August 22nd 2016, Daily News Digest

August 22nd 2016, Daily News Digest

News Comments Today’s most interesting news are about banks and their paradoxical branches;  how real estate listings could come with financing included; how Bondora proves a 16.7% return to investors; China is putting in place P2P loans and individual caps ; last but not least the pros and cons of regulatory sandboxes. United States Goldman […]

August 22nd 2016, Daily News Digest

News Comments

United States

United Kingdom

  • 9-months-old online real estate auction house partners with LendInvest. “On the information page for each pre-qualified lot, summary funding details will be presented alongside other key property information.” Imagine if in the US when you go to an open house you can receive guidelines on what financial parameters will automatically qualify you for the house !

European Union

New Zealand



  • An article advocating for a regulatory sandbox for P2P lenders. For example, P2P lenders should receive the right to operate with “1,000 customers in one city, for three months”. This approach has worked tremendously well in China since the 1980s where the government provided capitalistic sandboxes in Shanghai and Shenzhen/Guangzhou at first. Then the government re-used this sandbox idea for any new initiative. A proven approach at a Chinese scale. If it worked in China perhaps it will work elsewhere.


United States

Meet Marcus, Goldman Sachs’s Online Lender for the Masses, (New York Times), Rated: AAA

After much internal discussion, the Wall Street firm has decided to call the retail banking operation Marcus — the first name of the company’s founder, Marcus Goldman.

Marcus is expected to be officially unveiled when the bank is ready to roll out the offering, most likely in October, according to people who were briefed on the plans.

Initially, Marcus will offer relatively small consumer loans, a business that Goldman has traditionally avoided.

One potential benefit of the retail banking operation is that it could help temper the reputational problems that Goldman suffered after the financial crisis, when Rolling Stone magazine called it “a great vampire squid wrapped around the face of humanity.”

The big question is whether Goldman will learn to successfully serve retail customers, something it has not done.

The Marcus business was referred to internally as Mosaic and has been operating with a staff of around 100 people.

Greater Scrutiny Looms for ‘Rent-a-Charter’ Deals, (Wall Street Journal), Rated: AAA

The startups’ regulatory advantage may be fleeting. Last month, the Federal Deposit Insurance Corp. proposed guidelines, including one that banks that partner with third-party firms to make loans “will generally receive increased supervisory attention.”

Though the FDIC has had guidelines for relationships between banks and outside vendors, the new proposal focuses specifically on lending partners, including proposing yearly examinations rather than every 18 months. It also recommends that banks should set “performance standards for third parties” and “require access to data.”

Fewer than 50 U.S. banks work closely with online lenders, estimates Brian Korn, a partner at Manatt, Phelps & Phillips LLP. “The FDIC wants to make sure these banks are doing their homework and aren’t just puppets,” he said. He added that in his experience such banks were “very focused on safety and soundness, even more so than other banks of their size.”

Among the most active banks working with online lenders are WebBank, a unit of conglomerate Steel Partners Holdings LP, and Cross River Bank in New Jersey.

The banks declined to comment on the FDIC guidelines. The FDIC is seeking comment on the proposal.

Some experts argue rent-a-charter arrangements reduce risk. Taxpayers aren’t in danger of being on the hook if a loan fails, while borrowers are given wider access to credit even if banks don’t want to take risks.

Online lenders that partner with banks, such as Elevate Credit Inc., have already been subject to some FDIC examinations, according to its chief executive, Ken Rees, because under a decadesold law, a bank’s primary federal regulator has the authority to examine certain service providers and vendors.

Meanwhile, court decisions in Maryland and West Virginia over the past two years defended state regulatory actions to stop an online lender from making loans at interest rates higher than the states permit, though the lender was working with a partner bank.

In July, Colorado authorities sent letters to Avant and Marlette Funding LLC saying state law would apply to loans made by them, although banks originated the loans, according to reports by Kroll Bond Rating Agency Inc. Avant and Marlette subsequently removed certain loans made to Colorado borrowers from bond offerings , Kroll added.

A revised Connecticut law that took effect in July requires companies that sell leads to lenders for people who want small loans, even if they don’t ultimately originate them, to obtain licenses as lenders.

Peer IQ analyzes Loan Purchase Agreements, (PeerIQ Email), Rated: AAA

Prosper announced Source: PeerIQ

Anatomy of a Loan Purchase Agreement
Purchasing raw whole loans involves substantial legal and administrative investment.  Originating platforms (“Sellers”) and whole loan investors (“Buyers”) enter into multiple negotiated contracts to purchase loans. These include the Loan Purchase Agreement, Loan Servicing Agreement, Loan Representation and Indemnity Agreement.
An LPA sets forth the economic terms, obligations, and representations for both the seller and buyer of loans. A

Developing a global financial architecture, (Tech Crunch), Rated: AAA

In their Insights article A World Awash in Money, Bain & Company define trust architecture as strong property rights protections, reliable legal systems and institutional depth. What this really boils down to is safety and transparency: People want to see that the money they send across borders is going where it is supposed to. Though the examples Bain uses detail larger foreign direct investments, these architecture problems persist even at the peer-to-peer level.

So what obstacles does technology need to overcome to create a reliable infrastructure to move money to emerging economies?

In his insightful article, When Bitcoin Grows Up, British journalist John Lanchester dives into why, historically, banks came about in the first place. When we spend money or get paid or give a loan, what we’re really doing is making an entry on a register. That entry says “this thing of value is being transferred.” Before the invention of common currencies, people would barter goods directly, or keep informal “IOUs” to log debts. The creation of banks allowed people to log their transactions in a centralized, authoritative ledger — the banker’s.

Though it’s difficult to paint heterogeneous markets in such broad strokes, the trend is clear — poorer people have less access to banks. This makes it hard to store and transact money.

One solution, which Lanchester evaluates thoroughly, is that of digital currencies based on technology such as blockchain.

Another problem for the developing world is the failure of many countries’ trust architecture to provide reliable personal identification and credit underwriting.

To solve this problem, the Indian government has famously rolled out an initiative to give a digital identity to its 1 billion+ residents using biometric identification. Now, following its critical success, Russia, Morocco, Algeria and Tunisia are all exploring similar programs.

Another novel approach to creating credit files comes from Kenya, home to the wildly successful Safaricom startup M-Pesa. In 2013, 43 percent of Kenya’s GDP flowed through M-Pesa. The tech is built on a radically simple idea: If you have access to someone’s cell phone account, you have a way to identify them individually and a history of payments to tell if they’re creditworthy.

Innovative technology firms, well-versed in the challenges of the developing world’s financial trust architecture, stand to revolutionize the way money is sent and lent globally. These solutions could also “trickle up” from the personal level to larger-scale investments, as transfer risks are smoothed across geographies. The inertial build-up of capital pools in the developed world creates an almost limitless opportunity for those platforms that can overcome the hurdles damming it.

U.S. banks want to cut branches, but customers keep coming, (Reuters), Rated: AAA

Despite banks’ nudging toward online tools, many U.S. customers are not ready to give up regular visits to their nearest branch, complicating the industry’s efforts to slim down.

U.S. banks have trimmed the number of branches by 6 percent since it peaked in 2009, according to Federal Deposit Insurance Corp data. The 93,283 branches open at the end of last year was the lowest level in a decade.

Yet analysts who have examined the data say banks should have done more to offset the pressure on revenue from low interest rates and regulatory demands.

The number of FDIC-insured banks has fallen by more than 25 percent over that time.

Bankers across the industry say that online banking complements traditional services for U.S. customers, but few have gone fully digital. While other factors are at play, one difference is that U.S. customers still routinely use checks and need branches to process them, said Rick Spitler, managing director at consulting firm Novantas.

The traditional branch costs roughly $2-4 million to set up and $200,000-400,000 per year to operate, according to Ed O’Brien, an analyst at Mercator Advisory Group.

Executives at JPMorgan Chase & Co JPM.N, the country’s largest bank, say each branch earns about $1 million in annual profit, but takes a decade to reach its full potential.

John Elmore, vice chairman of community banking and branch delivery at U.S. Bancorp, says branches are especially important for small businesses that need to deposit cash frequently, prefer to negotiate loans in person, or want strategic advice.

They have reduced the number of tellers and moved them to the back. Their ATMs can perform more sophisticated tasks and banks have developed nifty mobile apps for routine banking needs. They are even experimenting with digital loan underwriting.

Yet customers still expect contact with bank staff and JPMorgan recently had to hire more tellers after customer complaints.

Bank of America Corp BAC.N, which has closed a quarter of its branches since 2009, could eventually serve as a test case.


Kickfurther Buyers Crowdfinance $ 10.2 Million of Inventory, (PR Web), Rated: A

Kickfurther Consignments are not loans. Buyers provide inventory, marketing, and sales support for businesses, and they earn Co-Op profits when Consignment Inventory sells. In this way, the interests of the businesses are directly aligned with the interests of their Buyers.

Kickfurther is an inventory crowd­funding marketplace that connects companies with individuals. The Kickfurther marketplace enables consumer product companies seeking capital to grow by sharing sales opportunities with individuals interested in participating in micro-retail.

Businesses post Consignment Opportunities by choosing the amount of inventory they want, the consignment profit Buyers will earn as inventory is sold, and the estimated duration of time it will take to sell the inventory based on prior sales history. Since its 2015 launch, Kickfurther has funded $10.2 million of inventory in 339 Consignment Opportunities by 288 product companies. Kickfurther users have earned, on average, more than 2% consignment profit per month on completed Co-Ops.

OnDeck Soars to #16 on Selling Power’s “50 Best Companies to Sell For” List, (PR Newswire), Rated: A

OnDeck® today announced it has been named to the Selling Power 50 Best Companies to Sell For list for the fourth consecutive year, rising to #16 on the list, ahead of sales giants ADP (#18), Google and Microsoft (tied at #37) and IBM (#50).

“OnDeck’s top twenty ranking on the Selling Power 50 Best Companies to Sell For list is a clear indication of our relentless commitment to fostering a top-notch workplace environment where employees feel both supported and challenged,” says Paul Rosen, Chief Sales Officer at OnDeck.

OnDeck’s robust compensation packages include medical, dental, vision and life benefits, up to four months of paid parental leave, lunch on OnDeck plus a fully-stocked kitchen, 401(k) matches, compensation for education, student loan refinancing and more.

Nova Credit launching from Y Combinator to give immigrants access to U.S. credit, (Tech Crunch), Rated: A

For millions of immigrants (roughly 15 million) landing on U.S. shores — even ones who had successful jobs abroad — there’s no way to access credit.

Collecting credit information and credit proxies (like cell phone billing receipts and records) into a single report it calls the “Nova Credit Passport”, Nova Credit passes the report onto the lender so that they can make a more informed determination on whether to accept or reject a credit application.

Both the UN and the World Bank have identified financial inclusion and the ability to access global credit as one of the keys to development and poverty alleviation globally.

Nova makes its money by charging lenders for access to their reports, in the same way Experian and Equifax do.

So far, the company is concentrating on two markets, India and Mexico, which account for roughly 21 million immigrants to the U.S. every year. As the company expands it intends to add countries in the UK, the European Union, Brazil, Russia and China.

Launching at Y-Combinator’s demo day this weekend, Nova Credit is already generating buzz among financial services companies. It has also partnered with organizations immigrant organizations like and Partnership For A New American Economy.

“We’re partnering with credit unions and fintech lenders,” said Goulimis. “Credit unions are committed to financial inclusion and trying to move away from taking shots in the dark [and] on the other hand we’ve been working with bigger fintech lenders [who] are trying to underwrite people who are unbanked.”

Message from Realty Mogul CEO, Jilliene Helman, (Email from Realty Mogul), Rated: A

What [Realty Mogul is] here for: to give more people on both sides of the marketplace (real estate companies and real estate investors) better access to real estate investing through innovation (in technology, products, regulations, or any other way).

Until now, was only open to accredited investors. To date, over 80,000 people have expressed interest in what we do by joining our investor network, but only the 25,000 accredited investors within that group could invest through our platform.

So we did just that – starting this week, investing on is finally available to nearly all investors*.

MogulREIT I Basics

Thanks to recent changes under The JOBS Act (more specifically, Title IV of the JOBS Act known as Regulation A+) we are now able to offer non-accredited investors the opportunity to invest in a diversified pool of commercial real estate investments through a single investment, MogulREIT I, a real estate investment trust (or “REIT”).

A “REIT” is a company that owns or finances real estate. REITs give their investors the opportunity to participate in large-scale real estate transactions by purchasing shares of the company that owns or finances them. REITs typically do not pay tax at the company level, and so they avoid the double-taxation problems that many corporations face.

Our first REIT, MogulREIT I, is a public non-traded REIT. That means that it is registered with the Securities and Exchange Commission, but is not traded on a stock exchange.

MogulREIT I investors can enjoy regular income, potential capital appreciation, and diversification across geographies, property types, and investment types.

We designed MogulREIT I to be accessible through our online platform, By offering it directly to investors instead of through other third-party distribution channels, we are able to eliminate the high expense loads that result from traditional, commission-based sales.

Investors in MogulREIT I will not be charged any sales commissions and the organization and offering expenses are anticipated to be approximately 3% of the target total raise of amount. Traditional non-traded REITs typically charge an average sales commission of 7% and organization and offering expenses of up to 15%**. That’s 400% more than what we charge.

Next FTC Fintech Forum to Discuss Crowdfunding, P2P Payments, (Crowdfund Insider), Rated: A

The Federal Trade Commission (FTC) recently announced their next Fintech Forum.  The next event will take place on October 26th at the FTC HQ in Washington, DC.

At the first Fintech forum, the FTC managed to bring together a respectable group of industry representatives. As we understand it, FTC staff is reaching out to potential panelists now.

The half-day forum will examine the various models of crowdfunding and peer-to-peer payments used by companies, the potential benefits to consumers, and possible consumer protection concerns. In addition, the forum will look at how the FTC Act and other existing consumer protection laws might apply to companies participating in these areas.

United Kingdom

Online auction house launches pioneering partnership with lender, (Estate Agent Today), Rated: A

LOT11, an online auction house, is teaming up with short-term lender LendInvest in the first alliance of its kind. On the information page for each pre-qualified lot, summary funding details will be presented alongside other key property information, such as floor plans and legal documents, reflecting the imperative of arranging auction finance in advance of a bid for prospective bidders.

LOT11, which is only nine months old, attracted participants from more than 120 countries to its most recent online auction.

European Union

Bondora Publishes Annual Report for 2015, (Crowdfund Insider), Rated: A

The reports can be found here.

Bondora, a European peer to peer lender based in Estonia, has been on a big push to bring greater clarity and transparency to their lending platform. The initiative is not a requirement but a strategic decision to drive investor confidence and utilization.

Earlier this month, Bondora published an audited annual report from last year. As a private company there is no mandated need to do this but Bondora has published it regardless.

Bondora raised equity in the amount of €4.5 million during 2015 and thus strengthened the balance sheet substantially.

Bondora may be a smaller platform but they have big ambitions.  The P2P lender claims some of the highest returns in the industry and hosts a secondary platform for investor liquidity.  The current annualized net return on investment stands at 16.7% and the highest grade loans are generating about 12 % today.  Most loans are small distributed across three countries: Estonia, Finland and Spain. Anyone may invest in Europe. US investors must be accredited.

New Zealand

P2P lender Squirrel Money is the first to launch secondary market for investors in NZ, (SMN Weekly), Rated: A

Peer-to-peer lender Squirrel Money announced on Thursday it is launching secondary market next week, which will allow loans to be on-sold to other investors. The Squirrel offer will be the first P2P secondary market available in New Zealand.

Squirrel Money expects that the launch of the secondary market will encourage more people to make long-term investments.

Keep in mind, however, that Investments being sold through the Secondary Market are subject to an administration fee of 1% (up to a maximum of $50) per investment sold.

Squirrel Money has so far lent $225,899 in loans. Earlier this year, the company raised $3,424,400 through its crowdfunding campaign on Snowball Effect – NZ’s leading equity crowdfunding platform.


P2P platforms face lending caps, (Global Times), Rated: AAA

Chinese authorities will roll out rules governing the country’s peer-to-peer (P2P) platforms, which are expected to set borrowing limits for the sector, a move experts said on Sunday highlights the regulatory emphasis on inclusive finance.

The China Banking Regulatory Commission (CBRC), together with several other departments, will set specific borrowing limits in the Interim Measures for the Administration of Business Activities of Online Lending Information Intermediaries, which are expected to be issued around February 2017, domestic news portal reported on Saturday, citing anonymous sources close to the matter.

Specifically, the report said an individual would be able to borrow no more than 200,000 yuan ($30,211) from a single P2P platform and no more than 1 million yuan in total from various platforms.

As for companies or other organizations, the amount should not exceed 1 million yuan from one platform or 5 million yuan from several platforms.

According to a draft version the CBRC released in December 2015 for public comment, P2P platforms should focus on small-scale lending and, with adequate risk management capabilities, should keep close control of borrowers’ total balances from all P2P platforms.

“At present, some P2P platforms may see ‘big orders’ for money, lending tens or even hundreds of millions of yuan to some real estate enterprises or other capital-intensive sectors, instead of supporting individuals and small and micro-sized enterprises,” Luo told the Global Times on Sunday.

“They will need to adjust their business once the borrowing caps become official,” Luo said, noting that tighter controls are inevitable.


Creating space for financial services, ( LiveMint), Rated: A

It is widely acknowledged that financial inclusion, and financial services more broadly, are at an inflection point in India. The so-called JAM trinity (Jan Dhan-Aadhaar-Mobile) and recent regulatory innovations (like the introduction of differentiated banking licences) have set the stage for a transformation.

As Nandan Nilekani eloquently put it, India has reached its “WhatsApp moment” in financial services.

Notably, there is a chicken-and-egg problem of innovation. Regulators desire to fully understand the potential risks of new technologies and approaches before making a decision.

So, how does one overcome this chicken-and-egg problem? One big idea that is taking shape is that of a “regulatory sandbox”.

A sandbox is a mechanism through which the regulator permits realistic simulations and limited-scale experiments of financial innovations in controlled environments (often ‘relaxing’ some regulatory norms). It studies the results of these experiments, and then makes final regulatory decisions. The sandbox functions as a safe space to try out innovations, and understand their associated risks, before allowing full-scale roll-out.

Here’s where a sandbox approach could help—by permitting an experiment where P2P lending platforms can be given some regulatory leeway such as being allowed to access centralized credit score and KYC databases, and hold funds in centralized accounts. Such an experiment could be run as a pilot with a limited set of customers—for instance, 1,000 customers in one city, for three months. If the regulator is satisfied that there were no major regulatory issues, the regulatory leeway could be formalized into the regulations.


George Popescu

August 5th 2016, Daily News Digest

August 5th 2016, Daily News Digest

News Comments Brexit gave a 500% boost to CrowdLending’s volumes. I would have expected it will give a boost to the lending capital interest, but it boosted the borrower interest, perhaps because borrowers believe that the Bank of England rate reduction was passed through to them and it made borrowing cheaper. I would love to […]

August 5th 2016, Daily News Digest

News Comments

  • Brexit gave a 500% boost to CrowdLending’s volumes. I would have expected it will give a boost to the lending capital interest, but it boosted the borrower interest, perhaps because borrowers believe that the Bank of England rate reduction was passed through to them and it made borrowing cheaper. I would love to see actual survey data of the borrower’s reasons for the increase in interest.
  • In the US the P2P spring is in full bloom: Prosper and Lending Club are in promising talks to put in place financing for $10bil in loans. Glad the winter is over.

United States

United Kingdom




News Summary


United States

 Online Lender Prosper in Talks on Billion Loan-Buying Deal, (Wall Street Journal), Rated: AAA

Online lender Prosper Marketplace Inc. is in advanced talks with a group of investment firms to sell them roughly $5 billion worth of loans over the next two years, people familiar with the matter said.

The buyers in the talks include Fortress Investment Group LLC or an affiliate, Soros Fund Management LLC and Third Point LLC, along with investment bank Jefferies LLC, the people said.

The loans would be bought at face value, but the firms are also in discussions to receive equity warrants in Prosper as they make the purchases, the people added. The potential buyers are also talking to banks about borrowing money to support their loan purchases, and a deal could wrap up in the coming weeks, they said.

In addition to the deal with the four investment firms, Prosper has also started selling loans to BBVA Compass, the U.S. regional-banking unit of Spanish lender Banco Bilbao Vizcaya Argentaria, according to a bank spokeswoman. BBVA’s venture-capital arm took an equity stake in Prosper last year.

Now, Prosper’s deal to sell loans at face value would provide a measure of validation of investors’ confidence in its underwriting ability. It also may give it a leg up on bigger rival LendingClub.

LendingClub had previously held talks for billions in loan-buying commitments with some of the same funds, including Soros and Third Point, but didn’t finalize a deal, the Journal earlier reported.

Prosper and LendingClub have raised rates they charge to new borrowers over the past few months. Loans sold in June by Prosper were expected to yield 7.4% on an annualized basis and taking into account expected losses, according to the company. That is short of 8.5% on such loan portfolios in 2013, but is still chunky when compared with U.S. Treasurys and other fixed-income asset yields at or near record lows.

Although new buyers would be a sign of confidence in Prosper, the equity warrants being discussed may lead to dilution of existing investors, including those who bought in the fundraising round valuing Prosper at $1.9 billion last year. Prosper hasn’t raised money since, while shares of publicly traded LendingClub have fallen 76% in that time.

Prosper lending in the second quarter is expected to dip sharply again from $972 million in the first quarter, which was down from $1.1 billion in the fourth quarter of 2015, according to people familiar with the company. Earlier this year Prosper cut back on marketing to new borrowers, as did other platforms, the Journal reported.

LendingClub Said in Talks With Western Asset on Loan Buying, (Bloomberg), Rated: AAA

LendingClub Corp., looking to bolster demand for the consumer debts it arranges online, is in talks with Western Asset Management Co. to set up a fund that would purchase as much as $1.5 billion of loans over time, people with knowledge of the matter said.  Western, a subsidiary of money manager Legg Mason Inc., would commit to purchasing a certain amount of the lending platform’s loans each month, said one person, who asked not to be identified because the information is private. A deal may be announced in coming weeks, the person said. The agreement isn’t final, so the terms could change and talks may not result in a transaction.

“The real question is, what does Lending Club have to give up in exchange for that firm commitment?”

Western, which specializes in fixed-income assets, had about $460 billion of assets under management as of June 30, according to its website.

Lending Club’s Q2 Earnings: A Preview, (Seeking Alpha), Rated: A

Comment: This article is trying to predict what the earnings will look like and mean.


Lending Club will break $20B in originations.

Total operating revenue is likely to be between $110M-$125M, a decrease of $27-$42M from the first quarter 2016.

The company is likely to report a second quarter loss of between $90-$120 million, or $0.23-$0.31 per share.

Data suggests that retail investors are returning to the platform.


What is impressive is that within two months, Lending Club reacted by reducing headcount by 179 positions (11.5% of its workforce), tightening underwriting policies, and increasing oversight.


Despite these quick changes, the company has made no secret that this quarter’s results will be drastically lower than previous quarters. Total operating revenue is likely to be between $110M-$125M, a decrease of $27-$42M from the first quarter 2016.

This decrease in revenue, combined with several large one-time write-downs, means that the company is likely to report a second quarter loss of between $90-$120 million, or $0.23-$0.31 per share.

The company’s cash will be decreased by a further $40 million, as the company was obliged to fund approximately 2% of loan originations from its balance sheet. From a historical perspective, this will represent the largest percentage of loans funded from Lending Club’s balance sheet since December 2011. To add perspective, in Q1’16 the company funded just under $1M from its balance sheet, or 0.05% of originations.

Though diminished, the company’s cash should remain significant at approximately $420M. This cash reserve allows the company some flexibility moving forward.

Lending Club’s credit policy has evolved since its founding in 2007. Since December 2010, most of the evolution has been in the form of loosening credit restrictions for high-risk borrowers. Loosening restrictions widened Lending Club’s target borrower market and fueled faster growth.

Investor appetite for notes is returning

While Lending Club has not yet released data files pertaining to loans released in Q2’16, a look at the retail loan inventory on their website offers an insight on investor sentiment.


Since July 10th note releases have returned to 90% of their former levels and inventory levels have returned to historical levels, both of which suggest that retail note investors are returning to the platform.

Stock buy-back imminent?

As a reminder, in February 2016, the board authorized $150 million to repurchase shares in the open market.

Fintech Companies Prepare for Same-Day ACH, (Bank Innovation), Rated: A

On Sept. 23 a major milestone in the journey toward faster payments will be reached: New rules will go into effect that will enable the same-day processing of ACH payments. Vendors are working to make sure banks are ready to take advantage. Adam Anderson, CTO of Q2, a provider of cloud-based banking software, said that his company will have same-day ACH capability ready to go as soon as the new functionality is turned on. The most common uses of ACH for Q2 users are payroll, person-to-person and billpay transactions, Anderson said.

“Standard ACH comes with no web hooks, no API wrapper, no KYC-AML,” said Jordan Lampe, director of communication and policy affairs for Dwolla. Standard ACH has no procedures for handling rejects and no way to help users keep their compliance updated, for example. “But it is affordable and reliable. We’re extending that business value to other areas of the company.”

“The bulk of demand for ACH is from SMBs, commercial uses, as a replacement for wire uses”

BofA Sees Digital Payments Cutting Billion Cash-Handling Cost, (Think Advisor), Rated: AAA

Bank of America Corp., which spends about $1 billion a year handling cash, will save money and require fewer employees as more customers make payments electronically, Chief Executive Officer Brian Moynihan said.

FinTech Boom Slows, But Not Over, (Financial Advisors), Rated: AAA

“Funding is down year over year, too, but there are pockets of growth and an incredible amount of innovation going on,” says Aaron Schwartz, DeNovo head of research. “When we bifurcate fintech into subsectors or trends, we see some areas that are slowing down in the later stages in the investment spectrum, and other areas that are in the early stages that show very healthy growth.”

A significant portion of Americans underserved by the financial industry are young adults, says Schwartz.

Robo-advisors might not be the wave of the future, says Schwartz.

“Robos have attracted a lot of money, but now the incumbents are stepping into the market,” Schwartz says. “We’re starting to see more activities around different types of enabling technology.”

Kickfurther in Showcase for Start Up Day Across America, (Press Release), Rated: B

Mattermark rankings recently placed Kickfurther as the 4th fastest growing company in Boulder. The Kickfurther marketplace enables consumer product companies seeking capital to grow by sharing retail opportunities with individuals interested in entrepreneurship and consumer products.

Kickfurther is a leading inventory crowd­funding marketplace that connects companies with individuals.  Since its 2015 launch, Kickfurther has funded $9.6 million of inventory in 325 Consignment Opportunities by more than 270 companies. Kickfurther users have earned, on average, more than 2% consignment profit per month on completed Co-Ops.

Money360 Hits $ 100 M in Closed Commercial Real Estate Loans, (Crowdfund Insider), Rated: A

Money360, a commercial real estate online marketplace lending platform, announced on Thursday it has officially surpassed the $100 million in closed commercial real estate loans with the completion of $15.25 million in recently closed loans.

The company also reported it has seen a 100% increase in borrower applications being rejected by banks and CMBS institutions due to the increased regulations.

The online marketplace’s recent transactions does include a bridge loan for the acquisition of a multifamily property in Tucson, Arizona; a bridge loan for the renovation of a full-service boutique hotel in Aurora, Ohio; cash-out permanent financing for a single-tenant retail building in Dayton, Ohio; and a bridge loan for the refinance of an anchored shopping center containing 206,257 square feet of rentable area in Jacksonville, Illinois.

United Kingdom

P2P lending dip blamed on economic uncertainty and authorisation process, ( Bridging and Commercial), Rated: AAA

The Peer to Peer Finance Association (P2PFA) revealed that new lending fell to £658m in Q2 compared to £715m.

New lending to businesses fell to £406m from £445m, while new lending to individuals dropped to £252m from £270m.

Rhydian Lewis, CEO and co-founder at RateSetter, put the dip down to the authorisation process adding: “In recent months there’s been a levelling off in general borrower demand as people defer large purchases, perhaps reflecting economic uncertainty.

“The main story behind these latest figures on peer-to-peer lending is the continued expansion in the number of investors and borrowers – with more than 150,376 lenders and 332,107 borrowers currently using P2PFA platforms.

Landbay recorded a £5m increase in lending compared to Q1 and John Goodall, CEO and co-founder of Landbay, felt the P2PFA’s figures showed that peer-to-peer lending was still becoming an increasingly attractive option to investors and borrowers.

Crowd lending venture records surge in interest following Brexit vote, (Herald Scotland), Rated: AAA

THE LendingCrowd funding operation has enjoyed a surge in business following the Brexit vote, which it said reflected expectations the Bank of England would cut interest rates to boost the economy.

The company said applications for loans increased by over 500 per cent in July, compared with the same month last year although many fear the June vote in favour of the UK leaving the European Union will result in a sharp slowdown in growth in the UK economy. LendingCrowd said the total value of applications rose by over 600 per cent annually in July.

The increase in activity at LendingCrowd contrasts with reports that the Brexit vote has prompted some firms to put mergers and acquisitions activity on hold until the outlook is clearer. Founded by Mr Lunn with serial technology entrepreneur Bill Dobbie, LendingCrowd made 34 loans worth a total of £1.75 million in its first year of operations, to 30 September. It signed up 1100 investors.

Funding Circle portfolio on track, (Stock Market Wire), Rated: A

Funding Circle SME Income Fund’s board notes recent market commentary on Funding Circle loan performance and reiterates guidance that the company’s portfolio of credit assets, randomly allocated to it through each of the Funding Circle marketplaces, continues to perform in line with expectations.

The company’s US credit assets are projected to return in excess of 8% per annum on a net unlevered basis – consistent with historic performance observed on the Funding Circle US marketplace.

The company’s UK credit assets are projected to return in excess of 7% per annum on a net unlevered basis – consistent with historic performance observed on the Funding Circle UK marketplace.

The company is on track to deliver its dividend target of 6-7 pence per share per annum and total NAV return target of 8-9% per annum once fully deployed and levered.

Zopa Relocates: Moves Into New London Bridge Digs, (Crowdfund Insider), Rated: B

Last week, the team at Zopa announced they have officially moved from their Chancery Lane office to the peer-to-peer lending platform’s new location in London Bridge.

Zopa recently announced the appointment of its new Chief Technology Officer (CTO), Ronen Benchetrit.

Tyrie raises concerns about gov’t P2P tax incentives, (FT Adviser), Rated: AAA

On 1 June, Andrew Tyrie wrote to the Financial Conduct Authority calling for closer scrutiny of the peer-to-peer lending and crowdfunding market.

Answering Mr Tyrie’s questions in a letter published today (4 August), Ms McDermott said the regulator has been watching the crowdfunding sector closely and acknowledged the sector poses risks to consumer protection.

She made it clear that crowdfunding investors are not protected if they lose their money simply because the underlying investment fails, but that Financial Services Compensation Scheme protection will apply if the P2P platform fails to meet its obligations.

Ms McDermott said the FCA considers crowdfunding a high-risk investment activity, pointing to rules which mean this type of investment cannot be promoted to investors who have not received financial advice.

The regulator has been assessing both P2P and investment-based crowdfunding firms on whether they are making the risks clear to consumers, with Ms McDermott stating that since 2014, nine out of 10 crowdfunding promotions were withdrawn or amended.

By comparison, 12 out of 27 P2P promotions have been amended or withdrawn over the same period.

She also said the financial watchdog “remains cautious” about the risks posed to consumers by P2P firms and said the sector will continue to be supervised – particularly when it comes to promotions – as it moves further into the mainstream.

Bank of England Cuts Rates: Alternative Finance Leaders Respond, (Crowdfund Insider), Rated: A

Gonçalo de Vasconcelos, CEO and co-founder of SyndicateRoom, stated investors would seek out alternative investments.

Kevin Caley, founder and Chairman of P2P lenderThinCats reflected on the interest rate announcement saying it would help business.

Angus Dent, CEO of business “crowdlender” ArchOver, called the move an act of “no confidence”.

Peter Behrens, Chief Commercial Officer and co-founder at P2P lending platform RateSetter, called the act almost inconceivable:

“Only a  few months ago, a further cut to the base rate was almost inconceivable, but here we are. This cut will further reduce returns on savings accounts which already pay very close to zero. Given this, it’s not surprising that peer to peer lending is increasing in popularity, as investors look for better returns in exchange for taking on some risk: we’ve had a hundred thousand new visits to our website in July alone.”

Frazer Fearnhead, CEO of The House Crowd, added his voice that P2P lenders stand to gain from the rate cut.

Treasury urged to clarify law to allow P2P in Sipps, (FT Adviser), Rated: AAA

Peer-to-peer lending platform RateSetter is calling on HM Treasury to clarify the law to allow such investments within a self-invested personal pension.

The Financial Conduct Authority recently expressed concern that letting savers use their pension money to invest in peer-to-peer might shift the customer base towards investors who are less experienced or knowledgeable and might not fully appreciate the risks involved.

Speaking to FTAdviser, P2P platform RateSetter’s head of investor operations Ceri Williams questioned why P2P is not available through a mainstream Sipp wrapper, when it has already been approved for Isas.

RateSetter is working with four Sipp trustees who Mr Williams said recognised this collusion issue was not a problem. It already has 50 active Sipps open on the platform, amounting to around £3m in assets, all of which have been set up over the past year.

So far it has been smaller Sipp schemes that are comfortable with the concept, with Mr Williams adding larger schemes are nervous about the “remote possibility of collusion coming to light”.

“Within a standard Sipp wrapper, many of the assets are earning next-to-nothing.


Peer-to-Peer Lending Platform i2ifunding Announces protection fund, (India Today), Rated: A investors will now have protection against loan defaults by borrowers in a first-of-its-kind [Comment: many other platforms have protection funds, it is unclear what makes this fund unique at this time] investor protection fund, which will allow its investors to enjoy up to 100% protection against loan defaults.

The participation in the Principal Protection Fund is available by default to all investors who lend through the platform. There are no extra charges for the same. will set aside 5% of the disbursed loans towards the Principal Protection Fund. The company has already created an initial corpus to set up the Investor Protection Fund.


Reckon Shares Details On Its Aussie Alt-Lending Entrance, (PYMNTS), Rated: A

One of the latest entrants into Australia’s alt-fin sector is Reckon. Primarily, Reckon provides small and medium-sized enterprises with cloud accounting solutions, but now, it’s utilizing the data it has about small businesses to its advantage by partnering with alternative lending company Prospa to underwrite loans to its SME users.

Reckon’s ability to use its small businesses’ financial data to underwrite loans issued via Prospa provides lenders with a potentially more robust way of being protected. That’s because bank underwriting processes are outdated, Rabie said.

According to MarketInvoice — another alternative lender based in the U.K. — Australian businesses wait an average of 26.4 days past-due to get paid, worse than any other market analyzed. The data, researchers pointed out, corresponds with research recently released by Dun & Bradstreetthat found that $19 billion is stuck in outstanding bills to businesses in Australia every year thanks to companies taking longer than the traditional 30 days to settle their invoices.


Silver Bullion reports first-year results for gold & silver secured P2P loans, (Press Release), Rated: A

Launched on 5th August 2015, Silver Bullion’s P2P loan platform is unique in two key ways. Firstly, it is a P2P loan platform that allows borrowers to obtain a loan using physical gold and silver bullion as collateral. This gives lenders, seeking a good rate of return, confidence that their investments are safe. Secondly, it is the only secured P2P loan platform to allow its customers to set the rate of return which they lend or borrow.

It is a secure lending platform since the loans have physical bullion as collateral. Borrowers can only borrow up to 50% of the value of the bullion they store with us. Should a borrower is unable to pay back the loan, the collaterized bullion would be liquidated and the lender receives the full principle plus interest.

Today is the first anniversary of our P2P loan platform and we are releasing the results today. We are delighted to have seen good borrowing activity this past year.

More importantly, there were zero borrower defaults and lenders received the funds due to them on time. We aim to continue making the platform secure for our lenders. This is unique and important because the most common caution against investing on a P2P lending platform is the risk of default.

Due to the safety that Silver Bullion’s loan platform gives to lenders, 72% of the matched loans were initiated by borrowers. The company has seen more than 30 loans matched consistently each month since March 2016 – a rate of more than 1 matched loan per day. Interest rates across all loan tenures currently hovers between 2.5% and 4.5% per annum. Unlike unsecured P2P lending platforms, loans matched by Silver Bullion’s lending platform are fully backed by physical gold and silver. Loans with tenures longer than 6 months begin with a collateral-to-loan value of 200%. The exceptions are loans with the 1 month tenure which have a lower collateral-to-loan value of 160%.


George Popescu