Thursday November 1 2018, Daily News Digest

student loans sofi

News Comments Today’s main news: Upgrade completes $282M securitization. KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-4 Trust. Funding Circle backs Just a Card. Monzo raises 85M GBP. Lendix changes name to October. Today’s main analysis: Which cities are spending within their means? Today’s thought-provoking articles: Total student loan balances by age group. Which cities are spending within […]

student loans sofi

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Upgrade, Inc. Completes $ 282 Million Securitization (PR Newswire) Rated: A

Upgrade, Inc., a consumer credit platform that offers affordable personal loans and personal credit lines with credit monitoring and education tools that help consumers better understand their credit, announced today it closed its inaugural securitization of personal loans. Upgrade Receivables Trust 2018-1 (“UPGR 2018-1”) issued approximately $282 million in notes to nearly 20 banks and asset managers.

This transaction marks the inauguration of Upgrade’s securitization program, designed as a quarterly issuance program. Credit Suisse and Jefferies acted as joint lead underwriters, and Upgrade served as sponsor, servicer and administrator for the transaction.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-4 Trust (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-4 (“SCLP 2018-4”). This is a $549.00 million consumer loan ABS transaction.

Initial credit enhancement levels are 37.29% for the Class A Notes, 29.29% for the Class B Notes. 17.96% for the Class C Notes and 8.96% for the Class D Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A Notes, Class B Notes and Class C Notes), excess spread and a reserve account funded at closing.

Source: BusinessWire

This company advertised student loan savings of more than $ 20,000. That promise was misleading (CNBC) Rated: AAA

SoFi’s ads boasted that its products led to people saving more than $20,000 on average. But, in its calculations, the company excluded student loan borrowers for whom refinancing resulted in a longer, and sometimes more expensive, repayment timeline than they had held prior, according to the FTC.

Source: CNBC

Spending Within Their Means: Some Cities Do It Better Than Others (PR Newswire) Rated: AAA

LendingTree today released its study on where Americans are spending within (and beyond) their means across the U.S.

To determine where people can afford their financial obligations, LendingTree analysts combed through anonymized credit report data of My LendingTree users from August 2018 and compared it to the average household income from the latest U.S. Census Bureau data. The ranking of the 50 largest metro areas factored in data such as the number of credit inquiries from the past two years, the use of revolving credit lines, non-housing debt and mortgage balances.

Key findings:

  • It may come as a surprise, but some of the most expensive U.S. cities have residents living within their budgets, suggesting that higher education and greater income may be the most salient factors for living within your means.
  • San Jose, Calif. (Silicon Valley), San Francisco and Raleigh, N.C., top the list for cities in which people are living within their means. High incomes help residents of San Jose and San Francisco pay their bills (despite exceptionally high housing costs), while a modest mortgage-to-income ratio gives Raleigh a big boost.
  • Residents of San AntonioRiverside, Calif., and Las Vegas are struggling to meet their bills. Previous studies have shown that people spend a lot on vehicles in San Antonio, incomes are very low in Riverside and unemployment runs high in Las Vegas.

New Study Reveals Entrepreneurs Need More Mentoring (Forbes) Rated: A

It is common wisdom that 

Popular Bank’s bid to streamline small-business lending (American Banker) Rated: A

Popular Bank in New York has contracted with Biz2Credit to use its software for automating commercial loan approvals and to outsource the underwriting of certain small-business loans — a move that is part of a broader effort among banks to better compete with online lenders.

The $9.5 billion-asset Popular Bank started using the loan software earlier this month, said Rohit Arora, the CEO of Biz2Credit, an online marketplace that connects lenders and small businesses seeking credit.

Financial terms of the contract were not disclosed.

Judge tosses RICO claims against Montel Williams, payday loan site (Reuters) Rated: A

TV personality Montel Williams and a payday loan website he endorsed do not have to face racketeering charges for allegedly marketing illegal payday loans, a federal judge in California ruled on Tuesday.

U.S. District Judge Jeffrey White in Oakland granted a judgment in favor of Williams and online firm MoneyMutual, saying borrowers suing them failed to show that they participated in coordinated activity to commit fraud, as required for claims under the U.S. Racketeer Influenced and Corrupt Organizations Act.

What challenger banks get about small businesses that banks don’t (American Banker) Rated: A

The ranks of challenger banks offering financial products and services to small businesses are growing.

But what do these firms offer that banks don’t or won’t?

In interviews, several executives argue that they make the process easier and more user-friendly. Loans can be approved quickly and digitally and challenger banks say they can provide a better customer service experience than traditional institutions.

Source: American Banker

Strong mobile apps

Only 52% consider their bank’s mobile banking solution to be satisfactory, according to Javelin surveys.

Even Financial acquires Birch Finance, a credit card rewards startup (Tech Crunch) Rated: B

On the heels of a funding round to the tune of $18.8 million, Even Financial has acquired Birch Finance for an undisclosed sum.

Cred Adds PayPal, Goldman Sachs, Tradeshift Executives to Global Leadership Team (Business Wire) Rated: B

Cred, the leading provider of crypto-backed lending with over $250 million in credit facilities, today announced the addition of three executive team members. Maxim Rohkline joins as Chief Product Officer, James Alexander joins as Chief Capital Officer, and Richard Oh joins as GM of Asia. Each executive brings a 20+ year proven track record of financial technology innovation, spanning capital markets, online lending, payment systems, risk management, and analytics.

Factual Data Announces Integration with LendingPad (Business Wire) Rated: B

Factual Data, one of the nation’s premier providers of credit and data verification services to lenders nationwide, today announced an integration of its credit reporting capabilities with LendingPad (www.lendingpad.com), a leading provider of loan origination software headquartered in McLean, VA.

This integration allows clients to order tri-merged credit reports directly from Factual Data. Credit reports are merged in LendingPad’s document management system and liabilities data is updated in real time. The integration is available to all LendingPad users and will automatically populate credit information into the platform.

White Oak Commercial Finance Hires New Talent to Meet Growing Client Demand (AP News) Rated: B

White Oak Commercial Finance, a division of White Oak Global Advisors, today announced the appointment of Robert Dean to Managing Director of Risk Management for ABL and Factoring. Mr. Dean joins from Wells Fargo Capital Finance, where he served as Senior Vice President and Regional Sales Manager responsible for sourcing and structuring asset-based financing for middle-market companies with credit needs ranging from $5 million to $40 million.

United Kingdom

Funding Circle backs independent alternative to Black Friday (Peer2Peer Finance News) Rated: AAA

FUNDING Circle has teamed up with small business campaign group Just A Card to provide an alternative to the annual Black Friday shopping event.

The peer-to-peer business lending giant will help promote the Just A Card campaign – run by artists, designers and small business owners – to encourage people to shop locally in the run up to Christmas.

The joint campaign will take place during Just A Card Indie Week on 19 November, the week before Black Friday where bigger retailers hold sales.

Monzo, the UK challenger bank, raises £85M Series E at a £1B pre-money valuation (Tech Crunch) Rated: AAA

Monzo, the U.K. challenger bank that now boasts more than a million customers, has raised £85 million in Series E funding. The round is led by U.S. venture capital firm General Catalyst and Accel. Existing backers Passion Capital, Goodwater, Thrive Capital, Orange Digital Ventures and Stripe also participated.

The latest funding was at a pre-money valuation of £1 billion (~$1.27b), meaning that Monzo is now a bona-fide member of the U.K. fintech unicorn club, joining recent entrant Revolut.

Meanwhile, the bank upstart is also planning to launch a large crowdfunding round later this year. Like a lot of other fintechs — and before it was fashionable — Monzo has historically opened up its fundraising to its passionate community and other armchair investors.

iwoca becomes first business lender to connect to UK bank via Open Banking (Fintech Finance) Rated: A

iwoca, one of Europe’s fastest growing small business lenders, has today successfully released Open Banking for all new customers with a Lloyds Bank account. The company becomes the first ever business lender to connect with any of the UK’s nine largest banks under the Open Banking initiative, launched in January 2018.

By securely linking their Lloyds Bank data, business owners can now provide iwoca up to five years of transaction history with a few quick clicks of a mouse. This speeds up the lender’s already swift application process even further for Lloyds customers, reducing the time they spend submitting bank information to less than 60 seconds.

P2P platforms reassure investors over risks of borrower litigation (Peer2Peer Finance) Rated: A

A property developer who borrowed money from Lendy is threatening to sue the P2P property platform and its investors for £10m, after Lendy put the developer’s loans in default.

Lendy has described the threat as “vexatious” and with “little prospect of victory.”

This has prompted Lendy investors who are on other platforms to seek clarification on the risks involved in the wider sector.

OakNorth: How AI Can Fuel Banks’ Return To SMB Lending (PYMNTS) Rated: A

Small businesses (SMBs) left behind by their banks, thanks to tightening risk and capital requirements post-financial crisis, certainly left a gap in the SMB lending market that alternative and marketplace lenders rushed to fill. In the U.K., support for FinTech, as well as challenger banks, to boost competition in the small business lending market is driven by the oft-repeated conundrum for this industry: small businesses are more complex than a consumer, yet not as lucrative as a large enterprise, and are, therefore, unattractive borrowers to traditional, large lenders.

With a growing community of alternative finance (AltFin) players, banks have taken to either letting AltFin handle filling the small business lending gap or partnering with and acquiring those FinTech firms to retain their SMB customers. Yet, a gap remains. While the Goldilocks Conundrum offers a simple explanation as to why, a deeper dive into the issue of small business bank lending reveals a far more complex issue.

According to OakNorth Analytical Intelligence, both large banks and alternative FinTech firms are struggling to overcome the challenges of SMB lending, and it often comes down to data. Amir Nooriala, COO of OakNorth, said that to underwrite an SMB loan, financiers have to take in and analyze unstructured data.

China

X Financial’s Kevin Zhang Is Long-Term Bullish For China’s P2P Sector (China Money Network) Rated: AAA

China’s online peer-to-peer (P2P) lending industry will grow at an estimated annual growth rate of 30% to 40% after the government’s tightened regulations weeding out bad and small players in the following two to three years. That’s the projection of Kevin Zhang, chief financial officer of X Financial, a Chinese P2P lender that completed a listing in New York two months ago.

European Union

European Marketplace Lender Lendix Changes its Name to October (Crowdfund Insider) Rated: AAA

The news was leaked last week. Now it’s official. From its Paris headquarters, Olivier Goy, founder and CEO, announced that the European lending marketplace formerly known as Lendix is changing its name into October. With this name change the company reasserts its ambition to expand both into new geographies and new products.

Why October? Among other things, the name celebrates the 4th anniversary of the company founded in October 2014. But more importantly, it is better suited to support the company’s international ambitions. Earlier this year, Lendix / October raised €32 million to fuel its international expansion. The marketplace already operates in four countries: France, Spain, Italy and the Netherlands where it has helped finance more than €230 million worth of SME loans. October as a name is easy to understand, to remember and to spell in most languages.

Another important reason behind the name change is that October as a name frees the company from an exclusive association with the lending category. We can expect more announcements soon. A banking license? Bonds retail? An equity platform? We can expect the unexpected from October.

New peer-to-peer property lending platform seeking investments as low as €500 (RTE) Rated: A

Ireland’s first online peer-to-peer lending platform for property investors went live yesterday.

Property Bridges is targeting investors who are finding it difficult to secure a loan from a bank, or who need funding relatively quickly, with people able to invest in projects with as little as €500.

Marc Rafferty – who was also an investor in the SME peer-to-peer lending platform Linked Finance – is one of the Co-founders of Property Bridges.

International

These are the 25 most innovative FinTech startups in the world, according to KPMG (Business Insider) Rated: AAA

KPMG, a global network of professional firms providing audit, tax and advisory services, has just published its ranking of the 100 most innovative fintech start-ups.

Several factors were taken into account to establish this ranking, including the amount raised on average over a year or the degree of innovation of their products or services.

24. N26 – Offering a mobile banking app that operates without a single physical branch, N26 is expecting to enter the US market in the first quarter of 2019 — the company is a new entry in this year’s ranking.

22. Monzo – Monzo, a new entry to the list, is a digital bank focused on building the best current account in the world.

19. Klarna – Klarna is a leading European provider of e-commerce payment options that distinguishes payers from buyers — the company came 14th in last year’s ranking.

5. SoFi – Social Finance Inc. is an online finance company that provides lending products, such as student loan refinancing, mortgages, and personal loans — SoFi came 11th in last year’s ranking.

1. Ant Financial – Ant Financial Services Group is dedicated to using technology to bring the world equal opportunities.

Their technologies, from blockchain and artificial intelligence to security, the Internet of Things and computing, have helped Ant Financial to “serve the unbanked and underbanked”.

BlockFi Blockchain Crypto Lending Platform Expands Services to the International Stage (Bitcoin Exchange Guide) Rated: A

BlockFi, a blockchain-based platform backed by Galaxy Capital, is taking its lending services to the global market.

The primary objective of BlockFi is to provide incremental liquidity for clients in the cryptocurrency space. Recently, the company expanded its customer service team to onboard Spanish and Mandarin speakers. In Q3 2018, half of the traffic on the BlockFiwebsite came from users residing outside the US. These foreigners were also responsible for 33% of loan applications on the platform.

Australia

Peer-to-peer lending group puts in AU$ 100m funding for South Australia home battery scheme (Energy Storage News) Rated: AAA

An extra AU$100 million (US$70.76 million) of funding could be put into a rebate scheme for households buying energy storage systems in South Australia, after a peer-to-peer lending group stepped in.

Peer-to-peer lending company RateSetter has agreed to finance the sum as part of the South Australian government Home Battery Scheme, which has committed to granting 40,000 households in the state up to AU$6,000 each in subsidies towards the purchase of batteries for use in home solar-plus-storage solutions. The Home Battery Scheme also allows households to finance the unsubsidised remainder of the cost, as well as rooftop solar. Launched in September, the scheme is partly motivated by the need to help manage peaks in energy demand on the state’s grid network.

Australian neo-bank Xinja hires Brett King as Advisor (FinExtra) Rated: A

Xinja, which is building a 100% independent digital bank, or ‘neobank’ for mobile, (subject to it receiving a banking licence) is adding significant global expertise to its organisation with the announcement that Brett King will act as a permanent advisor to the Board, and help guide Xinja’s strategic direction.

Brett King founded neobank Moven in 2011, which launched the world’s first mobile, downloadable bank account. He is widely considered the most influential expert on retail banking innovation globally.

India

How do P2P companies handle defaults? (The Economic Times) Rated: AAA

Many investors get excited the moment they hear that P2P lending can earn them higher double-digit returns. However, the very next moment they would ask: what happens if the borrower defaults? How do P2P companies handle such defaults.

To begin with, P2P companies assess the financial footprints of the borrower through different sources as per their own credit evaluation system. “We try to ensure that loans are advanced to genuine customers with a structured credit evaluation process. Usage of alternate data also helps in refining the process to gauge the intent of a customer,” says Dhiren Makhija, co-founder and CEO, Cashkumar.

Pramod Akhramka elected President of the association of NBFC P2P Platforms (News Barons) Rated: B

Pramod Akhramka, Founder and Managing Director of OML P2P has been elected as the President of the newly formed association of NBFC P2P Platforms. Rajiv Ranjan, Founder of PaisaDukan has been appointed as the Secretary and Mukesh Bubna, Founder of Monexo has been elected as the Treasurer of the association.

To represent the NBFC-P2P lending industry at international forums, existing and new players in the industry has formed an association of NBFC P2P Platforms.

Asia

New tech and FinTech: opportunity and risk in Singapore case study (The Nation) Rated: AAA

DISRUPTIVE technology evolution has made a wide impact to global economies, the very first forefront business that feel this in both positive and negative way is financial service industry.

Due to the nature of business has been digitised and operated both locally and internationally when conduct business transaction and service. In this “global-digitisation” context, financial service firm must excel how to harness these technologies to improve efficiency and enhance customer experiences. New tech and fin tech in particular, have been increasing adopted by not only financial industry but also other businesses as well. This promote the collaboration and interdependency within and outside of the industry.

Authors:

George Popescu
Allen Taylor

Tuesday June 5 2018, Daily News Digest

Delinquency and cumulative loss on 60 month loans

News Comments Today’s main news: Revolut to seek U.S. banking license. SoFi former venture head to raise $150M fintech fund. BBVA invests 85.4M GBP in Atom Bank. China Rapid Finance receives SO27001 certification. Lendix raises $37M. Today’s main analysis: U.S. economic outlook, according to TransUnion. Today’s thought-provoking articles: Millennials are set to be next wave of single family rental […]

Delinquency and cumulative loss on 60 month loans

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

British fintech startup Revolut to seek U.S. banking license (Reuters) Rated: AAA

British financial technology startup Revolut plans to apply for a banking license in the United States, Chief Executive Officer Nikolay Storonsky said on Monday.

The company, launched in 2015, could apply by the end of the year in California, Storonsky told Reuters in an interview at the sidelines of a fintech conference in Amsterdam.

Debate on Consumer Credit Health, TransUnion Summit (Peer IQ) Rated: AAA

Source: Peer IQ

US Economic Outlook from TransUnion Financial Services Summit 2018

  1. Short-run GDP growth rate will be around 3%, driven by consumer spending and stimulus from the tax reform act. However, over the long-term, GDP growth will be hampered as the economy’s resources are approaching full employment, low trend productivity growth, and fading (and reversing stimulus) effects of tax reform.
    Source: Peer IQ
  2. Long-range inflation expectation is ~2% which would put a natural ceiling on the neutral Federal Funds Rate and the number of Fed hikes.
  3. As the Fed raises rates and tapers the reinvestment of its balance sheet, the 1-5 year part of the treasury curve will be most affected, as that’s where the majority of the Fed’s holdings lie. This should lead to a flatter yield curve and put pressure on refinancing of corporate debt, most of which is benchmarked to the less than 5-year part of the yield curve. Rising rates will also cause the debt-laden US consumer to slow down spending as a larger portion of income goes towards debt service.
  4. Tight lending standards and economic strength have brought down the delinquency rates in all asset classes except auto loans. Delinquencies in auto loans have picked up recently to 4.3%, with subprime auto doing worse.
    Source: Peer IQ
  5. US GDP growth has been aided by strong tailwinds in the form of stimulus from tax reform, low interest rates, and strong credit growth. As interest rates rise and consumer credit growth slows, investors need to keep an eye on economic fundamentals before making investment decisions.

SoFi’s Ex-Venture Head to Raise $ 150 Million Fintech Fund (Bloomberg) Rated: AAA

Social Finance Inc.’s former head of ventures and corporate development, Logan Allin, is raising a $150 million fund to invest in early stage financial technology firms in the U.S. and abroad, including Asia, Europe and Israel, according to people familiar with the matter.

Fin Venture Capital plans to invest in companies that will spin out of top fintech firms, like SoFi, Affirm Inc. and Stripe Inc. and sectors like real-estate technology, insurance technology and alternative lending. The venture firm will also look for corporate blockchain applications, but not investments in cryptocurrencies, the people said.

How student loan companies pretend to be your friend (The Guardian) Rated: A

This month, banking company Laurel Road announced that if you refinance your student loan with them, they will give you a year’s membership to MoviePass, the movie theater subscription service.

The partnership shines a light on the growing market for private student loans. Private lenders currently hold less than 10% of the $1.4tn in outstanding student loan debt but have been aggressively lobbying for legislation that would loosen the government’s monopoly.

Social Finance Inc (SoFi), one of the most high-profile private financial startups in the US, has led the charge in this regard.

Education Loan Finance Launches $ 50,000 Contest to Pay Off Student Loans (Digital Journal) Rated: A

Education Loan Finance (ELFI), a division of SouthEast Bank, focusing on student loan debt refinancing and consolidation, announces the launch of a video contest where the winner will receive a $50,000 cash prize towards their student loan debt.

According to the Brookings Institute, more than 44 million Americans have student loans that total nearly $1.4 trillion. Student loan debt is now the second-largest source of household debt in the U.S. after home mortgages.

Eloan Personal Loans Review: Fast Loans in As Little As a Day (Student Loan Hero) Rated: A

According to TransUnion, fintechs, or online lenders that use financial technology to streamline the lending process, originated 32% of personal loans in the first six months of 2017.

The rates on your loan will depend on your creditworthiness, as well as your loan amount and repayment terms. Here are the ranges you can expect depending on your credit score:

  • Excellent: 5.49% to 10.49%
  • Very good: 10.49% to 13.49%
  • Good: 13.49% to 16.49%
  • Pretty good: 16.49% to 19.49%
  • Fair: 19.49% to 35.99%

Eloan looks beyond your credit score

Your credit score isn’t the only factor at play when Eloan reviews your application. The lender also looks at your debt-to-income ratio, length of credit, and debt repayment history before making a final decision.

Tom Burnside of LendingPoint (Lend Academy) Rated: A

In this podcast you will learn:

  • Tom’s background building databases and credit systems.
  • The founding story of LendingPoint.
  • The loans terms that LendingPoint offers for their loans.
  • The kinds of data they use for underwriting.
  • How they are using technology to run their underwriting and elsewhere in their business.
  • What was behind their decision to acquire LoanHero, the point of sale platform.
  • How they have integrated LoanHero into their company.
  • How they closed the additional $600m credit facility from Guggenheim.
  • Tom’s thoughts on what we are doing well and what are we doing poorly as an industry.
  • What they are working on at LendingPoint for the future.

Fintech startup SpotOn almost tripling staff this year as it squares off against Square (San Francisco Business Times) Rated: A

SpotOn, which started the year with 150 employees, now has a workforce of about 250 people, working at the company’s Financial District headquarters or in a Chicago office. SpotOn said it expects to have 400 employees by year-end.

SpotOn offers credit card processing services and a range of other services to small and mid-sized merchants, pitting the upstart against Square (NYSE: SQ).

Retail Banking Company Chime Raises $ 70M in Series C Funding (Finsmes) Rated: A

Chime, a San Francisco, CA-based retail banking company, raised $70m in Series C funding.

The round, which has valued the company at about $500m, was led by Menlo Ventures, with participation from Forerunner Ventures, Aspect Ventures, Cathay Innovation, Northwestern Mutual, Crosslink Capital, and Omidyar Network.

Fifth Third adds new fintech partner to enhance service for corporate clients (American Banker) Rated: B

Fifth Third has struck a strategic partnership with Intellect Global Transaction Banking, a unit of Intellect Design Arena that has its U.S. headquarters in New Jersey.

Why Millennials Are Poised To Be The Next Wave Of Single Family Rental Investors (Forbes) Rated: AAA

While it may be a surprise given the stereotypes surrounding the millennial generation, research from the National Association of Realtors found that millennials continue to be the largest group of homebuyers, representing 65% of all first-time homebuyers last year. According to TD Bank, 

TD Ready Challenge launches (Finextra) Rated: B

TD today launched the TD Ready Challenge, an annual North American initiative that has ten $1 million (CDN) grants available to help catalyze innovative solutions for a changing world.

United Kingdom

BBVA Announces Completion of £85.4 Million Investment in UK-Based Atom Bank (Crowdfund Insider) Rated: AAA

On Friday, BBVA announced it has completed the £85.4 million investment into Atom, which was announced in March of this year. According to the firm, With this transaction, it increases its stake in UK’s first bank built exclusively for smartphone or tablet to 39%. Atom also secured capital from some other shareholders, bringing the total capital raised to £149 million.

BBVA added that the new investment will allow Atom to continue its impressive growth, and support the uptake of new clients and build core capabilities.

P2P lenders prepared for new data rules (Peer2Peer Finance) Rated: AAA

PEER-TO-PEER lending platforms have welcomed the new General Data Protection Regulation (GDPR) and confirmed that their processes meet with the new EU standard.

A RateSetter spokesperson told Peer2Peer Finance News that the firm “has implemented a comprehensive cross-departmental project to ensure [we are] compliant with new data protection legislation,” while Landbay chief executive and co-founder John Goodall said that “we view GDPR as an opportunity to further build customer trust and confidence and continue to offer quality information to our customers.”

Light at the end of the tunnel for green energy P2P lenders (Peer2Peer Finance) Rated: A

RENEWABLE energy is in the midst of a “turnaround”, according to Trillion Fund’s chief executive, which could benefit the peer-to-peer lending sector.

Theresa Burton heads up the wound-down green energy P2P platform, which closed to new investment in 2015 after government subsidies for the sector were cut.

P2P lenders show there’s life outside London (Peer2Peer Finance) Rated: A

P2P lenders headquartered around the UK’s regions are demonstrating impressive growth, while helping create employment in other parts of the country.

One example is Manchester-based Assetz Capital, which recently passed the £500m lending milestone.

Meanwhile, Edinburgh-based P2P lender LendingCrowd recorded its best-ever month for completed loan deals in May.

Businesses should mind the scale-up gap (Spear’s) Rated: A

While some £8.27 billion was poured into SMEs last year versus £3.9 billion in 2016, 81 per cent of these deals took place at the seed and start-up stages. Of the 35,210 ‘scale ups’ – defined as companies posting annual growth above 20 per cent (across three years) with turnover between £1-20 million and ten or more employees – a mere 1,505 received investment. Furthermore the number of investment deals has plateaued over the last five years for these firms, at around the 20 per cent of investment.

The report from the Supper Club, an entrepreneurial network and advocacy group, shows that over the last five years the number of SME investment deals has risen from 1,010 in 2013 to 1,500 — a 50 per cent rise. The corresponding increase in the ‘scale up segment, however, was under 20 per cent, with the number of deals going from 260 to 280.

China

China Rapid Finance Receives ISO27001 Certification (PR Newswire) Rated: AAA

 China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE:XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it achieved ISO/IEC 27001:2013 Certification (“ISO 27001”), the international standard that describes best practices for an information security management system (ISMS). Certification to ISO 27001 demonstrates that the company has adopted internationally-recognized standards to ensure borrowers and investors on its marketplace benefit from the highest level of data protection.

China’s debt collectors focus in on $ 200bn P2P debt pile (Financial Times) Rated: A

An estimated Rmb1.3tn in outstanding P2P debt as of May, according to online lending intelligence firm Wdzj.com, and a rising number of defaults have opened the door to a wave of start-ups using new technologies to try to recover tardy loans.

Ziyitong, which has sought to recover Rmb150bn since it was set up in 2016, recently launched an AI platform to help recover delinquent loans for some 600 debt collection agencies, and more than 200 lenders including Alibaba Group and Postal Savings Bank of China, Ms Sheng said.

European Union

Lendix raises $ 37 million for its lending marketplace (Tech Crunch) Rated: AAA

French startup Lendix has raised a new funding round of $37 million (€32 million). With this new influx of cash, the startup has one goal in mind. It wants to become the leading lending marketplace of Continental Europe.

Idinvest and Allianz are leading the round, with CIR SpA (De Benedetti’s holding firm) also participating. Existing investors Partech, CNP Assurances, Decaux Frères Investissements and Matmut are also participating once again.

Next year, Lendix  plans to operate in 7 countries.

BBVA teams up with Fintonic on loan marketplace (Finextra) Rated: A

Today the Spanish Fintech announced at the Money20/20 Europe event that BBVA has signed up to be part of the Fintonic loans platform, that processed the entire loan procedure for amounts of up to 30,000 euros without you having to leave the app, regardless of the institution providing the loan.

In addition to BBVA, other large banks and financial companies such as EVO Finance, Wanna, WiZink or Zaplo have partnered with the Fintonic loan platform. To date, the platform has processed over 7,500 loans for users, with a total volume of over 30 million euros and an average of 3,850 euros per contract.

First nine startups selected for EBAday2018 Fintech Zone (Finextra) Rated: B

Now in its thirteenth year, EBAday, a conference built by bankers for bankers, is expected to attract 1500 banking professionals and 70 exhibitors to the Munich, Germany conference on 12-13 June.

With interest in digital banking and fintech at an all-time high, the EBAday Fintech Zone will provide a dedicated space for innovative startups to network with and demonstrate their products to payment heads from across the European banking industry.

The first nine firms selected for this year’s Fintech Zone touch on many of the critical elements currently driving the digital agenda of banking and payments, from P2P payments to marketplace lending, Open APIs and artificial intelligence.

International

Personetics Accommodates Digital-Only and Challenger Banks (Finovate) Rated: A

Cognitive analytics company Personetics has traditionally served large banks, including six of the top 12 banks in North America and Europe. Today, however, the company launched a new offering that makes its solutions more accessible for smaller digital-only and challenger banks.

  • Pre-built banking content: The offering includes hundreds of pre-built insights, financial tips, and personalized advice that the bank can easily modify and control
  • API-first approach: Personetics uses open APIs to integrate AI functionality into a bank’s digital banking experience and allows banks to create their own brand identity and customer engagement strategy.
  • Editing tools: These tools allow the bank to retain control over the content and develop new capabilities to support its own business goals.
  • Fast time-to-market: Personetics delivers a production-level solution in just three months.
Australia

Online lenders challenging the big banks (Rate City) Rated: AAA

As the RBA leaves the cash rate on hold, new research has revealed the average home loan customer could save $82K by switching from a big four bank, to a low rate online lender.

New calculations show a family with a $350K loan looking for a fully-featured mortgage, could save up to $82,118 over the life of their loan, by going with the lowest comparable online lender, instead of a major bank.

Online lenders facts

  • Around 30% of lenders in the RateCity database are online.
  • Australia’s fifth largest home loan lender is online only (ING).
  • Nine of the 10 lowest rate lenders in our database are online lenders.

5 killer EOFY home loan deals (Mozo) Rated: A

loans.com.au Essentials Variable 80

  • 3.64% variable rate (3.66% comparison rate*)
  • No application or annual fees
  • Free extra repayments and redraw facility

Looking for a no fuss mortgage option offering up superb value? Look no further than the  Essentials Variable home loan from popular Aussie online lender loans.com.au. With a super low rate, no upfront or ongoing fees and the option to choose weekly, fortnightly or monthly repayments, this loan is easy on the hip pocket. You can also opt to split your loan between fixed and variable rates to find the perfect balance between certainty and flexibility.

India

CoinTribe, a MSME Lending Marketplace, Raises $ 10M from Sabre Partners and Existing Investors (Disrupt) Rated: AAA

CoinTribe, Gurugram headquartered credit based lending marketplace for MSMEs, has raised over $10 million equity capital in Series-B round led by Sabre Partners along with participation from existing investor, Puneet Dalmia.

With this round of funding, total equity capital raised by CoinTribe has increased to over $15 million. CoinTribe plans to use this additional capital to further enhance capabilities of its proprietary online credit algorithm, expand to new markets and further develop technology to enable faster and nimble product and credit model innovation.

Asia

How can new crowdfunder GlobalSadaqah improve transparency, impact of Islamic social finance? (Salaam Gateway) Rated: A

Umar and Ethis Ventures are behind Ethis Crowd, the world’s first Islamic real estate crowdfunding platform that raises funds for social housing development projects in Indonesia. These projects are backed by the Indonesian government. Ethis Crowd began with retail crowdfunding and moved into the institutional space when it started working with Islamic banks and large investors.

Ethis is also behind Kapital Boost, which crowdfunds financing for small and medium-sized enterprises.

In Southeast Asia, The Fintech Era Is Just Starting (Thailand Business News) Rated: A

In Indonesia, for example, Go-Pay and a number of other apps target the 51 percent of folks without bank accounts by providing cash transfers. Meanwhile, a bank called Mandiri allows people to avoid having a bank account entirely, instead letting them link their e-wallet to a mobile phone number. The wallet is topped up at kiosks and stores around the country. You can even withdraw money from your e-wallet via a Mandiri ATM.

For Indonesia’s Investree, it works like this: a small business is waiting to be paid by a client, but that won’t happen until the end of the month. So Investree lenders immediately pay the business owner the invoice amount.

Latin America

Brazil online lender Agibank says IPO may raise around 2.5 bln reais -filing (Reuters) Rated: AAA

Brazil’s online lender Banco Agibank SA set on Monday the price range for its initial public offering between 13.87 reais ($3.70) and 16.96 reais per share, according to a securities filing.

Agibank’s shareholders and the bank may raise around 2.5 billion reais in the offering, considering the mid-point of the price range, 15.41 reais. The pricing is scheduled for June 21. ($1 = 3.7447 reais) (Reporting by Carolina Mandl; Editing by David Gregorio)

Authors:

George Popescu
Allen Taylor

Friday May 18 2018, Daily News Digest

Seedinvest returns vs traditional

News Comments Today’s main news: PayPal to buy iZettle. LendInvest integrates with Stripe. KBRA assigns preliminary ratings to Avant Loans Funding Trust 2018-A. Ant Financial extends dominance. Today’s main analysis: SeedInvest delivers 17.4% IRR. Today’s thought-provoking articles: UK tech expanding faster than the rest of the economy. Why spreading fiber optic cable in Africa offers hope. Digital transformation is key […]

Seedinvest returns vs traditional

News Comments

United States

United Kingdom

European Union

International

  • PayPal to acquire iZettle for about $2.2 billion. AT: “This is huge news. If PayPal becomes a regular option in retail stores alongside Visa and Mastercard, it could become the defacto payment option for the majority of consumers. Of course, it will still have to compete with Square, Affirm, and Klarna. It’s bright spot is the massive head start is has over all of the above.”
  • Bitcoin boosts fintechs. AT: “I just can’t see any way that lenders and othe fintech companies to lose by offering crypto alternatives to their current products.”

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2018-A (Business Wire) Rated: AAA

-Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2018-A (“AVNT 2018-A”). This is a $221.935 million consumer loan ABS transaction that is expected to close on May 31, 2018.

Preliminary Ratings Assigned: Avant Loans Funding Trust 2018-A

Class Preliminary Rating Expected Initial

Class Principal

A A- (sf) $149,010,000
B BBB- (sf) $47,500,000
C BB- (sf) $25,425,000

SeedInvest Publishes Report on Investor Returns, Delivers IRR of 17.4% (Crowdfund Insider) Rated: AAA

SeedInvest, one of the largest investment crowdfunding platforms in the US, has released a performance report on investor returns. SeedInvest has been in operation since 2013 following the creation of accredited crowdfunding under Title II of the JOBS Act (Reg D 506c). Since that date, SeedInvest has become a full stack crowdfunding platform offering investments in the three different crowdfunding exemptions to both accredited and non-accredited investors.

Source: Crowdfund Insider

According to SeedInvest, investors on their platform have generated an unrealized Internal Rate of Return (IRR) of 17.4%1 since 2013. In comparison, this number is 1.5x greater than the 11.7% median return calculated by research firm Cambridge Associates for U.S. venture capital funds of the same vintage. The term of the report was up to the end of 2017.

SeedInvest said that the top 10% of their listed investors generated an a whopping 76.86% IRR while the bottom 10% delivered a negative 7.4% IRR. SeedInvest estimated that only 1.3% of their platform investors who have invested in three or more companies have generated negative unrealized IRR.

Check out the full report here.

Study Details Why Women Entrepreneurs Have Greater Crowdfunding Success (Entrepreneur) Rated: A

Crowdsourcing has emerged as a positive platform for women. The National Women’s Business Council released a report — Crowdfunding as a Capital Source for Women Entrepreneurs — based on exclusive and original data from the two leading crowdsourcing platforms, Kickstarter and Kiva. The goal was to determine various predictors of success on crowdsourcing platforms for women business owners, and if those predictors of success were different than their male counterparts.

Real Estate Crowdfunding Platform Small Change Lists Side by Side Reg CF – Reg D 506c Offer (Crowdfund Insider) Rated: A

Recently, Small Change has listed their first side-by-side Reg D 506c / Reg CF offering thus leveraging a work around other securities crowdfunding platforms in the early stage space have incorporated.

 

The SEC Just Launched a Fake ICO Website to Educate Investors (CoinDesk) Rated: A

The regulator announced Wednesday it has launched a mock ICO called HoweyCoin, presumably named after the Howey Test, which “touts an all too good to be true investment opportunity.”

However, the company notes, “the offer isn’t real.” Users who try to invest in the token sale will instead be redirected to the regulator’s education tools, which are aimed at pointing out the signs of fraudulent token sales.

BlackRock’s bet on Acorns is a bet on tomorrow’s investor (Financial Planning) Rated: A

BlackRock’s investment in microinvesting app Acorns underscores an evolution occurring in financial services in its shift toward digital — that gaining scale early will be essential to amassing future client assets.

The world’s largest asset manager is leading a $50 million funding round that will build out the startup’s portfolio stack with new investment options. It also gives BlackRock an inside look into the behavior of next generation investors, which it says will help fine-tune future releases and broaden its appeal beyond large institutions and pension funds.

Fundation grabs $ 120 mln from SunTrust (PE Hub) Rated: A

Fundation Group LLC, a lender and credit solutions provider, has secured a $120 million credit facility from SunTrust Bank. Fundation is also backed by Waterfall Asset Management and is majority-owned by Garrison Investment Group.

TransUnion Announces Agreement to Acquire iovation to Strengthen Fraud and Identity Solutions (Omaha World-Herald) Rated: A

TransUnion (NYSE:TRU) has agreed to acquire iovation, one of the most advanced providers of device-based information in the world, strengthening its leadership position in fraud and identity management.

PR Mortgage & Investments Selects SS&C Precision LM to Support Its Agency Lending Operations (SS&C Technologies) Rated: B

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that PR Mortgage & Investment Corp. (“PR Mortgage”) has selected SS&C Precision LM to support loan servicing and origination for HUD/Ginnie Mae, Fannie Mae, Freddie Mac and its banking programs. SS&C Precision LM will also enhance PR Mortgage’s asset management and investor reporting, and provide secure web-based portals for borrower self-service and document workflow automation.

United Kingdom

LendInvest Announces Integration With Payments Platform Stripe To Streamline Loan Application Process (Crowdfund Insider) Rated: AAA

On Thursday, specialist property finance lender LendInvest announced it has expanded on its long-term partnership with Stripe by integrated the payments platform in order to streamline its loan application process. According to the online lender, the new integration will be embedded in the primary stages of the buy-to-let loan application process. LendInvest reported:

“Stripe allows the broker to pay the valuation fee through LendInvest’s online buy-to-let portal immediately after the borrower’s application forms have been signed. This process was previously handled manually, with the case manager having to call the broker and then the borrower to arrange payment. Managing these payments centrally through LendInvest’s self-service online portal cuts down the overall time taken to complete the application, whilst providing a transparent way to track this stage of the application process.”

Tech Nation 2018 report: UK tech expanding faster than the rest of the economy (Information Age) Rated: AAA

Tech is expanding 2.6 times faster than the rest of the UK economy, according to Tech Nation’s 2018 report. The digital tech sector is worth nearly £184 billion to UK economy, up from £170 billion in 2016.

London ranks as second most connected place for tech in the world, after Silicon Valley. But, when it comes to proportion of overseas customers, the UK capital trumps the self-appointed tech capital of the world.

The UK’s digital tech sector continues to accelerate faster than the rest of the economy, according to Tech Nation 2018. Turnover of digital tech companies grew by 4.5% between 2016-17 compared to UK GDP which grew by 1.7% over the same period, according to the figures.

HSBC to tap Open Banking potential through new partnership (AltFi News) Rated: A

HSBC UK is set to capitalise on the opportunities presented by Open Banking after agreeing to a partnership with consents.online, an Account Information Service Provider (AISP).

Under the deal, HSBC can access consumer transaction data held by other organisations. The bank plans to use this information to launch new consumer products.

It will also use consents.online’s consent management architecture, which allows consumers to view and control how their data is used. The platform gives consumers and small businesses the ability to see who is accessing their data and to control access – with the power to revoke it at any time.

Peer to Peer (P2P) Lending – Withholding Tax Obligations – Borrowers (and Lenders) Beware (Lexology) Rated: A

Borrowers and lenders should be aware that currently Ireland’s withholding tax regime has not been amended for P2P Lending (aside the ability in certain circumstances to group payments together to the same lender in a calendar year) and in that regard the Irish Revenue Commissioners have issued a timely Revenue eBrief reminding Irish corporate borrowers (as well as lenders) of their Irish tax obligations. In particular the general obligation on an Irish corporate borrower2 to, amongst other things, withhold tax on interest payments made on the finance raised, at the standard rate (currently 20%) subject to certain exceptions, most of which will not apply where the lender is an individual, regardless of where resident.

Ablrate takes equity stake in Huddle (Peer2Peer Finance) Rated: A

ABLRATE has taken an equity stake in fellow peer-to-peer lender Huddle, as part of a wider strategic partnership between the two platforms.

Under the new deal, Ablrate has taken a minority holding in the business lender and the two platforms will share their investor bases.

 

Atom Bank launches mortgages for first-time buyers (AltFi News) Rated: A

Digital banking app Atom has launched first-time buyer products on its standalone Digital Mortgages platform.

The new loans will offer first-time home-buyers £500 cashback, along with a free valuation and no product fee. The newly-launched range will be available for mortgages between 80-95 per cent loan-to-value (LTV). The range consists of two, three and five-year fixed rates mortgages, with rates starting at 2.24 per cent.

The platform has also extended its existing range by adding 95 per cent LTV products for its purchase and remortgage products.

Furthermore, Atom has removed the £300,000 limit on first-time buyer applications and increased its maximum mortgage term from 35 to 40 years – changes meant to increase its flexibility and in line with broker feedback.

BitBose ICO (BOSE Token): Crypto Lending & Investment Platform (Bitcoin Exchange Guide) Rated: B

  • The platform will also have the Bitbose crypto loans program that will allow users to be able to receive real cash by holding to their crypto assets in a secured platform. The program offers an easy way for users to get money without having to sell their crypto assets. The program will have an easy to borrow and lend application, almost instant approval of loans and the borrower will get their cash instantly since it will be credited to borrower’s bank account. The interest rates are also competitive and do not have advance payment requirements. Another significant feature of the program is the lack of a capital block. Users of the program can withdraw their assets back anytime.
China

Ant Financial extends dominance in Chinese online finance (Financial Times) Rated: AAA

In documents reviewed by the FT Ant Financial says they now have more than 620 million users and their wealth management business has $345bn in assets under management; the information was put together for investors as the fintech company looks to raise $10bn of new capital; reports say the round is already oversubscribed and would value Ant Financial at more than $160bn

European Union

Hermes launches European Direct Lending Fund (AltFi News) Rated: A

Hermes Investment Management has launched the Hermes European Direct Lending following on from the launch of a UK direct lending fund in 2016.

Also headed by Patrick Marshall, Hermes head of private debt & CLOs, the European focused direct lending fund aims to offer institutional investors access to stable, low-correlated returns from high-quality, senior-secured loans.

These loans are typically to middle-market businesses in the UK and Europe, with a focus on Scandinavia, Germany, Benelux and Ireland.

Lendix Appoints Luuc Mannaerts As New CEO of Lender Nederland (Crowdfund Insider) Rated: B

Earlier this week, France-based online lending platform Lendix announced it has appointed Luuc Mannaerts as the new CEO of Lender Nederland, Lendix’s Dutch subsidiary. According to the online lender, Mannaerts has more than 20 years of experience in the Dutch and European banking sector.

Prior to joining Lendix, Mannaerts was CEO of ABN AMRO Commercial Finance, an ABN AMRO subsidiary with over 500 employees and specializing in SME finance in the Netherlands, the UK, France, and Germany. Lendix also revealed that thanks to his background, Mannaerts has specialized knowledge of the Dutch SME fabric

International

PayPal Agrees to Buy European Fintech Startup iZettle for About $ 2.2 Billion (Wall Street Journal) Rated: AAA

PayPal Holdings Inc. has agreed to buy European financial-technology startup iZettle AB for about $2.2 billion, a move that would catapult the U.S. digital-payments giant into hundreds of thousands of brick-and-mortar retailers around the world.

The acquisition, the largest in PayPal’s history, sets up a showdown between the San Jose, Calif., company and Jack Dorsey’s Square Inc.

Bitcoin is steroids for fintech startups that big banks are afraid to touch (Quartz) Rated: AAA

Making money by trading bitcoin, whose price has fallen by about 40%this year, has been difficult lately. But startups that provide services supporting crypto markets are faring much better. Companies like Revolut, a payment app, and Robinhood, a mobile broker, scoredlegions of new customers after they added buying and selling of digital tokens to their services.

TransferGo, a remittance company, is another fintech upstart that plans to offer crypto trading to customers. CEO Daumantas Dvilinskas says users were asking for ways to buy digital assets—about 4,000 people pre-registered for the service in just a few hours. The London-based firm, which announced today that it raised an additional $10 million from venture capital investors, will soon allow customers to buy and sell bitcoin, ethereum, XRP, litecoin, and bitcoin cash.

India

Fintech Startup Open Raises Pre-Series A Funding (Inc42) Rated: AAA

Bengaluru-based fintech startup Open Financial Technologies has raised an undisclosed amount of pre-series A funding led by Unicorn India Ventures and Recruit Co. Ltd, through its investment subsidiary RSP India Fund LLC.

Existing investors ISME-ACE and Vaibhav Domkundwar’s BetterCapital AngelList syndicate also participated in the round.

How has lending Money to SME evolved in India? (The Indian Wire) Rated: A

According to a report by Planning Commission of India, the MSME sector comprises 30 million establishments. It generates employment for 70 million people, manufactures over 6000 products, and contributes 45% to manufacturing output and 40% to exports. These statistics validate the fact that MSME sector is the backbone of the Indian economy.

There are several reasons why small and medium-size enterprises are unable to secure easy and quick business loans in India:

  • They do not have hard assets to mortgage, which disqualifies them from loans offered by most credit channels.
  • They do not have documented credit scores to assess their creditworthiness.
  • The loan application process in banks and other mainstream financial institutions is very tedious.

 

Asia

Validus, Lighthouse Canton launch S$ 20m SME financing fund (The Business Times) Rated: A

VALIDUS Capital and Lighthouse Canton Group launched a S$20 million fund to finance small and medium enterprises (SMEs) in Singapore on Friday, and hope to grow the fund to S$200 million in the next three years.

The LCV Trade Finance Fund will invest in loans that originate from Validus’ peer-to-peer lending platform.

Africa

Why the Spreading Network of Fibre Optic Cables Carries So Much Hope for Africa (Equities) Rated: AAA

The growing fibre infrastructure also has a direct impact on labour markets across the continent as the demand for specialized technicians and engineers increases. Plus, because fibre gives users and businesses access to more bandwidth, this technology is helping spur growth for small businesses directly and indirectly.

To illustrate, online P2P lending platforms such as Kiva and Lending Club have become quite popular with small businesses around the continent that now maintain an online presence. As a result, small business owners have ready access to unsecured business lines of credit, which helps them grow outside the confines of traditional financial systems.

Latin America

Why Digital Transformation Is Key to Argentina’s Future (Knowledge@Wharton) Rated: AAA

A surging U.S. dollar is playing havoc with its interest rates and the central bank pushed the key rate from 27.25% to a stunning 40% recently to support the peso. Even that was not enough to stem the run on the currency, and last week the government requested aid from the International Monetary Fund in the form of a $30 billion credit line.

In a country that has one of the smallest financial systems in the world as a percentage of GDP (14%), some of the world’s highest interest rates, and where nearly half of the population is unbanked, the opportunities presented by digital technologies are tremendous.

These include 123Seguro, the largest online insurance broker in Argentina, Mexico and Colombia, which is growing over 50% per year with an admittedly simple offering, and Afluenta, a peer-to-peer lending platform serving Mexico, Peru, Colombia and Argentina, and now expanding into Brazil, Chile and Uruguay.

Authors:

George Popescu
Allen Taylor

Friday March 2 2018, Daily News Digest

Seed

News Comments Today’s main news: How Funding Circle wants to fix the financial system. VPC Specialty Lending, Ranger Direct see dividends move up. Klarna triples net profit, mainly in Nordic countries. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Can Seed solve banks’ digital onboarding issues? How banking institutions can decentralize (The best read of the day). Institutional […]

Seed

News Comments

United States

United Kingdom

European Union

International

Asia

News Summary

United States

This neobank believes it can solve banks’ digital onboarding problem (American Banker), Rated: AAA

Since 2014 the neobank Seed has been reimagining one of the sleepier areas of banking: deposit accounts for small businesses.

Rather than walk into a branch — Seed, of course, has none — yoga instructors, food truck owners and other would-be customers can apply for accounts in less than five minutes on the startup’s web or mobile app. If approved, they receive a business debit card in the mail.

Now Seed, led by veterans of the fintech Simple, is selling banks software to help them solve one of their most pressing problems: finding a way to open accounts online as branch transactions continue to decline.

Source: American Banker

Lendio Franchise Announced in Clemson Region (Lendio), Rated: A

Lendio, the marketplace for small business loans, today announced the opening of a new Lendio franchise in the Clemson, South Carolina Region. Through the Lendio franchise program, Andy Ronemus will help local businesses in the community apply for loans, review their options and secure funding, easing the financial hurdles for small business owners.

In A Time of Need, A Woman Rises To Disrupt Fintech In Puerto Rico (Forbes), Rated: A

One notable leader in this endeavor is 

Fintech Startup Magilla Wants to Be the Match.com of Loans (Big Law Business), Rated: A

Since its launch in January 2016, Sacramento-based startup Magilla Loans says it’s originated more than $5 billion in loans and is changing the way lenders connect with borrowers. The platform can shrink into a few days what can often be a weeks- or months-long process of loan applications, data submissions and waiting just to get a loan term sheet.

Crowdlending helped Shorewood business woman’s dreams come true (tmj4), Rated: A

One Shorewood businesswoman did this all on a website called Kiva.

Shelia Long’s business is a workspace that helps ladies who work from home come together to get inspired.

“It was so great as the loans were coming in you can see like Switzerland, Boston, Carlsbad, Texas,” said Shelia Long.

One-hundred-thirty-seven people in total used PayPal to help her get to a goal of raising $8,000 at zero-percent interest.

Validus Specialty Launches Package Policy for Fintech Companies (Crowdfund Insider), Rated: A

Validus Specialty Underwriting Services, Inc. (Validus Specialty) announced on Thursday a comprehensive package policy specifically designed for private U.S. fintech companies. According to the company, the solution is designed to address Fintech’s complex risk management needs, which are traditionally underserved by incompatible and inadequate policy forms.

What’s next for marketplace ABS? Revolvers, ETFs & IOs (Asset Securitization Report), Rated: A

Last year, marketplace lenders learned that maintaining diverse sources of funding is just as important as managing the credit risk in their loans.

LendingClub, Marlette Funding and others developed their own securitization platforms, rather than relying on whole-loan sales to large investors. They also invited some of these investors to contribute seasoned loans to collateral pools for these in-house deals.

INSTITUTIONAL INVESTORS WARY OF PASSIVITY (All About Alpha), Rated: AAA

Geopolitical events are the most worrisome prospect on the minds of the decision makers at institutions looking ahead to 2018. The percentage of respondents who believe such events will have a negative impact this year is at 74%. The second most worrisome? Asset bubbles (65%).

More than three fifths (63%) of those surveyed said that the growth of passive investing has increased systemic valuation risk: 59% believe that flows into passive strategies artificially suppress volatility.

In 2015, Natixis found that 64% of institutions said they were upping their investments with active managers. In 2016, that number rose to 67%. In the latest survey it rose again, to 68%.

Be cautious when seeking income (Money Week), Rated: A

But Square Pie had sold bonds on the Crowdcube platform, offering lenders 8% a year. It illustrates why so many people are suspicious of mini-bonds (debt issued by small, retail-orientated firms). Anyone thinking of lending to just the one relatively new business has to be aware of the risks – and then ask: is 8% enough?

A more diversified option

The latest offering in this category comes from a platform called Goji, which aggregates a variety of direct-lending and peer-to-peer (P2P) platforms. It has just brought out a Renewables Lending Bond, which pays out anything from 5.5% for a three-year term (with regular income) to 7.6% over five years, where the interest is rolled up at repayment. The underlying assets are provided by a direct lender called Prestige Group, which lends to clean-energy projects.

The book of loans – around 39 – has an average duration of four years, with a typical loan-to-value ratio of between 70% and 80%.

2018 LightStream Home Improvement Survey (PR Newswire), Rated: A

More than half (58 percent) of homeowners are planning to spend money on home improvement projects in 2018, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks, Inc. (NYSE: STI). Budgets for renovations are on the rise: among homeowners planning renovations, 45 percent will spend $5,000 or more — an all-time survey high. Those planning to spend $35,000 or more doubled from 2017.

The survey shows robust enthusiasm for renovation, as well as a thoughtful desire to balance a home’s needs and the homeowners’ budget, so they have the financial confidence to move forward. Specifically, the survey revealed the following trends:

    • Home “Sweat” Home
      The majority of homeowners plan to invest sweat equity, as 65 percent say they’ll do at least some of the work themselves. The 18-34 group is particularly fond of do-it-yourself projects, with 70 percent planning to work on at least a portion of their renovation.
    • Staying — and Aging — in Place
      Only seven percent of homeowners are renovating to prepare their homes to be sold, the lowest percentage since 2015. Instead, 14 percent of homeowners across all age groups — not just baby boomers — are citing “aging in place” as a reason for making a home improvement. Even respondents aged 18 to 34 (11 percent) and 35 to 44 (10 percent) say they’re renovating “to prepare my home so I can stay in it as I get older.”
    • Tax Reform Boosting Budgets
      With recent passage of tax reform, homeowners have already begun calculating how the changes might affect what they spend on home improvements. One in four homeowners who have set a budget for renovation projects stated that tax reform has had an impact, with 18 percent increasing their budget and seven percent decreasing it.
    • Paying for Projects
      The majority of homeowners (62 percent) plan to pay for projects, at least in part, by using savings. Additional payment strategies were further revealed. Intent to fund through home equity lines of credit (HELOC) jumped from 10 to 13 percent. “U.S. economic growth and limited housing inventory have contributed to healthy home equity gains,” said Ellen Koebler, SunTrust head of consumer solutions. “HELOCs can offer a financial solution for many homeowners, as accrued value may be available to tap for renovations.”

At the same time, the percentage of people intending to use a home improvement loan has grown 29 percent from 2017 with 54 percent more 18- to 34-year-olds planning to fund projects through home improvement financing.

Crowdfunding your way to homeownership (Mic), Rated: A

According to recent research from the National Association of Realtors®, 24% of buyers under age 36 saved for their down payment for more than two years.

NAR research also found that 25% of homebuyers ages 36 and younger used a gift from relatives or friends for some or all of their down payment.

Platforms have popped up that simplify this process: HomeFundMe, which launched last year, and Feather the Nest.

An estimated 1,500 “nesters” have used Feather the Nest to crowdfund a down payment since 2014, according to company president Beth Butler, with an average goal of $10,000 to $15,000.

JPMC’s FinLab Launches $ 3M Contest For FinTech Startups (PYMNTS), Rated: B

To help identify FinTech products that may improve the financial health of underserved populations in the U.S., the Financial Solutions Lab (FinLab) launched its fourth annual $3 million challenge. The lab focuses on products that meet the financial needs of overlooked populations, JPMorgan Chase said in an announcement.

Accounts in Transit (O’Dwyer PR), Rated: B

Kwittken signs up Laurel Road, online lender of student loans, personal loans and mortgages. Aaron Kwittken’s firm will be responsible for raising awareness of the company’s products through content marketing, brand activations, thought leadership and traditional media relations. Laurel Road, which is part of Darien Rowayton Bank, recently surpassed $3 billion in student loan originations.

United Kingdom

Keeping the little guys in the loop: How Funding Circle hopes to fix the financial system (City A.M.), Rated: AAA

“When we think about the people we hire, it’s all about energy,” says Funding Circle co-founder James Meekings. “We want staff to share their excitement about what they do with others in the office – even if they’re talking about tax.”

“Even though we now have 800 employees, we still feel like a small business. We still push for opportunity and for people to be creative.”

VPC and Ranger funds see dividends tick up, but remain below target (AltFi), Rated: AAA

The £219m Ranger Direct Lending and £337m VPC Specialty Lending investment trusts have announced their latest quarterly dividends with both portfolios showing an uptick since their last pay-outs.

Leeds offers business loans through peer-to-peer platform (Room151), Rated: A

Leeds City Council is to use a peer-to-peer lending platform to lend money to local businesses.

The authority has decided to use the rebuildingsociety.com platform — based in the city — to provide money for small and medium sized businesses with an LS postcode.

Isas 2018: Innovative Finance Isas hit stumbling blocks (Financial Times), Rated: A

Innovative finance Isas (IF Isas) offer the promise of a good return, sheltered from tax, to investors willing to take on the higher risks of the peer to peer (P2P) finance market.

The market has taken longer than expected to ignite, however, as providers struggle to match growing demand with limited supply. Many new investors will find the door shut, at least for now.

Growing consumer indebtedness in the UK combined with the prospect of rising interest rates could push up default rates on loans, sharpening the dangers for those invested in the highest-risk P2P products.

How does the Isa allowance actually work? (Which?), Rated: B

For the tax year 2017-18, the maximum amount you can pay into one – or a combination – of Isas held in your name, is £20,000.

Once the new tax year for 2018-19 begins on 6 April, your allowance resets – once again to £20,000.

There are five main types of Isas. The current annual limits are as follows:

  • Help to Buy Isa: Money can only be used to buy your first home, and savings receive a government bonus of 25%. You can save £1,200 in the first month, then £200 per month thereafter. Therefore, in the first year you will have a limit of £3,400. In the following years the limit will be £2,400.
  • Lifetime Isa: Expressly for first-time buyers or to be used in retirement once the account holder has reached the age of 60. There’s a 25% government bonus on savings up until the account holder is 50 years old. You can pay in up to £4,000 per year.
  • Cash Isa: A traditional savings account – money you pay in grows with the provider’s interest rate. You can pay in up to £20,000.
  • Stocks & shares Isa: Money you deposit is invested in stocks & shares by the provider. Returns can be higher, but so is the risk that you may end up with less money than you paid in. There will also usually be fees involved for managing your investments. You can pay in up to £20,000.
  • Innovative finance Isa: Money paid in is invested in Peer-to-Peer (P2P) lending platforms, and you receive the interest when this loan is repaid. There is also some risk involved. You can pay in up to £20,000.
European Union

Klarna’s profits driven by growth in Nordics and Germany (Financial Times), Rated: AAA

The Swedish group posted a 27 per cent increase in revenues to SKr4.53bn ($546m) while net profit more than tripled to SKr346m. Klarna processed about €18bn in online transactions last year, an increase of 42 per cent.

Klarna reports double-digit sales growth (Finextra), Rated: A

As a result, 89,000 retailers globally now use Klarna products, this represents a 20% growth compared to the previous year. Available in 14 countries, retailers are increasingly adopting Klarna solutions which makes the payment processes as smooth as possible for consumers. As a result of the surge in retailer adoption, Klarna now handles 10% of all online payments in Northern Europe.

International

How Banking Institutions Can be Decentralized (CoinTelegraph), Rated: AAA

Decentralized banking is a term that has been construed in the wake of the cryptocurrency boom.

Cryptobanks are decentralized platforms that provide the usual services that centralized banks provide, primarily lending services and credit scoring, but essentially cuts out all of the middlemen that a centralized bank uses. The people needed in a bank to approve loans and structure financial data are replaced in a crypto banking ecosystem by smart contracts and p2p, peer-to-peer, services.

What kind of technologies do crypto banks use?

P2P, Blockchain, cryptocurrencies, Machine Learning, Big Data and smart contracts are used in crypto banking.

All transactions are recorded on the Blockchain.

Machine Learning Big Data.These technologies help to automate the lending process and cut through bureaucracy. AI can work 24/7 and match lenders with borrowers.

Do crypto banks have their own native currency?

Yes. Native cryptocurrencies help make the bank global.

Datarius, the first social p2p crypto bank, for instance, uses their own native token DTRC for all transactions. This helps create a standard for a global payment system within the p2p lending process.

What is social lending?

Thanks to Big Data and AI, crypto banks can see beyond a borrower’s credit score to identify their level of trust. Listings can include Trust Limit, Trust Management and User Ratings which helps AI decide if the participant is justified in borrowing from a specific lender.

Crowdlending: Anatomy of a successful strategy (EurekAlert!), Rated: A

The entrepreneur’s strategy for achieving this can be summarized in three stages. The first consisted of bypassing the banking monopoly on his platform using “cash vouchers,” a tool dating from 1937 that had long been forgotten. They allow personal loans to be made without a bank as intermediary. Secondly, by collaborating with future competitors, the public authorities and the sector’s regulators(2), the entrepreneur contributed to the development of a long-term crowdlending regulation in France. This collaboration relies on the creation of a meta-organization(3) called “Financement Participatif France” (FPF), which worked to define the status of “Intermédiaire en Financement Participatif” (IFP, equivalent to “crowdlending financing intermediary” in English), which regulates this new market.

Asia

Smartag International Signs Agreement to Provide Fintech Solutions to Rural Indonesia (PR Newswire), Rated: A

Smartag International, Inc. entered into a joint venture agreement with PT. Supratama Makmur Sejahtera (“PTSMS”), an Indonesian Fintech company to form a Joint Venture Indonesian PMA company in which Smartag will own 51% equity and PTSMS will own 49%. This follows an earlier MOU signed on October 12, 2017 between PTSMS and PT Rijan Dinamis Selaras (“RDS”) representing Pondok Pesantren Riyadhul Jannah Pacer Mojokerjo, founder of Consultative Assembly of Indonesian Boarding Schools which has a network of 28,000 boarding schools to undertake a Fintech project (the “Indonesian Project”).

Authors:

George Popescu
Allen Taylor

Friday February 16 2018, Daily News Digest

Amazon small business lending

News Comments Today’s main news: Amazon partners with Bank of America on lending. Roostify raises $25M for expansion. Lendy’s pretax profits hit 3.3M GBP. Lendix to enter Dutch, German markets. Revolut to launch banking app in APAC. Vested backs Dojo. Today’s main analysis: Important barriers to alternative investing digitization. Today’s thought-provoking articles: Americans can’t get enough consumer debt. Who are Britain’s […]

Amazon small business lending

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Amazon has partnered with Bank of America for its lending program (CNBC), Rated: AAA

CNBC has learned that Amazon Lending, which launched in 2011, ultimately found a partner in Bank of America Merrill Lynch, according to people familiar with the matter who asked not to be named because the alliance is confidential. Partnering with Bank of America allows Amazon to reduce its risk and access capital specifically to provide credit to more merchants so they can acquire inventory.

Amazon Lending is an invitation-only program that makes loans of $1,000 to $750,000, with terms of up to a year, for companies that may have difficulty landing traditional business loans. In June 2017, Amazon said it issued more than $1 billion in loans during the previous 12-month period, compared to $1.5 billion in combined loans for the four years prior to that.

Scaling back

But even with the Bank of America deal, Amazon Lending has been tapping the brakes on growth of late. After almost doubling to $661 million in 2016, outstanding loans just barely increased last year to $692 million, according to Amazon’s annual report earlier this month.

Source: CNBC

These 10 MBA Programs Will Earn You the Highest Salary, According to SoFi (Levo), Rated: A

According to SoFi, the student loan refinancing company, “No BS” Return on Education 2018 MBA rankings, these are the best schools for earning back your money.

With Americans owing more than $1.48 trillion in student loan debt,  (which is $620 billion more than the total U.S. credit card debt) knowing which schools are going to help you pay off your debt faster, is something you should consider if you are looking at business school programs.

Source: Levo

Roostify Closes $ 25 Million Series B To Fund Expansion (VentureBeat), Rated: AAA

Roostify, a digital lending platform provider, today announced the completion of a $25 million Series B round of financing. The round included new investments from Cota Capital, Point72 Ventures, and Santander Innoventures, the venture capital arm of Banco Santander, as well as additional funding from previous investors JPMorgan Chase, Colchis Capital, and a subsidiary of USAA. The new funds will power the company’s ambitious growth goals, including a deeper presence in the enterprise space, rich product enhancements, and expansion into new markets.

Abode Aims to Make Home Buying and Selling Easier (Chicago Inno), Rated: A

In 2016, Kyle Stoner and best friend Carson Junginger were both having a hard time navigating the home-buying process. Between finding a realtor, finding a property and securing a mortgage, the two tech entrepreneurs realized that buying a home was too cumbersome and fragmented. And when they couldn’t find a single platform where they could manage all these separate tasks, they teamed up to create one — Abode.

SoFi named Abode in its 2018 class of SoFi Entrepreneurs, the fourth cohort of startups which will receive mentorship and funding from the alternative lending startup, but Stoner declined to comment on whether SoFi is officially partnering with Abode in the future. Stoner said Abode is rolling out a new consumer product in March 2018, but declined to give further details.

Americans Can’t Get Enough Consumer Debt (WSJ), Rated: AAA

If anything, consumers are borrowing more on credit cards or through auto loans than they have in years, and lenders seeking growth are happy to oblige them.

In the fourth quarter, consumer debt, excluding mortgages and other home loans, rose 5.5% from a year earlier to $3.82 trillion. That is the highest amount since the Federal Reserve Bank of New York began tracking the data in 1999. Moreover, consumers’ non-housing debts accounted for just over 29% of their overall debt load, also the highest amount on record.

Overall, households are paying about 5.8% of their disposable personal income to stay current on their nonmortgage debts, according to third-quarter Federal Reserve data. This figure, which is at the highest level since the end of 2008, bottomed out at 4.9% in 2012.


URGENT VS. IMPORTANT: BARRIERS TO DIGITIZATION IN ALTERNATIVE INVESTING (All About Alpha), Rated: AAA

KPMG International and CREATE-Research have jointly prepared a report about the digitization imperative for alternative investment management.

Early on, its authors list eight key digital innovations that are reconstructing the industry:

Application programming interfaces; cognitive technology and machine learning; Big Data; blockchain; new digital platforms; robo-advisors; robotic process automation; and social media.

To that end they have talked to 125 alternative managers located in 19 countries, with combined assets under management of $2.6 trillion.

A Need to Future Proof

They found that the scale of the ongoing shake-up is well understood. Only 2% of respondents saw a “business as usual” scenario playing out over the next 10 years. Roughly one-third (35%) expect marginal changes. But 53% anticipate “partial” disruption and the remaining 10% anticipate “total” disruption.

Can small-dollar loans be both profitable and safe? (American Banker), Rated: A

Is now the time when U.S. banks, credit unions and their regulators finally see eye to eye on small-dollar loans to consumers who have checkered credit histories?

A long-running stalemate between the industry and its overseers has ceded much of the subprime consumer market to payday lenders, pawn shops and other high-cost lenders. But in recent months, banks started to get some insight from Washington about what type of product would be deemed acceptable.

Citi, PNC invest in B-to-B payments fintech (American Banker), Rated: A

In the latest example, Citi Ventures and PNC on Wednesday announced a strategic investment in the fintech firm HighRadius, which makes business-to-business payments and receivables software. Terms of the investment were not disclosed. HighRadius has an existing partnership with Bank of America on an accounts receivables platform, and also counts as clients Fortune 500 companies such as Walmart, Johnson & Johnson, Procter & Gamble and Starbucks.

U.S. Bancorp hit with $ 613M in penalties linked to payday lender Scott Tucker (USA Today), Rated: A

U.S. Bancorp, the parent of U.S. Bank, agreed to the criminal and civil penalties in settlements announced by the Manhattan U.S. Attorneys Office in New York, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Crimes Enforcement Network.

From 2009 until 2014, U.S.Bank set an artificial cap on the number of alerts generated by its customer transaction monitoring systems, authorities said. The Minneapolis-based bank based the number of alerts on low staffing levels, rather than on the level of risk in the transactions.

The lax oversight aided Tucker, a longtime U.S. Bank customer who was sentenced to more than 16 years in prison last month for running an illegal $3.5 billion Internet-based payday lending scheme that victimized thousands of consumers with loan interest rates as high as 1,000%.

 

Fluid Market Launches Truck Sharing Marketplace (Business Insider), Rated: A

Fluid Market, a neighborhood truck sharing application that allows people to rent trucks seamlessly from one another, today announced the nationwide launch of its truck-sharing marketplace, providing a seamless and on-demand utility vehicle rental experience to its peer-to-peer network of users and lenders across the country.

Finalists for the LendIt Fintech Industry Awards 2018 Announced (Crowdfund Insider), Rated: A

Fintech Innovator of the Year

  • Affirm
  • Varo Money
  • Better Mortgage
  • Upstart
  • Plaid
  • Circle
  • loanDepot

Top Consumer Lending Platform

  • LendingClub
  • Zopa
  • Marlette Funding
  • Marcus by Goldman Sachs
  • LightStream
  • Yirendai

Top Small Business Lending Platform

  • Kabbage
  • Funding Circle
  • BlueVine
  • Mirador
  • Credibly
  • StreetShares

Top Real Estate Lending Platform

  • Sharestates
  • LendInvest
  • LendingHome
  • PeerStreet
  • LendingOne
  • Fundrise

Emerging Lending Platform

  • Upgrade Inc.
  • Better Mortgage
  • ETHLend
  • Neat Capital
  • Nexoos
  • LendingUSA

Excellence in Financial Inclusion

  • Kreditech
  • LendUp
  • LenddoEFL
  • Oportun
  • China Rapid Finance
  • Elevate Credit

Most Promising Partnership

  • Katipult + Polymath Inc
  • Macquarie + PeerIQ
  • Lending Club + Opportunity Fund
  • Intrinio + QUODD
  • Financeit + Goldman Sachs
  • Minna Technologies + Swedbank

Most Successful Cross-Border Partnership

  • Kabbage + ING
  • Kreditech + PayU
  • PayJoy + Macrocel
  • nCino + OakNorth
  • Kasisto + DBS Bank
  • Phoenix Finance + Saxo Bank

Most Innovative Bank

  • BankMobile
  • Cross River Bank
  • Laurel Road
  • CBW Bank
  • Marcus by Goldman Sachs
  • HSBC

International Innovator of the Year

  • UP Financial
  • LexinFintech
  • Afluenta
  • Phoenix Finance
  • IrisGuard
  • Borrowell

Top Enterprise Technology Company

  • Salesforce
  • Roostify
  • Blend
  • ThreatMetrix
  • Mambu
  • CUneXus

Top Emerging Technology Company

  • Nav
  • Ingo Money
  • Nova Credit Inc.
  • MoneyLion
  • dv01
  • Emailage

Most Innovative Mobile Technology

  • PayJoy
  • Clarity Money
  • AutoGravity
  • Dave.com
  • Blinker
  • Juvo

Top Investment Bank in Fintech

  • Macquarie
  • Marlin & Associates
  • FT Partners

See the full list here.

Macquarie looks to broaden US ABS footprint (Global Capital), Rate: B

Macquarie Group is seeking to hire a US ABS director for its credit markets team as it looks to grow its presence in US esoteric ABS sectors, including whole business, marketplace lending and renewable energy finance.

Small nonbanks call for clearer exemption from CFPB audits (American Banker), Rated: A

Nonbank mortgage firms are seeking formal assurance from the Consumer Financial Protection Bureau that they will not become subject to surprise audits or enforcement without involvement of a state regulator.

In a joint letter to acting CFPB Director Mick Mulvaney, the Community Home Lenders Association and the Community Mortgage Lenders of America said the agency should practice “streamlined supervision” of smaller nonbanks, which is consistent with the Dodd-Frank Act.

 

Business Innovation Could Accelerate Under a Friendlier CFPB, LeClairRyan Attorney Says (Business Insider), Rated: B

Recent moves by the federal Consumer Financial Protection Bureau (CFPB) could signal a friendlier approach to businesses, according to Jay Spruill, a partner in LeClairRyan’s Richmond office and leader of the national law firm’s Marketplace Funding Team.

“The Payday Loan Rule has been heavily criticized by the small loan industry which says the rule will restrict consumers’ access to credit,” Spruill notes in the blog, CFPB Signals Retreat from Aggressive Regulation. The post appears in Marketplace Shift, which focuses on the impact of legal and regulatory developments on financial innovation.

United Kingdom

P2P Lender Lendy Releases Financial Results: Pretax Profits Rise to £3.3 Million (Crowdfund Insider), Rated: AAA

Peer to peer lending platform Lendy has released its audited accounts for 2016, showing profits before tax rising to £3.3 million compared to £53,000 in 2015. The company reports that since launch in 2012, Lendy has originated over £376 million in secured loans generating £36 million in interest for investors. Approximately £141.5 million in principle has been repayed with current outstanding loans at £186.5 million.

 

The digital upstarts taking on Britain’s dominant few banks (The Economist), Rated: AAA

For some British millennials, Monzo is as close to a cult as a bank can be. Its coral-pink cards are hard to miss. “People in bars will get very excited if they see you are a fellow Monzo user,” says Mr Matthews, who is 29.

Counting the British arm of Santander, Spain’s largest bank takes the share to over 80%. In 2015 Britons had 70m-odd active current accounts. They paid £500 ($750) or more into 70% of them every month.

Supervisors have licensed more than 30 entrants since 2013. But by no means are all the challengers young. One of them, CYBG, owns Clydesdale, a Scottish bank that turns 180 this year, and Yorkshire Bank, aged 159. It has about 1.8m personal current-account customers and assets of £43bn. Nor are all the infants purely digital. Metro Bank has since 2010 established 55 “stores” (ie, branches) and is spreading beyond south-east England.

Among digital purists, Monzo’s chief rival is Starling Bank—where Mr Blomfield used to work. It started current accounts last spring; around 100,000 have been opened. Tandem, which recently acquired Harrods Bank, the banking arm of a posh department store, is also open for business. Atom Bank, part-owned by Spain’s BBVA, focuses on mortgages funded by fixed-rate savings. N26, a German smartphone bank, is due to arrive this year. Another near-cult, Revolut, is seeking a European licence (valid, for now, in Britain).

To ginger up small-business banking, RBS, the market leader, must cede ground and money to competitors as part of the price, agreed on with the European Commission, of its rescue by the government in 2008. RBS will put up £425m, divided into sums from £5m to £120m, to build up rivals’ capabilities, plus £350m for incentives to customers to switch banks. Banks with assets of up to £350bn may bid. That excludes the big four but just lets in Santander (£315bn), to some challengers’ chagrin.

 

Industry reacts to SME finance inquiry (Bridging&Commercial), Rated: A

Earlier this month, the Treasury committee launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS’s Global Restructuring Group (GRG).

The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.

For example, unsecured lending to an SME borrower for the purposes of their business will only be regulated if the SME is unincorporated and the amount being borrowed is £25,000 or less.

The UK’s Financial Conduct Authority doubles down on algorithmic trading (Crowdfund Insider), Rated: A

The UK’s Financial Conduct Authority (FCA) on Monday published its report on the supervision of algorithmic trading, which is intended to illustrate best practices and give guidance to firms considering implementing AI to automate trading operations.

The focus areas of the report hint at concerns the FCA harbors about AI use in capital markets. The regulator placed particular emphasis on humans being able to intervene in an algorithm if something goes wrong, and ensuring the technology doesn’t start behaving in a way unintended by its creators.

Innovate Finance Announces Finalists for 2018 FinTech Pitch360 (Crowdfund Insider), Rated: B

The 2018 Pitch360 finalists are the following:

  • Artificial Intelligence: Axyon AI SRL, Coriolis Technologies Ltd, Eye Capital S.A.
  • Banking/ Enterprise Solutions: Akoni, Hedgewiz Pure Risk Management Solutions, Salt Edge Inc
  • Distributed Ledger Technology: hiveonline, SPIRAL
  • Financial Inclusion: CommuScore, CreditSpring, Trezeo
  • Payments & FX: Duality Banx, Divido Financial Services, Envision&Company LTD
  • Peer-to-Peer / Alternative Funding / SME Lending: Alterest, Credit Data Research Ltd, StrideUp
  • Personal Finance Management & Robo Advice: CASHOFF Ltd, Bedaan
  • RegTech: Calcabis, Exate Technology
China

 

Hexindai: Positive Quarter Strengthens Bull Case (Seeking Alpha), Rated: AAA

Sales increased 575% to $43.31 million, driven by loan facilitation growth, which was $388 million – an increase of 187.1% over the prior year. The high sales growth rate contributed to a whopping 1,589% net income growth, which was $26.9 million for the quarter. Gross billing ratio contributed to overall growth with an increase from 7.4% in the previous year to 12.1% in the reported one as the company continues its shift to credit loans.

The company increased its guidance, bumping EPS estimates for the year from $0.74 (see linked article for full estimate calculations) to $1.30 per share, as sales are now expected at $108 million – up from previously expected $90 million. The company believes this will be driven by a bump in loan facilitation, which it expects to be $1.23 billion, up from previously expected $1 billion.

In my previous article I initiated the company with a price target range of $14.80 to $22.20 per share given a 20x to 30x forward earnings multiple, and given recent positive catalysts I believe fair value lies in the same multiple. As the company has hiked its sales and net income guidance, pushing EPS to $1.30 for fiscal 2018, I believe the company’s fair value now lies in the range of $26.00 to $39.00 per share. That represents almost 200% upside from the current share price.

Money20/20 launches in China, the world’s biggest FinTech market (CUInsight), Rated: A

Ascential announced in Hangzhou recently the launch of its trailblazing FinTech event Money20/20 at Hangzhou International Expo Center on 14-16 November 2018.

Guest speakers includedArthur Zhu, President of LianLian Pay; Raymond Qu, CEO of Geoswift; Jeff Parker, Managing Director of WorldFirst Asia-Pacific; Eric Gu, founder & CEO of Metaverse; and experts such as Dr. Ben Shenglin, Dean of Zhejiang University’s Academy of Internet Finance.

Chinese ADSs on the Rise (Capital Watch), Rated: B

Coming in second and third place, China Rapid Finance Ltd. (NYSE: XRF) and JP Holdings Ltd. (NYSE: JP) both soared 8 percent to close at $5.17 and $19.85 per share, respectively, while Jianpu Technology Inc. (NYSE:JT) rose nearly 6 percent to $7.28 per share.

European Union

Online Lender Lendix Plans Entrance into German and Dutch Markets (ICO News Desk), Rated: AAA

Continuing its plan to lead the European SME lending market, fintech company Lendixcontinues its geographical expansion with plans to branch into Germany and the Netherlands.

bitJob teams up with the Dutch government blockchain program to enrich students résumés with a crypto flair (Chipin), Rated: A

bitJob, the P2P marketplace that connects students and businesses, is announcing today its partnership with the Blockchain projects division inside the Dutch government, to deploy its pilot project in Holland. The marketplace, developed by bitJob, bridges the gap between businesses and students by enabling both sides to offer/look for employment with a technology that promotes honesty, immediacy, and robustness.

Opiria & PDATA token: peer reviewed token sale from Germany (Opiria email), Rated: B

Opiria allows consumers to sell their personal data and companies to buy personal data directly from consumers without a veiled middleman in a fully transparent and secure way.

We are presently running an ICO. About our ICO:

  • peer reviewed with due diligence report – showing PDATA is a top 5% ICO

  • Already >1 million USD raised in the Pre-ICO (hard cap $5 million in Pre-ICO)

  • 4k+ active users providing personal data and opinions

Management Team:

  • Dr. Christian Lange (CEO): proven track record in entrepreneurship and successful exit in 2015

  • Marlene Gagesch (CTO): head of B2B software departments for > 10 years

For more information:

  • 2 min pitch video: 

    1 page business model canvas: 

    ICO website/whitepaper: 

    International

    Can’t Miss Quick-Start Guide to Launching a New Business Venture (Influencive), Rated: A

    The following quick-start guide will explain the 7 steps that you need to follow to launch your business venture.

    Make Sure There Is a Market for Your Idea

    The very first step you should take is to validate your idea or concept. You need to make sure that there is a market for your idea.

    Create a Basic Business and Marketing Plan

    If you are trying to launch your product or service as soon as possible, you will still need a solid business and marketing plan. You do not need to be completely detailed, but you should have a good plan in place.

    Obtain Funding for Your Idea

    Another way to get financing is to use P2P (peer to peer) lending. This is similar to crowdfunding, which is another option. With both P2P lending and crowdfunding, you will need to properly explain the value of your product or service. Also, it may take a while to obtain all the funding that you require.

    Research Your Target Demographic

    Once you get funding, you will need to start researching your target demographic. You need to know who you are marketing to before you start a marketing campaign.

    Create a Website

    You do not need to spend a lot to build a website. There are several affordable options with easy to use website builders. These website builders include drag and drop layouts, so anyone can build their own website. A few options include WordPress, Wix, and SquareSpace.

    Decide on a Business Structure

    The next step is to choose a business structure. This is essential and should be decided before you release your product or service.

    Start Marketing Your Product or Service

    The final step is to begin marketing your product or service.

    India

    In consultation with MCA, Sebi makes headway in framing crowd-funding norms (Business Standard), Rated: AAA

    The Securities and Exchange Board of India (Sebi) is finalising the regulatory framework for crowd-funding in consultation with the corporate affairs ministry.

    APAC

    Revolut uses GPS for FX app launch in APAC (Fintech Futures), Rated: AAA

    Revolut will be using Global Processing Services (GPS) for the launch of its multi-currency FX app in the APAC region.

    Revolut will unleash its app, starting with New Zealand, Singapore and Japan. GPS announced the deal during the Lord Mayor of the City of London’s UK Business delegation, which is currently in Australia this week.

    Middle East

    Fintech Startup Beehive Is Closing The Gap For SME Finance In The GCC (Dubai Forum), Rated: AAA

    She found Beehive, a Dubai-based peer-to-peer lending platform. Through Beehive, Lowmass borrowed $54,000 in late 2016 at an interest rate of 9.89%. Although it took about the same amount of time to get a loan from Beehive as it did through the bank, Lowmass says, “the funds were raised cleanly and extremely quickly and we were delighted with the resultinginterest rate we ended up paying.”

    It has 6,000 registered investors—mostly from the U.A.E.—and has channeled a total of $40 million to borrowers.

    Africa

    Ecobank: African Fintech Predicted to Grow Exponentially by 2020 (Crowdfund Insider), Rated: A

    Africa is now at the forefront of fintech with 57.6% of the world’s 174 million active registered mobile money accounts (100.1 million) in Sub-Saharan Africa. Fintech in Africa is predicted to grow from US$ 200 million to US$ 3 billion by 2020. As Ecobank works seamlessly across 36 countries in total, Ecobank is also the only bank that allows customers to transact more easily across borders.

    Ecobank’s mobile app allows customers in any of the 33 African countries in which it operates to check balances, pay bills and merchants, and many other services. Rwanda, where the summit is taking place, has the second highest use of mobiles in Africa, with more than 50% of the population unique subscribers. Kenya has the highest penetration rate of almost 60% of the population.

    Canada

    Vested Ventures completes seed round in gamified savings app Dojo (Finextra), Rated: AAA

    Vested Ventures, the investment arm of the fastest growing public relations agency globally, Vested, announced it has successfully completed a seed round investment in Vancouver financial software company Dojo Technology Corp (“Dojo”).

    Dojo’s iOS and Android-friendly mobile platform reimagines how families and young people interact with their banks and credit unions by providing reward-based gamification and nudging users towards positive financial habits.

    Authors:

    George Popescu
    Allen Taylor

Wednesday January 17 2018, Daily News Digest

European alt SME lending

News Comments Today’s main news: Wells Fargo is closing branches left and right. Repeal  of payday lending rule under consideration. Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A-LLC. RateSetter leads in personal loans. Curve launches. Victory Park Capital looks overseas. Today’s main analysis: How Lendix blazes a trail in SME lending. Today’s thought-provoking articles: Why regulation is crucial. Wells […]

European alt SME lending

News Comments

United States

United Kingdom

China

European Union

International

Asia

Africa

Canada

News Summary

United States

Wells Fargo is getting more aggressive with branch closures (Tearsheet), Rated: AAA

Wells Fargo is charging toward its goal to cut over 800 branches by the end of 2020, it said in a presentation of its fourth quarter earnings on Friday.

 

Wells, which has been struggling to cut costs while it continues getting hit with legal fees following its various scandals, expects to save $4 billion as a result of the plan.
Source: Tearsheet

Consumer Financial Protection Bureau considering repeal of payday lending rule (NBC News), Rated: AAA

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday that it plans to take a second look at the payday lending rules. While the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations. The bureau also said it would grant waivers to companies as the first sets of regulations going into effect later this year.

Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A LLC (Moody’s), Rated: AAA

Moody’s Investors Service has assigned provisional ratings of (P)Aaa (sf) to Class A-1 Notes, the Class A-2A Notes and the Class A-2B Notes to be issued by SoFi Professional Loan Program 2018-A LLC (SoFi 2018-A). The collateral underlying the transaction consists of SoFi’s private student loans, which are loans the government does not guarantee. Our cumulative net loss expectation for SoFi 2018-A’s loan pool is approximately 2.0%.

Issuer: SoFi Professional Loan Program 2018-A LLC

  • $55,000,000 Floating Rate Post-Graduate Loan Asset-Backed Class A-1 Notes, Assigned (P)Aaa (sf)
  • $358,500,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2A Notes, Assigned (P)Aaa (sf)
  • $236,800,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2B Notes, Assigned (P)Aaa (sf)

Magilla Loans Platform Surpasses $ 4.5B Loan Origination Milestone (PR Newswire), Rated: A

Magilla Loans, a search engine for loans that connects borrowers to banks without requesting personal information, announced it has surpassed $4.5 billion in aggregated loans from top banks across the U.S. The Magilla platform provides business owners with access to multiple financing options, including access to business, home and real estate loans.

UpLift Closes Financings of $ 90M (FINSMES), Rated: A

UpLift, a Sunnyvale, CA-based travel financing company, closed financings of $90m.

The company received:
– a $75m credit facility in partnership with funds managed by affiliates of Fortress Investment Group, and
– a $15m equity round which includes participation from previous investors including PAR Capital with Draper Nexus, Highgate Ventures, and former Expedia CEO Erik Blachford.

NextCapital does $ 30-million VC round with a staggering objective that’s taking shape first with John Hancock (RIABiz), Rated: A

The shoot-the-moon robo strategy of NextCapital Advisers Inc. is looking up now that John Hancock Financial Services Inc. has come out of pilot and State Street Global Advisors became a partner in going after RIAs.

The Chicago-based digital advisor, founded in 2013, announced it more than doubled its backing with $30 million of venture round led this time led by Oak HC/FT of Greenwich, Conn. See: NextCapital raises $16 million as its founder goes where Financial Engines’ 401(k) robo strategy didn’t.

All told, the firm has raised $54 million: Six million dollars in August 2014, $18 million in 2015 and, just recently, this $30-million round.

Borrowers in the Lone Star State Can Now Get a Better Mortgage (Digital Journal), Rated: A

Better Mortgage, a digital mortgage company focused on improving access to home financing for a new generation of homeowners, is now available to Texas homebuyers. Better will now be able to serve more than half of Americans who are looking to own or currently own a home. In 2017, Better expanded its footprint in major real estate markets around the country, with Texas being the latest licensed states.

Texas is Better’s 14th market. In 2018, they expect to continue their expansion, focusing on geographies that help first-time homebuyers invest in their communities by putting down roots.

Gary Lieberman of Laurel Road (Lend Academy), Rated: A

In this podcast you will learn:

  • The history of Darien Rowayton Bank.
  • Why Gary decided to buy this small community bank in 2010.
  • How the bank has grown since Gary took it over.
  • How student loan refinancing first got on his radar decades ago.
  • When DRB originated their first student loan.
  • The advantages of being a bank and a fintech platform.
  • Some of the affiliate partnerships DRB has.
  • Other verticals where DRB has offerings today.
  • Why DRB rebranded to Laurel Road in 2017.
  • The scale they are at today with student loan refinancing.
  • Their approach to securitization.
  • How their loans have been performing to date.
  • The profile of their typical borrower.
  • How they market their offerings.
  • What the future holds for Laurel Road.

Refinancing Student Loans Gets Mixed Report (247WallSt), Rated: A

More than 45 million Americans have borrowed $1.45 trillion in student loans to help pay for their post-secondary educations. Repaying those loans can be tough, especially if the loan amount is high and pay for the first job after graduation is low.

Student loan marketplace and refinancing website LendEDU has just released its second annual report on the state of the student loan refinancing market. Here are several highlights from the report:

  • Average credit score of an approved refinance applicant is 764.
  • Just over 58% of 2017 applications are denied.
  • The average interest rate on a refinanced loan is 5.56%. The average rate rose 74 basis points year over year from 4.82% in 2016.
  • The average size of a refinance loan was $66,453. The 2017 average was more than 23% higher year over year.
  • Less than half of approved applicants actually end up refinancing their loans. In 2016, just over 33% of all applicants completed the loan process.

Reliamax’s Michael VanErdewyk: ‘We’re seeing a move towards more private student loans’ (Tearsheet), Rated: A

With all the excitement around online lending, there are still some spaces that have a long growth runway. One of the most persuasive growth opportunities is private student lending. Macroeconomic and policy changes are contributing to the growth thesis but so too are the number of local lending institutions that want to move into this asset class.

Rising costs of higher education
The cost of education continues to increase and the number of kids in school isn’t declining. So, it’s a big opportunity. Really, we have to talk about the cost of education. The cost of higher education in the U.S. today costs over $400 billion a year. About 25 percent of that is free money (grants and scholarships). Another 25 percent is federal student loans. The remainder — about $200 billion a year — is really family contributions.

The focus on private student loans
If you look at the total outstanding student debt, there’s about $1.4 trillion in federal student loans and $100 billion in private student loans, comprising only about 7 percent of total outstanding student debt.

CreditVest starts crowdfunding advisory firm (BizJournals.com), Rated: B

Jon Mauro founded Realty Mentors with Andrea Humphrey, who is president and owner of CreditVest, to focus on individual investors who want to participate in commercial real estate crowdfunding.

Zelle is now running TV ads (Tearsheet), Rated: A

Zelle is spending “tens of millions” of dollars on a television ad campaign featuring spoken word artist Daveed Diggs.

Early Warning, the bank-owned consortium behind the peer-to-peer payments platform, aired the first ad Saturday during the National Football League’s divisional round of playoff games and will continue to run them alongside unifying cultural events like the Grammy Awards, the NBA All-Star Game and the Super Bowl pre-game show. They’ll also run during popular shows on Bravo, Comedy Central, The Discovery Channel, ESPN and MTV.

Zelle is trying to build some brand recognition for itself among its target audience, mobile users, in an effort to compete with Venmo.

An investing platform founded by a 25-year-old went free — and now it’s facing a backlash from its rivals (Business Insider), Rated: A

M1, which was founded by CEO Brian Barnes when he was 25, originally charged users 25 to 40 basis points to use its platform, which allows users to buy fractional stocks and invest in pre-built portfolios. In December, it decided to go free, and make money strictly on the backend, by selling flow to trading firms and lending out non-invested funds sitting in users’ accounts to banks. The company also plans to offer margin trading to its users.

Since going free in December, M1 has seen daily inflows hit as high as $1 million, and a 10-fold increase in the number of new accounts each day.

Still,  M1’s robo rivals aren’t convinced the strategy will work for the small company.

Tipalti Launches Payables Automation Partner Program (BusinessWire), Rated: A

Tipalti, the leading global payables automation platform, today announced the launch of its Partner Program, which will offer accounting firms, financial institutions, system integrators, ERP resellers/VARs, consultants, and partners who work with the office of the CFO, the ability for their clients to leverage Tipalti’s software to eliminate the friction, risk, and time spent on manual accounts payable operations.

Key Features of Tipalti’s Partner Program:

  • Training and support for partners as they assist their clients
  • Option to pass exclusive savings on to their clients
  • Option to receive income stream through revenue-sharing
  • Low-impact engagement with minimal investment by partner

STOCKHOLDER INSPECTION RIGHTS SURVIVE CHALLENGE IN DELAWARE (AllAboutAlpha), Rated: A

On December 29, 2017, the last business day of the expiring year, the Delaware Chancery Court, in a memorandum of opinion by Vice Chancellor Slights, upheld stockholders’ statutory books-and-records inspection rights against a defendant corporation that sought to invoke and considerably to widen the scope of the Delaware Supreme Court’s Corwin decision of 2015.

The significance of this is that Delaware, some impressions to the contrary, is not a corporate-management-always-wins state. It was not so before the Corwin decision, nor did that decision make it so.  That ought to be good news for activist investors and their counsel. There may be alpha, or at least leverage toward alpha, lurking in the right to inspect books and records.

United Kingdom

RateSetter leading the way for personal loans (RateCity), Rated: AAA

Interest rates for personal loans listed on RateCity range from as low as 3.57 per cent to as high as 48.00 per cent.

The average personal loan interest rate was 11.89 per cent at the end of December, according to an analysis of the dozens of lenders listed on RateCity.

RateSetter, a peer-to-peer lender, has a one-year unsecured personal loan with an advertised rate of 3.57 per cent and a comparison rate of 3.92 per cent.

Curve, the fintech that connects all your cards to a single card and app, gets full consumer launch (TechCrunch), Rated: AAA

Curve, the London fintech startup that offers a platform that lets you consolidate all your bank cards into a single Curve card and app to make it easier to manage your spending, is finally launching to U.K. consumers. Up until now, the service remained in beta and was only officially available to business users.

In a call with Curve founder and CEO Shachar Bialick, he described the consumer launch as a major milestone for the company, noting that 50,000 people have signed up to its waitlist, in addition to the 100,000 or so users who joined Curve in its beta phase. It’s free to join, although a premium version of the Curve card is also available for £50 that offers additional perks.

How P2P could be a financial lifeline for UK landowners (Bridging&Commercial), Rated: A

A recent study of 172 farms by the Prince’s Farm Resilience Programme found that just 16% made a profit from their farming activities over the period assessed. The analysis found that instead many farms are now reliant on alternative income streams to turn a profit, such as tourism, renewable energy and selling their products directly to consumers.

But moving into alternative areas of business requires capital. And – with the average farm in the study making a loss of more than £20,000 from its farming activities – it may be capital that landowners require to invest in their business to prevent a loss.

Folk2Folk champions local lending because we believe in creating financially and socially sustainable communities by matching local businesses with local lenders.

Robo advice platform citing AI and machine learning raises £562k on Crowdcube (AltFi), Rated: A

Marketsflow, a new digital wealth management platform closed its fully funded investment round via equity crowdfunding.

Initially looking to raise £210k, the fundraise has seen more than £562k of commitments from nearly 800 investors giving Marketsflow a pre-money valuation of £2.4m.

What we learned about fintech from some of the biggest brains at Clifford Chance (Legal Cheek), Rated: A

What kind of financial technology has come across your desk at Clifford Chance, then? (Here comes the educational bit.) Chapman identified four technologies driving change:

Marketplace lending: crowdfunding or peer to peer lending, with the potential for “disintermediation” of the financial institution that used act as middleman for loans.
Big data and AI: you might just have seen it in the newspapers. But it’s closer than you think: if you’ve applied for a credit card, according to Chapman, chances are that a machine took part of the decision on whether or not to approve you.
Mobile payments: forget branches, even internet banking on a web browser is old hat. Some banks, indeed, exist only as apps (I instantly thought of my Revolut app, which started out offering as a slick currency exchange platform, but is now offering credit).
Blockchain and distributed ledger: different things, but often used in combination. These are “the pieces of technology that underpin the Bitcoin phenomenon”. It’s not just media hype, either: Clifford Chance is “seeing a lot of work in this space”.

5 Top Alternative Investments in the UK (What Investment), Rated: B

1. Crowdfunding

Rather than rely on venture capital trusts and angel investors, many new businesses are using crowdfunding to get off the ground. In fact, UK platforms such as CrowdCube and Angels Den have raised over £72 million from investors this year.

5. Peer-to-peer lending

Peer-to-peer lending allows you to loan money to people through online platforms, without a bank. These agreements are arranged through peer-to-peer lending platforms such as Zopa, Prosper and Lending Works. These peer-to-peer companies are typically FCA regulated and they organise credit and ID checks as well as set interest rates, collect payments and pay your returns.

After PSD2 and GDPR, what Wayfinding Signs will guide visitors through an Open Bank? (LinkedIn), Rated: A

When branch banking was the mainstream method of service distribution in financial services, both a bank’s customers and potential business partners could follow clear signs that directed them where to go and who to contact. The first sign that a bank sent its customers and potential business partners was the geographic location of a bank branch.

One in four very-low income households are struggling to pay bills or debt, with 10 per cent spending more than a quarter of their salary on credit card repayments, a report has found.

Data from the Institute for Fiscal Studies (IFS) showed one-sixth of the poorest households in Britain were in arrears on repayments and bills.

A further 10 per cent were spending at least a quarter of their monthly income on unsecured debts, such as credit cards and payday loans.

China

‘Freedom at a Price’: Why Regulation Is Crucial to Fintech’s Future (Wharton), Rated: AAA

In recent years, financial technology, or fintech, has dramatically expanded financial inclusion in China and elsewhere in Asia. Small and midsized businesses that have been underserved by banks now have access to capital, as fintech enterprises use the internet and mobile technology to reach those borrowers; leverage data analytics to build credible and innovative risk profiles to gauge creditworthiness, and are able to scale their reach exponentially with 24/7 customer windows and without the baggage of fixed-cost overheads that typically shackle traditional banks. Not surprisingly, the unmet needs of the underserved have provided huge market potential for fintechs.

Credit China FinTech, which is listed on the Hong Kong Stock Exchange as Chong Sing Holdings FinTech Group Ltd., or CSF, provides third party payments, online investment, technology-enabled lending, and traditional loans and financing services. Today, it has more than 51 million users who generated transactions worth RMB 868 billion ($130 billion) in the first half of 2017.

At the same time, both have proved massively popular in China which accounts for roughly half of the world’s digital payments and three-quarters of global, online P2P lending volume, according to Pricewaterhouse Coopers.

For one, default rates are higher than anticipated on peer-to-peer lending platforms. Also, instead of being disrupted by the fintechs, traditional banks have entered the peer-to-peer lending space to become the dominant players, he added.

China regulator says fintech must serve real economy (Finextra), Rated: A

Jiang Yang, vice chairman of China’s Securities Regulatory Commission (CSRC) was speaking at the Asian Financial Forum to an audience of fintech entrepreneurs. The development of fintechs should benefit the real economy and not “a small group of people”, he said in comments reported by the Nikkei Financial Review.

European Union

Lendix Raises €200 Million Institutional Financing to Trailblaze European Alternative SME Finance (Crowdfund Insider), Rated: AAA

The European Investment Bank Group (EIB), CNP Assurances, Eiffel IM, Groupama, Zencap AM, Matmut and Decaux Frères Investissements are among the first investors joining to finance Lendix’s latest investment vehicle to fund unsecured loans to SMEs in France, Spain and Italy. New institutional investors from banks and asset management firms in Spain and Italy are joining. As of now, €120 million of the planned €200 million are already committed and the first loans from this fund will start rolling out as soon as February.

Source: Crowdfund Insider

As of December 2017, Lendix originated a cumulated worth of €143 million of SME loans, a 90% increase from 2016.

Online Lender Robo.Cash Shares Insight into Investor Activity (Crowdfund Insider), Rated: A

Peer to peer lender Robo.cash has shared a “financial portrait of a Robo.cash investor.”

According to their results, investors from a younger age group, 18-24 years old, usually deposit circa €200 at a time and rarely withdrew  any funds. The maximum funding size is characteristic of the older age groups: the average deposit of investors of 35-44 years old is equal to €879 and for those who are older than 45 years old is €838.

Millennials of 25-34 years of age invest about €679 on average making frequent deposits in comparison to the younger age group.

Approaching energy crowdfunding with eyes wide open (YourIS.com), Rated: A

youris.com met Sissy Windisch, from the German company Green Crowding, who published a guide for new small investors, to allow them to make the best decisions. The document was released under the EU project CrowdFundRES.

This is a different kind of crowdfunding, unlike what platforms such as Kickstarter do?
With Kickstarter you donate money, so a comic book for example can be published, or you just want an artist to keep on creating art. Instead, the type of crowdfunding we are interested in is debt-based, which means that you get your money back plus interest. If you finance a solar roof on a school for five years, you get 3% every year and at the end of five years you get your money back.

Could you tell us more about debt-based crowdfunding?
Debt-based funding is already one of the largest types of crowdfunding. I would say one of the biggest areas in terms of funding volume at the moment is real estate. I think for 2016 alone the funding was estimated at around 3.5 billion dollars.

Why can’t the traditional financial institutions, such as banks or investment firms, offer these services?
What we’ve often seen, particularly for renewables, is that banks and other traditional financial institutions often look for large projects to invest in. They prefer investing in one 50-million wind park than in 500 small photovoltaic installations.

Swaper Offers One-Click Portfolio Investing (Benzinga), Rated: B

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

Swaper CEO Peteris Kisis: Swaper is a loan marketplace offering an easy investing in pre-funded consumer loans originated by its parent company Wandoo Finance Group in Poland, Georgia, Spain, Denmark and Russia. All investments offered on our marketplace start from 12 percent annual interest and are BuyBack guaranteed, meaning Swaper will compensate investors both for the invested principal and accrued interest in case the borrower is late with payments.

International

Top backer of US subprime lenders eyes overseas opportunities (Financial Times), Rated: AAA

Victory Park Capital, a Chicago-based investment firm, has been a vital source of debt capital for a string of online lenders, including Avant, Elevate and LendUp, all of which focus on borrowers in the subprime segment. Total commitments and investments come to about $6.5bn from more than 90 deals, mostly in the US.

The firm, which was founded 10 years ago, is seeking to add to a portfolio including zip Money in Australia, Kreditech in Germany and Oakam in the UK.

(The Merkle), Rated: A

Vitalik Buterin, the creator of the Ethereum Network, recently proposed a new method for decentralized fundraising called the “DAICO”. Incorporating elements of Decentralized Autonomous Organizations, or DAOs, the new model is designed to minimize the complexity and risk associated with ICOs.

Buterin outlined the new model in a post on the Ethereum Research Forum entitled “Explanation of DAICOs”. In the exposition, the Russian-Canadian programmer outlines a new model that integrates characteristics of DAOs into ICOs to create a new model he refers to as the “DAICO”.

Source: The Merkle
Asia

New Crypto Exchange and 1000 Percent Revenue Growth Could Make KPAY The Crypto Stock To Own In 2018 (Baystreet), Rated: AAA

The little-known Indonesian digital payments company KinerjaPay (KPAY) reported another blowout quarter in December with sales that topped the previous 3 month period by a whopping 1,100%!

Revenue and User-Base Growing Parabolically? +1100% in Q3

KinerjaPay is a digital payments platform in Indonesia and South Asia, and the company ha been growing at an astronomical rate in the last year. In the third fiscal quarter of 2017 ended September 30, 2017, the company posted quarterly transactional revenue of $1.76 million, an 1,183% increase over $149K in the second quarter.

User growth is accelerating as the company brings on more partners for digital payments and bill pay capabilities in a region of the world where a fraction of people have a bank account or credit/debit card. The rate at which KinerjaPay is adding customers grew 58% in the 3rd quarter; the company reported 10,962 new users compared to 6,904 new users in the same quarter of last year, demonstrating just how fast they’re adding users for a small emerging company.

Asian stocks bounce back, with Hang Seng closing at a record (MarketWatch), Rated: A

Asian equity markets on Tuesday found their footing after some initial softness, leaving Hong Kong’s benchmark at a record closing high.

The Hang Seng rose 1.8% to 31,904.75, topping the previous high set on Oct. 30, 2007.

Japanese stocks rebounded from Monday’s selloff, with a weaker yen helping the country’s exporters. The dollar gained 0.2% to ¥110.7200, pushing the Nikkei to finish up 1% at a fresh 26-year high.

Africa

Fintech startups took nearly a third of all African venture funding in 2017 (Quartz), Rated: AAA

Almost a third of funding raised by African startups in 2017 was in the fintech sector as investors bet on consumers turning to more formal financial services in a region where just 17% of the population have banking accounts. Venture funding for African startups jumped by 51% to $195 million in 2017, according to a report from Disrupt Africa.

The success of mobile money technology like M-Pesa in Kenya and across East Africa has long shown the potential for other underserved markets. M-Pesa’s success is likely also behind for the increasing presence of mobile networks in the African financial sector and the convergence of the two sectors (pdf page 11).

Nigeria, South Africa and Kenya remained the countries with highest funding raised, consistent with their record from previous years.

Canada

Still a market for short-term loans (Edmonton Journal), Rated: A

Payday loan licences in Alberta have fallen by more than one-quarter, to 165 from 230, and industry officials predict even more payday loan stores will be shuttering their doors this year.

Before then, rules around payday loans in Alberta allowed for the second-highest interest rates in Canada, with lenders being allowed to charge up to $23 for every $100 borrowed, up to a maximum of $1,500. Now, the rate is $15 per $100 — touted to be the lowest in Canada — and borrowers are allowed to repay the the loans in instalments over two months. Lenders are also no longer allowed to penalize customers for paying back loans early and must restrict the number of times a lender can make preauthorized withdrawals.

Authors:

George Popescu
Allen Taylor

Thursday November 16 2017, Daily News Digest

securitization

News Comments Today’s main news: Marcus surpasses 2017 goal. LendInvest gets into buy-to-let. Top 3 spots on KPMG Fintech 100 list are all Chinese. Lendix launches SME bridge loans in France, Spain, and Italy. Mauritia issues draft P2P lending rules. Marlette closes fourth securitization in a year. Today’s main analysis: Rising challenges unlikely to deter U.S. securitizations. Today’s thought-provoking articles: […]

securitization

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Canada

Russia

News Summary

United States

Marcus from Goldman Sachs Surpasses 2017 Goal (Bank Innovation), Rated: AAA

Martin Chavez, chief financial officer for Goldman Sachs, showed in a slideshow at a Bank of America Merrill Lynch event yesterday that Marcus had already surpassed $1.96 billion in originations as of Nov. 9.

What that means is that from Nov. 9 to Nov. 14, over a span of five days, Marcus originated more than $40 million in loans.

Rising challenges unlikely to deter U.S. securitization in 2018 (Asset Securitization Report), Rated: AAA

As a result, Fitch’s outlook for U.S. structured finance ratings is predominately stable for 2018. That said, given where we are in the credit cycle, Fitch is keeping a close watch on select asset types that could run into some issues over the next 12 months.

Entering 2018, Fitch has either Positive or Stable Outlook on over 90% of its rated securitized bonds.

Perhaps the most notable change that has manifested from risk retention is the shrinking universe of originators bringing new securitizations to market. This is particularly notable in the universe of CMBS originators, which has shrunk from a high of roughly 40 to now less than 20 due to a combination of risk retention and Reg A/B.

Competitive pressures, long in place for subprime autos, are escalating in a marketplace ABS environment that is struggling to find its footing by testing recent underwriting models, asset quality and, in some cases, business models. Delinquencies and chargeoffs of existing assets continue to increase as marginal borrowers increase their leverage. Not likely to help is the drive for growth among large marketplace lenders coupled with rising market pressure from competing banks like Goldman Sachs (Marcus), Discover, and Suntrust. And unless originators tighten their credit policies with discipline, the strain will intensify.

Source: Asset Securitization Report

Online lenders should heed criticism of their effect on borrowers (American Banker), Rated: AAA

The consumer lending industry is abuzz about the Federal Reserve Bank of Cleveland’s recent report on debt consolidation and online lending. This excellent piece of research concludes that, on average, online installment loan borrowers fall into more debt after taking out a loan, experience hits to their credit score and history as a result, and take out online loans despite having access to traditional banking and credit channels.

The first two conclusions are damning, especially as these loans are often marketed as a way to help consumers consolidate credit card debt and improve their finances. At the end of the day, a lender’s duty is not merely to avoid losses. Any loan must be suitable for the customer — which means it should be made only if the lender believes it is improving the customer’s financial health. A lender not guided by that principle should be prepared for severe criticism as well as elevated losses down the road.

But it would be nonsensical to discredit or ignore the study because it includes online lenders beyond well-known fintech names.

The Best of Both Worlds with Prosper for Borrowers and Lenders (DoughRoller), Rated: AAA

Founded in 2005, and generally recognized as the first peer-to-peer (P2P) lending platform in the US, Prosper has funded more than $10 billion in loans since.

While borrowers can get personal loans ranging in size between $2,000 and $35,000, investors can put as little as $25 toward funding those loans.

There is one exception, however. You cannot use loan proceeds for post-secondary educational expenses. That’s because some of the rules in federal law aren’t compatible with P2P lending. More specifically, with education loans, the borrower must have at least 30 days to accept or reject a loan offer.

Medical procedures available for financing under the PHL program include:

  • Cosmetic dentistry
  • Bariatric surgery
  • Cosmetic and plastic surgery
  • Fertility and reproductive procedures

All Prosper loans have a term of either three or five years.

The minimum requirements are:

  • A minimum FICO score of 640, based on a TransUnion FICO 08 score
  • Debt-to-Income (DTI) ratio below 50%
  • Stated income greater than $0 (you must have an income)
  • No bankruptcies filed within the previous 12 months
  • Fewer than seven credit bureau inquiries within the last six months
  • A minimum of three open trades reported on your credit report

Interest rates are between a minimum of 3.00% for the best AA rated borrowers to a maximum of 36.00% for the lowest rated HR borrower grades.

Source: DoughRoller

Prosper for Investors

Prosper advertises that the average rate of return by investors on the platform is 7.41% per year.

Loans rated HR have a much higher average return, at 11.73%.

You can open either a General Investment Account or an IRA. Available IRAs include traditional, Roth, SIMPLE, SEP and rollover IRAs (IRA accounts are held with Millennium Trust Company). At this time, Prosper has made only individual accounts available. You cannot hold an account jointly with someone else.

For regular investment accounts, the minimum is $25. For IRA accounts, the minimum is $5,000.

Similar to other P2P platforms, when you invest with Prosper, you don’t actually invest in whole loans. Instead, you invest in small slivers of those loans, referred to as “notes.” The notes are in denominations of $25. This means that you can spread an investment of $1,000 across as many as 40 different loans.

The servicing fee is 1% of the outstanding balance of a loan. That means that if the loan pays 8%, your net return will be 7%.

Source: DoughRoller

Marlette Funding Closes Fourth Personal Loan Securitization Within Past Year (LendEDU), Rated: A

Last week, marketplace lender Marlette Funding announced the closing of its fourth proprietary securitization. The transaction was worth an estimated $312 million, and it is the fourth securitization announcement since August of 2016 from Marlette Funding.

eOriginal Named as One of Fastest Growing Companies in North America on Deloitte’s 2017 Technology Fast 500 (eOriginal), Rated: A

eOriginal, Inc., today announced it has been named to Deloitte’s Technology Fast 500 list as one of North America’s fastest growing technology, media, telecommunications, life sciences, and energy companies. eOriginal earned the rank of 294 by more than doubling revenues during the evaluation period of FY 2013 through FY 2016.

Betterment, the investing startup with $ 11 billion in assets, is rolling out a new service to make charitable giving easier (Business Insider), Rated: A

Betterment, the New York-based roboadviser, announced Wednesday a charitable giving feature that’ll let users donate shares of their account to partnered charities.

The firm, which manages $11 billion for over 300,000 customers, partnered with 11 charities for Betterment Charitable Giving, including Big Brothers Big Sisters of NYC, UNICEF, and World Wildlife Fund, according to a news release. The new feature is set to go live November 28.

Subprime car loans souring faster at nonbank lenders (American Banker), Rated: A

Despite signs of trouble in subprime auto lending, U.S. banks and credit unions are well positioned to ride out any market turbulence, a new report from the Federal Reserve Bank of New York suggests.

More than $435 billion in auto loans to borrowers with credit scores below 660 were outstanding during the third quarter of this year, the report found. That total has been climbing steadily since bottoming out at $249 billion in early 2011. Delinquency rates have also been rising as it has become easier to qualify for an auto loan.

Fidelity latest financial firm to facilitate data sharing with fintechs (American Banker), Rated: A

Fidelity Investments is joining the ranks of financial firms sharing customer account data with others through an application programming interface.

The new service, called Fidelity Access, will give third parties access to Fidelity customers’ account data for use in apps and services like tax preparation, budgeting, financial planning, spending analysis and portfolio advice — provided the Fidelity customers give their OK. Customer data to be shared includes Fidelity account balances, securities holdings, and transactions.

These are the most valuable fintech companies in America (MarketWatch), Rated: A

Stripe Inc., whose software is used by businesses to accept and track digital payments, leads the way as the most valuable fintech startup in the U.S., with a $9.2 billion valuation.

And just to be clear, fintech startups are nowhere near close to catching up to the big banks. Wells Fargo & Co. has a market cap of more than $266 billion, and Bank of America Corp. has a market cap of more than $273 billion.

RealtyProfits Offers Accredited Investors an Innovative Platform to Invest in the Real Estate Sector (Digital Journal), Rated: A

RealtyProfits (www.RealtyProfits.com) announces today an exciting and innovative investment opportunity, RealtyProfits IV, with a Preferred Return of 12 percent per annum, available exclusively to accredited high net-worth individuals and institutional investors. The private preferred equity securities, available for purchase at www.RealtyProfits.com, are being offered through WealthForge Securities, LLC, a registered broker/dealer and member of FINRA/SIPC.

The geographically diversified portfolio includes properties in 700 cities coast to coast, with a current estimated value of $1.73 billion and more than $700 million of equity in more than 5,900 portfolio properties. The properties include primarily single-family homes and condominiums ranging in value from $100,000 to more than $2,500,000.

Accredited investors can start investing with as little as $20,000. RealtyProfits IV offers monthly cash distributions. Preferred equity investors receive all distributions made by RealtyProfits IV until fully repaid. The Preferred Return is 12 percent per annum, with initial monthly Base Preferred Return payments at 6 percent per annum anticipated depending on cash flow during each of the first 24 months.

Reality Shares Teams up with Nasdaq to Launch Blockchain Tech Index (BusinessWire), Rated: A

Reality Shares and Nasdaq announce the creation of the Reality Shares Nasdaq Blockchain Economy Index, a smart-beta index that tracks the growth and development of leading global companies creating and implementing blockchain solutions.

An ETF that will track the Index is already in the works, with Reality Shares filing for it on November 2, 2017.

Reality Shares and Nasdaq compiled the index by utilizing internal and external research and their proprietary Blockchain ScoreTM ranking system. The Index is comprised of global companies that seek to capitalize upon transformational blockchain technology that may potentially disrupt the markets in which they operate.

How to Choose Between a Peer-To-Peer Lending or Traditional Loan (Experian), Rated: A

Shopping for a loan at a P2P provider is a two-step process. First, based on a credit score (or credit scores) and your answers to a few basic questions—your full name, address, date of birth and annual income—the lender determines which loan offer(s) to extend to you. (It’s possible at this juncture that the lender will decide not to extend any loan offers; if they do, they’ll explain why.)

Once you choose the loan you want, the lender does a more detailed credit check and may ask you to verify your income and to provide additional background information.  Each P2P site has its own lending criteria, including minimum credit scores, and additional information requirements vary accordingly. Some P2P lenders want information on your educational background; others want work history or details about your financial assets. In most cases, you can submit the necessary documents electronically.

The first step in the P2P loan-approval process gets one or more of your credit scores by a method known as a soft inquiry—the same process you use when you check your own credit scores. Soft inquiries have no impact on your credit scores. However, the hard inquiries traditional lenders make when you apply for a credit cards or bank loans are reported to the national credit bureaus. They appear on your credit reports, and typically cause temporary credit-score drops of several points.

In the second step of P2P loan approval, the lender performs a hard inquiry to confirm your credit score and, likely, to review your full credit report.

Before you apply for a P2P loan

  • Take a look at the fine print on the bottom of each provider’s homepage, to get an overview of the loan amounts they offer and the rates and fees they charge.
  • Make sure the lender operates in your state.
  • Check your FICO Score and review your credit reports for any major negative entries. Accounts in collection, liens and civil judgments are among the items that could torpedo your loan application, even if you meet the credit-score requirements.
  • Determine the amount of money you need and watch out for tempting upsells.
  • Consider using the Experian loan-referral tool to explore offers from multiple P2P lenders (and possibly traditional lenders as well).

Resignation of CFPB head gives Trump opportunity to erase Elizabeth Warren’s legacy (Legal Insurrection), Rated: A

Richard Cordray, an Obama appointee and head of the Consumer Financial Protection Bureau (CFPB) announced to staff in an email Wednesday his plans to resign. While he’s yet to confirm his plans, there’s speculation Cordray will return home to run for Ohio’s governorship.

Seven Signs That the Bond Bull Market is Over (INTL FCStone), Rated: A

  • The bond bear market is already here: short and medium-term treasuries have lost value in the past 5 years
  • Buybacks have fallen to a five-year low, and big repurchasers have underperformed
  • Oil prices are at a 30-month high, and the futures curve is in backwardation
  • The long and the short ends of the yield curve are moving together again
  • The Chinese trade surplus has shrunk from 10% of GDP to almost zero in the past ten years
  • The U.S. deficit is growing again, an unprecedented phenomenon in times of expansion and peace
  • Small bubbles are popping out: Auckland houses, Ethereum crypto coins, and collectible cars
Source: Global Macro Report, INTL FCStone

Read the full report here.

Spring Framework Creator Launches Atomist for Development Automation With $ 22 Million in Series A Funding (Marketwired), Rated: A

Today on stage at Structure 2017, Atomist is formally launching and unveiling its Development Automation Platform with an Open Source client and API. As part of today’s launch, Atomist is announcing $22 million in Series A funding from Accel and Matrix Partners.

Bestow Gives Texas Residents First Access to On-Demand Life Insurance (PRWeb), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced the early access roll out of its comprehensive, full-stack, digital life insurance solution in Texas. For the first time Bestow’s solution is available to the public, giving Texas residents primary access to apply for the only on-demand life insurance solution, instantly and without a medical exam.

Leveraging applied intelligence and algorithmic underwriting, Bestow redefines the way consumers research, buy and manage life insurance. Using data to calculate risk, Bestow removes the need for a medical exam and streamlines the entire process into a matter of minutes. The Texas launch gives consumers access to choice term life insurance plans, including a unique two year term policy never before available for life insurance. Additionally, customers can choose between ten or twenty year term life insurance.

The Zebra Raises $ 40 Million, Taps New CEO To Expand Beyond Car Insurance (Forbes), Rated: A

The Zebra, which has always described itself as the Kayak of car insurance, has hired a longtime Kayak executive as its new CEO.

The Austin-based company, which allows drivers to compare prices for car insurance online, said on Tuesday that it has tapped Kayak’s former president Keith Melnick to run the company.

The Zebra also said it has raised $40 million in a Series B funding round, led by Accel Partners. That brings its total funding to $61.5 million.

MarketScout in Dallas Creates $ 25M Insurtech Venture Fund (Insurance Journal), Rated: B

Dallas-based insurance exchange and MGA MarketScout announced it has launched MarketScout InsurTech (MIT), which will make investments in tech-enabled insurance distribution. The initial funding of $25 million will come exclusively from MarketScout Corp., parent of MIT, according to the firm.

House Financial Services Committee Approves Legislation to Help Keep Lending Partnerships Between Banks and Online Lenders (Crowdfund Insider), Rated: A

The House Financial Services Committee has approved HR 3299 or the “Protecting Consumers’ Access to Credit Act of 2017.” The bill “restores consistency” in lending laws across state boundaries. HR 3299 impacts the case of Midland Funding, LLC v. Madden – an ongoing law suit that has the potential to undermine online lenders. Sponsored by Congressman Patrick McHenry, includes an important statement that clarifies allowable interest rates on loans potentially ending the issue associated with the law suit.

How Do You Beat a Robo-Advisor? Trust (Think Advisor), Rated: A

“Technology by itself cannot create trust,” Robert C. Merton, a Nobel laureate in economics now teaching at MIT, recently told ThinkAdvisor. “The successful advisor must have the trust of their clients.”

Given the importance of trust in the advisor-client relationship, Merton recommends financial advisors (the breathing kind) should:

  • Check what they are doing to retain and enhance trust with their clients.
  • Make sure the business model being used supports the creation of trust.
  • Take advantage of technology to improve/enhance what the advisor does.
  • Do not view technology as a “competitor or substitute” for the advisor.
  • Understand and assess the financial technology they employ to certify trusting its use in client solutions.

HFLA launches initiative to help underserved reach financial stability (Cleveland Jewish News), Rated: A

The Hebrew Free Loan Association has launched its Looking to the Future Initiative with support from the St. Luke’s Foundation and the PNC Foundation. The initiative accounts for $73,000.

The initiative enables HFLA to increase its lending of interest-free loans to Cleveland’s underserved neighborhoods and grows the organization by expanding its reach, according to a news release. HFLA received a $63,000 grant from the St. Luke’s Foundation and a $10,000 grant from the PNC Foundation to launch the effort.

Fundation Purchases Select Assets from Able Lending to Enhance Partnership Strategy (BusinessWire), Rated: B

Fundation Group LLC, a digitally-enabled lender and credit solutions provider, today announced that it has acquired a variety of assets from online small business lender, Able Lending of Austin, Texas.

Former Capital One Executive Troy Jamison Joins Victory Park Capital as Chief Risk Officer (BusinessWire), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Troy Jamison joins as chief risk officer for the firm’s nonbank financial services portfolio. Jamison is based in Chicago and reports directly to CEO and Co-Founder Richard Levy.

CFPB updates website to officially address end of arbitration rule (Housingwire), Rated: B

The Consumer Financial Protection Bureau finally updated its website to acknowledge President Donald Trump revoking the controversial arbitration rule.

blog post from Ballard Spahr previously stressed the importance of the CFPB updating its website to note the rule’s override since the rule was killed nearly two weeks ago.

The webpage for “Arbitration agreements” now has an update on the top that states:

On Nov. 1, 2017, the President signed a joint resolution passed by Congress disapproving the Arbitration Agreements Rule under the Congressional Review Act (CRA). Pursuant to the joint resolution, the Arbitration Agreements Rule has no force or effect. The materials relating to the Arbitration Agreements Rule on the Bureau’s website are for reference only.

HOUSE FINANCIAL SERVICES COMMITTEE PASSES SMALL BUSINESS CREDIT ACT (Coalition for Small Business Growth Email), Rated: B

The 

United Kingdom

LendInvest launches into buy-to-let (Mortgage Strategy), Rated: AAA

LendInvest is launching a range of buy-to-let loans aimed at professional landlords and investors.

Rates start at 3.69 per cent for a two-year fix at 60 per cent LTV.

The firm will offer loans of between £50,000 and £5m, up to a maximum LTV of 80 per cent.

Citigroup joins the AI bandwagon (Business Insider), Rated: A

Citigroup 

Source: Business Insider

SyndicateRoom Alum Squirrel Launches Crowdcube Funding Round (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, has launched an equity crowdfunding round on Crowdcube. This initiative debut comes less than one year after the company completed its SyndicateRoom funding round with £585,000 in funds. Squrriel is now seeking £400,000.

Government unveils financial package to support tech (P2P Finance News), Rated: A

THE GOVERNMENT has given a £21m boost to a technology programme that has supported firms such as Zopa and Funding Circle as part of a range of measures to boost the tech sector.

The funding will make Tech City UK and Tech North one national organisation called Tech Nation and help grow government-backed startup support programmes such as Founders Network, Northern Stars, Future Fifty and Upscale.

Cash Converters International Ltd reports security breach and ransom demand (The Motley Fool), Rated: A

Payday lending and pawnbroking business Cash Converters International Ltd (ASX:CCV) announced a cybersecurity breach in its UK operations last night.

Sadly, computer system integrity is becoming an increasingly relevant – and often overlooked – concern for investors, with a vast majority of companies relying in one way or another on computer systems.

Valorem Foundation Launches All-New Cryptocurrency Platform (PR Newswire), Rated: A

Valorem Foundation, a Blockchain startup specializing in stabilized value-based exchange and transactions, has announced the launch of its new cryptocurrency platform. The company has developed a multi-layered platform to disrupt and expand the following services globally: microloans, car loans, student loans, rent payment, P2P networks, buying and selling of goods & services, business investing, real estate crowdfunding, and insurance.

Empowering the world: How you can make money through improving lives (City A.M.), Rated: A

This sea change should explain why investment firm Ethex has managed to scoop up so much support in its short history – raising more than £50m since 2013.

Its business model has a peer-to-peer lending feel – that is, it uses a digital platform to allow retail investors to lend to individuals and entrepreneurs.

But it comes with a twist, because Ethex is a not-for-profit organisation which lets you invest in companies that have a positive impact – socially and environmentally.

If you want to get involved, the platform has a minimum investment of £50, which arguably makes it more accessible to younger generations.

Trussle hires VP engineering from Funding Circle (Mortgage Introducer), Rated: B

Trussle has appointed Matthew Gretton as vice president of engineering from peer-to-peer lending platform Funding Circle.

China

Alibaba affiliates sweep top 3 spots in global fintech ranking (Asian Review), Rated: AAA

Financial technology companies linked to China’s Alibaba Group Holding took over the podium in KPMG’s latest Fintech 100 list, announced on Wednesday.

Ant Financial, which runs Alibaba’s massive Alipay e-payments network, took the No. 1 spot on the list, which was compiled with fintech accelerator H2 Ventures. Online property insurer ZhongAn Insurance and microloan provider Qudian placed second and third; both have received investments from Ant.

See the full list here.

One of China’s hottest companies rebuffs criticism about transparency (CNBC), Rated: A

Despite public criticism about a lack of transparency in some practices, Ant Financial is doing things the right way, a senior executive at the company said Wednesday.

“The demand for these securities is very healthy and continuing to expand,” Douglas Feagin, senior vice president and head of global business at Ant Financial, told CNBC’s “Street Signs.” “That, at the end of the day, is the ultimate barometer of whether you’re giving enough information to investors to invest.”

Ant Financial will use local partners in Southeast Asia: executive from CNBC.

Earnings at Some U.S.-Listed Chinese Microlenders Taper (Caixin), Rated: A

In the three months ending Sept. 30, Yirendai’s net income was down 12% to 303 million yuan ($45.7 million) from 344.3 million yuan a year ago, the company said Wednesday. Another Chinese microlender, China Rapid Finance Ltd., earlier reported a wider net loss of $4.4 million in the third quarter. Although Qudian Inc., a larger player that listed in New York last month, recently posted a four-fold increase in its third-quarter net profit from a year ago, citing better operational efficiency and its growing borrower base.

Cinda International Leads Massive Round In Chinese Fintech Company 9f Group (China Money Network), Rated: A

Beijing-based fintech company 9f Group has raised a massive new funding round from Cinda International Holding Ltd, a subsidiary of state-owned China Cinda Asset Management Co., Ltd., Focus Media Information Technology’s Chairman Jiang Nanchun, video game developer Youzu Interactive’s chairman Lin Qi and an unnamed Chinese industry fund.

The company did not disclose financial details except to say that it raised “hundreds of millions of U.S. dollars” in the latest financing deal, according to a company announcement. It is also unclear how the company is valued in the round, but 9f Group is listed on China Money Network’s China Unicorn List with a US$1 billion valuation when it last raised a US$110 million series B round in 2015.

European Union

For Spain’s banks, survival means digital (Financial Times), Rated: AAA

Santander’s Openbank has changed a great deal since it was founded as Spain’s first telephone banking service in 1995. Now a fully digital operation, its mobile app allows users to temporarily disarm a lost credit card, as well as to check whether fellow Openbank customers are buying or selling a given stock at any moment. Currently, it has some 1.2m customers in Spain and more than €8bn ($9.3bn) in assets under management.

In recent years, Spain’s two biggest banks — Santander and BBVA — have increased their financial and managerial investment in fintech, digital banking and big data. Like their peers, they are convinced that the days of branch-based lending are drawing to a close.

Spanish banks average about €15m assets under management per employee, says Daragh Quinn, banks analyst at investment bank Keefe, Bruyette & Woods. At a digital operator like Openbank, that number is close to €60m.

The digital push is on two fronts: first, a mobile app that allows customers to access almost all of the bank’s products without going into a branch. Second, a venture capital approach whereby banks invest in or partner with fintech start-ups to add products.

Online Lender Lendix Launches Flexible SME Bridge Loans in France, Spain & Italy (Crowdfund Insider), Rated: AAA

Lendix, online lender for SMEs in continental Europe, has announced the launch of a new financing product: the Flexible Bridge Loan. This product is designed to will allow a greater number of French, Spanish and Italian SMEs to benefit from the speed of execution of Lendix’s lending platform while leaving them the possibility of setting up an overall refinancing solution with other financial institutions.

The Lendix Flexible Bridge Loan is a 5-year amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

Swedish $ 370 Billion Home-Loan Market Gets New Mortgage Fund (Bloomberg Quint), Rated: A

As investors wonder whether Sweden’s housing market is headed for a correction, the country’s first mortgage fund is about to enter the $370 billion Swedish home-loan industry.

Stabelo plans to pool capital from Swedish institutional investors in exchange for fixed-income securities. That money will then be lent to home buyers. The fund starts offering its products this week and will work with Avanza Bank AB, Sweden’s largest online lender. Avanza, which owns just below 20 percent of Stabelo, will handle distribution and marketing.

International

Has P2P marketplace lending become B2P? (Cuffelinks), Rated: AAA

Due to this issue, the original incarnation of peer-to-peer lending has not lasted. As the CEO of Zopa, a UK-based P2P lender said,

“As bad debts soared, the approach was abandoned and Zopa was moulded into a ‘big sausage machine’. Its technology now links lenders with a pool of borrowers without any direct contact or the need for investors to make credit decisions.”

Australia’s major peer-to-peer lender is SocietyOne. It currently has $350 million borrowed through its platform, and is growing rapidly. In fact, loan volumes in the first three quarters of this year have totalled $141 million so far, surpassing the $139 million in loans facilitated over the entire course of 2016, as shown below.

Source: Cuffelinks
Australia/New Zealand

Exemption for personalised digital (robo) advice (Scoop), Rated: A

Following the FMA’s release of its second consultation paper on personalised robo-advice (now called digital advice), the leading law firm has published its tips for providers looking to develop digital advice platforms.

Head of Russell McVeagh’s Corporate Advisory group, Dan Jones, says the exemption is a necessary first step in putting the New Zealand financial advice regime on equal footing with overseas regimes, and may provide particular assistance to New Zealanders in KiwiSaver.

India

How P2P lending can be a route to creating financial inclusion (Daily News & Analysis), Rated: A

For years, banks have had a monopoly in lending money to businesses and individuals. However, the 2007-08 financial crisis created a havoc, rapidly-expanding the funding gap. This led to the advent of a niche fintech vertical, peer-to-peer (P2P) lending.

The geographical reach of a P2P lending platform is far superior, with the major differentiator being its online interface. Such digital financial services play an important role in supporting the objective of financial inclusion. Anybody, from the remotest areas, having access to internet, can be eligible to get/give a loan.

In the age of digitisation where almost everyone has access to internet, such platforms have the potential to change the financial graph of a country.

Are P2P platforms safe for lending and borrowing? (India Times), Rated: B

While banks and non-banking finance companies (NBFC) are the readily available sources for loans, who does the P2P platform cater to? “Unfortunately, banks in India follow mediocre credit assessment policies which are suited only for borrowers who can offer collateral or have an impeccable credit history. In practice, majority of the borrowers lie in between these extremes. Therefore, majority of Indians can borrow on P2P platforms,” says Raghavendra Pratap Singh, co-founder, i2ifunding, an online P2P lending marketplace.

RBI has put a cap on the amount that can be borrowed and lent. The aggregate exposure of a lender or the maximum that one may borrow at any point of time, across all P2Ps, shall be capped at Rs 10 lakh. Even the exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000 and the maturity of the loans shall not exceed 36 months. “More clarity from RBI is expected on how the regulator intends to monitor the compliance of this aspect and how it will fix the responsibility,” says Singh.

Risks for a lender
Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender needs to be aware of the risks involved. Bubna says, “All investments involve risk. However, in comparison to equity or commodity market investments or real estate, P2P lending has lower risk as it is addressed by on-boarding high quality borrowers. Further, lenders are suggested to create a diversified portfolio of loans.”

Asia

Introducing ACE, Crowdo’s New Artificial Intelligence Due Diligence System (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding unveiled today its proprietary Artificial Intelligence driven due diligence system, Crowdo ACE, aimed at benefiting both their borrowers and investors. Crowdo ACE takes into account a few thousand unconventional and alternative attributes and represents a new way to perform due diligence versus traditional means used by conventional financial institutions. It has already been applied to process more than 3,000 loans.

In a largely-unbanked Indonesia, Amartha uplifts women micro-entrepreneurs (YourStory), Rated: A

Twenty-six people, four nationalities, 10 days. Travelling across Southeast Asia as a Startup AsiaBerlin Roadshow delegate to explore startup ecosystems was an experience unto itself.

Amartha has so far disbursed over $13 million to 60,000 women micro-entrepreneurs and aims to improve their income, and ultimately quality of life.

Aria: Amartha is an Indonesian financial technology startup that focuses on providing affordable financial access, and mentorship to the unbanked population living below the poverty line. Amartha operates much like a peer-to-peer lending platform, and so far, has disbursed more than $13 million to 60,000 borrowers. The borrowers are mostly women micro-entrepreneurs and Amartha aims to improve their income, and ultimately alleviate their status through financial inclusion.

Aria: When we started operations in April 2016, we disbursed $40,000 a month. By the end of 2016, we were disbursing $800,000. Today, on average, we disburse $2.5 million per month. So far, we have disbursed more than $13 million, across more than 60,000 borrowers. The average ticket size of a loan now is around $300.

We charge a fee based on the profit sharing principle. Of the 22-30 percent annual interest rate paid by borrowers, we collect 11-13 percent for our revenue.

Africa

The Mauritian Financial Services Commission Issues Draft Peer-To-Peer lending Rules (Mondaq), Rated: AAA

Following the announcement of the Government on peer-to-peer lending and funding in the 2017-2018 Budget, the Mauritian Financial Services Commission (“Commission”) has issued draft rules on 10 November 2017 to regulate the peer-to-peer lending sector – as sector which has grown rapidly in other countries.

In the region, Kenya and Africa are leading in the peer-to-peer business lending market. According to a study conducted by the University of Cambridge, within Africa, South Africa had the largest number online alternative finance platforms, with $15 million raised in 2015 (The Africa and Middle East Alternative Finance Benchmarking Report, February, 2017).

Borrower and lender – a borrower must be a resident in Mauritius; however, there is no residency requirement for the lender.

Restrictions on amounts  Hence, a lender, who is a legal person, cannot lend more than MUR 500,000 (approx. GBP 11,000) in any 12 months’ period. A lender, who is a natural person, cannot lend an amount in excess of 10 per cent of his income or a maximum of MUR 300,000 (approx. GBP 6,600), whichever is lower, in any 12 months’ period.

Obligations of a P2P operator – the Peer-to-Peer operator must publish the following information on its website:

  • details of how the P2P lending will operate
  • measures to prevent money laundering and combatting terrorist financing
  • security measures to ensure data protection
  • dispute resolution mechanism.
Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

Russia

Moscow Is On Its Way To Becoming A Smart City And Fintech Powerhouse (Forbes), Rated: A

Its citizens and businesses are also quick to adopt the latest disruptive technologies such as fintech and cryptocurrencies. Moscow has a 35 percent fintech adoption rate, higher than New York’s 33.1 percent.

Authors:

George Popescu
Allen Taylor

French Alternative Lending Market: An Overview

European alternative lending

European Overview The alternative lending market in continental Europe is still in its nascent stage but has been demonstrating strong growth. The European online alternative market, including the UK, grew by 92% in 2015 to €5.4 billion while, excluding the UK, the European alternative lending market reached approximately €1 billion in 2015. The average growth […]

European alternative lending

European Overview

The alternative lending market in continental Europe is still in its nascent stage but has been demonstrating strong growth. The European online alternative market, including the UK, grew by 92% in 2015 to €5.4 billion while, excluding the UK, the European alternative lending market reached approximately €1 billion in 2015. The average growth of the online alternative lending market between 2013 and 2015 was 73%.

Although the UK is the pioneer as far as alternative lending is concerned, continental Europe is catching up rapidly. In the first three quarters of 2016 the total market volume of the European alternative lending market stood at €623 million.

France’s Alternative Lending Market

After Brexit, France is battling Germany for the position as the biggest alternative lending market in Europe. The volume of French online lending market grew from a paltry €76 million in 2013 to €319 million in 2015. In 2016, the number of fintech companies in France stood at 55 with Younited Credit being one of the biggest with loan originations amounting to $600 million. In 2015, France Fintech Association was established in order to stimulate the fintech market.

Fintech lenders in France are growing aggressively owing to the measures taken by the French government and the regulatory authorities overseeing the alternative lending market. AMF (Financial Market Authority) and ACPR (Prudential Control Authority and Resolution) are the two regulators that regulate the French alternative lending market. These bodies launched the Fintech Forum, a joint initiative to gain a clear view of regulatory and supervisory challenges faced by fintech companies. After Brexit, they launched “Agility Program” to attract UK fintech companies to France. The program will guide financial firms through the French authorization process and will provide other such services to help UK’s financial firms to set up in France.

Top Alternative Lending Companies in France

The French market is buzzing with new lending startups, but there are some stalwarts who have created a strong position in the French market for themselves. Though the sector has currently seen no listing, there are many potential unicorns.

Younited Credit

Founded in 2009, Younited Credit is one of the biggest fintech lenders in France. It was founded by Thomas Beylot, Charles Egly, and Geoffroy Guigou. The company operates as a peer-to-peer lending platform and is recognized by the French Central Bank. It allows investors to lend money to the borrower directly with the help of a secured bond market place. So far, the company has managed to raise US$122 million in funding and is currently working to expand across Europe. Since its launch, Younited Credit has helped fund almost 60,000 projects for a total origination of more than €433 million.

Lendix

Lendix is a peer-to-peer lending platform founded in 2014 by Olivier Goy. It is an online marketplace for business loans where investors are allowed to lend money directly to small and medium enterprises (SMEs). Lendix has raised approximately US$27 million to date. The company also bagged the 32nd position in the global ranking of the 2016 FINTECH 100.

Unilend

Founded in 2013 by Nicolas Lesur, Unilend is the leader in participative financing for SMEs. It is the
first French site which allows anyone to lend money directly to SMEs. The startup has raised more than €10 million in funding. NewAlpha Asset Management led its latest funding round.

FinexKap

FinexKap is a web-based platform founded in 2012 by Cedric Teissier and Arthur de Catheu. The company provides short-term capital solutions to SMEs. SMEs can simply sell their receivables and gain access to short-term funds. FinexKap has raised €7 million in equity since inception. It recently raised €12 million in debt for further expansion.

Lendosphere

Founded in 2014, Lendosphere is a niche platform dedicated to renewables and environment-friendly projects. Currently, the company has 70 projects under its ambit out of which 66 are completed while fundraising is going on for the remaining 4. Total loans originated by the company is more than €19 million.

Conclusion

French banks loaned out €2.169 trillion in 2016. Almost 50% of it went to households, and consumer credit accounted for €161 billion in outstanding loans. Outstanding loans to small businesses stood at almost €400 billion.

French banks accounted for 20% of overall bank credit in the Eurozone. These statistics highlight the tremendous market opportunity for alternative-lending entrepreneurs. It is one of the last developed markets that have not been tapped aggressively by online lenders and where regulators have been supportive of alternative financing. The sector is sure to see upheaval with the category maturing and Brexit creating an opportunity for startups to capture the trillion dollar French market as well as use Paris as a springboard for the entire European credit market.

Author:

Written by Heena Dhir.

Thursday June 1 2017, Daily News Digest

India fintech venture capital

News Comments Today’s main news: Fitch rates Prosper Marketplace Issuance Trust, Series 2017-1. Zopa raises 32M GBP to start a bank. Evolute raises 5.5M Euro. Capital Match hits S$40M originations. Today’s main analysis: Fintech startups hit purple patch, VCs make a beeline. Today’s thought-provoking articles: 80s generation team made a difference. Family offices eye real estate online. United States […]

India fintech venture capital

News Comments

United States

United Kingdom

China

European Union

International

India

Singapore

News Summary

United States

Fitch Rates Prosper Marketplace Issuance Trust, Series 2017-1 (FitchRatings), Rated: AAA

Fitch Ratings-New York-25 May 2017: Fitch Ratings has assigned the following ratings and Rating Outlooks to the notes issued by Prosper Marketplace Issuance Trust, Series 2017-1 (PMIT 2017-1):

–$311,300,000 class A ‘A-sf’; Outlook Stable;
–$70,670,000 class B ‘BBB-sf’; Outlook Stable.

Collateral Quality: PMIT 2017-1 has a weighted average (WA) FICO score of 706, including 28.1% of non-prime borrowers with FICO scores below 680. The introduction of PMI7, the latest generation of Prosper’s credit model, shifted the company’s risk appetite toward lower credit grades. Due to this, Fitch assigned cumulative gross default (CGD) assumptions for the 36- and 60-month loans in this pool of 13.75% and 20.75%, respectively, increased from previous transactions.

Form 8-K Elevate Credit, Inc. For: May 31 (Street Insider), Rated: A

On May 31, 2017, Elevate Credit, Inc. issued a press release announcing the Elastic line of credit product surpassed $200 million in outstanding loans. A copy of the press release is attached hereto as Exhibit 99.1.

Massachusetts AG Obtains Judgment Against Online Auto Title Lender for Illegal Loans (JD Supra), Rated: A

On May 25, 2017, Massachusetts Attorney General Maura Healey (“Massachusetts AG”) announced a final judgment and permanent injunction entered in Suffolk Superior Court against an unlicensed online auto title lender, permanently banning the company from operating in Massachusetts and voiding over 200 loans made by the company to Massachusetts borrowers. The judgment also prohibits the title lender from repossessing any of the vehicles connected to the loans, and orders the company to pay $1.135 million in civil penalties and nearly $200,000 in restitution.

Why traditional financial service firms are having difficulty competing with technology startups for talent (Orchard Platform), Rated: A

Figuring out how best to approach fintech has many traditional financial institutions scratching their heads. According to a report earlier this year, almost 60 percent of them are developing fintech capabilities in house. Of these, only 2.8 percent say they’ve successfully embedded innovation into their company cultures. Even “moderately structured” fintech initiatives challenge these companies; less than a third (29.2%) have managed to implement such projects. Building a creative culture of innovation within a large, risk-averse institution is turning out to be a much more complicated problem than many of them expected.

It’s easy to dismiss big financial institutions as slow and sclerotic compared to startups. In reality, it’s not even fair to compare the two. Traditional banking and financial service firms operate under very different constraints and attract an entirely different type of employee. An engineer who is best suited for a startup likely won’t be a good fit at a traditional firm and vice versa.

Open source libraries, modern software design, the availability of cheap hardware, and the support of venture capital have provided the foundation for the current explosion of startups focused on developing financial technology. These attributes make them a big draw, attracting both top engineering graduates, battle-tested coders, and recent MBAs alike.

Lenders Optimistic that Policy Changes Could Benefit the Lending Environment (Altisource Email), Rated: A

A large majority of lenders surveyed (73 percent) believe the new administration’s policies will have a positive impact on the lending environment, according to the 2017 Lenders One® Mortgage Barometer, a survey of 200 mortgage lending professionals.

Lenders are also ready to make investments in their organizations’ business operations. In fact, 42 percent of lenders indicate their biggest investment is in operational changes (hiring new staff, compliance support and software support), and 25 percent of lenders surveyed say they are currently making the greatest investment in marketing. While these investments are necessary for the industry to keep pace with consumer demand, they may also be driving up the cost per loan, with 65 percent of respondents indicating that the cost per loan will continue to increase.

Regulations Don’t Weigh Quite as Heavy on Lenders in 2017
Lenders are ready for new regulatory requirements, such as updates to the Home Mortgage Disclosure Act (HMDA), with two-thirds (65 percent) indicating they are very prepared for HMDA changes. Yet, the biggest HMDA compliance challenge for lenders is around additional resources needed to report transactional data, such as home equity lines of credit (HELOC) and dwelling secured loans for apartments. While lenders are investing in staff and technology, about one-third (32 percent) of them cite challenges with securing additional resources to report, connect and analyze transactional data.

E-closings See Broad Adoption a Decade after Their Inception
Though 39 percent of lenders report they are not using electronic closings (e-closings) on mortgage loans, a third of those respondents expect their organizations to implement e-closings in one to two years, on average. The majority (61 percent), however, say their organization has implemented e-closings while seasoned lenders — those in the business for 10 or more years — are the predominant category of lenders utilizing them (67 percent).

Banks’ emerging strategy for digital advice: All channel access (Financial-Planning), Rated: A

As banks wade into digital advice, they do so knowing they will need to appeal to every stripe of client, rather than a specific niche.

The strategy then calls for relying on an advantage banks still have over virtual competitors and even wealth management firms, says Mark Jordahl, president of U.S. Bank’s wealth management group: meeting clients in multiple channels, including bank branches.

U.S. Bank is one of several institutions that paired with BlackRock to launch a digital wealth platform, and Jordahl says that it is on track to be launched this year.

Fintech goes to Washington: Regulators, financial firms discuss wave of future (The Hill), Rated: A

As financial technology (fintech) startups enhance collaboration with traditional financial institutions to diversify and modernize financial services, a better understanding of how the regulatory environment impacts a company’s operations is becoming increasingly critical.

Two-way conversations: Regulators have set up new initiatives to allow them to engage directly with fintechs. Many of the regulators have designated a single entry point to make it easier for fintechs to open a dialogue.

Both the CFPB and OCC have begun holding office hours for fintechs in New York and elsewhere and have dedicated personnel to fostering engagement with fintechs.

Dissemination of information: The regulators are interested in learning about new technologies‎ to ensure that information about emerging technology is spread throughout and between agencies.

Clear expectations: Regulators are focused on potential operational risks associated with the use of novel technologies and expect financial institutions to meet high standards for the due diligence and monitoring of their third-party service providers, especially around cybersecurity and data security.

No silver bullet: The regulatory landscape in financial services is complex, and there is no silver bullet for the adoption of new technologies.

5 Startups Using Machine Learning And Behavioral Biometrics To Fight Fraud (CB Insights), Rated: A

Using CB Insights database we identified 5 cybersecurity startups to watch that are working on fighting fraud with a mix of behavioral biometrics and machine learning. We selected these private companies based primarily on CB Insights’ Mosaic scoring algorithm, which uses financial and non-financial signals to assess the health of private companies.

Ravelin offers a fraud detection and prevention platform that allows organizations that rely on online payments to automatically examine customer behavior in real-time and identify fraudsters before they do damage.

Simility offers a fraud prevention platform which combines machine learning and data visualization technology with a rules engine to help protect enterprises from fraud.

Shift Technology is a SaaS company designed to detect potential insurance fraud.

Socure’s social biometrics solution helps organizations detect fraudulent users on websites and in mobile applications using machine learning algorithms.

Sift Science provides machine learning software that automatically learns and detects fraudulent behavioral patterns, alerting businesses before they or their customers are defrauded.

How to identify and fight online fraud (TransUnion), Rated: A

Read Leveraging Collective Data to Combat Lending Fraud to uncover:

  • What types of online fraud to be wary of
  • How an integrated fraud solution helps eliminate gaps and weaknesses
  • How to leverage collective data across the industry

Key to acquire HelloWallet from MorningStar in latest fintech bid (Crain’s Cleveland Business), Rated: B

KeyCorp has announced plans to acquire software platform HelloWallet from Morningstar Inc.

Terms of the deal, which marks yet another fintech partnership for the Cleveland-based bank holding company, were not disclosed.

Fin-tech firms offer ways to diversify investments: Dusty Wunderlich (RGJ), Rated: B

In January, the Dow Jones surpassed 20,000 for the first time and the Case-Schiller Housing Index hit all time high at 185.56.

What then is causing the markets to continue to rise? Artificially low interest rates set by the Federal Reserve have allowed for cheap borrowing.

Thankfully there are many great financial technology companies giving individual investors new ways in which to diversify away from traditional markets.

  • Cryptocurrency
  • Precious Metals
  • Fine Art
  • Peer-To-Peer Lending: Lending Club and Prosper built the first platforms to directly invest in consumer loans. Low interest rates policy means low fixed income returns in the bond market. Peer-to-peer lending is one of the few fixed income investments left to obtain 8 percent plus in returns.

6 of the best crowdfunding sites for commercial real estate (Realty Biz News), Rated: B

There are numerous crowdfunding platforms available on the market, and Realty Biz News has identified six of the best for those interested in buying commercial real estate.

  1. PATCH OF LAND
  2. ACQUIRE REAL ESTATE
  3. FUNDRISE
  4. REALTY MOGUL
  5. CROWDSTREET
  6. REALTYSHARES

Family Office Networks Launches Los Angeles Family Office Association for Wealthy Families (PR Newswire), Rated: B

Family Office Networks announced today the launch of a new division in Los Angeles led by local resident James R. (Jim) Hedges, IV. Family offices, high net worth individuals and the top advisors who serve them are invited to join the Los Angeles Family Office Association, which will host events on a regular basis across Los Angeles. The group will celebrate its local kick off with an exclusive, invitation-only networking event this summer at the Beverly Hills Hotel.

The Los Angeles Family Office Association (losangelesfoa.org) will serve one of the most intellectually astute family office regions in the country. The group is designed to serve the extremely accomplished single and multi-family office community by creating an environment in which to share intellectual capital, leverage their years of industry expertise, and bring unique industry-generated deal flow and opportunities.

United Kingdom

Zopa completes fundraising ahead of bank transition (P2P Finance News), Rated: AAA

ZOPA has closed a £32m investment round led by Indian financial conglomerate Wadhawan Global Capital (WGC) and European venture capital fund Northzone, following which WGC’s chairman will join the peer-to-peer platform’s board, the firm confirmed on Thursday.

Kapil Wadhawan will join the consumer lender’s management board to help lead its transition towards a double-operation model comprising new banking propositions such as credit, savings and insurance products.

Zopa’s plans to become a “next-generation bank”, which first emerged last November, will enable the firm to expand its product range to service UK consumers more thoroughly.

Victory Park Capital fund toughens fees, exits Funding Circle US loans (AltFi), Rated: AAA

The board of the £358m VPC Specialty Lending Investments fund is introducing a hurdle on its performance fees payable to its investment manager Victory Park Capital.

The new hurdle, which came into effect from 1 May 2017, means the payment of the performance fee to the investment manager will be conditional portfolio achieving at least a 5 per cent per annum total return for shareholders. This will be relative to a high water mark starting from 30 April 2017.

Woodford and Artemis ramp up RateSetter stakes (Citywire), Rated: AAA

Neil Woodford and fund group Artemis have added to their stakes in RateSetter, after the peer-to-peer lender conducted a funding round to finance the launch of its Innovative Finance ISA.

RateSetter has raised £13 million from existing shareholders, including Woodford and Artemis, in a fundraise that valued the unquoted business at over £200 million.

RateSetter has now raised more than £40 million from investors since its launch in 2010.

Growth Street sees strong demand from millennials (P2P Finance News), Rated: A

ALMOST 40 per cent of Growth Street’s investors are under 35 years old, research from the peer-to-peer lending platform showed.

The firm, which channels funds to small- and medium-sized enterprises, said that 37.5 per cent of its retail lenders are 35 years old or younger, contradicting recent criticism that millennials lack savings and investment skills.

Major banks add crowdfunder to alternative lender panel (Bridging&Commercial), Rated: A

Seedrs has been invited to join NatWest and Royal Bank of Scotland’s (RBS) select panel of alternative funding solutions.

The crowdfunder has become an equity funding partner in the banks’ Capital Connections programme.

The panel allows NatWest and RBS relationship managers to offer UK business and commercial customers an alternative solution if their standard finance offerings aren’t suitable.

A third of people put no money away last quarter (Rochdale Online), Rated: A

More than a third of UK adults (37 per cent) have not saved or invested a penny in the last three months, according to a quarterly tracker launched by RateSetter this month.

On average, people put away £211 each month in the last quarter.

Men saved significantly more than women over the period (£246 a month, compared to £175).

25-34 year olds put away the most over that period (averaging £245 a month), followed by those of retirement age (£228 a month – aged 65+). Younger adults, aged 18-24, put away the least (£141 per month).

One in five (19 per cent) say that they currently have no savings at all, and two in five (43 per cent) no investments.

Average total savings and investments stand at £17,811 and £20,138 respectively.

Fintech firm partners with broker for Mifid II solution (Citywire), Rated: B

Fintech firm Red Deer has partnered with brokerage firm Westminster Research Associates to provide what they describe as an end-to-end Mifid II solution for the asset management industry.

The two businesses will offer research valuation and payments solution that meet Mifid II regulatory requirements around research consumption and valuation—whilst at the same time improving operational efficiencies.

China

Standing in the Right Wind, the 80’s generation team made a difference. (Jade Value), Rated: AAA

Several years ago, the best-selling book “Rich Dad Poor Dad” convinced people that a person knowing how to invest would be the winner of his life. If we see this as a criteria, then Yang Li, the founder of Xeenho, would be a “winner” already in young age. At his time in 2012, Yang Li was still pursuing his PhD at Central South University. Due to his research in P2P projects, he became considered as the “master of investment” by his friends and family,and even started investing their money for them.

P2P finance started to grow in China around 2008, but did not become well known among the public until 2012. Suddenly, individual investors discovered that the internet also could serve as an instrument for financial investment, allowing them to lend their money to other people for a financial return. This became attractive, especially as P2P companies started to promise clients over 10% returns. However, due to the large increase in number of platforms and lack of good practice, many scandals and bad press arose, consequently bankrupting a lot of the P2P platforms or getting them shut down. In addition, most P2P platforms were run from tier-1 cities, such as Beijing, Shanghai, Guangzhou and Shenzhen, far away from investors in sub-tier cities, i.e.borrowers and lenders on P2P platforms were located in areas with different capital needs and risk tolerance.

Although Yang Li researched P2P platforms from an academic perspective, he discovered a golden business opportunity, as there was an obvious demand from individual investors for professional investment advice. At the same time, the market for online investment advisory was just in its infant stage, with no players offering Robo-advisory services for investors, consequently a whole untapped market full of opportunities.

Yang Li founded Xeenho in 2014, a financial asset management platform, which evaluates P2P platforms risk profiles, and re-packs P2P assets into their own low-risk portfolio. He chose to headquarter Xeenho in Changsha, Hunan province, a second-tier Chinese city, with a clear purpose: “Since there are no financial institutions locating their headquarters in Changsha, many students cannot find a financial job in the city after graduation. They can only work in marketing or other areas.”

At that time, Yang Li only had one other partner, the co-founder Huang Zhenyu. The third co-founder Yang Xue, was still working with a large financial institution in Changsha, but realized that in order to advance in her professional development in her current company, she would have to re-locate to another province. Yang Xue and Yang Li studied their PhD together, and through her work experience she has developed a unique understanding of financial risk management. Yang Li finally managed to persuade her to join after many attempts, and as they already had known each other for many years, trust was already established between them.

Another key member of the team, Ding Yan, used to be a researcher in a listed company in Hengyang, Hunan province. She was not only a classmate to Yang Li before, but also his partner in several math contests. Consequently, she was an obvious choice when built the team.

Although Xeenho has strong theoretical know-how, the reality of building a company is tough with everyday ups and downs. Yang Li nicely told this with his anecdote of a special day. On the 2nd of May 2015, when his daughter was born, Xeenho also experienced a huge increase in number of fake users signing up to receive the registration reimbursement promoted through 10 RMB digital ‘Hongbao’s’, attracting thousands of new users daily. During normal days, this number was normally under 100. The fast increase offake users coupled with the inadequate marketing cost of acquiring them, forced Xeenho to start doing fraud assessment on each new registered manually by phone.

Xeenho’s business may look simple on the outside, but is actually complex looking under the hood. Through Xeenho’s platform, investors are introduced to and guided to the right P2P asset investment for their specific requirements. Compared to registering directly on a single P2P platform, Xeenho’s approach has several advantages. 1) Each asset package is composed of a range of P2P platform assets, which diversifies their portfolio and reduce risk. 2) Xeenho conducts in-depth research and risk management of each platform listed on their platform, in order to detect sudden changes and give investors first-hand information to lower their investment risk. In other words, Xeeno serves like an investor risk management assistant, which they are also earning commissions for.

This comes with a certain operational complexity, as Xeeno has to deal with more than a thousand different P2P platforms, on a real-time information basis. If investments has to be withdrawn from a platform, they need to monitor the original creditors’ rights and debts from the packaged assets. This is the core value of Xeenho, to have first-hand information before any retail investor in regards to debtors and P2P platforms.

Micro-loan network to share shares shares Yangquan Bank holding 9.76% (01 Caijing), Rated: A

According to WeChat public number “P2P intelligence agency” news that micro-loan network has been shares Yangquan City Commercial Bank Co., Ltd. (hereinafter referred to as Yangquan Bank).

European Union

Swiss fintech startup Evolute raises €5.5 million Series A (Tech.EU), Rated: AAA

Swiss fintech startup Evolute has raised €5.5 million in Series A financing. The investors were not disclosed. Evolute has also just been accepted into the Swiss Startup Factory’s Growth Accelerator Program.

The company says the new capital will be used for further development of its wealth management platform, and to develop more innovative technologies for personalized portfolio optimization.

Russian Banks Launch FinTech Lab Incubator (PYMNTS.com), Rated: A

Mastercard announced Monday (May 29) that Russian financial firms working within the collaborative FinTech acceleration program Fintech Lab has chosen 12 FinTech startups they plan to mentor and guide through the program.

International

TECH-SAVVY FAMILY OFFICES EYE REAL ESTATE ONLINE (CampdenFB), Rated: AAA

A new generation of tech-savvy investment officers are providing family offices with access to buoyant global property markets via new innovative online real estate portals, says Emmanuel Lumineau, chief executive at BrickVest, the London-based online real estate investment platform.

Maintaining wealth across generations has always been a complex task and the fallout from the financial crisis of 2008 resulted in many family offices focusing upon avoiding risk. Preventing the permanent loss of capital, counterparty and credit risk and a lack of liquidity have been an ongoing concern in the family office sector in recent years. There are about 3,000 single family offices globally, at least half of which were set up during the past two decades, according to a white paper published in 2014 by Credit Suisse. Administrative family offices are estimated to have assets of between $50 million and $100 million US dollars, according to the Zurich-based investment bank.

Family offices and high net-worth investors – with €8 billion of assets – make up the bulk of investors using the platform. These investors are poised to deploy €300 million on the platform over the next year, primarily in European and US real estate. The BrickVest platform has attracted about 200 real estate sponsors with €170 billion of assets under management.

Cambridge Centre for Alternative Finance Releases Their Second Americas Report (Lend Academy), Rated: A

Here are some highlights of the report.

Market size and growth

  • The online alternative finance market in the America’s grew to $35.2 billion in 2016, up 23% from 2015.
  • The 2016 US market volume of $34.5 billion marked a 22 per cent year-on-year increase from 2015.
  • Canada’s alternative finance market grew to $334.5 million, a 62 per cent year-on-year increase from 2015.

Prevailing online alternative finance models

  • In the US, consumer marketplace lending continued to account for the largest share of market volume with $21 billion recorded in the US in 2016 (up 17 per cent).
  • Balance sheet business lending became the second largest model in the US in 2016 with $6 billion originated, surpassing balance sheet consumer lending which had $3 billion.
  • In Canada, donation-based crowdfunding remained the top alternative finance model with $105.9 million, but balance sheet business lending rose at a rate of 282 per cent to $103.3 million in 2016.

Businesses tapping alternative finance

  • An estimated 218,188 businesses raised funds across the Americas from online alternative finance channels in 2016, led by the US with 143,344.
  • A total of $9.2 billion in alternative business funding was raised in 2016, which is distributed largely to the US ($8.8 billion).
  • Equity-based Crowdfunding reached $569.5 million.
  • Over two-thirds (71 per cent) of Latin America/Caribbean online alternative business finance came from Chile ($97.1 million) and Mexico ($69.5 million).

An Interview with Grégoire de Lestapis, CEO of Lendix Spain (Crowdfund Insider), Rated: A

Gregoire de Lestapis has left traditional banking, most recently the direction of BBVA France, for the world of fintech entrepreneurship. In 2016, he joined Lendix, the French SME lending group, as head its Spanish subsidiary and member of the executive team.

Spain is home to very large banks and has among the highest density of commercial bank branches in Europe, why did Lendix decide to enter this overbanked market?

Firstly, the rapid consolidation of the Spanish banks after the financial crisis of 2008 has fractured the relationship between SMEs and their bank.

The credit crunch that followed the crisis made many otherwise viable SMEs bankrupt. Scandals such as the abusive practice of the “floor lending rate clause” emerged. SMEs felt betrayed. The shock was all the greater as they were completely dependent on banks.

Secondly, regulatory requirements such as Basel II are making it less profitable for Spanish banks to serve SMEs. They would prefer to limit their exposure to 25% of the overall liabilities of a given SME.

The third point is that Spanish banks’ credit processes are still very inefficient.

Contrary to what the term “alternative lending” says, we don’t view Lendix as an alternative to banks. All our customers, lenders as well as borrowers, have one or several established banking relationships. Our strategy is to position our offering as complementary to banks’.

What about the competition from other SME lending marketplaces?

Since our first operation in February 2017, we have completed about 10 loan transactions of an average value of €350,000 and an average maturity of 47 months.

Isn’t the Spanish default rate of business loans quite high? 

Indeed, the default rate has steadily decreased from its peak of 13%, but it remains high at 8%. We are therefore very cautious. However, the main cause of defaults was the real estate sector. Outside of this sector, the default rate is much lower. Spain’s GDP growth rate is a solid 3% per year.

Olivier Goy, the founder and CEO of Lendix talks about the company’s international expansion as being multilocal, can you explain?

What mutilocal means is that, while sharing the European goal, vision and values, local teams are on the ground and fully immerse themselves in the local context. They make sure that the company respects local regulations. For example, a Spanish retail investor can lend a maximum of €3,000 per project and a total of €10,000 per year, whereas there is only a limit of €2,000 per project in France. As we enable French, Spanish and Italian investors to lend across borders, implementing these different thresholds is quite challenging.

India

Fin-tech startups hit purple patch as VCs make a beeline (VC Circle), Rated: AAA

A VCCircle analysis shows that since the beginning of the year, at least 24 fin-tech startups have raised venture funding. And the inflows have been well-distributed across the broader fin-tech space—while digital wallet firm Paytm may have got the biggest slice of the funding pie, raising a whopping $1.4 billion from SoftBank, online lending and payment gateway startups are also hot in terms of investor interest.

Wealth and expense management, financial advisory and investment platforms have also managed to raise capital over the last five months.

The most recent one was US-based Ebix Inc. acquiring an 80% stake in India’s ItzCash Card Ltd for $120 million (Rs 778 crore), a move aimed at gaining a foothold in India’s fast-expanding digital payments market.

Rahul Chandra, co-founder and managing director at Helion Venture Partners, is looking to raise $100 million for early-stage fund Unitary Helion. Rahul Chandra, co-founder and managing director at Helion Venture Partners, is looking to raise $100 million for early-stage fund Unitary Helion.

Banks now bank on fintech companies for more customers (India Times), Rated: A

Banks are no longer fighting financial-technology startups, instead they are gaining from them in terms of acquiring more customers and reducing operational costs leading to a flurry of partnerships in recent months.

RBL Bank, which has partnerships with more than 90 startups, has been able to acquire 30% of its total 2.8 million customers through these tieups, said Rajeev Ahuja, head of strategy retail and financial inclusion at RBL Bank.

MoneyTap, a startup that has tied up with RBL Bank to give lines of credit to customers, was able to bring 2,00,000 users to the bank through downloads of its app, chief executive Bala Parthasarathy said. The app targets the lower-middle income group and offers chatbot tech to be the “front end of the bank”, he said.

Another bank to have seen significant impact from such partnerships is Yes Bank, which acquires nearly 20% of its customers through digital channels, such as through its partnerships with PaisaBazaar and Niyo.

“Constructive Synergy”: Indian P2P Lender Faircent Introduces New Student Loan (Crowdfund Insider), Rated: A

Indian online P2P lending platform Faircent.com announced a new semi-secure student loan product in collaboration with Bangalore-based micro-lending startups.  Lenders ay also opt for a partly-secured alternative-investment opportunity that delivers a higher return. Under the partnership, college students may fund purchase of items such as laptops, books and smart mobile, by registering their loan requirements on the platform at a “reasonable rate” with a flexible loan period ranging between 6 and 36 months.

Singapore

Singapore’s biggest marketplace lender hits S$ 40 million originations (AltFi), Rated: AAA

Singaporean marketplace lender Capital Match has hit S$40 million in loans funded and has started rolling out infrastructure to onboard European investors.

The company, the largest marketplace lender in Southeast Asia, is hoping Singapore’s strong fintech scene and the chance to diversify into Singaporean dollars will lure foreign investors.

Authors:

George Popescu
Allen Taylor

Monday April 24 2017, Daily News Digest

credit card delinquency rates

News Comments Today’s main news: Credit Card ABS vs installment loans ABS comparison. Assetz Capital hits 240M GBP in four years. Octopus Choice close to 50M GBP in first year. Lendix expands to Italy. Today’s main analysis: 90+ wealthtech companies. Today’s thought-provoking articles: 88% of global banks sweat losing revenue to fintechs. 17 fintechs that may become unicorns. China SME […]

credit card delinquency rates

News Comments

United States

  • Credit Card ABS vs installment loans ABS comparison. GP:” People often try to use credit cards data, which there is plenty of, and goes back very far, to predict installment loans behavior. However, Americans have a priority in defaults which is proportional to the pain point if the product stops working. We believe unsecured personal loans are very low on the totem pole of default priorities. PeerIQ here analyzed the difference quantitatively and concluded very interestingly: ‘Peak delinquencies in credit card ABS are ~8% in a stress scenario. By contrast, three-year unsecured personal loans (such as loans in the seminal CHAI shelf) are typically associated with a ~12% cumulative loss estimate (under a benign base case).’ “
  • 90+ companies transforming investment, wealth management. GP:” We saw Wealthfron enter lending last week. Perhaps we should look at a few other companies for partnerships.” AT: “WealthTech as a sub-niche seems to have come out of nowhere. Yet, many of these companies are important to the overall fintech ecosystem, and I see WealthTech growing by leaps and bounds worldwide in the foreseeable future.”
  • Why having a trust strategy is key to fintech’s future. AT: “Building trust is the single most important thing for any financial services company.”
  • Allianz invests in Lemonade. GP:”Insuretech is coming? Is Lemonade the Lending Club of insurance?”
  • NASDAQ announces venture investment program for fintechs. AT: “This is interesting. I like reading the NASDAQ analyses on the industry on NASDAQ’s blog. I’d be interested in seeing how their investments perform, and how they choose which companies to invest in.”
  • North American Financial Institutions go social. GP:” Our readers are already aware of this trend I believe. Nothing really new.”
  • Fintech puts payday lending in old wine in new bottles. GP:” It is very hard to point exactly when innovation happens. Before 1990 there was no online payday lending, because there was no internet. Today it exists. Something did change. Everything we build is built on top of online lending. Perhaps lending was invented when the first money was invented and searching who invented something, for the glory, is not very useful in this case. We are losing time with the history of lending or with the exact meaning of certain words. I would rather look who is making the money, Elevate Credit or brick and mortar stores? Who’s revenue is growing?”
  • Fintech lures MBAs away from banking and consulting. GP:”Fintechs even lures executives and CEOs of Wall Street banks, no wonder MBAs are also following. “AT: “We’re also starting to see banks and traditional financial institutions poach talent from the fintech companies.”
  • Biz2Credit to expand to Puerto Rico. GP:” Puerto Rico doesn’t often make the lending news. I wonder if it is underserved.”
  • Inside Online gives off good vibes with digital branded magazine. AT: “I applaud Elevate Credit starting an online brand magazine. This is one of the most underrated and most effective online marketing strategies to implement, and I’m glad to see at least two companies in this space pursuing this channel.”
  • Elevate appoints Tony Leopold as GM.
  • BMO Harris Bank launches fintech partnership program with 1871.

United Kingdom

European Union

International

Australia

China

India

Asia

  • Indonesia’s fintech landscape. GP:” The Indonesian market is particularly closed to international ownership, investment, etc. However, they are the 4th most populous country in the world and their financial sector is far from being mature. Which leaves a lot of opportunity if people are willing to approach the Indonesian market properly, perhaps in partnership with local entrepreneurs and by structuring firms through local law firms .”
  • ASIC signs agreement with Indonesia.

Africa

News Summary

United States

Credit Trend Through Delinquency Rates (PeerIQ), Rated: AAA

Banks earnings season continued this week following strong Q1 results from JP Morgan and Citi last week. Morgan Stanley beat expectations on each line of business increasing year-over-year profits by 82%. The investment bank also generated 122% YOY revenue growth in the fixed income currency and commodities business. Bank of America exceeded expectations and benefitted from the greater net interest income due to a rise in long-term rates.

For the first time since 2015, GS surprised analysts by missing expectations on top and bottom line performance. Fixed income revenues were flat year-over-year trailing double-digit business unit gains across peers including JPM, C, MS, and BAC.

Bloomberg reports that, Navient, the largest servicer of student loans, reached an agreement to purchase JPMorgan’s approximately $6.9 Bn FFELP education loan portfolio.

In the ABS space, Yirendai reported its progress in funding consumer loan products via ABS. Another Chinese online lender, China Rapid Finance, announced that it plans to list on the NYSE, making it the second Chinese online lender to go public in the US.

We are often asked by investors whether credit card receivables are a proxy for installment loan performance. This week, we dig into credit performance of credit card securitizations representing over $100 Bn+ in consumer credit ABS deals. We include the following issuers in our analysis: American Express, Bank of America, Discover, Capital One, JP Morgan Chase, and Citi.

We compare delinquency and loss levels of credit card ABS to installment loans and conclude that credit card ABS performance is a poor proxy for installment loans, and that installment loan delinquencies are arguably a leading indicator of credit risk.

Credit Card ABS – A Strong History of Credit Performance

The credit card ABS market has historically been the benchmark sector in consumer ABS due to its liquidity, transparency, and strong performance including through the Great Recession.

The Credit Card ABS market is not an originate to distribute risk-transfer market, but rather a critical channel for funding and liquidity. Issuer incentives are strongly aligned with investors due to their dependence on debt capital markets for funding.  Credit Card ABS provides over 50% of funding for card issuers (followed by deposits). New Credit Card ABS issuance is expected to grow in the wake of higher rates and funding costs from deposits.

Post-2008, new ABS issuance contracted significantly, including in the credit card markets. Consumers entered a de-leveraging phase reducing demand for loans. Large banks, in response to the new capital and liquidity regime, shifted to borrowers with higher credit scores and focused on existing relationships. Wider spreads and higher capital charges also reduced available sources of funding for consumer credit.

Post-crisis, non-bank lenders emerged to fill the lending gap by offering installment loan products to expand access to credit. Since installment loans sometime re-finance higher rate credit card debt, some investors have drawn analogies between credit card performance to installment loan debt.

Credit Card ABS Delinquencies are Near Multi-Decade Lows

In our March 2016 newsletter, we discussed credit card master trust performance, noting that delinquencies from 2011 through 2015 followed a downward trend for major credit card issuers.

We continue our analysis below, observing delinquencies continuing the downward trend in 2016, reaching historic lows in early 2016.

While the Composite index shows this trend, there is variability among the individual trusts. Discover and Capital One, with a mass-market tilt in customer base, experienced larger rises in delinquencies, compared to Amex and Chase which have a mass affluent footprint.

Source: Federal Reserve

Installment Loans Lead Credit Card Losses

There are limitations in comparing delinquency rates on credit card ABS to installment loans. For instance, unlike MPL ABS deals which consist of static pools, credit card trusts are revolving securitizations that re-invest principal and interest over time. Also, we do not have access to the credit score distributions for credit card issuers to compare risk on an apples-to-apples basis.

Nevertheless, when comparing credit card ABS performance to the PeerIQ loan performance monitor we can draw some conclusions:

Delinquencies on credit cards reached multi-decade all-time lows in early 2016.

Credit card delinquencies are in early stages of reverting to historical levels, whereas the Loan Performance Monitor indicates that the unsecured personal installment loans have started a pattern of higher losses in successive vintages starting in 2015.

Through-the-cycle losses on credit card products are lower than losses on installment lending products.

Peak delinquencies in credit card ABS are ~8% in a stress scenario. By contrast, three-year unsecured personal loans (such as loans in the seminal CHAI shelf) are typically associated with a ~12% cumulative loss estimate (under a benign base case).

Note: We should expect higher losses on installment loans as non-banks offer access to credit to borrower segments outside of a traditional bank’s higher credit score underwriting box.

Historical credit card performance data is a poor proxy for measuring installment loan performance.

We can also offer the following tentative hypotheses which we look forward to testing with our TransUnion partnership:

Installment loans are lower in the consumer payment priority stack.

Installment loan losses lead performance in other asset classes such as credit card.

Credit card account management strategies (e.g., re-pricing of delinquent loans, credit line decrease tactics, etc.) are powerful levers for managing risk as compared to installment loans where issuers can only set terms at time of approval.

Deeper borrower relationship engagement (as measured by breadth of product penetration) reduces borrower’s credit risk all things being equal.

90+ Companies Transforming Investment And Wealth Management (CB Insights), Rated: AAA

Wealth tech investments reached a record of 74 deals in 2016.

We identified over 90 companies in the wealth tech space and organized them into 7 main categories based on the services and software they offer, then sub-categorized them by the client group they serve, whether business-to-consumer (B2C), business-to-business (B2B) or both.

Wealthfront has raised approximately $129.5M from investors, including Social Capital, Spark Capital, Greylock Partners, and Index Ventures.

This includes AdvisorEngine which raised a $20M Series A investment from WisdomTree Investments.

Stash, for example, is a goal-based digital investment platform that lets investors contribute as little as $5. Another company, Acorns, rounds up credit and debit card purchases to the nearest dollar then automatically collects and invests that spare change.

This category is exclusively B2B focused and includes Plaid Technologies, a software intermediary that securely connects financial application users with their respective bank accounts.

Click here to see a full list of WealthTech startups.

Why Having A Trust Strategy Is Key To The Future Of FinTech (Forbes), Rated: A

FinTech continues to see massive investment across the board and according to the annual FinTech Report, global cumulative investment will exceed $150 billion in 2017 alone. At least 80% of financial institutions PwC recently surveyed believe that they are at risk to innovators whether that be mobile banks like Monzo and N26 or more hardcore technological innovations like Lemonade and Algodynamix who want to change FinTech from the inside out with AI and other technologies like Blockchain. Trust is central to all of these emerging propositions whether it is from an emotional perspective because of previous traditional banking issues or a technological one like Blockchain.

Tom Blomfield, CEO, Monzo wants the youth market to come through word of mouth; “We’re focused on people who live their lives on their smartphones. Generally (but certainly not exclusively), these people tend to be younger and more willing to try out new products and services. For these customers, ‘trust’ is earned by making a product or service that demonstrably works well. It’s less about expensive advertising campaigns or branches on the high street… For us, it’s centred around transparency and community. We have a very active community forum.”

Ajay Bhalla, President, Global Enterprise and Security, Mastercard wants to increase trust by removing friction from the tedium of security.

Allianz Invests in Lemonade (PR Newswire), Rated: A

Lemonade, the insurance company powered by artificial intelligence and behavioral economics, today announced a strategic investment by Allianz, the world’s largest insurance company.

Nasdaq Announces Venture Investment Program For Fintech Companies (Crowdfund Insider), Rated: A

U.S. stock exchange group Nasdaq (Nasdaq: NDAQ), announced on Wednesday the launch of its venture investment program, Nasdaq Ventures, which is dedicated to discovering, investing in and partnering with unique fintech companies worldwide. According to the group, this program’s main objective is to identify and collaborate on new technologies and groundbreaking services and solutions which align with its clients’ needs an d the company’s long-term objectives in the global capital markets.

Innovation spotlight: North American FIs going social (Banking Tech), Rated: B

As banking continues to go digital, online innovators and niche players in North America are getting personal by adding social activities to their customer services.

SoFi, short for Social Financial, combines better rates on student loan refinancing with parties for its members (aka borrowers), around the country. It even offers career and financial counselling.

CommonBond offers an online student loan evaluation tool to help prospects determine the best ways to manage their debt. It estimates that members save an average of $14,581 as they repay their student loans, and even more for people like doctors and dentists with advanced degrees and higher debts.

Fintech Puts Payday Lending Old Wine in New Bottles (Naked Capitalism), Rated: A

And before you conclude that I am being a reflexive skeptic, Georgetown law professor Adam Levitin weighed in via e-mail:

First, Fintech is a meaningless term. The consumer-facing stuff is mainly (1) gussied up payday lenders (see, e.g., Think Financial and their tribal lending alliances), (2) money transmitters, and (3) BitCoin Bros. The money transmitters are probably harmless enough, but the first group are just trying to escape state usury laws and rollover restrictions, while the third group are grab bag of fools and con artists who think they are much more clever than they actually are. People on the Hill go ga-ga for Fintech without having any real knowledge of what they are and assuming that a digital platform represents a material (and better) transformation of a product.

The Lyric Financial website is remarkably content-free, particularly for specific product features and details of terms and conditions. Apart from the cloying trendiness which it is far too early in the morning to stomach, it’s very hard to find out what the deal really is.

You’re subjected to mandatory binding arbitration, which for a sophisticated product aimed at financially unsophisticated customers is a very bad sign.

It gets worse. In the bowels of their T’s and C’s I found this:

Governing Law

These Terms & Conditions, as well as any claims arising from or related thereto, whether in tort, contract or otherwise, are governed by, and are to be interpreted and enforced in accordance with, the laws of the State of Tennessee, without regard to New York’s conflicts of laws principles.

Which sounds suspect  – my take is that they are under Tennessee’s statutes (don’t know if that signifies anything noteworthy, either good or bad) but they don’t want to be liable under an aspect of NY law (which I’m guessing is much better settled and consumer-friendly than TN’s).

Fintech lures MBAs away from banking and consulting (Financial Times), Rated: A

Many fintech founders went to business school. Insead’s MBA alumni include Giles Andrews, British founder of peer-to-peer lending platform Zopa, and Taavet Hinrikus, the Estonian-born chief executive of online foreign exchange marketplace TransferWise. Jeff Lynn and Carlos Silva jointly developed the business plan for equity crowdfunding business Seedrs as part of their MBA course at Oxford’s Saïd Business School.

Now, as fintech founders grow their businesses, they are heading back to business schools to find well-qualified staff. About a fifth of hires from the international MBA class at Madrid’s IE Business School last year were made by financial services companies. Fintechs made 5 per cent of those hires, up from none last year.

Eight of Nutmeg’s 78 staff are MBA graduates, including two product managers, its chief marketing officer, chief architect and head engineer.

MBA graduates are unlikely to join fintech companies in the expectation of high salaries. Many,particularly those who have worked in private equity, understand start-ups operate differently, Nutmeg’s Mr Hungerford says.

Biz2Credit to Expand Online Access for Small Business Financing in Puerto Rico (Crowdfund Insider), Rated: A

Biz2Credit announce on Thursday it has formed a partnership with Puerto Rico’s Oriental Bank to help develop a digital lending platform for the bank’s commercial clients. According to the Biz2Credit, Oriental Bank will be considered the first bank in Puerto Rico to engage commercial clients through a digital platform that supports applications for business credit cards, as well as lines of credit, term loans, real estate loans, equipment purchase, and SBA loans.

Inside Online gives off Good Vibes with “digital branded magazine” (Prolific North), Rated: A

Inside Online has launched an online magazine as part of a digital marketing campaign for an online lending company.

Good Vibes aims to build a greater owned audience for Elevate Credit brand, Sunny.

Good Vibes will include in-house editorial, an external newsroom and illustrated graphics.

Elevate Appoints Tony Leopold as General Manager, Rise (BusinessWire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading provider of innovative online credit solutions for nonprime consumers, today announced the appointment of Tony Leopold as the General Manager of its Rise product, effective immediately.

BMO Harris Bank Launches FinTech Partnership Program with 1871 (Yahoo! Finance), Rated: B

BMO Harris Bank today announced a partnership with 1871 – a leading technology and entrepreneurship ecosystem which is currently home to nearly 500 high-growth digital startups in the Merchandise Mart – that will provide a select group of FinTech startups the opportunity to participate in a three-month mentorship program.

United Kingdom

Assetz Capital hits £240m of lending in four years (P2P Finance News), Rated: AAA

ASSETZ Capital hit its fourth anniversary with £240m lent to date and a plan to double that figure over the next 12 months.

The peer-to-peer lending platform, which channels funds to small- and medium-sized enterprises (SMEs) and small property developers, confirmed on Friday that it has returned over £20m of interest to investors since inception, yielding rates ranging between 3.75 and 18 per cent to investors.

Thanks to a recent surge in borrower demand, it also launched a temporary rate hike offer on its 30-day account last week to 4.75 per cent for a 90-day window.

Octopus Choice close to £50m loan target ahead of first anniversary (P2P Finance News), Rated: AAA

OCTOPUS Choice is set to have raised £50m within its first year of operation.

The lender offers average returns of 4.2 per cent based on conservative loans-to-value of up to 70 per cent and currently has 20 loans open for investment.

It pre-funds the loans, which a spokesman said has been given the green light by the Financial Conduct Authority (FCA) – despite several other P2P lenders having to stop the practice in order to gain approval from the City watchdog.

The platform’s loan book shows it has funded loans of as little as £95,000 to more than £5m, secured on properties valued between £175,000 and £8m.

What Brexit Means for London’s First FinTech Unicorn TransferWise (Coin Telegraph), Rated: A

According to a report published by GP Bullhound, TransferWise is one of Europe’s fastest growing unicorns. Also, according to the same report, the UK has the largest number of fastest growing unicorns, which are fast-growth, profitable businesses at 18 with a cumulative value of $39.6 bln.

Despite the clouds of Brexit looming, British tech deals hit a high in 2016 according to GP Bullhound. Whether the growth in the tech sector can be maintained post-Brexit is an interesting question.

Moneysupermarket pioneer sets up new financial advice business eVestor (The Telegraph), Rated: A

Duncan Cameron’s jointly-owned eVestor service aims to cut the cost of full-service financial advice by 80pc. He says it will deliver sophisticated advice to investors “whether they have £1 or £1m”.

He says eVestor will use complex digital “decision trees” to replicate the role of human advisers at a fraction of the cost and “provide more consistent outcomes”.

My Moneything Investment Experience after 13 Months (P2P-Banking), Rated: A

Last year I started investing on British p2p lending marketplace Moneything. Read my past article about opening a Moneything account. Moneything mostly offers property backed loans, with a few different asset-backed deals in between. I used Transferwise and Currencyfair to deposit money from my Euro account. Recently I also used the Revolut App to transfer money from another UK p2p lending marketplace to Moneything.

I am invested in 31 loans right now, mostly at 12% interest rate with small amounts also at 10.5%, 11% and 13% invested. I have had no defaults and there are no fees for investors.

Why choose a robo-adviser? (IG.com), Rated: B

Anyone can use robo-advice to manage their finances, whether that involves a £500 initial investment in a Stocks and Shares ISA, or a £100,000 Self Invested Personal Pension (SIPP).

Just last year, the Financial Conduct Authority (FCA) warned that 16 million UK consumers could be trapped in a ‘financial advice gap’ where they need professional investment advice but simply can’t afford it.

There is a £310 billion shortfall in the UK’s pension savings, according to Aviva’s calculations, while Zurich Insurance recently found that 41% of women and 30% of men aged 25 to 39 have nothing saved in their pension fund.

According to a MetLife survey, 45% of retirement savers are so concerned about their dwindling returns that they feel forced to take on more risk – a decision which could have disastrous consequences in the absence of professional financial guidance.

Fintech Startup Prime Trust Appoints Former Hambrecht Partner Whitney White As New CTO & COO (Crowdfund Insider), Rated: B

Nevada-based Fintech startup Prime Trust announced on Friday it has appointed former Hambrecht Partner and CTO, Whitney White as its new COO and CTO. 

European Union

Lendix Now Offering Loans to Italian SMEs (Crowdfund Insider), Rated: AAA

European marketplace lending platform Lendix has opened its platform to Italian SMEs. As of today, Italian businesses may borrow from €30,000 to €2 million directly financed by international investors. Lendix called the operation “a new step towards a true European credit market.”

International

88% of Global Banks Sweat over Losing Revenue to FinTech Firms (Cryptocoins News), Rated: AAA

The report, Global Fintech Report 2017 [PDF], found that 88 percent of global banks are increasingly concerned that they will lose revenue to fintech businesses. The areas major banks feel they will lose out on include payments, fund transfers and personal finance sectors. In response, 82 percent claim that they intend to increase partnerships with financial technology services over the next three to five years.

The survey found that difference in management and culture in addition to regulatory uncertainty and legacy technology limitations, are identified as being significant challenges for financial technology companies and banks. Not only that, but banks are restricted to a system of checks and balances that can hinder the innovation process while fintechs are able to adapt easily due to a lack of bureaucracy.

The technology is moving from hype to reality and as it does so funding in the sector increased 79 percent year-over-year in 2016 to $450 million.

17 fintech businesses that could one day be worth over billion (Business Insider), Rated: AAA

GP Bullhound, a boutique investment bank focused on tech, on Thursday published an in-depth report looking at the global fintech industry.

The report found 39 fintech companies around the world already valued at $1 billion or over, and found that global venture capital investment into the sector has risen almost fivefold in the past three years to reach $13.6 billion in 2016.

GP Bullhound identified promising businesses in the alternative lending space, data analytics, digital banking, insurance, and asset management. Here are the 17 businesses that made the cut and, in GP Bullhound’s view, could be the next fintech unicorns:

  • LendInvest — Online mortgage platform
  • Prodigy Finance — Peer-to-peer university loans for overseas students
  • ID Finance — Online lending in Russia
  • Ebury — Financing for small businesses trading overseas
  • iZettle — Mobile phone linked card readers
  • WorldRemit — International money transfer on your smartphone
  • Cardlytics — Analytics of card spending
  • Kreditech — Digital credit scoring and lending
  • Taulia — Supply chain finance
  • PolicyBazaar — Indian insurance marketplace
  • Collective Health — Tools for employers to manage company health insurance
  • Atom — Digital-only challenger bank
  • OakNorth — Digital challenger bank pitched at entrepreneurs
  • N26 — App-only bank that is hugely popular across Europe
  • Betterment — Online investment advisor
  • Wealthfront — Online investment manager targeting millennials
  • Nutmeg — Online investment managet

SME Lending Activity: China Spikes, US Banks Reboot (PYMNTS.com), Rated: AAA

Small business lending activity across the globe is in flux. China saw a whopping 17 percent increase in small business lending in Q1, while U.S. banks are rebooting their efforts to capture SMEs from their alternative rivals. The U.K. and Canada, meanwhile, see their small businesses struggling to find financing.

$3.2 trillion worth of outstanding SME loans in China means lending activity to small businesses in the community has inched up in Q1 2017. New data from the People’s Bank of China released the statistic, which signals a 17 percent increase from a year ago, reports said.

Three out of five London SMEs have been turned away from lenders, according to data released by SME finance LDF. Its research revealed that more than half of London’s SMEs say the jargon associated with financing has turned them off from accessing a loan, and 57.6 percent said they have been turned down from a loan outright.

Fewer than 15 percent of Canada’s small businesses are run by entrepreneurs aged 25 to 39, said CIBC Capital Markets in a new report.

Three minutes could be all it takes for a small business to get financed from NatWest. The bank said last week that it has rolled out a new platform for its SME customers that have been pre-assessed for financing.

A dip of 1.1 in the PayNet Small Business Lending Index may appear to be bad news — signaling a slight decline in Canadian small business lending in February compared to January. But according to PayNet data, medium-sized business lending increased nearly two points in the index, marking the highest level since January 2016 and reflecting separate data from CIBC Capital Markets that signals strong growth among Canada’s SME community.

Australia

The fake offset accounts that could make your savings vanish (The Sydney Morning Herald), Rated: A

You recently answered a question regarding the safety of a home loan with an online lender (the debt would be on-sold to another provider and the loan would continue). My question relates to the security of money in an associated offset account. How secure would the money in the offset account be? If the lender goes bust would they be able to take all of our savings in the offset account and then on-sell the full value of the loan?

There was a time when a compelling reason not to go with a cheaper online lender was that, not being authorised deposit-taking institutions, they could not offer offset accounts. Some have since begun splitting out certain repayments in a quasi offset – on occasion, simply like a displayed redraw facility.

But there is a downside: offset accounts set up in this way are not subject to the Financial Claims Scheme or the scheme protecting deposits of up to $250,000 in the event the provider goes bust … only truly separate deposit accounts of locally incorporated authorised deposit-taking institutions (ADIs) are, whether they are offset or not.

Note APRA regulates ADIs (mainly banks, building societies and credit unions); online and other non-bank lenders are subject to the Consumer Credit Code and can be ruled on by the Credit and Investments Ombudsman.

Gerard Brody, chief executive of Consumer Action, says: “Non-bank lenders that offer these products should be warning customers clearly that if they go under, the money in the account won’t be protected by the government guarantee.”

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On April 11, Xiaomi Corp., China’s leading mobile phone maker, launched the mobile application Xiaomi Lending in Android market, signaling a strong ambition to expand in the country’s booming Internet Finance sector.

On March 20, Dianrong.com announced to enter into a strategic partnership with Quark Finance, with an aim to launch a new online microcredit platform.

On April 12, Chinese online peer-to-peer lending service Renrendai.com announced that its P2P business would be operated as an independent platform.

National Internet Finance Association of China has announced the first major report to its members regarding the legal and regulatory status of consumer finance. The document, which is echoing to the P2P Finance Association established by the organization in March, is the first to officially classify consumer finance in the eyes of the Chinese government.

On April 8, the first Committee of Internet Finance Law was established in Beijing. The committee held symposiums about the technology innovation and legal protection in Fintech industry, which attracted several representatives of governmental organizations and university professors.

India

P2P lending can play a pivotal role in financial inclusion (India Times), Rated: AAA

However, what is noteworthy is that P2P as a product does have the ability to make a real difference in the financial inclusion space.

According to “Accenture’s Digital Disruption: The Growth Multiplier” report, digital tech could power $2 trillion of global economic output by 2020. The survey states that the US is leading the race with digital revenue making up a third (33%) of output. In terms of industry sector, Financial Services is the largest contributor in terms of their digital contribution to national and global GDP. In fact the same is true for every country across the world.

P2P lending and borrowing ticks all the boxes in terms of being simple, rates that appeal to both borrowers and lenders and is available to individuals often neglected by banks. As a result, it is finding traction regardless of social strata, age or education.

Our lenders are young with 51% belonging to the age bracket of 30-39 years. About 36 % of the lenders are over 40 and 13 % are below the age of 30.

It is well known in India that it is very difficult to get a loan from a bank if you are an SME. When we talk of financial inclusion, it should not be merely limited to an individual, but also ensuring access to finance for companies of all sizes. P2P has done a great job in lending to SMEs and this is largely possible because of wide range of data sets used to arrive at a lending decision.

Financial institutions feeling fintech heat, says PwC study (India Times), Rated: AAA

Financial institutions are increasingly at risk of losing business to fintech innovators, with 67 per cent already feeling the heat, says a PwC study.

According to PwC’s Global FinTech Report, 67 per cent believe their business is at risk from financial technology (fintech) firms and as many as 95 per cent of incumbents seek to explore fintech partnerships to boost innovations.

In India, 67 per cent financial institutions acknowledge that non-traditional fintech poses a threat to their businesses, lower than the global average of 80 per cent, indicating that the market in India is not yet as matured as it is globally.

Can e-KYC Service Providers Like Finahub Ride The Aadhaar Wave? (Bloomberg Quint), Rated: A

Finahub Technology Solutions, a Kerala-based software technology solutions company, is riding a building wave in financial services–the increasing use of Aadhaar-enabled e-KYC (know your customer) by banks and non-banking financial services (NBFC).

The bank or the financial institution is a KYC User Agency, and must first register with the UIDAI. The intermediary, called a KYC Service Agency, transfers the confidential Aadhaar information in an encoded form from the user to the UIDAI, and then back to the bank’s server.

The software solutions provider, in this case Finahub, provides software that connects all the points in the chain.

The software solutions provider, in this case Finahub, provides software that connects all the points in the chain.

The company also offers an Aadhaar e-sign facility as an add-on service. If this option is chosen, once the e-KYC process is complete, the bank’s representative asks the customer to scan his fingerprint a second time.

Asia

Understanding Indonesia’s Burgeoning Fintech Landscape (Global Indonesian Voices), Rated: A

From 2008 until 2013, the investment value in fintech had increased threefold.

As reported by Tech In Asia, in Indonesia fintech is the business sector with the second largest investment in 2016, after e-commerce. According to Bank Indonesia, there are around 142 local fintech companies in Indonesia. They are categorized into four types: Market Provisioning, which includes CekAja and Cermati; Deposit, Lending, and Capital Raising, which includes UangTeman and Investree; Investment and Risk Management, which includes Bareksa and Stockbit; and Payment, Clearing, and Settlement, which includes Midtrans and Doku. This last category is the one with the most players, comprising around 80 companies.

There are at least 11 fintech startups that received funding from investors during 2016.

ASIC signs fintech agreement with Indonesia (InvestorDaily), Rated: A

The agreement, signed on Friday, provides a framework for the two regulators to share information on market trends and regulatory issues that develop from innovation within their respective markets.

The regulator said increased co-operation between the two regulators will support them to promote innovative practice, and described the agreement as “positive confirmation” of the relationship between ASIC and the OJK.

Africa

How Africa’s FinTech Industry Is Impacting Its Growth And Development (The Marketing Mogul), Rated: AAA

The emergence of Africa’s FinTech industry, through its software and platforms, has made financial products and services more accessible to consumers in developing countries with low standards of living. It has also made these products and services more affordable by reducing the cost of doing business for financial institutions and other intermediaries.

Africa’s largest economy, Nigeria has experienced 27% growth in mobile money usage between the years of 2011 and 2016. The country’s FinTech industry currently comprises of over 50 companies with investments exceeding $200m in the last two years. Nigeria, according to Irrational Innovations, has developed effective payment and lending platforms, with 37% of FinTech start-ups focused on offering payment and remittances services (such as Paga and Remitta) while 32% offer lending and financing services (like Renmoney and Onefi). The remaining 31% are divided amongst insurance, banking, trading, data, bitcoin and business solutions.

Kenya has also exhibited very promising potential and growth in the mobile money lending operations. In March 2015, financial times reported that $150m worth of loans had been issued to borrowers, following the collaboration between Kenya Commercial Bank and M-Pesa (a mobile money platform). The vast majority of these borrowers are low income earners previously regarded as un-bankable due to their lack of credit history and access to financial services (financial exclusion).

Ghana has also been on the rise in regards to Africa’s FinTech space. As of 2009, about 70% of Ghana’s population were un-banked, and the country had a GDP growth rate of 4%. But between 2011 and 2015, largely due to the utilisation of mobile money, the country recorded a 41% increase in the population’s access to formal financial services, as well as a compounded GDP growth rate of 7.7% between the same periods.

The use of mobile money in Sub-Saharan Africa has increased over the years, with approximately 70% of adults in Kenya, for example, utilising mobile phones for money transactions. African small- to medium-sized businesses (SMEs) account for over 45% and 33% of the continent’s employment and GDP rates respectively.

Authors:

George Popescu
Allen Taylor