- Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow.
- Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ)
- Today’s thought-provoking articles: Peter Renton’s quarterly marketplace lending results. Loans for sneakers. Lessons learned from LendIt Fintech Europe. What’s happening in fintech worldwide.
- Affirm debuts new app for shoppers. The app allows consumers to shop and check out with “virtually any retailer.” This Business Insider article highlights Affirm’s need to step up its game in order to compete with Amazon, 66 percent of whose customers begin their search for new product at Amazon. Affirm will have to offer better deals for consumers and make it easy to purchase things. With Affirm’s relationship with Walmart, that shouldn’t be too much of a challenge. However, it will be a challenge.
- Affirm app allows for bill splitting.
- Interview with Max Levchin, founder and CEO of Affirm.
- OnDeck survey indicates small businesses are concerned about economy. Old news, still interesting.
- Marcus, jobs, the economy, housing prices, and Oportun. From PeerIQ, well worth the read.
- Peter Renton’s quarterly MPL results. For Q2 2019. Always interesting to read how Renton’s investments have been doing. With lots of charts.
- The rose of “loans for sneakers” as a business. The focus is on Afterpay, an Affirm competitor, but this is a good read because it tackles POS lending from a consumer’s perspective. Insightful and interesting.
- What happened to Borro?
- Auto, home equity are soft spots in consumer lending.
- Maker offers multi-collateral DAI lending.
- A $40 billion pile of leveraged loans battered by huge losses.
- CFPB ruling shorts debt collectors.
- The SEC is hiring a data chief.
- Voyager selects Celsius Network for asset management.
- Zopa’s profits tick upward.
- Zopa says 9 out of 10 shoppers are confused by car finance options.
- RateSetter recovering from loan scandal.
- Wonga customers average 118 GBP payout.
- Savvy secures 20 million GBP funding facility.
- Interview with founder of Blend Network.
- Crowdfunding options for startups explained.
- Lessons learned from LendIt Fintech Europe.
- Linked Finance launches ‘Beyond Brexit’ business loans.
- ID Finance to double revenues within two years.
- Binance launches next phase of crypto lending program.
- What’s happening in the fintech revolution worldwide. A great read with interesting charts.
- Marcus, Neobank, and fintech developments. This is today’s must-read. Very detailed with lots of charts, but the focus is mostly on digital banking. Still, a very good read.
- Blockchain: The future of finance.
- China: PPDAI stock soars 7% on institutional-funding lending increase.
- Australia: RBA cuts rates. Online lenders do too.
- Australia: loans.com.au cuts rates.
- Bahrain: Beehive funds first SME.
- Malaysia: The risks and rewards of SPV 2030.
- Australia: OnDeck appoints national broker chief.
- Canada: BFS Capital opens data science and engineering hub in Toronto.
- United States
- OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
- Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
- Affirm ships new shopping and bill splitting app (Finextra), Rated: A
- Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
- Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
- My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
- The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
- What Happened to Borro? (deBanked), Rated: A
- Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
- Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
- A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
- Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B
- The SEC is hiring a chief data officer (Business Insider), Rated: B
- Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
- United Kingdom
- Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
- Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
- Ratesetter recovering from loan scandal (The Times), Rated: AAA
- Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
- Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
- MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
- Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
- Landlords wary of tax changes (Money International), Rated: A
- PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
- European Union
- What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
- Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
- ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
- Binance Launches New Lending Program Phase (CoinCodex), Rated: A
- A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
- Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
- Blockchain: the future of finance (Financier Worldwide), Rated: A
- Hot home loan rates starting with a 2 (mozo), Rated: AAA
- loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA
- OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
- SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
- Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA
- BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.
- Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
- Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
- 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
- 93% of those surveyed said they plan to vote in the 2020 election.
- 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.
Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
The point-of-sale (POS) financing provider
Affirm ships new shopping and bill splitting app (Finextra), Rated: A
Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.
Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.
Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — Afterpay, Uplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone Square, Mastercard, PayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.
Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.
On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.
House prices are expected to rise 5.8% over the next year due to low mortgage rates.
Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.
My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.
The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.
Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.
Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.
Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.
What Happened to Borro? (deBanked), Rated: A
In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.
Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.
Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.
Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.
Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.
A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.
Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.
The SEC is hiring a chief data officer (Business Insider), Rated: B
The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.
Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.
Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.
Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.
Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.
Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.
MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
WHY DID YOU START BLEND NETWORK?
I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.
Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.
Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.
- Reward based crowdfunding;
- Equity based crowdfunding;
- Debt based crowdfunding, and
- Donation based crowdfunding.
Landlords wary of tax changes (Money International), Rated: A
Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.
A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.
PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.
For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.
What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.
- CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
- Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions.
- French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.
ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.
Binance Launches New Lending Program Phase (CoinCodex), Rated: A
The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.
A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.
Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.
San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.
Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.
Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).
The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.
Blockchain: the future of finance (Financier Worldwide), Rated: A
Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.
The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.
MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.
St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.
Hot home loan rates starting with a 2 (mozo), Rated: AAA
The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.
OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.
SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.
News Comments Today’s main news: SoFi has raised $500M. Morningstar accelerates acquisition of DBRS. PayPal hits $10B in small business loans milestone. Lendy goes into administration. Klarna launches installment loan app for all retailers. New York overtakes London as financial hub of the world. Today’s main analysis: LendingClub’s advance shareholder meeting presentation (A MUST-READ). Today’s […]
- Today’s main news: SoFi has raised $500M. Morningstar accelerates acquisition of DBRS. PayPal hits $10B in small business loans milestone. Lendy goes into administration. Klarna launches installment loan app for all retailers. New York overtakes London as financial hub of the world.
- Today’s main analysis: LendingClub’s advance shareholder meeting presentation (A MUST-READ).
- Today’s thought-provoking articles: PayPal small biz lending compared to OnDeck, Funding Circle. Mortgage borrowers can save $2K+ shopping for loans online. Where we are in the credit cycle. Who’s lending to small businesses.
- SoFi quietly raises $500 million. What’s noteworthy about this raise is the source of the funding: Qatar Investment Authority.
- SoFi’s valuation remains unchanged.
- SoFi could have its name on a football stadium soon. Almost as interesting as SoFi’s fundraising news.
- Morningstar accelerates acquisition of DBRS. This is an interesting acquisition. Consolidation in the credit ratings business means fewer ways to analyze a potential investment. It will strengthen Morningstar’s reputation and analysis technology, but investors will lose in the long run since analysis information will come from fewer quarters.
- PayPal hits $10 billion in small business loan originations. In only five years, that’s not a bad accomplishment, but it likely will not take as long for the next $10 billion milestone. PayPal is becoming a competitor.
- PayPal vs. OnDeck vs. Kabbage, vs. et.al. From Lend Academy and deBanked.
- LendingClub’s pre-meeting presentation. Read up on LendingClub’s position before their annual shareholder meeting, scheduled for June 5, 2019.
- Mortgage borrowers can save over $2,000 by shopping for loans online. From LendingTree.
- Where are we in the credit cycle? From PeerIQ. More interesting is the Fed’s dot plot.
- Who’s lending to small businesses? Alternative lenders continue to take more percentage of small business lending. Banks have all but handed this sector over to Kabbage, OnDeck, and the rest.
- LendingTree earns 5-star rating.
- RedWeek, Affirm partner on travel financing.
- Alternative lending options for business credit.
- CoreLogic Teletrack launches platform for lenders, credit issuers.
- Intuit to buy Origami Logic to use data for marketing.
- Kabbage, Azlo partner on small business lending.
- BitX Funding partners with Pelagic Capital on equipment financing.
- How much Social Security Numbers are worth on the dark web.
- Costco has a home loan app.
- Investing with very little money.
- BFS Capital appoints new chief technology officer, chief product officer.
- Lendy enters administration.
- Does it spell the end of P2P lending?
- BondMason to exit P2P lending.
- Interview with Wagestream CEO Peter Briffett.
- Microfinance trends.
- Klarna launches installment payments app for all retailers.
- Klarna to open “all-immersive store” in London.
- Stabelo’s mortgage lending business model.
- New York overtakes London as world’s financial hub. This is based on a survey, not actual objective statistics or data. But it’s still interesting. There is a lot of anxiety surrounding Brexit. The Big Apple can now be known for something else.
- Cred to migrate tokens to Binance Mainnet.
- BlockFi launches Gemini Dollars accounts.
- Emerging fintech hubs.
- Nexo releases crypto lending update.
- Apolitical releases list of most influential people on gender equality.
- United States
- Online lender SoFi has quietly raised $ 500 million in funding, led by Qatar (TechCrunch), Rated: AAA
- SoFi Raises $ 500M, Valuation Remains $ 4.3B (PYMNTS), Rated: A
- SoFi Is Close to a Deal Putting Its Name on L.A. Football Stadium (Bloomberg), Rated: A
- Morningstar to Accelerate Credit Ratings Business with DBRS Acquisition (Morningstar), Rated: AAA
- PayPal’s Latest Milestone: $ 10 Billion In Small Business Loans (Forbes), Rated: AAA
- PayPal Crosses $ 10 Billion In Small Business Loans (Lend Academy), Rated: AAA
- LendingClub Posts Presentation in Advance of Shareholder Meeting (Crowdfund Insider), Rated: AAA
- Borrowers can save over $ 2,000 by shopping for lenders who offer low mortgage fees (LendingTree), Rated: AAA
- Home Loan Provider Earns Top 5-Star Rating from TopConsumerReviews.com (PRWeb), Rated: A
- Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
- Prevent attrition and win new relationships with loan options (Bankless Times), Rated: AAA
- RedWeek Teams Up with Affirm to Help Travelers Vacation Now and Pay Later (Yahoo! Finance), Rated: A
- 3 Alternative Lending Options to Help Build Your Business Credit (Nav.com), Rated: A
- CoreLogic Teletrack launches a new platform for lenders and credit issuers (Automotive News), Rated: A
- What Intuit knows about you (AXIOS), Rated: A
- Kabbage And Azlo Collaborate To Make Small Business Lending Easier (eSellerCafe), Rated: A
- BitX Funding Strikes Equipment Finance Alliance (PYMNTS), Rated: A
- On the Dark Web, your social security number is only worth $1 (CB Insights Email), Rated: A
- 5 Home Loan Apps To Test-Drive (Spokes-Recorder), Rated: B
- Top 5 ways to start Investing With Little Money!! (EconoTimes), Rated: B
- BFS Capital Appoints Fred Kauber as Chief Technology Officer and Chief Product Officer (Yahoo! Finance), Rated: B
- United Kingdom
- Peer-to-peer lending provider Lendy enters administration (Credit Strategy), Rated: AAA
- Does Lendy Collapse Hint the Failure of P2P Loans Industry? (LearnBonds), Rated: A
- BondMason Reportedly Is Shutting Down P2P Business (Crowdfund Insider), Rated: A
- Combating The Payday Loan With On-Demand Wages (PYMNTS), Rated: A
- Microfinance Trends and Size of the Market (Cryptopolitan), Rated: A
- European Union
- Klarna Launches a Direct-to-Consumer App With Installment Payments Built in (Digital Transactions), Rated: AAA
- 10 more big retail tech plays in 2019 (Retail Innovation Hub), Rated: A
- Becoming a mortgage lender (IPE), Rated: A
- London toppled by New York as world’s financial hub (Tech HQ), Rated: AAA
- Crypto Lending Platform Cred to Migrate Tokens to Binance Mainnet in New Partnership (CoinTelegraph), Rated: A
- Crypto Lending Startup BlockFi Launches Gemini Dollar Accounts (CoinTelegraph), Rated: A
- Top 5 emerging fintech hubs (World Finance), Rated: A
- Nexo Releases Crypto Lending Update Clarifying Misconceptions and Future Outlook (Bitcoin Exchange Guide), Rated: B
- These are the world’s 100 most influential people in gender policy this year (CNBC), Rated: B
- Australia/New Zealand
- Advice beyond mortgages: “the opportunity is huge” (NZ Adviser Online), Rated: AAA
- TaniGroup Secures US$ 10 Million in Series A Funding to Re-Imagine Agriculture in Indonesia (Global Banking and Finance), Rated: AAA
- Peer-To-Peer Lending In Indonesia: A Regulatory Update (Mondaq), Rated: A
- Qatar Investment Authority invests more than $ 500M in SoFi (Mobile Payments Today), Rated: AAA
- East Africa
- Kenya Is Also Setting The Standard For Mobile Lending (Forbes), Rated: AAA
- This Alternative Lending Company Offers Investors a Huge Margin of Safety (The Motley Fool), Rated: AAA
Online lender SoFi has quietly raised $ 500 million in funding, led by Qatar (TechCrunch), Rated: AAA
Online lending startup Social Finance, better known as SoFi, took another tack this morning, quietly announcing in a press release that it has closed half a billion dollars in a single funding round led by Qatar Investment Authority, a Doha, Qatar-based private equity and sovereign wealth fund.
SoFi Raises $ 500M, Valuation Remains $ 4.3B (PYMNTS), Rated: A
The company said it will use the capital to invest in growth and add some muscle to its $2.3 billion balance sheet. The company’s valuation will stay about the same as with the last funding round two years ago, which was led by Silver Lake.
SoFi Is Close to a Deal Putting Its Name on L.A. Football Stadium (Bloomberg), Rated: A
Social Finance Inc., a financial technology startup, is close to signing a deal that would put its name on a new NFL stadium under construction in Inglewood, California, according to two people familiar with the matter.
The deal for the stadium, which would be home to the Los Angeles Rams and Chargers, hasn’t been signed so figures could change. But currently the agreement would have SoFi pay $20 million a year for 20 years, these people added.
Morningstar to Accelerate Credit Ratings Business with DBRS Acquisition (Morningstar), Rated: AAA
Morningstar, Inc. today announced it has entered into a definitive agreement to acquire DBRS, the world’s fourth-largest credit ratings agency, for a purchase price of $669 million. The combination of DBRS with Morningstar Credit Ratings’ U.S. business will expand global asset class coverage and provide an enhanced platform for providing investors with leading fixed-income analysis and research.
PayPal’s Latest Milestone: $ 10 Billion In Small Business Loans (Forbes), Rated: AAA
The small business lending market is booming and it’s not the traditional banks that are benefiting. Fintechs are leading the way. Case in point: PayPal. It hit a milestone, announcing it has provided more than $10 billion in loans to more than 225,000 small businesses around the globe.
The $10 billion mark comes a little more than five years after PayPal made its first loan. Today it has issued more than 650,000 loans through financing programs in the U.S., UK, Australia, Germany, and Mexico.
PayPal Crosses $ 10 Billion In Small Business Loans (Lend Academy), Rated: AAA
Now they are hitting some impressive quarterly milestones, originating $1 billion per quarter, so their next $10 billion is surely to happen even quicker.
deBanked recently highlighted the leading small business originators which showed that PayPal is solidly the leader when it comes to originations in the US. OnDeck which is second to PayPal reported originations of $636 million in Q1 2019. According to data provided by Funding Circle on their website, which includes their lending globally, they have originated $9.5 billion in loans.
LendingClub Posts Presentation in Advance of Shareholder Meeting (Crowdfund Insider), Rated: AAA
Borrowers can save over $ 2,000 by shopping for lenders who offer low mortgage fees (LendingTree), Rated: AAA
- Mortgage fees in the first quarter had a median of $2,059 for purchase loans and $1,807 for refinancing.
- The more offers a borrower receives, the greater the potential for savings. For people receiving five offers, the median spread between the highest and lowest fees offered was $2,045.
- 7% of new purchase borrowers and 8% of refinance borrowers were offered $0 in fees.
- 15% of new purchase borrowers and 19% of refinance borrowers paid less than $500 in fees.
- 28% of purchase borrowers paid less than $1,000 in mortgage fees, with 35% of refinance borrowers also paying less than $1,000 in fees.
- At the high end, 13% of purchase borrowers were hit with fees over $5,000, 3% over $10,000 and 0.21% over $20,000.
- For refinance loans, 12% were offered upfront fees over $5,000, 1% over $10,000 and 0.02% over $20,000.
Home Loan Provider Earns Top 5-Star Rating from TopConsumerReviews.com (PRWeb), Rated: A
TopConsumerReviews.com recently gave their highest rating to LendingTree, an industry leader among providers of Home Loans, for another consecutive year.
Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
First, a quick summary of headlines. The Fed agreed to keep interest rates on hold for longer according to the minutes of the April meeting. The decision is expected to help inflation pick up towards the Fed’s 2% target. The Fed’s latest ‘dot plot’, shown below, indicates Fed governors on the margin expect lower rates in the 2019 to 2021 timeframe suggesting lower growth expectations.
“…what we see is right now the fundamentals of the economy in the U.S. on a global basis and the fundamentals of consumers and unemployment being low as you mentioned, means that credit is in good shape and we just don’t see that changing a lot.”
Brian Moynihan, CEO of Bank of America
Kroll also released a report on the Evolution of the Consumer Loan Marketplace Sector to lay out how the sector has matured over time. The report comes on the heels of a Fitch report that said that declining credit enhancements in MPL deals is unwarranted.
Prevent attrition and win new relationships with loan options (Bankless Times), Rated: AAA
Small business clients are increasingly looking to alternative lenders for financing. There are numerous draws for SMB clients: a fast and easy application process, quick funding, and a higher chance of being approved for a loan.
According to the Federal Reserve’s Small Business Credit Survey, the main reason clients applied for funding from an online lender was the speed of decision / funding (63 percent) followed by a better chance of being funded (61 percent).
The number of small business owners who turn to alternative lenders for funding has increased steadily since 2016.
RedWeek Teams Up with Affirm to Help Travelers Vacation Now and Pay Later (Yahoo! Finance), Rated: A
RedWeek.com, the largest online community for timeshare rentals and resales, announced a new partnership with Affirm that will give travelers the flexibility to pay for their vacation rentals in simple, monthly installments.
Travelers can check eligibility for a loan online before booking their next trip and, after entering five simple pieces of information, receive a real-time decision without impacting their credit scores.
3 Alternative Lending Options to Help Build Your Business Credit (Nav.com), Rated: A
1. Online Business Loans
Once upon a time, if you wanted to borrow money for your business you had to make a trip down to your local bank branch or credit union to see if you could qualify for funding. However, a new generation of business lenders has since emerged to offer business owners an alternative way to secure capital.
2. Invoice Financing
Is your business structured in a way so that it gets paid after delivering services or goods to customers? If so, invoice financing is an alternative lending option that might work for you.
Microloans are issued through non-profit organizations aptly named microlenders. Although the maximum loan size is generally $50,000, the average microloan issued to a small business or startup is a much smaller $6,000.
CoreLogic Teletrack launches a new platform for lenders and credit issuers (Automotive News), Rated: A
CoreLogic today launched the new CoreLogic Teletrack platform, offering lenders and credit issuers superior access and greater insight into alternative credit data through one of the industry’s largest alternative credit databases. The new platform and solution combine upgraded services, data, products and an analytics engine to help users discover new market segments, make smarter risk decisions and grow their business throughout the credit lifecycle.
What Intuit knows about you (AXIOS), Rated: A
Intuit said Tuesday it had agreed to buy analytics company Origami Logic, effectively doubling down on the use of customer data to enhance its marketing.
The company can cross-sell its own products as well as products and services from third parties — like a Capital One Platinum Credit Card or a loan from Lending Club — based on what it knows about you.
Kabbage And Azlo Collaborate To Make Small Business Lending Easier (eSellerCafe), Rated: A
US online banking platform Azlo and online small business lender announced the launch of Mission Street Capital, a new program that provides small businesses banking with Azlo access to loans through Kabbage up to $250,000.
BitX Funding Strikes Equipment Finance Alliance (PYMNTS), Rated: A
Small business lending marketplace BitX Funding has struck an alliance with transportation equipment finance company Pelagic Capital, the companies said in a press release Tuesday (May 28).
On the Dark Web, your social security number is only worth (CB Insights Email), Rated: A
5 Home Loan Apps To Test-Drive (Spokes-Recorder), Rated: B
Not many know this discount bulk retail giant also provides a loan marketplace to shop for the best mortgage rate. While open to all, Costco members can access discounts on lending services. Loan options include home equity, fixed and adjustable rate, FHA, VA, USDA, and jumbo. Note, this lender’s services are strictly digital so you will not be able to meet up with someone face-to-face.
Top 5 ways to start Investing With Little Money!! (EconoTimes), Rated: B
Though P2P lendings are not low investment choices; with Fast invest, it is possible. You can start investing here with just 1 pound to accelerate cash flow. The website allows investors to deposit amounts and based on that suggests loans. After you choose the loan pack as an investor, the site assigns borrowers. Once the borrower takes the loan from you, the site starts increasing your invested amount with the applied interest rate of up to 14% till the payback period. It also comes with buyback guarantee if the borrower fails to return your loan in the payback period.
Real estate crowdfunding sites provide you the opportunity to invest in third-party properties. Fundrise is the best crowdfunding platform to go for that lets you start investing with only $500. With a year’s saving, you can start investing in this crowdfunding site and gain 8.7 to 12.4% annual returns based on your deposited amount.
BFS Capital Appoints Fred Kauber as Chief Technology Officer and Chief Product Officer (Yahoo! Finance), Rated: B
BFS Capital today announced the appointment of Fred Kauber as Chief Technology Officer and Chief Product Officer. As a member of the management team reporting to CEO Mark Ruddock, Kauber will be responsible for leading a customer-focused product and technology organization whose mission is to help BFS re-imagine financial services for small businesses.
Peer-to-peer lending provider Lendy enters administration (Credit Strategy), Rated: AAA
Damian Webb, Phillip Sykes and Mark Wilson of RSM Restructuring Advisory have been appointed as joint administrators of three companies within the Lendy Group: Lendy Limited, Saving Stream Security Holdings Limited and Lendy Provision Reserve Limited.
Does Lendy Collapse Hint the Failure of P2P Loans Industry? (LearnBonds), Rated: A
Before administration, over £90 million of loans defaulted out of £160 million of outstanding loans. The collapse of Lendy means investors had lost millions of pounds.
BondMason Reportedly Is Shutting Down P2P Business (Crowdfund Insider), Rated: A
BondMason, an online savings and investments platform that sources investments from across the peer-to-peer (P2P) market for its clients, has reportedly announced it is officially shutting down its P2P lending business.
Combating The Payday Loan With On-Demand Wages (PYMNTS), Rated: A
Peter Briffett, CEO of U.K. FinTech Wagestream, told PYMNTS in a recent interview that the cash flow constraints of having to wait for a single day to receive wages every month can be dangerous to the financial wellness of professionals. A single, expensive incident can force these professionals into debt via bank overdrafts or credit cards — or worse, Briffett said, into the payday loan cycle.
The company recently announced a $51 million funding round for its solution — led by Balderton Capital and Northzone, which provided equity, and Shawbrook, which provided debt.
Microfinance Trends and Size of the Market (Cryptopolitan), Rated: A
And that is where microfinance is moving – to an era where individuals and businesses can get financial services from other individuals and business entities. Technology is providing tools for matching borrowers and lenders. And even more important – the tools for creating contracts that execute accordingly.
Klarna Launches a Direct-to-Consumer App With Installment Payments Built in (Digital Transactions), Rated: AAA
Announced Tuesday, the Klarna app presents the retailer’s site with a footer containing a Pay with Klarna button. When selecting that option, the shopper can pay for purchases in four equal installments with no interest or fees. The app is open to any merchant, not just those already affiliated with Klarna, the company says. These could include retailers without an alternative-payment option or that use a competitor’s program.
10 more big retail tech plays in 2019 (Retail Innovation Hub), Rated: A
PayTech venture Klarna is launching its first UK “all-immersive store” in London’s Covent Garden, with a private VIP party on 4th June.
Becoming a mortgage lender (IPE), Rated: A
Stabelo’s model is to pool capital from institutional investors in exchange for fixed-income securities and uses the money raised to lend mortgages directly to homebuyers. The firm offers mortgages in conjunction with Avanza Bank, which is the biggest online lender in Sweden, and owns just under 20% of Stabelo.
London toppled by New York as world’s financial hub (Tech HQ), Rated: AAA
A survey by consultancy and advisory firm Duff & Phelps, involving 180 executives in asset management, private equity, hedge funds, banking and brokerage, found that confidence in the UK capital has plummetted in the last year.
Just 36 percent ranked London as the foremost global financial hub— a year-on-year drop of 17 percent. With New York rising 10 percent, ranked by more than half (52 percent) as the world’s new financial powerhouse, the two cities have “switched places”.
Crypto Lending Platform Cred to Migrate Tokens to Binance Mainnet in New Partnership (CoinTelegraph), Rated: A
As part of the agreement, Cred will migrate some of its ERC-20 LBA tokens to Binance’s mainnet, Binance Chain, and become the official lending and borrowing platform for the decentralized financial ecosystem.
Crypto Lending Startup BlockFi Launches Gemini Dollar Accounts (CoinTelegraph), Rated: A
Per the announcement, GUSD deposits will see a yearly yield of 6.2%, paid in the stablecoinin question. BlockFi notes that it also offers GUSD as a U.S. dollar funding option and as collateral from institutional cryptocurrency borrowers.
Top 5 emerging fintech hubs (World Finance), Rated: A
Brazil has more fintech start-ups than any other Latin American country, and most of them are consolidated in the country’s financial centre, São Paulo.
One country poised to see an explosion of opportunities after Brexit is Lithuania. In February of this year, the country saw around 100 British financial companies apply for a licence in the country.
Estonia has one of the highest rates of start-ups per capita in Europe. According to Startup Genome, 29 percent of all jobs created by these start-ups are within the country’s fintech industry.
Home to the European Central Bank and more than 200 banks – most of which are foreign – Frankfurt plays an important role in the EU’s financial system.
Bengaluru (previously Bangalore) is anticipated to become one of the next big tech hubs. One of Asia’s fastest growing start-up ecosystems, the city is home to 438 fintech start-ups and has been dubbed the ‘Silicon Valley of India’.
Nexo Releases Crypto Lending Update Clarifying Misconceptions and Future Outlook (Bitcoin Exchange Guide), Rated: B
Nexo claims their key business model “is unchanged” but that the company is:
“actively exploring new avenues to maximize token utility and investor value.” The company also claims their ultimate goal is to become “a multi-billion dollar financial institution.”
Apolitical, a peer-to-peer lending platform for governments, unveiled its list of the world’s 100 most influential individuals on gender equality on Wednesday. It recognized politicians, activists and academics, among others, who were shaping gender policy in 2019.
Advice beyond mortgages: “the opportunity is huge” (NZ Adviser Online), Rated: AAA
According to Adrienne Church, General Manager at small business lender Prospa, venturing into an unfamiliar type of lending may be worrying – but it is also necessary as the lending market expands, and the property market remains as unpredictable as it inevitably always is.
TaniGroup Secures US$ 10 Million in Series A Funding to Re-Imagine Agriculture in Indonesia (Global Banking and Finance), Rated: AAA
Agritech startup TaniGroup, which operates agriculture e-commerce TaniHub and peer-to-peer lending provider TaniFund, today announced it raised a US$10 million Series A round of financing led by Openspace Ventures with participation from Intudo Ventures, Golden Gate Ventures, and The DFS Lab.
Peer-To-Peer Lending In Indonesia: A Regulatory Update (Mondaq), Rated: A
In February of this year, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued an updated checklist for peer-to-peer lending (“P2P lending”) platform providers (“Checklist”) registering with the OJK or applying to the body for a business license or change of ownership. The new Checklist introduces several changes to the previous checklist issued in October 2018. We highlight the key material changes and new requirements introduced by the Checklist.
Qatar Investment Authority invests more than $ 500M in SoFi (Mobile Payments Today), Rated: AAA
Qatar Investment Authority has led an investment of more than $500 million in SoFi, a mobile-first personal finance firm. The investment values the company at $4.3 billion on a pre-money basis, according to a release from the fund.
Kenya Is Also Setting The Standard For Mobile Lending (Forbes), Rated: AAA
We all know that Kenya revolutionized mobile payments for the developing world and brands like M-Pesa continue to lead the market, but what about mobile lending? According to Creditinfo Kenya, 93 percent of all mobile loans originate from regulated financial institutions, and there are around five million borrowers and each has an average of 5.89 loans.
This Alternative Lending Company Offers Investors a Huge Margin of Safety (The Motley Fool), Rated: AAA
Home Capital is a specialty finance company that primarily deals in mortgages. The company typically deals with borrowers who don’t meet normal bank requirements. It offers traditional mortgages and consumer lending as well as securitizing insured mortgages and offering home equity lines of credit.
News Comments Today’s main news: Clarity Services integrates with Experian. Octopus Choice passes 100M GBP AUM. Funding Circle hits 100M Euro in German lending. Younited Credit tops 100K loans. Square Peg invests $8M in Airwallex. Silver Bullion hits $50M in loans. Today’s main analysis: The deteriorating auto loan quality. Today’s thought-provoking articles: China’s startup investors are a bunch of “cashed-up […]
- Today’s main news: Clarity Services integrates with Experian. Octopus Choice passes 100M GBP AUM. Funding Circle hits 100M Euro in German lending. Younited Credit tops 100K loans. Square Peg invests $8M in Airwallex. Silver Bullion hits $50M in loans.
- Today’s main analysis: The deteriorating auto loan quality.
- Today’s thought-provoking articles: China’s startup investors are a bunch of “cashed-up cowboys.” Chinese borrow a lot from multiple lenders. How China’s war on risk benefits U.S. companies. Online banking, payments solutions coming down the pike. How M-Pesa is transforming money for the poor in Africa.
- Clarity Services integrates completely with Experian. AT: “A letter to Clarity Services suppliers explains Experian invoicing.”
- Max Levchin explains, again, how Affirm is different from credit cards. AT: “I don’t understand why this is confusing. It isn’t Levchin’s communication skills.”
- Moody’s sends warning about deterioriating auto loan quality. AT: “Goes broader than auto lending, but it connects auto loan quality to the broader economy. A great read.”
- Square doesn’t want to be lumped in with Amazon, Facebook. AT: “I can’t blame them.”
- Interview with Levi King of Nav.
- Why traditional financial advisors should not fear artificial intelligence.
- America’s gig economy workers. AT: “This is very telling. More than a third of American workers are in the gig economy. Of course, most of them are part-time and/or earn less than $500/month. So the question is, are these workers prime targets for online lending products, and, if they’re entrenched in the gig economy, does that mean the way to reach them is through online channels?”
- $287M restitution sought in CashCall case.
- How to create the best B2B customer experience.
- Why P2P lending is an interesting investment. AT: “Very basic.”
- Cayan being acquired.
- Octopus Choice now has more than 100M GBP under management. AT: “Congratulations. Great achievement.”
- Assetz Capital changes Great British Business, green energy accounts.
- Ranger Direct Lending provides $9.1M for Argon Credit.
- ThinCats launches updated website, rebranding.
- Goji makes new appointments.
- Startup investors are ‘cashed-up cowboys’. AT: “Perhaps there was a natural tendency to favor their own despite the evidence of overvaluation. It’s not like we haven’t seen similar tendencies in the U.S.”
- Borrowers still target multiple online lenders. AT: “The interesting thing here is the indication of attempts to profit from lending arbitrage.”
- Fintech IPOs don’t dazzle Wall Street.
- Funding Circle lends 100M Euro in Germany. AT: “Congratulations.”
- Younited Credit issues 100K loans. AT: “Congratulations.”
- BorsadelCredito.it raises 1.6M Euro.
- DreamQuark wins Fintech of the Year award.
- Chairman appointed to National Personal Credit Platform.
- Airwallex secures $8M investment from Square Peg.
- Chatbot home loan advice is diversified.
- Challenger banks are okay, but need improvement.
- Silver Bullion hits $50M in lending.
- Amartha focuses on P2P lending for women entrepreneurs.
- Affin Islamic Bank’s latest sponsored volume on IAP.
- United States
- Integration of Clarity Services by Experian (Clarity Services Email), Rated: AAA
- PayPal Co-Founder Max Levchin Gave a Remarkably Honest Response to Accusations About His New Startup (Inc.), Rated: AAA
- Moodys Warns Of Deteriorating Auto Loan Quality (ValueWalk), Rated: AAA
- Square to small banks: Don’t lump us in with Amazon and Facebook (American Banker), Rated: A
- Levi King of Nav (Lend Academy), Rated: A
- Traditional FAs Shouldn’t Fear AI (Financial Advisor IQ), Rated: A
- Working in America’s gig economy (Multibriefs), Rated: A
- Consumer board seeks $ 287 million in restitution over CashCall case (Northern California Record), Rated: A
- How To Build The Best B2B Customer Experience (Forbes), Rated: A
- Interesting Investments: Peer-to-Peer Lending (Equities.com), Rated: A
- Boston Fintech Company Cayan Is Getting Acquired for $ 1.05B (Bostinno), Rated: B
- United Kingdom
- Octopus Choice passes £100m AUM (AltFi), Rated: AAA
- Assetz Capital Makes Changes to the Great British Business & Green Energy Accounts (Crowdfund Insider), Rated: A
- Ranger Direct Lending makes further $ 9.1m provision for Argon Credit (AltFi), Rated: A
- ThinCats Reveals New Branding, Launches Updated Website (Crowdfund Insider), Rated: B
- Goji – Empowering Direct Lending (LinkedIn), Rated: B
- China’s Wild Bunch: Startup Investors Are Cashed-Up Cowboys (WSJ), Rated: AAA
- Borrowing From Multiple Online Lenders Remains Prevalent (Caixin), Rated: AAA
- China’s war on risk hands US$ 121b loan market to big firms (The Malay Mail Online), Rated: AAA
- Chinese FinTech IPOs Don’t Dazzle Wall Street (PYMNTS), Rated: A
- European Union
- Funding Circle hits €100m lending milestone in Germany (P2P Finance News), Rated: AAA
- C’est Génial! Younited CREDIT Tops 100,000 Loans (Crowdfund Insider), Rated: AAA
- BorsadelCredito.it Raises €1.6M in Funding (FinsSMEs), Rated: A
- DreamQuark wins the 2017 Fintech of the Year (Digital Journal), Rated: B
- National Personal Credit Platform Appoints Chairman (Caixin), Rated: B
- Online Banking and Payments: Innovative Solutions on the Horizon (FinsSMEs), Rated: AAA
- How Banks Are Leveraging Chatbots for Customer Service (Crowdfund Insider), Rated: A
- Digital investments: Modern ways to invest in the digital age (Bankless Times), Rated: A
- Australia/New Zealand
- Australian Fintech Airwallex Secures $ 8 Million Investment From Square Peg (Crowdfund Insider), Rated: AAA
- Testing a chatbot’s home loan advice gives a range of outcomes (Stuff), Rated: A
- Regulatory Pathway for Challenger Banks Just OK, Could be Improved (Crowdfund Insider), Rated: A
- 5 Consumer Lending Trends To Look Forward To In 2018 (Inc42), Rated: AAA
- Unique Secured P2P Lender Silver Bullion Reaches $ 50 Million in Loans (Crowdfund Insider), Rated: AAA
- Amartha Powers Micro Peer to Peer Lending in Indonesia, Focuses on Women Entrepreneurs (Crowdfund Insider), Rated: A
- Affin Islamic Bank lists latest sponsored venture on IAP (New Straits Times), Rated: A
- Payday lenders squeezed by new regulations (The Globe and Mail), Rated: B
- A mobile banking service is transforming how the poor transfer money — here’s how it works (Business Insider), Rated: AAA
Integration of Clarity Services by Experian (Clarity Services Email), Rated: AAA
As a supplier to Clarity Services Inc, we are writing to formally notify you that as of October 6, 2017, Clarity Services Inc has been purchased by Experian Holdings, Inc.
Effective January 1, 2018, purchases and invoice payments will be processed by Experian’s centralized Procurement and Accounting departments.
PayPal Co-Founder Max Levchin Gave a Remarkably Honest Response to Accusations About His New Startup (Inc.), Rated: AAA
To its critics, though, Affirm, which recently raised $200 million in a growth round, is engaged in something sinister, luring people into a financial trap by enticing them to buy things they can’t afford. CEO Max Levchindoesn’t agree with that interpretation at all, but he does accept some of the blame for not creating a more accurate perception.
Here’s how Affirm works: You can borrow money to make a purchase at any store that integrates with Affirm (or any store at all if you use the mobile “virtual card”). If Affirm’s proprietary credit model judges that you’ll be able to pay back the sum, then you’re offered a loan. During the next several months — up to a year — you’re expected to make monthly payments, which include interest. The APRs range from 10 to 30 percent.
The key things that differentiate Affirm from other credit options are that you get all of the information up front, stated plainly, and the interest charged by the startup is simple rather than compounding. When you make the initial purchasing decision, you know exactly how much extra you will end up paying to buy the product right now, instead of saving up over several months. There are no additional fees.
Moodys Warns Of Deteriorating Auto Loan Quality (ValueWalk), Rated: AAA
The economy is expected to expand in 2018, with projections for stock market performance clocking in at 8% basis Goldman Sachs. But not all is well – a Moody’s report notes that specific asset sectors are struggling, particularly when it comes to car loan quality worsening.
Moody’s anticipates that US GDP growth will strengthen slightly to 2.3% in 2018 from 2.2% in 2017, with unemployment also continuing to move lower to 4.0% from 4.4%.
Auto loan quality is worst, but pockets of “challenged” loans exist across the board
Auto loan ABS issuers will likely securitize pools with attributes broadly similar overall to those in the pools backing their 2017 securitizations, even as a further decline in US auto sales pressures lenders to loosen underwriting to support volumes. We project sales will slip another 0.6% after an estimated 3.6% drop in 2017, following eight consecutive years of annual increases.
Auto loans appear to be on the front-lines of credit issues. Household debt, for instance, has increased to $13 trillion, with a significant part of that increase in auto loans. Sub-prime auto loans, in particular, are showing signs of weakness.
When looking at investment in asset-backed securities, the originator makes a difference. ABS backed by loans from online lenders such as SoFi, Lending Club Corporation, Prosper Marketplace Inc. and Marlette Funding have correlated with “prime credit quality.” But that is not the case across the board.
Square to small banks: Don’t lump us in with Amazon and Facebook (American Banker), Rated: A
Square, the Silicon Valley payment processor that is at the center of the fight over the tech industry’s ambitions in banking, is firing back at its small-bank critics, while also taking steps to placate community activists.
Advocacy groups that once expressed concern about the adequacy of Square’s plan to satisfy its obligations to low- and middle-income customers are now sounding more supportive of the fintech’s bid to open a bank.
Levi King of Nav (Lend Academy), Rated: A
In this podcast you will learn:
- Levi’s background that led to the founding of Nav.
- The products that Nav offers today.
- How their business model works.
- How they get small business owners interested in finance.
- How Nav saves their customers money.
- Why Levi thinks that small business owners may not need to be educated on finances in the future.
- Their approach to producing content on their site.
- The marketing channels they use to attract small business owners.
- Levi’s thoughts on the entry on Amazon, PayPal and Square into small business lending.
- Why proprietary data sets are going to be so important going forward.
- The story behind the Nav brand and why they rebranded a couple of years ago.
- The big name equity investors they have and how they closed their funding rounds.
- What the future holds for Nav.
Traditional FAs Shouldn’t Fear AI (Financial Advisor IQ), Rated: A
Traditional wealth managers are convinced the advent of robo-advisors and artificial intelligence threatens the jobs of financial services professionals, Wendy Spires writes on WealthBriefing. But the reality is that the high-touch business of financial advice stands to benefit from AI, as do its traditional practitioners, she writes.
For example, while 71% of wealth managers believe financial advice clients are prepared to accept advice from robo-advisors, the reality is different, she writes. Self-directed investing, for example, dropped from 45% in 2010 to 38% in 2016 — during a time when the number of robos and the services they offer expanded significantly, according to Spires.
Working in America’s gig economy (Multibriefs), Rated: A
“The gig economy … is now estimated to be about 34 percent of the workforce and is expected to be 43 percent by the year 2020,” notes Intuit CEO Brad Smith. “We think this points to a lot of growth as we look ahead.”
Based on the most recent demographic data available from the Bureau of Labor Statistics, it appears the gig workforce is fairly evenly distributed across the age spectrum, but the highest percentages are seen at opposite ends of the scale. Individuals 65 years and older had the highest level of self-employment at 24.1 percent, while those under 35 (the so-called millennial generation) made up 18 percent.
BLS data reveals a few more interesting statistics concerning the gig workforce:
- Men are almost twice as likely as women to be self-employed.
- More than 30 percent of gig workers possess professional or advanced degrees.
- Whites and Asians are marginally more engaged in gig work than are other racial or ethic groups.
In fact, data crunched by online lender Earnest and reported by Priceonomics indicates that about 85 percent of gig workers make less than $500 per month.
Consumer board seeks $ 287 million in restitution over CashCall case (Northern California Record), Rated: A
A Nov. 20 hearing featured the Consumer Financial Protection Bureau calling CashCall a purveyor of “financial snake oil” and arguing the online lender should pay as much as $287 million because they deceived customers.
How To Build The Best B2B Customer Experience (Forbes), Rated: A
In order to build the best B2B customer experience, companies should focus their effort on four principles:
- Invest in digital systems. Financial technology start-up Kabbage leverages new technology to approve small business loans in just seven minutes—a huge improvement over the 20 days it takes a typical bank. By simplifying the loan application process for web and mobile, Kabbage allows customers to apply for loans within minutes from anywhere in the world, which relieves a huge pain point for small businesses.
- Leverage data.
- Customize the experience.
- Use omnichannel to see the big picture. In fact, the average B2B customer uses six different channels as they make a decision. Customer experience happens in many places, which means companies need to create a consistent omnichannel experience.
Interesting Investments: Peer-to-Peer Lending (Equities.com), Rated: A
Peer-to-peer (P2P) lending, also known as peer lending, crowdlending, or social lending, is essentially what it says on the tin: lending money to another in an unsecured loan.
Prosper, one of the bigger companies managing P2P lending, has seen a fairly consistent return of about 9 percent through 2014, with a dip to 6.6 percent in 2012. Lending Club has seen a rise from 4.9 percent in 2009 to about 8 percent in 2014. All told, not bad ROIs.
First, you must be at least 18 years old, with a Social Security number, and live in an eligible state to even consider investing. Then, some states require that you have a minimum $70,000 gross income ($85,000 for California), and a minimum net worth of $70,000. You may not be able to invest more than 10 percent of your net worth. However, if your net worth is at least $250,000, there is no minimum income requirement.
Boston Fintech Company Cayan Is Getting Acquired for $ 1.05B (Bostinno), Rated: B
Cayan, a payment processing company that has been around the Boston fintech scene for the last 19 years, is in the process of getting acquired by Total System Services in an all-cash transaction valued at approximately $1.05 billion. The transaction is expected to close in the first quarter of 2018.
Octopus Choice passes £100m AUM (AltFi), Rated: AAA
Octopus Choice has passed £100m of assets under management, following on from the launch of its Innovative Finance ISA in the summer.
Assetz Capital Makes Changes to the Great British Business & Green Energy Accounts (Crowdfund Insider), Rated: A
On Monday, online lending platform Assetz Capital announced it is doing away with the Great British Business Account (GBBA) and the Green Energy Account (GEA).
China’s Wild Bunch: Startup Investors Are Cashed-Up Cowboys (WSJ), Rated: AAA
In the first 11 months of this year, 3,418 new venture-capital and private-equity funds in China raised 1.6 trillion yuan ($241.76 billion), more than double the amount of 2015 and more than 10 times that of 2006, according to consultancy Zero2IPO Group. It estimates about 12,000 investment firms manage 8.5 trillion yuan in capital, an increase from 8,000 firms managing 5 trillion yuan in 2015.
Out of 221 unicorns in the world, 59 are in China, according to CB Insights. While that may lag behind the 127 from the U.S., it’s ahead of the U.K.’s 12 and India’s nine. Many Chinese investors want to invest in Silicon Valley because they think the valuations there are more reasonable.
Government agencies and local governments have announced 1,040 venture funds since 2015 aiming to raise about 8 trillion yuan, according to Zero2IPO. Much of the money is used to lure businesses to set up local offices, to help boost employment and tax revenues. The Hubei Province’s 200 billion yuan fund is believed to the largest of its kind.
Borrowing From Multiple Online Lenders Remains Prevalent (Caixin), Rated: AAA
In China, online lenders or peer-to-peer (P2P) platforms that only facilitate lending do not have full access to borrowers’ credit information as there is no such centralized platform that shares the data.
Some borrowers take advantage of this information asymmetry to apply for loans from multiple lenders so they can roll over previous debts elsewhere, or to take out cheaper loans to repay the ones that charge higher interest rates and profit from the difference, or even become lenders on other P2P platforms themselves, according to a study by the Beijing Internet Finance Industry Association.
The association’s recent report found that among the 61 online lenders surveyed, 44% of their customers on average had borrowed from multiple sources.
The survey found that nearly 500,000 borrowers tried to profit from arbitrage by taking advantage of the different interest rates charged by different online lenders. On average, each of them borrowed from 2.36 online lenders, the survey said.
China’s war on risk hands US$ 121b loan market to big firms (The Malay Mail Online), Rated: AAA
China’s whac-a-mole approach to risk — hit it everywhere it pops up — is set to hand control of the surging US$121 billion technology-driven lending market to a small group of leaders such as Lufax Holding and the finance affiliate of Jack Ma’s Alibaba Group Holding Ltd.
Macquarie estimates credit extended by China’s fintech firms will jump more than seven-fold by 2022 to 6.2 trillion yuan (RM3.8 trillion) to pay for things like luxury and household goods or training and education. About half that market is micro-lending — typically small, short-term loans with high interest rates, Macquarie says.
China’s 10 biggest fintech companies account for 36 percent of all loans, said Dexter Hsu, a Taipeh-based Macquarie analyst. Tighter regulation could erode China’s more than 2,000 online micro-lenders and so-called P2P platforms, which directly match borrowers with investors, to less than 200, he said.
Chinese FinTech IPOs Don’t Dazzle Wall Street (PYMNTS), Rated: A
Newly listed Chinese FinTech companies in the U.S. are struggling on Wall Street, leaving investors with unexpected losses and posing as a setback to other Chinese firms hoping to go public.
“The quality of the businesses were either too early [to go public], untested or just poor,” said Anh Lu, an equities portfolio manager at T. Rowe Price in Hong Kong. “And they were asking for very high valuations on top of that.”
Funding Circle hits €100m lending milestone in Germany (P2P Finance News), Rated: AAA
FUNDING Circle has hit the €100m (£88.2m) loans milestone in Germany just two years after launch in the country.
The business lending platform says 3,000 investors have backed 1,100 German businesses and created more than 2,000 jobs since 2015.
The platform entered the European market following its acquisition of German platform Zencap in 2015. It now has operations in the UK, US, Germany and the Netherlands.
C’est Génial! Younited CREDIT Tops 100,000 Loans (Crowdfund Insider), Rated: AAA
Younited Credit has just surpassed 100,000 in loans since platform inception. The Paris based online lender (formerly named Pret d’Union) reported an accelerating rate of loan originations as the number has doubled since September 2016 when total loans stood at 50,000. The platform provides loans from €1000 to € 40,000. To date, Younited Credit has originated over € 650 million in loans.
BorsadelCredito.it Raises €1.6M in Funding (FinsSMEs), Rated: A
BorsadelCredito.it, a Milan, Italy-based fintech startup, raised €1.6m in funding.
The round was led by P101 Ventures, with participation from Azimut Enterprises Holding, GC Holding, Banca Popolare di Fondi and private investors.
DreamQuark wins the 2017 Fintech of the Year (Digital Journal), Rated: B
A startup company called DreamQuark, which produces Artificial Intelligence applications for financial services, has been awarded the Finance Innovation ‘Fintech of the Year’ prize.
National Personal Credit Platform Appoints Chairman (Caixin), Rated: B
The chairman of a wholly-owned central bank subsidiary, Zhu Huanqi, has been appointed chairman of a planned national personal credit-information platform, Caixin has learned from sources familiar with the matter.
Online Banking and Payments: Innovative Solutions on the Horizon (FinsSMEs), Rated: AAA
In the near future, online banking and payments will go through some fascinating changes beyond what has already happened over the past several years.
Advanced Mobile Payments
Today, there is increasing demand for biometric authentication apps. To ensure that consumers get what they want, MasterCard is going a step further by developing facial identification, voice recognition, and even cardiac rhythm programs. These innovative solutions will enhance the mobile payment experience for customers and retailers alike.
Growing Opportunities for Mobile Wallets
Back in 2014, Apple was the only real contender for mobile wallets. Within just one year, others followed their lead, including Samsung and Google. Then, in just a short amount of time, more big-name players joined in, such as Chase, Amazon, and Walmart. However, that was not the end. Even social media platforms started offering online payment options. With sites like Facebook that have mobile wallet solutions, people can send money and make payments.
Another prediction is that by 2025, 75 percent of all transactions will be made using mobile wallets rather than actual cash.
Greater Demand for Digital Remittances
For instance, a San Francisco-based company founded in 2001 called Xoom has experienced amazing growth because of digital remittances. In fact, it passed up MoneyGram, which speaks volumes.
Growth Potential with Peer-to-Peer Lending
For instance, having originated loans over $20 million since being founded, Lending Club ranks as one of the fiercest competitors in this arena.
How Banks Are Leveraging Chatbots for Customer Service (Crowdfund Insider), Rated: A
Bank of America: Erica
In October of 2016, Bank of America unveiled Erica, their new AI chatbot. Available in the bank’s mobile app, Erica can work with voice and text commands.
Erica uses machine learning and specially-designed algorithms to provide Bank of America services that were typically reserved for the bank’s top-tier customers. As an example, it could recommend a way to pay down more on your credit card debt to save on interest payments. Or if your checking account is close to being overdrawn, it could contact you to recommend a transfer from your savings account.
Customers can access Nina from the bank’s website, and it can understand a wide range of text requests using specially designed Natural Language Understanding technology.
In the first three months after Nina’s release, the software was handling an average of 30,000 customer interactions per month. Of those early interactions, Nina was able to provide a resolution rate of 78%.
Capital One: Eno
Eno from Capital One is a chatbot program that works through SMS messaging.
You can use this AI chatbot to check the balance on your accounts, see your available credit, track recent transactions, pay bills, and more.
The Wells Fargo virtual assistant is a chatbot that the bank recently released for use with Facebook Messenger. Once a customer enrolls their account, they can then use Messenger to contact the virtual assistant for basic tasks like tracking recent transactions, balance inquiries, and finding the nearest ATM.
Digital investments: Modern ways to invest in the digital age (Bankless Times), Rated: A
The internet has brought about all kinds of new ways to invest one’s money.
- Peer-to-peer lending – You’re best off using a well-established site such as Ratesetter.
- Micro-investment apps – Some apps round up all of your expenses to the nearest dollar and then put the leftover change into an account (for example, if a cup of coffee costs $3.14, this will be rounded up to $4 and the $0.86 extra change will be put into the account).
- Social media shares
Australian Fintech Airwallex Secures $ 8 Million Investment From Square Peg (Crowdfund Insider), Rated: AAA
Less than one year after securing $13 million during its Series A funding round, Aussie fintech startup Airwallex announced it has received an $8 million investment from Paul Bassat’s Square Peg.
Testing a chatbot’s home loan advice gives a range of outcomes (Stuff), Rated: A
A mortgage broking firm is offering an AI chatbot to help first-home buyers understand some of the basics – but an experiment shows you shouldn’t put too much faith in any online calculators’ estimates of how much you might be able to borrow.
Squirrel has launched Alan, an online tool that answers questions like “how much deposit do I need”, “what’s an auction” and “how much can I borrow?”
Regulatory Pathway for Challenger Banks Just OK, Could be Improved (Crowdfund Insider), Rated: A
FinTech Australia has provided a comment onthe consultation paper published in August regarding authorising new entrants into the banking industry. The creation of digital challenger banks in Australia is a welcomed move but, according to FinTech Australia, needs some improvement.
5 Consumer Lending Trends To Look Forward To In 2018 (Inc42), Rated: AAA
This amendment to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 is a step towards standardisation and providing a visible digital identity, thereby promoting transparency in financial transactions. Another factor that is pushing financial transparency is the rise of Fintech and the subsequent new-age companies that are offering digital avenues for finance such as payment platforms, blockchain companies, alternative financers like P2P lenders and so on.
Consumer Lending Trends To Look Forward To In 2018
Alternative Lending Boom
New service providers will serve the underserved and unserved, meeting the unmet demand. We will continue to see the rise of direct lending as well as P2P lending, marketplaces, crowdfunding platforms etc.
Ease Of Access To Credit
Credit will continue to grow, thanks to the alternative lending boom. One such burgeoning space is the Line of Credit. It has gained momentum in 2017 with the metros being early adopters and is expected to expand into tier 2 & tier 3 cities in 2018.
The Rise Of InsurTech
Investment In Emerging Technologies
Blockchain will expand in putting together smart contracts, and digital identification. Already, FinTech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015, driven mainly by China and India.
Government And Regulatory Push For Fintech
Unique Secured P2P Lender Silver Bullion Reaches $ 50 Million in Loans (Crowdfund Insider), Rated: AAA
Silver Bullion, a peer to peer lending platform based in Singapore, has reached $50 million in loan originations. The unique platform that provides secured lending based off of bullion saw more than double the lending volume in 2017 versus year prior.
Amartha Powers Micro Peer to Peer Lending in Indonesia, Focuses on Women Entrepreneurs (Crowdfund Insider), Rated: A
Amartha Founder & CEO, Garuda Typhoon Andi Putra recently commented;
“Since its establishment, Amartha has been committed to connecting the unbanked micro entrepreneurs, and investors who want to add this asset investment in a sector that is more profitable and socially valuable. The uniqueness lies in the micro-entrepreneurs or Amartha Partners, all of which are women. Today, more than 72,000 women micro entrepreneurs throughout Indonesia have enjoyed our services, with a total fund distributed more than 200 billion rupiah (US $ 15 million). “
Affin Islamic Bank lists latest sponsored venture on IAP (New Straits Times), Rated: A
KUALA LUMPUR: Affin Bank Bhd’s wholly owned subsidiary, Affin Islamic Bank Bhd, has today listed its latest sponsored venture with Segi Seri Sdn Bhd on Investment Account Platform (IAP), a shariah-compliant platform similar to crowdfunding and peer-to-peer lending platforms.
Affin Islamic said the venture plans to raise RM3.3 million on IAP to part-finance contract awarded to them recently, which is related to preparation and serving of dietetic food to an established government hospital in Malaysia for a duration of three years.
Payday lenders squeezed by new regulations (The Globe and Mail), Rated: B
Another challenge is the new technology. Instant Financial Inc., a Vancouver-based startup, released an app this year that lets workers paid by the hour get their day’s earnings after a shift. It’s free for employees. Employers pay a fee. The focus so far is the hospitality industry, and includes companies such as McDonald’s and Outback Steakhouse in the United States. Instant has about 175,000 people on the service in the United States and about 5,000 in Canada. Wal-Mart has a similar product, which it sourced from another company.
A mobile banking service is transforming how the poor transfer money — here’s how it works (Business Insider), Rated: AAA
In 11 countries around the world, some 30 million people use a mobile money service that is transforming how people handle their finances.
It’s called M-Pesa, and it has lifted hundreds of thousands of people out of poverty in Kenya.
Krispo, 40, is enrolled in GiveDirectly’s experiment in basic income, a system of wealth distribution in which people receive a standard salary just for being alive.
The money comes with no strings attached. Krispo and the other villagers have received $22 a month since October 2016, and they’ll continue getting it until October 2028.
Scattered around town are M-Pesa stands, outfitted with live agents who can dispense money — essentially an ATM with a human teller.
There is a small fee for each transaction. For the amount given to GiveDirectly recipients, this fee is 30 shillings. (GiveDirectly actually wires 2,280 shillings each month — 30 shillings above the 2,250 recipients can spend — to cover the cost.)
Steve Polsky has a simple vision: Take financial inclusion to the world’s unbanked and underbanked by extending short-term microloans through their smartphones so they can stay connected on those devices longer and more conveniently. “We have an opportunity to walk hundreds of millions of people up the pathway of financial services through their mobile phones,” […]
Steve Polsky has a simple vision: Take financial inclusion to the world’s unbanked and underbanked by extending short-term microloans through their smartphones so they can stay connected on those devices longer and more conveniently.
“We have an opportunity to walk hundreds of millions of people up the pathway of financial services through their mobile phones,” he said. “Nearly 80 percent of the world is on prepaid phone, but their usage is very different than in the United States.”
To that end, prepaid phone users spend trillions of dollars every year on transactions related to those devices. In fact, Polsky said, the most frequent financial transactions for a large number of smartphone users are done on their mobile phones. Many smartphone users prepay for their service by the day, but Juvo allows them to extend their service by borrowing the money to pay for it while building a credit history that can then be used for future credit. After starting in Latin America three years ago, he has taken his brainchild into 25 countries with 500 million downloads.
Juvo’s Explosive Launch
Chief Executive Officer Polsky founded Juvo in 2014, but the actual launch of the app didn’t take place until September 2016. Out of the gate, the company saw 100 million downloads. Growth since that time has quintupled, a big stretch of business from the launchpad of Guatamala and El Salvador where the first users logged in.
“Today, 43 percent of Guatamalan smartphones transact with us multiple times and 47 percent of smartphones in El Salvador transact with us multiple times,” he said.
From these countries, Juvo expanded quickly into Southeast Asia and Eastern Europe. To get to the users in those countries, however, the company had to establish relationships with the mobile operators that provide the service to smartphone users. He spent two years setting up the infrastructure in order to do business and get the reach that he has. Currently, Juvo partners with Millicom, Cable & Wireless, and Tune Talk in the countries where they are operational. In the U.S., they work with Sprint. Every three months, the number of transactions processed through the mobile app doubles putting them on pace to register half a billion transactions by the end of this year.
Financial Identities in the Developing World
In essence, what Juvo is attempting to do is help people in developing countries establish a financial identity. According to World Bank figures, two billion people worldwide in 2014 didn’t have bank accounts. That was down from 2.5 billion three years earlier. At that pace, it will be 12 years before the entire world has a bank account. Juvo wants to make that happen more quickly.
“We call it identity scoring,” Polsky said. “In 83 percent of the world, there is no underlying credit scoring, no signals about financial capabilities, and we can reach a broad number of people to help them gain access to more financial services.”
Those services include checking and savings accounts, credit and debit cards, mortgage products, personal and consumer loans, business financing, investment vehicles, insurance products, credit scores, and more—services that many of us in Western societies take for granted. By bringing the world’s unbanked and underbanked into the financial ecosystem, they’ll have access to more buying power and consumers, and it has the potential to increase the service clout of companies with the ability to service them, such as online lenders. In short, a rising tide raises all ships.
Juvo’s Financial Clout
Recently, the company closed a B Series funding round with $40 million led by New Enterprise Associates and Wing Venture Capital. That takes their total funding up to $54 million including the Series A round completed in September 2016. On top of that, in May, Juvo appointed Ron Suber to its board of advisors.
They’ve also got backers across a broad spectrum of telecom and fintech sectors, Polsky said.
“We partner with these big mobile operators and help them with the way they service their customers,” Polsky said. “And we do it without charging the end customer.”
Instead, they provide the funding to extend mobile service for those consumers without charging fees or interest. A person in Africa, for instance, may be paying for mobile service by the day because that is all they can afford. But they can download the Juvo app and get an extension on their service for one day. After paying for that day’s service on their own timetable (no late fees) they are able to move up to a larger commitment and get funded for two days of service.
“So the consumer can move up as they pay off the previous commitment to bronze, then silver, then gold, then diamond,” Polsky said. “And we do it without ever using the words ‘bank,’ ‘loan’, or ‘credit’.”
This benefit is provided at the expense of the mobile operators, who pay Juvo a percentage of the extra business they gain by extended longer mobile service agreements with their customers. Everyone wins.
Polsky said the worldwide average revenue per user (ARPU) per month is about $12, but it varies in different parts of the world. In the U.S., it’s $30. In other parts of the world, the ARPU is $2.
Communication is a Basic Human Need
Consumers in various parts of the world download Juvo at Google Play, the Apple store, and anywhere mobile apps are available. Most users, Polsky said, are on Android devices because they tend to be more affordable, but the company wants to be available anywhere customers may download the app.
Worldwide, the smartphone is the most important device for most people because communication is a basic human need. And because computers are so much more expensive compared to smartphones, the smartphone is an entry-level device to access of much of what the developing world has to offer. Still, Juvo is a unique company even in Silicon Valley where it is located because of the global nature of its business and the channels through which they reach their customers.
“The idea of someone being out of data and needing to get more minutes on their phone and being able to borrow the money for that, that actually started in Africa,” Polsky said. “But we take it to another level. We’re willing to go up to a full month.”
In Africa, everyone is familiar with M-Pesa, a mobile-based money transfer and microfinancing service. That company is popular in Tanzania and Kenya. Nevertheless, Polsky doesn’t see anyone competing directly with Juvo at this point in the company’s lifecycle. That doesn’t mean there won’t be competition at some point in the future.
“Any time you’re doing something well, you’re going to have competition,” he said.
Right now, though, he’s focused on expansion.
“We’re hoping to partner with upstream financial services and with more big mobile operators,” he said. “That’s how we’ll grow.”
Long the global laggard in financial inclusion, Africa has in recent years kept steadily ahead of the Western world in moving towards a cashless, card-less, mobile-driven future. In just a decade, the region has used mobile phones to spearhead a revolution in financial services. While some in the press heralded Apple Pay as a “revolutionary […]
Long the global laggard in financial inclusion, Africa has in recent years kept steadily ahead of the Western world in moving towards a cashless, card-less, mobile-driven future. In just a decade, the region has used mobile phones to spearhead a revolution in financial services. While some in the press heralded Apple Pay as a “revolutionary product” after its 2014 launch in the U.S., Kenyans were first introduced to M-Pesa in 2007. Today, more people have mobile bank accounts than traditional bank accounts across 19 African markets. Kenya may be the poster child for fintech aficionados, but Nigeria, Africa’s biggest country, is ready to surpass other African nations in financial inclusion. For it to do so, Nigerian banks and fintech providers will need to partner to expand access to credit, leverage recent improvements in mobile payment platforms, and improve information sharing.
A decade ago, making standard financial transactions in Nigeria was a Herculean feat that tried and tested customer patience. Years of inefficiency means that approximately half of Nigerians remain unbanked. Although many of these customers have savings accounts, less than 8% have accessed credit from a formal financial institution, and there are less than 300,000 credit cards in issue. During the last five years, however, banks and regulators have undertaken slow, yet effective steps to transform Nigeria’s financial center from a cash-dominated bureaucracy to one of the most sophisticated banking industries in Africa. In the last 6 months, leading banks have launched new apps that offer best-in-class mobile delivery and biometric and facial recognition. Wema Bank, which recently celebrated its 72nd anniversary, launched ALAT, Nigeria’s first fully digital bank. These developments may enhance the “tech credibility” of legacy banks and appeal to shareholders in annual reports, but it’s unclear that their tech-driven strategies have facilitated greater access to credit or contributed to deeper levels of financial inclusion. Although the payment infrastructure is now in place, incumbents’ reluctance to expand opportunities for consumers leaves open an opportunity for fintech companies to lead in retail banking where traditional institutions are sleeping.
Until recently, the last mile of payments to consumers and SMEs was unreliable and impeded efforts to integrate more Nigerians into the financial ecosystem. However, recent improvements in interoperability have opened the door to consumer finance as a viable source of revenue. Kenya’s M-Shwari, M-PESA’s landmark platform that revolutionized Kenyans’ capacity to save, has been a much-touted success. The launch of mCash in late 2016 has been a game-changer for Nigeria’s banking industry by going farther than M-Shwari. Whereas M-Shwari customers can only make transfers and save using the Safaricom network, mCash is compatible with all Nigerian banks and telecommunications companies. In one fell swoop, Nigeria obtained what other markets have struggled to achieve. Prior to this shift, payments across platforms were onerous and expensive; however, thanks to companies like Flutterwave, Amplify, or Paystack, which are focused on creating seamless interoperability in Africa’s financial sector, fintech providers can better access the bottom of the pyramid. In 2016, Wema Bank loaned N12bn to retail customers (5% of total lending) from their 135 branch locations. In the same year, two leading consumer finance startups loaned just under N10bn and are projected to surpass Wema’s retail lending in 2017. With the benefit of data-driven models, fintech providers can target consumers that legacy banks might overlook due to the low returns, and with interoperable platforms, they can build service models that provide a gateway to other financial services such as loans and insurance.
To scale this transformative potential, greater collaboration between banks and fintech companies is required. Nigeria should consider following the lead of the European Union where the recently enacted Payment Services Directive (PSD2) compels all banks to open up their core banking applications so that customer data may be accessible to fintech startups. This groundbreaking law helps to drastically reduce the costs of new customer acquisition for startups and will force banks to focus more on users’ needs, benefiting consumers greatly. Increased competition in financial services coupled with increased availability of digital services will accelerate adoption of business models with lower fixed costs and greater use of technology. For Nigeria, more information sharing between banks and fintech providers will improve risk profiling, enhance customer services for Nigerians at every income level, and provide customers with more options best suited to their individual situations.
Nigeria’s financial sector has the tools to expand access to finance through existing legislation, but without more will to collaborate between banks and fintech companies, too many users will continue to be left out of the system. As Africa assumes a larger share of the world’s working age population, overlooking tomorrow’s clients is a mistake. Improving efficiency, cost, optimization, and delivery will enable banks and fintech companies alike to shape Nigeria’s development, better benefit from economic growth, and diversify their clientele in order to weather downturns.
Chijioke Dozie is director and co-founder of Kaizen Venture Partners and CEO of OneFi, the largest smartphone-based loan provider in Nigeria.
Zopa, the first marketplace lender in the world, was born in the UK in 2005. In the next couple of years, two of the biggest economies in the world–United States (Prosper in 2006) and China (Paipaidai in 2007)–opened the gates to marketplace lending (MPL). However, it wasn’t until the 2008 financial crisis when alternate lending gained […]
Zopa, the first marketplace lender in the world, was born in the UK in 2005. In the next couple of years, two of the biggest economies in the world–United States (Prosper in 2006) and China (Paipaidai in 2007)–opened the gates to marketplace lending (MPL). However, it wasn’t until the 2008 financial crisis when alternate lending gained real momentum.
MPL is expected to reach USD $350 billion by 2025, and the market is expected to grow at a prodigious CAGR of 48.2% between 2016 and 2024, but this amazing innovation has been concentrated in the developed world with its well-developed credit scoring system FICO. The developing world has not been able to participate due to lack of credit scores, minimal banking history, and small ticket loans, which made client acquisition tricky.
Pioneering fintech startups have been able to leverage your everyday smartphone to solve the developing market conundrum. Smartphones have taken over our lives and therefore data and information produced by each smartphone serves as an important piece of the jigsaw puzzle in understanding an individual’s habits. In the bigger scheme of things, MPL uses that information to develop products that help in addressing customers’ financial needs.
The expertise in using smartphones for generating credit data coupled with the ability to provide loans in the remotest location without requiring any physical banking infrastructure is changing the entire financial ecosystem in many developing countries. The ability of data scientists at these startups to utilize information from smartphones and other tech devices in a meaningful way has helped in halting the over reliance on FICO and similar credit scores.
Below are some indicators which can be collected from smartphones to analyze credit worthiness:
- Number of phone calls made.
- Internet Browsing
- Social media updates
- Prepaid top ups, mobile bill payments
- Location services to track a location of client
- Driving habits/gambling
How Smartphones Make the Lending Process Easy
According to the World Bank, there are approximately 2 billion adults who do not have any account with any financial institution. Almost 73% of the Southeast Asian population do not have a bank account. Thus, these lending startups are unlocking vast untapped markets which have been completely neglected by the brick-and-mortar banks. Startups like Branch and InVentures provide loans, and in return, the prospective borrower will need to grant access to their smartphones.
These startups use innovative algorithms to understand the individual, and based on that, determine their risk profile. For instance, the InVentures algorithm says people who call after the rate drops during a certain time of the day are low-risk borrowers. Many other such start-ups like Affirm, LendUp, and Zest Finance are using algorithms based on social media usage and online behavior. According to a report by Omidyar Network, around 580 million people without credit scores will benefit from such app-based lending.
The above charts show that smartphone usage and internet penetration are exploding across the world. Case in point: In India, there were 220 million (18% of the population) smartphone users in 2016, and that is expected to reach 340 million (28%) in 2017. Focus on digitization as well as growing smartphone penetration offers a unique opportunity to lenders to tap into phone and other utility payments databases for disbursing loans and evaluating credit worthiness.
Features provided by smartphone lending apps these days, which are key for marketplace lending, include:
- Optimized app for low-cost phones
- Streamline and simplified registration process while completing KYC requirements
- User-friendly user interface, which provides delightful customer experience
- Provision to upload document via smartphone and checking eligibility of loan in a few clicks
- Better rates and faster decisions on loans compared to banks
- Secure and Confidential
- Since companies use high-end predictive analysis tools to analyze data, need for credit bureau information is not necessary
- Once approved, funds are issued immediately and user can track the status instantaneously
Impact and Security Threat of Smartphone Penetration
Privacy experts might be incensed with the ability of lenders to scroll through a person’s smartphone and social media feeds, but upliftment from poverty will always be more important for a family in Nigeria as compared to outrage over what a lender can access on a borrower through Facebook. Also, lenders only look at metadata and have obviously no interest in status updates.
Since companies have almost complete access to user data, this also poses a security threat. Many countries have passed regulations to protect consumer interest, but there is a long way to go. Some of the key regulations are:
- Bringing all providers of digital credit under a regulatory framework thus creating a level playing field
- Mandating that individual data collected by lenders are subject to privacy laws
- Requesting that lenders institute measures to prevent customer over-indebtedness, be it through more flexible repayment terms or more extensive verification and credit checks
- Requiring that T&C be simplified and better communicated; for example, using summary displays before customers accept the loan and after loan disbursement accessible within the app, rather than by following a link away from the session.
How the Smartphone is a Game Changer
In China, fintech companies serve the same number of clients as major banks, and much of the credit goes to smart phones. India is also experiencing a fintech boom and now is the world’s third largest market for smartphones, with more than 300 million people expected to access the Internet via smartphones by 2017.
Many new platforms like M-Pesa and PAYTM provide a way to load cash on smartphones, and can be used to transfer or make payments bypassing legacy banking infrastructure. Fintech lenders are thus entering a golden period where digital money is the norm, and even citizens of third-world countries will be able to access credit and other financial products through their smartphones.
Written with Heena Dhir.