inc, a Hong Kong-based digital wallet operator founded in 2013, is poised to close a funding round and is targeting a valuation of about US$500mil, according to a person familiar with the matter.

It has attracted almost US$60mil in the series A round from investors including a Beijing-based private equity fund, said the person, who asked not to be named discussing private deliberations.

TNG, which offers global money transfers, foreign-exchange transactions and bill payments, expects to be profitable this year and is targeting a listing in either New York or Hong Kong by 2019, the person said.

Jeffrey Chen of ZhongAn Insurance (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Jin (Jeffrey) Chen, the CEO of ZhongAn Insurance. I sat down with him when I was in Shanghai recently for Lang Di Fintech (LendIt’s Chinese event) and we conducted this interview with the assistance of his translator.

People’s Bank of China Has Fintech on Its Mind (Fox Business), Rated: A

The People’s Bank of China said in a report that it is considering expanding its risk-assessment system beyond banks to include major online financial businesses. Last month, it reached agreement with 45 nonbank financial firms– including payment systems affiliated with internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd.–on joining a new payment-clearing platform called Wanglian, according to listed-company documents.

This effectively gives the PBOC a clearer view of payments, enhancing regulation, said Tencent, which owns the TenPay payment system.

European Union

Fellow Finance Adds Invoice Financing (P2P-Banking), Rated: A

Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.

In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.

Balderton Capital on European Fintech (Stitcher), Rated: A

Rob Moffat is a Partner at Balderton Capital, a London-based venture capital firm that has invested in fintech businesses including GoCardless, Revolut, Crowdcube, Nutmeg, Seedcamp, ComplyAdvantage, Wonga, Zopa and more. Prior to joining Balderton, Rob worked at Bain & Company and Google. Rob holds degrees from Cambridge and INSEAD.

Listen to the podcast here.

International

Senate To Mull Financial Choice Act, UK Officials Look For Tighter Controls (PYMNTS), Rated: A

As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate.

In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”

Visa And The QR Code Evolution/Revolution (PYMNTS), Rated: A

As it turns out, putting that spec on the shelf helped to inform the development of the EMVCo QR code standard, which was released yesterday into a payments ecosystem that looks at them as anything but uninteresting.

China is a prime example as, over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country — and leapfrogged credit and debit cards — to become Chinese consumers’ preferred alternative for payment. There are $5.5 trillion worth of mobile payments made in China per year, the vast, vast majority of which are handled via QR code.

But perhaps most striking is India and its government’s November 2016 decision to move toward a cashless society. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.

Getting To Scale

Visa is currently developing mVisa as a worldwide solution. The key to scale, Shrauger told Webster, is making it useful and accessible for their two client groups — merchants and their customers.

Australia

Westpac Banking Invests $ 40 Million into zipMoney (Crowdfund Insider), Rated: AAA

zipMoney (ASX:ZML) has announced a $40 million strategic investment from Westpac Banking (ASX:WBC). The investment was paired with an agreement for the two companies to explore the integration of Zip’s products and services into Westpac’s network across Australia. The investment will be by subscription of ordinary equity of 49,382,716 shares at a price of $0.81 per share. This represents a 14.1% premium over the close of $0.71 on August 4th.

India

How technology is helping investors achieve their financial aspirations (Financial Express), Rated: A

Most Indians save first and think of spending later. However, when it comes time for them to plan their expenses, they end up relying on mental estimates of their financial position. As a result, most people are never confident of 1) how much to save and 2) whether they can reach their financial aspirations with their current investment plan. This is especially true for young professionals who want to save for a secure future but also want a more fulfilling life experience. What is required is financial advice that delivers the answers to these questions in a clear and quantified way.

A solution to these issues has come from the field of artificial intelligence. Cognitive technologies is a branch of artificial intelligence that deals with the application of computers towards tasks traditionally performed by people. The aim of this process is to design a software solution that has comprehensive and detailed instructions, that enables it to do the same work that a person can. The benefits of this approach are that the same work can be done at a much faster pace, at a higher accuracy and at a lower cost.

Asia

Japan’s SoftBank says Q1 profit jumps 50.1% after inclusion of Vision Fund (CNBC), Rated: AAA

Japan’s SoftBank Group Corp on Monday reported a 50.1 percent rise in first-quarter operating profit, after the company included Vision Fund, the world’s largest private equity fund, as a new reportable segment and booked a valuation gain.

The internet and telecoms giant said profit for the quarter through June increased to 479.2 billion yen ($4.33 billion).

Fintech investments tripled in Singapore (The Star), Rated: AAA

GLOBAL investment in financial technology (fintech) firms more than doubled in the second quarter of the year, compared with the first quarter, to US$8.4bil (S$11.4bil) across 293 deals, KPMG said in a recent report.

Investment in fintech in Singapore more than tripled to US$61.5mil (S$83.3mil), although there were only four deals, compared with seven the quarter before.

Indonesian P2P Lending Platform UangTeman Secures Million During Series A Funding Round Led By K2 Venture Capital (Crowdfund Insider), Rated: A

On Monday, Indonesia-based peer-to-peer lending platform UangTeman announced it successfully secured $12 million during its Series A funding round, which was led by K2 Venture Capital, with participation from STI Financial Group and Draper Associates.

Middle East

UAE Authorities Plan SMB Crowdfunding Framework (PYMNTS), Rated: AAA

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market, news reports on Sunday (Aug. 6) said.

Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85 percent of all UAE companies. In Dubai, that number is even higher, at nearly 95 percent of all businesses, reports added.

Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70 percent of small business loan applications in the UAE are rejected by traditional banks, despite efforts from the national government and the Central Bank of the UAE to promote SMB financing.

Latin America

Mexican fund invests in peer-to-peer lending network (Latin Lawyer), Rated: A

Greenberg Traurig SC in Mexico City has helped Mexican venture capital fund Ignia invest in peer-to-peer lending network Afluenta.

Africa

Why African fintech startups are becoming even more attractive for investors (Quartz), Rated: AAA

Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital.

Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.

In more advanced economies, fintech startups are focused on disrupting the traditional banking industry by changing how people access financial services. But in most parts of sub Saharan Africa, that’s not the case. In fact, fintech startups are typically creating products and services to plug many of the gaps which currently exist.

Indeed, as of 2014, only 34% of adults in sub Saharan Africa had bank accounts. Given the sheer size of the market which remains under-served, fintech startups are presented with a huge opportunity. And for investors, all that represents a major upside.

Authors:

George Popescu
Allen Taylor

 

Wednesday July 5 2017, Daily News Digest

abs market overview

News Comments Today’s main news: SoFi to shut down Zenbanx. Red Ventures to buy Bankrate website for $1.24B. BofE to get tough on consumer lending. UK P2P lending surpasses 10B GBP. China re-thinks social credit. Korean P2P lending passes 300B won. LendInvest out of P2P lending. Today’s main analysis: US ABS market overview. Traditional wealth management challenged by robo boom. Today’s thought-provoking […]

abs market overview

News Comments

United States

  • SoFi to shut down Zenbanx. GP:”We do not know the details of the acquisition but we assume part of the due diligence SoFi was aware of this issue and therefore they didn’t purchase Zenbank for their customers or services, but perhaps for their team and know how?”AT: “I suspected this would happen. If they have the technology and the talent, what else do they need?”
  • US ABS market overview. GP:”steady growth in all segments except maybe auto”
  • How the market pushed Realty Mogul out of residential fix and flips. GP:”I continue to believe that fix and flip is highly correlated with the economic cycle and if a company relies on it there will be years with no origination in that market at some point.”AT: “Markets, and market conditions, change. This looks like a smart move for Realty Mogul. A good rationale, at least.”
  • Ally Bank online savings APY increases to 1.15%. GP:”Goldman Sachs online Bank increased it, Ally increased it… perhaps the FED rate adjustment is having an impact or perhaps the competition for savings dollars is increasing. Or both.  “AT: “If consumers can get better savings interest rates at online banks, why wouldn’t they?”
  • Inside the arms race between banks and startups. AT: “Focuses on negatives for banks. Seems a bit one sided. I don’t believe banks are out of the picture just yet, but we will likely see a steady decline soon. The survivors will be those banks that adapt and adopt the technology of online lenders.”
  • LendingTree, LeadsCon unveil first $25K startup innovation spotlight.
  • Tide raises $14M. GP:”Congratulations!”
  • Lifshitz&Miller investigate LendingClub. GP:”All public companies have an ongoing litany of lawsuits as soon as their stock does something un-usual. This is normal life for a public company in the US.” AT: “I don’t understand why now, a full year after the Renaud Laplanche issues.”
  • Red Ventures to buy Bankrate website for $1.24B. GP:”This is big news, and an amazing valuation. There is money in customer acquisition for fintech.”
  • Goldman raises $1B for real estate fund. GP:”Goldman has been in the real estate funding business for long time. focused on large commercial properties. Perhaps a good usage of the savings capital from Goldman Sachs bank could be real estate crowdfunding as well in the same way as Marcus works for unsecured personal lending? $1B for Goldman is not much money, this is not big news anyway. “
  • Suretly launched initial chocolate offering. GP:”Very amusing, but looks a little desperate.”

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

News Summary

United States

Six months after acquisition, SoFi is shutting down Zenbanx (TechCrunch), Rated: AAA

Online lending company SoFi is closing down Zenbanx, the online banking provider it bought earlier this year. In an email sent to Zenbanx customers, the company announced that it will close all accounts at the end of next month.

According to a SoFi spokesperson, Zenbanx had a partnership with Wilmington Savings Fund Society (WSFS) that expired this month and, rather than renew it or find another partner, the company decided to just close existing accounts.

US ABS Market Overview (Finsight.com), Rated: AAA

Recent New Issue

The Market Pushed Us Out of Residential Fix and Flip (Realty Mogul), Rated: AAA

If you are like many investors, you loved our residential loan product. Short term investments with high yield (9-12%) and monthly distributions, what’s not to love? And as much as our investors love them, you will no longer find them on RealtyMogul.com. We stopped originating them.

The purely local nature of fix and flip lending changed with online lenders having nationwide reach and access to tremendous amounts of capital, either from retail or institutional investors. At one point, RealtyMogul.com had in hand nearly $1 billion in capital commitments to purchase fix and flip loans from institutional buyers – that’s a lot of homes!

In late 2015 we started to notice a market shift. Fix and flip loan pricing started to drop. First it was 11%, then 10%, then 9%, and in many major markets it dropped to 8%. Throw in the cost of servicing these loans and on an 8% loan, investors’ estimated return is 7%.

At 8%, there should be a relatively lower risk profile to a loan. But in fact, the opposite was true. The dramatic increase in capital in the market meant that riskier loans were demanding lower and lower rates. Borrowers with great experience, credit and lower leverage were able to get rates in the 4-5% range from banks, whereas the 9-12% loans were only available in markets where there were no alternatives and the risk was fairly high.

Ally Bank online savings APY increases to 1.15% (Reddit), Rated: A

Chat rep said that my account should reflect the new rate by the end of today.

Peek Inside The Fintech Arms Race Between Banks And Startups (International Business Times), Rated: A

Capital One is opening Capital One Cafes in major cities across the U.S., with hip decor and more laidback consulting vibes than traditional branches. JPMorgan is trying the same idea with its Manhattan technology hub. Bloomberg reportedthe bank’s $9.6 billion technology budget coincided with new startup-style offices featuring foosball tables, open workspaces and snacks. But it might be too little, too late.

While, money transfer apps like Apple Pay, Venmo and WorldRemit garner widespread adoption, some experts predict banks could also lose well over half their retail profits to fintech startups. Flashy offices won’t change the fact that the days of traditional banking are over.

Nubank looks beyond traditional credit scores, using cellphone data and driver’s license information to find creditworthy customers who would never meet the requirements of a traditional bank. Like SoFi mortgages in the U.S., Nubank interest rates are flexible and can change as the customer’s financial security increases. Combine that with a lack of fees plus a smooth mobile experience, and traditional credit cards seem very outdated by comparison.

According to a Gallup poll, the amount of Americans who feel confident in U.S. banks dropped from 49 percent in 2006 to just 27 percent by 2016.

A nationwide survey of 500 chief financial officers byWEX Virtual Payments found 55 percent consider mobile payment options very important, in addition to 54 percent who say to same of blockchain solutions.

53 million Americans aren’t served by the current credit score market,  but have great cash flow,” Thomas told IBT. Nubank in Brazil and the fintech startup Tala, which has distributed around 2 million micro-loans in places like in Kenya and Tanzania, prove there’s no need to restrict loan eligibility to traditional metrics.

LendingTree, LeadsCon Unveil First-Ever $ 25,000 Startup Innovation Spotlight (IT Business Net), Rated: A

LendingTree, the online loan marketplace, and Access Intelligence, a business information and marketing company, today announced a new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The “LendingTree Startup Innovation Spotlight” at LeadsCon’s Connect to Convert will recognize the most innovative fintech startups across the consumer lead generation, call center and customer experience sectors. Startups around the world can apply today at  a chance to receive exposure, bragging rights and $25,000 in cash. Finalists will be announced in August and selected live on stage amid 1,000 industry executives at LeadsCon’s Connect to Convert industry conference and expo, August 21-23 at the New York Hilton Midtown.

Banking startup Tide raises $ 14 million to ‘give small businesses back their time (Business Insider), Rated: A

Banking startup Tide raised $14 million in one of the largest Series A funding rounds closed by a fintech company this year.

Tide, a digital-only banking app aimed at small businesses, has also partnered with online lender iwoca, in a move to allow small companies access to loans of up to £100,000.

The funding round was led by specialist fintech investor Anthemis, along with Passion Capital, LocalGlobe and Creandum, the company that backed Spotify.

Lifshitz&Miller LLP Announces Investigation of LendingClub Corporation (PR Newswire), Rated: A

Lifshitz & Miller announces investigation on behalf of LC investors concerning whether LC’s former CEO, Renaud Laplanche, engaged in improper loan transactions and personal investments as a result of material weaknesses in LC’s internal controls.

If you are an LC investor, and would like additional information about our investigation, please complete the Information Request Form or contact Joshua Lifshitz, Esq. by telephone at (516)493-9780 or e-mail atinfo@jlclasslaw.com.

Bankrate website to be bought by Red Ventures for $ 1.24bn (Financial Times), Rated: A

Bankrate, the US personal finance website, is to be bought for $1.24bn by Red Ventures, a digital marketing company which is expanding its footprint in financial services.

Private equity-backed Red Ventures has agreed to pay $14 per share in cash for Bankrate, which produces online content focused on financial advice and research, such as mortgage and savings calculators and credit card and insurance comparison tools.

Goldman Raised $ 1B For A Real Estate Fund (Bisnow), Rated: B

Documents filed with the Securities and Exchange Commission show that the investment bank has raised $1B for a new real estate fund, Broad Street Real Estate Credit Partners III. Further documents show it is on the road looking to raise more capital for the fund, with a source indicating to Bisnow that it is looking to pull in the same amount again over the coming months.

Around $600M came from U.S. investors and the rest from overseas, the documents show. Goldman typically puts around 20% of the equity into the funds it manages.

Suretly launched an Initial Chocolate Offering (Newsbtc), Rated: B

NYC-based startup Suretly, which raised $350K during preICO round this May, launched an Initial Chocolate Offering.

The event took place in Copenhagen, Denmark during Money2020 conference. All guests, who has visited Suretly’s booth, were gifted with a chocolate souvenirs shaped in SUR-token. Each token was packed in the individual memorable wrapping with the future Suretly ICO information.

United Kingdom

The Bank of England is preparing to get tough on consumer lending (Business Insider), Rated: AAA

The Bank of England ordered British banks and other lenders on Tuesday to prove by September that they are not taking on too much risk with their increased lending to consumers.

The BoE’s Prudential Regulation Authority did not set out any new rules on Tuesday but its move was the first time it has ordered firms it supervises to apply consumer credit rule more conservatively.

The PRA said it was “requesting evidence from all firms with material exposures to consumer credit of how they will – across consumer credit portfolios- ensure” they are not taking too much risk after years of low interest rates.

Lenders will have until September to respond and could then be asked to fix any specific areas of weakness by the PRA.

ORCA celebrates peer to peer lending uk surpassing £10 billion mark (Orca Money), Rated: AAA

Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms. In the first half of 2017 alone, over £2 bn was invested through P2P.

Take a look at the UK alternative lending ecosystem.

Traditional wealth management challenged by robo-adviser boom (Raconteur), Rated: AAA

Survey after survey shows that millennials, and indeed most potential investors aged under the age of 60, are happy to entrust their savings to a digital platform or mobile app, so long as it’s credible, secure, trustworthy, capable of offering them a range of low-cost funds and some personal investment advice.

Of the robo-advisers in the UK, the largest is Nutmeg. Launched in 2012, it has so far raised £71 million in five funding rounds from venture capitalists and others. Nutmeg has more than £600 million under management, though it remains loss making, and escalating marketing and advertising costs meant that in 2015 its losses widened from 2014.

Other UK players include Wealthify, launched in 2015; MoneyFarm, launched in Italy in 2012, and in the UK in 2016; and Scalable Capital, launched in 2016.

Brewin Dolphin has launched a robo-adviser that allows customers with between £10,000 and £200,000 to invest in one of six model portfolios at a cost of 0.7 per cent of invested assets, plus underlying charges of between 0.11 per cent and 0.16 per cent.

 

LendInvest out of P2P sticks to managing funds (Anonymous Email), Rated: A

Our sources reported that LendInvest cancelled their FCA application due to their decision to completely exit the p2p lending space.

As can be seen on the FCA website:

Firm name: Lendinvest Limited
Interim Permissions reference number: 658890

 

Permission Description Status Limitation Against Permission Permission End Date
Consumer credit business Entering into a regulated credit agreement as lender; and exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement. Inactive 02/06/2017
Credit brokerage Credit broking
Or
Credit broking limited to credit intermediation
Inactive 02/06/2017
No right to canvass off trade premises

It appears that this decision was due to the 36(H) legal rules around peer top peer in the UK . It has apparently become “more difficul to stay within the new 36(H) rules without becoming a bank or fund manager”. As LendInvest was already a fund manager, the company has decided to remain a fund manager and focus on that structure as opposed to applying for FCA p2p regulation.

In a similar fashion the online lender Wellesley has taken a similar approach having ‘paused’ P2P yet still shows as active.

This change makes Assetz Capital the 2nd largest business and property lender who is P2P in Europe. See

Of £295m lent, c £290m is P2P retail investors.

Kuflink Debuts Property-Backed Innovative Finance ISA & New Investment Options (Crowdfund Insider), Rated: A

UK-based peer-to-peer lending platform Kuflink has launched its Innovative Finance ISA (IFISA) and also two investment options. This news comes just a few months after the online lender received full authorization from the Financial Conduct Authority (FCA).

Assetz Capital bids to lend £300m after profitable year (Bridging&Commercial), Rated: A

Assetz Capital has revealed that it made a seven-figure pre-tax profit during the 2016/17 financial year, while revenues have now reached over £10m pa.
The peer-to-peer lending platform saw a total of £126m lent through it to SMEs between April 2016 and March 2017 with £38m of that total being achieved in the final quarter.

Assetz Capital claimed it would lend over £60m during the first quarter of this current financial year as it bids to reach £300m of lending for the whole of the year.

It’s time to bring ghost houses back to the land of the living – Lendinvest (Mortgage Solutions), Rated: A

As the Council of Mortgage Lenders has previously pointed out, even if the government managed to push the building industry into producing 300,000 homes across the UK each year, 90% of the housing stock that will exist by 2025 has already been built. If we are to tackle the housing issues we face, it’s not just down to increasing the rate at which new developments spring up – we need to make far better use of the houses we already have, too.

An obvious problem with some of these ‘ghost homes’ is that in their current condition nobody would want to live in them. They may have been ignored for years, falling into disrepair to the extent that they may actually be unlivable.

But these are exactly the sorts of properties that savvy investors may be looking for, the worst house on the street which can be done up, turned into a nice, respectable home and then sold on at a profit.

Londoners Borrowed £17B in New Mortgages in 2016, Wimbledon & Wandsworth Top Borrowers (Crowdfund Insider), Rated: A

Londoners borrowed another £17 billion in new mortgages last year as the affluent southwest London neighbourhoods of Wimbledon and Wandsworth topped the borrowing league table and and 17 of the top 20 areas for new mortgage lending last year are in London, reported European P2P lending platform Lendy.

The highest non-London area among for new mortgages is Maidenhead, which placed 11th out of the 2,717 postcode areas in the study.

AI savings platform launches £700,000 crowdfunding campaign (P2P Finance News), Rated: A

AN ARTIFICIAL intelligence platform that has partnered with RateSetter to help people save and invest is looking to raise £700,000 through crowdfunding.

The fintech firm, Plum, has launched a crowdfunding campaign on Seedrs, to build its team and platform.

NatWest trials AI compliance tool to ensure financial advice is spot on (Internet of Business), Rated: A

The UK bank will use the Recordsure compliance tool based on artificial intelligence (AI) from regulatory risk specialist TCC Group in order to record face-to-face and telephone conversations between the bank and its customers – with those customers’ consent, naturally.

The AI technology is able to analyze an interaction and then classify sections of the conversation, according to Recordsure’s creators. For example, it could determine which aspects of the conversation were general chitchat, which involved financial advice, and what topics were discussed.

P2PFA Announces New Associate Membership, Publishes Names of First New Members (Crowdfund Insider), Rated: A

The Peer-to-Peer Finance Association (P2PFA) has created a new category of membership to boost its ranks and add perspective to the association that represents the UK’s top online lenders.

These new members include:

  • Alterest – Provides non-bank lending markets with loan intelligence infrastructure that enables: seamless exchange of lending data in a secure and timely manner, and flexible analysis of performance and risk of any loan pool or exposure.
  • Altus Consulting: A specialist provider of consultancy services to the financial services sector.
  • Equifax: A global information solutions company that uses data, analytics, technology and industry expertise to power organisations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.
  • Fox Williams LLP: A City law firm with one of the leading Fintech practices in the UK, acting for over fifteen P2P lending platforms.
  • Grant Thornton UK LLP: A global consultancy that is part of a network of over forty-thousand people in 130 countries. In the UK they are led by 185 partners and more than 4,500 people.
  • Orca Money: A platform that is driving the mainstream adoption of peer-to-peer lending by providing research, analysis and tools to empower investors.
  • Simmons & Simmons: An international law firm with a Fintech team that comprises a range of multi-disciplinary lawyers from across their European, Middle Eastern and Asian offices.
  • TLT LLP: Supports large corporates, public institutions and high-growth businesses on their strategic and day-to-day legal needs.

Hive Project Launches Blockchain-Based Invoice Financing Platform, Targets SMEs (Finance Magnates), Rated: A

Despite being the backbone of every economy, small and medium-sized businesses have traditionally faced challenges in securing access to short-term financing from traditional lenders. To resolve this issue, the Hive Project today announced the development of a cryptocurrency invoice financing platform to help SMEs overcome the hurdles they face when trying to get the financing they need.

WiseAlpha Founder & CEO Rezaah Ahmad Comments on Successful Crowdcube Round (Crowdfund Insider), Rated: B

WiseAlpha, a UK first online lending platform that gives investors access to high yield institutional bond and loan investments, has overfunded its £500k target on Crowdcube by 258%, raising £1.29 million.

The largest single investment was £150K.

“We’re thrilled to have overfunded our original target and glad that the 1452 people who have invested in us so far are backing our vision of a fairer investment world where everyday investors aren’t shut out from accessing the biggest and best investments.”

UK P2P Lender RateSetter Update: Targets New Business Borrowers (Crowdfund Insider), Rated: B

Now the lender is planning to boost its direct marketing methods to diversify its new business borrowers sources, according to Peer2Peer Finance News.

Lewis appointed on b2b brief for p2p lending platform (PR Week), Rated: B

Lewis has been appointed by ArchOver, a peer-to-peer lending platform for UK SMEs, to run a campaign aimed at business audiences.

China

China changes tack on ‘social credit’ scheme plan (Financial Times), Rated: AAA

Beijing has pulled back on plans to license big technology companies to develop “social credit” scores for consumers, based mainly on their online activity, because of concern over conflicts of interest, industry analysts said on Tuesday.

The People’s Bank of China, the central bank, selected eight tech companies in 2015 — including e-commerce group Alibaba’s Ant Financial and game developer Tencent — to develop pilot programmes to give consumers credit scores.

The pilots, which monitored spending patterns but also personal behaviour and social media activity, initially raised concerns about consumer privacy. Some of their metrics were seen as irrelevant, including proposals to factor in exercise routines or what time of day people went online. Others were considered more sinister, such as efforts to rate “honesty” or “trustworthiness” by linking credit scores to friends’ social media posts.

Beijing has now decided not to award any licences this year after regulators expressed increasing concern about the potential for conflicts of interest.

MYbank Deepens Push for Business Big Banks Won’t Touch (Bloomberg), Rated: AAA

MYbank, the two-year-old Chinese online lender that already has 3.5 million small-business customers, plans to push deeper into a segment that’s long been shunned by the country’s largest banks.

MYbank wants to capitalize on its links to billionaire Jack Ma’s Alibaba Group Holding Ltd. by offering loans to the more than 10 million smaller merchants that use the company’s e-commerce platforms, MYbank President Huang Hao said in a June 29 interview. Ant Financial, Alibaba’s financial affiliate, owns 30 percent of the online lender.

Formally known as Zhejiang E-Commerce Bank Co., MYbank was able to more than quadruple its lending through 2016, taking its outstanding loans to 33 billion yuan ($4.9 billion).

Its nonperforming-loan ratio was around 1 percent, Huang said, lower than the national average of 1.74 percent. The bank’s technology, which runs loan applications through more than 3,000 computerized risk-control strategies, has kept delinquencies in check, he said.

Still, last year’s lending explosion came at a cost, dragging its capital adequacy ratio down to 11.07 percent by December from 18.51 percent a year earlier.

Chinese tourists are driving mobile payments across the globe (IBS Intelligence), Rated: A

The number of Chinese tourists abroad hit 122 million in 2016, with a vast majority of them paying via their mobile phones. That’s according to a new study from Kapronasia and CANCAN. The survey pool contained 1,000 Chinese consumers abroad and 60 global merchants.

While 67% of respondents reported that they use Alipay or WeChat Pay for overseas purchases. This represents about 41% of overseas consumption and tourists used mobile payments for more than 10% of total transactions.

The report also highlights how Chinese tourists are spending more and more in retail ($900 on average in 2016), instead of luxury items. Only 5.7% spent more than $6,288, with a total amount of $109.8 billion throughout 2016.

80% of merchant respondents cited consumer demand as one of the main reasons for adopting mobile payments, with 70% adding that mainland Chinese consumers were their largest source of global revenue. Clothing, makeup, skincare, food and beverages top the list of goods purchased with mobiles, with travel and accommodation not far behind.

UAV Startup Clobotics Raised its First Round of Financing from GGV Capital (Xing Ping She), Rated: A

Recently, a Shanghai-based Unmanned Aerial Vehicle (UAV) startup—— Clobotics finished its first round of financing from GGV Capital, the amount was not disclosed. According to George Yan, the founder and CEO of Clobotics, this round of financing will focus on developing and iterating their products and technology, expanding the marketing layout, and accelerating the development of Clobotics in the key vertical field.

Set up in November 2016, Clobotics is a provider of business intelligence (BI) and visualizing data, focus on the research of UAV machine vision, industrial big data acquisition, and cloud big data processing and analysis. Unlike many of the domestic manufacturers that focus on hardware plane, Clobotics is good at using leading software, technology and platforms to embed advanced technologies in the field of artificial intelligence, so as to fully explore the value of UAV-collected data.

Police Arrest 32 Employees of Company Behind ‘Straddling Bus’ (Sixth Tone), Rated: B

The test site of China’s fantastical traffic-straddling bus was dismantled in June, and now the peer-to-peer financing company that backed the project is being investigated for illegal fundraising.

Following reports of unlawful conduct, a total of 32 suspects at Beijing-based Huaying Kailai Asset Management Co. Ltd. have been arrested, according to an announcement Sunday by Beijing police on their Weibo microblog.

European Union

Investor protection vs Access to Finance: The Growth of Alternative Finance (Crowdfund Insider), Rated: AAA

Clearly in Europe (Brexit aside) the UK has led sector growth. A combination of a culture of entrepreneurship and risk taking has combined with a supportive government and a regulatory body tasked with a mission of fostering competition – perhaps to the frustration of traditional financial firms. The rise of internet finance in the UK has engendered few occurrences of fraud to date. Growth has been sustained. Perhaps the Brits have gotten the balance right so far?

But which country has the largest alternative finance market in the world? China, of course.

Kleverlaan points to Italy as a country that has stumbled out of the gate. Something the country is attempting to rectify with recent rule changes specifically targeting equity crowdfunding.

View the full report on alternative finance here.

The European Investment Bank Pledges €18.5 million to Finance Continental European SMEs through Lendix (Crowdfund Insider), Rated: A

The European Investment Bank Group (EIB) through the European Investment Fund (EIF) has announced that it will provide €18.5 million to back a joint investment fund designed to lend money to SMEs through crowdlending platform Lendix.

Swedish tech elite’s darling startup Karma just bagged $ 4 million for its hyper-growing food waste app (Business Insider), Rated: A

Swedish startup Karma has built an app that helps restaurants, grocers and cafés reduce their food waste by selling their surplus to consumers at reduced prices.

The company has now raised between 30 and 40 million SEK ($3,5 – $4,7m) to take on Europe after a booming start in its Swedish home market.

The seed round comes from Swedish investor Eequity and global VC fund e.ventures, which has also backed the hyped Swedish fertility app Natural Cycles.

P2P Lender VIAINVEST Hits €10 Million in Funded Loans (Crowdfund Insider), Rated: A

Newly launched peer to peer lending platform VIAINVEST has announced topping €10 million in loans. The 7 month old Latvian platform said consumer loans issued by VIA SMS Group, came from the Czech Republic, Poland, Latvia and Spain.

Australia/New Zealand

Xpress Super and Australian P2P lender RateSetter announce partnership (Finder.com), Rated: A

RateSetter, Australia’s largest peer-to-peer lender, and self-managed-superannuation-fund (SMSF) administrator Xpress Super have today announced a partnership.

Through the partnership, SMSF investors will now have direct access to their RateSetter account via the Xpress Super platform, making it easier for SMSF investors to lend to creditworthy borrowers.

Introducing HashChing – an online marketplace for home loan deals (sa real estate news), Rated: A

Based in the heart of Sydney, HashChing is Australia’s first online home loans marketplace for broker-negotiated home loan deals.

All mortgage brokers are verified and rated through the website Artificial Intelligence Algorithm, selecting the brokers who offer the best services and then recommending them to borrowers in their area. Similar companies that had paved the way before HashChing had simply listed rates to the consumer through the bank or lender’s website.

Home loan rates on HashChing start from 3.59% p.a. and consumers can browse through the home loan deals page to see what offers are available.

Currently the company has helped over 14,500 borrowers with their home loan enquiries, all worth more than $7 billion dollars combined. Of which, $6 billion has come in the last 12 months alone, and the company also currently lists more than 600 verified mortgage brokers – including 30 mortgage brokers from SA.

Colliers’ alternative to bank funding (True Commercial), Rated: B

A new Colliers International service is providing an alternative to traditional bank funding by matching commercial property investors to development and investment opportunities.

The Capital Sourcing unit was established by Tim Lichtenstein, who has a track record in capital raising for commercial real estate assets.

India

UrbanClap Raises $ 21M in Series C (BW Disrupt), Rated: A

Home services start-up firm UrbanClap has raised $21 million in a series C funding round led by Internet investment fund Vy Capital. Led by Alexander Tamas, Dubai-based Vy Capital is a major investor in Zomato.

Early investors SAIF Partners, Accel Partners and series B investor Bessemer Venture Partners also participated in the round. Existing investors also spent approximately $1 million more to buy shares held by some employees and a part of stakes of angel investors Kunal Bahl and Rohit Bansal, the founders of Snapdeal, UrbanClap co-founder Abhiraj Bhal told LiveMint.

Reliance Capital arm invests $ 1 mn in P2P lending platform Billionloans (VC Circle), Rated: A

Billionloans Financial Services Pvt. Ltd, a Bengaluru-based fintech startup that operates a peer-to-peer (P2P) lending platform, has raised $1 million (around Rs 7 crore) in seed funding from Reliance Corporate Advisory Services Ltd, a wholly owned subsidiary of Reliance Capital Ltd.

Asia

Peer-to-peer loans pass 300 billion won for first time (Korea JoongAng Daily), Rated: AAA

The number of peer-to-peer loans more than doubled in just six months, going from 96.9 billion won ($84.5 million) in June last year to over 300 billion won in December.

The change represents a 220.5 percent increase, according to data provided by the Financial Supervisory Service and Financial Services Commission.

The number of users also surged 116.6 percent to 6,632 in June compared to December’s 3,062.

Singapore fintech startup Instarem raises $ 13 mn to expand payment infra (VC Circle), Rated: A

Instarem, a Singapore-headquartered cross-border payments company founded by Indian-origin entrepreneur Prajit Nanu, has raised $13 million in a Series B funding round led by Chinese venture capital firm GSR Ventures, a company statement said.

Singapore fintech startup Validus Capital raises US$ 2.9M to grow SME lending platform (e27), Rated: A

Singapore-based fintech startup Validus Capital has raised S$4 million (US$2.9 million) from Vertex Ventures.

It will use the newly-raised round to expand regionally and grow its online lending platform.

Chinese investors eye Indonesia’s P2P lending marketplace Investree for Series B (udaipur kiran), Rated: A

Indonesian peer-to-peer lending marketplace Investree announced recently that Chinese investors have initiated discussions for an investment in the company for its next Series B round.

If successful, the deal will become one of the first international investments in Indonesia’s fintech space. Previously, the startup has raised an undisclosed Series A round in 2016 from local venture capital Kejora which typically invest US$2 to US$5 million in their portfolio firms.

Authors:

George Popescu
Allen Taylor

Thursday April 13 2017, Daily News Digest

small business fintech lenders

News Comments Today’s main news: Small businesses hate fintech lenders more than big banks. All is not well in the world of student loans. UK equity crowdfunding investments set new record in March 2017. Lending Works registers 8.8M GBP in ISA since launch. Today’s main analysis:  VC funding report. Small biz lending approval rates. Today’s thought-provoking articles: Portfolio review – […]

small business fintech lenders

News Comments

United States

  • All is not well in the world of student loans. GP: “There are many parallels between credit crisis in general: investors wrong feel of safety is, I think, the main one. And in this case student debt can only be releaved in bankruptcy in very exceptional cases, in short, nearly never. So investors feel that student debt is safe. The same way as mortgages perhaps? I think we are far away from a crisis or bubble. However student debt is growing and questions have to be asked of where this is going and why. Brian from BlueElephant told me one day that any market that is being skewed by government intervention from its normal equilibrium should be avoided as the price doesn’t reflect the risk. Is the government skewing the student debt market? Certainly. I have no issue with the risk in the student debt market, I am worried about the price pressure from non-profit participants. ”  AT: “Lenders need to get better at judging risk and cutting down on defaults.”
  • Small biz lending approval rates. GP: “We now see for a few quarters an improvement in small bank’s approval rate for small business loans.”AT: “Small banks and institutional investors are doing better at approving loans than big banks and alt lenders. I wonder what this means. Could be a trust issue.”
  • Small businesses hate fintech lenders more than big banks. GP:”As a small business you have a choice to borrow money below 10% from a bank, a product you will not qualify for, or to borrow moey from MCAs and fintech at rates often above 20%, a product you will nearly always qualify for. Who do you have more? The people who have a great product they don’t want to sell to you or the ones who have an expensive product you have no choice but to buy? To me this is a huge issue for the SME fintech lending sector. This means that as soon as credit from any other institution is anywhere close to being competitive the small businesses will not use a fintech offering. The second question is why are fintechs ranked so low? My personal believe is that it’s due to the onerous terms fintech usually charge small businesses especially in comparison to banks.  “AT: “This is interesting. Significant is the fact that this data comes from successful applicants, not non-borrowers. Driving this data could be the varied nature of borrower profiles. Small banks are likely lending to prime borrowers whereas online lenders are heavily weighted toward sub-prime borrower who likely expect to be treated like prime borrowers and can’t get a loan from a bank. This requires further investigation.”
  • VC funding report Q1 2017. GP:”Unaccredited investors had no scalable legal way to invest in private stocks before. The money inventory for unaccredited investors is fixed or at best stable given the wage stagnation, and the small inflation. And I think crowdfunding also includes more entertainment thant the stock market with the benefit of often also receiving a product. “AT: “I think it’s interesting that fewer people in the U.S. are investing in stocks? Does that mean they are investing in crowdfunding asset classes?”
  • Elevate Credit not trading at elevated price. GP:” I would compare them to Yirendai more. “AT: “The comparison to Square is interesting.”
  • Should fintech startups buy banks? GP:”If you want a bank, there is rent, buy or build. These approaches are standard business questions. The real question is should you work with a bank or not. Why not an insurance company? Why not with another deposit taking structure that is not a bank? ”  AT: “I don’t see why not. The most likely targets would be community banks, if they can get there before the big banks swallow them up.”
  • Diversification 101 in MPL. AT: “Basic investing advice.”
  • Podcast: Economic analysis of real estate, Part 2.
  • Redfin vets raise pre-seed round, launch digital mortgage platform.
  • Opus releases new version of OpusNotes.

United Kingdom

European Union

International

Asia

News Summary

United States

All is Not Well in the World of Student Loans (Lend Academy), Rated: AAA

It is clear that burdensome student debt is now holding many people back financially. Student loan debt now stands at a staggering $1.3 trillion (as of the end of 2016) an increase of 170 percent over the preceding 10 years. There are three contributing factors to this increase:

  1. More students are taking out loans.
  2. The loans are for larger amounts.
  3. Borrower repayments have slowed down.

Borrowers are now leaving school with over $30,000 in student loan debt and they are defaulting more. This is particularly true of those borrowers with balances of $100,000 or more. Over 20% of borrowers who left school in 2010 or 2011 owing that amount have already defaulted on this debt (a default means they are at least 270 days past due). That is an astonishingly bad default rate.

Small Biz Lending Approval Rates Improve at Institutional Investors and Small Banks, Stall at Big Banks in March 2017 (Biz2Credit), Rated: AAA

Loan approval rates at institutional investors and small banks improved in March 2017, according to the latest Biz2Credit Small Business Lending IndexTM, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Big banks’ ($10 billion-plus in assets) loan approval were stagnant in the last month, but remained at an all-time Index high. Meanwhile, loan approval rates at credit unions and alternative lenders continues to falter.

Small businesses hate fintech lenders more than big banks (Financial Times), Rated: AAA

On Tuesday, the Federal Reserve Bank of New York released its 2016 small business credit survey, which gives us an idea of the experiences of over 10,000 firms across the US. As Matt highlighted yesterday, one of the things we learn from the research is that small business expectations doesn’t tell us much about the economy. But we also get some information on how small business owners view various sources of credit. The results for fintech startups, specifically online lenders, are not as great as you might expect:

So, the hype about streamlining processes and building better customer experiences is not all hype, though they do just slightly worse in terms of transparency.

But there is something going on with the cost of credit provided by online lenders, and the terms they demand. The survey defines ‘online lenders’ as “nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital”, so there are potentially two things going on here.

One is that online lenders typically have a higher cost of capital than banks, and so they also charge higher interest rates, which is what drives the dissatisfaction. The second is that online lenders are targeting riskier businesses, who wouldn’t be able to borrow from a bank. That would suggest the higher level of dissatisfaction about repayment terms and interest rates arises from the fact they are lending to businesses that generally encounter high borrowing costs, no matter who they are borrowing from.

Venture Capital Funding Report Q1 2017 (CB Insights), Rated: AAA

US VC-backed companies saw $13.9B in total financing across 1,104 deals in Q1’17, up 15% and 2% from Q4’16, respectively.

While Asia saw an increase in unicorn births from Q4’16, North America remained flat with a total of 3 new unicorns. Notably, Europe has not seen a new VC-backed unicorn since the first quarter of 2016.

Source: Gallup

Elevate Credit: Not Trading At An Elevated Price (Seeking Alpha), Rated: A

The fintech has funded more than $4 billion in loans for 1.6 million customers by using machine learning to lower fraud scores while providing quick lending decisions based on data inputs for a high-risk borrowing group.

Revenues grew 34% to $580 million last year while operating income expanded to $48 million, up from $9 million in 2015. The fintech is still losing money; that typically is a large negative in the recent IPO market, though other offerings have rallied despite large losses.

In total, Elevate sold 14.26 million shares at $6.50 including the over allotment amount. The company raised about $81 million after fees.

The company has a fully diluted market cap of only $350 million using a share count of 41 million and nearly 4 million of outstanding stock options.

The reality is that Square had a very subdued IPO similar to Elevate Credit. The initial price range target was $11 to $13 while the actual offer price dipped to only $9, though Square jumped back to that original price range trading around $12 for most of the first month as a public company.

Should fintech startups buy banks? (Tearsheet), Rated: A

Banks buying startups isn’t anything new. But for financial tech startups, looking for scale at any cost, perhaps the solution would actually be to buy a bank, according to a growing number of observers and experts in the industry.

There are almost 6,000 FDIC-insured banking institutions in the U.S. as of the end of 2016 and 1,541 of them have less than $100 million in assets, including a sliver of failing banks that need saving. With average common equity around $12.5 million for a healthy bank of that size, a well-established startup could pay $25 million and get fully licensed to be deposit taking.

Part of the reason startups haven’t been able to scale, at least in the retail banking world, is that so-called innovations are usually just different ways for people to interface with their banks, while core banking transactions – deposits, loans, mortgages and payments – generally remain the same on the backend. In other words, there hasn’t truly been an Uber for banking, said Pascal Bouvier, a venture partner at Santander Innoventures. Most fintech startups operate at the thin outer layer of banking.

The valuation gap between fintech startups and banks makes it difficult to structure a deal, he said. Banks tend to be valued more through historical earnings and the price of tangible book value, whereas fintech startups, because of their perceived high growth potential, often tend to have higher earnings multiples.

Diversification 101 in Marketplace Lending (LendingClub), Rated: A

While loans are issued in amounts between $1,000 and $40,000, Notes can be purchased for as little as $25.

If you invested $2,500 in only one borrower and that borrower becomes late and the loan eventually charges off, you could potentially lose 100% of your total investment amount. If you invested $25 in 100 different borrowers your potential loss on any single Note would be limited to 1% of your total investment amount.

 

Episode 6 – Economic Analysis of Real Estate, Part 2 (RealCrowd), Rated: A

In this episode listeners will learn about:
– How rising household income impacts multifamily investments
– How property tax factors into decision making
– Where to access data on real estate markets
– What asset class RealSource is pursuing in this current economic climate 

Redfin Veterans Raise Pre-Seed Round and Launch Digital Mortgage Platform “Approved” (Yahoo! Finance), Rated: A

Approved launched its digital mortgage platform today, aimed at radically simplifying the home loan experience for lenders and borrowers nationwide. The company raised $1 Million in pre-seed funding led by Social Capital and Precursor Ventures to support the launch.

Lenders in the pilot saw an average 50% reduction in the time it took to get those documents.

Approved technology includes:

  • DocCast™: Automatically collect original bank statements, W2s, 1099s, 1040s and paystubs.
  • DocVision™ Camera Scanning: Allows borrowers to securely “scan” documents using their mobile devices.
  • White-labeled Dashboards: A delightful and frictionless platform for borrower and lender collaboration.
  • Digital Document Library: Support for all popular loan programs.

Opus releases new version of OpusNotes (Hedgeweek), Rated: B

Opus Fund Services, a provider of hedge fund administration services, has launched new release of the OpusNotes loan accounting platform for marketplace lending vehicles.

United Kingdom

Latest OFF3R Index Data Reveals Significant Increase in Equity Crowdfunding Investments in March 2017 (PR Web), Rated: AAA

This record breaking figure smashed the previous monthly high, set back in July 2015, by over £13 Million. This made March 2017 the most successful month for the total amount raised via equity crowdfunding platforms in the young life of the asset class in the UK.

According to the data from OFF3R, equity crowdfunding had a very strong finish to 2016 but had so far had a slow start to the year.

The data revealed that March 2017 was a strong month for the sector. Just over £300 Million was lent in March via the platforms that form the P2P element of the OFF3R Index, including Zopa, Ratesetter and Funding Circle. This was marginally higher than February’s data but slightly down from January’s year to date high.

Lending Works Announcement: £8.8 Million Has Been Invested In ISA Account Since February 2017 Launch (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lending platform Lending Works announced on Wednesday £8.8 million has been invested into the company’s Individual Savings Account (ISA) since its launch on February 8th.

Lending Works reported given that there are no limits on transfers of ISA funds accumulated in previous financial years, the largest individual investment to date within a Lending Works ISA stands at £154,190, while the average amount invested among the 815 ISA investors currently stands at £10,769.

Fintech founder: I would not set up in London today (Financial News), Rated: A

The founder of one of London’s best-known fintech startups has said that he would not choose London as a location to set up his business today, as he has “no idea what Brexit will mean”.

Taavet Hinrikus, the chief executive and co-founder of online FX service TransferWise, urged the UK government to quickly secure access to talent and trade with Europe in a post-Brexit world.

Funding Circle’s Desai: use P2P for monetary stimulus (P2P Finance News), Rated: A

UK POLICYMAKERS should start using peer-to-peer platforms to stimulate the economy, Funding Circle’s chief executive and co-founder Samir Desai said on Wednesday.

The head of the country’s third-largest business lender called on the government and the Bank of England to bypass the banking system and inject monetary stimulus via P2P platforms, capitalising on the direct access they provide to the real economy.

Boost Capital Secures New £15m Credit Line (Boost Capital Email), Rated: A

No end to Boost Capital’s growth spurt as the business funding specialist secures new £15m credit line to meet small business loan demand.

An extra £15m will now be available to UK small businesses, after alternative business lender Boost Capital secured a new credit line from American Investment Firm Atalaya Capital Management.

Ex-Aldermore director joins SME lending platform (Bridging and Commercial), Rated: B

SME lending platform Growth Street has announced the appointment of a new commercial director and general counsel.

Chris Weller will serve as commercial director, having formerly held the role at Aldermore Bank from 2013-14 before becoming sales director for invoice finance until 2015.

Meanwhile, general counsel April Nardulli joins from P2P platform RateSetter, having served as senior regulatory counsel, regulatory lawyer and interim compliance manager since her appointment in 2015.

European Union

Finbee Experiences – My Portfolio Review (P2P-Banking), Rated: AAA

A year has passed since I last wrote about the portfolio I built on Finbee. Currently I have invested 1,027 Euro in 35 loans. 32 are current (965 Euro), 2 are late (23 Euro) and one is in default (38 Euro), but rates for this loan are paid to me by Finbee’s compensation fund. The average interest rate of my loan parts is 31%.

My self calculated yield (XIRR) is 31.5%. This is the highest I achieved on any p2p lending marketplace over a longer duration of time. Calculating the result again, this time with assuming a full write-off of the defaulted loan gives a yield of 29.4%.

Why banks are reluctant to enter the roller coaster of FinTech (JAXenter), Rated: AAA

Blockchain, NFC, Peer to peer lending are just a few of the options traditional banking could have fully adopted. This would have had a tremendous impact on the way we exchange transactions, do business and live our lives. However, I cannot name a big bank that has jumped on the bandwagon and delivered a fully-fledged product in this area. Just the opposite — the stories I hear are, for example, about two of the top executives of BNP Paribas in Bulgaria leaving the company to start their own Peer to peer lending platform called Klear. Why didn’t they initiate this project inside the organization?

I think there are two factors causing this:

  • Internal factor: Company culture in the traditional banking
  • External factor: The public image of banks is all about security, while innovation relates to risk.

Usually, new banking products need a lot of IT involvement — for each new type of deposit/loan you need someone to implement tens of forms and wizards.

How to enable innovation in banking

We have a good example of consortium of banks coming up with a radical move to start a joint blockchain project. This way none of the big players risks their own reputation.

Another way to announce innovative projects is by strongly focusing on the physical design and digital UX of the innovation because, believe it or not, the mass client judges how reliable something is by the external look of it.

Former HSBC banker Lake joins fintech revolution (Financial News), Rated: B

Spencer Lake, a former HSBC banker who led the group’s global capital financing business, has joined a fintech firm that boasts the UK bank as one of its main clients.

Lake has been named vice-chairman of Fenergo, a Dublin-based firm that makes what it calls client lifecycle management software, according to a statement from the company on April 12.

International

How fintech startups are helping SMEs choose who they do business with (Daily Fintech), Rated: A

According to Xero, 38 percent of small business owners indicate late payments cause them to delay payments to their suppliers, while 15 percent claim this often sees them delaying wage payments to staff, along with other benefits.

62 percent of businesses would not survive more than three months if all invoices went unpaid, while nearly 25 percent wouldn’t last a month.

Xero’s Live Contacts, a partnership with the local arm of credit bureau Equifax (formerly Veda) is one such data driven solution. As part of a paid-up Xero subscription, businesses can now see a credit risk indicator against a contact in their database, helping them to better assess whether to do business or not, or even risk adjust payment terms.

At the other end of the data spectrum, CreditMonk in India allows businesses to add a review of a creditor’s payment behaviour via its platform.

Asia

SINGAPORE-based Marvelstone Capital, which is a data-driven asset management company, is planning to launch its robo advisor platform for family offices in Asia in the third quarter of this year.

According to Cho, the robo advisor platform is being developed with Singaporean fintech startup Smartfolios, which is focused on building next-generation advisory and thematic investment technologies. The robo advisor will be available on desktop and mobile for Marvelstone Capital’s clients.

To give an idea of the market size of family offices in Asia, Cho cites a report that says that overall, the billionaires in the Asian market have about US$400 billion of assets at their disposal, which equates to an average of about US$3.6 billion per individual, which in turn makes all of them potential clients of family office solutions or even owners of single family offices. (Source:

Cho explains that family offices with below US$1 billion assets under management are the underserved family offices.

He adds that second priority countries will be Korea, China, Taiwan and Japan and that the third priority will be emerging markets such as Myanmar and Vietnam.

30 Under 30 Asia 2017: The Top Young Venture Capitalists And Fintech Entrepreneurs (Forbes), Rated: AAA

Val Yap founded PolicyPal — a Singapore-based smartphone app that helps users never miss a premium by tracking all their insurance on one dashboard.

MoolahSense Adds Invoice Financing to List of Services (Crowdfund Insider), Rated: A

Singapore-based MoolahSense, a marketplace lending platform, has added invoice financing as a new product line. The new service will allow SMEs to access financing to address short-term capital needs of up to $15,000. For investors, a nominal interest rate of up to 12% may be earned. An invoice backed loan would mature in 15 to 90 days’ time and investors would be able to receive returns in a relatively shorter period of time.

Authors:

George Popescu
Allen Taylor