Thursday August 8 2019, Weekly News Digest

LendingClub

News Comments Today’s main news: Funding Circle debuts U.S. ABS platform for small biz loans. LendingClub to pursue national bank charter, reports Q2 losses. SoFi sues unnamed defendants over Consumer Loan Program 2015 Trust. DigiFi launches first open-source loan origination system. BlockFi raises $18.3M for crypto lending. Funding Circle posts higher revenues, bigger pre-tax losses. […]

The post Thursday August 8 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Funding Circle debuts ABS platform for U.S. small-business loans (Asset Securitization Report), Rated: AAA

Funding Circle is securitizing its first pool of U.S.-based small business loans.

According to Kroll Bond Rating Agency, the online business-loan lender is marketing $198.45 million in notes backed by loans made to small- and medium-sized businesses in the U.S. Funding Circle has previously issued notes for asset-backed pools of small-business loans in its native UK.

The transaction consists of four classes of notes, including a $142.8 million Class A tranche with an initial A- rating from Kroll, and benefiting from 32.5% credit enhancement.

LendingClub Discusses National Bank Charter, GreenSky Exploring Sale (Lend Academy), Rated: AAA

A topic that has been coming up more often is the potential of a national bank charter. Last week we learned that small business lender OnDeck was pursuing a charter and LendingClub is doing the same.

Today LendingClub reported their Q2 2019 earnings. Highlights include record loan originations of $3.1 billion, up 11% from the prior year period and record net revenue of $190.8 million, up 8% year over year.

Source: LendingClub and LendAcademy

GreenSky Q2 2019 Earnings

David Zalik, GreenSky Chairman and CEO included this statement in the press release:

Notwithstanding the Company’s solid operating results, in light of the complexity of the Company’s operating model, we do not believe that the Company’s current market value is reflective of the Company’s strong record of cash flow generation and intrinsic value. Accordingly, GreenSky’s Board of Directors, working together with its senior management team and legal and financial advisors, has commenced a process to explore, review and evaluate a range of potential strategic alternatives focused on maximizing stockholder value. In connection with this review, GreenSky has retained FTP Securities LLC (“FT Partners”) and J.P. Morgan Securities LLC as its financial advisors, and Cravath, Swaine & Moore LLP and Troutman Sanders LLP as its legal advisors.

The news sparked Christopher Donat, an analyst Sandler O’Neill to speculate that Square or Goldman Sachs could be potential buyers according to this article in American Banker.

LendingClub envisions a ‘marketplace bank,’ seeks charter (Bank Innovation), Rated: A

Peer-to-peer lending platform LendingClub is exploring the possibility of obtaining a national bank charter as it adjusts its strategy following a $10.6 million loss in the second quarter.

Digital Banking: LendingClub Gets Some Fintech Love as it Pursues National Bank Charter (Crowdfund Insider), Rated: A

Shares in LendingClub (NYSE:LC) are rising during another down market day as the trade war with China has no end in sight and political tempers flare. Shares are currently trading over 10% higher following yesterday’s Q2 earnings report where LendingClub said it expected to finally report a positive net incoming in Q3 following years of losses.

Second, LendingClub has hardened its lending model with years of fine-tuning. Unlike some other digital-only banks, LendingClub has been providing credit to consumers for more than a decade having originated over $50 billion in loans.

LendingClub Logs Lower-Than-Expected Losses (PYMNTS), Rated: A

By the numbers, net loss came in at $10.66 million or $0.12 per share — a lower loss than last year when Lending Club reported a loss of $60.86 million or $0.72 per share. Adjusted loss per share narrowed to $0.01 from $0.08 a year earlier.

Net revenue increased 8 percent from year-ago revenues of $176.98 million in 2018 to $190.8 million in 2019, driven by the higher volume of loan originations Sanborn mentioned.  Loan originations during the quarter were at $3.1 billion, up 11 percent year over year. While the revenue number is an improvement, it came in very, very slightly below analysts’ estimates.

LendingClub posts smaller-than-expected loss on loan originations (Nasdaq), Rated: A

LendingClub said it now expects smaller loss for the year than it had previously forecast. Adjusted net loss is expected to be between $5 million and $20 million, from $9 million to $29 million.

P2P lender LendingClub increases credit access with Select Plus Platform (Verdict), Rated: B

LendingClub, a US-based P2P lending platform, has introduced the Select Plus Platform to offer borrowers access to sophisticated investors.

LendingClub: America Does Not Need Another Credit Card, Apple Card Spells Disaster for Consumers (Crowdfund Insider), Rated: A

Apple Card, a “new kind of credit card” launched by Apple (NASDAQ:AAPL) in partnership with Goldman Sachs (NYSE:GS) is expected to be made available to the public within the next few days. In fact, it has been reported that invitation emails have already gone out to a small group of iPhone owners. More will follow during August.

One detractor is LendingClub.

Anuj Nayar: Americans don’t need another credit card. They need the right tools to help them build their financial futures and pay down debt without the opportunity to accumulate more at high-interest rates. Goldman Sachs tried to pursue building a helpful consumer tool with Marcus but now has slipped back into its old ways, looking to make money by getting consumers hooked on revolving, high-interest debt on Apple’s credit card.

Court activity on July 12: Sofi Lending Corp. vs Jaime Daric (Northern California Record), Rated: AAA

The Superior Court of California for San Francisco County reported the following activity in the suit brought by Sofi Lending Corp. against Jaime Daric and other unnamed defendants on July 12: ‘Declaration Of Non Service (transaction Id # 63543270) Filed By Plaintiff Sofi Lending Corp., As Attorney In Fact For Deutsche Bank National Trust Company, Trustee Of Sofi Consumer Loan Program 2015 Trust’

Rate cuts (PeerIQ), Rated: AAA

This week, we discuss the Fed rate cut to the 2 to 2.5% target range, and provide market color on OnDeck earnings.

Fun fact #1: It has been 3,878 days (10.5+ years) since the FOMC last cut rates.

This is the second longest streak on record behind the 4,115 days that passed between cuts in the discount rate since 1954. Markets are speculating on additional rate cuts before year-end although Fed Chair Powell positioned the rate cut as an “adjustment” rather than a change in trend.

Source: Chicago Fed PeerIQ

DigiFi Launches the World’s First Open-Source Loan Origination System (Markets Insider), Rated: AAA

DigiFi, an enterprise SaaS company building the future of lending technology, announced today the launch of its open-source loan origination system (LOS). The free-to-use platform, which was built over 45,000+ development hours and has been operating in-market with top lenders since late 2018, provides an end-to-end suite of modular capabilities that can be used individually or together to drive digital transformation.

DigiFi’s open source release underscores the lending industry’s dissatisfaction with the closed-loop systems available from existing LOS providers, which force lenders into onerous long-term contracts for inflexible systems.

Bitcoin and Ether Lender BlockFi Raises $ 18.3 Million Series A (CoinDesk), Rated: AAA

Crypto lending startup BlockFi received $18.3 million in a Series A funding round led by Valar Ventures, the company announced Tuesday.

Valar, which was founded in part by PayPal co-founder Peter Thiel, was joined by Winklevoss Capital, Galaxy DigitalConsenSys, Akuna Capital, Susquehanna, CMT Digital, Morgan Creek, Avon Ventures and PJC. Valar’s investment was its first in the cryptocurrency industry following prior investments in other fintech firms like Transferwise, a press release said.

Want to Hire Millennials? Better Help Repay Student Debt (Bloomberg), Rated: AAA

Like millions of her peers, Nicole Read graduated with thousands of dollars of debt. Unlike most of them, she’s getting direct help from her employer to pay it back.

In Read’s case, it’s $100 a month.
Such plans are spreading. They were on offer to staff at about 8% of U.S. employers in 2019, more than double the 2015 level, according to an April survey by the Society for Human Resource Management.

Another study by business adviser Willis Towers Watson found that 32% of firms are considering introducing a similar benefit by 2021.

Source: Bloomberg

Verishop Inc. is excited to announce a partnership with financial technology company Affirm Inc., giving customers more choice at checkout to pay for their purchases over time.

To see if they qualify, customers only need to provide five simple pieces of information2 and a credit decision is made within seconds. Monthly payments are shown in real dollars instead of hard-to-calculate percentages so customers will know exactly what they owe with no hidden or late fees. Customers never pay a dollar more than they agree to at checkout. The pay-over-time option is available for purchases ranging from $50 to $17,500 with a 30-day payment deferral available for smaller amounts.

Klarna offers payment installments to Toms, Asos US customers (Retail Dive), Rated: B

  • Klarna, an alternative payment platform, announced Monday that Asos shoppers in the United States will now be able to use its services, according to a press release. The announcement comes after Klarna also publicized its partnership with Toms on Thursday.

Lendio Surpasses $ 1.5 Billion in Small Business Loans Facilitated (Lendio), Rated: A

Lendio today announced it has facilitated more than $1.5 billion in financing to small businesses across the U.S.

According to the Federal Reserve Banks’ 2019 Small Business Credit Survey, “applications to online lenders continued to trend upward” last year, with 32% of applicants turning to online lenders, up from 24% the previous year.

Lendio’s 15-minute online application gives business owners access to multiple lenders with offers suited to meet their capital and business needs.

Behind the growth of PayPal’s SMB lending business (Tearsheet), Rated: A

In just a few years, PayPal’s business financing solutions has serviced over 225,000 small businesses around the world with funding. Between PayPal Working Capital and PayPal Business Loans, the company has recently surpassed $10 billion of capital it’s leant out to SMBs

Online lender backed by Nas says it was hit by security breach (New York Post), Rated: A

Earnin, which is also backed by tech investor Andreesen Horowitz, discovered in February that a third-party security firm had accessed customers’ bank transactions — including all their debit card purchases and payment statements going back for months, the company confirmed to The Post.

Small Business Loan Approvals at Banks Hit Record Highs (GlobeNewswire), Rated: A

Approval rates for small business loan applications rose to another post-recession record (27.7%) at big banks ($10 billion+ in assets), while also climbing above 50% at small banks in July, according to the Biz2Credit Small Business Lending Index released today.

Small bank approvals of small business loan applications inched up one-tenth of a percent to 50.1% from 50% in June.

Small business loan approval rates among alternative lenders dropped three-tenths of a percent to 56.8% from 57.1% in June.

What business does a crowdfunding fintech have with banks? (American Banker), Rated: A

Krista Morgan, the founder and CEO of the crowdfunding fintech P2Binvestor, always understood that funding small-business loans through investors would be challenging. But when the firm launched in 2014, she quickly recognized it wasn’t lining up the investors or capital that was the difficulty.

“Finding capital through our investor platform has been relatively straightforward,” she said. “Finding businesses and winning the business and being competitive in market and building the technology that supports the lending has been the harder side of the marketplace.”

Fox Corp. Buys 67% Stake In Consumer Loan Marketplace Credible Labs (Stock News Press), Rated: A

Citing reports, as per the terms of the deal, the shareholders of Credible Labs will reportedly receive A$ 2.21 in cash per CHESS depository interest (CDI), representing A$55.25 per share of common stock of the company.

Fox says it will commit up to $USD 75 million ($AUD110.8 million) of growth capital to Credible over the next two years.

Cross River — A Regional Bank Providing Specialized BaaS Services (Tearsheet), Rated: A

  • Who we spoke to: Gilles Gade (Founder and CEO) and Phil Goldfeder (SVP and Communications)
  • Establishment year: 2008
  • Bank license: Yes
  • API documentation

Al Goldstein of Avant and Amount (Lend Academy), Rated: A

We last had Al Goldstein, the CEO and Chairman of Avant and Amount, on the show back in 2015. So much has changed since then not just in the personal loan space but in the banking space as well. And Avant has evolved to meet those challenges.

Mall landlords weigh becoming lenders to blunt retail crash (American Banker), Rated: A

Mall landlords accustomed to offering rent reductions to ailing retailers are mulling a new strategy to forestall the industry’s collapse: positioning themselves as lenders to tenants struggling to stay afloat.

The boutique bank PJ Solomon has organized discussions with several mall owners about pursuing such a strategy with the troubled retailer Forever 21, according to people with knowledge of the matter, in what could serve as a model for future transactions within the sector.

This woman paid off ,000 in credit-card debt with a personal loan, but her first attempt landed her in the red again (MarketWatch), Rated: A

Rogers is far from the only person to have used this debt-consolidation strategy with success. At the end of 2018, nearly 11% of adults in the U.S. held a personal loan, according to data from ExperianEXPN, +1.84%.   The number of personal loans has risen 42% since 2015, making them the fastest-growing category of debt in the country.

Around 61% of personal loans are used for debt consolidation, said Ezra Becker, senior vice president of research and consulting at TransUnion.

An update on credit access and the Bureau’s first No-Action Letter (CFPB), Rated: AAA

For some consumers, the use of unconventional sources of information, or “alternative data,” to evaluate creditworthiness may be a way to increase access to credit or decrease the cost of credit. Alternative data includes information not typically found in core credit files of nationwide consumer reporting agencies and may indicate a likelihood of meeting obligations on time that a traditional credit history may not reflect.

The Bureau remains committed to using all of the tools at its disposal under the Dodd-Frank Act to help address these important issues around access to credit.  Toward that goal, the Bureau is currently reviewing comments to its proposed No-Action Letter, Trial Disclosure, and Product Sandbox policies.

Don’t let AI trigger a fair-lending violation (American Banker), Rated: A

The use of artificial intelligence and machine learning poses both opportunities and risks for financial institutions.

While using such predictive techniques may mitigate consumer lending credit risk, financial institutions should be cognizant of the potential impacts of bias and its implications on fairness.

Peer-to-peer crypto lending startup Dharma pauses new deposits and loans (The Block Crypto), Rated: A

Dharma, the San Francisco-based crypto lending startup behind the open-source protocol of the same name, has announced via Twitter that it is “pausing new deposits and loans” on its platform.

I quit my job at 34 with $ 3 million—here are my 5 biggest regrets about early retirement (CNBC), Rated: AAA

And in 2012, I finally retired at 34. By the time I quit my job, I had amassed a net worth of about $3 million that generated roughly $80,000 in investment income per year.

If I worked a few extra years before retiring, I would have had the financial confidence to buy more real estate in 2012, right before prices began to take off. (A rental property in San Francisco that cost $900,000 in 2012 would be worth roughly $1.6 million today.)

Source: Bay Area Market Reports, Compass

I also could have leveraged my interests in real estate and technology to start a real estate crowdfunding company — or, at the very least, join one. I still believe that real estate is one of the most straightforward ways most Americans can build wealth over the long term.

OppLoans Review: Installment Loans for Borrowers with Bad Credit (Money Check), Rated: A

One such lender that is looking to capitalize on this space is OppLoans. The US-based lender offers loans to those with poor credit, ranging from $500 up to $5,000.

Galaxy Digital Makes Its Next Move in Crypto Lending Markets (Bitcoin Magazine), Rated: B

DrawBridge Lending (DBL), a digital asset loaning, borrowing and investing company, has received an investment from merchant bank Galaxy Digital with the aim to greatly expand DBL’s institutional investment and lending capacity.

Minneapolis-based Digital Finance Startup DeFiner.org Wins 2019 Detroit Fintech Challenge (Yahoo! Finance), Rated: B

Less than two years after being conceptualized, Minneapolis-based digital lending & borrowing platform DeFiner.org has beat out 17 other Fintech startups to win one of the industry’s most coveted prizes.

United Kingdom

Funding Circle adds to August ABS supply with first US deal (GlobalCapital), Rated: AAA

UK-based marketplace lender Funding Circle is set to issue its first US securitization, a $198.45m deal backed by loans made to small and medium-sized enterprises (SMEs).

Funding Circle posts higher revenues but pre-tax losses widen (P2P Finance News), Rated: AAA

FUNDING Circle has increased its revenues but widened its pre-tax losses, according to a half-year report which echoed last month’s results preview.

The FTSE 250-quoted firm posted a 29 per cent jump in revenue to £81.4m but pre-tax losses widened to £30.8m from £27.1m in the first half of 2018.

Adjusted core earnings fell year-on-year to £1.2m from £3.3m.

Tide, Starling Ramp Up Rivalry Over SMB Customers (PYMNTS), Rated: A

The rivalry between U.K. challenger banks Tide and Starling continues to heat up as Tide signs on its 100,000th small business customer.

Reports in The Telegraph on Monday (Aug. 5) said the companies continue to compete for the small business customer base. Tide has on-boarded 100,000 small business customers, described by the firm’s chief executive Oliver Prill as a “very significant milestone.”

Young SMEs and companies that have recently switched banks are prime UK neobank targets (Business Insider), Rated: A

1 in 4 UK robo-advisors shuttered in two years (AltFi), Rated: A

Digital wealth management, or robo advice as it used to be called, has been around for more than a decade and launched into the UK in 2011 with the arrival of Nutmeg. Things started to get really interesting around 2016 and 2017 when a flurry of companies were founded to attack the space dominated by traditional wealth management, an industry looking after £1trn of investors’ assets.

OakNorth strengthening leadership team with appointment of Jackson Hull as CTO and COO (Fintech Finance), Rated: B

OakNorth has today announced the appointment of Jackson Hull as its Chief Technology Officer (CTO) and Chief Operating Officer (COO). With over 15 year’s C-suite experience in London and San Francisco, Jackson is a leading expert in building high-volume eCommerce applications, global SaaS platforms, mobile and IoT platforms, as well as award-winning products and services in finance, fintech, travel, accommodation and retail.

China

Jiayin Closes Cases Against 12,000 Debtors Online (CapitalWatch), Rated: AAA

Jiayin Group Inc. (Nasdaq: JFIN), China’s online lending platform, announced it has solved more than 12,000 cases of overdue payments and attempts to escape debt as of May.

Shanghai-based Jiayin runs a peer-to-peer lending marketplace, known as Niwodai, which connects borrowers and investors. The company has established a tailored legal department for post-loan management to handle online arbitration. As it reported on its website, as of the end of May, it has closed more than 12,000 cases in more than 30 provinces in China.

European Union

Swedish fintech Klarna valued at $ 5.5 billion in funding round (Reuters), Rated: AAA

Online payments firm Klarna, which has attracted a growing following with its “buy now, pay later” service for shoppers, said on Tuesday it had raised $460 million in a funding round that makes it Europe’s most valuable fintech startup.

Investors led by San Francisco-based Dragoneer Investment Group put new money into the Swedish company, giving it a valuation of $5.5 billion and additional financial firepower to expand in the United States.

Video: What’s next for Klarna, the most valuable EU fintech (Yahoo! Finance), Rated: A

Yahoo Finance’s Adam Shapiro, Julie Hyman, Rick Newman, and Scott Gamm join Klarna Co-Founder and CEO Sebastian Siemiatkowski.

Penta, the German business banking startup, raises €8M additional funding (TechCrunch), Rated: A

Penta, the business banking provider for small and medium-sized enterprises (SMEs) that was recently acquired by fintech company builder Finleap, has raised “over” €8 million in new funding.

The startup raised a €7 million Series A round in late 2018, and is thought to have had more than €18 million investment since being founded in 2016.

Two Issues Currently Evolving on P2P Lending Marketplaces (P2P-Banking), Rated: A

This week some investors on the p2p lending marketplaces ViventorGrupeer and Mintos are affected by issues that hinder the normal procedures on these marketplaces.

(Screenshot from Viventor.com)

Update 14:02: Apparently Mintos has now suspended trading of Aforti loans on the secondary market.

EstateGuru, a Marketplace for Short-Term, Property Backed Loans, Launches in Portugal (Crowdfund Insider), Rated: A

EstateGuru, an online marketplace for secured, short term loans, has launched in Portugal, according to a note from the company. EstateGuru is now providing crowdfunding services in six different countries including Estonia, Latvia, Lithuania, Finland, and Spain. EstateGuru said by opening in the Portuguese market the company had achieved its next milestone in its long term strategy.

International

International P2P Lending Volumes July 2019 (P2P-Banking), Rated: AAA

Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 611 million Euro.

Source: P2P-Banking

Ethereum’s Latest Milestone — 200,000 Smart Contracts (Crypto.IQ), Rated: A

DeFi protocols such as Compound, Dharma, and Uniswap are among the most advanced tools of Ethereum-based P2P lending solutions. Another interesting use case built on Ethereum is the decentralized prediction market platform Augur (REP).

Crowdfunding: alternative ways to find a community of impact investors (Specialist Banking), Rated: B

At the same time, there’s been a remarkable increase in the impact investment market — investments made with the intention to generate positive social and environmental impact alongside a financial return — with the Global Impact Investing Network valuing the global market at $502bn.

Australia/New Zealand

CommBank Invests US$ 100 Million In Fintech Klarna As Digital Transactions Continue To Grow (Which-50), Rated: AAA

Commonwealth Bank has invested in Klarna, a Swedish rival to Afterpay, and will bring the European buy now, pay later provider to Australia. The deal accompanies the bank’s continued investment in its digital capabilities.

CommBank invested US$100 million in the fintech’s US$460 million funding round, announced yesterday, which values the company at $5.5 billion. The bank will also become Klarna’s exclusive partner in Australia and New Zealand.

Prospa Establish NZ Warehouse Facility, Shares Rise on ASX (Crowdfund Insider), Rated: AAA

Online lender Prospa Group Limited (ASX: PGL) has established its first warehouse facility specifically to fund New Zealand small business loans. According to a note from Prospa, the 3-year facility has an initial capacity of NZ $45 million.

Judo bank breaks Aussie record with $ 400m round (Fintech Futures), Rated: A

Australian challenger, Judo Bank, has completed the biggest single funding round in the country’s history by raising $400 million, writes Jane Connolly.

StartupSmart reports that the finance – which is double Judo’s original target for the round – came from new institutional investors, including Bain Capital Credit and Tikehau Capital, along with existing investors.

India

India’s Indifi raises $ 21M to expand its online lending platform (TechCrunch), Rated: AAA

Indifi, a Gurgaon-based startup that offers loans to small and medium-sized businesses and also operates an online lending marketplace, has raised 1,450 million Indian rupees ($21 million) in a new financing round to expand its business in the country.

Indifi, which has raised about $34 million in venture capital to date, has also relied on debt to grow and finance loans on its platform. Currently, it’s in about $21 million in debt, Alok Mittal, co-founder and managing director of Indifi, told TechCrunch in an interview.

A typical loan processed by Indifi is of about $7,000 in size. Overall, the startup offers between $1,400 to  $70,000 in capital to businesses.

Asia

65% of Singapore Customers Interested in Digital Banking (Crowdfund Insider), Rated: AAA

According to a recent survey, in Singapore digital banking has some pent up demand. JD Power has published a brief retail banking satisfaction study and, according to their numbers, 65% of consumers are interested in opening digital bank accounts. This is an increase from the year prior where 52% of surveyed individuals expressed similar digital banking interest.

Authors:

George Popescu
Allen Taylor

The post Thursday August 8 2019, Weekly News Digest appeared first on Lending Times.

Thursday December 20 2018, Daily News Digest

US Yield Curve

News Comments Today’s main news: OnDeck to enter equipment financing. SoFi releases video to destigmatize debt. RateSetter sees 47% revenue growth. Funding Circle fund expects lower returns. 360 Finance financials. Today’s main analysis: U.S. yield curve inverts. Today’s thought-provoking articles: Why did OnDeck file suit in Arlington? Fewer Americans rely on cash. More than half of Americans can’t cover a $1,000 […]

The post Thursday December 20 2018, Daily News Digest appeared first on Lending Times.

US Yield Curve

News Comments

United States

United Kingdom

China/Hong Kong

Southeast Asia

Other

News Summary

United States

OnDeck (ONDK) to Enter Equipment Financing Market (StreetInsider), Rated: AAA

OnDeck announced today that it will begin offering equipment finance loans to select U.S. small businesses next year, bringing its heralded technology and digital lending expertise to what has traditionally been a slow-moving, opaque, and complicated process.

Who’s On Deck? And why are they in Arlington? We explain. (Biz Journals), Rated: AAA

At 2 p.m. on a Friday in mid-October, it’s judgment day for 13 small companies from across the country.

The plaintiff is On Deck Capital Inc., a publicly traded online small business lender based in New York that has sued each of the 13 companies for not repaying loans. Its choice of setting: the Arlington General District Courthouse.

New SoFi Campaign Aims To Destigmatize Debt and Financial Insecurity In Powerful “Money Talks” Video (PR Newswire), Rated: AAA

SoFi today launched a campaign showcasing some of its members’ most intimate stories around their personal struggles with money. Produced in collaboration with director Tatia Pilieva, the filmmaker most notably known for her sensational short film ‘First Kiss,’ the video captures twelve SoFi members, strangers to each other, meeting for the first time to have open-ended, unfiltered conversations about their lives, their money, and their views for their futures.

The video, along with more about the members featured in the video, are now live at 

US Yield Curve Inverts; Spreads Widening on New FinTech Deals (PeerIQ), Rated: AAA

Core CPI rose by 2.2% keeping the Fed on track to raise interest rates next week for the fourth time this year. The market-implied probability of a rate hike next week is ~77%, although the rate hike path in 2019 remains uncertain. The US yield curve saw its first post-crisis flatteningwhich we will look at in greater detail below.

US Yield Curve Inverts for the First Time Post-Crisis

The US yield-curve saw its first inversion post-crisis as the spreads between the yields on 3-year and 5-year Treasuries fell to -1 bps. The spread between the yields on 3-month and 10-year treasuries has been an accurate predictor of past recessions. As the chart below shows, there have been 6 recessions since 1970 after the 3-month – 10-year curve inverted. Currently, the 3-month – 10-year curve is 49 bps away from inversion, but markets are watching every part of the yield curve closely.

Source: Federal Reserve, PeerIQ

Spreads are Widening on New FinTech Deals

LendingClub and CommonBond are out with new securitizations. KBRA has rated the tranches on LendingClub’s latest $272 Mn deal CLUB 2018-P3 A-, BBB, and BB. The $300 Mn collateral pool consists of 17,825 Prime loans with an average balance of $16.8 k, a weighted average coupon of 14.58%, and a weighted average remaining term of 48 months. The weighted average FICO score of the borrowers is 703. The deal has an initial O/C of 9.2% and an excess spread of 9.1%. Both the O/C and excess spread are the lowest for LC’s 2018 prime deals. This deal priced 27-50bps wider than LC’s prior deal in September due to market volatility and widening structured products spreads, according to DebtWire.

More Americans are making no weekly purchases with cash (Pew Research), Rated: AAA

Entegra Bank Chooses Velocity Solutions to Power Its Small Business Digital Lending (deBanked), Rated: A

Velocity Solutions announced today that its Akouba digital lending platform was selected by Entegra Bank to power the bank’s digital lending for its small and medium-sized business customers. Akouba provides community and regional banks with origination and underwriting services.

LoanStreet Signs Up Workers Credit Union to Use Fintech Loan Participation Platform (Crowdfund Insider), Rated: B

LoanStreet, a Fintech “loan participation platform,” has signed up Massachusetts-based Workers Credit Union to its growing network.

Lending Express Appoints Former Maple Founder Ofer Ariel to Chief Product Officer; Promotes Daniel Katz to Chief Operating Officer (PR Newswire), Rated: B

Lending Express, the technology company dedicated to increasing access to funding for small businesses, today announced the promotions of Ofer Ariel and Daniel Katz to Chief Product Officer and Chief Operating Officer, respectively. This announcement follows a period of impressive growth for the company, and is indicative of its commitment to provide best-in-class service to both its customers and partners.

United Kingdom

RateSetter Announces 2017-18 Revenue Growth of 47% (Crowdfund Insider), Rated: AAA

UK based peer-to-peer lender RateSetter announced last week the results of its 2017-2018 financial year, which ended on March 31, 2018. The lending platform reported that revenues were up by 47% (which was £34.3 million) from the previous year (£23.4 million). The company noted that the year-end, there were 44,441 active investors on the platform with loans under management of £700 million.

Funding Circle fund expecting lower returns (AltFi), Rated: AAA

A hit from its European Investment Bank transaction as well as higher UK loss rates have prompted a fall in expected returns for the Funding Circle SME Income fund.

The £332m Funding Circle SME Income Fund saw a fall in its net asset value (NAV) of 1.4 per cent in November as the investment trust’s board said it expected returns for the full year would be lower than previously anticipated owing to a higher expected rate of defaults among certain loan pools.

Orca opens waiting list ahead of 2019 IFISA launch (P2P Finance News), Rated: A

ORCA has opened a waiting list for investors interested in its self-select portfolio and Innovative Finance ISA (IFISA), with plans to launch both products in the first quarter of 2019.

The peer-to-peer lending analysis and investment platform, which first revealed its plans to launch a tax wrapper to Peer2Peer Finance News in October, said the Orca ISA will allow investors to hold multiple P2P loans from different providers in one tax wrapper.

It will offer interest of up to 6.5 per cent.

Transferwise – the power of partnerships (Fintech Futures), Rated: A

Cross-border payments were ripe for disruption and doing more than most to shake up things is peer-to-peer (P2P) specialist, Transferwise. Its number of partnerships with banks is multiplying while, in parallel, it is adding settlement options, most recently for direct access to the euro payment infrastructure through a euro settlement account with the Bank of Lithuania.

At present, with one notable exception, the partner banks that have been announced are challenger or other low-end players. However, it now claims over four million people around the world using its service to transfer over £3 billion each month. In the UK, global head of partnerships, Stuart Gregory, says its share of consumer international transfers is around 15%, putting in on or close to a par with some of the largest UK banks.

P2P property lending platform completes £10m investment round (AltFi), Rated: A

Peer-to-peer property lending platform BLEND Network has completed a £10m late-seed round of investing.

N26 Metal Now Available in the UK (coverageR), Rated: A

N26, the provider of mobile banking services which launched in the UK last month with a free account, is now offering N26 Metal – its first premium membership for UK customers.

For the price of £14.90 per month, Metal members get access to an exclusive partner program, dedicated customer service, and worldwide travel insurance provided by Allianz. In addition, members benefit from free ATM withdrawals in pounds, free payments in any currency, free withdrawals worldwide, and LoungeKey airport access in over 1k destinations.

This ex-Googler wants to help high street banks be more like Monzo (Yahoo! Finance), Rated: A

The head of innovation at one of Britain’s big high street banks told me earlier this year that he has a mantra when approaching a new problem: “What would Monzo do?”

Traditional banks are struggling to keep pace as Monzo pushes the boundaries. The startup sends smartphone push alerts when you spend money, knows when you’re abroad, lets you freeze your debit card if lost, and offers chatbot customer service — all through the app.

Onfido Sees 342 Pct Sales Growth In 2018 (PYMNTS), Rated: A

Onfido, the global identity verification company, announced Tuesday (Dec. 18) that it achieved 342 percent sales growth in 2018 compared with 2017 and that it has a four-year growth rate of 3,857 percent.

Starling Bank’s Megan Caywood jumps to Barclays’ ship (Fintech Futures), Rated: B

Megan Caywood, Starling Bank’s chief platform officer, is joining Barclays, as she handed in her notice a couple of weeks ago, according to TechCrunch.

China/Hong Kong

How a Chinese anti-virus software maker builds a fintech firm to wrestle with giants (TechCrunch), Rated: AAA

360 Finance,  an online consumer loan platform that spun off from China’s anti-virus service giant 360 Group, has joined a raft of Chinese fintech companies to go public in the U.S. over the last two years.

The company priced its initial public offering at $16.50 per share last Friday, raising $51 million by selling 3.1 million American depositary shares.

Source: TechCrunch

You’ve applied for a Virtual Bank license, what’s next? (Hubbis), Rated: AAA

Hong Kong is preparing for the arrival of virtual banks (VB) — pure digital players that offer banking services solely through digital channels without bricks-and-mortar branches. In an exclusive article from Synpulse we discover the challenges associated with virtual banking.

What is your differentiating proposition?

With HKMA’s recent announcement of receiving 29 applications for VB, competition is expected to be intense.

Focus on Customer Needs

Basic banking services are about fulfilling three main needs of the customer:

  • How do I pay or get paid?
  • How can I borrow?
  • How do I grow or protect my savings?

Capitalize on strong partnerships

FinTechs have traditionally excelled in one particular area (e.g.p2p lending, remittance and FX conversion).

Avoid a Pure Discount Model

VBs can leverage their lower operating costs to provide lower fees, higher deposit rates or other price incentives to attract customers. However, without a clear differentiating proposition, a pure low-cost play will not be sustainable.

Jiayin, a Top Player in P2P Lending Business, Files for $ 57.5 Million IPO on Nasdaq (Capital Watch), Rated: A

A leading individual financial marketplace, Jiayin Group Inc., is seeking to raise up to $57.5 million in an initial public offering on the Nasdaq Global Select Market in New York.

ByteDance registers fintech trademarks (Technode), Rated: A

In July, Jinri Toutiao launched a fintech product named Safe Lending. Up to 20,000 users were permitted to borrow up to RMB 200,000 (around $30,000) per person per day. The company claimed the Bank of Nanjing was one of its loan partners.

The product became the subject of investigations by the media in September. ByteDance later shuttered the online money lending service, while thousands of Chinese P2P lending companies shut down in the second half of the year.

PINTEC Partners with China National Investment & Guaranty Corporation to Develop Digital Lending Technologies (Markets Insider), Rated: B

Pintec Technology Holdings Ltd. (“PINTEC”) (NASDAQ: PT) today signed a strategic cooperation agreement with China National Investment & Guaranty Corporation (“I&G”), a leading enterprise in China’s guarantee industry. The two sides will jointly develop the next generation digital lending technologies and nurture a dynamic credit financing ecosystem for small and micro-sized enterprises in China.

European Union

Online Lender Creditshelf Partners with CrossLend to Offer First Digital Securitization of Loans (Crowdfund Insider), Rated: AAA

Germany based Fintech creditshelf Aktiengesellschaft, an SME financing platform, is launching a new partnership with CrossLend to offer the first digital securitization of SME loans in Germany.

A Visit to Crowdestor in Riga (P2P Banking), Rated: A

On invitation of Crowdestor I travelled to Riga and met the founders of Crowdestor Janis Timma and Gunars Udris. Crowdestor is a Latvian p2p lending platform for SME loans. They launched a year ago. Loans are typically for terms of up to 18 months and interest rates are quite high – the current loan offer by a transportation company seeking expansion capital carries 17% interest rate. The Crowdestor website is available in English, German and Portuguese language. Currently most investors on the platform are Germans, followed by Spanish investors.

Funding Options: From Fintech Petting Zoos To SME Lending Sanctuaries (Forbes), Rated: A

Both financial institutions and fintech startups have made serving SMEs a priority in 2018. However, despite business current accounts like Mettle being created this year, online comparison marketplace Funding Options has helped millions of firms across Europe, especially those that cannot get traditional bank lending because they are early-stage, high-growth or in difficulty, since its launch in 2012.

International

Finastra announces Eric Duffaut as President and Global Head of Field Operations (RealWire), Rated: A

Finastra has appointed Eric Duffaut as President and Global Head of Field Operations. Based at Finastra’s London Headquarters, Duffaut will take responsibility for the company’s entire go-to-market organization including global sales, services and consultancy, as well as overseeing the Finastra partner ecosystem.

Strengthening the Spread: ETHOS Now Live on Nitrogen Network (CoinTelegraph), Rated: A

Token of Ethos.io, a leading cryptocurrency wallet provider and Blockchain Financial Services (BFS) platform, has been officially listed on Nitrogen Network, a new decentralized peer-to-peer crypto lending network.

Nitrogen Network enables market participants to lend and borrow cryptocurrencies on their own terms, all while maintaining control of their holdings and private keys. This supports effective portfolio management and a diverse range of investment views across a wide variety of crypto assets.

Australia

As banks become stricter with lending, could your HELP debt get in the way of getting a home loan? (ABC.net.au), Rated: AAA

As banks rein in lending in the wake of the banking royal commission which revealed “irresponsible lending is endemic in Australia”, those who might have easily secured a home loan a few years ago now face much more stringent criteria.

Banks are looking more carefully at expenses and debts which, for 2.7 million Australians, will include a HELP (formerly HECS) debt.

India

NBFC Vivriti Capital secures Rs 200 Cr from Creation Investments in Series-A equity funding (Your Story), Rated: AAA

Vivriti Capital, a Chennai-based lending platform for corporate entities, has raised Series A equity funding of Rs 200 crores from Creation Investments, an investment management company focused on financial services.

Crowdfunding – A Brief Overview Of The Regulatory Framework (Mondaq), Rated: A

3. Peer-to-Peer Lending or Debt Crowdfunding: Peer-to-Peer Lending (P2P lending) is a form of crowdfunding used to raise loans which are re-paid along with interest. It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans. The borrower can either be an individual or a legal person requiring a loan. The interest rate may be set by the platform or by mutual agreement between the borrower and the lender. Fees are paid to the platform by both the lender as well as the borrower.2

4. Equity Crowdfunding:

The SEBI Consultation Paper furnishes proposals for a regulatory framework governing procedure of Security based Crowdfunding methods for Start-ups and Small and Medium Enterprises (SMEs).

The Directions define a “Non-banking financial company – Peer to Peer Lending Platform”4(NBFC-P2P) as a non-banking institution which carries on the business of a Peer-to-Peer Lending Platform. Peer-to- Peer Lending Platform5 has been defined as an intermediary providing the services of loan facilitation via online medium or otherwise, to the participants6(a person who has entered into an arrangement with an NBFC-P2P to lend on it or to avail of loan facilitation services provided by it). Non-banking institutions other than companies have been prohibited from undertaking the business of Peer-to-Peer Lending platform.7 The Directions provide the scope of activities, prudential norms (the aggregate loans taken by a borrower at any point of time, across all P2Ps, is subject to a cap of Rs.10,00,000/-), operational guidelines, inter alia other regulations.

Southeast Asia

Why the ASEAN P2P lending market will avoid the Chinese pitfalls (ASEAN Today), Rated: AAA

To say that 2018 was a rough year for peer-to-peer (P2P) lending businesses in China would be a gross understatement. It was nothing short of a bloodbath, mirroring in many ways the US sub-prime mortgage crisis of 2008-09.

China, despite its economic power, shares the following crucial features with smaller markets in South and Southeast Asia:

  • A large percentage of small-to-medium enterprises (SMEs) and individuals without access to traditional banking services
  • High mobile penetration among the population
  • Easy access to investor funds, both domestic as well as international

The Southeast Asian approach to P2P lending regulation is more proactive than the Chinese model

In the heydays of P2P platforms in China, the authorities pursued more of a “wait and watch” approach. In marked contrast, the regulatory bodies of Southeast Asian economies have adopted more pro-active steps to regulation.

Korea’s digital banks have two speeds: fast and faster (Asia Money), Rated: A

The average internet speed in South Korea is 26.7 megabits per second, faster than anywhere else in the world, according to French virtual private network developer Le VPN.

No Korean bank has ever been in the mix for this much-coveted prize. Nor did a single Korean firm appear in the latest Forbes rankings of the world’s 50 most innovative fintech companies. Indeed, it’s hard to identify a single well-known and home-grown fintech brand. There’s no Korean answer to, say, China’s Ant Financial, or Singapore-based ride-sharing-to-food-delivery service Grab.

OJK Pledges to Announce Names of Illegal Fintech Firm (Tempo), Rated: A

The Financial Services Authority (OJK) committed to monitoring legal and registered financial technology (fintech) companies of peer-to-peer lending or online loan as an effort to maintain the security for consumers.

Eurasia

Russia Is A Top Five Leader Of Digital Banking In Europe (Forbes), Rated: AAA

Because of the lack of legacy IT infrastructure within banks in Russia, the country has been listed in the top five leaders of digital banking in Europe, according to a new Deloitte and ID Finance report.

Latin America

Vitacon innovates again and launches an investment opportunity starting at USD250 with return of up to 12,8% per year (PR Newswire), Rated: AAA

Vitacon, a leading construction company that is revolutionizing the way people live in São Paulo, is launching one more investment opportunity for people seeking new options for earning income and diversifying their portfolios. The company, which for the past nine years has been incentivizing the shared economy in its residential developments, is launching the possibility for any investor to invest directly USD250 in a CD, a fixed income security issued by Banco Topázio, with a 24-month maturity, which allows for annual yields of up to 12.8%.

This new method, P2P Lending, is similar to one introduced in 2015, when Vitacon launched the first real estate crowdfunding, which surpassed expectations and created an international benchmark in the field, raising 28% above what was expected for the construction of the VN Cardoso de Melo building in a very prime location of São Paulo, scheduled for delivery next year.

Authors:

George Popescu
Allen Taylor

The post Thursday December 20 2018, Daily News Digest appeared first on Lending Times.