Monday October 2 2017, Daily News Digest

marketplace lending uk

News Comments Today’s main news: CEO-less SoFi will have to wait to get a bank. Zopa partners with Saffron Building Society. Zopa updates credit risk model. Assetz Capital lowers commercial mortgage interest rate to 6.9%. RateSetter reports 56% of investors switch from cash. Beehive raises $5M. African billionaire invests in digital bank. Today’s main analysis: UK marketplace lenders struggle to find […]

marketplace lending uk

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

MENA

South Africa

News Summary

United States

SoFi’s CEO Hiatus Stalls Its Big-Time Banking Ambitions (The New York Times), Rated: AAA

One of the most valuable private financial technology startups in the United States, SoFi’s $4.3 billion valuation was based on expectations it could develop into a major lender but Cagney’s departure this month and the circumstances around his exit complicate efforts to create a new-generation bank that could compete against JPMorgan or Bank of America.

The company has hired headhunters over the past few days to help find his replacement, but an appointment is not expected to take place until the end of the year, a source familiar with the matter told Reuters.

The gap at the top is likely to stall SoFi’s application for a banking license, according to the source, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

A banking license was a key part of Cagney’s push to grow SoFi beyond its core business of student loans and unsecured personal loans.

But without Cagney at the helm, the emphasis is expected to shift.

The company will be more disciplined about testing new products before selling them widely, a source close to the company said.

Square Wants To Be A Bank, And Real Banks Are Pissed (BuzzFeed), Rated: AAA

Small businesses love Square because it charges them less than the bigger, bank-owned payment processors, and the little white card-swipes that plug into a smartphone are easier and more convenient than handheld credit card terminals. Square also — through a partnership with a tiny bank in Utah — makes loans to small companies and entrepreneurs banks would turn away.

As much as small merchants love Square, smaller banks distrust it, particularly now that the company, which is based in San Francisco, has applied to become an industrial loan company (ILC), a controversial type of banking license offered in Utah and a few other states.

And while Square insists it only wants to make small loans to the merchants it serves, banks see this as a backdoor way into their bread-and-butter business of taking deposits and making loans, both to businesses and consumers.

And Square, with its at least 2 million merchant customers, may look to today’s bankers a lot like Walmart did a decade ago. The company has been aggressively soliciting the merchants who use it as a payment processor, offering them small-dollar loans by email.

Take Courtney Foster, who runs a one-chair salon in the Murray Hill neighborhood of Manhattan and has used Square to accept payments for years. One day she got an email from Square Capital with an offer of a loan of $1,000 to $1,500, which would be paid back directly out of her payments processed through Square.

She has since borrowed about $3,000 in total from Square using the money (supplied by Celtic Bank) to start her own line of hair products.

The average loan approved by Square is about $6,000, and the company has either advanced or loaned almost $2 billion since 2014. The amount due back is typically 10% to 16% more than the amount loaned out — which is on the low end for similar types of small business finance  with payments coming out of a fixed percentage of the merchant’s receipts received through Square. The whole balance is due after 18 months, though Square customers can repay early.

Utah has 16 industrial banks, and most fall into the latter category, while some are retailers that issue their own loans, like BMW. Other companies that operate Utah industrial banks include American Express, USAA, UBS, and Sallie Mae.

Acting OCC Head Noreika Comments on FinTech Charter and Online Lending (PeerIQ), Rated: A

Also, in a major shift from prior OCC Head Tom Curry, Noreika affirmed that the proposed FinTech charter could be granted to commercial firms. Former Chair of the FDIC, William Isaac, was also constructive on the concept of enabling commercial firms to engage in banking to drive greater competition, customer choice, and expand access to credit to the 60% of Americans that cannot access a loan from a US bank. Historically, the separation of banking and commerce under the Bank Holding Company Act has prevented commercial firms (outside the ILC charter) from offering banking services. Our interpretation of the above is that, under the FinTech charter, commercial firms such as Walmart, Amazon, Google, and Facebook would have a path to offering banking services.

Cross River Bank CRO Adam Goller moderated a panel including PeerIQ (Ram Ahluwalia), Affirm (Alex Karram), Marlette Funding (Jeff Meiler), and former Massachusetts Commissioner of Banks, David Cotney. PeerIQ cited data and research from Columbia and Harvard Law concluding that the lack of regulatory clarity stemming from Madden-Midland has reduced the availability of credit in District 2.

On Timing for Issuing Charters:
“Interest also remains in the possibility of the OCC offering special purpose national bank charters to nondepository fintech companies engaged in the business of banking. … We have not, however, decided whether we will exercise that specific authority to issue special purpose national bank charters to nondepository fintech companies. We will keep you posted.”

PeerIQ Context: The Conference of State Bank Supervisors and NYS Dept of Financial Services have challenged the OCC’s authority to issue charters. Also, the OCC may be waiting for the nominee of Head of OCC Joseph Otting to be confirmed by the US Senate before introducing the FinTech Charter. Otting was approved by the Senate Banking Committee in early September.

Will They or Won’t They: The OCC’s Fintech Charter (Payments Journal), Rated: A

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 non- depository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.”

“Acting U.S. Attorney Joon Kim, representing the defendants, argued that DFS lacks standing in the complaint because the OCC’s regulations addressing the special-purpose national bank charter have resulted in no injury-in-fact, because the office has not reached a final decision on whether it will offer the specific type of national bank charter that does not take deposits and conducts activities other than fiduciary activities. The U.S. Attorney’s Office also argues that the complaint should be dismissed for failure to state a claim.”

Scott Robinson of Plug and Play Fintech (Lend Academy), Rated: A

One of the leading accelerator programs today is Plug and Play, they claim to be the world’s largest startup accelerator. Lending Club and many other big names have gone through their program. In 2014 they started a dedicated fintech accelerator program, founded by Scott Robinson, who is our latest guest on the Lend Academy Podcast.

The Massive Hedge Fund Betting on AI (Bloomberg), Rated: A

Man Group, which has about $96 billion under management, typically takes its most promising ideas from testing to trading real money within weeks.

What spooked him was an experiment at his firm, Man Group Plc.Engineers at the company’s technology-centric AHL unit had been dabbling with artificial intelligence—a buzzy, albeit not widely used, technology at the time. The system they built evolved autonomously, finding moneymaking strategies humans had missed. The results were startlingly good, and now Ellis and fellow executives needed to figure out their next move.

The program stayed in quarantine until 2014, when a senior portfolio manager with a Ph.D. in mathematical logic named Nick Granger decided it was time to take it out of testing. He gave the AI system a small amount of money from a portfolio he was managing—then more, then more again. At each step, the program was profitable.

Source: Bloomberg

Matic Insurance Services and LendingQB Team Up to Eliminate Stress, Mortgage Delays Related to Homeowner’s Insurance (PR Newswire), Rated: B

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, today announced a new partnership with LendingQB, a provider of “lean lending” loan origination technology. Matic announced the news as part of a live demonstration at San Francisco’s Digital Mortgage conference.

Matic’s integration with LendingQB’s flagship loan origination software (LOS) makes it easy for borrowers to upload or secure a homeowner’s insurance policy during the mortgage application process. The result is a less stressful experience for borrowers and the elimination of costly insurance-related delays for LendingQB’s lender clients.

Is Yahoo a fintech company now? (Quartz), Rated: B

Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.

The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product.

Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.

United Kingdom

Zopa searches for new borrowers through Saffron Building Society loan partnership (City A.M.), Rated: AAA

Zopa is partnering with a building society to offer its loans as it seeks to add more borrowers to the platform.

The online peer-to-peer lender will provide loans at 11 bricks-and-mortar branches of Saffron Building Society across Hertfordshire, Essex and Suffolk, as well as online.

Zopa Announces Credit Risk Model Update (Crowdfund Insider), Rated: AAA

On Friday, online lending platform Zopa announced the latest update of its credit risk model. This news comes just a few weeks after the lender announced updated on improving loan sale time progress, rebate period, and ISA transfer-in. Chief Product Officer at Zopa, Andrew Lawson, revealed he and his team are continuing to monitor leading macroeconomic indicators carefully alongside how Zopa’s loans are performing compared to expectation:

Marketplace lenders struggle to find borrowers (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers. These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans.

Source: Financial Times

According to Mr Zhang, institutional investors such as hedge funds, asset managers, pension funds and family offices now account for between 30 and 40 per cent of peer-to-peer consumer and business lending, compared with less than 5 per cent before 2014. BlackRock, the world’s largest asset manager, made its first significant retail investment in peer-to-peer loans last year when it bought a stake in Funding Circle’s investment trust.

So far, however, they have struggled to attract borrowers to match this demand. Competition is increasing from traditional banks — Goldman Sachs has its own online lending platform — especially for prime and super-prime debt that is less likely to default.

Source: Financial Times

Assetz Capital Lowers Commercial Mortgage Interest Rate From 7.9% to 6.9% (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the UK’s fastest growing peer-to-peer finance platforms and the largest property backed peer-to-peer lender, announced on Friday it has lowered its entry interest rate for commercial mortgages from 7.9% to 6.9% in an unprecedented move to give access to even lower rates for lower-risk borrowers looking for commercial mortgages. This is one of the lowest rates available from any alternative finance providers.

Three million small businesses still don’t accept cards, despite move away from cash (The Telegraph), Rated: AAA

Around three million of Britain’s small businesses do not accept card payments, despite the UK rapidly becoming a nation of card-only shoppers.

One in six British shoppers now uses cards only to pay. A further 38pc would typically try to pay with a card first before they have to pay with cash, according to a study by Square, the payment company belonging to Twitter founder Jack Dorsey.

Small companies could be missing out on millions of pounds’ worth of business by not offering card payment facilities, Square warned.

Card payments overtook cash payments as the main method of purchases in the UK for the first time in July this year, according to the British Retail Consortium. The average Brit has just £32.54 in cash in their purse or wallet right now – not enough to cover more than one of the average transaction size of £18.42.

Wonga on course for profit this year after major changes (Express), Rated: A

The company, which has been overhauled under new management after being accused of targeting the vulnerable and being forced to compensate nearly 200,000 borrowers who overpaid owing to “system errors”, cut its annual pre-tax loss from £80.2million to £64.9million.

Revenue grew by 18 per cent to £76.7million as more products boosted customer numbers by 6 per cent.

Wonga confirms £64.9m loss in year it ended Newcastle United sponsorship (ChronicleLive), Rated: A

Britain’s biggest payday lender Wonga has revealed it remained deep in the red last year with losses of £64.9m, but confirmed plans to return to profit in 2017.

Nutmeg loss widens to £9.3m as it develops advice offer (Citywire), Rated: A

Nutmeg’s 2016 losses have widened £9.3 million as it continued to invest heavily, as it presses ahead with developing the ‘most approporate’ advice proposition for its customers.

The loss, revealed in its accounts published on Companies House, follows the £8.9 million loss it posted in 2015. Its operating expenses rose from £10.8 million to £11.9 million over the year.

At the end of the year Nutmeg managed around £600 million in assets under management on behalf of 25,000 clients.

Turnover rose by almost 50% from £1.72 million to £2.56 million.

Wealthtech is coming to the High Street (Banking Technology), Rated: A

One area of fintech that is of interest is wealthtech. This sub-sector is likely to become more visible over the next few months. Wealthtech has become defined as utilising technology to enhance wealth management and the retail investment process.

The most visible players in the UK are the robo-advisors with Nutmeg the best known (and RiskSave following behind!) but other concepts are also deserving of attention, such as Munnypot.

These developments will soon be more visible at branch level.

An offering of automated financial advice from the retail banks could go a long way towards alleviating this. Santander and HSBC have already launched product offerings in this space, RBS is trialling a service through its Coutts’ sub-brand and Lloyds (with a quarter of the UK market) are sitting on the sidelines awaiting the results of the regulator’s Financial Advice Market Review (FAMR).

Fintech start-up Curve adds cloud-based accounting software to its app to simplify expenses (CNBC), Rated: A

Fintech start-up Curve will now let users claim business expenses across multiple bank cards through its app.

The London-based firm’s app allows its users to link all of their bank cards to one contactless MasterCard. Curve said it hopes to automate the tedious process and remove any friction associated with business expenses. It is predominantly targeted at small business owners and the self-employed.

Curve said Monday it would add online accounting software developer Xero to the app, meaning users will now be able to claim business spending across all their accounts.

The hottest startups in London (Wired), Rated: A

As London’s startup community awaits the result of Brexit negotiations – and its impact on single-market access – one might think tech would have ground to a halt. But growth continues: the last 18 months have seen billion-dollar valuations for TransferWise, Funding Circle and Improbable, and a near-unicorn valuation for Deliveroo.

Monzo

Monzo wants to make banking smarter. Founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, it offers pre-paid cards connected to an app that tracks spending and lets its customers analyse their financial activity.

Nested

One of a growing number of UK property – or proptech – startups, Nested guarantees that it will sell your house within 90 days, or buy it themselves.

Habito

Habito scours more than 15,000 mortgage products to suggest the best option, and takes a commission from the eventual lender. In January 2017, the startup raised £5.5 million in a Series A round led by Ribbit Capital.

Ravelin

Founded in 2014, Ravelin analyses online behaviour in real time to reduce payment-related fraud. According to its clients – including Deliveroo, Karhoo, and Easy Taxi, its technology reduces fraud incidence by more than 50 per cent. The company has raised £4.3 million to date from backers including Passion Capital and Errol Damelin.

P2P needs the FSCS stamp of approval (Citywire), Rated: B

Some commentators estimated nearly half a million new investors would try their hand at P2P lending when the Innovative Finance ISA brought eligible platforms into the ISA fold.

This is unsurprising given that, according to government statistics, British consumers have around £500 billion either saved or invested in ISAs.

However, the stampede has not arrived yet.

Plenty of people think the FSCS offers an insurance policy against poor investment performance. It does not. If a share portfolio tanks, for example, the scheme will not be there to save you. That is the risk you run by choosing to invest in the equity markets.

The FSCS is, however, on hand to compensate investors if a provider has been shown to mismanage its product, and has subsequently gone bust. Only then does it offer up to £50,000 (2017/18 tax year), not the larger amount doled out to savers.

Hull has fast become a profitable city for buy-to-let landlords (Mortgage Introducer), Rated: B

LendInvest’s buy-to-let index ranked the city as the fifth best buy-to-let postcode for landlords in the third quarter of 2017, up from 33rd in the second quarter.

“Cities such as Hull and Nottingham making significant gains in the Index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

The top 10 areas for investors in order of ranking are Luton (#1), Colchester (#2), Manchester (#3), Rochester (#4), Hull (#5), Stevenage (#6), Romford (#7), Southend-on-Sea (#8), Ipswich (#9) and Ilford (#10).

China

Wealth-Management Industry at Turning Point (Caixin), Rated: AAA

China’s wealth-management industry is undergoing profound changes, shifting away from short-term, fixed-income products to longer-term, equity-based investment, said Tang Ning, chief executive of Beijing-based fintech conglomerate CreditEase.

Last year, the Forbes listed a record 400 billionaires from the Chinese mainland, compared to 335 a year ago. The listed members held a total of $947 billion assets, a 14% rise from the previous year. Meanwhile, China’s per-capita GDP exceeded $8,123 in 2016, up from $8,069 a year earlier, according to the World Bank.

Unlike investors in the U.S. and other developed market, Chinese investors have long favored most the fix-income products like bonds and bank bills, betting on governments’ implicit payment guarantee. But as China’s economy slows and its financial market liberalizes, the government has become increasingly hesitant to offer such sweeping guarantees.

A number of wealth management companies including CreditEase have launched private equity FOF over the past few years. In early September, the China Securities Regulatory Commission (CSRC) approved the first batch of six firms including China Asset Management, China Southern Fund Management and Manulife Teda Fund Management to set up publicly offered FOF products.

Tang estimated that there are 200 million active investors in China who do not have access to human advisers and asset managers because of their hefty fees.

Alibaba’s Jack Ma places bet on China’s online insurance market (Asian Review), Rated: A

When the heads of three of China’s most prominent companies join hands to launch a start-up, investors notice.

Jack Ma Yun of Alibaba Group HoldingTencent Holdings‘ Pony Ma Huateng, and Peter Ma Mingzhe of Ping An Insurance Group — collectively known as the “three Ma’s” — did just that. Looking to turn Ping An into a full-blown financial technology company within ten years, Peter also enabled the growth of Lufax, which started as a peer-to-peer lending platform in 2011 and became one of the most valuable e-finance company worldwide as of September.

Four years ago they founded China’s first online-only insurer. It was a company with an untested business model and making no money, but it sparked an investor frenzy.

Source: Asian Review

HSBC: Mobile banking in China begins with your face (Enterprise Innovation), Rated: A

Mobile banking continues to soar in China. According to China Internet Watch, total transactions of China mobile banking clients totaled 55.63 trillion yuan (US$44 trillion), up 5.1% quarter on quarter. China Construction Bank (26.1%) and Industrial and Commercial Bank of China (21%) have a combined market share of close to half of mobile banking in Q2 2017.

European Union

French Real Estate Crowdfunding Grows Steadily and Delivers (Crowdfund Insider), Rated: AAA

The French real estate crowdfunding market grew by 50% in 2016 and keeps growing at the same linear growth pace in 2017. While new platforms continue to join, first entrants strongly dominate the nascent market. With €160 million worth of real estate projects funded, the French platforms have a positive record of delivering expected returns.

It has since grown at a fast, but more linear pace of +53% to reach €68 million in 2016, and is expected to grow by 50% again in 2017.

French real estate crowdfunding attracts new platforms. In 2016, their number grew from 26 to 42, with 19 new entrants and 3 withdrawals. Indeed, more than 90% of real estate crowdfunds are raised by the top 10 platforms and 75% by the top 5. Between them, the two leaders, WiSeed and Anaxago, account for more than 50% of the market.

Top 10 French real estate crowdfunding platforms
Platform

Regulatory Status

Regulated Real estate since

Projects

Value

Repaid

Wiseed

PSI

2014

123

€53,197,600

33 %

Anaxago

CIP

2014

83

€38,908,333

18 %

Lendix

IFP

2014

14

€15,875,000

7 %

Clubfunding

CIP

2015

30

€10,075,500

27 %

Lymo.fr

CIP

2015

29

€8,196,500

45 %

Fundimmo

CIP

2015

23

€7,734,900

26 %

Homunity

CIP

2016

22

€6,732,200

18 %

Koregraf

CIP

2015

17

€4,935,500

47 %

Proximea

CIP

2015

5

€3,490,000

20 %

Immovesting

CIP

2016

7

€2,932,000

Source : , September 2017

 

Source: Crowdfund Insider

WINNERS ANNOUNCED FOR INVESTOR ALLSTARS EVENT (BusinessCloud), Rated: A

The winners of the 15th annual Investor Allstars awards were announced this week, with Funding Circle co-founder and CEO Samir Desai being crowned Entrepreneur of the Year and CoderDojo winning the Tech4Good award.

The Entrepreneur of the Year award went to Samir Desai of Funding Circle and online property lending and investment platform LendInvest was announced as Europe’s Allstar Company.

The full list of award winners is:

  • Exit of the Year: Skyscanner (Scottish Equity Partners)
  • Growth and Buyout Fund of the Year: Livingbridge
  • Entrepreneur of the Year: Samir Desai (Funding Circle)
  • VC Fund of the Year: Idinvest Partners
  • Europe’s Allstar Company: LendInvest
  • Corporate Development Team of the Year: Sage Group
  • Investor of the Year: Benoist Grossmann (Idinvest Partners)
  • VCT of the Year: Octopus Ventures Specialist
  • Debt Provider of the Year: Kreos Capital
  • Seed Fund of the Year: LocalGlobe
  • Service Provider of the Year: Orrick
  • Tech4Good Award: CoderDojo Foundation (part of Raspberry Pi Foundation)
  • Digital Innovation in Art: Articheck

That viral ‘mermaid dog’ video was too good to be true (The Daily Dot), Rated: B

It seemed too good to be real. A hairy creature, which some people guessed was an afghan hound, effortlessly floats underwater and moves its arms with the grace of a ballet dancer. It’s pure euphoria, captured in a video that lasts only a few seconds.

When Klarna, a tech bank with a focus on online shopping, posted the video to its Instagram account on Sept. 17 with the caption, “When you’re swimming into the weekend like… #noworries,” many people assumed it was a video of a real animal swimming in a pool. Or maybe they just wanted to believe.

It’s an animation that is part of an ad campaign for Klarna, which is trying sell people on the company’s “smooth” payment system.

International

Regtech Startups On Pace For Record Deals, Against Backdrop Of Shifting Regulatory Landscape (CCB Insights), Rated: AAA

Deals to regtech startups have increased steadily (if at times slowly) over the past few years, from 83 deals in 2013 to 147 last year. At the current run rate, deals in 2017 are on track to hit a new high, while funding is on pace to grow 14% to nearly match record funding levels set in 2015.

In 2017 YTD, regtech startups have seen 103 deals worth $894M in disclosed equity funding. At the current run rate, deals in 2017 are on track to reach a new high of 148 (up slightly from 147 in 2016). Funding is also on pace to grow, potentially bringing total disclosed equity investment over the last 5 years to more than $5B.

Source: CB Insights

Last quarter saw 34 deals, dipping 13% from Q1’17 to hit a 6-quarter low. Though deals were down, funding was up 14% from the previous quarter — and grew 64% year-over-year — to reach $326M.

H1’17 has seen 73 investments, up 3 deals from H1’16, while funding is up approximately 54% over the same period.

Source: CB Insights
Australia/New Zealand

Yield-hungry investors switch their cash to peer-to-peer lenders (The Sydney Morning Herald), Rated: AAA

Peer-to-peer lender, RateSetter, says 56 per cent of money invested with it is from savers withdrawing their money from their bank savings accounts.

Yield-hungry investors are understandably frustrated with earning next-to-nothing on their cash held at their banks, with interest rates at historic lows and likely to stay that way for the foreseeable future.

With the the advent of peer-to-peer (P2P) lenders, online platforms that match investors and borrowers, investors can get up to  three times the interest paid by term deposits.

NZ named Asia Pacific’s fintech champ (NZ Adviser), Rated: A

New Zealand has the highest per capita fintech lending volumes of any country in the Asia Pacific, and has embraced fintech faster than any other neighbouring Asia Pacific countries.

According to the research, peer-to-peer consumer lending forms the bulk of market activity in here. The second largest was donation-based crowdfunding, for which US$16.8 million was raised in 2016 – an increase of around 100% over the previous year. Equity-based crowdfunding was the third largest model in New Zealand with US$13.85 million across 2016 – up from US$11.86 million in 2015.

Appetise’s ASX listing; Study Loans & RateSetter close funding (Deal Street Asia), Rated: A

UK startup Appetise looks to list on the ASX, Study Loans has secured seed funding and P2P lender RateSetter Australia has closed additional funding from a private equity (PE) fund.

Melbourne-based fintech Study Loans, which offers a credit engine targeted at the student loans sector, has raised A$2 million ($1.56 million) in seed funding from investors that include the Simonds family and RMY Corp, as well as A$5 million ($3.9 million) in debt equity.

RateSetter Australia, a peer-to-peer (P2P) lending platform, has secured A$8.5 million ($6.65 million) from private equity fund Five V Capital. The deal values the company in excess of A$100 million. Existing equity investors in RateSetter are RateSetter UK, Carsales and Strattons.

India

Chqbook – Gurgaon Based Fintech Startup Raised Funds (Bizztor), Rated: B

Chqbook – a fintech startup that allows customers to explore, compare, book and get personal finance products like home loans, personal loans and credit cards, raises undisclosed funds from Youwecan backed Startup Buddy, Apurva Chamaria, global head of corporate marketing, HCL, Sachin Arora, ex-CTO Myntra, Bharat Gupta, Founder of Net Asset Consulting LLP, Amit Manocha, Private equity professional based out of Singapore, and others.

APAC

Indonesian P2P lending platforms recorded 496.5 per cent year-to-date growth of funding allocation (e27), Rated: AAA

Indonesian Financial Services Authority (OJK) revealed that peer-to-peer (P2P) lending platforms in Indonesia in total has channeled up to IDR1.4 trillion (US$106 million) in funding for small and medium enterprises (SMEs) in the country. The number is a 496.5 per cent year-to-date (YTD) growth from December 2016’s number of IDR242.48 billion (US$17.9 million).

Funding Societies Dubbed First Southeast Asian Company to Win Global SME Excellence Award from United Nations’ ITU Telecom (Crowdfund Insider), Rated: A

Singapore’s and Southeast Asia’s SME crowdfunding platform Funding Societies announced on Friday it was named the first southeast Asia company to win the Global SME Excellence Award from United Nations’ ITU Telecom, which was held this year in Busan, South Korea. 

PLDT unit disrupts businesses (Manila Standard), Rated: A

Vea, 67, now heads Voyager Innovations Inc., the digital arm of PLDT and the one behind digital platforms such as Smart Padala (mobile remittances), PayMaya Philippines Inc. (formerly Smart e-Money), Freenet (free sponsored data platform), VYGR (digital performance-based marketing), Tackthis! (electronic commerce platform), Hatch, (marketing technology and innovations platform), Lendr (digital consumer loan platform), FINTQ (financial technology unit) and Voyager DX (digital transformation).  Voyager, which has 600 employees, introduces solutions that allow customers to participate in the digital economy such as by using digital money.

Marzan presented data showing that 60 million or 58 percent of the Philippines’ 103 million people are Internet users.  Active social medial users are 60 million as well.

“In the Asia-Pacific region with 4.2 billion population, 46 percent are already Internet users and active social media users are 1.5 billion or 36 percent.  Mobile connection is 3.99 billion and active mobile social users are 1.44 billion. This is exponentially growing and we have to prepare for it,” Marzan said.

How FinTech uses technology to help the ‘unserved’ (Manila Bulletin), Rated: B

TrueMoney, a new financial technology player, seeks to have one TrueMoney center in each of the country’s more than 42,000 barangays to serve those who need a remittance network but have no bank accounts.

To meet that goal, TrueMoney teams up with cooperatives and groups in different regions. Its latest partnership is with Cebu People’s Multi-Purpose Cooperative (CPMPC), a community-based savings and credit cooperative with over 55,000 members to-date.

At this point, TrueMoney has over 5,000 centers in the Philippines.

MENA

Fintech Peer to Peer Lending Platform, Beehive, Raises $ 5m Investment (PR Newswire), Rated: AAA

Beehive, MENA’s leading peer to peer lending (P2P) platform, has secured $5m investment as part of a Series A round led by Riyad TAQNIA Fund and supported by the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, as well as several other regional investors. This latest fundraise brings the total raised by Beehive to $10.5m since its launch.

To date, Beehive has successfully facilitated finance over $35 million (AED 130 million) to more than 200 business funding requests and registered more than 5000 international investors.

South Africa

African Billionaire Patrice Motsepe Invests In Digital Bank (Forbes), Rated: AAA

South Africa’s first black billionaire Patrice Motsepe has reportedly invested in TymeDigital, an online lender that has recently been awarded an operating license by the South African Reserve Bank.

African Rainbow Capital (ARC), an investment firm founded by Patrice Motsepe, recently acquired a 10% stake in TymeDigital, which is a subsidiary of the Commonwealth Bank of Australia, one of the world’s largest banks.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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International

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News Summary

United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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News Summary

United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Wednesday September 27 2017, Daily News Digest

small business alternative loan originations

News Comments Today’s main news: SoFi’s lawsuits not affecting brand. Zopa to reopen to investors. Funding Circle revenue hits 50M GBP. CFPB sues over illegal online lending in Canada, Malta. Today’s main analysis: Why Square is entering the banking business. Today’s thought-provoking articles: Prosper loses unicorn status. Banks tell Equifax to get it together. Job loss concerns amid digital disruption […]

small business alternative loan originations

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United Kingdom

International

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Asia

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United States

SoFi’s lawsuits don’t seem to be affecting its brand (Tearsheet), Rated: AAA

The resignation of the company’s co-founder and former CEO, Mike Cagney, amid lawsuits from employees stemming from sexual harassment allegations and other workplace issues has thrown into question whether the brand can continue to be known as a “different kind of finance company,” as it markets itself. But despite the bad news so far, the damage to the company’s standing seems to have been contained — the result of being in the shadow of bigger scandals in Silicon Valley and the company’s actions in the aftermath of the scandal.

Based on online sentiment expressed on Twitter, Facebook, Instagram, blogs, forums and news sites between Aug. 12 and Sept. 23 (when the news of lawsuits first emerged), 71 percent of categorized mentions of the brand were positive, according to social media analytics firm Brandwatch. While sentiment dips Sept. 12-16 (reaching the level of 86 percent negative on Sept. 16, coinciding with Cagney’s resignation), feelings quickly rebound by Sept. 19, showing a certain resilience despite the negative press.

In addition, the quick timing of Cagney’s resignation reduced the effects of the negative news, said Crenshaw.

“I guess I don’t really care as it pertains to my loan,” said Alex Nocella, 27, a SoFi customer since 2013. “It damages my view with the way they’re operating their business, but it doesn’t change the relationship I have with them. It wouldn’t stop me from getting another loan with them.”

In addition, he said, the company was proactive about informing customers of Cagney’s resignation prior to the news becoming public by giving them a heads-up on the customer-only Facebook group.

Source: Tearsheet

Why Square Is Entering the Bank Business (Market Realist), Rated: AAA

Square Capital has distributed more than $1.8 billion in loans to over 140,000 merchants since its inception in 2014. In 2Q17, Square Capital loan volumes rose at 68% year-over-year to $318 million.

In the business of supplying alternative financing to merchant customers, Square competes with PayPal (PYPL), Amazon (AMZN), and LendingClub (LC). PayPal says it has distributed $3.0 billion in small business loans through its credit arm, while Amazon says it has supplied more than $2.5 billion in credit to its merchant clients.

Why Square Is Pursuing a Bank Charter

Square is pursuing its application for a bank charter because it’s seeking more independence in its financial services business. Square Capital head Jacqueline Reses told the Wall Street Journal, “As we scale, it’s becoming increasingly important that we have direct relationships with regulators.”

While a partnership with Celtic Bank has helped Square Capital grow, Square prefers running a financial services operation that it controls. The US (SPY) small business alternative lending market is forecast to originate $52 billion in loans by 2020 compared to $5.0 billion in 2015, according to BI (Business Insider) Intelligence.

 Why Square Opted for an Industrial Bank Model 

Square (SQ) is seeking an industrial bank license rather than a traditional bank license. Why? In deciding to go for an industrial bank license as opposed to a traditional bank license, Square chose the easy way out.

Source: Market Realist

How SFS Could Change Square Capital

Square has applied for an industrial bank charter so that it can take its lending business to a higher level and potentially unlock more growth.

However, Square intends to keep its consumer-facing financial services separate from its main bank unit.

Through Square Cash, Square is targeting the multibillion-dollar P2P (peer-to-peer) payments market. According to Forrester Research, global P2P transactions will reach $17 billion by 2019. According to Javelin Strategy and Research, the number of Americans using the P2P payment service will increase to 126 million by 2020 from 69 million in 2016.
$1 trillion alternative financing market

SFS, to be capitalized with $56 million in cash, will provide credit and offer deposit account services to merchants. The Polsky Center estimates that US (SPY) alternative loan volume rose to $34.5 billion in 2016 from $28.3 billion in 2015. Globally, the alternative financing market is forecast to grow to $1.0 trillion in the coming decade.

Square’s bank CEO will be Lewis Goodwin, an executive who recently joined the company from Green Dot (GDOT). Goodwin was CEO and president of Green Dot for several years.

Green Dot is a provider of prepaid debit card services. In 2016, Goodwin’s last full year as the company’s head, Green Dot’s revenue grew to $718.8 million from $694.7 million in the prior year.

Prosper raises $ 50 million but loses unicorn status (Business Insider), Rated: AAA

In another sign that the US marketplace lending industry has successfully 

Source: Business Insider

Banks To Equifax: Get It Together (Or Else) (PYMNTS), Rated: AAA

Equifax has been the Bad News Bears of financial services lately. First there was the massive data breach that sent the personal information of most of the U.S. adult population to the dark web for exploitation. Then there was the fake phishing site to which the credit rating agency accidentally referred a bunch of recently breached people, as they could not distinguish their own site from a cloned version of it. Thankfully, that site was actually set up by a security researcher to illustrate a flaw, not a real cybercriminal – but still, it hasn’t been a good fortnight for Equifax.

And now the banks – i.e. the lenders who supply credit rating agencies like Equifax with the data they need to feed their scoring model – are making loudly discontented noises in Equifax’s direction.

“If there’s only two players, then they have less ability to play them against one another” in negotiating prices for credit reports, Thomas said.

But the willingness of lenders to support Equifax is damaged by the firm’s handling of the hack so far, which has failed to impress anyone.

U.S. CFPB suing over alleged illegal online payday loan business (Biv.com), Rated: AAA

The U.S. Consumer Financial Protection Bureau (CFPB) is seeking the BC Supreme Court’s help to compel a group of former employees of a Langley company that allegedly ran an illegal online payday loan business through a web of affiliated companies in Canada and Malta.

The U.S., on behalf of the bureau, filed a petition in BC Supreme Court on September 8, naming Roo Chang, Annie Wang, Juila Zhu, May Chan, Doug Patton, Andrew Hung, Michelle Duncan and the Bank of Montreal as respondents.

The petition is related to a lawsuit filed by the bureau in New York in July 2015 over alleged violations of the Consumer Financial Protection Act “by using a series of interrelated Canadian and Maltese companies … to operate an illegal online payday lending business targeting U.S. consumers in all fifty states.”

The Second Annual Online Lending Policy Summit in Washington (Lend Academy), Rated: A

Yesterday, I attended the second annual Online Lending Policy Summit in Washington DC. It was headlined by the Acting head of the OCC, Keith Noreika, Congressman Greg Meeks (D-NY), Congressman Tom Emmer (R-MN) and William Isaac, the former head of the FDIC.

William Isaac was the head of the FDIC under President Reagan and he painted a stark picture of the US today where 60% of the population cannot get a bank loan. He said that we have to do better and figure out a way to lend to a broader cross section of the population.

I found Congressman Meeks to be the most engaging speaker of the day. His enthusiasm for financial innovation was infectious. He said that fintech should focus more on being an enabler than a disruptor. We need to enable more access to credit through partnerships with traditional financial institutions. He brought up the idea that fintech platforms could partner with black-owned banks that are struggling to keep up with the technological changes happening today.

Top 10 Jungle Releases Top 10 Small Business Loan Award to OnDeck Capital (PR Newswire), Rated: A

Digital media powerhouse Top 10 Jungle has just released its Top 10 Small Business Loan Reviews for 2017 and has given the top spot to New York City-based OnDeck Capital.

Acting Comptroller Noreika Comments On Madden “Fix,” Other OCC Initiatives (The National Law Review), Rated: A

In Madden, the Second Circuit ruled that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge.  Yesterday, at the Online Lending Policy Summit in Washington, D.C., Acting OCC Comptroller Keith Noreika advocated a Madden “fix” as an example of an action Congress could take “to reduce burden and promote economic growth.”  Mr. Noreika stated that the OCC supports proposed legislation that would codify the “valid when made rule” and provide that a loan that is made at a valid interest rate remains valid at that rate after it is transferred.

Mr. Noreika also was asked whether, as we have previously suggested, the OCC would address the risk posed by the theory that a bank making loans is not the “true lender” if a nonbank marketing and servicing agent acquires the “predominant economic interest” in the loans.  Unfortunately, Mr. Noreika stated that “true lender” guidance might be unnecessary at this time due to prior guidance issued during the tenures of former Comptrollers Hawke and Duggan.

With regard to the OCC’s special purpose national bank (SPNB) charter proposal, Acting Comptroller Noreika stated that the OCC is continuing to consider the proposal and intends to defend its authority to grant an SNPB charter to a nondepository company in the lawsuits filed by the NY Department of Financial Services and the Conference of State Bank Supervisors.

Mr. Noreika also indicated that the OCC intends to revisit its guidance on deposit advance products, observing that its views on such products are not necessarily consistent with those of the CFPB.

First-of-its-Kind Online Subscription-based Golf Club Upgrade and Instant Financing Program Powered by Klarna (PR Newswire), Rated: A

An innovative new online golf club upgrade and financing program, developed by TaylorMade Golf (www.taylormadegolf.com) in collaboration with Klarna (www.klarna.com), provides golfers access to the newest and most advanced equipment as soon as it is released.

In the first five months since its inception, the program has experienced significant success, with a 30 percent overall lift in conversions and a five percent increase in average order value.

‘The Turn’ is a first-of-its-kind upgrade program for purchasing golf clubs. It is named for when golfers finish the ninth hole of a round of golf and then ‘turn’ for home. The program allows TaylorMade Golf fans to finance their purchases over 18 or 30 months on the TaylorMade Golf website, and keep or exchange their clubs for the latest models toward the end of the payment period. If a customer chooses to upgrade, payments on the existing clubs will stop and payments on the new clubs will begin.

The program is powered by Klarna, a global leader in providing instant financing solutions to e-tailers and customers. Customers opt-in to the program by applying for financing at the point of checkout through a simple, instant credit approval process that provides them with an open line of credit that may be used wherever Klarna is accepted.

ArborCrowd Announces $ 40.8 Million Multifamily Real Estate Deal (Crowdfund Insider

Commercial real estate crowdfunding platform ArborCrowd announced on Tuesday it is now offering a $40.8 million multifamily real estate deal to investors. The property, Quarry Station Apartments, is located in San Antonio, Texas.

Deloitte says it was hacked (American Banker), Rated: A

Another hack: Deloitte said Monday it suffered a cyberattack. But the hacker accessed data affecting only a “very few” of the big accounting firm’s clients and “no disruption has occurred to client businesses, to Deloitte’s ability to continue to serve clients, or to consumers,” the firm said.

ReliaMax Acquires Assets of FUTR Corporation (BusinessWire), Rated: A

ReliaMax, the complete private student lending solutions provider for banks, credit unions, schools and alternative lenders, today announced it has acquired the assets of FUTR Corporation, a San Francisco- and Texas-based private student loan servicing provider. The acquisition brings over 40 new lenders and $55 million in borrower servicing to The ReliaMax Solution, the only fully-integrated private student loan solution that includes borrower acquisition, origination, servicing, insurance, and capital markets/portfolio liquidity support.

Fidelity Axes Suit Over High-Cost Investments, Robo-Adviser Fees (BNA.com), Rated: A

The participants’ claim that Fidelity breached its fiduciary duties by selecting and hiring Financial Engines—an online financial advice provider commonly known as a robo-adviser—also fails, Burroughs wrote. The allegations were premised on the notion that Fidelity, rather than the plan sponsor Delta, hired and selected Financial Engines, but the plan’s language contradicts this premise, Burroughs concluded, granting Fidelity’s motion to dismiss.

LEND360 Partners with LendingTree to Award a $ 10,000 Prize to Winner of the LEND360 Startup Innovators Program (PRWeb), Rated: B

LEND360 announces LendingTree, the nation’s leading online loan marketplace, will award a $10,000 prize to the winner of the LEND360 Startup Innovators Program, an on-site competition where fintech startups will present cutting-edge solutions that are propelling the online lending ecosystem forward.

Startups in the fintech space will pitch solutions on the LEND360 Innovation Floor Spotlight Stage. Each company will have approximately five minutes to make their pitch followed by a brief Q&A session. All LEND360 attendees are invited to attend.

Members of the LEND360 Investor Advisory Board will judge all presentations and attendees will submit their choice via our conference app. The winner will be announced on Friday morning, October 13, and will have the opportunity to pitch their solution on the mainstage.

Check Into Cash founder pulls ads from NFL games, denounces league as ‘unpatriotic’ (Times Free Press), Rated: B

But after NFL players and coaches challenged President Donald Trump and many took a knee during the national anthem played before their games over the weekend, Jones said he is through sponsoring the wardrobes or advertising on stations that air the National Football League.

“Our companies will not condone unpatriotic behavior!” said Jones, CEO of the payday lending chain Check Into Cash and owner of Hardwick Clothes — America’s oldest suit maker.

Envestnet to buy FolioDynamix for $ 195 mln (PE Hub), Rated: B

Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today announced that it will acquire FolioDynamix, a provider of integrated wealth management technology solutions.

How Do You Refinance Your Student Loans? It’s Actually So Much Easier Than You Think (Bustle), Rated: B

In February, Forbes reported that the total student loan debt had reached $1.13 trillionspread out across almost 45 million borrowers in the United States.

According to SoFi’s own refinancing calculator, people who refinance with SoFi save on average almost $23,000 total, or $288 a month — not an insignificant chunk of change. (Other lenders boast similar returns.) “If you’re paying an 8 or 9 percent [interest rate], and you can refi down to 4 percent, and you can lower the term — take it from 15 years to 10 years — you’ve cut the interest rate, you’ve cut the length, you would have been paying double the interest for a longer period of time,” Bradford explains.

By combining your all federal and private loans into one new private loan, you lose out on certain protections that come with federal loans, like income-based repayment or student loan forgiveness, according to the Consumer Financial Protection Bureau.

Research by LendEDU found that 57 percent of applicants qualify, so there’s little excuse not to at least try. And according to Student Loan Hero, across the top six student loan refinancers, it takes on average less than 20 minutes total to check your rates and apply online (or even on an app).

United Kingdom

P2P lender Zopa set to reopen to new investors (Financial Times), Rated: AAA

Zopa, the UK’s first peer-to-peer lender, is aiming to reopen to new investors by the end of this year following a long-running imbalance between those who want to lend money via the platform, and those who want to borrow.

Zopa’s website offers annualised projected returns of up to 4.5 per cent to those prepared to lend money to individuals via its platform for five years. However, high demand meant Zopa stopped taking new client money last December. After re-opening temporarily, it stopped again in March, and started a waiting list which has details of 15,000 potential investors waiting to lend.

Andrew Lawson, Zopa’s chief product officer, said the company was growing its book of new loans at 50 per cent year-on-year but was finding it harder to lure appropriate borrowers due to declining credit quality and fierce competition among peer-to peer lenders.

The platform’s existing investors have also been hit by long delays after a surge in demand for Zopa’s Innovative Finance Isa, which allows peer-to-peer loans to be held within the popular tax-free wrapper.

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Online small business lender Funding Circle lifted the lid on business performance on Wednesday, showing revenue passed £50 million for the first time last year.

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

Graham Wellesley hits back at critics (P2P Finance News), Rated: A

Earlier this year, a series of media reports highlighted a report from auditor BDO which stated that Wellesley & Co was “dependent on raising further capital to continue to operate for 12 months”. This statement referred to the firm’s performance as at December 2015.

However, Graham Wellesley told Peer2Peer Finance News that these reports were misleading as they referred to the firm’s mini-bonds only, and not its peer-to-peer lending platform.

LendInvest and NACFB launch broker development finance course (Financial Reporter), Rated: A

LendInvest has launched its first property development course for brokers, in partnership with the NACFB.

Aimed at providing brokers with a better understanding of how to add more value to clients that require development finance, the courses outline in detail what it takes to make sure small-scale developments run smoothly.

Can you trust the bonds that pay 8.5%? We run the rule over five deals wooing savers with juicy rates (This is Money), Rated: B

QuidCycle — 6.1 per cent

QuidCycle is a so-called peer-to-peer lending company, which brings together borrowers and savers.

There is just one bond available now, paying 6.1 per cent for five years. You must invest at least £500 and your money isn’t accessible until the fixed term expires.

THE RISKS: The worry is that the borrower won’t be able to make repayments. QuidCycle has a Provision Fund, a pot of money set aside in case borrowers can’t pay.

Your money is spread across at least five borrowers to limit your risk exposure, and there’s an option to lend a maximum of £100 to any single borrower.

Former Swift chief Campos joins Scottish financial technology vendor ID Co (Finextra), Rated: B

A leading UK financial technology company has strengthened its position in the market with the appointment of new chairperson, Lazaro Campos, and chief technology officer, Scott Leckie.

The Edinburgh headquartered business, established in 2010, has won some major clients in the UK and North America. These include a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance. Over the last 12-months alone, the volume of transactions facilitated by the company has grown by 15% month over month.

New chairperson Lazaro Campos brings over 30-years C-level experience in banking technology, having previously served as a non-executive director of The ID Co. from 2014. He is also co-founder of innovation ecosystem company FinTechStage, member of the advisory board of financial services company Payoneer and Senior Advisor to management consulting firm Booz Allen Hamilton. Elsewhere Lazaro served at SWIFT, the global banking network, in various executive roles and was its CEO from 2007 until 2012.

International

Avalon is Inviting Investments in Its Initial Coin Offering to Reshape The Trends of Online Lending (Digital Journal), Rated: A

Avalon Capital Group, Inc. has announced that it is inviting investors from around the world to make investments in its initial coin offering. With a well-established base of research, development and operations, the company is introducing cryptocurrency and initial coin offerings as a new way of transaction for its valued customers. In addition, the rising private investment company is backed by HSBC bank with 4,000,000 USD investment already.

This blockchain based crypto lending model will open new possibilities of lending money online safely and easily. Furthermore, this decentralized peer to peer lending platform will enable anyone to lend and borrow money is a safe and secure environment online.

India

How Fintech Players can Help Banks Bridge the Gap in SME Lending in India (BW Disrupt), Rated: A

The SME business opportunity in India can be seen in possibly every sector – financial services, telecom, education, automobiles, media, food, real estate and so on. SME businesses are the biggest contributor to the economy of any country and the same goes with India. After agriculture, small business in India is the second largest employer of human resources. Also, in recent years, this sector has been weaving some of the most inspiring business success stories. In fact, MSMEs were found to account for 46% of the industrial production and 95% of the total industrial units.

From inefficacy of measures in credit flows (such as credit scoring for SMEs) to information asymmetry faced by banks and financial institutions, there are plentiful challenges that have impacted the contribution and performance of small and medium enterprises in the Indian economy. More than 80% MSME entrepreneurs are forced to resort to other unorganized avenues of financing to obtain credit assistance.

Fintech lenders can change that.

P2P Lending – A twist or a stick? (India Times), Rated: A

Although still in its infancy as a market, P2P lending firms in the US and UK in 2010 generated cumulative lending of USD 1.5m and this increased to USD 7bn in 2015 so unprecedented rise in the demand. In the US alone, in 2015, P2P platforms issued approximately $6bn in loans and based on our global analysis, this is expected to grow to $150bn by 2025 (25 times or 2400% over 10 years).

The estimated P2P lending to be generated in India over the next 5 years is pegged at circa USD 4bn (160 times the current lending size). Still this is way too low compared to China where there are circa more than 2000 P2P lending firms with a lending book size north of circa USD15bn indicating the potential to grow exponentially in India.

What are the risks involved in P2P lending?

1. Weak underwriting process resulting in bankruptcy of the P2P firm due to poorly executed business model resulting in granting loans to scrupulous borrowers with poor credit history

4. Data privacy laws could be breached if the platform firms disclose the names of the borrowers and lenders in their website.

5. If KYC and AML checks are not carried out robustly, the platform firms could be used for money laundering and routing illegal sources of funding.

Our perspectives

1. Platform based lending will invariably gain huge momentum over the next 3-5 years due to competitive interest rates and ease of making finance available.

2. Secured lending may have a better preference from a risk averse investor stand point due to the fact that this business has progressed very well since the past 5 years and there are established RBI regulations governing this type of lending.

4. Over a period of time, if unsecured P2P lending is well established like in the developed markets (e.g. Funding Circle in the UK), banks and institutional investors will potentially look to buy blocks of P2P loans to add to their portfolios.

Kae Capital backs consumer lending startup CrediFiable (VC Circle), Rated: A

Online consumer lending platform CrediFiable, which is operated by Bengaluru-based OneFiable Technologies Pvt. Ltd, has raised an undisclosed amount of funding from Kae Capital, the startup said in a statement.

Asia

Job loss concerns raised amid digital disruption in Indonesia (Straits Times), Rated: AAA

Disruptive innovation in digital technology is on the horizon, with bankers and toll road operators beginning to replace manual jobs with digital machines, raising concerns that millions of jobs in the finance and service sectors will be replaced.

Meanwhile, banks are opening fewer physical branches, putting more money into developing digital banking and digital offices.

State lender Bank Mandiri, the largest bank in terms of assets, has announced that it plans to open only 100 branches this year, far fewer than the annual plan of 400 to 600. Such a move will lead to a reduction in the number of new recruits taken on.

Other lenders joining the digital wave include private lender BTPN, which spent 1.3 trillion rupiah (S$131 million) on developing a digital platform, dubbed Jenius, over the past three years, while DBS Indonesia launched Digiland, an entirely paperless and signature-free banking experience.

Southeast Asia’s fintechs: Target the underbanked (Euromoney.com), Rated: A

But southeast Asia isn’t China. While Ant Financial knows China like the back of its hand, and vice versa, the company recognizes the limits in its abilities outside the country. Because of that, Ant Financial and Alipay’s work in southeast Asia is done through local partners.

It’s the Facebooks and Googles of the world that really keep the banks up at night, not the explicit fintech companies, says Yew.

CIMB says more than 90% of its total banking transactions are done through digital and self-service channels at this point.

Aquaculture investment platform GrowPal wins G-Startup Indonesia 2017 (e27), Rated: B

Global startup competition G-Startup Worldwide announced aquaculture investment platform GrowPal as the first-place winner of G-Startup Indonesia 2017.

GrowPal is a P2P lending platform that aims to help freshwater fishermen raise funding for their business.

Canada

Fear of financial loss limits investors’ opportunities (Investment Executive), Rated: A

Specifically, 72% of investors surveyed said they feel financially secure in the current economic climate and 68% said they are comfortable taking risks to get ahead. However, if investors were forced to choose between safety and performance, 83% would choose safety.

76% of investors surveyed believe that some fund managers charge high fees for just tracking an index, which investors say they can also do and at a lower cost.

Another area in which investors could benefit from good advice is alternative investment strategies that go beyond stocks and bonds. Although many investors are open to alternative investments, the Natixis study suggests a lack of education in this area may be a roadblock. For example, 71% of investors believe alternative investing is too complex and 65% say these investments are riskier than traditional asset classes.

Authors:

George Popescu
Allen Taylor

Friday September 22 2017, Daily News Digest

APAC alternative finance

News Comments Today’s main news: SoFi hit with a new lawsuit. Former SoFi loan reviewer says company created a hostile work environment. LendingClub launches Android app for investors. ZhongAn prices Hong Kong IPO at HK$59.70, raises $1.5B. Australia passes Japan to become second largest alternative finance market in APAC. Today’s main analysis: APAC alternative finance report. Today’s thought-provoking […]

APAC alternative finance

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United States

United Kingdom

China

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APAC

South America

News Summary

United States

SoFi Condoned ‘Rampant Sexual Activity,’ Lawsuit Alleges (Bloomberg), Rated: AAA

A former loan reviewer at Social Finance Inc. claims in a lawsuit she was repeatedly sexually harassed while working there, ratcheting up pressure on the embattled fintech startup.

Sonoma County Superior Court court clerk confirmed by phone that the complaint was filed Thursday.

Top management indulged in the inappropriate behavior, which then trickled down through the ranks, according to the complaint. Cagney dated subordinates at SoFi’s San Francisco office — where his wife works as chief technology officer and vice president of engineering — and attended parties with SoFi’s Healdsburg staff while intoxicated, Zamora alleges.

SoFi Faces New Sexual Harassment Claim Days After CEO’s Departure (WSJ), Rated: AAA

Yulia Zamora, who worked as a loan reviewer at SoFi’s Healdsburg, Calif., office from October 2015 until October 2016, said in a complaint against the company that a manager had propositioned her for sex and retaliated against her when she refused.

She added that SoFi exhibited a “hostile work environment where sexually inappropriate behavior became widely accepted and laudable by upper management.”

In her complaint, Ms. Zamora said that a SoFi director of operations who had authority over promotions approached her during and after an office Christmas party in December 2015. The manager, Adam Cobb, told her that he was “intimidated by [her] beauty” and that he “want[ed] to do sexy things” to her, according to the complaint. She denied his advances, the complaint added.

In the weeks following those comments, Mr. Cobb refused to promote Ms. Zamora and refused to write her a letter of recommendation after she resigned from the company, according to the complaint. She raised the issue with supervisors just after the party, but said that they found the story “entertaining rather than upsetting.”

Why Startup Founders Should Be Required to Sign a ‘No Go, Bro’ Clause (Fortune), Rated: AAA

Startup CEOs like Cagney, Travis Kalanick at Uber, and Taylor Freeman at UploadVR—accused in a recent lawsuit of bragging with his co-founder Will Mason about how many girls they were going to have sex with at company parties, and designating a room at the office as a “kink room”—can destroy as well as create billions of dollars in value for their companies, all while creating toxic work environments.

Whether they resign like Cagney and Kalanick or remain with the company like Freeman and Mason, startup executives typically own a large percentage of company stock. That often leads investors and boards to treat them gently when it comes to sexual harassment allegations and other forms of misconduct—but it should not.

Before making a big investment in a startup, investors should use their power to require CEOs to sign a clause under which they forfeit a large proportion, or potentially all, of their stock, if fired for misconduct, including reasons such as sexual harassment and misrepresentations to investors.

 

 

 

LendingClub, a peer-to-peer loans platform, just launched its Android app for investors (Android Police), Rated: AAA

With the LendingClub Invest app, you can log in via your fingerprint, view information like your current value and return, as well as transfer money.

Keep in mind that this is for investors, not borrowers. It’s for those using the service who want to manage their accounts and view the details of their current investments. Borrowers using LendingClub don’t have an app just yet.

The full log for this initial release is below:

WHAT’S NEW

Access your LendingClub investor account through a convenient experience optimized for your mobile device.
In this initial version you can:
– Log in to your account with a touch of the finger (for Android 6.0 or above)
– View and manage your account
– See your Net Annualized Return (NAR)
– Invest in Notes
– Use your saved filters to find the Notes you want
– Set up and update automated investing
– Transfer money between your LendingClub account and your bank

Hackers Entered Equifax Systems in March (WSJ), Rated: AAA

Hackers roamed undetected in Equifax Inc.’s EFX +2.76% computer network for more than four months before its security team uncovered the massive data breach, the security firm FireEye Inc.FEYE +0.24% said this week in a confidential note Equifax sent to some of its customers.

FireEye’s Mandiant group, which has been hired by Equifax to investigate the breach, said the first evidence of hackers’ “interaction” with the company occurred on March 10, according to the Mandiant report, which was reviewed by The Wall Street Journal.

Equifax has said it didn’t discover the breach until July 29. Days later it called in Mandiant. Equifax didn’t disclose the breach until Sept. 7.

In a progress report that accompanied that announcement last Friday, Equifax said hackers accessed consumers’ data from May 13 through July 30. It didn’t mention in that report that the attack had begun at an earlier date.

Mandiant’s report this week noted the hackers accessed one of Equifax’s servers by taking advantage of a flaw in software called Apache Struts, used by many companies to build interactive websites.

Two days before the access occurred, on March 8, security researchers at Cisco Systems Inc. warned of the flaw in Struts and a patch was issued by the Apache Software Foundation. Equifax in its report last week said its security staff “took efforts” to fix the system, saying it understood the intense focus outside the company on patching efforts and that its review was ongoing.

After interacting with Equifax’s server in early March, the hackers then entered the computer command “Whoami,” Mandiant wrote. This command would have given the attackers the username of the computer account to which they had just gained access, an early step in a hacking attempt.

The Ultimate Anti-Competitive Mergers (Prospect), Rated: A

When you need a new mortgage in the future, will your only options be AmazonWellsFargo or AppleChase? The prospect of a mash-up of banking and commerce keeps people like George Washington University law professor Arthur Wilmarth up at night. “This would mean an end to healthy innovation and startups and competition,” said Wilmarth. “I think it is that dire.”

In principle, these maneuvers could inject competition into a banking industry controlled mostly by four Wall Street giants, making financial services more accessible and flexible to modern needs. But special charters also let fintech evade critical regulatory scrutiny. And the tentative steps by SoFi and Square seem like a dry run for the day Silicon Valley’s giants decide to get in the game, building sprawling businesses the government has aimed to prevent for decades.

Banks get all sorts of privileges from the government—and if banks can also function as ordinary commercial enterprises, they have unfair advantages against other businesses (who are also their clients).

Non-Prime Gen-Xers Lack Financial Stability According to New Research by Elevate’s Center for the New Middle Class (BusinessWire), Rated: A

Members of Generation X (those born between 1965 and 1980) now sit at the age where they anchor the country’s economic and social structure. Yet, new research from Elevate’s Center for the New Middle Class shows that Gen-Xers face a slew of economic challenges that perpetually keep them off balance. Worse still, that lack of balance means they can’t plan for the future or get back on track.

Non-prime Gen-Xers, in particular, lack stability – in their employment as well as their income. They have difficulty predicting their monthly income, and consequently act like cash accountants in managing their day-to-day finances. Non-prime Gen-Xers are thus the least likely generational cohort to be able to save money—an important aspect of financial planning. Compared to their prime counterparts, non-prime Gen-Xers are:

  • 4x as likely to be living paycheck to paycheck
  • 4.5x as likely to worry about meeting monthly expenses
  • 2x as likely to have been laid off in the past year, and almost 3x as likely to be laid off in the last 5 years
  • 5x as likely to feel “significant stress” over finances
  • 5x more likely to say that in the prior 12 months they were never able to plan for a major expense

The planning gap between prime and non-prime Gen-Xers is wider than any other generation, and 1 in 5 reports running out of money every month. When it comes time to pay for unplanned or unexpected expenses, such as medical bills or car repairs, only 13 percent feel confident they could come up with $1,200. This lack of confidence may be due to lack of reliable options. Though 80 percent of prime Gen-Xers have a solid option – savings, credit or turning to family/friends – only 44 percent of their non-prime counterparts have a solution for coming up with the funds.

3 Stocks With eBay-like Return Potential (The Motley Fool), Rated: A

Peer-to-peer lending platform Lending Club is finally starting to show signs of growth after several quarters of stagnant loan originations. With the stock down 74% since its first trading day in 2014, there’s certainly potential for a big investment win if things continue to go well.

For the second quarter of 2017, Lending Club’s loan originations grew by 10% year over year as well as sequentially, which came as a pleasant surprise to investors. Revenue grew by an impressive 35% from last year, and profit margins improved tremendously. What’s more, Lending Club’s CEO said that the company could approach GAAP profitability as we head into 2018, which would be a major improvement from the first half of the year.

Lending Club’s loan portfolio is currently about $11.1 billion in size, which may sound like a lot, but consider that the U.S. nonrevolving (loan) consumer lending market has more than $2.7 trillion in outstanding balances, not including mortgages, according to the Federal Reserve.

US auto-loan fintechs help incumbent lenders stay up to speed (Business Insider), Rated: A

Hyundai Capital America, the car maker’s US lending division, has partnered AutoGravity, a US-based digital car shopping and financing platform, to extend its loans more easily to consumers looking to buy a Hyundai, Kia, or Genesis vehicle.

Hyundai Capital will be one of several auto lenders that consumers can borrow from via the platform.

JPMorgan Chase partnered online car marketplace TrueCar in August 2016 to launch an end-to-end digital platform, Chase Auto Direct, for finding and financing a vehicle. Additionally, Ford Motor Credit Co., the car giant’s lending arm, started leveraging US marketplace lender AutoFi’s software in January to make it easier for customers to buy and finance a vehicle without going to showrooms.

The Saatva Company Partners with Payment Solutions Company Klarna (PR Newswire), Rated: A

The Saatva Company, the largest online luxury mattress retailer, has formed a strategic partnership to offer financing plans to its customers with Klarna, a global payment solutions company that works with other top U.S. brands like Microsoft and Taylormade.

Through this partnership, Saatva customers now have the option to “Slice Up Your Payment” through Klarna and spread the cost of purchases over time with convenient, stress-free low APR financing offers. It is available immediately under all three Saatva Company brands – Saatvamattress.com, Loomandleaf.com and Zenhaven.com.

After selecting the perfect mattress, customers can apply for Klarna financing at checkout through a simple three-step instant credit approval process. Customers are approved for an open line of credit that may also be used at any other merchant where Klarna is accepted.

Digital Lending Dramatically Cuts Down Closing Times (The M Report), Rated: A

In a recent sampling of 10,000 purchase loans from LendingTree, a leading online loan marketplace, the closing times on mortgages saw a sharp decrease thanks to more digital lending; approximately 74 percent on average from May 2016 to May 2017. According to the report, the average closing still takes roughly 72 days, but this rate is influenced by several other buying factors as well as digital integrations.

The study shows the average amount of days to close in Boston (79.5) strongly differs from the time spent in a city like Denver, (56.2); a 23.3 day difference.  New York closely followed Boston at 79.2 days and Cleveland at 71.5. Phoenix and Dallas barely ranked above Denver at 57.5 and 57.6 days respectively. The time to close also varies largely by state, with Montana measuring at 52.7 days until closing and New York at 91 days.

Activehours raises $ 39 million for its new take on cash advances (TechCrunch), Rated: A

Nine months after raising $22 million for its unique take on the cash-advance business, Activehours has gone back to the venture capital well and pulled out another $39 million in financing.

Led by Andreessen Horowitz, with participation from the company’s early-stage investors Matrix Partners, Ribbit Capital, and March Capital Partners, Activehours has managed to now raise nearly $65 million since its launch in 2013.

The Palo Alto-based company skirts regulation as a payday lender because it doesn’t charge interest on the cash that it fronts to customers. Instead, the company asks that users pay a small voluntary fee for access to their money ahead of their payday.

Tribal Lender Claims Immunity From Challenge To Immunity (Law360), Rated: A

An online lender accused of striking “rent-a-tribe” deals with a Native American tribe in order to benefit from tribal immunity urged a Virginia federal judge Tuesday to dismiss a proposed class action over its lending practices, saying it is, in fact, a sovereign arm of the Chippewa Cree tribe and therefore immune from the litigation alleging false immunity.

The Government Shouldn’t Collect Private Financial Information from America’s Poor (National Review), Rated: A

The CFPB, which was created under Dodd-Frank supposedly to protect consumers and prevent the next big financial crisis, is now being used to try to discourage payday lending, vehicle title, and certain high-cost installment loans.  The rule will require customers applying for a small-dollar loan – the average of which is $350 — to submit extensive personal financial information in support of their applications. In addition to determining a customer’s ability to repay the loan, the lenders will be required to share this information with each credit reporting agency (CRA) registered with the Bureau.

With this data all in one place, it will be vulnerable to a potential hack.

And just this week the SEC reported a hack.  Now government will have a new pool of data for hackers to try to infiltrate.

Embracing Blockchain Is in the ‘National Interest’ (Coindesk), Rated: B

Giancarlo continued:

“Everything we do has been digitized. The one thing that has not yet been digitized is regulation. We’re still very much an analog regulator of digital markets.”

And most importantly, Giancarlo stressed that it is imperative that U.S. regulatory structures catch up with the fast-moving digital economy.

eOriginal Announces Coluzzi as New Chief Financial Officer (Benzinga), Rated: B

eOriginal, Inc., today named Michael Coluzzi as Chief Financial Officer (CFO), another valuable addition to the executive team of the rapidly growing financial services technology firm.

Coluzzi is the third key addition to eOriginal’s leadership following a growth capital investment by LLR Partners. In addition to the new CFO, Brian Madocks joined as Chief Executive Officer in April 2017 followed by Timothy Wall as Chief Revenue Officer earlier this month. These hires and the existing eOriginal management team together will drive the business towards achieving full potential.

Veteran CFO Bruce Felt Joins Personal Capital’s Board of Directors (Business Insider), Rated: B

Personal Capital, the leading digital and professional advisor based wealth management firm, today announced that Bruce Felt, the Chief Financial Officer of DOMO, has joined Personal Capital’s Board of Directors and will chair the Audit Committee.

Felt is the CFO of DOMO, one of the fastest growing SaaS companies in the country. Previously, he was the CFO of SuccessFactors, where he guided the company through six acquisitions, a public offering and the sale of the business to SAP. Felt has spent 25 years managing financial operations for high-tech companies and serving on multiple boards of directors.

Form 8-K Elevate Credit, Inc. For: Sep 15 (StreetInsider.com), Rated: B

The Registered Office of the corporation in the State of Delaware is changed to 251 Little Falls Drive, in the City of Wilmington, DE, County of New Castle, Zip Code 19808. The name of the Registered Agent at such address upon whom process against this Corporation may be served is Corporation Service Company.

United Kingdom

Ex-Barclays CEO Antony Jenkins raised £34 million for his fintech startup (Business Insider), Rated: A

Former Barclays CEO Antony Jenkins has raised £34 million ($46 million) for his fintech startup 10X Future Technologies.

The Series A funding round was led by Chinese firm Ping An Insurance and consulting firm Oliver Wyman.

London-based 10X, which went public last October, will help banks and financial institutions modernize their back office technology.

Older people are underserved by financial services, says the City watchdog (City A.M.), Rated: A

In its Ageing Population Project, the FCA found that older people’s needs are not being fully met which may result in exclusion, poor customer outcomes and possibly even harm.

It has called on retail banks, advisors and the savings industry to think about the vulnerabilities which older people – defined as those who are aged 55-plus – may face.

Cautious investors blind to risks of alternative favourites (FT Adviser), Rated: A

The aftermath of the financial crisis has seen investors pour capital into income generating alternative assets perceived to be low risk but market watchers have warned the dangers won’t be evident until interest rates rise.

The AIC said 70 per cent of the investment trust launches over the past five years have been in the alternative income sector.

Jonathan Davis, who runs Jonathon Davis Wealth Management in Hertford, said he has been preparing his clients portfolios for higher inflation, and higher interest rates, and generally avoiding UK equities.

LendInvest hires Aldermore’s Boden (Mortgage Strategy), Rated: B

Aldermore head of commercial mortgages Ian Boden has joined specialist lender LendInvest.

Boden joins the group as sale director, after five years at Aldermore Bank.

He has previously worked at Lloyds Bank and HSBC and has an advanced diploma in financial planning from the CII.

In his new role, Boden will help grow the business development team at LendInvest. He will help the group expand to new markets.

Deadline nears for pub purchase (County Echo), Rated: B

THE 30 September deadline to secure the necessary funds to purchase the threatened Tafarn Sinc pub in Rosebush is fast approaching.

“The aim now is to see a sum of £200,000 in shares achieved by 1 October and also the committee has endorsed a special Peer to Peer (P2P) lending scheme where a four per cent gross interest rate is offered to individuals who can lend a £5,000 sum to the co-operative to secure the total funds.

“As a target for the P2P we have 20 lots of £5,000 loans we are seeking and then this will bring in the needed final sum to purchase the pub and ensure it is owned by local people.”

China

China online insurer ZhongAn prices HK IPO at top end, raises $ 1.5 bln (Kitco), Rated: AAA

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

China’s first Internet Insurance Company is set to list in Hong Kong on 28th Sep (Xing Ping She), Rated: A

Zhongan Insurance, which was co-founded by Jack Ma of Alibaba, Ma Mingzhe of PING AN and Pony Ma of Tencent, is the first internet insurance company in China. Because of its strong background, every move of Zhongan Insurance is closely concerned. On September 17, Zhongan Insurance revealed it would be listing in the main board of Hong Kong stock exchange. More details, the price range will be set at HK$53.7- 59.7, and the company plans to raise HK$10,948 million in total, it is scheduled to begin trading on the main board of the Hong Kong stock exchange on September 28. If the plan is implemented, Zhongan will become the first publicly listed fintech unit of China.

Chinese online stockbroker Tiger Brokers gets investment from US firm Interactive Brokers (SCMP), Rated: A

Tiger Brokers, a Chinese online securities brokerage start-up backed by Wall Street billionaire investor Jim Rogers, said on Thursday it has landed an investment from Interactive Brokers Group, one of the largest electronic brokers in the United States.

The Beijing-based Tiger Brokers, which offers an app to allow Chinese investors to trade on US stock markets and the Hong Kong exchanges and in Chinese A shares, did not disclose the size of the investment by Interactive Brokers.

The Top 10 Most Valuable Unicorns (Benzinga), Rated: B

The United States is home to the most unicorn companies in the world, with over 100 such companies, according to a new report by HowMuch.

8. Lu.com ($18.5 billion): China

Lu.com is an online finance marketplace which started as a peer-to-peer lending platform. Since 2011 it has service over $2.5 billion peer-to-peer loans.

 

European Union

EU’s new data privacy law creates headaches for U.S. banks (American Banker), Rated: AAA

What happens when a cookie of a Brit in London lands in the server of a community bank in the U.S. if, on an off-chance, the Brit browses the bank’s website?

It’s unclear, experts say, but U.S. banks — especially small and midsize banks — need to go find out because the European Union’s General Data Protection Regulation (GDPR) could affect them, unlike the EU privacy regulations before it.

The countdown is ticking on GDPR’s website. The law, approved by the European Parliament in April 2016, will take effect in late May 2018. It will apply to “all companies processing and holding the personal data of data subjects residing in the European Union, regardless of the company’s location,” the website said.

International

SoftBank’s Banker Stash (Bloomberg), Rated: AAA

Their presence begs a question of the Vision Fund, whose backersinclude Apple Inc. and Saudi Arabia. Is its long-term goal to get into everything from ride-hailing apps to indoor farming, or is it more about getting juicy returns?

One Fund to Rule Them All
SoftBank’s $93.2 billion Vision Fund is the world’s largest private equity fund.
Anshu Jain, Deutsche Bank’s former co-chief executive officer and key architect of its rapid growth in markets prior to the credit crunch, was an adviser at SoftBank-backed U.S. based online lender Social Finance Inc. until recently.

While SoftBank put in equity to the tune of $28 billion, its partners, including the government funds of Saudi Arabia and Abu Dhabi, hold part of their stakes via preferred instruments, also known as mezzanine capital. It means they’re owed yearly payouts, similar to a dividend.

Saudi Arabia’s Public Investment Fund, for instance, is injecting $45 billion, but only $18 billion of that is straight equity, the Wall Street Journal reported in May. The preferred units will earn about 7 percent interest annually over the life of the fund, expected to be 12 years.

Source: Bloomberg

Which banks are leading digital (and who are the laggards)? (The Finanser), Rated: A

Banks typically spend 80% of their IT budgets on legacy technology maintenance and a tier one bank could easily spend up to $300m a year on existing software which constantly needs expensive updates in order to meet regulatory requirements.

Why so much? Because most of those systems are written in programming languages that no one knows anymore. Anna Irrera writes on Reuters that 43 percent of US banks’ core systems are written in COBOL.

$3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.

In another report, Autonomous Research said the banks with the most potential to do better than analysts’ profit expectations because of digitisation were: JPMorgan Chase and SunTrust in the US, Spain’s CaixaBank, Lloyds Banking Group in the UK and KBC in Belgium.

Autonomous ranked the banks based on two criteria: their current level of digitisation and their transformation outlook. It assessed 18 attributes from customer ratings of mobile banking apps to IT expertise on the board of directors. Banks viewed as being behind on digitalisation included HSBC, BNP, Credit Suisse, Intesa Sanpaolo and Standard Chartered; the three biggest Japanese banks: MUFG, Mizuho and Sumitomo Mitsui Financial Group; and the four big Canadian banks: TD Bank, Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia.

Bitcoin’s connection to the real economy (Business Live), Rated: A

Among those leaving the building is Wayniloans (‘an online peer to peer lending platform based on bitcoin technology. Wayniloans INC was founded in 2015 and is based in Buenos Aires, Argentina’).

According to Juan Salviolo, Wayniloans co-founder:

On Wayniloans part of our business is achieved thanks to bitcoin, and in May we agreed to a sentence to reach consensus for the good of the ecosystem. This sentence was later changed to a longer agreement without our notice, and it was known as the New York Agreement (NYA). At the time we didn’t know that existing developers wouldn’t support it, or that most Latin American bitcoin users, our customers, would view it as a contentious proposal.

Which brings us back to Fickling’s point. The connection between Bitcoin and the real economy is sentiment and therefore, ipso facto, prima facie, mutatis mutandis, sentiment is the sole driver of value.

Australia

Australia ranked as the second largest alternative finance market in the Asia Pacific (Finextra), Rated: AAA

Findings from a joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies, released today, reveals that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US $609.6 million.

According to the Second Asia Pacific Alternative Finance Industry Report, Australia has leap-frogged Japan to become the second largest alternative lending market (behind China) across the Asia-Pacific.

Outside of China, Australia now contributes 30.42% of the total market in Asia Pacific and stands well ahead of Japan (US $398.45 million) and South Korea (US $376.31 million) in terms of market size.

CCAF Asia-Pacific Report Shows Dramatic Rise for Alternative Finance in Australia (Crowdfund Insider), Rated: A

China is the biggest kid on the block when it comes to the emerging alternative finance market in the Asia Pacific region. In fact, China has the largest alternative finance market in the world driven by a fast growing economy, a highly connected population via mobile devices, and a need for access to capital not serviced by traditional state owned banks. But rapid alternative finance growth is not isolated to just China in the Asia Pacific region. Australia experienced growth of 53% from 2015 to 2016, according to the recent research report published by the Cambridge Centre for Alternative Finance. Australia’s alternative finance market has now reached US $609.6 million.

MoneyPlace CEO Stuart Stoyan echoes Bertoli’s sentiment regarding online lending;

“We have now moved on from being an ‘early stage’ and ‘cottage’ industry to be a legitimate source of funding for Australian borrowers,” he said.

Daniel Foggo, CEO of RateSetter Australia, explained that while trust and confidence in banks continues to erode, peer-to-peer lenders are building a sustainable, technology-led alternative to the bank model, offering better value to Australian investors and borrowers.

Trademarks and fin-tech (Lexology), Rated: A

Technology is an increasingly important aspect of the financial marketplace. With the rapid introduction of platforms such as crowdfunding, peer-to-peer lending and new crypto-currencies, it is important for fin-tech users and providers to protect their intellectual property (IP) from infringement and ensure they are not at risk of infringing the IP of another.

Businesses that provide fin-tech services are at risk of infringing the trademarks of other such providers. For instance, one European peer-to-peer facilitator attempted to register a trademark for their brand, only to be challenged by a similarly branded business. This resulted in an expensive negotiation that lasted for almost a year and a half.

India

RBI move on P2P lending companies may affect small players, say experts (The New Indian Express), Rated: AAA

While the recent Reserve Bank of India (RBI) notification treating all peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) is likely to bring some credibility to the business, experts say it’s a battle half won by the fintech firms.

The RBI proposal, they say, might cripple the operations of small players who won’t be able to comply with some of the new requirements such as keeping net available funds of Rs 2 crore.

APAC

Asia Pacific Alternative Finance Report “Cultivating Growth” Released (Lend Academy), Rated: AAA

The Cambridge Centre for Alternative Finance together with the Australian Centre for Financial Studies at Monash University and Tsinghua University today released their second annual alternative finance report.

Source: Lend Academy

Alternative finance volume totaled $245.28 billion in 2016, up from $103.31 billion in 2015. It’s amazing to see alternative finance continue to grow in the region. Not surprisingly, China is the main driver accounting for 99.2% of the total Asia Pacific market. China represented approximately 85% of the entire global market in 2016.

Other findings from the report include:

  • China continues to see “distinctively low levels” of institutional participation in alternative finance compared to other markets such as the US and UK, with only five per cent of peer-to-peer business lending coming from institutions in 2016.
  • In the Asia Pacific outside of China, about $1.5 billion was raised by businesses through alternative finance channels, up 72 per cent from the previous year, with an estimated 43,000 business entities utilising alternative channels of business finance.
  • In China, 72 per cent of peer-to-peer consumer lending platforms see cyber-attacks as the biggest threat to the industry, while more than 50 per cent across all platforms in China see current and proposed regulatory norms to be adequate.
  • Outside of China, 69 per cent of platforms in Japan see existing regulation as inadequate or too relaxed, while in Singapore, Australia, New Zealand and Malaysia around two thirds of platforms see current regulations as adequate.
Source: Lend Academy
South America

Venezuela Said to Be Late on $ 185 Million Sovereign Bond Payment (Bloomberg), Rated: A

The intermediaries tasked with passing along interest payments for the cash-strapped nation haven’t received the funds for an $185 million coupon that was due Sept. 15, according to people with knowledge of the matter. Investors interviewed by Bloomberg say they haven’t been paid, and brokers say their clients are still waiting on the cash.

The government has a 30-day grace period — now 25 days — to make good on the payment before triggering an event of default on the notes.

Authors:

George Popescu
Allen Taylor

Tuesday September 19 2017, Daily News Digest

Multifamily REITs

News Comments Today’s main news: Equifax cans two executives. Credit Karma to launch free ID monitoring tool. Funding Circle’s new lending options now in effect. Wealthsimple expands into the UK. HighRadius raises $50M. ID Finance launches Mexico operations. Today’s main analysis: Multifamily REITs reduce leverage, development pipelines. Today’s thought-provoking articles: The next crisis will start in Silicon Valley. RateSetter’s Rhydian Lewis […]

Multifamily REITs

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

Latin America

News Summary

United States

Equifax hack claims two executives (American Banker), Rated: AAA

The Equifax data breach has claimed its first two executives. The company late Friday announced the immediate retirement of David Webb, its chief information officer, and Susan Mauldin, its head security officer. They will be replaced, respectively, by Mark Rohrwasser, who joined Equifax last year as head of the company’s International IT operations, and Russ Ayres, most recently vice president of IT.

Credit Karma to launch free ID monitoring following Equifax hack (Reuters), Rated: AAA

Credit Karma Inc is launching a new free service that will alert customers if their identity data has been compromised in hacks, the San Francisco-based fintech company said on Friday in the wake of massive breach at credit monitoring agency Equifax Inc(EFX.N).

The new ID monitoring service is being tested and will be available in October, the company said on Friday.

CreditKarma saw a 50 percent spike in sign-ups to its platform in the weekend after the hack, it said.

Multifamily REITs Reduce Leverage and Development Pipelines as Fundamentals Downshift and Supply Peaks (Morningstar), Rated: AAA

Key takeaways:

  • Stronger credit profiles and balance sheets provide the multifamily REITs rated by Morningstar Credit Ratings, with flexibility to withstand substantial market disruptions.
  • New apartment supply is pressuring multifamily fundamentals, and REITs on average are lowering their exposure to new construction.
  • Morningstar expects net operating income among multifamily REITs to moderate after years of solid gains.
  • Since 2016, Net Operating Income (NOI) growth has slowed amid additional supply.
  • Multifamily REITs rated by Morningstar reduced their leverage and their exposure to new construction, positioning themselves for the impending completions and an environment where borrowing rates are expected to rise.
  • Rental growth among multifamily properties should be subdued for the next two years. While fundamentals remain sound, surplus inventory of new units likely will keep rent increases in check.
Source; Morningstar
Source: Morningstar

Read the full report here.

The Next Crisis Will Start in Silicon Valley (Bloomberg), Rated: AAA

It has been 10 years since the last financial crisis, and some have already started to predict that the next one is near. But when it comes, it will likely have its roots in Silicon Valley, not Wall Street.

Since 2007, a tremendous wave of innovation has swept across the financial sector, affecting almost every aspect of finance. New robo-adviser startups like Betterment and Wealthfront have begun dispensing financial advice based on algorithmic calculations, with little to no human input. Crowdfunding firms like Kickstarter and Lending Club have created new ways for companies and individuals to raise money from dispersed networks of individuals. New virtual currencies such as Bitcoin and Ethereum have radically changed our understanding of how money can and should work.

But revolutions often end in destruction. And the fintech revolution has created an environment ripe for instability and disruption. It does so in three ways.

First, fintech companies are more vulnerable to rapid, adverse shocks than typical Wall Street banks.

Second, fintech companies are more difficult to monitor than conventional financial firms.

Third, fintech has not developed the set of unwritten norms and expectations that guide more traditional financial institutions.

Enova Announces $ 25 Million Share Repurchase Program (PR Newswire), Rated: A

Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced that its Board of Directors has authorized a share repurchase plan for up to $25 million of its common stock through December 31, 2019.

Prime Meridian Ranks High on the Prestigious INC5000 List as one of Fastest Growing Companies in America (PRWeb), Rated: A

Inc. magazine ranked Prime Meridian Capital Management 554 on its 2017 annual Inc. 5000, which ranks the fastest growing private US companies in all industries. Amongst asset managers in the finance industry, Prime Meridian ranks near the very top of the list. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment— its independent small and midsized businesses. Companies such as Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees of the Inc. 5000.

The 2017 Inc. 5000, unveiled online at Inc.com is the most competitive crop in the list’s history. The average company on the list achieved a mind-boggling three-year average growth of 481%. The Inc. 5000’s aggregate revenue is $206 billion, and the companies on the list collectively generated 619,500 jobs over the past three years.

60-Second Market Review and Insights (Credit Chronometer), Rated: A

Regulatory uncertainty will continue to be a significant challenge going forward. Practices will be shaped by the standards imposed on fintech and other non-bank entities, which in turn, depends in part on the outcome of the tussle between the Office of the Comptroller of the Currency (OCC), which has begun offering a special purpose national charter, and state regulators who believe they are best suited to protect consumers.  The industry may soon also be impacted by legislation introduced recently in the Senate and the House that would overrule the 2nd Circuit’s Midland v. Madden decision denying purchasers of high-interest loans the benefit of preemption of state usury laws afforded their sellers under federal law.  Despite the ongoing debates, there appears to be momentum for more uniform and streamlined laws in the future that will provide greater certainty and, consequently, cost advantages for marketplace lenders.

dv01 Launches Cashflows for Securitizations (Business Insider), Rated: A

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, today announced the launch of a cashflow engine for securitizations, with full waterfall and collateral model support. dv01’s cashflow engine is available for a library of 30 consumer unsecured, student, and small business deals, covering over $10 billion of securitizations from originators including Avant, Lending Club, Marlette, Prosper, SoFi, and Upstart.

dv01’s cashflow engine is powered by deal waterfall models that operate on loan level data sourced directly from originators. All projections are performed at the loan level and tied out to trustee reports, ensuring accuracy across the entire waterfall, down to the residual.

Within the cashflow engine, investors have access to full deal structure models to generate tranche and residual cashflow projections. This includes a wide array of functionality, including cohort-level control over assumptions; price, yield, and spread re-computation directly from the results screen; and price-yield matrix calculations. The output computations include a projected paydown chart and cumulative prepay/loss plots, all of which show both historic actuals and projected values.

The cashflow engine is integrated directly into dv01’s Securitizations solution, which offers investors 24/7 access to a reporting and analytics portal populated with loan level securitization data. When analyzing a securitization, users have access to deal-specific detail, collateral, and performance pages, as well as the ability to download updated loan tapes to track the evolution of a pool over time. Additionally, users can use dv01’s Pool Explorer to construct curves using historical platform data.

Fintechs get another alternative to IPOs (Business Insider), Rated: A

US-based VC firm Social Capital — whose portfolio includes fintechs Wealthfront, CommonBond, Jetty, and Cover — has 

Source: Business Insider

Small Business Crowdlending Fund Offers Startups Loan Opportunities (WYSO), Rated: A

Mom and pop business owners often struggle to find enough capital to get their ideas off the ground and succeed, research shows. Kiva Dayton’s recently launched crowdlending platform aims to help solve this problem.

Now, the Downtown Dayton Partnership is offering to commit the first 20 percent of each Kiva loan to help potential business owners build buzz and raise more funds through the platform.

According to a study by the U.S. Small Business Administration’s Office of Advocacy, inadequate capital is the major obstacle facing small businesses when it comes to growth, expansion and wealth creation.

All Kiva loans are zero percent interest and they’re small, with no loans over $10,000.

Younger Americans More Likely to Invest in Bitcoin (Coindesk), Rated: B

New survey data from online student loan marketplace LendEDU suggests that younger consumers in the United States are more interested in investing in bitcoin.

Of those between the ages of 18 and 24, 35.9% said they plan on investing in bitcoin, versus 43.5% who said no and 20.5% who weren’t sure. For the 25-34 age group, the “yes” figure grew to 40.4%, with 31.7% of respondents in that demographic saying no.

United Kingdom

Funding Circle New Lending Options Go Into Effect (Crowdfund Insider), Rated: AAA

Less than a month after Funding Circle announced the new versions of its existing Autobid and Autosell lending tools, the online lender revealed the new changes have officially gone into effect.

As previously reported, as part of these changes, Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Wealthsimple Brings Simple, Accessible Investment Advice to the UK (PR Newswire), Rated: AAA

Wealthsimple, a digital wealth manager, continues to make smart investing accessible and low-cost to more people with today’s announcement of the company’s expansion to the United Kingdom. UK residents can now open an account and have access to diversified investment portfolios in less than five minutes on wealthsimple.com or by downloading the iOS or Android app.

At launch, clients are able to open ISAs (Individual Savings Account), JISAs (for children) and personal accounts with a 0.7% management fee.

The London-based team is led by Fintech entrepreneur Toby Triebel, the former CEO and co-founder of the global online lending platform Spotcap. Triebel joined the Wealthsimple team in September 2016, leading the company through regulatory approval and initial beta testing, which saw over five thousand people sign up for early access to Wealthsimple through an online waitlist.

In May, Wealthsimple raised an additional C$50 million from Power Financial group of companies, a strategic partner, bringing Power’s total investment to C$100 million thus far in support of Wealthsimple’s global ambitions.

Rhydian Lewis on ‘dinosaur’ banks and making RateSetter the ‘crowdsourced Libor’ (SpearsWMS.com), Rated: AAA

Since he and co-founder Peter Behrens set up the online exchange from a flat in 2010, it has handled the loans of £2 billion.

‘I’ve come to realise the importance of emotional intelligence to give other forms of intelligence the chance to come out right.’

It makes so much more sense for lending to be funded by investment as opposed to by an instrument called the deposit’ – not least because of the strictures imposed by regulators.

So far, 50,000 people have lent money through RateSetter, with £1.3 billion of loans repaid. Turnover this year should be £30 million; the headcount is 260. ‘Our ambition is that in due course the rates exchanged on RateSetter will be seen as benchmark rates,’ he says. And one day he would like peer-to-peer lending be ‘a crowd-sourced Libor’.

Clever Lending partners with LendInvest (Mortgage Strategy), Rated: A

Clever Lending has been made a strategic partner of bridging specialist LendInvest.

The firm will be able to distribute LendInvest’s specialist bridging and development finance products.

Brokers can now deal directly with Clever Lending to gain access to LendInvest’s range.

Pollen Street completes merger with MW Eaglewood (P2P Finance News), Rated: A

POLLEN Street Capital has completed its acquisition of a controlling stake in MW Eaglewood, creating one of Europe’s biggest alternative finance-focused investment managers.

The deal, first announced in May, sees Honeycomb Investment Trust manager Pollen Street become the majority shareholder of the combined group, which has assets of around £2bn.

Downing-backed report tackles ‘misconceptions’ over debt-based securities (P2P Finance News), Rated: A

A REPORT has been published that aims to tackle advisers’ confusion and misunderstanding of debt-based securities (DBS), following their acceptance into the Innovative Finance ISA (IFISA) in 2016.

The CPD-accredited report, published by Intelligent Partnership, identifies some of the opportunities in the market and the role DBS can play in a diversified portfolio.

The term is used to describe a variety of different models for deploying capital, usually involving a borrower, lender and interest rate over an agreed period. DBS are increasingly arranged through crowdfunding platforms.

The report explains the investment types available, how to evaluate risks in varying market conditions, tax wrapper options, fees and returns, the difference between DBS and peer-to-peer lending, and due diligence issues.

‘Vital advisers understand debt-based securities’ – report (Professional Adviser), Rated: B

Alternative debt-based securities (DBS) will become more popular thanks to regulatory pressure and greater demand for diversification, therefore it is vital advisers understand the products, research provider Intelligent Partnership has said.

Time is running out to save this iconic Welsh pub from closure (Wales Online), Rated: A

A Welsh community has just weeks to raise enough money to save an iconic pub after the current owners set a deadline for when they intend to pull their last pints.

Despite raising £130,400 of an initial target of £300,000 so far – including £50,000 in the first few weeks of the campaign – time is now running out after a deadline was set of Saturday, October 28.

In a fresh attempt to raise more money, a Peer to Peer (P2P) lending scheme is being proposed whereby people can loan £5,000 to the scheme which, the group say, would generate a 4% gross interest return per annum.

China

Too Little, Too Late? China Can’t Seem to Get a Grip on Fintech Regulation (WSJ), Rated: AAA

In recent weeks, Chinese central bank officials, banking and securities regulators have tightened oversight of a range of investing and technology platforms used by individuals to trade virtual currencies, invest in online loans and rapidly shift cash in and out of mutual funds.

A surge of Chinese investment—possibly more than $600 billion in the past two years—has gone into these so-called retail products, according to data from online platforms, financial information aggregators and cryptocurrency research houses.

In August, regulators placed limits on the growth of mutual funds made wildly popular via China’s mobile-payment platforms.

More than 700 online-loan platforms, known as peer-to-peer lenders, closed in the last year ahead of new caps on their operations that take effect this month that dimmed their prospects for profitability.

Source: The Wall Street Journal

HK needs crowdfunding-friendly regulatory regime (EJ Insight), Rated: A

However, despite the fact that Hong Kong is one of the major global financial hubs, so far we still don’t have clear guidelines or any specific regulatory regime for crowdfunding, thereby hindering the development of our tech industry.

As far as equity crowdfunding and P2P lending are concerned, since they involve financial returns and yields, they are usually subject to legal regulation. Yet, in order to ride the global crowdfunding wave, major financial markets such as the US, Britain, Japan, South Korea, Singapore and Australia have all eased restrictions on crowdfunding in recent years.

At present, Hong Kong doesn’t have a single and comprehensive piece of legislation that deals specifically with crowdfunding. Instead, it is regulated separately by different existing laws such as the Securities and Futures Ordinance, the Money Lenders Ordinance as well as the Companies Ordinance.

Nevertheless, according to the same study, Hong Kong is lagging far behind other major financial centers when it comes to crowdfunding volume. In 2015, we raised a mere US$9.3 million (HK$72 million) through crowdfunding compared to US$28.4 billion, US$4.33 billion, US$360 million and US$240 million in the US, Britain, Japan and Australia, respectively.

As such, I suggest that the new regulatory framework for crowdfunding be more flexible. For example, the administration can consider exempting crowdfunding initiatives that involve less than HK$20 million from certain requirements that currently apply to public companies such as the need to submit a prospectus to the Securities and Futures Commission for scrutiny before launching any investment offering for sale to the public.

China hit by financial scam ‘epidemic’ (BBC), Rated: A

Li Wenxing was starting a new life. In May, the young university graduate left his home in rural China on the offer of work with a software company in the city of Tianjin.

But the job was a scam and Mr Li was swept into the web of a gang running a pyramid scheme.

Two months later he was dead.

The tragedy, which is being investigated, sparked national outrage and has illuminated the growing problem of financial fraud and its devastating impact on communities in China.

Pyramid schemes

Pyramid schemes are flourishing in parts of the country where education levels are low.

Peer-to-peer lending and virtual currencies have fuelled the spread of other investing scams, luring victims with little financial knowledge.

Government crackdown

As part of the crackdown, more than 100 arrests were made in southern China last month, targeting individuals over their suspected links to a 360m yuan (£42.3m) pyramid scheme.

Authorities had at least one major bust last year – breaking up a 50bn yuan online finance scam which was suspected of defrauding 900,000 investors.

European Union

Peer-to-peer lending: Information externalities, social networks, and loan substitution (VOXEU.org), Rated: AAA

The evaporation of trust in the banking system following the financial crisis fostered the growth of digital platforms offering peer-to-peer investment opportunities in the US, Europe, and China. In Europe, as the debate about the capital market union progresses (European Commission 2017), policymakers see the possibilities for the digital investment and lending industry to help foster a unified capital market, which has been missing for so long.

Data show instead that over the years, default rates in the platforms have decreased steadily and are much lower than those in the traditional banking system. Lending rates have gone down (though still remaining attractive for investors), and trade volumes have steadily increased.

Brexit Raises Doubts Over Britain’s Fintech Future (Bloomberg), Rated: A

Britain’s impending exit from the European Union has put a “question mark” over the country’s attractiveness to financial technology firms, according to the head of France’s biggest peer-to-peer lender.

The French firm, Younited Credit, has just raised an additional 40 million euros ($48 million) to finance its expansion into another seven European countries, only to postpone its decision on entering the U.K. until the economic consequences of Brexit become clearer.

Maiden PE ICO Light on the Blockchain (Invezz), Rated: A

A new private equity ICO resembles a typical PE fund structure more than it does any blockchain innovation. Ethereum-based FundCoin (FND), which was developed by Dutch fund of hedge fund manager Finles Capital, is scheduled to make its debut as the industry’s maiden private equity token ICO on Sept. 30.

FundCoin, which is targeting EUR 100 million in its ICO, describes itself as bridging the gap between the blockchain and private equity, but there’s one problem. FundCoin doesn’t appear to have attached itself to any blockchain innovation.

Citing a lack of clarity on the designation of digital tokens as securities, U.S., Singaporean and EU investors are excluded from the FundCoin crowdsale, as per the white paper. Finles Capital says the ban will be revisited as regulation takes shape.

Monthly origination summary for August 2017 (Bondora), Rated: B

Loans issued in August 2017 came in at €2,926,457. The figure is well above the running average for the year. August was the third strongest month for originations in 2017 outpaced by only January and March.

As usual Estonia was the leader on loans issued amounts. However, the total share of the country was slightly lower than many previous months. The country represented less than 60% of the total share reaching 59.91%. Meanwhile, Spain came in at 17.57% and Finland represented nearly a quarter of the total with 22.51%.

Source: Bondora

 

International

Alpha Payments Cloud rebrands as Alpha Fintech (Finextra), Rated: B

Alpha Payments Cloud is unveiling its comprehensive rebranding and new corporate identity as Alpha Fintech.

The rebrand aims to crystalize Alpha’s positioning as fintech‘s first end-to-end middleware, connecting the merchant buyer and vendor supplier across the entire payments, risk and commerce spectrum through a single API and UI.

India

HighRadius Raises $ 50 mn (YourStory), Rated: AAA

Hyderabad-based HighRadius, a player in cloud-based integrated receivables software space, announced that it had raised $50 million in growth funding from Susquehanna Growth Equity. Founded in 2006, this is the first external funding round that HighRadius has raised in its journey and the company aims to leverage it to grow its global footprint and also expand the team.

Fastforward to 2017, HighRadius works with hundreds of Global 2000 companies, including brands like Adidas, Starbucks, Procter & Gamble, Johnson & Johnson and Warner Bros. Their integrated receivables platform optimizes cash flow through automation of receivables and payments processes across 6 categories- credit, collections, cash application, deductions, electronic billing and payment processing.

HighRadius currently employs over 500 people across US, India, and Europe. Narahari explained that USA is currently their largest market, with about 90 percent of their business concentrated there and a small percentage in Europe.

Asia

China’s JD.com announces $ 500M e-commerce and fintech joint ventures in Thailand (TechCrunch), Rated: AAA

Following on from Alibaba’s $1 billion deal with Lazada and a $1.1 billion round in Tokopedia led by Alibaba, rival Chinese e-commerce firm JD.com has announced a $500 million investment that will create e-commerce and fintech businesses in Thailand.

Southeast Asia, a region of 600 million consumers, is forecast to see its internet economy grow to $200 billion by 2025 thanks to rising internet access. That potential has attracted investment dollars from Chinese giants lie Tencent and Alibaba, and now JD.com is upping its own efforts.

Africa

Fintech defines new trends in financial services offerings for farmers (AFGRI), Rated: A

For agriculture, the rise of Fintech means easier access to funds, new competitors in financial services and a global reach. Selling cattle or produce? Fintech and digital markets can now connect farmers directly to buyers on a mobile platform, doing away with the middleman. Important to note is that Fintech not only minimises the dependency on traditional banks as the middlemen, but increases the use of peer-to-peer lending, growing and strengthening the sharing economy model. Good examples are M-Pesa and FarmDrive in Kenya, where FarmDrive connects smallholder farmers to loans and financial management tools through their mobile phones.

In Mozambique, the Institute of Cereals of Mozambique (ICM), which is responsible for regulating and promoting agricultural production and commercialisation under the remit of the Ministry of Industry and Trade, recently joined forces with FinComEco to link agriculture to the latest financial technology.

Latin America

ID Finance grows footprint in Latin America with launch of Mexico operations (ID Finance Email), Rated: AAA

19th September 2017 – 

Mexico readies bill to regulate fast-growing fintech industry (Reuters), Rated: A

Mexico would regulate its fast-growing financial technology sector, including firms that use crypto-currencies like bitcoin, to protect consumers and spur competition, under a proposed bill seen by Reuters.

The proposed legislation, which Mexican President Enrique Pena Nieto said this month would be unveiled in the Senate before Sept. 20, seeks to ensure financial stability and defend against money laundering and financing of extremists.

Financial services firms envisage massive potential growth in Latin America’s No. 2 economy by reaching the more than 50 percent of Mexico’s roughly 120 million citizens without bank accounts.

Authors:

George Popescu
Allen Taylor

Friday September 15 2017, Daily News Digest

ZhongAn Chinese fintech

News Comments Today’s main news: CFPB issues first no-action letter to online lender. SoFi defends its mortgage underwriting standards. Was SoFi’s FICO-free zone really FICO-free? RealtyShares raises $28M for commercial real estate investing. Betterment partners with Goldman Sachs, BlackRock. JustUs receives full FCA authorization. Raisin offers term deposits to businesses. Earthport partners with Cross River Bank. Reserve Bank of India waiting for government […]

ZhongAn Chinese fintech

News Comments

United States

United Kingdom

China

European Union

International

India

Canada

News Summary

United States

CFPB Issues First No-Action Letter To Online Lender (Law360), Rated: AAA

The Consumer Financial Protection Bureau on Thursday issued its first no-action letter to online lender Upstart Network Inc., allowing the company to continue using alternative credit data to evaluate borrowers in exchange for providing data to the federal consumer finance watchdog.

SoFi defends mortgage standards, denies Fast Company allegations (Housingwire), Rated: AAA

SoFi, also known as Social Finance, adamantly said it doesn’t shy from criticism, stepping up to defend itself amid the recent negative news coverage on the company’s alleged toxic workplace environment.

Included in Fast Company’s coverage of the fintech company is a bold claim that “in the first round of SoFi mortgages, some homes lacked appraisals.”

According to a SoFi spokesperson:

In late 2014, we tested a simplified version of our home mortgage product that used paystubs for income verification and did not require home appraisal. The test did not proceed into a launched product, and we launched our mortgage product with requirements for full income verification and home appraisal, which is still the case today. All of these mortgages met the ability-to-repay standards promulgated by Dodd-Frank and none of these pilot mortgages were ever sold to investors, and we continue to hold those loans on our balance sheet.

SoFi’s “FICO-Free Zone” Loan Process Was Maybe Actually Rather Full Of FICO (Dealbreaker), Rated: AAA

It turns out that when SoFi executives and employees weren’t banging the “collateral” out of each other in parked cars or office bathrooms, they were being less than honest with loan applicants about how their loan applications were being evaluated.

According to conversations with numerous former SoFi employees, the company’s “FICO-Free Zone” loan product actually relied quite heavily on evaluating applicants by their FICO score. After very publicly announcing in early 2016 that SoFi would no longer use FICO scores to evaluate loans, sources tell Dealbreaker that the company saw defaults tick up and made the internal to decision to reintegrate FICO data. No announcement of the shift back was ever made, the “FICO-Free” language disappeared from the website and some evidence of the SoFi’s move away from FICO was even scrubbed from the company’s blog.

Eager to please, did SoFi close early mortgages without appraisals? (Housingwire), Rated: A

I’ve sat on panels that discuss all the benefits the aforementioned Silicon Valley approach brings to housing. Having SoFi around isn’t one of them, if their underwriting standards are as bad as some claim.

If this article at Fast Company proves true, this explosive headline is correct: At SoFi, The Problems Go Way Beyond Its Toxic Workplace.

Ainsley Harris writes: “In the first round of SoFi mortgages, some homes lacked appraisals.”

Why on earth would a lender not get the value of the collateral it was lending to? Did SoFi think in-depth valuations where unnecessary? Do investors know that SoFi doesn’t know how much these homes are worth in the event of an REO?

Let me say this, whatever the reason to potentially forego appraisals, SoFi’s investors will disagree with that decision. The Fast Company revelation is so baffling that SoFi’s plan for an IPO will be delayed, perhaps indefinitely.

Let’s hope so. A company that plays fast and loose with its own people is shameful. A company that plays fast and loose with prudent lending practices is downright dangerous.

Here is SoFi’s Response to NYT Article that Criticized Operations & Culture at Fintech Firm (Crowdfund Insider), Rated: A

SoFi has published a public letter addressing the allegations leveled by NYT.com earlier this week.

The letter is republished in its entirety below. (Ed. Note: Excerpted by Lending-Times)

Mortgage: The story cites unnamed sources saying there was some period where we were “not doing enough” to validate income for mortgage borrowers. This is an incredibly vague claim, and we have no idea what this means. We underwrite our mortgage loans consistent with market standards, which includes rigorous income verification, and consistent with the ability to repay requirements put in place by Dodd-Frank.

Personal Loans: The story implies that our personal loans business grew in part because of a change in the way loans were approved: that customer service reps were approving loans rather than underwriters. That view reflects a lack of understanding of our business. We underwrite loans using a highly automated platform where all credit decisions are made by a pre-defined algorithm that analyzes each applicant’s credit profile and ability to pay.

A Thriving Business: The story did mention our business performance, and indeed, SoFi is thriving. Since inception, we have funded more than $20 billion in loans, $3.1 billion in the second quarter alone. In Q2, we had $134 million in revenue, up 67% year over year, with adjusted EBITDA of $61.6 million, up 60% year over year. We have more than 350,000 members, and they like what we do – our products run Net Promoter Scores in the 60-80 range, among the highest in financial services.

RealtyShares raises $ 28 million for commercial real estate investing (TechCrunch), Rated: AAA

RealtyShares is raising a $28 million Series C round led by Cross Creek Advisors, with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures.

Founder and CEO Nav Athwal says that RealtyShares has over 120,000 users on the platform. The startup says it has deployed over $500 million across more than 1,000 properties since it was founded in 2013.

Credit markets need legislative guidance after Madden decision (American Banker), Rated: AAA

In a recent op-ed in American Banker (derived from a longer blog post), professor Adam Levitin argues that the recent legislative proposals to “fix” the repercussions of the United States Court of Appeals for the Second Circuit’s Madden v. Midland Funding decision are “overly broad and unnecessary and will facilitate predatory lending.” The legislation Levitin opposes would restore the ability of banks to sell loans to nonbanks and have the loans remain valid on their original terms, the type of transaction on which the Madden decision has cast doubt. I disagree, at least with regard to marketplace lending. There are compelling legal and policy arguments to undo the Madden decision that Congress should consider.

Levitin is certainly right that the Nichols case and the similar 19th-century cases reflect a different fact pattern than was presented in Madden. It does not necessarily follow, however, that the principle of valid-when-made should not also apply under the Madden facts.

The issue at question in Madden, the interest charged on the loan, was set by the bank at the loan’s inception. The borrower got the benefit of the federal regulatory regime, which includes the incorporation of the bank’s home state usury law, when the loan was created, and the relevant characteristics did not change. So why is there suddenly a problem?

The impact of Madden on innovative credit is harmful to borrowers

Madden also appears, as would be expected, to be reducing access from marketplace lenders to credit for borrowers with lower credit scores. Contrary to Levitin’s argument, a recent study shows a reduction in credit availability not just for borrowers with FICO scores under 625 (though that is where the reduction is most pronounced). The study indicates that borrowers in New York and Connecticut with FICO scores under 700 saw a reduction in availability relative to comparable borrowers outside the Second Circuit.

For example, it is important to keep in mind that the majority of marketplace loans are used to pay off bank-issued credit cards (which are not subject to borrower state usury laws) or consolidate existing debt. Denying borrowers access to these loans does not leave the borrowers unencumbered by debt; it leaves them in the situation they view as worse than taking out this new loan. This is especially true given that there is evidence that marketplace lenders can help provide expanded access and competition, services in areas that have few banks, and better pricing for some borrowers than they would receive from banks. Cutting off access isn’t protecting borrowers, it is leaving them with fewer, perhaps inferior, tools to protect themselves.

Usury caps can lead to loan arrangements being distorted in ways that make the loans legal but worse for the borrower. We see examples of this in the shift from payday to “payday installment” and subprime auto loans, where lenders bound by interest rate caps change the loan principal amount or repayment schedule to make the loans viable. These loans can actually be more expensive in total because the lower interest rate is applied to a higher principal over a longer time period. Larger loans also can be more expensive for borrowers if they pay them off early or go into default. Borrowers also could be forced into using suboptimal options like pawn shops or illegal loans, or find themselves without credit altogether.

Betterment struck a deal with 2 Wall Street giants to provide its 270,000 users more investment options (Business Insider), Rated: AAA

Betterment, the largest roboadviser with $10 billion under management, has enlisted the support of financial juggernauts Goldman Sachs and BlackRock for two new portfolio options.

The portfolio managed by Goldman Sachs is a smart-beta option, providing users with a more aggressive alternative to Betterment’s core portfolio, which allocates money to stocks and bonds, according to Arielle Sobel, a spokeswoman for the firm. It will be more exposed to emerging markets and REITs, according to a press release.

Wealthfront, Betterment’s San Francisco rival, announced an in-house-built smart-beta portfolio in June, according to a company spokeswoman.

The other portfolio option is an income-based portfolio, managed by BlackRock, the largest fund manager in the world with $5.7 trillion under management. It provides investors a more conservative option and delivers target income.

The imperative for self-sovereign identification (get lost Equifax) (TheFinanser.com), Rated: AAA

As we have known for a long time now, it is no longer good enough to use customer’s personal information for account access. After Ashley Madison and so many other incidents (Tesco Bank, Lloyds Bank, JPMorgan Chase, SWIFT, the Federal Reserve, the IRS, the Department of Homeland Security eBay, Yahoo, Google, Adobe, Target, Neiman Marcus, Home Depot …), surely we should be moving away from this antiquated system. Bear in mind it’s been used for almost two decades, it’s no wonder the system is no longer working.

So the banks add second-factor authentication (2FA) with secure entry pads and PINs, but they still rely on personal information for account access when you ring their call centres, and this is just annoying.

Is there a solution?

First is biometrics and TouchID, voice, eyes and more can easily be used for authentication via a smartphone. Why banks aren’t incorporating these into their onboarding and access mechanisms beggars belief …. or maybe not, as banks would need modern systems to use such radical authentication techniques, and that’s a big ask. Far easier to rely on name, address, date of birth and all the information the hackers stole from Equifax.

Source: TheFinanser.com

Emerging technologies (particularly blockchain, although not exclusively) are making the development of “self-sovereign identity” a real possibility.

The basic idea behind self-sovereign identity is that rather than have our information held by third parties (often without us even knowing what that information is) and used to guarantee our identity and make decisions that affect us; we could turn the entire model on its head and give each individual control over their own digital identity.

With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.

Anuj Nayar Leaves PayPal For Lending Club (Holmes Report), Rated: A

PayPal’s global head of product communications Anuj Nayar has left to become head of communications at peer-to-peer investment company Lending Club.

In his new role that starts on Monday, Nayar will be in charge of the team running all internal and external communications, as well as social media, for the $2.5 billion publicly-traded fintech company.

A recap of Goldman’s summer siege on fintech lending (AltFi), Rated: A

Last night we learned that Goldman Sachs is poaching roughly 20 employees from online lender Bond Street, which seems to have paused making new loans, according to The Wall Street Journal.

It is indicative of Goldman’s strategy that the bank has forced its way onto the AltFi (“Alternative Finance”) homepage three times this week. Those incursions were tied to its £100m investment in UK employee benefit lender Neyber, its $300m deal with home solar financing firm Mosaic, and the announcement that it plans to launch an online bank in the UK.

So its latest decision, to nab 20 workers from the dormant Bond Street, is not without precedent. But Bond Street is not a consumer lender. It offers term loans of up to $1m to small businesses. Could Goldman, then, be sizing up an expansion into small business lending for Marcus?

Open the door to new loan opportunities without sacrificing security (CUInsight), Rated: A

Year-to-year, community financial institutions have become more conservative about consumer lending. So as to not open themselves up to additional risks, many of these institutions tend to only service consumers with prime and super prime credit. However, consumers with non-prime credit make up a solid portion of the consumer lending market, so this desire to stick with “safer” loans leaves quite a few loan opportunities on the table. And when many community financial institutions are dropping their rates to as low as 0% in order to compete with large national lenders for prime and super prime consumers, missing additional revenue opportunities for your loan portfolio is not a small matter.

Market disruptors like retail lenders (i.e. Costco), mobile lenders (i.e. AutoGravity), and peer-to-peer lenders (i.e. Lending Club) are finding ways to bypass the existing banking system, credit bureaus and financing requirements to lend to this highly sought after demographic.

Got Student Debt? Soon Your Employer Might Help With That (Buzzfeed), Rated: A

Fidelity Investments introduced a program Thursday that will let employers make regular payments to their employees’ student loan accounts, much the way companies already pay into their workers’ 401(k)s or health care savings accounts.

Some smaller financial services companies already facilitate this type of benefit program, such as First Republic Bank and startups like Student Loan Genius and SoFi.

But the entry into the market of Fidelity Investments — one of the country’s biggest mutual fund, money management and financial planning companies — is a sign that student debt relief may soon become a mainstream benefit that employers will have to offer to remain competitive.

This Startup Is an ATM for the Money You Haven’t Been Paid Yet (Inc.), Rated: A

If you’re living paycheck to paycheck, on the other hand, even small unexpected expenses can put you in the red. The two weeks between paychecks is an eternity for an hourly worker whose credit card is already maxed out, or who doesn’t have one to begin with. Every parking ticket and hospital co-pay is a potential crisis. By the time payday comes, it’s too late — the next crisis has already arrived.

Financial technology startup DailyPay thinks giving people in this situation more frequent access to wages would go a long way toward solving this problem and putting them on the path to financial security.

DailyPay’s solution works like this:

1) The startup integrates with a company’s established payroll and time-tracking systems. Instead of going directly to an employee’s bank account, paycheck deposits are set up to go through DailyPay first.

2) An employee can withdraw wages he or she has earned but not yet received throughout the two weeks or month before formally getting the paycheck. DailyPay fronts the money for a small fee, and keeps the expense on its balance sheet.

3) Come payday, DailyPay deducts whatever money the employee has already withdrawn, and sends the rest of the paycheck through to the employee’s bank account.

Perhaps Lee likens his service to an ATM because the more obvious comparison — a payday loan provider — is often considered predatory.

One key difference is that DailyPay interfaces directly with employers, positioning itself as an HR benefit. DailyPay’s pitch to other companies is that flexible payroll reduces turnover, which is good for the bottom line, and the service is free to implement. One internal study of 20 DailyPay clients found that turnover shrank by 40 percent on average after they adopted it.

Mosaic Will Sell $ 300 Million Worth of Solar Loans to Goldman Sachs (GreenTechMedia), Rated: A

Solar loan provider Mosaic reached an agreement with Goldman Sachs in which the bank will buy $300 million in loans over time.

This deal will clear up space on Mosaic’s balance sheet to finance more loans, and signals a prestigious bank’s willingness to buy and own solar loans for itself.

Market Overheated? Not These Sub-Sectors (Seeking Alpha), Rated: A

Since I run an opportunistic portfolio that seeks out high upside “Fat Pitches” (soon to be a subscription service), it may seem as though I, too, would be stumped; however, I continue to find opportunities, albeit in sectors a bit off the beaten path.

While “value” and “high-growth tech,” may seem anathema to each other (wait till you see the next section), the three public fintech companies – Lending Club, Ondeck, and Elevate Credit – all seem undervalued today relative to their potential, and each have posted strong results in the recent quarter.

Ondeck, which lends to small and medium businesses, also recently decided to scale back its growth, raise rates, and cut staff. The company lowered orginations last quarter by 19% sequentially last quarter, but loss provisions as a percentage of revenues also fell from 8.7% to 7.2%. After implementing a $45 million cost reduction program, the company’s losses declined to only $1.5 million, down from $16 million in losses a year ago.

Speaking of acceptance, it may seem on the that the company that serves the subprime market – thought to be the riskiest of all – is the most profitable of the three. Elevate Credit has been doing everything right – though you wouldn’t know it by its languishing stock price. Last quarter, Elevate grew originations 29% and revenues by almost 19% (due to a higher mix of lower rate, but higher-quality loans), expanded its core RISE product to the state of Kansas—its 16th state, and was able to lower its interest rate on its high-cost funding from Victory Park Capital.

How A Bank And A FinTechs Are Jointly Cracking The Code On Financial Inclusion (PYMNTS), Rated: A

The teams at FinTech startup LendUp and Oakland-based Beneficial State Bank think very differently about that relationship. As LendUpCEO Sasha Orloff and Beneficial State Bank Co-CEO Kat Taylor told PYMNTS in a recent interview, banks and FinTechs need each other, and a very large segment of the population living on the margins of financial services in the United States need these two groups to work together as well.

That constituency, Orloff noted, isn’t always easy to serve – or to serve profitably – without relying on a business model that counts on its customers to fail and then charging sky-high fees for those failures. LendUp and Beneficial State Bank have a different approach: They want to invest and make money on their customers who are succeeding financially and are able to participate in the full spectrum of the financial system.

Fifty-six percent of Americans have a sub-prime credit score, meaning mainstream banks likely can’t approve them for their products; more than half of all Americans could not find $400 in the event of an emergency; and two-thirds of millennials have not started building any kind of credit score, in a system in which having no score or a poor score can cost a person $250,000 over their lifetime.

Lending money beyond what people can bear is the hallmark of predatory lending, she emphasized, and that’s not going to help the customer.

That alternative – the L Card, issued by Beneficial State Bank in partnership with LendUp – is a low annual fee card (starting at $0 and capped at $5 per month or $60 per year) that offers consumers a grace period for payments and even caps late fees (at $7). It has a higher interest rate – 19.99 percent to 29.99 percent – for a credit card than the national average, but according to The PEW Charitable Trusts, is a fraction of the payday lending rate, which is around 400%. Credit limits range from $300 to $1,000 based on credit score, and a year of timely payments and responsible behavior allow customers to double the limits.

CommonBond gets new CFO from Deutsche Bank (India Times), Rated: A

Jay Coleman, a Wall Street banker focused on equity raises and initial public offerings, has joined online lender CommonBondas chief financial officer, according to the company’s co-founder David Klein.

While still small, the company had lent about US$1bn to 12,000 borrowers as of May 1, according to Moody‘s Investors Service.

Coleman was poached from Deutsche Bank where he was head of private capital and equity capital markets execution, according to a CommonBond spokesperson. Prior to that he worked at Barclays, Lehman Brothers and Morgan Stanley.

eOriginal Appoints Timothy Wall Chief Revenue Officer (Broadway World), Rated: B

eOriginal, Inc., a rapidly growing financial services technology company, has named Timothy Wall Chief Revenue Officer (CRO).

As CRO at eOriginal, Wall will be responsible for all aspects of the company’s sales organization and revenue development, including direct sales, channel sales, sales engineering and customer success.

Ex-U.S. Representative Nussle: credit unions are the ‘original disrupters’ in financial services (Radio Iowa), Rated: B

Former Iowa Congressman Jim Nussle today said Iowa’s 94 not-for-profit credit unions have filled a void as banks throughout the country and in Iowa continue to consolidate.

More than 1.1 million Iowans are members of a credit union and the state’s credit unions have about $16 billion in assets, according to Nussle.

Nussle indicated the “speed of change” and stress in the industry has been rather dramatic, not only because of the “Great Recession,” but because of incidents like Wells Fargo’s admission that its employees created fake accounts without customers’ permission. The recent growth of on-line “peer to peer” lending presents credit unions with an opportunity rather than a challenge, according to Nussle, because credit unions are member-driven.

GDS Link Welcomes 2017 LEND360 to Dallas (PR Web), Rated: B

GDS Link, a global provider of credit 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 leasing, announced its role in bringing the fourth annual LEND360 to Dallas.

“The LEND360 Dallas host committee, co-chaired by Ken Rees, Chief Executive Officer of Elevate Credit, Inc. and Paul Greenwood, President and Co-founder of GDS Link, and supported by other influential members of the fintech community, has been meeting since late 2016 to ensure a valuable attendee experience for the upcoming conference, assist with speaker development and engage innovative industry leaders to take part in the event,” according to a LEND360 press release.

Hear from Both Sides of the Aisle on the Future of Fintech (Business Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced its roster of speakers for the Second Annual Summit on Sept. 25 at the Renaissance Hotel in Washington D.C. The Online Lending Policy Summit provides an opportunity for industry participants to share insights, propose standards, and have an open dialogue with regulators and policymakers to build consensus viewpoints on the regulation of online lending. Keynote addresses will be delivered by the following four policy leaders:

  • Keith Noreika, Acting Comptroller of the Currency. Mr. Noreika advocates for the need to embrace innovation while ensuring that new products and services do not present undue risk to the financial system. He will discuss how regulators and industry can work together on “responsible innovation” and with principles for governing the rapidly growing financial technology sector.
  • Congressman Gregory W. Meeks (D-NY-5), now in his tenth term, serves one of the most diverse constituencies in the nation. Mr. Meeks is known for being an effective, principled, and commonsense leader. Congressman Meeks is a senior member of the U.S. House Financial Services Committee, and is the lead Democratic sponsor of important legislation dealing with the Madden v Midland Funding court case.
  • Congressman Tom Emmer (R-MN-6) represents Minnesota’s 6thDistrict in the U.S. House of Representatives. He began his congressional career on January 6, 2015 and serves as a key member of the U.S. House Committee on Financial Services. Prior to his congressional service, Mr. Emmer practiced law for several years, and followed his entrepreneurial calling and opened his own law firm.  In 2004, he was elected to the Minnesota House of Representatives and re-elected by overwhelming majorities in 2006 and 2008.  After a narrow loss in the 2010 gubernatorial race, Tom entered the radio business as a conservative radio host.
United Kingdom

JustUs Receives Full Authorization From the Financial Conduct Authority (Crowdfund Insider), Rated: AAA

Peer-to-peer lending platform JustUs announced this week it has received full authorization by the Financial Conduct Authority (FCA). The online lender revealed that the full authorization is a pre-requisite to offer the JustUs Innovative Finance ISA (IFISA) and registration forms have been submitted to HMRC with a planned launch of the ISA in October.

A Battle For The Soul of Peer-To-Peer Lending (Forbes), Rated: AAA

Crowd2Fund, a relative newcomer to the alternative finance industry, is accusing Funding Circle, one of the market leaders, of turning its back on the whole ethos of peer-to-peer lending.

The row follows an announcement last month by Funding Circle that it will no longer allow investors on its platform to choose which specific companies they want to lend their money to. Instead, the platform will automatically spread investors’ cash across a group of businesses looking for funds – much as a professional collective fund manager in any other asset class chooses investments on behalf of its investors.

Crowd2Fund said Funding Circle’s move reflected the larger platform’s increasing focus on large institutional investors in peer-to-peer lending, as well as concern about the growing regulatory scrutiny of the sector.

36% of UK adults did not save or invest last quarter (Bridging&Commercial), Rated: A

Over a third of UK adults (36%) have not saved or invested any money in the last three months, according to the second instalment of RateSetter’s quarterly tracker.

On average, people saved or invested £232 each month in the last quarter.

The research also revealed:

  • men saved significantly more than women over the period (£296 a month, compared with £170)
  • 25- to 34-year-olds put away the most over the period (averaging £278 a month), followed by those aged between 35 and 44 (£260 a month)
  • young adults, aged between 18 and 24, put away the least (£154 a month).

ArchOver CEO: SMEs have “wrong attitude” in eschewing finance (P2P Finance News), Rated: A

ARCHOVER’S chief executive Angus Dent (pictured) has urged small business owners to be more confident in taking on debt, after new figures showed that 80 per cent of small- and medium-sized enterprises (SMEs) are refusing to apply for new finance.

The boss of the peer-to-peer business lender said that while their caution was understandable, it is the “wrong attitude” for SMEs that want to scale up.

LendInvest property academy receives public support (Mortgage Introducer), Rated: A

LendInvest  has received public support from three major industry bodies for its property development academy.

The Centre for Entrepreneurs, Homes for Scotland, and the Home Builders Federation have each praised the academy, which was established in 2016 to help develop the skills of aspiring and new small-scale housing developers.

ASTL conference: FCA praises regulated bridging market’s ‘rosy picture’ (Mortgage Solutions), Rated: A

Data from the FCA showed regulated bridging customers contrasted strongly with the stereotypical version, with just 3.3% of bridging loans going to credit impaired clients.

The regulator found bridging customers ware typically wealthier, older, more likely to be self-employed and bought bigger houses than standard mortgage customers.

The FCA data revealed:

  • Bridging is much more concentrated in London and the South East – around 40% of loans are in these regions compared to 26% for standard mortgage lending;
  • Significantly less bridging lending takes place in the north of England, Scotland, Wales and Northern Ireland;
  • Median bridging loan value is around £208,000, compared to £143,000 for a standard mortgage;
  • Median property value is significantly higher at around £550,000 compared with a normal mortgaged property value of £230,000;
  • Significantly more bridging loans are on detached houses – 51% compared with 23%;
  • Average bridging customer age is 56, compared to 37 for a normal mortgage;
  • Bridging customer are more likely to be self-employed – 31% vs 11%;
  • Bridging customers are also significantly more likely to be retired at 28% vs 1% standard mortgage customers.

Why Investors are Excited about Birmingham (Landlord News), Rated: A

Birmingham, the site of LendInvest’s latest Property Development Academy, is a perfect example of this. Time and again we heard from attendees of just how exciting the city is for property development currently, and why they are so desperate to get cracking with their own development projects.

It’s notable that in last year’s Emerging Trends in Real Estate report from PwC and the Urban Land Institute, which looked specifically at which European cities present the best opportunities for investors, Birmingham was the best performing UK city. It ranked 22nd, ahead of cities like Manchester, Edinburgh, London, Brussels and Rome.

All of this has led to a thriving rental sector. Our most recent Buy-to-Let Index found that the city currently boasts a rental yield of a very strong 5.03%, with capital gains of 4.97% over the last year.

The latest UK Economic Outlook report from PwC named the West Midlands as one of the housing hotspots, predicted to see house price growth of 4.5% this year, compared to a UK average of 3.7%.

China

Lawmaker urges FSC to curb online lending bad debt (Taipei Times), Rated: AAA

Democratic Progressive Party Legislator Lin Chun-hsien (林俊憲) yesterday urged the Financial Supervisory Commission (FSC) to curb bad debts stemming from fraud and loan sharking on Internet-based peer-to-peer lending platforms.

Online lending platforms have existed for years in other nations and have caused many problems, Lin said, adding that in China they are blamed for generating an estimated 60 billion yuan (US$9.2 billion) of bad debt.

ZhongAn Plants a Fintech Acorn for China (Bloomberg), Rated: AAA

Like electric cars, whose era of global dominance has yet to arrive, the app-driven insurance industry is more of a concept than reality. That doesn’t mean investors should dismiss the Hong Kong initial public offering of ZhongAn Online P&C Insurance Co., despite its hefty price tag.

Bankers are currently sounding out investors for an IPO that could raise as much as $1.5 billion, giving ZhongAn a valuation of $11 billion. That’s well above CLSA’s $8 billion estimate, which already ranks the online insurer as China’s third-most valuable fintech company after Ant Financial, an affiliate of Ma’s Alibaba Group Holding Ltd., and Lufax, the peer-to-peer lender owned by Ping An Insurance (Group) Co.

ZhongAn is the world’s sixth-most-valuable e-finance company, at about $8 billion.

So here’s the bad news. ZhongAn is tiny. Its net written premiums were a mere 3.4 billion yuan ($520 million) last year, or 0.5 percent of China’s insurance industry, according to Bernstein Research analyst Linda Sun-Mattison.

Source: Bloomberg

It’s also expensive. The $11 billion valuation implies an adjusted price-to-book level of 4.3 times, Smartkarma analyst Ke Yan estimates.

European Union

Wealth Products Marketplace Raisin Takes a Leap Forward with Term Deposits for Businesses (Crowdfund Insider), Rated: AAA

Pan-European marketplace Raisin continues its trailblazing expansion. Having penetrated new geographies with international and localized services in 2016, the Berlin-headquartered startup is now broadening its offering to address a new customer segment: small and medium-sized enterprises (SMEs). Starting September 14, businesses can open term deposit accounts on Raisin’s German site www.weltsparen.de, or more precisely, on www.weltsparen.de/geschaeftskunden.

International

Earthport strengthens US network with Cross River partnership (Finextra), Rated: AAA

Earthport (AIM: EPO), the leading payment network for cross-border transactions, is pleased to announce its partnership with Cross River, a US-based bank, to provide inbound cross-border payment services across the US market, adding to its existing capabilities to process payments in the US.

The partnership will facilitate the execution of inbound ACH payments through Cross River, and further strengthen Earthport’s global payment network, enabling high volumes of low-value payments originating outside the US to be serviced more efficiently.

Fintech to the rescue for the world’s unbanked (City A.M.), Rated: A

Half the world is unbanked. That’s the provocative title of a 2009 research paper published by the Financial Access Initiative (FAI), a consortium of researchers from New York University, Harvard, Yale and Innovators of Poverty Action.

Their study also provided an empirical grounding that, although it is possible to serve low-income communities at scale with financial services, there are still billions left to reach. According to figures from the World Bank, as of 2015 there are still 2bn people who lacked access to any formal financial services.

The advent of mobile technology along with increasing smartphone penetration, especially in developing countries, has opened up a new portal of possibilities.

This newfound access in countries across South East Asia and Africa has provided the perfect ecosystem to initiate financial inclusion.

Top Fintech Innovations To Look Out For in 2018 (Finovate), Rated: A

Nick Ogden – founder and Executive Chairman, ClearBank

The number one thing that’s going to occur in 2018 is fragmentation of the marketplace as we know it today. The days of big banks delivering everything and being specialists in everything are over. Some of them might still not accept that but the reality is that it’s happened.

Karen Kerrigan – Chief Legal Officer, Seedrs

Rather than looking at a specific technology, have a look at a particular sector. There are a lot of challenger banks out there at the moment – Starling Bank, ClearBank, Monzo, Tandem – and they’re all vying for the same space. They’re all doing things slightly differently, but  ultimately are taking on the banks.

Lol a FoHFs ICO, srsly (FT Alphaville), Rated: A

Tokens may not be available to all persons in all jurisdictions as certain offering restrictions may apply. In particular, no tokens will be available in the US, Singapore or the EEA. Offering and trade restrictions, as well as the rights of holders of FundCoin, will be set out in further detail in the offering memorandum.

That little snippet is from the last page of the “whitepaper” for FundCoin, which deserves a spot in the pantheon of initial coin offerings (ICOs) to which regulators should be paying more attention. FundCoin is “the first private equity token ICO” and is the creation of Finles, a 40-year-old Dutch fund of hedge funds manager that has decided to turn to the crypto markets to raise money.

Virtual money shifting global trading trends (BusinessDay), Rated: A

Cryptocurrencies are the most undervalued asset class in the world, says Farzam Ehsani, leader of Rand Merchant Bank’s blockchain initiative.

The combined market capitalisation of all cryptocurrencies was only about $120bn, Ehsani said on Thursday at the Business Day/Financial Mail Investment Summit, held in partnership with Old Mutual Wealth.

By comparison, the market capitalisation of all stock markets is about $68.5-trillion, according to figures from the World Federation of Exchanges.

The price of a single bitcoin has surged from $605 to $3,487 over the past year, leading sceptics to label it a “bubble”.

India

‘RBI AWAITING GOVT NOTIFICATION FOR COMING OUT WITH P2P LENDING NORMS’ (Daily Pioneer), Rated: AAA

The Reserve Bank is waiting for a gazette notification from the Government on getting the peer-to-peer lenders under its regulatory ambit before coming out with guidelines on the sector, a senior official said on Wednesday. “Following up on the consultation paper we did last year, we are shortly going to come up with guidelines on peer to peer lending,” RBI’s executive director Sudarshan Sen said at an industry event here.

According to the official, the P2P lending interface will come under the purview of RBIs regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the Government.

Investree to develop online transaction system of state securities for retail investors (e27), Rated: AAA

Indonesian peer-to-peer (P2P) lending platform Investree announced that it has been appointed by the country’s Ministry of Finance to run a pilot project that aims to develop online transaction system of state securities for retail investors.

According to a DailySocial report, through the project, users will be able to purchase state securities through the Investree platform.

Demonetization in India shines a light on the digital future (The Asset), Rated: A

India’s demonetization experiment has been declared a failure by economic pundits. However, it has expanded India’s tax base and fast-tracked the digitization of payments, which is a good thing.

Some nine-million-odd new taxpayers came into the fold thanks to the scheme. Around 20 million new bank accounts were created by Indians panicked by the possibility of having their cash holdings voided.

Second, the scheme accelerated the digitization of payments in India, with a vast swathe of merchants forced to accept digital payments in lieu of cash.

Types of crowdfunding and why it is beneficial for real estate sector (Moneycontrol), Rated: A

The global crowd-funding industry generated about USD 34.4 billion in 2015.

Apart from raising capital, crowdfunding is also a way to create awareness among the masses and support for a project from the people around you.

Crowdfunding has exploded new ways to raise funds for start-ups, social sector, real estate, inventions and so on.

In India, transaction value in the “Crowd-funding” segment amounts to a meagre USD 6 million in 2017.

Transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 24.8 percent resulting in the total amount of USD 16 million in 2021.

The most used method for real estate crowdfunding is “equity crowdfunding” which helps individual become partial owners in distinct properties, allowing them to participate alongside real-estate companies who acquire, redevelop, or build.

Another type of crowdfunding used for real estate is syndicated debt crowdfunding. This fast growing platform takes some or all of an existing real-estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.

Canada

IOU Financial Ranked Fourth Fastest-Growing Company in Canada (Business Insider), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that Canadian Business and PROFIT ranks IOU Financial as the fourth-fastest growing company on the 29th annual PROFIT 500, the definitive ranking of Canada’s Fastest-Growing Companies. Published in the October issue of Maclean’s magazine and at CanadianBusiness.com, the PROFIT500 ranks Canadian businesses by their five-year revenue growth.

IOU Financial makes the 2017 PROFIT 500 list as the fourth fastest growing company with five-year revenue growth of 8,600%.

Authors:

George Popescu
Allen Taylor

Tuesday August 15 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: Prosper reports strong Q2, closes $500M securitization. Zopa to refund investors affected by IT glitch. RateSetter in final stages of FCA authorization. Funding Societies joins international association of credit portfolio managers. Goldmoney reports Q1 profits, plans to open physical branch. Today’s main analysis: Third largest corporate note offering easily digested by bond market. Today’s thought-provoking […]

corporate bond credit spreads

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Prosper Progress: Online Lender Reports Strong Q2 Growth, Closes $ 500 Million Securitization (Crowdfund Insider), Rated: AAA

Summary of Key Financial Highlights for Prosper during the quarter:

  • Prosper facilitated $775 million in loan originations through its platform, up 32% quarter-over-quarter and 74% year-over-year driven by strong demand for its personal loan product.
  • Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
  • The company reported a Net Loss of $41.4 million in the second quarter of 2017, which included $39.3 million in non-cash charges related to warrants to purchase preferred stock that were issued to a consortium of investors, and a third party in connection with a settlement agreement.
  • Prosper generated $8.6 million of Net Cash from Operating Activities and Adjusted EBITDA of $6.7 million in the second quarter of 2017, driven by an increase in origination volume, improved marketing efficiencies and lower general and administrative expenses.

Third-largest corporate note offering easily digested by bond market (Morningstar), Rated: AAA

From a microeconomic perspective, second-quarter earnings reports have generally been in line, with the usual amount of hits and misses. Thus far, our corporate credit analysts have not discerned any significant change to their sector outlooks. From a macroeconomic perspective, second-quarter real GDP was reported to have expanded an annualized 2.6%, and as widely expected by the market, the Federal Reserve did not make any change to monetary policy.

In the corporate bond market, the average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) continued its tightening trend but declined only 1 basis point to end the week at +106. In the high-yield market, the BofA Merrill Lynch High Yield Master Index tightened 5 bps to +359. In equities, the S&P 500 was unchanged and volatility sank to new lows.

Fund flows in the high-yield market came to a near standstill last week, as the amount of redemptions from high-yield exchange-traded funds more than offset inflows into open-end funds, resulting in a net outflow of $0.1 billion.

Chatter Increases that Earnest is Up for Sale. Again. (Crowdfund Insider), Rated: A

Back in May, Crowdfund Insider reported that Earnest, an online lender providing personal loans, was up for sale. Referencing a report in Bloomberg, the rumor was quickly squashed by Earnest representatives who told this publication they were absolutely not for sale.

But now the chatter is increasing that Earnest is, in fact, on the auction block.  Apparently management is attempting to sell itself for $200 million. Alternatively, Earnest needs a quick equity injection of $50 million. Otherwise, things don’t look so good.

Millennials are financing everything from bed sheets to concert tickets (MarketWatch), Rated: A

In recent years, payment companies including PayPal PYPL, +1.76% Affirm and Bread have created installment plans for retailers that give consumers the option to finance the weirdest purchases over time.

These payment methods have taken hold at a time when millennials have been more reluctant than their parents to use credit cards. Millennials had about two credit cards each on average last year, according to the credit reporting company Experian. That’s compared with about three for boomers and an average of 2.5 for members of Generation X.

Brooklinen partnered with the payment company Affirm in June to offer a payment plan spread over three, six or 12 months. Financing doesn’t come cheap: Rates range from 0% to 30% APR, after Affirm checks the buyers’ credit and approves them. That compares to an average APR of almost 17% for credit cards — or zero if you’re paying with cash.

If the consumer does not pay within 120 days, Affirm no longer lends to that person, and writes off the debt. Affirm then sends the remaining balance to a third-party debt collector, which Affirm supervises, but Affirm does not package and sell the balances, Metcalf said. Affirm makes its money from simple interest consumers pay, Metcalf said.

PayPal offers two types of credit, both as part of a program called PayPal Credit. One option is to wait six months without paying anything, and no interest on purchases over $99 from select retailers. The other option is an installment payment plan called Easy Payments: Consumers pay interest at an APR of 19.99% if they don’t first pay off their balance within the term they select.

DiversyFund Announces First Ever ‘No Fee’ Real Estate Income Fund (Digital Journal), Rated: A

DiversyFund, Inc., a fast growing, online real estate investment platform, announced the first ever “no fee” real estate debt fund to investors today. With the Fund, investors gain the ability to invest in a diversified portfolio of real estate debt investments that target risk-adjusted returns and generate passive income.

The Fund already has an impressive four-year track record since its launch in March 2013, posting an average annualized net return of 11.4% since inception through Q1 2017, a track record that few Wall Street funds have been able to match. The Fund targets passive income by making real estate-backed debt investments in assets featured on DiversyFund’s platform. The Fund makes quarterly distributions of interest income to its investors and has never lost any investor principal.  The minimum investment amount is $10,000.

How Some Savvy FAs are Overtaking ‘Basic’ Robos (Financial Advisor IQ), Rated: A

Robo advice for mass-affluent investors keeps evolving. But brick-and-mortar advisors aren’t standing still. In fact, some traditional FAs are taking into their own hands ways to automate more sophisticated types of holistic planning – from philanthropy to tax strategies and healthcare issues.

For instance, Heron Financial uses a mobile app, Mobile Assistant, that helps Edwards turn client meetings into easy-to-disseminate notes in Redtail, the firm’s CRM system.

Savant Capital says it’s licensing new off-the-shelf software suites to create their own robo-like experience for clients.

By year’s end, Savant expects to start beta testing its own robo-style package that automatically plucks key data from a family’s tax returns.

Savant is also working on a similar tool to automate estate planning. It’s designed to automatically sort through internal client reporting software, CRM data and core financial planning databases to identify an appropriate estate planning strategy from 120 different scenarios, according to Brodeski.

Advisor Jonathan Swanburg in Houston isn’t writing special algorithms. But his employer, Tri-Star Advisors, finds it can achieve similar results automating more areas of clients’ comprehensive plans by taking advantage of new algorithms being embedded in core prepackaged financial planning suites.

Behalf Inc. Partners with FinWise Bank to Offer Small Business Loans (LendIt), Rated: A

Behalf, a rapidly growing on-demand commercial credit platform, today announced its partnership with FinWise Bank.

Operating since 2013, Behalf is an alternative financing provider that facilitates commerce between business buyers and sellers. Driven by data and technology, Behalf allows merchant partners to offer business customers instant credit and flexible payment terms at the point of sale. Once approved, Behalf customers can use their credit line to fund purchases with virtually any vendor, including MasterCard accepting businesses.

LendingTree Announces Finalists for $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, today announced the five finalists for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

  • Traaqr
    Brian Handrigan, Co-Founder & Co-CEO

This SaaS disruptor is bringing click level analytics to companies of all sizes while providing automated data capture at a precision never believed possible before.

ForeverCar works with consumers to find and compare quotes for the right vehicle protection plan, and offers concierge support when a vehicle needs service or repairs, keeping you up-to-speed throughout the repair process.

  • Outleads
    Dorin Rosenshine, Founder and CEO

Outleads integrates with leading contact center software, including Genesys, Five9, and more, and onboards CRM data directly into Adobe Analytics, Google Analytics™ & AdWords™ for conversion attribution and real-time retargeting.

LeadCrunch solves the problem of finding optimal B2B targets by analyzing a company’s best customers to identify “Smart Personas”, and then engages look-alike personas with relevant content to generate permission-based leads.

Starbutter AI is a voice and chat app development company focusing on chatbots and AI agents, giving consumers high quality information so that they can pick the best financial products and helps financial companies match the right products to their customers.

The age of e-mortgages finally arrives (Scotsman Guide), Rated: A

The Michigan-based lender United Wholesale Mortgage recently received much media attention for rolling out what it claimed to be the first-ever truly digital mortgage after a Chicago couple in late July completed the entire process of refinancing their mortgage from a computer.

What was supposedly newsworthy about this event — worthy to be featured in an Aug. 9 article in the Wall Street Journal — was that a notary was remotely patched in for the e-signing, and didn’t have to be present in the couple’s home.

A male employee claims he was fired after reporting sexual harassment at a $ 4 billion startup (Business Insider), Rated: A

But a lawsuit filed on Friday against hot fintech startup Social Finance, better known as SoFi, is strikingly different.

This suit has been filed by a male employee who claims that he saw sexual harassment of his female coworkers and was fired after he reported it, according to a report by The New York Times’ Nathaniel Popper.

SoFi Harassment Suit (Fortune), Rated: A

Charles’ lawyer says he will file another lawsuit this week claiming broader employee mistreatment and seeking class-action status.

Fintech Startup SoFi Faces Wage, Retaliation Suits (Law360), Rated: A

Social Finance Inc. was hit with a wage-and-hour putative class action in California court Monday, just days after a former worker sued the financial startup, alleging it fired him for reporting the harassment of a female coworker and for reporting managers who fraudulently canceled loan applications to reap bonuses.

Five employees — Sean Pullen, Christina Cane, Michael Carrera, Matthew Taylor and Yulia Zamaora — allege that San Francisco-based SoFi failed to provide them with meal and rest breaks, failed to pay them for overtime and all….

Income& Selected for Highly Competitive Plug and Play Fintech Accelerator (LendIt), Rated: A

Income&, a real estate investment platform based in San Francisco, announced today that it was one of 24 startups selected for the sixth class of the Plug and Play Fintech Accelerator. The company will participate in a 12-week accelerator program geared toward financial technology startups, during which time it will gain access to Plug and Play’s extensive network of leading banks and financial institutions. Income& was among 3% of startup company applicants selected from a highly competitive pool for the fall 2017 Plug and Play Fintech Accelerator class.

How One Lawyer is Making Real Estate Investing Safer (Markets Insider), Rated: A

Last year, attorney Amy Wan, received a call from a real estate developer client who was trying to raise $300,000 from investors to acquire an investment property. When he asked how much the legal services would be, she gave him a flat fee of $10,000.

While working as a Partner in Crowdfunding Lawyers, a boutique real estate securities law firm, Wan says she began to come face-to-face with the reality that clients doing small raises could not afford her services.

She was named one of “Ten Women to Watch in LegalTech” by the American Bar Association Journal, and pivoted to a career in securities law when she became General Counsel of Patch of Land, a real estate crowdfunding startup. At Patch of Land, Wan works to help democratize investment opportunity. Now, she hopes to democratize access to counsel for small businesses.

Bootstrap Legal is a legaltech/fintech startup based in Los Angeles.

E-Signatures & Digital Lending: How to Move 99% of Customers off Paper (Bright Talk), Rated: A

In the sub-prime lending market, speed-to-close determines market share. Join us to learn how an end-to-end digital process with e-signatures transformed OneMain’s lending business – positioning the lender as the largest personal loan company in the U.S. Today,99% of OneMain’s loans are e-signed, enabling them to be closed and funded significantly faster than on paper.

In this 60-minute presentation, you’ll learn how the company took a phased approach and implemented e-signatures in the call center and online channels, then expanded to the branch network. This year, OneMain will complete its e-signature roll-out to 1,700 branches, where the majority of its loans are transacted.

Presenters

David Smith, Vice President, Application Systems, OneMain
Philip Hannah, Director of IT, OneMain
Mary Ellen Power, VP Marketing, eSignLive by VASCO

Live online Aug 31 11:00 am United States – Los Angeles  or after on demand

SEC Suspends OTC-Traded Emerging Markets Investor Over ICO Concerns (Coindesk), Rated: A

Issued August 9, the order was made against a firm called CIAO Group (now rebranded as NuMelo Technology), which trades on markets operated by OTC Markets Group. NuMelo first announced plans for an ICO on July 6, at the time indicating a desire to bring a “digital financial products marketplace” based on blockchain tech to the African market.

ETHLend announces date of LEND token presale and ICO (CryptoNinjas), Rated: B

ETHLend token pre-sale details:

Starting: 25.09.2017 at 12.00 GMT

Ending: 25.10.2017 at 23.59 GMT or when the cap is reached

AMOUNT TO RAISE: 2,000 ETH

TOKENS FOR SALE: 60,000,000,LEND (6% of total sold tokens)

LEND TOKEN PRICE: 30,000 LEND = 1 ETH

(price includes 20% bonus tokens for all pre-sale participants)

Minimum amount to participate: 1 ETH

ETHLend token pre-sale details:

Starting: 25.09.2017 at 12.00 GMT

Ending: 25.10.2017 at 23.59 GMT or when the cap is reached

AMOUNT TO RAISE: 2,000 ETH

TOKENS FOR SALE: 60,000,000,LEND (6% of total sold tokens)

LEND TOKEN PRICE: 30,000 LEND = 1 ETH

(price includes 20% bonus tokens for all pre-sale participants)

Minimum amount to participate: 1 ETH

3 Stocks That Doubled So Far in 2017 (Madison), Rated: B

LendingTree’s efforts have proven immensely successful. In its most recent quarter, the online loan marketplace reported record results both from mortgages and other types of loans, and the number of loan requests jumped by nearly half to 5.4 million. In particular, efforts to expand beyond the mortgage realm have been extremely lucrative, as non-mortgage product revenue more than doubled in just the past 12 months.

United Kingdom

Zopa to refund investors affected by technical glitch (Bridging&Commercial), Rated: AAA

The technical issue has now been fixed and Zopa will be refunding impacted investors the difference between the amount paid and the true value of the loans purchased.

RateSetter in “final stages” of FCA authorisation process (P2P Finance News), Rated: AAA

RATESETTER believes it is in the “final stages” of reaching full authorisation after becoming the last of the main peer-to-peer lenders to be trading on interim permissions.

The platform is the last of the Peer2Peer Finance Association (P2PFA) members still awaiting full permission after ThinCats announced it had received Financial Conduct Authority (FCA) authorisation last week.

Invesco sells £9.6m Ranger Direct Lending fund stake (AltFi), Rated: A

Invesco Perpetual, the asset management giant, has been trimming its exposure to the £243m Ranger Direct Lending fund amid a testing period for the alternative credit investment trust.

The firm is one of Ranger’s largest investors with, until this week, just under a third of total shares in the fund.  This, however, has been trimmed in the past seven days, according to regulatory documents, with Invesco Perpetual’s current holding now down at 27.9 per cent.

Invesco Perpetual, who owns the fund as an income play within their fleet of top equity income portfolios, sold £9.6m worth of Ranger’s stock last week.

London fintech Tail is a cashback platform built on the promise of Open Banking (TechCrunch), Rated: A

London-based Tail is a new fintech startup that offers a glimpse into the promise of Open Banking. This is seeing upcoming legislation in the EU and U.K. force banks to offer third-party developer access to your bank account data — with your permission, of course.

The app, initially available for iOS and serving London only, offers heavy discounts at local places to eat and drink, all linked to the card you pay with and delivered each week in the form of cashback. However, the draw is how seamlessly it all takes place, by being built on top of digital-only challenger bank Starling‘s API, with Monzo integration also in the works.

Hargreaves Lansdown cashes in on (not too much) excitement (FT Alphaville), Rated: A

Back on August 4, the Financial Conduct Authority said it needed to “reassess” the broker’s capital requirements, because of its plans to do things a little more interesting than selling investment funds – such as offering an online cash deposit service, and lifetime individual savings accounts.

That meant Hargreaves had to retain another £50m, scrap its planned special dividend, and reassure the market of its profitability ahead of schedule.

Hence, this morning’s results contain no real surprises. Its 21 per cent rise in pre-tax profit, to to £265m, for the year ending June 30 had been rushed out with the capital announcement 11 days ago, “to allow investors to assess its strong financial and trading performance”.

P2P lenders offering rates up to five times better than mainstream best buys (P2P Finance News), Rated: A

THE MAIN peer-to-peer lenders are currently offering rates five times higher than the best offerings on the mainstream savings market.

It comes as a new challenger bank launched last week called PCF, offering a fixed savings rate of 2.6 per cent.

This may come with Financial Services Compensation Scheme (FSCS) protection, but seven years is a long time to lock up your money for and savers could do better by taking a bit more risk with a P2P platform.

P2P investors can earn up to 6.1 per cent a year for backing consumer loans, even while using an Innovative Finance ISA (IFISA).

End of Line for iFunding? Real Estate Crowdfunding Site May Be Done (Crowdfund Insider), Rated: A

The chatter on Bigger Pockets regarding iFunding has taken a new twist. In a series of public posts investors are referencing a possible bankruptcy for the real estate crowdfunding platform.

According to the posts, a company named Jazco has offered to take over the remaining deals that have funded on the iFunding site.

Fewer Advisors View Robos as a Threat (Financial Advisor IQ), Rated: A

Sixty-six percent of advisors are undecided about whether robos are a positive or negative force for their practice, according to a survey of 102 advisors by U.K.-based Panacea Adviser cited by FT Adviser. Just last year, when Panacea Adviser last conducted the survey, a whopping 89% of respondents said robo-advisors were a threat, according to the paper. The rate of incorporating robos into traditional advice practices is also picking up. While only 2% of advice firms surveyed this year currently offer a robo platform, 8% are in the process of integrating one and 12% are considering doing so, FT Adviser reports.

Buy to Let mortgages and peer to peer lending explored (AXA), Rated: A

Zoopla research from May 2017 discovered that it’s now cheaper to rent than to buy in 54% of UK cities.

Those with good credit ratings could be offered interest rates as low as 3%. If your credit rating is not so great, however, rates can rise to as high as 30%.

Is this the end of fintech as we know it? (Banking Technology), Rated: A

In the age of the internet, fintech dominates finance. In the UK, the sector is currently worth £7 billion, employing around 60,000 people with figures set to increase.

With unseen levels of growth in fintech, it’s important for companies to make sure that they don’t fall prey to the same mistakes their predecessors did. The easiest way to do so is by sticking to regulation standards.

As online banking slowly becomes the norm for managing money, it’s only natural that online banks emerge. Usage of online banking has more than doubled since 2007, kindling a banking revolution through which the UK has lost 40% of its banks and building societies since 1989. Online banks offer two key services: better banking deals and superior user experience.

Challenger banks like MonzoAtom and Starling have been making a lot of noise in this new banking arena. In 2016, Monzo raised £1 million in just 96 seconds in the fastest crowdfunding campaign ever. Atom Bank established its base outside of London, and Starling is now expanding outside the UK.

LendInvest signs up former Interbay BDM (Mortgage Strategy), Rated: B

Specialist lender LendInvest has appointed Andy Virgo (pictured) as its first BDM for the South of England.

Virgo will be responsible for sourcing deals across the South of England and joins LendInvest from Interbay Commercial, the commercial mortgage lending arm of OneSavings Bank, where he was a senior BDM.

ONLINE LENDER QUIDIE UNVEILS NEW MARKETING PUSH (ResponseSource), Rated: B

Croydon based online lending company, Quidie has launched a new digital marketing campaign to support sales of its new low rate short term loan products (of up to £1,000 with a fixed interest rate of 180%*) which are available to qualifying UK consumers exclusively online via the website.

The new campaign includes a 40 second video ad starring up and coming rapper and actor Craige Middleburgh.

London-based Integrated Marketing Agency Brandnation was responsible for all campaign creative and production. Brandnation is also handling all supporting PR and Social Media activity for the campaign.

China

The Score On Tencent’s Credit Scoring (PYMNTS), Rated: AAA

Hong Kong Stock Exchange to Launch Blockchain-Powered Market in 2018 (Coindesk), Rated: A

The Hong Kong Stock Exchange (HKEX) is planning to launch a blockchain-powered private market aimed at helping smaller firms obtain financing.

HKEX chief executive Charles Li detailed the plan, which would play out through a separate venture dubbed HKEX Private Market, in an August 1 note.

China’s biggest unicorns are a different breed (NASDAQ), Rated: A

China boasts 695 million mobile web users and shops more online than anywhere else in the world, with e-commerce sales likely to top $1.1 trillion this year, according to eMarketer, or more than twice the outlay in the United States.

China’s startups confront a particular set of regulatory risks. A crackdown on peer-to-peer lending and online “wealth management products” has probably delayed flotations by both Ant and Lufax, for example.

And Didi, which now has no serious local rivals, recently took in more than $5 billion from Japan’s SoftBank and others.

Overall, VC and private equity funds ploughed 384 billion yuan ($57.5 billion) into startups in the first half, according to Zero2IPO, not much changed from the previous year’s frantic pace. Local giants Baidu, Alibaba, and Tencent have deep pockets and want to keep emerging threats under control. They boast stakes in or ties to more than half of the top ten. SoftBank is also eyeing China as it invests a $93 billion mega-fund.

European Union

Fintech CEO says tech giants like IBM may go on M&A ‘shopping spree’ for start-ups in 2018 (CNBC), Rated: A

Tech giants like IBM and Capgemini could go on a mergers and acquisitions “shopping spree” for financial technology (fintech) start-ups next year, the chief of one such start-up has told CNBC.

new European directive, which becomes effective in January 2018, would enable third party businesses to monopolize on banks’ software and customer data to build new products – something referred to in the fintech world as “open banking”.

Döderlein, whose company helps develop mobile payments products for 17 banks, said that this would result in big, mainstream tech companies snapping up smaller fintechs to harness the newer technologies they have on offer.

International

Visa’s Latest Big Bets in Fintech (The Motley Fool), Rated: AAA

When extolling the virtues of long term, buy-and-hold investing, it’s hard to think of a better example than Visa Inc. (NYSE:V). Since going public in March 2008, Visa’s shares have returned well over 600%, crushing the market in the process.

Broadening its partnership with a Pal

Was it really just a little over a year ago when, after a frosty and testy co-existence as business frenemies, that Visa and PayPal Holdings Inc (NASDAQ:PYPL) first struck a deal covering their North American business?

For starters, in Europe, Visa Checkout will automatically be enabled at any merchant utilizing PayPal’s Braintree payment processing. More impressively, however, is that, since PayPal holds a banking license in Europe, Visa will be issuing PayPal debit cards in Europe.

Kleaning up with Klarna

Visa also recently announced a strategic investment in and a new partnership with Klarna, a European online payments company that offers credit and flexible payments during the checkout process at online merchants.

Going to the market with Marqeta

Finally, in its most recent fintech deal, Visa announced a multiyear partnership and strategic investment in Marqeta, an open API (application programming interface) card issuer platform. Marqeta offers a number of payment solutions for issuers for on-demand delivery, alternative lending, the disbursement of earnings and rewards to card holders, advance cost controls, and on-demand virtual and tokenized cards.

Foolish takeaway

The payments industry is changing rapidly, with fintech start-ups and larger financial institutions all wanting a bigger piece of the pie. That is why Visa shareholders should take heart that the company is making constant investments to ensure it gives its clients and card holders the best payment experience possible.

The 10 largest P2P and marketplace lending deals of Q2 2017 (AltFi), Rated: AAA

The three months of this year, from April to the end of June, was a particularly active period for fundraising in the space. The top ten deals to marketplace lending companies received a combined investment total of $658m in the second quarter of the year, which represents 84 per cent of the total capital committed to deals in the sector, according to data provider Fintech Global.

The largest deal in Q2 went to Chinese P2P lender Tuandaiwang which raised a whopping $262.6m of private equity funding in May. This was the only marketplace lending company in Asia to feature in the top ten deals.

Fintech: Why It Matters So Much to Your Investment (FX Daily Report), Rated: A

In their latest report, Accenture established that international investment in fintech blast through the roof in just a couple of years. From $ 800 million in 2008, the figure has moved up to $ 12 billion by the onset of 2015. In Europe, the growth rate rose by 215% to $1.48 billion between 2008 and 2014. This figure is expected to continue going up and having a huge impact on individual businesses and institutions.

Transferring cash within and outside the country had made the traditional methods complicated, expensive, and unrealistic. However, latest technologies have made international cash transfer easy, transparent, reliable, and highly secure. Using online wallets such as Skrill, GOOG, and others, money is transferred within seconds and accounts maintained in top conditions.

India

Fin-tech startup DigiLend raises funds from InCred, Fullerton (VC Circle), Rated: AAA

Mumbai-based fin-tech firm DigiLend Analytics & Technology Pvt Ltd has raised nearly Rs 2 crore ($311,939) from two non-banking financial services companies, filings with the Registrar of Companies show.

Mumbai-based InCred Finance and Temasek-owned Fullerton India Credit Company Ltd have made the investment, the filings indicate.

DigiLend will use the funds to pilot its product in the personal loan segment, Dattani said.

Asia

Funding Societies Joins Prestigious IACPM and Welcomes Risk Expert Terry Tse to Board of Directors (Markets Insider), Rated: AAA

Funding Societies has become the first and the only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a prestigious forum for credit risk management. In addition, risk expert Terry Tse joins Funding Societies’ Board of Directors. Mr. Tse is the former Chief Risk Officer of Dianrong — one of China’s leading P2P lending platforms.

Together with sister platform Modalku, Funding Societies is currently the biggest SME loan crowdfunding platform in Southeast Asia, with operations in SingaporeIndonesia, and Malaysia. Recently, Funding Societies has also become the only Southeast Asian digital lender to be selected by CB Insights to the Fintech 250, a list of 250 top private companies changing the face of financial services around the world.

Canada

GOLDMONEY REPORTS FIRST QUARTERLY PROFIT OF $ 3.3 MILLION, PLANS TO OPEN PHYSICAL BRANCH IN TORONTO (Betakit), Rated: AAA

Toronto-based Goldmoney, a gold-based payments and savings platform that allows users to acquire, store, and spend gold that is stored in a secure vault, has released the financial results for its first quarter of 2018, which ended on June 30, 2017.

Goldmoney reported an adjusted profit of $3.3 million and an IFRS profit of $2 million. The company said this is the first time it’s reported a quarterly profit in Goldmoney history.

Goldmoney also reported a quarterly revenue of $125 million, suggesting improvement from $112 million year-over-year (YoY).

Canadian Small Business Growth Continues (Lessors), Rated: A

PayNet, the premier provider of credit assessments on private companies reports that the PayNet Canadian Small Business Lending Index (CSBLI) increased 1% to 123.8 in June 2017 from 122 in May, the third month in a row of year-over-year increases. Compared to May 2016 the CSBLI is up 5%.

The Construction sector investment increased 4% which continues to reflect improvements in housing starts and prices throughout much of the country. Accommodation and Food fell 5% while all other segments were within 3% of May 2017. Growth geographically remains broad based as well with British Columbia and Quebec showed the largest increases from May, both up 3%, while Atlantic Canada exhibited the largest decrease (3%).

The financial health of Canadian companies continues to maintain stability with relatively few signs of deterioration of financial health. The PayNet Canadian Small Business Delinquency Index (CSBDI) 31-180 days past due held steady at 1.09% in June from May 2017. Compared to June 2016, delinquency decreased (10 bps).

Agriculture delinquency decreased by (11 bps), the largest monthly decrease amongst all industries in June.

Africa

Nigeria’s Fintech industry has grown by over 90 % in 4 years (Business Day Online), Rated: AAA

In 2009, we began to look at how digital  is affecting the economies and consumers. The economy has changed, the world has changed. We now live in global, digital economy and because of that, one of the key things that makes money gets to businesses is through payment.

Fintech in Nigeria has come to stay, but what is your assessment of the industry in Nigeria today?

We are coming a bit late but the nation is doing so well compared to other nations. In the last 3-4 years the industry has grown by over 90 percent. It is said that there is over 400 Fintech organisations working with Africa Fintech organisation. These are all entrepreneurs and different groups providing solutions.

Are you saying that  Fintech has impacted  hugely on the economy, assist to solve clients’ challenges and provide job opportunities?

Imagine the 400 Fintech firms working with Africa Fintech Organisation and many of them are at infancy.  And each of them has its own niche of providing  solution to a particular sector. This is the new economy. Before now we had an economy that is based on crude oil, manufacturing and others, but the new economy is digital.

Are there examples of countries that employed Fintech to drive their economy?

Fintech  manifests in different forms and that is why speakers at the forum said that they do not see Nigeria being a follower in Fintech market. They see Nigerian being a leader because it is leading its own form of Fintech which is different from countries like S/Africa.  Though South Africa is doing so well in Fintech with its peculiar needs and penetration of banks to customers.

Nigeria is now growing from a combination of these models. But there are some models, where Nigeria is yet to get to which have been done so well in other markets. For instance, Econet which has worked very well in Zimbabwe where the number of people who are insured through the mobile platform are higher than the number of people insured in Nigeria. Under Fintech, people can borrow money like in Kenya without going to the bank because the whole system can read all your transactions as the system knows how money comes in and how it goes out. So when you ask for loan, they know that you are trustworthy and then they can lend you money easily.

Shivani Siroya of Tala (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Shivani Siroya, the CEO and founder of Tala. While Tala is headquartered in southern California its lending operations are focused on the developing world. They launched in Kenya back in 2014 and in three short years they have become the #5 most downloaded app in that country. How they have done this is a fascinating story.

Authors:

George Popescu
Allen Taylor

Monday August 14 2017, Daily News Digest

OnDeck net interest margin

News Comments Today’s main news: Varo Money applies for a bank charter. This news could blight SoFi for a time. MPOWER Financing launches $100M debt funding round. Zopa updates on IT glitch, disappearing money. JD Finance opens VC fund for early-stage projects.SoftBank invests in Flipkart.Money Forward to IPO in Tokyo. Today’s main analysis: PeerIQ on PayPal, LendingClub, and OnDeck. Today’s […]

OnDeck net interest margin

News Comments

United States

United Kingdom

China

European Union

International

India

APAC

Middle East

News Summary

United States

Fintech Firm Backed by Warburg Pincus Files for Bank Charter (WSJ), Rated: AAA

Varo Money Inc., a digital banking startup backed by private-equity firm Warburg Pincus LLC, last week formally applied for a national banking charter and deposit insurance, the company said. The filings aren’t public yet.

Taking those steps could put Varo—which now partners with banks to provide services for its mobile banking application—on the path to becoming a full-fledged, regulated bank. That means it would take deposits, pay interest, make loans in any state, and issue cards, all through smartphone apps.

Social Finance Inc., known as SoFi, is seeking to become a Utah industrial bank. A group of Silicon Valley venture-capital firms recently bought stakes in a New Jersey bank, CRB Group Inc., that partners with fintech software firms.

Varo is going a step further, seeking a national banking charter from the Office of the Comptroller of the Currency, as well as the ability to take deposits from the Federal Deposit Insurance Corp.

Another Silicon Valley Start-Up Faces Sexual Harassment Claims (The New York Times), Rated: AAA

Social Finance, a hot financial start-up, is the latest prominent Silicon Valley company to face accusations that it turned a blind eye to sexual harassment.

The former employee who filed the suit, Brandon Charles, worked at SoFi for only a few months this year. But the lawyer handling the case, Robert Ottinger, said that he expected to file another lawsuit next week claiming broader mistreatment of other SoFi employees and seek class-action status.

A spokesman for SoFi, Jim Prosser, said that the claims by Mr. Charles were “investigated in depth by the company and found to have no merit. We will vigorously defend ourselves against any claims otherwise.”

PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings (PeerIQ), Rated: AAA

PayPal acquired Swift Capital, a provider of working capital to small business owners. PayPal cited Swift’s talent and capabilities as rationale for the transaction, as well as a desire to strengthen PayPal’s overall merchant value proposition. We note that PayPal invested in LendUp just a few weeks ago. The payment processor appears keen on bulking up its lending footprint to compete with rivals Square, Affirm, and Amazon Lending.

On Thursday, it was announced that KKR agreed to buy Australian non-bank lender Pepper Group for $518 Mn. Vyze, which offers a tech solution for point-of-sale financing, announced a $13 Mn investment led by Austin Ventures. Lastly, Coinbase, the cryptocurrency brokerage and exchange, has raised $100 Mn at a $1.5 Bn valuation.

Lending Club Beats Estimates

After a rough 2016, Lending Club has regained investor confidence with net revenue and originations at their highest levels since Q1 2016. As of Friday’s close, Lending Club’s share price was at $5.90, up 20% from its recent low of $4.92. A key success in Lending Club exceeding expectations was the CLUB securitization which netted $3.7 Mn–a key driver of Lending Club’s $4.5 Mn in Adjusted EBITDA this past quarter.

  • New revenue stream: Lending Club plans to continue with one securitization per quarter, with expectations of a prime deal in Q3. They plan to contribute approximately $100 Mn in prime loans off the balance sheet for Q3’s deal. 
  • The CLUB securitization netted $3.7 Mn and was highly oversubscribed: Through sponsoring the security, Lending Club earned ~$600k, via a combination of selling servicing rights, pricing above book value, and netting out costs. The other $3.1 Mn came from $4.6 Mn in interest income earned while accumulating near-prime loans, less $1.4 Mn in write downs as principal was paid off.
  • Increased bank participation: Lending Club saw 44% participation from banks in Q2 which decreases its “effective funding cost” and shows confidence in their loans.

OnDeck

OnDeck moved to a positive adjusted Net Income ($1.5 Mn) and generated gross revenue of $86.7 Mn (up 25% year-over-year). OnDeck has focused on tightening credit underwriting and cost rationalization; consequently, originations were down for the quarter to $464 Mn (from $590 Mn last year). OnDeck has successfully executed its $45 Mn cost rationalization plan and expects operating expenses of ~$40 Mn for each of the next two quarters.  

Net Interest Margin and Net Interest Margin after Losses have fallen to their lowest points in recent times. A large contributing factor to this is Net Charge-Offs by quarter which has hit a recent high of 18.5%. We would expect charge-offs to decline in future quarters and NIM to expand due to management actions to tighten credit underwriting and cost rationalization.

Source: PeerIQ, Bloomberg
Source: PeerIQ, Bloomberg

MPOWER Financing Launches $ 100 Million Debt Funding Round (Markets Insider), Rated: AAA

MPOWER Financing (www.mpowerfinancing.com), an innovative fintech company and provider of educational loans to high-potential, international students, has launched a $100 million debt financing round to meet its growing pipeline of loan applications.

MPOWER Financing also announced that Mike Davis, the company’s co-founder, has assumed the position of chief investment officer, replacing Alonso Garza, who will become a member of the company’s board of advisors and will serve as consultant for LATAM business and capital development out of Mexico City.

Initial coin offerings have raised $ 1.2 billion and now surpass early stage VC funding (CNBC), Rated: AAA

The amount of money raised by cryptocurrency and blockchain start-ups via so-called initial coin offerings (ICOs) has surpassed early stage venture capital (VC) funding for internet companies for the past two months.

The total amount of money raised via ICOs in April was just under $100 million, but by May this had more than doubled to almost $250 million, according to Coinschedule, a website that tracks such data. In June, ICO funding had hit over $550 million and it was the first month ever that it surpassed angel and seed VC funding.

Angel and early VC funding in June was just under $300 million, Goldman noted, according to CB Insights data. In July, ICOs were just over $300 million, while angel and early VC funding was just over $200 million.

 

Fundrise Adds National For Sale Housing eFund to Growing List of Investment Options (Crowdfund Insider), Rated: A

Fundrise, an online investment platform for real estate, has filed for a National For Sale House eFund. Fundrise has previously announced targeted eFunds dedicated to specific metro markets. Fundrise will be offering up to $50 million in common shares to the public at $10.00 per share. The minimum investment in our common shares for initial purchases is 100 shares, or $1,000 based on the current per share price. The offering circular has all the information you may want to review and this specific eFund is not yet available on the Fundrise real estate investing platform.

Fundrise National For-Sale Housing eFund, LLC was formed to acquire property for the development of for-sale housing in metro areas other than Los Angeles and Washington, DC – where Fundrise currently has targeted eFunds.

LendingClub CIO: Delinquencies Decline as Marketplace Lending Model Continues to Improve (Crowdfund Insider), Rated: A

The executive explains that part of the power of the marketplace lending model is the iterative nature of the loan making process. Over time, data generated from lending provides a Kaizen like process of continuous improvement. This allows LendingClub to anticipate and adapt faster on behalf of both borrowers and lenders.

Projected investor returns are also largely unchanged from the first quarter ranging from approximately 4% to 9%.

Source: Crowdfund Insider

RealtyMogul Update: Over $ 290 Million has Been Invested via the Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: A

RealtyMogul has now raised over $290 million online from over 135,000 investors.  RealtyMogul has returned more than $65 million to investors with zero principle lost, according to management. RealtyMogul also operates a 1031 exchange that allows current investors in real estate to defer capital gains tax on the sale of a property if they reinvest the proceeds in another qualifying property.

Jilliene Helman: The are currently 11 investments in MogulREIT I, which recently declared its twelfth consecutive month of 8% annualized returns on investment.

Jilliene Helman: With increasing demand for housing across the country, we see a huge opportunity in the multifamily marketplace. As millennials and Gen Z enter the workforce, they are of prime age and income for renting, and their preference to maintain a flexible lifestyle supports renting instead of buying a home.

Opportunities exist in many geographies around the country, and while the underwriting process is very complicated, some factors we look for are favorable business climates, an upward trending influx of young people and strong job growth in key industries. Markets that meet these criteria include Atlanta, Dallas, Nashville, Raleigh and Salt Lake City.

Application fraud continues to escalate, causing more and more companies to seek biometric solutions (PR Newswire), Rated: A

LexisNexis® Risk Solutions, a part of RELX Group, and BioCatch, the behavioral biometrics industry leader, announced today that they are working together to help companies in all industries bolster efforts to stymie fraud scenarios, like application fraud, a rapidly-growing issue. According to the LexisNexis Risk Solutions card issuer fraud study, application and account takeover fraud represents 40 percent of total fraud losses.

As a result of this new relationship, companies will receive additional risk scores through the LexisNexis® Risk Defense Platform that expand on the data typically provided by the customer (which can be compromised) by analyzing how the user behaves (which is innate). During the application process, this solution monitors behavior and is able to discern between a real user and an impostor. This approach is achieved by recognizing normal user behavior and fraudster behavior, which includes Application Fluency, how well a user knows the site; Navigational Fluency, how well a user knows various computer functions, and Data Familiarity, how well a user knows the information they are entering.

Integrating behavioral biometrics to detect criminal behavior has proven to be very successful and has already prevented major financial losses. For example, BioCatch was able to save a major Latin American e-commerce retailer more than $200,000 a month against new account fraud, with nearly $2 million saved in the last Black Friday weekend alone.

Online lender expanding into Utah, plans to hire 500 in 5 years (KSL.com), Rated: A

In a move announced Thursday, San Francisco-based financial-tech company Earnest will expand into Utah, with plans to spend $5.6 million on a new office and hire 500 employees over the next five years.

Marketplace lending sobering needs more time. (The Financial Revolutionist), Rated: A

The fact that OnDeck and Lending Club posted upbeat Q2 earnings this past week is a constructive step. But in the wake of Goldman’s growing Marcus juggernaut, Affirm’s point-of-sale traction, Softbank’s $250-million infusion into Kabbage and ongoing rescue financings courtesy of Asian conglomerates and US credit hedge funds, it’s premature to suggest that the good times are back for the publicly traded former wunderkinds. And for that, we blame the 2014-15 fintech hype machine, which led the consumer and small business marketplace lending sector to achieve skyscraper technology multiples in the first place. Cleaning up after a wild party is never fun, and given the former frenzy of online lending start-ups, it’ll take more than a decent quarter to make things right.

A road map for reclaiming the digital customer experience (American Banker), Rated: A

The rapid pace of upheaval in banking and payments today is leading to many innovative non-banking customer experience ecosystems, with banks largely serving a utility function.

The payments process is increasingly a minor, hidden step in the chain. With ongoing digital innovations, nonbanks could take over more of the payments space, too, as well as other financial services. But more importantly, banks stand to lose the all-important customer engagement layer entirely unless they reinsert themselves into the customer experience.

Not only can banks easily orchestrate and field transactions across various industries that the customer interacts with, but banks are best-positioned to provide insights that help customers move closer to their overall goal of financial wellness. For example, in addition to offering card-linked retail promotions, banks can help customers control or channel their spending in the context of their financial status and goals.

Customer experiences pertaining to payments, retail and financial health still operate to a large degree independently of each other. Each interaction in these ecosystems builds on a distinct silo from the customer’s overall financial profile. A fragmented customer experience means that our financial goals are fragmented, our shopping wish lists are fragmented and our planning is fragmented. As a result, customers have unmet needs in terms of maximizing their financial well-being, and must regularly look for reinforcement from external sources to validate the personal finance recommendations of walled-off ecosystems.

Meet Brittany Laughlin, ‎Partner at Lattice Ventures (Vator.TV), Rated: A

Brittany Laughlin is a ‎Partner at Lattice Ventures.

Laughlin served as General Manager at Union Square Ventures, an early stage venture capital firm with $1B+ under management. Some portfolio companies include Etsy, Twitter, SoundCloud, Tumblr, Lending Club, and Kickstarter.

VatorNews: What is your investment philosophy or methodology?

Brittany Laughlin: So my perspective, even before staring Lattice, which was over a year ago, was just on how companies can successfully scale and grow.

The philosophy at Lattice is making sure that the early stage entrepreneurs get the support, the connections, the talent, and the long-term perspective that they need to be successful over a long period of time.

VN: What do you look for in companies that you put money in? What are the most important qualities?

BL: In terms of the entrepreneurs, we look for people who have some attachment to the problem. We look for a kind of obsession with the problem because it’s going to be a long road ahead and if they don’t have that passion early on for what they’re solving then it’s really hard to keep them motivated as times get harder as they grow.

We look for entrepreneurs that are able to build a team, because that’s such a key component: no business grows without a team. If the entrepreneur doesn’t have a certain skill, they can show that there are people around the table that do. We want them to be smart, hardworking, passionate, things that are required in any entrepreneur, but those are things we specifically hone in on and make sure they have.

VN: These days a seed round is yesterday’s Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. So what are the attributes of a seed round vs a Series A round?

BL: That’s a question we’ve been asking ourselves too. As seed investors, we’re speaking to our companies about what they need to raise the next round.

If you’re a SaaS-based business, they’re going to compare your revenue multiples to try to come up with a valuation that way. The rumored metrics for SaaS business, it used to be $100,000 MRR and now that’s creeping to $200,000. I think the reason you’re seeing the larger A rounds is that the businesses have a lot more traction than they did a few years ago so the bar is higher to meet those traction goals, and that’s why the funding reflects that.

I think sometimes taking on too much money too early creates an artificial hurdle for that company where, if they don’t need it, they’re in a worse place than if they took less money, proved some traction, and then returned to market. They can always raise more if they had good growth versus trying to get a big lump sum at the beginning and then, only when they’re out of runway, really looking hard at where their numbers are or where they’re going. They can sometimes get stuck in between.

Can Investors Profit From Peer-To-Peer Lending? (Stock Investor), Rated: A

The question is whether LC could become a buying opportunity for investors anytime soon.

As a result, P2P lenders are able to provide their services more cheaply than banks and other traditional financial institutions. P2P lenders therefore have the ability to achieve higher returns compared to what might be offered by banks. Borrowers can borrow at reduced interest rates even when a P2P lending company’s fee is included.

However, P2P lending is not without its risks. There is a greater risk that the borrower defaults on his loan, since the lower interest rates of P2P lending appeal greatly to those who have low credit scores.

PolicyGenius’ road to traction. (The Financial Revolutionist), Rated: A

Today, Fitzgerald doesn’t get shown the door so abruptly by investors or major insurance incumbents, now that PolicyGenius has become a significant force in introducing life and other types of insurance to consumers eager to comparison shop. However, the “Kayak for insurance” metaphor that is sometimes attributed to PolicyGenius isn’t welcomed by Fitzgerald. That’s because shopping for insurance can be a complicated process with no hard and fast rules.

Alternative Investing Platforms Partner with VIA Folio to Gain Access to Investors and Online Brokerage, Clearing and Custody (PR Newswire), Rated: A

Alternative investing platforms now use VIA Folio’s fully integrated, online offering and brokerage platform to improve investor engagement and access to alternative assets, such as Reg A+ IPOs, Reg D private debt and equity and unlisted REITs.

The alternative investing platforms working with VIA Folio include:

  • ALTZ Investment Strategies – enables access to alternative equity and debt investments, with offerings for Reg D-accredited investors that include real estate, renewable energy, private equity, Reg A+ IPOs and liquid alternative investment opportunities.
  • BANQ® – an electronic investment banking platform for small cap IPOs, public offerings and Reg A+ offerings and placements. It gives advisors exposure to rapidly growing sectors and new technologies, and provides investors with liquidity through dividends or the public markets.
  • Boustead Securities, LLC – an investment banking firm that executes and advises on IPOs, mergers and acquisitions, capital raises and restructuring assignments in a wide array of industries, geographies and transactions, for a broad client base.
  • Cambria Capital – a technology-driven investment bank that uses its institutional investor relationships, and high-net-worth and retail investor accounts, to raise capital for growth-stage companies throughReg A+ and other types of public and private offerings.

Marketplace Lending News Roundup – August 12 (Lend Academy), Rated: A

Lending Startup Earnest Is Working With Barclays to Find Buyer from Bloomberg – It will be very interesting to see who ends up buying online lending platform Earnest.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal from Bloomberg – Emily Chang interviews LendingClub CEO Scott Sanborn to discuss credit card debt, the economic cycle and more.

Big banks kick small-business lending into high gear from American Banker – Banks have been steadily increasing their approval rates for small business loans.

What JPMorgan’s latest moves reveal about online lending’s future from American Banker – Good piece by Kevin Wack giving more details of the Chase OnDeck partnership.

ETHLend preparing for ICO (Bankless Times), Rated: A

A decentralized peer-to-peer lending application built on top of the Ethereum Network is preparing for its initial coin offering.

ETHLend uses blockchain technology to provide secure and transparent lending for people across the world, with the goal of eliminating interest rate differences by injecting liquidity into local markets by using blockchain technology to enable secure and transparent lending.

Best Fintech Reports of 2017 (Crowd Valley), Rated: A

According to Bloomberg, more than $8 Billion has been raised in Fintech so far in 2017. Also, 5 companies have already joined the “Unicorn” status with values over $1 Billion. We have compiled a list of best Fintech reports for 2017, from some of the leading names in the industry.

  1. Capgemini – The World Fintech Report 2017
  2. PwC – Global Fintech Report 2017
  3. EY – Fintech Adoption Index
  4. KPMG – The Pulse of Fintech Q1 2017 | The Pulse of Fintech Q2 2017
  5. CBInsights – Global Fintech Report Q1 2017 | Global Fintech Report Q2 2017

Insurtech Reports:

  1. PwC – Global Insurtech Report 2017
  2. Capgemini – Top Ten Trends in Insurance 2017
  3. Accenture – The Rise of Insurtech 

Payments Reports:

  1. Capgemini – World Payments Report 2017
  2. Nordea – Future of Payments 

Peer to Peer Roundtables can help your small business grow (The Shreveport Times), Rated: A

LED’s Peer to Peer Roundtable is a 10-month series of roundtable sessions where 15-18 small business owners meet to share their experiences and learn from one another in a supportive environment. Each roundtable is a problem-solving session that addresses the issues impacting your business right now.

Applications are currently open for small businesses and we invite your business to apply today.

Robo advisors look beyond wealth creation to automated personal financial advice (AITopics.org), Rated: B

In addition to building an investment strategy based upon investment and risk preferences, the next generation of automated financial advisor would need to fully understand customers’ goals and how they prioritise some over others; an emotional dislike of being in debt may see the client seek to pay off cheaper debt and eschew potentially higher yielding investment opportunities, just to get it off their back.

Introducing… Fintech Insider News (LinkedIn), Rated: B

We at 11:FS and Fintech Insider have launched Fintech Insider News – a dedicated news and commentary platform for our people to come together and discuss what’s new and interesting in the financial services industry.

FHA Slips a Little With Millennials (National Mortgage Professional), Rated: B

Several months ago Ellie Mae started tracking loans made by millennials.  When they started, 36% of millennials chose an FHA loan.  That has dipped to 32% in the latest survey.  Conventional loans are now at 63% for that age group.  When one considers the skimpy loan limits in many areas and the cost of FHA insurance vs. PMI when you have a high score, this is not surprising.

United Kingdom

Zopa provides update on ‘disappearing money’ IT glitch (P2P Finance News), Rated: AAA

OPA has said that it has fixed a technical issue that resulted in a small amount of money seeming to have disappeared from some investors’ accounts.

The peer-to-peer consumer lender said in a blog post on its website on Friday that the glitch had occurred due to recent changes to how they value loans on the secondary market.

Update on loan sale pricing (Zopa), Rated: AAA

One of the ways investors can access their money early is by selling active loans to other investors on the secondary market. When investors sell their loans we work out their value, and compare them to new loans.  If the loans being sold are worth less than new loans, the seller compensates the buyer for the difference, which is reflected in the loan’s price. This happens as part of the loan sale process, which we manage for you.

Due to a technical issue, some investors may have paid too much when buying or selling loans.

Positive Lending to join Landbay’s panel of distribution partners (LendIt), Rated: AAA

Landbay, the specialist buy to let mortgage lender, is today announcing a new partnership with Positive Lending, the latest specialist distributor to join its panel of distribution partners.

Landbay will help Positive Lending service its professional buy-to-let landlord clients with bespoke mortgage offers, including products for HMOs, Multi Unit Freehold Blocks and expat borrowers.

The partnership will also give Positive Lending access to Landbay’s online intermediary portal. This includes features such as case tracking and a property portfolio key, which will allow brokers to enter detailed analysis of a landlord’s full portfolio in advance of September’s PRA portfolio landlord changes. Once brokers have completed the online application process, Landbay issues an Offer in Principle within 48 hours and typically completes loans within 21 days.

Flender looks to raise £2m from institutional friends (P2P Finance News), Rated: A

SOCIAL lending peer-to-peer platform Flender is planning a funding round to prepare for its launch in the UK.

The business and consumer lender, which lets borrowers share their fundraising campaigns on social media, is raising £2M in equity funding and looking for more in debt funding.

Borrowers can create and share a personalised link to their campaigns on social networks, or invite selected individuals to contribute to their loans directly by email.

Ablrate Receives Rapid Response to Recently Launched IFISA (Crowdfund Insider), Rated: A

Asset-backed lending platform Ablrate announced it has received a rapid response following the launch of its new flexible IFISA. The online lender revealed the exciting news on Twitter.

The launch of Ablrate’s flexible IFISA comes less than six months after the online lender received full authorisation from the Financial Conduct Authority (FCA).

Prior to the IFISA, the company revealed it saw an 850% increase in loan volume within the last year.

Mandatory bank referral scheme has delivered £4m to small businesses so far (AltFi), Rated: A

At inception, the mandatory bank referral scheme was terribly exciting. The plan was simple enough. Big banks would direct small business loan applicants which they had rejected to neutral finance platforms, which would then find a more suitable funding solution for the applicant, using matchmaking technology. Those solutions were to come from a whole host of potential providers: from peer-to-peer lenders, to building societies, to challenger banks.

The scheme took a long time to put together. Announced by government in August 2014, it wasn’t until November last year that the scheme finally went live. Initially there were three designated finance platforms: Funding Options, Funding Xchange and Bizfitech.

New opportunities in P2P buy-to-let (MoneyWeek), Rated: A

The big story for the UK’s alternative-finance sector is how many platforms are beginning to look less than “alternative”: Zopa is getting a banking licence, while Funding Circle’s deal with fast-food titan JustEat – to supply lending capital to takeaway food businesses – feels very much like the commercial banking relationships of old. But what has most caught my eye is peer-to-peer (P2P)  property-lender Landbay: more than £30m of its buy-to-let mortgages have been included in a large securitisation of loans with an AAA rating. 

Digital Micro-Lender Oakam Announces Julie Haugen as Chief Product & Marketing Officer (CCR Magazine), Rated: B

Oakam, a digital micro-lender for the UK’s unbanked and underbanked consumers, has appointed Julie Haugen to Chief Product & Marketing Officer. Most recently, she was Oakam’s Head of Digital Strategy & Customer Experience, playing an instrumental role in the digital transformation of the business. In her new position, Julie will drive customer-led digital product innovation through closer alignment of Oakam’s marketing and product teams.

Julie has played a central role in Oakam’s digital growth over the past two years, including the launch of its award-winning mobile app in 2015, and the subsequent rollout of Oakam Grow in 2017.

Firm advises on significant retail bond issuance by LendInvest (Simmons&Simmons), Rated: B

International law firm Simmons & Simmons has advised LendInvest Limited on the establishment of a £500m Euro Medium Term Note Programme for its subsidiary LendInvest Secured Income plc, and on the issuance of £50 million 5.25 per cent Notes due 2022.

China

Jingdong Finance also do the investment? Grilled a Pa “1000 tree capital” past lives (Huxun), Rated: AAA

On the Thousand Tree Capital, Jingdong Financial said, Thousand-tree capital investment target for the angel turn round A start-up company, the core idea is the data for the investment decision-making engine to the public ecological and financial technology for the post-support, through investment A small proportion of the shares, not too much in the strategic and operational restrictions and interference with the investment enterprises, and ultimately to be invested with enterprises to grow together to share the long-term growth in China’s consumption of the purpose of the dividend.

Online lenders limit the withdrawals in the name of rectification, Is that normal? (Xing Ping She), Rated: A

Recently, there have been a number of online lenders having long-term restrictions on withdrawals in the name of wed site upgrades and the bank depository connection. Many industry insiders said that it is abnormal , and investors need to be vigilant.

Industry insiders also warned that the centralized release of compliance pressure lead the industry to the “detonation” risk period. If the period of delay in payment is over one week, you should be extremely vigilant about the risk of running.

51 announced the launch of one billion credit card industry investment funds (epaper), Rated: A

The new 51 billion credit card industry investment fund, will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies (51 credit card industry investment funds), will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies Expand the layout of ecological investment. As early as the beginning of 2016, 51 credit card has been in the Internet financial industry upstream and downstream layout of a number of projects. As of the press conference, has accumulated 15 investment projects, of which three in the investment projects have been recognized by other capital, access to follow-up financing.

China preps central clearing house for mobile payments providers (Finextra), Rated: A

The People’s Bank of China is set to make digital payment firms such as Ant Financial and Tencent use a new central clearing house, a move which will see companies forced to share transaction data with rivals.

China has become the world’s mobile payments leader, with non-bank providers handling nearly $15 trillion in transactions last year, according to a central bank unit.

China Sets up Centralized Clearing Platform for Online Payments (Crowdfund Insider), Rated: A

The People’s Bank of China, the country’s central bank, has required all banks and third-party payment institutions to connect to a unified platform by June 30 of 2018 to ensure effective regulation and transaction security.

The new platform, dubbed Nets Union Clearing Corp., is aimed at enhancing supervision of the country’s expanding online payment market. The platform was set up by 45 companies, including the PBOC which own a 12% stake in the platform.

European Union

German Fintech Startup Acquires Rival as Dealmaking Heats Up (Bloomberg), Rated: AAA

Deposit Solutions GmbH, a Hamburg-based company that enables consumers to move their savings around a network of 15 European banks to find the best interest rate, today acquired Savedo GmbH, a Berlin startup in the same field. The terms of the deal, which Deposit Solutions announced in a statement, were not disclosed.

Lenders and other corporations participated in almost a third of the funding rounds for European financial technology startups in the second quarter, a 31 percent jump from the same period in 2016, according to CB Insights, a New York-based research firm.

In an April report produced by PricewaterhouseCoopers, half the banks surveyed worldwide said they’re planning outright acquisitions of fintech firms. That same month, BNP Paribas SA purchased Compte Nickel, a digital bank in France, for 200 million euros ($236 million).

EU FINTECH REGULATION, MOBIZ PRESIDENT & OLAMOBILE (Delano), Rated: B

  • The European Banking Authority (EBA) has called for fintech regulation to be harmonised across Europe. A report published on its website from an analysis exercise carried out on 282 fintech operators in 24 member states in spring found 31% of companies reviewed were not subject to any regulatory regime.
International

10 MOST DEMANDED SECTORS FOR A FINTECH DEVELOPER (Mobil Unity), Rated: AAA

In 2015, fintech hit $19 billion in total, and by mid-August 2016 global fintech funding had already reached $15 billion. Later, by September 2016, there were over 1,000 fintech firms worldwide and their value made $867 billion. PaymentGenes predicts that already by 2019, 5 billion people will be making digital payments. Moreover, 72% of the consumers of the financial services already use digital channels to open checking accounts, so banking technology in this case plays a major role. The article on Business Insider outlines that major fintech startups on modern market appear in such areas as investment and financial management, banking payments, currency and exchange, insurance, financing and lending.

According to PaymentGenes, at the moment the most popular and in-demand fintech sectors are the following:

  • Mobile banking
  • Internet banking
  • Blockchain
  • Insurtech
  • Predictive analytics
  • Crowdfunding
  • Peer-to-peer landing
  • Smart finance management
  • Innovative payments
  • Robo-advisors

At the same time, Efinancial Careers outlines seven most demanded skills fintech developers should have:

  • Machine learning expertise
  • Target data analysis
  • Domain (industry) expertise
  • Cyber-security
  • Business and sales expertise
  • Blockchain and distributed ledger expertise

India

SoftBank Fund Is Said to Invest $ 2.5 Billion in Flipkart (Bloomberg Quint), Rated: AAA

SoftBank Vision Fund will invest about $2.5 billion in Flipkart Group, swelling the Indian e-commerce players’ cash hoard as it vies with Amazon.com Inc., people familiar familiar with the matter said.

The investment includes approximately $1.5 billion directly into Flipkart and $1 billion for part of Tiger Global Management’s stake, the people said, asking not to be identified discussing the details. The deal will make the fund created by SoftBank Group Corp. Chairman Masayoshi Son the biggest shareholder of Flipkart, the people said.

Fintech firm Payworld focuses on insurance, loans for growth (DNA India), Rated: A

Digital transaction facilitator Payworld is now focusing on insurance and small ticket loan disbursal as next phase of growth story and has tied-up with a few insurers and NBFCs to tap potential customers, a company official said.

Payworld, a nine-year old fintech firm, provides digital transaction services like mobile recharge, e-payment, railway reservation and remittances facilities.

It aims to bring about 10 lakh lives under insurance cover in next one year through this tie-up.

FinTech Impacts Financial Services: Journey of Fintech from Present to the Future (BW Disrupt), Rated: A

Whether it is the portfolio management process or offering individual financial advice, digital disruption has impacted across every part of the industry. For example, a digital financial services company can now provide investment recommendations while leveraging machine learning to conduct on-going portfolio performance updates sent to customers via a smartphone. The impact of this will be felt increasingly as millennials gives way to even more tech-savvy generations in future for which digital will become the norm.

Many banks will attempt to remodel themselves as technology companies, ȧ la Goldman Sachs, in an attempt to conduct “capital lite” activities that are more reliant on a technological or intellectual competitive advantage and less impacted by regulatory capital and size of balance sheet. For example, UBS Prime Brokerage claims to have a return on assets twice as a high as some of its competitors by using technology to reduce its costs to serve hedge fund clients.

As a consequence of FinTech’s impact we will see the emergence of commercially viable digital businesses that have a sustainable economic advantage. They will not need to extract economic rents due to their privileged position as market intermediaries, providers of capital or holders of an asymmetric informational advantage.

APAC

Fintech startup Money Forward IPO expected September (Nikkei), Rated: AAA

Fintech startup Money Forward could go public on the Tokyo Stock Exchange’s Mothers market by September.

The funds raised from the initial public offering will be spent on boosting sales offices and expanding operations and the company’s market capitalization is expected to be between 10 billion yen to 20 billion yen.

Philippines’ PBCOM participation in Lendr affirms FINTQ regional ambitions (EnterpriseInnovation.net), Rated: A

Philippine Bank of Communications (PBCOM) will make available its consumer lending business including home, auto and personal loan products on the Lendr platform following the bank’s signing the agreement with FINTQ in late July 2017.

By offering these products via a seamless, telco-agnostic digital platform like Lendr, PBCOM is extending the reach of its financial products and offering potential borrowers the convenience of applying for a loan, submitting their requirements, and getting notified about the status of their application all at the tap of their smartphones.

PBCOM’s 2016 earnings grew on the back of a 28% expansion of its loan book to P44.3 billion, with focus on secured consumer loans as well as bankable large and middle market corporate accounts. It also provided credit worth P9.6 billion to clients in the same period, resulting in an 11.61% increase in net interest income.

Middle East

New FinTech Partnership in Abu Dhabi (The National Law Review), Rated: AAA

On 7 August, Abu Dhabi Global Market (ADGM), the International Financial Centre (IFC) in Abu Dhabi, and the Responsible Finance & Investment Foundation (RFI), a think tank for responsible finance, announced their entry into a partnership to help the growth and sustainability of the FinTech ecosystem through financial inclusion and ethical and responsible finance practices.

They will highlight emerging FinTech trends and support the development of innovative Shari’ah-compliant FinTech companies seeking to participate in the Middle East and African markets.

Bahrain woos Indian fintech startups (The Hindu Business Line), Rated: A

Bahrain plans to set up a Fintech Centre next year to provide accelerators and co-working spaces for fintech companies, Simon Galpin, Managing Director, Bahrain Economic Development Board (EDB) has said.

The Fintech Centre, which is likely to be opened in February or March 2018, would also provide networking opportunities for both startups and big banks interested in the fintech area, Galpin told BusinessLine.

Authors:

George Popescu
Allen Taylor

Thursday August 10 2017, Daily News Digest

Lending Club

News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA

NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.

The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.

The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.

Q2 2017: An Update from Our CIO (LendingClub), Rated: AAA

Projected investor returns are also largely unchanged from the first quarter and continue to range from approximately 4% to 9% (see below).

A few factors that influence returns on the platform1 are listed below:

  • Economic Backdrop. The American economy remains robust but growth continues to be relatively modest. The unemployment rate has changed little over the past year, measuring at 4.4% as of July 2017. Meanwhile, GDP increased by 2.6% in the second quarter of 2017.
  • Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
Source: LendingClub

Lending Club makes a surprise comeback (Business Insider), Rated: AAA

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal (Bloomberg), Rated: AAA

LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites (BNL Finance), Rated: A

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions.

PFM apps are folding as banks work them into their own apps (Tearsheet), Rated: AAA

Last week,  Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.

PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.

For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.

Chinese Stock That Rallied 4,555% Could Get the Boot From the Nasdaq (Bloomberg), Rated: A

Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.

Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.

Source: Bloomberg Markets

Installment Loan Provider Earns Top Rating from TopConsumerReviews.com (PR Web), Rated: A

TopConsumerReviews.com recently awarded their highest five-star rating to Lending Club, an industry leader among companies offering Installment Loans.

“For Installment Loans ranging from $1000 to $40,000, Lending Club provides incredible customer service with fair interest rates and fees,” according to Brian Dolezal, of TopConsumerReviews.com, LLC.

StreetShares raises $ 10.3m for “Shark Tank meets eBay” approach to P2P lending (Banking Technology), Rated: A

Alternative lending platform StreetShares raised $10.3 million in a venture round this week, writes Finovate(Banking Technology‘s sister company).

The funds come from an undisclosed investor and bring the Virginia-based company’s total funding to almost $20 million since it was founded in 2013.

Real Estate Crowdfunding Platforms Work to Find a Niche (National Real Estate Investor), Rated: A

However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.

Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.

RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.

Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.

Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.

How David Zalik Skipped High School On His Way To Becoming A Billionaire (Forbes), Rated: A

With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.

GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.

From Illinois’ woes to the state of credit: Jamie Dimon lets loose (Crain’s Chicago Business), Rated: A

Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.

What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.

Would you ever see banks getting directly into online consumer lending?

Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable

5 fintech trends disrupting retail banking (and how banks can fight back) (The Financial Brand), Rated: A

  1. Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
  2. Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
  3. Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
  4. Smart Budgeting and Personal Finance Management
  5. Digital Currencies That Don’t Require Central Banks

Fintech expert Maule to join British digital banking startup (American Banker), Rated: A

Fintech expert Sam Maule has been hired by nascent digital banking firm 11:FS to head up its expansion in North America.

Marketplace Lending Abs Fund Form D (Weekly Register), Rated: B

The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.

Online Lending Policy Institute to Host Second Annual Summit in Washington, D.C. (Markets Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.

Capital One VP Joins veteran-focused fintech firm (American Banker), Rated: B

A former Capital One executive has moved to StreetShares, an online lending and investing platform.

Heather Tuason, formerly senior vice president of small business at Capital One, is now the fintech startup’s chief product officer, it announced Tuesday.

EquityBuild Announces Master Class Webinar on Five Years to Wealth Through the Brand New Model (Benzinga), Rated: B

EquityBuild announces a new master class on the Power of Five, highlighting their new five-year investment model.

Here is the upcoming webinar master class to attend August 14, 2017:

EquityBuild Power of Five Master Class – Find out how this unique model changing the way investors view real estate. Join us for this special event here.

Labor Department delays fiduciary rule implementation date (Reuters), Rated: B

The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.

Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.

United Kingdom

LendInvest makes London Stock Exchange debut with £50m raise (Finextra), Rated: AAA

LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).

The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.

The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.

P2P Lending: MarketInvoice Loanbook Snapshot (LinkedIn), Rated: AAA

MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.

Source: Sukhwinder Shoker

MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.

Source: Sukhwinder Shoker

Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.

Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.

Meet Finimize: The fintech startup that turned a popular newsletter into a financial planning platform (Tech World), Rated: A

Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.

Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.

Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.

The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.

The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.

WiseAlpha opens up corporate bond market for investors (AltFi), Rated: A

Online lending platform WiseAlpha is adding corporate bond and loan investments to its platform.

Retail investors can now access Tesco’s £300m institutional bond that has a 4.8 per cent return.

Users can buy the debt for as little as  £100 and cash in their bonds via the secondary market on the platform. The grocers bond matures in 2042.

Six of the best alternative income ideas (IG.com), Rated: A

Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.

Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.

MARKET INSIGHT: OLD MONEY, NEW METHOD (Campden FB), Rated: A

Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:

  • attractive absolute and relative returns compared to other fixed interest instruments
  • ability to create some granular/diverse portfolios through investment in loan parts
  • transparent credit process and loan pricing
  • ability to match maturity profile to desired outcomes

At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.

How can family offices engage with marketplace lenders?

Firstly, investors need to consider the asset class and risk profile they wish to invest in.

Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.

Glint is a stealthy London fintech startup that promises to turn gold into a ‘new global currency’ (TechCrunch), Rated: A

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.

Railsbank, a new fintech startup from founder of Currencycloud, raises $ 1.2M led by Firestartr (TechCrunch), Rated: A

Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.

The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.

China

China targets mobile payments oligopoly with clearing mandate (Financial Times), Rated: AAA

China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.

Big banks on notice that they’re losing ground to China’s fintech giants (SCMP), Rated: AAA

“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.

“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”

The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.

The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.

Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.

Top3 Chinese block chain asset trading platform (the second-tier platforms) (Xing Ping She), Rated: A

First of all, how to define the Chinese second-tier platforms? We refer to the following three factors:

  1. It has been established for a long time, and there is little risk of failure for the company after a long-term market test and trials.
  2. Popular and profitable.
  3. It belong to the major currencies which are the top of the list. And it has certain dominance in a few currencies.

So, the TOP3 Chinese second-tier platforms are finally selected as:

BTC
Online date: May 2013
Website: btc38.com
Registered capital: 10 million
Office address: Shenzhen

CDC CloudCoin
Online date: April 2014
Website: yunbi.com
Registered capital: 10 million
Office address: Beijing

CHBTC
Online date: early 2013
Website:chbtc.com
Registered capital: 10 million
Office address: Zhongshan city, Guangdong province

China Commercial Credit Enters Share Exchange Agreement with Sorghum Investment Holdings Limited (Markets Insider), Rated: A

China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.

Sina Corp Establishes $ 500M Online Finance Fund To Back Chinese FinTech Firms (China Money Network), Rated: A

Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.

Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.

Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.

LendIt Lang Di Fintech Names Omega One PitchIt Competition Winner (PR Newswire), Rated: B

LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.

As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.

Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.

European Union

FinTech Group Counts on BearingPoint RegTech (BusinessWire), Rated: B

Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.

International

Fintech startup brings blockchain and cryptocurrencies to invoice finance (GT Review), Rated: A

New fintech startup Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space.

Having raised more than US$10mn in crowdfunding in just five days, the company has now started piloting its new platform, which lets firms and individuals sell or buy invoices globally.

Australia

Locked out of property market? Five better places for Millennials to put money (The Sydney Morning Herald), Rated: A

Below are five better places to put your money as a young Australian in 2017.

Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.

You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.

Women in Finance finalists revealed (TheAdviser), Rated: B

Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.

India

Just Rent, Don’t Buy (Business Today), Rated: AAA

India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.

There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.

Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).

There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”

Is our banking industry facing existential crisis from fintech boom? (The Jakarta Post), Rated: A

Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.

The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.

On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.

Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.

Asia

Globe Telecom’s Fuse to Provide Loans Powered by Mambu (Markets Insider), Rated: AAA

Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.

Mynt is increasing access to  financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.

Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.

Singaporean fintech hub Lattice80 to launch office in India (Tech Wire Asia), Rated: A

LATTICE80, Singapore’s fintech hub will be opening an India branch at the end of September, as reported by Bloombergmarking the company’s first step in expanding their global operations.

The fintech hub is planning to open offices in world’s financial capitals, especially London, New York and cities in the Middle East.

MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.

Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.

Authors:

George Popescu
Allen Taylor