The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community. Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in […]
The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community.
Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in the industry from fintech.
The reason for this exuberance is smartphone adoption. South Africa and Kenya are the fastest growing smartphone markets in the world. As per 2015 research statistics, 88% of Africans didn’t have a bank account, but they did have smartphones. In 2015, 183 million people in Africa had a mobile wallet. That was 3 times the number of digital wallet users in the U.S. and expanding at 3 times the annual growth rate. If this trajectory continues, every African will have a mobile wallet by 2020. Numbers here clearly suggest that fintech startups have a huge opportunity staring at them.
Potential for Home Grown Peer-to-Peer Platforms
As per the Africa and Middle East Alternative Finance Benchmarking Report, Kenya and South Africa are leading the P2P business lending market in Africa. But a noteworthy point here is that 90% of online alternative lending originated from platforms headquartered outside of Africa.
The third largest alt-lending model in Africa was P2P business lending, which experienced astronomical growth from a modest $2 million in 2014 to $14 million in 2015. In 2015, Kenya and South Africa were the market leaders, garnering $16.7 million and $15 million, respectively.
“(Source) The East Africa region has the largest market share of the African alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.”
Since the market is still in a nascent stage, there has been no regulatory policy for the alternative finance industry. But positive efforts have been made in recent times to develop a regulatory ecosystem that will help in developing this budding industry in the region.
The Alternative Lending Leaders in Africa
Leading alternative lenders in Africa include:
Aella Credit – Started in 2015 by Akin (Akinola) J, Aella Credit’s headquarters is in Mountain View, California. The firm provides instant credit solutions that eliminates the hassle of standard loan applications and enables employees to borrow at competitive and fair rates through their employers. Company offices are located in the United States and Nigeria. They raised a paltry $150,000 as seed capital but have gone on to raise an additional $1 million. Aella Credit disbursed over $1 million in loans with a 0% default rate to about 1,100 borrowers in the course of its soft launch.
Branch – Branch was launched in 2015 by Daniel Jung, Matt Flannery, and Random Bares. They raised over $11 million in various funding rounds. Branch eliminates the challenges of getting a loan by using the data on borrowers’ phones to create a credit score. It encrypts the data, thus ensuring complete privacy. Branch is a for-profit socially-conscious company based in San Francisco and Nairobi.
KiaKia – Founded in 2016 by Chiemeziem Anyadike, Olajide Abiola, and Olajide Abiola, KiaKia is headquartered in Abuja, Federal Capital Territory, Nigeria. Utilizing machine learning, big-data, predictive analytics, digital forensics, and social collateral as part of its proprietary algorithm for credit scoring and risk assessment, the company provides real-time access to consumer and SME capital to underbanked Africans. Loans offer interest as low as ₦10K – ₦200K at 0.80%, durations ranging from 7-30 days, and no collateral. It has managed to raise $50,000 in funding.
Microcred Group – Microcred was created in 2005 by Arnaud Ventura with the support of Positive Planet and a number of institutional investors. Its headquarters are in Paris, Ile-de-France, France. A leading digital finance player for financial inclusion in Africa & China, Microcred offers financial services to emerging client segments, particularly the unbanked with a focus on micro & SMEs. The company operates in Madagascar, Senegal, Nigeria, Ivory Coast, Mali, Zimbabwe, Burkina Faso, Tunisia, and China. The group has raised over € 99 million in various rounds of funding.
Musoni – Founded in 2009, Musoni is headquartered in Amsterdam. Musoni BV is a social enterprise that establishes best-practice microfinance institutions and uses technology to lower costs, reduce risk, and improve efficiency. In 2009, Musoni set up the first cashless Microfinance Institution (MFI) in the world using mobile payments for all transactions. Since then, Musoni Kenya has disbursed close to 50,000 loans to micro entrepreneurs with a total value of $12 million. In 2011, Musoni won the award for ‘most innovative use of technology’ at the Global Microfinance Achievement Awards in Geneva.
RainFin – RainFin was launched in 2012 by Hannes Van Der Merwe and Sean Emery. Headquartered in Somerset West, South Africa, RainFin was South Africa’s first lending marketplace. It pioneered a viable alternative for quality borrowers looking for access to finance and lenders looking for returns that are higher than fixed deposits or the stock market. It offers loans ranging from 6-24 months and at an APR starting from 10.25%.
FarmDrive – Founded in 2014 by Peris Nyaboe and Rita Kimani, FarmDrive is headquartered in Nairobi, Kenya. This firm is a social enterprise that connects unbanked and underserved smallholder farmers to credit, while helping financial institutions to cost effectively increase their agricultural loan portfolios.
Apart from the above-mentioned lenders, there are a few more who are trying to make their mark in the African market, such Merchant Capital, Lydia.co, and many more.
Africa is not a homogeneous market. It is imperative for alternative lending startups to understand the different cultural nuances so they can develop products that have utility. As the region continues its socioeconomic upliftment, more people will need access to financial services. This makes Africa an exciting market for alternative lending in years to come.
News Comments Today’s main news: Affirm raises $200M at almost $2B valuation. Elastic Line of Credit surpasses $1B in funding. Klarna signs 500 online retailers in U.S. Zopa makes changes to Isa. Mintos adds first Russian loan originator. Flexiti offers online financing for e-tailers in Canada. Today’s main analysis: UK alternative finance is still healthy. Today’s thought-provoking articles: Cross River […]
Affirm almost hits $2B valuation with $200M fund raise. AT: “From last reports, this exceeded expectations. Congratulations to Max Levchin and his team for this achievement. This entrepreneur continues to surprise. Affirm is going to be one of the huge fintech success stories this decade.”
Klarna North America signs 500 online retailers in U.S. AT: “Congratulations to Klarna too. The competition in POS financing and e-commerce financing is heating up in practically every geographical region around the globe. Klarna is one of the major players, as is Affirm.”
Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the Elastic product has originated more than $1 billion, and has served over 200,000 customers since 2013.
Elastic, a bank-issued line of credit offered by Republic Bank & Trust Company (“Republic Bank”), currently has more than $260 million in total principal outstandings across over 150,000 open accounts.
Since Klarna introduced its financing solution in the U.S. in October 2016, 500 online retailers have already enrolled in the simple and ‘smoooth’ credit solution that is fully integrated into the online checkout process. Available in 10 countries via a single API, retailers include powerhouse global brands like Microsoft, TaylorMade, Overstock and Lenovo.
Cross River Bank, the bank of fintech startups, is working with Mastercard to give consumers cardless access to ATMs through an offering called Mastercard Cash Pick-Up. It allows businesses or individuals to send cash payments by logging in to the Cash Pick-Up platform via their bank’s website or mobile app and entering the necessary transaction and recipient. When they’ve done that, recipients receive a text message with the order number, PIN and a link that helps them locate a participating ATM nearby.
The offering highlights the role of mobile phones in banking’s new normal — mobile is more than just a channel, it’s the thing that’s guiding both financial incumbents and consumers alike through the shift from physical to digital banking, which still hasn’t been fully realized.
For now, Mastercard Cash Pick-Up is only available at enabled ATMs in the U.S., where the postal service plays far too big a role in payments, particularly low dollar disbursements, Isaacson said.
Niehenke theorized that consumers whose trust in traditional banks had eroded might become a willing customer base for financial technology startups. But it was a bumpy time for tech companies entering the highly regulated financial sector.
Among those startups was Prosper, a peer-to-peer lending startup that had been temporarily shut down in 2008 by the Securities and Exchange Commission. The SEC maintained that the company was, in effect, selling securities rather than merely functioning as a marketplace connecting lenders and borrowers, TechCrunch reported.
CAN Capital, a small business specialty finance company, today announced three strategic hires as the company continues to invest in its technology and growth strategies. Mike Dodson, Vice President, Technology, Michael O’Brien, Director, Business Development, and Liping Deng, Director, Modeling & Analytics, have joined CAN Capital to focus on accelerating the company’s expansion.
E-commerce giant JD.com, the closest rival to Alibaba in China, is broadening its presence in Silicon Valley after it announced a collaboration with accelerator firm Plug and Play to seek out and work with promising U.S. startups.
More than eight out of ten (82%) US commercial banks have pledged to increase fintech investment over the next three years as the sector continues to expand, with 86% of senior managers planning an imminent rise in investment.
The in-depth research commissioned by global Fintech provider Fraedom, polled decision-makers in commercial banks including shareholders, middle managers and senior managers.
The study also found that more than seven out of ten (71%) respondents believe that the rise of technology within commercial banking threatens traditional one to one bank and customer relationships. This disruptive impact was felt greatest by shareholders (95%) as opposed to 67% of middle managers.
Startup founders know to look for grants, crowdfunding, and angel investors, and established small business owners understand the ins and outs of bank loans. However, another form of financing for established small businesses—working capital loans—is a little less familiar to many owners, yet working capital loans can be the ideal financial tool to handle opportunities (or problems) that present themselves in the shorter term.
Here are some of the highlights:
You don’t need to lay out a detailed plan of what you want to do with the money. Paperwork is minimal.
If your credit score is at least 500, you’ll need to show an annual profit of $50,000; if your credit score is at least 600, that gets cut in half to $25,000. If you’ve been denied a bank loan, your chances may still be good for a working capital loan.
You have the flexibility of choosing the type of working capital loan that best meets your needs: a term loan, cash advance, invoice factoring, revolving line of credit, or purchase order advance.
$682 billion | Amount that consumers are expected to spend on presents and other holiday preparations this holiday shoppingseason, with retailers going the extra mile to meet them where they are in a simpler and faster way. That means upping mobile and online shopping experiences, offering a buy online pick up in-store model and launching services like curbside pickup and better shipping options.
Broker-dealer firms aren’t confident the SEC’s consolidated audit trail (CAT) – a single, comprehensive database expected to store an unprecedented amount of sensitive trade data and personal identifiable information (PII) – is secure, according to testimony delivered before the U.S. House of Representatives.
National securities exchanges, Finra, alternative trading systems and broker-dealer firms have been required to submit information on trading activities – including customer information and prices – to the CAT daily since November 15 of this year. Large broker-dealers will be required to start submitting information to the CAT by November 15, 2018, while small broker-dealers are expected to do so by November 15, 2019.
The CAT is expected to take in 58 billion records daily – including orders, cancellations, modifications, executions and quotes for the equities and options markets – and maintain data for more than 100 million customer accounts and their unique customer information, according to parties involved in the CAT.
.46 Billion in Extra Credit Card Charges Due to Upcoming Fed Rate Hike (WalletHub Email), Rated: A
Forecasts call for a 99%+ chance of a Federal Reserve rate hike on Wednesday, which would make three for 2017. The move couldn’t come at a worse time for consumers, according to WalletHub’s
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Financial advisor consultancy founder Angie Herbers has launched an online training platform aimed at helping advisors grow their firms.
Beyond U offers advisor education via videos, online seminars and assessments, covering such topics as operations, management, sales and marketing, client services, compensation and more, according to a press release from the firm.
The UK’s alternative finance market — including marketplace lending, crowdfunding, and invoice trading — grew 43% year-over-year (YoY) in 2016, from £3.2 billion ($4.3 billion) to £4.58 billion ($6.17 billion), according to a recently released study from the Source: Business Insider
Researchers said about 72 percent of market volume in 2016 can be traced back to demand for lending options among startups and small businesses, up from 50 percent the year before. That amounts to more than $4.4 billion driven by startups and SMBs in 2016.
Peer-to-peer businesses lending was 2016’s largest alternative finance market segment, which saw 36 percent year-over-year growth.
Squirrel, a personal finance app designed to help users have more control over their money, has successfully secured its initial £400,000 funding target from 450 investors through its equity crowdfunding campaign on Crowdcube.
DOWNING has hired two real estate experts from Funding Circle’s property division as it enters the property development space through its crowd bonds platform.
Investors on Downing’s crowd bonds platform are being offered returns of five per cent for one year or six per cent for two years by investing in Downing Development Finance (DDF) through the DDF Property Bond.
Edinburgh Worldwide is another Baillie Gifford managed trust, though rather obscured by the group’s better known trusts. Notable performers (not a Scottish name among them) were Alnylam Pharmaceuticals, a gene silencing company, LendingTree, an online loan marketplace, and IPG Photonics, a manufacturer of fibre-lasers used in metal processing.
Banking disintermediation – essentially, taking out the middle man – has taken a new twist. While in recent years peer-to-peer (P2P) lending has become the poster-child for threatening banks’ lending business, a new type of hybrid disrupter is apparently starting to emerge: asset managers backed by financial technology.
One such firm attempting to cut banks out of the consumer-lending equation is FinEx Asia. The newly-licensed asset manager connects Asian investors with American consumer-credit assets, using artificial intelligence to select the loans based on risk appetite.
Founder and chief executive Maggie Ng said the company’s three funds now have US$100 million under management. They are backed by a portfolio of more than 10,000 US-based borrowers who have obtained loans from multiple online lending platforms, she said without specifying which ones.
Thomson Reuters, the news and market data giant, is partnering with a Hong Kong government-backed body to help the city’s banks and fintech firms develop new technology, cut costs and create new products.
Celebrating its 150th anniversary in Hong Kong next year, the new arrangement will see Thomson Reuters offer its platform to financial firms to distribute their products as well as use its technology, tools and data to create products, for free.
Whether bank customers are consumers or businesses, chances are good that they do at least some of their banking online. This month, startup nanopay is announcing a partnership with Canadian nonprofit interbank network Interac to help businesses manage the complexity of working across borders.
The partnership creates access for any bank account holder in the country to send funds to or receive funds from any other bank account served by nanopay. So far, that’s a short list including just India. But, according to nanopay CEO Laurence Cooke, coverage will be supported in the U.S. and China as well in Q1 of 2018.
The Datarius main characteristics are the use of blockchain, artificial intelligence, cryptocurrency operations and a special designer of the customer-adapted tariffs.
P2P lending is another characteristic of Datarius. It provides millions of people around the world with the possibility to receive and make loans using a Personal Account in the browser or through a smartphone application. It is a fast, reliable and easy way to get a loan wherever a person is. This is an opportunity to earn without involving brokers.
The pre-ITO round starts on December 12 on the official website of the Datarius Cryptobank and will last till December 31. 1 DTRC token = $ 1, but during the Pre-sale every buyer receives a 35% bonus. Soft Cap: $ 125,000.
CONVERSION PROS, a marketing agency within the retail finance sector and founding company behind the iFX EXPO series of financial B2B events, has announced their next event, the iFX EXPO Asia 2018, which will take place in Hong Kong from the 23rd to the 25th January 2018 at the HKCEC (Hong Kong Convention & Exhibition Centre).
This event holds special significance, according to Gal Ron, CEO of CONVERSION PROS:
“This will be our 12th show to date and we expect to showcase this steady growth as we present an expanded floor plan with more exhibitor and sponsor areas tailored to the needs of our attendees. We are also placing special focus on Crypto as well as Peer to Peer lending as we are sure that this is part of the future of the online trading industry.”
The Mintos marketplace for loans has added its first Russia based loan originator: EcoFinance. The online lender offers investments in unsecured personal loans issued in Russia under its CreditPlus brand. Mintos reports that EcoFinance loans on its marketplace will initially be listed in Euros with investors able to earn up to 11% annually.
It’s no longer news that many individuals and SMEs in Nigeria have limited access to finance, especially from commercial banks.
Kiakia, an AI and machine learning powered alternative credit scoring, customer service, direct and a P2P lending platform has launched a virtual agent called “Mr K” to help working adults and SMEs access credit.
According to the Co-founder, Olajide Abiola (who also doubles as the Chief Data Scientist), millions of naira in loans have been successfully granted to and repaid by hundreds of borrowers across 22 States in Nigeria. This comes with a loss/default/NPL ratio of below 2.3%, which is consistently maintained over a 12-month period, all thanks to Kiakia’s algorithm.
Flexiti Financial, a provider of Point-Of-Sale (POS) financing and payment technology, announced today that its award-winning POS consumer lending platform is now available for online transactions. Retailers across Canada now have access to a powerful, online financing platform that easily integrates into any e-commerce engine, offering a low-cost solution. This is a critical new offering for Canadian retailers as it overcomes two key hurdles – speed of implementation and cost – as e-commerce continues to grow as a critical sales channel.
Flexiti Financial’s POS lending platform offers low rates for retailers who want to offer their customers flexible payment options, such as 0% interest financing. Customers do not require an existing credit card to apply.
News Comments Today’s main news: SoFi cancels plans for Australia, Canada. SoFi completes largest consumer loan securitization to date. Elevate launching credit card for sub-prime consumers. Funding Circle posts record month. Zopa developing IFISA transfer features. PPDai debuts weakly in New York. WeLab raises $220M for expansion. Australia upgrades RateSetter. Today’s main analysis: Three Myths of Peer-to-Peer Lending. Today’s thought-provoking articles: Cleveland […]
Online loans leave consumers deeper in debt. AT: “Well, what kind of loans don’t leave consumers ‘deeper’ in debt? There will certainly be an intense debate around this report, and members of the Marketplace Lending Association weigh in on that debate in this article.”
Online lender Social Finance Inc said on Thursday it is pulling back from expanding into Australia and Canada as previously planned, choosing instead to focus on improving its core lending products like student loans and mortgages in its home market.
The San Francisco-based company will also drop its plans to push into asset management, according to a letter from its interim CEO to shareholders and seen by Reuters.
On Friday, SoFi announced it has completed a $727 million issuance of SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”) notes, making it the largest offering of securities backed by consumer loans and is SoFi’s 11th ABS transaction this year, bringing the lender’s total issuance for 2017 to $6.1 billion.
Elevate, a fintech lender from Texas, recently announced it wants to try out the credit card business according to Business Insider. On Monday, the company released its plans for 2018 which included a variety of new products and a possible partnership with a bank.
One of the products that Elevate is looking to release is a credit card with a third-party bank by next year. The card would be potentially geared toward subprime borrowers, which constitutes a large group of Elevate’s customer base.
Another company, Petal, is trying to offer a new credit card in 2018. It’s goal is to increase the availability of credit cards to consumers who are lacking credit.
The peer-to-peer lending industry has the potential to destabilise consumer balance sheets, with loan performances bearing a striking resemblance to the subprime mortgage market before the 2007 crisis, warns a new paper from the Cleveland Federal Reserve.
And things could get much worse, warn the Fed researchers after looking through credit bureau data on 90,000 people who took out P2P loans between 2007 and 2012 and comparing them to 10 million traditional borrowers.
The researchers conclude that, in fact, P2P loans do not achieve these things and actually resemble “predatory loans” in terms both of who takes them out and the impact on borrowers’ finances.
Are consumers really better off skipping the local BofA branch and instead filling in a few online forms and having an algorithm spit out an interest rate? Are all these newfangled credit-rating tools helping to serve those traditionally brushed aside by the big boys? Is P2P good?
Researchers at the Cleveland Fed have an answer to all these questions: No.
The pattern is worse for those with credit card debt; compared to the control group, P2P borrowers see a 47 percent increase in credit card debt after getting an online loan.
Meanwhile LendingClub has posted exactly two quarters of profit since going public in 2014. Its last earnings report sent shares down 20 percent.
According to the authors, Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, peer to peer loans resemble predatory loans in terms of the consumer market they serve and impact on consumer finances.
Among their findings:
Credit scores of P2P borrowers fall substantially after taking out a loan when compared to peers who did not take out a P2P loan.
Loan delinquency rates are more than 50% higher for P2P borrowers two years after the loan origination when compared to peers who did not take out a P2P loan.
P2P borrowers exhibit a 47% increase in credit card balances after obtaining P2P credit when compared to similar non-P2P borrowers.
[Side note: This report seems to be using P2P lending to mean the broader online lending industry beyond just Lending Club and Prosper so keep that in mind when you see me using the P2P lending term in this article].
One of the things I disliked most about this new report was the how opaque their analysis was. They just said they used data provided by TransUnion “in which we observe about 90,000 distinct individuals who received their first P2P loan between 2007 and 2012.”. They provide no indication as to which platforms this data is based upon and then we see this very strange chart below showing supposed delinquency rates by year.
In 2006, the only consumer P2P lending (or any significant online lending) platform in existence in this country was Prosper and their 2006 vintage was terrible. This data was all publicly available at one point and I reported that of the 28,936 loans issued during those initial two and a half years 10,456 loans defaulted, a 36% default rate. Subsequent vintages at Prosper performed much better. When I see the table above showing those numbers I have to question the entire data set of the report because obviously their 2006 data is wrong.
The study, published Thursday, is likely to spark intense debate. One of its findings is that consumers who take out online loans, sometimes called peer-to-peer loans or marketplace loans, likely have access to traditional banking services.
“We are scratching our heads,” Nathaniel Hoopes, executive director of the Marketplace Lending Association, an industry trade group, said in an email, “because the Philadelphia and Chicago Federal Reserve recently conducted a more granular study and reached the opposite conclusion as this Cleveland Fed research.”
In 2010, digital lenders originated $249 million in unsecured personal loans, according to a recent study by the credit bureau TransUnion. By last year, the annual loan volume had grown more than ninetyfold.
The study finds that the consumers who took out online loans grew their other debts by about 35% more over the next two years than did their counterparts who did not take out the loans.
Several major sellers of travel, such as Expedia, United, JetBlue, Southwest, and Lufthansa, are testing extending credit to U.S. consumers to enable them to pay for their vacations over time rather than up-front.
Paying for a trip in monthly payments primarily appeals to consumers with average credit ratings who are willing to accept short-term, interest-based loans.
But consumers with high credit scores also appear to be getting tempted into splurging on luxury trips if companies lend them credit on attractive terms.
The new installment products — called layaway when paid off prior to trip and a loan if paid off after — have been common in developing countries.
A few fintech startups — most prominently Affirm, Airfordable, and UpLift — are hoping that their services will make delayed payment for travel fashionable.
THE DOWNLOW ON UPLIFT
This year, UpLift said that its average 12-month travel loan through travel brands was $2,420, said CEO Brian Barth in an interview. For “highly-qualified” borrowers, it has typically charged 8.99 percent annual percentage rate, he said.
Consumers participating in UpLift’s loans had an average FICO (Fair Isaac Corp.) score of 692. Scores range from 300 to 850. UpLift has lent money to customers with FICO scores as low as 475.
Affirm said that its travel partners see a 20 percent increase in customer conversions, on average, by offering its product.
PeerIQ’s Q3 Public Lender Tracker (PeerIQ Email), Rated: A
The tracker, a new release from PeerIQ’s research and analytics team, examines credit performance trends across publicly traded banks, FinTechs, and card issuers. We also deep-dive into the earnings of Lending Club and OnDeck. Stay tuned for a release this week and scroll down for an excerpt.
Groundfloor has filed a Form 1-A with the Securities and Exchange Commission indicating its intent to sell shares in the real estate crowdfunding platform. According to the filing, GroundFloor is offering up to 2.5 million in Common Stock at $10 per share. Interestingly, the Groundfloor offering circular indicates the company intends to limit the offer and sale solely to accredited investors – even though under Reg A+ issuers may sell to both accredited and non-accredited investors alike (although in other parts of the document it appears they will accept non-accredited investors).
Real estate crowdfunding is a growing industry of great interest for realtors and investors. A report on Crowdfunding for Real Estate by crowdsourcing.org anticipated a $3.5 billion growth for real estate crowdfunding in 2016, and experts project that the industry will grow to over $300 billion by 2025.
Despite digital mortgage advances, borrowers think it still takes too long to get a loan, J.D. Power finds in its annual customer satisfaction ranking of originators.
The most frequently used method for submitting a mortgage application for both refinances and purchases was online for the first time, according to the survey. Forty-three percent applied digitally, up from 28% a year ago.
But satisfaction with online submissions declined 8 points and borrowers also gave online submission a satisfaction score 10 points below that of in-person applications.
As sales from Marketplace outpace Amazon’s own sales, sellers need increased funding for things like, advertising and purchasing inventory.
The SellersFunding model interprets data like products, prices, payments, customer reviews and feedback. With more than fifteen billion single data points on tap, all rigorously tasked, the company’s model can boast high levels of accuracy.
But those laws may be up for reconsideration, as Keith Noreika, the acting Comptroller of the Currency, has raised the possibility that those laws are in need of review and possibly revision.
Needless to say, the nation’s small banks and their representatives are less than thrilled.
“If Walmart wants to be a bank, that’s fine, as long as they make the appropriate investments to protect the parts of the banking system that are so critical,” said Kelly King, chief executive at regional lender BB&T Corp.
King added that he was “absolutely opposed” to the idea of a limited banking license.
LendingTree, Inc. (NASDAQ: TREE) today announced it will host an Analyst and Investor Event on Wednesday, December 13, 2017 in New York. The company will host in-person attendees at the Nasdaq MarketSite, 4 Times Square, New York, NY10036. Doors will open for registration at 10:00 a.m. Eastern Time and presentations will begin promptly at 10:30 a.m.
A FUNDING Circle loan portfolio would still deliver returns of close to five per cent in a severe recession, the platform claims.
The peer-to-peer business lender has stress-tested its loan book, using a model similar to what the Prudential Regulation Authority (PRA) uses for banks, to see how two example portfolios would stand up against a severe recession similar to the one in 2007/08.
Even with these assumptions, the projected annual returns after fees and bad debt but before tax were 5.3 per cent for portfolio A, and 4.9 per cent for portfolio B, Funding Circle said.
ZOPA is working on ways to let investors transfer their existing holdings into its Innovative Finance ISA (IFISA).
Andrew Lawson (pictured), chief product officer for Zopa, said some investors have already been selling old loans and buying new ones to fund the tax-free product.
However, the lender is now working on a one-off option for customers with more than £1,000 in its Classic or Access account to move that money into an IFISA, keeping the Safeguard coverage intact and without paying sale fees.
New peer-to-peer platforms should put as much effort into attracting borrowers as they do promoting and obtaining inward investment, according to Kuflink.
Stuart Law, chief executive at Assetz Capital, claimed: “A number of long-established peer-to-peer platforms have more investors than borrowers, meaning they have been closed to new investment, while the company tries to find more loans.
Stephen Findlay of BondMason added: “I think there is generally an oversupply of capital for the available investment opportunities, across most markets.”
Peer-to-peer (P2P) lending has grown dramatically since the financial crisis. In 2005 when Zopa, the first lending “platform” was launched, loans totalled just £1.5m.
But last year total lending was £3.2bn with Zopa, Funding Circle (which counts the British government as an investor) and RateSetter controlling two-thirds of the market.
Rates offered by P2P firms have dropped: investors can earn 3.7pc with Zopa Core and 4.5pc with Zopa.
Risks are also rising. When Zopa launched it only offered loans to 0.5pc of applicants, said Neil Faulkner of 4thWay. Now its approval ratings are in line with traditional banks, which give loans to 20pc of applicants.
A new report from equity crowdfunder VentureFounders has found that most tech founders in the UK intend to exit within 2-5 years, despite recognising the risks of exiting too early. Fully 56 per cent of the entrepreneurs surveyed by VentureFounders expect to sell their business for £50m or less.
Ppdai, which operates an online platform connecting small investors and lenders, priced its initial public offering at $13 a share, well below the $16-$19 target. At that level, the company raised about $220 million, compared with its maximum goal of $350 million.
The shares then opened higher and rose as much as 10% in early trading in New York. Ppdai finished its first day trading at $13.06.
WeLab, an online lender in Hong Kong and the Chinese mainland, said it has raised $220 million in new funds from investors including Alibaba Hong Kong Entrepreneurs Fund and International Finance Corp.
Part of the new funds will be used to expand outside Greater China, WeLab said in a statement.
PPDAI priced its offering a week after news that Chinese regulators are considering a crackdown on the country’s cash microlenders in response to claims that some have charged excessive interest rates. The initial public offering of Qudian helped trigger the regulator’s review of the sector, people with knowledge of the matter said earlier this month.
PPDAI priced its sale of 17 million American depositary shares at $13 apiece, after marketing them at $16 to $19 each. The stock started trading Friday in the U.S.
While Chinese law already limits lending rates to 36 percent annually, regulators are considering drafting rules to specify the cap applies to the cash microlending sector, people with knowledge of the matter said this month. In its IPO prospectus, PPDAI said total borrowing costs for some of its loan products exceed that level after adding in transaction fees.
ZhongAn shares have risen 28 percent from their IPO price, outpacing the 5.3 percent gain in the Hang Seng Index over the same period.
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 in the annual Asia-Pacific Economic Cooperation (“APEC”) CEO Summit event, in Da Nang, Vietnam on November 9.
“Over the next decade, tens of millions of SMEs in China will focus more on the quality of their growth, technological innovation, and sustainable development. We at CreditEase has been committed to empowering these SMEs as well as the real economy with technology breakthroughs and new business models ever since the company’s establishment,” said Mr Tang. “Going forward, we will continue to leverage our FinTech strengths in inclusive finance and wealth management to enhance SMEs’ overall financial capabilities and create more value for society.”
If you are looking to take out a loan from online lending platform WeLend to buy the iPhone X, be warned – should you use only upper-case letters when filling out the address field in your application, you could be charged a higher interest rate.
“We actually match how people fill out addresses with the probability of [them] declaring bankruptcy after a certain number of years,” said Simon Loong, the founder and chief executive of WeLab, the Hong Kong company that operates WeLend.
“The probability of [an applicant] declaring bankruptcy is highest when they fill in their address in capital letters,” he said.
n Hong Kong, the company relies primarily on a user’s credit history and interaction data. In mainland China, where less than 30 per cent of the population has a credit score, WeLab relies much more on unstructured, mobile data.
Yet another observation WeLab has made is that delinquency rates tend to correlate with loan application times – if a user applies for a loan between 1am and 6am, they are more likely to default on a payment than users who apply in the day, Loong said.
On November 8th, Chinese leading food delivery platform Ele.me quietly marched into the micro lending market. The loans ranges from RMB 500 yuan to RMB 2000 yuan with terms of either 7 days or 14 days. This is a collaborative product with Lixiadai.com which means borrowers apply this loan on Ele.me will be directly led to Lixiadai.com.
Nearly two months ago, the stock app jointly set up by JD Finance and four other brokerages stopped operating. According to JD.com, the suspension of the operation is due to a system upgrade. Yet, as reported by the media, the app was actually halted for procedural noncompliance in account opening and trading.
Ho fills Cheddar in on why there is such a massive opportunity in peer-to-peer lending in China. He notes that companies capitalized on the governments unwillingness to hand out small loans to individuals.
Sweden’s Klarna made its mark with a pay-later model for e-commerce shopping that’s spread to other European countries and the U.S., and now it’s piloting the same concept for in-store purchases.
In partnership with the Danish payments technology firm Nets, Klarna has developed a feature that appears on payment terminals at certain stores giving consumers the option to pay for a purchase later—fully or in part—before completing the transaction, Klarna said in a recent blog post.
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Kony, Inc., the leading enterprise mobility and digital applications company, today announced it is expanding its global partner ecosystem with financial technology solutions featured on the Kony Digital Banking Marketplace.
FinTech is disrupting the traditional financial services, such as: money transfers, loans, mobile payments, asset management and fundraising. According to Statista, Transaction Value is expected to show an annual growth rate (CAGR 2017-2021. of 20.5 percent resulting in the total amount of U.S.$6.9 billion in 2021.
1. Multi-currency digital wallets
A recent example is CashDash, a mobile app that allows you to buy, collect and return foreign currency.
2. Payments security advances using biometrics
4. Robo-advisors and automated wealth management services.
In an effort to offer rideshare workers faster access to their wages, First Data recently launched a new solution that delivers the money directly onto a debit card.
A collaboration between Ingo Money, Visa and digital lending platform OnDeck will allow SMBs that request loans through OnDeck to have the funds disbursed directly to their business debit cards in real time.
A group of 13 Australian banks announced a joint effort to allow customers to get real-time payments beginning on January 26, the nation’s Australia Day holiday. With the service in place, bank customers can exchange money between contacts in a matter of seconds using identifiers such as mobile numbers and email addresses, instead of sensitive data like bank accounts.
YES Bank is all set to launch a first-of-its-kind fintech survey. Called India Fintech Opportunities Review, the study will cover India and a few major fintech markets in the world.
A research initiative of YES FINTECH, which is the bank’s innovation programme to accelerate fintech start-ups, the survey will cover more than 1,000 firms globally, said Amit Shah, Head-Strategy, Yes Bank.
Payoneer, a global cross border B2B digital payments provider, has decided to expand the scope of its offering in the Indian market to e-commerce related export businesses, it’s visiting CEO Scott Galit has said.
Galit said that India is the fastest growing digital market in the world and that more people are going digital in India than anywhere in the world.
India will move faster than China for a while, but on much smaller scale. The B2C e-commerce exports in India is around $ 500 million a year, while in China it is $ 400 billion, according to industry insiders.
My opinion is that both views are problematic in its own way, branch banking is still quite a distance away from being dead largely fueled by face to face KYC requirements and the need to serve different segments of the customer.
However, there’s one reality that bankers cannot escape from, banks are increasingly under pressure to close their branches.
The Digitised Branch
The whole idea of digital banking is the ability to perform banking on-the-go, to go to the bank to perform banking-on-the-go (what a tongue twister) seems to defeat the point entirely.
This approach enables bankers to still serve the segment of their customers prefer to conduct their banking activities through the branch or customers who for whatever reason need to visit branch all while still keeping the costs at bay.
Among the fresh fintech funds that have come into this space is GTR Ventures (GTRV), the venture capital arm of trade finance intelligence firm Global Trade Review. Operating in both Singapore and London, it is the world’s first investment platform targeted specifically at fintechs operating in the global trade ecosystem.
Kelvin Tan, co-founder and chief investment officer, told The Business Times that the fund screens fintechs that can help to close the annual US$1.5 trillion trade finance gap, particularly for SMEs.
China Construction Bank’s name may not be a household one in the Middle East, but the stats speak for themselves in evoking the bank’s vast resources and influence within China, and across the world. With 363,000 employees on its books, CCB is consistently ranked in the top 30 of the Global Fortune 500 and currently has over $3 trillion worth of assets. In 2015, it was the second largest bank in the world by market capitalisation, and the sixth largest company in the world by revenue.
Aside its numerous products that are void of the usual financial bureaucracy and also offer easy access capital to SMEs and individuals, KiaKia, a licensed online peer to peer and direct lending platform, has introduced ‘Mr. K’, an artificial intelligence (AI) and machine learning powered alternative credit scoring, customer service, Direct and P2P lending virtual agent.
Speaking further on the new product, Abiola said 80 percent of KiaKia high scoring borrowers access the same loans at between 7.5 percent and 15 percent as against the 30 percent of its competitors, as well as, connecting credible borrowers with lenders offering loans as low as 5.5 percent interest rate for longer tenured loans.