Thursday March 22 2018, Daily News Digest

Thursday March 22 2018, Daily News Digest

News Comments Today’s main news: LendingTree launches free credit monitoring. Paytm gets into P2P lending. EquityMultiple stops promoting Reg D 506c offerings. Trusted Quid customer info stolen in data breach. PPDai grows revenue as stock rises. Today’s main analysis: Why China Rapid Finance’s ownership structure is important. Today’s thought-provoking articles: Are Amazon, Costco, and Target inching into wealth management? Open banking […]

Thursday March 22 2018, Daily News Digest

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingTree Launches Free Credit Monitoring Service (LendingTree), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today announced the launch of a free credit monitoring service within the My LendingTree platform. In partnership with TransUnion, LendingTree monitors users’ credit profiles daily and sends alerts of any changes or potential suspicious activity within 30 minutes of the credit report being updated.

Real Estate Investment Platform EquityMultiple Gives up on Reg D 506c (Crowdfund Insider), Rated: AAA

No longer will EquityMultiple publicly promote its real estate offerings online and elsewhere. Previously, EquityMultiple has leveraged Reg D 506c – a new securities exemption created by the JOBS Act of 2012. This rule allowed issuers and platforms to promote offerings on the internet – via social media and elsewhere  – in contrast to old Reg D (506b) that was barred from any advertising. And why on earth would EquityMultiple not want to promote unique and compelling investment opportunities? Because of the broken nature regarding the general solicitation rule.

Amazon in wealth management? What about Costco or Target? (Financial Planning), Rated: AAA

With Amazon inching closer to financial services, industry observers say its a worthy exercise to think about other potential retail competitors.

“People may roll their eyes in the land of wealth management and financial services, but it’s no longer a place for just banks. They don’t own it anymore,” said Doug Fritz, CEO and founder of F2 Strategy, a technology and marketing consulting firm to the wealth management industry based in the San Francisco Bay area.

Costco seems like the most obvious candidate to get into the wealth management space, said Fritz.

Incumbents such as Charles Schwab have already boxed in robos with products and are not being shy about advertising them, he adds.

5 Savvy Ways To Invest $ 10,000 In 2018 (Forbes), Rated: A

Online Real Estate Investing

Poll of SMBs Reveal Plans to Make Tech Investments Amid Strong Sales Growth (WWD), Rated: A

In a recent poll of small- to medium-sized businesses, financial and technology firm Kabbage Inc. found high expectations for sales growth this year as well as plans to make investments aimed at automation.

Kabbage, which offers lines of credit of up to $250,000 and cites retail as its top vertical, said more than 67 percent of the brick-and-mortar retailers polled expect revenue growth of over 20 percent this year. More than 73 percent of the online retailer respondents expect the same. The survey was based on responses from 800 businesses.

Regarding automation technology, nearly 44 percent of physical store retailers have plans to make investments in this area compared with 60 percent of online retailers. With cyber security and similar fraud prevention technologies, about 44 percent of both online and physical store retailers have plans to make investments in these solutions.

 

 

 

Hundreds of Start-Ups Tell Investors: Diversify, or Keep Your Money (New York Times), Rated: A

The American venture capital industry, which invested $84 billion in more than 8,000 companies last year, has long faced little to no impetus to alter its demographics. Venture firms are usually small private companies made up of former tech executives or financial types, who are mostly male and white. And because venture firms operate with long-term horizons — their funds generally invest over a 10-year period — the industry’s pace of change is often glacial.

In 2016, 11 percent of venture capital firms’ investment partners were women, according to a survey by the National Venture Capital Association and Deloitte. The survey found no black investment partners at venture firms, while 2 percent of investment partners were Latino.

Buyers acquire taste for deposit-rich banks (American Banker), Rated: A

Total loans at banks with less than $10 billion in assets rose by nearly 17% between 2012 and 2017, surpassing the roughly 5% increase in deposits over that time, according to data from the Federal Deposit Insurance Corp.

 

NYDFS sends survey request to online lenders (National Law Review), Rated: B

The New York Department of Financial Services has sent a letter directed to businesses that the DFS “understands…may be involved in online lending in the State of New York” and that asks recipients to complete a “New York Marketplace Lending Survey” that they can access online.

The letter states that the DFS is conducting the survey to gather information for a public report that it is required to issue by July 1, 2018 and which must include information about online lenders operating in New York and their business practices, including lending practices, interest rates and costs charged, and consumer complaints and investigations about the industry.

United Kingdom

Open Banking prompts UK fintechs to reassess collaboration partners (P2P Finance News), Rated: AAA

A report from accountancy firm EY, released on Thursday, found that 59 per cent of UK fintech firms see Open Banking as an opportunity to review their collaboration strategies.

The survey of 31 UK fintech firms also found that 74 per cent of respondents believe that new competitors such as tech firms will become increasingly important over time.

The new data rules, which mandate high street banks to share anonymised customer data with approved third parties, came into effect in January 2018. Peer-to-peer lenders such as Zopa and Lending Works have already announced their plans to capitalise on the new initiative.

94 per cent of fintech firms said they were focused on enhancing their current products and services and 81 per cent said they are planning to use Open Banking to build new services.

Early Returns From Open Banking Show a Mixed Picture (Lend Academy), Rated: A

Banks have not really stepped into the new world until recently as HSBC has stated they will be set to go live with a product by early May, RaboBank is creating a mobile ecosystem and RBS has explained they are working on solutions which includes a stand alone digital bank.

Digital banks Monzo and Starling Bank have already established themselves as early leaders in the market with their open APIs. Both have created financial marketplaces to allow for easy integration and access to different banking services.

Payday lender Trusted Quid admits 66,000 customers details were stolen in data breach (The Sun), Rated: AAA

Details of 66,000 customers including phone numbers, dates of birth, addresses, loan details, employment status and bank account information, were all taken from the website.

In a statement the company said: “There has been a theft of data from unauthorised access to the Trusted Quid website.”

“The incident relates to data directly entered by people applying for a loan only on the Trusted Quid website between 1 July 2016 and 17 February 2018.”

Trusted Quid say they have made three previous attempts to contact customers affected by the data breach.

 

Feature: Is London cooling? (Mortgage Strategy), Rated: A

Research from online estate agent HouseSimple in January showed only 387 properties for sale in zones 1–2 below the magic £300,000 level, rising to just 1,235 in zone 3. For homes valued at £300,001–£500,000, there were just 7,687 in zones 1-3 that were eligible for a stamp duty cut.

BUSINESS SHOWCASE : LOANBIT (Irish Tech News), Rated: A

LoanBit is a multi-currency platform that supports everything from fiat currencies to the latest cryptocurrencies. It allows you to send money in an encrypted format and secure it with state-of-the art security measures.

LoanBit offers an armor of a protection for the lenders. It safeguards the interests of the lenders in the community by covering up to 75% of the loan.

With LoanBit you can:

  • Keep money in a multi-currency wallet,
  • Trade on the integrated exchange,
  • Invest money in cryptocurrencies, and
  • Get a loan in the currency of your choice

ISAs 2018: Innovative Finance Isa can offer rates from 5 to 10 per cent (Express), Rated: A

The Innovative Finance Isa, or Ifisa, was announced by the Government in April 2016, giving ordinary savers the opportunity to invest in growing British businesses free of tax through the growing peer-to-peer (P2P) lending market, sometimes called crowdlending.

Landbay targets 3.54 per cent, Zopa aims for 4.6 per cent a year, Ratesetter offers between3and 6 per cent and Money&Co an average of 8.6 per cent.At the riskier end of the scale the RebuildingSociety is aiming for 9.7 per cent.
China

Is Ping An China’s Most Valuable Insurer or a Tech-Investing Fad? (The Wall Street Journal), Rated: AAA

The $100 billion question for the world’s second-largest insurer: is it an insurance firm or is it a technology firm?

Shares of China’s Ping An Insurance—the biggest insurer by market value after Warren Buffett’s Berkshire Hathaway—have more than doubled in the past year, far outpacing peers. The increase in its market capitalization—of more than $100 billion—is partly due to the fast growth of its life- and health-insurance business. The value of new business last year grew 33% from 2016.

Shares Rise as PPDai Reports Revenue Growth, Stock Buyback (Capital Watch), Rated: AAA

PPDai Group Inc., an online peer-to-peer lending platform in China, reported today that its operating revenues for the fourth quarter increased more than 85 percent compared with a year earlier.

The Shanghai-based company, which completed its initial public offering in November, said during the quarter, it had a net loss attributable to ordinary shareholders of $200.4 million, or 89 cents per American depositary share. That was in contrast to income of $2.8 million a year earlier. Revenue for the three months ended Dec. 31 was $140.2 million, up from $75.7 million in the year-earlier period.

Why China Rapid Finance Limited’s (NYSE:XRF) Ownership Structure Is Important (Simply Wall St News), Rated: AAA

I am going to take a deep dive into China Rapid Finance Limited’s (NYSE:XRF) most recent ownership structure, not a frequent subject of discussion among individual investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, I will take a look at XRF’s shareholders in more detail.

Source Simple Wall Strett

Institutional Ownership

In XRF’s case, institutional ownership stands at 18.79%, significant enough to cause considerable price moves in the case of large institutional transactions, especially when there is a low level of public shares available on the market to trade.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market.

General Public Ownership

The general public holds a substantial 42.76% stake in XRF, making it a highly popular stock among retail investors.

Private Equity Ownership

Private equity firms hold a 16.12% stake in XRF.

Private Company Ownership

Potential investors in XRF should also look at another important group of investors: private companies, with a stake of 5.44%, who are primarily invested because of strategic and capital gain interests.

China toughens supervision on third party payment (xinhuane), Rated: B

Agricultural Bank of China announced in a recent notice that it would cut off the payment channel for Internet finance businesses such as peer-to-peer lending, the Xinhua-run Economic Information Daily reported.

The move followed a series of penalties levied at banks and online payment companies, which analysts said were aimed at curbing risks arising from direct clearance agreements between them.

European Union

 

Danish online lender basisbank to implement Fico Blaze Advisor (Finextra), Rated: B

With FICO Blaze Advisor decision rules management system, Basisbank risk analysts will be able to quickly make changes to credit strategies for unsecured consumer loans and point-of-sale financing in order to increase profitability and reduce the risk of loans going unpaid. Basisbank receives more than 75 percent of its credit applications from mobile devices.

International

How digital banks are raising the bar for customer experience (Tearsheet), Rated: AAA

Challenger bank N26 raised $160 million in Series C funding this week to fuel its expansion to the U.S., and other markets, later this year. Revolut, another U.K. challenger, has been planning a U.S. launch this year too and Monzo is rumored to follow.

Digital-only challenger banks have changed customer expectations, including customer service and how customers want to use financial products. Big banks are taking notice, with companies developing sub-brands to hook younger, digital-savvy customers or others — the most recent of which is rumored to be the Royal Bank of Scotland.

For Monzo, which just crossed 500,000 current account holders, the absence of physical branches doesn’t mean a lack of interaction with customers. Monzo’s approach is to release early versions of products to a group of customers and get customer feedback from within the app and through an online forum. It’s an approach that gives customers a sense of ownership and excitement about the brand. For Monzo’s marketplace beta, it sought out feedback from 3,000 customers.

India

Digital payments player paytm wants slice of P2P lending (The Economic Times), Rated:AAA

Paytm, the country’s largest digital payments company, is trying to enter the lending space and is seeking a licence from RBI to become a peer-to-peer lending platform.

According to documents sourced by ET from the Ministry of Corporate Affairs, the company moved a board resolution on February 7 saying it intends to “carry on the business of non-banking financial company — peer-to-peer”.

Authors:

George Popescu
Allen Taylor

Friday October 6 2017, Daily News Digest

Funding Circle lending

News Comments Today’s main news: LendingClub completes second self-sponsored securitization. Pennsylvania AG sues Navient. Federal regulator clamps down on payday lending. Elevate supports rule on small dollar lending. RateSetter expected to profit next year. China’s pyramid schemes double in 2017. KBRA opens first European office. LendIt leadership changes. Today’s main analysis: Funding Circle’s October review. Today’s thought-provoking articles: Payday lending’s tough restrictions. Cordray’s […]

Funding Circle lending

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

News Summary

United States

LendingClub Corp Completes Second Self-Sponsored Securitization (Financials Trend), Rated: AAA

LendingClub Corp (NYSE:LC), America’s leading web marketplace connecting investors and borrowers, has contributed to and sponsored its second securitization contract. The Consumer Loan Underlying Bond Credit Trust 2017-P1 released $323.1 million in prime notes supported by consumer loan assets enabled through the LendingClub platform. It marks as the sixth securitization sponsored or supported by company, and the fourth rated securitization of company facilitated loans overall.

This deal was backed by around $350 million of collateral and comprises $217.3 million of Class ‘A’ notes rated “A-(sf)”, $51 million of Class ‘B’ notes rated “BBB (sf)” and Class ‘C’ notes worth $54.7 million rated “BB (sf)”. All ratings were given by Kroll Bond Rating Agency, Inc.

Pa. attorney general files suit against student-loan company (Philly.com), Rated: AAA

The Pennsylvania Attorney General’s Office filed suit Thursday against Navient, the largest U.S. student-loan servicer, alleging widespread abuses and deceptive acts involving its administration of student loans.

The suit against Navient Corp. and its subsidiary Navient Solutions LLC, formerly a part of Sallie Mae, could affect hundreds of thousands of Pennsylvanians, Attorney General Josh Shapiro said, adding that the office is seeking restitution for all borrowers affected by the practices.

That includes anyone who received private student loans from Sallie Mae or who has had federal or private student loans serviced by Navient and has had problems with repayment.

The Wilmington-based company, which has a large servicing center in Wilkes-Barre, already is the subject of a federal lawsuit filed this year by the Consumer Financial Protection Bureau (CFPB). Washington state and Illinois also have sued the company.

Pennsylvania residents have filed 1,059 complaints against Navient with the CFPB as of September, the Attorney General’s Office said.

Online lender Earnest sells to Navient, in a disappointing deal for investors (TechCrunch), Rated: A

Earnest, a well-funded fintech startup with bold ambitions to create a modern financial institution, is selling to the student-loan company Navient for $155 million in cash.

The exit isn’t so great for Earnest’s investors. They’d plugged roughly $320 million in cash and debt into the company, which was initially centered around providing small loans to people based on their earning potential and evolved over time to provide personal loans to a broader base of customers, as well as lend money to coding academies, as it told TechCrunch in late 2015.

Fintech deal suggests everything old is new again (NASDAQ), Rated: A

Everything old is new again in finance. Navient, which services debt, is buying startup student-loan refinancer Earnest for less than half its 2015 valuation. Even then, it’ll eat into the new owner’s earnings and share buybacks. Worse, Navient faces a fresh lawsuit over dodgy practices.

The Pennsylvania attorney general’s office filed charges on Thursday that follow ones from the U.S. Consumer Financial Protection Bureau in January with Illinois and Washington. All allege that Navient in some way or other cheated borrowers paying for college, which the company denies.

Earnest’s $155 million price tag suggests most in the industry have downgraded their expectations about profitable growth.

Navient shares tumbled 12 percent, erasing market value more than three times the value of the acquisition.

Elevate Expresses Full Support for CFPB Small Dollar Lending Rule (BusinessWire), Rated: AAA

Ken Rees, CEO of Elevate Credit, Inc. (“Elevate”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, issued the following statement in response to the final “small dollar lending” rule issued today by the Consumer Financial Protection Bureau (CFPB):

“We applaud the CFPB, and we fully support this rule. We believe this rule is good for consumers and for the business we have built to better serve them. The small dollar rule protects consumers from the cycle of debt inherent in payday loans, short-term auto title loans, and certain balloon payment loans, and it encourages the kind of innovation we’re doing in underwriting, pricing and product development. We are heartened that regulatory uncertainty has been lifted with today’s announcement. Our current view is that the rule requires minimal or no changes to our business.”

Federal Regulator Clamps Down on Payday Lending Industry (U.S. News), Rated: AAA

Payday and auto title lenders will have to adhere to stricter rules that could significantly curtail their business under rules finalized Thursday by a federal regulator. But the first nationwide regulation of the industry is still likely to face resistance from Congress.

The Consumer Financial Protection Bureau’s rules largely reflect what the agency proposed last year for an industry where the annual interest rate on a payday loan can be 300 percent or more. The cornerstone is that lenders must now determine before giving a loan whether a borrower can afford to repay it in full with interest within 30 days.

Because studies by the CFPB have found that about 60 percent of all loans are renewed at least once and that 22 percent of all loans are renewed at least seven times, this cap is likely to severely wound the industry’s business model. In California, the largest payday loan market, repeat borrowers made up 83 percent of the industry’s loan volume.

The CFPB estimated that loan volume in the payday lending industry could fall by 55 percent under the new rules.

Roughly 12 million people took out a payday loan in 2010, according to the Pew Charitable Trusts.

In addition to the “full payment test” and the limits on loan renewals, the CFPB rules would also restrict the number of times a payday lender can attempt to debit a borrowers’ account for the full amount without getting additional authorization.

This Government Agency Is Seriously Overstepping Its Bounds (Fortune), Rated: A

The Consumer Financial Protection Bureau (CFPB) has a mission: to protect consumers from unfair, deceptive, or abusive practices. According to a new national poll by the Cato Institute in collaboration with YouGov, protection from deceptive practices is just what the American public wants. Asked to prioritize regulatory goals, the majority of respondents put “protect consumers from fraud” front and center.

Unfortunately, the CFPB continually misses the mark, issuing rules that make splashy headlines but in practice do little to stop bad behavior. Its latest proposed rule, expected to become final soon, doesn’t target fraud itself. Instead, it goes after an entire industry and will significantly reduce consumers’ access to credit at the exact moments they need it most.

As the Cato poll finds, the majority of payday borrowers say they receive good information about rates and fees from their payday lenders.

Payday Lending Faces Tough New Restrictions by Consumer Agency (The New York Times), Rated: AAA

The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people, many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.

Industry officials said on Thursday that they would file lawsuits to block the rules from taking effect in 2019 as scheduled.

Under the new rules, lenders would be allowed to make a single loan of up to $500 with few restrictions, but only to borrowers with no other outstanding payday loans.

A dropoff of that magnitude would push many small lending operations out of business, lenders have said. The $37,000 annual profit generated by the average storefront lender would become a $28,000 loss, according to an economic studypaid for by an industry trade association.

Prepared Remarks of CFPB Director Richard Cordray on the Payday Rule Press Call (ConsumerFinance.gov), Rated: AAA

After a long process of research, outreach, and review of over one million public comments, the Consumer Bureau today has issued a rule aimed at stopping debt traps on payday and auto title loans. The rule is guided by the basic principle of requiring lenders to determine upfront whether people can afford to repay their loans. These strong protections cover loans that require consumers to pay all or most of the debt at once, including payday loans, auto title loans, deposit advance products, and longer-term loans with large “balloon” payments. The new rule also curtails repeated attempts to debit checking accounts that rack up fees and make it harder for consumers to get out of debt. This provision applies to the same kinds of loans and to high-cost installment loans as well. These protections bring needed reform to a market where far too often lenders have succeeded by setting up borrowers to fail.

Loans like these are heavily marketed to financially vulnerable consumers. Though they offer cash-strapped consumers access to credit, the full-payment requirement can make these loans unaffordable.

More than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or soon thereafter. In fact, about one-in-four initial payday loans are re-borrowed nine times or more, as consumers pay far more in fees than they borrowed in the first place. Just like payday loans, the vast majority of single-payment auto title loans are rolled over or re-borrowed on the day they come due or soon thereafter. And one-in-five borrowers end up having their car or truck seized by the lender because they cannot repay the debt.

Our research has shown that the business model for payday and auto title lenders is built on miring people in debt.

The new rule also addresses how lenders extract loan payments from consumers’ accounts. This part of the rule covers short-term loans, balloon loans, and high-cost longer-term loans where the lender has account access. After two straight unsuccessful attempts, the lender cannot debit the account again unless it gets a new authorization from the borrower. In addition, lenders must notify consumers in writing before attempting to debit an account at an irregular time or for an irregular amount.

The final rule issued today applies the underwriting requirements only to lenders of short-term and balloon-payment loans. This is a change from our proposal, which would have required underwriting for a wider swathe of longer-term loans. We want to take more time to consider how the longer-term market is evolving and the best ways to address practices that are currently of concern and others that may arise as the market responds to the reforms prompted by this new rule.

The Bureau has spent five years developing this rule.

Despite Ban on Payday Lending, Public Pensions Profit from Outlawed Loans (NBC New York), Rated: A

Short-term, high-interest debt known as payday loans are illegal inside New York borders. But that hasn’t stopped state and city retirement funds from investing more than $40 million in payday lenders that operate in other states.

The Finance Industry’s Complaint Against the Consumer Financial Protection Bureau (U.S. District Court, Northern District of Texas), Rated: A

Read the full complaint here.

Fifth Third Bancorp’s Greg Carmichael Discusses the Relationship Between FinTechs and Banks (The Clearing House), Rated: A

This environment presents challenges to introducing technologies, products, or services. If we have an issue, we can’t advance the products or services. A zero-tolerance regulatory environment puts constraints on products and services that we may like to get into the marketplace. For instance, small dollar lending has been problematic. As you know, Jim, small-dollar lending is a very important product for our customers. Many customers are regularly going out to payday lenders, title loans, and pawn shops to get short-term access to dollars.

When you look at the amount of capital you have to hold, and the underwriting requirements for a small business loan versus a larger loan, the cost is the same. It makes it more difficult to serve small businesses, and you see small business lending by banks being significantly reduced over what you saw pre-crisis.

This partnership has already helped us form relationships with companies like GreenSky, ApplePie Capital, Transactis, and AvidXchange. This has enabled Fifth Third to accelerate our innovation in those different areas, whether it is unsecured lending, small business franchise lending, or accounts payable automation.

Well, the interesting thing with FinTechs is that most of them need a bank as a partner to be successful.

GreenSky doesn’t exist, Lending Club doesn’t exist, OnDeck doesn’t exist without liquidity and the safe harbor banks provide for the asset. Partnerships between a bank and a FinTechs are a potential strong win for our customers and a win for our banking shareholders because we’re more efficient in how we deliver innovative products and services.

Our $30 billion community commitment focuses on supporting low- to moderate-income borrowers. $11 billion of our five-year commitment is dedicated to mortgage lending; $10 billion is for small business lending; and $9 billion is for community development lending and investments.

Balance Credit Expands to California Consumer Credit Market (BusinessWire), Rated: A

Balance Credit, a leading online lender whose analytics and technology-driven solutions have enabled nearly $100 million in credit access for underserved Americans, has expanded its personal loan offering to residents of California. The expansion will allow Balance to assist the estimated 26 percent of Californians who are currently underserved by mainstream banking products. With the launch in California, Balance has expanded its geographic coverage from 19% to 31% of US consumers.

With today’s news, California marks the 9th state where Balance Credit operates, including Delaware, Missouri, New Mexico, Ohio, South Carolina, Texas, Utah, and Wisconsin.

5 ways to buy a home with a low down payment (KHOU.com), Rated: B

In fact, the average down payment, according to the National Association of Realtors, has been 6 percent for the last three years.

What do you do if you don’t have 20% lying around?

SoFi. SoFi is new to the mortgage lending space, but it’s setting itself apart in a big way. It accepts borrowers with a 10 percent down payment, but they primarily target borrowers with higher FICO Scores — think 700+. On the bright side, they do not charge mortgage insurance. In fact, SoFi doesn’t charge any loan origination, application or broker commission fees.

Lawmakers Call Ex-Equifax CEO’s Testimony Insufficient (Law360), Rated: A

House lawmakers on Thursday sharply questioned the former chairman and chief executive of Equifax Inc. over a massive data breach that left more than 145 million Americans’ personal information exposed, raising questions about why he had appeared to testify as opposed to current executives.

Appearing in his fourth congressional hearing over a three-day span, former Equifax Chairman and CEO Richard Smith faced a flurry of questions over the details of the breach, including over curious stock trades by top company executives just before the breach was made….

Ex-Bookkeeper Stole $ 1.6M From NJ Co. Via PayPal (Law360), Rated: B

Pennsylvania federal prosecutors Thursday filed an indictment charging a Philadelphia man with using PayPal to embezzle $1.6 million from his former employer, a New Jersey company that sells products for the cellular phone industry.

Peter Goodchild, 54, who was a bookkeeper at the Florham Park, New Jersey-based QwikSource LLC, allegedly pilfered the funds over a 10-year period. He also faces charges of money laundering, aggravated identity theft and filing false income tax returns.

Barclays US tests personal finance tool (Banking Technology), Rated: B

Barclays US is dipping its toe into the financial health business, testing a personal financial management tool that aggregates all of a customer’s Barclays credit cards, personal loans and savings products – as well as accounts with other banks – in one place, reports Banking Technology‘s sister publication Paybefore.

This new service, My Personal Bank, which will be announced soon, is embedded in the bank’s credit card mobile app.

Allrise Financial moves into downtown Reno (Northern Nevada Business Weekly), Rated: B

Allrise Financial Group has leased 5,500 square feet at 200 S. Virginia Street in Reno.

Did the CEO of Hardwick Clothes Cut Ties With the NFL Over ‘Unpatriotic’ Protests? (Snopes), Rated: B

In September 2017, Tennessee businessman and CEO of Hardwick Clothes Allan Jones withdrew all NFL-related advertising for his companies, in response to “unpatriotic” national anthem protests.

Source: Snopes

On 26 September 2017, Jones, who also owns Buy Here Pay Here U.S.A. and U.S. Money Shops, posted a screenshot to his Facebook page showing an email instructing his ad-buyer to stop any commercials for his companies from being broadcast during NFL games.

United Kingdom

RateSetter will return to profit next year, says CEO (P2P Finance News), Rated: AAA

RATESETTER will return to profit next year, its chief executive and co-founder has said.

The peer-to-peer lender was profitable in the financial years ended 2014 and 2015, but has fallen into the red since then, as it has invested heavily into scaling up the business.

The ‘big three’ platform published a recording of a recent speech by Rhydian Lewis (pictured) on its website on Thursday, in which he underlined his belief that RateSetter is a “sustainable and profitable model”.

Your October Review – Insight and Analysis (Funding Circle), Rated: AAA

Last month Funding Circle investors, like you, lent over £100 million to UK businesses to help them grow and develop.

Source: Funding Circle

September industry news

Thanks to investors, last year over £1 billion was lent to 10,000 businesses through Funding Circle, helping to create 25,000 new jobs.

We recommend lending £2,000 or more, so you can lend to 100+ businesses, with no more than 1% going to each one.

Source: Funding Circle

From peer-to-peer to here: Three issues that Zopa must solve (AltFi), Rated: AAA

Zopa is the world’s original peer-to-peer lending platform and the biggest consumer-focused platform in the UK. It has also been closed to new investors for the better part of eight months. The reason is explicitly that it cannot find enough new borrowers. Demand for its loans among existing investors is more than sufficient to match demand on the other side of the marketplace. For this reason, Zopa‘s Innovative Finance ISA has largely been an exercise in tax efficiently wrapping money that it already had on the platform.

A more meaningful initiative in the platform’s ongoing plight to attract borrowers might be its latest partnership with Saffron Building Society. This, for the first time in Zopa’s 12 year history, brings it into branches. Its loans will now be made available to Saffron’s 90,000 customers in any of its 11 branches across Hertfordshire, Essex and Suffolk, as well as via the building society’s website. Applicants can expect a quote within minutes.

Zopa may well have a bright future, but in the short-term it seems to me that it has three core issues that it must iron out:

  • Finding new origination channels in order to open to new customers once more, capitalise on the IFISA opportunity and take advantage of the cost benefits of deposit funding.
  • Meaningfully speed up whatever is delaying loan sales on the platform.
  • Find a way to maintain an attractive risk-premium for its P2P investors.

LendInvest CEO Christian Faes Challenges Government to Back SME Builders: Game On (Crowdfund Insider), Rated: A

“There are five times fewer small scale developers today than in the last housebuilding boom and not a single one of today’s top ten housebuilders was created before 1990. There is a clear monopoly in the sector,” clarified LendInvest Co-Founder & CEO Christian Faes.

Online Lender Lendy Seeks IFISA Permission & Announces Repayment For Largest P2P Loan (Crowdfund Insider), Rated: A

UK-based peer-to-peer property platform Lendy is currently seeking permission to launch an innovative finance ISA (IFISA). This news comes just after the online lender announced its 2016 earnings and additional growth plans.

Meanwhile, Lendy also announced the repayment of its largest p2p loan. Bridge and Commercial reported that the loan, which was secured against former the Kentish Town Studios building in North London, has been repaid in full 21-days ahead of schedule and even returned a gross 12% per annum in interest.

Digital wealth manager Moneyfarm acquires tech behind fintech chatbot Ernest (TechCrunch), Rated: A

Moneyfarm, the U.K.-headquartered “digital wealth manager” has acquired the technology behind personal finance chatbot Ernest. Terms of the deal aren’t being disclosed, though I understand that, along with the tech, this is an acqui-hire of sorts, seeing London-based Ernest’s CTO Lorenzo Sicilia join Moneyfarm to oversee technology integration.

Starling Bank expands to offer business accounts (Banking Technology), Rated: A

Starling Bank, one of the first banking challengers to offer a mobile-only current account in the UK, is expanding into the business market.

The Starling for Business account will initially be for entrepreneurs, sole-traders, and small business owners. The aim is to offer “fast, secure, and flexible” ways of managing business finance from mobile.

Can a robot give financial advice? (Which?), Rated: B

New guidance setting out how artificial intelligence services can give streamlined financial advice has been published by the Financial Conduct Authority (FCA).

Some of the most popular include:

  • Nutmeg: an online service that suggests a diversified investment portfolio tailored to the personal information you provide. Nutmeg will continually rebalance your portfolio in line with your risk profile, unless you change your preferences.
  • BestInvest: a platform to manage your investments online, offering research and analysis tools. Further advice is provided via phone by advisers.
  • RPlan: a tool for DIY investors, with the choice to choose, track and review investments online.
  • Barclays Financial Personality Assessment: this tool helps you identify your attitude towards risk and your composure levels. Users can then work with an adviser to build a portfolio.

Robo-advice on mortgages

Aside from investing advice, online services are also helping people make another major financial decision – applying for a mortgage.

A handful of robo-advisers for mortgages are currently operating in the UK market – Trussle and Habito are both up and running, while MortgageGym was granted a license from the FCA earlier this year.

Saving by app

  • Chip is a smartphone app which analyses your spending patterns and automatically transfers your money into a savings account, based on what it thinks you can add afford to save. While its standard interest rate is 1% AER, users can earn up to 5% AER by referring friends to the app.
  • Plum operates in a similar way, analysing your transactions and recommending savings, though it communicates via Facebook Messenger.
  • Cleo analyses your spending and suggests improvements to help you save more, but it won’t move your money for you.

Where are the top 10 buy-to-let postcodes? (Bridging&Commercial), Rated: B

Luton has held off Colchester to remain top of the LendInvest buy-to-let index, while Manchester has broken into the top three amid increasingly stronger metrics in northern markets.

The top 10 buy-to-let postcodes

Source: Bridging & Commercial

The bottom 10 buy-to-let postcodes

Source: Bridging & Commercial
China

Pyramid scheme investigations in China double during 2017 (NASDAQ), Rated: AAA

The number of pyramid schemes investigated by Chinese police more than doubled in the first nine months of the year, with cases involving nearly 30 billion yuan ($4.5 billion), the official Xinhua News Agency said on Thursday.

Police investigated 5,983 schemes from January through September, an increase of 118 percent, with internet-based pyramid schemes on the rise, many involving virtual currencies, according to the report which cited the Ministry of Public Security.

European Union

Rating agency opens in Europe (Structured Credit Investor), Rated: AAA

KBRA has opened its first European office, located in Dublin, Ireland, and intends to expand into further jurisdictions (SCI passim). Several new hires and some existing staff will support the European effort, which will have a concerted focus on infrastructure and aviation securitisation, along with traditional core business areas.

MyBucks Named ‘Best Financial Inclusion Company’ at European FinTech Awards 2017 (Next Billion), Rated: B

Luxembourg-based and Frankfurt-listed fintech, MyBucks S.A., was announced as the winner of the Award for ‘Best European Financial Inclusion Company’ at the European Fintech Awards 2017 taking place in Brussels, Belgium.

International

Leadership Changes at LendIt (Lend Academy), Rated: AAA

LendIt events today look and feel very different from our early events. Along with that LendIt as an organization has grown and matured. Last month we made some internal changes that I want to share with you here.

My partner Jason Jones, who has been the driving force in the growth of our business, took over the CEO role some time ago as the business became more complex.

As of early September, Jason has transitioned out of the CEO role and is now Co-Chairman along with me. This allows him to focus his entrepreneurial drive on areas of our business where he can make the most impact. He is turning his attention to become more client focused as major global financial services and technology companies become more involved in our business.

Bo Brustkern, who has until recently stayed in the background, is now taking on the mantle of CEO of LendIt.

Similarly, we have promoted Joy Schwartz, our longtime head of operations, to become President of LendIt.

Finastra, R3 and seven banks have blockchain plan (Banking Technology), Rated: A

FinastraR3 and seven banks – including BNP ParibasBNY MellonHSBCING and State Street – are working together to create a blockchain-fuelled online marketplace for the syndicated loan market.

Underpinned by Corda, R3’s distributed ledger technology (DLT) based platform, Fusion LenderComm exposes real-time credit agreement, accrual balances, position information and transaction data to lenders, from agent bank loan servicing platforms such as Finastra’s Fusion Banking Loan IQ.

How Prodigy Finance Helped Fund My MBA At London Business School (Business Because), Rated: A

Determined to boost her business skills and gain more international exposure, Argentinian Amelia Martinez decided to pursue an MBA at London Business School (LBS).

Coming from a developing country with high levels of inflation and currency fluctuations, she faced many hurdles funding her MBA, particularly when new government restrictions were imposed preventing her from taking money out of her country to pay for the last instalment of her tuition.

With a Prodigy Finance loan however, she was able to pay for and complete her degree. Having completed her MBA at LBS, she’s since gone on to work for the company that helped her do it.

Banks team up with IBM in trade finance blockchain (Financial Times), Rated: B

A group of banks are teaming up with IBM to build a new global system for trade finance using blockchain technology that is designed to track goods and automatically release payments as they move around the world by plane, ship or truck.

Bank of Montreal, Caixabank, Erste Bank and Commerzbank are joining the project called Batavia, which was launched by UBS and IBM last year and aims to start testing the technology using real transactions by early next year.

Australia

Millennial Money: We’re not willing to pay to keep our finances in check (Stuff), Rated: A

A 2014 survey by global investment banking company UBS found millennials preferred to seek advice from their friends rather than a professional.

Most millennials, like older generations, first looked to a spouse or partner for financial advice. Their next choice is their parents, followed by friends and other family members.

Non-millennials were much bigger champions of financial advisors: 40 per cent of non-millennial respondents reported seeking advice from one as their first port of call on a financial decision, while only 14 per cent of millennials said the same.

Source: Stuff

Blockchain Driven P2P Lending & Investment Platform Announces Crowdsale (Coin Idol), Rated: B

The crowdsale for the platforms ‘LoanBit Token (LBT)’ is scheduled to go live in November, with a presale beginning on 4th October 2017, and ending on 15th October 2017.

The ICO for LoanBit is set to go live on in November and will be open for only 31 days.

LoanBit – Legit Bitcoin Lending Interest Rates & Earning Platform? (Bitcoin Exchange), Rated: A

LoanBit is a lending platform created by an Australian startup called LoanBit Proprietary Limited. The platform is designed to work as a mediator between bitcoin lenders and businesses looking for short-term loans in bitcoin.

LoanBit promises to offer you a guaranteed daily interest rate of 2% to 5%, which adds up to triple or quadruple digit guaranteed returns per year. You can invest in LoanBit for as little as 0.01 BTC.

LoanBit claims to be a legitimately registered Australian company. The company lists an address in Canberra (17/7-17 Bunda St). They also have an Australian company number (610 418 794).

In any case, the LoanBit.net website was registered on February 16, 2017. The latest version of the website, which features the HYIP scam, only appeared online on September 10, 2017 – so it’s brand new.

Yes, LoanBit appears to be a scam, based on all of the information we can find online today.

India

P2P lending norms will bring order to industry, but speed bumps ahead (VC Circle), Rated: AAA

India’s P2P lending market, which is predicted to be worth $4-5 billion by 2023 according to community loan exchange platform Faircent, has several players operating in the space, such as LenDenClub, Monexo, BillionLoans, i-Lend, LoanMeet, i2iFunding and FinMomenta. However, so far, P2P lending had been operating in a regulatory grey area. As such, the rollout of these guidelines gives legitimacy to the business.

FinMomenta co-founder and CEO Brahma Mahesh Khaderbad believes it paves the way for P2P platforms to gain legality, transparency and credibility.

The RBI has said that every company seeking registration should have a net-owned fund of not less than Rs 2 crore.

The guidelines say that any fund transfer between participants on a P2P lending platform shall be through an escrow account, which will be operated by a trustee. At least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, shall be maintained.

The central bank has said that the aggregate exposure of a lender to all his/her borrowers at any point, across all P2Ps, should be capped at Rs 10 lakh. The aggregate loans taken by a borrower at any point of time, across all P2Ps, has also been capped at the same amount. The exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000.

Read more on the guidelines here.

P2P lending platforms to get transparent, safer (Business-Standard), Rated: A

The norms on peer-to-peer (P2P) lending platforms issued by the Reserve Bank of India (RBI) will help make them more transparent and also safer for customers. “The regulations ensure that P2P platforms will protect the interests of lenders and borrowers will get faster access to credit,” says Shankar Vaddadi, founder and director of i-lend.

What peer-to-peer lending is and how RBI’s guidelines will impact it (Financial Express), Rated: B

The RBI said P2P lending, even though of no significant in value, yet can “disrupt the financial sector and throw up surprises” in future, and the associated risks to the financial system are “too important to be ignored”.

The RBI has laid down following criteria for registering under Non-Banking Financial Companies (NBFC) :

  • P2Ps should have a minimum Rs 2 crore capital
  • P2Ps cannot take any loan exposure themselves
  • P2P will undertake credit assessment and risk profiling of the borrowers and lenders
  • P2P will maintain documents related to loan agreements
  • P2P will provide assistance in disbursement and repayments of loan amount
  • P2Ps cannot hold balance sheet or funds
  • P2Ps cannot cross-sell products except for some insurance products

“This is an extremely positive step for the P2P lending business. The retail millennial lenders, an investor demographic which has been focussed on extensively in the regulations will be leveraging the power of the crowd for the benefit of small
borrowers,” Vinay Mathews, Founder & COO, Faircent.com said.

Student micro-financing startup SlicePay raises Series A round (VC Circle), Rated: A

SlicePay, a digital payment platform catering to college students, has raised $2 million (about Rs 13 crore) in a Series A round from Japanese investment fund Das Capital and Russian early-stage investor Simile Venture Partners, its co-founder told VCCircle.

Existing investor Blume Ventures also participated in the round.

YES BANK launches second cohort of YES FINTECH accelerator (YourStory), Rated: A

YES BANK, India’s fifth-largest private sector bank, has been significantly contributing to the fintech space by collaborating with and mentoring more than 100 fintech startups to co-create innovative financial solutions for its Corporate, SME, and retail customer base. In March this year, they launched a business accelerator programme for fintech startups called YES FINTECH, in association with T-Hub, Anthill, and LetsTalkPayments.

YES BANK is all set to launch the second cohort of YES FINTECH, which will kick off on November 13.

The YES FINTECH roadshow in Mumbai will include a Fireside Discussion on GES (Global Entrepreneurship Summit) and its impact on Fintech and Mumbai as India’s Fintech Hub. In conversation will be Amit Goel, Founder LTP, Puneet Shukla, NITI Aayog and Vivek Belgavi, Partner, PwC. After this, Rajeev Chari, COO, Numberz and Arpit Ratan, Founder, Signzy, both startups that graduated from the Summer Cohort of YES FINTECH, will share their experience of being a part of the programme.

When: 6th October

Where: ISME Ace, One India Bulls, Lower Parel, Mumbai

Time: 2 pm-5pm

The YES FINTECH roadshow in Bengaluru will begin with a GES lead-up panel discussion on ‘Women in Fintech. Panellists will include Lizzie Chapman from Zestmoney, Prashanthi Reddy from YES BANK and Dr. Anna Roy of NITI Aayog.  Following this, Shankar, Founder, FRS Labs, and  Ankit Ratan, Founder, Signzy, both startups that graduated from the Summer Cohort of YES FINTECH, will share their experience of what it was to participate in the programme.

When: 11th October

Where: 91 Springboard, 8th Block Koramangala, Bengaluru

Time: 2 pm-5pm

Authors:

George Popescu
Allen Taylor