- Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu.
- Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued?
- Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and big data.ESG and credit risk.Myanmar’s focus on SMEs.
- More on the LendingClub/IEG Holdings drama. AT: “This is more about IEG Holdings and its bizarre founder Paul Mathieson, who claims to have left Australia in fear of his life.”
- IEG Holdings is planning a cryptocurrency for lending.
- Investors buy bitcoin with debt. AT: “Am I the only one thinking this is foolish?”
- Small business financing trends. AT: “A heavy focus on online lending.”
- JP Morgan Chase teardown on digital technology. AT: “Besides Goldman Sachs and Citi, no other big bank is investing in digital technology like JP Morgan Chase. Whether their investments will make them a strong competitor in digital banking remains to be seen, but this is one area–at least, in the U.S.–that desires way more exploration and focus than it’s getting.”
- Nav facilitated more than 20,000 small biz credit approvals in 2017. AT: “Congratulations.”
- Bono investment fund backs Acorns.
- LendingPoint acquires LoanHero. AT: “LendingPoint is making some moves as of late.”
- Oportun is opening 20 Florida offices.
- Key trends in fintech. AT: “Some of these are obvious, but I like the mention of emerging economies because some, like Africa and Latin America, tend to get forgotten.”
- Google rebrands payments tools into one umbrella.
- Ladder nabs $30M.
- Fifth Third regains top CRA grade, enters M&A.
- Beginners guide to college loans.
- Roostify hires VP of engineering.
- Roofstock appoints CMO.
- Open banking could change how people manage money. AT: “No kidding. It will change how banks acquire and attempt to retain customers, too.”
- ThinCats looks for a great year in SME lending.
- Loan Store to reduce interest rates on instant cash loans.
- Crowdstacker joins P2PFA.
- Yirendai undervalued, says analyst.
- Black Fish raises $145M.
- Renren poised to grow with blockchain.
- Dianrong partners with Dalian Finance Development Bureau.
- Shangai tightens supervision of finance sector.
- Moneygram partners with Ripple.
- How banks can use trade finance, data to increase wallet share.
- Principles, ESG, credit risk.
- ABS braces for more auto deals.
- Ways fintech will change the world. AT: “Some interesting insight into payments and lending.”
- Overstock’s innovation and expansion. AT: “And people are talking about Amazon.”
- TradePlus24 partners with Trade Ledger.
- Bankers fear Amazon-like tech disruption. AT: “Maybe they should fear being Overstocked.”
- Karma token trading opens.
- United States
- Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA
- SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A
- Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA
- Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA
- JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA
- Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A
- Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A
- Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A
- Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A
- 6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A
- Google Pay brings payment tools under a single brand (Tearsheet), Rated: A
- Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A
- Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A
- A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A
- Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B
- Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B
- United Kingdom
- An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA
- ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A
- Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A
- Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B
- 3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA
- Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA
- China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A
- Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A
- Shanghai tightens financial sector supervision (Ecns), Rated: B
- European Union
- Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA
- MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA
- How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA
- PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA
- ABS braces for more auto deals after strong start to year (IFR), Rated: A
- FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A
- Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A
- Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A
- Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A
- Karma token trading opens after successful $10 million ICO campaign (Crypto Ninjas), Rated: B
- German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA
- Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A
- NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A
- Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA
- Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B
- Local digital currency eyes real estate disruption (ITWeb), Rated: AAA
Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA
Lending Club has all kinds of problems: a history of profit warnings, faint traces of scandal after a management upheaval almost two years ago, and a share price still more than 80 per cent adrift from its peak.
Add to that list: a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson, who told authorities in his native Australia that he fled to America in 2008 because he feared being killed by a mobster.
Mathieson’s case for change at Lending Club, laid out in a letter to the company’s board on 2 January, is not a terrible one, on the face of it. He argues that the cost structure at the loss-making company, a pioneer in peer-to-peer lending, is “excessive,” noting fancy headquarters in San Francisco and “hundreds” of “excess” developers. He says that the board should consider a pivot to using its own balance sheet to lend, rather than acting as a broker, taking fees for matching borrowers with lenders. Underwriting has been sloppy, he says, resulting in sub-par returns to investors.
Mathieson is offering 13 shares in his own penny-stock company, IEG Holdings, for every share in Lending Club. At the time of the offer on Monday morning, that was a premium of 19 cents, or about 5 per cent.
SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A
IEG Holdings Corporation (OTCQB: IEGH) provides online unsecured consumer loans under the brand name “Mr. Amazing Loans” via its website, www.mramazingloans.com, in 20 US states. The company offers $5,000 and $10,000 personal loans over a five-year term at rates ranging from 19.9% to 29.9% APR. IEG Holdings plans future expansion to a total of 25 US states, which would cover 240mn people and represent approximately 75% of the US population.
Since 2013, IEGH has obtained additional state lending licenses, and they are licensed and originating direct consumer loans in 20 states including: Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Wisconsin. The Company was founded in 2010 and is headquartered in Las Vegas, Nevada.
IEG Holdings Plans to Create its own IEGH Crypto/Blockchain Currency Backed by Gold Metal and SEC Registration as a Security
IEGH announced that its wholly owned subsidiary, Investment Evolution Crypto, LLC (“Crypto”), is negotiating to purchase a gold project with gold metal in the ground and prospecting licenses. IEG Holdings plans to utilize a gold resource to investigate creating, through Crypto, and a joint venture with Investment Evolution Corporation, also a wholly owned subsidiary of IEG Holdings, its own gold metal-backed crypto/blockchain currency, and potentially offer loans and accept loan repayments in its own crypto/blockchain currency.
IEGH increases loan originations
The company stated that it provided $960,000 in new consumer loans through its online property mramazingloans.com, from the October 2017 to December 2017 period. This represented a 12.3% increase over its July to September 2017 operating period, during which the company’s new loan originations were $855,000.
Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA
Roughly 18 percent of people who buy bitcoin use a credit card to do so, according to a new survey by loan marketplace LendEDU. Of those, 20 percent have not paid off their balance. The phrase “buy bitcoin with credit” has been trending on Google for weeks.
Another problem with going into debt for cryptocurrencies is that people will have to pay back their debt before they see sufficient returns, said Erika Safran, founder of Safran Wealth Advisors. That may require tapping other resources, potentially creating further financial trouble.
Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA
- Traditional bank loan rejections are notoriously high in all markets
- Small Business Administration (and equivalent agencies) are nefarious for overextending the time-to-credit tolerances of small businesses
- Volatility of markets, and exposure of almost all markets to disruption by startups could pose urgent cash needs for businesses, which are generally not considered for loan applications by traditional lenders.
Online Lending And Its Deepening Hold Over The Small Business Finance Market
In 2014, a Federal Reserve (US) survey concluded that one in five small business owners opted for loans from online lenders. Since then, the proliferation of online lending platforms has been on the surge, to the extent that traditional brick and mortar lending institutions have also had to move base to the online domain. In the coming years, multiple factors will result in the success and sustainability of online lending platforms. These include:
- Growing confidence among small business owners to trust online lending platforms
- Availability of cheaper, quicker, and more convenient loans
- Options to truly personalize and customize the loan repayment terms to suit the business’ interests
The Call for Transparency in the Online Lending Market
Though the online lending market has been growing year on year, this doesn’t detract from the concerns around lack of transparency in the way some of these platforms operate. Some of the key concerns are around undisclosed APRs and hidden fees. In fact, some online lenders have been castigated for charging significantly high rates of interests from borrowers, often with service quality issues post-approval. Thankfully, there’s already some progress towards bringing a degree of regulation in place for online lending platforms to be at par with traditional lending regulations.
JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA
JPMorgan is making a bigger push into payments technology as digital banking becomes a strategic priority.
In 2016, the bank spent $9.5B on technology and Dimon has committed $300M alone to improve JPMorgan’s technology for its asset management products. Relative to its peer group, JPM claims the highest number of mobile banking customers and its Chase Mobile app currently sports a 4.7 (out of 5) rating in the App Store.
Earnings call analysis – Barclays, Bank of America, Morgan Stanley talking up digitization
- JPM discussed continued digital consumer banking growth, which grew 6% in Q3’17.
- Bank of America spent portions of its Q1’17 and Q3’17 talking about digital banking initiatives and technology investment. Specifically, CEO Brian Moynihan mentioned the bank spent $2.25B on technology initiatives in the first three quarters of 2017. The bank also now sees mobile devices account for 1 of every 5 deposit transactions.
- On Morgan Stanley’s Q3’17 earnings call, Morgan Stanley CFO Jonathan Pruzan mentioned the bank is beta testing new customer-facing digital products it plans to launch, potentially in the robo-advisory space. Specifically, Pruzan noted: “When we think about our wealth business, it’s a business that’s built on scale. And it’s built on the fact that people with wealth want personal advice. So it’s going to be both a mix of technology and digital with the personal element of the advice channel. And we think that’s the winning formula going forward.”
Based on the data, JPMorgan ranks ahead of most bulge bracket banks when it comes to overall fintech investment since 2013, but behind its peers Goldman Sachs and Citi.
Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A
Nav, a small business marketplace lending platform, announced this week it has facilitated more than 20,000 small business credit approvals in 2017.
The company currently has more than 327,000 entrepreneurs now using its platform to manage their data and access capital.
Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A
The Rise Fund, a private investment firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private.
Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A
LoanHero, one of San Diego’s few financial technology startups, has been acquired by Georgia-based company LendingPoint.
Terms of the deal, announced Jan. 11, were not disclosed.
Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A
Oportun, a community development financial institution that provides small loans to individuals with little or no credit history, is planning to open 20 lending offices in Florida.
The Redwood City, Calif.-based lender said this week that it has already opened four offices in Miami and Hialeah and that it expects to add 16 more in the Sunshine State, primarily in South Florida, by the end of the year.
6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A
- Convergence of Software and Financial Products One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing.
- The Power of the Machines Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers.
- Emerging Economies Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.
- Last year, Alipay and WeChat processed nearly $3 trillion of payments, up from $80 billion in 2012
- In Kenya last December, fintech lending companies like Branch and Tala ranked higher in the Google Play Store than Facebook and Instagram.
- Wealth Management
- Rise of Crypto and Blockchain
Google Pay brings payment tools under a single brand (Tearsheet), Rated: A
The Internet giant is finally putting its many payments capabilities — Google Wallet, Android Pay and Pay with Google — under a single name, Google Pay, after lagging for years behind Apple Pay and Samsung Pay.
Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A
CA-based life insurance MGA Ladder announced it has raised $30M in a Series B round led by RRE Ventures, with participation from Thomvest Ventures, as well as Ladder’s existing investors: Canaan Partners, Lightspeed Venture Partners and Nyca Partners . Ladder launched its fully-digital life insurance solution in California on January 10, 2017, and has since expanded to nearly every state across the country.
Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A
Fifth Third Bancorp has received top marks from the Federal Reserve on its most recent Community Reinvestment Act examination as expected.
Fifth Third announced the results on Wednesday, saying in a press release that the Fed gave it an “outstanding” rating on its most recent exam. The Cincinnati company had said in a regulatory filing last month that it expected to ace the test, which covered the period between Jan. 1, 2014, and June 30, 2016.
A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A
Student loan debt statistics show that more than 70 percent of students graduating from four-year colleges have debt, so you aren’t alone if you need to borrow to cover educational costs.
Step 1: Understand your options
- Federal loans for students
- Federal loans for parents
- Private loans for students
- Private loans for parents
Step 7: Determine if you’ll need to apply for private loans
- Family contributions if parents or other family members are willing and able to pay
- Scholarships or grants from community groups or other sources
- Parent PLUS Loans
- Private student loans
Step 8: Learn how to apply for private student loans
Because there are many private student loan lenders, it’s a good idea to shop around. You should consider:
- Loan eligibility requirements: What do you need to qualify?
- Loan terms: How long do you have to repay the loan?
- Repayment terms: When do you need to start repaying, and is there a prepayment penalty?
- Fees: Is there a cost to apply for the loan or a loan origination fee?
- Interest rates: Is the rate fixed or variable? How much will you pay to borrow?
You can visit our private student loan marketplace to find private student loan lenders offering loans to parents and students.
Here are the top 6 lenders of 2018!
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|2.76% – 7.25%||Undergrad
|2.99% – 5.15%||Undergrad
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Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B
Roostify announced Thursday that it hired Adnan Habib as the company’s new vice president of engineering.
In this role, Habib will lead Roostify’s growing product delivery team and will be responsible for making improvements to the Roostify’s digital lending platform.
Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B
Roofstock (www.roofstock.com), the leading online marketplace for buying and selling leased single-family rental homes, today announced the strategic hire of Suresh Srinivasan as chief marketing officer. Srinivasan has 20 years’ experience leading marketing, product, and e-commerce functions at Fortune 500 and high-growth tech startups. Most recently serving as the SVP of Marketing for Xome, Srinivasan brings a deep understanding of the fast-growing real estate technology sector to Roofstock where he will be responsible for accelerating growth of Roofstock’s marketplace for single-family rental homes and developing the company’s partnership network.
An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA
Regulators in Europe and the UK are ordering banks and credit card companies to share customer data with other companies if their customers agree. The companies will also be able to carry out payments on a customers’ behalf.
Open Banking forces lenders to offer a digital “fire hose” of data that any third party can use to get standardised access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data. They won’t have to negotiate deals with banks, just plug into their digital systems and go.
The aim of Opening Banking is to give customers greater control over their data and to encourage account switching.
An investigation by the UK Competition and Markets Authority in 2015 found just 3% of customers switched their banks in the last year, meaning many were left with accounts that were not right for them.
ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A
ThinCats says 2018 is poised for growth. The online lender reports that December was a record month booking £12 million of funding listed on the platform followed the biggest-ever ThinCats-listed loan of £6.7 million to the Chelsea Yacht & Boat Company at the end of September.
Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A
Loan Store is the responsible lending hub that reveals to reduce the interest rates on instant cash loans for the UK people.
Hennery Dicosta, a senior adviser of Loan Store, has offered the complete details about this announcement. This is what he said- In a recent scenario, people usually try to borrow a small loan amount. That is why we have decided to provide the loans for bad credit people with no guarantor and no fees on an instant decision to resolve their short term emergencies. We never charge any processing fee and we are now providing these loans on quite low rates of interest. Besides, we do not judge the creditworthiness of the borrowers with their credit rating and give an instant decision on their loan request.
Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B
CROWDSTACKER has joined the Peer-to-Peer Finance Association (P2PFA), becoming the self-regulated trade body’s eighth member.
The business lending P2P platform will be represented by chief executive Karteek Patel.
3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA
With that in mind, we asked three Motley Fool investors to each profile a company that has a low valuation now compared to its earnings-growth potential. They identified Yirendai (NYSE:YRD), Criteo S.A.(NASDAQ:CRTO), and Changyou.com (NASDAQ:CYOU) as strong contenders trading at attractive discounts.
China’s first P2P online lending platform
The Chinese P2P lending market blossomed in the late 2000s, catering to customers who were underserved by traditional banks, and is worth about $60 billion today.
Analysts expect Yirendai’s revenue and earnings to rise 74% and 14% respectively this year, followed by 43% revenue growth and 41% earnings growth next year. Yet the stock trades at just 14 times earnings, compared to an industry average of 26 for credit service providers. Based on those numbers, Yirendai looks likely an undervalued growth stock.
But there are some obvious reasons why investors are discounting it.
First, Yirendai is a subprime lender. Just 1.7% of its loans were rated as prime “Grade A” last quarter. Another 8.7% were Grade B, and 14.1% were Grade C — but 75.5% were rated Grade D. Yirendai collects higher fees from lower rated borrowers, but its business could collapse if its delinquency rates rise.
The company only discloses delinquency rates for loans past due by 15 to 89 days, and that rate came in at a low 1.8% last quarter. But it doesn’t report any data on loans delinquent for over 90 days.
Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA
Black Fish, a consumer finance platform based in China’s Nanjing region, has received $145 million in a series A round from a cluster of firms including Lightspeed China Partners and Shanghai and Kuala Lumpur based Gobi Partners.
Others who participated in the round include Morningside Venture Capital, JAFCO Asia, Fullcent Capital and Zhang Tao, founder of Dianping.com.
At this point, the average annual growth rate of consumer finance is 16.4 percent.
China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A
Renren holds a significant investment portfolio that is easily worth $12 per share. This value will likely be realized in the near term due to multiple catalysts.
The company has started to get involved with blockchain-related businesses, which potentially turns them into a “blockchain play”.
This situation leads to an asymmetrical payoff structure in which there is very little downside and significant upside. My target price is $18.
Renren was an early VC investor in Sofi, taking part in its seed round of financing as well as a later follow-on round. They currently hold a 13% stake in SoFi, having sold 14.1% of their holdings (representing 2% of SoFi) in April 2017 for $92 million.
Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A
Dianrong and the Dalian Finance Development Bureau and Dalian Finance Industry Investment Group (DFIIG) recently signed a strategic cooperation agreement to drive financial innovation in Dalian and across China. According to the agreement, Dianrong will develop a series of specific projects in partnership with the Dalian government, including:
- Assist the Dalian Finance Development Bureau in creating a financial technology (fintech) cloud platform to provide fintech capabilities for small loan and guarantee companies, and other small and medium-sized financial institutions in the region and at large. Tools and services will include sophisticated fraud detection, big-data risk management tools, payment channel integration, and compliance reporting. The fintech cloud platform will also provide regulators with easier monitoring of local lending activities and trends in an ongoing and comprehensive way, helping them provide timely policy guidance and support on risk management.
- Work with DFIIG to establish a special Internet finance investment fund for Dalian. The fund will focus on investment in fintech projects and startups with the potential to strengthen Dalian’s new economy and financial services industry.
- Develop a supply-chain trading platform in Dalian utilizing advanced fintech and blockchain capabilities to help more small and medium-sized suppliers secure needed funding. Last year, Dianrong created the first blockchain platform for supply-chain finance with FoxConn Group, a global leader in consumer electronics.
Shanghai tightens financial sector supervision (Ecns), Rated: B
Shanghai is one of China’s largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).
Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.
Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA
Germany’s Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.
Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.
MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA
The Dallas-based company agreed to test XRP as a tool for reducing money-transfer costs and settlement times.
How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA
While global trade presents tremendous growth opportunities, businesses of all sizes are none-the-less finding it difficult to access much needed credit, resulting in a global trade finance gap. According to an Asian Development Bank’s (ADB) 2017 Trade Finance Gaps, Growth, And Jobs Survey, that gap was $1.5 trillion in 2016.
Non-financial institution competitors are aggressively targeting this market, using innovations such as blockchain to develop products and tools that not only replace outdated paper and manual-based processes, but also deliver unprecedented levels of cybersecurity that are critical in today’s digital transaction space. The same ADB survey revealed more than $13 billion in venture capital was invested in FinTech trade finance in 2016 alone.
The recent Simmons & Simmons Hyperfinance studyof the world’s leading trade banks found that only 7% believe they are at the forefront of digital innovation in spite of the fact that 80% of innovation leaders report digitally-driven products and services introduced over the past three years have expanded revenue growth. This illustrates the reality that financial institutions recognize the importance of developing a digital strategy, but few are moving aggressively enough to take advantage of these new technologies.
PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA
The question before the house right now, though, is: what about the credit rating agencies? The question comes in three parts: there are the global CRAs; the smaller/regional CRAs in most of the world, and regional CRAs in the special case of China.
First, the global CRAs [there are just two of them, Moody’s and S&P] are making “strong efforts” to incorporate an understanding of ESG issues. They are hiring staff with ESG backgrounds, equipping their existing analysts with the relevant expertise, and drawing on third party providers.
Then there is China. Its CRAs include Dagong Global, China Chengxin, and Golden Credit Ratings. The idea of integrating ESG into their analyses is thus far limited to the issue of green bonds, that is, bonds issued for the development of brownfield sites. Government policy in China encourages green bonds and the CRAs have responded. The resulting assessments are focused on the “E,” not so much the “S” or the “G.” And their environmental assessments rely on measuring the impact of the project the bond aims to finance.
- Research very generally supports the hypothesis that there exists a causal link between ESG factors and the credit worthiness of a borrower;
- Academic research in limited in that it is too exclusively content to measure credit risk by credit ratings, rather than testing the ratings themselves against alternative measures;
- But some research does employ the spread of credit default swaps as an independent measure of risk;
- Anecdotal observation indicates a clear link between G and defaults, although the linkage between E and S and defaults is more difficult to pin down;
- There is much evidence in the linkage of ESG to macroeconomic factors and potential growth, which in turn are important to sovereign risk in particular.
ABS braces for more auto deals after strong start to year (IFR), Rated: A
The asset-backed bond market is braced for a slew of new issues next week, with deal flow expected to be dominated by auto issuers including BMW and Mercedes.
Just two issuers sold deals this week – GM Financial and Consumer Portfolio Services – and both auto trades were met with strong demand from investors. One banker on the GM deal said the deal was over-subscribed across the capital stack.
The biggest tightening though was seen on the smallest and lower rated tranches. The 3.58-year Class B, rated Aa3/AA by Moody’s and Fitch, priced at 30bp over interpolated swaps versus guidance of 35-40bp and whispers of 45bp area.
The 3.58-year Class C, rated A1/A, priced at 50bp over interpolated swaps versus guidance of 55-60bp and whispers of 65bp area.
FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A
To give you a perspective, venture capitalists invested more than $13 billion across 840 different fintech holdings in 2016, according to a report by KPMG. This is 7 percent more than they invested in 2015.
According to the McKinsey report, five areas will see high growth over the next decade. They are consumer finance, mortgage, lending, retail payment, and wealth management.
PayPal handled $1.73 billion worth of transactions in the first quarter of 2017 alone, representing a 30 percent increase year-on-year.
Borrowing and lending
However, the delinquency rates have been increasingover the last few years. These rates have increased from 0.56 percent in January 2015 to 0.75 percent in December of the same year.
Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A
Overstock’s blockchain-focused subsidiary, Medici Ventures, named its board of directors in 2017, and also saw a number of its portfolio companies continue to use blockchain to revolutionize industries including capital markets, money and banking, property registry, voting, identity, and underlying blockchain technology, including:
- tZERO, the world’s first SEC approved, blockchain-based alternative trading system, launched its initial coin offering (ICO), which attracted over 10,000 subscribers and raised $100M in commitments in the first 12 hours of its pre-sale. A significant portion of the tZERO security tokens issued will be available to accredited investors in the public sale beginning in January, 2018.
- DeSoto Inc., a joint venture between Overstock.com founder and CEO Patrick Byrne and world-renowned economist Hernando de Soto, was created to develop a global property registry system to surface the property rights of billions of people in the developing world.
- Bitt, a Barbados-based financial technology company using blockchain to create central banking tools and mobile money applications, named Rawdon Adams, son of former Barbadian Prime Minister Tom Adams, as its CEO. Bitt also fully launched its new mMoney digital payment product, bringing to market a blockchain-based mobile wallet that allows users to participate in digital transactions on their smartphones without the need for a traditional bank account, helping to foster financial inclusion in the region.
- South-American based Ripio (formally known as BitPagos), participated in an ICO that raised $37M to fund its Ethereum-based peer-to-peer lending platform, Ripio Credit Network.
- Belgium-based SettleMint launched a token sale for its DataBroker DAO, a peer-to-peer marketplace created to provide Internet of Things (IoT) sensor-owners with a clear path to data monetization, and data consumers with a decentralized marketplace in order to buy IoT sensor data. SettleMint also signed an agreement with The Islamic Research and Training Institute, the research arm of the Islamic Development Bank Group, to work with local partner Ateon on developing blockchain-based financial products that can be used to support development and inclusion in IsDB member countries.
Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A
Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.
Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A
According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020.
Secondly, this spending could substantially boost banks’ productivity, and profits.
Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.
Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.
Karma token trading opens after successful million ICO campaign (Crypto Ninjas), Rated: B
German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA
German online lender Kreditech is making its way to India, Bank Innovation has learned.
For this expedition, the fintech has teamed up with SaaS banking platform Mambu for providing short-term lending products specifically tailored to local consumers.
Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A
Kreditech currently operates in Europe and Latin America and will expand into India in early 2018, together with its partner PayU, a global online payments provider and Mambu client in Latin America.
The loan product is expected to go live in the first quarter of 2018, all data will be hosted by AWS India.
NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A
NiYO Solutions Inc., a Bangalore, India-based fintech startup for salaried employees, raised $13.2m (85 crore) in Series A funding.
Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
Currently, local banks extend loans at interest rates ranging between 8.5 percent and 13pc. The local banks began offering SME loans at8.5pc interest in 2015. Since then, the Japan International Cooperation Agency (JICA) and KfW Development Bank from Germany have also launched SME loans.
To get around the financial constraints, borrowing from family members and peers is common.
In fact, a rising number of businesses have resorted to P2P lending for funds to build up their businesses. Without any guarantees of success though, many entrepreneurs ultimately end up in debt. Others fall prey to fraud. Last year, The Myanmar Times reported at least three cases of fraud involving fake promises of repayments with up to 30pc interest.
Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B
Cloud Lending Solutions was recognized as a “Top 25 FinTech Company for 2017” by APAC CIO Outlook Magazine. A panel of industrial experts and executives collaborated with the editorial board to curate the list with an aim to provide clarity into the ideal FinTech partners.
Local digital currency eyes real estate disruption (ITWeb), Rated: AAA
Cape Town-based fintech company, Wealth Migrate, has launched a global digital currency – WEALTHE Coin.
According to Wealth Migrate, while almost half of the world’s wealth is held in real estate, fewer than 13% of people have access or the resources to invest in and benefit from this lucrative market.