Wednesday July 5 2017, Daily News Digest

abs market overview

News Comments Today’s main news: SoFi to shut down Zenbanx. Red Ventures to buy Bankrate website for $1.24B. BofE to get tough on consumer lending. UK P2P lending surpasses 10B GBP. China re-thinks social credit. Korean P2P lending passes 300B won. LendInvest out of P2P lending. Today’s main analysis: US ABS market overview. Traditional wealth management challenged by robo boom. Today’s thought-provoking […]

abs market overview

News Comments

United States

  • SoFi to shut down Zenbanx. GP:”We do not know the details of the acquisition but we assume part of the due diligence SoFi was aware of this issue and therefore they didn’t purchase Zenbank for their customers or services, but perhaps for their team and know how?”AT: “I suspected this would happen. If they have the technology and the talent, what else do they need?”
  • US ABS market overview. GP:”steady growth in all segments except maybe auto”
  • How the market pushed Realty Mogul out of residential fix and flips. GP:”I continue to believe that fix and flip is highly correlated with the economic cycle and if a company relies on it there will be years with no origination in that market at some point.”AT: “Markets, and market conditions, change. This looks like a smart move for Realty Mogul. A good rationale, at least.”
  • Ally Bank online savings APY increases to 1.15%. GP:”Goldman Sachs online Bank increased it, Ally increased it… perhaps the FED rate adjustment is having an impact or perhaps the competition for savings dollars is increasing. Or both.  “AT: “If consumers can get better savings interest rates at online banks, why wouldn’t they?”
  • Inside the arms race between banks and startups. AT: “Focuses on negatives for banks. Seems a bit one sided. I don’t believe banks are out of the picture just yet, but we will likely see a steady decline soon. The survivors will be those banks that adapt and adopt the technology of online lenders.”
  • LendingTree, LeadsCon unveil first $25K startup innovation spotlight.
  • Tide raises $14M. GP:”Congratulations!”
  • Lifshitz&Miller investigate LendingClub. GP:”All public companies have an ongoing litany of lawsuits as soon as their stock does something un-usual. This is normal life for a public company in the US.” AT: “I don’t understand why now, a full year after the Renaud Laplanche issues.”
  • Red Ventures to buy Bankrate website for $1.24B. GP:”This is big news, and an amazing valuation. There is money in customer acquisition for fintech.”
  • Goldman raises $1B for real estate fund. GP:”Goldman has been in the real estate funding business for long time. focused on large commercial properties. Perhaps a good usage of the savings capital from Goldman Sachs bank could be real estate crowdfunding as well in the same way as Marcus works for unsecured personal lending? $1B for Goldman is not much money, this is not big news anyway. “
  • Suretly launched initial chocolate offering. GP:”Very amusing, but looks a little desperate.”

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

News Summary

United States

Six months after acquisition, SoFi is shutting down Zenbanx (TechCrunch), Rated: AAA

Online lending company SoFi is closing down Zenbanx, the online banking provider it bought earlier this year. In an email sent to Zenbanx customers, the company announced that it will close all accounts at the end of next month.

According to a SoFi spokesperson, Zenbanx had a partnership with Wilmington Savings Fund Society (WSFS) that expired this month and, rather than renew it or find another partner, the company decided to just close existing accounts.

US ABS Market Overview (Finsight.com), Rated: AAA

Recent New Issue

The Market Pushed Us Out of Residential Fix and Flip (Realty Mogul), Rated: AAA

If you are like many investors, you loved our residential loan product. Short term investments with high yield (9-12%) and monthly distributions, what’s not to love? And as much as our investors love them, you will no longer find them on RealtyMogul.com. We stopped originating them.

The purely local nature of fix and flip lending changed with online lenders having nationwide reach and access to tremendous amounts of capital, either from retail or institutional investors. At one point, RealtyMogul.com had in hand nearly $1 billion in capital commitments to purchase fix and flip loans from institutional buyers – that’s a lot of homes!

In late 2015 we started to notice a market shift. Fix and flip loan pricing started to drop. First it was 11%, then 10%, then 9%, and in many major markets it dropped to 8%. Throw in the cost of servicing these loans and on an 8% loan, investors’ estimated return is 7%.

At 8%, there should be a relatively lower risk profile to a loan. But in fact, the opposite was true. The dramatic increase in capital in the market meant that riskier loans were demanding lower and lower rates. Borrowers with great experience, credit and lower leverage were able to get rates in the 4-5% range from banks, whereas the 9-12% loans were only available in markets where there were no alternatives and the risk was fairly high.

Ally Bank online savings APY increases to 1.15% (Reddit), Rated: A

Chat rep said that my account should reflect the new rate by the end of today.

Peek Inside The Fintech Arms Race Between Banks And Startups (International Business Times), Rated: A

Capital One is opening Capital One Cafes in major cities across the U.S., with hip decor and more laidback consulting vibes than traditional branches. JPMorgan is trying the same idea with its Manhattan technology hub. Bloomberg reportedthe bank’s $9.6 billion technology budget coincided with new startup-style offices featuring foosball tables, open workspaces and snacks. But it might be too little, too late.

While, money transfer apps like Apple Pay, Venmo and WorldRemit garner widespread adoption, some experts predict banks could also lose well over half their retail profits to fintech startups. Flashy offices won’t change the fact that the days of traditional banking are over.

Nubank looks beyond traditional credit scores, using cellphone data and driver’s license information to find creditworthy customers who would never meet the requirements of a traditional bank. Like SoFi mortgages in the U.S., Nubank interest rates are flexible and can change as the customer’s financial security increases. Combine that with a lack of fees plus a smooth mobile experience, and traditional credit cards seem very outdated by comparison.

According to a Gallup poll, the amount of Americans who feel confident in U.S. banks dropped from 49 percent in 2006 to just 27 percent by 2016.

A nationwide survey of 500 chief financial officers byWEX Virtual Payments found 55 percent consider mobile payment options very important, in addition to 54 percent who say to same of blockchain solutions.

53 million Americans aren’t served by the current credit score market,  but have great cash flow,” Thomas told IBT. Nubank in Brazil and the fintech startup Tala, which has distributed around 2 million micro-loans in places like in Kenya and Tanzania, prove there’s no need to restrict loan eligibility to traditional metrics.

LendingTree, LeadsCon Unveil First-Ever $ 25,000 Startup Innovation Spotlight (IT Business Net), Rated: A

LendingTree, the online loan marketplace, and Access Intelligence, a business information and marketing company, today announced a new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The “LendingTree Startup Innovation Spotlight” at LeadsCon’s Connect to Convert will recognize the most innovative fintech startups across the consumer lead generation, call center and customer experience sectors. Startups around the world can apply today at  a chance to receive exposure, bragging rights and $25,000 in cash. Finalists will be announced in August and selected live on stage amid 1,000 industry executives at LeadsCon’s Connect to Convert industry conference and expo, August 21-23 at the New York Hilton Midtown.

Banking startup Tide raises $ 14 million to ‘give small businesses back their time (Business Insider), Rated: A

Banking startup Tide raised $14 million in one of the largest Series A funding rounds closed by a fintech company this year.

Tide, a digital-only banking app aimed at small businesses, has also partnered with online lender iwoca, in a move to allow small companies access to loans of up to £100,000.

The funding round was led by specialist fintech investor Anthemis, along with Passion Capital, LocalGlobe and Creandum, the company that backed Spotify.

Lifshitz&Miller LLP Announces Investigation of LendingClub Corporation (PR Newswire), Rated: A

Lifshitz & Miller announces investigation on behalf of LC investors concerning whether LC’s former CEO, Renaud Laplanche, engaged in improper loan transactions and personal investments as a result of material weaknesses in LC’s internal controls.

If you are an LC investor, and would like additional information about our investigation, please complete the Information Request Form or contact Joshua Lifshitz, Esq. by telephone at (516)493-9780 or e-mail atinfo@jlclasslaw.com.

Bankrate website to be bought by Red Ventures for $ 1.24bn (Financial Times), Rated: A

Bankrate, the US personal finance website, is to be bought for $1.24bn by Red Ventures, a digital marketing company which is expanding its footprint in financial services.

Private equity-backed Red Ventures has agreed to pay $14 per share in cash for Bankrate, which produces online content focused on financial advice and research, such as mortgage and savings calculators and credit card and insurance comparison tools.

Goldman Raised $ 1B For A Real Estate Fund (Bisnow), Rated: B

Documents filed with the Securities and Exchange Commission show that the investment bank has raised $1B for a new real estate fund, Broad Street Real Estate Credit Partners III. Further documents show it is on the road looking to raise more capital for the fund, with a source indicating to Bisnow that it is looking to pull in the same amount again over the coming months.

Around $600M came from U.S. investors and the rest from overseas, the documents show. Goldman typically puts around 20% of the equity into the funds it manages.

Suretly launched an Initial Chocolate Offering (Newsbtc), Rated: B

NYC-based startup Suretly, which raised $350K during preICO round this May, launched an Initial Chocolate Offering.

The event took place in Copenhagen, Denmark during Money2020 conference. All guests, who has visited Suretly’s booth, were gifted with a chocolate souvenirs shaped in SUR-token. Each token was packed in the individual memorable wrapping with the future Suretly ICO information.

United Kingdom

The Bank of England is preparing to get tough on consumer lending (Business Insider), Rated: AAA

The Bank of England ordered British banks and other lenders on Tuesday to prove by September that they are not taking on too much risk with their increased lending to consumers.

The BoE’s Prudential Regulation Authority did not set out any new rules on Tuesday but its move was the first time it has ordered firms it supervises to apply consumer credit rule more conservatively.

The PRA said it was “requesting evidence from all firms with material exposures to consumer credit of how they will – across consumer credit portfolios- ensure” they are not taking too much risk after years of low interest rates.

Lenders will have until September to respond and could then be asked to fix any specific areas of weakness by the PRA.

ORCA celebrates peer to peer lending uk surpassing £10 billion mark (Orca Money), Rated: AAA

Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms. In the first half of 2017 alone, over £2 bn was invested through P2P.

Take a look at the UK alternative lending ecosystem.

Traditional wealth management challenged by robo-adviser boom (Raconteur), Rated: AAA

Survey after survey shows that millennials, and indeed most potential investors aged under the age of 60, are happy to entrust their savings to a digital platform or mobile app, so long as it’s credible, secure, trustworthy, capable of offering them a range of low-cost funds and some personal investment advice.

Of the robo-advisers in the UK, the largest is Nutmeg. Launched in 2012, it has so far raised £71 million in five funding rounds from venture capitalists and others. Nutmeg has more than £600 million under management, though it remains loss making, and escalating marketing and advertising costs meant that in 2015 its losses widened from 2014.

Other UK players include Wealthify, launched in 2015; MoneyFarm, launched in Italy in 2012, and in the UK in 2016; and Scalable Capital, launched in 2016.

Brewin Dolphin has launched a robo-adviser that allows customers with between £10,000 and £200,000 to invest in one of six model portfolios at a cost of 0.7 per cent of invested assets, plus underlying charges of between 0.11 per cent and 0.16 per cent.

 

LendInvest out of P2P sticks to managing funds (Anonymous Email), Rated: A

Our sources reported that LendInvest cancelled their FCA application due to their decision to completely exit the p2p lending space.

As can be seen on the FCA website:

Firm name: Lendinvest Limited
Interim Permissions reference number: 658890

 

Permission Description Status Limitation Against Permission Permission End Date
Consumer credit business Entering into a regulated credit agreement as lender; and exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement. Inactive 02/06/2017
Credit brokerage Credit broking
Or
Credit broking limited to credit intermediation
Inactive 02/06/2017
No right to canvass off trade premises

It appears that this decision was due to the 36(H) legal rules around peer top peer in the UK . It has apparently become “more difficul to stay within the new 36(H) rules without becoming a bank or fund manager”. As LendInvest was already a fund manager, the company has decided to remain a fund manager and focus on that structure as opposed to applying for FCA p2p regulation.

In a similar fashion the online lender Wellesley has taken a similar approach having ‘paused’ P2P yet still shows as active.

This change makes Assetz Capital the 2nd largest business and property lender who is P2P in Europe. See

Of £295m lent, c £290m is P2P retail investors.

Kuflink Debuts Property-Backed Innovative Finance ISA & New Investment Options (Crowdfund Insider), Rated: A

UK-based peer-to-peer lending platform Kuflink has launched its Innovative Finance ISA (IFISA) and also two investment options. This news comes just a few months after the online lender received full authorization from the Financial Conduct Authority (FCA).

Assetz Capital bids to lend £300m after profitable year (Bridging&Commercial), Rated: A

Assetz Capital has revealed that it made a seven-figure pre-tax profit during the 2016/17 financial year, while revenues have now reached over £10m pa.
The peer-to-peer lending platform saw a total of £126m lent through it to SMEs between April 2016 and March 2017 with £38m of that total being achieved in the final quarter.

Assetz Capital claimed it would lend over £60m during the first quarter of this current financial year as it bids to reach £300m of lending for the whole of the year.

It’s time to bring ghost houses back to the land of the living – Lendinvest (Mortgage Solutions), Rated: A

As the Council of Mortgage Lenders has previously pointed out, even if the government managed to push the building industry into producing 300,000 homes across the UK each year, 90% of the housing stock that will exist by 2025 has already been built. If we are to tackle the housing issues we face, it’s not just down to increasing the rate at which new developments spring up – we need to make far better use of the houses we already have, too.

An obvious problem with some of these ‘ghost homes’ is that in their current condition nobody would want to live in them. They may have been ignored for years, falling into disrepair to the extent that they may actually be unlivable.

But these are exactly the sorts of properties that savvy investors may be looking for, the worst house on the street which can be done up, turned into a nice, respectable home and then sold on at a profit.

Londoners Borrowed £17B in New Mortgages in 2016, Wimbledon & Wandsworth Top Borrowers (Crowdfund Insider), Rated: A

Londoners borrowed another £17 billion in new mortgages last year as the affluent southwest London neighbourhoods of Wimbledon and Wandsworth topped the borrowing league table and and 17 of the top 20 areas for new mortgage lending last year are in London, reported European P2P lending platform Lendy.

The highest non-London area among for new mortgages is Maidenhead, which placed 11th out of the 2,717 postcode areas in the study.

AI savings platform launches £700,000 crowdfunding campaign (P2P Finance News), Rated: A

AN ARTIFICIAL intelligence platform that has partnered with RateSetter to help people save and invest is looking to raise £700,000 through crowdfunding.

The fintech firm, Plum, has launched a crowdfunding campaign on Seedrs, to build its team and platform.

NatWest trials AI compliance tool to ensure financial advice is spot on (Internet of Business), Rated: A

The UK bank will use the Recordsure compliance tool based on artificial intelligence (AI) from regulatory risk specialist TCC Group in order to record face-to-face and telephone conversations between the bank and its customers – with those customers’ consent, naturally.

The AI technology is able to analyze an interaction and then classify sections of the conversation, according to Recordsure’s creators. For example, it could determine which aspects of the conversation were general chitchat, which involved financial advice, and what topics were discussed.

P2PFA Announces New Associate Membership, Publishes Names of First New Members (Crowdfund Insider), Rated: A

The Peer-to-Peer Finance Association (P2PFA) has created a new category of membership to boost its ranks and add perspective to the association that represents the UK’s top online lenders.

These new members include:

  • Alterest – Provides non-bank lending markets with loan intelligence infrastructure that enables: seamless exchange of lending data in a secure and timely manner, and flexible analysis of performance and risk of any loan pool or exposure.
  • Altus Consulting: A specialist provider of consultancy services to the financial services sector.
  • Equifax: A global information solutions company that uses data, analytics, technology and industry expertise to power organisations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.
  • Fox Williams LLP: A City law firm with one of the leading Fintech practices in the UK, acting for over fifteen P2P lending platforms.
  • Grant Thornton UK LLP: A global consultancy that is part of a network of over forty-thousand people in 130 countries. In the UK they are led by 185 partners and more than 4,500 people.
  • Orca Money: A platform that is driving the mainstream adoption of peer-to-peer lending by providing research, analysis and tools to empower investors.
  • Simmons & Simmons: An international law firm with a Fintech team that comprises a range of multi-disciplinary lawyers from across their European, Middle Eastern and Asian offices.
  • TLT LLP: Supports large corporates, public institutions and high-growth businesses on their strategic and day-to-day legal needs.

Hive Project Launches Blockchain-Based Invoice Financing Platform, Targets SMEs (Finance Magnates), Rated: A

Despite being the backbone of every economy, small and medium-sized businesses have traditionally faced challenges in securing access to short-term financing from traditional lenders. To resolve this issue, the Hive Project today announced the development of a cryptocurrency invoice financing platform to help SMEs overcome the hurdles they face when trying to get the financing they need.

WiseAlpha Founder & CEO Rezaah Ahmad Comments on Successful Crowdcube Round (Crowdfund Insider), Rated: B

WiseAlpha, a UK first online lending platform that gives investors access to high yield institutional bond and loan investments, has overfunded its £500k target on Crowdcube by 258%, raising £1.29 million.

The largest single investment was £150K.

“We’re thrilled to have overfunded our original target and glad that the 1452 people who have invested in us so far are backing our vision of a fairer investment world where everyday investors aren’t shut out from accessing the biggest and best investments.”

UK P2P Lender RateSetter Update: Targets New Business Borrowers (Crowdfund Insider), Rated: B

Now the lender is planning to boost its direct marketing methods to diversify its new business borrowers sources, according to Peer2Peer Finance News.

Lewis appointed on b2b brief for p2p lending platform (PR Week), Rated: B

Lewis has been appointed by ArchOver, a peer-to-peer lending platform for UK SMEs, to run a campaign aimed at business audiences.

China

China changes tack on ‘social credit’ scheme plan (Financial Times), Rated: AAA

Beijing has pulled back on plans to license big technology companies to develop “social credit” scores for consumers, based mainly on their online activity, because of concern over conflicts of interest, industry analysts said on Tuesday.

The People’s Bank of China, the central bank, selected eight tech companies in 2015 — including e-commerce group Alibaba’s Ant Financial and game developer Tencent — to develop pilot programmes to give consumers credit scores.

The pilots, which monitored spending patterns but also personal behaviour and social media activity, initially raised concerns about consumer privacy. Some of their metrics were seen as irrelevant, including proposals to factor in exercise routines or what time of day people went online. Others were considered more sinister, such as efforts to rate “honesty” or “trustworthiness” by linking credit scores to friends’ social media posts.

Beijing has now decided not to award any licences this year after regulators expressed increasing concern about the potential for conflicts of interest.

MYbank Deepens Push for Business Big Banks Won’t Touch (Bloomberg), Rated: AAA

MYbank, the two-year-old Chinese online lender that already has 3.5 million small-business customers, plans to push deeper into a segment that’s long been shunned by the country’s largest banks.

MYbank wants to capitalize on its links to billionaire Jack Ma’s Alibaba Group Holding Ltd. by offering loans to the more than 10 million smaller merchants that use the company’s e-commerce platforms, MYbank President Huang Hao said in a June 29 interview. Ant Financial, Alibaba’s financial affiliate, owns 30 percent of the online lender.

Formally known as Zhejiang E-Commerce Bank Co., MYbank was able to more than quadruple its lending through 2016, taking its outstanding loans to 33 billion yuan ($4.9 billion).

Its nonperforming-loan ratio was around 1 percent, Huang said, lower than the national average of 1.74 percent. The bank’s technology, which runs loan applications through more than 3,000 computerized risk-control strategies, has kept delinquencies in check, he said.

Still, last year’s lending explosion came at a cost, dragging its capital adequacy ratio down to 11.07 percent by December from 18.51 percent a year earlier.

Chinese tourists are driving mobile payments across the globe (IBS Intelligence), Rated: A

The number of Chinese tourists abroad hit 122 million in 2016, with a vast majority of them paying via their mobile phones. That’s according to a new study from Kapronasia and CANCAN. The survey pool contained 1,000 Chinese consumers abroad and 60 global merchants.

While 67% of respondents reported that they use Alipay or WeChat Pay for overseas purchases. This represents about 41% of overseas consumption and tourists used mobile payments for more than 10% of total transactions.

The report also highlights how Chinese tourists are spending more and more in retail ($900 on average in 2016), instead of luxury items. Only 5.7% spent more than $6,288, with a total amount of $109.8 billion throughout 2016.

80% of merchant respondents cited consumer demand as one of the main reasons for adopting mobile payments, with 70% adding that mainland Chinese consumers were their largest source of global revenue. Clothing, makeup, skincare, food and beverages top the list of goods purchased with mobiles, with travel and accommodation not far behind.

UAV Startup Clobotics Raised its First Round of Financing from GGV Capital (Xing Ping She), Rated: A

Recently, a Shanghai-based Unmanned Aerial Vehicle (UAV) startup—— Clobotics finished its first round of financing from GGV Capital, the amount was not disclosed. According to George Yan, the founder and CEO of Clobotics, this round of financing will focus on developing and iterating their products and technology, expanding the marketing layout, and accelerating the development of Clobotics in the key vertical field.

Set up in November 2016, Clobotics is a provider of business intelligence (BI) and visualizing data, focus on the research of UAV machine vision, industrial big data acquisition, and cloud big data processing and analysis. Unlike many of the domestic manufacturers that focus on hardware plane, Clobotics is good at using leading software, technology and platforms to embed advanced technologies in the field of artificial intelligence, so as to fully explore the value of UAV-collected data.

Police Arrest 32 Employees of Company Behind ‘Straddling Bus’ (Sixth Tone), Rated: B

The test site of China’s fantastical traffic-straddling bus was dismantled in June, and now the peer-to-peer financing company that backed the project is being investigated for illegal fundraising.

Following reports of unlawful conduct, a total of 32 suspects at Beijing-based Huaying Kailai Asset Management Co. Ltd. have been arrested, according to an announcement Sunday by Beijing police on their Weibo microblog.

European Union

Investor protection vs Access to Finance: The Growth of Alternative Finance (Crowdfund Insider), Rated: AAA

Clearly in Europe (Brexit aside) the UK has led sector growth. A combination of a culture of entrepreneurship and risk taking has combined with a supportive government and a regulatory body tasked with a mission of fostering competition – perhaps to the frustration of traditional financial firms. The rise of internet finance in the UK has engendered few occurrences of fraud to date. Growth has been sustained. Perhaps the Brits have gotten the balance right so far?

But which country has the largest alternative finance market in the world? China, of course.

Kleverlaan points to Italy as a country that has stumbled out of the gate. Something the country is attempting to rectify with recent rule changes specifically targeting equity crowdfunding.

View the full report on alternative finance here.

The European Investment Bank Pledges €18.5 million to Finance Continental European SMEs through Lendix (Crowdfund Insider), Rated: A

The European Investment Bank Group (EIB) through the European Investment Fund (EIF) has announced that it will provide €18.5 million to back a joint investment fund designed to lend money to SMEs through crowdlending platform Lendix.

Swedish tech elite’s darling startup Karma just bagged $ 4 million for its hyper-growing food waste app (Business Insider), Rated: A

Swedish startup Karma has built an app that helps restaurants, grocers and cafés reduce their food waste by selling their surplus to consumers at reduced prices.

The company has now raised between 30 and 40 million SEK ($3,5 – $4,7m) to take on Europe after a booming start in its Swedish home market.

The seed round comes from Swedish investor Eequity and global VC fund e.ventures, which has also backed the hyped Swedish fertility app Natural Cycles.

P2P Lender VIAINVEST Hits €10 Million in Funded Loans (Crowdfund Insider), Rated: A

Newly launched peer to peer lending platform VIAINVEST has announced topping €10 million in loans. The 7 month old Latvian platform said consumer loans issued by VIA SMS Group, came from the Czech Republic, Poland, Latvia and Spain.

Australia/New Zealand

Xpress Super and Australian P2P lender RateSetter announce partnership (Finder.com), Rated: A

RateSetter, Australia’s largest peer-to-peer lender, and self-managed-superannuation-fund (SMSF) administrator Xpress Super have today announced a partnership.

Through the partnership, SMSF investors will now have direct access to their RateSetter account via the Xpress Super platform, making it easier for SMSF investors to lend to creditworthy borrowers.

Introducing HashChing – an online marketplace for home loan deals (sa real estate news), Rated: A

Based in the heart of Sydney, HashChing is Australia’s first online home loans marketplace for broker-negotiated home loan deals.

All mortgage brokers are verified and rated through the website Artificial Intelligence Algorithm, selecting the brokers who offer the best services and then recommending them to borrowers in their area. Similar companies that had paved the way before HashChing had simply listed rates to the consumer through the bank or lender’s website.

Home loan rates on HashChing start from 3.59% p.a. and consumers can browse through the home loan deals page to see what offers are available.

Currently the company has helped over 14,500 borrowers with their home loan enquiries, all worth more than $7 billion dollars combined. Of which, $6 billion has come in the last 12 months alone, and the company also currently lists more than 600 verified mortgage brokers – including 30 mortgage brokers from SA.

Colliers’ alternative to bank funding (True Commercial), Rated: B

A new Colliers International service is providing an alternative to traditional bank funding by matching commercial property investors to development and investment opportunities.

The Capital Sourcing unit was established by Tim Lichtenstein, who has a track record in capital raising for commercial real estate assets.

India

UrbanClap Raises $ 21M in Series C (BW Disrupt), Rated: A

Home services start-up firm UrbanClap has raised $21 million in a series C funding round led by Internet investment fund Vy Capital. Led by Alexander Tamas, Dubai-based Vy Capital is a major investor in Zomato.

Early investors SAIF Partners, Accel Partners and series B investor Bessemer Venture Partners also participated in the round. Existing investors also spent approximately $1 million more to buy shares held by some employees and a part of stakes of angel investors Kunal Bahl and Rohit Bansal, the founders of Snapdeal, UrbanClap co-founder Abhiraj Bhal told LiveMint.

Reliance Capital arm invests $ 1 mn in P2P lending platform Billionloans (VC Circle), Rated: A

Billionloans Financial Services Pvt. Ltd, a Bengaluru-based fintech startup that operates a peer-to-peer (P2P) lending platform, has raised $1 million (around Rs 7 crore) in seed funding from Reliance Corporate Advisory Services Ltd, a wholly owned subsidiary of Reliance Capital Ltd.

Asia

Peer-to-peer loans pass 300 billion won for first time (Korea JoongAng Daily), Rated: AAA

The number of peer-to-peer loans more than doubled in just six months, going from 96.9 billion won ($84.5 million) in June last year to over 300 billion won in December.

The change represents a 220.5 percent increase, according to data provided by the Financial Supervisory Service and Financial Services Commission.

The number of users also surged 116.6 percent to 6,632 in June compared to December’s 3,062.

Singapore fintech startup Instarem raises $ 13 mn to expand payment infra (VC Circle), Rated: A

Instarem, a Singapore-headquartered cross-border payments company founded by Indian-origin entrepreneur Prajit Nanu, has raised $13 million in a Series B funding round led by Chinese venture capital firm GSR Ventures, a company statement said.

Singapore fintech startup Validus Capital raises US$ 2.9M to grow SME lending platform (e27), Rated: A

Singapore-based fintech startup Validus Capital has raised S$4 million (US$2.9 million) from Vertex Ventures.

It will use the newly-raised round to expand regionally and grow its online lending platform.

Chinese investors eye Indonesia’s P2P lending marketplace Investree for Series B (udaipur kiran), Rated: A

Indonesian peer-to-peer lending marketplace Investree announced recently that Chinese investors have initiated discussions for an investment in the company for its next Series B round.

If successful, the deal will become one of the first international investments in Indonesia’s fintech space. Previously, the startup has raised an undisclosed Series A round in 2016 from local venture capital Kejora which typically invest US$2 to US$5 million in their portfolio firms.

Authors:

George Popescu
Allen Taylor

Monday May 22 2017, Daily News Digest

cumulative net trigger loss

News Comments Today’s main news: DBRS confirms SoFi professional loan program 2016-B LLC.  Bond buyers return to online lenders. RateSetter acquires Vehicle Trading Group. Linked Finance receives full FCA authorization. Australian banks have paid $60M in forced refunds. StashAway raises $2.2M. Today’s main analysis: Prosper Marketplace Issuance Trust PMIT 2017-1. Today’s thought-provoking articles: Bond buyers return to online lenders. China, […]

cumulative net trigger loss

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

Barbados

News Summary

United States

DBRS Confirms SoFi Professional Loan Program 2016-B LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today reviewed and confirmed the four outstanding publicly rated classes from SoFi Professional Loan Program 2016-B LLC. All four classes were confirmed because performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their current respective rating levels.

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Professional Loan Program 2016-B LLC Post-Graduate Loan Asset-Backed Notes, Class A-1 Confirmed AAA (sf) May 19, 2017 US
SoFi Professional Loan Program 2016-B LLC Post-Graduate Loan Asset-Backed Notes, Class A-2A Confirmed AAA (sf) May 19, 2017 US
SoFi Professional Loan Program 2016-B LLC Post-Graduate Loan Asset-Backed Notes, Class A-2B Confirmed AAA (sf) May 19, 2017 US
SoFi Professional Loan Program 2016-B LLC Post-Graduate Loan Asset-Backed Notes, Class B Confirmed A (high) (sf) May 19, 2017  US

Weekly Industry Update: Prosper Marketplace Issuance Trust (PMIT 2017-1) (PeerIQ), Rated: AAA

Prosper priced its first unsecured consumer deal of 2017 on May 19th, representing the sixth deal consisting of Prosper collateral, and the first deal backed by Prosper’s consortium of institutional investors. The deal was structured by Credit Suisse and co-led by Jefferies.

The Consortium appears on track to deliver the $5 Bn loan purchasing commitment to Prosper as evidenced by i) size of the deal size ($470.8 Mn), ii) average age of the portfolio (two months), and speed to marketing th deal. The deal generates incremental revenue for Prosper which holds unrestricted cash and cash equivalents of $22.3 MM.

We note that Kroll has added 4.5% points for base case loss range reflecting the somewhat higher path of losses on CHAI 2016-PM1 than initially expected. (CHAI 2016 PM-1 has a revised base case loss range of 12 to 14% from 10.61% initially). 

 The deal’s excess spread is substantially tighter, reflecting higher coupons, improved market conditions, and stronger investor appetite for MPL ABS bonds. The attractive excess spread of ~10% implies a significant return for residual tranche investors assuming base case loss estimates are borne out.

Improved Predictive Risk Model PMI-7 

Prosper made a significant change in the in the credit underwriting by switching from Experian to TransUnion, the dominant credit bureau in the FinTech sector. The switch to TransUnion affords Prosper access to trended bureau data, more diverse credit attributes, and alternative data. Trended data provides lenders with a longitudinal view rather than merely a snapshot into a borrower’s credit behavior.

Prosper rolled out a new proprietary credit risk model PMI-7 on December 20th based on the TransUnion dataset. Although the trended bureau data is a significant long-term enhancement, it will take some time for Prosper to re-calibrate models based on new performance data. Investors and Prosper will be monitoring the vintage performance from PMI-7 closely to assess the smoothness of the transition.

Source: PeerIQ

Bond investors in the deal benefit from credit enhancement consisting of over-collateralization, subordination, reserve accounts, and excess spread. For PMIT 2017-1, the A, B, and C tranche has a total credit enhancement of 43.9%, 31.1%, and 10.4%.

Pricing Tighter

The Prosper deal priced tighter than a recent LendingClub prime deal ARCT 2017-1, in part due to the much higher initial credit enhancement in PMIT as compared to other recent deals.

We observe a parallel shift in the credit curve: For instance, PMIT 2017-1 A (A-rated) has about 44% credit enhancement and 0.8 year WAL; ARCT 2017-1 A (BBB-rated) has about 29% credit enhancement with a similar WAL. PMIT 2017-1 A was priced 95 basis points tighter than the senior class in ARCT 2017-A.

Walking down to lower junior tranches, PMIT 2017-1 C (B-rated) was priced about 40 basis points wider than ARCT 2017-1 B (BB- -rated). The steepening in the pricing curve again reflects demand for senior rather than equity-like risk profile.

Trigger Talk

We continue to observe a pattern of higher CNL triggers in recent deals, reflecting conservative outlook from market participants. Exhibit 4 shows several cumulative net loss (CNL) trigger profiles in recent personal loan ABS deals. Here, we summarize the cumulative loss trigger profiles from recent deals and contextualize the CNL triggers of the new Prosper deal with those of CHAI 2015-PM1.

All Is Forgiven? The Bond Buyers Return To Online Lenders (PYMNTS), Rated: AAA

After the rather spectacular fireworks display that Lending Club had going on this time last year, it was not great surprise when the bond buyers who had been snapping up P2P marketplace debt suddenly got a case of cold feet and starting fleeing those marketplace lending platforms.

Since April of this year, over $2 billion in securities backed by loans have either been sold or are being prepared for an imminent sale, according to credit-rating firms and people familiar with the matter.

That is some much needed good news for the segment, as it represents more than was issued in the entire second quarter of 2016, according to data tracker PeerIQ.

And it seems to be a continuation of recent activity that saw $3 billion in bonds backed by online loans that were issued in the first quarter of 2017, double the amount from the same period a year earlier.

Bonds backed by online loans is a small part of the securitization market — as of 2016, $7.8 billion of bonds backed by online loans were issued, compared with $191 billion in total issuance of asset-backed securities, according to S&P Global Ratings.

New Fed Mortgage rolls out the “Fast Track Mortgage” (PRWeb), Rated: A

NewFed Mortgage Corp., a multi-state residential mortgage lender is excited to announce their “Fast Track Mortgage” loan origination technology integration with BeSmartee, an online mortgage automation company based in Huntington Beach, California. This smart technology platform utilizes intuitive artificial intelligence targeting the specific needs and qualification of borrowers.

Fast Track is an online self- serve platform offering mortgage shoppers the convenience of 24/7 access to obtain a personalized rate and cost quote with the option to continue to apply and obtain a conditional loan approval in less than 15 minutes. Fast Track streamlines the application process by allowing the borrower online to pull their own credit report, calculate costs, obtain loan disclosures on the spot and receive an automated loan approval and along with the option to order their home appraisal. The ease of Fast Track Technology allows borrower to send documents right through their specially created account.

Nuance Strengthens Biometrics Security Portfolio and Attacks Fraud with Advanced, Multi-Modal Offering (NASDAQ), Rated: A

Nuance Communications, Inc. (NASDAQ:NUAN) today took a major step towards reducing the risk of consumer fraud by announcing a new suite of biometric security solutions, driven by the latest in artificial intelligence (AI) innovations.  The new Nuance Security Suite includes not only the company’s award-winning voice biometrics technology, but also new advances in facial and behavioral biometrics that combine to provide advanced protection against fraud, across customer service channels.

Applying deep neural networks (DNN) as well as advanced algorithms to detect synthetic speech attacks, and integrating facial and behavioral biometrics means the Nuance Security Suite takes fraud prevention to new levels.  By combining a range of physical, behavioral, and digital characteristics to provide secure authentication and more accurately detect fraud across multiple channels – from the phone to the Web, mobile apps and more – Nuance’s new Security Suite allows enterprises to attack fraud head-on, while at the same time offering an improved customer experience.

With its latest Security Suite, Nuance can equip an organization with one or more of the following options to fight fraud, improve security and boost the customer experience:

  • Voice biometrics – authenticates the customer when they say a predetermined phrase like “My voice is my password,” or during the course of normal conversation with an agent to determine if the customer is indeed who they say they are.
  • Facial biometrics – utilizes the camera on a smart phone to verify the person in real time.
  • Behavioral biometrics – tracks how users interact with Web and mobile applications, (e.g. scrolling, mousing, or tapping), creating a pattern against which to compare.
  • Additional biometric modalities – In addition to offering support for voice, facial, and behavioral biometrics, the Nuance Security Suite can also accept plug-ins for other emerging authentication technologies such as retinal scans.

The mortgage search goes digital (American Banker), Rated: A

Interest rates on the rise and a lower inventory of homes on the market are tightening access to the housing market. At the same time, nonbank, online-only lenders have boomed, accounting for 73% of loans originated, according to the Federal Housing Authority.

This trend is likely to continue in the coming years. And members of the digital-native Millennial generation, who rely on online search to find home loans–and everything else–are taking over as the primary home-purchasing segment of the population–Millennials accounted for 84% of closed home loans in January 2017, according to the Ellie Mae Millennial Tracker™ report. In this environment, an effective organic local search strategy is no longer just beneficial for traditional mortgage lenders; it’s existential.

Of 5,849 loan officers whose online presence Yext studied across the online ecosystem (including sites like Google, Facebook, Bing, Yelp, and many others), 64% of their business listings contained incorrect addresses, 42% had phone number errors, and 46% had errors in business names. 9.25% of loan officer listings were duplicates, and 57.8% of loan officers studied had no online presence at all.

CFPB Explores Ways to Assess the Availability of Credit for Small Business (CFPB), Rated: A

The Consumer Financial Protection Bureau today launched an inquiry into ways to gather and use new and existing information to identify the financing needs of small businesses, especially those owned by women and minorities. Small businesses typically need access to credit to take advantage of growth opportunities, yet public information on this lending market is inconsistent and incomplete. The Request for Information asks for public feedback to help the Bureau better understand how to bridge this information gap. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB to collect data about small business lending to help identify needs and opportunities in the market and to facilitate enforcement of fair lending laws.

500 Startups Creates Pooled Investment Fund for Fintech (Crowdfund Insider), Rated: A

500 Startups has filed a Form D 506(c) for a pooled investment fund targeting Fintech. The 500 Fintech LP is seeking $25 million according to a filing with the Securities and Exchange Commission.

The Silicon Valley based operation has committed over $350 million in early stage investments. Over 1,800 companies have benefited from both funding and support around the world since the global seed fund was launched in 2010.  Some of the better known investments include Twilio, Credit Karma, Maker Bot and more.

TSB offers online consumer lending (The Mountain Press), Rated: A

PIGEON FORGE — Tennessee State Bank is excited to announce online consumer lending, powered by Lending Club, the world’s largest online credit marketplace, is now available.

These loans range from $1,000 to $40,000, are unsecured (which means no collateral is required), and can be used to eliminate high interest debt, kick-off a home improvement project, or make a major purchase.

JPMorgan formally quits R3 (LinkedIn), Rated: A

Not subscribing to a consortium like R3 is not the same as banks not leveraging blockchain/DL. Here is a link to an excerpt from a report we did on a bankers perspective (former head of digital banking at Deutsche Bank) on blockchain which may provide some insights:

At the same time, Ripple is posting amssive gains, overtaking Etherium on market cap:

First Federal Lakewood invests in Boston startup Numerated Growth Technologies (Cleveland Business), Rated: B

The mutual bank, with $1.6 billion in assets, has announced an investment partnership with Boston’s Numerated Growth Technologies Inc., a fintech (the term ascribed to programs and technology that support financial services) startup spun out of Boston-based mutual Eastern Bank own in-house fintech accelerator, Eastern Labs.

Numerated’s platform focuses on small-dollar loans, allowing the loan process to be managed in real-time — reportedly conducting the process in as quick as five minutes, according to the firm — in addition to automating marketing to existing and prospective bank customers, which helps feed the loan pipeline as fewer consumers visit brick-and-mortar bank branches.

Nicki Minaj Is Starting An ‘Official Charity’ To Pay Off Student Loans (Huffington Post), Rated: B

Last weekend, hip-hop living legend Nicki Minaj made waveswhen she decided ― seemingly spontaneously ― to start making tuition and student payments for straight-A students who reached out to her via Twitter.

Most notably, Minaj announced that she was in the process of launching an “official charity for Student Loans/Tuition Payments,” meaning kids who are having trouble paying their way through school could soon get some much-needed help.

United Kingdom

HSBC tech chief on digital challenger banks: ‘We are building similar stuff ourselves’ (Business Insider), Rated: AAA

One of HSBC’s most senior technology executives says that the big bank is not far behind digital-only challenger banks when it comes to consumers offerings.

Raman Bhatia, HSBC’s head of digital for retail banking and wealth management in the UK and Europe, told Business Insider that while startups enjoy a technological advantage, HSBC is working hard to catch up.

Bhatia pointed to HSBC’s SmartSave app as an example of how the bank is keeping pace with digital rivals. The app helps people automatically put money into savings based on pre-set rules. It evolved from Nudge, an internally developed and trialled savings app HSBC worked on last year. SmartSave was trialled with around 2,000 HSBC customers in December.

Assetz Capital reaches quarter of a billion lending milestone (P2P Finance News), Rated: AAA

ASSETZ Capital announced that it has now lent £250m to UK businesses.

The peer-to-peer lender said it has provided up to £25m of secured loans a month since its launch in 2013, with more than £55m lent so far this year.

Stuart Law (pictured), chief executive of Assetz Capital, said investors have earned more than £21m with actual rates of between 3.75 per cent and 18 per cent.

Sub-prime vehicle finance provider bought out of administration (AM Online), Rated: AAA

Peer-to-peer lending company RateSetter has acquired sub-prime vehicle finance provider Vehicle Trading Group out of administration.

The Leicester-based operation has now been sold to RateSetter, which is planning to rebrand the business, but Insider Media reported that the deal “will not impact its day-to-day operations”.

Linked Finance receives full authorisation from UK regulator (The Irish Times), Rated: AAA

Linked Finance, a peer-to-peer lending platform, has received full authorisation by the UK’s financial conduct authority to enter the UK lending market.

Figures from the first quarter of 2017 show that the company’s Irish platform increased lending activity by more than 326 per cent on the same period a year earlier.

Since its launch in 2013, Linked Finance has facilitated more than 870 loans and more than €25 million in funding for Irish small to medium enterprises.

Deloitte Launches Enhanced Digital Banking Offering (PR Newswire), Rated: A

Deloitte today announced the launch of its enhanced Digital Bank offering to further accelerate a bank’s digital transformation. Based on the Salesforce Intelligent Customer Success Platform and utilizing the Salesforce Financial Services Cloud, Digital Bank helps banks create exceptional experiences by providing tailored banking capabilities with accelerated implementation and realization of value.

Digital Bank’s capabilities and potential benefits include:

  • Augmented Salesforce Platform with many technologies, fintech solutions and AppExchange partners, as well as personalized channel engagement through automated marketing using Salesforce Marketing Cloud
  • Ability to expand relationships by having full visibility into bank relationships across business units
  • Established customer trust through multifactor secured cloud banking platforms and improved onboarding for customers through a fully mobile process enabled by many technologies
  • Increased speed and agility to meet customer needs, as well as the regulatory needs of the banking industry, using predictive analytics based on account behavior to recommend next best offers and next best actions
  • Accelerated implementation allowing banks to generate ROI faster, including linking newly created accounts in Salesforce to a blockchain secured digital identity

The job creation contradiction in fintech (AltFi), Rated: A

It got me thinking about the broader impact of fintech lenders in the UK, especially those built to fund businesses. Companies like Funding Circle – the country’s largest marketplace lender for SMEs – regularly reference their impact on job creation in corporate updates. The logic is that the loans that Funding Circle and other platforms like it facilitate help small businesses to grow, and so too to hire more staff.

Leading US firm OnDeck released a report in late 2015 analysing the economic impact of the first $3bn lent through the platform. The report found that OnDeck loans had powered $11bn in business activity, creating 74,000 jobs across the country. Similarly, Funding Circle published findings last summer suggesting that its lending had supported the creation of 40,000 jobs in the UK since 2010, boosting the economy by £2.7bn.

In this way, they are unquestionably killing jobs, as well as creating them – but nobody ever talks about that.

Barely a month goes by without news of a fresh round of bank branch closures. In March, for example, we learnt that RBS and NatWest would be cutting 158 branches and 400 jobs across the country.

Welsh start-ups can become unicorns with a $ 1bn plus valuation (Wales Online), Rated: A

As a result, Improbable has become one of the few UK start-ups to achieve the so-called ‘unicorn’ status, namely having a valuation of over $1bn.

Since then, their numbers have grown to nearly 200 firms globally and that are collectively valued at £523bn. The most valuable is Uber, the online taxi company that, in only four years, has reached a valuation of over £50bn.

A recent article in Forbes Magazine suggested that investors, with few places to put their money during an era of near zero interest rates, are fuelling the growth in unicorns as they look for better returns.

Property is top pick less than a year after funds gated (FT Adviser), Rated: A

According to research from peer-to-peer lending platform Kuflink, conducted in the first week of May, nearly a third of UK investors are planning to direct their attention to traditional asset classes such as property over the course of the financial year.

This comes after some of the largest property funds in the UK temporarily stopped investors from cashing-in their money last summer when thousands of people panicked after the European Union referendum and pulled out of the asset class.

The Kuflink survey, which questioned 1,100 investors across the UK, also found that Brexit and the snap election have impacted UK investment decisions more than any other political event in their lifetime.

Almost 40 per cent of investors are taking a more cautious approach by favouring ‘safe-haven’ asset classes, while 38 per cent are waiting until after the 8 June election to make any further investment decisions.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

Belt and Road Forum for International Cooperation, also known as the Belt and Road Initiative, was held in Beijing on May 14-15.

On May 12, the State Council Information Office of China announced that China has reached a series of agreements with U.S. related to agriculture, investment, energy and especially in financial service area.

Key points of the Initial Agreements of the China – US Economic Cooperation 100-Day Plan in financial service area:

  1. By July 16, 2017, China is to allow wholly foreign-owned financial services firms to provide credit rating services in China, and to begin the licensing process for credit investigation.
  2. The People’s Bank of China and The U.S. Commodity Futures Trading Commission (CFTC) are to work towards a Memorandum of Understanding (MOU) concerning the cooperation and the exchange of information related to the oversight of cross-border clearing organizations.
  3. By July 16, 2017, China is to issue further necessary guidelines and allow wholly U.S.-owned suppliers of electronic payment services (EPS) to begin the licensing process.

The hotly anticipated initial public offering of Alibaba’s finance arm, Ant Financial, has reportedly been delayed until at least the end of 2018 because of the need to secure regulatory approval and to focus on building the business.

E-commerce giant Alibaba Group and affiliated online payment service Alipay are aiming to use facial recognition technology to help retirees simplify pension authentication. Shenzhen is chosen to be the first pilot city.

The Peoples Bank of China (PBOC), the country’s central bank, announced that it has set up a Fintech committee to enhance research, planning and coordination of work on financial technology.

Happigo Home Shopping Co. Ltd., a leading Chinese multichannel e-retailer, announced that the company had the local government approval to build a small loan company.

The new micro-credit company will be named “Happy Tongbao”, which has about RMB 300 million in registered capital. It will focus on online micro-credit and expects to start its business in Hunan Province, lending to merchants in desperate need of a loan, then gradually expand to the entire Chinese market. Entrusted loans, bill business, financial advisory and other online business models is said to be covered in its future development.

To reduce lending risks, Happigo said it had developed a cloud system for tracking merchants on its online shopping platform to help it keep a record of the business of would-be borrowers’ cash flow.

IFRM: A Risk Control Model keeping No Bad Debt! (Xing Ping She Email), Rated: A

IFRM ( Internal Financal Risk Management) is a unique method created by Xeenho, focusing on the operation modes of platforms. In the IFRM Solution, the risks of P2P lenders are evaluated through three indicators: FOW (qualitative indication system), TOS (quantitative indication system) ,O2O Due Diligence, and Big Data Supervision. By using the model, Xeenho has been keeping the Zero Bad Debt since 2014 with a business volume up to $400M.

FOW ——qualitative indication system
FOW means Forbidden, Observation and Warning. FOW detects and prevents P2P fraud, if a platform is categorized as Forbidden, Observation or Warning then it won’t proceed to the next step.

TOS ——quantitative indication system
TOS means Transparency, Operation and Safety. TOS thoroughly evaluates a platform, from its basic information to its UX, and the risk is ranked thereafter.

O2O ——due diligence from online to offline
O2O means making due diligence from online to offline, in order to ensure a platform that passed FOW and TOS is as good as it seemed to be.

Big Data——Analytics & Observation System
This dynamic surveillance system continuously over watches the performance of a platform, and adjusts the rating accordingly.

The Business Model of Xeenho
European Union

Alternative Lending Index Unveils European Cross-Border Lending Opportunities (Crowdfund Insider), Rated: AAA

Twino, one of the leading Baltic lending marketplace, has produced in conjunction with KPMG Baltics a report called Alternative Lending Index which assesses the potential of alternative finance in 23 European countries based on a set of economic credit data. While the report does not pretend to exhaust the analysis of the drivers and hurdles of alternative finance across Europe, it presents a very useful snapshot of the Pan-European credit landscape that should help support international strategies.

The first platform to tackle cross-border lending was Estonian pioneer Bondora in 2009. Since then, and particularly in the past two years, international lending marketplaces have mushroomed in the Baltics. There are now more than a dozen of them, with a strong dominance of consumer lending platforms. Leaders such as Mintos and Twino have long passed the €100 million mark in cumulated loan funding. They currently grow at a rate of between €10 to €20 million worth of new loans funded a month. If you operate a lending marketplace in the UK, France or Germany you should know these platforms because they are targeting your smartest investors:

Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.

Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.

The ALI ranks 23 European countries. It concludes that countries with the highest gaps and inefficiencies in traditional lending, hence the highest potential for alternative lending in Europe are, in that order:

  • Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland.

Conversely, the countries where the existing sources of financing available to households and corporate borrowers are sufficient and the potential for the development of alternative lending is therefore considered low, leaving little room for alternative lenders are:

  • France, Germany, Netherlands, Austria, Finland and Sweden.

Read the full report.

International

US Anniversary and the (Possible) Regulation of Crowdfunding in Ireland (Lexology), Rated: AAA

The US has just celebrated the first anniversary of its regulated crowdfunding regime, known as “Regulation Crowdfunding”. It was by all accounts a very happy anniversary for many US start-ups, as Regulation Crowdfunding reportedly raised $40 million in its first year. US advisory and education firm, Crowdfund Capital Advisors report that the average successful crowdfunding campaign raised around $282,000 from around 312 investors. Regulation Crowdfunding allows companies to raise up to $1,070,000 over a 12-month period.

An unregulated environment brings with it its own set of benefits and drawbacks:

  • On the positive side, the absence of a regulatory framework means there are no restrictions on who can invest, or on the amounts that can be raised or invested. In contrast, the Regulation Crowdfunding regime in the US has strict limits on the amount which a person may invest through crowdfunding each year. These limits are determined by an individual’s annual income and net worth.
  • On the negative side, the lack of regulation means that many investor-protection mechanisms are simply not available. For example, the Central Bank’s codes of conduct and client asset rules do not apply to crowdfunding platforms.

The Department of Finance (the “Department”) and the SME State Bodies Group have issued a public consultation paper on the possible ‘Regulation of Crowdfunding in Ireland’. They are considering how to facilitate the development of crowdfunding in Ireland for the benefit of the economy while also ensuring adequate protection for small investors and consumers.

The objective of this consultation is to invite the views of interested parties on whether a regulatory regime would be appropriate for the crowdfunding sector.

Breaking Banks: Small-business fintech around the globe (American Banker), Rated: A

How do we get money to small businesses that make the economy work for most people around the world? What kind of systems do we need to create? And how do we make them flexible so multiple cultures can utilize them?


A ‘paradigm shift’ is taking place in financial technology (Business Insider), Rated: A

Venture capital firms, which poured $117 billion into fintech startups from 2012 to 2016, have been pulling back on their investments.

Financial technology companies experienced a surge in funding from 2012 to 2015, during which time venture capital firms poured $92 billion into the space.

In 2016, global venture capital investment in fintech companies dipped to $25 billion, from $47 billion in 2015.

According to Morgan Stanley, there are a number of factors that will push legacy financial firms to step up their investments in fintech companies. The most obvious factor is the fear of disruption.

Deregulation is another trigger. If the Trump administration follows through on its promises of Wall Street deregulation, then incumbent firms won’t have to spend as much cash on regulatory compliance. That would free up money for fintech investment initiatives. Legacy firms’ focus on lowering cost also provides an incentive to invest in fintech.

Online Financial Advice Lacks The Human Touch (iexpats.com), Rated: B

Robo-advisers can do more or less the same job, but without the human touch and the expensive fees that go with it.

Now, anyone can find financial advice 24/7 as long as they have an internet connection, cash to invest and a smartphone or other gadget to access the web.

The recommendations that come out of the robo-advice process should be similar to those suggested by a human adviser.

Some would argue robo-advisers are less likely to make mistakes, but if a consumer keys the wrong information the ‘rubbish in, rubbish out’ rules applies.

Australia/New Zealand

Big banks pay $ 60m in advice refunds (Financial Standard), Rated: AAA

AMP, ANZ, CBA, NAB and Westpac have to-date repaid $60 million out of an estimated $204 million for charging clients for financial advice that was not provided.

On a per-institution basis, AMP has paid $3.8 million out of an estimated $4.4 million; ANZ paid $43 million out of an estimated $52 million; CBA paid $5.8 million out of an estimated $105 million; NAB paid $4.4 million out fan estimated $5 million; and Westpac has paid its estimated total compensation of $2.6 million in full.

Robo adviser to get access to Westpac’s Panorama platform (Financial Review), Rated: AAA

Small-balance investors that financial advisers usually avoid will now get a chance to use BT Panorama, Westpac’s $500 million integrated banking and wealth operating system, after the bank inked a deal with Barry Lambert-backed robo adviser Ignition Wealth.

Currently the platform has about $110 billion under administration and 800 advisers are using it.

Via Ignition Wealth, which rich lister Mr Lambert took a minority stake in in 2016, customers can go fully advised, use a hybrid model where they control their investments with an adviser, or go fully DIY. Fees slide up and down depending on how it’s used.

Ignition Wealth has announced it is partnering with BT Panorama to offer its digital advice solution to accountants, advisers, and investors using the BT Panorama platform.

The digital advice provider said its 360 advice offering would offer a post-Future of Financial Advice (FOFA) compliant solution for accountants and financial industry professionals who did not hold an Australian financial services licence (AFSL) but were looking to source financial advice for their clients in a post-FOFA environment.

Advisers, accountants, and investors using BT Panorama would have access to digital and full service financial advice powered by Ignition Wealth from Q3 of 2017.

DIY investors reject advice, says ASX study (ifa), Rated: A

The main reason some Australian investors do not use financial advice is because they prefer “to be in control” and are not convinced that advice adds value, recent research from the ASX has shown.

According to the 2017 ASX Australian Investor Study report, which looked at the behaviour and attitudes of 4,000 Australian investors, around 60 per cent of all investors use some form of professional financial advice.

For those not using advice, 90 per cent said it is because they “prefer to be in control”, while 56 per cent said they were “not convinced advice adds value”. Close to 40 per cent said advice was “too expensive” while around 30 per cent said their “investment is too small to need advice”.

Borrowers could save more than $ 3000 a year by switching to an online lender (News.com.au), Rated: A

AUSSIE borrowers could save up to $3184 a year by switching to an online lender, but unfamiliarity and lack of face-to-face customer service are keeping them away, according to Mozo.

The financial comparison website examined 504 home loans from 89 providers, finding nearly two thirds of the best-value home loans on the market are from online lenders, which were 0.7 per cent cheaper on average than the big four for a typical 25-year, $350,000 loan.

Online lenders iMortgage, loans.com.au and UBank scored the highest marks in Mozo’s Experts Choice Awards, while Homestar was named Non-Bank Home Lender of the Year.

But according to a survey of 1000 consumers, Australians are less likely to apply for a home loan online than other financial products despite the huge savings on offer. Australians are twice as likely to purchase car insurance online versus a home loan.

The biggest barrier for applying for a home loan online was lack of familiarity with online lenders, with 56 per cent of respondents saying they simply don’t know enough about them, while 43 per cent said they would prefer to discuss their needs face-to-face with a mortgage expert.

More men than women would consider applying for a home loan online. Of those who said they would, half were aged between 25-44.

OnDeck business loans help franchise businesses get on with it (Professional Planner), Rated: B

Small business loan specialist OnDeck announced a partnership with the Franchise Council of Australia (FCA), the peak body for the franchise sector in Australia. The agreement underscores OnDeck’s go-to-market approach for its joint flagship product with partner MYOB – ‘MYOB Loans Powered by OnDeck’.

By partnering with the FCA, OnDeck aims to reach the thriving $146 billion franchise sector as a supplier of choice for small business loans, which can be approved online in as fast as one business day with minimal paperwork. OnDeck aims to fill a serious gap in the market for franchise owners by satisfying more of their unsecured lending requirements that go beyond equipment financing to renovation, relocation and working capital needs.

India

Fintechs to drive financial inclusion or will banks save the day? (India Times), Rated: AAA

Disintermediation of the lending value chain – Banks would traditionally source, acquire, underwrite, onboard, collect and service customers. Most would do some parts well, and a few parts not so well. This is increasingly now being solved by the entry of new ‘customer owning’ entities into the game, who will acquire, owners of data who can underwrite, and the lenders who can lend and collect. This makes partnerships key.

Alternate data – Lending to the bottom of the pyramid and micro SMEs has always been the problem to solve for financial institutions, due to lack of documented income and collateral. Non-traditional data promises to come in and provide an alternative.

However, most such data algorithms do not seem to be working out. Many fintechs across India, Africa etc, are running NPAs upwards of 8-10%, including some of the flagbearers of the phenomenon, but that is not out in the public domain, and typically shoved under the carpet. The main reason for this is that the algorithms are raw and untested. They have not run their credit cycles yet.
Payments – Payments as an innovation is done. It’s commodity now. Fintechs who continue to invest in incremental experiences will find it difficult to scale. The trend to watch for will be digital ecosystems. What I mean is digital marketplaces, the likes of Ping-an and Alipay, serving the integrated needs of the digital consumer a.k.a the millennials, enabled through digital payments and leveraging financial services cross-sell sitting on top of all of this, as the revenue driver.

Fintech firm Telr gets $ 3 million funding (The Hindu), Rated: A

Financial technology start-up Telr said that it had received an investment worth $3 million from Innovations East fund as part of its series-B funding round.

Telr, which is a payment gateway aggregator of multiple payment methods such as cards and online banking, has operations in West Asia, South East-Asia and India.

The Rainmakers (Business Today), Rated: A

Year ago, Captain Pankaj Kumar, owner of a New Delhi-based shipping solutions company, was looking to raise Rs 20 lakh. He approached banks for a loan, but soon realised it would be anything but smooth sailing. Then, his former banker suggested that he approach CoinTribe, a Gurgaon-based online lending platform that connects creditworthy micro and small enterprises (the company helps individuals as well) with potential lenders such as banks and non-banking financial companies (NBFCs). This time, paperwork was minimal, and the entire process moved fast.

Then, his former banker suggested that he approach CoinTribe, a Gurgaon-based online lending platform that connects creditworthy micro and small enterprises (the company helps individuals as well) with potential lenders such as banks and non-banking financial companies (NBFCs). This time, paperwork was minimal, and the entire process moved fast.

At present, the company caters to small businesses with Rs1-50 crore turnover; anything below that is treated as a micro business. The ticket size varies from Rs5-30 lakh (the company also offers unsecured loans starting from Rs20,000 to cement dealers, for shorter tenure) with interest rate pegged at 18-20 per cent. So far, it has helped disburse close to Rs170 crore loans, servicing over 500 customers and 250-odd dealers through its marketplace.

Harnessing the power of data, CoinTribe has come up with a three-step screening process that ascertains an applicant’s identity, analyses its ability to repay and gauges its intent to pay. To determine a borrower’s identity, the company checks all available online data and social media footprint. To analyse any given applicant’s ability to pay, it has identified 180 sub-industries and places the potential client in the right category to run it past all relevant data points.

Asia

Singapore Fintech Startup StashAway Raises US $ 2.2 Million in Series A (Crowdfund Insider), Rated: A

According to TechinAsia, StashAway, a Fintech startup based in Singapore focused on providing wealth management, announced it had secured US $2.15 million in funding for its Series A round.

StashAway is a software solution for individual investors to manage their investment portfolio.

Why should security professionals pay attention to the rise of fintech? (MIS Asia), Rated: A

The rise of financial technology (fintech) may result in increased cybersecurity threats and attacks, said Chia Hock Lai, President, Singapore Fintech Association, at the Computerworld Singapore Security Summit 2017.

He highlighted the five areas of fintech that introduce cybersecurity risks:

  1. According to a report by Accenture and CB Insights, global investments in fintech rose from 2012 to 2016 to reach US23 billion.
  2. More than a third (34 percent) of banks globally said they are open to collaborating with a fintech company, according to a study IDC did on behalf of SAP last year.
  3. According to the World Bank Group, only 50 percent of adults in ASEAN have bank accounts. The availability of mobile or peer-to-peer payments from fintech startups will thus enable more underserved to access financial services, said Lai.
  4. “[Gartner predicts that] in the next four years, the number of IoT devices [that will be in use in the consumer sector] will reach 13.5 billion,” said Lai. With every device generating data, machine learning will be required to analyse the large amounts of data generated to churn meaningful insights.
  5. According to Aite Group, banks will increase their investment on blockchain over the next few years to reach US$400 million in 2019.
Canada

futureshare Launches to Help Canadian Homeowners Unlock Their Real Estate Wealth (Marketwired), Rated: A

There is more than $2.9 trillion in unmortgaged real estate equity in Canada (CREA), and today fintech platform futureshare launches to help Canadians unlock that real estate wealth without taking on new debt. The company was founded in 2016 as an alternative to home equity loans, home equity lines of credit (HELOCs) and reverse mortgages and gives homeowners a lump sum free of ongoing payments and interest rates in exchange for a percentage of the home’s appreciation, which can be paid out without penalty at any time or once the property is sold. futureshare’s online platform is the first of its kind in Canada and is now live in beta and accepting online applications for homes within Ontario with plans to launch in Alberta, Manitoba and British Columbia by the end of 2017.

The average Canadian owes $1.67 for every dollar in income (StatsCan), and futureshare is designed to help homeowners access the equity tied up in their home without adding to their ongoing debt burden. Unlike a reverse mortgage or HELOC, futureshare doesn’t require homeowners to have perfect credit scores or to fall within a specific income bracket, and it doesn’t increase monthly payments. A homeowner’s eligibility is based primarily on their home value and whether they have at least 25 per cent equity ownership in their home. Homeowners will be able to access on average up to 10-20 per cent of their home equity using futureshare’s platform, and unlike a loan, there’s no ongoing payments or interest rates.

Barbados

COMPANY AIMING TO PUT IDLE MONEY TO USE (Barbados Advocate), Rated: A

SOME of the $3 billion sitting idle at commercial banks in Barbados will soon be better utilised so as to earn higher returns for depositors and to help grow this country’s economy.

Those funds will be utilised under a new facility known as Peer-to-Peer lending, which was officially launched by finance company Carilend on Thursday night, at the Limegrove Lifestyle Centre, Holetown, St. James.

Authors:

George Popescu
Allen Taylor

Friday April 28 2017, Daily News Digest

10-year Treasury yields

News Comments Today’s main news: U.S. VC fintech investment rises to $1.2B. P2P Global Investments sees NAV bounce. Kuflink receives FCA authorization. Robo-advisor launches in Luxembourg. OnDeck Canada partners with Lightspeed. Ant Financial plans expansion into Japan. Today’s main analysis: Behind the 2017 bond-market rally. Today’s thought-provoking articles: China P2P industry news. Xero: Best overall fintech. Brazilians embrace robo. Who leads Africa’s fintech, […]

10-year Treasury yields

News Comments

United States

  • U.S. VC fintech investment rises to $1.2B. GP:”Total raise if you include non-VC sources is $1.5bil. New record since Q1 2016. Focs continues on lending and robo. “AT: “What I find interesting is in the report itself: The biggest deals of the quarter – SoFi’s Series G round, UniRush M&A, Zenbanx M&A, ProducePay early-stage, and Kensho Series C2 are the top 5 in the U.S. Also in top 10 are CommonBond and Upstart. Get the report here.”
  • Behind the 2017 bond-market rally. GP:”A very interesting piece worth reading to understand market reactions to the world and in fact cost of capital.”
  • Banks loosening up internally to work with startups. GP:”There is always a risk in relaxing control which translates into a cost, usually fines. To be practical, if the cost of the fines is significantly lower than the return from the business perhaps the fines become just the cost of doing business. On the other side, a regulator regularly fining a financing institution usually has a major impact on the institution reputation which has nonnegligible effects on the business. It is a very difficult to quantify where to relax by how much and the cost of doing so, especially the indirect costs. “AT: “What’s interesting are smaller banks are now starting to see the light.”
  • Mark Cuban backs an app that saves people overdraft fees. GP:”I don’t know anybody who never paid an overdraft fee. There shouldn’t be any overdraft fees, transactions should just be rejected by the bank. Or there should be a real product to compensate for it that has a reasonable cost, in line with the cost of a loan or or a credit card.”AT: “Overdraft fees are a huge frustration for a lot of young people learning how to manage their finances as an adult. It’s a part of growing up. The best solution is to learn how to balance a checkbook, but an app that does it for you on the fly isn’t a bad idea because most young people aren’t that great at balancing checkbooks.”
  • OCC: Fintech charter not a ‘ticket to light-touch supervision’. GP:”The OCC has always been very clear that the fintech charter is not light-touch; if anything it is the same-touch as for a bank while enabling them to offer a smaller amount of services. “AT: “When you’re being sued, the best course of action is to offer some sort of consolation. But you can’t say too much or it will be used against you.”
  • Chatting with PeerStreet’s founders. AT: “Expecting every type of real estate loan to go through a marketplace platform is a tall order, but I like the way BJ thinks.”
  • Debt is a deal-breaker for millennials considering marriage.
  • Quovo raises $10M in Series B. GP:”Quovo offers a series of finance APIs to enable innovation. Worth a look for sure.”
  • Robinhood hits 2 million users, raises $110M in Series C. GP:”RobinHood offers free stock trading. The consolidation that happened in the stock-brokers market from charging a large commission to free is an interesting lesson. The main driver of this cost cutting has been electronic and online trading which pushed brokers to seek an alternative business model, which happens to be in many cases selling order book data or ancillary services and products. “
  • Bitcoin values increases as SEC reconsiders ETF decision. GP:”I continue to believe that cryptocurrencies are a good remittance system. There is also a slew of new ICOs happening. And last but not least Ethereum and the smart contract world are also seeing a very large increase in demand. The main barriers to cryptos seem to be unclear regulation, unclear business model, and security risks.”AT: “It will be interesting to see if the SEC overturns its own decision to turn down the Bitcoin ETF.”
  • Easy Solutions launches AI anti-fraud service. GP:”Detection abnormal behavior on a credit card has been in place for sometimes. Government agencies have also been using abnormal behavior detection on large data for sometimes. Perhaps there is still space for improvement. “

United Kingdom

China

  • Top 5 P2P lending ratings. GP:”In China a lot of websites are trying to rate online lenders. And there is a rating of raters. Here people take a position of the top raters. Most lenders pay money to the rating websites to be rated in a process which can not always be impartial. Caution is advised and perhaps an index of the average rating per lender accross many rating websites is needed. “
  • MaizinJinfu raises Series B. GP:”Congratulations!”

European Union

Australia

India

Canada

South America

Africa

Asia

  • Ant Financial looks to expand into Japan. GP:”Japan is a mature financial system where the mentality is very conservative. I hope Ant has a Japan-adapted plan for the expansion which takes into account Japanese mentalities. In my experience this means at the minimum having Japanese employees, in Japan, and having everything done the Japanese way from the way the contracts are bound to the way you treat your customers. Japan is open to foreign products, but only if they have been well tested and are mature. In fact they seek them. I have brought multiple companies to Japan succesfully.”

News Summary

 

United States

VC Investment in Fintech Rises to $ 1.2 Billion in US: KPMG (Think Advisor), Rated: AAA

U.S. venture capital investment in fintech companies rose to $1.2 billion in the first quarter, the highest activity since last year’s first quarter, according to KPMG International’s Pulse of Fintech report, released Thursday.

Non-VC fintech investment in the U.S. reached $300 million, resulting in a total of $1.5 billion in fintech investment in the U.S. for the quarter.

“Payments and lending continue to attract the most funding globally, although we’re seeing increasing interest in a variety of technologies,” Brian Hughes, national co-lead partner in KPMG U.S. venture capital practice, said in the statement.

“In addition to continued growth in regtech and insurtech, areas such as artificial intelligence, machine learning and Internet of Things are gaining increasing investor attention.”

Next quarter, it said, robo-advisory, artificial intelligence and data analytics look to be “hot investment areas.”

KPMG reported that private equity firms in the U.S., including not-technology-focused ones, are proving robust actors in the late-stage fintech arena, with $1.2 billion in total deal value across 11 deals in the first quarter.

During the same period, however, U.S. fintech M&A got off to a slow start at just $200 million across 24 deals.

The West Coast continued to account for the largest concentration of U.S. fintech investment, with 67.6% of total value of deals in the first quarter and 39% of the total number of deals.

Get the report here.

Behind the 2017 Bond-Market Rally (WSJ), Rated: AAA

When the yield on the 10-year U.S. Treasury note fell to a record low in July, many investors agreed that the developed world was stuck in a “new normal” of ultralow growth, inflation and interest rates. Stronger U.S. economic data in subsequent months helped chip away at that view, lifting yields. They got another boost from Mr. Trump’s victory, as investors bet on a turn to expansionary fiscal policies–including an overhaul of the tax code–that would boost growth and inflation and allow the Federal Reserve to raise rates at a faster pace.

While the yield on the 10-year note is still well above its level on Election Day, that is partly because the Fed has raised short-term interest rates twice since then.

Banks are loosening up internally so they can work with startups (Tearsheet), Rated: A

With public confidence in them in the U.S. below 50 percent across the political spectrum, banks have a branding problem — one that gets even more problematic when they have to work with those outside the industry.

Wells Fargo is one of the banks that has taken active interest in facilitating dialogues with startups. While most most major banks have accelerator programs, Wells Fargo said one of the focuses of its startup program is helping banks understand startup culture and vice versa. Wells Fargo’s accelerator program mentors companies for six months and provides up to $500,000 of equity investments for selected companies. The companies may also work on proof of concepts across different business lines within the bank after the completing of the program.

For smaller banks, a focused approach ensures that the relationship will be productive. Boston-based branchless virtual bank, Radius Bank, has a staff member dedicated to partnerships with startups who carefully vets each startup for compatibility.

Mark Cuban is backing an app that’s trying to help people avoid overdraft fees (Business Insider), Rated: A

The billionaire has invested in a new app called Dave that aims to predict coming expenses for users to help prevent them from overdrafting on their bank accounts.

Once Dave connects with a user’s checking account it forecasts the account’s lowest possible balance in seven days based off the person’s spending habits.

Users are notified when their seven-day forecast is negative. That way they can be proactive and potentially avoid overdrafting and being burdened with bank fees.

According to a report by CNN Money, the top big banks – Chase, Wells Fargo, and Bank of America – raked in over $5 billion in ATM and overdraft fees in 2016. In total, overdrafts cost customers $36 billion a year.

OCC: Fintech Charter Not a ‘Ticket to Light-Touch Supervision’ (ABA Banking Journal), Rated: A

Gardineer emphasized that fintech firms granted a national bank charter would undergo the same supervision process and be held to the same capital, liquidity and consumer protection standards as OCC-supervised banks. She added that state laws on fair lending, debt collection and other things would still apply, just as they do for nationally chartered banks. Her comments came after a lawsuit filed earlier this week by the Conference of State Bank Supervisors, which said that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act.

Chatting with Brew & Brett, Co-Founders of PeerStreet (Simple Innovative Change), Rated: A

Brew Johnson was in real estate law by chance back in the mid-2000’s, which is when he happened upon the dismal reality that our housing market was built on a house of cards through his deep research and desire to figure out what was going on. He knew something needed to change, and he had a plan for how to do it.

When the time was right he brought in Brett Crosby, Co-Founder and COO of PeerStreet to take his tech background from building Google Analytics to help revolutionize the housing market with a new approach to financing the mortgage markets.

BJ: A lot of what we’re doing at PeerStreet is informed by what I learned during that time as a real estate attorney within the securitization market.

Fast forward to 2013, and all the barriers to entry that existed in 2008 had been significantly reduced. After the market crash, government regulation started to favor the startup community, and with the advancements in technology, I felt that it would be a lot easier to create a company like this.

BJ: For me, it was about seeing the movement in marketplace lending, and the growing comfort in investing in this asset class through a new type of platform. This sudden shift in comfort coinciding with easing regulation led to a huge boom for private lending.

The reason we believe it’s so important to build a tech-enabled platform like this is because there are more independent lenders now than ever, and they’re scattered around the country, leading to a significant amount of fragmentation in the market.

What PeerStreet does is use technology to make sense of this fragmentation, and then layer a whole level of positives onto it.

BC: In other spaces like consumer credit, auto loans, and student loans, the location of the lender is not important so it’s possible to lend from a central position. In the mortgage and real estate development space, however, having local knowledge matters a great deal.

BJ: Since we partner with and provide capital to local lenders who lend to small businesses, who in turn lend to other small businesses or real estate entrepreneurs in their communities, we’re enabling our investors to support the value chain of local economies. Essentially, we are investing in communities and helping to promote the up-cycling of housing stock in those areas.

BC: The reality is many of the new business models may go out of business because they are simply taking too much risk on their loans. We’re positioning PeerStreet for the ups and downs of the American economy.

BJ: We think every type of real estate loan will go through a platform like ours eventually, so we are taking a very measured approach to how we decide to move into each of those asset classes.

Deal Breaker?! Dating and Debt (CBN News), Rated: A

According to a new study from online personal finance company, SoFi, debt is a big deal breaker to 20 percent of Millennials (ages 25-35).

“It depends on what they are paying for with their debt. If she has 10-15k in cc debt for B.S. that’s obviously a red flag. If it’s student loans, I can’t complain. If she’s not paying on any of it, run,” said another.

SoFi also looked into how much Millennials cared about a person’s future earnings when deciding whether to date them or not.

According to SoFi, Millennials don’t think debt needs to come up right away. 58 percent say it only needs to be talked about when the relationship gets serious.

Finally, SoFi asked Millennials if they would dump someone over debt. A majority, 55 percent, said no. (Still, 24 percent said they may not consider marrying someone with more than $100,000 in debt.)

Quovo Raises $ 10 Million in Series B Funding to Fuel Fintech Platform Expansion (Crowdfund Insider), Rated: A

Quovo, a Fintech company that leverages data to provide insights alongside connectivity for financial accounts, has raised $10 million in Series B funding.  Existing investors FinTech Collective and Long Light Capital were joined by F-Prime Capital and Napier Park Financial Partners to provide the capital. As one would expect, the cash will be used to fuel platform growth and build out the suite of data analytics offers which include the newly launched bank authentication API and Quovo Connect module.

Robinhood Hits Two Million Users & Raises $ 110 Million During Series C (Crowdfund Insider), Rated: A

California-based fintech company Robinhood announced on Wednesday it not only has reached two million users, but it also secured $110 million during its recent Series C funding round, which was led by DST Global, with participation from NEA, Index Ventures, Ribbit Capital, Thrive Capital and Greenoaks Capital. This brought the company’s total funding to $176 million.

Bitcoin’s value increases as the SEC reconsiders its ETF decision (The Merkle), Rated: A

Not long ago, the three-year effort put in by the Winklevoss twins to bring the Bitcoin ETF to the market was blocked by the SEC, after the agency ruled against them. What followed was a major crash bringing along a 15% decrease in Bitcoin value.

The initial Winklevoss proposal was to list the Bitcoin ETF on the Bats BZX exchange, which is one of the largest equities market operators in the United States. The exchange then decided to file a petition with the SEC, kindly asking the exchange commission to review last month’s decision. Luckily, the petition was accepted, therefore the SEC will proceed to reconsider their decision.

Optimism in the market has appeared all over again, and the price of Bitcoin again the U.S. dollar is further increasing due to these new speculations. Precisely, it has managed to increase to $1,294, from $1,251 in a single day.

Easy Solutions Launches Artificial Intelligence Anti-Fraud Service (Yahoo! Finance), Rated: B

Easy Solutions, the Total Fraud Protection company, today unveiled its new Detect TAArtificial Intelligence (AI) Fraud Assessment Service for banks and other financial institutions. Artificial Intelligence delivers a competitive edge to any business that leverages it effectively, and it is already being applied by leading financial institutions to improve fighting fraud.

United Kingdom

P2P Global Investments sees NAV bounce, expands into alternative credit (AltFi), Rated: AAA

The £833m P2P Global Investments fund saw its net asset value [NAV] rise 0.55 per cent in March, including a 0.16 per cent uplift from its share buybacks, prompting a boost to its latest quarterly returns.

Its latest numbers, however, show a boost in returns with total NAV return for Q1 2017 of 1.18 per cent, while its discount has narrowed to 15 per cent.

Kuflink’s P2P Lending Platform Receives FCA Authorization (Crowdfund Insider), Rated: AAA

On Thursday, Kuflink received full authorization from the Financial Conduct Authority (FCA) for its peer-to-peer lending platform. According to the registration, Kuflink has been given permission to provide regulated products and services, which includes accepting deposits, provide credit to consumers, offer investment advice, and arrange deals with investments.

B&C Awards 2017 shortlist announced (Bridging&Commercial), Rated: A

The top brokers, lenders and individuals in the bridging, commercial, development finance, peer-to-peer and specialist banking markets have been shortlisted and are now in the running to win one of the industry’s most prestigious awards.

The shortlist includes new categories ‘Best Use of Fintech’, ‘Specialist Product of the Year’ and ‘Best Bridging Lender Newcomer’.

Last year’s Bridging Lender of the Year, Octopus Property, has been shortlisted again in 2017 for the coveted title and will be up against fellow nominees Precise Mortgages, Together, Amicus, Funding 365, Masthaven, MTF and LendInvest.

The brand new category ‘Alternative Lender of the Year’ brought in scores of votes, with Assetz Capital, Funding Circle, LendInvest, RateSetter, Lendy and Kuflink making the shortlist.

Pariti adds second online lending partner (AltFi), Rated: A

Pariti, the personal finance management app which helps users to manage their debts, has teamed up with Lendable to broaden its range of loan options. Pariti made leading marketplace lender Zopa its first lending partner in September of last year. Pariti users looking to consolidate their debts will now receive offers from both lenders.

China

P2P Industry News (Xing Ping She Email), Rated: AAA

Top Five P2P Lending Ratings in China
Rating is an important reference for investors. A senior industry player taking the following as the top five P2P lending rating agencies in China: Online Lending House Rating, Xeenho Rating, Net Credit Eye Rating, Rong 360 Rating and Dailuopan Rating.

Online Lending House Rating
Online Lending House is one of the biggest P2P lending portal sites in China. It has been engaged in platforms’ rating since August 2013. Up to now, Online Lending House has issued 44 rating reports maintaining over 100 rated objects.

Xeenho Rating
Xeenho Rating is the first rating agency from the buyer’s perspective, and it was launched by the P2P lending funds Xeenho in October 2016. Yet it has issued its fifth report, with a selection of around 45 P2P lending platforms. The rating is neutral for it stand on the investors’ side, so its rating could be more reliable. Actually, Xeenho’s risk-control management keeping the Zero Bad Debt in the industry.

Net Credit Eye Rating
Net Credit Eye Rating is similar to Online Lending House Rating in terms of contents’ provision. It was launched in September 2015 and has issued 18 periods of reports with over 70 P2P lending platforms.

Rong 360 Rating
Rong 360 Rating is quarterly issued, so far it has 8 periods of rating reports on 70 platforms. Rong 360 includes a wider range of content compared by other agencies, therefore some low rating results may exists.

Dailuopan Rating
Dailuopan launched its own ratings services mainly based on big data method. It started from May 2016, and has issued 10 periods of reports on over 500 P2P lending platforms.

Jack Ma: We need a reliable credit system on P2P lending industry
On April 23rd, the 2017 Annual Summit of China Green Companies was held in Zhengzhou. Jack Ma attended the occasion and said, “Only when a reliable credit system has been built, the real P2P business could be exist.” He also pointed out that new finance is to create a share-benefited and fair environment for residents, which should reach the effect that “an old woman has the same rights with a bank CEO .”

In fact, Jack Ma has previously said that the P2P lending should based on three elements: data, credit system and risk control system with big data. Unlike the negative view on P2P lending five years ago, this time Jack Ma show an optimistic attitude to the industry.

MaiziJinfu Raises Series B Funding (Yahoo! Finance), Rated: A

UniFi ‘s parent company Shanghai Wheat Asset Management Co., Ltd. (“MaiziJinfu”, “Maizi” or “the Company”), a China -based Internet-based financial information service provider, today announced that it has received Series B funding,  at the Internet Finance Development and Innovative Application Forum (IFDIA), which was co-hosted by Money Weekly in Shanghai .

European Union

FINANCIAL ADVICE FROM A ROBOT LAUNCHES IN LUX. (Delano), Rated: AAA

From about $19bn under management by robo advisors in the US in 2014, this figure has since quadrupled. However, this is still small compared with traditional financial services. For example, the Luxembourg wealth management industry alone had four times these assets under management in 2015. Nevertheless, these are early days.

The grand duchy is now part of this trend with the launch of the KeyPrivate service by Keytrade Bank Luxembourg. Residents and non-residents alike can use the service. You tap in how much you want to invest, for how long, and with what risk profile, and then there’s a questionnaire to check that you have the necessary financial means.

The site will then design a portfolio based on 12 funds invested principally in shares and bonds in different international markets.

After investment, each portfolio is reviewed automatically by the robot to take the latest market developments into account. KeyPrivate chose exchange-traded funds (ETFs) to power this system. Not only is it easier and cheaper to move in and out only of ETFs than with standard funds, but these “tracker” products seek to mirror industry benchmark indexes that tend to give average returns.

The minimum investment is €15,000, and the service is provided at “a fee that is two or three times cheaper than a traditional wealth manager,” said Thibault de Barsy, CEO of Keytrade Bank Luxembourg. It is a flat fee on total assets of 0.75% plus VAT per year. There is no up-front fee, nor is there an extra charge even if the client rebalances their portfolio.

Australia

Xero wins Best Overall Fintech award (Xero), Rated: AAA

We feel humbled to be awarded the Best Overall Fintech platform by the Fintech Breakthrough Awards. It also provides validation that we’re truly changing the lives of our more than one million subscribers.

Award organizers report $36 trillion in digital payments will be processed by the end of 2017. In the past 12 months, Xero alone transacted $1.2 trillion worth of economic activity.

The very foundation of a small business owner’s financial web is secure bank integrations. These enable banking, accounting and business management to come together. Xero is building a strong, global financial web, working with 110 financial institutions and 500 ecosystem partners around the world.

Millennials fast losing interest in low-rate accounts (LendIt), Rated: A

  • Poor rates on savings accounts, pricey property and stock market volatility is leading to an influx of millennial money to P2P lending
  • The number of millennial investors has increased by >250% over the last 12 months as young savers join older investors in seeking out alternatives to traditional saving and investment products
  • Surge in millennial money has helped RateSetter reach $100m of loans funded in record time for an Australian lending platform
  • 80% of all lenders expect to increase the amount invested within the next 12 months
Source: RateSetter

RateSetter: Millennials are driving P2P growth in Australia(P2P Finance News), Rated: A

The London-headquartered P2P platform, which launched its Australian division to the public in 2014, argues that poor rates on savings accounts, high property prices and stock market volatility have pushed people aged 18-35 towards P2P lending.

RateSetter Australia said that its number of millennial investors had grown by 250 per cent over the last 12 months and now accounts for 58 per cent of total active investors.

India

Here’s all you want to know about alternative asset class – P2P lending (Financial Express), Rated: A

What P2P lending offers investors
– P2P lending in India currently gives a net return of 18-22%
– Borrowers repay principal & interest every month so there is a steady cash flow
– Investors can pursue legal recourse against the borrower in case of defaults
– By diversifying your investment across different borrowers, you will begin to mirror the overall default rate of the platform

P2P lending is like investing in debt; the capital risk is lower, and there exist ways to mitigate it. In case a borrower defaults, investors can pursue legal recourse against the borrower.

Cash in on P2P lending (Telengana Today), Rated: B

A good percentage of people in the world are involved in digitally enabled peer-to-peer exchange. This form of exchange has expanded dramatically in recent years, moving beyond simple retailing and free file exchange to personal, human-intensive services such as hosted accommodation, urban and city-to-city transportation, and peer-to-peer lending.

Here is the basic premise of P2P lending: People sign up on a P2P lending platform like PeerLend as a borrower or as a Lender. A borrower submits an application for a loan by providing his details, and KYC documents. The platform back office team performs a credit assessment of the profile and determines his credit worthiness.

From a lender’s perspective, peer to peer lending allows them to directly lend to other people by having them register on the platform by providing their ID and address proof. They also provide the bank account details that they will use to transact on the platform.

Interest rates – Various P2P platforms in India are charging a one-time registration fee ranging between Rs.500/- to Rs.1,500/-, and a loan servicing fee ranging from 3.5% to 6% of the loan amount.

Canada

OnDeck Canada Partners With Lightspeed (Yahoo! Finance), Rated: AAA

OnDeck Canada, a leading online lender to small businesses in Canada , and Lightspeed, a cloud-based point-of-sale platform for independent retailers and restaurants, have announced a partnership that will allow Lightspeed users to secure OnDeck loans. The new offering will be available to Lightspeed customers in Canada and the US providing up to $500,000 (US) term loans and $100,000 (US) lines of credit.

This strategic partnership between OnDeck and Lightspeed, who each share a focus on assisting small businesses, is a major step forward for Canadian businesses, especially those retail, restaurant, and e-commerce companies that can now acquire OnDeck financing to support their investment in the Lightspeed point of sale (POS) solution.

OnDeck loans will also enable Lightspeed clients to take advantage of growth opportunities such as buying inventory, purchasing equipment, and boosting their customer experience.

OnDeck’s advanced lending technology and staunch dedication to customer service has enabled it to deliver more than $6 billion dollars in capital to over 60,000 businesses across the United States , Canada , and Australia.

South America

Magnetis sees more Brazil investors embracing robo-advisory (NASDAQ), Rated: AAA

Magnetis Gestora de Recursos Ltda, Brazil’s first fintech asset manager, expects demand for affordable access to automated investment advice to surge in coming years as interest rates decline and economic uncertainty persists.

As the central bank undertakes the most aggressive rate cutting cycle in eight years, demand for cheap financial advice has fueled a surge in trials for robo-advisers, an automated form of passive money management that identifies a client’s risk-taking preference.

Since March 2015, Magnetis has conducted 30,000 trials for clients eager to understand a platform providing access to 15,000 different domestic tradable assets.

Growing scale has helped Magnetis cut management fees to 0.4 percent, well below the 0.8 percent to 1 percent that banks and brokerages typically charge customers.

Africa

Banks vs startups: Who leads Africa’s fintech innovation? (This is Africa), Rated: AAA

Only an estimated 34 percent of Africa’s adult population has any form of formal bank account. This is an improvement from a decade ago. Much of this progress can be credited to the growth of mobile and agent network-based banking solutions.

To scale up the trend, banks need to figure out how to effectively join Africa’s fintech innovation ecosystem.

A number of banks have launched bespoke accelerator programmes in a bid to reach out to African entrepreneurs and startups. Barclays, Standard Bank, Citi, and DBS Bank are just a few.  Others seek to partner directly with startups to develop new products and services.

In Cape Town, for example, Barclays has launched a business accelerator programme called Rise in a bid to encourage mutually beneficial collaboration between banks and startups.

Others agree. In east Africa, KCB Bank has partnered with more than 10 startups on projects and is involved with multiple projects supporting entrepreneurship in the region. This is bearing fruit: the bank’s mobile banking app was built by a startup.

Peach Payments took part in the Barclays accelerator in 2016. Upon completion, it signed a proof of concept with the bank to explore further collaboration.

However Keith Jones, co-founder at Sw7, believes that despite their efforts banks have so far failed to develop a mechanism to effectively engage with startups.

While the intent is there, he says, the strict corporate mindset of financial institutions has meant they are slow to adapt to new solutions and models. They can also have a tendency to “smother” small businesses rather than help them to thrive.

6 artificial intelligence startups in Africa to look out for (VentureBurn), Rated: A

South African startup DataProphet last year received a significant investment of an undisclosed amount from Yellowwoods Capital Holdings to expand its international offering. As part of the deal, DataProphet will act as the advanced analytics partner for the group.

The startup, based in Cape Town, has developed various machine-learning interventions, mainly for the finance and insurance sector.

Nigerian startup Kudi.ai has developed a chatbot which allows users to make payments and send money to friends and family in Nigeria via messaging. The company is a graduate of the YCombinator Winter 2017 batch.

The company uses AI to understand user requests, drive conversations, understand user spending habits and prevent fraud.

The startup has put together a business-to-business solution too, which it is piloting with banks and telecommunication companies.

Founded by former equity-derivatives specialist Annabel Dallamore (pictured here) together with Julian Dallamore and Mark Karimov in 2013, Johannesburg startup Stockshop.co.za offers a number of artificial intelligence solutions to financial institutions such as banks and insurance companies.

The startup has also developed a bot interface that completes real-time identity verification checks on behalf of banks and financial institutions in line with requirements under the Financial Intelligence Centre Act (FICA).

The startup has also developed a solution that uses an algorithm that pairs financial behaviour, spending and other data along with emotional cues and provides clients with assistance around financial matters such as payments, administration, rewards, education, analytics and tracking.

It’s also launched a micro-insurance platform in April that is unique to the African market.

Asia

Ant Financial Eyes Japan (Finews), Rated: AAA

China’s Ant Financial Services Group has said it wants to increase operations in Japan and is actively seeking a partner there.

With a deal in Korea already in the bag after a $200 million investment in South Korea’s mobile platform company Kakao Talk, the focus has turned to the world’s thrid-largest economy Japan.

Authors:

George Popescu
Allen Taylor 

Wednesday April 26 2017, Daily News Digest

robo-advisors deal share

News Comments Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round. Today’s main analysis: Affordability of houses in U.S. cities relative to income. Today’s thought-provoking […]

robo-advisors deal share

News Comments

United States

  • Wela launches mobile app pairing AI with real financial advisors. GP:”In online lending the equivalent would be mixing AI underwriting and human underwriting. “AT: “It won’t be long before everyone is managing their finances with mobile apps: Household income, investments, savings, college education expenses, you name it. Artificial intelligence will be a major part of that movement.”
  • Kroll assigns preliminary ratings to Avant Loans Funding Trust 2017-A. GP:”Avant continues to securitize and the securitization continues to perform well. This is great news for Avant and their peers.”
  • Affordability of houses in major U.S. cities relative to income. GP:”Afforability of housing, as it is the largest budget item in most people’s budget, is correlated with all kind of useful parameters like affordability,etc. However, the correlation is not always in the direction one would expect: if housing is cheap it could mean people have no credit/only expensive credit options/no good income , etc. “AT: “While interesting data, this says nothing about whether these markets are good investment markets for real estate. Rather, its says a lot more about whether John Q. Homeowner can afford to buy a home in these markets. Looking at median incomes, I’d say the majority of income earners all across the country would have a difficult time buying a home in most of these markets. But the data can also be misleading. For instance, in Dallas, the median house value is $162,300, but the average middle-class home purchaser can get a home for half that. Medians don’t give a realistic view of on-the-ground reality, in my opinion.”
  • Upgrade to hire up to 300 in Phoenix. GP:”Renaud Laplanche is hiring up to 300 people after barely opening doors. Lending Club I believe has about 1,000 employees. In my personal experience in growing companies I made the mistake of hiring too many too fast and I now prefer to see what I can do with as few people as possible.” AT: “Upgrade is expanding fast. I wonder why they chose Phoenix.”
  • Reliamax now services $275M in private student loans. GP:”A decent size portofolio. We encourage as much transparency as possible. I wish more companies published their portofolio size and numbers.”
  • RIP MPL? AT: “This is an apologia for Misys, which I think is trying too hard to convince people that banks can compete with fintech companies on technology. One problem: They haven’t proven it yet, and it doesn’t appear as if they are working at it real hard. In order for the premise to be true, community banks will have to follow the larger banks in adopting emerging technologies, and very few of them are. I don’t even think it’s on their radars.”
  • Lending Technologies introduces Leads2Lend. GP:”We have on our database close to 20 tech companies who provide platforms to lenders. How many more will enter this space? Is this a crowded space yet?”
  • Banks to overhaul their technology. AT: “There are some valiant efforts here, but big banks are not agile. I don’t see these changes happening as rapidly as their digital competitors in fintech can operate.”
  • How the CRE industry is adapting to fintech.
  • Comparative look at REITs and MPL. GP:”REIT is very tax efficient.”
  • Roostify names Frank Gelbart as CRO.

United Kingdom

European Union

China

International

  • Mapping robo-advisors around the globe. GP:”Robos market is well correlated with online lending.” AT: “That the wealthiest nation in the world would lead in WealthTech funding is not surprising. But this is about investment. U.S. consumers have not adopted robo-advice as quickly as consumers in other nations, especially Asia.”
  • Fintech patents jump, U.S. leads. GP:”I am surprised China comes in as #2.” AT: “I think U.S. creators care more about protecting their intellectual property than creators in other parts of the world, or it could be that the U.S. mechanism for protecting patents is much more sophisticated and effective than in other parts of the world. Either way, you can’t judge the size of the fintech sector by patents alone. Otherwise, the UK would be way down the list.”

Australia

News Summary

United States

Wela Launches World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors (Yahoo! Finance), Rated: AAA

Wela today announces its free mobile app changing the way financial advice is delivered by pairing real financial advisors with Artificial Intelligence (AI) through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps on the market, Wela pairs AI capabilities with a human touch, offering access to real financial advisors via phone, video chat or in-person at no additional cost.

The Wela iOS app enables users to track all their financial accounts in one place, protecting user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Wela’s digital advising algorithm, Benjamin, uses linked account information to run a complete analysis, helping users take steps toward financial health based on three main pillars: creating an emergency reserve, paying off debt, and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Wela’s in-app budgeting tool, Benjamin, makes budgeting tangible and prevalent on a day-to-day basis. Once Benjamin is activated, the onboarding process begins with the creation of a personalized ‘Daily Spend Limit’. Benjamin then compares that number to actual daily spending and other transactions so users can understand how they are progressing toward the customizable goals they have set for themselves within the app. With real-time analysis of daily spending, rather than an end-of-month review, users are empowered with a better budgeting method and reassurance in their progress.

“Wela is the first free app to give comprehensive financial advice in real time in real-world scenarios personalized for you,” said Matt Reiner, Wela CEO and co-founder.

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2017-A (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-A (“AVNT 2017-A”). This is a $192.6 million consumer loan ABS transaction that is expected to close on May 4, 2017.

This transaction represents Avant, Inc.’s (“Avant”, the “Servicer” or the “Company”) fourth rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated through its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.

Avant has a strategic partnership with WebBank, whereby WebBank, a Utah chartered industrial bank, originates loans through the Avant Platform. Avant utilizes technology and customized scoring models to assign credit grades. The Avant website is designed to provide customers with an easy interface and quick online loan decisions at competitive rates compared to traditional lending platforms.

Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.

Affordability Of Houses In Major U.S. Cities (Relative To Income) (Investment Zen), Rated: AAA

Using median income data from the U.S. census and median home prices from Zillow, this map shows how many years of median income it costs to purchase a median house in each of these cities.

DETROIT

#1

  • Median House Value: $38,200
  • Median Household Income: $25,764
  • Amount of Income Needed to Purchase: 1.5x

SAN FRANCISCO

#27

  • Median House Value: $1,147,300
  • Median Household Income: $81,294
  • Amount of Income Needed to Purchase: 14.1x

California finance startup opening downtown Phoenix office, hiring up to 300 (Biz Journals), Rated: A

San Francisco-based financial services startup Upgrade Inc. is opening its first expansion office in downtown Phoenix, with plans to potentially hire up to 300 people.

The startup is opening an operations center in July on two floors of the Renaissance Square Building One at 2 N. Central Ave.

ReliaMax Now Services $ 275 Million in Private Student Loans (Yahoo! Finance), Rated: A

ReliaMax, the complete private student lending solutions provider for banks, credit unions and alternative lenders, says it services $275 million in loans, an increase of nearly 670 percent from the close of 2015, driven by portfolio conversions that helped banks, credit unions and alternative lenders enter the private student loan asset class.

The ReliaMax loan servicing platform was built with the latest technology and exclusively for private student loans, making it unencumbered by the infrastructure constraints facing other student loan servicers whose platforms were designed to principally serve federal student loans or other consumer loans.

Marketplace lending RIP? (Bankless Times), Rated: A

Once banks master financial technology, the marketplace lending industry is in deep trouble, Jean-Cedric Jollant believes. And the bad news is that’s starting to happen.

“The (fintech) challengers made the move by trying to build a hybrid model where they may not own 100 per cent, 50 per cent or even zero per cent of a loan, but the need the technology to do that,” Mr. Jollant said. “They need new underwriting material and servicing software which they don’t necessarily have.”

Once more banks embrace new technology, they will be able to capitalize on a long list of advantages they have over marketplace lenders, Mr. Jollant said. Their abilities to process payments, service credit and onboard customers are superior. Close the technology gap and the banks can provide much better service at competitive rates.

“So (the marketplace lenders) are just intermediaries. Eventually they will not be able to compete with banks. The only difference between what the marketplace lenders are doing today and the banks really is the underwriting model and that gap will be breached really fast.”

Mr. Jollant believes the venture capital industry will soon begin to sour on marketplace lenders, possibly as soon as later this summer. Those surviving that will then have to withstand the next downturn, which many models have yet to be tested by.

Lending Technologies Corp Introduces Leads2Lend CAM Solution (PR Newswire), Rated: A

B2B fintech firm Lending Technologies Corp, a pioneer in loan origination technology, announces Leads2Lend, its new marketing platform for alternative lenders. Produced in cooperation with Lead One Marketing, Inc. the Leads2Lend program provides alternative finance companies with an all-in-one digital solution to identify and engage with potential new customers—ultimately leading to a stronger bottom line.

The Leads2Lend platform combines Lending Technologies Corp’s white-label customer acquisition management (CAM) technology with a digital marketing program that connects alternative finance firms with new clients. Using Lending Technologies Corp’s proprietary digital onboarding and loan building tools, designated agents can individually download leads and create bespoke lending solutions for the clients. Other functionalities include tools to expedite credit decisions and facilitate loan package construction.

Lending Technologies Corp’s white-labeled CAM technology, serving customers in the U.S. and Switzerland, provides a fully digital, mobile-responsive, end-to-end process for banks and alternative finance companies that allows lenders to save time and money while reducing the risk associated with underwriting loans to small- and medium-sized enterprises. Lending Technologies Corp provides a seamless, paperless solution to all users and gives loan officers the latest digital tools for lenders to issue credit decisions—all with a comprehensive back end.

An omnichannel overhaul in 5 steps (American Banker), Rated: A

U.S. Bank and Bank of Montreal have begun multiyear overhauls of their websites, mobile apps, call centers and ATMs.

Fix what’s broken. Both U.S. Bank and Toronto-based BMO are starting with the “dissatisfiers” — the things that vex customers or make them give up on one channel (say, mobile) and switch to another (such as the call center). JPMorgan also made this part of its approach when it rewrote its mobile app last year.

Make incremental enhancements. 

U.S. Bank’s mobile app was improved 27 times in the past two years, with the help of so-called agile development methods.

BMO also has adopted agile development. “Gone are the days when our tech people took months and months and built detailed requirements,” Badarinath said.

Create a “unified customer experience.” For years, banks have talked about having a consistent experience across mobile apps, websites, branches, ATMs, video kiosks, call centers and text messages. Yet you would not want to talk with a teller the same way you tap on a mobile app or withdraw cash from an ATM.

This fits with recent Javelin research that found most consumers would prefer to apply for credit cards in digital channels: 48% said online, 13% mobile, and 34% said they would prefer a branch. For a checking account it was 41% online, 8% mobile and 49% in a branch.

Today, only 8% of successful applications start and finish in a smartphone or tablet.

Establish an innovation team.

BMO has a group whose job is to look for interesting fintechs the bank can partner with to augment his group’s work.

Test emerging technologies.

And it is exploring options for using chatbots to let people use text messages to request and perform transactions.

Gaston envisions using augmented reality to help customers who want to purchase a car, a house or a boat understand their options.

He foresees using machine learning in the bank’s decisions about online accounts.

How is the CRE Industry Adapting to the Emergence of Fintech Solutions? (NREI Online), Rated: A

NREI recently spoke with Frank Muhlon, head of transactions at CrediFi Corp., to hear more about what’s ahead for this segment of the market.

Frank Muhlon: For sales and financing, technology allows for faster and broader market reach, meaning you have the ability to get to multitudes of investors and lenders. Being able to get to those people faster is really helping to drive the business.

The other area is risk mitigation and the opportunity to reduce your risk, which goes hand-in-hand with more transparency and more information.

Frank Muhlon: At its heart, it has always been a people business and I really don’t foresee that changing. But tech and innovation have been a hallmark of commercial real estate for some time. Eight to 10 years ago we went through a significant and humbling downturn and going through that adversity brought innovation and numerous opportunities. Institutional capital, debt and equity capital got reshuffled, and it presented some opportunities in the marketplace.

I think there is a segment of our industry that is not completely convinced that tech is necessarily disrupting our business in the way that it is disrupting other industries.

Frank Muhlon: In the last five years, the crowdfunding space has grown. There were fewer than 10 pioneering real estate platforms focusing mostly on equity investment. Now there are arguably over 100 sites covering the entire capital stack.

Five years ago, crowdfunding as a whole was a few billion [dollars] in activity globally. In 2016, it was well over $50 billion. Real estate is a more modest piece of that, but it has grown substantially as well. There was about $3.5 billion in activity on real estate crowdfunding sites in 2016. That has been a tremendous growth market, and alternative financing and lending is seeing similar trends.

The online lending industry was about $40 billion last year and it could be upwards of $1 trillion in the next five years.

Frank Muhlon: CredifX is the first cloud-based and data-driven commercial real estate financing marketplace for borrowers, brokers and lenders. The platform focuses on loans of $1 million and up across all major property types nationally. We leverage technology to match loan applicants with financing based on their criteria and the extensive loan product offerings in our lender network.

Comparative look into REITs and Marketplace Lending (Realty Biz News), Rated: B

One reason to invest in REITs is the favorable tax treatment and dividend payouts. Unlike investing in businesses where you expect to see increasing profits from continued growth, 90% of the profits have to be issued in dividends from investments in REITs. Instead of waiting for a business venture to show profits before receiving a dividend, investors get their share quarterly or annually in regular dividend checks.

With Marketplace lending, investors can expect to receive monthly disbursements throughout the lifetime of the loan. Principal investments are typically returned to investors between 6 months to 24 months, depending on loan payoff dates and loan extensions. Servicing fees vary by marketplace lending platform, but typically range from 1% – 3%, compared to REIT management and servicing fees from 3% – 15%.

Finally, REITs instantly diversify your portfolio resulting in better returns. In one REIT you may be invested in a commercial building, an apartment building, and a couple of warehouse distribution centers. The more diverse the portfolio, the better the returns, and the better the hedge against volatility.

While this style of diversification may work to the benefit of experienced REIT investors. marketplace lending allows portfolio diversification controlled by the investor.

Roostify Names Frank Gelbart as Chief Revenue Officer (Yahoo! Finance), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced it has named Frank Gelbart as Chief Revenue Officer. Frank will be responsible for driving new and existing revenue streams as well as managing partner relationships for Roostify.

United Kingdom

Assetz Capital to launch property-only and longer-term accounts (P2P Finance News), Rated: AAA

ASSETZ Capital is launching two new investment accounts to capitalise on the surge of demand it has experienced on both the investor and the borrower side.

The peer-to-peer lending platform is expanding its account range to seven offerings, adding a longer-term and a purely property-backed account to its existing 30-day access, quick-access, green-energy, “great British business” and manual loan accounts, it told Peer-to-Peer Finance News.

The longer-term account will offer investors an interest rate of about 4.75 per cent over one-year investments, while the new specialist account, which caters for investors who want to focus exclusively on loans secured against property rather than other assets, will target returns of around five per cent.

Mint Bridging ups development lending as Funding Circle exits market (Financial Reporter), Rated: AAA

Mint Bridging has reported an “influx” of development finance business after Funding Circle announced plans to stop lending in this area earlier in the month.

Its product ranges can accommodate up to £5,000,000 at 80% LTV, with heavy refurbishment projects up to 100% of the purchase price & 100% of the refurbishment costs.

P2PGI keeps NAV growing through UK asset-backed market (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) continued to shore up its finances in March, posting a 0.55 per cent increase in net asset value, from 0.38 per cent in February, which brings first-quarter growth to 1.17 per cent.

The P2P investor’s shift away from US and unsecured assets, as well as a share buyback last month, was the main driver of the improvement.

US consumer assets now dropped to 45.1 per cent of the London-listed fund’s portfolio, down from 46 per cent a month earlier and 48.4 per cent at the start of the year.

The firm is targeting a further reduction to 30 per cent of total investment, to boost its focus on UK property and asset-backed products, where it said new origination from partnering with P2P lenders has increased significantly in the last quarter

Growth Street Reports Rapid Growth as 600 Investors Sign Up in Just 5 Months (Crowdfund Insider), Rated: A

Peer to peer lender Growth Street is reporting solid growth. The online lender said it has captured over 600 investors since platform launch at the end of 2016. Growth Street is a platform that provides online financing options for UK SMEs. The company also touted its review on 4thWay that categorized the P2P lender as one of the lowest risk platforms in the industry.

High earners log-on for robo-advice (Finextra), Rated: A

The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.

Deloitte’s research shows over half (51%) of people earning £45,000 to £70,000 would use a robo-adviser for investments, compared with just 30% of those on incomes under £15,000.
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43%) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24%) for the 45-54 year olds and a fifth (21%) of those aged 55 and above. Also, 35% of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45%) among those with the smallest pensions pots, many of whom cannot afford traditional advice.

An MBA Graduate Left Banking To Launch Online Lender Spotcap Overseas (BusinessBecause), Rated: A

When Niels Turfboer enrolled in the MBA program at IE Business School in Madrid, he looked beyond a traditional career in banking. He decided to join the fast-growing fintech industry instead.

Having worked at institutional lenders for over a decade, his MBA training enabled him to spot an opportunity in the business banking space. Four years after graduation, he joined fintech startup Spotcap as managing director.

Spotcap offers working capital lines of credit — up to £250,000 — to small and medium-sized companies online. Spotcap has a run rate of £100 million in loans per year. The company operates in Spain, the Netherlands and Australia. Spotcap also opened a branch in the UK last year, despite Brexit. The business employs 100 people and has raised €75 million in venture capital.

Q. Did you know you wanted to work in fintech before the MBA? 

I’m a traditional banker. I worked for over a decade in the banking industry. But I wanted to be more entrepreneurial. There were opportunities to be entrepreneurial in banking, but after the crisis, this was gone. I chose a very particular school — IE — because it is known for having a strong focus on innovation and for being entrepreneurial. A large part of the MBA course is focused on teaching people to build and run a company.

Q. You’ve launched in the UK. After the Brexit uncertainty, are you reconsidering?

No. We moved in after Brexit. We were surprised at the result, but having analysed the situation, we concluded it’s not a negative. I see downsides, but not for our business model. We know there will be two years of deal making and uncertainty over trade barriers and freedom of movement. It tends to be bad for the economy, and this has had an impact. But we already had this knowledge moving into the market. We might be able to be more selective about lending to companies in industries that are hit hardest by the uncertainty. We are not going to do cherry picking, but we might take precautions in lending money. At the same time, during uncertainty banks are risk-averse and take a step back, and that opens up opportunities for the alternative finance sector to fill that gap.

Q. Is the MBA curriculum relevant to entrepreneurs?

Yes, at least the MBA I’ve done. At IE, 30% of the courses I did had an entrepreneurial focus.

The House Crowd Celebrates Five Years of Property Crowdfunding (Crowdfund Insider), Rated: A

Manchester property crowdfunding, the House Crowd,  is celebrating five years of operations having raised more than £44 million since it launched it 2012. According to the platform, the House Crowd now serves over 15,000 investors who have received over £9 million in returns. The House Crowd received the ‘Crowdfunding Platform of the Year’ award at this year’s inaugural Property Wire Awards, in recognition of its position in the alternative finance industry.

Lend and earn annual returns of up to 6% with Kuflink (Property Investor Today), Rated: B

The Kuflink Group is offering investors an opportunity to earn up to 6% a year through its peer-to-peer (P2P) lending platform, while also providing short-term finance for those looking to invest in property.

When it comes to the option to lend against various properties on Kuflink’s P2P platform and earn up to 6% gross pa for short-terms, up to 12 months usually, interest is paid monthly.

Secondly, Kuflink offer short-term lending against property for business purposes for terms of up to 24 months.

European Union

The FT 1000: The complete list of Europe’s fastest-growing companies (Financial Times), Rated: AAA

7 Optal United Kingdom Fintech 6,161%

 

21 iZettle Sweden Fintech 3,036%

 

46 Epos Now United Kingdom Fintech 1,579%

 

65 Lemonway France Fintech 1,260%

 

78 RateSetter United Kingdom Fintech 1,176%

 

146 Innofis Spain FinTech 781%

 

150 Fonix United Kingdom Fintech 761%

 

167 orderbird Germany Fintech 703%

 

198 YouPass France Fintech 615%

 

242 Trustly Sweden Fintech 501%

 

335 Prepaid Financial Services United Kingdom Fintech 367%

 

433 Paymentsense United Kingdom Fintech 261%

 

763 Smart Currency Exchange United Kingdom Fintech 114%

 

780 Deus Technology Italy FinTech 110%

 

923 HPD United Kingdom Fintech 76%
China

China Creation Ventures Leads $ 16M Round In SME Credit Firm IceKredit (China Money Network), Rated: AAA

China Creation Ventures, a newly founded venture firm established by several former KPCB executives, has led a RMB110 million (US$16 million) series A round in IceKredit Inc., a Shanghai-based credit assessment service provider catering to small and medium-sized enterprises (SMEs).

Founded in 2015, IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China.

Its products include an SMEs credit evaluation system and an individual credit assessment system, which consists of an anti-fraud engine, personal credit portrait and missing customer contact information restoration.

China’s new illegal fundraising topped $ 36 billion last year (Daily Mail), Rated: AAA

Chinese authorities vowed on Tuesday to step up a crackdown on illegal funding scams, after reporting 5,197 new criminal cases last year involving 251.1 billion yuan ($36.5 billion), state-run Shanghai Securities News reported.

More than 30 percent of illegal fundraising cases were related to private investment and financial intermediaries, including unlicensed investment advisers and providers of third-party wealth management products, the report said.

Moreover, financial fraud spread last year from China’s east to rural areas, where funds approached unsophisticated Chinese farmers, the office of the joint meeting said.

Last year China approved the arrest of 9,441 people on suspicion of illegal soliciting public deposits and prosecuted 14,745, according to a separate Shanghai Securities News report on Tuesday.

P2P Giant Dianrong is Preparing for Full Blockchain Integration (Coindesk), Rated: A

Already, Dianrong has co-founded a blockchain lending platform called Chained Finance; now, less than a week after the firm hired IPO expert Yawen Cui, he has revealed comprehensive plans to swap over much of the startup’s services to a blockchain.

By January of this year, Dianrong had released a statement showing that 3.62 million investors had originated a total of ¥16.2bn in loans last year alone, a 148% increase over the previous year, and its fourth year of growth.

Then, last month the firm revealed it had joined Taiwan-based Foxconn to launch Chained Finance, a blockchain trade finance platform built using technology from the Linux Foundation-led Hyperledger Project.

P2P Lending News (Xing Ping She Email), Rated: A

P2P Lending Funds Depository Cooperation Fair was held in Chengdu
On 24th April, “P2P Lending Funds Depository Cooperation Fair”was held in Chengdu by NIFA. The Fair is aiming at building bridges between P2P Lending institutions and banks.
Owing to the Fair, over 11 commercial banks, including Xingwang Bank, Ping An Bank, Beijing Bank, Shanghai Bank, Baoshang Bank, etc., reached agreements with over 50 P2P Lending institutions and five fintech companies. Officials from People’s Bank of China (Chengdu branch), Bureau of Finance of Sichuan Province, Chengdu financial services office and other relevant departments attended the Fair, with nearly 170 participants.
Chinese:
中国互联网金融协会首办P2P存管对接洽谈会
4月24日,中国互联网金融协会在成都举办“全国网贷机构资金存管对接洽谈会”。据悉此次洽谈会在网贷行业尚属首次,旨在搭建网贷机构与银行的沟通桥梁,促进双方合作。据透露,本次对接洽谈会共有新网银行、平安银行、北京银行、上海银行、包商银行等11家商业银行,与到会的全国50多家网贷机构、5家金融科技公司实现了对接洽谈。参会人数近170余人。人民银行成都分行、四川省金融工作局、成都市金融服务办公室等相关部门领导出席会议。

P2P Lending industry may acquire a bank-like license in the future
On April 22nd, China Fintech 50 Forum(CFT50) was found in Beijing. According to Yang Dong, the vice president of Renmin University Of China Law School and the director of Fintech and Internet Security Research Center(FTCS), who involved in making CBRC Regulations on P2P lending industry, revealed that although P2P is currently playing the role of Internet information intermediary, it may develop to a bank-like institution acquiring a new type of license and the industry also has huge space in the future.
Chinese:
行业整顿后,P2P或将获得类银行牌照
4月22日,在中国金融科技50人论坛成立现场,参与银监会网贷管理办法等新规制定的中国人民大学法学院副院长、金融科技与互联网安全研究中心主任杨东透露,尽管目前P2P定位于网络信息中介,但P2P下一步的发展可能会发放许可,是类似银行的新型牌照,未来的政策空间很大。

The scale of cash loan over 600billion RMB, who will be knocked down by regulations?
Due to the low threshold, lacking of supervision and disorderly development, problems such as violent collection, high commissions and usury, etc., cast a shadow on cash loan.
According to the instructions of the State Council and the requirements of Internet Financial Risk Special Rectification Office, cash loan has been incorporated into the rectification work of controlling Internet financial risk. In addition, Notice on carrying out the rectification work of “cash loan” business activities and its supplementary documents have been issued. Regulators also began to start the cash loan risk investigation.
Chinese:
现金贷规模超6000亿元 上千家平台谁会被监管重拳击倒?
由于门槛低、缺乏监管,无序发展所带来的暴力催收、砍头息、高利贷等问题在现金贷背后投下一片阴影。
根据国务院领导批示及互联网金融风险专项整治工作领导小组办公室要求,现金贷已纳入互联网金融风险专项整治工作,并下发了《关于开展“现金贷”业务活动清理整顿工作的通知》和《关于开展“现金贷”业务活动清理整顿工作的补充说明》两份文件。各地监管部门也由此开始启动现金贷风险排查。

Half-hearted crackdown dents case for Chinese P2P (NASDAQ), Rated: A

A half-hearted crackdown dents the investment case for Chinese peer-to-peer lending. While P2P lender China Rapid Finance is set for a $100 million initial public offering in New York, the timing looks bad. Sector heavyweight Lufax, last valued at $18.5 billion, is unlikely to list soon.

Instead, lending has accelerated and there are still more than 2,000 online platforms in operation, according to industry tracker Wangdaizhijia. Loan volumes in March hit a new record of 251 billion yuan ($36 billion), bringing the total outstanding to 921 billion yuan – up 83 percent in a year.

Shoddy local enforcement is the obvious culprit. Provinces and cities interpret the rules differently, according to an industry insider.

Investors are cautious too. China’s only U.S.-listed lender, Yirendai <YRD.N>, trades at just above 6 times forward earnings, down from more than 15 times last summer.

E.Sun launches new AI chabot to offer futuristic financial advice (The China Post), Rated: B

E.Sun Bank’s (玉山銀行) AI Chatbot (玉山小i) is the latest artificial intelligence financial advisor that Taiwan-based banks have launched to assist locals with any finance-related issues.

The AI Chatbot utilizes the IBM Watson Conversation Service to interpret commands and generate responses, local media reported.

At this stage, the AI Chatbot’s responses are limited to inquiries regarding exchange rates, mortgage assessments, and credit card recommendations. It has yet to acquire the knowledge to answer questions regarding personal financing.

International

Mapping Robo-Advisors Around The Globe (CB Insights), Rated: AAA

Since 2012, private robo-advisors have raised over $1.32B globally across 119 equity investments. Robo-advisors make up the largest sub-category of companies in wealth tech and account for roughly 30% of total funding.

Three of the earliest robo-advisors firms and largest in terms of total funding are Betterment, Personal Capital, and Wealthfront. Though they lead in the US, expanding internationally is a challenge because of the complex international regulatory environment, differing investment practices, and other barriers to entry.

US-based robo-advisors have received 57% of the global deal share since 2012. Germany took second with 9%, followed by the United Kingdom, and China.

The two largest robo-advisor deals outside the US went to Wacai, a robo-advisor and personal wealth management technology company based in China.

The third and fourth biggest deals went to UK-based Nutmeg, with a $37.5M Series C in Q4’16 preceded by a $32M Series B in Q2’14 that included Armada Investment Group, Balderton Capital, Pentech Ventures, and other investors.

Fintech patents jump in “arms race” between banks and startups: These are the 10 countries filing the most (City A.M.), Rated: B

Global fintech patents have grown by 49 per cent in the past five years, reaching 9,545 in 2016 according to official global filings.

The US led the way in terms of numbers of fintech patents with 4,523, more than double the number of the next country, China. The UK boasted more fintech patents than any other country in Europe, ranking seventh with 89 patents, in areas such as banking, exchanges, investment, insurance and payments architecture.

The top 10 countries filing fintech patents

  1. US
  2. China
  3. Korea
  4. Australia
  5. Japan
  6. Singapore
  7. UK
  8. Russia
  9. Canada
  10. Germany
Australia

Fintech firms that walk the talk (The Australian), Rated: A

The rush to judgment about the disruptive power of fintech is premature, given it’s not even clear which part of the financial services value chain will be most affected.

Also, no matter how you cut it, the fact remains that by the end of last year there were 39 fintech companies around the world with valuations in excess of $US1bn, including Xero, which offers cloud-based accounting software for small and medium-sized businesses and is the sole Australasian representative.

Not surprisingly, the dominant vertical where 16 of the 39 companies with valuations in excess of $US1bn ply their trade, is so-called alternative finance, which includes marketplace lending and crowd-funding.

“Consumer lending in the US is a $US1.5 trillion opportunity, and in Australia it’s $100bn and the leading players are yet to crack $1bn.

Authors:

George Popescu
Allen Taylor

Monday February 13 2017, Daily News Digest

middle east africa alternative finance

News Comments Today’s main news: American Banking Association endorses digital lending solution by Akouba. LendingTree announces top customer-rated lenders for Q3, Q4 2016. Chinese manager of 8 P2P lenders disappears. Today’s main analysis: UK housing whitepaper: Government could boost online lending. Today’s thought-provoking articles: Australian P2P economy now worth over $15B/year. A speculative report to be taken with […]

middle east africa alternative finance

News Comments

United States

International

  • The economics of P2P lending. GP:” Forecast is for Saudi Arabia to have the 2nd largest p2p market at $10.3bn ahead of UK’s $4.3bn. Surprising, isn’t it? What about India? China? Mexico? France? I also get confused when the author uses an expression as p2p money transfer and then p2p lending. They are very different things. And last but not least what is p2p? Is Avant a p2p company in this report? I would take this report with a grain of salt. ”  AT: “This is an interesting read simply for the country comparisons of P2P transaction value.”

United Kingdom

Australia

  • The P2P economy now worth over $15B a year. GP:” P2P goes beyond lending into all kind of sharing markets from Uber to Airbnb. The internet disintermediates AT: “This goes well beyond P2P lending and into the sharing economy as a whole. Nevertheless, Australians are participating in huge numbers.”

Canada

China

Africa, Middle East

 

United States

LendingTree Announces Top Customer-Rated Lenders for Q3 & Q4 2016 (Yahoo! Finance), Rated: AAA

LendingTree®, the nation’s leading online loan marketplace, released today its quarterly list of the top customer-rated network lenders for the third and fourth quarters of 2016. Winners are based on a five-star quality review system for overall customer experience as determined by LendingTree account holders. The list features the top lenders in LendingTree’s core financial marketplace categories: Home Lending, Personal Loans, Auto Loans, and Business Loans.

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

While it was officially launched last year, the Philadelphia Department of Commerce’s 29 member Capital Consortium appears to be up and running now.

RELATIONSHIP TROUBLES THIS VALENTINE’S DAY? YOU MAY WANT TO CHECK YOUR CREDIT SCORE (Elevate Email), Rated: A

If you’re having relationship troubles this Valentine’s Day, you may want to check your credit score. Nonprime Americans are 45 percent more likely to be divorced, according to new research by Elevate’s Center for the New Middle Class, a research institution that examines the everyday effects of being nonprime in America.

“This latest research raises an interesting question about cause and effect. Are people getting divorced because stressful finances put pressure on relationships, or are people becoming nonprime because divorce has negative financial consequences?” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Regardless of the cause, it’s clear that financial pressures are greater in nonprime couples, and that people experiencing financial difficulties are more likely to be nonprime.”

The study also found that 1 in 5 married nonprime Americans feel they have little control over the things that happen to them in general, and more than 50 percent run out of money every 2-3 months or more often. Additional key findings about married nonprime people include:

  • 4 out of 5 say they cannot regularly save money

  • They are 2x more likely to carry a credit card balance

  • They are 2x as likely to have lost a job in the prior 5 years

  • They are 1.4x as likely to have had their pay or work hours reduced in the prior 5 years

  • They are almost 3x more likely to worry over their monthly expenses

  • They are 1.5x more likely to admit that their finances cause significant stress

In nonprime households, uncertainty compounds with marriage rather than dissipates. In fact, married nonprimes are much less likely to feel they have control in their lives compared to prime people and even when compared to their single nonprime counterparts.

ABA Endorses Digital Lending Solution by Akouba (Yahoo! Finance), Rated: A

The American Bankers Association – through its subsidiary the Corporation for American Banking – has endorsed the digital lending solution provided by Akouba, which provides community and regional banks with an origination and underwriting platform for small business loans. ABA members will receive preferred pricing.

Akouba is transforming the way banks help business owners through a cloud-based, white-labeled technology that provides business lending quickly, accurately and profitably. Akouba’s business lending platform provides banks with leading edge technology that integrates the bank’s own unique credit policies into a convenient, online process—from application to documentation— all the way to closing and funding. The bank uses its own credit policies, originates its own loans and owns the entire brand and customer relationship.

Crowdfunding puts the mojo in flipping (News-Press), Rated: A

For the Landings penthouse, the partners decided to finance the flip with Atlanta-based Groundfloor.

Groundfloor underwrote the project as any bank would, by looking at the partners’ financials and evaluation of the project, then sending a local broker to do an independent appraisal. It considered the cost and scope of work estimated by Helm’s contractors — he works with three contractor teams — and factored it with what the penthouse could be bought and re-sold for.

Here’s Groundfloor’s breakdown:

  • Groundfloor financing: $372,090
  • Partners’ skin in the game: $41,344
  • Project cost $413,434
  • Value after repairs: $610,000
  • Loan-to-after repair value: 61 percent

P2P lending growth attracting regulation (Fort Wayne Business Weekly), Rated: B

Indiana’s securities commissioner encourages investors in the state to do their homework on any peer-to-peer lending they consider as federal officials weigh how they might regulate the new financial technology companies.

International

The Economics Of Peer-to-peer Lending (The Market Mogul), Rated: AAA

This type of lending has been growing ever since, and last year, the total transaction value of peer-to-peer money transfers reached $50.7bn. According to estimations, it should grow to $75.3bn this year, with the US accounting for a $23bn chunk of the amount.

The forecasts put Saudi Arabia as the country with the second highest value worldwide, with $10.3bn and the UK in third with a $4.3bn chunk of the total.

By the end of last year, peer-to-peer lending platforms based in the UK had already lent a total of £7.3bn. Estimations are that this could equate to half of what the entire P2P lending market has already provided since it was established.

TrustBuddy, a lending platform, went bankrupt in October 2015 and until now none of the lenders has seen their money back at all.

Lending Club had a rough first quarter last year as its stock price had dropped 50% from December 2015 to March. The business volume largely increased, so why did it fall?

When peer-to-peer lending moved into the mortgage business, banks finally started taking it seriously.

But the biggest opportunities are probably related to the potential future market for peer-to-peer lending. PwC forecasts that the market now has the opportunity to reach “vast new segments of untapped market potential”.

United Kingdom

Housing Whitepaper: Government Actions May Boost Online Lenders (Crowdfund Insider), Rated: AAA

So what does the UK government do? How do you boost housing supply in a market that is struggling to meet demand? The white paper states that “since 1998, the ratio of average house prices to average earnings has more than doubled.”

In brief, the UK government plan is as follows:

  • For local authorities, the Government is offering higher fees and capacity funding. They want to make it easier for local authorities to move projects along
  • For private developers, the Government is offering a planning framework that is more supportive of development
  • For housing associations, the Government has announced funding of £7.1 billion
  • For utilities the government expects infrastructure providers to move things along
  • For lenders, the Government is offering a clear and stable long-term framework for investment, including products for rent. In return. they call upon lenders and investors to back developers and social landlords in building more homes.

Stuart Law, CEO and co-founder of Assetz Capital commented on the Housing white paper saying;

“Putting pressure on local authorities is a step in the right direction. It’s time for the alternative finance sector to step up.”

Law believes the role of funding many of these projects could end up being financed by the alternative lending sector.

LendInvest is another platform that may gain with added business.

While Property Partner may have been underwhelmed, the real estate platform stated;

“It is both fairer and wiser that the government has moved to a more balanced view of the property market, which must work for those renting, as well as those who aspire to homeownership. Encouragement of institutional investment is a recognition of the important role that investors can play in providing high quality accommodation and a quality experience for renters.”

Kuflink Aims to Be UK Market’s Leading P2P Brand (Crowdfund Insider), Rated: A

Crowdfund Insider had a chance to interview CEO of Kuflink Tarlochan Garcha to learn more about his company’s platform.

Chan Garcha: Our niche is that our sister company Kuflink Bridging retains 20% in every deal on Kuflink’s peer-to-peer platform. All deals are secured against UK property which means the maximum LTV for our lenders is 56% against an auction value of 90 days.

CG:  Investing 20% in every deal demonstrates to our lenders that we have full confidence in all our deals.

CG:  We have an independent credit committee of three independent non-executive directors. All deals are vetted by them before they go onto the platform. We also use credit reference agencies, independent professional valuations along with internal checks and verifications before a proposal goes to the credit committee.

CG:  We feel it is very important to work with the regulator. Unfortunately, they are under-resourced and the knowledge seems to be fairly low. The process takes much longer than it really needs to. We also feel that Treasury could do more to protect lenders. For example, allow the FSCS to cover peer-to-peer.

Meet Anil Stocker: Boss of peer-to-peer outfit MarketInvoice that’s taking on City lenders (IB Times), Rated: A

After overseeing his peer-to-peer finance outfit cap £1bn in lending over the last four years, Anil Stocker is a man in a hurry to get to his next billion mark “by the end of 2017”.

To the outside world, the Fintech sphere might appear cluttered and competitive, and all about going after big banks, but Stocker says that is an oversimplified interpretation of the market dynamic.

“We’re still the flies around the big elephant, so peers and competitors are on the same side. All of us are small compared to HSBC, Lloyds, Barclays, and other legacy finance players whose market and scope is very, very big. Our goal is trying to convince people looking for invoice finance not to just run to their bank for funding needs, but rather consider talking to us.”

MarketInvoice’s lending has increased four-fold over the last 12 months, providing on average £2,196 every minute to UK businesses.

Furthermore, the appetite for asset-based finance is roaring and MarketInvoice is busy carving its own niche in this £20bn industry, a billion at a time.

Australia

Peer to peer economy now worth over $ 15 billion a year (Mozo), Rated: AAA

The bi-annual Sharing Economy Trust Index, produced by peer-to-peer lender RateSetter, showed that trust in ride sharing platforms such as Uber and online marketplaces like eBay have grown the most.

With the sharing economy now worth over $15 billion a year, the study revealed that over two thirds of Australians actively participate in the market – whether by spending or earning.

Online marketplaces such as Ebay and Etsy remained by far the most popular way to make money through the sharing economy, while ride sharing, online outsourcing, peep-to-peer lending, and accommodation sharing also proved popular with Australians.

Aside from earning money, consumers can also use the sharing economy to save on goods and services. If we take peer to peer lending as an example, Mozo’s database shows a borrower with a good credit score could secure a rate of just 8.90% by taking out a personal loan with peer to peer lender RateSetter. That compares to the average 12.21% rate offered by the big banks.

Canada

WAVE LAUNCHES SMALL BUSINESS LENDING WITH ONDECK PARTNERSHIP (Betakit), Rated: A

Toronto-based Wave, which provides entrepreneurs with accounting, payroll, and invoice software to run their small businesses, has officially stepped into the lending space.

Wave is partnering with US-based OnDeck, which provides small business lending. Lending by Wave will use OnDeck’s platform to streamline and automate the lending process within Wave’s platform.

China

Manager of 8 P2P lenders disappears, $ 145m in investors funds locked up (Global Times), Rated: AAA

Eight peer-to-peer (P2P) lending platforms announced that their manager disappeared in January, leaving investors unable to withdraw at least 1 billion yuan ($145 million) in funds, domestic media has reported.

The platforms, cmtouzi.com, naipinglicai.com, zaodianlicai.com, wanerjialicai.com, qianguan360.com, lexinglicai.com, xjinfu.com, huoniu360.com, simultaneously announced on January 18 that their manager Fang Fan’s mismanagement of funds had left investors unable to withdraw their money, according to a report on chinatimes.cc.

The platforms are all controlled by Beijing Qiyuan Fortune Network Technology Co, according to the report. As of January, cmtouzi.com users had invested 170 million yuan on the platform. The figure was 350 million yuan for zaodianlicai.com and 428 million yuan for naipinglicai.com. In total, the three platforms controlled nearly 1 billion yuan in user funds.

At present, cmtouzi.com continues to operate. On Friday, the platform issued a statement that denied the incident was caused by inappropriate management. It also issued a plan that would allow investors to withdraw their money.

Africa, Middle East

Cambridge Centre for Alternative Finance Publishes Africa & Middle East Alternative Finance Report (Crowdfund Insider), Rated: AAA

The Cambridge Centre for Alternative Finance (CCAF) has published its first benchmarking report covering alternative finance in the African and Middle East markets. Growth was said to be at 59% during 2015 with a total pegged at $242 million. Much of the alternative finance came via equity crowdfunding and online microfinancing. This is in contrast to more developed markets where peer to peer lending (online lending) tends to dominate.

In Africa, the market was nearly $190 million between 2013-2015, and grew 36% in 2015 to $83 million. Most African activity was through online microfinance as well as donation and rewards-based crowdfunding. Investment-based equity and debt models are yet to really make their mark on the African market. CCAF said 2016 may be the year that investment crowdfunding emerges in these markets.

As for the Middle East, about $286 million was raised in 2013-15, including an increase of 75% in 2015 to $159 million. Equity-based crowdfunding accounted for two-thirds of market activity in the Middle East – with the vast majority occurring within Israel. Donation and reward-based crowdfunding, online microfinance, peer-to-peer business and consumer lending and real estate crowdfunding accounted for similar proportions of market activity of 5% to 6% in the Middle East.

Israel was by far the largest market across the surveyed regions, with a total of nearly $125 million in 2015, followed by the United Arab Emirates (UAE) with over $17 million, Kenya with more than $16 million and South Africa with $15 million.

Other findings of note from the CCAF report include:

  • In 2015, well over 75% of the total online alternative finance raised from Africa and the Middle East regions was funding for start-ups and SMEs, with $62 million raised across Africa and $132 million raised across the Middle East. 
  • In Africa, 90% of online alternative finance originated from platforms headquartered outside of the continent, while in the Middle East the reverse is true with 93% of online funding originating from home-grown platforms in the region.
  • Both the African and Middle Eastern online alternative finance markets are showing signs of decelerating growth, particularly in the Middle East. The Middle East experienced an annual growth rate of 152% from 2013-2014, but that rate fell to 75 per cent from 2014-2015. The African market grew 38 per cent from 2013-14 and 36 per cent between 2014-2015.

 

Authors:

George Popescu
Allen Taylor

Tuesday January 10 2017, Daily News Digest

Global VC FinTech investment

News Comments Today’s main news: Wellesley aims to raise 1.5M BP on Seedrs. China cracks down on P2P lending. Today’s main analysis: It doesn’t take much to put nonprime Americans into financial crisis. Today’s thought-provoking articles: Why France will steal the UK FinTech crown. Indonesia releases new P2P regulations. United States What it will take to put […]

Global VC FinTech investment

News Comments

United States

United Kingdom

European Union

China

India

Asia

News Summary

United States

UNEXPECTED EXPENSES: IT DOESN’T TAKE MUCH TO PUT NONPRIME AMERICANS INTO FINANCIAL CRISIS (Elevate email), Rated: AAA

Unexpected expenses are more likely to hit nonprime Americans much sooner and harder than their counterparts with prime credit scores, according to research released today by Elevate’s Center for the New Middle Class. For example, the research shows that the 160 million Americans who are nonprime, can only weather an unexpected expense of 31 percent of their monthly income, as opposed to 53 percent for their prime counterparts.

The Center’s latest study explores the impact of unexpected expenses on nonprime Americans, defined as those who have credit scores below 700. Key findings include:

  • A bill becomes a crisis for nonprime Americans at $1,400; for prime, it’s $2,900
  • Many common expenses such as a vehicle transmission, broken arm, or apartment security deposit are above the $1,400 threshold for nonprime Americans, but below the $2,900 threshold for prime Americans
  • Almost half of nonprime Americans have more than three disrupting expense events per year compared to approximately one-quarter of primes
  • Nonprime Americans can survive only half as long as prime Americans after a drop in income
  • Half of nonprime Americans have an income that fluctuates month-to-month

Additionally, based on geographic location, purchasing power can create large disparities in threshold amounts. For example, local purchasing power adjusted for $100 in Tulsa, OK, acts more like $131 in Kansas City, MO, and a mere $77 in New York, NY.

What to Watch For in Marketplace Lending During 2017 (Crowdfund Insider), Rated: A

While surprises are undoubtedly in store for 2017, indications are that certain trends—the growth of bank partnerships and industry consolidation—will continue and accelerate as some legal certainty is achieved, legal cases which absorbed the industry’s attention in 2016 will be resolved and the focus will shift to Capitol Hill, as marketplace lenders step up lobbying activities given the new administration’s presumed predilection to assist the expansion of credit.

Taking a Look Back at 2016

From the start of the year through mid-May we witnessed what can be described as “rational exuberance” as market participants continued to look optimistically at opportunities, tempered by a recognition that regulatory scrutiny was increasing and demanded careful attention.

The mid-May developments at Lending Club, with the abrupt resignation of its CEO Renaud Laplanche, one of the most prominent figures in the industry who had just a few weeks before regaled the LendIt crowd with a keynote address, marked the start of the second distinct period.

With the end of the summer, the market entered its third phase, as parties again waded back into the water, cautiously optimistic about the outlook. By the end of the year, things had come nearly full-circle, as Lending Club tapped investor demand and completed its first rated securitization of consumer loans.

What’s Ahead for 2017

Increased Bank Partnerships. One theme likely to continue in 2017 is the increasing focus on partnerships between lending platforms and traditional banks.

While the Office of the Comptroller of the Currency’s December announcement to move forward with limited purpose national bank charters for fintech companies represents a measured and beneficial step for the industry, it is relatively unlikely that any final developments occur before the end of 2017.

Further Industry Consolidation. Expect the industry consolidation that started in 2016 to continue and grow in 2017.

Lastly, expect M&A activity in the marketplace arena to accelerate in 2017.

Morningstar Corporate Credit Research Highlights (Morningstar Email), Rated: A

Money360 Closes Record $ 35.6 Million in Loans in December (Yahoo! Finance), Rated: A

Money360, the leading commercial real estate marketplace lending platform, announced today that it closed a record $35.6 million in commercial real estate loans in December 2016 — the result of ongoing growth of the company.

December’s transactions reflect short-term bridge loans for a mix of property types, including retail, office and industrial in California, Florida and Illinois. A total of five properties were financed including a one-story suburban office building in Irvine, California; a three-building industrial complex in Richmond, California; a seven-building anchored retail property in Orlando, Florida; a three-story suburban office building in Palm Harbor, Florida; and a three-story office property in Rosemont, Illinois.

December’s loans were for terms of between one and two years, and all were collateralized with a first-lien positions on the properties. They include:

  • Irvine, California: $5.4 Million to Refinance an Office Property Currently Being Re-entitled for Multifamily Development: Money360 provided a 12-month, $5.4 million bridge loan to the owner of a one-story, suburban office building to pay off two maturing loans, taxes and to provide cash out to afford the borrower sufficient time to continue processing land entitlements for a 45-unit condominium project planned on the site. The borrower brought in equity of $548,000 to close with a loan-to-value of 75 percent.
  • Richmond, California: $5.7 Million to Purchase a Three-Building Industrial Complex: Money360 provided a $5.7 million 24-month bridge loan to allow the borrower to purchase Adel Park, consisting of three contiguous industrial buildings containing a total of 159,156 square feet. The borrower was processing an SBA loan, but due to a hard closing date, opted for the bridge loan to consummate the purchase.
  • Orlando, Florida: $9.53 Million to Refinance a Seven-Building Anchored Retail Property: Money360 provided $9.53 million in bridge financing to pay off two current maturing loans and to finance tenant improvements and leasing commissions associated with re-tenanting the anchor space. The first-lien mortgage loan has a term of 24 months, with a loan-to-value ratio of 73.9 percent.
  • Palm Harbor, Florida: $2.5 Million to Refinance a Three-Story Office Building: Money360 provided a $2.5 million bridge loan to pay off a maturing CMBS loan for the three-story Palm Harbor office building in Palm Harbor, Florida. The first mortgage loan is for a term of 24 months with a loan-to-value ratio of 71.43 percent. The subject property is 84.6 percent occupied and professionally managed.
  • Rosemont, Illinois: $12.5 Million to Refinance a Suburban Office Property: Money360 provided a $12.5 million bridge loan for a single-tenant, suburban property in Rosemont, Illinois, allowing the borrower to pay off a maturing loan and buy out existing partners. The 24-month loan is secured by 71,132 square foot property, broken down as 60,207 square feet of office space and 10,925 square feet of warehouse space.
United Kingdom

Wellesley Aims to Raise £1.5M on Seedrs for Further Expansion (Crowdfund Insider), Rated: AAA

Peer to peer lending platform Wellesley has been crowdfunding on Seedrs for almost a month to raise £1.5M (approximately $1.82M). The campaign is currently restricted to Wellesley customers so it is hard to track.

Wellesley, like many other young firms, needs additional capital to continue operations.

Wellesley told P2P Banking that the platform’s campaign on Seedrs stands out because over 15,000 people have already invested in the company, the firm has a social issue of building Britain, and the company has been running for three years while remaining less speculative than other startups in this space.

Advisor Focused P2P Platform Octopus Choice Receives FCA Approval (Crowdfund Insider), Rated: A

Peer to peer lending platform Octopus Choice has received full authorisation from the Financial Conduct Authority. Octopus Choice is part of Octopus Investments. The company said the FCA approval was a first for an advisor focused P2P platform.

Octopus Choice was launched in April 2016, to coincide with the FCA’s decision to broaden the scope of advisers’ permissions to include P2P lending.  The company now claims to be one of the fastest growing P2P platforms having facilitated approximately £45 million in loans for 75 deals since launch.

James Hay bans non-standard investment purchases through platform (Money Marketing), Rated: A

From today, new customers will no longer be able to buy non-standard investments through James Hay’s platform except for in SSASs.

James Hay lists the following investments as non-standard: intellectual property, land banking, overseas commercial property, peer-to-peer lending, unconnected loans, carbon credits, storage pods, UK unquoted shares, overseas unquoted shares, unquoted loan notes and bonds, second-hand endowment policies, and fractional property investments.

Gold bullion will no longer be treated as a non-standard investment in James Hay products, however, and will still be allowed for new investments.

InvestCloud acquires UK fintech Babel for $ 20M (EconoTimes), Rated: A

Californian fintech firm InvestCloud has announced a strategic acquisition of London fintech company Babel Systems for $20 million in a deal.

The strategic acquisition connects InvestCloud’s digital platform with Babel’s trading and accounting capabilities in a move to provide a unique solution for fintech companies. InvestCloud will carry on supporting clients using other accounting solutions and also serve as an open supplier to the market, the release stated.

The client base of Babel includes the market leader in Robo-Advice ‘Nutmeg’ and other progressive Wealth Managers and Family Offices. The fintech company is the modern trade and accounting firm that addresses the needs of a regulated and international marketplace. The modular Babel’s solution is API based and enables the company to be integrated with any client platform.

Getting to know you: Tarlochan Garcha (Business Matters Magazine), Rated: A

Kuflink Ltd is our entry into the peer-to-peer world.  This business is about to go live and compliments Kuflink Bridging, as it will be facilitating lenders and borrowers on UK property.

The conclusion of those findings was clear and this complemented Kuflink Bridging.  Whilst the peer-to-peer sector is highly regulated, the barriers to entry are very high and this appeals to us given our knowledge of the industry, niche offering and desire to build a successful business.  Just nine months later, we are ready to launch our unique peer-to-peer lending platform.

Survival guide to personal loans (Independent), Rated: B

When we asked Moneysupermarket.com what the best buy deals were on personal loans from £1,000 – £1,999, £2,000 – £2,999, and £3,000 – £4,999 – enough for a modest car purchase or an affordable kitchen, the cheapest deal each time was from Zopa, the original peer-to-peer lender.

The advent of peer-to-peer lending has revolutionised the loan market by cutting out middle men and matching up savers looking for a better than average deal with would-be borrows hoping the beat the high street loan rates. When peer-to-peer (also known as P2P) started out it wasn’t regulated in the way as the banks and customers were initially nervous about both lending and borrowing. That’s all changed, with Uk registered P2P lenders falling under the same policing as traditional banks by the Financial Conduct Authority (FCA). From April 2017 they’ll also have to have at least a £50,000 cash buffer to bail out their customers if one side of the deal fails for some reason.

AlliedCrowds: Here’s 2016 Recap & 2017 Priorities (Crowdfund Insider), Rated: B

AlliedCrowds’ 2016 highlights include:

  • Building its database, the Capital Finder: Offers information for crowdfunding, VCs, angel networks, impact investors, and public/semi-public firms.
  • Consulting Service Expansion: AlliedCrowd invested more time in running a number of consulting projects for developing organizations and private sector firm.

  • Created Ecuador’s First Crowdfunding Platform: Known as GreenCrowds.

AlliedCrowds’ 2017 priorities will be to finalize Capital Finder, publish a new alternative report, and appoint a new MD for its debt platform.

European Union

Here’s why France might steal the UK’s fintech crown (Business Insider), Rated: A

The UK’s fintech sector overwhelmingly supported remaining in the EU in the runup to June’s referendum.

Now, as Brexit looms

€2 billion has been invested over German fintech platform Raisin (Business Insider), Rated: A

German fintech Raisin has passed €2 billion (£1.7 billion, $2.1 billion) of investment over its platform three years after launching.

Raisin announced in a press release on Tuesday that it had passed the milestone, just three months after announcing €1.7 billion had been invested over its platform. The fintech said the money comes from 60,00 customers, up from 50,000 in September.

Entrepreneur behind a $ 180M watch brand quietly invested in Klarna (Business Insider), Rated: A

Filip Tysander, the founder of the Daniel Wellington watch brand, quietly bought millions of pounds worth of shares in payments startup Klarna, according to Swedish tech site Breakit.

Klarna has raised over $290 million (£238 million) and is worth $2.25 billion (£1.85 billion), making it one of Sweden’s few billion dollar tech companies.

China

China Cracking Down On P2P Lending (PYMNTS.com), Rated: AAA

The first nationwide crackdown on P2P lending in China is underway — and expected to eliminate many of the 2,400 or so leading platforms in the nation.

The crackdown comes following a series of multi-billion dollar scams in the Chinese P2P lending space, as well as governance issues in U.S. segment leader LendingClub.  Chinese regulatory authorities have officially released new guidelines and sent inspection teams to companies to make sure said guidelines are being following. Those that do not comply by August of this year will be shut down.

The new regulations will block lenders from guaranteeing principal or interest on loans they facilitate as well as cap the size of loans for individuals at Rmb1m and at Rmb5m for companies. Lenders going forward will also be required to use custodian banks — which the vast, vast majority do not.

CreditEase Boosts Customer Experiences with Verint Customer Engagement Optimization Solutions (BusinessWire), Rated: A

Verint® Systems Inc. (Nasdaq: VRNT) today announced that CreditEase—a leading FinTech company in China, specializing in small business and consumer lending as well as wealth management for high net worth and mass affluent investors—is leveraging Verint Speech Analytics, along with Call Recording and Quality Management, to support the transformation of its customer engagement platform.

Since implementing the Verint software solutions, CreditEase has experienced improvements in operational performance and reports an increase in the use of digital channels through omnichannel service strategies. The ability to assess larger data samples, focus on important interactions, gain customer intelligence and target coaching to employees also has helped the organization enhance service delivery and the customer experience.

CreditEase also reports that it has saved operating costs of 45 percent on an annual basis by reducing print and mailed financial statements as customers have migrated to the use of digital channels and self-service e-statements. Its quality assurance initiatives also have yielded benefits in terms of generating an additional 30 percent savings by helping personnel become even more effective in their roles. The organization’s customer satisfaction ratings also have increased, in part due to a sharp reduction (by 80 percent) in billing-related complaints.

India

FSA Support Service Fintech Peer to Peer Lending (Tempo.co), Rated: AAA

the Financial Services Authority (FSA) shows its commitment to support the development of technology-based financial services orfinancial technology (fintech) in Indonesia.

Deputy Commissioner Strategy Management IA FSA, Imansyah said that regulation provides an opportunity for offenders fintech in Indonesia in order to grow.

Faith added the FSA will set up a special website page to facilitate it. The process of setting up a website to ready access would require at least six months after the regulation is published.

InstaEMI expands to more metro cities (India Times), Rated: B

Hyderabad-based financial services platform InstaEMI today announced its plans to expand its presence in metro cities across the country including New Delhi, Mumbai, Pune and Kolkata.

While peer-to-peer lending is another area of their focus, marginal size of the business constitutes of big ticket investments.

Asia

Indonesia: New Fintech, P2P Regulations Released (Crowdfund Insider), Rated: AAA

According to a report in Deal Street Asia, the Indonesian Financial Services Authority (OJK) laid out the following rules:

  • Registration – P2P lending (pinjam meminjam) startups must register and obtain their business license before operating.
  • Foreign ownership – Foreign businesses have to find a local partner because foreign ownership is limited to 85 percent of a company, and they can only act as lenders.
  • Minimum capital requirements – A company must have access to a little over $260,000 in order to carry out its business.  It must have at least approximately $74,000 in capital by the time it registers, and it must also have at least approximately $188,000 to obtain its operating license.
  • Interest rate provision – There is no limit on the interest rate, but loans cannot exceed $150,000.
  • Consumer protection – Fintech firms must only “advise” lenders and borrowers of its selected interest rates, which take “into account fairness and developments in the economy”.  They must also use escrow and virtual accounts in order to prevent operators from directly accessing the capital flowing between the lenders and borrowers.

CoAssets Launches New Real Estate Subsidiary for Full Spectrum of Real Estate Services (Crowdfund Insider), Rated: A

CoAssets Limited, a Singapore-founded Fintech firm that is listed on the ASX (ASX:CA8), has launched a newly incorporated subsidiary, CoAssets Real Estate (Care) Pte Ltd.

“As a crowdfunding platform, user protection is one of our key focus. We are now looking at crowdfunding deals that are backed by assets as a way to protect our users amidst economic uncertainty. Given this move towards secured crowdfunding and our market position as a real estate crowdfunding platform, having a real estate agency fits in well into our overall business strategy,” said Getty Goh, CEO of CoAssets.

CoAssets also shared that all deal listed on the crowdfunding platform undergo a proprietary risk assesment model labeled CoAssets Risk Assessment Model or CRAM.  This process was said to be developed with the assistance of one of the top auditing firms.  The CRAM score is used to help decide whether crowdfunding or other forms of financing could be offered to companies that are looking for funding.

RE/MAX Malaysia Crowdfunding Campaign Raises Over MYR 300,000 (Crowdfund Insider), Rated: A

Kellerhhof International Sdn Bhd led RE/MAX Malaysia‘s equity crowdfunding campaign over the past month to aim to raise MYR 200,000 (approximately $45,000).  The campaign on CrowdPlus.asia finished yesterday and resulted in RE/MAX Malaysia successfully surpassing its minimum goal, raising MYR 322,888 (approximately $72,000).

Yesterday our Equity Crowdfunding was closed. An amazing 161% funded, what gives us great appreciation.

 

Authors:

George Popescu
Allen Taylor

Friday December 2 2016, Daily News Digest

auto loan originations

News Comments Today’s main news: Subprime Auto Debt Grows Despite Rising Delinquencies, Today’s main analysis : Subprime auto debt and delinquencies. Today’s thought-provoking articles: 2017 will be good year for partnering with banks. Rapid growth of alternative finance. Does online lending create less systemic risk? United States Weiss comments at investors conference on marketplace lending. AT: “The […]

auto loan originations

News Comments

United States

United Kingdom

European Union

China

India

Pakistan

News Summary

United States

Remarks by Counselor to The Secretary Antonio Weiss at The Second Annual Investors Conference on Marketplace Lending (Treasury), Rated: AAA

In recognition of the changing industry dynamics and in response to the feedback we received to the RFI, in May of this year, Treasury published a White Paper entitled Opportunities and Challenges in Online Marketplace Lending.

We proposed six recommendations to public and private sector participants.  First, we support exploring more robust small business borrower protections and effective oversight.  Second, we encourage companies to align interests of borrowers and investors by ensuring sound borrower experience and back-end operations.  Third, to promote a transparent marketplace, we recommend the creation of a private sector registry for tracking data on transactions, issuances, securitizations, and loan-level performance for the public.  Fourth, we suggest the expansion of access to credit through partnerships that ensure safe and affordable credit.  Fifth, we support the use of smart disclosures and data verification sources to improve the borrower experience and make loans and investments safer and more accurate.  And last, we proposed the creation of a standing, interagency working group on online marketplace lending to facilitate regulatory coordination.

Banks, particularly community banks, have traditionally provided the majority of credit to small businesses in the United States.  Community banks are often closest to their borrowers and in a unique position to assess and address the credit needs of their customer base.  This can lead to more effective risk assessments and better outcomes for lenders and borrowers.

However, small businesses are increasingly turning to online marketplace lenders as potential financing sources.  According to the 2015 Federal Reserve’s Small Business Credit Survey, one in five small businesses sought out online marketplace lenders in 2015 as potential financing sources.

Unfortunately, those same survey results found small businesses approved for financing were often dissatisfied with their experience using marketplace lenders.  The top three survey complaints were high interest rates, unfavorable repayment terms, and most critically, a lack of transparency.  These results echoed the comments Treasury received in the RFI.  Commenters across the spectrum, including some industry participants, argued that small business borrowers need enhanced safeguards to ensure terms are well understood.

The need for greater transparency and standardized terms across the full spectrum of small business credit products is necessary to promote competition and ensure customers have relevant and accurate information to make informed financial decisions.

Treasury’s White Paper showed that the use of data for credit underwriting is a core element of online marketplace lending.  It holds both the most promise and the most risk for borrowers.  Data-driven algorithms may expedite credit assessments and reduce operational friction.  In particular, data allows marketplace lenders to reduce the cost of customer acquisition, automate the origination of loans and the collection of loan documentation, and potentially reduce fraud.

However, these algorithms also carry the risk of disparate impact in credit outcomes and the potential for fair lending violations.  There is limited public research on these topics, and therefore, a lack of consensus on the potential benefits and risks.  This is partly because credit scoring models and operations are proprietary, and data sources are expensive to construct or unavailable to outside researchers.

These algorithms continue to evolve, and their ability to generate superior credit outcomes was tested in 2016.  Unsecured consumer loans across a composite of marketplace lending platforms saw delinquency rates rise 30 to 50 basis points from the same time a year ago.  To ensure continued investor confidence in the validity of these new underwriting models, marketplace lenders adjusted to demands by investors for greater transparency, independent due diligence reviews, and heightened data integrity and validation standards.

We also see the potential for marketplace lending to expand credit in underserved markets.  According to the CFPB, at least 45 million consumers have no access to credit because they have either no credit report or insufficient credit histories.  It is estimated that 26 million Americans are credit invisible and do not have credit records maintained by any of the three credit reporting agencies.  An additional 19 million lack a credit score.  Use of alternative data may mitigate this problem.  Importantly, alternative data can also be used to satisfy customer identification requirements and combat fraud.

However, with the proliferation of partnerships, it will be critical to ensure that financial institutions maintain oversight and compliance obligations under the distribution partnership model.  The proposed third party guidance by FDIC is critical in this regard, and extends beyond marketplace lending.

Given the rate of change and innovation occurring in fintech and online marketplace lending, this will continue to remain an area of focus for federal regulatory agencies.

Subprime Auto Debt Grows Despite Rising Delinquencies (Liberty Street Economics), Rated: AAA

The latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data showed a small increase in overall debt in the third quarter of 2016, bolstered by gains in non-housing debt. Mortgage balances continue to grow at a sluggish pace since the recession while auto loan balances are growing steadily. The rise in auto loans has been fueled by high levels of originations across the spectrum of creditworthiness, including subprime loans, which are disproportionately originated by auto finance companies.

Originations of auto loans have continued at a brisk pace over the past few years, with 2016 shaping up to be the strongest of any year in our data, which begin in 1999.

Although it remains true that banks and credit unions comprise about half of the overall outstanding balance of newly originated loans, the vast majority of subprime loans are originated by auto finance companies.

Auto loan delinquency data, reported in our Quarterly Report, show that the overall ninety-plus day delinquency rate for auto loans increased only slightly in 2016 through the end of September to 3.6 percent. But the relatively stable delinquency rate masks diverging performance trends across the two types of lenders. Specifically, a worsening performance among auto loans issued by auto finance companies is masked by improvements in the delinquency rates of auto loans issued by banks and credit unions. The ninety-plus day delinquency rate for auto finance company loans worsened by a full percentage point over the past four quarters, while delinquency rates for bank and credit union auto loans have improved slightly. An even sharper divergence appears in the new flow into delinquency for loans broken out by the borrower’s credit score at origination, shown in the chart below. The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years.

2017 Will Be A Huge Year For Bank Partnerships (Lend Academy), Rated: AAA

Both banks and fintech companies have come to the realization that they have core competencies that are complimentary.  According to a recent Manatt survey, a whopping 72% of regional and community banks said that they plan to collaborate with a fintech company in the next 12-18 months.

Banks are naturally conservative so it comes as no surprise that the early adopters have chosen to partner with fintech companies rather than buy or build.  We expect that partnerships are going to rapidly accelerate in 2017.

Bank-Fintech-Bank (BFB): In this scenario the bank uses their channel to originate borrowers, the online lender underwrites the loan, and the bank uses its depositor base to fund the loan.

Fintech-Fintech-Bank (FFB):  In this scenario, the online lender uses their own channel to acquire the borrower, they use their technology to underwrite the loan, and the bank provides the lending capital.

Bank-Fintech-Fintech (BFF):  In this scenario the Bank uses their channel to acquire the borrower but the fintech underwrites the loans and funds it themselves.

Co-Brand or White Label: Each partnership must also decide whether to co-brand or white label.  Regions Bank is most interesting because they chose to white label with Avant but co-brand with Fundation.

Last month Goldman Sachs officially launched Marcus, the first online lending platform built by a bank.  This was a major milestone for the industry.  It signaled that banks and online lending platforms can co-exist.

SunTrust is the only major bank to have actually acquired an online lending platform.

Online Lending Update (Orchard Email), Rated: A

I mentioned in last month’s newsletter that the feeling among most of the industry participants I’d spoken with was that the worst was behind us and the prevailing sentiment was that we’d likely end the year on a positive note. While I believe this is still the case, we won’t know it for sure until we start seeing it in the numbers. November was a month of mixed signals.

A recent

PeerIQ and TransUnion Forge Strategic Partnership to Bring Suite of Data Transparency Solutions to Marketplace Lending (Marketwired), Rated: A

PeerIQ, a leading provider of data and analytics in the marketplace lending sector, and TransUnion (NYSE: TRU), a global information solutions provider, today announced a core strategic partnership to bring enhanced transparency and insight to alternative lending markets. This newly launched partnership will target the most pressing issues facing lending markets to foster greater investor confidence. It also positions PeerIQ as a key facilitator of efficient investment between marketplace lenders and institutional investors.

In addition to building authoritative data and derived analytics solutions for the industry, PeerIQ and TransUnion will collaborate on distribution and integration opportunities. As part of the partnership, Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit, will become a PeerIQ board observer.

Online lenders talk partnerships (Banking Exchange), Rated: A

Banks that partner with online lending platforms can find new opportunities to expand their markets, but key challenges also need to be addressed.

Online lender Avant seeks financial-driven bank partnerships, according to Kevin Lewis, head of business development. Avant partners with banks to provide a bank-branded product for both existing customers and new online customers.

Manny Alvarez, general counsel and chief compliance officer for online lender Affirm, says his company seeks customers who either don’t have or don’t use a credit card for big ticket purchases.

Affirm—started by Max Levchin, co-founder of PayPal—works with web-based merchant verticals in segments such as home goods, automotive parts, and luxury apparel.

Richard Neiman, head of regulatory and government affairs at Lending Club, said his company has over 30 bank partners on its platform. He says the banks find these partnerships “attractive and a strong value proposition” because it provides them with the ability to:

1. Acquire attractive assets (consumer credits)

2. Offer a digital system without having to build a new system or adapt a legacy system

3. Fill a product gap

4. Say “yes” to more customers because loans the bank doesn’t want to hold on its balance sheet could be funded by the other investors on its platform.

Lending Club partners with banks to originate and issue its loans. It also partners with large and small banks that invest in loans on its platform or originate loans through white label programs on its platform.

Mastercard roll out AI to detect fraud in card transactions (The Asset), Rated: A

Mastercard has launched Decision Intelligence, a comprehensive decision and fraud detection service. The solution uses artificial intelligence (AI) technology to help financial institutions increase the accuracy of real-time approvals of genuine transactions and reduce false declines.

Current decision-scoring products are focused primarily on risk assessment, working within predefined rules.

SFIG Issues First Marketplace Lending Best Practices Report (PR Newswire), Rated: A

The Structured Finance Industry Group, Inc. (“SFIG”) released the First Edition in a series of papers aimed at supporting the responsible growth of securitization in the marketplace lending sector. These papers, termed “Green Papers,” are a product of SFIG’s Marketplace Lending Committee Best Practices Initiative. The Best Practices Initiative was launched in February 2016, and seeks to identify a framework of market standards and recommended best practices through an open discussion among a broad cross-section of market participants.

The involvement by membership in SFIG’s Marketplace Lending Committee and the best practices effort is broad. Each working group differs in size, and SFIG’s Marketplace Lending Committee currently includes 250 individuals, representing more than 70 SFIG member institutions. The initiative has established the following five work streams related to marketplace lending:

  • Disclosure & Reporting;
  • Representations & Warranties;
  • Regulatory;
  • Operational Considerations; and
  • Enforcement.

RealtyShares Announcement: More Than $ 5.1M Has Been Raised For Nashville Dining Franchise Net Lease Deals (Crowdfund Insider), Rated: A

RealtyShares announced on Thursday a total of $5,144,000 has been raised through its real estate crowdfunding marketplace for the acquisition and development of four free-standing triple net (NNN) leased quick service restaurants in Nashville, Tennessee.

According to RealtyShares, the tenants, which includes three Checkers and one Taco John’s, each raised more than $1 million through the crowdfunding platform at an 80% Loan-to-Cost (LTC) ratio. All were fully funded within two weeks of being featured on RealtyShares’ online marketplace, demonstrating the crowd’s strong interest in this type of deal.

FTC FinTech Forum Part II – Crowdfunding and P2P Payments (Venable), Rated: A

Earlier this year, the Federal Trade Commission (FTC) held its first FinTech Series forum exploring the benefits, risks, and regulatory issues applicable to the FinTech industry. The forum, which took place on June 10, 2016, focused on marketplace lending. The second forum in the series took place on October 26, 2016, and focused on crowdfunding platforms and peer-to-peer (P2P) payments. The half-day forum featured opening remarks by FTC Commissioner Terrell McSweeny, panel discussions on crowdfunding and P2P payments, a presentation by the FTC’s Office of Technology, Research, and Investigation, and closing remarks by Malini Mithal, the Acting Associate Director of the FTC’s Division of Financial Practices.

At the second FinTech Series Forum, the FTC discussed its planned regulatory direction for the crowdsourcing and P2P payments industries, and the level of compliance flexibility regulators expected to provide early-stage fintech companies (spoiler: not much). The FTC made clear that although FinTech-specific regulation is still taking shape, the agency will monitor this sector aggressively and expects compliance with long-standing consumer protection laws, including its guidance on unfair or deceptive acts or practices (UDAP).

While crowdfunding has created a new system for individuals and groups to raise money for personal and business projects, the FTC believes such platforms also create a potential for fraud and other abuse. The panelists noted that consumer understanding is always a source of risk and commented that some issues may be driven by consumers viewing crowdfunding platforms (particularly reward-based platforms) as online stores, rather than as an investment in a not-yet-extant product.

For its part, the FTC stated it would continue to take action against fraud by project creators, recalling the 2015 Forking Path case (discussed here), in which the FTC asserted that a project creator’s claims constituted UDAP in violation of Section 5 of the FTC Act.

During the forum, one panelist emphasized that regulations that govern existing funding mechanisms should apply to P2P payment with equal force. Indeed, there are multiple overlapping legal and regulatory frameworks that could apply to P2P payment systems, depending on how they are set up, including the Bank Secrecy Act and anti-money laundering regulations, money transmission laws, laws applicable to prepaid programs, payment card network rules, and NACHA rules, to name a few. In addition to such existing regulations, the CFPB’s Prepaid Rule, discussed here, will also likely apply to many P2P transfer systems in the near future.

Bank of America shows off new tech at renovated financial centre at Stanford (Finextra), Rated: B

Bank of America today celebrated the grand opening of its newly renovated Stanford financial center located at 3000 El Camino Real.

Specifically, the financial center features a new design layout and a host of new finishes, such as a digital demonstration counter with iPads showcasing mobile and online banking platforms, new waiting area amenities, and private offices for providing financial advice to clients.

The Final Chapter of the BillGuard Journey (Medium), Rated: B

Today, we mark the last page in the beautiful story of BillGuard. What an exhilarating journey it has been.

From BillGuard to Prosper Daily

Six weeks later, in October 2015, we announced BillGuard was joining forces with Prosper. Barely catching our breath, we felt reinvigorated that added resources and access to bleeding edge financial services capabilities could take the materialization of our mission to a new level. We suddenly could take BillGuard from read-only insights to actually impacting user’s accounts and saving them money, or at least reducing their debt. As a team, we could dream even bigger as we moved from our cash-strapped start-up phase, to aggressive growth planning, including plans to double our team and dramatically grow the product and its user base.

2016 A bad year for everyone, even unicorns

Lenders reacted by quickly changing their strategy from growth to profitability. They started cutting costs and hitting “undo” on all those scaling investments. Prosper, LendingClub and Avant were forced to lay off significant portions of their US workforce early in 2016. Lenders reduced other costs wherever they could and reduced borrower acquisition in pursuit of marketplace equilibrium.

Startup Reality hits hard: Scale down or shut down

Then came the time to set our 2017 strategy and budgets. Tight budgets would continue until market conditions and Prosper’s financials shifted back to growth. No matter how many times we ran the numbers, it was clear expenses had to be reduced further. This meant significantly reducing the size of the Tel Aviv office or consolidating the app operations in San Francisco.

Thus started our final BillGuard/Prosper Daily project — organizing and transferring our work to colleagues in San Francisco. It will take a couple of months to complete, and it comes with some sadness as you can imagine. Still, it’s good to know the app will live on and Prosper will continue to build on what we created at BillGuard.

The BillGuard Mafia — Unleashed

As we close the doors on the Rothschild office (and balcony) we’ve been so lucky to call home for the last four years, it is exciting to think of all the new chapters that will be started by this team. Whether they’re joining some of the most recognized companies or starting their own industry-revolutionizing ventures, they will take these BillGuard learnings and friendships and apply them in new ways.

What’s next?

During this difficult moment of seeing our incredible team disband, I struggle to find the words to articulate how much this group has taught me about what it means to be a team, about building beautiful things that people actually use and love, and about handling the great honor that it’s been to lead during this adventure.

New CTO Plants Product Innovation to Grow Kabbage (Hypepotamus), Rate: B

Chief Technology Officer Amala Duggirala joins lending startup, Kabbage at a great time. The Atlanta unicorn company has experienced astronomical growth over the past year, priming itself for technology advancements in processing direct loans to small businesses across the country.

Duggirala has two decades of experience in building large-scale systems and growing enterprises. Her history of transforming corporations, including ACI Worldwide, which she helped boomed from $260 million in revenue to $1 billion, will lend itself to taking the Kabbage platform to the next level.

Think Finance Leaders To Speak at the Marketplace Lending & Alternative Financing Summit (PR Newswire), Rated: B

Think Finance, Inc., the company behind CortexSM, which provides a flexible and complete solution for financial service providers to enter the online consumer lending market, announced two of its senior executives will speak at the Marketplace Lending & Alternative Financing Summit taking place December 4th through December 6th in Dana Point, California. The Summit gathers fintech industry leaders – including credit issuers, platform providers, underwriters, rating agencies, service providers, investors and other professionals – to share insights on the latest trends and tools in the growing area of marketplace lending.

Think Finance CEO Martin Wong will participate in a panel discussion focused on online consumer lending platforms in the United States>, and Think Finance Senior Vice President of Decision Sciences and Risk Management Scott Morrison will give remarks during a panel discussion on credit risk.

United Kingdom

Watson Wheatley implements iRecs platform at P2P lender ThinCats (Finextra), Rated: A

Watson Wheatley Financial Systems (WWFS) are pleased to announce the implementation of the iRecs reconciliation solution at online peer-to-peer SME business loan specialists ThinCats.

This new deal for WWFS marks the first time the iRecs platform has been used in a peer-to-peer lending environment and adds value to the operational control processes already established at ThinCats.

Lending company Kuflink moves in to former Blockbuster store in Gravesend (KentOnline), Rated: B

A former Transport Minister came to the county to cut the ribbon on a new headquarters for a peer-to-peer lending company.

Stephen Hammond, who is the MP for Wimbledon, was invited by Gravesham MP Adam Holloway to formally open the new base of the Kuflink Group.

The company, founded in 2011, is made up of Kuflink Bridging, which offers development funding, and its peer-to-peer lending platform focused on residential and commercial property.

European Union

THE RAPID GROWTH OF ALTERNATIVE FINANCE (International Banking), Rated: AAA

That being said, alternative finance as a concept still remains somewhat amorphous. Given that the industry has only recently established any significant presence—and given that new forms of alternative finance continue to be created—financing methods now commonly being identified as “alternative” are essentially those that do not originate from traditional sources such as banks and stock and bond markets. Others provide a more stringent definition of the industry as one that has a direct connection between market participants, generally via online platforms.

Furthermore, recent figures show that such financing methods have been experiencing startling growth over the last few years. According to a September report from Cambridge University’s Centre for Alternative Finance (CCAF), the online alternative-finance market in Europe grew by a massive 92 percent in 2015, hitting €5.4 billion. The UK currently possesses the lion’s share of the region’s industry, with the CCAF recording the country’s transaction volume at €4.4 billion, or 81 percent of Europe’s market share.

China is deemed to be the world’s largest alternative-finance market at $101.69 billion, which represents a rather dramatic ascent over the last few years. The country’s market in 2013 was only $5.56 billion before jumping to $24.3 billion by last year, and then exceeding $100 billion last year. Much of China’s growth has been attributed to the rapid rise of mobile Internet in China, which has allowed 685 million people to get connected, more than any other country in the world. The rest of Asia-Pacific pales in comparison to China, with a market value of just $1.12 billion; but with a staggering 313-percent growth rate from 2014 levels, alternative finance looks set to explode across the entire region.

The World Bank recently estimated that the world’s alternative-finance market could grow to $90 billion of investment by 2020 from $34 billion at present.

Does Online Lending Create Less Systemic Risk than Traditional Credit? (Crowdfund Insider), Rated: A

One of the frequently touted benefits of peer to peer/marketplace lending is the heightened transparency associated with loan originations processed online.

Today, many online lenders are providing credit from their own balance sheet or doing hybrid lending, perhaps using retail and institutional money. So in some respects, online lending is becoming less transparent than the early days, but these multiple capital channels are helping to propel sector growth. Arguably this added complexity comes with solid benefits and additional cost.

“Every originator and every lender have their own product structures and credit policies. They find ways of originating demand and then say ‘yes’ to some of the applicants.  Saying yes to the right customers using the right policies and products should result in a very resilient portfolio of loans regardless of whether you’re holding the loans or selling them downstream.”

Rotman is not overly enthusiastic about banks these days. He believes they resemble utilities.  Banks must hold higher levels of capital and endure steep overhead costs that are offset with products with a low ROA. All in an attempt to achieve a low return on equity.  The positive to all of this is that a bank can survive if profits fall to zero. For online lenders it’s different, “…zero for marketplace lenders is bad and negative ROA is toxic.”

BitLendingClub to Shut Down: Claims Closure Is Caused By Regulatory Pressure (Crowdfund Insider), Rated: A

BitLendingClub, a bitcoin peer-to-peer lending platform, announced on Thursday it was shutting down all of its services. The website claimed the closure was due to regulatory pressure.

BitLendingClub’s team shared they are planning to restrict the functionality of the website to either repaying of a loan, deposition to repay or withdrawing funds. They noted there would be no new registrations, loan requests, new users verifications, investments or any other service other than just repaying. They are expecting that service restrictions will begin sometime next week, without knowing a specific date, but will send an email to users when the changes occur.

Latvia’s VIA SMS Group Set to Launch New P2P Lending Platform Viainvest (Crowdfund Insider), Rated: A

Latvia-based VIA SMS Group announced this week it is launching Viainvest, a peer-to-peer marketplace for both private and legal entities offering to invest into consumer loans originating from non-banking lenders.

It was also reported that loans available for investment on VIAINVEST are originated by VIA SMS group and its daughter companies across Europe, so investors are able to create diversified and secured investment portfolios.

China

Female users of online lending platform find their naked pictures leaked (Global Times), Rated: A

An Internet lending platform clarified on Thursday that it has not posted or stored any naked pictures, after a great number of nude pictures of female students were exposed online.

JD Capital’s Jiedaibao, a popular online peer-to-peer lending platform, said on its official Sina Weibo account that the naked pictures were from a small number of desperate users who resorted to private transactions with shady lenders while bypassing the platform.

The pictures, serving as a receipt of the loans, are transmitted through social network app WeChat and instant messenger QQ.

India

Lendingkart Group Featured as the Only Indian Digital Lending Company in the KPMG and H2 Ventures ‘FINTECH 100’ Global Report (Udaipur Kiran), Rated: A

India’s leading online platform that facilitates SMEs in obtaining working capital loans, Lendingkart Group, has been recognized as one among the world’s top fintech innovators by KPMG and H2 ventures in their prestigious 2016 FINTECH 100 Global report. Lendingkart Group’s consistent focus on seamless delivery of quality and hassle-free services in facilitating small business working capital loans, has enabled it to become a part of the celebrated report. It is the only Indian fintech company to be featured thus in the online lending SME space.

Lendingkart Technologies is a fin-tech startup in the working capital space. It has developed technology tools based on big data analytics that facilitates lenders to evaluate borrowers’ credit worthiness.

Lending marketplace IndiaLends gets mn from DSG Consumer, others (TechCircle), Rated: A

Online lending marketplace IndiaLends has secured $4 million (around Rs 27.3 crore) in its Series A funding round from existing investor DSG Consumer Partners. American Express Ventures, Chinese investment firm Cyber Carrier VC and Noida-based early stage fund AdvantEdge Partners also participated in the round.

The company had previously raised $1 million in a bridge round in October 2015 led by existing investor DSG Consumer Partners and two individual investors—Siddharth Parekh and Gautham Radhakrishnan.

India

14 graduating startups from a Google-backed incubator in Pakistan (Business Standard), Rated: B

The incubator is now almost two years old and has seen a total of 79 startups graduate from its four-month-long program.

Credvestor is a peer-to-peer lending platform that wants to circumvent banks by helping borrowers and lenders communicate directly with each other.

 

Authors:

George Popescu
Allen Taylor