Thursday August 1 2019, Weekly News Digest

Consumption loans

News Comments Today’s main news: OnDeck, Chase divorce; OnDeck to pursue bank charter. DBRS assigns provisional ratings to Upstart Securitization Trust 2019-2. RateSetter ISA passes 250M GBP in subscriptions. Iwoca doubles lending, turns first annual profit. Nubank raises $400M. Elevate Credit CEO resigns. Today’s main analysis: What the Fed rate cut means. Today’s thought-provoking articles: […]

The post Thursday August 1 2019, Weekly News Digest appeared first on Lending Times.

Consumption loans

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United States

United Kingdom

China

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News Summary

United States

OnDeck Pursuing Bank Charter, Loses Chase (Lend Academy), Rated: AAA

OnDeck had some pretty interesting updates in their earnings release which took place earlier today (Editor: July 29).

Probably the biggest shock was that Chase is concluding their partnership with OnDeck.

Chase will stop originating loans through OnDeck and OnDeck will continue to service the loans for two years.

You can view OnDeck’s Q2 earnings press release here.

Source: Lend Academy

What’s next for OnDeck after breakup with JPMorgan? (American Banker), Rated: A

In retrospect, Jamie Dimon’s comment that his bank could duplicate the capabilities of online lenders might have served as a warning.

“Can we do something like that? Of course we can,” the JPMorgan Chase Chairman CEO 

OnDeck shares slide 22% (Biz2Credit Email), Rated: B

Shares of OnDeck (According to industry expert Biz2Credit CEO Rohit Arora, OnDeck spent a lot of money marketing when they should have focused more on managing risk and developing technology – the two most important things in today’s small business lending environment.

“Their gross write-offs were 15%… and that is in an economy that is doing very well,” Arora said.

DBRS Assigns Provisional Ratings to Upstart Securitization Trust 2019-2 (DBRS Email), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by Upstart Securitization Trust 2019-2 (UPST 2019-2):

— $230,208,000 Class A Notes at A (low) (sf)
— $61,558,000 Class B Notes at BBB (low) (sf)

Source: DBRS

Read the DBRS Presale Report here.

KBRA Assigns Preliminary Ratings to Upstart Securitization Trust 2019-2 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2019-2 (“UPST 2019-2”). This is a $358.4 million consumer loan ABS transaction that is expected to close on August 7, 2019.

Preliminary Ratings Assigned: Upstart Securitization Trust 2019-2

Class

Preliminary Rating

Expected Initial
Class Principal

A

A- (sf)

$230,208,000

B

BBB- (sf)

$61,558,000

C

BB- (sf)

$66,617,000

Europe’s startup banks are coming to America. Can they succeed? (CNN), Rated: AAA

Two of Europe’s most popular online banks are making a big push into the United States. But they may struggle to win over consumers.

Berlin-based N26 and its UK rival Monzo have signed up millions of young professionals in Europe by offering free accounts that can be opened in minutes via smartphones.
Critics say the startup European banks remind them of American online-only banks that sprang up and then disappeared during the dot-com boom.

Netflix for banking; Equifax settles (PeerIQ), Rated: AAA

But first, in industry news, Equifax settled $700 million with state and federal authorities due to the 2017 security breach. Investors are looking past the incident. Equifax’s stock price is within earshot of an all-time high.

“Netflix” Model for Banking

MoneyLion’s “all-you-can-eat” membership pricing model has distinguished itself from the pack. MoneyLion provides customers access to financial advice, loans, and other banking service. Customer’s can enjoy the lion’s share of offerings all at a bundled rate $20/month.

The near-Unicorn FinTech announced a roaring $100 M funding round led by Edison Partners and Greenspring Associates, bringing PIC to ~$200M. MoneyLion is looking to invest in broker dealer, training, and stock-investing capabilities and further distance itself from potential copycats.

Series Money Raised Valuation Services Provided
MoneyLion C $200M ~$1B Financial advice, loans, integration of other bank accounts
Chime D $309M $1.5B Debit, checking, and savings accounts with no fees
Acorn E $270M $860M Rounds up purchases and invests the change, financial education
Betterment E $275M $800M Robo-advising, savings, checking (soon), debit cards

Source: PeerIQ

Here’s what that Fed rate cut means for you (CNBC), Rated: AAA

The Federal Reserve’s decision to cut interest rates 25 basis points for the first time in over a decade marked a dramatic shift in monetary policy.

Now, interest rates are historically low, which leaves the central bank with little wiggle room in the event of a recession or if the economy stumbles. The current target range for its overnight lending rate is 2% to 2.25%.

In the past five years, the average interest rate charged on credit card debt has increased 35%.

Considering that the average household currently owes $8,390, credit card users would save roughly $1.5 billion in interest as a result of a quarter-point rate cut, a separate report by WalletHub found.

Elevate Credit CEO Resigns as Q2 Revenue Misses, Guidance Cut (Crowdfund Insider), Rated: AAA

Elevate Credit (NYSE: ELVT) announced the exit of CEO Ken Rees today a Q2 earnings release missed on top-line numbers and the Fintech lowered guidance for Q3. Current COO Jason Harvison was selected to be interim CEO as the firm seeks a full-time replacement. Rees will remain on the Board of Directors.

Japanese Online Retailer Rakuten Seeks U.S. Bank Charter (WSJ), Rated: A

Japanese online merchant Rakuten Inc. wants to open a bank in Utah to offer loans, credit cards and other financial services to customers of its existing U.S. cashback-shopping business, the company said Friday.

“We’re going to focus on that customer base we already have,” said Lee Carter, the new head of banking development at Rakuten and a former UBS Group AG executive. “That’s really the community that we want to extend additional financial services to.”

My Company Surpassed $ 7 Billion in Business By Investing in This 1 Thing (Inc.),Rated: A

In the early days of my company, Kabbage, we struggled against requests from some potential partners. They wanted customers to be able to upload traditional loan paperwork like bank statements and tax returns.

By insisting on data connections, which in 2008 was usual, we lost some potential upfront revenue but prioritized a unique customer relationship and experience that would make us a more than $7 billion lending platform just a few years later.

Online bank Green Dot reveals savings account with a rate 30 times the national average (CNBC), Rated: A

Branchless bank Green Dot is launching the highest yielding bank account in the industry.

The Pasadena, California-based bank, which gained traction with prepaid cards in the dot-com era, launched a new bank account Tuesday with 3% annual interest on savings, and 3% cash back on all online debit card purchases. The average rate for savings accounts, according to Bankrate.com, is 0.1%.

The 3% rate on a savings account is the highest for any bank in the country, according to Bankrate.

The Story of Rocket Loans and the Rebirth of Detroit (Lend Academy), Rated: A

I was in Detroit recently at the invitation of Rocket Loans CEO, Bill Parker. I do visits to fintech companies quite regularly but usually in the big hubs of New York, San Francisco or London. This was my first visit to Detroit for a couple of decades so I was excited to see how the city had changed. And you can’t really tell the story of Rocket Loans without also talking about the city of Detroit.

Quicken Loans is the crown jewel of the financial component of Rock Ventures. It is now the largest mortgage lender in the country, bigger than even the largest banks. They seem to be slowly moving away from that brand, though, and moving to Rocket Mortgage which has a much more modern and innovative feel.

BofA terminates First Data partnership (Finextra), Rated: A

Bank of America is to terminate its merchant services partnership with First Data when the ten-year contract expires in June 2020.

The news came within hours of Fiserv acquiring control of First Data, sending its shares downward.

BofA says it expects to incur an impairment charge of about $1.7 billion to $2.1 billion in Q3 2019 due to the termination of the partnership, which started in 2009.

Open Banking Takes On Bad Rap Of Merchant Cash Advance (PYMNTS), Rated: A

The merchant cash advance is considered the payday loan for many in the small business lending market — and that’s not necessarily a good thing. While designed to connect small business owners to quick capital for a boost to their cash flow, the MCA has earned a reputation for some predatory behavior, like sky-high interest rates and fees.

Man Repeller and Klarna Collab on “Dream Closet” Pop-Up at Showfields (Sourcing Journal), Rated: A

Fashion and lifestyle blog Man Repeller is taking operations offline through a pop-up retail collaboration with Klarna. Opening at Showfields in New York on Monday, the “highly instagrammable” retail space was crafted to represent a shopper’s “dream closet,” Man Repeller said in a statement. Curated by the Man Repeller team, the temporary store includes offerings…

Visa pitches a program offering fintechs faster market access through an ecosystem of partners (TechCrunch), Rated: A

Visa is pitching a new way for startups in the fintech space to get to market faster by using its rails and a group of pre-approved partners.

Chiefly, the process makes it easier to integrate with Visa. It’s an attempt to put the payment processor’s network, VisaNet, at the center of a vast array of services ranging from payroll to business to business payments and online banking, online lending and even digital wallets.

The Most Exciting Piece Of Opportunity Zone Investing Is Still Being Defined (Benzinga), Rated: A

Despite the enthusiasm they have received from the private equity world and the billionaire hedge fund set, a majority of investors have been mostly shut out of the conversation surrounding the Opportunity Zones initiative included in the 2017 Tax Cuts and Jobs Act.

Although there is already a flood of capital being funneled into qualified funds (upward of $40 billion according to the National Council of State Housing Agencies’ Opportunity Zone Fund Directory) Opportunity Zones remain an ongoing experiment in maximizing the benefit to both investors and the communities in which they invest.

According to Thomas McDonald, Investment Product and Portfolio Manager of the online real estate investing platform CrowdStreet, the new language is a critical move for the program.

Real estate lending platform Groundfloor raises $ 3 million through crowdfunding (Housingwire), Rated: A

Groundfloor, a real estate lending platform that raises its loan funds via crowdfunding from the public, announced Wednesday it raised $3 million from 1,580 investors, while also doubling its annual revenue in the second quarter of 2019.

Groundfloor is taking private real estate lending public (Groundfloor Email), Rated: B

As we close out the first half of the year, we’re excited to report accelerating growth and strong financial results for the quarter. Once again, GROUNDFLOOR more than doubled its year-over-year revenue for the quarter to $1.6 million, 1H revenue to $2.6 million and trailing 12-month revenue to $4.4 million.

OCC’s innovation pilot gets little love from banks (American Banker), Rated: A

The OCC received 19 comment letters on a pilot program announced in April meant to provide supervisory clarity as national banks pursue “novel activities” in which regulatory uncertainty is perceived to be a barrier to development.

Melissa Koide of FinRegLab (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Melissa Koide, the founder and CEO of FinRegLab. They have just published their first research report this week on the use of cash flow data in underwriting. It is the first independent research done on this topic and it is milestone for both FinRegLab and the fintech community.

Zerocard aims to reduce overspending with “debit-style” credit card and rewards (CNBC), Rated: A

Fin-tech company Zero announced on Tuesday, July 30, the public release of Zerocard, a credit card providing a “debit-style experience” issued by WebBank and backed by Mastercard.

Zerocard aims to be an alternative to credit cards from big banks that make money off cardholders who fall into debt.

Genesis Reports $ 746 in Crypto Lending/Borrowing Originations in Q2: Best Quarter Ever (Crowdfund Insider), Rated: A

Genesis, a digital asset trading and lending platform that is also a broker-dealer registered with FINRA, and a BitLicense holder with the New York State Department of Financial Services, reports that its services are booming.

According to a release from last week, Genesis’ Q2 performance was the best over as it topped $746 million in loans/borrowing – a 48% quarter over quarter increase.

Genesis states that total active loans increased to $454 million – a 149% increase over Q1.

Northwest Community Credit Union Short-Term Loans, Powered by QCash Financial’s Platform  (Yahoo! Finance), Rated: A

Headquartered in Eugene, Oregon, Northwest Community Credit Union (NWCU) launched two new products earlier this year called Northwest Cash and Northwest Cash Plus, offering short-term loans from $150 to $700 and $701 to $4,000, respectively. Both products are designed to help their members deal with unexpected cash needs with an easy to use application process.

Using QCash Financial’s white-label, digital lending platform, NWCU automated the loan process using the member’s credit union relationship to make the lending decision rather than credit history.

Kony Secures $ 37 Million in Financing from BMO (Finovate), Rated: B

An infusion of $37 million in debt financing from BMO will help cloud-based digital banking and low-code platform company Kony “accelerate growth” in its two signature solutions: Kony DBX, the company’s digital banking technology, and Kony Quantum, its low-code development platform. The financing, courtesy of BMO’s Technology and Innovation Banking Group, adds to the more than $115 million in funding Kony has raised to date.

White Oak Commercial Finance Responds to Increasing ABL Demand with New Key Hires (GlobeNewswire), Rated: B

White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today the addition of two new professional underwriters, further increasing the company’s originations presence across the United States. Mr. Sudhir Chaudhry joins White Oak’s Los Angeles office bringing nearly 25 years of structured finance and underwriting experience. Mr. Kevin Maitland joins White Oak in Boca Raton with over 14 years of asset-based lending and commercial banking experience.

FINICITY INTEGRATION WITH ELLIE MAE ENCOMPASS DIGITAL LENDING PLATFORM NOW LIVE  (Finicity), Rated: B

Finicity, a provider of real-time financial data access and insights, and Ellie Mae, the leading cloud-based platform provider for the mortgage finance industry, today announced that Finicity’s digital Verification of Assets (VoA) solution is now available through Ellie Mae’s Encompass Digital Lending Platform.

United Kingdom

RateSetter ISA passes £250m in subscriptions (LoveMoney), Rated: AAA

But by investing within a large, diverse portfolio of loans (RateSetter’s portfolio is currently £875 million with 250,000+ loans) investors get the stability of scale and this makes for steady and predictable returns.

And putting this inside the ISA tax-free wrapper, it’s no wonder that in less than 18 months since launch, RateSetter’s Innovative Finance ISA has attracted more than £250 million of investments from people looking to put their money to work.

Platforms may be forced to favour high net worths due to incoming 10pc rule (P2P Finance News), Rated: AAA

RETAIL investors are at risk of being shut out of the peer-to-peer lending sector due to the so-called 10 per cent rule that will come into force this December.

However, a number of P2P lending platforms have a minimum investment of £1,000, which would mean that individuals must have at least £10,000 in total to invest across a variety of asset classes. Official statistics indicate that most UK adults do not have this amount of money to invest, which could effectively bar them from certain platforms.

P2P lenders such as Zopa, Funding Circle and ThinCats require a minimum investment of £1,000, but the FCA’s latest financial lives survey shows that 49 per cent of UK adults, equating to 25 million people, either have no such assets or have less than £10,000 in value.

Iwoca doubles lending, turns first annual profit (AltFi), Rated: AAA

Iwoca almost doubled its loans last year, leading to its first annual profit since the small business platform was founded eight years ago.

The London-based fintech, started by chief executive Christoph Rieche (pictured, centre) and James Dear in 2012, said loan originations jumped by 91 per cent to £325m, as its lending hit the equivalent of 12 per cent of the UK’s small business overdraft market over the last year.

Former RateSetter executive to launch new P2P platform (P2P Finance News), Rated: A

RATESETTER’S former chief technology officer John Gillespie is preparing to launch a “next generation” peer-to-peer consumer lending platform.

After raising money from family and friends, SquareDeal.Finance has opened pre-registration for a funding round on equity crowdfunding platform Seedrs.

Gillespie has described the platform as “the next generation P2P consumer lender”, although he said there would be scope to expand into other types of finance in the future.

Digital asset lending platform outlines new framework in a bid to resemble securities market (The Trade Crypto), Rated: A

A digital asset lending platform is looking to set new industry standards with the launch of a framework using master agreements typically seen from incumbent capital markets bodies.

The Global Digital Assets Lending Agreement (GDALA) was developed by Lendingblock, with legal counsel and support from Norton Rose Fulbright.

The platform, targeting institutional investors, will use master agreements framework similar to ISLA’s Global Master Securities Lending Agreements, ICMA/SIFMA’s Global Master Repurchase Agreements and ISDA’s Master Agreements.

What to Know About Alternative Lending (Nav), Rated: A

Alternative lending includes business lenders that exist outside of the traditional lending space. The different types of alternative lending these lenders provide include short-term business loans, medium-term business loans, lines of credit, invoice financing, equipment financing, merchant cash advances and more. They don’t typically include bank loans or SBA loans.

ARBUTHNOT SPECIALIST FINANCE STRENGTHENS TEAM WITH TWO NEW APPOINTMENTS (Arbuthnot Latham), Rated: B

Arbuthnot Specialist Finance (ASFL) announces the appointment of Chloe Skae and Molly Markey to the relationship management team.

OakNorth completes loan to Kexgill for latest student accommodation development at the University of Hull (Fintech Finance), Rated: B

Fintechs invited to enter £2m affordable credit challenge (P2P Finance News), Rated: B

THE TREASURY and innovation foundation Nesta Challenges are offering £2m in prize money to encourage fintechs and community lenders to work together on affordable credit solutions.

Over 5.4 million high-cost short-term credit loans were made in the year to 30 June 2018, according to the Financial Conduct Authority’s consumer credit data.

China

China’s Generation Z Is Hooked on Credit (Bloomberg Businessweek), Rated: AAA

At one point in June last year, Zeng Jinpeng was more than 10,000 yuan ($1,500) in debt to a smartphone app.

Formal household borrowing rose to 54% of gross domestic product in the first quarter, up more than 4 percentage points in a year. China’s ratio is still lower than that of the U.S. (66%), Hong Kong (72%), or South Korea (100%), according to S&P Global.

Source: People’s Bank of China

Regulators last year launched a crackdown on peer-to-peer lending, which besides being a source of easy credit had also become a popular investment vehicle. The sector has shrunk to less than half its peak size as a result of forced shutdowns. Official data showed that almost 70% of China’s 50 million P2P investors were younger than 40.

New era of technological finance faces spectrum of challenges (Global Times), Rated: A

Online attacks against China’s peer-to-peer (P2P) platforms have been rising. An industry report released on Wednesday shows that more than 10 million malicious attacks were encountered by the online financial sector in the first half of 2019, and gambling-related attacks accounted for over 56 percent.

China Lending Arranges Partnership With Zhong Lian in Consumer Financing (CapitalWatch), Rated: A

China Lending Corp. (Nasdaq: CLDC) announced Monday its five-year strategic partnership with Zhong Lian Jin An Insurance Brokers Co. Ltd. in the development of consumer financing and litigation guarantee business, sending its shares up 4 percent intraday to 88 cents apiece.

European Union

Is ‘Hodling’ the Future of Cryptocurrency Lending? (150sec), Rated: AAA

The nascent cryptocurrency sector is renowned for its volatility.  It’s very early days in the development of the industry and with that, various niches are emerging within its overall purview.  DeFi or decentralised financing is one such area.  Over many years, the world of retail and business sector lending has seen little in the way of disruption.  However, that may be in the process of changing.

Firms like Ripio Credit Network (RCN), Salt Lending, EthLend, and WeTrust are emerging, providing their unique twists on financing with blockchain as a basis to their respective propositions.  Within Europe too, the market is innovating. Hodl Finance is one such entity – which is harnessing this newly emerging economy to provide its unique take on financing.

Engaging shoppers is hard. Keeping them is harder. (Candy Industry), Rated: A

New research from Klarna, a Swedish firm that offers interest-free installment payments among other payment solutions, suggests shoppers will only tolerate such aggravations for so long.

Through a survey of 2,065 shoppers conducted in May and June, Klarna found 55 percent of consumers say one bad retail experience would stop them from returning to a brand. Nearly 30 percent of consumers said they don’t find shopping as fun as it used to be.

Klarna also noted 39 percent of the 250 retailers surveyed realize shopper loyalty isn’t just driven by rewards programs. Nearly 70 percent understand they have to do more to retain customers, but just over a third of retailers are struggling to keep up with changing consumer expectations because of outdated technology and a short-term emphasis on sales.

International

The Fintech Revolution: Who Are The New Competitors In Banking? (Forbes), Rated: AAA

In Asia, Africa and Latin America, the percentage of unbanked people exceed 60% in all cases. However, people in this segment of the population do own a mobile device.

The massive use of mobile phones has allowed great successes, such as that of M-Pesa in Kenya and ten other African countries, which over the past decade has enabled more than 30 million users to transfer money, take out loans and make deposits using mobile phones, from the remotest rural areas.

The Pulse of Fintech H1 2019 (KPMG), Rated: A

Both the number of global fintech deals and the total global investment in fintech dropped in H1’19, raising $37.9 billion across 962 deals, driven by the lack of  mega deals seen in 2018.

Source: KPMG

Catching attention in marketing (Business Daily Africa), Rated: A

Kiva, with its African headquarters in Nairobi, thrives as a peer-to-peer lending website whereby millions of US dollars get lent from around the world at zero percent interest rates. In 2009, dozens of competitors of Kiva emerged based largely off their business model: get generous individuals to lend their money for a few months up to a few years all while earning no interest return as long as the funds go towards helping entrepreneurs.

Australia

4 small business tips to kickstart the 2019/20 financial year (Mozo), Rated: A

And Australian businesses have access to a number business loan sources including traditional banks and online lenders, although according to online lender OnDeck, some small businesses can have trouble securing funding from traditional sources.

New research from the lender found that nearly 25% of small to medium enterprises (SME’s) that have applied for business finance with a bank have been rejected – a figure that rises to 37% of SMEs which have been operating for less than five years.

India

P2P Lender Rupeecircle launches Affordable Credit Products for Rural Tamil Nadu (IndianWeb2), Rated: AAA

Digital lending marketplace RupeeCircle has set up a segment-wise model of credit disbursement through its P2P platform. Deserving Individuals and families belonging to certain communities who were hitherto declined loans from banks and NBFCs due to lack of sufficient credit history or lack of a proper bank account can now avail loans on the P2P platform.

Asia

Vietnam tech company NextTech pledges US$ 10M fund for early-stage startups (e27), Rated: AAA

Vietnam-based tech company NextTech announces a total of US$10 million injected into Next100, a fund dedicated for backing early-stage startups.

Recently, Next100 invested in VayMuon.vn, a P2P lending platform based in Vietnam, Heyu.asia, a startup that provides order consolidation and shipper services, and Teky.edu.vn, a tech academy for kids.

Latin America

Fintech decacorn Nubank raises $ 400M led by TCV (TechCrunch), Rated: AAA

Brazil-based Nubank, which offers a suite of banking and financial services for Brazilian consumers, announced today that it has raised a $400 million Series F round of venture capital led by Woody Marshall of TCV. The growth-stage fund is best known for its investment in Netflix but has also made fintech a high priority, with over $1.5 billion in investments in the space. According to Nubank, the company has now raised $820 million across seven venture rounds.

Shares in Brazil’s Banco Inter surge as it lures SoftBank (Business Recorder), Rated: A

Shares in Banco Inter SA surged more than 20% on Tuesday as the Brazilian online lender raised 1.25 billion reais ($329.73 million) in an offering largely sold to Japan’s SoftBank Group Corp, boosting pressure on traditional banks.

Africa

Reaching the unbanked — MTN to shake up Nigeria’s fintech sector (the africa report), Rated: AAA

In the latest bullish development, OPay, founded by Norwegian browser company Opera and which includes lead investors such as Sequoia China, raised $50m to partly fund its expansion in Nigeria.

While sub-Saharan Africa’s number of adults with a bank or other financial account increased to 43% in 2017, up 9% from 2014, Nigeria’s banked population dropped to 40%, down 4% from 2014. Over half of Nigerian adults — 60 million people — lack access to financial services.

Under the new mobile-money framework, MTN will drive user acquisition with its large existing subscriber base and powerful agent network. With a 42% market share of Nigeria’s 163m active voice subscriber accounts, MTN has a huge pool of untapped demand as each voice subscriber represents a potential new mobile money account.

Authors:

George Popescu
Allen Taylor

The post Thursday August 1 2019, Weekly News Digest appeared first on Lending Times.

Tuesday May 8 2018, Daily News Digest

Ant Financial

News Comments Today’s main news: Sharestates forms sister company, launches $300M fund with bank partners. UK mortgage industry in need of innovation, says FCA. PaisaDukan raises $225K in seed money. ShopBack buys Seedly. Today’s main analysis: Credit card usage at all-time high, delinquency rates in check. Today’s thought-provoking articles: Ant Financial is getting policy attention in China. Investor experience […]

Ant Financial

News Comments

United States

United Kingdom

China

International

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News Summary

United States

Sharestates Partners with Prominent Banks, Equity Investors to Launch $ 300 Million Fund (ADVFN) Rated: AAA

Sharestates, an online real estate investment platform, today announced their partnership with prominent bank partners and equity investors, launching a new $300 Million fund that will provide individual and institutional investors with increased funding power for real estate deals.

Coinciding with the launch of the $300 Million fund will be Syndicate Profile, a sister company offering 12-40% annual returns to investors with the potential for quarterly cash flow. With individual investments starting at $25,000, individual and institutional investors, as well as family offices, will be able to deploy capital across a spectrum of real estate opportunities not available outside of Syndicate Profile.

Credit Card Usage at All-Time Highs, But Delinquency Rates Still Remain in Check (Global Newswire) Rated: AAA

TransUnion’s report found that serious credit card delinquency rates per borrower (90+ DPD) increased in Q1 2018 to 1.78%, up from 1.69% in Q1 2017. The delinquency rate is now level with the 1.77% mark observed six years prior in Q1 2012, though it remains below the 10-year first quarter average of 1.91%. The average card debt per borrower also followed a similar path as delinquencies during the last year, rising 2.63% to $5,472 in Q1 2018 from $5,332 in Q1 2017.

The number of credit card accounts rose 2.6% in the last year to 416.5 million in Q1 2018, up from 405.8 million in Q1 2017. In that same timeframe, the number of consumers with access to a credit card also increased by 2.1% to 174.9 million from 171.4 million one year ago.

The latest origination data point to a modest 1% growth rate between Q4 2017 and Q4 2016.

Changes between Q1 2018 and Q1 2017 for Key Consumer Credit Metrics

New York State Bill Would Add Another Compliance Hurdle with “Limited Charter” for Online Lenders (Crowdfund Insider) Rated: A

A bill (Senate Bill S8340) sitting in the New York State Senate now, will create a limited state charter for internet lending.

Sponsored by New York State Senator Elaine Phillips, the bill would authorize the Department of Financial Services (DFS) to issue a new, limited state charter to “Internet Lending Services Corporations.” These entities are defined as businesses making loans over an internet or electronic platform.

Frank Rotman of QED Investors (Lend Academy) Rated: A

Frank Rotman is a founding partner of QED Investors, the most prolific VC investor in fintech over the past decade. He also authors an excellent blog, Confessions of a Fintech Junkie, which is where he published his seminal white paper, The Copernican Revolution in Banking.

 

Jitters mount as loans from private equity continue to rise (Financial Times) Rated: A

An article in the FT shares examples of businesses that have not benefited from the recent economic expansion and at the same time took out loans; companies with poor credit ratings took out $564 billion in commercial loans in 2017 which beat out a record set before the financial crisis; these loans are funded by private equity firms and other types of asset managers; the article notes that loan quality may be deteriorating as more capital enters the space and lenders look to make riskier loans.

All that tech, yet customers keep opening accounts at branches (American Banker) Rated: A

Heeding predictions that the future of banking is digital, banks of every size now offer customers mobile and online ways of opening accounts. Yet according to J.D. Power, the majority of customers — even millennials who prefer digital banking — say they open bank accounts in branches because it is too confusing to do so online.

Potential LendingTree HQ move would have significant impact to downtown Pineville, town manager says (Charlotte Business Journal) Rated: B

The online lender is considering a roughly 30-acre site in downtown Pineville for its headquarters after determining that its plans for SouthPark would not be adequate to accommodate its growth. LendingTree will go before Pineville Town Council on Tuesday to discuss its proposal for what’s known as the Cone Mill site, at 436 Cone Ave.

StratiFi Technologies Raises $ 7M in Series A Funding (Finsmes) Rated: A

StratiFi Technologies Inc., a New York- and San Francisco, CA-based provider of fintech technology solutions, raised $7m in Series A funding.

The round was led by Anthemis Group, with participation from Wolverine Holdings, Cboe Global Markets, HOF Capital, AngelList, Mike Curcio, Matt Hougan, Matt Wyndowe, and Luke Powell.

 

CyberMiles gains praise at global blockchain technology expo! (Crypto Recorder) Rated: A

CyberMiles (CMT) is one project that has been flying under the radar for some time now, but one that has the potential to transform ecommerce as we know it for good. Think of it like a next generation eBay. Therefore, it is not surprising that it was selected as the most promising blockchains during the recent global blockchain technology expo.

Last, but not least, CyberMiles (CMT) has the potential to change how loans are made and disbursed in the finance sector. That’s because it allows for the use of a person’s blockchain identity to be used in peer-to-peer lending.

FinTech Breakthrough Names CIT Point-Of-Sale Platform As “Best Small Business Lending Solution” In 2018 (PR Newswire) Rated: B

FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market, today announced that it has selected CIT‘s point-of-sale digital platform as the winner of its “Best Small Business Lending Solution” award. The platform allows business customers to finance their purchases at the point-of-sale in as little as five minutes.

CIT’s point-of-sale platform finances B2B purchases of more than $2,500. An automated credit process and mobile document signing, simplifies the financing experience enabling customers to shop, apply and complete purchases either in store or online.

United Kingdom

FCA Says Mortgage Industry in Need of Innovation (Crowdfund Insider) Rated: AAA

The Financial Conduct Authority (FCA) has published an interim report on UK mortgage market. According to the FCA, Mortgage debt accounts for over 80% of total UK household liabilities – so this is a significant sector of finance that has a profound impact on individuals.

While the FCA found that competition was effective for providing home financing, the sector of finance could do with a bit more innovation.

Source: FCA

Read the full report here.

 

China

China’s Got Jack Ma’s Finance Giant in Its Crosshairs (Bloomberg) Rated: AAA

Spanning online payments, insurance, lending, credit scores, asset management and more, Jack Ma’s Chinese behemoth resembles a mashup of PayPal, Geico, Wells Fargo and Equifax — with a bit of BlackRock thrown in for good measure. Thanks to clever mobile apps and a burgeoning Chinese middle class, Ant oversees the world’s biggest money-market fundand handles more than $2.4 trillion of mobile payments every three months. Many of the company’s 870 million customers rely on it for nearly every aspect of their financial lives.

But Ant’s extraordinary reach may soon expose the company to a major challenge: Chinese policy makers, worried that Ant and other financial holding companies pose systemic risks to the nation’s $12.7 trillion economy, are drafting new regulations that could make it much harder for the companies to grow.

12 Banks in China Implemented Blockchain Technology in 2017 (The Oofy) Rated: A

CEBNet, which is the news source for China’s banking sector, reported on Friday that twelve of the 26 Chinese banks had included in their annual filings a case in which blockchain applications were accepted to be used in different cases over the past year. Among these institutions, there are commercial banks, including China Construction Bank, Bank of China, and the Agriculture Bank of China, as well as private ones such as the Chinese Merchants Bank and some other banks at the city level.

European Union

Experience of investors determines the future p2p lending (TechBullion) Rated: AAA

Peer-to-peer lending is turning to a priority type of additional income for a growing number of the European investors and going to increase its importance in the next few years. According to the studies conducted by the own analytical center of the Latvian P2P platform Robo.cash, the younger generation of investors who consider P2P lending as an advantageous and comfortable financial tool will contribute to the dynamics greatly.

The younger generation is speeding up

With an account of stagnating interest rates on deposits in developed countries, as well as the cautious lending policies held by banks after the global economic crisis, alternative lending is attracting more and more investors and borrowers. Its volumes have grown drastically and the global scale is predictedto come close to $1 trillion by 2025. The increased volume of investments made by investors, who are already experienced in P2P lending, and a grown number of new investors help to maintain such a high momentum on the market.

The own statistics of the P2P platform Robo.cash working in the European market since February 2017 shows that 22-37-year-old Millennials are steadily catching up with an elder generation of investors. This promises to create a favorable environment for the further growth of alternative lending globally. Six months ago, an average age of investors of the platform was equal to 38 years and age groups were distributed as follows: Silent Generation (73-90) — 0.8%; Baby Boomers (54-72) — 9.5%; Gen X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Post-Millennials (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years due to the increased share of investors under 37 years old: Millennials — 53.9% and Post-Millennials — 1.8%.

Source: TechBullion

How banking is open to innovation (Global Banking and Finance Review) Rated: A

Open Banking, which is the sister regulation of the EU’s PSD2 legislation, is off to a slow start – but that is to be expected. We’re only at the start of a revolution which will unleash an incredible range of innovative financial services and products, and profoundly change the financial and tech industry. Ultimately, it may radically alter how we think about money and do business.

Data sources have been restricted or denied, integration was complex and slow, and there was no universal regime for security and compliance. In short, all the cards were stacked in favour of financial institutions – they could push exclusive arrangements or buy any solution perceived as a threat at a very early stage. As a result, innovation has been largely restricted to international payment processing, automation, peer-to-peer lending and accounting software. Scaling a consumer focused fintech solution that seeks to do a core banking service better or cheaper has been incredibly difficult to pull off. Open Banking turns this situation on its head.

International

Amazon. Stop Being Everything to Everybody! (Crowdfund Insider) Rated: AAA

While Amazon may have missed out in the purchase of Flipkart, Amazon just extended it’s investment into India’s Capital Float – India’s largest online lender.

May, 2018 – Amazon Pay – Who moved PayPal and Square’s cheese? Amazon did.

March, 2018 – Amazon Checking Account

March, 2018 – Amazon Mortgage – Amazon is making it’s first inroad into personal finance with Amazon Mortgage.

Feb, 2018 – Amazon Lending – We have known this for sometime now, Amazon Lending started back in 2011 has made over 3 billion worth of loans to small businesses that sells goods on their platform. An invitation only program, Amazon lends anywhere from $1,000 to $750,000. Terms are favorable to credit cards and the fees a deducted from the merchant’s seller accounts at Amazon. Of course amazon uses sellers inventory, product mix and revenue data to underwrite but now with the help of Bank of America, Amazon is ready to restart their SME (Small and Medium-sized Enterprises) lending in a big way again. This is a direct threat to OnDeck, recently teamed up with JPMorgan Chase and Kabbage, which might need to re-stack their chips and integrate more with Ebay and Paypal. –  “Amazon has partnered with Bank of America for its lending program: Sources” –

Ten years before Jeff Bezos founded Amazon.com, a movie entitled “1984” was released. If you haven’t watched this film, stop reading and do yourself a favor and get it today…. on Amazon. DOH!

How to Use AI in Fintech and Improve Your Financial Services (Payments Journal) Rated: AAA

There are a few main ways how AI is used today in the financial world.

  1. Advanced customer service
  2. Fraud detection
  3. Lowering the risk in P2P lending
  4.  Improved insurance support
  5. Enhanced investment analysis

Kabbage
This company is a P2P lender that actively uses AI in their service. Their company is situated in the USA. They created AI algorithms that can assess all risks of lending money to a certain customer, and it allows managers of the company to give loans very fast.

India

P2P Lending Marketplace PaisaDukan Raises Additional Seed Funding of $ 225K (BW Disrupt) Rated: AAA

PaisaDukan.com, a P2P Lending marketplace owned by Mumbai based FinTech start-up BigWin Infotech today announced second round of seed funding and secured USD 225K through angel investment. The company has raised $650K of seed funding last month that takes company to the total Seed investment of $875K till date. The investors’ names are still undisclosed by the company.

Fintech Valley Vizag and Knowledge Partner KPMG Announce Startup Market Connect 2018 (The New Indian Express) Rated: B

Fintech Valley Vizag, an initiative of Government of Andhra Pradesh, conducted a demo day to enable startups to showcase their solutions to leading corporates in banking and financial industry. As a part of this Connect, eight corporate partners who were looking for innovative solutions shared their 19 high priority use cases. These corporate partners included ICICI Lombard, DCB, Kotak Mahindra, RBL Bank, Fullerton India, IDFC, Tata Capital and Bajaj Allianz.

MENA

Vault Investment and MIG jointly form “Relam Investment” (Zawya) Rated: A

UAE-based company Vault Investment  and Vietnamese MIG Holding, announced that they have aligned to form Relam Investment Company LLC.

Lootah also announced three new technological investment projects. The first would serve the real estate sector through the crowdfunding platform.

During the launch ceremony today, Relam Investment Company signed three partnership agreements. The second agreement was with Cygnus Technology Services represented by Mr. Swapnil Patil which is a technological company to launch the services system (OYA) in UAE and Vietnam followed by the agreement for BRICX – a Real Estate Crowdfunding  project with MMD Technologies represented by Mr. Samy Moselhy.

Investing in My Future by Investing in Israel (The Times of Isreal) Rated: A

A thriving economy starts with local investments, and for my future and the future of my kids, I know that investing in Israel is the right choice moving forward. Low risk investment optionsexist, and this includes your standard bonds, real estate and certain stock options.

It’s difficult to help fund a startup through venture capital, but through peer to peer lending, a lot of investors can invest in local, small companies. OurCrowd is a go-to choice, based in Israel, that allows you to invest in upcoming startups.

Asia

Seedly helps millennials manage their money – and Singapore’s ShopBack just acquired it (Tech in Asia) Rated: AAA

Singapore-based ShopBack, an online product comparison and rewards platform, has made its first acquisition. The company snapped up Seedly, which focuses on personal finance advice and expense tracking for young people.

Founded in 2016, Seedly developed an app that allows users to connect their bank accounts and credit cards as well as get detailed reports about their spending habits.

On its website, community members can ask each other questions and review products like mobile plans, lending startups, and robo-advisors.

Authors:

George Popescu
Allen Taylor

Singapore Fintech Market: Overview

southeast asia fintech lending

South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry. Top and Emerging Fintech Sectors in […]

southeast asia fintech lending

South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry.

Top and Emerging Fintech Sectors in South East Asia by Country

Singapore in particular has become a hub for the nascent fintech lending industry. It is the runaway leader in the region and holds 52% of the market share (both by number of deals and money invested). It is followed by Philippines which accounts for 14%, Thailand 13% and Indonesia 12%.

However, with so many different governments involved, SEA poses an overregulation risk. Already, P2P lenders here have to criss-cross through various layers of regulations that their competitors in other regions don’t have to face.

Singapore Fintech Market: Overview

Singapore has always been known as the technology capital of Asia; MNCs and financial institutions have considered it a natural choice as HQ for their Asian operations. Though Singapore has deep roots in technology and innovation but ironically it got on the Fintech bandwagon rather late. But with the support of regulators, Singapore has established itself as the “Fintech Hub” of South East Asia. Singapore fintech market crossed $83 million in deals during the second quarter of 2017. In 2016, investment in Singapore based fintech companies dropped by staggering 65 percent (US$605 million to US$214 million), as per KPMG International study- Pulse of Fintech. But interestingly the number of deals decreased by only two to 28 during the same period. The main reason for the fall was complicated authorization process for fintechs, but Monetary Authority of Singapore (MAS) is working aggressively to streamline the authorization process, in order to attract more fintechs to Singapore.

Regulatory Ecosystem

“Over the longer term, MAS hopes to see more fintechs using Singapore as a base to pilot and then deploy solutions to other countries within South-east Asia, such as Indonesia and Thailand,” said Mr Chia Tek Yew, the head of financial services advisory at KPMG Singapore.

Monetary Authority of Singapore; the regulatory body has backed the fintech industry right from the get go and that is the reason why Singapore has become the leader in South East Asia. Some of those favorable regulations are mentioned below:

  • Last year, under the “FSTI” scheme, MAS committed S$225 million (US$164.2 million) over the next five years to foster the innovation ecosystem in Singapore.
  • It also developed the road map that showed the central bank’s move toward an open Application Programming Interface (API) architecture.
  • In association with National Research Foundation, it announced the establishment of a dedicated FinTech office to facilitate the use of technology and innovation in the financial sectors (FinTech office to review, align and enhance FinTech-related funding schemes across government agencies).
  • It also released a consultation paper on proposed guidelines for a ‘regulatory sandbox’ that will enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.
  • Struck partnership with the Australian Securities and Investments Commission (ASIC) to help FinTech companies from their respective countries scale into each other’s markets and help reduce regulatory uncertainty and time to market and it is trying to strike such more partnerships with other countries as well.
  • MAS have also announced it will be opening a fintech innovation hub “the looking glass” to promote innovation.
  • It also released a consultation paper on proposed changes to the payments regulatory framework and establishment of a National Payments Council, whose key initiatives are to promote interoperability and adoption of common standards.

This highlights that though the regulator was slow from the blocks, but has aggressively covered ground to create a supportive environment for the fintech lending community.

Leading players in the Singapore Market

Capital Match ( an online peer-to-peer lending marketplace for SMEs based in Singapore and Southeast Asia. It provides SMEs with affordable working capital from professional investors through its online platform. It was founded in 2014 by Arnaud Bailly, Kevin Lim, and Pawel Kuznicki. Since inception, it has facilitated over S$60 million in cumulative origination. It has raised S$1,000,000 from three investors; Innosight Ventures being the lead investor. It offers business and SME loans and invoice financing facilities of S$50,000- S$200,000 with loan duration ranging from 3-12 months.

Minterest ()- Minterest is a peer-to-business financial technology platform founded by a team of former bankers with more than 120 years of collective experience in corporate and structured finance. It was founded in 2016 by Charis Liau, Ronnie Chia, and Wei Choong Loo. It offers various flexible funding options with interest rate as low as 1% and loan terms ranges from 3-12 months.

SmartFunding ( is a platform that provides trustworthy alternative financing solutions that are 100% focused on small and medium businesses. It was founded in 2016 and raised S$700,000 as seed funding. It offers invoice financing to SMEs.

FinAccel ( FinAccel is a financial technology company creating products for the retail credit sector for Southeast Asia. With an all-star team of investors, founders and employees, FinAccel is currently focused on disruption in the unsecured lending space. It was founded in 2015 by Akshay Garg, Alie Tan, and Umang Rustagi. It raised S$1,100,000 from various rounds of funding. Kredivo is the flagship product developed by the company; it gives ecommerce shoppers instant credit financing based on real-time decisioning. Jungle Ventures led the funding round in the company.

InvoiceInterchange ( is a peer-to-peer invoice-trading marketplace that provides working capital solutions to fund growth for small- to medium-sized enterprises. It offers both selective invoice discounting and the whole turnover invoice discounting to SMEs. It was founded in 2015 by Brian Teng and Nalinee Chinowuthichai. Investor fee is typically between 0.8% – 1.5% (per 30-days) of the advanced amount. Transaction fee is typically between 1.0%-1.5% of invoice amount.

Conclusion

Singapore has emerged as an undisputed leader in the SEA region but considering it has always been the gateway to Asia, it will certainly want to have a bigger share of the fintech lending pie. The MAS has laid out a well-thought out road map to attract startups and investments. With a massive demand-supply mismatch in credit, Singapore is poised to witness a marketplace-lending boom.

Author:

Written by Heena Dhir.

Wednesday November 22 2017, Daily News Digest

delinquent credit cards

News Comments Today’s main news: Ron Suber shares lessons learned from his first 120 days in ‘rewirement’. Paytm invests in CreditMate. Faruqi & Faruqi law firm investigates Qudian. China clamps down on microlending. Australian alternative lenders make Fintech 100. Today’s main analysis: Americans having trouble paying off credit cards. Today’s thought-provoking articles: Alt lenders accuse banks of not following […]

delinquent credit cards

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

LESSONS FROM THE FIRST 120 DAYS OF REWIREMENT (Ron Suber), Rated: AAA

The first 120 days were filled with new languages, cultures, histories, beliefs, and people. I visited four foreign lands that were completely new to me, and no, New York and Silicon Valley were not on the itinerary.

Here are some lessons I’ve gained from the journey.

  • LESSON 1: Being first, ahead of your time and unique doesn’t guarantee success and longevity.
  • LESSON 3: The USA credit card and payments industry has a long way to go to catch up. No one (and I mean no one) swipes a credit card nor inserts a chip credit card in a machine and then signs a paper receipt in Australia and Singapore.
  • LESSON 4: There is still a huge opportunity to disrupt the currency exchange market. Upon arriving in Australia, I went to change US dollars to AU currently and was faced with: “No, you are not a customer” or “Yes, no problem” followed by a bad conversion rate and a 12% fee!
  • LESSON 8: New and old global giants are awakening to the FinTech Golden Age and responding accordingly, albeit slowly. Singapore is now a major global financial center that has come a long way very fast, and generally not focused on the short term.

The big successes are coming to those thinking long term (Bezos/Musk), the balance of power is shifting globally and the best is yet to come!!

P.S. Two young new FinTech companies to watch: Finch and Friendly Transfer. (No, I am not invested…yet)

US law firm launches investigation into star Chinese payday loan lender Qudian (SCMP), Rated: AAA

Qudian, the Chinese online payday loan platform, could be facing a rash of class-action lawsuits in the US after its share price tumbled drastically this week on the New York Stock Exchange, triggering concerns over the integrity of the firm.

New York-based law firm Faruqi & Faruqi, is now encouraging investors in Qudian to get in contact with it, as it is now “investigating potential claims against Qudian”, it said in a statement. Qudian was unavailable for comment.

Shares in the leading provider of online small consumer credit in China tumbled 5.28 per cent on Monday to close at US$20 in New York, 16.7 per cent down from its IPO price of US$24, and more than 40 per cent down from a historic intraday high of $35 reached on its trading debut on October 18.

Source: South China Morning Post

Americans are having trouble paying off their credit cards — and it could spell trouble for the economy (Business Insider), Rated: AAA

US credit-card debt recently surged to record highs, surpassing peaks seen before the 2008 financial crisis. Several large US banks and credit-card companies reported a rise in credit-card delinquency rates for August, the second consecutive monthly rise.

Source: New York Fed
Source: New York Fed

Fed funds is just 1% to 1.25% after four increases starting in December 2015, and yet many Americans pay credit-card rates well into the double digits.

Banks aren’t following CFPB data-sharing guidance, fintechs say (American Banker), Rated: AAA

Some fintechs are accusing financial institutions of not following either the spirit or letter of the data-sharing principles the Consumer Financial Protection Bureau released in October.

One of fintechs’ primary accusations is that banks are selectively choosing fintechs to work with — leaving the rest out in the cold. Though the CFPB data-sharing principles do not spell out that banks should work with everyone equally, the spirit of the document suggests financial institutions should work with all trusted third parties.

Capital One has signed agreements with five fintechs and data aggregators—Clarity Money, Intuit, Abacus, Xero and Expensify—since introducing its data-sharing application programming interface in February. It says more are in the pipeline.

Banks have too many conflicting requirements

Another issue cited by fintechs is that it’s tough dealing with each bank’s different set of standards and requirements.

“Some of those standards may be in conflict,” Petralia said. “It can take years to comply with a bank’s requirements and it probably eliminates access to newer startups, to smaller businesses that don’t have a lot of cash sitting on their balance sheet, to support that kind of long lead time for legal requirements.”

Early Stage Investing vs. Real Estate Investing: Similarities and Differences (Crowdfund Insider), Rated: A

Both venture capital (VC) investing and real estate investing involve some level of risk assessment, they both have the potential for big returns, and investors have the opportunity to help someone else reach a desired goal. Despite this common ground, there are some distinct differences.
Private Equity Investing
To realize returns on this type of investment, investors must understand the different stages of the startup cycle, how to evaluate a business plan, understand how to assess talent, technology, and business processes to determine whether a startup has the potential to succeed, and know how to judge market forces that could have an impact on the startup company.
Real Estate Investing
Real estate investments can be structured in many ways to benefit investors who are looking for specific types of returns. For instance, house flipping (Fund That Flip and Peerstreet) or commercial or multifamily flips (Sharestates and Patch of Land) offer short-term gains while rental properties (Roofstock and HomeUnion) offer long-term passive income. Commercial real estate investing (CrowdStreet and RealtyShares) may involve property development or long-term leasing with spans of three, five, ten years or more. New REITs (FundRise eREITs and MogulREIT) offer investors a way to invest in multiple properties or types of real estate through a single vehicle. Real estate funds or portfolios (AlphaFlow) also allow investors to diversify their debt investments through a single vehicle.
How to Evaluate an Early Stage or a Real Estate Crowdfunding Opportunity
Due diligence in real estate investing is also important. Basic criteria for evaluation include:

  • The platform – Does it have a strong financial position and available capital? Is the underwriting done in-house or outsourced? What is the background and experience of management team? What is their plan for insolvency, recouping losses, and managing risk?
  • Fees – Every investment involves opportunity cost. Is there an ongoing management fee, or does the investor pay a percentage based on returns or total portfolio size?
  • Borrowers – How does the platform assess borrower track record and credit? 
  • The investment – What is the developer’s business plan? What are the expected cashflows, expenses and projected returns? What is the loan-to-value before repairs and after repairs? Are investors in a first-lien position or second? Where is the property located?

CFPB, CashCall Spar Over Possible $ 287M In Restitution (Law360), Rated: A

The Consumer Financial Protection Bureau squared off against CashCall Inc. and its affiliates in California federal court on Monday about whether it would be appropriate to make the online lender pay as much as $287 million for deceiving consumers, with the CFPB calling the company’s loans “financial snake oil” and CashCall saying its business was legitimate.

JPMorgan, Goldman Sachs Trial DLT for Equity Swaps (Coindesk), Rated: A

A group of major financial firms including JPMorgan Chase and Goldman Sachs has trialed the exchange of equity swaps over a distributed ledger (DLT) system.

By carrying out trades across a network where all parties use the same valuation data and share the same books, in theory, payments can be processed nearly instantaneously and disputes over transactions will be less likely.

Small Business Saturday: Why Banks And Businesses Need To Start Playing Offense (Forbes), Rated: A

Similarly, while I do believe the banking industry has made strides in embracing technology over the past few years, the reality is that far too many bankers are still “playing defense” when it comes to fully integrating technology into every aspect of their business.

Finastra Universe introduces Sophia the humanoid robot (Finastra Email), Rated: B

I wanted to invite you attend Finastra Universe in New York on Tuesday, December 5thFinastra Universe is a one-day global executive event series focusing on fintech and the future of financial services.

The event will include panel and Q&A sessions, where Finastra experts and guest speakers will explore how financial firms can leverage new, more dynamic technologies within lending and other areas to improve internal efficiencies, deliver connected customer experiences and enhance business outcomes.

I’ve included a link to the full agenda Where: Marriott Marquis Times Square, 1535 Broadway, New York

When: Tuesday, December 5th, 2017
 
Click 

Financial tech is a big business. What Charlotte’s doing to become a larger player. (Charlotte Observer), Rated: B

More than 125 people attended the inaugural Southeast Fintech Venture Conference on Monday to hear presentations from investors, fintech success stories such as small-business lender Kabbage and new firms just getting off the ground, including some from Charlotte. Sponsors included investment firm Frontier Capital and asset manager Barings, which hosted the event at its new Tryon Street headquarters.

According to the National Venture Capital Association, Charlotte-area companies brought in about $393 million in venture capital investments in 2017, led by a $300 million round for payments company AvidXchange.

United Kingdom

Consumer credit – walking the regulatory tightrope (Lexology), Rated: AAA

Subprime and near prime lending have been subject to intense regulatory scrutiny during the aftermath of the financial crisis. The global economic crisis that took hold in 2007 has largely been attributed to the widespread practice of irresponsible lending to consumers, often with no means of repayment. In 2013, StepChange Debt Charity reported that the average payday loan debt of its clients was £1,657, whereas the same clients’ average net monthly income was a much lower £1,379.

Following the transition in regulatory regimes from the OFT to the FCA, a series of tougher measures have been introduced to move staunchly away from the lending practices which allowed firms such as payday lender Wonga to maintain a representative APR of 5,853% in 2013. The FCA has made it clear that it regards non-standard finance as a “high risk” activity and as such dedicates special resources to intensively monitoring businesses in this sector.

Almost half of SMEs have never checked their credit score (Bridging&Commercial), Rated: A

Nearly half of SMEs (44%) have never checked their credit score, according to the latest research from RateSetter’s business finance division.

RateSetter’s research also found that a further 6% of businesses had not checked their credit score within the last 12 months and only 18% had viewed their score within the last six months.

Never mind the Brexit: Alternative finance offers a route to prosperity (Startups.co.uk), Rated: A

It is a little over a decade since Northern Rock became the first UK bank in 150 years to fail because of a run on its deposits. For a brief moment it looked as if the entire global financial system might collapse overnight, with only government intervention and billions in bail-outs preventing a worst-case scenario.

According to data from the Office for National Statistics (ONS), the number of small businesses that were successful in their attempt to get a loan fell from 90% in 2007, to 65% in 2011.

According to our latest research, just 43% of small business owners see trading conditions improving in the coming year. Meanwhile 52% of start-up business owners say they do not think banks will continue to lend at the same levels in 2018.

More than half of the 1,000 small business owners we surveyed say they are planning to grow or expand their business in 2018.

These alternatives to traditional forms of lending are proving particularly popular among the 96% of UK businesses that employ fewer than 10 people.  According to our research, 40% of start-ups and younger business owners say the growth of alternative finance options has made them less reliant on banks for funding.

Investment Committee: Arnaud Gandon, Heptagon Capital (Citywire), Rated: A

One area of credit we find attractive, however, is lending to small businesses in the UK and Europe. The opportunity set for companies such as Funding Circle is growing fast, due to the retreat of traditional banks in providing loans for smaller companies. During the last quarter, Funding Circle outstripped the major high street banks for net new loans. We see the company essentially as a technology platform enabling the efficient issue of small loans to thousands of companies. It has a solid management team and is looking to expand its successful business model to other geographies.

Here’s what the UK’s fintech community is most concerned about over Brexit (Verdict), Rated: A

Fintech is now worth over £7bn to the UK economy every year and employs around 60,000 people, according to the Treasury office.

Marta Piekarska, director of ecosystems at Linux Foundation’s Hyperledger project, said she believes Brexit will impact fintech in the UK because it will make things harder for collaboration.

“About half of our developer workforce today are non-UK European nationals. Already it is hard to find great developer talent in the UK.  Obviously, if freedom of movement isn’t as easy and non-UK EU nationals feel that it’s not really a nice environment to come to the UK to work, then we will have a problem.”

Open Banking: How can customer centricity drive innovation? (City A.M.), Rated: A

The Payments Services Directive (PSD2) is a major piece of UK/EU legislation that will ensure that all payment service providers (PSPs) that operate in the single market are subject to rigorous supervision and adhere to the appropriate transformative rules to create a fair, open-banking framework.

In practical terms, a customer will be able sign up for a loan, credit card or a mortgage by using a log-in that looks and feels a little bit like Facebook Connect and authorises the provider to see all of the customer’s financial transactions from the previous 36 months. The main gatekeepers and one of the leading innovators in this space are London-based FinTech company TrueLayer. As the go-between between a customer, their bank and the product or service provider, they ensure real-time, secure connectivity of the customer’s data.

Blockchain Based Building Platform BitRent Announces Token Sale (The Merkle), Rated: B

BitRent has given itself a mission: to make real estate investing easy, transparent and profitable all over the world. The platform uses a combination of techniques that will allow its users to control construction processes. These techniques include BIM open modeling and computer aided monitoring using RFID chips, to make investing in commercial and residential shared-equity construction more transparent and predictable. On the platform, investors can invest in real estate, without a minimum entry threshold. The online mode allows them to control construction processes and receive dividends when the construction has been completed. Moreover, users can receive data on free area or items of commercial property.

The BIM (Building Information Modeling) technology that the platform uses, allows all users of the platform to monitor a project at any stage.

The platform will release its RNT tokens, based on Ethereum. The token sale will start on the 1st of December 2017, 11:00 UTC and will last till March 1, 2018.

China

China clamps down on online micro lending; U.S.-listed shares plunge (Reuters), Rated: AAA

China took steps to rein in the rapidly growing and lightly regulated market for online micro-lenders in the government’s latest crackdown on internet finance, sending shares of U.S.-listed Chinese financial firms into a tailspin.

A top-level Chinese government body issued an urgent notice on Tuesday to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders, sources who had seen the notice told Reuters.

The multi-department body, tasked by the central government to rein in risks in the internet finance sector, also told local regulators to restrict granting of new approvals for micro-loan firms to conduct lending across regions, according to the sources.

Shares Of Chinese Online Credit Providers Crash Over Crackdown Fears (NASDAQ), Rated: A

Shares of Qudian ( QD ), Yirendai ( YRD ) and other China-based providers of online credit plunged Tuesday on reports that China’s Internet Financial Risk Management Group had ordered a suspension of online small-loan approvals, but some stemmed their losses by session’s end and others even gained ground.

In addition to Qudian and Yirendai, also falling were China Rapid Finance ( XRF ) and PPDAI Group ( PPDF ).

U.S.-listed Chinese financial firms dive on regulatory action (Reuters), Rated: A

Shares in online lender Qudian (QD.N), whose shares only debuted last month, sank by as much as 20 percent in early trading.

Shares of China Commercial Credit Inc (CCCR.O) fell 6.4 percent, those in PPDAI Group (PPDF.N) some 17.8 percent. Jianpu Technology (JT.N), which also debuted just this month, fell 9.5 percent and China Rapid Finance (XRF.N) slipped 12.92 percent.

From Drone Hackers to Cyber Bodyguards, China Cyber Security a Growing Concern (China Money Network), Rated: A

Q: What major trends are you seeing in China’s cybersecurity market?

A: I think the major trend in China is similar to what is happening in the rest of Asia. The frequency and extent of cyber-attacks are increasing rapidly.

Q: What Chinese business sectors are most vulnerable, or need to do more to protect themselves?

A: Tech companies with lots of portals to its websites, especially like peer-to-peer lending, or any tech companies with valuable intellectual property are prime targets of cyber attacks.

Q: What should Chinese tech companies be doing to defend themselves, or at least reduce the damage done by cyber attacks?

A: Firstly, employee education is important. Over 90% of hacking is conducted through phishing and spear phishing. We have worked with a Chinese company with 20,000 employees, and we sent 20,000 emails to them with a link offering a chance to win iPhone. 30% of the staff clicked on the link, which actually is a quite regular percentage. In a real-life scenario, if 30% of your 9000 staff were to click, that’s 3000 cases of malware potentially downloaded into your systems. But after phishing training, finishing the exercises, the number was reduced to 5%.

Q: There are reports saying cyber security experts “cyber bodyguards” is one of the hottest jobs in China. What particular specialty expertise faces the greatest shortage?

The “cyber bodyguards” are in a booming industry, particular for providing preventative measures. Firstly, there are the penetration testers; also known as ethical hackers or white hat hackers. They replicate what a real hacker would do; not stealing any data or doing anything bad, but will scan systems for any gaps and weaknesses in the company’s defenses that may be exploitable during a cyber attack. They will then advise on remediation measures.

European Union

EBA weighs up risk and rewards of Fintech in new Discussion Paper (FinanceJobs.ie), Rated: AAA

The European Banking Authority takes a cautious and carefully balanced view in its deliberations on how it should approach FinTech in its latest Discussion Paper. In reviewing the FinTech landscape in Europe the EBA raises many more questions than it answers, concluding that it should undertake much more detailed follow-up work in a number of areas. But it does raising warning flags about possible unevenness in the playing fields offered by different jurisdictions, in the area of sandboxing and innovation hubs, for example.
Overall, the The European Banking Authority says, FinTech may increase competitiveness in the Single Market by lowering barriers to entry for newcomers while preserving fair competition and incentives to innovate.

The EBA says a significant increase in overall operational risk has been witnessed in the last few years, including higher conduct risk, increased cybersecurity issues and digital fraud issues, and increased outsourcing risk. ‘At the same time new or previously immaterial risks, such as the risk of mismanagement of personal data / lack of data privacy, seem to be amplified by the lack of expertise of human resources and the inadequacy of technology infrastructures.’

It points out that alternative lending platforms such as peer-to-peer lending can put pressure on the interest income from loans of existing credit institutions while new entrants offering commoditised products and services at lower costs, such as money transfers and brokerage, can reduce the fees and commission income of established players.

DreamQuark beefs up financial services through artificial intelligence (TechCrunch), Rated: A

Meet DreamQuark, a French startup that wants to help banks, insurance companies and asset management firms with all of their artificial intelligence needs. DreamQuark crunches your data, creates models based on machine learning and lets you apply those models on all past and future data points.

International

Robeco launches fintech investment fund (Finextra), Rated: A

Robeco has launched a Global Fintech Equities fund to give wholesale and retail investors exposure to companies that are transforming the financial sector.

The actively managed fund will invest in three distinct segments, labelled ‘today’s winners’, ‘fintech enablers’ and ‘challengers’. Today’s winners include companies that already have a competitive advantage in this space, fintech enablers provide the digital backbone for emerging companies, and challengers are the companies that have the breakout potential to stand out from the pack.

Following a successful pre-ICO, Etherecash has announced a public ICO that launched November 15th and will end December 19th. Focusing on the 2.5 billion unbanked, Etherecash looks to excel in both spending and sending, as well as providing a peer-to-peer lending platform, to enable those with little or no credit history the ability to access funds.

The ICO sale will auction off 144,000,000 tokens, which will help support ongoing development of the platform and can be purchased with Bitcoin or Ethereum. A bonus of 12% is available for participants in the first week, which goes to 3% in week four, and finally to 0% in week five.

The ICO has a soft cap of $15 million, which if not reached, will conclude the ICO as a failure with funds returned to the respective investors. The hard cap is set at $100 million. 40% of funds will be used for further core development; 25% in growth and marketing; 20% for legal, accounting, and advisory feeds; and the remaining 15% for admin and operational costs.

57% of internal frauds are carried out by senior and middle management, according to the whitepaper.

Australia/New Zealand

Aussie lenders make Fintech 100 list (TheAdviser), Rated: AAA

Ten Australian companies have been listed in KPMG’s Fintech 100 list, which identifies the top 50 fintech firms and an “emerging 50” list of companies “seeking to boldly push the envelope in financial services”.

Online SME lender Prospa was the highest ranked Australian company at number 24. It also placed second on the Australian Financial Review’s Fast 100 list after averaging a 239 per cent revenue growth since 2013–14 and holding $50 million in equity and debt funding in 2017.

US-based lender OnDeck, which broke into the Australian market in 2015, placed 28th in the ranking, up two places from last year’s report, while German fintech Spotcap (which also has operations in Australia) came in at number 32.

How I’m Saving a Week (or ,500 This Year) on My Home Loan (Mozo), Rated: A

Fast forward to three months ago, when I suddenly realised my rate of 4.27% was more than 60 basis points higher than the best on the market. I had become a victim of that time honoured tradition of banks fattening profit margins and it was time to do something about it.

I knew there were now stacks of lenders offering rates below 4.00%, and after comparing the best loans decided to go with an online lender to take advantage of their super low variable rate of 3.64%.

India

Paytm invests in online lending startup CreditMate (VC Circle), Rated: AAA

One97 Communication Ltd, which runs mobile wallet firm Paytm, said on Tuesday it has picked up a stake in Mumbai-based fintech startup CreditMate.

CreditMate helps two-wheeler dealers and financiers assess and approve vehicle loans to customers with no formal credit history, Paytm said in a statement.

8 ‘blockhain hacks’ which NITI Aayog, AWS, Microsoft, Accel, Coinbase believe are beneficial for society (YourStory), Rated: AAA

Anshul said that there is a lot of hype and misconceptions related to blockchain. He explained that outside of a small group of crypto-savvy investors and developers, blockchain is often synonymous with cryptocurrency, and erroneously so. Their goal with this hackathon was to give developers (with or without past blockchain experience) a chance to envision how the same distributed ledger technology that powers Bitcoin might be able to improve transparency, efficiency, and honesty in enterprise and government processes, particularly in regions of the world suffering from high corruption.

Anshul added that another objective of the event was to explore use cases for concepts like IndiaChain — a blockchain infrastructure for a Digital India, building on existing initiatives like Aadhar, the world’s largest biometric identity project with unique 12-digit IDs for 1.2 billion Indian residents.

Gif credit- Proffer

Here are eight hack projects recognised by the partners.

  • 1. SWASHchain: a battery SWApping and SHaring infrastructure verified on the blockchain
  • 2. AgroChain: tracking farm products from farmer to consumer
  • 3. chAIn: decentralised AI with Homomorphic Encryption to guarantee data privacy
  • 4. Betoken: decentralised Hedge Fund for social impact investing
  • 5. Open Complaint Network: crowdsourcing issues and rewards
  • 6. 0xSHG: zero-interest loans for rural microfinance – Hence the team believes that blockchains are a unique solution which address both issues by organising not just financial capital but also social capital. The team has created an Aadhar-linked capital-pooling network.

  • 7. SureFly: last-minute crowdfunded insurance for flight delays – Insurance premium is calculated as a function of the probability that a passenger will miss a flight which is in turn a function of flight time, insurance seeker’s distance from the airport, traffic on the roads, length of airport lines, etc.
  • 8. MyH2OBot for “Habit Economics”

Sharing economy: creating opportunities in the digital era (livemint), Rated: A

The rise of the sharing economy is commonly attributed to culture or ideology. It’s assumed that millennials don’t want to be trapped by houses, cars and other expensive belongings, for example, or that they believe sharing is good for the environment.

Research conducted by the BCG Henderson Institute (BHI) indicates that economics, not attitude, is driving the sharing economy.

Among respondents who use sharing services, 40% of Germans, 57% of Americans and 67% of Indians said that well-priced, convenient offers could convince them to abandon ownership altogether.

Aside from physical assets, investors have also poured $5.7 billion into peer-to-peer lending ventures.

Start-ups by no means have a lock on the sharing market, however. In fact, 55% of consumers in India said they would prefer dealing with established operators—the highest among the countries surveyed.

Asia

Banyuwangi Regent Anas Connects MSME with Fintech Startups (Netral News), Rate: A

Banyuwangi Regional Government will again partner with digital platform startups to develop the region.

After with Gojek ride-hailing service provider, there are several more similar companies that will be embraced. One of them is the startup of financial technology (fintech), especially for financing facilities to micro, small and medium enterprises (MSME).

Canada

CANADIAN PAYMENTS INNOVATION FORUM SAYS COLLABORATION CONTINUES TO DRIVE FINTECH INNOVATION (Betakit), Rated: A

At the third annual Canadian Payments Innovation Forum in Toronto, over 100 payments and banking executives gathered to examine how FinTech is transforming the Canadian financial services industry, and what providers can do to prepare.

After launching with Samsung Pay earlier this year, Gamble indicated that ‘cash alternatives’ would continue to be a focus and something to watch in the market. Due to Interac’s smaller size (the company has about 250 employees), Gamble said they just don’t have the “bandwidth” to do everything themselves, so turning to partnerships is key.

“We strive to deliver alternatives to cash, and as a community, we’ve done an amazing job of delivering contactless capabilities at POS. Canadians moved more than $90 billion in etransfers this year, so our little country is significantly leading the space in P2P transfers.”

AI is already moving forward quickly in financial advice and management, and the use of financial technology, or fintech, seems to be growing among older Canadians.

“Our average client is 47 years old and our second largest demographic group is baby boomers,” says Randy Cass, CEO and founder of Nest Wealth, a Canadian financial robo-advisor that was founded in 2013.

“For retirement planning, the AI isn’t necessarily cutting the financial advisor out of the process. What we’re likely to see is AI helping the financial advisor to get faster and more comprehensive data analysis and provide more seamless client support,” Mr. Narvey says.

Authors:

George Popescu
Allen Taylor

Friday November 17 2017, Daily News Digest

consumer debt

News Comments Today’s main news: Kabbage secures $200M credit facility from Credit Suisse for AI-based lending expansion. Consumer Financial Protection Bureau (CFPB) files suit against Think Finance. Royal Bank of Scotland to launch robo under NatWest brand. Hexindai names Citi depository bank for American Depository Receipt Program. ICICI Bank, Paytm partner on short-term credit. Today’s main analysis: PeerIQ Lending […]

consumer debt

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

Kabbage gets $ 200M from Credit Suisse to expand its AI-based business loans (TechCrunch), Rated: AAA

After picking up $250 million in equity funding from Softbank earlier this year, the small business loans and finance company Kabbage — which uses only algorithms and machine learning (no humans) to determine an applicant’s eligibility — is announcing another big infusion of money. The company is picking up $200 million from Credit Suisse in a revolving credit facility that it will use for loans.

Specifically, Kathryn Petralia, who is the COO and co-founded the company with Rob Frohwein, said the funding will help the company increase the number of loans it can make to larger companies in the US. The average size of those loans will grow to “north of $200,000,” she said.

DBRS Assigns Ratings to Kabbage Asset Funding 2017-A LLC (DBRS), Rated: A

DBRS, Inc. (DBRS) assigned ratings to the following classes of loans extended by a group of lenders to Kabbage Asset Funding 2017-A, LLC (the Facility):

— Up to $148,150,000 of Class A Loans rated A (sf)
— Up to $24,868,000 of Class B Loans rated BBB (sf)

The Facility is a warehouse financing arranged for the benefit of Kabbage, Inc. (Kabbage) to support originations of small business loan receivables. Kabbage acts as servicer for the Facility.

Study suggests many borrowers bungle credit card debt consolidation (Credible), Rated: AAA

Thanks in part to the rise of fintech companies that make loans online, more than 16 million Americans now have personal loans — an increase of 64 percent in the last five years.

Payoff — a personal lender that specializes in helping consumers tackle credit card debt — says its internal data shows borrowers who paid off at least $5,000 in credit card balances between August 2016 and January 2017 saw a 40-point increase in their FICO score within four months.

Cleveland Fed study: a cautionary tale

One year after taking out a P2P loan, borrowers had credit scores that were 16 points lower than those of the non-P2P borrowers they were matched to, on average — an impact that persisted for four years, the authors said in their working paper.

The study found no evidence that P2P lenders are providing access to credit for “underbanked” consumers — borrowers taking out P2P loans were obtain other credit from traditional banks at rates similar to other consumers.

But a number of companies on the list, including Lightstream, BestEgg, LendingPoint, Earnest, and RocketLoans weren’t around in 2012, when the most recent loans studied by the Cleveland Fed researchers were made. Several others — including Avant, CommonBond, Pave, and Upstart — were just getting off the ground at the time.

The growth in fintech lending has been a driver in overall personal loan growth, with 16.1 million consumers owing $106 billion in personal loan debt as of June 30, 2017. That’s up from the 9.8 million borrowers who owed $45 billion in personal loan debt in mid-2012.

Fed flags online lending as subprime redux, but market hits back (Global Capital), Rated: A

ABS participants, speaking with GlobalCapital this week, hit back at the report, written by Yuliya Demyanyk, senior research economist, Daniel Kolliner, research analyst, both of the Cleveland Fed; and Elena Loutskina a professor of business administration at the University of Virginia’s Darden School of Business, and contributing author at the Cleveland Fed.

The authors challenge the belief that peer-to-peer (P2P) loans have expanded credit to borrowers with limited access to debt since the financial crisis.

A central argument of the Fed’s report was that sector has not done much to expand access to debt for borrowers with low credit scores.

In securitization, subprime consumer ABS has thinned since the crisis. For the five major credit card issuers, the years 2008-2016 saw revolving credit available to US borrowers with a Fico score of less than 660 reduced by approximately $142bn, according to data published by online lender Elevate earlier this year.

Even portfolios backing recent marketplace loan ABS have a weighted average Fico score above 680, the level that defines so-called ‘near prime’ credits, despite the notable dip in collateral quality. Marlette, for example, had an average score of 705 for its most recent transaction which was priced in October, while Prosper had a weighted average Fico score of 709, according to data from Kroll Bond Rating Agency.

PeerIQ Lending Earnings Insights Report (PeerIQ), Rated: AAA

We are pleased to release our inaugural Lending Earnings Insights report.

Below are some of the main themes that we explore in this tracker:

  • Large banks continue to retrench.  Wells Fargo’s loan portfolio is down $13 Bn YOY. Loss reserves are down at all major banks except at GS due to the ramp-up in their consumer lending portfolio. Goldman Sachs expects lending initiatives to add $2 Bn in revenue in the coming years. GS loan loss reserve increased 50% and GS had the highest improvement in ROE across its peer group.
  • Credit re-normalization trend continues remains a recurring theme across all major lending groups. Overall, loss-rates on recent vintages are increasing versus prior recent vintages, although performance remains stronger than pre-crisis levels.  Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Discover and American Express increased loan loss provisions ~50% although loan growth is at 9% and 14% respectively.
  • Consumer installment lenders do not anticipate an increase in loss rates, after having recalibrated loss expectations and increased reserves in 2016. OneMain had the smallest increase in loss reserves at 4%.
  • Consumers now have access to greater supply of credit and credit demand continues to grow. Consumer average debt-to-incomes are below pre-crisis levels.
  • Several lenders cited the shifting competitive landscape and the role of technology in driving innovation and risk management. 
  • Where are we in the credit cycle? 
Source: PeerIQ

Goldman Sachs’ lending platform is booming (Business Insider), Rated: A

Other banks may be tempted to emulate Goldman Sachs’ move into lending, but they should proceed with caution. Although consumer credit demand in the US 

Source: Business Insider

LendingTree Holiday Shopping Survey Suggests Bigger Budgets, Selfless Spending and Mobile Shopping Among Parents this Holiday Season (Business Insider), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, recently conducted its Holiday Shopping Survey among 1,050 Americans aged 25 to 55 with at least one child. The results show that people generally expect to give more than they expect to receive, and although only 55 percent of respondents have a set budget this holiday season, 76 percent plan to spend the same amount or more on holiday shopping compared to last year.

According to the survey, the average holiday shopping budget across all age groups was $943, although 45 percent of respondents say they don’t have a set budget for holiday shopping this year. LendingTree’s 2016 holiday survey found that 56 percent of respondents planned to shop for the holidays without a pre-set budget.

Additionally, 29 percent say they plan to spend more on holiday shopping in 2017 than they did in the 2016 holiday season.

Source: LendingTree

Parents are setting a low bar for their children’s gift giving abilities in 2017, with 68 percent of parents expecting to receive no gifts from or on behalf of their kids.

Most parents (80 percent) plan to spend at least $100 per child this year while 37 percent of parents plan to spend at least $250 per child.  Although 62 percent of parents say they try to spend the same amount on each child, younger children have a slight advantage with 12 percent of parents admitting to spending more on younger children and only 6 percent of parents use a child’s behavior to dictate how much money is spent on their gifts.

A debit card is the primary form of payment for holiday shopping for 46 percent of respondents, as well as the primary form of payment for across all groups. Second to debit cards, 29 percent designated cash as their primary form of payment, and only 21 percent are primarily credit card users – although credit cards are considered more secure than cash or debit cards. A recent CompareCards by LendingTree survey found that 66 percent of Americans think debit cards are as safe or safer than credit cards for payments, when in fact debit cards don’t offer the same consumer protections as credit cards.

Respondents expect to do 50 percent of their shopping online and 34 percent of their shopping on their mobile phone. Millennials (age 35 and under) expect to do 40 percent of their shopping on their phone, the largest of any other age group.

LendingTree Inc. (TREE) Breaks into New 52-Week High on November 16 Session (Equities.com), Rated: A

Shares of LendingTree Inc. (TREE) broke into a new 52-week high yesterday, hitting a peak of $281.80. Shares closed at $279.40 after opening at $271.75 for a move of 2.83%. The company now has a market cap of $3.34 billion.

Sharestates, America’s Private lender, Launches Their One Click Closing Option (PR Newswire), Rated: A

Sharestates, an online real estate investment marketplace, announced today the launch of its new One Click Closing tool, a feature that will allow return borrowers to visit a page where they can upload all the details and documents required for a new loan, allowing for a seamless transfer of closing date information without further communications. The launch of this new tool coincides with the company’s overarching goal of providing borrowers with a streamlined funding process, while providing them the opportunity to solely focus on identifying viable real estate investment opportunities.

Bitcoin Tax Laws Are A Nightmare So People Ignore Them (International Business Times), Rated: A

A survey of 564 American bitcoin users by the online loan marketplaceLendEDU, revealed more than 35 percent didn’t plan to report bitcoin-related gains or losses on their tax returns. On average, respondents said the current fiat value of their bitcoin holdings were $2,930.85, although that will probably continue to rise along with bitcoin’s market price.

The Best Personal Loans of 2017 (U.S. News), Rated: AAA

Some of the most common requirements for a personal loan are:

  • Minimum credit score: Most lenders require that you have at least fair or good credit when applying for a personal loan. Each lender sets its own cutoff for what it considers to be excellent, good, fair or bad credit. In general, fair credit is a FICO score between 580 to 669 and good credit is a score between 670 to 739. Most companies require a score of at least 600, but some have greater requirements. A higher score will increase your ability to be approved, and the higher your score, the lower interest rate you’ll qualify for too.
  • Clean credit history: Lenders don’t like to see defaults, collections or bankruptcies. If you have one or more of these on your credit report, you might not be approved for a personal loan. If you’re approved, you may have to pay an exorbitant interest rate.
  • Stable employment: A lender needs to know that if it lends you money, you’ll have the means to repay it over time. Without a stable job, you could miss payments or default on the loan. Proof of employment validates your loan application.
  • Proof of identification: Lenders usually need to see proof of identification, such as a copy of your driver’s license or passport, before approving your loan. Identity theft is common and they want to prevent thieves from taking out loans under another person’s credit.

Choosing a Personal Loan Company

There are two types of lenders you can choose from: banks and peer-to-peer lenders. Banks offering personal loans include SoFi and LightStream and peer-to-peer lenders include Upstart, LendingClub, Prosper and Peerform.

Marketplace-based lenders usually have less strict credit score requirements than their bank-based counterparts. For example, LendingClub and Peerform only require a FICO score of 600 while bank-based companies such as SoFi and Payoff have minimum FICO scores of 660.

Every lender has a minimum and maximum loan amount. For example, SoFi will lend up to $100,000 while Payoff lends up to $35,000. If you need to borrow $45,000, then only look at lenders who offer that amount or more.

Best Personal Loan Companies of 2017

  • Best for very good credit, low APR and no origination fees: LightStream
  • Best for very good credit, low APR, no origination fees and a range of offerings: SoFi
  • Best for very good credit and low APR with merit-based qualifications: Earnest
  • Best marketplace for fair to good credit with merit-based qualifications: Upstart
  • Best bank for fair to good credit with merit-based qualifications: LendingPoint
  • Best for fair to good credit with a co-signer option: LendingClub

The Best Bad Credit Loans of 2017 (U.S. News), Rated: AAA

Bad credit usually is a FICO score below 640. FICO is the main scoring system for consumer credit, with credit score rangesdefined as:

  • Exceptional (800 to 850)
  • Very Good (740 to 799)
  • Good (670 to 739)
  • Fair (580 to 669)
  • Very Poor (300 to 579)

Payday Loans Versus Personal Loans

Payday Loans Personal Loans for Bad Credit
Lenders Online, brick-and-mortar Online, brick-and-mortar
Loan Amounts Typically less than $500 $1,000 to $50,000
Loan Terms Two to four weeks One to five years
Interest Rates 200 to 400 percent APR 36 percent APR or less

(Source)

Some alternative payday loan companies market themselves as more socially responsible than traditional payday lenders because they offer better terms. They also want to help consumers rebuild their shaky credit and make payments on time. For instance, LendUp provides financial education and rewards existing borrowers who repay their loans to be eligible for loans at larger amounts and lower rates. Fig Loans only charges fees to cover the costs of the loan.

Choosing a Bad Credit Lender

Consumers should evaluate lenders based on the following criteria:

  • Type of lending company
  • Credit history and general qualifications
  • Co-signer option
  • Additional eligibility qualifications
  • Employment requirements
  • Interest rates and types
  • Loan terms
  • Fees and penalties
  • Repayment options

The Best Small Business Loans of 2017 (U.S. News), Rated: AAA

According to the National Small Business Association, 69 percent of small businesses used financing in 2016, including loans, credit cards, venture capital and crowdfunding. The remaining 31 percent were not able to obtain adequate financing.

According to data from the U.S. Small Business Administration, small business bank loans totaled nearly $600 billion in 2015. At the same time, lending from alternative sources such as finance companies and peer-to-peer, or P2P, marketplace lenders amounted to $593 billion.

There are two categories of alternative lenders, direct and peer-to-peer lenders:

1. Direct lenders: Direct lenders are finance companies that fund your loan with capital other than a bank and without a middleman such as a broker, investment bank or private equity firm. Some direct lenders, such as LiftFund, offer SBA loans. Typically, small to midsize businesses borrow from direct lenders.

2. Peer-to-peer lenders: Online peer-to-peer lending directly connects you with investors who usually have a diversified loan portfolio made up of small portions of loans. A loan is often divided among several investors.

Choosing a Small Business Loan

Eligibility Requirements:

  • Minimum credit score
  • Minimum years in business
  • Minimum annual revenue

Best Small Business Loans of 2017

  • Best for very small businesses: Kabbage
  • Best for borrowers with low credit scores: OnDeck
  • Best for new businesses: Accion
  • Best for low APR: LendingClub
  • Best for invoice financing: Fundbox

Square Now Letting Some Users Buy & Sell Bitcoin Through Cash Mobile App (Crowdfund Insider), Rated: A

Financial service company Square is reportedly now testing out bitcoin on some of its Cash mobile app users. The new feature will allow users to buy and sell the cryptocurrency through the app.

YieldStreet Surpasses $ 200M in Originations, Bolsters Leadership Team and Launches New Website amid Period of High Growth (BusinessWire), Rated: A

YieldStreet, the alternative investment platform that is working to change the way wealth is created, announced that it has surpassed $200 million in originations and has added two new executives to its leadership team: Volfi Mizrahi as Managing Director of Originations and Ivor Wolk as General Counsel. Their additions come on the heels of the appointment of Hrishi Dixit as CTO earlier this year.

$ 15 Million Investment Round Fuels Accelerated Growth at Goji (PR Newswire), Rated: A

Goji announced a $15 million investment round led by Hudson Structured Capital Management Ltd., doing business as HSCM Bermuda.

CFPB Guns for Think Finance. Files Suit Alleging Consumer Deception in Repaying Loans Not Legally Owned (Crowdfund Insider), Rated: AAA

The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court against Think Finance, a Fintech that leverages its technology to power online lending platforms. The CFPB says the suit was filed for its “role in deceiving consumers into repaying loans that were not legally owed.”

The CFPB alleges that Think Finance illegally collects on loans that are void under state laws governing interest rate caps or the licensing of lenders.

The actual filing states:

“From 2011 through at least 2015, Defendant has performed critical functions for three separate lending businesses owned by Native American Tribes: (1) Great Plains Lending, LLC (Great Plains); (2) MobiLoans, LLC (MobiLoans); and (3) Plain Green, LLC (Plain Green) (collectively, the Tribal lenders). Defendant is therefore a “service provider” under CFPA. 12 U.S.C. § 5481(226).”

Read the filing here.

Richard Cordray’s CFPB Has Done Its Job Well (Bloomberg), Rated: A

As recently as a decade ago, the U.S. had no single regulator tasked with looking out for the interests of consumers in financial markets. Fragmented oversight allowed all kinds of bad behavior to fall through the cracks. Mortgage brokers hid the true terms of loans in piles of nearly indecipherable documents. Banks changed the order of transactions to extract the maximum overdraft fees from poor customers. Payday lenders offered products designed to trap people in an unending cycle of debt.

Cordray has accomplished a lot. The CFPB designed new, simpler mortgage-loan disclosures. It shed light on banks’ overdraftpractices. It created the first federal rules to make payday lending less predatory. It gave the public reams of valuable information, such as a database that allows consumers to compare credit-card agreements. Its practice of publishing complaints pushed financial institutions to be more responsive. Its investigation of Wells Fargo brought national attention to the fake-accounts issue.

Some of its practices (in particular, preferringdiscretionary enforcement over explicit rule-making) are less than ideal and ought to be revisited; in other areas (such as auto lendingand credit reporting) its authority should be expanded.

We need a watchdog at Consumer Financial Protection Bureau (Washington Post), Rated: A

Cordray’s departure gives President Trump an opportunity to appoint a new leader, and I’m concerned that this will derail the watchdog agency’s consumer-first mission.

In Cordray’s parting statement, he wrote that the agency has recovered $12 billion for nearly 30 million consumers.

Five opportunities and challenges in digital lending (American Banker), Rated: A

Despite the rapid growth of online and mobile lending in recent years, many banks are still just getting started.

Traditional banks should help govern fintech (Reuters), Rated: A

Traditional lenders should demand that online financial companies protect consumer privacy and money interests, Federal Reserve Governor Lael Brainard said on Thursday.

Banks often pay tech companies for the information they gather on borrowers. For that reason, Brainard said, those lenders can set high standards in consumer protection and privacy.

Under Trump, Banking Watchdog Trades Its Bite for a Tamer Stance (The New York Times), Rated: A

The regulator, the Office of the Comptroller of the Currency, which oversees the nation’s biggest banks, has made it easier for Wall Street to offer high-interest, payday-style loans. It has softened a policy for punishing banks suspected of discriminatory lending. And it has clashed with another federal regulator that pushed to give consumers greater power to sue financial institutions.

Buffett’s ‘Million-Dollar Bet’ shows how much fees matter (Herald Tribune), Rated: A

One category of alternative investments includes hedge and private equity funds. I am not in favor of such investments, especially for the average investor, and I am not alone.

Typically, hedge fund fees are 2 percent plus an incentive, or “carry,” of 20 percent of the profits. The result is billions of dollars for the managers and far less for clients.

In 2015, Buffett lagged his hedge fund rival for the first time since 2008, gaining 1.4 percent versus Protégé’s 1.7 percent. However, 2016 saw Buffett gain 11.9 percent to Protégé’s 0.9 percent. At the end of 2016, Buffett’s index fund gained 7.1 percent per year, or $854,000 in total, compared with 2.2 percent per year, or $220,000, for Protégé.

United Kingdom

Royal Bank of Scotland to launch robo-advice under NatWest brand (Financial Times), Rated: AAA

Royal Bank of Scotland is launching robo-advice for more than 5m customers as banks return to the investment market after a string of fines and as regulators attempt to plug the UK’s wide “advice gap”.

The state-backed lender is claiming to be the first in the UK to launch automated online investment advice when it opens on Monday under its NatWest brand. The service is designed for the majority of customers and for people with as little as £500 to invest as a lump sum.

The process, which costs £10 plus fees for the investment, is aimed at customers who lack the confidence to invest alone but do not wish to pay higher charges for full-blown financial advice, such as tax and inheritance planning.

Beyond the bank (Prospect Magazine), Rated: AAA

Five high street banks remain responsible for more than 80 percent of business lending, prompting calls for greater market choice both from challenger banks and from emerging FinTech (financial technology) firms. However, the introduction of new platforms and new players raises questions of integration, innovation and regulation.

Launched seven years ago, Funding Circle has since hosted 70,000 lenders and is responsible for 2 percent of total UK business lending. While going head-to-head with the banks it is worth noting that Funding Circle is also growing the market.

So what next for financial services? Will the disruptors get disrupted? Possibly. One attendee suggested that FinTech firms would soon be providing ‘white label’ versions of their services to traditional banks that would then offer those services to customers. Others suggested that the likes of Amazon and Google would provide the biggest future threat not just to banks but to today’s FinTech leaders.

RateSetter, Funding Circle, Zopa feature in Women in Fintech Powerlist (P2P Finance News), Rated: A

FEMALE employees at RateSetter, Funding Circle, Zopa and Landbay have all made this year’s Women in Fintech Powerlist, which celebrates the achievements and talent of women across the sector.

RateSetter’s entrants are: Alexa McAlister, head of partnerships; Angela Yotov, head of legal; Joanna Wright, chief risk officer; Katie Brown, corporate counsel; Laurence Perrin, head of compliance; Lucy Bott, head of customer operations; and Maud Holma, finance counsel.

Women from Funding Circle who made the list are: Alysha Randall, global finance director; Lisa Jacobs, chief strategy officer; Lucy Vernall, global general counsel and global head of compliance; Maria Weaver, chief people officer; Panni Morshedi, managing director of international; Swati Lay, chief information security officer; and Vittoria Reimers, VP loan operations.

VPC takes majority stake in online lender Borro (P2P Finance News), Rated: A

VICTORY Park Capital Specialty Lending (VPC) has continued its expansion into balance sheet lending by upping its investment in online secured lender Borro.

The alternative finance-focused investment trust now has the largest stake in the firm, which provides loans secured on luxury assets, owning around 49 per cent.

How does LendInvest’s buy-to-let offering stack up to P2P rivals? (P2P Finance News), Rated: A

LendInvest said it will be offering buy-to-let loans through intermediaries ranging between £50,000 and £5m, with rates starting at 3.69 per cent depending on whether borrowers take a two, three or five-year fixed rate.

In comparison, Landbay facilitates fixed rate and tracker buy-to-let loans of between £70,000 and £500,000 from 3.55 per cent.

And fellow P2P lender LandlordInvest offers loans of between £30,000 and £300,000 from five per cent.

Crowdproperty Pitches to Raise 600K GBP through Equity Crowdfunding (P2P-Banking), Rated: A

UK p2p lending marketplace Crowdproperty is currently pitching on Seedrs to raise 600K GBP from the crowd at a pre-money valuation of 5.9M GBP.

Digital bank Monzo sizes up IPO (AltFi), Rated: A

In an advertisement for a new Chief Financial Officer, Monzo has let on about its plans for an IPO within three to four years time.

The posting, published today on Monzo’s job site, says:

Alongside the CEO, you’ll be heavily involved in future capital raising – pitching to investors and negotiating the best terms. In the next 3-4 years, it’s likely you’ll be responsible for taking the company through an IPO.

UK FinTech Beats Brexit Blues with New Funding Record (Digit), Rated: A

The UK fintech sector has enjoyed a record year of investment in 2017 with more than £2 billion invested across 182 deals, according to research body FinTech.Global.

Additionally, the compound annual growth rate (CAGR) of 10.7% experienced by firms valued below £75 million between 2014 and 2016 was supplemented with a further investment of £1.2 billion for this bracket in 2017. As for companies valued above the £75 million figure, a further £877.1 million has been committed across eight deals.

Investment in the UK’s top-10 fintech firms accounted for nearly 46.7% of the total investment between Q1 and Q3 2017. The largest of these deals went to Gryphon Insurance in June, valued at £179.6 million. Of the top 10 deals, four went to lending firms – Prodigy Finance1stStop GroupNeyber and Funding Circle, valued at £457.5 million. Of the remaining six deals, two went to challenger banks Tandem and Atom, two went to enterprise software companies Options Technology and Darktrace, and the final two went to insurtech companyies Gryphon Insurance and Revolut.

Millennials say advisers are inaccessible and too expensive (Financial Times), Rated: A

Millennials view financial advice as an industry of “exclusivity, inaccessibility and high cost,” according to research carried out by the financial advice trade body.

The poll of 178 millennials found 78 per cent of them believed they could only receive advice if they had investible wealth in excess of £50,000 but a significant number wanted advice when they had £10,000 or less.

Online-only options appealed to just 12 per cent of those surveyed.

Cardiff will host one of the first a new network of tech hubs being set up in a £21m investment (Wales Online), Rate: B

A new tech hub will be set up in Cardiff as part of a UK-wide network of regional hubs under a £21m investment announced by the UK Government.

China

P2P Lender Hexindai Names Citi As Depositary Bank for American Depositary Receipt Program (Crowdfund Insider), Rated: AAA

On Wednesday, Chinese peer-to-peer (P2P) lending platform Hexindai announced it has appointed Citi’s Issuer Services business as the depositary bank for its American Depositary Receipt (ADR) program. According to the online lender, the program was established through an initial public offering of its American Depositary Shares (ADSs), priced at $10 per ADS, which raised approximately $50 million.

Unified credit rating system expected soon, say experts (China Daily), Rated: A

A unified platform for collecting personal financial information and assessing people’s credit ratings is being planned, and it is expected to be launched soon as a part of the central bank’s regulatory framework, experts told China Daily.

It will complement the existing credit center of the People’s Bank of China, the nation’s central bank.

China Fintech Companies Dominate Top-10 List of Global Innovators (China Money Network), Rated: B

Compared with the ranking last year, two more Chinese firms were added to the top 50 list. Online marketplace lending company Dianrong and credit card and online financial service firm U51.com, or 51Xinyongka, rose to top 50. Among the 100 fintech companies, lending and payments focused companies lead in terms of sectors.

European Union

Online Lender WeShareBonds Raises €12 Million in Mission to Help Finance French SMEs (Crowdfund Insider), Rated: A

WeShareBonds, an AMF-registered crowd lending platform, has raised €12 million to continue financing French SMEs. The new funding includes both the closing of WeShareBonds’ second credit fund (Prêtons aux PME 2018) to finance French SMEs for €10 million and an equity increase of €2 million to finance platform growth.

International

Peer to Peer (P2P) Lending in India: A positive disruption to traditional financing, albeit cautious approach required (CARE Ratings), Rated: AAA

The overall size of the NBFC sector in India has grown significantly during the last few years with increasing share of NBFC total assets to bank total assets (approximately around 15 per cent of the total banking assets).

P2P Lending in UK: In UK, the P2P market has seen active retail investor participation. The outstanding loan book in the UK industry is approximately around £2.9 billion (~Rs.25,000 crore) as on Q3-2017 as compared to £0.75 billion (~Rs.6,500 crore) as on Q4-20142 . Based on the outstanding loan book as on Q3-2017, the key players in the segment are Funding Circle, Zopa, FolktoFolk, Ratesetter and ThinCats capturing majority of the market.

P2P Lending in USA: P2P industry in USA is around $20 billion (~Rs.1.3 trillion) in 2016 up from $18 billion in 20153 . P2P lending in the USA has seen active participation of institutional investors (approximately 70 per cent of the total investor volumes) lending to borrowers through the platforms. In the USA, three dominant players capture majority of the market which include Lending Club, Prosper and Sofi.

P2P Lending in China: Globally, China has the largest market size of P2P lending which started in 2006. As of January 2017, there were total 2388 P2P platforms in China4with trading volume in 2015 touching $67 billion (~Rs.4.4 trillion) which is ten times that of UK and four times bigger than USA. However unlike USA and UK, the China P2P market is dominated by large number of small and medium size firms.

P2P Lending in India: Globally P2P lending has been in existence for more than ten years; however, it has been evolving in India in the last couple of years. Given the recent RBI guidelines, companies will now need to obtain NBFC–P2P license and will come under the purview of the regulator. There are more than 50 P2P online platforms operating in India. I-Lend, LenDenClub, Faircent, Lendbox, i2iFunding, Monexo, India Money Mart, Rupaiya Exchange are some of the leading P2P platforms operating in India. Currently, some of the leading P2P platforms claim to disburse loans amounting to ~Rs.1 to 2 crore a month. Outstanding loans under P2P model is estimated to have reached ~Rs.50-60 crore.

Source: CARE Ratings

Read the full report here.

TAURUS COIN OPENS FOR BUSINESS GLOBALLY (EIN News), Rated: A

United Kingdom’s leading peer to peer cryptocurrency lender Taurus Coin today launched its online lending marketplace with USD 150M lending capital, bringing the world’s fastest growing form of lending to the South-East Asia, Gulf, Africa, Europe, and India investors.

Australia/New Zealand

Sharesies to look at robo-advice once regulator rules on exemptions (The National Business Review), Rated: A

Start-up fund distribution platform Sharesies will develop a plan to provide personalised, automated financial advice, known as robo-advice, once there is more clarity about regulatory exemptions.

Last month the Financial Markets Authority decided to grant an exemption to enable the provision of robo-advice services under the current financial advice regime and said it aims to finalise the exemption and be open for applications in early 2018.

India

ICICI Bank and Paytm partner for short term credit for users (Medianama), Rated: AAA

ICICI Bank and Paytm have partnered to offer short-term credit to users. The credit given to customers will be interest-free for 45 days and the bank says that it will give loans up to Rs 20,000. Initially, this will be allowed for select ICICI Bank customers who are on Paytm and will be extended to other bank customers as well who use Paytm.

Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.

In August, the bank launched product called Instant Credit Card where certain pre-approved customers of the bank will be able to get a virtual credit card much before the physical card is delivered to them. A physical card will be sent to the customer’s address in 5-7 days.

Meanwhile, the bank’s rival, HDFC Bank said that it would start offering a virtual credit card for customers through its PayZapp wallet, as indicated by this Financial Express report. HDFC Bank has the maximum number of credit cards in circulation with 9.03 million. Meanwhile, ICICI Bank has 4.34 million credit cards.

  • Paytm’s rival in the wallet space, MobiKwik has partnered with Bajaj Finance to to bring in credit facilities to a wallet business.
  • In April this year, PayU India will be investing $50 million in its product LazyPay over the next few years. The credit facility could extend for amounts from Rs 3,000 and even up to Rs 10,000, depending upon customer behaviour.
  • For the recently concluded festival season, e-commerce player Flipkart started to offer EMIs on debit cards on high-value purchases.

Narrow banking is an idea whose time has come (livemint), Rated: A

The most heartening takeaway from last week’s public sector bank executive jamboree was the discussion around differentiated lending structures. The ThinkShop (earlier editions were called Gyan Sangams) suggested that large banks focus on corporate lending, while smaller lenders focus on retail loans or specific geographies.

Taking differentiated lending to its logical end, the time has come to consider converting the worst performers among state-owned lenders to narrow banks, which won’t lend at all.

Narrow banks are safe banks. By not lending, and using their deposits to buy government bonds, they carry virtually no credit risk. There is no danger of non-performing loans and frequent injections of equity capital that has to be funded by taxpayers. For the Reserve Bank of India (RBI) too, supervision gets easier. There is no need for deposit insurance.

RBI likely to issue clarifications on P2P lending norms soon (Money Control), Rated: B

The Reserve Bank of India is soon likely to issue clarifications on the guidelines for peer-to-peer (P2P) lending platforms relating to the lending limits, trusteeship and other operational norms.

Asia

Active.Ai raises over million in Series-A round (India Times), Rated: A

Singapore-based fintech platform Active-.Ai has raised $8.25 million in a series-A round, which was led by Vertex Ventures, Creditease Holdings and Dream Incubator. Existing investors Kalaari Capital and IDG Ventures also participated.

Canada

WEALTHSIMPLE, LEAGUE AMONG KPMG’S TOP 50 FINTECH COMPANIES (Betakit), Rated: B

Toronto-based WealthsimpleLeague, and SecureKey were among the company recognized in the top 50 category. In the emerging stars category, Toronto-based BorrowellWave, and Sensibill were recognized.

The list was put together by FinTech investment firm H2 Ventures and KPMG FinTech.

Authors:

George Popescu
Allen Taylor

Thursday November 16 2017, Daily News Digest

securitization

News Comments Today’s main news: Marcus surpasses 2017 goal. LendInvest gets into buy-to-let. Top 3 spots on KPMG Fintech 100 list are all Chinese. Lendix launches SME bridge loans in France, Spain, and Italy. Mauritia issues draft P2P lending rules. Marlette closes fourth securitization in a year. Today’s main analysis: Rising challenges unlikely to deter U.S. securitizations. Today’s thought-provoking articles: […]

securitization

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Canada

Russia

News Summary

United States

Marcus from Goldman Sachs Surpasses 2017 Goal (Bank Innovation), Rated: AAA

Martin Chavez, chief financial officer for Goldman Sachs, showed in a slideshow at a Bank of America Merrill Lynch event yesterday that Marcus had already surpassed $1.96 billion in originations as of Nov. 9.

What that means is that from Nov. 9 to Nov. 14, over a span of five days, Marcus originated more than $40 million in loans.

Rising challenges unlikely to deter U.S. securitization in 2018 (Asset Securitization Report), Rated: AAA

As a result, Fitch’s outlook for U.S. structured finance ratings is predominately stable for 2018. That said, given where we are in the credit cycle, Fitch is keeping a close watch on select asset types that could run into some issues over the next 12 months.

Entering 2018, Fitch has either Positive or Stable Outlook on over 90% of its rated securitized bonds.

Perhaps the most notable change that has manifested from risk retention is the shrinking universe of originators bringing new securitizations to market. This is particularly notable in the universe of CMBS originators, which has shrunk from a high of roughly 40 to now less than 20 due to a combination of risk retention and Reg A/B.

Competitive pressures, long in place for subprime autos, are escalating in a marketplace ABS environment that is struggling to find its footing by testing recent underwriting models, asset quality and, in some cases, business models. Delinquencies and chargeoffs of existing assets continue to increase as marginal borrowers increase their leverage. Not likely to help is the drive for growth among large marketplace lenders coupled with rising market pressure from competing banks like Goldman Sachs (Marcus), Discover, and Suntrust. And unless originators tighten their credit policies with discipline, the strain will intensify.

Source: Asset Securitization Report

Online lenders should heed criticism of their effect on borrowers (American Banker), Rated: AAA

The consumer lending industry is abuzz about the Federal Reserve Bank of Cleveland’s recent report on debt consolidation and online lending. This excellent piece of research concludes that, on average, online installment loan borrowers fall into more debt after taking out a loan, experience hits to their credit score and history as a result, and take out online loans despite having access to traditional banking and credit channels.

The first two conclusions are damning, especially as these loans are often marketed as a way to help consumers consolidate credit card debt and improve their finances. At the end of the day, a lender’s duty is not merely to avoid losses. Any loan must be suitable for the customer — which means it should be made only if the lender believes it is improving the customer’s financial health. A lender not guided by that principle should be prepared for severe criticism as well as elevated losses down the road.

But it would be nonsensical to discredit or ignore the study because it includes online lenders beyond well-known fintech names.

The Best of Both Worlds with Prosper for Borrowers and Lenders (DoughRoller), Rated: AAA

Founded in 2005, and generally recognized as the first peer-to-peer (P2P) lending platform in the US, Prosper has funded more than $10 billion in loans since.

While borrowers can get personal loans ranging in size between $2,000 and $35,000, investors can put as little as $25 toward funding those loans.

There is one exception, however. You cannot use loan proceeds for post-secondary educational expenses. That’s because some of the rules in federal law aren’t compatible with P2P lending. More specifically, with education loans, the borrower must have at least 30 days to accept or reject a loan offer.

Medical procedures available for financing under the PHL program include:

  • Cosmetic dentistry
  • Bariatric surgery
  • Cosmetic and plastic surgery
  • Fertility and reproductive procedures

All Prosper loans have a term of either three or five years.

The minimum requirements are:

  • A minimum FICO score of 640, based on a TransUnion FICO 08 score
  • Debt-to-Income (DTI) ratio below 50%
  • Stated income greater than $0 (you must have an income)
  • No bankruptcies filed within the previous 12 months
  • Fewer than seven credit bureau inquiries within the last six months
  • A minimum of three open trades reported on your credit report

Interest rates are between a minimum of 3.00% for the best AA rated borrowers to a maximum of 36.00% for the lowest rated HR borrower grades.

Source: DoughRoller

Prosper for Investors

Prosper advertises that the average rate of return by investors on the platform is 7.41% per year.

Loans rated HR have a much higher average return, at 11.73%.

You can open either a General Investment Account or an IRA. Available IRAs include traditional, Roth, SIMPLE, SEP and rollover IRAs (IRA accounts are held with Millennium Trust Company). At this time, Prosper has made only individual accounts available. You cannot hold an account jointly with someone else.

For regular investment accounts, the minimum is $25. For IRA accounts, the minimum is $5,000.

Similar to other P2P platforms, when you invest with Prosper, you don’t actually invest in whole loans. Instead, you invest in small slivers of those loans, referred to as “notes.” The notes are in denominations of $25. This means that you can spread an investment of $1,000 across as many as 40 different loans.

The servicing fee is 1% of the outstanding balance of a loan. That means that if the loan pays 8%, your net return will be 7%.

Source: DoughRoller

Marlette Funding Closes Fourth Personal Loan Securitization Within Past Year (LendEDU), Rated: A

Last week, marketplace lender Marlette Funding announced the closing of its fourth proprietary securitization. The transaction was worth an estimated $312 million, and it is the fourth securitization announcement since August of 2016 from Marlette Funding.

eOriginal Named as One of Fastest Growing Companies in North America on Deloitte’s 2017 Technology Fast 500 (eOriginal), Rated: A

eOriginal, Inc., today announced it has been named to Deloitte’s Technology Fast 500 list as one of North America’s fastest growing technology, media, telecommunications, life sciences, and energy companies. eOriginal earned the rank of 294 by more than doubling revenues during the evaluation period of FY 2013 through FY 2016.

Betterment, the investing startup with $ 11 billion in assets, is rolling out a new service to make charitable giving easier (Business Insider), Rated: A

Betterment, the New York-based roboadviser, announced Wednesday a charitable giving feature that’ll let users donate shares of their account to partnered charities.

The firm, which manages $11 billion for over 300,000 customers, partnered with 11 charities for Betterment Charitable Giving, including Big Brothers Big Sisters of NYC, UNICEF, and World Wildlife Fund, according to a news release. The new feature is set to go live November 28.

Subprime car loans souring faster at nonbank lenders (American Banker), Rated: A

Despite signs of trouble in subprime auto lending, U.S. banks and credit unions are well positioned to ride out any market turbulence, a new report from the Federal Reserve Bank of New York suggests.

More than $435 billion in auto loans to borrowers with credit scores below 660 were outstanding during the third quarter of this year, the report found. That total has been climbing steadily since bottoming out at $249 billion in early 2011. Delinquency rates have also been rising as it has become easier to qualify for an auto loan.

Fidelity latest financial firm to facilitate data sharing with fintechs (American Banker), Rated: A

Fidelity Investments is joining the ranks of financial firms sharing customer account data with others through an application programming interface.

The new service, called Fidelity Access, will give third parties access to Fidelity customers’ account data for use in apps and services like tax preparation, budgeting, financial planning, spending analysis and portfolio advice — provided the Fidelity customers give their OK. Customer data to be shared includes Fidelity account balances, securities holdings, and transactions.

These are the most valuable fintech companies in America (MarketWatch), Rated: A

Stripe Inc., whose software is used by businesses to accept and track digital payments, leads the way as the most valuable fintech startup in the U.S., with a $9.2 billion valuation.

And just to be clear, fintech startups are nowhere near close to catching up to the big banks. Wells Fargo & Co. has a market cap of more than $266 billion, and Bank of America Corp. has a market cap of more than $273 billion.

RealtyProfits Offers Accredited Investors an Innovative Platform to Invest in the Real Estate Sector (Digital Journal), Rated: A

RealtyProfits (www.RealtyProfits.com) announces today an exciting and innovative investment opportunity, RealtyProfits IV, with a Preferred Return of 12 percent per annum, available exclusively to accredited high net-worth individuals and institutional investors. The private preferred equity securities, available for purchase at www.RealtyProfits.com, are being offered through WealthForge Securities, LLC, a registered broker/dealer and member of FINRA/SIPC.

The geographically diversified portfolio includes properties in 700 cities coast to coast, with a current estimated value of $1.73 billion and more than $700 million of equity in more than 5,900 portfolio properties. The properties include primarily single-family homes and condominiums ranging in value from $100,000 to more than $2,500,000.

Accredited investors can start investing with as little as $20,000. RealtyProfits IV offers monthly cash distributions. Preferred equity investors receive all distributions made by RealtyProfits IV until fully repaid. The Preferred Return is 12 percent per annum, with initial monthly Base Preferred Return payments at 6 percent per annum anticipated depending on cash flow during each of the first 24 months.

Reality Shares Teams up with Nasdaq to Launch Blockchain Tech Index (BusinessWire), Rated: A

Reality Shares and Nasdaq announce the creation of the Reality Shares Nasdaq Blockchain Economy Index, a smart-beta index that tracks the growth and development of leading global companies creating and implementing blockchain solutions.

An ETF that will track the Index is already in the works, with Reality Shares filing for it on November 2, 2017.

Reality Shares and Nasdaq compiled the index by utilizing internal and external research and their proprietary Blockchain ScoreTM ranking system. The Index is comprised of global companies that seek to capitalize upon transformational blockchain technology that may potentially disrupt the markets in which they operate.

How to Choose Between a Peer-To-Peer Lending or Traditional Loan (Experian), Rated: A

Shopping for a loan at a P2P provider is a two-step process. First, based on a credit score (or credit scores) and your answers to a few basic questions—your full name, address, date of birth and annual income—the lender determines which loan offer(s) to extend to you. (It’s possible at this juncture that the lender will decide not to extend any loan offers; if they do, they’ll explain why.)

Once you choose the loan you want, the lender does a more detailed credit check and may ask you to verify your income and to provide additional background information.  Each P2P site has its own lending criteria, including minimum credit scores, and additional information requirements vary accordingly. Some P2P lenders want information on your educational background; others want work history or details about your financial assets. In most cases, you can submit the necessary documents electronically.

The first step in the P2P loan-approval process gets one or more of your credit scores by a method known as a soft inquiry—the same process you use when you check your own credit scores. Soft inquiries have no impact on your credit scores. However, the hard inquiries traditional lenders make when you apply for a credit cards or bank loans are reported to the national credit bureaus. They appear on your credit reports, and typically cause temporary credit-score drops of several points.

In the second step of P2P loan approval, the lender performs a hard inquiry to confirm your credit score and, likely, to review your full credit report.

Before you apply for a P2P loan

  • Take a look at the fine print on the bottom of each provider’s homepage, to get an overview of the loan amounts they offer and the rates and fees they charge.
  • Make sure the lender operates in your state.
  • Check your FICO Score and review your credit reports for any major negative entries. Accounts in collection, liens and civil judgments are among the items that could torpedo your loan application, even if you meet the credit-score requirements.
  • Determine the amount of money you need and watch out for tempting upsells.
  • Consider using the Experian loan-referral tool to explore offers from multiple P2P lenders (and possibly traditional lenders as well).

Resignation of CFPB head gives Trump opportunity to erase Elizabeth Warren’s legacy (Legal Insurrection), Rated: A

Richard Cordray, an Obama appointee and head of the Consumer Financial Protection Bureau (CFPB) announced to staff in an email Wednesday his plans to resign. While he’s yet to confirm his plans, there’s speculation Cordray will return home to run for Ohio’s governorship.

Seven Signs That the Bond Bull Market is Over (INTL FCStone), Rated: A

  • The bond bear market is already here: short and medium-term treasuries have lost value in the past 5 years
  • Buybacks have fallen to a five-year low, and big repurchasers have underperformed
  • Oil prices are at a 30-month high, and the futures curve is in backwardation
  • The long and the short ends of the yield curve are moving together again
  • The Chinese trade surplus has shrunk from 10% of GDP to almost zero in the past ten years
  • The U.S. deficit is growing again, an unprecedented phenomenon in times of expansion and peace
  • Small bubbles are popping out: Auckland houses, Ethereum crypto coins, and collectible cars
Source: Global Macro Report, INTL FCStone

Read the full report here.

Spring Framework Creator Launches Atomist for Development Automation With $ 22 Million in Series A Funding (Marketwired), Rated: A

Today on stage at Structure 2017, Atomist is formally launching and unveiling its Development Automation Platform with an Open Source client and API. As part of today’s launch, Atomist is announcing $22 million in Series A funding from Accel and Matrix Partners.

Bestow Gives Texas Residents First Access to On-Demand Life Insurance (PRWeb), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced the early access roll out of its comprehensive, full-stack, digital life insurance solution in Texas. For the first time Bestow’s solution is available to the public, giving Texas residents primary access to apply for the only on-demand life insurance solution, instantly and without a medical exam.

Leveraging applied intelligence and algorithmic underwriting, Bestow redefines the way consumers research, buy and manage life insurance. Using data to calculate risk, Bestow removes the need for a medical exam and streamlines the entire process into a matter of minutes. The Texas launch gives consumers access to choice term life insurance plans, including a unique two year term policy never before available for life insurance. Additionally, customers can choose between ten or twenty year term life insurance.

The Zebra Raises $ 40 Million, Taps New CEO To Expand Beyond Car Insurance (Forbes), Rated: A

The Zebra, which has always described itself as the Kayak of car insurance, has hired a longtime Kayak executive as its new CEO.

The Austin-based company, which allows drivers to compare prices for car insurance online, said on Tuesday that it has tapped Kayak’s former president Keith Melnick to run the company.

The Zebra also said it has raised $40 million in a Series B funding round, led by Accel Partners. That brings its total funding to $61.5 million.

MarketScout in Dallas Creates $ 25M Insurtech Venture Fund (Insurance Journal), Rated: B

Dallas-based insurance exchange and MGA MarketScout announced it has launched MarketScout InsurTech (MIT), which will make investments in tech-enabled insurance distribution. The initial funding of $25 million will come exclusively from MarketScout Corp., parent of MIT, according to the firm.

House Financial Services Committee Approves Legislation to Help Keep Lending Partnerships Between Banks and Online Lenders (Crowdfund Insider), Rated: A

The House Financial Services Committee has approved HR 3299 or the “Protecting Consumers’ Access to Credit Act of 2017.” The bill “restores consistency” in lending laws across state boundaries. HR 3299 impacts the case of Midland Funding, LLC v. Madden – an ongoing law suit that has the potential to undermine online lenders. Sponsored by Congressman Patrick McHenry, includes an important statement that clarifies allowable interest rates on loans potentially ending the issue associated with the law suit.

How Do You Beat a Robo-Advisor? Trust (Think Advisor), Rated: A

“Technology by itself cannot create trust,” Robert C. Merton, a Nobel laureate in economics now teaching at MIT, recently told ThinkAdvisor. “The successful advisor must have the trust of their clients.”

Given the importance of trust in the advisor-client relationship, Merton recommends financial advisors (the breathing kind) should:

  • Check what they are doing to retain and enhance trust with their clients.
  • Make sure the business model being used supports the creation of trust.
  • Take advantage of technology to improve/enhance what the advisor does.
  • Do not view technology as a “competitor or substitute” for the advisor.
  • Understand and assess the financial technology they employ to certify trusting its use in client solutions.

HFLA launches initiative to help underserved reach financial stability (Cleveland Jewish News), Rated: A

The Hebrew Free Loan Association has launched its Looking to the Future Initiative with support from the St. Luke’s Foundation and the PNC Foundation. The initiative accounts for $73,000.

The initiative enables HFLA to increase its lending of interest-free loans to Cleveland’s underserved neighborhoods and grows the organization by expanding its reach, according to a news release. HFLA received a $63,000 grant from the St. Luke’s Foundation and a $10,000 grant from the PNC Foundation to launch the effort.

Fundation Purchases Select Assets from Able Lending to Enhance Partnership Strategy (BusinessWire), Rated: B

Fundation Group LLC, a digitally-enabled lender and credit solutions provider, today announced that it has acquired a variety of assets from online small business lender, Able Lending of Austin, Texas.

Former Capital One Executive Troy Jamison Joins Victory Park Capital as Chief Risk Officer (BusinessWire), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Troy Jamison joins as chief risk officer for the firm’s nonbank financial services portfolio. Jamison is based in Chicago and reports directly to CEO and Co-Founder Richard Levy.

CFPB updates website to officially address end of arbitration rule (Housingwire), Rated: B

The Consumer Financial Protection Bureau finally updated its website to acknowledge President Donald Trump revoking the controversial arbitration rule.

blog post from Ballard Spahr previously stressed the importance of the CFPB updating its website to note the rule’s override since the rule was killed nearly two weeks ago.

The webpage for “Arbitration agreements” now has an update on the top that states:

On Nov. 1, 2017, the President signed a joint resolution passed by Congress disapproving the Arbitration Agreements Rule under the Congressional Review Act (CRA). Pursuant to the joint resolution, the Arbitration Agreements Rule has no force or effect. The materials relating to the Arbitration Agreements Rule on the Bureau’s website are for reference only.

HOUSE FINANCIAL SERVICES COMMITTEE PASSES SMALL BUSINESS CREDIT ACT (Coalition for Small Business Growth Email), Rated: B

The 

United Kingdom

LendInvest launches into buy-to-let (Mortgage Strategy), Rated: AAA

LendInvest is launching a range of buy-to-let loans aimed at professional landlords and investors.

Rates start at 3.69 per cent for a two-year fix at 60 per cent LTV.

The firm will offer loans of between £50,000 and £5m, up to a maximum LTV of 80 per cent.

Citigroup joins the AI bandwagon (Business Insider), Rated: A

Citigroup 

Source: Business Insider

SyndicateRoom Alum Squirrel Launches Crowdcube Funding Round (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, has launched an equity crowdfunding round on Crowdcube. This initiative debut comes less than one year after the company completed its SyndicateRoom funding round with £585,000 in funds. Squrriel is now seeking £400,000.

Government unveils financial package to support tech (P2P Finance News), Rated: A

THE GOVERNMENT has given a £21m boost to a technology programme that has supported firms such as Zopa and Funding Circle as part of a range of measures to boost the tech sector.

The funding will make Tech City UK and Tech North one national organisation called Tech Nation and help grow government-backed startup support programmes such as Founders Network, Northern Stars, Future Fifty and Upscale.

Cash Converters International Ltd reports security breach and ransom demand (The Motley Fool), Rated: A

Payday lending and pawnbroking business Cash Converters International Ltd (ASX:CCV) announced a cybersecurity breach in its UK operations last night.

Sadly, computer system integrity is becoming an increasingly relevant – and often overlooked – concern for investors, with a vast majority of companies relying in one way or another on computer systems.

Valorem Foundation Launches All-New Cryptocurrency Platform (PR Newswire), Rated: A

Valorem Foundation, a Blockchain startup specializing in stabilized value-based exchange and transactions, has announced the launch of its new cryptocurrency platform. The company has developed a multi-layered platform to disrupt and expand the following services globally: microloans, car loans, student loans, rent payment, P2P networks, buying and selling of goods & services, business investing, real estate crowdfunding, and insurance.

Empowering the world: How you can make money through improving lives (City A.M.), Rated: A

This sea change should explain why investment firm Ethex has managed to scoop up so much support in its short history – raising more than £50m since 2013.

Its business model has a peer-to-peer lending feel – that is, it uses a digital platform to allow retail investors to lend to individuals and entrepreneurs.

But it comes with a twist, because Ethex is a not-for-profit organisation which lets you invest in companies that have a positive impact – socially and environmentally.

If you want to get involved, the platform has a minimum investment of £50, which arguably makes it more accessible to younger generations.

Trussle hires VP engineering from Funding Circle (Mortgage Introducer), Rated: B

Trussle has appointed Matthew Gretton as vice president of engineering from peer-to-peer lending platform Funding Circle.

China

Alibaba affiliates sweep top 3 spots in global fintech ranking (Asian Review), Rated: AAA

Financial technology companies linked to China’s Alibaba Group Holding took over the podium in KPMG’s latest Fintech 100 list, announced on Wednesday.

Ant Financial, which runs Alibaba’s massive Alipay e-payments network, took the No. 1 spot on the list, which was compiled with fintech accelerator H2 Ventures. Online property insurer ZhongAn Insurance and microloan provider Qudian placed second and third; both have received investments from Ant.

See the full list here.

One of China’s hottest companies rebuffs criticism about transparency (CNBC), Rated: A

Despite public criticism about a lack of transparency in some practices, Ant Financial is doing things the right way, a senior executive at the company said Wednesday.

“The demand for these securities is very healthy and continuing to expand,” Douglas Feagin, senior vice president and head of global business at Ant Financial, told CNBC’s “Street Signs.” “That, at the end of the day, is the ultimate barometer of whether you’re giving enough information to investors to invest.”

Ant Financial will use local partners in Southeast Asia: executive from CNBC.

Earnings at Some U.S.-Listed Chinese Microlenders Taper (Caixin), Rated: A

In the three months ending Sept. 30, Yirendai’s net income was down 12% to 303 million yuan ($45.7 million) from 344.3 million yuan a year ago, the company said Wednesday. Another Chinese microlender, China Rapid Finance Ltd., earlier reported a wider net loss of $4.4 million in the third quarter. Although Qudian Inc., a larger player that listed in New York last month, recently posted a four-fold increase in its third-quarter net profit from a year ago, citing better operational efficiency and its growing borrower base.

Cinda International Leads Massive Round In Chinese Fintech Company 9f Group (China Money Network), Rated: A

Beijing-based fintech company 9f Group has raised a massive new funding round from Cinda International Holding Ltd, a subsidiary of state-owned China Cinda Asset Management Co., Ltd., Focus Media Information Technology’s Chairman Jiang Nanchun, video game developer Youzu Interactive’s chairman Lin Qi and an unnamed Chinese industry fund.

The company did not disclose financial details except to say that it raised “hundreds of millions of U.S. dollars” in the latest financing deal, according to a company announcement. It is also unclear how the company is valued in the round, but 9f Group is listed on China Money Network’s China Unicorn List with a US$1 billion valuation when it last raised a US$110 million series B round in 2015.

European Union

For Spain’s banks, survival means digital (Financial Times), Rated: AAA

Santander’s Openbank has changed a great deal since it was founded as Spain’s first telephone banking service in 1995. Now a fully digital operation, its mobile app allows users to temporarily disarm a lost credit card, as well as to check whether fellow Openbank customers are buying or selling a given stock at any moment. Currently, it has some 1.2m customers in Spain and more than €8bn ($9.3bn) in assets under management.

In recent years, Spain’s two biggest banks — Santander and BBVA — have increased their financial and managerial investment in fintech, digital banking and big data. Like their peers, they are convinced that the days of branch-based lending are drawing to a close.

Spanish banks average about €15m assets under management per employee, says Daragh Quinn, banks analyst at investment bank Keefe, Bruyette & Woods. At a digital operator like Openbank, that number is close to €60m.

The digital push is on two fronts: first, a mobile app that allows customers to access almost all of the bank’s products without going into a branch. Second, a venture capital approach whereby banks invest in or partner with fintech start-ups to add products.

Online Lender Lendix Launches Flexible SME Bridge Loans in France, Spain & Italy (Crowdfund Insider), Rated: AAA

Lendix, online lender for SMEs in continental Europe, has announced the launch of a new financing product: the Flexible Bridge Loan. This product is designed to will allow a greater number of French, Spanish and Italian SMEs to benefit from the speed of execution of Lendix’s lending platform while leaving them the possibility of setting up an overall refinancing solution with other financial institutions.

The Lendix Flexible Bridge Loan is a 5-year amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

Swedish $ 370 Billion Home-Loan Market Gets New Mortgage Fund (Bloomberg Quint), Rated: A

As investors wonder whether Sweden’s housing market is headed for a correction, the country’s first mortgage fund is about to enter the $370 billion Swedish home-loan industry.

Stabelo plans to pool capital from Swedish institutional investors in exchange for fixed-income securities. That money will then be lent to home buyers. The fund starts offering its products this week and will work with Avanza Bank AB, Sweden’s largest online lender. Avanza, which owns just below 20 percent of Stabelo, will handle distribution and marketing.

International

Has P2P marketplace lending become B2P? (Cuffelinks), Rated: AAA

Due to this issue, the original incarnation of peer-to-peer lending has not lasted. As the CEO of Zopa, a UK-based P2P lender said,

“As bad debts soared, the approach was abandoned and Zopa was moulded into a ‘big sausage machine’. Its technology now links lenders with a pool of borrowers without any direct contact or the need for investors to make credit decisions.”

Australia’s major peer-to-peer lender is SocietyOne. It currently has $350 million borrowed through its platform, and is growing rapidly. In fact, loan volumes in the first three quarters of this year have totalled $141 million so far, surpassing the $139 million in loans facilitated over the entire course of 2016, as shown below.

Source: Cuffelinks
Australia/New Zealand

Exemption for personalised digital (robo) advice (Scoop), Rated: A

Following the FMA’s release of its second consultation paper on personalised robo-advice (now called digital advice), the leading law firm has published its tips for providers looking to develop digital advice platforms.

Head of Russell McVeagh’s Corporate Advisory group, Dan Jones, says the exemption is a necessary first step in putting the New Zealand financial advice regime on equal footing with overseas regimes, and may provide particular assistance to New Zealanders in KiwiSaver.

India

How P2P lending can be a route to creating financial inclusion (Daily News & Analysis), Rated: A

For years, banks have had a monopoly in lending money to businesses and individuals. However, the 2007-08 financial crisis created a havoc, rapidly-expanding the funding gap. This led to the advent of a niche fintech vertical, peer-to-peer (P2P) lending.

The geographical reach of a P2P lending platform is far superior, with the major differentiator being its online interface. Such digital financial services play an important role in supporting the objective of financial inclusion. Anybody, from the remotest areas, having access to internet, can be eligible to get/give a loan.

In the age of digitisation where almost everyone has access to internet, such platforms have the potential to change the financial graph of a country.

Are P2P platforms safe for lending and borrowing? (India Times), Rated: B

While banks and non-banking finance companies (NBFC) are the readily available sources for loans, who does the P2P platform cater to? “Unfortunately, banks in India follow mediocre credit assessment policies which are suited only for borrowers who can offer collateral or have an impeccable credit history. In practice, majority of the borrowers lie in between these extremes. Therefore, majority of Indians can borrow on P2P platforms,” says Raghavendra Pratap Singh, co-founder, i2ifunding, an online P2P lending marketplace.

RBI has put a cap on the amount that can be borrowed and lent. The aggregate exposure of a lender or the maximum that one may borrow at any point of time, across all P2Ps, shall be capped at Rs 10 lakh. Even the exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000 and the maturity of the loans shall not exceed 36 months. “More clarity from RBI is expected on how the regulator intends to monitor the compliance of this aspect and how it will fix the responsibility,” says Singh.

Risks for a lender
Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender needs to be aware of the risks involved. Bubna says, “All investments involve risk. However, in comparison to equity or commodity market investments or real estate, P2P lending has lower risk as it is addressed by on-boarding high quality borrowers. Further, lenders are suggested to create a diversified portfolio of loans.”

Asia

Introducing ACE, Crowdo’s New Artificial Intelligence Due Diligence System (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding unveiled today its proprietary Artificial Intelligence driven due diligence system, Crowdo ACE, aimed at benefiting both their borrowers and investors. Crowdo ACE takes into account a few thousand unconventional and alternative attributes and represents a new way to perform due diligence versus traditional means used by conventional financial institutions. It has already been applied to process more than 3,000 loans.

In a largely-unbanked Indonesia, Amartha uplifts women micro-entrepreneurs (YourStory), Rated: A

Twenty-six people, four nationalities, 10 days. Travelling across Southeast Asia as a Startup AsiaBerlin Roadshow delegate to explore startup ecosystems was an experience unto itself.

Amartha has so far disbursed over $13 million to 60,000 women micro-entrepreneurs and aims to improve their income, and ultimately quality of life.

Aria: Amartha is an Indonesian financial technology startup that focuses on providing affordable financial access, and mentorship to the unbanked population living below the poverty line. Amartha operates much like a peer-to-peer lending platform, and so far, has disbursed more than $13 million to 60,000 borrowers. The borrowers are mostly women micro-entrepreneurs and Amartha aims to improve their income, and ultimately alleviate their status through financial inclusion.

Aria: When we started operations in April 2016, we disbursed $40,000 a month. By the end of 2016, we were disbursing $800,000. Today, on average, we disburse $2.5 million per month. So far, we have disbursed more than $13 million, across more than 60,000 borrowers. The average ticket size of a loan now is around $300.

We charge a fee based on the profit sharing principle. Of the 22-30 percent annual interest rate paid by borrowers, we collect 11-13 percent for our revenue.

Africa

The Mauritian Financial Services Commission Issues Draft Peer-To-Peer lending Rules (Mondaq), Rated: AAA

Following the announcement of the Government on peer-to-peer lending and funding in the 2017-2018 Budget, the Mauritian Financial Services Commission (“Commission”) has issued draft rules on 10 November 2017 to regulate the peer-to-peer lending sector – as sector which has grown rapidly in other countries.

In the region, Kenya and Africa are leading in the peer-to-peer business lending market. According to a study conducted by the University of Cambridge, within Africa, South Africa had the largest number online alternative finance platforms, with $15 million raised in 2015 (The Africa and Middle East Alternative Finance Benchmarking Report, February, 2017).

Borrower and lender – a borrower must be a resident in Mauritius; however, there is no residency requirement for the lender.

Restrictions on amounts  Hence, a lender, who is a legal person, cannot lend more than MUR 500,000 (approx. GBP 11,000) in any 12 months’ period. A lender, who is a natural person, cannot lend an amount in excess of 10 per cent of his income or a maximum of MUR 300,000 (approx. GBP 6,600), whichever is lower, in any 12 months’ period.

Obligations of a P2P operator – the Peer-to-Peer operator must publish the following information on its website:

  • details of how the P2P lending will operate
  • measures to prevent money laundering and combatting terrorist financing
  • security measures to ensure data protection
  • dispute resolution mechanism.
Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

Russia

Moscow Is On Its Way To Becoming A Smart City And Fintech Powerhouse (Forbes), Rated: A

Its citizens and businesses are also quick to adopt the latest disruptive technologies such as fintech and cryptocurrencies. Moscow has a 35 percent fintech adoption rate, higher than New York’s 33.1 percent.

Authors:

George Popescu
Allen Taylor

Wednesday October 25 2017, Daily News Digest

chinese investors

News Comments Today’s main news: RateSetter partners with Experian. Australia publishes fintech regulation draft laws. Lending Loop hits $10M financing milestone. TD Ameritrade offers stock trading through Facebook Messenger. Abra secures $16M in Series B led by Chinese electronics manufacturer. Zero raises $8.5M for credit card that acts like a debit card. Nested raises 36M GBP. TransferWise changes its fee structure, but […]

chinese investors

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

Canada

Latin America

News Summary

United States

TD Ameritrade Clients Can Now Trade Stocks on Facebook Messenger (Bloomberg), Rated: AAA

TD Ameritrade Holding Corp. customers are now able to trade equities and exchange-traded funds using Facebook Inc.’s Messenger services, according to a company statement Monday. Clients can also make deposits, access quarterly performance video statements and receive weekly alerts that rehash market moves.

Hon Hai invests in fintech start-up (Taipei Times), Rated: AAA

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, participated in a US$16 million Series B fundraising program to invest in US-based digital wallet start-up Abra, the new firm said on Monday.

Barhydt said that Abra’s existing investors — Arbor Ventures, American Express Ventures, Jungle Ventures, Lehrer Hippeau and RRE — also participated in the fundraiser that closed on Monday.

The program helped Abra reach more than US$35 million in total capital, Barhydt said, but did not elaborate on potential uses of the additional US$16 million.

Zero raises $ 8.5 million for a credit card that functions like a debit card (TechCrunch), Rated: AAA

Just one-third of young adults have a credit card, according to a Bankrate survey.

A startup called Zero thinks it has a solution to this and it is gearing up to launch a credit card that functions like a debit card. The startup is also raising $8.5 million in a funding round led by ENIAC Ventures, including participation from NEA, Lightbank and others.

Biometrics is Going to Eat the Finance World (Lend Academy), Rated: AAA

In a recent survey it was revealed that 81% of people use the same password for multiple accounts with that number being even higher, at 92%, for millennials.

The introduction of Touch ID on the Apple iPhone in 2013 was a seminal moment in the history of biometrics. People could suddenly use their thumb or finger print as an identity verification tool and forgo using a password. Today, on my phone I can login to my bank account, buy music or apps, buy a plane ticket, even check my Lending Club account all with the press of my thumb.

While still primarily in the testing stage in banking, this past summer Bank of America announced the trialing of iris scanning technology from Samsung. In the UK, TSB is becoming the first European bank to start using this same technology, also with Samsung phones.

Behavioral biometrics can capture things like hand-eye coordination, pressure, hand tremors, keystroke dynamics, gait analysis, mouse use characteristics, navigation, scrolling and other finger movements.

USAA offers three variations of biometrics authentication already in their mobile app. Just this week Samsung announced a partnership with Biocatch to bring behavioral biometrics to its Nexsign biometric authentication platform.

‘We’re moving from the back end to the front end’: Cross River Bank CEO Gilles Gade (Tearsheet), Rated: A

Cross River banks some of the biggest names in fintech, including at least a dozen online lending companies like Affirm, Marlette and Rocket Loans. It has also developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe in the past.

It’s been almost a year since you announced your VC funding. How have you been using it?
We have absorbed the capital very quickly, managed to deploy it on the marketplace lending side. We like to retain loans from the origination platforms so instead of selling 100 percent of the origination we retain 10 percent. As our partners are growing nicely, naturally that 10 percent has kept increasing.

Can both banks and fintech vendors deliver banking-as-a-service?
We’re strong believers that BaaS has to be delivered by a bank. The fintech players need access to payment rails and they’re going to use a bank ultimately to do that. As a service, the bank could be either the facilitator of a transaction or the purchaser of the BaaS technology to provide it to consumers. There is a level playing field now — consumers can have the same functionalities in a small bank in Nebraska that they can have with a Chase or Wells Fargo.

Are banks prepared?
Most banks are not equipped or not API-driven, ubiquitous, priced properly — and the banks that are, the big banks, have been unwilling to do that because it would cannibalize some of their business or presents high risk — do they have the required compliance and adequate staff to be able to manage the operations?

What’s going on inside Almond?
Almond is our exploratory R&D lab for us to understand the aspirations of consumers. We’re trying to develop a front-end solution that could possibly be a killer app that we could white label and sell as one BaaS functionality — so that would be an online or mobile app for a bank account. We’re moving from the back end to the front end.

loanDepot Announces Agreement with Artificial Intelligence Real Estate Technology Company, OJO Labs (PR Newswire), Rated: A

Today loanDepot announced an agreement with OJO Labs, Inc. to act as the mortgage provider of its machine-powered assistant known as “OJO.” By matching OJO’s leading AI technology with loanDepot’s digital lending platform, melloTM, the combined offering will allow house hunters to access real estate and mortgage information, and get pre-qualified, through an entirely digital, mobile-first experience.

Large banks make terrible partners, fintechs say (American Banker), Rated: A

While large banks and fintechs are ostensibly working more closely together than ever, in private conversations and even publicly at a few conferences, fintech leaders have expressed increased frustration about working with bank partners.

Though they won’t name names, they claim tier-one U.S. banks string them along, fail to communicate, don’t pay anything and, worst of all, out-and-out steal intellectual property.

More seriously, fintechs claim large banks are bad at paying for new technology and services.

Parker Crockford, commercial director for the U.S. at identity verification software startup Onfido, said at the RegTech conference in early October that when he’s engaging with large financial institutions, “we get pulled into a lot of innovation conversations where they just want to pick our brains and look cool. I don’t have time for that any more. I’ll say, ‘I’m happy to give you a white paper or a 20-minute chat over the phone.’”

‘Buy The Block’ on its Way to Raising Millions of Dollars for Property Development in Black Communities (BlackNews.com), Rated: A

Entrepreneur Lynn P. Smith is the founder and CEO at Buy The Block – one of the only Black-owned platforms in the country that is dedicated to making investments in real estate as a group more accessible. The movement is presently on its way to recording massive success in funding for diverse development projects across Black communities in the US.

This enviable initiative offers every Black American an opportunity to invest as little as $100, and connect with other investors – with an added advantage of helping every member buy a piece of their first block.

Evolve Capital Partners Advises on CleanFund’s Financing Transaction (Accesswire), Rated: A

Evolve Capital Partners,Inc. is proud to announce that its client, CleanFund Commercial Capital, Inc., the leading direct provider of commercial Property Assessed Clean Energy (“C-PACE”) financing, recently announced its first closing of a $15 million equity financing round, led by Vulcan Capital affiliated entities. The financing will accelerate CleanFund’s growth across the U.S. and help the company continue to meet growing demand from commercial property owners.

Thrive Delivers Landmark Performance Gains for Horizon (Thrive), Rated: A

Thrive Inc. (Thrive) is excited to announce the compelling performance of its digital lending technology, ensuing from its multi-year technology licensing agreement with Horizon Community Bank (HCB), a leading Arizona-based FDIC insured bank and subsidiary of Horizon Bancorp, Inc.

Key Performance Highlights:

  • Application Time: Avg. of 5 minutes, as opposed to days
  • Automated Decisioning: 90% of applications are instantly decided; powered by Thrive’s configurable credit rules based algorithms
  • Time to Decision: <1 Day, as opposed to several weeks
  • Loan Booking Rate: 100%, as applicants prefer the quick digital application and decision process
  • Offer to Close: 1.5 Days, digital closing enables efficiency

Key Portfolio Highlights:

  • Portfolio Interest Yield: Above market interest rates drive loan profitability
  • Customer Acquisition Costs: <$200, driven by leveraging internal bank customers as well as new customers
  • Delinquent/Charge-Off: 0%, effective underwriting and real time loan monitoring is driving modern and powerful risk management while also compressing loan reviews
  • Monthly Origination Growth: 60%, driven by customer demand for a quick, efficient and friendly loan application experience

IBM and Zelle team up to advance P2P payments (Banking Technology), Rated: A

IBM says it has launched an “industry first” solution to support the full lifecycle of peer-to-peer (P2P) transactions, from the back office of financial institutions to the mobile device.

The project is a collaboration with Zelle, a P2P network in the US built on the clearXchange platform. Zelle now includes over 20 banks and credit unions, and is poised to reach an estimated 85 million US customers this year.

How FinTech Companies Are Closing The Banking Gap (Forbes), Rated: A

According to the World Bank, there are two billion people globally who currently have no access to banking services.There are many reasons for this: they may not have built up enough traditional credit history, they may have bad credit because of poor financial choices in the past, or they may live in an area where access to credit and other financial services are limited.

For instance, Jennifer Tescher, founder and president of The Center for Financial Services Innovation (CFSI), has helped launch financial inclusion initiatives by incubating startups addressing U.S. financial health through their Financial Solutions Lab. Some of these startups include Propel, which streamlines the food stamp process; Bee, a mobile alternative to potentially predatory financial services for low-income people; and popular startups that aim to assist with savings and debt repayment including Digit, EarnUp and LendStreet.

Founder and CEO Shivani Siroya, of California-based Tala, is trying to fix the challenge of low access to financial services by providing alternative credit scoring and instant credit delivery via mobile wallet.

Mexico, for instance, sees 38% mobile wallet use, compared to 17% overall in the US, even though 93% of Americanshave access to financial services.

3 Types Of Alternative Lenders You Need To Know About (Bisnow), Rated: A

1. Crowdfunding Platforms

Real estate crowdfunding hit $2.5B in 2015 and shows no sign of slowing down.

Platforms like RealtyShares and Fundrise offer several loan options and flexible payment terms, and cater to different asset classes. The latter prioritizes small-deal properties valued under $50M, and the former charges no fees for the first two years, or until an investment earns a 15% annualized return.

2. Nondirect Marketplace Lenders

Nondirect marketplace lending uses technology to connect lenders directly with borrowers, bypassing traditional banks, reducing barriers to transaction, and offering strong savings for borrowers and good returns for lenders. Popular for auto and student loans, financial institutions have increasingly stepped into the commercial lending role on these platforms, creating a marketplace in which loans are packaged and sent out to individuals, hedge funds, wealth advisers and banks.

3. Direct Lenders

Money360 is a direct lender with discretionary capital that ensures certainty of execution and timely closings. The lender offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans use 25- to 30-year amortization schedules.

12 Tips to Get The Right Loan For Your Startup (Killer Startups), Rated: A

1. How much do you need for a small business loan for your startup?

Microloans work with the Small Business Association (SBA). They are for businesses that need to borrow between $35,000-$50,000 and have a limited credit history.

2. How quickly do you need access to loan funds?

If you’re positive that you need $100,000 right-off-the-bat, then an installment loan may be a better option. If you need $50,000 to start, but believe you’ll need additional capital down the road when you start to grow, you may want to look into revolving credit.

3. What is the loan going to be used for?

4. How long have you been in business?

If your business is still in the early stages, it may be difficult to secure a loan from traditional lenders like a bank since they require a positive credit history, collateral, business plan, projected financial statements, and cash flow projections.

In this situation, you may have to search for a small business loan from an alternative lender like an online lender like Lending Club.

5. Do you have collateral?

Do you have an property or inventory that you can put up as a collateral? If not, you may not qualify for a loan from a traditional lender. Instead, you may have to seek alternative funding options where you would offer accounts receivable, future sales, or a percentage of the company in exchange for the loan.

6. Eliminate your bad debt.

7. Research possible loan provider options.

Do your due diligence and seek lenders that are transparent with their rates, terms, and have positive reviews from customers.

8. Consider your niche.

9. Find a grant or contest.

10. Crowdfund Your idea.

11. Pay attention to APR, fees, and other costs.

12. Investor or capital?

Payday lender Speedy Cash files for IPO (Axios), Rated: A

The parent company of payday lender Speedy Cash has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol CURO, with Credit Suisse listed as left lead underwriter. The Kansas-based company reports $33 million of net income of $442 million of revenue for the first half of 2017, and is owned by private equity firm FFL Partners.

Islands, Bodyguards, and Mansions – How would you spend $ 1 Billion? (NJ Online Casinos), Rated: B

Our new survey finds out the top 10 ways that people across America would spend their money if they won a $1 billion jackpot, including how many would buy a mansion, and how many wouldn’t give any to charity.

  • 89% would give some to their close family
  • 49% would pay off their debts as their first act
  • 37% would give some money to their friends
  • 28% would put $100 – $500 million into savings
  • 28% would buy a mansion

Arcadia launches new online payment options (Drapers Online), Rated: B

The owner of brands including Topshop, Topman, Miss Selfridge and Dorothy Perkins has joined forces with payment provider Klarna to offer online customers the option of paying for goods 30 days after delivery, without being charged interest.

20% of millennials said they would feel less guilty if they were offered deferred payment options, while one in five were more likely to complete a purchase if they knew they could spread the cost over time.

United Kingdom

RateSetter partners with Experian to boost business credit assessment (P2P Finance News), Rated: AAA

RATESETTER has teamed up with Experian to boost its credit decision-making process as it expands its commercial finance division.

Under the partnership, Experian is providing credit reference data and analytical services to RateSetter.

This has enabled the P2P lender to increase the number of business loan applications it processes each month from 150 to more than 600.

Nested Raises £36M in Third Round of Funding (Finsmes), Rated: AAA

Nested, a London, UK-based PropTech startup, raised £36m in its third round of funding.

The round was led by Global Founders Capital.

The company, which has raised almost £50m in total funding to date, intends to use the capital to expand its business reach, initially within London and in the near future expanding across the U.K.

TransferWise changes fees for GBP transfers, introduces complicated flat transaction fees (TechCrunch), Rated: AAA

Fintech startup TransferWise has built a solid reputation when it comes to transparency. The startup just announced new fees for transfers initiated from the U.K. And it’s quite hard to understand if transfers are going to be cheaper or not after the change.

TransferWise is switching from a simple variable fee to a flat transaction fee with a lower variable fee.

Let’s take an example. If you’re trying to transfer £1,000 from the U.K. to the Eurozone. With the old fee, you’d pay 0.5 percent (or the equivalent of £5) in fees. With the new fee, you now pay 0.35 percent + £0.80, which represents £4.30. You eventually get more euros.

For a £1,000, you now pay 14 percent less if you take into account all fees. But this percentage is going to change depending on your transfer.

Because of this tiny little flat transaction fee, you’ll now pay morethan before if you transfer less than £530.

This is even worse for GBP/USD transfers. If you transfer less than £800, you now pay more than before. But it’s now cheaper if you transfer more than £800.

Is an IFISA-inspired boom coming to the P2P sector? (P2P Finance News), Rated: A

THE PEER-TO-PEER Finance Association (P2PFA) has reported yet another quarter of increased lending among members in the sector, and the figures show just how beneficial ISA manager status can be.

P2P platforms offering Innovative Finance ISAs (IFISA) have previously said that most inflows have been coming in this tax year, and the latest P2PFA data shows just how much of a boost the fully regulated firms are getting.

Lending Works and Landbay, which both received full Financial Conduct Authority (FCA) authorisation and launched IFISAs at the start of this year both recorded some of the biggest increases in loanbook sizes and lenders.

The property loan fund that won’t surprise you with a lock in (Citywire), Rated: A

For LendInvest Real Estate Opportunities, a small Luxembourg-based fund run by the former peer-to-peer lending platform LendInvest, post-referendum it has provided an opportunity.

Assets in the fund have more than doubled to £130 million since the Brexit vote as investors have viewed its investments in short-term loans to property developers as a different way to get exposure to bricks and mortar.

The fund can be held in a self-invested personal pension (Sipp) but is not an eligible investment for an individual savings account (ISA).

The real estate fund has become a key focus for LendInvest as it has moved away from peer-to-peer lending after the Financial Conduct Authority (FCA) made it clearer what it thought P2P actually meant.

The fund lends to professional investors, developers and landlords who use their property portfolio as a prime source of income, transact several times a year and operate as a business.

‘He then went into discussions with the bank because he wanted to keep the asset and let it out, so refinanced. It had a valuation of £10 million, so 100% return in 10 months. We charged 15% interest.’

With interest rates that high it is not surprising perhaps that the fund has so far achieved its annual target of an 8% net return.

Accounting and business banking fintech raises €750k in seed round (AltFi), Rated: A

UK startup Countingup has raised €750,000 led by Frontline Ventures along with private investors to support sole traders.

Uniting business banking and accounting into a single product, Countingup aims to use the funding to build an accounting bank to serve 1m entrepreneurs.

Invest in property development from just £500 (This is Money), Rated: A

A new crowdfunding platform is allowing retail investors the chance to back residential property developments by investing as little as £500.

The start-up, called Homegrown, is giving individuals the chance to invest in developments – such as a converted milk processing factory that’s being turned into flats and offices – and claims projected annual returns of around 12 per cent over roughly two years.

HOW DO I… ACCESS BUSINESS FINANCE? (BQ), Rated: A

While credit conditions have continued to improve over the last 12 months there is still an issue for smaller businesses when it comes to the best finance options available and information on how to access them. There has been rapid developments in the different types of funding available to businesses, including peer-to-peer lending, crowd funding and business angel finance, but small businesses don’t always have the time to navigate around all the types of finance available.

Businesses can discover the funding options available to them including The Start Up Loans Company by using the Business Finance Guide (published by the British Business Bank in partnership with the ICAEW, and a further 21 business and finance organisations).

Equity finance

Whether you’re starting out or experiencing a high-growth phase, equity can be an important resource to provide finance as well as broader expertise. There is a breadth of equity funding options available, including the Northern Powerhouse Investment Fund, which provides early or late stage equity finance ranging from £50,000 to £2m.

Debt finance

At any stage of its development your business is likely to need a mix of different forms of debt, all of which have their advantages for business growth. The Northern Powerhouse Investment Fund offers microfinance covering micro-finance ranging from £25,000 to £100,000 and debt finance covering larger business loans £100,000 to £750,000.

London – Still The #1 FinTech Hub (Let’s Talk Payments), Rated: A

In H1 2017, UK attracted $564 million of VC investment, up 37% on H1 2016. FinTech is worth $9.25 billion to the UK economy and now employs 60,000 people.

About 77% of UK businesses are aware of FinTech products and services and 65% have adopted at least one FinTech application, with a fifth (19%) taking on four. MarketInvoice, a London-based invoice financing firm found that these as result of using FinTech products and services, adopters reported saving (on average) over £5,500 a year.

London consistently attracts foreign direct investments (FDI) from around the world. Between 2006 and 2016, the capital has recorded investments from 67 different countries. The US, India, China, Japan and Spain together accounted for 56% of the investment. Of top source countries, the fastest-growing contributors to FDI into London are China, which has seen a tenfold increase over the last 10 years, Italy (+450%), and Canada (+400%).

Seven tips to help prepare to raise funds for your GP practice (Practice Business), Rated: B

1 Decide on equity or debt – or a combination

For example, if your business is already two-years old try Funding Circle.

Thirty per cent equity and 70% debt is a good ratio and can make the company easier to manage.

2 Test your financial model – it must be robust

3 Be realistic about your valuation

4 Decide on the appropriate people to approach

In the £1 to £5m area, try EIS/SEIS funds and VCT funds. This is where an expert adviser can be helpful in providing introductions and knowledge. For smaller amounts contact Angel Investors.

5 Make contact and ensure you follow-up

6 Prepare the right information for the right stage in the process

7 Take your team with you

Number of UK financial services trade marks surges due to fintech growth (Finance Feeds), Rated: B

According to data provided by professional services firm RPC, the number of trade marks registered by financial services firms has jumped 35% in five years – from 3,141 in 2011 to 4,228 in 2016.

Examples of fintech companies and challenger banks that have registered a number of trade marks recently include Atom Bank, Monzo, and Redwood Bank. Last year, the raft of fintech and financial services trade marks registered in the UK comprises names like “ Zentity” and “Numus Cash”.

China

A glimpse at how Qudian and China’s online micro lenders revolutionise financing (SCMP), Rated: AAA

One day in July, Carina Shi awoke to incessant phone calls by angry, loud men, seeking repayment on a 20,000 yuan loan taken out by a friend.

Unbeknown to Shi, the 20-year-old college student had been listed as the contact by a friend who defaulted on a loan borrowed from Qudian Inc, the Beijing-based online lender at the centre of the fourth-largest US initial public offering this year. Debt-collection calls only ceased after Shi called her friend’s mother in Inner Mongolia to resolve the debt.

Shi’s experience offers a glimpse into the inner workings of Qudian, a provider of micro loans that ballooned within three years into a sizeable lender offering a loans book of 38.2 billion yuan (US$5.6 billion) to 7 million active users during the first six months of 2017.

The annualised interest rate on 59.5 per cent of loans lent last year surpassed 36 per cent, according to the company. That compares with between 12 and 14 per cent among the country’s largest commercial banks.

That crackdown gave Qudian and other online lenders like Ppdai, Fenqile and Hexindai the niche to build a market, which expanded by 23 per cent in two years to 452.4 billion yuan at the end of last year.

Chinese overseas investors prefer tech stocks (Technode), Rated: AAA

China’s sizable middle class is on fire. A McKinsey & Company report projected that they would account for 76% of the country’s urban population by 2022.

When we say Chinese people are becoming increasingly tech-savvy, we don’t only refer to the fact they are the first adopters of cutting-edge technology software and voracious buyers of smart gadgets. We also have a knack and understanding for technologies to seek better investment returns. The report shows that tech stock is the most popular category for Chinese-speaking investors.

A dominating 56% interviewees said they have invested in Alibaba, which had a growth of nearly 80 percent since the start of this year. JD and Apple performed equally well to rank the second and third.

Source: Technode

As digital natives, the country’s younger generations are first-movers to the sector. The report points out that post-80s gen represents nearly half (47.2%) of the users with post-90s gen comes as a close second (36.2%).

Over 65% of Chinese traders prefer Chinese companies when investing in the US.

Over 55% of Chinese investors will hold a position for over three months, and 20.03% for longer than a year.

The Role of Punctuation in P2P Lending: Evidence from the People’s Republic of China (Asian Development Bank), Rated: AAA

Using data from Renrendai, one of the largest P2P lending platforms in the People’s Republic of China, we investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate. We propose that the use of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability.

Source: ADB.org

Download the full report here.

China’s Latest Fintech Offering Looks Overpriced (WSJ), Rated: A

Investors sent the stock of Chinese online microcredit company Qudian Inc. QD 7.00% —which literally translates as “Fun Shop”—up nearly 50% on its first day of trading on the New York Stock Exchange last week. But on Monday, following criticism of Qudian’s high lending charges in Chinese social media and newspapers, the stock tanked, dropping almost 20%.

The market does seem ripe for growth: Nonmortgage consumer loans are only around 20% of household deposits in China, according to Bernstein analysts.

Still trading at 6.6 times book value even after Monday’s share price tumble, Qudian is asking for a lot of faith compared with more-established lenders.

Source: The Wall Street Journal

Chinese P2P lenders face IPO scrutiny (International Financial Law Review), Rated: A

Online lending companies are facing a number of issues when planning an initial public offering in Greater China and the US, according to panelists at last week’s IFLR Fintech Asia conference in Hong Kong. Regulators’ attitudes towards business models,
accounting requirements and risk reserves are issues companies need to be mindful of.

Credit Industry Leader Joins China Rapid Finance Board of Directors (PR Newswire), Rated: B

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), one of China’s largest consumer lending marketplaces, today announced the appointment of Zhou Ji‘an, Executive Director and General Manager of China United SME Guarantee Corporation (“Sino Guarantee”), to its board as a non-executive independent director.

A seasoned chief executive in the financial industry, Mr. Zhou brings to the Company more than 18 years of experience in global organizations, financial institutions and government.

European Union

3 Advices For Peer-To-Peer Investors From ‘Inspeer’ Ceo (Coinidol), Rated: A

AltFi Data Analytics, published by investment bank Liberum, shows that the ratio of operating costs to the loan portfolio at the crowdlending platforms is lower by almost 40% comparing to banks.

  • Diversification is a key
  • Know your borrower
  • Pay attention to risks
International

Creation of Billion Dollar Startups Shifting Out of US (BW Disrupt), Rated: AAA

Today, there are 214 unicorn startups globally — private companies that have reached a hefty valuation of over $1 billion.

Of these, the United States has taken the largest share of the world’s most valuable private companies, with 127 US-based startups reaching unicorn status since 2013. China follows in second place, producing 59 unicorn companies over the same time period.

Since 2013, the share of new unicorns born each year in the United States has consistently dropped, from 75 percent of all unicorn births in 2013 to less than half (49 percent) by 2015. That number sunk even lower to hit just 43 percent last year.

Chinese unicorns rising

In 2017 YTD, 16 new unicorns have been born in China.

In the third quarter of 2014, Lu.com, a finance marketplace that deals largely with P2P lending, reached a $10 billion valuation after a VC round backed by Morgan Stanley and Ping An Insurance.

Looking at companies with the highest valuations upon their entrance into the unicorn club, 7 of the top 10 spots go to China-based companies, with the US claiming the remaining 3.

Wish Finance: Small Business Lending Blockchain Platform (BlockTribune), Rated: A

BLOCK TRIBUNE: Could you tell us a bit how Wish Finance got started?

EUGENE GREEN: A decade ago I was a small businessman. Several of my closest friends are small businessmen in Asia, Europe and the US. All of them had the same massive problem, which I had – an inability to get a loan. So I founded Wish Finance to solve this major pain point.

BLOCK TRIBUNE: Where do you see the value of Wish tokens in the medium to long-term and the ultimate benefit for token holders?

EUGENE GREEN: We are not selling digital candy wrappers, but a token convertible to real company equity. The token price will go up with the company valuation, and comparable FinTech lending companies showed a fiftyfold valuation growth in only a few years. So the token holders could stand to benefit in a big way.

Better structure could protect investors in P2P market – BoJ paper (Central Banking), Rated: A

A research paper published by the Bank of Japan on October 23 suggests using specific purpose companies and specific purpose trusts to strengthen investor protection in the field of P2P lending.

P2P lending matches borrowers and lenders online without making use of traditional financial intermediaries such as banks. In recent years, the amount of outstanding loans in the P2P sector has grown significantly in the UK, the US and China.

Australia

Australia publishes draft laws for relaxed fintech regulation (Reuters), Rated: AAA

The Australian government published draft laws on Tuesday that would let financial technology companies operate without a full licence, a measure it said would encourage innovation without compromising existing levels of consumer protection.

Financial technology companies would be able to test products involving non-cash payments, crowdfunding, consumer credit and provide financial advice on pension funds, life insurance and domestic and international securities.

Industry superannuation funds need to adopt digital advice into their offering to retain those members who eventually seek advice elsewhere and inevitably leave their industry fund.

Through digital advice, super funds should begin focusing on what Cheung terms as “incremental advice”.

Instead of providing just intra-fund and single-issue advice, super funds should provide members with the ability to deal with cashflow, debt management, or protection and insurance needs, as needed.

India

Fintech Valley Vizag and Knowledge Partner KPMG Announce Finackathon 2017 (BW Disrupt), Rated: AAA

HackerEarth, a leader in innovation and talent management software, has been selected by Fintech Valley Vizag – a Government of Andhra Pradesh initiative, to host Finackathon 2017.

The hackathon will be held in two stages. The idea phase which began on September 14th is currently underway with entries set to close on October 30th. The shortlisted teams will participate in the final round to be conducted in the first week of December in Visakhapatnam. The winning teams in each category (Banks, Insurance, Capital Markets, and NBFCs) will be awarded a sum of INR 3,00,000. The winners will also be given a chance to carry out Proof of Concept (PoC) with corporates and will need to be executed in Fintech Valley Vizag. Investor network of The Fintech Valley, Vizag will be invited for Hack Day, where they will go through the prototyped solution.

The hackathon is looking for solutions across the following 5 themes:

  1. Customer Experience
  2. Process Automation
  3. Financial Inclusion
  4. Risk Management
  5. Lending
MENA

Betterpaydayloansonline.com Now Allows Getting Quick Payday Loans (MENAFN), Rated: B

Betterpaydayloansonline.com is a web-based service, which makes it possible to get quick, safe and convenient payday loans with no hassle at all.

Canada

LENDING LOOP HITS MILESTONE OF PROVIDING $ 10 MILLION IN FINANCING (Betakit), Rated: AAA

Lending Loop, a Canadian P2P lending platform, has officially provided financing of more than $10 million across the country.

The company says it has supported the expansion of over 180 small businesses through a system that allows investors to reach out to small businesses on Lending Loop’s digital marketplace.

Lending Loop’s investment model moves away from institutional or accredited investors; Canadians can even invest $50 into a pool of larger loans.

A new service is helping employers reduce turnover by paying their employees by the day (The Washington Post), Rated: A

Restaurant News reports that hourly employees can use a smartphone app to access money for hours worked and have it deposited on a debit card. The amount is limited to 50 percent of what’s earned and–to discourage impulse buying–employees only have an hour after their shift to access the money. There’s no fee for the worker, but businesses pay Instant Financial $1 per active user per month.

Barha is aiming to put a dent into the burgeoning payday loan industry, which was used by approximately 12 million Americans in 2015. His service is also being looked at as a potential recruiting and motivation tool by employers, particularly in — but not limited to — the retail and restaurant industries.

According to a recent USA Today report, almost 150,000 employees at more than 50 companies like McDonalds, Outback Steakhouse and Dunkin’ Donuts as well as other restaurants and retailers, trucking companies and staffing firms have access to the service.

GDS Link Joins Canadian Lenders Association to Support Innovative Lending; Sponsoring Canadian Lenders Summit (PRWeb), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business lending and leasing, today announced that it has joined the Canadian Lenders Association (CLA) as an affiliate member and will be sponsoring the Canadian Lenders Summit.

GDS Link is sponsoring the Canadian Lenders Summit, which has partnered with the CLA. The inaugural event will take place on October 26, 2017 in Toronto, Canada. Representing GDS Link is Rich Alterman, EVP of Business Development.

Latin America

Brazilian fintech Nubank offers accounts for transfers, payments (Reuters), Rated: AAA

Brazilian startup Nubank said on Tuesday it would expand from credit cards into digital accounts allowing users to make transfers, pay bills and earn more interest than average savings account, beefing up its challenge to traditional banks.

Tech-savvy millennials have been the core demographic for Nubank’s credit card, but Velez said he hoped new accounts would serve some of the roughly 60 million Brazilians – around 30 percent of the population – who do not have a bank account.

Venture capital firms including Sequoia Capital, Kaszek Ventures, Tiger Global Management and DST Global have invested $179 million in Nubank since 2013, giving it a value of $500 million in early 2016 that made it the largest Brazilian fintech startup.

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

News Comments Today’s main news: SoFi funds over $3.1 billion in Q2. Bread raises $126M to offer white label solution for major online purchases. RateSetter offers summer prize draw. Thomson Reuters adds alt finance data to Eikon. OnDeck partners with Payment Source in Canada. Today’s main analysis: FT Partners’ CEO monthly alternative lending market analysis for August 2017. International P2P […]

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

FT Partners’ CEO Monthly Alternative Lending Market Analysis (August ’17) (FT Partners), Rated: AAA

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

SoFi letter to investors (SoFi Email), Rated: AAA

Fintech Startup Bread Raises $ 126 Million In Bid To Finance Big Online Purchases (Forbes), Rated: AAA

When you buy something online, chances are you use your credit card. If it’s a bigger purchase, like a mattress or a washing machine, you might decide to pay it off over time. Bread is among the financial technology start-ups attempting to get you to ditch your plastic and instead opt to finance your purchase with a loan that has lower rates and predictable monthly payments.

Bread said on Wednesday it has raised $126 million through a Series B funding round to expand the number of retailers that offer its financing. Menlo Ventures led the equity portion of the investment, with participation from Bessemer Venture Partners, RRE Ventures and others. A debt facility was also provided by Victory Park Capital.

The New York-based company was founded in 2014 and offers white-label solutions for retailers who wish to offer convenient financing to their customers.

You can now use PayPal through Skype’s mobile app (TechCrunch), Rated: A

The still growing payments giant today announced a new deal with Skype that will allow users in 22 countries worldwide to send money to other Skype users through an updated version of the Skype mobile app. This extends PayPal’s potential reach by a sizable amount – the Skype app has been downloaded over a billion times to date, and has approximately 300 million monthly active users, according to Skype parent company Microsoft, as of last year.

To be clear, the feature is designed for sending money between friends and family – not payments for goods or services from a business.

How Two Brothers Turned Seven Lines of Code Into a $ 9.2 Billion Startup (Bloomberg), Rated: A

Every day, Americans spend about $1.2 billion online. That figure has roughly doubled in the past five years, according to the Department of Commerce, and it’s likely to double again in the next five as the internet continues to devour traditional retail.

In 2010, Patrick and John Collison, brothers from rural Ireland, began to debug this process. Their company, Stripe Inc., built software that businesses could plug into websites and apps to instantly connect with credit card and banking systems and receive payments.

The company now handles tens of billions of dollars in internet transactions annually, making money by charging a small fee on each one. Half of Americans who bought something online in the past year did so, probably unknowingly, via Stripe. This has given it a $9.2 billion valuation, several times larger than those of its nearest competitors, and made Patrick, 28, and John, 26, two of the world’s youngest billionaires.

One way to justify the number: Stripe’s new partnership with Amazon. com Inc., the largest and most sought-­after customer on the internet. Over the past couple of weeks, Stripe began handling a large, though undisclosed, portion of Amazon’s transactions. Neither company will address the scope of the deal—which was only revealed by Stripe’s addition of Amazon’s logo to its website—but it could help Stripe greatly increase its trans­action volume.

Seven years in, however, Stripe’s mission is less to send more books, vacuums, and grooming kits into the world than to “increase the GDP of the internet,” Patrick says. To do this, the company is beginning to move beyond payments by writing software that helps companies retool the way they incorporate, pay workers, and detect fraud. It’s part of an ambitious bid to revamp how online business has been conducted for 20 years and to give anyone with a bright idea a chance to compete.

Real Estate Lender Zeus CrowdFunding More Than Doubles Its U.S. Service Area (PR.com), Rated: A

Zeus CrowdFunding will now provide fast funding to more of America than ever before. The company more than doubled its service area this month, expanding to eight new states as well as Washington, D.C.

The full list of territories in which Zeus CrowdFunding will provide real estate listings for investment are as follows: Colorado, Connecticut, Florida, Georgia, Massachusetts, Mississippi, Nebraska, Nevada, New Hampshire, North Carolina, Rhode Island, Texas, Virginia, Washington, D.C. and West Virginia.

KPMG: ALTERNATIVE INVESTMENT INDUSTRY DEAL MOMENTUM CONTINUES (All About Alpha), Rated: A

The auditing giant KPMG says in a recent report on merger and acquisition activityin the alternative asset management world that there was a dip in activity in this space in 2015, that there was a rebound “to more normalized levels” in 2016, and that the momentum off of that rebound continues in 2017, which saw 18 M&A transactions in the first quarter alone.

Stepping back a bit, the report observes that asset managers that have been focused for a long time on the long-only segment of the market are turning to M&A as one good way of capitalizing on the growing retailization of alternative strategies, “the increasing availability of liquid alternative investments to retail investors through registered investment (mutual) funds and retirement accounts.”

Another Big Picture point – various segments of the AI industry want to merge with one another. Private equity firms in particular want to “expand into adjacent asset classes such as real estate, infrastructure and hedge fund.”

RIA headcount, AUM on the rise as more firms embrace robo model (Financial-Planning), Rated: A

The RIA sector is enjoying brisk growth in both personnel and assets under management, but remains dominated by small businesses that cater to specialized sets of clients, including a growing number of firms that are rolling out interactive digital advice services.

Those are among the findings from a new report by the Investment Adviser Association, the group’s annual industry snapshot.

By the numbers, the RIA sector reached an all-time high with 12,172 SEC-registered advisers as of April 2017, up 2.7% from a year ago. Those advisers serve 35.6 million clients and manage $70.7 trillion in assets, according to the IAA’s analysis.

The data show that there are only a handful of mega-advisers serving a vast portfolio of clients, suggesting a heavy reliance on an automated advice platform. Just eight registrants report that they have more than 1 million clients.

Far more common are firms that have fewer than 100 clients, the analysis finds.

By far the largest segment of firms are those with AUMs between $100 million and $1 billion (56% of all registrants), and 87% of all registrants count fewer than 50 employees. Just 1% of registered advisers — only 124 — boast an AUM of $100 billion or more, yet those shops manage 54% of the total assets in the industry.

LendingTree, LeadsCon Announce Judges for First-Ever $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, and Access Intelligence, a leading business information and marketing company, today announced the judges for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The judges for the Startup Innovation Spotlight are:

  • Doug Lebda, Founder and CEO of LendingTree
  • Matt Coffin, Founder of Coffin Capital & Ventures
  • AJ Agrawal, Founder of Verma Media and Marketing Consultant to Fortune 500 companies
  • Chris Fralic, Partner at First Round
  • Shawn Colo – Shawn is the Co-Founder & Managing Partner of 3L Capital as well as a senior advisor with Spectrum Equity Investors.

Beware the return of the ILC (American Banker), Rated: A

Recent remarks by acting Comptroller of the Currency Keith Noreika and the industrial bank application submitted by Social Finance have raised significant policy questions about the mixing of banking and commerce, really for the first time since Walmart’s and Home Depot’s failed banking bids prior to the financial crisis.

SoFi’s application, meanwhile, indicates that there may be greater interest in the last viable type of FDIC-insured bank charter still legally available to commercial firms. To be sure, the fintech-powered marketplace lender is not a commercial entity like Walmart. As a financial services provider, SoFi could apply for a mainstream bank holding company license. But SoFi’s industrial bank bid could be seen as a stalking horse, potentially opening the door for more companies — including commercial and industrial firms — that want banking powers. In addition, we should question the wisdom of granting SoFi an FDIC-insured banking license without requiring SoFI to accept regulation by the Federal Reserve as a bank holding company, as other financial owners of banks must do.

Ripple’s Product Suite is Growing (Ripple), Rated: A

And now, Ripple’s growing global payments network has 90+ customers, 75+ commercial deployments in progress and a common set of payment standards governing all transactions on the network.

Based on customer feedback, we’ve given our global payments network a name, RippleNet. This is not new – but simply an evolution of the growing network that has been building significant momentum. RippleNet is the world’s only enterprise blockchain solution for global payments.

Cloud Lending Solutions Announces Major Expansion of the CL Solution Suite With New Product: CL Portal (BusinessWire), Rated: A

Cloud Lending Solutions, a leader in cloud-based loan and leasing software, announced upgrades to its end-to-end suite of lending products for its commercial banks, retail banks and credit union clients with the expansion of its latest product CL Portal™ already in production at a Fortune Global 500 Bank.

The new CL Portal provides a differentiated borrowing experience for commercial, small business and consumer loans for borrowers, investors, and stakeholders by seamlessly integrating with loan product workflows and document management to create a personalized, unique experience for loans ranging from fully automated consumer loans to multi-entity, collaborative commercial loans. The CL Portal supports multiple borrower types including:

  • Commercial Loan Origination Portal: financial institutions can now design a commercial loan portal and enable borrowers to log on and securely upload required documents and check the status of a loan in progress. The CL Portal extends existing document management functionality already in CL Originate, to display a list of document requirements associated with the borrower and facilitate the document upload process and review process.
  • Small Business Loan Application Portal: facilitates a cost-effective, online small business loan origination process leveraging automated scoring criteria and third-party data. Designed to integrate with borrower and back office lending workflows, 3rd party data collections, document collections, and review from CL Originate.
  • Consumer Loan Application Portal: providing a multi-channel personalized and differentiated borrowing experience for consumer loan products. Configurable workflows allow banks to manage the complete consumer loan application including acknowledgments, credit, document delivery, offer, and acceptance.
  • Investor Portal works in conjunction with CL Marketplace, enables financial institutions to extend investment opportunities to their customers by making portions of loans available for investment. CL Portal enables investors to view investment opportunities, bid on applicable loans and manage existing investments.

15 Creative Ways Large Real Estate & Infrastructure Developers – Raise Millions Outside of Traditional Debt and Equity (Part I) (JDSupra), Rated: A

We know one developer who invested only $10,000 by utilizing just two of these strategies and made $35,000,000 by selling to a national homebuilder, and saving substantial within a tax preferred vehicle that his attorney helped him devise.

  1. Forward Sale Funding
  2. Overriding Royalty Interests
  3. Sponsorships
  4. Presales
  5. Crowdfunding
  6. Options Contracts
  7. Pay upon Completion Contracting
  8. Corporate Bond Funding
  9. Municipality Bonds
  10. Private Transfer Fees
  11. Sales/Leaseback
  12. 3rd Party Subordination & Cross-collateralizations
  13. Joint Ventures
  14. Subdividing
  15. Tax

Presales

Lenders typically require developers to presale or pre-lease a certain percentage (e.g. 50%) of their project before providing construction financing.

This requires that developers have the considerable skills and resources to generate presales.  While a typical sales and marketing budget may represent 5% of sales, the ability to achieve these presales makes the difference between getting funding and not.

Crowdfunding

Real estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016. By 2025, the crowdfunding industry as a whole is anticipated to be valued at more than $300 billion and online real estate marketplaces are primed to capitalize on that explosive growth.

 

Why young women today have a gloomier financial outlook than men (CNBC), Rated: B

Millennial women still trail their male peers when it comes to financial satisfaction, according to a new report from online loan marketplace LendingTree. Other elements point to why: The survey found women earn less, carry almost 30 percent more in outstanding debt, and are less confident about their ability to pay it off.

  • 57 percent of millennial men have an annual income of $50,000 or greater, compared to 42 percent of their female counterparts.
  • LendingTree, an online loan marketplace, says millennial women also carry almost 30 percent more outstanding total debt.
  • The top financial priority for millennial women was increasing savings while their male peers said increasing income.

Somewhat Favorable Media Coverage Somewhat Unlikely to Impact Elevate Credit (NYSE:ELVT) Share Price (Community Financial News), Rated: B

News stories about Elevate Credit (NYSE:ELVT) have trended somewhat positive recently, according to Accern. Elevate Credit earned a news sentiment score of 0.14 on Accern’s scale. Accern also gave media headlines about the company an impact score of 46.2609752435269 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the company’s share price in the immediate future.

Fund That Flip plans to expand in Cleveland (Crain’s Cleveland Business), Rated: B

A New York City real estate services company, Fund That Flip, is bringing its sales and back-office operations to Northeast Ohio.

The three-year-old company currently has a small presence here at 1382 W. Ninth Street, and it intends to add 25 employees.

The convergence of fund administration and FinTech (Hedgeweek), Rated: A

The forces shaping industry change demand that the role of the fund administrator increasingly needs to also be that of a technology services firm, rather than simply a provider of financial services. The influence that FinTech is having on the fund administration industry is growing and the long-term demands will be even greater.

United Kingdom

RateSetter spurs on business brokers with summer prize draw (P2P Finance News), Rated: AAA

RATESETTER is giving its business finance brokers an extra incentive to find borrowers over the typically slow summer months, with a “six weeks of summer” prize draw.

The peer-to-peer lender, which originates both consumer and business loans, has previously expressed its intentions to boost its business finance segment.

RateSetter will automatically enter its business loan brokers into the draw, which started on 24 July and ends on 1 September. There is a different prize for each week within this timeframe.

Who will be the first £3bn P2P lender? (P2P Finance News), Rated: AAA

IT HAS been a busy quarter for the “big three” peer-to-peer lenders with Zopa, Funding Circle and RateSetter all reaching the £2bn lending milestone.

But who will be first to £3bn?

Zopa’s loanbook reached £2bn in January and was at £2.4bn as of the end of the second quarter of 2017, P2PFA figures show.

Funding Circle, which hit £2bn in February and was at £2.4bn by the end of the second quarter, saw 12 per cent growth since the first quarter and 45 per cent annually.

Meanwhile, RateSetter, which hit £2bn last week, had £1.9bn at the end of quarter two, up 9.6 per cent since the first quarter and up 35.9 per cent annually.

Going by growth rates, Funding Circle appears to be growing fastest so could hit the £3bn the quickest.

Meet the company behind Nutmeg’s ISA (AltFi), Rated: A

When Nutmeg launched its Lifetime ISA in April, it was through a partnership with digital wealth platform InvestCloud. The cloud computing and API-based technology allowed Nutmeg to quickly on-board clients while complying with regulators.

Asset-backed peer-to-peer lender launches IFISA (AltFi), Rated: A

There’s a new peer-to-peer ISA on the market. Asset-backed lending platform Ablrate has just launched its own take on the Innovative Finance ISA, after receiving full authorisation from the FCA in April.

Chinese investment powering regeneration of the North (Bridging&Commercial), Rated: A

One city that is often overlooked is Sheffield. There are already encouraging signs that Sheffield is a city on the up, however, and a big part of that is down to Chinese investment.

Last year it was announced that Chinese company Sichuan Guodong Construction had tied up a 60-year partnership with Sheffield City Council, with an initial commitment to spend £220m on up to five projects in the city centre over the next three years. It’s the largest Chinese investment deal in a UK city outside of London.

Folk2Folk launches Three Counties Hub (Bridging&Commercial), Rated: B

Folk2Folk has expanded its presence into Worcestershire, Herefordshire and Gloucestershire.
The peer-to-peer lending platform has repurposed its Tewkesbury office in Gloucestershire into a regional hub and, as a result, it is now active in these three counties.

When bank lenders say no, where does a business go? (RealBusiness), Rated: B

When bank lenders turn business owners away, they should refer them to alternative finance lenders instead. But how does it work?

However, accessing finance is still a bug-bear for many SME owners. Despite the increasing variety of options available, raising awareness is still crucial to the uptake of funding with many business owners still turning to bank lenders.

Tavener suggested aggregating all the funders into one place and creating a market comparison site. This is exactly what happened – pretty much every alternative funder was incorporated into Clifton’s Alternative Business Funding portal.

The platform now incorporates 120 different business funding products.

China

Intelligent finance new trend: UP Financial sets sail with “AI+big data” (PR Newswire), Rated: A

As the root of multiple industries, the financial industry’s evolution will make a significant contribution to the growth of the economy. On July 16Steven Yuan, CEO of UP Financial, at the LendIT Summit in Shanghai, presented to the whole world at the commercial application of shared AI- geometric stock, which marked the growth and imagination of China’s intelligent finance. In a speech under the title of “technology-driven new finance”, he predicted that wealth management and investment decisions will become highly intelligent for the economyIt can promote financial assets growing in a geometrical progression, and be able todrive the real economy’s development, and create unlimited value. The ultimate goal of the transformation of technological finance is to break the boundary of industrial innovations and increase the social value to the economy. New intelligent finance marks this improving direction.

What’s in a name? Everything, when it comes to China’s stock market (SCMP), Rated: A

You could be forgiven for assuming that a company with a name like Shanghai P2P Financial Information Service might be in the business of, well, peer-to-peer financial information services.

But names can be misleading, particularly when it comes to the Chinese stock market.

As of last Friday, shares of P2P Financial Information traded at 6.66 yuan, more than 72 per cent shy of its close of 23.4 yuan on June 11, 2015.

European Union

Fintech funding on the rebound as Irish start-ups play part (Irish Times), Rated: A

Ireland played its part, recording fintech investments of more than $230 million (€194 million) in the three-month period, led by Plynkwhich raised €25 million in a Series A round from Swiss Privée in June.

Total global funding to fintech firms rose to $8.4 billion (€7.1 billion) from $3.6 billion (€3 billion) with European fintech investment jumping to over $2 billion (€1.7 billion). This is well below the peak investment high of $5.8 billion (€4.9 billion) seen in the fourth quarter of 2015, but up on the $880 million (€741 million) reported in the first three months of 2017.

International

Thomson Reuters adds alternative finance data to Eikon with TAB Dashboard (Finextra), Rated: AAA

Created by Cambridge-based TAB U.K., TAB Dashboard is the world’s most comprehensive source of intelligence on the global alternative finance market, and its deployment on Eikon opens up a significant new asset class for its users.

Data on the alternative finance market is difficult to obtain, with financial professionals forced to gather information on a piecemeal basis, or direct from individual platforms, which is inconsistent between services, languages and definitions and therefore extremely hard to extract insight from. The addition of TAB Dashboard to Eikon allows customers to use extensive data in a format and environment they are comfortable with and which is consistent, shaping their strategy and keeping them aware of regulatory and policy changes.

TAB Dashboard analytics shows that in 2016 an average of $40.9M was raised every single day, more than double the daily average of $18.4M in 2014, with signs that that growth is continuing along the same path.

TAB U.K. analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions.

International P2P Lending Volumes July 2017 (P2P-Banking), Rated: AAA

Milestones reached this month are:

  • Zopa crosses 2.5 billion GBP originated since launch
  • Ratesetter crosses 2 billion GBP originated since launch
  • Mintos loan volume since launch now over 250 million Euro
  • Lendix reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

Today in Data: Mobile App News Breakdown (PYMNTS), Rated: A

225 million | Current amount of Paytm users prior to new messaging service launch at the end of August

$250 | Amount of coupons offered through grocery operator Food Lion’s new mobile app

31 | Number of European markets P2P payment service Klarna Bank’s new mobile app Wavy enables for mobile money transfers

India

Will RBI Regulations Facilitate Or Inhibit The P2P Lending Market? (Inc42), Rated: AAA

In the absence of proper regulations, people are often hesitant to use P2P platforms for lending and borrowing. To that end, the RBI has highlighted three main reasons peer-to-peer lending should be regulated in India.

In the 2016 paper, the RBI talked at great length about the risks of money laundering associated with peer-to-peer lending. To minimise these risks, the RBI is looking to cap the interest rates charged by P2P lending companies at the same level as NBFCs and microfinance institutions (MFIs). It also raised concerns regarding the lack of transparency in KYC and loan recovery practices.

  • The P2P companies would serve only as intermediaries, responsible for matching lenders and borrowers on the platform. The portal would act as the loan originator, without the lending and borrowing actually getting reflected on its balance sheet.
  • The platform will be prohibited from giving any assured return either directly or indirectly. It will, however, be allowed to opine on lender suitability and borrower creditworthiness.
  • Advertisements should contain adequate mention of P2P lending regulations.
  • The funds will have to move directly from the lender’s bank account to the borrower’s bank account to reduce the threat of money laundering.
  • Peer-to-peer lending platforms will also be prohibited from participating in cross-border transactions, under the FEMA guidelines for transactions between residents and nonresidents.

Fintech startups like Lendingkart, KredX move towards hybrid lending model  (India Times), Rated: A

Lendingkart, which has been lending through its own books as a nonbanking financial company, is set to start co-lending with banks and other financial firms through a marketplace platform in six-nine months, chief executive Harshvardhan Lunia said.

On the other hand, KredX, an invoice discounting marketplace platform for small and medium enterprises, has applied for an NBFC licence. Consumer lending company ZestMoney is also seeking to become a non-banking financial company.

Capital Float, which started its marketplace model last year and currently co-lends with five financial institutions, is set to scale up loans disbursed through its partners to 50% of its total disbursals by the end of this fiscal year. Currently, that’s at 40%.

Some digital lending companies such as BankBazaar, which runs a marketplace, and LoanTap, which lends on its books, do not see the need for a hybrid model.

Sebi forms panel to study fintech impact on securities market (Livemint), Rated: A

The Securities and Exchange Board of India (Sebi) on Wednesday formed a 10-member committee on financial and regulatory technologies, headed by Manipal Global Education chairman T.V. Mohandas Pai.

Sebi said the panel will recommend to the regulator the utilization of fintech solutions for further widening and deepening of the Indian securities market. For this, the committee has to advise Sebi on better usage of existing financing platforms, both traditional and alternative (e.g. peer to peer lending and equity crowd-funding).

The panel will also advise Sebi on how to enhance market access and improve mobilization of household savings through new delivery channels of financial products, Robo Finance, investment advisory and portfolio management services.

Asia

Polytechnics in Singapore to add fintech courses in banking and IT diplomas (Tech in Asia), Rated: A

Polytechnics in Singapore are about to start teaching fintech with the help of Germany-headquartered Fidor Bank.

The bank is working with the Monetary Authority of Singapore to insert the Fidor Student Academy Singapore program into the curriculum of banking and IT-related diplomas offered by five polytechnics in the city-state.

Canada

OnDeck partners with Payment Source in Canada (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today a partnership with Payment Source, the largest retail distribution network for prepaid products in Canada, to offer Payment Source’s Now Prepay customers access to the OnDeck online small business lending platform.

Payment Source operates the Now Prepay brand and provides prepaid mobile top ups, gift cards and financial products and services to more than 15,000 retailers throughout Canada.

Africa

Synthesis named as one of top ten fintech firms to watch (Synthesis), Rated: A

Synthesis, founded in 1997, offers highly specialised software development, consulting and integration services and technology based product solutions to banking and financial institutions in South Africa and other emerging markets.

Philippines

JG Summit diversifies into digital financing (The Standard), Rated: AAA

Conglomerate JG Summit Holdings Inc. said a unit teamed up with the founders of internet giants Skype and LU.com to form digital financial services marketplace to address the financial needs of underbanked consumers and micro and small and medium enterprises in the Philippines.

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

News Comments Today’s main news: SoFi funds over $3.1 billion in Q2. Bread raises $126M to offer white label solution for major online purchases. RateSetter offers summer prize draw. Thomson Reuters adds alt finance data to Eikon. OnDeck partners with Payment Source in Canada. Today’s main analysis: FT Partners’ CEO monthly alternative lending market analysis for August 2017. International P2P […]

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

FT Partners’ CEO Monthly Alternative Lending Market Analysis (August ’17) (FT Partners), Rated: AAA

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

SoFi letter to investors (SoFi Email), Rated: AAA

Fintech Startup Bread Raises $ 126 Million In Bid To Finance Big Online Purchases (Forbes), Rated: AAA

When you buy something online, chances are you use your credit card. If it’s a bigger purchase, like a mattress or a washing machine, you might decide to pay it off over time. Bread is among the financial technology start-ups attempting to get you to ditch your plastic and instead opt to finance your purchase with a loan that has lower rates and predictable monthly payments.

Bread said on Wednesday it has raised $126 million through a Series B funding round to expand the number of retailers that offer its financing. Menlo Ventures led the equity portion of the investment, with participation from Bessemer Venture Partners, RRE Ventures and others. A debt facility was also provided by Victory Park Capital.

The New York-based company was founded in 2014 and offers white-label solutions for retailers who wish to offer convenient financing to their customers.

You can now use PayPal through Skype’s mobile app (TechCrunch), Rated: A

The still growing payments giant today announced a new deal with Skype that will allow users in 22 countries worldwide to send money to other Skype users through an updated version of the Skype mobile app. This extends PayPal’s potential reach by a sizable amount – the Skype app has been downloaded over a billion times to date, and has approximately 300 million monthly active users, according to Skype parent company Microsoft, as of last year.

To be clear, the feature is designed for sending money between friends and family – not payments for goods or services from a business.

How Two Brothers Turned Seven Lines of Code Into a $ 9.2 Billion Startup (Bloomberg), Rated: A

Every day, Americans spend about $1.2 billion online. That figure has roughly doubled in the past five years, according to the Department of Commerce, and it’s likely to double again in the next five as the internet continues to devour traditional retail.

In 2010, Patrick and John Collison, brothers from rural Ireland, began to debug this process. Their company, Stripe Inc., built software that businesses could plug into websites and apps to instantly connect with credit card and banking systems and receive payments.

The company now handles tens of billions of dollars in internet transactions annually, making money by charging a small fee on each one. Half of Americans who bought something online in the past year did so, probably unknowingly, via Stripe. This has given it a $9.2 billion valuation, several times larger than those of its nearest competitors, and made Patrick, 28, and John, 26, two of the world’s youngest billionaires.

One way to justify the number: Stripe’s new partnership with Amazon. com Inc., the largest and most sought-­after customer on the internet. Over the past couple of weeks, Stripe began handling a large, though undisclosed, portion of Amazon’s transactions. Neither company will address the scope of the deal—which was only revealed by Stripe’s addition of Amazon’s logo to its website—but it could help Stripe greatly increase its trans­action volume.

Seven years in, however, Stripe’s mission is less to send more books, vacuums, and grooming kits into the world than to “increase the GDP of the internet,” Patrick says. To do this, the company is beginning to move beyond payments by writing software that helps companies retool the way they incorporate, pay workers, and detect fraud. It’s part of an ambitious bid to revamp how online business has been conducted for 20 years and to give anyone with a bright idea a chance to compete.

Real Estate Lender Zeus CrowdFunding More Than Doubles Its U.S. Service Area (PR.com), Rated: A

Zeus CrowdFunding will now provide fast funding to more of America than ever before. The company more than doubled its service area this month, expanding to eight new states as well as Washington, D.C.

The full list of territories in which Zeus CrowdFunding will provide real estate listings for investment are as follows: Colorado, Connecticut, Florida, Georgia, Massachusetts, Mississippi, Nebraska, Nevada, New Hampshire, North Carolina, Rhode Island, Texas, Virginia, Washington, D.C. and West Virginia.

KPMG: ALTERNATIVE INVESTMENT INDUSTRY DEAL MOMENTUM CONTINUES (All About Alpha), Rated: A

The auditing giant KPMG says in a recent report on merger and acquisition activityin the alternative asset management world that there was a dip in activity in this space in 2015, that there was a rebound “to more normalized levels” in 2016, and that the momentum off of that rebound continues in 2017, which saw 18 M&A transactions in the first quarter alone.

Stepping back a bit, the report observes that asset managers that have been focused for a long time on the long-only segment of the market are turning to M&A as one good way of capitalizing on the growing retailization of alternative strategies, “the increasing availability of liquid alternative investments to retail investors through registered investment (mutual) funds and retirement accounts.”

Another Big Picture point – various segments of the AI industry want to merge with one another. Private equity firms in particular want to “expand into adjacent asset classes such as real estate, infrastructure and hedge fund.”

RIA headcount, AUM on the rise as more firms embrace robo model (Financial-Planning), Rated: A

The RIA sector is enjoying brisk growth in both personnel and assets under management, but remains dominated by small businesses that cater to specialized sets of clients, including a growing number of firms that are rolling out interactive digital advice services.

Those are among the findings from a new report by the Investment Adviser Association, the group’s annual industry snapshot.

By the numbers, the RIA sector reached an all-time high with 12,172 SEC-registered advisers as of April 2017, up 2.7% from a year ago. Those advisers serve 35.6 million clients and manage $70.7 trillion in assets, according to the IAA’s analysis.

The data show that there are only a handful of mega-advisers serving a vast portfolio of clients, suggesting a heavy reliance on an automated advice platform. Just eight registrants report that they have more than 1 million clients.

Far more common are firms that have fewer than 100 clients, the analysis finds.

By far the largest segment of firms are those with AUMs between $100 million and $1 billion (56% of all registrants), and 87% of all registrants count fewer than 50 employees. Just 1% of registered advisers — only 124 — boast an AUM of $100 billion or more, yet those shops manage 54% of the total assets in the industry.

LendingTree, LeadsCon Announce Judges for First-Ever $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, and Access Intelligence, a leading business information and marketing company, today announced the judges for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The judges for the Startup Innovation Spotlight are:

  • Doug Lebda, Founder and CEO of LendingTree
  • Matt Coffin, Founder of Coffin Capital & Ventures
  • AJ Agrawal, Founder of Verma Media and Marketing Consultant to Fortune 500 companies
  • Chris Fralic, Partner at First Round
  • Shawn Colo – Shawn is the Co-Founder & Managing Partner of 3L Capital as well as a senior advisor with Spectrum Equity Investors.

Beware the return of the ILC (American Banker), Rated: A

Recent remarks by acting Comptroller of the Currency Keith Noreika and the industrial bank application submitted by Social Finance have raised significant policy questions about the mixing of banking and commerce, really for the first time since Walmart’s and Home Depot’s failed banking bids prior to the financial crisis.

SoFi’s application, meanwhile, indicates that there may be greater interest in the last viable type of FDIC-insured bank charter still legally available to commercial firms. To be sure, the fintech-powered marketplace lender is not a commercial entity like Walmart. As a financial services provider, SoFi could apply for a mainstream bank holding company license. But SoFi’s industrial bank bid could be seen as a stalking horse, potentially opening the door for more companies — including commercial and industrial firms — that want banking powers. In addition, we should question the wisdom of granting SoFi an FDIC-insured banking license without requiring SoFI to accept regulation by the Federal Reserve as a bank holding company, as other financial owners of banks must do.

Ripple’s Product Suite is Growing (Ripple), Rated: A

And now, Ripple’s growing global payments network has 90+ customers, 75+ commercial deployments in progress and a common set of payment standards governing all transactions on the network.

Based on customer feedback, we’ve given our global payments network a name, RippleNet. This is not new – but simply an evolution of the growing network that has been building significant momentum. RippleNet is the world’s only enterprise blockchain solution for global payments.

Cloud Lending Solutions Announces Major Expansion of the CL Solution Suite With New Product: CL Portal (BusinessWire), Rated: A

Cloud Lending Solutions, a leader in cloud-based loan and leasing software, announced upgrades to its end-to-end suite of lending products for its commercial banks, retail banks and credit union clients with the expansion of its latest product CL Portal™ already in production at a Fortune Global 500 Bank.

The new CL Portal provides a differentiated borrowing experience for commercial, small business and consumer loans for borrowers, investors, and stakeholders by seamlessly integrating with loan product workflows and document management to create a personalized, unique experience for loans ranging from fully automated consumer loans to multi-entity, collaborative commercial loans. The CL Portal supports multiple borrower types including:

  • Commercial Loan Origination Portal: financial institutions can now design a commercial loan portal and enable borrowers to log on and securely upload required documents and check the status of a loan in progress. The CL Portal extends existing document management functionality already in CL Originate, to display a list of document requirements associated with the borrower and facilitate the document upload process and review process.
  • Small Business Loan Application Portal: facilitates a cost-effective, online small business loan origination process leveraging automated scoring criteria and third-party data. Designed to integrate with borrower and back office lending workflows, 3rd party data collections, document collections, and review from CL Originate.
  • Consumer Loan Application Portal: providing a multi-channel personalized and differentiated borrowing experience for consumer loan products. Configurable workflows allow banks to manage the complete consumer loan application including acknowledgments, credit, document delivery, offer, and acceptance.
  • Investor Portal works in conjunction with CL Marketplace, enables financial institutions to extend investment opportunities to their customers by making portions of loans available for investment. CL Portal enables investors to view investment opportunities, bid on applicable loans and manage existing investments.

15 Creative Ways Large Real Estate & Infrastructure Developers – Raise Millions Outside of Traditional Debt and Equity (Part I) (JDSupra), Rated: A

We know one developer who invested only $10,000 by utilizing just two of these strategies and made $35,000,000 by selling to a national homebuilder, and saving substantial within a tax preferred vehicle that his attorney helped him devise.

  1. Forward Sale Funding
  2. Overriding Royalty Interests
  3. Sponsorships
  4. Presales
  5. Crowdfunding
  6. Options Contracts
  7. Pay upon Completion Contracting
  8. Corporate Bond Funding
  9. Municipality Bonds
  10. Private Transfer Fees
  11. Sales/Leaseback
  12. 3rd Party Subordination & Cross-collateralizations
  13. Joint Ventures
  14. Subdividing
  15. Tax

Presales

Lenders typically require developers to presale or pre-lease a certain percentage (e.g. 50%) of their project before providing construction financing.

This requires that developers have the considerable skills and resources to generate presales.  While a typical sales and marketing budget may represent 5% of sales, the ability to achieve these presales makes the difference between getting funding and not.

Crowdfunding

Real estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016. By 2025, the crowdfunding industry as a whole is anticipated to be valued at more than $300 billion and online real estate marketplaces are primed to capitalize on that explosive growth.

 

Why young women today have a gloomier financial outlook than men (CNBC), Rated: B

Millennial women still trail their male peers when it comes to financial satisfaction, according to a new report from online loan marketplace LendingTree. Other elements point to why: The survey found women earn less, carry almost 30 percent more in outstanding debt, and are less confident about their ability to pay it off.

  • 57 percent of millennial men have an annual income of $50,000 or greater, compared to 42 percent of their female counterparts.
  • LendingTree, an online loan marketplace, says millennial women also carry almost 30 percent more outstanding total debt.
  • The top financial priority for millennial women was increasing savings while their male peers said increasing income.

Somewhat Favorable Media Coverage Somewhat Unlikely to Impact Elevate Credit (NYSE:ELVT) Share Price (Community Financial News), Rated: B

News stories about Elevate Credit (NYSE:ELVT) have trended somewhat positive recently, according to Accern. Elevate Credit earned a news sentiment score of 0.14 on Accern’s scale. Accern also gave media headlines about the company an impact score of 46.2609752435269 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the company’s share price in the immediate future.

Fund That Flip plans to expand in Cleveland (Crain’s Cleveland Business), Rated: B

A New York City real estate services company, Fund That Flip, is bringing its sales and back-office operations to Northeast Ohio.

The three-year-old company currently has a small presence here at 1382 W. Ninth Street, and it intends to add 25 employees.

The convergence of fund administration and FinTech (Hedgeweek), Rated: A

The forces shaping industry change demand that the role of the fund administrator increasingly needs to also be that of a technology services firm, rather than simply a provider of financial services. The influence that FinTech is having on the fund administration industry is growing and the long-term demands will be even greater.

United Kingdom

RateSetter spurs on business brokers with summer prize draw (P2P Finance News), Rated: AAA

RATESETTER is giving its business finance brokers an extra incentive to find borrowers over the typically slow summer months, with a “six weeks of summer” prize draw.

The peer-to-peer lender, which originates both consumer and business loans, has previously expressed its intentions to boost its business finance segment.

RateSetter will automatically enter its business loan brokers into the draw, which started on 24 July and ends on 1 September. There is a different prize for each week within this timeframe.

Who will be the first £3bn P2P lender? (P2P Finance News), Rated: AAA

IT HAS been a busy quarter for the “big three” peer-to-peer lenders with Zopa, Funding Circle and RateSetter all reaching the £2bn lending milestone.

But who will be first to £3bn?

Zopa’s loanbook reached £2bn in January and was at £2.4bn as of the end of the second quarter of 2017, P2PFA figures show.

Funding Circle, which hit £2bn in February and was at £2.4bn by the end of the second quarter, saw 12 per cent growth since the first quarter and 45 per cent annually.

Meanwhile, RateSetter, which hit £2bn last week, had £1.9bn at the end of quarter two, up 9.6 per cent since the first quarter and up 35.9 per cent annually.

Going by growth rates, Funding Circle appears to be growing fastest so could hit the £3bn the quickest.

Meet the company behind Nutmeg’s ISA (AltFi), Rated: A

When Nutmeg launched its Lifetime ISA in April, it was through a partnership with digital wealth platform InvestCloud. The cloud computing and API-based technology allowed Nutmeg to quickly on-board clients while complying with regulators.

Asset-backed peer-to-peer lender launches IFISA (AltFi), Rated: A

There’s a new peer-to-peer ISA on the market. Asset-backed lending platform Ablrate has just launched its own take on the Innovative Finance ISA, after receiving full authorisation from the FCA in April.

Chinese investment powering regeneration of the North (Bridging&Commercial), Rated: A

One city that is often overlooked is Sheffield. There are already encouraging signs that Sheffield is a city on the up, however, and a big part of that is down to Chinese investment.

Last year it was announced that Chinese company Sichuan Guodong Construction had tied up a 60-year partnership with Sheffield City Council, with an initial commitment to spend £220m on up to five projects in the city centre over the next three years. It’s the largest Chinese investment deal in a UK city outside of London.

Folk2Folk launches Three Counties Hub (Bridging&Commercial), Rated: B

Folk2Folk has expanded its presence into Worcestershire, Herefordshire and Gloucestershire.
The peer-to-peer lending platform has repurposed its Tewkesbury office in Gloucestershire into a regional hub and, as a result, it is now active in these three counties.

When bank lenders say no, where does a business go? (RealBusiness), Rated: B

When bank lenders turn business owners away, they should refer them to alternative finance lenders instead. But how does it work?

However, accessing finance is still a bug-bear for many SME owners. Despite the increasing variety of options available, raising awareness is still crucial to the uptake of funding with many business owners still turning to bank lenders.

Tavener suggested aggregating all the funders into one place and creating a market comparison site. This is exactly what happened – pretty much every alternative funder was incorporated into Clifton’s Alternative Business Funding portal.

The platform now incorporates 120 different business funding products.

China

Intelligent finance new trend: UP Financial sets sail with “AI+big data” (PR Newswire), Rated: A

As the root of multiple industries, the financial industry’s evolution will make a significant contribution to the growth of the economy. On July 16Steven Yuan, CEO of UP Financial, at the LendIT Summit in Shanghai, presented to the whole world at the commercial application of shared AI- geometric stock, which marked the growth and imagination of China’s intelligent finance. In a speech under the title of “technology-driven new finance”, he predicted that wealth management and investment decisions will become highly intelligent for the economyIt can promote financial assets growing in a geometrical progression, and be able todrive the real economy’s development, and create unlimited value. The ultimate goal of the transformation of technological finance is to break the boundary of industrial innovations and increase the social value to the economy. New intelligent finance marks this improving direction.

What’s in a name? Everything, when it comes to China’s stock market (SCMP), Rated: A

You could be forgiven for assuming that a company with a name like Shanghai P2P Financial Information Service might be in the business of, well, peer-to-peer financial information services.

But names can be misleading, particularly when it comes to the Chinese stock market.

As of last Friday, shares of P2P Financial Information traded at 6.66 yuan, more than 72 per cent shy of its close of 23.4 yuan on June 11, 2015.

European Union

Fintech funding on the rebound as Irish start-ups play part (Irish Times), Rated: A

Ireland played its part, recording fintech investments of more than $230 million (€194 million) in the three-month period, led by Plynkwhich raised €25 million in a Series A round from Swiss Privée in June.

Total global funding to fintech firms rose to $8.4 billion (€7.1 billion) from $3.6 billion (€3 billion) with European fintech investment jumping to over $2 billion (€1.7 billion). This is well below the peak investment high of $5.8 billion (€4.9 billion) seen in the fourth quarter of 2015, but up on the $880 million (€741 million) reported in the first three months of 2017.

International

Thomson Reuters adds alternative finance data to Eikon with TAB Dashboard (Finextra), Rated: AAA

Created by Cambridge-based TAB U.K., TAB Dashboard is the world’s most comprehensive source of intelligence on the global alternative finance market, and its deployment on Eikon opens up a significant new asset class for its users.

Data on the alternative finance market is difficult to obtain, with financial professionals forced to gather information on a piecemeal basis, or direct from individual platforms, which is inconsistent between services, languages and definitions and therefore extremely hard to extract insight from. The addition of TAB Dashboard to Eikon allows customers to use extensive data in a format and environment they are comfortable with and which is consistent, shaping their strategy and keeping them aware of regulatory and policy changes.

TAB Dashboard analytics shows that in 2016 an average of $40.9M was raised every single day, more than double the daily average of $18.4M in 2014, with signs that that growth is continuing along the same path.

TAB U.K. analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions.

International P2P Lending Volumes July 2017 (P2P-Banking), Rated: AAA

Milestones reached this month are:

  • Zopa crosses 2.5 billion GBP originated since launch
  • Ratesetter crosses 2 billion GBP originated since launch
  • Mintos loan volume since launch now over 250 million Euro
  • Lendix reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

Today in Data: Mobile App News Breakdown (PYMNTS), Rated: A

225 million | Current amount of Paytm users prior to new messaging service launch at the end of August

$250 | Amount of coupons offered through grocery operator Food Lion’s new mobile app

31 | Number of European markets P2P payment service Klarna Bank’s new mobile app Wavy enables for mobile money transfers

India

Will RBI Regulations Facilitate Or Inhibit The P2P Lending Market? (Inc42), Rated: AAA

In the absence of proper regulations, people are often hesitant to use P2P platforms for lending and borrowing. To that end, the RBI has highlighted three main reasons peer-to-peer lending should be regulated in India.

In the 2016 paper, the RBI talked at great length about the risks of money laundering associated with peer-to-peer lending. To minimise these risks, the RBI is looking to cap the interest rates charged by P2P lending companies at the same level as NBFCs and microfinance institutions (MFIs). It also raised concerns regarding the lack of transparency in KYC and loan recovery practices.

  • The P2P companies would serve only as intermediaries, responsible for matching lenders and borrowers on the platform. The portal would act as the loan originator, without the lending and borrowing actually getting reflected on its balance sheet.
  • The platform will be prohibited from giving any assured return either directly or indirectly. It will, however, be allowed to opine on lender suitability and borrower creditworthiness.
  • Advertisements should contain adequate mention of P2P lending regulations.
  • The funds will have to move directly from the lender’s bank account to the borrower’s bank account to reduce the threat of money laundering.
  • Peer-to-peer lending platforms will also be prohibited from participating in cross-border transactions, under the FEMA guidelines for transactions between residents and nonresidents.

Fintech startups like Lendingkart, KredX move towards hybrid lending model  (India Times), Rated: A

Lendingkart, which has been lending through its own books as a nonbanking financial company, is set to start co-lending with banks and other financial firms through a marketplace platform in six-nine months, chief executive Harshvardhan Lunia said.

On the other hand, KredX, an invoice discounting marketplace platform for small and medium enterprises, has applied for an NBFC licence. Consumer lending company ZestMoney is also seeking to become a non-banking financial company.

Capital Float, which started its marketplace model last year and currently co-lends with five financial institutions, is set to scale up loans disbursed through its partners to 50% of its total disbursals by the end of this fiscal year. Currently, that’s at 40%.

Some digital lending companies such as BankBazaar, which runs a marketplace, and LoanTap, which lends on its books, do not see the need for a hybrid model.

Sebi forms panel to study fintech impact on securities market (Livemint), Rated: A

The Securities and Exchange Board of India (Sebi) on Wednesday formed a 10-member committee on financial and regulatory technologies, headed by Manipal Global Education chairman T.V. Mohandas Pai.

Sebi said the panel will recommend to the regulator the utilization of fintech solutions for further widening and deepening of the Indian securities market. For this, the committee has to advise Sebi on better usage of existing financing platforms, both traditional and alternative (e.g. peer to peer lending and equity crowd-funding).

The panel will also advise Sebi on how to enhance market access and improve mobilization of household savings through new delivery channels of financial products, Robo Finance, investment advisory and portfolio management services.

Asia

Polytechnics in Singapore to add fintech courses in banking and IT diplomas (Tech in Asia), Rated: A

Polytechnics in Singapore are about to start teaching fintech with the help of Germany-headquartered Fidor Bank.

The bank is working with the Monetary Authority of Singapore to insert the Fidor Student Academy Singapore program into the curriculum of banking and IT-related diplomas offered by five polytechnics in the city-state.

Canada

OnDeck partners with Payment Source in Canada (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today a partnership with Payment Source, the largest retail distribution network for prepaid products in Canada, to offer Payment Source’s Now Prepay customers access to the OnDeck online small business lending platform.

Payment Source operates the Now Prepay brand and provides prepaid mobile top ups, gift cards and financial products and services to more than 15,000 retailers throughout Canada.

Africa

Synthesis named as one of top ten fintech firms to watch (Synthesis), Rated: A

Synthesis, founded in 1997, offers highly specialised software development, consulting and integration services and technology based product solutions to banking and financial institutions in South Africa and other emerging markets.

Philippines

JG Summit diversifies into digital financing (The Standard), Rated: AAA

Conglomerate JG Summit Holdings Inc. said a unit teamed up with the founders of internet giants Skype and LU.com to form digital financial services marketplace to address the financial needs of underbanked consumers and micro and small and medium enterprises in the Philippines.

Authors:

George Popescu
Allen Taylor

Friday July 7 2017, Daily News Digest

mobile banking

News Comments Today’s main news: Orchard Platform, Experian partner on big data. Marlette closes $369 ABS transaction. OCC seeks to make banks fintech enforcers. MarketInvoice Q2 results. Dashu Finance raises $117M. BNI Europa enters Portuguese market with Puzzle. TWINO expands into central Asia. Today’s main analysis: The state of consumers and technology (a must-read report). International P2P volumes. Today’s thought-provoking articles: High-tech, low-effort loans […]

mobile banking

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

Orchard Platform, Experian collaborate on big data challenges (Cision), Rated: AAA

Experian® and Orchard Platform, the provider of data, technology and software to the online lending industry, have joined together to announce a strategic collaboration that will give institutional investors access to Experian’s depersonalized consumer credit data. Orchard’s institutional clients can use depersonalized credit data for ongoing monitoring of borrower creditworthiness for loans in existing portfolios. Experian also will provide access to anonymized historical data sets for enhanced credit modeling, analytics and reporting.

Delivering greater transparency, high-quality data and analytical tools to the market is central to the mission of both companies. Orchard’s institutional clients should benefit from the use of Experian data to not only make more informed investment decisions through refined credit modeling but also through the ability to manage risks more effectively with more current loan data. Experian has been harnessing the power of data for many years to help consumers, financial institutions and governmental organizations make more informed and effective decisions. Raw data without the right level of interpretation is nothing more than untapped potential.

Marlette Funding Closes $ 369 Million Securitization Transaction (BusinessWire), Rated: AAA

Marlette Funding, LLC, a leading provider of online consumer lending platforms and services, announced it has closed its third securitization from its proprietary “MFT” shelf. Approximately $369 million of Best Egg unsecured personal loan collateral was financed via three classes of Notes and one class of Certificates with certain loan sellers retaining risk on a portion of the Certificates.

The transaction was significantly oversubscribed and successfully priced well inside the two previous Marlette sponsored offerings. In this transaction ratings for each of the offered Notes attained one higher category to AA (sf), A (sf) and BBB (sf), respectively, by Kroll Bond Rating Agency (KBRA). Underwriting the transaction were Goldman Sachs, who served as the structuring agent, Deutsche Bank and Citi.

This transaction, in similar vein to MFT 2017-1, involved the sale of loans by Marlette and four other whole loan buyers who accessed the securitization markets via the MFT shelf.

The State Of Consumers And Technology: Benchmark 2017, US (Bank Innovation), Rated: AAA

The US market is fueled by empowered customers, who experiment with and rely on technology. In 2017, for example, 14% of US online adults use a fitness tracker, 8% use a smart speaker with a personal assistant, and 7% use Apple Pay.1 Forrester’s Empowered Customer Segmentation shows that about a quarter of US online adults are Progressive Pioneers, the most empowered consumers who lead the demand for product and experience innovation. Smartphone and tablet usage is now common among mainstream US consumers: Three-quarters use a smartphone, and half use a tablet.

Get the full report here.

The high-tech, low-effort loans winning over online shoppers (American Banker), Rated: AAA

In a study of more than 2,000 consumers conducted by Researchscape and sponsored by Klarna North America, 47% said that when shopping online, they would like to be presented with the option of instant financing.

The customer types in very little information — in some cases, nothing more than a name and email address. No effort is required.

Behind the scenes, Klarna’s underwriting software takes in data from more than 100 sources and uses artificial intelligence to make a credit decision in less than a tenth of a second.

Jim Lofgren, Klarna’s CEO for North America, theorizes that instant loans have become popular as a reaction against widely publicized card fraud and data breaches. Essentially, people are drawn to not having to surrender a bunch of information.

“The phone is only this big and you don’t like the inconvenience of having to pull up the card and keypunch all those numbers in and verify everything every time you want to make a purchase,” Lofgren said. “Instant financing lends itself well to the smartphone environment.”

Aaron Allred, CEO of Acima Credit, a provider of instant leases at the point of sale, gives a lot of credit for the growing U.S. market in the U.S. to Affirm, a startup based here.

Lofgren calls Klarna’s credit issuing platform the “secret sauce of what we do.”

It takes into account more than 180 creditworthiness variables.

Goldman Sachs is working on an iPhone app for the masses  (Business Insider), Rated: A

Goldman Sachs, which has been expanding its offerings to retail consumers in recent years, is building an iOS app for its growing crop of digital retail banking services, according to a job listing on the company website.

Here’s the job posting (emphasis added):

We are looking for an expert iOS developer to work on a greenfield enterprise-grade project delivered on iOS platforms.  Our goal in engineering is to facilitate the creative, iterative, and data driven creation of our all digital retail bank. As a Mobile Developer you will be working closely with our marketing team and UX designers to build mobile user experiences which will be A/B tested for effectiveness and impact to our clients. The code you write will reach millions and help redefine the firm.”

BETTERMENT CEO: We ‘could become the Amazon of financial services’ (Business Insider), Rated: A

Betterment, the largest independent roboadviser in the world, with $9 billion under management and 270,000 customers, thinks it might be able to do the same in finance.

Chaparro: Incumbents have had their own robo offerings for years, and they have their big brand and infrastructure to back them up. What makes you so certain Betterment can survive up against such competition?

Stein: For the same reason why we often see those few innovators break out.

You could also ask “Why did Amazon break out and become the dominant online retailer?” — some would say dominant retailer period. And why wasn’t it Barnes and Nobles, Target, or Walmart, or anybody else? It is because Amazon has a specific focus. They didn’t have conflicts with a set of existing infrastructure and systems and people who were built around doing things the old way.

In Lending, Next-Day Payout Doesn’t Cut It (PYMNTS), Rated: A

“So, many of these lenders have been wrestling with this problem for a long time,” said Edwards. “The number one complaint they get after a loan is approved is, ‘Why do I have to wait on my money?’”

That speed factor is why some online lenders may lose market share to competition. If a borrower’s car breaks down and he needs the vehicle to get to work, an online loan that takes a week for funds to transfer to his account won’t be much help. Instead, Edwards said, those borrowers are going to go to someone who can provide cash immediately.

The emergence of push payments and instant funding perfectly addresses this need for lenders. Push payments use the same mechanism as pull payments — only in reverse, moving funds from a business to a consumer. They deploy existing rails to do this, instantly transferring funds to credit and debit cards or a PayPal account.

For Ingo Money, API technology has been critical to making it easy for lenders and other companies to deploy push payment capabilities.

What Fintech Entrepreneurs Can Learn From Big Tech Companies (Entrepreneur), Rated: A

You may have heard of a number of successful “big tech” execs leaving behind great jobs at companies like Apple and Google to develop a new passion project in fintech. The trajectory from big tech to fintech is becoming increasingly common. What makes for a successful transition and what can big tech folks take with them in their new ventures?

Mission matters.

This is a lesson I learned repeatedly at Google. What you are trying to do as a company, and often as a team within a company, matters. It’s not simply having a mission, but having a mission that galvanizes others to action.

Leverage the “tech method.”

A huge lesson I learned from my career is the benefit of building a platform that empowers an ecosystem. Think about Android, AirBnB or Amazon. If your business model is designed to benefit other participants in the ecosystem, rather than competing with them, it can have far-reaching impacts that turn an industry in your favor. If you can create a system that connects buyers, sellers, service-providers, etc., you have the ability to change how that industry functions.

Use your network.

Leverage your network in a way that also allows them to participate in your cause. The successful big tech to fintech pioneers do not view the companies they have left as something in the past, but rather an ongoing support group.

Get creative.

We do lots of things, but one amusing yet somehow successful example is taking pictures of people wearing our PeerStreet hats.

Finra Fines Have Skyrocketed for Offenders (Financial Advisor IQ), Rated: A

The industry’s self-regulator imposed 624 monetary sanctions in 2016 – a 10% drop from the 691 it doled out the year prior, according to the report. But revenues from fines grew to $173.8 million in 2016 from $80 million in 2015, according to the regulator.

Finra also ordered firms to pay back $27.9 million in restitution to investors last year, according to the report. The fines helped the regulator post net income of $57.7 million in 2016, compared to a net loss of $39.5 million the year prior, Finra says.

In addition to a boost from fines, the regulator’s portfolio returns grew $70.9 million year-on-year, according to the report.

Two major lending changes mean it’s suddenly easier to get a mortgage (CNBC), Rated: A

First, the nation’s three major credit rating agencies, EquifaxTransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete. Specifically, the data must include the person’s name, address, and either date of birth or Social Security number.

Of about 220 million Americans with a credit profile, approximately 7 percent have liens or civil judgments against them. With these hits to their credit removed, their scores could go up by as much as 20 points, according to a study by credit rating firm Fair Isaac Corp. (FICO).

In addition to the FICO changes, mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. The two are raising their debt-to-income ratio limit to 50 percent of pretax income from 45 percent.

Creating a Bridge Between Fintech and FinServ (qlik), Rated: A

With this in mind, I recently set out to create examples of utilizing the Qlik platform in the Fintech space.

Ripple distributed financial ledger:

Working with our Qlik partner (Pomerol Partners) we utilized the Restful API’s provided by Ripple to access all 8.7 million payments transacted on the Ripple platform.

Lending Club peer-to-peer lending and alternative investing:

Whether it is Fintech, Insurtech, Regtech or any other new & exciting technology, there is one certainty…the data from these systems will need to be combined with other information to get a complete picture of the customer relationship, profitability and risk profile of the business.

OCC SEEKS TO MAKE BANKS FINTECH ENFORCERS (Yodlee), Rated: A

But, even amidst serious uncertainty with regard to the future of a federal charter for certain fintech firms, the OCC continues to demonstrate that it has every intention of continuing to expand its jurisdiction over the fintech market. Earlier this week, the agency released supplementary guidance to its risk management bulletin on third-party relationships for federally regulated banks. The new guidance very broadly defines third-party relationships as “any business arrangement between the bank and another entity, by contract or otherwise.” The guidance further notes that “If a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship,” and the OCC would require that the bank include that fintech firm as part of its OCC-supervised third-party risk management process.

Bank web lending can be faster and cheaper (Banking Exchange), Rated: A

The company, with four subsidiary banks in New York and Pennsylvania, continues to do a traditional community banking business. Yet, just as every local retailer is potentially competing with Amazon and Walmart.com, Tompkins and other commercial lenders face competition from the likes of Kabbage and other business-oriented online lenders that promise fast online service with minimal hassle.

A year and a half ago, the parent company began evaluating web-based services from outside vendors that could help its subsidiary banks deliver what customers desired. What they found was a service that could integrate with their existing systems and credit standards—as a pure technology play, not a substitute for the bank’s own lending.

In January the company began rolling out Lightning Loans, beginning with the Tompkins VIST affiliate.

Payday Lender Taps Wall Street For Cash As Regulations Bite (ValueWalk), Rated: A

As lenders grow, they’re turning to the ABS market for funding as a natural step of diversifying. Securitisation trades began in 2014 and are slowly gaining traction around the world. Last year, P2P Global Investments Plc and Zopa Ltd. produced Europe’s first securitization of unsecured consumer loans originated online. The $179 million transaction was backed by 27,137 lines from individuals. This deal followed Funding Circle’s first securitization of peer-to-peer loans, comprising small-business debt — another first for Europe.

And as the pace of securitization picks up for peer-to-peer, other short-term non-traditional lenders are looking to get into the market. According to the June 30 issue of the Asset-Backed Alert, payday lender DFC Global is eyeing securitization as a funding source.

At least one other payday lender, Check ‘n Go, is known to be looking at the asset-backed bond market as a funding source.

Legislative Update 160 (Experian Email), Rated: A

Highlights:

  • The CFPB estimated in its May 2015 study “Data Point: Credit Invisibles” that more than 45 million American consumers are credit invisible, meaning they either have a thin credit file that cannot be scored or no credit history at all.
  • On June 8, the US House of Representatives passed the Financial CHOICE Act on a strictly partisan vote with Republicans supporting the bill and Democrats opposing it. In addition to making broad changes to the Dodd-Frank Act, the bill would substantially transform the CFPB into an enforcement agency by repealing the Bureau’s supervision authority, abolishing the UDAAP provision
    and prohibiting the public disclosure of complaint data.
  • On June 12, the US Treasury Department released a report on the Administration’s priorities for financial regulatory reform. The report was requested as part of the President’s February Executive Order on Dodd-Frank Reform.
  • Massachusetts H.B. 157 stipulates that no person or company engaged in trade or commerce shall have a right to obtain, possess, sell, lend, distribute, disseminate or use any person’s account number without his/her prior written permission. Account number is defined to include each person’s social security number, driver’s license number, license plate number, bank account number, credit card number, account number at a retail store which sells goods or services, account number at a business which sells goods or services on-line, telephone number and all other account numbers of all kinds and varieties.

See the full legislative update here.

Public Pensions Should Weigh Pros and Cons of Alternative Investments (Plan Sponsor), Rated: A

The allocation to alternative investments more than doubled from 9% to 24% during 2005 to 2015, according to data by the Public Plans Database (PPD), which accounts for more than 95% of pension assets. Between 2010 and 2016, traditional equity returned about 14% compared to private equity at 25% minus fees.

In 2005, for example, the maximum share held in alternatives by any plan was less than 30% and half of plans held less than 10%. As of 2015, however, the maximum allocation among plans was more than 50%, and only 9% of plans held less than 10% in alternatives.

New Teeth Dental Solutions Provides Exceptional Dental Implant Dentistry (Digital Journal), Rated: A

Another unique service that New Teeth Dental Solutions offers is their financing options. Dental service is considered a compulsory service to all people, and at a patient’s convenience, the clinic provides a choice between dental loans (CareCredit, Healthcare lending) and patient financing plans (Lending Club) that allow a low monthly payment with no down payment for at least three to seven weeks.

18 States Sue Betsy DeVos for Refusing to Enforce Student-Loan Protections (New York Magazine), Rated: B

Federal law already allows borrowers to apply for loan forgiveness if they attend a school that deployed fraudulent advertising or violated state consumer-protection laws. But the process for securing such forgiveness can be cumbersome. And some schools limit their students’ capacity to win settlements in fraud cases, by forcing them to pursue justice through arbitration instead of the court system.

These defects became conspicuous during the Obama administration’s final years, as hundreds of for-profit colleges collapsed amid accusations of widespread fraud. The demise of the mega-chain Corinthian Colleges, alone, led to more than 15,000 loan discharges, totaling $247 million.

Eighteen states and the District of Columbia reject that rationale. On Thursday, 19 Democratic attorneys general, led by Massachusetts’s Maura Healey, filed a lawsuit against the Trump administration in federal court, accusing DeVos of refusing to enforce duly enacted regulations in violation of the Administrative Procedures Act. They are hoping to convince a federal judge to order the administration to implement the new rules.

Elevate to Release Second Quarter 2017 Earnings on Monday, July 31, 2017 (BusinessWire), Rated: B

Elevate Credit, Inc. today announced that it will release its second quarter 2017 financial results after the market closes on Monday, July 31, 2017.

United Kingdom

Peer-to-Peer Lender Flender Celebrates First Wave of Successfully Funded SME Loans (Crowdfund Insider), Rated: AAA

The recently launched peer-to-peer lending platform, Flender, announced on Thursday it is celebrating the successful funding of its first batch of SME loans. According to the online lender, companies that received their requested funding include one of Europe’s fastest growing lingerie retailers, a café, and coffee roasting chain, a further education provider and developers of non-toxic disinfectant technology.

MarketInvoice sees record-breaking Q2 (AltFi), Rated: AAA

The growth builds on its previous record set in Q1 2017, with the firm funded invoices worth £161.9m in Q2 2017 providing UK business with critical working capital.

June 2017 was the company’s busiest ever month funding invoices worth £64.2m. The value of invoices funded is up 57.2 per cent from £103m (Q2 2016) to £161.9m (Q2 2017), and the current cumulative value of invoices funded stands at £1.34bn.

VPC Speciality Lending fund sees income growth but NAV hit (AltFi), Rated: A

The £350m VPC Speciality Lending fund saw a fall in its net asset value [NAV] of 0.68 per cent in May after a 0.62 per cent income return but a -1.3 per cent capital loss. It’s income return was the fifth consecutive payout increase.

Bridging ‘dabblers’ expected to exit the market (Mortgage Solutions), Rated: A

Earlier this week, asset finance lender Borro announced it was leaving the bridging sector with new chief executive officer John Allbrook citing overcrowding in the market as the reason for the decision.

“However, if you are well funded and provide a first-class service there is plenty of business. I suspect the cost of funding was prohibitive for Borro which was only a small player. Potentially others will exit this market, such as the ‘dabblers’ who may excel elsewhere but have been drawn into the property market seeing the potential returns while not realising what is involved and how competitive it is.”

Some of the UK’s hottest fintech firms went down, including Monzo and Revolut (Business Insider), Rated: A

A number of UK fintech startups encountered technical issues on Thursday, warning customers that their payments may not go through.

App-only banks and firms including Monzo, Revolut, Loot, Starling Bank, and Curve all ran into problems due to a supplier that provides some of their underlying technology.

How fintech can beat the banks and offer you competitive savings rates (Startups.co.uk), Rated: B

Rather than the modest 0.1% or 0.5% offered by most banks, the alternative saving and investment sectors have seen significant growth, offering rates of up to 15% per annum.

Peer-to-peer loans

This is currently one of the most popular ways to obtain a higher interest rate, with the peer-to-peer (P2P) lending industry estimated to reach £7bn in 2017.

Equity crowdfunding

This allows you to pitch to purchase a stake in a small business or start-up. Usually through a platform like Crowdcube, the business states how much of a stake they are willing to give up based on their valuation e.g. 7% or 15%.

Product Savings Rate Per £1,000 per annum Source
Peer to peer loans 3.3% to 9.9% £1,033 Zopa
Innovative Finance 8% £1,080 Innovative Finance ISA
Property investing 3.5% £1,035 Landbay
Business loans 10% to 15% £1,150 Rebuilding Society
Guarantor loans 10% £1,100 Guarantor My Loan
Equity Crowdfunding 1% to 20% Depends Crowdcube
China

PAG, Primavera Lead $ 117M Round In Online Unsecured Loan Lender Dashu Finance (China Money Network), Rated: AAA

Asian alternative investment management firm PAG and China-focused private equity firm Primavera Capital Group have led a RMB800 million (US$117 million) series C round in Dashu Finance, a Shenzhen-based online lender of unsecured loans to small and micro enterprises that traditionally could not secure funding from banks.

Dashu specializes in credit analysis based on big data, a method traditionally applied only to credit card loans and micro loans. It has issued over RMB200 billion in accumulated unsecured loans to individuals over the past several years, it said in an announcement.

In addition, Dashu offers its credit analysis tools to traditional financial institutions such as banks. To date, it has helped commercial banks issue micro loans worth roughly RMB10 billion. The cumulative non-performing loan ratio of these loans is around 2.3%, it says.

P2P firm Jusheng gets new funding (Shanghai Daily), Rated: A

ONLINE finance firm Jusheng Assets announced yesterday in Shanghai to finish a new round of finance, which made its registered capital hit 300 million yuan (US$43.5 million) and triple the previous level.

The new investor Zhejiang Fengzhou has core business in tourism, hotel and construction materials, which will help the platform find projects related to consumption upgrade as the national strategy, said Yang Dengpeng, chairman of Jusheng.

European Union

Challenger Bank BNI Europa Announces “Puzzle”, an Online Lender to Streamline Consumer Credit (Crowdfund Insider), Rated: AAA

Announced today, “Puzzle“, as it has been named, is the first totally digital and real time credit application in the Portuguese market.

“Puzzle” offers credit of up to three thousand euros with different payment maturities and is intended to be a quick response to small credit needs.

Accel leads Series B round for PayFit (PE Hub), Rated: A

PayFit, which simplifies payroll management and core HR processes for SMBs, announces that it has closed a €14 million Series B investment led by global venture capital firm Accel, with participation from Xavier Niel and Otium Venture.

Founded just one year ago, the startup has grown to have more than 600 clients and a team of more than 40 employees. This round will enable PayFit to continue to expand its suite of digital HR processes, kickstart its international expansion, with an initial focus on Europe, and double its workforce by 2018.

PayFit’s ambition: become the go-to solution to manage core HR and payroll processes for SMBs in Europe
PayFit drastically simplifies payroll management, which can be complex, expensive and time consuming for businesses of all sizes, particularly SMBs in countries with complicated labor laws. PayFit’s Software-as-a-Service solution is fast, intelligent, intuitive and automated. It allows employers to easily manage payroll on their own, saving time and money, and comply with local labor laws without having to be a payroll expert.

Accelerating internationalization – first step: Europe
The startup is planning to launch internationally with an initial focus on Europe. Rollout will begin with Spain, Italy, Germany and the United Kingdom. Markets with labor laws that can be as complex as those in France are a particular focus, as PayFit can bring significant core HR and payroll improvements to local businesses. In each market, PayFit will launch a fully localised version of its solution, covering all relevant regulations.

International

Why Banks And Startups Should Collaborate On Fintech (Forbes), Rated: AAA

Volume migration to pure digital players remains in the low single digits in the US, multiple challenger banks in the UK are facing funding and regulatory issues before they are even out of the gate, and many of the more successful fintech insurgents have been bought by incumbent banks just as they matured into legitimate competitors. Disruption of the banking industry hasn’t turned out to be a dramatic big bang; instead, the erosion of bank profitability by low interest rates and increased regulatory costs has triggered an industry-level response in which banks are using technology to improve efficiency and the customer experience. Instead of going extinct, the dinosaurs have been evolving.

London-based TransferWise, which allows consumers to transfer money internationally at a fraction of the traditional cost, is actually disruptive because it lowers fees by smart trade matching between buyers and sellers.

But TransferWise is an exception. Most fintechs have struggled to create sustained competitive differentiation.

This doesn’t mean that banks can be complacent. The asteroid strike on the banking industry is still possible, but is far more likely to come from existing tech giants than small startups. Amazon is now lending a billion dollars a year to merchants on its platform, a drop in the ocean for the largest commercial banks, but a statement of intent. While it hasn’t happened yet, Accenture research suggests that the combined disruption from fintech startups and Google, Apple, Facebook and Amazon could cause full-service banks in developed markets to lose about 35% of their market share over the next five years.

International P2P Lending Volumes June 2017 (P2P-Banking), Rated: AAA

 

The unconquerable attraction of cash (ATM Marketplace), Rated: AAA

An online survey of consumers in France, Germany, Israel, the U.K. and the U.S. poll revealed that fintech does appear to be gaining traction, with Israel emerging as a leader in early-adoption, according to a press release.

Nevertheless, cash remains king in most of these countries. For instance, in Germany, 75 percent of adults still use paper currency and coins to make purchases at least once a week.

What is more, nearly 1 in 10 Israeli adults say they have used alternative financing or lending services within the last 12 months.

Source: ATM Marketplace

 

Source: ATM Marketplace
Source: ATM Marketplace
Australia

KKR bids $ 500 million for Australian mortgage lender Pepper (PE Hub), Rated: A

U.S. private equity giant KKR & Co LP moved to bolster its presence in Australia’s lucrative mortgage market on Wednesday, joining a rush of players hungry for a slice of a property boom even as the sector shows early signs of slowing.

KKR Credit Advisors LLC made a $500 million bid for non-bank lender Pepper Group Ltd at an indicative price of A$3.60 per share, a 4 percent discount to Tuesday’s close. Pepper shares sank 7.2 percent to A$3.48 on Wednesday.

India

How alternative lending startups are rewriting traditional lending habits in India (India Times), Rated: AAA

People like Desai form the key clientele for financial-technology startup MoneyTap, which has developed a lending product called Credit Line—essentially, it assigns Rs 25,000 to Rs 5 lakh to a borrower deemed eligible for a loan.

The startup has nearly 300,000 registered users in about six months of launch. Like MoneyTap, which recently raised about $9 million from Sequoia India and others, a dozen-odd startups have attracted a string of investors to back them in the past few months.

EarlySalary secured $4 million from IDG Ventures and Diwan Housing Finance, and PaySense recently raised $5.3 million from Jungle Ventures.

The lending models are diverse—to allow customers to buy online; to buy consumer durables from regular stores; providing salary advances; or helping cover unplanned requirements such as medical bills.

Yes Bank taps AI to directly offer small loans to students (India Times), Rated: A

Yes Bank has partnered with fintech startups like Redcarpetup, Anytime Loans and FRS Labs among few others to adopt innovative technology based solutions for various businesses, such as lending, anti-fraud detection and easier customer onboarding processes.

Redcarpetup will allow the bank to lend to students, which is something banks have never done before. The technology company has identified about 100 colleges in the National Capital Region and underwrites applicants on the basis of the college, the type of course, their education background and their social circle.

Anytime Loans is an automated P2P lending platform that uses artificial intelligence to read facial features and feed it into a predictive model that determines the borrower’s propensity to default. The company has disbursed Rs 68 crore over the last 30 months to 38,700 entities for personal loans, business loans and education loans. Its gross defaults are at a low 0.6 per cent.

Where is fintech headed? Seven start-ups chart their course (livemint), Rated: A

Atyati Technologies: Mobile delivery

Bengaluru-based Atyati Technologies Pvt. Ltd, is a technology platform provider for the rural banking sector in India.

The company’s long-term vision is to have more services and products—custom lending products, insurance, e-tailing, etc.—across more geographies and more points of service, besides achieving quality-of-service levels in remote areas that are on a par with those in the metros.

FinBox: Banking on apps

This fintech aims to increase the revenue of lenders by increasing the number of customers on their books by reducing the cost of acquiring and servicing the loan—which it essentially does by building software tools such as application programming interfaces (APIs) and software development kits (SDKs).

FlexiLoans: Data-driven

The goal of FlexiLoans, the fintech platform run by Mumbai-based FlexiLoans Technologies Pvt. Ltd, is to provide working capital financing to small- and medium-sized businesses in India that are currently underserved by traditional institutional channels due to lack of collateral or inadequate credit history.

FundExpert: Robo adviser

Gumption Labs Software Solutions Pvt. Ltd, which launched FundExpert’s automated investing platform in 2016, wants to make monitoring investments “super-easy, using algorithms”.

IndianMoney.com: Financial guidance

Today, IndianMoney.com boasts of being “India’s largest financial education company”, with over 200 employees, serving 80,000 financial intermediaries and 3 million consumers.

KrypC: Blockchain riders

This fintech provides blockchain technology solutions to various organizations to enable them “to utilize blockchain features such as privacy, security and trust”, among others.

Turtlemint: Insuring its future

Touted as India’s first online-offline insurance platform, Turtlemint is building a pan-India network of offline partners and, according to co-founder and CEO Dhirendra Mahyavanshi, has been “a pioneer” in the online insurance aggregation domain with offerings like ‘match score’, ‘policy recommender’, ‘renew in a snap’, etc.

Fintech is now an innovator and enabler, says KPMG India’s Neha Punater (livemint), Rated: A

“This industry is definitely a force to reckon with,” Punater added, pointing out that the global annual growth of the fintech sector at 55% is not led by volume expansion but by investment, which shows investor confidence in the space. “Compared to about 12,000 global start-ups, there are about 900 Indian fintech firms—and over 120 of them were started in 2016 alone. An investment of $2.25 billion has been infused into Indian fintechs from 2010 to 2016,” she added.

The Indian fintech market, according to her, typically mirrors global trends. “Payments-related companies have the highest market share at 25% in India and in the world. Payments, lending and wealth management are growing, while P2P (peer-to-peer) lending, blockchains and payment banks are still nascent. Many payments-related activities are still in the business-to-consumer space but we haven’t seen much happening on the business-to-business side,” she added.

According to Punater, wealth tech is the third-largest sector in the fintech space and is still relatively small.

Asia

 

TWINO expands into Central Asia with Kazakhstan loans (IBS Intelligence), Rated: AAA

TWINO, a European peer-to-peer lending platform, has announced that it has started to list short-term loans via its Kazakhstan originator.

Kazakhstan is the sixth country to appear on the peer-to-peer lender’s platform. It is also the first time a European peer-to-peer lender has expanded into Central Asia.

The Kazakh loans have a duration of one month and will offer investors a return rate of 11% per annum.

Convenience drives growth of South Korean P2P lenders (Asian Review), Rated: A

The Korea P2P Finance Association said that accumulated loans of its 56 members reached 1.2 trillion won in June, up 665.1% from a year ago when the total reached 152.6 billion won. Month-on-month, total loans rose 17.5%.

“It is very convenient. Borrowers can get short-term loans quickly while investors enjoy higher profitability,” said Kim Soo-hyun, an analyst at Shinhan Finance Investment. “They may threaten banks’ business in the long term, if they become equipped with more advanced technology infrastructure.”

Lenders focusing on real estate projects are leading the market, with the biggest lender, Tera Fintech, accounting for 147.5 billion won of total loans in June, followed by Roof Funding with accumulated loans of 114.3 billion won.

Deputy Finance Minister I of Malaysia: Disruption in Banking is The Normal (SAT PR News), Rated: B

In a room of over 200 senior level bankers, Deputy Finance Minister I, YB Dato’ Wira Othman Aziz made a call to Malaysian banks during his opening speech at the 9th BankTech Asia Conference & Exhibition, an event co-organized by Knowledge Group of Companies, to disrupt themselves before others do it for them.

Quoting recent studies from Gallup which states that more than half of Malaysian banking consumers are indifferent towards their primary banks, YB Dato’ Wira Othmanbrought attention to this point to illustrate the industry’s need for an overhaul to remain relevant.

Authors:

George Popescu
Allen Taylor