- Today’s main news: SoFi withdraws banking application. SoFi completes largest loan securitization to date. Retailer sues Kabbage. New UK marketplace loan deal mandated. OakNorth achieves unicorn status with 154M GBP raise. PPdai plans $350M U.S. IPO. Linked Finance gets 2M Euro equity investment.
- Today’s main analysis: Q3 2017 FinTech Insights Report (must-read). New generation of high net worth individuals spur investment shift.
- Today’s thought-provoking articles: Why Revolut’s employees work 12-13 hour days. Supply and demand of private credit industry. Indian P2P lender seek clarity on trustee appointments. New generation of high net worth individuals spur investment shift. Tech relaxes Mumbai’s finance monopoly.
- SoFi withdraws banking application. AT: “There has been growing speculation about SoFi’s chances of obtaining a banking license following the exit of CEO Mike Cagney, but did anyone expect the company to withdraw its application? It does make sense. The company needs to re-establish its footing and focus on finding new leadership and decide upon its direction from that. However, this positions Square to potentially be the first alternative lender to be approved to start a bank.”
- SoFi completes largest loan securitization to date. AT: “But not all news for SoFi is bad news. This proves the company is still forward looking. It should emerge from its present circumstances just fine.”
- GENCapital partners with SoFi on first anniversary.
- Q3 2017 FinTech Insights Report. AT: “A must-read.”
- Massachusetts retailer sues Kabbage over alleged high-interest loan scheme. AT: “I don’t understand this. Didn’t NRO Boston LLC evaluate Kabbage’s business model before giving the firm access to its customers?”
- Renaud Laplanche opens up on exit from Lending Club and new startup Upgrade.
- Global Debt Registry verifies over $1.5B in loans.
- American Express may compete with Square, PayPal on small business lending. AT: “All competition is good.”
- Redpoint Capital Group, LLC enters credit services agreement with Elevate Credit subsidiaries.
- True Link Finance closes $8M Series A. AT: “Congratulations.”
- Is online lending the next systemic risk?
- Google, Amazon ready to disrupt small business lending. AT: “We hear a lot of people talking about it, but we have yet to see any real moves by either company to attempt it.”
- SBA lending activity shows consistent growth.
- Lend Academy interviews Ray Sturm of AlphaFlow.
- P2B Investor program allows community banks to lend more.
- Payday loans rule could change in 2019. AT: “Not much you don’t already know.”
- AutoGravity offers car shopping by mobile app.
- Cardplatforms disrupts financial services.
- CarGurus IPO hits 72% return on first day.
- New kind of finance setting off Fed alarm bells.
- The Unbanking of America. AT: “A book review.”
- Corporate boards should demand answers to these 5 company culture questions.
- Is the Consumer Financial Protection Bureau about to change how it handles enforcement?
- Race car driver found guilty of payday loan crime.
- FINRA ratches up fintech engagement.
- New UK marketplace loan deal mandated.
- OakNorth raises 154M GBP, claims unicorn status. AT: “Congratulations.”
- 4B GBP problem stunts SME growth.
- Seen and heard at LendIt Europe.
- BitRent opens for investors.
- The changing role of the P2PFA.
- Rob-advice in 10 points.
- Are banks ignoring women?
- PPdai plans $350M U.S. IPO.
- Tencent approved for insurance license, Alipay to intro house rentals in 8 cities.
- MioTech gets strong backing in Hong Kong.
- What investors need to know about the Qudian IPO.
- Chinese P2P lending platforms expand into Southeast Asia.
- Linked Finance receives 2M Euro equity investment.
- Why Revolut’s employees work 12-13 hours per day.
- Compeon grabs 12M Euro funding.
- Migdal partners with Lendoit.
- Supply and demand of private credit industry.
- International mobile payments through blockchain.
- How to get a loan with bad credit.
- P2P lenders seek clarity on trustee appointments.
- Why Reserve Bank of India should ease P2P regulations.
- How technology relaxes Mubai’s financial services monopoly.
- 5 fintech platforms that will revolutionize business.
- New generation of high net worth initiatives spur investment shift.
- fidentiaX introduces world’s first marketplace tradable insurance policies.
- United States
- SoFi withdraws U.S. banking application, citing leadership change (Reuters), Rated: AAA
- SoFi Completes its Largest Loan Securitization to Date (PR Newswire), Rated: AAA
- Wealth Management Firm GENCapital Partners with SoFi and Celebrates One-Year Anniversary (Digital Journal), Rated: A
- FT Partners Research Publishes Q3 2017 FinTech Insights Report (FT Partners Email), Rated: AAA
- Mass. Retailer Sues Over Alleged High-Interest Loan Scheme (Law360), Rated: AAA
- Lending Club founder Renaud Laplanche opens up on his ‘frustrating’ exit and new startup Upgrade (Business Insider), Rated: A
- Global Debt Registry Verifies Over $ 1.5 Billion in Loans (AltFi), Rated: A
- Amex targets Square, PayPal in small-biz lending (American Banker), Rated: A
- Redpoint Capital Group, LLC Enters into Credit Services Agreement with Elevate Credit, Inc. Subsidiaries (BusinessWire), Rated: A
- True Link Financial Secures $ 8 Million Series A Round (PR Newswire), Rated: A
- Could online lending become the next systemic risk? (American Banker), Rated: A
- Google and Amazon are ready to disrupt small business lending, former Obama advisor says (CNBC), Rated: A
- SBA Lending Activity in FY17 Shows Consistent Growth (PR Newswire), Rated: A
- Ray Sturm of AlphaFlow (Lend Academy), Rated: A
- P2B Investor Program Allows Community Banks to Lend More with Marketplace Lending Partnership (Crowdfund Insider), Rated: A
- Payday loans rule could change in 2019 (MSN), Rated: A
- AutoGravity Is Fintech’s Answer To Car Shopping (Benzinga), Rated: A
- Cardplatforms disrupts the financial services market (Biz Journals), Rated: A
- CarGurus races up 72% in a week with 4 strong pops (NASDAQ), Rated: A
- The rise of a new kind of finance is setting off alarm bells at the Fed (Business Insider), Rated: A
- The Unbanking of America, by Lisa Servon (Patheos), Rated: A
- Corporate Boards Should be Demanding Management Answer These 5 Questions About Company Culture (Entrepreneur), Rated: A
- Is the way the CFPB handles enforcement about to change? (Housingwire), Rated: B
- BREAKING: Auto Racer, Atty Guilty Of Running Criminal Payday Loan Empire (Lexis Nexis), Rated: B
- FINRA ratchets up fintech engagement (FinancialPlanning), Rated: B
- United Kingdom
- New UK marketplace loan deal mandated (Global Capital), Rated: AAA
- Challenger bank OakNorth nabs £154m, claims unicorn status (AltFi), Rated: AAA
- This £4bn problem is stunting SME growth (City A.M.), Rated: A
- Seen and Heard at LendIt Europe: The Future of Finance (Crowdfund Insider), Rated: A
- BitRent Opens New Horizons for Investors (The Merkle), Rated: A
- Christine Farnish on the changing role of the P2PFA (P2P Finance News), Rated: A
- Robo-advice in ten points (London School of Economics and Political Science), Rated: A
- Ignoring women: Banking’s £130bn a year own goal? (AltFi), Rated: B
- Chinese P2P Lending Platform PPdai.com Plans $ 350M IPO In US (China Money Network), Rated: AAA
- WeiyangX Fintech Review (Crowdfund Insider), Rated: A
- Li Ka-shing shows strong backing for Hong Kong’s fintech sector with MioTech funding (SCMP), Rate: A
- Qudian IPO: What Investors Need to Know (The Motley Fool), Rated: B
- Over Ten Chinese P2P Lending Platforms expand to Southeast Asian Market (Xing Ping She), Rated: B
- European Union
- Linked Finance Secures €2 Million Equity Investment (Crowdfund Insider), Rated: AAA
- The Revolut founder on why his people work 12-13 hours a day (Business Insider), Rated: AAA
- German fintech Compeon scoops €12m fundraise (AltFi), Rated: A
- Israel’s Migdal Partners Decentralized P2P Lending Platform Lendoit (Finance Magnates), Rated: B
- PRIVATE CREDIT INDUSTRY: SUPPLY AND DEMAND (All About Alpha), Rated: AAA
- FinTech builds on blockchain for international mobile payments (Computerworld), Rated: A
- How to Get a Loan with Bad Credit (The Global Dispatch), Rated: B
- TSYS’ ProPay Sets Up Shop In Australia (PYMNTS), Rated: A
- Australian Government Agencies Flagged For Company Card Fraud (PYMNTS), Rated: A
- P2P lenders seek clarity from RBI on appointment of trustee (Livemint), Rated: AAA
- Why RBI should ease regulations for P2P lenders (VC Circle), Rated: A
- How tech has relaxed Mumbai’s monopoly on finance (India Times), Rated: AAA
- Watch out for these 5 fintech platforms to revolutionise business in India (Business Standard), Rated: B
- A new generation of HNWIs spur shift in investment (Asia Asset), Rated: AAA
- Fintech Start-Up fidentiaX Introduces World’s 1st Marketplace for Tradable Insurance Policies (PR Newswire), Rated: A
- Middle East
- Kuwaiti Fintech Startup Ajar Online Closes Second Investment Round Led by BECO Capital (Albawaba), Rated: AAA
- Discovery Gets Go-ahead to Operate a Bank (Tech Financials), Rated: AAA
SoFi withdraws U.S. banking application, citing leadership change (Reuters), Rated: AAA
Student online lender Social Finance Inc said on Friday that it is withdrawing its application for a bank license in the wake of the departure of a number of senior executives, including co-founder and former Chief Executive Mike Cagney.
SoFi Completes its Largest Loan Securitization to Date (PR Newswire), Rated: AAA
SoFi announced today the closing of a $776.7 million offering of SoFi Professional Loan Program 2017-E notes.
SoFi 2017-E marks the company’s largest asset-backed securities issue to date and its 10th ABS transaction this year, bringing SoFi’s total issuance for 2017 to $5.375 billion. Since inception, SoFi has closed 30 transactions totaling $12.4 billion in issuance. With the closing of SoFi 2017-E, SoFi maintains its position as a top ten ABS sponsor. The recent transaction was heavily subscribed with orders totaling $2.3 billion.
Wealth Management Firm GENCapital Partners with SoFi and Celebrates One-Year Anniversary (Digital Journal), Rated: A
GENCapital is proud to announce a partnership with SoFi, a new kind of finance and lending company. In addition, GENCapital celebrated its one-year anniversary in September.
FT Partners Research Publishes Q3 2017 FinTech Insights Report (FT Partners Email), Rated: AAA
Highlights of the Q3 2017 report:
- Q3 2017 financing volume of $5.1 bn was lower than in Q2 2017 ($8.8 bn), but higher than in Q1 2017 ($4.3 bn). This quarter saw the second highest financing deal count ever at 412 transactions, only behind Q1 2016, which had 438.
- Financing volume year-to-date is tracking just below 2016’s record level and is on pace for the second strongest year ever. This is even more impressive considering that 2016 was skewed by a handful of megadeals in China.
- The Banking sector continues to be the most active sector this year in both the number of transactions (356 year-to-date) and financing volume ($6.3 bn year-to-date).
- 2017 FinTech financing volume in Europe ($5.3 bn) is already more than 2x the financing volume of 2016 for the region ($2.6 bn).
- Q3 2017 M&A volume ($32.9 bn) was the highest since Q4 2015 ($50.5 bn), which included Visa’s $23.4 bn acquisition of Visa Europe. This quarter had eight $1 billion+ M&A deals, which is the most since Q4 2015 (which also had eight).
- So far this year, 57% of the total global M&A dollar volume is comprised of international targets, although only 38% of the number of transactions represents international targets.
Get the full report here.
Mass. Retailer Sues Over Alleged High-Interest Loan Scheme (Law360), Rated: AAA
A Massachusetts clothing and sports retailer filed suit in federal court Thursday alleging that financial technology company Kabbage Inc. evaded state law by offering high-interest loans through an industrial bank based in Utah, which places no ceiling on interest rates for commercial loans, all the while serving as the true lender.
NRO Boston LLC and owner Alice Indelicato accuse Kabbage and Celtic Bank Corp. of devastating the retailer with their “rent-a-bank” scheme, whereby the bank was listed as the lender for loans in order to get….
Lending Club founder Renaud Laplanche opens up on his ‘frustrating’ exit and new startup Upgrade (Business Insider), Rated: A
Renaud Laplanche tries to “keep a positive attitude rather than focus on my frustration” when it comes to Lending Club.
“It was very, very frustrating. I’m not commenting on the story, but the best way to actually understand what really happened is to read the filings. I think the press made it sound a lot worse, a lot more sensational, than it really was.”
Upgrade raised $60 million (£45.7 million) in April, the biggest ever Series A funding round for a US fintech startup. Many of Lending Club’s original investors have backed the business and Jefferies, an investment bank burned by Lending Club’s loan term scandal, has signed up to buy loans from Upgrade — a vindication for Laplanche.
Now he is focused on “what can I learn from it, what can I do better. Upgrade has been part of that.”
Global Debt Registry Verifies Over $ 1.5 Billion in Loans (AltFi), Rated: A
Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has exceeded a $1.5 Billion of loans issued by digital lending platforms and verified by the Company’s suite of due diligence solutions. On the heels of the GDR’s announcement of its successful SOC 1 Type 2 and SOC 2 Type 2 attestations last week, this achievement confirms the Company’s role as a leader in online lending’s ongoing expansion, driving capital growth in the sector by providing certainty and transparency around investors’ online lending portfolios and protection against risks surrounding the loan data integrity.
Amex targets Square, PayPal in small-biz lending (American Banker), Rated: A
In the digital age, a lot has changed about how businesses operate — and a lot of new data is being generated in the process.
This creates new possibilities for judging a consumer or merchant’s creditworthiness. Square and PayPal have been taking advantage of this for years with models that rely on a merchant’s sales history to determine their likelihood to repay a loan, and American Express is ready to compete.
Redpoint Capital Group, LLC Enters into Credit Services Agreement with Elevate Credit, Inc. Subsidiaries (BusinessWire), Rated: A
Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing across an array of asset-based strategies, announced it has entered into two additional Credit Agreements with two separate wholly owned subsidiaries of Elevate Credit, Inc.
Rise Credit Service of Ohio, LLC entered into a Credit Services Agreement with Redpoint Asset Funding Ohio, LLC (“Redpoint Ohio”) whereby Rise Credit Service of Ohio, LLC acts as a credit service organization on behalf of consumers for certain loans originated, funded and collected by Redpoint Ohio.
Furthermore, Rise Credit Services of Texas, LLC, a wholly owned subsidiary of the Company, entered into a Credit Services Agreement with Redpoint Capital Asset Funding, LLC (“Redpoint”) whereby Rise Credit Services of Texas, LLC acts as a credit access business on behalf of consumers for certain loans originated, funded and collected by Redpoint.
In addition to the agreements with Redpoint and Redpoint Ohio described above, Rise Credit Services of Texas, LLC, Rise Credit, LLC and the Company also entered into new guarantees of certain receivables of the Company and its subsidiaries held by Redpoint and Redpoint Ohio.
True Link Financial Secures $ 8 Million Series A Round (PR Newswire), Rated: A
True Link Financial, the financial services provider for seniors, announced today that it has raised $8 million in a Series A funding round led by QED Investors, with additional investment from Radicle Impact and Initialized Capital. In conjunction with the investment, QED’s Founding Partner Frank Rotman will join True Link’s Board of Directors. With this latest round True Link has raised $15.8 million since the company’s founding in 2012.
The 45 million seniors in America – the largest and fastest-growing segment of the population – are facing new challenges. Average lifespans increased by more than thirty years over the 20th Century, stretching savings further and layering in new medical costs. Since the time today’s retirees entered the workforce, the percentage of workers with a pension has dropped by more than half. 5.5 million Americans have Alzheimer’s today, and more than 16 million will have the disease by 2050. And according to True Link’s groundbreaking 2015 study, financial fraud costs the aging a whopping $36 billion a year. In short, people are living longer with fewer resources and more risks.
The company’s customer base has grown twentyfold in the last three years. Its cards division is the first Silicon Valley startup debit card issuer to turn a profit, and its robo-advisor is Silicon Valley’s first robo-advisor to turn a profit.
Could online lending become the next systemic risk? (American Banker), Rated: A
When banks resisted expanding credit in the years following the financial crisis and passage of the Dodd-Frank Act, online marketplace lending seized on what seemed like a niche opportunity: targeting the credit markets deserted by banks.
But with issuance of marketplace securitizations now exploding — rising 300% cumulatively in the past two years — the idea of online lending as a niche is quickly deteriorating.
Google and Amazon are ready to disrupt small business lending, former Obama advisor says (CNBC), Rated: A
Karen Mills, who served as Obama’s administrator for small businesses, told CNBC that the tech giants would probably push to disrupt the market and deal a blow to established lenders.
“I think they are going to dominate the market, and that is the next phase that’s coming,” she told the LendIt Europe fintech conference in London.
SBA Lending Activity in FY17 Shows Consistent Growth (PR Newswire), Rated: A
The U.S. Small Business Administration today announced fiscal year 2017 lending numbers showing increasing loan levels in small business lending through the 7(a) and 504 loan programs, as well as increases in lending to women, veterans and emerging communities.
SBA approved over 68,000 loans in the 7(a) and 504 loan programs in FY17. These programs provided over $30 billion to small businesses.
In FY17, the 7(a) program supported a consistent number of loans — more than $25.44 billion combined across 62,430 loans. The SBA continues to streamline and improve access to its loan program for small loans and emerging communities, delivering more than $5 billion in smaller loans of $350,000 or less in FY17.
7(a) lending to women-owned businesses (both majority and minority owned) grew in total dollar and volume. FY17 lending exceeded $7.5 billion, an increase of $298 million from FY16.
FY17 504 lending to women-owned businesses reached $955.2 million, a $277 million increase over the previous fiscal year. Loans to veterans totaled $1.15 billion for 7(a) and 504 lending.
Ray Sturm of AlphaFlow (Lend Academy), Rated: A
In this podcast you will learn:
- What AlphaFlow does and why it is unique in real estate investing.
- The real estate platforms they are working with today.
- Why they are looking to also work with offline hard money lenders.
- How they decide which platforms to work with.
- Details of their own proprietary real estate analytics platform.
- The area of the real estate market they focus on.
- The average duration, rate and LTV of the loans they invest in.
- Why they decided to become a Registered Investment Advisor.
- The types of investors coming to their platform today.
- How they are able to get new investors a diversified portfolio with days.
- The tech they are using to connect to the real estate platforms.
- Some of the big names that participated in their recent seed round.
- Ray’s view on the real estate crowdfunding space in general.
- How Ray thinks about the long term direction of AlphaFlow.
P2B Investor Program Allows Community Banks to Lend More with Marketplace Lending Partnership (Crowdfund Insider), Rated: A
P2B Investor has launched an interesting partnership program that is good for banks, good for borrowers and good for P2Bi. Banks, typically smaller banks, would like to lend more to SMEs but are risk averse due to multiple reasons. P2B Investor’s new program allows the bank to buy the first half of the loan with their low cost of capital, and P2Bi marketplace buys the second half. Thus the SME has a hybrid line of credit to finance its cash needs.
Payday loans rule could change in 2019 (MSN), Rated: A
Consumers who are caught in a financial squeeze might one day be able to skip the payday loan store and turn to banks and credit unions for lower-cost, quick-fix loans.
Congress could move to overturn the rule — but some say that’s unlikely.
What could change: Lenders eventually would be required to research upfront whether borrowers could afford to repay all or most of their short-term loans at once — including payday loans and auto title loans — and longer-term loans with “balloon” payments.
What won’t change: People who are cash-strapped still will be looking for ways to cover their bills.
AutoGravity Is Fintech’s Answer To Car Shopping (Benzinga), Rated: A
AutoGravity, a fintech platform for car shopping, has been nationally available for less than a year. The app’s been downloaded more than 750,000 times and processed more than $1 billion in financing requests.
Of the 20 largest automotive lenders, AutoGravity has some form of an agreement with 19, said chief marketing officer Serge Vartanov.
The app’s momentum is building: 100,000 of its downloads came in the month of August alone.
AutoGravity is now available in 49 states after kicking off with a soft launch in California.
While AutoGravity doesn’t disclose its overall lender portfolio, it has previously announced partnerships with Mercedes-Benz Financial Services and Hyundai Capital and a $30 million investment from Volkswagen and Daimler Financial Services.
Cardplatforms disrupts the financial services market (Biz Journals), Rated: A
The Boca Raton fintech company has grown revenues by nearly 400 percent in 2016.
CarGurus races up 72% in a week with 4 strong pops (NASDAQ), Rated: A
CarGurus and three medical device companies each had a strong debut, averaging a first-day pop of 45%.
at IPO ($mm)
|CarGurus ( CARG )||$150||$1,798||14%||72%||78%|
|Online marketplace for buyers and sellers of new and used cars.|
The rise of a new kind of finance is setting off alarm bells at the Fed (Business Insider), Rated: A
The challenge is that regulatory bureaucracies in Washington, including the Federal Reserve, may be too slow to react to new technology — from cryptocurrencies and blockchain to crowdfunding — in the same way policymakers missed the risks embedded in the “innovations” in mortgage finance that ultimately fueled the worst housing bust and financial crisis in modern history.
The Unbanking of America, by Lisa Servon (Patheos), Rated: A
Add in the number of people suffering because of the poor economy, especially millennials in the Gig Economy, living from paycheck to paycheck, unable to accumulate enough money for emergency savings, and Americans’ use of businesses such as check cashing companies or payday lenders or other alternate lenders, is entirely rational, in her portrayal, and it’s wrong for policymakers to act as if all Americans need to do is to be told they should get a bank account and that’s that.
Servon’s research for the book consisted, in part, of actually working at a check cashing service and a payday lender.
She then concludes the book by talking about “innovators.” She profiles a start-up that intends to provide an alternate credit-scoring model that takes into account other types of financial behavior that’s not typically incorporated into the mainstream credit bureaus’ credit scores, and a start-up that intends to make it cheaper to transfer money from one person to another, and a bank, KeyBank, that is more mission-oriented than the usual faceless big corporate bank.
One thing she entirely fails to mention is the fact that interest rates have dropped so dramatically.
A second development in the banking world that she neglects to mention is the rise in prepaid debit cards.
And the third missing item is that of competition.
Corporate Boards Should be Demanding Management Answer These 5 Questions About Company Culture (Entrepreneur), Rated: A
- Is the leadership team operating with a high level of professionalism and integrity? Do they value diversity and inclusion?
- Do legal and HR have a seat at the table in making key strategy, organizational and business decisions?
- Does the company have published policies, processes and trainings so employees easily understand what type of behavior is unacceptable and what to do if they have a problem?
- What is the company’s strategy to create a diverse and inclusive environment on the board and in the office?
- Does the board have oversight and access to management, so as to be informed about the company’s internal controls and policies and when the same are violated?
Is the way the CFPB handles enforcement about to change? (Housingwire), Rated: B
But regardless of what happens to Cordray, the way the CFPB handles enforcement could be changing as we speak, because the CFPB’s enforcement director is apparently leaving the bureau.
Anthony Alexis, the Consumer Financial Protection Bureau’s enforcement chief, is stepping down after more than two years overseeing the agency’s efforts to combat abuses by the financial industry, a departure certain to fuel speculation that Director Richard Cordray will leave soon to pursue the Ohio governorship.
Alexis, a former Mayer Brown partner who was named enforcement director in 2015 after holding the role in an interim capacity, announced his departure plans to CFPB staff Thursday afternoon, according to a former CFPB attorney who is familiar with the matter.
BREAKING: Auto Racer, Atty Guilty Of Running Criminal Payday Loan Empire (Lexis Nexis), Rated: B
A Manhattan jury on Friday found auto racer Scott Tucker and his attorney Timothy Muir guilty of operating a $2 billion criminal payday loan empire that preyed on millions of vulnerable borrowers and entered into sham deals with Native American tribes.
FINRA ratchets up fintech engagement (FinancialPlanning), Rated: B
FINRA was looking to ratchet up engagement with industry players, he said.
To that end, the regulator has hosted roundtable discussions around the country with fintech firms, robos, vendors, and traditional broker-dealers’ technology departments to get a better handle on how the business is changing, Cook said. Later this month, FINRA will convene a new fintech advisory committee.
New UK marketplace loan deal mandated (Global Capital), Rated: AAA
The transaction, MOCA 2017-1, will be offered in three tranches and is backed by 31,153 Zopa loans with a total outstanding balance of £208.96m. The loans have an average current balance of £6,708 and a weighted average seasoning of 4.5 months. The average interest rate is 7.2%.
Challenger bank OakNorth nabs £154m, claims unicorn status (AltFi), Rated: AAA
OakNorth, a challenger bank focussed on lending to high growth businesses and property developers, has raised £154m in equity money in a round that values the company at £934m (approximately $1.3bn). The fundraise pushes the firm into “unicorn” territory – a term reserved for private tech firms with a valuation north of a billion dollars.
The money comes from The Clermont Group, Toscafund and Coltrane, which together have purchased a 16 per cent stake in the challenger bank. OakNorth says the money will be used to boost its lending by an additional £1.5bn.
This £4bn problem is stunting SME growth (City A.M.), Rated: A
Every year, tens of thousands of small businesses see their loan applications refused by the big banks.
In fact, figures from the British Business Bank (BBB) indicate that this amounts to around £4bn in loans annually – a staggering figure when you consider that this is preventing businesses from being able to reach their full potential.
SMEs are expected to contribute £241bn to the British economy by 2025, up 19 per cent from last year’s figure of £202bn, according to research from challenger bank Hampshire Trust Bank and the Centre for Economics and Business Research.
Seen and Heard at LendIt Europe: The Future of Finance (Crowdfund Insider), Rated: A
“Data that the bank holds on the consumer belongs to the consumer and not the bank.”
Imran Gulamhuseinwala OBE, Global Head of Fintech at EY
“Banks have outdated technology. To change that takes a lot of effort. From where they are starting, it is not easy.”
“Users do not really care about the tech. They just know it works.”
Radoslav Albrecht, CEO and founder of BitBond
“As for Cost of Capital. Marketplace lending has access to a very wide range of cost of capital. A lot of platforms sell loans to banks. You have Credit Unions buying loans. Credit Unions have a return target of 2 to 3%. Lower than Goldman Sachs. Marketplace Lenders have access to similar cost of capital.”
Renaud Laplanche, CEO and founder of Upgrade
“The biggest myth of all is that Banks and other financial services are advantaged at this. They have all the data. The truth is the data is fragmented across all different tech stacks and it is difficult to utilize. Very expensive and slow. The data is in the wrong place.”
Antony Jenkins, CEO and founder of 10X Future Technologies
BitRent Opens New Horizons for Investors (The Merkle), Rated: A
Blockchain platform BitRent announced a revolutionary solution in the area of new-built property: commercial and residential property shared investing at an early stage of construction and total control over construction process in real time by means of modules and structures chipping. The company operates on blockchain technology and smart-contracts protocol. BitRent platform’s mission is to make real estate investing easy, transparent and profitable all over the world.
Christine Farnish on the changing role of the P2PFA (P2P Finance News), Rated: A
There are changes ahead for the Peer-to-Peer Finance Association (P2PFA). The self-regulated trade body has been shaping industry standards for six years, but as alternative lending enters the mainstream, even the P2PFA has to be willing to evolve.
However, the next board meeting – set to be held in November – is expected to focus on an update to the P2PFA rules, membership criteria, and the association’s role in the wider regulatory community.
The departure of RateSetter and LendInvest (which no longer defines itself as a P2P lender) has brought the P2PFA’s market share down to around 50 per cent of the UK’s P2P sector. Current members include Funding Circle, Zopa, MarketInvoice, Landbay, ThinCats, Lending Works and newest member Folk2Folk but no new members have joined since February of this year. However, Farnish rejected rumours that the association is “a closed shop”.
For now, the P2PFA is focused on reviewing its own rules and Farnish confirmed that a revised version of these rules will be published before the end of the year.
Robo-advice in ten points (London School of Economics and Political Science), Rated: A
The asset management industry is currently in a state of flux, and the manner in which individuals and institutions interact with their wealth managers is on the cusp of dramatic change. Digitisation and increased use of technology should mean that we are at the point of a low-cost revolution.
Robo-advice in ten points:
- Robo-advice is online
- The key is probably cost: Robo-advisors can be 60-70 per cent cheaper than traditional solutions and can provide savings of 1 percentage point per year of assets. Over a lifetime of investing, this would make £100,000s of difference to millions of investors in the UK alone.
- Growth is strong: Whilst still only a fraction of the market, the assets under management of major players are growing between 50 and 100 per cent per year, and new entrants and concepts are developing all the time. There are currently over 100 robo-advisors in Europe with most based in either Germany or the UK.
- There is a long way to go: Nutmeg, the UKs’ largest robo, has $1bn in assets, but Legal and General, the UK’s largest traditional asset manager, has over $1 trillion – a thousand times larger. Data in the US is similar, with BlackRock having $6 trillion under management and Betterment, the largest US robo, having a fraction of this.
- On-boarding is a noted differentiator, but also a concern: The faster process and fact finding may not always be up to date with regulations or as rigorous as it should be.
- Millennials are less important than predicted: Most of the original players in this nascent market targeted millennials. But older, wealthier and still tech-savvy baby boomers have become core clients.
- Robo-advisors mainly use ETFs
- Future robo-advisors will be more sophisticated
- Robo-advice aids financial inclusion: Both the regulator and the industry are hoping that robo-advice will improve participation and access to the investment process.
- Robo-advisors typically use Modern Portfolio Theory: Robo-advisors typically use mean-variance optimisation for asset selection, but future solutions are likely to use Liability Driven Investment (LDI) frameworks for portfolio construction.
Ignoring women: Banking’s £130bn a year own goal? (AltFi), Rated: B
Financial services firms could be missing a £130bn opportunity by not winning over women, according to a new report.
UK financial institutions are failing to connect with female customers at every stage of the buying journey, from advertising to offerings and funds, finds Kantar’s latest research. It shows financial advertising and marketing strategies fail to communicate trustworthiness, dependability or understanding – particularly to women, 65 per cent of whom report low confidence in their financial institutions, compared to 55 per cent of men.
Only 38 per cent of women claim to feel ‘in control of their financial future’ compared to 51 per cent of men.
Chinese P2P Lending Platform PPdai.com Plans $ 350M IPO In US (China Money Network), Rated: AAA
Chinese peer-to-peer lending platform PPdai.com will seek an initial public offering on the New York Stock Exchange, the company said in a filing, marking the latest Chinese financial technology company to go public. PPdai.com is currently values as a unicorn on China Money Network’s China Unicorn List with a US$2 billion valuation.
The company aims to raise as much as US$350 million through the IPO, though it has not determined the listing price or the number of shares to be offered, according to an IPO prospectus filed with the U.S. Securities and Exchange Commission.
WeiyangX Fintech Review (Crowdfund Insider), Rated: A
This week, China Insurance Regulatory Commission (CIRC) announced that it had grant an operation license to Shenzhen Wei Min Insurance Agency Co. Ltd. Tencent owns a majority stake (57.8%) of this new insurer.
On October 10th, Alipay announced to introduce house rental service in eight cities (Shanghai, Beijing, Shenzhen, Hangzhou, Nanjing, Chengdu, Xi’an and Zhengzhou). Users can enter the credit renting platform by searching “rent” in Alipay. If users’ Sesame Credit is above 650, they can enjoy deposit exemption and pay rent monthly.
Hexindai, a less well-known online consumer finance platform, is going to be listed in the US. Hexindai plans to raise $80 million in this IPO.
October 10th marked the 92th birthday of the world-renowned Palace Museum. It was on the same day that the museum started to embrace a brand new era of digital payment.
Li Ka-shing shows strong backing for Hong Kong’s fintech sector with MioTech funding (SCMP), Rate: A
Horizons Ventures, Li’s private investment arm, led a US$7 million Series A funding round for MioTech, one of just a few Chinese tech companies in the firm’s portfolio.
Qudian IPO: What Investors Need to Know (The Motley Fool), Rated: B
The Chinese micro-lending specialist is about to hit the U.S. stock market following an IPO early next week. Millions of Chinese consumers and businesses tap Qudian for credit, but does this make the stock a potential buy?
Qudian’s sweet spot is consumer loans. According to a study from Oliver Wyman commissioned by the company, it was the top small lender in the country in terms of number of active borrowers and volume of transactions as of June 30.
These loans are fairly small, even by local standards, and typically have short durations. There sure are a lot of them, though — in the first six months of this year, the company dispensed a total of around 38.2 billion yuan ($5.8 billion).
Over Ten Chinese P2P Lending Platforms expand to Southeast Asian Market (Xing Ping She), Rated: B
Recently, the PINTEC Group has announced a joint venture in Singapore to enter the Southeast Asian market with robo-adviser as its entry point. So far, there are more than 10 Chinese Internet finance companies layout in the Southeast Asian market，including Lufax, Dianrong.com, etc.
Yu-Hang Guo, the co-founder& co-chief executive of Dianrong.com, said that China’s internet finance companies have concentrated on the southeast Asian market, there are active plans as well as passive responses. With Chinese regulations tightening, many of them are looking abroad for growth. It is reported that cash loans, P2P and third-party data services have become the three most promising businesses in the Southeast Asian market.
Actually, before the small and medium-sized internet finance platforms have been set foot, industry faucets such as Ant Financial have already started to move and accelerate into the digital payment market in Southeast Asian.
Ireland-based peer-to-peer lending company Linked Finance announced on Thursday it secured €2m in equity funding to support its plans for expansion. The funding round was led by the company’s original venture capital backers, Frontline Ventures. The platform has now lent over €34.5 million to Irish SMEs since its launch in 2013, with more than €16.9 million already repaid to its lenders.
The Revolut founder on why his people work 12-13 hours a day (Business Insider), Rated: AAA
So far this year, Revolut, which started as a foreign exchange card linked to an app, has launched business accounts, loans, loyalty offers, mobile phone insurance, a bill splitting feature, a subscription “Premium” account, a chatbot, and more. Oh, and raised $66 million.
“The vision is very simple,” Storonsky said. “At the moment in the world, all banks are very local. As a result, you always struggle with international activity. That means you always need to open new bank accounts, issue new cards, set up a new credit profile.
“Nowadays people are all international. Banks are not providing this service. The vision for us is alternative global banking. Anyone in the world can just download the Revolut app and set up a local bank account to access any services they need.”
‘A lot of people work on weekends’
It’s a bold ambition. But can the business sustain this pace? I had heard from people in the industry — startup founders, PRs, former staff — that Revolut’s working culture can be tough: long hours, aggressive targets, burn out.
“We are not about long hours — we are about getting shit done,” Storonsky said. “If people have this mentality, they work long hours because they want it.”
It should be said that all the company’s Glassdoor reviews are five-star reviews, even those that mention the hours. “This company is highly addictive,” one reads.
German fintech Compeon scoops €12m fundraise (AltFi), Rated: A
A credit brokerage platform by the name of Compeon has raised €12m in a series B fundraising round. The round was led by existing investor Tengelmann Ventures, with btov Partners and Dieter von Holtzbrinck Ventures also participating.
Compeon processed a total of €2.5bn in loan requests in 2016, with an average loan request of €700,000.
Israel’s Migdal Partners Decentralized P2P Lending Platform Lendoit (Finance Magnates), Rated: B
Lendoit, a new decentralized P2P lending platform, has announced that it has partnered with one of Israel’s biggest institutional investment firms, Migdal Investment Banking. Established in 1965 and part of Migdal Capital Markets Group, it currently manages assets valued at $9 billion for thousands of clients in the Israeli private, business and public sectors.
PRIVATE CREDIT INDUSTRY: SUPPLY AND DEMAND (All About Alpha), Rated: AAA
The Alternative Credit Council, an affiliate of the Alternative Investment Management Association, has put out a paper on the present state of the private credit industry, considering both the demand (from borrowers) for its services and the supply (from investors) of capital to lend.
In preparing this paper, the ACC has partnered with Dechert LLP, an international law firm that specializes in financial and regulatory intricacies, to research and present a discussion of how private credit has managed to “cement its place in the lending landscape globally.”
One of the points of the paper is that private credit so understood is no longer stuck in the midmarket. It is moving outward in both directions.
On the other side of the market, there continue to be a number of borrowers who are good risks yet whose needs are not being met by the banking system, which is undergoing its own uneasy transformation in the face of regulatory pressure.
The top three characteristics of private credit that borrowers value most are: the speed of decision making, the ability to develop complex structures, and the flexibility of terms.
FinTech builds on blockchain for international mobile payments (Computerworld), Rated: A
IBM has partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.
The new payment network uses IBM’s Blockchain Platform, a cloud service, to enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.
KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, are backing the new cross-border payments service.
How to Get a Loan with Bad Credit (The Global Dispatch), Rated: B
If your bank does not agree to your request, start exploring alternative lenders. Do not limit your options to institutions. Your friends or family members can lend you the cash you need to handle an emergency. Peer to peer lending is a great alternative to banks, which allows you to borrow from individuals instead of institutions.
You can easily access a quick loan with bad credit online if you have a stable and verifiable source of income. Online lenders run your credit history but will approve your loan request with proof that you can repay in time. In most cases, the lenders offer payday loans that fall due on your next payday. You must be careful when applying for a personal loan online. Most of the search results you will get are from marketing companies and not direct lenders.
TSYS’ ProPay Sets Up Shop In Australia (PYMNTS), Rated: A
TSYS’ merchant services company ProPay is expanding into new territory.
The company announced in a press release this week that ProPay has launched in Australia, bringing small- and medium-sized businesses (SMBs) there to its merchant acquiring payment network and enabling them to efficiently accept card payments. The solution is built for direct-selling companies, micro merchants, distributors and payment facilitators.
Australian Government Agencies Flagged For Company Card Fraud (PYMNTS), Rated: A
Australian government agencies are reportedly plagued by company card fraud and misuse, according to new analysis from media company Fairfax Media. By certain accounts, some agencies are seeing more than $100,000 in misspend.
Fairfax analysts found an array of instances in which government purchasing cards were used for personal use, including one that attempted to use a Weather Bureau card for a transaction surpassing $1,000, an Able Seaman who repaid nearly $2,350 after misusing a card and one employee at the Foreign Affairs department who was fired after spending more than $7,000 on the department’s credit card, The Sydney Morning Herald reported.
The ABS had 156 cases of inappropriate spend on its cards, Fairfax found, valuing more than $43,000 in misspend.
P2P lenders seek clarity from RBI on appointment of trustee (Livemint), Rated: AAA
Peer-to-peer lending (P2P) platforms in India have requested the Reserve Bank of India (RBI) to allow non-bank trust companies to act as trustees for fund transfers between the participants—investors and borrowers—on their platforms.
“It took us six months to get a trustee. Most of the bank promoted trustees were unwilling to come on board as the industry is nascent,” said Mukesh Bubna, founder and chief executive at Monexo Innovations Ltd, a Mumbai-based P2P platform.
“This creates a monopoly. A limited number of trustees managing transactions for multiple P2P firms may lead to conflict of interest and also a higher fee being charged by the trustees for managing the escrow accounts,” said Raghavendra Pratap Singh, co-founder at i2iFunding.com, a Noida-based P2P platform.
So far, the firms have informally reached out to the regulator, said two people close to the development. They requested anonymity. They are expected to send formal feedback to the regulator soon.
Email sent to RBI did not elicit any response.
Why RBI should ease regulations for P2P lenders (VC Circle), Rated: A
For the sake of brevity, below are summarised certain key issues of the P2P directions after taking into consideration various arguments in the central bank’s consultation paper:
- P2P entities as NBFCs
- Ambiguous definition of P2P lending – The term “or otherwise” in the definition does not clarify whether P2P lending is restricted only to online platforms.
- Net-owned fund and leverage ratio – The RBI in its directions stated that any NBFC-P2P platform needs to have net-owned funds of more than Rs 2 crore or as is prescribed by the central bank.
- Limit on lending – However, the P2P directions state that loans are subject to a cap of Rs 10,00,000.
- Exempting non-institutional lenders from regulation
- Are NBFC-P2Ps intermediaries for banks?
How tech has relaxed Mumbai’s monopoly on finance (India Times), Rated: AAA
Six months after he founded payment gateway company Razorpay in 2013, Harshil Mathur was looking to shift his headquarters from Jaipur. Of his three options — Delhi, Mumbai or Bengaluru, Mathur chose the tech hub of Bengaluru over the financial capital, Mumbai.
With the rise of tech startups that focus on financial services, the traditional banking landscape is transforming — and Mumbai, Delhi-NCR and Bengaluru are competing to become the country’s fintech capital. Mumbai is still the financial capital as it is home to major banks and financial institutions, but it is technology that is becoming integral to finance.
Watch out for these 5 fintech platforms to revolutionise business in India (Business Standard), Rated: B
LoanTap is a fintech platform delivering flexible EMI free loan products to salaried professionals.
India’s largest peer to peer lending website, Faircent is a platform where people who have spare money, use the means of lending it directly as a form of loan, thereby eliminating intermediaries and their margins.
Having started as an online mobile recharge and bill payments app. Paytm in a short span of time has scaled to over 250 million registered users.
CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financiers.
A new generation of HNWIs spur shift in investment (Asia Asset), Rated: AAA
HNWIs’ wealth growth remains led by Asia, with ongoing gains from an increasingly affluent middle class, enhanced productivity, and property price gains.
As the largest HNWI market, the US has been the beneficiary of a sustained rally in the equities market, driven by capital inflow and currency appreciation. The recent resurgence in mergers and acquisitions and initial public offerings is also driving wealth growth.
By comparison, Europe remains beset by low yields and flagging economic growth, characterised predominantly by inherited wealth and ‘old money’.
Research from around 940 Asian shows a clear shift towards engagement of financial investment professionals over self-management.
Also notable is the shift in allocation from domestic to international equities. In 2013, there was a 60:40 split favouring domestic equities, but this has reversed to favour international stocks through to 2017.
HSBC, with US$112 billion of private bank client assets under management (AUM) in its core Hong Kong and Singapore markets, is building upon its existing investment platform and network as a new entrant to the Australian market as of November 2016.
Fintech Start-Up fidentiaX Introduces World’s 1st Marketplace for Tradable Insurance Policies (PR Newswire), Rated: A
Fintech start-up fidentiaX is in the developmental phase of creating the world’s first marketplace for tradable insurance policies by disrupting the status quo by empowering policyholders to monetise policies on the blockchain. fidentiaX will also be setting up fidentiaX Open Source Foundation (fSOF) to proliferate the embracing of blockchain technology for the insurance industry.
In 2016 alone, the total market size for insurance premiums in the 40 OECD reporting countries was estimated to be in the north of $3.86 trillion dollars and Asia is projected to the be fastest-growing market for life insurance with an estimated real annual compounded growth rate of 10.2%.
fidentiaX’s marketplace will be a membership-based ecosystem focusing on the key stakeholders and providing the following services:
- Policy ledger – Break traditional reliance on intermediaries by creating a digital ledger for policyholders.
- Trustless Marketplace – Provides a platform for buyers and sellers to connect and trade policies via the blockchain.
Kuwaiti Fintech Startup Ajar Online Closes Second Investment Round Led by BECO Capital (Albawaba), Rated: AAA
Ajar Online, a fintech startup based in Kuwait, closed a second investment in a round led by Dubai-based venture firm BECO Capital, followed by an investment from Sharq Ventures, since late 2016.
The service allows tenants to pay their rent online, at anytime and anywhere via SMS and email in less than 60 seconds. Simplifying the rent collection process for landlords and providing efficient property management tools to save time, reduce cost and take the right decisions.
Discovery Gets Go-ahead to Operate a Bank (Tech Financials), Rated: AAA
The South African Registrar of Banks has given the go-ahead for Discovery, South Africa’s medical scheme operator and financial services group, to operate a retail bank.
The firm announced on Monday that NewDisc Limited (to be renamed Discovery Bank Limited) has been granted a banking licence in South Africa by the Registrar in terms of Section 17(1) of the Banks Act.
The company plans to operate a retail bank to be known as Discovery Bank by 2018.