Thursday December 28 2017, Daily News Digest

china IPO

News Comments Today’s main news: VPC Specialty Lending Drops Prosper Loans.Best Egg to broaden services in 2018.Faircent raises $4M.RoboCash updates loan origination process.Tyro to launch new SME solutions. Today’s main analysis: China leads Asia’s IPO boom. Today’s thought-provoking articles: Can Lending Club grow by 20% in 2018?Blockchain could transform these major industries.APAC online lending is […]

china IPO

News Comments

United States

United Kingdom

China

  • China leads Asia in IPO boom. AT: Not really news, but it’s interesting to see where Chinese companies are going public. The big winner is the New York Stock Exchange. But Shanghai and NASDAQ are also looking good with Hong Kong hanging in there.”

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Reversal of fortune (Breaking Views), Rated: AAA

Most new entrants have also found it hard to build scale. Lending Club’s top line may grow by 20 percent in 2018, according to Reuters data, but that will take it only to $800 million. Even online student lender Earnest, which largely avoided industry potholes, has struggled. In October it sold itself to old-school servicer Navient for $155 million – less than half its value in a 2015 funding round.

Best Egg Will Broaden to Financing Purchases in 2018 (Banking Innovation), Rated: AAA

Marketplace lender Best Egg will move towards financing consumer purchases, including homes, as it looks to expand in 2018, the company told Bank Innovation.

If I can know my monthly cost for Amazon Prime before I sign a contract, why can’t I know my monthly cost for a car payment before going to the dealership? If I can see movie options before I go to the theater, why can’t I see my financing options before I sign a 5-year loan contract? Being empowered with concrete choices would make both budgeting and buying a car that much easier and help to save hours on the financing process. So, using my personal experiences from childhood to fuel my passion, I co-founded AutoGravity in October of 2015.

Our goal at AutoGravity was to make car financing as easy as watching a movie on Netflix, streaming an album off Spotify or buying a book from Amazon. So, we demystified the process by making it accessible to everyone – empowering them through our app on their smartphone.

Tax cuts, softened regulatory tone likely to help banks in 2018 (Central Penn Business Journal), Rated: A

Financial institutions also could face challenges in the near future as a result of technology-driven competition and long-term impacts from the recently approved tax reforms.

Marsico expects banks to increase automation of certain support-center processes over the next year. Artificial intelligence, for example, could handle some of the work that goes into processing loans, as well as tasks like verifying the authenticity of checks submitted through mobile deposit apps.

One study predicts banks throughout the world will increase their tech budgets by 4.1 percent in 2018.

Consumers still not benefiting from bank overdraft programs (Consumer Affairs), Rated: A

Most consumers still don’t know they are not required to accept their bank’s overdraft protection service, according to the Pew Charitable Trusts’ latest consumer finance project.

Before the law was changed in 2010, banks automatically enrolled consumers in overdraft protection. If consumers made purchases that overdrew their accounts, the banks covered the expense and then assessed an overdraft fee, which often cost as much as $35.

Since the law changed, consumers must opt-in to this coverage — banks cannot automatically enroll them. Thaddeus King, officer of The Pew Charitable Trusts’ consumer finance project, says it’s clear consumers don’t understand that overdraft protection is not only costly, but unnecessary.

In September a survey found that an estimated eight million consumers have opted-in, primarily because they thought they had to. Two-thirds of consumers who agreed to pay the overdraft fees were unaware it was optional.

Banks actively headhunting, but they want specific skill (CNBC), Rated: B

The rising influence of digital and banking-specific technology — so-called fintech — is “really changing how banks themselves will organize their own recruitment functions,” O’Sullivan told CNBC.

United Kingdom

VPC Specialty Lending Sells Prosper Marketplace Loans (London South East), Rated: AAA

VPC Specialty Lending Investments PLC on Wednesday said it sold its Prosper marketplace loans and was able to immediately reinvest substantially all of the proceeds into new investments.

The loans sold represented around 4.1% of VPC’s net asset value as at the end of October, and it expects the hit to net asset value from the sale to be around 0.56%.

China

China bourses behind Asia’s lead in global IPO boom (Nikkei Asian Review), Rated: AAA

Asian companies raised $79.14 billion through initial public offerings as of Dec. 18, up 10% from 2016, data from Dealogic shows. The sum represents 42% of the global tally, which surged 41% on the year to $194.8 billion.

Shanghai, the world’s second largest economy saw a total of 409 companies tapping $31.61 billion from the market, up 30% compared with last year. Of the country’s total funds raised, 56% was from Shanghai, making it Asia’s top IPO destination.

Source: Nikkei Asian Review

Hong Kong saw total funds raised fall 34% to $14.08 billion this year, despite a 24% jump in volume.

Alibaba-backed online lender Qudian, for instance, saw its New York-listed shares tumble 55% after it debuted in October. Its peer LexinFintech Holdings, backed by JD.com, on Dec. 14 slashed its fundraising target by 76% to $120 million.

European Union

P2P Lender RoboCash Updates on 2017 Progress (Crowdfund Insider), Rated: AAA

Latvia-based European peer to peer lender Robo.Cash, a young platform that is less than a year old, has provided an update on loan origination progress.  According to the P2P lender, RoboCash attracted € 2.5 million of investments in pay day lending (PDL) loans in 2017. Robo.Cash launched its platform in Latvia in February 2017.

Robo.cash said the current average sum of investments is € 2.900 per investor with over 1,500 investors from 28 EU-countries have joined Robo.cash in 10 months. The site says investors may be separated as follows:Germany (50,5%), Spain (7,2%), the Czech Republic (6,1%), Austria (4,6%), Latvia (3,9%), Portugal (3,6%), the United Kingdom (3,3%), Netherlands (2,7%), Lithuania (2,3%), Estonia (1,6%).

More retailers’ customers using Klarna’s buy-now, pay-later plan (The Columbus Dispatch), Rated: AAA

The Swedish e-commerce company signed 500 online retailers for its new service, which allows consumers to buy products now and pay for them later.

And the company’s North American operations signed on a new CEO, Jim Lofgren, replacing central Ohio native Brian Billingsley, who recently was named chief revenue officer for Dallas-based payment-service company Modo.

“We serve more than 70,000 merchants over 18 markets, and our data in the U.S. market is really very similar to other markets,” Lofgren said recently. “We’re making a very significant impact for our merchants.”

Brussels moves to boost Europe’s fintech sector (Financial Times), Rated: A

The European Commission is to present draft legislation early next year to remove administrative hurdles to the cross-border operation of crowdfunding sites and online peer-to-peer lending services. It says the initiative will ensure that EU companies can grow and compete.

European fintech successes include TransferWise, the Estonian-developed foreign exchange company, and France’s PayPlug, which makes it easier for sole traders to accept credit card payments.

LoanBook Shares Latest Milestone (Crowdfund Insider), Rated: A

LoanBook, a Spanish marketplace lending platform, having easily surpassed its initial £650,000 last week is, is heading toward the home stretch having raised over £721,200 for 6.40% equity with the help of more than 253 Crowdcubeinvestors. £340,000 of this investment sum comes from current shareholders, local Business Angels and Family Offices. Funding will be used to continue LoanBook’s platform growth and development.

Crowdfunding saves tumbling down French chateau (The Business Times), Rated: B

It’s a modern story of an ancient fairytale castle: a crowdfunding effort online has raised 1.6 million euros (S$2.55 million) to restore a chateau in western France.

Around 25,000 people from 115 countries have become shareholders in the chateau de La Mothe-Chandeniers which has turrets, a moat and an elderly owner who had not maintained it.

International

30 Big Industries Blockchain Could Transform (CB Insights), Rated: AAA

1. BANKING

Swiss bank UBS and UK-based Barclays are both experimenting with blockchain as a way to expedite back office functions and settlement, which some in the banking industry say could cut up to $20B in middleman costs.

2. PAYMENTS AND MONEY TRANSFERS

Abra, another blockchain-enabled mobile wallet and payments startup, was recently integrated into the payments ecosystem of American Express: through a new feature, customers will be able to fund their Abra wallets using an eligible American Express Card.

3. CYBERSECURITY

Other potential applications include using blockchain to provide massive scale data authentication: for example, using its blockchain-enabled KSI (Keyless Signature Infrastructure), cybersecurity startup Guardtime tags and verifies data transactions for cryptographic assurance of their integrity and authenticity.

11. STOCK TRADING

Partnerships with existing trading networks and exchanges will help blockchain take off in the space. Blockchain startup Chain (which is also mentioned below) is a leader on that front: the company helped orchestrate a live blockchain integration that successfully connected Nasdaq’s stock exchange and Citi’s banking infrastructure.

12. REAL ESTATE

Tech startup Ubitquity offers a Software-as-a-Service (SaaS) blockchain platform for financial, title, and mortgage companies. The company is currently working with Land Records Bureau in Brazil, among other stealth clients, to input property information and record documents through the blockchain.

13. INSURANCE 

LenderBot is a micro-insurance proof of concept for the sharing economy that demonstrates the potential for blockchain applications and services in the industry. LenderBot, which allows people to enroll in customized micro-insurance by chatting through Facebook Messenger, enables blockchain to serve as the third-party in the contract between individuals as they exchange high-value items through the sharing economy.

28. CREDIT HISTORIES

Lenders minimize the risk posed by loans or lines of credit to small businesses by evaluating their histories using business credit reports. These third-party reports — issued companies such as Dun & Bradstreet — are inaccessible to the small business owners (beyond the basic profile information they provide to the credit bureau). This can make business owners feel like credit bureaus have all the power over loan terms, even though the credit bureau may be assessing outdated or inaccurate information to determine their reports.

Lumeno.us is one startup using blockchain technology to make business credit reports more accurate, transparent, and shareable. Lumeno.us normalizes semi-structured financial data using a proprietary application of collaborative tagging and advanced analytics. From there, it provides business owners the tools to share their data in order to get a loan, find trusted partners, or manage a portfolio or network.

30. CROWDFUNDING

Initial Coin Offerings (ICOs), in which companies sell cryptocurrency-backed tokens in their companies in the same manner as a publicly-traded company sells stock, are another example of blockchain-powered crowdfunding — startups such as OpenLedgermake that possible. Individuals may soon invest in real estate using “crypto crowdfunding,” as well: Singapore-based Real Estate Asset Ledger (REAL) intends to use blockchain technology to inject greater liquidity and transparency into real estate investing.

How telepresence can revolutionize financial services industry (Born2Invest), Rated: A

Imagine, you are trying to make an investment somewhere in the World and you want to be face to face with your investment advisor without leaving your own office or room?

What is different about telepresence is that you can be telepresent through someone else instead of being even present through video conferencing or other methods.

I the financial sector, companies are using telepresence to connect their customers with their loan officers, investment advisors, and other employees to discuss all the requirements and provide solutions without actually the presence of the customer as well as the financial organization at the same place.

Australia/New Zealand

Challenger Bank Tyro to Launch New Financial Solutions for SME (Crowdfund Insider), Rated: AAA

Australian fintech and challenger bank Tyro is set to launch a new set of financial solutions for small to medium enterprises (SMEs). Founded in 2001, Tyro describes itself as Australia’s largest independent EFTPOS provider, focusing on smaller to medium enterprises. The company states it is now has a license from APRA to offer banking products and deposits with its platform are government guaranteed. The company currently has 20,000 customers and has $42.2 billion in transaction.

Online Financing Down Under: A Rapidly Evolving Market (TG Daily), Rated: AAA

The research paints a clear picture of trends currently taking place in Australia and New Zealand, where $348.37 million and $267.77 million respectively has been issued through online financing options (through 2015). These statistics are notable since 2012, with a growth rate of 653% between 2013 – 2015.

Various small business loans lenders currently offer funding to Australian clients from $5,000-$400,000 (depending on the industry lender). Australian small business loans lenders such as prospa, Capify, Sail, and Spotcap dominate the market.

India

Online Peer-To-Peer Lending Startup Faircent Raises $ 4 Million (Bloomberg), Rated: AAA

Faircent raised $4 million (Rs 25 crore) in early-stage funding led a Belgium-based impact investor Incofin Investment Management, Rajat Gandhi, co-founder of Faircent, told BloombergQuint over the phone.

P2P lending marketplace platform launched (The Hindu Business Line), Rated: AAA

Rajiv Ranjan, a former Infoscion along with Ambar Kasliwal, a Mumbai-based Chartered Accountant, has launched a fully-owned P2P lending marketplace platform.

Called PaisaDukan.com, it is a part of BigWin Infotech, a government recognised start-up and it aims to start operations from January 2018, company officials said. The startup is among a few who have applied for an NBFC ((non-banking financial company)-peer-to-peer (P2P) licence after RBI’s revised guidelines.

Fin-tech gains from innovations, digital push (VC Circle), Rated: AAA

Private equity and venture capital firms, which sat on huge money piles and waited on the side lines looking for the right opportunities, caught on to the excitement and loosened their purse strings to record a four-fold jump in investments to $1.84 billion in 2017 from $447 million, showed provisional data from VCCEdge, the data and analysis platform of News Corp VCCircle.

While seed and angel investments accounted for 43% of the total number of deals at 32, growth- and late-stage deals, besides private transactions and venture debt accounted for the rest.

Besides, Paytm’s $1.4 billion infusion from Softbank, Policybazaar’s $77-million Series-E round, SME Lending platform Capital Float’s $45 million Series-C funding, MSwipe’s $41 million funding from UC-RNTand Eduardo Saverin’s B Capital, and Mobikwik’s $35 million round from Bajaj Finance also made the headlines during the year.

Source: VC Circle

RBL Bank to go stronger on fintech partnerships (Economic Times), Rated: A

While banks are fighting a bitter turf war with fintech startups to retain their share of business, private sector lender RBL Bank has seen value in strategic partnerships. The bank is growing its advances book by almost half annually, driven largely by partnerships with non-banking finance companies (NBFC) and tech startups.

While startups such as MoneyTap, BookMyShow are helping the bank acquire customers for its credit products, even its tie-up with one of the most prominent NBFCs Bajaj FinservBSE -0.14 % is helping the bank get customers who were never eligible for a credit card previously.

Rein in your exuberance as you step into 2018 (Business Standard), Rated: A

Investors need to position their personal finances in a manner that will enable them to gain from developments in the future.  Book profits in the mid- and small-cap space: Mid- and small-cap funds’ strong performance streak continued in 2017 (category average return: 47.19 per cent year-to-date). As valuations of growth stocks shot up, investors turned to value picks. …

Asia

Robo-advisory and its role in capital management (Fintech Innovation), Rated: AAA

Africa

Robots versus financial advisors (Moneyweb), Rated: A

With the advent of robo-advisors, where advice is provided at low- or no cost over the internet, questions are being raised as to the future of qualified financial advisors. Is my job becoming obsolete?

A qualified and trusted advisor is able to spot potentially poor financial decisions and gently advise against this course of action. A robo-advisor could never be such a friend in need.

Authors:

George Popescu
Allen Taylor