Thursday September 26 2019, Weekly News Digest

LendingClub eligibility

News Comments Today’s main news: SoFi intros crypto trading. Investors locked out of LendingClub in 4 states. Funding Circle asks US regulators to folow UK’s model. Fundbox raises $176M. Klarna surpasses 12M transactions per year. Today’s main analysis: U.S. subprime auto loan ABS recession scenarios (A MUST-READ). Today’s thought-provoking articles: Recession talk cooling. Consumers with […]

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

LendingClub eligibility

News Comments

United States

United Kingdom

European Union

International

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News Summary

United States

SoFi Introduces Crypto Trading With SoFi Invest (PR Newswire), Rated: AAA

SoFi announced today that it has added crypto trading to its fast-growing SoFi Invest platform, as a response to demand from its over 800,000 members. SoFi Invest is now the first platform to offer automated and active investing with stocks, ETFs, and crypto through a single app.

SoFi Adds Bitcoin, Litecoin, and Ethereum to Invest Platform (Cheddar), Rated: A

SoFi goes live with crypto trading service for its over 800K users (The Block), Rated: B

SoFi users can initially buy and sell three cryptocurrencies – bitcoin (BTC), ether (ETH) and litecoin (LTC). The Block first reported the story last week, saying that the firm is beta testing the service in partnership with Coinbase.

SoFi CEO on what’s next for the company (Yahoo! Finance), Rated: A

Sofi CEO Anthony Noto joins The First Trade to discuss what’s next for the company.

Watch the video here.

Charlie Lee {LTC} praises SoFi as crypto-investing with Litecoin kicks-off (Our Bitcoin News), Rated: A

Litecoin is ranked at #6 underneath Tether, as well as Bitcoin Cash, in the market. The price jumped up at a rate of 0.60% in the course of the past 24-hours. This led to LTC scaling all the way up to $57.03 where it presently rests. The trading volume recorded stands at roughly $2.957 billion, whereas the supply has 63,337,479 LTC coins included as part of circulation. The total market cap of Litecoin amounts to $3.612 billion which depicts a massive decline compared to the value attained a week back.

SoFi CEO: Start investing in your 20s (Yahoo! Finance), Rated: A

SoFi CEO Anthony Noto discusses how his company’s consumers can now buy and sell Bitcoin, Ethereum and Litecoin.

SoFi Refunds Investors Hit By Capital Gains from Proprietary ETFs (ETF Trends), Rated: A

Financial technology company SoFi is offering refunds to investors hit by capital gains taxes following the change of replacing Vanguard funds with their proprietary ETFs in certain portfolios managed by their robo-adviser.

Some Investors Locked Out of Investing in LendingClub Loans (Lend Academy), Rated: AAA

Over the last 24 hours we’ve received several messages from Lend Academy readers alerting us that they have received information that they are no longer able to invest in LendingClub notes. There is is also an active discussion on the Lend Academy forum.

LendingClub state eligibility as of 9/24/2019. Source: Lend Academy

Funding Circle urges US regulators to follow UK model (P2p Financ News), Rated: AAA

FUNDING Circle’s US division is urging the Securities and Exchange Commission (SEC) to amend its restrictions on peer-to-peer retail investment.

The US financial regulator limits annual investment to five per cent of an investor’s annual income if their yearly income or net worth is under $107,000 (£86,075), rising to 10 per cent if the investor earns more than that.

Two Franchise Trends Aspiring Franchisees Should Look Out For (Forbes), Rated: A

Over the past 14 years, I’ve coached more than 1,500 people who were searching for the best franchise for their situation. I recently read the 2019 Small Business Trends 

Fintech Fundbox raises $ 176M to lend to business using AI (Information Management), Rated: AAA

Fintech Fundbox Inc. has raised $176 million in a new funding round from investors including Allianz SE and General Catalyst. The company planned to announce the funding along with a new $150 million credit facility.

A Fundbox spokesman said the new round valued the company at between $500 million and $1 billion, but would not disclose the exact valuation.

U.S. Subprime Auto Loan ABS: Evaluating Recession Scenarios (DBRS), Rated: AAA

Summary Highlights

  • Under the hypothetical Recession Scenarios, DBRS found that credit enhancement (excluding excess spread) coverage of remaining expected losses, as determined by a multiple calculation, decreased at the inception of the hypothetical recession for all of the Sample Transactions. The senior debt tranches experienced a swift deleveraging whereas some of the subordinated debt tranches could be at risk for a potential downgrade during the hypothetical Recession Scenarios.
  • After the initial decline in the multiple calculations at inception of the hypothetical Recession Scenarios, the deleveraging nature of the sequential pay structures of the transactions resulted in the calculated multiples for the analyzed debt tranches to move into the multiple range corresponding to the original rating of the debt tranche over varying lengths of time. The multiples for some of the debt tranches originally rated BB were weaker and moved into the BB range at a slower pace. As a result, those tranches would be more likely to be considered for a potential downgrade as compared to the more senior debt tranches where the structures delevered more quickly and the multiples reached the range corresponding to the original rating over a generally shorter period.
  • Over the life of the Sample Transactions, the credit enhancement multiples for all of the debt tranches analyzed, some on a delayed basis, ultimately moved into the AAA rating multiple range.
  • In each of the Recession Scenarios, the structure of each of the transactions provided sufficient credit enhancement for timely payment of interest and ultimate payment of principal of all debt tranches.
Source: DBRS

Read the full report here.

A Cooling in Recession Talk, Heat Up in Housing (PeerIQ), Rated: AAA

Lower rates, improved credit scores, and tighter housing inventory are improving the outlook for housing. Housing market achieved an 18-month high in housing starts and a record high in FICO scores.

The Citigroup Economic Surprise Index – a measure of actuals vs economist’s expectations – has also registered readings above the neutral baseline suggesting slowdown fears may be exaggerated.

Source: PeerIQ, CitiGroup

Consumers with Significant Liquidity Needs Often Access Alternative and Traditional Credit Markets Concurrently (GlobeNewswire), Rated: AAA

Many lenders believe that consumers who turn to the alternative credit market for liquidity do so because they have no other options. However, a TransUnion study presented today at the Lend360 conference found that these borrowers are frequently applying for and receiving traditional credit at the same time. While traditional subprime installment lenders and alternative lenders are competing over the same consumers, the study finds that the liquidity need is often not fully met in either market.

Source: TransUnion

Risk Levels Higher for Traditional and Alternative Loan Borrowers

Controlling for risk score, 8.5% of the alternative credit-active consumers had a serious delinquency in the first 12 months, vs. just over 2% for the control group. Bankcard performance was also worse. While these borrowers exhibited a preference for unsecured personal loans under $1,500 within 12 months of the alternative credit origination, they also originated auto and bankcard credit during that time.

Read the full report here.

Lendio to Double Sales Force, Expand Loan Product Offerings (Benzinga), Rated: A

Lendio today announced plans to double the sales force at its Lehi, Utah, and Woodbury, New York, offices. The company has hired 80 employees in 2019, and intends to add another 40 sales representatives by the end of the year, with plans to bring on another 40 in the first quarter of 2020. In addition to the expanding workforce, Lendio plans to bolster its selection of loan products for small businesses, with a 10% increase in the number of product offerings in the coming year.

Fintech lenders taking more market share from banks, survey finds (American Banker), Rated: A

Fintechs are continuing to siphon away customers for unsecured personal loans from traditional lenders, according to a study released Wednesday by Experian.

The study found that digital lenders more than doubled their market share in the past four years, with consumers across the credit spectrum increasingly turning to fintechs like Lending Club and Social Finance.

Fintechs now provide 49.4% of unsecured personal loans as of March compared to 22.4% in 2015, according to Experian.

Fintech Lenders Could Hold the Keys to Recession Recovery (Salon), Rated: A

Born out of the last recession, young fintech lenders have not yet been tested by a significant economic storm, and many in the industry are wrapped up in a dialogue of speculation about the industry’s ability to ride out an impending recession. It’s time to turn the conversation instead to focus on how fintech lenders can position themselves to play a critical role in recovery from the next downturn, whenever it may happen.

WeWork should ask SoFi CEO for advice on how to save the company (Yahoo! Finance), Rated: A

The two new guys running the slowly sinking ship known as once hot tech startup WeWork should give SoFi CEO Anthony Noto a holla on his Apple iPhone. Trust me, Noto has some good, timely advice for Artie Minson and Sebastian Gunningham.

Because the former Goldman Sachs banker and Twitter chief financial officer, now SoFi chief clearly gets how to rebuild a promising tech startup after a high-profile challenge or two. And then possibly, take it down the path of a successful initial public offering.

Generation Z’ers want more financial education – and innovative tools to help them learn (PR Newswire), Rated: A

As high school students return to school, they may see the benefits of new state laws across the country that require curriculums to offer a class about personal finance. This is great news for young adults as 76% of recent high school graduates agree it should be required, according to a national survey by Experian.

Many Gen Z’ers surveyed say innovative tools are the way to go when it comes to learning about credit (45%) and almost half (48%) would prefer to use tech-driven tools versus textbooks to learn more.

Survey respondents also say they are currently learning about finances mostly through their friends (28%), YouTube (27%) and some form of social media (24%).

D.C. Court Dismisses Challenge to OCC’s Fintech Charter (Manatt), Rated: A

In the latest battle over the Office of the Comptroller of the Currency’s (OCC’s) plan to issue special purpose national bank (SPNB) charters, a D.C. federal judge has for a second time dismissed a lawsuit brought by the Conference of State Bank Supervisors (CSBS).

The decision creates the potential for circuit split, as a New York federal court reached the opposite conclusion in a nearly identical action filed by the state’s Department of Financial Services (DFS).

9 Ways To Build an Empire Without Lifting a Finger (Yahoo! Finance), Rated: A

Another way to build your real estate empire is through real estate crowdfunding. As with investing in a REIT, real estate crowdfunding allows you to pool your money with other investors to invest in real estate. This could include multifamily units, commercial properties and bundles of single-family homes.

According to U.S. News & World Report, the top real estate crowdfunding platforms are ArborCrowd, RealCrowd, Groundfloor, CrowdStreet, PeerStreet, Small Change and RealtyMogul.

If you can afford the minimum investment — which is usually $25,000 — you can make big returns. Groundfloor boasts 10% returns for individual investors and CrowdStreet’s is even higher with 25.5% total average annual returns across all fully realized deals.

RealCrowd offers a breakdown of average annual income on a $1 million investment based on the property type: $78,000 for a suburban office, $72,000 for a retail space, $59,000 for a downtown office and $58,000 for a multifamily unit.

The Best And Worst MA Towns For Young Families (Patch), Rated: A

The online mortgage broker Lending Tree has tried to take some of the guess work out of that decision by ranking every community in Massachusetts with 5,000 or more residents based on their appeal to families with school-age children.

Hingham, under Lending Tree’s methodology, received a score of 72.5. Last-place Webster’s score was 31.9. Other towns in the top 10 included Winchester, Needham, Milton, Longmeadow, Wellesley, Cochituate, Pinehurst, Lexington and Nantucket.

JPMorgan donates $ 25M to get fintech in hands of underbanked (American Banker), Rated: A

JPMorgan Chase announced Tuesday a $25 million commitment to the Financial Health Network’s Financial Solutions Lab, a program meant to focus on the creation of fintech tools to help consumers better manage their finances.

The Financial Health Network (formerly The Center for Financial Services Innovation) previously received a $30 million philanthropic donation from the bank that spanned the last five years.

Bitcoin and Ethereum dive deep, is Bakkt to blame? (Mashable), Rated: A

“The disappointing BAKKT opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support,” Alex Mashinsky, CEO at crypto lending and depository company Celsius Network, told Mashable in an emailed statement.

STRATA Trust Company Reaches $ 2 Billion AUC Milestone (PR Newswire), Rated: A

STRATA Trust Company (“STRATA”), a custodian dedicated to the complexity of holding alternative investments in tax-advantaged, self-directed retirement accounts, announced today that the firm has surpassed $2 billion in assets under custody. STRATA offers access to a range of asset classes that include private equity, private debt, real estate, crowdfunding, structured settlements and more. Since 2008, STRATA has been committed to empowering investors and the investment community with wider diversification and alternative asset custody solutions in retirement portfolios by delivering industry-leading service, education and support.

Online Pawn Lending Goes Back Offline (Business Wire), Rated: A

Prominent online lender Borro Private Finance unexpectedly ceased its collateral-based lending program this summer after nearly ten years of business. The UK-US-based establishment specialized in online pawn loans against valuable assets, including fine art, jewelry, and watches. Borro’s discontinuation of its operations comes nearly two years after the company’s withdrawal from the bridge loan market in July 2017.

Eleventh Circuit Tosses Online Lender’s Forum Selection, Class Waiver Clauses (Lexology), Rated: A

Siding with six consumers who filed suit asserting violations of state usury laws against online lenders, the U.S. Court of Appeals for the Eleventh…

Marqeta Hires Vidya Peters As First Chief Marketing Officer, as Company Continues to Build Out Expansive Global Vision (Business Wire), Rated: B

Marqeta, the first global modern card issuing platform, today announced the addition of Chief Marketing Officer Vidya Peters to its executive team.

White Oak Commercial Finance Acquires Veritas Financial Partners’ Asset-Based Loan Portfolio (ABL Advisor), Rated: A

White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today it has purchased a portfolio of asset-based loans from Veritas Financial Partners, a Boca Raton, FL based specialty finance company.

Alchemy Technology And Equifax Partner To Drive FinTech Innovation (PR Newswire), Rated: B

Alchemy Technology Inc. and  Equifax Inc. (NYSE: EFX) today announced a new partnership to drive FinTech innovation. The relationship is designed to help banks, specialty financing firms and FinTech startups accelerate their time to market with easily deployable white labeled lending solutions. The two companies will make the “tech” in FinTech available to organizations of all sizes with a powerful combination of the Alchemy Lending Operating System and Equifax data analytics, credit, identity and income verification solutions.

Ex-Goldman Sachs Managing Director Joins Lendingblock as Strategic Advisor (Lendingblock), Rated: B

Lendingblock, the regulated, open exchange for institutional borrowing and lending of digital assets, today announces the appointment of John Macpherson as a strategic advisor.

CoreLogic Credco Integrates its Three-Bureau PreQual Solution with eLEND Solutions (CoreLogic), Rated: B

CoreLogic, a global provider of property information, insight, analytics and data-enabled solutions, today announced that CoreLogic Credco integrated its Three-Bureau PreQual credit report and score solution on eLEND Solutions, an automotive technology company specializing in online and in-store credit and finance solutions. The integration of the prequalification solution gives CoreLogic Credco customers who use eLEND instant, single-source access to a consumer’s credit report and FICO score from all three national credit bureaus – Experian, TransUnion or Equifax.

Tavant Named to 2019 IDC FinTech Rankings (Business Wire), Rated: B

Tavant, a Silicon Valley-based provider of AI-powered digital lending technologies, announced today it has been named to the 2019 IDC FinTech Rankings, the most comprehensive vendor ranking within the financial services industry.

United Kingdom

Klarna Surpasses 12M Transactions This Year (PYMNTS), Rated: AAA

FinTech payments disruptor Klarna has announced the start of its “No drama, just Klarna” retail campaign in partnership with 13 brands in the U.K., the company said in a press release on Wednesday (Sept. 25).

Klarna offers “pay later” payment options and attracts 50,000 new users each week. The startup said that in the past year, it has processed 12 million transactions. In August, more than 100,000 U.K. shoppers downloaded the Klarna app.

Klarna reports surge in payments, merchant growth during first half of 2019 (Mobile Payments Today), Rated: A

Klarna, a London based installment financing provider and challenger bank, said it surpassed 3 million active users in the U.K. and 170,000 retail merchants worldwide.

Brits hit financial maturity at 31 (P2P Finance News), Rated: A

THE age at which UK men and women finally feel secure in their finances is 31, according to Zopa.

The survey showed a clear split between age groups, with 21 to 25 year-olds believing 32 would be the age when they finally felt good about their finances, while those age 26 to 30 were less optimistic about the future, saying they would reach money maturity at 38.

OakNorth Bank completes £20m loan to specialist lending fund (London Loves Property), Rated: A

OakNorth Bank, the UK bank powered by OakNorth, has provided a £20m loan to the RAW Mortgage Fund, a specialist fund providing buy-to-let property loans against residential real estate in the UK.

Wonga borrowers have less than a week to submit payday loan reclaims (The Sun), Rated: A

Anyone who believes they have been mis-sold a Wonga loan is allowed to apply for compensation, but its administrators set a deadline of 11.59pm on September 30.

If you miss the deadline, you won’t be able to apply anymore and you won’t get any compensation for mis-selling.

Nexo Now Accepts Tokenized Gold for Instant Credit Lines and Will Offer Interest-Bearing Accounts on Gold (Covington Journal), Rated: A

Nexo is adding the NYDFS-regulated PAX Gold as a collateral option for its signature , bringing gold-backed lending to the blockchain.

With PAX Gold, now offers gold investors instant access to their gold wealth in over 45 fiat currencies via same/next day transfers and across 200+ jurisdictions.

European Union

Kreditech Eyes Expansion After Securing EUR 20 Million in Equity Financing (Yahoo! Finance), Rated: AAA

Kreditech is ready to scale globally in the near-prime customer segment – declares David Chan, Kreditech CEO. The Germany-based online direct lender and Point-of-Sale (POS) financing provider estimates its global target market at ca. EUR 300 bn in consumer credit issuance. It aims to reach EUR 1 bn in revenue by 2025, which will be driven by growth in existing markets where Kreditech is present, as well as expansion into new geographies. Kreditech currently operates in IndiaPolandRussia and Spain, and serves over one million customers. The company has raised EUR 20 million in its latest equity financing round.

You’ve heard of challenger banks, now meet the challenger lenders (sifted), Rated: AAA

For better or worse, it was Wonga that first put “challenger lenders” on the map. The UK payday lender’s meteoric rise saw it become a household name before its collapse last year after a string of irresponsible, inflated loans.

This month alone, large funding rounds were announced by Sweden’s Capcito and Lendify, as well as by UK’s Sonovate, an invoice lender for SMEs with over 750 active clients. Banks are also watching closely, with Goldman Sach’s equity arm being a notable funder in Lendable, recently ranked the UK’s sixth fastest-growing private tech company.

In the UK, the challenger-lender industry grew to £6.1 billion in 2017, according to a study by the Cambridge Centre for Alternative Finance (CCAF). The CCAF also estimated that 29% of all new loans issued to SMEs came from challenger lenders in 2017. PwC predicts that figure will rise to nearly 40% in the next decade.

Source: Financial Times
International

Marketplace Lenders Navigate The Choppy Waters Of Compliance (PYMNTS), Rated: AAA

Regulators the world over are beginning to take a closer look at the alternative and marketplace lending business model.

In June, the U.K.’s Financial Conduct Authority announced plans to impose stricter restrictions on marketplace and peer-to-peer (P2P) lenders beginning this December following the watchdog’s decision to place P2P lending platform Lendy into administration — a result, the FCA said, of the industry’s lenient requirements to disclose governance arrangements and controls.

Also, in China, analysts at Yingcan Group pointed to the government’s P2P and marketplace lending crackdown as being likely to shrink the industry by as much as 70 percent this year.

This Fintech Safari Could Be a Wild Ride (The Washington Post), Rated: AAA

From ATMs to credit cards and PayPal, the West’s dominance of innovation in consumer finance appears to have exhausted itself.

At the top of the emergent new order is the fintech duo from China — Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Next in line are Alphabet Inc. and Walmart Inc., whose highly localized smartphone payment rivalry is playing out between Google Pay and PhonePe in India. In Southeast Asia, two homegrown ride-hailing giants are aspiring to dominate commerce.

The rise of African mobile money is associated with M-Pesa, Kenya’s digital-wallet revolution. Now traditional lenders like Standard Chartered Plc, with a presence on the continent going back more than a century, are discovering that online banking can help them mobilize low-cost current and savings accounts more profitably than acquiring customers via physical branches.

Australia/New Zealand

Harmoney says the P2P lender has been ‘slowly moving to lending our own money’ since 2015 (interest), Rated: AAA

The founder of Harmoney, New Zealand’s biggest licensed peer-to-peer (P2P) lender, says he can’t see a viable P2P lending model in New Zealand which is why Harmoney has started lending its own money.

Neil Roberts and David Stevens of Harmoney (Lend Academy), Rated: A

Harmoney, the first peer to peer lender to be licensed in New Zealand, has originated more than NZ$1 billion in loans since launching five years ago.


Read the PDF transcript here.

India

Kreditech targets India after EUR20m funding boost (Finextra), Rated: AAA

Kreditech, a German-based online lender and POS financing provider focused on “near prime” borrowers, is looking to the Indian market after raising EUR20 million in funding.

The round was co-led by Runa Capital and unnamed German private investors, with participation from existing shareholders HPE Growth and Amadeus Capital Partners.
Southeast Asia

Accumulated P2P lending exceeds W6tr (The Investor), Rated: AAA

Accumulated peer-to-peer loans in South Korea have surpassed 6 trillion won ($5 billion), data showed on Sept. 26.

Outstanding P2P loans extended by 220 companies stood at 6.2 trillion won in June, compared with 4.7 trillion won at the end of last year, according to the data compiled by the Financial Supervisory Service.

Indonesia’s Investree in talks to raise series C funding for regional expansion (Tech in Asia), Rated: A

Indonesia’s fintech peer-to-peer lending startup PT Investree Radhika Jaya is in talks with several investors to raise a series C funding as the firm looks to boost its expansion in Southeast Asia.

The Securities Commission Malaysia Approves EdgeProp as First Property Crowdfunding Platform in Malaysia (Crowdfund Insider), Rated: A

The Securities Commission Malaysia (SC) has registered EdgeProp Sdn Bhd as the first “Recognised Market Operator” to establish and operate a property crowdfunding platform in Malaysia. EdgeProp was granted an approval in principle in September 2019.

FINTECH COMPANIES FACE TALENT SHORTAGE (StaffingIndustry.com), Rated: A

The majority, or 94%, of fintech companies in Singapore, say the country requires fintech talent, according to survey data from Michael Page Singapore.

The number of Singapore consumers adopting fintech products and services has drastically risen in the last two years, tripling from 23% in 2017 to 67% in 2019, according to Michael Page.

Bitcoin Daily (PYMNTS), Rated: B

And Singapore-based exchange Bitrue has announced the launch of a low-interest crypto lending platform, which goes live on September 30.

MENA

Qatar Boosts FinTech Focus (PYMNTS), Rated: A

As reported by Crowdfund Insider, the Qatar Financial Centre (QFC) has expanded the number FinTech-related activities that will be awarded licenses. The additional support will come from the QFC platform.

The seven firms include DecisionLogic, which focuses on advanced bank verification that lets lenders qualify borrowers.

Africa

Proven ways you can make money in real estate (Daily Monitor), Rated: A

You can utilise a variety of methods that includes any of the following:
•Seller financing through lease options
•Trading fixed assets such as cars, jewellery and more
•Taking over someone else’s mortgage payments who might be in a distressed situation
•Bringing in an investment partner with cash
•Borrowing from a bank or getting a hard money loan
•Taking out a home equity line of credit
•Utilising a peer-to-peer lending network

Caribbean

Victoria Mutual acquires shares in Barbados-based FinTech Carilend (Jamaica Observer), Rated: AAA

Victoria Mutual Investment Limited (VMIL) has acquired a 30 per cent stake in Carilend, a Barbados-based financial technologies (FinTech) company, that is said to have revolutionised borrowing and lending in the Caribbean.

Authors:

George Popescu
Allen Taylor

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

Friday May 4 2018, Daily News Digest

Square Q1 2018 results

News Comments Today’s main news: Law firm files class action against Lending Club. KBRA assigns preliminary ratings to Marlette Funding Trust 2018-2. Funding Circle’s securitization priced at tighter spread than expected. Klarna intros new consumer app. Today’s main analysis: Square’s Q1 2018 results. Today’s thought-provoking articles: More light shed on Lending Club’s hidden fees. Fintech funding at $127B. Financial inclusion […]

Square Q1 2018 results

News Comments

United States

United Kingdom

International

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News Summary

United States

New Securities Fraud Class Action Against Lending Club (LC) Has Been Filed (Markets Insider) Rated: AAA

Block & Leviton LLP (www.blockesq.com), a securities litigation firm representing investors nationwide, announces that a new class action lawsuit has been filed against Lending Club Corp. (“Lending Club” or the “Company”) (NYSE: LC) and certain of its officers and directors alleging violations of the federal and securities laws. Class members interested in serving as lead plaintiff are reminded of the July 2, 2018 lead plaintiff deadline.

The lawsuit, filed in the United States District Court for the Northern District of California (No. 3:18-cv-02599), alleges that throughout the Class Period, defendants made false and/or misleading statements when they stated that Lending Club customers would receive a loan with “no hidden fees.” On April 25, 2018, the Federal Trade Commission (“FTC”) filed a complaint alleging that Lending Club knowingly charged consumers hidden fees, contrary to their public disclosures.

The FTC Shines the Light on Hidden Fees and Hidden Disclosures: A Cautionary Tale for Advertisers (the National Law Review) Rated: AAA

Lending Club was fully aware that thousands of consumers applied for loans with no knowledge of the obscure origination fee. In fact, Lending Club received “[a]t least tens of thousands”12 of complaints directly from consumers about the hidden fees.  Indeed, Lending Club’s own training materials for customer service representatives listed “I didn’t receive the full loan amount” as one of the two most common complaints that representatives were trained to address.13 Consumers “frequently complained that they only discovered the fee after [Lending Club] disbursed their loan proceeds, when they noticed that the amounts disbursed were smaller than they were expecting.”14 Once consumers became aware of the fee, many elected to cancel their loans, often “preferring a loan from a competitor or no loan at all.”15

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2018-2 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2018-2 (MFT 2018-2). This is a $310.1 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Marlette Funding Trust 2018-2

Class Preliminary Rating Class Principal
A AA (sf) $216,125,000
B A (sf) $45,592,000
C BBB- (sf) $48,375,000

Square Announces First Quarter 2018 Results (SquareUp) Rated: AAA

Square, Inc. (NYSE: SQ) has posted its financial results for the first quarter of 2018 on the Financial Information section of its Investor Relations website at square.com/investors.

From the shareholder letter:

We continue to accelerate growth at scale, expanding our ecosystem for sellers and individuals. In the first quarter of 2018, total net revenue was $669 million, up 45% year over year, and Adjusted Revenue was $307 million, up 51% year over year. This is an increase from the fourth quarter of 2017, when total net revenue and Adjusted Revenue grew 36% and 47%, respectively, year over year. Gross Payment Volume (GPV) was $17.8 billion, up 31% year over year. Net loss in the first quarter was $24 million, which is an increase of $9 million from a net loss of $15 million in the first quarter of 2017. Adjusted EBITDA was $36 million in the first quarter of 2018, compared to $27 million in the first quarter of 2017. We achieved an Adjusted EBITDA margin of 12%, which reflects our reinvestment in the business to drive long-term growth.

Source: SquareUp.com

Read the full shareholder letter here.

Goldman CEO pledges caution in consumer lending (Financial Times) Rated: A

Goldman’s Marcus has scaled extraordinarily fast having provided $2.4 billion in consumer loans; some analysts have expressed concerns on the credit quality of the loans Marcus has been making; Blankfein on Wednesday noted that a poor credit environment could bring new risks but he isn’t concerned with their timing into the market; the bank has a long-term view on their consumer focused business and believes they can manage it through the ups and downs.

Trusted Key Solutions Raises $ 3M in Seed Funding (Lend Academy) Rated: A

Trusted Key Solutions Inc., a Seattle, WA-based blockchain-based secure digital identity company, raised $3m as part of a seed funding round.

The round was led by Founders Co-Op, with participation from Pithia, Inc., the venture capital company of The RChain Cooperative.

 

Private Lenders Eye Graduate Loan Market (Inside Higher Ed) Rated: A

Private lenders hold just a fraction of the outstanding student loan debt in the U.S. — about 7.7 percent as of last year. But those companies have plans to grow their student loan holdings.

The PROSPER Act, House Republicans’ opening bid to update the Higher Education Act, would raise undergraduate lending limits and add new annual limits for graduate student borrowing. Those students would have their total annual borrowing capped at $28,500 annually. Currently, graduate students can borrow up to the cost of attendance.

Graduate loans also offer a higher loan volume for private lenders. As Quinlan noted to investors, grad students make up 16 percent of the borrower market but hold 40 percent of student loan debt. So the average borrower holds more debt, they’re older, and they’re better educated, too, making it more likely that they will pay off their loan.

Promise Financial No Longer Offers Personal Loans (Student Loan Hero) Rated: A

The recent end of Promise Financial personal loans leaves brides- and grooms-to-be with one less borrowing option. The company, which focused solely on financing weddings through unsecured personal loans, stopped funding new loans in January 2017, reported Bloomberg.

Group aims to form first new bank in Mass. in decade (American Banker) Rated: A

A group in Springfield, Mass., has applied to form a new bank. The group hopes to raise $25 million to $30 million in initial capital. If it opens, Green Apple would become the first new bank in Massachusetts since 2008, according to the state’s Office of Consumer Affairs and Business Regulation.

The application notes that Green Apple, which aims to open by the end of this year, would focus on small-business banking, commercial real estate lending, personal banking, renewable energy, local agriculture businesses and the food security sector.

Confessions of a former trader: Incentives at banks are misaligned (Tear Sheet) Rated: A

Banks like to call themselves technology companies. And most large ones are currently focused on fighting — and winning — the war for talent against Silicon Valley.

The problem is, they have issues when it comes to incentivizing their many tech employees to create great products.

Big tech firms have a plan…do you? (CU Insights) Rated: A

Credit unions aren’t paving the way.  Nor are they pioneering the ability to serve the underbanked.  Seriously.  Many are doing great things, that’s for sure, yet the fundamental change is originating from tech firms.  And they’re not doing it alone (more on that later).

4 Facts You Need to Know About Personal Loan APRs (Student Loan Hero) Rated: A

Although CreditCards.com lists the national average APR on a credit card at 16.38% as of January 2018, the rates on three-year unsecured loans are only 9.22% for credit unions and 10.09% for banks as of March 2018, according to the National Credit Union Association.

An online lender might provide an even lower personal loan APR, with FreedomPlus offering rates starting at 4.99% and SoFi at 5.37%.

Virginia sues, accusing major online lender of violating consumer protection laws (Daily Press) Rated: A

Virginia alleges one of the nation’s largest online lenders made more than $47 million of illegal, high-interest-rate loans that put Virginians on the hook for tens of millions of dollars in interest and fees.

The state is suing Net Credit, which sells personal loans for up to $10,000 and charges interest rates of as much as 155 percent, for violating the state’s consumer protection laws.

The lawsuit also alleges that Net Credit has lied to Virginians about the legality of its loan terms and that it has continued to automatically debit money from customers’ bank accounts after they’ve filed bankruptcy and won a court-ordered freeze on debt collections.

Online Lending Policy Institute (OLPI) And Benzinga Partner For The 2018 BZ Awards Gala in NYC (Benzinga) Rated: B

The Online Lending Policy Institute (OLPI) today announced that it will partner with Detroit-based financial media outlet Benzinga for the Benzinga Global Fintech Awards Gala (BZ Awards) in NYC on May 15, 2018.

United Kingdom

 

European Investment Fund and KfW back Funding Circle securitisation (Peer2Peer Finance) Rated: AAA

FUNDING Circle’s latest securitisation has been priced at a tighter spread than its first with backers including the European Investment Fund (EIF) and German development bank KfW.

The £207m portfolio is issued by investment trust P2P Global Investments and has been priced at 75 basis points, compared with 220 basis points on the tranches issued in 2016.

NatWest outlines plans to grow digital lending offshoot Esme (Finextra) Rated: A

NatWest has outlined plans to scale and grow its digital lending platform Esme Loans following a successful pilot phase.

Esme Loans was developed by the bank at its innovation unit with fintech firm Ezbob as a direct response to the emergence of specialist direct and P2P lending platforms.

Overfunding: Real Estate Source Platform Infabode Secures £750,000 Funding Target on Seedrs (Crowdfund Insider) Rated: A

Real estate source platform, Infabode, has successfully secured its initial £750,000 funding target on equity crowdfunding platform Seedrs from more than 150 investors. Founded in 2013, Infabode reported that it connects its community of users with industry information from the real estate sector on one customizable online platform. Infabode’s platform has more than 450 content providers and over 17,000 members.

Financial inclusion in the rich world (The Economist) Rated: AAA

The council identifies only 36% of the population as “white British”. Dalston Junction, a now-trendy part of the borough, buzzes with a down-at-heel sort of cosmopolitanism: a Caribbean bakery; the Halal Dixy Chicken shop; the Afro World wig-and-extensions parlour; dozens of outlets for Lycamobile (“call the world for less”) and for money-transfer firms.

Competing with this last group is a branch of Oakam, a British lender set up in 2006. It advertises itself as an “alternative to doorstep lenders”, the traditional financiers for those beneath the bar set by mainstream banks. Originally aimed at recent immigrants, it extended its reach to the rest of those “lacking access to basic financial services”—a group it puts at 12m across Britain. A report published in March 2017 by a House of Lords committee estimated that 1.7m adult British residents have no bank account; 40% of the working-age population have less than £100 ($140) in cash savings; and 31% show signs of financial distress.

Profits jump 86% at City broker Numis on M&A advice boom (Financial Times) Rated: A

Revenues jumped 41 per cent in the six months ending in March to £74.1m compared with £52.4m over the same period of the prior year. Pre-tax profits rose 86 per cent to £19.5m.

Corporate broking and advisory revenues were up 76 per cent year on year to £50.9m, boosted in part by a growth in fees from M&A advisory work, a growing sector for some City brokers. However this compared with a weak comparative period, and fell 10 per cent below a record performance in the second half of last year.

Majority of savers misunderstand benefits of IFISAs (Global Banking and Finance) Rated: A

61% of UK savers acknowledge possibility of higher returns and better interest rates with IFISAs, but majority still don’t understand the service 

Over a third (36%) of UK savers would place their money in an IFISA if they had the money available.

While a large proportion acknowledge the prospect of higher returns (61%) alongside the allure of the tax-free wrapper and greater diversification, the IFISA is still a hard sell, according to research undertaken by P2P lending service ArchOver. In truth, the majority of UK savers (57%) still don’t fully understand the service.

 

European Union

Klarna escalates its war on banks with a new consumer app – and upcoming payment card (Business Insider) Rated: AAA

  • The $2,5 billion e-invoicing company is today launching its first pure consumer app, which gives users an overview of their Klarna transactions in addition to a host of other features.
  • It’s essentially a remake of Klarna’s existing app and serves as a meeting place between merchants and their end customers.
  • The app is first rolled out across the Nordics and continental Europe, with UK and US launches planned for later this year.

Zopa’s Giles Andrews named Kreditech advisory board chairman (Peer2Peer Finance) Rated: A

ZOPA co-founder Giles Andrews OBE has been named as chairman of German alternative consumer lender Kreditech’s advisory board.

The fintech firm provides loans and credit cards for the under-banked and those with poor or little credit history and operates in Mexico, Spain, Czech Republic, Poland and Russia.

International

Fintech funding hits $ 127bn (AltFiNews) Rated: AAA

More than $127bn has been invested in fintech companies globally since 2014, with funding topping $40bn last year, according to data gathered by Fintech Global.

Last year this number declined to just over 1800 but with an increased in the average deal size to $22.4m in 2017.

Source: AltFiNews; Fintech Global

 

RCN launches Ripio engine to bring blockchain and smart contracts to loans (Venture Beat) Rated: A

Ripio Credit Network (RCN) — a global credit network based on cosigned smart contracts — has released an entirely new version of its NanoLoanEngine, the driving mechanism behind its protocol. The upgrade, which is called Basalt, includes significant improvements that will offer lenders and borrowers more flexibility. The company also claims that the new engine lowers costs.

Basalt changes how interest is applied to the network’s loans and eliminates nearly all maintenance fees associated with those transactions.

 

HOLD Platform plans on surpassing SALT as a “Crypto as a Collateral for a Cash Advance” (Tech Newsletter) Rated: A

What HOLD (HOLD) allows you to do is simple, if you don’t want to sell your crypto or you want to “HODL” but at the same time you need cash, then HOLD is the platform for you. By creating an escrow that will lock up your funds as a collateral, HOLD will then send you a credit card of that amount in fiat, which means that you can have liquidity without selling your crypto assets.

How HOLD (HOLD) can have major advantages over SALT

What you might be thinking is that SALT already provides these types of services but the major advantage of HOLD platform is the almost instant credit card that will be issued for you to use in any store making adoption of crypto as payment a closer reality. This is a very important middle step towards businesses accepting crypto as payment.

Hellas Direct and Revolut Join Forces (Coverager) Rated: B

Athens-based digital-first insurer Hellas Direct  has teamed up with banking alternative Revolut  to build “microinsurance, by-the-day products.”

Also, according to the press release, “the partnership will allow Revolut and Hellas Direct to push their offering into new markets and enable them to leapfrog some of the traditional barriers of growth and expansion by using the core competencies of each partner.

Profile Software ports core banking platform to the cloud (Finextra) Rated: B

Profile Software, an international, award-winning banking solutions provider, announced today that FMS.next, its leading Core Digital Banking platform, is now available in the cloud.

 

Australia

Major Bank Loses 12 Million Customers’ Data in the Most Embarrassing Way Possible (Gizmodo) Rated: A

BuzzFeed reports that the Commonwealth Bank lost 12 million customers’ data after magnetic tape backups containing their personal financial history from 2004 to 2014 went missing. It just lost them. They may have literally fallen off a truck. And the bank didn’t even bother telling its customers about the incident.

While said losing-of-data was only publicly revealed this week, it took place back in 2016, when the Commonwealth Bank hired a subcontractor to destroy the backup tapes while decommissioning a data center. After it didn’t get a receipt of the tapes’ destruction, the bank investigated and discovered that the tapes were nowhere to be found.

Cryptocurrency for the rest of us (PHYS.ORG) Rated: B

Enter Bamboo, a West Australian startup whose mission is to make a cryptocurrency investment platform for the rest of us.

Bamboo brings together two new ideas. One complicated (cryptocurrency) and one a bit more simple (microinvesting). As platform Raiz (previously Acorns Australia) describes on their site, microinvesting works by transferring “spare change automatically from everyday purchases into a diversified portfolio”. For example, if you were to buy a coffee for $4.80, Raiz would round the sale up to $5.00 and then invest the $0.20 for you.

India

OYE! Loans Receives $ 2.25 Mn in Funding from UK’s GAIN Credit (Indian Web 2) Rated: AAA

Noida-based OYE Fintech, which operates a consumer-focused lending platform called OYE! Loans, has raised $2.25 million (about ₹15 crore) from GAIN Credit, Inc. OYE! Loans currently serves new-to-credit and new-to-workforce consumers with simple, timely and affordable One Year EMI loans (hence the brand OYE!), with ticket-sizes ranging between 10K and 1L INR.

The company leverages alternative data to assess risk on customers who have thin or non-existent footprints on the credit bureau. The loan application to disbursal process is largely online, enabling for quick turn-around times of less than 2 business days – an attribute that has strengthened its growing reputation as a lender-of-choice within its target markets.

Bigger Gains (Business Today) Rated: A

Interest rates on bank deposits are at a decade low, and those on small savings schemes are close to a 40-year low. This has forced people to look for alternatives, one of which is peer-to-peer, or P2P, lending.

 

 

Authors:

George Popescu
Allen Taylor

Monday April 23 2018, Daily News Digest

Marcus lending

News Comments Today’s main news: Top customer-rated lenders by loan product. Kabbage, Ingo Money partner on SMB loan disbursements. RateSetter offers 100 GBP cash incentive to ISA investors. TransUnion to buy Callcredit in Europe for $1.4B. Today’s main analysis: Bank earnings. Today’s thought-provoking articles: P2P lending vs. stock markets. Using psychometry for loan disbursement. Don’t fear the robo-advisor. Bank earnings. Fintech leaders […]

Marcus lending

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United Kingdom

China

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United States

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2018 (Markets Insider) Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the first quarter of 2018.

The top lenders for the first quarter by product are:

Mortgage Category

#1 Winner:
Howard Bank

Personal Loans Category

#1 Winner:
First Midwest Bank

Top 3 Badge:
Lending Club
Upgrade

Business Loans Category

#1 Winner:
OnDeck

Auto Loans Category

#1 Winner:
iLendingDIRECT

Kabbage and Ingo Money Partner to Get Small Businesses their Loan Funds Faster (Small Business Trends) Rated: AAA

Kabbage and Ingo Money have teamed up to expedite the payout of loans into the accounts of small and medium-sized businesses in real time. The move is important news for small businesses in need of a fast loan payout to capitalize on new opportunities or continue operations.

Thanks to the new partnership, when businesses get a loan from Kabbage, the Ingo  Money technology will be used to deliver the funds to the applicant’s account right away. The loans are going to be paid out using Ingo Money’s push platform with push-payments-in-a-box technology.

The partnership was announced on pymnts.com at which time Kabbage President Kathryn Petralia explained the importance of accelerating the delivery of funds.

Strong Bank Earnings, The Copernican Revolution in Banking (PeerIQ), Rated: AAA

Goldman Sachs delivered its highest revenue in 3 years, also driven by a boost from its fixed income trading business. The bank continues to invest in Marcus and has originated $2.3 Bn in loans life-to-date and has $17 Bn in deposits. Marcus is only one part of GS’s broader lending strategy. We note in the slide below from GS’s earnings call that Goldman has substantially increased its loan book from $64 Bn at the end of 2016 to $81 Bn at the end of 2017 by expanding collateralized lending to high net-worth clients and securities-based lending.

Source: PeerIQ

Bank of America’s total revenue grew by 3.7% to $23.3 Bn driven by its Consumer business which saw profits grow by $0.8 Bn to $2.7 Bn, and 32 straight quarters of loan growth. Average loans increased by $22 Bn to $280 Bn driven by growth in mortgages and credit cards. Provision for credit losses increased by $97 Mn to $935 Mn, driven by credit card seasoning and loan growth. The net charge-off ratio increased slightly to 1.27%. Bank of America is the leader in mobile banking and active mobile banking users increased 12% YoY to 24.8 Mn.

 

DON’T FEAR THE ROBO! (All About Alpha) Rated: A

Technology advances have infiltrated every corner of finance, including the world of wealth management. While few can argue with the positives of automated, algorithm-based portfolio management platforms, the advent of the cost-efficient, dispassionate robo-advisor has struck fear into the heart of many a financial advisor and fund manager, who see these technology options as a threat to their business practice.

FIRST, WHAT ARE SOME BENEFITS OF A ROBO?

Lower fees. Most of these robo advisors charge less than 1%, with some south of .20%, versus the standard investment advisor fee range of 1-3% on a client’s portfolio.

Elimination of emotional trading. With a robo advisor executing a passively managed program, there is no chance of active management decision-making being affected by human emotional reaction to markets.

Index-like performance with tax efficiencies and global access. Most robo platforms feature ETFs that aim to produce results like an index, but with lower expense ratios than their equivalent counterparts found in mutual funds. For individuals focused on low cost but benchmark performance in a portfolio, a mix of ETFs can be a desirable option long term.

How Barclays US is using AI (Tearsheet) Rated: A

Barclays — the bank behind popular co-branded cards including Uber, American Airlines, JetBlue and a host of other retail partners — is using customer data to suggest products and understand the root causes of customer complaints. It’s an approach large banks like Capital One and JPMorgan Chase as well as startups like Credit Karma and MoneyLion are using to push insights and recommendations that are most relevant to the customer’s spending behavior and product preferences.

With all this data gathering, how do you avoid creeping out the customer?
We do a lot of testing, we are very thoughtful about products we develop and ways we communicate with customers. We don’t want to be in a situation where the customer is “creeped out”. We try to be very sensitive to that. We do a lot of data analysis and co-create experiences and products with customers to get a sense whether something will resonate or not. It’s an interesting time. It becomes straddling between convenience and relevance for the customer and going too far, [the sense of which] is different for each customer.

 

Lead Bank CEO: Tech, innovations help better clients, which makes a better bank (Kansas City Business Journal) Rated: A

Lead Bank CEO Josh Rowland is leaving no stone unturned on the technology front to help consumers gain financial strength and in turn create loyal, lifelong customers.

6th Avenue Capital Tips Off First “Merchant Madness” Promotion (AltFi), Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the launch of its first “Merchant Madness” promotion. Throughout the month, and coinciding with the annual NCAA Men’s Basketball Tournament, 6th Avenue Capital will award points for all new ISOs, Merchant Cash Advance (MCA) submissions, approvals and funded deals.

In addition to the new Merchant Madness promotion, 6th Avenue Capital also recently announced competitive underwriting guidelines, buy rates and incentive programs for 2018.

United Kingdom

P2P lender RateSetter offers ISA investors £100 cash incentive (AltFi News) Rated: AAA

RateSetter is offering new investors up to £100 for opening a new Innovative Finance ISA with the p2p lending platform.

Lending Works set for further growth after passing £100m milestone (Financial & Business Insights) Rated: AAA

Peer-to-peer lender Lending Works has passed £100 million in terms of the amount of money lent, cementing its position as one of the biggest UK platforms of its type.

Some 20,000 customers – over 16,000 borrowers and nearly 4,000 lenders – have used the platform to date and every penny of capital and expected returns has been delivered to lenders on time.

Gone in 98 minutes! Blend Network sees surge in property loans (Peer2Peer Finance) Rated: A

A PEER-TO-PEER lending platform aiming to be “Goldman Sachs of P2P” has reached £2m of lending in less than four months, with its latest development loan getting backed within 98 minutes.

The platform launched in January and currently offers average returns of 12.11 per cent on property-backed development loans outside London.

A new challenge for business banking (Money Week) Rated: A

There are a few providers already in business. CountingUp is a new service that integrates a business account with automated bookkeeping. Income and expenses are automatically categorised, and it can produce profit-and-loss accounts, raise invoices and file taxes. Sole traders will pay £9.95 a month; limited companies £19.95. Cash can be deposited via the Post Office for a £1 fee or via Paypoint for a 2.5% commission. Cash withdrawals cost £1.

Also in the works is CivilisedBank, which gained its banking licence in May last year, but released it earlier this month to give itself more time to develop its technology platform. CivilisedBank proposes a branch-free service for more established companies, and will focus on customer service by employing up to 80 “local bankers” for businesses with a turnover of more than £1m. It hopes to provide savings, loans, current accounts with overdrafts, and foreign exchange. It will also offer savings products to non-business customers.

Meet Andrea Linehan, commercial director with Grid Finance… (Business Irish) Rated: A

The recent warning that banks are no longer making the effort to get to know small- and medium-sized businesses when they apply for a loan, struck a chord with Andrea Linehan.

Linehan, the commercial director with Grid Finance, is keen to stress that Grid’s model is much more business friendly, with staff around the country eager to dig into the fine details of a business hungry for capital.

China

LexinFintech to Invest RMB1 Billion in Partner Cooperation over Next Three Years (Benzinga) Rated: AAA

LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ:LX) announced that it expects to invest RMB1 billion in cooperation with its partners over the next three years, to better serve its customers and to expand the use of credit services.

European Union

TransUnion expands into Europe with $ 1.4 billion Callcredit deal (Reuters) Rated: AAA

U.S. credit reporting agency TransUnion (TRU.N) on Friday said it will buy UK consumer data provider Callcredit for 1 billion pounds ($1.4 billion) from private equity firm GTCR, expanding its operations into Europe for the first time.

The deal comes at a time when credit-checking services are growing, in response to the proliferation of non-traditional lenders to consumers, such as payday loan providers and online lenders.

Fintech in Germany (Lexology) Rated: AAA

As the largest economy in the European Economic Area, the German market offers many opportunities for fintech innovation. Although some of the initial disruptive energy has been mitigated by regulatory challenges and a soft trend towards consolidation, a second phase of solid and mature business development is on the horizon.

Important players in the market include:

  • N26 – an app-based direct bank;
  • Kreditech – offers data-based bank lending;
  • Raisin – offers a pan-European marketplace for savings products;
  • Spotcap – offers loans for small and medium-sized enterprises;
  • Auxmoney – operates an online platform for peer-to-peer money lending services;
  • Smava – offers a loan comparison platform;
  • Liqid and Scalable – both offer online portfolio management to retail customers;
  • Exporo – offers an equity crowdfunding platform for real estate investment and bitbond, a bitcoin-based peer-to-peer lending platform; and
  • Finleap – while not a fintech company itself, it offers a fintech company builder ecosystem.
International

SPRING MEETINGS 2018 GLOBAL VOICES: INTERVIEW WITH IMAD MALHAS (World Bank Live) Rated: A

As part of our Spring Meetings 2018 Interview Series, we will be talking with Imad Malhas, ​CEO, IrisGuard, on how technology can help in the financial inclusion of displaced people.

Australia

“It was clear the loan products for small businesses were just not good enough,” says Moshal. He, and joint CEO Beau Bertoli, 34, set out to solve that problem in 2011 with Prospa, their Sydney-based online lender. Last year, Prospa provided over A$500m (£273m) in small-business loans, which are funded by bundling the loans together and selling them on to institutional investors. Interest rates start at around 12%, stretching into the mid-20s depending on risk.

Prospa’s draw is its speed in processing applications, with funding coming the same day. “We aren’t necessarily cheaper than a bank, but we offer speed, convenience and more access to credit,” says Bertoli. A A$25m funding round last year valued the business at A$235m, and the lender is now testing the waters for a stockmarket listing.

India

SoftBank-backed fintech firm True Balance raises $ 23m bridge round (Deal Street Asia) Rated: AAA

Gurgaon-based digital payments firm True Balance has reportedly raised $23 million in a bridge round from a clutch of foreign institutional investors.

According to a report in The Economic Times, Japan-based Line Ventures Corporation, Korean search engine Naver, Korean lender Shinhan Bank, TS Investment and other investors participated in this latest round.

P2P Lending Vs Stock Markets: The ideal Investment for you (Money Control) Rated: AAA

Investment in Financial Assets has been increasing in India. High return assets such as stocks and Peer to Peer (P2P) lending are increasingly sought after by investors.

It depends on the knowledge and risk profile of the person. While P2P lending is simple, stocks are pretty complex and require a lot of knowledge. However, both have the potential to provide good returns.

Indian households tend to have the highest savings in the world – at about 30 percent of income. Surprisingly, this does not translate into investments in the same proportion. Only about 3.2 crore people invest in the country’s stock markets – that is less than 3 percent of the population.

Africa

Using Psychometry In Its Loan Disbursement Process, Nigeria’s P2P Lender KiaKia Is Bringing Down The Loan Default Rate (Wee Tracker) Rated: AAA

Although news reports from the Q4 2017 show that banks are increasingly becoming open to lending more money even as lenders are expected to loosen credit scoring criteria in Q1 2018, they recorded an 8 percent increase in bad loans recorded in 2017.

Indeed the market is vast for Kiakia and other competing online loan services. Statistics from Nigeria interbank settlement system shows that there are over 31 million verified bank accounts in Nigerian banks.

For Kiakia about 75% of this number has never accessed any form of consumer or business credit from any financial institutions.

Asia

Robo-advisors offer low-cost growth opportunities, says GlobalData (Fintech Finance) Rated: A

Nomura Asset Management, a wholly owned subsidiary of Japan-based Nomura Holdings, has recently agreed to buy majority stake in Tokyo-based robo-advisory services provider 8 Securities Inc and a minority stake in Hong Kong headquartered parent company 8 Limited for JPY2.7bn ($25m). Expect major international asset managers to build similar distribution channels via the purchase of other established robo-advice FinTechs, says leading data and analytics company GlobalData.

Compared to most robo-advisers, 8 Securities has been in the market for a while. Chloe, its robo-advice platform, was the first in Asia to be offered via a mobile app and it currently has a presence in Hong Kong and Japan.

Latin America

Brazil Fintech Nubank Launches Facial Biometrics “AccessoBio” (Crowdfund Insider) Rated: AAA

Brazilian fintech startup Nubank announced earlier this week the launch of its new facial biometrics feature, AccessoBio. According to various reports, the fintech firm will now use the AccessoBio tool to help prevent identity fraud in credit card transactions.

ZDNet noted that Nubank believes the introduction of biometrics to its technology is a positive for customers due to the fact it does improve the mobile-based experience around the credit card requests and reduces the possibility of false rejects while reducing identity fraud possibility.

Authors:

George Popescu
Allen Taylor

Friday January 12 2018, Daily News Digest

bitcoin debt

News Comments Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu. Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued? Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and […]

bitcoin debt

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China

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International

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United States

Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA

Lending Club has all kinds of problems: a history of profit warnings, faint traces of scandal after a management upheaval almost two years ago, and a share price still more than 80 per cent adrift from its peak.

Add to that list: a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson, who told authorities in his native Australia that he fled to America in 2008 because he feared being killed by a mobster.

Mathieson’s case for change at Lending Club, laid out in a letter to the company’s board on 2 January, is not a terrible one, on the face of it. He argues that the cost structure at the loss-making company, a pioneer in peer-to-peer lending, is “excessive,” noting fancy headquarters in San Francisco and “hundreds” of “excess” developers. He says that the board should consider a pivot to using its own balance sheet to lend, rather than acting as a broker, taking fees for matching borrowers with lenders. Underwriting has been sloppy, he says, resulting in sub-par returns to investors.

Mathieson is offering 13 shares in his own penny-stock company, IEG Holdings, for every share in Lending Club. At the time of the offer on Monday morning, that was a premium of 19 cents, or about 5 per cent.

Source: Financial Times

SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A

IEG Holdings Corporation (OTCQB: IEGH) provides online unsecured consumer loans under the brand name “Mr. Amazing Loans” via its website, www.mramazingloans.com, in 20 US states. The company offers $5,000 and $10,000 personal loans over a five-year term at rates ranging from 19.9% to 29.9% APR. IEG Holdings plans future expansion to a total of 25 US states, which would cover 240mn people and represent approximately 75% of the US population.

Since 2013, IEGH has obtained additional state lending licenses, and they are licensed and originating direct consumer loans in 20 states including: Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Wisconsin. The Company was founded in 2010 and is headquartered in Las Vegas, Nevada.

IEG Holdings Plans to Create its own IEGH Crypto/Blockchain Currency Backed by Gold Metal and SEC Registration as a Security

IEGH announced that its wholly owned subsidiary, Investment Evolution Crypto, LLC (“Crypto”), is negotiating to purchase a gold project with gold metal in the ground and prospecting licenses. IEG Holdings plans to utilize a gold resource to investigate creating, through Crypto, and a joint venture with Investment Evolution Corporation, also a wholly owned subsidiary of IEG Holdings, its own gold metal-backed crypto/blockchain currency, and potentially offer loans and accept loan repayments in its own crypto/blockchain currency.

IEGH increases loan originations

The company stated that it provided $960,000 in new consumer loans through its online property mramazingloans.com, from the October 2017 to December 2017 period. This represented a 12.3% increase over its July to September 2017 operating period, during which the company’s new loan originations were $855,000.

Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA

Roughly 18 percent of people who buy bitcoin use a credit card to do so, according to a new survey by loan marketplace LendEDU. Of those, 20 percent have not paid off their balance. The phrase “buy bitcoin with credit” has been trending on Google for weeks.

Another problem with going into debt for cryptocurrencies is that people will have to pay back their debt before they see sufficient returns, said Erika Safran, founder of Safran Wealth Advisors. That may require tapping other resources, potentially creating further financial trouble.

Credit card debt from CNBC.

Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA

  • Traditional bank loan rejections are notoriously high in all markets
  • Small Business Administration (and equivalent agencies) are nefarious for overextending the time-to-credit tolerances of small businesses
  • Volatility of markets, and exposure of almost all markets to disruption by startups could pose urgent cash needs for businesses, which are generally not considered for loan applications by traditional lenders.

Online Lending And Its Deepening Hold Over The Small Business Finance Market

In 2014, a Federal Reserve (US) survey concluded that one in five small business owners opted for loans from online lenders. Since then, the proliferation of online lending platforms has been on the surge, to the extent that traditional brick and mortar lending institutions have also had to move base to the online domain. In the coming years, multiple factors will result in the success and sustainability of online lending platforms. These include:

  • Growing confidence among small business owners to trust online lending platforms
  • Availability of cheaper, quicker, and more convenient loans
  • Options to truly personalize and customize the loan repayment terms to suit the business’ interests

The Call for Transparency in the Online Lending Market

Though the online lending market has been growing year on year, this doesn’t detract from the concerns around lack of transparency in the way some of these platforms operate. Some of the key concerns are around undisclosed APRs and hidden fees. In fact, some online lenders have been castigated for charging significantly high rates of interests from borrowers, often with service quality issues post-approval. Thankfully, there’s already some progress towards bringing a degree of regulation in place for online lending platforms to be at par with traditional lending regulations.

JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA

JPMorgan is making a bigger push into payments technology as digital banking becomes a strategic priority.

In 2016, the bank spent $9.5B on technology and Dimon has committed $300M alone to improve JPMorgan’s technology for its asset management products. Relative to its peer group, JPM claims the highest number of mobile banking customers and its Chase Mobile app currently sports a 4.7 (out of 5) rating in the App Store.

Earnings call analysis – Barclays, Bank of America, Morgan Stanley talking up digitization

  • JPM discussed continued digital consumer banking growth, which grew 6% in Q3’17.
  • Bank of America spent portions of its Q1’17 and Q3’17 talking about digital banking initiatives and technology investment. Specifically, CEO Brian Moynihan mentioned the bank spent $2.25B on technology initiatives in the first three quarters of 2017. The bank also now sees mobile devices account for 1 of every 5 deposit transactions.
  • On Morgan Stanley’s Q3’17 earnings call, Morgan Stanley CFO Jonathan Pruzan mentioned the bank is beta testing new customer-facing digital products it plans to launch, potentially in the robo-advisory space. Specifically, Pruzan noted: “When we think about our wealth business, it’s a business that’s built on scale. And it’s built on the fact that people with wealth want personal advice. So it’s going to be both a mix of technology and digital with the personal element of the advice channel. And we think that’s the winning formula going forward.”

Based on the data, JPMorgan ranks ahead of most bulge bracket banks when it comes to overall fintech investment since 2013, but behind its peers Goldman Sachs and Citi.

Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A

Nav, a small business marketplace lending platform, announced this week it has facilitated more than 20,000 small business credit approvals in 2017.

The company currently has more than 327,000 entrepreneurs now using its platform to manage their data and access capital.

Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A

The Rise Fund, a private investment firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private.

Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A

LoanHero, one of San Diego’s few financial technology startups, has been acquired by Georgia-based company LendingPoint.

Terms of the deal, announced Jan. 11, were not disclosed.

Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A

Oportun, a community development financial institution that provides small loans to individuals with little or no credit history, is planning to open 20 lending offices in Florida.

The Redwood City, Calif.-based lender said this week that it has already opened four offices in Miami and Hialeah and that it expects to add 16 more in the Sunshine State, primarily in South Florida, by the end of the year.

6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A

  1. Convergence of Software and Financial Products  One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing.
  2. InsureTech
  3. The Power of the Machines  Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers.
  4. Emerging Economies  Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.
  5. Wealth Management
  6. Rise of Crypto and Blockchain

Google Pay brings payment tools under a single brand (Tearsheet), Rated: A

The Internet giant is finally putting its many payments capabilities — Google Wallet, Android Pay and Pay with Google — under a single name, Google Pay, after lagging for years behind Apple Pay and Samsung Pay.

Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A

CA-based life insurance MGA Ladder announced it has raised $30M in a Series B round led by RRE Ventures, with participation from Thomvest Ventures, as well as Ladder’s existing investors: Canaan Partners, Lightspeed Venture Partners and Nyca Partners . Ladder launched its fully-digital life insurance solution in California on January 10, 2017, and has since expanded to nearly every state across the country.

Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A

Fifth Third Bancorp has received top marks from the Federal Reserve on its most recent Community Reinvestment Act examination as expected.

Fifth Third announced the results on Wednesday, saying in a press release that the Fed gave it an “outstanding” rating on its most recent exam. The Cincinnati company had said in a regulatory filing last month that it expected to ace the test, which covered the period between Jan. 1, 2014, and June 30, 2016.

A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A

Student loan debt statistics show that more than 70 percent of students graduating from four-year colleges have debt, so you aren’t alone if you need to borrow to cover educational costs.

Step 1: Understand your options

  • Federal loans for students
  • Federal loans for parents
  • Private loans for students
  • Private loans for parents
Source: Federal Student Aid

Step 7: Determine if you’ll need to apply for private loans

  • Family contributions if parents or other family members are willing and able to pay
  • Savings
  • Scholarships or grants from community groups or other sources
  • Parent PLUS Loans
  • Private student loans

Step 8: Learn how to apply for private student loans

Because there are many private student loan lenders, it’s a good idea to shop around. You should consider:

  • Loan eligibility requirements: What do you need to qualify?
  • Loan terms: How long do you have to repay the loan?
  • Repayment terms: When do you need to start repaying, and is there a prepayment penalty?
  • Fees: Is there a cost to apply for the loan or a loan origination fee?
  • Interest rates: Is the rate fixed or variable? How much will you pay to borrow?

You can visit our private student loan marketplace to find private student loan lenders offering loans to parents and students.

Here are the top 6 lenders of 2018!

LENDER RATES (APR) ELIGIBLE DEGREES
CHECK OUT THE TESTIMONIALS AND OUR IN-DEPTH REVIEWS!
2.58% – 7.25% Undergrad
& Graduate
VISIT SOFI
2.57% – 6.39% Undergrad
& Graduate
VISIT EARNEST
2.76% – 7.25% Undergrad
& Graduate
VISIT COMMONBOND
2.99% – 5.15% Undergrad
& Graduate
VISIT LAUREL ROAD
2.74% – 7.26% Undergrad
& Graduate
VISIT LENDKEY
3.11% – 8.46% Undergrad
& Graduate

 

 

Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B

Roostify announced Thursday that it hired Adnan Habib as the company’s new vice president of engineering.

In this role, Habib will lead Roostify’s growing product delivery team and will be responsible for making improvements to the Roostify’s digital lending platform.

Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B

Roofstock (www.roofstock.com), the leading online marketplace for buying and selling leased single-family rental homes, today announced the strategic hire of Suresh Srinivasan as chief marketing officer. Srinivasan has 20 years’ experience leading marketing, product, and e-commerce functions at Fortune 500 and high-growth tech startups. Most recently serving as the SVP of Marketing for Xome, Srinivasan brings a deep understanding of the fast-growing real estate technology sector to Roofstock where he will be responsible for accelerating growth of Roofstock’s marketplace for single-family rental homes and developing the company’s partnership network.

United Kingdom

An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA

Regulators in Europe and the UK are ordering banks and credit card companies to share customer data with other companies if their customers agree. The companies will also be able to carry out payments on a customers’ behalf.

Open Banking forces lenders to offer a digital “fire hose” of data that any third party can use to get standardised access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data. They won’t have to negotiate deals with banks, just plug into their digital systems and go.

The aim of Opening Banking is to give customers greater control over their data and to encourage account switching.

An investigation by the UK Competition and Markets Authority in 2015 found just 3% of customers switched their banks in the last year, meaning many were left with accounts that were not right for them.

 

ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A

ThinCats says 2018 is poised for growth. The online lender reports that December was a record month booking £12 million of funding listed on the platform followed the biggest-ever ThinCats-listed loan of £6.7 million to the Chelsea Yacht & Boat Company at the end of September.

Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A

Loan Store is the responsible lending hub that reveals to reduce the interest rates on instant cash loans for the UK people.

Hennery Dicosta, a senior adviser of Loan Store, has offered the complete details about this announcement. This is what he said- In a recent scenario, people usually try to borrow a small loan amount. That is why we have decided to provide the loans for bad credit people with no guarantor and no fees on an instant decision to resolve their short term emergencies. We never charge any processing fee and we are now providing these loans on quite low rates of interest. Besides, we do not judge the creditworthiness of the borrowers with their credit rating and give an instant decision on their loan request.

Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B

CROWDSTACKER has joined the Peer-to-Peer Finance Association (P2PFA), becoming the self-regulated trade body’s eighth member.

The business lending P2P platform will be represented by chief executive Karteek Patel.

China

3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA

With that in mind, we asked three Motley Fool investors to each profile a company that has a low valuation now compared to its earnings-growth potential. They identified Yirendai (NYSE:YRD)Criteo S.A.(NASDAQ:CRTO), and Changyou.com (NASDAQ:CYOU) as strong contenders trading at attractive discounts.

China’s first P2P online lending platform

The Chinese P2P lending market blossomed in the late 2000s, catering to  customers who were underserved by traditional banks, and is worth about $60 billion today.

Analysts expect Yirendai’s revenue and earnings to rise 74% and 14% respectively this year, followed by 43% revenue growth and 41% earnings growth next year. Yet the stock trades at just 14 times earnings, compared to an industry average of 26 for credit service providers. Based on those numbers, Yirendai looks likely an undervalued growth stock.

But there are some obvious reasons why investors are discounting it.

First, Yirendai is a subprime lender. Just 1.7% of its loans were rated as prime “Grade A” last quarter. Another 8.7% were Grade B, and 14.1% were Grade C — but 75.5% were rated Grade D. Yirendai collects higher fees from lower rated borrowers, but its business could collapse if its delinquency rates rise.

The company only discloses delinquency rates for loans past due by 15 to 89 days, and that rate came in at a low 1.8% last quarter. But it doesn’t report any data on loans delinquent for over 90 days.

Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA

Black Fish, a consumer finance platform based in China’s Nanjing region, has received $145 million in a series A round from a cluster of firms  including Lightspeed China Partners and Shanghai and Kuala Lumpur based Gobi Partners.

Others who participated in the round include Morningside Venture Capital, JAFCO Asia, Fullcent Capital and Zhang Tao, founder of Dianping.com.

At this point, the average annual growth rate of consumer finance is 16.4 percent.

China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A

Renren holds a significant investment portfolio that is easily worth $12 per share.  This value will likely be realized in the near term due to multiple catalysts.

The company has started to get involved with blockchain-related businesses, which potentially turns them into a “blockchain play”.

This situation leads to an asymmetrical payoff structure in which there is very little downside and significant upside. My target price is $18.

Renren was an early VC investor in Sofi, taking part in its seed round of financing as well as a later follow-on round. They currently hold a 13% stake in SoFi, having sold 14.1% of their holdings (representing 2% of SoFi) in April 2017 for $92 million.

Source: Seeking Alpha

Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A

Dianrong and the Dalian Finance Development Bureau and Dalian Finance Industry Investment Group (DFIIG) recently signed a strategic cooperation agreement to drive financial innovation in Dalian and across China. According to the agreement, Dianrong will develop a series of specific projects in partnership with the Dalian government, including:

  • Assist the Dalian Finance Development Bureau in creating a financial technology (fintech) cloud platform to provide fintech capabilities for small loan and guarantee companies, and other small and medium-sized financial institutions in the region and at large. Tools and services will include sophisticated fraud detection, big-data risk management tools, payment channel integration, and compliance reporting. The fintech cloud platform will also provide regulators with easier monitoring of local lending activities and trends in an ongoing and comprehensive way, helping them provide timely policy guidance and support on risk management.
  • Work with DFIIG to establish a special Internet finance investment fund for Dalian. The fund will focus on investment in fintech projects and startups with the potential to strengthen Dalian’s new economy and financial services industry.
  • Develop a supply-chain trading platform in Dalian utilizing advanced fintech and blockchain capabilities to help more small and medium-sized suppliers secure needed funding. Last year, Dianrong created the first blockchain platform for supply-chain finance with FoxConn Group, a global leader in consumer electronics.

Shanghai tightens financial sector supervision (Ecns), Rated: B

Shanghai is one of China’s largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).

Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.

European Union

Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA

Germany’s Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.

CAUTIOUS MARKET

Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.

International

MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA

MoneyGram International Inc. MGI +2.63% signed on to run a pilot program testing XRP, a digital currency created by San Francisco startup Ripple, in its payments network, the companies said Thursday.

The Dallas-based company agreed to test XRP as a tool for reducing money-transfer costs and settlement times.

How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA

While global trade presents tremendous growth opportunities, businesses of all sizes are none-the-less finding it difficult to access much needed credit, resulting in a global trade finance gap. According to an Asian Development Bank’s (ADB) 2017 Trade Finance Gaps, Growth, And Jobs Survey, that gap was $1.5 trillion in 2016.

Non-financial institution competitors are aggressively targeting this market, using innovations such as blockchain to develop products and tools that not only replace outdated paper and manual-based processes, but also deliver unprecedented levels of cybersecurity that are critical in today’s digital transaction space. The same ADB survey revealed more than $13 billion in venture capital was invested in FinTech trade finance in 2016 alone.

The recent Simmons & Simmons Hyperfinance studyof the world’s leading trade banks found that only 7% believe they are at the forefront of digital innovation in spite of the fact that 80% of innovation leaders report digitally-driven products and services introduced over the past three years have expanded revenue growth. This illustrates the reality that financial institutions recognize the importance of developing a digital strategy, but few are moving aggressively enough to take advantage of these new technologies.

PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA

The question before the house right now, though, is: what about the credit rating agencies? The question comes in three parts: there are the global CRAs; the smaller/regional CRAs in most of the world, and regional CRAs in the special case of China.

First, the global CRAs [there are just two of them, Moody’s and S&P] are making “strong efforts” to incorporate an understanding of ESG issues. They are hiring staff with ESG backgrounds, equipping their existing analysts with the relevant expertise, and drawing on third party providers.

Then there is China. Its CRAs include Dagong Global, China Chengxin, and Golden Credit Ratings. The idea of integrating ESG into their analyses is thus far limited to the issue of green bonds, that is, bonds issued for the development of brownfield sites. Government policy in China encourages green bonds and the CRAs have responded. The resulting assessments are focused on the “E,” not so much the “S” or the “G.” And their environmental assessments rely on measuring the impact of the project the bond aims to finance.

  • Research very generally supports the hypothesis that there exists a causal link between ESG factors and the credit worthiness of a borrower;
  • Academic research in limited in that it is too exclusively content to measure credit risk by credit ratings, rather than testing the ratings themselves against alternative measures;
  • But some research does employ the spread of credit default swaps as an independent measure of risk;
  • Anecdotal observation indicates a clear link between G and defaults, although the linkage between E and S and defaults is more difficult to pin down;
  • There is much evidence in the linkage of ESG to macroeconomic factors and potential growth, which in turn are important to sovereign risk in particular.

ABS braces for more auto deals after strong start to year (IFR), Rated: A

The asset-backed bond market is braced for a slew of new issues next week, with deal flow expected to be dominated by auto issuers including BMW and Mercedes.

Just two issuers sold deals this week – GM Financial and Consumer Portfolio Services – and both auto trades were met with strong demand from investors. One banker on the GM deal said the deal was over-subscribed across the capital stack.

The biggest tightening though was seen on the smallest and lower rated tranches. The 3.58-year Class B, rated Aa3/AA by Moody’s and Fitch, priced at 30bp over interpolated swaps versus guidance of 35-40bp and whispers of 45bp area.

The 3.58-year Class C, rated A1/A, priced at 50bp over interpolated swaps versus guidance of 55-60bp and whispers of 65bp area.

FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A

Currently, it represents only 1 percent of the global financial industry. By comparison, digital media accounts for 40 percent while eCommerce accounts for around 10 percent.

Source: Tech Genix

To give you a perspective, venture capitalists invested more than $13 billion across 840 different fintech holdings in 2016, according to a report by KPMG. This is 7 percent more than they invested in 2015.

According to the McKinsey report, five areas will see high growth over the next decade. They are consumer finance, mortgage, lending, retail payment, and wealth management.

Online payments

PayPal handled $1.73 billion worth of transactions in the first quarter of 2017 alone, representing a 30 percent increase year-on-year.

Borrowing and lending

However, the delinquency rates have been increasingover the last few years. These rates have increased from 0.56 percent in January 2015 to 0.75 percent in December of the same year.

Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A

Overstock’s blockchain-focused subsidiary, Medici Ventures, named its board of directors in 2017, and also saw a number of its portfolio companies continue to use blockchain to revolutionize industries including capital markets, money and banking, property registry, voting, identity, and underlying blockchain technology, including:

  • tZERO, the world’s first SEC approved, blockchain-based alternative trading system, launched its initial coin offering (ICO), which attracted over 10,000 subscribers and raised $100M in commitments in the first 12 hours of its pre-sale. A significant portion of the tZERO security tokens issued will be available to accredited investors in the public sale beginning in January, 2018.
  • DeSoto Inc., a joint venture between Overstock.com founder and CEO Patrick Byrne and world-renowned economist Hernando de Soto, was created to develop a global property registry system to surface the property rights of billions of people in the developing world.
  • Bitt, a Barbados-based financial technology company using blockchain to create central banking tools and mobile money applications, named Rawdon Adams, son of former Barbadian Prime Minister Tom Adams, as its CEO. Bitt also fully launched its new mMoney digital payment product, bringing to market a blockchain-based mobile wallet that allows users to participate in digital transactions on their smartphones without the need for a traditional bank account, helping to foster financial inclusion in the region.
  • South-American based Ripio (formally known as BitPagos), participated in an ICO that raised $37M to fund its Ethereum-based peer-to-peer lending platform, Ripio Credit Network.
  • Belgium-based SettleMint launched a token sale for its DataBroker DAO, a peer-to-peer marketplace created to provide Internet of Things (IoT) sensor-owners with a clear path to data monetization, and data consumers with a decentralized marketplace in order to buy IoT sensor data. SettleMint also signed an agreement with The Islamic Research and Training Institute, the research arm of the Islamic Development Bank Group, to work with local partner Ateon on developing blockchain-based financial products that can be used to support development and inclusion in IsDB member countries.

Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A

Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.

Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A

According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020.

Secondly, this spending could substantially boost banks’ productivity, and profits.

Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.

Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.

Karma token trading opens after successful million ICO campaign (Crypto Ninjas), Rated: B

India

German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA

German online lender Kreditech is making its way to India, Bank Innovation has learned.

For this expedition, the fintech has teamed up with SaaS banking platform Mambu for providing short-term lending products specifically tailored to local consumers.

Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A

Kreditech currently operates in Europe and Latin America and will expand into India in early 2018, together with its partner PayU, a global online payments provider and Mambu client in Latin America.

The loan product is expected to go live in the first quarter of 2018, all data will be hosted by AWS India.

NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A

NiYO Solutions Inc., a Bangalore, India-based fintech startup for salaried employees, raised $13.2m (85 crore) in Series A funding.

APAC

Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA

A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.

A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.

Currently, local banks extend loans at interest rates ranging between 8.5 percent and 13pc. The local banks began offering SME loans at8.5pc interest in 2015. Since then, the Japan International Cooperation Agency (JICA) and KfW Development Bank from Germany have also launched SME loans.

P2P lending

To get around the financial constraints, borrowing from family members and peers is common.

In fact, a rising number of businesses have resorted to P2P lending for funds to build up their businesses. Without any guarantees of success though, many entrepreneurs ultimately end up in debt. Others fall prey to fraud. Last year, The Myanmar Times reported at least three cases of fraud involving fake promises of repayments with up to 30pc interest.

Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B

Cloud Lending Solutions was recognized as a “Top 25 FinTech Company for 2017” by APAC CIO Outlook Magazine. A panel of industrial experts and executives collaborated with the editorial board to curate the list with an aim to provide clarity into the ideal FinTech partners.

Africa

Local digital currency eyes real estate disruption (ITWeb), Rated: AAA

Cape Town-based fintech company, Wealth Migrate, has launched a global   – WEALTHE Coin.

According to Wealth Migrate, while almost half of the world’s wealth is held in real estate, fewer than 13% of people have access or the resources to invest in and  from this lucrative market.

Authors:

George Popescu
Allen Taylor

Thursday May 11 2017, Daily News Digest

ondeck loan origination

News Comments Today’s main news: SoFi to apply for ILC. FC exposes 6K US SSNs. Alipay launches in US. CFA finance exams to gauge knowledge of AI, big data, robo-advice. LendInvest shutting out retail investors. PayU invests 110M Euro in Kreditech. Today’s main analysis: OnDeck’s recovery plan is paying off. Today’s thought-provoking articles: 92% of finance pros not confident advising on […]

ondeck loan origination

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

News Summary

United States

SoFi plans to apply for a bank charter in the next month (TechCrunch), Rated: AAA

With an eye on providing banking services later this year, online lending startup SoFi is planning to apply for an industrial bank charter in the next month, according to CEO Mike Cagney. If approved, it would become the first company to receive a new industrial loan company (ILC) charter in a decade.

Industrial bank charters, or ILCs, provide a way for companies that aren’t banks to provide banking-like services to customers. And while ILCs have been around for more than 100 years, they’ve fallen out of vogue in the last decade due to increased regulation against them.

According to Cagney, that’s because companies like John Deere and Harley-Davidson used ILCs as a way to take advantage of FDIC-insured deposits to fund the financing arms of their businesses.

By combining a banking option with its lending products, Cagney said SoFi could offer discounted rates to members who set up auto-pay between their accounts. And with a SoFi-issued credit card, he said the company could potentially use its reward program as a way to help users pay down student loans.

As a result, the company is working on other ways that it could begin offering a SoFi-branded banking product later this year. Even if the company is not able to get approval for an industrial bank charter, it would still be able to offer checking, deposit and credit card services through a regional banking partner.

Funding Circle Error Exposes 6,000 SSNs Of American Clients (Forbes), Rated: AAA

An upcoming London-based business loans provider, Funding Circle, left a database containing 6,000 social security numbers of American clients exposed to anyone on the internet, it emerged Wednesday.

The company, which has helped companies bypass banks to borrow more than $3.5 billion from its peer-to-peer investor network since its founding in 2010, also admitted a misconfigured Amazon Web Services database exposed more than 13 million marketing email addresses for individuals, businesses and government organizations in the U.S., as well as more than 45,000 notes summarizing conversations with customers and partners.

According to the firm that uncovered the unsecured database, Kromtech Security, credit scores and business loan histories of clients were also available to anyone who knew the eight IP addresses of Funding Circle’s American branch.

Additionally, private data sets Funding Circle had purchased from third parties and credit agencies including Dun & Bradstreet, Experian and Powerlytics were left open.

OnDeck’s recovery plan is paying off (Business Insider), Rated: AAA

US online lender OnDeck had a tough

Alipay Launches in US (Crowdfund Insider), Rated: AAA

Alipay, part of internet conglomerate Alibaba (NYSE:BABA), has launched its payments platform in the US thus challenging other established players in the space such as Apple Pay. Alipay is partnering with First Data (NYSE:FDC) on the US expansion.

Alipay is currently used by more than 450 million people globally and 200 financial institution partners. . Well established in Asia, Alipay is now crossing the Atlantic following the recent announcement by competitor WeChat Pay, owned by Tencent, that is expanding into the US as well.

OnDeck Capital’s Chairman survives challenge from activist shareholder (American Banker), Rated: A

Fending off a challenge from dissatisfied hedge fund investors, OnDeck Capital Chairman and CEO Noah Breslow was re-elected to the company’s board Tuesday by an 84% to 16% margin.

SoFi looks to deepen buyer base with S&P stamp on latest ABS (Global Capital), Rated: A

A $530m consumer loan offering from online lender SoFi is expected to garner interest from a bigger group of investors, with S&P Global Ratings tapped to rate an offering from the issuer’s consumer loan shelf for the first time.

More Than a Quarter of Upstart’s Loans Are Now Fully Automated (Bank Innovation), Rated: A

Upstart — a five-year-old online lender — bets you can (and you must).

In fact, more than 25% of Upstart’s current loans are fully automated, Bank Innovation has learned.

The lender utilizes AI and machine learning algorithms to analyze consumer data points, including education history, employment history, social media, and even web behavior (during the online application process), in order to make underwriting decisions. The company has originated almost $700 million to date, from about 60,000 loans.

How Credit Karma CEO Kenneth Lin Built A Billion-Dollar Brand (Fast Company), Rated: A

Lin founded the company in 2007, with the goal of creating a customer-friendly alternative to trickster credit score services. He has since raised $386 million, vaulting Credit Karma into the ranks of Silicon Valley’s startup unicorns, and figured out how to turn a profit while helping nearly 70 million Americans discover financial services products that meet their needs.

Create a Credit Karma account, and you can monitor your credit score for free. Based on your credit history, the company then generates targeted offers for financial services including credit cards, student loans, and auto loans. If you opt in to one of those offers, Credit Karma gets paid by a referral fee by the bank or lender—a new credit card customer, for example, could be worth as much as $700. In 2015, the company made around $350 million.

Now Lin is embarking on mortgage refinancing recommendations, Credit Karma’s second major launch in less than six months (a free tax service launched in January, in time for April 15 filing).

The company is operating the service in 26 states, with plans to expand nationwide in the coming months. By Lin’s reckoning, 20% of U.S. mortgage debt is represented on the Credit Karma platform, and roughly one-third of homeowners would benefit from refinancing—a major opportunity.

The bank of the future: A (digital) financial mall (American Banker), Rated: A

Assume for a moment that most of the services legacy financial companies provide today could get competed away as innovators extend reach and scale across the landscape of financial products. If so, big financial institutions will look to re-establish a foothold. Their only sure competitive advantage seems to be the regulatory compliance (i.e. anti-money-laundering and know-your-customer capabilities) that the government has forced them to develop.

Bain & Co. estimates “governance, risk and compliance (GRC) costs account for 15% to 20% of the total ‘run the bank’ cost base of most major banks.” That, combined with the long and difficult process to establish and validate credibility with regulators, makes the challenge to potential competitors even more imposing.

That’s right, instead of making money from lending out deposits, or investment banking or capital markets … people will pay banks to simply hold their money and validate their identities and sources of funds.

Application programming interfaces will put a twist on this tried-and-true model. Banks will look to compete. When they do, as always, winning will come down to pricing and service. To do so, they’ll set up “financial malls.”

Conversely, in the financial mall ecosystem, fintech partners (providers with requisite core competency and scale) will open up shop and link with the banks via robust APIs. How this relationship manifests will vary as established players ponder the decision to build, buy or partner. Regardless, front-facing service providers — the fintechs — will operate in the most efficient manner and will lead the charge.

Earnest Operations LLC (SEC), Rated: A

For purposes of our procedures and at your instruction:
·
with respect to our comparison of Characteristics 9. and 13., for any first payment date or original maturity date falling on the 29th, 30th or 31st day of the month (as set forth on or derived from the Servicing System), we were instructed to assume the first payment date or original maturity date, as applicable, as the 1st day of the succeeding month;
·
with respect to our comparison of Characteristic 11., differences of $1.00 or less are deemed to be “in agreement;” and
·
with respect to our comparison of Characteristic 19., for those Sample Loans with a “borrower income” amount, derived from the Transactions Summary, (i) less than $80,000 (as determined above), differences of 10.0% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement” or (ii) greater than or equal to $80,000 (as determine above), differences of 20.0% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement.”  Further, for those Sample Loans with a “borrower income” amount, derived from Income Verification Documentation, differences of 2.5% or less of the “borrower income” indicated on the Statistical Loan File are deemed to be “in agreement.”

From the company’s filed EX-99.1 Charter, which can be read at Edgar.

Kathryn Petralia – Kabbage (Cheddar), Rated: A

Kathryn joins Cheddar to speak about Kabbage and how they’re assisting small businesses.

Watch the interview here.

Ripple vs Stellar (The Merkle), Rated: A

Stellar uses a consensus mechanism known as Stellar Consensus Protocol. This particular feature is outlined in the project whitepaper, for those who want to know more technical aspects about the mechanism.

Furthermore, Stellar’s native currency is known as Lumens – which we discussed here – whereas Ripple uses XRP. Stellar is mainly designed to target individuals and focuses strongly on technology, rather than making a name for themselves among financial institutions.

Ripple is a project designed to target financial institutions and provide a distributed ledger-based solution to facilitate cross-border payments.

It is also worth noting Ripple has a deflationary currency model. The number of XRP tokens in circulation will gradually decrease as it is used more often to facilitate cross-border currency transactions. Additionally, Ripple has formed several partnerships with banks and other financial institutions all over the world.

Online lending startup EarlySalary raises $ 4 mn from IDG, Dewan Housing (VC Circle), Rated: A

Social Worth Technologies Pvt. Ltd, which runs online lending platform EarlySalary, has raised $4 million (Rs 26 crore) in its Series A funding from IDG Ventures India and mortgage lender Dewan Housing Finance Corp.

The startup, which offers salary advances and loans to young working professionals, will use the capital to build products and increase its lending book, it said in a statement.

It will also use the money to expand team, specifically in skill sets of machine learning, as well as to grow customer base and provide 200,000 loans in this financial year.

Fintech company launches monopolisation lawsuit (Global Competition Review), Rated: B

TrueEX sued its rival and interest rate swap trading provider MarkitSERV on Monday, accusing it of using its monopoly in the trade processing services industry to crush the financial technology company by refusing to provide a critical service.

United Kingdom

CFA finance exams to grill hopefuls on AI, big data and robo-advice (Financial Times), Rated: AAA

The CFA Institute, the organisation that hands out the coveted designation of “Chartered Financial Analyst” to people who make it through three rounds of exams, more than 300 hours of study and four years of work experience, is to revamp its tests to include questions on artificial intelligence, big data and robo-advice.

The new curriculum will appear in exam papers from 2019, as the global association of investment professionals tries to reshape its course to meet demand from employers for practical fintech skills.

But big data analysis, machine learning, robo-advice and blockchain have shaken up the investment industry in recent years, as investors compete against low-cost passive fund trackers to deliver market-beating returns after fees.

Exam entrants will need to know how to back-test investment algorithms, work out the limits of big data analysis and appreciate the impact of wider trends on the industry, such as how blockchain technology affects trading and how robo-advisers may shape the way financial advice is given.

92% of financial professionals not confident advising on P2P products (Bridging&Commercial), Rated: AAA

Peer-to-peer (P2P) finance is in the ascendancy, yet many brokers still appear to be in the dark about the range of products on offer from this new wave of lenders.

Last month, members of the Peer-to-Peer Finance Association exceeded £8bn of cumulative lending following a strong first quarter of 2017.

However, a recent poll conducted by Bridging & Commercial found that 92% of financial professional respondents do not feel confident advising their clients on P2P products at the time of writing.

“I don’t know why it is, but in all my years, I’ve only had one approach from a P2P lender,” explained Stephen Burns of specialist finance brokerage Adapt.

This sentiment was echoed by Liam Brooke, co-founder of P2P platform Lendy, which has recently invested heavily in boosting marketing and communications efforts to improve the understanding of the sector.

“It is the P2P companies themselves that need to take responsibility for improving the public’s understanding of their products.

“This can be achieved in a number of ways, including building more one-to-one relationships with brokers and reaching them through different media.”

LendInvest shifts focus to sophisticated investors, nears £1bn in lending (AltFi), Rated: AAA

LendInvest, the UK’s largest property-focused online lender, is refocusing and restructuring its investment platform. The firm is shutting out retail investors with the introduction of a qualification test, which investors will have to pass in order to lend through the platform.

The average balance for individual investors on the LendInvest platform is roughly £30k.

LendInvest is right on the cusp of crossing the £1 billion mark in cumulative loan originations – a feat that has been accomplished by just four UK-based marketplace/online lenders to date.

Peer-to-peer savings warning: easy access accounts at risk (The Telegraph), Rated: A

Investors in “peer-to-peer” loans are in danger of sleepwalking into accounts that are sold as “easy access” but have no guarantee money will be returned quickly.

A report from 4thWay, an analyst of the sector, warned “easy access” accounts offered by providers could not guarantee the quick return of cash.

Landbay, a property specialist, calls this its “tracker fund”, Assetz Capital has a “quick access” account while Ratesetter offers a “rolling market” option as part of its “everyday account”.

It added in some cases, perversely, it was less risky for investors to tie their money up for longer in a fixed-term deal offering higher interest rates.

The average interest rate offered by early access accounts is 3.2pc, compared to an average of 4.9pc on other types of accounts, according to 4thWay.

Commenting on the firm’s “rolling market” account, a spokesman for Ratesetter, one of the largest peer-to-peer providers, said: “When we launched our account in 2016 40pc of our investors had cited access to their money as a key priority when making investment decisions, and since then, it has become one of our most popular products.”

He added that of the 15,000 requests for customers to withdraw their money Ratesetter has received so far, 99.6pc completed within one working day.

Innovate Finance Publishes Industry Fintech Sandbox Consultation Report (Crowdfund Insider), Rated: A

Innovate Finance has published a report today on industry sandboxes in the Fintech startup community.

According to the authorKey findings of the report include:

  • Addressing Cost and Inefficiency in Validating Innovative Solutions: Responses indicated that there is significant friction, both in terms of resources required and length of process, for startups and institutions in developing multiple Proof’s of Concept or “POCs” bilaterally.
  • Addressing Cost and Inefficiency in Developing Collaborations: Industry feedback has been that an Industry Sandbox could be helpful in bringing participants together in the resolution of shared challenges.
  • Supporting Efficiency in Compliance and Regulatory Engagement: The process revealed that within the startup community, understanding of the need for authorisation and compliance requirements in local and foreign markets could benefit from being accelerated.

 

Fintech: The second wave of challenger banks (Euromoney), Rated: A

In the third quarter of this year, if all goes to plan, ClearBank will go into business as the first new UK clearing bank to open its doors to customers for 250 years.

What distinguishes ClearBank from the mass of fintech newcomers and challenger banks is that its customers won’t be small or medium-sized enterprises (SMEs) that the big banks refuse to lend to at other than punitive rates; they won’t be looking for working capital finance advanced against invoices to be paid by bigger corporations, neither will they be retail investors looking for a better return on their cash than zero-rate bank savings accounts, or wealthier individuals looking for a low-fee allocation to a mainstream asset class.

LendInvest makes largest development loan (PropertyWeek.com), Rated: A

LendInvest has completed its largest-ever development finance package, worth £21m.

41% of SMEs expected to vote Conservative (Bridging&Commercial), Rated: B

Some 41% of small businesses surveyed said they would vote Conservative in the general election, followed by Labour with 13%, Liberal Democrats on 9% and UKIP on 3%.

The survey found that 40% of small businesses believed that tax was the most important policy area, followed by Brexit (26%).

Funding Circle’s research also found that most small businesses are optimistic about their future turnover prospects despite the current uncertainty, with nearly 70% saying they expected it to increase within the next 12 months.

China

P2P Industry News (Xing Ping She), Rated: A

SAC Recommended Fintech as one of the research direction of next year
On May 8th, Securities Association of China (SAC) issued the notice about next year’s research project application, and announced the research theme “Opportunities and Challenges of stable development of Securities Industry”. Fintech is among one of the 8 topics specified by the Notice.

Sharing economy is sweeping China! Public charge pal company Raised 300M RMB within 10 Days.
JUMEI invested 300M RMB in charge pal sharing
On May 4th, JUMEI announced an investment of 300m RMB in a Mobile power leasing company——Shenzhen Street Electrical technology co., LTD(Anker Box). After the financing, JUMEI will hold 60% shares of Anker Box. The money will be used for the upgrade of production lines of charge pal sharing and cabinet etc., as well as the R&D of new series of product. It was also revealed that Leo Chen, the CEO of JUMEI, would become the chairman of Anker Box after this round of strategic investment, and JUMEI would continue to increase its investment amount.

Attitudes on Charge Pal: “National Husband” vs “Headstrong CEO” 
Charge Pal sharing becomes the second popular sharing product after Bicycle-sharing. Sicong Wang, the son of Wanda Group’s chairman Wang Jianlin(China’s Richest man), and Leo Chen, the CEO of JUMEI, holding different views on it.
Sicong Wang takes a negative attitude on the future of charge pal sharing, while Leo Chen think small probability is the feature of venture investment, the sharing project of Street Electricity could be a public welfare even it failed. He also showed his appreciation for Sicong Wang but warned him that personal preference should not be the factor of decision making.

European Union

PayU Invests EUR 110M Into Kreditech (Let’s Talk Payments), Rated: AAA

Kreditech, the leading technology group for digital consumer credit using machine-learning based underwriting, has closed EUR 110 million in investment from global online payment service provider PayU.

The landmark investment is the largest ever equity investment in a German FinTech company and builds on a successful 12-month pilot program in Poland.

The announcement follows a successful pilot program managed by Kreditech and PayU, offering Polish consumers improved access to credit in a real-time online process. The pilot program issued more than EUR 10 million in credit.

Through this major growth financing, PayU has acquired a significant minority stake in Kreditech, joining existing prominent FinTech investors including JC Flowers, Varde, Blumberg Capital, HPE, Peter Thiel, Rakuten and the World Bank’s IFC.

Alexandra Strömberg |Female Leader of the Future (Life at Klarna), Rated: A

This week we saw one of our own, Alexandra Strömberg, recognized as one of Sweden’s top 75 future female leaders (28th actually!).

Can you give me a little timeline on your life at Klarna?

I started at Klarna 4 years ago building up a new function and team named Customer Relations. Today we have an average customer satisfaction of 88% – that is better than best practice!

In recent years I’ve also been part of other Klarna projects. For instance I’m part of the Klarna Executive X network.

It’s been 4 years since you joined Klarna, a lot has changed. Where do you see yourself and Klarna in a further 4 years?

In 4 years I think Klarna will be a global player that not only fosters more and more talents, but also makes life a little bit easier for consumers and merchants by offering an even better and more innovative service. We will continue to disrupt and change. If I am at Klarna in 4 years, it’s because I still bring value to the company and that Klarna does the same for me I enjoy going to work knowing that I am part of this journey.

International

7 Things to Consider Before Launching a Fintech Startup (Entrepreneur), Rated: AAA

1. Regulations

However, fintech has ushered in new ways of viewing and handling money and has become a gray area for regulation. This is something that has been drawing the attention of lawmakers, especially in fintech companies’ charter applications to be “special purpose national banks.” This isn’t as straightforward as it seems since some fintech services such as peer-to-peer lending operate using new models.

In addition, these regulations may vary per market depending on the state, country or region in which you seek to operate. In Europe, there’s the impending implementation of the Revised Payment Services Directive (PSD2).

2. Competition from institutions

While banks have acknowledged the disruption fintech has created, this doesn’t mean that they will just accept defeat and step aside for the new guys. It isn’t exactly banks as institutions that are under threat as much as it’s the way we do banking.

3. Customer trust

Data breaches and cyberattacks are still rampant. With the nature of the information fintech companies handle, they are becoming an optimal target for cybercriminals.

4. The need for a strong team

This might seem obvious, but fintech isn’t exactly an area where there are turnkey tools and free scripts one can use to come up with an app or service. This isn’t like some other tech ventures where barriers to entry are relatively low. Financial, technological and business expertise are all required to develop fintech.

5. Unique and valuable service

The fintech industry is starting to get crowded now that many pioneers have done enough for new ventures to follow. Still, a key entrepreneurial question to ask is if your venture will be able to offer something unique and high value.

6. Technology choices

As a startup, you may have to bet on technologies that would power the service. On the plus side, technologies such as machine learning and analytics engines are now being offered as a service by cloud platform providers like Microsoft Azure and Google Cloud Platform, which lowers the barrier for development. However, these technologies have yet to fully mature. You should be prepared for growing pains and hiccups when using them.

7. Funding

Global venture capital investment was $17.4 billion in 2016. However, this excitement only means that competition for funding is also increasing. VCs are getting more selective, seeking out companies with truly game changing offerings, thus making your value proposition all the more important.

WorldFirst launches international payment platform (AltFi), Rated: A

The fintech firm yesterday announced the launch of its World Account – an international payments platform for small businesses and online sellers. The firm says that the new account delivers “international banking functionality”, stripping administrative burden and cost out of operating cross-border.

The opportunity for WorldFirst could be significant. Its own research shows that over 1.5 million UK SMEs are trading £76bn globally every month (see infographic below).

Australia/New Zealand

Financial “robo advice” to be cleared for first time in New Zealand (Voxy), Rated: AAA

The way will be cleared for robo advice to be given on financial investments and services in NZ for the first time, when the reforms of the Financial Advisers Act (2008) are complete. MBIE’s consultation on a draft bill paving the way for robo advice closed on 31 March.

‘Under the current timeline, the law won’t be changed until at least 2019. While MBIE and NZ’s Financial Markets Authority will be scratching their heads for ways to expedite the reforms, the FinTech industry is fast moving and there is a real risk that New Zealand firms looking to operate in the robo-advice area will be left behind by their overseas competitors if the reforms don’t happen sooner,’ he says.

Mr Ward-Marshall says that once robo advice is fully implemented in law and regulation in NZ, it is likely existing financial advisers will team up with clever technology companies to provide it.

India

MobiKwik Reaches for Unicorn Status, Set to Raise Funding from BlackRock (Crowdfund Insider), Rated: AAA

MobiKwik is set to raise funds from investors including BlackRock Inc. which will value the innovative Indian Fintech company at about $1 billion, according to Bloomberg.

The company with over 55 million users has been in talks these last months to raise funding that would give the startup this $1 billion valuation, and has forged new ties with banks and offering new financial services on its growing platform, Currently MobiKwik  investors include Sequoia Capital, Taiwan’s MediaTek, Japan’s GMO Venture Partners and hedge fund Tree Line Asia.

Country’s First Loan Marketplace for Used Automobiles Launched by Droom (Legman News), Rated: A

Droom—an online marketplace for used vehicles has launched India’s only loan marketplace for used vehicles, named as Droom Credit. The company has partnered with many non-banking financial companies and finance firms. It has also tied up with various lenders such as HDFC Bank, Kotak Prime, Faircent, and Tata Capital.

The creditworthiness of the applicants will be analyzed by Droom Technology Pvt. Ltd. through its credit risk engine. The loan approval procedure will be processed within 30 seconds based on the credit score validation, Aadhar details, PAN verification, and other credit evaluation platforms.

Aggarwal also revealed about its revenue generation models, which will be bifurcated in multiple ways.

First
The applicant will have to select the take rates that will be dependent on the lenders, borrower profile, and commission structures.

Second
The company will charge Rs 999 from borrowers that include Rs 299 as Cibil score checking fees and rest of the amount will be charged if the borrower makes his or her move toward next step with his loan approval.

Authors:

George Popescu
Allen Taylor

Monday April 10 2017, Daily News Digest

orchard platform key indicators

News Comments Today’s main news: FICO launches cloud-based origination solution for mid-market lenders. Monzo granted full banking license. FC SME Income Fund nearly doubles in size. Orca launches P2P comparison site. Supporting America’s Innovators Act passes. Today’s main analysis: Liberum/AltFi Financial Disruptors Index up 8.86% MoM, Yirendai down 16.06%. Today’s thought-provoking articles: How fintech is serving subprime lenders. Time to buy […]

orchard platform key indicators

News Comments

United States

United Kingdom

European Union

China

India

Asia

 

News Summary

United States

FICO Launches Cloud-Based Origination Solution to Help Mid-Market Lenders Automate Small Business Lending Decisions (Yahoo! Finance), Rated: AAA

FICO has launched FICO® Origination Manager Essentials to help smaller financial institutions make faster, smarter small business lending decisions. Delivered as a cloud service, the easy-to-use loan origination system streamlines and automates the decision process and gives smaller institutions access to the same powerful analytics in risk assessment for which FICO is known. Lenders using the solution can process small business loan applications in as little as 60 seconds, as opposed to days, which is still the average processing time for many lenders today when dealing with small business credit.

Currently, small banks and credit unions are challenged by nimble lenders who operate online and can give auto-approvals for loans in minutes. Origination Manager Essentials, delivers banks the same technical advantage so they can compete on experience and relationships rather than technology.

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

Source: Orchard Platform

How fintech is serving subprime lenders—inside Elevate Credit’s IPO (SRN News), Rated: AAA

 

 

Should Elevate Credit IPO Worry Other Online Lenders? (NASDAQ), Rated: A

Texas-based lending company, Elevate Credit, Inc. went public on New York Stock Exchange, priced at $6.50 per share. This was the company’s second attempt to be listed after postponing its IPO in Jan 2016 due to unfavorable market conditions.

On the first day of trading, Elevate Credit’s shares increased 10.9% versus LendingClub’s gain of 1.7% and On Deck Capital’s closing at the price it opened with. But this outperformance in terms of price might not be an indication of threat for the peers.

The model of lending and customer examination used by the company have not been experienced at times of recession and the changing interest rate environment, making it a risky investment as of now. Moreover, it reported high net charge-off rates in the last few years. Hence, other lending companies might appear more lucrative to investors at present compared to Elevate Credit.

5 Metrics to Help Advisors Master Online Commercial Real Estate Investing (Think Advisor), Rated: A

According to a recent study conducted by Accenture, 90% of advisors say clients are more educated about investing than they were five years ago.

However, even in this DIY-friendly arena, financial advisors still play a pivotal role in analyzing single-asset investment opportunities and providing expert guidance. In order to do so, they must educate themselves on the following five metrics:

  1. Capitalization Rates.
  2. Cash Flow.
  3. Capital Improvements.
  4. Occupancy and Lease Rates.
  5. Leverage.

US lending agents make inroads into peer-to-peer space (Global Investor Magazine), Rated: A

Major US lending agents are continuing to move into the peer-to-peer space, bypassing traditional lines of intermediation to connect clients with end borrowers.

The growing interest in peer-to-peer, or direct lending, has been spurred by the constraints being felt by typical intermediaries, including broker-dealers, which have limited capacity to service market activity to the levels they once did.

However, this non-traditional activity appears to be growing within the framework of the traditional banking system. Banks may not act as a credit intermediary, but their infrastructure and technology is sought after.

States Oppose OCC’s proposed Fintech Charter (JD Supra), Rated: A

Because of their opposition, the states are likely to mount legal challenges to any final rule. For instance, there is a significant open question about whether OCC’s enabling statute, dating back to 1863, even conveys authority to grant such charters. States might also argue that the charter represents a violation of state sovereignty. Absent a distinct shift in Supreme Court precedent, however, this position seems dubious because such companies are almost always engaged in interstate commerce and because the benefits of state regulation are easily outweighed by the access created by a unified federal system.

Investors want a blend of digital and traditional financial advice (Investment Executive), Rated: A

A slight majority of investors don’t want to deal with either upstart robo-advisors or established, traditional financial advisors. Instead, they want a hybrid scenario that marries the best of both worlds, according to a new report from global consulting firm Accenture LLP.

Specifically, 51% of investors in the U.S. and Canada across a range of asset classes who were surveyed for the report prefer combination of face-to-face, personalized advice and access to low-cost digital tools, rather than retaining only a dedicated advisor or relying on a robo-advisory service.

That sentiment is also shared among high net-worth investors with investible assets of between $1.5 million and $10 million as 56% of them say they need more than just traditional advice.

Cohn said to support Glass-Steagall (American Banker), Rated: A

Gary Cohn, the former president of Goldman Sachs and current director of the White House National Economic Council, told federal lawmakers in a private meeting that he could support legislation to reinstate the Glass-Steagall Act, which separated commercial from investment banking. According to the Wall Street Journal, Cohn said he “could support a simple policy completely separating the two businesses” and “expressed an openness to working with” Sen. Elizabeth Warren, D-Mass., an ardent critic of big banks, on the issue.

Supporting America’s Innovators Act Passes the House of Representatives (Crowdfund Insider), Rated: A

The US House of Representatives passed the Supporting America’s Innovators Act (HR 1219) today. The bill received solid backing with a vote of 417 for and 3 against. The bill now moves to the Senate for review.

The Act amends an exemption under the Investment Company Act of 1940 increasing the investor limitation from 100 to 250 people for qualifying venture capital funds. The bill would also eliminate a significant barrier facing small businesses and startups by incentivizing venture capital funds to grow their investments in rural-state entrepreneurs, helping local economies grow and thrive.

NYCUA and SimplyCredit agree to new business partnership (CU Insight), Rated: A

A new partnership between the New York Credit Union Association and San Francisco-based fintech company, SimplyCredit, aims to help New York’s credit unions combat online disruption and accelerate lending growth. Through the partnership, SimplyCredit will enable consumers to refinance high-APR credit card balances with participating New York credit unions using a seamless mobile and web interface.

SimplyCredit’s online tools enable members to not only apply for personal lines, but to also enroll credit cards and schedule balance transfers and line payments. As a result, many members are saving $2,000 or more in interest payments a year. Combined with this service are sophisticated analytics and marketing support that have achieved application rates of nearly 6% on marketing campaigns.

United Kingdom

Monzo, a UK digital-only challenger bank, granted full banking license (TechCrunch), Rated: AAA

Monzo, one of a number of so-called “challenger” banks in the U.K. aiming to re-invent the current account, has had the “restrictions” on its banking license lifted and says it will begin rolling out full current accounts to its pre-paid card and beta app users.

This can also include being able to lend those deposits out at some point in the future, which, like rival Starling and traditional banks, forms the basis of the company’s initial business model.

Funding Circle SME Income Fund Near Doubles In Size With Placing (ALLISS) (Morningstar), Rated: AAA

Funding Circle SME Income Fund Ltd on Friday said it has raised GBP142 million in a placing of 142 million C Shares at 100 pence, nearly doubling the fund’s size.

Shares in Funding Circle SME were up 0.4% at 103.25 pence Friday.

Orca launches peer-to-peer comparison site (Bridging&Commercial), Rated: AAA

Orca – a data, research and analysis provider to the UK P2P lending market – has announced the launch of its new platform, which offers unique standardised metrics to compare P2P investments.

The platform allows users to perform in-depth due diligence on P2P investments and benchmark them in a similar manner to a traditional asset class so that they can make risk-adjusted, informed investment decisions or recommendations.

The Orca platform will also offer market data on items such as interest rates, default rates, bad debt rates and a platform’s financial standing.

Forget about banks buying fintechs — this deal happened the other way around (Yahoo! News), Rated: A

StatPro, a fintech company long before fintech was even a term, on Friday announced a deal to buy UBS’ Delta platform for €13 million (£11.1 million).

Shares in AIM-listed StatPro jumped 10% on news of the deal, which both the company and house broker Panmure Gordon called “transformational.”

Industry urges for standard default definition (P2P Finance News), Rated: A

Peer-to-peer lenders are backing calls for a standardised definition of defaults in the sector.

Although actual default rates are low, the definition of when a loan has failed is not consistent across all platforms, making it harder for investors to compare.

Members of the Peer-to-Peer Finance Association (P2PFA), such as Zopa and RateSetter, define a loan as being in arrears if repayments haven’t been met for more than 45 days. A loan is then declared as being in default, and recoveries started, if the amount owed becomes 120 days late.

MoneyThing founder Ed Pearce says the business lending platform defines a default as when a borrower fails to repay for two consecutive months.

Property lender Kuflink declares a default at three missed payments at any point in the loan period. Meanwhile, an asset-backed loan from Lendy, formerly known as Saving Stream, is in default if the amount owed is not paid within 180 days, which the platform calls a tolerance period.

Despite the differences, the P2P rules are actually slightly more definitive than those in the mainstream banking sector.

There’s a simple reason why no sector is immune from becoming obsolete (City A.M.), Rated: A

Financial institutions exist to reduce transactions costs. Without them, somebody saving money for a rainy day or for their pension would have to seek out and assess the credit worthiness of a vast number of individuals or companies before lending them money. And, without securities markets and banks providing on-demand deposits, the cost of individuals realising their investments at convenient times would be huge.

Airbnb can thrive because the internet means that those who wish to rent out rooms temporarily don’t have to group them altogether in one building in a permanent business.

Peer-to-peer lending radically simplifies the “middle-man” in credit transactions; and other innovations are on their way in finance. In China, 2,000 platforms intermediate £100bn of peer-to-peer lending. And a combination of the development of drones, the internet and modern computerised logistics means that Amazon provides services from a warehouse in Dundee to people who have never heard of Dundee.

If you want to predict major developments in business and commerce, you should look at how technology will change transactions costs.

RateSetter’s Peter Behrens joins George Banco board (P2P Finance News), Rated: B

RATESETTER’s co-founder and chief operating officer Peter Behrens has joined the directors’ board of guarantor loan provider George Banco.

The specialist lender, which provides finance to borrowers with poor or no credit history by involving a third person who can step in if the former run into repayment issues, is looking to increase its penetration into the broader consumer finance market.

European Union

4finance Group Ensures Compliance with New Anti-Money Laundering Requirements Using Cloud Solution (PR Newswire), Rated: A

Silicon Valley analytic software firm FICO today announced that consumer online lender 4finance Group is using the FICO® TONBELLER® Siron® Anti-Financial Crime Solutions to ensure anti-money laundering regulatory compliance across its global network. Supported by the FICO® Analytic Cloud and Amazon Web Services (AWS), the FICO solution has been deployed by 4finance Group in nine EU countries and in Georgia in six months, and is being rolled out across the rest of the lender’s global network.

Headquartered in Latvia, 4finance Group uses the FICO modules Siron®AML (Anti-Money Laundering) to monitor customer activity, and Siron® KYC (know your customer) to do customer due diligence, including PEP (politically exposed persons) sanctions, and known criminals screening.

Kreditech Appoints Senior Global Consumer Bankers to its Advisory Board (Kreditech), Rated: B

Consumer finance technology company Kreditech has appointed two new independent Board Members to further strengthen its Advisory Board: Michael Lenora joined as Independent Chairman, Andy Golding as Independent Board Member. These recognized experts from the consumer finance industry will support Kreditech further in its mission to provide access to credit for the underbanked.

China

The Best Low P/E Chinese Stocks to Buy in April (Madison.com), Rated: AAA

Chinese tech stocks have a reputation for being pricey and volatile stocks. But if we look closer at this market, we’ll notice that several high-growth plays are still trading at surprisingly low multiples.

YY Is a Chinese social network, powered by family of apps, which enables users to share photos and stream live videos. Revenue from YY’s live streaming business rose 42% annually to 2.22 billion yuan ($319.5 million) last quarter, which accounted for 89% of its top line.

Yirendai is basically China’s version of LendingClub (NYSE: LC), a peer-to-peer (P2P) lender which directly connects investors to lenders while cutting banks out of the loop. This is a very hot market — research firm Yingcan estimated that China’s P2P industry brokered about 982 billion yuan ($142 billion) in loans in 2015 — nearly quadruple the amount brokered in 2014.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 31, Ant Financial, the finance arm of Alibaba Group Holdings, revealed its new payment service for virtual reality shopping at the Shenzhen Innovation Week.

On March 28, Shanghai Insurance Exchange (SHIE) and nine insurance institutions announced that they had successfully verified the feasibility towards applying blockchain technology to their insurance exchange.

Omni Prime, a consumer finance provider, announced that it had completed the asset-backed securitization of RMB 500 million of notes in a transaction that closed on March 28. The asset-backed securitization was carried out as a joint effort of JD Finance, Hony Capital and Omni Prime. The consumer loans, which were rated as A notes and B notes, were purchased by JD Finance and Hony Capital, and Omni Prime.

On March 28, Ant Financial and China Construction Bank signed a strategic cooperation agreement to develop a QR code payment business.

On March 27the National Internet Finance Association of China held the Third Member Conference and announced to establish the P2P Finance Association. The association would be led by the People’s Bank of China, in conjunction with China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission etc.

On March 28, Credit Intelligence Company Yongqianbao closed on RMB 466 million ($67 million) in Series C funding led by Golden Brick Capital and CICC Alpha. Other participants in the round included Cash Capital, Source Code Capital, WeWork and GX Capital.

On April 1, Chinese online finance and lending company China Rapid Finance announced it would file for an IPO on the New York Stock Exchange with a fund-raising target of US$100 million. Morgan Stanley, Credit Suisse and Jefferies will be the underwriters.

India

FinTech Tracker: Lendbox Joins The P2P Lending Club (Bloomberg Quint), Rated: AAA

Peer-to-peer (P2P) lending was among the first forms of fintech that Indian consumers were exposed to. In a country where access to formal credit has always been a problem, and loans from friends and family are common, P2P lending seemed like a no-brainer. And it didn’t disappoint.

Early entrants into the market like Faircent saw a strong response to their P2P lending platforms, which, in turn, has attracted newer entrants like Lendbox which launched P2P lending operations in November 2015.

At Lendbox, business has been growing at an average of 20 percent month-on-month over the past year, Bhuvan Rustagi, one of the three co-founders of Lendbox told BloombergQuint in a phone conversation. The platform currently has outstanding loans of Rs 20 crore, Rustagi said. BloombergQuint could not independently verify these claims since Lendbox is a private company.

State Bank of India to Enter Digital Fintech Era With New Brand Identity (BW Disrupt), Rated: A

State Bank of India, the nation’s largest banking and financial services provider, unveiled on 7th April, 2017, its new brand identity, designed to position SBI as a modern, progressive bank, ready to meet the financial needs of all Indians.

While the legendary SBI monogram has been the de-facto symbol of State Bank of India, combining it with the abbreviated SBI word mark was pivotal to the new identity. It made the brand more concise, modern and approachable, infusing new energy, while retaining its core values.

Asia

Here are 5 future trends that would disrupt Singapore’s real estate industry (Singapore Business Review), Rated: A

Wang said e-commerce and changing consumer habits render shopping malls obsolete.

The second trend is the utilisation of data analytics. Wang said big data and advanced analytics allows for richer insights into all types of transaction data.

There is also a growing trend in terms of green and sustainable buildings.

Wang also cited crowdfunding as a major driver, saying real estate crowdfunding brings a greater variety of quality real estate assets with lower barriers of access.

Lastly, Wang said that the most important trend that would be unfolding is towards education, where the next generation of real estate professionals must be prepared for the evolutionary challenges that technology will bring. –

Authors:

George Popescu
Allen Taylor

Thursday March 20 2017, Daily News Digest

China mobile payments

News Comments Today’s main news: New York investigates online lenders. Elevate’s roadshow. AltFi adds Lendix to Data Analytics Platform. Kreditech Russia achieves MFC status. Today’s main analysis: Age of advice manufacturing has arrived. Today’s thought-provoking articles: How fraudsters are gaming online lenders. Framing the debate around disclosure standards in Europe. Chinese smartphone users flock to risky investments. United States New […]

China mobile payments

News Comments

United States

United Kingdom

European Union

China

Canada

News Summary

United States

New York Regulators Investigating Online Platform Lenders (BNA), Rated: AAA

New York state regulators will continue investigating online platform lenders to see if they have violated state lending laws or if their activities require licensing, regardless of how the Legislature handles a proposal to broaden regulation of the industry by statute, an official with the state Department of Financial Services (DFS) said March 27.

The proposal would extend state licensing requirements to all lenders making loans of $25,000 or less for personal uses and of $50,000 or less for business uses. The requirements now apply to those loans only if the interest rate exceeds the state’s 16 percent usury cap.

The proposal also specifies that the licensing requirement applies to any company that solicits loans and buys loans. That apparently would cover online lenders that partner with banks in some standard industry set-ups, such as one in which the online platform originates the loan and a bank partner issues the loan and then sells it within days to the online lender, which then both securitizes and services the loan.

Elevate Performs a Roadshow (Retail Roadshow), Rated: AAA

Download the documentation here.

The age of advice manufacturing is here (Financial-Planning), Rated: AAA

The new DoL fiduciary rule is about fully aligning the interests of the individual investor and the investment management industry. While the original lobbying efforts against the new fiduciary rule argued that it would drive up costs and reduce access to investment advice for regular Americans — we are witnessing the exact opposite in the marketplace.

The current administration has moved to delay the rule’s applicability and could repeal the new rule entirely. However, the financial services industry has already moved to comply with the rule and smaller investors who did not have access to financial advice previously will benefit from a best interest standard as well as digital advice technology.

However, even without the fiduciary rule in place, technology is the other disruptive force, which will move us towards new standards. Personalized digital advice solutions are helping advisers take into account more than just financial products. As a result, investors have more awareness of their entire financial picture. Advisers would be smart to embrace change, whether from regulations or technology, because the industry is quickly moving in a new direction.

ADVICE MANUFACTURING RISES

The new DoL rule, coupled with the rise of technology-driven TAMPs, managed account platforms, and now more holistic digital advice platforms, is fundamentally shifting the entire industry from product manufacturing to “advice manufacturing.” The investment management business, while perhaps not yet a fully formed concept yet in the minds of all industry executives, is now in a race to manufacture scalable personal advice solutions. Digital advice platforms will be utilized to fulfill both the near term regulatory requirements of the fiduciary rule, but perhaps more importantly, to ensure long-term offensive competitiveness.

How fraudsters are gaming online lenders (American Banker), Rated: AAA

Online lenders’ advantage in speed has exposed them to a growing problem: a type of fraud called loan stacking.

People are taking advantage of the quick loan approval times online lenders offer to game the system by applying for multiple online loans in a short time before credit files update to reflect the increased debt load. By doing so, they are able to get more money than they would typically qualify for in any one loan.

One surprise in investigators’ early findings is that online lending fraudsters tend to hit phone companies first.

According to TransUnion data, stacked loans in the superprime segment are 10.5% more likely to default than loans without stacking, whereas stacked prime loans are only 3.2% more likely than non-stacked loans to go bust.

ID Analytics buckets loan stackers in three categories: fraudsters, shoppers, and the over-leveraged. Fraudsters deliberately apply for loans they have no intention of repaying. Loan shoppers are financially savvy consumers who apply for several loans because they’re smart enough to know they can shop around and get the best rate. The third category is consumers with financial problems who need more than one loan to make ends meet.

Second-Quarter 2017 Corporate Credit Market Insights (Morningstar), Rated: A

Key Takeaways

  • Rising federal-funds rate did not preclude fixed-income indexes from rising in the first quarter.
  • Corporate credit spreads remain near the tightest quartile they have registered over the long term.
  • Corporate credit rating upgrades continue to outpace downgrades.

Chinese Lender Says It Didn’t Gloss Over Regulation Risks (Law360), Rated: A

Peer-to-peer lender Yirendai Ltd. urged a California federal court on Tuesday to toss a shareholder suit alleging it glossed over risks from the Chinese government’s crackdown on online lending fraud, saying investors’ “dire predictions” of revenue loss from the new regulations were never actualized.

The China Banking Regulatory Commission’s new peer-to-peer lending regulations have not caused revenue losses by limiting offline customer sourcing, Yirendai said, arguing the stock-drop suit fails because securities fraud claims cannot rely on false premises.

Online Lenders: The ‘Modern Day Loan Sharks’ (The Epoch Times), Rated: A

Jamar White had no idea what he was getting into when he took out a nearly $50,000 loan with an online lender in 2013 for his New York-based restaurant Buffalo Boss. “Like a lot of small businesses, we made a bad decision by getting into high-interest loans,” he said.

He later realized that the annual interest rate on his loan was in fact between 40 and 50 percent.

White is just one of the small-business owners around the country who, having failed to secure a traditional loan from a bank, turned to online-based alternative lenders to stay open. What they encounter are loans without clearly stipulated terms and a dearth of regulation and oversight.

According to Doxford, many of the predatory lenders approve loans based on the average daily bank balance of the company they’re lending to.

California-based Opportunity Fund, the nation’s largest nonprofit microlender, has formed a dataset about the conditions provided by these alternative lenders. They gained the data through their own clients who they refinanced.

They found that the APR was 94 percent. One loan was for 358 percent, which Opportunity Fund called “shocking.”

Proliferating AI-backed tools remake wealth management (Financial-Planning), Rated: A

It’s a piece of the continued creep of AI into financial advice — a recent study by Bloomberg determined that 58% of an adviser’s work can now be digitized and done by computers.

Like IBM’s Watson, Salesforce says its Einstein can analyze client sentiment based on data profiling and content analysis to provide insight. The suite of tools combines with aggregation to allow advisers to scan across a client’s wealth holdings.

That’s the name financial services consultancy Synechron chose for its matrix of 14 financial management tools, from robos to chatbots, all powered by proprietary AI as well.

How states can still outmatch OCC over fintech (American Banker), Rated: A

The OCC’s draft charter requirements, while well-meaning, appear too cumbersome to help the firms most likely to benefit from more consistent regulations. The agency’s misfire presents the states with an opening to come back, but they will need to change their playbook — and will likely need to ask Congress for a little help.

So far states have objected to the OCC’s fintech charter on technical and substantive grounds. The states’ primary technical argument is that the OCC lacks the authority to offer charters to fintech firms, an assertion the OCC disputes.

The “dangerous” argument holds that a federal charter will preempt state consumer protection laws and replace them with inferior federal laws or the more lenient laws of the bank’s home state. The “unnecessary” argument holds that states are better positioned to facilitate innovation and growth by fintech firms and the OCC would muck things up. The “state sovereignty” argument holds that the OCC charter represents an inappropriate intrusion by the federal government into state jurisdiction.

Further, our current system already allows some states the de facto authority to regulate the entire country. Large states or states uniquely important to the financial system, such as New York, have outsize influence on what products and services can be provided. Companies need to build their product to meet bigger states’ regulations to remain competitive — effectively allowing large states to limit the options of the citizens of smaller states.

Open Source Data:The Last Frontier of the Fintech Revolution (Crowdfund Insider), Rated: A

In today’s Fintech ecosystem and the larger consumer privacy concerns, there are questions regarding the regulatory oversight looming over issues like the United States’ Office of Currency and Comptroller’s newly proposed Fintech charter.

Should we take a lesson from the open source movement of the 1980’s and 1990’s and rise to the occasion as an industry to embrace the ability to make our data and information transparent? To enable the inner workings of how we approve transactions, issue credit and making investments available for consumers, regulators, and competitors?

In particular, they point out the following value propositions over proprietary formats:

  • Security
  • Affordability
  • Transparency
  • Perpetuity
  • Interoperability
  • Flexibility
  • Localization
United Kingdom

P2P fund manager cuts regular fixed income exposure as inflation worry kicks in (AltFi), Rated: A

Thesis Asset Management is slashing its exposure to fixed income across its range of seven model portfolios as uncertainty has increased over the outlook for inflation and interest rates.

He says the firm had briefly considered adding a little to fixed income exposure, but with the election of Donald Trump to the Whitehouse and the subsequent trend of rising inflation, they reversed course.

How to lend your money (PC Advisor), Rated: B

With savings accounts offering increasingly poor interest rates, what else can you do to boost your finances. Aside from stocks and shares, buying property or even selling your unwanted stuff online, you could try peer-to-peer lending.

Funding Circle

This is a well established peer-to-peer lender that specialises in loans to small businesses. So far the company has lent over £2.5bn, with 25,0000 businesses on its books. The UK government even granted Funding Circle £40m so it could help small companies with loans.

Zopa

The loans offered by Zopa are to a mixture of individuals and organisations, which provides a wide range of risk and rewards to choose from.

Ratesetter

Financial advice site moneyexpert.com says Ratesetter is a good place for beginners, mainly due to the layout and style of accounts.

European Union

Disclosure standards: framing the debate (AltFi), Rated: AAA

And while regulation is beginning to catch up with the burgeoning industry, disclosure standards and levels of transparency still vary massively amongst the myriad of marketplace lenders.

The European alternative finance sector is estimated to have grown 92 per cent to €5.4 billion last year. It continues to experience substantive growth. The players are diverse and the stakes are high.

At present both regulation and disclosure standards vary widely across Europe. In the UK the big four (MarketInvoice, Zopa, RateSetter and Funding Circle) are providing sufficient disclosure to allow third-party validation of their lending data. The consistency and proactive approach is positive – a good start that benefits investors as well as the wider industry. The Dutch are also starting to move towards jointly agreed upon standards. The ongoing debate is centered on the who, how and when.

Perhaps one of the most interesting initiatives in Europe is that of the crowdfunding sector in Germany. The German Crowdfunding Association (Bundesverband Crowdfunding) recently announced that its twenty-one members have adopted common rather stringent standards for reporting to investors.

AltFi Data Announces the Addition of Lendix to the AltFi Data Analytics Platform (AltFi Email), Rated: AAA

AltFi Data has today announced that the historic origination data of Lendix, the leading European SME lending platform, has been added to the AltFi Data Analytics platform. This allows all the information relating to loans originated by Lendix to be represented into AltFi Data’s established standards. Investors can now review a track record of net return, together with all supporting metrics, and perform like-for-like analysis against the other marketplace lending platforms that make up AltFi Data Analytics – including Zopa, Funding Circle, Ratesetter and MarketInvoice in the UK, and Prosper Marketplace in the USA. This represents the first time that standardised comparison has been made available outside of the UK and USA.

Kreditech Russia achieves Microfinance Company (MFC) status (Finextra), Rated: AAA

A new federal law in Russia aims to make the microfinance market transparent and understandable. It therefore requires the MFC status for all alternative lending companies operating in the country. As a Microfinance Company, Kreditech Russia is going to offer both consumer credit and deposit products.

Marketplace and P2P Lending: Viable or Not? (AltFi), Rated: A

Conceptually, the beauty of the matching nature of marketplace and peer-to-peer lending is that it is a perfect solution for matching supply and demand of capital and risks. Finding the right risk profile for the investor and matching maturity, currency, and tenor would eliminate a lot of regulatory hassle and burdens.

How do we get conventional fixed-income investors (pension funds, insurance funds, large asset managers) to properly engage with marketplace lending as an asset class?

Despite these obvious advantages, institutional investors have not yet fully embraced marketplace lending. Why?

Standardisation of data: How important is it for investors to be able to accurately compare risk and reward across the asset class?

At present, the lack of a uniform set of standards places severe obstacles for investors willing to invest across multiple marketplace lenders.

China

Swipe by Swipe, Chinese Smartphone Users Flock to Risky Investments (WSJ), Rated: AAA

In China, about 700 million people carry a smartphone, and many of them are comfortable sending money from their screens through the world’s busiest mobile-payment networks. That has created a crowdfunding wave bigger than anywhere else, a real-time experiment in a type of online investing proponents have long pushed in the U.S.

Swipe by swipe, the online money supply is helping to democratize investing and loosen capital markets. It also is propping up indebted Chinese companies and inflating bubbles in asset types from bonds to plastic pellets. And it is shifting more of the risks from China’s corporate debt load onto consumers.

Last April, crying investors flocked to Shanghai Kuailu Investment Group to demand their money back after its 13 fundraising platforms halted redemptions for about 38,000 customers who invested more than $2 billion, according to company documents reviewed by The Wall Street Journal. It had invested in at least 20 feature films, one starring former boxer Mike Tyson.

In a recent survey, about 70% of Chinese internet users said carrying cash is no longer a daily necessity. It is common for consumers to swipe from deal to deal on apps that advertise investment opportunities. The apps usually are connected to online payment services that supply the customer’s personal details and link to bank accounts.

Online finance is part of China’s wider shadow-credit system, where borrowings totaled $9.22 trillion in 2016, equivalent to 90% of gross domestic product, according to UBS Securities. The term shadow credit refers to lending outside the formal banking system and its regulations.

 

Chinese P2P Lenders Are Still Having Trouble Finding Bank Custodians (Crowdfund Insider), Rated: A

In the face of numerous scandals plaguing P2P lenders, commercial banks in China have been reluctant to take up custodial duties.

Even though the CBRA clarified that banks would not be responsible for P2P defaults, banks clearly only want to act as custodians to P2P lenders with a reputable track record.

Canada

A 5-year look at fintech in Canada (MaRS), Rated: A

The data demonstrates that over the last five years both highs and lows were evident in Canadian investment activity from angel investors, VCs and corporate VCs. Growth was marked, with a rise from US$87.21 million in investments in 2012 to US$367.51 million in 2016.

RBC introduces MyAdvisor to digitally connect clients with advisors for real-time advice (Newswire), Rated: A

A new digital experience for clients, using live video to connect them in real time with advisors, has been introduced by RBC.

MyAdvisor uses an online advice platform to digitally connect a client to an advisor, where both can view and adjust a dynamic “dashboard” showing the client’s savings and investment goals and establish actions to achieve those goals – all in real time.

Now being piloted in Ontario, MyAdvisor is using feedback from pilot participants to further shape the final product ahead of full national launch, to ensure it meets the financial needs of Canadians.

Authors:

George Popescu
Allen Taylor

Thursday December 15 2016, Daily News Digest

consumer confidence index

News Comments Today’s main news: Fitch says OCC charter could harm innovative firms. UK’s Govt. bank funds almost 10% of MarketInvoice’s loans. Rakuten invests EUR10M in Kreditech. Today’s main analysis: CCI highest since before great recession. Today’s thought-provoking articles: Bank SME lending surges, alt-lenders flop. Vaya, RateSetter launch online mobile shop. United States OCC FinTech charter could harm agility, […]

consumer confidence index

News Comments

United States

  • OCC FinTech charter could harm agility, cost of innovative firms. GP:” Absolutely everything has a good side and a bad side, including OCC’s new fintech charter. It goes without saying that getting an OCC charter is more onerous than no regulation at all. But is it more or less onerous than partnering with a FDIC Bank ? I think that only once a few fintech companies jumps the gun and get a charter will we be able to compare. In my eyes even if it is more onerous, the benefits of being independent and not at the merci of a life-or-death partner (the FDIC bank) is worth a lot and if I would advise fintechs to setup a separate structure and test the waters with an OCC charter while continuing to operate as they have been so far with their primary structure.”
  • Consumer confidence high. AT: “This is political commentary, but it’s not just political commentary. There is a great deal of insight here regarding the economy on the whole and consumer confidence in the economy specifically, especially regarding investments. If Halbert is correct and consumer confidence leads to increased investments in equities and stocks, how will that affect alternative investments? My guess is, there will be a negative correlation. Remember, part of the reason for the rise in alternative investing has been the decline in the stock markets. On the other hand, millennials are full of surprises, so continued distrust of banks may keep alternatives interesting to a segment of the investor class. Any way you look at it, the next four years should be an interesting run.”
  • Bank SME lending surges, alt-lenders flop. GP:” The interesting number here is the 23.7% approval rate for traditional bank’s SME loan approval rate in Nov 2016. It seems high to me but if it is true, and it could be, that is much higher than the single digits numbers we all had in mind I believe. “. AT: “It’s possible this renewed faith in bank lending is tied to consumer confidence in the economic outlook.”
  • Possible credit score changes for 2017. AT: “The initial comment on this Reddit thread has been redacted. Judging from some of the comments, it likely had something to do with medical bills being removed from credit scores if paid off.”
  • SmartBiz Loans to offer up to $5 million SBA 7(a) CRE loans.
  • InterNex Capital’s asset-based loans now available to small businesses through Bizfi.
  • RECF is here and thriving.

United Kingdom

European Union

Canada

China

News Summary

United States

Fitch: OCC Fintech Charter Could Harm Agility & Cost of Innovative Financial Firms (Crowdfund Insider), Rated: AAA

Fitch Ratings is out with a note on the recently announced Comptroller of the Currency (OCC) Fintech charter. The OCC has crafted a document to allow digital banks to become regulated entities by receiving federal bank charters. Fitch is of the opinion the Fintech charter could have significant impacts on the operating strategies and regulatory environments of these innovative firms. And the impact may not be all good.

As for benefits, some Fintech firms such as marketplace lending platforms may no longer have to partner with banks to facilitate loan origination.  This echoes a similar comment that Moody’s made just a few days back. A Fintech banking charter may also reduce uncertainty regarding state usury rate caps that have become a more prominent issue recently following the Madden versus Midland decision in June, which stated that agreed upon interest may not be enforceable in certain circumstances.

A special purpose digital bank charter may not allow for insured deposit-taking, which would require FDIC approval and regulation, but in Fitch’s opinion, it could be an initial, gradual step in that direction.

Consumer Confidence Highest Since Before Great Recession (ValueWalk), Rated: AAA

The US Consumer Confidence Index has been soaring since the end of the Great Recession, and it hit another recent new high last month. The Conference Board reported Friday that its Consumer Confidence Index rose to a surprising 107.1 in November, versus the pre-report consensus of 101.1, the highest reading since 2008.

On the other hand, the Commerce Department reported that 3Q GDP rose by 3.2% in the 3Q as reported on November 29. That surprising estimate will be revised again on December 22. But if the next GDP estimate confirms that GDP growth is above 3%, we will need to upgrade our outlook for the US economy going forward.

The post-election surge in the major stock market indexes also has buoyed feelings about equities, with 40% saying now is a good time to invest, up 10 points from before the election. Here again, Democrats became somewhat more negative on stocks while Republicans grew significantly more optimistic.

Those differences are also clear in the choice for what Americans believe are the best investments right now. While real estate remains the top choice for the third straight year, stocks gained the most ground at the expense of gold, real estate and Treasuries. For now, the shine is off of gold for Republicans and they, along with Independents, have grown more favorable toward equities.

Virtually everyone expects the Fed Open Market Committee to raise its short-term interest rate by 0.25% at the meeting today and tomorrow. Fed Funds futures put the odds at 97%. While the first rate hike last December sent stocks sharply lower, stocks are today at yet another new record high.

Investors are aggressively seeking alternative investments to generate income in today’s continued low interest rate world. While the US equity markets have soared to new highs since the election, many are wary of an overdue downward correction. That’s understandable.

Bank SME Lending Surges, Alt-Lenders Flop (PYMNTS.com), Rated: AAA

Reports Tuesday (Dec. 13) said Biz2Credit’s latest index showed surges in traditional banks’ SME loan approval rates in November, hitting 23.7 percent. According to researchers, eight out of the past nine months have seen loan approval rates for small business applicants increase among traditional, large banks.

Even small banks have seen their loan approval rates tick up to 48.8 percent.

At the same time, Biz2Credit found continuing declines in alternative lending activity for SME borrowers. November saw a decline in SME loan approval rates among alt-lenders, down to 59.2 percent in November, according to the report.

Growth of consumer borrowing slows a bit (News Journal), Rated: A

Total borrowing rose $16 billion, the Federal Reserve reported Wednesday. The October increase was the smallest since June.

Revolving credit, which covers credit cards, increased $2.3 billion in October. The non-revolving category, which covers auto loans and student loans, rose $13.7 billion in October.

Possible Credit Score Changes for 2017 (Reddit), Rated: A

I had over 12 collections on my credit as of a year ago and about 8 of them were hospital bills. What I did was write each creditor a letter saying essentially: “I dispute this debt. I don’t not recall this debt in anyway and it was not me. However, I am willing to pay the debt in full if you will agree to remove the debt from all credit bureaus. If you agree to these terms please send me on company letterhead the terms. Once I receive the agreement I will send payment by certified mail the same day I received your letter. If you do not accept these terms I am asking you to send me all proof that this debt is mine and I will dispute it further. You and I both know that paying this debt without you agree g to remove it from my credit report will not benefit me at all and I may as well wait until it falls off naturally.”

I now have 3 collections left, the rest were removed and

I’m working on the last few. You don’t even have to offer to pay 100% I’ve seen others offer 50% for a pay for delete and it went through. I offered 100% because I have the funds and I really wanted it off my credit report.

Edit 2: one of the collections was for capital one. They sent me a letter saying they denied my pay for delete request. Then about a month later they sent me another letter saying since I requested proof of the debt and they couldn’t provide it they are removing the debt from my credit report and my balance is $0. So they denied the request then started to assemble the proof and couldn’t find it. Was pretty funny.

SmartBiz Loans Announces New Online SBA Commercial Real Estate Loan Offering up to million (BusinessWire), Rated: A

SmartBiz Loans, the first online SBA marketplace and bank-enabling technology platform, has announced that they will now offer SBA 7(a) Commercial Real Estate (CRE) Loans up to $5 million to eligible business owners based in the U.S.

The CRE loans are now available through SmartBiz for purchase or refinance through an automated, mobile-optimized online flow that allows eligible businesses to pre-qualify online (even on their mobile phones) in less than five minutes without impacting their credit score. Loans are available for amounts between $350,000 to $5 million with 25-year repayment terms, variable rates as low as 5%, no balloon payments and no prepayment penalty after the first three years. Unlike traditional bank commercial real estate loans, SmartBiz SBA 7(a) CRE loans do not require re-qualifying every three to five years.

The loans are available to small-business owners based in the U.S. with a personal credit score of 675, a minimum of three years in business and $250,000 or more in annual revenue.

InterNex Capital’s Asset-Based Loans Now Available to Small Businesses through the Bizfi Marketplace (BusinessWire), Rated: A

Today, Bizfi (www.bizfi.com), the premier fintech company with a platform that combines aggregation, funding and a marketplace on a single platform for small businesses, expands its business lending capabilities through a funding partnership with InterNex Capital, an asset-based digital lender. The partnership will allow small to mid-sized businesses in manufacturing, wholesale, trucking, business and consulting services to apply for and access an asset-based revolving line of credit from $250,000 to $5 million through the Bizfi marketplace at www.bizfi.com.

Along with short-term financing, equipment financing, SBA loans, and many other products, small businesses that require $250,000 or more can easily and quickly apply for the revolving line of credit online. In addition to InterNex, the Bizfi platform features 45 lenders providing financial options to small businesses in the United States. Bizfi also acts as a direct lender on the platform.

Real Estate Crowdfunding is Here and Thriving For Investors (Realty Biz News), Rated: B

As a real estate investor, are you staying current with the latest investing technology? Just like all modern industry, the real estate industry continues to evolve and how investments are made has a new technology that is on the cutting edge for real estate investors, welcome to real estate crowdfunding.

Both dealmakers and lenders found a strong interest in private financing following the Great Recession. Dealmakers needed access to capital that the banks quit providing. Qualified investors and individuals with 401k funds to invest quickly became attractive. For money investors, more reliable and more secure investments (real estate) outside of the stock and bond markets also became attractive. Now, with crowdfunding, this match becomes even more powerful as more investors (beyond qualified investors) are able to participate in the market.

United Kingdom

Government cash funds almost 10% of peer-to-peer MarketInvoice’s loans (Business Insider), Rated: AAA

The taxpayer-backed British Business Bank is providing a major boost to fintech MarketInvoice, new figures show.

9% of loans by value made over MarketInvoice’s platform to date have been financed by money from the government-backed British Business Bank, according to a Freedom of Information request seen by Business Insider.

The bank has provided the cash for £93.2 million-worth of loans on the platform, out of a total of just over £1 billion made by the platform.

New crowdfunding platforms following peer-to-peer lending are riskier than many realise (Express.co.uk), Rated: AAA

The new breed of crowdfunding platforms that have followed in the wake of P2P are far riskier than many realise.

City regulator the Financial Conduct Authority (FCA) is looking to crack down on these crowdfunding platforms to protect savers who do not understand the dangers.

It is lining up tough new regulations after warning that some platforms fall short of its demands to be “clear, fair and not misleading”.

The best-known platforms are Zopa.com, which has taken £1.89billion from savers since 2005, and RateSetter.com, which has taken almost £1.6billion since 2010.

Their interest rates have dipped lately, but Zopa still pays a variable 3.1 per cent and RateSetter pays 2.9 per cent.

Hannah Maundrell, editor-in-chief of , says P2P platforms need a robust fallback plan so people do not lose money if the company goes bust: “They will also have to carry out more thorough checks on borrowers.

“Some do, but the FCA’s rules could make it compulsory.”

Vaya, RateSetter get together to launch online mobile shop (ITWire), Rated: AAA

Mobile service provider Vaya has teamed up with peer-to-peer lending platform RateSetter to launch an online mobile phone shop.

Vaya says it has worked with RateSetter to provide fair financing terms and an easy online sign-up process for mobile phone customers – combining “some of the sharpest handsets on the market with the choice of outright purchase or wallet-friendly payment terms over 12 or 24 months”.

The two companies say they are bucking the trend of telcos locking people’s mobile plans up with their handset repayments.

Taplend: Viktor Ihnatiuk (Startups.co.uk), Rated: A

Taplend is a financial help service. With our app, people can get up to £2,500 in a few minutes, provided by friends or lending companies.

The problem we are solving is a fairly common one for all of us – situations when you need money urgently, but cannot get it immediately. The mechanism of Taplend is a very simple one: after the user downloads the application, he sets the desired amount of money and return terms, submits detailed information and sends a request via the service to his friends or credit companies.

After the request is accepted, it takes a couple of minutes for the money to come to the user’s bank account or mobile wallet.

While working in the p2p lending area, we noticed that the average time to get a loan through such a platform is around three days, under affordable rates. It is clear that millions of people have the urgent need for money.

Our business model can be split into two parts:

  1. We let friends help each other with money under a 0% interest rate. Taplend would be useful for these people, who might face the strong need for the financial assistance to be provided as soon as possible. In other words, Taplend is a p2p money transfer tool for friends to help each other. In this case, we charge a small split fee from transactions between the users.
  1. Besides asking from friends, Taplend lets the user request the loan from our partners – financial institutions. In this case, we let the user to choose the lender among the list of companies, after this we provide him with specific loan application form (depends on the lender).

When the user finishes filling the application form, we send this data to the lender. If everything is ok with this data, the user gets his request approved, receives the money and the lender pays Taplend a lead generation fee.

Denheath Desserts Closes PledgeMe Crowdlending Campaign With Nearly 0,000 in Funds (Crowdfund Insider), Rated: A

Denheath Desserts, a custard square brand from South Canterbury, has officially closed its crowdlending campaign, which raised nearly $369,001 from 161 investors, on PledgeMe. Denheath Desserts currently produces 10,000 custard squares per day from its Timaru factor.

The UK alternative finance industry is still not transparent enough (City A.M.), Rated: A

One of the most important risks when it comes to crowdfunding and online lending, which will be fairly obvious to anyone with investment experience, is asset risk.

Then there is the risk in the instrument. What do you get for your money? Share, bonds, a loan contract? Are there other lenders? Are you senior or junior? Is the investment secured?

Crowdfunding should not say it is transparent, but be transparent. You don’t think people are funny because they tell you they are comedians. You think they are funny when they tell you a joke that makes you fall off your seat.

That means being transparent about fees for starters. How does that platform get paid? By the lender, the borrower or a bit of both? When does it get paid, and do they take a spread?

Platforms should earn their fees – and yes, those should be completely and clearly set out too.

Appropriateness tests and caps on the amount of investment are just some of the other methods that platforms can implement to help manage risk. Each of these are worth an article in their own right, but the most important thing for investors to be aware of, for now, is that not all platforms offer the same levels of disclosure and protection.

European Union

Rakuten invests EUR10m in Kreditech (Finextra), Rated: AAA

This is another landmark investment in fintech by Rakuten, a leader in internet services and global innovation headquartered in Japan. Rakuten joins Kreditech’s outstanding group of backers, including J.C. Flowers and the World Bank’s International Finance Corporation. Michael Piechalak of the Rakuten FinTech Fund will join the Board as an observer.

Kreditech aims to invest the new funding into further developing its partnership business. The company has launched its Lending-as-a-service in spring 2016. Renowned partners such as PayU (Naspers) are making use of Kreditech’s POS financing integration.

Firm seals biggest-ever Irish P2P loan (Independent), Rated: A

Irish peer-to-peer (P2P) lending firm Linked Finance has completed the country’s largest ever P2P loan, raising €150,000 for serviced workspace provider Iconic Offices.

The loan, which is double the size of the previous biggest amount raised by Linked Finance, will be used to fit out Iconic Offices’ location at Herbert House, Dublin 2.

Linked Finance, which targets the non-bank SME-lending sector, said the loan was fully subscribed in less than 20 hours.

EstateGuru’s average historic return highest in the market! (EstateGuru Email), Rated: B

In December, EstateGuru’s average historic return reached the level 13.4% (since December 2014), which is the highest return among crowdfunding platforms for secured property loans.

Within two operational years, EstateGuru has offered its investors the chance to invest in 95 secured property loans with a record high annual average historic return 13.4%,“ said EstateGuru’s founder and CEO Marek Pärtel.

In comparison, some of Europe’s most popular and most established crowdfunding platforms like LendInvest, PropLend and Saving Stream have an annual average return of respectively 7.06%, 9.39% and 12%.

EstateGuru has managed to offer its investors the best returns due to high-quality projects and additional bonuses (e.g when the loan is repaid earlier, the borrower is obligated to pay the minimum 3-4 months interest). Our platform allows both professional and still experimenting investors earn equally great returns. Moreover, our more eager investors can take advantage of our affiliate program,“ Marek Pärtel added.

EstateGuru’s more than 5600 investors from 34 countries have earned a cumulative interest revenue €648,421 and more than €15 million worth of loans have been funded. Largest investment portfolios on the platform exceed €700,000 and the investors have not lost a single euro on the EstateGuru platform throughout its entire history. EstateGuru’s priority is to offer its investors secured and high-quality investment opportunities in Estonia and abroad.

Canada

NCFA Publishes Research on Alternative Finance in Canada (Crowdfund Insider), Rated: AAA

The National Crowdfunding Association of Canada (NCFA) has published a report on the status of crowdfunding and other forms of alternative finance including online lending.

The report tallied numbers for 2015, tracking 100 online platforms including both rewards and investment, stating that Canada reached $133 million in total volume. This amount is predicted to increase to $190 million during 2016.

The NCFA is not totally complimentary of the current crowdfunding ecosystem. Earlier this year, one industry insider labeled the regulatory approach as a “mess”. Another called it “dead in the water.”

China

eToro Announces Key Strategic Partnership for China with Lufax Holding (Finance Magnates), Rated: A

One of the leading social trading networks in the foreign exchange and CFDs space, eToro has announced that it has signed a strategic partnership with Lufax Holding Ltd. The cooperation agreement between the firms is aiming to boost eToro’s profile with Chinese clients.

Authors:

George Popescu
Allen Taylor

Thursday October 6th 2016, Daily News Digest

Thursday October 6th 2016, Daily News Digest

News Comments Today’s main news: Zopa and AirBnb partner; PeerIQ’s quarterly securitization update. Financeit raised $US 17 mil in equity. Today’s main analysis : New 40-act funds launching in the US ;4 charts on the state of digital migration in banks Today’s thought-provoking articles: An interesting article on Insure-tech startups ; An interesting article on using character profiling in lending; CrowdLending Fund One in […]

Thursday October 6th 2016, Daily News Digest

News Comments

United States

Canada

United Kingdom

European Union

Australia

India

News Summary

 

United States

PeerIQ’s MPL Securitization Tracker for Q3 2016, (PeerIQ), Rated: AAA

  • Marketplace lending securitization remains a bright spot in the ABS market. Total issuance topped $2.3 billion this quarter—a record—and is up 34.8% from Q2, with cumulative issuance now totaling $12.6 billion.  YTD issuance of the sector stands at $5.4 billion as compared to $3.0 billion from the prior year, an 80% increase as compared to a 10% decrease in non-MPL ABS issuance.
  • Although MPL origination volumes have declined at some platforms, ABS issuance is increasing as is the proportion of loans funded by ABS. The percentage of loans funded by ABS is over 50%.
  • The movement towards rated securitizations at larger transaction sizes continues.  All the deals issued in the third quarter were rated, with the exception of LCIT 2016-NP1. Further, the growth in average deal size continued, growing to $267 million in 2016 as compared to $64 million in 2013.
  • New issuance spreads continued to tighten in—a friendly environment for securitization.  Across all segments in MPL, Q3 2016 saw spread compression across each part of the capital structure, indicating strong investor appetite for MPL ABS paper in the market.
  • We estimate $6.0 to $10.3 billion MPL ABS issuance for 2017. Goldman Sachs, Morgan Stanley, and Citi take top positions on the league tables.
  • Differences in execution and losses are emerging across issuers. SoFi maintains a significant execution advantage over peer originators, and remains the largest issuer in the category. PeerIQ expects 3 additional deals to breach loss triggers in the coming months.

With new mutual funds, marketplace lenders continue to seek diversified sources of capital, (Tradestreaming), Rated: AAA

The first two marketplace lending mutual funds were approved in the U.S.
Total size of marketplace lending securitization issuance volume to date is $10.3 billion.

The first two marketplace lending mutual funds, sponsored by Stone Ridge Asset Management and RiverNorth Capital Management, were approved recently in the U.S. by the S.E.C., with similar funds launched earlier in the U.K.

“This is an exciting opportunity for RiverNorth and our investors,” said Philip Bartow, co-portfolio manager of the RiverNorth fund. “The benefit of being early to the retail market will give us the enhanced ability to purchase loans directly from quality online lending partners with whom RiverNorth has negotiated loan acquisition and servicing relationships.”

More funds have filed to become ’40 Act funds for marketplace lending and are awaiting S.E.C. approval.

Though anyone can invest directly on the marketplace lending platforms, they are cumbersome compared to mutual funds, a product investors and advisors know how to manage. In order to invest in marketplace lending, one needs to open a new account and learn a new set of analytical tools to aggregate and select loans that fit his risk preferences. If an investor wants to invest in more than one platform, this problem might become prohibitive.

Alternatively, hedge funds, which comprise a big chunk of the capital in marketplace lending, are only open to accredited investors. Launching these mutual funds will give retail investors easier access to consumer debt.

“By expanding marketplace loans to a broader investor base, these new funds will transform the industry and could eventually move today’s platforms towards principal broker-dealer markets, similar to other fixed income instruments,” Monja, a marketplace lending analytics solution, explained in a blog post.

TransUnion Launches Fraud Prevention Exchange to Reduce Online Fraud, (TransUnion Email), Rated: AAA

TransUnion data show that, on average, 4.5% of borrowers take out more than one personal loan on the same day.

TransUnion (NYSE:TRU) today announced the launch of its

4 charts on the state of digital transformation in banks, (Tradestreaming), Rated: AAA

Only 11 percent of banking executives plan to enhance mobile or omnichannel banking this year.
Projects prioritized in the next 24 months, are more likely to be middle- and back-office focused, like building an enterprise-wide compliance architecture.

Ten fintech start-ups that are causing a stir in insurance, (Financial Times), Rated: A

Insurtech — or instech — is now attracting entrepreneurs and the investors that back them.

The start-ups are targeting all parts of insurance. Many are focusing on distribution, using new technology to reach consumers that traditional insurers miss. Others are looking at analytics, helping insurers to use data to make better underwriting decisions. Blockchain — the technology that underpins bitcoin — is increasingly popular, while health insurance has been a big area of start-up activity in the US. Nor have start-ups ignored the potential of the “internet of things” — the growing use of data-collecting devices in everyday items, from cars using telematics systems to connected homes.

Few start-ups have become full, risk-bearing insurers. Analysts say that the capital requirements, regulatory burden and complexity required, combined with the desire of investors for short-term returns, means that very few of them underwrite their own policies.

Form D Alert: Crowd Lending Fund One Filing. Daniel Najarian Submitted Oct 5 SEC Form, (Frisco Fastball), Rated: A

The Massachusetts-based Crowd Lending Fund One, Llc had published FormD because of $10.00 million offering. This is a new filing. The Limited Liability Company raised $1.05 million so far. That is 10.50% of the $10.00 million offering. The total offering amount was $10.00 million. This form was filed on 2016-10-05. Crowd Lending Fund One, Llc’s clarification was: none. The offering has $8.95 million left to be raised and is still open.

Crowd Lending Fund One is based in Massachusetts. The company’s business is Pooled Investment Fund. The SEC form was submitted by Daniel Najarian Manager. The company was incorporated in 2016. The filler’s address is: 17 Main Street, Watertown, Ma, Massachusetts, 02472. Daniel Najarian is the related person in the form and it has address: 17 Main Street, Watertown, Ma, Massachusetts, 02472. Link to Crowd Lending Fund One Filing: 000168619216000001.

On average, companies in the Pooled Investment Fund sector, sell 37.80% pooled investment interest. Crowd Lending Fund One sold 10.50% of the offering. The average offering amount is $24.76 million for companies in the Pooled Investment Fund industry sector. The total amount raised is 95.76% smaller than the average for companies in the Pooled Investment Fund sector.

Payoneer raises $ 180 million for its global payments technology, (TechCrunch), Rated: A

Payoneer, a global provider of payment processing technologies, has added another $180 million to its already sizable war chest as it looks to continue to grow its payment services.

Already profitable, and with a solid amount of cash on the balance sheet, the new money will double the company’s product development and technical staff, according to the company’s chief executive officer Scott Galit.

For now, the company’s focus seems to be on China, where Payoneer has launched local bank account services in China for customers that don’t have Chinese accounts.

Oleg Seydak on Blackmoon & Marketplace Lending as a Service, (Crowdfund Insider), Rated: A

Blackmoon Financial Group is a newer entry into the marketplace lending sector.  Launched in 2014, Blackmoon is marketed as “marketplace lending as a service” or MLaaS. Focusing on balance sheet lenders, Blackmoon has developed technologies to provide integration with  loan originators with institutional investors. The platform started in Europe – starting with Russia – and adding multiple platforms before crossing the Atlantic. Blackmoon has also launched a $100 million fund, along with Target Asset Management, to invest in loans originated by European balance sheet lenders. Announced early in 2016, the fund is open to international investors with minimum commitment size of €125,000 and targeting annual returns of 12-13% net of fees.

This past July, Blackmoon entered the US marketing opening an office in Manhattan.

Blackmoon has set an ambitious goal of $1 billion in brokered loans by the end of 2017.

So far, Blackmoon has had a “good experience in the US”. They currently have 5 institutional investors using their platform including 3 family offices and 2 private equity funds.

The most difficult part of setting up operations in the US?  The regulatory environment.

“We have already spent a good amount of money on counsel and attorneys. It is hard to get a clear answer and it is costly.  There is no “stop factor”…”

Tests of character, (The Economist), Rated: AAA

How personality testing could help financial inclusion.

In rich countries, lenders use credit scores to weigh risk. But just 7% of Africans and 13% of South Asians are covered by private credit bureaus. Bailey Klinger of the Entrepreneurial Finance Lab (EFL), which explores new kinds of credit data, argues that psychometrics could scoop many more people into the financial system. Everyone has a personality, after all.

Some lenders are convinced. Grupo Monge, a retailer, uses psychometrics to sell household goods on credit to low-income Peruvians. “Most of the time we are the first company to give them credit,” says Gabriel Trelles, its boss in Peru. The biggest market for psychometrics is for such consumer loans. But microlenders and banks are catching on. EFL’s software has been used in 690,000 loan decisions in 27 countries. Creditinfo will use its psychometrics unit, recently acquired from a marketing firm, to expand in emerging markets.

The technique is still in its infancy and will not replace credit bureaus, says Miriam Bruhn of the World Bank. The best way to tell if somebody will repay a loan in future is to see if they have repaid one in the past. But bureaus improve more slowly than technology. Lenders, looking for an edge, will find ever more ways to peer into their customers’ souls.

Canada

Financeit announces $US17 million investment round led by The Pritzker Organization, DNS Capital and existing investors, (Email), Rated: AAA

Financeit, a point-of-sale financing provider, today announced a new round of equity financing led by new investors–Pritzker family business interests advised by The Pritzker Organization, L.L.C. (“TPO”) and DNS Capital, LLC (“DNS”)– as well as existing investors.

The capital raise, which follows the close of a minority equity financing round led by Goldman Sachs in October 2015, will also support the ongoing needs of the company as it continues its rapid growth.

This investment round of $US17 million ($CAD22 million) enabled Financeit to fund the recently-announced acquisition of TD Bank Group’s indirect home improvement financing assets, which included the purchase of more than 800 merchant dealer agreements and the transition of a number of former TD relationship managers and operational staff.

After a transition period, the transaction will also lead to Financeit servicing approximately 45,000 existing TD consumer loans.

United Kingdom

Two P2P Sharing Economy Players Team Up– Airbnb and Zopa, (Finovate), Rated: AAA

Here’s how it works, upon logging into their Zopa dashboard, borrowers click a link to sign up to become an Airbnb host. If they earn £500 from Airbnb within six months, they get £50 off their loan. If they earn £1,000 from Airbnb rentals, they get £100 off. U.K. hosts earn an average of £2,000 per year for renting their home for 46 nights, which means borrowers would need to rent out their homes around 18 times over the course of a year to take full advantage of Zopa’s offer.

While the partnership makes sense for Zopa– it’s a focused way to help borrowers increase their income– I don’t envision banks making the same move.

Zopa debuted at FinovateSpring 2008. Since then, the company has weathered the ups and downs of the financial crisis and the P2P lending industry itself. Earlier this year, Zoparevamped its product lineup, debuting Classic, Access, and Plus, which allows institutions to lend to higher risk borrowers. In May, the company began offering auto loan refinancing, tapping into the used car financing market. Most recently, Zopa appointed Ronen Benchtrit as its CTO in an effort to grow its technology strategy.

CrowdBnk Re-Launches & Rebrands as Code Investing, (Crowdfund Insider), Rated: A

Our focus on supporting proven small businesses seeking larger sums of growth capital, means we no longer feel the name CrowdBnk is fully representative of what we do and the services we provide. We have never been a bank and neither do we wish to emulate their position.

Management stated that around one-in-ten firms are considering P2P lending in the coming year. Additionally, one in six firms with revenues over £10 million are considering this option.  This data supported the decision to reposition their platform and help SMEs raise between £1 million to £20 million in financing.

European Union

Aztec Exchange launches online early payment solution ePayMe in Spain through Grupo SERES, (Email), Rated: A

DUBLIN, IRELAND and MADRID, SPAIN – Aztec Exchange, a global supplier of invoice finance products and services, today announced the launch in Spain of its early payment solution ePayMe (payme.cloud/es/) through Grupo SERES, reaching their 6,000 SME clients.  With this partnership, Aztec continues to grow its position among European SMEs seeking early payment – a nearly €1.6 trillion market.[i]

ePayMe takes traditional early payment services like factoring and turns it on its head.  Typically issuing payment within 24 hours, ePayMe offers complete transparency, so there are no hidden costs or interest charges, and suppliers only pay minimal fees. Additionally, a supplier can sell as many invoices as it wants, provided the corporate debtors are creditworthy, and there are no long-term contracts.

Kreditech announces former Bank Managing Director Michal Panowicz as CPIO, (Email), Rated: B

Hamburg, October 6 2016 – Kreditech, the consumer finance technology Group, today announced that Michal Panowicz is joining as Chief Product and Information Officer (CPIO). In the newly created role of the CPIO, Michal will be responsible for the product and technology departments. Michal joins the Executive Team in the Hamburg Headquarters together with Founder and CEO Alexander Graubner-Müller, CFO Rene Griemens, CDO José Garcia Moreno-Torres and COO Oliver Prill.

Kreditech Group’s mission is to improve financial freedom for the underbanked by the use of technology. Combining non-traditional data sources and machine learning, the Company is aiming to provide access to better credit and a higher convenience for digital banking services.

Australia

Marketplace Lender DirectMoney Appoints New CEO, (Crowdfund Insider), Rated: A

Australian marketplace lending platformDirectMoney has appointed Anthony Nantes as CEO. Former CEO Peter Beaumont will move into the Chief Operating Officer role. DirectMoney released a statement that Nantes will bring a set of skills that will deliver the next phase of company growth.

He was previously Chief Operating Officer at Prospa, a fintech lending company, which during his tenure in 2015 was recognised by Deloitte as the fastest growing technology company in Australia.

DirectMoney is listed on the ASX and shares have performed poorly during the past 12 months. The company has garnered some support from Macquarie Group but has struggled at times to find sufficient capital to fund loans.  The most recent financial results published indicate top line growth of 177% and loan originations growth of 77%.  The company continues to deliver a net loss.

India

Faircent forays into secured loan, (Business Standard), Rated: A

Faircent, country’s largest peer-to-peer (P2P) lending firm, has now started focusing on secured loans, a segment that these players had so far not been present in. Now, with tie-ups with the firm has forayed into auto loans and is eyeing dispensing loans for other asset backed products.

Vinay Mathews, Co-founder and Chief Operating Officer,explained that apart from personal loans, even for the secured products some consumers may find it difficult to take a because of their income or risk profile.

Apart from this is also looking at exploring other products such as gold loans, against property etc.

As per a RBI report in April, there are around 30 start-up P2P lending in India, RBI said. Globally, the cumulative lending through P2P platforms at the end of fourth quarter of 2015 reached ?4.4 billion, from just ?2.2 million in 2012. And in most countries where these firms are allowed to exist they are treated as banking intermediaries. Now, even RBI is looking at regulating this sector and is supposed to come out with guidelines pertaining to it.

Author:

George Popescu