Thursday September 12 2019, Weekly News Digest

bank technology

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-4 Trust. Stripe debuts corporate credit cards. College Ave completes $300M securitization of private student loans. Yirendai issues earnings results. Today’s main analysis: Deregulating Fannie and Freddie (A MUST-READ REPORT FROM THE U.S. TREASURY). Today’s thought-provoking articles: Average FICO scores hit […]

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

bank technology

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-4 Trust (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-4 Trust (“SCLP 2019-4”). This is a $465 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-4

Class

Preliminary Rating

Class Principal

A

AAA (sf)

$360,000,000

B

AA+ (sf)

$29,500,000

C

A+ (sf)

$47,500,000

D

BBB+ (sf)

$28,000,000

OnDeck CEO Noah Breslow to Deliver Keynote Address at 2019 LEND360 Conference (GuruFocus), Rated: A

OnDeck today announced that Chairman and CEO Noah Breslow will be a keynote speaker at the LEND360 Conference in Dallas, Texas on Thursday, September 26, 2019. Mr. Breslow will discuss industry trends in alternative data and how they are improving many aspects of online lending to small businesses.

Case activity for On Deck Capital, Inc. vs Beautyshea, LLC on Sept. 9 (Pennsylvania Record), Rated: B

‘Judgment Entered For $6,593.50 On 09-09-2019 236 Notice Of Judgment Sent 09-09-2019’

Payments giant Stripe debuts a credit card in its latest step into the financing fray (TechCrunch), Rated: AAA

Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.

College Ave Student Loans Completes $ 300 Million Securitization of Private Student Loans (Crowdfund Insider), Rated: AAA

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $300 million securitization of private student loans, its third securitization and largest to date. According to College Ave, the transaction was oversubscribed attracting a broad and diverse group of repeat investors and new participants. Barclays and Goldman Sachs were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

The Deregulation of Fannie and Freddie; Rate Cuts; “Full Stack” Banks (PeerIQ), Rated: AAA

This week, the Trump administration released their long awaited housing finance plan that will privatize Fannie Mae and Freddie Mac.

The plan would require a significant recapitalization – up to $180 Bn.

Read the full report here.

Source: Federal Reserve, PeerIQ

Average FICO score hits all-time high (CNBC), Rated: AAA

For the first time, the average national credit score has reached 706, according to FICO, the developer of one of the most commonly used scores by lenders.

Source: CNBC

U.S. Consumer Debt Surges on Jump in Credit-Card Balances (Bloomberg), Rated: A

U.S. consumer borrowing swelled in July by the most since late 2017 as Americans carried larger credit-card balances to fund both everyday and online purchases.

Total credit rose by $23.3 billion from the prior month, exceeding all estimates in a Bloomberg survey of economists, Federal Reserve figures showed Monday. Revolving debt outstanding increased by $10 billion, also the most since November 2017, while the growth of non-revolving credit was little changed from a month earlier.

Kabbage Launches New Small Business Revenue Index (Crowdfund Insider), Rated: A

Global financial service platform Kabbage announced this week the launch of its new Small Business Revenue Index. According to Kabbage, the index has two million live data connections the platform maintains across its customer base of more than 200,000 small businesses.

The Current State of the Small Business Lending Sector (Lend Academy), Rated: AAA

The companies that I view as pioneers in this space are Kabbage and OnDeck.

Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding CircleStreetsharesFundboxBlueVineBiz2CreditFundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.

The Challengers of Small Business Lending

Probably the most recognizable name is PayPal and the Working Capital product which, according to deBanked, has surpassed OnDeck in small business lending volume.

Patriot Financial leads $ 15 million round for Numerated (American Banker), Rated: A

Numerated, the loan technology company that incubated inside Eastern Bank and spun off on its own in May 2017, has raised $15 million from bank investment fund Patriot Financial Partners. Existing investors Venrock, Fintop Capital and Hyperplane also joined the round.

TBF Financial Buys $ 60 Million in Commercial Debt from Major Online Lender (PR Newswire), Rated: A

TBF Financial purchased nearly $60 million in non-performing loans from a major online small business lender in recent transactions, CEO Brett Boehm announced today.

TBF bought the pools of post-charge-off loans as the highest bidder in transactions arranged through multiple brokers. In most cases, the company purchases directly from alternative lenders, equipment leasing companies and banks.

LendingTree Ranks the 50 Most Expensive Towns in America (NewKerala), Rated: A

No. 1 Vineyard Haven, Mass.

Total population 17,321
Median individual income $39,045
Median home value $674,600
Affordable housing costs for a median income earner $911
Calculated mortgage payment for a median priced home $2,767
Median rent payment $1,441
Home affordability deficit -$1,856
Rent affordability deficit -$530

The DeFi trend is accelerating and gaining acceptance, with Coinbase joining the fray. The leading brokerage has created the Coinbase Bootstrap Fund, to boost DeFi projects. Coinbase will invest in two projects, the Compound crypto lending scheme, and the dy/dx crypto derivative exchange.

The 30-somethings guide to creating passive income (Ladders), Rated: A

You might not have $30,000 saved up to buy a rental property right now, but do you have $500? The beauty of REITs like DiversyFund is you can start investing for the amount of money you might drop on a new pair of shoes.

There are public and private REITS as well as funds classified as real estate crowdfunding. Compare your options and find the best one that works for you.

PeerStreet Named CRETech 2019 Real Estate Tech Award Winner (Crowdfund Insider), Rated: B

Real estate investment platform PeerStreet announced on Tuesday it won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs for the Information & Intelligence – Crowdfunding category.

Zillow chooses Impac Mortgage COO Rian Furey to lead mortgage expansion (Housingwire), Rated: B

Zillow announced Monday that it is naming Rian Furey president of Zillow Home Loans.

Balboa Capital Continues Accelerated Growth, Adds 125 New Employees in First Half of 2019 (Yahoo! Finance), Raated: A

Balboa Capital, an online lender that specializes in equipment financing and small business loans, hired 125 new employees during the first six months of 2019 to accommodate the company’s rapid increase in new business and acquisition of several new strategic partners.

United Kingdom

Why crowdfunding may not be the great democratising force in investment after all (The Conversation), Rated: AAA

The digital revolution has had a huge impact on the way new and small companies are financed – and crowdfunding has been at the forefront.

Initially, crowdfunding brought great optimism that it would have a “democratising effect” on finance. On the one hand it would enable entrepreneurs excluded from traditional sources of finance to attract funding. And, on the other, it would provide new opportunities for people with even relatively modest amounts of money to invest. For example, private investors looking for higher returns than those available with high street banks have been attracted to various lending platforms – also known as peer-to-peer (P2P) platforms.

Sonovate raises £110m to drive invoice finance (Fintech Futures), Rated: A

Finance tech provider Sonovate is looking to expand internationally and deploy more working capital to SMEs and mid-market businesses after raising £110 million, reports Jane Connolly.

Spotcap find 77% of SME brokers are upbeat about Brexit (AltFi), Rated: A

Over three-quarters of commercial finance intermediaries in the UK expect the number of loans they broker to increase after Brexit, with more than half saying the number will rise “by a lot”.

In July Berlin-based online lender Spotcap asked 132 UK brokers, accountants and advisers about the future of SME finance in the UK, the results of which it published today as part of a report entitled The State of Commercial Finance in the UK.

FCA urges firms to prepare for no-deal Brexit and launches helpline (P2P Finance News), Rated: A

FIRMS should prepare for the possibility of a no-deal Brexit, says the Financial Conduct Authority (FCA), as it launches a dedicated helpline for businesses.

The City watchdog, which oversees the peer-to-peer lending market as well as the rest of the financial servcies sector, says firms who have not prepared appropriately for the UK leaving the EU without a deal may see an impact on their business.

Foreign firms eyeing P2P market entry (P2P Finance News), Rated: A

REGULATORY consultancy Bovill has reported a steady stream of interest from new entrants to the peer-to-peer lending market, particularly from overseas firms.

Brown attributed the slowdown to the fact that P2P is a more mature market, meaning there was “less of a gold rush” for new players.

H&M extends Klarna ‘buy now, pay later’ service to the UK (Fashion United), Rated: B

Swedish fast-fashion giant H&M has extended its partnership with payment provider Klarna to the UK market, offering Brit shoppers the option to ‘buy now, pay later’.

New SME services added to Starling Bank’s marketplace (AltFi), Rated: B

Digital Risks is an insurance provider for small and medium-sized digital businesses, including cover for specific threats like commercial legal protection, cyber security, management liability, employers liability, public liability and professional indemnity.

While CyberSmart is a platform for SMEs to identify digital weaknesses and achieve their Cyber Essentials Certification, the government-backed accreditation for companies looking to protect against cyber threats.

China

Yirendai (NYSE:YRD) Issues Earnings Results (Mayfield Recorder), Rated: AAA

Yirendai posted its earnings results on Tuesday, September 3rd. The technology company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.24), Morningstar.com reports. Yirendai had a return on equity of 32.93% and a net margin of 15.30%. The firm had revenue of $322.89 million for the quarter.

LexinFintech Secures $ 300 Million Private Placement of Convertible Notes with PAG (Crowdfund Insider), Rated: A

Chinese consumer financing platform LexinFintech announced on Wednesday it has entered into a convertible note purchase agreement with PAG issue and sell convertible notes in an aggregate principal amount of $300 million through a private placement. 

IceKredit Raises $ 47M in Pre-Series C Funding (FINSMES), Rated: A

IceKredit, Inc., a Los Angeles, CA and China-based credit risk and credit management company, raised $47m in pre-Series C funding.

These Chinese Online Lenders Are Not For the Weak at Heart (GuruFocus), Rated: A

Beijing-based online lender Yirendai (NYSE:YRD) and Shanghai-based Paipaidai, or PPDAI Group (NYSE:PPDF), shares have been pummeled down to their lowest levels in the past year. Yet aside from receiving credit lines from large Chinese institutions amid China’s crackdown on fraud lending in their industry, both lenders appear to remain in a healthy state.

PPDAI — the older and bigger of the two lenders — came out strong in its recent quarter, beating earnings expectations. The $1.2 billion online lender reported it had 29% year-over-year growth in loan origination volume to $3 billion, compared to just 1.6% growth a year earlier.

Hexindai Announces Support For Regulators’ Decision to Include P2P Platforms in Central Bank’s Credit System (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Tuesday its support for the decision by industry regulators to include the country’s P2P platforms in the central bank’s credit system. The online lender reported that it believes this as a positive move for the P2P industry.

Sequoia-Backed P2P Lender Huobank Collapses As Beijing Mops Up Online Finance Risks (China Money Network), Rated: A

European Union

Banks raise concerns ahead of ECB meeting (Irish Examiner), Rated: A

The president of Germany’s powerful savings banks association, community lenders that dominate the country’s shopping streets, joined Dutch bank ING yesterday in criticising the ECB’s loose monetary policy.

Its 50 million customers have increased their savings by almost 5% since last year to €965bn which is roughly the size of the Dutch economy. With lending amounting to about €860bn, the banks are left with a chunky unused surplus.

Fintech Europe Selects Eight Startups for its Fourth Batch (Yahoo! Finance), Rated: B

Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the eight startups selected for its fourth batch. The platform has grown its partner base to 11 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, and Finablr, it runs two 12-week innovation programs a year.

CashDirector 

CashDirector SA is a technology company providing SMEs and banks with a Digital CFO integrated with on-line banking, helping with SMEs manage cash flow and accessing financing.

Credit Kudos

Credit Kudos is a credit bureau that uses financial behaviour to measure creditworthiness.

International

Technology Is Banks’ New Battleground (WSJ), Rated: AAA

European banks are spending vast sums on technology—but it may not be enough to defend against the incursions of bigger, richer American rivals.

U.S. lenders already dominate investment banking in Europe. The big risk for the continent’s banks is that slicker tech could give their American rivals a platform to make gains in lending to companies—the Europeans’ traditional stronghold.

This year, Europe’s banks plan to make technology investments worth in aggregate $77 billion, according to consulting firm Celent. That compares with $105 billion for their U.S. rivals. Faster, more seamless trading systems have long been a priority, but tech spending has shifted across business lines and from back office to front office. It can cover everything from maintaining decades-old systems to cutting-edge artificial intelligence.

Source: Celent

Wirecard Teams Up With Credibly to Digitalize Funding Disbursements (Crowdfund Insider), Rated: A

Germany-based global provider of digital payments and commerce solutions Wirecard announced on Wednesday it is partnering with U.S. business funding fintech Credibly to digitalize funding disbursement. Wirecard claims to be one of the largest issuers of payout cards in the U.S. and is now offering fully digitalize solutions.

PwC to AM industry: disrupt yourself or face extinction (City Wire Selector), Rated: A

The European financial services industry is facing an ‘Amazonisation’ moment, in which those offering consumer-first solutions underpinned by sustainable finance will survive and the others will cease to compete.

That is the headline finding of 52-page report co-authored by PwC Luxembourg and Luxembourg for Finance, which investigated underlying industry trends and indicated that the European market is losing ground on its US and Asian peers when it comes to innovation and assets.

State of the Chain: Five Winning Use Cases for Blockchain in 2019 (U.today), Rated: A

Predictably it was Binance that stole the limelight, with the surprise launch of its eponymous lending platform, which was unveiled on Monday, August 26, and then proceeded to fill its initial lending quota of 200,000 BNB and 10 million USDT in a matter of seconds two days later.

Dharma and Compound have announced new products, while Coinbase has hinted that this will be the next vertical it expands into.

Lenders can enjoy annualized interest of up to 15%, which is significantly better than the negative rates they are currently offered on fiat savings and on negatively yielding government bonds.

Australia

Hopes fintech inquiry will ‘validate’ bank competitors (The Sydney Morning Herald), Rated: A

On Wednesday New South Wales senator Andrew Bragg successfully moved to secure a senate committee inquiry into the fintech and regulatory technology spaces, paving the way for a year-long review into how competitive Australia is in these sectors.

Chief executive of small business lender Lumi, Yanir Yakutiel, said the inquiry should focus on expanding the regulatory sandbox program, which is designed to help early stage fintechs test their ideas.

India

Five Ways Artificial Intelligence Is Instigating Paradigm Shift In Online Lending Space (Via.news), Rated: AAA

Currently, digital lending accounts for around 15% to 20% of the total lending market and could surpass 50% in coming years.

Asia

Chinese P2P Lending Companies Ventures to Vietnam (LearnBonds), Rated: AAA

This business model boomed in China, but following a regulatory clampdown by authorities on risky financial practices, the number of fintech and peer-to-peer (P2P) lending platforms in the country dropped from about 1,900 a year ago to just 900 in May.

It now appears that some of these Chinese P2P lending companies have not necessarily disappeared. They simple ventured into new markets and in particular Vietnam.

According to the State Bank of Vietnam (SBV), there were 40 peer-to-peer lending companies operating in Vietnam as of March. Of these, 10 companies are from China.

MENA

The opportunity of peer-to-peer lending in Lebanon (Executive Magazine), Rated: AAA

Through conversations with Lebanese entrepreneurs, business owners, bankers, and politicians, I have had a number of eye-opening discussions into the challenges and opportunities faced by Lebanon’s SME ecosystem. Given the country’s long-standing tradition in financial services and its large banking sector, I believe fintech—with solutions such as peer-to-peer lending, machine learning to personalize insurance solutions, and the use of artificial intelligence for wealth management—stands as a serious contender to unlock the funding challenges faced by Lebanon’s SMEs.

Latin America

SoftBank in talks to invest in Latam venture capital funds (Reuters), Rated: AAA

Japan’s SoftBank Group Corp (9984.T) is in talks with venture capital firms in Latin America to invest hundreds of millions of dollars in their funds, a move likely to speed up spending of a $5 billion regional venture capital fund, three sources with knowledge of the matter said.

So far, SoftBank has only announced direct investments using the fund’s resources, injecting capital into Colombian delivery app Rappi, Brazilian lender Creditas, gym membership app Gympass and Mexican payments firm Clip, for instance.

Proptech Flat raises US$ 4.5 million pre-seed round led by ALLVP (Contxto), Rated: A

Contxto – Not only is the Mexican real estate industry huge but also outdated with many inefficient processes. Counteracting this, a new Mexican startup, Flat, recently raised US$4.5 million in one of Mexico’s largest pre-seed rounds ever.

Africa

Nigerian online-only bank startup Kuda raises $ 1.6M (TechCrunch), Rated: AAA

Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.

Canada

Peer to Peer Lender Lending Loop Tops $ 50 Million in Loans (Crowdfund Insider), Rated: AAA

Canada’s first peer to peer lending platform for SMEs, Lending Loop, has topped CDN $50 million in loans, according to a post by Brendon Vlaar, co-founder and CTO of the company. Lending Loop provides investment opportunities in debt-based securities to both accredited and non-accredited investors.

PayBright Raises $ 34M in Growth Equity Financing (FINSMES), Rated: A

PayBright, a Toronto, Canada-based fintech company, received a $34m equity investment from goeasy.

Authors:

George Popescu
Allen Taylor

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

Thursday May 3 2018, Daily News Digest

10 best states for small business lending

News Comments Today’s main news: Microloans for SMBs are becoming big business. RateSetter offers IFISA transfers. Funding Circle opens IFISA to transfers. Funding Circle SME Income Fund issues more shares. BNP Paribas Asset Management launches SME lending fund. Today’s main analysis: Lendio’s top 10 best states for small business lending. Today’s thought-provoking articles: The missing benefit in employee financial […]

10 best states for small business lending

News Comments

United States

United Kingdom

International

European Union

Other

News Summary

United States

Microloans a glimmer of hope for small businesses in need (USA Today) Rated: AAA

The microloan market has evolved in the last five years, says Antara Dutta, a social entrepreneur and mentor with the Delaware chapter of SCORE, a volunteer network of small business advisers. Many nonprofit organizations, foundations and peer-to-peer lending networks have also entered the microloan market.

One such company is Funding Circle, a San Francisco-based lending platform that connects investors with small business owners.  “Banks have really pulled back from doing small business loans over the past decade,” says Sarina Siddhanti, Funding Circle’s U.S. Head of Commercial. “We fill that gap.”

While Funding Circle awards business loans up to $500,000, they also offer microloans to entrepreneurs who need less.

Lendio Announces Annual List of Top 10 Best States for Small Business Lending (Lendio) Rated: AAA

In honor of National Small Business Week, Lendio, the nation’s leading marketplace for small business loans, today announced its third annual list of top 10 states for small business lending, based on lending data from the Lendio platform, which matches businesses with more than 75 lenders.

Source Lendio; sba.gov

CommonBond’s Latest Study Reveals the Missing Benefit in Employee Financial Wellness (Crowdfund Insider) Rated: AAA

On Tuesday, CommonBond, an online lending platform servicing the student loan market, released the results of one of the most comprehensive employee financial wellness benefits studies to date. According to the lender, the research revealed the extent to which student debt affects employees’ financial wellness, as well as how companies are meeting, or not meeting,  the financial wellness needs of their employees.

Key findings of the study included:
  • Student debt cuts across all age groups, including parents who are taking out loans for their children: Nearly 75% of all workers have taken out loans to fund their own education, while 21 percent of workers expect to take out a loan for a child or other family member’s education in the next five years. 
  • Human resources executives prioritize benefits for employees without student debt: For employees with student debt, student loan repayment is the most-requested financial wellness benefit; however, human resources teams rank student loan repayment as their third priority. 
  • Employees do not think their benefits are as innovative as human resources executives believe: 71% of human resources executives see their benefits offering as innovative, compared with 50 percent of employees. 
  • Student loan benefits attract talent, retain employees, and improve work performance: 78% of employees with current or future student loan debt want their employer to offer this benefit, and 65% of employees over age 55 in these categories want the same.

RealtyMogul Brings Fintech Solutions To Commercial Real Estate Investment (Benzinga) Rated: A

What does your company do? What unique problem does it solve?

RealtyMogul is a unique commercial real estate private markets investing platform that provides discerning investors exclusive access to thoroughly vetted opportunities, rigorous underwriting, and high-touch customer service through licensed investment professionals. We strive to build wealth through sound principles and data insights, serving real people who want a smart alternative investing strategy.

Fannie and Freddie approve thousands of loans with no formal appraisals (The Washington Post) Rated: A

For homeowners and buyers, it’s been a windfall: relief from having to pay for a traditional mortgage appraisal that usually costs between $400 and $600. The savings nationwide to consumers in just the past year alone may total tens of millions of dollars.

Last year, the two largest sources of American mortgage financing — federally backed Fannie Mae and Freddie Mac — began accepting home-purchase loans that carried no formal property appraisal.

Ryan Lundquist, an appraiser in Sacramento, noted that computer programs “cannot smell 20 cats living at the property.”

Pat Turner, a Richmond appraiser, says that, worse yet, the “savings” from Fannie and Freddie may not always flow to buyers. He cited a recent case in his area where a major online lender allegedly charged a buyer $600 on a loan with an appraisal-fee waiver.

 

After ceding a key competitive advantage to fintech companies in recent years, several mass market and regional banks are testing alternative data for use in marketing, pre-screening, and underwriting consumer loan products like credit cards and personal loans, and exploring emerging use cases in fraud prevention and other areas.

While most lender decisions still use traditional sources, such as credit file data managed by the consumer reporting agencies, the potential for alternative data to transform lending is clear. Rent and utility payments, employment information, and behavioral data paint a clearer picture of a consumer’s creditworthiness and could allow lenders to reach underserved populations. In fact, alternative data has allowed Lending Club, a marketplace lender, to extend lower-priced credit to borrowers that would otherwise be classified as subprime, according to the Federal Reserve.

Inside Bank of America’s big plans for small businesses (TearSheet) Rated: A

What about branch transformation on the small business side? How is B of A marrying its physical and digital strategies?
We know in certain pockets of towns and cities you’ll have more business owners coming in and out than in others; in those centers with high traffic of business owners we add more capabilities so we’re there for them and have more people who understand small business.

What’s an example of technology you’re investing in?
Three weeks ago we launched our relationship rewards program, which is our version of the Preferred Rewards, where when you bring more to us — more deposits or lending — you get more benefits. It’s a very straightforward way to bank with us that encompasses lending, merchants and operating accounts. That’s a technology investment in itself because we have to on the back-end tie everything together and understand the full picture of the relationship; it comes from updating our products and solutions in the backend to streamlining the underwriting and fulfillment processes.

 

 

First RealFund Raises $ 500,000 of Preferred Equity for Brooklyn Property Renovation (Citizen Tribune) Rated: B

First RealFund (“FRF”) has raised $500,000 of preferred equity financing for the renovation of a 4-story brownstone in Brooklyn’s Bedford Stuyvesant neighborhood.

Morgan Stanley kicks new tech strategy into gear (American Banker) Rated: B

Morgan Stanley CEO James Gorman has asked Rob Rooney, the investment bank’s technology chief and leader of its international unit, to return to New York to focus solely on the tech part of his job.

“We have enormous, staggering amounts of data for risk management, [anti-money-laundering], regulatory and other purposes,” Rooney said. “The use cases here are enormous. The job in our technology organization is to make sure we build a strategy we can leverage across the firm, otherwise it’s not efficient.”

The bank is increasing its investments in innovation and cybersecurity, he said.

United Kingdom

RateSetter opens IFISA to transfers (Peer2Peer Finace) Rated: AAA

RATESETTER has opened its Innovative Finance ISA (IFISA) to transfers from other providers.

RateSetter will accept full and partial transfers and there is no limit on the number of existing ISAs that can be transferred.

RateSetter introduces bonus scheme (Bridging & Commercial) Rated: B

Investors will receive a £50 bonus if they recommend the platform to a family member or friend who then invests £1,000.

The referred person can also receive a £100 bonus if they keep the £1,000 invested in RateSetter for a year.

Funding Circle opens IFISA to transfers (Peer2Peer Finance) Rated: AAA

FUNDING Circle has opened its Innovative Finance ISA (IFISA) to transfers, meaning that all of the ‘big three’ peer-to-peer lenders now offer this capability.

“Since last November more than £90m has been lent directly to businesses through the Funding Circle ISA, and we’re pleased to see so many of you taking advantage of the opportunity to earn attractive, stable returns tax-free,” the company said on a blog post on its website.

 

6%-yielding Funding Circle fund issues more shares (Citywire) Rated: AAA

The 6% yielding lender to small businesses, plans to sell up to 24.9 million shares it holds in treasury having bought them back when they briefly traded at a discount two years ago.

The shares are being offered to ‘qualified’ experienced investors at  102.2p, which is 2.2% less than the share price at Monday’s close and a 2%-3% premium to their net asset value.

Starling Bank partners with Samsung for mobile payments (AltFiNews) Rated: A

Announced today, digital bank Starling has partnered with Samsung to offer mobile payments method Samsung Pay to all Starling customers, creating the bank’s fourth partnership for making purchases via a mobile phone.

Starling users will now be able to make contactless payments at the point of sale using nothing but their Samsung phone, using iris, fingerprint or PIN recognition to prove their identity.

Nucleus targets start-ups with new type of loan (Peer2Peer Finance) Rated: A

The alternative business finance provider announced the launch of Start-up Finance on Wednesday, which is tailored to help start-ups get their business off the ground.

Young companies can borrow between £25,000 and £20m, with a secured interest-only loan, over a period of up to five years.

High-cost lending provides “a socially valuable function”, says regulator boss Bailey (City A.M.) Rated: A

The boss of the UK’s top financial regulator believes access to controversial high-cost loans is an “important feature” for many Britons to fund everyday living.

Andrew Bailey, the chief executive of the Financial Conduct Authority, today indicated a clampdown on the sector would not be forthcoming.

How to become an IFISA millionaire in 25 years (Peer2Peer Finance) Rated: B

Figures from P2P analyst 4th Way suggest if a lender invests £10,000 each year across several platforms and aims for nine per cent interest after bad debts, they could be a millionaire within two-and-a-half decades.

Rip-off debts soar as rent-to-own, catalogue credit and doorstep lending surge after payday loan crackdown (The Telegraph) Rated: B

Debts from catalogue credit, doorstep lending and rent-to-own have all more than doubled in recent years even as regulators cracked down on payday loans.

Lenders now face a crackdown as the City watchdog wants to make sure high-cost loans are only used by borrowers who can afford the debt and are helped by it.

 

China

Niwodai Seeks Partners for Fintech-driven Expansion into Southeast Asia (PR Newswire) Rated: AAA

Niwodai, one of the largest Chinese P2P lending companies, is said to be seeking a path into Southeast Asia, according to sources. The company is in frequent contact with potential partners, looking to map out a proper route to advancing their business, of which financial technology is the most powerful tool. Considering the challenges that most Chinese fintech companies have faced, proper cooperation with a local partner should be a win-win situation.

European Union

BNP Paribas Asset Management launches SME lending fund (AltFiNews) Rated: AAA

BNP Paribas Asset Management has launched a new SME lending fund for institutional investors.

The BNP Paribas Novo 2018 business loan fund follows on from its Novo 1 fund, launched in 2013. The new fund has the backing of the FF and the CDC and aims to provide new sources of financing to help French medium-sized companies expand.

BNP Paribas Novo 2018 could invest €264m over the next three years, the firm said in a statement.

German Varengold Bank Provides Credit Line to Estateguru (P2P Banking) Rated: B

Estonian property p2p lending marketplace Estateguru announced that it has secured its first institutional investor.

In March 2018, Estateguru signed the firm’s first institutional credit line to be invested in loans originated in the Baltic market with Germany based Varengold Bank AG.

International

New FIS Study Finds Larger U.S. and U.K. Banks Are Vulnerable to Losing Critical Small-Midsized Business Customers (Fintech Finance) Rated: AAA

The study found that more than 80% of surveyed SMB customers in the U.S., and 70% of SMB customers in the U.K., are satisfied with their primary banking providers. However:

  • In the U.S., SMBs report higher satisfaction with services from community banks over larger banks.
  • In the U.K., nearly one in four SMBs – most of which use larger banking providers – are planning to switch banking providers in the next 12 months
  • Common reasons cited by SMBs in both countries for switching banks are uncompetitive fees, dissatisfaction with services/products provided, outdated bank processes, or being declined for a business loan/line of credit.
  • SMBs in both countries report difficulty in obtaining reliable and accurate information from their banks, especially larger institutions, without visiting a physical bank branch.

Growing Adoption of Digital Tools

  • About 60% of SMBs in both countries have increased the number of transactions done digitally over the past year.
  • More than 40% of financial transactions were completed digitally by SMBs in both countries.
  • Acceptance of online, mobile app and person-to-person payments increased 38% over the last year for U.S. SMBs.

 

Banks are treating customers like product developers (TearSheet) Rated: A

Banks’ race to meet the customers “where they are” has taken on a new twist: customers are now product developers — not just end users.

Digital-only challenger banks like Monzo are emphasizing customer involvement to build a human connection with customers — a move others like Tandem, Revolut and Chime are also emulating. Chime, for instance, recently launched a chat feature within its mobile app that lets customers provide real-time feedback, a tool that’s used by around 50,000 users every month, according head of product Zachary Smith.

Three-year-old Monzo, which has 650,000 customers, has been active on various fronts in seeking feedback from customers on products while they’re in development — both through in-person “Testing Tuesdays” at Monzo offices and an exchange of views and polls on its online forums.

Rad Card Great HODL Survey Reveals Average Crypto User 25-34, Male (Bitcoin Exchange Guide) Rated: A

The team at Rad Card, found online at RadLending.com, just completed something called “The Great HODL Survey”.

  • The average cryptocurrency user is a male between the ages of 25 and 34
  • That person holds a bachelor’s degree
  • The average cryptocurrency users “hodls” between $1,000 and $10,000 worth of tokens, but has never used cryptocurrency for payment of goods and services
  • Crypto investors, overall, “prefer not to use their assets in real life as much as business owners”, according to the study, as well as freelancers or service providers that accept cryptocurrencies in exchange for their work, products, or services

Core features of the RAD platform include a P2P lending platform, crypto-secured lending, and a digital credit score. The company will offer its services to miners, small crypto businesses, post-ICO companies, exchanges and traders, and traditional fiat investors, all of whom can benefit from crypto-backed loans.

Fintech and the Sharing Economy (TLE) Rated: B

One of the phenomena this has supported is a surge in partnerships forged online, to provide peer to peer services.

The prediction is that the sharing economy will be worth over $335 billion by 2025. Fintech is pivotal in this, as it’s responsible for developing the accessible and efficient systems to carry out these digital “barter and buy” opportunities.

Peer to peer lending using Fintech also requires less cost to facilitate and therefore provides greater equality of opportunity.

ZPER Embeds Trustonic in New Mobile Wallet for Optimized Security (Blockchain News) Rated: B

Decentralized peer-to-peer (P2P) Lending Platform ZPER is using features from digital security semiconductor group Trustonic in its new mobile cryptocurrency wallet, claiming that it will be the most secure available.

The wallet will also be able to store and exchange multiple cryptocurrencies, thus enabling P2P cross-border value exchanges.

 

Australia/New Zealand

Online lender continues huge loan growth (Australian Broker) Rated: AAA

Neo-lender Wisr Limited saw a 42% growth in its origination of personal loans in the latest financial quarter.

This was the company’s largest quarter in loan originations since Wisr, formerly known as DirectMoney, began in 2014.

Loan originations have continued to grow over the financial year, growing by 20% in the first quarter and by 79% in the second quarter.

The FMA Makes A Guidance Note For Peer – To – Peer Lending Services & Crowdfunding Services (Mondaq) Rated: A

The Financial Markets Authority (FMA), New Zealand’s regulator for financial services, has released a guidance note to licensed peer-to-peer (P2P) lending services, licensed crowdfunding services for fair dealing in advertising and communicating offers of financial products or services.

Who is this guidance for?

  • The FMA addressed the guidance note to P2P lending services and crowdfunding services, but it is useful for anyone who is promoting or advising others about these services (i.e marketing teams, investment bankers, lawyers).
  • The fair dealing expectations stretch beyond New Zealand’s borders, so they apply to people overseas. Anyone who acts in relation to, or makes an offer of financial products or services in New Zealand should take note.
  • The guidance note is applicable to any media channel that businesses use to communicate and advertise their financial products and services (be it snail-mail or social media).

 

 

Bank names new group executive (Mortgage Business) Rated: B

Online lender ME has appointed Craig Ralston as group executive of customer banking, effective as of 1 May. He will be responsible for ME’s product and service delivery, with a focus on improving the design, simplicity and fairness of the bank’s offerings.

Mr Ralston joined ME in February 2015 as head of strategy to enhance the bank’s strategic and business planning cycle.

India

Fintech Startup OpenTap Raises ₹3 Crore from HNIs (IndianWeb2) Rated: AAA

Chennai-based OpenTap, a fintech startup focusing on the alternate lending segment, has raised about ₹3 crore funding from HNIs (high networth individuals). The capital raised will be used by the startup to strengthen its technology infrastructure and widen the reach of its financial services network across the country. The startup had earlier raised undisclosed amount in seed funding, in May 2015.

India Dealbook: MyLoanCare raise funding (Deal Steet Asia) Rated: B

Fintech startup MyLoanCare raises $975k in Series A round Online loans marketplace MyLoanCare, operated by My Finance Care Advisors Pvt. Ltd, has raised Rs 6.5 crore ($975,000) from Ncubate Capital Partners, the venture capital arm of Gurugram-based SAR Group.

Asia

Startup bags funds from Singapore ex-minister to get ultra-wealthy into crowdlending (Tech in Asia) Rated: AAA

Singapore-based Helicap is a new fintech platform that aims to bring a fund management angle in the peer-to-peer (P2P) lending space. To make this happen, it has raised US$1.5 million in seed funding.

The round was led by Teo Ser Luck, the former Minister of State for Manpower who last year decided to trade politics for the startup sector. Fintech company Nufin Data, where Teo serves as chairman, also invested.

Latin America

Neon Raises $ 22M in Series A Funding (Finsmes) Rated: AAA

Neon, a São Paulo, Brazil-based fully-digital Brazilian bank, raised $22m in Series A funding.

Propel Venture Partners, Monashees, Quona Capital, Omidyar Network, Tera, and Yellow Ventures participated in the funding round. As part of the investment agreement, Neon Pagamentos SA transferred its controlling interest to a holding company in the United Kingdom. In addition, as part of the new round, Jay Reinemann of Propel Venture Partners, and Marcelo Lima of Monashees, are joining Neon’s board of directors.

The company intends to use the funds for product expansion, investment in technology and innovation on customer experience.

Canada

On Wednesday, Lending Loop, a peer-to-peer online lending platform for small-business loans, announced a pilot project in partnership with Ontario that will provide $3-million of loans over the next two years. The government will boost Lending Loop’s loans by 10 per cent, which will help fund more than $30-million of loans to businesses across Ontario. The government will receive a full re-payment of the loan plus interest at the end of the loan terms.

Authors:

George Popescu
Allen Taylor

Monday March 12 2018, Daily News Digest

Funding Circle

News Comments Today’s main news: Zopa competes with tech giants, not banks, for talent. Funding Circle to use 4 big banks to prepare for IPO. Japan tours Europe to pitch Open Banking. Lending Loop expands into corporate lending. Today’s main analysis: Preqin on the PE outlook. Today’s thought-provoking articles: Banking Amazon’s moment. How a commission-free robo-advisor plans to generate […]

Funding Circle

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United States

United Kingdom

China

International

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News Summary

United States

Banking’s Amazon Moment (PeerIQ), Rated: AAA

Co-branded partnerships are not new, and banks have long partnered with retail institutions to launch co-branded credit cards. In a co-branded partnership, the financial partner deals with deposit or credit management, account servicing, and regulatory compliance, while the retail partner deals with marketing and customer acquisition. We have recently seen Barclays launch a credit card with Uber and Goldman Sachs potentially partner with Apple to finance device purchases. What is novel about this partnership is that it extends the same business model to checking accounts.

Benefits of Partnership

In the current regulatory environment, Amazon needs a partner as there is no clear regulatory swim lane for Amazon to compete head-on with the banks today. The Bank Holding Company Act demarcates commerce and banking. Partnering with JPM makes sense as it avoids Amazon having to comply with onerous banking regulations, but also makes it possible to offer products like checking accounts to its customers.

These strategic partnerships are also incredibly valuable to banks. As we pointed out in a prior newsletter, banks that do not establish a digital banking presence do not have a seat at the table. For banks, this is a battle for long-term customer relevance. Banking products are increasingly commoditized, and new generation customers want to bank with technology firms. They like the customer experience, the self-service nature, control, and value. These customers shudder at the idea of walking into a bank branch.

The customer segment that Amazon is targeting – younger generation, unbanked – generate notoriously low checking account and debit card fee-income for banks. Amazon has no legacy bank branch network, low customer acquisition cost and can make the economics work where most banks cannot. Banks also get access to a new customer acquisition channel, like Alexa where Amazon controls access and can leverage the customer data that their partner has gathered to offer better products to existing and new customers.

Significance of this Partnership

The primary motivation in the short-term is economics. Amazon pays about $250 MM in interchange fees – about 2% per transaction. Customers with an Amazon checking account can pay directly out of their checking accounts and avoid the network transaction fees. If Amazon captures even 25% of this opportunity, and adds $50 Mn to its bottom line, it would be accretive to its market capitalization by ~$10 Bn.

Amazon’s banking footprint today consists of its Visa Signature Rewards credit card issued by Chase, and Amazon Lending, a small business lender that has made ~$3 Bn in loans. It is conceivable that once Amazon’s customers sign up for a checking account, Amazon could sell them a variety of financial products like insurance and investment advice. Bain estimates that Amazon could establish a retail financial relationship with 70 Mn US customers, similar to that of Wells-Fargo.

Who might follow Amazon?

Source: PeerIQ

Amazon hiring head of newly-formed mortgage lending division (Housing Wire), Rated: A

While limited in scope, Amazon’s plans are to start with offering checking programs first, then maybe move into the debt product space after.

Well, after reporting that, we’ve received information that Amazon is currently looking to hire someone to lead their newly-formed mortgage lending division.

Due to non-disclosure agreements, we probably shouldn’t reveal their identities. After all, with Amazon planning a move into mortgage lending, it’s best we work with them and not against them. Am I right?

We can say that if you look at the top 10 HMDA lenders and pick out the nonbanks, that’s where Amazon is recruiting their talent.

How a commission-free robo-adviser plans to generate revenue (Tearsheet), Rated: AAA

Digital investment startup M1 Finance is making a big bet that no fees are the future.

The Chicago-based company, which launched its platform two years ago, decided to drop its assets under management fees to zero in December.

Investment companies can make as much as 70 percent of revenue from services that don’t involve charging customers commission, like lending and transaction fees for third parties, according to its CEO, Brian Barnes.

Source: Tearsheet

Instead of subscriptions, Barnes added that revenue from other services is more than enough to sustain a profitable business: lending to banks based on the securities it holds, interest from loans to customers who borrow from M1 using their portfolio as collateral, and transaction fees paid to the company from exchanges. While it’s free to use the platform and execute trades, M1 charges customers other miscellaneous fees for services like paper statements, transferring an account to another brokerage, and wire transfers.

THE TIPPING POINT FOR ALTERNATIVE DATA (All About Alpha), Rated: AAA

The term “alternative data” as Deloitte uses it refers to any set or sets of data that may be useful for investors but that is outside their traditional/conventional frame of reference.  In this age of “big data” that frame is going to have to expand, and the use of (say) communications metadata or satellite imagery, which might still be innovative this week, might be quite common next week, and a bare necessity for survival the week after that.

The traditional model for data analytics by IM firms (however ‘alternative’ they may be in their assets or strategies) involves as the paper puts it “structured data sets acquired from various information providers” that are then “aggregated and loaded into proprietary quantitative models.”

But the sometimes unstructured data sets on which investment managers will hereafter be expected to draw are large, heterogeneous, and would have to be processed at an extremely fast rate to be of any use. This requires machine learning and cognitive computing for the analytics.

In 2016, big data analytics (BDA) solution vendors received $3.2 billion from securities and investment services (S&IS) firms. About 15% of that (close to half a billion) originated from technologies that at least potentially support the generation of alpha.

How banks are promoting Zelle (Tearsheet), Rated: A

How banks promote Zelle is about more than television ad campaigns.

This year Chase and Wells Fargo have launched 15- and 30-second commercials advertising Zelle, the peer-to-peer payments offering built right into banks’ mobile apps. Zelle itself has even launched a couple of spots, one featuring Hamilton star Daveed Diggs.

Smaller banks that can’t afford national commercials, however, will need to promote Zelle in their existing products, their mobile banking apps, and perhaps take a page from fintech startups’ marketing playbook and design their apps in such a way that the product does the selling for them. That’s according to a new report by Javelin Strategy on Zelle’s rollout; that it emphasizes within its own mobile banking experience that a product called Zelle exists and communicates the benefits of using it and the reasons its better than competitors like Venmo or Square Cash.

Only 25 percent convey that Zelle is free or that it only requires an email or cell phone number, and only 38 percent convey that users can send it to anyone with a U.S. bank account, even if they bank at a different institution than the sender.

However, within those mobile apps, banks are positioning Zelle a little more prominently. Bank of America, Wells Fargo and USAA are all examples of different banks that have chosen to show customers they can send money with Zelle. Bank of America more clearly shows users they also have the options to split or request money. Chase has chosen to rebrand its existing peer-to-peer payment service, Chase Quick Pay, by adding the Zelle name at the end of it and offering customers the option to “QuickPay with Zelle.” SunTrust has changed platforms entirely from PopMoney to Zelle.

LESS ACTIVE ROLE IN FINANCIAL LIVES LEAVES WOMEN MAKING LESS, SACRIFICING MORE (PR Newswire), Rated: AAA

A recent study of college-educated Americans found that more than half (54%) of adults don’t think they will ever make enough money to reach their financial goals. Findings released today by national online lender Laurel Road reveal the factors fueling this pessimism, which is significantly higher in women than in men. Millennial women (64%) are significantly more stressed than their male peers (47%) about their finances, and they report starting salaries that fall more than $10,000 lower than millennial men’s, on average ($29,403 vs. $39,839).

Fiscally confident millennial male grads (94%) were significantly more likely than their female counterparts (79%) to prioritize their future earning potential over personal passions when picking a major. Of those without a degree in finance, 88% of male millennials report taking personal or business finance courses while in college, compared to only 54% of female millennials. Meanwhile, nearly one-fourth (24%) of women completed an unpaid internship, compared to just 12% of men.

Millennial women (35%) are more than three times as likely as their male peers (11%) to not have completely understood their financing options when applying to college. These stark differences have a clear trickle-down effect post-graduation. More than half of women (57%) have had to decrease nonessential spending to save money since graduation, compared to just 35% of their male peers.

76% of college-educated adults aren’t completely confident they thoroughly understood their financing options to pay for college. Accordingly, more than half (55%) of Americans with student loans report that it took them longer than expected to pay them off – and for millennials, that number rises to 66%.

However, readjusting interest rates through options like refinancing can ease the burden. But it seems Americans might not be fully aware of this option, as only about one-third (34%) of college-educated adults who have taken out student loans have refinanced their student loans. Despite having less student loan debt, millennial men (62%) are taking advantage of refinancing benefits to a far greater degree than women (39%).

Additional findings include:

Advice adverse: Just more than half (57%) of college graduates have asked for financial advice, and only 16% do so on a monthly basis.

Overlooking the basics: Surprisingly, many college-educated Americans still haven’t taken some of the most basic steps to ensuring a healthy, long-term financial plan, including:

  • 83% have not taken a personal finance course or seminar outside of college classes
  • 62% have not negotiated a higher salary at a job
  • 37% have not begun investing in a retirement account

Persisting pessimism: Nearly 2 in 3 (66%) grads are not fully confident they know the steps required to finance a home. While millennial men (42%) are more likely than their female peers (29%) to feel completely confident they know the steps required to finance a home, it seems a solid financial foundation early on is key to building a comfortable future later on down the road.

Are HNW Investors Ready for Real Estate Crowdfunding Platforms? (National Real Estate Investor), Rated: A

Cecilio is founder and CEO of San Diego-based DiversyFund Inc., which bills itself as a “vertically-integrated real estate crowdfunding platform.” Rather than acting as a middleman, DiversyFund manages all of its real estate projects from start to finish.

Accredited investors put money directly into development of commercial and residential real estate projects in Southern California, such as a multifamily development in San Diego’s Hillcrest neighborhood. Investors can place as little as $5,000 in one of DiversyFund’s deals. Today, DiversyFund claims over 30,000 investors and more than $100 million in assets under management.

For now, an accredited investor must either make at least $200,000 a month or have a net worth of at least $1 million. But DiversyFund plans to open up its online platform this spring to non-accredited investors who can put as little as $500 into a project, Cecilio says.

NY Wealth Manager to Issue Loans Against Bitcoin (CoinDesk), Rated: A

With all the ICOs that have taken place (not to mention the meteoric rise in the value of crypto assets late last year), there are a lot of entrepreneurs who fit this description, but few products that allow them to turn long-term HODLing into actionable capital.

That’s the idea behind a new subsidiary being started by Dominion Capital, a family office based in New York City. While the company has long invested in a variety of assets, Dominion’s known for helping to finance projects by backing loans.

For the entrepreneurs who are willing to bet on the strength of their holdings, there’s a strategic opportunity at play. Essentially, the service would allow individuals and projects to borrow against either their own crypto assets (or those invested by supporters) rather than converting them directly to cash.

Restaurants Outpace Other Industries Investing In Mobile Technologies in 2018 (Modern Restaurant Management), Rated: B

The new findings show an overwhelming focus on mobile technologies, with 63 percent planning to invest; a well-advised investment given nearly 85 percent of all mobile users searching for a restaurant go on to make a purchase. The total average across all industries is 51 percent. In fact, restuarants and bars are among the most bullish to invest in mobile, trumped only by accounting services (70 percent) and marketing agencies (67 percent).

What’s more, nearly in one in four (23 percent) plan to invest in real-time analytics or big data solutions, to help analyze and identify growth opportunities.  This is an emerging opportunity for all small businesses as insights, typically available only to large corporations, are becoming increasingly more available.

U.S. Treasury Official Previews Report on FinTech Regulation (The National Law Review), Rated: B

Craig Phillips, Counselor to the Secretary of the U.S. Department of the Treasury (Treasury), recently delivered remarks at a conference held by the Institute of International Bankers in which he previewed the upcoming Treasury report about possible reforms to the laws and regulations that apply to non-bank financial institutions and FinTech companies.

Mr. Phillips reportedly signaled that the report will include a review of the regulations governing mortgage originators and servicers, marketplace lenders, payment processors and other FinTech companies, and will also cover the “regulatory asymmetries” between such institutions and more regulated institutions.

Pennsylvania judge partially dismisses action against investors of an online lending scheme (Lexology), Rated: B

On January 26, the U.S. District Court for the Eastern District of Pennsylvania partially dismissed an action brought by the Pennsylvania Attorney General against out-of-state investors of an online payday lender and the lender for violating Pennsylvania’s Corrupt Organizations Act (COA). The Attorney General alleged that an online payday lender and the investors “designed, implemented, and profited from a consumer lending scheme to circumvent the usury laws of states.” The alleged conduct, which the court referred to generally as “rent-a-bank” and “rent-a-tribe” schemes, involved the online lender partnering with an out-of-state bank and later with tribal nation to act as the nominal lenders of the loans.

Alabama Senate OKs bill to cap payday lending interest rates (Tuscaloosa News), Rated: B

Payday lending customers would have longer to repay their loan under a bill approved Thursday by the Alabama Senate, which marks the latest attempt to cap the interest rates charged with the short term loans.

The bill by Republican Sen. Arthur Orr of Decatur would give borrowers 30 days to repay a loan instead of as little as 10 days. Orr said the change would give people a better opportunity to pay off the loan. Senators approved the bill on a 20-4 vote.

Square’s Cash app now supports direct deposits for your paycheck (TechCrunch), Rated: A

Case in point, the app just rolled out support for ACH direct deposits, meaning users can now get their paycheck or other deposits put directly into their Cash app balance.

Like other features in the peer-to-peer payments app setting up direct deposits is almost too simple. After accepting a disclosure you’re given an account number and routing number, which is all an employer needs to start making direct deposits. Users get a notification when deposits hit their account, and all funds get added to their normal Cash app balance – meaning it can be sent to a friend, spent using a debit card, used to buy bitcoin or withdrawn to another account.

This feature combined with the Cash app’s debit card now means that the app can essentially provide all the basic functions of a bank account, assuming you don’t need to deposit checks or do complex things like wire transfers.

United Kingdom

Zopa is competing with tech giants not banks for talent, says CEO (P2P Finance News), Rated: AAA

ZOPA is competing with Google and Facebook for talent, not the likes of HSBC, the peer-to-peer lenders’ chief executive Jaidev Janardana (pictured) has said.

Funding Circle Picks Goldman Sachs, Morgan Stanley for IPO (Bloomberg), Rated: AAA

Funding Circle Ltd., the biggest online loan provider in Britain, named Bank of America Merrill Lynch, Goldman Sachs Group Inc., Morgan Stanley and Numis Corp. Plc to help manage its initial public offering, according to a person familiar with the deal, in a milestone for U.K. fintech.

The offering in London, planned for the second or third quarter, will probably value the eight-year-old company at between 1.5 billion pounds ($2.1 billion) and 2 billion pounds, according to the person, who asked not to be identified as the information is private. That would make it the biggest IPO by a British financial-technology startup.

Funding Circle has arranged more than 4 billion pounds in loans for small and medium-sized companies in the U.K., the U.S., Germany and the Netherlands.

 

Source: Funding Circle and Bloomberg

 

Funding Circle co-founder joins crypto-lending platform as advisor (AltFi), Rated: A

Andrew Mullinger’s LinkedIn profile reads: “currently semi-retired until I get bored”. The Funding Circle co-founder stepped back from the firm in May 2016. He has now joined a very different kind of online lender.

Lendingblock, an open exchange for cryptocurrency loans, today announced that Mullinger has joined the company as an advisor.

Augmentum Fintech raises £94m in IPO (Fine Extra), Rated A

Fintech venture firm Augmentum has raised £94 million in an initial public offering ahead of a listing on the London Stock Exchange.

Set up by venture group Augmentum Capital, Augmentum Fintech is raising the money for a new fund investing in early-stage financial technology companies in the UK and wider Europe.

The new company is acquiring Augmentum’s existing investments in a portfolio of five fintech firms, including Seedrs, Zopa, Interactive Investor, BullionVault and SRL Global.

In a rare meeting of the public and private markets, crowdfunding platform Seedrs was itself used to raise more than £500,000 towards the IPO. The management team and family members have provided £2 million in capital.

BBVA and Visa-backed banking platform solarisBank scores €56.6m in Series B raise (AltFiNews), Rated: B

solarisBank, the first banking platform to be fully regulated by the FCA with a banking license, has successfully completed a Series B investment round, gaining another €56.6m in funding. Current investors Arvato Financial Solutions and SBI Group renewed their stakes, with BBVA, Visa, Lakestar and ABN AMRO’s Digital Impact Fund (DIF) joining them.

 

China

Review: The flimsy finances behind China’s miracle (Nasdaq), Rated: AAA

Since the financial crisis of 2008, China’s economic growth has depended less on exports than on rising levels of domestic investment. Capital spending is mostly directed at construction, which directly accounts for some 20 percent of China’s gross domestic product and indirectly for much more. The long construction boom has produced dozens of ghost cities – McMahon counts 50 in all – filled with empty apartment blocks. Mighty skyscrapers have sprouted up in unlikely provincial backwaters.

Increasing property supply has been accompanied by rising prices. Sky-high valuations have priced many Chinese workers out of the market, creating a nation of “mortgage slaves” and “ant tribes” – graduates forced to live in cheap properties in urban peripheries. In some super-hot markets like the southern city of Shenzhen, the price of land has exceeded the value of the properties built on it, giving rise to the expression “flour more expensive than bread.”

If China’s economy is fuelled by construction, it’s no secret what keeps the cranes swinging and the bulldozers revving. The country has been on a credit binge ever since Beijing announced the “Great Stimulus” late in 2008.

Last China P2P Company Delists Domestically, foreseeing New Tide of Listings Abroad (PRNewswire), Rated: A

China-based Jiayin Fintech, parent company to Niwodai, one of chinese largest P2P lending companies, applied delisting from National Equities Exchange and Quotations (NEEQ) in China on 7 March.

Jiayin Fintech’s main business is offering micro-finance services solution, among which, the part accounting for the largest income is tying qualified individual borrowing needs with the investing demands through Niwodai platform. So this delisting may indicate some trends of P2P industry, according to media in China.

Chinese peer-to-peer lender Golden Bull decreases proposed US IPO deal size to million (Nasdaq), Rated: A

The Shanghai, China-based company now plans to raise $7 million by offering 1.6 million shares at a price range of $4.00 to $4.50. The company had previously filed to offer 2 million shares at the same range. At the midpoint of the revised range, Golden Bull will raise -23% less in proceeds than previously anticipated.

 

International

PREQIN ON THE PE OUTLOOK (All About Alpha), Rated: AAA

Preqin has issued a report on the near term outlook for private equity based on a recent (November 2017) survey of more than 350 PE firms around the globe.

Although this isn’t new, the worries about high valuations for portfolio companies have been a factor for years now; such worries are getting more intense over time. In November 2016, 36% of respondents said pricing for portfolio companies had gotten higher over the preceding year. In November 2017, 58% said the same thing.

A majority (56%) of fund managers plan to make more exits in 2018 than they did in 2017, though only 8% said that will be “significantly” more.

Australia

Fintech Australia begins hunt for new CEO as Danielle Szetho steps down (IT Brief), Rated: A

Fintech Australia’s Danielle Szetho is stepping down from her position as CEO after nearly two years in the role.

The organisation has already begun the search for its new lead executive while appointing Sarah Worboys as interim CEO.

 

Asia

Open Banking Provides Perfect Environment for FinTech Integration in Japan (PRNewswire), Rated: AAA

With a rapidly changing, quality business environment, the Government of Japan has launched a series of events across Europe to inform and promote active discussions around the future opportunities in Japan’s lucrative and intelligent market.

On February 19, a Japan You Didnt Know roundtable event kicked off in London at the office of global management consulting firm, A.T. Kearney. Discussions at the event focused on the impact of the new wave of finance, technology, consumerization and personalization sweeping Japan, and how the country is adapting its policy and regulatory framework to welcome foreign investors to deliver predictable conditions for accelerated growth.

Japan boasts the world’s third largest economy and has seen eight straight quarters of stable macroeconomic growth. Driven by a transformation of the market by means of bedrock deregulation and international trade deals, Japan is designing an efficient and productive environment that welcomes foreign business for the coming opportunities in financial services.

Canada

 

P2P PLATFORM LENDING LOOP NOW OFFERING CORPORATE LENDING (Beta Kit), Rated: AAA

Toronto-based Lending Loop, which provides a peer-to-peer lending platform for small business loans, is now allowing corporations to invest in small business loans through its online platform.

The launch of corporate lending is expected to expand small business’ ability to access fast financing, while enabling more lenders to earn attractive returns. To date, Lending Loop says it has facilitated over $17.5 million in loans to businesses across Canada.

Som Seif’s Purpose Financial to acquire fintech lender Thinking Capital (BNN), Rated: A

Canadian ETF pioneer Som Seif’s Purpose Financial announced Friday it is acquiring Montreal-based Thinking Capital, an online lender to small businesses, for an undisclosed amount of cash and securities.

Authors:

George Popescu
Allen Taylor

Alternative Lending In Canada

Canada alternative lending

In many ways, Canada has long lived under the shadow of the U.S. The alternative lending industry has proven to be no exception. The last few years, however, have seen Canada turn the corner on marketplace lending (MPL). With MPL markets around the world (especially Europe, U.S., and UK) maturing, startups around the world are […]

Canada alternative lending

In many ways, Canada has long lived under the shadow of the U.S. The alternative lending industry has proven to be no exception. The last few years, however, have seen Canada turn the corner on marketplace lending (MPL).

With MPL markets around the world (especially Europe, U.S., and UK) maturing, startups around the world are scampering to find new locations and new opportunities to tap. Though it is not fair to term Canada as a new entrant to the fintech ecosystem, it has finally garnered the attention as one of the most promising alt-lending hubs.

Canadian Alternative Lending Numbers

 

Source: Alternative Finance Benchmarking Report 2016

As the above image indicates, the Canadian alternative finance industry is on a strong growth momentum. All segments of alt-lending (consumer, SMB, real estate) have shown multiple times growth albeit on a very low base. With a GDP of over 1.5 trillion dollars, it is a massive market for lenders. The current size of the market does not even reach a billion dollars, a paltry sum for a country with household debt over 2 trillion dollars.

A Supportive Regulatory Framework

Ontario Securities Commission (OSC), the fintech regulatory body of Canada, has been very supportive of the industry and is one of the major tailwinds for alternative lending in Canada. In October 2016, OSC started LaunchPad with an aim to support and guide fintech startups with compliance. This initiative was followed by the establishment of a Fintech Advisory Committee in January 2017, which helps apprise the regulator on fintech-related developments as well as regulatory challenges faced by businesses. Feedback from the committee will be used by OSC to frame future regulatory guidelines.

Lending startups will still have to comply with different regulatory compliance obligations depending on what kind of financial services are offered by them. Also, depending on which province they are operating in, they will be subject to different regulation and licensing requirements.

Leading P2P Lenders in Canada

  • Lendified was founded in 2015 by Troy Wright and is headquartered in Toronto, Ontario. It raised $80 million in a couple of funding rounds. Small business owners can apply online in under 10 minutes, receive an instant quote, and get funded in as fast as 48 hours. It offers loans ranging from CAD $5,000 to CAD$150,000 with APR ranging from 8%-18% and terms ranging from 6-24 months.
  • Borrowell was founded in 2014 by Andrew Graham and Eva Wong.  It’s also headquartered in Toronto. It recently raised over $57 million in funding for aggressive expansion and offers free credit score monitoring, personal loans, and product recommendations. It has lent over $10 million to over 10,000 customers. Borrowell offers loans ranging from $1,000-$35,000 and offers two terms–36 months or 60 months–with APRs ranging from 5.6%-25%.
  • Financeit was founded in 2011 by Casper Wong, Michael Garrity, and Paul Sehr. Headquartered in Toronto, it has managed from inception to raise over $38 million and recently was acquired by Goldman Sachs for an undisclosed amount. Over the years, Financeit has worked with over 7,000 merchants and processed over $2.5 billion in loan applications. Financeit offers a platform that allows businesses to offer consumer financing to their customers from various devices in Canada. It works with multiple lending partners and automates the banking role for its partner financial institutions, entirely managing loan origination, credit adjudication, regulatory reporting, loan servicing, and collections.
  • FundThrough was founded in 2014 by Steven Uster. Its headquarters is in Toronto, and it has raised over CAD $26 million in multiple funding rounds. FundThrough is an innovative technology company helping American and Canadian small business owners improve their cash flow through invoice factoring and financing. It charges 0.5% fees on the top of the funding amount and the borrower has to repay within a period of 12 weeks. The average invoice ranges from $1000 to $100,000 while the average outstanding loan is around $50,000-100,000.
  • Lendful Financial was founded in 2015 by Alex Benjamin and is located in Vancouver, British Columbia. It has raised $15 million in multiple funding rounds and offers three-to-five-year, fixed-term loans to credit-worthy borrowers with a credit score of 650 and over. It offers loans up to CAD $35,000 with APRs starting from as low as 7.9%. Loan terms range from 3 to 5 years.
  • Lending Loop was founded in 2014 by Brandon Vlaar and Cato Pastoll. Headquartered in Toronto, it has raised $12 million in debt and equity. Lending Loop is Canada’s first and only regulated peer-to-peer lending marketplace focused on small businesses. Its core focus is on providing businesses with accessible capital at a fair rate of interest through a simple online process. Loans range from $5,000- $250,000 with rates starting as low as 5.9% and terms from 3-60 months.
  • Progressa was founded in 2013 by Ali Pourdad, David Gens, and Michael Jover. Since inception, it has raised over $11 million. Progressa is a direct-pay lending platform that helps Canadian individuals who are in debt pay back their due bills. It pays its users’ bills directly so they are able to manage debt, interest payments, and collections. The platform provides users with partial payment loans between $1,000 and $15,000 with payback terms ranging from 6 to 60 months. It enables its users to get access to automated interest rate reductions every six months helping them cut down borrowing costs with good payment behavior.

Conclusion

From a global point of view, Canada is a relatively small market and still at a nascent stage. But the supportive regulatory framework coupled with growing interest of VCs and investors in the Canadian market says that major expansion is just around the corner. The Canadian market would also be conducive for U.S. players looking to expand their geographical ambitions.

Authors:

Written by Heena Dhir.

Wednesday October 25 2017, Daily News Digest

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News Comments Today’s main news: RateSetter partners with Experian. Australia publishes fintech regulation draft laws. Lending Loop hits $10M financing milestone. TD Ameritrade offers stock trading through Facebook Messenger. Abra secures $16M in Series B led by Chinese electronics manufacturer. Zero raises $8.5M for credit card that acts like a debit card. Nested raises 36M GBP. TransferWise changes its fee structure, but […]

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United States

TD Ameritrade Clients Can Now Trade Stocks on Facebook Messenger (Bloomberg), Rated: AAA

TD Ameritrade Holding Corp. customers are now able to trade equities and exchange-traded funds using Facebook Inc.’s Messenger services, according to a company statement Monday. Clients can also make deposits, access quarterly performance video statements and receive weekly alerts that rehash market moves.

Hon Hai invests in fintech start-up (Taipei Times), Rated: AAA

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, participated in a US$16 million Series B fundraising program to invest in US-based digital wallet start-up Abra, the new firm said on Monday.

Barhydt said that Abra’s existing investors — Arbor Ventures, American Express Ventures, Jungle Ventures, Lehrer Hippeau and RRE — also participated in the fundraiser that closed on Monday.

The program helped Abra reach more than US$35 million in total capital, Barhydt said, but did not elaborate on potential uses of the additional US$16 million.

Zero raises $ 8.5 million for a credit card that functions like a debit card (TechCrunch), Rated: AAA

Just one-third of young adults have a credit card, according to a Bankrate survey.

A startup called Zero thinks it has a solution to this and it is gearing up to launch a credit card that functions like a debit card. The startup is also raising $8.5 million in a funding round led by ENIAC Ventures, including participation from NEA, Lightbank and others.

Biometrics is Going to Eat the Finance World (Lend Academy), Rated: AAA

In a recent survey it was revealed that 81% of people use the same password for multiple accounts with that number being even higher, at 92%, for millennials.

The introduction of Touch ID on the Apple iPhone in 2013 was a seminal moment in the history of biometrics. People could suddenly use their thumb or finger print as an identity verification tool and forgo using a password. Today, on my phone I can login to my bank account, buy music or apps, buy a plane ticket, even check my Lending Club account all with the press of my thumb.

While still primarily in the testing stage in banking, this past summer Bank of America announced the trialing of iris scanning technology from Samsung. In the UK, TSB is becoming the first European bank to start using this same technology, also with Samsung phones.

Behavioral biometrics can capture things like hand-eye coordination, pressure, hand tremors, keystroke dynamics, gait analysis, mouse use characteristics, navigation, scrolling and other finger movements.

USAA offers three variations of biometrics authentication already in their mobile app. Just this week Samsung announced a partnership with Biocatch to bring behavioral biometrics to its Nexsign biometric authentication platform.

‘We’re moving from the back end to the front end’: Cross River Bank CEO Gilles Gade (Tearsheet), Rated: A

Cross River banks some of the biggest names in fintech, including at least a dozen online lending companies like Affirm, Marlette and Rocket Loans. It has also developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe in the past.

It’s been almost a year since you announced your VC funding. How have you been using it?
We have absorbed the capital very quickly, managed to deploy it on the marketplace lending side. We like to retain loans from the origination platforms so instead of selling 100 percent of the origination we retain 10 percent. As our partners are growing nicely, naturally that 10 percent has kept increasing.

Can both banks and fintech vendors deliver banking-as-a-service?
We’re strong believers that BaaS has to be delivered by a bank. The fintech players need access to payment rails and they’re going to use a bank ultimately to do that. As a service, the bank could be either the facilitator of a transaction or the purchaser of the BaaS technology to provide it to consumers. There is a level playing field now — consumers can have the same functionalities in a small bank in Nebraska that they can have with a Chase or Wells Fargo.

Are banks prepared?
Most banks are not equipped or not API-driven, ubiquitous, priced properly — and the banks that are, the big banks, have been unwilling to do that because it would cannibalize some of their business or presents high risk — do they have the required compliance and adequate staff to be able to manage the operations?

What’s going on inside Almond?
Almond is our exploratory R&D lab for us to understand the aspirations of consumers. We’re trying to develop a front-end solution that could possibly be a killer app that we could white label and sell as one BaaS functionality — so that would be an online or mobile app for a bank account. We’re moving from the back end to the front end.

loanDepot Announces Agreement with Artificial Intelligence Real Estate Technology Company, OJO Labs (PR Newswire), Rated: A

Today loanDepot announced an agreement with OJO Labs, Inc. to act as the mortgage provider of its machine-powered assistant known as “OJO.” By matching OJO’s leading AI technology with loanDepot’s digital lending platform, melloTM, the combined offering will allow house hunters to access real estate and mortgage information, and get pre-qualified, through an entirely digital, mobile-first experience.

Large banks make terrible partners, fintechs say (American Banker), Rated: A

While large banks and fintechs are ostensibly working more closely together than ever, in private conversations and even publicly at a few conferences, fintech leaders have expressed increased frustration about working with bank partners.

Though they won’t name names, they claim tier-one U.S. banks string them along, fail to communicate, don’t pay anything and, worst of all, out-and-out steal intellectual property.

More seriously, fintechs claim large banks are bad at paying for new technology and services.

Parker Crockford, commercial director for the U.S. at identity verification software startup Onfido, said at the RegTech conference in early October that when he’s engaging with large financial institutions, “we get pulled into a lot of innovation conversations where they just want to pick our brains and look cool. I don’t have time for that any more. I’ll say, ‘I’m happy to give you a white paper or a 20-minute chat over the phone.’”

‘Buy The Block’ on its Way to Raising Millions of Dollars for Property Development in Black Communities (BlackNews.com), Rated: A

Entrepreneur Lynn P. Smith is the founder and CEO at Buy The Block – one of the only Black-owned platforms in the country that is dedicated to making investments in real estate as a group more accessible. The movement is presently on its way to recording massive success in funding for diverse development projects across Black communities in the US.

This enviable initiative offers every Black American an opportunity to invest as little as $100, and connect with other investors – with an added advantage of helping every member buy a piece of their first block.

Evolve Capital Partners Advises on CleanFund’s Financing Transaction (Accesswire), Rated: A

Evolve Capital Partners,Inc. is proud to announce that its client, CleanFund Commercial Capital, Inc., the leading direct provider of commercial Property Assessed Clean Energy (“C-PACE”) financing, recently announced its first closing of a $15 million equity financing round, led by Vulcan Capital affiliated entities. The financing will accelerate CleanFund’s growth across the U.S. and help the company continue to meet growing demand from commercial property owners.

Thrive Delivers Landmark Performance Gains for Horizon (Thrive), Rated: A

Thrive Inc. (Thrive) is excited to announce the compelling performance of its digital lending technology, ensuing from its multi-year technology licensing agreement with Horizon Community Bank (HCB), a leading Arizona-based FDIC insured bank and subsidiary of Horizon Bancorp, Inc.

Key Performance Highlights:

  • Application Time: Avg. of 5 minutes, as opposed to days
  • Automated Decisioning: 90% of applications are instantly decided; powered by Thrive’s configurable credit rules based algorithms
  • Time to Decision: <1 Day, as opposed to several weeks
  • Loan Booking Rate: 100%, as applicants prefer the quick digital application and decision process
  • Offer to Close: 1.5 Days, digital closing enables efficiency

Key Portfolio Highlights:

  • Portfolio Interest Yield: Above market interest rates drive loan profitability
  • Customer Acquisition Costs: <$200, driven by leveraging internal bank customers as well as new customers
  • Delinquent/Charge-Off: 0%, effective underwriting and real time loan monitoring is driving modern and powerful risk management while also compressing loan reviews
  • Monthly Origination Growth: 60%, driven by customer demand for a quick, efficient and friendly loan application experience

IBM and Zelle team up to advance P2P payments (Banking Technology), Rated: A

IBM says it has launched an “industry first” solution to support the full lifecycle of peer-to-peer (P2P) transactions, from the back office of financial institutions to the mobile device.

The project is a collaboration with Zelle, a P2P network in the US built on the clearXchange platform. Zelle now includes over 20 banks and credit unions, and is poised to reach an estimated 85 million US customers this year.

How FinTech Companies Are Closing The Banking Gap (Forbes), Rated: A

According to the World Bank, there are two billion people globally who currently have no access to banking services.There are many reasons for this: they may not have built up enough traditional credit history, they may have bad credit because of poor financial choices in the past, or they may live in an area where access to credit and other financial services are limited.

For instance, Jennifer Tescher, founder and president of The Center for Financial Services Innovation (CFSI), has helped launch financial inclusion initiatives by incubating startups addressing U.S. financial health through their Financial Solutions Lab. Some of these startups include Propel, which streamlines the food stamp process; Bee, a mobile alternative to potentially predatory financial services for low-income people; and popular startups that aim to assist with savings and debt repayment including Digit, EarnUp and LendStreet.

Founder and CEO Shivani Siroya, of California-based Tala, is trying to fix the challenge of low access to financial services by providing alternative credit scoring and instant credit delivery via mobile wallet.

Mexico, for instance, sees 38% mobile wallet use, compared to 17% overall in the US, even though 93% of Americanshave access to financial services.

3 Types Of Alternative Lenders You Need To Know About (Bisnow), Rated: A

1. Crowdfunding Platforms

Real estate crowdfunding hit $2.5B in 2015 and shows no sign of slowing down.

Platforms like RealtyShares and Fundrise offer several loan options and flexible payment terms, and cater to different asset classes. The latter prioritizes small-deal properties valued under $50M, and the former charges no fees for the first two years, or until an investment earns a 15% annualized return.

2. Nondirect Marketplace Lenders

Nondirect marketplace lending uses technology to connect lenders directly with borrowers, bypassing traditional banks, reducing barriers to transaction, and offering strong savings for borrowers and good returns for lenders. Popular for auto and student loans, financial institutions have increasingly stepped into the commercial lending role on these platforms, creating a marketplace in which loans are packaged and sent out to individuals, hedge funds, wealth advisers and banks.

3. Direct Lenders

Money360 is a direct lender with discretionary capital that ensures certainty of execution and timely closings. The lender offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans use 25- to 30-year amortization schedules.

12 Tips to Get The Right Loan For Your Startup (Killer Startups), Rated: A

1. How much do you need for a small business loan for your startup?

Microloans work with the Small Business Association (SBA). They are for businesses that need to borrow between $35,000-$50,000 and have a limited credit history.

2. How quickly do you need access to loan funds?

If you’re positive that you need $100,000 right-off-the-bat, then an installment loan may be a better option. If you need $50,000 to start, but believe you’ll need additional capital down the road when you start to grow, you may want to look into revolving credit.

3. What is the loan going to be used for?

4. How long have you been in business?

If your business is still in the early stages, it may be difficult to secure a loan from traditional lenders like a bank since they require a positive credit history, collateral, business plan, projected financial statements, and cash flow projections.

In this situation, you may have to search for a small business loan from an alternative lender like an online lender like Lending Club.

5. Do you have collateral?

Do you have an property or inventory that you can put up as a collateral? If not, you may not qualify for a loan from a traditional lender. Instead, you may have to seek alternative funding options where you would offer accounts receivable, future sales, or a percentage of the company in exchange for the loan.

6. Eliminate your bad debt.

7. Research possible loan provider options.

Do your due diligence and seek lenders that are transparent with their rates, terms, and have positive reviews from customers.

8. Consider your niche.

9. Find a grant or contest.

10. Crowdfund Your idea.

11. Pay attention to APR, fees, and other costs.

12. Investor or capital?

Payday lender Speedy Cash files for IPO (Axios), Rated: A

The parent company of payday lender Speedy Cash has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol CURO, with Credit Suisse listed as left lead underwriter. The Kansas-based company reports $33 million of net income of $442 million of revenue for the first half of 2017, and is owned by private equity firm FFL Partners.

Islands, Bodyguards, and Mansions – How would you spend $ 1 Billion? (NJ Online Casinos), Rated: B

Our new survey finds out the top 10 ways that people across America would spend their money if they won a $1 billion jackpot, including how many would buy a mansion, and how many wouldn’t give any to charity.

  • 89% would give some to their close family
  • 49% would pay off their debts as their first act
  • 37% would give some money to their friends
  • 28% would put $100 – $500 million into savings
  • 28% would buy a mansion

Arcadia launches new online payment options (Drapers Online), Rated: B

The owner of brands including Topshop, Topman, Miss Selfridge and Dorothy Perkins has joined forces with payment provider Klarna to offer online customers the option of paying for goods 30 days after delivery, without being charged interest.

20% of millennials said they would feel less guilty if they were offered deferred payment options, while one in five were more likely to complete a purchase if they knew they could spread the cost over time.

United Kingdom

RateSetter partners with Experian to boost business credit assessment (P2P Finance News), Rated: AAA

RATESETTER has teamed up with Experian to boost its credit decision-making process as it expands its commercial finance division.

Under the partnership, Experian is providing credit reference data and analytical services to RateSetter.

This has enabled the P2P lender to increase the number of business loan applications it processes each month from 150 to more than 600.

Nested Raises £36M in Third Round of Funding (Finsmes), Rated: AAA

Nested, a London, UK-based PropTech startup, raised £36m in its third round of funding.

The round was led by Global Founders Capital.

The company, which has raised almost £50m in total funding to date, intends to use the capital to expand its business reach, initially within London and in the near future expanding across the U.K.

TransferWise changes fees for GBP transfers, introduces complicated flat transaction fees (TechCrunch), Rated: AAA

Fintech startup TransferWise has built a solid reputation when it comes to transparency. The startup just announced new fees for transfers initiated from the U.K. And it’s quite hard to understand if transfers are going to be cheaper or not after the change.

TransferWise is switching from a simple variable fee to a flat transaction fee with a lower variable fee.

Let’s take an example. If you’re trying to transfer £1,000 from the U.K. to the Eurozone. With the old fee, you’d pay 0.5 percent (or the equivalent of £5) in fees. With the new fee, you now pay 0.35 percent + £0.80, which represents £4.30. You eventually get more euros.

For a £1,000, you now pay 14 percent less if you take into account all fees. But this percentage is going to change depending on your transfer.

Because of this tiny little flat transaction fee, you’ll now pay morethan before if you transfer less than £530.

This is even worse for GBP/USD transfers. If you transfer less than £800, you now pay more than before. But it’s now cheaper if you transfer more than £800.

Is an IFISA-inspired boom coming to the P2P sector? (P2P Finance News), Rated: A

THE PEER-TO-PEER Finance Association (P2PFA) has reported yet another quarter of increased lending among members in the sector, and the figures show just how beneficial ISA manager status can be.

P2P platforms offering Innovative Finance ISAs (IFISA) have previously said that most inflows have been coming in this tax year, and the latest P2PFA data shows just how much of a boost the fully regulated firms are getting.

Lending Works and Landbay, which both received full Financial Conduct Authority (FCA) authorisation and launched IFISAs at the start of this year both recorded some of the biggest increases in loanbook sizes and lenders.

The property loan fund that won’t surprise you with a lock in (Citywire), Rated: A

For LendInvest Real Estate Opportunities, a small Luxembourg-based fund run by the former peer-to-peer lending platform LendInvest, post-referendum it has provided an opportunity.

Assets in the fund have more than doubled to £130 million since the Brexit vote as investors have viewed its investments in short-term loans to property developers as a different way to get exposure to bricks and mortar.

The fund can be held in a self-invested personal pension (Sipp) but is not an eligible investment for an individual savings account (ISA).

The real estate fund has become a key focus for LendInvest as it has moved away from peer-to-peer lending after the Financial Conduct Authority (FCA) made it clearer what it thought P2P actually meant.

The fund lends to professional investors, developers and landlords who use their property portfolio as a prime source of income, transact several times a year and operate as a business.

‘He then went into discussions with the bank because he wanted to keep the asset and let it out, so refinanced. It had a valuation of £10 million, so 100% return in 10 months. We charged 15% interest.’

With interest rates that high it is not surprising perhaps that the fund has so far achieved its annual target of an 8% net return.

Accounting and business banking fintech raises €750k in seed round (AltFi), Rated: A

UK startup Countingup has raised €750,000 led by Frontline Ventures along with private investors to support sole traders.

Uniting business banking and accounting into a single product, Countingup aims to use the funding to build an accounting bank to serve 1m entrepreneurs.

Invest in property development from just £500 (This is Money), Rated: A

A new crowdfunding platform is allowing retail investors the chance to back residential property developments by investing as little as £500.

The start-up, called Homegrown, is giving individuals the chance to invest in developments – such as a converted milk processing factory that’s being turned into flats and offices – and claims projected annual returns of around 12 per cent over roughly two years.

HOW DO I… ACCESS BUSINESS FINANCE? (BQ), Rated: A

While credit conditions have continued to improve over the last 12 months there is still an issue for smaller businesses when it comes to the best finance options available and information on how to access them. There has been rapid developments in the different types of funding available to businesses, including peer-to-peer lending, crowd funding and business angel finance, but small businesses don’t always have the time to navigate around all the types of finance available.

Businesses can discover the funding options available to them including The Start Up Loans Company by using the Business Finance Guide (published by the British Business Bank in partnership with the ICAEW, and a further 21 business and finance organisations).

Equity finance

Whether you’re starting out or experiencing a high-growth phase, equity can be an important resource to provide finance as well as broader expertise. There is a breadth of equity funding options available, including the Northern Powerhouse Investment Fund, which provides early or late stage equity finance ranging from £50,000 to £2m.

Debt finance

At any stage of its development your business is likely to need a mix of different forms of debt, all of which have their advantages for business growth. The Northern Powerhouse Investment Fund offers microfinance covering micro-finance ranging from £25,000 to £100,000 and debt finance covering larger business loans £100,000 to £750,000.

London – Still The #1 FinTech Hub (Let’s Talk Payments), Rated: A

In H1 2017, UK attracted $564 million of VC investment, up 37% on H1 2016. FinTech is worth $9.25 billion to the UK economy and now employs 60,000 people.

About 77% of UK businesses are aware of FinTech products and services and 65% have adopted at least one FinTech application, with a fifth (19%) taking on four. MarketInvoice, a London-based invoice financing firm found that these as result of using FinTech products and services, adopters reported saving (on average) over £5,500 a year.

London consistently attracts foreign direct investments (FDI) from around the world. Between 2006 and 2016, the capital has recorded investments from 67 different countries. The US, India, China, Japan and Spain together accounted for 56% of the investment. Of top source countries, the fastest-growing contributors to FDI into London are China, which has seen a tenfold increase over the last 10 years, Italy (+450%), and Canada (+400%).

Seven tips to help prepare to raise funds for your GP practice (Practice Business), Rated: B

1 Decide on equity or debt – or a combination

For example, if your business is already two-years old try Funding Circle.

Thirty per cent equity and 70% debt is a good ratio and can make the company easier to manage.

2 Test your financial model – it must be robust

3 Be realistic about your valuation

4 Decide on the appropriate people to approach

In the £1 to £5m area, try EIS/SEIS funds and VCT funds. This is where an expert adviser can be helpful in providing introductions and knowledge. For smaller amounts contact Angel Investors.

5 Make contact and ensure you follow-up

6 Prepare the right information for the right stage in the process

7 Take your team with you

Number of UK financial services trade marks surges due to fintech growth (Finance Feeds), Rated: B

According to data provided by professional services firm RPC, the number of trade marks registered by financial services firms has jumped 35% in five years – from 3,141 in 2011 to 4,228 in 2016.

Examples of fintech companies and challenger banks that have registered a number of trade marks recently include Atom Bank, Monzo, and Redwood Bank. Last year, the raft of fintech and financial services trade marks registered in the UK comprises names like “ Zentity” and “Numus Cash”.

China

A glimpse at how Qudian and China’s online micro lenders revolutionise financing (SCMP), Rated: AAA

One day in July, Carina Shi awoke to incessant phone calls by angry, loud men, seeking repayment on a 20,000 yuan loan taken out by a friend.

Unbeknown to Shi, the 20-year-old college student had been listed as the contact by a friend who defaulted on a loan borrowed from Qudian Inc, the Beijing-based online lender at the centre of the fourth-largest US initial public offering this year. Debt-collection calls only ceased after Shi called her friend’s mother in Inner Mongolia to resolve the debt.

Shi’s experience offers a glimpse into the inner workings of Qudian, a provider of micro loans that ballooned within three years into a sizeable lender offering a loans book of 38.2 billion yuan (US$5.6 billion) to 7 million active users during the first six months of 2017.

The annualised interest rate on 59.5 per cent of loans lent last year surpassed 36 per cent, according to the company. That compares with between 12 and 14 per cent among the country’s largest commercial banks.

That crackdown gave Qudian and other online lenders like Ppdai, Fenqile and Hexindai the niche to build a market, which expanded by 23 per cent in two years to 452.4 billion yuan at the end of last year.

Chinese overseas investors prefer tech stocks (Technode), Rated: AAA

China’s sizable middle class is on fire. A McKinsey & Company report projected that they would account for 76% of the country’s urban population by 2022.

When we say Chinese people are becoming increasingly tech-savvy, we don’t only refer to the fact they are the first adopters of cutting-edge technology software and voracious buyers of smart gadgets. We also have a knack and understanding for technologies to seek better investment returns. The report shows that tech stock is the most popular category for Chinese-speaking investors.

A dominating 56% interviewees said they have invested in Alibaba, which had a growth of nearly 80 percent since the start of this year. JD and Apple performed equally well to rank the second and third.

Source: Technode

As digital natives, the country’s younger generations are first-movers to the sector. The report points out that post-80s gen represents nearly half (47.2%) of the users with post-90s gen comes as a close second (36.2%).

Over 65% of Chinese traders prefer Chinese companies when investing in the US.

Over 55% of Chinese investors will hold a position for over three months, and 20.03% for longer than a year.

The Role of Punctuation in P2P Lending: Evidence from the People’s Republic of China (Asian Development Bank), Rated: AAA

Using data from Renrendai, one of the largest P2P lending platforms in the People’s Republic of China, we investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate. We propose that the use of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability.

Source: ADB.org

Download the full report here.

China’s Latest Fintech Offering Looks Overpriced (WSJ), Rated: A

Investors sent the stock of Chinese online microcredit company Qudian Inc. QD 7.00% —which literally translates as “Fun Shop”—up nearly 50% on its first day of trading on the New York Stock Exchange last week. But on Monday, following criticism of Qudian’s high lending charges in Chinese social media and newspapers, the stock tanked, dropping almost 20%.

The market does seem ripe for growth: Nonmortgage consumer loans are only around 20% of household deposits in China, according to Bernstein analysts.

Still trading at 6.6 times book value even after Monday’s share price tumble, Qudian is asking for a lot of faith compared with more-established lenders.

Source: The Wall Street Journal

Chinese P2P lenders face IPO scrutiny (International Financial Law Review), Rated: A

Online lending companies are facing a number of issues when planning an initial public offering in Greater China and the US, according to panelists at last week’s IFLR Fintech Asia conference in Hong Kong. Regulators’ attitudes towards business models,
accounting requirements and risk reserves are issues companies need to be mindful of.

Credit Industry Leader Joins China Rapid Finance Board of Directors (PR Newswire), Rated: B

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), one of China’s largest consumer lending marketplaces, today announced the appointment of Zhou Ji‘an, Executive Director and General Manager of China United SME Guarantee Corporation (“Sino Guarantee”), to its board as a non-executive independent director.

A seasoned chief executive in the financial industry, Mr. Zhou brings to the Company more than 18 years of experience in global organizations, financial institutions and government.

European Union

3 Advices For Peer-To-Peer Investors From ‘Inspeer’ Ceo (Coinidol), Rated: A

AltFi Data Analytics, published by investment bank Liberum, shows that the ratio of operating costs to the loan portfolio at the crowdlending platforms is lower by almost 40% comparing to banks.

  • Diversification is a key
  • Know your borrower
  • Pay attention to risks
International

Creation of Billion Dollar Startups Shifting Out of US (BW Disrupt), Rated: AAA

Today, there are 214 unicorn startups globally — private companies that have reached a hefty valuation of over $1 billion.

Of these, the United States has taken the largest share of the world’s most valuable private companies, with 127 US-based startups reaching unicorn status since 2013. China follows in second place, producing 59 unicorn companies over the same time period.

Since 2013, the share of new unicorns born each year in the United States has consistently dropped, from 75 percent of all unicorn births in 2013 to less than half (49 percent) by 2015. That number sunk even lower to hit just 43 percent last year.

Chinese unicorns rising

In 2017 YTD, 16 new unicorns have been born in China.

In the third quarter of 2014, Lu.com, a finance marketplace that deals largely with P2P lending, reached a $10 billion valuation after a VC round backed by Morgan Stanley and Ping An Insurance.

Looking at companies with the highest valuations upon their entrance into the unicorn club, 7 of the top 10 spots go to China-based companies, with the US claiming the remaining 3.

Wish Finance: Small Business Lending Blockchain Platform (BlockTribune), Rated: A

BLOCK TRIBUNE: Could you tell us a bit how Wish Finance got started?

EUGENE GREEN: A decade ago I was a small businessman. Several of my closest friends are small businessmen in Asia, Europe and the US. All of them had the same massive problem, which I had – an inability to get a loan. So I founded Wish Finance to solve this major pain point.

BLOCK TRIBUNE: Where do you see the value of Wish tokens in the medium to long-term and the ultimate benefit for token holders?

EUGENE GREEN: We are not selling digital candy wrappers, but a token convertible to real company equity. The token price will go up with the company valuation, and comparable FinTech lending companies showed a fiftyfold valuation growth in only a few years. So the token holders could stand to benefit in a big way.

Better structure could protect investors in P2P market – BoJ paper (Central Banking), Rated: A

A research paper published by the Bank of Japan on October 23 suggests using specific purpose companies and specific purpose trusts to strengthen investor protection in the field of P2P lending.

P2P lending matches borrowers and lenders online without making use of traditional financial intermediaries such as banks. In recent years, the amount of outstanding loans in the P2P sector has grown significantly in the UK, the US and China.

Australia

Australia publishes draft laws for relaxed fintech regulation (Reuters), Rated: AAA

The Australian government published draft laws on Tuesday that would let financial technology companies operate without a full licence, a measure it said would encourage innovation without compromising existing levels of consumer protection.

Financial technology companies would be able to test products involving non-cash payments, crowdfunding, consumer credit and provide financial advice on pension funds, life insurance and domestic and international securities.

Industry superannuation funds need to adopt digital advice into their offering to retain those members who eventually seek advice elsewhere and inevitably leave their industry fund.

Through digital advice, super funds should begin focusing on what Cheung terms as “incremental advice”.

Instead of providing just intra-fund and single-issue advice, super funds should provide members with the ability to deal with cashflow, debt management, or protection and insurance needs, as needed.

India

Fintech Valley Vizag and Knowledge Partner KPMG Announce Finackathon 2017 (BW Disrupt), Rated: AAA

HackerEarth, a leader in innovation and talent management software, has been selected by Fintech Valley Vizag – a Government of Andhra Pradesh initiative, to host Finackathon 2017.

The hackathon will be held in two stages. The idea phase which began on September 14th is currently underway with entries set to close on October 30th. The shortlisted teams will participate in the final round to be conducted in the first week of December in Visakhapatnam. The winning teams in each category (Banks, Insurance, Capital Markets, and NBFCs) will be awarded a sum of INR 3,00,000. The winners will also be given a chance to carry out Proof of Concept (PoC) with corporates and will need to be executed in Fintech Valley Vizag. Investor network of The Fintech Valley, Vizag will be invited for Hack Day, where they will go through the prototyped solution.

The hackathon is looking for solutions across the following 5 themes:

  1. Customer Experience
  2. Process Automation
  3. Financial Inclusion
  4. Risk Management
  5. Lending
MENA

Betterpaydayloansonline.com Now Allows Getting Quick Payday Loans (MENAFN), Rated: B

Betterpaydayloansonline.com is a web-based service, which makes it possible to get quick, safe and convenient payday loans with no hassle at all.

Canada

LENDING LOOP HITS MILESTONE OF PROVIDING $ 10 MILLION IN FINANCING (Betakit), Rated: AAA

Lending Loop, a Canadian P2P lending platform, has officially provided financing of more than $10 million across the country.

The company says it has supported the expansion of over 180 small businesses through a system that allows investors to reach out to small businesses on Lending Loop’s digital marketplace.

Lending Loop’s investment model moves away from institutional or accredited investors; Canadians can even invest $50 into a pool of larger loans.

A new service is helping employers reduce turnover by paying their employees by the day (The Washington Post), Rated: A

Restaurant News reports that hourly employees can use a smartphone app to access money for hours worked and have it deposited on a debit card. The amount is limited to 50 percent of what’s earned and–to discourage impulse buying–employees only have an hour after their shift to access the money. There’s no fee for the worker, but businesses pay Instant Financial $1 per active user per month.

Barha is aiming to put a dent into the burgeoning payday loan industry, which was used by approximately 12 million Americans in 2015. His service is also being looked at as a potential recruiting and motivation tool by employers, particularly in — but not limited to — the retail and restaurant industries.

According to a recent USA Today report, almost 150,000 employees at more than 50 companies like McDonalds, Outback Steakhouse and Dunkin’ Donuts as well as other restaurants and retailers, trucking companies and staffing firms have access to the service.

GDS Link Joins Canadian Lenders Association to Support Innovative Lending; Sponsoring Canadian Lenders Summit (PRWeb), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business lending and leasing, today announced that it has joined the Canadian Lenders Association (CLA) as an affiliate member and will be sponsoring the Canadian Lenders Summit.

GDS Link is sponsoring the Canadian Lenders Summit, which has partnered with the CLA. The inaugural event will take place on October 26, 2017 in Toronto, Canada. Representing GDS Link is Rich Alterman, EVP of Business Development.

Latin America

Brazilian fintech Nubank offers accounts for transfers, payments (Reuters), Rated: AAA

Brazilian startup Nubank said on Tuesday it would expand from credit cards into digital accounts allowing users to make transfers, pay bills and earn more interest than average savings account, beefing up its challenge to traditional banks.

Tech-savvy millennials have been the core demographic for Nubank’s credit card, but Velez said he hoped new accounts would serve some of the roughly 60 million Brazilians – around 30 percent of the population – who do not have a bank account.

Venture capital firms including Sequoia Capital, Kaszek Ventures, Tiger Global Management and DST Global have invested $179 million in Nubank since 2013, giving it a value of $500 million in early 2016 that made it the largest Brazilian fintech startup.

Authors:

George Popescu
Allen Taylor

Friday October 20 2017, Daily News Digest

Chinese IPOs

News Comments Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO. Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the […]

Chinese IPOs

News Comments

United States

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

MENA

Canada

News Summary

United States

Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA

Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.

Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.

EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding.

Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA

PayPal is giving over 2 million retailers in the US the ability to accept Venmo payments, marking the firm’s most aggressive move yet to 

PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA

Sharp growth in mobile payments led PayPal Holdings Inc (PYPL.O) to report a better-than-expected third-quarter profit on Thursday and lift its guidance for earnings through the rest of the year.

The San Jose, California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. Those deals are clearly starting to bear fruit, analysts said.

PayPal shares were up 3.9 percent at $69.89 in after-hours trading following the results.

The company’s adjusted profit rose 32 percent during the third quarter to $560 million, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 21.4 percent to $3.24 billion.

Its mobile payments volume jumped 54 percent during the third quarter compared with the year-ago period, to about $40 billion. Total payments volume rose 31 percent to $114 billion.

Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA

Florida fintech firm Finova Financial announced on Tuesday it has secured $102.5 million in equity and credit facility funding. The financing was led by CoVenture with participation from existing investors.

Finova’s current digital products include its Car Equity Line of Credit (CLOC) and Automobile-Secured Prepaid Card. Its services are available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon and Arizona.

Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A

The Fundrise Equity REIT, or Growth eREIT, has filed with the SEC to raise up to $45,730,440 under Reg A+.  The amount includes $11.8 million from a previous offering circular.

The Growth eREIT most recently paid an 8% dividend.

The first Growth eREIT sold out at the maximum amount under Reg A+ of $50 million.

Investors may purchase shares in the eREIT with at a minimum $1000. Under Reg A+, both accredited and non-accredited investors may participate.

LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options  (PR Newswire), Rated: A

Mota Group’s LILY® division today announced a new flexible time-payment option, partnering with Affirm to offer shoppers in the United States the flexibility of buying now and making simple monthly payments for their purchases.

This new option is in addition to LILY’s existing payment methods of credit and debit cards, Bitcoin, and PayPal, making LILY the only consumer drone company to offer all five methods of payment.

LILY customers may select Affirm at checkout and view their monthly payments up front before making their purchase. More information and purchasing options are available at www.lily.camera/affirm.

Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A

“The number one thing that prevents entrepreneurs from growing big businesses is access to capital,” says tech entrepreneur and CBC Dragon Michele Romanow. She’s looking to change that for e-commerce businesses.

Today, Romanow’s Clearbanc, which provides revenue-based financing to online businesses, announced a new program with Facebook that will give the social media giant’s five million online merchants across Canada and the U.S. access to up to $500,000 in financing without having to give up any equity or fill out any paperwork or even undergo a credit check.

Facebook advertisers that have been operating for more than six months and are looking for money to grow, and have positive economics on ad spends — meaning when they buy an ad they are making a positive margin on selling that product — can apply online through Clearbanc’s Chrged program, which provides tools to help businesses scale, and connecting their Facebook Ad Account and payment processor.

Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A

Sasha Orloff, CEO and Co-Founder of LendUp:

As a socially-responsible lender on a mission to improve credit access for underserved consumers, LendUp shares the CFPB’s goal of reforming the troubled payday lending market. Since our founding, we’ve been a strong advocate for eliminating the predatory practices that have defined the short-term lending market and are pleased that many of these reforms are included in the rule.

At a time when more than half of Americans are unable to access traditional banking products, it is critical that we offer consumers as many safe credit options as possible.

Ken Rees, CEO of Elevate Credit:

We believe the CFPB got it exactly right with the rule.

The rule will dramatically change the landscape of non-bank, non-prime lending in this country. In addition to reducing the number of payday lenders and title lenders, the requirements for advanced underwriting and reporting will push most of the mom-and-pop, primarily brick-and-mortar lenders out of existence.  We believe that the growing need for non-prime consumer credit will be filled by more sophisticated technology-enabled online lenders.

Lisa McGreevy, President & CEO, Online Lenders Alliance (full response here):

The biggest problem with the rule is the very prescriptive nature for a product that is $500 or less. There is no room for any new products or innovation in this space.

APR is an irrelevant measure for very short term loans like this. The CFPB quotes that more than 80% of these loans are rolled over for another loan within the month. That is unacceptable.

CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B

The CFPB has published a notice in the Federal Register announcing that a meeting of its Consumer Advisory Board will be held in Tampa, Florida on November 2, 2017.

Presumably, the loan discussion will focus on the CFPB’s final payday loan rule.

Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A

Climb Credit, a student lending company that expands access to quality education for the new economy, today announced that it has entered into agreements with investors to purchase $130 million of student loans originated by Climb Credit.

The transaction will enable Climb Credit to continue expanding its student loan programs beyond its current network of software development, UI/UX design, robotics, welding, nursing, and other skills-based programs in additional high-earning fields. Climb Credit’s focus is to transform the higher education paradigm by providing better access and affordable funding to students to attend schools that consistently demonstrate a strong return on investment (ROI) for their students.

Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A

Roostify, a provider of automated mortgage transaction technology, today announced the upcoming release of Decision Builder, a new tool that will enable lenders to easily provide their prospective applicants with a clear, easily-digestible view of their loan options, based on the lender’s actual product and pricing system. The company will be offering live demonstrations of Decision Builder for the first time at the upcoming MBA Annual Convention.

The Decision Builder tool can be placed on a lender’s existing website, and features a handful of dropdown questions, such as the desired loan amount, the expected down payment, and the ZIP code of the house to be purchased. With that information, Decision Builder will generate a series of loan options based on the lender’s product and pricing system, showing the consumer what products and rates they would qualify for. Each option is presented in a visual, easy-to-understand interface with clear explanation of the benefit of the loan product – for example, a lower monthly payment or low total interest. From there, the consumer can more easily evaluate which loan product is right for them.

With accurate, realistic loan information from the lender’s website, the consumer can carefully consider their options on their own time, without the pressure of having to decide within the limited window of an appointment with a loan officer. When they’ve made a decision, the interface includes a convenient option to move forward on their chosen loan with the click of a button.

How consumer banking leaders are embracing AI (American Banker), Rated: A

Artificial intelligence is becoming a competitive advantage that will force institutions to incorporate it, according to participants at the BankAI conference this week.

“People will have to adopt artificial intelligence,” said Brian Pearce, senior vice president of artificial intelligence at Wells Fargo. “It will have to become part of everyone’s set of tools.”

What banks are doing

Wells Fargo is piloting several chatbot technologies, though it has yet to suggest a launch date for any of them.

The bank has a team dedicated to bereavement — they take these phone calls and help executors manage the estates of the newly deceased.

Bank of America

Michelle Moore, head of digital banking at Bank of America, shared an update on the virtual assistant it announced a year ago, erica. It’s now in use by 300 employees. Sixty percent of the time, employees choose to interact with erica by voice, though they could also use chat, Moore said.

Ally Bank

Ally Bank was one of the first to launch an AI-based virtual assistant two years ago: Ally Assist, which is based on technology from Personetics.

Most people who commonly interact with Ally Assist are heavier transaction customers, Morais said.

The bank is also using AI in the back office. For instance, the bank used robotic process automation to streamline an exception process that had required back-office staff to navigate multiple screens and type hundreds of keystrokes. It now takes three clicks.

BBVA

Robert Sears, executive vice president and global head of product for new digital businesses at BBVA, said the bank is applying AI in credit decisions and focusing on explainability.

The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A

For those studying abroad, organizations like Prodigy Finance—a borderless, peer-to-peer lending platform—provide international, post-graduate loans.

Student Loan Hero looked at 116 of the top American business schools to identify which programs are most financially affordable, taking into account the average debt of graduates, average starting salaries, and annual tuition fees.

Rank Business School Average Indebtedness Percentage of graduates with debt Annual tuition and fees Average starting compensation
1 Lehigh University $0 0 $19,350 $86,667
2 Oklahoma City University $11,331 9 $16,230 $101,090
3 University of Texas —​ Dallas $7,132 25 $19,048 $83,000
4 Missouri University of Science and Technology $11,386 19 $15,402 $66,667
5 Oklahoma State University (Spears) $18,728 22 $12,121 $70,700
6 University of Missouri (Trulaske) $20,495 20 $14,599 $64,252
7 Florida State University $14,379 31 $18,693 $67,308
8 West Virginia University $18,608 33 $9,450 $58,488
9 Louisiana State University—​Baton Rouge (Ourso) $17,900 27 $17,800 $62,429
10 West Texas A&M $18,500 54 $9,600 $93,625

Jay DesMarteau, head of commercial bank specialty segments at TD Bank, said early-stage businesses will often use their funds for operational necessities such as buying inventory and building products.

Isaac Rodriguez, CEO of Provident Loan Society, notes that as a not-for-profit collateral lender, most of his organization’s loans are made for short-term expenses such as meeting payroll.

David Reiling, CEO of Minnesota-based Sunrise Banks, confirmed this trend, noting that many of the bank’s small business customers now use their borrowed capital for technology purchases.

For example, according to a recent survey from TD Bank, 69 percent of small business owners either believe they do not have a business credit score or believe that business credit scores do not exist.

Of course, an alternative lender may be a better option if you want an even smaller loan or if you don’t qualify for a traditional bank loan.

Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A

Student loan marketplace and refinancing website LendEDU polled 1,000 Americans to discover their personal finance preferences when it comes to dating.

The big question, though, was this one: “Would you consider [annual income, student loan debt, or credit card debt] to be a critical factor when deciding to date someone?”

Just over 30% of respondents said that credit card debt was a critical factor in deciding whom to date, compared with just less than 19% who saw annual income as a critical factor and 12% who saw student loan debt as critical.

OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B

Acting Comptroller of the Currency Keith Noreika today reiterated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks, while emphasizing that a path should exist for these companies to apply for a national bank charter.

Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B

So, in case you want to make sure you aren’t doing anything that might send up red flags, here are some things buyers do that scare off sellers.

For instance, a new, fly-by-night online lender might give some sellers the heebie-jeebies. So make sure to ask your agent (and also the seller’s agent) whether there’s a certain lender they trust.

Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B

Online lender OppLoans announced on Thursday it has appointed Andy Pruitt to the role of CTO. Pruitt is a hands-on technologist who has helped start and grow three Chicago-area software companies. He isfounder of Data Anywhere, a data management company.

State rolls out refund program, checks on the way (KFOR), Rated: B

CashCall refunds are still on the way.

By the time Wanda took action she had already paid online lender, CashCall, $1800 dollars on an $800 dollar loan and she didn’t even get her loan through CashCall.

The agreement gives the state one million dollars to distribute to customers.

United Kingdom

Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA

LENDY has announced that it has returned £100m to investors over the last year alone, as it celebrates its fifth birthday this week.

The peer-to-peer property platform said on Thursday that this was a 120 per cent year-on-year increase and that it has now repaid £183m to investors since launch.

Lendy recently announced the repayment of a £7.92m loan, one of the largest seen in the UK’s P2P sector to date. The facility had been repaid ahead of schedule and delivered annual returns of 12 per cent to investors.

First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A

First Associates Loan Servicing announced that they have received Financial Conduct Authority authorization to undertake debt administration and debt collection in the United Kingdom.

In addition to having a stellar reputation for their loan servicing support and being the only loan servicer in their class to earn Morningstar Credit Ratings’ highest operational assessment ranking1, First Associates also offers lending support solutions to their roster of industry-lending clients including:

  • Capital Markets Support
  • Pre-Funding Support
  • Post-Funding Support

IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A

2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.

Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.

Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.

Othera ​announces ​new ​contract ​with ​U.K.’s ​Lendhaus (LendIt), Rated: A

Announced ​at ​Lendit ​in ​London, ​Othera, ​a ​blockchain ​software ​provider ​for ​the ​financial ​services industry ​has ​just ​signed ​to ​their ​proprietary ​blockchain ​platform, ​Lendhaus, ​a ​London- ​based ​loan originator ​providing ​syndicated ​lending ​for ​the ​commercial ​real ​estate ​sector.

HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A

HSBC UK has announced a partnership with Bud through first direct to offer an integrated offering  of financial services products and tools across the market.

This first direct trial kicks off in December and it includes proprietary algorithms – Market+ – to suggest the most suitable financial and non-financial products and services based on individual needs.

Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A

More than £825million has been pumped into the UK fintech since January – double the amount raised in the same period in 2016 – proving the vote to leave the European Union (EU) has not turned investors off Britain.

In fact, since the EU referendum vote, UK fintech companies have raised more than £1billion, according to research by London & Partners.

The capital has been the major winner from investment, receiving around 90 per cent of all venture capital investment.

London-based firms Funding Circle, Revolut and Receipt Bank each raised tens of millions of pounds of investment this year.

3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B

There are several online lenders available to offer you loans; they use your social media data to take a decision. Kabbage is the most popular loan landers working online. Kabbage offers the loan to the small businesses and keeps the cash flow in the different businesses. Before giving you the loan, they will ask you to get the access to your social media accounts.

Mark Arnold – a branding expert advises the credit unions and banks check a business credibility and see how effectively they are grabbing the market through social media. These businesses primarily look at different business especially at LinkedIn pages to determine the loan eligibility.

Use some crowdfunding websites to raise money for your business-like GoFundMe, Kickstarter, and Indiegogo.Share links to your crowdfunding webpages on your social networks on Twitter and Facebook and motivate people to share on their social networks.

China

Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA

Qudian, one of China’s largest online lenders, had a debut to remember on the New York Stock Exchange this week. Its shares closed up 22 per cent, making a multi-millionaire of founder and chief executive Min Luo.

The company, which raised $900m in the share sale, is the latest to underline investors’ appetite for the collision of lending and technology that has given rise to the Chinese fintech sector. Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to raise $350m in New York, and at least a dozen similar issuers are preparing flotations.

About 40 per cent of consumers in China make payments online, and 14 per cent have gone on the web to borrow money, according to DBS.

Qudian’s IPO — the fourth-biggest in the US this year — comes on the heels of Chinese online insurer ZhongAn’s hotly received $1.5bn IPO last month in Hong Kong. ZhongAn’s stock is up 34 per cent from its debut.

Source: Financial Times

Wary of online lending, regulators have strictly limited online financial products such as high interest “payday loans” and microloans by capping interest rates at 36 per cent. Last May, new restrictions wiped out scores of P2P lending networks in China, after worries that it was fuelling real estate speculation and subprime lending.

Source: Financial Times

A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA

In the past two months at least seven online lenders backed by SOEs have collapsed. It was a business none should have been in, far removed from the industries they were supposed to focus on. The money potentially lost is trivial—roughly 1bn yuan ($150m), compared with government assets worth more than 100trn yuan. Still, these cases highlight how hard it is for the party to stamp its authority on the vast state sector.

The troubled SOEs include distant subsidiaries of the national nuclear company, an aviation company and a big energy company in Shanxi, a northern province. They had acquired stakes, from as little as 20% up to 100%, in online peer-to-peer (P2P) lending platforms.

They were “marriages of convenience”, says Joe Zhang, chairman of China Smartpay, a financial-services company.

Source: The Economist

Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A

China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.

And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.

That 15 trillion yuan figure was calculated by Forward Business, a Shenzhen-based consultancy focusing on studies of IT and other emerging industries, which also suggests mainland banks granted a combined 12.65 trillion yuan in new loans to the budding sector.

But the grim reality remains, that the larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk.

Established in 2013, Tiandihui is an online platform where cargo and trucks are matched.

It s network stretches across 50 mainland cities and it handled some 64 billion yuan worth of transactions last year. The company, which charges fees for its matchmaking, has yet to break even.

European Union

Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA

Israeli fintech startup PayKey has raised $10 million in its Series B round led by MizMaa with participation from SBI Group, Digital Ventures, SixThirty, Fintech71, and The FinLab.

The new funds will be invested in global expansion, namely in the Asian market. Several of the investors in this round are Asian based while the startup graduated from the Singaporean FinLab accelerator.

Mind the GAP in the Lending GAP (AltFi), Rated: AAA

The Lending Gap has been one of the most quoted negative consequences of the financial crisis. Many political efforts have been conducted to stimulate the economy. New business models (e.g., private debt, direct lending, alternative finance, peer to peer) were born with the explicit aim and mission to “fill the gap”.

Where are we today, 10 years after the crisis?  Are borrowers still suffering? What investment opportunities are out there, if any?

  • FACT #1. The lending gap has been reduced, and the drivers have changed.
  • FACT #2. New alternative lending opportunities have opened up.
  • FACT #3. Banks are in better shape today, but exposed to the digital revolution and various structural challenges.
Source: AltFi
  • FACT #4. Credit expansion has resumed since YE 2014.

P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A

THE MOVE towards auto-lending among some peer-to-peer platforms may limit interest rates and be a stumbling block for investors worried about the type of businesses they lend to, a European automated P2P firm has said.

Despite being automated itself, Latvia-based Robo.cash has claimed lenders may be missing out on higher interest rates with a passive investment strategy.

As an example, Funding Circle recently moved from manual to auto-lending,now offering a conservation option at 4.8 per cent or a balanced approach at 7.5 per cent.

Australia/New Zealand

Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA

Online retail marketplace MyDeal.com.au has launched business loan offering MyDeal Marketplace Loans to accelerate the growth of their listed retailers.

Retailers who list their products through the MyDeal Marketplace can now apply for a business loan of up to $250,000 directly through their supplier management system and in many cases receive the funding in under 24 hours.

This offering is in partnership with fintech business Prospa, Australia’s leading online lender for small business.

Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A

“We’ve long seen the potential for technology to deliver better personalised financial advice to Kiwis,” said Ramesh Naran, Senior Manager, Digital and Innovation at Kiwi Wealth. “With this decision by the FMA, we can go through the application process and turn Future You into the powerful, personalised tool we’ve always wanted it to be. It’s already on its way to becoming the platform that’ll set the industry standard.”

Mr Naran said the FMA’s approach recognises the ability of technology to improve financial understanding and outcomes for New Zealanders.

India

What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A

In a much-awaited move, RBI issued guidelines to govern peer-to-peer lending or P2P. This is a landmark decision that will go the distance in achieving the objective of financial inclusion.

For the time being, RBI has advised NBFC P2Ps not to offer or arrange any credit enhancement or credit guarantee. Against this backdrop, the principal protection fund, which has been an exclusive offering of i2iFunding so far, may need some tweaking. At present, we are neither guaranteeing any compensation from the third-party nor are we making a claim of apportioning our capital for the purpose. Therefore, we will approach the regulator to get more clarity on this and would do our best in the interest of members of the platform. Existing investors need not hit the panic button.

Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B

More than 24,000 branches and 42 crore customers make the State Bank of IndiaBSE 0.00 % the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.

“Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“

Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled.

Asia

Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA

Founded and developed in Kazakhstan, the biggest economy of Central Asia, FinTech startup Lendex has announced plans for ICO crowdsale to finance the launch of a cross-border P2P (peer-to-peer) lending platform for underbanked consumers in Central and South East Asia.

MENA

Transitioning to a digital future in the Middle East (TXF News), Rated: AAA

Global fintech investment has risen phenomenally in recent years &ndash; from $3 billion in 2013 to $24.7 billion in 2016.

Although less than 0.1% of fintech investment originates in the Middle East, growing influence from a soaring millennial population, and increasing expectations for digital solutions, are giving rise to a burgeoning number of fintech initiatives throughout the region. In fact, the number of fintech companies in the Middle East and North Africa (MENA) region is expected to surge &ndash; from 105 at the start of 2016 to 250 by 2020. And fintech investment is predicted to grow by 270% in the Middle East this year, indicating the huge potential for digital change &ndash;and a strengthening drive to deliver it.

Payments

The majority of fintech innovation so far has been in the payments sector. Although fintech has already made a mark in the retail payments space &ndash; with new companies such as the UAE&rsquo;s Beehive, an online marketplace for peer to peer lending, and Telr, an online payment gateway for emerging markets &ndash; effecting change in the corporate sector is more challenging. This is primarily due to the often more complex, cross-border nature of corporate payments and the accompanying regulations and security requirements.

SWIFT gpi already has the backing of over 110 banks across the globe &ndash; including BNY Mellon &ndash; which represents over 75% of SWIFT&rsquo;s global payments traffic. The UAE&rsquo;s Mashreq Bank was the first Middle Eastern bank to join SWIFT gpi earlier this year.

Trade finance and fintech development

AI, for instance, offers solutions to improve documentation flow and cut the need for time consuming processes. Two types of AI that could benefit trade finance are optimal character recognition (OCR) and intelligent character recognition (ICR). OCR converts images of paper documents into machine-encoded text, enabling documents used in trade transactions to be verified automatically; while ICR is able to learn and identify patterns of behaviour embedded in trade documentation. These capabilities would both help to improve efficiency and reduce costs in the supply chain.

Canada

They launched their Toronto-based venture, MagneTree Books, in the spring of 2015 with the help of a Kickstarter campaign for presales of their inaugural book.

Neither Josie, who was at the end of a maternity leave, nor Ronny, who worked for a humanitarian aid organization, had much savings to fund their startup or the first run of books, which together rang in at more than $65,000. A bank loan wasn’t an option; neither entrepreneur was in a position to cover the debt if something went awry.

Online sales have been slow – just 15 per cent of their books are sold on the web. But corporate gifting and wholesaling has proven fertile. Still, the company has yet to break even. Profit on a run of books rings up at about $7,000.

But they have a big problem: no cash to fund the second book’s production and marketing. Neither sibling is able to personally lend the company money, and they have begun crowdfunding once more.

Expert advice

Mr. Zakharia notes that the amount of money the siblings need to fund their second book is relatively small at between $7,000 and $10,000. Still, their inability to make a personal loan or secure a bank loan will make them unattractive to traditional lenders. “Banks are going to be very conservative,” Mr. Zakharia said.

One option the pair might consider is Lending Loop, a peer-to-peer lending marketplace that might be their fastest route to raising cash. “Because it’s such a small amount, I think it would be pretty easy to raise,” he said.

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

Wednesday August 2 2017, Daily News Digest

Bank branch proximity

News Comments Today’s main news: PeerIQ wraps up $12M Series A financing, expands into traditional lending. LendInvest 5.25% bond offer closes Friday. Confirmed: LendInvest pulls out of P2P Finance Association. RateSetter enter hire purchase market with new partner. Yirendai’s Q2 results. Dianrong raises $220M from Asian investors. Lending Loop launches auto-invest, raises $2M. Today’s main analysis: Consumers prefer digital banking capabilities […]

Bank branch proximity

News Comments

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United Kingdom

China

European Union

International

India

Asia

Middle East

Canada

Philippines

News Summary

United States

PeerIQ Secures $ 12M in Series A Financing to Expand Leading Data and Analytics Platform for Lending Markets (Globe Newswire), Rated: AAA

PeerIQ, a provider of data and analytics for the lending sector, today announced that it has closed a $12 million Series A funding round, co-led by TransUnion, Hearst’s Financial Venture Fund and Macquarie Group, along with existing investors Uprising and former Morgan Stanley CEO John Mack. With the new capital, PeerIQ will expand its core platform to unlock more value for its clients, extend beyond online into traditional lending markets, and collaborate on new product initiatives with its strategic partners.

Already a core data partner to PeerIQ, TransUnion is deepening its relationship, with Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit, joining the PeerIQ board. Shea Wallon, managing director of Hearst’s Financial Venture Fund, which invests in early-stage financial information, service and technology companies, is joining the board as well.

Consumers Prefer Digital Banking Capabilities Over Branch Proximity (The Financial Brand), Rated: AAA

The 2017 Omni-Channel Shopper Study, published by Novantas, found three major shifts in consumer behavior that will impact bank distribution and sales strategies in the future.

  1. A significant shift from branch dependence to digital preference
  2. A redefinition of the drivers of bank consideration and purchase
  3. An increase in demand for digital account opening

A Shift in Dependence on Branches

The research found that segments that placed the highest importance on branches for their checking relationship shrunk significantly in the past year, at the same time that those segments with the lowest branch attachment grew. The same was true for segments that were the most dependent on branches for ongoing transactions. These segments also shrunk significantly over the past year.

A New Definition of Convenience

The biggest news is that the drivers of ‘perceived convenience’ start with an organization’s digital capabilities. In fact, the importance of branch-centric factors have dropped in each of the past three years of the study. This is especially true for consumers aged 18-54.

Another significant trend of note is the increasing importance of being able to access cash without a fee, irrespective of primary bank proximity.

The Novantas shopping survey found that 79% of consumers are doing at least some of their shopping for new checking accounts digitally, with 54% using only digital channels. These digital-only shoppers are both older and wealthier, with the size of the digital-only shopper category increasing in size.

Juvo Raises $ 40M In Series B Funding Led By NEA And Wing Venture Capital (PR Newswire), Rated: A

Juvo, a pioneer in mobile Identity Scoring, today announced a $40 million USD Series B funding round led by New Enterprise Associates (NEA) and Wing Venture Capital. Also included in the round are investments from SignalFire as well as add-on investments from existing investors. Juvo will leverage these new funds to drive global growth and scale, with a particular emphasis on Asia,  Latin America and Europe, and broaden its suite of financial service offerings targeting the financially excluded. The company also announced the appointment of Peter Wagner, founding partner of Wing, to Juvo’s board of directors.

Juvo, who came out of stealth mode 10 months ago, was founded with an overarching mission: to establish financial identities for the billions of people worldwide who are creditworthy, yet financially excluded. By partnering with mobile operators and financial institutions around the world, Juvo uses sophisticated, data science-based credit algorithms to identify previously anonymous prepaid subscribers, enabling them to build financial identities and gain access to basic financial services.

Juvo currently partners with seven mobile operators around the world, with a reach of over 500 million subscribers across 25 countries and four continents. Juvo’s operator partners have reduced churn by 50 percent or greater, while lifting average revenue per user (ARPU) numbers by as much as 15 percent. Most importantly, operators across the board are seeing an average increase in subscriber lifetime value of 65 percent.

Reverse Mortgage Funding Named One of LendingTree’s Top Reverse Mortgage Lenders (BusinessWire), Rated: A

Reverse Mortgage Funding LLC (RMF), a leading national reverse mortgage lender dedicated to helping older Americans achieve financial peace of mind, today announced that it has been named one of the nation’s top reverse mortgage lenders by LendingTree, a leading online lending exchange that connects consumers with multiple lenders, banks, and credit partners. Based on loan volume from the top reverse mortgage lenders for the third quarter of 2016 analyzed by LendingTree, RMF was chosen for consistently scoring high approval ratings and reviews among consumers.

Microsoft rolls out Surface Plus financing, support programs (ZDNet), Rated: A

Called Surface Plus and Surface Plus for Business, the two programs are available in the US only as of noon ET on August 1. The plans can be purchased in the US Microsoft brick-and-mortar stores or online at Microsoft.com.

Students seem to be one of the primary, if not the main, target of the new Surface Plus program.

Microsoft’s Surface Plus page is now live. It notes that new Surface Pros will go for $34 per month for 24 months; Surface Laptops for $42 per month for 24 months and Surface Books for $63 per month for 24 months under the plan. Payment plans are arranged with Klarna Inc.

Marketplace Lender Blackmoon to Launch Ethereum Token Management Platform (Coindesk), Rated: A

Released by Blackmoon Financial Group today, Blackmoon Crypto is designed to enable verified asset managers to create and manage tokenized funds in a legally compliant manner. Operating in nine countries, Blackmoon has attracted $2.5 million to date in investment from firms including Target Global and Flint Capital.

Even Financial launches tool to semi-automate financial compliance for online ads (Martech Today), Rated: A

For the financial industry, which has long dealt with compliance requirements, New York City-based Even Financial is out with a Programmatic Compliance Tool that helps to semi-automate the process of staying within boundaries.

In real time and via an API, the tool looks at the blog, web or app page where a client’s ad for a financial product will appear. Image recognition analyzes daily screen grabs to assess ad placement. The tool also parses the surrounding text on the page to detect any issues that could pose problems with US federal or state regulations, as well as any nearby content that could be embarrassing for the advertising financial service.

CEO and co-founder Phillip Rosen told me that Even’s clients are financial companies — including Lending Club and Discover Loans — which run ads and offer affiliate links for loans, credit cards or other products on about 200 sites, blogs and apps.

How Legacy Financial Institutions Are Deepening Financial Inclusion Through Fintech Partnerships (PR Newswire), Rated: A

The Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance (IIF), with the support of MetLife Foundation, today released a new report examining how partnerships between mainstream financial institutions and fintechs are expanding access to the formal financial economy to the unserved and underserved, particularly in emerging markets.

The report, “How Financial Institutions and Fintechs Are Partnering for Inclusion: Lessons from the Frontlines” is based on 24 in-depth interviews with firms and experts from around the world, and highlights 14 partnerships in as many countries. The report identifies four key financial inclusion challenges in emerging markets that mainstream financial institutions address through fintech partnerships:

  • gaining access to new market segments
  • creating new offerings for existing customers
  • data collection, use, and management
  • deepening customer engagement and product usage

15 Biggest Mid-Day Losers For Tuesday (Benzinga), Rated: B

  • Yirendai Ltd – ADR YRD shares dropped 10.7 percent to $34.18. Yirendai posted Q2 earnings of $0.66 per share on revenue of $174.5 million.

Get the full scoop on Yirendai under the China heading today.

United Kingdom

LendInvest 5.25% bond offer closes on Friday (Citywire), Rated: AAA

Peer-to-peer lending group LendInvest is offering investors exposure to the property market and a 5.25% return from through a retail bond.

The LendInvest bond is offering a return of 5.25% with a maturity date of 2022, the first time a bond has been listed on Orb paying over 5% since April 2016. Neither has there been a retail bond listed on Orb that has a maturity of five years since Orb opened in 2010.

The bond can be held in ISAs and self-invested personal pensions (Sipps) and the minimum investment is £2,000. It can be purchased through a number of investment platforms including, Hargreaves Lansdown, AJ Bell Securities, Alliance Trust Savings, Barclays Bank, Equiniti Financial Services, Interactive Investor, Redmayne Bentley, and Syndicate Room.

LendInvest leaves the P2PFA (Bridging&Commercial), Rated: AAA

The Peer-to-Peer Finance Association (P2PFA) has confirmed that LendInvest has withdrawn its membership of the self-regulatory body.

The P2PFA said communication of LendInvest’s intention to withdraw from the P2PFA with immediate effect had been received and the lender is no longer a member of the association.

“As we continue to scale the business, we’re increasingly looking to diversify our funding model and expand our capacity to lend to underserved borrowers, as well as to create new entry points to an attractive asset class that suits a broader range of investors seeking competitive risk-adjusted returns,” said Christian Faes, co-founder and CEO of LendInvest.

RateSetter unveils partner as it enters hire purchase market (P2P Finance News), Rated: AAA

RATESETTER has named leasing and asset finance specialist Corporate Asset Solutions (CAS) as its partner in the launch of new hire purchase loans on the peer-to-peer platform.

Businesses will be able to access hire purchase agreements for up to £750,000, processed by CAS.

British fintech start-up Neyber secures £21m in funding (Financial Times), Rated: A

What do several thousand police officers, two former Goldman Sachs executives and an Indian investment company have in common?

They all are central players in a £21m fundraising set to be announced this week by a British fintech start-up, which provides loans that are repaid out of people’s salaries.

Neyber is a kind of digital credit union.

The police officers — more than 5,000 of them — make up the majority of borrowers on Neyber’s platform, which has lent more than £65m over two-and-a-half years.

FCA answers your questions on robo-advice (FT Adviser), Rated: A

Set up in May 2016, the advice unit offers regulatory feedback to firms developing automated models providing low-cost advice.

So far 17 firms have worked with the unit, which was launched following the Financial Advice Market Review, a joint initiative by the Treasury and the FCA to look at ways to bridge the gap between people who could benefit from financial advice and those who can afford it.

Oxford University is getting into fintech (Business Insider), Rated: A

The university’s Saïd Business School announced on Wednesday that it will launch an online short course in fintech — financial technology for the uninitiated — that is designed to help prepare business executives for a future where more and more financial services functions are based around tech.

Oxford has launched the programme in conjunction with educational technology firm GetSmarter, which was recently acquired by fellow ed-tech business 2U for $103 million (£78 million).

Banking jobs ‘will completely change’ (Business Insider), Rated: A

Business Insider chatted with Axel Lehmann, chief operating officer of Swiss bank UBS, to ask how the organisation is coming to terms with fast-changing world of fintech.

Axel Lehmann: True change is really coming from outside the industry.

It’s less the technology, as such, providing a transformative element in the banking industry. It’s really alternative business models that have the potential to shake up everything and eat into our cake.

AL: I truly believe that whole question of robotics and artificial intelligence over a time horizon of four to eight years will fundamentally change the banking business. As banks, we understand that our business is all about data. These technologies have the potential to really fundamentally change the way we operate in terms of getting smarter with the customer, understanding what kind of products we should offer and so on.

AL: Dealing with fintechs is a cultural shift that needs to take place and you want to have the local people to innovate. At UBS we have a systematic process on how we expose ourselves to fintech companies.

L: We have to be mindful going forward. Regulation shouldn’t stifle innovation. The banks should welcome when regulators like the PRA in the UK or the MAS in Singapore open up to fin tech and allow companies to better explore potential changes in the business model. The one request we would have is a level playing field.

Increasingly regulation will have to shift to a more functional regulatory approach. At the moment, if I’m a bank I’m regulated like a bank. If I’m an insurance company, I’m regulated like an insurance company. However some of these lending platforms are partially unregulated although to the customer it looks the same as a regulated offering. To avoid regulatory arbitrage regulators will have to move to a more functional perspective.

Evolving For Symbiosis: Rethinking The Bank-Fintech Puzzle (The Financial Brand), Rated: A

While a few traditional financial institutions continue to view fintechs as pure competition, there is a broad realization that the way customers and businesses consume financial services is changing faster than banks are able to adapt—especially while maintaining focus on a premier experience for full-service banking customers.

Failure to adjust to changing expectations and preferences will result in falling behind the market while more nimble, non-traditional players poach current customers and dominate the attention of the next generation of account holders.

Collapsed engineer Morgan Tucker owed creditors £3m (Construction News), Rated: B

Failed engineer Morgan Tucker collapsed owing an estimated £3m, according to the administrators’ latest report.

The Newark-based company was estimated by administrator FRP Advisory to owe a total of £3,038,952 to creditors when it entered administration on 30 May.

The biggest unsecured creditor was the Funding Circle, one of the country’s biggest peer-to-peer funding firms, which was owed a total of £218,911.

China

Yirendai Reports Second Quarter 2017 Financial Results (PR Newswire), Rated: AAA

In the second quarter of 2017, Yirendai facilitated RMB 8,189.6 million (US$1,208.0 million) of loans to 138,529 qualified individual borrowers on its online marketplace, representing a year-over-year growth of 80%; 70.9% of the borrowers were acquired from online channels; 51.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.

In the second quarter of 2017, Yirendai facilitated 199,591 investors with total investment amount of RMB 11,446.7 million (US$1,688.5 million), 100% of which was facilitated through its online platform and 90% of which was facilitated through its mobile application.

For the second quarter of 2017, total net revenue was RMB 1,183.1 million (US$174.5 million), an increase of 61% year over year; net income was RMB 269.1 million (US$39.7 million), an increase of 3% year over year.

Here’s Why Yirendai Stock Is Crashing Today (The Motley Fool), Rated: AAA

Shares of Yirendai (NYSE:YRD) are plunging today, down by 16% as of 12:25 p.m. EDT, after the peer-to-peer lender reported second-quarter earnings.

The company’s loan volume grew 80% year over year, and is up by 18% from the first quarter, continuing an amazing streak of growth. Revenue grew by 61% year over year (16% from last quarter), and both loans and revenue handily surpassed the company’s own expectations.

Loans and revenue increased by 18% and 16%, respectively, during the quarter, but total expenses shot up by 29%, including a 32% rise in sales and marketing expenses. This is the main reason net income fell 23% from last quarter, and grew by just 3% from last year, despite the 61% revenue growth.

European Union

European fintechs are ‘valued too highly’ and consolidation is coming (Business Insider), Rated: A

Victor Basta, cofounder and CEO of London-based Magister Advisors, wrote in a blog post shared with Business Insider ahead of publication: “Many fintech companies are valued too highly in financing rounds, and need years of performance for their ‘cash value’ to catch up to the financing round valuations.

TransferWise was reportedly valued at $1.1 billion in its funding round last year. It said earlier this year that it is on track for revenues of £100 million in 2017 and should make its first ever operating profit.Revolut was reportedly valued at £300 million in a recent $66 million funding round. Its first year of full accounts show it lost £7.1 million on £2.3 million of revenue.

International

JPMorgan to Unveil Robot to Execute Stock Trades (Newsmax), Rated: AAA

JPMorgan reportedly plans to develop a robot to execute stock trades, essentially replacing the human touch in the process.

Daniel Ciment, JPMorgan’s head of global equities electronic trading, told the Financial Times that the AI — known as LOXM — has been used in the bank’s European equities algorithms business since the first quarter and will be launched across Asia and the U.S. by year’s end.

India

Anshu Jain-backed InCred on the hunt for buyout deals to grow lending biz (VC Circle), Rated: A

InCred Finance, a non-banking financial company backed by private equity firms and former Deutsche Bank co-CEO Anshu Jain, is looking to make acquisitions to start microfinance and vehicle loan businesses as part of efforts to expand its loan book.

Asia

Singapore’s GIC Leads $ 220 Million Funding Round for Chinese P2P Firm Dianrong (U.S. News), Rated: AAA

Chinese peer-to-peer lending platform Dianrong said on Wednesday it raised $220 million from a group of investors led by Singapore sovereign wealth fund GIC Pte Ltd, looking to step up research of new technology as it expands across China and explores ventures in other countries in the region.

Other investors in the funding round included CMIG Leasing, a unit of China’s biggest private investment conglomerate China Minsheng Investment Group (CMIG), and South Korean fund manager Simone Investment Managers, Dianrong said.

The Shanghai-based firm would use the funds to automate some of its new branches across China, for research and development and potential acquisitions, Soul Htite, co-chief executive of Dianrong, told Reuters.

Middle East

Dubai Regulations for Crowdfunding: Issuers May Raise Up To Million (Crowdfund Insider), Rated: AAA

The Dubai Financial Services Authority(DFSA) announced the enactment of a regulatory regime designed to engender a robust crowdfunding ecosystem for the country.

At a high level, crowdfunding offers are capped at $5 million. This is in line with the UK but far higher than Reg CF in the US.

As for the specifics of the rules you may view them here.

Fintech in Iran: An Overview (Fintech News), Rated: A

Fintech is gaining steam in Iran as the country’s central bank, financial institutions and government agencies are taking steps to make Tehran a regional hub for financial innovation.

Several fintech events have been organized in Iran in recent months, including the Fintech Festival sponsored by Bank Pasargad Iran earlier this year. The bank also held the Second Fintech Trig-Up during the festival wherein 45 experts help startups develop their ideas.

The CBI is planning to launch a new regulatory body specifically for fintech firms. The authority has also been working on a regulatory framework for fintech companies since 2015.

In March, a group of Iranian fintech companies joined hands to form an association representing the industry. Called Fintech A, the organization is set to bring industry players under one roof, mainly to find a solution to their problems and boost innovators’ relations with regulatory bodies.

Online payment services provider ZarinPal, peer-to-peer payment app Bahamta, online invoicing service Hesabit, money transfer service PayPing and crowdfunding platform Mehrabane are among founding members of the association.

Canada

LENDING LOOP RAISES $ 2 MILLION, LAUNCHES AUTOMATED INVESTMENT PLATFORM (Betakit), Rated: AAA

Toronto-based Lending Loop, a peer-to-peer lending platform, has raised $2 million in funding from the MaRS Investment Accelerator Fund. The round also saw participation from a group of finance and technology investors.

Lending Loop said the funding will help the company roll out its latest product Auto-Lend, which allows lenders to automatically invest in loans through Lending Loop’s marketplace. The company also plans to invest in machine learning capabilities to assess the risk of borrowers applying for loans.

Flexiti Financial Announces Closing of $ 6.25M Convertible Unsecured Debentures Offering (Newswire), Rated: A

Flexiti Financial, a provider of point-of-sale (POS) financing and payment technology for retailers, is pleased to announce the closing of an oversubscribed $5M convertible debentures offering. Oversubscription amounts totaled an additional $1.25M of aggregate principal, for a total investment of $6.25M. These funds will allow Flexiti Financial to accelerate its rapid growth and further develop the company’s award-winning POS lending platform technology, which is currently adopted in over 1,500 merchant locations and used by over 10,000 customers across Canada.

Philippines

Oriente-Express joint venture to address financial inclusion through fintech (Inquirer.net), Rated: AAA

Greater China-based Oriente and Express Holdings, Inc. (a subsidiary of JG Summit Holdings, Inc.), through an exclusive partnership, will address the financial exclusion problem of underbanked consumers and MSMEs in the Philippines.

This joint venture is setting up a digital financial services marketplace that will enable Filipinos to tap into credit facilities to bridge their ever-growing needs, whether to pay for tuition, unexpected medical expenses or even finance a small business.

According to the World Bank, close to 90 percent of adult Filipinos are not covered by a credit bureau and many people resort to informal means to borrow money. In addition, according to the Banko Sentral ng Pilipinas, of the 43 percent of the population who save money, only 14 percent of households maintain a deposit account and 68 percent keep their savings in unsecured places.

Authors:

George Popescu
Allen Taylor

3 Ways Marketplace Lenders Can Expand Internationally

Funding Circle

The most successful online lenders frequently reach a point where they are faced with a question: Continue developing domain expertise over one’s geography or expand internationally? Last year, we covered in-depth the kinds of markets that online lenders can expand into in a three-part series (part 1, part 2, part 3.) Yet, when a company […]

Funding Circle

The most successful online lenders frequently reach a point where they are faced with a question: Continue developing domain expertise over one’s geography or expand internationally? Last year, we covered in-depth the kinds of markets that online lenders can expand into in a three-part series (part 1, part 2, part 3.) Yet, when a company makes a decision to expand, this still leaves a big question open: How will they do it?

Most marketplace lenders come to a three-pronged fork in the road: Expand by partnership, by acquisition, or by colonization.

Partnering into a Market

The first type of expansion is the most low-risk and the fastest to successfully undertake. A successful online lender looking at new geographies also faces a significant slate of new risks should they choose to expand without fully understanding the new market. If they partner with an existing player – whether another lender or an established financial institution – they mitigate a large part of this risk.

Partnering with a local company carries many benefits. A lender can instantly gain valuable insights about the new geography, such as the regulatory environment, credit and underwriting risks, and intensity of competition. They also gain a foothold through an established brand rather than having to build from the ground up in what may already be a fierce market. The drawbacks are that partnership is usually less lucrative for a lender: If they have to partner to enter a market, then they have to share in the gains from entering, and that often means making concessions back to the company they partner with.

 

Current Kabbage lending stats

Perhaps the industry king of expansion through partnership is Kabbage. Kabbage is an online working capital platform based out of Atlanta that has used partnerships to expand out of the U.S. to multiple geographies. In late 2015, they partnered with Spanish bank ING to begin offering €100,000 loans to Spanish small businesses. This also came with an equity investment from ING into Kabbage.

As Kabbage CEO Rob Frohwein commented, “As financial institutions embrace new lending technology, we see that platforms like Kabbage are interesting for them to provide a superior experience to their customers. We are incredibly proud of our partnership with ING, and most importantly, we are thrilled to serve the small and medium businesses powering the economy in Spain.” Kabbage also used an investment from SoftBank – a Japanese investment bank – to expand into the Asia Pacific region by first gaining a foothold in Australia, where it licensed its technology under the label “Kikka.”

Most recently, Kabbage partnered with Santander bank in the UK. As Kabbage COO Kathryn Petralia commented, “Kabbage’s business growth throughout Europe, the Middle East, and Africa has been exponential over the last several months.”

Expansion via Acquisition

Maybe the second most popular way for marketplace lenders to expand into new markets is by purchasing an existing player that already has a strong foothold in the market they want to enter. A marketplace lender that makes an acquisition is usually signaling a more committed desire than a tentative partnership expansion. This usually happens after significant vetting, due to the heavy costs incurred by the purchasing company when they buy out the local player, normally for a mix of equity and cash.

The benefits of acquiring a domestic competitor in a new market are similar to those that a marketplace lender achieves through partnership, with one big addition: They are able to maintain control over how their product is distributed in that new geography, and retain all the profit and benefits from offering it.

One of the most prominent examples of continued international expansion through acquisition comes from Funding Circle, which was originally founded in the UK. In October 2013, the marketplace lender to small businesses expanded into the US, purchasing San Francisco-based Endurance Lending Network. This came in conjunction with a $37 million equity raise for the firm. Then, in September 2015, Funding Circle continued its expansion into Germany, the Netherlands, and Spain with the acquisition of the Rocket Internet startup Zencap, which came following a $150 million round.

It’s possible to see the positive impact this continued expansion has had on Funding Circle’s ability to grant loans in the chart below. Loan count doubled between 2012 and 2013, and again between 2013 and 2014, as the firm expanded its U.S. operations. Likewise, though Funding Circle’s originations in continental Europe have ramped up more slowly, it maintained a similar pace of growth through the end of 2015.

As Funding Circle CEO Samir Desai mentioned following the Zencap acquisition, “Our vision is to help millions of businesses across the world sidestep the outdated and inefficient banking system and borrow from investors. Today’s news is the next exciting stage of this journey. By coming together, we combine Funding Circle’s leading position in the UK and U.S. with Zencap’s deep understanding of local markets to create the first truly global marketplace lending platform.”

Colonizing a New Geography

The last expansion method is the most controversial: Going it alone. Marketplace lenders can choose to “colonize” new geographies through a native expansion, bringing their brand clout and international expertise to a different market themselves, without any partnerships or acquisitions. This is a favorite method in many tech sectors, such as online commerce or the sharing economy. However, it has shown mixed results in the past, such as Uber’s painful exit from China due to competitive pressure from rival Didi Chuxing.

One of the more prominent examples of expansion through colonization comes from online lender OnDeck, which in 2015 separately expanded its U.S. operations to Canada and Australia by establishing new offices in both geographies. In Canada, OnDeck’s entrance was facilitated by the fact that it was entering a relatively uncompetitive market, with Lending Loop the other established lender in the region. Australia, conversely, is a relatively mature market with a host of other online lenders such as ThinCats, SocietyOne, and RateSetter – a UK peer-to-peer lender that expanded into Australia the same way as OnDeck.

As OnDeck CEO Noah Breslow commented upon expansion, “Australia represents an exciting growth opportunity. Similar to the U.S. market, in Australia, we see a huge gap between small business financing needs and the availability of capital from traditional sources. There is significant unmet small business lending demand in Australia, and we believe our online platform is well suited to address the capital needs of Australian small businesses.”

RateSetter made similar comments when they expanded via colonization. As founder Rhydian Lewis noted, “Australia’s financial system is ripe for disruption – for too long, banks have been offering below-par savings and loan deals in the absence of real competition.”

Success in going it alone depends on many factors, such as the ability to scale quickly in an already competitive market, and the ability of a company to leverage an international brand in a way that disrupts loyalty to local ones. This normally means that colonizing lenders have to be very well-capitalized – having raised a lot of equity – to support not only their existing operations but also their more nascent, experimental geographies. Time will tell if the examples above pan out for OnDeck and RateSetter.

Author:

Written by Nik Milanovic