- Today’s main news: PayPal, Synchrony close consumer credit portfolio deal. Personal loans hit record high. Funding Circle updates projected returns. Furongbao gets $121M investment. Creditshelf to IPO on Frankfurt Stock Exchange.
- Today’s main analysis: Swindlers in Korea tarnish P2P lending.
- Today’s thought-provoking articles: Why Kabbage isn’t ready to go public. Why a lack of local payment options hurts retailers. Swindlers in Korea tarnish P2P lending.
- PayPal closes consumer credit portfolio sale. It will be interesting to see how this helps PayPal become a better company. Will they invest in the lending side of their business?
- Why Kabbage is not ready to go public yet. Measured growth is much more important than moving too fast. Kabbage has done well at managing its growth to this point, and alternative lenders have not fared too well after jumping the IPO shark.
- Kabbage dropped Karrot. It’s good to focus on your core strength.
- OnDeck gets highest award from TopConsumerReviews.
- SoFi adds new board members.
- Personal loans hit a new record high. Interesting that Kabbage is bailing on this segment when its hitting new highs. But I can’t fault them.
- Small Change is aming crowdfunding in DC worth it to developers.
- 19 state attorneys general unite against “Madden Fix” bills.
- Nelnet seeks to become a bank.
- PayNet hits new high on small business lending.
- Funding Circle updates projected returns.
- Who’s guiding the big three P2p lenders?
- Lendy tops 400 million GBP in funding.
- Money saving product recommendations incentivise open banking.
- LendingCrowd has record first half.
- LendInvest has another profitable year.
- Landbay co-founder wants to shake up property market.
- Orca co-founder shares update, quiz info.
- Furongbao receives $121 million strategic investment.
- Chinese P2p platform fails to pay back $15 million.
- DLA Piper adds Beijing partner.
- Why a lack of local payment options hurts retailers. An excellent read, and it brings out that in some countries Klarna is popular while in others bank payments are more popular.
- Key learnings from Cambridge Centre for Alternative Finance 2018.
- PolicyBazaar to pursue blockchain initiative.
- Artha Venture Fund makes first close.
- BigWin Infotech gets NBFC-P2P certifiction.
- Monexo Fintech to raise $5 million in equity.
- United States
- PayPal closes sale of consumer credit portfolio (FinExtra) Rated: AAA
- Why This Ambitious Startup Isn’t Going Public–Yet (INC) Rated: AAA
- Karrot Personal Loans Got Chopped: Here’s Where to Borrow Instead (Student Loan Hero) Rated: A
- Business Loan Company Receives Highest Award from TopConsumerReviews.com (Markets Insider) Rated: B
- SoFi Elects Peggy Alford & Magdalena Yeşil to Board of Directors (Crowdfund Insider) Rated: B
- Personal Loans Surge to a Record High (Bloomberg) Rated: AAA
- Why DC Developers Heart Crowdfunding (Commercial Observer) Rated: A
- 19 State Attorneys General Unite Against “Madden Fix” Bills (OLPI) Rated: A
- Nelnet Files Application for Industrial Bank Charter (Nelnet) Rated: A
- PayNet Sees Small Business Lending Reaching New Heights (Business Wire) Rated: A
- United Kingdom
- Funding Circle updates projected returns (Bridging & Commercial) Rated: AAA
- P2P platform Lendy tops £400m funding (Mortgage Finance Gazette) Rated: A
- Money saving product recommendations “biggest incentive” to use Open Banking (Credit Strategy) Rated: A
- Record first half for Scottish alternative lender (Business Insider) Rated: A
- LendInvest notches another year of profit (AltFi News) Rated: A
- Landbay co-founder looks to shake up property market (Peer2Peer Finance) Rated: A
- Who is guiding the Big Three? (Peer2Peer Finance) Rated: A
- Orca Cofounder Jordan Stodart Shares Update and Quiz Info (Crowdfund Insider) Rated: A
- Chinese P2P Lending Platform Furongbao Receives $ 121M Strategic Investment (China Money Network) Rated: AAA
- Chinese P2P platform fails to pay back $ 15m (Global Times) Rated: A
- DLA Piper Adds Beijing Partner From Shearman (The American Lawyer) Rated: B
- European Union
- Creditshelf Plans Initial Public Offering on Frankfurt Stock Exchange in Q3 (Crowdfund Insider) Rated: AAA
- ‘Dollars On The Floor’ — Why A Lack Of Local Payment Options Hurts Retailers (PYMNTS) Rated: AAA
- Key Learnings at the Cambridge Centre for Alternative Finance 2018 Conference (Lend Academy) Rated: A
- PolicyBazaar.com Becomes First Indian Unicorn Foraying into Blockchain (BW Disrupt) Rated: AAA
- Artha Venture Fund makes first close at Rs 40 crore (The Economic Times) Rated: A
- Lending platform BigWin Infotech gets NBFC-P2P certification from RBI (Media Nama) Rated: B
- P2P platform Monexo Fintech to raise $ 5 million in equity (The Economic Times) Rated: B
- Swindlers tarnish P2P loans’ reputation (Korea Joongang Daily) Rated: AAA
- Indonesia’s OVO platform to start peer-to-peer lending in Q4 – head (Nasdaq) Rated: B
PayPal closes sale of consumer credit portfolio (FinExtra) Rated: AAA
PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the closing of its consumer credit receivables transaction with Synchrony (NYSE: SYF).
Under the terms of the transaction, and related transactions with unaffiliated third parties, Synchrony acquired $7.6 billion in receivables, including PayPal’s U.S. consumer credit receivables portfolio, which totaled $6.8 billion at the time of closing, and approximately $0.8 billion in participation interests in receivables held by unaffiliated third parties. PayPal received approximately $6.9 billion in total consideration at closing.
Why This Ambitious Startup Isn’t Going Public–Yet (INC) Rated: AAA
Petralia was discussing her Atlanta-based company’s ambitious expansion plans this year, which include buying other startups and rolling out new payments products. But she was also joking about what’s shiny and new in the world of financial technology startups: everything and anything involving cryptocurrency, relating to the blockchain, or connected to artificial intelligence. Such startups were heavy on the ground in mid-June, when I interviewed Petralia and her co-founder, Rob Frohwein, at the annual MoneyConf event in Dublin, a 5,000-person gathering of entrepreneurs and established companies in every corner of the fintech ecosystem.
Lending remains a large draw for fintech-focused venture capitalists, who put $900 million into the sector in the first quarter of 2018, according to an April CB Insights report. However, venture capitalists are “on pace for a new low” of money spent on lending startups, even while overall global fintech investment is “on pace for a new high,” the report found. Instead, investors are increasingly willing to bet on startups working in wealth management or robo-advising, insurance and blockchain or cryptocurrency.
Karrot Personal Loans Got Chopped: Here’s Where to Borrow Instead (Student Loan Hero) Rated: A
In 2014, Kabbage introduced Karrot, a program that provided unsecured personal loans up to $35,000.
But Kabbage recently stopped offering Karrot personal loans to grow its other offerings. Customers who already borrowed Karrot personal loans can continue making payments online. But those in need of a personal loan will have to look elsewhere.
Business Loan Company Receives Highest Award from TopConsumerReviews.com (Markets Insider) Rated: B
TopConsumerReviews.com recently awarded their best-in-class 5 star rating to OnDeck, a leader among online lenders who facilitate Business Loans.
SoFi Elects Peggy Alford & Magdalena Yeşil to Board of Directors (Crowdfund Insider) Rated: B
On Tuesday, SoFi announced the election of Peggy Alford and Magdalena Yeşil to its Board of Directors. According to the online lender, Alford is the Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative. Previously she held positions at PayPal as CFO of Americas, Global Credit and Global Products and COO in the Asia Pacific region. Most recently, she served as the head of Human Resources-People Operations as well as the head of Cross-Border Trade for PayPal.
Personal Loans Surge to a Record High (Bloomberg) Rated: AAA
Personal loans surged to a record this year and are the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion. Outstanding balances rose about 18 percent in the first quarter to $120 billion. Fintech companies originated 36 percent of total personal loans in 2017 compared with less than 1 percent in 2010, Chicago-based TransUnion said.
Web-based firms like LendingClub, Prosper Marketplace Inc. and closely held Social Finance Inc. are driving the expansion of personal loans. LendingClub said in a filing that personal-loan originations in the first quarter soared 20 percent from a year earlier to $2.1 billion.
Why DC Developers Heart Crowdfunding (Commercial Observer) Rated: A
Small Change, was founded by Eve Picker, an architect and urban designer, with the idea of connecting investors with real estate professionals. The company’s first offering was for a tiny house in Pittsburgh, Penn in 2015. (Picker and Small Change could not provide comment due to federal law. Regulation Crowdfunding requires that all information about an offering reside on the Small Change portal and nowhere else.)
While Small Change is one of the newer platforms to the scene, other online real estate crowdfunding platforms, like Fundrise and Patch of Land, have been around for years.
19 State Attorneys General Unite Against “Madden Fix” Bills (OLPI) Rated: A
The Attorneys General of 19 states and the District of Columbia (the “AGs”) on June 27, 2018, publicly opposed to previously proposed pieces of legislation pending in Congress often referred to as the “Madden fix” bills. Namely, the AGs made their views against HR 3299 (“Protecting Consumers’ Access to Credit Act of 2017”) and HR 4439 (“Modernizing Credit Opportunities Act”) in a letter (“AG Letter”) to Majority Leader McConnell, Minority Leader Schumer, Chairman Crapo, and Ranking Member Brown. A copy of the letter can be found here: AG Letter. HR 3299 passed the U.S. House of Representatives and is pending in the Senate and revises various laws to state that a loan valid when made does not become invalid when it is sold, transferred or assigned. HR 4439 pending in a House committee would explicitly state that a bank’s being named lender is not affected by any arrangement is has with a service provider.
Nelnet Files Application for Industrial Bank Charter (Nelnet) Rated: A
Nelnet (NYSE: NNI) today announced it has filed an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Nelnet Bank, a Utah-chartered industrial bank. If the charter is granted, Nelnet Bank would operate as an internet bank franchise with a home office in Salt Lake City. Nelnet Bank would be a separate subsidiary of Nelnet, and the industrial bank charter would allow the company to maintain its other diversified business offerings.
Nelnet has hired Andrea Moss to lead the application process, and then Nelnet Bank if the charter is granted.
PayNet Sees Small Business Lending Reaching New Heights (Business Wire) Rated: A
The Thomson Reuters / PayNet Small Business Lending Index (SBLI) jumped 9.4 points to 152.7 in May and is up more than 10% on the year. The SBLI 3-month moving average also rose in May and is 11% above its year-ago level.
Of the ten largest states, growth was led by Texas (+12.9% Y/Y) and North Carolina (+12.3% Y/Y), which both climbed to record highs. The majority of industries also experienced growth in May, led by Transportation & Warehousing (+15.0% Y/Y), Mining (+9.4% Y/Y), and Construction (+7.5% Y/Y). Notably, all four of the industries that declined on a year-over-year basis are in the service sector, including Information (-9.3% Y/Y) and Accommodation & Food Services (-8.1% Y/Y). However, Health Care posted its third consecutive monthly gain (+4.1% Y/Y) after a steady two-year decline.
The PayNet Small Business Default Index (SBDFI) fell two basis points to 1.82% in May and is down seven basis points compared to a year ago, its sharpest annual decline since late 2014. On an annual basis, more than half of the major industries saw defaults fall in May, led by Mining (-183bp Y/Y), Transportation & Warehousing (-133bp Y/Y), and Professional Services (-32bp Y/Y). Regionally, defaults fell in eight of the ten largest states on a monthly basis, but were up in half of the largest states relative to year-ago levels. Notably, Texas (-36bp Y/Y) has seen defaults fall by double-digits in each of the last nine months.
Funding Circle updates projected returns (Bridging & Commercial) Rated: AAA
Following the latest review, the P2P platform has updated the projected returns it displays for each lending option and will now show these returns as a range.
Projected returns are the annual returns that a diversified investor could earn after fees and bad debt, but before tax.
The projected returns for its balanced and conservative lending options are now:
• balanced: 6-7%
• conservative: 5-5.5%
P2P platform Lendy tops £400m funding (Mortgage Finance Gazette) Rated: A
Lendy’s latest milestone comes as some banks pare back their lending and more property developers seek out alternative finance options.
The firm reached £300 million in lending in April last year and has funded hundreds of bridging and commercial property development loans since its launch in 2012. These include residential developments, commercial property, and conversions.
The £400 million has been invested by over 21,500 investors who have earned more than £40 million in interest so far.
Money saving product recommendations “biggest incentive” to use Open Banking (Credit Strategy) Rated: A
Six months into Open Banking, two fifths of customers willing to share their bank transaction data with a new lender would do so if it provided product recommendations which save them money.
That’s according to research carried out by Equifax. Other motivations to share transaction data through Open Banking include the ability to easily compare products from different financial institutions (36 percent), being offered tailored incentives for switching to a new provider (34 percent), and a streamlined process when applying for mortgages (28 percent) and loans (25 percent).
Record first half for Scottish alternative lender (Business Insider) Rated: A
LendingCrowd , the Scottish alternative lending specialist, has reported record first half lending of almost £14m in 2018 and has upped its proportion of loans to Scotland-based businesses, helped by its £2.75m partnership deal with Scottish Enterprise’s investment arm.
After three consecutive months of record lending in April, May and June, the Edinburgh-based company loaned £13.9m in the first six months of the year, compared to £4.9m for the same period last year. Activity during the second quarter also reached an all-time high, with lending of £8.8m – a 225 per cent increase on the £2.7m delivered in the second quarter of 2017.
LendInvest notches another year of profit (AltFi News) Rated: A
Its loan originations came close to doubling, up 91 per cent to £536m. Revenues were also up, increasing to £53m for the year. Originations look set for further growth too, with lending capital growth of 94 per cent to £791m.
However, despite a surge in these key metrics, profits remain relatively modest at just £1.9m before tax for the period, up from £0.1m before tax the previous year, according to the firm’s gross management accounts. By IFRS standards, LendInvest recorded a similar £1.8m in profit last year, but made a loss of £1m in the preceding year (ending 31 March 2017).
Landbay co-founder looks to shake up property market (Peer2Peer Finance) Rated: A
GRAY Stern (pictured), the co-founder of buy-to-let peer-to-peer lender Landbay, is aiming to shake up the UK property market with his new company.
The investment portal, called Dot, enables amateur landlords to invest in UK and US properties that it has already sourced via estate agents and property portals. The properties come with a pre-approved mortgage, enabling anyone with a 30 per cent deposit to buy them instantly.
As part of its package, Dot provides all the services a landlord would need, including insurance, tax compliance, lettings and management, thereby taking some of the hassle out of the process.
Who is guiding the Big Three? (Peer2Peer Finance) Rated: A
The ‘big three’ P2P lenders – Zopa, Funding Circle and RateSetter – have often led the way in this process.
And as these firms have evolved, their board members – both executives and non-executive directors (NEDs) – have reflected these changes.
Here we look at the make-up of these boards and analyse the expertise and experience of the people who are guiding the big three.
Orca Cofounder Jordan Stodart Shares Update and Quiz Info (Crowdfund Insider) Rated: A
In preparation of its Lending Challenge, the P2P investment aggregation provider Orca partnered with UK P2P Lending Knowledge Leaderboard and posted a quiz targeting investors and industry players to see how much people know about the P2P knowledge. Neither questions nor answers will be posted here to keep the quiz fair.
Orca has teamed up with Peer2Peer Finance News; all winners will receive a print subscription to the magazine. The top 3 quiz placers will win:
- 1st place: £100 John Lewis voucher, P2P Finance News magazine subscription & Trophy
- 2nd place: Amazon Echo Dot and P2P Finance News magazine subscription & Silver medal
- 3rd place: Regency Hamper and P2P Finance News magazine subscription & Bronze medal
Chinese P2P Lending Platform Furongbao Receives $ 121M Strategic Investment (China Money Network) Rated: AAA
Chinese peer-to-peer lending platform Furongbao announced that it has received a RMB800 million (US$120.6 million) series B round, strategic investment from a controlling shareholder of Wanjiale Gas Appliances, a Chinese household appliances manufacturer.
Chinese P2P platform fails to pay back $ 15m (Global Times) Rated: A
A Hangzhou-based peer-to-peer (P2P) lending platform has failed to pay around 100 million yuan ($15 million) back to its investors, media reports said on Thursday.
An investor surnamed Zheng who is based in Hangzhou, East China’s Zhejiang Province, told the Global Times on Thursday that he had invested about 50,000 yuan on niubangold.com, but now he cannot withdraw money from the platform. “[Investors] have reported the case to local police,” Zheng said.
According to a statement posted on niubangold.com late Tuesday, projects worth 98.5 million yuan are overdue.
DLA Piper Adds Beijing Partner From Shearman (The American Lawyer) Rated: B
DLA Piper has recruited capital markets partner Yang Ge in Beijing from Shearman & Sterling, where she was counsel.
Ge’s practice focuses on equity and debt securities offerings. During her time at Shearman, which she joined in 2011, she was involved in several Chinese companies’ initial public offerings in the U.S., including advising the underwriters on online lender LexinFintech Holdings Ltd.’s $124.2 million Nasdaq IPO earlier this year and online micro-lender China Rapid Finance Ltd.’s $60 million listing on the New York Stock Exchange last year.
Creditshelf Plans Initial Public Offering on Frankfurt Stock Exchange in Q3 (Crowdfund Insider) Rated: AAA
Creditshelf Aktiengesellschaft, a Germany based online lender, has announced its intent to do an initial public offering (IPO) on the Frankfurt Stock Exchange. The IPO is currently scheduled to take place for the third quarter of 2018. The offering is expected to be newly issued shares with a capital increase in the amount of around € 15-20 million. Creditshelf says that Hevella Capital GmbH & Co. KGaA (backed by Rolf Elgeti) has placed a backstop order of up to € 15 million if and to the extent the shares are not subscribed for by investors in the course of the offering.
Creditshelf is an online lender that targets the German marketplace providing access to capital for SMEs. The platform targets a larger ticket size than many other SME lenders with an average loan size of around €500,000 and €600,000 – and moving higher.
‘Dollars On The Floor’ — Why A Lack Of Local Payment Options Hurts Retailers (PYMNTS) Rated: AAA
As digital technology keeps bringing new efficiencies to transactions, and more consumers around the world turn to eCommerce for retail and other purchases, an accompanying trend is making life interesting for merchants and payment providers. Local payments options are increasing, resulting in a sector that promises to undergo more fragmentation in the coming years.
Scandinavian consumers have embraced Klarna and other pay-by-invoice services — for reasons not entirely understood by Booth and other analysts, it seems.
If a Chinese consumer trying to make an online purchase cannot do so through Alipay or WeChat Pay, that consumer is more likely to search for another merchant that takes that form of payment rather than, say, using their own UnionPay-branded payment card, Booth said.
Key Learnings at the Cambridge Centre for Alternative Finance 2018 Conference (Lend Academy) Rated: A
Greg Medcraft is the former head securities regulator in Australia and is now the Director of the Directorate for Financial and Enterprise Affairs of the OECD. He talked about trust and how trust in business is low today, particularly in finance. The power of the crowd is impacting trust where companies misdeeds are amplified and public opinion can turn against a company quite quickly. One of the antidotes to this is distributed ledger technology that can create networks with more trust, transparency and traceability.
Probably the country with the biggest success story when it comes to financial inclusion is Kenya. While I have heard the story of M-Pesa before I have never heard it from the person that was in charge of overseeing the economy as it was transforming Kenya. Professor Njuguna Ndung’u was the Governor of the Central Bank of Kenya from 2007 to 2015 during which time M-Pesa went from a curiosity to having half of the country’s GDP flowing through its platform. The introduction of such a system was a major challenge for central bankers as they worried about KYC concerns and financial instability.
PolicyBazaar.com Becomes First Indian Unicorn Foraying into Blockchain (BW Disrupt) Rated: AAA
Blockchain has been the talk of town primarily because of bitcoin and other crypto tokens’ parabolic rise in price and then the recent downfall. However the underlying technology, blockchain, rarely gets its fair share of limelight. But when a billion-dollar fintech startup plans a foray in this tech, it deserves attention.
In a chat with their CTO and CPO, Ashish Gupta, he revealed their plans to implement blockchain technology at PolicyBazaar.com, his outlook on the technology as well as how it could affect the fintech space in general.
Artha Venture Fund makes first close at Rs 40 crore (The Economic Times) Rated: A
Early stage venture capital firm Artha Venture Fund (AVF) has achieved the first close of its maiden fund having raised Rs 40 crore. Artha Venture Fund I, which received the approval of the Securities and Exchange Board of India in March this year, will have a corpus of Rs 200 crore along with a greenshoe option of Rs 100 crore.
The fund, which is structured as a Category I alternative investment fund, will invest in startups across seed, pre-series A and series-A levels of growth.
Lending platform BigWin Infotech gets NBFC-P2P certification from RBI (Media Nama) Rated: B
Fintech start-up, BigWin Infotech (PaisaDukan.com) has received its Certificate of Registration (CoR) from the Reserve Bank of India (RBI), paving the way for the launch of its Financial Platform – PaisaDukan.com, a release from the company said today. Though the company received an in-principle approval from RBI to set up an NBFC Peer-to-Peer lending platform in May, the operations could only commence after the firm received a CoR from the central bank. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.
P2P platform Monexo Fintech to raise $ 5 million in equity (The Economic Times) Rated: B
Armed with a licence from the banking regulator to operate an NBFC-cum-P2P lending platform, Monexo plans to invest in IT and infrastructure, which require continuous capital injection in the initial stages of any online marketplace.
The Mumbai-headquartered firm received the RBI licence last Friday.
Swindlers tarnish P2P loans’ reputation (Korea Joongang Daily) Rated: AAA
Korea’s peer-to-peer (P2P) lending market is turning out to be a Wild West of hucksters and frauds, and government regulations are nowhere in sight.
According to Crowd Institute, a research center that specializes in P2P financial markets, to date, about 3.65 trillion won ($3.2 billion) of P2P loans have been taken out in Korea, about five times the amount from two years ago.
Indonesia’s OVO platform to start peer-to-peer lending in Q4 – head (Nasdaq) Rated: B
Indonesian conglomerate Lippo Group’s payment platform OVO plans to start peer-to-peer lending in the fourth quarter of 2018, its head said on Thursday.