News Comments Today’s main news: Funding Circle sets new high on loans under management. SoFi partners with Lemonade, Root. Salary Finance hires SoFi co-founder, raises $32.8M. Dianrong to raise $100M. Klarna may be headed to the stock market. Linked Finance sees record quarter. Today’s main analysis: European online alternative finance grows 36%. (A MUST-READ REPORT […]
LendIt Fintech USA 2019 slide presentations. Everyone should be able to find something of interest here. Start with the keynote speaker addresses: Mike Cagney of Figure, Renaud Laplanche of Upgrade, and Rob Frohwein of Kabbage.
Groundfloor doubles year-over-year revenue. Groundfloor is one of the few opportunities for non-accredited investors. They are looking better every day. Disclosure: I own stock in and have an account with Groundfloor.
SoFi has announced two new partnerships in the insurance space. The partnerships expand SoFi’s portfolio of offerings to include homeowners’ and renters’ insurance through Lemonade and auto insurance through Root.
As the world continues to wait for the US SEC’s decision on the Bitcoin ETF applications that are still being processed months after a decision was expected, some investors may find themselves seeking alternative methods of entering into the Bitcoin market without actually having to do the dirty deed of investing in Bitcoin itself.
Crypto lending serviceshave recently reported record profits; crypto futures exchanges are also reporting higher-than-ever trading volumes.
Young adults are getting married later than previous generations. In 1980, the median age for men and women at their first marriage was 24.7 and 22, respectively. In 2018, the ages increased to 29.8 and 27.8, for men and women, respectively.
Millennials make up the largest share of homebuyers at 37%, according to a report from the National Association of Realtors.
Nearly a quarter (24%) of millennial first-time homebuyers want to own a home before getting married.
On the flip side, this means just over 3 in 4 millennial buyers (76%) want a marriage before a mortgage. Additionally, 27% of millennial buyers are postponing parenthood until they’ve achieved homeownership. Among homebuyers of all ages, nearly 2 in 5 are waiting to get a pet until after purchasing a house.
More than a quarter (26%) of first-time buyers have poor credit.
Just 15% of first-time buyers have a score of 740 or higher. Nearly 2 in 5 (38%) aren’t satisfied with their credit score, yet more than a quarter of those who are dissatisfied haven’t taken steps to improve their score. By contrast, more than 70% of repeat homebuyers are satisfied with their credit score.
GROUNDFLOOR, an investing and lending platform that allows anyone to invest fractionally in real estate, is today announcing its Q1 results and momentum. Despite the government shutdown of the U.S. Securities and Exchange Commission for 35 days, GROUNDFLOOR still experienced 123% percent non-GAAP Q1 revenue growth compared to the prior year Q1.
Additional Q1 momentum for GROUNDFLOOR includes:
Achieving a 166% increase in unit volume for loans closed in Q1 ’19 vs. Q1 ’18
More than doubling loan application volume for Q1 ’19 vs. Q1 ’18 (121% increase)
Selling more than $14.5M in real estate investments to retail investors on the platform
Surpassing more than 60,000 registered users
Eclipsing $100MM in loans to real estate developers to-date in more than two dozen states
Expanding product offerings, such as new construction loans and a fixed annualized notes product returning 5 percent on a 90-day term
Launching a second online public offering to purchase stock in GROUNDFLOOR directly
A San Francisco-based startup called Returnly is seeking to solve at least a portion of the headache—namely, the payment delay—by issuing instant store credit when you decide you don’t want an item. The company says that by assessing a shopper’s risk, it can offer store credit to 85% of customers on the spot, without first requiring that the item has been received or even put in the mail.
Returnly announced on Wednesday that it has raised $19 million in a Series B funding round, led by venture capital firm Craft Ventures and with participation from Max Levchin, the PayPal cofounder who currently runs Affirm.
Last year 32% of credit-seeking small businesses applied to an online lender, up from 19% in 2016, according to the survey, which was released Tuesday. Over the same period, large banks, small banks and credit unions all saw either steady application rates or a slight decline in interest from those same small businesses, which typically had fewer than 10 employees.
Mastercard (NYSE: MA) today announced it has acquired Vyze, a technology platform that delivers more choice – and purchasing power – to people who want their point-of-sale payment options to match the flexibility and convenience of today’s shopping experiences.
Increasingly, consumers are seeking alternative financing options,1 leaving merchants and financial institutions with a need to deliver these services at the point of sale. In the U.S. alone, these solutions represent a more than $1.8 trillion opportunity, according to Accenture.
Earnest today announced that it’s modernizing student loans with a new in-school student lending offering.
Built based on feedback from students and people with student debt, an Earnest student loan incorporates four unique differentiators:
Innovative eligibility check – A quick two-minute eligibility check requires only basic personal information, school details, and an estimated credit score.
Cosigner invite – Earnest’s application makes it simple and easy to invite a cosigner to the process.
Checkout– Clients can customize their loan according to their individual financial needs with easy-to-understand terms and a clear understanding of their monthly payments after graduation.
9-Month grace period – Earnest found through talking with recent graduates that they wanted the flexibility of a longer grace period after graduation to get settled. Earnest offers a 9-month grace period after graduation compared to the 6-month industry standard.
In the “If you can’t beat ‘em, join ‘em” world of bank-fintech relations these days, TD Bank’s recent agreement with the online lender Avant fits right in.
Avant is expanding its efforts to license technology to traditional banks, and TD Bank in March announced it will use the Chicago company’s technology platform, called Amount, to power the bank’s unsecured loan product, TD Fit Loan. HSBC, Regions Banks and Banco Popular also use Amount.
Over the past decade, the digital-lending industry has evolved to become more sophisticated. For example, companies are integrating big data and proprietary algorithms to analyze a borrower’s credit risk score in a matter of seconds, according to Juniper Research.
According to the firm, MPLs are projected to generate US$588 billion in loan origination value annually by 2023. This is estimated to account for 41 percent of SME funding around the world.
The research firm further reports that revenue from MPLs are predicted to grow at a 48 percent CAGR. This brings MPL platform revenue to US$137 billion annually by 2023, a 400 percent return from the estimated US$30 billion in revenue in 2019.
The odds of winning the $654 million Mega Million prize last year were put at one in 302 million, while the $345 million Powerball offered one chance in 292 million. But those astronomical odds apparently haven’t deterred the many Americans who are banking on using a lottery jackpot for their retirement nest egg.
Thirty-one percent of Americans don’t invest because they think it’s risky, but 39 percent, including 59 percent of millennials, feel it’s reasonable to think of the lottery jackpot as a potential means of retirement, according to the survey.
Miillennial men in particular (66 percent) believe the lottery is a reasonable retirement plan, compared to 58 percent of millennial women. However, if they did win the lottery, more millennial men (61 percent) than women (42 percent ) would save or invest the entire amount.
Documents filed in a New York Supreme Court case by the receiver managing Direct Lending Investments (DLI), revealed that DLI had more than 950 investors worldwide with collective investments on the books totaling over $780 million.
A loose-knit group of Virginians, stung by triple-digit interest rates on payday and other loans, is trying to do what the General Assembly won’t — make sure all lenders, including online ones, follow Virginia laws.
The latest lawsuit, filed last week, alleges that four web sites — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — set up in the name of the Habematolel Pomo of Upper Lake tribe in northern California were actually operated by non-tribal members in a Kansas City suburb, including the son of a payday loan executive convicted of fraud and racketeering.
Lendio has announced the opening of a new Lendio franchise in Phoenix. Through the Lendio Franchising program, Sam Foreman will help local businesses apply for loans, review their options and secure funding, easing the financial hurdles for area small business owners.
Ocrolus today announced a partnership with BlueVine. BlueVine leverages Ocrolus technology to accelerate growth and scale operations efficiently, creating a faster and more seamless experience for its customers.
Shanghai-based peer-to-peer lending platform Dianrong is looking to raise $100 million in fresh funding, according to a Financial Times report, a move that should give it enough buffer to meet China’s strict capital requirement for P2P players.
The GIC-backed firm has not made any official statement about its fundraising plan but analysts said the move is part of the firm’s efforts to meet Beijing’s proposed Rm500 million ($74.5 million) capital requirement for P2P operators nationwide.
It will not be soon for China’s commercial banks, consumer finance service firms and other institutions to see a national regulation governing internet-based lending activities, despite recent progress on specific rules for online peer-to-peer lending and microloans, Caixin learned.
Swedish tech unicorn Klarna is nearing the point where it could seek a stock market listing, but it’s unlikely to be this year, the CEO and co-founder of the fast-growing online payments services firm said.
The Stockholm-based fashion house Acne Studios has expanded their existing European partnership with Klarna. Showing at Paris Fashion Week, Acne Studios encompasses women’s and men’s ready-to-wear, shoes, accessories and denim, but also moves across the borders of fashion, art and design. With Klarna now available in Acne Studios’ online store, shoppers in the U.S. can choose to checkout with four equal payments – with no interest or fees.
The first quarter of 2019 saw the platform provide more than €11.3 million in loans to Irish SMEs, an increase of 32% over the same period last year.
Since its establishment in 2013, Linked Finance has helped provide more than 2,000 loans and €92 million in funding to businesses across Ireland. Lenders who have supported SMEs through the platform have earned more than €7.1 million in interest and received more than €50.4 million in repaid principal since the business launched in 2013.
Linked Finance issued its largest loans ever in the quarter with a number of €300,000 loans provided. The average loan increased to €70,000.
According to new research commissioned by SME lender OnDeck, Australia’s small to medium enterprises (SMEs) are bracing for “a double whammy” of disruption from the back-to-back Easter/Anzac Day public holidays.
Over one in four (27 per cent) of SMEs expect the Easter/Anzac Day period to disrupt normal trading.
In the wake of the Royal Commission we’re seeing a tightening of finance for SMEs with even long time customers being turned away for loans. For years, banks have taken too long and required too much, like property collateral, from SMEs. Innovations like marketplace lending are giving SMEs transparent and prompt access to.capital when they need it.
Stephen Barnes, Principal at Byronvale Advisors Pty Ltd
I would say that the term ‘redundant’ may not be so appropriate but certainly through a number of factors the ‘Big 4’ may be less able to meet the needs or timeliness requirements of small business. A large number of small business owners need to use personal assets, usually the family home, as security for loans.
A little more than a year after the Reserve Bank of India (RBI) came out with guidelines for peer-to-peer (P2P) lending companies to convert into non-banking finance companies (NBFCs), micro and small enterprises (SME) lending has turned out to be the focus area for these companies.
However, the current regulation does not allow a single lender to lend more than Rs 10 lakh across P2P platforms at a time. This is hampering growth prospects, say P2P players. The association of P2P lenders has sought relaxation in the norm, and requested the RBI to raise the limit to Rs one crore, according to sources in the industry.
Fintech startups have started offering a broader set of banking services beyond payments and lending, pointing to a deep integration with lenders that has the potential to change the way customers access banking products.
South Korean Financial Services Commission (FSC) has identified three sectors — payments, data, and lending — to protect consumers, foster fintech innovation, and ultimately remove uncertainties that may restrict investments into Korea.
Legal Framework Around Marketplace Lending
South Korea is a country that has gone through two economic crises which has made banks extremely conservative especially in terms of lending. As such, 40% of the population cannot receive loans from tier one banks and must resort to secondary markets such as savings banks with extremely high interest rates above 20% and shady underground loan sharks.
This paper provides case studies and market analysis from the Arab Middle East and Africa as examples of fast-growing economies, open to best-in-class solutions, with both wealthy and underbanked populations. Key go-to-market findings serve to inform fintech firms, investors and others about participating in the region.
News Comments Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland. Today’s main analysis: LendingClub’s Q4 2017 results. Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean […]
A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.
From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.
As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.
U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.
Updated pricing and return forecast
We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.
Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.
Platform Summary and Projections as of February 20, 2018
Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.
LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.
First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.
Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.
Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.
1. Buffalo, N.Y. – 67.6 At $738, Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.
2. Minneapolis – 62.9 At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.
3. Salt Lake City – 62.6 Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.
Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.
Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.
Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.
Greenlight Financial Technology, the startup behind an app and debit card for kids and college students, has raised $16 million in a Series A funding round joined by SunTrust Bank, Ally Financial and the Amazon Alexa Fund.
Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.
GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.
With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.
Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.
This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.
The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.
Signing Up for a Savings Account at Marcus
Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.
Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.
She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.
Q: What sets Kabbage apart from other online small business lenders?
A:Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.
Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?
A:There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds.
The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.
Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?
A:Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.
But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses.
Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?
A:If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.
The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.
The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.
We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.
Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.
European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.
For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.
Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.
A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:
First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.
About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.
In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.
While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.
Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.
A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.
LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.
Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.
Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.
Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.
The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital investment in 2017, with 90% of that money going to startup and early stage businesses based in London.
Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).
Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.
Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.
Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.
Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.
With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.
To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.
RaboDirectIreland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.
The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.
In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.
The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.
Anyfin, a Swedish startup that offers to refinance consumer loans and credit card debt using a combination of artificial intelligence and a photo of the current statement and repayment terms, has bagged €4.8 million in Series A funding led by Accel and Northzone.
The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.
As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.
A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.
500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.
The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.
Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services
Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canada, the United States, and the United Kingdom. More than 80 per cent of people who use digital investing in Canada use Wealthsimple.
News Comments Today’s main news: SoftBank leads $120M funding round for Lemonade. Shareholders file class action against Qudian. RateSetter looks to cautious growth in car financing. LoanBook rakes in 650K GBP on Crowdcube. Prospa planning a 2018 IPO. Today’s main analysis: Muddy Waters goes cold on China Internet Nationwide Financial Services Inc. (CIFS). Today’s thought-provoking articles: Two big banks […]
Two big banks to launch online lending platforms. AT: “I suspect more to come. This Lend Academy analysis is worth the read and highlights how online lending has grown to the point of being ‘legitimized’. Marcus has proven that traditional banks can compete with up-and-coming tech companies. But will they be the only success story? Maybe not, but we will have to wait and see.”
The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against Qudian Inc. (NYSE: QD) (“Qudian” or the “Company) on behalf of investors who purchased the Company’s securities between October 18, 2017 and November 20, 2017, inclusive (the “Class Period”).
Qudian shareholders may, no later than February 12, 2018, petition the Court to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member.
A little over a year ago Goldman Sachs launched their consumer lending platform Marcus as part of a digital strategy to move into the retail banking segment. They have since grown faster than any online lending platform with originations approaching $2 billion. Goldman Sachs now believes revenues from online loans will equal that of trading in the near future.
U.K. based Barclays has been increasing their footprint in the U.S. the last few years through the Barclaycard brand. They are now one of the top 10 credit card issuers in the US. News broke last month that Barclays would be launching a digital bank in 2018 and rebranding from Barclaycard to Barclays in the US.
After a meteoric rise, marketplace lending has had its share of challenges and scrutiny, but the future should still be bright for such an industry on the forward edge of technology and consumer needs. Yet marketplace lending seems to be ending 2017 under an unwarranted attack from regulators and commentators determined to find similarities in marketplace lending to the subprime mortgage market in the years leading up to the financial crisis.
CEO Charles Clinton and CIO Marious Sjulsen co-founded EquityMultiple with a shared vision of transforming real estate investing through tech and by providing new access to private transactions while streamlining the investment process.
Erin:Please share EquityMultiple’s latest stats.
Charles: We’ve funded 32 investments to date and are expecting to hit around 100% year-over-year growth in dollars invested. For investments that have fully repaid or are currently cash-flowing to investors, we’re averaging around a net 9% annualized dividend.
Erin: What sets EquityMultiple apart from its industry peers? How will EquityMultiple continue to differentiate itself?
Charles: We’ve taken a different path from most of our direct competitors and I suspect that will continue. This started at the very beginning – rather than look for venture capital financing, we sought out a real estate firm to partner with and found that in Mission Capital, a national capital markets firm that has done over $70 billion of business in its 15-year history.
Erin: Earlier this year you stated that individuals made up 100% of EquityMultiple’s investments. Has institutional money entered into this investment flow? Why or why not? What are your methods of tapping into new investors?
Charles: We are still 100% focused on individual investors by design. We feel that individual investors are the customers that we provide the most value to. For institutional investors, there often is no real accessibility issue for getting into commercial real estate. Individual investors, on the other hand, are significantly under-allocated into real estate by comparison.
Investors can access the robo-adviser by itself for 25 basis points (formerly 50 basis points), which includes algorithmic portfolio construction, tax minimization strategies, and now support from human advisers via email and text.
For 50 basis points and an account minimum of $50,000, investors can access Ellevest Premium, which includes the technology platform as well as personalized goals-based planning from an adviser with certified financial planner credentials.
Roughly a quarter of American families suffer a major disruption to their income each year, according to the Urban Institute. Nearly one in five of those families suffer an income drop of 50% or more: a potentially catastrophic shock for low-income families.
But it’s not just these one-time shocks that affect families’ ability to plan and save — it’s the month-to-month fluctuations, as well. The JP Morgan Chase Institute foundthat, between 2012 and 2015, 55% of the bank’s customers regularly experienced more than a 30% change in income — up or down — from one month to the next.
BankMobile has become the first bank to start using online lending software developed by Upstart, which is designed to use artificial intelligence and alternative data to determine the creditworthiness of consumers with thin or no credit files.
BankMobile, the digital-only subsidiary of Customers Bank in Wyomissing, Pa., which is due to be spun off and merged with Flagship Community Bank in mid-2018, is planning to use the software to offer its first credit product to the students it reaches through relationships with 800 universities.
Finra has fined Merrill Lynch $1.4 million for alleged supervisory failures related to extended settlement transactions, the industry’s self-regulator says in a press release.
From April 2013 through June 2015, the wirehouse allegedly didn’t collect enough margin to offset credit, market and exposure risk presented by the longer time period between trades and settlements inherent in such trades, Finra says.
Banks have always proclaimed themselves as technology companies with banking licenses. But culturally, banks are still banks: conservative. Innovation teams can only innovate so much before someone in legal or compliance tells them no; they can only move so fast before someone tells them to slow down.
In this installment of Confessions, in which we trade anonymity in exchange for honesty, we spoke with an analyst at a startup attached to a large bank about internal innovation, attracting strong talent and why alternative bank service companies should get serious about becoming or partnering with a bank.
Move over Wells Fargo, another prominent financial firm has taken your place as the poster child for bad behavior.
Equifax, the credit reporting agency whose primary responsibility is to protect consumers’ personal information, became public enemy No. 1 this year when it revealed that thieves hacked into its database and stole the personal information — birth dates, credit card data, Social Security numbers — of some 145 million consumers.
Runway Growth Credit Fund Inc. (“Runway Growth Credit”), a provider of term debt to fast-growing companies seeking an alternative to raising equity, today announced the successful closing of its $275 million initial equity capital raise with an increased commitment to $139 million from OCM Growth Holdings, LLC, an entity owned by certain investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), along with commitments from other investors.
As reported by CoinDesk, the first leg of the sale – in which the firm is selling Simple Agreements for Future Equity (SAFEs) that will later be redeemed for tokens by accredited investors – began yesterday, albeit a bit laterthan planned. Hiccups aside, Byrne told CoinDesk the sale ultimately attracted a big crowd – some 2,000 accredited investors.
As such, he indicated the company may move to shorten the initial two-month timeframe for the token sale.
Some of the offers, he said, were as high as $5 million or more for single token allocations.
Comptroller of the Currency Joseph Otting said in a press conference Wednesday morning that there is a place in the banking world for some kind of fintech charter, though the exact parameters of such a charter are still unclear and have to be worked out.
“I’m not sure what it looks like, and how it’s funded, but I do think there’s a space there that a technology solution can solve,” Otting said when asked whether he sees a future for the Office of the Comptroller of the Currency’s nascent fintech charter.
An October paper put out by Strategic Partners Fund Solutions, of Blackstone, argues that(despite risks and drawbacks) investing in the secondary private equity market can still be a smart play, offering “accelerated returns with lower volatility, lower loss rates, and greater downside protection” than the primary market.
The 2016 Small Business Credit Survey, published by the Federal Reserve Bank of New York, reports that startups are more likely than their mature counterparts to be undergoing growth and planning to add jobs. The report shows 70 percent of startup applicants are in need of funding to support this growth, versus 60 percent of mature applicants. Additionally, in 2016, 52 percent of startups applied for financing.
The Credit Survey highlights that only “31 percent of startup applicants were approved for the full amount of financing sought”.
Debt crowdfunding: Peer-to-Peer lending
Lending Tree was a revolutionary option for individuals to secure financing when they simply wanted to compare options or if they may not have been bankable. Kiva, for example, allows lenders to contribute small amounts, sometimes as little as $25, to help fund requests.
As of October 2017, Kiva reports funding over 1M loans resulting in $1 billion being lent.
Now, instead of searching for affluent individuals looking to invest in a business, entrepreneurs can turn to sites like MicroVentures. MicroVentures is a public, online venture capital investment bank. Investors have the opportunity to invest as little as $100, which opens up the market to a much larger pool of potential investors. This option is best suited for established companies with strong historical performance and larger financial needs. Since their launch in 2011, MicroVentures reports facilitating over 160 investments, resulting in over $100M in capital investment to date.
Bank on Atlanta, a financial access program that will focus on providing free or low-cost banking products, along with financial education and financial counseling, to unbanked and underbanked residents in the city of Atlanta has been created.
Research shows that relying on alternative financial service providers such as check-cashing or payday lending establishments makes it hard for residents to rise out of poverty in our city.
Online student loan marketplace LendEDU.com studied the most sought-after gift cards and listed them in descending order: Amazon (AMZN – Get Report) , Walmart (WMT – Get Report) , Target (TGT – Get Report) , Best Buy (BBY – Get Report) , and Subway. But these cards sold for only 2% to 5% less than face value, compared with 1-800-Flowers (FLWS – Get Report) , H&M or Dress Barn gift cards which offered, on average, 30% off face value on their sites. Even Dunkin’ Donuts (DNKN – Get Report) and Godiva mark down their gift cards by 25%.
Credit Karma, the leading personal finance technology company in North America, today announced it has appointed Gannesh Bharadhwaj as general manager of credit cards. Previously president of Renew Financial, Bharadhwaj brings a strong background in financial institutions as Credit Karma remains focused on using innovative technology to bridge the gap between banks and consumers.
Entrepreneurs can make charity a part of their approach to business, and in a variety of ways. A survey by Funding Circle revealed some interesting figures, as reported by Joshua Sophy last December for smallbiztrends.com.
Of 1,400 small business owners polled, 52 percent said they were donating or had already donated to charity.
Chip, the chatbot app that plugs into your bank account and lets you automatically save for a rainy day, has raised nearly £1.1 million on equity crowdfunding platform Crowdcube.
The fund raise, which is part of a larger £2.4 million funding round, forms part of plans for the London-based startup to apply for a banking license so that it has more flexibility regarding the kinds of products it can offer in the future. The app currently claims 30,000 active users “who are collectively saving millions a month”.
We conclude that China Internet Financial Services Inc. (NASDAQ:CIFS) is a King Zero – just another worthless China fraud, says Muddy Waters Research.
Every one of the purported borrowers to which CIFS disclosed having made loans (accounting for 84.2% of loan balances) appears to be a sham counterparty. (The purported borrowers of the remaining 15.8% of reported loan balances were not disclosed; however, we strongly suspect that most – if not all – of these loans and associated income are also fabrications.)
CIFS’s recently announced “big data” company purchase also appears to be a lie.
47.3% of CIFS’s reported 2016 net income purportedly was generated by its Kashgar subsidiary; however, that subsidiary existed for only two days in 2016.
CIFS is too good to be true – claiming to turn a seeming commoditized business model into an overnight juggernaut with purported gross margins over 97% and net margins over 70%.
Since 2009, China has surpassed the United States as the largest market for new-vehicle sales, according to Deloitte Consulting LLC. And now, auto finance is starting to catch up.
For many years, the Chinese automotive market has been propped up by government incentives like tax breaks, which encouraged customers to purchase cars. So far, this incentive has led to more than 2 million cars being sold a month, with growth running up 15% last year, the Wall Street Journal reported in March. But as the tax breaks are expected to wind down, auto lenders have a greater opportunity to step in and capture marketshare in China, where penetration rates remain lower than other developed nations.
In the U.S., for instance, 84% of new cars in the U.S. were financed in 2014 compared with 20% in China, according to Experian. The Chinese auto finance rate rose to 38% in 2016, and is expected to rise steadily in the next few years; reaching an estimated 55% in 2021, according to ReportLinker.
China maintains a public blacklist of debtors that effectively restricts their movements and their spending habits.
The country’s highest court publishes the names and ID numbers of “dishonest people” on its website and restricts those people from flying domestically, using high-speed trains, or enrolling their children at expensive private schools.
Defaulters are also prevented from staying at hotels with three-stars or more. They also face tougher exams if they want to join the civil service, and are charged higher fees for booking cars. The bans work by linking to a person’s ID number. Some people used their passport when travelling to circumvent the ban, but that loophole now appears to be closed.
LoanBook, a Spanish marketplace lending platform, has successfully secured its initial £650,000 funding target from more than 200 investors through equity crowdfunding platform Crowdcube. Founded in 2013, LoanBook claims to be Spain’s largest marketplace lending platform, with a 4-year track record of working capital lending to Spanish SMEs and 40% market share.
iZettle CEO Jacob de Geer says you should team up with peers – and experiment.
“Apart from getting the business started, is to experiment with whatever idea you have. Most of your trials will fail, but one in 100 will work. If you view problem solving as a way of increasing the value of the company that you are building, then you are off to a good start.”
Klarna co-founder Sebastian Siemiatkowski thinks it’s important to have a holistic approach to problem solving.
When I advise young entrepreneurs, I tell them, “It’s not about figuring out the best business ideas, and it’s not about solving problems theoretically, but it’s about testing your ideas. It’s about coming up with an idea, and then trying it and learning from it.”
Investment bankers lining up for a stronger 2018 pipeline of initial public offerings have online business lender Prospa in their sights.
Street Talk understands a handful of banks have pitched their wares to Prospa’s chief executives Greg Moshal and Beau Bertoli in recent weeks ahead of a planned run at the local bourse some time next year.
Alternative investing is as much a mindset, as it is about specific investments. Here are some alternative investments approaches culled from our members around the world that are applicable to any investment decisions.
Invest in markets or assets that your analysis leads you to believe will do well; don’t invest in a product just because it’s likely to (or, worse, has in the past) “outperform the market”.
Understand that returns are one-dimensional, risk is multi-dimensional
You should constantly revisit your assumptions of the return drivers of the investment (much more so than its price performance), in case they change and you need to rethink your investment.
When we’re asked to define alternatives, we often end up saying “well, anything that’s not traditional”. Actually that’s not quite such a lame definition; alternative investment practitioners know that the best opportunities are usually those that are yet well known or exploited, and hence the field of “alternative investment” is one populated by investment ideas that may not be immediately obvious.
Diversification is the only free lunch – make sure you are diversified
India has a unique problem of too much money chasing too few customers. So at one end, we have traditional salaried class getting loan offers and at the other end, people are left at the mercy of hawkish money lenders ever-more resembling Shakespeare’s Shylock. Clearly, P2P lending and borrowing is the disruption that was waiting to happen as banks and NBFCs have successfully struggled at twin accounts of making credit affordable and accessible in a credit-hungry nation.
If 2016 saw demonetisation change India’s fintech ecosystem forever, this year will be remembered for the Reserve Bank of India’s (RBI) multiple regulations aimed at organising the sector. Recognition of peer-to-peer lending startups, revised guidelines for digital wallets, finalising charges for digital payments—the second half of the year saw it all, setting the template for a more mature yet challenging 2018.
The 22nd Wharton India Economic Forum (WIEF) has announced the finalists of the Yes Bank – Wharton India Startup challenge.
Perpule:Perpule’s 1Pay is a self -checkout app for express checkouts and easy payments in Perpule’s partnered stores like Hypercity, Spar etc.
Capzest: Capzest is a digital lending platform focused on providing unsecured credit to individuals for income generation purposes. It secures partnerships with income generation service platforms and provides short term capital to their various stakeholders. It was founded in October 2015 in Mumbai by Rohan Adlakha andSayantan Sarkar.
Luharia Technologies Pvt. Ltd: Based in Hyderabad, Luharia Technologies owns and operates peer-to-peer platforms for businesses and individuals. Founded by ISB alumni Keerthi Kumar Jain, Luharia’s flagship solution is Vote4Edu, which is an online peer-to-peer lending platform for K-12 education loans. The company also runs Vote4Cash, a P2P marketplace where borrowers can avail cash loans. Machine Bank, an infrastructure ecommerce platform, and P2P lending platform SMEBank are also owned by Luharia Group.
Your credit score reflects how well you have treated your credit in the past. It is one of the most important factors that lenders consider while evaluating a loan or credit card application. But what if you don’t have a credit score?
If your bank has rejected your personal loan application, approach NBFCs. Since they usually target customers with low or no credit score, they are more flexible with credit scores than banks.
Peer to Peer Lending
Since P2P platforms connect borrowers and investors online, they run with lower overheads and resultantly offer services cheaper than what traditional financial institutions have to offer. There are over 40 peer-to-peer lending platforms in India that are helping a large section of people who have been failed to qualify for loans from banks.
News Comments Today’s main news: Fiduciary rule delayed–again.SoFi prepares sixth student loan refinance ABS.LendingTree secures $250M amended, restated credit facility.Indonesian tech investments hit $3B YTD. Today’s main analysis: Qudian bounces back. Today’s thought-provoking articles: Will Mulvaney back consumers or payday lenders?American consumers say financial crisis had no impact on their lives.Online education startup promises to […]
SoFi is has entered the post-Thanksgiving pipeline with its sixth student loan refinancing transaction this year, in line with its plans to issue 12 securitizations in 2017.
The California-based online lender filed documents with the US Securities and Exchange Commission on Tuesday. Credit Suisse, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley are banks on the deal, according to the deal documents.
While relaxing over the Thanksgiving weekend you might have noticed a new trend occurring in television while watching the games: six second ads.
SoFi is focusing their message on the consumers lifestyle, presenting an understanding as to why someone needed to increase their credit card debt.
They also placed a Black Friday circular with several national newspapers which you can see in the photo below. The ad is a clever take on the typical sales fliers we all see around this time of year. But instead of an ad featuring low prices we see an ad touting much higher prices. The message is that if you are buying gifts on credit cards this holiday season and carrying a balance you will be paying a lot more than the advertised price. It is a message focused on smart spending, giving a better look at the true costs of products when financed.
Demonstrators gathered outside the Consumer Financial Protection Bureau (CFPB) in Washington D.C. Wednesday to protest President Trump’s decision to appoint White House budget director Mick Mulvaney to director of the agency.
As a Congressman, Mulvaney accepted $55,500 in contributions from payday lenders during his four successful runs for Congress, including $26,600 during the 2016 election cycle, according to the National Institute on Money in State Politics. Before he was tapped to lead President Donald Trump’s Office of Budget Management, Mulvaney took $115,200 from the securities and investment industry, and another $96,564 from the insurance industry in the 2016 cycle, both more than any other industry, according to the Center for Responsive Politics. This record, along with comments Mulvaney made indicating he would shutter the agency if given the opportunity, has led critics to question whether Mulvaney’s priority will be consumers — or the companies the agency is responsible for regulating.
Payday lenders appear to want Mulvaney to lead the CFPB.
President Trump’s hostile takeover of the Consumer Financial Protection Bureau, by contrast, relies on the rather less cherished legal principle of habeas cuppedia, Latin for “you shall have the pastries.”
Under the statute that created the CFPB, the watchdog agency set up after the 2008 crash to police lending abuses, it should now be rightfully run by Leandra English, the deputy director who succeeds the just-resigned director, Richard Cordray, until the Senate confirms a permanent replacement. Trump found another statute that he says lets him appoint Mulvaney. English filed suit to defend her legitimacy, Mulvaney submitted doughnuts, and a Trump-appointed federal judge, to nobody’s surprise, ruled in Trump’s favor.
New data released today by Hartford Funds revealed that a decade after the Great Recession, Americans are unclear how the economic event impacted their life and financial behavior.
The majority (40 percent) of respondents said that the financial crisis had no impact on their life, yet large numbers reported that they avoid the market (42 percent) and have altered their spending and savings habits (46 percent). Others (26 percent) shifted their retirement timeline and plan to work longer then they’d hoped, and 25 percent had to change jobs or take on additional jobs.
The majority (40 percent) of respondents said that the financial crisis had no impact on their life, yet large numbers reported that they avoid the market (42 percent) and have altered their spending and savings habits (46 percent). Others (26 percent) shifted their retirement timeline and plan to work longer then they’d hoped, and 25 percent had to change jobs or take on additional jobs.
The company’s growth is set to continue with ongoing success in the US, Monevo’s newest territory.
Personal loan originations in the US reached new heights by the end of 2016. Total balances reached $102bn for the first time, $14bn higher than the end of 2015. The number of consumers with personal loans at the end of 2016 was 15.82 million.
Fifteen US lenders, including Lending Club, Sofi, and Prosper have joined Monevo’s roster of over 150 personal loan lenders across the world.
Just like Uncle Sam, Education Secretary Betsy DeVos wants you…to be able to apply for financial aid on your phone.
DeVos said Tuesday that the government plans to launch an app for the Free Application for Federal Student Aid, or FAFSA, which some 20 million people fill out every year in hopes of getting grants, loans and other money for college or career training. It’s all part of a plan to make the FAFSA much simpler to submit.
HouseCanary, the data analytics and valuation platform for real estate professionals, today announced it has closed a $31 million series B funding round, bringing the company’s total funding to $64 million to date. Investors in the round include PSP Growth, the venture and growth equity arm of PSP Capital, a private investment firm founded by entrepreneur and former Commerce Secretary Penny Pritzker, as well as Alpha Edison and other existing investors.
Investors can now value over 100 million properties with a median error of 2.5% or less. Lenders and appraisers use HouseCanary technology to reduce the time it takes to complete an appraisal from more than 25 days to less than a week.
How secure is your data? Recent hacks and breaches have re-stressed the importance of the data security and customer information. This track will help young startups and big box financial institutions verify customers, understand data security and utilize tools to improve efficiency. The future of technology is in robotics, machine learning and biometrics, not grasping these changes will make your business extinct.
Bitcoin. Blockchain. Cryptocurrencies. ICO’s. Everyone’s talking about them, but how will these new age concepts change the future of money?
Banks are looking to fintech partners to transform their business for the digital revolution. This track will explore the crucial role of mobile banking, smart ATM innovations, chatbots’ role, and the digital transformation at all levels—from branch to infrastructure to data storage.
Learn how to scale your growth like Lending Club, increase access to credit like LendingPoint, and utilize mobile-only technologies like MoneyLion.
There will be 3.5 million unfilled cybersecurity jobs by 2021, up from 1 million last year, according to the research firm Cybersecurity Ventures. Meanwhile, Frost & Sullivan estimates 1.8 million cybersecurity jobs will go unfilled by 2022, a rise of around 20% since 2015.
The military is skilled at producing what Gary McAlum, the chief security officer at USAA, calls “Jedi Knights.”
Wells Fargo is making a big push to hire veterans, said Rich Baich, its chief information security officer. He has held several positions in the Navy, the North American Air Defense Command, the National Reconnaissance Office and the FBI.
As of August more than 8,500 veterans worked at the San Francisco bank, and at any given time it has 200 team members on active duty.
LendingTree (NASDAQ: TREE), a leading online loan marketplace, announced today it has entered into an amended and restated $250 million five-year senior secured revolving credit facility that will replace LendingTree’s previous $125 million credit agreement. The amended and restated revolving credit facility provides increased borrowing capacity and improved pricing, along with greater strategic and operational flexibility. The facility can be used to finance working capital needs, permitted acquisitions, capital expenditures, and general corporate purposes.
The amended and restated revolving credit facility will be governed by a maximum net leverage covenant of 4.50x, with step downs to 4.00x over time. Additionally, the amended credit facility contains an accordion feature under which the borrowing capacity can be increased by $100 million or a greater amount, subject to certain conditions.
The UK chancellor’s recent Budget reminded us that systemic problems continue to plague the government’s delayed roll-out of universal credit – a single monthly welfare payment that will replace six separate benefits.
Govcoin, intent on ‘disrupting’ welfare state provision, has been working with the Department for Work and Pensions (DWP) since early 2016 to develop a solution for welfare payments.
‘Claimants can – voluntarily – download an app, which enables them to create virtual jam jars and apportion money to them. Whether that’s ‘rent’, ‘gas and electric’ – it’s entirely up to them,’ said Kay in an last autumn.
Govcoin will financially empower benefit claimants. But its distribution model involves benefits being paid – not in pounds and pence – but in the form of a cryptocurrency similar to . Govcoin promises to allow claimants to pay for goods and services – such as utilities – linked to the system.
Called Bond, the fund lets accredited investors buy securities known as “Bond Units” in an asset portfolio that holds a mixture of property bonds, real estate and cryptocurrency assets.
Each Bond Unit, which digitally represents an equity share of Bond’s asset portfolio, will be issued on the Bitshares Blockchain and traded via the Bitshares decentralised exchange.
The portfolio has 30 per cent exposure to P2P Bitcoin lending; 30 per cent to property bonds and real estate; and 30 per cent to digital currency learning website the Billion Hero Campaign. The remaining 10 per cent is invested in alternative cryptocurrencies.
After losing more than 40% of its market value last week — as Chinese regulators tightened rules for online consumer lending — Qudian is seeing a 16% bounce today in its American depositary receipts (ticker: QD), to a recent $14.
One of the Chinese fintech players that made their way to the US public market is Rong360 Inc’s Jianpu, an online platform for discovery and recommendation of financial products. The founder and CEO Ye Daqing recently joined its investor James Mi, founding partner of Lightspeed China Partners, on stage at TechCrunch Shanghai to discuss why the fintech is booming in China and what opportunities lie ahead.
There are many fintech companies that are quite controversial because some of them have damaged the reputation of the market. But two of the [fintech] companies you invested in have both filed for an IPO recently. James, what’s your view [on the market]? What makes you such a good investor, landing two IPOs?
Mi: Lightspeed mostly invests in early-stage companies. We usually look at their development in 3-5 years down the road.
We were actually very prudent about P2P. When we finished looking at all the companies we ended up choosing PPDAI because it was offering a real online solution. No offline sales. And this type of business contributes to the society.
Why are so many Chinese [fintech] companies going IPO in the US recently?
Ye: China will see ten to twenty years of significant growth in fintech and micro-finance. The level of digitalization of finance in China is much lower than that of e-commerce, which took more than ten years to reach 14%. Digital finance is currently at less than 5% penetration. In four to five years, or even longer, fintech will surpass retail. For example, lending, car mortgage, credit cards, and insurance.
Let’s look at another buzzword, that is artificial intelligence (AI). Every single industry nowadays is talking about AI. What will happen when AI meets fintech?
Ye: The financial industry is actually a data industry, wholly relying on data to make risk control decisions and take care of customer service and marketing. Take our platform for example—it has nearly 70 million registered users, more than 2,500 partnered financial organizations, with 170,000 types of products, and each product is facing a changeable set of challenges and varying user behavior.
The attack on banking jobs has been relentless. British banks are set to close almost 800 branches this year, after shutting nearly 600 in 2016. The CEO of Deutsche Bank, Germany’s largest bank, warned that the company could afford to lose half of its staff to automation. Swiss bank Nordea announced at the end of last month that it was cutting a tenth of its staff, and its CEO said the banking industry could cope with half its current number of personnel. Consultancy Greenwich Associates estimates that 15% of the finance industry’s jobs are at risk of being lost to AI-driven alternatives.
In addition to teaching, Nguyen Trieu is leading by example with the launch of an AI-enabled mobile savings app, which is in the early planning stages.
But there’s a big difference in fintech scenes across the world.
The mindset and the way people use technology and fintech is very different. If you’re in Hong Kong, you have WeChat on your phone and you use it on a daily basis. Here, you don’t use fintech on a daily basis. Some people might use Revolut but they still have a traditional bank account. Here, fintech is seen as innovations on top of existing financial services whereas in Hong Kong, fintech is finance.
So the course is for everyone, everywhere?
And not just for people in finance. When we did the beta test only 40% of the users were from the finance industry—the rest were from tech, or were entrepreneurs or consultants.
So automation, AI, machine learning, and the like are all coming for your job if you don’t retrain?
Banks are thinking today about cutting thousands of jobs and increasing their technology budgets. To me, it is is absurd for a CEO of a bank to think this way.
So, what finance jobs most at risk right now?
In general, anything that can be automated will be automated. But right now, compliance is at risk. Over the past few years there’s been a lot of investment in compliance and KYC [know your customer], because regulators wanted the investment and it was a way for banks to demonstrate they were doing their part after the financial crisis. Now, that has totally changed. It’s starting to cost a lot and regulators have said we want you to show that you are being efficient, not just hiring a lot of people.
Bloom is a global decentralized credit scoring system available to anyone – even the unbanked and underbanked. Bloom’s flexible ecosystem will allow users to have access to credit services which work globally and are extremely secure and transparent thanks to the blockchain’s inherent features.
First off, why did you decide to use the blockchain in building Bloom?
People shouldn’t be forced to rebuild credit from scratch when they move to a new country. Billions of people around the globe are still considered “credit unscorable,” forcing them into taking out dangerous, informal loans.
To make matters even worse, many governments generate credit scores based on religion, political affiliation, and voting status, instead of data. Even in the United States, 45 Million Americans (including many financially savvy millennials) still do not have a credit score.
What do you think is the biggest problem Bloom will solve and why is the problem important to solve?
3 Billion people cannot access credit, largely due to artificial restrictions from governments. Tell us more about how BloomID works behind the scenes. The most interesting part about is the vouching process; how does this work and how does Bloom ensure that vouches are not manipulated or faked in any way?
BloomID is the Bloom protocol’s method of both establishing a reliable identity as well as forming the basis of creditworthiness for users who are newly entering the Bloom network. BloomID allows organizations who store information about individual identities to attest to the identity of a Bloom user and mark that information on the blockchain for future re-use. A user’s friends, family, and peers can help an individual bootstrap creditworthiness by vouching for their ability to act responsibly with credit. This is like a reference, similar to co-signing.
Is Bloom already working with notable businesses or firms? Are there any future partnerships in process? If yes, can you explain briefly about it?
We’ve been in touch with 100’s of lenders and partners. We’ve announced quite a few. Peer to peer lending, traditional fiat businesses, crypto lenders… we’re working with people on the whole spectrum.
For example: Self Lender is a credit building lender we are working with, Everex, Lendoit, and ETHLend are crypto lenders. We’re working with partners for anti-fraud such as TypingID.
ETHLend is a Decentralized Lending Innovation using the Ethereum platform as its base.
First off, why did you decide to use the blockchain in building ETHLend?
Finance is where blockchain technology was conceived, and it is in finance that blockchain technology is arguably most transformative. It intrinsically offers greater visibility, scalability, and efficiency – and potentially at a lower cost.
By providing a means of authorizing fully trackable and verifiable transactions, it also offers the potential for truly open-source many-to-many lending. Presented in these terms, it may well seem like a threat to peer-to-peer firms. If blockchain removes the need for marketplaces, why should borrowers and lenders pay fees to these platforms? ETHLend promotes less fees, transparency, and integrity amongst borrowing and lending.
What do you think is the biggest problem ETHLend will solve and why is the problem important to solve?
In today’s world, you are at the mercy of banking institutions for borrowing and lending. We all know the bank pays out minimal interest on investment accounts and charges maximum interest on borrowing. We have partnered up with Bloom who provides credit scoring capabilities so both borrower and lender build a reputation amongst the ETHLend community which is usable elsewhere on the blockchain.
Why do you think the shift from traditional lending to P2P lending is happening right now?
Market research tells us that there are countries at the moment which are paying from 0.5 to 5 percent. For example, here in Finland, it is quite common to have a secured mortgage loan with an interest of 0.4 to 0.8 percent on bank’s marginal. On the contrary, In Brazil, the interest rate tops to 32 percent and Russians pay on average of 11 percent and in India 10 percent (take note that today’s numbers may differ).
The differences in interest rate mean that with a higher interest rate, people and businesses have less access to finance.
More than 140 LPs responded to the survey, of whom approximately 52 per cent were based in North America, 31 per cent in Europe and 15 per cent in Asia Pacific. Nearly one quarter (22 per cent) were public pension plans, 15 per cent were consultants and 13 per cent were either endowments or family offices.
Intralinks is a leading financial services company with over USD31 trillion of transactions executed on its platform and over four million users. It has the largest community of GPs and LPs and is used by over 1,000 private equity, real estate and hedge funds on a daily basis. Over USD1 of every USD2 raised globally for private equity was facilitated using Intralinks for a total of USD317 billion in 2016 and 13 out of the 20 largest funds were raised on its platform.
More than one third of investors confirmed that their current allocation was more than 30 per cent, with nearly two thirds confirming that they planned to increase their allocation to alternatives over the next 12 months by 1 to 10 per cent.
Gregor discusses Silver Bullion SG a company he started in Singapore where individuals can securely store their gold and silver. They just hold your precious metals and validate their authenticity. They do this without counterparty risk as your assets are marked, segregated and you hold the title. The company holds over 230 million in hard assets.
Using peer to peer lending you can withdraw up to half of your holdings in loans at low-interest rates.
A new study from Juniper Research ranks GoCardless as the current clear leader in the fintech market. GoCardless enables simple payment processing and integration with many popular services, and Juniper believes that its potential for efficient, borderless commerce is disruptive and far-reaching.
Indonesia’s tech start-ups have been catching the eye of investors, having raised close to $3bn in funding in the year to September 13, a substantial increase on the $631m received in 2016.
Chinese firms are prominent among the foreign investors in Indonesia’s start-up boom, according to research firm CB Insights: Alibaba committed $1.1bn to online marketplace Tokopedia in August, and in May JD.com and Tencent Holdings invested $1.2bn in ride hailing motorbike service Go-Jek, which utilises mobile payment services.
Alternative financing posts 1462% growth
Last year Indonesia posted one of the highest growth rates in the Asia-Pacific region in alternative finance activity. The segment’s total market size expanded by 1462% to $35.4m, according to a report by the University of Cambridge, Monash University and Tsinghua University published at the end of September.
The study found that peer-to-peer (P2P) business lending had come to dominate Indonesia’s alternative finance market, accounting for just over 60% of the 2016 total, with P2P consumer lending representing 18% of the figure, or $6.5m.
Fostering collaboration and growing market opportunities
Indonesian tech start-ups attracted the second-highest amount of investment in South-east Asia between 2012 and September 13, at $4.6bn, behind Singaporean companies, which raised $7.3bn over the same period.
A programme entitled ‘Fintech Challenge Vietnam’ has been launched by the State Bank of Vietnam (SBV), with the aim of fostering innovation in financial services that promote greater financial inclusion in Vietnam.
Fintech Challenge Vietnam has been organised by the SBV with the support of the Mekong Business Initiative and sponsorship by the Vietnam Bankers Association and the Vietnam Fintech Club.
The focus of the Fintech Challenge is on fintech solutions that can improve the offer of financial services to the underserved and unbanked.
The challenge is an opportunity for Fintech companies from both inside and outside Việt Nam who are interested in collaborating with commercial banks to pilot and scale solutions that improve financial services in the following categories: electronic payments, e-KYC (Know Your Customer)/e-Identification, open APIs, blockchain and peer-to-peer lending to apply.
The deadline for application is January 18, 2018, at fintech.mekongbiz.org.
The Financial Services Authority (OJK) aims to issue a regulation on financial technology (fintech) businesses by March next year amid robust development of the industry, OJK deputy commissioner Nurhaida said Tuesday.
News Comments Today’s main news: Ron Suber delivers last keynote at Lend360. Kroll assigns preliminary ratings to Marlette Funding Trust 2017-3. Judge says he is likely to certify LendingClub lawsuit as class action. Lemonade rolls out open API. Zopa CEO struggles with perception that P2P lender is struggling. Reserve Bank of India issues KYC guidelines for prepaid payment instruments. State Bank of Mauritius, […]
Digital microlending could replace payday lending. AT: “This is excellent timing considering that everyone is talking about the new payday loan rules. If payday lending is squelched by legislation, someone will have to tap into the huge market black hole left behind. Who better than online lenders? But they’ll still have to abide by the law, and this could be a great opportunity to tap into the subprime small, short-term loan market with better-than-payday-lending rates that consumers and regulators can support.”
Ron Suber walked onto the LEND360 main stage to the theme song of Francis Ford Coppola’s The Godfather.
This was Ron’s last keynote in the US (until he makes a Jordan-like comeback, perhaps?), which attracted a standing room only crowd. His talk started off with the theme of consolidation, comparing FinTech to previous life-changing industries such as radio, tv and mobile phones.
Ron also shared his top tips for entrepreneurs and platforms:
He suggested that the platforms know what makes them unique and to be able to pitch your company in two sentences or less.
He also said that there is no “single solution.” There will always be ways to do things.
Also, listen to consumers–they’re the ones that drive innovation.
Focus. The need to focus as an entrepreneur is key to success.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Marlette Funding Trust 2017-3 (MFT 2017-3). This is a $297.8 million consumer loan ABS transaction that is expected to close on October 26, 2017. This transaction represents the fifth securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.
The transaction has initial credit enhancement levels of 37.70% for the Class A Notes, 24.90% for the Class B Notes, 14.90% for the Class C Notes and 7.00% for the Class D Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A, Class B and Class C Notes) and a reserve account funded at closing.
A California federal judge Thursday said he will likely certify a class of LendingClub Corp. investors who allege the peer-to-peer lending company hid defects in its internal controls before and after its $1 billion initial public offering, over objections from both the company and investors pursuing separate state law claims.
U.S. District Judge William Alsup indicated he was “inclined to certify everything,” but seemed likely to trim the terms, telling LendingClub attorney Victoria Parker of Quinn Emanuel Urquhart Sullivan LLP she’d “raised some good points” about….
“We’re opening up the Lemonade platform to the world!” says Shai Wininger, co-founder of Lemonade, a US-based insurtech firm.
The new Lemonade API supports quoting, policy creation and payment for homeowners, condo, and renters insurance policies in the company’s active markets of New York, California, Texas, Illinois, New Jersey and Rhode Island. More regions will be added “in the near future”.
Renaud Laplanche, co-founder and CEO of Upgrade, and former co-founder and CEO of Lending Club tried to reignite the flame of the consumer lending sector by forecasting not only its continuing success, but further the emergence of major innovations.
The growth of online lending will re-accelerate in the next 15 months.
Credit card debt is currently growing at a 5% rate and represents $1.021 trillion. The total debt balance of US households totals $12.73 trillion.
The US is experiencing one of the longest economic growth run, yet still 20 months shorter than the growth run which preceded the great depression. Observers estimate at less than 30% the risk of recession.
When I asked Renaud Laplanche about his personal vision of the ideal product – the product he would like his company to deliver if there were no technological or other barrier, he said: “one click responsible credit.”
Now Goldman is getting into lending for real estate pros through its acquisition of Genesis Capital.
The deal, for undisclosed terms, gives Goldman a business that makes loans of $100,000 to $10 million at rates of 7 percent to 12 percent. It won’t lend to occupants, so that leaves real estate professionals who are renovating and looking to sell fairly quickly. Genesis made $1 billion of loans last year.
You’ve heard the old story: If brick-and-mortar merchants watched 75 percent of their customers walk in their stores and then walk out without having purchased a single thing, sirens would be screaming. But that’s precisely the situation with online commerce – three out of every four consumers who load their cart, don’t buy what’s in that cart.
AMP is integrated with seven of the top email service providers that online merchants use to market to consumers. Thee integrations give online merchants a new way to nudge a consumer into making that purchase by offering the ability to pay in installments, using Affirm. Retailers using any of those email providers are able to drag and drop the Affirm “as low as” pricing offer into any of their email templates, and then use it as a mechanism to convert abandoned carts.
“We want to give retailers a new way to follow up,” Overstreet said. “Instead of just showing their consumer the same $400 loveseat that they decided not to buy a day or a week ago, the consumer gets a prompt letting them know they can buy that $400 loveseat for little as $35 a month.”
Got your eye on a new living room set at Wayfair? Or maybe you’re booking your honeymoon on Expedia. Increasingly, shoppers at these sites and others are encountering payment options from third-party lending companies like Affirm, Bread, Klarna and Acima Credit.
Lyst, an online clothing store carrying brands such as Burberry, Marc Jacobs and J. Crew, offers loans through Klarna. And Walmart is considering checkout loans from Affirm for items above $200, according to a report by the Wall Street Journal.
While some retailers may offer zero-interest promotional rates, annual percentage rates from Affirm and Bread, for example, can be as high as 30%. A $345 handbag at Rebecca Minkoff will wind up costing you $385 if you pay for it with a 12-month loan from Affirm at an APR of 21% — the average rate for its borrowers, Affirm says.
HOW SHOPPING LOANS WORK
The process is similar to selecting a store credit card at checkout. The loan option might appear next to the purchase price or in your shopping cart. In the online experience, selecting the loan option will direct you to the lender’s website or a smartphone app. You enter a few pieces of personal information — typically your name, date of birth and last four digits of your Social Security Number, or in some cases, just your phone number.
If you’re approved, the lender displays multiple loans with varying interest rates, monthly payment amounts and terms. You pick a loan, sign the agreement and finish checking out. Just like using a store credit card, the whole process takes anywhere from a few seconds to a few minutes.
In this Knowledge@Wharton interview, Spencer Robinson, head of strategy for the company, explains what Kabbage has discovered that allows it to approve loans in minutes, versus what he says can often be a multi-week slog with traditional banks.
Knowledge@Wharton: Your website notes that you’ve provided $3.5 billion in financing to some 100,000 businesses online, and you’re still not a household word, which, with those kinds of numbers, surprises me.
Spencer Robinson: Capital One really changed the way people looked at consumer credit finance. And that sort of mindset really helps lay the foundation for the types of things that we do.
Knowledge@Wharton: It’s interesting, the difference between you and a traditional lender. I’ve seen stories about Kabbage. One is about a small business owner who wanted to borrow $50,000 and they took their loan request to a bank. It took three weeks and the answer was “no.” And then they went to you and they got their $50,000 in six minutes. Why can’t banks do that? Why is it that you can do that?
Robinson: I would say banks can. A lot of times it’s a matter of getting out of your own way.
Robinson: Our APR average is right at about 39% to 40%.
Knowledge@Wharton: What is the highest amount that you lend?
Credit unions frequently are the best available choice for those who have difficulty obtaining credit through traditional banks. But for some, digitally coordinated peer-to-peer lending agreements—inspired by microfinance arrangements for economically fragile communities internationally—also are proving to be an emerging option.
Peer-to-peer digital microlending has the potential to fill a portion of the gap by providing this cohort with small, short-term loans that typically range from $100 to $500.
If it can be properly scaled, peer-to-peer digital microlending could be a worthy option over payday loans for subprime borrowers.
ValueInsured, the only provider of down payment protection, today announced the closing of $6.5M of funding led by an affiliate of Everest Re Group Ltd. and also Houston International Insurance Group (HIIG). The latest round of funding from Everest Re and HIIG builds on their existing partnerships with ValueInsured, which began in 2014 with an initial $6M seed round. This additional investment provides ValueInsured with the growth capital to continue its aggressive distribution partnership strategy, expanding channel presence and enhancing the features of the +Plus SM down payment protection program.
But many consumers could soon find an easier process for obtaining savings on such purchases, thanks to an API-based solution: Earny, an app-based bot born from a Mastercard API. Earny launched last year with the promise of offering consumers a more frictionless price protection process.
According to Vakrat, Earny’s inspiration started with a blazer purchased for $129 by co-founder Dori Yona. A few weeks later, Yona came down with a sudden case of sticker shock after shopping online and finding the same blazer available for roughly half the price.
Vakrat said he and Yona contacted the credit card company to see if Yona could receive a refund on the difference. The credit card company offered price protection, but Vakrat politely described the process of getting reimbursed for the difference as “inefficient.” While ultimately successful, it took two weeks for Yona to complete the process and receive his $65.
To develop a more efficient post-purchase refund process, the two co-founders entered Mastercard’s Masters of Code Hackathon. The result was the Earny app, which taps into Mastercard’s Simplify Commerce API. Earny uses APIs to authenticate users through their Gmail, Yahoo or Microsoft email providers, then scans their inboxes for eCommerce receipts and compares them to prices from approximately three dozen retailers – including Target, Costco and Overstock.com – checking for price drops. The service works by automating the price protection process, automatically refunding consumers for any detected price differences.
According to Mastercard’s research, U.S. consumers walk away from more than $50 billion in price drops every year because they were either unaware of better offers or because the refund process can be lengthy and require tedious paperwork.
U.S. banking regulators must accelerate efforts to address the risks posed by fintech companies to the banking sector which could be “eviscerated” by these innovative new players, St. Louis Fed President James Bullard said on Thursday.
In the lending sector alone, Goldman Sachs estimates that $11 billion of annual profit is at risk of leaving the banking system, according to research cited by the Fed.
Marketplace lending platform P2Binvestor announced today the launch of a first-of-its-kind bank partnership program with New Resource Bank in order to provide crowdsourced lines of credit to growing, mission-aligned businesses with a hunger for innovation.
Alongside transforming the lending structure for fintech companies, P2Binvestor’s attitude towards diversity in the workplace and moving away from traditional, yet stereotypical roles is second to none, headed up by CEO Krista Morgan.
Corporate culture is a growing concern for boards and stockholders. One study shows that 92% of executives believe improving corporate culture would increase their firm’s value. That is an overwhelming majority, and yet so many companies with seemingly unlimited resources keep falling into the trap of poor culture.
A recent victim is SoFi, a privately held online lender. SoFi lost its CEO amid a storm of accusations including sexual harassment, verbal harassment and a culture of fear.
Kansas legislators should take steps to rein in the predatory lending practices some in the payday lending industry employ.
According to the state bank commissioner, payday loans in Kansas totaled more than $300 million in 2016. Interest rates and fees average an astounding 391 percent per year.
Under UCCC rules, payday loans are limited to $500 on loans that last seven to 30 days, and lenders cannot charge more than 15 percent of the amount borrowed. However, they can charge an additional 3 percent per month for loans that go past their maturity date. Lenders cannot make more than two loans to the same person at any one time, and they cannot make more than three loans to the same person within a 30-day period.
The average federal student loan carries an interest rate of around 5 percent. When you take out a loan for a car, you can expect to pay between 3 percent and 10 percent. The average interest rate for a credit card is a little more than 15 percent. But if you get a payday loan in Kansas, you’ll be slapped with an interest rate of 391 percent.
According to the Pew Charitable Trusts, payday borrowers are disproportionately likely to be low-income African Americans with lower average levels of education. Borrowers are 62 percent more likely to earn less than $40,000 per year, 82 percent more likely to have lower than a four-year degree and 105 percent more likely to be African American.
LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, announced that it will report earnings for the third quarter of 2017 on Tuesday, November 7, 2017, after market hours. LendingClub will host a conference call to discuss the third quarter financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.
A live webcast of the call will be available at under the Events & Presentations menu. To access the call please dial +1 (888) 317-6003 or outside the U.S. +1 (412) 317-6061 with conference ID 7584209 ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).
The CEO of peer-to-peer lending business Zopa has rejected claims the business is struggling to attract borrowers, saying the platform is still growing lending volumes by as much as 50%.
CEO Jaidev Janardana told Business Insider: “I do struggle a little bit with this thing that we’re struggling with borrowers. We have been growing [lending] by 45-50%. I don’t think there are other businesses that are growing at 50% year-on-year that would be looked at as struggling.”
Zopa has built up a waiting list of 15,000 people who want to lend over the platform. The company hopes to let some of them onto the platform towards the end of the year.
Orca’s analytic service recorded a new milestone for the asset class this month – £11bn cumulatively lent, all-time in the UK. With over 200,000 active investors and 30% of market share attributed to institutional investment, UK P2P lending is maintaining its growth trajectory, set for a market value of £15bn by 2020. In 2017 year-to-date, £3.4bn has been invested across P2P lending platforms, which is over £100m more than the 2016 total lent figure, according to the Guide.
Law firms across Greater Manchester continue to act for a host of well-known lenders and borrowers on a wide range of leveraged, real estate and corporate and asset finance transactions.
While this year’s tiers one and two remain the same as last time, Eversheds Sutherland (International) LLP has moved up from tier four to tier three and gunnercooke LLP has moved from tier five to tier four.
TIER TWO – DWF has a ‘strong’ borrower practice whose experience spans corporate banking, acquisition finance, public sector finance, and peer-to-peer lending.
In terms of alternative uncorrelated debt what are the alternatives? I hold Investec local currency EM debt, Carador income and Funding Circle IT.
Can the gilt portion be modified to other sources of debt? I have considered SQN Asset, and P2P global (recent weaknesses) as a top up. Will these forms of debt hold up in a downturn? I’m not so sure against gilts/treasuries which are overvalued but possibly the only real diversifier (I also hold 7% in gold).
China’s online peer-to-peer (P2P) lending industry is going through a welcome consolidation. Weak, noncompliant platforms are failing, but long overdue regulatory tightening and still excessive competition is likely to further winnow down the 2,000 platforms online today to a few hundred in the coming years. However, those that survive will compete in a much larger market that has grown quickly despite a minefield of new regulations and frequent failures.
This post expands and updates two earlier installments in this series: an introduction to Chinese P2P in part 1, including its earlier growing pains and the regulatory loopholes they used to grow. Part 2describes regulatory measures taken up to July 2016, especially the difficulties involved with regulation through local officials.
P2P loans outstanding in China at the end of September are up 63 percent from a year ago, to RMB 1.15 trillion (around $173 billion).
On this week’s podcast: Peer-to-peer lending platform Linked Finance raises €2m to fund its expansion and why small and medium sized Irish companies stand to benefit from more favourable tax treatment for employee share incentive schemes announced in Tuesday’s budget.
Private investors may now participate in a new equity crowdfunding real estate round for a mortgage of residential buildings in Darmstadt / Frankfurt area of Germany. “Wohnen Im Village 11” on zinsbaustein.de features ten semi-detached houses and one detached house. Private investors can participate in the form of a subordinated loan from 500 euros to 10,000 euros with a maturity of approximately 18 months and receive an interest rate of 5.25 percent per year. There is a repayment option after 12 months, when construction and sales run according to schedule. To date, 625,000 euros have been raised from the crowd for the project; a waitlist has been started.
Finastra is bringing its next-generation payments solutions to the cloud via Microsoft Azure, Microsoft’s enterprise-ready trusted cloud platform. Banks will benefit from streamlined onboarding, as well as faster access to new products and upgrades. This alliance is an extension of Finastra’s cloud-based lending oversight solution that was previously launched on Azure in the US and Canadian markets in 2016. Since then, Finastra has broadened its relationship with Microsoft and is migrating its payments capabilities to Azure.
Worldcore is an established online money transfer service, which has recently announced plans to expand its operation to create an online, blockchain-powered peer-to-peer lending platform. To this end, they have announced an ICO, which is currently scheduled to begin on October 14, 2017.
The State Bank of Mauritius, SBM Group and FinTech service provider SALT, creators of the first Blockchain-backed loan platform, today announced that they have entered into an exploratory relationship to become the first to use Blockchain assets as collateral for lending services.
Buenos Aires micro-lending startup Ripio has raised $31 million as part of an initial coin offering (ICO) pre-sale ahead of a new credit network launch. The public ICO will begin on October 24.
Investors in the pre-sale included Blacktower Capital, Blockchain Investors Consortium, and FBG Capital. According to the startup, participants were drawn from various parts of the world like Russia, South Korea and Canada.
This year, the two largest contributions were made to Creditas, which received ~$18.87 million, mostly from IFC (the World Bank’s investment arm), and Avante – with ~$12.14 million received mostly of Fiinlab, innovation laboratory of the Mexican group Gentera, and the Vox Capital impact fund.
Avante, a FinTech startup that provides micro-loans, has already lent more than ~$31.45 million to 44,000 microentrepreneurs.
Creditas, an online lending platform that offers secured consumer loans to individuals with home and automobile as collateral, offers credit at lower rates using technology and data intelligence for efficiency. The startup is the second-largest Brazilian in funding, with a total of ~$28.3 million – only behind Nubank.
News Comments Today’s main news: SoFi Ventures to support financial services startups. Prosper’s valuation dives 70%. Fundrise drops minimum investment to $500 for New Starter Portfolio Offering. UK P2P lenders asked to reveal past defaults. Hargreaves Lansdown cancels special dividend. FinMason expands into Prague. PledgeMe close to profitability. Today’s main analysis: LendingClub is looking beleaguered. Australian fintech update. Today’s thought-provoking articles: Surge […]
For PeerIQ, it means continuing to execute upon the vision we shared at our seed financing just over two years ago. This fall, we will be launching our first products uniting TransUnion’s dataset with the PeerIQ analytics platform.
Along with its investment, Hearst brings several major holding companies, including auto data provider, BlackBook, and Fitch Ratings, the global ratings provider, which opens up many new value propositions for our customers. Finally, we are working hand in hand with Macquarie, a major provider of capital to the fintech space, to improve tools for warehouse lenders and their borrowers alike.
Fast forward to Monday. That’s when Lending Club is expected to log another progressive quarter, cranking revenue up to $136.2 million, and whittle the per-share loss back to only one cent; the company lost nine cents per share on $103.4 million in sales for the same quarter a year earlier. Not only is revenue expected to keep growing beyond that, Lending Club is expected to swing back to a profit in Q3, of two cents per share.
The Fundrise Starter Portfolio starts with a $500 minimum and includes a 9.25% annual dividend yield and zero advisory fees through the end of the year. If you want to try it out the Starter Portfolio comes with a 90 day guarantee. If you have a change of heart, Fundrise will purchase your investment back at the original investment amount. Not a bad deal to test the waters.
Prosper Marketplace Inc. is in talks to sell a roughly 10% stake to a Chinese conglomerate in a deal that could reduce the online lender’s valuation by more than two-thirds, according to people familiar with the matter.
Under the terms of the proposed transaction, Linca would invest $50 million in Prosper at a valuation of about $550 million. No deal has been finalized, however, and there was no guarantee the parties would come to an agreement, the people said.
David Kimball, who took over as Prosper’s CEO last December, has been focused on making the company profitable. In February, to ensure a funding source for the company’s loans, Mr. Kimball agreed to sell $5 billion worth of Prosper’s loans to a consortium of investors over the next two years along with warrants to purchase shares representing 35% of the company, The Wall Street Journal previously reported.
Real estate investment crowdfunding site Small Change has closed its first real estate offering available to everyone – not just accredited investors.
Small Change reports that investors have funded projects via their platform in cities including Pittsburgh, Los Angeles, New Orleans, and Washington D.C. These projects are as diverse as the cities in which they’ve been built. They include Pittsburgh’s first tiny house, a historic main street mixed-use conversion, and affordable housing in Washington, D.C. with the largest residential solar install in the country.
WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, today announced that it is now offering Private Student Lending Solutions, expanding its consumer lending product line to bridge the funding gap that exists between the actual cost of higher education and the federal aid, grants and scholarships available.
Social Finance, better known as SoFi, first teased it would file for an initial public offering nearly three years ago.
SoFi CEO Mike Cagney appears to be interested in filing for an IPO again.
If SoFi did file for an IPO, it would mark the second major IPO for a housing-related company after a dry spell the last few years.
According to an article in Reuters by Lisa Lambert, “Last year IPOs in the United States fell by more than a third from 2015, and many of those 102 share offerings ended up trading below their debut price.”
Fintech and adtech startup Fluid announced a strategic partnership with Nomad Credit, a financial marketplace for international students in the US; the partnership looks to offer better credit options to this underserved market; together the companies will deliver better financial literacy, credit building tools and more cost effective financial products.
Fledgling businesses rarely command seed or venture funding right out of the gate. But they still need cash to get started.
In reality, there’s a big difference between securing a loan for your business and winning over backers on a site like Kickstarter. Meanwhile, equity crowdfunding, enabled by sites like AngelList,CircleUp and SeedInvest, is generally for businesses that are further along.
Here are the real ways that most entrepreneurs get money at the very start.
Nine of the 15 United States financial technology “unicorns” — companies worth $1 billion or more, as tracked by CB Insights — are in the San Francisco area. These Bay Area companies, which are not public, include the online payments processor Stripe, the online lender Social Finance and the finance website Credit Karma.
For the last seven years, a New York business-backed program — the FinTech Innovation Lab — has been working to stem that West Coast tide by helping financial services start-ups sell their services in New York in an industry where the city clearly dominates: big banks and other finance companies.
One such “industry of the future” that Delaware should be working to attract is the financial technology sector, or what some affectionately call “FinTech. Empowered by mobile computing, these companies use technology to bring better, cheaper, more efficient financial services to citizens. Mobile apps that allow you to send money quickly to friends or family are examples of FinTech products.
For a number of reasons, Delaware is well-suited to become the nation’s FinTech capital. First, the financial services industry has served as a core portion of Delaware’s economy for over 40 years. Individuals with skills and expertise are ready and waiting.
Second, banks, of which many call Delaware home, are leading the way in partnering with startups large and small to develop new solutions and businesses in the space.
Third, Delaware’s nimble government and business community make it a flexible, attractive place for innovation.
There should be no surprise that with the growth of the internet and online banking that online lending would be close to follow. Over time, banks began to accept loan applications online and eventually began to offer full-service lending through the web.
While online loans may be tempting, it is important to consider every option when borrowing a large sum. Comparison shopping is your friend. There are more than 44 different kinds of business financing — that’s a large ocean to navigate before finding the lowest-cost option that fits your business profile and approval chances.
Nonbank lenders typically lend from their own funds or look to the financial markets to raise millions or billions of dollars to lend in smaller increments.
Here are some questions to ask yourself to get started:
How much money do you need to borrow?
Do you need an in-person experience or are you comfortable online?
The FCA is expected to announce new measures later this year, including forcing P2P groups to give extra information on the past performance of loans and on how much due diligence they have done on the borrowers’ past performance.
P2P lenders — which had collectively facilitated loans of £7.3bn in the UK by the end of last year, according to research from the Peer-to-Peer Finance Association (P2PFA) — have had plenty of time to prepare for tighter regulation.
The FCA’s latest review is the second in two years, and any measures are unlikely to come in before mid-2018, since the industry will be given between three and six months to respond to the proposals the authority puts forward later this year.
Fund supermarket Hargreaves Lansdown cancelled a planned special dividend on Friday after Britain’s financial regulator said the company needed to shore up its capital base, sending its shares lower.
The company plans to launch its HL Savings product later in the year, a cash deposit service supported by marketplace lending, and this year also launched Lifetime ISAs, or individual savings accounts eligible for a government bonus.
A recent survey revealed a third of SMEs in the IT sector have missed out on business opportunities because of a lack of finance. Distributors have long been a major source of credit for SME resellers but with consolidation taking place in distribution through mergers and acquisitions, the sources of credit available to resellers are being reduced.
One distributor that has publicly taken the initiative on credit is Exertis. The company recently introduced a programme called Credit Xtra with the intention of doubling the credit limit for more than 1,650 of its SMB accounts. There is also the option to increase the limit further if resellers remain within the distributor’s credit terms.
Dow believes that it is especially important to offer extra credit at this time of year, when resellers are targeting the peak summertime buying period in education.
NEW pricing rules on business loans will not apply to peer-to-peer lenders, the Competition and Markets Authority (CMA) has confirmed.
From today, all providers of unsecured loans and overdrafts worth up to £25,000 to small- and medium-sized enterprises (SMEs), will have to publish and clearly display the annual percentage rates (APRs.)
It had previously been unclear if this would apply to P2P and alternative finance lenders but the CMA confirmed to Peer2Peer Finance News this morning that it would not.
While NBFCs mostly deal with the unbanked population, P2P concentrate on the businesses that are usually locked out by traditional lenders and also on the tech-savvy individuals.
While P2P platforms have embraced the use of modern technology, NBFCs have failed in the use of technology. This has really affected their growth as they cannot really compete efficiently in the modern world.
The returns available to investors aren’t as high as they used to be, but they’re still much, much more than you’d get putting your money in a deposit account. But there’s a very good reason for that. It’s an awful lot riskier too. You’re not covered by the financial services compensation scheme – which safeguards up to £85,000 of your savings if your bank goes bust. That means you cold lose everything.
Hexindai Inc. (“Hexindai” or “the Company”), a fast-growing consumer lending marketplace in China, today announced that it has partnered with China UnionPay to launch its “Quick Pass” app on Hexindai’s mobile platform. The app will allow investors on the Company’s platform to use surplus funds that have not been lent out to pay for goods and services provided by stores partnered with China UnionPay by scanning a QR code created by the app.
CHINA will explore methods to include large Internet financial businesses of systemic importance in its macro prudential assessment, said a central bank report issued late Friday.
The first peer-to-peer lending platform opened in 2007, and exploded in popularity, with the number of such platforms increasing 18-fold between 2012 and 2015 and the combined transaction volume jumping about 40 times over the period, said the State Information Center.
Financial technology or fintech companies, particularly those focused on credit analysis, will greatly reduce cost of lending and also reduce credit risks. So, they are likely to experience fast growth on market demand as commercial banks are joining the inclusive finance market.
That market is currently dominated by smaller, private financial institutions, such as peer-to-peer or P2P lending platforms and consumer finance platforms.
In China, only 30 percent of citizens are covered by existing credit reporting system, while in mature markets the percentage could be 70 percent or higher.
By the end of July, the five biggest banks in China-Industrial & Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications and Bank of China－had launched inclusive finance arms, just two months after the authorities concerned called for better financial services for a wider group of people across China.
Boston-based fintech and investment analytics firm, FinMason, announced its international expansion plans and the opening of a new operations center based in Prague. The company stated the initial expansion will include the hiring of twenty software engineers to keep pace with the rapid growth and development needs of the company.
The company shared that FinMason Europe, s.r.o., opened August 1st and the first employees have already started.
Vendorly, an innovative vendor oversight platform for financial institutions, today announced the continued expansion of its platform through the addition of three new third-party oversight integrations available on the Vendorly™ platform. These additions further enable our customers to enhance their compliance management framework and help them maintain the high oversight standards required in today’s marketplace.
Continuing this momentum, the new vendor oversight additions to the Vendorly platform include:
Dun & Bradstreet (NYSE: DNB)— Vendorly customers now have access to Dun & Bradstreet data to help make smarter decisions about their current and prospective vendor network.
The ID Co. — With DirectID, Vendorly customers now have the ability to conduct bank verification for current and prospective vendors in their network, to reduce fraud and misrepresentation prior to payment.
TINCheck — Vendorly customers now have the ability to validate the tax ID of all organizations in their current and prospective vendor network.
A new entrant in German online real estate lending, iFunded wants to address the market of larger property development projects that lie beyond the scope of real estate crowdfunding. Partnering with umbrella investment bank NFS Netfonds Financial Service, the platform is launching its first €10 million real estate bond issue, to be listed on the open market of the Frankfurt Stock Exchange. With this, iFunded leads, for the real estate online funding segment, the Fintech startup trend that consists in moving from exemption/sandbox status to a fully regulated financial environment.
According to Crowdfunding.de, in the first half of 2017, German online real estate crowdlending platforms raised €58 million, 45% more than in the entire year of 2016.
In July 2017, iFunded launched its first public bond offering, what motivated you as a company to add the classical fundraising channel to your online real estate platform?
Real estate crowdfunding in Germany has grown very significantly recently and will reach between €100 and €120 million by the end of 2017. However, it still is small.
Our first project Eisenzahnstrasse Berlin is a €10 million bond issue (ISIN: DE000A2E4FQ5) with a 3.5-year maturity and 5.5% interest rate. It is destined to transform an exi property into 281 flats, including a penthouse, and 2,400 sqm commercial space. The total estimated budget is €49.6 million and the expected income €67 million.
European robo-adviser Moneyfarm expects to become profitable by 2019 as it looks to bring to market new products in the coming months.
The Italian firm filed its 2016 financial statements this morning, announcing expansion to 10,000 customers in the UK and £260 million in global assets under management (AUM), which renders it the second largest robo-adviser in Europe.
The firm has reported total losses of £6.4 million in 2016, but claims this was in line with its agreed targets.
Linked Finance, Ireland’s leading peer-to-peer (P2P) lending company has raised over €1m for Kildare-based businesses.
36 Kildare businesses including well-known businesses Kelly’s Mountain Brew, Celbridge Playzone, and The Academy Barber, have used the Linked Finance platform to raise funds and facilitate business growth.
Mueller notes that Singapore and the UK were the early leaders in Fintech innovation as the respective governments determined it was of strategic importance. With government backing, Fintech flourished.
But there are many challenges for this transformation that is occurring at a breakneck speed. And as Mueller says;
“analog regulations built for the traditional banking space are not conducive to fostering innovation in a financial services industry turned digital.”
Mueller bullets out intrinsic challenges to the existing regulatory ecosystem:
Fear of failure has resulted in some regulators taking a go slow approach instead of being proactive. When things go wrong – who gets the blame?
Complexity in Fintech requires new skills. Regulatory agencies are typically populated with people entrenched in well defined processes. There is a lack of proper skills and staffing.
Internal culture may not be willing to adapt. Changing processes is always a challenge. A cohesive policy strategy is missing.
Fintech innovators may struggle to engage and communicate with a regulator. Fear of engagement harms us all
Yes, some countries are blazing trails in Fintech and the list of countries pursuing a Fintech Hub status is growing. Without acknowledging the elephant in the room that the US is not at the top of this list (even though it is the leading global financial center) is telling about the regulatory morass elected officials have allowed to persist.
Global banks and investment banks are far more complex creatures than their high street counterparts, which is why we’ve seen far less disruption in corporate, commercial and wholesale banking that we are seeing in retail, but don’t be complacent or closed here. There are things happening in the more complex areas too.
While fintech covers a diverse array of companies, business models, and technologies, companies generally fall into several key verticals, including:
Lending tech: Lending companies on the list include primarily peer-to-peer lending platforms as well as underwriter and lending platforms using machine learning technologies and algorithms to assess creditworthiness.
Payments/billing tech: Payments and billing tech companies span from solutions to facilitate payments processing to payment card developers to subscription billing software tools.
Personal finance/wealth management: Tech companies that help individuals manage their personal bills, accounts and/or credit, as well as manage their personal assets and investments.
Money transfer/remittance: Money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.
Blockchain/bitcoin: Companies here span key software or technology firms in the distributed ledger space, ranging from bitcoin wallets to security providers to sidechains.
Institutional/capital markets tech: Companies either providing tools to financial institutions such as banks, hedge funds, mutual funds, or other institutional investors. These range from alternative trading systems to financial modelling and analysis software.
Equity crowdfunding: Platforms that allow a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.
Meantime, rather than ignoring these changes, the biggest banks are investing in them. Since 2012, the ten largest US banks by assets participated in 72 rounds of investment totalling $3.6 billion in 56 FinTech companies whilst, in Europe, Banco Santander leads with the most number of unique investments to FinTech startups. The firm has made 13 investments to 12 unique fintech startups. The largest investment was a $135 million in Q3 2015 to small business lender Kabbage, that also included participation from ING among other investors.
Alternative lending was the golden child among investors around 2015, but lately, the industry seems to have fallen out of favor thanks to regulatory uncertainty and questions over the viability of some business models.
This week alone saw two examples of those concerns in action: One U.S. lawmaker, Rep. Emanuel Cleaver II (D-Mo.) sent a letter to five alternative small business lenders operating in the country, inquiring about their business practices.
PledgeMe came within cooee of turning a profit in the 2017 financial year, boosting revenue from fees to use its equity crowdfunding and peer-to-peer lending platform while also clamping down on costs, and is considering adding another string to its bow which that could need another capital injection.
The Wellington-based company narrowed its annual loss to $11,228 in the 12 months ended March 31 from $398,611 a year earlier as revenue climbed 55 per cent to $268,473 and operating costs were slashed 48 per cent to $288,502.
We have seen demand for construction loans between $10 million and $30 million spike 20 per cent per cent over the last six months as Tier 1 banks are quickly tightening both pre-sales thresholds and loan-to-valuation ratios on new developments.
One area of the greatest demand for non-bank finance is coming from Chinese property developers, who do not have the track record or Australian assets to provide comfort to the major lenders.
Peer-to-peer lending models, like that of Chifley Securities, allow us to access investor funds to progress these developments, as we are applying different, more nuanced assessment of the risks associated with these loans.
Braam Lowies, the study’s lead researcher, noted that while the concept was relatively new in Australia, it had been successful in the United States and United Kingdom for approximately seven years.
Wadhawan Global Capital (WGC), which owns 38% of Dewan Housing FinanceBSE 0.07 %, has invested Rs 175 crore in London-based mortgage financer Neyber, marking it’s second investment through the newly set up UK arm as it seeks to expand its global footprint.
Those who do not back the idea of PPF believe investors should carry the risk of loss as the principal idea of P2P Lending is to offer investors an “alternative investment route”. The P2P Lending platform, at best, can try to strengthen the risk-assessment processes by making the optimal use of technological innovations.
While the other camp which is in favour of PPF opines that it is not a luxury but a necessity at the moment as it will only instill confidence among the investors. And, it’s not about disbelieving one’s capabilities.
A summary of the proposals put forward by MAS in the Consultation Paper is set out below.
Expansion of licensing exemptions
(a) Expansion of licensing exemption for dealings in securities other than CIS
(b) Expansion of licensing exemption for provision of fund management services incidental to advisory activities
Dispensation with prior client approval for each and every rebalancing transaction
Case-by-case exemption from collecting full information on the financial circumstances of clients
Relaxation of criteria for CMS licences in fund management for digital advisers
Development, monitoring and testing of client-facing tools
Provision of information on algorithms and conflicts of interest
Responsibility of the board and senior management
MAS Establishes Payments Council (LATTICE80 Email), Rated: A
The Monetary Authority of Singapore (MAS) announced on 2 August that it will establish a Payments Council, comprising 20 leaders from banks, payment service providers, businesses,and trade associations. Members are appointed for a two-year term and chaired by Mr Ravi Menon, Managing Director, MAS. The Payment Council marks the vision of an e-payments society, fostering collaboration between providers and users of payment services in Singapore.
Communication and technology services company Green Packet Bhd is eyeing an expansion into a new growth area – the mobile payment solutions segment, an area poised for disruptions through technology.
According to the 2016 Visa Consumer Payment Attitudes survey, 74% of Malaysians prefer to make electronic payments instead of cash, an increase of 8% compared with 2015. In fact, Visa indicated in a separate study that seven in ten Malaysians are willing to use mobile wallets.
Such is the case of American banking giant Citi, which sees itself as a technology company with a banking license, having introduced video banking recently in India.
Video banking is seen suitable especially in wealth management, which is part of the regional consumer business led by Selva. This is a segment where customers need trust and constant advice.
Citi receives 70 million calls a year, almost half of which are answered by a phone agent. The bank usually spends about 30 to 45 seconds validating the call, asking the client his or her mother’s maiden name, date of birth and details about the last transaction.
In the Philippines, Citi now implements voice-enabled biometrics for easier client verification. Citi is likewise moving toward facial recognition.
GSX, which owns and operates the Gibraltar Stock Exchange, said on Friday that Cyberhub Fintech Holdings Limited is a new strategic shareholder. Cyberhub is a unit of Broctagon, a derivatives trading technology provider.
The stock exchange also wants to become the world’s first to fully integrate blockchain technology.
According to the 2017 Old Mutual Savings & Investment Monitor, working South Africans allocate only 15% of their incometowards savings.
Naidoo explained that these statistics emphasise the extent of the national savings deficit and the large gap that exists between targeted economic growth of 5.4% per year, as per the NDP, and the ability of the South African economy to fund that growth.
Naidoo believes that financial services providers and advisers have a vital responsibility to promote a savings culture via collaborative advice and financial literacy efforts.
Just three months in and Barbados’ sole peer-to-peer lending company, Carilend, is seeing tremendous success with 100 percent of its loans.
With over 900 registered users on the site to date, the team at Carilend has been amazed at the response they have received.
Carilend reported their “average” Borrower is borrowing $8,617 for 43 months at an average interest rate of 11.34%. Whilst all applications receive an answer in one working day, Carilend recently approved a brand new Borrower in 2 hours; 22 minutes from receipt of their initial application.
News Comments Today’s main news: KBRA rates Prosper’s Series 2017-1. SoFi’s bid to become bank pulls FDIC into fintech fray. LendInvest joins Home Builders Federation. Monzo puts API dev on back burner. PBOC sets up new China fintech committee. N26 launches savings accounts with Raisin. Today’s main analysis: Asset volatility diminishing and approaching new lows. Today’s thought-provoking articles: The future […]
Asset volatility diminishing and approaching new lows. GP:” Low volatility is surprising given the fairly high political impredictability under the new administration. With low volatility also comes usually high leverage which will backfire when the volatility increases again. Warren Buffet: ‘Be greedy when people are fearful, be fearful when people are greedy’. “
SoFi’s bid to become industrial bank pulls FDIC into fintech fray. GP:”It was very unlikely for FDIC to stay out to start with as Web Bank and Cross River Bank sued Colorado already. “AT:”I’m still not clear on why SoFi filed for an ILC. I thought the point was to perform banking services without being a bank, but if they’re planning to use Zenbanx, wouldn’t that violate the purpose of the ILC?”
SoFi COO on authentication and lending practices. GP:”Going on CNBC and punching one own’s chest saying it is safe during a hacking attack is the best way to attract hackers and especially for them to take it personally. A lot of hacking is about pride and showing off and I wouldn’t be surprised if SoFi.com had a fun message on it one of these days. Perhaps it’s healthier to just be happy that you are safer instead of bolstering about it. ” AT: “I like drawing out the distinction between a single online interface and multiple branch locations for brick-and-mortar. SoFi truly can boast it is more secure simply by having fewer access nodes for bad actors. This is an argument any online lender can make.”
How can I pay for fertility treatment? AT: “Here’s a good example of how to use your blog for marketing. LendingClub is not in the fertility treatment business. It’s in the lending business, but by writing about how loans can be used for specific purposes, they brand themselves and make themselves an authority in the lending niche.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-1 (“PMIT 2017-1”). This is a $450.5 million consumer loan ABS transaction that is expected to close on May 24, 2017.
This transaction represents the sixth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).
Volatility in the asset markets has been steadily declining and is nearing new lows. One factor helping to suppress volatility is the lack of many surprises in the first-quarter earnings season, which passed with results generally within the range of expectations. From an economic point of view, while GDP was weak in the first quarter, it is expected to rebound in the second quarter.
Following the French presidential election and the general lessening of international tensions, corporate credit spreads have tightened and asset volatility has declined toward its lowest levels.
The average corporate credit spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 3 basis points last week to +117, a new low for the year. The last time the index was at this level was September 2014. From a longer-term perspective, the average spread of the Morningstar Corporate Bond Index has been lower less than one fourth of the time since the end of 1999. In the high-yield market, the Bank of America Merrill Lynch High Yield Master Index tightened 5 basis points to +377. The tightening was led by the energy sector, which declined 10 basis points as oil prices continued to rise. Since the end of 1999, the average spread of the high-yield index has been tighter only 17% of the time.
As TransUnion (NYSE:TRU) data from the end of March 2017 suggest, the consumer credit market is as complex as ever. Mortgage delinquency rates: continuing to drop. Auto loan delinquency rates: rising. Personal loan market: growing, but slowing. Access to credit cards: highest since 2005.
Maneuvering through this ever-changing credit landscape is difficult for lenders of all sizes, ranging from credit unions to regional banks to the largest financial institutions. To help navigate through this complex maze, TransUnion today introduced the newest modules in its PramaSMenvironment – Benchmarking and Data Extract.
Prama Benchmarking provides advanced data analytics and visualization capabilities specific to the auto loan, credit card, mortgage and personal loan markets—to deliver relevant insights for each line of business. Lenders will now be able to measure their performance across numerous metrics and filters, and compare it to the industry and their peers. This information can be used to improve how financial services companies segment, target, acquire, cross-sell and retain customers. The Data Extract module provides self-service access to query against 100 percent of TransUnion depersonalized archive credit data, allowing customers to receive faster delivery of data to support their own analytics—in their own environment with their preferred tools.
Measuring Business Performance Against Peers
Benchmarking provides performance data on metrics such as delinquencies, charge-offs, bankruptcy, average balance and utilization. It offers views of market share in terms of number of accounts, total limit or total balance. The module also lets lenders analyze depersonalized data using dimensions such as APR, origination vintage, credit tier, state or MSA region, account status and consumer credit age.
For instance, a regional bank in Western Pennsylvania interested in growing its credit card portfolio is now able to observe five years of its own data versus other similar banks in their region.
Extracting Data Faster – From a Month or More to Hours
A traditional archive request process – from customer order to product delivery – typically takes 30 days or more. This includes time spent defining and iterating on the customer’s data requirements. “With Data Extract, the process will take less than 24 hours – an enormous time savings,” said Gomez.
With Data Extract, customers gain the following advantages:
Self-service – On-demand, point-and-click access to query TU depersonalized archive credit data.
Speed – Secure overnight delivery of the dataset.
Confidence – Quick access to depersonalized data to support a customer’s own analytics, so they can make faster decisions with more confidence.
Control – Create queries according to their data requirements, avoiding the back and forth that is often typical of an archive request process.
Flexibility – Quickly obtain depersonalized data for use within their own analytics environment and processes.
The Federal Deposit Insurance Corp. has so far managed to stay out of the growing battle over how the U.S. fintech sector should be regulated, but that appears likely to end as one of the nation’s largest online lenders announced plans to apply for a specialty banking charter soon.
Social Finance Inc., the San Francisco-based consumer lender known as SoFi, hopes to secure an industrial bank charter. That state-issued charter used to be a popular way to organize a bank, and was commonly used by companies that are not primarily in the financial services industry.
SoFi Chief Operating Officer Joanne Bradford was back visiting with CNBC today. Bradford addressed several topics including the recent cyber attack that has public and private entities running for cover around the world. SoFi has not been impacted by the digital attack and Bradford was quite confident that SoFi is better prepared for any malicious attempts to infiltrate SoFi due to their single point of access (unlike traditional banks).
Asked if the Fintech industry is more, or less, vulnerable than traditional types, Bradford explained;
“We are less vulnerable. You only come to SoFi at SoFi.com. We don’t have branches which helps make it more efficient. Less points of vulnerability…but for the consumer it is more about speed and ease of use. Getting things done quickly on your mobile device.”
Recently, three economists—Oded Netzer and Alain Lemaire, both of Columbia, and Michal Herzenstein of the University of Delaware—looked for ways to predict the likelihood of whether a borrower would pay back a loan. The scholars used data from Prosper, a peer-to-peer lending site. Potential borrowers write a brief description of why they need a loan and why they are likely to make good on it, and potential lenders decide whether to provide them the money. Overall, about 13 percent of borrowers defaulted on their loan.
It turns out the language that potential borrowers use is a strong predictor of their probability of paying back. And it is an important indicator even if you control for other relevant information lenders were able to obtain about those potential borrowers, including credit ratings and income.
Listed below are ten phrases the researchers found that are commonly used when applying for a loan. Five of them positively correlate with paying back the loan. Five of them negatively correlate with paying back the loan. In other words, five tend to be used by people you can trust, five by people you cannot.
Here are the phrases used in loan applications by people most likely to pay them back: debt-free, lower interest rate, after-tax, minimum payment, graduate.
And here are the phrases used by those least likely to pay back their loans: God, promise, will pay, thank you, hospital.
Now, let’s consider language that suggests someone is unlikely to pay their loans. Generally, if someone tells you he will pay you back, he will not pay you back. The more assertive the promise, the more likely he will break it. If someone writes “I promise I will pay back, so help me God,” he is among the least likely to pay you back. Appealing to your mercy—explaining that he needs the money because he has a relative in the “hospital”—also means he is unlikely to pay you back. In fact, mentioning any family member—a husband, wife, son, daughter, mother or father—is a sign someone will not be paying back. Another word that indicates default is “explain,” meaning if people are trying to explain why they are going to be able to pay back a loan, they likely won’t.
Misys has stepped up to the artificial intelligence (AI) plate, today unveiling Misys FusionCapital Detect. The component helps financial institutions spot booking errors, anomalies and unusual activity, accelerating trade validations and reducing exceptions with machine learning.
FusionCapital Detect behaves as a smart personal assistant for validation teams, red flagging probable mistakes that are otherwise time consuming to identify. Users can catch errors that existing tools on the market let through, reducing operational risk and preventing manual mistakes that lead to decisions being made on the wrong profit and loss information and incorrect end-of-day reports.
Being able to validate transactions at T+0 has become crucial in today’s pressurised regulatory environment, including under:
The European Market Infrastructure Regulation (EMIR): which makes it necessary to identify errors as soon as possible in order to confirm trades within 24 to 48 hours.
The Fundamental Review of the Trading Book (FRTB): which requires daily risk reports – unidentified trade errors will invalidate these reports, breaching compliance.
OpenInvest (www.openinvest.co), a social impact investing platform for retail investors, announced today that it raised $3.25 million in seed funding. The round was led by Andreessen Horowitz with participation from Abstract Ventures, Wireframe Ventures and SV2. OpenInvest is an accessible online financial advisor that empowers investors to fully align their investments with their values, and then take action to more meaningfully engage companies and drive social change.
According to a recent Morgan Stanley survey, 84 percent of millennials want the companies they invest in to align with their values. OpenInvest meets this opportunity with an innovative platform that allows consumers to invest with their hearts, without having to compromise financial returns. The company’s investment screens include climate change, fossil fuels, weapons manufacturers, gender equality, LGBTQ workplace treatment, deforestation, tobacco, companies funding the Dakota Access Pipeline, and companies supporting President Trump, which can be freely mixed and matched to construct a personalized portfolio. Investors can further customize by including or excluding individual companies, while their portfolio auto-rebalances to maintain diversification and broad tracking of the market.
Lemonade Inc, a tech-driven insurance startup that promises renters and homeowners insurance in as little as 90 seconds and payment of claims in 3 minutes, has won approval from California regulators to sell policies in the state, the company said.
The insurer’s foray into California, the most populous U.S. state, comes amid the company’s push to become licensed nationwide, less than a year after launching in New York. Last month, Lemonade, which sells policies directly to consumers through its website and smartphone app, expanded into Illinois.
First Data CEO, Frank Bisignano, noted in the wake of First Data’s earnings release this week that the company remains on track to meet its guidance for 2017 and that he is “confident that the current weakness is transitory.”
First Data will be instrumental in helping drive Alipay expansion into the U.S. market, focusing on firms that use First Data’s Clover platform.
By the numbers, First Data reported adjusted earnings per share of $0.28 and revenue of $1.7 billion.
Credit and retail processing in North America were up 1 percent, and the business, globally, gained 2 percent. Accounts on file, again for North America, grew by 7 percent.
The deal will give Alipay scale roughly equivalent to Apple Pay’s in terms of presence, at around 4.5 million U.S. sites.
OnDeck’s Falling Figures
Reflecting the changes, the company lowered its full-year net revenue outlook to a range of $342 million to $352 million. It previously had forecast $377 million to $387 million.
Annual costs are also slated for a big cut — by around $25 million. Those cuts will be achieved by lowering headcount. About 27 percent of the staff will be cut back from levels at the end of 2016.
By the numbers, losses clocked in at $0.11 per share, slightly more than the $0.10 loss analysts were looking for. Gross revenue rose 48.4 percent to $92.89 million on higher net interest income, beating analysts’ estimates of $90.38 million.
Green Dot Beats the Streets (In a Big Way)
The company posted adjusted earnings per share of $1, which was $0.16 better than analysts were forecasting. Revenue clocked in at $253 million, was up 11 percent year over year and was higher than the roughly $234 million that had been forecasted.
Guidance for the full year was also ticking up — just about in line with the magnitude of the beat, with revenue to range from $830 million to $845 million (both ends of the range were taken up by $15 million). Earnings per share are slated to come in between $1.89 and $1.94, which compares with the consensus of $1.92 as of Wednesday morning.
Green Dot is making pre-paid cards look easy, OnDeck is demonstrating how marketplace lending (or marketplace anything) is really, really hard — and First Data is greatly looking forward to next quarter, when it can report smoother sailing.
The US government has awarded research contracts to three startups working with blockchain worth a total of about $2.25m.
The Department of Homeland Security (DHS) quietly revealed the grants last week as part of its Small Business Innovation Research initiative.
Who got funded: DHS said that it parceled out a total of $9.7m between 12 companies, three of which are working with the tech. According to a release, each firm got about $750,000 to fund their research.
Here are the companies that got funds for their blockchain-related initiatives:
BlockCypher: The startup has been awarded a grant for its “blockchain platform for multiple blockchains, applications and analytics. BlockCypher was the recipient of a $600,000 DHS grant last summer.
Digital Bazaar: According to DHS, the company is working on a “verifiable claims project” that utilizes “fit-for-purpose distributed ledgers”. Like BlockCypher, Digital Bazaar was given a DHS grant in 2016.
Evernym: This Utah-based business will use the funds to support its research into “decentralized key management using blockchain”, according to DHS.
The team at Lendio is pleased to announce that they are now offering small business loans within minutes.
In addition to providing small business owners loans as quickly as possible, Lendio also features a business loan marketplace that lets people find the financing tools they need to help run their business.
In 2015, I graduated with over $150,000 in student loans from pharmacy school. At the time, it felt like an insurmountable amount of money to pay back, especially considering I took a substantial pay cut to complete a 1-year residency after graduating. The monthly payments were extremely high and to make matters more confusing, I had multiple loan providers between my private and federal loans, with some in my name and some in my parent’s name. The interest rates on these loans varied from 6.5% to 8%.
After finishing my residency, I knew I had to take a close look at my financial situation and make a plan to aggressively start paying off these loans. After extensive research, I decided to refinance my student loans through Social Finance, Inc (SoFI), an institution that offers a number of different loan types through a “nontraditional” approach.
Refinancing through SoFI will save me over $15,000 in cumulative payments over a 10-year term by lowering my interest rate to 5%.
If you’re refinancing with a longer repayment period (10 to 20 years) and prefer stability, a fixed rate may be the better option. Personally, I chose a variable rate loan because the interest rate was significantly lower than the fixed rate loan, and I plan to pay off my student loans long before the end of my 10-year term.
Specialist mortgage lender, LendInvest, has announced that it has joined the Home Builders Federation, in a move aimed at supporting property developers to build more homes of every type.
The Home Builders Federation is the representative body of the private sector home building industry in England and Wales and its members are responsible for 80% of housing output each year. The organisation currently supports the LendInvest Property Development Academy, a non-profit, two-day course delivered in five key cities across the UK and intended to create a new generation of property entrepreneurs.
Digital bank Monzo is putting its API developer plans on ice as it faces up to the challenge of launching current accounts for its 190,000 customers.
The news will be a blow to the 2000 people on the bank’s developer Slack channel who have invested time in building integration to the Monzo API.
In the two years since it launched its first hackathon encouraging developers to build products using the API, the bank now counts some 100 personal projects integrating with the toolkit. Despite these efforts, Monzo will not allow developers to publish their current applications.
Nearly half (48%) of Moneywise.co.uk readers use peer-to-peer (P2P) lending in a bid to earn higher returns on savings, our latest poll results reveal.
This is an increase from 39% of Moneywise users who said they used P2P lending in August 2016, and 33% who said the same when we asked in February 2016.
The number of Moneywise users aware of P2P has also risen. Just 4% said they’d never heard of P2P lending in our most recent poll, compared to 6% who hadn’t heard of it last August, and 9% who hadn’t heard of it last February.
Tennis star and Seedrs advisor Andy Murray has invested in three early-stage UK businesses. The Seedrs listed companies include Den, Morpher and Landbay. Murray’s Seedrs originated portfolio now stands at over 20 companies, according to the platform.
Landbay is back on Seedrs once again. The property rental crowdfunding platform has crowdfunded successfully multiple times on Seedrs. Landbay was one of the very first peer-to-peer platforms to be granted full authorisation by the FCA at the end of 2016. Landbay has raised £2.3 million overfunding to 157% in the round.
Currently, a real need exists to increase consumers’ engagement with their financial life and enable easy access to robust financial advice for all. However, for many consumers, the breadth of choice available, when it comes to making financial planning decisions, only serves to create confusion and adds to the complexity often resulting in no decisions being made at all.
2 – Realistic expectation of range and level of returns
This means that not only should the overall forecasts be realistic but each individual scenario, which makes up the forecast, should also be sensible and capable of occurring. Suggesting a potential outcome which, in reality, is impossible is obviously not particularly helpful to consumers when it comes to making investment decisions.
3 – Risk Suitability Assessment
In the UK, it is clear that robo advice needs to meet the same suitability standard as traditional advice. Therefore, any risk suitability tool must be rigorous and robust in order to ensure an accurate measurement of a consumer’s tolerance to risk and capacity for loss.
4 – Personal Advice Given
As everybody’s situation is different, in order for a robo advice proposition to be successful it must be able to provide appropriate personal advice which not only reflects a consumer’s individuality and specific objectives but is also not detrimental to their other financial needs.
5 – Fully automated with appropriate compliance reviews
By automating the advice process so that it can be delivered remotely and driven by the consumer, costs will be cut sharply as a result. At the same time, consistent quality and thorough documentation generated by the process will provide a full and reliable digital paper trail to ensure regulatory compliance.
The automated financial advice market is set for a decade of strong growth, according to a new report by consultancy Deloitte, which suggests the underlying disruptive technology will spread into more niches than its current wealth management segment.
To date, automated advice has been most prevalent in wealth management – called robo advice – but this is just the tip of the iceberg. In its latest research into the space, entitled The next frontier: The future of automated financial advice in the UK, Deloitte says the UK offers a rich opportunity for automated advice with up to 15 million consumers willing to pay for it.
China’s central bank said on Monday it has set up a committee to oversee financial technology, reflecting an attempt to bring regulation up to speed with a fast-growing industry that could bring cross-sector financial risks.
The People’s Bank of China said on its website it will gauge the impact of fintech on monetary policy, financial markets, financial stability, payment and clearing.
It will also beef up the use of new technology, such as big data, artificial intelligence, and cloud computing to enhance its capabilities in protecting against and resolving cross-market financial risks, it said in the statement.
P2P Industry News (Xing Ping She Email), Rated: A
People’s Bank of China is going to set up FinTech Committee
Recently, People’s Bank of China (PBC) announced to set up FinTech Committee, aiming at reinforcing the planning and coordination of fintech. PBC is going to do deep research on the influence of fintech on monetary policies, financial market, finance stability, payment and settlement etc. And it also encourages finance sector to use high-tech, such as big data, AI and cloud computing, as regulatory method to improve the ability for identifying, preventing and solving financial risks.
BNP Paribas Group Investigates for Financial Innovation in Asia
On May 5th, executives from security services department of BNP Paribas visited JadeValue, China’s first fintech incubator, to investigate for financial innovation in Asian market. Xeenho Wallet, as one of the incubated enterprise of JadeValue, and a typical example of Chinese modern fintech company, communicated with the European professional financial survey team, and achieved initial intent of cooperation on exchange of P2P industry news.
Xeenho is one of the first P2P funds platforms in China. Based on big data and robo-advice, Xeenho’s risk-control management keeps the Zero Bad Debt in the industry.
N26 is launching yet another feature to build a modern retail bank for European customers. This time, the company is partnering with Raisin, a German startup also known as WeltSparen. In just a few taps, you’ll be able to open a savings account for money you don’t need.
All your deposits are guaranteed up to €100,000 per bank by the National Deposit Guarantee Scheme as part of the European Union.
N26 is only launching this feature in Germany for now, but Raisin accepts customers from other countries. So you can expect to see this feature in other countries later this year. Similarly, if you don’t want to have your money stuck on a savings account, N26 will launch overnight savings later this year.
Raisin has built an API in order to facilitate the N26 integration.
Rabobank has partnered with Norway’s Signicat to provide a digital identity hub for businesses looking to onboard new customers and sign legally-binding contracts online.
The joint Digital Identity Service Provider (DISP) offers a range of online login, identity, signature and data archiving services under the banner of Rabo eBusiness. Rabobank says it will initially market the programme to energy, telecom and insurance companies, healthcare institutions and financial services providers.
Banking and payment financial technology have grown exponentially in just the past few years thanks to tech like blockchain, artificial intelligence, and big data. These crossovers are making for faster, safer processes and lower prices for individuals and businesses alike.
Wyre boasts transfer speeds under 6 hours internationally, significantly faster than the traditional SWIFT or bank wire transfer networks.
Xendit is a payment processing infrastructure provider that covers the southeastern Asia region. Among the services offered through Xendit are bank transfers, card processing, and escrow services.
Xero offers accounting professionals and small-to-medium businesses (SMBs) with more than 600,000 customers a cloud-based accounting software.
N26 allows UK customers to open accounts in minutes, perform withdrawals at any ATM, and pay with the N26 MasterCard.
Beyond making in-person and mobile payments more secure, Circle is also working to reduce the cost of in-person and international payments as well as the time intensity of global payments.
Simple unifies accounts under one card and splits the net interest margin from lending across all of the partner banks in its network to help simplify the customer experience.
Earnest is using data science, design, and software automation to allow their clients to manage their existing finances and debts while opening up new opportunities for well-behaved clients to see better interest rates and more options.
Featurespace has developed and deployed artificial intelligence and machine learning solutions for financial service providers in more than 180 countries.
InstaMed has changed the healthcare payments industry through the use of their easily-integrated, private cloud computing network.
Peer to Peer (P2P) lending platform i2iFunding said today that it planned to increase the loans disbursed on its platform to Rs 200 crore over the next two years. It currently disburses loans worth Rs 60-70 lakhs a month.
Having strengthened its risk processes, the company is now keen to expand operations, he said. The company also expects business to pick up the RBI issues regulatory guidelines for the sector.
But while there has been a major change in the appetite for risk among Indians, P2P lending requires an investor to be thoroughly aware and educated on how to make informed choices when opting for P2P lending. P2P lending is globally growing at a CAGR of 48%. In India, the industry is expected to touch $5 billion by 2020-2021. It’s here to stay and the faster a smart investor understands, learns, and makes the most of it, higher the returns.
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Small Ticket-size, More Loans – One of the biggest advantage of P2P lending is that the average ticket size can be as low as Rs. 1000/-. So invest small amounts in large numbers. And by that we don’t mean putting Rs. 2,50,000/- across 10 loans of Rs. 25,000/- each but to aim for 50 loans of Rs. 5,000/- each.
Compounding Benefit – P2P lending is the only, unique asset class in which investors begin to receive returns – principal as well as interest – through EMI from the very next month of making the investment.
Realistic Expectations, Long-term horizon – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
Informed Choices – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
TFSA has published a report specifically on this subject. Entitled, “Seizing the Opportunity: Building the Toronto Region into a Global Fintech Leader,” the report states that the Toronto/Kitchener-Waterloo corridor today benefits from a strong core of financial institutions, top-tier research facilities, a strong talent base and relatively low business operating costs compared with other global Fintech ecosystems.
The report sets out six key areas to target:
Collaboration: Closer and more frequent engagement among Fintech startups, well-established financial institutions and the venture capital community.
Capital: Improved access to sophisticated seed-level and local later-stage capital for Canadian Fintechs.
Regulation: Reduced regulatory burden on emerging Fintech companies, and modernized regulatory frameworks to attract foreign investment and further reflect changing business models, technologies and priorities.
Research: Encouraged commercialization of research for financial services to further establish the region as a global leader.
Talent: Creation of opportunities and conditions that will attract top talent with experience growing and scaling fintech companies.
Awareness: Raising of the region’s profile on the global stage as a Fintech hub.
Power Financial Corp has invested C$50 million ($37 million) in “robo-adviser” Wealthsimple, bringing its total investment in the 2-year-old financial technology company to C$100 million, they said on Thursday.
Toronto-based Wealthsimple provides automated investment advice to consumers and helps manage personalized portfolios based on responses to an online questionnaire about investment goals. It entered the U.S. market at the end of January.
The company said it now has more than 30,000 clients in Canada and the United States, up from 20,000 in late January, investing more than C$1 billion in exchange-traded funds.
Brazil is experiencing a wave of growth in financial technology that will most likely eat into the market share of the country’s huge and long untouchable banks, a new report from Goldman Sachs says.
Entitled “Fintech Brazil’s Moment,” the 45-page research report estimates that the more than 200 financial technology companies in Brazil should generate a potential revenue pool of about $24 billion over the next 10 years. Payments, lending and personal finance are three promising segments, as is insurance, the report found.
The Goldman Sachs economists cited what they called “an oligopolistic market structure” in Brazil where the top five banks, excluding development banks, hold 84 percent of total loans. In retail branch banking, the top five banks have 90 percent of branches. That is up from 71 percent in 2007, the report said, observing that “the market has become more concentrated since the financial crisis” of 2008.
By contrast, in the United States, the top five banks hold just about 20 percent of all branches. In India, that figure is slightly over 30 percent, and in Turkey it is just under 30 percent.
News Comments Today’s main news: Credit Card ABS vs installment loans ABS comparison. Assetz Capital hits 240M GBP in four years. Octopus Choice close to 50M GBP in first year. Lendix expands to Italy. Today’s main analysis: 90+ wealthtech companies. Today’s thought-provoking articles: 88% of global banks sweat losing revenue to fintechs. 17 fintechs that may become unicorns. China SME […]
Credit Card ABS vs installment loans ABS comparison. GP:” People often try to use credit cards data, which there is plenty of, and goes back very far, to predict installment loans behavior. However, Americans have a priority in defaults which is proportional to the pain point if the product stops working. We believe unsecured personal loans are very low on the totem pole of default priorities. PeerIQ here analyzed the difference quantitatively and concluded very interestingly: ‘Peak delinquencies in credit card ABS are ~8% in a stress scenario. By contrast, three-year unsecured personal loans (such as loans in the seminal CHAI shelf) are typically associated with a ~12% cumulative loss estimate (under a benign base case).’ “
90+ companies transforming investment, wealth management. GP:” We saw Wealthfron enter lending last week. Perhaps we should look at a few other companies for partnerships.” AT: “WealthTech as a sub-niche seems to have come out of nowhere. Yet, many of these companies are important to the overall fintech ecosystem, and I see WealthTech growing by leaps and bounds worldwide in the foreseeable future.”
Fintech puts payday lending in old wine in new bottles. GP:” It is very hard to point exactly when innovation happens. Before 1990 there was no online payday lending, because there was no internet. Today it exists. Something did change. Everything we build is built on top of online lending. Perhaps lending was invented when the first money was invented and searching who invented something, for the glory, is not very useful in this case. We are losing time with the history of lending or with the exact meaning of certain words. I would rather look who is making the money, Elevate Credit or brick and mortar stores? Who’s revenue is growing?”
Fintech lures MBAs away from banking and consulting. GP:”Fintechs even lures executives and CEOs of Wall Street banks, no wonder MBAs are also following. “AT: “We’re also starting to see banks and traditional financial institutions poach talent from the fintech companies.”
Global banks sweat losing revenue to fintechs. GP:”I think they are right to be concerned in a world with Uber, AirBnB, mobile phones, and in a market where there is no need for hardware or physical assets to be competitive and scale fast.”
Indonesia’s fintech landscape. GP:” The Indonesian market is particularly closed to international ownership, investment, etc. However, they are the 4th most populous country in the world and their financial sector is far from being mature. Which leaves a lot of opportunity if people are willing to approach the Indonesian market properly, perhaps in partnership with local entrepreneurs and by structuring firms through local law firms .”
Banks earnings season continued this week following strong Q1 results from JP Morgan and Citi last week. Morgan Stanley beat expectations on each line of business increasing year-over-year profits by 82%. The investment bank also generated 122% YOY revenue growth in the fixed income currency and commodities business. Bank of America exceeded expectations and benefitted from the greater net interest income due to a rise in long-term rates.
For the first time since 2015, GS surprised analysts by missing expectations on top and bottom line performance. Fixed income revenues were flat year-over-year trailing double-digit business unit gains across peers including JPM, C, MS, and BAC.
Bloomberg reports that, Navient, the largest servicer of student loans, reached an agreement to purchase JPMorgan’s approximately $6.9 Bn FFELP education loan portfolio.
In the ABS space, Yirendai reported its progress in funding consumer loan products via ABS. Another Chinese online lender, China Rapid Finance, announced that it plans to list on the NYSE, making it the second Chinese online lender to go public in the US.
We are often asked by investors whether credit card receivables are a proxy for installment loan performance. This week, we dig into credit performance of credit card securitizations representing over $100 Bn+ in consumer credit ABS deals. We include the following issuers in our analysis: American Express, Bank of America, Discover, Capital One, JP Morgan Chase, and Citi.
We compare delinquency and loss levels of credit card ABS to installment loans and conclude that credit card ABS performance is a poor proxy for installment loans, and that installment loan delinquencies are arguably a leading indicator of credit risk.
Credit Card ABS – A Strong History of Credit Performance
The credit card ABS market has historically been the benchmark sector in consumer ABS due to its liquidity, transparency, and strong performance including through the Great Recession.
The Credit Card ABS market is not an originate to distribute risk-transfer market, but rather a critical channel for funding and liquidity. Issuer incentives are strongly aligned with investors due to their dependence on debt capital markets for funding. Credit Card ABS provides over 50% of funding for card issuers (followed by deposits). New Credit Card ABS issuance is expected to grow in the wake of higher rates and funding costs from deposits.
Post-2008, new ABS issuance contracted significantly, including in the credit card markets. Consumers entered a de-leveraging phase reducing demand for loans. Large banks, in response to the new capital and liquidity regime, shifted to borrowers with higher credit scores and focused on existing relationships. Wider spreads and higher capital charges also reduced available sources of funding for consumer credit.
Post-crisis, non-bank lenders emerged to fill the lending gap by offering installment loan products to expand access to credit. Since installment loans sometime re-finance higher rate credit card debt, some investors have drawn analogies between credit card performance to installment loan debt.
Credit Card ABS Delinquencies are Near Multi-Decade Lows
In our March 2016 newsletter, we discussed credit card master trust performance, noting that delinquencies from 2011 through 2015 followed a downward trend for major credit card issuers.
We continue our analysis below, observing delinquencies continuing the downward trend in 2016, reaching historic lows in early 2016.
While the Composite index shows this trend, there is variability among the individual trusts. Discover and Capital One, with a mass-market tilt in customer base, experienced larger rises in delinquencies, compared to Amex and Chase which have a mass affluent footprint.
Installment Loans Lead Credit Card Losses
There are limitations in comparing delinquency rates on credit card ABS to installment loans. For instance, unlike MPL ABS deals which consist of static pools, credit card trusts are revolving securitizations that re-invest principal and interest over time. Also, we do not have access to the credit score distributions for credit card issuers to compare risk on an apples-to-apples basis.
Delinquencies on credit cards reached multi-decade all-time lows in early 2016.
Credit card delinquencies are in early stages of reverting to historical levels, whereas the Loan Performance Monitor indicates that the unsecured personal installment loans have started a pattern of higher losses in successive vintages starting in 2015.
Through-the-cycle losses on credit card products are lower than losses on installment lending products.
Peak delinquencies in credit card ABS are ~8% in a stress scenario. By contrast, three-year unsecured personal loans (such as loans in the seminal CHAI shelf) are typically associated with a ~12% cumulative loss estimate (under a benign base case).
Note: We should expect higher losses on installment loans as non-banks offer access to credit to borrower segments outside of a traditional bank’s higher credit score underwriting box.
Historical credit card performance data is a poor proxy for measuring installment loan performance.
We can also offer the following tentative hypotheses which we look forward to testing with our TransUnion partnership:
Installment loans are lower in the consumer payment priority stack.
Installment loan losses lead performance in other asset classes such as credit card.
Credit card account management strategies (e.g., re-pricing of delinquent loans, credit line decrease tactics, etc.) are powerful levers for managing risk as compared to installment loans where issuers can only set terms at time of approval.
Deeper borrower relationship engagement (as measured by breadth of product penetration) reduces borrower’s credit risk all things being equal.
We identified over 90 companies in the wealth tech space and organized them into 7 main categories based on the services and software they offer, then sub-categorized them by the client group they serve, whether business-to-consumer (B2C), business-to-business (B2B) or both.
Wealthfront has raised approximately $129.5M from investors, including Social Capital, Spark Capital, Greylock Partners, and Index Ventures.
This includes AdvisorEngine which raised a $20M Series A investment from WisdomTree Investments.
Stash, for example, is a goal-based digital investment platform that lets investors contribute as little as $5. Another company, Acorns, rounds up credit and debit card purchases to the nearest dollar then automatically collects and invests that spare change.
This category is exclusively B2B focused and includes Plaid Technologies, a software intermediary that securely connects financial application users with their respective bank accounts.
Click here to see a full list of WealthTech startups.
FinTech continues to see massive investment across the board and according to the annual FinTech Report, global cumulative investment will exceed $150 billion in 2017 alone. At least 80% of financial institutions PwC recently surveyed believe that they are at risk to innovators whether that be mobile banks like Monzo and N26 or more hardcore technological innovations like Lemonade and Algodynamix who want to change FinTech from the inside out with AI and other technologies like Blockchain. Trust is central to all of these emerging propositions whether it is from an emotional perspective because of previous traditional banking issues or a technological one like Blockchain.
Tom Blomfield, CEO, Monzo wants the youth market to come through word of mouth; “We’re focused on people who live their lives on their smartphones. Generally (but certainly not exclusively), these people tend to be younger and more willing to try out new products and services. For these customers, ‘trust’ is earned by making a product or service that demonstrably works well. It’s less about expensive advertising campaigns or branches on the high street… For us, it’s centred around transparency and community. We have a very active community forum.”
Ajay Bhalla, President, Global Enterprise and Security, Mastercard wants to increase trust by removing friction from the tedium of security.
Allianz Invests in Lemonade (PR Newswire), Rated: A
Lemonade, the insurance company powered by artificial intelligence and behavioral economics, today announced a strategic investment by Allianz, the world’s largest insurance company.
U.S. stock exchange group Nasdaq (Nasdaq: NDAQ), announced on Wednesday the launch of its venture investment program, Nasdaq Ventures, which is dedicated to discovering, investing in and partnering with unique fintech companies worldwide. According to the group, this program’s main objective is to identify and collaborate on new technologies and groundbreaking services and solutions which align with its clients’ needs an d the company’s long-term objectives in the global capital markets.
As banking continues to go digital, online innovators and niche players in North America are getting personal by adding social activities to their customer services.
SoFi, short for Social Financial, combines better rates on student loan refinancing with parties for its members (aka borrowers), around the country. It even offers career and financial counselling.
CommonBond offers an online student loan evaluation tool to help prospects determine the best ways to manage their debt. It estimates that members save an average of $14,581 as they repay their student loans, and even more for people like doctors and dentists with advanced degrees and higher debts.
And before you conclude that I am being a reflexive skeptic, Georgetown law professor Adam Levitin weighed in via e-mail:
First, Fintech is a meaningless term. The consumer-facing stuff is mainly (1) gussied up payday lenders (see, e.g., Think Financial and their tribal lending alliances), (2) money transmitters, and (3) BitCoin Bros. The money transmitters are probably harmless enough, but the first group are just trying to escape state usury laws and rollover restrictions, while the third group are grab bag of fools and con artists who think they are much more clever than they actually are. People on the Hill go ga-ga for Fintech without having any real knowledge of what they are and assuming that a digital platform represents a material (and better) transformation of a product.
The Lyric Financial website is remarkably content-free, particularly for specific product features and details of terms and conditions. Apart from the cloying trendiness which it is far too early in the morning to stomach, it’s very hard to find out what the deal really is.
You’re subjected to mandatory binding arbitration, which for a sophisticated product aimed at financially unsophisticated customers is a very bad sign.
It gets worse. In the bowels of their T’s and C’s I found this:
These Terms & Conditions, as well as any claims arising from or related thereto, whether in tort, contract or otherwise, are governed by, and are to be interpreted and enforced in accordance with, the laws of the State of Tennessee, without regard to New York’s conflicts of laws principles.
Which sounds suspect – my take is that they are under Tennessee’s statutes (don’t know if that signifies anything noteworthy, either good or bad) but they don’t want to be liable under an aspect of NY law (which I’m guessing is much better settled and consumer-friendly than TN’s).
Many fintech founders went to business school. Insead’s MBA alumni include Giles Andrews, British founder of peer-to-peer lending platform Zopa, and Taavet Hinrikus, the Estonian-born chief executive of online foreign exchange marketplace TransferWise. Jeff Lynn and Carlos Silva jointly developed the business plan for equity crowdfunding business Seedrs as part of their MBA course at Oxford’s Saïd Business School.
Now, as fintech founders grow their businesses, they are heading back to business schools to find well-qualified staff. About a fifth of hires from the international MBA class at Madrid’s IE Business School last year were made by financial services companies. Fintechs made 5 per cent of those hires, up from none last year.
Eight of Nutmeg’s 78 staff are MBA graduates, including two product managers, its chief marketing officer, chief architect and head engineer.
MBA graduates are unlikely to join fintech companies in the expectation of high salaries. Many,particularly those who have worked in private equity, understand start-ups operate differently, Nutmeg’s Mr Hungerford says.
Biz2Credit announce on Thursday it has formed a partnership with Puerto Rico’s Oriental Bank to help develop a digital lending platform for the bank’s commercial clients. According to the Biz2Credit, Oriental Bank will be considered the first bank in Puerto Rico to engage commercial clients through a digital platform that supports applications for business credit cards, as well as lines of credit, term loans, real estate loans, equipment purchase, and SBA loans.
Elevate Credit, Inc. (“Elevate”), a leading provider of innovative online credit solutions for nonprime consumers, today announced the appointment of Tony Leopold as the General Manager of its Rise product, effective immediately.
BMO Harris Bank today announced a partnership with 1871 – a leading technology and entrepreneurship ecosystem which is currently home to nearly 500 high-growth digital startups in the Merchandise Mart – that will provide a select group of FinTech startups the opportunity to participate in a three-month mentorship program.
ASSETZ Capital hit its fourth anniversary with £240m lent to date and a plan to double that figure over the next 12 months.
The peer-to-peer lending platform, which channels funds to small- and medium-sized enterprises (SMEs) and small property developers, confirmed on Friday that it has returned over £20m of interest to investors since inception, yielding rates ranging between 3.75 and 18 per cent to investors.
OCTOPUS Choice is set to have raised £50m within its first year of operation.
The lender offers average returns of 4.2 per cent based on conservative loans-to-value of up to 70 per cent and currently has 20 loans open for investment.
It pre-funds the loans, which a spokesman said has been given the green light by the Financial Conduct Authority (FCA) – despite several other P2P lenders having to stop the practice in order to gain approval from the City watchdog.
The platform’s loan book shows it has funded loans of as little as £95,000 to more than £5m, secured on properties valued between £175,000 and £8m.
According to a report published by GP Bullhound, TransferWise is one of Europe’s fastest growing unicorns. Also, according to the same report, the UK has the largest number of fastest growing unicorns, which are fast-growth, profitable businesses at 18 with a cumulative value of $39.6 bln.
Despite the clouds of Brexit looming, British tech deals hit a high in 2016 according to GP Bullhound. Whether the growth in the tech sector can be maintained post-Brexit is an interesting question.
Anyone can use robo-advice to manage their finances, whether that involves a £500 initial investment in a Stocks and Shares ISA, or a £100,000 Self Invested Personal Pension (SIPP).
Just last year, the Financial Conduct Authority (FCA) warned that 16 million UK consumers could be trapped in a ‘financial advice gap’ where they need professional investment advice but simply can’t afford it.
There is a £310 billion shortfall in the UK’s pension savings, according to Aviva’s calculations, while Zurich Insurance recently found that 41% of women and 30% of men aged 25 to 39 have nothing saved in their pension fund.
According to a MetLife survey, 45% of retirement savers are so concerned about their dwindling returns that they feel forced to take on more risk – a decision which could have disastrous consequences in the absence of professional financial guidance.
European marketplace lending platform Lendix has opened its platform to Italian SMEs. As of today, Italian businesses may borrow from €30,000 to €2 million directly financed by international investors. Lendix called the operation “a new step towards a true European credit market.”
The report, Global Fintech Report 2017 [PDF], found that 88 percent of global banks are increasingly concerned that they will lose revenue to fintech businesses. The areas major banks feel they will lose out on include payments, fund transfers and personal finance sectors. In response, 82 percent claim that they intend to increase partnerships with financial technology services over the next three to five years.
The survey found that difference in management and culture in addition to regulatory uncertainty and legacy technology limitations, are identified as being significant challenges for financial technology companies and banks. Not only that, but banks are restricted to a system of checks and balances that can hinder the innovation process while fintechs are able to adapt easily due to a lack of bureaucracy.
GP Bullhound, a boutique investment bank focused on tech, on Thursday published an in-depth report looking at the global fintech industry.
The report found 39 fintech companies around the world already valued at $1 billion or over, and found that global venture capital investment into the sector has risen almost fivefold in the past three years to reach $13.6 billion in 2016.
GP Bullhound identified promising businesses in the alternative lending space, data analytics, digital banking, insurance, and asset management. Here are the 17 businesses that made the cut and, in GP Bullhound’s view, could be the next fintech unicorns:
LendInvest — Online mortgage platform
Prodigy Finance — Peer-to-peer university loans for overseas students
ID Finance — Online lending in Russia
Ebury — Financing for small businesses trading overseas
iZettle — Mobile phone linked card readers
WorldRemit — International money transfer on your smartphone
Cardlytics — Analytics of card spending
Kreditech — Digital credit scoring and lending
Taulia — Supply chain finance
PolicyBazaar — Indian insurance marketplace
Collective Health — Tools for employers to manage company health insurance
Atom — Digital-only challenger bank
OakNorth — Digital challenger bank pitched at entrepreneurs
N26 — App-only bank that is hugely popular across Europe
Small business lending activity across the globe is in flux. China saw a whopping 17 percent increase in small business lending in Q1, while U.S. banks are rebooting their efforts to capture SMEs from their alternative rivals. The U.K. and Canada, meanwhile, see their small businesses struggling to find financing.
$3.2 trillion worth of outstanding SME loans in China means lending activity to small businesses in the community has inched up in Q1 2017. New data from the People’s Bank of China released the statistic, which signals a 17 percent increase from a year ago, reports said.
Three out of five London SMEs have been turned away from lenders, according to data released by SME finance LDF. Its research revealed that more than half of London’s SMEs say the jargon associated with financing has turned them off from accessing a loan, and 57.6 percent said they have been turned down from a loan outright.
Fewer than 15 percent of Canada’s small businesses are run by entrepreneurs aged 25 to 39, said CIBC Capital Markets in a new report.
Three minutes could be all it takes for a small business to get financed from NatWest. The bank said last week that it has rolled out a new platform for its SME customers that have been pre-assessed for financing.
A dip of 1.1 in the PayNet Small Business Lending Index may appear to be bad news — signaling a slight decline in Canadian small business lending in February compared to January. But according to PayNet data, medium-sized business lending increased nearly two points in the index, marking the highest level since January 2016 and reflecting separate data from CIBC Capital Markets that signals strong growth among Canada’s SME community.
You recently answered a question regarding the safety of a home loan with an online lender (the debt would be on-sold to another provider and the loan would continue). My question relates to the security of money in an associated offset account. How secure would the money in the offset account be? If the lender goes bust would they be able to take all of our savings in the offset account and then on-sell the full value of the loan?
There was a time when a compelling reason not to go with a cheaper online lender was that, not being authorised deposit-taking institutions, they could not offer offset accounts. Some have since begun splitting out certain repayments in a quasi offset – on occasion, simply like a displayed redraw facility.
But there is a downside: offset accounts set up in this way are not subject to the Financial Claims Scheme or the scheme protecting deposits of up to $250,000 in the event the provider goes bust … only truly separate deposit accounts of locally incorporated authorised deposit-taking institutions (ADIs) are, whether they are offset or not.
Note APRA regulates ADIs (mainly banks, building societies and credit unions); online and other non-bank lenders are subject to the Consumer Credit Code and can be ruled on by the Credit and Investments Ombudsman.
Gerard Brody, chief executive of Consumer Action, says: “Non-bank lenders that offer these products should be warning customers clearly that if they go under, the money in the account won’t be protected by the government guarantee.”
On April 11, Xiaomi Corp., China’s leading mobile phone maker, launched the mobile application Xiaomi Lending in Android market, signaling a strong ambition to expand in the country’s booming Internet Finance sector.
On March 20, Dianrong.com announced to enter into a strategic partnership with Quark Finance, with an aim to launch a new online microcredit platform.
On April 12, Chinese online peer-to-peer lending service Renrendai.com announced that its P2P business would be operated as an independent platform.
National Internet Finance Association of China has announced the first major report to its members regarding the legal and regulatory status of consumer finance. The document, which is echoing to the P2P Finance Association established by the organization in March, is the first to officially classify consumer finance in the eyes of the Chinese government.
On April 8, the first Committee of Internet Finance Law was established in Beijing. The committee held symposiums about the technology innovation and legal protection in Fintech industry, which attracted several representatives of governmental organizations and university professors.
However, what is noteworthy is that P2P as a product does have the ability to make a real difference in the financial inclusion space.
According to “Accenture’s Digital Disruption: The Growth Multiplier” report, digital tech could power $2 trillion of global economic output by 2020. The survey states that the US is leading the race with digital revenue making up a third (33%) of output. In terms of industry sector, Financial Services is the largest contributor in terms of their digital contribution to national and global GDP. In fact the same is true for every country across the world.
P2P lending and borrowing ticks all the boxes in terms of being simple, rates that appeal to both borrowers and lenders and is available to individuals often neglected by banks. As a result, it is finding traction regardless of social strata, age or education.
Our lenders are young with 51% belonging to the age bracket of 30-39 years. About 36 % of the lenders are over 40 and 13 % are below the age of 30.
It is well known in India that it is very difficult to get a loan from a bank if you are an SME. When we talk of financial inclusion, it should not be merely limited to an individual, but also ensuring access to finance for companies of all sizes. P2P has done a great job in lending to SMEs and this is largely possible because of wide range of data sets used to arrive at a lending decision.
Financial institutions are increasingly at risk of losing business to fintech innovators, with 67 per cent already feeling the heat, says a PwC study.
According to PwC’s Global FinTech Report, 67 per cent believe their business is at risk from financial technology (fintech) firms and as many as 95 per cent of incumbents seek to explore fintech partnerships to boost innovations.
In India, 67 per cent financial institutions acknowledge that non-traditional fintech poses a threat to their businesses, lower than the global average of 80 per cent, indicating that the market in India is not yet as matured as it is globally.
Finahub Technology Solutions, a Kerala-based software technology solutions company, is riding a building wave in financial services–the increasing use of Aadhaar-enabled e-KYC (know your customer) by banks and non-banking financial services (NBFC).
The bank or the financial institution is a KYC User Agency, and must first register with the UIDAI. The intermediary, called a KYC Service Agency, transfers the confidential Aadhaar information in an encoded form from the user to the UIDAI, and then back to the bank’s server.
The software solutions provider, in this case Finahub, provides software that connects all the points in the chain.
The software solutions provider, in this case Finahub, provides software that connects all the points in the chain.
The company also offers an Aadhaar e-sign facility as an add-on service. If this option is chosen, once the e-KYC process is complete, the bank’s representative asks the customer to scan his fingerprint a second time.
From 2008 until 2013, the investment value in fintech had increased threefold.
As reported by Tech In Asia, in Indonesia fintech is the business sector with the second largest investment in 2016, after e-commerce. According to Bank Indonesia, there are around 142 local fintech companies in Indonesia. They are categorized into four types: Market Provisioning, which includes CekAja and Cermati; Deposit, Lending, and Capital Raising, which includes UangTeman and Investree; Investment and Risk Management, which includes Bareksa and Stockbit; and Payment, Clearing, and Settlement, which includes Midtrans and Doku. This last category is the one with the most players, comprising around 80 companies.
There are at least 11 fintech startups that received funding from investors during 2016.
The agreement, signed on Friday, provides a framework for the two regulators to share information on market trends and regulatory issues that develop from innovation within their respective markets.
The regulator said increased co-operation between the two regulators will support them to promote innovative practice, and described the agreement as “positive confirmation” of the relationship between ASIC and the OJK.
The emergence of Africa’s FinTech industry, through its software and platforms, has made financial products and services more accessible to consumers in developing countries with low standards of living. It has also made these products and services more affordable by reducing the cost of doing business for financial institutions and other intermediaries.
Africa’s largest economy, Nigeria has experienced 27% growth in mobile money usage between the years of 2011 and 2016. The country’s FinTech industry currently comprises of over 50 companies with investments exceeding $200m in the last two years. Nigeria, according to Irrational Innovations, has developed effective payment and lending platforms, with 37% of FinTech start-ups focused on offering payment and remittances services (such as Paga and Remitta) while 32% offer lending and financing services (like Renmoney and Onefi). The remaining 31% are divided amongst insurance, banking, trading, data, bitcoin and business solutions.
Kenya has also exhibited very promising potential and growth in the mobile money lending operations. In March 2015, financial times reported that $150m worth of loans had been issued to borrowers, following the collaboration between Kenya Commercial Bank and M-Pesa (a mobile money platform). The vast majority of these borrowers are low income earners previously regarded as un-bankable due to their lack of credit history and access to financial services (financial exclusion).
Ghana has also been on the rise in regards to Africa’s FinTech space. As of 2009, about 70% of Ghana’s population were un-banked, and the country had a GDP growth rate of 4%. But between 2011 and 2015, largely due to the utilisation of mobile money, the country recorded a 41% increase in the population’s access to formal financial services, as well as a compounded GDP growth rate of 7.7% between the same periods.
The use of mobile money in Sub-Saharan Africa has increased over the years, with approximately 70% of adults in Kenya, for example, utilising mobile phones for money transactions. African small- to medium-sized businesses (SMEs) account for over 45% and 33% of the continent’s employment and GDP rates respectively.
News Comments Today’s main news: Zopa’s securitization ; SoFi’s new life insurance product; New true lender decision in California. Today’s main analysis: 4 charts about emerging markets; Today’s thought-provoking : Ant Financial is worth more than Goldman Sachs. Are you paying attention yet ? ; Lemonade’s charity model to reduce fraud. United States SoFi is about to […]
SoFi is about to launch Life Insurance. Insurance companies typically have large funds from premiums payment under management waiting for payouts. I would expect that the insurance premiums may be the cheapest capital out there, if regulation accepts it, for lending. The reason why SoFi chose life insurance is likely because the policies have similar or longer maturity than the loans maturity.
Most famous US P2P insurance company, Lemonade launched. Why is this interesting ? First, because SoFi may be the 2nd P2P insurance company in the US. Second because insurance premiums may be a great source of capital for lenders. And 3rd, and most interesting here, they will pay to charity any leftovers in each fund after payouts and the company takes its toll in an effort to reduce fraud. A very interesting approach, isn’t it ? Imagine if Prosper and Lending Club paid to charity any profit left after paying investors their due and taking a set fee that is proportional to the loan performance. Yes it will cap the upside to investors, but it may be able to, in fact, increase the return to investors from the (about) 7% to maybe 9% or higher.
The San Francisco company will soon start selling term life insurance to its base of mostly millennial customers, said people familiar with the matter. SoFi expects to roll out the product, which pays out a benefit if a customer dies during the period of time covered by the plan, before the end of the year or as soon as next month.
SoftBank Group Corp. led a $1 billion investment in the startup last year, valuing it at $4 billion, and it’s now seeking to sell an equity stake of about $500 million to help fund its rapid growth, people familiar with the matter said this month. Last year, the company issued $5 billion in loans and is on pace to double that this year, two of the people said.
SoFi could take a slice of the $159 billion in U.S. life insurance premium revenue generated last year, according to data from the National Association of Insurance Commissioners, a trade group.
People are more likely to purchase policies around certain life events, such as getting married, having children or buying a home, according to a study published last year by Deloitte LLP. SoFi may be well positioned to capitalize on that demographic thanks to its already sizable base of young customers.
Mike Cagney, SoFi’s chief executive officer, chairman, and co-founder, has said his goal is to eventually render banks obsolete.
On September 20, the U.S. District Court for the Central District of California dismissed a class action suit alleging illegally charged usurious interest rates on private student loans in violation of California law. Beechum v. Navient Solutions, Inc.
In doing so, the court rejected the plaintiff’s arguments that the defendants were the de facto “true lenders” of loans made by a national bank under a bank partnership with a non-bank partner.
The plaintiffs, in this case, obtained private student loans using loan applications that identified Stillwater National Bank and Trust Company, a national bank, as the “lender.”
The plaintiffs alleged that the “actual lenders” of the loans were the Student Loan Marketing Association (SLMA) or subsidiaries of the SML Corporation.
Under the agreement, SLMA would originate, underwrite, market and fund loans on which Stillwater would be identified as the lender and which SLMA would then purchase from Stillwater.
The court relied on two California appellate decisions in holding that courts “must look only at the face of a transaction when assessing whether it falls under a statutory exemption from the usury prohibition and not look to the intent of the parties.”
In looking “solely to the face of a transaction” in determining whether the subject loans were exempt from California’s usury prohibition, the court applied an objective standard that, unlike the highly subjective and fact-sensitive “true lender” line of reasoning, would result in consistent outcomes from one case to the next.
While this recent decision does not address the question of whether the claims were preempted by the National Bank Act, the case represents the latest “true lender” case, with a reasoned and measured approach to bank partnerships. In dismissing this case, the court rejected the idea of looking beyond the face of the transaction and into the intentions of the parties.
The Central District of California is the same court that, just three weeks prior, provided the decision in Consumer Financial Protection Bureau v. CashCall, Inc.Unlike the CashCall decision, the court did not use the “predominant economic interest” test for determining “true lender” status and acknowledged the negative effect on the secondary market of looking to the intentions of the parties instead of the transaction on its face.
Lendio, a marketplace for small business loans, today announced a partnership with Supplier Success, LLC, a Detroit-based company focused on providing working capital solutions, and on improving minority and women business owners’ access to capital.
Through this strategic partnership, Lendio and Supplier Success will provide minority and women business owners access to transparent lending rates and respectful business practices. Lendio recently reported facilitating more than $250 million in funding to more than 10,000 small businesses.
By joining forces with Supplier Success, we’re able to expand our capabilities to provide minority business owners easier access to financing,” said Brock Blake, CEO, and co-founder of Lendio.
Lemonade raised $13 million in the biggest seed round of 2015 and, having secured a license as a full-stack insurance carrier by New York State, the firm is now inviting homeowners and renters to sign up online and through its app. Under the peer-to-peer model, Lemonade will ask customers to nominate a charity when they buy a policy.
Claims are paid out of these pools and any funds that are left at the end of the year go to the chosen charity. Policies start at $35 a month for homeowners and $5 for renters, with the entire process digitized, “replacing brokers and bureaucracy with bots and machine learning”. Lemonade takes a flat 20% fee and says that its model not only benefits charities but also customers and the company itself by reducing the incentive for fraud.
When Facebook Messenger launched five (!) years ago this month, it was not immediately clear why or what it might do — messages already existed within Facebook, everyone was texting madly already, so why launch a whole new app?
A Forrester report in August warned banks off bots. Today’s bots are not ready for regulated industries that demand a certain level of user experience.
But the warning came too late — banks embraced bots, and a whole host of bots was wheeled out at Finovate. Perhaps most significantly, Kore (from the guys that brought you Kony) introduced its Smart Bot platform for banks to build their own bots. (In response to Kore’s demo a few fintech watchers at the show tweeted various versions of, “Uh oh.”)
Hardest hit will be independent broker-dealers, who stand to lose $4 billion in revenue, or 22%, of the industry’s total, according to the study, which was released in August. IBDs are also expected to see a decline of $350 billion in client assets, or 11% of the industry’s total.
MoneyLion is headquartered in New York with offices in San Francisco and Kuala Lumpur, Malaysia.
MoneyLion’s free mobile app will help Malaysian consumers gain a 360-degree view of their finances through a suite of analytics tools that track spending and saving activity across multiple bank accounts.
Following last month’s launch of MogulREIT I, RealtyMogul.com’s first crowdfunded real estate investment trust, the company announced today that it had closed five transactions in markets across the country. Four of the five deals were equity investments into multifamily properties, while the fifth marked the commercial real estate platform’s largest 1031-qualified transaction to date.
Africa has long been touted as the continent whose specific geographical challenges and the widespread poverty of many of its inhabitants have enabled it to skip over traditional banking infrastructures into the waiting arms of cost-efficient fintech solutions.
The statistics, for those who are rooting for a cashless, bankless Africa, are encouraging. The following charts, sourced from a recent report on financial inclusion in emerging markets published by the institute of international finance, demonstrate that the economy is Africa is starting to pick up, along with mobile phone ownership.
Mobile money accounts aren’t exactly threatening the banks, even in developing countries.
According to an analysis from the Global Findex, 2.2 billion, or 95 percent, of the total 2.3 billion adults in low- and middle-income countries with a financial account held the account at a financial institution in 2014.
Moreover, contrary to popular belief, financial incumbents are major drivers of economic inclusion in developing countries.
Banks have a number of reasons aside from profitability to expand their activities in emerging markets, such as CSR and investment. Whatever the cause, the way forward for banks in developing countries will probably start with cellphones, smart or otherwise.
The first securitisation of loans issued by leading consumer lending platform Zopa – “Marketplace Originated Consumer Assets 2016-1 plc” (“Moca 2016-1”) – has been provisionally rated by Moody’s. The loans that make up the £138m portfolio were funded in the first instance by P2P Global Investments, the £870m investment trust.
Deutsche Bank was heavily involved in Funding Circle‘s inaugural securitisation and is now acting as the sole arranger and lead manager for the Zopa deal.
Moody’s has assigned a rating of (P)Aa3 to the £114m senior tranche of Class A Notes. The Class B Notes, of which there are £7.5m, were rated (P)A2. The £7.5m of Class C Notes were assigned a rating of (P)Baa2. The £9m of Class D notes were rated (P)Ba3. There are also £12m of Class Z Notes which will not be rated. All Notes are due October 2024. Target Servicing Limited has been appointed as the back-up servicer of the portfolio.
We now learn that Fitch has conferred a landmark rating on the Zopa deal. Fitch rated the Class A Notes “AA-(EXP)”. This is the highest rating to have ever been assigned to a marketplace lending transaction by Fitch. There has been over $10bn in global securitisation issuance by the marketplace lending sector to date. Fitch declined to rate Funding Circle‘s SBOLT 2016-1 earlier this year.
This will be the UK marketplace lending sector’s second securitisation to date. Funding Circle’s SBOLT 2016-1, a £130m transaction, received an Aa3 rating from Moody’s in April. The Class A Notes, which were sold to KfW, came with a guarantee from the European Investment Fund attached.
The securitised portfolio as of 31 August 2016 consists of unsecured consumer loans to UK private borrowers. According to the borrower but not verified by the platform provider these loans are mainly used to finance cars (36.2%), for debt consolidation (34.0%) and for home improvements (22.3%). The portfolio consists of 27,137 contracts with a weighted average seasoning of 10 months and a maximum loan term of five years. Most borrowers are employed full-time (89.9%) and their average outstanding loan balance with Zopa is GBP 5,500.
According to Moody’s, the transaction benefits from: (i) a granular portfolio originated through the Zopa marketplace lending platform, (ii) a static structure that does not allow to buy additional receivables after closing, (iii) continuous portfolio amortization from day one, (iv) an independent cash manager and liquidity provided through two reserve funds, (v) an appointed back-up servicer at closing, and (vi) credit enhancement provided through subordination of the notes, reserve funds, and excess spread.
Moody’s notes that the transaction may be negatively impacted by: (i) misalignment of interest between the platform provider Zopa and investors who finance the loans, (ii) the fact that Zopa does not retain a direct economic interest in the securitized portfolio, (iii) the limited historical data that does not cover a full economic cycle, (iv) a higher fraud risk due to the online origination process, (v) an unrated servicer with limited financial strength, and (vi) the regulatory uncertainty due to the still developing regulation for the marketplace lending segment.
Moody’s determined the portfolio lifetime expected defaults of 7.0%, expected recoveries of 5% and Aaa portfolio credit enhancement (“PCE”) of 35.0% related to the loan portfolio. The expected defaults and recoveries capture our expectations of performance considering the current economic outlook, while the PCE captures the loss we expect the portfolio to suffer in the event of a severe recession scenario. Expected defaults and PCE are parameters used by Moody’s to calibrate its lognormal portfolio default distribution curve and to associate a probability with each potential future default scenario in the ABSROM cash flow model to rate Consumer ABS.
The principal methodology used in these ratings was “Moody’s Approach to Rating Consumer Loan-Backed ABS” published in September 2015. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.
In rating consumer loan ABS, default rate and recovery rate are two key inputs that determine the transaction cash flows in the cash flow model. Parameter sensitivities for this transaction have been tested in the following manner: Moody’s tested six scenarios derived from a combination of mean default rate: 7.0% (base case), 7.5% (base case + 0.5%), 8.0% (base case + 1.0%) and recovery rate: 5.0% (base case), 0% (base case – 5%).
BurningNight Group, a city center bar chain, successfully raised over £500,000 within the first week of its crowdfunding campaign on UK’s peer-to-peer lending platform, Crowdstacker. The company is currently offering 7% p.a. interest to those investing in the £3.5 million raise.
According to Crowdstacker, approximately half the funds raised so far have been invested through the Innovative Finance ISA.
Last month, the two firms announced their partnership as an industry first and will see LendInvest pre-qualify lots at LOT11 auctions which fall within the lender’s criteria. Lendinvest, the world’s first online lending business for the property, has announced today that details of the properties it has pre-qualified ahead of the next LOT11 auction are now live.
The partnership begins with LOT11’s quarterly auction on 27 September.
HarmoneyCorp Ltd. (www.harmoney.co.nz) – Harmoney became the first FMA-licensed P2P lending platform in mid-2014. The platform has helped match borrowers and lenders for more than $307 million in loans.
Lending Crowd Ltd. (www.lendingcrowd.co.nz) – The platform can be used by either individuals or businesses. It was the fourth P2P lending platform to obtain a license in New Zealand.
Lendme Ltd. (www.lendme.co.nz) – LendMe, New Zealand’s second authorized P2P lender, got licensed in April 2015 and commenced operations just five months later.
Pledgeme Ltd. (www.pledgeme.co.nz) –PledgeMe is a platform that combines three different crowdfunding models in one place – project (aka reward), equity, and lending (aka P2P lending) crowdfunding.
Squirrel Money Ltd. (www.squirrelmoney.co.nz) – Squirrel Money is part of the Squirrel Group, which also provides mortgage brokerage services. The platform helps people borrow funds to finance everyday needs such as renovations or buying a car, or events such as marriage or starting a family. In August 2016, the platform launched New Zealand’s first P2P secondary market, which allows loans to be on-sold to other investors.
Leung estimates that most of Ant Financial’s value is in Alipay, China’s most popular online payment service, with a projected worth of $50 billion. Its micro loans service is probably worth another $8 billion, while Ant’s wealth management unit is given a valuation of $7 billion. The rest of Ant Financial’s valuation comes from investments and cash on hand, outstripping Goldman’s roughly $70 billion market value as of Monday.
The company could grow to $100 billion in two years, as the current valuation doesn’t include growth brought in by insurance, credit scoring, and cloud computing, Leung said.
Ant Financial is considering an initial public offering in Hong Kong in the first half of next year, people familiar with the matter said last month.
Regulators have unveiled a series of measures to head off signs of rising risks in its fast-growing P2P market, including borrowing limits and forcing P2P platforms to use third-party banks as custodians of investor funds. The regulator’s announcement knocked 22 per cent off the New York-listed shares of Chinese P2P lender Yirendai Ltd, while Chinese stocks fell to a two-week low, weighed by banking shares on concerns over the crackdown on riskier lending practices.
But many larger P2P companies including Lufax, Yirendai, PPDAI and Dianrong.com say they already comply with many of the new requirements, so could benefit from the restrictions.
The volume of P2P loans surged more than 20 times to 656.8 billion yuan ($US98.7 billion) at the end of July from just 30.9 billion yuan in January 2014, according to industry data provider Wangdaizhijia.
Nomura estimates that could reach 880 billion yuan by the end of 2016 and 1.5 trillion yuan by the end of 2018.
Several lenders already segregate investors’ funds into custodial accounts with banks to prevent fraud, while for companies like Lufax, a typical unsecured loan would be in the 100,000 yuan to 200,000 yuan range, below the government cap.