Thursday April 18 2019, Weekly News Digest

digital banking

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 […]

The post Thursday April 18 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

China

Other

News Summary

United States

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.

LendIt Fintech USA 2019 Slide Presentations Now Live (LendIt Fintech), Rated: AAA

Keynote Presentations

Advancements in Credit, Underwriting and Identity

Small Business Lending Innovation

Niche Lending: Looking for Yield

Are Crypto-Tracking Stocks Viable Alternatives to a Bitcoin ETF? (Finance Magnates), Rated: AAA

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.

Source: @CMEGroup on Twitter

Nearly 1 in 4 Millennial Homebuyers Want to Buy a Home Before They’re Married (LendingTree), Rated: AAA

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 Doubles Year Over Year Revenue (PR Newswire), Rated: A

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

Real estate startup Reali acquires online lender Lenda, expands into mortgages (Housingwire), Rated: A

Reali announced Wednesday that it acquired Lenda, an online mortgage lender that launched in 2013 and currently operates in 12 states.

And with the acquisition, Reali is launching Reali Loans, a mortgage lending operation of its own.

Avant to pay $ 3.85M to settle allegations of deceiving borrowers (American Banker), Rated: A

The online lender Avant will pay $3.85 million to settle Federal Trade Commission allegations that it misled customers who were seeking to repay their loans.

The FTC said Monday that its commissioners approved the settlement by a 5-0 vote.

A Max Levchin-Backed Startup Raises $ 19 Million To Tackle Online Returns (Forbes), Rated: A

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.

Small businesses turning far more often to online lenders (American Banker), Rated: A

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 Redefines Choice at Checkout with Acquisition of Vyze (Business Wire), Rated: A

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 Launches Private Student Loans (PR Newswire), Rated: A

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.

Banks turn to a former rival to jump-start digital platforms (American Banker), Rated: A

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.

Digital Lending Companies Considering Stricter Credit Approvals (Investing News), Rated: A

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.

7 Smart Ways To Invest $ 1,000 (Forbes), Rated: A

2. Lend to those in need and earn some interest.

Lending Club is one such peer-to-peer lending service I tried out, and I found it to be very easy to use and reliable (see my 

Nearly 60% Of Millennials Look To Lottery For Retirement, Survey Says (FA-Mag), Rated: A

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.

Direct Lending Investments Had Over 950 Investors (deBanked), Rated: A

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.

No-income, no-asset mortgages are back (at one lender, at least) (Housingwire), Rated: A

And now, NINA loans are back, as 360 Mortgage Group announced this week that it is launching a no-income, no-asset mortgage pilot program.

Some online lenders charge 900% interest and ignore Virginia law. So borrowers are suing. (Pilot Online), Rated: A

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 Franchise Opens in Phoenix to Expand Access to Capital for Local Businesses (Lendio), Rated: B

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.

BlueVine Partners with Ocrolus for Faster Processing of Financing Applications (Ocrolus), Rated: B

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.

United Kingdom

Peer-to-peer lender Funding Circle’s loans under management soar to record highs (City A.M.), Rated: AAA

Loans under management grew 44 per cent to £3.4bn compared to £2.3bn in the first quarter of the previous year, and revenue growth soared by 40 per cent.

The firm reported that loan originations were up 23 per cent from £525m in the first quarter of 2018 to £644m between January and March this year.

Salary Finance raises $ 32.8m, hires SoFi co-founder for US push (Finextra), Rated: AAA

Salary Finance, a UK-based startup focused on salary-linked savings and loans for employees, has raised $32.8 million and hired SoFi co-founder Dan Macklin for a US expansion.

Welendus closes funding round as it prepares for India expansion (P2P Finance News), Rated: A

WELENDUS, the peer-to-peer lender focused on short-term loans, has closed its last seed funding round, as it prepares to expand into India.

City watchdog readies new rules for cryptoassets and P2P (FN London), Rated: B

The Financial Conduct Authority is prepping new rules for cryptoassets and peer-to-peer lending, two rapidly growing areas of fintech.

China

China’s P2P lending platform Dianrong raising $ 100m (Deal Street Asia), Rated: AAA

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.

National Rules on Online Lending Still Far From Sight (Caixin Global), Rated: A

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.

Large P2P lenders ordered to ready disclosures for regulators (technode), Rated: A

Large platforms with loan balances of more than RMB 5 billion ($750 million) must register with the information disclosure database by the end of May.

European Union

Tech unicorn Klarna could quickly be prepared to contemplate bourse itemizing (Infosurhoy), Rated: AAA

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.

Klarna Expands Relationship with Acne Studios (Business Wire), Rated: B

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.

Linked Finance marks record quarter (Tech Central), Rated: AAA

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.

Total Online Alternative Finance Grows 36% Topping €10 Billion (Crowdfund Insider), Rated: AAA

According to CCAF, in 2017 the alternative finance market grew by 36% to € 10.44  billion – dominated by the UK.

Excluding the UK, European online alternative finance industry grew 63% from €2.06 billion to €3.37 billion in 2017.

The top three European markets following the UK, include:

  • France at €661 million
  • Germany at €595 million
  • The Netherlands at €280 million
  • The Nordic countries collectively generated €449 million, making them the third-largest regional market in Europe following France and Germany.
Source: Cambridge Centre for Alternative Finance

Read the full report here.

Top 5 Real Estate Stocks To Invest In (Prague Post), Rated: A

But before I share these top real estate crowdfunding companies, I would first want to tell you about the characteristics which a best performing real estate should have. Well, they must have:

  • Pricing power
  • High usage rates
  • Regular dividend
International

Challenger banks overtake traditional banks in customer satisfaction, in 4 charts (Tearsheet), Rated: AAA

Challenger banks have leapfrogged to the forefront in overall customer satisfaction, according to a new study from FIS.

63 percent of direct bank customers report being “extremely satisfied”, compared to 52 percent of credit union customers and just 19 percent of customers of the top 50 global banks.

73 percent of all consumer interactions with banks in the US are done digitally.

Nearly two-thirds (65 percent) of younger millennials (between ages of 18 and 26) reported that they have not used any branches at all in the prior month.

Source: Tearsheet
Australia

April holidays to negatively impact 1 in 4 SMEs (My Business), Rated: AAA

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.

LET’S TALK: THE BIG 4 BANKS (Dynamic Business), Rated: A

Leo Tyndall, CEO and Founder Marketlend

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 BarnesPrincipal 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.

India

P2P firms seek RBI relaxation on lending limit (Business Standard), Rated: AAA

A little more than a year after the (RBI) came out with guidelines for peer-to-peer (P2P) lending companies to convert into non-banking 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 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 to raise the limit to Rs one crore, according to sources in the industry.

Fintech startups spot a lucrative space in ‘open banking’ (Economic Times), Rated: A

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.
Asia

Riding the Korea FinTech Wave (Finextra), Rated: AAA

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.

Cambodia, Singapore In X-Border FinTech Pact (Cambodia Daily), Rated: A

Deputy Managing Director of MAS Jacqueline Loh said the relationship demonstrates a FinTech that may extend to other countries in the ASEAN region.

MENA

A ROADMAP FOR FINTECH FIRMS ENTERING FAST-GROWING EMERGING MARKETS (LendIt Fintech), Rated: AAA

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.

Download the report here.

Canada

TORONTO FINTECH, LENDIFIED, RAISES $ 15 MILLION CAD SERIES A (Betakit), Rated: AAA

Lendified, a Toronto-based FinTech, announced today that it has closed a $15 million CAD Series A funding round, in order to continue its growth within Canada.

The round was co-led by WD Capital Markets and INFOR Financial, and saw funding from CI Financial Corp., Windsor Private Capital, FirePower Capital, and a group of investors including Glenn Murphy, founder of FIS Holdings and former CEO of Gap Inc. and Shoppers Drug Mart.

Latin America

How sky-high interest rates are choking economic growth in Brazil (The Brazilian Report), Rated: AAA


Brazilian Credit Card Interest Rates: Enough to Choke a Horse or Risk Based Pricing? (Payments Journal), Rated: A

Bank accounts for consumers is still relatively low, with only 68%, compared to 79% in China.  Debit cards, however, outpaced credit by 2:1.

While you may see a slight uplift in the U.S. and U.K markets, consider this:

  • Annual consumer rates for credit cards topped 270 percent for unpaid balances.
  • As Brazil suffered its worst economic crisis in history, the banks raised credit card rates to a stunning 500 percent per annum on unpaid bills.
  • With Brazilians relying on credit an paying for everything from everyday goods to luxury items in installments, massive interest rates are being embedded into these payments.

Authors:

George Popescu
Allen Taylor

The post Thursday April 18 2019, Weekly News Digest appeared first on Lending Times.

Monday February 12 2018, Daily News Digest

credit immigrants

News Comments Today’s main news: SoFi loan performance suffers, earnings projections missed. Ant Financial to pursue equity fundraising at potential $100B valuation. Elevate publishes FY 2017 results. Symphony, OpenFin join forces. Openwrks, Zopa, TrueLayer get into open banking. Rupeek raises $6.8M. Today’s main analysis: MPL securitizations comparison (SoFi 2018-A, MFT 2018-1, SCLP 2018-1). Today’s thought-provoking articles: Silicon Valley investors fund […]

credit immigrants

News Comments

United States

United Kingdom

China

Australia

India

APAC

News Summary

United States

SoFi Reports Disappointing Earnings as Loan Performance Suffers (WSJ), Rated: AAA

Customers of online lender Social Finance Inc. are missing their loan payments at an unexpectedly high rate, a misstep for a company that has boasted that its focus on high-earning individuals would yield better borrowers.

The privately held San Francisco-based company said it missed its internal fourth-quarter earnings projections, due in part to a markdown in the “value of certain personal loan assets due to lower-than-expected credit performance,” according to a letter to investors that was reviewed by The Wall Street Journal. The company also cited increased hiring costs and expenses related to recent management changes.

You won’t believe how much grads from these top business schools rake in (Moneyish), Rated: A

SoFi examined 60,000 student loan refinancing applications to determine which MBA programs churn out the highest earners, and which produce grads who are mired in student debt.

According to SoFi, these are the top 10 business schools, ranked by average salary three years after graduation:

1. University of Pennsylvania (Wharton School of Business): $224,034
2. Columbia University: $189,295
3. Stanford University: $186,534
4. Harvard University: $184,463
5. University of California, Berkeley: $171,270
6. Dartmouth College: $169,498
7. Northwestern University: $167,770
8. Cornell University: $167,544
9. University of Chicago: $166,215
10. Massachusetts Institute of Technology: $165,666

These 10 programs have the best salary-to-debt ratio in the US:

1. University of Wisconsin-Madison: Avg. salary = $122,532; avg. debt = $52,568
2. Brigham Young University: Avg. salary = $114,559; avg. debt = $50,224
3. Harvard University: Avg. salary = $184,463; avg. debt = $83,337
4. Stanford University: Avg. salary = $186,534; avg. debt = $85,443
5. Villanova University: Avg. salary = $136,464; avg. debt = $63,014
6. University of Pittsburgh: Avg. salary = $149,157; avg. debt = $71,471
7. Loyola University, Maryland: Avg. salary = $122,915; avg. debt = $59,029
8. North Carolina State University: Avg. salary = $92,184; avg. debt = $46,140
9. University of Florida: Avg. salary = $110,942; avg. debt = $56,035
10. University of Houston: Avg. salary = $105,476; avg. debt = $54,308

Elevate Announces Full Year 2017 Results (Crowdfund Insider), Rated: AAA

Elevate’s  Fourth Quarter 2017 Financial Highlights are the following:
  • Fourth quarter GAAP net loss due to federal tax law charge, but fourth consecutive quarter of net income on an adjusted basis: Fourth quarter 2017 net loss totaled $12.2 million, or $(0.29) per diluted share, reflecting a one-time $12.5 million charge associated with the change in the federal tax law resulting from the tax reform in 2017. Excluding the impact from the tax law change, net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share, versus a net loss of $4.4 million, or $(0.34) per diluted share, for the fourth quarter of 2016. The net loss for full-year 2017 totaled $6.9 million, or $(0.20) per diluted share. Excluding the impact of the federal tax law, net income for full year 2017 would have been $5.5 million, or $0.16 per diluted share, compared to a net loss of $22.4 million, or $(1.74) per diluted share, for full-year 2016.
  • 16% year-over-year revenue growth: Revenues for the fourth quarter of 2017 increased 14.5% from the fourth quarter of 2016 and were up 16.0% for full-year 2017 versus 2016. Revenues totaled $193.4 million in the fourth quarter of 2017 compared to $169.0 million for the prior-year period. Full-year 2017 revenues totaled $673.1 million compared to $580.4 million for full-year 2016.
  • More than 28% year-over-year growth in combined loans receivable – principal: Combined loans receivable – principal totaled $618.4 million, a 28.5% increase from $481.2 million for the prior-year period. The Rise installment loan and Elastic line of credit combined loans receivable – principal balances as of December 31, 2017 were up 19.6% and 47.4% over the prior year-end balances, respectively.
  • Adjusted EBITDA up 45% compared to prior year: 2017 Adjusted EBITDA totaled $87.5 million, up 44.7% from $60.4 million in 2016. Adjusted EBITDA margin was 13% for both the fourth quarter of 2017 and full-year 2017.
  • The ending combined loan loss reserve as a percentage of combined loans receivable was 14.3%, lower than the 16.1% reported for the prior-year period due to the improved credit quality and the continued maturation of the loan portfolio. Charge-offs as a percentage of originations for full-year 2017 continued to trend below previous years at less than 25% of principal originations.
  • The total number of new customers acquired during the fourth quarter of 2017 was approximately 95,000 with an average customer acquisition cost of $231, below the targeted range of $250-$300. This represented a 34.6% increase over the approximately 70,000 new customers acquired in the fourth quarter of 2016.

Equity Market Volatility, GS Dialing Up M&A (PeerIQ), Rated: AAA

Volatility made an abrupt return to capital markets after a nearly 18 month hiatus. Equity markets dropped almost 10% from their peaks, as investors focused on rising US treasury yields. 10-year yields touched 2.88% – nearly a four-year high. Corporate bonds (CDX.IG spreads) widened 5bps this week to 60bps, while high-yield widened 16bps to 353bps.

US consumer credit grew by $18.4 Bn in December 2017, at an annualized growth rate of 7.7%. Revolving credit card debt increased by $5.1 Bn to $1.03 Tn, the highest on record. Consumer spending has boosted US GDP, although the increasing cost of leverage and rising rates could create a drag on growth.

GS M&A Accelerating

Source: PeerIQ

 

Source: PeerIQ

Taking a cut of student’s future paychecks has Silicon Valley investors funding education (Quartz), Rated: AAA

The model is attracting a new generation of startups, as well as investors, eager to bail out American students drowning in $1.3 trillion in student debt. The Brookings Institute estimates as much as 40% of students who entered college in the early 2000s may default on their loans by 2023, based on historical trends.

One of the first firms to enter the US market was the Chilean firm Lumni founded in 2002 (although it only came to the US in 2009) followed by 13th Avenue (2009), Cumulus Funding (2011), Upstart (2012), Pave (2012), and Vemo (2015). Not all are still signing ISAs, but current interest seems to be based on growing demand.

Are income-sharing arrangements a good deal for students?

The federal government already provides more than $200 billion (paywall) in grants, loans, and work-study assistance for students’ post-secondary education each year. Private lenders hand out about $8 billion in student loans annually, estimates the Consumer Financial Protection Bureau. Parents and family contribute still more.

Almost 60% of college graduates in the US carry student debt, and about 57% of Americans regard it as a major problem, reports the Harvard Kennedy School of Government. Yet many are not even confident their college educations are still the golden ticket they once were. A 2017 survey of 32,000 college students revealed only one-third felt prepared to enter the job market, while only half said their major will lead to a good job.

Four-year universities like Purdue are using them as a way to show their commitment to students as much as reduce their financial burden. The school’s program, Back a Boiler (an abbreviation of the nickname for the student body known as Boilermakers), is offering 175 students almost $2 million in ISA funding. Graduates with high income never pay more than 2.5 times their original ISA amount, while those earning less than $20,000 a year see their payments go to $0.

MissionU, a one-year training program in data analytics and business intelligence, offers students a blended online (80%) and in-person curriculum (20%), and work experience. It charges no tuition. After graduates earn at least $50,000, they pay back 15% of their income for the first three years.

 

2 startups are joining forces — and together they could pose a threat to Bloomberg (Business Insider), Rated: AAA

Symphony, a messaging service that has gained some traction among Wall Street firms, has been integrated into OpenFin, an operating system built for financial-services, the two companies announced Thursday.

OpenFin hosts more than a hundred applications on its platform, and the integration means Symphony will be “interoperable” with those apps, the same way social media apps on your phone are able to talk with one another.

In total, Symphony has 230,000 users across 200 firms, whereas OpenFin can be found on more than 100,000 desktops across the Street.Symphony, a unicorn, announced a $63 million fundraise in May, bringing the total amount the company has raised to $234 million. OpenFin finished a $15 million round of venture funding backed by JPMorgan in February 2017. It has raised $22 million in total funding.

For new immigrants, buying a home or getting a cellphone is complicated and expensive. Even if they have financial identities and wealth in their home countries, they have no credit history in the U.S.

It’s a challenge for millions of people, and a handful of fintechs, including Nova Credit, CreditStacks, and Petal, see an opportunity to help with some creative solutions.

Others, like Deserve (formerly SelfScore) and Petal have been hoping to woo immigrants and other thin files with their own credit products, while still others like eCredable are crunching alternative data to help people build up their credit history.

And in January, CreditStacks announced a credit card product aimed at immigrant professionals who want to have a U.S. credit card in hand when they arrive in America.

San Francisco mortgage fintech Lenda expects growth spurt in 2018 (San Francisco Business Times), Rate: A

San Francisco mortgage fintech Lenda, which offers mortgages faster and at lower cost than traditional rivals, expects growth to accelerate this year as it expands into a dozen states and puts to work the $5.25 million it raised in its first venture round.

New Retail P2P Investment: The Worthy Bond (P2P Lending Expert), Rated: A

When I wrote my book on P2P Lending for the retail investor, P2P Investing 101 (the paperback version here), that came out in November, there were only 7 options for retail investors.  Those options were Lending Club and Prosper, as well as 5 options that take advantage of the adjustment to SEC Regulation A known as Reg A+.

We now have an 8th investment option.  The Worthy Bond, which uses Reg A+ and comes from Worthy Financial. By using Reg A+, the Worthy Bond is available to retail investors as a proxy savings account within the p2p lending landscape.

Prices up for January, Subaru 0-percent financing (Kelley Blue Book), Rated: A

While the average transaction price (ATP) for light vehicles hit $36,270 in January, a whopping $1,360 or 3.9-percent gain over a year earlier, the ATP declined from December’s record, dropping $486 or 1.3 percent month over month.

Subaru 0-percent financing

Subaru, which has been setting sales records, typically runs tight inventories and keeps a close rein on incentives. However, through the rest of February it is offering 0-percent financing for 63 months on select models along with a couple of enticing fleet deals.

The 0-percent deal for 63 months is being extended on 2017/18 Legacy models, 2017/18 Outbacks and 2017 Foresters. On the 2018 Legacy, there’s also a $185 per month lease for three years with $2,595 down. The 2018 Outback is being offered on a 3-year lease deal for $239 per month with $1,739 down, while the 2018 Forester can be leased for 36 months at just $219 with $1,719 down.

Interest rates climb

According to Bankrate.com, the average 60-month new car loan is averaging 4.51 percent interest, a two-basis point increase over rates being offered at the end of November. Shorter 48-month loans are slightly cheaper, averaging 4.44 percent, again, two basis points higher than two months ago. On the used car side of the ledger, rates are closing in on the 5 percent level, averaging 4.97 percent on 3-year loans. That’s up from an average of 4.78 percent at the end of November.

Eyeing robo advisors, IBDs to launch new client portals (FinancialPlanning), Rated: A

Independent broker-dealers are rebuilding their online presences for a digital investing era, ushering in new client portals and offering automated investing for smaller accounts.

Advisors have pushed the firms to mimic the speed and look of digital investment platforms. Digital advice clients of all kinds will soar 844% to more than 17 million by 2021, according to a September study by Aite Group. In a nod to incumbents’ services, robos have also started offering human advisors to clients.

Narmi integrates top fintech companies into digital banking platform for credit unions (CUInsight), Rated: A

Narmi, a financial technology company, showcases two of its remarkable fintech integrations – Billshark and Lemonade.

Billshark – Helping Reduce Monthly Bills for Millions of Americans

Billshark helps consumers reduce monthly bills on cable, satellite TV, wireless phone, internet and many other categories. There are currently approximately 375 million monthly bills in America and roughly 80% can be negotiated. The average amount saved per bill is $280-300.

Lemonade – Reinventing Insurance Through Artificial Intelligence

Lemonade provides a mobile-first, artificial intelligence-infused way to obtain a home insurance policy. The company’s focus is on homeowners and renters insurance, and policies start at $25 a month and $5 a month, respectively.

When fintech lite is the right small-business lending strategy (American Banker), Rated: A

Adding a community touch to automation has proved a profitable lending strategy for one bank.

Marquette Bank in Chicago has been able to digitize its lending processes and improve its credit memo creation time by upwards of 25% using technology from the cloud-based loan origination software firm Baker Hill.

Small-business lending has long been a staple of community banking, but in recent years customers have turned to online lenders and other fintechs for credit, in large part due to the speed and digital aspect of the experience.

Zelle’s next phase takes shape at BNY Mellon (American Banker), Rated: A

The banks behind the Zelle network had more in mind than P-to-P payments between consumers, and BNY Mellon is beginning the network’s evolution by targeting the business payments market.

Zelle will help support tokenized digital payments for institutional and corporate clients in a market that is notoriously resistant to automation. BNY Mellon hopes corporates will see the Zelle network’s ability to increase control over cash flow through near-instant processing.

Webster Bank Offers Customers An Automated Digital Investment Platform (PR Newswire), Rated: A

Webster Investments, a division of Webster Bank, N.A., now offers Guided Wealth Portfolios (GWP), an advisor-enhanced, digital investment platform designed to enhance customer experience by providing an additional option to manage their investments. The online investment platform was designed as an innovative option for clients seeking a technology-enabled investment solution combined with the opportunity to have a relationship with a financial advisor.

We’re partnering with SURE to bring you Small Business Insurance (Inc Authority Email), Rated: B

Small Business Insurance is an all-in-one policy that protects you and your growing business from critical risks. Your policy will cover:

  •   General liability
    • Get up to $2 Million of coverage in legal and litigation issues tied to 3rd party claims of property damage, and bodily injury and associated medical costs.
  •   Business personal property
    • Replace lost or damaged property owned by your business, such as computers, furniture, and machinery.
  •   Lost business income
    • Receive up to $250,000 in lost income if your business has to close due to a covered loss.
  •   And other coverage
    • Includes coverage for data breaches, litigious employees, non-business automobiles, and more.
United Kingdom

Openwrks, Zopa and TrueLayer get into Open Banking groove (Finextra), Rated: AAA

The UK’s major banks are being shown a clean pair of heels by non-bank competitors in the Open Banking space, with new announcements by TrueLayer in tandem with Zopa, and Openwrks demonstrating the determination of third party providers to open up access to consumer account data.

Zopa has worked with TrueLayer to create an income verification product which removes the need to manually upload documents to verify income – replacing it with Open Banking data.
Separately, Openwrks – which likewise enables providers of consumer and small business products and services to access consumer’s financial data – has become the first third party provider to successfully connect to all of the banks currently providing functional APIs (Lloyds, RBS, AIB, HSBC and Danske).

Elliott takes majority stake in new Welsh online bank (The Times), Rated: A

China

China’s Ant plans equity fundraising at potential $ 100 billion valuation – sources (Reuters), Rated: AAA

China’s Ant Financial Services Group is planning to raise up to $5 billion in fresh equity that could value the online payments giant at more than $100 billion, people familiar with the move told Reuters.

The new round should start with a valuation of between $80 billion to $100 billion, the people said.

China Fintech Watchdog to Step Up ICO Oversight (CoinDesk), Rated: A

A self-regulatory association that draws support from China’s banking and securities sectors is vowing to increase its oversight over cryptocurrency and initial coin offerings (ICO) in 2018.

In its annual meeting held on Feb. 9, China’s National Internet Finance Association (NIFA) revealed that while it has put special efforts into overseeing the sector in 2017, it expects this work to become a regular part of its 2018 agenda.
Australia

Loans.com.au slashes home loan rates for owner-occupiers, investors (mozo), Rated: AAA

Online lender, loans.com.au has today slashed rates for both owner-occupiers and investors on certain home loans, and is now offering some of the lowest mortgage rates in the market.

One of the changes was to cut the Essentials Variable 80 rate for owner-occupiers looking to make principal and interest repayments by 12 basis points, bringing it to a red hot 3.52% – the lowest rate for a loan of its kind in the Mozo database.

The rate on loans.com.au’s Offset Variable 80 for owner-occupiers making principal and interest repayments was also slashed by 12 basis points, bringing it down to a competitive 3.60%.

India

Online gold loan platform Rupeek gets $ 6.8 mn from Accel, Sequoia (VC Circle), Rated: AAA

Bengaluru-based Rupeek, which operates an online marketplace for gold loans, has raised $6.83 million (Rs 44 crore) in a fresh funding round led by Accel Partners.

Eduvanz Financing raises funds from Blinc Advisors (livemint), Rated: A

Eduvanz Financing Pvt. Ltd, an education technology start-up that provides loans for skill development to students, has raised $500,000 in a round of funding led by Blinc Advisors, a venture capital fund, a senior executive at the start-up said.

Fintech start-up EarlySalary is making emergency loans more affordable (Business-Standard), Rated: A

Neha Kumari needed a new phone urgently after her old one was damaged during a Saturday night party. To add to her difficulties, it was the beginning of the last week of the month and the salary day was 10 days away. Missing client calls for more than a couple of days was out of the question and the weekend was expensive anyway.

Neha, who did not have a credit card, could have borrowed from friends, but most of them were as broke as she was then. And borrowing from the family was ruled out. The last time she had borrowed Rs 10,000 from a friend to book emergency tickets was three …

Preventive measures (The Hindu Business Line), Rated: A

This is with reference to reports on market volatility. Regulators must ensure that this trend does not end up promoting alternative investment avenues of an uncertain nature. Investor interests demand that risk-based P2P lending via online/social marketplaces be regulated. Peer lending has significantly grown and enabled borrowers with a sub-par credit history. P2P lending is highly prone to performance risks on account of a higher probability of a borrower-default, credit risks owing to poor loan-sanctioning decisions & lack of fund-monitoring post disbursal, cash drag risks because of a larger borrower-population than the available lenders, platform Risks driven by borrower insolvency or frauds or technology risks/cybersecurity breaches and market risks owing to interest rate fluctuations and unemployment risks leading to non-payments.

What’s Driving India’s Fintech Boom? (Wharton), Rated: A

With more than 200 million active users in India — the largest anywhere in the world — WhatsApp is expected to drive large volumes on peer-to-peer (P2P) payments and also become a popular platform for merchant payments. India is slated to be the first country globally to get the payments facility from WhatsApp.

Other global giants, too, are zeroing in on this space. For instance, Google has already launched its payments app Google Tez (“Tez” in Hindi means fast), while Samsung has launched Samsung Pay and Amazon has introduced Amazon Pay.

Paytm, India’s largest online payments and mobile wallet company, has invested Rs. 5,000 crore ($786 million) in mobile payments to date.

This was 13% less than $14.6 billion in 2015. On the other hand, fintech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015.

Fintech Will Change How We Bank (Business-Standard), Rated: A

In the not too distant future, there may come a time, where we cease to interact with the as we know it. which were monolithic organization who created the products, sold it directly and owned the customers are being slowly ceding ground to so called new breed companies chipping away at the edges. While regulations and strict KYC/AML regulations still enable to continue to be in business, the power they once wielded is diminishing. As Niti Aayog Chairman, Amitabh Kant said “Debit cards, credit cards and ATMs might lose relevance in the next four years”.

Peer to peer lending picks pace (Telengana Today), Rated: B

According to the latest annual report of RBI, during Q1 of FY18, as against negative incremental rise in bank credit, the non-bank sources gained space in lending. The total flow of funds to the commercial sector from non-bank sources during the period increased to Rs 1,16,600 crore while the formal banking system trailed behind.

In terms of financial assets, NBFCs recorded a healthy growth — a compound annual growth rate (CAGR) of 19% in the past few years — comprising 13% of the total credit and are expected to reach nearly 18% by 2018-19.

APAC

Asia-Pacific Fintech Market to reach US$ 72 billion by 2020, finds Frost & Sullivan (Business Insider), Rated: AAA

Active support and initiatives by financial regulators such as the Monetary Authority of Singapore, Bank Negara Malaysia and Bank Indonesia has enabled the Asia-Pacific Fintech ecosystem to grow significantly in 2017.

The Fintech industry in the Asia-Pacific region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion.

Future of Cashless Payments in Singapore

According to Ms Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast. There are many supportive regional and local regulations and initiatives that will help Singapore move towards a cashless Society.

Fintech in Singapore’s SME Landscape

In the wake of the global Fintech boom, disruptive market innovations have forced a radical shift of business models in the Financial Services industry, notably within the P2P Lending segment. Frost & Sullivan believes that leading banks and financial institutions are driven to be lean and agile on multiple fronts, including but not limited to new digital services, elevated customer experiences and innovative technological solutions.

Online loan providers have recently begun targeting young adults here in their 20s and 30s in Korea in the name of “providing pocket money.” Other peer-to-peer lending platforms promote their services as an investment fund or shared wallet to relax young people’s vigilance toward the money lenders.

Blockchain spending surges in China and Asia (Shine), Rated: B

Blockchain spending in Asia Pacific excluding Japan will jump 91 percent in the five years until 2021, thanks to applications in finance and supply chain industries, said IDC in a report today.

China will see a five-year annual growth rate of 95 percent, compared with about 81 percent growth worldwide, said IDC in the report, the first blockchain report released by the company.

For example, PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said in January it would invest 1 billion yuan (US$156 million) within three years to set up a new research institute.

Authors:

George Popescu
Allen Taylor

Tuesday September 14 2017, Daily News Digest

Goldman Sachs

News Comments Today’s main news: Equifax CEO vows to make changes in USA Today op-ed. dv01 closes Series A with big name investors. SmartBiz Loans surpasses $500M in SBA loan funding. stREITwise rolls out first REIT, focused on institutional-quality office buildings. Klarna completes BillPay acquisition. Wish Finance intros SME lending on blockchain in Singapore. Today’s main analysis: What millennials would give […]

Goldman Sachs

News Comments

United States

United Kingdom

European Union

International

India

Asia

News Summary

United States

Equifax CEO: ‘We will make changes’ (USA Today), Rated: AAA

Last Thursday evening we announced a cybersecurity breach potentially impacting 143 million U.S. consumers. It was a painful announcement because of the concern and frustration this incident has created for so many consumers. We apologize to everyone affected. This is the most humbling moment in our 118-year history.

Equifax Security first discovered the intrusion on July 29. Understandably, many people are questioning why it took six weeks to report the incident to the public. Shortly after discovering the intrusion, we engaged a leading cybersecurity firm to conduct an investigation.

At the time, we thought the intrusion was limited. The team, working with Equifax Security personnel, devoted thousands of hours during the following weeks to investigate.

dv01 Closes $ 5.5M Series A Led by OCA Ventures (PR Newswire), Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, today announced a $5.5M Series A round, led by OCA Ventures. Ribbit Capital, Illuminate Financial, and CreditEase Fintech Investment Fund also participated in the round, joining existing dv01 investors Leucadia National Corporation and Pivot Investment Partners.

OCA advisor Jack Lavin has joined dv01’s board, and will work alongside existing board members from Jefferies LLC, a subsidiary of Leucadia National Corporation, and Quantum Strategic Partners Ltd., a private investment vehicle managed by Soros Fund Management LLC.

SmartBiz Loans Surpasses $ 500 Million in Funded SBA Loans (BusinessWire), Rated: AAA

SmartBiz Loans, the first SBA loan marketplace and bank-enabling technology platform, today announced that it has surpassed half a billion dollars in funded SBA loans. This milestone comes on the back of other recent successes for SmartBiz, including the addition of a fifth bank to its software platform and ranking as the number one facilitator of traditional SBA 7(a) loans under $350,000 for the 2016 fiscal year, over Wells Fargo and other major banks according to SBA lending data released in November, reflecting its 2016 fiscal year.

The company’s first-of-its-kind software platform automates a bank’s underwriting to cut time and costs by up to 90 percent for processing SBA loans under $350,000. By automating the underwriting process, the platform helps banks get low-cost capital into the hands of small business owners in a matter of weeks instead of months. This is vitally important to any busy, small business owner who needs capital.

The $500 million in funded SBA loans reflects not only continued growth for SmartBiz, but also for the entire market of bank-originated, small-sized business loans. Post-2008, banks reduced the number of smaller business loans they made because they couldn’t process them efficiently enough to make a profit.

Survey Reveals What Millennials Would Rather Deal With Than Paying Student Loans (Credible), Rated: AAA

The number of people with student loan debt is staggering. According to the latest numbers from the U.S. Department of Education, 42.3 million Americans are paying back $1.33 trillion in federal student loan debt. Lenders are collecting payments on another $64 billion in private student loans. A survey of borrowers by the Federal Reserve puts the median student loan debt balance at $17,000, with monthly payments of $222. Student loan debt can be suffocating for those who are struggling to make payments each month.

  • A staggering 49.8% of all respondents said they would give up their right to vote in the next two presidential elections in order to have their debt forgiven
  • Ride-sharing services like Uber or Lyft don’t seem to matter to millennials quite as much as some of the other options in the survey. According to the results, 43.6% were willing to give up these services forever in exchange for debt forgiveness
  • Interestingly, 42.4% of respondents would also give up traveling outside of the country for 5 years, while only 27.0% said they would be willing to move in with their parents for 5 years
  • Millennials seem to value texting more than the other options – only 13.2% reported being willing to give up texting and any mobile messaging equivalent for the next year in exchange for having their debt forgiven
  • Only 8.2% of respondents chose to select none of the above and said they would rather keep paying off their student debt

Working to Expose Silicon Valley’s Dark Side (Again) (The New York Times), Rated: AAA

Even before the ink was dry on an article Nathaniel wrote last year about an online lending start-up, Social Finance, and its unusual success — headlined “SoFi, an Online Lender, Is Looking for a Relationship” — he began hearing from people who painted a very different picture of what life looked like inside the company.

But in the intervening months, tales of sexual harassment and wrongdoing in Silicon Valley took center stage, in part because of Katie’s own reporting, which exposed a dark side to an industry known for growth, wealth and fantastic employee perks. Companies like ZenefitsTheranos and Uber made it clear that many venture capitalists and the companies they funded were incentivized to focus on growth at any cost, with good governance and corporate culture getting short shrift.

We are already getting more emails and phone calls that point to where the story might go from here — both with SoFi and the issue of bad behavior in Silicon Valley more broadly. These issues aren’t going away anytime soon.

stREITwise Announces Regulation A+ Offering to Lead New Era of Real Estate Crowdfunding (PR Newswire), Rated: AAA

stREITwise is introducing a new way to invest in real estate online commission-free by allowing direct investment on its website. Today they announced a Regulation A+ initial public offering for their first Real Estate Investment Trust (REIT) – 1st stREIT Office – which seeks to provide a diversified portfolio of institutional-quality office buildings with a revolutionary low-cost structure. Because it’s filed as a Regulation A+ offering, 1st stREIT Office will allow accredited and non-accredited investors alike the opportunity to participate.

This announcement comes shortly after 1st stREIT Office successfully raised over $20 million in a private offering to acquire the Panera Bread HQ Property in St. Louis, MO. At 99% occupancy in three separate buildings, the Panera Bread HQ Property includes over 290,000 square feet of Class “A” office space that is leased to many large tenants, including Panera Bread (World HQ), New Balance (Regional HQ), Wells Fargo, Edward Jones, Nationwide Insurance, and others.

With the Panera Bread HQ Property acquisition, 1st stREIT Office has been able to make 10% annualized dividend distributions to its existing investors. The company seeks to acquire more high-quality, stabilized office buildings in undervalued markets across the United States.

While Non-Traded REITs typically charge upfront fees of 10-15%1, stREITwise caps its upfront fee at just 3% by cutting out the middleman, eliminating financial advisor commissions, and passing the savings on to investors.

Goldman Banks on Lending to Grow (WSJ), Rated: A

The New York firm said Tuesday that loans to wealthy clients, companies and consumers would contribute almost half the $5 billion in revenue growth it is projecting by 2020.

Harvey Schwartz, a top lieutenant to Goldman Chief Executive Lloyd Blankfein, on Tuesday said persistently low volatility in financial markets meant that the third quarter would be a “challenging” one in terms of trading. J.P. Morgan Chase JPM 0.29% & Co. CEO James Dimon and executives at Citigroup Inc. and Bank of America Corp. projected trading declines of between 15% and 20% for the quarter.

Goldman on Tuesday laid out a detailed plan to grow revenue, which has remained flat since the financial crisis. Its target of $5 billion in new revenue by 2020 hinges on businesses that have been footnotes for most of the firm’s 147-year history: lending, asset management and tending to the mundane needs of corporate clients and money managers.

Lending to wealthy clients, companies and consumers could add $2 billion of new revenue over the next three years, said Mr. Schwartz at a global financial-services conference hosted by Barclays PLC.

Source: The Wall Street Journal

Lenda to expand in more states, invest in software platform (Mortgage Professional America), Rated: A

Online lender Lenda has announced plans to expand its reach to more states along with increased investment in its software platform, which offers a complete refinancing or mortgage origination transaction online.

New Pave’s Decentralized Global Credit Profile (GCP) Unlocks Access to Credit for Millions of Americans (BusinessWire), Rated: A

Pave, Inc announces an initial coin offering (“ICO”), scheduled for mid-October to fund Pave’s Global Credit Profile project, which could provide a ground-breaking solution to the problems associated with credit reporting worldwide. Based on its deep knowledge of lending to individuals with limited credit history (“thin files”), Pave’s GCP will give consumers and credit institutions access to richer and more accurate personal financial data than traditional credit bureaus provide, while significantly improving data security. GCP has the potential to unlock access to credit for millions of people — such as millennials and immigrants — who are marginalized by the current financial system.

While the centralized systems of companies such as Experian, Equifax and TransUnion continue to perform a valuable service by acting as a reliable source of information for third parties, they are plagued with systemic problems including a lack of transparency and control over personal data, vulnerability to fraud and data theft and unnecessary administrative costs. Using blockchain and related technologies, Pave’s GCP will decentralize the storage and ownership of an individual’s financial data by placing the user in control. The GCP thereby removes the reliance on a singular record keeper making security breaches infinitely less likely.

DigiFi Announces Launch of Next-Generation Digital Loan Origination System (PR Newswire), Rated: A

DigiFi, an enterprise financial technology company, announced today the launch of its cloud-based digital loan origination system (“LOS”) for banks, credit unions and consumer finance companies.  DigiFi’s next-generation LOS enables the automated online delivery of multiple consumer lending products through a single platform, driving better customer experiences and lower operating costs.

DigiFi’s proprietary technology was built over three years to digitize the consumer lending process, offering consumers immediate feedback and funding from any device at any time.  The platform supports multiple products including Personal Loans, Credit Cards, Personal Line of Credit, and Student Loan Refinancing, and DigiFi is adding additional products, including Home Equity, Auto and Mortgages.

The platform is highly configurable, empowering banks, credit unions and consumer finance companies to utilize their own risk models, documents and procedures.

Meet two fintech innovators showcasing their work at Finovate (Biz Journals), Rated: A

Two entrepreneurs who jumped up on the stage Tuesday were Lisa Shields and Ellison Anne Williams.

Shields, a longtime purveyor of payment technology, is the founder and former CEO of Vancouver-based Hyperwallet Systems Inc. After handing the reigns of that company over to Brent Warrington in 2015, she went on to launch Fi.Span, a provider of cloud-based platforms for commercial banks.

In the second half of the podcast, data mining expert Ellison Anne Williams also addressed the predominantly male demographic of her field. The effect it has on her approach is next to none, she said.

As the CEO and founder of data securitization startup Enveil, Williams brings more than a decade of experience in large scale analytics, information security and privacy.

U.S. banking regulator not ready for fintech charter applications (Reuters), Rated: A

The U.S. banking regulator, the Acting Comptroller of the Currency, said on Wednesday that he is not ready to accept applications from financial technology companies seeking a special purpose federal charter.

His comments underscore the broader difficulties faced by regulators globally as they attempt to keep up with dramatic changes in banking industry brought about by the increasing use of digital technologies which threaten to undermine traditional financial services businesses.

Samsung is working with banks to roll out retail pop-ups (Tearsheet), Rated: A

Banks may soon be experimenting with a new way to engage with customers: retail pop-ups.

Samsung’s head of sales for financial services, Reginald Jones, told Tearsheet that the company is in talks with its financial services customers about rolling out retail pop-ups “sooner than in a year.”

Those could be in a variety of formats, he said: a bus promoting a certain bank that drives a number of customers to an NFL game; a university campus presence where banks look to attract customers as they become of banking age; a shopping center that normally just has ATMs where banks could roll up for a weekend service to attract these potential new customers. Samsung, the consumer electronics giant, provides the devices that change how bank employees conduct business — to better influence the customer outcome.

Samsung has been working with bank branches for the last five years, incorporating its display screens into retail spaces as they take old signage and posters and move them to digital platforms. In some branches, greeters and bankers are also using Samsung tablets, he said.

How Fintech Is Reshaping the Small Loan Market (GuruFocus), Rated: A

Fintech companies around the world have moved swiftly to fill the gap left by mainstream lending institutions due to constraints related to interest rates and profit margins. Big lenders in the market are under constant pressure to increase profit margins, which limits the size of their addressable market, especially when trying to woo small and medium-sized business borrowers. Their interest rates are often high as they seek to remain competitive in the larger spectrum of the financial services industry.

One of the largest beneficiaries is LendingClub Corp. (NYSE:LC), which has seen its revenue increase 1,278% in under five years, from just over $37 million to over $500 million as of June 30 on a trailing 12-month basis.

Brazilian-based fintech companies are paying investors about 22% returns per year while borrowers are charged interest rates from as low as 1.7% to as high as 6.3% per month based on their credit profiles.

Fintech entrepreneur launches digital advice platform for retirees (Smartbrief), Rated: B

Matt Fellowes has launched United Income, an automated retirement-planning tool for retirees.

Federal Reserve Bank Of Philadelphia To Hold Conference On Blockchain’s Impact On Regulatory Policy (ETHNews), Rated: B

The Federal Reserve Bank of Philadelphia announced that it will hold a FinTech seminar in conjunction with the Journal of Economics and Business on September 28-29, 2017, focused on consumers, banking, and regulatory policy.

Aptly named FinTech: The Impact on Consumers, Banking, and Regulatory Policy, the conference will feature keynote speeches and research from industry experts on consumer protection; roles of alternative information; FinTech lending; blockchain-based currencies; machine learning and artificial intelligence; the new FinTech landscape; and marketplace lending and crowdfunding. The conference will also focus on the disruptive factors of blockchain technology and to what measure they continue to shape regulatory policies.

Erik A. Falk Joins Star Mountain Capital as Senior Advisory Board Member (BusinessWire), Rated: B

Star Mountain Capital, LLC (“Star Mountain”), a specialized investment manager focused exclusively on the large and underserved U.S. lower middle-market, is pleased to announce that industry veteran Erik A. Falk has joined the firm as a strategic personal investor and Senior Advisor.

Mr. Falk is a senior executive focused on strategic initiatives at Magnetar, a $13+ billion alternative asset management firm. Until early 2017, Mr. Falk oversaw the private funds as a Head of Private Credit within KKR’s (Kohlberg Kravis Roberts & Co.) $35 billion credit business and served on the Private Credit Investment Committee, the Leveraged Credit Investment Committee and the Portfolio Management Committee. He also oversaw KKR’s investment in Star Mountain. Before joining KKR in 2008, Mr. Falk spent eight years at Deutsche Bank where he held several roles including founding the Special Situations Group and Co-Heading the Global Securitized Products Group. Mr. Falk began his career in the Asset-Backed Securitizations group at Credit Suisse First Boston where he knew Star Mountain’s Chairman, Brian Finn, whose prior roles include Co-President of Credit Suisse First Boston and Head of Credit Suisse Alternatives (with approximately $100 billion in AUM at the time).

United Kingdom

UK Inflation Rate Jumps More Than Expected in August (Kirklin News), Rated: AAA

The UK’s annual inflation rate climbed to a higher-than-expected 2.9% in August, matching a four-year high reached in May, the Office for National Statistics (ONS) said on Tuesday, two days ahead of a key meeting by members of the Bank of England’s monetary policy committee.

The consumer prices Index (CPI) climbed from 2.6% in July, the ONS said on Tuesday. The August reading matched the highest since April 2012 and beat the 2.8% average forecast by economists polled by investing.com.

The annual core inflation rate, which strips out volatile food and fuel costs, also jumped to 2.7% from 2.4% in July, topping the 2.5% expectation by economists in an investing.com survey.

Chapters Financial to enter AI arena with chatbot technology (FT Adviser), Rated: A

Advisory firms need to do more to attract the next generation of clients or risk selling themselves short, financial adviser Keith Churchouse has said.

His firm Chapters Financial is developing a chatbot platform for its online advice business Saidso.

The chatbot will be aimed at the generation of clients who are more comfortable with changing and emerging technology. They are usually 45 years old or younger; the typical age group of customers who already use the Saidso website, which has been operational for the past two years.

UK regulator sounds alarm over initial coin offerings (Financial Times), Rated: A

The UK City watchdog has warned investors of the “high risk, speculative” nature of initial coin offerings as their popularity booms, becoming the latest global regulator to sound the alarm.

The Financial Conduct Authority warned that ICOs are mostly unregulated and potentially fraudulent, while investors may be provided with “unbalanced, incomplete or misleading” documents by the ICO issuer.

Even if an ICO is not fraudulent, the regulator said, investors still had “a good chance” of losing their entire investment.

10 Tips for New P2P Lending Investors – How to start (P2P-Banking), Rated: A

  1. Advantages of platforms with a track record  I prefer platforms that have a track record and have operated at least 1 or two years.
  2. Loan term and loan types – There are three main types: consumer loans, SME loans and property secured loans. SME loans has further subtypes like invoice financing. It can be a good idea to diversify over different loan types and different platforms.
  3. Diversification – Diversification can be achieved faster on platforms with very many comparable consumer loans, and will take longer on property platforms which launch only few large property loans.
  4. Autoinvest – Before you use the autoinvest I suggest to spend the first days/weeks making manual investments on the primary market to get a better understanding of the loans on offer.
  5. Secondary market – Before you use the secondary market, I suggest you first spend some time investing on the primary market to deepen your understanding of how the platform works.
  6. Cash drag – Investors only earn interest on money invested into loans. Cash deposited, but not (yet) invested will earn no interest.
  7. Unsecured vs. secured loans – Consumer loans listed on platforms are mostly unsecured (exception some car loans). SME loans offer no or or some type of asset as security and property loans typically offer a first or second charge on the property as security. Usually it is preferable to lend with some kind of security offered.
  8. Recovery process – A certain percentage of loans will default. This is normal in p2plending and nothing to worry about as long as this percentage stays in a healthy relationship to the interest offered for the risk.
  9. Tax – If the country you live in does not allow you to offset default losses against interest income earned, it may be a good idea to invest into loans with lower interest rates, but also lower default rates, to achieve higher returns after tax than with a more risky strategy.
  10. Final tip – Start slow. P2P lending has somewhat of a learning curve.
European Union

Klarna Announces Completion of Acquisition of BillPay (Klarna), Rated: AAA

Klarna Bank AB (publ) today announces that the acquisition of German online payments company BillPay has been completed. This will strengthen Klarna’s position as one of the leading e-commerce payment providers in Europe and further accelerate its growth in Germany, Austria, Switzerland and The Netherlands.

VISA reportedly owns almost one percent of Klarna (Business Insider), Rated: A

However, it wasn’t clear how much money had been invested. Now Swedish tech site Di Digital has revealed that Visa took part in Klarna’s $75 million euro acquisition of Billpay, a German competitor, in February.

Out of the $57 million euro share emission that went to financing the deal, Visa paid roughly a third, or $22 million.

Goldmint Is Unlocking Liquidity in Gold to Allow P2P Lending (Cointtelegraph), Rated: A

GoldMint is a comprehensive P2P solution that allows businesses like pawnshops to raise credit.

Recently, a Time article revealed that 28 percent of college educated millennials between the ages of 23-55 have accessed short-term lending from pawnshops and payday loan providers in the last five years.

Dmitry has had an eye on the pawnshop segment since 2015, when he noticed that while the pawnshop business was immensely profitable, it was void of technological progress. He worked with a team of four people in 2016 to address the four main issues that faced the pawnshop businesses:

  • realization of unclaimed pledges
  • wired payments
  • funding of pawnshops (lending)
  • the introduction of unified standards (consolidation)

GoldMint is holding an initial coin offering (ICO) in less than a week’s time starting Sept. 20, 2017. They have published a detailed whitepaper which lays the details of their crowdsale.

Interview with Stanislav Kulechov: 14 Facts About ETHLend (Coinspeaker), Rated: A

4. How did you start building ETHLend?

We started by developing the Smart Contract. It was ideal to begin with the token escrow contract, which allows the collateral to be held securely in the Smart Contract until the borrower repays the loan. If the borrower does not repay, the lender can claim the tokens and realize any losses. We made many interesting findings during the development and wrote the white paper after Alpha DApp. We believe this is a big advantage for us since practice does not always follow theory. Also, delivering an Alpha for the Ethereum main-net is important proof-of-concept wise.

7. Do you think the system will be more popular among individuals or companies?

Hard to tell since at the moment individuals are more keen on using cryptocurrencies. ETHLend has received a lot of interest from miners who want to expand their mining facilities or purchase more rigs. There are also growing tendencies for companies to use blockchain technology. We have received inquiries about pledging some of the ICO tokens for financing pre-sale marketing efforts. What I would like to see is that merchants who use cryptocurrencies would adopt ETHLend for financing and increasing their business.

8. What is the difference between the type of crediting ETHLend offers and the scheme “have sold the possessed currency-have bought ETH for raised money”.

Good point. Since our main financing instrument is pledging digital tokens, it provides opportunity to receive ETH when one does not want to sell digital tokens. Such might be the case when one has a token portfolio, investment funds like TaaS or ICONOMI. Funds or individuals could easily keep the possession of the token positions and still get more liquidity for growing their portfolio. On the other hand, a blockchain startup might keep more tokens at their possession when pledging the token before an ICO for a loan and repaying the loan after an ICO. A strategy like that leaves more tokens for the startup to recruit more talent.

11. How much time do you think you need to launch the project in case you obtain sufficient financing?

ETHLend has an extensive roadmap that stretches to the late 2019. At the moment we are still developing the ETHLend DApp. However, we need further resources to comply with the features set in the roadmap. We are also looking to add more developers and financial experts to the team. The basic collateral based lending is available on ETHLend but there are lot of functions that require more time to develop, such as being able to borrow Bitcoin or to use the price feed for the collateral value. We aim to  have a fully sophisticated DApp by the end of 2019.

14. The last tricky question: is lending good or bad?

Lending is an instrument that should be used in the correct circumstances and for the correct funding goals. Lending could be compared to other products – when consumed wrongly, they might be bad and vice versa.

A new Form of Real Estate Investment for Estonia: Crowdfunding (PropertyShowrooms), Rated: A

Igors Puntuss, co-founder of Bulkestate.com, explained that as wages rose rapidly and with it “population welfare”, meaning disposable income and savings, people living in Baltic countries began to look for safe and profitable ways to invest their spare cash. But banks are not able to provide smaller investors with attractive interest rates on deposits and, as the market of real estate crowdfunding is far from maturing, there are opportunities to be had.

He added that high reliability does not equate to low profit, when it comes to real estate crowdfunding. The website offers an annual interest rate of 14% at a low threshold for those who are risk adverse, and the minimum investment required is just 50.00 euros at Bulkestate.com.

Starling and Zopa CEOs to speak at LendIt Europe (Specialist Banking), Rated: B

Anne Boden of Starling Bank and Zopa’s Jaidev Janardana will be speaking at LendIt Europe, which brings together fintech experts from across the continent.

The conference takes place on 9-10th October at the InterContinental London – the O2, where more than 120 speakers will take to the stage with experts from banking, lending, technology and regulation.

Anne will be speaking on LendIt’s keynote panel, which will look at the digitalisation of finance and how customer expectations are changing.

International

How Banks Are Driving API-First Strategies (PYMNTS), Rated: A

The latest edition of the PYMNTS.com B2B API Tracker™, a FI.SPAN collaboration, examines how APIs are helping both banks and smaller businesses address their fears and embark on new ventures in new markets.

Recent research indicates merchant anxiety over non-payments is widespread. According to a study by Payoneer, 75 percent of small- and medium-sized businesses (SMBs) have backed away from global trade over concerns of not getting paid for their services.

India

OpenTap aims to lend ₹100 cr. by Dec. 2018 (The Hindu), Rated: A

OpenTap, a fintech firm that enables peer-to-peer lending for middle and low income borrowers, aims to facilitate ₹100 crore in short term loans by the end of 2018.

The Chennai-based fintech firm provides alternate financial services to blue-collared workers, which is two times of net salary. As on date, it has provided credit worth ₹3 crore to 1,200 borrowers.

Asia

Wish Finance Introduces Blockchain-Based Lending for SMEs, Schedules ICO (Crowdfunding), Rated: AAA

Wish Finance, based in Singapore, has announced the launch of its blockchain-based lending platform for small and medium businesses. The company has reportedly issued 100+ loans in 2017 during a soft launch with every loan successfully repaid and 0% default rate. Wish Finance plans to keep its entire portfolio on the public blockchain, anonymized, so investors can audit its performance at any given time.

Wish Finance is offering merchant cash advances and business loans with interest rates based on the company’s real cash flow, not assets. Wish Finance said it has direct access to POS terminals infrastructure to see real time financial transactions, which it combines with the local market data for scoring. Wish says it issues a loan in 24 hours, and then deducts a few percents of the merchant customer’s’ payments to automatically repay the loan. In this way, repayments are made seamless and effortless for SMEs. Each loan is said to be insured from customer’s bankruptcy.

Trade finance gap narrows amid minimal fintech impact (Global Trade Review), Rated: A

The global trade finance gap has fallen from US$1.6tn to US$1.5tn, but the impact of fintech has been minimal to date.

But despite the industry’s zeal for digitisation, just 20% of firms reporting have used digital finance platforms. In line with global trends, peer-to-peer lending is the most-used fintech model (23%).

74% of rejected trade finance transactions are for SME and midcap applicants, with 29% of these being rejected over KYC concerns. Last year’s survey showed that 56% of SME trade finance proposals are rejected, compared with 10% of multinationals.

Fintech firm SixCap responds to complaints about its investing strategy game (CNBC), Rated: A

Singapore-based financial technology company Six Capital Groupresponded Thursday to complaints from users who say they’re unable to cash out from the firm’s web-based strategy game.

The game, called Tagg Switch, works similarly to how trading currencies works: Players purchase one of six types of so-called “Nodes” that represent a different currency — either the U.S. dollar, Singapore dollar, British pound, euro, yen or the Australian dollar.

But a report from Singapore’s The Straits Times last week said users have complained online about facing problems cashing out of the game. However, the report added that there weren’t yet any complaints registered with the Consumers Association of Singapore, a consumer protection group.

Authors:

George Popescu
Allen Taylor

Tuesday September 12 2017, Daily News Digest

Lending Club

News Comments Today’s main news: SoFi CEO Mike Cagney to step down by end of year. Goldman Sachs invests 100M GBP in Neyber. PayJoy raises $6M investment. Groundfloor announces $100M expansion of lending capital with Direct Access Capital. Zopa customers battle loan sale delays.  Former Ezubao lead gets life sentence. Lenda raises $5.25M to fund expansion Today’s main analysis: LendingClub launches next generation […]

Lending Club

News Comments

United States

United Kingdom

China

International

Australia

India

News Summary

United States

SoFi Chief Executive to Step Down (The New York Times), Rated: AAA

Mike Cagney, the co-founder and chief executive of Social Finance, is to step down from the online lender by the end of the year.

  • Several former employees said that Mr. Cagney had inappropriate relationships with SoFi employees.
  • In 2012, Mr. Cagney sent sexually explicit text messages to an executive assistant named Laura Munoz. The company and its board agreed to pay Ms. Munoz a $75,000 settlement.
  • A former employee of SoFi filed a lawsuit in August saying that he had witnessed female employees being harassed by managers and was fired after he reported it. The lawsuit did not initially name Mr. Cagney, but he was added later.
  • Mr. Cagney may have been overaggressive in expanding the business, skirting risk controls and compliance rules.
  • The company said it had raised $90 million in debt financing for one of the loan products that it sold to investors in 2012, but that financing never took place. SoFi eventually bought the loans back from investors.
  • Employees who spoke to The Wall Street Journal also described a culture in which they felt pressure to work extra hours for fear of being fired. These employees also described angry executives breaking furniture and throwing telephones.

SoFi Reportedly Comprehends The Meaning Of “Sexual Harassment” As Well As Everyone Else Comprehends The Meaning Of “Fintech” (Dealbreaker), Rated: A

It used to be that financial services firms would respond to accusations of sexual harassment inside their company with denials, followed by investigations and inevitably a spate of firings and public apologies.

In Silicon Valley, the whole thing seems to be strangely flipped. Harassment is so seemingly rampant in tech that companies are on the offense, attempting to prove a negative and paint themselves as the rare “Woke” tech firm. More often than not, the whole thing unravels.

According to the WSJ, the online lender SoFi is denying widespread sexual harassment inside the company by willfully misunderstanding what sexual harassment is.

So like a Fantasy Football thing, or was this another example of a touching-based-yet-non-sexual dispute? It seems like nothing at SoFi is ever sexual, which is hard to believe at a place that offers such great rates!!!

SoFi Announces ‘SoFi Accelerate’, A Career Retreat For Young Professionals (PR Newswire), Rated: AAA

SoFi today announced its first-ever ‘SoFi Accelerate’ event series for ambitious millennials looking to break away, look beyond, and get ahead in their careers. SoFi Accelerate is a series of one-day retreats taking place just outside ChicagoNew York City, and San Francisco that will give event attendees the time and space to think big—as well as the tools and structures to make their career goals happen.

Launching in September, the retreats will consist of creative visioning and leadership exercises, career strategy sessions with SoFi career advisors, and inspirational talks from unconventional thinkers like criminal justice reform advocate Adam FossStanford professor and co-founder of Electronic Arts Dave Evans, and Gretchen Rubin, author of New York Times bestseller The Happiness Project, among others on how to set and achieve professional goals.

The event also includes transportation to and from the retreat venues, complimentary breakfast and lunch, and a concluding cocktail reception. Both members and non-members can learn more about the program here and sign up via links to each city: www.sofi.com/blog/introducing-accelerate-sofis-first-ever-career-retreat/

UNCONVENTIONAL VENUES
SoFi Accelerate will offer its programming in unconventional retreat settings to encourage expansive views and open minds. These venues include the Chicago Botanic Garden (Glencoe, IL), Grounds for Sculpture (Hamilton Township, NJ), and Montalvo Arts Center (Saratoga, CA).

UNEXPECTED SPEAKERS
A panel of experts from unexpected (i.e. outside of the financial planning realm) and highly relevant disciplines discuss how to create and execute on life, career, and financial goals. These speakers will include:

Chicago – September 24, 2017

  • Ryan Holiday: Writer, media strategist, entrepreneur, and editor-at-large for the New York Observer
  • Adam Foss: Criminal justice reform advocate; co-founder of Roxbury CHOICE Program, a collaborative effort between defendants, the court, the probation department, and the D.A. to recast probation as a transformative experience rather than a punitive process

San Francisco – October 1, 2017

  • Dave Evans: Former tech executive at Apple and Electronic Arts, Stanford d. School professor, and co-author of the New York Times Bestseller Designing Your Life
  • Irene Au: Operating partner at venture capital firm Khosla Ventures, former head of User Experience at Google

New York City – October 15, 2017

  • Gretchen RubinNew York Times bestselling author of The Happiness Project and Happier at Home, and most recently, Better Than Before
  • Coss Marte: Ex-drug dealer, ex-convict, and founder of ConBody, a “prison-style” fitness boot camp with a loyal following of 10,000+ clients that employs formerly incarcerated individuals, giving ex-convicts stability and breaking down barriers between them and the general population

Lending Club Announces Launch of Next Generation Credit Model (Lend Academy), Rated: AAA

Today, Lending Club announced a new credit model in an email to investors. According to the email, this is the most advanced and predictive credit model ever used on the Lending Club platform. This is Lending Club’s fifth generation model that began to go in effect on September 8, 2017 and will roll out to all borrowers in the coming days.

The company outlines that the model further leverages machine learning along with the 10 years of data on 1.5 million borrowers they have accumulated. The new model is 24% better at differentiating the likelihood of a borrower charging off compared to the fourth generation model. It also includes more data points, and uses new custom attributes that Lending Club states are predictive in assessing risk.

  • Instead of using aggregates, the new model uses very granular views of credit data which discern individual borrower actions vs. a simple aggregate (e.g. a borrower’s credit card balance per credit card vs. his total credit card balance).
  • The model makes more extensive use of trended data, which provides insight into a borrower’s credit behavior over time rather than a snapshot into a borrower’s credit behavior at a point in time. Dozens of new custom variables like these improve the model’s predictive power and are proprietary to Lending Club.
Source: Lend Academy

What critics of fintech ILC bids aren’t saying (American Banker), Rated: AAA

The bids by tech firms Social Finance and Square for industrial loan company charters and federal deposit insurance have rekindled debate over two questions: What is the appropriate regulatory oversight for industrial loan companies, and should fintech platforms be allowed to compete with traditional banks?

Many of the arguments in this debate have less to do with either applicant’s qualifications than with traditional banks’ fear of new, innovative competitors, and with a decades-old turf war between the Federal Deposit Insurance Corp. and the Federal Reserve over the regulation of ILCs.

ILCs face greater restrictions on the types of deposits they are allowed to offer compared to commercial banks.

SoFi and Square are actually asking for more regulation, not less, by seeking a charter. This would put leading nonbank fintech providers on more equal regulatory ground with banks — something that mainstream financial institutions say they want. Getting an ILC would add yet another agency — the FDIC — to the regulatory labyrinth the companies must navigate. This should be considered a win for banking industry and consumer advocates who favor more transparency and oversight of fintechs.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (“CLUB 2017-P1”). This is a $363.098 million consumer loan ABS transaction that is expected to close September 28, 2017.

Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1

Class Preliminary Rating Expected Initial Class Principal
A A- (sf) $244,234,000
B BBB- (sf) $57,362,000
C BB- (sf) $61,502,000

Groundfloor Announces $ 100 Million Expansion Of Lending Capital With Direct Access Capital (Business Insider), Rated: A

Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced that it has entered into a whole loan purchase relationship with Direct Access Capital (DAC), a specialty finance company focused on providing liquidity to non-bank lenders of short term residential backed business loans. This marks Groundfloor’s first institutional partnership to enable the company to scale its loan origination volume and expand its product offerings over the next year. The shared target is $100 million in loans through 2018.

Online mortgage lender Lenda raises $ 5.25 million to fund expansion (Housingwire), Rated: A

Lenda, an online mortgage lender based in San Francisco, announced Monday that it closed its Series A round of funding, raising $5.25 million from a group of investors.

According to the company, the funding round was led by SF Capital Group, along with CreditEase Fintech Investment Fund and inside investor, Rubicon Venture Capital.

Fintech Startup PayJoy Bags $ 6 Million Investment (Bank Innovation), Rated: A

It’s been a busy few days for fintech startup PayJoy, which today announced that it closed a $6 million investment, only a few days after it reached another milestone.

Based in San Francisco, PayJoy hopes to make the smartphone a mainstream financial tool for those who cannot afford these devices. Established in 2015 at Stanford University, PayJoy provides payment plans to purchase smartphones for people with limited or no access to credit.

Square’s ILC bid may open floodgates for fintechs (American Banker), Rated: A

Trends pick up fast in Silicon Valley and for financial innovators, the up-and-coming regulatory strategy is to seek a bank charter.

In June, the online lender Social Finance, or SoFi, applied for an industrial loan company charter in Utah to process certain depository accounts and credit cards.

Betterment for Business Survey Shows that Majority of Employees Do Not Receive Advice on their Retirement Investments (Business Insider), Rated: A

Betterment for Business, the technology-led 401(k) provider that aims to deliver better retirement outcomes and personalized advice, today announced the results of its new consumer retirement survey, the State of Consumer Retirement Advice. The results of the survey show that alongside the expansion of digital and employer-sponsored retirement advice resources, a majority of respondents (53 percent) report receiving absolutely no advice on their retirement investments. For the 47 percent of consumers who do seek retirement advice, 65 percent of this group utilize a financial advisor, the top source of advice among those consumers.

Less than half of respondents (42 percent) correctly identified the definition of a fiduciary; 20 percent of respondents believed that the terms “fiduciary” and “financial advisor” are synonymous, and 27 percent did not know what one was at all.

Nearly all (94 percent) of respondents in a 401(k) with auto-enrollment, which allows an employer to “enroll” an eligible employee in their plan unless the employee affirmatively elects otherwise, currently make contributions to their plan. In fact, for those who remained enrolled, 49 percent of respondents increased the contribution rate. Millennial respondents were most likely to remain enrolled in the plan after auto-enrollment. 78 percent of respondents that have access to an auto-escalation feature, which gradually increases plan contribution amounts over time, use it.

Targeted education could go a long way in setting consumers on the right path–given that 89 percent of respondents were offered a 401(k) match by employers, but 23 percent didn’t take full advantage of it. Of those 23 percent, 16 percent don’t max out their match, and 7 percent don’t know if they do.

LendUp Recognized by Fast Company for 2017 Innovation by Design Awards (Business Insider), Rated: A

LendUp, a socially responsible financial services firm for the emerging middle class, was selected as a finalist in the Social Good category of Fast Company‘s 6th annual Innovation by Design Awards.

“We believe there are two types of financial products: chutes and ladders. Ladders help you up, chutes push you down. We’ve used design to create loan and credit card ‘ladder’ products for the more than half of Americans who’ve traditionally been shut out of mainstream banking due to poor credit or income volatility,” said Sasha Orloff, co-founder and CEO of LendUp.

According to Fast Company, the award—one of the most sought-after in the design industry—is based on seven core factors of innovation: functionality, originality, beauty, sustainability, depth of user insight, cultural impact and business impact.

Studies have shown that 56 percent of Americans don’t have access to traditional financial services due to low credit scores or thin credit files1, and nearly half of U.S. families don’t have enough savings to cover a $400emergency expense2. As workplace trends shift from careers to jobs to the gig economy, 40 percent of Americans blame irregular work schedules for volatile monthly incomes, with paychecks sometimes varying by more than 30 percent3.

Congress should reject rent-a-bank predatory lending legislation (CUInsight), Rated: A

Today, the Center for Responsible Lending (CRL), the National Consumer Law Center (NCLC), and more than 150 national and state organizations sent a 

Fintech Opens Opportunities for Small Business Lenders – and Borrowers (Small Biz Trends), Rated: A

Small business lenders have unprecedented opportunities ahead of them, according to Rohit Arora, the CEO of Biz2Credit.

The only thing is, not all lenders are positioned to seize these opportunities. The ones that are, says Arora, are the lenders that understand two things. “They understand the changing expectations of today’s borrowers. They also understand how to leverage new technology,” Arora explains.

Biz2Credit recently analyzed 30,000 small business credit applications. Based on the analysis, one of the top expectations small business borrowers have is for 24/7 customer availability. In fact, 51 percent of customer application activity occurred outside of regular banking hours or on weekends.

In other words, banks and other financial institutions that are not available 24/7 may be losing out on potentially half of their future customer base.

The 4 Big FinTech Trends of the Year (Newsmax), Rated: B

  1. Advanced Credit Repair Technology – Last year alone, Lexington Law helped clients remove more than 9 million negative items from their credit reports. This wouldn’t have been possible without advanced technology.
  2. Growing Focus on Artificial Intelligence
  3. Biometric Security
  4. Emergence of Challenger Banks – If there’s one thing we know about Millennials, they’ve shown an affinity for online banking and “challenger banks.” On a related note, there’s been a massive increase in the use of virtual wallets and alternative forms of payment. These two trends go hand-in-hand and will support each other.

Pittsburgh Tech Council Names Real Estate Crowdfunding Platform Small Change Tech 50 Awards Finalist (Crowdfund Insider), Rated: B

On Monday, real estate crowdfunding platform Small Change announced the Pittsburgh Technology Council has named it a Tech 50 Awards Finalist in the “Start-Up of the Year” Category.

Small Change revealed that the Pittsburgh Technology Council’s annual Tech 50 Awards recognize southwestern Pennsylvania’s most successful, innovative, and thought-leading technology companies.

Who Are The Major Shareholders In China Rapid Finance Limited (XRF)? (Simply Wall Street), Rated: B

XRF’s 14.61% institutional ownership seems enough to cause large share price movements in the case of significant share sell-off or acquisitions by institutions, particularly when there is a low level of public shares available on the market to trade.

XRF insiders hold a significant stake of 16.89% in the company.

A big stake of 38.57% in XRF is held by the general public.

Private equity firms hold a 29.92% stake in XRF.

United Kingdom

Zopa users are reporting significant delays when trying to sell their loans, with the firm battling against slow speeds on its platform.

At present, users trying to sell their loans on the site are currently told to expect delays beyond the standard 20-day sales window. The platform says: “We will continue to try and sell your loans for 20 days, but there is no guarantee that you will be able to access your money before your loans mature.”

Fellow Moneywise reader John Mitchell is an existing Zopa customer and wished to transfer his holdings to its IF Isa. When the Isa product was launched, customers were told they would soon be able to sell their existing Zopa loans – without incurring a 1% sales fee – before purchasing new loans within the Isa wrapper.

Three months on, and Zopa is yet to offer these fee-free sales to its customers.

Moneywise reader Jonathan Yonge, who manages his own portfolio of assets for a living, is one of the customers that has been affected by the issue. He currently has around £220,000 invested in the Zopa Access product and a further £100,000 in Zopa Plus. Zopa Access has now been closed to new investors and he has been unable to sell most of his loans.

Funding Circle, Zopa and RateSetter named among fastest growing tech firms (P2P Finance News), Rated: AAA

THE ‘big three’ peer-to-peer lending platforms have been recognised among Great Britain’s fastest growing technology firms.

Zopa, Funding Circle and RateSetter have been included in latest Tech Track 100, featured in the Sunday Times.

Funding Circle was the highest ranked out of the ‘big three’ lenders, placed at number 27.

The list was topped by personalised children’s books company Wonderbly, while former P2P platform LendInvest ranked at 37, with average sales over three years of 97.9 per cent.

Goldman Sachs invests £100m in UK consumer lender Neyber (Financial Times), Rated: AAA

Goldman Sachs is making its first investment in the British consumer lender market by providing £100m of debt and equity financing to Neyber, a fintech start-up providing loans that are repaid out of people’s salaries.

Founded by two former Goldman Sachs investment bankers five years ago, Neyber partners with companies to offer their employees loans at lower rates than credit cards or payday lenders.

The company says its loans are less likely to default because of the security of deducting repayments directly from a borrower’s salary, and the extra information it gains about its customers by tapping into their employer’s payroll systems.

From regulation to securitisation, a year in the life of Peer2Peer Finance News (P2P Finance News), Rated: A

September 2016
Peer2Peer Finance News launched just a month after interest rates had been cut to record lows amid uncertainty following the shock Brexit vote.

October 2016
Lending Works became the first major P2P lender to gain full authorisation from the Financial Conduct Authority (FCA).

November 2016
The structure of some of the UK’s most high profile P2P lenders came under the spotlight.

December 2016
The FCA revealed its long-awaited interim feedback as part of a post-implementation review of regulation of the P2P sector.

January 2017
The P2P sector was given a New Year boost with the government-backed British Business Bank pledging a further £40m for lending through Funding Circle.

February 2017
The first Innovative Finance ISAs (IFISA) from more established P2P firms began to get released, starting with Lending Works, which saw an inflow of funds of more than £1m in 24 hours, followed by Landbay.

March 2017
Zopa showed how popular P2P had become by having to create a waiting listto cope with demand from investors on the platform.

April 2017
There were plenty of shifts in strategy during April.

Funding Circle announced it was winding down its property lending to refocus entirely on its original small- and medium-sized enterprise (SME) target market.

May 2017
Zopa became the first of the ‘big three’ platforms to gain full FCA approval, later joined by Funding Circle.

June 2017
It was an interesting month for dropping plans.

One of the early members of the P2PFA, LendInvest, announced it had cancelled its application for FCA authorisation.

July 2017
A freedom of information request by Peer2Peer Finance News showed regulation has cost the sector up to £2m.

August 2017
Funding Circle announced a re-brand and the end of manual lending on the platform and RateSetter departed the P2PFA amid transparency concerns over its approach to wholesale lending.

September 2017
We are barely halfway into the month but have already seen a high-profile departure, with Jane Dumeresque leaving Folk2Folk.

How to invest in renewable energy (IG.com), Rated: B

The government launched the Innovative Finance ISA last year to give savers a tax-efficient way to participate in peer-to-peer lending. Official figures for the last tax year showed low take-up of the new ISA so far, with just £17 million invested. But there are renewable projects available through this route so it could be worth a look.

A crowdfunding platform called Abundance Investments launched what it said was the UK’s first green energy ISA in 2016. It allowed customers to invest directly in renewable energy projects through a range of bonds, and predicted a 6% annual return.

China

Leader of China’s $ 9 Billion Ezubao Online Scam Gets Life; 26 Jailed (U.S. News), Rated: AAA

A Beijing court on Tuesday sentenced the architect of the $9 billion Ezubao online financial scam to life imprisonment, and handed down jail time to 26 others, marking the close to one of the biggest Ponzi schemes in modern Chinese history.

Beijing First Intermediate People’s Court sentenced Ding Ning – chairman of Anhui Yucheng Holdings Group that launched Ezubao in 2014 – to life in prison and fined him 100 million yuan ($15.29 million) for crimes including illegal fundraising, illegal gun possession and smuggling precious metals.

Ding Dian, the chairman’s brother, was also sentenced to life, while Zhang Min, Yucheng’s president, and 24 others were sentenced to imprisonment for 3 to 15 years, according to an article on the Beijing Courts social media account.

International

B2BPay, PayJoy & Pineapple Payments (Paybefore), Rated: A

Pittsburgh-based Pineapple Payments, which offers omnichannel payment processing technology, has secured a $35 million growth equity commitment from Providence Strategic Growth (PSG), the an affiliate of Providence Equity Partners, a global private equity firm with more than $50 billion in assets under management.

PayJoy, which offers smartphone financing for underserved consumers, has closed $6 million of new investment with strategic partners that will help the San Francisco-based company, which has offices in Mexico City, to further expand throughout Latin America, Asia and Africa.

Finnish B2BPay earned the top spot among hundreds of entries in its segment in BBVA’s Open Talent competition “because of the way their solution enables SME businesses to grow internationally and trade with greater ease.”

Australia

NAB’s wealth builder vows to lift the game, restore trust (The Australian), Rated: AAA

In his first interview since being appointed chief executive of the nation’s largest retail superannuation fund, MLC Super, Matthew Lawrance told The Australian that the industry needed to lift its standards.

He also called for more balanced media commentary that would help to inform the public rather than instil fear.

“Our customers want more targeted support and advice across banking and wealth management, and so we need to invest to develop new and innovative solutions that give them the ability to engage us — whenever, however, and through whatever means suits them, whether it be digital or face-to-face,” Mr Lawrance said.

NAB is currently developing its robo-advice capabilities, with more details to be released in the coming months, but Mr Lawrance says it won’t replace traditional face-to-face advice. Rather, the two will complement each other.

India

How fintech startups can help banks bridge the gap in SME Lending in India (Moneycontrol), Rated: A

There is no doubt that future growth would also be sustained by the performance of the 50-million plus strong SME sector, which employs close to 40 percent of India’s total workforce and contributes 45 percent of the total industrial output.

A major challenge that could stymie SME sector growth is the lack of adequate and timely funding.

Fintech lenders use non-conventional data sources for underwriting

This movement makes available data pertaining to these businesses which new-age Fintech lenders can use to accurately assess the SMEs. For instance, an SME registered under GST files documentation that reveals their sales trajectory, income sources, inventory sold, credit cycles, etc.

Banks want to diversity loan books without scaling OPEX

Banks have large balance sheets from which they churn loans, catering to millions of customers. However, traditional underwriting practices have prevented them from effectively underwriting certain SME segments.

Authors:

George Popescu
Allen Taylor