Friday May 18 2018, Daily News Digest

Seedinvest returns vs traditional

News Comments Today’s main news: PayPal to buy iZettle. LendInvest integrates with Stripe. KBRA assigns preliminary ratings to Avant Loans Funding Trust 2018-A. Ant Financial extends dominance. Today’s main analysis: SeedInvest delivers 17.4% IRR. Today’s thought-provoking articles: UK tech expanding faster than the rest of the economy. Why spreading fiber optic cable in Africa offers hope. Digital transformation is key […]

Seedinvest returns vs traditional

News Comments

United States

United Kingdom

European Union

International

  • PayPal to acquire iZettle for about $2.2 billion. AT: “This is huge news. If PayPal becomes a regular option in retail stores alongside Visa and Mastercard, it could become the defacto payment option for the majority of consumers. Of course, it will still have to compete with Square, Affirm, and Klarna. It’s bright spot is the massive head start is has over all of the above.”
  • Bitcoin boosts fintechs. AT: “I just can’t see any way that lenders and othe fintech companies to lose by offering crypto alternatives to their current products.”

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2018-A (Business Wire) Rated: AAA

-Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2018-A (“AVNT 2018-A”). This is a $221.935 million consumer loan ABS transaction that is expected to close on May 31, 2018.

Preliminary Ratings Assigned: Avant Loans Funding Trust 2018-A

Class Preliminary Rating Expected Initial

Class Principal

A A- (sf) $149,010,000
B BBB- (sf) $47,500,000
C BB- (sf) $25,425,000

SeedInvest Publishes Report on Investor Returns, Delivers IRR of 17.4% (Crowdfund Insider) Rated: AAA

SeedInvest, one of the largest investment crowdfunding platforms in the US, has released a performance report on investor returns. SeedInvest has been in operation since 2013 following the creation of accredited crowdfunding under Title II of the JOBS Act (Reg D 506c). Since that date, SeedInvest has become a full stack crowdfunding platform offering investments in the three different crowdfunding exemptions to both accredited and non-accredited investors.

Source: Crowdfund Insider

According to SeedInvest, investors on their platform have generated an unrealized Internal Rate of Return (IRR) of 17.4%1 since 2013. In comparison, this number is 1.5x greater than the 11.7% median return calculated by research firm Cambridge Associates for U.S. venture capital funds of the same vintage. The term of the report was up to the end of 2017.

SeedInvest said that the top 10% of their listed investors generated an a whopping 76.86% IRR while the bottom 10% delivered a negative 7.4% IRR. SeedInvest estimated that only 1.3% of their platform investors who have invested in three or more companies have generated negative unrealized IRR.

Check out the full report here.

Study Details Why Women Entrepreneurs Have Greater Crowdfunding Success (Entrepreneur) Rated: A

Crowdsourcing has emerged as a positive platform for women. The National Women’s Business Council released a report — Crowdfunding as a Capital Source for Women Entrepreneurs — based on exclusive and original data from the two leading crowdsourcing platforms, Kickstarter and Kiva. The goal was to determine various predictors of success on crowdsourcing platforms for women business owners, and if those predictors of success were different than their male counterparts.

Real Estate Crowdfunding Platform Small Change Lists Side by Side Reg CF – Reg D 506c Offer (Crowdfund Insider) Rated: A

Recently, Small Change has listed their first side-by-side Reg D 506c / Reg CF offering thus leveraging a work around other securities crowdfunding platforms in the early stage space have incorporated.

 

The SEC Just Launched a Fake ICO Website to Educate Investors (CoinDesk) Rated: A

The regulator announced Wednesday it has launched a mock ICO called HoweyCoin, presumably named after the Howey Test, which “touts an all too good to be true investment opportunity.”

However, the company notes, “the offer isn’t real.” Users who try to invest in the token sale will instead be redirected to the regulator’s education tools, which are aimed at pointing out the signs of fraudulent token sales.

BlackRock’s bet on Acorns is a bet on tomorrow’s investor (Financial Planning) Rated: A

BlackRock’s investment in microinvesting app Acorns underscores an evolution occurring in financial services in its shift toward digital — that gaining scale early will be essential to amassing future client assets.

The world’s largest asset manager is leading a $50 million funding round that will build out the startup’s portfolio stack with new investment options. It also gives BlackRock an inside look into the behavior of next generation investors, which it says will help fine-tune future releases and broaden its appeal beyond large institutions and pension funds.

Fundation grabs $ 120 mln from SunTrust (PE Hub) Rated: A

Fundation Group LLC, a lender and credit solutions provider, has secured a $120 million credit facility from SunTrust Bank. Fundation is also backed by Waterfall Asset Management and is majority-owned by Garrison Investment Group.

TransUnion Announces Agreement to Acquire iovation to Strengthen Fraud and Identity Solutions (Omaha World-Herald) Rated: A

TransUnion (NYSE:TRU) has agreed to acquire iovation, one of the most advanced providers of device-based information in the world, strengthening its leadership position in fraud and identity management.

PR Mortgage & Investments Selects SS&C Precision LM to Support Its Agency Lending Operations (SS&C Technologies) Rated: B

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that PR Mortgage & Investment Corp. (“PR Mortgage”) has selected SS&C Precision LM to support loan servicing and origination for HUD/Ginnie Mae, Fannie Mae, Freddie Mac and its banking programs. SS&C Precision LM will also enhance PR Mortgage’s asset management and investor reporting, and provide secure web-based portals for borrower self-service and document workflow automation.

United Kingdom

LendInvest Announces Integration With Payments Platform Stripe To Streamline Loan Application Process (Crowdfund Insider) Rated: AAA

On Thursday, specialist property finance lender LendInvest announced it has expanded on its long-term partnership with Stripe by integrated the payments platform in order to streamline its loan application process. According to the online lender, the new integration will be embedded in the primary stages of the buy-to-let loan application process. LendInvest reported:

“Stripe allows the broker to pay the valuation fee through LendInvest’s online buy-to-let portal immediately after the borrower’s application forms have been signed. This process was previously handled manually, with the case manager having to call the broker and then the borrower to arrange payment. Managing these payments centrally through LendInvest’s self-service online portal cuts down the overall time taken to complete the application, whilst providing a transparent way to track this stage of the application process.”

Tech Nation 2018 report: UK tech expanding faster than the rest of the economy (Information Age) Rated: AAA

Tech is expanding 2.6 times faster than the rest of the UK economy, according to Tech Nation’s 2018 report. The digital tech sector is worth nearly £184 billion to UK economy, up from £170 billion in 2016.

London ranks as second most connected place for tech in the world, after Silicon Valley. But, when it comes to proportion of overseas customers, the UK capital trumps the self-appointed tech capital of the world.

The UK’s digital tech sector continues to accelerate faster than the rest of the economy, according to Tech Nation 2018. Turnover of digital tech companies grew by 4.5% between 2016-17 compared to UK GDP which grew by 1.7% over the same period, according to the figures.

HSBC to tap Open Banking potential through new partnership (AltFi News) Rated: A

HSBC UK is set to capitalise on the opportunities presented by Open Banking after agreeing to a partnership with consents.online, an Account Information Service Provider (AISP).

Under the deal, HSBC can access consumer transaction data held by other organisations. The bank plans to use this information to launch new consumer products.

It will also use consents.online’s consent management architecture, which allows consumers to view and control how their data is used. The platform gives consumers and small businesses the ability to see who is accessing their data and to control access – with the power to revoke it at any time.

Peer to Peer (P2P) Lending – Withholding Tax Obligations – Borrowers (and Lenders) Beware (Lexology) Rated: A

Borrowers and lenders should be aware that currently Ireland’s withholding tax regime has not been amended for P2P Lending (aside the ability in certain circumstances to group payments together to the same lender in a calendar year) and in that regard the Irish Revenue Commissioners have issued a timely Revenue eBrief reminding Irish corporate borrowers (as well as lenders) of their Irish tax obligations. In particular the general obligation on an Irish corporate borrower2 to, amongst other things, withhold tax on interest payments made on the finance raised, at the standard rate (currently 20%) subject to certain exceptions, most of which will not apply where the lender is an individual, regardless of where resident.

Ablrate takes equity stake in Huddle (Peer2Peer Finance) Rated: A

ABLRATE has taken an equity stake in fellow peer-to-peer lender Huddle, as part of a wider strategic partnership between the two platforms.

Under the new deal, Ablrate has taken a minority holding in the business lender and the two platforms will share their investor bases.

 

Atom Bank launches mortgages for first-time buyers (AltFi News) Rated: A

Digital banking app Atom has launched first-time buyer products on its standalone Digital Mortgages platform.

The new loans will offer first-time home-buyers £500 cashback, along with a free valuation and no product fee. The newly-launched range will be available for mortgages between 80-95 per cent loan-to-value (LTV). The range consists of two, three and five-year fixed rates mortgages, with rates starting at 2.24 per cent.

The platform has also extended its existing range by adding 95 per cent LTV products for its purchase and remortgage products.

Furthermore, Atom has removed the £300,000 limit on first-time buyer applications and increased its maximum mortgage term from 35 to 40 years – changes meant to increase its flexibility and in line with broker feedback.

BitBose ICO (BOSE Token): Crypto Lending & Investment Platform (Bitcoin Exchange Guide) Rated: B

  • The platform will also have the Bitbose crypto loans program that will allow users to be able to receive real cash by holding to their crypto assets in a secured platform. The program offers an easy way for users to get money without having to sell their crypto assets. The program will have an easy to borrow and lend application, almost instant approval of loans and the borrower will get their cash instantly since it will be credited to borrower’s bank account. The interest rates are also competitive and do not have advance payment requirements. Another significant feature of the program is the lack of a capital block. Users of the program can withdraw their assets back anytime.
China

Ant Financial extends dominance in Chinese online finance (Financial Times) Rated: AAA

In documents reviewed by the FT Ant Financial says they now have more than 620 million users and their wealth management business has $345bn in assets under management; the information was put together for investors as the fintech company looks to raise $10bn of new capital; reports say the round is already oversubscribed and would value Ant Financial at more than $160bn

European Union

Hermes launches European Direct Lending Fund (AltFi News) Rated: A

Hermes Investment Management has launched the Hermes European Direct Lending following on from the launch of a UK direct lending fund in 2016.

Also headed by Patrick Marshall, Hermes head of private debt & CLOs, the European focused direct lending fund aims to offer institutional investors access to stable, low-correlated returns from high-quality, senior-secured loans.

These loans are typically to middle-market businesses in the UK and Europe, with a focus on Scandinavia, Germany, Benelux and Ireland.

Lendix Appoints Luuc Mannaerts As New CEO of Lender Nederland (Crowdfund Insider) Rated: B

Earlier this week, France-based online lending platform Lendix announced it has appointed Luuc Mannaerts as the new CEO of Lender Nederland, Lendix’s Dutch subsidiary. According to the online lender, Mannaerts has more than 20 years of experience in the Dutch and European banking sector.

Prior to joining Lendix, Mannaerts was CEO of ABN AMRO Commercial Finance, an ABN AMRO subsidiary with over 500 employees and specializing in SME finance in the Netherlands, the UK, France, and Germany. Lendix also revealed that thanks to his background, Mannaerts has specialized knowledge of the Dutch SME fabric

International

PayPal Agrees to Buy European Fintech Startup iZettle for About $ 2.2 Billion (Wall Street Journal) Rated: AAA

PayPal Holdings Inc. has agreed to buy European financial-technology startup iZettle AB for about $2.2 billion, a move that would catapult the U.S. digital-payments giant into hundreds of thousands of brick-and-mortar retailers around the world.

The acquisition, the largest in PayPal’s history, sets up a showdown between the San Jose, Calif., company and Jack Dorsey’s Square Inc.

Bitcoin is steroids for fintech startups that big banks are afraid to touch (Quartz) Rated: AAA

Making money by trading bitcoin, whose price has fallen by about 40%this year, has been difficult lately. But startups that provide services supporting crypto markets are faring much better. Companies like Revolut, a payment app, and Robinhood, a mobile broker, scoredlegions of new customers after they added buying and selling of digital tokens to their services.

TransferGo, a remittance company, is another fintech upstart that plans to offer crypto trading to customers. CEO Daumantas Dvilinskas says users were asking for ways to buy digital assets—about 4,000 people pre-registered for the service in just a few hours. The London-based firm, which announced today that it raised an additional $10 million from venture capital investors, will soon allow customers to buy and sell bitcoin, ethereum, XRP, litecoin, and bitcoin cash.

India

Fintech Startup Open Raises Pre-Series A Funding (Inc42) Rated: AAA

Bengaluru-based fintech startup Open Financial Technologies has raised an undisclosed amount of pre-series A funding led by Unicorn India Ventures and Recruit Co. Ltd, through its investment subsidiary RSP India Fund LLC.

Existing investors ISME-ACE and Vaibhav Domkundwar’s BetterCapital AngelList syndicate also participated in the round.

How has lending Money to SME evolved in India? (The Indian Wire) Rated: A

According to a report by Planning Commission of India, the MSME sector comprises 30 million establishments. It generates employment for 70 million people, manufactures over 6000 products, and contributes 45% to manufacturing output and 40% to exports. These statistics validate the fact that MSME sector is the backbone of the Indian economy.

There are several reasons why small and medium-size enterprises are unable to secure easy and quick business loans in India:

  • They do not have hard assets to mortgage, which disqualifies them from loans offered by most credit channels.
  • They do not have documented credit scores to assess their creditworthiness.
  • The loan application process in banks and other mainstream financial institutions is very tedious.

 

Asia

Validus, Lighthouse Canton launch S$ 20m SME financing fund (The Business Times) Rated: A

VALIDUS Capital and Lighthouse Canton Group launched a S$20 million fund to finance small and medium enterprises (SMEs) in Singapore on Friday, and hope to grow the fund to S$200 million in the next three years.

The LCV Trade Finance Fund will invest in loans that originate from Validus’ peer-to-peer lending platform.

Africa

Why the Spreading Network of Fibre Optic Cables Carries So Much Hope for Africa (Equities) Rated: AAA

The growing fibre infrastructure also has a direct impact on labour markets across the continent as the demand for specialized technicians and engineers increases. Plus, because fibre gives users and businesses access to more bandwidth, this technology is helping spur growth for small businesses directly and indirectly.

To illustrate, online P2P lending platforms such as Kiva and Lending Club have become quite popular with small businesses around the continent that now maintain an online presence. As a result, small business owners have ready access to unsecured business lines of credit, which helps them grow outside the confines of traditional financial systems.

Latin America

Why Digital Transformation Is Key to Argentina’s Future (Knowledge@Wharton) Rated: AAA

A surging U.S. dollar is playing havoc with its interest rates and the central bank pushed the key rate from 27.25% to a stunning 40% recently to support the peso. Even that was not enough to stem the run on the currency, and last week the government requested aid from the International Monetary Fund in the form of a $30 billion credit line.

In a country that has one of the smallest financial systems in the world as a percentage of GDP (14%), some of the world’s highest interest rates, and where nearly half of the population is unbanked, the opportunities presented by digital technologies are tremendous.

These include 123Seguro, the largest online insurance broker in Argentina, Mexico and Colombia, which is growing over 50% per year with an admittedly simple offering, and Afluenta, a peer-to-peer lending platform serving Mexico, Peru, Colombia and Argentina, and now expanding into Brazil, Chile and Uruguay.

Authors:

George Popescu
Allen Taylor

Monday November 21 2016, Daily News Digest

orchard weekly update

News Comments Today’s main news: iovation predicts increase in holiday CNP fraud. Today’s main analysis : PeerIQ goes to Washington. Today’s thought-provoking articles: Orchard’s weekly snapshot. Tech City News. Protect college students from online lending. New shot at lending for SMEs. United States iovation predicts increase in holiday CNP fraud. AT: “The takeaway here is that we are […]

orchard weekly update

News Comments

United States

  • iovation predicts increase in holiday CNP fraud. AT: “The takeaway here is that we are well past due for credit card companies, online merchants, and, yes, online lenders to provide stronger security for digital currency transfers. The increase of mobile phones has created a huge challenge that needs to be solved.”
  • PeerIQ Weekly Update. GP: ” A must read summary of what is going on in Washington and how it will affect the online lending space. From SEC , to OCC to more..”. AT: “Very interesting read. Take a look at upcoming regulation and changes taking place at the SEC.”
  • Orchard’s weekly online lending snapshot. AT: “Mostly a rehash of last week’s news, but worth a refresher.” GP:” There were a lot of news last week. Important to keep up.”
  • Uplift brings online lending to travel market.

United Kingdom

Australia

China

India

Asia

United States

iovation Predicts New EMV Chip Cards Will Lead to Significant Increase in Online Holiday Fraud (Marketwired), Rated: AAA

iovation, a provider of device intelligence for authentication and fraud prevention, is predicting a significant increase in card-not-present fraud — fraudulent transactions where a credit card is not physically presented to a merchant — from Black Friday to Cyber Monday when compared to past years. iovation attributes the anticipated rise in fraud to the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards.

This upward trajectory aligns with a report released earlier this year by iovation and research and advisory firm Aite Group — which found CNP fraud will cost retailers and financial institutions $7.2 billion in the United States by the end of 2020. Conversely, the report found that as more merchants become EMV-capable, counterfeit fraud will fall from a high of $4.5 billion to less than $1 billion in 2020.

New research from iovation finds that since October 2015 online credit card fraud increased 35 percent.1 October 2015 was when the U.S. liability shift began where U.S. merchants who didn’t accommodate chip cards faced a larger financial burden for fraudulent transactions.

iovation also predicts that 52 percent of retail online transactions from Black Friday to Cyber Monday will be conducted using mobile phones and tablets this year. This continues an ongoing mobile retail transaction increase over the holidays and year-to-year. Specifically, iovation data shows:

  • The annual growth in mobile retail transactions
    • 44 percent of all online transactions were made from a mobile device in 2015
    • 32 percent of all online transactions were made from a mobile device in 2014
    • 20 percent of all online transactions were made from a mobile device in 2013
  • Mobile retail transaction increases over Black Friday to Cyber Monday
    • 47 percent of all online transactions were made from a mobile device during the period in 2015
    • 37 percent of all online transactions were made from a mobile device during the period in 2014
    • 31 percent of all online transactions were made from a mobile device during the period in 2013

PeerIQ Weekly Update: November 20, 2016 (PeerIQ Email), Rated: AAA

In this “PeerIQ Goes to Washington” newsletter, we synthesize our findings from dozens of conversations with market regulators and industry participants. Specifically, we discuss the likely direction of SEC leadership, what to look for in the OCC charter, and legislation that may alter the financial regulatory landscape.

On the capital formation panel, in response to Sebastian Gomez’s (SEC Head of Office of Small Business Finance) opening question on what innovation is driving capital formation, PeerIQ CEO, Ram Ahluwalia, noted:
  • Banks, facing stringent capital and liquidity rules, have tightened access to credit.
  • Non-banks, using technology and customer experience innovation, are filling the lending gap. Remarkably

    Weekly Online Lending Snapshot – November 18, 2016 (Orchard Platform), Rated: AAA

    Prosper Marketplace announced that CFO David Kimball had succeeded Aaron Vermut as CEO. They have not announced who will take over the vacated CFO position. It was also reported this week that former Lending Club CEO, Renaud Laplanche, is working on a new lending business called Credify Finance Corp. that hopes to begin originating loans in 2017, and the U.K.’s Zopa intends to launch a digital bank. Lastly, this week’s news about the uptick in delinquencies that have breached the triggers of a handful of securitizations of online consumer loans appears consistent with Orchard industry data showing an increase in charge-offs at originators across consumer credit grades—particularly from the riskier grades of older vintages.

    UpLift brings marketplace lending to travel industry (Bankless Times), Rated: A

    Through their flagship product Pay Monthly, UpLift allows customers to book vacations and make monthly payments at low interest rates, CEO Brian Barth said.

    Enter UpLift, which is already integrated with more than 200 travel partners, Mr. Barth said.

    Many travelers will spend more when they see, for example, that an ocean view room will only cost them $15 per month more, Mr. Barth added. Insurance purchase rates double when it costs three or for dollars more per month.

    It is clear to see UpLift’s allure to travelers, but investors find it equally attractive, Mr. Barth said.

    Smaller average loan sizes also make it easier for institutional and accredited investors to diversify, Mr. Barth said while adding UpLift does not tranch loans.

    United Kingdom

    Top tech stats: London crowned top tech startup city, global VC FinTech investment & more (Tech City News), Rated: AAA

    Welcome to your round up of some of the past week’s most interesting surveys, statistics and reports relevant to those involved in the UK tech industry.

    An index by alternative investments marketplace Off3r has outlined the month-on-month performances of equity crowdfunding and peer-to-peer lending platforms over the last year.

    The report analysed major equity crowdfunding platforms including Seedrs, Crowdcube and Syndicate Room, showing the combined total raised was £216.25m.

    Just 43% of FinTech employees believe gender diversity helps drive performance, according to a survey of staff working in London by Astbury Marsden.

    With 69% of FinTech companies being made up of men only, this is perhaps unsurprising.

    A recent survey of 800 executives, IT managers and project management professionals by Changepoint revealed that although 78% of employees want to use mobile time-tracking apps, only 11% currently do so.

    Overall global investment in FinTech increased by 27% to $15.2bn up to Q3 2016, according to statistics compiled by Innovate Finance. This has already surpassed the 2015 total of $14.9bn.

    However, despite the soar in global investment, UK VC investment for FinTech firms decreased by 26% in Q3 2016, with the year’s total investment standing at $532m. This is approximately half of the FinTech investment total for 2015.

    London is the top city in Europe to start a tech business, according to the European Digital City Index, compiled by innovation foundation Nesta and the European Digital Forum.

    Four City Contenders For London’s ‘Fintech Capital of Europe’ Crown (Forbes), Rated: A

    Before the fateful day of June 23, 2016, London was the undisputed fintech startup and financial capital of Europe. Whether the vote to leave the EU will change that will depend on the post-Brexit landscape, but without access to the single market, and free movement of continental tech talent, London’s ability to retain its prestigious title is already being called into question.

    Speculation is rife over London’s most likely successor.

    No sooner had the Brexit result been announced than Berlin was claiming the European fintech throne. The German capital has a mature fintech community, with Spotcap and Lendico two of its biggest success stories, and it is home to plenty more nimble, crowd investment, peer-to-peer lending and online marketplaces that are successfully operating beyond Germany’s fintech ecosystem.

    Famous for unicorns like Spotify, King, and Minecraft, Stockholm has also produced some great fintechs, such as crypto currency company KnCMiner, mobile payment firm iZettle, and Lendify, which have all enjoyed extraordinary success.

    A worthy contender to the top fintech spot, The Netherlands has a solid reputation built on a buoyant financial services industry, a large capital assets base, and innovative banks, such as ING and Rabobank. Credited as the birthplace of the stock market, Amsterdam is a fast growing European fintech hotspot.

    Not long ago the Portuguese capital would have been considered a rank outsider in the EU fintech rankings. Not so today, thanks to a flourishing funding ecosystem, boosted by government incentives and growing interest from VC firms like Caixa Capital, all of which has helped to make the city a major draw for tech entrepreneurs and an attractive base for an expanding fintech cluster.

    Not long ago the Portuguese capital would have been considered a rank outsider in the EU fintech rankings. Not so today, thanks to a flourishing funding ecosystem, boosted by government incentives and growing interest from VC firms like Caixa Capital, all of which has helped to make the city a major draw for tech entrepreneurs and an attractive base for an expanding fintech cluster.

    Landbay launches specialist buy-to-let range (Financial Reporter), Rated: A

    Peer-to-peer lending platform Landbay has launched a new range aimed at professional landlords, including products for HMOs and expats.

    The three products, available up to 75% LTV, include a standard term tracker at 3.88%, a HMO/MUFB term tracker at 3.98%, and an expat term tracker at 4.38%.

    Australia

    Southern Cross Financial to become peer-to-peer mortgage lender (Stuff), Rated: AAA

    There’s a “perfect storm” putting wind into the sails of what will be New Zealand’s newest peer-to-peer lender.

    Southern Cross Financial will “push the button” on December 1 transforming it from an old-style contributory mortgage broker to a peer-to-peer (P2P) lending business.

    Going P2P would make Auckland-based Southern Cross Financial the country’s first “significant” P2P mortgage lender, chief executive Luke Jackson said.

    Financial advice businesses that do not offer a digital advice service will be the “exception rather than the rule”, according to Ignition Wealth.

    The robo-advice provider also noted that financial advice businesses will not have to refund fees due to non-service under digital advice.

    Fordree added that digital financial advice could follow the trend of the ATM, which progressed from being a novelty service to one that had become an essential service of everyday life.

    Fintech fund Reinventure seeking riskier investments (The Australian Business Review), Rated: A

    Armed with a $50 million cheque from Westpac and many lessons from their first fund, Danny Gilligan and Simon Cant are dialling up the risk.

    Not the type that raises eyebrows in banking, but rather trying to get more blockbuster returns out of the more mainstream fintech industry, even if that means failing often.

    Cant, a lawyer who worked in the media before co-founding Reinventure, adds that making riskier investments with their new fund will partly be driven by a strategy to be more “non-consensus”, and bet on fintech start-ups that few others like.

    China

    Protect College Students from Online Lending Firms (Women of China), Rated: A

    Despite strengthened control of online lending platforms that target students, college students continue to fall prey to online loan sharks, which points to the failure of regulatory authorities to combat such scams.

    In March, a college student in Central China’s Henan Province committed suicide for failure to repay the money he had borrowed through a number of online lending platforms. The first amount he borrowed was not high, but given the high interest rate, commission charges and surcharges for delayed payment, he continued borrowing to repay his initial, unending debt.

    According to media reports, many university students use their own nude photos as collateral to borrow money from online lenders, which shows that part of the online lending market remains unregulated. Therefore, regulatory forces should renew their efforts to cleanse the market.

    Online lending companies should be more strictly regulated not only because they have covertly lent money to college students, but also because many of them have used irregular and illegal means to make profits. For example, some reports say many online lending companies charge interest rates that are many times the normal rate of banks. In other words, they have engaged in illegal financial operation, or usury, which is a crime.

    Inda

    Financial Inclusion: Threats dwarf opportunities (Deccan Herald), Rated: A

    Over the last decade, three key enablers for technology-led financial inclusion have emerged. First, there has been a rapid expansion of mobile telephony. Secondly, the government has developed ‘Aadhaar’: a biometrically linked unique identity number. Finally, there has been increase in the number of basic bank accounts, for example through the government’s ‘Jan Dhan Yojana’, under which 25 crore bank accounts have been opened since 2014.

    These enablers come together to form the JAM Trinity: ‘Jan Dhan Yojana’, ‘Aadhaar’ and Mobile,  which allow the government to better target subsidies to the poor and transfer money to bank accounts directly, cutting out the middle man and reducing leakages.

    Financial technology can also be used for more complicated services like insurance and lending. For lending, banks have traditionally used loan officers and a deep paper trail to assess the creditworthiness of the borrower. The challenge is to replicate this at a lower cost using information technology.

    We want to tap salaried middle class: Anuj Kacker (DNA), Rated: A

    MoneyTap, an app for credit line to salaried customers, is the second entrepreneurial venture of Anuj Kacker.

    It’s an app for credit line for salaried customers, not for businesses.

    It is India’s first app-based credit line. The concept of a credit line or a personal line of credit exists in business but if somebody wants an Over Draft (OD) facility, a customer like you and me, we can’t get it.

    Asia

    Special Report: New shot at funding for creditworthy SMEs (The Edge Markets), Rated: AAA

    Securities Commission chairman Tan Sri Ranjit Ajit Singh notes that Malaysian SMEs face a financing gap of a staggering RM80 billion.

    This is based on the SC’s internal research and analysis which found that SMEs and micro-enterprises as a whole would need that amount of financing, but found it difficult, if not impossible, to get loans from conventional banks.

    P2P lending has landed in Malaysia with the SC last Thursday announcing the registration of six approved platform operators.

    The six operators are B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, Managepay Services, Funding Societies Malaysia and Peoplender. (See sidebar for details.)

    Authors:

    George Popescu
    Allen Taylor