Alternative Lending in Mexico

alternative finance Mexico

Albeit a bit late, Latin America has finally joined the global fintech revolution and Mexico is right at the forefront. Mexico has the largest fintech ecosystem in Latin America ahead of Brazil (230 startups) as per a recent report published by IDB and Finnovista in the second quarter of 2017. Alternative lending saw 41 startups and […]

alternative finance Mexico

Albeit a bit late, Latin America has finally joined the global fintech revolution and Mexico is right at the forefront. Mexico has the largest fintech ecosystem in Latin America ahead of Brazil (230 startups) as per a recent report published by IDB and Finnovista in the second quarter of 2017. Alternative lending saw 41 startups and accounted for 17% of the total.


Mexico was the largest player in the Latin American market with a volume of $114 million in 2016. The marketplace/ p2p lending model saw a 6x growth with over $40 million in 2016 lending.


Alternative Lending Regulation in Mexico

The fintech lending industry enjoyed little to no regulatory oversight in Mexico, but path-breaking growth made it necessary to have safeguards for the burgeoning market. Hence, in the beginning of December 2017, the Senate passed a bill called “The Law to Regulate Financial Technology”, and in the beginning of 2018, it will be presented in the lower House. If passed, the bill will help enhance financial stability and bring a clear and concise legal framework to alternative lending. It will also help improve credit access to millions of Mexicans.

Opportunity for Alternative Lenders

The majority of people in Mexico use Socaps (savings and loan cooperative societies) since they live in rural areas where there are no banks. As per Condusef data, only 800 municipalities out of 2,492 have bank branches. More alarmingly, Mexico had just 1.5 bank branches per 10,000 adults compared to 4.7 in Brazil in 2016, according to the National Report on Financial Inclusion. Furthermore, only 39% above the age of 15 have bank accounts as per data from the World Bank. These numbers clearly suggest Mexicans are underserved when it comes to banking activities, which presents a huge window of opportunity to the fintech lending sector.

Leading Fintech Lenders

  • Kueski – Kueski was founded in 2012 by Adalberto Flores and Leonardo de la Cerda. Its headquarters is in Guadalajara, Jalisco, Mexico. Kueski is the online lender for the middle class of Mexico and Latin America. The company uses big data and advanced analytics to approve and deliver loans in a matter of minutes. The company has become the fastest growing platform of its kind in the region and has raised almost $39 million. It offers loan ranging from $1,000-$2,000 and term ranges from 1-30 days.
  • Konfio – Launched in 2013 by David Arana and Francisco Padilla, Konfio is headquartered in Mexico City. It has raised $18 million from the Accion Frontier Inclusion Fund managed by Quona Capital, QED Investors, Kaszek Ventures, and Jaguar Ventures to strengthen the platform’s operations, grow its user base, and adopt corporate practices. Konfio is an online Mexican lending platform that helps financially underserved micro-enterprises in Latin America to obtain convenient and affordable loans through a proprietary algorithm. It offers loans ranging from MXN $10,000 to $350,000 for terms ranging from 4-36 months.
  • MiMoni – MiMoni was founded in 2008 and is headquartered in Mexico City. It has raised over $15 million in various rounds of funding. MiMoni analyzes submitted loan requests and approves them enabling its users to get access to benefits provided by the platform. Members are able to ask for loans whenever they need and after when they have settled their previous loans. It allows its users to make biweekly payments based on the amounts they have received as loans. It offers three loan amounts–$4000, $5,000 and $6,000–at an annual fixed rate of 401%.
  • Kubo.Financiero was founded in 2012 by Allan Seidman, Tomas Hernandez, and Vicente Fenoll. Since its inception, it has raised over $11 million in various rounds of funding. Kubo.financiero is a Mexican P2P lending platform regulated by local authorities including The Bank of México, CNBV (equivalent to the SEC in the US) and CONDUSEF. After five years, it is now one of Mexico’s leading P2P lending platforms with over 10,000 loans providing for a total of MXP$254m (USD$14m) and around 1,000 investors funding 60%-80% of the total loan value over the last 18 months. It issues loans ranging from ~US$200 to $25,000 with payments being made weekly, bi-weekly, or monthly over 16-36 months. All borrowers have a minimum score of 620 with the Buro de Crédito (equivalent to FICO).
  • Yotepresto – Started in 2014 by Luis Chavez, Yotepresto has raised $1.2 million in various rounds of funding. It is the fastest growing Mexican-based marketplace lending platform connecting individual and institutional investors to near-prime borrowers applying for a personal loan. It has more than 130,000 registered users and has originated $75 million in loans so far. It offers loans ranging from MXN $10,000-$300,000 with terms ranging from 6-36 months with rates starting from as low as 5.9%.

Apart from these leading players, there are a few more alternative lending platforms, such as Aspiria, El Buen Socio, Credilikeme, Doopla, Finv, and Cohete. These lenders are trying to break into the untouched Mexican market.


With new legislation set to roll out, and leading international players like Startupbootcamp FinTech using Mexico as the launching pad to establish their foothold in the Latin American market, it is easy to conclude that Mexico is set to be the fintech hub of the LATAM region. Considering many social and economic factors support the fintech-lending ecosystem, there is no doubt VCs and investors likewise will be lining up to fund and support altermatove lending startups in the region.


Written by Heena Dhir.

Wednesday February 7 2018, Daily News Digest


News Comments Today’s main news: SoFi named official sponsor of Big Ten. Equifax supports SME lending with new data sharing solution. UK fintech venture investment rises 150%. Klarna partners with London College of Fashion. Revolut ditches Wirecard, takes card issuances in-house. Today’s main analysis: The most wanted for anti-money laundering cases in Asia. Today’s thought-provoking articles: Banks close 1,700 […]


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United States

SoFi Named Official Presenting Sponsor of the Big Ten Men’s Basketball Tournament (, Rated: AAA

The Big Ten Conference and Big Ten Network announced a multi-year agreement naming SoFi as the presenting sponsor of the Big Ten Men’s Basketball Tournament. SoFi, a modern finance company taking an unprecedented approach to lending and wealth management, will not only be the on-site tournament sponsor, but also present the on-air coverage of all 10 tournament games televised on BTN.

Equifax launches data sharing solution to support SME lending (AltFi), Rated: AAA

Information solutions company Equifax has launched a new solution that provides back up for the government’s Commercial Credit Data Sharing (CCDS) initiative, which is seeking to boost the economy by encouraging new entrants into the SME lending sector.

According to the platform, the new solution “gives lenders a comprehensive picture of a business’ financial health to facilitate faster and more informed lending decisions”.

Equifax was designated as a credit reference agency under the CCDS initiative, giving it access to new data sets from leading business banks, including cash flow activity and debit and credit turnover. The data will be provided to lenders through Equifax Business Insights.

Banks Shutter 1,700 Branches in Fastest Decline on Record (WSJ), Rated: AAA

The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record, according to a Wall Street Journal analysis of federal data.

Source: The Wall Street Journal

Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression.

Many of the closings were in big cities and surrounding suburbs, where branches were consolidated largely because of falling foot traffic. Others were in rural areas, where some large regional lenders are leaving town altogether.

From mid-2012 to mid-2017, Capital One Financial Corp. cut 32% of its branches, SunTrust Banks Inc. 22% and Regions Financial Corp. 12%.

Source: The Wall Street Journal

What a scrappy Oklahoma bank can teach the industry about branch strategy (Tearsheet), Rated: A

Citizens Bank of Edmond is trying to get closer to small business customers by providing space, guidance and almost anything else they might need — besides, of course, a loan.

The one-branch community bank in Edmond, Oklahoma once had another branch, 12,000 square feet located one block away from the main space, with a drive-thru window and some executive offices. But recently the bank decided to consolidate it into a single location and has now turned it into a “business social” co-working environment, called Vault 405, for its small business customers that includes wireless charging stations, conference rooms and a podcast studio.

Ideally, by creating an environment that would bring customer and community relationship returns, as well as grow deposits and loan volume. Citizens currently charges monthly rates between $400 and $1,000 for offices and $175 to $275 for desks and shared spaces. It also offers day passes.

Citizens is also addressing cash pickups for small business customers, one of the most compelling cases for banks thinking of repurposing their branches, using as much readily available technology as possible.

Why Digit is over chatbots (American Banker), Rated: A

Now, Ethan Bloch, founder and CEO of the San Francisco startup, believes his company has been offering the wrong primary user interface. “We think [chatbots] haven’t lived up to their promise,” he said. “So we are done believing they will.”

While the premise of Digit is still the same — use the service to automatically transfer funds from checking to savings every few days in amounts its algorithms believe a person can afford — Bloch believed the chatbot model is terribly flawed in its inefficiency to find out information.

Lendio Franchise Announced in Seacoast Region (Lendio Email), Rated: B

6th Avenue Capital adds trio to executive ranks (Bankless Times), Rated: B

6th Avenue Capital, a provider of small business financing solutions, announced the appointment of three senior members to their business development team. Mitchell (Mitch) Levy, Marc Seidel and Gary Lockwood were named to lead the sales teams. The new hires follow last year’s appointments of Christine Chang as CEO and Darren Schulman as COO and a $60 million commitment in capital from a large institutional investor.

US states team up to streamline fintech licensing (Finextra), Rated: A

Currently, firms offering services such as money transfers and cryptocurrency trading have to apply individually to operate in each of the 50 US states.

Under the new compact, if one of Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington reviews key elements of licensing – IT, cybersecurity, business plan, background check and Bank Secrecy Act compliance – the other six will accept the findings.

Wela Partners with In-Fi to Bring AI-Powered Bot to Insurance Agency Platform Website (GlobeNewswire), Rated: A

Wela, a fintech company that blends artificial intelligence (AI) with human advisors, today announces a partnership with In-Fi, an insurance agency management company specifically for financial institutions. Wela’s AI-powered chatbot, personified as Benjamin, is now fully integrated into In-Fi’s website, with the function of creating a more cohesive and engaging experience for their customers. Integration into In-Fi’s website is a pivotal step for Wela, which aims to place Benjamin at the center of financial decisions for families by integrating across a variety of financial service providers.

How the payday lending industry shapes academic research (American Banker), Rated: A

The hotly contested question of how to regulate payday lending is partly about ideology. How far should the government go to save repeat borrowers from their own worst habits? Your answer will depend on your political beliefs.

But this debate, like a lot of fights involving financial regulation, is also about facts. Do payday customers indeed suffer economic harm when they get into a cycle of repeat borrowing? That is an empirical question that unbiased researchers should be able to answer.

Inside Aspiration’s ‘values-based’ marketing strategy (Tearsheet), Rated: A

SoFi, whose earliest ads told people, “Don’t Bank. SoFi” has softened its marketing efforts, realizing the smart thing is for it to become a bank itself. Transferwise once ran provocative anti-bank ads but now advertises its own borderless account. But Aspiration isn’t shy about ruffling the feathers of the big banks. When Bank of America yanked its “free” checking accounts last month, moving them to its core checking account product that comes with a monthly $12 fee, Aspiration used it as a rallying point to get customers to bring their business to Aspiration, offering a $12 credit if they did. It claims its marketing has influenced “tens of thousands” of customers to leave B of A for Aspiration. Bank of America declined to comment for this story.

A fruitful journey from the attic to an angel investor (, Rated: A

Pear venture capital has helped some aspiring entrepreneurs build their foundations from scratch. How did the idea behind Pear fructify and what is the significance behind its name?
We actually started out as an angel investor. Around 2009-2010, I felt that there was no institution to help founders from ground zero. Given my background and network, I thought I could build an institution, which would help founders in their early stages to work on their ideas, which would stay in the business for generations.

Today Pear is an early stage seed fund and we invest in founders who are building category defined companies and that which focus on solving a big problem in the market.

As a venture capitalist, how do you identify potential entrepreneurs before signing them a cheque? What sectors and businesses do you look at? Considering the humongous number of aspirants, how do you identify a viable idea and that which is worth your support and funding?
If I look back at the last 18 years, there are some traits which are quite common among exceptional founders. We like those individuals who are looking to solve big problems in the market. They should either be close to the problem that they are trying to solve or they should have lived through their problem.

We also like those who have ability to track talents, are paranoid in a healthy way, have a vision and tend to question themselves every day. I also like CEOs who are captains of the ship,. the ones who usually stay till the end when the ship is sinking. Overall, we also look at size of the market. It’s fine if things don’t work out today as long as it’s going to be massive when it works. If you look at our portfolio companies, some of them have started in the unconventional space. As VCs, you live for those moments where you want to break the rule and partner with outliers.

LendingTree Releases Monthly Mortgage Offer Report for January (Guru Focus), Rated: A

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

Purchase Mortgage Offers by Credit Score


FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans




































*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

Refinance Mortgage Offers by Credit Score


FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans



































*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

The hottest cities where it’s good to be a home seller but not so much a buyer (The Washington Post), Rated: A

LendingTree, an online loan marketplace, recently analyzed 1.5 million purchase mortgage loan requests that came in through its system from the 100 largest cities in 2017. The study identifies the locations where buyer competition is the toughest based on three criteria:

The top 10 cities with the most competitive buyers based on those criteria include:

  • San Francisco
  • San Jose
  • Denver
  • San Diego
  • Ventura, Calif.
  • Los Angeles
  • Seattle
  • Honolulu
  • Portland, Oregon
  • Sacramento

The three cities on the bottom of the list, where homes are more accessible to buyers and competition is less aggressive, are Youngstown, Ohio; McAllen, Tex.; and Scranton, Pa.

For the full report, click here.

CBC National Bank Among LendingTree’s Top 10 Highest Customer-Rated Mortgage Lenders in Fourth Quarter (PR Newswire), Rated: B

CBC National Bank, headquartered in Fernandina Beach and with branches in Fernandina BeachOcala and The Villages, Fla., and Beaufort and Port Royal, S.C., today announced that it has been named by LendingTree as among the Top 10 highest customer-rated mortgage lenders in the fourth quarter of 2017. It also achieved this prestigious designation in the first quarter of 2017.

rateGenius Awarded Top 3 in Auto Customer Satisfaction by LendingTree for 7th Consecutive Quarter (PR Newswire), Rated: B

rateGenius is pleased to announce that it has once again been named Top 3 in Auto Customer Satisfaction by LendingTree.

M Financial Group Partners with Plug and Play Insurtech to Enhance Client Experience in Life Insurance Space (PR Newswire), Rated: B

Plug and Play Insurtech welcomes M Financial as its 55th partner. Headquartered in Portland, Oregon and comprised of 155 Member Firms across the U.S., as well as the U.K. and U.A.E., M Financial is searching for startups to transform the life insurance industry for the clients they serve. Startups accepted into Plug and Play’s platform will have the opportunity to pilot their technology with M Financial and the other partners in the program. M Financial is the first Plug and Play partner that is both a distributor and reinsurer of life insurance products.

5 Passive Income Ideas That Still Work In 2018 (SavingAdvice), Rated: B

Peer to peer lending: The demand for credit is sure to continue for centuries to come. There is always someone in need of some quick business loan or a personal loan and this gives a quick opportunity if there is another person with the capital and risk appetite to back it up. With the current boom in crypto currency usage, you can take advantage and set up a peer-to-peer lending service. Alternative funding can very well give traditional banking a run for the money because some people need quick loans but cannot have the convenience of applying through the mainstream banking system. Peer-to-peer lending offers the keys to unlock instant liquidity to a wide online community and offers attractive rewards to those who supply the capital.

A great advantage to the lender is that once a peer to peer lending platform has been selected, the popularity of the wallet will ensure that there is exposure to a wider target of borrowers. Most banks often get restricted to lending to people within a certain country or state. Since peer-to-peer lending is blockchain-backed, anyone around the globe with access to the platform can lend money to another peer and start earning money over the duration of the loan contract.

United Kingdom

LendInvest completes £16m development deal in three weeks (Mortgage Introducer), Rated: AAA

Property finance lender LendInvest has completed a £16m financing deal with established development finance borrower, Yogo Group, in just three weeks.

Taking a Deeper Look into the Moving Average For Funding Circle Sme Income Fund Limited (Stock Press Daily), Rated: AAA

Funding Circle Sme Income Fund Limited (FCIF.L) are in focus today as the charts are revealing that the Mesa Adaptive Moving Average (MAMA) is holding steady above the FAMA, or Fractional Moving Average.  This environment typically indicates that there might be a buying opportunity aligning in technicals.  When there are crossovers between the FAMA and MAMA, the shares are often widely traded.  When the MAMA crosses above the FAMA, it means that the shares are likely to move higher.  Conversely the opposite occurs when the MAMA crosses below the FAMA.  The Mesa Moving Average was first mentioned by John Ehlers in a paper published in a 2001 edition of Technical Analysis of Stocks and Commodities Magazine.

Venture investment in UK fintech more than doubles (Financial Times), Rated: AAA

Fintech companies, such as TransferWise and OakNorth, raised $1.8bn of venture capital investment last year, up more than 150 per cent from $704m in 2016, the year of the UK’s vote to leave the EU, the data show.

The surge in UK funding contrasted with an 18 per cent drop in global fintech investments to $14.4bn, according to the report by Innovate Finance, the British fintech trade body.

The UK industry was boosted by handful of large fundraisings of more than $90m. The biggest was by TransferWise, a cross-border payments provider, which raised $280m. OakNorth, a digital lender to small businesses, raised $203m.

Banks divided on cryptocurrencies card purchases (Financial Times), Rated: AAA

British banks are debating whether to ban their customers from buying cryptocurrencies using their credit cards after Lloyds Banking Group and Virgin Money said they had imposed such a ban.

Barclays, the UK’s leading credit card issuer through its Barclaycard business, said it was “keeping this matter under close review” after holding a meeting to discuss whether to follow the lead of Lloyds on Monday.

Last week MasterCard said that cross-border volumes on its network were up 22 per cent, driven in part by customers using their credit cards to buy cryptocurrencies.

British banks are also shunning companies that handle cryptocurrencies by refusing to let them open bank accounts or closing their accounts, which has forced many of them to open accounts in Gibraltar, Poland and Bulgaria.

Lloyds Bank cutting 930 jobs (Fintech Futures), Rated: B

Lloyds is axing 930 jobs within its commercial banking, chief information office, community banking, insurance, and wealth and risk management.

Looking beyond traditional banks (Specialist Banking), Rated: A

I recently came across an article headlined: “8 in 10 SMEs still prefer traditional bank loans over alternative finance.”

It noted that 83% of financial directors preferred to go to their bank as their first port of call when seeking a loan, rather than finding an alternative, such as P2P lending or equity crowdfunding.

It claimed that a lack of understanding could be the reason for this, but pointed out that almost three-quarters of finance directors (74%) believed their knowledge of alternative finance was either “average or above average”.

Challenger Bank Tandem Partners with Cognitive Banking Company Personetics (Crowdfund Insider), Rated: A

UK Challenger bank Tandem has announced a partnership with cognitive banking company Personetics to provide users personalised insights on their spending across all of their bank accounts in one place, as well as warning people about unexpected fees and unusual activity on their accounts.

Are you holding too much cash in your ISA? (WhatInvestmen), Rated: A

In a survey of financial advisers by Octopus Investments, three-quarters of respondents said they believe their clients hold too much in their cash ISA relative to the rest of their portfolio.

The majority (83 per cent) feel their clients are put off investing in stock and shares due to the risk of losing money, followed by concerns of an overstretched (49 per cent) and volatile (46 per cent) market.

The Differences Between Short Term Loans and Payday Loans (, Rated: A

If you need to borrow money, a variety of options are available. Two of the most common short term borrowing options are payday loans and short-term personal loans, both of which provide immediate access to cash to help you pay bills, purchase items and run your financial life.

One of these borrowing options — payday lending — has been in the news a lot over the last few years, as new regulations make the industry more borrower friendly.

Short-Term Personal Loans

Most people use short-term loans for purchasing certain items or covering other major expenses.

From a borrower’s perspective, the advantages of short-term loans include lower overall costs than payday loans. However, the credit check process and approval period mean that loans of this type often aren’t instant enough to help borrowers deal with urgent financial needs.

Payday Loans

Most payday loans are for relatively small amounts of money, such as £200 to £500, and are aimed at providing cash until you get paid again.

Payday loans form a major part of the UK lending industry, with an estimated market value of approximately £2 billion.

Folk2Folk appoints chapter development manager (Bridging&Commercial), Rated: B

P2P lending platform Folk2Folk has appointed Claire Thayers as its chapter development manager.

In the newly created role, Claire will be responsible for raising Folk2Folk’s profile across the South West and Three Counties regions and improving awareness of its products to both borrowers and brokers.


The key to surviving in China’s P2P marketplace? Understanding regulations (Nikkei Asian Review), Rated: AAA

China’s increasingly competitive peer-to-peer marketplace requires players to understand government regulations and align their strategies accordingly, said Kevin Guo, co-founder and co-chairman of Dianrong, which specializes in making small loans over the internet.

European Union

Klarna partners with London College of Fashion (LeapRate), Rated: AAA

European payments provider, Klarna, has announced a UK partnership with London College of Fashion, UAL, in an exciting initiative to support the next generation of talent at the intersection of fashion and technology.

Fashion is now the UK’s largest online retail market segment, worth around £10.1bn, and this growth is only set to continue. By 2020, fashion will represent 28.8% of UK online spend.

With Klarna research showing 94% of retailers are investing in new technology to meet the needs of younger customers, opportunity for innovation in the sector has never been greater.

German digital business bank Penta raises €2.2m in seed funding (AltFi), Rated: A

Penta, a German digital bank for start-ups and small businesses, has secured €2.2m in seed funding, led by the UK-based and fintech-focused Inception Venture Capital .

Founded in May last year, Penta moved out of its private beta in December to a waitlist of over 3,000 local businesses. The platform has now opened its waitlist up to new users, and hopes to reach 10,000 businesses by the end of 2018.

P2P investors risk losses by lending to just one borrower (P2P Finance News), Rated: A

PEER-TO-PEER analysis firm 4th Way is urging investors to diversify after stress testing revealed the odds of losing money in a severe recession can be 10 times higher in some cases when lending to just one borrower on a P2P platform.

The research, released on Tuesday, applied international banking stress tests to P2P platforms it assesses such as Zopa, Funding Circle and RateSetter, and found when lending to 100 borrowers, investors have just a 0.1 per cent chance of losing 20 per cent or more of their original money.

Acquisition of 85% of Telenor Banka fails to win Serbia’s c-bank approval (SeeNews), Rated: A

Serbian online lender Telenor Banka said on Tuesday that Bulgaria-based investment fund River Styxx Capital has not received the consent of Serbia’s central bank for the acquisition of 85% of its share capital from Norwegian telecommunications group Telenor.

Telenor will support any further step that will contribute to the positive closure of the transaction, Ingeborg Ofsthus, CEO of Telenor Serbia and chair of the Telenor Banka board of directors said in a statement issued by Telenor Banka.


Revolut ditches Wirecard for in-house card issuing (Fintech Futures), Rated: AAA

Revolut will no longer be relying on Wirecard for card issuing as it has now brought this function in-house.

Asia Most Wanted Top Ten AML Cases (Fintech News), Rated: AAA

Over the last decade, the quantity of money laundered has been steadily increasing. According to The United Nations Office on Drugs and Crime, it is estimated that approximately USD $1.6 trillion or 2.7 percent of global GDP was laundered in 2009.

Even worse, less than 1 percent of this global illicit financial flow is ever seized and frozen, meaning that the criminals are winning.

Effective anti-money laundering (AML) regulations and processes are essential to countering such criminal activity. Yet due to tighter anti-money laundering regulations in the US and Europe, money laundering activity is moving into the Asia Pacific as a way to avoid detection.

Source: Fintech News

In December 2012, Standard Chartered was ordered to pay USD $330m to settle claims by United States government agencies that it had moved hundreds of billions of dollars on behalf of Iran. It was suggested that this practice exposed the international financial system to exploitation by to “terrorists” and “drug kingpins”.

Open banking role models: Fidor, Rabobank and BBVA (American Banker), Rated: A

Google accelerator focuses on emerging markets (IT Web), Rated: A

In its fifth year, Google Launchpad Accelerator is taking place in San Francisco this week. It focuses on start-ups that already have a product, with a good market fit, and are ready to scale.

OneFi has created Paylater, an online provider of digital financial services for the underbanked in West Africa.

Nubank is a financial technology company offering a fully digital and branchless experience, and Viva Real is an online real estate marketplace that connects buyers, sellers and renters with properties in Brazil. There is one other Brazilian start-up, Loggi, which creates new-wave logistics.

Kubo.financiero, a P2P lending platform, from Mexico.

Ayannah from the Philippines enables affordable and accessible digital financial services to be delivered to the world’s emerging middle-class.


Banks are exploiting loyal customers, warns Productivity Commission (The Guardian), Rated: AAA

The Australian financial system is uncompetitive, allowing banks and insurers to boost profits by exploiting loyal customers and adding up to $87 a month to the average mortgage repayment.

That is the conclusion of the Productivity Commission’s highly critical draft report into the sector, which finds it is “unquestionably strong” but calls for greater transparency to compare financial products and for regulators to gain powers to promote competition.

Australia gives regulator sweeping powers over bank bosses’ pay (Reuters), Rated: A

Australia has given its financial regulator sweeping powers to cap bank bosses’ pays, delay their bonuses and even ban them from the industry if found guilty of non-compliance, as it scrambles to restore trust in the scandal-hit sector.


ADGM is region’s 1st Fintech regulator, says Al Sayegh (, Rated: AAA

In the future, Fintech will be the most important aspect of financial services in the world, according to Ahmed Ali Al Sayegh, the Chairman of Abu Dhabi Global Market, ADGM.


George Popescu
Allen Taylor

August 9th 2016, Daily News Digest

August 9th 2016, Daily News Digest

News Comments Today’s news focus on Lending Club’s results, OnDeck’s results, and the FDIC proposing tougher hurdles for partnerships with marketplace lenders. United States Lending Club results are in my opinion really positive: Originations in Q2 2016 > Q2 2015. I did not expect that ! Yes, there is a reduction in origination vs Q1 […]

August 9th 2016, Daily News Digest

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United States

Lending Club results reveal pain of governance scandal, (FT), Rated: AAA

Lending Club said that originations of loans between April and June came to $1.96bn in the period, down 29 per cent from the previous quarter but fractionally higher than a year ago. That came as a surprise to some analysts, who had been braced for a steeper year-on-year fall.

Despite the stronger-than-expected top line, profits at Lending Club were hit by a surge in fees to professional services firms engaged in helping it to fight back, goodwill writedowns related to a 2014 acquisition, and a host of payments to staff affected by severance and retention programmes.

The net loss for the second quarter came to $81.4m, compared to a loss of $4.1m a year earlier.

Lending Club ended the quarter with 1,499 employees and contractors, down from 1,545 at the end of March.

There had been “a gaping hole [in management], given that the two most important people in the business — the CEO and Jeff Bogan, head of capital markets, had to leave,” said Peter Renton, founder of LendIt.

Despite the $2bn or so in quarterly loan originations the survival of the company was still in doubt, said Peter Atwater, Delaware-based president of Financial Insyghts.

OnDeck Reports Second Quarter 2016 Financial Results, (PR Newswire), Rated: AAA

OnDeck® today announced second quarter 2016 financial results highlighted by strong credit performance and record levels of Loans Under Management, Originations and gross revenue.

For the three months ended June 30, 2016, OnDeck increased Loans Under Management by 47% year-over-year to $1 billion, grew Originations 41% to $590 million, and increased gross revenue by 10% to$69.5 million.

“Our leadership position and diversified funding model enabled us to produce solid results this quarter,” said Noah Breslow, OnDeck’s chief executive officer.  “Although financial comparisons continue to be affected by our planned reduction inMarketplace sales and its resulting accounting impacts, we believe that retaining a greater percentage of loans on our balance sheet is the right decision for the long-term economics of the business. To that end, our Unpaid Principal Balance grew 57% year-over-year, which will drive future gross revenue.”

Mr. Breslow continued, “In addition, we are encouraged by credit performance trends across OnDeck’s portfolio, which continued to be strong, demonstrated by both sequential and year-over-year improvements in our 15+ Day Delinquency Ratio. We will continue to prioritize responsible growth of Loans Under Management as we progress through the remainder of the year.”

Financial Highlights

  • Gross revenue was $69.5 million for the quarter, up 10% from the prior year period.
  • Net revenue was $28.9 million for the quarter, down 33% from the prior year period.
  • GAAP net loss attributable to OnDeck common stockholders was $17.9 million for the quarter, compared to net income of$5.0 million in the prior year period.
  • Adjusted EBITDA* was a loss of $12.4 million for the quarter, compared to positive $8.7 million in the prior year period.
  • Adjusted Net Loss* was $14.0 million for the quarter, compared to Adjusted Net Income* of $7.3 million in the prior year period.

Key Business Highlights

  • Origination volume increased to a record $590 million for the quarter, reflecting 41% growth over the prior year. Lifetime Originations also reached a new milestone of over $5 billion during the second quarter.
  • Loans Under Management reached $1 billion, up 47% from the prior year period.
  • Unpaid Principal Balance grew to $790 million, up 57% from the prior year period.

Gross revenue increased to $69.5 million during the second quarter of 2016, up 10% from the comparable prior year period.  The increase in gross revenue was primarily driven by higher interest income, partially offset by lower gain on sale revenue. Interest income increased to $63.9 million during the quarter, up 27%, and primarily reflected the growth of average loans, which increased 37%.  The Effective Interest Yield for the second quarter of 2016 was 33.3%, down from 35.9% in the comparable prior year period, reflecting the continued mix shift to lower cost distribution channels, an increase in average term loan length over the period, and OnDeck’s lower pricing and origination fees for repeat loan customers.

Gain on sale was $2.8 million during the second quarter of 2016, down 76% from the comparable prior year period. The decline in gain on sale primarily reflected a lower Gain on Sale Rate during the quarter and the reduction of loans sold through OnDeckMarketplace.  OnDeck sold $79.3 million1 of loans sold through OnDeck Marketplace at a 3.5% Gain on Sale Rate during the second quarter of 2016, compared to $149.7 million of loans through Marketplace at a 7.8% Gain on Sale rate in the second quarter of 2015.  Loans sold or designated as held for sale through OnDeck Marketplace represented 15.6% of term loan originations in the second quarter of 2016 compared to 32.8% of term loan originations in the comparable prior year period.

Net revenue was $28.9 million during the second quarter of 2016, down 33% from the comparable prior year period. The decline in net revenue primarily reflected the reduction of Marketplace sales in the second quarter, which led to lower gain on sale revenue, higher provision expense and higher funding costs for the period. Net revenue margin decreased to 41.5% during the second quarter of 2016 from 67.9% in the prior year period, reflecting the decline in net revenue.

Overall, credit performance in the second quarter of 2016 was strong, with the 15+ Day Delinquency Ratio decreasing to 5.3% from 8.0% in the prior year period and from 5.7% sequentially.

The Cost of Funds Rate during the second quarter of 2016 increased to 6.7% of Average Funding Debt Outstanding, up from 5.2% in the comparable prior year period. The increase primarily reflected the acceleration of $1.6 million of deferred debt issuance costs due to the early voluntary prepayment in full of our prior securitization issuance.

Operating expenses were $47.5 million during the second quarter of 2016, up 24% over the comparable prior year period as OnDeck continued investing in our technology and analytics capabilities and incurred expenses related to supporting OnDeck’s overall growth.

Total Funding Debt at the end of the second quarter of 2016 was $554 million, up 52% over the prior year period.  The increase in total funding debt reflected the growth of Unpaid Principal Balance during the period. OnDeck continues to actively explore opportunities to further strengthen its financial flexibility, including upsizing existing debt facilities, adding new debt facilities, entering into additional securitizations, increasing Marketplace sales, and increasing its corporate line of credit.  While no assurance can be given, OnDeck expects that it will continue to be able to obtain sufficient financing to maintain its current level and planned growth of originations.

At the end of the second quarter of 2016, cash and cash equivalents were $78 million, down from $160 million at December 31, 2015. The decrease in cash and cash equivalents primarily reflected the company’s increased funding of loans on balance sheet.

Third Quarter 2016

  • Gross revenue between $73 million and $76 million.
  • Adjusted EBITDA between a loss of $9 million and a loss of $11 million.

Full Year 2016

  • Gross revenue between $280 million and $290 million.
  • Adjusted EBITDA between a loss of $35 million and a loss of $43 million.

FDIC Proposes More Hurdles for Bank Partners of Marketplace Lenders, (Pepper Hamilton), Rated: AAA

On July 29, 2016, the FDIC issued FIL-50-2016, which seeks comment on proposed Guidance for Third-Party Lending for FDIC-supervised institutions when lending through a business relationship with a third party. The guidance would apply to all FDIC-supervised institutions that engage in third-party lending, regardless of asset size.

The proposed guidance defines third-party lending as an arrangement that relies on a third party to perform a significant aspect of the lending process. This includes institutions originating loans for third parties; institutions originating loans through third parties or jointly with third parties; and institutions originating loans using platforms developed by third parties. These include marketplace lending companies with bank partnerships.

Due Date for Comments

Comments are due October 27, 2016 and should be sent to


The FDIC is seeking comment on the following topics:

  • the definition of third-party lending and scope of the guidance
  • potential risks arising from the use of third-party lending programs
  • elements of third-party lending risk management programs
  • supervisory considerations.
  • examination procedures.

The proposed guidance states that the FDIC would evaluate lending activities conducted through third-party relationships as though the activities were performed by the institution itself.

To manage the risks identified by the FDIC, the proposed guidance requires institutions to establish a third-party lending risk management program and compliance management system that is commensurate with the significance, complexity, risk profile, transaction volume, and number of third-party lending relationships the institution has.

This proposed guidance is another example of the FDIC continuing to raise the bar for marketplace lenders’ relationships with FDIC-insured banks. The FDIC has a negative view of the risks associated with marketplace lending, as evidenced by its November 6, 2015 Financial Institution Letter FIL-49-2015, which addressed the underwriting and credit risks associated with purchased loans and loan participations from third parties. More recently, in the February 1, 2016 issue ofSupervisory Insights, the agency discussed the specific risks that banks need to consider when dealing with marketplace lending companies, including third-party risk, compliance risk, transaction risk, servicing risk and liquidity risk, as well as specific due diligence recommendations.

Carrie Dolan Departs Lending Club as CFO, (Crowdfund Insider), Rated: A

Dolan is a highly respected executive not only at Lending Club but within the financial industry.  Last year, Dolan was named the “Most Powerful Woman in Finance” by American Banker. The same year she was also recognized as the Financial Woman of the Year by the Financial Women of San Francisco. Before coming to Lending Club, Dolan was Treasurer for the Charles Schwab Corporation.

Lending Club released a statement on her departure, alongside Q2 financial results. The company stated;

“Carrie was integral to Lending Club’s maturity and growth over the past six years,” said Scott Sanborn, CEO and President of Lending Club. “She approached us early this year about planning a transition, and in May the Board and I asked her to postpone her plans until we could navigate recent events. I and the Board want to thank her for her leadership, commitment and dedication particularly over the last several months, and wish her well in her next endeavor.”

Dolan for her part said of the decision to leave Lending Club;

“I remain a passionate believer in this business model and this company, and it has been a deeply rewarding experience to help build Lending Club from 40 employees to over 1,500. Now that investors are re-engaged with the platform, I am excited to begin my next chapter.”

Ron Suber, President of Prosper and a marketplace lending industry advocate, told Crowdfund Insider;

“I have known and respected Carrie for many years. We wish her the very best in her next endeavors. She has played a vital role in the growth of not just Lending Club but all of marketplace lending. This industry is maturing and entering a new era.”

The announcement of Dolan’s departure comes at a time when there are rumors of tanking moral at the online lender. The all hands mentality, following the resignation of former CEO Renaud Laplanche, may have taken its toll.

Lending Club CFO Dolan steps down, (FT), Rated: AAA

Chief executive Scott Sanborn, said:

Our efforts to reengage investors are working, with fifteen of our top twenty largest investors back on the platform today.

Despite the unusual disruption to our supply of capital in May, we facilitated nearly $2 billion of loans to nearly 170,000 borrowers. While we still have a lot of work ahead, the value that we bring to borrowers and investors is stronger than ever, and we believe we have the resources and resolve to execute on our mission.

The company said on Monday that its chief financial officer Carrie Dolan had resigned to “pursue a new opportunity”. The San Francisco-based company said that Ms Dolan had approached the board earlier this year about the move but had her delay her departure until the company could “navigate recent events”. Bradley Coleman, who previously served as Controller has been named interim CFO.

News of Ms Dolan’s departure came as the company deepened its losses for the second quarter. Lending Club reported a net loss of $81.4m or 21 cents a share in the three months ended in June, compared with a loss of $4.1m or 1 cent a share in the year ago period.

Excluding one-time items, adjusted loss came in at 9 cents a share, worse than the 3 cent loss that analysts were looking for.

Revenue however climbed nearly 7 per cent to $103.4m, ahead of analysts’ forecasts for $100.6m.

Private agencies devise new credit score models for first-time loans, (LiveMint), Rated: AAA

The inability of traditional credit bureaus to assign credit scores to many loan applicants who haven’t borrowed earlier has spawned a variety of private agencies using novel techniques to fill the gap.

CreditVidya says it looks at data sources ranging from behavioural, transactional, location and social profiles to assess the risk of an individual. This could be, for instance, a check on whether a loan applicant checks office e-mail from a place where she says her office is located. The bureau says its engine runs basic searches around the Internet to verify the applicant’s employment, spending habits and cash withdrawal rates from ATMs. Consistency of a particular behaviour among these data points demonstrates stronger stability of a customer,” said Abhishek Agarwal, co-founder and chief executive officer, CreditVidya.

Hong Kong-headquartered Lenddo, another credit assessment firm, says it uses psychometric tests and application form analysis as tools to check credit risk. The company, which works in 20 countries around the world, is focusing purely on small-value loans between Rs.1 lakh toRs.8.5 lakh in India.

Experian, which started in 2010, has introduced a technique that compares a first-time customer with statistically similar customers who have borrowed before to see the trend in repayment.

According to Sumit Bali, senior executive vice-president and head-personal assets at Kotak Mahindra Bank, the main issue with using third-party services for credit assessment seems to be the issue of invasion of privacy.

Kotak Mahindra Bank has been using surrogates such as educational background, duration of employment and financial stability to assess younger customers who may not have a credit history.

For instance, LenDenClub, a P2P lender, has been looking at a customer’s income data, equated monthly instalments (EMIs) repayment record and credit bureau data and pairing it with behavioural patterns on consumer loans, family details and employer track record to take lending calls.

David Snitkof of Orchard Shares Unique Insight into Online Lending Market Dynamics, (Crowdfund Insider), Rated: AAA

Orchard Marketplace is a platform that is uniquely positioned at the intersection of institutional money and online lending.

From my perspective, the first half of 2016 has proved defining for online lending, further solidifying the fundamental truths of our industry, including broader access to credit, a better customer experience and significantly increased transparency. The unfortunate events of the past few months presented a learning moment for online lending and I’m pleased to see that many participants have taken that opportunity to set the bar even higher.

It’s not surprising that originators are trying to diversify their capital structure.

For the past couple years, originators were flush with investor demand and could compel adherence to their preferred terms.  Today, these originators are more willing to be flexible with investors who make commitments to fund their lending.

The news cycle has started to slow for many of the negative headlines of early 2016, so I expect to see the path cleared for positive developments.

In addition to continued enthusiasm from European investors, we’ve seen strong interest from Chinese Wealth Management firms to invest in U.S. credit, as evidenced by notable US-Chinese partnerships such as those between DriveWealth and CreditEase, Robinhood and Baidu, Saxo Bank, and Shanda group’s growing stake in Lending Club.

There is a common misconception that the online lending industry is not regulated, when in fact, it is.

Marketplace Update: Pre-Qual Changes, (Funding Circle Email), Rated: A

Borrower Minimum Requirement Changes
As our business grows, so does the strength of our risk models. Each loan we review provides us with more data, allowing us to continuously make improvements to the accuracy and efficiency of our assessment process.

Based on thorough statistical analysis, our Credit & Risk team have updated our minimum requirements to the following :

  1. Business Tenure – Greater than 2 years
  2. Annual Revenue – No revenue restriction
  3. Net Profit – No net profit restriction (application could be approved based on risk assessment and loan affordability)
  4. Business Type – Should not be sole proprietor
  5. Bankruptcy – Should not have happened in last 7 years
  6. Tax Lien – No auto decline due to tax lien (application could be approved based on risk assessment and paid off status)
  7. Ineligible Industries – Speculative real estate, loan brokers, non-profit, adult entertainment, weapon manufacturers and sellers, money transacting/movement businesses, gambling, marijuana producers/sellers, bail bondsmen, government entities

Elevate Hires GE Executive Director Al Comeaux as Chief Communications Officer , (Business Wire), Rated: A

Elevate, a provider of online credit solutions for non-prime consumers, announced the addition of Al Comeaux, who has assumed the role of Chief Communications Officer. Mr. Comeaux brings to the role nearly 30 years of experience leading digital and online communications strategies at leading international consumer brands.

In his role, Comeaux will focus on investor relations, corporate communications, and internal communications.

Term Sheet: August 09, 2016, (Fortune), Rated: AAA

A new study on the state of startup/corporate collaboration from MassChallenge and Imaginatik shows that not only are corporates more eager to work with startups, 23% of it see it as “mission critical, and 82% said it’s at least “somewhat important.”

Most importantly, 67% of those responded that they wanted to work with earlier stage startups.

It became trendy to launch corporate-run startup accelerator programs, which I used to mock as “innovation by osmosis.” There’s a whole new class of corporate venture arms from non-tech corporations ranging from the insurance industry toCampbell Soup. Fortune 500 companies have hired “startup scouts” and opened innovation hubs in Silicon Valley.

But lately I’ve noticed a shift in the strange, sometimes awkward relationships between corporations and startups. Corporations take startups—even very young ones—far more seriously today. Look no further than the recent Fortune 500 acquisitions of startups as proof:General Motors spent $1 billion (or around that with earn-outs) on Cruise Automotive, a 30-person autonomous vehicle startup that hasn’t even launched a product. Unilever spent $1 billion on Dollar Shave Club, a razor startup that adds just $200 million in revenue to Unilever’s €53.3 billion bottom line. And of course, yesterday Wal-Mart spent $3 billion on

Brief: Marketplace Lender LendingUSA Names Brian Walby Vice President of Sales, (Crowdfund Insider), Rated: B

On Monday, marketplace lending platform, LendingUSA, announced it has appointed Brian Walby as its new vice president of sales. Walby previously worked as owner and managing director of RVC Consulting and has held executive and senior level positions at Experian Interactive Media and LendingTree.

United Kingdom

UK regulator responds to government questions on P2P regulations, (Business Insider), Rated: A

FCA’s response to Tyrie’s questions was published last week, the same day the UK announced its first interest rate cut in seven years. This is particularly timely, as the rate cut may end up being a driver behind new growth in the alternative finance industry, as outlined in last Friday’s briefing.

  • Responsibility f0r accuracy of information lies squarely with firms. FCA said that since October 2014 it has considered 37 cases of P2P and investment-based promotion, of which 21 were amended or withdrawn for breaking guidelines. FCA’s hard line on misleading promotions is especially important — falling interest rates will drive a decline in the interest rate paid on bank accounts, which could drive savers to explore P2P lending as an alternative way to earn interest income.
  • Firms have regulatory incentives to ensure creditworthiness of borrowers. P2P lenders must abide by the same rules as legacy lenders when it comes to assessing borrowers’ creditworthiness. Firms also voluntarily publish their loan books meaning they have a commercial incentive to ensure creditworthiness of borrowers — if books showed a default rate, potential investors would be put off, while existing investors would likely withdraw funds.
  • FCA has its own concerns about consumer understanding of risk. There is some evidence that FCA and Tyrie are right to be concerned — 37% of UK consumers who are aware of P2P lending think it is either equally risky, less risky, or are unsure of its risk relative to savings accounts. Savings accounts are covered by deposit insurance while all capital invested via P2P lending is at risk.
  • FCA admits crowdfunding is a small industry but has faith it will grow. FCA expects P2P lending and other crowdfunding models to result in a growing choice of finance providers. We think this may be optimistic and that as banks acquire new technology enabling them to compete with alternative lenders, we will actually see consolidation in the industry.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on fintech regulation that explains how regulators in Europe are successfully growing fintech innovation and how it’s becoming a model for regulators around the world.

Here are some of the key takeaways from the report:

  • The financial technology sector is booming, and Europe is a leading region for growth. VC-backed fintech companies in Europe raised £1 billion ($1.5 billion) in funding across 125 deals in 2015.
  • With this boom in funding comes a need to regulate the nascent industry. There are a variety of approaches — active, passive, and restrictive — that regulators can take. The EU and the UK, in particular, have taken an active approach, in order to encourage growth.
  • The regulation that will have the most impact on the European fintech market is the Second Directive on Payments Services, known as PSD2. It will force banks to open up their systems to fintechs. This will allow fintechs to act as intermediaries between banks and their customers.
  • The UK regulator is actively promoting its approach to regulation as a model for other countries to follow. Some of its innovations are already being copied by other regulators around the world.

In full, the report:

  • Examines the different approaches to fintech that regulators can take
  • Explains the key EU laws that will affect the European financial services industry in the next two years and beyond
  • Explores the potential impact of new regulations
  • Details the workings of the initiative central to the UK regulator’s approach to fintech
  • Highlights what can be achieved when regulators, governments, and fintech companies work together

What does a drop in interest rates mean for SME P2P lenders?, (Alt Fi News), Rated: A

Last week marked a historic day for the UK economy. The Bank of England announced a 0.25 per cent cut to interest rates and a raft of monetary policies to encourage growth in the wake of the referendum. A 0.25 per cent base rate is the lowest we’ve ever seen, it’s the first time the monetary policy committee MPC has cut interest rates in seven years, and the committee is not ruling out a further cut later this year.

As expected we’ve already seen banks and building societies review the savings and mortgage rates they pass on to customers but the impact is less clear in the emergent P2P sector. Inevitably, there will be some changes to the rates of return that lenders receive, but whether this will actually have a tangible effect on the appeal of P2P, is doubtful.

In reality, a 50 per cent reduction in base rate is only a 0.25 per cent fall, and that will not, in itself, make much of a difference to the industry.

By providing a steady stream of cheap money for banks to lend, there was little incentive for them to attract deposits from savers, weighing down available rates.

Even with this additional incentive for banks to lend, we’ll have to wait and see whether businesses really do benefit from the scheme.

In this environment, P2P lending has emerged as a genuine alternative to this type of intervention, producing investment income four or five times greater than bank deposits, while simultaneously providing business loans to fill the funding gap left by the banks. When all is said and done, a base rate cut won’t alone be enough to drive business-led growth in the economy and may put some downward pressure on returns, but for peer to peer lenders and the platforms they use it will be water off a duck’s back.


Asset Direct – Canada’s Marketplace for Unsecured Credit, ( News Wire Canada), Rated: A

Asset Direct of Canada Inc., is proud to announce the launch of their services to consumers inCanada.  Asset Direct is Canada’s premier loan search engine for unsecured credit.  Simple and easy to use, their free platform gives consumers the power to search multiple lenders in order to find a loan and payment plan that best suits their needs.

Asset Direct works with many lenders across Canada including: Canada Drives, Consolidated Credit, Easy Financial, Grow, LendingArch, Magical Credit, OnDeck, and Refresh Financial.  Together, Asset Direct and the above-mentioned companies are co-innovating the lending market.


Mexican P2P Lender Kubo.Financiero Raises .5M During Series A Funding Round, (Crowdfund Insider), Rated: A

Last week, Mexican peer-to-peer lending platform, Kubo.Financiero announced it had secured $7.5 million during its Series A funding round, which was led by Bamboo Finance with participation from Endeavor Catalyst, Monex Grupo Financiero, KuE Capital, Tanant Capital, Javier Molinar, Alta Ventures Mexico Fund I, Capital Invent, Vander Capital, and Wayra.

Founder and CEO of Kubo.Financiero, Vicente Fenoll, stated this is a sign of confidence not only for the company but also for Mexico’s fintech industry.

Diego Serebrisky, managing director of Alta Ventures Mexico Fund I, Managing Partner of Dalus Capital and Board Member of Kubo, added:

“We decided to continue supporting kubo in this round of capitalization, because it is one of the leading companies in the Fintech industry in Mexico, offering a much higher financial product competition, generating huge profits for their customers. “


Funding Societies raises .5M for its loan marketplace in Southeast Asia, (Tech Crunch), Rated: A

Look! Another notable funding round for a fintech startup in Southeast Asia, after Singapore-based Funding Societies raised a $7.5 million Series A round for its take on marketplace lending.

Fund Societies is active in Singapore and (as ‘Modalku’) Indonesia — Southeast Asia’s most developed economy and its largest economy, respectively — where it is rivaled by the likes of Capital Match and MoolahSense.

The company said it has paid out $8.7 million to date across 96 loans. It claims a 94 percent repayment rate which CEO Kelvin Teo touted as its most notable data point since it shows reliability over volume.

“We’re not the biggest in Singapore, but we have done the most term loans because we take the approach that over-lending to a person will come and bite you in terms of defaults,” he explained.

As for fine details: Funding Societies is primarily focused on working capital loans. In Singapore, the average loan size is SG$90,000 ($67,000) while that falls to SG$25,000 ($18,500) in Indonesia.

It charges a loan origination feed to the borrower (3-4 percent in Singapore, 5-6 percent in Indonesia) and a 1 percent monthly fee to the lender. It claims an approval rate of between 15-25 percent for loan applicants.

Teo told TechCrunch that the company is working to expand its service to Malaysia, where it has a handful of employees and an application to operate locally is pending regulator feedback.

Teo foresaw plenty of competition coming to market — that is why he and co-founder Reynold Wijaya launched the company in 100 days last year while they were in the U.S. completing their studies at Harvard University.

That sounds like a lot, and the company has already grown to some 70 employees, but the Funding Societies CEO insists that the company is matching startup-style growth with the responsibility that comes with providing financial products.


RBI governor Raghuram Rajan may unveil P2P norms as parting shot, (India Times), Rated: A

As Reserve Bank of India governor Raghuram Rajan prepares to deliver what would be his last monetary policy speech on Tuesday, speculations are rife that he will announce regulations for peer-to-peer (P2P) lending.

In April, RBI had come out with a consultation paper on P2P lending platforms and asked for public suggestions on the need to regulate them. Next step for the regulator is to come out with draft guidelines and ask for further suggestions before coming out with the real regulations.

People in the know said the buzz at the RBI is that Rajan wants to get all the innovative projects – including P2P platforms, regulations around the financial technology space and new payments procedures like Unified Payments Interface and Bharat Bill Payments – cleared before he demits office.


George Popescu