News Comments Today’s main news: SoFi Money has launched. Lendio Employee Contribution Program funds 2,800 loans through Kiva. Goldman funds Yirendai. Nubank opens 1.5M digital accounts. Today’s main analysis: UK banks are closing branches faster. Today’s thought-provoking articles: How Goldman Sachs is transitioning into a consumer-facing bank. Europe’s IPO market is heating up. SoftBank yanks startups from Renren. The rise of […]
At first glance, SoFi’s banking app, which launches in beta today, is no different from the existing options on the market. It comes with a debit card, enables peer-to-peer payments, and accepts mobile check deposits. The interface, like that of many banking apps, is dominated by a blue-and-white color scheme. But in the details, there is a hint of SoFi’s bigger ambitions. SoFi Money, as the product is known, sets the stage for the fintech company to become both a financial hub and lucrative recommendation engine for its 500,000-plus members.
The Wall Street investment bank is trying to transform itself into a broader financial-services company like bigger rivals Bank of America Corp. and JPMorgan Chase & Co. So a couple years ago, Goldman expanded beyond its traditional clientele — elite corporations, big investors and the super-rich — to provide retail banking through a new website called Marcus. The company now offers both personal loans and savings accounts, with a minimum deposit of just $1. So, ordinary people can apply.
But here’s why you should take a look now: Since New York-based Goldman is trying to build up the business rapidly, it’s offering some of the highest rates on savings deposits in the U.S. – currently 1.7%. That compares with near-zero rates at the biggest retail banks, including Bank of America, JPMorgan Chase, Citigroup Inc. and Wells Fargo & Co.
Lendio announced today that Lendio Gives, its employee contribution and employer matching program, has provided more than $70,000 in microloans to 2,800 underserved entrepreneurs in 78 countries through Kiva. In May, Lendio ranked 6th among Kiva’s Internal Business Groups for total fundings, with over 300 new loans funded.
Also, find out how much you can actually afford to borrow by calculating your Debt Service Coverage Ratio (DSCR). To figure out your DSCR, you simply divide your net operating income by your total debt service. With some lenders, you can get away with a 1.0 ratio; however, most lenders prefer a DSCR that shows your annual net operating income is higher than your total debt, such as a DSCR of 1.35 and above.
Finastra has acquired Malauzai, a provider of mobile and Internet banking solutions for community financial institutions. The deal reflects Finastra’s commitment to the US retail and business banking sectors by further enabling digital transformation for community banks and credit unions across the country.
The acquisition is built on an already successful and proven partnership between Finastra and Malauzai, which saw the latter’s digital solution integrated into Finastra’s Fusion Phoenix core banking system.
LendingClub Corp. asked a California federal judge Monday to toss a Federal Trade Commission suit claiming the online lender falsely promises consumers their loans come with “no hidden fees,” arguing that its origination fee is noted on its website in at least three places.
The San Francisco-based company asserts in its motion to dismiss that an origination fee, deducted when loan funds are initially disbursed, is not hidden, and the FTC knows it.
The $8.5 trillion U.S. financial services industry is going through a dramatic transformation, with incumbents fending off upstart fintech companies that promise to disrupt their old ways of doing business.
#1 Paypal (NASDAQ: PYPL)- PayPal processed approximately $49 billion in mobile payment volume in the first quarter, which is up 52 percent from a year earlier. Mobile payments actually account for 37 percent of Paypal’s entire payment volume.
#2 QPAGOS (QPAG)-QPAGOS (QPAG) is upending this dynamic industry, with what some like to call small “super-banks” deposited on street corners, in supermarkets, or an endless number of other convenient locations.
#4 Alibaba (NYSE: BABA)-Alibaba is quickly becoming one of the world’s hottest companies thanks to its innovative approach to technology.
Some of the world’s most successful companies have been formed by founders quitting university to nurture their start-ups, not least the Harvard dropouts Bill Gates, of Microsoft, and Mark Zuckerberg, of Facebook.
But a small yet significant number of students on masters in finance degrees do the opposite, enrolling to improve their core finance knowledge.
Maximilian Voigt applied for a place on the masters degree in financial economics at Saïd Business School at Oxford university shortly after co-founding Gründermaschine, an incubator for early stage fintech ventures in Frankfurt.
Brex, a San Francisco company that offers a corporate credit card for startups, has launched its first product and raised $50 million in new investment, bringing its total funding to $57 million. PayPal founders Max Levchin and Peter Thiel contributed to the Series B financing round, in addition to fintech venture capital firm Ribbit Capital, early Facebook investor Yuri Milner and former Visa CEO Carl Pascarella.
The startup has a new model for determining whether companies are creditworthy. Instead of focusing on founders’ personal credit history or a company’s expected profits, it looks at the amount of money a startup has in its bank account, and it sets a credit limit that’s typically 10% of that total.
Home improvement tops the list of uses for home equity loans. The most common use was home improvement, at 43 percent of home equity loan requests.
Real estate investors borrow the most. Borrowers who were looking to invest in another property had the highest property values and requested loan amounts. For property investments, borrowers requested an average of $103,625.
For non-property investments, which likely include small businesses, borrowers requested $80,241.
Just over 1 percent of requests were to fund retirement. Not surprisingly, this cohort had the highest average age of 63 — 12 years above the next highest average age.
A small share accessed their home equity for emergency expenses. This group had the lowest loan amount requested of $35,747 and kept their LTV low at 51 percent.
Debt consolidators push the limits on LTV. Borrowers looking to consolidate debt had the highest LTV of 74 percent.
Klarna Launches First U.S. Out-of-Home Marketing Campaign (Klarna Email) Rated: B
Klarna is mounting its first out-of-home marketing campaign in the U.S. in three-cities. Elements of the campaign will appear in San Francisco, New York City and Columbus, Ohio, beginning the week of June 18.
MoneyLion Inc., the financial operating system revolutionizing the way Americans save, invest, borrow, and build their credit, announced today that Jon Stevenson has joined the company as the new Head of Wealth Management and Banking.
In this role, Stevenson is responsible for developing simplified, accessible solutions that address the financial challenges faced by millions of Americans every day. He will help MoneyLion Plus members create investment plans that align with their unique circumstances and goals – services traditionally reserved for high-net-worth individuals through their Financial Advisor.
Here are some key statistics about branch closures:
Branch closures are accelerating. In 2016, 630 bank branches and building societies closed. This number increased nearly 40% to 879 in 2017. Meanwhile, 670 branches have already been closed or are due to close by the end of June, suggesting that this number will probably far higher this year.
Most branches have closed in Scotland. Not all regions in the UK have seen the same level of closures, and Scotland is currently leading the way with 368 closed branches, followed by the Southeast and Southwest, with 361 and 327, respectively. Northern Ireland, on the other hand, has only seen 44 branches close, so far. The trend toward closing branches probably depends in part on demand from customers, so branches in rural areas or with an older demographic may be more likely to stay open.
This means that more Starling customers will now be able to use their smartphone and wearable devices as a fast and secure way to pay almost anywhere that contactless payments are accepted and without ever having to get their card from their wallet.
Plus new customers on Android will be able to add their sparkling new Starling debit card to their Google Pay wallet straight from our app meaning that, like our iOS customers, you can start spending within minutes of opening your account!
Less than a year after securing nearly £925,000 through its first equity crowdfunding campaign on Seedrs, Plum, an artificial intelligence (AI) chatbot for personal finance, has returned to the funding portal, seeking an additional £850,000 in funding.
Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that Goldman Sachs, a leading global investment banking firm, has provided the Company with RMB 324 million of funding for a term of 3 years.
Installment payments are helping to power China’s domestic consumption and sales of online lender LexinFintech Holdings Ltd’s installment finance platform Fenqile surged 220 percent during an e-commerce shopping festival.
Fenqile, translated as “Instalment Pleasure” in Chinese, lets consumers buy electronic equipment like mobile phones and consumer accessories such as handbags on credit and repay the loan in installments.
Sales of Shenzhen-based LexinFintech’s Fenqile surged 220 percent during the annual 618 e-commerce shopping festival on Monday, a major mid-year shopping event initiated by e-commerce giant JD.com.
So far this year, 27 IPOs totaling $32.5 billion have been launched in Europe, eclipsing the 57 listings worth $8.28 billion last year, according to dealroom.co, an Amsterdam firm that tracks fast-growing companies. The big difference this year is not the number of listings, which has been fairly steady in recent years, but the size of the valuations of the companies. “There is a clear emergence of unicorns after a few years of increasing investment in the venture capital sector,” said Gilles Babinet, a French serial entrepreneur.
Swedish digital payments firm Izettle should have been the next head-turner for investors, but PayPal swooped in with an offer of $2.2 billion — twice the IPO value.
Fast Invest is a European P2P lending investment facilitator platform specialising in low-risk, medium-high return investment opportunities. With one successful ICO crowdsale behind and one currently ongoing, the company is now embarking on a blockchain enabled global expansion. Fast Invest is headquartered in London, with offices in Milan and Warsaw, and already employs a team of about 50 people.
We recently had the opportunity to talk with the founder and CEO, Simona Vaitkune, about the Fast Invest story so far and projects ahead.
SoftBank continues to make waves by underwriting the valuations of a growing number of turbocharged “unicorns” carrying private values north of $10 billion. It recently bought 15% of Uber at a $48 billion valuation. In partnership with GM, it paid $2.25 billion for a 19.6% stake in Cruise Automation. Masayoshi Son’s conglomerate is also
On the other side is 31-year-old Arpit Sabharwal, a Mumbai-based businessman, and lender on P2P platform Faircent. Arpit’s portfolio stands at ₹4 lakh and returns have been around 17 to 19 per cent. He is now re-allocating some of his mutual fund portfolio to the peer-to-peer lending platform.
But these platforms are not really risk-free. According to officials, the average default rate is in the range of 5-6 per cent.
According to industry insiders, there has been a near 15-20 per cent growth in loan applications and disbursements (across these platforms) on a month-on-month basis in the last one year.
While bigger players such as Faircent are said to be disbursing close to ₹2 crore a month, others like i2i Funding.com have been disbursing close to ₹60 lakh to ₹1 crore on a monthly basis.
Mumbai-headquartered IndiaMoneyMart has launched a Helpline for Loan applicants who are stressed and stuck in payday loan debt trap. Borrowers are welcome to reach out on +91-9082646766 between 11am to 4pm from Monday to Friday.
Brazil-based challenger Nubank has got 1.5 million customers signed up for its digital savings account (“NuConta”) over the last six months.
As reported in October, Nubank started to offer these accounts in addition to its credit card business. The move was designed to provide access to billpay, account-to-account transfers, and the ability to earn more in interest than is available with a regular savings account.
According to the bank, it has transacted around BRL 4 billion ($1 million) in its digital account so far, with over four million credit card customers on its books.
News Comments Today’s main news: How Funding Circle wants to fix the financial system. VPC Specialty Lending, Ranger Direct see dividends move up. Klarna triples net profit, mainly in Nordic countries. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Can Seed solve banks’ digital onboarding issues? How banking institutions can decentralize (The best read of the day). Institutional […]
Seed wants to solve banks’ digital onboarding issues. AT: “I doubt that Seed, or any neobank, can save brick-and-mortar banks. This is an issue that traditional banks have to solve for themselves. Of course, the solution may be to partner with a tech company like Seed that can provide for banks what they can’t provide for themselves.”
International P2P lending volumes for February 2018. AT: “The big growth this month came to Landbay, Lendix, Mintos, Toborrow (229% and 245% vs. previous month and last year’s month, respectively), and MytripleA. Big losers include ArchOver, Loanbook Capital, MoneyThing, ThinCats, and Proplend (100% and 100%).”
Since 2014 the neobank Seed has been reimagining one of the sleepier areas of banking: deposit accounts for small businesses.
Rather than walk into a branch — Seed, of course, has none — yoga instructors, food truck owners and other would-be customers can apply for accounts in less than five minutes on the startup’s web or mobile app. If approved, they receive a business debit card in the mail.
Now Seed, led by veterans of the fintech Simple, is selling banks software to help them solve one of their most pressing problems: finding a way to open accounts online as branch transactions continue to decline.
Since its launch in January 2016, Sacramento-based startup Magilla Loans says it’s originated more than $5 billion in loans and is changing the way lenders connect with borrowers. The platform can shrink into a few days what can often be a weeks- or months-long process of loan applications, data submissions and waiting just to get a loan term sheet.
Validus Specialty Underwriting Services, Inc. (Validus Specialty) announced on Thursday a comprehensive package policy specifically designed for private U.S. fintech companies. According to the company, the solution is designed to address Fintech’s complex risk management needs, which are traditionally underserved by incompatible and inadequate policy forms.
Last year, marketplace lenders learned that maintaining diverse sources of funding is just as important as managing the credit risk in their loans.
LendingClub, Marlette Funding and others developed their own securitization platforms, rather than relying on whole-loan sales to large investors. They also invited some of these investors to contribute seasoned loans to collateral pools for these in-house deals.
Geopolitical events are the most worrisome prospect on the minds of the decision makers at institutions looking ahead to 2018. The percentage of respondents who believe such events will have a negative impact this year is at 74%. The second most worrisome? Asset bubbles (65%).
More than three fifths (63%) of those surveyed said that the growth of passive investing has increased systemic valuation risk: 59% believe that flows into passive strategies artificially suppress volatility.
In 2015, Natixis found that 64% of institutions said they were upping their investments with active managers. In 2016, that number rose to 67%. In the latest survey it rose again, to 68%.
But Square Pie had sold bonds on the Crowdcube platform, offering lenders 8% a year. It illustrates why so many people are suspicious of mini-bonds (debt issued by small, retail-orientated firms). Anyone thinking of lending to just the one relatively new business has to be aware of the risks – and then ask: is 8% enough?
A more diversified option
The latest offering in this category comes from a platform called Goji, which aggregates a variety of direct-lending and peer-to-peer (P2P) platforms. It has just brought out a Renewables Lending Bond, which pays out anything from 5.5% for a three-year term (with regular income) to 7.6% over five years, where the interest is rolled up at repayment. The underlying assets are provided by a direct lender called Prestige Group, which lends to clean-energy projects.
The book of loans – around 39 – has an average duration of four years, with a typical loan-to-value ratio of between 70% and 80%.
More than half (58 percent) of homeowners are planning to spend money on home improvement projects in 2018, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks, Inc. (NYSE: STI). Budgets for renovations are on the rise: among homeowners planning renovations, 45 percent will spend $5,000 or more — an all-time survey high. Those planning to spend $35,000 or more doubled from 2017.
The survey shows robust enthusiasm for renovation, as well as a thoughtful desire to balance a home’s needs and the homeowners’ budget, so they have the financial confidence to move forward. Specifically, the survey revealed the following trends:
Home “Sweat” Home The majority of homeowners plan to invest sweat equity, as 65 percent say they’ll do at least some of the work themselves. The 18-34 group is particularly fond of do-it-yourself projects, with 70 percent planning to work on at least a portion of their renovation.
Staying — and Aging — in Place Only seven percent of homeowners are renovating to prepare their homes to be sold, the lowest percentage since 2015. Instead, 14 percent of homeowners across all age groups — not just baby boomers — are citing “aging in place” as a reason for making a home improvement. Even respondents aged 18 to 34 (11 percent) and 35 to 44 (10 percent) say they’re renovating “to prepare my home so I can stay in it as I get older.”
Tax Reform Boosting Budgets With recent passage of tax reform, homeowners have already begun calculating how the changes might affect what they spend on home improvements. One in four homeowners who have set a budget for renovation projects stated that tax reform has had an impact, with 18 percent increasing their budget and seven percent decreasing it.
Paying for Projects
The majority of homeowners (62 percent) plan to pay for projects, at least in part, by using savings. Additional payment strategies were further revealed. Intent to fund through home equity lines of credit (HELOC) jumped from 10 to 13 percent. “U.S. economic growth and limited housing inventory have contributed to healthy home equity gains,” said Ellen Koebler, SunTrust head of consumer solutions. “HELOCs can offer a financial solution for many homeowners, as accrued value may be available to tap for renovations.”
At the same time, the percentage of people intending to use a home improvement loan has grown 29 percent from 2017 with 54 percent more 18- to 34-year-olds planning to fund projects through home improvement financing.
To help identify FinTech products that may improve the financial health of underserved populations in the U.S., the Financial Solutions Lab (FinLab) launched its fourth annual $3 million challenge. The lab focuses on products that meet the financial needs of overlooked populations, JPMorgan Chase said in an announcement.
Kwittken signs up Laurel Road, online lender of student loans, personal loans and mortgages. Aaron Kwittken’s firm will be responsible for raising awareness of the company’s products through content marketing, brand activations, thought leadership and traditional media relations. Laurel Road, which is part of Darien Rowayton Bank, recently surpassed $3 billion in student loan originations.
“When we think about the people we hire, it’s all about energy,” says Funding Circle co-founder James Meekings. “We want staff to share their excitement about what they do with others in the office – even if they’re talking about tax.”
“Even though we now have 800 employees, we still feel like a small business. We still push for opportunity and for people to be creative.”
Innovative finance Isas (IF Isas) offer the promise of a good return, sheltered from tax, to investors willing to take on the higher risks of the peer to peer (P2P) finance market.
The market has taken longer than expected to ignite, however, as providers struggle to match growing demand with limited supply. Many new investors will find the door shut, at least for now.
Growing consumer indebtedness in the UK combined with the prospect of rising interest rates could push up default rates on loans, sharpening the dangers for those invested in the highest-risk P2P products.
For the tax year 2017-18, the maximum amount you can pay into one – or a combination – of Isas held in your name, is £20,000.
Once the new tax year for 2018-19 begins on 6 April, your allowance resets – once again to £20,000.
There are five main types of Isas. The current annual limits are as follows:
Help to Buy Isa: Money can only be used to buy your first home, and savings receive a government bonus of 25%. You can save £1,200 in the first month, then £200 per month thereafter. Therefore, in the first year you will have a limit of £3,400. In the following years the limit will be £2,400.
Lifetime Isa: Expressly for first-time buyers or to be used in retirement once the account holder has reached the age of 60. There’s a 25% government bonus on savings up until the account holder is 50 years old. You can pay in up to £4,000 per year.
Cash Isa: A traditional savings account – money you pay in grows with the provider’s interest rate. You can pay in up to £20,000.
Stocks & shares Isa: Money you deposit is invested in stocks & shares by the provider. Returns can be higher, but so is the risk that you may end up with less money than you paid in. There will also usually be fees involved for managing your investments. You can pay in up to £20,000.
Innovative finance Isa: Money paid in is invested in Peer-to-Peer (P2P) lending platforms, and you receive the interest when this loan is repaid. There is also some risk involved. You can pay in up to £20,000.
The Swedish group posted a 27 per cent increase in revenues to SKr4.53bn ($546m) while net profit more than tripled to SKr346m. Klarna processed about €18bn in online transactions last year, an increase of 42 per cent.
As a result, 89,000 retailers globally now use Klarna products, this represents a 20% growth compared to the previous year. Available in 14 countries, retailers are increasingly adopting Klarna solutions which makes the payment processes as smooth as possible for consumers. As a result of the surge in retailer adoption, Klarna now handles 10% of all online payments in Northern Europe.
Decentralized banking is a term that has been construed in the wake of the cryptocurrency boom.
Cryptobanks are decentralized platforms that provide the usual services that centralized banks provide, primarily lending services and credit scoring, but essentially cuts out all of the middlemen that a centralized bank uses. The people needed in a bank to approve loans and structure financial data are replaced in a crypto banking ecosystem by smart contracts and p2p, peer-to-peer, services.
What kind of technologies do crypto banks use?
P2P, Blockchain, cryptocurrencies, Machine Learning, Big Data and smart contracts are used in crypto banking.
Machine Learning Big Data.These technologies help to automate the lending process and cut through bureaucracy. AI can work 24/7 and match lenders with borrowers.
Do crypto banks have their own native currency?
Yes. Native cryptocurrencies help make the bank global.
Datarius, the first social p2p crypto bank, for instance, uses their own native token DTRC for all transactions. This helps create a standard for a global payment system within the p2p lending process.
What is social lending?
Thanks to Big Data and AI, crypto banks can see beyond a borrower’s credit score to identify their level of trust. Listings can include Trust Limit, Trust Management and User Ratings which helps AI decide if the participant is justified in borrowing from a specific lender.
The entrepreneur’s strategy for achieving this can be summarized in three stages. The first consisted of bypassing the banking monopoly on his platform using “cash vouchers,” a tool dating from 1937 that had long been forgotten. They allow personal loans to be made without a bank as intermediary. Secondly, by collaborating with future competitors, the public authorities and the sector’s regulators(2), the entrepreneur contributed to the development of a long-term crowdlending regulation in France. This collaboration relies on the creation of a meta-organization(3) called “Financement Participatif France” (FPF), which worked to define the status of “Intermédiaire en Financement Participatif” (IFP, equivalent to “crowdlending financing intermediary” in English), which regulates this new market.
Smartag International, Inc. entered into a joint venture agreement with PT. Supratama Makmur Sejahtera (“PTSMS”), an Indonesian Fintech company to form a Joint Venture Indonesian PMA company in which Smartag will own 51% equity and PTSMS will own 49%. This follows an earlier MOU signed on October 12, 2017 between PTSMS and PT Rijan Dinamis Selaras (“RDS”) representing Pondok Pesantren Riyadhul Jannah Pacer Mojokerjo, founder of Consultative Assembly of Indonesian Boarding Schools which has a network of 28,000 boarding schools to undertake a Fintech project (the “Indonesian Project”).
News Comments Today’s main news: Spreads narrow on SoFi’s SCLP 2018-1 consumer loan ABS. DiversyFund raises $1M. Ranger Direct Lending sees arbitration delay. Klarna partners with Maplin. BNI Europa partners with Funding Circle on German SME lending. Western Union opens tech center in India. Today’s main analysis: Banco Popular reboots Eloan. Today’s thought-provoking articles: Marketplace Lending Association executive director’s testimony […]
Goldman acquires Final. AT: “It was probably more cost-effective to purchase an already-experienced team to do what Goldman wants to do rather than build the team in-house. Final’s team is ready to start engineering. Hiring an entire division to build from the ground up would take time and money. In today’s business environment, legacy institutions cannot afford to risk falling behind the innovators. Goldman is consistently showing that it can compete, and will compete, with alternative lenders. They are a contender, and now they’re expanding.”
Strong demand and higher credit enhancement allowed Social Finance to offer lower spreads on its first consumer loan securitization of the year, even after upsizing the deal to $850 million from $650 million originally.
Four tranches of rated were issued, resulting in an advance rate of 91%, according to a person familiar with the transaction. The amount of overcollateralization in the deal will gradually build from 9% to 16%.
Two senior tranches of notes rated AA + by KBRA were issued. The Class A-1 tranche, which has a shorter expected life, pays 50 basis points over the Eurodollar synthetic forward curve, in from 57 basis points on the comparable tranche of the previous transaction. The Class A-2 tranche pays 75 basis points over the interpolated swaps curve, in from 90 basis points on the previous deal.
The company, more commonly known by its acronym SoFi, laid off a “small percentage of our employment base” at the office next to the Healdsburg Plaza, said spokesman Jim Prosser. He declined to state an exact number.
DiversyFund, the only vertically-integrated crowdfunding platform for alternative investments such as private market real estate, announces today that it has surpassed its $1 million Series A financing goal, as investors flock to the innovative platform that is using technology to disrupt alternative investing.
DiversyFund also plans on entering the crypto-currency space by launching an Initial Coin Offering (ICO) as part of its financing plan. An ICO will make it easier for crypto-currency users to invest in DiversyFund and own a crypto-currency that is uniquely backed by institutional-grade real estate assets.
As the Chairman and Ranking Member know, fintech – and marketplace lending in particular – is no longer just an idea or a possibility, it is now a proven solution to a long-standing problem – the lack of access to a wide range of affordable credit options for tens of millions of working Americans, recent graduates, and millions of small businesses. This industry is effectively serving the broad American “middle class” that remains our engine for economic growth and prosperity. It is also bringing greater democracy to investment in credit – providing investment opportunities once only available to the wealthiest or largest institutional investors in society. MPPs are delivering new, beneficial products to consumers, in locations that many banks no longer can serve; and increasing needed competition in key markets.
This Subcommittee and the full Committee can build on its previous work to make that happen with the following:
Awareness: Hearings like this one are pivotal to making more Americans aware of the financial services MPPs have to offer.
Reaching the Underserved: MPPs are reaching communities that have traditionally been unbanked and underbanked.
Opportunities for Congress: There are a series of bipartisan bills that MLA encourages Congress to take up and pass as soon as possible, including the Protecting Consumers’ Access to Credit Act of 2017 and the IRS Data Verification Modernization Act of 2017.
Goldman Sachs has agreed acquire Final, an Oakland-based credit card startup, the bank confirmed to Fast Company on Monday. The new talent will help fuel the big bank’s expanding consumer efforts.
With Final, Goldman gains about a dozen engineers and product managers with experience building a consumer finance product from scratch. When they arrive at Goldman in the spring, they will join a growing roster of consumer-oriented employees, all part of the bank’s new Consumer and Commercial Banking division.
Wealthfront, the California investing startup with $10.5 billion under management, announced Monday a new feature to help users with the home-buying process.
Drawing on data from real estate database Redfin, the feature allows people to explore housing costs in neighborhoods across the US. It also shows them whether or not a certain home purchase is affordable and how it might impact other financial goals.
RealtyShares is a middle market real estate investment platform that uses technology to more efficiently source and underwrite real estate transactions within the $250 billion per annum middle market segment. RealtyShares provides an online capital-opportunity link between its network of individual and institutional investors and pre-vetted real estate operators.
Petralia said existing customers have been asking for larger credit lines.
The small-business lender has been growing quickly: In three years revenue growth has jumped 979%. It provided 250,000 loans in 2017 and has lent out $4 billion overall.
Kabbage worked with its partner, Celtic Bank, to develop the bigger line of credit.
The lending process for the new line will still take 10 minutes, with no human intervention, she said. The lowest loan rate will be 6% of the loan amount in a six month period or 12% in a 12-month period.
Consumers looking to purchase a Nissan can now access personalized retail and lease preapproval offers through digital credit shopping on their smartphones. Nissan Motor Acceptance Corporation (NMAC) today announced it is joining the mobile-first AutoGravity automotive shopping and financing platform. Through this collaboration, consumers will be able to select any Nissan vehicle and see finance offers from NMAC within minutes on their mobile device.
The AutoGravity app guides automotive shoppers through an intuitive four-step digital retail process:
Select any make and model of any new or used car available in the United States.
Browse thousands of cars by trim, color, body type and other attributes. The platform shows the closest dealers and inventory based on vehicle preference and geo-location.
Search for financing with smartphone simplicity. Users can scan their driver’s license and connect to social media to quickly pre-fill the application.
Receive up to four personalized preapproval finance offers in minutes and complete the purchase or lease at the dealership selected by the consumer.
Despite the uptick in online loan securitizations, only a small handful of deals have been backed by small business loans due to the fragmented nature of the industry. This makes it challenging to aggregate data for securitizations, speakers said at the conference on Tuesday.
eSecLending has updated its securities lending best practice guide to reflect the rise of US non-cash collateral, term trading, and peer-to-peer lending, along with the rising costs of indemnification.
The financial services provider’s third edition, available from today, aims to help market stay current on developments in order to optimise their programmes for both risk and return in the modern market landscape.
The guide outlines the fact that non-cash collateral is becoming more prevalent for US-domiciled lenders as some borrowers prefer to offer non-cash for balance sheet reasons.
As digitization has revolutionized financial services, new online and mobile tools have made financial advice and planning services more accessible to everyone. Now, advances in artificial intelligence (AI) promise to deliver a second big bang to the wealth management universe, making it even easier for consumers to assess their financial health, make investing decisions and plan for long-term goals – on their own and in their own time.
In accordance with the terms of RiverNorth Marketplace Lending Corporation’s 5.875% Series A Term Preferred Stock (“Series A Preferred Stock”) (NYSE: RMPL), the Board of Directors of RiverNorth Capital Marketplace Lending Corporation has declared a Series A Preferred Stock cash dividend for the first quarter of 2018 of $0.4488 per share of Series A Preferred Stock.
The following dates apply to the dividend declared:
QCash Financial, a provider of automated, cloud-based, small-dollar lending technology, today announced that it is partnering with I.H. Mississippi Valley Credit Union (IHMVCU) to offer short-term, small-dollar pay loan alternatives to credit union members through its QCash product.
Using QCash Financial’s product suite, IHMVCU can offer an affordable lending option to members who otherwise might rely on costly services like traditional payday loans to cover unexpected expenses.
Community radio station KOPN announced the station will use profits from its online store to make loans to entrepreneurs in the developing world. The station will utilize a technology platform from online lender Kiva.org, a nonprofit founded in 2005 and based out of San Francisco. Items in the online store include mugs, sweatshirts, hats, and tote bags.
Guaranteed Rate, one of the largest retail mortgage lenders in the nation, was named a Best Overall Online Lender and a Best FHA Mortgage Lender for Refinance by the popular personal finance news site NerdWallet. NerdWallet’s Best-of Awards Program recognizes industry-leading options for consumers across a variety of financial products. As part of providing consumers with clear and objective recommendations for all their financial decisions, NerdWallet evaluated dozens of financial products across multiple product categories to identify the best options of the year.
FinTech will drive the finance industry – In fact, around 40% of Americans haven’t stepped foot in a bank or credit union in the last six months (Bankrate Financial Security Index survey), which isn’t surprising since the number of actual branches has dropped considerably in the past 10-15 years.
Blockchain technology will become mainstream
More mobile technology – The trend in mobile usage within banking is expected to continue to rise over the next year– it’s predicted that by 2019, mobile banking and payments will reach a staggering $92 billion.
The New Year rally in Ranger Direct Lending (RDL) shares has come to an abrupt halt after the listed loan fund, which is backed by fund manager Mark Barnett, said arbitration to settle the legal dispute between it and Princeton Alternative Finance had been extended by around two months.
The £119 million investment trust has been locked in an argument with Princeton, a New Jersey-based investment fund in which it is the leading investor, over its exposure to Argon Credit, a US peer-to-peer lending platform that collapsed in December 2016.
Uncertainty over the exposure to Argon – which represents 14% of its £217 million net assets – and doubts over the due diligence by its adviser Ranger Alternative Management (RAM) have hobbled the shares. They fell over 23% last year but had rallied since the end of December when they hit a record low discount of 32% below net asset value. From 704p at the start of the year they recovered to 767p last week but have dropped 4% or 31p today after yesterday’s announcement. Although still wide, the discount has narrowed to just under 13%.
Relx, the UK-listed information and analytics group formerly known as Reed Elsevier, has struck its biggest deal in a decade with the £580m purchase of ThreatMetrix, an online identify verification business.
ThreatMetrix has one of “largest repositories of online digital identities”, according to UBS analysts, and has built a database containing 1.4bn unique online digital identities from 4.5bn devices in 185 countries.
in particular, the UK’s peer-to-peer lending platforms are now crying out for new customers.
Today, however, more than 30 lending platforms, including all the large small business lenders, offer their own IFISA or are on the verge of launching a product. For investors, moreover, the returns available from these schemes looks very attractive: annual yields of 10 per cent or more in some cases look phenomenal when set against the backdrop of bank and building society accounts typically paying less than 0.5 per cent a year, even if there is a risk of losses on IFISAs if borrowers default.
Augmentum Capital, the venture group backed by Lord Rothschild, is planning to list a financial technology investment fund in what would be one of the sector’s biggest initial public offerings in a decade.
It is understood to be applying for admission to London’s main market in March and will seek to raise up to £125m with the sale of new shares.
The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.
“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”
According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (S$34.75 trillion), or 203 per cent of China’s nominal GDP in 2017.
Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, announced terms for its IPO on Tuesday.
The Chengdu, China-based company plans to raise $14 million by offering 3.3 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Senmiao Technology would command a market value of $109 million.
Today, leading payments provider Klarna has announced a partnership with Maplin – the UK’s number one specialist technology retailer. Maplin customers will now be able to use Klarna’s Pay later and Slice It services, allowing them to order online and receive the very latest Smart Home tech, security/CCTV products, top quality drones and so on, and then pay for them either at a later date or spread the cost over time.
Pay later enables online and mobile Maplin customers making purchases of £200 or less to receive their products and pay for them 30 days later, with no interest or fees.
Banco Popular is relaunching E-loan (it dropped the hyphen from the name) to serve as its “fintech arm,” a stand-alone brand offering solely digital products.
Launched in 1997, Eloan re-enters a market where fintechs now account for over 30% of personal loan originations, according to TransUnion. The brand will compete for clients alongside well-financed upstarts like LendingClub as well as new offerings from banks such as Marcus from Goldman Sachs.
Spendesk, a fintech solution that helps businesses manage their spending, has raised an €8 million Series A round led by Index Ventures, with participation from existing investors. The funds will be used to accelerate product development and expand across Europe.
Three Dutch banks, ABN Amro, ING and Rabobank, suffered a series of DDoS attacks last weekend (27 and 28 January).
During the attack, internet banking, mobile banking, its website and Ideal were unavailable or extremely slow on 27 January from around 8pm to 12.15am CET and on 28 January from 12pm to 2pm CET and after 7pm CET.
According to the World Bank’s Global Findex report, nearly 2 billion adults and 160 million small businesses from all over the world do not have bank accounts. Efforts to approach them to traditional financial institutions have not been enough, limiting their economic growth potential.
Only 14% of adults living in the Middle East hold a bank account, opposed to the 94% of citizens from first world western countries that do. Developing regions with underserved communities such as India and sub-Saharan Africa comprise, when combined, nearly 32% of the world’s unbanked and underbanked population.
As a response to this issue, Nassim Benzekri and his team developed CHECQIT, an Ethereum-based, decentralized, peer-to-peer lending platform that allows users to grow their collaterals against a fast-guaranteed loan.
Finastra has acquired Olfa Soft SA and its cutting edge FX e-trading platform for banks and financial institutions. The move enables Finastra to deliver a unique end-to-end real-time eFX trading solution for banks’ treasury departments, covering distribution, position-keeping, post-trade and payments.
Cross-border payments company Western Union is opening a technology center in India, which will focus on biometrics, machine learning, and robotics, the company announced yesterday.
The center, located in Pune, Maharashtra, will have over 1,000 employees all focused on building these “innovative digital and retail customer experiences globally,” the company said in a press release.
Rubique, a marketplace lending platform for individuals and SMBs, entered into a strategic partnership with OptaCredit, an Artificial Intelligence-powered, data-driven online lending platform focused on providing unsecured credit to salaried professionals across India.
With its Online PLUS technology led model and proprietary matchmaking algorithm, Rubique will enlist the company on its online marketplace for applicants to avail viable loan products from OptaCredit’s offerings.
RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders. The NBFC-P2Ps will act as an intermediary to provide an online platform to lenders and borrowers to transact on mutually agreeable terms. RBI has defined P2P lending as a form of crowdfunding that entails issuing unsecured loans to borrowers via an online portal in its 2016, ‘Consultation Paper on Peer to Peer Lending’. However, P2P lending is different from other crowdfunding activities in being a purely debt product, in which multiple lenders fund borrowers as personal loans or small business loans. Most of the P2P platforms in India such as IndiaMoneyMart curate their borrowers after conducting KYC checks, credit assessment, and due diligence before listing them on their loan exchanges.
On the positives, the regulation has made P2P lending platforms accountable to furnish credit repayment/non-repayment information to all 4 credit bureaus, thereby increasing transparency in the credit rating system. The credit rating agencies have records on about 150 million population but P2P lending platforms are also going to bring customers hitherto relying on private money lenders. This presents a huge opportunity to close the credit information gap. It will also reward sub-prime borrowers with a better credit score for showing improvement in loan repayment behaviour.
As many first time or retail borrowers take loans from money lenders or payday companies which charge interest as high as 5% to 20% per month, P2P platforms like IndiaMoneyMart are bridging the gap by making credit not only accessible but affordable. Bangalore-based IT consultant, Tanmay Thorat* (name changed) was paying over 300% interest to payday loan companies and approached IndiaMoneyMart for a small ticket size loan of INR 1 Lakh secured at rate of 13% annualized interest in March 2016required to settle his credit card debt and pay rent deposit.
The expectation from the Union Budget 2018 is immense in the BFSI segment, especially after RBI regulation. Experts hope that essential financial services will have GST rates revised from 18% to 5% or nil.
Most importantly, the fund of funds for startups (FFS) has begun to take shape with as much as Rs 1,100 crore being disbursed to SIDBI for allocation to venture funds. As of September 15, 2017, 17 venture funds have raised Rs 605 crore from SIDBI and as many as 72 startups have received about Rs 318 crore funds. The Department of Industrial Policy and Promotion (DIPP) has also recently announced that this number will be increased to Rs 2,400 crore by the end of the next fiscal.
For instance, the startup space has reportedly seen a decline of 53 percent in seed funding and 25 percent in venture funds in 2017.
Listed below are four suggestions for Budget 2018.
Allow a lower MHP for servicing short-term needs of MSMEs
Raise rate caps under MUDRA scheme: The RBI currently has capped the final rate that can be charged above the refinance rate offered by MUDRA at 3% for banks, 6% for NBFCs and 10%-12% for MFIs, depending on portfolio size. Since most of the new lenders incur high opex, this cap should be increased in the Budget 2018 to 10-12% in line with MFIs, for loans up to Rs 5 lakhs, and 8-10% for loans from Rs 5-25 lakh value.
Extend the SIDBI net
Make P2P platforms more attractive: A cap of 5% of net worth for lenders and a maximum individual loan amount of Rs 25 lakh for the borrowers would make these platforms attractive for both lender and borrower.
Expand access to MSMEs
Introduce PSU Banks turndown program
Raise eKYC-based lending limit: The cap for lending through OTP based eKYC should be increased from Rs 60,000 to Rs 5 lakh.
Tokyo-based Lancers, which operates a crowdsourcing platform under the same name, has closed a JPY 1 billion ($9.2 million) round from Tokyo-listed enterprises Persol Holdings and Shinsei Bank.
The investment sees Lancers concluding business partnership contracts with both companies concurrently and will also see it commence its new financing business targeting freelance workers, which the company claims comprise 17 per cent, or 11.22 million workers of Japan’s entire working population.
The addition of Shinsei Bank as an investor will see Lancers, Persol and Shinsei collaborate to develop and provide a new loan service to individual workers who need equipment investment or education/training upon starting a new business.
Tokyo-based property crowdfunding portal Crowd Realty has closed its Series A round at JPY 580 million ($5.2 million) from Tokyo-listed Mitsubishi Estate, Shinsei Corporate Investment, Shinsei Bank, and Mizuho Capital, based on an account from The Bridge.
The Series A round saw two tranches: a follow-on investment of JPY 230 million subsequent to a JPY 350 million investment from Mitsubishi Tokyo UFJ Bank, Mitsubishi UFJ Capital, and Kabu.com Securities.
In a notice issued on its website on Monday, SSC said that the market now had companies operating in fintech, including cryptocurrency, initial coin offering, crowdfunding, peer-to-peer lending and blockchain. These were new products that had not been regulated, SSC said, thus posing high risks.
News Comments Yesterday, Lending-Times incorrectly stated that Zopa would charge all borrowers the same rates with its planned bank. In actuality, the plan is to price the book the same between new and existing customers, and not make a difference between new and existing customers as other banks do. Today’s main news: MarketInvoice, Funding Circle, […]
Yesterday, Lending-Times incorrectly stated that Zopa would charge all borrowers the same rates with its planned bank. In actuality, the plan is to price the book the same between new and existing customers, and not make a difference between new and existing customers as other banks do.
Elevate Credit enters 16th state. GP:”A small step. I am surprised that it is not in more states than this. I guess there is clear path to revenu growth. “AT: “Congratulations. Elevate is making fast strides to becoming a major powerhouse in alternative lending.”
9 steps to a successful Reg A+ IPO. AT: “A great read with practical tips. The focus here is on marketing and networking, which, of course, are imperative to spreading the word about your offering.”
College Ave closes first securitization. GP:”A milestone worth celebrating: College Ave now has access to cheap capital which will help it grow its lending capital sources and become more profitable. Now the issue will still be cost of customer acquisition and volume.”
Plaid puts out call for startups in nine underserved sectors. GP:”Great list. All entrepreneurs should read it. “AT: “There are some huge opportunities here. A robo for tax preparation? I’d pay for that. We’ve seen mobile apps that allow bank customers to manage their accounts on their phones, but to open them? A great idea. And there are still plenty of opportunities in the insurtech and regtech arenas. Kudos to Plaid for offering the encouragement.”
Easiest path to riches on the Web? ICOs. AT: “It’s also one of the riskiest. What if nobody buys your coins, or the underlying technology you’re funding with your ICO never makes it to development? Still, who can’t wink at the innovation?”
Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced today that its RISE product, traditionally offering installment loans, will now offer lines of credit. Kansas will be the sixteenth state where RISE’s products are available and the first state in which RISE’s line of credit is available to non-prime consumers.
RISE is a state-licensed online lender offering unsecured installment loans and lines of credit. RISE is designed to meet the needs of the millions of non-prime Americans with less than prime-credit, who do not have access to traditional sources of credit. RISE is a path toward a brighter financial future with features such as fast approval, flexible loan terms, lower rates than other non-prime lenders, rates that can go down over time, credit bureau reporting, free credit score monitoring and financial literacy courses.
When online peer to peer lending was new, consumers were the first investors to step in while accredited and institutional investors stayed on the sidelines until later – they now dominate the peer to peer lending business, which has grown to be a huge multi-billion dollar market.
1. If you have an enthusiastic following in your industry:
If you have a large enough network, this group might fund your entire capital raise. Take steps to build a working contact list of them. And make sure to establish a regular habit of emailing them so that when you later send out an email suggesting that they consider investing in your Reg A+ offering, your email will be opened and read.
2. Build a large and enthusiastic customer base.
VidAngel emailed their most active 30k customers andraised $10 mill in 5 days live to investors, setting the record for the fastest rate of onlineinvestor capital raise in Reg A+ to date.
3. Establish a direct sales relationship with your customers.
When your customers find it normal that you send them an email message, they are far more likely to respond favorably when you send them an email offering them the opportunity to become an investor and part owner of your company.
4. Add a consumer appealing product or service;
5. Build a large social media fan base;
A fan base of 100k people is a good start.
6. Combine product and investment marketing;
This combination can save marketing expense and also emphasizes the brand building and product sales synergy that can be levered in a Reg A+ offering.
7. Leverage your existing investors;
As an example, a sizable portion of the recent MYONYSE IPO and the ADOMNASDAQ IPO investments were from existing investors and their friends.
8. Prepare consumer investment rewards:
Line up your reward packages ahead of time to ensure that you have long lead time items ready and on hand in quantity when your Reg A+ goes live.
9. Assemble the proof points that you will need;
Gather and build the market size and total available market evidence you will need to make credible claims that your market is large enough to justify the attention of investors.
Financial Engines Inc. CEO Larry Raffone is seeking to give his company a second date with destiny by combining the biggest 401(k) robo-advisor and one of the larger national RIAs — and coming out of it with a true national RIA that can take on the accounts of Fortune 500 companies at the retail as well as the pension-plan level.
Raffone plans to open new Financial Engines offices in more populous areas such as Southern California, where Financial Engines is already on-site at corporations where participants use its managed account 401(k) service.
The pricing model is still TBD, but William Blair equity analyst Robert Napoli said in an April 6 report that he expects Personal Advisor to come in at 80 basis points. He notes that compares to 35 basis points for FE’s managed account 401(k) program.
LendingOne, one of the nation’s fastest growing online lenders for real estate investors, announced today it closed a Series A financing round.
Investors include Ron Suber, a prominent fintech investor and President of Prosper Marketplace, Richard Vague, co-founder and former CEO of two credit card companies, First USA and Juniper Financial, Sidney Brown, CEO of NFI Industries and former Chairman of Sun National Bank, Michael Heller, CEO of Cozen O’Conner, a national full-service law firm, along with LendingOne founder and CEO, Bill Green.
College Avenue Student Loans, an online student loan refinancing and origination company, has closed its first securitization of private student loans, according to Global Capital.
Getting into the asset-backed securities (ABS) business for the first time, College Ave’s securitization is a $160.89 million offering backed by private student loans. Barclays is the only underwriter on the company’s first ABS transaction.
Credit research and ratings company DBRS has assigned provisional ratings for the various classes of notes issued by College Ave. The Class A-1 notes worth $95,320,000 have been given an A rating, while the Class A-2 notes worth $43,470,000 have also been an A rating. The Class B notes worth $10,760,000 have been given a BBB rating, and, finally, the Class C notes worth $11,340,000 have been given a BB rating, according to DBRS.
Most executives of middle-market companies not only expect their business to experience disruption in the near future, but welcome it, according to Disruption in the Middle Market, a report released today by Capital One Commercial Bank. However, this optimistic view does not always translate into action; only a small portion of middle market companies have taken a full range of defensive measures to protect against disruption’s potentially destructive consequences.
Capital One surveyed more than 300 senior executives from companies with annual revenues ranging from $100 million to $3 billion to determine their views on disruption—a significant interruption to an existing business arising from innovative technology, a new business model, or political, economic and environmental forces.
The study revealed that attitudes toward disruption correlated to size. Smaller middle-market companies are more likely than their larger counterparts to be unprepared for disruption. The report also highlighted a series of steps, such as strengthening financial relationships, that smaller companies can take to catch up.
Disruption in the Middle Market provides a detailed picture of the views of middle-market executives about disruption and the steps they are taking to address it. Eighty-eight percent of respondents reported that their companies have already experienced disruption or expect to experience it during the next three years. However, only one-sixth of those surveyed believe they are prepared to deal with a disruptive event. Despite this lack of preparation, four-fifths of middle-market executives view disruption as an opportunity, not a threat. Many of these executives believe that disruption threatens their industry—but not their own company. Forty-three percent said that their industry is vulnerable to disruption, while just 18 percent reported that their own company is vulnerable.
Size proved the key determinant in a company’s preparedness and attitude toward disruption. Companies with revenue between $2 billion and $3 billion are much more likely to see a disruptive event as an opportunity than companies in the $100 million to $499 million range. In addition, larger companies are more likely to have insulated themselves from the effects of a disruptive event and to be pursuing a disruptive strategy of their own that could lead to a competitive advantage.
Financial Preparation Is Critical
The study revealed that a strong relationship with a stable financial institution could play a critical role in helping a middle-market company respond to disruptive forces. Sixty-eight percent of those with an ongoing banking relationship expect to need additional funding in the face of a disruption. These companies will find it easier to arrange than the 32 percent without a strong banking relationship. Here again, smaller companies are at a disadvantage. Many lack the holistic banking relationship needed to confront disruption, and instead are willing to consider alternative sources of capital like peer-to-peer lending and even crowdfunding.
Attitude toward disruption varies considerably by industry Middle market executives in some industries have adopted a much more proactive approach to disruption than those in others.
Financial services and insurance companies are archetypical disruptors. Forty-seven percent are quite or extremely prepared for disruption, and 83 percent are pursuing a disruptive strategy. The overall middle-market averages for the survey are 16 percent and 60 percent, respectively.
Energy, resources, and chemicals companies tend to be classic delayers. Eighty-three percent are slightly or not at all prepared for a disruptive event (compared to 53 percent for the full survey), and only 37 percent are pursuing a disruptive strategy (compared to 60 percent overall).
Plaid wants to make it easier for financial services companies to serve consumers and businesses, but it also sees significant holes in the fintech ecosystem. As a result, the company has issued a Y Combinator-like “request for startups” to tackle particular issues where it believes significant innovation is lacking.
Like Yodlee before it, Plaid enables startups and other tech companies to more easily connect with banks, credit card companies and other financial institutions, both to authenticate consumer accounts and access their financial data.
A new crop of technology entrepreneurs is forgoing the usual routes to raising money. The entrepreneurs are not pitching venture capitalists, selling stock in an initial public offering or using crowdfunding sites like Kickstarter.
Instead, before they even have a working product, they are creating their own digital currencies and selling so-called coins on the web, sometimes raising tens of millions of dollars in a matter of minutes.
Since the beginning of the year, 65 projects have raised $522 million in these offerings, according to Smith & Crown, a research firm focused on the new industry.
Last month, a small team of computer engineers in Lithuania raised $14 million in 45 minutes by selling a coin, known as Mysterium, that is intended to give access to an encrypted online data service that is still being built.
The next day, a group of coders in the Bay Area pulled in $35 million in under 30 seconds of online fund-raising. The coders were offering Basic Attention Tokens, which will one day work on a new kind of ad-free web browser.
Then this week, a team in Switzerland raised around $100 million for a coin that will be used on an online chat program that has not yet been released, known as Status.
Last year, the first blockbuster coin offering, the Decentralized Autonomous Organization, quickly raised more than $150 million. But the project blew up after a hacker manipulated the code and stole more than $50 million worth of digital currency.
U.S. mortgage lenders are bracing for rockier times as consumers demand for home loans slows and competition in the mortgage industry intensifies, Fannie Mae’s latest quarterly survey released on Monday showed.
The margin on the share of lenders who saw a drop in consumer demand for a loan to buy a home in the past three months over the share of lenders who saw a rise in purchase loan demand fell to about 30 percent, the lowest in two years on a year-over-year basis, Fannie Mae said.
The net percentage of lenders which anticipate lower profit margin in the next three months stood at 6 points, down from 12 points in the first quarter and from 31 points in the fourth quarter of 2016.
Moody’s has placed on review for possible upgrade the ratings of 41 private student loan ABS bonds – totalling approximately US$2.56bn worth of securities across 19 securitisations – issued by three marketplace lending platforms. At the same time, Fitch has released an exposure draft of criteria for rating US private student loan ABS that could result in multiple-category upgrades for …
Life/annuity: Private startups providing distribution of life insurance products including term life and annuities including Abaris and PolicyGenius
Auto insurance (split into distribution, usage-based insurance/telematics, and claims): Startups ranging from aggregators including CoverHound and Goji to white label auto claims apps (Snapsheet) to per-mile managing general agents like Metromile.
P2P insurance: Private peer-to-peer insurance and mutual-based startups include Lemonade, Guevara, Friendsurance, and others.
Small business insurance: Private tech companies serving as commercial insurance brokers and managing general agents to SMBs include Insureon, Embroker, and Next Insurance.
Insurance industry software/analytics/IaaS: Insurance-specific software across the value chain providers range from BI and data-warehousing startup Quantemplate to insurance fraud detection firm Shift Technology to re-insurance SaaS analytics startup Analyze Re to claims inspection startup Spex.
Mobile insurance management: Startups focusing on allowing consumers to manage and purchase insurance policies via their mobile device including Knip and GetSafe.
Product insurance: Companies insuring or tracking products — i.e. smartphones, laptops — for insurance applications.
Renters/homeowners: Startups providing distribution of renter’s insurance and homeowner’s insurance as well as lease default insurance programs.
Sharing economy: Startups working on new insurance products in coverage areas including short-term rental marketplaces and for sharing economy 1099 workers.
Health insurance: Across new carriers like Oscar as well as healthcare insurance startups targeted at individuals (Stride Health) and employers (Zenefits).
One of the most hotly contested aspects of the Fiduciary Rule is around the standard of suitability as a determinant for an investment choice made by a registered representative. Today, a registered representative must only ensure that an investment is ‘suitable’ for a client. This suitability is determined by factors including investment risk tolerance, time frame, and goals. However, there is no determination made as to whether the investment is in the client’s best interests.
To illustrate, let’s say the registered representative (RR) has a choice of offering two different mutual funds to a client. Both invest in similar stocks and have relatively similar returns (before fees), but one charges higher fees and also pays the RR’s firm based on the total dollar investments made into that particular fund. The RR only offers the client the one for which they get compensated, even though the other mutual fund option may be a better option for the client (because it charges lower fees). The reason the RR can do this is that both mutual funds are considered “suitable”: meaning as long as the recommendation meets the client’s risk profile and investment goals, then they can offer that product to their client.
In contrast, an investment adviser representative (IAR) must act as a fiduciary. In the same situation, if the IAR wanted to offer the same mutual fund that the RR did, they would need to disclose to the client that they are getting compensated for sales of that fund and that the lower cost option makes more sense for the client. So, instead of simply offering a suitable choice for the client, the IAR must: 1) disclose conflicts of interest and, 2) act in the best interest of the client rather than in their own best interest.
What The Fiduciary Rule Would Change
Staying with the scenario above, the Fiduciary Rule would require an RR to act like the IAR in when selling any products related to, or be advising on anything related to retirement.
The rule would also apply to anyone dually-registered (meaning they are registered both as an RR and an IAR). Currently, the dually-registered representative can decide what ‘hat’ they wear (RR or IAR) when suggesting investments for retirement.
LendingTree, the popular mortgage site, which debuted its own valuation model earlier this month, can tell you why: Because none of the other value estimators calculate your home equity or suggest how and when you might want to tap into it.
If you’re not quite ready to move ahead but instead prefer to track your equity, credit and mortgage situation on a regular basis, you can sign up for a more comprehensive “My LendingTree” service, for which there is no charge. It provides you with monthly updates plus periodic alerts on your home equity movement. You get an alert when there’s “an actionable opportunity” for you to tap into your equity on favorable terms, based on “real-time market data,” changes in your credit files and equity levels, according to the website. There’s no requirement that you take any action.
OppLoans, the nation’s leading socially responsible online lender serving non-prime consumers, has announced the appointment of Daniel Fell to the role of Vice President of Business Development. Fell will oversee all strategic business development and partnership objectives at the high-growth, profitable firm.
Debt works really well when you choose the right type of debt for your business. You can reduce what you pay for business debt by making a well-informed choice. For example, peer-to-peer lending may be an option if you’re unable to get a loan or finance from a traditional bank and can be cheaper too.
2. Nurturing your cashflow/credit score
If your business doesn’t have great creditworthiness, or is too new to have any credit history, then a lender will look at the credit score of someone able to guarantee the business’ debts.
3. Shopping around for the best deal
If you need finance consider all the options – the high street bank, the online lender, the peer-to-peer lender and the government-backed lender.
MARKETINVOICE, Funding Circle, Zopa and LendInvest have made CB Insights’ Fintech 250 list for 2017, which awards the companies worldwide that are leading the transformation in financial services.
The list of 250 emerging private companies from 23 countries, which was chosen out of a longlist of more than 2,000 entrants, was revealed by the research firm’s chief executive and co-founder Anand Sanwal during The Future of Fintech conference in New York on Tuesday.
The Fintech 250 companies (in alphabetical order):
The evidence from a sample of 20 fintech startups in the UK is that there are substantial profitability challenges that still need to be overcome. As of June 2017, the total equity investment in the sample companies I have looked at has been £852m. The total valuation of the sample at the last valuation round for each company was £2.6bn, but none are profitable and cumulative losses have been £211m.
Only one company in the whole sample has reported a single year of profitability, but this has since fallen back into loss.
However, the median losses are: £0.3m in year 1, £1.3m in year 2 and £2.0m in year 3. One company, Atom Bank, is already losing £22.5m in the third year of operation, substantially more than any of the others.
While the head of one of the United Kingdom’s largest P2P sites understands why small business owners are hesitant to make big decisions in Brexit’s wake, he cautions them to not miss the opportunities either.
“The door is open for business leaders to redefine Brexit so that it is seen as an opportunity, rather than a threat.”
Property investors have had to deal with a host of government and regulatory changes over the last couple of years.
These new rules have resulted in many buy-to-let lenders requiring much more significant interest rental coverage, often looking for as high as 145%.
For example, in the last LendInvest Buy-to-Let Index we found that Southampton offered an average yield of 4.08% – significantly lower than landlords can enjoy in other areas of the UK. Yet it has seen solid capital price growth at 5.47%, its excellent transport links into the capital regularly see it named as a future house price hotspot, while the presence of two large universities boosts its appeal to landlords.
Financial Technology Partners (FT Partners), the only global investment banking firm focused exclusively on FinTech, is pleased to formally announce its planned expansion into the Europe, the Middle East and Africa (EMEA) markets. This announcement is a direct response to the global demand the Firm is seeing for its highly specialized and deep domain focused advisory capabilities from EMEA clients and further highlights the Firm’s strong activity in cross-border FinTech deals globally. FT Partners’ global team of FinTech focused investment bankers will continue to serve its clients and its EMEA operations will be based out of London in the United Kingdom. The Firm is also announcing the continued expansion of its senior team with the addition of Timm Schipporeit, former FinTech investment banker at Morgan Stanley and FinTech investor at Index Ventures, who joins as Managing Director in our London office
Concerns that bad-loan levels are worse than lenders are confessing to, combined with fears the country’s fintech giants, including Alibaba Group Holdings Ltd. affiliate Ant Financial, are disrupting operations, have weighed on stocks.
For one, bad-debt figures, if you believe them in the first place, are coming down. And even if you do think nonperforming loans have been understated, what’s undeniable is that the country’s big banks have been shifting into mortgage lending, which has a lower default rate than the state-firm lending that’s long been their bread and butter. The nonperforming loan ratio of a mortgage in China is 0.37 percent, one sixth of a corporate advance, according to CIMB Securities Ltd. analyst Michael Chang.
Of course, fintech companies getting into the lending business is cause for concern. Alipay’s consumer credit site Ant Check Later will lend up to a certain amount without needing to see bank records, while e-commerce outfits like JD.com Inc. allow monthly payment installments that blur the line between bank and retailer.
However, it’s worth noting that lending is a business with thin margins, and figuring out default risk is crucial, especially considering many fintech startups cater to those people the big banks won’t touch.
According to Morgan Stanley, online loan volume in the US market is expected to reach US$120 billion in 2020, up from US$20 billion in 2015.
Among others, one important promise of FinTech is that there will be greater reliance on algorithmically-determined financial decisions in areas such as loan, insurance and stock picking. The advancement of artificial intelligence methods has been the propeller facilitating the transition in such a direction.
The overall implication here is that a machine can replace a human in processing large amounts of text in a much more efficient way. This information extraction procedure also helps us understand more about the interplay between investors and various types of information. Interestingly, we find that investors react more strongly to negative than to positive text, and that analyst report text is more useful when it places more emphasis on non-financial topics, is written more assertively and concisely, and when the perceived validity of other information signals in the same report is low.
One common feature of the above two research studies is that computer algorithms are used to extract and quantify some otherwise fuzzy concepts: analyst sentiment in the first study, and analyst information discovery and interpretation effort in the second one. The computer achieves it by aggregating a huge amount of data which is surely beyond any human’s ability to process. Even though humans can understand intuition through very limited observations, it is hard for them to transfer the intuition or knowledge to other people. The computational limitation and the qualitative nature of the human knowledge are the underlying reasons why computers will eventually outperform humans in more and more settings.
FinTech does not come as a free lunch, however. Algorithm-based decisions are not immune to anomalies and manipulations. On 6 May, 2010, the Dow Jones Industrial Average dropped 998.5 points (about 9%), mostly within minutes. This sudden market crash was later attributed to the algorithm trading systems being manipulated by a trader.
Klarna, the $2 billion+ startup out of Sweden that works with some 70,000 e-commerce sites to enable payments and provide flexible financing to make purchases, is adding one more key investor to help take its next steps into a wider range of services. Today it announced that credit card giant Visa is making an equity investment in the company, and as part of it, the two are forging a strategic partnership to roll out new products.
Visa and Klarna are not disclosing the size of the stake — following the same pattern Visa took when it invested some years ago in two other fast-growing financial startups, Square and Stripe — and Klarna is not specifying what form the strategic partnership will take.
In 2014, I moved to London to launch an asset management firm investing in loans originated by marketplace lending platforms.
Starting the business in London made sense. The UK boasted a business environment in which risk-taking was encouraged and entrepreneurial success valued and rewarded. Simple rules such as entrepreneurs’ relief, which reduces capital gains tax on the sale of a business, are very attractive for budding entrepreneurs.
However, the vote in last year’s referendum for Britain to leave the EU has caused me to reconsider my decision to live in and operate my business from London.
Exactly one year after winning Money20/20 Europe Startup Competition, James (a FinTech in Credit Risk, formerly known as CrowdProcess) returns to Copenhagen after closing an oversubscribed investment round led by Ex-Credit Suisse Board Member Gaël de Boissard. This round also included ex-Deutsche Bank COO, Henry Ritchotte, and BiG Start Ventures, a VC focused on FinTech and InsurTech. As a result of this deal, Mr. de Boissard has now joined James’s Board of Directors, after having previously been at the board of Credit Suisse.
IBM is building blockchain technology that will be used by seven of Europe’s largest banks, including HSBC and Rabobank, to facilitate international trade for small and medium-size enterprises, the company said on Tuesday.
TodayKiva.org, the world’s first and largest crowdfunding platform for social good, announced that it surpassed $1 billion USD in loans supporting borrowers around the world. More than 2.4 million entrepreneurs, farmers and students globally have been able to launch and expand viable businesses or pursue an education thanks to loan support from 1.6 million people, lending just $25 dollars at a time.
Recently on World Refugee Day (celebrated globally on June 20), Kiva launched a new World Refugee Fund, a $250K matching fund to be followed by a rotating fund of up to $9M in loan capital to provide support to refugees and host communities in countries including Lebanon, Jordan, and Turkey.
The World Refugee Fund seeks to fill this lending gap and is being developed by Kiva and the Alight Fund, along with founding partners the Tent Foundation and USA for UNHCR. To date, Kiva has crowdfunded $4.3 million in loans to 4,544 refugee borrowers globally.
According to KPMG’s 2016 global Pulse of Financial Technology (FinTech) Report (source), Venture Capital (VC) investment in the FinTech sector reached an all time high with a total of $13.6 billion across 840 financings in 2016. While FinTech investment proved to be “hot” in 2016, has this massive investment translated into consumer adoption? Today, at Money 20/20 Europe, early-stage venture capital firm Blumberg Capital released the results of its recent survey conducted online by Harris Poll in France, Germany, Israel, United Kingdom (U.K.), and the United States (U.S.), which found that FinTech appears to be gaining traction with Israel emerging as a leader in early-adoption. Despite investment and adoption progress, cash still remains king for most of these countries such as Germany, where 75 percent of adults still use paper currency and coins to make purchases at least once a week. Can cash ever be crushed? To see the full findings, please visit globalfintech.blumbergcapital.com.
Israel Embraces FinTech Early but Cash is Still KÃ¶nig in Germany The findings indicate Israel as a leader in early FinTech adoption as this country is more likely than other countries surveyed to use mobile banking apps and mobile wallets to make a purchase at least once per month. Additionally, nearly one in 10 Israeli adults say they have used alternative financing/lending services within the last 12 months. While many may believe cash to be an antiquated form of payment, the survey revealed paper money is still regularly in use.
Israeli adults are most likely to use a mobile banking app at least once a month (e.g., to check account balances, transfer funds, make a mobile deposit) (50 percent vs. 38 percent in U.S., 37 percent in U.K., 35 percent in France, 28 percent in Germany).
Israeli adults are more likely than French, British, and American adults to use mobile wallet apps to purchase goods/services at least once a month (27 percent of Israeli adults vs. 21 percent of French adults, 18 percent of American adults, and 17 percent of British adults).
Seven percent of Israeli adults have used alternative financing/lending services (e.g., peer-to-peer lending, online lender, lease-to-own) within the last 12 months.
German adults are most likely to use cash to make purchases at least once a week (75 percent vs. 64 percent of British adults, 58 percent of American adults, 48 percent of French adults, 47 percent of Israeli adults).
What is Fraud Anyway? As cybersecurity continues to dominate the headlines, there was a surprisingly low level of concern among most countries surveyed given the current risk landscape. In Blumberg Capital’s 2017 State of Cybersecurity Report, findings revealed a gross overconfidence in cybersecurity knowledge and safety despite $15 billion being stolen from 13.1 million American consumers in 2015 in the U.S. alone (source). This disregard for fraud risk could indicate that consumers generally have confidence in the products and services they choose, suggesting that FinTech companies have the opportunity to educate new users on the security measures they have in place and why they are important.
British, American and Israeli adults are more likely than French and German adults to worry about being defrauded (e.g., getting scammed, having identity stolen, having accounts hacked) when they make financial transactions online (43 percent, 39 percent, and 38 percent vs. 31 percent and 23 percent, respectively).
Nationalism vs. Globalization: Are transactions crossing borders? The survey also looked at how often people make online cross border purchases at least once a month. Again, Israeli adults lead the charge in cross-border transactions which could reflect on the narrower range of product choice available locally in Israel compared to other countries or Israel’s acceptance and wider adoption of FinTech and international eCommerce. Additionally, people were polled regarding the costs related to cross-border transactions, which revealed a budding anticipation of increased costs for these types of purchases in the future, especially in the U.K. This belief in the U.K could be related to Brexit. Findings include:
Israeli adults are most likely to make online purchases outside of the country they live in at least once a month (44 percent vs. 17 percent of French adults, 14 percent of German adults, 13 percent of British adults, and 9 percent of American adults).
21 percent of British adults believe making online purchases outside of the country they reside will become more expensive (i.e., goods/ services will cost more and/or there will be additional fees) in the future. (Vs. 16 percent of American adults, 14 percent of German adults, 11 percent of French adults, 9 percent of Israeli adults).
Methodology This survey was conducted online by Harris Poll on behalf of Blumberg Capital from May 16-22, 2017 among 2,166 American adults ages 18+, 1,046 German adults ages 18+, 1,048 French adults ages 18+, 1,050 British adults ages 18+, and 550 Israeli adults ages 18+. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For additional information about the survey results and methodology please contact: email@example.com
For the 50th anniversary of the first ATM, YouGov has conducted a global poll of 8000 consumers on behalf of ACI Worldwide to survey the usage of automated teller machines.
The survey found that only 42% of British consumers use ATMs just as much as they always have, while 48% in Germany, 47% in Spain and 40% in France believe the same, perhaps because of the widespread availability of alternative digital payments. 29% of UK consumers, 31% of French, 38% of Spanish and 43% of Italian would prefer this as well as a more secure way of payment authentication.
Zurawski does not see an ATM retirement any time soon as many still prefer using hard cash because it is a deliberate way of controlling spending.
The survey presented that customers want mini-statements, alerts for upcoming payments or overdraft fees plus the ability to dispense a new credit or debit card.
The rise of fintech does not pose any compelling risks to financial stability, according to a review by global regulators, but this may change as the sector grows.
While financial technology is changing how financial services and information are being delivered, there is no evidence that services like crowdfunding, “robo” advice and cloud computing will fundamentally change underlying activities such as lending, the Financial Stability Board (FSB) said in a report published on Tuesday.
While money transfers and payments services still lead the fintech charge with an adoption rate of 50 per cent in 2017, insurance has come in a surprise second with a 24 per cent global adoption rate.
The adoption level for insurance fintech services in Australia stands at four per cent higher than the global average (29 per cent), linked to the upswing of personalised wearables with in-built abilities which allow for prediction of claim probability and lifestyle trends by insurance firms.
While many players try to attract investors by offering high-interest rates and leave them in the lurch in the case of default, i2iFunding has walked the talk by making the first payment from the Principal Protection Fund, and reiterated its commitment to shore up investors’ confidence.
Deteriorating asset quality has become an inevitable problem of the banking sector these days. Bad loans skyrocketed 135 percent over the last two years, and now, they constitute close to 11 percent of the advances of Public Sector Banks (PSBs).
The P2P lending industry is no immune to this trend.
i2iFunding has become the first P2P lending platform in India to compensate investors for the loss of outstanding principal amount incurred on the defaulted accounts.
Principal Protection programme will also be strengthened further, and many new features will be included. As of now, the level of principal protection depends on the category of the loan. Default in the category “A” qualifies for 100% protection of outstanding principal. This falls by 10% for the every next category and default in the “F” category offers you 50% protection. The functioning of the Principal Protection Fund will be further rationalised and smoothened. i2ifunding will primarily provide 50% and 100% principal protection options in each category from ‘A’ to ‘F’. There will also be the third option of ‘zero’ protection. Depending on the option selected by the investor, he/she will have to settle in for lower EMIS. The fee for offering principal protection service would be deducted through EMIs, but won’t be collected upfront. It’s noteworthy that, this may proportionately reduce the returns earned on lending projects but would make lending at i2iFunding safer and more secure.
Always ahead of the innovation curve, Rubique has yet again demonstrated its focus on making financial solutions accessible to as many users as possible. The one-stop online marketplace providing technology enabled end-to-end solutions to financing needs of individuals and SMEs has just localised its Rubique Associate app.
The interactive app now live in Hindi, Marathi and Bengali language will now enable more number of potential Business Associates to register with Rubique and earn a commission for every reference search for loans or credit cards.