Thursday June 7 2018, Daily News Digest

Lending Tree Purchase APR by Month

News Comments Today’s main news: Circle seeks a banking license. Revolut has 2M users. Ping An looks beyond insurance. TransferWise partners with first big bank. Today’s main analysis: How microfinance is navigating the fintech revolution in Africa. Today’s thought-provoking articles: Where retail credit, charge cards are used the most. The case for a VRP strategy. A different type of Know Your […]

Lending Tree Purchase APR by Month

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Crypto Unicorn Circle Aims to Expand Into Regulated Banking (Bloomberg) Rated: A

Circle Internet Financial Ltd., one of the world’s most valuablecryptocurrency platforms, is looking to make a big leap into the highly regulated realm of U.S. banks and brokerages.

The venture, partly backed by Goldman Sachs Group Inc., plans to seek a federal banking license to provide more services to customers. It also intends to pursue registration as a brokerage and trading venue with the Securities and Exchange Commission, so it can help investors buy and sell tokens deemed to be securities.

LendingTree Releases Monthly Mortgage Offer Report for May (PR Newswire) Rated: AAA

LendingTree today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

Source: PRNewsfoto/LendingTree
  • May’s best rate offers for borrowers with the best credit profiles had an average APR of 4.35% for conforming 30-year fixed purchase loans, up from 4.26% in April.
  • Refinance loan offers for borrowers with the best profiles were up 12 bps to 4.35%.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 10 bps to 5.02%. The loan note rate of 4.91% was also up 10 bps.

CompareCards Study Reveals Which Places Use the Most Retail Credit and Charge Cards (Benzinga) Rated: AAA

CompareCards by LendingTree today released the findings of its study on the places that use the most retail credit and charge cards. The study found that some metro areas are home to heavy users of retail cards while other locations have a population who use retail cards more sparingly.

Nationally, 61.3 percent of credit card owners have at least one retail card. Of those who have at least one retail card, 30.4 percent carry a balance on a retail card, representing 11.4 percent of outstanding balances. The average balance on a retail card in the U.S. is $2,699.

Highlights from the report:

  • Residents of McAllen, Texas are by far the highest users of retail credit and charge cards. The metro earned a final score of 87.2 and ranked first in these categories:
    • The number of people who have retail cards (72%)
    • The number of retail card owners who carry a balance on their retail cards (45%)
    • And the percentage of credit card debt carried on a retail card (17%)
  • People in Charleston, S.C. have this retail card claim to fame: They carry the highest balances on their retail cards among all 100 metros, with an average balance of $4,026and a median balance of $1,746. Meanwhile, Albany, N.Y. had the lowest average balance ($2,420).
  • Honolulu has the lowest retail card usage, with a final score of 9.4. Although it didn’t rank last in any individual category, it ranked extremely low in all.
Source: Benzinga and CompareCards

AQR MAKES THE CASE FOR A VRP STRATEGY (all About Alpha) Rated: AAA

AQR Capital Management, the Greenwich, CT-based global investment firm, has posted a new discussion of thevolatility risk premium and of the advantages of strategies based thereon.

In principle the premium would disappear if markets efficiently estimated the probability of significant losses. But it remains, because investors are risk averse and tend to overestimate the probability of substantial losses.

QR models an investor who was hypothetically long the S&P 500 from 1996 to 2016, while hedging his position with a continuously rolled one-month 5% out-of-the-money put. The hedged strategy will in fact lessen portfolio volatility as measured against simply being long in the S&P without the hedge. Vol falls from 16.1% in the latter case to 14.7% in the former.

But, as noted, this risk aversion comes at a hefty cost. Average portfolio returns decline from 5.1% to just 1.8%.

Unchained Capital Raises $ 3M To Lend Fiat To HODLers (Crunchbase News) Rated: A

Austin-based crypto-finance startup Unchained Capital has raised nearly $3 million in seed funding. Unchained’s first product is a crypto asset-backed loan, which is like borrowing against one’s home—except the company lends against digital assets such as bitcoin and ethereum.

The round includes $2.4 million in new capital and $595,000 of SAFE notes converting.

Court upholds sanctions against lawyers, KC firm in payday case (Kansas City Business Journal) Rated: A

A federal appeals court upheld $150,000 in sanctions levied against Stephen Sixand Austin Moore of Stueve Siegel Hanson LLP in Kansas City, Darren Kaplan of the Darren Kaplan Law Firm PC in New York, and their respective law firms.

The plaintiff filed a class-action lawsuit that wasn’t against the online payday lending companies themselves, but against four nonlender financial institutions — Generations Federal Credit Union, BMO Harris Bank, Four Oaks Bank & Trust Co. and Bay Cities Bank — that processed the debit transactions and were paid fees.

LoanNow Reviews: Beware Personal Loan Offers With Sky-High APRs (Student Loan Hero) Rated: A

That’s where online lender LoanNow comes in. LoanNow reviews your application even if you don’t have strong credit.

Here are the ranges for APRs and repayment terms in the six states that LoanNow operates in as of June 6, 2018. Double-check the LoanNow website for the latest rates.

State Loan amount APR Repayment term
Alabama $2,500 – $5,000 29.00% – 229.00% 12 – 48 months
California $2,500 – $5,000 29.00% – 229.00% 12 – 48 months
Georgia $3,100 – $5,000 29.00% – 59.00% 12 – 48 months
Missouri $1,000 – $2,500 29.00% – 299.00% 9 – 24 months
New Mexico $2,600 – $5,000 29.00% – 229.00% 12 – 48 months
Utah $1,000 – $2,500 29.00% – 299.00% 9 – 24 months

Startup Aims to Disrupt High-Interest Payday Lending With Blockchain (Thirty K) Rated: A

Meje Tuyo thinks the payday loan industry is ripe for disruption and he wants to do it using blockchain technology. Specifically, Tuyo wants to deliver more equitable access to loans through Owo, a startup venture set to debut this fall. The company’s name means “money” in the West African language of Yoruba.

Tuyo, a native of Nigeria, is looking to, at first, address the challenges of African Americans, a population that relies more on payday loans than other groups. Another study from the Pew Charitable Trusts from 2012 found that 12 percent of African-Americans had taken out payday loans, compared with 4 percent of whites and 6 percent of Hispanics.

The company plans to launch an app called Pazimawhich will allow consumers to request loans that will be automatically repaid when they receive their paychecks.

Renovate America Named “Esoteric ABS Issuer of the Year” (PR Newswire) Rated: B

Renovate America, a leading provider of home improvement financing, has been recognized as “Esoteric ABS Issuer of the Year” in the 2018 U.S. Securitization Awards announced by GlobalCapitalmagazine. The award recognizes Renovate America’s position as a leader in the esoteric ABS market, which includes not only PACE, but also equipment leasing, containers, marketplace lending, whole business, solar, and cell tower deals, to name a handful.

Sallie Krawcheck thought she hated banking (Business Insider) Rated: A

  • Sallie Krawcheck spent years as a Wall Street exec, commonly called “the most powerful woman on Wall Street.”
  • But when she got her first investment banking job in her early 20s, she hated it, and even went back to business school to transition into her dream jobs in media.
  • It wasn’t until she asked herself what she loved about media that she could find in banking that she found a place in equity research, which launched her into a series of executive roles on Wall Street.

David Mitchell Joins White Oak Business Capital as Senior Vice President and Senior Business Development Officer (Globe Newswire) Rated: B

White Oak Business Capital, Inc. (“WOBC” or White Oak), an affiliate of White Oak Global Advisors, LLC, today announced the appointment of David Mitchell to the role of Senior Vice President and Senior Business Development Officer, responsible for expanding business in the Southeast and Mid-Atlantic markets.

United Kingdom

UK fintech start-up Revolut reaches 2 million users (The Telegraph) Rated: AAA

London fintech start-up Revolut has announced that it has grown to 2m users following its launch in 2013.

Revolut said that it has now signed up 2m customers in Europe ahead of plans to launch in the US this year. Customers have also made over 100m transactions, the company said, with a monthly transaction volume of $2bn (£1.4bn).

Going tribal: A different type of ‘know your customer’ (Mortgage Finance Gazette) Rated: AAA

The fintech industry is coming of age. Global investments in the sector have grown from $20 billion in 2014 to $39 billion in 2017, according to Fintech Global. Fintechs like Transferwise, Nutmeg, Revolut, Starling Bank and Funding Circle in the UK have grown rapidly over the last five years. A large reason for this success is attributable to the way fintechs are able to develop deep relationships with their customers who rally around them in an almost tribe-like manner. Successful firms manage to convert isolated customers into communities and finally highly engaged ‘tribes’.

Fintechs that have successfully demonstrated that they can generate a sense of community within their customer base share the following six characteristics.

  1. Transparency-or at least the perception of it – is a great way to build trust and attract younger customers. Transferwise publishes its rate card in full on its website for instance.
  2. Reachability-In general, fintechs are much more in tune with what their customers want to be developed next. Revolut got this formula right from the start – this has helped them to grow to a $1.7 billion company in just 33 months.
  3. A sense of purpose-A large part of fintechs’ success in tribe-building is their ability to generate the sense of a greater purpose. Fintechs are typically focussed on achieving a specific goal which on its own, is mundane and something on the lines of – ‘help you transfer money cheaply’. However, this mundane goal is transformed into a grandiose vision when put into the intended context— ‘transfer money cheaply and beat the big banks at their game’. An origin story is the final touch required to transform this vision into a sense of purpose for the community – ‘transfer money cheaply, beat big banks and be a part of something meaningful’.

The growing popularity of bridging loans for investors (Property Week) Rated: A

This trend has only been exacerbated by Brexit as the ongoing uncertainty around Britain’s exit from the EU leaves borrowers, banks and new lenders without a clear picture of the next few years.

In light of this, bridging loans are increasingly popular as a short-term solution for investors and a way for high-net-worth individuals to see a return on capital.

Although the recent rise of bridging loans is associated with specialist lenders, particularly in the commercial space offering non-FCA regulated loans, the product originated as an option for property buyers to bridge a gap between exchanging contracts and completion of a sale where you needed to purchase a property in the interim but did not have the capital.

China

Chinese Giant Ping An Looks Beyond Insurance To A Fintech Future (Forbes) Rated: AAA

Global 2000 list — look beyond the stodgy insurance business and into the realm of high technology, whose tentacles reach into every aspect of commerce in China and eventually show up in the mobile handsets of Chinese consumers.

European Union

Klarna at Money 20/20: Banks are obsessed with themselves (Bobs Guide) Rated: A

In a presentation entitled ‘Banking on the CX factor’, Klarna CEO Sebastian Siemiatkowski spoke to a packed crowd under The Big Top at Money 20/20 EU, Amsterdam, today, taking the opportunity to open fire on the banks.

The audience heard insight from Klarna on customer experience, including the fact that, according to the Happiness Index, consumers are more stressed and unhappy than ever before.

Auto1 Joins Deutsche Bank, Allianz in Fintech Car Financing Push (Bloomberg) Rated: A

Auto1 Group GmbH is partnering with Deutsche Bank AG and Allianz SE as the German startup expands into fintech to ease financing for customers buying its used cars.

The three partners together own more than 50 percent in a new company called Auto1 Fintech, that will offer refinancing loans and insurance products to car dealerships buying SoftBank Group Corp.-backed Auto1’s vehicles, co-Chief Executive Officer Hakan Koc said Wednesday in an interview.

International

TransferWise just partnered with its first big bank (Business Insider) Rated: AAA

UK-based cross-border money transfer company TransferWise has announced a partnership with France’s second-largest bank, BPCE Groupe, that will take effect at the beginning of 2019. Under the partnership, TransferWise will provide international money transfer services for BPCE Groupe’s customers, enabling them to send money in different currencies with TransferWise’s low standard fees.

Source: Business Insider

StartUp Nation Ventures Announces the Israel-Florida Innovation Alliance’s First Call for Proposals (PR Newswire) Rated: A

StartUp Nation Ventures (“SUNV”) in partnership with the Israel Innovation Authority (“IIA”) is proud to announce the initial Call for Proposals through the Israel-Florida Innovation Alliance (“Innovation Alliance”).

The Innovation Alliance was created to support Israeli innovation companies in the discovery and selection of Florida as their destination to establish U.S. headquarters—a gateway for expansion into the U.S., and Latin America markets.

The joint collaboration between SUNV and the IIA establishes a scalable platform to support Israeli companies that have proven the feasibility of their technologies and have a minimal viable product or working prototypes for the U.S and Latin America markets in the following areas:

  • Financial Technologies (FinTech), Blockchain, Cybersecurity, Augmented Reality/Virtual Reality (AR/VR) Entertainment, Cryptocurrency, Initial Coin Offerings (ICOs); and
  • Tech Innovation related to smart contracts, supply chain, asset verification, certification, identity, health and financial transactions, digital and mobile payments; capital markets & investing, banking & corporate finance, financial platforms, crowdfunding & peer-to-peer lending, and personal financial management.

How Fintech Is Disrupting the Personal Loans Market (The Market Mogul) Rated: A

Lending has experienced one of the biggest changes in the traditional banking marketplace with financial technology startups, or simply, fintechs, introducing disruptive products to consumers. Peer-to-peer lending platforms have been at the forefront in this space, but recent developments suggest more could be about to unfold over the coming years.

Startup lending companies have managed to gain a substantial chunk of the market over the last few years. According to credit analysts, this growth has been driven by personal loans. In a report published by TransUnion late last year, it was established that fintechs continue to disrupt the personal loans market at an alarming rate. In the report titled Fact versus Fiction, the TransUnion study found that fintechs have grown from a mere 1% of personal loan originations in 2010 to one-third of the entire personal loan market in 2017.

The 32% market share for fintechs in the personal loans market was more than the 29% for banks, 24% for credit unions, and 15% for traditional finance. This clearly shows that fintechs are on the path to dominate the entire lending market if the momentum can be maintained.

Here’s why robo-advisors won’t replace human financial advisors (CNBC) Rated: A

Robo-advisors give retail investors access to automated investment strategies, creating portfolios and coming up with an asset allocation that’s based on client data points, including time horizon and risk tolerance.

As convenient as it may be, this technology doesn’t make human financial advisors obsolete, said Joe Duran, founder and CEO of United Capital.

That’s because robo-advisors fail to account for the complexity of financial planning, he says.

Cambridge Centre for Alternative Finance Launches Global Research (Crowdfund insider) Rated: B

Having now tracked alternative finance for five years, and from this relatively short perspective, the Centre has noted an emerging industry that has progressed quickly. Where once there were only handful of early adopters and innovators in a given country, they now see an “altfin” landscape that is growing rapidly, with an exponential number of new platforms driving competition and introducing new products.

In many regions (the EU, UK, USA) the Centre is also seeing their first cases of consolidation, but with continued diversification of products and services to customers.

Africa

MICROFINANCE PAPER WRAP-UP: “How Microfinance is Navigating the Fintech Revolution in Africa” (MicroCapital) Rated: AAA

We are also looking to provide insight for microfinance stakeholders into how MFIs can leverage Fintech solutions to remain competitive in the rapidly changing financial landscape in Africa. While it is still too early to present a definitive response to the opportunities and challenges of Fintech, we are
convinced that MFIs will need to adapt to succeed in this increasingly dynamic microfinancing environment in Africa.

Source: Triple Jump

Fintech is considered more as an enabler than as a disruptor.

  • The MFIs surveyed perceived Fintech more as an opportunity than as a threat to their business (see graph 3: 88% consider it as a (very) great opportunity, while only 35% see a moderate to high threat).
Source: Triple Jump
  • Few MFIs foresee increasing competition in the future from Fintech-based (B2C) companies. This is explained by the fact that most digital lenders enter relatively easy markets with a target audience that is tech savvy, literate and more urban and where data and technical infrastructure are already available. But to access more informal and rural client segments effectively, these Fintech players face a number of challenges, such as client acquisition, initial high write-offs and limited profitability.

Read the paper in full here.

Asia

The Trillion-Dollar Investment Trend You’ve Never Heard Of And How You Can Be A Part Of It (Indonesia Expat) Rated: AAA

You can support Indonesian micro businesses and help them grow and thrive by investing in their loans. A leading, Indonesia-based peer-to-peer lending platform lets you do just that in just a few simple steps. Mekar (PT Mekar Investama Sampoerna) connects you, the investors (also called ‘funders’ in Mekar) from all over the world, with micro businesses in many provinces in Indonesia that are in need of funding.

About 99% of the micro businesses that are seeking loans in Mekar are run by women. Loans in Mekar range from around Rp 2 million (US$ 140) to Rp 8 million. For the last couple of years 99.5% of these borrowers have repaid on time.

Source: Indonesia Expat

Authors:

George Popescu
Allen Taylor

Taking Trade Finance to SMEs

trade finance SMEs

The financial crisis of 2008 led to many developments in fintech generally and alternative lending specifically. We’ve heard many of those stories before. One of the problems the crisis revealed is the restriction of capital, particularly among international small- to medium-sized enterprises (SMEs). Another problem was the massive proliferation of mobile coupled with the “digital […]

trade finance SMEs

The financial crisis of 2008 led to many developments in fintech generally and alternative lending specifically. We’ve heard many of those stories before. One of the problems the crisis revealed is the restriction of capital, particularly among international small- to medium-sized enterprises (SMEs). Another problem was the massive proliferation of mobile coupled with the “digital self” that allowed lenders to identify the types of businesses people engaged with. Digital data became a game changer for a lot of companies employing new technologies. One company got the bright idea to solve both of these problems with a single solution aimed at SMEs making their first entrance into the online ecoystem.

Who Are Kountable, And Why Do They Count?

Kountable saw its genesis in 2013 with CEO and Co-founder Chris Hale getting together with co-founders Craig Allen and Kathy Numera.

“We looked at trade finance in a different way,” Hale said, adding that one of his co-founders spent 30 years doing trade financing at the institutional level. Typically being an instrument extended by banks, Kountable puts the emphasis on the finance rather than the trade part of the equation. The financial crisis, Basel III, and other regulations that followed handcuffed banks in their ability to extend capital to SMEs. Kountable stepped in to fill the void.

By using a cloud-based platform for the import and export of goods, Kountable gives SMEs access to trade. By outsourcing third-party logistics and bringing curated transactions so deals get institutional level treatment, the company helps SMEs sidestep problems they would typically have accessing top tier products.

Currency management is one area that requires Kountable’s due diligence. As they buy in one currency and deal in another, there are commercial terms, such as paying suppliers, during negotiations.

The company is successful when it simplifies the translation between big and small. Hale said, in most trade finance deals, you have big-to-big (that is, enterprise-level business trading with enterprise-level business). For example, Cisco might sell a network bridge to a multinational corporation. But when you have a small business involved (Cisco selling to a bank in East Africa, for instance), Kountable ensures that everyone gets the same retail treatment. By bringing users together in a mobile app on a cloud-based system, the company makes it seem institutional to both parties.

“The asset is a trade receivable,” Hale said. For example, an alternative credit fund that extends a $150M line of credit. “We align ourselves with the success of the transaction by pricing our service like a margin-sharing arrangement.” The four-step process includes:

  1. Kountable collects directly from the end customer
  2. The bank buys new servers from Cisco
  3. The reseller negotiates the margin for the procurement process, importation, and installing services
  4. Kountable takes a portion of the margin for the trade services it provides.

The Three Components of the Technology

The technology includes three key components:

  1. Identity management—The small business reseller downloads a mobile app and shares his or her data with Kountable. That includes social media, business registration, and personal info about the owners and shareholders. Kountable builds a “robust profile” on the SME and runs Know Your Customer (KYC) and Anti-Money Laundering (AML) processes for validation. The company also looks at supply, and, if it’s a private business, customs. The company looks at trade as a network. The more transactions they do, the more the network effect creates a safe environment for more transactions.
  2. Cloud-Based Control Management System—This digitally manages assets on the operating side and the financial side of a trade transaction. Hale said it’s tricky because there’s not a lot of financial data inside the transaction. Most of the info is operational. That is, goods are paid for and shipped–in transit, through customs, etc. Traditional financial institutions aren’t set up for this. This system manages the operations and payment of this trade asset. The reason it’s important to have collaboration taking place between the reseller and the in-country partners (who help with the documentation of the banking relationships, clearing customs, and more) through the mobile app with the Kountable team in San Francisco is that they all plug in to make sure transactions go smoothly. These two elements combine to create a financial asset.
  3. Trade Accounting Service—The investor who extended the $150M line of credit (LOC) is consuming trade receivables as collateral. The trade accounting service will be able to report on the synthesis of the financial and operating information in order to report the portfolio value to the investor.

Not being a formal venture fund, Kountable is a “traditional single family office with a portfolio of private companies with double bottom lines.” The company has raised $15M, 85% of which came from the family office with capital added from other investors. These are for-profit companies, of course, but the business focus is on the “larger good.” The concessionary returns the company receives by leaving some of the money on the table to make a significant impact is a part of the reward.

Kountable Key Differentiator and KPIs

“Our committed focus is to the SME,” Hale said. This led the company to build a network of enterprise-level participants and a technology platform to cater to that user. “Most other trade platforms focus on digitization of a two-party trade,” but it’s all “enterprise to enterprise.” Kountable was created to help the global SME population. “That focus on the SME as the user has created an ecosystem unlike any other platform I’m aware of.”

Kountable has about 5,000 SMEs registered and moves $3 million per month in trade transactions. That’s in two countries–Kenya and Rwanda. Interest from 40 other countries has led to building a platform to address the market demand.

“We have a line of sight to profitability just by working within these two markets,” Hale said. “[We’re] building
global expansion to go outside of the family office this year.”

SMEs in Kountable’s two markets buy goods from the U.S. and work with U.S. supplies to sell to customers in East Africa products they wouldn’t have access to otherwise. In the year ahead, Kountable plans to work with U.S. SMEs on similar transactions.

Kountable’s Competition and the Future of Trade Finance

Kountable’s competition consists of large procurement companies, groups like Tradeshift, and financial relationship companies. On the other side, there are e-commerce platforms, like Amazon, that are more consumer focused.

“There really isn’t a competitor that fits together a solution targeting our market specifically,” Hale said. The competition is mostly peripheral.

Hale believes the future is going to see trade financing dramatically influenced by digitization across the board. “The players are focused on enterprise-level digitization, where invoicing becomes an Application Programming Interface (API) and customs brokerage becomes digitized. As that continues, the nature of trade financing will evolve toward a a focus on operations.” He sees this evolution ultimately leading to the incorporation of the blockchain. “The elements of smart contracts and the distributed ledger are very well suited to the network approach to trade facilitation.”

Kountable’s near-term plans are to continue demonstrating the universality of its solution. Hale said they have significant demands in many regions of the world, including the U.S., and the goal is to plant some flags in some specific markets. Along with the U.S., he mentioned Southeast Asia and Latin America as potential growth regions. “There are many elements of our transactions that are replicable across different verticals and different regions,” he said.

Conclusion

The company is looking to internalize its engineering team and build its other respective teams. They have a number of product launches in the next quarter and a half including a redesign of the mobile app. Beyond that, Kountable is focused on growth capital for market expansion, enterprise sales, and putting in place the legal and financial structures needed to move into Southeast Asia markets like Vietnam, Thailand, and Malaysia.

By focusing on the double-bottom line, Kountable not only has a bright future in the spaces of trade and trade financing, but the company is also doing its part to improve the quality of life in areas of the world where goods, services, and technology would be otherwise less accessible. And while it isn’t evident if the company will ultimately succeed, it’s certainly evident that it should.

Authors:

Written with Paul Keenan.

Allen Taylor

6 Blockchain-Based Crypto Lenders Changing P2P Lending

ETHLend

The integration of blockchain technology into multiple facets of our world could greatly streamline many industries that affect our day-to-day lives, and financial lending is the ideal forum. A natural progression of P2P lending, blockchain application can make the entire lending process more seamless and greatly reduce the amount of time the process takes. Here […]

ETHLend

The integration of blockchain technology into multiple facets of our world could greatly streamline many industries that affect our day-to-day lives, and financial lending is the ideal forum. A natural progression of P2P lending, blockchain application can make the entire lending process more seamless and greatly reduce the amount of time the process takes.

Here are a few of the players in the early days of this promising technology.

SALT (Secured Automated Lending Technology)

According to its website, SALT is the only platform built to facilitate loans secured by blockchain assets.

“Distributed ledgers represent a paradigm shift in the storage and transfer of assets and, for the first time in history, there is a perfect form of collateral: blockchain assets,” the website reads.

Basing loans on blockchain assets makes creditworthiness no longer an issue. Writing for Forbes, Roger Aitken reported that SALT asserts that, by focusing on the borrower’s assets instead of their credit score, it is able to “dramatically reduce the complexity and cost of the loan process.” SALT seeks to streamline every step of the loan process, facilitating a new blockchain-backed lending market.

The investor retains the value of their holdings, with any earnings or losses that occur to the wealth during the process reverting completely to the borrower.

Among the potential assets to blockchain-based coin lending are that it is a realm where crypto wealth is recognized. Company CEO Shawn Owen, speaking with Forbes, said “if you’re a holder of blockchain assets, a lot of your financial wealth is not being recognized by lenders.” This technology is poised to open those funds to be leveraged and also break down geographic constraints while bringing the potential for the unbanked and underbanked into the financial world.

SALT offers three value tiers and products.

  1. The basic membership package affords one up to $10k in term financing, paid only in USD; terms go from three to 24 months
  2. The premier package offers up to $100K in term financing with a line of credit. This can be paid in USD, Euro, GBP, JPY, and RMB. Term lengths are anywhere from one hour to 36 months.
  3. The enterprise package provides access to over $1M of term financing and a line of credit to be paid in an ad hoc currency selection, dictated by metered terms. This package offers two benefits that the premier package doesn’t–API integration and cold storage enterprise wallets.

All three packages offer no pre-payment penalties, market data and educational resources, and loan management web portals. The premier package offers access to the SALT hardware wallet, customizable loan terms, and early access to new products. These are not offered with the basic membership package.

All member lenders are Regulation D accredited investors, and while credit checks are not done on borrowers, SALT undertakes full Anti-Money Laundering (AML) and Know Your Customer (KYC) verification checks.

The loans, which sport interest rates in the 10 to 15 percent range, are not transferable via the blockchain, as they become securities and are thus transferable through existing financial channels.

EthLend

EthLend is an Estonian-based fully decentralized P2P lending platform on the Ethereum blockchain for lending Ether as tokens for collateral. The platform uses any ERC20 token. All lending on the platform is facilitated through the use of smart contracts, a feature unique the Ethereum blockchain.

The company’s Twitter feed from January 3 reports that it has reached nearly $600K USD in lending volume. The company offers address-to-address loans that are sent within minutes, with no middle men, assuring that no one, not even EthLend, can stop one’s lending or borrowing.

With a roadmap that goes into Q4 2019, the company seems to have a well-plotted vision. Included in that roadmap are:

  • Q1 2018—Plans for a Decentralized Credit Rating (DCR), which will draw on Credit Tokens (CRE) and previous loans on EthLend to create a decentralized credit rating that can be used for other Decentralized Applications (DAPPs) as well
  • Q2 2018—The addition of bitcoin to the DAPP
  • Q2 2018—CRE from third party services, such as uPort and Civic, which can be used when the borrower doesn’t have enough previous loans
  • Q4 2018—the incorporation of the lending of other altcoins and tokens
  • Q3 2019—expansion beyond Ethereum to other distributed ledger networks

Rating the company, CrushCrypto.com says “use cases may seem limited for now, but we believe as tokenization of real assets becomes more prevalent, EthLend has a good chance to become a market lender in this space.”

A pre-ICO lasting from September 25th to October 25th of last year sold 62.5 million LEND available at a sale price of 1 ETH = 25K LEND. The ICO, which ran from November 25-30, saw the company raise $17.86M USD, essentially 100% of the $17.9M goal.

In Q4 2107, the company opened up to USD-based loans and installments.

The platform is not without some aspects that may cause concern for some industry insiders. Certain functions are only accessible with LEND tokens, such as featured loan listings and email marketing for new loan requests. Also, EthLend is currently only available through the Eidoo ICO search engine.

On the upside, only dealing with crypto-to-crypto borrowing means there will be fewer regulation restrictions when those start to be handed down. Also, some insiders fear that other blockchain lending platforms that deal in fiat currencies might be swallowed by the banks, as they do open their transactions to become securities.

ICO Bench rates EthLend at 4.4 out of 5.

Celsius

Celsius is a New York-based NPO based on the Ethereum blockchain, which extends instant credit through a decentralized P2P network. The network is akin to a membership organization that consists of both lenders and borrowers. Members must complete a Celsius profile to join.

Celsius touts itself as the “first crypto wallet that allows users to earn interest (7%) on their held coins” and allows borrowers to use cryptocurreny as collateral to gain access to USD loans. Using a token called a DEG, Celsius deals in BTC, ETH, and USD and uses smart technology to bind the lender/borrower relationship.

Borrower’s metrics are ascertained by using the Celsius Score, a digital credit score calculated by using various traditional metrics, such as FICO scores and mortgage history, as well as non-traditional ones such as Uber and Amazon histories. Lenders choose their borrowers using this score to determine risk.

An NPO acting in the best interests of its users through lower fees and no hidden fees, Celsius’s ultimate goal is to give credit to large blocks of the public who are underserved by banks.

ICO Bench rates Celsius at 2.8 out of 5. The central reason for the less than stellar mark centers around the company being long on marketing, but less so in technology terms.

Some Other Players

Fusion LenderComm

Seven banks, including BNP Paribas, HSBC, ING, BNY Mellon and State Street, have joined forces with R3 and Finastra to develop a blockchain-powered marketplace for syndicated loans. The first pilots have already been successfully completed.

With the early support of seven global banks (two of which do not yet wish to be named), the platform will cover 10% of the syndicated loan market when live next year.

Inspeer

An expansion under the Russian LightFin.ru brand, Inspeer deals in crypto and fiat. The company serves three million regional customers and processed 200,000 loans in its first year.

LendingBlock

For those who like to be in the know a little earlier, there is LendingBlock, a securities lending platform for crypto and digital assets. Users can lend and borrow cryptocurrencies against collateral of other cryptocurrencies in a completely decentralized and private manner. Watch for a Q1 token presale and a Q3 launch. LendingBlock is not currently working with fiat currencies.

 

Conclusion

The business of cryptocurrency lending is looking like the Wild West. There are some promising players to consider, and more if you look. SALT has Erik Voorhees associated with it, who founded Coinapult and gambling site SatoshiDice. He is a long-time cryptocurrency and blockchain advocate.

Do your own homework to make informed choices, but if crypto lending is in you future, start your research with these platforms.

Author:

Written with Paul Keenan.

Allen Taylor

A Distributed Ledger For Alternative Lending, KYC, Digital Identity

SAP blockchain solution

SAP’s website is asking us to “Imagine people, businesses, machines, and algorithms all communicating in a frictionless way—where data sharing is fast, open, yet completely secure for all parties.” That’s what the company is seeking to offer its customers with the incorporation of blockchain technology to its Leonardo IoT (Internet of Things) portfolio. The early […]

SAP blockchain solution

SAP’s website is asking us to “Imagine people, businesses, machines, and algorithms all communicating in a frictionless way—where data sharing is fast, open, yet completely secure for all parties.” That’s what the company is seeking to offer its customers with the incorporation of blockchain technology to its Leonardo IoT (Internet of Things) portfolio.

The early evidence shows that isn’t such an unimaginable thing at all. In the middle of last month, the company joined with the Alastria Consortium and the Blockchain in Trucking Alliance (BiTA) bringing 27 customers and partners with a total market value of $819B. The partnership is evidence that we can imagine a seamless future in the lending industry and beyond.

And what are the benefits that the members of these consortiums believe in so much?

Benefits of Blockchain

The blockchain, a true P2P network, will reduce alliance on some types of third-party intermediaries such as banks, lawyers, and brokers. The transactions not being limited by office hours, the blockchain can speed up process execution in multi-party scenarios. The fact that all of the information is viewable by all parties and cannot be altered promises to reduce fraud and create trust. The use of the distributed ledger technology (DLT) will provide quick ROI by helping businesses create leaner and more efficient processes, which will make them more profitable.

The distributed and encrypted nature of the blockchain makes it difficult to hack and promises greater IoT security. The blockchain is also programmable making it possible to trigger actions, events, and payments once conditions are met.

Our interview with Nadine Hoffman, innovation manager for SAP Financial Services, and Juergen Hofman, the company’s social manager for financial services, sheds a light on the benefits to business and industry and why SAP is a fitting company to grow these advances.

SAP’s Application of the Blockchain

While using the company’s hyperledger as a base structure, Nadine tells us that having encountered so many potential partners who want to add to the existing product has led the company to being what she terms as “tech agnostic.” She expands by saying, “We offer infrastructure to connect existing technology and advantage to combine with other technology, using machine learning to take the best of all worlds specifically for process and use.”

She says the DLT will help companies discern what the best technology is for their needs, with a focus on lending.

The full life cycle of lending is a slow and complex process because there are so many parties to cooperate with. Nadine tells us that onboarding can make it seamless with the use of the DLT. The blockchain customer owns their own data and is in charge of how and with whom it is shared, which leads to greater transparency. The ownership of a “single source of truth” will allow customers to reach real digitalization.

Juergen chose to focus on two examples of the benefits SAP has already seen, one in the area of bonded loans and the other as pertains to KYC (know your customer).

In the case with bonded loans, as SAP exhibited through its partnership with Deloitte, the bond comes with a bond and a loan aspect, but since it isn’t dealt across a stock exchange, it isn’t subject to DOC rules. Also, we once again see speed and efficiency as an upside. With the exchange and confirmation of information and requests for changes, the process of issuing bonded loans manually is more time consuming. What’s more, if a customer later wants to sell his or her share, banks might not be aware of it, which creates KYC issues.

The Deloitte blockchain solution creates a digital asset and different investors buy a piece of it. It serves as a marketplace, a shop window, and source of P2P transactions. The offering can be made to all of the peers in a network and to a specific network.

When it comes to KYC benefits, it’s really pretty simple. Juergen gives us this example: You walk into a bank you want to do business with. You have to provide them with all of your information. Then, you want to do business with another bank, and you have to do the same thing. The distributed ledger solution is to store a customer’s ID and link it to their personal documents, which are not stored on the blockchain. Once the transaction is cleared, the link is established and the documents are accessed to prove identity and the onboarding process continues. In this, SAP provides a solution to KYC issues, with running proof of identity.

In terms of regulation, Juergen says the data of a trade must be tamper proof, and the SAP DLT can be advantageous to those ends in that it records transactions as a “single source of truth,” which is tamper proof and contains info that is easier to access in real time.

SAP’s Blockchain Application Over Its Competitors

Nadine tells us that SAP has the edge over its competition because the company is active in 25 industries, not only in lending cases, but in all of its DLT cases. She reminds us that, quite often, the company is doing work that spans multiple industries. The SAP DLT breaks down former silos and gives a 360-degree view of a chain. Working across industry lines in this manner helps to create the ease with which parties from all industries can integrate.

Juergen underscores this, adding that, in the case with bonded loans, the company’s advantage is that it has strong capabilities with its other solutions.

Still, the technology being what it is, and the company’s tech-agnostic stance, means that there really is no competition. Yes, there are similar offerings from other large software companies, but there’s a lot of space in the market for more than one company to find the right footprint.

SAP Blockchain Performance Benchmarks

The technology is still evolving. It is not yet mature, which means we have no history of performance to report. Currently in the pilot phase, the technology will go live and be available soon.

When it does become available, SAP’s DLT will become so for everyone, and Juergen tells us that there won’t be a typical customer. From small firms to major banks, the broad range of companies in business with SAP, along with the global reach of the company, help to create a blockchain that will benefit fintech companies as well as traditional companies as the technology changes how everyone does business.

SAP’s Fit with the Direction of the Industry

Nadine assures us that SAP is pleased with its tech progress and that they have multiple use cases ongoing in every industry–public sector, telecom, and healthcare; and that every industry is working on blockchain topics but not limiting technology. Through the IoT, machine learning, and DLT, the company is furthering its investigation into and introduction of new products for customers.

Nadine also sees the advantage of the openness of the market. “There are a lot of players approaching lending, not only banks. Industries are creating their own banks and creating alternative lending markets. We’re investing in all of this.”

When asked what the company is looking for right now, she assures us that SAP is “very good” when it comes to the tech side. The hurdle to face now comes from the legal and regulatory side. That is on its way she tells us.

Conclusion

It seems only rational to think that we are going to get to the point where the blockchain is in place and well-functioning in accordance with the SAP vision. This is the latest and most adroit technology when it comes to the streamlining of data sharing and acquisition, and it’s just human nature to go down new avenues and do what comes next. We learn beyond what we had previously known and we use it to make our lives better and easier, and that’s what we’ll do with the blockchain.

Is there any reason to think that SAP won’t be one of the companies at the forefront of this application? Not at all. With the company’s vision, establishment in all industries, and existing IoT and DLT structures, they are a safe bet to be among the leaders paving the way into this seamless version of what’s next.

Author:

Written by Paul Keenan.

Monday November 6 2017, Daily News Digest

SoFi CLP 2017-6 structure

News Comments Today’s main news: Lending Club considering bid for bank charter. N26 to launch in the UK. TransferWise hooks $280M investment for APAC expansion. Zopa vows rate hike won’t impact loan performance. Hexindai debuts on NASDAQ with 60% increase. Westpac profits AU$7.99B. Kaodim raises $7M. Today’s main analysis: SoFi’s latest consumer lending deal. Today’s thought-provoking articles: How payment tech is […]

SoFi CLP 2017-6 structure

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

Lending Club eyes charter as landscape evolves (Global Capital), Rated: AAA

Lending Club is exploring the idea of operating as a bank or obtaining a fintech bank charter in order to keep pace with a changing lending and regulatory landscape, an executive from the marketplace lender said on Thursday.

Speaking at the Digital Lending + Investing conference in New York, Valerie Kay, Lending Club’s head of institutional investor group, said that the platform is considering both pathways as the business grows.

How payment technology is being disrupted (The Next Web), Rated: AAA

One of the earliest changes involving the payment industry is how banks and customers behavior is shifting with one another. Quite simply, people have different expectations with how money should move, as well as how quickly. This is a cross-generational phenomenon and something that banks are trying to keep up with.

According to Bank Innovation, approximately 70 percent of millennials now do their banking online.

According to Business Insider, peer-to-peer payments alone are on pace to be worth $86 billion by 2018. And with the popularity of apps like VenmoPayPal, and even Square Cashcontinuously on the rise, this trend doesn’t show signs of slowing down anytime soon.

CurrencyPay, an online payment system that not only finances major equipment for businesses, but extends online payment methods from credit and debit cards to include ACH or wire, all the while reducing fees across the board.

SoFi’s Latest Consumer Lending Deal (PeerIQ), Rated: AAA

On Thursday, President Trump announced his nomination of Jerome Powell to succeed Fed Chairwoman Janet Yellen as the next chairman of the central bank.

Also on Thursday, President Trump rolled out his new tax plan which reduces the number of tax brackets from seven to four and cuts the corporate tax rate to 20% from 35%. Relevant to marketplace lenders, the tax plan reduces the mortgage interest deduction cap by half.

SoFi’s Latest Consumer Lending Deal

SCLP 2017-6 is the largest deal on SoFi’s shelf, and the first since SCLP 2017-5, which priced concurrently with Mike Cagney’s resignation. As we discussed in our previous blog post, SCLP 2017-5 priced slightly wider on the news (10 to 15 bps). SoFi’s latest consumer lending deal, SCLP 2017-6, is the first deal from SoFi with borrowers living in FEMA declared disaster areas, comprising approximately 12% of the deal.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

SCLP 2017-6 Structure
Although it may seem that SoFi is structuring deals more aggressively, the A and B classes have higher initial CE when compared to SCLP 2017-5 by 2.38% and 0.76% respectively.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

Square’s Jack Dorsey: We’re moving as fast as we can with bank application (Fast Company), Rated: A

“I think the [regulatory] environment really changes depending on who you’re talking about,” says Dorsey, who traveled to New York this week for the unveiling of Square Register, a new hardware device. “There’s a lot of appreciation for the fact that we’ve spent eight years serving an underserved customer, an underbanked customer, both on the seller and the individual side.” Before Square unveiled its signature card reader, he adds, micro-merchants “couldn’t participate in the economy in the way that the economy was moving.”

Investors see “perfect storm” in marketplace loan ABS (Global Capital), Rated: A

An investor roundtable at the Digital Lending + Investing conference in New York on Thursday highlighted developments in the securitization of marketplace loans over the last 12-18 months. The transition to a hybrid funding model for lenders, in addition to the emergence of more sophisticated deal structures, have …

MoneyLion takes on America’s savings crisis with the launch of MoneyLion Plus (BusinessWire), Rated: A

Despite solid economic and wage growth in the U.S. since the 2008 crisis, a host of studies point to critically low rates of savings and widening income inequality among American consumers. In the face of this savings crisis, mobile consumer finance platform, A monthly subscription gives MoneyLion Plus members access to the following benefits:

  • Guided savings: MoneyLion Plus makes it easy and convenient to save $50 or more per month. MoneyLion’s technology analyzes each member’s cash flows to determine when to set aside and save money from their checking account. Via the MoneyLion mobile app, members are provided with personalized daily budgeting tips to help them optimize their spending and increase their savings even further.
  • Fully-managed investment account: The funds saved are automatically invested into a fully-managed investment account featuring a diversified portfolio of ETFs built to suit the financial needs and life stage of each member, all without any additional trading or management fees. These portfolios are based on simple investment strategies that will help members grow their wealth.
  • Low-cost access to credit: Unexpected expenses can reset savings back to square one, preventing longer-term growth of wealth. Access to personal loans with APRs of 5.99% or less, regardless of credit score, offers MoneyLion Plus members an affordable means to manage their cash flow needs and avoid costly overdraft or late payment fees. 
  • Cashback bonus: MoneyLion Plus offers its members additional rewards, including an instant $1 cashback bonus deposited into a member’s investment account each day they log into the MoneyLion app. Members also earn rewards based on their investment account balance.
  • MoneyLion mobile app: Members can access all of their benefits on-the-go via MoneyLion’s mobile app, including viewing their savings progress, getting personalized tips and offers for saving more, and accessing their loan funds in just a few taps.

Credit Karma Launches Online Vehicle Center (Finovate), Rated: A

Consumer credit monitoring and financial health startup Credit Karma has launched a new offering today that changes those routines. The company’s new automotive information center is a one-stop shop for helping consumers to manage and organize their vehicle-related finances and information. Included among the capabilities are an overview of the user’s DMV profile, with vehicle and drivers license information, vehicle value estimations, and manufacturer recall notices.

The two most notable capabilities are the auto insurance score and comparison tool and the vehicle refinancing decision tool.

Fintech Lenders Are Holding Larger Portion of the Personal Loan Market (Lend EDU), Rated: A

During the Digital Lending + Investment Conference in New York, the consumer credit reporting agency Transunion released the results of a study called ”Fact versus Fiction: FinTech Lenders.” In a nutshell, the study concluded that fintech lenders were not riskier than other lenders, and they are starting to represent a more significant part of the loan industry in the USA.

By the end of the year, the fintech lenders comprised 30 percent of outstanding personal loan balances which is up from four percent in 2012. Up through June in 2017, fintechs represented 32% of the personal loan market.

In the second quarter of 2016, 14.8 million people had a personal loan; after one year, that number increased to 16.1 million. Additionally, the total outstanding personal loan volume more than doubled from $45 billion in Q2 2012 to $106 billion by Q2 2017.

Wells Fargo Launches New Banking App “Greenhouse” (Crowdfund Insider), Rated: A

Banking giant Wells Fargo announced on Thursday the launch of its new banking app, Greenhouse. The company described the app as a new mobile banking experience that provides tools to help consumers manage their money and know where they stand financially. 

According to Wells Fargo, consumers using the Greenhouse app will be able to have money management with two accounts that work together, immediate access to their Greenhouse account, and the ability to send and receive payments.

Marketplace Lending News Roundup – November 4 (Lend Academy), Rated: A

Redpoint Capital Group Sells Stake to Dundon Capital Partners (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint Capital”), a leading alternative credit manager, announced today that it has agreed to sell a stake in its affiliated General Partner and Management Company to an affiliate of Dundon Capital Partners, LLC (“DCP”). DCP is led by Thomas (“Tom”) Dundon, one of the founders and former CEO and Chairman of Santander Consumer USA (“SCUSA”), a leading publicly-traded non-captive finance company.

As part of the transaction, both Tom Dundon and DCP Partner, John Zutter, will sit on Redpoint Capital’s Board of Directors along with Redpoint Capital Managing Partners Alex Dunev and Andy Thomas.

Digital Lending Innovation Starts with the Simple Things, Bank of America Says (Bank Innovation), Rated: A

Financial services should focus on “making the easy stuff really easy,” Schleck said yesterday during a panel discussion at the American Banker Digital Lending and Investing conference in New York.

Schleck was the sole representative from a traditional bank during the discussion, with fellow panelists hailing from alternative fintech companies and lenders  – Lending Club, Funding Circle, and Varo Money.

The key to BofA’s innovation in this space was a cross between data (also highlighted by others on the panel) and simplicity, Schleck said, pointing to the bank’s success with mobile direct deposit as an example.

Citizens Digitizes SMB Lending Process With Fundation (PYMNTS), Rated: A

Citizens Bank is enhancing its small and medium-sized business (SMB) lending offering by digitizing the loan application process, according to a press release published by the financial institution (FI) on Thursday (Nov. 2).

The bank is launching a new platform, built in collaboration with alternative online lender Fundation, allowing SMB customers of the bank to apply for a loan or line of credit and receive an approval online.

BlackRock pivots to US west coast as part of tech push (Financial Times), Rated: A

BlackRock is pivoting its business to the US west coast, moving Mark McCombe, head of Americas, to San Francisco as part of a broader plan by the world’s top asset manager to step up its focus on technology and innovation.

More than 40 per cent of BlackRock’s $5.9tn in client assets are managed from San Francisco, which accounts for a third of group revenue.

New Online Portal Offers Loans Up to $ 500,000 to African American Entrepreneurs in Chicago (Black Enterprise), Rated: A

The national advocacy group Small Business Majority, national online lender Fundera, and micro-lender Accion have developed SimpleGrowth, a new online lending marketplace. Calling SimpleGrowth a first-of-its-kind local lending portal, officials say the platform will allow African American entrepreneurs in Chicago to connect with area lenders via a website.

Individuals can seek loans ranging from $500 to $500,000 at various rates, depending on the business owner’s readiness and other factors.

There are 230,000 small businesses in Chicago, but an unusually high percentage of those businesses are owned by African Americans. Cook County, Illinois—which includes Chicago—has the most African American-owned small businesses of any county in the country at 110,000, the U.S. Census Bureau’s 2012 analysis of small businesses reports.

The financing will come from Chicago lenders including Accion, Local Initiatives Support Corporation Small Business and the Women’s Business Development Center, all Community Development Financial Institutions that support small business entrepreneurship. Businesses can apply for the loans for free.

LoanDepot Starts JV (Orange County Business Journal), Rated: B

LoanDepot LLC, the nation’s second largest non-bank consumer lender, announced a joint venture with OfferPad, a real estate investment company, to speed up the process of mortgage approval.

The joint venture will be a stand-alone mortgage broker with LoanDepot acting as the wholesale lender, Calle said. It is expected to launch in the first quarter and will be based in Phoenix.

Online Lender Better Mortgage Names Jeff Corbett New Director of Business Development (Crowdfund Insider), Rated: B

Better Mortgage, a digital mortgage company working to improve access to home financing through transparency, honest guidance, and zero loan officer commissions, announced on Friday it has appointed Jeff Corbett as its Director of Business Development and adding him to its growing Strategic Partnership team.

Silicon Valley Start-ups Join the Line-up for Blockchain Expo North America (Coinspeaker), Rated: B

Amongst those speaking is Karma – a cross-border peer-to-peer lending platform, working to eliminate inefficiencies in the P2P lending industry. Karma will be taking to the stage in the ICOs, Tokens and Cryptofinance conference track on November 29, to introduce their service to delegates ahead of their closed ICO sale later this month.

Goji Appoints Peter Breitstone As New CEO (Crowdfund Insider), Rated: B

Specialist provider of P2P and marketplace lending products and services, Goji, announced on Friday it has appointed Peter Breitstone as its new CEO. According to the company, Breitstone has over 20 years of senior executive leadership experience at several global insurance companies, including Insureon, Zurich, and Aon. Breitstone also built and ran Environmental Partners, an insurance brokerage specializing in Environmental Risk and Insurance Management, which he sold to Aon.

Weekly WealthTech Report: The First CEFEX-Certified Robo (Wealth Management), Rated: B

PlanCorp is putting its experience and research into a new hybrid robo advisor called BrightPlan, which it says is the first of its kind to be certified by the Centre for Fiduciary Excellence for providing prudent fiduciary practices to clients. The online service offers goals-based financial planning without requiring users to invest.

Clients can choose either a digital-only service, or tap into Plancorp’s team of wealth managers.

United Kingdom

European Fintech N26 to Launch in the UK in Early 2018 (Crowdfund Insider), Rated: AAA

N26, a digital-only challenger bank based in Germany, announced on Friday it is launching its services in the UK in early 2018. This news comes after the fintech startup announced plans to launch in the U.S. next year. UK customers may now get early access by signing up directly on the company’s UK homepage.

TransferWise announces $ 280m investment round as company looks towards APAC expansion (AltFi), Rated: AAA

The international money transfer service raised $280m in a Series E round as it plans for global expansion and challenge to banking disruptors.

The round was led by asset management firm Old Mutual Global Investors (OMGI), investing funds managed by its small and mid-cap UK equities desk, and Silicon Valley venture capital firm IVP.

Zopa says rate hike will not impact loan performance (P2P Finance News), Rated: AAA

ZOPA has reassured investors that the Bank of England’s interest rate hike will not impact the performance of the peer-to-peer platform’s loans.

On Thursday, the central bank raised the base rate from 0.25 per cent to 0.5 per cent – the first increase in a decade.

LendInvest to enter BTL market after securing new funding line (Bridging&Commercial), Rated: A

LendInvest has agreed a long-term financing facility with Citi which will help the lender enter the UK’s £40bn buy-to-let market.

LendInvest now manages over £500m of lending capital on behalf of its institutional investors.

UK interest rates rise for first time in 10 years (Growth Business), Rated: A

For the first time in more than ten years, the Bank of England has raised interest rates. The official bank rate has been lifted from 0.25 per cent to 0.5 per cent, the first increase since July 2007.

The hike has divided opinion and it is yet to be seen how severely the impact will hit the UK. Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.

With an alternative outlook, Giles Cross, CMO at FOLK2FOLK, says, “For years low interest rates have been bad news for consumers wanting a positive return on their money in real terms. So today’s announcement may come as a small relief to many people who are looking for an increase. Whilst the reality is that consumers may not see the outcome passed on from their financial services provider or bank for a long time.

British fintech lender Cashplus seeks licence (Times of Malta), Rated: A

Cashplus said yesterday it will soon apply for a UK banking licence as part of the British fintech firm’s plan to step up its challenge to traditional banks.

The move will allow Cashplus to convert the £200 million of customers’ funds it holds into bank deposits, its chief executive Richard Wagner told Reuters.

Volkswagen explores obtaining UK banking licence (Financial Times), Rated: A

Volkswagen is preparing to apply for a UK banking licence so it can carry on providing finance to motorists after Britain leaves the EU.

Lendy considers offering auto-invest products (P2P Finance News), Rated: A

LENDY is seeking views from investors on the introduction of an auto-invest product.

The peer-to-peer property lender has issued a survey to its customers to find out their views on a product that would self-select loans for lenders.

Simon Champ of P2PGI and Pollen Street Capital (Lend Academy), Rated: A

In this podcast you will learn:

  • How Simon first became interested in the online lending space.
  • Simon’s original goal when he started P2PGI.
  • What it was like trying to raise the initial capital for the fund in 2014.
  • How many platforms they launched with initially.
  • The scope of the fund: both lending verticals and geographies.
  • How Brexit and the currency challenges of the British Pound has impacted the fund.
  • How the fund has evolved from P2P to a broader direct lending focus.
  • The main challenge of pure peer to peer lending platforms.
  • How they are using leverage today at P2PGI.
  • The P2PGI approach to due diligence and how they decide to make an investment in a new platform.
  • The historical returns of the fund and Simon’s views of the challenges here.
  • His view on the poor performance at US consumer platforms in 2015 and 2016.
  • Why P2PGI left Marshall Wace and merged with Pollen Street Capital.
  • Simon’s view on the evolution of the lending space and where it is going.

CoInvestor Provides First Digital Access For Advisers Into LendInvest’s Real Estate Opportunity Fund (MondoVisione), Rated: A

CoInvestor, the alternative assets platform, has been chosen by LendInvest Capital as a preferred method for UK advisers to invest in its Luxembourg-domiciled Real Estate Opportunity Fund.

Interview with Stuart Law, CEO and co-founder of Assetz Capital (P2P-Banking), Rated: A

Assetz Capital is now the UK’s second-largest peer-to-peer business and property lender and also the second largest in Europe.

What are the three main advantages for investors?

Firstly, we only lend to businesses who we assess as credit worthy businesses with tangible assets.

Secondly, we cater for all types of investors.

Thirdly, we are also the only major UK P2P platform to still offer a manual investment option.

What are the three main advantages for borrowers?

Rather than being just a website with automated credit assessments, Assetz Capital is run by finance, banking, credit and lending professionals with huge industry experience, alongside our large UK-wide network of employed Regional Relationship Directors who visit potential borrowers and help structure the loans.

We’re also a lean business, and as such we have lower overheads than traditional lending institutions.  Coupled with the fact that we only lend to credit worthy businesses holding tangible assets, this means our cost of borrowing for businesses is kept low.

Assetz Capital has succeeded in growing loan originations sharply in the past 12 months. How did you achieve that and were intermediaries like brokers a major factor?

To date, more than 350 successfully funded projects have come through brokers, and we predict that this will grow to approaching 1,000 by the end of the 2018 year.

Singaporean sovereign wealth fund piles into OakNorth fundraise (AltFi), Rated: A

Challenger bank OakNorth entered into the UK’s stable of unicorns in October when it raised £154m.

The £154m round valued OakNorth at £934m (approximately $1.3bn). The money came from three investors, The Clermont Group, Toscafund and Coltrane, which collectively took a 16 per cent stake in the company. Today, the trio has been joined by a fourth investor: GIC, Singapore’s sovereign wealth fund.

Anyone for a Crowd VCT? (AltFi), Rated: A

Currently the excellent Wise Alpha is plastered all over the Waterloo and City line. And in recent months Crowdcube has also been blasting out adverts at the Waterloo train station. Not to be outdone, Seedrs is making a regular appearance on the London tube as are a whole number of digital banking apps. Even Abundance in recent years has been making an appearance on billboards at railway stations as far away as Winchester. Now we’re seeing Funding Circle blasting out its message nationwide as part of its multi-million-pound advertising campaign.

This is all very welcome, but I think it poses some broader questions about what the alternative finance space needs to make itself seem more mainstream. I see no reason why a big player such as Funding Circle shouldn’t use big national brand advertising, but I doubt its overall effectiveness.  My sense is that much smaller, baby steps are needed to mainstream the sector and originate new customers – and, crucially, build brand acceptance amongst investors.

Three alternative reasons to consider peer-to-peer investing (Your Money), Rated: B

However, any investment where capital is at risk – such as alternative lending – is not covered by the Financial Services Compensation Scheme (FSCS) and should not be considered as a substitute for cash deposits. So, why should investors look at the burgeoning alternative lending sector? There are three possible reasons:

  • Diversification
  • Funding your income needs
  • Managing pension allowances – Alternative lending certainly offers attractive returns relative to other investment options, as well as against cash at the bank. ThinCats has achieved average returns for investors of 7%-8.5%(as at 11 Oct).

Hello Soda Raises £5.5M in Funding (FINSMES), Rated: B

Hello Soda, a Manchester, UK-based international big data and text analytics company, raised £5.5m in equity and debt funding.

China

Chinese peer-to-peer lender Hexindai shrugs off tighter scrutiny concerns, rising more than 60pc on Nasdaq debut (SCMP), Rated: AAA

Shares in Hexindai, China’s fifth biggest P2P lender, surged more than 60 per cent on its Nasdaq debut on Friday, shrugging off looming concerns of possible tighter scrutiny on P2P lending platforms by Chinese authorities.

Shares in the company traded up 65 per cent to US16.50, just 20 minutes into the listing under the symbol HX, from its offering price of US$10 per American depositary share. The company aims to raise up to US$88 million through the flotation.

China’s unicorns face questions over fundraising (Financial Times), Rated: AAA

Jianpu Technology, the Chinese financial comparison site poised to list later this year, has been stripped of its status as a “unicorn” worth $1bn after regulatory filings revealed it had inflated the funds raised from investors.

Peer-to-peer lender Ppdai’s fundraisings detailed in its filing also fall short of earlier disclosures, according to calculations by Crunchbase, which collates its data from a variety of mostly publicly available channels, including US Securities and Exchange Commission documents.

Qudian’s initial public offering prospectus put its bad-loan ratio at 0.5 per cent — an unusually low but not impossible figure, especially if was selling off bad debt to third parties, which is a common practice among online lenders.

Source: Financial Times

Qudian’s prospectus did not advertise a clear pre-IPO fundraising figure. However, Crunchbase says the company raised about $873m from a number of investors before it went public.

Source: Financial Times

Chinese auto-trading IPO may prove to be a lemon (NASDAQ), Rated: A

Yixin could raise more than $800 million in a Hong Kong float. The Chinese firm wants to be to cars what Ctrip has become for mainland travellers: a one-stop online shop. It is well-positioned for China’s car boom and changing attitudes towards borrowing, but a punchy valuation means it could struggle after listing.

China’s car market is booming. And Yixin smartly targets people born from the 1980s onwards. They are more open to borrowing than their thrifty parents, and many don’t have credit scores, making it tricky for them to borrow from banks instead.

Yixin Group, an online auto-trading and financing company backed by Chinese internet giant Tencent, is planning to raise up to $867 million through an initial public offering in Hong Kong, Thomson Reuters publication IFR reported on Nov. 2.

IDG Capital, CreditEase help retail investors tap new economy (China Daily), Rated: B

Leading venture capital firm IDG Capital and Credit Wealth Management, an independent wealth management arm of CreditEase Group, has formed a comprehensive strategic partnership at the latter’s 2017 private equity investment forum held in Beijing on Friday.

The system enables analysis of 20,000 institutions via 60 dimensions such as styles of their management teams, when they exit from companies they have invested in and who buy into these companies.

European Union

Early Facebook Backer Tied to Russia Bank, Kushner Platform (Bloomberg), Rated: A

A prominent Silicon Valley investor who was an early backer of Facebook Inc.partnered in two investments with the Russian state-controlled bank VTB Bank PJSC before it was sanctioned, his spokesman confirmed Friday.

Yuri Milner, the Russian-born founder of DST Global, also invested $850,000 of his personal money last year in Cadre, a real-estate investing platform co-founded and partially owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser. Milner’s spokesman said that VTB played no part in his Cadre investment, which was done solely on the business merits of Cadre.

You too can become an investor in exciting new Irish innovation (Independent), Rated: A

Backing young companies sounds expensive and risky but it doesn’t have to be either. Today with no more than €50 you can start lending to fledgling Irish businesses through a peer-to-peer platform like Linked Finance. The same €50 could back numerous new ideas on a crowdfunding platform like Fund It.

Today there are 17,000 people lending a total of over €35m through Linked Finance alone but there’s €99bn more sitting in Irish deposit accounts, according to the Central Bank’s July 2017 figures.

International

An Acceleration in Fintech Capital Raising (Lend Academy), Rated: AAA

The recent CB Insights Fintech Trends Briefing points to the rise in fintech financings as Q3’17 saw 278 deals to VC-backed fintech companies, the largest quarter since Q1’12. While total capital invested is down 25 percent from Q2’17 to $4bn the pace of the deals show investors appetite for fintech companies is still very strong.

Facial recognition startup Megvii Face++ raised $460mn in their most recent investment round led by China State-Owned Venture Capital Fund and the China-Russia Investment Fund.

German based online lender Spotcap raised $26mn in equity and debt funding.

Credit Sesame, a San Francisco and Mountain View, Calif. – based personalized credit service and financial wellness company, raised over $42mn in funding.

FS Card Inc., a Washington, DC-based financial services company focused on underserved consumers, raised a $150mn credit facility.

Finova Financial, provider of fair and affordable digital alternatives for Americans underserved by the traditional banking system, secured $102.5mn in equity and credit facility funding.

LendingHome, a San Francisco, CA-based real estate marketplace lender, raised $457mn in capital, which includes both permanent equity and the launch of LendingHome Opportunity Fund II.

BlueVine, a Redwood City, CA-based provider of working capital financing to small and medium-sized businesses, secured up to $130mn in debt capital financing.

OakNorth, a London, UK bank that provides debt finance to fast-growth businesses and established property developers, received a $202mn investment.

SalaryFinance, a London U.K.-based innovative financial wellbeing employee benefits company, completed a $52mn funding round.

How banks can use ETHLend to reduce interest rates globally (TechBullion), Rated: A

P2P platforms are great for smaller loans (i.e. paying off credit cards or repairing a damaged car), but they might not be as affordable and available for larger purchases (i.e. a home purchase or a new car). Especially in developing markets, such larger finance goals might be out of reach due to the lack of credit scoring systems or access to capital in the first place.

Now, how could ETHLend be used to fulfill this market? Let us imagine that a bank or an institutional financer is looking to finance asset backed loans. They have a minimum loan amount of $100,000, and because of this they will be unable to accept loan terms for smaller loans. These banks and institutional financiers would be able to go onto the ETHLend platform, and offer their liquidity to another investor (wholesale borrower) who has large amounts of digital tokens (cryptocurrency) to pledge as collateral.

The investor (wholesale borrower) can then take that $100,000 they got from the bank and turn around and offer loans on a smaller scale to people on the platform or in their local markets, whom do not need to pledge collaterals.

Lendoit – The Decentralized Marketplace Lending Platform Where Everyone Benefits (Chipin), Rated: A

Current P2P platforms are not really P2P because they need to have intermediaries like issuing banks or trust accounts for the system to work. This is a problem as intermediaries usually lack transparency and are also restricted geographically.

For instance, the annual interest of a loan in Brazil may be more than 50% while it is only 1% in Japan.

Source: Chipin

Lendoit is a decentralized peer-to-peer lending marketplace platform that connects borrowers and lenders globally in a fast, easy, and extremely secure manner by using the blockchain and smart contracts.

With the blockchain, Lendoit is able to automate all of the processes required in P2P money lending without sacrificing anything. Instead, everything will be much cheaper and more efficient which is exactly the solution to problems of cross-border loans.

Smart Loan Contracts contain the borrower’s details including his or her score as well as containing the conditions of loans and their respective tenders.

The Smart Reputation Contract works similarly to credit score; in Lendoit, they act as the global score of an Ethereum address and can be utilized for other purposes other than credit transactions.

The Smart Conversion Contract is responsible for converting currencies into the LOAN token when it comes to making transactions on the platform.

Lendoit Global Payments will launch a token for sale for the aptly named LOAN token.

  • Token name: LOAN
  • Token base: Ethereum (ERC-20 compliant)
  • Token supply: TBA
  • Token sale duration: December 13th, 2017

P2P Lending Offers Participants More Efficiency and Convenience in the Financial Services Sector (NewsBTC), Rated: B

The global lending marketplace market is projected to reach $290bn. by 2020, with an expected compound annual growth rate of 51% from 2014-2020.

Colombia Fintech Startups Alegra and Bankity to Compete for Funding at Finnosummit in Miami Next Week (Finance Colombia), Rated: A

Later this month in Miami, a group of 10 Latin American fintech startups will gather in Miami to compete. Two companies, Alegra and Bankity, are from Colombia and will be vying against peers from Mexico, Brazil, Argentina, and Chile for the $50,000 USD prize.

The competition is part of Visa’s Everywhere Initiative and will be taking place within Finnovista’s larger Finnosummit on November 9 in Florida’s largest city.

Bankity offers the first intelligent banking card in Latin America.

Alegra, founded by Santiago Villegas and Jorge Soto, is also great because it aims to help small business owners with tedious tasks like invoicing and reporting with its cloud-based accounting software.

Blockchain is bringing the sharing economy to everyone (VentureBeat), Rated: A

The sharing economy relies on a distributed workforce, shareable assets, and peer-to-peer transactions and contracts. Companies in these emerging marketplaces handle payments through smart contracts and blockchain technology. This greatly lowers costs, improves trust and transparency with the community, and simplifies transactions at a global scale by making them near-instantaneous, even when distributing payments to thousands of digital wallets at once.

One of the biggest markets for data is social media and online retail. DataWallet, based in San Francisco, helps users download their digital identity and upload it to a blockchain-powered data exchange where companies can purchase it, with payments made to users through the blockchain.

Ride-sharing company LaZooz, based in Tel Aviv, is building a decentralized, Uber-like app that uses blockchain to pay drivers and other community participants. WeTrust, in Fremont, CA, is doing something similar in the peer-to-peer lending space, charging only a max fee of .3 percent instead of 1 percent, like LendingClub.

Australia

Westpac posts AU$ 7.99b yearly profit, sends digital Customer Service Hub live (ZDNet), Rated: AAA

Westpac has processed its first live home loans through its new technology platform, the Customer Service Hub, with the bank saying the initiative aimed at speeding up and simplifying the home loan process as its largest transformation program to date.

For the 2017 financial year, the bank reported AU$7.99 billion in after-tax profit, on revenue of AU$21.8 billion, an increase of 4 percent year-on-year.

As of September 30, 2017, Westpac boasted 13.8 million customers; 4.53 million were considered digitally active, with 72 percent of them using a mobile platform.

Additionally, through its AU$100 million venture capital firm Reinventure, Westpac has made 16 investments covering areas such as blockchain and digital currencies, payments, peer-to-peer lending, as well as big data and data analytics.

The bank also this year entered into a “strategic” relationship with Australian-listed payments firm Zipmoney, investing AU$40 million by way of a private share placement in August to allow the integration of the fintech’s products and services across Westpac’s network throughout Australia, as well as other initiatives including the provision of in-development business-to-business products and services.

In April, the bank went live with Samsung Pay, opening up the phone-based wallet to debit and credit card cardholders across both Mastercard and Visa. This came a year after it launched Android Pay, in addition to Westpac’s own tap and pay function, which was unveiled to customers in 2014.

Banks wealth models are ‘unravelling’ (Financial Review), Rated: A

Independent investment and superannuation platforms like Hub24 and Netwealth are readying to reap the rewards of the “unravelling” of the bank’s traditional wealth management models.

The best interest duty is a key plank of a package of financial advice reforms, known as the Future of Financial Advice (FOFA), introduced in July 2013. This was tested with the corporate watchdog recently ordering Melbourne-based financial planning firm to pay $1.1 million in fines and costs as part of the first civil penalty imposed for breaching its duty to act in the best interest of its clients.

Last week, BT Financial Group (BTFG) said it would expand its life insurance APL from its sole in-house product, adding a minimum of three alternative insurers by March next year.

Increasingly, these platforms are snaring a fair whack of adviser business in the $750 billion platform market, which is growing at 10 per cent a year.

Netwealth has about $16 billion in funds under advice and more than 2000 financial advisers and planners using its services. When it lists on the ASX with an $879.2 million market capitalisation late next month, it will be the second biggest IPO of the calendar year to date

Australian FinTech SelfWealth IPO Offering Self Directed Investors Alternative to Traditional Broker Trading (BusinessWire), Rated: A

SelfWealth Limited (“SelfWealth” or “the Company”), an Australian FinTech business offering a flat fee brokerage service and social portfolio construction network for Australian investors, is pleased to announce the opening of its Initial Public Offering (IPO) to raise up to A$7.5 million (with a minimum subscription of A$5.0 million).

SelfWealth is offering for issue 37.5 million shares priced at A$0.20 per new share; the indicative market captialisation of SelfWealth will be approximately A$26.1 million. The Company’s ASX ticker code will be SWF.

India

Here are four lending platforms that are helping unbanked SMEs (The Hans India), Rated: A

Despite being a major part of the Indian economy, Small and medium-sized enterprises (SMEs) in India face multiple challenges.

From inadequate banking to lack of constant cash supply, these SMEs are deprived of the smooth and consistent growth factors

These four SME lending platforms are bridging the requirements digitally:

  1. Lendingkart – The company aims to transform small business lending by making it convenient for SMEs to access credit easily.
  2. CoinTribe – Another online loan disbursement platform, CoinTribe provides quick and easy collateral-free loans to small businesses and individuals.

    It is the only online lending platform which has back-tested its credit model with large banks.

  3. Faircent – Largest peer to peer lending website, Faircent caters to retail and business loans.
  4. TAB Capital – The platform has commissioned an advanced proprietary algorithm that leverages big data and analytics to simplify and accelerate loan application, verification, approval and disbursement.

China’s Fosun leads $ 10 million round in fin-tech startup Kissht (VC Circle), Rated: A

OnEMi Technology Solutions Pvt. Ltd, which runs lending startup Kissht, has raised $10 million (Rs 67 crore) led by China’s Fosun International, a report in a financial daily stated.

In June this year, the startup raised $2 million (around Rs 13 crore) from Endiya and Ventureast.

India’s Largest Bank Goes Big on Blockchain (Cryptocoins News), Rated: B

The State Bank of India is gearing up to implement blockchain solutions in a number of financial processes including the management of its Know Your Customer (KYC) system.

SBI is now pressing ahead with its first implementation of the decentralized technology by using an enterprise blockchain solution for managing its Know Your Customer (KYC) system, via a new partnership with Intel that sees the technology giant become the consortium’s official technology advisor.

Asia

Square Peg, SIG Asia lead $ 7m round in SEA service marketplace Kaodim (Deal Street Asia), Rated: AAA

Southeast Asian service marketplace Kaodim Group has raised $7 million (MYR 29.5 million) in a funding round led by Australia venture capital firm Square Peg Capital and Shanghai-headquartered SIG Asia Investments.

A clear path to transforming Singapore’s financial services sector (Channel News Asia), Rated: A

Minister for Education (Higher Education and Skills) and Monetary Authority of Singapore board member Ong Ye Kung unveiled the Industry Transformation Map (ITM) for the financial services sector on Monday (Oct 30).

The ITM outlines key growth strategies for the financial sector that aim to generate greater productivity, attain higher growth rates, and create 4,000 jobs each year up to 2020.

These include strengthening financing channels for small- and medium-sized enterprises (SMEs), simplifying the regulatory framework for venture capitalmanagers, introducing dual class share structures for high-tech companies, and encouraging other sources of private sector financing for start-ups and entrepreneurs.

According to a Deutsche Bank report released last year, debt burdens have risen from less than 240 per cent of GDP in 2009 to 265 per cent in 2015. This is largely due to Singapore’s high levels of private sector leverage, for which there are limits to greater growth.

Singapore plays fintech evangelist on global mission (Business Times), Rated: A

IN TWO short years, Singapore has zipped into pole position in the fintech space, challenging rivals such as London in drawing intellectual and funding capital into the city-state with its open adoption of new technology and more broadly, innovation.

The strategy, led by the Monetary Authority of Singapore (MAS), is now widening to a regional and global endeavour, as MAS expands into cross-border projects that could pay significant digital dividends in time.

This will chiefly include blockchain experiments, with MAS now looking at ways to expand an inter-bank payments pilot to create a cross-border payments system between two countries, Ravi Menon, managing director of MAS, said in a wide-ranging interview with The Business Times.

Middle East

Seven in ten UAE residents unsure how to achieve their financial goals (The National), Rated: AAA

Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a poll by National Bonds revealed on Monday, as the UAE investment company launched a new campaign to encourage better saving habits.

According to the poll of almost 400 residents conducted in the first nine months of the year, 69 per cent of respondents lack awareness about financial planning.

Despite the lack of clarity on how to save and invest their money, 53 per cent were most interested in receiving financial advice related to retirement planning. This was consistent among Arabs, Asians and Western expats, according to National Bonds, while Emiratis are more concerned with advice on financial health.

Authors:


George Popescu


Allen Taylor

Thursday October 19 2017, Daily News Digest

China p2p lenders

News Comments Today’s main news: Affirm wants to offer financial advice. RateSetter to launch IFISA. SoFi announces Entrepreneur Program 2.0. Prosper tightens guidance on consumer loan ABS. Qudian priced IPO above range. IBM partners with 8 banks on blockchain trade platform. GuiaBolso raises $39M in Brazil. Today’s main analysis: U.S. banks get aggressive on growth. Party on, Chinese consumers. Today’s thought-provoking articles: […]

China p2p lenders

News Comments

United States

United Kingdom

China

International

India

Asia

MENA

Latin America

  • .

News Summary

United States

Affirm Wants To Move Beyond Simple Lending to Provide Financial Advice (WSJ), Rated: AAA

Online financial services company Affirm Inc. wants to move beyond simple lending to provide financial advice to customers, its founder and chief executive said Wednesday.

Additional services Affirm wants to provide would include helping some consumers “get over this hump” of too much debt.

SoFi Announces Entrepreneur Program 2.0 (Crowdfund Insider), Rated: AAA

Online lending platform SoFi recently announced the launch of its Entrepreneur Program 2.0. The company reported that original program was launched four years ago and since then has helped four classes of 70 companies founded by the lender’s members to get off the ground with its coaching and resources.

SoFi then revealed some improvements, which would benefit the future classes.

  • More Eligibility: The program is now open to all members working as a founder or co-founder either full or part-time on an innovative and scalable tech-enabled business.
  • SoFi Offers Investment: The lender will give equity capital to each of the members of the Class. For this coming Class, this amount will be $25,000 per company.
  • New Curriculum.
  • Alumni engagement:
  • Community engagement: SoFi will engage our 380,000-plus members in the accelerator process and share the incredible companies their fellow members are working on.
  • Dedicated resources:

Prosper tightens guidance on consumer loan ABS (IFRE.com), Rated: AAA

Online lender Prosper Marketplace pulled in guidance on its US$501.05m consumer loan ABS on Wednesday, with all three of the deal’s tranches heard to be at least twice covered.

Guidance was announced at 85bp area over EDSF on the largest 0.85-year A-/A tranche (Fitch/Kroll) and 165bp-175bp over iSwaps for the US$77m 2.14-year BBB-/BBB tranche.

Guidance on the 2.89-year Class C, unrated by Fitch and rated B+ by Kroll, is 340bp area over iSwaps.

Those levels were tightened from whispers circulated at 85bp-95bp over EDSF, 180bp-190bp over iSwaps and mid-300bp over iSwaps, respectively.

US banks abandon crisis-era taboo of growth (Financial Times), Rated: AAA

“I’m happy to say our focus has shifted beyond the implementation of regulations . . . to growth,” said Mr Chavez.

No other big US bank put it that bluntly, but the sentiment seemed to be shared. With the notable exception of Wells Fargo, still trying to shake off the damage of its fake-account scandal, executives were making encouraging noises about new businesses and top-line expansion as they presented third-quarter results.

At Citigroup, for example, which shed about $500bn of assets in the years after the crisis, CFO John Gerspach talked about growth in credit cards in Mexico and wealth management in Asia. At Bank of America, which added about $90bn of assets over the year, CFO Paul D’Onofrio said he welcomed any “refinement” to rules that “allows us more access and control over our capital [and] liquidity in support of responsible growth”.

Source: Financial Times

At Morgan Stanley, James Gorman said the bank “won’t be shy” about doing deals such as last month’s acquisition of Mesa West Capital, a commercial real estate platform — prompting one analyst to remark on the chief executive’s “more aggressive” tone.

“We’re not looking for any grand splash here, but we’re open for business opportunistically,” said Mr Gorman.

Source: Financial Times

Now the mood has changed in Washington. Few laws have been ripped up, as yet, despite Donald Trump’s early pledge to “do a number” on Dodd-Frank. But new figures in agencies such as Randy Quarles, appointed this month to the most powerful bank regulatory job in the country, should make a real difference. Trade groups say they are expecting him to take a looser grip on the banks than Daniel Tarullo, the previous supervisor-in-chief at the Federal Reserve.

Banks Need Next-Generation KYC to Confront Today’s Digital Identity Crisis (Dealbreaker), Rated: AAA

Cybercrime has evolved to exploit gaps in enterprise data security and disrupted identity theft in the process. It has spawned a parallel black market on the Dark Web, where criminals transact in bitcoin to anonymously trade stolen data, minting hundreds of billions in annual and often untraceable proceeds for sellers[1].

Javelin Strategy & Research’s 2017 Identity Fraud Study said ID theft hit a record high in 2016, victimizing 15.4 million people, or roughly two-million more victims than the previous year[2]. ID theft is generally a precursor to credit card fraud, which attributed to worldwide losses of $21.84 billion in 2016[3].

Card issuers incurred 72%, of those losses last year, with card fraud expected to syphon a grand total of $88.87 billion out of the global financial system over the next four years.

Understanding the vast supply-and-demand mechanism of the Dark Web economy is integral to KYC strategy for banks. The Center for Strategic and International Studies pegs the worldwide cost of cybercrime at $445 billion a year[5]. According to the 2016 Cost of Cybercrime Study, data breaches, cyber-fraud and related disruptions impact U.S. organizations the hardest, with the average cyberattack generating $17.36 million in costs. Of the 4149 data breaches and 4.2 billion records exposed in 2016[6], as reported by cybersecurity firm RiskBased Security, the U.S. comprised 47.5% and 68.2% of those numbers, respectively.

Feedzai closes $ 50M Series C to help banks and merchants identify fraud with AI (TechCrunch), Rated: A

Feedzai is announcing a $50 million Series C this morning led by an unnamed VC with additional capital from Sapphire Ventures. The six year old startup builds machine learning tools to help banks and merchants spot payment fraud.

With 60 clients including major financial institutions like Capital One and Citi, Feedzai remains optimistic that allowing savvy customers to build on top of its service is the key to longevity.

Affirm CEO: Credit Security Is Centuries Behind (WSJ), Rated: A

Women who own businesses find bank loans harder to get (Fox Business), Rated: A

A survey of businesses conducted this summer and released Wednesday found that 30 percent of companies owned by women were able to get bank loans during the previous three months, compared to half of all the owners surveyed.

Only 21 percent of the women surveyed said they expected it will be easy to raise debt financing — essentially loans — in the next six months, compared to 44 percent of all companies. Fewer of those owners said they were likely to pursue a bank loan, at 67 percent compared to 75 percent of all owners.

The number of U.S. businesses owned by women grew nearly 27 percent from 2007 to 2012, rising to nearly 10 million from 7.8 million, according to the most recent Census Bureau figures. The total number of businesses grew less than 2 percent.

Bank of America found this year that 11 percent of owners who are women applied for loans the past two years versus 13 percent of owners who are men. Some banks have realized they need to be more aggressive in lending to businesses owned by women; Wells Fargo set a goal of $55 billion in loans by 2020, but surpassed that number in 2013, spokesman Jim Seitz says.

iCapital and CAIA Partner On Alternative Investment Education Initiative (FIN Alternatives), Rated: A

Financial technology platform iCapital Network has partnered with the Chartered Alternative Investment Analyst (CAIA) Association on a sweeping education initiative aimed at increasing knowledge about alternative investing.

As part of the new initiative, iCapital will offer CAIA’s Fundamentals of Alternative Investments program to its member network of more than 1,900 registered investment advisors, broker-dealers, private banks and family offices.

Harvard Partners LLC Announces Investment Interests in Commercial Finance (Lessors), Rated: A

Harvard Partners CEO Bill Verhelle announced his firm is seeking to invest in, or purchase, small innovative U.S.-based commercial finance firms. Interest is not limited to companies already in the equipment leasing and finance industry, though he will be at that industry’s annual convention next week.

Harvard Partners is specifically interested in companies with demonstrated experience and capable management teams employing new business models. Harvard Partners’ first equity investment this year, along with another private equity investor, involved a West Coast business lending and equipment finance firm with advanced financial technology (fintech) capabilities.

Top of the Morning (Axios), Rated: B

Another sovereign wealth fund is opening shop in Silicon Valley. This time it’s Abu Dhabi-based Mubadala Investment Co., which also is launching a $400 million direct VC fund (in partnership with SoftBank) and a $200 million VC fund-of-funds.

  • “It’s more than just setting up an office — it’s a real committed and genuine intent to be an active member of this community,” Mubadala’s Ibrahim Ajami tells Axios’ Kia Kokalitcheva, who scooped the news.
  • He adds that the direct fund shouldn’t compete with SoftBank Vision Fund, into which Mubadala has pumped $15 billion, given that it will be looking at earlier-stage deals. Get the full story.

REALTYSHARES REVIEW: AN EASY WAY TO START INVESTING IN REAL ESTATE (The College Investor), Rated: B

Real estate crowdfunding is one of the fastest growing trends in the investment community. They provide obvious value to investors who would otherwise be priced out of commercial and private equity deals. RealtyShares is one of these crowdfunding platforms, but they have a unique niche.

They work with both institutional investors and “the crowd” of smaller investors to find a wide range of projects.

To invest in RealtyShares, you need to be an accredited investor.

What Types Of Investments Does RealtyShares Offer?

  • First position liens
  • Preferred Equity
  • Mezzanine Debt (aka Bridge Loan)
  • JV (Joint Venture) Equity

Your minimum investment is $5000, and you’ll pay a 1% investment fee on equity investments, and up to a 2% interest rate spread on debt.

Private Lending Association Partners With Deal-Flow Company (Broadway World), Rated: B

American Association of Private Lenders (AAPL) has partnered with Private Money Lending Guide (PMLG). The partnership brings together an association that provides education, ethics and networking opportunities for private money lenders and a tool for deal-flow that enables borrowers and lenders to find the appropriate counterpart for their deals.

Ken Rees, CEO of Elevate, to Speak at Money 20/20 Conference (BusinessWire), Rated: B

Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will speak on a panel at the Money 20/20 conference in Las Vegas on October 24, 2017. The panel will focus on the future of alternative lending, including fintech’s potential to partner with banks to create better outcomes for both parties. The panel will also tackle the challenges that alternative lenders face now, and how to use innovation and creative solutions to address them.

SESSION: Reinventing Consumer Lending: More Access, New Models & Overcoming Big Challenges

WHEN: Tuesday, October 24, 2017 at 3:10-4:00pm PT

WHERE: San Polo, The Venetian Level 3 – The Venetian Las Vegas, 3355 S Las Vegas Blvd, Las Vegas, NV 89109

United Kingdom

RateSetter plans to launch IFISA this tax year (P2P Finance News), Rated: AAA

RATESETTER has said it plans to apply to HMRC for ISA manager status and launch its Innovative Finance ISA (IFISA) before the end of the current tax year.

RateSetter said on Wednesday that it will keep lenders updated via its website but also gave people the option to sign up to its IFISA mailing list.

FCA identifies low P2P usage but fewer signs of consumer vulnerability (P2P Finance News), Rated: A

JUST 1.4 per cent of the adult population are using peer-to-peer lending or crowdfunding but the product has among the proportionally lowest levels of financially vulnerable customers, figures from the Financial Conduct Authority (FCA) suggest.

The data is revealed in the City watchdog’s financial lives survey, a poll of almost 13,000 consumers about the products they hold and their experiences of them.

The research shows just 180 out of 12,865 adults, or 1.4 per cent, surveyed said they have used a crowdfunding or P2P product, which the FCA says works out as 700,000 adults when weighted against the UK population.

Of those who are using P2P, 74 per cent of respondents identified themselves as male and 25 per cent said they were female.

Wellesley & Co: Get ready for proptech 3.0 with “elite survivors” (P2P Finance News), Rated: A

WELLESLEY & Co has cited predictions that there will be consolidation in the proptech sector, as firms drop by the wayside leaving “a crop of elite survivors”.

The alternative property lender said it expects the rest of 2017 and early 2018 to be “exciting for the progression of property technology” with lots of M&A activity.

LendingCrowd launches Refer a Friend promotion (AltFi), Rated: A

LendingCrowd, the peer-to-peer (P2P) lender, has launched a £50 “refer a friend” promotion as it continues to experience strong demand from borrowers across the UK.

Following a record quarter for new loans and the rising popularity of its tax-free* Innovative ISA (IFISA) accounts, investors on the P2P lending platform will be given a £50 bonus when each friend they refer invests at least £2,000. Each friend will also receive a £50 referral reward.

China

China’s Qudian IPO seen priced above range (Reuters), Rated: AAA

Online micro-credit provider Qudian Inc’s (QD.N) initial public offering could be priced above the expected range of $19-$22 per American depositary share, sources familiar with the matter told Reuters.

The offering could give the company, backed by Alibaba’s (BABA.N) banking unit Ant Financial, a market capitalization of more than $7 billion and raise over $825 million.

Party On, Chinese Consumers (Bloomberg), Rated: AAA

Qudian Inc., operator of a loan platform for consumers and small businesses, jumped 22 percent on its New York trading debut Wednesday. The Beijing-based company raised $900 million in an initial public offering on the eve of China’s 19th party congress, pricing its shares above the high end of its indicative range. It’s the largest U.S. listing by a Chinese company since the $1.4 billion sale by logistics company ZTO Express (Cayman) Inc. in September 2016.

Qudian’s experience stands in sharp contrast to that of China Rapid Finance Ltd., a peer-to-peer consumer lender. In April, China Rapid Finance managed to raise only $60 million, having priced at the bottom end of its range. Since then, though, the shares have soared more than 90 percent, with most of the gain coming this month. Similarly, the October rally has brought the advance for Beijing-based consumer finance company Yirendai Ltd. to 150 percent this year.

Source: Bloomberg

Looking at Qudian’s financials, one can’t help the bullish feeling that China’s consumer credit market is only in its early stages. Qudian’s rate of loan delinquencies, defined as those over 30 days past due, is only 0.5 percent or less this year, according to the company, which relies on Alibaba Group Holding Ltd.’s Ant Financial affiliate for new borrowers and credit rating services.

Source: Bloomberg

The Young and the Leveraged (BreakingViews), Rated: A

Betting on China’s next generation of borrowers just got easier. Qudian, an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters. It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.

China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs. The investment bank expects outstanding consumer credit excluding mortgages to more than double to $1.9 trillion by 2020.

Qudian focuses on the younger segment of this market, providing small, short-term loans for ordinary purchases.

Source: BreakingViews

The truth about Ant Financial … (The Finanser), Rated: AAA

A key theme in the new book is financial inclusion and, to those ends, I made a visit to Hangzhou, China, to meet the executive team of Ant Financial.

As Americans struggle with the pains of Chip & PIN and Europeans embrace contactless payments, China has leap-frogged us all. In 2016, Chinese consumers spent $5.5 trillion through their mobile apps. That’s more than any other economy and many predict that China will be first major economy to be completely cashless. The chosen mobile payment system for most Chinese citizens is Alipay, and the company has recently started to expand its footprint globally.

Many of you may have heard of Alipay, but it is not the Chinese version of PayPal, as many think. In fact, it bears no relationship or resemblance to anything we see in Europe or America. It is distinctly Chinese and, having been born out of a need to trade, is now moving towards global dominance.

How far things have changed, in that today’s Alipay monitors every transaction from its 450 million users, in real-time with artificial intelligence monitors constantly searching for potentially fraudulent transactions. That is a far cry from where they started, but then the company has refreshed its systems architecture four times in the last twelve years and has just embarked in another refresh. They moved from basic escrow services to real-time payments to cloud to microservices, and are now working on their new machine learning and super intelligent structure. A structure that can process 250,000 transactions per second today, and is architecting systems that will scale to over 100 billion transactions per day. To put that in perspective, Visa and MasterCard handle just over 60 billion transactions per year combined, and average near 2,000 transactions per second.

Source: The Finanser

China: The frontier of networked money (SupChina), Rated: A

In the last two years, China has gone from a country without credit cards to a cashless society where even beggars use mobile phones to accept payments.

The number of P2P companies has been reduced through attrition and government regulation, and a few strong players are emerging:

  • Caixin reports (paywall) that P2P platform PPDAI Group has announced plans “to raise up to $350 million through a New York initial public offering (IPO).
  • In September, online-only insurer ZhongAn Online P&C Insurance raised $1.5 billion in an IPO on the Hong Kong Stock Exchange.
  • The South China Morning Post reports that shares of Qudian, a leading online consumer credit provider, “surged nearly 46 percent to US$35 on its debut trading on the New York Stock Exchange on Wednesday morning.” Aside from fierce competition in the sector, the SCMP says that “Qudian has one other worry — potential competition with its principal shareholder Ant Financial,” which is, like the SCMP itself, an Alibaba affiliate.
International

IBM and eight banks unleash we.trade platform for blockchain-powered commerce (Banking Technology), Rated: AAA

Since January 2017, a group of seven banks (Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and UniCredit), together with IBM, have been developing the Digital Trade Chain platform.

Now with the recent addition of Banco Santander as a founding partner, the group have decided to rebrand the Digital Trade Chain platform to we.trade.

Banks Start Broad Use of Blockchain, as JP Morgan, IBM Lead Way (DarkReading), Rated: A

Two major players announced cross-border payment networks built on blockchain technologies Monday, and more financial services will follow soon, despite opinions about Bitcoin.

The distributed ledger technology that underpins cryptocurrency like Bitcoin is rapidly going mainstream. Blockchain is building a tremendous amount of buzz as technology and financial industry heavyweights and startups race to apply the technology in innovative new applications for the banking sector. Their efforts are starting to bear fruit in the area of cross-border payments, as three separate announcements from IBM, J.P. Morgan, and Bank of Canada highlighted this week.

The ultimate goal is to provide a secure, speedy and transparent financial platform between global markets that may have found it difficult to do business with one another due to the bureaucratic pitfalls of legacy international payment networks.

The developments this week underline that banking executives are increasingly seeing the upside of combining distributed ledgers with solid cryptographic applications for new means of facilitating payments, trades, contracts, and transactions of all stripes.

Six courses that will get you clued up on fintech (CNBC), Rated: B

New York University’s Stern School of Business has a number of courses on fintech that consider innovations in the sector, regulatory challenges and opportunities for growth.

Students have the option to learn about digital currencies, blockchain, robo advisors, personal finance and payments.

The U.K.’s Oxford University, ranked by Times Higher Education as the number one institution in the world, made its fintech debut this month.

Oxford’s Saïd Business School launched the Oxford Fintech Programme in collaboration with GetSmarter, which is owned by education tech giant 2U Inc.

Students on the course study a range of subjects within the fintech sector, including digital payments, regulatory technology, blockchain and artificial intelligence.

Imperial College London is another British university to have its own course dedicated to all things fintech.

Imperial’s ‘Fintech — Innovative Banking’ course focuses on three key areas of the industry: blockchain, digital identity and digital money and payments.

India

P2P lending platforms can put downward pressure on interest rates (livemint), Rated: AAA

Mint Money spoke to Rajat Gandhi, founder and chief executive officer of Faircent, a P2P marketplace which has been in operations since 2014, on his vision for the nascent industry in India.

Now that the RBI has given NBFC status to P2P platforms and has also come out with guidelines for the sector, what is the way ahead?

Most of the guidelines also are in line with the industry expectations, just that there are a few grey areas where we would need some more clarifications. The way I see it, the RBI document is a framework, rather than hard guidelines.

In the short term, we all have to file our applications and get certifications in place.

The P2P lending process was legitimate; the RBI framework has just validated it further. An important development is that the framework has created a redressal system— both for the borrower and the lender. While a lot of obligations will be on the platforms, there is also a lot of clarity now on our roles and responsibilities.

How do the RBI guidelines help a consumer, borrower or lender? 

The guidelines basically tell the lender particularly what they are getting into, including the fact that the principal is not protected. We as companies should also keep telling them. Because the moment an investor hears interest rate, the immediate thought is assured returns.

Secondly, the guidelines have unlocked the supply side. Borrowing till now was restricted to banks and NBFCs, which have stringent guidelines. Whereas out here, this is an exchange model and the P2P platforms cannot lend from their own balance sheet, so the platform’s returns become interest rate agnostic. Their role is only to rate and price the borrowers, and as a platform, we do not directly benefit from this rating and pricing.

If a P2P platform is interest rate agnostic, what is your business model and how does your business make money?

Basically, we charge 1% from the lender and 2-4% from the borrower, of the loan disbursed.

The guidelines also talk about P2P platforms giving services to lenders for recovery of loans. How does that work?

We have a panel of lawyers who will take up the matter on behalf of the lenders. This is charged as this is a separate service.

What is the size of P2P lending industry in India at present? 

The size right now will be roughly around (RS) 50-60 crores on an annualised basis.

Fresh funding to enable LenDenClub meet capital requirement set by RBI (India.com), Rated: A

After a successful growth stint in the past six months, LenDenClub, a P2P lending platform is looking to meet the capital requirement set by the Reserve Bank of India (RBI) regulations, banking on the newly secured capital which is being used to enhance the product platform and improve tech automation.

Earlier this month, the firm closed a USD 500,000 pre-series A round from a fund based out of Mumbai.

Kotak Bank ties up with Samsung Pay (India Times), Rated: B

Private sector lender Kotak Mahindra Bank today said its credit and debit card holders will be able to tap and pay using smartphones at merchant establishments.

The city-based lender has tied up with Samsung, under which its cardholders will be able to tap and pay using smartphones of the Korean electronics major having the Samsung Pay acceptance machines, a bank statement said.

PayPal bets big on India’s FinTech boom (Ogilvy), Rated: B

Financial transaction company PayPal has long been a supporter of innovation in India, having set up an incubator programme there to support local start-ups. And now, the company is evolving its partnerships with the start-ups that join the incubator, taking equity in participating firms.

Asia

Fintech startup Finja breaks new ground in Pakistan with $ 1.5m series A funding (Tech in Asia), Rated: A

The catalyst for ecommerce and other internet businesses to flourish in China, India, and Southeast Asia is digital payments. This in turn has a multiplier effect on economic growth.

That’s why today’s announcement of US$1.5 million series A funding for Pakistani fintech startup Finja is notable. More so, because Swedish investment company Vostok led the round – the Pakistan startup ecosystem rarely hits headlines for attracting international investment. Dubai-headquartered Gray Mackenzie Engineering Services also participated in the round.

Finja is giving a push to digital payments in Pakistan with its SimSim wallet.

Finja claims SimSim has been doubling its mobile wallets every month to notch up 80,000 accounts since it went live a few months ago. It has clocked transactions worth a total of US$14 million so far.

Danadidik, the platform that helps Indonesian students fund their study, raises seed funding (e27), Rated: A

Indonesian student loan platform Danadidik announced on Wednesday that it has raised an undisclosed seed funding round from Singapore-based impact investment fund Garden Impact Investments.

Danadidik Co-Founder and CEO Dipo Satria said that the new funding will be focussed on hiring, product development, and marketing.

He also stated that for the year 2018, the South Jakarta-based startup plans to launch its mobile app and is targeting to fund 2,000 students.

MENA

Abu Dhabi Inks FinTech Development Pact with Mastercard (Cryptocoins News), Rated: A

Abu Dhabi’s international financial center has entered a collaboration with payments giant Mastercard to develop and accelerate FinTech solutions in the region.

The Abu Dhabi Global Market (ADGM), an international financial center established by a UAE Federal Decree to develop and strengthen financial services in Dubai as a global center for business and finance, is partnering Mastercard to develop FinTech activities in UAE’s capital and the wider MENA (The Middle East North Africa) region.

Latin America

Amid Brazil’s persistent economic crisis, fintech startup GuiaBolso raises $ 39 million (TechCrunch), Rated: AAA

Despite a continuing economic crisis, Brazil’s technology startups are continuing to attract cash and financing, with the mobile personal financial service GuiaBolso raising $39 million in fresh funding.

The new round was led by Vostok Emerging Finance, a publicly traded Swedish fund with its roots in big Russian private equity. Additional investors include Ribbit Capital, the International Finance Corp. and QED Investors, while impact investment firms Endeavor Catalyst and the Omidyar Network also participated.

Authors:

George Popescu
Allen Taylor

Wednesday June 7 2017, Daily News Digest

Ranking by average gross yield

News Comments Today’s main news: SoFi to add 400 Delaware workers by 2018. KBRA rates Upstart Securitization Trust 2017-1. RateSetter, MarketInvoice, LendInvest make Fintech50 list. China P2P lenders face tighter disclosure rules. Danish fashion tycoon invests in Klarna. Today’s main analysis: RentRange identifies 25 markets with highest average gross yield. Today’s thought-provoking articles: Did someone cancel the fintech revolution? Innovators […]

Ranking by average gross yield

News Comments

United States

United Kingdom

China

European Union

International

India

Canada

News Summary

United States

FinTech company SoFi to add 400 Delaware workers by 2018 (Delaware Online), Rated: AAA

SoFi, an online provider of personal loans, will add 400 workers to its Claymont office by the end of 2018.

SoFi entered Delaware in February when it acquired Claymont-based Zenbanx for an undisclosed sum. The Zenbanx purchase bolstered SoFi’s portfolio of online personal finance offerings. Among the former Zenbanx products that now belong to SoFi are software that enables customers to transfer international currency through mobile devices and an app that allows users to transfer money through the sound of their voice.

SoFi has vowed to ramp up the former Zenbanx office with an aggressive hiring plan that will see it add 100 workers by August, 200 workers by the end of the year and 400 employees by the end of 2018.

The majority of the openings are call center jobs, but SoFi is also looking to fill IT, business development and management positions. Of the first 200 openings, 130 will be call center positions, 30 will be mortgage operations jobs and the remaining 40 will be IT, business development and office staff.

KBRA Rates Upstart Securitization Trust 2017-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2017-1 (“UPST 2017-1”). This is a $163.107 million consumer loan ABS transaction that is expected to close on June 21, 2017.

This transaction is Upstart Network, Inc.’s (“Upstart” or the “Company”) first securitization of prime and near prime unsecured consumer loans. The loans are facilitated by Upstart’s proprietary models supporting an online marketplace that connects borrowers and investors by offering consumer loans originated by Cross River Bank (“CRB”) through the platform, www.upstart.com (the “Upstart Platform” or the “Platform”).

RentRange Identifies 25 Markets with the Highest Average Gross Yield (Markets Insider), Rated: AAA

RentRange, one of the premier providers of market data and analytics for the housing industry, today released data ranking the top 25 U.S. metropolitan statistical areas (MSAs) by highest average gross yield for singlefamily1 homes during the first quarter (Q1) of 2017. The data analysis also identified the average rental rate increase between the first quarter (Q1) of 2017 and the same quarter in 2016, average vacancy rate in Q1 2017 and investor purchases over the past 12 months.

The Q1 2017 RentRange® data shows that the highest yielding markets are dominated by older metro areas in the Midwest and Northeast.

Analyzing the average vacancy rates, which is the percentage of rental properties that are vacant or unoccupied at a particular time, the lowest rates from the list are in Pittsburgh, Indianapolis, St. Louis, Oklahoma City and Canton. Lower vacancy rates generally mean properties stay vacant for less time, limiting the loss of rent.

Source: Markets Insider

Lenders Seeking to Provide Real-Time Credit Offers Online Can Cut Implementation from Months to Weeks with TransUnion Find My Offer Solution (Globe Newswire), Rated: A

As financial institutions seek to improve customer experiences online, TransUnion (NYSE:TRU) today announced the launch of Find My Offer to help lenders deliver relevant credit offers to consumers online. Find My Offer is a set of configurable white-label web screens that support a lender’s consumer prequalification and digital prescreen initiatives.

Lenders can use Find My Offer to acquire new customers and expand existing relationships online. The site automatically integrates with TransUnion’s DecisionEdge suite, allowing lenders to use their existing underwriting criteria for their online marketing.

A top 20 national bank recently utilized Find My Offer to increase online acquisitions. Its IT team estimated a six month development cycle to build a customer-facing site to initiate credit offers online. Using Find My Offer, the bank saved more than 40% in development costs and was able to present relevant, tailored offers to consumers within three weeks – approximately 20 weeks earlier than what was projected using internal IT resources.

Sharestates Launches Auto-Invest Tool for Highly-Tailored Investments While Surpassing $ 500M in Loan Originations (PR Newswire), Rated: A

Sharestates, an online real estate investment marketplace, announced today the launch of its new Auto-Invest tool, a feature that will maximize the investor’s chances of investing in the platform’s highly sought after real estate debt opportunities. The new feature will allow investors to choose from multiple strategies, including a custom investment strategy that includes 12 underwriting filters to choose from. The launch of this new tool coincides with the company reaching a major milestone of $500 million in loan volume.

With the Auto-Invest tool, the investor will have the ability to increase the frequency at which their funds are deployed. These automatic investments will give the investor a better chance of eliminating “cash drag,” which occurs when the investor does not have a chance to log in, review the new loan and manually make their investment before the loan sells-out.

The interface provides a user-friendly and client-focused tool, making investing in real estate loans hassle-free. Additionally, after every auto-invest transaction, the investor will receive a confirmation email with loan and investment details, where they will then have a 24-hour window to opt out or increase participation.

In order to tailor the best possible loan selection for each individual, Sharestates uses a multitude of adjustable measurements for each investor to meet their investment goals. These measurements include; investment totals per loan, maximum investment frequency and limit, interest rate requirements, risk ratings, property types and more.

Sharestates continues to outperform the online real estate lending industry with originations exceeding $500 million since inception in 2014. Current run rates have Sharestates exceeding $1 billion in total originations before the end of 2017, with current monthly totals hovering around $60 million. Sharestates has funded more than 520 individual loans, providing an average return on investment of 10.62%.

Kuber’s Fluid App that Allows Students to Borrow Money Interest Free Now Live on iTunes (Crowdfund Insider), Rated: A

Kuber Inc, a Southern California based Fintech company, has launched it’s personal finance product targeting the more than 22 million university students in United States. Fluid App is now live on Apple iTunes store and free to download. This is first of its kind finance product is designed specifically to build credit for college students in America.

Using the app, users may borrow up to $500 dollars interest free and without and other associated fees. The lending and repayment activities are then reported to major U.S. credit bureaus to start building credit from day one.

Direct Online Loans: Support That Works For You (NuWire Investor), Rated: A

Direct lenders have streamlined their rules and regulations to help those typically overlooked by conventional lenders. They still review you application carefully, but they don’t necessarily use subprime credit scores to reject your application. If you speak with the representatives at MoneyKey, they’ll you know what you need to provide. These reps may review your rating through other channels, but it’s not the only way they’ll determine your candidacy. It’s just one number amongst many factors they use to review your application.

They also don’t rely on in-person meetings to determine your candidacy, as they do most of their business online. All they require is basic contact and financial information submitted in an online application, and they’ll notify you if you qualify within minutes. For those that do, you’ll receive a phone call from a representative to verify the information that you supplied. If everything checks out, direct payday lenders like MoneyKey deposit your approved short term loan into the account that you supplied on your application. In some cases, you’ll receive your cash in as little as one business day.

Robo-Advice Is Not Your Differentiator (FA Magazine), Rated:  AAA

Increasingly, robo-advice technology will become bare necessities for any retail financial advice firm that wants to grow by adding value to financial advisors and their clients.

How to Get Small Business Loans: Part 2 (FX Daily Report), Rated: B

At some point, bank is one of the most reputable lenders. Banks usually have lower interest rates and the credit duration may be longer. However, large banks usually have more requirements and slower process.

These banks may have slightly higher interest rates. However, local community banks offer simpler procedures, as they always want to be the partners for small business. Local banks commonly offers shorter credit period.

They are the most welcoming partners for quick loan. Direct online lenders usually apply a relatively easy loan process. They are also supported by reputable lenders. Another advantage is that the lenders may not require you to provide collateral. Some lenders do not even check your credit record before making approval. Some lenders even offer overnight credit process. Once you send the application today, you will get the money in your account tomorrow.

The disadvantages include higher interest rates, shorter duration, and lower credit limit. Direct online lenders can be easily found on internet. Some of them have only online presence, but some are online divisions of a conventional lending agency.

They also have online presence. However, peer-to-peer lending sites are not the true lenders. Instead, they act as the middlemen between the clients and the lenders.

Merrill Lynch, Betterment Execs Agree On Financial Advice For New Grads (FA Magazine), Rated: B

Joe DePaulo, CEO and co-founder of College Ave Student Loans, had this advice for grads starting a job on how to ease the burden of the ball and chain of college debt weighing on their finances:

1. Organize all your student loans to make sure you know when your monthly payments start, the amount due for each one and your various due dates so you don’t accidentally miss any payments or pay late.
2. Get to know your loan servicers — the companies handling the billing and payment services for your loans — and make sure each of them have your current contact information, including both your e-mail and mailing address.
3. Consider signing up for auto-pay for each loan through your student loan servicers. You’ll often get a discount on your interest rate when you’re making automatic payments, and you’ll know that your payments are being made on time each month. It’s a great way to save money and build good credit.
4. Know your grace period for your student loans, or how long you can wait after leaving school before you have to make your first payment. This can vary by loan depending which types of loans you have. The grace period is usually six or nine months, and it’s designed to give you time after you graduate to find a job and get on your feet before payments are due. Interest continues to accrue during the grace period on most loans though, so if you have the ability to start making payments before the grace period ends, you should. This will help you save money in the long run.
5. Pay attention to the interest rate on each loan. When you can afford to pay a little extra, you’ll usually save the most money by paying down the loan with the highest interest rate first.

United Kingdom

RateSetter, MarketInvoice and LendInvest make this year’s Fintech50 list (P2P Finance News), Rated: AAA

RATESETTER, MarketInvoice and LendInvest have made this year’s Fintech50 list, while Funding Circle and Zopa have been awarded a place in the Fintech50 Hall of Fame.

The annual Fintech50 list, which was first launched in 2013, selects the 50 European fintechs that are transforming financial services and recognises innovation rather than revenue. The companies are selected by a panel of more than 60 industry experts, following extensive year-round research from the Fintech50 team.

This year’s list, unveiled at a launch event at Silicon Valley Bank in London on Tuesday night, was chosen out of 1,500 companies. As well as an impressive presence from a raft of UK peer-to-peer lenders, the list includes business finance provider Iwoca, crowdfunding platform Seedrs, challenger lender Atom Bank and cryptocurrency Ethereum.

The Fintech50 2017:

  • Action.ai (London, UK)
  • Advice Robo (Amsterdam, Netherlands)
  • Aire (London, UK)
  • Algomi (London, UK)
  • AQMetrics (Kildare, Ireland)
  • Atom Bank (London, UK)
  • Azimo (London, UK)
  • Behaviosec (Stockholm, Sweden)
  • Bonify (Berlin, Germany)
  • Clearmatics (London, UK)
  • Clearscore (London, UK)
  • ComplyAdvantage (London, UK)
  • Contego (London, UK)
  • Credit Benchmark (London, UK)
  • Curve (London, UK)
  • Cuvva (Scotland, UK)
  • DarkTrace (Cambridge, UK)
  • Digital Shadows (London, UK)
  • Ethereum (worldwide)
  • FeatureSpace (London, UK)
  • Fenergo (Dublin, Ireland)
  • Figo (Hamburg, Germany)
  • FundApps (London, UK)
  • Iwoca (London, UK)
  • Kantox (London, UK)
  • LendInvest (London, UK)
  • Mambu (Berlin, Germany)
  • MarketInvoice (London, UK)
  • Meniga (Rejkyavik, Iceland)
  • Monzo (London, UK)
  • N26 (Berlin, Germany)
  • NetGuardians (Switzerland)
  • Onfido (London, UK)
  • OpenGamma (London, UK)
  • PayKey (Tel Aviv, Israel)
  • Privitar (London, UK)
  • Qumram (Zurich, Switzerland)
  • Railsbank (London, UK)
  • Raisin (Berlin, Germany)
  • RateSetter (London, UK)
  • Revolut (London, UK)
  • Scalable Capital (Munich, Germany / London, UK)
  • Seedrs (London, UK)
  • SETL (London, UK)
  • solarisBank AG (Berlin, Germany)
  • Suade (London, UK)
  • Thought Machine (London, UK)
  • Traxpay (Berlin, Germany)
  • Trussle (London, UK)
  • WeFox (Switzerland)

The FinTech50 Hall of Fame:

  • Adyen (Amsterdam, Netherlands)
  • Currencycloud (London, UK)
  • eToro (Limassol, Cyprus)
  • Funding Circle (London, UK)
  • iZettle (Stockholm, Sweden)
  • Klarna (Stockholm, Sweden)
  • Nutmeg (London, UK)
  • Transferwise (London, UK)
  • WorldRemit (London, UK)
  • Zopa (London, UK)

The Hot Ten – this year’s ones to watch:

  • Bud (London, UK)
  • ClearBank (London, UK)
  • Cleo (London, UK)
  • Datasine (London, UK)
  • Deposify (Dublin, Ireland)
  • Governance.io (Luxembourg)
  • Meteo Project (Paris, France)
  • Nxchange (Amsterdam, Netherlands)
  • Post Quantum (London, UK)
  • 10xBanking (London, UK)
China

China P2P lenders facing tighter disclosure rules (China Economic Review), Rated: AAA

Efforts to clean up China’s scandal-plagued peer-to-peer (P2P) lending sector are taking another step forward with a pilot program that imposes tighter information disclosure requirements to protect customers from being swindled, Caixin reports.  Under an initiative announced on Monday, companies will have to give people who use their P2P platforms a range of information including their registration address, shareholders, who provides custodian services, how many investors they have, their bad loan ratio and their outstanding loans. Altogether 47 separate pieces of information will need to be disclosed, 32 of which are mandatory, according to the National Internet Finance Association of China (NIFA), which is in charge of the pilot.

Chinese banks boost offshore lending in Asia-Pacific (The Asset), Rated: A

Chinese banks have been increasing their offshore lending volume in Asia-Pacific, outside of Japan, since 2014. Based on the pro-rata mandated lead arranger (MLA) role, China’s offshore lending amounted to US$70.5 billion via 300 deals in 2016, or nearly double the 2015 figure of US$36.3 billion, and nearly three times the 2014 volume of US$24 billion in 2014.

Figures released by Thomson Reuters on June 5 show that the bulk of China’s offshore lending has been concentrated in Northeast Asia. In 2016, Chinese banks accounted for US$52.7 billion through 172 transactions on a pro-rata basis at the MLA lender level, representing an increase of 83% from 2015.

European Union

Danish fashion tycoon invests in Swedish payments firm Klarna (Daily Mail), Rated: AAA

Anders Holch Povlsen, owner of Danish fashion retailer Bestseller, is buying a stake in payments firm Klarna, one of Europe’s most highly valued tech startups, the firm said on Wednesday.

A Klarna spokeswoman declined to comment on the precise size of the stake, but said it would be at least 10 percent.

Klarna said Povlsen’s company Brightfolk would buy shares from General Atlantic, DST Global and Niklas Adalberth, who will all still retain stakes in the firm.

Doing KYC on International Investors and the Potential of Automation (P2P Banking), Rated: A

On the majority of p2p lending marketplaces that accept non-resident international investors, the necessary process to comply with ‘Know Your Customer’ (KYC) rules involves multiple manual steps both on the side of the investor and on the side of the marketplace. After filling in details in forms the investor typically needs to submit scans (or photos) of an ID or a passport. As an investor  I balk at the very few marketplaces that ask me to submit these via unsecured email. The better ones offer an upload inside the SSL secured website after login. The British marketplace typically also require a recent utility bill to confirm address.

In continental Europe a few marketplaces are doing video ident. Recently when I registered at Paskoluklubas, aside from entering details in forms I needed to schedule a Skype video call in which I answered several questions and had to show my ID live. While it was straightforward, it is not more time efficient (both for investor and for marketplace). And I was lost for words for a split second when asked for my zodiac. How many non-native-english speakers can answer that question without hesitating for the right word (luckily mine is easy to translate).

Another example of outsoucing is the process Lenndy uses. When registering, all an investor is asked by Lenndy is his email address, nothing else. Then the investor is required to link an Paysera account with at least level 3.

Last week British Relendex moved from a manual document upload process to an automated process for investors of 7 countries; Australia, Canada, Denmark, Germany, Sweden, Switzerland. Relendex uses the Call Validate solution and checks (in case of Germany) first , middle, last name, gender, phone, address, city and postal code with the data coming from three different data sources and which Relendex says has high match accuracy. Relendex’s criteria was that the data available should be of equal quality and accuracy to that of the UK database.

Irish fintech start-up Plynk raises €25m in fundraising round (The Irish Times), Rated: A

Dublin-based financial payments start-up Plynk has raised €25 million in a Series A fundraising round as it looks to roll out its money-messaging app globally.

The investment, which has been led by Swiss Privee, is one of the largest-ever Irish Series A rounds.

The company has also announced plans to increase headcount from eight to 28 over the next 12 to 18 months as the number of users it has in Ireland this week reached 6,000, easily surpassing its initial target of 4,000.

Plynk has a licence to operate across the European Economic Area, which includes the EU along with Iceland, Liechtenstein and Norway. While only available in Ireland, the start-up intends to roll out its app in Spain over the summer with Portugal to follow shortly after.

German fintech platform Fincompare raises €2.5 million to provide financing for SMEs (Tech.EU), Rated: A

The German fintech startup Fincompare has raised €2.5 million in seed financing. The funding comes from the VC Speedinvest and Uniqa insurance, both from Austria. Several business angels from Berlin also participated in the round.

The Fincompare platform allows SMEs to receive and compare various offers for loans – anywhere from €10,000 to €5 million.

Grundag Real Estate Crowdfunding Platform Launches Powered by CrowdDesk (Crowdfund Insider), Rated: A

A new real estate crowdfunding platform has launched in Germany. Grundag GmbH & Co., a wholly-owned subsidiary of CrowdDesk, has launched to provide debt based crowdfunding for German real estate projects. CrowdDesk is a white label crowdfunding platform that powers several well established platforms in Germany. The new site was launched in partnership with ERGE Miet- & Finanzvermittlung GmbH & Co. KG.

International

FINTECH – DID SOMEONE CANCEL THE REVOLUTION? (Finextra), Rated: AAA

There are indications the Fintech revolution has stalled. It promised to change market structure, to radically improve products and services, and to save the incumbent banking sector from a slow slide to invisible utility status.

But these promises are yet to come to pass. Yet the revolution could still be completed – the underlying technologies are real and, deployed in the right way, they can still have a transformative effect on the financial services industry.

Source: FinTech – Did Someone Cancel the Revolution, Accenture

Read the full report.

FinTech Innovators vs. Incumbents: Understanding the Odds (Morgan Stanley), Rated: AAA

How can investors navigate this next chapter in FinTech? In a recent global collaborative report, “FinTech: A Gauntlet to Riches,” Faucette and his colleagues offer an investment framework for understanding where FinTech companies are likely to disrupt—and where established players are poised to get ahead.

Indeed, the pace of venture capital funding in FinTechs has slowed recently, suggesting that early-stage investors are coming to grips with the challenges of this space, and that established financial services firms are likely to take a more meaningful role in funding and developing new technology.

To understand which trends favor startups and which bode well for incumbents, investors should ask some key questions:

  1. What is the existing infrastructure? Innovators have the best shot at success in areas that lack established infrastructure. One area that is particularly poised for growth is B2B payments, a large and underserved corner of the market, with roughly 50% of payments still made via checks.
  2. Is consumer behavior changing? Early adopters in a nascent market tend to be more receptive to a new technology or provider, giving innovators a first-mover advantage. This bodes well for FinTech disruptors focused on small-business insurance (a.k.a. InsurTech).
  3. Does government help or hinder innovation? 
  4. How important is access to data? Investors should take note of the role of data, which can limit a small firm’s ability to scale without partnering with a data owner.
  5. Does success hinge on collaboration? 
  6. How important is access to capital markets? Companies that require continuous access to capital markets are subject to a high degree of market volatility, which can put an entire business model in jeopardy if still early in its formation, says Faucette. For fledgling U.S. marketplace lenders (a.k.a. peer-to-peer lending) and mortgage originators, access to capital markets could be a limiting factor, especially now that established players are investing in the space.
  7. Is the industry concentrated?

TransferWise CEO: ‘There is a huge fight to be the fintech capital of the world’ (Business Insider), Rated: A

The CEO and cofounder of TransferWise says cities around the world are becoming increasingly competitive in attempts to attract tech companies.

Luxembourg earlier this year set up a public-private partnership called the “House of Fintech,” aimed at attracting more companies to set up in the country. Lobbyists from Paris have made multiple trips to the UK in recent months in a bid to tempt financial services, including fintech, to set up in the French capital in the wake of Brexit. The Monetary Authority of Singapore has also copied the UK regulator in setting up a regulatory “sandbox,” which allows innovative companies to experiment with new products in a safe environment.

Why Trustly CEO Oscar Berglund Is Offering An Alternative To Credit Cards (Forbes), Rated: A

Excitement over fintech remains high even though investor enthusiasm has been curbing in recent months. According to a KPMG report, the flow of investments has started to ease. Global investments dropped to $3.2 billion in Q1 of 2017 from $4.15 billion in Q4 of the previous year. Indeed, investors seem to have made their wagers and are now more focused on ensuring that existing fintech companies start delivering.

More mature segments, such as payments, are also seeing saturation, as new competitors seek to maximize opportunities in markets keen on going cashless.

Having processed a whopping €3.2 billion in transactions in 2016, payment startup Trustly has recently emerged as a leader in the global fintech scene. Based in Stockholm, Trustly offers a fresh perspective on payments by putting the bank account at the center of digital payments instead of credit cards. The company is now used in 29 European countries, enabling merchants to perform cross-border business easily.

Berglund: We aren’t really going head to head against big banks. We see the bank account as the hub of people’s financial lives, and it’s what most other payment methods depend on. Trustly’s service is built around the relevance of the bank account and as such around the relevance of banks.

In Europe banks focused on the online channel are at the forefront of the adoption of new technology and I believe more banks will no doubt make use of our services going forward.

Berglund: Credit cards were invented to make payments easier in the physical world, but they may not have the same raison d’être as people move to online and mobile platforms. The truth is, it’s a pain to dig for your credit card and key in a long string of numbers, especially if you’re on the go and trying to make a purchase from a tiny smartphone screen. With Trustly, users can make a payment in just a few steps using only information they know top of mind. And our product is optimized for mobile and other devices to make it even more convenient. So while credit cards won’t be going anywhere for a while, it’s important to offer other user-friendly alternatives too.

India

CIOs Will No Longer be the Most Influential Technology Decision Makers (BW Disrupt), Rated: AAA

The year 2016 registered an impressive impact on the Indian economy and therefore was a landmark year for fintech and banking industries. This year, 2017 started out to be an exciting one for Financial Technology which will spell out a future of continued scale and disruption for the industry, especially after India’s digitalisation movement. With the proliferation of cloud and mobile technologies advancing and customer demand for better digital banking experiences growing, Fintech firms will continue to innovate faster and offer new services with richer user experiences.

Top 5 Trends to watch out for: 

  1. Mobile Everything
  2. Chatbots, machine learning & AI
  3. Banks & Fintech firms to partnerAccording to a recent Business Insider report, 87% of banks that have partnered with financial service providers (fintech companies) have been able to cut costs. Additionally, the same study found that 54% of partnerships increased revenue.
  4. Blockchain moves out of the labs into the real world
  5. Reforming Digital Leadership: CIOs will no longer be the most influential technology decision makers. With the continued rise of the Chief Digital Officer and in many cases the Chief Marketing Officer will help financial institutions usurp the IT team in implementing ‘digital’ throughout the organisation.

FinMomenta Plans to Expand Footprint of P2P Lending Model ‘Tachyloans’ to Other Asian Nations (BW Disrupt), Rated: A

FinMomenta founders believe that they are the Next Moment in FinTech industry. With their latest product TachyLoans, they plan to build a digital lending marketplace that connects people (Investors/Lenders) who wants to invest/lend their incomes, with people (Borrowers) who are looking to borrow funds to meet their financial requirements. The platform caters to both Individuals and Small & Medium Enterprises (SMEs).

How does the platform FinMomenta work?

Investors can earn returns as high as 25% per annum and borrowers can avail loan at lower interest rates starting from 11.5% per annum. Interest rates are charged based on borrower’s creditworthiness. Lenders and borrowers can negotiate on the loan amount, interest rates and loan tenor through a two-way bidding process available on their dashboard.

Please elaborate key features/services of Tachyloans?

The platform uses a unique proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. It also uses e-KYC and Aadhaar for verification of the borrowers that helps lenders to automatically invest in the recommended list of borrowers.

Tachyloans not just focuses on cutting down the transaction time for lenders and borrowers but also reduces the overhead costs associated with the traditional lending process and enables us to pass on the cost savings to lenders in the form of higher returns and to borrowers in the form of lower interest rates. Lenders and borrowers can negotiate on the interest rates through Tachyloans platform.

What is the Monetization model of FinMomenta?

FinMomenta charges a service fee to both lenders and borrowers for having loans enabled on the platform.

What is the market size and opportunities for companies operating in Fintech industry in India?

Consumer credit market in India is currently at $300bn out of which $98bn is the personal loans market. The market is currently growing at 14% year on year. The SME business loan market is currently at $600bn and is expected to grow to $3.4 trillion by 2022. In terms of the population, out of 1.2bn population only 150mn population has their history in credit bureaus and 20mn has scores acceptable to banks. There is a very small population that is being serviced by the banks. Around 10mn citizens are entering jobs every year and with more than 55% less than 45 years, the population would have huge aspiration to grow in life which would require access to credit for them.

Canada

Aztec Exchange Launches PayMe in Canada with EDI Gateway (PR Newswire), Rated: A

Aztec Exchange, a global supplier of invoice finance products and services, and Canadian EDI provider EDI Gateway today announced a partnership to deliver Aztec’s breakthrough early e-invoice payment service PayMe (payme.cloud) to EDI Gateway’s (edigateway.com) Canadian supplier and corporate clients.

PayMe is unique in the early payment market because, unlike with factoring firms, creditworthiness is based on that of the buyer, not the supplier.  There is complete pricing transparency, meaning there are no hidden fees or interest charges.  Suppliers are only required to pay a minimal invoice discount charge and a standard transaction fee.  For customers on the EDI Gateway platform using PayMe, this means they’ll typically receive payment within 24 hours.  Furthermore, because it’s entirely online, they can submit for early payment any time from any internet-connected device.  There are also no restrictive long-term contracts and suppliers can sell as many approved invoices as they want.

This partnership with EDI Gateway is the latest for PayMe, which launched in May 2016.  Over the course of the past year, PayMe has had tremendous growth and is now available to more than 100,000 SMEs globally via e-invoice providers as a white label solution for traditional banks.  It will soon be launched directly through corporates. For EDI Gateway, PayMe complements their existing e-invoicing solution, enabling them to offer an integrated payment and financing service.  The firm looks to continue this approach going forward to attract and retain their retail and vendor clients.

Authors:

George Popescu
Allen Taylor

Regulating Fintech: Five Key Steps to Sustainable Growth

fintech regulation

Ronald Reagan once succinctly summarized the US government’s view on regulation the following way: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Taking the UK as an example, financial technology is worth about 7 billion GBP and employs around 60,000 people – safe to say, […]

fintech regulation

Ronald Reagan once succinctly summarized the US government’s view on regulation the following way: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Taking the UK as an example, financial technology is worth about 7 billion GBP and employs around 60,000 people – safe to say, the sector is on a roll. On top of the direct economic effect, one has to consider fintech’s wider and broader economic impact from lowering the lower cost of credit or insurance, improving the level of financial inclusion and reducing financial transaction costs across remittances, payments and investments.

Of course, any industry is prone to missteps along the way. The few examples for fintech globally include the proliferation of Ponzi schemes in China together with the growth of P2P lending, the use of bitcoin for illegal purchases, and investor misleading at Lending Club that brought the demise of the company’s founder. Nonetheless, since the industrial benefits are beyond reproach, the ball is in the regulator’s corner to curb the excesses, streamline the judicial framework, and establish the rules of the road for the multi-faceted and rapidly ascending Fintech industry.

There is clear recognition worldwide that regulation is needed to ensure long-term and sustainable growth. At the end of last year, the Office of Comptroller of the Currency (OCC), a division of the U.S. Department of the Treasury, proposed to create a federal charter for non-deposit banking products and services – a major change for a country with state-by-state financial regulation, which could lower barriers to entry for companies looking to innovate the financial services industry. While the Governor of the Bank of England Mark Carney has recently stressed the need to create holistic infrastructure to support the flourishing sector.

Having had first-hand experience in a regulated financial services industry from Brazil to EU and Central Asia, I believe there are a number of clear steps that can drive the growth of fintech globally.

Clear communication With the Industry

Although it may appear obvious, it is critical for the regulator to engage with the fintech industry in gaining an optimal understanding of the needs of the industry. Obviously, the industry is only one of the voices, but in the environment of rapid technological and economic change, it makes sense to get first-hand information. This may help the regulator to prioritize and focus on solving strategic issues.

Share regulatory functions

As much as is possible, regulatory functions have to be shared. The fintech umbrella covers multiple industries: consumer and corporate lending, insurance, and payments to name a few. In our experience, it makes sense to functionally compartmentalize the regulation. For instance, the central bank or consumer protection bureau division regulating consumer lending by the banks should be regulating the similar area of fintech activity. This makes sense from the perspective of synchronized standards for consumer protection. It’s in everyone’s interests to have a unified set of standards on anti-money laundering (AML) and know-your-client (KYC) information disclosure as well as collection practices. Furthermore, incorporating fintech regulation together with mainstream financial services firmly places the former into the center of regulatory attention.

Focus on creation of new infrastructure

Any government should be actively seeding, sponsoring, and promoting what Mark Carney calls “hard infrastructure” for the new breed of financial services companies. This type of infrastructure is more often too much of a burden even for shared corporate investment, yet its potential benefits are clear for any country. The area of focus should be within payments, settlement, identification, and data access. One of the best global examples of the sovereign strategic thinking on the subject is undoubtedly Aadhaar in India – a biometric ID system with over one billion enrollees, or most of the country’s adult population. This gargantuan project coupled together with the country’s recent clamp down on hard cash in the economy can really change the lives of hundreds of millions of its citizens by actively encouraging financial inclusion.

Share the use of existing infrastructure

While creation of the infrastructure is clearly needed, there is lower hanging fruit for driving industrial competitiveness available to regulators globally. First and foremost, it is key to empower the citizens to take ownership of their data held by large incumbents including mainstream financial services (banks, insurance companies) and telecom companies. The way to do this is through the mandatory sharing of this information to third parties, obviously with the explicit consent of the ultimate data owner. While on the one hand it enables the latter to monetize the data and get access to more competitive offerings, this also enables the fintech firms to focus on what they do best: deploy cutting edge technologies and data analysis in targeting market inefficiencies. The prime example of data sharing is the PSD2 directive in the EU that is forcing banks to open up the trove of transactional data to third-parties via API. This initiative is clearly laudable and should be mirrored by regulators globally.

Introduce 5-year road maps

Regulatory uncertainty acts as a major overhang, preventing the industry from developing. First and foremost, this uncertainty stops the flow of capital into the industry creating a massive earning multiple compression. This further prevents the reinvestment of capital due to the increase in uncertainty. It’s important to emphasize that in the fintech world global players with technological know-how have optionality over geographical expansion. All else being equal, these companies will always invest in the countries with the most transparent rules of the road. This implies that the countries that take an ambivalent position are in a precarious position of losing out.

The future of the fintech industry will not be shaped by market adoption and technological advances alone. The role of the government in fostering fintech and steering it in the direction of sustainable growth is key.

Authors:

By Alexander Dunaev, COO at ID Finance

The establishment is still winning (in the bond market)

It’s been a tough year for The Establishment, what with all the disrupting and the Brexiting and the Trumping.

But in the bond market, the incumbents are hanging on.

Continue reading: The establishment is still winning (in the bond market)

It’s been a tough year for The Establishment, what with all the disrupting and the Brexiting and the Trumping.

But in the bond market, the incumbents are hanging on.

Continue reading: The establishment is still winning (in the bond market)