Thursday October 19 2017, Daily News Digest

China p2p lenders

News Comments Today’s main news: Affirm wants to offer financial advice. RateSetter to launch IFISA. SoFi announces Entrepreneur Program 2.0. Prosper tightens guidance on consumer loan ABS. Qudian priced IPO above range. IBM partners with 8 banks on blockchain trade platform. GuiaBolso raises $39M in Brazil. Today’s main analysis: U.S. banks get aggressive on growth. Party on, Chinese consumers. Today’s thought-provoking articles: […]

China p2p lenders

News Comments

United States

United Kingdom

China

International

India

Asia

MENA

Latin America

  • .

News Summary

United States

Affirm Wants To Move Beyond Simple Lending to Provide Financial Advice (WSJ), Rated: AAA

Online financial services company Affirm Inc. wants to move beyond simple lending to provide financial advice to customers, its founder and chief executive said Wednesday.

Additional services Affirm wants to provide would include helping some consumers “get over this hump” of too much debt.

SoFi Announces Entrepreneur Program 2.0 (Crowdfund Insider), Rated: AAA

Online lending platform SoFi recently announced the launch of its Entrepreneur Program 2.0. The company reported that original program was launched four years ago and since then has helped four classes of 70 companies founded by the lender’s members to get off the ground with its coaching and resources.

SoFi then revealed some improvements, which would benefit the future classes.

  • More Eligibility: The program is now open to all members working as a founder or co-founder either full or part-time on an innovative and scalable tech-enabled business.
  • SoFi Offers Investment: The lender will give equity capital to each of the members of the Class. For this coming Class, this amount will be $25,000 per company.
  • New Curriculum.
  • Alumni engagement:
  • Community engagement: SoFi will engage our 380,000-plus members in the accelerator process and share the incredible companies their fellow members are working on.
  • Dedicated resources:

Prosper tightens guidance on consumer loan ABS (IFRE.com), Rated: AAA

Online lender Prosper Marketplace pulled in guidance on its US$501.05m consumer loan ABS on Wednesday, with all three of the deal’s tranches heard to be at least twice covered.

Guidance was announced at 85bp area over EDSF on the largest 0.85-year A-/A tranche (Fitch/Kroll) and 165bp-175bp over iSwaps for the US$77m 2.14-year BBB-/BBB tranche.

Guidance on the 2.89-year Class C, unrated by Fitch and rated B+ by Kroll, is 340bp area over iSwaps.

Those levels were tightened from whispers circulated at 85bp-95bp over EDSF, 180bp-190bp over iSwaps and mid-300bp over iSwaps, respectively.

US banks abandon crisis-era taboo of growth (Financial Times), Rated: AAA

“I’m happy to say our focus has shifted beyond the implementation of regulations . . . to growth,” said Mr Chavez.

No other big US bank put it that bluntly, but the sentiment seemed to be shared. With the notable exception of Wells Fargo, still trying to shake off the damage of its fake-account scandal, executives were making encouraging noises about new businesses and top-line expansion as they presented third-quarter results.

At Citigroup, for example, which shed about $500bn of assets in the years after the crisis, CFO John Gerspach talked about growth in credit cards in Mexico and wealth management in Asia. At Bank of America, which added about $90bn of assets over the year, CFO Paul D’Onofrio said he welcomed any “refinement” to rules that “allows us more access and control over our capital [and] liquidity in support of responsible growth”.

Source: Financial Times

At Morgan Stanley, James Gorman said the bank “won’t be shy” about doing deals such as last month’s acquisition of Mesa West Capital, a commercial real estate platform — prompting one analyst to remark on the chief executive’s “more aggressive” tone.

“We’re not looking for any grand splash here, but we’re open for business opportunistically,” said Mr Gorman.

Source: Financial Times

Now the mood has changed in Washington. Few laws have been ripped up, as yet, despite Donald Trump’s early pledge to “do a number” on Dodd-Frank. But new figures in agencies such as Randy Quarles, appointed this month to the most powerful bank regulatory job in the country, should make a real difference. Trade groups say they are expecting him to take a looser grip on the banks than Daniel Tarullo, the previous supervisor-in-chief at the Federal Reserve.

Banks Need Next-Generation KYC to Confront Today’s Digital Identity Crisis (Dealbreaker), Rated: AAA

Cybercrime has evolved to exploit gaps in enterprise data security and disrupted identity theft in the process. It has spawned a parallel black market on the Dark Web, where criminals transact in bitcoin to anonymously trade stolen data, minting hundreds of billions in annual and often untraceable proceeds for sellers[1].

Javelin Strategy & Research’s 2017 Identity Fraud Study said ID theft hit a record high in 2016, victimizing 15.4 million people, or roughly two-million more victims than the previous year[2]. ID theft is generally a precursor to credit card fraud, which attributed to worldwide losses of $21.84 billion in 2016[3].

Card issuers incurred 72%, of those losses last year, with card fraud expected to syphon a grand total of $88.87 billion out of the global financial system over the next four years.

Understanding the vast supply-and-demand mechanism of the Dark Web economy is integral to KYC strategy for banks. The Center for Strategic and International Studies pegs the worldwide cost of cybercrime at $445 billion a year[5]. According to the 2016 Cost of Cybercrime Study, data breaches, cyber-fraud and related disruptions impact U.S. organizations the hardest, with the average cyberattack generating $17.36 million in costs. Of the 4149 data breaches and 4.2 billion records exposed in 2016[6], as reported by cybersecurity firm RiskBased Security, the U.S. comprised 47.5% and 68.2% of those numbers, respectively.

Feedzai closes $ 50M Series C to help banks and merchants identify fraud with AI (TechCrunch), Rated: A

Feedzai is announcing a $50 million Series C this morning led by an unnamed VC with additional capital from Sapphire Ventures. The six year old startup builds machine learning tools to help banks and merchants spot payment fraud.

With 60 clients including major financial institutions like Capital One and Citi, Feedzai remains optimistic that allowing savvy customers to build on top of its service is the key to longevity.

Affirm CEO: Credit Security Is Centuries Behind (WSJ), Rated: A

Women who own businesses find bank loans harder to get (Fox Business), Rated: A

A survey of businesses conducted this summer and released Wednesday found that 30 percent of companies owned by women were able to get bank loans during the previous three months, compared to half of all the owners surveyed.

Only 21 percent of the women surveyed said they expected it will be easy to raise debt financing — essentially loans — in the next six months, compared to 44 percent of all companies. Fewer of those owners said they were likely to pursue a bank loan, at 67 percent compared to 75 percent of all owners.

The number of U.S. businesses owned by women grew nearly 27 percent from 2007 to 2012, rising to nearly 10 million from 7.8 million, according to the most recent Census Bureau figures. The total number of businesses grew less than 2 percent.

Bank of America found this year that 11 percent of owners who are women applied for loans the past two years versus 13 percent of owners who are men. Some banks have realized they need to be more aggressive in lending to businesses owned by women; Wells Fargo set a goal of $55 billion in loans by 2020, but surpassed that number in 2013, spokesman Jim Seitz says.

iCapital and CAIA Partner On Alternative Investment Education Initiative (FIN Alternatives), Rated: A

Financial technology platform iCapital Network has partnered with the Chartered Alternative Investment Analyst (CAIA) Association on a sweeping education initiative aimed at increasing knowledge about alternative investing.

As part of the new initiative, iCapital will offer CAIA’s Fundamentals of Alternative Investments program to its member network of more than 1,900 registered investment advisors, broker-dealers, private banks and family offices.

Harvard Partners LLC Announces Investment Interests in Commercial Finance (Lessors), Rated: A

Harvard Partners CEO Bill Verhelle announced his firm is seeking to invest in, or purchase, small innovative U.S.-based commercial finance firms. Interest is not limited to companies already in the equipment leasing and finance industry, though he will be at that industry’s annual convention next week.

Harvard Partners is specifically interested in companies with demonstrated experience and capable management teams employing new business models. Harvard Partners’ first equity investment this year, along with another private equity investor, involved a West Coast business lending and equipment finance firm with advanced financial technology (fintech) capabilities.

Top of the Morning (Axios), Rated: B

Another sovereign wealth fund is opening shop in Silicon Valley. This time it’s Abu Dhabi-based Mubadala Investment Co., which also is launching a $400 million direct VC fund (in partnership with SoftBank) and a $200 million VC fund-of-funds.

  • “It’s more than just setting up an office — it’s a real committed and genuine intent to be an active member of this community,” Mubadala’s Ibrahim Ajami tells Axios’ Kia Kokalitcheva, who scooped the news.
  • He adds that the direct fund shouldn’t compete with SoftBank Vision Fund, into which Mubadala has pumped $15 billion, given that it will be looking at earlier-stage deals. Get the full story.

REALTYSHARES REVIEW: AN EASY WAY TO START INVESTING IN REAL ESTATE (The College Investor), Rated: B

Real estate crowdfunding is one of the fastest growing trends in the investment community. They provide obvious value to investors who would otherwise be priced out of commercial and private equity deals. RealtyShares is one of these crowdfunding platforms, but they have a unique niche.

They work with both institutional investors and “the crowd” of smaller investors to find a wide range of projects.

To invest in RealtyShares, you need to be an accredited investor.

What Types Of Investments Does RealtyShares Offer?

  • First position liens
  • Preferred Equity
  • Mezzanine Debt (aka Bridge Loan)
  • JV (Joint Venture) Equity

Your minimum investment is $5000, and you’ll pay a 1% investment fee on equity investments, and up to a 2% interest rate spread on debt.

Private Lending Association Partners With Deal-Flow Company (Broadway World), Rated: B

American Association of Private Lenders (AAPL) has partnered with Private Money Lending Guide (PMLG). The partnership brings together an association that provides education, ethics and networking opportunities for private money lenders and a tool for deal-flow that enables borrowers and lenders to find the appropriate counterpart for their deals.

Ken Rees, CEO of Elevate, to Speak at Money 20/20 Conference (BusinessWire), Rated: B

Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will speak on a panel at the Money 20/20 conference in Las Vegas on October 24, 2017. The panel will focus on the future of alternative lending, including fintech’s potential to partner with banks to create better outcomes for both parties. The panel will also tackle the challenges that alternative lenders face now, and how to use innovation and creative solutions to address them.

SESSION: Reinventing Consumer Lending: More Access, New Models & Overcoming Big Challenges

WHEN: Tuesday, October 24, 2017 at 3:10-4:00pm PT

WHERE: San Polo, The Venetian Level 3 – The Venetian Las Vegas, 3355 S Las Vegas Blvd, Las Vegas, NV 89109

United Kingdom

RateSetter plans to launch IFISA this tax year (P2P Finance News), Rated: AAA

RATESETTER has said it plans to apply to HMRC for ISA manager status and launch its Innovative Finance ISA (IFISA) before the end of the current tax year.

RateSetter said on Wednesday that it will keep lenders updated via its website but also gave people the option to sign up to its IFISA mailing list.

FCA identifies low P2P usage but fewer signs of consumer vulnerability (P2P Finance News), Rated: A

JUST 1.4 per cent of the adult population are using peer-to-peer lending or crowdfunding but the product has among the proportionally lowest levels of financially vulnerable customers, figures from the Financial Conduct Authority (FCA) suggest.

The data is revealed in the City watchdog’s financial lives survey, a poll of almost 13,000 consumers about the products they hold and their experiences of them.

The research shows just 180 out of 12,865 adults, or 1.4 per cent, surveyed said they have used a crowdfunding or P2P product, which the FCA says works out as 700,000 adults when weighted against the UK population.

Of those who are using P2P, 74 per cent of respondents identified themselves as male and 25 per cent said they were female.

Wellesley & Co: Get ready for proptech 3.0 with “elite survivors” (P2P Finance News), Rated: A

WELLESLEY & Co has cited predictions that there will be consolidation in the proptech sector, as firms drop by the wayside leaving “a crop of elite survivors”.

The alternative property lender said it expects the rest of 2017 and early 2018 to be “exciting for the progression of property technology” with lots of M&A activity.

LendingCrowd launches Refer a Friend promotion (AltFi), Rated: A

LendingCrowd, the peer-to-peer (P2P) lender, has launched a £50 “refer a friend” promotion as it continues to experience strong demand from borrowers across the UK.

Following a record quarter for new loans and the rising popularity of its tax-free* Innovative ISA (IFISA) accounts, investors on the P2P lending platform will be given a £50 bonus when each friend they refer invests at least £2,000. Each friend will also receive a £50 referral reward.

China

China’s Qudian IPO seen priced above range (Reuters), Rated: AAA

Online micro-credit provider Qudian Inc’s (QD.N) initial public offering could be priced above the expected range of $19-$22 per American depositary share, sources familiar with the matter told Reuters.

The offering could give the company, backed by Alibaba’s (BABA.N) banking unit Ant Financial, a market capitalization of more than $7 billion and raise over $825 million.

Party On, Chinese Consumers (Bloomberg), Rated: AAA

Qudian Inc., operator of a loan platform for consumers and small businesses, jumped 22 percent on its New York trading debut Wednesday. The Beijing-based company raised $900 million in an initial public offering on the eve of China’s 19th party congress, pricing its shares above the high end of its indicative range. It’s the largest U.S. listing by a Chinese company since the $1.4 billion sale by logistics company ZTO Express (Cayman) Inc. in September 2016.

Qudian’s experience stands in sharp contrast to that of China Rapid Finance Ltd., a peer-to-peer consumer lender. In April, China Rapid Finance managed to raise only $60 million, having priced at the bottom end of its range. Since then, though, the shares have soared more than 90 percent, with most of the gain coming this month. Similarly, the October rally has brought the advance for Beijing-based consumer finance company Yirendai Ltd. to 150 percent this year.

Source: Bloomberg

Looking at Qudian’s financials, one can’t help the bullish feeling that China’s consumer credit market is only in its early stages. Qudian’s rate of loan delinquencies, defined as those over 30 days past due, is only 0.5 percent or less this year, according to the company, which relies on Alibaba Group Holding Ltd.’s Ant Financial affiliate for new borrowers and credit rating services.

Source: Bloomberg

The Young and the Leveraged (BreakingViews), Rated: A

Betting on China’s next generation of borrowers just got easier. Qudian, an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters. It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.

China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs. The investment bank expects outstanding consumer credit excluding mortgages to more than double to $1.9 trillion by 2020.

Qudian focuses on the younger segment of this market, providing small, short-term loans for ordinary purchases.

Source: BreakingViews

The truth about Ant Financial … (The Finanser), Rated: AAA

A key theme in the new book is financial inclusion and, to those ends, I made a visit to Hangzhou, China, to meet the executive team of Ant Financial.

As Americans struggle with the pains of Chip & PIN and Europeans embrace contactless payments, China has leap-frogged us all. In 2016, Chinese consumers spent $5.5 trillion through their mobile apps. That’s more than any other economy and many predict that China will be first major economy to be completely cashless. The chosen mobile payment system for most Chinese citizens is Alipay, and the company has recently started to expand its footprint globally.

Many of you may have heard of Alipay, but it is not the Chinese version of PayPal, as many think. In fact, it bears no relationship or resemblance to anything we see in Europe or America. It is distinctly Chinese and, having been born out of a need to trade, is now moving towards global dominance.

How far things have changed, in that today’s Alipay monitors every transaction from its 450 million users, in real-time with artificial intelligence monitors constantly searching for potentially fraudulent transactions. That is a far cry from where they started, but then the company has refreshed its systems architecture four times in the last twelve years and has just embarked in another refresh. They moved from basic escrow services to real-time payments to cloud to microservices, and are now working on their new machine learning and super intelligent structure. A structure that can process 250,000 transactions per second today, and is architecting systems that will scale to over 100 billion transactions per day. To put that in perspective, Visa and MasterCard handle just over 60 billion transactions per year combined, and average near 2,000 transactions per second.

Source: The Finanser

China: The frontier of networked money (SupChina), Rated: A

In the last two years, China has gone from a country without credit cards to a cashless society where even beggars use mobile phones to accept payments.

The number of P2P companies has been reduced through attrition and government regulation, and a few strong players are emerging:

  • Caixin reports (paywall) that P2P platform PPDAI Group has announced plans “to raise up to $350 million through a New York initial public offering (IPO).
  • In September, online-only insurer ZhongAn Online P&C Insurance raised $1.5 billion in an IPO on the Hong Kong Stock Exchange.
  • The South China Morning Post reports that shares of Qudian, a leading online consumer credit provider, “surged nearly 46 percent to US$35 on its debut trading on the New York Stock Exchange on Wednesday morning.” Aside from fierce competition in the sector, the SCMP says that “Qudian has one other worry — potential competition with its principal shareholder Ant Financial,” which is, like the SCMP itself, an Alibaba affiliate.
International

IBM and eight banks unleash we.trade platform for blockchain-powered commerce (Banking Technology), Rated: AAA

Since January 2017, a group of seven banks (Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and UniCredit), together with IBM, have been developing the Digital Trade Chain platform.

Now with the recent addition of Banco Santander as a founding partner, the group have decided to rebrand the Digital Trade Chain platform to we.trade.

Banks Start Broad Use of Blockchain, as JP Morgan, IBM Lead Way (DarkReading), Rated: A

Two major players announced cross-border payment networks built on blockchain technologies Monday, and more financial services will follow soon, despite opinions about Bitcoin.

The distributed ledger technology that underpins cryptocurrency like Bitcoin is rapidly going mainstream. Blockchain is building a tremendous amount of buzz as technology and financial industry heavyweights and startups race to apply the technology in innovative new applications for the banking sector. Their efforts are starting to bear fruit in the area of cross-border payments, as three separate announcements from IBM, J.P. Morgan, and Bank of Canada highlighted this week.

The ultimate goal is to provide a secure, speedy and transparent financial platform between global markets that may have found it difficult to do business with one another due to the bureaucratic pitfalls of legacy international payment networks.

The developments this week underline that banking executives are increasingly seeing the upside of combining distributed ledgers with solid cryptographic applications for new means of facilitating payments, trades, contracts, and transactions of all stripes.

Six courses that will get you clued up on fintech (CNBC), Rated: B

New York University’s Stern School of Business has a number of courses on fintech that consider innovations in the sector, regulatory challenges and opportunities for growth.

Students have the option to learn about digital currencies, blockchain, robo advisors, personal finance and payments.

The U.K.’s Oxford University, ranked by Times Higher Education as the number one institution in the world, made its fintech debut this month.

Oxford’s Saïd Business School launched the Oxford Fintech Programme in collaboration with GetSmarter, which is owned by education tech giant 2U Inc.

Students on the course study a range of subjects within the fintech sector, including digital payments, regulatory technology, blockchain and artificial intelligence.

Imperial College London is another British university to have its own course dedicated to all things fintech.

Imperial’s ‘Fintech — Innovative Banking’ course focuses on three key areas of the industry: blockchain, digital identity and digital money and payments.

India

P2P lending platforms can put downward pressure on interest rates (livemint), Rated: AAA

Mint Money spoke to Rajat Gandhi, founder and chief executive officer of Faircent, a P2P marketplace which has been in operations since 2014, on his vision for the nascent industry in India.

Now that the RBI has given NBFC status to P2P platforms and has also come out with guidelines for the sector, what is the way ahead?

Most of the guidelines also are in line with the industry expectations, just that there are a few grey areas where we would need some more clarifications. The way I see it, the RBI document is a framework, rather than hard guidelines.

In the short term, we all have to file our applications and get certifications in place.

The P2P lending process was legitimate; the RBI framework has just validated it further. An important development is that the framework has created a redressal system— both for the borrower and the lender. While a lot of obligations will be on the platforms, there is also a lot of clarity now on our roles and responsibilities.

How do the RBI guidelines help a consumer, borrower or lender? 

The guidelines basically tell the lender particularly what they are getting into, including the fact that the principal is not protected. We as companies should also keep telling them. Because the moment an investor hears interest rate, the immediate thought is assured returns.

Secondly, the guidelines have unlocked the supply side. Borrowing till now was restricted to banks and NBFCs, which have stringent guidelines. Whereas out here, this is an exchange model and the P2P platforms cannot lend from their own balance sheet, so the platform’s returns become interest rate agnostic. Their role is only to rate and price the borrowers, and as a platform, we do not directly benefit from this rating and pricing.

If a P2P platform is interest rate agnostic, what is your business model and how does your business make money?

Basically, we charge 1% from the lender and 2-4% from the borrower, of the loan disbursed.

The guidelines also talk about P2P platforms giving services to lenders for recovery of loans. How does that work?

We have a panel of lawyers who will take up the matter on behalf of the lenders. This is charged as this is a separate service.

What is the size of P2P lending industry in India at present? 

The size right now will be roughly around (RS) 50-60 crores on an annualised basis.

Fresh funding to enable LenDenClub meet capital requirement set by RBI (India.com), Rated: A

After a successful growth stint in the past six months, LenDenClub, a P2P lending platform is looking to meet the capital requirement set by the Reserve Bank of India (RBI) regulations, banking on the newly secured capital which is being used to enhance the product platform and improve tech automation.

Earlier this month, the firm closed a USD 500,000 pre-series A round from a fund based out of Mumbai.

Kotak Bank ties up with Samsung Pay (India Times), Rated: B

Private sector lender Kotak Mahindra Bank today said its credit and debit card holders will be able to tap and pay using smartphones at merchant establishments.

The city-based lender has tied up with Samsung, under which its cardholders will be able to tap and pay using smartphones of the Korean electronics major having the Samsung Pay acceptance machines, a bank statement said.

PayPal bets big on India’s FinTech boom (Ogilvy), Rated: B

Financial transaction company PayPal has long been a supporter of innovation in India, having set up an incubator programme there to support local start-ups. And now, the company is evolving its partnerships with the start-ups that join the incubator, taking equity in participating firms.

Asia

Fintech startup Finja breaks new ground in Pakistan with $ 1.5m series A funding (Tech in Asia), Rated: A

The catalyst for ecommerce and other internet businesses to flourish in China, India, and Southeast Asia is digital payments. This in turn has a multiplier effect on economic growth.

That’s why today’s announcement of US$1.5 million series A funding for Pakistani fintech startup Finja is notable. More so, because Swedish investment company Vostok led the round – the Pakistan startup ecosystem rarely hits headlines for attracting international investment. Dubai-headquartered Gray Mackenzie Engineering Services also participated in the round.

Finja is giving a push to digital payments in Pakistan with its SimSim wallet.

Finja claims SimSim has been doubling its mobile wallets every month to notch up 80,000 accounts since it went live a few months ago. It has clocked transactions worth a total of US$14 million so far.

Danadidik, the platform that helps Indonesian students fund their study, raises seed funding (e27), Rated: A

Indonesian student loan platform Danadidik announced on Wednesday that it has raised an undisclosed seed funding round from Singapore-based impact investment fund Garden Impact Investments.

Danadidik Co-Founder and CEO Dipo Satria said that the new funding will be focussed on hiring, product development, and marketing.

He also stated that for the year 2018, the South Jakarta-based startup plans to launch its mobile app and is targeting to fund 2,000 students.

MENA

Abu Dhabi Inks FinTech Development Pact with Mastercard (Cryptocoins News), Rated: A

Abu Dhabi’s international financial center has entered a collaboration with payments giant Mastercard to develop and accelerate FinTech solutions in the region.

The Abu Dhabi Global Market (ADGM), an international financial center established by a UAE Federal Decree to develop and strengthen financial services in Dubai as a global center for business and finance, is partnering Mastercard to develop FinTech activities in UAE’s capital and the wider MENA (The Middle East North Africa) region.

Latin America

Amid Brazil’s persistent economic crisis, fintech startup GuiaBolso raises $ 39 million (TechCrunch), Rated: AAA

Despite a continuing economic crisis, Brazil’s technology startups are continuing to attract cash and financing, with the mobile personal financial service GuiaBolso raising $39 million in fresh funding.

The new round was led by Vostok Emerging Finance, a publicly traded Swedish fund with its roots in big Russian private equity. Additional investors include Ribbit Capital, the International Finance Corp. and QED Investors, while impact investment firms Endeavor Catalyst and the Omidyar Network also participated.

Authors:

George Popescu
Allen Taylor

Wednesday October 18 2017, Daily News Digest

personal loans

News Comments Today’s main news: LendingHome surpasses $100M in monthly loan volume, secures $57M in Series C-2. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2017-3. RateSetter says FCA authorization merely a milestone. Qudian raises $900M in biggest listing by Chinese fintech firm. BBVA focuses on U.S.-Mexico remittances with money-transfer app. New Zealand paves path for robos. SoftBank considering second […]

personal loans

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Middle East

Canada

News Summary

United States

LendingHome Surpasses $ 100 Million Mark in Monthly Loan Volume & Secures $ 57 Million During Series C-2 Funding Round (Crowdfund Insider), Rated: AAA

Less than a week after announcing its new office in Pittsburgh, real estate marketplace lending platform LendingHome announced it has surpassed $100 million in monthly loan volume and secured $57 million during its Series C-2 funding round, which included participation from Sberbank and Noah Holdings Limited.

The online lender also revealed the closing of the LendingHome Opportunity Fund II, which was managed by LH Capital Management, with $100 million in commitments from more than 40 investors including asset managers, international funds, family offices, and high net worth individuals. An additional credit facility of up to $300 million brings the fund’s total potential assets to $400 million.

2017 shaping up to be the year of the venture capital ‘mega-round’ (Biz Journals), Rated: AAA

Georgia companies scored the most venture dollars in the third quarter, since first quarter 2000. Fintech Kabbage and access management technology firm Core Security raised a combined $450 million, or about 60 percent of total venture capital invested in Atlanta companies in the third quarter.

Goldman Attacks Lending Club & Prosper, Courts Main Street (CB Insights), Rated: AAA

As its bond trading revenue plummets, Goldman has undergone a major strategic shift, looking to grow the revenue opportunity from its consumer digital finance operation.

Goldman Sachs has changed a lot through its 148-year history. But as technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.

When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”

  • 46% of Goldman Sachs job postings are in technology.
  • Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
  • Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
  • Goldman has pushed investments into Brazil.
  • Goldman made its first fintech acquisition in 2016 and is looking for more.
  • Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.

BACKGROUND ON CORE GOLDMAN SACHS

Goldman Sachs makes money in five primary areas: investment banking, equities, investment management, investing & lending, and FICC client execution.

Source: CB Insights

Digital finance initiatives

Notably, Goldman seems to believe that its digital consumer lending and deposit platform has as large of a net revenue growth opportunity as its FICC trading unit. This is a remarkable shift in strategy that only materialized in the last three years, and the strategy is still in the extremely early innings of its growth potential for Goldman.

Another advantage Marcus has over other bank incumbents looking to launch a competing initiative is its non-legacy IT architecture and the fact that Goldman does not have an existing consumer credit card business for Marcus to cannibalize.

Marcus reportedly passed $1B in loan origination in its first 8 months and is expected to originate $2B by the end of 2017. While data on number of loans doled out is hard to find, Goldman reached its first billion in consumer loans significantly faster than competing online personal loan companies (Lending Club launched in 2007). At the CB Insights Future of Fintech conference, Talwar noted that Marcus’s average loan size was “around $14,000.”

Source: CB Insights

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2017-3 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-3 (“PMIT 2017-3”). This is a $501.05 million consumer loan ABS transaction.

This transaction represents the eighth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).

Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2017-3

Class Preliminary Rating Expected Initial Class Principal
A A (sf) $313,500,000
B BBB (sf) $77,000,000
C B+ (sf) $110,550,000

Quicken Loans and eOriginal Partner on Next Phase of the Digital Mortgage Revolution (PR Web), Rated: A

eOriginal, Inc. and Quicken Loans today announced a partnership to complete the final steps of the online mortgage process – to digitally create an electronic note, and securely store it as an authoritative copy with delivery to both custodians and the secondary market. This advancement accelerates the time between origination and replenishment of capital.

Quicken Loans, the country’s largest online mortgage lender, closed more than $7 billion in mortgage volume through Rocket Mortgage, the nation’s first fully online mortgage process, in 2016 – its first full year in market. The rapid growth of Rocket Mortgage comes from its appeal to a new generation of homebuyers. In fact, two-thirds of Rocket Mortgage clients used the online process to finance a home purchase, and 80 percent of those consumers were first-time home buyers.

eOriginal’s platform delivers a fully digital mortgage and supports every type of digital closing strategy. 

Modo Emerges From Reverse Stealth With New Service For Payment Event Data (Business Insider), Rated: A

Modo, the payments fintech working with Bank of America Merrill Lynch, Alliance Data, FIS, Verifone, and Klarna, today announced they’re ready to break their self-imposed silence and discuss the work they have been doing to deliver innovative payment solutions for their clients in Q4 2017.

Modo has already announced support for three payment event types, in diverse areas of payments with Klarna, Verifone and FIS, and Bank of America Merrill Lynch (respectively):

  • Payout Events: Enable your corporate and commercial customers to send money globally using the ever growing number of digital wallets to accelerate the last mile of disbursements.
  • Checkout Events: Checkout anywhere, using any method of payment. Whether you are a merchant or a payment provider, offer consumers any way to pay.
  • Loyalty Events: Earn and burn loyalty in entirely new ways in entirely new experiences. Combine multiple rewards and loyalty programs to make a purchase or send a gift.

J.P. Morgan to buy payments firm WePay in first major fintech acquisition (Fox Business), Rated: A

J.P. Morgan Chase & Co. (JPM) said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.

The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.

The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising.

Bank of America processed $ 4 billion in Zelle payments this quarter (Tearsheet), Rated: A

Bank of America processed $4 billion in Zelle transactions in the third quarter of 2017 alone, CEO Brian Moynihan reported on the bank’s earnings call Friday morning. Digital payments volume increased nine percent to $324 million. Within that, person-to-person payments growth was about 67 percent with the addition of Zelle this summer, reporting 13.6 million transactions and $4 billion in volume. The bank recently processed half a billion dollars in a single week, Moynihan said.

The bank’s digital users grew 5.2 percent to 34.5 million on a year-over-year basis. Mobile banking users grew 10.8 percent to 23.6 million.

Over at Wells Fargo, CEO Tim Sloan said during that earning call that third-quarter peer-to-peer payments increased 46 percent, but didn’t provide a Zelle-specific number.

Source: Tearsheet

Digital growth stands out for Bank of America and Wells Fargo (Business Insider), Rated: A

Although the imminent death of the bank branch is being drastically overstated, if the Q3 earnings of Wells Fargo

  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
Source: Business Insider

Crowdfunding comes to Arizona real estate (Biz Journals), Rated: A

Crowdfunding ventures raise $34 billion annually in the U.S.

Is There Anything New About New Lenders? (Seeking Alpha), Rated: A

At many times in history there have been finance companies that made loans that banks chose not to make. Such finance companies have thrived in good economic times and tended to fail in major recessions. I predict the same will be true of the newer editions.

But second, let us ask why are the banks not making these loans? The answer is simple. The combination of the costs of marketing and administration and the credit risk is too great to make money on a consistent basis. Therefore the banks are funding a large part of the loans by lending to the lenders and taking a senior position, cushioned by the equity of other investors and shielded from the marketing and loan acquisition costs (as well, perhaps, as some of the consumer regulatory risks). Smart banking, it seems to me. The banks have a lower cost of funds than the new lenders, so they can make money at a lower effective interest rate on the money they lend, so long as it is safer.

I have been shocked at the levels of expenses being incurred by some of the new lenders.

P2P mortgage lending could be a game changer for Millennials (The Mortgage Reports), Rated: A

Not finding a mortgage lender you like? Try borrowing from a friend – or several of them – instead. According to reports, a new platform called Celsius could make P2P mortgage lending a viable option.

Using blockchain technology, Celsius is in the process of building a peer-to-peer lending network specifically aimed at the Millennial market. According to Alex Mashinsky, founder of the company, the platform will allow younger buyers to secure funding using their social circle, rather than big banks and financial institutions.

So how will it work? To start, each user creates a digital profile. They’ll need to upload FICO scores, online transaction histories and other non-traditional financial data. Then, Celsius will assign each profile a credit score that’s unique to the site.

To protect lenders, Celsius will offer insurance that covers a percentage of the principal loan amount in case of default.

$ 40 Million: Digital Asset Holdings Closes Series B Fundraising (Coindesk), Rated: A

Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.

AlphaPoint Utilizes Intel Security Technology to Deliver Enterprise-Ready Blockchain Platform (AlphaPoint Email), Rated: A

Today, AlphaPoint announces the AlphaPoint Asset Digitization solution making illiquid assets liquid by facilitating the digitization of assets and launching new markets. AlphaPoint also announces the release of the AlphaPoint TrustedVM, a trusted virtual machine enabled by Intel Software Guard Extensions (Intel SGX) technology which allows smart contracts and blockchain services to run securely.

The latest release of the AlphaPoint Asset Digitization solution with AlphaPoint TrustedVM adds additional enterprise-class capabilities by securing access to information from intermediaries and network participants, thereby enhancing privacy and security to the AlphaPoint Distributed Ledger Platform. AlphaPoint has been working with some of the largest Fortune 100 financial institutions since 2013 to launch markets on blockchain technologies.

Enterprise-ready Blockchain Platform
In collaboration with Intel, the AlphaPoint Asset Digitization solution as designed at its core to help enterprises efficiently deploy blockchain solutions that implement business initiatives with world-class privacy and security. This solution was architected to create Trusted Virtual Machine, or TrustedVM, that leverages the trusted execution environment (TEE) that Intel SGX enables. AlphaPoint’s solution utilizes the security and privacy capabilities of Intel SGX, thereby allowing customers to benefit from several key technology and business advantages:

  • Faster time to market – Quickly develop and deploy blockchain applications with proven technology.
  • Hardwareenforced privacy and secure consensus – Execution and validation inside the TrustedVM, ensuring data is not visible to any unwanted parties.
  • Lower and predictable costs – With linear scalability, this technology improves total cost of ownership (TCO) and operational efficiencies.
  • Simplified development – Smart contracts and applications may be written in TypeScript and JavaScript, instead of highly specialized languages.

IBM is using the technology behind bitcoin to help businesses in countries with weak banking systems (Business Insider), Rated: B

IBM is using the technology behind bitcoin to help farmers and other small businesses in underdeveloped countries participate in global trade.

The companies will use IBM’s blockchain technology to process financial transactions across borders and currencies — a process which is often prohibitively slow and costly for small business owners, especially when they are in developing regions with smaller banking infrastructures.

The project is focused on what Stellar calls “underdeveloped payment corridors” — countries like Samoa and Fiji, where monetary policies, currencies, and economic instability make it difficult for businesses to move money internationally.

Are fintechs charging minorities more for business loans? (American Banker), Rated: A

Minorities are more likely to turn to a financial technology firm when seeking a business loan, but they may pay higher interest rates, according to the preliminary results of a congressional investigation released Monday.

Retiree robo shuns app, still lands $ 8M funding (FinancialPlanning), Rated: A

A fintech startup with no mobile app does a fundraising round. It secures $8 million. How is that even possible?

True Link, a retiree-focused hybrid advice platform, had a simple pitch to investors: elderly clients like the convenience of digital advice, but want to talk on the phone. The firm claims it received 1.6 million client calls last year.

Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism? (WSJ), Rated: A

Now they are actually doing something about it, by launching a new framework for corporate governance, investing and trading called the Long-Term Stock Exchange. Backed by top Valley figures such as venture capitalist Marc Andreessen and LinkedIn co-founder Reid Hoffman, the LTSE says it plans to seek regulatory approval by the end of this year to become the newest U.S. stock exchange.

Its key feature: a system in which the voting power of shares increases the longer investors own them.

Source: The Wall Street Journal

Block brands (CB Insights Email), Rated: A

Source: CB Insights

Lending Club Sweetens the United Airlines Frequent Flier Promotion (Lend Academy), Rated: B

A year ago Lending Club launched a deal for new investors with United Airlines. New investors could earn 1 MileagePlus frequent flier mile for every $2 invested in a new Lending Club account.

Well last week Lending Club sweetened the deal. They basically doubled the amount of miles you can receive. So, instead of 1 mile for every $2 invested it is now 1 mile for every $1 invested. This deal is only valid until January 9, 2018 whereas the last deal had a three year expiration date.

whoa: blockchain, blockchain, blockchain (CB Insights Email), Rated: B

First, we’ve teamed up with Fortune Magazine for a joint review of Blockchain Trends & Opportunities. Robert Hackett of Fortune will be joined by CBI Intelligence Analyst, Arieh Levi.

United Kingdom

Peer-to-peer lender RateSetter gets stamp of approval from UK financial watchdog (Business Insider), Rated: AAA

RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been “a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.”

RateSetter has increased the amount of market data it makes public and earlier this month announced plans to simplify early access for investors to their money.

“Authorisation is a milestone but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter.”

The Growth of P2P Lending: Is It Sustainable? (The Market Mogul), Rated: AAA

According to data gathered by AltFi lending volumes through P2P platforms achieved a staggering compounded annual growth rate of 110% between 2011 and 2016 and shows little sign of letting up this year.

However, there are some indications this honeymoon period for the industry may be over as the UK’s inflation rate hit 3.0% last month piling pressure on the Bank of England to raise interest rates. This is an understandable worry for the industry, as much of the lending it facilitates is higher risk than that of the traditional banking sector.

Furthermore, there are several emerging industry trends, which are likely to boost its resilience to deteriorating economic circumstances.

  1. Consolidation- While nearly 100 platforms are operating in the UK a resilient oligopoly is emerging. This is made up of the markets four largest lenders: Zopa; Funding Circle; LendInvest and Rate Setter who cumulatively facilitate over 70% of lending volume.
  2. Securitisation – Previously, P2P platforms lacked the scale to make securitisation economic and this new trend will likely provide a further edge to the industries established participants.
  3. Diversification

Zopa: more risk, same reward (FT Alphaville), Rated: AAA

Zopa, the world’s oldest “peer-to-peer” lender, has long focused on low-risk borrowers. The weighted average interest rate the 12-year-old company charges its British customers has never gone higher than 10 per cent and was as low as 5.6 per cent in 2013. While startups like Wonga focussed on the high returns available from borrowers who are under-served by financial institutions, Zopa has largely competed at the “prime” end of the spectrum with high street banks. The returns are lower, but so too are the risks, including to its reputation.

In recent years, Zopa has added riskier borrowers to help drive growth. (It’s worth saying that it is still miles from Wonga territory.) The weighted average interest rate across its portfolio has grown from 5.8 per cent in 2014 to almost 8.8 per cent in 2017:

Source: Financial Times

Zopa has been taking on more risk to achieve pretty much the same returns as when it made fewer risky loans.

Source: Financial Times

Starting small: what support do small scale housebuilders need? (Prospect Magazine), Rated: A

Britain has seen its population of small housebuilders shrink by 80% in a single generation as market dominance has passed to an entrenched group of major players – among the top 10 UK housebuilders, none was founded after 1990. The disappearance of small and medium-sized housebuilders from the UK – defined as companies that complete between one and 100 units a year – has seen their numbers fall from more than 12,000 in the mid-1980s to about 2,400 today, according to research by the non-bank mortgage lender LendInvest.

China

Qudian raises $ 900 mln in biggest U.S. listing by a Chinese fintech firm (Fidelity), Rated: AAA

Chinese online micro-credit provider Qudian Inc said it raised about $900 million in an IPO that priced above expectations, underscoring robust U.S. investor demand for fast-growing Chinese companies.

The offering from Qudian represents the biggest-ever U.S. listing by a Chinese financial technology firm. It is also the most high-profile company to take part in a resurgence of U.S. listings by Asian firms this year.

Qudian IPO feeds debt-hungry Chinese millennials (The Star), Rated: AAA

Qudian , an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters.

It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.

China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs.

Backed by Alibaba’s Ant Financial, Qudian lends cash to young Chinese consumers such as white collar workers, and advances credit so they can buy goods online and pay for them in monthly installments. The company provided $5.6 billion to 7 million active borrowers in the first half of 2017.

The sale of 37.5 million shares in Qudian has already raised about $900 million, making it the biggest U.S.-listing by a Chinese company this year, the report said. The offering values Qudian at as much as $7.9 billion, the report added.

China’s Qudian is about to go public and it could be the largest Chinese listing in the US this year (CNBC), Rated: A

Online micro-lending company Qudian is about to go public at the New York Stock Exchange on Wednesday, and it’s set to be one of the largest U.S.-listed floats by a Chinese company this year.

In its prospectus, Qudian said it was offering 37.5 million American Depository Shares with a float price range of $19-$22 per share. The company said it could offer up to 43.1 million shares if underwriters exercised an option.

LCQ22: Promoting equity crowdfunding activities in Hong Kong (7th Space), Rated: A

Question:

In recent years, raising funds through crowdfunding activities is becoming increasingly popular among enterprises worldwide, and the governments of quite a number of countries have introduced legislation to regulate raising funds through crowdfunding activities. On the other hand, the Financial Services Development Council (FSDC) released on March 18 last year a report entitled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, which explored options for establishing a framework and a regulatory regime to promote and, at the same time, regulate equity crowdfunding activities in Hong Kong. So far, however, the Government has not yet announced any specific measures to promote equity crowdfunding activities.

Reply:

(1) We note that crowdfunding activities might come in different forms, including equity crowdfunding (ECF) and peer-to-peer (P2P) lending. The regulatory approaches towards these activities vary globally across jurisdictions in view of the nascent nature of the business. While some economies have developed dedicated new regimes, others leverage existing rules to regulate such activities.

(2) At present, parties engaging in crowdfunding activities in Hong Kong (e.g. where the activity involves an offer to the public to purchase securities, including shares, debentures or interests in collective investment schemes, or where the platform offers its own funds to borrowers) may be subject to the provisions of the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163), depending on the specific structure and features of the relevant arrangement.

European Union

Citi fosters Israeli fintech to meet changing needs of financial sector (The Times of Israel), Rated: AAA

Israeli startup Innovative Assessments (IA) says financial lenders like banks are missing out on huge numbers of potential clients because their criteria for handing out credit are too stringent and do not take the full picture of the client into account.

As a result, banks are effectively cutting themselves off from lending out money to large segments of the population, and many borrowers are denied access to affordable credit.

IA wants to help solve this problem. Banks should not only look at financial information to assess creditworthiness, IA says, but also at personal character, which is a whole new dimension of data that is missing from today’s credit scores. So, IA has come up with an idea to help lenders do this.

IA has developed patent-pending software that uses advanced psychometrics for credit scoring.

“Our algorithms look at people’s preferences towards certain financial behaviors,” added Fine. “And while there are no right or wrong answers, we can also identify people who may be responding insincerely.”

SeerGate, a real-time payments firm, was acquired by MyCheck in May 2015 while Ramat Gan-based Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was snapped up by Avante in July last year.

NSKnox has created a Digital Notary based on cooperative software that allows a secure transaction approval for banks and organizations, the company says. The software, which uses algorithms, allows two or more blind witnesses — who are actually financial or other kind of organizations — to help independently authenticate, authorize and detect fraud while verifying business transactions.

A total of 68 startups, including nine in the latest brew, have taken part in Citi’s Israel Accelerator program since it was set up in November 2013 in Tel Aviv.

Citi provides the entrepreneurs access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites. The banking giant does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters.

The graduates of Citi’s program, which include startups like Paykey, Paybox and Vatbox, have raised a total of $300 million to date, according to data provided by Citi, and there have been two exits, with Sling and SeerGate having been acquired.

International

Spanish bank launches money-transfer app focused initially on US-Mexico remittances (TechCrunch), Rated: AAA

BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S.

However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest.

Ripple & the Gates Foundation Team Up to Level the Economic Playing Field for the Poor (Ripple), Rated: A

Many of the world’s poor in developing countries — nearly 2 billion, according to the World Bank — struggle to lift themselves out of poverty simply because they don’t have a bank account or financial services.

However, a new collaboration supported by the Bill & Melinda Gates Foundation will change that. Ripple, in partnership with Dwolla, ModusBox, Software Groupand Crosslake Technologies, with funding and support from the Gates Foundation, developed a new open-source software called Mojaloop for creating a real-time, interoperable payments platform on a national scale to reach the world’s poor with essential financial tools.

Leveraging the power of the Interledger Protocol (ILP), Mojaloop offers a way for financial providers, governments and mobile network operators to simplify and reduce the cost of developing inclusive payments platforms.

Securities markets: standing at the crossroads (Banking Technology), Rated: A

Financial technology has the potential to radically transform the securities industry. The fast pace of change could lead to disintermediation, according to an Iosco study.

Key trends identified in the report include:

  • Greater availability of data
  • Exponential growth in computing power allowing the analysis of ever larger data sets
  • Broader access to and the decreasing cost of goods and services
  • Increasing disintermediation and re-intermediation
  • Demographic and generational changes

Innovative fintech business models are disintermediating and re-intermediating certain regulated activities. For example, online equity crowdfunding platforms intermediate share placements and disintermediate stock exchanges and underwriters; peer to peer lending platforms intermediate or sell loans and disintermediate banks and lenders, and robo-advisers provide automated investment advice and thereby disintermediate traditional advisors.

Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.

With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.

GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.

There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:

  • Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.
  • GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.
  • GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.
  • If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.

GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages.

Australia/New Zealand

‘Robo’ financial advice on the way (Radio NZ), Rated: AAA

The Financial Markets Authority has decided to allow financial services companies to provide so-called “robo-advice” to individuals.

Such methods are widespread around the world, but New Zealand law requires any financial advice to be given by a human adviser, and law changes to allow advice to be given by a computer programmes are not expected to be passed until 2019.

Companies wanting to offer robo-advice will have to apply to the FMA for an exemption.

FMA fast-tracks personalised robo-advice with exemption (NZ Herald), Rated: A

The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.

The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.

Banks readying their roboadvisers (Stuff), Rated: A

Big banks are planning roboadvice services, but only BNZ has revealed how far advanced it is.

Westpac and BNZ have both told the Financial Markets Authority (FMA) they expect to launch roboadvice services, which could close the “advice gap” by using artificial intelligence (AI) systems to give customers advice on things like KiwiSaver, insurance and mortgages.

The banks’ intentions were revealed in submissions on whether the FMA should use its “exemption” powers to allow roboadvice services to operate despite current law only allowing personalised advice to be given by a human being.

ANZ and Kiwibank’s intentions were blacked out in their submissions, released by the FMA.

FMA allows personalised robo-advice; applications open early 2018 (FMA), Rated: B

Submissions to the consultation focused on a number of themes:

  • Strong support for an exemption from the current laws preventing personalised robo-advice.
  • Opposition to financial limits and product exclusions.
  • Robo-advice should meet the same standards as those that apply to authorised financial advisers (AFAs).
  • Exemption applicants should be pre-approved or licensed.
  • Exemption conditions should be aligned with new advice regime requirements.

The FMA has decided not to impose financial limits on personalised robo-advice and the eligible product list has been expanded to include mortgages and personal insurance products.

Companies seeking to offer personalised robo-advice will have to provide the FMA with good character declarations for directors and senior managers as well as information showing they have the capability and competence to provide the robo-advice service. The exemption conditions will also be designed so that the robo-advice service is provided in a manner that is consistent with AFA requirements.

A summary of the submissions can be found here. 49 submissions were received by the FMA. 47 are being published.

India

P2P lending platform Lenden Club gets Rs 3.5 cr in equity investment (India Times), Rated: AAA

Mumbai-based peer-to-peer lending platform Lenden Club has raised $500,000 almost Rs 3.5 crore in equity investment from three major investors Venture Catalyst, Anirudh Damani and an Indian venture capital fund. Venture Catalyst and Anirudh Damani had put in seed investment of Rs 1.5 crore in the company as well in May last year.

Whither P2P lending by NBFC’s (Bar and Bench), Rated: A

The Reserve Bank of India’s notification on peer to peer (P2P) lending issued on October 4 this year (“Regulations”) seems to have only added an element of ambiguity in the minds of stakeholders. Eighteen months since the RBI issued the consultation paper and it is not certain how and whether stakeholder comments have been internalised in the paper.

The definition of a “peer to peer lending platform” as an intermediary providing the services of loan facilitation, may unintentionally bring into the purview, a wide variety of operators. As a literal construct, this does not seem to take into cognizance the various types of business operations in the industry simply because it doesn’t clarify whether this excludes a model that doesn’t provide syndication. Theoretically even an internet search engine, business correspondents and lead generators could fall under this definition.

This must be the first category of Non-Banking Financial Company (NBFC) to not function in the manner in which it has been typically designed. The new Regulations set a precedent to regulate entities as NBFC’s that undertake neither lending nor credit enhancement.

The new Regulations also seem to bring into its ambit, an “off-line” P2P: the very essence for P2P start-ups has been low transaction costs thereby resorting to the online medium for such lending.

Asia

SoftBank in talks to raise second, possibly larger than $ 100b, fund (Deal Street Asia), Rated: AAA

Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.

The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.

Middle East

S&P says fintech revolution unlikely to hurt GCC bank profitability (The National), Rated: AAA

The fintech revolution sweeping finance will lessen the profitability of banks in the GCC when it comes to parts of consumer banking – such as money transfers and foreign exchange – but overall it is unlikely to hurt the ability of regional lenders to make money.

The rating agency noted that the GCC banks that it assigns ratings to get about a quarter of their revenues from fees and commissions and foreign exchange gains and, while a big portion that is generated from lending and advisory activities, some of that money comes from transfers and currency exchange.

Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash. Lenders are fortunate that this country has one of the highest smartphone penetration rates in the world.

Fintech threatens Gulf bank jobs (Arab News), Rated: A

The rising influence of financial technology (fintech) firms in the Gulf could eventually threaten jobs and profitability at the region’s banks, warned ratings agency S&P Global.

“This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said Mohamed Damak, S&P Global Ratings credit analyst in the report.

Already, the region’s banks are starting to rethink their business model.

In early October, Mashreq launched one of the region’s first full service digital branchless bank — Mashreq Neo — as well as a new new digital mobile wallet service called Mashreq Pay — that can be used to make purchases around the world.

The Dubai-based bank has also started to use robotics in the third quarter to manage open account trade payments, according to the bank’s Q3 statement.

Canada

Lending Loop invests in Canadian board game cafe chain (P2P Finance News), Rated: AAA

LENDING Loop, a Canadian peer-to-peer lending platform, has agreed to finance Snakes & Lattes, a cafe chain where people can play and buy board games.

Amfil Technologies, which owns Snakes & Lattes, said on Tuesday that the financing will be used to fuel the expansion of the brand across North America.

Amfil Technologies Inc. Provides Update on Audit Completion, Uplisting / Dividend, Franchising and General Company Operations (Marketwired), Rated: A

Snakes & Lattes has entered into an EXCLUSIVE partnership with Lending Loop, Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. This partnership will fuel and facilitate the mass expansion of the Snakes and Lattes brand across North America, while simultaneously preserving shareholder value. This is the first time in history that Lending Loop has made a direct partnership to finance a growing company, and they will be conducting a mass marketing/advertising campaign to promote both Lending Loop and Snakes & Lattes.

In contrast, Amfil is collaborating with financial innovator, Lending Loop, to fuel the subsidiary’s growth at a fair market rate with flexible cash repayment terms.

Web’s creator to fintech players: Beware the blockchain Frankenstein (American Banker), Rated: A

Internet pioneer Sir Tim Berners-Lee looks at the fintech landscape today and sees something familiar — a creative ferment that reminds him of the early web. He also sees some mistakes in danger of being repeated.

Authors:

George Popescu
Allen Taylor